Best CFO Awards 2016-17 | Always In Top Gear
Ajay Seth and his 360- degree view strategies are the reasons behind the success of one of the top auto companies in India
Photo Credit : Ritesh Sharma,
Fifty-seven-year-old Ajay Seth has been at the helm of the country’s largest car maker Maruti Suzuki India for nearly 13 years as its chief financial officer (CFO).
Perhaps, there is no match in the industry for his experience and the long years that he spent in the automotive sector. Seth has been, in fact, associated with the sector for most part of his professional career.
Seth joined Maruti when its turnover was around Rs 12,000 crore. Today, it is over Rs 75,000 crore. In the decade that followed, Maruti’s market cap increased from $5 billion to $31 billion, and the earnings per share rose from Rs 41/share to Rs 243/share, thanks to a variety of steps taken by the company and its management.
As a veteran CFO, Seth firmly believes the strategy for shareholder wealth creation demands a 360-degree focus on the business surroundings, an eye for detail when dealing with concern areas, and an inclusive approach through a mix of technology, business partner support, compliances and value creation insights. Seth has been actively involved with the management of Maruti Suzuki in helping the auto giant reduce costs and increase profitability. For example, the backward integration through merger of ‘Suzuki Powertrain India’ and ‘Maruti Suzuki Automobile India’ with Maruti Suzuki, resulted in cost reductions and increase in profitability through the synergies.
When asked about the expectations from today’s CFOs versus those in the 1980s, Seth says, “Today, the role of CFOs has become much more important than before. A CFO is not just a key managerial person but he is also supposed to look at the strategic bit of the business. He has to network with the management and most of the departments.” Further, on what should be the most important duty of any good CFO, he says, “A good CFO should be capable of giving not just the ‘good news’ to his board but also prepare the board for anything that may adversely impact the company. Also, he should be ready with the corrective actions or measures that will help mitigate that risk.” So what makes a good CFO for an automotive firm? Seth says, the CFO should be well versed with production processes, what competition is doing, the latest developments in engineering and design, etc. “These expectations from CFOs were traditionally not there a few decades ago. Today, it’s a must,” he adds. Since Seth is a product of the Institute of Chartered Accountants of India (ICAI), we had to ask for his views on the quality of education given by the institute. “The technical skills provided by ICAI are excellent and on par with the global standards. There is no doubt about that. But I wish more importance was given to develop softer skills too. If that is the case, CAs can also fit the role of general manager, etc., seamlessly,” he says.
Encouraged by his plain speaking, we decided to pose perhaps the biggest question that gets discussed behind closed doors in board meetings. Can CFOs become better CEOs? Seth says, “Of course, they can.” Do you aspire to become one, we asked? “Everyone does. And why not?” He offers his rationale too. “A CFO is interacting with every department of the company and over time he knows a bit of everything. So he makes for an important contender or an aspirant for the post of CEO,” he adds.
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