S. Ravi on Compliance, Risk, and Strategic Governance for Sustainable Growth

S. Ravi on Compliance, Risk, and Strategic Governance for Sustainable Growth

India’s emerging businesses face critical challenges due to weak governance, excessive leverage, and unchecked ambition, warns S. Ravi, Founder of Ravi Rajan & Co. LLP and former Chairman of the Bombay Stock Exchange (BSE). He emphasizes that lessons from past corporate failures are essential for SMEs, MSMEs, and startups aiming for sustainable growth in today’s competitive and rapidly changing market environment.

Citing historical data, S. Ravi noted that 60% of the first 50 companies listed on the NSE in 2008 either underwent restructuring or were acquired. “This clearly demonstrates the consequences of inadequate capital discipline and poor oversight,” he said. According to him, governance goes beyond regulatory compliance—it involves strategic planning, budgeting, capital management, and anticipating controllable challenges.

Governance Beyond Compliance

S. Ravi stresses that governance must be deeply embedded into the operational DNA of businesses. Navigating the Companies Act, GST, labor regulations, and the newly implemented 2024 Data Privacy Act requires robust compliance systems. “Neglecting these fundamentals can imperil growth, particularly for SMEs and MSMEs,” he added.

Strong governance also encompasses succession planning—whether in family-led or professionally managed companies—and clearly defined shareholder agreements. Human resource planning is critical, especially in high-attrition sectors such as pharmaceuticals and insurance, where first-level attrition can reach 33%. Proactive leadership ensures talent retention and operational continuity.

Rising Compliance Costs

Compliance costs have increased from 5% a decade ago to 10% today, reflecting greater accountability and the demand for skilled personnel, according to S. Ravi. Emerging businesses are mitigating these costs by sharing resources and leveraging collaborative tools, maintaining strict adherence to regulations without compromising efficiency.

Data Privacy and Operational Risk

The 2024 Data Privacy Act introduces new layers of compliance and risk management. S. Ravi emphasizes that every link in the business ecosystem—from vendors to partners—must comply strictly with data privacy requirements. Masking sensitive data, drafting robust agreements, and meticulous documentation are now essential to prevent fines and operational disruptions.

Future-Ready Governance and Strategy

For S. Ravi, sustainable growth depends on adopting a long-term, future-ready approach. Emerging businesses must continuously monitor competitors, assess market trends, and anticipate regulatory or policy changes. Effective governance integrates compliance, financial foresight, stakeholder management, and HR planning.

A proactive approach enables businesses to navigate unforeseen crises, such as the Covid-19 pandemic, which disrupted nearly 30% of MSMEs. He highlights that scenario planning, robust documentation, and crisis preparedness are critical for operational resilience. “Governance is not just compliance; it’s strategy, foresight, and operational resilience,” S. Ravi says. Companies that embed these principles are better positioned to thrive sustainably in an unforgiving market landscape.