Event Summary:

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On 9^th May, Felix Advisory in association with HSBC organized an audio-webinar Role of CFO – Manufacturing Industry During and Post COVID. It was an endeavour to assist finance leaders in driving through the COVID-19 crisis with confidence. The world is grappling with COVID-19 situation, businesses have moved beyond the short-term reactive phase and it has become essential to shift focus from survival to stability with tactical steps to operate in the “new normal”.

The esteemed panellists were Mr. Jogendra Singh, Sr. Vice President, Finance, Hero Corporate Services; Mr. Kapil Sharma, Managing Director, Nippon Oil Pump India & Director, NOP Japan; Mr. Neeraj Jain, Angel Investor, Mentor and ex CFO, Johnson & Johnson; Mr. Jaideep Singh Kalra, HSBC – Director and Regional Head Business Banking, North India; and Mr. Vikas Mittal, Partner – VM Shared CFO Services, Ex. Director Finance & Controls – DSM Sinochem Pharmaceuticals and Mr. Adamya Sharma, Partner, Felix Advisory, was the session moderator.

The session commenced with an opening statement from Adamya Sharma about difficult times we are in and the significant uncertainty attached to it. He highlighted how the crisis and the consequential lockdown, social distancing, work from home, etc. have had affected the manufacturing industry. While service sectors can survive with remote location working however for manufacturing it is impossible to operate without physical resources.

He opined “Cash is King, and CFO is the custodian of cash”, the role of CFO in businesses is expected to increase.

Mr. Jogendra Singh and Mr. Neeraj Jain, given their inputs that now CFOs should play a bigger role in business and explore/evaluate business combination, help to identify new but related products, explore shared resources and productivity should be the key aspect to monitor.

The entire panellist mentioned that the current situation is expected to be there for at least 4 to 8 months and may lead to 10%-12% sales reduction for essential commodity and 30% to 50% reduction for non-essential commodity, the effect may vary sector to sector.

Mr. Jaideep Singh Kalra, enlisted steps CFOs should take to foster the relationship with their banking partners in these situations, emphasise having frequent and transparent interaction with the bank on the status.

Mr. Kapil Sharma suggested that the CFOs should review their Delegation of Authority and customer credit limits.

Mr. Vikas Mittal reiterated the importance of digitalisation and CFO role in current times & Mr. Kapil and Mr. Jaideep joined to put forward their views on digitalisation, its impact on future and how it will contribute to optimising costs.

The panellist also listed the sustainable cost control aspects a company should explore considering the situation and suggested to continue in the post-COVID situations, few of the suggestions CFOs should explore:

• Plant optimisation by implementing round the clock shifts
• Control over marketing spend as suggested to explore digital tool of marking
• Reassess customers credit limits
• Opt for variable cost instead of fixed costs
• Push digitalisation and use of technology
• Help business to implemented product-wise MIS and realign portfolio and efforts
• Critically examine working capital cycle
• Review fixed assets register to see what can be disposed
• Reassess collection process and sales team KPIs
• Long terms vendor contracts

During the above discussion, Mr. Adamya also mentioned that Felix Advisory is already working with clients on the above aspects to explore sustainable optimisation.

Additionally, multiple clients wanted to implement changes in the Delegation of Authority or Zero-Based Budgeting.

Mr. Jaideep elaborated on the products launched by HSBC, which can help businesses, like Export Credit, Supply Chain Financing, and Collection Support, etc.

The panellists, collectively, shared their perspectives on considerations post lockdown, gave inputs to ensure cash inflows by exploring new product lines, new market, new delivery models, realigning product mix and opting for effective collection mechanisms and suggested that the business should endeavour to ensure at least 3-month cash balance by the time operation restart and reach 50% capacity.

In conclusion, the panellists deliberated on expected changes in the way Finance Function works, possible and sustainable cost control measures for new-age businesses and the role of finance to support business in Faster Recovery and Suggested CFO to get involved in scenario building/assessment and keep a close monitoring on cash.

The panellists then addressed different queries of the attendees in the Q&A section of the session. The event concluded with a vote of thanks by Mr. Adamya, expressing gratitude towards the panellists who shared valuable insights and opinions and the attendees who took out the time to attend the event and make it successful.

The event concluded with an interactive Q&A session and a vote of thanks by Mr. Adamya Sharma, expressing gratitude towards panellists for sharing the information and their opinions and the attendees for sparing their valuable time to attend the audio-webinar and make it successful.