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Indian CEOs focusing on M&As, digital transformation in a post-pandemic world

K.R. Srivats | | Updated on: May 24, 2022

The EY CEO Survey 2022 also finds that 50% of respondents expect to improve their business profit margins via digital and technological interventions

A significant majority (90 per cent) of Indian CEOs surveyed are clearly looking at “sustainability” as the primary driver of competitive advantage for companies in a post-pandemic volatile environment, the EY CEO Survey 2022 has showed. Besides sustainability, nearly 33 per cent of Indian CEOs surveyed expect mergers & acquisitions to help accelerate their business transformation

Digital transformations, ESG

Almost 50 per cent of respondents expect to improve their business’ profit margins through digital and technological interventions, the survey — which polled about sixty top CEOs of the country —revealed.

Over 40 per cent of CEOs are paying the greatest attention to investments in existing businesses to accelerate organic growth and value creation, as well as digital transformation. Nearly 49 per cent of respondents intend to invest in digital and technological innovations in the near future.

The survey also highlights the growing importance of ESG with 78 per cent of respondents identifying ESG factors as extremely important or important when it comes to strategic decision making and driver of value — at par with those who considered revenue growth as a factor.

Building agility

Rajiv Memani, Chairman, EY India, said, “There is no doubt that Indian CEOs are leading from the front to combat the challenges emanating from the pandemic and geopolitical tensions. More than ever, CEOs are looking at how these interconnected issues may impact their growth agendas and are building the ability to pivot quickly into their overall corporate strategy.  They are increasingly looking at M&As as a lever for accelerating business transformation and long-term value creation.”

Ongoing geopolitical tensions are also triggering Indian CEOs to readjust their supply chains, with 80 per cent of them doing so to manage geopolitical risks or reduce logistic costs and uncertainty.

Post dealing with pandemic-induced disruptions, businesses now grapple with increased geopolitical issues, rising inflation, higher commodity prices and the ensuing impact on profitability.

The EY report highlighted that the post-pandemic challenges that hold the CEOs agenda can be encapsulated in three themes — Innovation, Sustainability, and Acquisitions.

Sustainability

As many as 17 per cent of respondent CEOs accepted that their businesses are witnessing the accelerating impact of climate change, thereby increasing the pressure to be sustainable. Nearly 96 per cent are proactively considering sustainability as a driving factor for their M&A agenda, and are creating KPIs for long-term value creation, acquiring technology and talent. 90 per cent consider sustainability as the primary driver for competitive advantage, long-term strategic growth and lowering cost.

Mergers and acquisitions  

Since the pandemic, business leaders have been forced to re-align their business solutions and approach. M&As have become a key element for business transformation, against solely driving growth and expansion.

 About 22 per cent of Indian CEOs will undertake M&A for the acquisition of technology, talent, new production capabilities or innovative start-ups, significantly higher than their global counterparts at 14 per cent.

Also, 22 per cent of the respondents have planned bolt-on acquisitions/consolidations in the near future to increase market share. As many as 11 per cent of the respondent CEOs plan to utilize their M&A strategy to improve their sustainable footprint because of changing customer behaviour, the survey revealed.

Published on May 24, 2022
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