5 questions for Bikash Prasad, Olam's new Africa CFO
Bikash Prasad has already been incredibly successful in restructuring and growing Olam International's business in Southern and Eastern Africa, notably striving to employ and develop as many local talents as possible. Recently the first hour supporter of CFO South Africa was promoted to Senior Vice President and CFO for the whole of Africa, still based out of Durban. We asked him 5 questions - here are his answers.
- Bikash Prasad will be one of the speakers during our upcoming CFO event Get Smart in 2016 on 23 February in 2016 at Summer Place in Hyde Park, Johannesburg. REGISTER NOW!
1. What will your new role look like?
Olam is present in Africa since 1989 and the continent continues to be strong pillar for Olam's business with invested capital of over US$ 2.5 billion. Being an agri-player and devoting ourselves to becoming a large part of ensuring food security solutions to governments in Africa, we are heavily invested in upstream, midstream and downstream opportunities in Africa. We have various investments in Africa like farming (coffee, rice, palm, rubber), flour milling, sugar milling, edible oil refineries, forestry concessions, cotton ginning, cashew processing, cocoa processing, coffee processing, fertilisers, sesame hulling, tomato Paste processing, biscuits and candies factories, logistics and storage assets, rice and dairy Products and packaged foods business. Olam has been recognised as the biggest company in agri and food in Africa.
We believe Africa is poised to become the food producer for the world. Having the lowest yield currently compared to other producers globally (only 25% of total potential yield on average as compared to 90% in East Asia), there is an opportunity to maximise yields and production through up skilling agronomics, improved fertilisers application, technological innovation, financing, infrastructure and public-private partnerships.
With our current massive investments on this continent and future growth plans, it puts significant responsibilities, challenges, as well as offers opportunities for me.
The new role will involve 'Building One Africa Finance Team' and:
- Capital raising and capital allocation.
- Optimise the balance sheet and improve returns to shareholders.
- Participating in all the key strategic choices and decision-making.
- Becoming growth champion for Africa and leading mergers and acquisitions, joint ventures and public-private partnerships.
- Manpower planning and capability building - leading and directing a diverse, multicultural and multilingual finance team of over 250 members consisting of expatriates and nationals in 24 countries across Africa. The challenge is to drive localisation, develop pipeline of talents and create cutting edge capabilities within the team to handle the our integrated value-chain operations.
- Protecting and creating value through managing risks proactively in ever volatile economic environment in the emerging markets be it commodity prices, currency or credits. Understanding of global and African macro- economic indicators is key to manage these risks effectively.
- Creating standardised systems and scalable processes across Africa to enhance controls and support the business requirements. We believe these systems will contribute significantly to the quality of our data and analysis which will allow us to constantly maximise our efficiency and add value to the company.
- Driving corporate governance of highest order.
- Value-added business partnerships and impactful engagement with stakeholders
2. What do you consider your greatest achievement in your previous role?
- Restructuring businesses, exiting tail profit centres and re-investing across value chain to be able to handle the volatility that happens in the commodity markets like our business.
- Improving operating efficiencies by reducing overheads, recalibrating pace of investments, focusing on working capital and fixed capital productivity. All these initiatives resulted in huge profits growth across my region.
- Localisation - One of my achievements was to get deeply entrenched in the countries and economies in which we operated and one of the best ways to do this was to maximise on the local talent in these countries and thereby overcome barriers such as language, culture on the softer side and manage the legal, regulatory, political and business environment more skilfully to ensure our success. To do this I actively nationalised my finance team and have created an African Talent Pool to which we are constantly adding through our various in country initiatives and our Africa Finance Trainees program. These trainees have now become managers and have also been afforded the opportunity to work in different countries in our region. This not only expands their skill set, but also brings in fresh new ideas, experience and set of skills in to our finance team.
- Setting up a macro-economic research desk to improve processes and take actions/decisions proactively.
- I was requested to present in various trade and commodity finance conferences and CFO Conferences.
3. What do you hope to achieve in 2016?
- Review the existing finance organisation for Africa, identify the weak links and make necessary changes at expatriates and national level. Continue with the next batch of Africa Finance Trainee Program to create pipeline of talents. Standardise performance management and capability processes across Africa.
- Review the businesses in geographies and assess the need for restructuring, rebalancing the portfolio considering the risks, capital employed and potential returns.
- Complete implementation of SAP across Africa before the close of 2016.
- Standardise financial close processes and monthly/quarterly reporting to internal/external stakeholders across 24 countries and over 40 legal entities.
- Fully leverage on macro- economic research cell to manage risks better in view of latest global volatility impacting adversely the businesses.
- Improve internal controls and processes through standardised schedule of authority and policies.
- Finance transformation and "Building One Africa Finance" which are collaborative, shares the best practices with cutting edge capabilities.
4. Which issue dominated the agenda of the CFO now more than ever?
The last 12 months have seen extremely volatile economic environment globally and Africa is no different. The crash of crude oil price, turmoil in Chinese economy, strengthening of US economy, challenges faced by Greece and other EU countries and the dollar to euro exchange rate have been few of the drivers causing the volatility globally.
The local currencies have lost their values in most of the African countries (ranging from 30% to over 100% except the francophone countries where the local currencies are pegged to Euro) and prices of commodities have seen the lowest levels. This has impacted most of the businesses in Africa and dominated the changed agenda and focus areas for the CFOs. The issues are now:
- Currency management.
- Price risk management, counterparty and credit risk management.
- Increase in inflation and hence the cost of borrowings.
- Cost reduction to improve the operating efficiencies.
- Challenges on compliance as the revenue authorities are looking at new ways of raising finance from corporates.
- Industries are looking for consolidation and hence prompting M&A and JVs.
5. What can CFOs learn from each other?
There are lots of areas of mutual interest where CFOs can collaborate, share their experience, learn from each other and protect or create value for their respective organisations. Potential areas of collaborations are:
- IT systems for transactions processing and reporting - experience sharing on implementations, benefits, precautions.
- Business analysis and reporting.
- Key processes/controls on debtors, stocks, creditors and fixed assets.
- Meeting authorities/policy makers on common areas impacting the businesses.
- Benchmarking on compensations for key finance managers, performance management processes and team management processes.
- Risk tracking, measurement and mitigating with specific focus on currency management.
- Sharing macro- economic trends and outlook with impact on businesses.
- Transfer pricing methodologies and documentation.
- Trade finance and structured products.
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