From renewed product focus to new business opportunities, the consumer care industry has grown with the changing consumer needs and the technology of the times. Raghavendran Swaminathan, CFO of Wipro Enterprises Limited, talks on the latest changes and the future of the CFO role.
Post the pandemic, how have the priorities in your role changed? We also understand newer businesses gained more relevance in the consumer-care space. How do you distil the financial changes?
Largely the CFO charter in the last decade has been a growth charter. With the democratization of data and excess availability of capital and labour, the C suite seeks trajectories for growth. The pandemic has created more velocity and added constraints like supply chain disruption and go to market disruption. CFOs are operating leaders first and then finance leaders. Broadly CFO charter has changed in the following areas:
- Securing Finances and Supply Chain: CFOs to ensure adequate funding is available both on the sourcing and customer sides. We deal with MSMEs and micro-SMEs and both sides of the supply chain. It is vital to support them and tide over crises, either financial or otherwise.
- Strategic Priorities to Continue: The focus of strategic priorities continues. For example, we made two acquisitions in Industrial automation and aerospace in the last 18 months. This has happened only due to the bandwidth created in the leadership team to do both, execute on the imperatives that are long term in nature and manage the current business.
- Reporting / Adoption of Accounts: The business-as-usual activities of closing/adoption of accounts continues. CFOs need to embrace the digital ways of working so that the same outcomes can be achieved with minimal FTF interaction.
- Growth: Any disruption creates opportunities for growth. For example in our FMCG business the anti-bacterial category was seen as an opportunity that opened up due to the increased health and hygiene concerns emanating from the pandemic. From our global brand portfolio, we were able to quickly launch the Hygienix brand of soaps, shower, hand sanitisers and hand wash and surface wipes. Further, we extended the anti-bacterial proposition to laundry and home care under Maxkleen, Safewash and Softouch brands. In the Industrial space, we had a number of new product launches related to healthcare.
- The Emergence of Digital: In the decade to come, only digital companies will survive. This is not doing teams meeting but reimagining your business in the context of the digital disruption either in Ecom, supply chain, or manufacturing. CFOs have to become digital natives, i.e. understand technology better than the technologist and translate the same for your internal stakeholders. In the FMCG space, we are now entering the decade of digital brands. It will accelerate. Historically the adage was we will get to the next 100k customers through increased reach. Now the question is, how do I get the next 100k customers to get to my products through the digital medium.
You have witnessed the financial transformation at Wipro Enterprises since your association from 2014, what are some of the landslide changes in the practises you adopted since the pandemic that will earn a place in all future plans going forward?
Being nimble in thoughts and actions can propel one to growth when one is faced with a black-swan event like pandemic. I experienced transformation of finance in three aspects.
First, being the accelerated collaboration with business teams in enabling plants continue to run and supporting New Product Introduction.
Second, transform within by digitizing processes, compliances like inventory count, with increased/better data analysis and connecting/organizing better continuously. Once having tasted success with this transformation my view is whether pandemic or nor it is irreversible.
The last being ‘skill transformation’ of the finance team with increased digital quotient which has created openness to accept technological changes.
As liquidity gained precedence during the pandemic, what were the areas most affected by the strategies around spend management and cost cutting?
I had said this before if the company was frugal before the pandemic, it would help them navigate better. Our cost lines did not have too much fat but we relooked at al line items of cost to either avoid/ renegotiate or rationalise. This task was carried out across multiple units/ geographies.
As a corporation, we have little debt, and our balance sheet is well funded. It was vital for us to ensure that we are deeply connected with our suppliers and distributors to work together in the ecosystem to tide over the hiccups. On the B2B side it became important for us to track collections across the spectrum.
On project business, there were deferrals and delays both on the supply side and customer side. We needed to plan adequately for the same, and some of the units required help tiding over any short term deficits.
When it comes to future investments, what is Wipro Enterprises’ best bet emerging from the recovery phase?
Our philosophy has been simple – Bring intensity in the short term and consistency in long term. Over the past few years, we have made forays into various businesses – viz, Aerospace, 3D, industrial automation and have made strategic acquisitions in our FMCG business for example, our entry into Philippines through Splash in Philippines and Canway in South Africa.
We will continue to grow and diversify in similar spaces, and are driven more by strategic consideration rather than any short-term gain of profit or revenue aggregation. About two years ago, we also created our Corporate venture fund in FMCG to understand how to work with and support startups in their journey, to learn and share our practices that can help them. We have created an SPV in Israel to invest in startups in the Industrial Automation space. This is under the aegis of the Israel innovation fund driven by the government. In a nutshell, we want to be ahead of the curve in thinking, understand global and local factors and internalize them for building a sustainable and solid portfolio.
Given the speed of change for the past few quarters and the certainty of crises altering consumer behaviour, what are some trends you envision to take centre stage in the coming quarters particularly in consumer care?
The pandemic has accelerated a latent trend that was already there. The age digital is the new medium – one can segment and target specific consumers efficiently and effectively. In the medium-term, E-commerce is expected to overtake modern trade this is because of the choice and convenience.
We see the emergence of ‘Omnichannel’ where players play both in online and offline. Even Amazon has started opening and experimenting with this. How digital-only brands can scale up remains to be seen at least in the Indian context. Overall the all FMCGs players will target the share of the wallet of the customer. One key element from an India standpoint how the per capita GDP moves. This will increase the share of premium and niche products.
How did the pandemic accelerate your technology and digital plans for, process, policies and people? What were the technology and digital initiatives that took precedence?
All our businesses are brick and mortar. Very early on in the pandemic we institutionalised across the organization to carry on the business with minimal disruption. This becomes important because one cannot produce soap or a hydraulic cylinder digitally. More than creating new technology, adaptation became wide spread across the organization, with our partners/ with our suppliers. There is a popular misconception that pandemic created newer technologies which is true to some extent but the big pivot was large scale adoption of existing technologies across the globe. The way of doing business has changed permanently and we will never go back. This adaptation has happened in order to cash, hire to retire, source to pay and record to report. People begin using technologies more deeply and we have began sweating the assets.
From a risk management perspective as the concern over cyber security looms, how can CFOs contribute to help mitigate the risk and be a partner with IT in staying ahead in a virtual world?
Wipro has always been deeply entrenched in a good governance backbone, and risk management has been a critical aspect. Having said that, during the year, we took up a very exhaustive corporation-wide risk exercise led by the Chief Risk Officer. A full-fledged risk assessment was undertaken across 25 business units. The top risks for WEL are similar to many others in our line of business as the impact of an economic slowdown.
From a cyber security standpoint we should recognize a new type of financial risk management related to cybersecurity risk as many finance activities are now conducted remotely and using technology. The potential consequences associated with cyber attacks in an organisation make it essential for a CFO to play an active role to understand the cyber risk and reduce them. This is done by bringing awareness at the Board level, ensuring business continuity plans, determining the cost of a data breach/attack and therefore the efforts required to protect our data. I would say 4 call outs on the same
- Highlight the status of Cyber security and actions being taken continuously to the Board and get the necessary management attention and funding
- Ensures Policy development and implementation to address more critical areas
- Regularly reviews of technology risks, mitigation
- Ensuring a readily available plan of action by highlighting roles and responsibilities in case of a cyber security incident
Shifting to a trending topic like ESG- , how do we move ESG interest from a chairman’s message on the financial report to a line on the balance sheet and add more value to it? Do you think companies are taking sustainability reporting seriously? And how can a country like India lead the charge for corporate consciousness?
We have always gone beyond its immediate business objectives to ensure a green, safe and sustainable environment. Our teams are at the heart of our sustainability journey, boosting engagement and advocacy. This has lowered the cost of our operations, making our business more sustainable for the environment. In Wipro Consumer Care business, most of factories maintain Zero Landfill and zero PVC Consumption. We consistently measure our plastic consumption, water & electricity consumption and waste generation and have goals to reduce them systematically. In our Infrastructure Engineering business, we ensure our factories adopted green culture consistently through use of eco-friendly chemicals for cleaning components, we recycle and reuse oil to achieve resource conservation and are a zero polluting industry.
From an adaptation standpoint ESG adoption will have in my mind 2-3 phases. The low hanging fruits where there is economic payback and it makes eminent sense from a organization standpoint like diversity. In the next phase and which can run in parallel , the regulations from the government will come in effect forcing businesses to adopt. This will be trickledown effect of the global protocols that countries have signed up and also community pressure. The accelerated adoption will happen when customers and consumer ask for this (this is already happening across many countries). Organization should get ahead of the curve. Set milestones internally that will help organizations have a competitive advantage of adopting ESG. One size will not fit all businesses. Make it contextual and relevant for your business.