Taking a new ROAD to Growth
15
TAKING A NEW ROAD TO GROWTH HOW INDIA INC. CAN PROSPER IN A CHANGED WORLD REPORT BRIEFING July 2016
-
Upload
kanvic-consulting -
Category
Business
-
view
212 -
download
0
Transcript of Taking a new ROAD to Growth
TAKING A NEW ROAD TO GROWTH HOW INDIA INC. CAN PROSPER IN A CHANGED WORLD
REPORT BRIEFINGJuly 2016
‘Taking a new ROAD to growth’ is based on Kanvic’s multi-year study of India’s Top 1,000 companies
2
Kanvic’s ROAD to Growth framework for growing in a changed world
‣Kanvic India Inc. Performance Navigator
‣Kanvic Trends Tracker (KaTT)
‣Kanvic’s Digital Start-up Database
‣ Interviews with C-level executives at India Inc.
This report brings ground-breaking new insights into the performance of India Inc., the challenges they now face, and the road ahead
PROFITS HAVE FALLEN India Inc. has struggled over the last 5 years as profits have fallen by more than half.
3
THERE IS A NEW ROAD TO GROWTH Kanvic has identified four fundamentals for India Inc. to grow in the new era which together form the new ROAD to growth.
THE GROWTH CONTEXT HAS CHANGED However, 3 factors have changed the context for India Inc.: the VUCA environment, the impact of digital disruption, and the debt trap.
WINNERS HAVE GROWN AGGRESSIVELY Despite the challenges, those companies that pursued aggressive growth in recent years improved their profitability.
FORTUNES HAVE SHIFTED There has been a dramatic shift in profits between sectors in India, with 5 industries now capturing almost 75% of profits.
India Inc. has been on a downhill path since 2010
563
EBITDA, Rs. ,000 Crore Net Profit, Rs. ,000 Crore
EBITDA as percent of GDP Net Profit as percent of GDP
8.7 7.2 2.0
2010 2015
Source: Kanvic India Inc. Performance Navigator, Economic Survey of India, Kanvic analysis
897 265 250
2010 2015
4.1
Corporate profit of India’s top 1000 listed companies, n=880
Sector 2010 2015
Information Technology 12,2 26,1
Automotive 6,2 16,2
Utilities 13,0 14,9
Healthcare 5,1 11,5
Auto-component 2,2 6,1
Telecom 6,0 3,2
FMCG-Food 4,7 2,1
Construction 8,5 -0,6
Metals & Mining 15,5 -1,2
Capital Goods 5,9 -2,7
Along with the profit squeeze, there has been a large scale shift in profits
Sector wise contribution to total corporate profits, percent
Source: Kanvic India Inc. Performance Navigator
Note: Total contribution of sectors to corporate profit pool does not add upto 100% because this is a selection of sectors which had the largest positive or negative change.
Five sectors have captured three quarters of the profit pool, almost doubling their share since 2010
74.8%38.7%
Auto-component Automotive Healthcare Information Technology Utilities
2010 2015
Source: Kanvic India Inc. Performance Navigator
Contribution of top five sectors to total corporate profits, percent
Note: We have excluded energy companies from this analysis because of their large share in the profit pool creating distortion for other sectors.
Companies with the most aggressive revenue growth have been more likely to see an increase in profits
Profit growth between 2010-15 for players that grew faster or slower than their industry median, Rs. Crore
1
10
100
1000
10000
100000
1 10 100 1000 10000 100000
Aggressive revenue growth Non-aggressive revenue growth
EBITDA 2015
EBITDA 2010
Profit Decline
Profit Growth
Note: Aggressive revenue growth means top-line growth above the sector median while Non-aggressive growth is below the median.Source: Kanvic India Inc. Performance Navigator
Three key factors are compelling India Inc. to take a new road to growth
VUCA ENVIRONMENT
DIGITAL DISRUPTIONDEBT TRAP
Since 2010 companies have been facing a very harsh and volatile economic environment
New digital technologies are disrupting industry after industry
A large number of Indian companies are burdened with high debt
Source: Kanvic Trends Tracker (KaTT)
Note: VUCA - Volatile Uncertain Complex and Ambiguous. A term which came into general use after the 9/11 attacks and has been widely used in the business context since the 2008 financial crisis. It signifies the dynamic nature of the business environment in the globalised world of the 21st Century.
The new ROAD to growth is built on four fundamentals of success
R
RESET YOUR ASSUMPTIONS
OORGANISE
FOR THE FUTURE
AADVANCE
WITH
AGILITY
DDIGITALISE
YOUR BUSINESS
A new ROAD to growth
Source: Kanvic analysis
Kanvic’s ROAD framework sets out the new route to growth in today’s changed world
R RESET YOUR ASSUMPTIONS
‣Engage in open conversations‣Mind your biases‣Display mental flexibility‣ Lead like CEO 3.0
O ORGANISE FOR THE FUTURE
‣Develop fluid structures‣Create a culture of experimentation‣Make way for millennials‣Rethink performance management
A ADVANCE WITH AGILITY
‣Sharpen your antennae‣ Interpret right‣Act and Adapt
D DIGITALISE YOUR BUSINESS
‣ Identify digital opportunities‣Make data a strategic asset‣Attract digital talent
A new ROAD to growth
Source: Kanvic analysis
Contact details
11
To have an interaction with the report’s authors please contact :
Gehan Wanduragala Email: [email protected]
To discover more and get your copy of the full report please visit
kanvic.com
Kanvic is a management consulting firm helping businesses reap long lasting rewards in the high growth Indian economy
12
Develop winning strategies1
2
3
to reap long lasting rewards in the high growth Indian economy.
Drive profitable growth
Achieve operational excellence
We leverage deep expertise in strategy to advise clients on their most pressing business challenges
13
Business Unit
Strategy
Corporate Strategy
Growth Strategy
India Entry Strategy
Organisation Design
Marketing strategy
Branding
Customer Insights
Channel
Management
Pricing
Mergers &
Acquisitions
Growth Financing
Investment
Assessment
Restructuring
STRATEGY CORPORATE FINANCE MARKETING
Performance Diagnostic
Cash & Capital
Management
Cost Management
Business Process
Redesign
Performance Dashboard
PERFORMANCE LEADERSHIP
We are present in India, the UK and France to help our client base of leading domestic and international companies succeed on a global scale
14
Kanvic Office
Kanvic Client
France
U.K.
Japan
Australia
India
Mauritius
China
Denmark
Italy
Switzerland
Costa Rica
U.S.A.
@Kanvic
BANGALORE NEW DELHI LONDON PARIS
Ravindra Beleyur Deepak Sharma Gehan Wanduragala Vlad Flamind
M: +91 94481 46963
M: +91 99283 77800
M: +44 7825 160716
M: +33 7624 51907
kanvic.com
