DSIJ Interview With Rajesh Bhatia Group President- Finance & Accounts,Uflex Limited
"CFO is a custodian of the company's strategy, growth and evolution"
Rajesh Bhatia Group President- Finance & Accounts,Uflex Limited
What are your top three priorities as a CFO?
There are several priorities that a CFO must look into and juggle, when leading a globally listed entity, like Uflex. Currently, the top three priorities on my list are:
1. Arranging requisite resources for the various expansion projects. CFO involvement in organising timely resources has a large role to play in the expansion and growth of the company globally and lead to better outcomes for organization-wide performance improvements.
2. According to me, moving beyond just finance and driving my business more towards value added services is important. This is required to facilitate a change in the company and collaborate to develop highly-compelling financial and operational agendas. Value drivers are unique to the kind of industry one works in and a lot of this driving is done with key KPIs. CFOs have to think of aspects like what drives value for our business the most, which lifecycle of the business are we in, and make sure the metrics are not only financial metrics but also non-financial metrics that makes the business perform the way it should be performing.
3.Continually improving the reporting and governance standards.
How is digitisation and technology influencing your company's operations?
Digitisation and technological advancements have played a significant role in the growth of our business, over years. Technology has helped us grow rapidly, whether it be process management, supply chain or enhancement of operational efficiency. Towards the end of the last financial year, we launched IIoT enabled packaging & converting machines, new dyes, adhesives, films, coating & lamination machines and much more, with strong credit, due to our technological advancements. In addition to this, we also introduced to the world, a unique blend of innovation and technology of manufacturing Rotogravure Cylinders and set up a Fully Automatic Robotic Laser Engraving Line at our Noida facility, making the production of cylinders a one-man operation.
It is with our cutting-edge technology and R&D that we have been able to create 90% post-consumer recycled content, helping us move closer towards our ambition of providing green packaging to our consumers.
Using technology optimally is among one of the top priorities for us, as it gives us access to company-wide data for faster and better decision-making. Digital drivers are leading to the transformation of multiple functions, as processes are streamlined through digitisation.
What are the key risks facing Indian economy in your view?
India is going through a phase of economic slowdown echoed through lower GDP growth and poor consumption numbers. This is largely triggered by credit squeeze starting initially with non-performing assets of banks and this squeeze quickly spread to NBFCs and now even the Mutual Funds industry is affected in a big way hence the credit availability has dried up at all levels. In my view, it’s time to address this squeeze at the utmost priority otherwise it will soon affect the credit amongst the private lenders also, which will be an irretrievable situation. We have seen that while the yields on govt securities have come down drastically, it has not resulted in lower cost of credit for the borrowers only due to liquidity squeeze.
Second challenge is the possible fiscal slippages due to lower collections of taxes, exports slowdown, divestment targets not being met and oil price shock. The policy makers need to ensure that the fiscal deficit targets are adhered to under all situations otherwise these could further dampen the economic environment.
Last, and the biggest challenge India is facing is the alignment and accountability of bureaucracy that is stifling the best intentions of government since they fear punishment for action rather than omission. So, the response would be that they won’t work, create hurdles in workings of the govt. This is something which is making things worse.
What are the key growths challenges facing your company?
All the negative publicity against Plastic is the biggest growth challenge currently and there is a real need that all the stakeholders – packaging companies, brand owners and the government/ regulators come together to put a realistic framework of Plastic Waste Management and educate about the boon of plastics.
There are already plastic recycling solutions available provided the plastic waste collection mechanisms are put in place in the same way as is being done for all others kind of waste. Bio-degradable solutions are on their way and all the large companies have announced their plans and timelines for recycling and biodegradability solutions.
Challenges give rise to opportunities and we need to tap into that. Uflex is working towards this problem through introduction of green films made out of 90% PCR content that do not add to the landfill and are further recycled to create a loop economy. Likewise, we are looking at working with local authorities to collect multi-layer plastic from households and recycle them at our unit which we will be setting up. We will also soon unveil our biodegradable solutions.
Lack of competent and trained manpower ready for packaging industry is another challenge that I can list out. There are no educational or technical institutes catering to our industry that churns out trained professionals for the Packaging Industry. This is despite the mammoth size of the packaging industry and the turnover it generates.
What are the key growth drivers/ levers of your company?
The international market is one of the key growth drivers of the company at the moment. Among the international markets, we are setting up manufacturing facilities in Nigeria, Hungary and Russia, which will begin operations in FY2021. One of the second growth drivers is also, cognizance of consumers’ requirements. Uflex is mindful of what our customers need in terms of green, recyclable and biodegradable packing. Our continued focus is on innovating and growing in order to develop an entire range of green packaging solutions. Our BOPET films with 90% post-consumer recycled waste are a fine example of that. We are striving to come up with more such innovations from our different businesses. By the end of this year, we plan to launch a range of plastic films that will be bio-degradable as well recyclable by nature, thereby reducing plastic waste going into landfill and saving our planet.
What skill-sets are a must to be a CFO of a successful company?
While CFOs in different geographies face unique challenges, there are a few common priorities that CFOs must always be mindful of. The CFOs of MNCs drive and execute global strategy. This means that CFOs have to continually re-evaluate business strategy and the direction adopted by the company. A CFO has to be aware of the competitive landscape in various geographies and is often instrumental in recognising potential new business models.
One of the topmost priorities for a CFO is ensuring total compliance with the changing regulatory environment. For example, FMCG and Consumer Product Goods companies dealing with consumers are facing minor disruptions in the entire supply chain due to GST implementation and CFOs are focused on ensuring a smooth transition. Therefore, while skill-sets, challenges and solutions may vary industry to industry and geography to geography, the KPI of a good CFO continues to remain her or his hawk eye on regulatory frameworks, the business strategy of the organisation and the ability to find opportunities in threats.
What is the single most challenging aspect of being a CFO? I think one of the most challenging jobs of a CFO in any organisation is to maintain a balance between business performance and earnings growth. The role of a CFO is very strategic and involves decision-making that has a direct impact on the overall business. While I enjoy working with people and value their contributions, a CFO has to be very practical in thought and clinical in execution, a calculated risk-taker. Having to put the broader interests of the organisation before the people is a tough decision and communicating it in the right manner is a challenging task. Often, finding this balance is the most challenging aspect of being a CFO, a global CFO, a glocal CFO.
How has the role of a CFO evolved over the years?
Where a CFO was once a custodian of company finances, today the CFO is a strategist, the right hand of the CEO, the MD and the Board. Finances oil the functioning of an organisation, but today’s CFO must have an eye on the triplebottom line and this is one of the biggest evolutions that the role of a CFO has seen over time. No more is the CFO the signatory authority, which while a great place to be in, is just a fraction of the role a CFO must play. Today’s CFO is a custodian of the company’s strategy, growth and evolution. Therefore, where earlier the CFO was the chief of finance and controlling, today (s)he is part of the holy triumvirate of CEO, CFO and COO that run an organisation.
What is your growth outlook for your company?
Uflex has two main businesses - Films & Packaging. In the overseas markets, we want to grow in packaging films business and for that we are expanding our capacity and presence by setting up two greenfield manufacturing facilities simultaneously in Hungary and Nigeria. We are not present in certain geographies like South East Asia, so at a later stage we may think of getting into those markets as well. Our goal is be a truly international company spread across all major consumption geos.
In India, our focus is to grow in the packaging business and towards this, we expanded our packaging capacity at Noida, set up aseptic liquid packaging business Asepto and expanded the capacity of our Holography business. With the investments already made, we are now looking to increase the utilisation levels over the next 1-2 years. The new pharma packaging product for which we got a patent is looking very promising and will entail higher investments in the future. So, our growth in domestic markets will be largely driven by our packaging business