FTN: India Inc must cut cost to survive economic crisis

FACING THE MUSIC: Global economic crisis has forced many companies to tighten their belts.

          

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The Index of Industrial Production (IIP) figures rose to 4.8 per cent in September from a dismal 1.4 per cent in the month before. But experts warn that it is not yet time to rejoice as the situation could worsen due to global economic meltdown.

Companies are putting expansion plans on hold due to the global liquidity crunch. In America 12 lakh jobs were lost in the last 10 months. But in corporate India the mantra seems to be cut costs and save jobs.

Hire and fire is not an option in the country with no social security system whatsoever. To gauge corporate India's health many look up to the Tatas or the Ambanis. Right now many indications point to an illness, taking precautionary pills.

Tata Son's Chairman Ratan Tata sent an e-mail to his managers saying says the group is gearing up for the economic slowdown. "We are being proactive in managing our companies and not letting circumstances lead us," the e-mail reads.

Leading companies like the Future Group, Hindustan Unilever, Reliance Retail, Reliance Industries, Grasim Industries and Aditya Birla Group are on a drive to cut costs and survive.

Measures include ways of reducing operational costs, deferring non-essential man power expansion, improving production capacity and efficiency and even putting on hold any plans to acquire new interests unless considered strategically critical.

The question asked on Face The Nation was-"Are corporate employees ready to face cost cutting?"

The panellists were Chairman and Managing Director of Bajaj Auto Limited, Rahul Bajaj; Managing Partner, of Counselage, Suhel Seth and the CEO of Naukri.com, Sanjeev Bhikchandani.

The discussion was moderated by senior editor Sagarika Ghose.

Premature celebrations and misreads

Rahul Bajaj said that his office did not require nor contemplate sending a message to employees to cut costs. He was, however, shocked by the misreading of the IIP figures of August and September by people in the power corridors. The uncalled for celebration and misinterpretation of the IIP figures irked him.

Bajaj felt that the IIP figures should be compared year-on-year and not month-on-month. The increase in September was due to the festival season in October and production or purchases do rise when Dussehra and Diwali are round the bend.