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CFO PROFILEYOGESH DHINGRA p. 22

IS YOUR EMERGING-MARKET STRATEGY LOCAL ENOUGH? P. 38

Once grossly undervalued, the CFO and the finance team today are considered critical to a

company’s fortunes. Here are four inspiring stories of finance-led turnarounds from India Inc. Pg 12

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TRAVEL: COFFEE IN THE RAINSp. 50CFO PROFILEYOGESH DHINGRA p. 22

IS YOUR EMERGING-MARKET STRATEGY LOCAL ENOUGH? P. 38

Once grossly undervalued, the CFO and

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company’s fortunes. Here are four inspiring stories

of fi nance-led turnarounds from India Inc. Pg 12

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26 EVEN THE LEADER NEEDS A BOOST - ESPECIALLY NOWFinancial executives do not always assess their level of self-motivation on a daily basis. But now might be a good time to take stock and find out what truly motivates them.

38 IS YOUR EMERGING MARKET STRATEGY LOCAL ENOUGH? The diversity of China, India and Brazil defy any one-size-fits-all approach. But by targeting city clusters within them, companies can seize growth opportunities.

COVER DESIGN PRASANTH T R

AD INDEX Empronc Inside Front Cover | Financial Executive 02 | Sodexo Inside Back Cover | ICICI Bank Back Cover

M A Y | 2 0 1 1

GAME CHANGERSThe rules of the game have changed and so has the CFO’s role. From being ‘tightwads’ they have become saviours of sinking ships. We spoke to four CFOs who led financial turnarounds, to understand how they did it.

FASTER, HIGHER, STRONGERYogesh Dhingra, COO and Finance Director of Blue Dart India talks about the reasons for the company’s success, the ‘firsts’ it has achieved and about his own ups and downs in life.

34 A NEW LEASE OF LIFELeasePlan, the Indian arm of the Dutch car leasing firm, was in troubled waters when CFO Ajay Narain came in and stepped up a gear, restructuring the financial model of the company.

10 SUNAM SARKARInflationary trends, a slowdown in demand and his golf handicap keep the CFO of Apollo Tyres awake at night.

43 LESSONS FROM AN ELECTIONThere are many leadership lessons to be learnt from the results of the general elections in Singapore this year, says leadership and negotiation coach David Lim.

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50 TRAVEL | COORG

52 BOOKS | FOR THE LEADERS OF

TOMORROW

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Changing !e Game

A FEW DAYS BACK I met the CFO of a well-known Indian IT firm. We discussed how resilient Indian companies were and how our suc-cess stories were so grossly under-reported. We spoke of companies that faced seemingly insurmountable challenges and emerged out of them, bruised but fitter and stronger. Since CFO India was planning a cover story on the increasingly important and over-arching role that the finance function is playing in business today, I asked him: “Can you recall any examples of finance-led turnarounds in India in recent years?” He looked at me quizzically for a few seconds and replied: “Are there any other kinds?”

Even if that was a bit of an exaggeration, since great marketing strategies, bold HR decisions and operational changes, too, have often seen companies emerge out of the red, it was, nonetheless, a very important statement, confirming just how powerful a role the CFO plays in any organisation today. There are numerous instances from India when the CFO and the finance team played a crucial, life-saving role for their organisation.

So we asked those with far greater domain knowledge than ours – bankers, CEOs and corporate analysts – to come up with some of the best examples of such finance-led turnarounds. We then spent the next few weeks tracking down these ‘heroes’, the men and women who headed the finance function of the organisations during the ‘crisis years’. Mr B.R Jaju was CFO of Crompton Greaves when the company saw its market cap plunge badly in 2001. Now CFO of Wel-spun, he remembers every detail of how the challenge was met. At the other end of the spectrum, Mr Koushik Chatterjee, the young and multiple award winning CFO of Tata Steel, is predictably a bit more cautious. After all, the turnaround of Tata Steel, post the acquisition of Corus, is still ‘work in progress’, even though the rise in profit margins for the steel major has been significant in the past two quar-ters. I hope you find the four case studies that we have written about this month, not just good reads but also as a source of inspiration.

Enjoy reading the issue.

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4 C F O I N D I A M AY 2 0 1 1

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I recently picked up an issue of CFO India. I really liked what I saw and read. I found the articles crisp, racy, good reading and relevant. I would like to subscribe to the magazine and would definitely enjoy contributing to it.—Joydeep Nag, CFO, GE Healthcare, Bangalore

Crisp and Relevant

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TIMELY COVER STORYI enjoyed reading the cover story in your April is-sue (Infrastructure in India: Boom Time Ahead?). I think it was an extremely well timed piece. Most of the articles were relevant and discussed impor-tant issues. It would be good to have more such features on the financial challenges before differ-ent sectors, and opportunities that await India Inc.—Shirish Navlekar, CEO, Ariston IET Infrastructure Fund, New Delhi

SUBSCRIPTION QUERYI would like to be more involved with the CFO community you have created through the maga-zine and the institute. Could you also include me in your subscription list. I would love to receive regular issues of CFO India. —Gaurav Dang, CFO, ExxonMobil Lubricants Private Limited, Gurgaon

NOT GETTING REGULAR ISSUESI enjoy reading CFO India online, but unfortu-nately, I have not been receiving the hard copy of the magazine since February 2011. In fact, I had written to the publishers earlier, to send a copy to

my office address. It would be great if you could look into the matter.— Sunjoy Podaar, Head Finance, Ultra Tech Cement, Mumbai

MORE CASE STUDIESI think the ‘Case Study’ section in your magazine is the most popular one. One gets to learn about how others dealt with a certain crisis and the lessons they learnt. This genuinely helps many others who have not been in similar situations before, but could well be one day, to get a fair idea of what to expect and how to deal with it. Also it is always great to read inspiring stories of success, victory over adver-sity, where the finance team played a key role. You should have more such articles in CFO India.—Roshan Jahgirdar, Sr General Manager, Finance, Royal Plastics & Metals, Kolkata

LACKING ARTICLES ON TECHNOLOGYI have been reading CFO India for a while and I have noticed that you have very few articles on technological innovations or tech tools that CFOs or the finance function can use. It would be good if you could carry articles by CIOs or by domain experts on technology that CFOs must know about, or on technological solutions and how to optimise their potential. This will be of immense value to a large number of finance executives who are extremely good at their job but not necessarily technologically aware.—M Kumaran, Head of Accounts & Finance, Silicon Software, Pune

05.11 Your voice can make a change: Share your view point on what’s happening in the community and your feedback on the magazine at editor@cfo-india.in

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Firms Hiring Social Media Spies

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IF YOU THINK your boss will never find those revealing party pictures because you used a fake name, think again. Companies are hiring social media spies to scour social and other sites, using software that cross-checks email addresses and other electronic identification codes. They are looking for racy images, racist remarks or other offensive behaviour of job appli-

cants and current employees, reports the New York Times.

Many companies check the crimi-nal and credit backgrounds of their applicants, so it is a logical next step to investigate someone’s online presence, says Max Drucker, CEO of Social Intel-ligence Corp., a web-checking com-pany he launched last year in Santa Barbara, California, USA.

Some clients are also using the service to monitor their existing workforces, Drucker says. They are looking for disclosures of confidential company information by employees or disparaging comments about the company in public forums. He declined to disclose how many com-panies have signed up to conduct the searches, which cost $20-50 ( 870-2,220) each.

But should employers be looking at these images? What if they reveal information about an applicant’s race, religion, marital status or other details that could launch a civil rights claim if they swayed hiring decisions? “I think it is really important to find out as much as you can about the CEO and other critical positions,” says David Barron, an employment lawyer who represents the management at the law firm Epstein, Becker, Green, Wickliff & Hall in Houston. But for lower-level retail or office jobs? It may not be worth the risk of facing a civil rights claim, Barron says.

A TEAM OF ARCHAEOLOGISTS, armed with a special radar device, have started digging inside a dilapidated convent in Flor-ence where they believe the body of the woman who modelled for Da Vinci back in the 16th century is buried. The real Mona Lisa, art historians say, was Lisa Gherardini, the wife of a rich Florentine merchant named Francesco del Giocondo, who is thought to have commissioned the portrait, although there is no defini-tive proof.

The researchers say that if they can find her skull, they will be able to reconstruct her face and compare it with the painting. Using radar equipment that can identify objects underground, scien-tists are scanning the church floor to pinpoint areas where they may start digging for Gherardini’s remains. “We have a document con-firming the burial of Gherardini in 1542 here in the convent,” said Silvano Vinceti, head of the National Committee for the Promo-tion of Historic and Cultural Heritage. Researchers say Gherardini spent the last years of her life at the convent, looked after by her two daughters who were nuns, and was buried there. “To be sure we have to find the DNA in her bones, and once we have found that, we can compare it with the DNA of her children who are buried at the Santissima Annunziata convent,” said Francesco Mal-legni, a palaeoanthropologist. Some of ‘Mona Lisa’s’ descendants however, have already expressed scepticism about the project.

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Hunting for Mona Lisa

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7M AY 2 0 1 1 C F O I N D I A

THE CFO POLL

Do you think IFRS will enhance the financial efficiency of your organisation?

Will rising inflation that is hampering growth be controlled by the end of 2011?

WHAT’S AROUND ZONECFObook .............................................................. Pg 08Jargon Decoded: FAT ........................................... Pg 08Billionaire Rulers .................................................Pg 09A Green Porsche ..................................................Pg 09

0123(415(62(5557891:4;2:2<23781=>?1@@

70%Yes

13%May be

RESULT

CURRENT POLL QUESTION

No17%

OVER 64.23 LAKH Indian mobile phone users have opted for mobile number porta-bility (MNP). The figure comes from official data till the end of March 2011, released by the Telecom Regulatory Authority of India (TRAI). “Mobile number portability requests have increased from 38.33 lakh subscribers at the end of February 2011 to 64.23 lakh sub-scribers at the end of March 2011,” the TRAI statement mentioned. The service was imple-mented across the country from January 20, 2011. To opt for MNP, a customer has to pay a certain amount to the new operator for ‘porting’ the number and remain with the new operator for at least three months.The customer has to send an SMS from the existing phone to 1900. Based on this, a unique porting code is sent by the existing provider. The application then has to be filed with the new service provider, mentioning the code for transferring the connection.

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64 Lakh Users 'Port' Numbers

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8 C F O I N D I A M AY 2 0 1 1

FOR DECADES, wisdom teeth were considered nothing more than a part of a painful rite of passage for many teens. But now, researchers are re-evaluating their function. Recent medical research shows that the soft pulp inside wisdom teeth contains a great store of stem cells, and it may soon be possible to store teeth after extraction and save them for later use, reports Crest-Pro, an American online medical journal.

Studies have already shown promise that these stem cells found in wisdom teeth can regenerate damaged bones and cardiac mus-cle. “It is exciting, but there are still a lot of questions,” says T. Bob Davis, spokesman for the Academy of General Dentistry, USA. “We are just at the beginning of the curve.”

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Wisdom Teeth May Save Lives

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THE DEFINITIONA little less offen-sive than it sounds, it stands for a pro-cess known as Final Acceptance Testing. This is always costly and time consuming. This is also when you find out whether your product actually works and meets all of its QC (Quality Criteria).

THE USAGEDo not watch your weight, but watch your back, if some-one tells you, “you failed the FAT”. It could mean a bad day at work.

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'12345$614178Wall Info Boxes +

What’s on your mind?

Rajesh Pasari changed his profile picture May 19 at 10.30 pm · Comment · Like

Rajesh Pasari is enjoying the challenges of leading the finance function in a semi start-up situationApril 17 at 9.05 pm· 2 people Commented · 1 person likes this

Rajesh Pasari believes that the CFO’s job has undergone a sea change in the last five yearsApril 012 at 11.00 pm · 5 people commented · Like

I Read...The Road Ahead by Bill GatesApril 16 at 6.26pm · Comment · 4 people Like this

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I Listen...Light classical music and old Hindi film songs April 14 at 7:14pm · Comment · 1 person likes this

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Zodiac: Capricorn Political Views: Liberal

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March 2010 to Present – CFO, Netambit Dec 2008-Feb 2010 – CFO Both-li Chemicals & Mining Manager, Becton Dickinson India 2006-2008 – National Com-mercial Manager, Spencer’s Retail 1999 - 2006 – Sr Manager, Seagram

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B.Com – St Xavier’s, Calcutta CA – Institute of Chartered Accountants of India Member - Institute of Cost & Works Accountants of India

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9M AY 2 0 1 1 C F O I N D I A

TOGETHER, THEY CAN easily set up or fund what could (theoretically) become one of India’s largest corpo-rate entities! Swiss authorities have announced that banks in their country had located almost $1 billion in assets of Libyan leader Muammar Gaddafi and the former presidents of Egypt and Tunisia.

Financial regulators in Switzerland have identified assets worth almost $416 million that belong to the embat-tled Libyan leader; $474 million that is linked to former Egyptian President Hosni Mubarak; and $69 million

belonging to Tunisia’s fallen leader Zine el-Abidine Ben Ali.

The announcement was made by Swiss President and Foreign Minister Micheline Calmy-Rey at a diplomatic meeting in the Tunisian capital Tunis and confirmed for the Washington Post by a Swiss foreign ministry spokesman.

Switzerland, long considered a haven for stolen assets of autocrats, has worked to combat that reputation and last year passed an aggressive new law to give the government power to seize and repatriate stolen assets.

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A Green PorscheFINALLY, A PORSCHE that is environment friendly! Porsche has added diesel power to the Panamera 4-door GT range for the first time – with the new car boasting a remarkable economy figure of 43.5mpg. This makes it the most fuel-effi-cient new Porsche on sale.

The new Panamera returns its impressive fuel economy thanks to a 3.0-litre V6 turbo diesel. It also emits 172g/km CO2. And if that is not green and fuel-efficient enough, Porsche lets you go one step further: thanks to an optional low-rolling resis-tance tyre kit, economy can be pushed up to 44.8mpg, and CO2 emissions cut to 167g/km. That is identical fuel economy to a 1.4-litre Fiat 500.

The total range from such amazing economy, says Porsche, is in excess of 1200 km: making it capable of taking four passengers in sporting comfort from Mum-bai to Mysore without refuelling. The Porsche Panamera diesel goes on sale in the UK this August, with list prices starting at £62,134 (approximately 52 lakhs).

Less Left to SaveThe household savings rate of an average employee in metros has come down by 45 percent in the last six years due to an exorbitant increase in prices of essential commodities, fuel and educa-tion, claims an Assocham survey.

A majority of the 5,000 employ-ees who participated in the survey said that they were falling behind financially and their stan-dard of living had deteriorated.

In the last six years, the salary of the common man has gone up by 30 per cent but discretion-ary spending has shrunk by 35 per cent, PTI reported, quoting the survey.

Another UniverseScientists have created the largest-ever three-dimensional map of a distant universe using the light of the brightest objects in the cosmos.

Scientists used light from 14,000 quasars, super massive black holes at the centres of galaxies billions of light years away, with the third Sloan Digital Sky Survey (SDSS-III) to construct the 3D map. “This is a potentially revolutionary technique for mapping the very distant universe. We are paving the way for future experiments like BigBOSS to follow suit,” said Anze Slosar of Brookhaven National Laboratory.

BigBOSS is a proposed survey that will find precise locations for 20 million galaxies and quasars and go beyond BOSS to encompass 10 times the volume of the finished BOSS map.

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10 C F O I N D I A M AY 2 0 1 1

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WHILE COUNTRIES AROUND THE world battle the challenge of no or low growth, India faces a different set of challenges thrown up because of high growth. Inflation, largely driven by supply side constraints, leads to a hardening of interest rates as the Reserve Bank attempts to cool growth. And the cycle becomes more and more vicious with every round of cost escalation. So demand too has its problems.

In an industry where raw materials account for 70 per cent of revenues, the current commodity cycle is particularly crippling. In such a scenario there is only so much that one can look at for improving internal efficiencies and managing costs. The vast majority of input cost is driven by trends of global commodities like crude, steel and rubber which all have been heading northward of late, driven largely by robust growth in the Chinese and Indian economies.

Competition from global players, inflationary pressures and a slowdown in demand have been worrying the Chief Financial Officer of Apollo Tyres these days. So is his current golf handicap.

“One can only hope that there will be no single trigger this time, but a gradual cycli-cal change that managers can prepare for.”

SUNAM SARKAR

IMPENDING SLOWDOWNIf these were not enough, now comes the outlook of a slowdown in the over-all economic growth. So most C-Suite executives in general, and CFOs in particular, now stare at the spectre of galloping inflation coupled with a demand slowdown. In many senses this will be similar to the months immediately after the collapse of Lehman Brothers in 2008. One can only hope that there will be no single

trigger this time, but a gradual cycli-cal change that managers can plan towards and prepare for.

The first signs are already visible, with the Chinese government deter-mined to rein in the spiralling growth. Their monetary actions signal a clear shift in policy orientation. In my own industry the recently released indus-trial policy of the Chinese government clearly signals a shift away from the old school ‘scale at any cost’ mantra towards higher quality and higher technology facilities. The effect on tyre production has been almost immedi-ate, with a rumoured 20 per cent of fac-tories in China already shutting down or in the process of doing so.

POSSIBLE JOB CUTS?In India too the RBI has already stated that it expects growth rate to become moderate in fiscal 2011-12, and most economic indicators to slow down. How this will impact companies that

Facts & TriviaEDUCATION: La Martiniere for Boys, B. Com, St Xavier’s College, Kolkata

MA in Management – Lancaster University

PREVIOUS JOB: General Manager, Xerox

PASSION: Playing golf

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have built up large capacities is going to be interesting to watch. From today’s over-heated job market, and its conse-quent challenges of attrition, retention and wage inflation, are we looking at a reverse trend of large scale lay-offs star-ing companies in the face?

Intensifying competition from global players, inflationary pressures,

demand slowdown and political inflex-ibility all appear to be on the next two to three-year horizon. Those compa-nies who start preparing for these chal-lenges today and have a clear strategic focus on addressing each of these will be the ones capitalising on the next growth phase. Great leaders will be burning midnight oil striving to posi-

tion their companies on solid ground and develop capabilities for the future.

Finally, on a personal note, I shall con-tinue to be kept awake by the steadfast refusal of my golf handicap to come down any further. It seems to have taken deep root and shows no signs of any desire to follow economic downtrend.

Once grossly undervalued, the CFO and the finance team today are considered critical to a

company’s fortunes. Here are four inspiring stories of finance-led turnarounds from India Inc.

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BY BENNETT VOYLES AND DHIMAN CHATTOPADHYAY

12 C F O I N D I A M AY 2 0 1 1

+hey know their numbers, keep a tight leash on financ-es and help the CEO run the company. What is less talked about though, is their role in a financial turnaround. It is to them that the CEO and the

board turn when in a tight spot. Take the case of a 3000 crore company that faced

potential bankruptcy in 2004 after a 288 crore loss. It turned to its finance director as a last resort. A year later, following a massive Corporate Debt Restruc-turing plan and a series of bold steps, the firm reported a profit of 42 crore.

Or consider the story of a large Mumbai-based manufacturing firm that saw its finance team swing into action after its market cap plunged from $1 bil-lion ( 4500 crore) to $20 million ( 90 crore). The CFO took some hard calls, reduced expenditure by moving factories out of Mumbai, provided golden handshakes to some staff and closed loss-making units. That money was used to acquire new busi-nesses. Two years later, the company returned a profit of $1 million ( 4.5 crore).Game changers? You bet! There was a time when the CFO and finance execu-tives in general were considered loners, number crunchers who preferred to stay in their own world, did not communicate with the rest or bother to pol-ish their knowledge about other areas of business. The marketing whiz who ‘understood the pulse of the client’ or the factory manager who knew every detail of the ‘product’, smirked at the ‘bean coun-ters’. After all, these were the naysayers whose only job was to manage accounts, ensure budgets were in place and shoot down any innovative ideas for fear of loosening the purse strings.

Today, the most talked-about difference in the

CFO’s role is the transition from being the company book-keeper to becoming a ‘partner to the CEO’. But, as example after example from India Inc. shows, the biggest change is the realisation that a good finance team and a great CFO at the helm brings immense value to a company.

The two economic slowdowns in recent memory – the relatively less crippling one of 2001 and the global crisis of 2008-09 – brought out these benefits clearly. In several cases, companies facing a liquidity crunch, a huge debt or a possible shut down, survived and grew only because of amazing finance-led turnarounds.

At a time when companies and investors are flock-ing for a share in the pie of the ‘India story’ and curious management students from Ivy League uni-versities are eager to imbibe lessons from our suc-cess, there are some within the country who would rather focus on the negatives, writing or talking about frauds, stories of failures or errors of judge-ment. Our view is simple: Let us celebrate success instead. India Inc has, over the past decade, witnessed some remarkable examples of financial turnarounds where the CFO and the finance team have played an all-important role. These stories need to be told to a larger audience. In the following pages, read four such inspiring stories where the finance team under the leadership of the CFO, played an invaluable role in taking their companies out of the red.

Certain sterling qualities that they possessed helped the CFOs in each of these cases. They were persistent, dared to think out of the box, took risks and communicated all important decisions to key stakeholders. Above all, they believed they could win. As B. R. Jaju, CFO of Crompton Greaves when it plunged into a crisis a few years back, says, “You have to have absolute commitment and abiding pas-sion. You have to believe you can do it.” IM

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!ompanies tend to get into serious trouble, much like the way the character in Ernest Hemingway’s The Sun Also Rises said when he went bankrupt –

“Two ways - gradually, then suddenly.” At Cromp-ton Greaves, years of losses and failed strategies finally led to a sudden crisis in 2000-01.

In 2001, when B.R. Jaju joined the firm as its CFO, things did not look good. Years of high costs and disappointing sales were leading towards an inevitable not-so-grand finale. As the stocks fell on what at one point had been one

The market cap of Mumbai-based Crompton Greaves plunged from $1 billion to $20 million. That was when B. R. Jaju took over as CFO and, with his colleagues, turned things around.

of India’s leading businesses, the market cap plunged from around $1 billion ( 4500 crore) to $20 million ( 90 crore).

“The employees’ morale was low, customers’ confidence was low. The business outlook was also very weak. Things were not very focused and management and leadership synergy was missing,” Jaju recalls. Sales were so weak that the company could not even repay its loans regu-larly. Other borrowing was being done, but at very high interest.

Structurally too, the company had some seri-ous problems. The previous year, Crompton Greaves had invested heavily in new facilities ,but

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demand had not met expectations. Fifty percent of the company’s net worth, built over the past 50 years, had been destroyed in just a year.

To cut a long story short, over the next two years, Jaju, who in addition to being an experi-enced finance hand is also an amateur magician, helped make all those problems disappear.

How did he and his team work magic?“A lot of things had to be done,” says Jaju,

looking back at the turnaround he executed with CEO Sudhir Mohan Trehan. The first and fore-most was reducing excessive costs. The team began by relocating its Mumbai plants 300km out of Mumbai, which he describes as a move from “high-cost, low-productivity areas to lower -cost, higher-productivity areas.”

Next, Jaju and Trehan had to reduce a bloat-ed workforce of 11,000 to 5,000, which it did through golden handshakes and Voluntary Retirement Schemes.

More trimming followed, including cutbacks in travel, exhibitions and high customer dis-counts. The team put a more disciplined inven-tory structure in place as well, which reduced the level of inventory from $60 million to $30 milion.

The next item on the agenda was to gener-ate better Returns on Investment (RoI) on the

books. “A lot of our businesses were overdepen-dent on government and semi-government bod-ies who were paying for the goods after three months to six months, sometimes longer,” he recalls. “So we changed the business model. Our sales strategy now was to concentrate on companies that had a cash surplus or good liquid-ity,” he says. Soon, the receivables payment cycle fell from 120 days to less than 20 days.

Last on the to-do list: Gradually closing 15 loss-making, non-core businesses and joint ventures. Many of these stood on valuable land which the company sold to pay off debt and support new programmes, such as an M&A war chest, in order to pursue an acquisition strategy designed to position the company not as an India-focused fan maker, but as a major global developer not only of fans but transformers, switchgear, circuit breakers and more.

Two years later, the company turned a profit of $1 million ( 4.5 crore). The next year, $10 mil-lion. Eight years later, it is generating a $160 mil-lion annual profit and its market cap has risen from $20 million to $3 billion.

One measure of his success came in the form of recognition from peers and the media – first for his well-executed defensive game, and later for an equally spirited offense as he pursued a number of global acquisitions.

In all, Jaju won at least three ‘CFO of the year’ awards from different business publications dur-ing those few years.

What does it take to be the financial architect of a successful turnaround? Beyond a solid strategy, says Jaju, now director and CFO at Welspun, you need a close working relationship with all business heads, particularly the CEO. Plus, there are two other special ingredients: “You have to have absolute commitment and be passionate. You have to believe you can do it,” Jaju concludes.

Company’s market cap falls from $1 billion to $ 20 million in 2001. Jaju and top man-agement decide to cut costs, relocate plants 300km out of Mumbai. Workforce is reduced from 11,000 to 5,000 through golden handshakes.

Disciplined inven-tory structure reduces inventory from $60 million to $30 milion. Gradually 15 losing, non-core businesses are closed. These lands are sold to pay off debt and support new acquisi-tions. Two years later com-pany reports profits of $1 million.

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SNAPSHOT

—B R JAJU, FORMER CFO, CROMPTON GREAVES

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HPCL’s Director Finance Bhaswar Mukherjee galvanised his team when volatility in crude prices saw the Fortune 500 company suffer heavy losses.

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7ost of the time, big companies are like big jets – the ride might be bumpy, but they usually get where they

are going, and even if something blows out, a second engine is there to keep the machine aloft. Only very occasionally will something in the atmosphere change without warning, the passengers’ coffee cups hit the ceiling, and the pilots start frantically flipping switches.

That was sort of the situation in which Bhas-war Mukherjee, the Finance Director of Hin-dustan Petroleum Corporation (HPCL), found himself in the last quarter of 2008, when a freak spike in the price of oil threw the price of a bar-rel all the way up to $147 in July and down to $34 in December – the worst situation of all for the company, Mukherjee says, because volatility is typically much harder for the company to deal with than a high or low price itself.

In the private sector, major fuel buyers typical-ly hedge themselves against large price swings if they cannot pass the costs straight through to their customers. But as a state-owned company, HPCL had always been reimbursed in full by the government for its losses. But in 2008, the gov-ernment balked, and decided to pay only a por-tion of the difference – in a year when its sales of petrol and diesel were growing by double-digits.

If the government had changed the price-sta-bility rules, the situation might not have been so serious, but the regulators kept most of the price restrictions. Forced by government regula-tion to sell many of its oil and gas products for less than the market rate, and at higher volumes than it normally would, in order to make up for shortfalls at two other state oil companies (IOC and BPCL), HPCL found itself in a bind.

To make matters worse, government reim-bursement was delayed that year, leading to a much greater need for working capital. By the

third quarter of 2008, the state-owned oil dis-tributor faced a loss of $1 billion.

The amount might not sound that much, given HPCL is a global Fortune 500 company with $27 billion in turnover, but for a company operating in an industry where 95 per cent of costs is for the oil it buys, it is a fair amount to dig up.

Finally, in the last quarter, the company’s for-tunes reversed, and the company ended $350 million ( 1575 Crore) in the black.

How? The first was what might be called a con-version of a good karma reserve to cash: the govern-ment gave HPCL a special subsidy above the same level of reimbursements it gave IOC and BPCL. To the media, government officials described the pay-ment as ‘compensation for the damage the com-pany had suffered’ in keeping fuel deliveries steady throughout the year. The finance team had stepped up a gear by now and, as Mukherjee recalls, it “took a hard look at the entire system,” looking for greater operational efficiencies.

Ultimately, perhaps more important in the long run than the immediate results of the cost-cutting effort was making the rest of the com-pany more aware of the finance department’s point of view.

To begin with, executives reviewed the com-pany’s Balanced Score Card. Mukherjee, a fan of the system, says it helps focus the company on creating not just greater sales volumes but more profitable sales. Mukherjee also embedded more finance people around the enterprise. “We had to make sure that finance did not work as a silo but that team members became actively involved in different areas of the organisation,” he says.

The upshot: More awareness that profit is not necessarily a function of volume. “Before the crisis, there was not enough appreciation within the organisation about the profitability of the projects. It was assumed if they reached volume, profit would come automatically. The crisis changed that forever,” he concludes.

HPCL fails to use hedging as an option. Pays the price when the government, which always reim-burses them in full for losses, pays only a portion of the differ-ence in 2008. By third quarter of 2008, HPCL faces a loss of $1 billion. Finally the govern-ment gives HPCL a special subsidy. Mukherjee ensures greater operational efficiencies. Executives review company’s Balanced Score Card anew. A year later, the col-lective efforts reap benefits, company reports profit again.

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.ought for $12 billion ( 54,000 crore) in 2007 after a bruising bidding war that forced the company to raise its initial bid by 33 per cent, the acquisition of Anglo-

Dutch steel giant Corus made Tata Steel CFO Koushik Chatterjee a hero of sorts. The young executive had pulled off India’s biggest foreign merger ever, catapulting the company from the 56th to 5th largest steel company in the world.

Tata Steel is, by most measures, one of the most profitable steel companies in the world. But some analysts worried that in engineering the leveraged buy-out of the $18 billion compa-ny, Tata Steel (valued at just under $5 billion or 22,500 crore ) had bitten off more than it could

chew. The 608-British pence-a-share deal was

well above what Mittal Steel had paid for Arcelor – seven times EBITDA compared to Mittal’s 4.6 times EBITDA. It also plunged Tata Steel into massive debt, though Chatterjee took care to keep the loans well away from Tata Steel’s bond rating by raising the $6.17 billion the company borrowed for the acquisition through a new sub-sidiary of Corus, Tata Steel UK.

Making matters much more precarious still, however, was the Western financial crisis of 2008 and 2009, which slashed global steel demand, and eventually drew Corus mills’ utilisation rate all the way down to 53 per cent. In March 2009, Moody’s Investors Service downgraded Tata’s stock to Ba2, two levels below investment grade. Moody’s cited the weakness of the steel market and the extent of the company’s debt as two fac-tors leading to the downgrade.

The acquisition of the British steel giant Corus in 2007 saw Tata Steel’s fortunes nosedive. CFO Koushik Chatterjee and his team have however, managed to effect a significant turnaround in 2010.

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Two years later, the Corus acquisition is still a work in progress, but its prospects are looking considerably brighter following a bounce-back in world steel demand. After suffering a net loss of 4,526.06 crore for the last nine months of 2009, the company reported 4707.32 crore in net profit for the last three months of 2010.

With more money coming in, Chatterjee has worked hard to strengthen the company’s financial position. These days, he keeps $1+ billion in liquidity on the books. Last September, he also refinanced the Corus debt into a five-year term loan of about £1.8 billion (approximately Rs 16,000 crore) and a £1 billion (approximately 8300 crore), seven-year term loan. “Returns from Europe and UK have been very good this quarter. In fact it has helped boost our profits. More importantly, the average utilisation of capacity in Corus will be 80 per cent from this quarter, a significant increase,” says Chatterjee. He sees a potential increase in EBITDA going forward. “The hedges are fixed and Corus is steadily giving us greater returns,” he adds. Once the full restructuring is complete later this year, he also believes there will be a positive impact on staff costs.

Market analysis firm Standard & Poors in fact liked the way Chatterjee went about his business and inked a 13-bank deal in September 2010. “The new bank loan lengthens the repayment schedule and will enable TSUK to significantly reduce its repayment obligations for the next four to five years,” S&P analysts wrote in Octo-ber 2010.

Looking ahead, Tata’s exposure to input volatil-ity may be changing. The company is working harder now on fixing more of its costs through long-term contracts and hedging, according to its 2009-2010 annual report.

The report also notes that a feasibility study has been completed for a 502-million ton coal field in Mozambique, one of the largest coal deposits outside Australia, in which the company has a major share. But Chatterjee and his team’s real bragging rights comes from the fact that Corus has done remarkably well over the last two quar-ters and helped Tata Steel show a significant turnaround in its numbers. “Tata Steel UK has started to deliver,” says Chatterjee.

Tata Steel acquires British steelmakers Corus for $12 billion. It plunges Tata Steel into massive debt. In March 2009, Moody’s Investors Service downgrades the company’s stock to two levels below investment grade. Chatterjee ensures the firm keeps $1 bil-lion in liquidity on the books. In early 2010, he refi-nances the Corus debt into a five-year term loan of £1.8 billion. Utilisation capacity of Corus increases to 80 per cent in 2010. After losses of

4,526.06 crore for 2009, the companyturns in a

4707.32 crore profit for the last quarter of 2010. Returns from Europe and UK boost overall Tata Steel profits this year.

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SNAPSHOT

—KOUSHIK CHATTERJEECFO, TATA STEEL

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A 288 crore loss had sounded the death knell for GSFC. The finance team however, refused to accept defeat.

—GAUTAM SEN, FORMER CFO, GSFC

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Fh e n M a n a g i n g Director A K Luke, company secretary V D Nanavaty and Finance Director Gautam Sen sat

down to address the Board and key shareholders of the 3000 crore Gujarat State Fertilisers and Chemicals (GSFC) in April 2003, they couldn’t possibly have been smiling. GSFC, (where the government had a 38 per cent stake) was staring down the barrel following a massive 228 crore loss – the largest in its history. A profit making, listed firm, it had suffered a 88 crore loss the previous year. But this time, the directors knew that unless drastic steps were taken, many of its naphtha and gas producing factories would be shut and jobs cut. Worse, they feared they would have to file for bankruptcy.

The situation was so bleak that the Board’s statement to stakeholders read: “In view of the losses, your directors are unable to recommend any dividend for the year under report.” It added that the Government of Gujarat had declared the company as a relief undertaking under The Bombay Relief Undertaking Act. “In the absence of corrective measures at this critical juncture by all the stakeholders, the cash-flow deficit may severely impact the sustained viabil-ity of the operations of the company,” the state-ment warned.

Luke had just joined as the new MD and many of the directors, both government nominees as independent members, were relatively new. Finance Director Gautam Sen therefore realised, that in many ways, the onus was on him and the finance team to somehow, miraculously, turn things around.

First therefore, the management decided to go for a comprehensive Corporate Debt Restructuring (CDR) Plan. “We worked through nights to prepare and submit a detailed plan to the CDR Cell of the RBI,” recalls Sen, now Director Finance at the Rashtriya Chemicals and Fertilisers Ltd.

“The company’s loan portfolio at the time was 1470 crore against a share cap of 79 crore.

More importantly, a majority of GSFC plants were mixed feed – 50 per cent naphtha and 50 per cent gas. “The trouble was that the price of naphtha was six times higher than gas. We just didn’t have the money to run these plants if we had to buy more naphtha,” Sen says. The final nail in the coffin was when Sen realised that if things went the same way for another two months, plants would have to be shut. “Overseas supplies were hit and we also defaulted with our main German bankers,” he says.

Luckily by mid-2003 the CDR operation had begun. “With the RBI stamp of approval in our pocket, we developed a package for loan restruc-turing,” says Sen. To begin with GSFC sought a 50 per cent waiver on the principal amount on all unsecured loans and a total waiver on interest for 2003-04. “Lenders realised this was the only way they would get back their money, so they agreed,” he smiles.

All other loan repayments were rescheduled as well. Deals were struck with GAIL and Gujarat Gas to buy additional gas from them to replace the more expensive Naphtha. Pipelines were put in place and the gas started flowing – all within months. “I also visited our bankers in Germany and convinced them to restructure the unse-cured part of the loan,” says Sen.

Exactly a year later when the Board met for the next annual meeting, the smiles were back. From a loss of 288 crores in the previous fiscal, GSFC reported a 42 crore profit for the 2004-’05 finan-cial year. “As a team, we achieved a mini miracle. It remains my biggest high till date,” he concludes. Sen left the following year, but his legacy remains. GSFC continues to grow and has never reported profits of less than 350 crores in any of the subse-quent years. Without doubt this remains one of the finest examples of a finance-led turnaround in the recent history of India Inc.

GSFC reports a 228 crore loss in 2003-04, the largest in its history. Finance team prepares comprehen-sive Corporate Debt Restructuring (CDR) plan. Interest on unsecured loans reduced, pay-ments for secured loans reschdeuled. Expensive naphtha replaced with gas, deals struck and pipelines laid. Foreign bankers restructure loan.

Company shows 42 crore profit in 2004-05.

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SNAPSHOT

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It maybe the undisputed market leader in India, but Yogesh Dhingra, COO and Finance Director, Blue Dart, is determined to make the firm a financial powerhouse and bring in the latest technology to make its service faster and better in the days to come.

WHEN YOGESH DHINGRA, fresh from a six-year stint at PriceWaterhouseCoopers, joined Blue Dart in its Delhi office back in 1992, few had heard of this small courier company, gen-erating less than 150 cores in revenue. What happened in the following two decades is the stuff novels are made of. And as the man who led the finance function for 12 of those years, first as the CFO and now as the COO and Direc-tor-Finance, Dhingra deserves at least some of the credit for helping Blue Dart become a 1000 crore giant. Blue Dart, which is now part of the global DHL empire (DHL has an 81 per cent stake in Blue Dart) is by far the largest courier firm in south Asia, with over 40 per cent market share in India alone. Interestingly, much like the company’s rapid rise, Dhingra’s own growth has been spectacular, an indication perhaps of the sharp mind that this Delhi University alum-nus possesses.

“Even as a student, I would never focus on just one thing. I was interested in a variety of sub-jects. I remain equally inquisitive about different

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FIRST JOB At PriceWater-

houseCoopers in New Delhi

BIG BREAK When I was

appointed CFO of Blue Dart in 1999 shortly after moving to the Mumbai headquarters from the Delhi office.

A HA! MOMENT During the mid

to late 1990s our cost of funding was around 21 per cent. I took up the challenge, cut a deal with ICICI and reduced the cost to less than half.

LITTLE KNOWN FACT:

When I need to de-stress, I play squash alone!

DREAM To one day head

an NGO and work to improve the world we live in. It is payback time.

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areas of business today and I think this trait has helped me to a large extent,” he says.

As a youngster, Dhingra says he was a bit of a ‘jack of all trades’. “Unlike my elder brother who routinely topped his class, I was just a good student, largely because I would do five things at the same time,” he laughs. Then, however, the expected happened. His brother, five years his senior, took up commerce at the under gradu-ate level. “It was almost a given that I would take it up as well. And I did, even though at that stage I was more keen on becoming a lawyer,” he recalls.

There was no looking back, though, once he passed his CA exams. “I cleared the exams in my first attempt. With that went my chances of becoming a lawyer,” jokes Dhingra. He spent the next six years learning the fine art of auditing. “I landed a job with PwC in Delhi and, between 1986 and 1991, audited results of several companies,” he says. Positive feedback from some clients helped and by 1991 he had been promoted to manager. “The pay was not that great, but the job taught me a lot. I was enjoying life,” recalls Dhingra.

Once again, though, fate conspired to change his career track. “In 1991, the econ-omy opened up and new players came into India. Like my colleagues, I too received offers where the pay package sounded incred-ible,” he says. But after taking one of those offers and working with a French firm (that gave him a salary three times more than his PwC package) he realised that job satisfac-tion mattered more than a hefty salary.

Luckily, offers were still coming in, among them one from Blue Dart, a small, decade-old cou-rier firm. “It was a gut feeling,” he says, “I some-how felt I would be happy here. I also liked the job role they had in mind for me.”

So in the summer of 1992, Dhingra joined Blue Dart in Delhi, as regional controller for the North Zone. Under him the region rose to one of the biggest profit centres. The management took note and in 1996, he was transferred to the HQ as corporate controller. Three years later he got his big break: the board decided to appoint him as the CFO, a position he held for the next nine, extremely eventful years, a time that saw Blue Dart rise dramatically to pole position in India, get into a global sales partnership with DHL and finally sign an M&A deal that saw DHL acquire an 81 per cent stake in Blue Dart.

It was also a period when Blue Dart became the first ever courier firm in India to have its own fleet of aircraft, revolutionising the way letters and packages would be delivered across the country from then on. Today with a fleet of seven Boeing aircraft and nearly 6000 trucks, Blue Dart can deliver packages to 27,000 cities, towns and villages in India and 220 countries, faster than anyone else.

DHINGRA IS A HANDS-ON LEADER WHO IS KEEN, EVEN TODAY, TO LEARN NEW THINGS IN DIFFERENT

AREAS OF THE BUSINESS.

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NEWSPAPERS HT, Mint

MAGAZINESHBR, Time, Economist

DESTINATION London

MUSICGhazals

MOVIE Sholay

BOOK The Concise 48 Laws of Power by Robert Greene

ROLE MODELBill Gates

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It was the deal with DHL, though, that really transformed the company’s fortunes. Earlier, Blue Dart had an alli-ance with another global giant – Fed Ex, an agreement the former terminated in 2002. “It was a tough period for us since it coincided with the economic slowdown of 2001. We desperately needed a global tie-up. In DHL, we met a perfect match,” recalls Dhingra. At first, a global sales alliance was signed. Within a year, it became clear that DHL was interested in more. The timing was perfect since the original promoters of Blue Dart were looking for an exit. “It helped that the DHL management had a vision similar to ours. Post the acquisition in 2004, their message to us was clear: they would not interfere in the India operations, apart from placing a few of their executives on our board. It has been

a happy marriage,” smiles Dhingra. Since then, the company has grown to become a 1000 crore firm (In 2010 it generated revenues of 1100 crore with net profit of just under 100 crore). “We had a fabulous 2010 when revenue grew by 30 per cent and profits by 55 per cent over the previous year,” Dhingra says. It was also a year when Blue Dart started its much talked-about new product: the Cash on Delivery (COD) sceheme that gives customers a chance to pay only after they receive a product.

While as COO he also looks at IT and operations today, purely from the finance perspective too, his role has changed over the years. “First we were the number crunchers. Then compli-ance, risk management and other areas came under the CFO. Now we are not just ‘partners’ but expected to look into

the future and come up with business plans for the next 5 years. We need to be visionaries,” he says.

His own vision is ambitious: to grab at least half the market share in India in the next two years. A strong believer in technol-ogy, Dhingra also wants to bring in the lat-est tech tools to speed up operations. “We are getting a new machine which can scan thousands of barcodes at one go. Imagine the time we would save,” he says. Speed, after all, is everything in this business.

“Another dream is to be able to deliver to every corner of India at a faster pace,” he adds. With new airports coming up around India, that day is not too far off. And when it happens, one can be sure that Dhingra will be there to ensure all deadlines are met, costs kept under a tight leash and returns on investments are fast. Really fast.

“We had a fabulous 2010 when revenue grew by 30 per cent and profits by 55 per cent over the previous year.”

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Financial executives do not always assess their level of self-motivation on a daily basis. But — on the heels of an economic slowdown — now might be a good time to take stock and find out what truly motivates them.

Strong, decisive leaders are highly valued in the corporate world, in personal interactions and in politics, as well. Many people aspire to possess the traits of strong leaders, which can include exhibiting an aura of self-direc-tion and self-assuredness.

That may well be true. But occasional-ly and particularly following the difficult economy and business environment of the past few years, even the most self-motivated executives may be question-ing their individual resolve. Sometimes even the leader needs a boost.

To provide this boost, we asked self motivation guru DENIS WAITLEY to step in. Waitley is a highly respected expert and author in the field of self-development who has worked with and counseled Fortune 500 leaders, Olympic gold medallists, Super Bowl champions, astronauts and prisoners of war. He says today’s executives are “concerned about remaining competi-

EVEN THE LEADER NEEDS A BOOST – ESPECIALLY NOW

ELLEN M HEFFES

tive, about their job and about their company not being downsized.”

So how are they kept motivated? Waitley says to start by understand-ing the basics. Motivation, he says, is defined as “a motive by action.” It is an inner force that compels behaviour. In other words, “real motivation drives you from within; it compels you to do something.” And, he cautions, there are good motivators and bad motiva-tors — but they are the drivers. In Wait-ley’s many years of research, backed up with research by Harvard and other top universities, he finds that motiva-tion falls into two categories: intrinsic and extrinsic. Intrinsically motivated people do things because they just love to do them; the involvement is its own reward, like teaching or being a sci-entist. Extrinsic motivation, the more popular model, refers to the force that pulls one forward by the power of some external benefit or a tangible reward.

For example, if I do this I will get this — a kind of a quid pro quo.

He gives as an example professional athletes. Once they leave college, many are driven by a big pay check — “that’s why the free agency rule drives them to go to other teams rather than stay with the one they were with.” This extrinsic motivation, Waitley says, is very strong. “Just look at people who go to a job every day that they don’t like.” They may hate their work, but they still “punch the pro-verbial clock” every day, he says, because of the external force of getting paid.

So when it comes to “real” motiva-tion, Waitley says, “You cannot intrinsi-cally motivate greatness. If you want to be the best at anything you really have to light the fire within yourself.”

When you know where you are going in life, you have an obsession or a com-pelling image inside. This inner moti-vation, he adds, is much stronger than a bonus or a quota. Basically, he says, “we

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are all self-motivated, although we don’t understand it.”

One technique to understand how the two types of motivation apply to actions is to perform a self-motivation audit to determine which external forc-es trigger responses.

Waitley has identified four types of exter-nal motivations. The first is status with experts. We all want to gain recognition as someone important in our field, he says, and want to be looked at as some-body who is authoritative or an expert.The second is what we have. It is the

acquisition of something tangible to show for our work. For example, we do something, we get paid. We do some-thing that many people want, we get paid more. Many people, he says, live for the things they love and they also don’t want to lose those things, so

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acquiring financial security is extreme-ly strong.

The third external motivator he char-acterises as status with peers, which differentiates from status with experts. Bluntly, he says, “we live in a skin-deep culture in which we’re motivated by how we are regarded by our friends, the group we run with and fellow employ-ees at work.”

The fourth motivator is competitive-ness, and the desire to achieve bet-ter than others or over others. And that’s been miscast, says Waitley, who explains that the original Olympic idea was to come together and get an olive branch and see how good you were against a fast field of really good people — using some kind of global standard of excellence. He recalls David Sarnoff, the founder of the National Broadcast-ing Corporation (NBC), who said com-petition brings out the best in products and the worst in people.

What Sarnoff really meant, says Waitley, was something much deeper. He explained that the quality of one’s life is in direct proportion to the com-mitment to excellence, regardless of your chosen field. When the internal or intrinsic concept is applied to self-motivation — whether for children or executives — Waitley says, “If they had more intrinsic motivation and less extrinsic motivation they would be a lot more competitive.”

This is because the big internal moti-vator is a concern for excellence. Thus, he explains: “You are motivated every day to be the best you can in whatev-er you do and you are eager to study because you want to learn, not because of the good grades or not because you are going to get in a good college.”

A scientist is a scientist because he or she loves the challenge of discovery, not because he expects to win the Nobel Prize. Waitley says people become financial executives because they love being part of an organisation that pro-vides a product or service that’s valu-able. And financial executives make it possible to continue to grow and pros-

per because they help foster the return on invested capital. More importantly, they know there is some accountability for making decisions that will help the enterprise grow.

It boils down to achievement via independence. That type of internal moti-vation, he says, is inherent in most people.

“You want to achieve on your own skill and merit.” So, ask yourself: Am I motivated more by money or concern over keeping a job? Do executives want to be competitive, adopt a “take no pris-oners” attitude, or be loved and appreci-ated by peer groups? Or do they really have an internal concern for excellence? Waitley likens concern for excellence to playing a difficult piece on the piano when no one else is listening.

“You’re doing it for the sheer exhila-ration of doing something difficult that you couldn’t do, and yet no one is there to applaud your efforts other than your internal feeling that you’re doing some-thing really good.”

That, he says, is what drives people to be educated and to have self-esteem because they believe they have poten-tial. “You would never try to do any-thing unless you believed you were worth the effort and that maybe you could get there.” Bottom line, Waitley believes that “one of the strongest moti-vators of all is the belief in your own potential — even though you haven’t performed well yet.”

STAYING MOTIVATEDThe past few years have been difficult. The economic recovery is tentative and many believe it’s now a case of “the new normal.” Leaders have had a tough time, too, having to do more with less, having to lay people off — and some being laid off themselves — and hav-ing to work much harder while often watching their nest eggs shrink sub-stantially. It’s been challenging, and has likely affected a lot of people deeply.

Motivation is an inner force that com-

pels behaviour

Motivation falls into two categories:

intrinsic and extrinsic

Perform a self-motivation audit to

determine which external forces trig-

ger responses

Success isn’t a status. It’s not a

perch. It’s a process

Intrinsic motivation is the key to last-

ing success

The more senior you become the

more vulnerable you are because

young people coming in, understand

technology

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The external environment can impact performance, cause a malaise.

How can executives mitigate personal performance problems resulting from external factors they may not be able to control? Waitley says rapid and sudden change can paralyse people, putting them in a situation where they feel out of control and that there’s nothing they can do to change it. “You get caught in your tracks, kind of dancing on peanut butter and running in place,” he says.

As a native Californian, he says he doesn’t know anyone who lives in that state who isn’t worried, for example, about bankruptcy. He says more people are now leaving per day than moving to California. What that creates, he says, is a feeling of helplessness, that “there’s nothing I can do about it.” To deal with this helplessness, he says, we need to step back and ask: “Is it true that the playing field will never be level again?” He notes rising expectations of people in developing nations who have been seeing a different life on television and the Internet and they want it, so there’s much unrest around the globe.

Waitley says there can no longer be a guarantee of employment. So, while guaranteed employment is no longer a given, employees can make them-selves as employable and desirable to businesses as possible. Thus, assump-tions need to be challenged. In such an environment, Waitley says, having a lifelong learning organisation is criti-cal. “We have to realise that every 30 seconds there’s a technological break-through with something that will com-pletely change what we just thought, and understand the shelf-life of formal education is only about 18 months. So, you’ve just received your MBA or your CPA, but those milestones are only about 18 months in terms of what you’ve learned.”

Indeed, he adds, “unless you’re learn-ing, you’re falling behind.” Waitley attri-butes his own experience working in China during his career as having cre-ated his own sense of urgency, which he’s been explaining to his children and

grandchildren — the need to get the “eye of the tiger” back, recalling the main character in the boxing film “Rocky.”So what should already-successful people keep in mind? They need to understand that success doesn’t make you happy necessarily, he says, and success isn’t a status. It’s not a perch. It’s a process.

The old cliché for motivational speak-ers, says Waitley — a renowned motiva-tional speaker himself for more than 30 years — is that “the road to high achieve-ment and peak performance is a toll road. It’s not a superhighway or a free-way, and it’s always under construction.”

In other words: don’t ever rest on your laurels. You want to spar with suc-cess but never embrace it. The minute you embrace success and believe you have arrived — that is the most danger-ous moment of all, that moment when you are at the top, he says.

WHAT YOU MUST KNOW ABOUT SELF-MOTIVATIONWhile most financial executives like-ly don’t think on a daily basis about whether or not they are self-motivated, Waitley helps to put the concept in per-spective. “The important battle cry is to chase your passion, not your pension.

Status is important. Peer approval is natural. Competing in a fast field of champions keeps you prepared and on your toes. And acquiring wealth is uni-versal,” he says. But it is intrinsic moti-vation, he says, that is the key to last-

ing success. Intrinsic motivation is all about having a burning internal desire for excellence, to be able to act indepen-dently without having to be told to do so. It’s the most powerful motivation of all, says Waitley, and “the rewards are much greater.”

Fear, he explains, can compel and inhibit. It is desire that propels and ignites people, to put the reward of suc-cess and the desired result ahead of the penalty of failure. Also, he adds, people need to understand the world around them. “Yesterday’s world records are today’s entry level requirements, and seniority is actually vulnerability,” he notes. “The more senior you become the more vulnerable you are because young people coming in understand technology. So because you have tenure does not mean that you’re set in place.”

He adds, “You must embrace lifelong learning.” People will be much more motivated, he advises, “if you’ll take some time out and dust off your child-hood, do what you love, what you do well, instead of just doing what other people tell you to do. Try to do things that are more exciting.”

“So keep your yearning and learning ahead of your earning,” he concludes.

ELLEN M. HEFFES IS EDITOR-IN-CHIEF OF FINANCIAL EXECUTIVE. © 2011 FINANCIAL EXECUTIVES INTERNA-TIONAL | WWW.FINANCIALEXECU-TIVES.ORG

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An interesting look at Expense Management systems.

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In my various discussions with CFOs on the topic of curtailing expenses, especially in the context of an automated Expense Management system, I have come across varied responses; ranging from being astonished, to being cynical, to being delighted at the possibilities.

I have shared below some useful dis-cussions, which I have had, which I think might interest a financial controller look-ing at better controls and compliance, or a CFO looking to reduce expenses.

Firstly, on the procurement side, including vendor invoices, there is definitely an expense reduction. For example, when you know how many laptops are required next month across your five offices, you can certainly buy laptops at better rates, or better delivery or other terms. You would find that the requirements shrink, where there are redundancies, simply because approv-ing business heads now know the cost impact on their cost centre, and want to keep expenses low. You find that you can stagger some purchases. You also find that vendor advances are controlled

WILL AIR TICKETS BE CHEAPER, OR LAPTOPS COST ME LESS ?

ILA IMANI

better, that is, they are settled faster, and total outstanding advances reduce. Vendor invoices are approved through a more stringent process, which prevents mistakes like over-payment. Excep-tions, like an expense in a branch office which shoots up dramatically catches your attention, and it enables you to take corrective action quickly.

On the employee initiated expenses, like travel for example, accurate spend analysis definitely helps you source better.

Are you saying there are frauds happen-ing in my organisation, which I don’t know about?Well, frauds, if at all they happen, are below the radar level. The question is,

what can we do to prevent activities like employees inflating their expenses in their claims, managers approving higher amounts than what should be approved, vendors charging two times for the same service, and so on. Just as most stop at a red signal, knowing that there could be a traffic cop around the corner, similarly, with an automated system, the sheer visibility makes employees think twice about doing any wrong practice.So now will we do away with all paper based forms, including paper-based expense supporting?Well, for filing, and to maintain a paper record you would still file the support-ing paper with employee claims, in a file. However, on one hand you want to

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make the approval process more strin-gent, across locations and business managers, and on the other you need to find a way to reduce the turn around time. Supporting bills can be attached on a selective basis into the automated system, and you have the best of both worlds – quicker turn around times since you don’t need supportings going from office to office, or desk to desk, and yet they are available for filing and audit purposes.

My biggest expenses are Manufactur-ing Costs and Staff Salaries. How will a System reduce costs for me?Well, one way of looking at expense control is that if I can’t reduce certain large expenses why do expense control at all. The other way of looking at it is that since I can’t control certain large expenses, atleast let me control that which I can! And yes, an automated sys-tem surely reduces costs, and these costs are worth reducing! If nothing else, the cost of processing employee claims and vendor bills could come down to half!

Will employees travel less, or spend less when they travel if we have an automat-ed System in place?In the area of Travel Expense control, there are many ways in which you reduce costs. Once you know you typi-cally spend 20 room nights in Banga-lore & Delhi in a quarter, you can get better hotel deals. You can also ensure employees and your travel team uses these negotiated deals only, and not other higher cost options.

Employees spend and claim within entitlement limits – this too saves costs. Time spent with employees, their man-agers, travel team, and accounts payable department – could reduce to half. Rec-onciling travel bills becomes easier. Trip cancellations result in less wastages now.

I always wanted a system like this. But do people adopt it easily, or will I need to coax them to use it?That’s the easy part actually. Give employees an easy to use system, give

them visibility into what expenses they have already claimed, and who’s desk the current claims are lying on, and once they know that follow ups are not required too – you have full hearted support!

My expense data is in my ERP/Account-ing Package. Why would I need an Expense Management System?ERP handles “post-facto” transactions, i.e. after a transaction occurs it records it. Few people in the accounts department use ERP for expense accounting or procure-ment. On the other hand, an Expense Management System is a “pre-facto” con-trol system, i.e. you control an expense before it is committed or incurred, not after. Also, all employees use it, i.e. not only the accounts department. Expense control is possible only pre-emptively, and since all employees use the system, the accounts team gets a visibility into the expense, as soon as anyone even thinks about it!

My team really doesn’t have time to take on large projects, especially after we just finished our ERP implementation. When is the right time to take on such initiatives?First of all, a well designed system, if implemented by a skilled team, is noth-ing like an ERP implementation – its quick, its painless, and its cost-effective.

If your company is expecting growth

then it’s the right time to put a system in place. If your company is facing challenges like higher turn around times for payments, large teams being required to process payments, expense policies not being complied to, or your auditors are not satisfied with their audits, it’s the right time.

What is the response of companies in India to Expense Management? Companies in India have become more cost conscious, especially staff costs, compared to the a few years ago. Smaller teams result in lower costs, and a system which lowers staffing require-ments is desirable.

Secondly, companies have become more aware of the need to minimise risks i.e. loopholes. Prevention is being preferred, over cure.

Lastly, Indian companies tend to have more offices, in more locations, and are looking at more growth. This initiative becomes a growth-enabler, and a criti-cal one.

We expect 30% growth this year. Our budgets are in place. Is this the right time to look at this initiative?Without an expense budgeting control system, there is a high probability that by the time you see your P&L, its too late, and you’ve already overshot bud-gets! Surprise expenses, unplanned expenses, etc. all have a way of jeopar-dizing your best intentions. A system which prevents expenses from over-shooting, is the only way you can be sure of staying within budgets.

So will I get cheaper laptops or cheaper air tickets with Expense Management Systems?Maybe. But that’s not the only expected outcome of an automation initiative.

What an automated Expense Man-

agement System typically does is: it

enables the process of approvals required at

every stage of an expense, be it committing

an expense, incurring it, or payment stage.

It enforces policies which decide which

employees can spend how much on what,

based on their role or seniority. It auto-

mates the rules for deciding who should

be the approvers for what kind of expenses,

esp. when a procurement has to be made.

Finally, it gives MIS which enables accurate

provisioning, expense planning, budgetary

control, and spend reduction. It facilitates

audits for spends and payments.

WHAT IS AN AUTOMATED EXPENSE MANAGEMENT

SYSTEM?

MRS.ILA IMANI IS CEO, NEXSTEP INFOTECH PVT. LTD.

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Smart thinking and new marketing tools can reduce cash outflow on brand building, and leave more cash in the bank to spend elsewhere.

While most CFOs and CMOs believe that half of their advertising money goes waste- and moreover, not knowing which half –we may now have a solution.

By taking a close look at the line-items underlying the two broad P&L heads of ‘Advertising & sales promotion expens-es’ and ‘Selling & distribution expenses’, one can identify areas where spends can be optimized. These savings lead to Profit After Tax (PAT) improvement, or get re-allocated to innovations that fuel growth.

Today, one also gains by using ‘new age’ marketing, i,e. digital tools, that not only ensure money spent on brand building gives you more bang for the buck, but also provide an opportunity, hitherto unheard of. An opportunity of measuring ROI on such money spent.

Together, these approaches are help-ing CFOs improve PAT and Enterprise Value, while helping CMOs enhance their Brand Equity.

MAKING YOUR MONEY WORK FOR YOU: SMALL STEPS TO INCREASE PROFIT

SRIKANT SASTRI

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80%

60%

40%

20%

Internetmarketing

Mobilephones

Social media(facebook,twitter, etc)

Others likeiPad or

digital kiosks

THE NUMBERSA typical medium sized organisation spends between 5 – 15 per cent of its turnover on advertising and sales pro-motion. This easily translates into an amount anywhere from 5 cr to 75 cr per annum.

With increasing instances of conver-gence of various marketing services (like advertising, media planning,

below-the-line, digital marketing, PR) under a single umbrella, agencies are able to reap benefits of economy of scale and pass it on their clients. Even a conservative estimate of 10 per cent savings could add significantly to the bottom line of the client organisation.

A recent survey of SMEs threw some light on the current trends of adop-tion of new media (illustrated on the

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right). Though, most of the marketers have jumped on the internet band-wagon; there’s still a lot to be leveraged through other digital channels, which can improve the ROMI.

HOW ARE MARKETERS SAVING MONEY?One needs to look at its P&L’s line items like, (a) Advertising expenses and (b) Sales & Promotion expenses and then further drill down the components adding up to the total figure. A typical expense sheet will throw up the follow-ing components:(1)Advertising spends (media buys across print, radio, digital et al)(2)Agency retainer fees (for ATL, Media planning, BTL and Digital)(3)Sales promotion expenses (channel rewards, MICE)(4)Below the Line activation (on ground events)(5)Loyalty programmes, CRMs

Once you are able to put numbers against most of them, you need to look at innovative ways to shave off 5 – 20 per cent against each item. For example, can better media planning shift your ad

spends from traditional media to new age and give you better ROMI? Can your agency be made more accountable for ROI and your business results? Can consolidating all work under the same agency group save you time and effort, which is a huge cost factor?

There’s plenty that one can do to save money and utilise it effectively else-where with smart marketing decisions.

REAL LIFE EXAMPLES OF INNOVATIONS(1)Using digital solutions for retail effi-ciency and impactChallenge: A FMCG major wanted to enhance the availability and visibility of its products at retail counters across the country, and evolve a robust incentivize mechanism for its sales force based on achieving this. Solution: Customized hand-held digi-tal devices were used to measure and report retail inventory, visibility and competitive status (including pictures) on a real-time basis across 200 towns in the country. This has empowered the company’s sales management to take corrective measures on a real-time basis.

Benefit: Huge impact on stock avail-ability and visibility, that has led to sales increases, and accountability of the sales team.

(2)Using new-age media to interact with hard-to-reach Decision MakersChallenge: A large international IT major wanted to showcase its high end solutions to its Target Audience. Attract-ing senior C-level executives from across the country at one single location would have been difficult, both in terms of availability and willingness to travel, as well as high cost of hosting the event.

Solution: The IT major used a highly impactful and engaging presentation on the subject matter and created vari-ous time slots to showcase it through web seminars and engaged with its target audience. The C-level executives were invited through various forms of direct marketing to register for the webinar and attend it free of charge, at their time of convenienceBenefit: They were able to engage with many executives, across areas of inter-est and expertise, with very low invest-ment. The executives on the other hand were happy and eager to interact and learn through this medium without actually stepping out of their cabins

While there are many real life exam-ples which can create better ROMI for all of you, the challenges particular to every organisation are different and require a customised solution and there is no ‘one-size-fits-all’ kind of solution.

We urge you to take the first step of analysing your Brand-wise P&L to see if you have already made sufficient efforts to reduce costs and improve efficiency. If you feel that the mediums have already reached the level of optimum efficiency, try and re-arrange them till not only all the mediums become effi-cient independently, but also the over-all strategy becomes not just brand focused, but also business-focused.

THE AUTHOR IS COUNTRY CHAIR, VIVAKI INDIA HE CAN BE CONTACTED AT: SRIKANT.SASTRI@VIVAKI.COM

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THE CHALLENGE:To bring in new technology for better cost management. Also, restructure the busi-ness model

TIME PERIOD:2006-07

PEOPLE INVOLVED:Top management and core finance team

KEY TAKEAWAYS:Communicating a decision and convincing all stakeholders about it is very important. Also, there is no substitute for teamwork.

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LeasePlan India, the Indian arm of the Dutch firm, was in troubled waters when Ajay Narain, the new Director-Finance, teamed up with the new MD and senior colleagues to restructure the entire financial set-up of the company. Here is how they set things right.

DHIMAN CHATTOPADHYAY

Less than a decade after arriving in India, Lease-Plan, the Dutch automobile leasing firm, found itself caught in technological and

cost related challenges that impeded its growth. It was also, as later events were to prove, stuck with a business model it had outgrown. It was at this time that LeasePlan India saw a change at the top, with a new MD and a new Director-Finance taking over. While some others may have seen the challenges as too hot to handle, this new team decided to tackle them head-on. In less than two years, some amazing teamwork within the firm saw them emerge ‘victorious’, with the

company making significant profit. As the Director-Finance, Ajay Narain played a crucial role in this turnaround.

THE CHALLENGE When Ajay Narain arrived in India in 2005 after a six year stint at the Amsterdam headquarters of LeasePlan, he walked right into what seemed like a financial muddle. LeasePlan, still a relatively young company in India, faced many bottle-necks, some related to automation in finance, others to poor cost management.

“When I came, LeasePlan India had just moved to an ERP platform. There were challenges pertaining to controls, processes and performance,” remem-

bers Narain. However, the young CFO decided to look at the challenges as ‘opportunities’ rather than hurdles.

HOW IT WAS TACKLEDNarain realised that there was no one solution to the problems and that it required a structured, multi-pronged approach. “A business turnaround is not only about creating processes and enabling systems to work towards enhancing quality and controls but is also about changing the attitude of employees and an alteration in the cul-ture of the organisation,” he says.

So, one of the first steps the finance team took was to draw up a strategic S

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plan. Narain teamed up with the Man-aging Director and his senior finance colleagues and together they set about defining the vision and mission of LeasePlan India. From this emanated the strategic objectives. To achieve such objectives, strategic actions were identi-fied. One of the first such actions was to go for more automated processes, thereby ensuring an enhanced func-tionality of the ERP platform in order to reduce manual intervention.

Fortunately, automation helped the organisation bring about a semblance of control including better checks, valida-tion and improved efficiency, resulting in saving time and cost. Narain’s next step was to inculcate a sense of cost-con-sciousness across the organisation, with the objective of bringing about better cost management and control. So the concept of departmental budgets was introduced.

However, Narain also realised that the need of the hour was multi-tasking. In other words – the simultaneous execu-tion of actions and not just improve-ment in the use of technology. During one brainstroming session, realisation dawned that the financial structure they were following was not in sync with LeasePlan’s business in India. “When we started in India in 1999 as a market entry strategy, we offered finance leases for which there was a requirement to have an NBFC license. However, by 2006, there was no longer any need to conduct business as an NBFC since a majority of our business, both in terms of revenue and asset base, was operat-ing leases, an activity not regulated by the Reserve Bank of India,” recalls Narain. Therefore, in consultation with the Board and the Head Office in The Netherlands, it was decided to file for

de-registering LeasePlan India as an NBFC. The RBI agreed to cancel its NBFC license, thereby paving the way for the de-registration of LeasePlan as an NBFC. Soon it moved from being a 51:49 joint venture partner to a wholly -owned subsidiary of LeasePlan Cor-poration in The Netherlands and the organisation was converted from a public to a private limited company. Thus, the organisational structure was simplified, enabling better focus on the business.

The final challenge now was to strengthen corporate governance. Narain wanted to create an environ-ment conducive to voluntary compli-ance. So, apart from various tools to ensure compliance, he implemented a risk-based approach using the ERM methodology. “Today, decision-making within LeasePlan has become more proactive and informed as a result of this step,” claims Narain.

THE LESSONS Narain attributes the organisation’s success and rapid growth since 2007 to a well-knit management team, con-tinuous support and guidance from the regional management and com-mitted and understanding employees. “In a turnaround, you will have key players but a successful turnaround is always a result of a sustained and effective team effort,” he says, add-ing that the exercise taught him a lot about teamwork and effective commu-nication as well.

“Change Management is only suc-cessful if an organisation can overcome the resistance to change by convinc-ing employees that such a change is required for the benefit of the organi-sation. Hence continuous communica-tion is the key to success,” he adds.

The experience also made him realise the redefined role of a CFO in an organisation today. The new genera-tion CFO, he says, needs to emerge as a thought leader by taking sustainable measures in linking the 3 Ps – the peo-ple, planet and profit.

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The diversity and dynamism of China, India and Brazil defy any one-size-fits-all approach. But by targeting city clusters within them, com-panies can seize growth opportunities.

Creating a powerful emerging-market strat-egy has moved to the top of the growth agendas of many mul-tinational companies, and for good reason: in 15 years’ time, 57 percent of the nearly one billion households with earnings greater than $20,0001 a year will live in the developing world. Seven emerging economies—China, India, Brazil, Mexico, Russia, Turkey, and Indonesia—are expected to contribute about 45 percent of global GDP growth in the coming decade. Emerging markets will represent an even larger share of the growth in product categories, such as automobiles, that are highly mature in developed economies.

Figures like these create a real sense of urgency among many multinationals, which recognise that they aren’t currently tapping into those growth opportunities with sufficient speed or scale. Even China, forecast to cre-ate over half of all GDP growth in those seven developing economies, remains a relatively small market for most multina-tional corporations—5 to 10 percent of global sales; often less in profits.

To accelerate growth in China, India, Brazil, and other large emerging markets, it isn’t enough, as many multinationals do, to develop a country-level strategy. Opportunities in these markets are also rapidly moving beyond the largest cities,

IS YOUR EMERGING-MARKET STRATEGY LOCAL ENOUGH?

YUVAL ATSMON, ARI KERTESZ, AND IREENA VITTAL

often the focus of many of these companies. For sure, the top cities are important: by 2030, Mumbai’s economy, for example, is expected to be larger than Malaysia’s is today. Even so, Mumbai would in that year represent only 5 percent of India’s economy and the country’s 14 largest cities, 24 percent. China has roughly 150 cities with at least one million inhabitants. Their population and income characteristics are so different and changing so rap-idly that our forecasts for their consumption of a given product category, over the next five to ten years, can range from a drop in sales to growth five times the national average.

Understanding such variability can help companies invest more shrewdly and ahead of the competition rather than

following others into the fiercest battle-fields. Consider Brazil’s São Paulo state, where the economy is larger than all of Argentina’s, competitive intensity is high, and retail prices are lower than elsewhere in the country. By contrast, in Brazil’s northeast—the populous but historically poorest part of the country—the economy is growing much faster, competition is lighter, and prices are higher. Multinationals short on granular insights and capabilities tended to flock to São Paulo and to miss the opportuni-ties in the northeast. It’s only recently that they’ve started investing heavily

In 15 years,

57%of households with earnings greater than

$20,0001 a year will live in the

developing world1 In terms of Purchasing-Power Parity (PPP)

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there—trying to catch up with regional companies in what is often described as Brazil’s “new growth frontier.”

As developing economies become increasingly diverse and competitive, multinationals will need strategic approaches to understand such variance within countries and to concentrate resources on the most promising submarkets—perhaps 20, 30, or 40 different ones within a country. Of course, most leading corporations have learned to address different mar-kets in Europe and the United States. But in the emerging world, there is a compelling case for learning the ropes much faster than most companies feel comfortable doing.

The appropriate strategic approach will depend on the characteristics of a national market (including its stage of urbanisation), as well as a company’s size, position, and aspi-rations in it. In this article, we explore in detail a “city cluster” approach, which targets groups of relatively homogenous, fast-growing cities in China. In India, where widespread urbanisation is still gaining steam, we briefly look at similar ways of gaining substantial market coverage in a cost-effec-tive way. Finally, in Brazil we quickly describe how growth is becoming more geographically dispersed and what that means for growth strategies.

TARGETING THE RIGHT CITY CLUSTERS IN CHINABy segmenting Chinese cities according to such factors as industry structure, demographics, scale, geographic proximity, and consumer characteristics, we identified 22 city clusters, each homogenous enough to be considered one market for stra-tegic decision making (Exhibit 1). Prioritising several clusters or sequencing the order in which they are targeted can help a com-pany boost the effectiveness of its distribution networks, supply chains, sales forces, and media and marketing strategies.

More specifically, this approach can help companies to address opportunities in attractive smaller cities cost effectively and to spot opportunities for, among other things, expanding within rather than across clusters (Exhibit 2)—a strategy that requires a less complex supply chain and fewer partners. Com-panies that nonetheless want to expand across clusters may find it easier to target 50 to 100 similar cities within four or five big clusters than cities that theoretically offer the same market opportunity but are dispersed widely across the country.

Another major benefit of concentrating resources on cer-tain clusters is the opportunity to exploit scale and network effects that stimulate faster, more profitable growth. Because

Chongqing

Kunming

Hangzhou

Nanchang

Shenzhen

Chengdu

Fuzhou

Xiamen

Beijing

Nanning

Hohhot

Changchun

Harbin

Dalian

Shenyang

Xi’an

Taiyuan

Zhengzhou

Hefei

Changsha

Shijiazhuang

Tianjin

Qingdao

Jinan

Shanghai

Guangzhou

Wuhan

Nanjing

Urban clusters and their hub cities

Clusters are grouped by size, based on average 2015 urban GDP as % of national urban GDP (in 2005 renminbi)

Small Large Mega

A recent analysis of China revealed 22 distinct urban clusters.

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40 C F O I N D I A M AY 2 0 1 1

most brands still have a relatively short history in China, for example, word of mouth plays a much greater role there than it does in developed economies. By focusing on attaining substantial market share in a cluster, a brand can unleash a virtuous cycle: once it reaches a tipping point there —usu-ally at least a 10 to 15 percent market share — its reputation is quickly boosted by word of mouth from additional users, helping it to win yet more market share without necessarily spending more on marketing.

Here are four important tips to keep in mind when design-ing a city cluster strategy for China.

FOCUS ON CLUSTER SIZE, NOT CITY SIZEIt’s easy to be dazzled by the size of the biggest cities, but trying to cover all of them is less effective for the simple reason that they can be very far from one another. Although Chengdu, Xi’an, and Wuhan, for example, are among the ten largest cities in China, each of them is about 1,000 kilometers away from any of the others. In Shandong province, the biggest city is Jinan, which is barely in the top 20. Yet Shandong has 21 cities among China’s 150 largest, which makes the area one of the five most attractive city clusters. Its GDP is about four times bigger than that of the cluster of cities around and including Xi’an, as well as three times bigger than the cluster of cities surrounding Chengdu.

LOOK BEYOND HISTORICAL GROWTH RATESThe growth of incomes and product categories is another variable that must be treated in granular fashion. Extrapo-lating future trends from historical patterns is particularly suspect—however detailed that history may be—because con-sumer spending habits change so rapidly once wealth rises.

In some clusters, many people are starting to buy their first low-end domestic cars; in others, they are upgrading to imports or even to luxury brands. We expect sales of SUVs to increase at a 20 percent compound annual growth rate nationwide in the next four years, for example, but to grow as quickly as 50 percent in several cities and, potentially, even to decline in some where penetration is already deep. Similar or even sharper variance held true in almost every service or product category we analysed, from face moisturisers to chicken burgers to flat-screen TVs. Yogurt sales in some cities are growing eight times faster than the national average.

The Shenzhen cluster has the highest share (90 percent) of middle class households—those earning over $9,000 a year. In other clusters, such as Nanchang and Changchun–Harbin, more than half of all households are still poor. As a result, people in the Shenzhen cluster are already active consumers of many categories, and the potential for growth is fairly lim-ited. In the poorer clusters, many categories are just emerg-ing, as larger numbers of people pass the threshold at which more goods become affordable. From a strategic viewpoint, the richer cluster could still be a major growth market for premium goods but not for most mass-market ones.

DON’T BE FOOLED BY GENERALITIESTalking about Chinese consumers and how they shop is a bit like talking about European consumers. While some gener-alisations may be fair, certain very strong differences, even within regions, go well beyond the already significant eco-nomic variance. Guangzhou and Shenzhen, for example, are both tier-one cities, located in the same province and just two hours apart. But Guangzhou’s people mainly speak Canton-ese, are mostly locally born, and like to spend time at home with family and friends. In contrast, more than 80 percent of Shenzhen’s residents are young migrants, from all across the country, who mainly speak Mandarin and spend most of their time away from their homes. To be effective, marketers will probably have to differentiate their campaigns and emphasise different channels when reaching out to the people in these two cities. That’s why we suggest managing them in different clusters, despite their proximity.

The need to localise marketing activities also results from the limited reach of national media. China has over 3,000 TV channels, but just a few are available across the country. In some areas, only around 5 percent of consumers watch national television. Other media, such as newspapers and

Top two clusters in each size category, projected 2015 urbanGDP as % of national urban GDP (in 2005 renminbi)

Small

Large

Mega

Cluster: Hohhot

0.4

Cluster: Guanzhong 1.6

1.6

0.9

Cluster: Xiamen–Fuzhou 4.1

1.3

Cluster: Jingjinji 10.4

7.2

Cluster: Shanghai

Hub city: Shanghai

Hub cities: Beijing, Tianjin

11.0

5.4

4.4

1.5

Cluster: Nanjing

Hub city: Nanjing

Hub city: Xiamen–Fuzhou

Hub city: Xi’an

Hub city: Hohhot

Clusters vary considerably in their share of urban GDP and in the relative importance of their hub cities.

41

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41M AY 2 0 1 1 C F O I N D I A

radio (and of course billboards), are even more local.Very few companies can craft their entire strategy at the

level of a cluster—those that do are usually its regional cham-pions. But with differences such as the following common ones, some tailoring is critical:

Every second consumer in Shandong believes that well-known brands are always of higher quality, and 30 percent are willing to stretch their budgets to pay a premium for the better product. In south Jiangsu, only a quarter of consumers preferred the well-known brands, and only 16 percent were willing to pay a premium for them.

In the Shenzhen cluster, 38 percent of food and beverage shoppers found suggestions from in-store promoters to be a credible source of information, compared with only 12 per-cent in Nanjing.

In Shanghai, 58 percent of residents shop for apparel in depart-ment stores, compared with only 27 percent of Beijing residents.

With such diversity being common, even merely fine-tun-ing the marketing mix and channel focus by cluster can pay enormous dividends.

ALLOW YOUR CLUSTERS TO BE FLEXIBLESome companies may want to merge or divide clusters for strategic-management purposes. A company could, for instance, merge geographically nearby clusters, such as Guangzhou and Shenzhen or Chengdu and Chongqing, if its supply chain was well positioned to manage these proxi-mate clusters as one. Other companies, highly driven by the media market, would find it sensible to split the Shanghai cluster into subclusters, because some markets within it are still quite different in their TV habits and other choices. By contrast, people in certain clusters, such as Chengdu or Guangzhou, watch similar TV shows across the entire cluster, so intracluster expansion allows companies to make more effective use of the media spending needed to attract consum-ers in the big cities.

The actual number of submarkets a company opts for will depend in practice on its needs. That number should be man-ageable—most likely, 20 to 40. Fewer wouldn’t be likely to produce the required degree of granularity, though a com-pany might have logistical reasons for taking this approach. More would probably be too many to run effectively.

COST-EFFECTIVE MARKET COVERAGE IN INDIAOften, the challenges of accessing consumption growth cost effectively are even greater in India than in China because India is less urbanised and at an earlier stage of its economic develop-ment. Companies would need to reach up to 3,500 towns and 334,000 villages, for example, to pursue opportunities in the 10 (of 28) Indian states that by 2030 will account for 73 percent

Cost to serve as % of sales

Company’s targetthreshold: 6%

.

11

200 cities

% of potential market addressed

8

10 states

5

8 clusters (67 cities)

81 75 70

of the country’s GDP and 62 percent of the urban population.To allocate financial and human resources smartly and

make things more manageable, companies need to walk away from averages and adopt more granular approaches. Some companies will be well served by focusing on 12 clusters around India’s 14 largest cities. Those clusters will provide access to as much as 60 percent of the country’s urban GDP by 2030, when the 14 largest cities are likely to account for 24 percent of GDP.

True, India’s major clusters won’t cover as much of the economy as those in China, where they will encompass 92 percent of urban GDP by 2015. Yet a hub-and-spoke approach in India should provide similar opportunities to optimise supply chains, as well as sales and marketing networks. An established technology player formerly operated in 120 cities

In India, focusing on city clusters helped one technology company reduce its customer service costs dramatically.

Example: consumer preference for name-brand detergent’s pack sizes,

pack size as % of total sales

0

Brazilian consumers overall Consumers in northeast Brazil

155 4

80 96

Small

Medium Large

1 Small = !500 grams, medium =" 1,000 grams, large = >1 ,000 grams.Source: LatinPanel

Small

Medium

Large

1

In Brazil, consumer preferences can vary dramatically across regions.

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42 C F O I N D I A M AY 2 0 1 1

all over India, for example. Recently, it shifted to focusing on eight clusters with a total of 67 cities, which still gave it access to 70 percent of its potential market. One benefit: customer service costs fell from a rapidly growing 9 to 10 percent of sales to a more acceptable 5 percent (Exhibit 3).

Alternatively, a company might improve the economics of its Indian business by focusing on a handful of states, an approach recently adopted by a retailer that had previously been pursuing a national footprint. Another company, this one in the consumer goods sector, recently decided to pursue opportunities in eight cities where con-sumers earn over $2,500 a year—more than twice the average for India—and the retail infrastructure suits its prod-ucts nicely. Without this more granular analysis, the multinational would have stayed on the sidelines in the mistaken belief that Indian consumers weren’t ready for its products. It would therefore have missed the opportunity to challenge a competitor rapidly gaining the lead in those markets.

SEIZING NEW REGIONAL OPPORTUNITIES IN BRAZILIn contrast to China and India, Brazil has been open to multi-nationals for decades. But during much of that time, most large companies in sectors such as consumer packaged goods focused on the southern (and most affluent) parts of the country. With just over half of the national population, this region includes São Paulo city and state, Brazil’s financial and industrial center.

As economic growth accelerated in recent years, many con-sumers started upgrading to more sophisticated products. But growth has also been moving beyond the south and a few large cities, becoming more geographically dispersed. In the populous northeast, for example, income per capita is only half of its level in São Paulo, but the economy is grow-ing faster than it is elsewhere in Brazil. Succeeding in new regions like the northeast requires a fresh approach for many companies. Consider the following:

Many global companies still make the mistake of doing their consumer research in São Paulo when they are designing new products or national marketing campaigns for Brazil. They don’t realize that cosmopolitan São Paulo probably has more in common culturally with New York than with any other city in Brazil.

Modern-format stores account for 70 percent of retailing in Brazil overall, but for only 55 percent in the northeast. To reach thousands of small (and often capital-constrained)

outlets spread all over the region, pack-aged-goods companies must develop third-party networks specialising in frequent deliveries of goods and small drop sizes. What’s more, in Brazil as a whole, many consumer goods com-panies found that they had focused too much on hypermarkets when design-ing assortments and promotions. One company, for example, discovered that Brazil’s expanding drugstore chains were the fastest-growing channel for personal-care and beauty products. Some leading consumer goods com-panies have now created specialised organisations that execute distinct channel strategies in different regions and categories, with tailored product portfolios and displays.

Many packaged-goods companies see detergent powders as a developed category in Brazil. But relatively afflu-ent consumers there are upgrading to

larger and more sophisticated washing machines, and many consumers in the northeast are buying their first fully auto-mated machines. New detergent formulas therefore have enormous potential—annual consumption in the northeast is less than half of what it is in the south. Seizing this oppor-tunity requires an understanding of the regional consum-er, however, particularly pack size preferences (Exhibit 4). Consumers in the northeast also want a strong perfume and great quantities of foam but care less about whitening power.

Brazil is distinct from China and India in many respects. But as these examples suggest, there too identifying growth opportunities increasingly requires a detailed understanding of vast regional variations in competition levels, income, product growth rates, consumer preferences, and retail channels.

There is no one-size-fits-all strategy for capturing consumer growth in emerging markets. What’s clear, though, is that tra-ditional country strategies and other aggregated approaches will miss the mark because they can’t account for the variabil-ity and rapid change in these markets. As the battle for the wal-let of the emerging-market consumer shifts into higher gear, companies that think about growth opportunities at a more granular level have a better chance of winning.

YUVAL ATSMON IS A PRINCIPAL IN MCKINSEY’S SHANG-HAI OFFICE, ARI KERTESZ, A PRINCIPAL IN SÃO PAULO, AND IREENA VITTAL, A PRINCIPAL IN THE MUMBAI OFFICE.THIS ARTICLE WAS ORIGINALLY PUBLISHED IN APRIL 2011 ON THE MCKINSEY QUARTERLY (C) 2011 MCK-INSEY & COMPANY. ALL RIGHTS RESERVED. REPRINTED BY PERMISSION.

10 (out of 28) Indian

states will account for 73 percent of the

country’s GDP by 2030

Mumbai’s economy is expected to be

larger than Malaysia’s is today

By 2030,

43M AY 2 0 1 1 C F O I N D I A

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Listen, communicate well and use technology to good effect. These are some of the leadership lessons to be learnt from the elections in Singapore. DAVID LIM

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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

A GENERAL ELECTION was held in Singapore on May 7, 2011. For most inter-national news media owners, the elections of an authoritarian capitalist state of 5 million people would not hold much interest. After all, the same ruling party has been in power since independence in 1965, and the most number of seats won by the Opposition has been four (of about 80 electoral seats) back in 1991. So what has made the 2011 campaign different, and what are the leadership lessons we can learn from what turned out to be the most dramatic elections since 1963? After all, when the dust settled, the ruling Peoples Action Party (PAP) still held 81 of the 87 seats.

For starters, the PAP won about 60 per cent of the popular vote, its lowest share since 1963, and with a vote swing against it of 6 per cent. Second, for the first time, a group constituency, where people elect not one, but a team of four to six Mem-bers of Parliament (MPs) was lost to the Opposition and, with it, two prominent ministers and a possible future Speaker of Parliament. Third, it was an election where closely-fought wards were won and lost using a combination of new media and rallies.

For decades, the PAP had entrenched itself in institutions which would be oth-erwise bi-partisan, as the Civil Services, town councils and, to an extent, the state-

44 C F O I N D I A M AY 2 0 1 1

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“Merely deciding on policy and then telling the people why it is good for them is grossly insufficient.”

supervised media. Debilitating defama-tion lawsuits filed by the ruling party’s key ministers post-elections served to further cripple key Opposition leaders and dissenters, and dissuaded many from being involved in civil society and politics. Based on their sterling past performance in delivering good, honest government and progress, studious tweaking of elec-toral boundaries at each elections, domi-nance in the media and broadcast tools, the PAP romped to resounding victories for decades.

However, this 2011 election provided a startling wake-up call to the PAP in the light of deep resentment over cost of liv-ing issues, public housing, and a lack of meaningful response through feedback. On top of these issues was deep resent-ment on issues like ministerial pay – where the PAP-led ministers peg their salaries to the GDP of the nation, and where they are paid several times more than the President of the United States. In addition, a champion of globalisation, the PAP’s policies of freely welcoming new immigrants was seen as depriving many Singaporeans of job opportunities and creating conges-tion in local housing markets.

Here are some of the most powerful leadership lessons from the election.

3/FOCUS ON THE MESSAGE AND WORK ON THE HEARTS

The Opposition’s most influential party, the Workers Party, spoke about a “First World Parliament” in Singapore, prom-ising to listen to people and a future where the people would be more engaged in the making of their destinies. The PAP pooh–poohed it as being “out of touch” with the people on the ground, but they ignored the power of aspirational political messages. These resonated with a public fed-up of not having a sympathetic ear. Worse, the PAP conducted a confused cam-paign where ministers sent threatening messages, and then conciliatory messages, to people. For the first time in living memory, Lee Hsien Loong, the Prime Minister, apologised for the mistakes made by some of his millionaire ministers, including, though not mentioned specifically, harsh com-ments by his father, the legendary Lee Kuan Yew, who ruled Singapore with an iron-fist until the 1990s. THE LESSON: As a corporate leader, would you prefer to cre-ate a culture of fear and respect, or one of respect and love? I guarantee the latter will get you people who will go the extra mile for you and your cause.

4 BRING YOUR GAME TO THE TABLE, DO NOT DILUTE FOCUS

This point has precedents in military history, and at critical moments, generals like Napoleon and Alexander the Great have beaten their often larger opponents by concentrating forces and setting them upon their opponent’s weakest points.

In a masterful campaign in the Group Representation Con-stituency of Aljunied, the Workers Party took a big gamble by placing all their top candidates in one team of five persons to challenge a minister-led PAP team. Aljunied became the con-fluence of the opposing forces. While the PAP was trying to fight the battle there on a constituency level, banking on its past performance, this time, it was overwhelmed by the tide.

By failing to listen and respond to the electorate on national issues, the electorate’s feelings far surpassed any localised benefits the PAP might have had. The Workers Party played the game at a higher level, raising national issues such as the glaring lack of alternative voices – and they won not narrowly, as predicted, but by a full 10 points. THE LESSON: As a leader, try and understand how much of your energy is being focused on the most critical aspects of your business versus the daily fire-fighting.

5COMMUNICATION COULD BE WHAT YOU HEAR, NOT JUST WHAT YOU SAY

A day after the elections where a key national complaint was the ruling party’s inability to listen and respond to the people’s pains, only one of the outgoing Aljunied MPs, the much-liked

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foreign minister George Yeo, admitted that the PAP really needed to listen and shake-up its feedback mechanisms. And yet, other ministers – mostly in wards polling less than 60 per cent, were reported as saying that they would ‘meet the people and find out what was troubling them’. This irony was not lost on commentators. After all, if they could not read the writing on the wall, how could they respond effectively afterwards?THE LESSON: As a leader, do you truly listen at meetings, or merely wait for your turn to speak? Try and find out.

6THE USE OF NEW TECHNOLOGY CAN BE AN ADVANTAGE

Despite their lack of financial resources, access to govern-ment machinery and a media used to serving the PAP’s inter-ests, the Opposition adopted a nimble campaign, making extensive use of social media networking such as Twitter and Facebook and streaming live video feeds, marshalling volun-teers and supporters to their cause. One 24-year-old Opposi-tion candidate created such an impact that she obtained over 100,000 ‘likes’ on her Facebook fan page, exceeding any PAP

minister’s page. Although PAP committees had been set to exploit the new media, they were clumsy in their execution, with their pages often being a one-way communication tool.

For the first time since 1963, almost every single ward was being contested; a watershed for Singapore politics. With more than double (2.2 million versus 1.1 million) the num-ber of citizens being allowed to vote in 2011, many voters, frustrated by the years of walkovers by the PAP, came out in force. With a large number of GenY voters who preferred news from alternative media, the Internet helped the Opposi-tion’s cause.THE LESSON: As a leader, are you looking at cutting edge technologies to help vault your business to a higher level? How are you engaging and winning over the Gen Y employ-ee? The 2011 elections in my island state is over, but the fight for the minds and hearts of its people will continue.

DAVID LIM IS A LEADERSHIP AND NEGOTIATION COACH AND CAN BE FOUND ON HIS BLOG HTTP://THEASIANNE-GOTIATOR.WORDPRESS.COM, OR SUBSCRIBE TO HIS FREE E-NEWSLETTER AT DAVID@EVERESTMOTIVATION.COM

46

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In its 2011 avatar, Hyundai’s upgraded Verna is a fantastic car to drive. Competition better beware! Amit Chhangani The Verna, sold in

most parts of the world as Accent (in India the Accent is a different model), is considered a ‘pre-mium segment’ car, or a ‘large’ car here. However, Hyundai promotes the model as a ‘small family car’ in all other key markets .

HYUNDAI HAS ALWAYS been known as a maker of fuel efficient and affordable small cars in India. Thanks to some very success-ful cars such as the Santro and i10, Hyundai’s small cars command some of the highest valuations in the used car markets. However, even with its impeccable reputation among the small car buyers, Hyundai has not been able to make a mark for itself as a premium car maker. The Korean company’s efforts to estab-lish itself in the big car market with products such as the Terracan, Sonata and Elantra didn’t quite fructify in the past.

Verna: Version 2.0HYUNDAI VERNA

But all that seems set to change now, once the company launches the new edition of the Verna. The product looks great thanks to the hard work Hyundai has put into its R&D. The company has made sure that the Verna’s engines and the automotive technology consis-tently matches and exceeds its European and Japanese counterparts. Hyundai has also given a definitive shape to its directionless design de-partment by developing the ‘Fluidic Sculpture’ philosophy for all its modern cars.

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THE LOOK The New Verna (known as the new Accent internationally) is a massive improvement on the current version of the car. With Fluidic Sculpture writ-ten all over its sheet metal, the Verna is a blend of flowing lines and mus-cular creases. A trademark hexagonal Hyundai grille, wolf-eyed headlamps, L shaped fog lights, a prominent crease running through the sides and a stub-by boot define this athletic looking car. The new Verna looks like a premium product and is draped in clothes which reek of its cosmopolitan pedigree.

FEEL POWERFUL But it’s not just the visuals which are creating waves for the Verna. Hyun-dai is all set to serve on your platter a choice of four engines – the widest choice in its class. With two petrol and two diesel units on offer, the Verna covers the segment like no other car. Throw in a wide variety of trim and equipment levels and you have a car that can pretty well cater to every customer from the entry level to the top-end bracket in its category.

The smaller 1.4-litre petrol and diesel engines will be available only with the standard 1.4 badge, which means that high-end features won’t be available as an option for the small engine vari-ants. However, the 1.6-litre engines, for both petrol and diesel will get four variants. This will include a standard 1.6, a middle of the road 1.6 SX, a top of the line 1.6 SX (O) and finally the automatic transmission version with 1.6 SX (O) AT badge. The AT version will be available only as a top of the line variant, with all the features.

LUXURY AND SAFETY Hyundai is offering some really great additions in the new Verna. For example, the top of the line SX(O) will have as many as 6 airbags – a safety feature not seen before in the segment. Apart from this, the top end

SX (O) variant will boast features such as rear camera display and parking sensors, fully automatic tempera-ture control for AC, electric ORVMs, push button start, proximity sensors for keyless entry and ipod / USB connectivity for the audio system. International variants of the car also feature advanced active safety features such as Traction Control and an Electronic Stability Programme, but there is hardly any chance of those features making it into the price conscious Indian market.

There are, however some features which a few rivals in the segment (Honda city, SX4 Diesel, VW Vento) have and the New Verna doesn’t. The most glaring ones of these include a glass antenna, rear map lamps and rear A/C vents.

The price has not been announced yet, though Hyundai would probably announce it by the time this magazine reaches you. If priced competitively, there is no reason why the executive-class customer won’t look at the Verna as a great buy!

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Engine 1.4 and 1.6 petrol

1.4 / 1.6 diesel

Power 107PS / 123 PS

Torque 90Nm / 128 Nm

Expected Price 10-11Lakh

(depending on the variants)

POSITIVESChoice of four engines gives buyers a lot of options, while safety fea-tures such as 6 airbags and parking sensors add value.

NEGATIVESThe absense of rear map lamps and rear AC vents, features which its rivals boast of, could be a dampner.

VERDICTThe airbags and addi-tional safety and luxury features as well as the new powerful engine, make it a good buy if the car is priced at around 10 lakhs.

A CHOICE OF 4 ENGINES, SAFETY FEATURES SUCH AS 6 AIRBAGS AND PARKING SENSORS

AND ADDED TECH TOYS MAKE THE NEW VERNA A VERY GOOD BUY G*8'($

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Though not very nice to look at, the latest Fujitsu notebook has a unique feature – an integrated pico projector instead of the optical drive. It also packs in a Core i5-2520M CPU and 160GB of storage, at $2,675

Fujitsu Life-Book S761/C

Razer Hydra

POWERED BY

India’s M

ost Read

MAGAZIN

E

TECHNOLOGY

Razer’s Hydra controller brings motion gaming to the PC. Piggy-backing on the launch of Portal 2, the controller comes with support for 125 other games. The device is set to be priced at $139.99.

THIS IS ONLY the second WP7 phone that we’ve reviewed, the HTC HD 7 being the first. The Venue Pro is a large, heavy (192 grams) phone, and feels thicker owing to a concave display. The screen is touted as gorilla glass, but picked up scratches. The top and bottom of the phone are wedge-shaped and with the chrome-rimmed 3.5mm jack adds some style. The bottom slideout QWERTY is about the sexiest form factor ever, and the mechanism is quite slick. The battery cover is glossy, a shame since we loved the matte one on the Dell Venue.

We’re not going to get into the benefits and pitfalls of WP7, for they alone could span several pages, but for normal consumer (as opposed to corporates), the Venue Pro has a few serious limitations – Bluetooth transfers, OS X connectivity to name a couple. We also had issues pairing with a couple of Bluetooth headsets that were on hand. Then there were Venue Pro-specific issues – like our test SIM getting locked without a password or the Internet refusing to

work after disabling and re-enabling data connections – an issue that a restart finally resolved. The display is advertised as AMOLED, and while the blackness level is good, and the colours are better than the Dell Venue, we still find the contrast slightly lack-ing. Sunlight legibility remains poor. The QWERTY keypad is a plus. The touchscreen is very sensitive, and the on-screen keypad works flawlessly. The Venue Pro is a reasonably speedy phone and we faced no slowdowns de-spite the fact that it runs a somewhat ageing SoC (Qualcomm QSD8250).

The Venue Pro is a good attempt from Dell, especially given their relatively short time in market with smartphones, and if you’re looking for a WP7 device with a good QWERTY, this is a viable option.

SPECIFICATIONS:Display: 4.1-inches, 480 x 800 pixels; OS: Windows Phone 7; SoC: Qualcomm QSD8250; RAM: 512 MB; in-built storage: 8 GB, micro SD expandable; battery: 1400 mAh; weight: 192.8 gramsPRICE: 34,990 (MRP, 8 GB)

A second sighting Michael Browne

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Dell Venue Pro

Judging by leaked images, the NEX-C3 may pack in the same 16.2 megapixel image sensor used in the Sony Alpha A55 DSLR, as well as HD video capture and the new flash. The camera may sell for around $500, with lens at launch.

Sony NEX-C3

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50 C F O I N D I A M AY 2 0 1 1

THE COORG REGION OF Karnataka (known locally as Kodagu), with their rich forests and plantations, offer an idyllic retreat during the monsoon months from June to September. Lying in one of the wettest sections of the Western Ghats, these hills turn lush green during the rainy season and water bodies seem to spring up everywhere. Another advantage is that Coorg is not far from Bangalore and Mangalore airports, making this region an ideal holi-day destination.

We drove from Mangalore to Madikeri, the capital of Coorg which is situated 1500 metres above the sea level. Away from the bustling marketplace, Madikeri is a pleasant hill town and the hotel we had selected, Heritage Resort, was located right on top of the hill, with a panoramic view of the hills.

After a few hours rest, our driver took us through the town to a road leading to the Abbi Falls. We walked through plantations and greenery to see the powerful, multi-tiered falls, heeding the notices posted along the trail not to pluck anything as this is a private plantation. It had been raining for a few days and the falls were im-pressive.We could hear the water much before we reached the location.

Next, we visited the historic fort of Madikeri which houses a museum in the old St Marks Church. The museum is a storehouse of information about Kodagu culture and the achievements of icons such as Field Marshal Carriapa, the first army chief of independent India and a ‘local boy’. After

The hills of Coorg are a dream destination, especially when it is pouring. Anil Mulchandani

a quick look at the lovely Omkareshwara temple which blends Kerala wooden temple architecture with Islamic domes, we headed for Raja’s Seat which is a park with a pa-vilion that offers a superb view of the hills around Madikeri.

Later in the day we visited the estate of Mr and Ms Bidappa, one of the planter families who have opened D

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Coffee in the Rains

51M AY 2 0 1 1 C F O I N D I A

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LEFT: MONKS AT THE NAMDROLING MONASTERY, THE WORLD’S LARGEST CENTRE OF NYINGMAPA BUDDHISM.BELOW: THE MAJESTIC ABBI FALLS IN ALL ITS GLORY

ABOVE LEFT: THE OMKARESH-WARA TEMPLE AT MADIKERI IS A MUST VISIT FOR THOSE INTER-ESTED IN ARCHITECTURE ABOVE RIGHT: THE LUSH GREEN VALLEYS AND MISTY HILLS OF COORG OFFER PICTURE-POST-CARD VIEWS DURING THE RAINS

HOW TO GET THERE: Madikeri is about a 3 hours drive from Mangalore and 5 hours from Bangalore. WHERE TO STAY: Orange Country Coorg: Luxurious cottages set in 300 acres of plantations with modern conveniences. HERITAGE RESORT COORG: Cottages set at different levels of a hilltop and the dining area and swimming pool on the crest of the hill.

short drive from there brought us to Bylakuppe, an area with important Tibetan Buddhist settlements. We entered the Namdroling Monastery, the largest teaching centre of Nyingmapa Buddhism in the world. This complex has the jaw-dropping Padmasambhava Buddhist Vihara, called the golden temple because of its gilded walls. Inside the Vihara is a hall with huge glistening Buddha statues. Thousands of monks were praying in this hall.

After lunch, we continued to Mullayanagiri, the high-est peak in Karnataka. Nearby is the Baba Budangiri peak known for the dargah of the person who is said to have brought coffee to this region in medieval times. Some of the country’s best coffee still comes from here.

Amazing coffee, leisurely walks, lush green hills, temples, waterfalls and some wonderful food - Coorg provided just the relaxed holiday we were looking for.

their plantation houses for tourists. Located just a few minutes from Madikeri, their house, called Dhyan’s Den, has simply decorated rooms. We had booked lunch with them and it

included pork, bamboo shoots and seasonal vegetables with ghee rice.

On our return journey, we visited Madikeri’s down-town area where we bought locally-produced honey, fresh Coorg coffee, a variety of tea and pickles.

The next morning, we set out to visit Talacauvery, a park set around one of the source points of the Kaveri river. A

C F O I N D I A M AY 2 0 1 152

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For the Leaders of Tomorrow In his new book, Ravi Chaudhry discusses some vital leadership traits to ensure success.

RAVI CHAUDHRY’S new book, Quest for Exceptional Lead-ership: Mirage to Reality outlines the emergence of a new fifth phase of human enterprise that is redefining the crite-ria of success as well as re-configuring the routes to success. The author analyses the changing paradigms and provides a down-to-earth, realistic blueprint to acquire relevant leader-ship traits. Corporations do not have the option to wait; they have to re-align themselves with the new reality now. Based on substantial research and analysis, the book introduces some innovative concepts such as: Seven prime realities that adversely impact our businesses and lives.

Seven allies to catalyse change that can augment social consciousness in business.

Five circles of leadership attitudes to assess where you are. The journey from base camp leadership traits, to the sum-mit of exceptional leadership.

The author makes a compelling case claiming that those who embrace the new realism will achieve sustained profit-ability for their companies and “triple top line of joy, peace, and contentment” in their personal lives. It also focuses on corporate governance and ethics, an attempt to create a critical mass of today’s as well as tomorrow’s leaders to start pursuing the path outlined. It analyses the business-politics nexus and other prime realities that have virtually brought the world to its knees. For instance, in the first chapter Chaudhry says: “We no longer have a government of the people, by the people and for the people. It is a government of corporations, by corporations, and for corporations.”

Chaudhry also identifies seven key players that could help bring about a transformation to “dissolve the unholy alliance between corrupt business and corrupt politics.” The

book presents a new look at leadership and attempts to ad-dress two key challenges: how to transform today’s leaders and how to transform today, the leaders of tomorrow. In practical terms, this means: how to de-corrupt the minds of today’s leaders and how to make the minds of coming generations incorruptible.

It has been well received so far. “In his book, Chaudhry has stressed the quest for exceptional business leadership that recognises and acts on the basis of the new realities and challenges of the 21st century,” says Jean-Pierre Lehm-ann, Emeritus Professor of International Political Economy, IMD, Lausanne, Switzerland. Others such as industrialist Ratan Tata too sound impressed. “I hope the book reaches out to enlighten the citizens of our country about the ills that are prevalent and helps in building a better society for the coming generations,” he writes.

Chaudhry, the founder Chairman of CeNext Consult-ing and Investment Pvt Ltd, a firm that provides strategic advisory services to corporate boards, has indeed written a masterpiece worth reading.

Book: Quest for Exceptional Leadership: Mirage to RealityAuthor: Ravi ChaudhryPublisher: Sage Publishers Price: 375