S. Ravi BSE: Why Governance Failures Are Making India’s Business Environment Unforgiving

S. Ravi BSE: Why Governance Failures Are Making India’s Business Environment Unforgiving

India’s business ecosystem is expanding rapidly, but growth without strong governance is becoming increasingly risky. S. Ravi, Founder of Ravi Rajan & Co. LLP and former Chairman of the Bombay Stock Exchange (BSE), has warned that governance failures are emerging as one of the biggest threats to India’s corporate and entrepreneurial landscape.

According to S. Ravi BSE, many business failures are not caused by market slowdowns alone, but by internal weaknesses—poor capital discipline, excessive leverage, and inadequate oversight—that surface during periods of stress.

What Market History Reveals

Drawing from historical market data, S. Ravi BSE highlighted that nearly 60% of the first 50 companies listed on the NSE in 2008 were later forced into restructuring or acquisition. This pattern, he explained, reflects how aggressive expansion without governance safeguards often leads to long-term instability.

In today’s fast-changing and highly competitive environment, businesses that ignore governance fundamentals struggle to protect value and retain investor trust.

Governance Is a Business Strategy, Not a Checklist

For S. Ravi BSE, governance goes far beyond regulatory formality. It is a strategic function that influences planning, budgeting, capital allocation, and risk management.

“Governance must be embedded into daily decision-making,” he emphasized. Whether it involves the Companies Act, GST compliance, or labour regulations, businesses need to adopt digital tools and structured processes that integrate compliance into their operational DNA.

This is particularly important for SMEs and MSMEs, where even minor lapses can stall growth or trigger regulatory scrutiny.

Leadership Continuity and Workforce Stability

Strong governance also depends on people. S. Ravi BSE stressed the importance of clearly defined succession planning—both in family-owned enterprises and professionally managed companies. Ambiguity in leadership transitions often weakens accountability and strategic focus.

Human resource planning is another growing concern. In sectors such as pharmaceuticals and insurance, first-level attrition rates can reach 33%, increasing operational risk. Proactive talent retention and leadership development are critical to sustaining performance.

The Rising Cost of Governance—and Smarter Solutions

Addressing cost concerns, S. Ravi BSE noted that governance and compliance expenses have nearly doubled over the past decade—from around 5% to nearly 10% of operating costs. This increase reflects higher accountability standards and the demand for skilled compliance professionals.

However, businesses are responding creatively by sharing compliance resources, adopting collaborative platforms, and leveraging technology to manage regulatory requirements efficiently.

Data Privacy Has Become a Core Governance Risk

The implementation of the 2024 Data Privacy Act has significantly raised governance expectations. S. Ravi BSE warned that compliance responsibilities now extend across the entire business ecosystem, including vendors and partners.

He emphasized the need for data masking, robust contractual safeguards, and meticulous documentation. Failure at any point in the data chain can result in severe financial penalties and reputational damage.

Building a Future-Ready Governance Framework

Looking ahead, S. Ravi BSE urged business leaders to adopt a future-ready governance mindset. This includes continuous competitor analysis, policy tracking, financial foresight, and scenario planning.

He referenced the Covid-19 disruption, which impacted nearly 30% of MSMEs, as evidence that businesses with strong governance structures were better equipped to withstand shocks.

“Governance today is not just compliance,” S. Ravi BSE observed. “It is strategy, preparedness, and resilience combined.”

Conclusion

As India’s regulatory environment grows more transparent and demanding, governance failures are becoming increasingly costly. Insights from S. Ravi BSE reinforce a critical truth: sustainable growth depends on embedding governance into leadership, operations, and long-term strategy.

For emerging businesses, governance is no longer optional—it is the foundation of credibility, resilience, and lasting success.