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July 2, 2001
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Money > Business Headlines > Report July 2, 2001 |
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India Inc feels competitiveness critical: CIIBS Corporate Bureau India Inc is aggressively using strategic planning processes and advanced information systems in order to manage growth during the ongoing economic slowdown. As per a survey done by the Confederation of Indian Industry, most of the corporates that the chamber contacted foresee less than 6 per cent growth in the ongoing financial year. However, they were optimistic that the GDP growth would be around 7 to 8 per cent in the next five years. "The respondents were unanimous that competitiveness was crucial for corporates in sluggish market conditions and was vital for growth. Respondents also stressed on the need for a cost-effective, need-based management information system with an in-built early warning mechanism to manage growth in a downturn," a CII statement says. "The need for restructuring the board by inducting independent directors has also been cited by many corporates as tools for managing growth. Respondents have pointed out that the expertise of the independent directors would be of crucial importance in helping the companies manage the downturn," the statement added. Besides, corporates are also giving adequate emphasis on the rewards system, training and retraining programmes and leadership succession planning in the various departments. "Among the key tools that the corporates are adopting to ensure implementation of strategic plans were periodic review strategies, dedicated top executives to implement the plans, detailed written plans communicated to everyone electronically and making senior management more accountable," it said. Most corporates are expecting a less than 10 per cent growth in their gross sales turnover in the current financial year. However, "they foresee brighter prospects in the next five years and expect a growth between 10 to 30 per cent," the statement added. According to CII, corporates perceive downward pressure on prices and squeezed margins as the biggest constraints to growth. "Cost of capital and high interest rate continue to act as impediments to growth for the corporate sector," the statement says. "Despite the initiative taken by the ministry of finance and the RBI to bring down the real effective rate of interest in the country, it is still higher than the rates prevailing in South-East Asia, the respondents felt," it added. As per the survey, most companies hope to finance growth through internal cash flows alone rather than accessing from outside sources. "Very few companies have evinced plans of financing growth through venture capital or public stock offering," it said. Besides, the sentiments prevailing in the capital market is another obstacle to go for public issues to finance new project or expansion work. Powered by YOU MAY ALSO WANT TO READ:
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