Ganesh Murthy helps Mphasis' manage liquidity better with faster cash conversions

BT-Yes Bank Best CFOs Survey

Consistent Liquidity Management (Large Companies)

WINNER: Ganesh Murthy, Former CFO and EVP, MphasiS

Ganesh Murthy, 52, had been with Mphasis for five years and has now moved on to Dell Services, but not before he put the company's balancesheet on a solid footing. When Murthy joined Mphasis from HP in 2009, the company had $12 million cash. Today, it has $430 million, after many acquisitions and dividend payouts.

Where does he park the money?

Mphasis, India's sixth-largest IT services company with revenues of Rs 5,796 crore in 2013, has a simple investment policy. The focus is safety, liquidity and returns. "We invest only in liquid mutual funds, bank deposits, and short-duration fixed maturity plans, which are not subject to any interest rate volatility," says Murthy. Most of its cash - Rs 2,080 crore - is in liquid mutual funds. Only Rs 100 crore are in bank deposits. "Our return is 6.3 per cent net of taxes last year. We have done a benchmarking with other Indian IT service companies - most of them have a return of 6 per cent," Murthy says.

The company does not invest in anything that exceeds 10 per cent of the corpus of the fund. If the fund size is Rs 1,000 crore, for instance, it does not invest more than Rs 100 crore in that fund.

Murthy says the company's treasury policies have not changed much in the last five years. It monitors the receivables closely and has made good progress over the last few quarters. The debtors turnover ratio at 9 in 2012/13 indicates debtors buy and pay nine times a year. The credit goes to the CFO in faster conversion of debtors to cash.

"Our DSO (Day Sales Outstanding) has improved considerably over the last few quarters. In the March quarter, we were at 71 days. The industry average is 76-80 days," Murthy says and adds that DSO was more than 80 days for the company earlier.

* An earlier headline of the story carried Ganesh Murthy's surname as Murty. His correct surname is Murthy. Changes have been made.