Birla: Govt needs to be more realistic on green targets

Billionaire Kumar Mangalam Birla on Thursday said his group has been going slow on capital investments this year, instead is diverting funds to drive sustainability initiatives, where he feels the government needs to become more realistic in setting the green mandates.

Birla, whose USD 48-billion group straddles cement carbon black, mining, aluminum, textiles and telecoms, supported capital markets regulator Sebi's move to bifurcate the posts of chairman and managing director, as joint role is more "ironic" than practical.

The comments on sustainability come amid the continuing slowdown in private sector investments both for expansion as well as in entering new businesses as consumer demand has been plunging. A leaded official data last week showed that rural demand has plunged to 40 year-low in FY18, forcing the government to junk the entire NSS report as such.

"Actually this year, we have cut on some capex and allocated those funds to investments on sustainability initiatives," he said during a conversation with former Sebi chairman M Damodaran on corporate governance.

Birla was, however, quick to add that his only contention is that the government mandates on climate change- related norms should become more "realistic" as in many cases, the policy expectations on the timelines to achieve the targets are "unrealistic".

"You can't tell me that your emission norms must be 'x' when no one in the world is able to meet that. Worst still, there doesn't exist a technology where we can achieve the 'x'; you can only achieve 'x' plus 20 percent," he said.

What is needed, he said, "the mandate given to the industry needs to be more realistic and the expectations on timelines are unrealistic now which needs to be looked into". Meanwhile, Birla backed the Sebi move to bifurcate the posts of chairman and MD, saying their requirements are different and it is "ironic" if a single person handled both posts.

But he was quick to add that he does not grapple with this issue because all his businesses have dedicated managing directors, even though he chairs the boards.

His views are in contrast to other corporate czars, including the house of Bajajs and Srinivasan of TVS, who have opposed the Sebi move.

The regulator has said two-thirds of the top 500 companies already comply with the mandate that is set to be enforced from April 2020.

Birla also seemed to back the regulator on the two posts not to be divided among family members, saying that two related persons may find it difficult to work and steer a company together.

He said very few corporates are paying attention to the otherwise critical issue of succession planning, and also went public with his disappointment on the directors' assessment system.

Birla said being the chairman he gets 10 on 10 from his fellow directors, depriving him of genuine feedback which can be helpful in a business.

On mandatory tests for independent directors, Birla sarcastically replied that "sometimes innovations are not required" and explained that a person's track record, expertise and experience are important.