The ongoing COVID-19 pandemic has changed how the world will work in all facets for the foreseeable future. Perhaps no entity faces a more perplexing road ahead than the private sector. With everyone coming to terms with what is being referred to as the “new normal”, the future poses more questions than answers for businesses and companies as we adjust to the pandemic and attempt to resume moving forward.
To get a better understanding of how companies are planning to acclimatize to these new conditions, BW Businessworld organised a roundtable discussion with CFOs from some of India’s most reputed companies. The discussion was centered around the challenges, perspectives and strategies of businesses during the time of this outbreak.
Daya Prakash, Consulting Editor, BW Businessworld kickstarted the discussion, saying “3 months into the lockdown (and current Unlocking), there is no more a fear of economic slowdown, but it is a harsh reality. The worst part about this situation is not knowing when this will all come to an end. However, history tells us that in times of crisis, there are two kinds of organizations; those that struggle to survive and fall to adversity, and those that turn adversity into opportunity.”
Dharmendar Tuteja, ED - F&A, Commercial, Dalmia Bharat Limited spoke about how he and his organization were navigating through these uncharted waters. “We at Dalmia, especially the finance team have been focused on three main roles during this difficult period of time; The employee is the most important asset, customer is king and cash is king. These three kings have been prioritised and so three teams have been created - Employee action team, cash action team and sales action team. In the first two teams, we have been playing a supportive role and for the cash action team, we have been leading from the front. Within this current situation, our cash action team has done enough work to ensure we have two years worth of liquidity even if no sales are to take place. That kind of assurance was a must for the organisation to feel secure. Cost cutting was a huge part of our process, especially curtailing all non-essential expenditure. Given this situation, each cost was looked at in great detail.”
Talking about the transition from Pre-Covid strategy to Post-Covid strategy, Neeraj Goel, CFO - Global, Jaquar and Company stressed on the importance of the employee. “For our organisation, we had to shift our focus from growth (pre-covid) to now sustainability in this period. The company has been focused on all four fronts, be it employees, vendors, customers or bankers. It is important, especially in the current time, that we ensure the maintenance and sustenance of cash flow, liquidity etc. We have to keep our employees motivated and driven, retain customers and customer interest and maintain the support of our vendors. While all these facets are extremely important, we have given a little more significance to the customers at this point in time.”
Strategy and planning have a great deal of significance for businesses during the time of this pandemic. Ranjeev Lodha, ED & CFO, Huhtamaki PPL elucidated on some of their own strategic incorporations. “Each company has a different risk profile and operation metrics. As the pandemic broke out, it was important to get stock of what we have on ground. We had to first get a daily check on the ground reality, get updates from our plants on various subjects such as the employees, which lines are in work, what orders are being accepted, etc. We also then had a morning review, and we closed with an evening review so we could constantly keep track of what was and is happening. This is because you need to adjust in a way that your strategy is constantly agile to what you may need. As far as strategy planning goes, our time-frame and their definitions have changed; one month is the new short term, a quarter is the middle term and one year is the long term.”
Sanjay Gupta, CFO, Mother Dairy brought in insights and perspectives from the dairy industry, one that has faced unique challenges due to COVID-19 constraints. “We have been lucky, being in the dairy industry, to be able to meet 80-90% of our capacity in terms of production and sales. Our main strategy has been to ensure fair remuneration for farms, farmers and providers and similarly fair pricing for our customers. Right now, we cannot purely operate on the basis of our mission and vision. We also need to look at the consumer and market behaviour, especially in such unprecedented times.”
The importance of data has increased multifold during this pandemic, Pinky Mehta, CFO, Aditya Birla Capital spoke about what and how data should be used. “Any organisation should have the ability to adopt a new mindset in this fast shifting world and circumstances. As a CFO, you must ensure to instill this key characteristic. In a situation like this, you need to have access to real-time data at your fingertips. You shouldn’t be fumbling for the data, nor should you struggle to get your hands on it. The biggest helping hand in this is the access to technology. During the time of the lockdown, I never struggled to get my hands on data, nor did I need to have any of my employees rush to the office to get the data for me.”
Bringing her insights to the panel, Mankiran Chowhan, Managing Director, Indian subcontinent, SAP Concur, shed light on how insight driven decision making is critical during this time. “To stay resilient through unexpected circumstances,visibility into costs and control over how money is spent is imperative to create the operational agility needed for business continuity. Without visibility and the tools to act, it’s difficult to know where to best direct funds to stabilize and thrive in these new circumstances and work towards achieving corporate goals be it maintaining or growing earnings per share, operating cash or profitability. Visibility, control, and flexibility therefore become the 3 keys areas to focus on for your spend governance strategy. She further added, “With spend operations becoming largely automated, finance teams will double down on business insights and service. The skills required by finance professionals will change, likely dramatically, as new combinations of technology and human workforces permeate the workplace.”
Sunil Bohra, ED & Group CFO, Minda Industries Ltd, addressed the challenges of working remotely. “If you look at the early stages of communicating and connecting with people, there was a concern as to the ease and availability of it. Additionally, there were doubts surrounding the infrastructure required for employees and customers to be able to do the same. All of these were gradually addressed as people became accustomed to the new normal. Success of remote working also depends heavily on the trust you have towards your employees. In a crisis, the first important task is to ensure that you maintain a constant line of communication with your employees and keep them in the loop regularly, especially when they are operating remotely.”
This discussion was built around 3Cs - Cope, Control and Conquer. However, Manoj Kedia, CFO, Aditya Birla Chemicals Fertilizers and Insulators unveiled his own 3Cs that he had implemented in his company. “Cash, Cost and Capacity. These 3 Cs have been the primary focus of our spend management strategies. Cash is king in these current circumstances. We have to question each and every cost, ask why it has to be made at the current time, and whether it can be deferred or even permanently discarded. Additionally, with regards to capacity management, safety is the utmost priority so we have to ensure that our capacity for safety is maximised and we comply with any and every precaution to the fullest, while not compromising our output or product.”
Deepak Doegar, CFO, JCB brought a new flavour to this discussion with his words. “When you’re formulating strategies, it is important to look at and understand the objective. The objective in the current context is to deal with a crisis. The strategy we have adopted can be acronymically defined as SPICE. The S stands for Securing the future of the business. This can be done by controlling cash, augmenting resources and expanding banking lines. P stands for Policy. Immediately modifying the delegation of authority. Modifying the responsibility of cash outflows, purchase commitment and expenses. The I is our Income, the C is to Conserve (Cash and Cost), and the E is to Engage, be it customers, financiers, employees, facilitators, supply chains or regulators. For us, the engagement is the most important part, as it involves the most parties and requires us to consistently communicate with them.”
With India and the rest of the world moving forward under tough and restricted circumstances, businesses and companies are finding new and innovative ways to control and redefine the finance function, to come out of this pandemic relatively unscathed. CFOs have a challenging road ahead, and it will be their ingenuity, quick thinking and mindfulness that will lead them victorious to the other side.