Kumar Mangalam Birla, the 46-year-old chairman of the $40-billion Aditya Birla Group

‘All your joys can’t depend on growth’

Kumar Birla Says Downturn An Aberration, Group Will Stay Ahead Of Bend In The Road

    Kumar Mangalam Birla, the 46-year-old chairman of the $40-billion Aditya Birla Group, is unwavering when it comes to achieving a turnover target the aluminium-to-telecom group has set for itself. But ever since the Indian multinational announced in 2008 that it wants to double the turnover to $65 billion by 2016 fiscal, the world has gone through quite an upheaval, economically.
    First, the developed markets slowed down, then the developing markets began showing signs of a downturn, and to add to the woes of Indian businesses with regard to clearances and policy paralysis, the rupee plunged to a record low of 68.83 against the dollar.
    In such a scenario, one would only expect Indian businesses to revisit their targets, make necessary shifts in gear and remodel their strategies in sync with the times. But Birla is in no hurry to change the target. At best, he would shift the goalpost. “We are keeping our target unchanged as of now, recognizing that the stress is much higher than what we initially envisaged. What’s happened in the external environment over the last 5 years, it makes the target even more difficult and in some ways unrealistic… the target is perhaps one that requires a stretch that is beyond the possible,” Birla told TOI in an exclusive interaction.
    “We are moving very strongly in that direction and the point is that if we don’t achieve it by 2016 fiscal, as we had envisaged, we would probably achieve it a year or year and a half later. I’m not putting a date to it,” he said. Birla did not hint at a probable change in trajectory either. “This is a very robust plan. It is based on a very granular assessment of each business, each of which has internally broken it down into various components and sub-components,” he said.
    He accepted these were difficult times and the group was reviewing investments worth about Rs 15,000 crore in Hindalco Industries. He agreed it was easier to run businesses abroad, but the fact that the government was finally taking cognizance of delayed projects gave him reasons to feel optimistic.
    As for the controls imposed on investments abroad, he agreed it will slow down investments but was hopeful that this was a temporary measure. Besides, he also doesn’t feel the current economic situation is as grave as the balance of payment crisis of 1991. 

The group When it comes to his business, Birla’s optimism in an otherwise bleak scenario also stems from his belief in the philosophy of the last man standing. “We are building businesses for the long term,” he said.
    “Our philosophy is always to be the last man standing. Which is that in a prolonged downturn, we are the least likely to get affected or the last to get affected in each of our businesses vis-a-vis competition and we have clearly outgrown not just competitors in most of our businesses, but also markets. So, we are actually seeing the fruits of our efforts playing out. In that sense, we will see fruition of the philosophy of the last man standing,” he said.
    It’s the group’s strategy of “dynamic nurturance” which appears to have worked, whether it is cement, where the group is a leader, or telecom, which has grown to create its own place in the crowd. While the group is providing a sharp focus on each of its businesses, which range from aluminium and copper to cement, textiles, financial services, fertilizers, telecom, retail and carbon black, it does not plan to enter a new business other than banking. “For us, it (banking foray) means that some important gaps in our portfolio in financial services would get filled. There is no reason why we should not be given an approval for a banking licence. It’s a business we feel excited about,” he said, refusing to divulge his game plan. 

New-age businesses Having revisited the strategy on retail, Birla believes the group has only grown wiser on this newbie. Using a calibrated approach, it is growing the business from the point of view of scaling the top line, which is focused on maximizing value. “Running a retail business is an art in itself,” said Birla, adding, “It is something very different from what the group has done so far.”
    While he hopes that FDI limits are increased, he is clear that the group’s growth would be one aimed at a breakeven in cash flows at the earliest. Birla said he is eyeing an ebitda breakeven by fiscal 2015 or 2016. Birla’s idea of a foreign partner is quite clear — one that is looking for growth-based on value creation — but it is not his intention to give away a majority stake at any point or enter into apartnership so as to sell out.
    As for telecom, despite rumours, it’s a sector Birla is not exiting. “We were never in a sellout mode at any point in time,” he said. Birla said his aim is to build the business on strong fundamentals and a strong customer-connect.
    As to whether Axiata was selling its stake in Idea, Birla said the investor was committed to Idea. “As investors, they have been very happy with the kind of returns Idea has given. In fact, the sense I am getting is they are very interested and would be hypothetically keen to take up their holding a little bit, if they could,” he said. 

‘Building for future’ Birla may be steadfast on his commitment on the turnover target, but the fact remains that demand is generally growing at a slower pace and is a cause for worry. Birla’s vision, however, goes beyond a business cycle. “You are building for a future. That process continues all the same irrespective of how the environment looks today. A downturn
is in that sense an aberration,” he said.
    Does he sense stress or dissatisfaction among managers owing to the slowdown? Birla, said: “All your joys can’t depend only on how fast you are growing. Then you will be in a complete state of mania. One has to derive pleasure from all of these things in a holistic sense. I am not saying it would not be remarkable if you were growing much faster, but all your happiness can’t be on that one factor.”
    His recipe for dealing with a downturn is to arm managers with skills required to sail through tough times. “You need far more mental toughness to handle and emerge looking a winner. These are tough times but business is about facing the rough-andtumble with different times.”
    The idea, according to Birla, is to have people with the right attitude who would not just put their finger on the pulse of the business and understand how it’s changing, but also take appropriate steps to stay in tune to make sure whenever there is a bend in the road, the group stays ahead. It’s no wonder that the one important factor Birla picked when asked on what keeps him going is the people he works with. The other thing, of course, is growth.