How grave is the economic scenario in India? How will this impact your business?
The last 2 quarters have been particularly difficult for the Indian economy, with growth contracting by as much as 2% compared to earlier periods. Further, the problem of slow growth is compounded by high inflation and high interest rates, putting pressure on consumption demand. Being a primarily consumption led economy; one could say India is in the midst of economic rough weather. In addition, we have challenges with a falling investment rate that has affected the core sectors of the economy and a current account deficit, which is leading to currency devaluation. The supply side picture is not great either and unless we find a way to spur both supply and demand, we are unlikely to see the 7-9% growth rates we took as a given, when things were going well.
We believe that the economic scenario is concerning but not grave as yet. We may however, see the situation worsening if investment and concomitant industrial activity do not pick up in the next 2 quarters. Government may have to restart the economic stimulus and also prevent subsidies from ballooning. Given the present state of policy and politics, it may be a tough act to pull off.
How are you responding to meet these challenges?
We operate in an industry whose demand is directly related to the disposable income people have and in the current scenario, when that is reduced, people cut down on discretionary spending. Managing in times like this requires a relentless focus on executing the strategy. Operational excellence right through the value chain with a focus on the best value satisfaction for consumers will differentiate performance.
In the backdrop of such uncertainty, what is the role that leaders in India Inc. must play to ensure business sustainability and growth?
Leaders have to be calm and resolute, and stay the course of strategy, changing the initiatives appropriately to be effective in this environment. Leaders everywhere have to learn to work collaboratively, respecting the various stakeholders, the communities and environments in which work gets done, all the while demanding and delivering excellence. Organizations need greater focus on fundamentals of execution and connecting with employees, customers, vendors. Leaders play a very important role in understanding internal and external dynamics, and prepare their people to cope with change. External vulnerability provides opportunities and threats, and leaders must understand both and prepare the organization and its people to overcome threats and convert opportunities into business results and growth.
As a leader, what have been the learnings from the previous crisis and how will those learnings help today?
There are several lessons that are relevant not just to times of crises, but always – like focus on the consumer, taking a long term view and managing effectively in the short-term, driving execution excellence, innovating for new value, relentlessly focusing on cost and continually investing in people competencies and organizational capabilities.