His career spanning 20 years is driven by the belief that ‘Ideas Create and Values Protect’. Alwyn Crasta is the Group CFO of Al Dahra Holding – a leading company specialising in agriculture and animal feed production; with global operations, farms and production facilities in the Americas, Europe, Asia and Africa. Crasta is also Second Runner up at the MENA CFO OF THE YEAR Award, 2013.
What is needed to be a top CFO?
A good CFO must be honest, ethical and able to develop and maintain the trust and confidence of all constituents. It is important that they always deliver the true message. Most of the time they may highlight bad news in order to take corrective action. Such highlights benefit all stakeholders as this creates confidence and better results
It is extremely important for the CFO to understand operations and business facts. We can’t just be the ‘Numbers Guy’; we have to integrate with operations and other departments. This helps to understand key cost divers, control matrix and the pain points of each business.
It is important to keep the company strong and emphasis on quality should not be compromised. In order to keep cost as low as reasonably possible, there should be constant review on the way we do the business. This includes bringing continuous efficiency, finding best alternatives with lower cost, cutting down on non-products costs like travel. Keeping general and admin cost low, centralising functions, automations and avoiding duplications are also important.
What are the main cost factors in your particular industry. How do you identify and exercise control over them?
Cost control is a continuous process that begins with the proposed annual budget. The budget helps to identify the key costs of each department of the business, and to plan and control identified cost. The planning process provides two types of control mechanism – feedforward, which provides a basis for control at the decision point, and feedback, which provides a basis for measuring the effectiveness of control after implementation.
We have a monthly reporting process, which highlights cost variances against budget and managers can focus and keep control over cost.
In such a volatile and competitive market, how does finance provide the cutting-edge in costs without compromising on quality?
One of biggest challenges in this real world is that nothing is certain. Operating efficiency involves reducing cost in all areas of the business.
• Some of the key areas where Al Dahra has been able to minimise costs are:
• Volume Management and better price negations
• Diversified sourcing
• Long-term hedging of product prices
• Forex hedging and logistics cost control through vertical integrations
What is your greatest area of spend where there is a lot of uncertainty on return?
As we are in the agriculture business and farming, big spending is needed to create proper structure. Uncertainty and risk go hand in hand with farming, agricultural production is directly dependent on nature with all its uncertainties, like climatic change, droughts, floods, frosts, storms, cyclones and disease. All these effects from nature impinge on yields through their effect on market supply, hence return on such spending is uncertain.
I always endeavour to use innovative financial planning ideas to transform long gestation agriculture projects into high-return self sustaining projects with the highest standards of corporate governance; thus doing my bit in bringing quality food at reasonable prices to the people around me.
What could disrupt your company and what can finance do to mitigate that risk?
Some of the issues we encounter are natural disasters or fire on stock, which might disrupt the business or the Group may be adversely affected by uncertainties such as change in policies, taxation and other developments in laws and regulations in other countries.
The Group sources almost all of its produce from foreign markets for which payments are made in foreign currencies. Depreciation of the value of the AED vis-à-vis other currencies, would increase the costs incurred by the Group in procuring forage and other agricultural products and would have an adverse impact on the financial position of the Group.
Some preventative measures for business continuity include setting aside financial reserves to ease cash flow problems if they arise and choosing the right insurance to protect against losses.
How has winning the CFO MENA runner up award helped you in business?
Receiving an award certainly makes you feel great. I got this esteemed recognition at Naseba 7th Annual CFO Strategies Forum. I consider it an acknowledgment for all the hard work and success demonstrated by Al Dahra in the last few years.
In this part of the world, where the climate is harsh, what is it like being in the agriculture sector?
Modern agriculture has vastly increased the amount of food that farms are capable of producing. But this can have a major negative impact on the environment. Al Dahra has partnered with experts all around the world to provide a consolidated management, logistics and funding platform that applies their in-depth expertise and knowledge in this field. The beneficiaries of the cultivated goods and produce are predominantly UAE and the host countries.
Our country faces two sets of challenges – internal challenges due to the geography and environmental conditions of the Emirate and external challenges due to global trade trends and changing market dynamics. Limited arable land, severe water shortages, rapidly growing population and increased domestic consumption are a few examples of internal challenges faced. On the other hand, soaring international food prices, export ban risks, decrease in global food stock levels, climate change, extreme nature conditions, supply shortages and pests, diseases and infections pose major external challenges.
The agriculture sector is a double-edged sword. It is the engine and the main vehicle to produce various food items but it also is undoubtedly the highest water consuming industry. The biggest concerns we face are in water and food security.
What are your biggest career accomplishments?
Cash flow and banking relationship; we have continually managed to arrange funds for operations as well as acquisitions and projects. The finance team has been able to effectively present and convince bankers to fund our transaction through innovative structures, resulting in significant reduction in leverage on Al Dahra’s books and cost of borrowing.
I have also assisted my organisation in many acquisitions and expansion projects to implement the strategic vision to create food security and emerge as a global player in agriculture. Another achievement has been reporting and standardisation. I have worked extensively to implement best financial control practices and standardised reporting mechanisms on all our subsidiaries worldwide. Currently, ERP roll out across all subsidiaries and standardised business models are in progress.
Since you work with associates in different parts of the world, how do you collate and manage different financial transactions?
We always have to face various challenges to manage business and financial transactions when we spread across all over the world with various different business models. Today we have offices and operations in four continents. Some of the initiatives we have done to better manage financial transactions include standardisation of accounting classifications and reporting. I am working in the direction of implementing standardised planning mechanisms through a five-year business plan which will play a critical role in future resource planning and performance evaluation.