Response to the downturn
Despite the slowdown, many Indian firms are confident of achieving double-digit growth, says an E&Y survey.
How is India Inc. coping with the worst economic crisis in living memory? Not too badly, finds an Ernst & Young study titled, “Opportunity in adversity: India’s response to the crisis” where India Inc.’s reaction to the slowdown on several parameters has been measured. For instance, when asked whether they would be able to deliver on their revenue targets in the financial year 2009-10, 42 per cent of the respondents said they were confident of achieving at least 90 per cent of their targets.
Another encouraging sign was that almost half (46 per cent) of those polled, said they would achieve at least 10 per cent growth for the period ended 2010. “Our research showed that companies which have emerged the strongest in the past two quarters, had clearly identified opportunities to sustain their development during the downturn and took strategic decisions that distinguished them from their competitors,” says a member of the research team.
An overwhelming 71 per cent firms, for instance, said they have re-evaluated their business plans and the focus has shifted from growth to preserving cash. Clearly, managing liquidity and financing have emerged as key challenges. The PSU banks in this case have come to their rescue. Most firms said they had access to finance. As many as 69 per cent of firms gave high preference to term loans, while 61 per cent said they preferred debt or equity from group entities in terms of the financing options available to them.
Whether the downturn will, indeed, end before the year ends, as a quarter of the respondents believe, is hard to predict, but the silver lining seems to be that India Inc. is facing the challenges with a positive outlook.
— Dhiman Chattopadhyay
Another encouraging sign was that almost half (46 per cent) of those polled, said they would achieve at least 10 per cent growth for the period ended 2010. “Our research showed that companies which have emerged the strongest in the past two quarters, had clearly identified opportunities to sustain their development during the downturn and took strategic decisions that distinguished them from their competitors,” says a member of the research team.
An overwhelming 71 per cent firms, for instance, said they have re-evaluated their business plans and the focus has shifted from growth to preserving cash. Clearly, managing liquidity and financing have emerged as key challenges. The PSU banks in this case have come to their rescue. Most firms said they had access to finance. As many as 69 per cent of firms gave high preference to term loans, while 61 per cent said they preferred debt or equity from group entities in terms of the financing options available to them.
Whether the downturn will, indeed, end before the year ends, as a quarter of the respondents believe, is hard to predict, but the silver lining seems to be that India Inc. is facing the challenges with a positive outlook.
— Dhiman Chattopadhyay
