MANAGING EXTERNAL STAKEHOLDERS
Rajendra Kasliwal - Hindalco
By Carla Rapoport

Rajendra Kasliwal cares passionately about numbers. In the latest annual report from Hindalco, India's largest aluminum company, the CFO gives pages and pages of figures and ratios, enough to please the fussiest investor in New York or London.

Kasliwal also gives numbers investors don't look for. These include how many widows the company has helped to remarry in villages where its employees live (300 over five years); how many vasectomies the company sponsored last year (1,406); how many women over 40 and children it helped learn to read (1,510); and how many villages it helped get fresh water (103).

Bereaved widows, illiterate children and impoverished villagers are not likely to buy a share in Hindalco. But given the chaotic, undeveloped nature of the parts of India where the US$535 million-a-year company makes its products, Kasliwal firmly believes that these constituencies are true stakeholders, as much as its customers and shareholders. "Our plants are in remote areas," he explains. "We have to take care of people in these places. Our efforts enhance our reputation, which in turn create value." More to the point, he says: "If we don't get the support of the society we are working in, then success is very difficult."

This practical commitment to its community, its pace-setting environmental standards and its US GAAP-standard annual report have won Kasliwal this year's Achievement in Best Practices Award for Managing External Stakeholders. In fact, it's the second honor this year for Hindalco. Last month, it was among the 28 winners of CFO Asia's Best Annual Reports, the top-ranked company in India and overall winner in the category of Corporate and Social Responsibility.

Talking Value

Born in a small village in Rajasthan, Kasliwal joined Hindalco in 1967 as a management trainee after studying accounting as a post-graduate. He rose through the ranks quickly and took on the CFO role seven years ago just as the company was switching from a profit-driven orientation to a value-creation model.

At the time, Kasliwal realized that communication was essential to the switch. "Changing from 'command and control' to 'enterprise-wide decision support' meant that the value we created needed to be reflected in the enterprise value at all times," he says. He has accomplished this over the years by raising his communications with stakeholders to an almost frenetic level.

In the last 12 to 18 months, for example, Kasliwal has had more than 100 meetings with investors in India, held 25 conference calls with analysts overseas, met investors at six one-day conferences, traveled around the world twice on two "no deal" roadshows, and organized a plant visit for shareholders.

The results, he says, are a stronger share price relative to its competition in India and a lower cost of capital. "Companies that believe in full and fair disclosure are treated better by investors," he says. "It also provides stability and attracts good quality investors." More than a third of Hindalco's shares are now in foreign hands, including funds run by Morgan Stanley and the government of Singapore.

Even better, Hindalco has been raising money at new benchmarks and recently won better rates than sovereign paper. And the group's own benchmark index, cash value added (CVA), a variant of EVA which measures cashflow minus the cost of capital, has jumped from 100 in its base year of fiscal 1997 to 298 in the year ended last March. The program has been so successful that Hindalco suffers from an enviable problem - excess cash. As operations generate a 30 percent return on capital employed, the surplus only generates 7 percent. So Kasliwal recently recommended a US$90 million share buyback, which should give a welcome boost to the share price. And this, in turn, should please Hindalco's stakeholders even more