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New strategic priorities for corporate India

The COVID-19 crisis is highlighting the strengths and weaknesses of India’s large businesses, and pointing the way to new strategic directions.

The COVID-19 crisis has brought new urgency to some of corporate India’s long-standing challenges. Writing for McKinsey & Company, Rajat Dhawan says the companies that act now to address these will emerge stronger from the crisis. He addresses five priorities:

  • Make balance sheets and cost structures more resilient
  • Reshape business portfolios for greater value creation
  • Embed digital and analytics to transform legacy businesses and build new ones
  • Build greater safety, flexibility and productivity into operations
  • Embrace systems thinking in corporate decisions.

1) MAKE BALANCE SHEETS AND COST STRUCTURES MORE RESILIENT

A common challenge among large businesses in India is that it’s become risky to finance growth with debt. As much as 43% of India’s long-term debt is held by companies with an interest coverage ratio of less than 1.5. At these levels, companies spend the predominant share of their earnings on servicing debt.

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Credits:
Source Article: Five Priorities For Corporate India In The Next Normal After COVID-19
Author(s): Rajat Dhawan
Publisher: McKinsey & Company