Business

‘It’s still difficult to do business here’

Henry R. Kravis

Henry R. Kravis  

The bureaucracy needs to improve, says the co-founder of KKR

With $7 billion invested in India, Henry R. Kravis, 74, co-founder of Kohlberg Kravis Roberts (KKR), a global investment firm of which he is also the co-chairman and co-CEO, is betting big on India for further investments despite the difficulties in doing business in the country. Edited excerpts:

On areas that need improvement

You have no capital market here. You have a stock market of sorts, but you have no bond market. If you don’t have a long-term bond market, you limit the growth because you’re putting the entire onus back onto the banks to basically be the provider of capital. When the banks run out of capital, you got to stop right now because you have got all these non-performing loans and we are not sure what the RBI wants us to do. Large companies here can always find capital alliances and others can find capital somewhere in the world.

That’s easy, but it’s the mid sized and smaller companies who will struggle to find capital.

On India opportunity

We have two non-banking financial corporations (NBFCs), one in real estate credit and one in corporate credit, because it’s a huge opportunity for us and we put to work a little over $7 billion in the last few years. We will put much more to work as we go forward in our credit business here as it’s a real opportunity for us. I am a believer that a country should have a broad and deep capital market. Having said that you’ve taken a very good step forward by having a bankruptcy law. Now, you have GST which makes a big difference. Then you have real estate regulations that have changed a lot. So, these are very positive steps.

On NPA issue

If somebody says we only have 5% non-performing loans, I don’t know if that’s the case. If you did a really good stress [test], it will be significantly higher than 5%. I’m not in that business here but I have just seen it every time the bank says it’s not that bad, it is actually much worse than that. Everybody wants to push it under the rug and hope it is going to get better but it doesn’t.

On change in State governments

You had an election, mid-term election as we call it in the [U.S] States. Yeah, Congress picked up a couple States and that’s great in the U.S. [where] the democrats took control of the House but not the Senate. Life will go on, so the more fundamental issues here is that you have a government right now, that is pro-business, it’s trying to do what needs to be done to improve business. Going forward, probably over the next five six months until your next general election, you’re probably going to have pretty large amount of liquidity put into the system to keep going.

On India’s position in U.S.-China trade war

I was there in Southeast Asia in October and I watched what was happening there and see what’s happening in China. So, this (U.S.-China trade war) is very positive for Southeast Asia. And it’s very positive in my view for India. You’ve got to make the country user-friendly, ease of doing business [is] okay, you’re improving.. you are now 77 based on the World Bank [ranking], so that’s all positive.

On challenges in India

It’s still difficult to do business here. I will give you an example. We put money behind somebody that wanted to build power plants. We give them the money. They finally got the approvals which took two years. They built the plant and they can’t get coal now and [in] the meantime, we got our money tied up there. Those kinds of things that stop foreign direct investment here is in the bureaucracy, so that needs to be improved.

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Printable version | May 22, 2020 8:56:55 AM | https://www.thehindu.com/business/its-still-difficult-to-do-business-here/article25746285.ece

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