Is India Inc prepared for GST rollout? | Business Standard News

The GST Council, on its part, has relaxed return filing rules for businesses in the first two months. In the run up to July 1 when the GST comes into force, Business Standard spoke to leading market experts on their views about the GST, its implementation and the likely impact on the economy, corporate profits andmarkets.

Here’s what they said:

FY18 Earnings can dip to single digit if GST pain prolongs, says ANDREW HOLLAND, chief executive officer, Avendus Capital Alternate Strategies

I don’t think India Inc is ready for GST. When we meet the big companies, they seem ready for the transition. It is the small companies and PSBs that are not ready. Even if the government delays implementation, companies will never be fully prepared for the impact. Therefore, it is better to implement it from July 1

The compliance burden will be felt far more keenly by small and medium enterprises, says SAURABH MUKHERJEA, chief executive officer, Ambit Capital

I don’t think anybody or any company can truly prepare properly for GST, beyond implementing the relevant systems and processes. Nobody that I have met can fully comprehend the impact of GST on working capital cycles and pricing. Clearly, the compliance burden will be felt far more keenly by small and medium enterprises (SMEs) which don’t have large finance and IT teams to deal with a scale of this magnitude.

Investors are willing to bear GST pain for long-term gains, says MAHESH NANDURKAR, executive director and India Strategist at CLSA

The June quarter numbers will see an elevated impact. What we hear and understand is that a lot of companies, traders, distributors and dealers are de-stocking inventory. This will have an impact on the June quarter reported earnings and revenues, which can possibly remain in the September quarter as well. The situation, however, will normalise. Investors are now looking beyond FY18; and from that perspective, the near-term disturbances that will be caused by the GST will only have a small impact on the investor sentiment.

The analysis for companies needs to be equally nuanced. One needs to factor in not just the change in the headline tax, but also changes to tax rates for the companies' customers and suppliers, and the bargaining power the firm has with each. Read More

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