The Hindu Business Line : ‘Companies need to make strategic choices for growth’

Chennai, June 21 Tie-ups with venture capital and private equity players and establishing business alliances are the key growth enablers for Indian companies aspiring to grow globally, according to Mr S. Mahalingam, Chief Financial Officer, Tata Consultancy Services Ltd.

Inaugurating a two-day meet ‘The Indian Finance Forum’ organised by the Confederation of Indian Industry here on Friday, he said companies need to make several strategic choices for growth.

Companies pursuing inorganic growth should exercise care in making the right choices when it comes to identifying targets for mergers and acquisitions.

Managing growth in a global environment requires dynamic thought leadership and specialised skills in cross border activities of managing exchange risks and multi-country regulatory issues.

Talking about TCS’ inorganic growth, he said TCS managed four mergers, six acquisitions spanning four continents and employing 11,000 people transitioned through mergers and acquisitions.

The growth also involved more than twenty insourcing deals, and five transfers of undertakings involving over 1,000 people transitioned through insourcing between 2001 and 2008.

India growth story

He said that the Indian corporate sector still has a lot to cheer about as the market provides huge growth opportunities for key sectors such as information technology, automobile, infrastructure, telecom, retail, healthcare and financial services.

The global market for IT products is estimated at $779 billion and the market is growing at 9 per cent.

There is a global recognition for Indian automobile companies.

However, the Indian industry should address the challenges of cost inflation, lack of qualified work force, project management skills and enhance productivity.

In his theme address, Mr L. Ganesh, Chairman, TIFF 2008 and Chairman of the Rane Group, said that over the past four years, India has done exceptionally well in taking advantage of a favourable global environment to strengthen policy frameworks and lower long standing vulnerabilities. However, the external environment has abruptly changed, led by mutually reinforcing financial sector shocks in the US that are spilling over into the global economy. Thus far, baseline forecasts show that the Indian growth story is holding up pretty well minus a few glitches. The dynamism of the financial sector is a challenge.

Addressing the session on ‘Growth Capital - Role of Private Equity and Venture Capital’, Mr Rajesh Khanna, Managing Director, Warburg Pincus India Ltd, said that India has emerged as a top destination for private equity firms. Private equity firms are becoming more relevant for companies that want to divest or sell non-core assets or subsidiaries and companies that want seed capital or funds for long-term growth in an uncertain environment.

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‘Companies need to make strategic choices for growth’