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Are you on track for the proposed demerger of all of the verticals by October would there be some near term disruptions to watch out for Mr Goenka?
I think the plans have been submitted to the stock exchanges as soon as we get the approval from the stock exchanges and SEBI we will move to the NCLT and then subject to their clearance we will move ahead.
We are looking by which you can finish this demerger exercise?
It is a difficult thing to forecast but the effective date will be 1st October for sure.
Let us talk about the individual businesses then first power generation and distribution that business in India is undergoing an overhaul with new normal shifting towards renewable how are you preparing for this new norm?
I do believe that power capacity will be available in abundance whether it is from renewable energy so that is why we had decided that we will not invest significantly in the generation of power any further so there will be some organic investments but there will not be any significant investments in generation.
We believe as a BoT that the future of power lies in distribution, we have expanded in distribution by taking three franchises in Rajasthan. You will see as doing more of this as we go forward.
We look forward to that and a lot of long term PPAs have recently been cancelled though due to the cheaper availability of merchant power is this trend dangerous, how are companies like you safeguarding your interests?
For us we do not sell our power on the basis of PPAs per se, we have got section 62 agreements in our IPPs or we have got distribution zones to sort of ring-fence our generation capacities. Our view yet again has been proved correct that do not invest significantly in a generation, it is not something that is going to be really remunerative.
You have boldly assertive that you would be able to double your profits across the various group entities in the next three years do you think that you would be on track to perhaps achieve them, what will help you in that endeavour?
Well I think when I made this forecast I had a certain set of assumptions in mind they are playing themselves are extremely well so I think we are very much on track for that and I do expect I mean one can never predict the future with certainty but as things stand yes we are completely on track for that.
Your power business as well has funded your various diversification ideas. With the overhang that will go post the demerger of your verticals, can you give us the internal math that you are working with, this is for the power business going forward?
The power business will be, I mean generation will be separate, the distribution will be separate, Spencer’s will be separate and other ventures will be separate. We are very bullish by the response we have got on FMCG, We have now decided to invest in manufacturing capacity and we are evaluating which state to put it up in. We should hopefully in the next fortnight take a call on that and move ahead.
I must ask you that yes you did speak about how you are going to separate of your distribution business, your power generation business, etc, what was the rationale for the separation of the power verticals, what is the argument in favour of that?
Well, fundamentally I think generation is a different business and distribution is a different business. It needs different scale basis at least different HR strengths. It needs different management strengths. Distribution is a consumer business.
To me it is not a commodity business, it is a consumer business and I think every power distribution utility has to move from being a commodity selling company to being a consumer facing company. So it becomes like it is not an FMCG product but you need very similar attributes to a retail or an FMCG business.
Generation is all about engineering, technical excellence. You need completely different mindsets. You need different management skills and I think as the company is becoming larger, I think it is high time that we segregate it and focus on each one with the specialised skill base and domain today is becoming more and more specific and important. You cannot have generalise running company. You need domain specialist running companies.
One thing that will definitely go away is the conglomerate discount overhang that weighs down on your group. Independent demergers of your business will ensure that the business will be fairly value, what are your thoughts on this?
I actually believe that yes we had a huge conglomerate discount which I expect to go away.
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