Finance honchos-at least during the mid-'90s-weren't exactly known for venturing out of the comfort of their bean-counting premises, nor did they appear keen to do so. So when chartered accountant Kewal Handa, who joined Pfizer in India in June 1990 as controller in MIS-Taxation, moved to head the pharma major's animal health division in December 1994, it was a bold step into the unknown. Quite literally, for Handa. On his first visit to a dairy on the outskirts of Mumbai, Handa fell into a ditch and found himself neck-deep in cow dung. "I soon learnt that there are different types of cows and cattle that give different quantities of milk," chuckles Handa, who has since learnt to watch his step when trudging through a dairy field.
PRAVEEN KADLE, Managing Director, Tata Capital since Sept. 2007.
- CFO stint: Executive Director, Finance and Corporate Affairs at Tata Motors from Oct. '01 to Sept. '07.
- High point as CFO: Part of the team that turned around the automobile major, which was reeling under huge losses after the entry into passenger cars.
- Current mandate: To scale up the Tatas' financial services business.
- "The CFO stint comes handy when you are a CEO because you are in a better position to understand the finances with an eye on creating shareholder value"
Handa was soon back in the function he knew best- and no it's not because of the dunk in the dung-when he took over as Finance Director in June 1996, a mandate he fulfilled till April 2005. The big break came soon after when he was promoted as Managing Director of the pharma giant's Indian operations-and became the first Indian in 60 years to head Pfizer in India. It's been quite a ride for Handa-something most CFOs aren't accustomed to, with most of them rising through the ranks of the finance ladder. "Most CFOs are not comfortable taking risks as by nature they are risk-averse," explains the 57-year-old. "It is up to the CFO to move away from his original domain to a different function whenever the opportunity comes," he adds.
Few CFOs would have had the opportunity for as adventurous a climb up the ladder as Handa's. But a quick glance across the corporate landscape would reveal that more and more CFOs today are gravitating to the CEO's corner room. Globally, there is no dearth of examples of CFOsturned-CEOs, right from PepsiCo's Indra Nooyi and Boeing's James Bell to Carrefour's Jos Luis Duran and Harley Davidson's James Ziemer. Back home, Vishakha Mulye, Keshav Murugesh, P.K. Mukherjee, D. Sundaram and Praveen Kadle and Handa are some of the CFO-elite who have moved beyond their core domain to assume overall charge.
According to a recent McKinsey study, "about a fifth of all CEOs in the UK and the US once served as a CFO. The number drops to between five and 10 per cent in European markets (for example, France and Germany) and in Asia, perhaps because many companies in those regions still have CFOs who are little more than controllers."
VISHAKHA MULYE, Managing Director & CEO, ICICI Venture Funds Management Co. since April 2009.
- CFO stint: Between August 2005 and October 2007 at ICICI Bank.
- High point as CFO: Mobilised billions of dollars for ICICI Bank.
- Current mandate: Nurture companies across sectors and maximise returns for shareholders.
- "The role of a CFO has undergone a change from its historical focus on accounting, auditing and regulation to being a partner for the CEO across all aspects of the business"
In a world just recovering from a colossal financial crisis, these controllers are increasingly finding themselves at the forefront of strategic decision-making. An understanding of the increasing complexity in regulation, the need for a higher level of communication with all stakeholders, and the increasing relevance of going international via acquisitions-for which capital has to be raised -are imperatives for survival and growth in today's rapidly-changing business environment.
The CFO today is best placed to deliver on all these counts. As Murugesh, who rose to become CEO from CFO at global IT services firm Syntel in 2009, and is now CEO, WNS Holdings, puts it: "Post-Lehman when risk issues and balance sheet deleveraging took centre stage, the situation was ripe for more CFOs to gain more prominence." Adds Mulye, Managing Director & CEO, ICICI Venture Funds Management Company: "The role of a CFO has undergone a change globally, as also in India, from its historical focus on accounting, auditing and regulation to being a partner for the CEO across all aspects of the business."
KEWAL HANDA, MD, Pfizer India since April 2005.
- CFO stint: Finance Director between Dec. '96 to Apr. '05.
- High point as CFO: Handled Pfizer's M&As like Parke Davis and Pharmacia.
- Current mandate: Pursue growth through acquisitions and product launches.
- "It is up to the CFO to move away from his original domain to a different function whenever the opportunity comes"
Mulye has been, since 1993, a part of the ICICI Group-a universe in which opportunities are there to be grabbed for fast-trackers. The 41-year-old had an opportunity to work across functions right from corporate finance (when ICICI was a development financial institution), to structured finance, treasury and distressed assets. She eventually rose to become CFO of ICICI Bank, where she found herself busy raising capital to the tune of billions of dollars, overseeing a merger (with Sangli Bank), and also hobnobbing with policy makers and regulators to create an intermediate holding company structure for the group and its myriad subsidiaries (that didn't find favour with regulators).
Before picking up the reins at ICICI's venture capital arm, Mulye also did a brief stint as Executive Director at the general insurance subsidiary, ICICI Lombard. "ICICI Group offers a wide range of opportunities and has the ecosystem to help leverage these opportunities," believes Mulye.
There are basically three types of CFOs-turned-CEOs: Those that rise to the top in a single organisation ( la Handa), those that jump organisations (like D. Sundaram, the veteran finance head of Hindustan Unilever who moved on as Vice Chairman and Managing Director at TVS Capital Funds last June), and those that are given an opportunity to head group businesses (like Mulye). Also fitting into that last category is 53-year-old Praveen Purshottam Kadle, who after a successful 11-year stint at Tata Motors, went on to head the newly-set up Tata Capital, two years ago.
KESHAV MURUGESH, CEO, WNS Holdings since Feb. 2010
- CFO stint: Director (Finance) at Syntel between Mar. '02 and Oct. '04.
- High point as CFO: Initiated business analytics that helped in sales and delivery.
- Current mandate: Move up the value chain and expand delivery locations.
- "Too many CFOs are happy just being CFOs and being an asset to the CEO"
Today, Kadle finds himself on the other side of the fence-from raising funds for growth to helping corporates do the same with Tata Capital's advisory services. The man who helped Tata Motors come back from a horrifying Rs 500-crore loss nine years ago says that the CFO experience comes in handy today as he is well-placed to understand the nuances of finance and creating shareholder value. An ability to navigate through the financial jungle is doubtless a great weapon to have in a CEO's armoury but by no means is it the only one.
P.K. Mukherjee, Managing Director, Sesa Goa (which was bought out by Anil Agarwal's Vedanta Group two years ago) recollects his six years till 2006 during which he was a CFO at the iron oremining firm. Along with looking at accounting and financial issues, Mukherjee would also travel to the business units and build informal relationships with operating managers. "I spent 25-30 per cent of my time on HR-related issues," says the 54-year-old CEO. "Most CFOs tend to behave like auditors-their approach is more of smelling a rat in the numbers," he quips.
P.K. MUKHERJEE, MD, Sesa Goa since April 2006
- CFO stint: Director (Finance) between July 2000 and March 2006.
- High point as CFO: Increased the return on capital employed, brought working capital efficiencies.
- Current mandate: Scout for iron ore in India and abroad.
- "CEO-CFO alignment is a must to make it a deadly combination for a firm's growth"
Murugesh of WNS is another CFO whose interests in nonfinance activities helped him climb to the top. He joined ITC as a finance executive but his interest in other aspects of the business was quickly noticed by then deputy chairman F.R. Vevaina who handpicked Murugesh to help out in the tobacco major's diversification strategy in the early '90s. CFOs with a burning ambition to get to the top should also be open to learning-and that may often mean going back to school.
"It would be suicidal (for a CFO) to pretend that he knows marketing or sales," says Handa. "At the end of the day, it's the leadership skills that you bring to the table that matter," he adds. So what did Handa do to develop that all-round perspective? Well, he attended a senior management development programme at IIM Ahmedabad, did a course in marketing strategy from Columbia Business School, and completed a leadership development programme from Harvard!
But, perhaps, the turning point in Handa's career was when he stepped out of his bookkeeping role at Pfizer into the dairy farm of the animal health division. From there on the sky was the limit-and perhaps, still is.
Why CFOs are being drawn into the corner room
- Increasing complexity in regulations and greater communication with stakeholders make them the face of the company.
- Post-Lehman and the liquidity crisis, CFOs have emerged as key decision makers in managing capital and rewarding shareholders.
- Globalisation and a sharper focus on international acquisitions bring the CFOs closer to decision-making and understanding business competitiveness.
- Best placed to put in place performance measures and controls in the company.