Business Today

Walk the tightrope

Unlike in the cash-and-carry business, the CFO in the infrastructure sector must have a keen foresight in order to accurately identify and factor in future profits into investment decision-making, says P. Alli Rani, Director (Finance), Container Corporation of India.

P. Alli Rani        Last Updated: June 6, 2013  | 11:18 IST

Container Corporation of India does not fit the common description of a government undertaking. It is the market leader and the most profitable player in a sector which has 15 competitors including prominent business houses. It has a huge shareholding by foreign institutional investors, probably the highest among PSUs. And it holds the record in the logistics sector for per employee productivity. For the CFO this is a tough environment to work in where, while the expectations are pegged at high levels that prevail in the private sector, the working strategies have to satisfy government guidelines and the concept of doing business with the taxpayer's money. Having a private sector shareholding of 37 per cent and serving the government at the same time is as good or bad as serving two masters.

This is not much different from tightrope walking.  Add to this the turbulent business environment during the past four years wherein the tightrope walking got more perilous with the rope itself swaying dangerously in the stormy world of international trade, making the experience most challenging yet stimulating. Hence, the success that followed as evident from the consistent financials and the launching of a record number of new projects at a rate unprecedented in the sector has been all the more satisfying. The company saw a phase when its burgeoning cash reserves attracted too much attention and it became a challenge to keep money from being diverted to areas that would have found no favour with the private shareholder. A fine balancing act kept the company's finances in an area that was agreeable to both private and government shareholders.


The numbers
#Revenue: Rs 4,101 crore, up 5%
#EBITDA: Rs 1,023 crore, up 25%
#Net Profit: Rs 866 crore, up 21%
#ROE: 16.5%

Highlights
#Dividend payout ratio of 28% on consolidated net profit
#Capital expenditure of Rs 366 crore; two terminals commissioned and four upgraded
#Initiated investments in bonds and e-tendering process for transparent online contracting

Identifying new income streams in new business ventures, balancing the spend, first guessing possible margins in never-before-experienced territory, and these to be done while having to fight competition in a sector perceived as the star sector of the recovery phase has been a tough game. The infrastructure sector in India is a toddler taking its initial steps, whereas the rest of the businesses depend on it to lead growth. Unlike in the cash-and-carry business, the CFO in the infrastructure sector must have a keen foresight in order to accurately identify and factor in future profits into investment decision-making. No wonder, risk management has been made part of the CFO's portfolio at Concor. It has not deterred the pace of investment in any way. On the other hand, it has defogged the road ahead for the team.  But this is exactly what keeps the CFO going, ready to take the blame but enjoying the limelight when results reflect their contribution in a job well done in a tough environment and the admiring glances say, "We knew we could rely on you."  

P. Alli Rani is director (Finance) of Container Corporation of India. She has been adjudged the Best Woman CFO.

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