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`Cos focusing on advanced info systems'

Our Bureau

NEW DELHI, July 1

COMPANIES are focusing on strategic planning processes and advanced information systems to get over these difficult times, according to the preliminary findings of a survey conducted by the Confederation of Indian Industry (CII).

The respondents of the survey on how corporates were `Managing growth in a downturn' were unanimous that competitiveness was crucial for corporates in today's sluggish market conditions and was vital for growth. The respondents also stressed on the need for a cost-effective, need-based management information system (MIS) with an in-built early warning mechanism to manage growth in a downturn.

The need for restructuring the board by inducting independent directors has also been cited by many corporates as tools for management growth. Respondents have pointed out that the expertise of the independent directors would be of crucial importance in helping the companies in managing the slowdown.

The corporates are also giving adequate emphasis on rewards system, training and retraining programmes and leadership succession planning in the various departments. Among the key tools that the corporates are adopting to ensure implementation of strateg ic plans were periodic review of strategies, dedicating top executives to implement the plans, detailed written plans communicated to everyone electronically and making senior management more accountable.

While most of the respondents are optimistic that the GDP growth would be 7-8 per cent in the next five years, they however, foresee less than six per cent growth in 2001-02.

Attributing the slowdown in the economy as a major obstacle in growth, companies see a similar trend in their gross sales turnover. Many respondents are expecting a growth of less than 1-10 per cent in gross sales turnover in the current year and only a few are expecting a growth of between 10-30 per cent.

However, the respondents foresee brighter prospects in the next five-year horizon and expect a growth between 10-30 per cent.

Among the other constraints to growth, as pointed out by the respondents, is the downward pressure on prices and squeeze on margins. Besides, cost of capital and high interest rates continue to act as impediments to growth for the corporate sectors. Comp ounding the problem of slowdown is also the high cost of input/raw materials and lack of proper infrastructure.

The survey reveals that most of the corporates hoped to generate more revenues from overseas in the medium term. However, as far as the current year is concerned, the trend is not very encouraging. ``It is clearly discernible that the Indian industry is slowly trying to tap global markets with a good share of revenue coming from overseas.''

Internally, to manage the slowdown, Indian companies are concentrating on restructuring of the board, generating internal cash flows to finance growth, efficient use of available resources, strategic planning, developing advanced information systems and periodic review of the progresses made in implementation and applying cost-effective techniques.

On the external front, Indian companies are concentrating on exploring new domestic as well as international markets, diversification of product portfolio, tie-ups and joint ventures with foreign companies, acquisition and expansion of companies abroad a nd increased outsourcing.