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United we stand

Communication with stakeholders such as shareholders and suppliers pays when it is proactive, aimed at providing transparency and solutions.

Shalini S. Dagar | Print Edition: March 8, 2009

Bad news sells, and sells well. Last fortnight, soon after DLF announced its third quarter results, Vice Chairman Rajiv Singh was all over the newspapers and television channels. Not only had DLF reported a near 70 per cent decline in profits over the previous year’s Q3 figure, Singh also pointed out to a grim future, too.

Most of what Singh had to say undoubtedly pummelled the DLF stock—it fell to new lows of nearly a tenth of its peak value. Singh had probably decided to bank on the strategy of direct communication realising that some straight talk was way overdue in the real estate sector.

Investors and shareholders apart, companies have to keep other stakeholders like customers, suppliers, dealers and lenders also informed. “While the project department is in constant touch with contractors, the customer relations department is sending out mails to our consumers. If things get difficult then we organise site visits,” says a senior Unitech official.

Today, the urgency of the situation has changed the tenor of communication. R. Seshasayee, MD, Ashok Leyland, says communicating “more” in difficult times may be a cliché but it is important to keep channels open. “It takes communication to sustain relations and trust, especially when the short-term stakeholder interests do not seemingly align,” he says. His executives are spending more time with customers, giving advice on fleet management, and interacting more with dealers.

“Proactive communication is always the preferred option,” says Genpact’s Executive Vice President, V.N. Tyagarajan. “The intensity increases in times such as these.” And it helps business, too. From weekly reviews and strategy sessions with customers, Genpact came up with a product set to help clients save cash, turning adversity into opportunity. The automobile sector has seen plenty of bad news—and communication— as demand ran out of gas over the past few months and pain cascaded down the supply chain. Deepak Jain, Senior Executive Director of auto lamp maker Lumax Industries, says: “We called our main supplier and asked it for a revision in payment terms.”

A lot is mutual give and take. As Sudam Maitra, Executive Officer, Supply Chain, Maruti Suzuki India, says: “Without a cost reduction, you cannot ask for a price reduction.” Maruti rolled out its “one component, one gram” programme, getting each vendor to make its component or sub-component one gram lighter without compromising functionality. Maruti expects to save Rs 10 crore on annual sales and hopes to share it with vendors.

Surinder Kapur, Chairman and Managing Director of the Sona Group, the steering systems major, says: “Real time market information is shared on production schedules, the inventories, retail sales, registrations and bank loans.” Kapur also heads the Vendors’ Council for Tata Motors. With payment delays coming up, such a mechanism helps. Attention to the problems of stakeholders is crucial, says Jnaneswar Sen, Vice President,

Marketing, Honda Siel Cars. “Are we doing any fancy, innovative or earth-shattering things? Are we sending them flowers? No. We are still communicating through e-mails, telephones and meetings. What is important is the content and transparency,” says Sen. Honda has managed to cut its dealers’ inventory holding costs by 40 per cent over June 2008, aiding their long-term viability. Now that is really walking the talk in these grey days.

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