An evening with Mr Vijay Gopalan
Introduction
On Friday, August 29, we had an insightful session by Mr Vijay Gopalan, a seasoned finance and strategy leader with over two decades of experience across sectors like aviation, infrastructure, investment management, and integrated business services.
About Mr Vijay Gopalan
Mr Vijay Gopalan is currently the Chief Financial Officer at Entellus Industries—India’s pioneering rare earth metals and alloys company. Previously, he was the CFO of AirAsia India. One of the youngest aviation CFOs globally at the age of 32, he helped build the airline’s financial backbone during its launch years. Mr Gopalan worked closely with the top management: Mr Ratan Tata, Mr Tony Fernandes and Mr S Ramadorai.
Mr Gopalan has been the CEO of Updater Services (UDS), one of India’s largest integrated facilities management and business support companies. He has also been head of Investments at the Tamil Nadu Infrastructure Fund Management Corporation (TNIFMC), and with Asian Development Bank, and held Fractional CFO roles for high-growth portfolio companies. Prior to this he spent almost a decade with Ernst & Young across India, US and the UK.
Mr Gopalan is a rank holder and first attempt Chartered Accountant. He also holds an Advanced Diploma in Marketing and Sales from the National Institute of Sales. Passionate about teaching and mentoring, Mr Gopalan has served as visiting faculty at the Loyola Institute of Business Administration, the Institute of Chartered Accountants of India. He is also a corporate speaker and trainer.
Mr Gopalan’s journey blends financial acumen with creativity. He has been a musician, RJ and even a Tamil film actor. His versatility and constant reinvention make him an inspiring voice on leadership, adaptability, and the future of work.
On the transition from a finance leader to an operational leader.
Running operations is very interesting but a different ballgame compared to managing finance. If a CFO has the flair for it, it's a great move to make.
At the bedrock of any organizational performance lie the numbers. As they say, the numbers don't lie. But the numbers are like geometric shapes: lines, triangles, and squares. The kind of drawing we make out of these shapes lies in the eyes of the beholder. A CFO might see one triangle, four lines, one quadrilateral, two circles, and probably one pentagon. A seasoned CEO might see a nice small house by the mountains.
The scope for creativity in the role of a CFO is minimal, and rightly so. Investors will be worried if the CFO gets too creative in an organization. They would always prefer a grounded CFO. In contrast, the CEO needs to be a lot more creative.
The art of storytelling is fundamental to any leadership role. So, a CFO should be able to explain the journey of the organization to a potential investor. A CFO cannot just call out the EBITDA, the CAGR and so on. The CFO should also be able to explain the context and narrate the underlying story.
The art of storytelling is required in every leadership role, but in the case of a CEO, the art of storytelling and the art of executing that story must be aligned. It calls for a very different bit of flair, a bit of charisma, and long-term vision.
CFOs are trained to have a degree of inherent scepticism. They are the watchdogs of the organization at the end of the day. A marketing professional will be extremely optimistic. A CEO may try to move very fast. An HR officer may be blissfully ignorant of the pitfalls that only the CFOs know.
The CEO should not be reckless but cannot be as overly cautious or conservative as the CFO. In the transition to CEO from CFO, the first step is hire a good CFO who will protect our blindside. This way, we don’t have to wear the two hats at the same time.
CEOs are outward facing. CFOs are often inward facing. If CFOs are aspiring to become a CEO they should start preparing when they are a CFO. They should start meeting customers and understand their pain points. They should start understanding the pulse of the market.
There are certain things that the numbers won't tell us. A good example is the geopolitics behind a particular product. For instance, Mr Gopalan’s company deals in rare earths. Till about 3-4 months back, not many people even knew that rare earths existed.
They appeared as footnotes in the periodic table. Thanks to President Trump's tariffs, and China putting an embargo, the global auto industry came to a grinding halt. Today the entire world is talking about rare earths.
It is very easy to say that rare metal prices have gone up steeply and explain the impact on the EBITDA, and shareholder value. But it is equally important to understand the geopolitics behind the price increase. What does it mean for the industry at large in terms of the long-term growth potential? There is no number to it. But one thing we do know is if countries are going to look beyond China, there's nobody else. Then we will move with a sense of urgency. It is this kind of mindset or personality we need to develop. It doesn't happen one day when we are given the role of a CEO. It must be work in progress from the beginning.
As one of Mr Gopalan’s first bosses told him, if we want to get to a leadership role, we should start thinking like a leader at this stage. We may be in middle management. But we should start thinking about what our different stakeholders expect from us.
On the importance of integrity.
A lot of training for CFOs focuses on the core technical skills, like working capital management, ratio analysis, stakeholder management, board presentations, governance, compliance. But integrity that forms the core for this role, is often an afterthought. Integrity goes beyond honesty, ethics, legal and compliance and governance.
Integrity is crucial for the role of CFO. There is only one CXO role that has a dotted line to the board of directors, which is the CFO. In many organizations, the CFO is the only CXO position that is appointed by the board of directors. For instance, at AirAsia, Mr Gopalan was appointed by the board.
The finance head has a fiduciary responsibility. When the board, shareholders, employees, are speaking multiple languages, people will eventually look up to the CFO to convey the truth as it is.
Integrity is an underrated skill set. At times, it pains Mr Gopalan to know that many CFOs do not even understand that what they are doing is wrong. They may push the provisioning from one quarter to the next to manage EBITDA for that quarter. Or they may push the revenues from one quarter to the next to manage analyst expectations. Today, it has become so common that if we point out it is wrong, they will look at us like we have come from a different planet altogether.
We have invested our lives and careers to become a professional and not a commission agent. We should not be doing disservice to ourselves. As a CFO, the scope for interpreting integrity is virtually zero. Being legally compliant does not make us ethically right. Apartheid was once legal, but unethical. Our conscience should know that what we are doing is right or wrong, and that cannot be silenced by the mind. It is very easy to say. I know I shouldn't be managing revenues like this, but everybody else is doing it. I need to keep up with the changing times. This is how our mind will justify what we are doing. But sooner than later, unethical deeds will catch up with us.
Mr Gopalan was once with a large company. There was a lot of pressure on him to approve a questionable transaction that he wasn't comfortable with. He resigned in response even though at stake was crores of bonus and probably a seat on the board. But Mr Gopalan asked himself: Why did I invest 4 years of my prime life burning the midnight oil, studying CA, one of the most difficult courses in the country. If I do this, can I meet my parents, and share it with them?
Within 12 months, the questionable transaction became the focus of a CBI inquiry. For the next 6 months, Mr Gopalan struggled to find a job. But when the CBI inquiry happened, Mr Gopalan was the only senior person from that organization who slept peacefully.
On becoming successful at a young age
Success at a young age need not be the be all and end all of life. For two years Mr Gopalan was riding high as a CFO, at a young age. But the moment he lost the job, he was a nobody in the scheme of things.
How do we define success? Is it by our salary, designation or car? So, we first need to be clear about what success means to us.
Once we define success, we must ask: What is young age? There are people who have become a CFO at the age of 25. Mr Gopalan became a CFO at 32. He is 45 today but still feels young and has a good 20 years of career ahead. His father was perfectly okay to reinvent himself at 60.
What is success? What is the right age to achieve that success? Once we have become a CFO, do we aspire to become a CEO? After that, should we become the chairman of the board? Then should we aspire to be a chairman of a Rs 1,000 crore company, a 5,000-crore company, etc. Where do we draw the line?
Concluding remarks
As finance professionals, if we are aspiring to go to the corner office, AI, management and other skills, are all needed. But the bedrock is integrity. If there is an integrity compromise, there is no coming back. Other skill sets can be acquired later. But we must develop Integrity from a young age.
When we transition from a CFO to a CEO, the lens with which we look at everything, necessarily must change. The lens moves from numbers to impact, from cash flows to ideas, from CAGR to portfolio growth As a CFO, we will be looking at growth from a sales perspective. As a CEO, we will be looking at it from a business development and new avenues perspective. So, there are many lens that we need to change.
If we don't want to make the shift from CFO to CEO, it is perfectly alright. That does not make us any less aspirational. Some people love thriving in the rigidity of a CFO role, rather than in the ambiguity of a CEO role. So, it's perfectly okay. But we should be clear about which way we want to move.
Q&A
The way Mr Gopalan defines integrity is: Am I doing anything that doesn't let me sleep in the night peacefully? Would I be proud to talk about what I am doing to my spouse or my children or my parents? If not, there's something fundamentally wrong.
Tariffs are not an integrity issue. It is all about trying to protect one’s interest. Trump is trying to safeguard the American interest. Interestingly, the tariffs that he decided to levy on China have benefited Mr Gopalan’s company, Entellus. It has suddenly become a lot more valuable than what it was.
We would have heard of the four Ps, people, profit, purpose, and planning. President Trump is focusing on his people, profit for the Americans, and secure the geography.
Very rightly, the Indian government too is putting our people first. The Indian response has been measured and mature but firm. Our Prime Minister’s meeting with the Chinese Premier, along with the Russian President is a masterstroke.
India has a large domestic economy. There will be an impact because of the American tariffs. But we are not as vulnerable as some of the other geographies that are completely dependent on America. We should bide our time. Sooner than later, America will blink.
People must follow the process in spirit and substance. Otherwise, the best of processes can easily be bypassed.
If we want to build a very honest organization, we should encourage open communication. When people are giving feedback, we should reward them for their honesty by listening to them. The moment we start stifling their voices with justifications, or reasons, they will be demoralised. The moment we say but, we have already stifled their voice and gone into a defensive mode.
During the MeToo movement, some countered it by saying Men too: it’s not just the women that face these problems. Not all men are involved. When women were coming out with a problem, it was not correct to counter it. The argument may have been right, but that was not the forum to express it. We should first acknowledge that there is a problem and ensure everybody feels heard.
Secondly, the governance framework should be a lot more rewarding and guidance-driven than prescriptive. The moment we start prescribing every small activity that a person must do, it will get very stifling, and people will try to break the rules. So, we need to have governance systems which reward open communication, but at the same time, which is also guidance driven and not prescriptive.
Third, the punitive action for integrity should be extremely severe. We can't say that we did something unethical just to benefit the company. Leaders on their part should not acknowledge that it benefited the company and so decide not to impose any punishment. The end should never justify the means. When people say I didn't do this for my personal gain but to benefit the company, leaders tend to go soft. However, if we break the rule once, this is going to become a habit.
In one of the large organizations where Mr Gopalan worked (where the questionable transaction happened, as mentioned earlier) , he built a very good team. The moment they sensed that there was some questionable transaction involved, they would not worry about the hierarchy. They would pick up the issue directly with that person involved, saying: Sorry, this is something that we are not going to allow. The person in question would come and say: Vijay, I'm having a problem with your team. Mr Gopalan would respond: I respect the fact that you've come to me. if you can convince them, I'm happy to sign off.
So, the system gave autonomy to his team to take a decision without worrying about being overruled by someone senior. This worked like magic when Mr Gopalan was the CFO. Even after he quit, it worked for some time as the team realized that their boss had quit on a matter of principle. Then, over time, the team changed.
After Mr Gopalan’s sessions, many attendees come and say: One thing that I very clearly remember from your session, is how we should maintain our integrity when we are in practice. He has seen this happening across batches. Which means, they have also started thinking about building processes within their own domain to prevent unethical actions.
It is possible to build systems that protect integrity. We should give autonomy to people and not overrule them when they uphold integrity. We should not trivialize integrity, make it utopian, or make it sound like it is an ideal position to have. We should make integrity practical, a, day-to-day thing. Then it will work.
It’s not easy. And when we are trying to implement it, we should not be disheartened. We will be overruled at times by our CEO or the board. We will have to absorb the pressure and ensure that it doesn't percolate down to the team and demotivate them. We will have to bear the brunt of it.
After 8 years at EY, Mr Gopalan decided to quit his job and try his hand at movies, computing, emceeing. Then he came back to AirAsia which gave him a semi-operational role also. He was a secondary accountable manager along with his CEO. So that helped him. Even in his current role his peers let him dabble a bit into operations.
It is a lot easier to be the CFO of an emerging sector organization than to be in charge of operations. As a CFO, the learnings and principles are fairly consistent across industries. But in an emerging sector, there is no playbook for how to run the business. The only precedents available in the rare earths industry are in China which is closed to us. But the advantage in a new sector is that we will not be weighed down by the baggage of the past. We can ask silly questions and make mistakes and learn from them. If we want to explore new avenues and are comfortable grappling with ambiguity, then it is a great space to be in.
What happened was very unfortunate. But the Satyam case gave the future CFOs, a lot of pointers on what not to do. It made CFOs a lot more detail oriented. It made them realize that they cannot get too adventurous or creative with finances. It also opened conversations in India about integrity, governance, and a whole lot of other things.
Irrespective of whichever domain or wherever in the hierarchy we are in, as leaders, our first allegiance is to our people. It is our responsibility to ensure that our team members grow if not in terms of promotions, at least as a professional or as a person. There should be something for them to take away from us. When we believe that our people are important to us and demonstrate that we will not sacrifice them to boost our profits, they will trust us. Then retaining talent is never a challenge. Again, it boils down to integrity. If we are honest to our own people, and if we truly mean it, we will not have a problem in retaining good talent.
Mr Gopalan has addressed hundreds of batches of CA students. He always concludes his sessions with the importance of integrity. He tells them that integrity will reward us in the long run. We should be honest to our people, our processes, our conscience. If we practise integrity, people will respect us. Everything will automatically fall in place.
Mr Gopalan also tells young people to keep reinventing themselves. We should not be in the comfort zone. We should spend 30 minutes every day to learn and read about something outside our domain.
CFOs should not be so conservative as to hold the organization back. But at the same time, they should not be so reckless as to let the CEO have a bull run. This is science. What happens between these boundaries is art. It is what differentiates one CFO from another. There's no right answer here.
Just because CFOs are the guardians of risk does not mean they have to be very conservative. The business must function. There are many organizations where people find it difficult to deal with the finance team. They believe that their first answer from the finance team to any proposal will be no.
Consequence management is important. But it is based on outcomes. We should also do whatever we can to put processes in place to ensure that unethical things are prevented in the first place.
The intent behind any legislation is good. But what happens in practice? When the CSR legislation came, Mr Gopalan was pained to note that a law was needed to ensure that companies have a response of social responsibility. Has the CSR legislation really achieved the impact that it was meant to achieve originally? The jury's still out there. If we talk to different people, we will get different views. (We would be aware that all kinds of expenses are being classified as CSR by some companies.)
In much the same way, sustainability reporting is a step in the right direction. But considering that it's too nascent, we need to wait and see the impact it will have.
Consider a parallel. IFRS reporting aimed at making the financials of companies more transparent. But IFRS has probably ended up complicating the financials for a layman. How will people without an accounting background understand things like retirement benefit obligations and lease accounting by reading the financials? So, IFRS reporting may not have achieved the end objective of transparency.
Let us hope sustainability reporting doesn't end up like that. However, it does put a bit of onus on the companies to start thinking about sustainability, especially the large organizations. So, to that extent, it's a move in the right direction.
it's extremely important to have a hobby. Mr Gopalan’s personality has been shaped by hobbies. His family is full of musicians, singers and actors. His mother is a Censor board member. Growing up in this kind of an environment, enabled Mr Gopalan to develop his artistic inclinations. He became an RJ thanks to his school, Vidya Mandir. He participated in an RJ hunt and was one of the 5 shortlisted from about 5,000 people. Mr Gopalan feels we must all find something that goes beyond our profession and expresses our personality.
We must also be curious and explore new things. Mr Gopalan’s father, a chartered accountant, was doing private equity deals in the early 90s when few had heard of it.
We need not be born with charisma or flair. These are things that we can develop over time. We can observe others, practice, consciously try telling ourselves certain things. We don't need to be good looking, but we can look presentable. Some people are blessed with great looks, but all of us can groom ourselves well, and that will set us apart.
When he was part of the Tamil Nadu Infrastructure Fund, many private equity investors were insisting on having one of the big four as the auditors in the portfolio company. Mr Gopalan accepted that the auditor’s appointment would be included in the agreement. But he insisted that the auditor need not be from the Big Four. It could be a good Indian auditing firm.
For an Indian company to be like the Big Four, the Indian audit profession first needs to be respected. Today there are many integrity compromises on the part of our auditors. The auditing profession will be respected only when it upholds the principle of integrity.