Photo: iStock
Photo: iStock

Opinion | 7 not-so-deadly sins Indian firms committed in 2018

The #MeToo campaign singed a few companies culminating in the suicide of an executive

While profits were up and markets surprisingly buoyant for the most part, Indian companies may not be ending 2018 on a particularly cheerful note. With a messy election year and a tightening global economy coming up ahead, growth in demand is likely to be subdued. However, some lessons from this year, if learnt well, could show the way to conquer the demons in what looks like a turbulent 12 months.

Here’s a smorgasbord of seven developments served up by corporate India in 2018 that will have ramifications not just in the year to come but well beyond.

For a market leader, it isn’t enough to own your space. As the march of the Jio juggernaut showed in telecom, if you leave untenanted gaps around your core business areas, it gives the competition the elbow room it needs. Over the years Bharti Airtel and Idea-Vodafone had most bases covered. Then the unexpected happened in the form of the Jio onslaught based on crashing prices and focusing on data. But in the year gone by, Jio also muscled into content with aggressive acquisitions like that of Saavn. Already under pressure, Bharti and Vodafone-Idea now have another mountain to climb. Meanwhile, Jio is already looking at full-fledged Internet of Things (IoT) solutions in the automobile and home automation space.

Who will regulate the regulators? Securities and Exchange Board of India (Sebi) is charged with the task of regulating companies; the Reserve Bank of India (RBI) is expected to regulate the banks and auditors are expected to regulate both. As the skeletons tumbled out of the closets at companies like Infrastructure Leasing & Financial Services (IL&FS), Fortis Healthcare, ICICI Bank and Yes Bank, it was evident that all three regulators had been remiss in doing their jobs. The question then is who are these institutions answerable to? Do we need an overarching regulator, an ombudsman for all businesses.

Off balance sheet developments need careful focus. The #MeToo campaign singed a few companies culminating in the tragic suicide of a Genpact executive, which showed just how complicated the issue was. Certainly not something that could be resolved by a quick meeting of a hastily assembled committee.

Sexual harassment and bullying were not priority areas for most Indian companies, but as the movement gained ground, these became centre stage. What’s changed forever is the earlier tendency of ignoring these issues. If nothing else, the fear of any such blowing up one day should ensure that.

There are no independent and non-independent directors. There are only directors who do their job and a vast majority that don’t. Way too many independent directors have been cheer leaders for the company’s management, in particular owners and chief executive officers (CEOs). In the process, they have been failing in their duty to improve corporate governance standards while functioning as watchdogs and playing a vital role in risk management. The consequences have been disastrous for minority shareholders whose cause they are expected to champion.

If the dollar doesn’t get you, oil will. In case both turn benign, there’s always Donald Trump. The first eight months of the year saw a steep climb in oil prices even as the rupee continued to weaken, leading to an increase in the input costs of Indian companies. In the last three months, even though oil prices dropped, the United States president’s tariff wars with China and lately with his own Federal Reserve chief, muddied the waters for Indian businesses. Globalization is a mixed blessing.

Green is the colour of money. For too long, sustainability was an issue for the convention halls. But in 2018, there were sufficient pulls and pushes to suggest it was becoming a boardroom issue. By the end of the year, makers of air purifiers were laughing their way to the bank, while automakers were accelerating plans for electric and hybrid vehicles. Through it all, smarter companies like United Breweries Ltd, Infosys Ltd and Grundfos Pumps India Private Ltd also figured out the cost savings from meeting their energy needs from solar power.

Governments are always chaotic. It is the nature of the beast. But eventually populism prevails. There were companies that planned for a goods and services tax (GST) rate of 28% on their products at the beginning of the year; they ended up with 12% by the end of it. Party time. Or take the repeated recapitalization of banks. Even while companies kept complaining of how the government does not listen to them, from interest rates to taxes to stoking demand, there was little to complain as the government invariably chose to appease. Oh and, not to forget, there was no demonetization scare in the year, a definite plus.

And an eighth one, just because it is the festive season. The tiny sector of Indian business experimented with Artificial Intelligence, played around with block-chain and in general looked to upend existing markets and systems. The largest companies stuck to the tried and tested, did little by way of innovation and discovery. So there were no breakthrough drugs or new tech products with a Made-in-India label. What’s worse, the few that were, faced extinction as the Chinese armada continued its relentless march in the country.

Sundeep Khanna is an executive editor at Mint and oversees the newsroom’s corporate coverage.

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