The enormous debt burdens of infrastructure companies appear to be taking a toll on their chief financial officers (CFOs). With the heat mounting by the day, many are heading for the exit.
The enormous debt burdens of infrastructure companies appear to be taking a toll on their chief financial officers (CFOs). With the heat mounting by the day, many are heading for the exit.
Subba Rao Amarthaluru, the CFO of GMR Infrastructure, put in his papers last month, a little over a year after his counterpart at Lanco Infrastructure, J Suresh Kumar, quit the company.
Two other CFOs are believed to have renegotiated their roles with their respective managements on “health grounds” and taken up other tasks in the companies.
Such is the pressure, one of the CFOs who put in his papers recently is learnt to have vowed in public that he won’t take up another assignment in the infrastructure sector.
“Most of us handling finance are in our 50s. Added to the age factor, the companies have raised significantly higher funds expecting the sector to perform well. Now, we are facing lenders almost on a daily basis. There is a lot of pressure in terms of bringing out a decent balance sheet every quarter,” said the CFO of a leading infrastructure company with presence in the power and roads sectors.
Stress has mounted over the last two years, as the pressure to bring in more funds or reduce the debt burden is resulting in unpleasant relationships with the promoters of the companies.
“The promoters do not discuss much when they manage to get funds or good returns. As soon as they see funds, they plan for a new project without factoring in the repayments that have to be made for the existing projects. This is putting more pressure on the finance executives,” said the CFO of another leading infrastructure company.
But it isn’t as if only the CFOs are under pressure. Going by sources, other top level executives have also been facing the heat.
“It is a fact that the debt serving versus the performance of a project or the pace of execution have not been matching. That has an effect on almost all the top executives. This across-the-board pressure has been culminating in the CFO’s office,” said the vice-president of finance at another infrastructure company.
“Take the case of a road project. the CFO is able to arrange funds and achieve the financial closure. But, there are various stages in between and approvals has remained a problem area.
The top executives handling this process too have been facing the heat,” he said.
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