Cutting costs key in India

13 November 2012

NEW DELHI: Cutting costs is a higher priority for brand owners in India than launching products or entering new markets, a report has revealed.

The Confederation of Indian Industry, the trade body, and McKinsey, the consultancy, polled 32 chief financial officers to determine the current corporate agenda.

Cost reduction was seen as the main goal overall, scoring 8.4 points out of a possible ten. Introducing new goods and services registered 7.1 points here, ahead of entering new markets on 5.9 points.

"Controlling spending, improving profitability and managing cash flow effectively is a top priority," the study said.

Exploiting untapped markets hit 5.5 points on this metric, trumping making acquisitions and reducing leverage, with 4.6 points apiece. Disposing of assets also logged 3.1 points.

Precisely 58% of operators expected their topline growth to beat that recorded last year, while 54% took the same view for profit after tax, as did 48% when discussing the return on capital invested.

More broadly, 60% of contributors agreed corruption and bureaucracy would be worse than last year, and over 50% forecast inflation would remain in the 6% to 8% range.

An additional 60% of participants believed economic growth was likely to come in at between 5% and 6% next year, a slowdown on the previously stellar rate of expansion.

Similarly, a 67% majority of those questioned asserted that India's attractiveness to foreign investment and economic policy-making should either match or improve on the situation in 2011.

The crisis in the eurozone, a financial slowdown in the US and rising oil prices are predicted to have the biggest impact on the economy.

Encouraging overseas investment, controlling fiscal debt, strengthening the local infrastructure and providing simpler policies for business were the main priorities it was believed the government must address, the study added.

Data sourced from Confederation of Indian Industry; additional content by Warc staff