CFO India - August 2012 by Bhupinder Sharma

CFO PROFiLE r. dharmarajan, cFo, Gvr inFra p. 30

i think trivikram kamath, kotak securities p. 10

On WhEELS renault duster p. 54

volume 03 issue 08 75 auGust 2012

3rd Annual CFO Leadership Conclave Special

The 2015 CFO A Juggler Par Excellence

key future challenges for CFos and how they can be addressed

a 9.9 media publication

CFO august | 2012

I THINK 10 trivikram kamath

Inside

14 COVer story

The EVP & Head - Operations, Finance and Technology at Kotak Securities talks about the worrying trend of corruption as a way of life and why CFOs will have to start learning afresh, to deal with new taxation laws and regulations

in practice 34 Every Company is a Potential Cyber risk Victim Security breaches are so inevitable that a major part of any company’s strategy planning is not only securing current operations, but also building a defense against future attacks

INSIGHT 41 developing global leaders Companies must groom leaders for global markets. Dispelling five common myths about globalisation is a good way to start

THE 2015 CFO: A JUGGLER PAR EXCELLENCE New laws and regulations, fast moving technological innovations, an uncertain global economy and an ever increasing job portfolio – the CFO will need to face many hurdles in the days ahead. Top CFOs tell us about key challenges they expect and how one can prepare to meet them

CFO PROFILE

event

R Dharamarajan

46 preparing for tomorrow

From a passionate cricketer to the CFO of an infrastructure company planning an IPO, R Dharmarajan talks about his journery so far and his vision for the future

The 3rd Annual CFO Leadership Conclave saw 60 of the country’s leading CFOs and other delegates engrossed in debates and identifying challenges that lie ahead

Cfo lounge 54 ON WHEELS | Renault duster 57 M&E | vinoteca by sula

leader’s world 50 thriving when

others are surviving

Positive thinking, setting achievable goals, counting the blessings instead of deliberating over problems can all help reduce stress and make you more successful as a leader, says David Lim CFO PROFiLE

r. dharmaraj an, cFo, Gvr inFra p. 30

i think trivikram kamath, kotak securities

p. 10

On WhEELS renault duster

58 TRAVEL | JAISALMER

Regulars 04 LETTERS TO THE EDITOR 60 NOT JUST THE LAST WORD

volume 03 issue 08 75

p. 54

CFo I ndIa

auGust

2012

3rd Annual CFO Leadership Conclave Special CFo PRoFIle: R. dhaRmaRajan

Cover design atul deshmukh

30 lounge: Renault dusteR 54 I thInk: tRIvIkRam

The 2015 CF O A

kamath

Juggler Par Excellenc e key future

CFos and challenges for how they addressed can be

volume

AD index 03

Issue

a 9. 9 media

publication

Bharti Airtel IFC | Sodexo 03 | SBI Capital 05 | Finacial Executive IBC | India Factoring BC

from the

managing editor

dhiman chattopadhyay dhiman.c@9dot9.in

The 2015 CFO:

What lies ahead?

The job of the Chief Financial Officer was never an easy one and going forward it will only get more complex. Areas of the business which the CFO merely considered peripheral to his role such as IT services, human capital management and corporate ethics, are now very much part of his portfolio. Over 50 per cent of Chief Information Officers in India still report to their CFOs. The finance head is also more involved in risk mitigation, governance, compliance, ethics, legal and even HR matters. As newer regulations become reality in India and new tax laws are enacted, there are suggestions that the CFO should go ‘back to school’ to re-learn how business is to be done. And as more Indian organisations get listed on the stock exchanges, CFOs have to contend with shareholder demands. Managing investor relations therefore will be a key skill for them to acquire. Clearly the CFO of the future will have his hands full juggling many hats at the same time. Of course India Inc has many stalwart CFOs and many of them may be already well-equipped to deal with these challenges. Yet the need for re-training and ‘refresher courses’, newer ideas and greater collaboration between financial leaders can’t be over-emphasised if all C-suite executives are to work together to take India Inc to greater heights in the years to come. Keeping in mind the importance of the issues at hand, CFO India invited over 50 of India’s leading CFOs to our 3rd Annual CFO Leadership Conclave this year, to identify the challenges that lay ahead and discuss ways to deal with them. In our cover feature, (The 2015 CFO: A juggler par excellence) we bring you excerpts of some key sessions where speakers identified important challenges before the finance fraternity. Of course not every area could be covered and every angle debated, even at the conclave. Some of the issues discussed find space in this month’s cover feature while others will be featured in subsequent issues. The cover package is merely the appetizer that we hope will take you to our website www.cfoinstitute.com where you can listen to the audio files of every session. I hope the articles encourage you to think afresh and look forward to hearing from you.

Managing Director: Dr. Pramath Raj Sinha Editorial EDITOR: Anuradha Das Mathur managing editor: Dhiman Chattopadhyay Assistant Editor: Purva Khole SUB EDITOR: Radhika Haswani Design Senior Creative Director: Jayan K Narayanan Art Director: Anil VK Associate Art Director: Atul Deshmukh senior Visualiser: Manav Sachdev Visualisers: Prasanth TR, Anil T & Shokeen Saifi Senior Designers: Sristi Maurya & NV Baiju DesignerS: Suneesh K, Shigil N, Charu Dwivedi Raj Verma, Peterson, Midhun Mohan & Prameesh Purushothaman C chief photographer: Subhojit Paul SENIOR photographer: Jiten Gandhi The CFO Institute Executive Director: Deepak Garg Assistant Brand Manager: Nisha Anand ASSISTANT MANAGER: Dr Leena Narain Assistant Manager - Corporate Initiatives: Deepika Sharma Sales & Marketing Senior VP SALES & MARKETINg: Krishna Kumar KG (09810206034) ASSISTANT REGIONAL manager (sales): Rajesh Kandari (+91-9811140424) National Manager (Events & Special Projects): Mahantesh Godi (+91-9680436623) Assistant Brand Manager: Arpita Ganguli South: Vinodh Kaliappan (+91-9740714817) West: Sachin N Mhashilkar (+91-9920348755) For any customer queries and assistance please contact: help@9dot9.in Production & Logistics Senior General Manager (Operations): Shivshankar Hiremath Manager Operations: Rakesh Upadhyay Asst. Manager - Logistics: Vijay Menon Executive Logistics: Nilesh Shiravadekar Assistant Production manager: Vilas Mhatre Logistics: MP Singh, Mohamed Ansari officE addrEss Nine Dot Nine Interactive Pvt Ltd Office No. B201-B202, Arjun Centre B Wing, Station Road, Govandi (East), Mumbai 400088 INDIA. Published, Printed and Owned by Nine Dot Nine Interactive Pvt Ltd. Published and printed on their behalf by Kanak Ghosh. Published at Bungalow No. 725, Sector - 1, Shirvane, Nerul, Navi Mumbai - 400706 Printed at Tara Art Printers Pvt ltd., A-46-47, Sector-5 NOIDA (U.P.) 201301 All rights reserved: Reproduction in whole or in part without written permission from Nine Dot Nine Interactive Pvt Ltd is prohibited. subscriber services: Call +91-120-4010999 Visit CFO India’s Website www.cfo-india.in

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Letters

CFO INDIA

august 2012

LOUNGE: MERCEDES BENZ 58 I THINK: S.N. MUKHERJEE 10 VOLUME

IN PRACTICE LEADING WITH PERSONAL MASTERY P. 28

ON WHEELS MERCEDES BENZ C63 AMG P. 58

VOLUME 03 ISSUE 07 75 JULY 2012

Managing a

Responsible Business: Challenges & Solutions Andrew Harding

Global MD, CIMA on how CFOs in India can tackle ethical issues better.

Andrew Harding CIMA’s Global MD

GLOBAL SURVEY ON BUSINESS ETHICS

ISSUE

08.12

CFO PROFILE: JOYDEEP NAG 24

The 3rd CFO Leadership Conclave was a great experience for me. One of the major issues with such conferences is the repetitiveness of the content over the days which then stops adding value. I am glad that this wasn’t the case with this conference. The speakers from the non-CFO world too generated a lot of interest and lateral thinking. Also I liked the idea of unconferencing. — Hari Mundra, Advisor, Wockhardt, Mumbai

CFO PROFILE JOYDEEP NAG, CFO, GE HEALTHCARE P. 24

CFO INDIA

A great platform for CFOs

A 9.9 MEDIA PUBLICATION

Your voice can make a change: Share your viewpoint on what’s happening in the community and your feedback on the magazine at editor@cfo-india.in

A different perspective

THANK YOU

Thanks to the entire 9.9 Media team for the warm hospitality shown to all of us at Cochin. Through the conclave, we got an opportunity to meet and interact with some truly remarkable CFOs and get an insight into their perspective and business views. I especially appreciated the ‘unconferencing’ format – it was very interesting to sit at one of the tables and listen to the CFOs in an animated discussion. The insights from CFOs on customers were particularly revealing to me as a marketer. — Kanika Bakshi, Oracle, Delhi

I would like to thank CFO India for inviting me to speak at this wonderful event. The event was clearly of a much larger scale compared to last year. I enjoyed my interactions, especially the informal ones with senior finance professionals across various industries and backgrounds. I look forward to being part of future conclaves and other events. — Sathya Kalyanasundaram, Director - Finance & Operations, Texas Instruments India, Bangalore

WELL DONE! The experience in Kochi (at the 3rd CFO Conclave) was very good and I found the discussions useful and relevant. I would like to congratulate CFO India for the efforts that went behind this event. My sincere appreciation to the entire team for putting up a great show! — S. Varadarajan, ED & CFO, V.A Tech Wabag, Chennai

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ADDING VALUE The CFO Conclave at Kochi genuinely helped me add value both at the professional as well as on a personal level. The topics chosen were excellent and so were the speakers. Having been associated with CFO Institute for almost four years now, I see great value addition to the CFO community through such events. The focus on technology at the conclave was useful and a great learning experience. — Bhavin Ashar, CFO, Perrigo, Mumbai

08.12 BUZZ

Vaccines work better if you sleep longer

An exhaustive study has found what many of us already knew or suspected – a good night’s sleep is vital not only for sound health but also for vaccines to work effectively. C-suite executives, who often work 12 hours a day and sleep less than six hours, take note! Apparently sleep deprived people or those who slept less than the prescribed eight hours everyday, show a decidedly slower reaction to vaccines and sometimes the vaccines did not have any effect at all on such people. “With the emergence of longer working hours, and the rise in the use of technology, chronic sleep deprivation has become a way of life for many,” said Aric Prather, clinical health psychologist at the 6

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University of California – San Francisco, who led the study, while at the Pittsburgh University. “These findings should help raise awareness in the public health community about the clear connection between sleep and health,” Prather was quoted as saying in the journal SLEEP. To explore whether sleep duration, sleep efficiency, and sleep quality – assessed at home and not in a controlled sleep lab – would impact immunity to infection, researchers investigated the antibody in response to Hepatitis B vaccinations on adults in good health. Antibodies are produced by the immune system to identify and neutralise foreign objects such as viruses and pathogens. The study involved 125 people (70 women, 55 men) aged between 40 and 60 years. All were non-smokers in relatively good health, and all lived in Pennsylvania. The researchers found that people who slept fewer than six hours on average per night were far less likely to mount antibody responses to the vaccine and thus were far more likely (11.5 times) to be unprotected by the vaccine than people, who slept more than seven hours on an average.

What’s AROUND ZONE CFO Book: Sunil Alimchandani �� Pg 08 Jargon Decoded: Boil the ocean �� Pg 08 CFO Movements...................................................Pg 09 Uncle Sam on hiring spree ��Pg 09

THE CFO POLL result

05% Yes

15% Maybe

Do you think Barack Obama’s speech urging India to step up reforms will re-energise the govt?

80% No

current POLL question

Is S&P’s downgrading of India’s growth estimate to 5.5% for the coming year, a fair call? Vote now at www.cfoinstitute.com/poll

SCIENCE

‘Curiosity’: Its real job in Mars RICH LIST

Ortega overtakes Buffet Amancio Ortega, the septuagenarian Spaniard who founded retailer Inditex, has bumped Warren Buffett from his perch as the world’s third-richest person, reports Bloomberg. The 76-year-old tycoon’s fortune rose $1.6 billion to $46.6 billion, according to the Bloomberg Billionaires Index, as shares of Inditex gained 3.8 per cent to close at a record. This places the owner of the Zara clothing chain above the Berkshire Hathaway Chairman, who has a net worth of $45.7 billion and had ranked No. 3 on the index since its inception March 5, 2012. Ortega’s wealth has surged 32 per cent — $11.4 billion — this year amid a market rout in his native Spain, where policy makers are resisting pressure to formally request aid from the European Central Bank. It Spain, unemployment currently hovers above 20 per cent.

A multi-billion dollar gamble, a most scary landing and possibly learning whether Mars once could have supported life — briefly, that’s what’s at stake in NASA’s Mars Curiosity mission, which touched down on Mars in early August. As reports suggest, Mars is a difficult place to get to — only about a third of the 44 missions there have succeeded. Curiosity is the most ambitious and complex Mars mission ever conceived. only six of more than a dozen spacecraft that have reached Mars actually landed successfully and completed their missions. Curiosity carries 10 science instruments with a total mass 15 times as large as the science payloads on the Mars rovers Spirit and Opportunity, according to NASA. Some of the tools are the first of their kind on Mars, such as a laser-firing instrument for checking elemental composition of rocks from a distance. The rover will use a drill and scoop at the end of its robotic arm to gather soil and powdered samples of rock interiors, then sieve and parcel out these samples into analytical laboratory instruments inside the rover, NASA said. The Mars Science Laboratory, the formal name of the mission deploying the Curiosity rover, was launched from Cape Canaveral in Florida on November 26, 2011. After Curiosity, the only planned US mission to Mars is an atmospheric orbiter meant to launch next year. au g u s t 2 0 1 2

CFO india

O-ZONE cfobook

JARGON BUSTER

THE PHRASE: Boil the Ocean

Sunil Alimchandani Wall

Info

Boxes

What’s on your mind? Attach

Share Sunil Alimchandani has joined HR College of Commerce and Economics Alumni Group August 19 at 18.35 · 4 people commented · 2 people like this

Personal

Sunil Alimchandani Managing investor relations is crucial to success of an organisation August 13 at 22.01 · Comment · 23 people

Z odiac: NA Views: Liberal

like this

WORK

Sunil Alimchandani Hates getting up at the crack of dawn to catch a flight

Group Senior Vice President, Finance, Network18 Media & Investments Limited. 2000 - present

August 11, at 18.05 · Comment · 14 people like this

I Read... N.A.

PAST Over 20 years in finance with stints at Godrej & Boyce, Coca Cola India and Blow Plast

I Listen... Old Hindi film music 2 comments · 4 people like this

EDUCATION

Recent activity Sunil Alimchandani likes Network18, CFO India and 1 other 03 VOLUME 07 ISSUE

LE CFO, 24 PROFI CFO P NAG, P. JOYDEE HCARE GE HEALT

ICE P. IN PRACT G WITH RY LEADINNAL MASTE PERSO

LS C63 AMG ON WHEE DES BENZ MERCE 28

JULY

2012

P. 58

CFO IND IA

ing a Manag nsible : Respuosiness B ges &

CFO PROFILE: JOYDEEP NAG 24 ES BENZ : MERCED LOUNGE

St Xavier’s School HR College of Commerce Mumbai University Cost & Management Accountancy from ICWAI

Chall ions Solut Network18, CFO India and Syndicated Loans Group I THINK:

ing ew Hard Andr l MD, CIMA

S.N. MUKHER

India Globa CFOs in l on how ethica r. can tackle bette EY issues AL SURV S

Harding AndrewGlobal MD CIMA’s

JEE 10

May 18 at 11.55 · Comments · 2 people Like this GLOB ESS ETHIC ON BUSIN

9 MEDIA A 9.

PUBLICATI

VOLUME

03 ISSUE

NOSTALGIA

Kodak patents up for grabs Eastman Kodak, which is planning to auction 1,100 digital patents, have received two big bids from software giants Apple and Google. Opening bids for the digital patents came in around $150m to $250m, far below the $2.6bn the company said they could be worth, an early sign the bankruptcy-court auction may not leave much cash for the firm after creditors are paid off. While Apple has teamed up with Microsoft and patent aggregation firm Intellectual Ventures Management, Google’s consortium includes patent aggregation firm RPX, Samsung Electronics, LG Electronics and HTC, reports the Financial News website efinancialnews.com. Kodak filed for Chapter 11 protection in January 2012 after failing to keep up as consumers and rivals shifted to digital photography. 8

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THE MEANING This means to waste time. The thinking here, we suppose, is that boiling the ocean would take a long time. It would also take a long time to fly to Jupiter, but we don’t say that. THE USAGE If the boss tells you “Are you guys boiling the ocean? Get cracking”, don’t stare with your eyes popping out. She simply expects you to stop wasting time.

O-ZONE

PEOPLE movement TECH

THE MILLION YEAR DISK A team of European scientists have made a hard disk from sapphire, which it claims will last one million years. The project was born when nuclear waste repositories realised that they needed to store records of where they had buried waste not just in the near-future, but for thousands of years, an US website reports. At present, there is no digital format that can last that long. This is why a team from French waste management agency ANDRA has commissioned a sapphire HDD in which information is

engraved using platinum. Made from two thin disks of industrial sapphire, the drive measures about 20 centimeters across. According to Science magazine, the prototype costs 25,000 euros. Data is etched in platinum on one side of one of the disks. The other is placed on top to form an ‘information sandwich’. The two disks are then molecularly fused together. The ultimate HDD was immersed in acid to test its durability and to simulate aging. Researchers believe it will survive at least one million years.

JOBS

Uncle Sam on hiring spree U.S. job openings rose to a four-year high in June, reports Reuters, but a slowdown in hiring underscored recent weakness in the labour market that has been blamed on an uncertain economic outlook. Job openings rose by 105,000 to 3.76 million in June, the highest since July 2008, the Labour Department said in its monthly “Job Openings and Labor Turnover Survey” report in mid August. But hires fell by 100,000 from May. Economists said worries of deep government spending cuts and higher taxes scheduled to kick in at the start of 2013 and Europe’s on-going debt crisis were making companies hesitant to take on new workers. There are fears that politicians in Washington will be unable to avoid the socalled fiscal cliff, in a repeat of last year’s debt ceiling debacle, which cost the country its cherished AAA credit rating from Standard and Poor’s. “Hiring actually slowed in June, an indication that firms may be willing to leave some jobs unfilled until the uncertainty of the election and the fiscal cliff are clarified,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “A moderation in terminations supports that conclusion.” Layoffs in June fell by 149,000 to 1.81 million, coming mostly from the government side.

Birla Corp. gets new CFO Birla Corporation Ltd. has informed BSE that the Board of Directors, on recommendation of the Audit Committee at its Meeting held on July 28, 2012, has appointed Aditya Saraogi as the Chief Financial Officer. Girish Sharma has been now appointed at the Sr Vice President (Indirect Taxes) and Company Secretary as the Compliance Officer.

KKR appoints India Director Private equity major Kohlberg Kravis Roberts (KKR) has appointed Akhil Puri as India director for KKR Capstone. Puri, earlier with TPG Capital, will lead KKR Capstone’s engagements with its portfolio companies in India, a company press release said.

Polaris board approves CFO hire Polaris Financial Technology Ltd has informed BSE that the Board of Directors of the Company has approved the appointment of Natarajan Narayanasamy as Chief Financial Officer and the Compliance Officer of the Company on July 24, 2012.

HDFC Life CFO elevated to Board Vibha Padalkar, CFO, HDFC Standard Life, has been elevated rto the Board of the company and has been re-designated as the Executive Director and Chief Finance Officer.

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CFO india

cfo

i think

Facts & Trivia EDUCATION: B.Com from Sydenham

College, Mumbai QUALIFICATIONS: Member ICAI and ICWAI LAST JOB: COO, Transaction Services

Division, IL&FS CAREER: CFO at Orix Auto & Business Solutions; VP, Equity Markets at IL&FS

THE OLD SAYING that nothing is constant except change is the theme of the script which is playing out before us. The CFO’s role and position has and is undergoing a change and is one which has assumed immense importance over the last few years and will continue to do so in the future. Almost anything, which does not fall in a particular functional area, lands up in the CFO’s lap. There is also a trend of the CFO being appointed CEO. However while this is challenging and encouraging for me as a CFO, there are a few factors both at a Macro level as well as industry level which do keep me on my toes and often a nagging worry at the back of the mind. To my mind the single most worrying factor is the growing divide between the haves and have nots, especially, where a larger section of the have nots find it difficult to maintain a roof over their heads and have two 10

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TRIVIKRAM KAMATH The EVP & Head- Operations, Finance & Technology at Kotak Securities talks about the worrying trend of acceptance of corruption as a way of life and the challenge of ‘relearning’ for CFOs as new taxation laws and regulations come in

meals a day. This imbalance could lead to a high level of unrest spelling turbulent times for a nation. It is also leading to a higher number of people in the initial years of their working

As a nation we seem to have scant respect for discipline and a need to abide by the law coupled with a sense of indifference and tolerance for wrong doing and wrong doers

career resorting to means, which can be generically be described as unethical, to increase their wealth.

CORRUPTION AS A WAY OF LIFE As a nation we seem to have scant respect for discipline and a need to abide by the law coupled with a sense of indifference and tolerance for wrong doing and wrong doers. The focus on corruption, scams and possible involvement of politicians and bureaucrats coupled with the UPA struggling to muster support on issues of national importance has lead to a virtual standstill on developmental policies. For a country whose economy needs to grow, we require the 4 I’s

• Investment • Innovation • Increment point (where we are today)

Jithen Gandhi

â&#x20AC;˘ Institution (framework building) Of the above the only factor in our favour is Increment point, as we are yet a developing economy.

I donâ&#x20AC;&#x2122;t see any tangible steps taken by the government in working towards the other three Is. And this is a big worry for CFOs as well as all C-suite executives.

POLICY PARALYSIS In the absence on the above, it will be difficult for any business to have a long term sustainable model as demand for its products will always be a question. au g u s t 2 0 1 2

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cfo

i think financial services, to which I belong. These have come at a cost and while necessary not sufficient in bringing back investor confidence. Events unfolding since 2007 in the US, Europe, India and other parts of the globe have two underlying factors – Greed and a Breach of Trust. What steps are being taken to mend this? Again with reference to my industry, unless there is a vibrant investor base who are active in the markets, revenues and performance is under stress.

POINTS TO PONDER

At the corporate level changes in corporate, accounting and tax laws will result in unlearning and relearning for many of us. How do we transition through this period? Having read the situation, there has been a huge demand for USD leading to sharp erosion in INR. While this is positive for exporters, being net importers, it does not augur well for our country. This, coupled with volatility is affecting all of us in our day to day lives and corporate performance. I remember reading an article wherein a study carried out found the common factors among globally successful and long surviving companies to be as:

• Sensitiveness to Environment (environment is used in a wider sense) 12

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• Cohesiveness as a company / group • Adaptability / tolerance to innovation • Financial conservatism In the backdrop of the larger macro environment, the CFO and companies have a challenge in their aspirations to be among the longer surviving and successful companies.

COMPLIANCE AND REGULATIONS Compliance and regulatory oversight has increased and particularly in the

At the corporate level changes in corporate, accounting and tax laws will result in unlearning and relearning for many of us. How do we transition through this period? How do we ensure that all employees of the corporate are updated on these changes which may have a bearing on the commercials and how we run our business? And how can we be on top of the myriad changes in technology, social dynamics, media & communication taking place at such a rapid pace? I and all other CFOs will continue doing our bit in pegging away to manoeuvre their corporates through these choppy waters. But do we see the shore? How can we influence policy makers, investors, customers and regulators? How do we rally our employees to work as a cohesive crew to steer the ship through this never ending storm? Although we live in a world which is changing and there is uncertainty I would like end by quoting R I Fitzhenry, an American painter famous for his style called luminism, “Uncertainty and mystery are energies of life. Don’t let them scare you unduly, for they keep boredom at bay and spark creativity.”

Views expressed here are personal and are not in any way reflective of the views of Kotak Securities Limited.

AM I READY TO BE A CIO? FIND OUT NOW! APPLY FOR INDIA’s FUTURE CIOs

2012 NEXT100 is an annual awards program instituted by IT NEXT magazine to identify experienced IT Managers who have the skills, talent and spirit to make to the top spot. Supported and endorsed by the CIOs and IT heads of India’s companies, this prestigious award is renowned for its objective selection process. TO APPLY FOR THE NEXT100 AWARD, START YOUR APPLICATION BY REGISTERING AT WWW.NEXT100.IN & FILLING OUT THE FORM. THERE IS NO APPLICATION FEE WHATSOVER.

Once you complete and submit the form, you will need to take a series of tests to assess your techno-commercial and management skills. The final selection of the NEXT100 award recipients will be made by a prestigious committee of technology and business leaders who will interview selected applicants, and evaluate their career accomplishments, professional expertise, skills and potential to be a CIO. All NEXT100 award winners will be felicitated at a gala event with a trophy and certificate, and will be profiled in a special edition book that is sent to India’s top 1000 CIOs.

PRINCIPAL PARTNER

NEXT100 BOOK PARTNER

TECHNOLOGY PARTNER

EVENT BY

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OF THE PAST NEXT100 AWARD WINNERS HAVE ALREADY BECOME CIOS, OR HAVE BEEN PROMOTED TO POSITIONS OF GREATER RESPONSIBILITY

Apply for the NEXT100 today—it could change your life. Go to: www.next100.in

cover story

The 2015 CFO

THE 2015 CFO A JUGGLER PAR EXCELLENCE

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cover story

Which technology would be most beneficial for the organisation? Which one would drive efficiency? Is the organisation doing enough to retain skilled manpower especially if the company has already invested time and money on them? How to tackle the new age investor who is more aware than before and who demands a lot beyond just quarterly performance? Is the senior finance team well-versed in new regulations, tax laws and compliance standards that will soon determine the way in which India does business? Dhiman Chattopadhyay

here are so many new areas, that till recently were only of peripheral interest to the CFO, but have now become part of his core job role. And the excitement is just beginning! Clearly the CFO role is becoming far more complex with newer areas beyond core finance being attached to the portfolio every year. This might mean the CFO will have to relearn and ‘unlearn’ where needed, add new skills to his repertoire, expand his knowledge horizon and collaborate with fellow C-suite colleagues wherever needed. In more ways than one, he (or she) would have to be a ‘juggler par

excellence’. In the following pages some of the country’s leading CFOs discuss key challenges before the finance community in the years to come and point out ways to stay on top of the game. This package comprises excerpts from presentations made during CFO India’s 3rd Annual CFO Leadership Conclave that was held recently in Kochi. Of course there were several other sessions at the conclave, which we will cover in subsequent issues. Do visit out website www.cfoinstitute.com for the complete audio versions of all the sessions at this year’s conclave. Till then, turn the page and let us know your thoughts. au g u s t 2 0 1 2

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cover story

The 2015 CFO

New Frontier, Newer Challenges

Uncertainty is the new normal and while the hurdles will be many, the five-pronged challenge of growth through business support, governance & risk, keeping pace with technology, building a sustainable business and understanding Gen-Y â&#x20AC;&#x201C; should be the key focus areas for CFOs Suresh Senapaty

he world around us has never been more uncertain. And this is particularly true when it comes to what a Chief Financial Officer does. The role, the style, the orientation and the skills of the CFO have all undergone a sea change over the past few years. So if the CFO role has changed from that of a controller to a business analyst, his style has become more consultative (instead of inward looking) , orientation more integrative and skills more interdisciplinary. Why do I say we are living in uncertain times? Look anywhere in the world and you will notice lack of political unanimity, high levels of protectionism, nationalism and government regulations, coupled with a short16

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age of differentiated talent.At the same time there is an increasing requirement to differentiate to win in the market place. wwUncertainty therefore is the new normal and with technology shifting at a fast pace, organisations will have to work in a world of constraints. Businesses too will have to rapidly redesign value chains to increase efficiency, reduce consumption and dependence on â&#x20AC;&#x2DC;constrained resourcesâ&#x20AC;&#x2122;. All this, in a high risk environment.

RISK Risk and security I feel are the biggest worries for CFOs. My feeling is that CFOs can ill afford to ignore issues such as lack of trust, and intent. Unless you have really brought about

a transformation in an individual or a community, breach of trust and corruption takes a bigger shape later. Do not ignore the intent...small things take bigger shape at a later date. This is exactly how the Jasmine revolution took place in the political world or how the Satyam scam happened. It starts small, but left unchecked, spirals into a huge problem. So who do we trust? When you run an organisation, you can go judgmentally wrong anytime. You can take a view on a business and investment and you can go wrong, since the very fact that you need to take new steps, innovate and take risks means you are bound to make some mistakes. So in the process of doing right things, you could go wrong sometimes. That is

cover story all right. But breach of trust and malicious intention – are things one should not pardon, however small a matter it is.

PARTICIPATION, DIFFERENTIATION & HUMAN CAPITAL

jiten gandhi

There are three key changes that I think CFOs have to accept quickly. Firstly we have to accept that the amount of support that corporates get from their governments is far far greater in the US or UK than in India. So unless we get a voice and form ourselves into a group that can influence policy, we will not be making any headway. Participation therefore is crucial for the CFO community. Many of us have the ability to influence, but we don’t. The other change that is happening around us is with regard to differentiated market conditions. In the new world, the focus on innovation and intellectual property is far greater. It is no more sectoral or geographical, just some companies that do well and some that do not do well. So we have to plan out our strategy to ensure we are not merely following a successful model someone else created, but a strategy that suits us in the market conditions we find ourselves in. It has to be bespoke. Finally, we are looking at the doubling of the working population in India by 2020. In comparison, retirees will double in US and the population will get much older in Japan. So India has a great advantage going forward. But what are we doing about it today? For every 1 per cent additional GDP growth, India creates employment for about 5 - 6 million people. So if our growth rate goes down from 9 per cent to 5 per cent, it will mean 20 million less jobs will have been created by 2020. The lesson? That we desperately need a talent pool. While we will have a younger population, we may run dry of talent.

EVOLUTION OF THE CFO ROLE @ 2015: THE 5 G’s There are five key areas where the finance role will witness big changes going forward.

1. Growth through Business Support 2. Governance and Risk Management 3. Glocal – Granularity of Growth 4. Gen Y – Changing employee dynamics 5. GRI – Sustainability

Growth through business support CFOs have to help anchor business strategies. Many times we find that our strategies are clear but execution doesn’t happen. This is because CFOs often chat about what they reported

‘‘In the new world, the focus on innovation and intellectual property is far greater. It is no more sectoral or geographical” — Suresh Senapaty ED & CFO, Wipro

and why no one listened. But it is not sufficient to just flag a problem. You have to influence that change and this would require softer skills and harder work. Make sure that each element of the strategy has a cockpit around it: do we have dashboards for each element so that it gets tracked properly? Going forward we will have to analyse and help evolve new business models with dashboards for tracking progress, acknowledge areas of turf and areas of conflict to drive alignment and optimise decision-enabling information flow especially as organisations scale globally. Finally CFOs have to reinvent themselves as innovators to ensure strategic fit and the viability of major innovations.

Governance & risk management Zero tolerance in this area is imperative. As a CFO one will have to be patient and prepared to deal with situations. But at the end of the day you should show zero tolerance to noncompliance in light of the changing nature of regulations (FCPA/Anti Bribery/Dodd Frank). Going forward, CFOs of tomorrow will also have to manage business risks through strong governance frameworks and institution of early warning systems. Focus on treasury risk management – on currencies, commodities, interest rate and liquidity management is also imperative. No longer is it good enough to see if an organisation belongs to a Fortune 100 list. The CFO and his team will have to check the credibility of every customer and constantly evaluate counter-party risks to understand the robustness of eco-system surrounding the business. Add to this the technology risks – evaluating challenges posed by changing technology paradigm. The CFO will have to keep track of technology to see how it is impacting the valuation of a company. Remember, increasingly, technology is becoming an enabler to drive risk management with process for anomaly detection, access au g u s t 2 0 1 2

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cover story controls, contractual compliance, hardware asset sanitisation and analytics to address systemic issues.

Globally Local Given the nationalism and protectionism, it is important to be cognizant of integration related matters. There will be increased level of unemployment in most countries than in the past and there will be social tensions. We have to be aware of this fact. Boundaries are shrinking globally, so it is more important than ever before for a CFO to develop an awareness and knowledge on local laws and regulations.

‘‘All of us would need to manage differentiated talent – hiring, training and retention – since the new generation employees are a very different breed” — Suresh Senapaty ED & CFO, Wipro

Managing inter-cultural sensitivities is also becoming crucial. Integrate the global workforce into the organisation. Whether an American or African or Indian, they should feel they are part of a global organisation. These are things we need to learn and therefore the ability to attract talent through an acquisition is an art we have to fine tune. The CFO of Indian multinational companies will perhaps have to lead the challenge of integrat18

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ing the global workforce into the organisation. Manage diversity in the workforce too. About half the college graduates are women. Where are they in the workforce?

Dealing with Gen-Y This is a challenge that CFOs have already started dealing with, but it will only get more complicated in the years to come. These are very high energy people. They play with new toys and gadgets. They can multi-task and do it well. All of us would need to manage differentiated talent – hiring, training and retention – since the new generation employees are a very different breed. There is a need to understand them, be cognizant of what they want. For instance, the 20-30 age group of employees are riding the wave of social media, so CFOs would do well to use these mediums to pass on CEO views/employee views and use them to reach out to GenY. Also use these media for customer updates, celebrations etc. The dynamics of collaboration and culture building is changing significantly as organisations become large. Multiple projects in every country or one project being handled by people across geographical locations – are all becoming a part of how we will work tomorrow. So social networking platform creation through blogs and editorials will help not just motivate Gen Y employees but also go a long way in retaining talent.

Sustainability The demands from new age stakeholders and shareholders are more geared towards sustainable growth over long term. Sustainability is important as are fair trade practices. The expectations of stakeholders now go beyond quarterly profit. The challenge here for CFOs will be to strike a balance between profit, people and planet. So increasingly we will see the focus on fair trade practices and a reverse supply chain for electronics good disposal and recyclable plastic. At the same time CFOs will have to contend with increased demand for transparency. Be transparent beyond what

is called for by regulators and also report beyond financials on sustainability parameters.

Where we are headed To sum it up, the global environment is changing at a rapid pace and risks associated with business are increasing. Competition is going to be more. Understanding the customer is becoming more complex since they are no longer in one community or one geography. The finance function will be increasingly expected to evolve and lead the transition to the ‘new normal’.We cannot be just a pass-by or an observer letting the CEO run the show. We have to be part of that mainstream and be an enabler. This will not be easy in the light of the complex regulatory environment coupled with increased stakeholder activism. Make sure there are filters. Have trust but also have systems that stop people from giving in to temptation to be corrupt. Clearly technology is going to be a key enabler. Over 60 per cent of CIOs still report to CFOs even in the US and so CFOs will have to be technologically aware. As we go forward therefore, three things will top the list of worries: a) differentiated services, differentiated products and making sure that all strategies are aligned to it. b) Risk levels are also going to go up more as we go forward c) Talent: we will have a large number of people. But enough investment will be required in-house to build talent that is suited to an organisation. Clearly differentiated services and products, dealing with regulatory and external risks and finally, tackling the talent pool will be the three key issues that every organisation and the CFO in particular will have to successfully deal with in order to win in the market place. Mr Suresh Senapaty is Executive Director & CFO, Wipro. The article is based on his talk at CFO India’s 3rd Annual CFO Leadership Conclave held recently. For further details of Mr Senapaty’s as well as other sessions at the conclave, visit www.cfoinstitute.com

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The 2015 CFO LEADERSHIP

CFO Survival Guide for 2015

Differentiating between fact and fiction, learning from mistakes and imbibing critical corporate lessons are essential to succeed in the new world HARI MUNDRA

oving away from the simile or metaphor of juggler, I will begin by discussing where we are today. Does a CFO achieve success by being like the backwaters? Do we become like the tranquility of the backwaters or like the island of excellence or do we become the ocean where we touch everybody’s lives, help everybody to come together? We can also create a tsunami if we so wish. So it really depends on us. When I am at leadership conferences as big as this one, I go back to my days at the IIM campus at Ahmedabad. When I sit there, everything is quiet and everything is right in the world. It’s so peaceful that you think life is also like that, but the moment you step out of the campus – there is absolute chaos. You are trying to protect yourself from being run over or knocked down by someone. In some ways this conference may have a similar effect on all CFOs, because when

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you get out, realities are going to hit you. Therefore unless you appreciate the reality, it will be tough surviving or growing in 2012 or 2015. So let me first begin differentiating fact from fiction.

FACT VS FICTION Fiction 1: Corporate governance and ethics are valued by the capital market and the financiers. CEOs and CFOs worry about corporate reputation. But in reality, investors and stakeholders worry far more about performance and results. For example, the RPG Group used to deal with power cables, telecom cables. Two things determined the growth and popularity of those cables. The first one was target. If you do not have a target, you would not reach there. The second was pricing. Fact: Corporate governance has little bearing on the market cap or bankability compared to what corporate reputation and results have. The practical

expectation is that the company should not get caught. The first thing that we need to know is, that corporate governance has ethics or dynamics. What is the value system? It is reputation. What is reputation? It is the value system, performance and results. Fiction 2: There is a trilemma between corporate performance, compliance and corporate governance. There is no dilemma or trilemma here. The bottom line is performance, and performance of the CFO in adding value to the organisation. If he gets 100 on 100 on corporate governance or in regulations but does not add value to the organisation, he will exit quickly. Fact: Performance is the bottom line. A good CFO must demonstrably contribute to the growth, profitability and competitive edge , transcending all hurdles. Management of costs, funds, capital employed, tax and forex are the key sources of his value addition. Efficient supply chain like receivables and

cover story stocks are important. Every `100 a CFO adds as revenue means he is generating cash. Fiction3: There has been a paradigm shift in the value system due to SOX, Bribery Act and Clause 49. Will it happen? When I see Indian society, I become cynical because we have become immune to corruption. There is absolutely no shame today if you are found to be corrupt. All our leading politicians may come back to power without any shame or problem. Fact: There has been more lip service than a shift. Corruption, criminal

you look at examples such as the recent Kingfisher crisis – the reason it has happened is because of over leveraging. Look at the 2008 crisis, the Euro crisis or the Greek crisis. The seeds of disaster were sown because of debts and over leveraging. So monitoring issues of leveraging is very critical. • Anticipation and adaptability are the recipes for long term success and sustainable profitability. The winning CFO’s foresight is the hindsight of others. He knows that seeds of disaster are often sown in times of success and growth and therefore, his challenge is to future-proof the company. It is critical to look into the future and create a Plan B. • To prepare and prevent are infi-

• Be a master of details; both the devil and innovation lie therein • Do not outsource understanding of ever changing laws and regulations: synthesise and synergise while preparing for the future • Be a Chief Operating Officer from within and a Chief Financial Officer from outside; be a Jack of a lot of trades and a master of your own. • Do not be an island or backwaters. Be an ocean to touch and value add every one with your problem solving skills, and networking • Have courage of conviction and communication. Be prepared to quit when certain lines, cast in stone, are about to be crossed • Stay with a promoter/owner whose

”A good CFO must demonstrably contribute to the growth, profitability and competitive edge, transcending all hurdles. ” — HARI MUNDRA Global Advisor, wockhardt

pressures and political patronage have increased exponentially, and so greed and ambition have and cash economy. CFOs have to contend with penalties of both As CFOs, we have all have to continue with both. If you don’t take recourse to a few corrupt practices, your business may die. Yet if you do not follow all regulations and compliance norms, you are dead as well. That is the biggest challenge now!

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CRITICAL CORPORATE LESSONS • Leadership and leveraging are the two biggest determinants of returns as well as failures. Poor financial leadership and over-leveraging in good times often lead to bankruptcy in bad times. As far as leveraging is concerned, when

nitely better options than to repair and repent. CFOs cannot remain like an island. They must make full use of the safety net of oversight agencies i.e. the internal and external auditors, audit committee, financiers and even RTI. If these groups are with you, you do not have to fight the battle alone.

source of wealth is the market cap, who has long term goals and who is not bold only till he is discovered.

IN CONCLUSION

A GUIDE TO THRIVE AND SURVIVE

When an egg is broken from outside, a life comes to an end. But when the egg breaks from within, a new life begins. Great things and great CFOs always begin from within and do not wait for a knock from outside.

• Be a perceptive macro person • Have a thorough understanding/intuitive feel of the business and its drivers • Understand and track the external and internal environment all the time • Give higher weightage to adaptability and robustness in the business model in order to withstand change, uncertainty and disruptions

Mr Hari Mundra, a former JT MD Essar Oil and currently global advisor to Wockhardt, also teaches at IIM Ahmedabad. The article is based on his talk at CFO India’s 3rd Annual CFO Leadership Conclave held recently. For further details of Mr Mundra’s as well as other sessions at the conclave, visit www.cfoinstitute.com au g u s t 2 0 1 2

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THE GROWTH & PROFIT CHALLENGE

The future is now

The online and e-commerce industry is still in its infancy in India. The challenges of showing profitable growth in this sector are monumental. But the opportunities too are truly exciting BADRI SANJEEVI

ne of the big questions today is around the entire e-commerce and online business segment. Can the almost unreal growth projections associated with it be matched by profitability? Why are companies with relatively low revenues, getting a billion dollar valuation? Why is Facebook or LinkedIn valued at several times their actual turnover figures? In the company I work, for instance, all our businesses are e-businesses and direct to consumer ones. So for us, it is about the number of people who engage with us rather than saying how big our revenue is. My company, the People Group, has 20 million monthly unique visitors across our properties on mobile and internet. Yet are these customer visits or ‘memberships’ being translated into revenue? Not always. In fact, most often, not. So why are we spending so much time on such businesses? We do have 40 to 50 per cent growth y-o-y and this will continue for the next ten years. But what about profitability? Will it happen?

Growth projections The internet industry is tiny in India. Its total size is $3-4 billion though it 22

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‘‘The current size of the online classified business in India is around `1,500 crore. By 2017 it has a potential of reaching `5,000 crore.” — BADRI SANJEEVI cfo, people group

promises a 40-50% growth for the next five to ten years

Online classifieds businesses The current size of the online classified business in India is around `1,500 crore. By 2017 it has a potential of reaching `5,000 crore. This includes the jobs, matrimonial, real estate as well as general classifieds and niche verticals. Clearly we are talking about eating into the print medium pie here, where the current size of the industry is `5,000 crore.

Retail e-commerce / Travel business This is a `10,000 - `12,000 crore business. This industry has seen three very distinct business cycles • Up to 2000: Unrealistic growth expectations; fuelled by cheap money; Winners: Alta vista, hotmail, yahoo, AOL etc • 2002 -2008: Google + Amazon led models; internet became serious about capability building; again euphoria around high growth rates. Winners during this were Amazon, Google, Yahoo, Match.com, Akamai, Rackspace, Myspace, Rediff, Monster.

cover story • 2010 -2012: Emergence of wave two of ecommerce. The current challenge is living up to high expectations. Winners: Facebook, mobile apps led innovations, Apple (Apps), LinkedIn. Now the whole focus has shifted to apps and social media.

Where we are today: The India picture The industry is today valued at US$ 3 billion but there is a lot of start up capital. The sector is growing at 40-50% and expectations of growth are still very high – thanks to the potential for internet usage growth in India and expected growth in credit card adoption and mobile applications usage. Moreover, investors continue to value and price online companies above other traditional media; Naukri is trading at 40x earnings but only grows at 20x; Now how do you justify that? LinkedIn is valued at 120 per cent of its actual growth. Is this justified? Where is this growth going to come from?

Growth challenges The real challenges for growth in this sector comes from several areas. The promoters are mainly first generation entrepreneurs, with very limited business experience and almost no scalability experience. Also, online is not actually in most cases bricks + clicks models. This is a rather recent realisation for Indian digital businesses. Pure online models are only a few. Moreover, large valuations have resulted in growth without rigour. Growth with rigour means lower growth rates. But valuation expectations remain high. Finally, the skill base here is often very poor. The Indian technical work force is service oriented with almost no product development. Our most prized hires are basically engineers.

So where’s the hope? The success of US e-commerce companies and online portals clearly show

the potential for profitable growth should India achieve certain benchmarks within the next three to five years. Look at Facebook. It has about 2 billion interactions per day. Apple creates 50 million downloads of apps per day and Google Paid clicks grows 50% annually. If you look around, some of the biggest online brands such as Google, Flipkart, Amazon and Facebook are today worth more than some of worlds most respected traditional brands. That is where the hope lies and that is where CFOs and business leaders need to focus on, so that they can all ride this wave. Mr Badri Sanjeevi is Group CFO, People Group. The views expressed here are personal. The article is based on his talk at CFO India’s 3rd Annual CFO Leadership Conclave held recently. For further details of Mr Sanjeevi’s as well as other sessions at the conclave, visit www.cfoinstitute.com.

Balancing growth and profitability Genuine juggling skills are required to find a meeting ground between profitability and growth and there is no ‘one-solution-for all’ answers here Anup Vikal

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s it possible to achieve that fine line where profitability and growth meet? Yes it is possible, though honestly the line keeps moving every time, and so, there is no fool-proof solution to this problem. Of course this remains a big question before companies and their CFOs today and they will continue to grapple with this issue in the years to come: is there

a nice sweet spot where CFOs can balance profitability and growth? We at Interglobe Enterprises recently did a survey of 139 companies to understand their nature of growth in the last decade. For this we looked at the stock market performances of these companies. Of the 139 companies we looked at (listed in India between 2001 and 2009), only 30 companies were able to

balance the equation and deliver sales growth underpinned by strong margins. These are what we call the ‘Intelligent Growth’ companies.

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cover story ‘intelligent’ companies have a higher total shareholder return versus a higher growth focused company or a higher margin focused company. Here the simple formula that works is: Total Shareholder return = Share Price appreciation + Dividends. My conclusion from this research is that Indian ‘intelligent growth’ companies use financial discipline to drive profitable sales growth, which more often than not, could mean growing at a slower pace than one’s peers in the short run.

put up in a circle in a month. That is the kind of scale we achieved by outsourcing. And yet Airtel grew profitably. Clearly these are two models of how things can be balanced out.

market benchmarking At Airtel, we would initially measure how many customers we had in the market. But soon we realised that revenues were not coming in since there were so many dud customers. Quickly Airtel moved on to measuring revenue market share and not customer market

An external view Before Indigo and Colt Telecom, I spent quite a few years at Airtel. Airtel’s and Indigo’s foresight of India’s telecom and aviation markets respectively, have helped them place the largest orders in their sectors, thereby giving them a significant headstart vis-à-vis competition. They have chosen their own speed of growth in their attempt to balance profitability and growth successfully. For instance, 2004 was a time when aviation market was going through tough times. Boeing and Airbus were struggling to sell aircraft. It was at this time that Indigo took the plunge into the aviation industry. We believed in the India growth story, the Asia growth story and we believed that the South East Asian market hadn’t yet been explored enough. We realised the market wanted more safe and clean aircraft to reach from one place to the other. So we ordered for 100 Airbus A-320. Since prices had dropped, this was a huge value proposition for us. People said we had lost it. At that point, the Indian aircraft market had 300 aircraft, (today there are about 350) and we were ordering 100. But from scratch, we now have 56 aircraft flying and yet we are India’s most profitable airline. In Airtel during 2003 – 04, we used to put three to four towers in a circle in a month. By the time I left Airtel n 2007, there were 100 towers being 24

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‘‘In a fastmoving, competitive market there is greater need for financial discipline throughout the life cycle of an investment.” — Anup Vikal CFO & head - it & strategy. Interglobe enterprises

share. Soon, others too started measuring cost sheet total revenue but Airtel had the first mover advantage. Another way of balancing this growth- profitability equation is to focus on variables within our control. There are multiple variables. For example in our Galileo business (at Interglobe) which is about our air transport and hotels and where people book tickets – there are variables. But when people do not book, there aren’t enough variables. We started changing our focus to look at these issues rather than looking at the number of segments that were growing. Similarly today, at Indigo, our focus is that even the smallest place should be connected. In a fast-moving, competitive market there is greater need for financial discipline throughout the life cycle of an investment. There are two major myths one must keep in mind in this regard: Myth # 1: Strong up-front project due diligence ensures long -term investment returns. The reality is that with time, economic and market variables change and impact your returns Myth # 2: Economic momentum will keep improving investment returns The reality is that strategic alignment, risk profile, scalability etc are critical drivers of higher returns. In conclusion, I do believe that it is possible to have cost discipline and fast growth simultaneously. But to do that CFOs will have to focus on shareholder returns in the long run and be cognizant of evolution of industry structure while following any of the models I have outlined above or choosing a model of their own. Mr Anup Vikal is CFO, Head of IT and Strategy - InterGlobe Enterprises. The views expressed here are personal. The article is based on his talk at CFO India’s 3rd Annual CFO Leadership Conclave held recently. For further details of Mr Vikal’s as well as other sessions at the conclave, visit www.cfoinstitute.com.

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MANAGING GEN Y

A mindset revolution

Never has one generation been as different from its immediate predecessor as the current generation. What are the strategies the CFO should be looking at, to keep the Gen Y employee motivated? Devraj Doss

thought I would begin by putting up a couple of characteristics of Gen Y which are pertinent. When I come back home everyday, I put my office bag away in one corner, switch off my Blackberry and mentally move to ‘family time’. My younger cousins who are technically Gen Y people, come back home but even as they play with their kids they keep heading back to the laptop or the smartphone to check office mails, do some work and again...head back to spend some ‘family time’. Their view of work and life is dif-

ferent. Lines between home and work do not exist for them and they view work-life balance in a completely different way. There was a time when we did our calculations on spreadsheets with rows and columns on a piece of paper. Those who started later had the luxury of working on computers straight away. This generation however, has learnt computers in school. Also they have probably grown up with change being an integral part of their life – change that has happened at a pace unseen and unheard of ever before. From a CFOs perspective, we should be able to integrate this new generation and their workview into a profitable and an efficient model.

Job shifts & workfromhome At P&G Asia-Pacific where I worked a few years ago, the company had a great ‘work from home’ policy. Once you signed on the dotted line, it defined ‘work from home’. The company actually paid employees to work from home! Of course this was primarily to allow them to buy infrastructure. The employee then had to ensure that he or she worked from home at least one day in a week. As a CFO what is the value that one gets out of this? We have a look at the infrastructure spend here. At the Singapore office of P&G, the big plus was that we had 20 per cent lesser space than the total

“We should be able to integrate this new generation and their workview into a profitable and an efficient model.” — Devraj Doss Director - Finance, Diageo

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cover story number of people! Job shift is another concept that Gen Y revels in. This is when one job is shared between two or more people, who complement each other, where all of them may be working part time. As a CFO you want to retain skilled manpower. So this is how we retained them and made it profitable and productive.

before, when employees were happy with annual appraisals and actually disliked the concept of regular meetings with seniors. It is obvious that this generation will not wait for tomorrow. They want to improve things as quickly as possible.

The Mindset

Collaboration in the workplace – team based work structure

The mindset of employees in their 20s today are also vastly different even from those in their 30s or 40s. Recently I was talking to two of my team members and I asked them what they would ask for, if they wanted one thing out of their CFO. Both said, ‘we know you don’t have the time to be there at every step. But sit with us one hour every month and tell us what we are doing wrong or right and how we should improve.’ Clearly this is a radical change from

One distinct characteristic of this generation is that they want to be with people, they want to discuss, to collaborate. And that is an advantage which we as CFOs must channelise, since the benefits of cross functional collaboration are obvious. Already many companies are using this innate desire (of Gen Y to collaborate) to create a social networking site within the workplace. This unleashes a lot of positives. If you check on all the

workstations of your younger employees tomorrow, you will see several windows switched on at the same time: Facebook, personal email, a finance or an ERP application, an excel sheet and may be something else.That is just the nature of the way this generation works. They can multi-task and do it well. Instead of trying to throttle this as ‘distraction’, CFOs should think of a strategy to channlise this energy and multitasking skill positively. We can bring this all together to increase productivity and create happier employees. Mr Devraj Doss, Director - Finance, Diageo. The views expressed here are personal. The article is based on his talk at CFO India’s 3rd Annual CFO Leadership Conclave held recently. For further details of Mr Doss’s as well as other sessions at the conclave, visit www.cfoinstitute.com.

Understand them, maximise returns

Some of the most phenomenal work from the new generation comes when they are multi-tasking. Understanding their work view will help make organisations work more efficiently and increase productivity. Sathya Kalyanasundaram

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erhaps one of the best ways to understand the mind of the new generation of 20-something workforce, is to take a case study of one organisation. In that sense I am lucky that Texas Instruments has a very high number of employees who are in their 20’s and who can truly be called new generation. While we have more than 36,600

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employees worldwide, our strength in India is around 1500. One reason why we have such a young workforce is because we manufacture semi conductor chips and our R&D operations are based in Bangalore. We were adjudged the ‘Most Innovative Company’ in India by Dataquest in 2005 and have the highest number of US Patents from India - over 800 and still counting.

Doing it differently So what is it that we do differently at TI to motivate and retain human capital?We begin early for one. So all interns for example, get to meet leaders of the organisation. Imagine the wow factor when a 20 -year-old meets the person who has designed the chip you have been using in your phone or in the TI calculator you

cover story worked on in class. We also get all our interns to work on real projects where we encourage them to think on what to do next with one of our products and then present their theories before the leadership team. Another way to motivate and get the best out of tomorrow’s leaders is to give them a workplace which attracts them. This is very different from what would attract someone a decade back. Cabins are no lure nor are perks like a car or a laptop. Those are passe. Take the case of a 22-year-old colleague in my finance team. He comes to work at 7 am, hits the office gym till 8.30, has a quick breakfast at the office cafe and works till 6 pm. After this, he takes a break, plays football at the TI grounds for an hour and again works till 8.30 pm. All this is by choice! He has an infrastructure at work which he loves.

Dealing with Gen y We recently received a request from a Korean firm to create a chip which would help customers click photographs while on the move at a speed of 80 km per hour! Now if we had gone to an engineer with 10 years of experience behind him, he would have told us, “are you crazy. This cannot be done.”But when we talked to an intern and a fresher, they said “exactly this is what we have been trying to do ourselves with our phones! Sure we will give it a shot.” In so many ways these Gen Y recruits relate to customers and in many ways they are the customers themselves. In whichever sector you are, having Gen Y people around you help you keep pace with changing times and feel the pulse of the customers. T here is an inherent advantage therefore in having them in your team. Another way we are ensuring the newer generation adds value to the organisation is by encouraging them to write white paper resea rc h proje c t s a nd t hen present them in the numerous

global conferences on technological innovations that happen through the year. At all these conferences, representatives of large corporations are

“For CFOs and for all industry leaders, the lessons are clear. We would do well to recognise that the new generation is energetic and they bring a wealth of perspective on how to approach a situation.” — Sathya Kalyanasundaram director - finance & Operations, texas Instruments

present, looking for innovative ideas. You will be surprised at the number of people in the age group of 19- 22 years who actually present papers at these global conferences and get contacted thereafter by large corporations. We also visit top campuses regularly to search for good, potentiaally talented interns. In this way we have a guaranteed pipeline of folks who want to come back and join us. They go through an intesnive four month internship and go through a 360 degree exposure.

Key Learnings For CFOs and for all industry leaders, the lessons are clear. We would do well to recognise that the new generation is energetic and they bring a wealth of perspective on how to approach a situation. Some of my best solutions (be it in Finance, Tax, IT or Procurement) have come from the new recruits. Why? Because they are not taught how to think and so they can think out of the box. T he advantages of this generation are enormous. They are willing to work on anything to improve their knowledge. They are great ambassadors and because they are so well connected, they can be a great source for referrals. And if they are happy at work, they will speak highly of their experience to their peers, and across social networks; This marketing is unbeatable and is a great way of improving an organisation’s image, credibility and ultimately its profitability.

Mr Sathya Kalyanasundaram is Director - Finance & Operations, Texas Instruments. The views expressed here are personal. The article is based on his talk at CFO India’s 3rd Annual CFO Leadership Conclave held recently. For further details of Mr Kalyanasundaram’s as well as other sessions at the conclave, visit www.cfoinstitute.com. au g u s t 2 0 1 2

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STRATEGIC CHALLENGES

Be on the ball

CFOs will have to keep pace with technology, market sentiments and be on top of the liquidity game. Ganapathy Subramaniam

hese are indeed the best of times and the worst of times. We are living in very confusing times to be honest and as CFOs we are smack in the middle of it. We don’t know whether we should aggressively look into investments or work as administrators.

Strategic Challenges – 2012 & Beyond You won’t have to look far to realise that rapid changes are taking place in business models driven by a dramatic shift in regulatory environment over the last two years, unpredictable changes in market dynamics, new and unforeseen technology shifts, and the inability of the government to make clear cut policy decisions in one linear way. Yet customers are becoming more demanding, and the financial markets are increasingly unforgiving.For all listed companies like ours, an additional challenge is the frequent scrutiny from regulators and meetings with investors every quarter.

The cable industry: symbolic of the change around us India’s cable television business is an apt metaphor for the strategic challenges that faces industry today. Seen as an unorganised sector run by the local ‘dada’, the cable TV industry reaches an about 90 million people but only 10 to 15 per cent of subscription revenues flow through to the MSOs & broadcasters. There is rampant under declaration and a huge black economy. (US$4 - 5billion)But like many other sectors all this is about to change. In the space of the next 30 months we are expected to digitise 90 million homes across the length and breadth of India, invest considerable capital to make this happen ( around US$ 2-3 billion), build a B2C business out of what was essentially a B2B model and build the technology backend. The developed markets completed this transition over a period of six to ten years. We want to do this in less than three years! So obviously, many

“Financial markets may take time to understand any new business model. There is also no natural hedge against forex risk.” — Ganapathy Subramaniam CFO, Hathway Cables & Datacom

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strategic challenges remain. There are several existential questions we have to constantly wrestle with.

The markets & the way ahead Financial markets have turned inimical. Availability of funds may not be a serious problem for some players but the requirement for the industry as a whole is huge. Yet, to be fair, financial markets may take time to understand any new business model. There is also no natural hedge against forex risk. However, manage we must! Collaboration between different functions as well as with external partners therefore is the name of the game for us, just as it is increasingly so for most other sectors. Partner with the experts for innovative use of technology for STB activation and subscription col-

cover story lection while in case of core technologies, the best bet might be to deploy the best of breed – and own this piece of technology.

Mr Ganapathy Subramaniam is CFO, Hathway Cables & Datacom. The views expressed here are personal. The article is based on his talk at CFO India’s 3rd Annual

CFO Leadership Conclave held recently. For further details of Mr Subramaniam’s as well as other sessions at the conclave, visit www.cfoinstitute.com

Of Challenges and Opportunities Managing investors, product and pricing – the CFO will have to reinvent himself as a strategist. Giri Giridhar

ndia Inc will face the challenge of growth and profitability for the next several years. And this is really something we have to tackle seriously. One of the biggest challenges for CFOs will be fixing a participation strategy. This is crucial and is often driven by the size of the prize. For instance look at the recent case of Uncle Ben, an American company that sells rice, getting into the mobile phone manufacturing market – driven by the sheer size of that market. CFOs will also have to think through which markets their organisation wants to enter and which products they want to get into. Of course, most importantly, an organisation has to decide what role it would play in a particular market – will it shape the market, adapt to the market conditions or play the role of a ‘local insider’.

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Profitability or Growth? Pace with rigour is the name of the game here. As a CFO, the big challenge would be in terms of product pricing – should it be for the premium market or the mass market? Strategic mergers and acquisitions, as in how much you pay for an M&A is another factor which will determine whether we achieve profitable growth. To ensure continued top line

and bottomline growth, one essential factor will be to keep the focus on cash very strong. The challenge here is not to keep cash for ‘Just in Need’ but to keep it for ‘Just in Case’. Another area of concern is the balance between inventory

“The challenge here is not to keep cash for ‘Just in Need’ but to keep it for ‘Just in Case’.” — Giri Giridhar global cfo, Wockhardt

and creditors. How do we optimise debtors? The answer lies in building partnerships with customers and suppliers.

Investor relations & regulatory challenges All these bring us to a tricky challenge: managing investor relations. How do I attract the shareholder base that supports my strategy? You need to have constant conversations with investors. We are entering an era when multiple regulations and controls will guide the way business is run. How do you plan for and respond to regulations will determine how your organisation fares in the longer term. Ultimately though, running a sustainable business and balancing profitability and growth is a leadership challenge and as CFOs we must step up to the plate. There is a world of opportunitiy waiting for us and for the proactive CFO it is a great time to be a leader. Mr Giri Giridhar is Global CFO, Wockhardt. The views expressed here are personal. The article is based on his talk at CFO India’s 3rd Annual CFO Leadership Conclave held recently. For further details of Mr Giridhar’s as well as other sessions at the conclave, visit www.cfoinstitute.com. au g u s t 2 0 1 2

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cfo

Profile R. Dharmarajan CFO - GVR Infra Projects

Preparing for a

From a passionate cricketer to CFO of a large infrastructure company planning an IPO – R Dharmarajan takes us on his journey to success interspersed with lessons he picked up on the way and his vision for the future Purva Khole

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At 17, R. Dharmarajan was a typical Indian teenager, practising his drives and cuts on the cricket fields of Chennai and later Mumbai. Little did he know then that over two decades later he would be busy with drives and pulls of a different kind – cutting costs and driving growth as CFO of the `12 billion ($240 million) GVR Infra Projects, the flagship company of the GVR Group.Finance in fact was far from his mind till he graduated. In Chennai where he grew up, his father was a General Manager with SBI and his brothers were employed with IT or Law firms. “In school too I was just about an average kid and I spent more time playing or watching films than studying,” laughs Dharmarajan, recalling his teenage days as we catch up over coffee at the Taj in Kochi where he has come for CFO India’s Third Annual Leadership Conclave. So when did he decide on finance being his true calling? What’s the story, we ask. Apparently it all started with the family moving to Maximum City when

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Long Innings

Milestones FIRST JOB Chartered Accountant with N.M. Raiji & Co in Mumbai BIG BREAK Becoming the CFO at Shriram EPC AHA! MOMENT Topping the college in Hindi within two years of moving to Mumbai from Chennai where the language was not taught in school LESSER KNOWN FACT He wanted to become a cricketer DREAM To be a successful entrepreneur

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cfo Profile young Dharmarajan was in college. “When I came to Mumbai I realised that most people my age were very ambitious about their careers. This shook me up and I wondered why I was so laid back,” recalls Dharmarajan. Though this did not transform him totally, it was a turning point is his life. “Everyone in that city wanted to become ‘someone’ and had an objective in life.” The environment, the kind of surroundings and perceptions also matter a lot, he observed all that in Mumbai. The secret desire to wield the willow did not go away all at once though. But back in the 1980s there was no IPL nor was cricket so all pervasive. At that point it was like, you are either at the top or nowhere in the game. All these things teamed with low self confidence made him give up his desire of becoming a cricketer. “But this didn’t make Chartered Accountancy an automatic choice. When I decided to pursue my CA in the late 1980s, not many people supported the idea. My brother advised me take up law instead because most people we knew took a long time to clear their CA exams and also it took quite some experience to become a CA. Even my professors suggested the same since I hadn’t really set the marksheets on fire as a star student,” he laughs. It was his mother however, who was stood by him and gave him the courage to pursue his CA dreams, recalls Dharmarajan. For him the motivation came from the fact that he had wasted the earlier days of my life. This fact drove him and made him realise that there is no looking back from there. By 1989 he was doing his articleship with C.C Choksi (now merged with Deloitte). This experience , though was an articleship which was mandatory for people pursuing CA, proved to be a great learning ground. He became a CA in 1993, and joined a CA firm, N.M. Raiji in Mumbai. “Here I got a very different exposure to the world of finance as a consultant CA. My biggest moment here was working as a consultant on the much talked about takeover of Kwality Ice Creams by Walls, a Hindustan Lever brand. This experience taught me a lot and made me realise that I wanted to explore other areas of finance as well,” he says. A few months later though he moved base overseas, something which is never easy in mid-career. Needless to say, Dharmarajan did go through the pangs of uncertainty that grips many of us in similar situations. Yet again 32

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a passionate cricketer in his youth, dharmarajan believes the calculated risks he took earler in his career have paid rich dividends in his life

though, his family, especially his mother stood by him. “Once again at this point, my mother was a pillar of support and she encouraged me to go to abroad and improve my career prospects. It wasn’t a very easy task because there weren’t too many opportunities in the finance and audit sector then, especially overseas and in English speaking nations. But in 1995, I got an opportunity and after a bit of soul-searching I moved to Singapore with my wife,” he recalls. Fifteen years later, in 2010 he moved back to India and took over as the CFO of Shriram EPC. It was a challenging stint not least because Dhar-

cfo Profile

“The last nine months have been phenomenal because the kind of work that I have done here, I haven’t done in my entire career”

marajan was returning to a very different India after one and a half decades. There was a paradigm shift when he took over as the CFO of Shriram EPC because this came up after doing a lot of statutory audits and internal audits in Singapore. Also, this was a much larger role. “Managing the corporate business and finance of a listed company, was not an easy task,” he smiles. Now as CFO of the `1,200 crore GVR Infra Projects which he took over in October 2011, he is probably handling one of the biggest job of his life. “Frankly at this point, GVR is a huge challenge because it an unlisted entity

and there is so much scope to develop and change things here. There are many things we have done and many more to do. The last nine months have been phenomenal because the kind of work that I have done here, I haven’t done in my entire career. There are a lot of exciting things being implemented despite the challenging environment,” he says. His vision for GVR is to look for growth over the next two years with a clear focus on the bottomline as well. In the days to come, he wants to take GVR Infra Projects forward to the bigger league. “The IPO is probably

the next logical step, which will take about two years time from now. This is because the company has undergone many changes in the last one year,” he says. “We have set up a lot of controls and internal audits for the streamlining process so we will take another two years to achieve the required financial stability and control. We are looking scoring big over the next few years, but at the same time I have to ensure that our feet are firmly inside the batting crease,” he smiles. Clearly this soft spoken Chennaiite hasn’t given up his love of cricket just yet. au g u s t 2 0 1 2

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Strategy

Every Company is a Potential Cyberrisk Victim Security breaches are so inevitable that a major part of any companyâ&#x20AC;&#x2122;s strategy planning is not only securing current operations, but building a coordinated defense against future attacks Glenn Alan Cheney

o matter how worried the top management team is about information security, it isnâ&#x20AC;&#x2122;t worried enough. The team should, in fact, be terrified, for two main reasons. One is that any system connected to the Internet can be breached by attackers who devote enough time and resources to the project. It happened to Sony Corp., resulting in an estimated loss of $1.25 billion. Amazon Inc., eBay Inc. and Zappos Inc. each had the data of tens of millions of customers stolen. A major health-services company found all its information encrypted, and the attacker offered to reveal the decryption code, for a price. Stratfor Forecasting Inc., a global intelligence and forecasting company, had its website plundered of credit card numbers, its servers destroyed, its website down for two weeks. Another company saw research worth $1 bil34

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in practice lion destroyed. Somebody even swiped $1.2 million from Microsoft Corp. The second reason is that the threat is existential. It could very well destroy the company, be it a Fortune 50 with mainframes and multiple backups or a mom-and-pop operation with a Mac laptop on a kitchen table. In fact, the larger the company, the more it’s worth the time and resources needed to crack it. Its information may include a goldmine of inhouse data, from research results to product designs to banking information to personnel files. Its external data may include client credit cards, passwords, sales records, vendor lists, emails. Virtually all information is valuable to somebody besides its owner. It’s a crime unique to the times. The thieves may never leave their farflung corners of the world, and the victims may never know they’ve been plundered. Vandals may have the best of intentions. It’s so new and amorphous that the law isn’t always sure what to do about it. Jurisdictions are antiquated notions of nationality. Liability is anybody’s guess. If the attack doesn’t kill a victim, litigation can.

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Repercussions of Attacks on the Rise Cyber attacks come in many styles and flavours. It could be a random virus wandering around the Internet, infecting any system that lets it in. It could be malware inserted into a specific system just to wreck it, destroying data or maybe just corrupting enough of it that the owner doesn’t know which data to trust. It could be an ‘advanced persistent threat’ aimed at a specific target for purposes of profit — the theft of information, the transfer of funds, the extortion of C-suite officers or the staffers with access to them. It could be a not-for-profit ‘hacktivist’ seeking revenge or publicity. It used to be just a kid hacking around, impressed with his or her own power. These days it’s more likely to be

a criminal ring of highlyskilled professionals working in transnational teams, applying months of creative problemsolving to get into a victim’s computer. Ensconced in Chechnya, China, Chile or anywhere else in the world, these

“When we discover they were a victim, it’s five or six months after they were first hacked; it’s almost never the victim that discovers it. We find that 80 per cent of cyber attacks were discovered by someone other than the victim” Wade Baker, Investigative response — team director of risk intelligence, Verizon Communications Inc.

teams operate effectively beyond the arm of the law — and help themselves to whatever they find. One Eastern European group was harvesting an easy $750,000 a week. It could be a company that wants to know what its competitors are doing. Or maybe a company that wants to cause a competitor some embarrassment, something to smack down its share price. Perhaps it’s a disgruntled employee. Or a diligent employee trying to get some work done at a wireless hotspot at an airport, unaware it’s a trap operating out of a suitcase just to see how he or she logs in to the cloud. It could be a hacktivist vandalising a company in the name of world peace, fair wages, the environment or some other issue. Wikileaks did it to the U.S. Department of State. Then the hacker group LulzSec hit the Public Broadcasting System for its coverage of Wikileaks and ‘Anonymous’ did it to the U.S. Department of Justice for shutting down Megaupload Ltd., a Hong Kongbased online provider of data storage and other services. Anonymous activists in Brazil, miffed over corruption and inequality, denied service to the sites of Banco do Brasil and the country’s two largest private banks. Somebody revealed Symantec code pilfered from India’s intelligence service. Having been hacked a few times, Facebook had to list ‘malicious cyber activity’ under ‘Risks Related to our Business and Industry’ in the documentation for its initial public offering. The cyber assailant could be a foreign government conducting espionage in search of military secrets, industrial vulnerabilities, economic advantages, back doors into strategic infrastructure or a route into vendor computer systems. It might be looking for names, dates, plans, addresses, passwords — data that may seem far removed from national security but which an intelligence agency can fit together in unforeseeable ways. In this time of cyberactivity, loose lips aren’t all that can sink ships. Au g u s t 2 0 1 2

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in practice The number of attackers is increasing quickly, and the losses due to attack are soaring. The 2011 Norton Cybercrime Report estimated global losses of $400 billion a year and one million victims a day. When the Ponemon Institute surveyed 50 companies in 2011, it found at least one successful attack on each per week and a total of 74 successful attacks, an increase of 44 per cent over the previous year. Generally, the larger the company, the larger the loss, with a median annualized cost of $5.9 million and a high of $36.5 million. Losses increased with the time before discovery. Wade Baker, Verizon Communications Inc.’s investigative response team director of risk intelligence, says that victims usually have no idea that they’ve suffered a security breach. “When we discover they were a victim, it’s five or six months after they were first hacked,” Baker says. “It’s almost never the victim that discovers it. We find that 80 per cent of cyber attacks were discovered by someone other than the victim.” Verizon offers corporate information security services for a good reason: 70 per cent of all Internet traffic crosses a Verizon network at some point. Baker says that something like 90 per cent of security failures are due to a lack of simple controls that could have been easily installed. And therein lies the security of other companies. Imagine a school of a thousand fish where the survivability of any one fish depends on the weakness of those around it. Much in the way of sharks, cyberattackers look for the easy hits. The companies with robust defenses often aren’t worth the trouble. The cybercrooks poke around but soon move on in search of easier prey.

“The question companies should be asking isn’t ‘Are we secure,’ but ‘How are we secure and what are the controls and processes we have in place to be sure we are doing everything we can to be as secure as possible?”

Defensive Actions

David Roath, Risk Assessment — Partner in PwC’s IT Risk & Security Assurance Practice

Putting up that basic defense shield isn’t all that hard. “Don’t buy a new product that promises to rid your network of anything bad,” Baker advises. “Take your policy document that says

‘We will do XYZ,’ then start a program to check that you are doing that across your whole business. You will find business units that are not adhering

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to those guidelines. It just doesn’t get done 100 per cent everywhere. We trace most security incidents to some failure to do what the company said it should be doing.” After you’ve done that, Baker says, do it again. But if the assailants really want to get in, they can eventually find a way. They may have teams of specialists. They can buy access information on the black market. They can use ‘social engineering’ to somehow get an employee to reveal a key bit of data that’s needed to crack the combination of the corporate safe. It might be through Facebook research, an email pretending to be from a colleague, an intercepted smartphone login or a hacked laptop with malware just waiting for an employee to sign in from home. Security breaches are so common and so inevitable that a major part of any company’s defense has to be a plan for reacting after the breach — a plan for detecting the breach as soon as possible, for containing the damage and stemming the loss of data, recovering full information capability and for protecting backup data. The company must also prepare for meeting legal requirements to announce breaches (required in 46 states and many countries), coordinated response from across the company (management, legal, financial, personnel, marketing, communication and of course information technology), training programs, preserving evidence and testing the entire process to ensure everyone knows what to do. One reason for the continuing increase in breaches is the exponentially expanding number of points of entry. Laptops, tablets and smartphones rarely have full anti-virus capabilities. They go into and out of offices constantly. They use hotspots in hotels, coffee shops, bars. They roam the world. They get lost in luggage or are stolen. How many lost laptops does it take to bring a multinational corporation to its knees? To clean out a bank account? To shut down a power grid? Just one. How safe is the cloud? No safer than the vendor offer-

in practice ing cloud services. In some cases, the vendor’s defenses might exceed those dcases it might not. Some basic protective measure will help: Encrypt all data. Control levels of authorisation. Monitor usage constantly to confirm that policies are being followed. Keep track of information in the cloud so that when it’s deleted, all of it is deleted everywhere. Have a plan for getting everything out of the cloud immediately. Make sure the company and the vendor understand who’s responsible for what. The shift to cloud computing was about the only good news in Booz & Co.’s Top 10 Financial Services Cyber Security Trends for 2012. The report notes that with proper architecture and planning, use of the cloud may reduce risk. But it sees increased vulnerabilities through mobile devices, more targeting of top managers, their staffs and families, more scrutiny of social media for information about individuals with access to information systems and more hardcopy documents going digital and escaping into cyber space. Additionally, as systems go more global, the risk of increased malware, insider threats and more regulatory scrutiny exposing defenses to illicit scrutiny tends to rise. David Roath, Risk Assessment Partner in PwC’s IT Risk & Security Assurance Practice, agrees that hackers can

One reason for the continuing increase in breaches is the exponentially expanding number of points of entry break into any company if they try hard enough. “If you have a company with 10,000 people, in one way or another you have 10,000 people with access to your system internally,” Roath says. “Externally, you have many threats, such as social engineering and different attack and penetration techniques. So the question companies should be asking isn’t ‘Are we secure,’ but ‘How are we secure and what are the controls and processes we have in place to be sure we are doing everything we can to be as secure as possible?’ ” Roath says information security is a board-level issue, that boards must have assurance not only from chief information and information security officers but from chief financial officers, internal auditors and, crucially, third-party consultants. Too often, he says, the biggest risks are the ones that no one is assessing. “Boards need to be asking the right questions of internal auditors, external auditors, security officers, the

Points to Ponder • Any system connected to the Internet can be breached by attackers who

devote enough time and resources to the project. • The threat is existential. It could very well destroy the company, be it a For-

tune 50 with mainframes and multiple backups or a mom-and-pop operation with a Mac laptop on a kitchen table • Virtually all information is valuable to somebody besides its owner.

CIO — all the stakeholders are responsible for this, not just any particular one,” he says. “The whole C-suite is responsible.” Scott McCallum, Manager of Communications, The Institute of Internal Auditors, says that cybersecurity is often overlooked in the internal audit function though it should rank in the top 20 priorities. He, too, suggests the use of outside expertise. “Depending on the likelihood and potential impact,” McCallum says, “companies with the resources to do so find it a valuable investment to cosource an audit engagement to a firm specialising in techniques such as conducting a penetration study. In these studies, an organisation’s IT systems are bombarded with hacker-like activities to identify where any weaknesses might exist. It can be expensive, but certainly worthwhile. It provides a roadmap of where to strengthen controls within the IT environment.” In the final analysis, the threat of cyber attack puts every company in a position that is unprecedented in corporate history. Never before have organisations been so vulnerable, and never has the vulnerability depended on something so essential and intangible — the information that connects the gears of industry. The global economy itself is at risk, and technology has yet to solve the problem that it has created.

• The 2011 Norton Cybercrime Report estimated global losses of $400 billion

a year and one million victims a day. • Make sure the company and the vendor know who’s responsible for what. • Never before have organisations been so vulnerable, and never has the

vulnerability depended on something so essential and intangible

Glenn Alan Cheney (glenncheney@com cast.net) is a freelance writer in Hanover, Conn., who contributes to Financial Executive on subjects relating to business, financial reporting and accounting. Au g u s t 2 0 1 2

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opinion

A Qualitative Challenge Why is qualitative reporting crucial in finance? And why is it relevant to Indian entities? Pankaj Chadha

inancial reporting challenges have increased manifold due to changing business models, economic developments like credit crisis, new sources of risks, innovative risk mitigation strategies and other business uncertainties. While financial reporting disclosures need to keep pace with these changing scenarios to ensure that qualitative reporting parameters are met, it also raises a crucial question - what exactly is qualitative reporting? The conceptual framework under both IFRS and US GAAP has clearly laid down the objective of financial reporting and qualitative characteristics of useful financial information. This guidance acts as a framework for qualitative reporting.

Objective of financial reporting The objective of general purpose finan38

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in practice cial reporting is to provide financial information about the reporting entity, which is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity. Moreover, it is directed at users who provide resources to a reporting entity, but the lack the ability to compel the entity to provide them with the information they need to make decisions about their investments.

What are the attributes and the yardstick for qualitative reporting followed globally? Qualitative financial reporting should be capable of adding value to the decision making process of its users. Financial information should have predicative or confirmatory value or both. This can be achieved if financial information fulfills the following characteristics: • Relevance • Faithful representation i.e. informa tion is complete, neutral and free from error • Comparability, • Timeliness • Verifiability • Understandability

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Global disclosure practices and trends IFRS and US GAAP contain extensive disclosures which are mandated in financial statements to fulfil qualitative reporting requirement. The International Auditing and Assurance Standards Board (IAASB) in its discussion paper ‘The Evolving Nature of Financial Reporting: Disclosure and Its Audit Implications’ issued in 2010 identified nine categories of disclosures which are normally found in a complete set of financial statements. These disclosures include critical estimates and judgements, assumptions/models/ inputs, significant accounting policies and descriptions of internal control pro-

cesses. It is observed that the number of pages in annual reports of UK entities have increased significantly over the years, especially ever since they began reporting under IFRS. Though there are elaborate disclosures mandated in IFRS or US GAAP, in practice, the level of disclosures continues to vary significantly among those who prepare it, impacting the quality of financial reporting. A large accounting firm conducted a survey of IFRS financial statements in 2012 and the following key observations relating to disclosures emerged out of their survey: Critical estimates and judgements IAS 1 Presentation of Financial Statements requires disclosure of critical judgements and estimates. Critical estimates are those assumptions or estimates that may have a significant bearing on future results (e.g., cash flow assumptions and discount rates used in impairment testing). In contrast, critical judgements relate to the application of accounting policies (e.g., defining when a lease will be regarded as operating or finance lease). These disclosures are critical for users of financial statements to appreciate how the entity has been impacted by various estimation uncertainties and judgement made by

sion (and reference to other notes in the financial statements) to minimal qualitative description. • The number of critical judgements and estimates disclosed ranged from 3 to as high as 18.The majority of entities disclosed between 5 to 8 critical judgements or estimates. Impairment disclosures It is not just the impairment charges themselves that are important, but also the related disclosures. These disclosures allow entities to communicate the key assumptions used and the uncertainties inherent in the impairment test to investors and other stakeholders. IAS 36 requires elaborate disclosures about impairment. A key observation with respect to impairment disclosures, from the survey highlighted that the entities set out the key assumptions used and the uncertainties inherent in the impairment test to investors and other stakeholders in their impairment disclosures. However, disclosures of impairment assumptions made by non-financial institutions varied from quantitative analysis or extensive qualitative discussion of the cash-generating units to the minimum disclosures required by IFRS. Survey identified that 40% of entities with goodwill provided quan-

Indian entities are becoming global in nature due to priorities related to acquisitions, fund raising or collaborations management. Key disclosure trends highlighted by the survey include: • Almost all of the entities surveyed present a note describing critical judgements and estimates. The extent of the note disclosures ranged from significant quantitative and qualitative discus-

titative sensitivity disclosures for their key impairment assumptions. Many entities provided sensitivity analysis based on factors such as discount rate and growth rate assumptions, while the minority included operating cost or other sensitivities. au g u s t 2 0 1 2

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opinion Segment reporting Segment reporting is an important disclosure that enables financial statement users to evaluate the nature and financial effects of the entity’s specific business activities. The underlying purpose of IFRS 8 Operating Segments is to require entities to externally report internal information. As a result, the focus of segment reporting is on the information used by a entity’s Chief Operating Decision Maker (or CODM). Key disclosure trends observed with respect to segment reporting were: • 39% of entities did not specify who the CODM is, while 61% did. The 39% included those entities that gave a general description, but did not identify a position or body as the CODM. • Only 14% of entities measured their segments’ performance based on nonGAAP measures, such as adjusted operating profit or normalized profit. Every entity that reported a non-GAAP measure reconciled its disclosure to IFRS profit. Financial instrument related disclosures In IFRS, many financial instruments are measured at fair value or fair value disclosures are required for categories of financial instruments. Fair value disclosures provide insights to investors on realizable value of such assets as at the balance sheet date. To derive fair value, those who prepare financial statement use (a) prices from quoted/active market (level 1 valuation) or (b) derive fair value using quoted prices or valuation technique using observable market inputs (level 2 valuation) or (c ) using valuation technique using unobservable market inputs (level 3 valuation). The survey revealed 59% of entities that provided disclosures under IFRS 7 indicated that they had level 3 valuations. 61% of entities used level 3 valuation technique to fair value unlisted equity instruments.

What are stakeholder expectations? Qualitative reporting requires full and 40

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transparent disclosure to stakeholders especially in a period of ongoing market uncertainty. Disclosure information should be comparable, timely, verifiable and understandable. If entities do not deliver on quality reporting yardsticks, the regulators are expected to ask for more disclosure. For example - In their comment letter dated March 11, 2011, the European Securities and Markets Authority (ESMA) requested more guidance on the identification of the CODM. Accounting standards are also undergoing slew of changes. For e.g. many new or amended IFRS are effective from January 1, 2013 (e.g., consolida-

setters are working on convergence with IFRS. Hence sooner or later, similar disclosure requirements will be applicable to Indian entities. In addition, Indian entities are increasingly becoming global in nature due to priorities related to acquisitions, fund raising or collaborations. Hence Indian entities will also have to meet expectations of not only the stakeholders in India but also those who are more global. Indian entities should benchmark themselves with their global counterparts; adopt best disclosure practices to provide meaningful and reliable information to their users of financial

Qualitative reporting requires full disclosure to stakeholders especially in a period of market uncertainty tion, joint arrangements, fair value measurement and employee benefits). Besides recognition and measurement impact, these changes are likely to have significant disclosure impacts. Entities should gear up their systems and processes for these new developments to ensure that financial information requirements are met in true spirit.

What does this mean for Indian entities? Quality reporting attributes laid down in Indian GAAP framework is also very similar. Indian GAAP is not aligned with IFRS across many areas. Disclosure requirements are not very elaborate in many cases. The level of disclosure, especially with regard to judgements, risk exposure, risk management and capital management is not comparable to their global counterparts. Indian regulators and standard

statement. This may result in some additional costs but it will help generate significant benefits in the form of increased confidence from global investors, analyst and regulators. It will also help them easily transition to IFRS framework whenever India moves to IFRS. To adapt itself for these ensuing changes, Indian corporates need to gear up with obtaining a better understanding of what these qualitative measures entail in terms of impact on business. This will help such business entities to engage proactively with regard to training, review of various business arrangements and allow updating of systems to generate information on a timely basis.

Pankaj Chadha is partner in a member firm of Ernst & Young Global. Views expressed are personal

insight

LEADERSHIP

Developing global leaders Companies must cultivate leaders for global markets. Dispelling five common myths about globalisation is a good place to start Pankaj Ghemawat

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s firms reach across borders, global-leadership capacity is surfacing more and more often as a binding constraint. According to one survey of senior executives, 76 per cent believe their organisations need to develop global-leadership capabilities, but only 7 per cent think they are currently doing so very effectively. And Some 30 per cent of US companies admit that they have failed to exploit fully their international business opportunities because of insufficient internationally competent personnel. Most of the prevailing ideas in business and academia about global leadership reflect efforts by leadership experts to adapt the insights of their field to the global arena. I come at this topic from the opposite perspective, having focused for nearly two decades on studying globalisation and thinking through its au g u s t 2 0 1 2

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insight implications for business and public policy. At the core of my work lies the reality that, while globalisation is indeed a powerful force, the extent of international integration varies widely across countries and companies and generally remains more limited than is commonly supposed. To be sure, rapid growth in emerging markets, combined with a long-term outlook of lower growth in most developed economies, is pushing companies to globalise faster. But metrics on the globalisation of markets indicate that only 10 to 25 per cent of trade, capital, information, and people flows actually cross national borders. And international flows are generally dampened significantly by geographic distance as well as cross-country differences. US trade with Chile, for example, is only 6 per cent of its likely extent if Chile were as close to the United States as Canada is. Furthermore, if two countries don’t share a common language, that alone slashes the trade volume between them by 30 per cent. An appreciation of how distances and differences influence international ties helps explain some of the organisational and other stresses that established multinationals are encountering as they accelerate their expansion to emerging markets (for more, see “Parsing the growth advantage of emerging-market companies,” on mckinseyquarterly.com). Emerging Asia is farther away—and more different, along multiple dimensions—than more familiar markets in Europe and North America. Japanese multinationals face a distinctive set of cultural, political, and economic issues that complicate their efforts to expand abroad. Exaggerated notions of what globalization means—what I call “globaloney”—are also apparent in prevailing ideas about global leadership. Some training centres aim to develop “transcultural” leaders who can manage effectively anywhere in the world as soon as they step off the plane. Yet scholars of cross-cultural management suggest that objectives like these are unrealistic. While global leadership is still a nascent 42

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Senior executives and CEOs tend to lead far more global lives than most of the world’s population, often touching several continents in any given month field, common conceptions of it already incorporate myths or half-truths that rest on misconceptions about globalisation. Correcting these myths should help the efforts of companies to increase their global leadership capacity.

Myth #1 My company, at least, is global When I present data on the limited extent of international interactions to executives in large multinational corporations, a typical reaction is that even if markets are not that integrated, their firm certainly is. Such claims, however, seldom hold up to scrutiny. Less than 2 per cent of firms on Fortune’s Global 500 list of the world’s largest companies, for example, derive more than 20 per cent of their revenues from three distinct regions. Most firms also remain quite domestically rooted in other aspects of their business, such as where they do their production or R&D or where their shareholders live. BMW, for instance, derived 51 per cent of its sales revenue from outside of Europe in 2011, but still maintained roughly 64 per cent of its production and 73 per cent of its workforce in Germany. An accurate read on the extent of globalisation in one’s firm and industry is certainly a crucial requirement for global leadership. Also invaluable is an appreciation of the extent to which the people within your company are far from completely globalised. Consider

just a few pertinent facts. Trust, which some have called the currency of leadership, declines sharply with distance. Research conducted in Western Europe suggests that people trust citizens of their own country twice as much as they trust people from neighbouring countries and that they place even less trust in people farther away. Turning to information flows—also central to leadership—people get as much as 95 per cent of their news from domestic sources, which devote most of their coverage to domestic stories. Similarly, 98 per cent of telephone-calling minutes and 85 per cent of Facebook friends are domestic. The persistent rootedness of both firms and employees has the surprising implication that global leaders should not seek to sever or hide their own roots to become global citizens. Rather, they should embrace ‘rooted cosmopolitanism’ by nurturing their own roots and branching out beyond them to connect with counterparts elsewhere who, like themselves, are deeply rooted in distinct places and cultures. Indeed, studies of expatriate performance confirm that expats who identify strongly with both their home and host cultures perform better than those who identify only with one or with neither. This rooted-cosmopolitan approach also accords better with research showing that people can become “biculturals,” with a truly deep understanding of two cultures but probably can’t entirely internalise three, which implies that four is out of the question. Facing such limitations, attempts to

insight become global by breaking free from one’s roots seem more likely to lead to symmetric detachment—a lack of meaningful ties to any place—than to symmetric attachment everywhere.

Myth #2 Global leadership is developed through experience Leadership scholars have argued that experience contributes some 80 per cent to learning about global leadership. My own investigations of senior executives’ perceptions of globalisation, however, indicate that experience, while required, is not sufficient for the development of an accurate global mindset. To illustrate, in a survey I asked readers of Harvard Business Review to estimate a set of basic values about the internationalisation of product, capital, information, and people flows. The respondents overestimated these values, on average, by a factor of three. And, more interesting from the standpoint of leadership development, the magnitude of the readers’ errors increased with their years of experience and the seniority of their titles. The CEOs in the sample overestimated the values by a factor of four! Why might experience correlate with less rather than more accurate perceptions about globalisation? One possibility is projection bias. Senior executives and CEOs tend to lead far more global lives than most of the world’s population, often touching several continents in any given month. 90 per cent of the people on this planet will never venture beyond the borders of the countries where they were born. If experience alone is insufficient to develop accurate perspectives about globalisation, what do executives need to learn off the job? A starting point is an accurate read on the magnitude and patterns of international interactions within their industries and companies. Rooted maps, described in my 2011 McKinsey Quarterly article, can help executives to visualise and interpret these patterns.

Global leaders also need to understand the factors that shape international interactions in their businesses, by undertaking a structured examination of cross-country differences and their effects. That is what a survey of academic thought leaders recently concluded should be the focus of the globalisation of business school curricula. Conceptual learning of this sort is a complement to—one might even say a precondition of, though certainly not a substitute for—experiential learning. When executives can fit their personal experiences into an accurate global perspective defined by conceptual frameworks and hard data, they can gain more from their typically limited time abroad and avoid costly mistakes.

Myth #3 Development is all about building standard globalleadership competencies Many lists of global-leadership competencies have been developed in business and in academia, but these provide only a starting point for thinking through the right competency model to apply within a particular company. Customisation and focus are essential. In part, that’s because even though literally hundreds of competencies have been proposed, a lot of these lists have important gaps or fail to go far enough toward incorporating unique requirements for global leadership. That isn’t surprising, since the lists often grow out of research on domestic leadership. One large review of the literature summarises it in three core competencies (self-awareness, engagement in personal transformation, and inquisitiveness), seven mental characteristics (optimism, self-regulation, socialjudgment skills, empathy, motivation to work in an international environment, cognitive skills, and acceptance of complexity and its contradictions), and three behavioural competencies (social skills, networking skills, and knowledge).

To my mind, most of these would also be useful for domestic leadership. Only the motivational point seems distinctively international, although one or two more (such as acceptance of complexity and its contradictions) clearly seem more important in the international domain than domestically. Typical competency lists also tend to focus on cultural differences, missing other components critical to global leadership. Economic differences (such as the challenges of fast- versus slow-growth markets) and administrative and political differences (including the extent of state intervention) are among the other factors that can cause leaders to stumble in unfamiliar contexts. Perhaps most important, standard lists of globalleadership competencies reinforce a one-size-fits-all view of global leadership that is inconsistent with the reality of globalisation and the mix of work global leaders do. A company may find it useful to recruit for and develop a small set of key competencies across all of its global leaders. Yet the diversity of roles that fall under the broad category of global leadership argues for substantial customisation around that common base. At the corporate level, this implies developing a portfolio of competencies rather than an interchangeable set of global leaders who have all met a single set of requirements. Operationally, an ideal training program would therefore include a geographic dimension and prepare people for dealing with particular origin–destination pairs. For example, a Japanese executive going to work in the United States would probably benefit from preparing for the higher level of individualism there. One preparing for China would in all likelihood benefit more from understanding that ‘uncertainty avoidance’ is less pronounced there, so executives must be ready for faster-paced change and greater levels of experimentation. Customising training-and-development efforts at the level of individual country pairs is likely to run up quickly au g u s t 2 0 1 2

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insight against resource constraints. However, the fact that 50 to 60 per cent of trade, foreign direct investment, telephone calls, and migration are intraregional suggests that, in many cases, customising at the regional level is sufficient. Firms will need a mix of regional and global leaders. Regional leadership is presumably less difficult and costly to develop than global leadership. At a more granular level, competencies can also be customised to the requirements of specific executives’ roles. The dimensions to consider include depth in particular markets versus breadth across markets, the frequency and duration of physical presence abroad, and a focus on internal versus external interactions.

Myth #4 Localisation is the key Some firms, rather than trying to fulfil the requirements of one size-fits-all lists of global-leadership competencies, have embraced the opposite extreme of localisation. Significant localisation has taken place in the management teams of foreign subsidiaries. According to one study, the proportion of expatriates in senior management roles in multinationals in the BRIC countries (Brazil, Russia, India, and China) and in the Middle East declined from 56 per cent to 12 per cent from the late 1990s to the late 2000s. Within this broad trend, some firms still rely too much on expatriates and need to localise more, but localisation can be—and, in some instances, clearly has been—taken too far. Giving up on expatriation implies giving up on building the diverse bench of global leaders that CEOs say they require. Persistent distance effects, particularly those associated with information flows, do confirm the general wisdom: global leaders need experience working for extended periods in foreign locations because living abroad creates permanent knowledge and ties that bind. Extreme localisation leaves no room or the development of leaders of this sort. 44

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Rather than pure localisation, firms should embrace the practice of rotation, which provides the foreign work experience— not just travel—essential to the development of global leaders Executives report that “it takes at least three months to become immersed in a geographical location and appreciate how the culture, politics, and history of a region affect business there.” This judgement accords with the finding that living abroad expands your mental horizons and increases your creativity. However, merely travelling abroad doesn’t produce these benefits. Long stays abroad are costly: traditional expatriation typically costs three times an employee’s salary at home. Nonetheless, firms that really wish to prioritise global-leadership development will need to allocate the required resources. Better metrics to track the returns on such investments may help. One survey indicates that just 14 per cent of companies have any mechanisms in place to track returns on international assignments. Most of these companies use metrics tracking only business generated from an assignment. Better career management could help capture and measure returns on investments in developing global leaders. Evidence indicates that in European and US multinationals, expatriates still take longer on average, to ascend the corporate ladder than managers who continue to work within their home countries. That indicates a deficiency in this area, as well as an incentive problem. Rather than pure localisation, firms should embrace the practice of rota-

tion, which provides the foreign work experience—not just travel—essential to the development of global leaders. And don’t make the mistake of viewing expatriation as being solely about sending people from headquarters to emerging markets. The same requirement for immersion outside of one’s home market also applies to the cultivation of global leaders recruited in emerging markets. For these executives, time spent in more established markets can, on the return home, reinforce both localand global leadership capacity.

Myth #5 We can attract the best talent Nationals from key growth markets are under-represented in the leadership ranks of many Western companies, so hiring future global leaders from these areas is critical. Yet recruiting top talent there is becoming increasingly difficult, as described in “How multinationals can attract the talent they need” (on mckinseyquarterly.com). I recall from my own youth in India how foreign multinationals used to be unequivocally the preferred employers, prized for their superior professionalism, brands, technologies, scale, and so on. Now I see that Indian companies have raised their game, putting pressure on multinationals in local talent markets.

insight The implications for global-leadership development are threefold. First, shifting to the rooted-cosmopolitan ideal described here is critical to attracting and developing executives from emerging markets. This approach makes it clear that ambitious young Indians, for example, proud of their country, don’t have to re-fashion themselves as ‘Westerners’ to succeed in Western multinationals. Second, escalating competition for talent in growth markets implies that it is even more urgent for multinationals to diversify their leadership teams quickly. One of the main advantages of local firms is the fact that young recruits often can see, in the faces of the current leadership, that if they excel they have a clear shot at rising to the top. In many multinationals, such promises will require a leap of faith until diversity is significantly expand-

ed. And the local competitors’ ongoing international expansion gradually diminishes another advantage of foreign multinationals: the ability to offer a wide range of global opportunities. Third, incorporating more local talent will require a greater emphasis on developing people. Tight talent markets and overstretched education systems imply, frankly, that firms hire some people who are not up to the standards they would prefer to uphold. Among the great strengths of India’s IT firms is their ability to convert such not quite fully prepared talent into effective performers on a large scale. It is indeed in today’s large emerging markets that the war for talent, identified by McKinsey back in 1997, has become most acute. Addressing the global-leadership gap must be an urgent priority for companies expanding their geographic reach. Predictable

biases rooted in widespread misperceptions about globalisation are hampering their efforts to develop capable global leaders.

The author would like to thank Steven A. Altman and Joel Bevin for their help researching and writing this article. Pankaj Ghemawat, an alumnus of McKinsey’s London office, is a professor of strategic management and the Anselmo Rubiralta Chair of Global Strategy at the IESE Business School, in Barcelona. He is also the author of World 3.0: Global Prosperity and How to Achieve It (Harvard Business Publishing, May 2011), the source of the approach to global-leadership development discussed in this article. This article was originally published in McKinsey Quarterly, www. mckinseyquarterly.com. Copyright (c) 2012 McKinsey & Company. All rights reserved. Reprinted by permission.

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EVENT

CFO LEADERSHIP CONCLAVE

The 3rd Annual CFO Leadership Conclave held at The Taj Malabar, Kochi between July 27-29, 2012, saw 60 of the country’s leading CFOs and other delegates engrossed in debates and discussions to identify key challenges for tomorrow and why the 2015 CFO needs to be a ‘Juggler par Excellence’. In between they also had oodles of fun 46

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Chief Financial Officers are deadly serious people who seldom smile, love saying ‘no’ and can only think numbers. Perish the thought. Yes, they do talk serious business most of the day. But put a bunch of CFOs together and they can have loads of fun, show a streak of adventure, think out of the box and come up with a dozen great ideas when discussing the challenges before the community and the way forward. Featuring the theme ‘The 2015 CFO: A Juggler Par Excellence’, this year’s three day/two night conclave organised by CFO India brought together a cap-

jiten gandhi

Preparing For Tomorrow

SUMMIT MEET: Chief Financial Officers from across India Inc. in attendance during one of the sessions at the 3rd Annual CFO Leadership Conclave

event tive audience of 60 CFOs and senior finance executives to identify effective frameworks, tools and techniques to tackle the financial and business challenges ahead and to strengthen the financial community in general. The sessions also identified policy barriers and discussed possible changes to overcome these challenges. A little after delegates from Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Kolkata and Pune had all arrived at the idyllic Taj Malabar on the banks of the Arabian Sea on July 27, the conclave kicked off with a welcome address by Ms Anuradha Das Mathur, Director and Co-Founder, 9.9 Media (the media group that also publishes CFO India). The keynote address was delivered by Mr Suresh Senapaty, Executive Director

and Chief Financial Officer of Wipro, a name almost synonymous with the IT giant, having worked there for over 30 years. In his speech, Mr Senapaty spoke about some of the key challenges that lay ahead in the spheres of technology, innovation, regulatory changes, security risks, governance and the perennial challenge of striking a balance between profitability and growth. In the next several sessions over the following two days, speakers – both CFOs as well as other domain experts – discussed various areas of the business which would pose a challenge to finance community in the days to come and engaged in lively debates in looking for ways to tackle these challenges. Mr Giri Giridhar, Global Chief Financial Officer, Wockhardt Ltd and Mr

Ganapathy Subramaniam, Chief Financial Officer, Hathway Cable and Datacom spoke on strategic challenges for 2012 and beyond. While Mr Giridhar spoke about the growing importance of cash-in-hand and for the CFO to ensure his organisation has a specific role in mind (that of shaping the market or adapting to the market or being a local insider) before entering any new market, Mr Subramaniam gave the example of the cable industry as a case study to highlight the uncertain times we were living in. “Those were the best of times. Those were the worst of times,” he said, quoting from ‘A Tale of Two Cities’ by Charles Dickens. In an interesting session on managing human capital and employee benefits that followed, Ms Anuradha Sri-

WALK THE TALK: Former Jt MD of Essar Oil and currently Advisor, Wockhardt, Mr Hari Mundra makes a point during his presentation on financial leadership

KEY TO SUCCESS: Mr Suresh Senapaty, ED & CFO Wipro Ltd, explains why the CFO has to become an expert ‘juggler’ during his keynote address at the conclave.

INVESTOR IS KING: Rajkumar Adukia of ICAI sharing his views during the session on ‘Managing the demands of the new-age investor’ on Day 1 of the conclave

ON THE BALL: Mr Giri Giridhar, CFO, Wockhardt answers a question as Mr G.Subramaniam, CFO, Hathway Cable and Datacom & Ms Anuradha Das Mathur, Director 9.9 Media look on

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event ram, Head Employee Benefits Towers Watson and Mr Shatrunjay Krishna Lead Consultant for T&R, Towers Watson India spoke on “Juggling with your people”, explaining how employee benefits could well turn out to be the game changer for CFOs in the years to come. Later in the afternoon, in a session on managing risk and governance, Mr Anil Khandelwal, Director – Finance & Strategy, L T Foods, Ms Rupa Vora, Group Director – CFO Fund Initiatives IDFC, and Mr S N Mukherjee, Chief Financial Officer, IL&FS addressed the delegates. The final session of the day saw Mr Sugata Sircar, Managing Director Gujarat Gas Company, Mr Sunil Alimchandani, Group Senior VP Finance, Network 18 Media & Investments and Mr Rajkumar Adukia, Chairman

Committee for Members in Industry, ICAI, debating on the topic “Charmer Par Excellence: How CFOs can look at value addition and manage the new age investors”. Once the day’s proceedings ended, the CFOs exchanged their formals for jeans and t-shirt, while some sported an ethnic look, as they met at the lawns of the sprawling property. The evening came to life with an enthralling Kalaripayattu (a martial arts form from Kerala) performance by a local troupe. Delegates then enjoyed the local cuisine. Day 2 began with a though-provoking talk by Mr Hari Mundra, Adviser Wockhardt and former Deputy MD, Essar Oil. Mr Mundra spoke on ‘The Master Juggler : The transition from CFO to CEO’. He raised the issues of ethics and governance and argued that

important as these issues were, the final word was still profitability and sustainable growth. Other sessions during the day saw Mr Shridhar Jayakumar, Programme Director, Oracle, delivering a talk on “Driving Business transformation: Finding the silver lining in the cloud” and an engrossing Leadership Workshop by Dr Pramath Raj Sinha, CEO & Group MD, 9.9 Media. Post lunch, the delegates came together to listen in rapt attention to a topic many of them are grappling with even today – striking a balance between profitability and growth. Both speakers, Mr Anup Vikal, CFO & Head–Strategy & IT, Interglobe Enterprises and Mr Badri Sanjeevi, Chief Financial Officer, People Group gave examples of their own organisations to argue in favour

STRIVING FOR EXCELLENCE: CFOs try their hand at juggling on stage during the entertainment show on Day 2

MERRY ON THE FERRY: Delegates enjoy the ‘Voyage of Discovery’ boat ride to the harbour - enjoying a laugh and clicking photographs as well

RISK MANAGEMENT?: Kalaripayattu performers dazzled with their movements and innvovative forms of self-defence

FUNDA-MENTALS : One of the groups arguing a point during the ‘unconferencing‘ session

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event

TECH-KNOW: Mr Hiren Israni, CFO, Microsoft shares his thoughts on where technology is headed and how CFOs can benefit from it

I BELIEVE: Mr Sugato Sircar, MD, Gujarat Gas explains a point during his presentation on ‘Managing investor relations’

FOOD FOR THOUGHT: Delegates catch up for some informal networking over coffee

of methods and ways through which such a sweet spot could be arrived at. In another much anticipated session, Mr Ram Ramasundar, former Group CFO of Ranbaxy and later ITF Jindal, (currently Managing Director Blue River Capital) and Mr Vishak Raman, Regional Director, India & SAARC, Fortinet, spoke on “Enhancing Enterprise Security in your Organisation”.

BEVERAGE BONDING: CFOs enjoy a light moment as they share a drink with peers during the gala cocktails and dinner on the Taj sea-front

In the final session of the day Mr Sandeep Kejriwal, Chief Financial Officer & Head – Corporate Sustainability, EMC and Mr Hiren Israni, Chief Financial Officer, Microsoft spoke on “Tech in Finance – the world that awaits us.” The day ended with an hour-long boat ride ‘Voyage of Discovery’, where a specially commissioned ferry took all the delegates on a voyage to the Kochi harbour before anchoring back at the hotel’s private harbour. Later in the evening, over cocktails and a gala dinner on the sea-front, the CFOs came face-to-face with professional jugglers – who taught them a thing or two about juggling! Many delegates tried their hand at juggling the balls, sticks and rings – with results that drew laughter and applause in equal proportions! They all were later seen networking and sharing a laugh over cocktails as they dug into the freshly grilled seafood and other delicacies. Sunday the 29th began with a lazy breakfast followed by an unique ‘unconferencing session’ where CFOs formed themselves into four groups, chose four top-of-the-mind topics, discussed them in separate rooms and then made group presentations – finally leading to an open house debate and Q&A session. The final session of the conclave was fittingly a tribute to the future leaders. Titled “Gen Y: Worldview and

Workview’ the session saw two relatively ‘young’ CFOs, Mr Sathya Kalyanasundaram, Finance & Operations Director, Texas Instruments and Mr Devraj Doss, Chief Financial Officer Diageo India Pvt Ltd talking about how to understand the new workforce better and utilise their ability to multitask and their fondness for social media to maximise business efficiency. Before they caught their flights back home, all CFOs came together one last time on a shopping trip – heading out to Kochi’s famed Jew Town and Spice Market. The poor shopkeepers didn’t have a chance – bargaining with perhaps some of the best and smartest bargainers in the country! As the written feedback from most attending CFOs suggested, the conclave was a runaway success with most sessions getting a thumbs up from the audience. The logistics and organising team got more than a thumbs up for ensuring there wasn’t a single glitch throughout the three days. The CFO India team also promised the delegates that they would increase the level of engagement with the CFO community in the months to come. The sponsors for the conclave were Towers Watson and Oracle (Knowledge Partners), Airtel (Gold Partner), Kotak and Tally (Silver Partners) without whom hosting a conference on such a grand scale would have been all but impossible. au g u s t 2 0 1 2

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leader’s

world

Thriving when others are Surviving Positive thinking, setting achievable goals, counting the blessings instead of deliberating over problems – can reduce stress and make you more successful as a leader, instead of merely ‘surviving’ David Lim

ABOUT THE AUTHOR David Lim, Founder, Everest Motivation Team, is a leadership and negotiation coach, best-selling author and two-time Mt Everest expedition leader. He can be reached at his blog http:// theasiannegotiator. wordpress.com, or david@everestmotivation.com

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Last week my wife caught me catastrophising. I realise that for most of us, that’s not exactly an action or a verb we get ‘caught’ doing often. But this time, it was most certainly a case of catastrophising. It was when my laptop’s screen died, and my desktop was also not exactly working well either. All my key data was still in the hard drive, I had no ability to access it. I was reduced to waving my arms and using phrases like ‘my whole life is in that thing’ and ‘I‘ve had it’. I then stopped sheepishly when I realised that I was guilty of the exact thing that I educate people not to do. Much more recently, we have had a couple of major financial crises. Trillions were lost on the stock markets. The language used by the media included evocative terms like ‘meltdown’, ‘bleeding’, ‘plummeting’, ‘panicking’ and ‘desperate’. Greece is sinking under its debts as are a number of other over-extended European nations. However, for quite a few people in these countries, the massive changes have really meant a shift from a lifestyle that was unrealistic anyway. The real disasters were on those who were relatively blameless but caught in the wave of unemployment and such difficulties. When you compare the woes of someone in a developed country with someone who has to walk 10 km for a bucket of fresh water – that should put things

leader’s world in perspective. When I was preparing my notes for a recent presentation, I realised that the key reality-forming steps that bring us from where we are to where we prefer to be lie in the language we use. Not just language in the big, important messages we live with, but everyday, little realities that shape the big picture. Here are some messages that many people may not like to hear, but are really what helps in making us thrive when others are merely surviving.

Learn to really, truly enjoy what you have: Joy in life is connected deeply with how we face each day, celebrating what we have, rather than what we don’t. If you drive a serviceable car, don’t let the flashy continental car that just went by make you feel a little green. Instead count the blessings that you don’t have to rely on public transport. If you’re stuck in a sardine tin of a commuter train, think about how you can enjoy reading a bit of the free sheet, and how this is so much better than having to walk to work.

“When you compare the woes of someone in a developed country with someone who has to walk 10 km for a bucket of fresh water – that should put things in perspective”

Think small to get big goals: In the field of Solutions Focus consulting, a powerful way of getting what we want (and thus getting closer to the Perfect World) in small steps, is to imagine, in movie terms, the sights, sounds and feelings of what our perfect world might be. Each is unique. By looking at what we need to do, instead of why what we do won’t work, we drive much more positive energy and motivation in getting what we want. But only if we realise we need to make small, but specific steps based on solutions. There is no such thing as reality: But only our own biased, perceptions of what is, as seen through our life experiences, cultural, educational and spiritual beliefs. By choosing to use language that fails to help us improve, we will never achieve our goals. If we get frustrated or concerned, should we be catastrophising as I did earlier in the week? Or should we ask special questions? In one of my programmes in transforming managers into leaders, we use what I term ‘power questions’. You can find these with practice and application to your own life. These questions will force us to re-look our situation, or reexamine a set of beliefs, possible erroneous. The result will be the loosening of previously rigid positions, and inject some healthy ambiguity over dead certainties. “You’ll never become a CEO?” – Never? Says who, on what grounds, and what spe52

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cific examples can you give to prove of show this? This kind of power question has the ability to turn around naysayers, gives hope, and often transforms a shaken team into a resolute, determined team. When I look back on nearly two decades of mountaineering, in every difficult expedition, there was always a defining moment. In each of these, the success of the trip almost always turned on the kind of beliefs we had of our abilities, the weather, the challenges ahead and so on. But the most powerful was our internal language we used to shape our future. So, move away from being mere ‘survivors’ as these are sometimes bankrupt of positive belief, and energy, preferring to feel sorry for themselves, and remain consistently negative. Instead, look to those who seem to be miraculously thriving. Even if they have lost half their investments, possibly their jobs, they remain resolute in finding solutions, dreaming and doing things that bring them closer to their perfect world.

David Lim is the Chief Motivation Officer of the organizational and team development firm Everest Motivation Team. He is best known for his leadership of the 1st Singapore Everest Expedition in 1998. Get to the top at http://www.everestmotivation.com

Lounge

08.12

CFO

Rains in the desert with a golden fort looming on the horizon. Sounds tempting? Read about mesmerising Jaisalmer this month. For the gadget geeks the Toshiba L850 is a new laptop that we review this month. And if you are a wine enthusiast, we suggest you try out Vinoteca by Sula, Mumbai’s newest wine and tapas bar.

Renault Duster

Burly Benevolence

The Duster offers terrific value for money, shaking up the entry level SUV segment in the process Amit Chhangani There has long been a void in the Indian auto market – the lack of a sub `10 lakh SUV of a reasonable size from an international auto manufacturer. Renault India is a first mover in this regard by filling the gap with the new Duster. Here’s why the Duster promises to be a big hit in the market.

Design and exterior finish Starting at the front, the triple slat chrome grille with the angular Renault logo setting pretty in the middle, flanked by those double barrel headlamps looks very bold. That wide bonnet along with those exaggerated wheel arches gives the face of this machine

DID YOU

KNOW?

The Renault corporation was founded in 1899 as Société Renault Frères by Louis Renault and his brothers Marcel and Fernand. Both Louis and Marcel raced company cars, but Marcel was killed in an accident during the 1903 ParisMadrid race. Louis never raced again but,Renault remains involved in racing even today.

cfo lOunge

on Wheels a beastly, brawny look. And that’s something which seldom goes wrong with us Indians – if it’s an SUV, it should look the part. The highlight of the Duster’s profile has to be its bulging wheels arches, both front and rear. When in motion, its wide track, accentuated by a low roofline gives it a planted look.

MEAN MACHINE: The duster is a powerful car and with brilliant shock absorbers, is ideal for india’s bumpy, pot-holed roads

Engine and gearbox The Duster is available with three engine options. A 1.6 litre petrol and a 1.5 litre turbo diesel in two states of tune. Even with its 100PS / 160 Nm power / torque output, we wouldn’t like to bet on the sales of the petrol version in these times. The diesel engines produce 85 / 110 PS of peak power and 200 / 240 Nm of peak torque respectively. A 1.5 litre turbo diesel may not sound like a potent enough engine for such a burly machine, but with its impressive power output of 110 PS, a forceful 240 Nm of peak torque the engine manages to haul the 1,200 kg weight of the Duster rather well. The torque build-up begins from 1,500-1,600 rpm mark where the vehicle begins pulling but not reassuringly enough. The engine is mated with a six-speed manual gearbox. The engine-transmission combo on the Duster leaves little to complain about. With a claimed fuel efficiency of 19.01 kmpl (for the 110 PS version), those conscious about the running costs shouldn’t have anything to worry about either.

Ride and handling quality If there is one feature of the Duster that puts it head and shoulders above its competition (and cars from a segment or two above too) – it has to be its unimpeachable ride quality. The car swallows potholes as if they didn’t exist. We were driving on some of the roughest terrain we have seen in Munnar, where some of the roads led us into complete wilderness. We literally

Duster ENGINE: 1.6L petrol and 1.5 L diesel TORQUE: 200PS/200Nm MILEAGE: 19Kmpl Price:

`7.99 to 10.99 lakh

(Ex-showroom, Delhi) Positives • Great value for Money • Muscular looks and great street presence • Phenomenal ride quality, decent handling Negatives • Unimpressive interiors • Improper placement of switchgear within the cabin • Small sales and service network VERDICT Good value for money. Handles Indian road conditions well. Go for it

sashayed over the Martian surface without a worry. Quite frankly I have not seen an SUV ride and handle better than this one in and around the segment.

Cabin comfort, features and quality Unfortunately the car has not been able to carry through its premium exterior feel to its passenger compartment. The instrument cluster comprises of vanilla black dials with white fonts. The plastics on the dashboard are rather hard. It however, redeems itself in the way those plastic panels have been put together. The assembly of panels within the cabin is top notch with a very high degree of precision and neatness. Everything seems to have been assembled with a vision to make things last. The car also offers an enormous boot capable of 475 litres.

Making the choice With a base price of ` 7.99 lakh for the 85 PS diesel, ex-Delhi, the Duster presents itself as an irresistible option. Even the top of the line RxZ 110PS variant with a sticker price of `10.99 lakh looks like a steal. au g u s t 2 0 1 2

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Gizmos new launches

Panasonic Lumix DMC-LX7

Hot Spot

Toshiba Satellite L850 Very powerful laptop, or a desktop replacement Vishal Mathur Straight out of the box, this looks like a traditional laptop, with a no-frills design. The lid has a brushed metal finish, which is a thankful reprieve from the hateful glossy finish of some rivals. The build quality does justify the price. The laptop’s tiled keyboard is well spaced out, helped by the margins offered by the 15.6-inch display no doubt. The touchpad is located towards the left. Call us old-fashioned, but we like it to be centre aligned, as that is just how the hand is naturally positions on the keypad. It houses a quad-core Intel Core i7-3610QM processor clocking at 2.3 GHz, with a Turbo Boost mode taking it to 3.3 GHz and 8 GB of RAM. Thanks to this power package, the L850 scores very impressively in all benchmark tests. The Radeon 7670 should satisfy the gamer amongst us, to a certain extent. It does score better than the GeForce GT630M that comes in the rival Acer Aspire V3. 56

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The 15.6-inch display on the Satellite L850 is absolutely brilliant. The brightness levels are quite high, and tend to act as an antidote to the slightly reflective nature of the the laptop’s display. No matter what, the battery will not last more than 90 minutes under full load. Don’t expect this to last more than 2.5 hours under standard usage conditions either. The Toshiba L850 is one solid desktop replacement, and is a viable alternative to the Aspire V3, in a slightly higher price bracket. Specifications: Processor: Intel Core i7-3610QM @ 2.3GHz (Turbo mode to 3.3GHz); RAM: 8GB; Graphics: ATI Radeon 7670M (2GB); Display: 15.6-inches, 1366 x 768 pixels; Storage: 750GB hard drive; Ports: 1 USB 2.0 + 2 USB 3.0, HDMI out, Ethernet

Panasonic refreshed its Lumix line of cameras and launched LX7, which will succed LX5. Sporting a 1/1.7-inch sensor, the optics on the LX7 is crafted by Leica having a maximum aperture of f/1.4. The ISO range goes from 80 to 6400. It’s capable of shooting in the RAW mode.

Motorola Atrix HD Atrix HD sports an Android 4.0 operating system housing the 1.5GHz Snapdragon S4 SoC. It has the circles widget which lets you toggle between time, messages, lets you toggle for weather between different cities. It is expected to cost approximately `35,000.

Nexus Q According to Google, this orbshaped device is the world’s first social streaming media player which was launched at Google I/O, allowing multiple Android devices to queue and play content on the same Nexus Q. Comes with a US$299 price tag.

Price: 56,000 powered by

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M&E

THE COOLEST NEW MEETING & EATING PLACE

A touch of class Looking for a place where you can wine and dine in some style when out for a drink with a friend or a guest? Try Vinoteca by Sula, Mumbai’s newest wine and tapas bar Dhiman Chattopadhyay Wine aficionados can rejoice. You don’t have to necessarily head out to a five star hotel next time you want the comfort of a classy bar where your favourite merlot will always be available. Rajeev Samant, the flabuoyant CEO of Sula has opened a wine and tapas bar at Worli in south Mumbai and this one promises to a tapas bar with a difference. Vinoteca by Sula boasts of over 70 labels of both Sula and international brands. From a Dom Perignon 2002 (priced at

Vinoteca By Sula Location: Sunville Building, Dr. Annie Besant Road, Worli, Mumba USP: Mumbai’s newest posh wine and tapas bar. Great collection of wines Reservations: + 91 22 40046234, + 91-8691033900

vINOTECA BY SULA IS A GREAT PLACE TO RELAX OVER A GLASS OF YOUR FAVOURITE WINE. THE CAREFULLY CHOSEN FOOD MENU IS A PLUS

`18,000) to the more popular (and affordable) Sauvignon Blanc from Jacobs Creek in Australia, Cono Sur Bicycle Chardonnay from Chile or Australia’s Hardys Pinot Noir, there are wines here for both those experimenting with grape varietals to the true connoisseurs. The Tablas (typical Spanish wooden boards on which a combination of appetizers are served) started us off on our gastronomical (and wine sipping) journey on a breezy Sunday afternoon. The vegetarian platter came at `1,000 and the nonvegetarian at `1,800. No prizes for guessing which this Bengali reviewer ordered! Next came the Pintxos – a Spanish version of the popular bruschetta. The delicatessen option comes for `300. For the tapas, we tried the escalivada (grilled eggplant, capsicum and tomatoes baked with garlic and parsley seasoning) and the pollo al chilindron (a mildly spicy stew with chicken in a tomato sauce). For non-vegetarians, the ‘must-try’ here is the entrecot a la pimienta which, translated, means grilled pork tenderloin served with green peppercorn sauce. Of course there is plenty to choose from. So while fish lovers can go for the marinera grilled kingfish, cooked with prawns and clams or the calamares a la Romana, vegetarians can opt for the sauted mushrooms and asparagus or the melting cheese and tomato pintxo. Of course the reason one would still come here is its impressive wine list. The maximum you will have to pay for a glass of Sula is `350. Even imported wines such as the Italian Ruffino Chianti will set you back by less than `500 a glass. Need we say more? au g u s t 2 0 1 2

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travel

Jaisalmer

Land of the Golden Fort Jaisalmer, made immortal by Satyajit Ray’s iconic film Shonar Kella (The Golden Fort) is a feast for the eyes with its ‘golden’ sandstone fort, sand dunes and throbbing marketplace Anil Mulchandani Jaisalmer is certainly one of India’s most enchanting destinations - its ‘golden’ sandstone fort, maze of markets and carved stone mansions evoke visions of the Arabian Nights. As Jaisalmer gets overcrowded in winter with domestic and foreign tourists flocking to Rajasthan, August-September is probably a better time to visit this desert destination. It was evening when we arrived at Jaisalmer, after a four hour drive from Jodhpur. We opted to stay at The Gateway Hotel Rawalkot set on an elevation with a superb view of the fort of Jaisalmer. The hotel is very much in keeping with the theme of Jaisalmer with courtyards, carved furniture a and 360 degree view of the desert. We were fortunate to get a room which looks out towards the Jaisalmer Fort, also known as the Golden Fort. We met families from Bengal and Gujarat as well as a host of European travellers at the swimming pool and at the restaurant who were clearly in awe of the breathtaking beauty of Jaisalmer. To enjoy the sunset, we drove to the Vyas Chattries which has an excellent view of the Jaisalmer citadel. The next morning we woke up early to visit the historic fort. Built in the 12th century by King Jaisal, the founder of 58

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Jaisalmer, and extended by successive rulers, Jaisalmer’s fort is one of the most majestic sights in Rajasthan and contains some of the state’s finest stone masonry work. We walked past richly carved balconies called jharokas and open plazas where large gatherings and festive celebrations were held, and came to the multi-storey royal palace. Inside this palace, now a museum, are floral paintings, carved doors, gleaming blue tiles, mirror mosaics, royal portraits, ornate

cfo lounge

travel LEFT: THE JAISALMER FORT, MADE IMMORTAL BY SATYAJIT RAY’S FILM SHONAR KELLA (THE GOLDEN FORT) BELOW: THE PALACE MUSEUM, PART OF WHICH HAS NOW BEEN CONVERTED INTO A HOTEL

Dinesh Shukla

ABOVE: THE MAJESTIC JAISALMER FORT, CARVED IN SANDSTONE, LOOMS LARGE OVER THE CITY; LEFT: TOURISTS NAVIGATE THE VAST OPEN THOR DESERT AS THEY ENJOY A CAMEL RIDE FAR LEFT: THE HAVELIS OF JAISALMER HAVE INTRICATE CARVINGS ON STONE

thrones, 19th century furniture and utensils, princely artefacts and old photographs. There is also a museum collection of historical finds like medieval sculpture, coins and currency, and stamps. From the terrace, we enjoyed a view of the fort complex with its temple spires and the citadel below. Walking further into the fort we saw the finely carved medieval Jain temples and areas where thousands still reside within the battlemented walls. We climbed into the ramparts for an unending view of the countryside. All the walking had made us rather hungry and we headed to the much talked about Trio Restaurant – famed for its Rajasthani, North

Indian and western food. After lunch, we visited the Welcomheritage Mandir Palace Hotel – a luxury hotel with one section being converted into a museum. A third part continues to be the residence of its owners! As evening approached, we drove out towards the sand dunes of Samm. August is a good time to visit these dunes when there are not too many tourists. The real challenge here though was getting up on the camel. For those who haven’t ridden a camel before, one word of caution here: this is not as simple as getting up on a horse! As soon as we had mounted our camel for instance, it rose – first on its hind legs so that we were pitched forward and looking at the ground from a precarious angle and then, even as we caught our breath, we were thrown back again as the animal rose on its fore legs. Slightly giddy, we started out on our jaunt, but soon found ourselves getting used to the rhythm. Standing on the dunes, sipping an evening drink, we witnessed the stunning sunset, a blazing ball disappearing over a vast ocean of golden sand in a magical land.

HOW TO GET THERE: Though Jaisalmer is not directly connected to Airways as such, Jodhpur airport is 300 km away. You can also travel to Jaisalmer by Palace on Wheels. WHERE TO STAY: The Gateway Hotel Rajwalkot and Fort Rajwada are both good five star hotels. Ideal for families. au g u s t 2 0 1 2

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not just

the last word

Contemporary dilemmas: what’s your take?

t CFO India’s 3rd Annual CFO Conclave, senior finance professionals debated business and functional issues with reasonable clarity. In most cases, they arrived at unanimous conclusions. But there was one casualty – the discussion around diversity and inclusion. Delegates could not even arrive at a common definition of what diversity should mean to organisations. Should I have been surprised? Well, I was. The discussion on diversity had hoped to achieve three things: • An appreciation of the need for diversity • Identify why it flounders • Concrete suggestions on how it could be enhanced, and finally • Could CFOs play a role The hiccup began early due to the absence of a common understanding. While the ‘converted’ pushed for the unequivocal merits of pursuing diversity in all its hues, the first debate became about gender as opposed to diversity - and whether that was a correct approach. Here is a well-known fact - women are one half of the world but are not ‘one-half’ of the workplace. Therefore, when discussing diversity the first step often becomes about ‘women at work’ and related issues. 60

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To my mind this is an obvious starting point – not necessarily a skewed view of diversity. Every other indicator - disability, religion, ethnicity, sexual orientation, etc are critical but smaller in terms of numbers and therefore, impact. There is little that competes with the ‘women at work’ issue in terms of global relevance. The converted believe, quite vehemently, that it is easy to commit yourself to diversity. It’s an old law of physics (Newtons’ Third Law of Motion actually) that – every action has an equal and opposite reaction. So the more vehement the converts, and their claim that it is easy to be diverse - the greater is the opposition from the skeptics and fence-sitters. From which element of diversity to pursue, to how it fits in with a meritocracy, to whether this should be a part of CSR, to it

being a part of the HR department – we heard it all! The financial implications of being an equal opportunity and diverse employer are also critical to acknowledge. From crèches, to ramps and disability friendly facilities, everything has a cost. To ignore what this commitment to diversity suggests in terms of budgetary resources is to set it up for failure. As a CFO particularly, its important to be transparent about ‘why’ the commitment and ‘how’ the commitment. As most of us know, a cost-benefit analysis is germane to our decisions – without clarity on that dimension you could continue to revisit your diversity plans. A possible way to address this is to pursue diversity as a differentiator for your organisation; consider the associated costs and hopefully conclude that it is well worth your while. As a CFO your endorsement – all things considered – could give this issue the fillip that it deserves. At least that’s my belief. What do you think? Here’s to a more equal and diverse working world! Anuradha Das Mathur, Editor, CFO India

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