Tuesday, September 12, 2006
Market Matrix – India Inc : Some practical advice – 12 Sep 2006
By krsna Khandelwal – A Stock Market Vedic Theory proponent
John Hagel , the management guru, an out of box thinking person was in India last week and advised the India Inc to have a sense of urgency and translate it into bigger and better orgnisations under their fold. I have to agree with this. In my opinion, the India Inc should embark on the course on the following lines to be able to withstand against still more free economic forces and trade winds.
a) They should shed love for the family where managing companies is in question, they may have desired owner ship pattern however, without question.
b) They should not have any greed for transferring benefits to themselves against the sleeping partners in their ventures.
c) They should be funding according to need ,not according to opportunity, there is however no problem in raising risk capital at the opportune time as this money can only be got when the times are okay, when needed this money is difficult to have, against this the loaned money may be taken any time. The costs may be higher at times and lower at other times but the ventures, in any case, have to generate beyond the interest rates to justify borrowing. The marginal return on every added rupee deployed has to be more than its present cost.
d) They should not be taking out profits from the companies through hefty pay cheques for them selves, their remunerations should be fixed by independent directors on board.
e) They should have well defined risk taking capacity/capability and desire for the managers to understand beforehand, plan accordingly the new forays, and subconsciously think within such limits.
f) Surprise announcements should be avoided, keeping the desired level of confidentiality.
g) Accounting practices should be stable and sound.
h) They should not fear the govt. and should be bold and frank where the policy matters and prudence have to be balanced.
i) They should not have any truck with politicians at company level; their own personal leanings may be what ever.
j) They should not shy away from joining hands with the fellow industrialists if the sizes of project are huge for being taken singularly, if the project has potential, the points enunciated above would make the climate congenial in any case.
k) They should, as a policy, have some part of business established out side India, which should have the ability to run itself even if the umbilical cord with parent is cut off.
l) Environment concerns should not be over bearing but the laws of the land should be honoured in spirit and practice.
m) Long term approach is necessary for market development and brand building without irregular expenditure pattern.
n) Economising on every front without hurting the due rights of the stakeholders should be the order of the day.
o) Quality and controlling cost to produce the required quality should be watchword and at the same time, the quality should be uniform.
p) The distribution of profits should be regular irrespective of the variations in profitability as the investors depending on the dividend for their regular expenditure should not have to worry for resources in times of dividends being skipped, this may be ensured by keeping reserves for this particular purpose and enriching them in extraordinary times.
q) The riskier projects should be through subsidiary route only and mergers and auisitionsq with tax angle in mind should be avoided.
r) The flow of news from the company should be without considerations for its impact on the stock market/share price and should be as per the importance of the news and accessible to all.
s) The purchase and sale of the shares by insiders as defined by the SEBI should be after the intent to do so (with price band) should be made public the evening before.
t) R&D fund should be regularly set aside and the research effort should be funded out of this, it should not come in piecemeal manner.
u) Social damage (due to activity of companies) should be set right and the social causes should be left for the individuals and the govt.
India Inc should keep in mind that the image at home has to be right for it to demand fair treatment out of Indian shores, you can’t be considered responsible at one place and not at the other place in this global village and vice versa. Indian businesspersons have ability and courage & means and manner, they have to inculcate the habit of being equitable and just and not be tempted with quick returns against consistent returns.
I do not proclaim to be any knowledgeable specialist person but I have seen enough to find the underlying cause of the matter where the good and bad corporate practices are involved. I have knowledge of the cases relating to Indian corporates where they have suffered on account of not following one or more of the above practices and have suffered more for themselves while making others suffering wrongfully.
Readers’ comments are welcome on the above post.