Rural India has felt more of a squeeze from the slowdown, says Adi Godrej, chairman, Godrej Group
While the discretionary spend in rural areas has not risen as per expectations, FY21 is likely to deliver better numbers than the ongoing fiscal, says Adi Godrej, chairman of the Godrej Group, in an interview to Vikas Srivastava.
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FY21 is likely to deliver better numbers than the ongoing fiscal, says Adi Godrej, chairman of the Godrej Group
While the discretionary spend in rural areas has not risen as per expectations, FY21 is likely to deliver better numbers than the ongoing fiscal, says
Adi Godrej, chairman of the Godrej Group, in an interview to
Vikas Srivastava.
The hope that GST rationalisation would lead to a 150-bps improvement in the overall GDP growth rate has been belied. In fact, there has been a continuous decline in growth since 2017? What factors could have contributed to the fall?
The implementation of GST itself has been good for the economy, so it would not be correct to attribute the decline in GDP growth to the new tax regime. There are other factors that have contributed to the slowdown we are witnessing. Despite talk of a breakthrough, the China and US trade deal has not happened as yet. The killing of an Iranian general by the Americans may also have impacted the economy; we can’t be sure. So, it’s a combination of geopolitical and other factors that have affected GDP growth. There is no doubt that the economy has slowed down, but it will recover, if only slowly. I expect FY21 to be better than FY20.
The slowdown has cast its shadow across sectors. Has your group felt the impact more severely in the rural or the urban areas?
For FMCG products, the slowdown has been more pronounced in the rural areas, though rural growth was ahead earlier. The rural economy has been impacted by the slowdown in production and an irregular monsoon. Also, the discretionary spend of the rural population has not grown as per expectations. We expect to fare better in FY21, though a lot would depend on government policy going forward.
What steps does the government need to take to boost overall consumption?
There may be no tax on agriculture, but animal husbandry is taxed fully, bringing under the net income from poultry, dairy, fisheries, etc. That affects rural growth.
Is that the reason why Godrej Agrovet did not perform well in FY20?
While it was affected, it has managed to recover from the lows. We expect the business to grow provided the government accepts our suggestion of treating animal husbandry on a par with agriculture.
Which segments of GCPL do you see performing well going forward?
We have done better in the October-December quarter. Our international businesses have been performing as the economies there have done well, especially Indonesia, which is a large market for us. The hair care business is rated number one in Africa; we are also introducing new products in the haircare and repellant segments, besides those to prevent dengue and malaria.
How is the real estate business placed? Are you focussing more on the residential or the commercial segment given the slowdown?
Our real estate business has done very well. Over the last two years we have had record sales. We will continue to grow both businesses though our commercial segment is doing better.
What could have led to that kind of growth at a time construction projects are facing liquidity and demand-related obstacles?
It is mainly reputation. People trust us , ensuring that our projects are lapped up by the market.
There is a lot of focus on online retailing now. Even Godrej Retail is looking at greater online presence.
How do you plan to go about this vis-a-vis, say, Walmart or Reliance?
We do not go through the strategies of other companies, being more of an in-shoppe player. However, we do have plans to increase our online presence. It will be a continuous exercise.
Where do you see India and the Godrej Group in the next five to ten years?
I believe India has a great future. On purchasing power parity, it will be the largest economy in the world by 2050. At present, we are ranked third after China and the US; so we will overtake both. India will also overtake China on population. As far as the Godrej Group is concerned, we will keep growing faster than the economy.
Interview | Rural India has felt more of a squeeze from the slowdown, says Adi Godrej, chairman, Godrej Group
Consolidated fund is not used to restructure companies but SBI and other private banks are buying up all the shares of Yes.