India Inc. Needs To Tap Own Abilities To Stem Slowdown, Says Marico’s Harsh Mariwala
Every time you can’t go to the government and ask for sops, says Marico Chairman Harsh Mariwala.
Indian companies need to “look internally” to counter cyclical problems rather than blaming the business environment as a whole, according to Harsh Mariwala, even as Asia’s third-largest economy battles a slowdown.
“In the worst off sectors, we have seen companies thriving because they have done something impactful to the consumers,” Mariwala , chairman at Marico Ltd., told BloombergQuint in an interview. “Don’t get swayed by the Indian economy not growing at higher growth rates. Do something so that you stand out.”
Domestic businesses, he said, must address the needs of consumers through innovation, improving quality of their talent or reducing the price points in order to revive growth.
India’s consumption sputtered following the liquidity crunch faced by non-banking financial companies since last year. Auto sales have been falling since the Diwali festive season due to higher upfront insurance costs and increase in vehicle prices. Consumer goods makers like Marico, the maker of Parachute coconut oil, have seen volume growth ease as demand slows. India Inc. was expecting some stimulus in Union Budget 2019-20 but was disappointed.
Government’s sops will have a short-term impact. Also, the government doesn’t have so much resources to be given as witnessed in the budget. This is actually a good thing. Every time you can’t go to the government and ask for sops.Harsh Mariwala, Chairman, Marico Ltd.
Mariwala On Indian Startups
India needs to catch up in terms of education and how Western societies view failure, said Mariwala, adding that overcoming such roadblocks will help Indian startups shine on the global front. Marico Innovation Foundation, a platform founded by Mariwala, helps domestic startups in terms of scaling up, funding and mentorship.
Watch the full video here:
Here’s the edited transcript:
What is the broad-brush view you have on what is happening at the Indian business space at large? Are there steps which can necessarily be taken to alleviate what is looking like a slowing economy?
Last two-three years, we have some discontinuous steps taken from the government, starting with demonetisation and followed with the Goods and Services Tax. At one level, they have settled down to some extent, but one doesn’t know the real impact as far as the impact on business is concern. When demonetisation happened, especially in our business, the wholesale channel—the distributor got impacted. When GST came in, again the people got impacted.
We still have to see the impact on business as GST becomes foolproof in terms of avoiding tax evasion. I think there will be some impact on players who are evading and they still continue to evade after the GST because it is not full-fledged and all the loopholes are not being filled. We have to wait and watch the impact.
In addition to that, being part of the global economy, it has impact on Indian environment, the global economy is not doing badly but I don’t know the impact. So, a lot of discontinuity on the global side disruptions and on top of that you have technological disruptions. There is unpredictability about monsoon. The only thing which is predictable is a stable government which is a good thing.
All in all, it is a fairly complex subject. I have discussed this with many industry leaders, and I believe that they predict that in the next three-six months it will improve. The factors which led to this are so complex that I am not able to predict when will the recovery take place. It will happen at some stage because some of the positive impact in reform will kick in. But to say that it will happen post monsoon is wishful thinking.
One thing is what the industry or economic tailwinds are and what businesses can do. The other thing is whether the businesses themselves have matured or transitioned enough to be able to withstand some pain and recover or shoot off the growth path once other things stabilise. Do you think Indian business are scaling to that level?
They have to do it. As an industrialist or promoter, we have to look at what can we do on our own rather than going and blaming the environment. Indian businesses have always looked at environment and what has been their impact on the business. We can say that you are a small player in a very large country, you will also be small player in your own segment of business and there are enough opportunities for innovation and creating growth rather than being in the environment.
I wish that Indian industries looked internally rather than blaming externally. Internally, in terms of improving quality of talent, having the right strategy, bringing focus and innovation, have a growth mindset. If they do this, then blaming the environment will reduce dramatically. In the worst off sectors, we have seen some companies thriving because they have done something which is impactful to consumers. So, don’t get swayed by the economy not growing by much higher growth rates. Do things on your own which will make you stand out.
Whenever auto sales slowed down, companies would say we need some excise benefits, or some benefits and things used to come back. But this time, one-two companies have said that, but we have Maruti Suzuki India Ltd. saying that we don’t need rollback of rates and we will manage on our own.
What is it that you see Indian companies not doing or wish that some of the innovation be done to give you that confidence as an industry veteran that things are looking much better than what they were 10 years ago?
The most important thing is you should have deep insight of consumer needs till that you make your product in line with it. Suppose you are making motor cars. A lot of your features may not be relevant to the consumer. Can you cut down your features and reduce the price points or do some innovation?
These sops will have a very short-term effect. The government also doesn’t have that much resources to give sops. We have seen that in this budget that no sops have come, which is good thing. Every time you can’t ask the government for sops. Can you do something on your own to drive growth? Whether it is pricing, innovation or whatever is required to drive growth. So, it is very important to drive your own journey. I understand that some businesses get impacted by environment, but can you overcome that by doing something unusual? There are good players who are doing well in a bad industry too.