The Tech-Driven Transformation of Accounting, Taxation, and Compliance

Technology is revolutionising the finance domain, bringing unprecedented efficiency, accuracy, and transparency to accounting, taxation, and compliance, shared Kishore Lodha, Chief Financial Officer, U GRO Capital, in an exclusive interaction with Srajan Agarwal of Elets News Network (ENN).

Can you share your journey in the finance sector and how your experiences at organisations like Future Group, SREI Infrastructure, and Hinduja Leyland Finance have shaped your approach to financial management?

I started my journey as one of the first few employees of the 1st Big Bazaar in India, and then a division of Pantaloon Retail India Limited, which subsequently became a part of Future group. In those days, organised retail was very nascent in India, and we all became part of the dream envisioned by Mr Biyani. I spent 11 years with the organisation, and it taught me innumerable things, specifically that if you can dream, you can achieve, and that human potential is far more than what we perceive it to be. It taught me to be respectful of everyone, customer centricity, hard work, taking people along on your journey of growth, having an eye for details, and being frugal in spending, as every rupee saved is every rupee earned.

When I moved to Srei, it took me some time to understand the finance business and infrastructure financing. I realised that infrastructure financing in India was not meant for NBFCs since there were too many execution risks back in those days, and cash flows were too unpredictable in the projects for the comfort of an NBFC.

In 2017, I moved to Hinduja Leyland Finance. The Promoter family is one of the most renowned families around the world, but the amount of respect they accorded everyone they would meet was one of my greatest learnings there. It was during my stay here that the industry went through multiple crises – ILFS, DHFL then the COVID-19 pandemic. While the struggle was real, these allowed learning to navigate the most difficult and unforeseen situations. Mr S Nagarajan, the then VC, taught me the sheer importance of ALM management in financial services. Eventually, I realised that while crises would be there in this dynamic industry every few years if a company has a good ALM set-up, they can brave the harshest waters.

Something crucial I have learnt over the years is that, in this industry, one has to get things right on the first try. While retail always allows you to learn, unlearn, relearn, fail and redo things, these luXuries are simply not present in the realm of financial management. Today, the financial services business has become very complex as it is highly regulated. Being conservative in financial management while being ambitious in growth is something every finance professional should learn to imbibe and implement.

What have been some of the most significant challenges you’ve faced as a CFO, and how have you successfully navigated them?

As a CFO, one of the most significant challenges has been navigating regulatory complexities and ensuring compliance with constantly evolving financial regulations. In the highly regulated NBFC sector, staying ahead of compliance requirements is crucial. I have addressed this by fostering a culture of continuous learning and keeping abreast of regulatory changes. Implementing robust compliance frameworks and leveraging technology for real-time monitoring and reporting has been instrumental in maintaining regulatory compliance.

Another challenge has been managing liquidity and capital adequacy, especially during economic downturns. Ensuring sufficient liquidity while optimising capital deployment requires meticulous financial planning and risk management. At U GRO Capital, we have adopted a proactive approach by maintaining a diversified funding base and leveraging our
strong relationships with institutional investors. This strategy has enabled us to navigate liquidity challenges effectively.

Furthermore, adapting to technological advancements and integrating them into financial operations posed another challenge. By embracing digital transformation and investing in advanced financial technologies, we have enhanced our operational efficiency and improved customer experiences. Our proprietary risk assessment model, GRO Score,
and cashflow-based lending approach exemplify our commitment to leveraging technology for better financial management.

How do you see technology transforming the finance domain, especially in terms of accounting, taxation, and compliance?

Technology is revolutionising the finance domain, bringing unprecedented efficiency, accuracy, and transparency to accounting, taxation, and compliance. In accounting, advanced software solutions and automation are streamlining processes, reducing manual errors, and enhancing real-time financial reporting. Technologies like artificial intelligence and machine learning are enabling predictive analytics, offering deeper insights into financial performance and aiding in strategic decision- making.

In the realm of taxation, technology is simplifying tax compliance and reporting. Automated tax filing systems and integrated tax management platforms ensure accuracy and adherence to regulatory requirements. These technologies also facilitate better tax planning and optimisation, helping organisations manage their tax liabilities more effectively.

Compliance is another area where technology is making significant strides. Regtech solutions are automating compliance processes, ensuring timely and accurate reporting. Real-time monitoring systems are helping organisations stay compliant with ever-evolving regulations. At U GRO Capital, we leverage advanced compliance management tools to ensure adherence to RBI norms and other regulatory requirements. These tools provide real-time alerts and comprehensive compliance dashboards, enabling proactive compliance management.

Overall, technology is transforming the finance domain by enhancing accuracy, efficiency, and compliance. Embracing these technological advancements is crucial for staying competitive and ensuring robust financial management in today’s dynamic business environment.

With your extensive experience in managing RBI compliances, what are some best practices you recommend for ensuring regulatory compliance in the financial sector?

Ensuring regulatory compliance requires a proactive and systematic approach. At U
GRO Capital, we emphasise the importance of continuous monitoring and updating of compliance frameworks to align with RBI guidelines. Implementing robust internal
controls and regular audits helps mitigate risks. Training and awareness programs for employees ensure adherence to regulatory standards. Additionally, leveraging technology for real-time compliance tracking and reporting enhances accuracy and efficiency. By integrating these best practices, we maintain regulatory integrity, build investor confidence, and foster sustainable growth in the MSME financing sector.

In your view, what are the emerging trends in financial planning and analysis that organisations should be prepared for in the coming years?

Emerging trends in financial planning and analysis (FP&A) are reshaping how U GRO Capital being a data tech NBFC, focuses on the integration of advanced data analytics and artificial intelligence (AI) into FP&A processes. These technologies enable more accurate forecasting, real-time financial analysis, and predictive modelling, providing deeper insights into financial performance and future trends.

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Another trend is the increasing focus on scenario planning and stress testing. Organisations are adopting sophisticated modeling techniques to simulate various economic scenarios and assess their impact on financial health. This approach helps in better risk management and strategic decision-making. The shift towards integrated financial planning is also gaining momentum. Organisations are moving away from siloed planning processes to a more holistic approach that integrates financial planning with operational and strategic planning. This ensures alignment across departments and enhances overall business performance.

Furthermore, there is a growing emphasis on agility and flexibility in FP&A. Organisations are adopting agile planning methodologies that allow for rapid adjustments in response to changing market conditions. This agility is crucial for staying competitive in today’s dynamic business environment.

Lastly, the role of the finance function is evolving from traditional number-crunching to strategic partnership. Finance teams are increasingly involved in strategic decision- making, providing insights that drive business growth and value creation.
organisations approach financial management.