The CFO of any company today is an all-rounder who has the job of a specialist i.e. managing finance and volatility. As a member of a core strategy team of any company, today’s CFO is considered a business leader responsible for achieving the vision and mission of the company. Come 2022 and the skills of the CFO have been put to test – be it managing finance owing to interest rate fluctuations thus impacting the cost of capital negatively or be it the supply chain issue that has created supply bottlenecks and has negatively impacted the raw material prices, thus pushing the product cost higher.  

A twin challenge of rising interest rates and rising raw material prices thus impacting the cost of production for the manufacturing companies has put the role of the CFO in the limelight once again. After all, managing the cost of capital is a role that a CFO must play diligently. Today, a CFO also needs to be tech-friendly with smart communication skills as interaction with the shareholders is the key. Globally, one of the biggest challenges faced by CFOs is to implement the digital growth strategy adopted by the company. Increasingly, the contribution of CFOs in executing the digital strategy and automating the operation processes using artificial intelligence are seen as the drivers to success. 

The most-valued CFOs are visionaries — they have an eye toward the future, work closely with top leadership and aren’t shy about recommending strategic moves. 

"We evaluate new markets and opportunities through three lenses. First, we ask ourselves whether an opportunity will expand our addressable market, and does that TAM have structural tailwind? Second, does this then align with our core business and overall sense of purpose where we can take a leadership role? And, finally, with our ownership, can we generate meaningful revenue and profit growth?" 

-Amy Hood, CFO, Microsoft

Budgeting for digital success and hiring talent with finance and digital skills remains one of the key focus areas for global CFOs in 2022. Another important task faced by CFOs in 2022 is to embrace risk in the face of disruption. We are in an era where disruption is commonplace. CFOs in today's world are tasked with creating value in the face of disruption. In such circumstances, only the bold can prosper and that means the CFOs of today’s world in order to add value are much bolder than their counterparts in yesteryears. 

Here is your opportunity to get to know the CFOs’ perspective on various issues faced by corporate India. This current CFO issue has insights from CFOs of some of the leading corporates in India. Finance heads and business leaders have shared their mind and strategic insights in their interaction with DSIJ in this special CFO issue. In this interaction with leading CFOs, understand how consistent investment can help drive growth strategies in turbulent times. 

What is your outlook on the global and domestic oil and gas sector?

Considering the extraordinary circumstances prevailing in global energy markets, how do you expect demand growth to evolve in the short to medium term? Even as the world is coming to the terms of subsequent waves of the pandemic with renewed demand and vigour, the war in Ukraine has dealt a severe blow to the global economy and added another dimension of uncertainty to the energy markets. Companies and governments worldwide are re-evaluating their dependencies and re-analysing their strategies. In the present circumstances, energy security has resurfaced as a top global priority. The global demand for oil and gas has rebounded but the corresponding mismatch or shortfall in supply sources will continue to keep oil and gas prices at elevated levels in the short to medium term. 

The global energy markets are under stress as they are facing a double whammy of energy crunch and higher prices caused by the pandemic and the war. India is the world’s third-largest energy consumer and a major force in the global energy economy. Energy consumption in India has doubled since 2000 due to growing population, rapid industrialisation and large-scale urbanisation. While the pandemic seriously hampered capacity growth in 2020 and 2021, the pace is likely to further pick up in 2022 and notwithstanding the rise in share of renewables the demand for oil and gas is going to stay for the next few decades to meet the growing energy needs of our population. 

Can you throw some light on your ongoing oil exploration campaigns over the next couple of years?

ONGC, as a premier Exploration and Production NOC, continues to aggressively pursue exploration programmes to maximise its reserve base as well as to augment the country’s prospective hydrocarbon-bearing areas. We also are making continuous efforts to create a commercial play in newer and frontier areas. In the present OALP regime, ONGC is continuously evaluating the prospects of new areas to maximise its acreage holding as well as to carry out aggressive exploratory efforts. Recent exploratory breakthrough in terms of finding hydrocarbon in the Bengal basin has boosted our efforts. 

And so has been the case with the commercial flow of hydrocarbons in the Vindhyan basin and the presence of gas within Kutch offshore. These are all major leads. The company has drawn up a comprehensive roadmap to further intensify its exploration campaign, allocating a capital expenditure of about ₹ 31,000 crore in the next three fiscal years during FY 2022-25. This is 150 per cent of our exploration expenditure of ₹ 20,670 crore in the last three fiscals. It will help ONGC achieve its acreage acquisition programme to bring around 500,000 sq. km under active exploration by 2025. 

ONGC reported a record net profit of ₹ 40,306 crore for FY22, becoming India’s second most profitable company. In view of the recent windfall tax, what is your earnings outlook for FY23? 

Our gross revenue and PAT were the highest ever in the last fiscal. With the current oil prices and upside in gas prices, we expect strong earnings in FY23. Considering the extraordinary circumstances prevailing in the global energy markets, the government imposed Special Additional Excise Duty (SAED) on crude oil with effect from July 1, 2022 which has been subsequently revised on two occasions till date in tune with international oil prices. We believe that this is a temporary measure and the government will review the imposition as the crude prices stabilise to protect the interest of domestic upstream producers. 

Can you describe your experience as the Director (Finance) of India’s largest crude oil and natural gas company? Also, what are the key challenges that you have faced during your tenure? 

It is a matter of great pride and honour for me to be appointed as Director (Finance) of this esteemed organisation relentlessly serving the energy aspirations of our nation. I am extremely indebted to all our seniors who have meticulously groomed us and motivated us all along to keep the flame of passion ignited for this great organisation. Constant support from all my colleagues and the ONGC teams all over has been my pillar of strength and source of inspiration. Today, when I take a pause and reminisce about my journey, there is a surge of emotions and wonderful memories that fills my heart with immense gratitude. 

It gives me immense satisfaction and confidence that I got the opportunity to handle many challenging assignments during my tenure covering operating, regulatory and policy aspects of both the upstream as well as downstream industry. I got the opportunity to became the first ever woman functional director on the Board of MRPL. Before this, I was also the first lady to become Head (Finance) of Assam Asset and handled this challenging assignment for four years. I also worked at the Directorate General of Hydrocarbons (DGH), the regulatory arm of MOP & NG, in its formative years and was instrumental in steering the production sharing contract (PSC), into the country. 

What are the key skills and aptitude needed to become a successful CFO? What are some of the crucial lessons you have learned in your journey as Director (Finance)? 

Determination is the key and perseverance always pays in the long run. Small hurdles may divert your focus but then we should have the courage and determination to stay focused on our goals. There are no substitutes for hard work. One should always remain abreast of the developments in the ecosystem and learning should never stop. Scheduling your tasks and prioritising is imperative as you rise up the ladder. When it comes to working in big organisations, it is the team work that matters rather than individual brilliance.

In an interaction with Rajeev Gupta, Chief Financial Officer, L&T Technology Services Ltd
 

In conversation with Nilesh Kambli, Chief Financial Officer, Star Health and Allied Insurance Company Ltd 

What is your mid to long-term outlook on the demand environment in the domestic wires and cables sector and the fast-moving electrical goods (FMEG) market? 

We are quite optimistic about both industries, given the improvement in the availability of electricity, consumer behaviour, urbanisation, and rising disposable incomes. While wires and cables play a vital part in all major sectors including power, housing, transport, telecommunication, and rural development, FMEG has enormous growth potential as more and more consumers are choosing comfort, convenience, and hygiene over everything else. We believe the large player will continue to outpace the industry growth rate due to better and safer products, investment in distribution and brand promotion, better ability to manage volatility in commodity prices, greater availability of products and providing customers with a wider choice. Besides, government regulations to further consumers’ interests, higher compliance requirements, increasing consumer awareness, and a volatile market environment are likely to pave the way for greater consolidation in the organised market. 

For Q1FY23, Polycab India's revenue and PAT grew by 48 per cent and 202 per cent, respectively on a YoY basis. What have been the key drivers for your healthy performance? 

Growth in Q1 has been healthy across categories and markets. If you look at wires and cables, almost two-thirds of the growth is coming from volume and the balance is from the pricing action. While domestic distribution-driven business sustained its strong growth momentum, institutional business improved its performance compared to the same quarter last year. The growth was also supported by strategic initiatives such as the merger of Heavy Duty and Light Duty Cables verticals, which brings better operational efficiencies and greater market access. Further, growth in FMEG business was quite broad-based across sub-categories such as Fans, lighting, switchgear, pump and conduit pipes. Our export also saw meaningful growth, with demand mainly coming from geographies like the USA, Africa and Australia. I believe our growth initiatives like distribution expansion, GTM strategy, product innovation and portfolio diversification, along with a strong focus on execution are helping us outperform the market in most of the categories. In terms of profitability, calibrated price hikes, premiumisation and better operating leverage helped us to improve our EBITDA margin on a YoY basis to 11.3 per cent. 

With inflation levels picking up steam, input costs are surging for companies across the board. What measures are you implementing to safeguard profit margins? 

We have a well-established hedging framework for mitigating volatility in commodity prices. In our business, we revise our price list generally on a monthly basis, and we consider two elements one is changes in copper and aluminium prices and the second is the change in USD and Rupee foreign exchange rates. So, high inflation concerns us but mitigating factors in our business will help us reduce the challenges significantly. On cable and wire, we will continue to hover between 11 per cent and 13 per cent, while on FMEG business, we aspire to get up to 10-12 per cent by FY2026. 

Can you shed some light on export? What is your vision for this segment over the next couple of years? 

We have put considerable efforts into our export business over the past few years in terms of new product development, getting approvals and penetrating new geographies. This is now materializing as we are seeing many repeat orders from large customers globally. In fact, a few years back, exports contributed 3-5 per cent to our top line, which is around 7.6 per cent in FY22. Our initiatives to invest in cutting-edge manufacturing and R&D capabilities will enable us to compete with the largest players globally and augment its export business significantly. Polycab has a presence in 60+ countries with the US, Europe, Australia, Africa, and Russia being the major revenue contributors. We believe that exports would continue to increase in the near to mid-term and we should be able to get to at least a double-digit contribution from exports to our top line over the medium term. 

Can you describe your experience as the CFO of India's leading FMEG company? Also, highlight the key challenges that you faced during your tenure. 

In my experience as a CFO, I've learned that this role has evolved beyond its traditional responsibilities, and one needs to cultivate a passion for learning and adopting new technologies to properly manage the finances as per the regulations. Until about a few years back, Polycab was a private company reporting financials once a year, generally six months post-closing of the period. Most of the activities like MIS, budgeting, and financial reporting were excel-driven involving significant manual intervention. However, we have automated the processes, eliminating any scope for errors or statutory non-compliance, leveraging the large volumes of data from ERP, CRM software etc, for data analytics and providing a coherent view of the business with real-time actionable insights 

We have come a long way in the finance function over the years, wherein the Role of the CFO has changed significantly in order to contribute to the sustainability of business in the long run. The role also involves connecting the dots for other leaders between strategy and goals and contributing to operational decision-making. Aspects such as risk management, strategy building, and business planning also became part of the role. With these key steps in mind, CFO needs to be a value creator and strategic partner to the business. 

What is your outlook on the Indian oil and gas industry? 

Consequent to the restoration of normal life and the economic activities post COVID period, which had a huge demand setback, the petroleum consumption in the country has been witnessing sharp growth. The E&P industry has a big responsibility of increasing the oil and gas output in the country. Oil India, being the 2nd largest CPSE in the E&P space, is fully geared up to play its role in contributing to the growing petroleum requirements in the country. 

The government has recently imposed special excise duties on crude oil production. How do you think this will affect the earnings of Oil India? 

The Special Additional Excise Duty (“SAED”) that was introduced effective July 1, 2022, has already been moderated twice. Looking at the levels of oil prices that have been prevailing in recent times, we expect to realise much better prices, net of a windfall tax, compared to the average prices that we have been realising historically. I also believe that the Govt. will do away with this taxation once the prices stabilise at a reasonable level. Therefore, I do not foresee any adverse effect on our earnings or financial position. 

OIL reported a consolidated net profit of ₹ 2,527 crore in Q4FY22, recording a 121 per cent YoY growth. What factors contributed to such robust outperformance? 

There were three main factors contributing to better profitability in FY22 as well as in Q4FY22. First, the higher crude oil price realisations. We realised USD 98/bbl in Q4 and USD 78/bbl in FY 22. Second, higher production of crude oil and natural gas. The natural gas production registered a significant growth of about 15 per cent YoY. And the third, much better refining margins of over USD 14/bbl reported by our subsidiary Numaligarh Refinery. 

What are the company’s top 3 focus areas? 

We are adopting a very focused approach towards the company’s growth to new levels. A plan of accelerated development of certain discovered fields in the states of Assam, Arunachal Pradesh and Rajasthan is under implementation which will result in a quantum jump in our oil and gas production in the next 2-3 years. Another one is the timebound exploration of vast acreages acquired/being acquired by us under the Open Acreage Licencing Policy and attempt to bring some of them to production quickly, subject to hydrocarbon discovery. And then scheduled completion of Numaligarh Refinery expansion project in 2025, increasing refining capacity to 9 MMTPA. 

How is the company planning to further expand its presence in North-East India? 

We have almost 95 per cent of our present business in the North-East which remains our main operating area. The efforts for taking the production to new levels in 2-3 years, that I mentioned earlier, are mainly focussed in this region. We are also increasing our exploration in North-East with a majority of the new OALP acreages that we have acquired existing here. We are continuing to strengthen our business profile in the Region with ownership in NRL, equity participation in BCPL, Assam Petrochemicals Ltd, and Indraprastha Gas Grid Ltd which is implementing the project for natural gas grid connectivity across capitals of North-Eastern States, acquisition of geographical areas for development of CGD networks, etc. 

Can you tell us about a challenge that you successfully faced during your tenure as Director of Finance? 

We have had our share of some difficult times too in the business. The sharp fall in crude oil prices at the beginning of 2020 and grossly inadequate gas prices for a long time posed serious issues for us in maintaining our liquidity and profitability. However, through concerted efforts and measures, we sailed through those difficult times. In that background, we also invested over ₹ 8,000 crore in the acquisition of a majority stake in NRL. We are in better times now with improved oil and gas prices and rising production levels.

In conversation with Sudhanshu Jain, Chief Financial Officer and Head - Corporate Centre, IDFC First Bank Ltd

In an interaction with Sunil Bohra, Chief Financial Officer, UNO Minda Group
 

What is your outlook on the Indian telecom and telecom data services sector for the next 3-5 years?

The December quarter of 2021 saw the telcos rebound to the net revenues of pre-2016 levels and I think this trend will continue going forward. The completion of the 5G auction will also ensure that India will not be behind the advanced nations in terms of technology and services. However, for a large country like ours, consolidation of the industry into an oligopoly/duopoly is something we need to be watchful of. The recent decision of the government to allocate spectrum for private networks for enterprises is likely to spur the ecosystem and rapid adoption of technology.

Railtel achieved its highest ever consolidated income of ₹ 1,628 crore in FY22, registering a healthy YoY growth of 15 per cent. What key factors have contributed to your exceptional performance?

The credit for this goes to the company’s workforce. RailTel has young manpower who is always ready to excel. The marketing team was geared to strengthen the order book. The technical team was asked to focus on maintaining the robustness of the network and to keep the SLA at the barest minimum. The technical implementation team was tasked with ensuring customer delivery within a strict timeline and ensuring that customer satisfaction was accorded top priority. The synergy so created produced results which are there for all to see. Further, the company not only focuses on new business but also looks forward to repeating orders and I am happy to state that the same continues to flow year on year.

Can you shed light on the new order wins secured during Q1FY23?

In Q1FY23 the company has bagged orders to the tune of ₹ 662 crore approx including a major order of ₹ 220.55 crore for providing MPLS and internet bandwidth connectivity for Delhi Safe City. Other orders have been received from Railways, MP State Dev Corp, Electronics and IT Dept Govt of Orissa, DRDO and NICSI. As of date, the company’s order book is over ₹ 5800 crore.

At the moment, what are your top 3 strategic objectives?

My current focus areas are to ensure optimal capacity expansion, streamline implementation and project delivery and create new services to move up the value chain. Optimal capacity expansion is a non-trivial task in telecom as expansion activity is mostly a step function and needs to be closely matched as possible to the demand. The global supply chain challenges have impacted our projects and implementation and need close monitoring and follow-up. Though mobile data has picked up, the rest of the telecom services like MPLS VPN and leased lines continue to fall affecting our bottom line. We are focussing on creating new value-added services to retain our margins.

After a blockbuster FY22, what is your earnings outlook for FY23? Do you expect the high growth momentum to continue?

To put it in simple terms, the journey has just begun. With a healthy order book and order book to the turnover conversion rate of about 3 years the company is poised to continue maintaining high growth momentum not only in FY23 but in coming years too.

What are some of the important lessons you have learned in your journey as a Director of Finance, so far?

Director Finance holds the purse strings of the company and the pressure to loosen it is always present. One has to finely balance needs and requirements to ensure effective utilisation of the available resources and at the same time not stifle the growth of the company. Further, DF has to be a team player in the true sense of the term and has to infuse confidence in their team through his actions. Greater delegation of powers and responsibilities and ensuring increased interaction among finance executives down the line effectively create a strong team. Last but not the least, continued training and up gradation of knowledge is a must in today’s business environment.

According to you, what is the requisite key skill set to become a successful CFO?

I would like to place on record that RailTel for the first time ever won the ICAI Award for Excellence in Financial Reporting for 2020-21. RailTel won the third prize in Category XI – Public Sector Entities. This is the ultimate recognition for any CFO. This was possible because the financials prepared were fully compliant with all laid down requirements, information was presented lucidly, suggestions received from Statutory Auditors, Audit Committee members were incorporated and the resulting financials was considered worthy of a prestigious award. To sum up, the skill set required is to be aware of the latest requirements in financial reporting, transparently report the same, be open to accepting and incorporating ideas and suggestions which add value and the most important quality is not to be rigid in thoughts, words and action. Further, it is useful if one can spend some time and understand the nuances of the business and an overview of the technologies and their implications. A successful CFO does not believe in the dictum of ‘I know everything’. 

In an interaction with Lakshay Kataria, CFO, J B Chemicals & Pharmaceuticals Ltd

What is your outlook on the global flexible packaging industry? How is your company placed in this sector?

The global BOPP Flexible packaging industry is about 9 million mt and BOPET is close to half of the global BOPP Industry. Flexible packaging as such globally is expected to grow by 5 per cent over the next couple of years. In the Indian context, BOPP flexible packaging production capacity stands at close to 800k mt and is annually growing in double digits.

We are optimist about flexible packaging demand particularly for the following reasons:

• Considering low packaged food penetration in India and rising personal disposable income, the industry is estimated to grow fast.

• Investment in the organized retail industry and a change in pack format from rigid to flexible are going to further add to increasing demand.

Cosmo First is very well placed to tab the opportunity of being one of the leading players globally in speciality BOPP flexible packaging films. Our focus on speciality films caused an 18 per cent growth in speciality films over the last couple of years. Cosmo Films offers a diverse range of speciality films for flexible packaging, lamination, labelling, and industrial uses, including synthetic paper, high barrier films, and films for velvet lamination. The BOPP and CPP films that Cosmo offers are created using a monolayer substance that makes them highly recyclable and sustainable.

Cosmo First’s net profit has increased by 67.42 per cent on a YoY basis in FY22. What factors have contributed to such splendid figures?

The company’s net profit climbed by 67 per cent during FY22 on the back of higher speciality sales, better operating margins, and an uptick in performance by subsidiaries. We expect the growth journey to continue with speciality films. Our continued focus on innovating films with lower carbon footprints would further strengthen our leadership position in speciality films.

The company has recently ventured into D2C omnichannel for pet care under the name “Zigly”. How has the new segment fared in the markets? What vision do you have for the same?

The company’s petcare vertical launched under the brand name Zigly during FY22. With Zigly, the company is targeting D2C Digital first Omni-channel presence in Products and Services in Petcare Industry which is growing by more than 25 per cent in India.

ZIGLY is a one-stop solution for pets’ needs. Our omni channel platform offers pet care products and services including food, clothing, health care, grooming, vet consultation, and more. The company has already started 4 experience centres and plans to increase the same to 15 nos during FY23 and to 150 experience centres in the next couple of years. The company is the first in Indian Industry to launch App in the petcare space during June 22Q.

In the next couple of years, the Company is targeting ₹ 400-500 crore topline from Zigly and demerge this business into a separate subsidiary.

What are the company’s Capex plans for the next 3 years?

The company is targeting about 70 per cent growth in flexible packaging over the next 3 years (led by the specialized BOPET line, CPP line and World’s largest BOPP line). Besides this speciality chemicals and petcare are expected to register multi-fold growth in coming years. While speciality chemicals and pet care are not capital-intensive businesses, a major part of the capex needs to be done in flexible packaging. We expect about ₹ 750-800 crore of capex to be done over the next three years. The financials are expected to remain strong even with this capex considering robust cash generation. The bottom-line addition from the capex will start in the coming years.

What are Cosmo First’s top 3 strategic objectives going further?

I would say continued focus on speciality films will to a large extent de-commoditize the business model, shareholders’ value creation with businesses like Zigly and a fair amount of business diversity with investments in higher ROCE businesses such as speciality chemicals.

As a CFO, what are some of the toughest decisions you have made?

At times an organization needs to rationalize costs and we need to take some difficult decisions in that journey. Besides this, decisions related to managing business volatility are at times fairly complex and difficult.

"We Expect The Demand To Continue To Look Interesting"

How can the domestic textile companies benefit from the decreasing share of China in the textile market due to the global changes? What is the general outlook for the textile sector?

Textile is one of the few sectors that is witnessing early signs of a sustained structural growth ahead on account of China + 1 sourcing strategy and the same is driven not only by supply chain de-risking by global exporters but also on account of geopolitical development such as the ban of Xinjiang cotton by the US which produces ~20 per cent of the global cotton. Global textiles and apparels exports are an USD 775 billion per annum opportunity and China commands a lion’s share in global textile and apparel exports at 38 per cent while India stands at 4 per cent. Even a 1 per cent shift in overall trade opens a ~USD 8 billion opportunity for India, which is huge.

Players in the yarn and fabric segment have been witnessing unprecedented growth and profitability improvement in FY22 on account of supply chain shift away from China and the ban on Xinjiang cotton by the US. This has led to capacity expansion by most of the large players, leading to further consolidation in the industry. With current spreads continuing to remain at elevated levels and the export demand continuing to remain strong, Indian spinners remain in a sweet spot. However, any reversal in the commodity cycle remains a key risk to their profitability.

A gradual shift away from over-reliance on a single country and diversifying the supply chain has been one of the most prominent outcomes of the global pandemic which is likely to shape the supply chain ecosystem over the next decade across industries. Textile and apparel being one of the largest in global trade and exports is also witnessing this shift. Given India’s underlying strength in the textile and apparel value chain, the opportunity is huge for the Indian textile industry. In order to grab the opportunity, most of the large textile players in India have chalked out ambitious expansion plans to spur the next leg of growth opportunity.

Which factors hold the highest ranking in reporting of the highest ever sales and profits in FY22 in domestic and export markets of the company?

There are certain specific factors such as:

• Robust Demand Scenario: Strong demand has been witnessed due to demand-supply mismatch and the China + 1 strategy adopted by global brands. Demand for knits, home textile and athleisure remained strong due to the work from home culture adopted by some of the big companies. Going forward we believe adoptions of the hybrid model of working will keep demand strong for the spinners.

• Cotton Spreads: In FY22, the domestic cotton price has been increasing due to strong consumption. Further relaxing of lockdown norms globally has led to increase in demand and reduction in estimated cotton production has led to increase in spread, implying that the increase in prices was passed on to the customers and higher capacity utilisation YoY resulted in higher margins. With highest ever sales and profitability in FY22 we had a roller-coaster ride. Some of the key challenges the industry dealt with included lack of container availability which was more prevalent in the export market. However, due to the strength in demand, companies were able to pass on some of the price increase in the export market also.

In terms of cost we saw two mainline items impacting margins in H2FY22. They were increasing coal prices and freight cost which posed a challenge but due to government support we were able to sail through it.

Can you shed some light regarding the additional capex and investment plans for the expansion of denim, cotton, melange yarn and knits business?

There has been sharp improvement in capacity utilisation ever since the economies around the world started opening up. In order to meet the requirement of global and domestic clients, our Board of Directors has decided to invest to lead this growth trajectory for the next five years. We at RSWM are investing across spinning and denims and from FY23 we are entering knitting. Given India’s underlying strength in availability of raw material, presence across the value chain of textile and the quality of products, we expect the demand to continue to look interesting. In terms of growth opportunity, having exposure to large exports and long-standing relationship with global clients will offer advantages. We will be incurring capex of around ₹ 300 crore which will be funded 80 per cent through internal accruals and 20 per cent by debt in H2FY23.

How does the company plan to capitalise on growth opportunities arising from new textile policies such as PLI scheme, Mega Investment in Textile Parks (MITRA) and Free trade Agreement (FTA)?

The government-approved Production Linked Incentive (PLI) scheme to provide incentives for manufacturing specific manmade fibre (MMF) apparel and technical textiles products has lot to offer. The scheme was approved with a total outlay of ₹ 107 billion under the government’s flagship programme to promote self-reliance. It is likely to cover 40 product categories under MMF and 10 products under the technical textiles segment. The scheme is likely to provide incentives of about 3-11 per cent on incremental revenue year-on-year for five years on greenfield as well as brownfield investments. The PLI scheme is likely to bring about structural changes in the industry by focusing on the above non-conventional segments.

To enable the textile industry to become globally competitive, attract large investments, boost employment generation and exports, the government has launched the MITRA scheme in addition to the PLI scheme. Under the scheme, seven mega parks will be set up in the country over the upcoming three years with plug-and-play facilities in a bid to create global champions in exports. The details of the location, government funding structure, etc. are likely to be finalised after the Union Cabinet’s approval of the proposed scheme.

As regards the Free Trade Agreement (FTA), the Ministry of Textiles has favoured a limited deal for free trade between India and the UK which may boost exports to the UK for garments and home textiles. The proposed trade agreement is likely to provide more market access for the Indian textiles and clothing sector. Further, the government is making efforts to facilitate FTA with European Union, Australia, Canada, and the UAE, etc. in line with the revamped foreign trade strategy. The company would certainly get some indirect benefits from PLI scheme, MITRA and FTA that will result in better exports to the UK and European Union.

Which is the greatest challenge you face being the CFO of the company and taking crucial decisions regarding the company’s bright future?

The role of a CFO has evolved over a period of time with new businesses, channels of distribution and management strategies being developed from simpler times of primary responsibility to ensure accuracy and compliance in all accounting practices. The modern era needs to be able to look beyond the scope of financial execution tasks and instead play a more substantial role in setting the broader strategic goals of an organisation. Future-oriented companies like RSWM which emphasise more on the growth of the company call for result-oriented actions. To do this, organisations as a whole are focusing on transforming business processes and building enterprise value.

Given that all data finds its way to the CFO’s desk, accurately interpreting this data to provide valuable insights and influence business direction while taking care of all the risks is a serious responsibility. One of such risks is currency fluctuation. Capex planning, evaluation and ensuring timely execution is critical to maintaining healthy cash flow. Along with risk management and margin of safety being the highest priorities, eliminating fraud and misleading practices and knowing where the security gaps exist in the organisation is also important.

According to you, which are the key metrics driving the company’s growth?

RSWM will be driven by value-added products like contribution of more dyed and melange yarn. Expanding the existing capacity to meet domestic and global demand is also a priority. Focusing on the turnaround of our denim business through more research and development and product innovation is also crucial so as to be accepted by the top global brands. The next leg of growth will come from forward integration of our business in knits which is value-added business and we will be catering to speciality products only. We are at just at the tip of the iceberg with exciting times ahead. Internally, we are evaluating many organic and inorganic paths for future growth. 

Methodology 

To compile the CFO rankings, DSIJ examined the performances of companies listed on the BSE across market capitalisation and sectors. The financial performance was examined over 12 months ended March, 2022 or December 2021. DSIJ evaluated the financial chiefs on twelve financial metrics. Equal weightage was given to the increase in market capitalisation (includes share price increase and equity issued), followed by growth in sales, operating profit and net profit. Return ratios were also considered for the ranking purpose as well. The segregation of companies into Large-Caps, Mid-Caps and Small-Caps was made based on DSIJ's definition of market capitalisation categorisation. For the purpose of ranking, the best performing CFOs in six major sectors and different caps were considered, along with creating one special category for women CFOs.

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