GST itself is huge; the Centre should pause on anything major for 6 months: KM Birla

As the Centre gears up to roll out GST next week, India Inc is ready to meet the challenges that come with such a disruption. Kumar Mangalam Birla, Chairman of the Aditya Birla Group, spoke to BusinessLine on a range of issues, including the GST rollout, private investment and the completion of UltraTech Cement’s acquisition of JP’s assets. Excerpts

How do you see UltraTech Cement’s prospects with the completion of the JP deal?

The deal gives the company access to markets where it either wanted to be or where it is not strong enough. For instance, we were not in Satna and the coastal regions. On the other hand, it has given us a stronger hand in Uttarakhand and Himachal Pradesh.

Also, given the complexity of setting up a greenfield project, we are happy to have completed the deal.

The deal takes us to 93 million tonnes capacity. We will be spending another ₹470 crore to complete the ongoing four-million-tonne capacity (addition).

Do you think GST could disrupt the economy if not implemented well?

I think the Indian economy is very resilient. It may take the next four months to settle down.

As far as our group is concerned, we are completely prepared to adopt GST. I do not think it is going to cause a major disruption in the economy.

Do you think companies that are not GST-compliant will have lower costs and be able to tap the market better?

I do not think they have a choice but to become GST-compliant. Expecting a small player to come online for GST is not complicated.

I think, even a small guy knows how to do a jugaad and keep his shop running. I do not think it is going to be a long-term difficulty.

Do you think the government would be able to spend on infrastructure ?

The government’s spending on infrastructure is going to be the major driver for cement demand. All the sectors, such as roads, airport and metro rail have done well, boosting cement demand. The only sector that has not done well is real estate.

When do you see private investment picking up?

In most sectors in India, there is concern on debt. With that kind of high debt it is unlikely that private-sector investment will pick up unless there is a dramatic change in the economy. I think it (lack of private investment) is more to do with private debt over the last few years and has nothing to do with government policy. For instance, we are investing ₹2,600 crore in a cement plant in Madhya Pradesh. So, government policy is encouraging for investment. We are going head with our investment plans.

What else would you like the government to do from here on?

I think the government should pause for six months from undertaking anything major. GST itself is huge.

COMMENT NOW