Declaring that his conglomerate is now in ‘digestion’ phase and new business forays or large investments are unlikely in the near term, Aditya Birla Group Chairman Kumar Mangalam Birla has said he is open to inducting a foreign partner in its retail business while girding up for a bigger play in telecom.
The head of one of India’s top conglomerates told ET that his group was today an “interesting portfolio” of disparate businesses.
Birla, whose AB Group boasts revenues of around $40 billion and a business footprint spanning continents, said exploring new frontiers was not required for now. “I think it is a very interesting blend of so-called new age and tradition, between asset-intensive and asset-light, between industrial goods and consumer-facing,” he said in an exclusive interview. “I don’t see need for us to enter into new businesses.”
Birla, 46, also said the group, with interests spanning diverse industries such as cement, aluminium, supermarkets and financial services, had only recently completed a two-year investment phase and fresh cash splurges were unlikely. “I think the priority for us is to digest that and get returns from that large capex. So large investments are not a priority for us,” said Birla, who will be conferred ET’s Business Leader of the Year award for 2013 on Saturday.
An MBA from the London Business School, Birla took charge of the group at the age of 28 upon the death of his father Aditya Birla in 1995. Under him, the group’s revenues have grown from just $2 billion when he took charge, helped by a string of acquisitions in India and overseas. It has been the most active among Indian conglomerates pursuing the inorganic route to growth, a strategy that has given it presence in 36 countries across six continents and overseas businesses accounting for its revenues.
Asked to comment on persistent speculation about the group’s mobile phone business â€” Idea Celular â€” being on the block, Birla said telecom was a core business and would remain so, especially now given the sector was emerging from a trough. The group was not in talks to sell out or induct a partner in the company, he said, adding that he did not also see Idea Cellular play the role of a consolidator in India’s splintered telecom market. “I don’t necessarily see ourselves as a consolidator, I don’t see that as very high,” he said.
Birla acknowledged that the planned entry of Reliance Industries could be a “game changer” in the telecom sector. “The entry of Reliance in the telecom space will cause some amount of anxiety. Reliance has always been a credible competitor with deep pockets and a great track record of execution,” he said. “Needless to say that is something that could be a potential game changer in the industry. My sense is that everybody in the industry is waiting to see what happens.” (Source:ET)