Inheriting the wonky books of a government-owned company known for its shoddy service delivery and corruption sagas involving many staff members including the senior management is not everyone’s cup of tea, but the Durban-born CA Suren Maharaj was clearly up to the task. He managed to turn around Pikitup, the waste management company of the City of Johannesburg and turn an organisation with disastrous financials into a success story.
"If I say it was a dog's breakfast when I arrived, it would be an understatement. I kept drilling down and finding new issues."
As Maharaj walks CFO South Africa through his career, it becomes clear that the resilience needed to tackle the Pikitup job was gained during an interesting career in the public and private sectors, with a number of successes and failures along the way. Now he's picking up the pieces in Johannesburg and getting Pikitup on the straight and narrow. Proud as Maharaj deservedly is, when he was young he didn't even want to be an accountant
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"It was my second choice," he admits. "I was in the top 30 of highest matric results in the country that year and my first choice was actuarial science towards becoming an actuary, but in the 1990s the only universities offering such studies were UCT, Stellenbosch and Wits and my parents could not afford for me to go so far away from Durban. In hindsight I have no regrets going the accounting route."
After doing articles at Deloitte in Durban, Maharaj made his way to London doing contract work to "build up international expertise, travel Western Europe and save money". He landed jobs in financial services, banking and the oil and pipeline industry. "Those jobs were all very commercially orientated. That is me as a person," says Maharaj, who on his return joined Motorola as Finance and Commercial Director in Sandton. "In 2002/2003 Motorola was still quite big with their handsets business and it was an excellent time to join. From Johannesburg we were responsible for Sub-Saharan Africa and in 7 years we grew top-line revenue more than threefold and opened regional hubs in Lagos (West Africa), Nairobi (East Africa) and Kinshasa (Central Africa)."
Looking back, Maharaj calls his job at Motorola still his "most fulfilling role", as he had the finger on the pulse of what happened throughout the continent. "Africa was a new territory, with credit risk, political risk and many other unknowns. As telcos (Vodacom, MTN) expanded their footprint into the countries, we as handset manufacturers piggybacked. From 95 percent of business in South Africa, it went to 40 percent, because we grew so much in the rest of the continent. From a $250 million business we grew to close to a billion dollars when I left."
Maharaj was "coerced by a friend to come and help clean-up at Pikitup"
Compared to his current job - which is basically cleaning up the financial rubbish of a company that is cleaning up Joburg's rubbish (and has been rubbish at that in the past) - the Motorala gig was pretty glamorous. "I was on a plane three out of four weeks to London, Singapore or within Sub-Saharan Africa. It was a novelty, travelling business class and 5 star hotels. I was newly married and it did take a strain on my marriage." When Motorola - like Nokia - started losing the competitive advantage, Maharaj's jetsetting days also came to an end. "The bubble burst as our product development people failed to create new, 'cool' products and our market share went south."
The next two adventures were even dicier than selling out-of-fashion mobile phones. At the state-owned enterprise Broadband Infraco, Maharaj was the second employee after the CEO. "I had a negative view of the public sector, but what appealed was that it was a brand new company. From finding an office to employing people, we had to do everything from scratch. It went quite well for about 4 years. National Treasury gave us money, but we had no operating license from ICASA yet, thus we could not sell out products on the open market. Neotel was renting our fibre-optic backbone and we had a distinct competitive advantage over pricing compared to Telkom and others. It took three years to get the operating license. The issue was that the competitors then lowered their pricing and we couldn't compete. We had serious going concern issues from an audit point of view. We had to take huge debt and the whole mood soured."
Maharaj decided to leave that sour mood when he was headhunted to join Primedia, as Group CFO for Primedia Sport. "It was my first role as Group CFO. The fulfilling aspect was that the company was in the sports marketing and hospitality industry, thus you were constantly rubbing shoulders with the leadership of the sporting who's-who, wining and dining the fraternity. However, the Group was losing considerable market share, as we got competition from young trendy companies. I was a victim of retrenchment there."
Subsequently, Maharaj was "coerced by a friend to come and help clean-up at Pikitup", he says. The company was started in 2002, but when Maharaj joined in February 2013 as CFO he was handed an organisation that had been costing the municipality money year on year.
"What appealed to me is the challenge. The company was fraught with fraud and corruption. You name it, it happened. Every year it had growing operating losses, with an accumulated deficit of half a billion rand. There was huge pressure from the executive mayor to stop the bleeding."
The turnaround was a challenge, says Maharaj, indicating that he made enormous headway at Pikitup just by getting the basics right. "We had to get rid of incompetency and malicious fraud. We are now hoping for a clean audit for the past financial year. That would be the first time in the history of the company. I put a temporary band aid in place and a rigorous turnaround strategy to make the company solvent. That was a 5 year plan., but with a lot of pride I can say that 2,5 years later, we have just become solvent. We clawed back half a billion rands, which is nothing short of a miracle."
During his tenure at Pikitup, Maharaj functioned as acting CEO as well for almost a year, while the Managing Director was suspended.
"The CEO was vindicated after a full disciplinary. With more than 17 years post-qualifying experience as a CA, I see myself as a business partner as opposed to an employee of a company, working hand-in-glove to the CEO, providing strategic, operational and tactical direction to ultimately enhance business performance. I perceive myself moving into a CEO role. I want to lead. Everywhere I have worked I have already acted in that position."
Besides putting solid financials in place, Maharaj has also gotten stuck into operational issues that affect the bottom line. "When I joined I had a look at our fleet of compactors. They cost R2 million each and we used 500, which would be a huge asset but we were leasing them on an ad hoc basis and they were often old and in a bad state. I went to the City of Johannesburg to ask them to use their Capex budget to start procuring new compactors. That is saving a lot of money now and improving service delivery. We now own the majority of our vehicles, bolstering the balance sheet."
A clean audit is great, but clean streets are the real mission Pikitup needs to fulfil. Maharaj admits service delivery is tricky but feels he is making a real difference. "We have 5000 employees, of which 4500 are general workers, belonging to a very provocative union. It is a very volatile environment. The potential for the guys to strike is rife. The victims are you and I, when our bin doesn't get picked up."