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IIM Alumni Share Tips for Surviving the Crisis

These are some of the suggestions that top executives from a cross-section of companies made at the first annual meeting of regional alumni of the Indian Institutes of Management. The executives expressed their views late Saturday in a panel discussion on the theme of “Riding out the Downturn.”

Cutting costs is important but not in itself a sufficient response for a firm when its sales take a hit in a slowdown. Business leaders must also go on the offensive with new tactics and ideas, the executives said, speaking before several hundred graduates and faculty at the first PAN IIM Alumni Gulf Summit at a downtown hotel.

When the current downturn intensified, Emirates NBD Group, the UAE’s largest bank, began to “weed out” marginal businesses and “focus on things that matter,” said Suvo Sarkar, its executive vice-president and general manager for retail banking. Emirates NBD took the proactive step of launching a private banking operation, he said, to cater to rich clients who might not be as badly squeezed as customers in the mass retail market.

When Dabur India Ltd. began to lose sales in its traditional Gulf markets, the company took a calculated risk and committed time, staff and money to cultivating new markets in other parts of the Middle East. The strategy paid off, and overall sales of Dabur’s Ayurvedic and herbal products have firmed up, its Chief Executive Officer Sunil 
Duggal said.

Like Emirates NBD, Dabur has cut costs, but Duggal emphasised that firms should pursue a mixture of “offense and defense” to weather the 
economic storm.

Electronics retailer Sharaf DG set up a crisis team to “re-think” what growth should mean in the recession. It decided that sales volumes and market share were less important than activities that generated the most cash for the least investment, said the company’s Chief Executive Officer Nilesh Khalkho.

At the same time, Khalko stressed the need for executives to bolster the morale of nervous employees and win them over with a credible business plan so that they’ll be inspired to continue working hard. This includes being honest with staffers and giving them bad news about their company’s situation along with the good.

“You can’t fool them. Everyone can go on Google and find out what’s going on,” Khalko said.

A firm must communicate more openly as well with its customers and shareholders, said Sanjeev Bikhchandani, co-founder of Info Edge – the first Internet company to list its shares on an Indian stock exchange.

Bikhchandani said that his firm – which runs the Indian job site Naukri.com and a match-making site called Jeevansathi.com—has cut costs by reducing its work force but that it has done so through attrition, not by firing. “No Indian manager likes to sack,” he argued. “We do anything to avoid sacking. It’s a cultural thing.”

Downturns need not be uniformly bad for a company. For example, Sarkar said that Emirates NBD, with its large branch network, is strengthening its market position as smaller rivals struggle. “In a way, the crisis has actually helped,” he said.

Duggal of Dabur added: “In a downturn, … the ones who survive are stronger for the whole experience.”

When recovery finally comes, companies must take to heart the lessons they’re learning now, the executives agreed. One mistake firms often make during boom times is to “lower the bar” of qualifications for the employees they want to hire, said Info Edge’s Bikhchandani.

For his part, Khalkho of Sharaf DG expressed relief that his company had not loaded up on debt before the crisis. Showing a conservative streak, he recalled that until so many highly indebted, or leveraged, firms came to grief in recent months, the practice of leveraging was widely 
considered “sexy.”

· bruce@khaleejtimes.com