It started since early 80s and has now reached the Tipping Point. India is now ready with competitive spirit and full motivation for growth and ready to take up the world financially. It has apparently mastered best competitive practices in marketing, customer services and corporate governance in corporate sector, especially in services, media and banking, the three sectors projecting their success even in global recession to the outside world. Mr.Anand Mahindra said in TOI, as early as on 22nd. June, 2009, in renaming Satyam that customer concentricity, high standard of corporate governance, unimpeachable ethics form the cornerstones of the Mahindra Group.
In 2008-9, overseas investment from India was US$ 11.3 billion, 10th largest in the world. Between 2004 & 2007, its CAGR was > 50%. India has grown @ 7.4%, despite global recession. It together with China, will contribute 40% of world growth in next decade and 5% of global trade by 2020. It already has 63 companies in Fortune 500. FDI inflow to India in 2009-10 was $ 43 bn.
India is now a strong voice in WTO, IMF Basel Committee and global committees on systemic risk management. CII-Indian Business Forum, UK, has been set up. FICCI has identified 12 large houses investing in EU and joined hand with USIBC for USA. . India has helped in setting up a farmers training and information centre in the backward and desert –like province of Ningxia in China. Yet, a word of caution seems to be in order for the following reasons:
- With increasing size, nimbleness and objectivity is lost as more variables and variability enter as determinant. . Hence, investment and lending decisions need frequent review, scenario planning and rolling forecast. Increasing size distorts clarity of perception. CEO’s / CFO’s responsibility and burden has become greater than ever. Co-ordination is getting more and more difficult. All this require professionalism and objectivity of highest order and work – life-balance. Otherwise only the paranoid will have the chance to succeed
- The basis of lending / borrowing and customer relationship has traditionally been trust and personal relations. With integration, globalization and enlargement in size, disconnect has developed and the gap is increasingly impacting customer service, leading to even malpractice and breach of contract.
- While telecommunication and outsourcing has helped greatly in information processing and communication, simultaneous misuse has enhanced this disconnect. In some large banks and corporate, a low profile borrower or customer has no way of reaching a responsible / understanding official. Interaction is allowed only with help / feedback / customer service / info through automatic telephone line/email. After pressing all nos.rightly and giving all personal and relationship details, you might reach recorded information / clarification and rarely the customer care executive. Even then inadequate response comes because these executives are usually fresh MBAs with very limited product knowledge and therefore unable to comprehend or respond to your unique problem that requires reference beyond a/c details. They have been provided with standard response, verbal / written, and the senior officials see to it that they don’t get involved and avoid responsibility. Proper customer service is now available to only crorepaties through Family Office/Private Banking
- Misuse of sophisticated software is done in falsifying accounts/information/presentation as happened in Satyam and there are instances of miss-selling of derivatives by banks.
- For loan evaluation, banks need state of art computerized statistical model based on bankruptcy data, but it is not yet available in India. Non-statistical models need comprehensive past financial record of the borrowing company, not generally available in SMEs. Moreover, for perception of qualitative factors such as management, one needs personal connect and grasp, a rarity these days. So evaluation is getting difficult with increasing size and dynamics in market.
- Tata’s ventures like Jaguar Land Rover and Corus may not have been well conceived. Indian pharma sector’s foray overseas has not really succeeded.
Therefore it may yet be a time for consolidation only. Each leader / CMD / CEO may like to ensure first that the standard of excellence said to be prevailing in India is actually being followed in companies/ subsidiaries / associates and divisions under his/ her control before embarking on new or expansion project / acquisition in India or overseas.
By Sudip Bhattacharyya