susan_uthayakumar_convo by xiaopangnv

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Argyle Conversations
   by Argyle executive Forumsm

                    featuring

        Susan Uthayakumar
      Chief Financial Officer
  Schneider Electric Canada

                             &
                             Meeting energy-distribution and
               John Wilson energy-management demands in
                    Partner nations that rely on existing and/
     Shearman & Sterling LLP or emerging resources was the
                             focus of a September 8 discussion
                             between Susan Uthayakumar,
                             Chief Financial Officer of Paris-
                             based Schneider Electric, and
                             John Wilson, Partner, Shearman &
                             Sterling LLP in San Francisco. The
                             conversation took place in San
                             Francisco at the 2011 Leadership
                             in Corporate Divestitures and
                             Acquisitions conference.
A r g y l e Co nv e r s a t i o n s
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September 8, 2011


   Susan Uthayakumar                                  As the Chief Financial Officer for Schneider
                                                      Electric Canada, the Canadian arm of
      Schneider Electric, a global specialist in energy management, Susan Uthayakumar manages all
      financial and risk-management aspects of the company. She is actively involved in mergers and
      acquisitions, including the integration of the acquired companies with the core business
      operations. Prior to becoming the CFO for Schneider Canada, Susan held various finance
      management positions within the North American Division of Schneider Electric and the
      position of Director of Corporate Development, focusing on acquisitions and divestitures.

      Prior to joining Schneider Electric, Susan was part of the Corporate Development Group of
      McCain Foods Ltd., with responsibility for the development of business in emerging countries via
      acquisition and greenfield site development. From 1996 to 2000, Susan held various positions
      with Deloitte, working with multinational corporations.

      Susan is currently enrolled in the Kellogg-Schulich Executive MBA program, in Toronto, and holds a
      bachelor’s degree and a master’s degree in finance from the University of Waterloo.




    John Wilson                 John Wilson has been a partner of Shearman & Sterling since
                                1988. From 2001 to 2010, he served as the Managing Partner
       for Shearman & Sterling’s Bay Area offices. From 2005 until 2009, he served as an
       elected member of the firm’s Policy Committee. Prior to 2001, he was a partner in the
       London office for five years, in the Paris office for three years, and in the New York
       office. He concentrates on securities and finance matters and mergers and
       acquisitions, including initial public offerings and other global equity securities
       offerings, complex acquisitions and joint ventures. He also regularly advises
       companies, Boards of Directors and Audit Committees on corporate governance
       matters, including Sarbanes-Oxley Act compliance, internal investigations,
       fiduciary duties and disclosure matters. Wilson has an extensive background in
       high-yield debt, private equity and acquisition finance transactions and public
       recapitalizations and restructurings.

       John is listed in the Guide to the World’s Leading Capital Markets Lawyers, a practice
       area directory produced by Euromoney Publications LLC.




                           W W W . A R G Y L E F O R U M . C O M
A R G YL E E X E C U T I V E F O R U M 122 W E S T 26T H S T, 2N D F LO O R N E W YO R K , NY 10001
A r g y l e Co nv e r s a t i o n s
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September 8, 2011


  JOHN WILSON: Please tell me about the genesis of Schneider Electric and the types of
  products and sectors that Schneider Electric focuses on today.

  SUSAN UTHAYAKUMAR: We specialize in global energy management, specifically making energy
  safe, reliable, efficient, productive and green. Our history is interesting. The company dates back
  to 1836, when two Schneider brothers acquired a company whose primary activities were iron and
  steel, heavy industry, railroads and shipbuilding; it then became one of Europe’s leading weapons
  manufacturers. From there, the company became a leader in power and control through a number of
  acquisitions and evolved into a global energy management specialist . We were €20 billion in sales in
  2010, present in 130 countries, with about 120,000 employees worldwide. And we’re very much present
  in new as well as mature economies.

  We operate with five business units: power, industry, energy, building and IT. And they, service
  segments such as oil and gas, mining, utilities and infrastructure, data centers, residential and industrial, and
  machines, to name a few.

  I joined Schneider about six years ago as director of corporate development, in charge of doing deals
  for North America. From there, I went into finance management and currently I’m the CFO for Canada,
  involved in both acquisitions and regular business management.

  Is your background in finance or on the technical side?

  My initial education was in finance. After
  graduating college, I joined what then was “One side of acquisitions is
  Deloitte & Touche and, obviously, got into consulting, the actual deal management;
  valuation and diligence work. From there, I the other side of it addresses
  focused very much on acquisitions and country what the acquisition brings
  development, landing at McCain Foods, a global
  provider of potato products, appetizers and snacks.
                                                          to your current business
  I was very focused on country development, either capabilities                  and how you
  greenfield site build-up or acquisitions in countries create value”
  like Turkey, India and China. That really got me
  interested in mergers and acquisitions. Eventually, I joined Schneider Electric to do North American deals.

  It’s a good thing that I have a varied educational and professional background because, at some point
  in your career, you need to take a broader perspective to any transaction. One side of acquisitions is
  the actual deal management; the other side of it addresses what the acquisition brings to your current
  business capabilities and how you create value. As a CFO, that’s my focus.

  In the last year, how many transactions has Schneider done, and what size were those
  transactions?

  To give you context, in 2005, our revenues were about €10 billion. Today, we’re at €20 billion. Most



                                 W W W . A R G Y L E F O R U M . C O M
A R G YL E E X E C U T I V E F O R U M 122 W E S T 26T H S T, 2N D F LO O R N E W YO R K , NY 10001
A r g y l e Co nv e r s a t i o n s
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September 8, 2011

    of that growth is from acquisitions on a global scale. Last year, we completed at least ten major
    acquisitions to improve our solutions capability and improve our presence in new economies. To
    name a few, we partnered with Alstrom to purchase Areva. Schneider took Areva’s medium-voltage
    distribution business, and the high-voltage portion went to Alstom. Imagine the complexity associated
    with a deal that splits a major global company between two purchasers, then requires integration at the
    country level. It kept us very busy last year. In 2010, in addition to Areva, Schneider Electric acquired
    Cimac, the leading systems integrator for industrial automation solutions in the Middle East; Zicom
    Electronic Security Systems in India; 50 percent of Electroshield–TM Samara in Russia; Uniflair SpA,
    the world’s number three manufacturer of in-room precision cooling systems; and Vizelia, a software
    provider in real time energy monitoring for building management.

    Our global acquisition strategy is to acquire in markets where we want to increase our presence such
    as emerging markets--or in areas where we want to enhance solutions or product capability--so that our
    energy-management portfolio continues to meet our clients needs.

    Typically, are these acquisitions of the entire business rather than joint ventures?

    For the most part, we tend to acquire
    complete     companies      because    our      “Our global acquisition strategy is to
    objective is to enhance our solutions           acquire in markets where we want to
    capabilities or product offering. But if        increase our presence such as emerging
    strategic, we will enter into partnerships.
                                                    markets--or in areas where we want to
    Last year for example, we announced
    a partnership with Masdar, a renewable          enhance solutions or product capability--
    energy company in Abu Dhabi. When we            so that our energy-management portfolio
    look at acquisitions, we evaluate what          continues to meet our clients needs”
    structure would bring the most value to
    the transaction.

    What is it about Schneider Electric that really creates the underlying value. Is it the technology?
    Is it specific expertise? Is it your market positions, vis-à-vis your competitors? And when you’re
    looking for companies, what do you really look for?

    We look for companies that are in a geographic region where we want to grow such as new economies,
    or companies that bring enhancement to our product or solutions capability. What differentiates us from
    our competitors is that, to my knowledge, we don’t have a competitor whose portfolio is as complete as
    ours, who can provide a total solution in energy management to a customer on a global scale.

    What has been your experience—and your challenge—to date in doing business in Asia, an area
    that is new to many companies?

    My professional experience at Schneider has been focused in the North American region but Schneider
    has been very, very active in Asia. In 2011, our half-year results showed that 24 percent of our revenue
    came from the Asia-Pacific region. Overall, our growth in Asia-Pacific was 15 percent in the first half of


                              W W W . A R G Y L E F O R U M . C O M
A R G YL E E X E C U T I V E F O R U M 122 W E S T 26T H S T, 2N D F LO O R N E W YO R K , NY 10001
A r g y l e Co nv e r s a t i o n s
                                                                                                           Page 5
September 8, 2011

    2011. Of course this growth comes with the challenges of dealing with legal and other regulations that
    are much different than what we face in North America, as well as a labor market that is very competitive.
    But the growth potential dictates that we understand how to do business in these regions quickly if we
    want to maintain our competitive advantage. At the same time, going to market in Asia is not easy. The
    safest, most successful way of going to market is to acquire companies that are already established and
    know the Asian market. As it relates to partnerships, we tend to do more of those in Asia, sometimes for
    regulatory reasons or because it’s not always possible to acquire the entire company.

    Additionally, Asia is important to us, obviously, because of our global supply-chain structure. A company
    our size has to focus on productivity and a lot of that is at play in Asia.

    How actively involved is Schneider in the debate over the larger issues of energy policy, the
    importance of renewable solutions, solar, wind, burning fossil fuels?

                                         As a company focused on energy management, we
     “Going to market in Asia is         clearly recognize that in order to respond to the
     not easy. The safest, most          growing world population and the development of emerging
     successful way of going to          countries, we must start by proposing solutions that allow all
     market is to acquire                of us to do more while using less. That’s much at the heart
                                         of our strategy. In 2008, we acquired Xantrex, a company
     companies that are already
                                         that manufactures inverters, which strengthened our play in
     established and know the            renewables. Certain countries, such as Canada and
     Asian market”                       Germany, grant government subsidies for solar
                                         development and, therefore, that’s a huge market for
    Schneider. Without having a presence in renewables or in clean energy, you’re not really a
    major player in energy-management. Schneider is also focused on how we help in providing the
    underprivileged population, in other words the 1.4 billion people who today have no electricity,
    access to energy and the benefits that come with it.

    So you’re in a new country where you’re essentially buying the local asset, which gives you the
    advantage in leveraging local knowledge. How do you deal with the post-closing integration
    and transition so that you capture the value by letting that entity do what it does best in its local
    market, and yet adhere to your own culture, your own norms, your own rules?

    It’s a real challenge that we face in the business. To address that challenge, first of all, we assign an
    integration team and an integration leader who is responsible for delivering the acquisition business
    plan. Because we do deals globally and we integrate at a country-specific level we really have to
    focus on that company’s culture to ensure that we can work together. We’ve realized the importance of
    having a relationship with the acquired company and the value of making sure that the people who hold
    the value in the company are interested in remaining with the company. We realize that we may have
    purchased the company, but unless we create excitement and trust in the new employees who are
    joining our organization, we will not be able to retain the value of that acquisition.




                              W W W . A R G Y L E F O R U M . C O M
A R G YL E E X E C U T I V E F O R U M 122 W E S T 26T H S T, 2N D F LO O R N E W YO R K , NY 10001
A r g y l e Co nv e r s a t i o n s
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September 8, 2011

    Second, we now allow the acquired company to operate independently for a period of time so that we
    get to know that company, its customers and its business processes, so that we can do the integration
    properly. From a back-office standpoint, we focus on the integration earlier. I mentioned that we have a
    person responsible for the acquisition business plan, and we monitor this on a regular basis to ensure
    that we’re realizing what we thought we were creating in terms of synergies. There’s a lot more business
    focus on what we’ve acquired and how we’re managing, and how we’re working together.

    Schneider is a French company, and so you’re not listed in the United States, which means
    you’re not obligated to the Sarbanes-Oxley regulations, correct? So, in terms of your practices
    with analysts and the market, do you provide guidance to them on an annual basis?

    We’re listed on the Paris Stock Exchange and as such are not required to file under Sarbanes-Oxley.

    We provide formal guidance to analysts, regularly based out of Paris. There are also
    investor-relations meetings with the release of our results, which is managed twice a year, and with significant
    acquisitions. The reality of doing business is that you’re always providing financial guidance, whether
    you realize it or not.

    Have you considered whether Schneider should be listed, as are several other global
    companies, on other stock exchanges? Why solely the Paris exchange?

    I am sure that question has been debated at head office. But when you weigh the cost vs. benefit of
    listing in multiple exchanges, I am not sure that multiple listing provides incremental benefits. The CAC
    40 is a major exchange and that should provide the visibility and market exposure that is needed.

    I lived for three years in Paris. For a native or longtime Parisian, the idea of moving to Hong
    Kong or elsewhere could be jarring. That could really shake up the culture and, over the long
    term, create an evolution in your corporate culture.

    I’ve been with Schneider six years now, and one
    of the things that has really impressed me most “The reality of doing business is that
    about the company is how global it really is. It has you’re always providing financial
    a head office in Paris. Our management team is guidance, whether you realize it
    international. The company’s very, very focused or not”
    on moving talent across continents, and within
    regions. For example, I moved to Toronto last year to become the CFO. I will probably be there for
    three to five years and then move to a different country. For a native Parisian, relocating might be
    jarring; for somebody at Schneider, I’m not so sure. Our international and global focus, related to talent-
    management, really impresses me.




                               W W W . A R G Y L E F O R U M . C O M
A R G YL E E X E C U T I V E F O R U M 122 W E S T 26T H S T, 2N D F LO O R N E W YO R K , NY 10001

								
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