Over 40% CEOs are paying the greatest attention and resources to invest in existing businesses to accelerate organic growth and value creation as well as digital transformation
49% of respondents intend to invest in digital and technological innovations in the near future
33% of respondents believe that M&A will help accelerate their business transformation
90% consider sustainability as the primary driver for competitive advantage, long-term strategic growth and lowering cost.
New Delhi | Mumbai, 24 May 2022: Post dealing with pandemic-induced disruptions, as businesses now grapple with increased geopolitical issues, rising inflation, higher commodity prices, and the ensuing impact on profitability, the EY CEO Survey 2022 reflects the change in capital strategy of businesses in India. For more CEOs (over 40%) sustaining and extending the core business, and digital transformation dominates the investment decisions to increase the potential to lead in the emerging landscape. The ongoing geopolitical tensions are also triggering the Indian CEOs to take proactive measures to readjust their supply chains, with 80% of them adjusting their supply chain to manage geopolitical risks or reduce logistic costs and uncertainty.

The survey also highlights the growing importance of ESG in CEO’s agenda with 78% of respondents identifying ESG factors (at par with revenue growth as a factor) as extremely important or important, when it comes to strategic decision making and driver of value.

Rajiv Memani, Chairman, EY India said, “There is no doubt that Indian CEOs are leading from the front to combat the challenges emanating from the pandemic and geopolitical tensions. More than ever, CEOs are looking at how these interconnected issues may impact their growth agendas and are building agility and the ability to pivot quickly as circumstances demand into their overall corporate strategy. They are increasingly looking at M&As as a lever for accelerating business transformation and long-term value creation.”

The EY report highlights that the post-pandemic challenges that hold the CEOs agenda can be encapsulated in three themes - Innovation, Sustainability, and Acquisitions (M&As

The necessity to innovate:

As companies see a significant increase in input prices, automation and technology offer tremendous potential for CEOs looking to drive transformation in their organization and to pivot employees to higher value activities. In parallel, the severe push towards digitisation has led organizations to upskill their existing workforce.
Almost 50% of the respondents expect to improve their business’ profit margins through digital and technological interventions
43% are using data effectively to develop new products and services and developing innovative delivery systems and channels for interacting with customers
Sustainability is the present and the future:

Climate change is real, and its consequences are beginning to show not only in terms of natural calamities but the preference of customers toward sustainable businesses.
17% of the respondent CEOs accept that their businesses are witnessing the accelerating impact of climate change thereby, increasing the pressure to be sustainable
96% are proactively considering sustainability as a driving factor for their M&A agenda, and are creating KPIs for long-term value creation, acquiring technology and talent
90% consider sustainability as the primary driver for competitive advantage, long-term strategic growth and lowering cost.
Mergers and acquisitions become key to business transformation:
Since the pandemic, business leaders have been forced to re-align their business solutions and approach to cater to their customers nationally and globally. Therefore, the role of M&As in their respective business strategies is a key element for their business transformation as against solely driving growth and expansion.

22% of Indian CEOs will undertake M&A for the acquisition of technology, talent, new production capabilities or innovative start-ups, significantly higher than their global counterparts (14%)
22% of the respondents have planned bolt-on acquisitions/consolidations in the near future to increase market share
11% of the respondent CEOs plan to utilize their M&A strategy to improve their sustainable footprint because of changing customer behaviour