Kanubhai S. Patel realised the true magnitude of the global financial crisis, when, a week after Lehman Brothers fell, his company, Voltamp Transformers, decided to ask each of its existing customers for a written promise that they would go ahead with orders they had placed recently.
"Over 60 per cent of the companies did not even respond. Of the rest, some admitted they did not know if they would be able to maintain enough liquidity in the near future. We knew then that it was time to put on hold any further procurement. It was time for drastic measures," says the 55-year-old Patel, who joined the group back in 1982.
Patel's journey as CFO of Voltamp of the past 18 years (today he also holds the positions of CEOand MD) has in fact been dotted with changes. Those milestones have transformed the company from a Rs 10-crore factory being run like a family business, into a listed firm with a turnover of over Rs 600 crore, boasting of clients such as Reliance Industries, Wipro, DLF and Infosys. Along the way, Patel has restructured the business, de-unionised the workforce, outsourced many jobs and made Voltamp a cash-rich, zero-debt company.
Such success, of course, didn't come without challenges, the toughest of which was the crisis of 2008-09. "We had to put on hold orders worth Rs 150 crore and slow down production. It was better than having to live with illiquid inventory," says Patel.
With a go-ahead from Chairman Lalit Kumar Patel (who isn't related to the CFO), Patel re-hedged prices of copper whose price was dropping by almost $200 a week at the time. "We reduced liability this way and had an inventory of only Rs 45 crore which we liquidated gradually over the next six months," he says.
At the same time, anticipating the crisis that would hit banks, Patel converted all maturing fixed maturity plans (FMPs, worth almost Rs 130 crore) into bank FDs at rates of 9.5 per cent and 10 per cent with an option to withdraw the money at any time. "We ensured we had enough liquidity and yet our money was growing," he recalls.
Such challenges have been Patel's constant companion from the time he was made CFO in 1992. "He has transformed the company by taking bold decisions even when the owners were not sure if the risk was worth taking," says V.N. Madhani, General Manager (Commercial) at Voltamp, who has worked closely with Patel for the past 15 years.
The worst days of the global crisis are behind him and Patel is confident. "Ours is an industry of overcapacity and there is always a price war. But if the MNCs who have now come in want a price war, we are more than ready. We have enough liquidity. A Gujarati knows how to win in business," he quips.
Best Transformation Agent (Mid-size Company)
KANUBHAI S. PATEL, CFO/ Voltamp Transformers