CFO India - February 2011

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BEACH BLISSHAVELOCK ISLAND p.53

FACE TO FACETIM KOLLER ON CREATING VALUE p. 20

VOLUME 02ISSUE 02Rs.50FEBRUARY 2011

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OF AUNRAVELLED: The key skills and qualities a CFO needs, to be successful pg. 26

A 9.9 MEDIA PUBLICATION

SANDIP CHATTERJEECFO PROFILE p. 26BEACH BLISSHAVELOCK ISLAND p.53

FACE TO FACETIM KOLLER ON CREATING VALUE p. 20

VOLUME 02ISSUE 02Rs.50FEBRUARY 2011

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20 LESSONS IN VALUE CREATIONIn an exclusive interview with CFO India, Tim Koller, co-author of Value: The Four Cornerstones of Corporate Finance talks about the basic principles of value creation and their relevance, especially for companies in India.

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30 CREATING MORE VALUE WITH CORPORATE STRATEGYFew companies create strategies that deliver more value than the sum of their business unit parts, but those that do also excel at moving resources and removing barriers.

COVER DESIGN JOFFY JOSE

AD INDEX Empronc Cover on Cover | Ace Data Inside Front Cover | Financial Executive 02 | Nexstep 09, 11 | Vivaki tab insert | NGO 37 | Young India Fellowship 49 | CFO 100 Inside Back Cover | ICICI Bank Back Cover

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DNA OF A CFOAs India Inc. looks at double digit growth and global acquisitions, what are the qualities that one needs to possess to be a successful CFO?

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#!'%4.'!(5$INKING A SUCCESS STORYSandip Chatterjee, CFO of DIC India talks about his vision for the company, the evolving role of the CFO and his passion for drums!

#"*$%*&67/46 A NEW BENCHMARKING MAPRapid growth caught MapmyIndia unpre-pared with lack of processes and systems affecting it badly. That is when CFO Asheesh Awasthy stepped up a gear.

(%&,()812 GOPAL MAHADEVAN What keeps the Executive Vice President and CFO of Thermax awake at night?

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38 THE DECADE IN TERROR Internal security expert Raghu Raman, on the ‘four world wars’ and how we have to look at tackling terrorism differently.

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50 ON WHEELS | BMW X1

52 GADGETS | HTC HD7

53 TRAVEL | HAVELOCK ISLAND

54 ART | PARTHASARATHY PAL

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03 EDITORIAL

04 LETTERS TO THE EDITOR

56 NOT JUST THE LAST WORD

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!e CFO Decoded

CONVENTIONAL WISDOM tells us that today’s Chief Financial Officers have to be superheroes (in fact CFO India had done a cover feature on CFOs as superheroes not too long back). Indeed we expect CFOs to be faster than a plane, more powerful than Tarzan and nimble enough to scale a tall building in a single leap! Don’t we also expect them to have X-ray vision, to understand the CEO’s mind?

One school of thought argues the years ahead will be challeng-ing and therefore, only those who who have gained experience in every area of the company, travelled the globe, and also held a CFO job somewhere else, will succeed as a CFO. Somehow, to me this seems an extreme view to take. As India Inc. prepares to take the great leap forward, will it become increasingly harder then, for those who haven’t previously been CFOs, to join the club? What is it that makes a successful CFO? What is in his (or her) DNA? These were the questions contributing editor Bennett Voyles asked when he ventured deeper for the cover feature this time (DNA of a CFO, Page 14). And as we learned through meetings and conversations with CFOs, CEOs, analysts and academicians, those with otherwise strong financial credentials can also find ways to make up for gaps in their résumés. Not that traditional wisdom is wrong, it just isn’t the final word.

Even then, the CFO’s job is becoming an increasingly complex one. As Gopal Mahadevan, the Executive Vice President and CFO of Thermax mentions in his column (I Think, page 12), how to ride a risk and on a global scale, how to manage finances in an era when resources are scarce and terror attacks are everyday occurrences – are issues that will keep most CFOs awake at night in the years to come.

How indeed will CFOs manage in this chaos? Read CFO India’s Editor, Anuradha Das Mathur’s exclusive interview with Tim Koller, a partner in McKinsey and Co’s New York office and co-author of the best-selling book Value: The Four Cornerstones of Corporate Finance (Face to Face, Page 20). We also have a detailed synopsis of the book inside, so you get a fair idea of what to expect when you buy it. This is a fully loaded, powerhouse of an issue. Over to you!

MANAGING DIRECTOR: Dr. Pramath Raj Sinha

EDITORIALEDITOR: Anuradha Das MathurMANAGING EDITOR: Dhiman ChattopadhyayASSISTANT EDITOR: Anoop ChughCONTRIBUTING EDITOR: Bennett Voyles

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4 C F O I N D I A F E B R U A R Y 2 0 1 1

I just loved the article on Mr Durgashankar and the feature on Saty-am’s turnaround. It was inspiring and demonstrates how the finance function can make or break a company’s future. The hard work that went in turning around the company was well captured along with the detailed interview of the man himself. Outstanding issue. Keep up the great work.— Shilpa Vora,Senior Manager Finance & Accounts,UPS, Mumbai.

Inspirational!

MORE ARTICLES ON TURNAROUNDSThe January cover feature was certainly arresting. Very well written and insightful. However, to be honest, barring the interview and the feature on Mahindra–Satyam, the other articles did not hold my attention. It would be good if you wrote on companies where the CFO or the finance function has played a crucial role in turning around the operations or the fortunes of the firm.— Venkatesh Iyer,Head, FinanceLionbridge Technologies Private Limited Powai,Mumbai

A GOOD READI enjoyed reading the interview of Mr S Durgashankar on your website. What an amazing story of turnaround. I am particularly happy for Durga since he is an old colleague of mine. The magazine is looking better and better. However, I haven’t received the physical copy yet.— Ravi Padaki,Head of Finance, India,Markets Global Finance Operations, Bangalore,Thomson Reuters,Bangalore

AN ISSUE WORTH SHARINGI am one of the latest entrants to the growing group of CFO India readers and the CFO Institute started by you. I am extremely happy with the way the last three issues of CFO India have turned out.

Congratulations on the January 2011 edition of the magazine. The turnaround story of M-Satyam was extremely well-covered. I am thinking of sharing the same with my entire finance team to inspire them to work harder as the article brings out the change which the finance function is capable of bringing about in any organisation.The first anniversary issue (November 2010) can safely be called a collector’s item. I liked the concept of CFOs turning writers and most people wrote very well. I plan to have my article framed. — Rajesh Pasari,CFO, NetAmbit,Pune

NEED MORE ‘CASE STUDY’ ARTICLESWhat an excellent issue! The interview of Mahindra-Satyam’s CFO was an eye opener and the twin cover features on Mahindra-Satyam’s turnaround and the lessons learnt from the Satyam and Lehman crises were well timed and crisply written. I also enjoyed reading the story of iYogi and how they scaled up in such a short time. The case study section has good articles. Can we have more of them?— Jaideep Ghosh,C-Founder,The Street-Food Co.,Kolkata

02.11 Your voice can make a change: Share your view point on what’s happening in the community and your feedback on the magazine at [email protected] or [email protected]


The Business of the World Cup

02.11

IT MAY BE A GAME but this is serious business. The ICC Cricket World Cup is underway and everyone, from satellitle service providers and apparel makers to those manufacturing soft toys or even straw hats – are cashing in.

Take High Definition (HD) television for instance. By the time you read this, you may have already realised the difference. But in case you think your eyesight improved every time you watch a cricket match on Tv, here is a reality check: the picture quality on Tv screen has suddenly improved, even if it is the same old Tv set you have had for the past 8 months. The reason: all World Cup cricket matches are being shown on High Definition by leading Satellite television providers. At least three of them, Tata Sky, Airtel and Dish TV have acquired rights to telecast the ICC Cricket World

Cup 2011 on HD, a spokesperson for ESPN Software India has confirmed, reports Mint.

“We are talking to the other Direct-To-Home (DTH) operators and will sign other contracts shortly,” the spokesperson told the newspaper. HDTV will allow viewers to watch the cricket matches with substantially higher clarity. The pay-Tv providers may have paid as much as Rs 3 crore each for the HD feed, according to media buyers.

Meanwhile, retailers and ,makers of everything from apparel to stuffed toys are preparing for a spurt in sales. A lot of theie sales and profit however, would depend on how Dhoni and his men perfom on field. Big players however, have jumped head-first into the fray. Big Bazaar, the Future Group hyper-market that is the authorised ,erchan-diser for the Woirld Cup, has launched products accross a range of categories from personal care amnd clothes rto home linen! Others such as Smiba Toys, Hypoercity and Nike India too are hoping to cash in. Simba Toys that has made the World Cup mascot ‘Stumpy’ has apparently shipped 50,000 items of merchandise featuring tyje little bluie elephant. These include soft toys, nursery bags, back packs and stationries priced between Rs 250 and Rs 2500, the firms business head Pradeep Parmar told Mint.

Now only if India brings home the cup!


Working long, sleeping less is bad for bones!CFO’S AND OTHER senior executives working for long hours and sleeping less due to stress, take note! Researchers have found that poor sleep quality is associated with higher levels of depressive symptoms, greater pain severity, increased fatigue, and greater func-tional disability in patients with Rheumatoid Arthritis (RA), reports ANI.

The study conducted at the University of Pittsburgh, School of Nursing, suggests that addressing sleep prob-lems via pharmacological or behavioural interventions may have a critical impact on the health and lives of patients with RA.

The study represents a cross-sectional examination of the relationship between sleep quality and functional disability in 162 patients with RA. The sample had an average age of 58.5 years, and 76 percent were female. All patients had been diag-nosed with RA for at least two years; on average, patients had RA for 14 years. The results provided input on their sleep quality, depres-sion, fatigue, and functional disability and pain severity, respectively.

Patients also provided sociodemographic information and their medical history. Results show that sleep quality has an indirect effect on functional disability after controlling for age, gender and number of comorbities. According to the results, 61 percent of patients were poor sleepers and 33 percent reported having pain that disturbed their sleep three or more times per week.

Love Sells! IT MAY BE impossible to measure love. But it certainly costs money. According to a study by the Associated Chambers of Commerce and Industry of India (Assocham), under the aegis of Social Development Foundation, the total total business done in India during Val-entine’s Week is a stunning Rs 12,000-crore or $2.6 billion! The two-month long study, which was con-ducted in 10 major cities from December 2010 to January 2011, ascertained the extent of over-spending among the young and even middle-aged people to make their partners feel special.

According to D.S Rawat, secretary general at Assocham, the spending on Valentine’s Week in 2011 was around 120 percent higher than last year. The biggest chunk of the earn-ings come from the staple greeting cards, followed by flowers, chocolates, toys, and moves on to more exorbitant stuff like dia-mond rings, bracelets, necklaces, readymade garments, cell phones and electronic gadgets. Sounds like a lucrative business to get into.

THE CFO POLL

Will the recent fuel hike affect the government’s attempts to curb inflation?

Will the govt. be able bring back the black money stashed away in European banks?

WHAT’S AROUND ZONECFO book ............................................................. Pg 08HTML5 to be ready by 2014 ................................ Pg 08Voice buzz for Facebook ....................................... Pg 10 Mission Mars......................................................... Pg 10

33%No

Yes

RESULT

CURRENT POLL QUESTION

67%


WORLD WIDE WEB Consortium (W3C) has announced that HTML5 version will be finished by 2014. HTML5 is the latest revision of the Hyper Text Markup Language, (HTML) standard. It offers easy way to add semantic markup and application-like features such as video without proprietary plug-ins, drag-and-drop, offline data storage, and more.

The versions of browsers like Chrome, Firefox, Internet Explorer, and Opera have different degrees of HTML support and also they have many innovative features which can be very useful, but these features may not support the final HTML5 version. The W3C has extended the character of HTML working group that comprises of more than 400 members from browser vendors, soft-ware developers and other organisations reliant on the Web.

Html5 to be Ready by 2014

THE DEFINITIONTo have or do a bake-off is basically a side-by-side comparison of two products or people, or a face-off to use a phrase from the world of sports and politics.

THE USAGEAnd you though your colleague had lost it when she told you: "Have you done a bake-off between the shortlisted vendors?" Now you know what she meant! Next time, nod sagely and reply that you need to bake some more!

Wall Info Boxes +

What’s on your mind?

Anil Saxena believes four elements (Trust, Care, Goodwill and Fortune) perfectly combine in the emblematic and rare, four-leaf clover to visually symbolise the values that bind together and form the core of the Religare vision.january 13 at 10:50pm · Comment · Like

Anil Saxena believes today’s CFOs act as a glue that binds a company together.january 3 at 7:30pm · 5 people Commented · Like

Anil Saxena listens to old Hindi songs to break away from monotony.january 1 at 1:10pm · Comment · 2 people Like this

I Read...Too Big to FailJanuary 29 at 1:35pm · Comment · 3 people Like this

Anil Saxena likes CFO India and five others...

Australia, Indian Food, 3 Idiots, The Economic Times, Narayana MurthyJanuary 15 at 11:00pm · Comment · 5 people Like this

RECENT ACTIVITY

Attach Share

Zodiac: Cancer Political Views: Reformist

2010-Present -- Group CFO, Director and Member of Share-holders/Investors Grievance Committee, Religare Enterprise Limited 2007-Present -- Non Executive Director and Member of Share-holders/Investors Grievance CommitteeReligare Technova Global Solutions Ltd Former Director Religare Well-ness Limited

B.Com- Delhi University CA - Institute of Chartered Accountants of India

I listenKishore Kumar January 05 at 06:20 am · Comment · 5 people Like this


OZONETEL SYSTEMS HAS LAUNCHED ‘Voice Buzz’ application for Facebook through which users can update their Facebook status in their own voice from their landline or mobile number. This service is com-pletely free for its users.

To register at Ozonetel’s ‘Cloud tele-phony platform’ one has to log on to the Voice Buzz application and have to provide their phone number will not be shared with anyone .While logging on Facebook the user has to sync his Facebook account and to post the voice message one have to call 040-30512834 from his registered phone and can

leave the voice message which will be instantly appear on Facebook feed.

Murthy Chintalapati, Founder & CEO, Ozonetel Systems, said, ‘Voice Buzz’ is exciting cloud telephony applications that will enable users enrich their social media presence and experience by connecting in their own voice. It also attests to the potential of cloud telephony technology in the area of business to consumer applica-tions which has not been adequately explored in the Indian market. We began with Facebook as it is the single largest platform in the world today and will add more in the near future.”

VOICE BUZZ FOR FACEBOOK

Electric Cars to Fight Crude Oil ReignIN A BID TO END their slav-ery towards crude oil and its by-products, Israel will deploy a massive army of electrical vehicles that take less than a minute to be refuelled. No drums, no trumpets, just the whirr of a robot changing batteries and an electric car silently gliding around the test track. These are the final touches as entrepreneur Shai Agassi prepares to deploy a fleet of electric cars later this year, hoping to break Israel’s dependence on oil.

But as similar projects get under way in Australia, Canada, Denmark and Hawaii, there are a few issues casting a shadow over his vision of making the world a better place. Rivals and experts have expressed doubts over the technical aspects, particularly the ability of Israel’s electric grid to handle a sudden increase in demand from electric cars.Still, Agassi - a hi-tech multi-millionaire and former number-two at software group SAP - remains optimistic about the success of his project and the inevitability of its global impact. “We decided to do something that will make the world a better place,” Agassi told AFP.

Not so smartThis is not yet a problem in India, but could soon be! Smart-phones are blocking the world’s mobile networks consuming five times more data than nor-mal mobiles. Though mobile operators are trying to improve the performance of networks and they have invested billions on it, still there is blockage in the network availability in New York, London and San Francisco. The head of the International Telecommunications Union in Geneva has in fact warned that concerned governments should take action quickly to support wireless broadband growth.

Ancient posthesisWashington scientists say they have found the world’s earliest prosthetic body parts. According to the experts, who tested repli-cas on volunteers, two artificial big toes - one found attached to the foot of an ancient Egyptian mummy, may have been used as artificial body parts in earlier times. The toes date from before 600BC, predating what was hith-erto thought to be the earliest known practical prosthesis - the Roman Capula Leg - by several hundred years.

Mission mars?Two volunteers in Moscow, cut off from the rest world for eight months stepped out to a Mars-like atmosphere in mid Febru-ary, reaching the half-way point of their experimental “voyage” to the Red Planet. The “Mars walk” is part of an experiment to test how humans respond to the pressures of a ‘there-and-back’ voyage to Mars.


IF SOMETHING KEEPS me awake at night, it is only because it merits thought and not because it worries me. Worrying is useless.

In our personal and professional lives, we are obsessed with only one thing – creating and enhancing value – for oneself, for one’s family, for the team and for the organisation. I keep wondering how can one keep adding value in one’s organisation?

We could not have asked for a more happening space and time. India is the place to be in and this is the time – when we are proving to the world that a country that taught the world to count, gave the concept of atom (bindu) and was the richest country till the British invasion, will bounce back.

India has changed dramatically. From a Hindu rate of growth to a blitz-krieg 9 per cent, having one fifth of the world’s population and one twentieth of its energy resources is no small matter. There is a paradigm shift in the way we are doing business today

How to ride a risk? How to plan long term strategy? These are some of the questions that makes the EXECUTIVE VICE PRESIDENT & CFO OF THERMAX think hard.

“Anticipation, evaluation and management of risks have become primordial. Firms that anticipate and evaluate risks better and therefore ride on them, are and will be successful.”

GOPAL MAHADEVAN

and the risks that are associated with it are hitherto unseen, fast and furious. Every turn in the corporate highway affords new opportunities, threats and risks. How can we survive, leave alone grow, amidst all this?

Anticipation, evaluation and management of risks have become

primordial. Firms that continuously anticipate and evaluate risks better and therefore ride on them, are and will be successful. Organisations that learn to evaluate them and develop strategies of defence will barely survive, if not per-ish. And that is the challenge. How do you ride a risk? How do you know if to mount and when to dismount?

We are in the age of uncertainty - whole economies and governments are collaps-ing. We are seeing resources becoming scarce and global food prices going through the roof. We are seeing that size and scale matters a lot. We are seeing that one’s country is not enough as a market place. Frankly we are seeing a lot.

So how do we manage all this complexity? This is one thought that keeps me awake. Believe me - the answers to this question also have the same effect on me.

First, the impact of what you do needs to be felt by the world at large. Progress has to be inclusive. Other-wise it will be short lived.

Facts & TriviaPROFESSIONAL QUALIFICATIONS:

ACA & ACS from Institute of Chartered Accountants of India

FIRST JOB: Sanmar Group asfinance executive.

PREVIOUS JOB: CFO, Amara Raja Batteries Ltd

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Second, it is the people who can and will do it and will have to do it. This is going to be the era of “The Power of People”. That’s why Facebook has a valuation upwards of US $ 50 bn - higher than Time Warner and Yahoo! Organisations would need to be cutting edge – what does that really mean? It means having or making

people that are cutting edge. Compa-nies that are respected for operational efficiency have people driving it. Here I am not talking about the head hon-chos or the senior leadership team – but about the huge mass that runs the engine.

The process of training, motivation and the reward & recognition system

will undergo change. Organisations have realised this and are working towards flatter structures. Empowering people with knowledge and processes is one of the most important things we can do to create leaders and leading organisations.

Here’s to another decade of uncer-tainty and excitement.

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BENNET VOYLES

The species has evolved over the years and the CFO has had to constantly learn new skills to reinvent himself. Now, as India Inc. looks at double digit

growth and global acquisitions, what are the qualities that a successful CFO needs to possess?

Years ago, the Chief Financial Officer was mostly the ‘book-keeper-in-chief.’ That is still part of the job, but increasingly, India’s CFOs are being pushed to do far more. At many com-

panies, CFOs and corporate finance consultants agree, the role has evolved from simply being a

trusted record-keeper for the company to being a trusted partner of the CEO. And tomorrow, they expect it will change even more.

“The CFO who would come to the board meeting every month and sit there and reply to questions when asked, a very introverted sort of person who saw their job as being a steward of the company’s assets and the guardian of the company’s cash and


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CFODNAOFA

The survey noted that in 2008, over the previous five years, companies where the finance function is most effi-cient and able to contribute the most intelligence and insight to the executive team experienced earnings growth 20 times greater than a conventional com-pany, generating 49 percent more rev-enue and 30 percent greater return on invested capital.

Other companies are running scared. In that same survey, more than

reporting systems -- and to be fair, the guardian of the company’s ethics -- that sort of person is not the CFO that for-ward looking companies in the Inter-net age are now looking for,” says Jer-emy Hope, co-founder of the UK-based Beyond Budgeting Roundtable, and co-author of the 2006 book Reinventing the CFO.

Indeed all over the world, the CFO role is changing. “It is no longer just about getting the month-end done and the accounts prepared …” adds Hope. “The more important part of finance is now moving deeper into the business and becoming a much more effective business partner.”

In a recently released survey of 1000 CFOs, Accenture found that 80 percent of the executives felt they had been asked to take on additional responsibili-ties in the last 12 months.

The shift in the CFO’s role stems from two long-term trends. First, the controlling function is becoming less of a focus now that so much of the work is automated or outsourced. What control work remains for the CFO tends to be more on the order of making sure that

the plumbing of the IT systems is arranged prop-erly, not directly reviewing the accounts.

Second, executive teams have realised over time that the CFO is perhaps uniquely positioned within the company to understand the work-ings of the business, from raw materi-als to profits.

“The need for quick turnaround of ideas and support of strategic vision have become important,” says P. Thiru-vengadam – Leader, Human Capital Advisory, Deloitte Touche Tohmatsu India Pvt Ltd. in Delhi.

The CFOs who are farthest along in making the adjustment, are not coincidentally, working for the fastest-growing and most dynamic compa-nies, according to a recent IBM study of 1,917 CFOs and finance directors.

The CFO has to keep a con-stant tab on

regulatory com-pliance norms

and ensure that adequate in-house

knowledge exists.

45 percent of CFOs admitted to their interviewers that their finance teams were not effective in the areas of strat-egy, information integration, and risk and opportunity management.

As the job description changes, so do its requirements. Of course, many of the qualities and skills needed have remained, but a new level of imagina-tion and dynamism is also needed.

So, what really does it take to be a successful CFO? And what is likely to be required tomorrow?

—JEREMY HOPE, co-author,Reinventing the CFO.

—ANIL CHANANA, CFO, HCL Technologies

The more important part

of finance is now moving deeper into the

business and becoming a much more effective business partner.


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RUNNING FINANCE IN 2011Today the CFO needs to think more about bigger-picture issues. “A 70 mm view, not a tunnel view,” says president of SRF capital Rajendra Prasad.

All in all, the mindset is much more on the order of former IBM chief Louis Gerstner’s quip when he came aboard the badly flagging busi-ness in the early 90s: “you no longer get points for predicting rain. You get points for building arks.”

But it’s not just about risk avoidance. CFOs are pushed now to help the com-pany deliver growth too. “Reducing risk is not the challenge. Managing and assessing and evaluating risk is what he should be doing,’ says Prasad.

This leaves the CFO in the difficult position of being responsible for both the brake and the gas pedal.

Stay too conservative and you’ll lose your job. Get too creative and maybe you’ll end up like Andrew Fastow, the former CFO of Enron – once CFO of the Year, now prisoner #14343-179.

Anil Chanana, as CFO of HCL Tech-nologies, deals with all kinds of com-

plexity all the time. “Today’s CFO in a technology company is dealing with a multiplicity of issues namely, the eco-nomic factors which impact the cus-tomers, the partners; those impacting the human resources; and the global regulatory regime,” says the Noida-based executive.

For Chanana, structuring deals with customers is an important part of the job. “The CFO has to keep himself informed of the specific economic envi-ronment the customer is operating in, and come up with a commercial solu-tion which would suit the particular customer’s requirements while not compromising on the risk to margins and cash flows,” he says.

“On the cost side, the CFO’s role is to assist the business by constantly point-ing out the opportunities to optimise on the costs of running the business. On the regulatory side, the CFO has to make sure that he keeps a constant tab on regulatory compliance norms and that adequate in-house knowledge exists,” he adds.

Others agree that a holistic view is critical. “A good CFO brings a detached

attachment, to the job, doing everything he can to make it a success, while being able to look at the company’s condition holistically and objectively,” says J.K. Jain, CFO & Senior VP, DCM Shriram Consolidated in New Delhi

WANTEDIf this sounds tough, it’s because it is. Globally, average tenure of the CFO of a major company has declined substantially in the last five years, from 5.5 years to 4.5 years, according to several surveys.

But while there does seem to be more convergence now between the work of CFOs at Indian companies and foreign multinationals, Prasad Kaipa, CEO of Self Corp in California, a consulting firm that follows both India and the US, believes the roles remain quite different in some respects, and demand some-what different personalities. The Indi-an CFO tends to have a more dynamic sense of what the market needs, and what the company and managing direc-tor need. In an American company, on the other hand, the CFO’s work tends to be a bit more generic, he says.

Often, says Giri Giridhar, President Finance, Wockhardt Limited in Mum-bai, the Indian CFO’s role tends to be broader than finance jobs in multina-tionals, where finance functions tend to be much more compartmentalised within different functions.

The Indian CFO also tends to be more aware of tax laws and loopholes and market conditions. Overall, a lot more jugaad is required to handle finance at an Indian company – and flexibility. Bending the rules goes on everywhere, Kaipa says, “but in an Indian company, it is more appreciated.”

Make it clear that you have the tech-nical knowledge and

the qualifications. But the area that you really need to focus

on is your ability to lead a team, be a team player and a good

communicator.—JK JAIN,

CFO and Sr VP, DCM Shriram Consolidated


&#'($)!"#$%

F E B R U A R Y 2 0 1 1 C F O I N D I A

Now, however, at least some of that may be changing. As the tax laws become more simplified, Giridhar notes that the challenge is less working with com-plexity than finding ways to simplify structures.

Sometimes, a short-term advantage a complex structure might yield isn’t really worth the trouble.

But P. Thiruvengadam – Leader, Human Capital Advisory, Deloitte Touche Tohmatsu India, believes that the skills required are actually not that different. The two main differences he sees is that first, the Indian CFO needs to be more aware of the business environment than his counterpart in a more level playing field economy, and second, that the working relationship with the CEO tends to be closer. A US

Of the 669 CFOs interviewed across

Middle East, India, Europe and Africa

by the Economist Intelligence Unit

for Ernst & Young, 73% saw their

role as a career destination of its own

with just 10% aspiring to be the CEO.

Over 60% of CFOs have seen their

standing within the organisation

elevated in the past three years.

CFOs identified cost management,

risk management and cash flow as

their top three business priorities in

the wake of the financial crisis.

Almost two-thirds of respondents

said they now act as the face of their

company on all financial matters

and performance

Less than half of the respondents

say that their relationship with inves-

tors is good or excellent

Just 21% said the same for their

relationships with governments

and 25% for their relationships with

the media.

A July 2010 report by Ernst & Young, titled The DNA of the CFO, challenges the assumption that all CFOs are aspiring CEOs and instead finds that the majority see their role as a vocation of its own.

THE CFO UNPLUGGED

the CFO requires all that and more – particularly in terms of flexibility and imagination, Kaipa says.

Others say that the difference is mostly a matter of the speed of growth. Managing a company that is growing 30 percent a year requires a different sensibility than managing a mature company where the work is mostly maintaining market share.

It’s increasingly important to be a good communicator as well, able to articulate very complex financial topics in simple terms that can be understood outside the finance department.

GETTING TO THE TOP So how do you reach the CFO’s office? It depends on whom you ask. Jain of DCM Shriram advises thinking first about who you are. “In growing mar-kets like India, there are every kind of requirements and every kind of com-pany, so all kinds of skills will have a place,” he says.

“I think the key part is …to under-stand what your interest is, what is it

multinational will want a CFO who is imaginative and yet detail-oriented, charismatic and yet able to work close-ly as a partner with the CEO and the other stakeholders. In India, however,

They need to understand that

it is not all routine work, and see that

there is an opportunity to really learn and grow in the

finance maze in India, —PRASAD KAIPA, CEO Self Corp, California


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Don’t hesitate to take roles which help you build those capabilities, even if they’re lateral movements.

that you like in the job, and to match your requirements and interests with the characteristics of the company you want to work with.’ Often, a promoter-driven company demands a much dif-ferent character than a public company, according to Jain. Typically, a CEO or a CFO will serve five to seven years. By contrast, the promoter may be there for a very long time – and that security means they may not budge if they won’t feel like it. “Sometimes it takes time for people to move .. and there is a limit up

to which you can go on pushing your point,” he says.

The finance knowledge is essential, but for Hope, the key to a promotion to the top job has much more to do with leadership skills. “Make it clear that you have the technical knowledge and you’ve got the qualifications, but the area that you really need to be sharp and focus on is your ability to lead a team, be a team player, be a good communicator,” he says.

For Kaipa, the candidate has to start out as a creative person who hap-

pens to get interested in finance. “They need

to understand that it is not all routine work, and

see that there is an oppor-tunity to really learn and

grow in the finance maze in India,” he says.

The second essential is accepting promotions less on the basis of money than on the potential educational value of the experience. These days, breadth often counts more than depth, and a lateral promotion that gives you expe-rience with a new part of the business can sometimes be more valuable than a senior, vertical promotion. “Don’t hesitate to take roles which help you build those capabilities, even if they’re lateral movements,” says Giridhar of Wockhardt. However, knowing the par-ticular industry in detail is also impor-tant. “Don’t get stuck in the monotony of accounting. Know the business pro-cesses, know the drivers, read about the drivers from sources other than within the business,” advises Rajendra Prasad.

That kind of knowledge pays off, as it makes you much more valuable in stra-tegic discussions. It’s not just numbers.

It is a storyline and while under-standing the detail is a one time exer-cise the benefits of it are felt every time. At the same time, the candidate needs to be ready to give up his earlier departmental perspective. If he was in charge of tax before, he has to think beyond tax considerations. He has to become non-biased and non-parochial. He has to change from being a depart-ment head to becoming CFO. He has to walk an extra mile and leave the baggage behind, is the advice most seasoned CFOs have to give. In the end, the formula sounds pretty simple, according to T.V Mohandas Pai, direc-tor of HR at Infosys in Bangalore and its former CFO. “Ultimately one has to be smarter than the rest, extremely energetic and hardworking, with a problem-solving attitude to be success-ful,” he explains.

In other words, just be the best and you’ll be a shoo-in.

—GIRI GIRIDHAR ,President Finance, Wockhardt Limited

—TV MOHANDAS PAI, Director HR, Infosys Technologies

Ultimately one has to be smart-

er than the rest, extremely energetic and

hardworking, with a prob-lem-solving attitude to be successful.


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In India for the launch of Value: The Four Cornerstones of Corporate Finance, TIMOTHY KOLLER, one of the co-authors of the book and a partner in McKinsey’s New York office, talks about the basic prin-ciples of value creation and their relevance, especially for India Inc.

“CFOS NEED TO HELP FIRMS THINK MORE SYSTEMATICALLY ABOUT GROWTH.”

ANURADHA DAS MATHUR

As you watch the landscape internationally, do you see a difference of opinion between CFOs, CEOs and other CXOs? And when this happens, does it lead to deals that get done for the wrong reasons?I would not necessarily call it a differ-ence of opinion. It is just that there isn’t a common framework or language that the CXOs have in a company to discuss strategic issues, and that is one of the reasons why we wrote this book (Value: The Four Cornerstones of Corporate Finance). We feel one of the roles of CFOs is to alert their colleagues on how companies create value, and whether their strategies are likely to create value or not. In order to do that the CFO has to increase awareness around what drives value creation, and that is what we see as the evolving role, and an opportunity for the CFO.

Can you illustrate that?Many executives without finance train-ing assume that they should focus on, say, earnings per share and, in some

cases, that is what their compensation is based on. Value, in fact, is about a combination of growth and return on capital. Companies also have a ten-dency to veer towards one or the other. Companies can grow their earnings by increasing their revenues organically, by improving their operating margins and cutting costs, or by repurchasing shares. Each of these methods will have very different impacts on the company. Should one focus more on growth or return on capital, and why? These are areas where CFOs have an important role to play, steering the fundamental decisions made by the company.

Do you believe that CFOs themselves understand these issues, or do you think more often than not they get carried away too?What I find is that CFOs often have a good intuition about what does and what does not create value but they do not have a formal way of communicat-ing it. What we are trying to do is help them make themselves more explicit.

There is a lot of pressure on CFOs to be more business oriented. As a CFO, does one stick to one’s core understanding of what influences the business and communicate that? Or do you think CFOs are getting so influenced by their business roles that often they also overlook some of the fundamentals?I have not seen that necessarily. I think that many CFOs are still trying to fig-ure out what their role is as a business partner. Over the last several years, there have been a lot of very impor-tant financial issues that companies have had to deal with. In the US, we had changing reporting regulations earlier in the decade, after the Enron scandal. Then we had the economic crisis. There were a lot of things on the CFO’s mind that had to be dealt with, and took up lot of his time. So, I have not necessarily seen the bal-ance between switching from a cor-porate perspective to running their basic finance function as that much


!"#

of an issue. But I do think that one thing that makes CFOs unique is bringing that framework to their cor-porate role. And part of the way they become business partners is through this awareness-building process, and helping their colleagues understand how value is created, and how their company creates value.

India is a market that didn’t slow down that much in the

last few years. Do you have a broad overall view of where things are in this market and what is going right in the context of your book? Based on the conversations that I have had over the years with either Indian executives and or my colleagues in India, I think Indian businesses are much more open intellectually than in other places, though I do not know why that is the case. But many of the

CFOs I have talked with are embracing new ideas, and many of these ideas are beginning to take hold.

What advice would you offer CFOs in terms of where the stock market should figure in their decision-making process?First of all, I think that companies need to better understand their share price. What I often find is that they say that their share price is not high enough,

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!"#

or their earnings multiple is too low relative to their peers. Most of the time when we analyse these companies in detail, we find that these superficial differences disappear, and you can explain why the PEs are different when you look at differences in capital struc-ture, accounting, etc. So part of it is just being more sophisticated about under-standing how you are valued.

Is it sophisticated or inexplicable? There are companies that, at one point, will say their share price is too low, and later when their share price rockets due to external factors, they generally take advantage and suggest that the rise is related to their internal expertise. What can this do to the internal decision-making of the company?I don’t think that share price should necessarily influence your decisions. It should be other way around. You should be thinking about how you are going to create value and what is the right thing to do. Our belief is that share prices will take care of themselves, over time.

But do you see the reverse happening?Yes, I do see the reverse happening. Bubbles in the stock market are not that frequent, and they are typically iso-lated pockets, but there are institutional reasons why they occur, and you need to know not just if ‘I am undervalued’ but if ‘I am overvalued’. If you are over-valued, your share price will eventually come down. One of the things that I have learned over the years is that markets do not do a very good job of predicting inflex-ion points or giving credit for stuff you have not done yet. So, if a company is going to accelerate its organic revenue growth, the company will not get credit for it until they start showing it. You have to be realistic.

While the whole framework discussed in your book seems to be about much better governance in the decision making process, CFOs are often faulted for becoming the naysayers. How can they use this framework, and still not become bigger naysayers, in some ways?CFOs need to help their companies think more systematically about growth. Realistically, a lot of the ideas that come up are often not that great, so you continue to have to be a nay-sayer at times.

in the organisation, and I know a num-ber of companies that are systemati-cally trying to upgrade the quality of the CFO’s office. You have to be as efficient as possible at accounting, but you also need people in the field who are part-ners to the business unit.

What are two or three things that come to your mind in terms of what the CFO’s office should be trained in or exposed to, to be able to do their job better?One is to bring up the level of sophis-tication about defining the value of dif-

($AAAE)1=2/(/,)<72(&)+(;</+(1/6(F<'/+-)&/(-*(1(5)981&CG/(8=)*4-+/(1='(2)0&A(H,'(@-..'=(-//<'(-/(0,'&(+,'(8=)*-+/(1='(,-.,A(I&2'=/+1&2-&.(0,1+(-/(2=-34-&.(8=)*-+/:(0,1+(-/(2=-3-&.(+,1+(.=)0+,:(-/(-98'=1+-3'A(J/(-+(,'17+,C()=(<&,'17+,C(.=)0+,KAAA(H,1+(-/(0,'='(;<2.'9'&+(871C/(1(6'C(=)7'AD

Your job should be to determine how to improve the quality of what does come up, not you personally neces-sarily, but through your organisation, so that you can have more superior sets of options. That is really what the CFO’s job should be.

What does that say for skill-development and training for CFOs?One of the things we advocate is skill development, not just for CFOs, but their whole staff. You have to embed it

ferent types of growth within the busi-ness, so the business unit heads grow their businesses efficiently. The other thing CFOs can do is priori-tise the different types of growth, and educate managers as to which ones are likely to create more value. What are the characteristics of the more value-creating growth opportunities versus those that are less likely to create value, and why. On one hand there is this huge focus on the synergies


!"#

between a business - adjacent businesses, backward and forward integration, and that really contributes to a holistic view of your corporate performance. Whereas if you actually start being pure and granular at the base level, you could lose synergies that the whole business would throw up. How does one deal with this?You have to be thoughtful about the way you break up the reporting, and the reporting formats do not have to be permanent. There may be certain phas-es of a product for which you want to make sure that its budget is protected. Once it reaches a certain stage, it can then get folded into a business unit. It is really just about being thoughtful, and not being dogmatic.

Are you pointing towards governance issues, especially in developing markets where 80 per cent of the market is still in some shape or form, owner-managed?I think that the governance issue is big-ger in the developed markets. When you have the 1st generation or even the 2nd generation owner-manager, you tend to see a greater focus on long term value creation and more granularity. As you get further away from that, gov-ernance becomes more of an issue. For example, in the US and Europe, much of the limited time spent by boards of directors of very large companies is on legal and compliance issues, as opposed to strategic issues.

In the context of numerous corporate and political scams that have come to light in India in the last few years, do you have any piece of advice for the CFO ?One of the reasons we do not have too many formulas in this particular book, compared to our earlier book (Valua-tion: Measuring and Managing the Value of Companies) is that a lot of

these ideas are useful to frame your judgement. For example, boards should not just ask questions if a company’s profits are down. The bigger issue is when the profits are high. Under-standing what is driving profits, what is driving that growth, is imperative. Is it healthy or unhealthy growth? Is it growth because our custom-ers are loving our products, or is it growth because we are cutting cost too much? That is where judgement plays a key role.

Are you saying that you need to question the good as much as the bad?Absolutely.

Is that based on observation that the good is questioned less than the bad? Absolutely, you see it all the time, and not necessarily related to scams. For example, in 2006, just before the crash, bank profits in the United States were getting disproportionately high. How could banks be earning such high returns? Is that sustainable or not? You

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have to surmise that in a big econo-my where banks are really facilita-tors and normally earn somewhere around 20- 25 per cent of the profits of the entire economy, something is not normal when earnings are dispro-portionately high. This should raise red flags. It cannot be sustainable, given that banking is also a highly competitive industry.

It seems that sustaining value is the a bigger challenge compared to creating value. They are both hard to do.

When you look at emerging markets, most young companies are looking at creating value in the short term and not really concerned about sustaining that value. Do you have a view on this phenomenon?It is pretty common for large compa-nies as well. Prior to selling off a busi-ness unit, they will dress it up and make it look attractive. That is always happening, and more sophisticated buyers are aware of it.

A piece of advice each for CFOs and the rest of the C-Suite. They go together and I would tell them two things. Firstly, companies need to do a better job of understand-ing how they create value historically, and therefore how different decisions will create value. It is not very diffi-cult to do. It is not complex. The ideas are pretty simple, but it is something that we need to make more explicit. Finally, and this is a corollary to my previous point, you must understand the kind of things that are not like-ly to create value and not spend too much time on them. I find companies spending way too much time thinking about issues like capital structure, dividend versus share purchases, when their efforts should be spent identifying value cre-ating drivers.

24 C F O F E B R U A R Y 2 0 1 1

!"#$%&'(!')#!""#$%&'(&)

In Value: The Four Cornerstones of Corporate Finance, authors Tim Koller, Richard Dobbs and Bill Huyett, partners at management-consulting firm McKinsey & Company discuss how to build lasting corporate value.

THE FINANCIAL CRISIS OF 2008 ren-dered us all shy of taking risks. After all, the experi-ence, observation, and intuition everyone seemed to have developed before the recession didn’t count for anything. The run-up to the financial crisis of 2008 is but one example of how easily financial myths, fads, and misconceptions overwhelm wisdom.

Will life, henceforth, for stakeholders and investors be governed by the play-safe formula “low-risk, low-return,” as we are still nursing our wounds from the downturn? Not necessarily, if the four cornerstones of finance are kept in mind while taking financial decisions, believe Tim Koller, Richard Dobbs and Bill Huyett, partners at management-consulting firm McKinsey & Company, in their ready-reckoner on long-term value creation – Value: The Four Corner-stones of Corporate Finance. When this piece of advice comes from the most trusted external advisors to top management, you know it is to be trusted.

The authors have zeroed in on four cornerstones of finance that should act as catalysts for more con-structive value-oriented dialogue among executives, boards, investors, bankers and the press – result-ing in courageous and even unpopular decisions that build lasting corporate value. The learning from the latest financial crisis, and periods of economic bubbles and bursts throughout history has taught

CREATING AND MANAGING VALUE

DEEPAK GARG, ANOOP CHUGH

25F E B R U A R Y 2 0 1 1 C F O

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us that the laws of value creation and value measurement are timeless. The four cornerstones of value propa-gated in the book are in line with the timeless law of value creation – when people invest, they expect the value of their investment to increase by an amount that sufficiently compensates them for the risk they took, as well as for the time value of their money.

The first and guiding cornerstone is that companies create value by invest-ing capital from investors to generate future cash flows at rates of return exceeding the cost of that capital. Named, the core of value, it signifies the faster companies can grow their revenues and deploy more capital at attractive rates of return, the more value they create.

The second cornerstone of finance divulged in the book is a corollary of the first: Value is created for shareholders when companies generate higher cash flows, not by rearranging investors’ claims on those cash flows. The authors have named it the conservation of value, or anything that doesn’t increase cash flows via improving revenues or returns on capital doesn’t create value.

The third cornerstone is that a com-pany’s performance in the stock mar-ket is driven by changes in the stock market’s expectations, not just the company’s actual performance. It has been called the expectations treadmill – because the higher the stock market’s expectations for a company’s share price become, the better a company has to perform just to keep up.

The fourth and final cornerstone of corporate finance is that the value of a business depends on who is manag-ing it and what strategy they pursue. Named the best owner, this keystone says that different owners will gener-ate different cash flows for a given busi-ness based on their unique abilities to add value.

These frameworks provide a stable frame of reference for making sound managerial decisions that lead to last-ing value creation. On the contrary,

ignoring the cornerstones may lead to decisions that erode value or lead to outright corporate disaster. The book cites the example of leverage. As the market heated up in 2007, many savvy financial services firms thought lever-age could be used to create (as opposed to merely redistribute) value. The mis-conception clashed with the four cor-nerstones leading to higher risks, and the resultant fall.

The second part of the book establish-es how stock markets and real econo-mies are typically aligned, hardly ever perfectly aligned, and rarely very mis-aligned. Executives and investors who understand this are better able to make

value-creating decisions. Conversely, ignorance of the linkages between the market and the real economy can lead to questionable decisions by executives. The book further cites the importance of distinguishing between stock mar-ket bubbles, bubbles in other assets, and financial crises. Though, it’s con-sidered difficult to analyse such bub-bles because there is no inherent value against which to compare the market value. The chapter instructs executives to take strategic decisions based on an intrinsic discounted cash flow (DCF) approach. After all, what matters is the long-term behaviour of any company’s

share price, not whether it’s 5 or 10 per cent undervalued this week.

Part three of the book deals with managing the value that has been cre-ated for the company. The book refers to how we miss value creation oppor-tunities because we can’t identify the one or two most important factors that influence the company’s ROIC – namely, what is the business’s competitive advantage and how is it affected by the industry’s structure and competitive behaviour? It is often competitive advantage, industry structure, and competitor behaviour that drive ROIC; probably, why some companies earn 10 per cent returns

while others earn 50 per cent returns. In all likelihood, the most difficult

part of creating value, and applying the four cornerstones, is getting the right balance between delivering near-term profits and return on capi-tal, and continuing to invest for long-term value creation. The book will give you the courage to sometimes go against the norm, and accept that there are no free lunches. It will help you to thoughtfully analyse the com-petitive dynamics of one’s industry, and make, and defend, decisions that will create value for investors and society at large.

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26 C F O F E B R U A R Y 2 0 1 1

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He has successfully led the finance function of DIC India, the Indian arm of Dainippon Ink & Chemicals, the world’s largest producer of printing ink, for the last few years. SANDIP CHATTERJEE, CFO of DIC India, talks about his vision for the company and how he sees the role of the CFO in the years to come.

DHIMAN CHATTOPADHYAY JI

TE

N G

AN

DH

I

BEING A SENIOR government officer’s son has some distinct advantages. One of the less tangible ones, though, is that people from many walks of life and professions come visiting your father on work, even at home. So while his mother, a home-maker, looked after such guests, Sandip Chatter-jee, then a teenager studying at Kolkata’s Nava Nalanda School, spent time asking them about their profession. “I loved math and the more I spoke to some of my father’s friends - many of whom were chartered accountants - the more I liked what I heard about the work. So, very early on in life, I decided that being a CA would be my aim,” recalls Chatterjee, sitting in his spacious CFO’s cabin at the Kolkata-headquartered India office of Dainippon Ink & Chemicals (DIC India), the world’s largest producer of printing ink — a company he joined 22 years ago as an accountant.

Born in Kolkata in 1962, Chatterjee had a pret-ty regular upbringing, playing cricket, bunking

SUCCESSINKING A

STORY

27

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F E B R U A R Y 2 0 1 1 C F O

FIRST JOB

With accounting

firm Lovelock &

Lewis in Kolkata

BIG BREAK

In 1988, when the

offer letter came

from Coates of

India to join the

firm as an accounts

executive

A HA! MOMENT

Turning around the

company’s fortunes

post the downturn,

as CFO

LITTLE-KNOWN FACT

Somewhere down

the line, I want to

play the drums or

the octopad and be

a part of a band

DREAM

To make DIC the

best place to work

1%&'(/#*'(

27

28

!"#!"#$%&'

C F O F E B R U A R Y 2 0 1 1

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school and just being a naughty child, till he was in class IX. His parents, who had moved to India from what was East Pakistan in 1947, had set up home in Kolkata, where his father worked for the state government.

“I probably did everything except study till Class IX when, suddenly, (and I still have no explanation for this), I did really well and ranked among the top five in the class. This was real-ly the turning point for me academically,” he recalls with a smile.

It also helped that the boy went to a coaching centre which admitted only toppers from differ-ent schools. “It obviously helped me improve as a student. Even today I cherish the memory of those days and that experience,” he says.

After school, Chatterjee took up commerce and enrolled in Goenka College for his Higher Secondary and then joined what is now regarded as India’s best place to study commerce – the St. Xavier’s College in Kolkata, for his gradua-tion. “It was at the same time that I sat for my CA entrance exams,” he says. Then, he managed something rather rare even today: he passed his CA final exams within days of giving his gradua-tion exams! At 21, therefore, he was a CA, ready to face the world.

Early on in his career, Chatterjee figured he wanted to play it big. So, after two years at Lovelock & Lewis he quit and joined Shalimar Tar to get some “industry experience”. Here, he worked in the internal audit department – a stint that helped him pick up a few tricks of the trade.

Then, four years into his career, came his big break in 1988 - an offer from Coates of India (currently DIC India Ltd) to join as an accoun-tant. “When I joined, Coates was a British company. It was subsequently taken over by Total, a French firm. Finally, in the mid-1990s, the shares changed hands and we became a part of the world’s largest printing ink firm, Dainippon Ink & Chemicals, Tokyo. The expe-rience of working with three different cultures is one that I am really proud of,” he says.

An industry veteran with over 25 years of experience, Chatterjee has worked in probably every division of the finance function at DIC during his 22 years at the BSE and NSE-listed firm. As CFO he has played a pivotal role in the company’s rise in fortunes, closing the 2009-10 financial year with a total turnover of a little over Rs 570 crores.

The current fiscal has been even better, says Chatterjee, as he prepares for the annual general meeting of the company to announce the perfor-mance for the 2010-2011 fiscal. “Our industry is very working capital-intensive and for 2010-11, with increasing raw material prices and gradual increase in interest rates, the challenge was to manage the working capital, where the topline is growing. It was a challenge I relished. The main lesson from the experience was realising that communication from the finance team to the rest of the management has to be continuous and effective, if all departments are to work in a perfectly synchronised manner,” he says.

CHATTERJEE NURTURES A SECRET DESIRE TO PLAY DRUMS FOR A MUSIC BAND ONE DAY!

",-#.&'/) !%-2(

NEWSPAPER

The Economic Times

MAGAZINE

HBR and CFO India

MUSIC

Kishore Kumar,

ABBA and Richard

Clayderman

DESTINATION:

The forts of Rajasthan

BOOK: ‘The Future of

Competition’ by CK

Prahalad. Also, ‘A Bias

for Action’ by Sumantra

Ghosal

29F E B R U A R Y 2 0 1 1 C F O

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Over the next few years, Chatterjee sees DIC growing bigger. But like a true modern day CFO, he wants to look at the big picture as well. “Apart from growing the business, my vision is to ensure that every employee feels happy to work here. This will, to a large extent, bring the best out of them and contribute to the growth of DIC. We have a very good working environment and we need to sustain this,” he says.

So, does he see himself as a ‘part-ner’ to the CEO, as the saying goes? “Much has been written about the changing role of a CFO but honestly, the role has changed manifold, from

an accountant to a strategic partner of the CEO with updated knowledge on the relevant industry, economy and the business process. We also have to look at our role as leaders for implementing changes in direct and indirect taxes, international taxation as well as imple-mentation of systems and processes,” he says. Going forward, he feels the CFO’s job will get even more complex with the DTC, GST and IFRS coming into play.

As of now, though, the 48-year-old is not letting any of this rob his sleep. A committed family man, Chatterjee still makes sure he spends quality time

with his wife, a home-maker and his children – a teenage daughter and a pre-teen son. “When I need to relax, I enjoy listening to instrumental music or reading a book. Normal stuff really,” he adds.

And with two of India’s best golf clubs located not far from his office, can the sport be far off his mind? “I love to play golf whenever I have time,” he admits with a smile.

At the moment, though, he is prepar-ing to tee off at work – to ensure DIC emerges as a financially bigger and stronger player in the Indian market in the years to come.

“Apart from growing the business, my vision is to ensure that every employee feels happy to work here. This will bring the best out of them....”

30 C F O F E B R U A R Y 2 0 1 1

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Few companies create strategies that deliver more value than the sum of their business unit parts, but those that do also excel at moving resources and removing barriers.

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A small group of 151 respondents emerged who rate their companies’ approaches to strategy development as very effective and also say their profit margins are higher than those of competitors. Executives at compa-nies that are “effective developers of strat-egy” are twice as likely as their peers to say their companies apply a distinct corporate strategy process (38 percent compared

THE DEVELOPMENT OF A corporate strategy should amount to more than the aggregation of busi-ness unit strategies. The best corporate strategies, in our experience, force a multi-business company to make clear choices about its portfolio and the allo-cation of its resources.

Yet the results of a recent McKinsey survey show that just one executive out of five says his or her corporation fully addresses strategy in this way. What’s more, more than a quarter of executives at multi-business companies say their corporations lack a consistent process for developing strategy.

In this survey, we asked executives at multi-business companies how they approach the development of corporate strategy—the frequency with which they review it and the amount of time they spend on it, the inputs of the pro-cess and the resulting activities, the barriers to reallocating resources, and the talent and other management pro-cesses they apply to overcome these barriers.

CREATING MORE VALUE WITH CORPORATE STRATEGY

with 18 percent of all other respondents). Furthermore, 97 percent of these

respondents view their companies’ pro-cesses for developing corporate strategy as consistent, compared with 59 percent of others. Executives also say these com-panies spend more time developing strat-egy, review strategies more frequently, and are much better at eliminating barriers to implementation.

Which point on the spectrum best represents your company’s approach to corporate strategy development?

!"Respondents who answered “don’t know” are not shown.

A distinct exercise that

level strategy, portfolio composition issues

An aggregation of business unit strategies, with no separate attempt to address corporate-level strategy questions

% of respondents, 1 n = 2, 174

6

1914

2216 14

6

Developing a distinct strategyExhibit 1

MICHAEL BIRSHAN, RENEE DYE, STEPHEN HALL

31F E B R U A R Y 2 0 1 1 C F O

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SLOW AND STEADY DOESN’T WIN In both the boom of the mid-2000s and the financial crisis that followed, many companies did not (or could not) make critical portfolio choices and trade-offs. This may be why so few—just 19 per-cent of all respondents to this survey—say their companies have a distinct pro-cess for developing corporate strategy (Exhibit 1).

Nearly a quarter, however, think their companies should engage in corporate strategy development on an ongoing basis (as opposed to episodically), com-pared with only 8 percent who say they currently do so (Exhibit 2). The small group of respondents at the effective-developer companies is ahead of the pack: 19 percent say their companies currently review corporate strategy on an ongoing basis.

A similar pattern emerges with regard to the amount of time a com-pany’s senior-executive team actually spends—and ideally should spend—

on developing corporate strategy in a typical year. No more than one in seven respondents say their companies’ senior leaders currently spend more than 15 percent of their time on this activity, but nearly three times as many describe that as the ideal time commitment. Among respondents at effective developers, a quarter say senior leaders currently spend more than 15 percent of their time on corporate strategy development.

WHAT GOES INTO STRATEGYFinancial projections are important for allocating capital to businesses in the existing portfolio. But the importance of trend analysis grows when it comes to adding corporate value by creatively reallocating resources and by chang-ing its composition through mergers, acquisitions, and divestments.

Yet executives rank financials as their

How often does your company engage in corporate strategy development? How often should it?

1"Respondents who answered “other” or “don’t know” are not shown.

% of respondents,1 n = 1,944

On an ongoing basis 823

More than once per year 48

Annually 4434

Every 2–3 years 2525

Every 4–5 years 118

Less than every 5 years 62

ActualIdeal

Few revisit strategy regularlyExhibit 2

32

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C F O F E B R U A R Y 2 0 1 1

companies’ most important input when developing corporate strategy—23 per-cent of all respondents rank it first, followed by the performance of the overall portfolio, which 21 percent of all respondents rank first.

Interestingly, executives at effective developers rank financial projections lower and macro level trends signifi-cantly higher (Exhibit 3). Furthermore, when asked what triggers a review of corporate strategy, more respondents say the trigger is their internal plan-ning cycle rather than any external event, regardless of whether they work at effective companies or not.

IMPLEMENTING STRATEGY Frustration about implementing strat-egy is evident among almost all respon-dents. For example, 40 percent say that ideally, their companies should fully engage in making major shifts in tal-ent across the portfolio—five times as many as those who say their companies currently do so (Exhibit 4).

The most striking contrast we found between most executives and those at effective-developer companies is the lat-ter group’s apparent success at disman-tling barriers to the implementation of corporate strategies. For example, when asked which barriers (such as risk-averse decision makers) interfere

with reallocation of their companies’ resources, 32 percent of the effective-developers group claim to have no bar-

riers, while only 11 percent of others say the same (Exhibit 5).

Similarly, 38 percent of respondents at effective developers say their com-panies face no barriers of any kind to implementing strategy, compared with only 7 percent of others. The secret of effective developers’ success may be the extent to which they integrate their corporate strategy processes with key management processes. For example, 49 percent of respondents at effective developers, compared with 22 percent of others, say their corporate strategy processes are fully integrated with the approval and allocation of capital expen-ditures. As for talent development and assignment, 31 percent of effectives, but only 6 percent of others, integrate it (Exhibit 6).

Indeed, 60 percent of executives at

Prioritising financials, macrotrends

!"Respondents who answered “don’t know” are excluded; respondents who answered “other” are not shown.

% of respondents1

Top-ranked inputs considered by company when developing corporate strategy

Respondents who say their companies are ‘effective developers of strategy,’ n = 149

Macrolevel trends

Performance of our overall portfolio

Competitors’ current strategies, known plans

Extent of regulation in the countries where we operate

Operational benchmarking

Investor expectations

Analyst expectations

Our talent pool

Industry dynamics

Financial projections

26

23

18

15

4

3

3

2

2

0

All other respondents,n = 1,743

13

21

20

24

5

3

1

8

2

2

Exhibit 3

Dissatisfaction with status quoExhibit 4

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% of respondents, n = 1,944

Activities in which my company currently engages fully, and ideally should engage fully, as a direct outcome of its corporate strategy development

2644

ActualIdeal

2549

Restructuring the organisation 2239

Driving performance transformation

Making major changes in operating expenditures across the corporate portfolio

Making major changes in organic capital expenditures across the corporate portfolio

Making major shifts in talent across the corporate portfolio

2051

1836

Divesting businessesAcquiring new businesses

Entering/exiting major markets

1535

1533

Redesigning key processes 1441

840

33

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F E B R U A R Y 2 0 1 1 C F O

effective companies say their compa-nies are extremely effective at translat-ing corporate strategies into day-to-day implementation. Just 6 percent of oth-ers say the same.

LOOKING AHEAD Many corporations have emerged from the hunker-down mentality of the financial crisis with strong bal-ance sheets and profits. Robust cor-porate strategy development will be essential to charting a future path to successful growth and returns.

Companies would do well to design an ongoing corporate strategy-development process that explicitly tackles key corpo-rate-level issues, such as resource real-location, and that drives on major eco-nomic trends and other external factors.

Managers should forge much stron-ger links between corporate strategy and other key management process-es, such as talent management and

Exhibit 5

% of respondents1

Which situations, if any, are your company’s biggest barriers to making substantial funding shifts across its portfolio?


All other respondents,n = 1,793

Decision makers are risk-averse and see emerging business opportunities,

34 51

Business units feel entitled to the same level of funding they received in the previous year

23 41

Funding is distributed based on the size of the business unit 16 30

People are reluctant to relocate 14 25

By conclusion of strategy development process, changes in operating environment have made strategy obsolete

10 26

Other 8 7

We have no barriers to reallocation of our resources 32 11

1"Respondents who answered “don’t know” are not shown.

allocation of capital expenditures, to ensure that their strategies translate into meaningful action.

The contributors to the development and analysis of this survey include Michael

Birshan, a principal in McKinsey’s Lon-don office; Renee Dye, a consultant in the Atlanta office; andStephen Hall, a director in the London office.

The online survey was in the field from December 7 to December 17, 2010, and received responses from 2,313 executives around the world, rep-resenting the full range of industries, regions, tenures, and functional spe-cialties. Of those, 1,944 respondents are at multi-business companies and can describe their companies’ process for developing a corporate strategy.

THIS ARTICLE WAS FIRST PUBLISHED IN JANUARY 2011 ON THE MCKINSEY QUARTERLY WEB SITE, WWW.MCK-INSEYQUARTERLY.COM. COPYRIGHT © 2011 MCKINSEY & COMPANY. ALL RIGHTS RESERVED. REPRINTED BY PERMISSION.

Better strategy through integration

% of respondents

The management processes that are fully integrated with decisions resulting from my company’s corporate strategy process

All other respondents, n = 1,793


Budgeting 3254

Business unit strategy reviews 3166

Approval, allocation of capital expenditures 2249

Transactions (eg, M&A, divestitures) 2256

Operating reviews 1850

Investor relations management 1525

Analyst communications 1225

Incentive structure, compensation 825

Talent development, assignment 631

Better strategy through integration Exhibit 6

34 C F O F E B R U A R Y 2 0 1 1

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Having an independent IT solution for your firm and outsourcing some work can cut cost and time. But CFOs need to plan this well.

JAYANT DWIVEDY

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be understood well and packaged to meet industry requirements Spend lesser time to generate relevant integrated reports even for businesses that are currently disintegrated Be ‘audit ready’ to significantly reduce extra hours put in for an audit preparation

The problem area has been the use of technology as a tool and not as a solution. IT tools deliver to a limited

THE ROLE OF THE Chief Financial Officer (CFO) is a rapidly evolving one. The ‘partner to the CEO’ also looks at risk, spend governance and takes an active role in deciding strategy for the company. Given this scenario, it may be pertinent to discuss what CFOs necessarily need to manage dynamically in today’s scenario. Here are a few key broad issues CFOs need to focus on:

Support business growth by increas-ing transactions and document management without necessarily adding headcount Use automation/ IT to integrate the organisation beyond what has been achieved already Outsource progressively: This will improve productivity, reduce turn-around time and optimise costs; It will also progressively eliminate non-value added work Examine and adopt best practices not prevalent in the organisation but available in a BPO. These need to

SPEND GOVERNANCE THROUGH IT-BPO CONVERGENCE

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design scope. Huge chunks of the organisation do not reap the benefits at all or only receive partial resolu-tions to their problem. This leads to a number of unwanted mechanisms coming in to work. If unattended, they remain in suspended animation for years and become ‘pain’ points. Don’t be surprised if the top management is unaware of this ground reality.

Can an organisation use external IT tools to provide solutions to internal

35F E B R U A R Y 2 0 1 1 C F O

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problems? The answer is ‘yes’. Multiple options are available as SaaS and cloud -based solutions. Can these solutions automate areas that are manual, with-out disturbing the existing core IT con-figuration? The answer is again ‘yes’. Focus on areas that are manual and low on productivity.

Can an organisation reap the benefits of an independent IT solution com-bined with the benefits of outsourcing (BPO)? Of course it can. But conver-gence is a term that needs discussion.

CONVERGENCEConvergence refers to previously sepa-rate bits such as productivity applica-tions, processes improvements (that encompasses documents and transac-tions) and governance (policies and reg-ulations) that now share resources and interact with each other in prefect syn-rergy, thereby creating new efficiencies.

The convergence of IT-BPO is a very valuable proposition for the industry in the area of spend management and

spend governance. An independent software vendor (offering a large suite of functionalities), coupled with a large BPO outfit, can bring in significant value to an organisation in about three months time. The key points to exam-ine would be :a) Is the solution just a work flow? That will not suffice.b) Does it provide a full-fledged accounting framework that matches my organisation’s current financial system? c) Does it also give me a spend gover-nance platform for audit readiness?d) Does it allow control from a dis-tance, even as the outsourced opera-tions take place?

Convergence, in this instance, is also defined as the interlinking of comput-ing and other information technologies and communication networks (includ-ing Internet) to provide a larger solu-tion to the organisation. The point to drive home is that an existing system should not be a deterrent to the wider use of standard and well-tested solu-tions across the organisation.

India still leads the global IT outsourc-ing market and its advantages are dis-tinct. However, if we were to obtain the percentage of operations outsourced by organisations in India, the number would be dismally small. A large part of transactions pertaining to ordering, invoice processing, payment processing and document management unneces-sarily happens in-house. This, in spite of the organisation realising that resources and headcounts can be better utilised in revenue generation and value creation.

EVALUATION CRITEREA FOR IT-BPO SOLUTIONSAssurance: The assurance factor is deter-mined by the competency to deliver for large and geographically-scattered organisations. Volume of transac-tions handled and availability of Busi-ness Continuity Plan (BCP) are also salient aspects.

Quality: Robust spend management soft-ware can deliver a six sigma quality in

36 C F O F E B R U A R Y 2 0 1 136

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transaction processing. The quality of the system documentation, ability to capture detailed relevant information and the retrieval process are vital selec-tion criteria.

Service: A new solution brings in the energy to review existing “as is” scenari-os and sets demanding Key Performance Indicators (KPIs) for the “to be” imple-mentation. It will be reasonable to expect 35-50 per cent reduction in turnaround time for key transactions in a good and well-resourced implementation.

Cost: The payback on such implemen-tations is usually less than a year. Use of a SaaS model can reduce the operating

Organisations can save considerable amount to time internally as the neces-sary knowledge and capability to deal with such changes exists at the service provider’s end.

The organisational awareness about outsourcing allows the delivery of capa-bility, which goes beyond the ‘known’ business requirement. It enables a ser-vice-oriented architecture.

The ability to do shared services, cen-tralised sourcing and consolidation of categories/ spend becomes a reality. Deskilling of tasks perceived to be dif-ficult and people-specific is another rev-elation in such an exercise.

Over-engineering within an organisa-tion is a waste. It is also a known risk

variety and volume can let an organisa-tion down). The desire to be compliant is being translated into enforcing com-pliance through automated systems and procedures.

Use of IT-BPO combine to deal with spend management is a valid option that brings in new energy, deals with the aspects around change manage-ment, removes unwanted old practices and makes the operations productive and transparent. All this, while the organisation can still focus on its core business and revenue growth.

In conclusion, to ensure you get opti-mum value from such convergence, these are some of the things to keep in mind:

Look out for a BPO organisation that has a large geographical presence, F&A team and a spend management software

Look at existing scale handled by the spend management software (make sure that it is not just a document work flow but a software that can handle transactions and provide a spend man-agement framework)

Look at offerings that can be either on capital expenditure mode or Software as a Service (SaaS)

Look out for a structured short term project that delivers in about 3 months

Evaluate an IT-BPO combined so lu t ion and implement . That would get you ‘three birds with one stone’- spend management software, related outsourcing and structured consultancy. A convergence in the true sense!

A large BPO expertise combined with electronic spend governance tech-nology provides a potent solution for addressing typical issues around costs, productivity and compliance.

JAYANT DWIVEDY IS CEO, EMPRONC SOLUTIONS AND CAN BE CON-TACTED AT [email protected]

BAZ THE FLAGSHIP PRODUCT FROM EMPRONC SOLUTIONS IS A LEADING SPEND MANAGEMENT SOLUTION FOR THE INDUSTRY.

expenditure almost instantaneously. Capital cost can be avoided. The ability to interact with the larger population in an organisation for online transactions, brings in tangible benefits. The intan-gible benefits are around spend gover-nance, control and reporting.

Innovation: Innovation is the key to success. The environment is changing too fast to allow complacency in system availability. Lack of innovative solutions can retard growth and considerably slow down organisations.

Regulatory factors: The combined solu-tion of IT-BPO should enable quick course corrections for regulatory changes and such changes should get handled effectively and completely.

and is best avoided, as such internal exercises tend to become team specific.

The residual hazard in situations where the person (or a team) moves on is huge. Solutions to difficult end-to-end operational problems are, in most instances, readily available in the market. Simplicity should be the chief criteria in an IT-BPO implementation move. The focus has to be on complet-ing the value chain in the process and no part should be allowed to remain disintegrated or manual.

With rising salary bills and real estate costs, elimination of every manual effort contributes to the margin of the business. Accountability and transpar-ency in business are forcing business leaders to be more vocal on the spend governance aspects, particularly where

38 C F O F E B R U A R Y 2 0 1 1

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The past decade, 2001- 2010, was one during which World War IV began. Over the last 100 years, the world has wit-nessed three major “world wars” and we are now at the beginning of the fourth one. The world was largely oblivious to the cataclys-mic changes during the world wars even though the signs were there for all to see. Unfortunately, very little has changed.

Each of these four world wars—of which two are well known—had peculiar characteristics. The First World War began in the summer of 1914 and ended four years later with millions dead, wounded and displaced. Devastation of this scale was possible because of technological advances in weap-onry characterised by their automation. Technologies such as machine guns and artillery barrages essentially automated killing to an extent unimaginable until then.

The Second World War (1939-45) was characterised by mobility. Fighter aircraft, long-range bombers, submarines, fleet carriers and blitzkriegs enlarged the theatre of opera-tions. At its peak, World War II saw more than 100 million military personnel mobilised all over the world and every major nation participating in the conflict. With over 50 mil-lion fatalities, this war was the deadliest conflict in all his-tory. Automation which was predominant during WW I was refined and provided mobility during WW II. The crescendo of this lethal combination was best demonstrated by the atomic explosions in Hiroshima and Nagasaki, where more than 200,000 were killed by a nation attacking them from halfway across the world.

THE DECADE IN TERROR RAGHU RAMAN*

39F E B R U A R Y 2 0 1 1 C F O

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The Third World War or the Cold War began immediately after the victors of WW II divided up the spoils of the war and continued the bifurcation across the globe. East and West Germany, the Koreas, the Soviet Satellites, Vietnam, Cuba, most parts of Africa and many parts of Asia were forced to join this proxy war between the two superpowers and their allies. The essential character-istic of the Cold War was subterfuge. Cloak and dagger operations, murky overthrowing of governments, fund-ing of terrorist movements (who would, of course, be rechristened as freedom fighters if they won), deniable black ops and unsavoury links between causes ranging from ideological to downright criminal were the essence of this war.

While the Cold War may not have caused as many casualties in a similar time frame as both the earlier wars, its damage potential has been very high and exacting. Virtually every conflict in the world today can trace its roots in the Cold War and many of those conflicts will continue to take their toll for the foreseeable future.

The Cold War ended with the fall of the Soviet Union in early 1990s, and had the unintended consequence of laying the foundation of World War IV—global radical fundamentalism and terrorism. With the Soviet Union crum-bling, the sole remaining super power could project its power unopposed into any part of the world that suited it, and the US did exactly that. Former global powers stood mutely as the US demon-strated that it could attack any nation unilaterally without even the fig-leaf of a UN sanction.

Until, on 11 September 2001, the Al Qaeda struck back and sounded a rally-ing call of “franchise” terrorism. It is not that terrorism had not been used before this instance. West Asia, Sri Lanka, and, at closer home, Punjab, the North-East and the Kashmir valley had echoed with blasts and terror attacks, but 9/11 was a harbinger of WW IV in many other ways. To begin with, the sheer scale, elaborate planning and audacity of the

attacks were without precedence. Sec-ondly, the Al Qaeda had taken the battle into the strategic base of their enemy instead of limiting it to a theatre defined by them, thus out-flanking consider-ably superior forces. Thirdly, it had used a small body of troops to achieve an objective far beyond its capabilities in conventional terms. These three subtle elements indicated the paradigm shift of the new war that we face now.

Essentially, the terrorists had man-aged to pull off an operation that com-bined the guile and planning of Cold War operatives, the cold professional execution capability of Special Forces and demonstrated the strategic ability to mount a “turning move” by open-

ing a new front in the ground of their own choosing.

The punch drunk reaction of the most powerful country in the world wasn’t because of the power of the punch; instead it was testimony to the fact that the US was fighting WW IV with the doctrines and structures of the previ-ous wars. The US carpet bombing of Afghanistan and its vision of WMDs in Iraq were manifestations of not having made the orbital shift between the old and the new wars.

But the US was not alone in this time warp. The Madrid bombing indicated another surprising paradigm shift of the global terror war. Unlike conventional forces, which seek strong command and control channels, the Al Qaeda and other terrorist groups encourage loose affiliations and “cut-outs” in its com-mand and control structures, providing the broad philosophy and resources and leaving the actual operations to local

*RAGHU RAMAN IS AN EXPERT AND A COMMENTATOR ON INTERNAL SECU-RITY. THE ARTICLE HAS BEEN REPRO-DUCED WITH PERMISSION FROM MINT (WWW.LIVEMINT.COM). IT FIRST APPEARED IN THE FEBRUARY 1, 2011 EDITION OF THE NEWSPAPER.

units. The London and Mumbai attacks reinforced this shift when countries with some of the most powerful armies of the world were cumbersome in their response to this new paradigm.

The rapid growth of terrorism as a preferred tool of waging war is testimo-ny to its efficacy and a guarantee of its sustained proliferation. Thus demand-ing that in-depth intelligence and sur-gical utility of force be the essential characteristic of WW IV—rather than absolute superiority of force.

There is reasonable certainty that the years to come will see an escalation of strategic terror that will affect the whole world directly and indirectly. And yet, we fight WW IV with the same structures

that stood us in good stead during the previous wars. The focus of most nations is still on adapting the conventional structures rather than developing more suitable ones from scratch. Our armies and para-military forces are still orga-nized and trained based on erstwhile “all-out decisive war” doctrines rather than newly developed ones that focus on pre-emptive action rather than overwhelm-ing force. And until we go back to the drawing board and redevelop structures based on intelligence rather than force, we will continue fighting the war on ter-ror with sub-optimal results.

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40 C F O F E B R U A R Y 2 0 1 1C F O F E B R U A R Y 2 0 1 1

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Acquisitions following a downturn generally yield strong returns. Suc-cess however, depends on a balance between growth and caution.

JANICE DIPIETRO

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before defining the acquisition strategy and the plan for recognising value post-acquisition.

SOURCES OF FUNDINGFunding can come from a variety of sources — internal liquidity, partner-ship, liquidity from debt or equity.

INTERNAL LIQUIDITYOne of the quickest and easiest ways to generate funding is by building

FOR COMPANIES SEEK-ING TO grow through acquisition, there’s good news: The recession has created a strong buyer’s market. Research has shown that acquisitions immediately following a downturn yield strong returns. On the other hand, growth in a sluggish economic era can be tricky, and aggressive pursuits can be dangerous, even disastrous. Compa-nies that emerge stronger will have an acquisition strategy that balances the need to grow with caution and respon-sibility.

A first step is to evaluate the com-pany’s appetite and readiness. Before entering any transaction, first deter-mine if there is the financial where-withal by performing a thorough finan-cial health check.

Since the recession, most organisa-tions have shifted their focus away from profit and loss statements toward liquidity. Does the company have enough liquidity to carry off a transac-tion successfully? If not, consider the company’s sources for funding growth

RESPONSIBLE ACQUISITIONS YIELD GROWTH

internal liquidity. This involves a faster turnover of critical balance sheet items and improving processes like collec-tions, inventory management and sup-plier settlement. The company could downsize to a smaller-scale version of the business or reshape it by outsourc-ing non-core functions. In addition, it could shift from a fixed-cost structure to a variable one, particularly to help weather weak markets.

When considering options, first understand the customer base and what matters most to them. For exam-

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41F E B R U A R Y 2 0 1 1 C F O

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ple, Dell Corp. was able to cut prices and gain market share by dropping free after-sale customer support. Customers now have the option to pay for the level of support they desire and no more.

PARTNERSHIPS New opportunities may also exist to gain new alliance partners, to move into adjacent markets, to adopt new pricing models or to enter new chan-nels. Some of these opportunities may be created by the failure of competitors or by a new customer appetite for solu-tions that show measurable return on investment or reduce the risk.

For existing key customers, relation-ships can be deepened by working together to improve each other’s perfor-mance. For example, are there aspects of supply chain logistics that could be handled for the customer that reduce

overall costs and improve profitability for both entities?

LIQUIDITY FROM DEBT A third option is renegotiating debt. Talk to lenders and update them about the company’s assumptions for the next six to 12 months. Be sure they understand any improvement initia-tives in place to increase cash flow. This conversation will help determine when the company might be in a position to renegotiate existing credit terms and/or expand borrowing capacity.

Establish relationships with new lending sources before they are needed. Doing so enables the financial execu-tive to best understand the competitive market lenders are facing and what alternatives might be available and when. Match short-term debt with the need for working capital and longer

term debt with the need for growth capital. Be sure to limit the use of debt for permanent needs — these are better financed with equity.

EQUITY Nearly 80 percent of private equity investors surveyed by the Bank of New York said they would increase or maintain their current level of invest-ing in the future. Private equity offers a potentially rapid infusion of cash for companies that are just beginning their growth trajectory.

There is much competition, and only the best deals are being financed. To stand out, a company must have a true growth story, initial traction in the market and readily available financial information.

Agreeing to private equity financing is likely to bring with it a host of chang-

42

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es, including how the company is gov-erned. So it is vital to understand and be prepared for the changes that would occur if this option is chosen.

WHY CONSIDER AN ACQUISITION? With funding sources in place, it is time to consider an acquisition. Many companies are timid when it comes to major transactions. But mergers and acquisitions are the lifeblood of growth.Darrell Rigby, author of Winning in

Turbulence, writes that acquisitions completed during and immediately fol-lowing the recession of 2001–02 gener-ated almost triple the “excess returns” of those made during the preceding boom. Recessions reshape industries faster than strong economic times because long-established business models have been weakened, and com-petitors have lost customers. Predict-ably, M&A activity is on the rise.

Robert W. Baird & Co. reported an impressive 93-percent increase in Unit-ed States middle market M&A transac-tions in March 2010, the largest month-ly deal count since June 2000. And the second quarter of this financial year was the strongest M&A quarter since the beginning of the credit crisis, with 175 deals done, amounting to approxi-mately $26.7 billion in capital deployed.

Though opportunities are ripe and

liquidity is loosening, it is important not to rush into an acquisition, particu-larly for first-time acquirers. Be sure the strategy in identifying an acquisition target is clearly understood. Ensure that the team in place has the experience to assess a transaction, complete the investment process, forecast its perfor-mance and tolerate sensitivities around the results. External advisers with the right experience are often necessary.

In all, make certain that the projected benefits, synergies and savings from the transaction can in fact be realised.

DEFINE GOALS AND SUCCESS FACTORS The M&A strategy should stem from an analysis of the company’s current com-petitive position and its future objec-tives. That means understanding what the business is doing, where its leaders want to go and what they value most.

Just what is the company trying to gain through an individual transaction? Is it increasing market share, entering contiguous markets, increasing econo-mies of scale to be the low-cost provider in its market, eliminating a competitor, expanding a product line or achieving vertical integration?

Whatever the rationale, be sure it is well understood and translated into specific, measurable goals and success factors.

Through the process, focus on goals relentlessly. The acquisition should be a

way to bridge the gap between the com-pany’s current state and the future state desired. Align decisions to this future vision throughout the process. These factors become the items to test for in screening for prospective targets and performing due diligence.

DUE DILIGENCE Due diligence is more than an audit or a financial exercise of checking historic results. When done properly, due diligence should test the strategic fit of the acquisition to the original goals as well as map out what it will take through the integration process to make this a reality.

There are a number of important factors to consider in screening acquisition targets, including inte-gration feasibility and developing revenue and cost models for the com-bined organisation.

When searching for candidates, avoid becoming too enamoured of any particular one; search for alter-natives, understanding the pros and cons of each. Becoming too person-ally attached to any one opportunity can cloud judgement, and a negotia-tor must be prepared to walk away if necessary.

Another useful technique is to write a mock press release announcing the acquisition. It’s an exercise that forc-es the focus on the relevant factors related to the acquisition and encour-ages thinking about the negotiation process before it actually begins.

Also, plan generously for transi-tion and closing costs, making sure the deal is financially viable, pre-pur-chase. As a rule of thumb, integra-tion will cost at least 10 percent of the acquisition price.

If the company cannot absorb a wide swath of sensitivities around forecasted performance, it won’t succeed. Pre-close planning should include performance tracking mea-sures that will help monitor the transaction’s success post-close.

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C F O F E B R U A R Y 2 0 1 1C F O F E B R U A R Y 2 0 1 1

43

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INTEGRATIONMore M&A deals fail due to poor inte-gration than any other factor. In fact, experts estimate that almost as many as 50 percent of post-merger integration attempts are poorly executed. To ensure a successful integration, begin plan-ning as soon as a target is identified.

PLANNING FOR INTEGRATION Major transitions require strong leader-ship, so it is critical to create a transi-tion steering committee and a function-al team. These groups should engage leaders from both sides and understand their role in realizing value assump-tions.

They should set their expectations high and work from a well-defined project plan, revisiting it as condi-tions on the ground change. The integration team must include line managers closest to the action, who can see problems brewing.

For example, in General Electric Co.’s integration team concept, major players from both the buyer and tar-get work together to ensure that the integration will work at all levels. In 2010, Tyco International Ltd.’s ADT division acquired Broadview Secu-rity Inc. The divisional chief execu-tive, a former GE executive, formed an integration team with members from both companies, representing all functional areas. Former senior members of Broadview also became members of the CEO’s senior man-agement team. Although it took some time, the best practices of each group — including cultural — were used for the new entity. This appears to be a contin-ued strategy for a successful integration.

Another key aspect of integration planning is to ensure the integration accounting team has a detailed under-standing of how the purchase price accounting will be applied.

This allows the books to close and reopen on deal day with all the necessary adjustments posted, instead of trying to

determine how to apply the accounting procedures many months later.

EXECUTING THE INTEGRATION Organisational and cultural issues are the most significant factors as to why deals succeed or fail. Yet they are often the most overlooked. Contrary to what most people think about integrations, it is generally best to integrate operations and culture first and wait on informa-tion technology systems.

Businesses that have survived due

diligence begin with using the existing IT systems first and spend the initial integration thriving in the marketplace rather than drowning in a new IT sys-tem. A system implementation can always be done at a later date.

Remember that no matter how thor-ough the due diligence, what’s actually purchased is generally not known until the post-merger integration process has begun.

Seeing a business from the out-side is often very different than see-ing it from the inside. As integration begins, revalidate the plans devel-oped since the deal was first con-sidered. Continue to evaluate what drives value, what is working and what is not.

Do not be timid when it comes to modifying plans if that’s the right move. Be sure to communicate, communicate and communicate even more. Mem-bers of both teams must understand — as quickly as possible — the direction to be taken and how they play (or not) so as to maximise value to both sides. Throughout integration, remember speed is crucial at this stage — delay drives failure and may cost key people.

Mergers and acquisitions will always be a critical step on the path toward growth. To ensure success, know well the organisation’s identity, resources and goals. Plan carefully and thor-oughly. Before any action is taken, evaluate every alternative. Be aggres-sive in pursuing and negotiating, but remain conservative in forecasting and integrating.

With an intelligent, measured approach to acquisition, the risks can be overcome, the company’s growth trajectory can be accelerated and it can land on top of the pile — even in this volatile buyer’s market.

JANICE DIPIETRO ([email protected]) IS NATIONAL MAN-AGING PARTNER OF CONSULTING FOR TATUM AND BASED OUT OF THE NEW ENGLAND PRACTICE IN BOSTON. WWW.FINANCIALEXECUTIVES.COM

THE M&A CODE

Research has shown that acquis

tions immediately following a down-

turn yield strong returns.

Before entering any transaction,

determine if there is the financial

wherewithal by performing a thor-

ough financial health check.

Ensure that the team in place has the

experience to assess a transaction,

Plan generously for transition and

closing costs, making sure the deal

is financially viable pre-purchase.

To ensure a successful integration,

begin planning as soon as a target is

identified.

It is generally best to integrate opera-

tions and culture first and wait on

information technology systems.

Do not be timid when it comes to

modifying plans if that’s the right

move

F E B R U A R Y 2 0 1 1 C F O

C F O F E B R U A R Y 2 0 1 1

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44

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ABOUT THE AUTHORDavid Lim, founder,

Everest Motivation Team, is

a leadership and negotiation

coach, best-selling author

and two-time Mt Everest

expedition leader. He

can be found at his blog

http://theasiannegotiator.

wordpress.com, or david@

everestmotivation.com

Guide toA Leader’s

2011 Predicting the future is risky but some trends are more than likely to dominate our work lives this year. DAVID LIM

WHAT IS IN THE crystal ball for 2011? And what are the leadership trends that will make a difference to you? As I have mentioned many times already, you need to lead yourself effectively before leading others. The trends below are based on my thoughts as well as those based on reports and research that have appeared on the web. But before we get to the top leadership trends for 2011 that everyone in posi-tions of influence need to know, let us talk about CFO leadership more specifically.More than in recent times, 2011 will be racked with some volatility in the markets, despite a broad global recovery. And CFOs who lead well, will be well-advised to do the following:a) No more Death by PowerPoint: Communicate more effectively to the Board, spe-cially about changes taking place that are affecting jobs, out placements, currency shifts and anything that impacts the strategy and thus the bottom-line. The second most underrated leadership skill is managing expectations. Do it well here, and it is likely that the Board will accept upcoming changes and actions. What is a good start? No more death by PowerPoint. Instead, if the Board needs numbers, give it to them. But your expertise lies in making sense of it. Be bold enough to summarise the salient points in 3 – 4 factoids or graphicsb) It is a war out there: Manage international finance and hedging more

F E B R U A R Y 2 0 1 1 C F O

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45

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To maximise their productiv-ity, leaders need to rethink how they communicate with the Millennials on a daily basis, constantly stimulating and chal-lenging a generation that can-not think of a workday without the Internet.

effectively as the threat of currency wars loom ahead; consider this a major player affecting the day-to-day issues such as managing budgets and keeping a healthy cash flow.c) Think like a CEO more often: The numbers are critical – but where do they lie in terms of the overall strategy and goals? Leading is about inspiring, taking calculated risks and swift action. d) Spend time crystal ball-gazing: Who said scenario planning was only for the CEO? Bring the key concepts of scenario planning into your team so you can better analyse your vulnerabili-ties, and possible consequences of a number of key risk variables.

If you are satisfied with your responses and reactions to the points above, here are what other experts and yours truly think are the most important trends in general leadership in the corporate world.

1Values-based leadershipMore organisations will be pushing for

higher transparency, accountability and a sys-tematic concept of leadership based on the right values. There will be more pressure on fulfilling other bottom lines than just the revenue bottom line. In India, as it is in any corporate market with moral hazards, how you project the integrity of your finances and deal with suppliers and business partners, are key to sustaining brand reputation.

2Leaders will reward more, and more innovativelySalaries are recovering, but the huge shakeup in job

losses and insecurity from the GFC will mean that to retain staff and to maintain staff numbers, leaders need to think about rewarding their people with more. The good news is that it does not have to be with just cash. Studies at Stan-dard Chartered Bank show that giving staff 3 paid days off to do volunteer work, increases staff satisfaction, engage-ment and (hopefully) reduces turnover.

3 Engaging the Millennials will be a leadership imperativeThose born between 1979 and 1996 are now heading

into the workforce, or are already beginning to influence people at the junior and middle management levels. Gen Y, as they are also known, are impatient to succeed, tech-savvy, have high expectations of themselves and like being team players. To maximise their productivity, leaders need to rethink how they communicate with the Millennials on a daily basis, stimulating and challenging a generation that cannot think of a workday without the Internet.

4 Training and development for leaders will be top priorityThis will need to be more outcome-focused, and the

results more tangible. Return on Objectives may include intangibles that have to be measured with different metrics – like team engagement, improving negotiation skills, and intra and inter team communications.

5 Leaders will need to be more innovative… seriously!“Thinking out of the Box” is passe – as a phrase anyway.

The Centre of Creative Leadership’s 2007 survey of 247 global executives (93 per cent of them being CEOs or senior VPs) showed that the #2 priority was innovation. This can be a problem in risk-averse Asia which has tended to follow, copy or ape norms and ideas rather than generate them. If you are not failing fast enough – which is what innovation demands – you are not winning fast enough. Peter Drucker recognised the need to innovate a long time ago when he said there are only 2 reasons for a company to exist – 1) to market its prod-ucts, and 2) to innovate.

What has been your most recent financial innovation to drive the organisation forward? Think about it.

DAVID LIM IS A LEADERSHIP AND NEGOTIATION COACH AND CAN BE FOUND ON WEBSITE HTTP://WWW.EVEREST-MOTIVATION.COM

46 C F O F E B R U A R Y 2 0 1 1

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THE CHALLENGE:

Benchmarking the finance

function

TIME PERIOD:

January to December 2010

PEOPLE INVOLVED:

CFO and the entire finance team

KEY TAKEAWAYS:

Set clear, short deadlines.

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47F E B R U A R Y 2 0 1 1 C F O

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A rapid rise in fortunes saw MapmyIndia’s finance team faced with unexpected workload. Lack of processes were beginning to hit them hard. That is when CFO Asheesh Awasthy and his team decided to put systems and processes in place.

DEEPAK GARG

Everyone at MapmyIndia was on a high in 2008. The digital navigation service provider had witnessed over 100 per cent growth

over the previous two financial years. In a short span of three years, it had shifted from being an enterprise solu-tions provider to a retail one, offering mapping and tracking solutions to a wide variety of clients. But, like many other startups before

them, they landed their punches but left their defences open (to use a boxing jar-gon). So, while the transformation was a success, the fast-paced growth saw MapmyIndia’s relatively lean finance team dealing with utter chaos. Respon-sibilities and processes had not been defined, resulting in the team function-ing quite inefficiently and haphazardly. It was, in fact, a scenario quite similar to that faced by most startup companies that witness high growth.

THE CHALLENGEOver the years, MapmyIndia’s finance function had evolved from being responsible for just rudimentary mat-ters such as raising invoices, handling payables and providing monthly sales reports to the management, to that of getting involved in strategic decisions and having all finance information available at a moment’s notice. This added and expanded role, coupled with the sudden expansion of business, cre-

SteeringBenchmarking Map

towards a new

48 C F O F E B R U A R Y 2 0 1 1

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ated a level of pressure that was fast affecting the team’s and therefore the company’s overall performance.

It was at a strategic juncture in early 2009 that Asheesh Awasthy joined MapmyIndia as Chief Financial Officer, bringing with him a decade of experi-ence in the BPO industry. “BPOs have evolved to have an ingrained culture of set processes and benchmarks. I was used to having such systems in place and this was clearly lacking at Map-myIndia. It was a big challenge to get similar systems and processes in place here,” he says.

Awasthy knew from experience that functions without defined responsi-bilities, processes and targets can lead to dissatisfied employees and undue

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stress, leading to subprime perfor-mance. He was determined to bench-mark his team’s responsibilities and hopefully ‘get more with less’.

HOW IT WAS TACKLEDThe benchmark standards put in place at BPOs are clearly different from what was required for the MapmyIndia finance team, but the fundamentals were the same. Through 2009, Awasthy researched existing standards and developed his own benchmarks for his finance function. He decided to start with the accounts payable and accounts receivable functions, and set out to put the systems in place.

The process of setting the bench-marks and implementation took time,

and involved regular discussions and debates with his team. “Convincing them of the benefits was a challenge, but over time, the benefits became apparent. In fact, the entire exercise forced the team to look into each and every process in detail,” recalls Awasthy.

As communication levels improved, as did an understanding of the overall situation, it enabled the team to iden-tify areas where automation was desir-able, thus enabling process efficiencies through the installation of software.

The result is visible today. Mapmy-India’s finance team is not just work-ing more as a cohesive unit now but also in a far more positive and less stressed environment. Quality rigour across the functions also resulted in substantial increase in compliance-related issues. To put it simply, every-thing is on time today. The exercise of creating process flows has also greatly simplified the auditing pro-cess, says Awasthy.

As the overall team efficiency improved, MapmyIndia has also managed to increase productivity, doing away with the need to hire addi-tional people to handle the increasing demands on the function.

THE LEARNINGSOverall, the process of benchmarking has been very positive, feels Awasthy. The CFO and his team is now keen to start benchmarking other func-tions. One of the key takeaways from the experience, he says, is that any benchmarking process should have a defined time frame, with clear time-lines and milestones for implementa-tion. “This period should also be kept as short as possible, to avoid the risk of the exercise losing its relevance and impor-tance due to delays,” he says.

Today, MapmyIndia is witness-ing high growth and the process of benchmarking has helped the com-pany cope with increasing demands on the finance function. The CFO, it seems ,is ‘steering’ the company in the right direction.

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.11

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A hulk of an SUV and a pretty hatch — The X1 is a wonderful combination of the two, says Anoop Chugh The Roundel logo

on all BMW cars stems from the days of its aircraft heritage, and sym-bolizes a spinning propeller. A large part of the logo are the blue and white, colours inspired by the Bavarian flag.

THE X1 IS truly a modern automobile – high on innovation and small in essence. The luxurious hatch is what the X1 can be best de-scribed as. It has been bestowed with titles like quasi-SUV, mini-soft-roader or an urban SUV.

So what exactly is an urban SUV anyway? Something that offers as much space as a

hatch would. Something that costs you four times a hatch. Something that guzzles fuel like an SUV. And something that is luxurious and attractive to look at.

We drove the cheapest BMW ever to hit Indian roads to find out if the X1 re-

Dude looks like a ladyBMW X1

ally fits the true urban SUV tag and if owning one is a good idea.

LooksThis baby is attractive and luxurious. After the first glance, I admit to having given it a second

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C F O I N D I A F E B R U A R Y 2 0 1 150


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and a third look. She may not be as stunning as Jessica Alba, but, this is as pretty as a crossover gets. At first glance the X1 looks like a compact model. As I explore it further though, subtle characteristics strike home. The rising lateral lines lend the X1 a dy-namic shape, while short overhangs and a sloping rear windscreen create a sporty shadow. But, zoom out a little and you would realise you are admiring a dwarf X3. At the front, the distinctively shaped hood and the three-eyed look of the headlights talk about the BMW pedigree, while the L-shaped taillights in conjunc-tion with the horizontal flow of lines visually broaden the rear. Yes, it attracts eyeballs.

InteriorsWith no competition in this category from either Audi or even Merc, the X1 is the benchmark in interior luxury. Other similarly priced SUVs – the For-tuner, or the Endeavour are no match in interior styling, comfort or gadgetry. But more on performance a little later. The X1’s ergonomic design needs no lengthy explanation; it’s something you sense immediately. The leather upholstery and a three-series kind of dashboard — all add to the feel-good driving experience. The raised seating position in the X1 compensates for the lower stance of the wannabe-SUV. The X1 uses the same underpinnings as that of the 3-Series, and hence there’s a little compromise on the space; it isn’t generous especially when you stack three adults in the back seat. Ide-ally, it’s a four-seater, hence a luxuri-ous hatch.

But what you lose in space, you gain in gadgets. This car has iDrive, a push button start and dynamic traction control along with flexible interiors and a multitude of pockets and trays. Though, the rear space isn’t what you’d expect from a half SUV, the rear seat bench can be split 40:20:40, or com-pletely levelled to create more space.

PerformanceIf it’s a BMW, it has to be a stormer on the road. Howev-er, the X1 is no roadster. Not in a way we know the X5, or the 6-Series. Out of the two engine options available – 18i (4-cylinder 1.8l Petrol, 150bhp, 200Nm) and 20d (4-cyl-inder, 2.0l diesel, 177bhp, 350Nm), the latter is a better performing and proven combination, but a tad expensive. And, sadly it’s no creamy six-cylinder horse pumping machine. As we found out, the four-cylinder 2.0l diesel engine isn’t the most refined way of converting thermal energy into mechanical energy, but again it beats other full-fledged SUVs at basic torque and bhp numbers. Of course it comes at a steep Rs 30-lakh price tag.

The humbler of the two engines – 18i, drives you around smoothly but lacks the BMW joy. But it is surely a BMW at a bargain (Rs 22-lakh for 18i.) Overall, the X1 doesn’t give you that powerful feeling that its bigger cousins do, but it is still a very good car thanks to its out-standing suspension tuning, optimal axle load distribu-tion and low centre of gravity.

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Price Rs 22 lakhs

Engine 1800cc

Max Power 150bhp

Max Torque 200Nm

Gear Box 6speed GT

Wheelbase 2815 mm

Top speed 210kmph

Cylinders 5 in-line

Fuel efficiency 10.5kmpl

Turning circle 11.9m

0-100kmph 8.9sec

POSITIVESWell designed, flashy interiors, lots of gad-gets inside. The push button start is a good add on.

NEGATIVESNot much space at the rear. Also the 18i is not quite the roaring, growl-ing BMW.

VERDICTThe X1 doesn’t quite have the powe rthat you would expect from a BMW, but looks awe-some and has enough gadgets and toys inside to keep you occupied.

FLASHY INTERIORS, A SLOPING REAR WINDSCREEN , LEATHER UPHOLSTRY AND A

PUSH BUTTON START, ALL MAKE THE X1 AN APPEALING CAR TO DRIVEI42().


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Xperia Play

POWERED BY

India’s M

ost Read

MAGAZIN

E

TECHNOLOGY

The Galaxy S II is making headlines as the thinnest smartphone in the world, measuring in at 8.49 mm in width. Price: N/A

THE HD7 IS a beautiful-looking phone - black and dark grey with slim side bezels and a handset that is dominated by a 4.3-inch capacitive touchscreen. This, indeed, is the sell-ing point of this phone. Or it might just prove to be its undoing. We would have loved the ultra-sharp super LCD technology of the HTC Desire to make a second appearance here, but that has not quite happened.

The touchscreen is very sensitive, and owing to this, navigating around is spontaneous. WP 7 has a nice flow-ing menu system, consisting of large tiles. This is the default homescreen. The second screen, that is just a side scroll away, contains all possible op-tions like alarms, calendar, games, browser, messaging and MS Office, all in a single vertical-scroll list.

The phone is easy to use. Even while playing games, scrolling through long mail lists or checking images, we had absolutely no issues with speed. The QSD8250 proces-sor running at 1GHz, coupled with the monster 576 MB of RAM keeps

everything running smoothly. The battery life is decent, consider-ing the paltry 1230 mAh powerplant. The huge screen is a drain, as is the processor. With the usual messaging and an hour of calls, you will need to charge the phone every evening. The camera is decent. It provides good contrast, the flash is reasonably powerful and seems to tone down when shooting bright subjects against a dim background.

Inevitably, as it is with all cell-phones, their USP comes down to a combination of price, features and us-ability. At an MRP of Rs. 29,990, the HD7 isn’t cheap. Neither is it perfect. The platform seems good and stable. The device is solidly built and gor-geous looking. However, it remains an expensive gadget.

SPECIFICATIONS: OS: Windows Phone 7; CPU: Qualcomm QSD8250 (1 GHz); RAM: 576 MB; Display: 4.3-inch, 480x800 pixels, capacitive; battery: 1230 mAh; weight: 162 grams

HTC HD7 Is it worth the money?Anoop Chugh

*#+$,-#+

Pretty Woman

The 8.9-inch Optimus Pad is an Android Honeycomb-based tablet running an Nvidia dual-core processor. The Pad includes a full HD camera in the back to allow for a 1080p experience. The tablet actually has two 5-mega-pixel cameras in the rear to allow for 3D video capture. Price: N/A

LG Optimus Pad tablet

Available in black or white, CDMA or GSM, the Xperia Play will be launched in Europe and the US sometime in March. The Play will come pre-loaded with “legendary” PS1 games, as well as a variety of popular Android games. Price: N/A

Samsung Galaxy S II

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ISLAND OF BLISS: (ABOVE) LAZE ON THE TRANQUIL BEACHES AT HAVELOCK ISLAND OR WATCH THE FISHERMEN RETURN WITH THEIR CATCH. (LEFT) IF YOU WANT A LITTLE ADVENTURE, GO SNORKELLING OR SCUBADIVING TO CHECK OUT THE WONDERFUL UNDER-WATER FLORA AND FAUNA HERE.

HAVELOCK ISLAND, ANDAMAN

Eat. Laze. Gaze.

WHERE TO STAY: Budget: Cafe Del Mar (beach#3), Sunrise Beach Resort (beach#5) Luxury: Barefoot Resort (beach#7)

WINTER IS ON ITS way out, and it is time again to make hay while the sun shines. So we did just that and escaped to the less trodden beaches in the Andaman Islands. Port Blair, the Union Territory’s capital, is the entry point for any of the beaches or islands you wish to explore. We could have chosen to hop on to the Kolkata-Port Blair or the Chennai-Port Blair ship service (not a cruise) which takes around two days to reach the islands. But a tight itinerary meant we had to choose the more expensive but faster route – by air.

After landing at the airport, while the foreigners queued up to get their 15-day tourist permits, we stepped out for a quick visit to the infamous Cellular Jail (where many of our freedom fighters were imprisoned during British rule) and then headed to the local dhabas for our first taste of sea food.

Talking of sea food, however, would remain incomplete till we talk about our stay at Havelock Island. The Red Snap-per in Burmese garlic sauce - both at ‘Benny’ and ‘Lynda’s Wild Orchid Beach Resort’ - were perfectly cooked, moder-ately spicy and mouth-watering. Small wonder, then, that it features in every traveller’s bucket list.

Having heard so much about the food there, we rose be-fore the sun on our second morning at Andaman and took the first ferry to Havelock. After the 90 minute voyage, we made our first discovery about the place: each beach here is known by a unique number. Probably, the municipality is too laidback to name them! So, after disembarking at beach#1, we hired a two-wheeler (Rs 250/day) and rushed to beach#7 in Radhanagar – the ultimate place to be if you like tranquil surroundings. There were designated areas here for swimming and zones where the coral reefs made it ideal for snorkelling. Not for us, though, for we chose to sunbathe and sleep on the beach! And that is when we learnt our next lesson about Havelock: the last ferry leaves for Port Blair at 4 pm and unless you have reservation at a

hotel here for the night, watching the sunset (stunning as it is) from the ferry would be a wiser idea.

My advice will be to stay back for a few days at Havelock, laze around, snorkel and watch the sun set as you sip beer and munch on some fresh fried fish. If you are a bit adven-turous, try trekking and scubadiving as well.

Kingfisher, Jet and IA operate daily flights to Port Blair from most metros. You can also take the passenger ship service from Chennai, Vizag or Kolkata.

Anoop Chugh gains a few pounds on a lonely island.


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PARTHASARTHY PAL HAS presented life through a woman’s soul in his latest exhibi-tion titled Insight. The artist has tried to depict the overwhelming power in every sphere and genre of life, kindling the cult of creative imagination. Pal’s inspiration for ‘Insight’ has been ‘Mother’, the creator of life. The sheer ability of women to create has empowered the Delhi-based artist with an expression to weave his brush to capute ‘mother’ in many forms.

In a male-driven world, his work is an at-tempt to capture the contribution of women. It’s an awakening of sorts as life swirls, we open the eyes of our souls and surrender to the magnifi-cent grandeur of womankind. Pal’s work talks about how women teach us the exordium of existence from where the spirit of being flows.

The paintings beautifully depict the insights of a mother, the creator. Looking at the paint-ings one can’t help but see a drop from heaven resting gently upon the earth beneath.

The paintings talk of unprecedented melo-dies of kindness and love, cherished dreams of bravery and glory, and eternal waves of joy and peace. A painting simply titled ‘Mother’ shows how mankind has embraced the graceful woman and lifted her to the glorious pedestal of knowledge, wisdom and confidence. The many splendoured colours of the Mother come out clearly in this work of art.

The artist has done true justice to woman-kind, by showing her in many forms where

Parthasarthy Pal did his diploma in Art from The Shankar’s Academy of Art, New Delhi. That proved to be a turning point for this commerce graduate from Del-hi University who till then pursued art merely as a hobby than a profession. In the last couple of years he has participated in vari-ous group shows across the country including IIAF, Pra-gati Maidan and at Lalit Kala Academy among others. His work is mostly acrylic on canvas and can be seen at a group show at Epicentre, Gurgaon on March 11.

The Essence of Life

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Artist Parthasarathy Pal presents an ode to ‘Mother’ in many forms. By Anoop Chugh

she waves humanity in her lustrous curls. Her womb is shown cradling the human race that tread the earth from where we grow. Her roots have explored deep to bring forth unrevealed beauty of love, knowledge and wisdom. The eternal saga of life begins with her, burgeons with her, flows around her and returns to her. She is projected as the unshackled melodious essence of life.

In one of the untitled paintings the artist has depicted a lady, who is worried, morose and depressed as she is watched by a devil when-ever she is there in the crwods. If a single hair is picked and left in the sea of hair, it can’t be identified; similarly she’s unable to identify the culprit who is camouflaging himself amongst many.

COMPASSIONATE SOUL: IN INSIGHT THE ARTIST HAS EXPLORED THE MANY QUALITIES THAT MAKE

UP HUMANKIND

PAL PLAYS WITH COLOURS AND FORMS AS HE DEPICTS ‘MOTHER’ IN MANY MOODS

55F E B R U A R Y 2 0 1 1 C F O

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APPALLED BY THE latest Radia revelations about your corporate heroes? Sick of the ‘nurtur-ing talent like tiny plants’ spiel doled out by most management manuals? Wondering why they never

acknowledge the ugly truth about

success: that the trick is either

to use your cunning and flattery

to rise to the ranks of those who lay down the rules, or at

least learn how to massage the egos of the rule makers?

Here finally is a candid, hands-on guide to surviving in the

Indian corporate world, complete with a questionnaire to

help you identify the particular malevolent subspecies your

boss can be classified under. .

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The Boss is not your Friend*+!,$#"$-.)$/#'-.

From Drinking to Serving Lattes

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The tell-tale Brain

THE BRAIN REMAINS a mystery to us. How can a three pound mass of jelly that we can hold in our palm, contemplate the meaning of infinity and even question

its own place in the cosmos? Eminent neuroscientist V.S. Ramachandran takes us on a fascinating journey into the human brain, studying patients who exhibit bizarre symp-toms to understand the functions of the normal brain.

Publisher: Random House Rs 499

Going Places

THIS IS THE STORY OF a small town cricketers like MS Dhoni, Virender Sehwag, Harbhajan Singh, Suresh Raina, Munaf Patel and S. Sreesanth who made the leap to

centre stage. Difficult as it is to become a top-flight cricketer in India, it is doubly so for those growing up in small towns. A perfect read as you brace up for the World Cup in India.

Publisher: PenguinPrice: Rs 199

Michael Gill’s story of riches to rags has many hidden lessons. By Anoop Chugh

Publisher: Hachette IndiaPrice: Rs 295

HEARD ENOUGH OF rags-to-riches stories? We believe this autobiography would be a routine breaker from the run-of-the-mill sagas. This is the story of Michael Gill who was sacked, 25 years into a highly success-ful career, when in his 50s. Then, after trying his hand at other stuff, Gill faced his most daunting challenge at 70 – re-evaluating his life and values. And no, there is no fairy tale ending here, for Gill then manages to get a job at Starbucks as a barista to regain peace of mind and self-respect.

As a reader, you might be shocked at the lack of aware-ness a seasoned creative director (Gill worked with JWT) displays. At times, it seems as if the author is feigning ignorance to garner some sympathy as he sets foot in the real world post his sacking. Having said that, the story of a talented advertising professional, fired by a young executive whom he had once hired, because the latter now wanted a “young team”, touches a chord. The books also ends up be-ing a great branding exercise for Starbucks.

This has the makings of a Hollywood movie and we hear Tom Hanks has already bought the rights for it. See you then, Mr Gill, at a cinema close by.

Book: How Starbucks saved my lifeAuthor: Michael GillPublisher: Harper CollinsPrice: Rs 250

56 C F O F E B R U A R Y 2 0 1 1

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In the early days of the Obama regime, as I watched him go after Wall Street and all big businesses, I wasn’t quite sure he was being fair. I was acutely aware of the fact that every American has benefit-ed, hugely, over the years from what the financial services industry had facilitated. For that matter, so has the rest of the world. And it, therefore, seemed unfair to single out the bankers, fund managers and insurance companies for everything that resembled a crisis. I must admit, this was my trained mind – not my intuitive one which having grown up in socialist India – does find it hard to digest the ‘ultra-right’.

However, when I met gelled 20-somethings who sounded affronted that they had been done out of their large (often undue) bonuses in a year when doom was on the horizon for a majority of others – something didn’t quite add up. They seemed to suggest that they had worked hard and that was rea-son enough to be compensated handsomely. Never mind everyone else! It smelled of a worldview that was bereft of context, proportion or accountability.

Was there some merit in their expectations – despite my predilection? I have debated this for a while and then last week I saw the ‘Inside Job’ – a popular and award-winning documentary on what lies behind the meltdown of the last few years. Even more importantly, it deliberates at length on what might lie ahead. And the penny dropped.

Many disasters are caused by personal dishones-ty, greed and corruption. Often, they are the result of incompetence. Unlike them, the recent crisis was – quite shockingly - the result of high degrees of competence coupled with ‘institutional’ greed.

The need to make more money, and the temptation to ignore what was going on year after year – is unprecedented in scale and overall impact. If the movie is to be believed, the people who participated in and/or caused the crisis in the first place – continue to decide and lead America’s economic destiny. The regulators includ-ed. Scary, at the very least.

India’s current state of governance has similar characteristics. We have seen scams before, as we have corruption. But the ‘institutionalisation’ of these is a more recent phenomenon. Traditional checks and balances that came to the rescue of the system seem to have died a natural death.

The magnitude and depth of the malaise can inspire corrective action or kick-in a sense of help-lessness. We don’t have the luxury of the second response. And therefore corrective action it must be. Institutional greed or corruption has to be dealt with, with an institutional response. At home, we have remarkable examples – the Satyam case and the Sukhna land deal scam are both role models on how deep-rooted problems can be addressed.

Whether Wall Street or closer home, it is time to demand and deliver a clean-up. Can we as profes-sionals play a role? Non-participation is one way, is there any other?

I have been negotiating my way through the maze of information and sentiment around the global financial crisis to figure where I stand on it - who was to blame and who was the real victim? Could it be attributed to America’s finance industry as was being widely suggested? Was I justified in feeling that there was something different this time compared with other crises, for example, the dotcom bust or the South Asian crisis?

Anuradha Das Mathur, Publisher CFO India

Documents

CFO India - February 2011