Category: Leadership

5 Questions posed by CFO South Africa

http://cfo.co.za/profiles/blogs/promotion-for-olam-cfo-bikash-prasad-an-interiew

What will your new role look like?
 Olam is present in Africa since 1989 and the continent continues to be strong pillar for Olam’s business with invested capital of over US$ 2.5 billion. Being an agri-player and devoting ourselves to becoming a large part of ensuring food security solutions to governments in Africa, we are heavily invested in upstream, midstream and downstream opportunities in Africa. We have various investments in Africa like farming (coffee, rice, palm, rubber), flour milling, sugar milling, edible oil refineries, forestry concessions, cotton ginning, cashew processing, cocoa processing, coffee processing, fertilisers, sesame hulling, tomato Paste processing, biscuits and candies factories, logistics and storage assets, rice and dairy Products and packaged foods business. Olam has been recognised as the biggest company in agri and food in Africa.

We believe Africa is poised to become the food producer for the world. Having the lowest yield currently compared to other producers globally (only 25% of total potential yield on average as compared to 90% in East Asia), there is an opportunity to maximise yields and production through up skilling agronomics, improved fertilisers application, technological innovation, financing, infrastructure and public-private partnerships.

With our current massive investments on this continent and future growth plans, it puts significant responsibilities, challenges, as well as offers opportunities for me.

The new role will involve ‘Building One Africa Finance Team’ and:

  • Capital raising and capital allocation.
  • Optimise the balance sheet and improve returns to shareholders.
  • Participating in all the key strategic choices and decision-making.
  • Becoming growth champion for Africa and leading mergers and acquisitions, joint ventures and public-private partnerships.
  • Manpower planning and capability building – leading and directing a diverse, multicultural and multilingual finance team of over 250 members consisting of expatriates and nationals in 24 countries across Africa. The challenge is to drive localisation, develop pipeline of talents and create cutting edge capabilities within the team to handle the our integrated value-chain operations.
  • Protecting and creating value through managing risks proactively in ever volatile economic environment in the emerging markets be it commodity prices, currency or credits. Understanding of global and African macro- economic indicators is key to manage these risks effectively.
  • Creating standardised systems and scalable processes across Africa to enhance controls and support the business requirements. We believe these systems will contribute significantly to the quality of our data and analysis which will allow us to constantly maximise our efficiency and add value to the company.
  • Driving corporate governance of highest order.
  • Value-added business partnerships and impactful engagement with stakeholders

2. What do you consider your greatest achievement in your previous role?

  • Restructuring businesses, exiting tail profit centres and re-investing across value chain to be able to handle the volatility that happens in the commodity markets like our business.
  • Improving operating efficiencies by reducing overheads, recalibrating pace of investments, focusing on working capital and fixed capital productivity. All these initiatives resulted in huge profits growth across my region.
  • Localisation – One of my achievements was to get deeply entrenched in the countries and economies in which we operated and one of the best ways to do this was to maximise on the local talent in these countries and thereby overcome barriers such as language, culture on the softer side and manage the legal, regulatory, political and business environment more skilfully to ensure our success. To do this I actively nationalised my finance team and have created an African Talent Pool to which we are constantly adding through our various in country initiatives and our Africa Finance Trainees program. These trainees have now become managers and have also been afforded the opportunity to work in different countries in our region. This not only expands their skill set, but also brings in fresh new ideas, experience and set of skills in to our finance team.
  • Setting up a macro-economic research desk to improve processes and take actions/decisions proactively.
  • I was requested to present in various trade and commodity finance conferences and CFO Conferences.

3. What do you hope to achieve in 2016?

  • Review the existing finance organisation for Africa, identify the weak links and make necessary changes at expatriates and national level. Continue with the next batch of Africa Finance Trainee Program to create pipeline of talents. Standardise performance management and capability processes across Africa.
  • Review the businesses in geographies and assess the need for restructuring, rebalancing the portfolio considering the risks, capital employed and potential returns.
  • Complete implementation of SAP across Africa before the close of 2016.
  • Standardise financial close processes and monthly/quarterly reporting to internal/external stakeholders across 24 countries and over 40 legal entities.
  • Fully leverage on macro- economic research cell to manage risks better in view of latest global volatility impacting adversely the businesses.
  • Improve internal controls and processes through standardised schedule of authority and policies.
  • Finance transformation and ”Building One Africa Finance” which are collaborative, shares the best practices with cutting edge capabilities.

4. Which issue dominated the agenda of the CFO now more than ever?
 The last 12 months have seen extremely volatile economic environment globally and Africa is no different. The crash of crude oil price, turmoil in Chinese economy, strengthening of US economy, challenges faced by Greece and other EU countries and the dollar to euro exchange rate have been few of the drivers causing the volatility globally.

The local currencies have lost their values in most of the African countries (ranging from 30% to over 100% except the francophone countries where the local currencies are pegged to Euro) and prices of commodities have seen the lowest levels. This has impacted most of the businesses in Africa and dominated the changed agenda and focus areas for the CFOs. The issues are now:

  • Currency management.
  • Price risk management, counterparty and credit risk management.
  • Increase in inflation and hence the cost of borrowings.
  • Cost reduction to improve the operating efficiencies.
  • Challenges on compliance as the revenue authorities are looking at new ways of raising finance from corporates.
  • Industries are looking for consolidation and hence prompting M&A and JVs.

5. What can CFOs learn from each other?
 There are lots of areas of mutual interest where CFOs can collaborate, share their experience, learn from each other and protect or create value for their respective organisations. Potential areas of collaborations are:

  • IT systems for transactions processing and reporting – experience sharing on implementations, benefits, precautions.
  • Business analysis and reporting.
  • Key processes/controls on debtors, stocks, creditors and fixed assets.
  • Meeting authorities/policy makers on common areas impacting the businesses.
  • Benchmarking on compensations for key finance managers, performance management processes and team management processes.
  • Risk tracking, measurement and mitigating with specific focus on currency management.
  • Sharing macro- economic trends and outlook with impact on businesses.
  • Transfer pricing methodologies and documentation.
  • Trade finance and structured products.

Passion for Africa : An interview with CFO South Africa

http://today.moneyweb.co.za/cfo-article?id=560249#.WEQfimxMo2w

A conversation with Bikash Prasad always includes exclamations like “I am passionate about Africa” and “we are very bullish about the continent”.  The finance wizard, nominated for the 2015 CFO Awards, readily dishes up facts and figures about Africa’s economic opportunities. “Olam’s investment in Africa in the last five years is over a billion dollars. It is humongous.”

When Bikash took over the CFO role for agri-business Olam International in Southern and East Africa three years ago, things were tough. He restructured the existing operations in the region, closed down tail profit centres and managed to reduce overheads and risk exposure.  The capital released as a result was reallocated to expand the value chains through organic and inorganic investments to balance the product portfolios in the region. Bikash also modernised IT and localised the finance teams in African countries, getting rid of superfluous expats. Being active in the agri-sector, Bikash believes Africa is the world’s food provider of the future with “young people, urbanisation, the rich mineral resources and better governance” the key to the continent’s potential.

Having joined Olam in 2006 in Cameroon before moving to Ghana as finance head for West Africa three years later, Bikash knows what he is talking about. He moved to Durban in 2012 to head up South and East Africa and since July he is CFO for Africa. Bikash is a longtime supporter of CFO South Africa, so we were extremely happy to speak him at length about his role at Olam, his approach to change management and the ups and downs of investing in African countries.

What were the challenges when you moved down to South Africa for Olam International?

“When I took over the regional CFO role for South and East Africa three years ago, the region was going through extremely tough times due to high dependence on cotton with prices at rock bottom. We had lost people at senior finance level, had extremely high operating leverage and an expat-dependent structure. Our systems were still catching up to support our new business models and not many businesses were very attractive.”

“After understanding this, I immediately started the strategy recalibration exercise along with the business heads and came up with a restructuring plan that involved exiting tail and non-performing profit centres, reducing overheads and reducing risk exposure. As difficult as these decisions were, we are already seeing the benefits of our strategy for the overall growth in value of the company. After implementing the changes, all the regional clusters have been turned around.”

Changes are often met with resistance. What were the toughest decisions you had to take?

“I had to convince the team to let go of 20 expats, 200 local staff and 5,000 temporary workers. It was a difficult period, but it helped in bringing down the overheads by 35%. The second tough decision was to start a localisation drive. We were very expat driven in pockets, but I find it very important for continuity and stability to have national talents.”

How have you gone about changing your finance team?

“I have actively tried to nationalise my finance teams and have created an African talent pool which we are constantly adding to through our various initiatives, like our Africa finance trainees programme. These trainees have now become managers and have also been afforded the opportunity to work in different countries in our region. This expands their skill set, but also brings in fresh new ideas, experience and sets of skills into our finance teams.”

“Over the last two years I have consolidated my finance team and geared it towards a more regional focus, allowing for cross sharing of skills and experience which has positively impacted all our businesses and the region as a whole. I have completely standardised reporting, systems and processes across the countries. I insist on market visits for all the finance team members, so they can develop better business understanding.”

What improvements can still be made?

“We aim to stay ahead of the game and have already started to build an Africa-wide tax function, where we are implementing processes and controls which may not currently be on individual countries’ tax agendas but which we believe will eventually top the list in the next five to ten years. We are also in constant conversation with the Big Four accounting firms to understand the key trends on the continent and which tax regimes are the most well-structured and efficient, so that we are geared towards the changing tax environments in each of the economies in which we operate.”

What is the role of technology in your finance team?

“It is very important, especially with our current value chain expansion. We have successfully implemented SAP in South Africa, Cameroon, Ghana, Senegal and Mozambique and are laying it out in the rest of the region. We believe these systems, which are linked to our BI platforms, will contribute significantly to the quality of our data and analysis which will allow us to constantly maximise our efficiency and add value to the company and its decisions.”

What is your recipe for success?

“I believe in standardising processes and reporting, because it makes reviews easier and more effective. I like working with teams, but also have a very good technical understanding myself. Before I go to sleep each night I spend 45 minutes reading about things like accounting and best practices. I interact a lot internally and externally. All of that improves my understanding and learning.”

You handle M&A, joint ventures and green field projects for Olam, making you almost a chief strategy officer. What are the prospects in Africa?

“Africa is a strong pillar for Olam’s business with invested capital of multi billions. Africa has 60% of available cropland in the world and higher GDP growth compared to developed economies. The rising middle class presents an opportunity for customer facing industries, which is why Olam has invested in packaged foods. I think the high percentage of young people, urbanisation, the rich mineral resources and the attempts towards better governance are holding the key for Africa.”

“Africa is poised to become the food producer for the world. Having the lowest yield currently compared to other producers globally – only 25% of total potential yield on average as compared to 90% in East Asia – there is an opportunity to maximise yields and production through upskilling agronomics, improved fertiliser application, technological innovation and PPP. Corporate farming firms will increasingly support small holders, thereby reducing poverty and improving farm productivity, which is very low today. As Olam we do this for many crops, including coffee, rice, rubber and edible nuts.”

“Our biggest successes are probably flour milling, packaged foods business and plantations. We bring the best technology in the world and get the best teams. Our sourcing capability and risk management are unparalleled.”

How do you keep up-to-date with opportunities and pitfalls in Africa?

“We operate in 24 countries in Africa and we work very closely with tax authorities and governments. We try to understand what their priorities are. I also subscribe to various publications and speak with various stakeholders across Africa on a regular basis, such as bankers, business managers and finance managers. I also attend and actively participate in various trade and finance conferences, CFO conferences across the continent and internationally, where topics related to our business are discussed.”

How have you organised your African finance function?

“We have four clusters: Eastern, Central, Mozambique and South Africa. They have cluster CFOs and the senior leadership comprises of 25 people. We now have a healthy mix of nationals and expats. Our routine accounting and reporting has been outsourced to Olam Global Business Services in Chennai, India. This allows my team to focus on value-adding roles and to become a trusted business partner.”

What misunderstandings do South African CFOs have about investing in other African countries?

“If you talk to CFOs, the perception is that infrastructure is very bad, but it is actually quite good compared to many other places in the world. There is also the often-repeated fear of huge amounts of corruption, security issues and political insecurity. Many of these fears are exaggerated. Corruption risks, for example, are entirely different per country. In countries like Ethiopia it is not bad at all and in other countries you can actually help governments fight corruption. In Ghana, for example, Olam has come with suggestions to curb illegal trade.”

Which three African countries would Bikash invest in?

“I would choose Gabon, Ivory Coast and Ghana. The new government in Gabon is very pro-investment. They are looking to diversify from oil, gas and timber. They are really promoting investments. As Olam we have established a special economic zone with them with all sorts of tax holidays. The opportunities are mind blowing. Ivory Coast might look scary from the outside, because of the recent political unrest, but inside the country there is a good climate for investors. Ghana also remains a good destination. While there are some economic challenges in the last few years, it is a great country with very friendly people and a pro-business climate.”

Role of CFO : “Forecasting and budgeting are more crucial than ever”

http://cfo.co.za/profiles/blogs/bikash-prasad-cfo-olam-international-forecasting-and-budgeting-ar

How do you perceive the role of the CFO has changed in the last five to ten years?
The role of CFOs has changed from a bean counter to strategic business partner, from accounting to decision-support and strategic planning.

Due to emergence of various international financing tools, increased focus on cost control for survival due to cut-throat competition, FP&A for informed decision-making, risk management processes in the most volatile times, stricter corporate governance requirements, investment decisions and M&A due to existence of both opportunities and threats have completely changed the profile of CFOs in and expectations of organizations from them.

How do you see the role of the CFO evolving in the next five to ten years?
The role of CFO has already started evolving from accounting to business support. In coming years, CFOs would play even a bigger role right from designing strategies for the businesses to its full implementations. CFOs may be called as CVOs (Chief Value Officer), being the custodian for preserving and creating values for the organization.  We may also see a time when there would be no month close exercise but online availability of financials all the times through advanced applications and implementations of IT systems.

Would you say that accurate forecasting and budgeting is still feasible for a financial department in today’s tumultuous financial markets?
In the current volatile times with the squeeze on resources (working capital, fixed capital, risk capital etc), forecasting and budgeting would be more crucial than ever. The limited resources will have to be deployed with proper budgeting and allocations amongst various BUs to get maximum returns and productivity. Cash is king in credit crunch scenarios and hence cash flow forecasting would be vital to plan and properly utilize the financial resources.

We deal with volatility in credits, currency and price using the Value at Risk model by putting risk limits in terms of both quantum and tenor. Use of derivatives and hedging techniques are must to handle these volatilities.

Which skill(s) do you think a finance professional should master to be most successful in his work? Please give an example when these skills are an absolute requirement.
I would suggest following skills to become successful in our career –

a)      Domain Knowledge of finance
b)      IT savvy
c)       Full understanding of business models and insights
d)      Stakeholders relationship (internal as well as external) and excellent communication skills
e)      Leadership and People skills
f)       Continuous up gradation of knowledge

Which achievement or project in your business career are you most proud of?
I feel excited about the number of M&A projects handled and closed by me in OLAM, right from identification of targets to project feasibilities to valuation to DD to deal closure and finally post merger integration (PMI). This helped my region to grow exponentially and leave behind the peers.

The other critical achievement was to get my company in Ghana the BEST TAXPAYER AWARD for 2011 by Ghana Revenue Authority through high level of corporate governance, valuable inputs to authorities resulted in increase in their revenues etc.

Please name something – a procedure or process for instance – that was implemented in your company before you were appointed CFO, which you changed after you took the position of CFO.
After I took over as Regional CFO, I revamped the financial closing and business support processes through implementation of new software developed in-house with the help of our central IT division. This ensured standardized reviews (whether a new FC/FM in the organization or a veteran) through defined checklists for financial closing. It further ensured standardized reporting across products and across geographies.

It also had features as group consolidations, web-based applications, central repository, and Excel look and feel with multiple views, process completion attestations, and online business support reports. This was implemented across organization after overcoming the initial resistance to change.

Who is your role model in life and why?
I respect Mahatma Gandhi and Nelsen Mandela for their dedication, focussed approach, outcome orientation, optimism, demonstration of great leadership and people skills, clear communications, politeness but with firmness. If we follow these traits and the approach in our lives, we can achieve what we want to.

What vital piece of advice would you give young ambitious finance professionals?
Take yourself seriously in all the jobs assigned to you, work with integrity and required aggression, develop business understanding, be a good listener with your team and develop mutual trust,keep yourself updated with latest happenings in the finance world.

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