An inspiring address

A mail was circulated to all the executives of the India’s automobile major informing that MD will address on the current economic scenario and company’s plans for the future at the state of the art conference room.

Dot 12.00 P.M the MD walked in and was dressed up in the company’s uniform. It sent across a strong message that he was one among the employees and was not sitting on an ivory tower. He commenced his address by the reasons which he perceived to be responsible for current liquidity crisis:

§ US economy – Sub prime mortgages
§ Credit Default Swaps – another US phenomenon (Buffet described it as “Weapons of mass financial destruction”)
§ Speculation money in Commodity and Money markets

He was of the opinion that India and China were still the bright spots in the global economy and the success stories these countries were sculpting were only “interrupted” and medium/ long terms were still intact.

He expressed that the company had been a little over ambitious in planning for capex, acquisitions, diversifying into adjacent businesses over the past 3/ 4 years amidst the boom. Those activities were still on but the pace at which the progress need to happen in the forthcoming years were to be relooked at and there is a burning need to get into non cyclical businesses and also to make it a major part of the business to survive in these kinds of scenarios in future.

Moving forward the company would focus on the following:

Spending on Product development (no cutting corners in this regard)
Uttarkhand project
Slow down on further investments. Be more prudent and “nimble footed”.
Nissan Joint venture
Efficiency in Frugality

He also elaborated on the 1998-1999 slowdown and said that following steps had been taken and the company had emerged successful:

Cash was preserved.
Brakes were jammed on capex and current assets were reduced to acceptable levels.
No corners cut in Product development costs

He ended his address by saying that lots of things could be learnt from the competitors such as TATA motors launching the Indica programme in the midst of the 98-99 gloom. It also had taught that evolving new models in the midst of the slowdown helps one to come out strongly after it and create demand for such products.

When he expressed that he wanted to have lunch with the new recruits it just turned out to be the icing on the cake.