Perhaps on a different day, business today's India's best CFO might have been Dabur India's Rajan Varma. Rajan who? Well, that might have been one of the reasons for Varma not making it to the top slot. Yes, he's worked miracles for Dabur--and that's no exaggeration, as you will realise when you read about his initiatives at the fast moving consumer goods major-but not too many in the Mumbai investing community (analysts and fund mangers) have had an opportunity to meet the man. That indeed may not be Varma's fault, but on another front where Varma fell short would be scale and complexity of operations. Whilst both Tata Motors' Praveen Kadle and Varma scored maximum points for their deliverables, what eventually turned the tide in Kadle's favour is the sheer breadth and depth of Tata's finance function-which includes intense treasury and working capital management as well as big-ticket fund raising and deployment. On the M&A front, both Kadle and Varma have been neck deep in deals, but once again, what would have worked in Kadle's favour is the challenge of structuring the deal for the Daewoo heavy trucks acquisition and, thereafter, his role in integrating it successfully into Tata Motors. Varma, too, had his hands full with the Balsara acquisitions, but they were smaller than the Daewoo one.

Another contender for BT's Best CFO award was Alok Agarwal, CFO, Reliance Industries. Anybody involved in the placement of a 100-year bond in the US markets and who raises multi-currency loans a dime a dozen (well, almost), should be an automatic shoo-in, at least till the shortlist. But you might have guessed why Agarwal didn't quite make it to the top slot: Yes, it's the poor track record of corporate governance at the conglomerate, much of which spilled into the public domain last year. As for the others, T.V. Mohandas Pai of Infosys has set such high standards for so long now that people have come to take it for granted, Tata Steel's Kaushik Chatterjee, perhaps, could well be tomorrow's best CFO, and S.G. Joglekar might just be lost in the towering shadow of the Kalyanis. Still, you can't take away from what Joglekar-and all the other CFOs on the final list-has achieved. We at BT salute them. Here are their profiles, in no particular order.

T.V. MOHANDAS PAI
47/Infosys
Beyond Numbers

If your idea of a bean counter is somebody with a droopy frame, who is sparse with words and heavy on the numbers, T.V. Mohandas Pai, 47, CFO, Infosys, doesn't quite make the cut. With a six-feet-three-inch, rugby-player frame, a booming voice and an opinion on most subjects, Pai is far removed from the traditional image of the humble scorekeeper-accountant honcho.

If numbers alone were to do the talking, Pai has an impressive story to share. In the past four years (the period under consideration for this study), Infosys has grown its top and bottom line at a compounded average growth rate in excess of 35 per cent. Return on capital employed and return on equity have always been in the 40s and high 30s. And the company's standards and benchmarks on the transparency and disclosure fronts are top notch. "It is almost like being on auto pilot," grins Pai. "We continuously work towards ensuring that it remains so."

When you become the beacon for others to follow, it's unsurprising that the usual metrics used to gauge CFOs-working capital and long-term capital management, clarity of accounting, investor grievance redressal, et al-get dismissed as "hygiene issues", which are perforce expected. Pai asserts one ought to look beyond numbers. And it's here that Infosys under Pai has set several new benchmarks.

Infosys was the first Indian company to receive a rating from Standard & Poor's that was higher than the sovereign rating accorded to the country. "We were not looking to raise any debt. In fact, we were (and still are) sitting on a huge cash pile. What we wanted to do by opting to be evaluated for this rating was to indicate that India must have a better rating than what had been given to it," says Pai. The success of its $1-billion or Rs 4,500-crore ADR receipts in the secondary market, which attracted bids worth $8.5 billion or Rs 38,250 crore, is another feather in Pai's cap. For the last 10 years running, Infosys has picked up the award for transparency and corporate governance handed out by the Institute of Chartered Accountants of India. It was the first Indian company to go in for sox (Sarbanes-Oxley) compliance. All this success has not come easy. In his role as the CFO, Pai spends 75 days on the road each year, travelling all over the world meeting key institutional investors and analysts.

These days Pai is being increasingly seen as a strategic advisor to CEO Nandan Nilekani in the quest to take Infosys to the next level of being a global it player. Pai already handles the infrastructure requirements of an organisation growing at a furious pace. In the past decade, Infosys has built 10 million square feet of property and it will be adding 3.5 million square feet this year alone. "We are the second largest builder in the country," says Pai. As land acquisition becomes more controversial, Pai has deftly handled the fallout by becoming the public face of the company in these matters.

Pai is Chairman of Progeon, the it-enabled services wing of Infosys, which is also growing rapidly. He is also a director in charge of human resources, reporting to the board. That's a huge challenge considering that Infosys is recruiting and training almost 1,000 people every month. "We have extremely competent people. I only help in policy and setting the direction," is Pai's modest way of putting it.

In addition to these internal roles, Pai sits on a number of external committees. He is a member of the Narayana Murthy Committee on Corporate Governance, SEBI's Accounting Standards Committee and the it Task Force of the Prime Minister, to name just three. "While my internal roles are a part of my job, what gives me tremendous satisfaction is the work I do, in helping set standards in openness, transparency, disclosure and corporate governance norms. For instance, we worked in drawing up ESOP (employee stock option) guidelines for ADRs as well as guidelines for framing of insider trader regulations." This fiscal, he would have spent close to 45 days in helping the Finance Ministry make the tax information network comprehensive.

Also involved in running and managing the 'Askhay Patra' scheme-which feeds 3.25 lakh less privileged school children a mid- day meal-Pai has donated Rs 9 crore of his personal wealth to the cause. Numbers-and their crunchers-aren't always cold.

-Venkatesha Babu

ALOK AGARWAL
49/Reliance Industries
Treasure Hunter

At the core of Alok Agarwal's work ethic is a rather simple philosophy, reflective of the stature of the company at which he works: That if you are doing what everybody else is doing, then the organisation you work for could be any run-of-the-mill organisation. But if you are continuously striving to do things that are newer, better and smarter than everybody else, that's when you will be able to make a difference to yourself and the company you work for. The results of that mindset are amply clear in the performance of the company: Reliance Industries, India's largest business house with consolidated revenues of close to Rs 1 lakh crore, equivalent to roughly 3.5 per cent of India's GDP. CFO Alok Agarwal also reflects that can-do-better spirit: He's the man responsible for making Reliance the first Asian corporate to issue 50- and 100-year bonds in the us debt market. Reliance is also the first Indian private sector company to be rated by international credit rating agencies. "If you are working for Reliance, you must be able to do something smarter than others. We are smart, opportunistic and believe we have to improve on what we have done before," says Agarwal, matter-of-factly.

There's a first time for everything though-even for Agarwal. "This is the first time I am meeting someone from the media and it's been five years since I shot my last photograph," he grins. An IIT (Kanpur)-IIM (Ahmedabad) alumnus, Agarwal is the man who's ensured that the treasury of Reliance keeps humming, and the cash that its mega-projects guzzle, keeps coming. "I have three challenges-one people related, second how to manage our balance sheet and the third is to manage the investor franchise by communicating the consistent long-term growth story of the company, primarily in the oil and gas space and the sustainability of its strong position in the petrochemical business."

Reliance has been the darling of its shareholders-3.1 million at last count-ever since it made its first initial public offering in 1977. In the last 15 months, even as fears of shareholder value destruction gained ground in the midst of the battle for ownership and control of the group's assets between brothers Mukesh and Anil Ambani, Reliance has succeeded in rewarding investors. In the past 15 months (between December 31, 2004, and March 13, 2006), market capitalisation has surged 37 per cent to a little over Rs 1 lakh crore. In addition, investors also get shares in four other companies that are now controlled by the younger brother, courtesy a recent demerger.

Yet, the recent past has been a challenging period for Agarwal, who spent most of his time conveying the Reliance growth story to international and domestic investors. The message was clear: The battle for ownership notwithstanding, Reliance was here to stay, and here to grow by pursuing the right opportunities-which currently includes the farm to retail game plan, gas exploration (where the company is investing close to $500 million or Rs 2,250 crore annually), and a new mega-refinery, in which Rs 1,000 crore has already been sunk (as of end-February). The philosophy running through all these projects is pretty much the same that has been followed over the decades: Think Big, derive benefits of integration, value-add and execute impeccably. For the CFO, the job has been to keep raising the greenbacks to fuel such projects-either via syndicated or multi-currency loans, or euro-issues or euro bond convertibles or even domestic IPOs. Reliance Petroleum will soon storm the market with a mega $1.3-billion or Rs 5,850-crore offering to fund the Rs 27,000 crore, 27 million tonne, export-oriented refinery in Jamnagar. Last month, Agarwal raised $750 million or Rs 3,375 crore via syndicated loans for the refinery project, the cost of which is estimated at $1.5 billion or Rs 6,750 crore. Early this year, the company also raised $348 million or Rs 1,566 crore syndicated loan for refinancing two existing higher cost loans. "We are conscious about raising money ahead of time so that our projects don't suffer due to lack of liquidity."

Agarwal's unforgettable moment doubtless is the issue of 100-year bonds in 1996-97. "Three unforgettable moments for me at Reliance are the 100-year bond, the sterling bonds (Reliance Industries had issued sterling bonds worth £150 million or Rs 855 crore then with institutional investors in the UK through a 10-year offering) and the European private placement among three-four investors done in 1996. They're still pioneering, and the fact that 10 years later, no Indian company has been able to repeat something like that means fundamentally it was path breaking," says Agarwal, who headed the treasury of an international bank before joining Reliance.

Mention of the Reliance treasury in Mumbai market circles is greeted with awe. Analysts point out a significant part of the refinery project will be funded by the treasury, which contributed Rs 1,000 crore to Reliance via sale of investments in 2004-05. Market sources also conjecture that around half of Reliance's investments could be in equities in the current market scenario. Going forward, Agarwal is cautious about the current global liquidity position, as he forecasts rising inflation courtesy of strong global economic growth. "It's time to be little more defensive and conservative. Access to capital market won't be as cheap as historically." Should Reliance worry? You probably guessed the answer to that. "Capital will be available for the group, given its track record. I don't really worry about it." Neither do over 3 million shareholders.

-Mahesh Nayak

RAJAN VARMA
56/ Dabur India
Capital Man

There were no nail-biting, almost-not-there moments for Rajan Varma, CFO, Dabur India, during the negotiations for the acquisition of three Balsara group companies last financial year. It was a deal where both the buyers and sellers were clear and quick. Between November 2004, when the idea surfaced, and January 28, 2005, when the two boards approved it, there was hardly a slip.

Varma, however, made up for it with enough anxious moments after the public announcements during the budgeting exercise for the acquired units in February and March. "Here we were budgeting, setting targets for the next financial and there was no means of verifying the background information," Varma recalls. Certainly, a CFO's nightmare! To add to his anxiety levels, there was an added detail. In a bid to close the deal quickly, the Dabur team had negotiated for a lower price in return for complete upfront payment with any post-deal liabilities devolving on to Dabur. The brief then was clear that the Balsara units had to sell from day one of the merger becoming effective, that is April 1- less than 90 days from the finalisation of the deal. "Those were tough times. Lots of planning, skills of speed and execution were needed," Varma recalls. Varma had a team parked in Mumbai for almost six months to iron out the glitches, the integration work took off at a furious pace. Common distribution and sales forces and common back-end for the sales were put in place. Training sessions were held for the integration of enterprise resource planning software.

Balsara provided Dabur with a sizeable presence in the oral care segment, which was a strategic thrust area for the company. "Our expectations were exceeded in terms of the speed and the problem-free manner in which the integration took place. The complete integration was a fairly complex job which went off quite smoothly," says CEO Sunil Duggal, who is all praise for Varma. The turnaround was dramatic: The acquired units, which were believed to be making losses to the tune of Rs 30-40 crore, were doing profits of Rs 7-8 crore by December, nine months post-acquisition. "We not only had fancy plans, but we executed them very well," quips Varma, who believes the turnaround in Balsara and the benefits that accrue in terms of cost reduction, far exceed the capital invested. The entire Balsara acquisition of Rs 143 crore was funded through internal accruals, with only a small short-term borrowing of some Rs 20-odd crore. Such conservative funding arrangements for the acquisition ensured that Dabur's robust capital structure was protected.

Varma can also take credit for the pretty numbers on the Dabur report card. Supply chain improvements and the commissioning of manufacturing plants in excise-free zones have helped drive up operating and net profit margins. Net working capital, which was negative five days of sales in 2003-04, was pulled down further to negative 20 days of sales a year later. That's helped drive up the return on capital employed into the 40s, from just 16.6 per cent four years ago. Return on net worth, too, is in the impressive 40s territory. Shareholders have been kept satisfied, the recent investment compulsions notwithstanding, with a dividend payout and a recent 1:1 bonus. S. Balasubramanian, Head of Corporate and Infrastructure Ratings at credit rating agency CRISIL says: "Dabur is expected to show continued improvement in its financial profile and in sustaining its strong business position."

As a final flourish in rising up the ladder of the most admired companies, Dabur is pushing aggressively in setting benchmarks in transparency and corporate governance. Dabur is one of the few companies in India to be coming out with a mid-year review and sending out copies of the document to its shareholders. It was also amongst the handful of companies to have volunteered for corporate governance rating a few years back. Just one of those small things, but enough to spread the good word around.

-Shalini S. Dagar

KAUSHIK CHATTERJEE
38/Tata Steel
Of Mint And Metal

Last November, as B. Muthuraman, Managing Director, Tata Steel, was about to leave his first floor chamber at his Jamshedpur headquarters for a dinner meeting, a bit of great news trickled in. Global ratings agency Standard & Poor's had promoted Tata Steel from bb+ to BBB (this enables the company to access global funds at much more competitive rates). Significantly, the rating was two notches higher than the country's sovereign rating. The upgrade meant the steel giant could access global funds for its various expansions, new projects and acquisitions at lower costs and with fewer hassles. A beaming Muthuraman was quick to pick up the phone and call on the members of his core team who were instrumental in this achievement. One of those few good men would have to be Kaushik Chatterjee, Vice President (Finance), at the Rs 16,000-crore TIS (Tata Steel and its subsidiaries) group.

To be sure, Muthuraman has genuine words of praise for the 38-year-old financial whiz-kid. "He carries a mature and balanced head on his young shoulders and will go very far in India's financial and business community." In the near term, of course, the managing director wouldn't want Chatterjee straying too far off Tata Steel limits. That's because Chatterjee has been keeping himself busy raising cash and structuring M&A deals in the recent past. On the back of the upgraded rating, Chatterjee lost no time in raising $1 billion or Rs 4,500 crore at competitive rates late last year. He was also a key member of the group that worked on the international acquisitions of National Steel and Millennium Steel.

Mobilising foreign currency at competitive rates, achieving higher credit rating and cross-border acquisitions are Chatterjee's prime responsibilities. A commerce graduate from Kolkata's Goenka College of Commerce and a qualified chartered accountant by training, Chatterjee has learnt to love these challenges after an 11-year stint with the Tatas. He is on the board of several companies, including Tata Refractories, Tata Services, The Tinplate Company of India, Dhamra Port Company, NatSteel Asia Pte Ltd, Singapore, and Southern Steel Berhad, Malaysia.

Chatterjee these days is one of the select few spearheading the thrust to transform Tata Steel from a relatively small Indian company with a marginal foreign presence into a global behemoth with footprints in at least seven countries, including Bangladesh, Iran, China, and parts of South East Asia. This will involve a capital outlay of a whopping $23 billion (Rs 1,03,500 crore) over the next 10 years. Chatterjee will clearly have to work over time in identifying targets, structuring deals, and raising cost-effective funds.

He has the experience to take on such onerous responsibilities. Chatterjee re-joined Tata Steel as Vice President (Finance) in August 2004, but his tryst with the metals giant dates way back to 1995 when he was part of the core team of the Managing Director, then J.J. Irani. Called the Synergy Group, this team was engaged in executing new projects, joint ventures of Tata Steel subsidiaries and associates as well as in assessing the viability of large projects. "All that was like interactive learning for me," muses Chatterjee, who also did a stint at Tata Sons' Group Executive Office in 1999 after moving from Tata Steel.

Married to a child psychologist and father of a three-and-half-year-old son, Mumbai-based Chatterjee has one regret. He wishes he had more time to teach and groom young executives at institutes like XLRI (where he taught corporate finance between 1996 and 1998). Once he's raised a few more billions for Tata Steel, he'll perhaps change his mind.

-Ritwik Mukherjee

SANJEEV JOGLEKAR
48/ Bharat Forge
Fun With Figures

His company has been on a global acquisition spree over the past few years, but you won't see Sanjeev Joglekar, Vice President (Finance), making the front pages too often. But don't let that delude you that Bharat Forge's CFO has little or no role to play in the M&A mania that's been under way at what's now become the world's second largest forgings manufacturer (that's right behind Germany's Thyssen). "My biggest financial challenge is to manage the tremendous organic as well as inorganic growth. This entails raising large amount of funds, the right mix of fund-raising and managing the overall costs of borrowings and judicious allocation of these funds," says the chartered accountant.

If that doesn't impress you, Joglekar's clean-up on the balance sheet front perhaps might. In 2001, Bharat Forge's return on net worth was 8.83 per cent. Four years later it had surged to 47.2 per cent. The net working capital cycle fell from 35 days to a negative 36 days in the same period. Shareholders have also been amply rewarded, with the market capitalisation rising 24 times since April 2002. Last fortnight, Joglekar was in China with the Kalyanis (the promoter family) to complete the regulatory formalities following the joint venture between Bharat Forge and Chinese company FAW Corporation, in which the Pune-based company will hold 52 per cent. Indeed, Joglekar is CMD Baba Kalyani's lynchpin when it comes to evaluating JVs and M&A. "The three acquisitions we did were all cash transactions, but we had restricted our investment to about 25-30 per cent of the deal size. The balance funds were raised via a combination of non-recourse debt in the acquired company and its cash flows," says Joglekar. Now you know what's keeping him busy.

-Mahesh Nayak

METHODOLOGY
How We Did It
The rigorous methodology behind Business Today's Best CFOs study.

The panellists: (Sitting left-right) Manish Chokani and Motilal Oswal; (Standing left-right) Prabhat Awasthi and Nilesh Shah

This is the second edition of Business Today's India's Best CFOs-last year the winner was Bharat Doshi of Mahindra & Mahindra-and there wasn't much deviation from the methodology of the previous year. Do remember that the financials considered when making the shortlist are for the four years up to 2004-05. Hence, also, the cfos were judged largely by their contribution to their respective companies-in terms of conceptualising, structuring and executing M&A deals, raising capital, and treasury management, to name just three areas-in that period. So, don't be surprised if you don't find CFOs who pulled off great feats in calendar year 2005 on any of the lists. Judging the CFOs involved maintaining a fine balance between the numbers, tangible contributions and market perception. That's why, akin to last year, a three-stage process was followed:

We started by identifying 386 companies-that's the number of companies common to the BSE 500 and the NSE 500-and their financial data for the four years up to 2004-05 was pulled out. Financial services firms were excluded because it is difficult to separate the role of the CEO and the CFO.

STAGE I: Data Analysis

To ensure that CFOs across sectors can be compared, we focussed on four significant areas:

Long-term Capital Management

A CFO's main responsibility is to generate return on capital, measured as return on capital employed (ROCE) and return on net worth (RONW). For our study, the CFO should have been able to show consistent improvement on both parameters. The survey considered the ROCE and RONW for 2004-05 as well as improvements on each over the past three preceding years.

Working Capital Management

A CFO should be able to keep inventories under check and extract more from creditors than he concedes to debtors. The net working capital cycle effectively captures this. Again, the survey considered latest year's net working capital cycle as well as improvements over the past three years. In cases where this parameter is not relevant (for software firms, for instance, it isn't), it was not considered, and weightages of the other parameters were increased.

Cost Reduction

CFOs also advise the top management on efforts that could reduce overall costs, thereby, improving margins (especially at the operating profit level). The survey considers the latest full year operating profits margins and improvements over the previous three years.

Accounting Efficiency And Transparency

This is an important role of the CFO and one proxy for this is the speed at which the companies finalise their accounts and conduct the annual general meeting. Again, the survey considers data on this front for the four years up to 2004-05.

STAGE II: Market Survey

Based on the scores the 386 companies received on these parameters, the top 50 with the highest scores were selected. In Stage II, Business Today appointed market research firm Synovate to survey the investing community nationwide (predominately brokers and fund managers) on a variety of issues related to the companies the 50 CFOs work for. Those surveyed were asked to rank the companies across 10 parameters: Appreciation in stock price, enthusiasm for dividends, speed with which investor grievances are addressed, clarity of accounts, quality of investor communication, access to company (for the analyst and fund manager community), quality of senior management, quality of financial management, and performance compared to peers. Companies were assigned an indexed score between one and five on each parameter (with five being the maximum score possible), and the average scores were totalled for each company. A median for each parameter was set, and only companies above that median across all 10 parameters were eligible for the final round. Nineteen companies and their CFOs made the cut.

STAGE III: Panel discussion

This is the stage at which the tangible achievements of the finalists were married with their impressive report cards for their respective companies. If ROCEs and market cap appreciation were working in favour of the CFOs, their record at innovative capital-raising, treasury management, originating M&A as well as in providing strategic direction were taken into account. A four-member panel met up in Mumbai's Taj, Colaba, and brainstormed for over two hours over who should be BT's India's Best CFO. The panel comprised Motilal Oswal, Chairman, Motilal Oswal Securities, Nilesh Shah, Chief Investment Officer, Prudential ICICI, Manish Chokani, Director, Enam Securities, and Prabhat Awasthi, Head (Research), Brics Securities. After sifting through the shortlist of 19, the panel was pretty unanimous on which CFOs deserve to make the finals. Six CFOs were picked out for their roles in providing respectability to their company numbers, as well as for playing pivotal roles in their growth strategies. Picking out a winner from the six wasn't a simple task, however. Soon, the shortlist had whittled down to three, with Alok Agarwal of Reliance Industries, Rajan Varma of Dabur India and Praveen Kadle of Tata Motors gracing the list. Agarwal, who easily handles India's largest treasury, could have been the winner but for his company's recent lapses in corporate governance and perceived lack of transparency. Varma almost made it, but the panel felt that the scale and complexity of Dabur's operations weren't in the league of most of the other finalists. Kadle won the big prize for his significant contribution to Tata Motors' turnaround, its subsequent surge, and the CFO's consequent growth in stature.

Few should have any complaints with that.