Business Today awards India's Best CFOs in 2010

In 2008-09, everything that could go wrong - and things that many thought would never go wrong - went awry. It was the Super-CFO who flew to the frontlines. Pics of best CFOs

(...they hold good in an upturn, too)

>> Focus on costs rationalisation across functions, both manufacturing as well as non-manufacturing.

>> Stand by your associates, including suppliers, endorsers and dealers.

>> Stick to the policy of keeping customer interest as top priority.

>> Maintain focus on the balance sheet, keep revisiting recoverable and debt positions.

>> Continue with good governance.

Third week of November, 2008: The location is a conference room at Tata Steel's Jamshedpur headquarters. B. Muthuraman, then Managing Director of the steel giant (now its Vice Chairman), asks CFO Koushik Chatterjee to address the trade unions. The objective: Boost morale during the slowdown.

Chatterjee makes a power-point presentation to the trade union, in which he explains why and how the global crisis is hitting the company, which had acquired British steel giant Corus for all of $13.7 billion 22 months ago. The intention is to alert the union leaders on the challenges ahead so they can talk to the workers about it. He touches upon the importance of generating internal capital-the same way one attempts to save at home during tough times.

"I translated my presentation into Hindi. That worked well with the union leaders who, at the end, came up to us (the management) and asked what they could do to help the company," Chatterjee told BT last fortnight. After the success in Jamshedpur, the activity was repeated in other Tata Steel markets, too, by other finance professionals of the company.

Cash, costs, communication, confidence. Those four Cs sum up the mandate of the Chief Financial Officer (CFO) in a year (2008-09) when everything that could go wrong-and also things that many thought would never go wrong -went spectacularly awry. And it was for the CFO to step into the breach like never before. As demand and liquidity dried up, cash flows had to be expanded. As margins came under a squeeze, costs came under the microscope.

The CFO had to scrounge for capital in a world starved of that till-recentlytaken-for-granted resource. Suddenly, the rules of the game had changed: Finance heads who once had little problems raising funds to make big-ticket acquisitions were now struggling to find capital to keep those assets afloat and squeeze growth out of them in recession-hit markets.

That's when the other two Cs moved up in priority in the CFO's lexicon. Investors, vendors, customers and employers had to be first told about the realities in the market place and on the balance sheet; and then confidence instilled into them that this too would pass.



Overall and Enhancing Competitiveness through M&A
S. Mahalingam, TCS

Best in Wealth Creation (Large Company)
V. Balakrishnan, Infosys

Best in Wealth Creation (Mid-size Company)
P. Ganesh, Godrej Consumer products

Best in Liquidity Management (Large Company)
Ravi Sud, Hero Honda

Best in Liquidity Management (Mid-size Company)
Anil K. Agarwal, Titagarh Wagons

Successfully Managing the Global Crisis (Large Company)
Koushik Chatterjee, Tata Steel

Successfully Managing the Global Crisis (Mid-size Company)
S.K. Sachdeva, Ahluwalia Contracts

Best Transformation Agent (Large Company)
Uday Phadke, Mahindra & Mahindra

Best Transformation Agent (Mid-size Company)
Kanubhai S. Patel, Voltamp Transformers,
S.V. Narasimhan, IOC
S.K. Joshi, BPCL

Best CFO of a PSU
B. Mukherjee, HPCL

Commitment to CSR
Gopal Mahadevan, THERMAX

Best in Treasury Management
Y.M. Deosthalee, L&T


Now CFOs aren't particularly known for moving out of the comfort zone of the books they keep, but the credit crisis provided them that challenge or-as some finance heads would like to see it-the opportunity.

As Uday Y. Phadke, President, Finance, Legal and Financial Services Sector and Member of the Group Management Board, Mahindra & Mahindra, points out: "During the good times, the job of a CFO revolves around getting the optimum funding through various domestic and international sources at the best possible rates. But during a time of crisis, like what we had in 2008-09, the job gets enhanced."

Tata Steel's Chatterjee adds that during the downturn his role extended well beyond the defined roles of finance, where proactive communication is vital. "Earlier, we used to communicate only what was required. Now, we are constantly talking to customers, investors and lenders."

Both Chatterjee and Phadke have emerged winners in the BT-YES Bank study of Best CFOs, the former for Successfully Managing the Global Crisis, and the M&M CFO for being the Best Transformation Agent amongst large companies.

Whilst Chatterjee has earned the reward for keeping Tata Steel afloat even as the Corus buyout was threatening to submerge it, Phadke is being honoured for being at the forefront of a string of acquisitions that have helped the tractor and automobile maker expand its bouquet of offerings as well as to consolidate its presence in one of its mainstay businesses (tractors).

Indeed, at a time when cash was king-or god, as one of our winning CFO sees it-it takes a brave man to loosen the purse-strings and chase the value that he believes exists in an asset.

S. Mahalingam, of TCS, our overall winner, did just that when he and his team sealed the acquisition of Citi's business process outsourcing (BPO) unit for a cool $505 million (Rs 2,272.5 crore)-the largest buyout of a foreign captive BPO in India.

The jury jaw-jaw

It took close to five hours for the jury to come up with 14 winners, including the overall Best CFO for 2008-09. Perhaps, the sheer challenge of the task itself is one reason for the discussion stretching on for so long. Or, perhaps, it's the depth and differing perspectives brought by members of the jury-from fields as diverse as equities, insurance, banking and private equity-that explains the duration. But by 3.30 p.m., when the final award category was decided, there was satisfaction, and smiles all around.

The first award category to be discussed-wealth creation- was a tough one to crack. Should the award go to a CFO who protected shareholder value with conservative policies during the downturn; or should a more adventurous CFO who sought to deliver returns in tough times get the award? After much debate, Infosys' V. Balakrishnan was selected for his zeal in protecting wealth when share prices were crashing all around.

In the next category of best liquidity management, the choice was between auto majors Hero Honda and Maruti Suzuki as they faced not only slowing consumer demand, but a rise in raw material prices, capacity shutdowns and a tight liquidity environment. Hero Honda's Ravi Sud made the cut for being able to increase market share when supply of funds had virtually run dry.

The category in which unanimity prevailed was the best CFO of a PSU-all jury members acknowledged the efforts of the finance heads of the three oil majors for being able to balance out the nation's needs with those of shareholders. Our overall winner, S. Mahalingam, too, had little competition, as his efforts at steering TCS through its toughest patch since it got listed are indeed commendable.

The transaction has all the makings of a master stroke. Consider: The deal was done just a fortnight after Lehman Brothers plummeted into bankruptcy, and in a year in which the Indian BPO sector registered single-digit growth after several years of robust double-digit (in the late '20s) growth.

The revival may be round the corner, what with tech research firm Gartner predicting that the Indian BPO sector will show revenue growth of 25 per cent in calendar 2010.

For the CFOs who successfully steered their ships through the financial squall, the onset of a recovery is good news not just from the operations' point of view but also from that of their own career path.

At a time when the trend of CFOs taking the step up into the CEO's corner room is gaining ground-see page 66-the winning moves of many finance heads will surely be noticed by their company's boards and promoters.

"Post-Lehman, when risk issues and balance sheet deleveraging took centre stage, the situation was ripe for more CFOs to gain more prominence," points out Keshav Murugesh, CEO, WNS Holdings. Murugesh himself made the move from CFO to CEO at his earlier employer, IT services firm Syntel.

Clearly, the smartest CFOs would have been those very select few storm watchers-and BT's writers haven't been lucky enough to stumble onto too many of them-who would have sensed the end of the party and the onset of a global recession.

The challenge today-albeit a much easier one-is to figure out how robust are the signals of recovery, when will the demons of the downturn be banished for good, and for how long will the good times last after that.

As liquidity conditions ease, demand picks up, and clients and consumers are more prone to spend, CFOs will doubtless breathe easier, but the smart ones among them won't forget the lessons of frugality, restraint, and the need for balance that they picked up in the tough times.


The BT 500, which ranks companies based on their average market capitalisation, was considered as the base set to kick off the quantitative part of the exercise of selecting India's best CFOs. The companies were segregated into large ones (those with sales of over Rs 2,000 crore for 2008-09) and mid-sized ones (those with net sales of less than Rs 2,000 crore).

Two-year financials (for 2007-08 and 2008-09) of these companies were analysed across three crucial categories: Wealth creation (or creation of shareholder value), leverage management and working capital management. Under wealth creation, parameters like market value to book value, return on equity and return on capital employed were considered. For leverage management, we looked at the companies' net debt, total debt/total net worth and total debt/earnings before interest, tax, depreciation and amortisation. And the working capital cycle was considered for liquidity management.

Based on the numbers, some 60-odd companies were selected for the next phase of evaluation, across the 12 different award categories (see page 33 for the award categories and the winners). In the next phase, Synovate, a market research agency, was appointed to conduct a survey amongst brokers and fund managers to create a further shortlist of 24 finalists (two in each award category). For the Commitment to CSR award, a separate questionnaire was sent to a panel of experts on the subject.

These included Parul Soni, Executive Director, Development Advisory Services, Ernst & Young; Urvashi Devidayal, Programme Manager, The Climate Group; Amol Tope, General Manager Environment, Health & Safety and Employee Training Manager, Johnson & Johnson; and Vinay Somani, Founder, Karmayog. The questionnaire sent to them dealt with factors like the extent of the involvement of the top management in CSR initiatives, how scalable and sustainable are these activities and whether there has been any negative impact on society or the environment on account of the company's operations.

The stage was set for the final stage, when an eminent jury of experts met to thrash out the final winners. The entire process was a gruelling one, but at the end of the day it was more than worth the effort and time spent.

- Reporting by Suman Layak, Rachna M. Koppikar, Anand Adhikari and Shalini S. Dagar