PwC says Indian businesses used downturn properly to cut costs
November 9, 2009
Industry-focused tax and advisory services consulting firm PricewaterhouseCoopers (PwC) said that the global meltdown changed the growth oriented objectives of Indian businesses, and there was a renewed focus on operational effectiveness to ensure survival and companies undertook various measures to achieve it.
According to a survey, Beyond the Downturn, PwC said, with over 91% respondents implementing significant cost reduction and 70% reviewing operational and working capital cycle, Indian Inc seems to have mitigated the impact of the meltdown on its businesses.
With the economy appearing to be on a path to recovery, Indian corporates are cautiously optimistic about prospects and are beginning to evaluate growth again but are still wary of large capital commitments, PwC said.
"We believe that the focus is more on organic growth and that acquisition opportunities would be more rigorously scrutinised, but these times offer unparalleled opportunities to Indian companies buoyed up with domestic demand to achieve world-class scale. We believe that Indian entrepreneurs should not let this opportunity go unaddressed," said Bharti Gupta Ramola, leader-financial advisory services, PwC.
As per the report, respondents ranked cash flow management, difficulty in forecasting results and maintaining employee morale during the downturn as key constraining factors. Majority of the survey respondents identified benefit from achieving increased operational effectiveness by following cost reduction, reduction in working capital and optimisation of supply chain as a significant opportunity resulting from the downturn.
Strong domestic economy, stable banking and financial system and timely government intervention were cited as key factors responsible for the reduced impact of the downturn on India. These factors are also cited as the key to expectations around a faster economic recovery, the survey added.
The survey was conducted amongst chief executives, chief financial officers and group heads of diversified Indian businesses. -Yogesh Sapkale[email protected]