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The face of the Birla empire
A chat with Kumar Mangalam Birla, Chairman Aditya Vikram Birla Group.
Chat conducted on Tuesday, June 20, 2000, between 1700 hours and 1930 hours IST.



K M Birla: Hello everybody. This is Kumar Mangalam Birla here. I am glad to be here to talk/chat with all of you. I hope you find it informative.

Rajesh Kumar Sharma: Sir, I am a Chartered Accountant and I have worked for ten years in Bombay. I am now working in Malaysia. What do you think about the South East Asian crisis and how the Indian Economy managed to insulate itself from that. Further, how do you expect the Indian Economy to perform in the coming years. Would you please also comment on the Rupee's stability against the USD. Thank you.
K M Birla: Hello Rajesh. The SE Asian crisis has been good learning prompting a revist of the economic plans and policies. As we in India approached the liberalisation process in a cautious manner, we managed to rehome insulated from the SE crisis. The government has taken a series of progressive steps. I am optimistic about our country's future. Market fluctuations will always prevail. In my opinion, so long as our fundamentals are strong, the stability of the Rupee vis a vis the US $ should not be a major cause of concern.

To generalise about all Indian business houses would not be appropriate. Many of these have created significant shareholder value, over the years. Investment proposals are normally vetted by different agencies both internal and external to the company, who provide the requisite safeguard against any misuse.



Mahesha: Why are the Birla's not making attempts to enter IT in a big way?
K M Birla: Mahesha, up until now our presence in IT has been relatively small. We are exploring ways of increasing it in a meaningful way. For example we have acquired a company in the US, Learning Byte, which focuses on technology led instructions for corporates.


Gaurav Mathur: What made you pursue a challenging course like Chartered Accountancy, when you would have had the option of completing almost any other business course in the world?
K M Birla: Gaurav, my father being a technocrat, one felt that an accounting degree with an MBA from LBS, would prove complementary. So I followed that route.



Amita Kasbekar: Hi, I wanted to know what it feels like to be the big boss of such a massive conglomerate. Is it fun, is it very hectic, and do you feel you deserve any of it or is it just a hand-me-down that you have been given?
K M Birla: Amita, managing the Aditya Group is a big responsibility. It is enjoyable, stressful at times, a great challenge.



Rohit Gupta: With the world exploding with 'e-businesses' what are your plans for the Net? Your group has undertaken a massive restructuring exercise over the last few years with the aid of an international consultant. Do you think that they have been instrumental in bringing about the change?
K M Birla: Rohit, the changed agenda was set by us. We relied on Boston Consulting Group for their international experience to help us effectively implemently the same. We are working in many areas, in particular B2B and B2C. For example, in our ready-to-wear apparel business and financial services, we will surely leverage the power of the web.



Anurag: Sometimes I feel you guys are in a better position than me because you were born in an already rich family. I want to make it as big as you people, but I think it will take some more time because I would be building everything on my own, what do you think about this and tell me some good things that you follow?
K M Birla: Anurag, the new Economy has proved that anyone with intelligence, out-of-the-box thinking, perseverance and passion can make it. I wish you great luck.



Dr Prashant Trivedi: Mr Kumar Mangalam you have global operations and you head one of the largest industrial Groups. What according to you are major stumbling blocks for a person to start business in India?
K M Birla: Prashant, managing the external environment is a challenging task. One is proud to be an Indian. Vande Mataram.

Rajat Dutta: Sir, may I request you most humbly to open a centre for propagating the Hindu culture in all the major cities of the world. Only powerful and responsible personalities like you can be relied upon to spread the message of India's great culture worldwide. Hopefully Birla Mandirs and Aditya Birla Hindu cultural centres will dot NY, Chicago, Moscow, Berlin etc in the years to come. May all auspiciousness come your way.
K M Birla: Rajat, the Aditya Birla Group has always and continues its patronage of drama, the performing arts and Indian culture.



Ashok Jain: Mr K M Birla, what is your vision for A V Birla Group in terms of business and market positioning, Group Structure and Creation of shareholders value. What were the challenges/difficulties you faced in implementing the current reorganization of resources - People, Business and Financials.
K M Birla: Ashok Jain, our vision is to be a premium conglomerate with a clear business focus in each sector. In essence it means getting into a leadership position in the businesses that we are in and will get into. Like changing tyres performance in the throes of change.



Rajat Sarawgi: How would you like to be known in the distant future -- as the chairman of the Birla Group or as the son of Aditya Birla?
K M Birla: Rajat, as the son of Aditya Birla, who made a mark as the Chairman of the Aditya Birla Group.



Monika M: In many Birla companies, many of the marketing/financial people seem to climb up the ladder much faster than the technical folk. In my opinion, this phenomenon results from too much internal politics and red-tape which is rife in all Birla companies. Please comment.
K M Birla: Monika To generalise is not the best thing to do. Four of my 10 directors hold a degree in engineering/technology. Many of our Profit Centre Heads are also technocrats. We never discriminate on the basis of a person’s background. We believe in meritocracy.



Aditya Kurian: Is india ready for globalisation?
K M Birla: Aditya Kurian India is more than ready for globalisation. We, of course, need to benchmark with the world’s best on an ongoing basis Our companies in India and globally are performing well.



Dr Prashant Sawant: In your opinion what should India do to attract more foreign exchange? Which sector do you think will be one in which potential businesses can developed?
K M Birla: Dr Prashant Sawant, India should continue with its focus to earn foreign exchange. NR Indians like the non-resident Chinese should plough some funds back into the country.



Vinod Solomon: What do you think of the role being played by the MNC's in India? Are they constructive or destructive for our economy?
K M Birla: To be competitive, one has to take tough decisions such as downsizing. Only if organisations rehome competitive, can they be profitable. MNCs bring in new technology, novel management practices and global experiences from which important lessons can be gleaned. They can spur economic growth in a constructive manner.

Durga Prasad: Considering the state of commodity business, are you looking at a G E kind of domination of the market?
K M Birla: Durga Prasad, we wish to be market-leaders. To be the number one or two in the businesses we are in.

Tejbir Singh: Do you think selling of the different public sector units by the government is a right step?
K M Birla: Tejbir Singh, PSU disinvestments barring industries of strategic importance to the nation, is indeed a forward step.



Naveen: Why is the Birla group behind Reliance? Every one knows Reliance is the number one private sector enterprise.
K M Birla: Naveen it is difficult to explain as to why a company is number one or two. In all of our businesses, we enjoy a leadership position. I have great admiration for Ferent industries present diverse growth opportunities. Business houses make a choice, based on their reasoning and competence. There is no single Reliance, for Mukesh and Anil Ambani. India will be a super power in the Asian belt.



Niranjan Nath Misra: Sir, Sri G D Birla was in the habit of building temples popularly known as the Birla Mandir. Why have you stopped this tradition?
K M Birla: Niranjan we are engaged in many charitable and community development initiatives that make a difference to the weaker sections of the society. We do build temples also.



Sayan Ghosh: Mr Birla, given that the trade dynamics in today's world are changing at a hyperconpetitive manner, Indian Companies are generally considered lackluster in the global business environment. What steps are you taking to turn Birla from a traditionally family owned business to a transnational company that competes at the international stage? Further, what sort of opportunitites are you offering the Indians, who are working abroad, to join Birla if they are interested in working for an Indian company and offer the experience of having studied & worked abroad? I would think you might want to accommodate young professionals of high caliber into your management programmes if you do have any, providing high incentives in North America and abroad. Thanks.
K M Birla: Sayan Ghosh, our companies span the UK, USA, Canada, the SE Asia belt and the Africa among others. We have a significant presence in 17 countries across the globe. Ours is a professionally managed Indian MNC Please visit our website www.adityabirla.com and contact our Corporate HR Cell.



N K Paul: If an NRI with extensive experience in India/USA will procure training materials for Birla employees, will the Birla group help specified charitable organisations in India?
K M Birla: N K Paul, please get in touch with our Corporate HR and our Corporate Communication Team on www.adityabirla.com for the information you seek.



Bharati Ghosh: Would you be interested in helping AAPI (American Association of Physicians of Indian Origin) set up to develop and improve a trauma center in Calcutta? This is partly funded by the AAPI charitable fund.
K M Birla: Bharati, please forward your request to the Aditya Birla Centre for Community Initiatives and Rural Development via www.adityabirla.com.

P C Sahajwala: Sir, some foreign observer has described India as the 'Country of Birla's and beggars'. How do you react to all these perceptions about India?
P C Sahajwala: Sir, does the budget Y2K do less justice to Industry as compared to the IT sector? Is the priority shifting from industry to the IT sector?
P C Sahajwala: Sir, what is your view about the Swadeshi-Videshi dispute? How much attention should be given to each?
K M Birla: Sahajawala, I am sure every country faces this duality of haves and have-nots. The key is the manner in which the well-to-do utilize their resources for the larger good of the society. The government is justifiably cashing in on the boom in the IT Sector. The Swadesh-Videshi dichotomy in the economic context is dated. Globalisation is the new mantra.



Srikant: Is the business environment in india capable of producing more Sabeer Bhatia's in India rather than them going to the United States. I am a 15 year old computer freak.
K M Birla: Srikant The business environment is highly conducive, and there is great scope for the likes of Sabeer Bhatia to bloom here. Remember several of the Silicon Valley ventures are the outcome of Indian genius at work. I wish you every success.

V Hemaprasad: What are the job opportunities that exist in your companies?
V Hemaprasad: Which type of budgeting do you say is best for companies going multinational? What is the chance of Birla groups going multinational?
V Hemaprasad: What is your invaluable suggestion to an engineer?
K M Birla: Hemaprasad, for job opportunities, please touch base with our Corporate HR Cell via www.adityabirla.com. I believe in Zero based budgeting.

We are already a global Group. Our Group companies span UK, USA, Canada the SE Asian Belt, the Africa among others.

Strive to be the best engineer.

Antony Joseph: Sir what is your opinion on political contributions by business houses, should they be more transparent than they are today?
K M Birla: Antony Joseph, transparency in contributions should be a norm. We have formed a General Electoral Trust for such funding.



Mary Wehner: Would you, could you, set an example for the people of India regarding the degradation and powerlessness of the women of India? I refer to the burning of women and aborting of the female fetus and the general feeling that women are useless and to be regarded as personal property. Thank you.
K M Birla: Mary Wehner, regrettably these incidences do occur, but one does hope that these atrocities will end, sooner rather than later. Women in India are slowly gaining recognition for their contribution and role in building the nation. In our own Group, many women are in senior positions.



K K Verma: Dear Mr K M Birla, I am glad to see Ajay Puri, a kid of 3 years, son of an employee of your textiles unit at Bangkok, in the lap of the President of USA for his excellent performance in the field of computer science. I have also seen him in many international magazines. What do you intend to do for such a whiz kid who is in the Guinness Book of World records and has added grace to your organisation?
Nitin Verma: Dear Mr Birla, how are you and your organisation looking at Ajay Puri who happens to be the son of your employee in Bangkok and has achieved excellence in computer science at an age of 3 years and has thus become the youngest website designer of the world? How you want to patronise the kid for better future in IT field.
Jatindar: Mr Birla, I have seen Ajay Puri, the whiz kid photographed with all top leaders including Bill Clinton. How is it that you have not appeared any where with the kid? Do you want to stay away from public view? Secondly what you propose to do for this kid?
Ghanshyam: Mr Birla, Ajay Puri, the whiz kid, wants to meet Bill Gates but his father cannot afford the travel and related expenses involved. Can you not do something for this kid to realise his dream as he is the son of your own organisation in Bangkok?
K M Birla: Ghanshyam, Jatindar, KK Verma, Nitin Verma, we are thinking if we can have some scheme for children of our employees who excel academically. We are very proud of Ajay Puri.

Manju: Does your group have a central recruitment office or agency where one can send their resume?
K M Birla: Manju Please log on to our website www.adityabirla.com for the information you seek.



Kedar: You are one of the busiest Indians. How much time do you devote to your family?
K M Birla: Kedar I try to spend at least Sundays with my family.



Krishnan: Sir, I had been to Harihar where you have established Grasim polyfibers. I heard from couple of South Indians who are well educated, that there is wide spread discrimination against them in terms of money, power, promotion and facilities. Where as a North Indian gets paid more than a South Indian inspite of them working harder. Why does the management have this kind of discrimination against them? As per the Indian Law this is an offence and is liable for public litigation. Can you please comment on this honestly. Thanks, Krishnan, New Jersey - USA.
K M Birla: Krishnan, as a policy, we make no discriminations between regions, people and races. We have several South Indians in senior positions as well; including some business heads. It might interest you to know that my mother too comes from the South.



Arvind: How can one become a Birla again?
K M Birla: Arvind, perseverance, hardwork and having a vision.



Madhu S Nair: I am a 34 year old engineer, presently doing my higher studies abroad. During my childhood days and till about 10 years back, the Birla's and Tata's were the face of Indian industry. What has happened since then, it appears there are many other names who have gained prominence. I feel that you have not been able to really deliver upon from your formidable position during the so called 'rapid industrial growth' period, and now in the IT era. Could you reflect on this?
K M Birla: Madhu S Nair, being at the forefront of Indian industry is not the preserve of a few. It should be a matter of pride to see the Indian entrepreneur flourish. However, this is no way takes away from our position of pre-eminence.

Debasish Lahiri: Customer focus is an absolute must in today's business which even some reputed companies are lacking. What needs to be done to address this problem?
K M Birla: Debashish We need a closer understanding of the customers requirement and we strive to become an extension of the customers organisation.



Vivek: There are cases of people working in your Group for the last 10-30 years at relatively junior positions who have neither had the opportunity to meet late Mr A V Birla or you. One fully appreciates the enormous amount of responsibility you shoulder and the consequent pressure on time but don't you think it will be a very warm gesture
K M Birla: Vivek I recently met a 1000 colleagues from the level of General Manager upwards. During my plant visits. I do try and meet as many people down the line as possible.

Mukul Pandey: Sir, your father, late Aditya Birlaji once said that 'thinking only for profit is a sin', in the present scenario how do you view this statement?
K M Birla: Business has a larger social responsibility to perform whilst striving to maximise value for its shareholders.



Pramod Soni: Kumar, If you were to single out only one factor which distinguishes the Birla Group from rest of the business houses, what would that factor be and why?
K M Birla: Our value system, in my view is a unique to us. We try to combine the best aspects of the culture of an MNC, with that of an Indian family owned business.



Sisupadhi: Sir, what led to the shutdown of the prestigious, the first in India... Sea Water Magnesia Plant? Was it not your father's dream project? Shouldn't you have continued it as your father's dream?
K M Birla: The Sea Water Plant unfortunately turned out to be a value destroyer, because of changes in several extraneous macro economic factors. Every business in the group is valued on value-creation criterion.



Pankaj: A very good decision has been taken for cement business integration. What is your future plan for other industries?
K M Birla: The plan for each industry is outlined on the basis of the unique competitive landscape of each sector. However our intent is to be the No 1 or No 2 player in each of the sectors in which we have a presence.



Gopal Sharma: Compared to other core sector industries your group companies have a compensation package which is lower, are you planning to revise this?
K M Birla: We review our compensation packages at regular intervals. Our endeavor is to be in the top quartile of the compensation paid in every industry.

Atoz: Congratulations on your takeover of INDAL. The same is expected to bring in a lot of synergistic benefits to your group. Why are you avoiding the fabricated products sector in aluminium and what do you propose to do with the idle capacities of Indal in South India?
K M Birla: The INDAL acquisition brings with it significant capacities in the fabricated products sector, for e.g. In the rolled and foils sectors. We will review the idle capacities in INDAL to see if it makes economic sense to revive them shortly.



A D T singh: What are your policies for middle management people in your Group company?
K M Birla: Our policies aim to give our middle management exposure to different parts of businesses, in order to offer them a wider perspective and cross functional exposure. The idea is to groom them to take on higher responsibilities faster.



Pankaj: You have just taken the decision to reduce employees by 20%. Where will these employees go? Or will you reassign the surplus employees to any other project?
K M Birla: We have not taken such a decision in the recent past. However our corporate HR group is quick to relocate employees in case a surplus may arise in a particular unit or business.



Perfect Guy 10000: Mr Kumarmangalam, Sir, you are a Chartered Accountant, what role do you envisage that the C A would play in the economy keeping in mind the changes brought about by the IT revolution?
K M Birla: I believe that CA’s will continue to play an important role as long as they keep themselves contemporary and in touch with business realities.



Ajay Jhala: Why do so many senior people get side-tracked in your group, as per the market information?
K M Birla: This is not true. We respect seniority and experience, in the group.



Pramod Soni: Kumar, what level of importance do you attach to brand positioning in a competitive market?
K M Birla: Brand positioning I think is extremely important. For example our brands in our cement business command a premium in their markets. Our endeavor is to brand our commodity business as well.



Hiten Pandhi: Is the Birla Group planning to venture the Hospitality industry as well?
K M Birla: No we do not have any plans to venture into the hospitality industry.



Vijay Singh: Sir, if I want to meet you how can I? Will I have to log on to www.adityabirla.com for that also?
K M Birla: Yes, you could do that.



Madhu: What are the plans for the Madura Garments range of products? Is the perceived value of the brand coming down?
K M Birla: The plan for Madura Garments is to grow the business aggressively. It is completely untrue that the perceived value of the brands have come down. In fact, the brands have witnessed very high rates of growth in April and May of this financial year.

Srikrishna: Why was Birla White spun off into a separate entity?
K M Birla: This is factually incorrect. Birla white is a division of Grasim.



Madan Biyani: Do you think General Insurance will be opened for Private sector companies?
K M Birla: General insurance has been opened for private sector participation.



Laxmikant: What is your outlook about cement industry in view of current acquisitions by MNCs?
K M Birla: If the economy is to grow at a rate of six to seven percent, the infrastructure sector will need to keep pace. Therefore the cement industry has, I believe, a bright future though in the short term competitive pressures are squeezing profit margins. Our cement units are internationally competitive in terms of technology and operations and our brands command a premium. Hence we see a bright future for our cement business. We see no threat from the foray of MNCs in the cement business in any way what so ever.



Krishnadevan: What is the Birla group's strategy for the telecommunications sector?
K M Birla: We see telecom as a core business for the group with a bright future. We have recently entered into an alliance with Tata Telecom. And after we come together we will have the circles of Maharashtra, Gujarat and Andhra Pradesh as our footprint. The intent is to enlarge the footprint in the future. We intend to stay in the service side i.e. the cellular side of the telecom business.



Shankar: Why has your Group not got any presence in consumer products?
K M Birla: One of our group companies, Indian Rayon has recently acquired Madura Garments that has in its fold some of the leading apparel brands in the country.

Ronald: Mr Kumar, we appreciate your contribution in industry and business but would also like to see some contribution for the environment. Could you please enlighten us on what your group is doing in this direction.
K M Birla: The group is a responsible corporate citizen. All our plants meet environment norms that are comparable internationally. This is an area of great importance to us.



Krishnakumar: Is there a thought to attempt a merger of all different Birla groups like S K Birla, B K Birla, etc. M&A is a happening phenomenon not only in businesses but also between politically differentiated countries like Germanys and Koreas.
K M Birla: No there are no such plans afoot.



D K Pandey: Sir, I am a 49 years old mechanical engineer with experience in an alluminium like industry. I'd like to serve Hindalco as it will enable me to serve my parents who are old and live in the vicinity of Renukoot. Can you help me to shift from Punjab to Hindalco to serve a noble cause. I have great respect for the various charity being carried out by you.
K M Birla: You can contact our Corporate HR through our web site www.adityabirla.com.



Raj Singh: After you had taken the reigns of the Birla group, how far do you think you have been able to bring professionalism?
K M Birla: I believe we have always been a professionally managed Group. Or else we could not have been in the position that we are in today. However the idea is to further institutionalise processes and focus on system building as the organisation grows larger.



Tarun: What are Grasims cement plans, considering the recent decision of other Birla groups to jointly sell there holdings to Blue circle
K M Birla: Grasim's plans are to grow in the cement business and be a major player in the industry post the consolidation phase that it is going through. We have no plans to exit the cement business which is a core business for the group.



A D T Singh: You have entered the metal sector in a big way but no expansion plan for steel sector why?
K M Birla: We do not have a presence in the steel sector except for the sponge iron business which is a division of Grasim. We do not have any plans for a foray into the steel business.

Raj Singh: Do you think your legendary purta system is still relevant in the present times when everything is moving towards becoming variable?
K M Birla: I believe that the purta system is still relevant for the manufacturing side of the business. However we have now started to use CVA or Cash Value Added as a measure of performance across the group's businesses since we believe it gives us a closer feel of the value addition being made by each business in relation to the capital employed by it.



Tarun: What are your Group's plans towards supporting the recent phenomenon of young, first generation entrepreneurs?
K M Birla: The group is very proud of these recent success stories. We believe that in terms of intellectual capital, we Indians are second to none.

Raj Singh: With the emergence of the new tycoons of IT, who have become billionaires overnight, do you get sleepless nights?
K M Birla: We are very proud of the achievements of the new generation of entrepreneurs. Our focus as a group is on the growth of our traditional businesses, whilst at the same time part-taking in the growth of some of the new age businesses. I sleep peacefully.



Raj Singh: Your company is branded as a marwari company. A company which favours marwaris in all aspects. Do you think so?
K M Birla: This is clearly a misconception you have. We look for merit irrespective of caste or cultural backgrounds.

Ajay Desai: You are now heading a huge conglomerate of successful companies. Do you know that some of your companies do not pay even minimum wages to the contract employees?
K M Birla: This is factually incorrect. In case you have concrete issue, you can access us through our website, www.adityabirla.com

John George: Mr Birla, the days of brick and mortar business are over. Do you agree with this?
K M Birla: No I do not think the days of brick and mortar are over. I think IT is a great enabler and can be used also to enhance the competitiveness of brick and mortar businesses.



Param Khetan: G D Babu once said that we make good managers. What do you think of the same?
K M Birla: Our objective is to groom our employees to give them cross functional exposure and make them 'complete' managers who are able to cope with divergent and multiple demands placed on corporate managers today, because of the skills they acquire in the process of their growth in our organisation.

Vikas Jain: What is the scope for youngsters in your group?
K M Birla: We are always looking for young and bright talent to enter the group. The group has a number of very interesting businesses and our policy of transfers within the group allow a manager to get exposure across businesses of his or her choice.



Nand Kumar Kurup: What is the key difference between the way Aditya Birla managed his business and way you wish and the way you are managing the Birla group?
K M Birla: The basic values rehome the same. However each individual, does definitely bring to bear his own style which to a large extent is impacted upon by what is happening in the external environment.



Deepak: G E has diversified business under one company and is very successful. Than why don't Fund Managers in India not like diversified companies?
K M Birla: I agree that diversification per se, is not detrimental to company's growth. What is more important is the manner in which each business is managed and transparency around the performance of each business.



Raj Singh: Do you have something like TAS of the Tata's?
K M Birla: We have something called the GMTS, or the Group Management Trainee Scheme that aims to take in hi-performers and give them one year of cross functional and cross business exposure including international exposure across the group, before giving them line responsibility.



Ajith: How does it feel to be one of the directors of the Tata Group? Are they not supposed to be one of your arch rivals?
K M Birla: We as a group, and I personally, have great respect for the Tata organisation. It is a misconception that we are rivals.



Santosh Kadam: Sir, I am a CA, and working with a Mutual Fund, I would like to ask you about the future of this industry and plans of the group.
K M Birla: I believe the MF industry has a great future in India because it brings specialist skills in investing and managing investments to institutional and retail investors. We see this as a long term core business, and our MF has been a trend-setter in many ways.

K M Birla: Thank you very much for your questions and interest. I hope I have been able to do justice to most of your queries.

Moderator: Thank you Mr Birla and chat participants for this insightful and informative chat. We thank Mr Birla especially for making the time to extend this chat to a duration of two and a half hours.

We hope you join us again next week for another ITGO chat session. Till then, goodbye.

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