Introduction
Ravi Nedungadi, President and group CFO of United Breweries Group, has steered the India-based brewing and aviation group through a number of major acquisitions. He is proud to have resisted the hard-sell tactics from investment bankers to get into exotic derivatives before their valuations tumbled. He was the youngest student ever to qualify in the final of the chartered accountancy exam at the age of 20. Early positions at industrial companies were followed by a move to UB Group in 1990 as corporate treasurer. Two years later, Nedungadi transferred to London as finance director of the group’s international businesses. Appointed president and group CFO in 1998, he has led the way to sharpening the group’s focus on areas of core competence and global reach. Under his leadership the market capitalization of the three principal group companies has grown to US$7.7 billion, up from US$145 million three years earlier. He has many awards, including the Udyog Ratan Award; CNBC TV18’s CFO of the Year M&A (2006); the CNBC Award for India’s best CFO in the FMCG & Retail Sector (2007), and the IMA Award for CFO of the year (2007). He lives in Bangalore, India, with his wife and two children.
Success for CFOs
Success means different things to different CFOs. This is because the solutions finance directors come up with are largely determined by the strategic goals of their organization, and the particular challenges of the sector and markets in which they operate.
In our own case, managing rapid growth in India’s burgeoning economy over the past two decades has given our finance function some sharp lessons and made us acutely aware of the importance of remaining focused on customer satisfaction.
In the light of the spectacular implosions of some previously highly respected institutions in the banking sector and elsewhere over the course of 2008 and 2009, the importance of putting customer satisfaction—rather than the pursuit of short-term profits—at the center of the organization’s business processes has been highlighted in the most dramatic way.
When our organization first began to develop an international dimension 20 years ago, it was a conglomerate. One of my first lessons was the importance of achieving a sharp focus for management and strategic thinking, since it is next to impossible to devise a coherent group-wide strategy for a conglomerate. The importance of thinking about what was core and what was noncore, and deciding where your strengths as an organization lie, were very obvious in that sort of structure.
After I became group CFO, we set about selling off noncore assets and focusing on two very clear business lines: alcoholic beverages and Kingfisher Airlines. Both are positioned in the consumer arena.
There were two major lessons from these changes. The first concerns the importance of establishing and maintaining strong brands. The second is that you will get the behavior you reward.
Regulators around the world are now taking on board the fact that what undoubtedly helped to create last year’s banking disasters was a reward structure based on a very short-term and partial view of profits. If you reward exuberant greed, you get exuberant greed.
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