Av Birla To Focus On India Operations

The Aditya Birla group has decided to focus on its Indian operations and does not plan any major expansion in its overseas business.

On the group's vision, Kumar Mangalam Birla, chairman, told Business Standard: "Our focus is now on India. The whole world is looking at India and so we don't want to miss out on it".

The over Rs 15,000-crore group is also going through an internal exercise to consider reorganisation of the group companies by bringing together similar product categories under one company. At the moment several companies in the group manufacture the same commodities. For example, three group companies, Grasim, Century textiles and India Rayon manufacture cement.

 

On the reorganisation of the group, Birla said: "We are exploring bringing similar businesses together but there are problems like stamp duty and taxation. It is a very complex procedure. We are looking at it with a long-term perspective and its impact on returns to shareholders. This will not happen overnight because once a decision is taken, it is irreversible."

Birla explained that the group's strategy is to become global players in core sector industries "We believe that in a growing economy core sector industries grow fast too. We will become global players in some industries like power, cement, aluminium and carbon black."

He said in viscose staple fibre, the group is one of the largest in the world with an 18 per cent market share.

In cement, with a capacity 8 million tonnes, the Birlas are the second-largest in the private sector in India and they were adding more capacity.

In carbon black, Birla pointed out they were the fifth largest player in the world and have plants in Egypt, Thailand and India. Eighty per cent of the Egypt plant's production is exported. "

The group has also decided to drop unrelated diversifications. Birla cited examples: "We have decided to drop the fibre glass project because there is not enough demand in the country to build a global sized plant. Similarly we have decided to drop the paper and pulp manufacturing investment because we found that there is not enough returns in the industry."

Birla claimed that he was focussing on giving a strategic edge to each of his chosen businesses and is watching return on capital employed and return on net worth of each company closely.

He also explained the group's huge investments in cellular services: "We believe that in a growing economy core sectors will grow fast and all our businesses are in this sector. We consider telecom to be a core sector industry and a focus area for us. We will have the largest cellular network in the country which will cover highways and also rural areas in the Maharastra, Gujarat and Goa circle."