 India's best CFO says next year will be challengingPublished on Wed, Nov 18, 2009 at 08:58 | Source : CNBC-TV18 Updated at Mon, Nov 23, 2009 at 11:35 110426 Investors following Larsen. Share this News with them.
Here is a verbatim transcript of the exclusive interview with YM Deosthalee on CNBC-TV18. Also watch the accompanying video. Q: What are the challenges for a CFO in these uncertain times? A: From an external perspective, life has improved. Today there is abundance of liquidity, so from the point of view of raising money, especially in the domestic market, it is reasonably simple now. Of course the international market from a debt perspective is still to open up. But overall the liquidity situation is quite comfortable but that doesn't mean that internally the life has become easy. The job that the CFO has to do to drive value in the organization continues. It is actually going on with much more vigor now because of the turmoil, which we faced last year, organizations have become much more alert now in terms of managing cash and in terms of creating value, in terms of improving productivity. Overall, internal challenges are continuing. I hope that this external ease will last for a few more months and next year is going to be challenging. Q: Why you think next year is going to be challenging? Are you worried about the external environment? A: There is one point, which we must understand that today the credit off take in the domestic market is pretty low. Therefore all the infrastructure projects are getting financed reasonably easily. However, if you look at all the projects, which are under varying stages of finalization and financial closure, six-months from now lots of them would get financially closed. My concern is that banks will reach their exposure limits. And if that happens then we are going to have serious problems because we need substantial amount of funding from the domestic system because in international markets I don't think there is an appetite for pure project finance transactions. So from an infrastructure financing perspective, next year is going to be a little challenging unless the Reserve Bank of India (RBI) or the regulatory authorities ease the norms for funding of infrastructure projects. There are various things, which they can do. So if they relax some of these guidelines then things will be okay but otherwise or come April we are going to have some problems. Q: There is possibility that the RBI might even go and increase the rates because of the way inflation is going. How do you read the interest rate scenario? A: As far as interest rate scenario is concerned, it is directly connected with the inflation environment in the country. RBI is seriously worried about inflation. You've seen tremendous amount of food price inflation today. So the RBI is sensing some problems in the months to come. Infact they were going to act in the last time when they revised the policy but everyone prevailed upon RBI and RBI finally decided to postpone. But the fact remains that there is this monster of inflation in front of us. If that really steps up substantially, RBI will have no option but to raise interest rates. At the same time they will have to manage the other problem, which is very poor credit off take. They have to also mange infrastructure financing and also money requirements for capital expenditure and for capacity expansion by the corporates. So I think it's a balancing act that they will have to do. But there is a fear that few months from now there will be some interest rate hike. Q: How is L&T as a company geared up for next year? A: In terms of our needs of financing, we are reasonably well placed. We have raised money from time-to-time - I should say at most appropriate times. Before the turmoil we had raised lot of debt at probably the best possible terms. We made a GDR issue in 2007 and recently we made another equity issuance. So today we are geared up for the next two-years.
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India's best chief financial officers were honoured at CNBC-TV18's CFO Awards at the Turf Club in Mumbai. On the sidelines of the event, YM 
