The Hindu Business Line : Corporates reiterate faith in economy

After the market mayhem of May 17 and the guarded economic views it triggered at company press briefings thereafter, equity analysts were treated today to a positive business outlook by the Rs 4,960-crore Mahindra & Mahindra Ltd (M&M). The main thrust of M&M's business is in the rural and semi-urban markets.

The company saw a 199 per cent rise in its Q4 FY04 profit after tax and a 50 per cent volume increase in tractor sales for the period. M&M said in its official statement, "With the change of Government, there could be a shift in priorities and the announcements so far made point towards accelerating investments in the agriculture and infrastructure sectors.''

Mr Anand Mahindra, Managing Director, M&M, told analysts: "We see this as a huge opportunity. Whether it is the NDA or the UPA, both parties had agriculture on their agenda.'' Political parties were aware that the rural scenario was a "missing link'' in the `India Shining' image.

What the new Government's policy implies is that a large size of the population, depending on agriculture and hailing from rural/ semi-urban regions, will be brought to the consuming category. Which is what China did.

"The satisfying thing is that the UPA Government was elected on that platform. I don't really see a sea change. What I see is the right kind of allocation for 65 per cent of the population that will make the next round of reforms more sustainable,'' he said.

Mr Mahindra discounted the impact of changed policy on disinvestment and labour reforms, arguing on the latter that even when the economy was doing well not much had happened on the labour front.

"Companies like ours had managed with what was available,'' he said.

Although lacking M&M's rural dependence, the Rs 27,000-crore Aditya Birla group is a heavy weight among Indian corporates. Its Chairman, Mr Kumar Mangalam Birla too seemed unperturbed by the change in Government.

"I don't think there is any cause for concern. The new Government will be pro-investment,'' he told Business Line during an informal chat.

Mr Birla felt the steep slide in the Sensex which followed the election result was due to a combination of factors ranging from correction across emerging markets to a recovery in the US economy and likely slow down of China's growth rate.

Even as the markets behaved the way they did, none of the group's foreign collaborators expressed worry at the developments in India.

"I don't see disinvestment not happening as a major negative,'' he said, maintaining alongside, he was comfortable with the brownfield or greenfield projects that may be consequently called for in the private sector.