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Vision 2020: Miles to go before goals are reached

Corporates have set ambitious targets for the coming year, which look increasingly difficult to achieve, given the nature of changes in the business environment.

, ET Bureau|
Last Updated: Dec 21, 2019, 04.18 PM IST
The next goalpost year for vision documents could be 2025 or 2030.
ET Intelligence Group: 2020 seems special for corporate goal setting, as numerous companies, industry bodies and the government, too, have chosen this year to achieve stated targets under their respective Vision 2020 plans.

Investors and analysts tend to laud advance planning by corporates. Company managements, too, revel in setting ambitious targets, be it in their financials, operational parameters, or social and environmental indicators.

It,therefore, becomes crucial for stakeholders to check if the goals will be met.

ETIG ran a reality check through some of the vision documents to analyse whether companies were, indeed, close to achieving what they had set out to do.

For instance, the pharmaceuticals sector stands out for the stark difference between vision and reality.

In 2013, the government said it would make India one of the leading destinations for end-to-end drug discovery and innovation by 2020.

With pharma companies facing several headwinds related to core manufacturing expertise and rationalizing spending on research and development, drug discovery continues to elude the domestic pharma sector. The result - the vision is far from ground reality as the year approaches.

The information technology (IT) sector, too, may miss its 2020 revenue target of $200-225 billion set by industry body, the National Association of Software and Services Companies (Nasscom).

Indian IT companies have been undergoing a business transformation of sorts, as clients shift to digital platforms and away from the traditional outsourcing services based on cost arbitrage.

This has delayed the sector's march towards the revenue target.

Nasscom, in fact, stopped giving annual revenue growth estimates from February. Considering the revenue trend reported by listed IT companies, the sector may see revenue near the lower end of Nasscom's target by the end of the 2020 fiscal year.

As far as banking is concerned, the Confederation of Indian Industry (CII) and consultancy Deloitte released a vision 2020 document in 2016, which envisaged the emergence of radically transformed banking models, non-traditional alliances making banking affordable, and harnessing technologies (such as fintech) to make banking customer-centric and secure.

While there has been some progress with respect to the use of fintech in banking, the sector continues to grapple with poor asset quality and delinquencies, amid a deceleration in credit growth.

The growth in the outstanding non-food credit slowed to 8.1 per cent year-on-year at the end of September, compared with 11.3 per cent a year ago. The health of banks and financial institutions has therefore gained priority.

For companies, achieving an aspirational quantum of revenue or profit by 2020 has been a popular vision over the past five years. Given the challenging business environment in the past couple of years, most companies have been struggling to achieve their yearly guidance, let alone their lofty five-year targets.

Targets also change with a reset in factors such as business dynamics or management teams.

In 2016, IT services provider Infosys, under the leadership of then CEO Vishal Sikka, said it was on track to meet $20 billion in sales by 2020. However, the following year, the company's annual report made no mention of the goal. In August 2017, Sikka resigned amid a tussle with the founders. Salil Parekh took charge as CEO in January 2018,after which the company realigned its strategy by selling some of the business assets that Sikka had acquired. In 2018-19, with about a year to go before achieving its target, the company's consolidated revenue stood at $11.8 billion.

Companies like Wipro and Marico are also slated to miss their 2020 sales targets.

In 2016, the Bengaluru-based software services company set an ambitious target of hitting $15 billion in revenue by 2020. However, it reported revenue of $8.4 billion in 2018-19, one year short of the targeted timeframe.

Similarly, in 2016, fast moving consumer goods (FMCG) company, Marico, set a sales target of Rs10,000 crore by 2020. The slowdown in demand in the following year, however, decelerated growth at the company which owns brands such as Parachute and Saffola. In 2018-19, Marico earned revenues of Rs7,940 crore.

Due to the growing awareness about complying with environmental, social and governance (ESG) norms, companies have targeted to either reduce carbon footprint, become plastic free or reduce salt, sugar and trans fats in processed foods, by 2020.

Unlike the revenue targets, though, these seem to be more achievable since the levers of change are within the control of the company's management.

For instance, FMCG behemoth HUL's parent Unilever has, under its sustainable living plan, targeted to improve health and well-being of a billion people, enhance the livelihoods of millions of people and empower five million women, by year 2020.

The next goalpost year for vision documents could be 2025 or 2030.

The challenges of recent years will, hopefully, make businesses and governments more diligent in planning ahead.

Automation, demographic changes, innovation, gig economy and growth amid protectionism are going to be the drivers of performance for Indian businesses in the next decade.

With business conditions changing drastically, striking a balance between reality and aspirations will, however, prove to be a tough ask.

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