Arnab Roy, CFO, Schneider Electric India Pvt.
I’ll give you a very topical example not from a finance function but from a business side of it. So, 50% of what we sell is to the government and since we sell large equipment, most of our products are physically inspected by a government inspector. Now when everything came to a shutdown in April 2020, obviously they couldn’t come to the factory to inspect, but power is an essential commodity. So, the supplies had to be made and there we started a visual factory inspection test. So, a government inspector sitting in Bihar was inspecting the product from his office through a (video conference) call like this. We put some high-resolution cameras to enable the inspection from him. So, that kind of technology started, and today when we speak, at least in the last nine months, of whatever we have shipped maybe about 30-35% of that has been virtually inspected. Now translate this when we come to a new situation—how this kind of productivity will translate in real life. Certainly, wait times in the factory are gone, you’re able to move the supply chain much faster. So that’s a practical example of how this crisis is turning into opportunities in real life.
I think what will happen is—how do we translate it to a commercial model? Possibly, we can propose a kind of a differential pricing if you do this, so which brings in efficiency to the customer as well as to us. So, there can be some sort of a thing which can be translated into a structural thing. Many of us went through a lot of tactical actions on the costs front in this year but now the challenge is how do we translate some of those tactical actions into structural savings.
Pratyush Mittal, Finance Director, Mondelez India Foods Pvt.
I think on the finance function what this crisis has taught us is to be a lot more opportunistic on how do you really simplify the business model. Because as businesses grow we do end up adding a lot of complexity—a lot of products that are there but possibly the consumers don’t need it, we end up pushing them. I think what this has kind of taught us is, take a step back and always look at the business and see what pieces of businesses are making sense or what are not making sense and what to discontinue and how to simplify your business, which brands do you not need etc.
Going forward, something that we should possibly be doing at regular intervals—let’s step back and say, these five SKUs (stock-keeping units) don’t make sense, or this process is just a complexity that we have added. Because, to be honest, in this crisis what happened was, we in many of the processes were not possibly doing 100% of what we were supposed to do, because they were just unnecessary bureaucracy added over the years by different departments. So, I think this has really taught us to say, how do you keep simplifying your business.
Aneel Gambhir, CFO, Blue Dart Express Ltd.
One is the digital journey, which has transformed everything in every space of working. In our case look at it, we were doing manual billing and then also payments were generally manual. However, a small portion of the collection used to be in the digital mode. Now, during pandemic period cash was truly king. For us cash become oxygen. To survive, obviously we had to work to make sure that enough cash is available to run the operation and also with handling fixed costs—as all these are fixed costs when you fly aircraft. To do that, obviously we also took hard calls not only in ensuring that we collect from our customers during the pandemic who are working from home but we also put cross functional teams to follow up and ensured that we have enough cash and cash surplus by the end of the quarter, that is June 2020.
We also implemented a first-time model which is cash and carry. So, anybody requiring essential things to be moved during that period had to pay cash at that point of time so that we have enough cash to operate our business.
Dinkar Venkatasubramanian, National Leader, Restructuring & Turnaround Services, EY India
Initially there was a lot of focus on working capital and opex (operational expenses), but as we went along and things became more normal we’re still going forward on the aspects around future proofing of capex as well as capital structure—these are two aspects which were initially ignored but now is in focus for a lot of the CFO community in terms of making sure that they have the right resources available.
Koushik Chatterjee, Group CFO, Tata Steel Ltd.
Just to extend the conversation we’re having now, one of the things that is important is, once you come out of it then you reset the business again and reset in a manner where the new ways of working come into place.
One of the areas is to look at capital structure. Capital structure is actually the muscles on which you will grow in the future. So reset that capital structure very quickly and carefully, which means that you have to start again back into—how do you generate more internal capital? The starting point is looking at spend reviews, questioning each and every spend that you have, classifying into the ‘must-have spends’ to ‘good to have spends’ to ‘discretionary spends’ and you get back to the basics and try to actually do cost-takeouts of a very different nature. So, that’s one starting point.
And then is the capital allocation towards growth. When do you actually restart your existing projects, etc. and how do you do it more smartly than before? What do you need to do yourself and what do you need to put onto say, a rental model? So, what are those assets that you can play arbitrage with?
Then the third thing is, all of this will lead to the kind of capital structure that is to be designed that—where do you want to go and how do you need to achieve that goal? So, I think these are the things that we’ve been working on.
