Scale and long-term vision must for the survival of a biz, says KM Birla at HTLS 2024 | Company Business News-OxBig News Network

Kumar Mangalam Birla, chairperson of the Aditya Birla Group, on Saturday said scale is crucial for the survival of a business in today’s competitive landscape. 

Acknowledging that scale isn’t the only factor for success, Birla, while speaking at the Hindustan Times Leadership Summit 2024, said it often becomes the decisive one. 

“Without scale, it’s very difficult for a business to survive today,” he said, underscoring the group’s ambition to be among the top two in every sector it operates in.

“We built our cement business 100 million tonnes in 36 years, in the next five years we got to 150 million tonnes. In another five years, we’ll get to 200 million tonnes,” he said. Birla’s UltraTech Cement currently has a consolidated capacity of 156.06 million tonnes of grey cement per annum. 

He emphasised how longevity and scale have become defining principles for the Aditya Birla Group.

Looking at a business from the long run is in many ways a promoter’s prerogative, he said. When Hindalco Industries limited acquired Novelis in 2007 for $6 billion, the company’s stock took a beating, and it was written off by investors, Birla added. 

“Any professional CEO who had taken that decision would have been sacked because it just seemed at that time to be the wrong thing to do…I think as a promoter, I had the prerogative and the desire to see much beyond not just quarters but years,” he said. “Running businesses for the long run is something that is a culture with us,” he added.

Consequently, it is the phase of a country’s growth curve that determines which business one wants to get into, Birla explained. “When we started financial services [in 2007], it was a nation coming of age…the average person was becoming more aware about his or her savings and was becoming more financially literate,” he said. 

Entering into retail businesses like paints was also driven by scale. Being in the cement business already, gave them an edge in paints as distribution was common. 

“Distribution is a very important success factor in a business like paints. The group launched its paints business, Birla Opus, in February this year. “The thing is that we’ve built 40% of the industry’s capacity…at the end of this financial year, we’ll be the combined capacity of the second, third, fourth, and fifth player in the market,” Birla said. 

“What we’ve learned in financial services, in some of our retail formats has given us more confidence to come closer to the customer,” Birla said. 

Also Read: ‘India’s risk-taking capacity…’: At HTLS Summit, PM Modi lauds India’s booming Start-up ecosystem, Rupay cards’ success

Building businesses for the long term has been a family legacy for the Birla group. However, the leadership has always been contextual. “My father came at a time when India was opening its doors to the world. My grandfather built his businesses in times of scarcity. My great-grandfather, India was just getting its freedom,” he said. “Everyone’s context has been different,” he added. 

The company’s values also lend to its longevity, Birla said. “A company is not just a repository of shareholders’ wealth. A company is a repository of people’s trust, especially the trust of shareholders, customers, suppliers,” he said. 

Similarly, the people associated with the group are very important, he added. “I’m the only person from the family who’s actively involved in running the business…the fact that we are so large, diversified…obviously means that we’re a very highly delegated and decentralised organisation,” Birla said. 

Calling the group a people’s organisation, he said “We’re very invested in our people, invested in their careers, invested in adding intrinsic value to them,” he added. 

Also Read: Aditya Birla Group eyes ‘bifocals’ for its diversified businesses, people policies