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Kumar Mangalam Birla: Creating Global Configuration Through Innovative
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Abstract of the Case Study presented at International Conference at IBS, Ahemadabad The Case Study unfold the unprecedented challenges KUMAR MANGALAM BIRLA faced. : fighting Low Market Capitalisation.& subsequent Innovative Techniques & Managerial Practices adopted by him, their impacts on Corporate growth .The Case also tries to explore various other issues in Business Strategy: logic of Acquisitions & Mergers, Operation Strategies, Marketing Techniques, Corporate Governance, Brand Competitiveness &
Marketing differentiation , Growth Strategy: growth through Product Development & Vertical Integration, Product Management, Retail Management and issues related with Global or
International Marketing .
KUMAR MANGALAM BIRLA: inherited a conglomerate of businesses. He consolidated in cement and metals to grow by mergers and acquisitions. It’s major subsidiaries include
Grasim, the world's leading producer of viscose staple fiber, and a manufacturer of rayon grade pulp, cement, sponge iron, textiles, and chemicals;
Hindalco, a leading producer of aluminum and copper;
UltraTech Cement, and related products;
Aditya Birla Nuvo, which manufactures clothing, textiles, and carbon black and is India's second largest producer of viscose filament yarn;
Indo Gulf, a fertilizer producer;
Birla NGK Insulators and
Idea Cellular Ltd, it is into software and IT services and financial products too.(
Birla Sun Life Insurance Co) .
Growth By Mergers, JVs & Acquisition to stand Globally Competitive KUMAR MANGALAM BIRLA has recasted the group and consolidated its businesses through acquisitions, backward integratrion and restructured it’s commodity businesses like cement and aluminium,
Strategic Intents behind Merger & Acquisitions: •: There are innumerable synergies gained which enhance the opportunities for
operational efficiencies, like: Cost Of Production Synergy, Raw Material Synergy, Variable Cost Synergy, Other Operating Expenses Synergy, Power & Fuel Synergy, Salary & Wages Synergy, Packaging Expenses Synergy.
Acquiring Successful Supply Chain Integration: Efficient supply chain integration is not just about short-term cost efficiencies, it has a direct impact on the success of four major types of synergies that are sought in a merger viz : Revenues, Operating Expenses, Capital Expenditure, Working Capital.
Consolidation Of Core Businesses & Narrowing Bets on Copper, Aluminium & Cement That is precisely due to the reason that soon after taking over, KUMAR MANGALAM BIRLA had presented the blueprint of Conglomerate’s growth : categorising the Group's 30-odd businesses as core, non-core, and adjacent.
COPPER BUSINESS : GROWTH THROUGH BROWNFIELD EXPANSION Aditya Birla Group acquired Copper business in FY 03. It had a capacity of one lakh tonnes per annum which we de-bottlenecked to 1.5 lakh tonnes. After brownfield expansion is completed, capacity will be hiked to 2.5 lakh tonnes. Presently copper contributes 52 per cent towards Hindalco’s total revenues.
ALUMINIUM BUSINESS : TURNING HINDALCO INTO A METAL MONOLITH Hindalco became the largest competitor to Indal, Indal was a 55% subsidiary of ALCAN (Canada). The company is now merged into Hindalco. INDAL has its focus on the specialty chemical business to make it globally competitive.
Hindalco was metal-surplus and marginally alumina-deficient, while Indal was alumina-surplus with downstream facilities. Besides, Indal’s special grade alumina is three times costlier than normal alumina and has high export potential. The acquisition will be instrumental in the creation of an integrated aluminum manufacturing facility in the entire value chain of the industry.
CEMENT BUSINESS : CREATING BRAND COMPETITIVENESS & MARKETING DIFFERENTIATION BY INTEGRATING NATIONAL CEMENT BRANDS INTO ONE ENTITY The cement division of L&T was demerged in 2004 after Grasim made the 30 per cent open offer for equity shares, gaining control over the new company, christened UltraTech.The Group has established itself as not only the most respected domestic player but also among the global leaders in cement. The Indian cement industry is on a roll. Driven by vertical-trajectory infrastructure development, a booming housing sector and surging global demand, the cement industry has ramped up production capacity, sparking off a spate of mergers and acquisitions to spur growth..
FIBRE INDUSTRY: EXPANDING COMMODITY MARKET THROUGH BRANDING COMMODITY MARKET THROUGH BRANDING & CRM, GROWTH THROUGH NEW PRODUCT DEVELOPMENT & VERTICAL INTEGRATION Grasim Industries Ltd. is a dominant player in the Indian Viscose Stable Fiber market and one of the leading players globally. It adopted the strategy, ‘Service beyond VSF' with the intention of promoting the usage of its VSF and reducing the impact of price fluctuations in substitute fibers. Grasim initiated value added services, branding and product development initiatives, to realize its objectives.
Offering Value Added Services to the Entire Value Chain Grasim believed that the market could be enlarged only if it worked with every segment of the VSF value chain. Therefore, the company implemented the 'Service beyond VSF' strategy to cover the entire VSF value chain.
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Product Devolopment Initiatives Grasim recognized that its efforts to enlarge the market for its VSF would be futile unless new applications and products were brought out regularly. Product development in VSF was virtually nonexistent as compared to other fibers which regularly came out in newer versions. Therefore, along with its provision of value added services, Grasim made efforts to introduce newer variants of VSF...