After Britain chose to exit the European Union, investors are worried over the impact on the global economy and markets. India Inc is also worried about the evolving situation. But some of the well-diversified groups such as Hinduja are unfazed.
Speaking to Bloomberg TV India, Hinduja Group Co-chairman Gopichand P Hinduja says his group – especially Ashok Leyland – will have no impact of Brexit as it is not an exporter to Europe even though it has major investment in EU. Emerging markets especially India will be in a great advantage after Brexit, he said.
How big an impact do you think Brexit will have on the UK economy? How is it going to affect India Inc’s operations in the UK and indeed your own business interests?
In my view, every issue has two sides. It was very clear that either it is going to be in or out. London and Scotland, they both have the majority, and wanted to be in. But the rest of England has given a negative vote and they want to be out. Now there is a reason behind it. You have to analyse why in the days of Ted Heath in 1975 Britain decided to be in EU because at that time there were two strong economies — US and Japan. And they wanted to be a part of EU as Britain in isolation could not become stronger. So if they were together in the EU, they would have become stronger. Now, since then they found the pluses and minuses. And they found that they were finding more and more East European immigrants coming in, which was affecting their jobs. And being dependent on Europeans, their own industries and manufacturing were disappearing. Now, if you look at the positive side. They have taken a bold step to be of their own. So, automatically what is going to happen is they will start working harder, they will try to see how their own industries and their own businesses can grow. It doesn’t mean that they can’t work with Europe. They can work with Europe but there is a very small tax for it. And it will be in a great advantage of emerging markets, especially for India, where the traditional relations have always been good. And they will focus more on emerging markets to make up for the deficit in trade and investment what they will have with Europe. As far as our group is concerned, we are diversified group. We are already in Europe, UK, the US and in Latin America. We are in 38-40 countries all over the world. So I don’t see any impact to our group at all. And, moreover our group has been a dollar-based group. So even if there is a currency problem, I think it will be short-lived. So there are immediate shocks, which come when such incidents happen. We should be more concerned to see what is going to happen now with the EU. But before even I go there, this process of withdrawal is going to take time. It’s not going to happen overnight. It will take at least two years. There will be a lot of time for making adjustments and to try and see how things work better. How will currency fluctuations going to impact the Hinduja Group?
We do not export to Europe. We have investment in Europe. We have analysed even before the Brexit poll results were out. We have no impact of Britain staying in or out of EU.
Investors are rushing to safe havens after Brexit. What type of asset classes have you invested?
Our investments are all in our 10 verticals. Wherever we find synergies in the 10 verticals, we only focus on those types of investments which can add value to our operations. We have never gone in new verticals. We have announced and we are looking for new investment in cyber security, which again is not in Europe but in the US.
Talking specifically company wise, Ashok Leyland has operations spread across European nations such as UK, Ireland, Spain, Hungary, Czech Republic and Slovakia. What kind of impact will Brexit have on the company?
Let me explain. Number one, we don’t have any more interest in Czech Republic as Ashok Leyland has already divested its plant. Number two, exports of Ashok Leyland is mainly to SAARC, African and Latin American countries. Our focus is there. We don’t export anything to Europe. Hence we don’t see any impact.