Success rate among Indian start-ups is good: Ex-Infosys CFO Balakrishnan

Industry is facing too many headwinds and that it is reflecting in their valuation, he said

Mortality rate among start-ups in India is not alarming, and their success ratio is actually good and on par with global trend, said an expert in information technology (IT) industry.

"In the start-up industry (in India), if you look at ten companies at least three or four will succeed. It's a good rate. Globally, that's the norm," former Chief Financial Officer of Infosys V Balakrishnan said. 

"I don't think it (mortality rate) is alarming. Some of them had some challenges in the B2C space. But it's okay. The nature of the industry is like that. Nothing alarming," he added.

On reports that valuations of top-listed IT companies in India are at record lows for nearly a decade, he said the industry is facing "too many headwinds and that it is reflecting in their valuation."

 

"But I think the IT industry is the only industry which is growing, has good cash flows, and return on equity is very good," he said.

There are very few industries in India with such a scale and good financial matrix, Balakrishnan said, adding "Once the headwinds somehow minimise, the market will see more value in those stocks."

Balakrishnan also said to make 'Make in India' initiative a success, large industries in manufacturing sector need flexible labour laws which give job protection to employees and help the companies scale up their business rapidly, like in China.

"A lot of changes are required in labour laws but I don't know whether it will happen in India with the kind of political situation what we have today. So, we have to build a consensus," he said.

The best way to deal with this situation is to give flexibility to states, allowing them to compete among themselves to come out with good labour law at their level, according to him.