On the backdrop of the GST roll-out on July 1, Asian Paints MD & CEO, KBS Anand talks to ET Now about how the new tax regimes would impact the paints business.

Edited Excerpts:

Your current tax rate is 25% on paints that is going to go up to 28%. How meaningful would this change be for your business?

It will have marginal impact, nothing very significant either way.

The market believes that it will be marginally negative. Do you go with that theory? Do you believe that at least for a couple of weeks in the transition that there would be some adjustments you may have to make?

I really do not understand how the markets think or operate. I do not think there is much impact either which way of the change in taxation rates. So due to the taxation rates, I do not think there will be an impact. Due to the implementation of GST through the learning process, the impact on trade and there could be something there.

What we are trying to Would you look to pass on any sort of benefit to customers or are you looking at increasing prices, what is the strategy?

I do not discuss the strategy on air and I am in my quiet period so you are not going to get much details on this from me. But we are in a competitive environment. So if my margins become very fat, competitors act and I am forced to react and vice versa.

All this talk about the industry being GST ready, how do you look at the transition phase under the new tax regime, it is clearly going to be reformist in nature?

Definitely but it is going to take little time because we directly deal with about 50,000 small shopkeepers all over the country. How many of them are really going to fall under with slab and complaint to what extent, how the implementation, connectivity, portal, everything is going to work. It is dependent on a whole series of factors. I think we will chug along. I do not think anything will go drastically haywire one way or the other. So let us wait and see.

I understand you are not going to talk about your pricing strategy, definitely not on air. Let us how dealers have been behaving ahead of GST. Is there any destocking activity that you have noticed?

There has been marginal destocking of sorts but it varies across the country, varies across type of dealers, etc, etc.

But your experience, what has it been like? Right now are you dealers sounding comfortable?

I am in a quiet period. My results come out in a short period of time. I cannot talk about that at this point of time.

Could you give us a very broad picture on in this transition, purely from the business point of view in the run up to the GST, how would you look at the demand scenario, how has that played out over the last two months and how do you foresee that in the coming few months?

So I would say retail demand has been okay. You have seen reflection of it in Q4 results of the previous year. Retail demand had picked up from demonetization. So we are okay with that as it stands.

Any problems, you foresee any challenges that you foresee in lieu of GST implementation?

Of course, there is a long learning process all across the unorganized sector of retailers spread across the country where connectivity is not necessarily the best. So it is going to take a period of time and understanding for people to, if the e-way bills come online, then it is one more level of complexity. So we will have to see how it all pans out. It will be learning but in India we trundle along so I do not expect any great hiccups.

 24 Jun 2017, 01:11 PM