Embrace change

Remember “the India growth story”? Over the past six-odd years, India Inc. has been firmly on the growth path—riding a domestic consumption boom, expanding businesses furiously, organically and inorganically, in India and across the globe. Robust double-digit earnings growth was a given for most top rung Indian companies. As a natural corollary, the stock market indices climbed almost seven times since 2003, till it hit its peak in January. The India story looked good, and head honchos, consultants and bankers never tired of telling everyone that this was a long-term story that was here to stay for the next 15-20 years.

They aren’t wrong; the India growth story isn’t over, make no mistake. But, why isn’t anyone talking about the India growth story anymore? To put it simply, the best chapter of that story—of high, no-holds-barred, uninhibited growth—is over. It’s now time to take stock, and re-jig strategies accordingly, to bring them in line with a scenario of high interest rates, rising inflation, zooming costs of raw materials, and an economy that’s losing steam. One company that’ attempting to come to grips with the change in the economic environment is ICICI Bank (see Are the Dark Clouds for the Real?).

Some eight years ago, ICICI made the shift from a development financial institution (DFI) to a bank—by merging the DFI into the younger bank—and trained its sights squarely on chasing growth in retail finance. When interest rates fell to single digits in the early 2000s, ICICI Bank rode the wave of consumptionspending to aggressively hawk home loans, car loans, personal loans and credit cards.

Those heady days are now behind it. Bowing to the requirements of the changed times, the bank now says it is focussing on “measured growth”, and tailoring its strategy accordingly. And it isn’t the only one. Across India Inc., a swathe of large and small companies are grappling with change—of economic environment, of political climate, of consumer mindsets and, sometimes, indeed, of the very paradigm of their businesses.

This, then, is the major challenge that lies ahead of the corporate world. Over the past 17 years, it has successfully made the transition from operating in a closed environment to functioning successfully in a free-market system; then, in the late 1990s and early 2000s, Indian companies broadened their horizons and stepped into the global playing arena, not as recipients of technology or as Indian partners of foreign MNCs, but as competitors and predators. Both these phases were marked by tectonic shifts in the way Indian companies operated.

Now comes another phase of the same drama. India Inc. will have to ride this tide… on to fortune, as well. The only way to do that is to accept the ground realities and embrace the change—as ICICI Bank is doing.