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Managing ‘Integration’ post acquisition – A CFO’s perspective

P Chandrashekar – President & Group Chief Financial Officer, Polycab Industries

An MBA in Finance from Narsee Monjee Institute of Management, Mumbai with B.Com from R A Podar College of Commerce, Mumbai. A Finance Professional with a Strong Business and Operational Orientation. 29 years of post qualification experience in a range of roles in different industries.

P Chandrashekar

In the course of the 29 years career, handled several dimensions of business from setting up new ventures to mergers and acquisitions, setting up systems and processes and implementing ERPs, scaling up businesses and turning around sick businesses as well as help CEOs run their businesses profitably and efficiently. Worked with Companies like the RPG Group, Jumbo Electronics Dubai, DHL, Coca Cola India, and Warburg Pincus Investee Companies.

Was involved with two Warburg invested companies, Radhakrishna Foodland and Alliance Tire Group. Was an entrepreneur, setting up a Turn Around and Asset Reconstruction Company. Presently working with Polycab Industries as President and Group Chief Financial Officer. Involved with Narsee Monjee Institute of Management Studies on the Board of Governments for their Retail MBA Program. Conducted sessions on “FINANCE FROM A CFO PERSPECTIVE” at Welingkar Institute of Management.

In the current post, Shekar shares his ‘own experience’ of how as the CFO he played a pivotal role which extended to building a team for the future, integrate IT and finance processes across entities and set up an operating structure at the group level to fix accountability and provide visibility into operating metrics. The  acquisitions were of global companies and Shekar also shares his perspective on how critical it is for organizations and CFO’s to also focus on getting the ‘cultural integration’ which invariably has a significant impact on the success of the integration.


The Group is in the automotive sector, manufacturing niche products primarily for export.

The Group was set by promoters with significant expertise in the space supported by a leading Private Equity Firm.

The journey of the Company started with an overseas acquisition of manufacturing facilities and brands, followed by setting up greenfield manufacturing facility in India and then another overseas acquisition of distribution assets and brands.

The company moved to a level of USD 500 Million in a matter of 5 years.

Ownership and Management

The company is owned substantially by the Private Equity firm with minority stakes with the promoters – first generation entrepreneurs.

While the promoters have been personally involved with the growing of the business, they have inducted professionals into key managerial positions. The overseas entities are managed by professionals with independent directors in each of the large overseas entities.

Key issues with the organization

  1. Since the company was set up with an acquisition, there was low data visibility
  2. With several entities in the group, each having a different ERP or a mini ERP, data integration and uniform group reporting was an issue
  3. Since the process orientation was low, decisions were more people driven
  4. Cross cultural issues with each entity wanting to run the operations based on their cultural orientation
  5. There was hardly any finance team as the Group was still in its infancy
  6. Statutory compliance issues and Transfer pricing issues
  7. In the second acquisition, the entity acquiring was a small business, acquiring a business 5 times its size and with a complete different business orientation


When I joined the organization, I set up a four point agenda for myself in the organization

  1. Build a strong team
  2. Integrate the processes in various entities
  3. Build a robust reporting template
  4. Get the Group operating structure right with adherence to the Transfer Pricing requirements

Additionally, since the India entity was a Greenfield project, had to complete the financial closure as well as set up working capital limits.

1.  Building a strong team

We had to set up the Finance function in India as well as recruit Controllers in the overseas entities.

Being a start up organization in India, there was low visibility for the Company and the space the Company was in. A fair number of people were offered the role of controller India Operation but all declined citing various reasons, till we found a candidate who was willing to take on the challenge. In the three years since, he has blossomed into a really good resource for the organization.

We took a number of fresh CAs and MBAs with “FIRE IN THE BELLY” and deployed them in various critical projects. Effectively, these young men, were given significantly larger roles in different geographies and the process of integrating the Finance organization across the group

In the USA, we found a candidate who had taken a VRS from a large Industry player and made an offer and he could come on board and start hitting from day one.

In Europe, after a search with the help of the Audit firms, we offered a person from a different industry and had him set up the European operations virtually from scratch.

Given the diversity of the group, it was necessary to get a good IT head. We found a candidate with industry background and experience in SAP implementation and tasked him with unification of the group ERP.

The approach to team building was simple – look for attitude, look for hunger and once the person was in – give a larger responsibility than could have imagined and support them to succeed. And it worked very well.

2.  Integrate the processes in various geographies

The group had 5 different ERPs in all. There were 2 manufacturing entities and 3 marketing entities and each of them had a different ERP and different versions of the same ERP.

The data integration was a serious challenge.

We embarked on a study of a unified ERP across the group – split as Manufacturing ERP and ERP for the Marketing entities.

The two manufacturing entities were in different stages of evolution – one was a very old facility with some old and archaic methods of working and the second was a brand new facility with a focus for enhancing production.

After a lot of discussion and debate and involvement of various stakeholders, it was decided to postpone an integrated ERP but focus on getting a Business Intelligence software, to pull the data from various entities and have group visibility.

To that end, various products were evaluated and we decided to go with robust BI tool.

The business was such that there were virtually new customers every day, new products every week and without an integrated master, it would have been difficult to get an integrated picture of the operation.

A team was created in India to manage the masters in every geography and processes were put in place to ensure that any additions in any part of the Group were managed seamlessly.

While the Group still does not have an integrated ERP, the BI tool implementation has helped in getting a group view on key parameters.

3.  Build a robust reporting template

When I joined the group, there were some reports but there were individual entity reports and not comprehensive and more importantly comprehensible.

The group did not have a view of the group wide sales, margins, working capital etc.

Further there was no group integrated reporting of the Financials – P and L, Balance Sheet and Cash flows.

We created a group reporting template and had the buy in of all the stakeholders in each of the group entities.

The challenge was then in getting each of the group entities to adapt to the Group reporting templates.

There was stiff resistance from all the non Indian entities for the change.

The approach we took was to prove that these templates were in the interest of the Entities concerned and sent out members of the India team to each of these entities to assist them in the changeover. Once there was a demonstration of how things can be done, the group entities, over time started delivering the reports on time.

Over time these formats were refined and process so well defined, that the Private Equity investor found the reporting pack one of the best reporting packs in their investments in India.

4.   Get the Group operating structure right with adherence to the Transfer Pricing requirements

A group operating in different geographies with multiple manufacturing entities and multiple marketing entities needed a robust transfer pricing mechanism, which was compliant with the tax laws in each geography.

We engaged one of the leading players in the TP area to advice us on the subject. Based on the advice we modified the transaction structure between the entities.

These are only some of the challenges which went in getting a multi location, multi culture group entity getting integrated and start reporting and acting as a Group and the role Finance played in this endeavor.

The role the Finance and IT team played in handling the challenges was incredible and the support from the auditors and the TP advisors was exceptional.

MyCFO  (deepak@wealthtree.in)

Is Budgeting merely ‘Number Crunching’?

Dr. Abhijit Phadnis worked as the Chief Operating Officer of UBS Investment Bank in India and as Head – Finance, Operations and Administration with Credit Issues. He also served on the board of a leading co-operative bank. Abhijit has experience in manufacturing and consulting sectors in a wide variety of interesting engagements.

Abhijit’s academic record is quite exemplary in the accounting & finance domain with high ranks in all the professional examinations such as CWA (1983), CA (1984), CS (1987) and CFA (1989). His all-India ranks were 2nd, 11th, 1st and 3rd respectively. He was recently awarded a PhD by IIT Bombay for his pioneering work on ‘Factors influencing investments into Indian states.’ Abhijit’s teaching experience also spans over 26 years. He has participated in over 250 executive education interventions. Abhijit has in the past served on the Academic Council and Board of Governors of the Institute of Chartered Financial Analysts of India. Abhijit has devoted significant time for non-profit activities. 

Abhijit Phadnis

Budgeting is a hotly debated tool. There are companies that swear by it. There are companies that have long abandoned it citing the dynamic nature of this world. Its proponents emphasize use of budgeting as a strategic, planning and control tool. Its opponents reject it as a ritual with huge costs and little benefits. Any tool is useful if we engage its heart and soul. At the soul of budgeting is the trio of communication, involvement and ownership.  Often this soul is completely forgotten and then budget circulars, budgeting calendar and deadlines take over. Finance professionals are busy crunching numbers throughout the year. Six months before the year begins, they begin their work on the budget, three months into the year there is an updated budget, in the middle of the year there is a mid-term review, the rituals go on but we hardly find any involvement of and communication with the people who are at the forefront executing the company’s strategy in the operations and market place. They hardly get to know what the firm’s strategic thinking is and how it is panning out. The question of seeking their views and involvement just does not arise at all! The ego at senior levels that we know everything often pushes firms to take a top-down approach to budgeting. But if one lets it go and accept the reality that intelligence and knowledge resides at all levels of the organization, it opens up the wonderful door to the real soul of budgeting: communication, involvement and ownership with lasting benefits for the organization.

I had an opportunity to serve on the Board of a leading co-operative bank. Come budget season, we gave up the past processes of a top-down approach and focused on the trio at the soul of budgeting. We began with a communication session in which the Board had an open session with all the operating and branch managers. Important aspects such as emerging banking environment, bank’s strategic imperatives, opportunities, critical organizational action issues were communicated with the operating and branch managers. The branch managers shared their views as well. More importantly, they carried these discussions forward at the branch level. The branch managers with support of senior executives held communication sessions with the branch staff. They together worked on the opportunities at the branch level, challenges and areas of improvement. Some of the operations staff even carried out surveys in the market place, giving them a feel of what the customers are looking for and emerging competition. The branches had a nearly a month to work together and prepare themselves for today and the future. This exercise wonderfully created a sense of camaraderie and involvement. The branch budget was no longer that of the senior management or of the branch manager. The staff members were focusing on certain business opportunities not because they were told to do so but because it was they who felt such opportunities were waiting to be exploited and they had to be done with alacrity for their common good.  This baby step of involvement and communication had a lasting impact on the ownership paradigm and I am really delighted to see that this sense of involvement and ownership has benefited the bank immensely with the bank being a proud winner of many awards and laurels.