As finance heads worry about political risk CFO India checks out

I THINK
INDRAJIT BANERJEE, RANBAXY
LABORATORIES P. 08
CFO PROFILE
VIVEK MATHUR, TATA AIA LIFE
INSURANCE P.20
CFO LOUNGE
CRUISE MI55ILE P. 42
VOLUME 04
ISSUE 05
75
MAY 2013
As finance heads worry about political risk
CFO India checks out possible solutions
A 9.9 MEDIA PUBLICATION
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CFO
MA Y | 2 0 1 3
Inside
12 COVer story
I THINK
08 Indrajit Banerjee
In listed entities, the promoter group, the board and the
senior managers have a legal and moral responsibility
to protect the interest of the minority shareholders, says
Indrajit Banerjee, president & CFO, Ranbaxy Laboratories.
in practice
24 A Governance Strategy
for Data Disposal
Today’s CIOs can collaborate with legal and records
management professionals to slash IT costs, improve
compliance and reduce risk.
Insight
32 Beyond csr: Integrated external
engagement
Companies must incorporate interaction with stakeholders
into decision making at every level of the organisation.
the political economy
Politics may not drive business but it can
certainly drive a business slowdown. CFOs
in India have started worrying about political
effectiveness, but is there a way or a need to
manage political risk?
CASE STUDY
cfo profile
28 Planning Ahead of Time
Vivek Mathur
As the insurance market
responds to the regulatory
overhaul Tata AIA Life CFO
discusses the future of the
20
Early detection of challenges and transparent
communication help find fair and durable solutions, says
Yogesh Dhingra, Finance Director & Chief Operating
Officer, Blue Dart Express.
Cfo lounge
42 on wheels | Cruise Mi55ile
45 M&E | dario’s in pune
LEADERS WORLD
38 The White
Horizon: Lessons
from the Desert
46 tRAVEL | greece
In the face of setbacks, the
strength of one’s commitment
to a shared goal and an attitude
of being a solution-seeker
matter the most.
I THINK
INDRAJIT
BANERJEE,
LABORATOR
IES, P. X08
CFO PROFILE
VIVEK MATHUR,
TATA LIFE
INSURANCE,
P.X06
CFO LOUNGE
CRUISE MI55ILE,
CFO I
NDIA
P. X044
Regulars
03 LETTERS TO THE EDITOR
48 NOT JUST THE LAST WORD
VOLUME
04
ISSUE 05
75
MAY 2013
CFO PROFILE:
VIVEK MATHUR
X8
I THINK:
Cover design manav sachdev
INDRAJIT
BANERJEE
X8
ON WHEELS:
CRUISE
MI55ILE
X0
VOLUME
AD index
04
ISSUE
05
Political
and
headachespolicy risk have again
become
CFO India for finance professiona
decodes
ls.
the political
matrix
A 9.9 MEDIA
PUBLICATION
Thomson IFC | Zenith Computers 11 | Udyog Softwatre
27
| Financial Executive 3 1 | Microsoft Gatefold IBC | Reliance MF BC
46
from the
consulting
editor
Shalini S. Dagar
shalini.dagar@9dot9.in
Managing Director: Dr. Pramath Raj Sinha
Deep
Engagement
The month of May is full of promise–promise of either a fruitful
financial or academic year or just a happy time with the prospects
of holidays blooming like the ‘gulmohars’ and the ‘amaltas’ trees
across the country. In the politically attuned capital city, May holds
the promise of the silly season as a sluggish news cycle takes over
and makes momentous events out of virtually hot air.
Politics is entertaining but is it the stuff of serious engagement?
Should we at CFO India care about politics? Well, the answer for us
comes from our CFO community and it is a resounding yes. Simple
reason: Politics has become a big business risk. Indian businessmen
who had learnt to shrug off political shenanigans and literally mind
their business are relearning to read the political straws in the wind.
Our cover story this issue explores this visceral link between politics,
governance, policy making, business and economy. Many in the
CFO community believe a greater political engagement has become
a necessity. We agree wholeheartedly. In consonance with this view,
in April, we launched the CFO India Network–a membership based
programme–which we hope will eventually help amplify the voice of
the CFO community on key issues. In the meantime, do check out
the cover story and tell us if it strikes a chord with you.
Meaningful engagement is also the message that another insightful piece in this issue sends to our community on societal enagagement. Politics and engagement, however, are not the only see-saws
that we have been skidding on. The sharp drop in commodity prices
last month heralds the end of the commodity supercycle, according
to some. We do not know, but we certainly know CFOs who have
coped with such volatility in the past. In our Case Study section, Blue
Dart Finance Director & COO, Yogesh Dhingra recounts his experience of another time when upcycle had just begun. That probably
has clues to handling the present.
Before Jack becomes dull, it is time to head to the Mediterranean
shores. For a moment of quiet reflection, there are David Lim’s lessons from the spare salt desert landscape of South America.
In the summer of 2013, keep sane and optimistic. And take some
time out to chill. Or, as GenY say ‘Chillax!’
Editorial
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2
CFO india
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Letters
CFO INDIA
may 2013
Payment Trends
The article on electronic payment trends was
very good. One of the points rightly mentioned
that was going electronic has huge resistance
from suppliers and vendors. However once they
taste success, they themselves love it. I speak
from the HyperCity experience where 98 per
cent vendor payments happen electronically.
—CA. VIJAY JAIN, General Manager - Finance
& Accounts, HyperCity Retail (India) Ltd
05.13
Your voice can make a change: Share your viewpoint on
what’s happening in the community and your feedback on the
magazine at editor@cfo-india.in
The Risk Lankscape
good work
Thanks to your team for elaborating on one of
the hot topics today. The fact is, as pointed out
in your article , that “it is impossible to do away
with risk.” Hope this is good lesson for many
CFOs. I wish, samples of the ‘Risk Scoring
Matrix’ can be shared within our community.
— G.T.Kannan, CFO–Dustven Private Ltd.
The April issue of CFO India has come up
exceptionally well. Kindly keep it up.
— Samba Moorthy V., Executive General
Manager – Finance DivyaSree Developer
TALENT FOCUS
I find the CFO India magazine quite interesting.
The recent issue has an interesting dimension
on risk. However, I felt contributions from
financial institutions, who thrive on risk
management, could have made the content
richer. It would also be nice to see coverage on
talent management in your forthcoming issues.
— Rajesh Maniar, Vice-President–Finance,
Sasken Communication Technologies Ltd.
want more...
I found both the February and March issues
interesting particularly the articles relating to
CFO as an enabler or inhibitor, and which CFO
profile suits a company, and of the story on
the cloud agenda. You could consider articles
on eCommerce, Valuations, boutique financial
services, emerging trends in technology based
payment solutions, supply chain management
and trends, sourcing strategies, forex, etc.
—Dilip Bidani, Director - Finance, Avon
Beauty Products India Pvt. Ltd.
happy reader
risk abroad
I really enjoyed reading the ‘Global risk for Indian
Business Abroad’ by Jean Devlin and the Editor’s
comment ‘Comfort with Risk’ which are so apt in
current scenario.
—Sanjay Datta, Head of Finance,
Corporate – Vodafone
My compliments to all at CFO India who
make it a huge success with lot of relevant
information for all finance community.
Well done and wish you all the best in the
years to come.
—Dilip Kohli, Director - Finance & Company
Secretary, Kuehne + Nagel Pvt. Ltd.
m ay 2 0 1 3
CFO india
3
05.13
WELLNESS
A recent study by researchers from Northumbria finds that rosemary
oil can improve memory amongst healthy adults. They presented the
results of the survey conducted at the Annual Conference of the British Psychological Society. The study suggests that this essential oil may
enhance the ability to remember events and to complete tasks at particular times in the future. Earlier research had indicated rosemary aroma
improved long-term memory and mental arithmetic.
In the most recent study, the researchers focused on prospective
4
CFO india
m ay 2 0 1 3
memory, which involves the ability to
remember events that will occur in the
future and to remember to complete
tasks at particular times this is critical
for everyday functioning. In this study,
rosemary essential oil was diffused
into a testing room by placing four
drops on an aroma stream fan diffuser
and switching this on five minutes
before the participants entered the
room. Sixty-six people took part in the
study and were randomly allocated to
either the rosemary-scented room or
another room with no scent.
In each room, participants were
given put through a test that assessed
their prospective memory functions.
All the tasks had to be done with no
prompting. If prompting was used,
the score would decrease. Participants
completed questionnaires assessing
their mood and their blood was analysed to see if performance levels and
changes in mood following exposure
to the rosemary aroma were related to
concentrations of a compound present
in the blood. The same compound is
found in rosemary oil and acts upon
the biochemical systems that underpin
the memory. The test results showed
that participants in the scented room
performed better than the participants
in the room with no scent.
photos.com
Rosemary aroma improves memory
What’s AROUND ZONE
CFO Book: Rishi Gupta���������������������������������������Pg 06
Jargon Decoded: Going Postal����������������������������Pg 06
CFO Movement..................................................... Pg 07
Japan’s return to aerospace��������������������������������� Pg 07
9%
Maybe
THE CFO POLL
result
Is the 8% growth
outlook for the
next five year plan
a practical one?
55%
Yes
36%
No
current POLL question
India’s March manufacturing Purchasing
Manager’s Index fell to 52. Will it get worse?
Vote now at www.cfoinstitute.com/poll
SCIENCE
New radiation therapy
provides new hope
SCIENCE
Microsoft to make
smart watches?
If sources are to be believed, Microsoft is
working on designs for a touch-enabled smart
watch as reported by The Wall Street Journal.
Executives at suppliers to Microsoft told WSJ
that the company was sourcing components
for the prototype of what could potentially be a
“watch-style device.” Microsoft has requested
1.5-inch displays from component makers, an
executive at a component supplier said. It is
unclear whether the company will decide to go
ahead with the watch. These days, a large number of companies such as Apple and Samsung
are looking at new product categories beyond
smartphones and tablets. This is not the first
time that Microsoft has gone experimental.
Way back in 2002, it had launched a smart
wrist watch around a concept called Smart
Personal Object Technology. It withdrew after
a lackluster performance.
Radiation therapy is known to have a lot of side effects like hair
loss and nausea. Scientists have developed a new radiation therapy
that does not have any such effects. Scientists in US have successfully killed cancer cells in mice and funding is now being sought to
test the treatment on humans.
According to the latest study, Professor M. Frederick Hawthorne
and his team from the University of Missouri took advantage of the
absorbent cells by forcing them to take in a specially-engineered
boron chemical.
Small amounts of
boron play a strengthening role in the cell
walls of all plants
and it is often found
in soil. The team
got cancer cells and
stored them in boron
chemical designed by
Professor Hawthorne.
When those boroninfused cancer cells
were exposed to neutrons, a subatomic particle, the boron atom
shattered and selectively tore apart the cancer cells, sparing neighboring healthy cells - and avoiding side-effects.
Prof Hawthrone said, “Our team finally found the way to make
BNCT work by taking advantage of a cancer cell’s biology with nanochemistry. A wide variety of cancers can be attacked with our BNCT
technique. The technique worked excellently in mice.”He further
added that the team is ready to move on to trials in larger animals,
then people. However, before we can start treating humans, we will
need to build suitable equipment and facilities.
m ay 2 0 1 3
CFO india
5
O-ZONE
cfobook
Jargon
Buster
Rishi Gupta
Wall
Info
Boxes
Term:
Going
Postal
+
What’s on your mind?
Attach
Share
Rishi Gupta wants to teach underprivileged kids
April 25 at 18.15 · View all 9 comments · 21 people like this
Personal
Rishi Gupta wants to retire by 50 and then do something for
nation building
Z odiac: NA
Views: Liberal
April 21 at 11.20 · View all 33 comments · 64 people like this
WORK
Director and CFO, FINO, (June
2006 to Present)
Project Officer, International
Finance Corporation ( Jan 2003 May 2006)
DGM, ICICI Bank, (May 1996
- Jan 2003)
EDUCATION
Chartered Accountant, ICAI
B.Com, Shri Ram College of
Commerce
St Xavier’s School, Delhi
Rishi Gupta to lead and support the cause of the girl child
against female foeticide
April 10 at 6.20 · 3 comments · 13 people like this
I Read...
The Kite Runner by Kahlid Hosseini
I Listen...
Burman, Bryan Adams
8 comments · 39 people like this
Recent activity
Rishi Gupta likes...ET and two others
The Economic Times, Business Today and Sholay
April 17 at 14.30 · Comments · 22 people Like this
AUTO
China to get made-in-India bikes
Yamaha is set to drive India-manufactured low-cost motorcycles and scooters into China. The Japanese two-wheeler major is planning to make India
a development and manufacturing hub for low cost products and plans to
launch a sub-$500 (under Rs 27,000) scooter and motorcycle. The company
announced the establishment of a new motorcycle R&D set-up at Surajpur in
Uttar Pradesh and this is Yamaha’s fifth overseas research centre on the lines of
similar ones in Italy, Taiwan, China and Thailand.
Yuh Motoyama, Yamaha’s Senior GM (Engineering Section — Motorcycle
Business Operations) said, “We are in the process of developing low-cost
products from India and these would be sold across major markets, including
China.” Motoyama added the products are currently under development and
the Indian R&D is playing the lead role in this, with assistance from Japan.
6
CFO india
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THE MEANING
Euphemism for
being totally
stressed out, for
losing it.
THE USAGE
Makes reference
to the unfortunate track record
of postal employees who have
snapped and
gone on shooting
rampages.
O-ZONE
CfO movement
BUSINESS
Japan’s return to aerospace
Banned from making planes by
American occupiers after the World War
II, Japanese aviation was only allowed to
make parts for US military jets. Teruaki
Kawai, President, Mitsubishi Aircraft
Corp, will preside over Japan’s biggest
aviation comeback since the war. In late
2013, the company plans the first flight
of its Mitsubishi Regional Jet, a sleek,
90-seat commercial plane that is Japan’s
bid to break into the industry’s big
leagues after almost 70 years.
Kawai recently said, “For decades,
we were confined to supplying parts
for other passenger jets. But we’re
finally heading into new territory.”
Mitsubishi’s comeback was abetted
in large part by Boeing’s outsourcing
more of its aircraft manufacture to
overseas suppliers. As Boeing came to
rely on foreign contractors, Japanese
manufacturers moved in, designing
and supplying some of the jet’s most
vital sections.
BUZZ
photos.com
New way to remember passwords
Many a time, we are confused with the multiple email-IDs and their respective
passwords. And with the increasing security concerns, one needs to change these
quite often. If you sometimes wish you could log in just with your thoughts, well
then it isn’t just a wish anymore!
According to a recent research by UC Berkeley School of Information it is
feasibile to use brainwave-based computer authentication as a substitute for passwords. In future, the computer user may only have to think the password instead
of typing it. This finding uses your
brain activity as a biometric identifier.
It seems in a manner similar to the way
DNA or the blood vessels in the retina
are unique to every human being, brainwaves too are unique. And the natural
conclusion is to use them to identify
— useful, if you want to log into a computer, or otherwise prove your identity.
The research team used the Neurosky
MindSet, which connects to a computer
wirelessly using Bluetooth and costs
$100. Other than the electroencephalogram (EEG) sensor, the headset is indistinguishable from a conventional Bluetooth headset for use with mobile phones,
music players, and other computing devices. Berkeley researchers believe their
system has an error rate of below 1 percent, which is comparable to clinical EEGs,
which typically attach 32-256 electrodes all over the skull and cost a lot more than
$100. However, successfully identifying someone 99 per cent of the time is good,
but not good enough for serious applications. The accuracy of the system should
increase over time, though, as hardware and biometric algorithms improve.
Times Television
Network gets
new CFO
Times Television Network (TTN)
has announced the appointment
of Jagdish Mulchandani as Chief
Financial Officer. In his new
role Mulchandani will lead and
drive finance-related strategy and
operations for Times Television
Network. In addition to this, he
will also oversee the functions of
distribution, traffic and administration of all the channels in the
Times Television Network fold.
Ashutosh
Agarwala joins
Essar Steel
Essar Steel has appointed
recently appointed Ashutosh
Agarwala as Director-Finance
and Chief Financial Officer. He
comes with more than 24 years
of experience in the fields of
finance, strategy, and mergers
and acquisitions. Prior to Essar
Steel, Agarwala has been associated with Jindal Steel & Power
Limited, where he held the position of Chief Financial Officer
and Director-Finance, for the
steel and cement business.
Suzlon appoints
new CFO
India’s largest wind turbine
manufacturer, Suzlon has
appointed Amit Agarwal as the
new Chief Financial Officer
(CFO) of Suzlon Energy. Prior
to this, Agarwal has held CFO
positions in Essar Steel, Essar’s
North American operations
and Arcelor Mittal Long Carbon
Europe segment.
m ay 2 0 1 3
CFO india
7
cfo
i think
Facts & Trivia
EDUCATION: Commerce from St Xavier’s
College, Kolkata
PROFESSIONAL QUALIFICATION:
Chartered accountant, member Institute of
Chartered Accountants of India (ICAI),1979
First Job: Audit and consulting firm,
PricewaterhouseCoopers
Minority protection – that’s the
key deliverable of corporate governance,
especially with regard to the shareholder as a stakeholder. But what happens if
you have different classes of minority?
Increasingly, this is a common issue
where due to a variety of reasons, a
listed company takes a controlling interest in another listed company which
is unlikely to be a target of delisting in
the foreseeable future. In such a situation, we have two sets of minority
shareholders, each of whose interests
as a class depend on the value created
(and to be created) in their respective
entities.
As a result, each entity and its
minority assumes significance. It
would be patently unfair to declare the
controlled (in other words, the subordinate) entity shareholders as the only
class which needs protection. Instead,
the principle of ‘fairness’ of related
transactions needs to apply to both
classes of shareholders equally.
8
CFO india
m ay 2 0 1 3
Indrajit
Banerjee
In listed entities, the promoter group, the board
and senior managers have a legal and moral
responsibility to protect the interest of the minority
shareholders, says Indrajit Banerjee, president &
CFO, Ranbaxy Laboratories.
The most effective way of delivering
good governance is to have a board that
understands the significance of minority protection. It is imperative that the
board understands the relevance of
all related party decisions on minority
shareholder value creation. If both the
entities in question have established
their own boards which pass the test of
‘independence’, then such a structure
goes a long way in achieving this aim.
“An effective
way of assuring
good governance
is to have a
robust board
which believes
in minority
protection.”
Indian regulations require that twothird of the board of directors belong
to the ‘independent’ category in cases
where the board chairmanship is with
the controlling group. These regulations if applied in ‘spirit’ can be a critical tool in assuring the minority that
the board will ensure appropriate value
creation in that entity. If the controlled
entity board is not a robust one, in that
the credibility of the independents is
suspect, then perhaps minorities may
be driven to clamour for a change in
its composition. On the other hand, if
the board consists of persons known
for their fairness then the shareholders
will continue to be a satisfied lot.
Fairness is often clearly manifested
in decisions involving related parties.
Finding the right balance is a very fine
art, especially so in these days of growing complexity in business models. In
an effort to show the world that they
are being fair to the controlled entity,
the controlling entity cannot give away
value in a generous manner to the
detriment of its own minority interest. That would be unjust. Hence, it is
important to be able to communicate
to stakeholders of both entities in a
convincing way. That is where the role
of management becomes critical.
Why then do we have this complexity
in the first place? Inevitable circumstances force many organisations
down this route. Earlier, regulations
forced many multinational organisations to sell down, thus reluctantly
forcing the entry of minorities in the
local entities. In recent years, acquisition of Indian entities by overseas players has emerged as another reason for
two-tier listing situations.
Current regulations do not provide a
sure route for the acquirer to buy out
the minority in a friendly and acceptm ay 2 0 1 3
CFO india
9
cfo
i think
“Management cannot be a slave of
promoters. Senior management
leaders can bring order and balance
through their understanding.”
able manner. Some acquirers find the
situation acceptable as they not only
avoid further cash outflow to acquire
the minority but also to retain exit
options for future. For an organisation
which needs to keep evaluating its
portfolio of assets, the latter assumes
strategic importance. It provides a
basis to value the business elements
through the play of market forces.
Further, it pays to have a company
continue to have a local listing as it
often makes local capital available
to the business, lowering the cost of
capital and consequently improving
returns for the majority. It is also not
uncommon to create a two-tier listing
structure with the aim of selling out
a local asset through a spin-off and
simultaneous listing.
Sceptics may find a grand design
in such an effort in that it is aimed
10
CFO india
m ay 2 0 1 3
at garnering an unusually high value
from the subscribers to the local IPO.
No matter how detailed such exercise
is, there would always remain room
for doubt and suspicion. On the other
hand the optimists would welcome
such a move in that this would enable
local investors to share business risks
while staking a claim in opportunities.
In fact, in many countries, it is
quite common for governments to
force local share-ownership. Both the
sceptics and the optimists would be
happy as long as the principle of fair
valuation is observed and disclosures
are made in an honest and complete
manner in related party transactions.
Rarely, is financing the root cause for
creation of a two-tier listing structure.
Investment advisors will tell us that
it pays to agglomerate businesses
residing in various regions and belong-
ing to the same value chain, and not
the other way around. It is unrealistic
to assume that complexity is created
with the bigger design to increase
value of one shareholder class at the
cost of another. But if that were to be
indeed the case it is not long before
bankers and other stakeholders would
intervene adding to long-term impact
on the promoter group.
We must acknowledge the role of
senior management in the maintenance of appropriate governance
standards. Management cannot consider themselves to be a slave of the
promoter group and behave as mere
spectators to developments. Senior
management leaders can bring order
and balance through their understanding of the statutory regulations, corporate practices and expectations of the
minority shareholders whose interest
they are duty-bound to protect.
In the end it’s the corporate image
that stands to gain, providing a longterm positive strength to the group,
its brands and its ability to attract the
right talent needed for growth.
Thanks to technology and the presence of sharp investment analysts,
listed entities are subject to increasing
public scrutiny. Corporate developments are, therefore, very closely
monitored by the stakeholders and any
inappropriate move, or even the perception of a move being inappropriate,
can inflict lasting damage to the image
of an organisation. As a listed entity,
the board, promoter group and senior
management have a legal and moral
responsibility to respect the interest
of the minority in ensuring they get a
fair share of the value in return for risk
they take. It is more the spirit and less
the letter that explains the behaviour
of the promoter group. In the end,
it’s the shareholders who decide the
true value of a company. It’s not the
earnings per share (EPS) alone, but
the price-to-earnings ratio (P/E) as well
that determines value of a company,
the latter usually having a greater
impact in the entire game.
cover story
Hands-off or
Hands-on?
Should finance heads engage with the
complexity of politics? And how?
anuradha das Mathur
Illustration By manav sachdev, design by haridas balan
12
CFO india
m ay 2 0 1 3
cover story
T
hey say life comes a full circle, and our cover story this month
is inspired by one such observation. From being obsessed
with politics and policy-making in the early 1990s to a period
of complete disengagement with Raisina Hill in recent years,
India’s corporate leaders seem to be right back in a situation
where policy and political uncertainty-related risks are their primary concern.
Full circle. Given this reality, we ask whether CFOs as the primary risk managers of their organisations, should concern themselves with the complexity of
political economy, and why.
Two decades ago, when India began to liberalise, there was a plethora of
companies that were setting up businesses or entering India for the first
time. With no historical knowledge of operating in India and its regulatory framework, they were preoccupied with understanding the government
m ay 2 0 1 3
CFO india
13
cover story
and political environment to plan their
businesses accordingly. Government
was everywhere. It was the way of the
license raj. Survey after survey, conducted amongst CEOs and CFOs of leading
corporations, revealed that government
policy was one of the top three concerns, right up till the early 2000s. And
at their behest, there would be frequent
and organized dialogue between government and business to find common
meeting ground.
And then the economy witnessed
a boom. The first traces of interest
within policy-making circles around
private enterprise became evident. As
a follow-on to the dismantling of barriers – both licensing and trade related
– government, at least seemingly, began
to recede. Where it was present, it could
be worked around.
Businesses therefore started ‘getting
on with it’ and the confidence stemming from a high growth environment
began to translate into a ‘we don’t really
need the government’ mindset. Phrases
like ‘India grows despite its government’ took root and resonated with a
large majority. Senior business leaders,
specially those based out of Bombay,
would say with pride that they don’t
visit New Delhi, because it was a waste
of time to engage with the Government
and, moreover, they didn’t need to.
But like breathing, political economy
can be ignored only till the going is
good! When the economy is booming,
industry can ignore politics at a pinch;
but it is always only a matter of time
when the next trough of the business
cycle comes around and then there is
no getting away from the influence of
politics over the economy and, therefore, corporate fortunes.
Given that growth has been slowing
down year after year for a while, government policies and fiscal and monetary
tools have a tremendous capacity to
mitigate the trauma. But what should
these policies be and what would help
corporate India is left to the Government to judge, since business leaders don’t want to invest either time or
effort in understanding politics and its
imperatives.
Democracy and dialogue go hand
in hand. Disengagement destroys the
advantages of a democracy – more in
the economic arena than in any other.
India is even more peculiar. The limited ideological commitment to reforms
ensures that policy-makers only reform
in response to a crisis. When corporate
India doesn’t highlight what’s wrong,
or even more damagingly, suggests
that things are well – the Government’s
Year after year, post a
lackluster budget, we heap
praise on the powers that
be despite a long list of
requests being ignored. We
sign away a license to insist
on change or reform
14
CFO india
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incentive to change becomes non-existent. Year after year, post a lackluster
budget, we heap praise on the powers that be – this despite a long list of
requests submitted before the budget
being ignored. To look good in our
larger corporate family, we pretend our
businesses are doing well as opposed
to raising merry hell about shrinking
growth, margin pressure, unbearable
inflation, draconian laws, and vindictive
taxmen. Not only do we lose an opportunity for improvement, we sign away a
license to insist on change or reform in
the foreseeable future.
So what can we change? I am not
suggesting we becoming political
economy junkies and use its chaos as
a reason for justifying the status quo.
But I do think that honing one’s understanding about the operating environment, and the impact that politicallymotivated decisions can have on our
businesses, is important. It is important to be brave and speak the truth
when these developments damage
our business. Just as it is important to
engage and demand what we believe
is in the best interests of growth and
progress – be it around interest rates,
taxation policies or Government. Why
wouldn’t someone stand up and object
to Vodafone’s treatment by the tax
authorities? It could be you next.
To be treated credibly, senior corporate leaders – specifically CFOs –
must learn to distinguish what serves
them and what serves corporate India
at large.
Partisan demands have often been
at the root of collapsing dialogue. And
sometimes engaging may not yield your
desired outcome, but then as Sheryl
Sandberg said in her much celebrated
book ‘Lean-in’, ‘the upside of painful
knowledge is so much greater than the
downside of blissful ignorance...’
In our cover story at CFO India, we
speak to a wide-range of opinion makers – those who observe industry, economists, credit raters and CFOs – and
ask what they think about the ‘CFO and
political economy’…
cover story
Political
Finance heads believe politics has the
power to hurt more than ever before.
It is time to step up the engagement
T
fiscal reforms slow,” Standard & Poor’s
observed last year, grimly noting the
political context of the problems.
CFOs who in the previous golden
years had learnt to shrug off Delhi
now again began to take notice. This
renewed interest in politics and government was noticed by none other
than the Prime Minister Manmohan
Singh in what was one of a series of
politicians addressing businessmen
in April. “In 2007, I often heard it said
that government had become irrelevant
because India will grow at 9 per cent
whatever the government does. The
consensus today is that unless the Gov-
SHALINI s. dAGAR
he old adage ‘good
economics does not
necessarily make for
good politics’ perhaps
needs to be modified.
‘Bad politics does necessarily make for
bad economics.’ In the last two decades,
we in India made our peace and reasonable progress with fractured mandates.
Despite the various hues of politicians
who ruled, politics by and large had
become predictable. And therefore, less
risky for businesses. No longer so.
In recent times, if there is one thing
which re-emerges as a bugbear in most
conversations with finance professionals, it is politics and how it stymies business. “Some of the present problems in
the economy are due to the very painful process of coalition making where
decisions take a very long time,” agrees
Dharmakirti Joshi, senior director and
chief economist at rating agency, CRISIL. Notice how crucial reforms such as
the introduction of Goods and Services
Tax (GST) remain stuck despite consensus on their utility.
Politics Matters
The bite is especially sharp when the
economy is already in a downslide.
After nearly a decade of robust economic growth with some years being within
kissing distance of double digit growth,
the GDP growth rate for the last quarter of calender 2012 dropped to sub-5
percent—what many CFOs would have
considered unthinkable just two years
ago. Much of this painful slowdown can
be attributed to a drought of decisionmaking in the aftermath of corruption
scandals of last three years. Almost Rs
seven lakh crore worth of projects have
been stalled due to issues such as environment clearances, fuel linkages or
land acquisition issues.
The situation has been aggravated
due to a weakening of the macro-economic indicators. As government revenues have slipped, fiscal deficit has shot
up due to the host of inflexible spends
on expansive social sector schemes.
Inflation has remained stubbornly
high limiting the central bank’s flexibility to cut rates. The sluggish global
economy has multiplied the misery. In
the matrix of global investment destinations, India’s slippage has been nailed
to a regressive and obdurate position
with respect to a few high profile tax
cases. Rating agencies whose ‘grades’
govern capital flows have been quick to
threaten downgrades. “A downgrade is
likely if India’s economic growth prospects dim, its external position deteriorates, its political climate worsens, or
“CFOs if they
are disengaged
from the
political
leadership
suffer the
consequences of
bad regulations
and inefficient
and ineffectual
systems.”
— TV Mohandas Pai
Chairman, Manipal Global
Education Services
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15
cover story
ernment acts swiftly, our growth, which
has already decelerated, will be perennially stuck at 5 per cent.”
The rediscovery of politics and government is simply because they have
become a major business risk in 2013
as CFOs see growth floundering on the
lower side of the 5-8 per cent range.
(See Outlook for the Economy). Based
on a pulse analysis, CFO India found
nearly 60 CFOs ranked their top risks
as follows: global and Indian economic
romita das
slowdown and currency fluctuations.
Political uncertainty is a threat comparable to these risks rooted in business.
Naturally then strategy development
and risk management which are the top
operational priorities for CFOs in the
coming year involve political talk.
Yet, how does one plan for the future
when there is a miasma of either inaction or uncertainty? P.K. Choudhury,
chairman and Group CEO of rating
agency, ICRA says, “all strategic planning is based on a large number of
assumptions about future — including assumptions about policy changes
and regulatory interventions. Adequate
knowledge of prevailing and changing
political scenario minimizes uncertainty around some of those assumptions.”
Used to global markets and capital pools, CFOs are not to be boxed in
How CFOs can
make sense
of politics for
business?
Engage, engage and
engage more…
… but do not cut
private deals to skew the
CFO tribe is articulated by Hemant
Kumar Ruia, CFO and Head, Legal at
Agro Tech Foods. “CFOs should care
about politics especially when it starts
affecting business,” he says.
Yogesh B. Mathur, group CFO, Moser
Baer echoes the sentiment when he
says, “CFOs should care about politics
to the extent that it provides insights
into the motives and conflict inherent
in economic and regulatory decisions
taken by governments.”
competitive landscape
Up the benchmarks on
compliance in your company
Make your voice heard with
the promoters and the board
on the correct thing to do
Short termism, nepotism,
corruption and cosy
relationships may not always
bite, but when they do they
destroy lives and companies
again. A recent poll done by the CFO
India shows that a majority believe that
CFOs need to care for politics and how
it affects them. (See The Importance of
Politics) A typical response from the
Engagement is crucial
Anil Singhvi, chairman, Ican Investment Advisors who in his earlier avatar both as CFO and CEO has years
of experience of gauging the political
winds says, “Politics was always important. Now it is even more so because
the stakes have gone up. Since a good
CFO is a CEO-in-the-making therefore
CFOs should keep their eyes on politics
and policy in a continuous and constant
manner.” The cost of not doing so can
be quite high therefore T.V. Mohandas Pai, chairman, Manipal Global
Education Services prescribes a steady
engagement with both politics and politicians. “CFOs if they are disengaged
from the political leadership suffer the
consequences of bad regulations and
inefficient and ineffectual systems.”
the importance of politics
CFOs believe politics has a pernicious impact on growth of corporate India
Should CFOs care for politics?
6%
No
21%
In specific cases
73%
Yes
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CFO india
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Do you care for politics?
8%
No
Is domestic turmoil a bigger threat
to growth of Indian companies
than global uncertainty?
6%
8%
Maybe
No
19%
Sometimes
73%
Yes
86%
Yes
cover story
Outlook for the economy
In your opinion, what is the outlook for the Indian economy
over the next 12 month?
Grow above 8%
Grow between 5.8%
Grow below 5%
De-grow
Thin red line
Speak Truth to Power
In such an evolving business climate,
CFOs cannot remain immune. They
have to engage with the political processes in a meaningful manner. Within their own companies they have to
become the champions of higher compliance. Ican Advisor’s Singhvi adds
that depending on the strength of their
Cannot say
CFO PERSPECTIVES 2013
To what extent do you perceive each of the following as
being threats to your company’s business this year?
3
2.5
2
1.5
1
0.5
influence within their own organisations, they should perhaps urge their
boards and senior managers to invest
in sustainable business models, shorn
off private political deals. “Any other
way of doing business may have some
short-term joys but cannot be a way
of doing business over the long term.
In this role, so far most CFOs in India
have failed,” he adds.
Speaking truth to power, both internally and externally is then the key to
the future. Sceptics, however, note that
Foreign exchange
Fluctuations
Political uncertainty
Slow down in the
Global economy
0
Slow down in the
Indian economy
Political engagement is, however,
double-edged. In recent times, many
companies have suffered due to an
unhealthy nexus with politicians. “Networking with politicians is perhaps
required but not to the extent where it
tinkers with policy making to alter the
competitive landscape,” says Singhvi.
What has changed about India’s business landscape in the last few years,
according to noted economist and professor at National Institute of Public
Finance and Policy, Ajay Shah is that
regulatory transgressions, if and when
they are punished, lead to decisive ruin
of people and companies involved.
“India shows medium grade enforcement actions as in transgressors are
sometimes, but not always, caught in
the regulatory net. However, when they
get embroiled in such enforcement
actions they simply cannot recover.
It has been shown in example after
example,” says Shah. Such ruin acts as
a powerful disincentive for the flow of
capital and labour towards such tainted
groups. As the cost of operating on the
grey side keeps getting prohibitively
higher, a ruthless process of natural
selection comes into play.
Technological
Discontinuities
His solution which comes from his own
previous experience as CFO for Infosys
Technologies is “to meet, articulate and
lobby in a good way and make sure
that the industry voice is heard.” Pai is
optimistic that individual activism and
higher engagement is rewarded. Certainly the IT industry has been one of
the most influential industries in lobbying the government. Perhaps it offers a
template for the CFO community.
typically CFOs do not have the power
to make such suggestions. Singhvi for
instance, feels that at a broader societal
level, we are very sensitive to criticism
and most institutional criticism is taken
as personal criticism.
Within these cultural pardigms,
CFOs would be failing in their jobs if
they do not raise appropriate red flags.
As the astute French politician, Charles
de Gaulle is reported to have said, “Politics is too serious a matter to be left to
the politicians.” Amen!
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17
cover story
Life on the
Knife Edge
A CFO’s job today is a daily rendezvous with risk and
uncertainty. In a volatile world, the third edition of
CFO 100 awards celebrates high achievers
PURVA KHOLE
It was a full
house at the
CFO 100
event in
Mumbai. Over
130 leaders
from the
finance world
joined us for
the evening
Marico
Industries’
Group CFO,
Milind
Sarwate
joined the Hall
of Fame for
his steady
performance
18
CFO india
Koushik Chatterjee, executive director and CFO, Tata Steel was the
other star of the evening. He too joined the Hall of Fame. Chatterjee and
Sarwate were felicitated by CFO-turned entrepreneur, Ravi Ramu
m ay 2 0 1 3
cover story
A
Some of
the CFO 100
winners.
CFOs were
honoured
across 13
categories
like strategy
and M&A
For more pictures of the CFO 100 awards, please log on to our website:
www.cfoinstitute.com
According to the survey, the current economic situation worries the
CFOs enough for 53 percent of them
to think that their business will not
grow in the coming year.
The following session dealt with
‘Capital Budgeting: Capital Financing
and Structure’ where the participants
included Yogesh Dhingra, Finance
Director and COO, Blue Dart, Praveen
Sood, Group CFO, HCC and Ashish
Sharma, Business Leader, Corporate
Lending Group, GE Capital India and
R Giridhar, Group Editor, 9.9 Media.
Another session on Managing Rapid
Business Growth was addressed by
Mr Asit Sinha, Head – Strategic Outsourcing Enterprise Services, Hewlett
Packard. Sinha outlined the creation
of business models based available
opportunities and aligning the customers and the suppliers. Creating a
comprehensive map which shows the
inter-linkages between supply chain,
customer order management and
other parts of the organisation could
be help in revenue maximisation.
Sayamdeb Mukherjee, Director
Business Finance, India Region, Ericsson, Mr Ravi Venkatraman, CFO,
Mahindra & Mahindra Financial Services and Mr Subeer Bakshi, Director,
Talent & Rewards Practice, Towers
Watson got together for the next session to discuss ‘Rising Compensation and Benefits Costs – Impact on
recruitment and retention initiatives.’
At the outset, Bakshi confessed that
though the HR data differs for MNCs
and Indian companies, the common
thread is that the compensation or
reward programmes are increasingly
looking unsustainable. Later in the
evening Ravi Ramu, Managing Partner, Primrose Resorts and Hotels who
has recently turned author had an
enjoyable interaction with the audience. As the winners and the guests
headed for the cocktails and dinner at
the end of the session, Dinesh Mishra
on flute and Ustad Hanif Khan on
tabla gave a stellar performance and
kept the mood of the evening alive.
Viva smart finance.
m ay 2 0 1 3
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19
Jiten Gandhi
nemic global demand,
dipping consumer sentiment back at home, a
questionable bust of
the commodity super
cycle and wildly gyrating forex and
other markets topped off with a looming general election and dysfunctional
polity--now that is a veritable cocktail of
variables that finance heads are dealing
with on a regular basis. Any of these
calls can go wrong and each of these
calls affect business in an unpredictable
manner. In the midst of the chaos that
characterises the operational environment today, the CFO India community
got together late March to celebrate the
survirors and the thrivers of the previous financial year.
In this celebration, over 130 brightest names of India Inc.congregated at
the Presidential Ballroom at Vivanta
by Taj President on March 21, 2013
to honour the finance wizards. In this
third edition of the CFO 100 awards,
Koushik Chatterjee, executive director and and CFO Tata Steel and Milind Sarwate, Group CFO of Marico
Industries joined the Hall of Fame
for their stellar and consistent performance. This was followed by the CFO
100 Roll of Honour in 12 categories,
namely, excellence in cost management, M&A, strategy, growth, risk
management, raising capital, financial control, use of technology, green
initiatives, collaboration, innovation
and finance in a start-up. Keeping in
mind the huge leap that India Inc has
taken in the past few years, each category saw awards being given in the
large (above Rs 1000 crore) and midsize (below Rs 1000 crore) company
segments.
Earlier during the day, the event
began with a discussion by Anuradha
Das Mathur, Editor, CFO India and
founder and director, 9.9 Media. During this, she shared the preliminary
findings of the CFO Perspectives
2013, where around 60 CFOs were
surveyed for their key thoughts and
challenges this year.
cfo
Profile Vivek Mathur
Senior vice-president & cfo
tata aia life insurance
After the recent changes in
the regulatory scenario for life
insurance products, the sector
will stablise soon, says Vivek
Mathur, Senior President &
CFO, TATA AIA Life Insurance.
Purva Khole
20
CFO india
m ay 2 0 1 3
Born and brought up in a middle class
family in Delhi, Vivek Mathur, today is a CFO
thanks to his father. While studying at the Sri
Ram College of Commerce (SRCC), Mathur’s
father asked him to pursue Chartered Accountancy because no one in the family had pursued
it, he reveals as we catch up over coffee at his
office in Lower Parel, Mumbai. Though Mathur
previously wanted to pursue his MBA after
graduation, today when he looks back he is really
happy to have followed his father’s advice.
After qualifying as a Chartered Accountant in 1991, Mathur worked as an article clerk
for a few months with Ratan Gupta and Company. During his articleship, he used to go for
audits and thus was getting trained on the job.
Mathur tells us, “During this period, my senior
made sure I learn to accomplish these tasks on
the computer which wasn’t as common then as
it is now.” While Gupta wanted him to continue
and ultimately become a partner at his firm,
Mathur wasn’t too keen on joining the practice
as he wanted to gain some industry experience.
Computer Point, a company which was
involved with software education and hardware trading at a time when computer training
was new to India was Mathur’s first corporate
job. After this he moved to Jet King which was
Jiten Gandhi
Sunny
Days Ahead
Milestones
FIRST JOB
Computer Point
BIG BREAK
When I got an
opportunity
to work with
American Express
AHA!
MOMENT
When I qualified
as a CA
LESSER
KNOWN FACT
Used to teach
Mathematics
tutions for school
children
DREAM
To become a
financial advisor
with a services
company
m ay 2 0 1 3
CFO india
21
cfo
Profile
involved with hardware education. Subsequently, he moved to Sterling Holiday Resorts as head
of finance, North Zone.
Mathur believes that he was really lucky to
work in sunrise sectors starting from his first
job. And that has led to an extremely enriching
professional experience.
At his next job with the Bharti group, Mathur
expanded his capabilities and got acquainted
with the other non-finance aspects of the job–a
rounding off that is crucial to any aspiring CFO.
He joined Bharti as the Head of Credit Control of
their internet division which was then known as
Bharti BT Internet. Since this was a start up and
because he had joined even before the company
had acquired licenses to operate, Mathur got an
excellent opportunity to observe first hand the
issues that a new business faces on a day-to-day
basis. He recalls, “At that point, we were working
on issues related to customer applications forms
and product pricing. The CEO asked me to join
the team which launched the first private internet
gateway of India. At that time, VSNL was the only
internet service provider available. I went to Singapore to deal with Syntel on the commercial issues
then returned and devised the internet products
with various bandwidths which could be sold to
individuals and small and medium businesses.”
After proving his project management and
team building skills, Mathur moved to American Express Bank as the Head of Taxation. Being
a Chartered Accountant who had come from a
background of accounting, fund management
and credit control, taxation was another new
arena to conquer. The Lead Controller, his supervisor, taking into account his background gave
him six months to prove himself. “For the first
two weeks on this job, I refreshed myself on the
finer aspects of Income Tax Act and the Double
Tax Anti-Avoidance agreements. It was of great
help because tax laws keep changing.” At that
point, Mathur did not really have anyone reporting to him and he had to work with the consultants to dredge out information. By Mathur’s
reckoning it was a tough assignment due to
sharp deadlines and absence of team support. He
needed to exercise influence within the organisation to get the relevant information. But the
rewards were sweet. “I was able to locate possible
tax savings worth crores for American Express on
broken period interest, credit cards, non-performing assets (NPAs). These were items which were
never looked at minutely in the past,” he says.
22
CFO india
m ay 2 0 1 3
Favourite
Picks
Book
Books by Brian Weiss
Magazine
The Economist
Film
3 Idiots
Music
Pt Jasraj and Jagjit
Singh
Holiday Spot
Kashmir
tata aia cfo vivek mathur believes that the
industry will settle in the next couple of
years after the regulatory overhaul
Passion
Astrology and
badminton
For Mathur one of the key learnings from the
experience was that a new person on a job typically brings fresh insights. “It has always happened that when someone new comes in and
looks at the way work is done and at the processes fresh perspective emerges because different
people bring in different kind of experiences. It
is always beneficial,” he muses.
After American Express, Mathur moved to
Mumbai to join Tata AIA Life Insurance. He
started as a Vice President – Controller, he moved
on to become as a Senior Vice President – Controller in 2007. In 2010 Mathur was promoted
cfo
Profile
“I do not think that the industry would
grow abnormally. The long term insurance
story is intact with both the economy and
per capita income poised to grow.”
as the CFO. As he talks about the business of the company, he says, “The previous year has been challenging mainly
because of the regulatory changes.”
Mathur adds, “If you look at our
financial statements, the profit and loss
account has grown from Rs 200 crore
to Rs 260 crore in 2011-12. In the just
closed financial year, 2012-13, new business premium has gone down due to
regulatory changes. Renewals have
been hit due to withdrawals mainly
because of the unit linked products.
As a result, growing business is a challenge but how to manage business strategically such that you remain a profitable company is a bigger challenge.
“Expense management is key. So,
we have spent the last two years focusing on costs control and alignment of
partners with business to ensure that
we grow our top line.”
Mathur expects regulatory changes
to subside by the financial year 201314 after which the industry should stabilise by around 2014-15. The regulator has given time till September 2013
to re-file products and get approvals
for the next six months. Mathur
believes that priorities for the next
few quarters include alignment of the
distribution network and retraining
of the sales force and employees to
ensure that the new products can be
appropriately sold in the market.
Though he is optimistic, Mathur
is not unrealistic. “I don’t think the
industry will grow abnormally. There
would be marginal growth. However,
post 2014-15, growth will likely come
back. With stability one can plan
ahead and hopefully there will not be
any more surprises.” The long term
insurance story is intact with the economy and the per capita incomes poised
to grow. Insurance penetration is still
low at less than 5 per cent.
At the end of the day insurance is
a game for the patient and long-term
players which both Mathur and his
company seem to be.
m ay 2 0 1 3
CFO india
23
in practice
Data management
A Governance
Strategy for
Data Disposal
Today’s CIOs can collaborate with legal and records management
professionals to slash IT costs, improve compliance and reduce risk.
Lorrie Luellig
T
oday’s CIOs face a host
of complex challenges. Their departments must continually find more efficient ways to store, process and analyse massive (and growing) volumes of
incoming data. They need to support
globally distributed enterprises, including internal staff, external partners, customers, facilities and other assets around
the world. More data in more places also
means more risk, as legal, regulatory and
privacy obligations increasingly apply
to all types of electronic information,
including email messages, texts, tweets,
phone call records, customer data, blog
posts . . . the list goes on.
What used to be solely the domain of
records management and legal departments is now yet another responsibility for IT, as information experts are
asked to identify and protect data that
has business, legal or regulatory value,
24
CFO india
m ay 2 0 1 3
while facilitating the defensible disposal (i.e., deletion) of everything else.
This is a critical task—the elimination
of “data debris” can have a dramatic
impact on compliance, corporate risk
and the bottom line.
Corporate Data
Unnecessarily Ties Up
IT Resources
At the 2012 Compliance, Governance
and Oversight Counsel (CGOC) Summit, a survey of corporate CIOs and
general counsels found that, typically,
one percent of corporate information
is on litigation hold, five percent is in a
records-retention category and 25 percent has current business value. This
means that approximately 69 percent
of the data most organisations keep
can—and should—be deleted.
Less IT budget spent on unnecessary storage, servers and backup means
that more resources can go to strategic investments. Less information to
manage means that legal and regulatory responses can be handled more
efficiently and with fewer errors. And
less waste overall allows corporations
to return more profit to shareholders.
Unfortunately, confusion often exists
about what data needs to be kept. More
than 100,000 international laws and
regulations are potentially relevant
to Forbes Global 1000 companies—
ranging from financial disclosure
requirements to standards for data retention and privacy. Additionally, many of
these regulations are evolving and often
vary or even contradict one another
across borders and jurisdictions.
To achieve defensible disposal, stakeholders from IT—who are stewards of
in practice
a dated one. It was devised in an era
where paper records were the norm and
IT departments didn’t need to concern
themselves with legal holds or retention policies, for example. The legal and
regulatory landscape has since changed
dramatically. Today, the vast majority of
information that needs to be either preserved, retained or deleted is under the
direct responsibility of IT.
Here’s the problem: IT often lacks the
legal and regulatory insight to link compliance obligations to the thousands
of applications, databases and other
repositories it manages. Legal and RIM
professionals possess the knowledge
to set retention and disposal policies,
but don’t have a holistic view of the IT
infrastructure needed to identify where
relevant data is, nor the ability to dispose of electronic information that’s
no longer of value. Clearly, a more
modern, broadly useful and executable
retention schedule approach is necessary—one that recognises the shared
responsibility for information management and defensible disposal among
legal, RIM and IT departments. In such
an environment, all stakeholders would
have insight into the flow of information throughout the enterprise and be
armed with the right policies, processes
and tools to protect what’s important
for business, legal and regulatory purposes. Only then can valueless data be
disposed of at the right time.
photos.com
“The elimination of ‘data debris’
can have a dramatic impact on
compliance, corporate risk and
the bottomline.”
the data—must collaborate more closely and transparently with records and
information management (RIM), legal
and business units to build an information retention and disposition strategy that makes sense in today’s global,
complex and digitally driven enterprise.
A retention schedule provides a
framework for RIM and legal departments to organise corporate records
and information, and detail the length
of time that such records must be
retained for compliance and business needs. It’s an important tool, but
Making It Work in the
Real World
A modern and executable retention
schedule supports the goal of
defensible disposal and guides the
roles of business, legal, RIM and IT
stakeholders in the process. The key
elements that must be incorporated
for a retention schedule in a real world
enterprise are:
Manage all information, not just
“records.” The retention schedule must
apply to all the data in an organisation’s
possession, not just information officially classified as “records.” Consider
m ay 2 0 1 3
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25
in practice
anything and everything—including
both structured and unstructured data
sources—as either having legal, regulatory or business value or as debris,
whether it’s a human resource record,
patent filing, financial statement, email
message or tweet.
Connect legal, privacy and regulatory
retention obligations directly to relevant
information. The retention schedule
must clearly define how legal, privacy
and regulatory obligations apply to all
types of information and business
users, including what is covered, who is
obliged to comply, and how retention
obligations, privacy directives and disposal mandates are triggered. Technology solutions may be deployed to help
organisations automate the connection
describing where data is stored, what
record classes apply, who was or is
responsible for the content and who
manages it. With the help of a reliable
“data map,” data stewards can more
easily identify information and understand the value and obligations related
to that information according to lines of
business, departments, and so on.
Ensure that retention and disposal
obligations are communicated and publicised in a language that stakeholders
can understand. This involves two key
elements: defining what is required of
data users when creating and identifying information, and defining the
responsibilities of data stewards related
to the disposition of information. For
example, IT won’t be able to make
“The retention schedule
must clearly define how
legal, privacy and regulatory
obligations apply to all
types of information and
business users.”
of information to retention and disposal requirements.
Retention periods must take into
account the business value of information in addition to legal and compliance
value. This value should be explicitly
defined by business stakeholders and
made transparent to legal, RIM and IT.
Again, technology solutions can help by
allowing users to associate information
types, such as purchase orders or
employee agreements, with specific
data sources, such as enterprise cost
management and human resources
systems, or applications such as Microsoft SharePoint, and to include details
on why and for how long the information is and will be of business value.
Identify where information is located. Information inventories are a must,
26
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sense of a disposition directive that
states, “Comply with record class
HUM100.” Translated more clearly, this
directive might state, “Job applications
created by HR users and stored in the
HR shared drive must be permanently
deleted 10 years after the termination
of the employee.” Clarity invites
compliance.
Allow for flexibility to adapt to local
laws, obligations and limitations. The
retention schedule must be flexible
enough to incorporate “local” insight
into the policies and procedures driving
retention and disposal. To assist with
this, technology solutions can be used
to catalog all the specific laws and regulations in applicable regions so that
various jurisdictional exceptions and
changes can be communicated to rele-
vant stakeholders.
Include a mechanism that allows
legal and IT to collaborate in executing
and terminating legal holds. No retention schedule can achieve the goal of
defensible disposal without clear communication between legal and IT stakeholders regarding what specific information is on legal hold, and when holds
can be released.
Identify and eliminate duplicate
information. Confusion about what
exactly needs to be retained and for how
long can encourage a tendency to “save
everything,” which is a bad information
management habit, especially as some
privacy laws—the Health Insurance
Portability and Accountability Act in the
United States and the Data Protection
Directive in the European Union, for
example—actually require the deletion
of certain types of information after a
period of time. With a clear retention
schedule, there’s no need to keep duplicate information.
Update in real time to account for
changes in laws, to the business and in
technology. With global regulatory, legal
and privacy requirements constantly
evolving, it’s important to stay ahead of
changes and incorporate new requirements into the retention schedule.
Technology can assist with alerts that
communicate to systems and data stewards when adjustments are needed.
Shepherding
Information Through
Its Useful Life Cycle
CIOs have an important role to play
in efficiently and cost-effectively shepherding the flow of corporate information through its useful life cycle while
finding a way to “release the pressure
valve” when the legal, regulatory or
business value of information has
come to an end.
Lorrie Luellig is of Counsel, Ryley Carlock &
Applewhite. The article was first published
in CIO Insight. For more stories please visit
www.cioinsight.com.
Case
Study
Project Map
The challenge: Reducing the impact of
higher price of aviation turbine fuel
TIMELINE: Four months
People Involved: V.N. Iyer, Varun
Dhawan, Rajesh Joshi from within Blue Dart,
vendors, suppliers and senior management
KEY CFO TAKEWAYS: Early detection of
challenges helps find appropriate and quick
solutions
28
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Case Study
Planning
Ahead of Time
Early detection of challenges and transparent communication
help find fair and durable solutions, says Yogesh Dhingra,
Finance Director & Chief Operating Officer, Blue Dart Express.
purva khole
U
sually the finance
heads are given
responsibility for
profitability targets.
Irrespective of the
health of the economy, the topline
and bottomline expectations remain
constant. In any company the ultimate responsibility lies with the CFO
because he has a clear understanding
of the revenues and costs. With this
knowledge he can partner with the CEO
and achieve those targets says Yogesh
Dhingra as we catch up with him at his
Andheri office in Mumbai.
Jiten Gandhi
The Challenges
Blue Dart, an express delivery company, maintains its own fleet of aircraft to
ensure timely service to its customers.
Being the only dedicated cargo freight
company in the country, Blue Dart is
heavily affected by the price of Aviation Turbine Fuel (ATF). On a regular
basis, the ATF cost varies between 16
and 18 per cent of the total cost depending upon the network and type of fleet.
A 10 per cent increase in the ATF cost
affects profitability by approximately
1.6 per cent, Dhingra elaborates. “To
understand the movement of ATF
rates, it is imperative to understand the
components contributing to the cost
build up,” says Dhingra. These include
international crude oil prices, refining,
marketing and distribution costs along
with the overheads of the oil companies
in India and the numerous taxes such
as customs, excise and Value Added Tax
(VAT). The crude oil price is a complex
function of demand and supply apart
from political or economic reasons, sea-
sonality and weather conditions. With
so many variables determining crude
oil prices, the only option lies is mitigating the associated risks, he adds.
Dhingra speaks with authority because
of his past experience. In 2001, crude oil
prices were stable in the range of $1820 per barrel. After mid 2002, however,
the rates started climbed up rapidly and
by July 2002 they had risen 50 per cent
to $27 per barrel. Since then, it has only
been an upward trajectory. Around this
time, Dhingra says, “we soon realised
that this risk had to be contained with
minimal impact on EBIT margins. Volatility and trending studies indicated
that this upward movement was not an
aberration. Hence, we needed to draw
up and clinically implement a strategic
plan to handle 40,000 loyal customers.”
At the same time, Blue Dart had to
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29
Case Study
“We linked service prices to the
Global Crude Oil Index. Without
this solution, the margin impact
in 2002 would have been only
4-5%, but would have wiped off
the company’s profits by 2008.”
explore other creative mechanisms
to tackle the resultant cost pressures.
For instance, seldom do companies
check whether the vendor has correctly charged the operating taxes or
if any tax efficiencies are possible. For
example, ATF attracts a state VAT varying from 4 to 23 per cent. With efficient modifications to the operational
plan, ATF tankering can be leveraged
in such a way that the resultant cost of
ATF is tax efficient.
Dhingra recounts, “the other tax efficiency possible on the cost side are the
input tax credits that are available to
us as a service provider.” In 2004, air
courier services were included in the
service tax ambit. Aircraft charter costs,
one of the key costs, would now attract
service tax. The incremental amount at
that time was around Rs 8 crore.”
30
CFO india
m ay 2 0 1 3
How it was tackled?
Blue Dart considered various options:
External Commodity Hedging: Could
not be considered because it was not
allowed by Indian law at that time.
Natural Hedging: Was unviable due
to lack of an equivalent natural hedge.
Internal Hedging: Was found to be
the only feasible option. Here the fluctuation in ATF prices could be passed
on to the customer thus protecting the
company from the ATF price volatility.
“We designed a fair and transparent
mechanism linking Fuel Surcharge
Mechansim to the widely available
Global Crude Oil Index,” says Dhingra.
The company formulated and rolled
out the mechanism in four months.
Without this solution, in 2002, the
impact on Blue Dart’s margins would
have been 4-5 per cent only but by
2008 when crude oil prices touched
$140 per barrel, the impact could have
wiped off the company’s entire profitability thereby eroding shareholders’
value. However, since 2001, the shareholder value has risen nearly 20 times.
On the tax side, the Blue Dart team
realised that the increased cost would
either have to be absorbed or passed on
to the customers. Looking at the competitive landscape and the sensitivity of
customers to any price hike, they knew
that they could afford neither.
Dhingra recollects, “I led a team of
taxation and accounting experts to
quickly put forth a solution on how
we could minimise this tax impact.
We drilled deep down to all the cost
elements. These were put through
various simulation models and after
long hours of detailing and hair splitting, we came to a solution which has
worked for us.” The Blue Dart team
investigated the cost base of the fuel
provider. After a lot of thought, the
solution was discussed with the suppliers. “If they could add further details to
their bills, splitting individual cost elements for ATF, we could neutralise the
service tax increase. Simultaneously,
we could reduce the overall cost base.”
he adds. After a lot of persuasion the
billing system was altered.
Lessons Learnt
Early detection of a problem helps in
finding a solution much faster thereby
making implementation easier. Also if
one communicates the problem clearly
and transparently and finds an equitable solution in the long run, it is often
accepted. Dhingra tells us “our communication to our customers regarding the Fuel Surcharge Mechanism
resulted in acceptability and continues
since the last 11-odd years. We may not
have been better off than what we are
had external hedging been allowed.
With internal hedging we achieved
a fair and transparent mechanism
to tackle fluctuating crude oil prices
which was neutral on earnings before
interest and tax (EBIT) as well.
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insight
Corporate Philanthropy
Beyond corporate social
responsibility: Integrated
external engagement
Companies must incorporate interaction with stakeholders into
decision making at every level of the organisation.
T
raditional corporate
social responsibility (CSR) is failing to
deliver, for both companies and society. Executives need a new approach to
engaging the external environment. We
believe that the best one is to integrate
external engagement deeply into business decision making at every level of a
company. In this article, we show how
to make that kind of integrated external
engagement (IEE) a reality. We set out
to answer three questions. Are companies doing well at external engagement? Where might they be going
wrong? How can they do better?
Are companies doing
well at external
engagement?
Properly understood, external engagement means the efforts a company
makes to manage its relationship with
the external world. This relationship can
and should include a wide variety of activ32
CFO india
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ities: not just corporate philanthropy,
community programs, and political lobbying, but also aspects of product design,
recruiting policy, and project execution.
In practice, however, most companies
have relied on three tools for external
engagement: a full-time CSR team in
the head office, some high-profile (but
relatively cheap) initiatives, and a glossy
annual review of progress. That traditional approach has had some positive
effects. Companies certainly consider
the external environment more carefully
than they did in the past, and their philanthropic programs have helped many
people. But in a majority of cases, CSR
has failed to fulfill its core purpose—to
build stronger relationships with the
external world. The Occupy movement
in the United States is the most visible
sign of discontent, but polls show that
levels of trust in business are below 55
percent in many countries. A significant minority views business executives
as villains, enriching themselves at the
expense of society. Even firms with the
glossiest CSR reports have found themselves cast as public enemies. Take major
Wall Street firms in the aftermath of the
financial crisis or BP after the Gulf of
Mexico spill: their relationships with the
external world have been shattered, and
they have lost billions of dollars of value
as a result. Many executives recognize
that their current approach is inadequate.
In a recent McKinsey survey of more
than 3,500 executives around the world,
less than 20 percent of the respondents reported having frequent success
influencing government policy and the
outcome of regulatory decisions. This
problem creates an opportunity for
significant competitive advantage. In
marketing or operations, companies
struggle to raise their performance a
few percentage points above that of their
competitors. But as leading-edge companies such as Statoil and Unilever have
discovered, effective external engagement can set you far above your rivals.
photos.com
John Browne and Robin Nuttall
insight
Where are companies
going wrong?
Executives should not blame themselves
alone. One reason they struggle is that
the expectations of citizens and governments have never been higher. Companies are expected not only to obey the law
or meet certain standards within their
own businesses but also to ensure high
standards across their supply chains.
Large companies are expected to go
further still, helping to solve major economic, environmental, and social problems— even those unrelated to their
businesses. Moreover, as the expectations of citizens have increased, so has
their power to scrutinize. Digital communication has enabled individuals and
nongovernmental organisations (NGOs)
to observe almost every activity of a business, to rally support against it, and to
launch powerful global campaigns very
quickly at almost zero cost. High expectations and scrutiny are here to stay. Successful companies must be equipped
to deal with them. What is wrong with
CSR? Why have well-resourced teams,
backed by the authority of CEOs, failed
to deliver on their core purpose? In our
experience, that centralized approach has
four serious flaws. First, head-office initiatives rarely gain the full support of the
business and tend to break down in discussions over who pays and who gets the
credit. Without the active participation
of the big spending functions—typically,
production and marketing—the ambitions of a central team are difficult to
realize. Second, centralized CSR teams
can easily lose touch with reality—they
tend to take too narrow a view of the
relevant external stakeholders. Managers on the ground have a much better
understanding of the local context, who
really matters, and what can be delivered.
Third, CSR focuses too closely on limiting the downside. Companies often see
it only as an exercise in protecting their
reputations—to get away with irresponsible behavior elsewhere. Effective exter-
nal engagement is much more than that:
it can attract new customers, motivate
employees, and win over governments.
Finally, CSR programs tend to be
short-lived. Because they are separate
from the commercial activity of a company, they survive on the whim of senior
executives rather than the value they
deliver. These programs are therefore
vulnerable when management changes
or costs are cut.
Michael Porter and Mark Kramer
summarize the result: “a hodgepodge of
uncoordinated CSR and philanthropic
activities disconnected from the company’s strategy that neither make any
meaningful social impact nor strengthen
the firm’s long-term competitiveness.”
How can companies
engage more
profitably?
In response to this problem, a number of
observers have proposed new intellectual
m ay 2 0 1 3
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33
insight
frameworks to analyse how businesses
manage their relationships with the
external world. Almost all of these frameworks, including Porter and Kramer’s
“shared value” and Ian Davis’s “social
contract,” share a core idea: companies
must deeply integrate external engagement into their strategy and operations.
The logic is simple and compelling. The
success of a business depends on its
relationships with the external world—
regulators, potential customers and staff,
activists, and legislators. Decisions made
at all levels of the business, from the
boardroom to the shop floor, affect that
relationship. For the business to be successful, decision making in every division and at every level must take account
those effects. External engagement cannot be separated from everyday business;
it must be part and parcel of everyday
business. In our experience, most executives share that objective, but many do
not know how to achieve it. What can you
do to integrate external considerations
into decision making across a business?
To build on our own experience at BP
and McKinsey, we spoke to seven leaders who excel in this area. We conclude
that you need to do four things: define
what you contribute, know your stakeholders, apply world-class management,
and engage radically. We discuss each
element in turn.
Define what you
contribute
Every company makes a significant contribution to society. At the most basic
level, businesses offer goods and services
people want. In the process, they provide
capital, jobs, skills, ideas, and taxes. But
many companies don’t emphasize that
contribution. Internally, they focus on
what they can get from society: cheaper
inputs, higher prices, and kinder regulation. Externally, they promote their tiny
CSR-related contributions—vaccines
they’ve donated, say, or playgrounds
they’ve built—ignoring the vast contribution made by the day-to- day business.
This focus creates two serious problems.
34
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Externally, it undermines credibility. If
your company exists to extract value from
society and tacks on a few CSR initiatives
to “give back,” no one will believe a word
you say. Citizens, NGOs, and regulators
will tend to view your efforts to engage—
even genuine ones—as cynical and selfish maneuvers. In that climate, cooperation is very difficult. Internally, the
same mind-set hinders the integration
of external engagement into daily activities. The goal, as BHP Billiton’s outgoing
CEO Marius Kloppers describes it, is for
“every single employee, contractor, and
supplier to take responsibility for social
issues.” That is very difficult to achieve if
these parties behave as if their relationship with the external world was essentially extractive. Companies that succeed
in building a profitable relationship with
the external world tend to think very differently: they define themselves through
what they contribute. This approach
does not mean changing purpose; it
means being explicit about how fulfilling
that purpose benefits society. Nor does
it mean abandoning a focus on shareholder value; it means recognizing that
“We are finding
out quite rapidly
that to be successful long term we
have to ask: what
do we actually give
to society to make
it better? We’ve
made it clear to the
organisation that
it’s our business
model, starting
from the top.”
—Paul Polman, CEO of Unilever
you generate long-term value for shareholders only by delivering value to society as well. That point may seem to be an
intellectual or linguistic distraction, but a
CEO’s vision for a company has a powerful practical impact.
Take Paul Polman, whose bold strategy we quoted above. His approach has
been formalized in the Unilever Sustainable Living Plan (USLP), which sets
a clear goal: to double the company’s
sales while reducing its environmental
impact. The plan explains why that goal
makes business sense, what targets the
company must hit en route, and how it
will do so. Every employee can understand what the company wants and how
he or she fits into that goal. Like other
companies following similar strategies—AstraZeneca, GE, and PepsiCo,
for example—Unilever hasn’t got there
yet. But with the USLP, Polman has
laid the foundation for external credibility and internal transformation.
Redefining the way a company thinks
about itself requires leaders to promote
their vision again and again with unremitting energy, both internally and
externally. Duke Energy’s Keith Trent
emphasizes this point: “Whether it’s
the CEO or his or her senior leaders,
the biggest job is creating that vision
for the company.” That involves a significant personal risk because you have
to take on incumbents who benefit
from the status quo. All of the leaders
we spoke to had met with resistance
from other executives, shareholders,
and competitors. Daniel Vasella, the
former chairman of Novartis, puts it
well: “When people believe change will
only cost them, you can be sure they
will do everything to make change fail
or not even start.” Leadership requires
you to put your reputation on the line
and to bring people with you. Make it
clear that they can choose to engage
with the world—or they can leave.
Know your
stakeholders
Our second maxim of integrated exter-
insight
nal engagement is to know your stakeholders. That idea may sound obvious,
but many executives do not take it
seriously. Knowing your stakeholders
means more than writing down a list
of risks they could pose, having a cup
of tea with some NGO heads, and holding a few focus groups. It means understanding your stakeholders as rigorously as you understand your consumers.
The McKinsey survey found a strong
correlation between the in-depth profiling of stakeholders and success at
engaging with them. Sixty-seven percent of respondents from successful
companies report that they are very
effective at understanding the priorities and objectives of the stakeholders,
versus 28 percent of respondents from
less successful companies. Effective
marketing relies on a detailed knowledge of the preferences and resources
of consumers. Likewise, effective external engagement relies on a detailed
knowledge of the preferences and
resources of stakeholders. That means
learning, on an individual and institutional level, what they want, when they
want it, how much they are prepared to
compromise, how your activities affect
their goals, and what resources and
influence they can bring to bear. Companies can gain such a detailed understanding only through a rigorous and
exhaustive process, including personal conversations with stakeholders,
expert analysis (from external sources where necessary), and specialist
monitoring of the Internet and social
media. Research may sometimes take
place at the corporate level—to develop
an overview of strategic social issues—
but more often at the level of a single
facility, market, or project. As we discuss later, line managers must have
the skills, incentives, and resources to
conduct that research.
Sometimes it takes more innovative methods to acquire the necessary
knowledge. In 2002, BP began developing the vast Tangguh gas field, in West
Papua, Indonesia. The area was rife
with social issues: political separatism,
“Companies often focus on speaking
about our needs and our business,
trying to persuade people about the
soundness of our activities. We would
be more effective if we understood
stakeholder dialogue as an exercise
to listen and understand.”
—Helge Lund, CEO of Statoil
land disputes, human-rights abuses,
and environmental degradation. Construction required the relocation of one
village to two new resettlement sites.
An independent advisory panel was
established to hear community concerns, encourage debate, examine BP’s
activities, and report its findings publicly and fully—all without influence from
BP. That gave the panel’s reports credibility and gave the company’s leadership a far greater understanding of the
issues than would have been possible if
the research had been left to executives
caught up in the project’s technical
challenges. BP’s approach may seem
expensive and even dangerous, but it
is essential, and far cheaper than misunderstanding social issues, making
mistakes, and being driven out by local
resistance, government decree, or international pressure. To act in ignorance
is to take a huge risk.
Thorough stakeholder research not
only summarizes issues and interests
as they stand today but also identifies
potential problems and opportunities
before they arise. That allows a company to act before its competitors do.
Paul Polman describes how a lack of
foresight hurt Unilever: “We missed
the issue of obesity and the value of
healthy and nutritional food. We were
behind, while Nestlé was riding that
wave. Not being in tune with society,
with the benefit of hindsight, can cost
you dearly.” The closer your relationship with stakeholders, and the greater
your expertise, the more likely you are
to spot the trends that seem so obvious
in hindsight.
Apply world-class
management
Companies that succeed at integrating external engagement into their
businesses see it as a critical contributor to profitability, not as some woolly
qualitative activity. They manage it like
any other business function, using the
three core tools of great management:
creating capabilities, establishing processes, and measuring outcomes.
Creating capabilities
Employees need the right skills to
include external considerations in their
decision making. That starts at the
top, as Statoil’s Helge Lund explains:
“We have to have 360-degree leaders.
They have to be good business people
who can develop talent and build business relationships, but they also have
to genuinely understand the requirements and the expectations of external society.” CEOs are responsible for
ensuring that their senior teams are as
capable at external engagement as at
internal management and that the necessary skills are valued, promoted, and
developed throughout the organisation.
Companies can develop their externalengagement skills through a mixture of
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CFO india
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insight
ing for employees. In many cases, particularly at senior levels, these skills are
best developed in several areas of the
business—experience in marketing,
for example, equips executives to analyse and communicate with stakeholders, experience in operations to deliver
change on the ground. Formal training
is a useful supplement, particularly for
more specialized skills, such as negotiation. For example, BP held master
classes with leaders such as Madeleine
Albright and Henry Kissinger, people
who really know how to align diverse
interests effectively. At the lower levels
of the company, training helps every
employee and contractor to understand
the importance of relationships with
the external world and to know the
company’s policy on social issues.
Establishing processes
Putting capabilities in place is not
enough; companies must formally
incorporate external engagement into
business processes at all levels. Every
process—whether it helps a company to
set corporate strategy, design products,
or plan projects—must include efforts
to consider its impact on stakeholders
and consequences for the business.
Helge Lund describes this approach
at Statoil: “Stakeholder interests, dialogues, risks, and opportunities are
deeply integrated in every business
decision that we take. Every single project or investment decision comes with
reflections, risk maps,
and mitigation actions
around the particular topic that we’re
discussing.” When
companies develop
processes, clarity is
essential: conflicting
policies, standards,
guidelines, and initiatives can be counterproductive, creating
overload and confusion. BHP Billiton has
worked hard to avoid
all this by replacing its old forms of
guidance with what Marius Kloppers
describes as “a series of group-level
documents that clearly articulate the
minimum standards that must be in
place at all company assets, to ensure
that all managers and employees fully
understand the company’s corporate
expectations.” The risk in practice is that
business lines will treat external engagement as an afterthought and a hoop to
jump through to satisfy the head office.
Each recommendation in this article—
setting the vision, creating capabilities,
and measuring outcomes—reduces
that risk, but ultimately it is a risk that
executives must take. Only business
lines have the resources, the influence,
and the knowledge to transform a company’s relationship with the external
world. It is worth cautioning against a
common error. Some companies publicize their internal processes, holding
them up as evidence for their responsibility and expecting praise in return.
Those details should remain behind
the curtain: stakeholders generally care
about results and results alone.
Measuring outcomes
Results should also be the only thing
executives care about. In external
engagement, perhaps more than in
any other business function, it is easy
to be diverted from a focus on outcomes to a focus on processes or, even
worse, an ill-defined sense of “doing
good.” To retain a focus on outcomes,
companies must set targets, measure
progress against them, and link incentives to their achievement. The saying
“what gets measured gets treasured”
is as true for external engagement as
for any other area of business. Ideally,
companies should measure outcomes
in terms of value added to the business,
a challenging standard— less than 20
percent of respondents to the McKinsey survey reported that their companies measure the financial impact of
external-affairs activities. The difficulty
arises because their financial benefits
are often indirect and far in the future
or can be quantified only against an
unobserved counterfactual. In practice,
businesses can observe various proxies, of varying degrees of accuracy, for
the value external engagement adds.
The closest proxy is satisfaction among
stakeholders, weighted according to
their importance to your business.
Independent panels, such as BP’s in
Tangguh, are a good way to get a fair
appraisal, and standard polling may be
useful in some circumstances. When it
is not possible to measure stakeholder
satisfaction, a company can look at specific impacts on society and the environment. Unilever’s Sustainable Living
Plan, for example, sets about 60 targets
for seven metrics, including total water
consumption and greenhouse-gas
emissions. In some cases, such as political engagement, companies cannot
track the satisfaction of stakeholders or
the impact on society.
The only possibility is
to measure activities
(such as the number
of meetings with politicians), though companies must take great
care to ensure that
these activities are not
undertaken for their
own sake. In general,
the issue in question
will determine which
measures are possible
and appropriate.
“There are the guys and
girls sitting at the top who are
wrestling to ensure that in the
long term they do the right
thing. Then there are the people
who are asked to deliver. The
question is how do they react
and behave?”—Martin Sorrell, CEO of WPP
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CFO india
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insight
Engage radically
The final hallmark of integrated
external engagement is a radical
approach to communication with the
external world. In our experience,
and the experience of the executives
we spoke to, companies must guard
against three pervasive errors. First, a
lot of companies start engagement too
late. The natural temptation for many
busy and cost-conscious executives is
to delay acting until something hits
them. That can be fatal. Integrated
external engagement requires you
to sit down with stakeholders early
and often. The discussion should be
ongoing, constantly building goodwill,
understanding, and connections, so
that companies stay informed and
establish a reserve of trust to draw
down in times of crisis. As Helge
Lund puts it, “Gaining stakeholder
trust is not something that you achieve
once and for all. You can lose it very
quickly. We have to be continuously
working on this subject, even when
we do not necessarily have big issues
to deal with. It has to be developed
as part of the DNA of the company.”
The McKinsey survey found that 65
percent of executives think they should
proactively engage with governments
but that only 38 percent actually do so.
As for regulatory bodies, 63 percent
of executives acknowledge the need to
engage with them but only 33 percent
follow through. The second error,
alluded to by Daniel Vasella above, is
to treat stakeholder engagement as
a propaganda exercise. Repeatedly
saying how responsibly your company
behaves is not credible and achieves
very little. Rather, engagement should
be understood as a negotiation
with intelligent and often powerful
operators. As in any negotiation, your
bargaining position determines your
strategy and style. That’s why it is so
important to know your stakeholders
and their payoffs and resources in
advance. Negotiating with them is
an ongoing game, and establishing
trust is therefore important. You may
be able to fool a regulator or an NGO
once, but that is liable to backfire the
next time you interact. In most cases,
if you are prepared to change your
business in a significant way, you
can achieve mutually advantageous
outcomes and thus real collaboration.
That does not mean the aim is to
please everyone—the third common
error. Sometimes, a mutually advantageous solution is impossible, collaboration will not yield your best outcome,
and a stronger negotiating strategy is to
attack. For example, in a dispute with
a regulator, if the law is on your side,
there may be no point in seeking compromise. If activists make ridiculous
demands that will win no sympathy
with the broader society, it may be best
to show them the door. As Iglo Group’s
former CEO Martin Glenn puts it: “You
don’t have to manage all of your stakeholders equally. Some people who think
they are stakeholders might not be. You
have to decide whether Stakeholder X is
truly critical to the long-term health of
your business or not.” Selective cooperation applies not only to stakeholders but also to competitors. When it
would be ineffective or too costly to
act alone in addressing an issue, cooperation with them may be in the best
interests of all players. For example,
an industry may sometimes seek intelligent regulation to shut out free riders that undermine its reputation. But
in certain cases, the first-mover advantage is considerable, and it is best to
act alone. As Martin Glenn told us,
“For big initiatives which we want to
own, we’ll take a risk, and then we will
seek advantage from that.”
From CSR to IEE
A good relationship with NGOs, citizens, and governments is not some
vague objective that’s nice to achieve
if possible. It is a key determinant of
competitiveness, and companies need
to start treating it as one. That does not
mean they have to initiate philosophical inquiries into social responsibility
“I have an aversion against missionaries. I don’t
like to go out as a
missionary and
preach, and then
be accused of
preaching for my
own parish. This is
a negotiation, and
it can be a very
tough one.”
—Daniel Vasella,
Former chairman of Novartis
and business ethics. But it does require
them to recognize that traditional CSR
fails the challenge by separating external engagement from everyday business. It also requires them to integrate external engagement deeply into
every part of the business by defining
what they contribute to society, knowing their stakeholders, engaging radically with them, and applying worldclass management. In other words,
it requires the same discipline that
companies around the world apply
to procurement, recruitment, strategy, and every other area of business.
Those that have acted already are now
reaping the rewards.
John Browne, former CEO of BP, is a
partner of Riverstone Holdings; Robin
Nuttall is a principal in McKinsey’s
London office. This article was originally
published in McKinsey Quarterly, www.
mckinseyquarterly.com. Copyright (c)
2013 McKinsey & Company. All rights
reserved. Reprinted by permission. m ay 2 0 1 3
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37
leader’s
world
The White
Horizon: Lessons
from the Desert
In the face of setbacks, the strength of one’s
commitment to a shared goal and an attitude
of being a solution-seeker matters the most.
ABOUT THE AUTHOR
David Lim, Founder,
Everest Motivation Team, is
a leadership and negotiation
coach, best-selling author
and two-time Mt Everest
expedition leader. He can be
reached at his blog http://
theasiannegotiator.
wordpress.com, or
david@everestmotivation.com
38
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I woke to a slight morning chill, even as the golden orb of the sun had begun
to sneak up on us. Outside our maroon and mustard tent, the sky was fast turning
from a deep blue to a pale gold. Inside, I groaned quietly to myself as I massaged
my right knee, now swollen and puffy. Day four of a six-day expedition, and my
right knee was suffering from an overuse injury. I turned to Shani who was just
stirring inside her voluminous, caterpillar like sleeping bag.
“It’s still puffy – and it hurts. What would you do?”
“If I were you, I’d cancel the expedition and call for an emergency pick-up.”
“What other options do we have?”
Shani shrugged. In her book, having a nice healthy knee going into one’s old age
was definitely a deciding factor. I was, instead, weighing up the failure of completing the mission versus what I reckoned to be a tendon injury that might resolve
after some rest. The satellite telephone lying at the foot of my sleeping bag looked
inviting, even seductive. Just a call to our logistics operator and it was likely that
they’d find us with their four-wheel-drive, or 4x4, in a matter of a day or so. The
‘easy’ way out lay within arm’s reach. But was that the best solution?
“So when are the trolleys arriving?” I queried, slightly exasperated. Over the tinny
sounding phone, the voice said. “They’re on their way tonight from Miami!” So
there we were, in La Paz, the world’s highest capital at about 3700 metres above
leader’s world
sea level. Landlocked Bolivia’s capital is
so high that just getting out of the plane
takes your breath away – literally. The
oxygen level here is about 30 per cent less
than that of Singapore, our wonderfully
warm and sticky tropical island home.
Our journey really started with a magazine feature in 1994 of Carla Perotti’s
daring solo crossing, on foot, and unsupported, across the world’s largest salt
desert. The Salar de Uyuni is one of the
world’s most surreal places, about 170
km across. The large desert comprises
of hard saltpan, crystalline salt metres
thick, left behind when the pre-historic
lake Minchin dried up aeons ago. The
years passed, and when the idea became
a reality in late 2006, Shani and I put
together a plan to pull our six days’ supplies of water and food and equipment
on specially made aluminium trolleys
designed by Hospimek.These trolleys
were supported by lightweight alloy tyre
rims and tyres picked just for the desert
environment. And now the entire shipment, thanks to the incompetence of our
shippers, was delayed. The days passed,
each one framed with more promises
that the trolleys would arrive on time.
It was impossible not to have a sense of frustration and
resentment in having nearly a year’s effort go waste. But then I
worked through this feeling and decided it was better to channel
it into positive energy. So within 36 hours, we purchased crude
La Paz trolleys made for street vendors, and had them modified
at a welding shop. We also acquired some heavy China-made
mountain bike tyres and accessories.
Two days later we were pushing and tugging our “La Paz
Express” trolleys across the stunning wastelands of the Salar.
By carefully balancing the 50 kilos of water and an additional
20 kilos of equipment and food, we eventually found a tipping
point for these so that an optimum amount of energy could
be expended in pulling them across the desert. The blinding
whiteness of the desert meant strong protection against the
ultra-violet rays of the sun was needed. Industrial-strength
sun cream was slathered on our faces everyday, as day time
temperatures would rise to 15 Cº and fall to -15Cº
We followed a routine of packing in at least nine hours of
pulling with short breaks every hour or so. In many ways,
it was harder than climbing, as we had to keep pulling for
much longer stretches without a break. To prevent difficultto-degrade stuff like used toilet paper from flying around the
dry Salar for years, we burned every scrap after using them –
quite a trick when the wind is blowing, your pants are down,
PHOTOS.COM
“ The blinding whiteness
of the desert meant strong
protection against the
ultra-violet rays of the
sun was needed.”
and your lighter keeps getting snuffed out.
“Let’s lash the two trolleys together, dump all the water
except for just the next 48 hours – and you pull it!”
So went the suggestion to which Shani demonstrated some pluck when she hauled both our trolleys. This
allowed me to hobble some half and hour behind her at a
much slower pace, carrying just the minimal amount of
water. I was filled with doubt as to whether this solution
was workable. By lunchtime though, Shani had not only
got the hang of it, but it was also proving to be less of a
problem than we thought. The lights of Colchani, the village at the edge of the desert could be seen. Not far now.
At about 10.30 a.m. next morning, on Aug 10th, 2007,
we walked through the grubby salt mines that ringed the
edge of the Salar until we reached a metalled road. My left
ankle was now swollen from all the weight I’d put on it
to ease my injured right knee. But it was the end of our
journey, and I’d survive – even if on the back of a handful
of painkillers.
But it was not the end of learning. The hardest won lessons
from the desert was that in the face of setbacks, only two
things matter – first, the strength of your commitment to a
shared goal, and second, your attitude in being a solutionseeker, rather than a problem-dweller. Never say die.
m ay 2 0 1 3
CFO india
39
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Lounge
05.13
CFO
This month enjoy the unique mix of the
capable and the romantic in BMW’s luxury
sedan–the M5. Despite the economic jitters it
causes Greece offers a truly relaxing time to
the vacationer. Gadget lovers take note of the
Samsung Galaxy Grand Duos. And Dario’s
in Pune is the place to head for vegetarian
Italian fare. In short, enjoy the summer!
BMW M5
Cruise Mi55ile
The M5 can raise every strand of hair on your
arms, and then take your date for a romantic
dinner. Quite simply, no other car in the world is
as ambidextrous as this one Amit Chhangani
The M5 is a true legend in the motoring history
– the nameplate that showed the world how a car
didn’t have to be impractical to be mind bogglingly fast. Almost a supercar under the skin, the M5
can juggle the roles of being a track day sports car
and your kids’ school van with equal adeptness.
Unassuming from the outside, practical from the
42
CFO india
m ay 2 0 1 3
inside and incredibly capable under the hood, the
M5 is the epitome of the sleeper car.
Design
If you intend to drive the M5 in the highly despicable Mumbai traffic, you have to adminis-
DID YOU
KNOW?
After World War I,
BMW had to stop
aircraft engine
production due
to the Versailles
Armistice Treaty.
The company
started producing
motorcycles
in 1923 after
the restrictions
were lifted.
Automobiles
followed in 1928.
cfo lOunge
on Wheels
ter anger-management therapy to this
baby. The Doctors of Bavaria have prescribed a magic tablet positioned right
behind the drive selector to cool her
down. Meant to increase or decrease
the shift points for the transmission,
the button helps the M5 act in a more
docile manner. There are three levels
to choose from, which, we hate to admit, are actually useful while driving
through the busy city streets.
And then you have the legendary
‘M’ mode. Unlike its predecessors,
the F10 M5 doesn’t have just one M
button. It offers you two buttons – M1
and M2, each one of which can be
programmed. There are three settings
each for suspension, steering and
transmission – comfort, Sport and
Sport Plus. Choose your poison, and
save it on one of the M buttons on the
steering wheel by long pressing it.
Engine and Transmission
Once on the Expressway, I chose the
M1 mode and showed the right pedal
its grave. The rev needle swung manically towards the 7000 rpm redline,
dropped back a wee bit, repeated the
procedure rapidly and brought up
the 200 kph mark in lesser time than
I took to write this sentence. The
electronically governed 250 kph mark
is reached within a silly span of time.
The M5 is relentlessly, murderously,
clinical – no drama, no theatrics, no
nerves – the speaker induced in-cabin
burble which gets more melodious
as the revs climb is probably the only
thing that makes you realize that
you’re going ballistic.
For a RWD car, with the power
being fed only to two wheels, the M5
shows enormous composure on the
limit in a straight line. The safety and
stability vigil is just too tight and at
the slightest hint of traction loss the
electronic SWAT team swings into action. A special limited slip differential
for the rear axles assures that the M5’s
rear wheels would dig through the tar
before losing grip.
first introduced in 1984 and
reinvented five times, the latest
m5 packs in quite a few practical
and memory-making features.
take a chance with the M5!
BMW M5
Engine: 4395 cc twin
turbo V8
Power: 560 bhp
Torque: 680 Nm
Price: `1 crore
ex-showroom
Cabin quality and features
Positives
• Phenomenal
performance
• Spacious and
comfortable interior
• The best fusion
of practicality and
performance
Negatives
• Steering not as
communicative as it
should be
The home of the M buttons, the steering wheel, is nice
and chunky – with a fatter rim than most other cars. Of
course its leather wrapped, and the stitch threads are
in M colors. And as you’d have assumed, it’s heavy. At
trundling speeds, the weak wristed have to make some
effort to steer the car. It’s precise, reassuring and does
everything right except for one crucial thing – communicate. It’s hydraulically powered in good old fashion,
but I didn’t quite get the good old fashioned connected
BMW feel. The hydraulic overboost is a tad much.
Performance
On our way back, we were easier on the throttle. The efficiency climbed up drastically, and in comfort mode the
suspension became more compliant. But I won’t really
talk about it. Why? For this is not that kind of a car. It’s
a machine meant to introduce you to an experience that
gets etched in your memory forever. And that’s what I
would rather let you know about – my experience. And
my experience substantiates what everyone has been
saying about this machine for almost three decades now
– it’s a fabulous, fabulous car!
m ay 2 0 1 3
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43
cfo lounge
Gizmos
new launches
Sony NEX - 6
Hot Spot
Samsung Galaxy
Grand Duos
A premium, dual-SIM, Jelly Bean smartphone
Sameer Mitha
The Galaxy Grand Duos stays
true to the design tradition of the
Galaxy family. From a distance it’s
easy to mistake the Grand Duos
for the S III because the look is so
similar. The device is comfortable to
hold in one hand but dual handed
operation is what it’s designed for. It
may appear slightly wider than the
other 5-inch devices available in the
market but that isn’t the case.
The 5-inch display of the Galaxy
Grand has a resolution of 480x800 pixels giving it a 162 ppi. The display does
suffer due to this, and also because
it has a yellow tinge that is especially
evident when watching videos.
The Grand Duos comes with the
TouchWiz skin and anyone who has
used a Samsung Android smartphone
will feel right at home here. Samsung
apps such as S Voice, Smart Stare (the
display won’t go to sleep if it knows
that you are reading), All share,
Chat On and more are also present
on the device.
44
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It may be slightly hard to recommend the Galaxy Grand Duos for the
price you pay. You have the Micromax
Canvas HD A116 which has better
specifications than the Galaxy Grand
Duos, and at a lower price. On the
other hand, with the Grand Duos, you
not only get a slew of Samsung apps,
such as multi window, smart stare and
more, but also better after sales service,
not to mention the TouchWiz UI.
The Canvas HD has a better display
than the Grand Duos. If you are on a
budget, we say take a look at the Canvas HD before the purchase decision.
If a dual-SIM premium device is what
you are looking for, then you can take a
look at the HTC Desire SV.
Specifications:
Processor: Dual-core 1.2 GHz;
RAM: 1GB; Display: 5-inch LCD;
Resolution: 480x800; Camera:
8MP; Battery: 2100mAh; OS: Android 4.1.2 Jelly Bean
Price: 21,500
Sony has added
another feather
to its mirrorless
camera cap,
the NEX-6, which
features a 16 megapixel APS-C sensor.
The kit consists of an incredibly
compact, 16-50mm f/3.5-5.6 zoom
lens. The NEX-6 utilizes a dial-on-dial
design. The dial on the back is used to
adjust various settings such as exposure
compensation, ISO, etc. We’ve shot with
the NEX-6 in all kinds of places and not
once did it disappoint. Price `49,990.
MapmyIndia
Lx340 navigator
Not many
navigators have
been able to
come close to
the Zx250 we
tested last year. Now, the Lx340 brings in
a lot of that goodness, at an affordable
price point. It has possibly the best 3D
Maps in this price bracket. Battery life
is good enough for a 50km journey
on a single charge. Price ` 8,990.
Circle Sniper
The Circle Sniper
is a very unusual
looking mouse, a
member of a breed
of so-called “vertical mice” that are
supposed to be ergonomic masterpieces
and will save your wrist from the
perils of Carpal Tunnel. We have no
complaints at all with the mouse other
than the fact that the design takes
some getting used to. Price `2,499.
powered by
ad
Re Y
st OG
Mo L E
’s NO ZIN
dia CH GA
In TE MA
cfo lOunge
M&E
India’s coolest new Meeting & Eating places
Old World Charm
If you looking for peace and
sometime off from the maddening
city life, make sure you visit Darios
and set yourself free in the lap of
mother nature Purva Khole
As summer arrives full force, it is
time to visit a quaint café instead of a bar.
Though right in the heart of the city, yet
far away from the maddening crowd, the
café that we head to is Dario’s, an Italian
specialty vegetarian restaurant by Rebecca
and Dario Dezio. It sits in a quiet lane at
Koregaon Park in Pune. The place serves
authentic Italian salads, pastas and woodfired pizzas and is laid out in an open air
courtyard along with indoor seating. The
café has a long restaurant area with a long
bar. Since it was an early Friday evening,
dario’s in
pune:
Location: Pune
Where: Sundarban
Hotel, Lane 1, Koregaon
Park, Pune
USP: All vegetarian
Italian food
Reservations:
020 26053597, 020
26053596
in a quiet bylane in pune
sits dario’s, a cafe which serves
complete vegetarain italian
meals. its open air courtyard is
an interesting place to catch up
we chose a table in the courtyard. And were soon
blessed for our choice with the sight of a peacock
emerging from the bushes and walking past us in
royal splendour.
To keep us company on the warm evening, we
started with Corona and then called for Crema
Di Spinaci which is a spinach and Parmesan
cheese dip, served with warm pita bread. The
dip tasted of freshness and went well with the
warm pita. Moving on to the main course, in
tune with our preference for homemade pasta
over the readymade options, we called for a
Tortellini Fulminati which was essentially pasta
parcels stuffed with mushrooms and cheese,
served with a creamy tomato sauce.
Our visit would have been incomplete without
one of their classic wood fried pizzas. And we were
literally spoilt for choice with the kind of variety on
offer. However, we opted for Pesto. The thin crust
pizza was really crisp and light with a pesto base
topped with mozzarella, sun dried tomatoes, bell
peppers, potatoes and parmesan shavings.
To end the meal on a sweet note, our choice
was a Tiramisu. Dario’s version of the dessert
was creamy and light. Though the place serves
only vegetarian food, with the number of options
available, one may never notice that! The food,
décor, ambience are perfect, the only thing which
would have made our experience top class would
be better service especially when the place is
packed over the weekends.
So next time you are in Pune and you have to
catch up with friends, take your family out, or have
a business meeting, this could be your choice.
m ay 2 0 1 3
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45
cfo lounge
travel
greece
Gorgeous
Green Waters
The richness of Greece makes
one forget it has the rest of
Europe in a financial spin
Natasha Verma
Greece is a traveller’s delight—there are breathtaking
vistas for amateur photographers; women on sparkling white
beaches for the young and restless; and the ancient ruins for
those who are looking for peace and quiet. It is a complete
package offering more than any other island clusters.
For our first visit as a family, we decided to pack in sun
and sand for the kids, and a bit of history for the adults. For
that we headed off to the famous islands of Mykonos and
Santorini. The town of Mykonos
is just four-kilometres from the
airport and is easily identifiable by
its trademark windmills that perch
proudly on its elevated land. There
is ‘pretty’, and then there is ‘Mykonos pretty’. The town looks straight
out of a fairy tale with pristine white
houses and narrow streets where
cars are not allowed to ply. For those
who pride themselves on their
sense of direction, Mykonos may
prove to be quite a challenge. The
streets are a confusing maze of passages which lead into one another
and can be very frustrating to navigate if you are in a hurry.
The town boasts of a ‘Little Venice’, an area where—you
guessed it—the houses are located on the sea. Little Venice
is dotted with quaint restaurants and bars where you can
enjoy a beer on a balcony jutting out over the sea, while
waving out to a neighbor who is fishing for his supper from
the comfort of his own balcony. Mykonos offers a variety of
cuisines for the avid foodie, from burgers to fish and chips,
46
CFO india
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to the souvlaki roll—a popular Greek fast food consisting of
small pieces of meat and vegetables grilled on a skewer.
A day trip to the island of Delos is a must if you are a
history buff and the trip must originate from Mykonos. The
Mykononians have an ownership of Delos and ferries to Delos ply only from their island. Delos itself is a well-preserved
site of ancient ruins and is known to be the birth place of
one of Greece’s most important deities, Apollo (the God of
cfo lounge
travel
the island of delos is rich with ancient ruins
ranging from temples to the greek gods of
apollo and artemis to structures which
housed cleopatra and dionysis. the simple
charm of the greek, designed to please, is
another winner.
PHOTOS.COM
the town of mykonos is
identified by its trademark
windmills, pristine beaches
and narrow streets where
no traffic plies. the town of
santorini continues with the
display of greek splendour.
sun), and the Goddess of the hunt
and hunters, Artemis. There are
several ruins that are worth a visit,
including the houses of Cleopatra
and Dionysis, the temple of Isis
and the Terrace of Lions. No one
is allowed to stay back on the
island at night, so do plan accordingly. But do not worry for Mykonos is most famous for
its sizzling nightlife and beach parties that often last up to
three days and nights, with the best disc jockeys.
After exploring Mykonos we set off for Santorini. Our
expectations were low and and Mykonos had truly won our
hearts. Fortunately, we were surprised. The images of the
glorious beaches vanished as we reached Santorini. It is
like no other island, made beautiful by volcanic activity that
sunk the mass in the middle. Left behind from this activity
is a crescent-shaped land with a caldera view. Most houses
and hotels are dug sideways or down the pumice, so you
may get to stay in places like ‘Mill House Steps’ that can be
reached only after climbing down countless flights of stairs.
There are few sunsets that can match what you get to see
in Santorini. Oia is touted to be one of the best villages to
view the sunset from and is frequented by famous photographers from all over the world.
We made our way to the small fishing village of Amoudia,
a 20-minute drive from the main town of Thira, and has
some of the most breathtaking views, with some great seafood. Santorini packs in yet another surprise with friendly
people and eager- to-please vendors. As if the magic of the
place did not make me feel pampered enough, a vendor
gave me a simple corn on the cob with a sparkler attached,
just to “make the lady feel special”. The food here is delicious as the volcanic soil helps in growing the most succulent cherry tomatoes and grapes, with the latter ending up
as house red or white wines, which hotels serve by the jug.
Interestingly, the wines are served in small glasses like the
ones our local dhabas serve ‘cutting chai’ in.
All in all, it is difficult to say ‘yassas’ (goodbye) to Greece
once you do set foot in the country. All I can say is ‘efharitso’
(thank you) to the powers that be for taking me there.
HOW TO GET THERE: Fly to Athens from Mumbai or New
Delhi and reach the islands by air from the capital city or
speed boats or ferries.
Climate: Typically Mediterranean climate. Hot and dry
summers; mild and wet winters.
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CFO india
47
not just
the last word
Can one size fit all?
I
n the last few months, as criticism
around what’s not happening in
India – both in the economy and
society - has become shriller than ever
before, I have been prodded into thinking about whether CFO India should
take a stand. Should we be known as
unequivocally liberal, right-of-centre,
free-market people or should we be
more centrist and therefore moderate in
our views? Should we sometimes be left
of centre? Should we highlight what’s
wrong with as much tenacity as we burrow for what’s right? Should we have a
view on the establishment and each of
its policies and programmes? Should we
expose companies and their misdeeds?
To tell you the truth, I have had to
think hard. But fortunately, it wasn’t
hard for me to arrive at who CFO India
is and wants to be. We represent you –
the CFO community - sometimes the
majority and sometimes a minority,
but always some of you. And the diversity amongst our readers is reflected in
the diversity of our coverage and opinions. They range from conservative to
risqué depending on the issue at hand.
They focus as much as on the future
as on the here and now. They hope to
inform as much as pre-empt thought,
action, approach and strategy.
As for the sensational reporting on
what corporates are doing wrong, we
would rather leave it to the ‘scoopers’!
Our aim is to create opportunities for
constructive dialogue amongst the key
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CFO india
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stakeholders for our community. The
intent is to promote sharing of best
practices and celebrate success and
use ‘collective wisdom’ to discover and
promote the ‘best-fit’ solution for the
challenges we face.
And here’s what makes it difficult
for us to attribute one particular ideology to CFO India. The ‘best-fit’ is
about judgement – and trade-offs. It
doesn’t often result from the cookiecutter application of an ideology or a
principle to a situation. Let me illustrate this with an example that is apt
given the theme of this issue i.e political economy. We broadly believe in less
government – but when capital account
convertibility (CAC) was being considered for India – most people were
pushing for it to be implemented at
the earliest. India’s policy-makers at
that point refrained. If CFO India was
ideology-bound, we would have been
pushed into criticising the lethargy of
the Government irrespective of the
ground realities and India’s readiness
to adopt CAC. But our informed readers were divided on the matter and we
saw merit in both arguments. This is
the power of judgment of the human
mind and the ability to consider tradeoffs. Quite to the contrary, we believe
that the Government’s inability to push
forth reforms in insurance and multibrand retail is based on ill-informed
opinion. Almost as an endorsement,
our readers seem to agree.
Access to information, facts, best
practices and diverse opinions, gives
us the opportunity to think unfettered
on most issues. I don’t think we should
reconsider democracy everyday – but
matters of economic import can most
certainly be subjected to collective
rigour and endorsed accordingly without being held hostage to some predecided notions. We shouldn’t give up
our ability to use judgement each time
or look at the trade-offs. We should
retain our prerogative to think afresh,
independently – each time. I think we
should be able to arrive at the ‘best
answer’ through dialogue not ideology.
But, what do you think?
Anuradha Das Mathur, Editor, CFO India