Adi Godrej, Chairman of the Godrej Group, has always been a proponent of GST. On the eve of Godrej Industries second quarter results, Godrej attributes the profitability of the holding company to the success of GST. Group companies like Godrej Consumer Products, Godrej Properties and Godrej Agrovet, which are under Godrej Industries have recovered from demonetisation and benefited from GST. In a chat with BusinessLine, Godrej admits that GST can be brought down even further and also hopes that the rankings in the ease of doing business increasingly improves. Excerpts:
To what would you attribute the profitability of Godrej Industries this quarter?
Our profits are up from the second quarter of last year by 53 per cent. GST is helping us tremendously and is good for the country. Am surprised by some of the negative media reports and sentiments on GST which is not correct. Our profits are up primarily because GST is helping the economy. GCPL has done well, while Godrej Properties, despite the real estate sector not doing well, has had record bookings. So, overall, all our businesses are doing well.
Godrej Consumer Products benefited the most, since the rates were brought down and benefited us tremendously. But, you are right, we should bring down the rates for businesses like appliances, which was already high, even before GST, and are now still high, post it. Within Godrej Industries, none of the other businesses were impacted. It was neither positive nor negative.
Do you think the GST needs to be brought down further since in other countries they are much lower across several categories?
There are still higher GST rates for categories like appliances and consumer durables. We need to bring them down further.
India’s rankings have improved to the top 100 in the ease of doing business. Have you felt the impact of this as an industrialist and Chairman of the Godrej Group?
It is a little better but we need to do much more. The government’s aim to get to the top 50 is good and will lead to liberalisation on the part of the government. For example, it is clear that we can rely on free enterprise and do not have interferences. But while 100 may be better than 130, it is still not a good ranking. Ideally, we should be in the top 50.
What are your plans for Godrej Agrovet now that it is a listed entity?
The listing was good for Godrej Agrovet as we had a 98 times over subscription and the price was also higher than what we had listed at. The company is doing well and we are doing a lot on R&D. We expect the agricultural sector, where this company plays a big part, will do very well since the government is also encouraging a lot. We are optimistic about the future of this company.
So how many listed entities does the group have today and would you consider doing so for the other businesses in future?
Today, we have listed companies like Godrej Industries, Godrej Agrovet, Godrej Consumer and even acquired business of Astec lifesciences, which is a subsidiary of Godrej Agrovet.
We are not looking at more listed companies in the near future. But listing is good since it helps the team to be competitive and also benefits shareholders.
The Godrej Group has not sustained most of its joint ventures. Would you regret breaking up with any of them like Hershey’s and re-entering categories like foods in the future?
Yes, while we continue to have a few JVs abroad and also one with Tyson Foods in the chicken and snacks category, but it is nowhere near what we had before.
While the last one was with Hershey’s, we were not successful in that kind of foods business. So we do not regret breaking off. We do not want to expand except into adjacency led businesses which would be new products across our group companies.
It has been a year since demonetisation and have all your businesses managed to recover from it?
Well it has had some negatives and some positives. Overall, the negative effects are over and now we will see the positive effects. The black economy has considerably reduced as a result.
Would you consider incubating start-ups like some corporate groups have done considering you have invested in a couple of them to help your diverse businesses?
We do want to get into e-retailing ourselves. Our products are e-retailed by others. We do not want to compete with our customers. We have incubated start-ups only in Godrej Agrovet where we have a company called omnivore capital which invests in agricultural start-ups. It is not a big thing for us. We maintain a strong position across our companies and will compete in every area.