ADITYA BIRLA GROUP

LETS REACH FOR THE SUN

THE REPORT IS ABOUT THE COMPLETE STORY ABOUT THE

ADITYA BIRLA GROUP FROM ITS GENESIS TO DAY OF TODAY.

PRATEEK, ANKIT, AVIRAL

 ADITYA BIRLA GROUP

Let`s reach for the sun

OVERVIEW:
 Type: Public
Industry: Conglomerate
Founder: Ghanshyam Das Birla
Headquarters: Mumbai, India
Area served: Worldwide
Key People: Kumar Mangalm Birla (chairman)
Products: Aluminum, Copper, Cement,
Fertilizer, Textile, Fibre etc.
Revenue: US$ 30 billion
Employees: 130600
Subsidiaries: Hindalco, Grasim, Indian Rayon,
Gulf fertilizers etc.
Website: Adityabirla.com

INTRODUCTION:
The Aditya Birla Group is India`s
largest internationally operating conglomerate, operating in 26
countries like USA, UK, Thailand, Myanmar, Laos, Dubai,
Indonesia, Philippines, Egypt, Canada, India etc. It’s a US$30
billion conglomerate which gets 60% of its revenues from outside
India. All the areas where it operates, it is a major competitor for
all others. The group has also been selected as the best employer
in India and among top 20 in Asia by Hewett Economic Times and
Wall Street Journal Study in 2007.

GENESIS:

The roots of the group

date back to 19th century, when in the picturesque town of Pilani,
Rajasthan, Seth Shiv Narayan Birla started in cotton and jute,
laying the foundation of Birla House. Despite of various monopoly
oriented policies, he managed to grow his business at a rapid
rate. By virtue of hard and commitment he succeeded to build the
family`s first fortune

ROAD TO SUCCESS - GHANSHYAM DAS BIRLA ERA

 In the beginning the 20 th
century, the next phase of Birla family`s success started when
Ghanshyam Das Birla took over as the head of the family
fortune. He was the person who took the family into industrial
sector by setting up a jute mill in 1919. Apart from the business
area, Birla became important supporter of the Indian
independence movement led by Mahatma Gandhi. Not only he
did financial backing for backing for Mahatma Gandhi but also he
also participated in the talks to British like in round table
conferences, which ultimately led to India`s freedom.
As a result of this the
company developed a very intimate relationship with new Indian
government. It helped them to emerge as one small number of
families who dominated the Indian corporate world for a long time.
Because of this, just
after getting the independence, Birla`s industrial empire grew by
leaps and bounds. Just few days after getting the independence,
Birla founded GRASIM INUSTRIAL LIMITED; it began importing
rayon fiber and started producing rayon based fabric. Later till
1960, Grasim started producing its own rayon and rayon pulp
also.
 The family`s interest in
rayon led it to acquire another branch called INDIAN RAYON in
1966 where they started producing where they started producing
viscose filament yarn. This company went on to become Birla
family`s largest sub conglomerate. Later ADITYA BIRLA NUVO
developed diversified operations like garments, textiles, carbon
black and insulators. This company later on entered in cement
production.
In the meantime, company`s industrial
interest led them into a new area-metal, specifically aluminum
production and in 1958, Birla founded HINDALCO. The company
later branched out into copper production as well.
The other
Birla Family holdings which developed during these times were
HINDUSTAN MOTORS and HINDUSTAN TIMES.

ADITYA BIRLA ERA – INTERNATIONAL PIONEER

In the mid 1960`s,

Aditya Vikram Birla joined the family business at the age of 24, he
was placed in charge of the 3 companies HINDALCO, GRASIM
INDUTRIES and INDIAN RAYON, which formed the basis of
Aditya Birla Group.
He was a great visionary, who totally
transformed the Birla Industry from an India focusing industry into
India`s first largest internationally operating conglomerate.
The company
totally enjoyed India`s ‘licensing raj’, devised by the prime minister
Pandit Nehru. This system made it difficult for new domestic
competitors to emerge. Although this system protected and
reinforced Birla family`s interests, it also subjected them to strict
capital controls. At the end of the 1960`s however Aditya Birla
recognized a way of avoiding these controls by the development
of the foreign interests. Mr. Aditya Birla dared to dream of setting
up a global business empire at the age of 24. He was the first to
put Indian business on the world map.

In 1969, his
ambitions took him to Thailand, where Birla launched its first
subsidiary, Indo Thai Synthetics, to produce and export synthetic
yarns in Thailand. Into the 1970s, the company continued to
invest in Thailand, launching two new subsidiaries in 1974. The
first of these, Thai Rayon, launched production of viscose rayon
staple fiber, which it marketed on a global basis as Birla
Cellulose. That company quickly grew into a major exporter, while
also supplying the Thai textile industry. The company set up in
1974 was Century Textiles Co., which operated a weaving and
dyeing plant, producing Centex-branded fabrics, including
polyester, rayon, linen, and later lycra and others.

By the end of
the 1970s, the company's Thai holdings included Thai Carbon
Black (TCB), founded in 1978. Carbon black, also known as soot
and lampblack, was used as a black pigment for inks, food
colorings, and especially for the production of rubber tires. TCB
grew strongly, building the world's largest carbon black facility on
a single location, and counting among its customers the global big
three tire manufacturers. The company was particularly
successful in Japan, where it captured more than half of the total
carbon black market.

Birla's success in
Thailand encouraged the group to extend its operations
elsewhere in the region. In 1975, the company launched a joint
venture in the Philippines, to produce spun yarn. The operation
became the basis of the group's other Filipino holdings, grouped
under the Indo Phil name. Malaysia became the company's next
foreign market, with the opening of an edible oil production
subsidiary in 1978. That business, Pan Century Edible Oils,
became the world's largest single-location palm oil refinery.

In the meantime,
Birla's Indian holdings continued to expand and diversify as well.
Grasim, for example, added cement production in 1985, launching
the Vikram Cement plant at Jawad, in Madhya Pradesh. By the
beginning of the 1990s, that operation had tripled its production
capacity. Through the 1990s, Grasim added other diversified
businesses, including merchant exporter Birla International
Marketing Corporation in 1992, and Vikram Ispat, a gas-based
sponge iron factory, in 1993. Grasim also expanded its cement
holdings, opening two new cement plants, Grasim Cement in
Raipur and Aditya Cement in Shambhupura, in 1995.
LIBERALIZATION:
The company also took advantage of the
liberalization of India's economy, launched during the country's
economic crisis in 1991, to enter a number of new areas. In 1988,
for example, the company launched a petroleum refining joint
venture with Hindustan Petroleum Corporation. The company
then entered the telecommunications market, forming a joint
venture with AT&T of the United States, Birla AT&T, in 1995. That
company merged with Tata Communications in 2000, becoming
one of the country's leading telecom groups.
The various
open policies allowed the Birlas to produce more and more and
export as well. It made him- => largest producer of viscose
staple fiber
=> Largest palm oil refinery
=> 3rd largest producer of insulator
=> 4th largest producer of carbon
Black

RESTRUCTURING UNDER K.MANGLAM BIRLA-GROWTH

STRATEGIES:
 Then the year came 1995, passing of
a titan, Aditya Birla died and his son took over as the head of the
family.
K.M. Birla done C.A. and MBA from
London School of Business at the age of 28 taken responsibility of
business having total revenue of INR 15000 cr and 600000
shareholders.

After taking
up the change, K.M.Birla decided to consolidate entire entire
group’s companies under one umbrella of the “ Adithya’s
birla group”.

Many critics were opinion that “K.M.Birla would unable to

manage the group successfully”

When k.M.Birla handover business from his father in

1995,his critics dismissed him as a soft and shy person, who
lacked the business expertise and assertiveness of his father
A.V.Birla.
 An unapproachable management style and misplaced
priorities the result was the investors started selling off their
shares .In 1996 the market value of group’s four largest
companies grasim ,indian rayon ,hindalco & indo gulf
fertilizer suddenly decreased by $1billion or 37%.

So K.M.Birla took several initiatives to prove his critics wrong.

1.Retirement policy

 He introduced a retirement policy in 1995,on the basis of

which around 325 senior emplayees,who were there early
60s,had quit the organization in the next five years
.subsequently about 400 young employees replaced them.

 Meanwhile ,answering the critics he said, "people in

the group about twice my age when I took over as chairman.
I had great respect for them personally, but I also feel the
need for change”.

 2.Corporate logo

 In 1996,he launched for the first time a corporate identity that

would serve a corporate logo. The group selected the rising
sun as the logo, which signified optimism and served as a
unification symbol for the group.

 K.M.Birla said, “The new corporate logo helped in bringing

various companies of the group together. This helped the
organization to reenergize and get started to the path of
change”.

 3.Recruitment process
  K.M.Birla also changed the group’s policy in house
recruitment. In 1996,he also made changes in group’s HR
system. He hired professionals from other companies into
his management team

 4.Change in decision making

 The partha system of daily financial reporting which focused

mainly on production was replaced with an “ Economic value
added model”. This model focuses on the aspects of
profitability, asset productivity and growth.

 K.M.Birla also established aditya birla management

corporation limited, the strategic decision making for
ensuring the best practices across the group companies.

 K.M.Birla decided to reduce the group’s dependence on fiber

based business where its market share was low. Instead he
decided to concentrate on non-ferrous metals as there was
less competition and hindalco already had a big presence in
the aluminum sector

 5.360 degree appraisal

 K.M.Birla introduced a 360 degree feedback program in

1999 that permitted managers to raise questions over his
leadership style, managerial ability and also personal traits
but he could not define what he expected from his
employees.

 After the feedback, he issued each senior manager a six

page letter mentioning the areas of improvement and his
expectations.


6.Scholarships to students and Awards to employees

 In 1999 K.M.Birla launched the aditya birla scholarship to

promote excellence among students community to cultivate
the leaders of tomorrow.

 He said, "cultivating a new generation of managers

and cultivating a participative culture are keys to the
increasingly energetic, people centered, and performance
focused culture we aspire for”.

 He also launched Aditya Birla awards in 1999 where team

achievements recognized every year .

 7.Happiness at work

 Birla had also implemented the organizational health survey

by the late 1990s, which measured the “ Happiness at work ”
index. This was carried out to track the employees
satisfaction.

 8.Hierarchy based on performance of employees

 K.M.Birla also brought in some managerial changes in the

group. Before K.M.Birla took the chairmanship, the hierarchy
in the group was determined by seniority instead of merit. He
instituted a performance appraisal system. He decided to
implement performance management systems,reviwed
compensations and accentuated on training to bring
meritocracy.

 He personally led the recruitment program from business

schools.
 9.Changes in reporting

 He also brought about changes in reporting system being

followed at the group. The top 20 executives of the group,
who had greater responsibilities in the group, could report
directly to K.M.Birla, thereby giving them complete freedom
to run their businesses and same holding the more
accountable for their performance.

SUCCESSES: (ACQUISITIONS)

 2007-NOVELIS - became largest rolled

aluminum producer.

• 2000- Majority stake in Indal in Alcan of

Canada.

 2003- Mines in Australia.

 2006- Purchasing equity of NGK,

subsidiary of Birla group.

 2006- Minacs Worldwide, a BPO company.

 TATA`s stake in IDEA cellular
 Trinetra, chain of retail stores.
 Empire kept expending and new markets continuously being
sought out.

Other new markets for

Birla included software development and IT services, which were
regrouped into Birla Technologies Ltd. in 2001. The company
entered the power generation market through a joint venture with
Powergen PLC. In 1999, Birla added financial services to its
range, forming a joint venture with Canada's Sun Life Assurance.
Into the mid-2000s, Birla also continued to expand its international
network. The company made its first entry into the North
American market, acquiring the Atholville Pulp Mill in New
Brunswick, Canada. The purchase, completed in 1998,
established Birla as the world-leading producer of viscose staple
fiber and also marked its first major foreign acquisition. In 2003,
the company turned to Australia, buying up the Nifty Copper
mines in Western Australia. The purchase enabled Birla to
develop into an integrated copper group, supplying its factories in
India with raw material. Later that year, the company bought up a
second Australia copper mine, at Mt. Gordon. In that year, as
well, Birla extended its reach into the mainland Chinese market,
where it established a carbon black production unit, Liaoning Birla
Carbon. Back at home, the company launched a project to build a
new aluminum production complex in Orissa, beginning
construction in 2005.

Birla's international expansion continued to drive the company's

growth into the mid-2000s. In 2005, for example, the company
reached an agreement to acquire the St. Anne Nackawic Pulp Mill
in Canada. The company also sought out new markets; in March
2006, the company announced its plans to build a $350 million
viscose staple fiber plant in Laos. Aditya Birla had grown into one
of India's leading conglomerates, and a major player on the world
market.

Principal Subsidiaries

Aditya Birla Chemicals (Thailand) Ltd.;

Aditya Birla Nuvo Ltd.;

Alexandria Carbon Black Company S.A.E. (Egypt);

Alexandria Fiber Company S.A.E. (Egypt);

AV Cell Inc. (Canada); AV Nackawic Inc. (Canada);

Birla Mineral Resources Pty. Ltd. (Australia);

Birla Mt. Gordon Pty. Ltd. (Australia);

Century Textiles;

Grasim Industries Limited;

Hindalco Industries Limited;

Indo Gulf Fertilisers Limited;

Indo Phil Textile Mills (Philippines);

Indo Thai Synthetics;

Liaoning Birla Carbon Co. Ltd. (China);

Pan Century Edible Oils (Malaysia);

PSI Data Systems Limited;

PT Elegant Textile Industry (Indonesia);

PT Indo Bharat Rayon (Indonesia);

PT Sunrise Bumi (Indonesia);

Thai Acrylic Fibre;

Thai Carbon Black;

Thai Peroxide;

Thai Rayon;
TransWorks Information Services Ltd.

Principal Competitors

RPG Enterprises;

Tata Sons Ltd.;

Murugappa Group;

Jaypee Group;

Amalgamations Ltd.;

Dabur India Ltd.;

Balmer Lawrie and

Company Ltd.; Escorts Ltd.; HMT Ltd.; Greaves Cotton Ltd.;

Bombay Burmah Trading Corporation.

Group companies
::
Grasim Industries Ltd.
::
Hindalco Industries Ltd.
::
Aditya Birla Nuvo Ltd.
::
UltraTech Cement Ltd.

Indian companies
 ::
Aditya Birla Minacs Worldwide Limited
::
Essel Mining & Industries Ltd
::
Idea Cellular Ltd.
::
Aditya Birla Insulators
::
Aditya Birla Retail Limited
::
Aditya Birla Chemicals (India) Limited

International companies

Thailand
::
Thai Rayon
::
Indo Thai Synthetics
::
Thai Acrylic Fibre
::
Thai Carbon Black
::
Aditya Birla Chemicals (Thailand) Ltd.
::
Thai Peroxide

Philippines
::
Indo Phil Group of companies
::
Pan Century Surfactants Inc.

Indonesia
::
PT Indo Bharat Rayon
::
PT Elegant Textile Industry
::
PT Sunrise Bumi Textiles
::
PT Indo Liberty Textiles
::
PT Indo Raya Kimia

Egypt
::
Alexandria Carbon Black Company S.A.E
::
Alexandria Fiber Company S.A.E

China
::
Liaoning Birla Carbon
 ::
Birla Jingwei Fibres Company Limited
::
Aditya Birla Grasun Chemicals (Fangchenggang) Ltd.

Canada
::
A.V. Group

Australia
::
Aditya Birla Minerals Ltd.

Laos
::
Birla Laos Pulp & Plantations Company Limited

North and South America, Europe and Asia

::
Novelis Inc.

Singapore
::
Swiss Singapore Overseas Enterprises Pte Ltd. (SSOE)
Joint ventures
::
Birla Sun Life Insurance Company
::
Birla Sun Life Asset Management Company
::
Aditya Birla Money Mart Limited
::

Tanfac Industries Limited

CONTRIBUTIONS OF SECTORS TO GROUP:

Sales
copper
aluminum
cement
telecom
VSF
carbon black
insurance
spinning
mines
acrylic fibre
chemicals
garments
fertiliser
sponge iron
VFY
insulators
bpo
other

Corporate Social Responsibility:

Transcending
business for over 50 years now, the Group has been and
continues to be involved in meaningful welfare-driven initiatives
that distinctly impact the quality of life of the weaker sections of
society in India, South-East Asia and Egypt.
In India, the Group's social projects span 2,500 villages. It
reaches out to seven million people annually through the Aditya
Birla Centre for Community Initiatives and Rural Development,
spearheaded by Mrs. Rajashree Birla. Its focus is healthcare,
education, sustainable livelihood, infrastructure and espousing
social causes.

The Group runs 42 schools, which provide quality education to

over 45,000 children in India's interiors. Of these, over 18,000
children receive free education. An additional 8,000 students
receive merit scholarships. Likewise at its 18 hospitals in India,
more than a million patients are given extremely subsidised
medical care. To embed corporate social responsibility as a way
of life in organisations, the Group has set up the FICCI – Aditya
Birla CSR Centre for Excellence, in Delhi.

The Group transcends the conventional barriers of business and

reaches out to the marginalised because of its conviction of
bringing in a more equitable society.

CREDITS:
PRATEEK SINGH
AVIRAL PANWAR
ANKIT SINGH
SUBMITTED TO:
PROF. DEEPAK DAVE