CFOs learn new lessons to reinvent job profiles
"In effect, it (the changes) turns around all that we'd learned and practiced in the past many decades," says Seshagiri Rao, CFO and Joint Managing Director of Mumbai-based JSW Group. With a new tax code and changed financial reporting system revamping the financial structure of Indian companies, CFOs will need to take on new roles and create new jobs for specialist functions.
Already, companies are looking at new job functions like that of group heads for taxation, risk and assurance, corporate finance and mergers and acquisitions. "The CFO's role has now become multi-dimensional," says Koushik Chatterjee, CFO, Tata Steel. About 60 percent of Tata Steel's revenues come from outside India, where international financial reporting is followed.
The government is bringing in a wide range of changes starting from the International Financial Reporting Standard (IFRS), a reporting standard that will replace the Indian Generally Accepted Accounting Principles (GAAP) to the new Direct Tax Code for the Income Tax Act, the Goods and Services Tax (GST), the new Companies Act. Most of these changes are scheduled to be implemented after April 2011.
"The changes mean a big challenge to current CFOs. First they have to unlearn everything and then relearn. Then they would have to communicate the changes to all stakeholders," says DD Rathi of AV Birla Group, who was earlier the CFO for the group's flagship, Grasim Industries.
As companies have to rework their business models, CFOs will also have to take into account the impact on product and service pricing due to GST. "This is another area which will prompt review of business models," says Vaibhav Manek, International Tax and Advisory Partner at audit firm KNAV.
Under the GST, where it is proposed to merge central and state tax rates, the costing of every product and service will change. Already the tax holiday structure for special economic zone has come under focus as the Direct Tax Code could take away the benefits.
All CFOs seem to agree that the time has more than arrived for a range of specialist functions within finance, posts which already exist in multinationals but will become critical in India as well. So that's a whole new set of jobs for finance MBA students to aspire for, in the future.
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