“Investments in digital are essential for businesses to survive”

S Subramaniam, CFO, Titan Company Limited, on the challenges he’s faced and the dynamic relationship between a CFO, CIO and CEO. By Shweta Gandhi

With over 30 years in the industry, S Subramaniam has a wealth of experience in finance and business. He has worked as the CFO for BPL Mobile and Essar Telecom Business Group. He even did a short stint as CEO at BPL Mobile Communications in Mumbai before joining Titan Company Limited, where he not only looks after the finance function, but also heads the IT department. And when he isn’t juggling all these roles, he is also on the panel of advisors for CFO Choice 2016.

Tell us a little bit about your role as a CFO at Titan.
“Besides the usual work associated with any finance role—accounting, controllership, governance, MIS, treasury, etc—I also work with my senior colleagues to expand the business and push for growth, organically and inorganically. These are just some of the discussions that a CFO engages in, and my role is no exception to that. As part of the senior management team I am also involved in taking policy decisions.

“Moreover, I am also personally actively involved in investor relations. Meeting analysts or investors in conferences or analyst meets, taking investor calls, quarterly earnings calls—these are all part of it. Interaction with the board is another important part—ensuring all the right information is presented to the board is crucial. And since I’m also the head of IT, I have the team reporting to me.”

What are the main constraints holding back your company’s growth, and how do you plan on overcoming them?
“Our main business is jewellery, which forms 80 per cent of our top line and bottom line, followed by watches. Then we have smaller businesses like eyewear and one B2B business. One of the big challenges is to do with the macroeconomic situation. The GDP growth has slowed down over the years and it is reflected in the slowdown of the consumer discretionary behaviour.

“In our case, we also have had a lot of issues with the regulatory impact on our jewellery business, in terms of value and volume. Over the last few years, the government has been discouraging the purchase of gold; that has impacted us heavily. Other issues came up too—increase in customs duty, ban on gold, hedging—though many of them have been reversed because the current account deficit situation is better. There has been a significant regulatory impact on our business, especially in two areas—the PAN card requirement for a purchase of Rs 2 lakh (earlier it was for Rs 5 lakh) and, as a company, we may get hit more than an unorganised jeweller. The second big impact has been the Companies Act, which made one of our most important schemes for customer acquisition come under the definition of deposits. That meant we had to shut down our Golden Harvest Scheme, which contributed almost 30 per cent of our revenue in the jewellery business. We relaunched the scheme after getting necessary approvals but it did impact our growth significantly over the last two fiscals.

“The advent of e-commerce has also hit our sale of watches. We’ve done some corrections in areas like pricing and recently launched smart watches. The rub off on the brand has been very positive. We are now significantly investing on our digital platform and the entire company will go omnichannel in a few months. I would say challenges exist so that you can correct yourself and learn.”

What are the biggest opportunities for finance transformation and how are you tackling them?
“Before I joined Titan, the finance function here was very traditional. The role was largely restricted to producing the books of accounts on time, ensuring legal compliance, following systems and processes, etc. Today though, we are far more involved with the business than we have been in the past. Today, we encourage people to take risks on growth and explore new opportunities.

“The big thing for all of us over the last couple of years has been the implementation of Internal Financial Controls, which is required under the Companies Act, 2013. This is pushing a lot of companies to identify risks and streamline processes. Even accounting standards are changing this year and this is a good thing for us because now we are more aligned with international accounting standards. The point is to challenge your team to comply with the new norms and also make them look towards the business. We need to be firm on the control and compliance angle, and pushing and supporting the business— finance needs to do both.”

How would you characterise the relationship between a CFO and a CIO?
“The relationship between the two is very important today simply because technology is extremely important for CFOs. The level of automation required for businesses is very high. So the two need to work closely together. Similarly, in the case of analytics—there is so much data all over the place; the CIO and CFO need to act like natural allies to make sense of all the data. The CFO should also be willing to put in investments in IT and see the benefits of technology.”

How can a CFO build a good relationship with a CIO?
“A CFO needs to understand technology and should observe what is happening by attending seminars with the CIO or talking to the techies. Today, companies will not survive without technology. The investments we are making in digital—the e-commerce and omnichannel platforms—are essential for the business today. So if a CFO doesn’t appreciate the importance of this, then the questioning of these expenses might lead to a very different scenario.”

Do you think the changing role of a CFO is affecting the role of a CEO?
“The CFO is now more active in terms of what is required to make better decisions for the company. The CFO is also helping the CEO take more decisions using data and actually pushing for growth—organic and inorganic. A CFO is today fully involved in exploring and working on inorganic opportunities. The CFO is more of a business manager than an accountant who just gives the CEO numbers and ensures compliance and controls. That is the big shift that’s happened in the role in the last 15 odd years.”

What are the biggest challenges facing a CFO today?
“There are so many challenges facing a CFO. One is regulatory. The Companies Act is another, which acted as a significant disruptor to a business like ours. The economic situation is a major challenge as well. Disruption in the form of technology is significant and is affecting a lot of businesses. Understanding what’s happening and proactively mitigating those challenges are very important for a CFO.”

How can the CFO help the CEO in overcoming these challenges?
“It would help immensely if the CEO understood the role of a CFO. If Internal Finance Controls was taken only as a finance function, it would fail miserably, because it’s a company-wide initiative. It is about documenting and looking at risks on a company-wide basis. While the CFO may be the one leading it, it’s not something that is restricted to the finance function. In a context like that, if the CEO does not support the initiative, the CFO will simply not succeed.”

What are some of the qualities a CFO must have today?
“The CFO needs to be a functional expert, who understands the business very well. He has to understand the risks and monitor performance. Looking at the volatile external environment today, the CFO should be on the lookout for things that could impact his business in the short term and the long term. So, risk management, assessment of risk becomes vital. Investor relations is yet another area—a CFO must be able to communicate effectively and quickly, particularly bad news.” 

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