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We have a very special conversation with Ramde Agarwal, chairman and co-founder of Motila Los and my colleague Niraj Sha is speaking to him directly. N over to you. Thanks Punit. Well it is as big as it gets in terms of reforms that you can anticipate. It almost seemed like we are preparing for the budget right the last three days ago and therefore we've got one of the biggest voices in Indian markets and arguably from an economic perspective and a corporate perspective Mr.
Ramdevagraal with me right here in their office. Mr. Graval, thank you so much for agreeing to do this. No, no, thanks for coming here. No, no, the pleasure is entirely love talking to you always. What did you think of this when you uh saw one the changes but to the approach of the government to making these changes Mr.
Gwal? So obviously it is coming from PMO or PM himself that he ski because this level of uh the complexity the size uh it can be done only with the push coming from the big office. Okay. So that has happened and they've done it very fast in fact faster than we thought that it will be third and fourth and maybe fourth night tonight it would have come but third only they finished the meeting and kind of announced so I think they're also in hurry and uh I only thing I couldn't understand is why is 2nd September why there is a gap or you do the meeting only on 21st September I don't know there must be some uh bureaucracy or something so anyway I think it's big and I think u it will take time for the market to digest it's so big that it will take time to digest and maybe people are much more focused on what happens September quarter and and then let me see the demand and all.
So I I did one thing I did only research I did I called up one of the dealers and incidentally he's the dealer for Maroti uh TVs Herro Motocop. So he he's a guy who understands auto. He said boss most likely we will not be able to supply the demand uh surge which is going to happen because of this. Wow.
So now we have to interpret in I mean we have to go and ask many guys companies guys will have less feel than uh than the dealers. So I think uh uh I mean see I think there are three four factors it's a lola plus effect in the sense that one is the credit flow. Okay because we we killed the I mean momentum last year by bringing down the credit flow from 17 18% to 8 9%.
You can't grow this economy at 11 12% if your credit flow is 8 9%. No way. Right. I don't know whatever was the econom logic for that they would know the regulators would know but now now even FM and government wants the credit flow to increase and inflation which was the main problem that is also well under control.
So now we have a credit flow we have liquidity flow with the CR cut and then now you have the GST uh cut. So all three have come together and there is a push from the uh whatever power that beers and everybody to push the economy forward. So I think um this all the three things uh uh uh the rate cut uh flow cut I mean the elability of liquidity and now GST I think we are going to see the second half and now bumper mansion also.
So the lot of factors which are coming together uh I would think that and then first quarter GDP growth of 7.8% or 8% I don't know how much extra pointable it is but it's a good news at least all the economists are wrong so what I'm saying is we are sitting on something very good and uh it can't be it can't get any better
and I I only hope that there no I mean uh there is no we will not because some of the guys I was talking to yesterday in my conference and they were saying sir we are hearing that they are going to tinker with the input credits and also I only hope there is no hidden uh you know kind of in this to cut the uh thing And uh the impact the revenue impact they're talking about is 45,000 crores for the current year.
So it it must be obviously to do with the second half. So the total impact on annualized basis would be 90,000 crores. I'm quite sure if uh I mean even if this is the level of impact of 90,000 lakh cr relief we have not seen ever. So uh but it will have a huge what do you call multip yeah multiplier effect and uh I think the bounce in the volume will bulk of it will be covered in one year uh one one and a half years I would think so if if the credit see apart from the GST card credit flow is very important they must make sure that credit is available in the economy and uh and it is the cost of credit is also important so they should also hammer the
uh the system that you know nobody should profiteer out of Everything should be every drop of it must go to the consumer. So that is very important and I think it will happen because competition is enough in the system. Banks are cutting each other. Uh now NBFCs will do very well. So there would be competition out there but NBFCs to get the liability so that they can disperse that has to be again the bank.
So I think banks have a major role to play to make this GST roll out success because it's not because if you cut the price but if you don't give me credit again things will not happen. That's true. So combination of credit and uh affordability it will it it should do wonders for one of the interviews.
You had told me that the government needs to move on reforms, ease of doing business etc. Do you think sir this is the start of some of the things this is the big bank start and some other measures are due to come. The thought process is absolutely right but you have to make see my guys are poor. I have very limited purchasing power though now the if you can't increase my purchasing power make the things cheaper so that I can buy instead of five units I can buy six but that one extra I mean in any case you charge me 25 30% income when I go to buy you charge me 28 and then 40% we don't get anything my rupee doesn't buy per say I earn less dollar and the dollar doesn't buy what is the fun you know so I I think uh my rupee should become much in fact as you keep reducing the taxes on the people the power of rupee will go up big time but like one rupee doesn't buy anything but $1 buys
you know so that the the currency should buy a lot more right that is very uh very important that can happen only if you uh because taxes they're what do you call they're cascading in the sense that you charge somewhere 18 and then you know at the end of it you get very little. So I think this is one thing this the style of it I mean the size and the impact with which they are doing it.
I hope this and I hope the my optimism bears out you know I'm very surprised. I'm very surprised. So I could be wrong. Market could be wrong. Only time will tell. So but but my uh I'm very excited about it and I showed you the tweet I I sent it to my investment team that uh they are saying that and it is going to see 50% of manufacturing is automo.
So I think the biggest impact will be on automo demand two wheelers I mean why should it be so expensive I mean 110 cc bike you ch 28%. I mean we got to be ashamed of it. So cement I think uh I think one thing I I I would say that this water I mean I think they should not categorize as sin at least that looks very bad.
So uh apart from that I think everything is very good and uh let's see I mean the action is yet to start only show is announced. Yeah. Yeah. So so sir do you believe that income tax cuts 12,000 per month then the RBI has reduced rates and therefore maybe borrowing could be cheap. Now this are we set for a bumper Diwali and the period to follow?
They were all very hopeful very very bullish and 25% we spoke to he came to the conference and all and so he said I mean we are in negotiation channels are open some sanity will prevail you know but it may take a month to whatever this geopolitical stuff so uh anyway that's apart from that I don't see any clouds uh on the the same horizon because now see just look at the flow see you can stock market is all about combination of things I mean one is the purchasing power so you are seeing massive flow of uh domestic last week last month uh they bought 95,000 crores and still building up okay uh that despite that very luck of performance in 12 months if you give 15 20% performance in next one I mean I I I don't know maybe in one and a half two years time we might be at 1 and a half lakh cr two lakh cr per month di flow.
So I think uh I mean and that has also got a role to play in the stock market performance and the performance leads to the flow and flow leads to the performance virtual cycle can come and once the performance comes then the risk money flows into the real economy. So now the real economy should have demand.
The moment you have demand the the interp see they keep saying the private capex is not private capex capacity already. If I have a capacity for 6 million motorcycle and my demand is five. Why do you expect me to put up another 2 million but now demand will not be six demand will be eight. And you just watch what exactly happens to the new capex announcement by these guys.
they will go at double the speed and then you must not miss out on that as policy makers you must in cash on that okay now I made 18 can I make it 15 and will you put up another five plants you know and they should also businessmen at the end of it in 12 months time we'll know whether it was a good business or not to cut the uh you know kind of a uh this GST rates was it better to be at 28 and was it is it better to be at 18 at 28 you might be collecting X number but what jobs are there?
There is no incremental job creation. At 18 you will collect more money and jobs will be a lot more. Right. Right. Right. You expect sir that the impact of something like this on the private capital could happen in as Susan 6 months or 12 months or could it take slightly longer? See once the businessman sees that boss one is that one time effect
most of I was talking to my analyst he said yeah you know so they have to also see this is a this is a compounded effect right you know the the impact is compounded because what will happen is that you buy instead of 100 cars you buy instead of buying say 3 million cars you start buying say 4 million cars
okay now that uh uh 1 million more car and then then what they're thinking that it'll go to 4 million then it stayed at 4 million. No, you know the whole thing will have that uh effect you know because uh your credit growth is yearon year. Yes. So so if if you bring down from 18% to 8% what what happens is that it you take out the purchasing for the from the uh power from the system.
So the growth in the GDP so GDP doesn't dislate it doesn't decrease the deceleration happens because you have taken away the purchasing power from the system. the the 10 lakh or 20 lakh crores extra credit you give that is additional purchasing power you have injecting in system and now you're saying that while you're injecting 20 uh lakh cr of purchasing power you're also making things cheaper so it will buy not only 20 lakh rupees worth more but it will buy maybe 22 23 lakh crantum kind of a thing so I mean I'm not an economist you speak to economist guys but
no but you say these things much better sir which is yeah so since I'm not I don't have the What a privilege of using some economics words economic jargon but you can explain it. So my business but I don't know I mean while I'm talking to you I'm even more excited you know I only hope that the next reooking happens much earlier.
I mean the policy makers must learn from this. I hope and they'll learn. I mean let's see what happens in next 12 months is going to be very important. Yeah. markets of course markets are there to in cash on the earnings explosion it earnings will surge okay and there's enough buyers so the moment earnings come uh you know what is going to happen sir so a question right
earnings ask me the index no no no of course not sir okay but if earnings are due to surge if DIA money might go hopefully to the numbers that you were talking about right that's a headline for me whatever it is. If all of that comes in, don't count on a fight. Don't count on it because out of I'm telling you and see they they're not seeing the they are comparing the companies they're not looking the stock price these are two different things you know I might get a cheaper rash This is another headline.
I know busy one last question sir like in if all of this were to happen right uh is this a big boost to the economy right because now you've seen the power of the stock markets helping the economy at large and in this fashion this will be a big boost now but wealth see when market goes up by 20%. What base we talking about?
Now it is 125% of GDP. My GDP is say 350 lakh crores in the current year expected. Okay. My market cap is 475. 475 will go up by 20%. GDP and boss is a real money in the hands market increase real. So the kind of wealth effect which is going to happen now capital use it to your advantage. I don't want any tax relief personally but you got to the way you are using this same you should use the cap capital market even bigger than the real economy real economy will be driven by the capital market and capital market can drive the real in fact the biggest strength of US is not their economy it is the capital market of theirs you know $65 trillion the kind of wealth effect they have when it goes up by 20% is like 123 trillion boss to that that magic machine is there with India also.
So how do we use that innovative important policy maker stock market GST machine so lovely talking to you Mr. Thank you so much for taking the time out. No, no, no. I would have loved to do this any which ways, but today was a special day and I I mean viewers, I'm sure you benefited out of this.
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