With increasing complexity in the business environment, CFOs need to work closely with key stakeholders in drawing up risk mitigation plans
Every finance department and CFO aspires that the function that he/she leads adds value to the business. Finance and the role of a CFO in being a driver rather than just being a record keeper is now a part of virtually every finance transformation session. Most of us are aware of the role of a CFO in being able to contribute to the company’s strategy, growth, work with cross functional teams, manage and lead board discussions and investor relations and build robust systems. While these are part of the daily discourse on the role of a CFO and also a part of their job descriptions, there are areas where CFOs and finance teams are doing interesting work to improve the effectiveness of the finance function and contribute to the business. Here are my three picks: Continue reading →
Our client Pharmax is a family owned and managed company with turnover close to INR 700 Crores. Pharmax is a leading name in the Active Pharmaceutical Ingredient (API) and Finished Drug Formulation (FDF) segments which is sold in both the regulated and the generic markets in India and over 50 countries worldwide. The company has state of the art manufacturing facilities approved by US FDA and has 17 Abbreviated New Drug Application (ANDA) filed and 12 in the pipeline.
Challenges for MyCFO:
Budgeting at Pharmax was a simple ‘spread sheeting’ exercise restricted only to collation of data inputs received from various departments. The variance between budgets and actuals for instance in financial year 13-14 was more than 80%. The variances were reported every month to the HOD’s and the management on a month on month basis for their review and comments. Continue reading →
The one key element that has changed the way of doing business is the flow of information. The new-age CFO must now realise that he is no longer expected to linger in the background and surface every time the results are to be announced.
As the one person in the organisation who has intimate knowledge of both the past performance and the expected future growth, it becomes his responsibility not only to steer the company towards a better future but also be able to provide a transparent, big picture view of the future, to internal stakeholders, customers and investors. Continue reading →
Our client Fulex is in the business of developing fuel efficiency solutions for the Genset manufacturers. This involves carrying out R&D on the technological and commercial feasibility of the products and, once the feasibility is demonstrated, developing and manufacturing these products. The Company is in a high growth phase with a need for maintaining high level of working capital to sustain the growth, in addition to capital requirement to fund expansion.
The objective of the budget exercise was
(a) to develop 5 / 10 year plans, Annual Operating Plan or Annual Budgets with monthly / quarterly break-ups at a departmental and segment level
(b) Determine sales targets to the sales team, broken by products, geographies, customer segments etc.
(c) Determine P&L position and cash/working capital requirements at various levels of sales
(d) Determine the amount of capital to be infused to support ongoing operations and expansion plans
(e) Planning for manpower needs
(f) Expense control, by allotting expense budgets to departments
(g) Determining profitability by product, geography, customer segments etc
(h) Exploring feasibility of expansion plans with metrics such ROI and IRR
(i) Scenario analysis, Sensitivity analysis and “what-if” analysis through modification of the assumptions.
There has been huge expectations from all sides since the new Government has been sworn in. In a bid to reignite the economic engine and make it chug along at a faster pace, the Government is trying to bring in legislations that it thinks will positively impact foreign investor confidence. The recent buzz/speculation around FDI in e-commerce industry is one of the most discussed topics.
While the brick and mortar traders have been and will continue to oppose the move, since they believe that it is likely to cannibalise their business, what has come as a surprise is the opposition this proposed change in policy is facing from the Indian giants in the e-commerce business. Continue reading →
Diagnostic Center is an ultramodern diagnostic centre with comprehensive facilities for Laboratory, Imaging investigations and other diagnostic facilities head-quartered in Mumbai. Lifecare provides digital x-ray, digital imaging, mammography, bone densitometry, sonography, cardiac imaging, advanced dentistry, spirometry, eye check up amongst others. Continue reading →
A CFO is amongst a rare breed of people who is not just responsible for his own function/ department but is also required to contribute to the other functions within an organization. The CFO now has to straddle and importantly contribute to the company’s business functions. The CFO is often labelled as someone who is conservative, takes a very ‘numerical’ view of the business and does not understand the business intricacies.
Companies think hard when it comes to investments or spends relating to diversification to new geographies, new product introduction, Capex, R&D, marketing spends, M&A activities etc. While there is always a sense of optimism associated with any new initiative, these need to be viewed from a stand point of whether the spends will generate reasonable returns over a finite time frame. This is where the role of the CFO becomes crucial. The CFO here not just need to look at situations like these from a numerical stand point but also need to understand the underlying business assumptions that make up the spreadsheets.