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India's reluctant
billionaire
By Raju Bist
 MUMBAI - In a
media-conscious world where business tycoons are
measured by the number of column centimeters and the
seconds of sound bytes they hog, Kumaramangalam Birla is
an anomaly.
The Mumbai-based chairman of the
giant Aditya Birla Group is reticence personified. He
shuns interviews; queries about his diversified group's
achievements or future plans are quietly diverted to the
corporate communications department.
Almost any
other businessman would have loved to be in Birla's
place. For there have been numerous occasions to be in
the limelight: acquisition of the Indian Aluminum
Company; buyout of a crucial 10 percent stake in Larsen
& Toubro, South Asia's largest engineering company;
takeover of the computer firm PSI Data.
Birla
was far away from inquisitive reporters even after
Fortune magazine announced last week that at age 34, he
is the eighth richest in the world (under the age of
40), and richest man in India. Birla's wealth of $2.1
billion is derived from interests in everything from
cement, textiles, rayon, carbon black and aluminum to
insulators, copper, fertilizers, chemicals and sponge
iron. Last year, the Aditya Birla Group clocked sales of
$5.5 billion.
Only two other Indians feature in
the list of 40 billionaires, and both of them are
settled abroad. Sabeer Bhatia hit the headlines when he
sold his popular e-mail service, Hotmail, to Microsoft
for $400 million. And UK-based Reuben Singh's RS Group
consists of 11 companies involved in activities as
diverse as currency trading and wireless Internet
services.
"What makes Birla's achievement all
the more significant is the fact that he has been able
to stabilize a gigantic business group that skeptics had
warned was in danger of falling apart in 1995," says
Kakoli Sengupta, an analyst with New Delhi-based
Pinnacle Securities.
That was the year his
father, Aditya Birla, after whom the group is named, had
succumbed to cancer at a relatively young age of 51. One
of the most dynamic and brilliant Indian industrialists,
Aditya Birla is credited with launching 70 new projects
in a span of 25 years.
Aditya Birla's would have
been a tough act to follow, industry-watchers had
predicted. True, Kumaramangalam Birla had the advantage
of being personally trained by his father in the nuances
of business. But the business environment in India had
changed of late. Economic liberalization had unleashed
intense competition, not only from existing Indian
companies but also from new overseas players attracted
by the huge potential of the Indian market place.
And the young lad, who had been shielded from
the topsy-turvy and often dirty maneuvers that make up
Indian business, would find the going tough, proclaimed
pundits in business circles. Would the young man be able
to handle the large and often unwieldy business group?
Another question everyone asked was: What would
the young inheritor do with the dozen-odd aging key
managers and advisors his father had left behind in
important positions in group companies? Kumaramangalam
Birla, in a surprising move, retained most of them.
But at the same time, he inducted fresh talent
from management schools in India and abroad. This unique
and potent combination of the experience of the old
guard and the drive and gung-ho initiative of young
blood would be a great help - in steadying the group as
well as in charting new courses.
Birla has
turned out to be a quiet but very efficient businessman
in his own right. As in the case of forming his A-team,
other key decisions emanating from the sixth floor of
Industry House, the group's imposing head office in
south Mumbai, soon proved that Kumaramangalam Birla was
his own man.
In a series of moves, Birla sold
off some businesses and expanded his reach in some
others. All the while he reinforced a message down the
line: he had decided to concentrate on the group's core
competency of commodities, something his family group
has dominated over the past four generations.
"I
put on hold a couple of projects, some of which were
announced and some of which had been at the take-of
stage," he says. These had included the Aditya Birla
Group's forays into sugar, paper, steel, glass fiber and
PTA (a key intermediate used in the manufacture of
textiles). "We didn't think that we would be a dominant
player in any of these industries in the long run, that
the returns would not match our expectations. We would
rather invest that money in businesses in which we are
strong and consolidate." As part of this policy, his
group has started talks with the Australian mining and
metal major BHP Billiton for acquiring its stake in a
Canadian copper mining venture, Highland Valley. If the
deal comes through, it could cost the Aditya Birla Group
around $100 million. The negotiations are being
conducted through group company Hindalco, India's
largest non-ferrous metals producer.
At the same
time, Birla has taken some tough decisions to exit from
businesses in which he has already poured in time and
money but which he feels may not add value to his group
in the long run. It is for this reason that he is
selling the group's 33.13 percent stake in Idea, the
cellular operating company in which the Tata group and
US telecom giant AT&T also hold similar stakes.
He has also pulled out of Mangalore Refinery and
Petrochemicals Corporation (MRPL), a joint venture with
the public sector giant Hindustan Petroleum Corporation
Ltd (HPCL). "We invested Rs 1.5 billion [$31 million] in
MRPL, but we want to exit due to various factors," Birla
said at Hindalco Industries Ltd's annual general meeting
held last fortnight. According to industry sources, the
Aditya Birla Group may also sell its 37.39 percent stake
for Rs 600 million to the public sector monolith Oil and
Natural Gas Commission Ltd (ONGC).
Birla is also
looking at expansion overseas, keeping a focus on
chemicals and carbon black (a key ingredient in the
making of automotive tires). The group already has a
presence in 17 countries where various activities bring
in total sales of Rs 81 billion. "We are strong in
chemicals and carbon black in some Southeast Asian
countries. These will be out first port of call when we
expand overseas," Birla announced at a press conference
last month.
Apart from his business mind, Birla
also stands out for the quiet, dignified way in which he
conducts himself. His immense wealth sits lightly on his
shoulders. Unlike many others of his ilk, he is not
given to a flashy lifestyle or an ostentatious display
of his wealth. The features editor of a business
newspaper had a tough time recently getting details of
the foreign cars in his collection; his office had tried
its best to block the information from leaking out.
Author and columnist Shobhaa De, who has made a
career out of chronicling the follies of the rich and
famous, has, surprisingly, a few good things to say
about Kumaramangalam Birla. "He has an extraordinary
memory. The sort of memory that extends well beyond
analyzing and recalling balance sheets. The sort of
memory that records and registers every-day encounters
with every-day folks," she wrote recently in the latest
edition of Shobhaa's People, her popular weekly
newspaper column.
"Birla's trademark low-key,
soft-spoken demeanor comes as a sharp (and very welcome)
contrast to the brash breed of braggarts strutting
around corporate India," she added.
At a young
age, the boy billionaire has hit upon a winning formula:
he lets the achievements of his companies, and not his
immense wealth, do the talking for him.
(©2002
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