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Spearheading Decision Making In Uncertain Times

The role of the CFO is to be able to take stock of all factors on a very agile basis, one has to be quite nimble in reacting and making sure that all flanks are being covered while taking decisions.

Photo Credit : Arranged


Sandeep Batra

A phenomenal leader with a wealth of experience expanding over 33 years in the world of finance, Sandeep Batra, CFO at Crompton Greaves Consumer Electricals, shared his insights on the vast assortment of challenges and opportunities present in the post-pandemic world.

Speaking exclusively to BW Businessworld, Batra discussed in length a wide range of topics, including the premiumization taking place in the Indian market, countering raging inflation, leveraging technology, the focus on sustainability, and future organisational goals.

The onset of premiumization in the Indian market:

There has been a tsunami of change in the consumer product business in the past couple of years, which has given birth to several new challenges as well as opportunities. Batra said, "There is premiumization taking place across the industry, as the Indian consumer in today’s time is far more discerning."

Batra gave an interesting example of ceiling fans to prove his comment on premiumization.

He underlined, "Not too long ago, just white and brown coloured fans used to sell across India. In today’s environment, there is a plethora of variants and functionalities that the product offers, and all of these are driven by consumer needs. In the past couple of years, fans with several different attributes, such as less noisy fans, voice-operated fans, or remote-controlled fans, have been made. It is very heartening to see that companies are spending time, effort, and money trying to understand the consumer by conducting surveys and research."

The idea of premiumization is not about selling the same product at a higher price to the consumers, as consumers are not naive and are always looking for value.

Batra pointed out, "It is the job of the manufacturer to identify the pain-point of the consumer, and use its resources, including R&D, accordingly, and provide a differentiated offering to the consumer at a price which is not exorbitant."

Also, in the post-pandemic period, the relevance of the kitchen has increased manifold. Batra strongly suggested, "It is no longer the workplace of just a single family member."

"Kitchen is now not just about cooking food, it is a place where several factors, including convenience, speed, and automation, count too. This provides room for a large number of appliances to provide comfort and convenience. Crompton is putting in a significant amount of resources in the kitchen space," he added.

Countering the raging inflation:

Batra highlighted that he has never seen the kind of commodity-cost headwinds they are witnessing now. He said, "In the past 15–16 months, there has been runaway inflation. Our industry is used to taking 2-3 per cent price rise each year, but thanks to the pandemic, the prices have now increased manifold. We do not fully understand the implications of that on consumers, because there is no playbook for that, it has never been done." 

Batra pointed out that the price rise has had a negative impact on the capital employed by his trade partners.

Batra remarked, "Now, we have the biggest joker in the pack—the Russian Ukraine war. Oil prices have gone through the roof, and no one knows when it will stop, and in what form and shape this disruption will unravel,"

The role of the CFO is to be able to take stock of all factors on a very agile basis. He commented, "The worksheet one might have made a week back is history. Yesterday, steel might have gone up by 15 per cent, so one has to be quite nimble in reacting and making sure that all flanks are being covered while taking decisions."

Evolving challenges in the post-pandemic period:

Transformation is required in the usage of data and information to enable faster decision-making capabilities. Batra mentioned, "One cannot wait for all the information to be put on the table before one makes a decision. The amount of information available should be enough such that you can process and make sense of it."

Batra doubled down on the need for organisations to process the available data. He said, "Companies have got a humongous amount of data. The challenge is to convert it into insights quickly."

Another challenge which Batra focused on is the "Great Resignation" as people are switching jobs like never before. Batra underlined, "There is a huge acceleration in the number of people leaving an organisation. As a result, the knowledge residing with those people also leave. If today I have knowledge and tomorrow if I am not there, how do I make sure that the knowledge gets enshrined into the corporation? The only way in which this is possible is through the usage of technologies."

Butterfly wings to help Crompton take off:

Batra also discussed Crompton Greaves acquiring stakes in Butterfly. He said, "We saw their business transform into a pure consumer product brand, and we entered into talks with them in the second half of 2021. We were able to do the entire transaction within 5 months, and it was a fantastic addition to the Crompton family."

Batra highlighted the reason why they were interested in acquiring Butterfly. He said, "The kind of market position they had in their chosen categories and their chosen geographies. It gave us the optimism that we can certainly expand geographically, especially in the south, where they are a major player and could help us in expanding pan India."

"Of course, it will not be an easy task, but with our distribution, experience, and market presence, it can certainly be done," he added.

Batra underlined that the biggest opportunity which Butterfly provided them was a strong entry into the kitchen segment. He said, "In the kitchen, we had only one product- the mixer grinder, with a low market share pan-India, Butterfly helped us leapfrog by 4-5 years due to the three categories where they are exceptionally strong, including pressure cookers, cooktops, and mixer grinders, all of which are a key part of what gets used in a kitchen." 

"Once you have that foothold, it is easily possible to expand that portfolio into bigger appliances and a wider range of products. This allows us to own the kitchen," he added.

Leveraging digital technology:

Batra emphasised that, unlike public opinion, the implementation of SAP was seamless and without any disruption. He commented, "Any changes in the on-going processes have to be justified by a business case. As a result, benefits from technology were very clearly articulated, and interventions were relevant. Once we got SAP as the core in place, we started building ecosystems around that. Imagine SAP as the sun, and then we created concentric circles around SAP by extending SAP applications."

In the journey to digitalise itself, Batra called Crompton the best in class. He mentioned, "100 per cent of our legal and company secretary functions are digital, involving zero paperwork."

Batra suggested that they are trying to harness the benefits of technology. He said, "We are working on using technology to improve the customer experience in deciding the product, enabling him to get his demand satisfied in partnership with traditional retail, and having it delivered to their homes."

The customer gets the same experience, with the same number of clicks, but a larger ecosystem is at play. Batra said, "The key is to get a cost-effective solution, and there is no point in having something that does not create value for either party."

Management of the supply chain is also equally important, which involves a lot of planning, and a lot of invisible value loss happens at this stage for companies. Batra commented, "How can the back end supply chain become far more nimble and agile such that one does cater to all the customer demands and at the same time does not have any leakage due to too much inventory? This is something we are focussing on."

Sustainability, the next frontier:

Batra believes sustainability is the next frontier where organisations will be measured. He remarked, "Sustainability is good for the business, and that attitude has to come from the top and run through the entire organisation. We are fortunate to have an enlightened board, as many of the board members in their personal capacity are champions of this subject."

Crompton is one of the few companies to have a separate and dedicated ESG committee. Batra commented, "We have decided to set a 3-year target on sustainability. We have engaged with a top-notch firm to consult with us and look at themes which are relevant to our industry, connect with the key stakeholders, and draw the milestones, and roadmap for Crompton to deliver on. We started this journey 5-6 months back, and I am personally leading it because I have a passionate interest in the subject."

Distinguish yourself from the pack:  

Batra remarked that they have a few strategic objectives set for the upcoming years. He said, "In the next few years, we will further strengthen our innovation pipeline where everybody thinks consumer first, understands the pain point of the consumer, and uses the capability that they have built-in manufacturing, R&D, and marketing insights to find solutions for consumers."

"To truly distinguish from the pack, one needs to offer a meaningful, distinct product proposition to the consumer," he added. 

Batra also emphasised the use of technology to further propel a company. He commented, "My view is to focus on strengthening the brand, making sure to offer the consumer truly differentiated products that address the unmet needs of the customers. One needs technology to weave it all together, be it knowledge retention, employee retention, or employee engagement."