Mr Kaushik Chatterjee (right) with Mr B Muthuraman In conversation with Mr Kaushik Chatterjee, Vice President, Finance, Tata Steel

Tisco News : What is the impact of global growth on Tata Steel finance functions and will the role of a finance person change in Tata Steel with the shift in the focus?

KC : Over the last decade, Tata Steel has focused its effort on building a world class company oriented around its Jamshedpur operations. As we are now focusing on growth in other geographies in India and overseas, based on the de-integration philosophy, the challenges for executing growth would be immense.

The finance function is the central nervous system of any organization. The pace of growth of the Company in the next 5-6 years would be very different to that of the past and, therefore, we need to migrate to a different business model for the finance function. There will be specialist functions within the function in the areas of transaction processing, financial reporting, treasury management, corporate finance and taxation. The landscape for the function will change significantly – both geographically and in complexity.

Therefore, the change management process in the finance function will have to accelerate further to take on future challenges. The capability and robustness of the finance process would become very critical to the organisation.

TN : In simplified terms, does it mean that, it also has to point out to the management the direction which should be taken or the path in which it should try to grow?

KC : The finance function has to act as the true trustee of the shareholder. The investors, including FIIs, rely on the financial reporting standards of the company to invest in the company.

By virtue of the role, the function on one hand is to reflect on the transaction integrity of the organization while also acting as the business partner of the company in areas of management accounting, financial analysis, foreign exchange management and tax planning.

TN: So earlier the finance professional was more of a commentator but today he actually looks at a canvas which is way beyond the opportunities available earlier, isn’t he?

KC : Absolutely. There are some activities in the finance function today, which were not undertaken earlier. To give you an example – we didn’t have too many people in the company who had experience in due diligence of a target in M&A transactions. Last year when we undertook the assessment for investment in NatSteel there were a group of managers who were exposed to a structured due diligence exercise for the first time. This will become an important part of the function in future.

TN : There are the differences between the accounting or reporting norms in India and overseas today. Will there be a need to rework our practices?

KC : Yes, we have already started our work. With the investment in overseas locations like NatSteel, so we have actually started a programme to migrate Tata Steel’s financial statements to the International Financial Reporting Standards (IFRS). This is a significant move and I would want my colleagues in the function to have a very good knowledge of IFRS.

TN : How important is training in the change management process?

KC : I have been telling my colleagues that the finance function has to accelerate the pace of change and adopt world class standards. In this Company, there has never been a limit to the space given to the managers to improve the processes and imbibe new knowledge. I think change is not something which is outside the job; change is something which is an integral part of the job of each professional. Training enables higher levels of ability and we have actually structured a Finance Gurukul in association with TMDC. The programme brings a balanced mix between technical training and managerial training.

Mr A M Mishra Mr Avinash Prasad Mr Varun Jha Top level moves to tap talent As organisations go global, the most compelling constraint is the quality of human resources. Tata Steel, however, has been fortunate to be able to draw on its own talent to meet its human resource needs, especially at the top management level. Mr Varun Jha, Mr A M Mishra and Mr Avinash Prasad have now been assigned greater responsibilities in the Company’s quest for growth on a global scale. Mr Varun Jha has been designated Vice President, Chhattisgarh Project, Mr A M Mishra, Vice President, Human Resources and Mr Avinash Prasad, Vice President, Industrial Relations.

TN : We do talk about finance for non-finance managers. What is the trend overseas? Will it be necessary for a non-finance person to have some kind of an outlook on financial aspects?

KC : In general the level of finance literacy in Tata Steel has increased tremendously over the past five years. Business demands that you understand the cost dynamics of operations and the impact of pricing. I believe that Tata Steel’s managers today are more finance-literate than in the past.

TN : What about the growth opportunities and will certain amount of work experience be needed?

KC : For young professionals in the Company today, the growth opportunities are significant and exciting. The model of operations of the finance function will change as we migrate to becoming a global organization. It is unlikely that we will have the same model of financial operations in all locations – we are looking at consolidation of certain financial activities across the organization. As the Company grows managers would definitely get opportunities by way of new challenges, more difficult assignments and the opportunities to learn. I think there are almost limitless opportunities for those who are hardworking, diligent and willing to take on more challenges.

TN : Is there a need for the Company to shift focus from accountancy to finance.

KC : I think if you are a good accountant, you will also be a good finance person. It is a question of an individual’s ability to take on unstructured problems, the ability to learn and apply newer tools and techniques. The Company requires both skills and there are a lot challenges in both aspects of the finance function.

TN : It takes us to the question of how actually does the finance function in a steel company compare with more exciting opportunities elsewhere

KC : I think if you look at the challenges in finance function in a growing company like Tata Steel, it is immense and exciting. I would certainly say that if one ranks the opportunities and challenges in Tata Steel versus some other companies, it would rank far higher than what you would have in any other sector or any other company. That is primarily because the company has set itself very challenging growth plans in the future.

TN : How does it compare from the job satisfaction point of view or other career opportunities?

KC : While it is an individual’s career choice, Tata Steel offers significant freedom and space to its managers to take on new challenges and provide opportunities to learn and improve their capability. I believe for a professional this is a very important criteria when planning for a career.

TN : You are one among the youngest CFOs in the Indian industry. How do you feel being the CFO at this point in time?

KC : Being one of the youngest CFOs is not an achievement by itself - Tata Steel has had CFOs who were young in the past - Mr Hussain was appointed as the CFO of Tata Steel at a very young age. The challenge is to ensure that the financial systems and processes reach higher levels of efficiency in the next couple of years so that the organization is able to grow at the pace it has planned. In order to be efficient in a multi- locational, multi cultural set up we would require considerable effort from everybody in the Company to achieve our target.

What is also important is to understand that as the spread of the operations widen, the finance function has to ensure that the governance processes in various geographies continues to conform to the value system of the Company.

TN : With the Company seeking an association with Dr Goldratt, how do you expect the Company to grow?

KC : Dr Goldratt’s assignment works on the Theory of Constraints, which is primarily working on the constraints to seek solutions to enhancement of the level of performance. We would certainly imbibe the philosophy to improve the process efficiencies of the financial operations of the Company.