How Biocon CFO is harmonising market expansion with financial prudence in a changing economy
We engaged with Kedar Upadhye, CFO, Biocon Biologics, to discuss supply chain resilience, global expansion, and emerging technologies.In
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We engaged with Kedar Upadhye, CFO, Biocon Biologics, to discuss supply chain resilience, global expansion, and emerging technologies.In
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V.S. Parthasarathy
Wearing the Group CIO’s hat, only a few weeks back, I had penned an article on ICE, an acronym for innovation, climate change and e-commerce. I feel it is already passé today, such is the speed of transformation in the IT environment.S. Vishvanathan (Ravi)
Medium and large enterprises have several advantages such as a large pool of capital, easy access to credit, a huge marketing reach, access to the best of human resources and the ability to withstand economic downturns.Anita Ananthan
The current economic and political environment have left everyone cautious. While big corporates are able to sail through, it…Vaibhav Sharma
Modern times require CFOs to part from their traditional roles of being bookkeepers and compliance managers to being strategists and business partners…Bharat Goenka
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V.S. Parthasarathy
We have moved from merely innovation to ‘Innovation and Adaptability’ and from e-commerce to ‘Experiential Commerce’. Therefore, I believe it is already time to modify the acronym to ‘ICE 2’ which stands for “Innovation and Adaptability, Climate Change and Experiential commerce.”
Research and innovation in IT are bringing newer technologies like cloud computing, big data analytics, Internet of all Things (IOT) etc. These will impact everything but most notably they will affect PPM – People, Processes and Machines.
Bill Gates had said that, “information technology and business are increasingly becoming inextricably interwoven. I don’t think anybody can talk meaningfully about one without talking about the other.” This very aptly captures the importance of IT in business and how IT is playing a much bigger role in making the business future ready.
However, achieving that would call for a change in philosophy of IT teams from simply enabling businesses to help them with a trifecta of ‘Enablement, Enhancement and Engenderment.’ This is to say that IT should take lead in driving business rather than just enabling it.
From the global Top 100 companies by market capitalization in 2009, only 66 managed to survive in the list in 2015, while, driven by innovation, technology companies recorded the highest increase (177%) in their market capitalization during the same period. Apple and Google top this list, while there are another 10 technology companies in the Top 1000. This reaffirms the importance of innovation and adaptability in current business scenario and it’s a clear demonstration of how the world has evolved from cost arbitrage to innovation arbitrage.
Innovation, be it in products, processes, position or paradigm, is unlocking new value for businesses. And channelling it into creative disruption has made some of the most successful business models. In business context, adaptability is an equally important aspect. In the past, scenario planning was a powerful tool in a strategist’s arsenal, but today, scenarios are changing at an exponential rate, not a step-by-step linear fashion.
To survive in such an environment, businesses have to be adaptable, which I believe is a combination of agility, ability to adapt to changes and resilience, ability to keep going in face of adversity. Just like an orchestra, where all instruments have to hit the right note at the right time or risk pandemonium.
Similar analogy applies to the business, if the company doesn’t keep up with trends, catching up will be expensive and if it’s too early it will incur huge investments. Those who change ‘as’ change happens, not before or after it, will be the ones who succeed. Just like a surfer has to ride the wave as it comes, otherwise he risks being under the wave or fall flat.
Earlier, innovation had a different dimension and could be done at its own pace. Today, it is about riding that wave and having the tools to do so. Each wave will require different types of surf boards and other tools.
A lot of people today are talking about global warming, the hazards from increasing carbon emissions and a need for sustainable source or renewable source of energy. The environment as we know is changing fast but, change is happening with much more vigour in the business environment as well – in business models, customer interface, regulatory requirements and many more areas. The important thing for businesses here is to be conscious of and to understand these changes.
A lot of businesses are moving to electronic platform but if they don’t understand and account for climate changes inherent in the business model, they are going to face a huge amount of turmoil. An automotive company has to understand the impact of its business model on climate change.
Another buzz word today is driverless cars. Businesses, therefore, have to understand the context of these changes and adapt accordingly. A more delicate climate change is happening at our workplaces. We have four generations (baby boomers, GenX, millennials and GenZ) working together, and each come with a very different approach. This is especially the case with millennials and GenZ, in part due to digital advancement. This diversity in mind-sets has both its challenges and opportunities. We have to be open to these changes and apprehend the opportunities which presents itself.
In today’s business environment, it is of utmost importance for a business to understand and to some extent anticipate also, the change in its climate, and align its strategies and priorities accordingly.
Today, selling your products and services through a web-page or a mobile app is in. Everyone is trying to ride this wave without understanding it completely. What people are often overlooking is the fact that things are not going to change dramatically as far as experiencing the product is concerned. If a person wants to buy a car, he would like to sit inside it, take a test drive, to see whether it meets his needs. This experience is important for him to be convinced to invest in that car.
A virtual reality room too, cannot provide him the same experience. This concurs with my point that the digital arena will wrap itself around the business model (brick-and-mortar shops) and not replace them. Those who comprehend this upfront will succeed faster and these will be the built-to-last companies. Whereas, those who simply slap e-commerce on top of their business, what I call ‘un-experiential commerce’, will be riding two horses at the same time and will find it difficult to manage in the long run.
However, the direction is very clear, digital is going to play a much bigger role in business as space availability shrinks, working from office becomes difficult and many other reasons. E-commerce obviously will be a big chunk of this new change, but it has to be experiential-commerce. Though there may only be a subtle difference between the two words, the business models may be very different. It may mean different answers to the question how do you complete a consumer’s experience?
For an online clothes retailer, the consumer’s need for touch and feel can be satisfied by providing a return policy without any cost dimension. The experience then is complete and the model is good enough to replace a brick-and-mortar showroom.
However, even here I am given to understand that many stores now offer immediate pick up from the ‘brick unit’ and hence the brick will complement the click. To conclude, the success of any e-commerce venture would largely depend on their ability to provide the consumer with a complete experience. Eventually, players which wrap around digital, e-commerce and analytics to give customer a complete experiential commerce that they need are the ones which will win. And often it will be organisations which are innovative and adaptive and look at these two megatrends of climate change and experiential commerce with a hawk’s eye. Only the paranoid will survive and thrive in this new world.
Meet the author:
Mr. V. S. Parthasarathy (Partha to all) is currently Vice Chairman of the board of Allcargo Logistics. He wears many hats and is actively engaged in the upliftment of poor women from rural and informal sectors.
He has served as the President of Mobility Services Sector, Mahindra Group. He was also the Group CFO & Group CIO at Mahindra Group for 7 years.
He has worked closely with the Ministry of Finance through CFO Board, and on global advisory boards for CISCO/ SAP.
S. Vishvanathan (Ravi)
Medium and large enterprises have several advantages such as a large pool of capital, easy access to credit, a huge marketing reach, access to the best of human resources and the ability to withstand economic downturns. But does this mean that over time the role of small and medium enterprises (SME) in the economy would diminish to a point that they become marginalized as a sector?
Civilizations that thrived in the past had one thing in common. A strong base of entrepreneurs who were willing to take risks, identify opportunities, provide employment and generally drive consumption. Through its history, civilization in the Indian subcontinent thrived due to its large pool of small entrepreneurs who had trade and commerce in their DNA and spread their wings to other regions of the world such as Sumatra, Indonesia, South Korea etc.
That entrepreneurial tradition has been passed on through generations of Indians and, to a large extent still, drives the country’s economy from an employment and consumption perspective.
India’s growth story is largely fuelled by internal consumption and this is one of the primary reasons why a large economy like ours can be relatively immune to global shocks compared to export driven economies. With the balance of trade between countries becoming a major factor in their commercial relationships in the medium to long-term, large internally driven economies are likely to be better placed than export driven economies.
Also, with technology now disrupting business models all the time, any country that thrives only on large businesses and has an insignificant SME sector runs the risk of seeing a decline in job opportunities in the medium to long-term.
In the current scenario, large enterprises derive their consumption demand from the masses who in turn are often employed in the SMB sector. Corporate India no longer has the capacity to employ the large number of engineers, accountants and other skilled and semi-skilled personnel who come out of our universities year after year. The large SME sector encourages many of these youngsters to don the entrepreneurial cap quite early in their lives. This reduces the burden on the economy from a jobs perspective and also opens up a window of employment in these small businesses.
The two most important conditions that any small entrepreneur requires for conducting business are: –’
Easy availability of small ticket loans and innovative working capital finance at a reasonably competitive rate is extremely important for small businesses. Banks have been not been able to devise many suitable products to finance the SME sector. Where the banking sector has provided finance, it has been accompanied by a lot of paperwork and the requirement of collateral security. SMEs are weak in both areas and asking a small entrepreneur who is just commencing his or her journey to provide collateral security is discouraging for entrepreneurship.
The government has recognized this issue and has devised schemes to address the financial needs of SMEs. However, such schemes have their own limitations. For example, they often work top-down, which has its own challenges. The Working Capital Gap in the SME sector, as per a report by the Reserve Bank of India, is a whopping 365 billion USD. The existing banking setup is ill equipped to address this need.
The mushrooming Fintech sector is coming out with innovative finance products for SMEs and would be able to address this gap to a large extent. It is important not to over-regulate Fintech lending as technology-based digital lending is still evolving and needs to go through several rounds of successes and failures before it matures.
The interesting thing is that the fintech lending space tries to address the finance requirement of SMEs and at the same time it is largely a part of the SME sector itself. Thus, it plays the dual role of generating employment and also simultaneously helping SMEs to grow and provide further employment.
While Fintech lenders may be regulated from a funding perspective to ensure that gullible small savers are not caught in any devious schemes, it is important that such fintech are actively encouraged through less interference by the government and its tax and inspection agencies. And most importantly, through a tax regime that is transparent and just.
Meet the author:
S. Vishvanathan (Ravi)is CFO & Director, Paymate. Prior to PayMate, Ravi built his own consultancy practice that focused on helping technology and financial services companies. He has also served A F Ferguson & Co, a leading accounting firm, and offered consultancy on corporate, strategic, financial and legal issues to some of the biggest businesses in India. Ravi is a sports buff who loves distance running and playing soccer.
Anita Ananthan
The current economic and political environment have left everyone cautious. While big corporates are able to sail through, it is the Micro, Small and Medium Enterprises (MSME) – the highest employment generator and the backbone of the economy – are struggling in the B2C segment. These enterprises are grappling for assistance and protection from big companies as they lack robust resources and technology. These are mostly enterprises in manufacturing and services with an investment and turnover lower than Rs 50 crore and Rs 250 crore, respectively.
The initiative of the Government of India, in the last five years, has played a major role in the protection, sustainability and growth of MSMEs. The government has introduced schemes, rebates and counselling to these enterprises from time to time.
Basic Requirements:
MSME applicants need to be in business for two to three years and should have filed income tax returns at least for a year. The credit score ought to be 750 or more. Registrations can be made online or offline.
Individual Sub-segments:
Basic Facilities:
Apart from the above subsidies, there are a few salient features to build quality products. MSMEs can benefit from innovation and digitalisation tools available at affordable funding.
Zero Defect Zero Effect:
Goods manufactured for export have to adhere to a certain standards so that they are not rejected or sent back to India. Exported goods are eligible for rebates and concessions.
Quality Management Standards & Quality Technology Tools:
MSMEs can implement quality standards required for new technologies. Businesses are sensitised through seminars, campaigns, and various other activities.
Grievance Monitoring System:
Business owners can check the status of their complaints, raise their concerns, if not satisfied with redressal mechanisms. The online grievance registration is quite simple and is similar to the consumer redressal court/ arbitration.
Incubation:
This scheme helps innovators to implement new designs, ideas or products. In fact, the government can finance up to 75 to 80 per cent of the project cost.
Credit-Linked Capital Subsidy:
New technology is provided to the business owners to replace obsolete ones. Capital subsidy is offered for upgradation and enterprises can directly approach banks or financial institutions to avail these subsidies.
Women Entrepreneurship:
The government provides capital, counselling, training and delivery techniques to women entrepreneurs to manage and expand their business.
However, the ground reality is most MSMEs are ignorant of the schemes and fail to take the advantages. In many cases digitalisation poses a concern for regular retailers who are unable to access to these systems. There is a crying need to educate these retail enterprises to rebuild a robust ecosystem and help the Covid-hit enterprises regain their growth path.
(The author is the Chief Financial Officer at Credence Analytics, a micro-certified MSME software company. The views expressed are personal and inspired by activities initiated by the Government of India with the intention to reach out to young entrepreneurs. The author can be reached at anitakumar@credenceanalytics.com)
Vaibhav Sharma
Modern times require CFOs to part from their traditional roles of being bookkeepers and compliance managers to being strategists and business partners and technology plays a huge part here, says Vaibhav Sharma, India CFO at Steelcase, a global furniture and technology products company. In an interview, Sharma says digitalization of the regular business processes has allowed him to focus on taking the business to the next level.
1. What drew you to finance as a profession?
I grew up in times where everyone was moving towards IT as a career (the early 2000s) and it was the obvious choice for everyone. I wanted to stand out from the crowd, and had an inclination towards finance as a career since it presented one of the best opportunities to work in international markets.
2. How has the role of the CFO transformed over time in your experience?
There has been a pronounced shift in recent years as CFOs have moved beyond their traditional duties to guide company strategy. CFOs are expected to be the change agents, which means that they have to be motivational, inspirational and they have to lead by example. They have to be cross-functional. They have to drive the talent agenda. It’s a very different muscle to leverage. In my view, charismatic leadership from the CFOs will be the requirement going forward.
3. You have moved across very different industries in the course of your career. How did you adapt to these changes?
I firmly believe that change is the only “constant” and in order to be a well-rounded professional, one needs to adapt to different businesses, economic environments and people. Adapting to change doesn’t come to me naturally but over time I have learned to welcome change and embrace it. It’s the only way to make progress.
4. What are the challenges that you have faced as an exceptionally young finance leader?
The biggest challenge for me was how to get people to accept me as their leader (especially people in my team who were more senior than me), look up to me and be inspired. It took some time as I also had to settle into my position and understand my roles and responsibilities.
5. What are the specific challenges you face as the finance leader of a top end global furniture company in India?
It’s a great privilege to be working as a CFO for a leading company like ours. I don’t take it as a challenge but as an opportunity. An opportunity to work with some of the great leaders of the industry, take the business forward and do much more than what’s been done in the past. I find it really motivating.
6. What are the different hats that you wear simultaneously? How has this made your role more complex, challenging and interesting?
There are many hats a CFO has to wear to be successful in the modern business world. When I work with my CEO, I work as a ‘strategist’. When I work with my team, I work as a ‘coach and mentor’. When I work with other business leaders I work as a ‘business partner’. This makes my job much more complex yet interesting.
7. Is the current economic climate a difficult one in which to plan business expansion?
Absolutely not. If your leadership has depth and strategy, and is driven to adapt to a changing business climate, it is bound to succeed. We have shown that recently by expanding plant capacities, launching new product lines and foraying into new markets. It’s been a resounding success.
8. Where is the expansion coming from in your business and what is your strategy?
Expansion in our Indian business is completely organic and is driven by growing market size, market share increase and introduction of new product lines.
9. What is the most exciting challenge ahead?
Business wise, in India we have been growing continuously and have been staying on top in the industry for last 15 years. Staying ahead of the curve was, is and will always remain an exciting challenge.
10. Do you see yourself as a digital age CFO? How have you related to and adopted new technologies over the years?
Yes, I absolutely do. Modern times require CFOs to part from their traditional roles of being book keepers and compliance managers to being strategists and business partners. Technology plays a huge part here. Businesses deal with huge chunks of data these days and culling out the right information from the data requires CFOs to use modern technologies such as automation, artificial intelligence, blockchain and RPA. I started with simple excel based automations and am now working on implementing technologies mentioned above to help my organization.
11. How has use of digital transformation affected your work sphere?
Digital transformation is more of a need than a ‘good to have’ in modern times. This is because it provides a valuable opportunity for core business functions such as finance to move away from manual processes and automate key areas like payables and receivables, enabling leaders to focus on wider business opportunities. I have done digitalization of my regular business process so that I can focus on taking the business to next level with my leaders. Therefore, I would say it has been a blessing for me.
Bharat Goenka
The Metals & Mining industry is dominated by century old behemoths like BHP Billiton, Alcoa, Noersk Hydro, etc. Against these Goliaths, we at Vedanta, see ourselves as David – always on the lookout of new ways to create disruption in the market place.
Technology, when intelligently integrated with your business model, can be a big disruptor and source of unconquerable competitive edge – so, can Vedanta be the Amazon of Metals – can it make the big elephants of Metals & Mining dance to its techno tunes?
There is a dynamic shift in approaches adopted by companies to sustain increasing profitability and a competitive edge. Having thrived during the boom of the 2000s and then survived the global financial crisis of 2008, mining companies are now competing for growth in the next stage of the industry’s development. A wide array of industry participants—diversified global majors, national champions seeking to go global, commodity specialists, and juniors aiming for the big league—are all looking to increase their presence on the global stage.
With the price of commodities standardized by the market, efforts should be made to increase profitability by focusing primarily on maximizing the output from operations and reducing the unit cost of production and transportation of minerals. The quality and nature of ore extract is governed by the cost and techniques used for mining. Business leaders have been constantly working on the companies’ core capabilities suitable for optimizing operations thereby minimizing costs.
While digital technologies offer a gamut of solutions and distinct benefits, employing the most relevant technology that suits the company’s business model is most crucial. From defining the facets of digitization, to bringing the concept into reality, both strategically and operationally, there is a need to inculcate digital algorithms into organizational planning. Collaborative practices adopted by multiple stakeholder groups lead to the realization of these achievements.
With this thought in mind, exactly a year ago, we launched Project Suhana (Hindi word meaning pleasant) with a pun on S4Hana. There is enormous value stuck across the value chain as we convert Mud to Metal or as the small Bauxite rocks mined in Odisha reaches as Aluminium Billets to Extruders in North America. Technology needs to play an integral part of the business chain. Adoption of cloud-based solutions like SAP S/4 HANA is a first step towards simplifying the business processes and re-engineering them towards value creation. It enables companies in cutting down the processing time, driving one version of truth ubiquitously available, multi-skilling employees, seamless interaction with customers and end to end visibility on supply chain.
The metal industry aims to improve efficiency, productivity, adaptability and sustainability of the supply chain system and their integration within agile business models and processes. For example, a company which is able to track the Quality (not just the traditional Quantity) of Minerals (like Coal) from the Mine Top to the Boiler (from the Shovel to the Socket) will be able to create value that can only be envied by its traditional competitors.
Successful digital transformation is not only limited to emergent technology but also governs several other factors that are critical for achieving success. Aligning enterprise goals and organizational strategy with digital intervention, enabling a technology mediated workforce, ensuring the existence of a well-defined operating model and facilitating the culture of innovation across various teams while communicating clearly defined implementation goals are some of these factors that determine the fate of a successful digital transformation journey.
Intelligent enterprises embrace information technology, process automation technology and communication technology to create value across the supply chain. They also adapt intelligent user-centred design concepts like SAP Fiori 2.0 that focuses on how employees work and provide business benefits catered to the data collected. It helps increase transparency, customer satisfaction and productivity by ensuring faster and direct access to relevant information.
So, with “Project Suhana” our safar (journey) has started – the quest is on for a technology that can disrupt the Metals and Mining space – the industry desperately needs new techno tunes!
– The writer is Chief Financial Officer, Aluminium and Power,
Marco Valsecchi
The large-scale layoffs in IT, realty and many other industries in India paint a dismal picture. What is Adecco’s experience in this regard?
We are the largest player in HR solutions space in India. With such massive lay-offs happening in this sector, HR companies do experience certain pressure from players. A strong quarter of headcount reduction in the IT industry has impacted us. But I think the picture is a bit fragmented than the ones we are getting in the news.
In spite of such lay-offs, we have noticed these sectors are moving in the same space. With regard to hiring, they are looking for great talents. We have noticed that this sector is rapidly picking up and sustaining a healthy growth.
Workplaces across the world are changing, so it’s time to push against traditional ways of thinking. For candidates, we remain relevant as employers either through providing them re-skilling, closing gaps in competencies or being flexible in terms of designation and roles. For clients, we keep on reviewing our strategies; customise them as per requirements to search good talent in the market.
Experts say that companies want to hire only the top 10 per cent of job seekers. How does Adecco ensure better opportunities across the employable base?
Adecco is committed to boost the employability of youth. So, we increase employable base via different initiatives and programmes. We equip youth with hard and soft skills that businesses require today. According to the 2014 edition of the Global Talent Competitiveness Index, lack of work experience and key employable skills have a serious impact on the employment prospects of youth across the world. They need to be equipped with hard as well as soft skills.
As a global leader in HR solutions, Adecco had launched the Adecco Way to WorkTM programme in 2013 to fight unemployment. This global initiative, involving Adecco employees in over 60 countries, focussed to address the mismatch of skills and experience that often prevent youth from entering the workforce.
With this pledge, Adecco commits to:
Finance and HR are so intertwined and central to a company’s agility that they are the logical first step towards unifying all back office functions…CFOs need better understanding of their company’s talent needs.
There is said to exist a huge skills gap in India. What is Adecco’s opinion on this?
The advancement in automation and artificial intelligence is the source of the most disruptive changes presently in the way we live and work. There will be an unsteady transition, so governments and business must act. The education system reforms are needed to provide right technical skills, and the ability to adapt to change. As a multi-career reality becomes the norm, workers must boost employability by committing to life-long learning. At the same time, employment policies must combine employers’ need for flexibility with social protection. We will respond to challenges only by working together.
As per a study by the Adecco Group in collaboration with INSEAD and Human Capital on Global Talent Competitiveness Index – Talent and Technology, India stood on a relatively solid pool of global knowledge skills compared to other emerging markets but it is not able to retain and attract talent.
Re-skilling is the solution for job seekers to remain relevant in the market. An understanding of technologies most likely to emerge in their industry of choice will go a long way in creating success for job seekers.
Finance and HR are the new power collaborators in companies across the globe and companies are moving these functions to the cloud. What is driving this and what are the benefits?
These two areas are so intertwined and central to a company’s agility that they are the logical first step towards unifying all back-office functions that exist. As CFOs get more involved with more defining business strategies, they need a better understanding of their company’s talent and resourcing needs.
I think the major benefits which can be achieved will be a single data model, the addition points between two areas can be automated, which will become increasingly important as a company grows. Also, one of the advantages which I can see is that we don’t have to grow headcount to manage all these tactical, back-office lengthy processes that become more complicated as the work gets to expand.
What is Adecco India offering to its Indian customers? How is its approach different from other HR solutions companies in the country?
Work is evolving at a fast pace, and organisations must be ready to keep up. At The Adecco Group India, we not only understand the changing employment landscape but work with clients to ensure they can embrace it. As we understand that businesses across the globe, we become more open to new ways of working. In recent years we’ve seen the global economy fluctuating dramatically. The way we all do business today will be different in five years, or in ten years. We don’t know what will happen. But we do know that no business can operate without people.
That’s why strategic workforce planning is vital. Make no mistake: we’re not just a service provider. We certainly don’t do ‘off the shelf’. We’ll listen, learn, get to know your business needs in-depth and then tailor the right solution for your organisation. We’ll ensure that you can maximise opportunities and minimise risks. With expertise gained on the global stage, we’re able to deliver the fully integrated HR solutions that will support your organisation’s development. Adecco India, currently, focuses on executive search, recruitment, temporary staffing, learning, and training services to its customers. With the help of global resources, we are able to merge our expertise with local intelligence to provide customised services to our Indian customers.
We are also in constant interaction and collaboration with leaders and domain experts across industries including retail, telecom, FMCG, engineering, IT, financial services, hospitality, and education. Our experts are skilled and experienced in finding the right candidate. We work on providing consecutive assignments, ensuring talent retention and skill enhancement.
What are the key responsibilities of a CFO in the HR industry? How is the CFO’s role in this sector different from other sectors?
In HR industry, people are supreme asset of an enterprise. An organisation’s employees drive growth and performance; and success is essentially related to skill, talent and knowledge of the workforce. This value is more than any physical asset. As businesses seek to grow, the two most likely hurdles they face are paucity of funds and scarcity of human resource.
High-performing CFOs have to play an active role or have the responsibility in strategic personnel planning and continuous forecasting. He has to move beyond the perception of a workforce plan. They bring acumen and analysis to combine external and internal data in a way to help the business strike the right equilibrium between building, obtaining and deploying talent to support corporate strategy.
The new job market would require a different set of skills to be learnt by employees and prospective employees, and also opens up a new customer base…
I don’t think that CFO roles are different. Of course, a CFO has to wear multiple hats which vary from sector to sector. A CFO with a strategic bent of mind knows well to navigate his way through. Today, CFOs have expanded their skills set and understood the need to control rising compensation and benefits costs without affecting recruiting or retention initiatives. In addition, they are also involved in addressing challenges presented by the troubled global economy. They not only display world-class finance skills but they also possess a holistic understanding of business functions and experience in collaborative decision-making.
The HR landscape has undergone sea changes in the past few years. What has been Adecco’s experience in India so far?
The HR as a whole, used to be considered with keeping records, ensuring companies followed regulations and were in compliance with laws, and determining wages, compensation packages, and other benefits. Over the past few years, the entire HR landscape has evolved tremendously. All thanks to technologies that automates much of the work traditionally done by HR professionals, the HR department that exist today looks almost nothing like the ones that existed before.
In addition to programs that can automate payroll and streamline the on boarding process, there are also platforms that simplify the recruiting process and talent management systems that enable companies to quickly determine if their employees are getting the right training opportunities.
What would be the hot areas in HR in the next few years and what is Adecco’s strategy for the market?
This segment has been evolving a lot as a function. It is not just considered as a support but is fully involved in business at strategic level in the last couple of years. The war for talent and engagement has been increasing, and as a result of this many firms are looking at it more prominently than before. The future will be decided by the investment of top leaders in some of the most serious challenges it is facing today. So if we look at the upcoming trends in coming years of HR, here is what will be different:
With automation threatening many assembly line and routine jobs, also in finance, how do you see the job market being impacted?
While automation might be in the process of replacing many assembly line and routine jobs, it has opened the door to a new job market, involving data analytics and machine learning. The new job market would require a different set of skills to be learnt by employees and prospective employees, and also opens up a new customer base that would require a variety of new services that would appear due to this change in operations and services provided. Thus, it is important for companies and employees to grow and adapt to the changing times.
How is the GST changing the services landscape in India? How do you see it impacting companies like Adecco?
The GST is a destination-based single tax on the supply of goods and services from manufacturers to consumers. GST has replaced multiple taxes. A common base and common rates across goods and services and similar rates across states and between Centre and states will facilitate better tax administration, improve tax compliance, alleviate cascading or double taxation while also ensuring adequate tax collection from inter-state sales.
This new system has led to positive impact on ease of doing business as GST had broken the barrier of state tax regulations. This will also have a direct impact on the job market. Jobs will go up specifically in the sectors that are open to competition and export. In temporary staffing, the demand for technical jobs will rise. In my opinion, more jobs will be created.
GST would bring in a significant change in doing business in India. Companies will invest in GST software to advocate for the best practices, gearing up for a change, training teams and developing IT systems. For this reason, temporary jobs will gain a big boost in the GST regime across all sectors. Talking about the job market scenario, it seems it will gain momentous rise across sectors. However, it will be temporary and fade away eventually.
“Treating employees benevolently shouldn’t be viewed as an added cost that cuts into profits, but as a powerful energizer that can grow the enterprise into something far greater than one leader could envision.” Howard Schultz, CEO of Starbucks
“I think as a company, if you can get these two things right — having a clear direction on what you are trying to do and bringing in great people who can execute on the stuff — then you can do pretty well” – Mark Zuckerberg, CEO of Facebook
An inspirational CEO is one who defines a vision, creates a sense of purpose, articulates the soundness of the logic and assumptions behind the vision and purpose, is surrounded by go-getters, develops a knack for decisiveness, collaborates with all stakeholders and delivers results through an action-packed performance.
In the current dynamic and volatile environment in which organisations operate, wherein innovation and technology are becoming huge disruptors in the external market place, information decay is growing at an alarming pace, work place conflicts and challenges are increasing, the job of a CEO has become extremely challenging, dynamic and carries a larger than life responsibility. Despite having an A-team, availability of enormous resources and talent pool, the CEO most times has to undertake a solo journey, the single most reason being the burden of carrying the entire organisation on his shoulders alone.
The burden may be actual or perceived, but it does not matter. So long as he is in the hot seat, the perception prevails and he has to keep making critical decisions every moment of his tenure. This article examines and provides insights into the qualities that are essential for the person occupying top job, both to succeed in the job and also to become an inspirational CEO.
Purpose and belief “To be truly successful, companies need to have a corporate mission that is bigger than making a profit.” – Marc Benioff, CEO of Salesforce
“A passionate belief in your business and personal objectives can make all the difference between success and failure. If you aren’t proud of what you’re doing, why should anybody else be” – Richard Branson, Founder, Virgin Group Great leadership is really a transfer of belief. Great leaders share their belief, vision, purpose and passion with others and in the process they inspire others to believe, act and impact. Great leaders are positively contagious and they instill confidence and belief in others.
Having a strong vision, a higher sense of purpose and an incessant belief in self and his core team can enable a CEO to overcome any obstacle and focus on the achievement of organizational objectives. Purpose, Vision and Belief can bring a strong alignment among all the key stakeholders which can help the teams to work as one cohesive unit and achieve success against all odds.
It is imperative that the CEO spends a considerable amount of his time in creating this vision, generating a consensual sense of purpose, bring thought level alignment among key stakeholders and empower larger teams in the achievement of organisational objectives.
Patience & perseverance
“Patience is not simply the ability to wait, it is how we behave while we are waiting – Joyce Meyer Great works are performed not by strength but by perseverance” – Samuel Johnson
The CEO position provides a power and authority which can be diligently used in the pursuit of the organizational objectives, by displaying in action, some essential key qualities and characteristics or the position can be abused through aggression and misuse. There are endless examples in corporate history of how the position has been manipulated and misused for personal indulgence and profit making.
Great organisations are built over a period of time based on sound and ethical principles which are upheld through a tenacious display of patience and perseverance from the CEO, aided by a core team and their followers. The twin qualities of patience and perseverance can help the CEO to overcome all challenges and achieve success while becoming a source of great inspiration to people around him.
People: Surrounded by A-team
“I think as a company, if you can get these two things right — having a clear direction on what you are trying to do and bringing in great people who can execute on the stuff — then you can do pretty well” – Mark Zuckerberg, CEO of Facebook
“Treating employees benevolently shouldn’t be viewed as an added cost that cuts into profits, but as a powerful energizer that can grow the enterprise into something far greater than one leader could envision.” Howard Schultz, CEO of Starbucks
In the hands of a capable boss, right and talented people can create wonders in the work environment through their creativity, ingenuity and intelligence. Obtaining such a talent is indeed a difficult proposition but the CEO who understands this and always makes it his priority to recruit right talent into the organisation at the right time can create strong pillars of people resources across the organization, which enables the organisation to not just compete with others, but become a strong differentiator in the market place which can generate tremendous amount of success to the organization.
Independently unbiased
Being unbiased and working in alignment with the same towards people and circumstances is a very difficult ask for the CEO. Most of his time goes in people management, situation management, negotiation, persuasion and presentations.
Availability of information & relevant analysis and effective communication are the two most essential tools that a CEO continuously utilises to navigate through the everyday challenges of being a top decision maker. In this process, he is bound to become emotional and judgmental towards particular set of circumstances or people associated with it. Sometimes it is difficult to draw a line between logic and rationality and emotion & judgment.
Tough situations call for tough decision making, but executing those decisions in an unbiased way is a very difficult challenge, reason being the consequences of those decisions may be felt over a period of time and it may not unfold in the manner it is expected when the decisions were initially made. The CEO who can uphold the moral and ethical values in all situations, assess the environment and people and make right decisions in a rightful manner can go a long way in creating a balanced, harmonious and value based organization, which eventually will have a lasting impact on the external environment as well.
Decisiveness
Decision making at a strategic level is as much intuitive, if not more, as the rational logic behind the process of arriving at a decision. Knowledge and skillset are the essential back bone of the decision making process. However, the breadth and depth of the thought process backed by robust real-life experiences are the hallmark of a qualitative decision making mindset. This essentially is the quality which sets aside great decision makers who walk the life and become great leaders in their respective areas and provide wonderful sources of inspiration and motivation for their followers.
In the VUCA world that is currently in vogue, it is imperative that the chief executive is decisive in almost every single activity that traverses through him. He has to navigate very tough waters, be with his team always, be one step ahead of all others, analyse through a maze of information, keep on radar the organisational objectives and make challenging and effective decisions. The decisions that are thus made can have a lasting impact on the environment, both internal and external and the people who are part of these environments.
The CEO may have support of the Board and his own management team, but his own decisiveness is an integral part of this decision making process which can transform him into a charismatic and inspirational leader. In the hands of such a capable and inspiring leader, the organization can not only achieve its goals but can create and transform the entire eco-system surrounding it into a highly productive and innovative hub.
Sense of being there: Ultimate collaboration
The hallmark of a great CEO lies in how he manages to bring on board diverse set of talented people and enables collaboration among all those people with the singular focus on achieving organizational objectives and building a wonderful and inspiring organization to which people from all walks of life aspire to be associated with. Google, Apple and Amazon are prime examples. Larry page, Steve jobs and Jeff Bezos are all extraordinary leaders who still provide a source of inspiration to large number of people.
This leadership and this inspiration has been a journey, a journey of collaboration among highly talented and intellectual mindsets, through which world-class organisations have been built from scratch and people across the world worship the leaders as much as the organisations.
Ajay Pai
In an interview with CFO India, Ajay Pai, Finance Director, India and SSEA at AB Mauri, talks about the impact of the COVID -19 pandemic on the food processing industry, cash management strategies and the role of finance leaders, priorities and outlook for the coming quarters, investment sentiment in the sector and how the government can help.
How has the COVID-19 pandemic impacted food processing industry and AB Mauri’s business in India over the past six months?
The current pandemic had a significant adverse impact in the initial few months on the food processing industry and also AB Mauri’s business in India. This was due to supply disruptions arising from stringent implementation of lockdowns, reverse migration of labour and also demand disruptions arising from the atmosphere of fear and uncertainty which curbed discretionary consumer spending.
In the past few months, we have seen a greater divergence of impacts across the food processing industry due to a multitude of consumer behaviour changes.
First is the increasing consumer demand for better health and nutrition, which has resulted in a rapid growth for products servicing this space.For example, Dabur Chawanprash saw 7x growth in Q1 reported sales. Second is sustained and strong demand for essentials and in-home snacking, which was visible in the Q1 results of companies such as Britannia. Britannia posted a 27% revenue growth in Q1 on the back of biscuits consumption increase.
Third is consumers’ preference for trusted brands as a sign of good quality, health and nutrition and this places companies with established, trusted brands at a significant advantage compared to players without good brand positioning.
Lastly, consumer spending is growing faster in rural compared to urban India on the back of higher MNREGA spending by the government and expectations of a normal monsoon this year boosting rural demand while uncertainty in urban India continues to moderate urban demand.
AB Mauri operates across multiple business divisions and has a range of trusted product offerings for the bakery market in India and our export customers outside India. The diversity of AB Mauri’sIndia business, along with strong risk mitigation undertaken by the business, has helped the business recover from a performance dip in March and April 2020.
What was the impact on your supply chain? How long will it take to get back to normal and stabilise?
In the initial few months of Covid-19, our supply chain was hugely disrupted due to challenges in operating plants in areas where lockdowns were imposed to protect lives of people, and subsequently due to the reverse migration wave that started in India, which disrupted both the logistics and manufacturing industries.
However, the situation has stabilised in the last couple of months as we have worked closely with our supply chain partners to arrive at optimal supply chain models while prioritising the health and safety of our employees, suppliers and customers. Due to the evolving nature of the Covid-19 crisis, we are constantly on the vigil and working with stakeholders across the value chain to ensure timely customer service.
More importantly, the learning for businesses from Covid-19 is the need to be better prepared for such events in future, acknowledging that this was not a black swan event. I have seen several articles published that the industry and supply chains have been disrupted from the black swan event of Covid-19, but these interpretations are wrong and hence future business responses linked to these interpretations also risk being flawed. A black swan event is an unpredictable, rare, catastrophic event as Taleb defines in his best-selling 2007 book “The Black Swan”.
However, Covid-19 is not an unpredictable or rare event. If we look at human history, pandemics have occurred with frightening frequency, whether it is SARS, Swine Flu or Spanish flu. Also, several studies conducted by US administration under President Obama as early as 2009 and speeches of several global personalities already flagged a major pandemic as probable event. Covid-19 has challenged traditional business supply chain models and we need to be better prepared to handle such situations in the future, adopting end-to-end operational responses.
What has been the role of the finance function in surviving through this crisis?
The finance function was instrumental in preparing and executing a holistic response to the Covid-19 crisis, understanding the likely business impact and considering the overall socio-economic context of the crisis in India. The immediate responses were supporting business with structured cash and cost management strategies, health and safety investments, IT investments and leveraging automation to ensure continuity of critical business processes and mitigate impact of Covid.
From an economic perspective, the crisis clearly has a significant medium-term impact on specific business and Indian economy due to the complete shutdown at the start of the crisis and disruption of supply chains. Hence, appropriate cash and cost management strategies were required not only to mitigate the impact of the crisis, but also to emerge resilient to capture future growth opportunities. Subsequent reports have validated this stance.
Indian GDP contracted 23% in April-June 2020 and is expected to contract anywhere between 10% and 12% on a full-year basis, depending on which reports you choose to refer – OECD, Goldman Sachs, or Moody’s. Hence there is continued need for the business to focus on cash and cost management and finance played an instrumental role in spearheading the organisation-wide efforts in this area.
The technology dimension of the crisis gained salience due to the need to keep teams connected while the Covid crisis placed severe restrictions on travel and mobility and increased the importance of social distancing to prevent further spread of the pandemic. Investments were made in technology capacity and capability building, working closely with business partners to ensure the business can operate under the new normal conditions. In addition, across the industry the pandemic has challenged the finance function to evolve from its traditional approach of evaluating investment based on financial returns to consider the broader aspect corporate responsibility towards employees and other stakeholders’ health and safety.
AB Mauri, with a strong culture of prioritising health and safety, adopted additional measures across its business operations and made investments to automate manufacturing processes in order to protect the health and safety of employees and other stakeholders. Lastly, the current crisis stressed on the need for businesses to enhance traditional enterprise risk management frameworks and business continuity planning, which typically prioritises business specific risks, to cover situations such as Covid-19.
Working with stakeholders within and outside the business to build structurally sound business models has helped build a more robust business, which can withstand such pressures in the future.
What is your outlook for the food processing sector over the next two or three quarters?
I think the current situation is very fluid and in the next two or three quarters companies in health, nutrition and essentials segments will continue to do better than those in indulgence categories until the situation has stabilised and the spread of the pandemic is contained. Also, industry players with a focus on the rural market and strong innovation of new products to meet requirements of cost sensitive customers will perform better.
While some of the high frequency indicators of the Indian economy gained in August, pointing towards potential recovery, there is still a long way to regain the growth momentum in India and we need to be aware of the potential downside risks of the resurgence of Covid-19 during winters, weak consumer sentiment while Covid infections are still rising, and risks of NPA and rising debt resulting in low credit creation stemming recovery and demand formation.
The food processing industry remains cautiously optimistic that the festive season might spur demand and it will have to maintain a close eye on demand during the upcoming festive season. My view is the food processing industry in India needs to prepare for an extended period of recovery from Covid-19 and should work to provide high quality and trusted branded products to consumers to drive growth in the current environment.
What would be the priorities over the next two-three quarters?
The priorities over the next few quarters will be to continue to explore growth opportunities and embed a strong cash and cost management culture within the organisation. While companies might find driving growth challenging in the current environment, specific product segments and channels are growing rapidly and hence business should grab the growth opportunities available.
We’ve already discussed the product segments which are expected to perform better earlier and businesses can prioritise growth in those segments. From the channel perspective, hygiene and risk factors will continue to propel faster growth in the E-commerce channel, whereas rural demand and convenience will provide a boost to traditional trade. In the current scenario, modern trade needs to evolve to offer more differentiated and relevant consumer experience in the new normal. Hence, the challenge for business in the coming quarters will be to offer the right product portfolio in the right channel to drive growth. Second, “cash is king” is an adage that is oft repeated in business and this gains more significance in periods of uncertainty as we are witnessing right now.
Through these measures the government can support the food processing industry, which plays an important role in the food value chain of the country. On the demand side, government’s higher budgetary allocations by 60% to MNREGA, which shows a commitment to support people’s livelihoods during this period of crisis, is expected to have a positive impact in rural demand. Similar benefits can be extended to the urban poor and tax breaks provided for the middle class to jump start flagging demand in the Indian economy.
The Indian government today faces the difficult task of promoting economic recovery supporting industries while protecting the lives and livelihoods of Indian citizens and managing the rising fiscal deficit.Fitch recently estimated India’s fiscal deficit for the current year at 8.2%, which leaves the government with some manoeuvrability to support industry and the government is proactively working out steps it can take to support industry.
However, given the nature and extent of the health, humanitarian and socioeconomic crisis created by COVID-19, the need of the hour is for collaborative and innovative joint efforts of the government, civil society, NGOs and industry to address this challenge comprehensively and emerge stronger in future.
“Time is more value than money. You can get more money, but you cannot get more time.” JIM ROHN
“If you do not find a way to make money while you sleep, you will work until you die.” WARREN BUFFETT
Long term financial and retirement planning has become an essential requirement in everyone’s life. It has become more so with an increase in the health risk due to lifestyle disorders and environmental pollution. Technological advances in medical field are providing adequate protection and cures to new set of lifestyle diseases; however, they come at an alarming cost as well.
Hence, inadequate financial resources during working life and post retirement can create havoc in one’s lives. Based on my experience and understanding, I have outlined in this article a financial and retirement roadmap that one needs to consider during their working life and it helps if one gets an early planning and investment start to leverage the power of compounding and time value of money.
Current cash flows, investments and a detailed financial analysis
Identifying long term goals and financial requirements
Creating an ideal investment portfolio
Identifying gaps in relation to ideal investment portfolio
Gaps always exist between an ideal investment portfolio and the current one being followed. Gaps could be:
Formulating short-term and long term financial investment strategy
There can be several ways to formulate short-term and long-term investment plans. A basic understanding of the options available, their evaluation both for short-term period and long-term periods, the current allocable surplus can help in devising a bare minimum strategy to start with. There is no order to what options to choose from, how many to do. It depends on the surplus available now, recurring surplus possible year on year, risk taking ability. But, always it helps to start small with some SIP’s and build onto it year after year. Given below are few options starting with an assumption on the saving ratio.
Use of debt
One always wonders whether to take debt or not for investments on house or land or car. Simple rule of debt is that one has to keep paying interest over a long period of time. Most of the current working generation is living on EMI’s only. While it is a good thing that credit is easily available these days, the burden of EMI’s over a long period of time can put oneself into an undue stress. Hence, it helps to have a clear plan of retiring the loans early.
A key principle to follow is not to have too many EMI’s simultaneously and that the portion of EMI’s do not cross 50% of the net salary, leaving still some scope for other investments.
In my own experience, debt has been a great motivator to work and clear the loans faster. No debt on the personal Balance Sheet can act as a key motivator not to work and explore other things that life has to offer. It is an individual choice to make, but prudence has to be exercised in either scenario.
Dos and don’ts of financial investment
Some examples of bad financial strategies in general
What are the challenges that you have faced as an exceptionally young finance leader?
The biggest challenge for me was how to get people to accept me as their leader (especially people in my team who were more senior than me), look up to me and be inspired. It took some time as I also had to settle into my position and understand my roles and responsibilities.
What are the specific challenges you face as the finance leader of a top end global furniture company in India?
It’s a great privilege to be working as a CFO for a leading company like ours. I don’t take it as a challenge but as an opportunity. An opportunity to work with some of the great leaders of the industry, take the business forward and do much more than what’s been done in the past. I find it really motivating.
What are the different hats that you wear simultaneously? How has this made your role more complex, challenging and interesting?
There are many hats a CFO has to wear to be successful in the modern business world. When I work with my CEO, I work as a ‘strategist’. When I work with my team, I work as a ‘coach and mentor’. When I work with other business leaders I work as a ‘business partner’. This makes my job much more complex yet interesting.
Is the current economic climate a difficult one in which to plan business expansion?
Absolutely not. If your leadership has depth and strategy, and is driven to adapt to a changing business climate, it is bound to succeed. We have shown that recently by expanding plant capacities, launching new product lines and foraying into new markets. It’s been a resounding success.
Where is the expansion coming from in your business and what is your strategy?
Expansion in our Indian business is completely organic and is driven by growing market size, market share increase and introduction of new product lines.
What is the most exciting challenge ahead?
Business wise, in India we have been growing continuously and have been staying on top in the industry for last 15 years. Staying ahead of the curve was, is and will always remain an exciting challenge.
Do you see yourself as a digital age CFO? How have you related to and adopted new technologies over the years?
Yes, I absolutely do. Modern times require CFOs to part from their traditional roles of being book keepers and compliance managers to being strategists and business partners. Technology plays a huge part here. Businesses deal with huge chunks of data these days and culling out the right information from the data requires CFOs to use modern technologies such as automation, artificial intelligence, blockchain and RPA. I started with simple excel based automations and am now working on implementing technologies mentioned above to help my organization.
How has use of digital transformation affected your work sphere?
Digital transformation is more of a need than a ‘good to have’ in modern times. This is because it provides a valuable opportunity for core business functions such as finance to move away from manual processes and automate key areas like payables and receivables, enabling leaders to focus on wider business opportunities. I have done digitalization of my regular business process so that I can focus on taking the business to next level with my leaders. Therefore, I would say it has been a blessing for me.
Sunil Sayal
You have been part of the mobile and telecommunications sector for long. How would you describe the developments that have taken place in India in the last decade or so? Where do you see the country headed?
The telecommunication sector has been perhaps one of the fastest evolving sectors in our country. For many of us who have been associated with this sector ever since the journey started, it has brought in its fold a variety of emotions – of excitement, of challenges, of fear, of uncertainty, of adrenalin rush – and there has never been a dull moment. The face of the Indian telecom sector is now dotted with just a handful of names. And what a journey it has been for those who survived! It is a sector where the size always matters and Big is Beautiful (supposedly) – big on subscribers, big on data volumes, big on capex spend, big on debt and big on risk – certainly not for the weak-hearted.
The last decade has been more tumultuous as compared to the earlier years. A decade ago we had a whole lot of new players on the block who got attracted by the sheer potential of the volumes, but were short-lived, thanks to some irregularities and judicial pronouncements. When things started to stabilise a couple of years ago, entered fresh competition. Everyone knew that things would change after the latest entrant, but I think the pace of change has left quite a few stranded, high and dry.
Apart from the competitive disruption, the Industry has also undergone a technological disruption. Growth in subscriber base and hunger for data, thanks to a thriving social media connect, has forced the operators to move quickly from an existing technology to a higher one. While 4G or LTE as we call it is currently being deployed we find the operators and Infrastructure providers already cosying up to the next generation, namely the 5G.
“The track record of the ICAI on disciplinary aspects has been under question every time an untoward incident on corporate fraud comes to light much the same way as of other professional bodies. There is merit in the stand that the executor and the regulator need to be separated from each other as is the case in many other countries.”
The third disruption has been driven by the consumers who have just loved the battle of the Titans. Propelled by the low cost offerings, low cost of devices and easy accessibility, the demand and usage of data has just exploded beyond everyone’s imagination. We seem to be using more data than even our Chinese neighbour forcing the operators to increase their spend on capacity, coverage and efficiency.
The fourth disruptor has been the high cost fees and taxes which this sector has had to bear. High spectrum auction prices, revenue sharing, interconnect charges, GST, to name the bigger ones. All this has had two effects, converted the operators balance sheet to a debt intensive one with a massive servicing cost and at the same time converted the telecom landscape from a spectrum starved to a spectrum sufficient one.
Going forward we should witness the effects of consolidation getting translated into some stable financial numbers for the current players as now there is enough room for all to play their cards without having to be constrained by the also rans.
From the digital divide to digital thrive, our mobile network language seems to have undergone a sea change. How do you see mobility driving India’s next lap of growth?
Digital is the new buzz word and digital disruption is the new fear in everyone’s mind irrespective of the industry you belong to and the skill set you possess. All of us run the risk of getting ‘dinosaured’ if we do not keep pace. Telecommunication plays a very important role as it is the PRIME ENABLER of the digital revolution. Without communication channels we cannot transfer and use information which is currently sitting on the cusp of the Fourth Industrial Revolution. I see Telecom as the vehicle on which all digital tools like RPA, AI, Machine learning, Cloud, Cognitive Learning will straddle to be able to move forward.
How would you rate the policy changes in the industry? Have the policies been progressive and in keeping the needs of the time? How have they helped India’s telecom sector’s growth journey?
Being a fast moving progressive sector, the Government has been trying to keep pace with the changes. A slew of measures have been taken regularly over the past years to help free spectrum, transparent allotment of spectrum through open auctions, input credit through GST, consolidation rules and regulations, reduction of interconnect charges, etc.
Lately, there has been a lot of support in terms of moving towards next generation of 5G technology with the state-run players also signing up collaboration measures with the technology providers. There seems to be a strong support and belief that India needs to digitalise and to be able to do that we need to have the best telecommunication infrastructure.
Yes, a lot needs to be done to ease the financial stress in the sector as we have seen five players folding up in a span of 12-15 months, which may be kind of acceptable in the West, but in our country it plays havoc with peoples livelihood, both direct and indirect, pressure on banks balance sheets, and on the economy on general. We all await the New telecom Policy with a lot of hope!
On the finance side, how has the recent shift in policy like GST impacted the sector?
GST has been good for the sector where the operators can get full input credit without gaps or leakages. The GST rate is something worth a relook, given the usage by the common man of this service and the fact that this will be the prime enabler of the digital regime going forward.
Ind AS has complicated the accounting side of finance. Or has it? How has it impacted your company? What about its impact on M&A activities?
Ind AS will bring about uniformity in the way the world reads and interprets financial statements, which should be good for the investors. Yes, during the transition period, it does cause pain for some industries and sectors. Some of the companies who are subsidiaries of multinationals or those who were listed on the SEC, etc., may not feel the discomfort as much as the others. But as they say, no pain leads to no gain.
The return of the dreaded Long Term Capital Gains Tax resulted in a furore with demands of roll back. Given your expertise in the field, what are your views?
Given our society and economy and the demands on it, every income earned needs to make its due contribution to the exchequer. If we make money on the stock exchange, there will be an element of taxes which it will suffer. However, the Government needs to make up its mind whether it wants to tax every transaction (STT) or it wishes to tax the income earned as LTCG. It doesn’t augur good if the stance of the government in terms of the mechanism to be used for taxability changes with the pace of growth or otherwise of the Sensex. A flip flop approach needs to be avoided to provide stability and trust.
The government has been talking about the Institute of Chartered Accountants of India’s poor disciplinary record. However, it has failed to notify National Financial Reporting Authority (NFRA) so far. What do you think is lacking in the current set up? Do you think such a body is necessitated?
The track record of the ICAI on disciplinary aspects has been under question every time an untoward incident on corporate fraud comes to light much the same way as of other professional bodies. There is merit in the stand that the executor and the regulator need to be separated from each other as is the case in many other countries.
It would have been an excellent situation had the ICAI been somewhat more proactive and forward leaning on the discipline aspect. However, the new body needs to pick up momentum and both need to work in a coordinated manner between themselves so that tangible results can be seen on the ground. Both of them have to work in tandem and respect each others domains and jurisdiction besides building trust and faith in the users of the financial statements.
The recent scams involving banks has put the spotlight on the role of auditors. What do you think needs to be done to strengthen the segment?
I think the involvement of the top management in the findings of the Audit, the upgradation of audit tools and methodology by using more and more digital tools, and close coordination between other watchdogs and regulatory bodies is what is required. An audit per se doesn’t guarantee the authenticity of all the financial numbers given the enormity of the volumes and the geographical spread of the operations.
Do you feel that despite corporate governance regulations, it is the lack of business ethics in companies that has hamstrung its implementation? What should be done to ensure strong corporate governance in companies?
A two fold approach -“ inside out and an outside in” is required. A self disciplinary culture, walk the talk behaviour, objective assessment of issues and long term view of the enterprise is required on one side. On the other side, we need comprehensive guidelines, rules, procedures and a quick remedial mechanism which doesn’t take months and years to dole out the required corrective/punitive actions will make the governance effective both in reality and in perception.
What is your view on the recent protectionist stance adopted by the government?
Make in India is something which I personally feel is very important for our long term growth stability and progress. Whether the protectionist measures alone will help is anybody’s guess. We need to get the entire ecosystem in place, ensure ease of doing business, ensure stability of our tax laws, get high quality infrastructure in place concurrently. The world seems to be starting to move towards protectionism and this could have a multiplier ripple and adverse effect if more countries start to retaliate such measures!!
Kanwar Singh
As enterprises adopt digital, the finance function is expected to lead the digital transformation. What are the specific expectations from finance in this transformation that companies have?
Digital transformation is creating new demands on CFOs and their finance teams, which is driving finance to rethink their mission and operating model. CFOs are increasingly being asked to act as corporate strategists or “co-pilots” to the CEO to ensure the business adapts to the digital age. The finance function has to balance ‘operational efficiency’ with ‘operational agility’.
‘Operational efficiency’ is focused on cost, quality, perfecting transactional processing and workflow.
‘Operational agility’ is about harnessing the ability to manage hyper-growth, using predictive analytics and modeling to uncover insights. Robotic process automation (RPA) and machine learning further improve process efficiency, as well as securing skill sets required to be collaborative and partner with the business to help guide the business forward.
The finance function must provide forward-looking guidance to the business, helping their management and line of business executives make the right decisions on future investment avenues in order to drive profitable growth, mitigate risks, and maximise shareholder value.
What are the primary compulsions/concerns that are forcing enterprises in India/globally to adopt digital? Are these concerns universal or are there some issues specific to Indian markets?
The digital age and turbulent market conditions present opportunities and threats to all current business models. There’s a perception that large organisations are built to survive by default due to their size, strength and history/legacy. It is believed that they become almost institutionalised in thought, processes and infrastructure; however, this limits their ability to innovate and adapt to change. Digital technology enables innovation, agility, efficiencies and, when leveraged appropriately, provides enterprises with a distinct competitive edge.
Adoption of digital technology and automation, leveraging cloud services, is a global trend. The challenge faced by all companies is to grow at, or above the pace of their industry without losing control of their operations. The Innosight (a growth strategy consulting firm) study shows that very few companies achieve this goal. Most corporations fade, meaning that most firms see their performance and their stock price fall as new technologies and startups with new business models enter and disrupt the economy.
Research suggests that many large companies have moved out of the Fortune 500 list in the past 10 years and in multiple instances, have been replaced by a company that would have started operations in the last 20 years or even less. We have examples of technology-driven businesses overtaking market capitalisation of corporations with a significant legacy. Here at Oracle, we believe that to survive and thrive, organisations need to be increasingly agile.
Companies should be able to make informed decisions swiftly about how to adapt to rapid and constant changes and then implement new strategies. In addition, they need to be able to manage performance nimbly, constantly monitoring what is working and what is not working, as well as redeploying resources to where the returns or opportunities are best.
Digital transformation is taking time in advanced countries like France despite the availability of various tools and technologies. Do you think Indian businesses are ready for it in such a scenario?
Change is the new constant – 88 per cent of organisations are undergoing some type of transformation today (Altimeter Group The 2014 State of Digital Transformation (http://altimetergroupdigitaltransformation.com/img/dt-report.pdf). I don’t think Indian businesses have any choice but to embrace digital transformation.
To secure their future, they need to radically reshape their business models. That has big implications on finance teams and the types of systems they use, in addition to the data needed to run the business. India’s transition to GST is a superb example of digital transformation for indirect taxation in India. Businesses large and small have to adopt “digital” to leverage GST.
At Oracle, we’ve seen a big shift in our customers’ willingness to embrace cloud applications. This pace is accelerating and Indian companies can only benefit from this digital transformation. Very recently we announced the availability of Oracle Enterprise Resource Planning (ERP) Cloud in India. The GST Bill was passed in Parliament in March 2017, and Oracle was ready with the solution two months before it was to take effect nationally in India.
What is the roadmap to digital transformation for businesses and finance? Is there a strategy companies must adopt? If so, what are the elements one should consider in developing such a strategy? Is digital transformation strategy adopted by a company cross-functional, or is each department including finance expected to develop its own strategy?
Every business is unique in terms of their digital transformation journey. Their vision, driving force, how they leverage their existing set up & resources, scalability, security/reliability, ability/cost and readiness to adapt with the latest technologies are some of the factors that could impact their digital transformation roadmap. We often help our customers define such a digital roadmap.
During these disruptive transformations, finance leaders and their teams might find it challenging to assess such a transformation could impact. Would it be sales or marketing or even the service side of the business? At Oracle, we believe that digital transformation helps companies to step into the future, and it enables them to be more competitive. The wonderful benefit of an enlightened digital enterprise, aside from making better decisions and optimising assets, is spending less on initiatives and programs that don’t advance the agenda of the company or empower employees/ customers, and spending more on core strengths.
What are the key elements to be considered in digital transformation of finance?
While factors like leadership and having a mandate are undoubtedly important, technology is overwhelmingly the most important enabler of financial transformation. As appropriate cloud-based solutions are available, technology is not the biggest challenge. Far from it – cloud technologies put the new operating model for modern finance within the reach of most businesses. The challenge then is to implement a change program and to develop or recruit the talent that’s needed to do so.
Oracle recently partnered with the Association of International Certified Professional Accountants in the US to conduct a study on finance transformation and business agility, and that study made the following recommendations on how CFOs and their finance teams can jumpstart their digital transformation strategy. Some of the findings included:
While automation provides agility, there are concerns around it especially in an era which is witnessing massive job cuts. How will it affect the finance function in India?
New tools such as machine learning and artificial intelligence (AI) enhance human decision-making, they do not replace it. Automation has always served to free up people to focus time and energy on what matters most and the new era of digital automation is no different. We believe that an enlightened digital enterprise allows you to focus on your customers and new innovations that can advance the well-being of everyone. We continue to be positive on finance talent in India.
What are the technologies and tools available for digital transformation of finance?
Digital transformation of finance leads to “Agile Finance” and has three broad KPIs:
i. Greater Efficiency : through relentless automation:
a. Simplify, standardise, and automate transactional processes using cloud, machine learning, artificial intelligence and robotic process automation
b. Centralise subject matter expertise in integrated business services, shared services, and centers of excellence
ii. Better Information : to predict the future:
a. Manage performance with planning and driver based forecasting
b. Stretch FP&A into a powerhouse to develop innovative strategies
c. Unleash potential in big data, advanced analytics, and artificial intelligence
iii. More Influence : to drive business outcomes:
a. Develop new skill sets in statistics, data analysis, and data visualisation
b. Implement cross-functional teams with multidisciplinary and business partnering skills
c. Support rapid decision making and strategic guidance to lines of business.
Your advice to our CFOs on digital transformation?
Digital transformation is critical to securing a competitive edge. CFOs should consider the following to effectively manage the transformation journey: