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Media enquiries
should be directed to: (Please use this contact for media
enquiries only ).
Dr. Pragnya Ram
Group Executive President
Corporate Communications
Aditya Birla Management Corporation Private Limited
Aditya Birla Centre
1st Floor, 'C' Wing
S.K. Ahire Marg
Worli
Mumbai 400 030.
telephone:
91-22-6652 5000 /
2499 5000
fax:
91-22-6652 5741/ 42
email: pragnya.ram@adityabirla.com
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The
Economic Times
20 November 2009
If you want to be part of the global growth
story, then you have to be connected with
India in one way or the other, depending on
the kind of business that you are in. That’s
the message Mr. Kumar Mangalam Birla, Chairman,
Aditya Birla Group has for global investors.
In a free-wheeling chat with Mr. Vallabh Bhansali,
Chairman, Enam Securities, Mr. Birla recalls
his struggles in his initial years and charts
out the road map ahead for the Aditya Birla
Group.
Vallabh
Bhansali: You
are the sixth or the seventh-generation legacy
— history shows that it goes back to
sometime in 1857 in Pilani when the first
significant enterprise started. You came in
at a very young age. So how difficult was
it and what do you recall of your early days?
Kumar Mangalam Birla: The circumstances
were such that it was very difficult, but
I think that the family, my father, what they
left behind was a legacy of goodwill and that
bank of goodwill saw me through a lot of the
initial years. Yes, it was very tough, but
we had a very good team. It was a team that
had built up the organisation in the 30 years
prior to that. I was very fortunate to have
their support to take me through the first
three or four years.
VB: We find that the market cap
of the Indian market has done better. It has
had a compounded growth of over 15 per cent,
assets have grown around 23 per cent and sales
have grown 25-26 per cent. How do you look
at the financial performance, as the stock
market is rather unimaginative and we think
only in terms of market cap?
KB: Couple of things. I think that
the market cap is obviously a product of the
kind of businesses that you are in and we
are even now fundamentally, to a large extent,
in the manufacturing businesses that has been
our forte. I think that there is a lot of
value creation to be done there. We have a
track record of running those businesses successfully.
There is a huge opportunity for growth in
those businesses. So although it means lower
P/E and lower market capitalisation, I do
not see the reason for us vacating that space.
We are very comfortably poised to take advantages
of all the opportunities that we have in those
businesses. But what we have done over the
years is to create a mix and match of the
portfolio of the group. We have tried to balance
it out by having on the one hand assets like
businesses, and on the other hand, more asset-intensive
or the more manufacturing kind of businesses.
Again, value businesses, as we call them,
are the slower growing, more mature businesses
than the newer age businesses, for example,
telecom or financial services.
VB: When your market cap behaves
in a certain manner, it also measures your
wealth in a certain manner, and it’s
very interesting that you are not a number-conscious
person. The Birlas were known for their cash
flow or cash-flow management. So, what is
your inspiration, were there any guides and
any gurus. What drove that conviction to do
that?
KB: No, there were no guides and gurus
at that point in time, but I think a sound
educational base and the fact that I had interned
with my father for about five-six years, helped.
I was looking after some businesses for about
three years before he passed away so there
was some sense of what the real world is all
about but I think it was more intuitive. It
was based on what we thought was hurting at
the moment, and like they say necessity is
the mother of invention. Around the time that
I took over, the economic environment had
changed very much, duties had gone down, the
whole investor base complexion of that change
you had, all the FIIs coming in more ferociously
than before. So the whole liberalisation theme
had actually started to play out. We, for
example, felt that we needed a skill set that
we did not have in the organisation at that
point in time. We did not have the luxury
of time, so we needed to import them. So,
it’s like saying that you know, you have
a good cricket team, you have some good batsmen,
you also need some people who can take good
catches, so we had a lot of people coming
in on lateral moves.
VB: What would you like to tell global
investors — about either India or your
group or anything else?
KB: I think India as we all recognise
is at a very interesting point in its growth
cycle. I think that what happened over the
past one year is that we have been able to
sustain a shock so well. And the fact that
we have come out of it looking even fitter
and stronger and relatively unscathed is a
fact that has not gone unnoticed across the
globe wherever we have our operations. I think
there is a very clear message that goes out
to investors and that is that India has clearly
bucked the trend, that the banking system
in India is much healthier than probably in
most other parts of the world, the fact that
our monetary and financial fiscal prudence
that we have over the past 10 years has stood
us in very good stead and the fact that India
is one of the few economies that is continuing
to grow at 6-7 per cent. Hopefully, it will
be in double-digits, going forward in the
next 2-3 years. India is an economy that you
cannot ignore. If you want to be a part of
the global growth story, then you got to be
connected with India in one way or the other
depending on the kind of business that you
are in.
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