Av Birla Group Preparing Consolidation Blueprint
The Rs 15,000 crore Aditya Vikram Birla group has begun a major exercise to assess its core strengths across nine product categories, namely cement, textiles, petroleum, telecommunications, man-made fibres, carbon black, chemicals, aluminium and power, as part of its Vision 2002 plan.
The exercise, which is expected to last about two months, will involve the preparation of detailed analytical reports on each product category. The group's investment plans for each category will then be drawn up on the basis of these reports.
The group has also decided to re-examine its non-core businesses. It is moving towards dropping unrelated diversification projects in steel and fibre glass, while its corporate strategy cell is working on vetting new investment proposals and evaluating important international and national developments which could have an impact on the group's activities.
A V Birla group chairman Kumar Mangalam Birla confirmed: The group is focusing on areas where it has built up a dominant presence over the last two years, which strengthen the group's position in its existing areas of dominance.
The reports on the product categories will dwell on the quantum of investments necessary for each category, and the group's likely turnover from each category in 2002. The reports will also have to specify whether the group would rank among the first two or three in the product category in 2002. This meshes with the AV Birla group's corporate philosophy of being active only in areas where it is a major force.
The Vision 2002 exercise will draw on some obvious synergies within the group. For instance, if Grasim and Indian Rayon have some common businesses, they will not prepare separate reports on the same product category. Rather, they will prepare a consolidated report on the sector, say, cement, and then seek investments in that sector.
Unrelated diversifications such as steel, fibre glass, paper and pulp have been dropped, said Birla. This means that the A V Birla group will exit from Grasim Industries' Vikram Ispat project and the fibreglass project under Indian Rayon, explained group sources. The group has already shelved Indo Gulf Fertilisers and Chemicals Corporation's Rs 1,900 crore paper and pulp project.
At the same time, the group is planning to strengthen its position in existing areas of dominance including viscose filament yarn, textile and cement. Accordingly, it has chalked out a three-year investment plan worth nearly Rs 8,500 crore. The group plans investments in the Rs 2,710 crore Bina Power Project, the Rs 3,690 crore phase II expansion of Mangalore Refineries and Petrochemicals Ltd and the Rs 1,900 crore Birla AT&T telecom project.
Group companies Hindalco, Grasim Industries, Indian Rayon and Indo Gulf Fertilisers are expected to invest Rs 865 crore in the proposed projects.
The A V Birla group has more than 50 manufacturing units spread over India, South-East Asia, Thailand, Indonesia, Malaysia, Philippines and Egypt. The group is the world's largest producer of viscose staple fibre and the third largest producer of insulators.
AV BIRLA GROUP: THE ROAD AHEAD
* 'VISION 2002' to be readied in two months
* Nine product categories being considered
* Group to focus only on areas where it has a dominant presence
* Steel, fibreglass investments being dropped
* Corporate strategy cell to monitor new investments
* Companies with common businesses to prepare consolidated reports