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business leaders > profiles > Kumar Mangalam Birla
Kumar Mangalam Birla
Kumar Mangalam Birla: A master strategist
Kumar Mangalam Birla, 39, is particularly known for his global ambitions — and successes. When he took over as chairman in 1995, the Aditya Birla Group was already present in the Far East (Thailand, Indonesia, Malaysia and the Philippines) and Egypt, apart from being among the top three business groups in India. Birla consolidated the overseas businesses and set up new ones in Canada, China and Australia.
Birla's strategy was to integrate all these operations seamlessly with one another and the ones in India. For instance, in Canada, two joint ventures (JV), AV Cell Inc and AV Nackawic Inc, produce the raw materials for the group's Indian Viscose Staple Fibre (VSF) business. Liaoning Birla Carbon is a pioneering JV in China that manufactures and markets furnace grade carbon black, building on the group's experience from its existing carbon black companies in Thailand, India and Egypt. And there are strong synergies between the copper operations of Aditya Birla Minerals Ltd in Australia and Birla Copper in India.

It is Birla's immense clout in India that allows him to venture bravely into global waters. The Aditya Birla Group is India's third largest business house. It is a leader in many of the businesses in which it operates including non-ferrous metals, cement, VSF, carbon black, viscose filament yarn, chemicals, fertilisers, insulators and branded apparel. The group is also active in services sectors like insurance and asset management, software and telecommunication.

The Aditya Birla Group has annual sales of $8.3 billion and a market capitalisation of $14 billion. Its important Indian companies include Grasim Industries Ltd, Hindalco Industries Ltd, Aditya Birla Nuvo and UltraTech Cement Ltd. Among its important JVs are Birla Sun Life (financial services) and Birla NGK (insulators). The group employs 72,000 people across the world. More than 30 per cent of the group's revenues accrue from its global operations.

Birla took over as chairman at 28 on the sudden demise of his father, noted industrialist Aditya Birla, after whom the group is named. Birla, who trained as a CA and holds an MBA from the London Business School, is also on the boards of major Indian companies like Tata Iron & Steel Company and Maruti Udyog Limited, apart from being the chairman of the flagship companies within his group.

He is also on the board of the G D Birla Medical Research & Education Foundation and a member of the board of governors at the Birla Institute of Technology & Science (BITS), Pilani, and the Indian Institute of Management, Ahmedabad. Birla is also a member of the London Business School's Asia Pacific advisory board.

He holds several key positions on various regulatory and professional boards, including chairmanship of the advisory committee constituted by the ministry of company affairs for 2006 and 2007, membership of the prime minister of India's advisory council on trade and industry and chairmanship of the board of trade reconstituted by the union minister of commerce and industry.

Most recently, the government of India's Ministry of Finance nominated Birla on the Central Board of Directors of the Reserve Bank of India, with effect from 27 June 2006.

Silencing the sceptics
When Birla took over the mantle at the Aditya Birla Group, sceptics doubted his ability to handle a mammoth business house with interests spanning viscose, textiles and garments on the one hand and cement, aluminium and fertilisers on the other… several of which were then in the grip of a cyclical downturn. There was also the question of how he would transform the traditional babu culture (internal bureaucracy) of the group — an anomaly in a rapidly globalising environment.

Birla proved all his sceptics wrong. He changed business strategies, brought in sweeping changes, professionalised the entire group and replaced internal systems. He reduced his group's dependence on the cyclic commodities sectors by entering consumer products. He hired well-known professionals like D Bhattacharya,
Dr Santrupt Misra, Sumant Sinha and Sanjiv Aga and gave them independent charge of key business functions. At lower levels, he inducted fresh talent from management schools in India and abroad and set up Gyanodaya, an in-house management learning centre.

Birla also put on hold projects, some already announced, others at the take-off stage. These included the Aditya Birla Group's plans to enter sugar, paper, steel, glass fibre and Purified Terephthalic Acid (PTA) — a key intermediate used in the manufacture of textiles. The group has also exited from unviable businesses like seawater magnesia and oil refining.

Seeing a future in cement, the group has strengthened its cement business by buying out the cement business of engineering and construction giant Larsen & Toubro (since then renamed UltraTech Cement). It also acquired Indian Aluminium Company from Alcan of Canada.

While under him the group has consolidated its position in existing businesses. It also carefully ventured into sunrise sectors like cellular telephony, asset management, software and BPO. In telecom the group bought over a 48.14-per cent stake from the Tatas and is now a 98.3-per cent stakeholder in Idea Cellular Ltd. The group also bought over Byte International, a US-based e-learning firm; PSI Data Systems Ltd, TransWorks Information Services Pvt Ltd and copper mines in Australia.

On 23 June 2006, the Aditya Birla Group announced that it has made an offer to acquire, through TransWorks, Minacs Worldwide Inc, Canada's leading BPO provider. The acuisition is expected to cost US$125 million in all.

Clearly, the low-profile Birla's multi-pronged strategies are working. In the last decade he has not only evolved into a respected industrialist, he has also succeeded in multiplying five-fold his group's revenues. As one of the youngest and most successful business leaders in this part of the world, perhaps his best is yet to come.

Compiled by Raju Bist
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