What does it take to stay afloat in a VUCA (Volatility, Uncertainty, Complexity & Ambiguity) world? Because it seems like the dealmaking realm in India may be facing constant and unpredictable change. So, what does it take to thrive amongst the chaos, especially in a market driven by changing economic policies, political shifts and global market trends?
According to Nitin Mittal, General Counsel & Company Secretary of Signify India, “India is a golden goose right now. It’s said that there’s a notion of VUCA on steroids and we need to ensure that there’s not too much of it right now or opportunities will be affected. From an MNC perspective, India is part of a global conglomerate. With any M&A that happens globally, there’s talk that India has to be treated specially, because there’s a lot of unpredictability and uncertainty, especially ensuring that the deal closes on time. So, at headquarters, they want to ensure that the deal closes in a certain time frame. But, in a certain sense, when we plan for India, we see there are certain variables and unknown unknowns that one doesn’t know how to plan for and that’s the VUCA environment. But, I would say from the last decade or so, predictability has improved to a large extent, especially with regulators”.
Mittal adds, “There are so many new regulations coming in India every few months, which leads to a lot of unpredictability. It’s, also, about the approach of regulators to hear the business, because, ultimately, it’s about ease of business and ensuring the Indian economy is growing… Labour law is something that needs to be made progressive. If you want to make India a manufacturing hub, you need to have a manufacturing base and M&A is all about manufacturing and developing”.
According to Disha Chhabra, M&A Director at Coca-Cola India, “I’ve seen a very clear shift amongst the corporates, when it comes to how they view and approach M&A. 15 years ago, corporates used to think that they just have to acquire a majority stake in the target and their objective is done. Now, the approach has totally changed. Even if one is acquiring a minority stake, as long as the strategic objective is being met, the corporates are fine with it and that’s how the structures have evolved… VUCA is good in a way, keeping corporates on their toes and it’s a wake-up call that innovation must never stop”.
And could open dialogue between the regulator and the regulated mitigate VUCA in the context of M&A?
Mittal remarks, “Once there’s an open dialogue between the two, the regulated can give their viewpoints much before a rule or legislation comes out and that business complexity can be taken into consideration before the regulation is actually announced. One of the key features of a rule of law is predictability”.
According to Cyril Shroff, Managing Partner at Cyril Amarchand Mangaldas, “From the point of practical effectiveness, if there’s a genuine ambiguous structure and one is looking for an answer, there would be bias because of risk aversion and a lack of trust. There’s distrust between the State and the private citizen and that vicious circle has to be broken. Really expressing what one wishes to get could yield a clear answer, but providing selective information would result in an ambiguous answer”.
And how much is VUCA an issue in India relative to other emerging countries?
Chhabra states, “I think it’s not fair to compare India or any developing market with a developed market. India is one of the world’s fastest-growing economies with a burden to grow the entire world. Compare that to developed economies that are either in low and single-digit growth or the growth has stagnated. The adaptability of India, when it comes to innovative structures or new regimes, is what makes India more attractive. Sure, there are pain points, but as long as corporates are able to adjust to this environment, it would help India’s growth”.
Watch the full interaction here:
