Top CFOs share insights into how tech is enabling smooth processing in the metal and mining industry
Innovation is something which each and every business in the metal and mining sector really needs to look at to survive because the market is heating up.
May 10, 2021 / 12:05 PM IST
It is an opportune time for businesses in the metal and mining sector as following an aggressive infrastructure push, robust government policies and reforms, rising competition, per capita consumption, and much more, the industry is poised to grow exponentially. It is estimated that the production capacity of steel alone could jump from an estimated 128.6 million tonnes in 2021 to 300 million tonnes by 2031.
To capture growth opportunities, businesses will have to draft short to long-term strategies, use intelligent systems, and re-imagine finance functions to enhance the pricing environment including other operations. Here, the role of Chief Financial Officers (CFOs) becomes prominent as they look at improving processes with technology and skilled workforce.
To discuss the present opportunities, what companies are doing and how technology can help in forecasting, Moneycontrol and CNBC-TV18 held The CFO Speak: Unlocking Opportunities in Metal and Mining where top CFOs discussed Re-inventing Finance with Process, People and Technology.
During the insightful discussion, industry stalwarts Sonam Donkar, CFO, Vedanta Limited (Aluminium and Power Business); Anurag Mantri, Group CFO, Jindal Stainless; Amit Harlalka, Deputy CFO, ArcelorMittal Nippon Steel India Limited; and Keval Shah, Director – Industry and Customer Advisory – ERP and Finance, India Sub-Continent, SAP spoke to CNBC-TV18’s Manisha Gupta about growth in domestic and international market, business partnering and enhancing digital footprint.
Speaking about uptick in demand, Harlalka said there is a lot of potential in the sector whether it is exports or meeting domestic requirements.
“The COVID-19 situation has thrown up challenges and opportunities for the business in the metal and mining sector. The transition from the first lockdown to the mini lockdowns has been phenomenal. The journey of the commodity and metal and mining business, which is an international commodity, we seen a significant uptick in terms of pricing environment overall globally mostly driven by supply constraints and demand recovery. This has thrown up a lot of opportunities in short, medium and long term for the business,” said Harlarka.
Experts said technology plays a significant role in boosting business, risk management and mitigating pricing risk. They said it is imperative to re-invent and ensure executions are done in record time.
“Innovation is something which each and every business in the metal and mining sector really needs to look at to survive because the market is heating up, it is competitive and we’ve seen that over the last decade or so, there has been huge transformation with every company focussing on improved operations. Innovation in terms of analytics, digitally-enabled smart pods, smelters, refineries, use of artificial intelligence, predictive analytics to monitor improved performance, asset optimisation, integrity. You name it and solution is there. Every metal and mining company is investing,” said Donkar.
The panellists also delved into how technology can add value, enhance volume and bring down cost. They said data gathering is automated and now CFOs must conduct predictive analytics from the data.
“Using technology to improve our ROC. It is not only the P&L or margins because in the commodity business your working capital cycles, supply chain, etc. how you use technology in all of these aspects is imperative. When we buy raw material and we have multiple SKUs, which are selling at a different chemical compositions, we monitor on our backend how much exposure we are running on an hourly business. The volatility in the commodities is much higher than the forex. So, if you are not maintaining on a real-time basis, you will run a risk of losing the ROC and even suffer a big blow on your P&L. The data is available now, analytics has to be done,” said Mantri.
Meanwhile, touching upon SAP’s role in finance and business functions, Shah spoke about a collaborative enterprise-wide planning engine and said certain situations will require tremendous amount of collaboration amongst various teams within the company, and to achieve that you really need to have a dynamic planning engine.
“We are seeing profitable growth for our customers in the future in the metal and mining space. A lot of stress is being given on analytics and real-time insights and we continue to work upon these with our customers such that both of these become a reality and really benefit our customers to deliver value to their stakeholders. We continue to also support our customers through the challenges they face in the business with our solutions whether it is cash management, pricing risk, supply chain, etc. how can we manage it better using technology and software,” said Shah.