The challenges for corporates are many in this volatile Environment. The Corporates have to tread with caution and assess as many risks as possible and be ready with the response to maintain a steady performance.
Economic Environment
• Expectations of Economic Growth had shown a declining trend in developed countries.
• US and Europe are affected in a big way and back to old normal will take a few years.
• Corporate Sector outlook in many countries had shown a negative trend.
• Asian countries offer promise in Economic Growth
• Customer sentiments are very positive in the Developing countries
• The developing countries have to take the lead in sustaining the global economic growth.
• Focus is shifting to the Real Economy activities.
• Regulators have started discouraging the Profiting from Derivatives and just paper transactions
• There will be increased regulation.
. There will be increased volatality in the performance of Economies, Corporates, Markets and different asset classes.
• The old method of forecasting and the available statistical models can not address all the imponderables.
• The inflation is likely to come down to 7% and then to 5% within a year.
• The Economic growth this fiscal would be between 8 and 8.5% and depending on global developments, the prospects for the growth will evolve in future.
Challenges for Corporates are many
• Managing a multi country operation
• Main challenge is how to manage volatility in Demand, Costs of inputs and managing Cash.
• Robust Financial and Performance Planning
• Ensuring predictable performance
• Measurement of Risk
• Be ready with an appropriate response for various types of risks.
• Introduction of new reporting standards by regulatory authorities
• Profiting from speculation will come down
Strategies to be adopted
• Develop a highly flexible organisation and Financial Architecture.
• Reduce the level of Fixed costs in the system and increase the variable costs.
• Strategic outsourcing of activities and follow asset light strategies.
• Focus on Cash generation
• Focus on Core business and reduce the income from financial and derivative transactions.
• Scenario planning and be ready with response for all possible scenarios.
• Hedge the input costs and output price at the budgeted levels.
• Monitoring of performance at regular intervals including daily, weekly and monthly depending on the need.
• Monitor supplier and Customer performance closely.
• Develop a good risk management system and monitor all types of risks continuously.
