Last financial year was a great one for Indian companies, especially those with larger market caps, with NIFTY 50 companies on an average seeing an 8.1% increase in revenue and 17.4% increase in profits compared to FY23. As companies move into a new fiscal year, CFOs have busy agendas for the year ahead.
According to a survey of 200 CFOs in Japan conducted by Resource Bridge, CFOs are likely to spend their time this year on three key issues: speeding up financial transformation, maintaining focus on improving profitability, and delivering further revenue growth, all underpinned by the increased adoption and implementation of digital and IT technologies.
“We have spent a lot of time in the last year upgrading and integrating SAP across our business, which has provided significant benefits and we will continue to explore opportunities to leverage technology to improve business outcomes,” said N Venkataraman, ED & CFO, Britannia Industries. Since COVID-19 and this year, CFOs expect to spend 25-30% of their time on these digitalization and technology-enabled finance transformation efforts, whether it be migrating to SAP HANA or implementing RPA to automate processes. For companies that started early on this journey, this automation has re-architected a single finance system that can be used for multiple purposes across reporting, MIS, GRC and analytics. This has unlocked a range of challenges that can benefit the entire organization.
Profitability was a key focus area for CFOs last year and it features prominently on their radar this year too, with 40% of attention being geared towards revenue improvement. Besides cost improvement projects, pricing and cash optimisation, several strategic themes are fuelling this agenda. For example, creating a commercial based team and tightening profitability by putting in place compliance and risk based controls has improved spend controls and profitability and margin protection has been implemented on the ground. CFOs will continue to explore innovative approaches to improve profitability. According to Mahadeo Karnik, CFO of Abbott India, one such approach is to “adopt a PE mindset” and reallocate investments towards the top 100 brands, which account for 80% of the business. Leverages such as sourcing, re-engineering of manufacturing processes, channel mix and customer segmentation remain valid.
Like profitability, growth continues to be a concern for CFOs, taking up 25-30% of their time this year. According to veteran CFO headhunter Saroja Ramadhurai, who heads Resource Bridge's CFO practice, an interesting development is seeing more mature CFOs step into more strategic roles with a focus on growth. For example, Coromandel International's Jayashree Satagopan has been given the responsibilities of Chief Growth Officer in addition to her previous role as Group CFO. Additionally, companies continue to leverage M&A to introduce new products, enter value-added segments, and expand their presence in export markets. In all of this, CFOs are expected to play a key role this year.
CFOs today are seen more as facilitators and business leaders, rather than sounding boards and advisors. “Overall, the next few years are shaping up to be exciting for CFOs, with those who can strategically respond to changing demands likely to be given more exciting responsibilities,” says Saroja.
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