Companies

Corporate India looking to make up for lost time: Sanjeev Krishan, Chairman, PwC India

K Giriprakash Bengaluru | Updated on August 13, 2021

The healthcare and pharmaceutical sectors have stood out in the last 18 months, he says

Sanjeev Krishan, the Chairman of PwC in India, joined the global consultancy firm in 1991 as an articled trainee. He became a partner in 2006 and has successfully led the firm’s transactions, private equity and deals business over the years, getting the firm to a pre-eminent position amongst its private equity clients and their investee companies. In an interview with BusinessLine, Krishan talks about how corporate India is looking at making up for the lost time during the pandemic. Excerpts:

You took over office during the peak of the pandemic. How have these seven months been for the organisation? Which are the focus areas for PwC?

Looking back at the last seven months, the first things that come to mind are a sense of pride and gratitude. With the second wave of the pandemic, we were definitely tested on multiple fronts. Right through the year, our emphasis has been on working with our clients as many of them went through significant disruption. Our mantra has been to see them succeed – we succeed if they do. This was made possible by the unrelenting efforts of our people. A month ago, we announced over 2,600 promotions – another testament to our powerhouse of talent. The strength and determination of our people are incredible, and this is our greatest asset. For me personally, the last seven months have been full of learning and extremely enriching. Managing diverse, at times complex but for the most part encouraging, points of view, opinions and personnel has been the most exciting part of the journey and I’m glad that during this period we have been able to define our aspiration for the next five years as well. We have assessed the market landscape and identified select sectors which are fuelling India’s growth. The retail and consumer space is going to be a bright spot in the India story. Financial services is another one and it has already witnessed significant disruption with technology being a major contributor. If there is an industry that has stood out in the last 18 months, it is definitely our healthcare and pharmaceutical space, which is in urgent need of attention, both in terms of capital as well as infrastructure. Covid-19 also highlighted the unviability of supply chains across the globe, creating a huge opportunity for Indian manufacturers to position themselves on a global scale. This in turn will boost the infrastructure space in the country.

Corporate India has undergone quite a few changes in terms of redrawing its strategies. How will the post-pandemic world be for the Indian corporate sector and what challenges will they face considering the fact that Covid-19 has made the weaknesses and strengths much more visible.

With the pandemic having impacted businesses and hurt growth this year, based on many of my conversations with corporations, there is a hunger to make up for the lost time. So, it may not be fair to say that businesses will be more conservative. There are of course changes that we are seeing and will continue to see in the way businesses operate – whether it is a greater need to incorporate technology or an increased focus on the wellbeing of the workforce. Corporations are also looking at various parts of the business with a view towards making them ‘disruption proof’ in the future. But the resilience that they are looking to build does not appear to be limiting their hunger to grow.

The corporate sector in India is seen as allocating much of its capital to sectors that lose value over a period of time. What are the initiatives the corporate sector should carry out to reorganise itself for greater value creation?

When one talks of greater value creation, there are two key steps that organisations take. One is assessing the areas in which they operate and whether they should continue to do so. Every organisation has its purpose and areas of expertise – venturing out of these areas can often be value destructive. This is therefore more about refraining from activities that destroy value or don’t bring in enough value. The other step is bringing in operational efficiency. This could be about reorganising processes and the way things are done, or it could be about using technology to bring in automation or reducing the inherent risk built into the business. This step involves increasing the value being created through specific activities.

Indian startups are witnessing a dream run with more investments being pumped into their ventures. Zomato's IPO has been a huge success while there are a few more lined up. Do you view this as a bubble as their fundamentals in carrying out businesses are completely different compared with the traditional ones?

This is subjective – while some regard it as a bubble, others are more optimistic. At the end of the day, only time will truly tell where we end up. Yet, I view the current situation very differently. It is not about the share price of one company or the profitability ratio of another – it is fundamentally about where we have reached as a nation and a marketplace. The fact that many of these businesses are not making profits is well known to many institutional investors, and yet they have been valuing them highly due to the opportunity they see for them to disrupt the markets. Today, we have anywhere between 30–100 unicorns depending on the parameters one uses to identify a unicorn. It is a far cry from where we were 10 years ago – in fact, even five years ago. It shows how the market around us is evolving. The potential of our domestic market is immense. These players have commanded these valuations as they have shown us a new way of approaching the customer – whether it is about delivering something that resonates with the new age consumer or about delivering a traditional service in a new and direct fashion to the customer.

How do you view the decision to scrap the retrospective tax and few other recent initiatives from the government which clearly shows that it is willing to tweak its policies whenever it is needed instead of standing on prestige?

Certain recent amendments to the Income-tax Act – specially annulling the retrospective amendments on the capital gains tax matter – are good signs and the policy certainty, together with the ongoing reform process, will hopefully bring back overseas corporate investors to supplement the investments PE investors have been making in India.

Even though it is a bit early to talk about what the next Union Budget will try to do, what are the initiatives that should be part of the government's laundry list? Do you also believe that the country's economy will take much longer to recover than some of the others?

I believe that our focus should be on some of the fundamentals and how we can ensure that the existing initiatives are leveraged to the fullest. Take, for instance, the asset monetisation initiative announced this year. It is definitely something that can boost the ability of the government to invest in nation-building and simultaneously drive improved utilisation of the assets. I am sure that since the announcement, the steps taken in this direction would have brought to light many issues that need to be addressed. If the focus can be on measures that help resolve these issues before a formal process to monetise the assets is begun, I am confident that additional value can be created, making this initiative a success. Another example of a great initiative is the PLI scheme. But, can we take it one step further by working on improving the availability of high-quality industrial land? Also, can we consider a PLI scheme for services, which can encourage more captives to be set up in the country, thus generating more employment?

According to a recent report, India needs at least $100 billion of foreign direct investment every year to reach its stated target of a $ 5 trillion economy. Drawing from there, what are the kind of changes, in terms of policies, that need to be brought about to attract such investments into the country?

India has definitely taken significant measures in driving ease of doing business and that shows in how our rankings have moved up. Our main aim should be to continue to drive such measures. Speaking specifically from an FDI perspective, one such aspect could be evaluating our various policies keeping in mind that today there are two different sets of investors – strategic and financial. Historically, corporate MNCs used to be the key investors in India, with the financial sponsors group showing limited interest. But, with the way the PE/VC industry has evolved, we clearly have two different classes of investors today. Yet, some of our policies do not reflect this change and we may want to revisit them considering the way things have evolved on the ground.

Published on August 13, 2021

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