The Hindu Business Line : Corporate bigwigs have divergent views on CFOs

IN the past, both L&T and ITC have resisted attempts to wrest management control. But their flavour is as different as chalk and cheese, a taste of it was had at today's CII organised-meet of chief financial officers.

Mr Y.M. Deosthalee, CFO, L&T, setting the theme for the conference said, "The challenge facing the CFO is to transform his office from that of chief financial officer to chief futuristics officer.''

The Chairman of ITC, Mr Y.C. Deveshwar, showed agreement at start. "Everything gets synthesised in the financial dimension,'' he said, before outlining his choice of corporate architecture, different for its slotting of the CFO as compared to that of Mr A.M. Naik, CEO & Managing Director, L&T, who spoke later.

According to Mr Deveshwar, the CFO is the custodian of the company's planning process and its performance management. Many performance drivers do not hail from finance and challenge to the CFO is to integrate these with known financial indicators for an overall picture in the financial dimension. Possibly averaging out CFOs' role in corporate recoveries and scams that left several companies tarnished of late, he cautioned, "The CFO must engage in conservative accounting. It is very tempting to communicate with investors and convey notions of potential value. It is better to convey genuine value.''

The ITC chief stood out for a studied cap to CFOs' roles. Relegating accounting jugglery to a bygone world of regulations, he placed the CFO as part of a team that bothers in the main of three dimensions: the vitality of the organisation (as that decides what it can do); market standing (what the consumer thinks of the company) and profitability (which is a by-product of organisational vitality and market standing). The conductor of the orchestra, is the CEO.

Mr Naik who gave the Aditya Birla Group a tough passage into shareholding at L&T, sketched in contrast a role for the CFO spanning funds management to identifying M&A opportunities to being a protector alongside the CEO against raids on the company. The CFO can make it to the top, time devoted en route to managing individual businesses helping to dilute criticism of his being just a number cruncher.

"I would not give the CFO the driver's seat, just because Mr Naik is so kind,'' Mr Deveshwar said, adding more seriously, "I would welcome a CFO to be CEO, but I would not have a CFO running a business simultaneously because there is a moral hazard in it.'' That, and recent scams which saw only CFOs hang, drew the question — the chief internal auditor reports to the CEO, not the CFO. So, why should not the CFO report to the board and not the CEO?

Mr Deveshwar conceded, there has to be balance, but not at the expense of creativity. "There is no substitute for personal integrity and personal example. There has to be check and balance but also unity of command,'' he said.

The spirit of sparring was alive when Mr Sumant Sinha, President (Finance), Aditya Birla Group spoke afterwards on M&A. Looking at L&T's name displayed on the dais, he quipped, "There is a delicious irony in that I should talk about M&As and L&T's name is written behind me.''

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