KV Kamath, non-executive chairman, ICICI Bank, and chairman, Infosys, believes that finance minister P Chidambaram is on the right track with regard to his attempts at streamlining the economy. In an interview with Darlington Jose Hector, Kamath, however, admits that he is surprised by the longevity of the slowdown.
The prolonged slowdown is having a severe impact on the profitability and margins of various companies across sectors. How do you view this situation?
As a banker, I have been having several talks with heads of companies. Today, I met the head of an infrastructure firm and he was talking about how companies in the sector have been impacted. But it’s not like there is a crisis. They are still growing, though the margins have been impacted. But I have to admit that I am a little surprised at the prolonged nature of the downturn. Last year, when I was asked this question I did not think it will last for another year. But I am an optimist. Finance minister P Chidambaram has done it before and he can do it again. He has the track record to turn this around. The system has to resolve this issue and there is little that companies can do.
But the situation is probably worse in some other parts of the globe…
Of course. Europe has gone into a recession. China’s growth has been snipped by 4% in the last one year. That’s why I am staying an optimist with regard to India, as consumption has not slowed.
Just look how low-cost housing has been growing. It’s the same with automobiles. But yes, affordability has been impacted by inflation. It (inflation) has been a tough nut. We have not been able to control inflation, by keeping interest rates at where they are currently.
Do you think the CAG reports have ended up raising the future prices of resources like coal, spectrum, land, etc?
The government has to think whether it is getting fair returns for its resources. The developers are going to make money. But we need to make sure that there is equitable sharing of benefits between the government, developers and the consumers.
There has been a lot of clamour about Infosys not acquiring a company (though, of late, it has made a bid for Swiss firm Lodestone). What are your thoughts?
I don’t mind the clamour. But we have to be careful. Many companies have suffered on account of acquiring the wrong company.
Do you think Infosys has come in for some unfair criticism of late?
The management has to be keep its focus. I believe Infosys has the right strategy. My opinion about the company has not changed. Infosys believes in having strong committee meetings. Several things are being worked out. But the global slowdown had impacted it just like every other firm. Investors have always had high expectations from Infosys.
This is the election year in the US. When president Barack Obama came to power, it was thought that this would be the end of outsourcing. But that was not to be.
US is a market-driven economy. That will not change. Outsourcing of IT jobs has not been impacted, the way people feared. Evolution of technology will always continue and for that one needs to be competitive. Outsourcing helps that competitiveness. So, I am not worried about who will come to power in the US.
