Vineet Agarwal, MD of Transport Corporation of India expects the supply chain business to grow at around 20 percent in FY15. He has a positive outlook for FY16.
With GST Bill being tabled in the Parliament, companies operating in supply chain business stand to benefit, says Vineet Agarwal, MD of Transport Corporation of India. But GST will have no direct impact on a company like his, which is a services company, since it is essentially a consumption tax and will have an impact on manufacturing.
However, the introduction of GST will lead to some reduction in expenditure, he adds.
He expects the supply chain business to grow at around 20 percent in FY15. He also has a positive outlook for FY16.
Going ahead, Agarwal sees a revival in the auto sector. Transport Corporation of India derives nearly 70 percent business from it. When compared to FY13 and FY14 he sees significant improvement in business.
Below is the verbatim transcript of Vineet Agarwal's interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Sonia: If you can explain the specifics to us with respect to your own company. What is the current tax rate that you pay and if the adjusted tax rate for goods and services tax (GST) is at about 24-25 percent then how much of a benefit would companies like yours get?
A: For us the direct impact of such taxation is not there. We are a services company and not a manufacturing company, so we just pay service tax and income tax, but the impact that you mentioned is actually on manufactured products. So what will happen is essentially GST being a consumption tax, it would mean that today let's assume that there is a company which has five production units and maybe 25 warehouses across India because of saving tax, saving the central sales tax they will start reducing these numbers of warehouses, so instead of 25 warehouses they might have 15 warehouses. Therefore, the distribution matrix will change from five factories to 15 warehouses which would essentially mean that the size of these warehouses will increase essentially reducing the overall inventory but concentrating that inventory at several locations. So a lot of changes will come from supply chain perspective for manufactured products with GST coming in.
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