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BW Businessworld

“There Is A Growing Recognition Among Industry Leaders That There Will Be No Shift Back To ‘Normal’”

To get a better understanding of how companies are planning to acclimatize to these new conditions, BW Businessworld organized a roundtable discussion with CFOs from some of India’s most reputed companies. The discussion posed some pertinent questions for the panellists regarding the road ahead, and their answers were enlightened.

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The ongoing COVID-19 pandemic has changed how the market will function in all facets for the foreseeable future. Perhaps no sector faces a more perplexing road ahead than the private sector. With everyone adapting to what is being described as the “new normal”, the future presents an uncertain road for businesses and companies as we adjust to the pandemic and attempt to resume moving forward. 

To get a better understanding of how companies are planning to acclimatize to these new conditions, BW Businessworld organized a roundtable discussion with CFOs from some of India’s most reputed companies. The discussion posed some pertinent questions for the panellists regarding the road ahead, and their answers were enlightened.

Kumaraswami Virpupakshan, CFO, JK Paper spoke about the need to use the challenges this pandemic has posed as an opportunity to learn and grow. “I’d like to say that the ‘crisis’ outlook on this situation isn’t warranted. Of course, it is a crisis in terms of the health and safety of people as we have seen over the past few months. I would like to treat this as an opportunity to make the best out of an unfortunate situation. I think there were a lot of negatives that had already accumulated, such as pollution, unwanted travel, heavy expenditures etc., and we were living with too many assumptions. We were not training ourselves for the advances in technology. This is a wake-up call. This situation has to be utilised for learning and growing. One of the biggest opportunities is that several markets that we were always trying to enter but faced high opportunity cost, because local markets were absorbing and giving us enough margins. But now that the capacity utilisations are 80%, it gives us a huge opportunity to enter these markets. Crisis management has 3 broad components; Rescue, Relief and Rehabilitation. The struggle here is that, unlike most crises, this situation doesn’t have a defined end point. This experience will allow businesses to adapt. They can find ways to trim their costs, overhead costs and fixed expenses.”

The Finance function of any company is extremely crucial in helping the company steer through this phase of uncertainty, due to the pandemic. Alok Garodia, CFO, Lenovo India discussed what role the finance function will play and how they can best tackle the current scenario with scenario planning. “This is a time where the finance function has to play a true partnering role with business. My memory goes back to March, when this crisis first emerged, and what we were looking at was completely an unprecedented event. Across the organisation, everyone was trying to assess the impact but what do you base your future prospects on? We had no clarity on re-opening of markets, supply chain, channel partner cash flows, demand/ consumption etc.? – and so how to look at rest of the year. Like most others, we decided to look at possible scenarios but such estimates were only possible with some past trends, assumptions or comparable data! and there were just too many unknowns. However, despite such uncertainty, the scenario planning exercise pushed us as an organisation to stretch and look beyond the usual business topics. The exercise brought all business and support functions to think together and arrive at common level of understanding of the possibilities, risks, opportunities and likely actions with the change of events, as they unfold. Idea was to ensure cohesive and speed of actions with the changing conditions in the market and the global environment. When we evaluated scenarios, we initially assumed a V shaped recovery but as the months passed, it obviously was not as simple as initially envisaged and the recovery cycle now seems to be much longer but thanks to the readiness, we saw a number of areas of new opportunities which were not even on the radar earlier. Our approach for demand generation and revenue has always been to stay positive and optimistic but when it comes to fixed costs and spend etc. need to stay lean and nimble so that one can adapt quickly in these evolving and uncertain times.

Mankiran Chowhan, Managing Director – India, SAP Concur,  shared some key insights on how she and her team at SAP Concur have been working with finance leaders on how they can convert the current crisis into an opportunity to accelerate some of their earlier stalled digital transformation initiatives. “There is a growing recognition that there will be no back to normal. This  is defining the challenges that each company will face as we move forward. Majority of the finance leaders are talking about being more resilient and agile. Their focus is now on serving customers, and on how it will place them in a better position down the line. In fact, over 60% of the clients we work with are talking about massive redesign initiatives and most of that is based on either reduction of costs, process efficiencies or improving their product quality. One of the priorities is maximising employee productivity while they work  remotely with less resources at their disposal. There are 3 focus areas for an intelligent organization - focus on providing agility and scale by allowing employees to do more with less through process automation. The second aspect focuses on flexibility and employee experience, it’s about anticipating and proactively responding to the user needs, and therefore being able to deliver the best in class experience for our employees, our internal consumers. Lastly, if we look at visibility, how do we shift from just having the data to looking at insights.  How do we reimagine the processes? If I look at an intelligent enterprise, that is really where the organization of the future needs to be.”

Policy decisions for companies will be crucial in the near future, with executives understanding the need for change and flexibility on the same. Tarun Rustagi, CFO, Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd. discussed the importance of said flexibility. “We need to change ourselves and our policies. We need to be Agile. One of the things we encountered as the lockdown was introduced was the unavailability of physical invoices. Therefore, what we did in the beginning was start releasing the payment (up to 80-90%) basis the soft copies received through email, since complete validation of invoice was not possible, the same was treated as advances to suppliers in our books. This was only for a few days as that policy was unsustainable. Another challenge was the GST aspect. You need to have the physical invoice signed by the suppliers to get GST credits and in many cases, other than the big suppliers, you’ll find that companies don’t have a digital signature enabled in their system. Without physical invoices, it becomes virtually impossible to get GST credit. We started talking to suppliers about them shifting to a digital invoice system, and in parallel started working on changes in our internal policies. We enabled our process to accept a digital invoice over a physical one. This move saved a lot of costs, such as courier, printing, handholding and saw an overall reduction in time consumption for the process. With new technologies coming in, the challenge is to implement these technologies without compromising on the quality of work or the integrity of our own processes, therefore we quickly adapted to these new environment and policy changes."

Gourav Chaturvedi, CFO, National Engineering Industries elucidated on the importance of being efficient with costs, taking a close look at each expense incurred and evaluating it’s necessity to the company. “The situation is not under our control. But this is not new, as people in the industry can attest to the fact that the market is never in our control. You can only influence it to a certain extent. The biggest concern is how to be efficient with our costs. The whole idea was to create variability in expenses, and not go based on fixed costs. In the past, there would be expenses that would fall through the cracks without being looked at. But, now we have a combing operation for all of these expenses and the entire company is looking at each and every element of cost, starting at zero, looking at what is needed and what isn’t. Even the minutest of costs are being scrutinised to try and reduce unnecessary spend. It’s not easy, but, that’s not a choice. We have to develop systems around that & embrace it.”

Raghavendran Swaminathan, CFO, Wipro Enterprise discussed the importance of zero-budgeting in today’s market. “Once the lockdown happened, our focus was on resuming operations for essential products and others. Within the first week of lockdown, we were focused on  getting the business back to normal with regards to supply chains and other factors. On the B2C and B2B  side, we created products from a pandemic standpoint which helps consumers. The questions CFOs should be asking themselves even during this time is how they can really grow.  Managing costs is a culture issue. It does not take much to understand where the costs are. If an organization  looked at costs judiciously before the pandemic and the company had a frugal  cultural , that culture will help them during the pandemic. The obvious costs will be reduced such as travel, rentals, consolidation etc where possible . When you look at a zero-cost budgeting model, you need to look at the cost drivers rather than cost itself. This is where opportunities can arise since business models/ channels will change, like more E-commerce, or technology disrupting distributor aggregation, or factories implementing more automation technology . The question concerning the ‘right costs’ i.e. cost incurred for driving growth needs to be asked constantly. Use that filter to right size the costs and eliminate redundancies through cost actions and technology.

Kailash Baheti, CFO, Magma FinCorp discussed the role technology will play for business to thrive in the new normal. “There is so much more that the CFOs and CIOs are doing together now. There has been a buzz around the technology reforms over the last 4-5 years, such as borrowers getting loan approvals in 60 seconds. The option of meeting customers in person is a luxury now. We cannot go to the customer to resolve their issues; we must help them from a distance. That’s where the real push has been over this period. Everyone is working from home, interacting with customers through digital mediums to help them as much as possible; this shift is a positive change that has come about due to the pandemic. 

Our colleagues are easily available today, if we need to speak with them regarding important company decisions. With everyone at home, meetings are arranged promptly and at short notice. This change is here to stay, and we are getting used to taking decisions quickly. Everyone responsible for the ultimate finance factor of the company (cash reserve, profitability, liquidity) has become used to making quicker decisions. With such improvement in the new normal, CFOs and CIOs will see far greater interaction with each other.”

Ashish Damani, CFO & COO, Bharat Financial Inclusion discussed the challenges the micro-financing industry faced with technology, and how they are overcoming it. “Technology is key, and digital is the new trend right now. At BFIL we are focussing on the latter now to stay in constant touch with our customers. Maintaining regular connect is very crucial in our business. We have used technology consistently to improve processes, cut down on TAT’s. It is difficult when your core customer base is in rural India, especially from a technology standpoint,  it requires you to bring the customer to a level where they can understand and self-service. While this has been challenging, we see the result of this process as a success-in-progress. Our processes have been moved to digital which has led to their expeditious execution.” 

The road ahead is new for companies. They may not see overnight success, but with a willingness to grow, change and adapt, businesses will be able to conquer this current scenario, and insulate themselves even better for the upcoming new normal, so that they can not only survive, but truly thrive. 

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