Uday Kotak Says India Inc. Should Drop Its ‘Quarter-To-Quarter’ Mindset
The banker said that this will help address a lack of trust in private companies.
Billionaire banker Uday Kotak has said corporate India needs to start focussing on a medium-term outlook instead of looking at their business situation on a quarterly basis.
“It’s important that the private sector changes its quarter-to-quarter psychology and adopts a medium-term strategy instead,” Kotak, president of the Confederation of Indian Industry, told Quintillion Media’s Sanjay Pugalia in an interview. “Along with growth, sustainability is important. Over a longer period, growth needs to be resilient and not volatile.”
This, he said, will also help address a lack of trust in private corporates.
Trust will be built if the private sector looks at the medium term and not the short term.Uday Kotak, President, CII
Kotak, who is also the managing director at Kotak Mahindra Bank Ltd., said India requires a lot of medium-term investment particularly in areas like education, healthcare, sustainability and nature.
He asserted the Covid-19 outbreak is triggering a lot of consolidation in the Indian industry. “The divide between weak companies and strong companies is getting intense.”
Kotak cited the massive challenges being faced by the airline, tourism and hospitality sectors, adding that the government needs to give these industries a chance to survive. “The hope should be that in six-nine months from now, things will be better.”
On Banking
Kotak said this leveraged sector should be protected to ensure the survival of the economy. With credit costs and stressed assets increasing, the fragile financial system should be “handled with care”, Kotak said.
Restructuring and moratorium will postpone the problem. But we will have to face reality at some point.Uday Kotak, President, CII
Kotak also pointed out that like borrowers, even the depositors need to be kept in mind while taking any policy steps. “We don’t want a situation that we end up asking moratoriums for depositors too. That wouldn’t be good for the economy.”
On IL&FS
When Kotak took over the responsibility of resolving the crisis at the IL&FS Group in October 2018, he said it was big ‘jalebi’ of 347 companies. Companies did not have arm’s length governance in many cases and it took the new board a lot of time to understand the flow of money in the “spider’s web”.
“Once we got a handle on that, we have come on a clear position. Roughly against Rs 1 lakh crore of total debt, our estimate is to recover Rs 55,000-60,000 crore,” he said. The process would’ve been faster if not for Covid and India’s cumbersome legal processes, he said.
On U.S. Elections
Uday Kotak said that he cannot bet on either U.S. Presidential candidates—Donald Trump or Joe Biden—even as polls show the latter leading.
Instead of the elections having an impact on the U.S.-India relationship, he said that we must see how the impact would be on the U.S.-China relationship. Kotak said that if China’s relationship with the U.S. is estranged, the necessary corollary will benefit India.
On India’s Digital Economy
Kotak equated India’s attempt to move towards a digital-first economy as repairing aeroplane mid-air.
He said that India needs to create digital platforms of global quality and diversify beyond just one country. He also said while India has a lot of advisors, the country needs to focus on execution on the digital front.
Watch the full conversation here: