What kind of valuation you are expecting for Aditya Birla Capital on listing?
Sushil Agarwal: Private Equity firm PremjiInvest put Rs 700 crore in Aditya Birla Capital for a 2.2 per cent stake in June. That valued it at about Rs 32,000 crore. But with the kind of valuations the financial services business is currently getting, Aditya Birla Capital may surpass the valuation of Rs 32,000 crore.
Where do you expect the growth for Grasim’s standalone business to come from in the coming quarters?
Dilip Gaur: Fundamentally, the growth of VSF (viscose staple fibre) is almost twice the rest of textile. We have been growing in double digits because of the work we have done on our brand. Our plants are fully stretched already, so we are now talking about expansion in VSF, and chemicals and cement. Grasim will do Rs 1,500 crore investment in the next 12 months, of which 60 per cent will be for VSF and the rest for chemicals. For both the cases, we are adding fresh capacity and doing debottlenecking.
Government-led disruptions have hit the industry hard. What has been your reaction?
These disruptions will lead to overall growth. Even from demonetisation, our financial service business benefited, with a lot of people’s savings coming to investments such as mutual funds. From the goods and services tax (GST) also, there has been some disruptions. But easy truck movements will help improve efficiency of manufacturing companies.
What is the outlook for cement business?
Sushil Agarwal: For this, a couple of areas need to be watched and focused on. The government’s initiative on housing, infrastructure and roads will help cement business. So, if the government is spending, then directionally there would be consumption. At what rate would that be is a matter of debate. But directionally it has to grow. The whole initiative of affordable housing will also benefit. Also, the good monsoon will create greater demand for cement, as it will boost farmers’ income.
What about the active consolidation phase in cement that we saw recent years?
Sushil Agarwal: Major pieces have already been done. But it all depends on the target company’s position and their point of pain. Acquisitions will be very opportunistic.