Interview: MP Vijay Kumar, CFO, Sify Technologies

In a free-wheeling chat with CFO India, MP Vijay Kumar, CFO, Sify Technologies detailed the various milestones of his journey within Sify, both as a leader of the financial function and as a member of the core executive team.

 
COST MANAGEMENT
Describe the initiative(s)/task(s) that you have undertaken in the field of Cost Management?
 
Year 2006 and 2013 were among the most difficult of times from an India business perspective. There was a dip in the overall investment climate given the uncertainty across geographies. Ironically, this was also the time, Sify had committed to the largest tranche of investment covering two captive Data Centres.
Given the twin compulsions on available capital, we embarked on a cost revisit of every business and support decision undertaken thus far. Also revisited were the cost of borrowed capital and collaterals.
At the end of the year-long exercise, while being equally affected as other Enterprises, Sify was in better shape to tide over the economic downturn. 
And in 2013 at the lowest ebb of the economic downturn, turned profitable.
 
What were the challenges / risks involved?
As with every economic downturn, lending institutions will adopt a cautious approach to businesses. We were no exception.
In our case, we had just closed down the largely cash & carry business of Retail for the more credit driven business of Enterprises. And also invested heavily in infrastructure capacity.
Recovering our investments in such a slow climate was a risk we were willing to take given the cyclic nature of businesses.
 
What was the immediate and medium-term impact on the overall business? (The impact could be strategic, financial, operational or social)
Mostly financial and to some extent, Operational.
During the said years, our bottom line did feel the pressure of the capital outflow.
Both Network and Data Centres, two of our largest investments were dependent on the capacity being used and hence suffered depreciation until then.
Add to that, client was not exactly signing up in droves to utilise this capacity.
Hence, keeping a tight rein on our cost outflow helped mitigate the external pressures.
 
INNOVATION
Describe the innovative task(s) that you have undertaken?
Part Funding A Pan India project through a partner rather than through a lending institution.
 
What were the challenges / risks involved?
Typically, all our projects are in association with partners where the partners will pitch in with their strengths; be it products or services support.
In the case of IndiaPosts 2012 by the Department of Posts, we had partnered with OEM.
Instead of approaching lending institutions for the capital, we negotiated with the financial arm of the said OEM, a subsidiary of HP to part fund the project at a rate significantly lower than market rates.
The scale of the project being huge (implementation across more than 29000 locations), the OEM saw merit in coming on as a partner both on the infrastructure side and also buying into the surety with a soft loan to Sify.
To Sify that translated in to benefits on two heads.
a) Partnership with one of the best in the business
b) Assured capital to complete one of the largest technology projects in India.
Note: The DoP project is on schedule to be delivered within the stipulated time frame.
 
What was the immediate and medium-term impact on the overall business? (The impact could be strategic, financial, operational or social)
Immediate impact - it freed Capital that could be invested elsewhere on other projects that were demanding Sify time and resources.
Strategic - It forged one of deepest partner relationship for Sify.
Operational - It allowed us to bank on Hp vast reseller network to reach into smaller town for support.
 
CORPORATE GOVERNANCE
Describe the initiative(s)/task(s) that you have undertaken in the field of Corporate Governance?
In late 2011, Sify was inducted into the NASDAQ GLOBAL SELECT MARKETS. The scrip was upgraded and joined a select group of 100 other scrips in recognition of the clarity of Board Guidance, Corporate Governance and Conduct of Business; an outcome of 2 years of rigorous introspection.
The first task on hand was to ensure that the books were revisited with regards to international reporting standards. In line with that, IFRS was adopted as the new reporting standard besides the current Indian GAP standards. In doing so, each line item was revisited to filter for ambiguity. The result was that each element of the revenue pool now had a clear structure, process and time period of fulfilment. Internally, this thorough process was extended to Receivables, Loans, Taxes and the likes.
In addition to the clarity of the elements, all time frames for updation with NASDAQ was adhered to. That process has been in continuous practice for the last 4 years.
In Aug 2014, we were awarded the Golden Peacock award for Corporate Governance by the Institute of Directors as a recognition along similar lines.
 
What was the challenges / risks involved?
As a child of infamous parentage, comparisons were bound to be drawn in the way we conducted business. And that was the first and biggest challenge.
To establish without doubt that there was no more any material or operating connect post sell-off, we repositioned the brand from a retail-focussed company to an Enterprise facing ICT Solutions and Services player.
Acceptability was the second challenge.
Having invested in India's first MPLS network earlier in our lifecycle worked in our favour, in that, we could now offer Enterprises a State-of-the-art Network and Data Centres on demand.
As a NASDAQ listed company, the compliance criteria is consistent, high and binding on member organisations.
On one occasion, I chose not to file the results as I was not satisfied with the due diligence done. NASDAQ did send us a notice asking for clarification and on doing the same, the issue was resolved.

What was the immediate and medium term impact on the overall business? (The impact could be strategic, financial, operational or social)
The immediate impact was both strategic and social.
The brand is accepted with credibility; in part due to the discipline we have conducted ourselves with and also that we have delivered large projects considered way beyond us well within the stipulated period.
Aside, we just completed 15 years of listing on the NASDAQ and were called upon to ring the opening bell this past October.
 
Please tell us in not more than 500 words why you think you deserve to be recognised in any one or more of the categories.
The three categories detailed above reflect 3 different attributes.
a) The first represents a clear balance of priorities and the foresight to see the future of each business
b) The second refers to integrity in reporting and its outcome inspite of the infinite compulsions
c)  The third refers to the innovation in raising capital and the ability to clearly enumerate the outcome to partners.
Their results thereon clearly establish the different traits that a CFO should possess.


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