Aditya Birla Case notes
Birla #1:The Unknown Global Indian Conglomerate
Q) After a decade of reform, had the Birla group done enough to outpace its rivals , or was there another step it had to take to be “Birla #1”?
Ans: Once Kumar Mangalam Birla took over the Birla group in 1995 after the untimely death of his father, he ushered in an era of reforms and mandated the company be among the top three players in the world or at least in the region for any particular investment. The renewed focus of the group was in making investments in India, acquiring companies outside India fuelling growth. One of his notable acqusitions was Novelis to make the high-risk aluminum business less vulnerable to price fluctuations on the London Metal Exchange. (Novelis was acquired by Hindalco).
Mangalam Birla focused on strengthening and consolidating similar businesses together and investing in growth business sectors from the cash generated from the value businesses. His strategy paid off and from being a conglomerate with just US$1.5 billion in revenues in 1995 it had grown to a business with revenues of approximately US$40 billion in year 2012.Though the group has come a long way it is still at number three amongst the Indian Conglomerates(Number 1 being Tata with revenues of US$100 billion as of 2012 and RIL with revenues of US$74 billion).
In certain businesses the group is number one like VSF and cement whereas in certain other sectors like retail it needs to work towards establishing itself amongst the top three. The level of competition has increased both at home and abroad and the Birla group needs to rethink their strategy to be the number one. The Birla Financial services can play a major role with insurance company and an asset management fund.
As a conglomerate it should be able to reap the benefits of distributing its costs across similar businesses and achieve cost leadership to gain a competitive advantage over its rivals.
The group is looking at investment opportunities in Africa,
Q) After a decade of reform, had the Birla group done enough to outpace its rivals , or was there another step it had to take to be “Birla #1”?
Ans: Once Kumar Mangalam Birla took over the Birla group in 1995 after the untimely death of his father, he ushered in an era of reforms and mandated the company be among the top three players in the world or at least in the region for any particular investment. The renewed focus of the group was in making investments in India, acquiring companies outside India fuelling growth. One of his notable acqusitions was Novelis to make the high-risk aluminum business less vulnerable to price fluctuations on the London Metal Exchange. (Novelis was acquired by Hindalco).
Mangalam Birla focused on strengthening and consolidating similar businesses together and investing in growth business sectors from the cash generated from the value businesses. His strategy paid off and from being a conglomerate with just US$1.5 billion in revenues in 1995 it had grown to a business with revenues of approximately US$40 billion in year 2012.Though the group has come a long way it is still at number three amongst the Indian Conglomerates(Number 1 being Tata with revenues of US$100 billion as of 2012 and RIL with revenues of US$74 billion).
In certain businesses the group is number one like VSF and cement whereas in certain other sectors like retail it needs to work towards establishing itself amongst the top three. The level of competition has increased both at home and abroad and the Birla group needs to rethink their strategy to be the number one. The Birla Financial services can play a major role with insurance company and an asset management fund.
As a conglomerate it should be able to reap the benefits of distributing its costs across similar businesses and achieve cost leadership to gain a competitive advantage over its rivals.
The group is looking at investment opportunities in Africa,