“The expectation from a CFO has changed dramatically”

“The expectation from a CFO has changed dramatically”

In his first week as CSS Corp’s CFO, Veerasundar Veluswamy had to oversee the company’s transaction with Partners Group and in successfully doing so, his impact was immense. Today, he believes in adding value to the organisation by partnering with business groups and offering forward-looking solutions

POORNIMA KAVLEKAR

When Veerasundar Veluswamy (Veera) joined Chennai-based CSS Corp, a global technology support services company, as its CFO in December 2012, he had his work cut out as within one week after joining the company he was talking to its prospective investor.  Partners Group and other investors were all set to acquire CSS Corp and Veera was instrumental in managing the end-to-end transaction and majority acquisition of CSS Corp by Partners Group for US $270 million. “It was an accelerated learning process,” recollects Veera, as he had to understand what was going on within the company in that short span of one week. He had to talk with authority about the company’s history over the last eight to nine years.

From being an accountant, over the last 25 years, his role as a finance professional has seen a sea change. He has become a part of the key management team and partners with the various business groups. He has spent a lot of time with MNCs like DuPont, Intel and Ford during his career and has had international stints. During the course of this experience, he realised that he needed a new skill set. In 2008 he started focussing on mid-sized companies in turnaround situations.  Narrating his experience, Veera says, “I was a part of Intelligroup’s (since acquired by NTT Data) core group, along with the CEO and CFO. There was negative cash and no one funding the company. Its EBIDTA was negative and it had very low valuation.” Within two years, he and the core group turned around the company and it was sold off for a valuation of US $200 million proving exit for investors with threefold appreciation.

The expectation from a CFO has undergone a sea change. He/she is no longer the bean counter or the guy who is going to publish the results. A CFO is supposed to partner with business groups.

After this stint, Veera moved to the U.S. and later returned to join CSS Corp. Currently, CSS is close to US $170 million in size and aspires to become a US $500 million company.

Partnering for growth

Talking about his experience during the Partners Group acquisition, Veera narrates, “There were three groups involved – The buyers consortium (led by Partners group, Capital Square Partners, etc.), lenders consortium, as we had taken leveraged debt and exiting shareholders and minority shareholders and the transaction had to be closed within the exclusivity window. I had to balance the interests of all groups and offer a win-win solution for all.”  At the time, Veera also was responsible for financial remodelling and says he learnt a fair bit about the importance of collaboration during an acquisition process.

Changing times, changing expectations

“The expectation from a CFO has undergone a lot of change. He/she is no longer the bean counter or the person who is going to publish the results. A CFO is supposed to partner with business groups and prepare the company for the future,” says Veera. He/She invests lot of time with the business heads trying to understand the competitive landscape.

A CFO is obviously also responsible for profitability and hence, needs to have an insight on the order status of the company as he cannot have people where business is not forthcoming. Accordingly, tracking of metrics like revenue per person, utilisation and project profitability are critical. “All this means that my role is forward-looking and it has to actively facilitate the business,” he says.

Veera also finds the need to stay connected with technology. He believes that a CFO needs to understand both the market and the technology trends to be able to add value. “For example, I can talk about BYOD (bring your own devise) enterprise solutions that is taking the industry by storm,” he explains.  The company is investing in BYOD enterprise solutions and is getting into connected homes. Currently, CSS is supporting almost 800 products, which are connected.  “I need to understand the environment, work with the CIO to understand the capital and operational costs and whether it can be transferred into a business opportunity,” he says.

In the past, Veera has managed international subsidiaries and has in-depth knowledge of global financial methods. He believes in as many disclosures as possible especially as businesses are becoming global, and firmly adopts this in his current role at CSS Corp.

Expertise in Financial Re-engineering

While at Intelligroup, Veera had structured a financial re-engineering exercise whereby potential high interest cost has been mitigated by way of an interest rate swap (relatively new concept in India).

He had also structured an innovative tax re-engineering exercise whereby the effective tax rate (covering all international subsidiaries) and real cash outflow has been substantially reduced. This was accomplished in Intelligroup by way of complex entity restructuring, leveraging tax treaties, restructuring of operations whereby the effective tax rate reduced from 46 per cent to 18 per cent.

Measuring value

Veera is currently a part of the core team at CSS Corp, driving the vision of increasing the company’s revenues by 2X in three years. And to achieve this, he believes in following a few matrices. One, focusing on the business matrix by increasing the business pipeline. “For a new business, the benchmark is at least 10X. If I’m looking at a growth of US $30 million, my new customer revenue has to be US $3.5 million,” adds he.

Two, judging the average deal size is a very important parameter. “Many times sales people look at the low hanging fruit. The effort that one puts to sell a US $100,000 deal and a US $5 million deal is the same,” says Veera.

Three, tracking revenue per person becomes essential in a non-linear model. “All international centers have to be profitable or at least be cash positive. I don’t expect the centers to start making profits from day one, but they should not burn cash,” adds Veera.

And finally, Veera carefully plays a hands-on roll in preparing forward-looking reports, with respect to how the next few quarters are going to look.

Where to from here?

While Veera’s family lives in Bengaluru (Veera commutes between Chennai and Bengaluru) and he could have found a job in the city, the fact that he was convinced about CSS’s growth potential made him take up this role. He believes that the company will be on a different growth path after two years. The company aspires to hit the US $500 million in the next four years and eventually, become a billion dollar company. “Customers respect us for what we are. We want to have a good margin and state of the art product offering and ultimately be a listed company,” states Veera.

Some of his key learnings during his professional life have been, understanding the importance of collaboration, to add value in whatever position one holds and to think-out-of box. “However, learning is a never ending process and I’m still learning,” concludes a smiling Veera.


QUICK BYTES

If you were to write a book, what would it be?

It will be about education, where the education process will about meeting industry needs. 

What would you have been if you had not chosen this field?

I would have probably become an organic farmer! Hailing from Theni, Madurai, I have been exposed to farming and would have liked the satisfaction of getting connected to nature and making a difference to farmers

Your favourite author

Dan Brown.

How do you unwind?

I spend time with kids. I also like travelling, trekking and cycling. 

Your favourite holiday destination

Kerala. 

CFO CFO Responsibilities CSS Corp Partners Group