As the global markets open up and India faces new challenges in the times to come, the role of the chief financial officers need to metamorphose from mere book keeping and control tabs, but to proactively direct the management in achieving strategic goals, was the overriding theme at the second annual CFO Strategies India meet in Mumbai on Monday.
With the markets opening up, the responsibilities of the CFOs have become complex and demanding that require constant reinvention of the role. DD Jalan, CFO, Vedanta Resources PLC set the scene by discussing the changing pressures on the CFOs as their role extends. He emphasised the need for creating shareholder value , which includes striking a balance between growth and non-dilution of controls. Jalan said, “For companies which are expanding their footprints in the global markets?multiple governance requirements assume huge importance considering it’s presence in various geographies. Striking an example, he mentioned that Vedanta is perhaps the first Indian company to be reporting under three different accounting standards?Indian GAAP, IFRS and US GAAP”.
Taking the discussion further, Marc Rudolf from Greater Zurich Area AG highlighted the trend of Indian companies using Europe as a destination for freeing up profits through tax effective structures. According to Marc, the large revenue-generating markets are usually also high-tax jurisdictions: “Smaller European countries are more flexible and provide better conditions for European Headquarters and Shared Services Centres, especially Switzerland which politically is not a member of the EU and can set its own tax rates.”
The forum also had an interesting educational case study on M&A presented by Kaushik Chatterjee, Group CFO, TATA Steel, highlighted the various cultural, financial and strategic challenges that a CFO faces during an M&A deal and the post integration challenges.
The event also had Bruce Rigby, the global retirement business leader, Mercer UK emphasising on the changing landscape of pension plans and liabilities. As Indian companies grow, they acquire the features of a multinational firm and face similar challenges, including those of pension and liabilities. Bruce further said, “There are issues that need to be considered for the Indian market, including changing healthcare costs, the need to engage the employees in order to keep committed workforces and also the application of technology to improve the benefit and HR processes generally.?