The Government of India helps entrepreneurs with good ideas by providing loan though the MSME scheme. Please visit the MSME site for more details. MSME also provides training and adequate support in helping to do all the required paperwork to make it easy for the entrepreneur to start the work with ease as one point window system. MSME, has evolved into preferred facilitation destination for both potential and existing Entrepreneurs by means of synergised initiatives in a Public-Private Partnership mode (PPP).

 The example of 108 emergency ambulance services is a classical example of PPP. The vision is expected to enhance the competitiveness of the existing enterprises, contribute towards sustainably establishing more number of potential enterprises, accelerate the employment generation, contribute towards economic growth and provide highly skilled Man Power to industries. There are many schemes released by Government of India to help entrepreneurs succeed.

 Guidelines for Market Development Assistance on Production Scheme

• Guidelines of Scheme for Assistance to Training Institutions 
• Scheme of Surveys, Studies and Policy Research 
• Scheme of Surveys, Studies and Policy Research – List of Agencies as on 26.08.2010
• Surveys/Studies conducted under the Surveys, Studies and Policy Research Scheme
• Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
• Rajiv Gandhi Udyami Mitra Yojana (RGUMY)
• Implemented through NSIC
• Marketing Assistance Scheme
• Performance and Credit Rating Scheme
• Implemented directly by Ministry
• Scheme of Surveys, Studies and Policy Research
• Guidelines of Scheme for Assistance to Training Institutions
• Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
• Rajiv Gandhi Udyami Mitra Yojana (RGUMY)

 Implemented through NSIC

• Marketing Assistance Scheme
• Performance and Credit Rating Scheme
• Implemented through KVIC
• Guidelines of the Market Development Assistance (MDA) on Production Scheme
• Prime Minister’s Employment Generation Programme (PMEGP)
• Product Development, Design Intervention and Packaging (PRODIP)
• Khadi Karigar Janashree Bima Yojana for Khadi Artisans
• Interest Subsidy Eligibility Certification (ISEC)
• Scheme for Enhancing Productivity and Competitiveness of Khadi Industry and Artisans
• Workshed Scheme for Khadi Artisans
• Implemented through Coir Board
• Rejuvenation, Modernization and Technology Upgradation of the Coir Industry.

 These are various schemes that are available for new entrepreneurs through Governmental Schemes and if they have the credentials with a good educational background these loans can be secured.

Globally, in every market, retail companies form part of the top 10 richest, most valuable companies. Retailers (e.g. Walmart) are part of the Fortune 500 list. Retail, whether brick and mortar, or e-tail is also a ‘long tail game’ – the business has a long gestation period and needs deep pockets of capital. However, once scale is created, the financials “tip-over”, the business becomes cash-positive and provides immense profitability.  Beyond this stage, it is  considered as a ‘cash-cow’- as global investors such as Warren Buffet and George Soros will testify.

In India, Reliance Retail is probably the closest to this tipping point. Other players including the e-tailers are in the ‘capital hungry’ mode.  The CFO conclave 2014 looked at what retail CFO’s can do during this journey to maintain the health of the company, in the quest to eventually creating wealth.

The event was attended by 150 people, including RAI members and academic partners.

The highlight of the event was the speech by Devdutt Pattanaik – the mythologist who used Jain mythology to profile the three types of roles that CFO’s could play: that of a “Vasudev” – who is action driven, that of a “Chakravarti” (who is rule driven) and that of a “Tirthankar” – who is thought driven. The Organization requires the CFO to play different roles in different contexts and at different parts of the life-cycle.

STOrai presents quotable quotes and glimpses from the event

Working capital management is a crucial function of a CFO and success of new ideas depend on it. India is an evolving market. People, technology and environment are dynamic and hence, there should be flexibility to manage the change” –  said CP Toshniwal during his Key Note Address. “The regulatory environment poses many hurdles and needs to be relooked – GST is to be brought in, MRP regulation needs to be made relevant, essential commodities act needs a revamp. Too fast growth can be detrimental if the system, process and people do not scale up in line with the rate of growth”, he added.
C P Toshniwal, Executive Director, Future Lifestyle Fashion Ltd.

The ‘predatory’ pricing of e-tailers is a concern, especially because capital continues to be abundantly available” said Ambreesh Baliga, Managing Partner, Global Wealth Management, Edelweiss Financial Services; moderating the panel on ‘Funding in Retail’.

– Ambreesh Baliga, Managing Partner, Edelweiss Financial Services

The panel on Risk Mitigation and Corporate Governance discussed the differences and similarities between Risk management and Corporate Governance

“Risk management can be imposed by management diktat, but Corporate Governance has to evolve from the culture of the company”, said Amar Chintopanth, the panel moderator and Director, CC Chokshi Advisors

For any retail CFO, expense management is about the Big 3 – Rentals, Manpower cost and Electricity” – said Atul Daga,

Chief Financial Officer, Aditya Birla Retail Ltd; as part of the panel discussion on ‘Managing Expenses in Retail’. – Atul Daga, CFO, Aditya Birla Retail

Delegate feedback showed that RAI’s use of business and inspirational speakers was much appreciated by the audience.

For more information see the ‘download zone’ link on www.rai.net.in/cfo

Below are some of the key highlights from the same:

Working capital management is a crucial function of a CFO and success of new ideas depend on it.

• Think about Business first – whether business is “doable, moveable or executable”.
• In retail, many ideas fail because of working capital management issues.
• New ideas have to be balanced with the risk attached.
• Only money does not make great business.
• India is an evolving market. People, technology and environment are dynamic and hence, there should be flexibility to manage the change.
• Too fast growth can be detrimental if the system, process and people do not scale up in line with the rate of growth.

Three policy changes which will take retail to the next level – implementing GST, abolishing the MRP concept and the Essential Commodities Act.

• GST is to be brought in. It will change the whole landscape in Supply Chain Management in India.
• India Retail has lot of challenges. MRP regulation need to be made relevant.
• Essential Commodity Act is to be relooked at.
• Business ideas may or may not work. But you need to be clear on your capacity & quantum of loss you can bear.

We have terabytes of data but we need to take meaningful & actionable information from this data.

• If merchandise is not replaced then retail shop becomes a warehouse.
• The law of averages does not work in retail.
• Managers have a lot of information with them. Only relevant information should be given to the team so as to not confuse them.
• Pick key metrics and keep communicating them consistently.
• While building your sales, you need to also build corresponding systems & processes.

The discussion on Managing Expenses in Retail has experts from retail industry discussing on the dynamics of managing expenses & improving efficiency.

Panelists in the discussion were:

Moderator: Amit Kumar, Partner, Progress Partners; Neeraj Raheja, Head Finance, Westside; Dinesh Maheshwari, CFO, Future Retail; Himanshu Gupta, CFO, Religare Wellness; Jayesh Patel, CFO, Globus Stores; Vikas Choudhary, CFO, AIMIA; Atul Daga, CFO, Aditya Birla Retail

Opening Remarks

Amit  D Kumar, Partner, Progress Partners

Expense management is not just cost reduction, but about creating efficiency.

Moderator: Amit Kumar, Partner, Progress Partners

•  The biggest component of expenses is RENTALS.
• Expense management in retail has to be about not just reducing the cost but also about increasing the efficiency of the money spent.
• CFO’s have to leverage technology
• Three key focus areas for retailers:
  • Optimizing the cost of Insurance
  • Efficiency in use of power
  • Engaging & retaining employees to optimize manpower costs.

What can be done to reduce cost?

Atul Daga, Chief Financial Officer, Aditya Birla Retail Ltd.

Incentivizing sales by staff can help increase sales & also reduce manpower cost.

Atul Daga, CFO, Aditya Birla Retail

•  Rentals:  Landlords need to showcase value to retailers: – show the CFO how they would be a partner in attracting footfalls.

• Manpower Consider using part-time workers for peak seasons and hours; create apprenticeship programs.
• Use Technology for : Inventory tracking, mapping buying habits, and loyalty programs which are difficult and expensive when done manually.
• Note: Share of revenue from Loyalty members is higher than from non-loyalty members. This single factor justifies technology investments.

Optimizing Costs ?

Dinesh Maheshwari, CFO, Future Retail

Contractual structures – exit clauses, minimum guarantees – these are critical cost ‘lock-ins’

Dinesh Maheshwari, CFO, Future Retail

• Rentals: Evaluate the exit and escalation clause in the rental agreement
  • Negotiate rent –Minimum guarantee structures –based on footfall, location, availability of cinema, food court -are more flexible.

• Technology:
  • Hardware costs are down by 80%, total technology cost is by 40 to 50% compared to previous years.
  • Use this to create greater impact and efficiency of technology spend.

• Electricity:
  • Use cooling tower water for utilizing in cooling.
  • Buy power from the exchanges rather from the Board.
  • Resort to solar power and use power monitors.

• Get expert help in structuring your insurance coverage.
• Customer satisfaction should be the priority.

How can the CFO leverage technology?

Himanshu Gupta, CFO, Religare Wellness

Store level profitability should be used to judge if the rentals are justified.

Himanshu Gupta, CFO, Religare Wellness

•  Use Technology for Training and empowerment of employees
  • HRMS (HR Management systems) help create SOP’s which measure efficiency and quality of service and reduce role stress among employees.

• Use electronic bidding to undertake due diligence on insurance –optimize coverage not just costs. Insurance covers must be reviewed annually, not when a claim rises.

• Use chargeable fixtures: to optimize costs.

• The approach has to be: use technology to make real time data available to each process owner.

How to manage Expenses?

Jayesh Patel, Chief Financial Officer, Globus Stores

Flexibility in providing customer experiences can improve customer engagement.

Jayesh Patel, CFO, Globus Stores

•  Ratio of sales and rental is to be calculated for efficient management and comparison.

• Apart from salary cost other personnel ratios are important.
• Use of technology to control inventory is imperative, the choice is what systems best fit the organizational requirement.
• Check the exclusion and inclusion in insurance policy.
• Green building design/ Led lighting.
• Optimize the high tension and low tension power mix in sourcing of electricity. Uniform power rates is required to ensure smooth functioning and reduce costs.
• Idea is to map the consumption pattern of electricity and accordingly adjust.

Management structures to create customer delight and employee engagement

Vikas Choudhary, CFO,  AIMIA  

Using loyalty programmes can help you reduce your marketing expense & also increase sales.

Vikas Choudhary, CFO, AIMIA

•  Factors to reduce costs and gain customer loyalty:
  • Revenue sharing with the developer
  • Maintain a level of Customer experience
  • Re-negotiate the MG and CAMP charges

• Information is key to decision making. Leverage technology to understand the customer needs and get higher share of wallet from the same rental should be the key.

• Sainsbury’s used technology to drop promotional cost to 32% from 71%. Retail is all about costs. Reduce costs and maintain the same level of service and revenue output.

• Resort to non-monetary benefits such as recognition as against monetary benefit to reward employees. This can be used tactically to reduce the manpower costs.

What are the preconditions for retailers to gain profitability?

Neeraj Raheja, Head Finance and Business Support , Westside

Negotiate rental with mall developer & set preconditions to make developer accountable.

Neeraj Raheja, Head Finance, Westside

•  Calculate and manage using a sales to rental ratio. Also convert and track footfalls to sales – to improve the sale to rental ratio.

• Control attrition because the cost of training etc. is gone once the employee leaves.
• Focus on what the customer wants – e.g. English language skills are expensive and in tier 2 cities, customers are more comfortable with regional languages.
• Use data analytics so as to understand customer behavior and loyalty – push stores towards in-store up-selling, cross-selling.
• Thereby, increase  the revenue without impacting rentals.

From L-R: Amit Kumar, Partner, Progress Partners; Neeraj Raheja, Head Finance, Westside; Dinesh Maheshwari, CFO, Future Retail; Himanshu Gupta, CFO, Religare Wellness; Jayesh Patel, CFO, Globus Stores; Vikas Choudhary, CFO, AIMIA; Atul Daga, CFO, Aditya Birla Retail

The panel discussion had industry experts discussing the aspects of risk mitigation & corporate governance with a focus on synergies & dissimilarities between the two.

Panelists:

Amit Prabhu, Executive Director – Puma

Pratap Swarup, CFO, Bestseller

Riaz Ahmed, Head – Finance, IT and Logistics, ITC – LRBD

S Kannan, CFO – Arvind Lifestyle

Moderator: Amar Chintopanth, Director, C C Chokshi Advisors

Opening Remarks

Amar Chintopanth, Director, C C Chokshi Advisors

We often use Risk Management & Corporate Governance interchangeably. But are they really same?

• Corporate Governance (CG) and Risk Management (RM) are used interchangeably. There similarities and differences are the focus of this panel discussion.  Other questions to debate:
  • RM can be imposed by management diktat – can CG be imposed?
  • For listed companies – CG has been imposed. Can it be done for all companies?
  • How do independent directors influence CG? 

Relationship between Risk Management & Corporate Governance

Amit Prabhu, Executive Director, Puma

Risk Management is an important part of Corporate Governance.

• Risk Management is independent of Corporate Governance. It is also a part of CG.
• For instance, our Bangladesh unit saw an immediate 40% decline in sales, when their factory structures collapsed due to lack of basic risk management structures.
• CG is self imposed.
  • The board is responsible for CG – but the CFO is responsible for compliance.
  • Culturally, Boards and the CFO have to push for the evolution of CG.  Implementing structures such as a “Whistle-blower policy”  is the first step.

 How company can discharge their Corporate Governance responsibilities with the required level of care?

Pratap Swarup, CFO, Bestseller

Risk management is a subset of business. Corporate governance takes care of the entire business.

• Corporate Governance is different from strategy and innovation.
• Balancing between the interest of the various stakeholders is mandatory.
• Strategy is to quantify and qualify risk.
• Analyze the best practices to keep the business transparent.
• CFOs play a major role. They have a reach across various functions. CFOs should have a parallel reporting to the board.

Relationship between Risk Management & Corporate Governance

Riaz Ahmed, Head – Finance,  IT & Logistics,  ITC – LRBD

Corporate governance has been the DNA of ITC.

• Risk  Management is managing the balance of risk and reward. It is a subset of Corporate Governance.
• CG is to be self-imposed. Everyone should have uniformly calibrated moral compass.
• All companies irrespective should come under or adopt codes of corporate governance.
• For corporate governance,  holistic approach &  a change in the mindset is required in the organization.
• Risk management is a subset of business. Corporate governance takes care of the entire business.

It is easy to impose risk management on an organization. Can same be said about corporate governance?

S. Kannan, Sr. VP & Chief Financial Officer, Arvind Lifestyle Brands Ltd.

Corporate governance is like a “movement” – it can be enabled, not imposed.

•   Corporate Governance is like a ‘quality movement.’ – it can be enabled, but not imposed.
•   Currently,  Corporate Governance is seen as a regulatory requirement.
•   In the retail value chain, we are interdependent. A problem at one level effects all. Hence, we should have CG in place to take care of the entire value chain.
  •    Rating of the boards should be done.
  •    Disclosure norms should be uniform and done in a right manner.
  •    We should have CRO (Chief Reporting Officer).

Conclusion

• RM & CG are different.  CG should be in the DNA of the organization.  CG & RM move across the tangible and the intangible such as the Brand.
• CFOs have a significant role within the powers conferred.
• CG takes time to evolve.
• While CFO is responsible for Risk but the CRO is responsible for directional indicators.