§ MBA is one of the most sought after post graduate courses in today’s academic circuit. Of this, MBA Finance grads are the undisputed champs beckoned by the corporate world to be part of their winning teams. MBA Finance grads serve the banking and financial services industry whose growth has been nothing less than outstanding in the past decade. And the good news is that the industry will continue its growth story with the increasing financial penetration in our economy.
§ MBA- Finance is a preferred degree for many students due to the lure of fat paychecks, corporate lifestyle and action packed world of corporate finance. Referred by some as finance whiz kids, these MBA Finance graduates are expected to manage a company’s financial resources. However that comes only at a later stage of the career. The starting points for many MBA Finance passouts will be in the roles of analysts. MBA Finance students of top Indian B schools like IIMs and ivy league B schools like Wharton, Harvard, Princeton, etc. are recruited by investment banks, consultancies, global banks, auditing firms and other financial service providers, besides corporates for their finance departments. The gloss of MBA placements and top notch salaries that MBAs are usually associated are has actually begun with these categories of recruiters who offer the best pay packages.
§ Once you have decided MBA-Finance is the path for you and once you have joined MBA course, reality begins to prick in. You start hearing about the salaries and job profiles of your seniors and earlier batches who have passed out of your college. Barring a few exceptions, you realize that the average salary is pathetic. You come to realize that the so called faculty are ill-equipped to guide you towards professional competence. Infact, most of the faculty are MBA students who have taken up teaching career because they could find no jobs !! What sort of MBA faculty is that ? Even in respect of other faculty, you realize that they are failing to deliver or inspire confidence. There may be a number of other reasons such as these that now enable you to see the stark reality.
§ Who are recruiting all these MBAs ? What are the salaries that they are paying them ? Why is there substantial salary differential amongst students passing out of same institute and with similar academic credentials ? Why is MBA degree not landing students in decent jobs ? Why are MBAs ending up working as sales representatives, commission agents and recovery officers ? Is the MBA degree failing the students or is the disconnect between academic offerings and job market requirement widening day by day ?
§ If you are an MBA student, especially in the second year when the first wave of fear of joblessness or low paying job flashes your mind, chances are pretty good that some of the above questions might have stared at you at some point of time. If not, Bayesian probability assures that with each passing day, chances are more and more that the above questions will disturb you giving you quite a few sleepless nights
§ You may even be doubting, whether I have made the right choice in joining a MBA course . I would certainly address this issue in another article. That is very important since most of our career choices are made by parents and relatives. In our society, our career choice is a byproduct of opinions of papa, mama, chacchi and dada dadis. Once we commence our careers, we realize that this is not the job you want to do. You feel like quitting, you feel like changing job, you want to work in a different company or even a different industry. This is a common problem and I would address this in a separate article
§ In this article, I will detail what a MBA-Finance student ought to do and what does the market and prospective employees look for while offering you a job
§ Financial Management is the bedrock course of any MBA Finance graduate. Be a star in this course and you have demonstrated sufficient proof that you have the aptitude to be a finance whiz kid. Yet, Financial Management is being taught in most colleges at a theoretical level only. Not surprising considering the fact that most of the MBA faculty have no industry experience and join teaching straight after their studies. They may be excellent in their studies but not having worked in industry they are at a loss to know what the industry demands.
§ In a recent campus interview by a nationalized bank in one of the MBA universities, a simple question was put to a candidate that what is current ratio. The student answered it is ratio of current assets and current liabilities. Fine, the teacher has succeeded in imparting the theoretical knowledge. Excellent. The interview panel then asked if a company diverted its working capital funds for an expansion project, what is the impact on current ratio. The student was Dumbstruck. I doubt whether the teacher would have any answer to that. Another question put to a candidate was what is the minimum DCSR for a construction project finance. Again dumbstruck. These seem like tough questions but NO. These are aspects that the bankers routinely deal in their day to day work. This is their bread and butter work. They have spent 25-30 years of their life doing this work, lending to companies, familiar with various financial ratios and impact on company’s financial position….they find it difficult to accept a candidate who cannot answer even such simple questions. These are tough questions you might say. But they say these are the basic things a MBA Finance grad ought to know
§ The problem in the above case stems from the fact that since 2000, a number of public sector banks have been recruiting financial analysts from various B-schools in Middle Management Scale II cadre. This was a revolution in banking HR practice as the entry level in banks for many many years is the general PO at Scale I. However after the initial excitement and having seen the knowledge levels and working of these young financial analysts, the majority opinion is that the quality is disappointing. So disappointing that financial analysts recruited to analyse balance sheets are made to do routine jobs of a savings bank account opening officer or cashier. It is accepted in banking circles that 80-90% of the financial analysts recruited are not upto the desired standard
§ That is not the sole problem. What is balance of payments ? Whether the rupee is appreciating or depreciating ? Who is our Finance Secretary ? What is CSO ? Who is head of Biocon ? What is CGTMSE ? Why did Bajaj which had 10 year waiting list of scooters enter bike segment ? What is the fuss about Davos ? Why did GMR group foray into infrastructure ? What is the prevailing steel price per tonne ? What is the Governmenn’s present fertilizer policy ? Do you subscribe to the views expressed in the book The Winning Way ? Who is the editor of Businessworld ? …..if you do not have answers for most of these questions, it is good news. It is bad news only when you stare quizzical looks in the air as to what is going on. It speaks volumes about your current pedagogy and curriculum of your college. You may be theoretical experts but that will not fetch you the job of your dream. Unless you aspire for a PhD, there will be absolutely zero chance of you being recruited to financial sector if your interest is not in alignment with the demands of the industry. Your continuous work on MBA articles, MBA resources will prove crucial. Financial sector is dynamic by its very nature and students who are not passionate about financial and general awareness stand no chance amongst their peers.
§ MBA Finance grads are supposed to be number crunchers. Nothing short of it. You got to live and breathe numbers. Whether you land up in banking or insurance or mutual funds, your skill with analyzing numbers and hidden patterns is what will set you apart from the rest. For this, Microsoft’s Excel is an absolute prerequisite. Not just working knowledge but advanced proficiency in Excel is required. In fact, days are such that even that is a bit short and introductory knowledge of SAS is also desirable. But at the bare minimum, if you do not have advanced knowledge of MS-Excel, your journey into the higher orbits of financial sector will be limited. If you are happy earning 10 K per month, there is nothing much to say. But if your aims are higher, your Computer Lab course in Excel, if there is one, is just not sufficient. You have to skilled to the extent of running advanced macros and VB code
§ The essence of the above discourse is simple. Your MBA degree no doubt is a pre-requisite to enter the job arena. It equips you with some armoury to fight the battle. Swords, maybe rifles or at best some fancy gizmos. But the battlefield is fierce than you imagine. The artillery that is aimed at you is lethal. Despite your best armoury and fighting attitude, you will fall short. It is a sorry tale…..only if, only if, the warrior is equipped with more relevant armoury, he could have conquered the battle]
§ Don’t lose the battle because of defects in your armoury. It is no shame when Federer loses to Nadal. It happens in sports that sometimes the opponent is better than you, and even when you give your 100% you might fall short. There is absolutely no shame in losing to such an opponent. But what if Federer is playing with a racquet with its nets coming loose and worse, he is not allowed to change the racquet ! All you guys with the zeal to conquer the best jobs must remember that it is no fun to lose when you know you could have put up a better show. Yes, when the organization has to choose between you and a IIM-Ahmedabad student in the final round and they choose that fellow, ok fine. You have your limitations, you know that fellow is brighter than you and armed with degree from one of the leading B-schools of the world, you can take the defeat positively. It is a fair game that you have lost. It is in the sphere of uncontrollable, the things we cannot control. But imagine this…..when the question asked in interview is what is the connection between Net Working Capital and Funds Flow Statement, it will hurt you. It hurts a lot because it is the sphere of the controllable. Had you had better grasp on the subject of Financial Management, you would have cracked it. Similarly, if the question is what is your view on the Administered Price Mechanism ? Atleast, you should be knowing that it is something related to Petroleum and Natural Gases. It hurts you if you could not answer that question because had you kept yourself updated with what is happening in the economy, something which every Finance student ought to, it would have been a cakewalk. Similarly if someone gives you data running into hundreds of sheets and ask you to summarise it using a pivot table, if you look around the interview room and find no tables and start wondering what sort of table is a pivot table, it will hurt you because had you known a bit of Excel, it would have been momentous. Simply, there is no disgrace in losing when the defeat is in the sphere of uncontrollable. But it is unpardonable if you have lost due to things which were under your control but you did not pay enough attention to
§ What is the solution ? First, accept that your MBA degree alone will not equip you with the requisite skills to meet the market requirements. MBA degree is necessary to strat the journey. Aterall, not everybody can offer MBA degree. Only AICTE approved institutions can do that and t that extent atleast you r MBA institute does the job. But beyond that, your regular classes will not suffice. If you are to become a industry-acceptable MBA Finance graduate, you need the following :
1. Thorough grasp on Financial management subject
2. Balance sheet analysis and accounting basics
3. Grasp on 1 or 2 subjects relevant to the particular field if you have preference to join - Banking and risk management or Project finance and appraisal and working capital assessment or Insurance or Mutual Funds, etc.
4. Knowledge of business environment
5. MS-Excel
6. IT skills
§ Just the above 6 areas are enough to establish yourself in the financial sector with a decent job. While all the above are taught at some level in a MBA Finance course, the depth and alignment with industry requirement is what is that is lacking in majority of the B schools. The solution is to augment your regular MBA course with the above skills to equip you with the desired skills that are being demanded by the industry. And these, I repeat, are to be taught not by lecturers who have just passed their studies and joined as faculty. It needs to be taught by people who have worked in industry and understands the exact industry requirements. All your subject concepts need to be backed in totality by relating with real industry happenings which can only be obtained by constant updating of MBA articles and various MBA resources
§ The rest of the subjects provide you basic groundwork for your career but are rarely tested and needed. If you go into a specialized career such as investment banking, you will need relevant courses such as Mergers and Acquisitions. Other electives such as Taxation and Derivatives are useful in respective fields. But for the majority of the MBA jobs, particularly in the beginning stages of your career, the above 6 areas are your gateway to professional success.
§ It is very important in this context to appreciate what prospective employers look for. If you focus on all the 20 subjects you have in your 2 year MBA course and come first in your entire batch, it counts for nothing when you attend an interview where the skill sets they are looking at is, say, financial analysis. In such case, someone who is proficient in balance sheet analysis with knowledge of latest accounting standards will beat you hands down and grab the job. I repeat this since it is worth repeating. Your aim is not to top the class. Your aim is not the gold medal in college. Your academic credentials in unrelated subjects are immaterial. Don’t get me wrong. You need to pass in those subjects and you also need a basic level of understanding in those subjects. But don’t waste you time in focusing too much on subjects which do not give the proportionate mileage. When the founder of Honda Motors Siochiro Honda attended engineering college, he had a very clear aim of what to learn. He is interested in automobiles and he wanted to know about them in depth. But the course was flooded with unrelated subjects that he quit the course midway. NO, I am not telling you to leave your MBA course, the point is made clear in Soichiro Honda’s own words “A person who is hungry needs something to eat. That’s it. He does not need a course in diet, biology, how crops are cultivated, how they are sold in the market, how food is digested in the human body”. It is a point all should remember. If you are MBA Finance student, it is certain that you will be landing in MBA job in either banking or insurance or mutual funds ot stock trading or taxation/auditing and such related fields. Even among these areas, you already must have narrowed down to a few sectors you would like to work because of your interest and aptitude. Now, it is crucial that you focus on those subjects that fetch you the job you want. Believe me, if you attend a MBA interview in banking industry, there are broadly only two profiles if you are a Finance stream student – either you get into retail segment or you get into industrial finance. Most of the public sector banks who are now recruiting heavily MBA Finance students with a very good starting salary of around Rs. 30000/- (this is only the salary, it does not include other allowances and benefits) are recruiting financial analysts. If you want to get this job, in your MBA interview of around 10-15 minutes, the interview panel has a set of questions already in mind which to ask. Remember that the panel comprises of bankers who are experts in credit and advances and have experience of above 20-30 years in that field. It is natural that whatever they do in their day to day job, they would test students on that. They don’t want to neither do they have the time to go through your MBA syllabus, the subjects you have learnt and ask you those questions. If you prepare for this interview by studying IM Pandey alone, you will not make the cut. You got to know what is the day to day job of a banker involved in loan processing, what are the criteria they use for loan evaluation, what are the financial ratios used in actual practice in banking industry today – it is those questions that will save you.
§ Your action points should therefore be as follows. I will discuss each of the above area and what you need to do as follows :
1. Financial Management
§ No other subject in entire MBA Finance curriculum deserves the attention than Financial Management. Your knowledge and grasp of Financial Management concepts will set you apart from other aspirants.
§ You need not master IM Pandey entirely. You need not go through your entire Financial Management syllabus also. You just need to know the concepts related to day to day banking of loan appraisal. In this area, you have to gain extreme proficiency and relate fund raising activities and financial profiles of key industries and major corporate in the Indian corporate sector and relate every concept to a live example
§ In other words, Financial management subject with industry focus concepts is required. Case studies from real life corporate credit proposals and advances accounts in major banks should complement the theoretical foundation. All the commonly asked Financial Management interview questions and trick questions which require absolute grasp of the subject need to be prepared.
§ Try to get hold of the above from your seniors, if you are in touch with them. Or else mail me, I have a few of them. There are only 70-80 questions from which you need to prepare, beyond that it is highly unlikely to be tested.
2. Balance sheet analysis and Accounting basics
§ Balance sheet analysis is one of the key skills expected of a MBA Finance graduate. You are expected to browse through a company’s balance sheet and assess the financial health of the company just as an experienced doctor browses through lab reports and diagnoses the patient. The routine ratio analysis in regular MBA curriculum is not alone sufficient as it is examination driven
§ Exposure to real life balance sheets coupled with credit requirements and financial sickness signals which will make you a decent expert on balance sheet analysis
§ To gain strong grasp on this, you might have done exercises on a few real life company balance sheets. But that is not enough. You need a thorough understanding of CMA data used in banking industry. Bankers deal only with CMA data. The entire balance sheet is compressed into a CMA data and this is a industry wide standard format. All your financial ratios commence from this. You need to understand CMA format thoroughly
§ You should know how banks use ratio analysis while appraising loan sanctions to companies. You should know how companies manipulate their balance sheets and how to detect them
§ I would also strongly suggest that you prepare atleast 4-5 project appraisals done in commercial banks on your own. This can be done as part of your winter or summer project. But my advice would be to do it as a desk project. If you have done a couple of these with thorough depth, the value that this will add to your resume is much greater since you will be able to steer the interview discussion into an area which is comfortable both to you and the interview panel.
§ If you know seniors or anyone else working in a commercial bank, you can get the above very easily. In case you don’t know anyone working in banks, mail me I can send you some.
3. Specialisation subjects
§ This depends on the particular specialization area and is very exhaustive hence I will discuss this in future articles
4. Financial and general awareness
§ Have you ever felt a sense of inferiority complex when someone in your class answers some question on business awareness or some product or some CEO. Do you know whether rupee is appreciating or depreciating now and who stands to benefit from each scenario ? Why are developments in Greece having impact on global economy ? Who is the owner of United Breweries group ? Why RBI is hiking interest rates almost every quarter ?
§ A majority of MBA students get so engrossed in course subjects that they fail to recognize what MBA curriculum is all about. And I don’t blame the students. As I discussed in my earlier post “Purpose of this blog”, the standard of faculty and pedagogy employed in most MBA colleges is the core problem. If you have not read that post, I suggest you do it now. MBA curriculum ought to be a industry driven course. After your MBA, you are not going to expand your theoretical base, you are going to jump into the harsh world of real world business and make real difference to companies. If you are not aware of the business environment, it means you are not interested in the business environment. And if you are not interested in the business environment, you can never become a hot commodity in the MBA job market. Business awareness is not for winning the business quiz competition at management fests. It is an integral part of any MBA curriculum. It is here where most of the MBA colleges are letting students down
§ Financial services industry operates in an economic environment and knowledge of the macro issues involved alongwith industry related developments are critical to a aspiring finance professional. These include business environment, the Government measures and tools, regulatory issues, industry trends, macroeconomic issues, inflation, external trade, economic growth, issues of banking, insurance, capital markets, industry analysis, company analysis, who’s who of corporate world, financial and general awareness
§ An MBA student is expected to read atleast one daily business newspaper such as Businessline or Economic Times. You should each and every issue of important business magazines including Businessworld, Business Today, Forbes India, Outlook Money. You should be aware of industry analysis, policy environment of key industries and company profiles of key players in the industry
§ The problem is the numerous developments in the economy and financial sector is covered in various newspapers, magazines, journals and television channels. As a student, your time is limited to reading all those, storing them and retrieving them. Each magazine takes 1.5 to 2 hours for reading, plus another half an hour for noting down points and organizing it. Going through so many newspapers and magazines is very time consuming. By the time you complete a couple of magazines, the next issue of another 5 magazines will come out. You cannot keep pace with that. If one were to do the above reading, collecting and organizing, it would take a minimum of 3 hours per day. You cannot afford to do that since investing that time in your core MBA subjects would be more beneficial
§ I therefore suggest you to regularly visit sites such as which do the above for free. They collect important articles and clippings from the newspapers such as Economic Times, Businessline, Business Standard, The Hindu, business magazines such as Forbes, Businessworld, Business Today, Outlook Money, general magazines such as Outlook, Frontline, Tehelka, journals such as Mc Kinsey Quarterly, Harvard Business review articles, etc. It is a matter of outsourcing the collecting and storing job so that only relevant, important information is collated and available to you. Remember you cannot do this everyday while attending to your studies. These sites will do it for you which will help you to concentrate on your core curriculum while at the same time allows you to update on industry and economic events of importance on everyday basis. I also do it in my newsletter. I collect key points from various MBA articles and MBA resources and put it in one place. This will be priceless in your MBA interviews. It is free and I am sending the newsletter to any MBA student interested in it. Please let me know if you are interested to receive the newsletter so that I can add you to my free mailing list : sandeep.maddu@gmail.com
5. MS-Excel
§ Advanced knowledge of MS-Excel alongwith VBA code is required. Today’s finance jobs make compulsory use of advanced Excel. Just entering data in two cell and adding them in another cell is not what is expected from you. Your Excel knowledge should be beyond doubt with advanced knowledge in topics such as VBA code, running macros, pivot tables, what if analysis, etc.
§ Master MS-Excel – not just working knowledge, you need advanced proficiency in MS-Excel.
§ While the above 4 points are pre-requisites and you have to do it before joining your first job, mastery in MS-Excel, especially advanced topics like VBA, can be taken up after you get your job. But I would strongly suggest you get comfortable with atleast pivot tables since it is widely used in all companies and they might test you on that in your interviews.
6. IT skills :
§ I will explain in detail the importance of IT skills and application development to MBA students in future articles. But in brief, there are 4 areas where you need to develop your IT skills
§ (i) atleast one operating system other than Windows such as Unix (ii) atleast one database management system such as Oracle (iii) atleast one analysis tool such as SAS (iv) atleast one application development programming language such as Java or .NET
§ You need not do the above immediately but I suggest that atleast you should learn Oracle and SAS before joining your first job. Unix can be learnt in workplace if required. Java or .NET may be difficult to learn at this stage in view of limited time, but do learn them immediately after joining your first job by enrolling in a good training institute.
§ The benefit is priceless of the above 4 IT skills is priceless. I will write another article on this aspect but remember that investing your time in acquiring hot IT skills will give you an amazing flexibility to shift to a IT job retaining your domain experience gained through your job in finance field. It may be difficult for you to understand this at this stage of your student life but atleast keep it in your mind. Anyway, am not telling you to learn them right now. But atleast after you get your first job, learn the above IT skills. I am sure none of your faculty would have told you this but listen this from those who are at present in IT field. The demand for IT professionals with domain knowledge of finance field is astonishing. Pay packages of not less than 7-8 lacs per annum will beckon you. You may say I am not interested in IT field. Fine. Please leave your judgement aside for the moment. Get into the area and job of your choice. Once you get into your job, atleast then you acquire these IT skills. You will realise the value of this in 3-4 years time.
§ Believe me, the above 6 areas suffice for you to get a decent paying finance job and to excel in your career. Career specific specialized skills can be learnt (may I say, can only be learnt) on the actual job environment. Your focus at this stage should be to gain proficiency in the above 6 areas, which should take no more than 3-4 months. This is all that it takes. Your entire interview process and even your job profile hinges on these 6 areas alone. None of the other subjects or skills really matter. It is exactly in this context that MBA students need to appreciate the academic course structure and pedagogy. You may have 6-8 subjects per semester. You may learn over 20 subjects in your MBA course. But all are not equally important. Well, that is not an eye opening statement but s many students forget this simple truth. They aspire for higher grades in all subjects to get that coveted higher overall grade. As I said earlier, brush that thoughts of grades aside if you want to be a successful MBA. Just understand that your prospective employers do not care for these 20 subjects and your proficiency in those subjects. They are worried only about their business and how you can help their business. If you can gain a reasonable degree of command on the above 6 areas, you can be a hot commodity in any of the MBA job profiles.
§ And if you want to know whether the above is true, ask someone who is employed in the financial services industry……don’t ask your “MBA passout-didn’t get job anywhere-hence became teacher” – sort of faculty for their advice on this. They will never understand what is said in this article.
§ I request your feedback and suggestions. Also, if you have any queries on MBA, curriculum, career, feel free to contact me at : sandeep.maddu@gmail.com. If you are interested in this article, I am sure you will also like my newsletter which is free subscription in which I provide valuable resources and tools on all the above 6 areas. Send me your email ID so that I can add you to my free newsletter mailing list.
