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As finance heads worry about political riskCFO India checks out possible solutions

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Political and policy risk have again become headaches for finance professionals.

CFO India decodes the political matrix

CFO PROFILE VIVEK MATHUR, TATA LIFE INSURANCE, P.X06

I THINKINDRAJIT BANERJEE, LABORATORIES, P. X08

CFO LOUNGECRUISE MI55ILE, P. X044

VOLUME 04 ISSUE 0575

MAY 2013

I THINK08 IndrajIt BanerjeeIn 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 dISpoSalToday’s CIOs can collaborate with legal and records management professionals to slash IT costs, improve compliance and reduce risk.

INsIgHT32 Beyond cSr: InteGrated external enGaGementCompanies must incorporate interaction with stakeholders into decision making at every level of the organisation.

Cover design manav saChdev

AD inDex Thomson iFC | Zenith Computers 11 | Udyog softwatre 2 7 | Financial executive 3 1 | microsoft gatefold iBC | reliance mF BC

CFO InsIdem a Y | 2 0 1 3

the polItIcal economyPolitics 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?

cOVer sTOry12

cfO prOfIlevIvek mathurAs the insurance market responds to the regulatory overhaul Tata AIA Life CFO discusses the future of the

case sTUDy28 plannInG ahead of tImeEarly 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

46 travel | Greece

regUlars

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leaDers WOrlD 38 the whIte horIzon: leSSonS from the deSertIn 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.

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 insight-ful piece in this issue sends to our community on societal enagage-ment. 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 experi-ence 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 les-sons 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!’

Deep Engagement

from the consulting editor

Shalini S. Dagarshalini.dagar@9dot9.in

22 C F O i n d i a m ay 2 0 1 3

subscriber services:

Call +91-120-4010999

visit cFO india’s Website

www.cfo-india.in

mAnAGInG DIreCTor: Dr. Pramath raj Sinha

eDITorIALeDITor: Anuradha Das MathurConSULTInG eDITor: Shalini S. DagarASSiStAnt EDitor: Purva Khole

DeSIGnSr. CrEAtivE DirECtor: Jayan K narayananSr. Art DirECtor: Anil vKASSoCiAtE Art DirECtorS: Atul Deshmukh & Anil tSr. viSuAliSErS: Manav Sachdev & Shokeen SaifiVISuAliSEr: Baiju nvSr. DESignErS: raj Kishore verma, Shigil narayanan & Haridas BalanDESignErS: Charu Dwivedi, Peterson PJ, Midhun Mohan, & Pradeep g nair mArCoMDESignEr: rahul BabuSTuDioChIEf PHotogrAPHEr: Subhojit PaulSr. PHotogrAPHEr: Jiten gandhi

The CFo InSTITUTeexeCUTIVe DIreCTor: Deepak GargnATIonAL heAD, CFo InDIA: Seema menonASSISTAnT BrAnD mAnAGer: nisha AnandASSISTAnT mAnAGer: Dr Leena narainASSISTAnT mAnAGer - CorPorATe InITIATIVeS: Deepika Sharma

SALeS & mArKeTInGSenIor VP SALeS & mArKeTInG: Krishna Kumar KGreGIonAL heAD (norTh & SoUTh): rajesh Kandari (+91-9811140424)nATIonAL mAnAGer (eVenTS & SPeCIAL ProJeCTS): mahantesh Godi (+91-9680436623)SenIor mAnAGer (South): Anshu Kumar (+91-9591455661) SenIor mAnAGer (WeST): Deepak Patel (+91-9820733448) BuSinESS DEvEloPMEnt MAnAgEr: Arjun Sawhney (+91-9582220507)

ProDUCTIon & LoGISTICSSenIor GenerAL mAnAGer (oPerATIonS): Shivshankar hiremathmAnAgEr oPErAtionS: rakesh upadhyay mAnAgEr - logiStiCS: Vijay Menon exECutivE logiStiCS: nilesh ShiravadekarASSISTAnT ProDUCTIon mAnAGer: Vilas mhatreLoGISTICS: mP Singh, mohamed Ansari

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All rights reserved: Reproduction in whole or in part without written permission from Nine Dot Nine Interactive Pvt Ltd is prohibited.

33m ay 2 0 1 3 C F O i n d i a

Letters CFO INDIAmay 2013

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 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.

TaLenT FOcUsi 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.

Risk abROadi 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

GOOd wORk The april issue of cFO india has come up exceptionally well. kindly keep it up. — Samba Moorthy V., Executive General Manager – Finance DivyaSree Developer

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 ReadeRMy 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.

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

payment Trends

44 C F O i n d i a m ay 2 0 1 3

WELLNESS

05.13

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 anal-ysed 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.

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 Brit-ish Psychological Society. The study suggests that this essential oil may enhance the ability to remember events and to complete tasks at particu-lar 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

Rosemary aroma improves memory

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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 success-fully 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 strength-ening 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 boron-infused cancer cells were exposed to neutrons, a subatomic particle, the boron atom shattered and selectively tore apart the cancer cells, sparing neigh-boring 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 nano-chemistry. 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.

SCIENCE

New radiation therapy provides new hope

55m ay 2 0 1 3 C F O i n d i a

THE CFO POLL

Is the 8% growth outlook for the next five year plan a practical one?

India’s March manufacturing Purchasing Manager’s Index fell to 52. Will it get worse?

WHaT’s aROUND ZONECFO Book: Rishi Gupta .......................................Pg 06

Jargon Decoded: Going Postal ............................Pg 06

CFO Movement .................................................... Pg 07

Japan’s return to aerospace ................................. Pg 07

Vote now at www.cfoinstitute.com/poll

REsULT

CURRENT POLL qUEsTiON

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 num-ber 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.

SCIENCE

Microsoft to make smart watches?

55%Yes

9%Maybe

36%No

O-ZONE

66 C F O i n d i a m ay 2 0 1 3

yAMAhA IS SeT to drive India-manufactured low-cost motorcycles and scoot-ers 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.

AUTO

China to get made-in-India bikes

JArgON BUSTEr

Term: GoinG PosTal

THE MEaNiNG Euphemism for being totally stressed out, for losing it.

THE UsaGE Makes reference to the unfortu-nate track record of postal employ-ees who have snapped and gone on shooting rampages.

cfobook

rishi GuptaWall Info Boxes +

What’s on your mind?

i Read...The Kite Runner by Kahlid Hosseini

Rishi Gupta likes...ET and two others

The Economic Times, Business Today and SholayApril 17 at 14.30 · Comments · 22 people Like this

RECENT aCTiviTy

Attach

i Listen...

Burman, Bryan Adams8 comments · 39 people like this

PErSONAL

Zodiac: NA Views: Liberal

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 wants to teach underprivileged kidsApril 25 at 18.15 · View all 9 comments · 21 people like this

Rishi Gupta wants to retire by 50 and then do something for nation building April 21 at 11.20 · View all 33 comments · 64 people like this

Rishi Gupta to lead and support the cause of the girl child against female foeticideApril 10 at 6.20 · 3 comments · 13 people like this

Share

O-ZONE

77m ay 2 0 1 3 C F O i n d i a

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.

BUSINESS

JaPaN’s RETURN TO aEROsPaCE

BUZZ

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 pass-words. 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, brain-waves too are unique. And the natural conclusion is to use them to identify — useful, if you want to log into a com-puter, 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 indis-tinguishable 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 CFOTimes 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 adminis-tration of all the channels in the Times Television network fold.

ashutosh agarwala joins Essar steelessar 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 associ-ated with Jindal Steel & Power Limited, where he held the posi-tion of chief Financial officer and director-Finance, for the steel and cement business.

suzlon appoints new CFOIndia’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.

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cfo i think

Minority protection – that’s the key deliverable of corporate governance, especially with regard to the sharehold-er 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 inter-est in another listed company which is unlikely to be a target of delisting in the foreseeable future. in such a situ-ation, 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 subor-dinate) 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.

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.

IndrajIt BanerjeeFacts & 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

“an effective way of assuring good governance is to have a robust board which believes in minority protection.”

indian regulations require that two-third of the board of directors belong to the ‘independent’ category in cases where the board chairmanship is with the controlling group. these regula-tions if applied in ‘spirit’ can be a criti-cal 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 grow-ing 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

the most effective way of delivering good governance is to have a board that understands the significance of minor-ity 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.

99m ay 2 0 1 3 C F O i n d i a

value in a generous manner to the detriment of its own minority inter-est. 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 circum-stances force many organisations down this route. earlier, regulations forced many multinational organisa-tions to sell down, thus reluctantly forcing the entry of minorities in the

local entities. in recent years, acquisi-tion of indian entities by overseas play-ers 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 accept-

1010 C F O i n d i a m ay 2 0 1 3

cfo i think

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

“Management cannot be a slave of promoters. Senior management leaders can bring order and balance through their understanding.”

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 main-tenance of appropriate governance standards. Management cannot con-sider 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 understand-ing of the statutory regulations, corpo-rate 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 long-term positive strength to the group, its brands and its ability to attract the right talent needed for growth.

thanks to technology and the pres-ence of sharp investment analysts, listed entities are subject to increasing public scrutiny. corporate develop-ments are, therefore, very closely monitored by the stakeholders and any inappropriate move, or even the per-ception 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.

1212 C F O i n d i a m ay 2 0 1 3

cover story

Should finance heads engage with the complexity of politics? And how?

anuradha das Mathur

Hands-off orHands-on?IlluStrAtIon By mAnAv SAchdev, deSIgn By hArIdAS BAlAn

cover story

1313m ay 2 0 1 3 C F O i n d i a

TT 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 manag-ers 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 regulato-ry framework, they were preoccupied with understanding the government

cover story

1414 C F O i n d i a m ay 2 0 1 3

and political environment to plan their businesses accordingly. Government was everywhere. It was the way of the license raj. Survey after survey, conduct-ed amongst CEOs and CFOs of leading corporations, revealed that government policy was one of the top three con-cerns, right up till the early 2000s. And at their behest, there would be frequent and organized dialogue between gov-ernment 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 bar-riers – 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 stem-ming from a high growth environment began to translate into a ‘we don’t really need the government’ mindset. Phrases like ‘India grows despite its govern-ment’ 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, there-fore, corporate fortunes.

Given that growth has been slowing down year after year for a while, govern-ment 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 Govern-ment to judge, since business lead-ers 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 lim-ited 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

incentive to change becomes non-exis-tent. Year after year, post a lackluster budget, we heap praise on the pow-ers 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 oppor-tunity 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 under-standing about the operating environ-ment, and the impact that politically-motivated decisions can have on our businesses, is important. It is impor-tant 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 cor-porate 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 mak-ers – those who observe industry, econ-omists, credit raters and CFOs – and ask what they think about the ‘CFO and political economy’…

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

cover story

1515m ay 2 0 1 3 C F O i n d i a

TT 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 reason-able 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 profession-als, it is politics and how it stymies busi-ness. “Some of the present problems in the economy are due to the very pain-ful process of coalition making where decisions take a very long time,” agrees Dharmakirti Joshi, senior director and chief economist at rating agency, CRI-SIL. Notice how crucial reforms such as the introduction of Goods and Services Tax (GST) remain stuck despite consen-sus on their utility.

Politics MattersThe bite is especially sharp when the economy is already in a downslide. After nearly a decade of robust econom-ic growth with some years being within

Finance heads believe politics has the power to hurt more than ever before. It is time to step up the engagement

shaLInI s. daGar

Political

“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

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 gov-ernment 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-

kissing distance of double digit growth, the GDP growth rate for the last quar-ter 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 decision-making 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 envi-ronment clearances, fuel linkages or land acquisition issues.

The situation has been aggravated due to a weakening of the macro-eco-nomic indicators. As government reve-nues 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 flex-ibility to cut rates. The sluggish global economy has multiplied the misery. In the matrix of global investment destina-tions, 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 pros-pects dim, its external position deterio-rates, its political climate worsens, or

1616 C F O i n d i a m ay 2 0 1 3

roMIta das

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.”

engageMent is crucialAnil Singhvi, chairman, Ican Invest-ment Advisors who in his earlier ava-tar both as CFO and CEO has years of experience of gauging the political winds says, “Politics was always impor-tant. 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. Mohan-das Pai, chairman, Manipal Global Education Services prescribes a steady engagement with both politics and pol-iticians. “CFOs if they are disengaged from the political leadership suffer the consequences of bad regulations and inefficient and ineffectual systems.”

ernment acts swiftly, our growth, which has already decelerated, will be perenni-ally stuck at 5 per cent.”

The rediscovery of politics and gov-ernment 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 slowdown and currency fluctuations. Political uncertainty is a threat compa-rable 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 inac-tion or uncertainty? P.K. Choudhury, chairman and Group CEO of rating agency, ICRA says, “all strategic plan-ning is based on a large number of assumptions about future — includ-ing assumptions about policy changes and regulatory interventions. Adequate knowledge of prevailing and changing political scenario minimizes uncertain-ty around some of those assumptions.”

Used to global markets and capi-tal pools, CFOs are not to be boxed in

the importance of politicsCFOs believe politics has a pernicious impact on growth of corporate India

73%yes

73%yes

86%yes

6%no

8%no 8%

no

21%In specific cases

19%Sometimes

6%maybe

Should CFOs care for politics? Do you care for politics? Is domestic turmoil a bigger threat to growth of Indian companies than global uncertainty?

How CFOs can make sense of politics for business?

engage, engage and

engage more…

… but do not cut

private deals to skew the

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

cover story

cover story

1717m ay 2 0 1 3 C F O i n d i a

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, “Poli-tics is too serious a matter to be left to the politicians.” Amen!

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. Cer-tainly the IT industry has been one of the most influential industries in lobby-ing the government. Perhaps it offers a template for the CFO community.

thin red linePolitical engagement is, however, double-edged. In recent times, many companies have suffered due to an unhealthy nexus with politicians. “Net-working 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 busi-ness landscape in the last few years, according to noted economist and pro-fessor 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 enforce-ment 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.

sPeak truth to PowerIn such an evolving business climate, CFOs cannot remain immune. They have to engage with the political pro-cesses in a meaningful manner. With-in their own companies they have to become the champions of higher com-pliance. Ican Advisor’s Singhvi adds that depending on the strength of their

influence within their own organisa-tions, 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 inter-nally and externally is then the key to the future. Sceptics, however, note that

cfo perspectiVes 2013To what extent do you perceive each of the following as being threats to your company’s business this year?

Slow

dow

n in

the

In

dian

eco

nom

y

0

1

1.5

2

3

2.5

0.5

Slow

dow

n in

the

g

loba

l eco

nom

y

Fore

ign

exch

ange

Fluc

tuat

ions

tech

nolo

gica

ld

isco

ntin

uitie

s

Polit

ical

unc

erta

inty

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

cannot say

cover story

1818 C F O i n d i a m ay 2 0 1 3

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

Life on the Knife EdgeLife on the Knife Edge

marico Industries’ group cFo, milind Sarwate joined the hall of Fame for his steady performance

It was a full house at the cFo 100 event in mumbai. over 130 leaders from the finance world joined us for the evening

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

cover story cover story

1919m ay 2 0 1 3 C F O i n d i a

AA nemic global demand, dipping consumer sen-timent back at home, a questionable bust of the commodity super

cycle and wildly gyrating forex and other markets topped off with a loom-ing 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 environ-ment today, the CFO India community got together late March to celebrate the survirors and the thrivers of the previ-ous financial year.

In this celebration, over 130 bright-est 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 direc-tor and and CFO Tata Steel and Mil-ind Sarwate, Group CFO of Marico Industries joined the Hall of Fame for their stellar and consistent perfor-mance. This was followed by the CFO 100 Roll of Honour in 12 categories, namely, excellence in cost manage-ment, M&A, strategy, growth, risk management, raising capital, finan-cial 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 cat-egory saw awards being given in the large (above Rs 1000 crore) and mid-size (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. Dur-ing 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.

According to the survey, the cur-rent 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 Out-sourcing Enterprise Services, Hewlett Packard. Sinha outlined the creation of business models based available opportunities and aligning the cus-tomers 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, Eric-sson, Mr Ravi Venkatraman, CFO, Mahindra & Mahindra Financial Ser-vices and Mr Subeer Bakshi, Director, Talent & Rewards Practice, Towers Watson got together for the next ses-sion to discuss ‘Rising Compensa-tion 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 Part-ner, Primrose Resorts and Hotels who has recently turned author had an enjoyable interaction with the audi-ence. 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. J

iten

gan

dh

i

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

cfo Profile

2020 C F O i n d i a m ay 2 0 1 3

ViVek Mathur Senior vice-preSident & cfotata 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

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 Accoun-tancy 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 Accoun-tant in 1991, Mathur worked as an article clerk for a few months with ratan gupta and Com-pany. 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 hard-ware 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 J

iten

Ga

nd

hi

Days Ahead Sunny

2121m ay 2 0 1 3 C F O i n d i a

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

Milestones

cfoProfile

2222 C F O i n d i a m ay 2 0 1 32222

involved with hardware education. Subsequent-ly, 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 Singa-pore 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 Ameri-can 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 super-visor, 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 report-ing to him and he had to work with the consul-tants 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 organ-isation 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-perform-ing assets (nPAs). These were items which were never looked at minutely in the past,” he says.

For Mathur one of the key learnings from the experience was that a new person on a job typi-cally brings fresh insights. “It has always hap-pened that when someone new comes in and looks at the way work is done and at the process-es 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 – Con-troller in 2007. In 2010 Mathur was promoted

TATA AIA CFO vIvEK MATHuR BELIEvES THAT THE INDuSTRy WILL SETTLE IN THE NExT COupLE OF

yEARS AFTER THE REGuLATORy OvERHAuL

favourite Picks

BOOK Books by Brian Weiss

MAGAzINE The economist

FILM 3 Idiots

MuSIC Pt Jasraj and Jagjit Singh

HOLIDAy SpOT Kashmir

pASSION astrology and badminton

cfoProfile

2323m ay 2 0 1 3 C F O i n d i a 2323

as the CFO. As he talks about the busi-ness of the company, he says, “The pre-vious 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 busi-ness 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 chal-lenge but how to manage business stra-tegically such that you remain a profit-able company is a bigger challenge.

“expense management is key. So, we have spent the last two years focus-ing 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 2013-14 after which the industry should sta-bilise by around 2014-15. The regula-tor 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 econ-omy 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.

“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.”

in practice Data management

2424 C F O i n d i a m ay 2 0 1 3

Today’s CIOs can collaborate with legal and records management professionals to slash IT costs, improve compliance and reduce risk.

T oday’s CIOs face a host of complex challenges. Their depart-ments must continually find more effi-cient ways to store, process and anal-yse massive (and growing) volumes of incoming data. They need to support globally distributed enterprises, includ-ing internal staff, external partners, cus-tomers, 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 depart-ments is now yet another responsibil-ity for IT, as information experts are asked to identify and protect data that has business, legal or regulatory value,

A GOvernAnCe STrATeGy fOr DATA DISpOSAl

while facilitating the defensible dis-posal (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 resOUrCesAt the 2012 Compliance, Governance and Oversight Counsel (CGOC) Sum-mit, 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 per-cent 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 unneces-sary storage, servers and backup means that more resources can go to strate-gic investments. Less information to manage means that legal and regula-tory 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 reten-tion 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, stake-holders from IT—who are stewards of

Lorrie LueLLig

in practice

2525m ay 2 0 1 3 C F O i n d i a

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 reten-tion policies, for example. The legal and regulatory landscape has since changed dramatically. Today, the vast majority of information that needs to be either pre-served, retained or deleted is under the direct responsibility of IT.

Here’s the problem: IT often lacks the legal and regulatory insight to link com-pliance 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 dis-pose of electronic information that’s no longer of value. Clearly, a more modern, broadly useful and executable retention schedule approach is neces-sary—one that recognises the shared responsibility for information manage-ment and defensible disposal among legal, RIM and IT departments. In such an environment, all stakeholders would have insight into the flow of informa-tion throughout the enterprise and be armed with the right policies, processes and tools to protect what’s important for business, legal and regulatory pur-poses. Only then can valueless data be disposed of at the right time.

Making it WOrk in the real WOrldA 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 offi-cially classified as “records.” Consider

the data—must collaborate more close-ly and transparently with records and information management (RIM), legal and business units to build an infor-mation retention and disposition strat-egy that makes sense in today’s global, complex and digitally driven enterprise.

A retention schedule provides a framework for RIM and legal depart-ments to organise corporate records and information, and detail the length of time that such records must be retained for compliance and busi-ness needs. It’s an important tool, but

“The elimination of ‘data debris’ can have a dramatic impact on compliance, corporate risk and the bottomline.”

ph

oto

s.c

om

in practice

2626 C F O i n d i a m ay 2 0 1 3

anything and everything—including both structured and unstructured data sources—as either having legal, regula-tory 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 dis-posal mandates are triggered. Technol-ogy solutions may be deployed to help organisations automate the connection

of information to retention and dispos-al requirements.

Retention periods must take into account the business value of informa-tion 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 Micro-soft SharePoint, and to include details on why and for how long the informa-tion is and will be of business value.

Identify where information is locat-ed. Information inventories are a must,

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 under-stand 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 pub-licised in a language that stakeholders can understand. This involves two key elements: defining what is required of data users when creating and identify-ing information, and defining the responsibilities of data stewards related to the disposition of information. For example, IT won’t be able to make

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 regu-lations 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 reten-tion schedule can achieve the goal of defensible disposal without clear com-munication between legal and IT stake-holders regarding what specific infor-mation 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 dupli-cate 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 require-ments into the retention schedule. Technology can assist with alerts that communicate to systems and data stew-ards when adjustments are needed.

shepherding inFOrMatiOn thrOUgh its UseFUl liFe CyCleCIOs have an important role to play in efficiently and cost-effectively shep-herding the flow of corporate informa-tion 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.

“The retention schedule must clearly define how legal, privacy and regulatory obligations apply to all types of information and business users.”

Case Study

2828 C F O i n d i a m ay 2 0 1 3

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

Case study

2929m ay 2 0 1 3 C F O i n d i a

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

Usually the finance h e a d s a r e g i v e n responsibi l i ty for profitability targets. Irrespective of the

health of the economy, the topline and bottomline expectations remain constant. In any company the ulti-mate 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.

The Challenges Blue Dart, an express delivery compa-ny, maintains its own fleet of aircraft to ensure timely service to its customers. Being the only dedicated cargo freight J

ItEN

Ga

ND

hI

Planning Ahead of Time

company in the country, Blue Dart is heavily affected by the price of Avia-tion Turbine Fuel (ATF). On a regular basis, the ATF cost varies between 16 and 18 per cent of the total cost depend-ing 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 mitigat-ing 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 $18-20 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. Vol-atility 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

3030 C F O i n d i a m ay 2 0 1 3

Case study

explore other creative mechanisms to tackle the resultant cost pressures. For instance, seldom do companies check whether the vendor has cor-rectly charged the operating taxes or if any tax efficiencies are possible. For example, ATF attracts a state VAT vary-ing from 4 to 23 per cent. With effi-cient 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 effi-ciency 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.”

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 fluc-tuation 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 profit-ability thereby eroding shareholders’ value. However, since 2001, the share-holder 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 com-petitive 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 split-ting, 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 suppli-ers. “If they could add further details to their bills, splitting individual cost ele-ments 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 learnTEarly 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 equita-ble solution in the long run, it is often accepted. Dhingra tells us “our com-munication to our customers regard-ing 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.

“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.”

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insight Corporate philanthropy

3232 C F O i n d i a m ay 2 0 1 3

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oto

s.c

om

Companies must incorporate interaction with stakeholders into decision making at every level of the organisation.

Traditional corporate social responsibility (CSR) is failing to deliver, for both companies and soci-ety. Executives need a new approach to engaging the external environment. We believe that the best one is to integrate external engagement deeply into busi-ness 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 com-panies doing well at external engage-ment? Where might they be going wrong? How can they do better?

are COmpanies dOing well at external engagement?Properly understood, external engage-ment means the efforts a company makes to manage its relationship with the external world. This relationship can and should include a wide variety of activ-

Beyond Corporate soCial responsiBility: integrated external engagement

John Browne and roBin nuttall

expense of society. Even firms with the glossiest CSR reports have found them-selves 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 respon-dents 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 com-panies such as Statoil and Unilever have discovered, effective external engage-ment can set you far above your rivals.

ities: not just corporate philanthropy, community programs, and political lob-bying, 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 tradi-tional approach has had some positive effects. Companies certainly consider the external environment more carefully than they did in the past, and their phil-anthropic 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 signifi-cant minority views business executives as villains, enriching themselves at the

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3333m ay 2 0 1 3 C F O i n d i a

where are COmpanies gOing wrOng?Executives should not blame themselves alone. One reason they struggle is that the expectations of citizens and govern-ments have never been higher. Compa-nies 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 eco-nomic, environmental, and social prob-lems— even those unrelated to their businesses. Moreover, as the expecta-tions of citizens have increased, so has their power to scrutinize. Digital com-munication has enabled individuals and nongovernmental organisations (NGOs) to observe almost every activity of a busi-ness, to rally support against it, and to launch powerful global campaigns very quickly at almost zero cost. High expecta-tions and scrutiny are here to stay. Suc-cessful 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 ini-tiatives rarely gain the full support of the business and tend to break down in dis-cussions over who pays and who gets the credit. Without the active participation of the big spending functions—typically, production and marketing—the ambi-tions 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. Manag-ers 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 limit-ing the downside. Companies often see it only as an exercise in protecting their reputations—to get away with irrespon-sible 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 com-pany, 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 com-pany’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

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frameworks to analyse how businesses manage their relationships with the external world. Almost all of these frame-works, including Porter and Kramer’s “shared value” and Ian Davis’s “social contract,” share a core idea: companies must deeply integrate external engage-ment 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 suc-cessful, decision making in every divi-sion and at every level must take account those effects. External engagement can-not be separated from everyday business; it must be part and parcel of everyday business. In our experience, most execu-tives 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 lead-ers who excel in this area. We conclude that you need to do four things: define what you contribute, know your stake-holders, apply world-class management, and engage radically. We discuss each element in turn.

deFine what yOu COntributeEvery company makes a significant con-tribution 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 regula-tion. Externally, they promote their tiny CSR-related contributions—vaccines they’ve donated, say, or playgrounds they’ve built—ignoring the vast contri-bution made by the day-to- day business. This focus creates two serious problems.

you generate long-term value for share-holders only by delivering value to soci-ety as well. That point may seem to be an intellectual or linguistic distraction, but a CEO’s vision for a company has a power-ful practical impact.

Take Paul Polman, whose bold strat-egy we quoted above. His approach has been formalized in the Unilever Sus-tainable 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 under-stand what the company wants and how he or she fits into that goal. Like other companies following similar strate-gies—AstraZeneca, GE, and PepsiCo, for example—Unilever hasn’t got there yet. But with the USLP, Polman has laid the foundation for external cred-ibility and internal transformation.

Redefining the way a company thinks about itself requires leaders to promote their vision again and again with unre-mitting 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 sig-nificant 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 staKehOldersOur second maxim of integrated exter-

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 self-ish maneuvers. In that climate, coop-eration is very difficult. Internally, the same mind-set hinders the integration of external engagement into daily activi-ties. 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 relation-ship with the external world was essen-tially extractive. Companies that succeed in building a profitable relationship with the external world tend to think very dif-ferently: 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 share-holder value; it means recognizing that

“We are finding out quite rapidly

that to be success-ful 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

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3535m ay 2 0 1 3 C F O i n d i a

nal engagement is to know your stake-holders. 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 hold-ing a few focus groups. It means under-standing your stakeholders as rigorous-ly as you understand your consumers.

The McKinsey survey found a strong correlation between the in-depth pro-filing of stakeholders and success at engaging with them. Sixty-seven per-cent of respondents from successful companies report that they are very effective at understanding the priori-ties and objectives of the stakeholders, versus 28 percent of respondents from less successful companies. Effective marketing relies on a detailed knowl-edge of the preferences and resources of consumers. Likewise, effective exter-nal engagement relies on a detailed knowledge of the preferences and resources of stakeholders. That means learning, on an individual and institu-tional 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. Com-panies can gain such a detailed under-standing only through a rigorous and exhaustive process, including per-sonal conversations with stakeholders, expert analysis (from external sourc-es 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 dis-cuss later, line managers must have the skills, incentives, and resources to conduct that research.

Sometimes it takes more innova-tive methods to acquire the necessary knowledge. In 2002, BP began develop-ing 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. Con-struction required the relocation of one village to two new resettlement sites. An independent advisory panel was established to hear community con-cerns, encourage debate, examine BP’s activities, and report its findings public-ly and fully—all without influence from BP. That gave the panel’s reports cred-ibility and gave the company’s leader-ship 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 mis-understanding social issues, making mistakes, and being driven out by local resistance, government decree, or inter-national 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 com-pany 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 relation-ship 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 managementCompanies that succeed at integrat-ing external engagement into their businesses see it as a critical contribu-tor 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 pro-cesses, and measuring outcomes.

Creating CapabilitiesEmployees 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 busi-ness relationships, but they also have to genuinely understand the require-ments and the expectations of exter-nal society.” CEOs are responsible for ensuring that their senior teams are as capable at external engagement as at internal management and that the nec-essary skills are valued, promoted, and developed throughout the organisation. Companies can develop their external-engagement skills through a mixture of on-the-job experience and formal train-

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3636 C F O i n d i a m ay 2 0 1 3

ing for employees. In many cases, par-ticularly at senior levels, these skills are best developed in several areas of the business—experience in marketing, for example, equips executives to anal-yse and communicate with stakehold-ers, experience in operations to deliver change on the ground. Formal training is a useful supplement, particularly for more specialized skills, such as nego-tiation. 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 prOCessesPutting 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, dia-logues, risks, and opportunities are deeply integrated in every business decision that we take. Every single proj-ect or investment decision comes with reflections, risk maps, and mitigation actions around the particu-lar topic that we’re discussing.” When companies develop processes, clarity is essential: conflicting policies, standards, guidelines, and initia-tives can be counter-productive, creating overload and confu-sion. BHP Billiton has worked hard to avoid

good.” To retain a focus on outcomes, companies must set targets, measure progress against them, and link incen-tives 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 McKin-sey survey reported that their compa-nies 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 prox-ies, 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 spe-cific impacts on society and the envi-ronment. 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 polit-ical 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 poli-ticians), though com-panies 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.

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 engage-ment 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 com-pany’s relationship with the external world. It is worth cautioning against a common error. Some companies pub-licize their internal processes, holding them up as evidence for their respon-sibility and expecting praise in return. Those details should remain behind the curtain: stakeholders generally care about results and results alone.

measuring OutCOmesResults 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 out-comes to a focus on processes or, even worse, an ill-defined sense of “doing

“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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3737m ay 2 0 1 3 C F O i n d i a

engage radiCallyThe 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 advanta-geous solution is impossible, collabora-tion 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 com-promise. 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 stake-holders 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 coop-eration applies not only to stakehold-ers but also to competitors. When it would be ineffective or too costly to act alone in addressing an issue, coop-eration with them may be in the best interests of all players. For example, an industry may sometimes seek intel-ligent regulation to shut out free rid-ers that undermine its reputation. But in certain cases, the first-mover advan-tage 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 ieeA good relationship with NGOs, citi-zens, 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 philosophi-cal inquiries into social responsibility

and business ethics. But it does require them to recognize that traditional CSR fails the challenge by separating exter-nal engagement from everyday busi-ness. It also requires them to inte-grate external engagement deeply into every part of the business by defining what they contribute to society, know-ing their stakeholders, engaging radi-cally with them, and applying world-class management. In other words, it requires the same discipline that companies around the world apply to procurement, recruitment, strat-egy, 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. 

“I have an aver-sion against mis-sionaries. 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

leader’s world

3838 C F O i n d i a m ay 2 0 1 3

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 AUTHORDavid 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

The White Horizon: Lessons from the Desert

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 complet-ing 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

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leader’s world

“ The blinding whiteness of the desert meant strong

protection against the ultra-violet rays of the

sun was needed.”

PH

OTO

S.C

OM

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 maga-zine feature in 1994 of Carla Perotti’s daring solo crossing, on foot, and unsup-ported, 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’ sup-plies 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 ship-ment, 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 difficult-to-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,

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 demonstrat-

ed 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 vil-lage 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 solution-seeker, rather than a problem-dweller. Never say die.

Gold PartnerPlatinum Partner Document Management Partner

People and Risk Consulting Partner

Knowledge Partner Silver Partner An Initiative By :

Congratulations!! CFO100 Honourees

Thank you for being a part of our CFO100 Conference and

Felicitation Ceremony and making it a grand success.

We appreciate your continuous support and cooperation.

Look forward to have you in our upcoming initiatives.

Please visit www.cfoinstitute.com/cfo100

to view the event photographs and CFO100 honourees list.

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CFO05

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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!

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 boggling-ly 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

Cruise Mi55ile BMW M5

DID YOUKNOW?

Lounge

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.

inside and incredibly capable under the hood, the M5 is the epitome of the sleeper car.

designIf you intend to drive the M5 in the highly de-spicable Mumbai traffic, you have to adminis-

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CFO LOUnGe ON WheelS

ter anger-management therapy to this baby. The Doctors of Bavaria have pre-scribed 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 ad-mit, 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 mani-cally 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 ac-tion. A special limited slip differential for the rear axles assures that the M5’s rear wheels would dig through the tar before losing grip.

Cabin quality and features 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 – commu-nicate. 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 ef-ficiency 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!

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!LoungeBMW M5

EnginE: 4395 cc twin turbo V8

PowEr: 560 bhP

TorQuE: 680 nM

PricE: `1 crore ex-showroom

positives•Phenomenal

performance•Spaciousand

comfortable interior•Thebestfusion

of practicality and performance

negAtives•Steeringnotas

communicative as it should be

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cfo lounge Gizmoscfo lounge Gizmos

new launches

Sony NEX - 6

powered by

India’s M

ost Read

MAGAZIN

E

TECHNOLOGY

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.

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 pix-els 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.

It may be slightly hard to recom-mend 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 Can-vas 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: An-droid 4.1.2 Jelly BeanpricE: 21,500

A premium, dual-SIM, Jelly Bean smartphone Sameer Mitha

Hot Spot

Samsung Galaxy Grand Duos Mapmyindia

Lx340 navigator

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.

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

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cfo lounge M & E

Old World CharmIf 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

IndIa’s coolest new MeetIng & eatIng places

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.

dario’s in pune:

Location: PuneWhere: Sundarban hotel, Lane 1, Koregaon Park, PuneUSP: All vegetarian Italian foodReSeRvationS: 020 26053597, 020 26053596

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 wood-fired 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,

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

cfo lounge travel

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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 ‘Myko-nos 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 pas-sages 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,

The richness of Greece makes one forget it has the rest of Europe in a financial spin Natasha Verma

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 De-los 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

greece

GorgeousGreen Waters

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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.

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.

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 photog-raphers 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 sea-food. 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 deli-cious as the volcanic soil helps in growing the most succu-lent 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.

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 accord-

ingly. 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

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.

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OTO

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cfo lounge travel

4848 C F O i n d i a m ay 2 0 1 3

In 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 think-ing 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 bur-row 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 diver-sity amongst our readers is reflected in the diversity of our coverage and opin-ions. 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

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 ide-ology to CFO India. The ‘best-fit’ is about judgement – and trade-offs. It doesn’t often result from the cookie-cutter application of an ideology or a principle to a situation. Let me illus-trate this with an example that is apt given the theme of this issue i.e politi-cal economy. We broadly believe in less government – but when capital account convertibility (CAC) was being con-sidered 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

Anuradha Das Mathur, Editor, CFO India

ground realities and India’s readiness to adopt CAC. But our informed read-ers 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 trade-offs. Quite to the contrary, we believe that the Government’s inability to push forth reforms in insurance and multi-brand 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 with-out being held hostage to some pre-decided 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?

Can one size fit all?

not just

the last word

CFO India_20 (w) x 26.7 (h).ai 1 4/19/2013 8:13:08 PM