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

Sanjeev Krishan, 50, 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:

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. This was made possible by the unrelenting efforts of our people.

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 retail and consumer space; financial services and more importantly, healthcare and pharmaceutical space.

Our new strategy is our response to the dynamic nature of the environment around us and the evolving needs of our clients. Covid-19, while a challenge in itself, has highlighted a host of disruptors which were already brewing beneath the surface – geopolitical issues, climate change, wealth disparities, technological advancements, among others. These disruptors have created an urgent need for transparency and accountability across a range of non-financial metrics – driving a critical need to restore trust. Simultaneously, businesses are also expected to deliver sustainable financial returns. The New Equation centres around these two fundamental and deeply intertwined needs confronting our clients – the need to build trust across a wider range of stakeholders and deliver sustained outcomes. We will balance internal building and lateral hiring for these capabilities – building from within is a core plank of our strategy.

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.

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.

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 compared with what it was five years ago. It is a far cry from where we were 10 years ago – in fact, even 5 years ago. It shows how the market around us is evolving. 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.

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.

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 has 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?

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