Despite the cabinet committee on investment, or CCI, clearing quite a few projects, most of them are yet to receive state government approvals. "These are pending projects, some of which have been cleared. But there are no new projects in the pipeline to the extent India requires given the supply side issues," says Koushik Chatterjee, Group CFO, Tata Steel.
According to him, a bigger worry would be – whoever comes to power and even if it is a restatement on July 1, it will take a long time before confidence and trust comes in as far as investments are concerned.
Below is the verbatim transcript of Koushik Chatterjee’s interview with Latha Venkatesh, Senthil Chengalvarayan and Anuj Singhal on CNBC-TV18.
Latha: Do you think there is anything in the Budget or in the economy for you to give orders?
A: The growth momentum in terms of newer projects, newer capital formation plans and active decisions on taking investments are still very much on pause. I heard the finance minister talk about the CCI-led process which has cleared investments. First of all that shouldn’t be there because it should have happened on its own. However, there have been some clearances that have been coming through but these are mostly central clearances because the state clearances are clearly on the table of the state governments. So, these are pending projects some of which has been cleared but there are no new projects on the pipeline to the extent India requires given its supply side issues.
I think that is a big cause of worry because even if you assume that July 1 is a restatement by whoever comes in power it will take a long time before confidence and trust comes in as far as investment is concerned. So, there is a gap between where we are versus what we would like to see and the question is how much time it takes, if it takes in terms of coming back to make serious investments.
Latha: Should we assume from what you are saying that in spite of the CCI giving some of the approvals life for you has not changed in the last 12 months?
A: In a way yes.
Senthil: 16-17 percent growth in, I am not going to ask you about your company but generally in corporate profits because that's what the numbers seem to be assuming?
A: Productivity improvement only can take you to a certain level of increase which is also linked to how the demand situation or how the consumption play up because otherwise you will have inventories all across the system if I produce more than what my market can take. So, I would not get into the hazard of guessing whether 16-17 percent is an appropriate number. There has also been a significant drive from the income tax or the tax departments in general on putting a lot of demand and compliance. I would imagine some part has been factored also on that front.
The third part will be dependent on what all capacity comes into play in the next say 12 month or so. You will have some increases coming up. So, most important part would be how does the demand cycle play up or hold or move forward. That will actually be a big decider for all the rest to follow apart from the own compliance and tax issues.
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