|Aditya Birla Group
January 9, 2011
Transformed, and ready for the Big Leap
The world has witnessed phenomenal changes over the last 15 years and India has been no exception. It has been a defining period for India in many ways. The most notable achievement has been the acceleration of growth from five per cent-plus to nearly nine per cent today. India has emerged as one of the world's new economic success stories in the last 10 years, as the impact of the liberalisation process begun in 1991 achieved a critical mass and made it one of the world's fastest growing economies.
These years have been marked with some macroeconomic shocks as well: the East Asian crisis, the economic sanctions that India attracted when it carried out nuclear tests, the collapse of the dotcom bubble followed by 9/11, the super commodity cycle of 2006, and the subprime lending crisis ending with a deep recession in 2009.
The world's view of business and capitalism has taken a beating because of the economic meltdown of 2008. Governments have moved dramatically to the left of centre in the past couple of years. Almost without exception, governments will now be vigilant in taxing anything that they could define as 'super normal profits'.
So running a business will only get more challenging, in every way. That is the transformed context in which.businesses will have to operate in the near future. The financial crisis has triggered more regulations and monitoring processes, and businesses need to prepare for a more regulated environment.
Fortunately, over the years, the Aditya Birla Group has developed a strong shield against precisely such adversities. We have always lived by a strong moral compass. Today our efforts stand vindicated. In the 15 years since I took over, we have transformed ourselves in some very fundamental ways.
First, every organisation, at some point, needs to import skills from the outside. We too have changed, from a very homogenous group of people with a striking similarity in backgrounds. to a heterogeneous and diverse entity. From barely 10 nationalities in 1995, today our workforce spans 40 nationalities. In many ways then, the group is a melting pot of cultures. We have done this even whilst retaining our values and our distinct identity. Our values - integrity, commitment, passion and speed - provide the organisational glue that binds us together seamlessly.
Second, we have morphed into a youthful organisation. In 1995, the average age of our management cadre was 56 years. Today, it is down to 36. There were few women executives. Today, they account for 17 per cent of the management and supervisory cadre. Gen-Y has grown from just two per cent of our people to 28 per cent. This shift in demographics brings with it a changed set of expectations.
Third, when my father looked beyond the shores of India in the late 1960s to free himself from the Licence Raj, it was truly visionary. In doing so, he earned respect and prestige not only for his own enterprise but also for taking India to South East Asia. Now when we make investments overseas, it is driven by our vision to be a premium global conglomerate with a clear focus on each business.
Nearly 60 per cent of our turnover comes from our global operations. And nearly one-third of our group's 130,000-plus employees are not Indians. We have consciously built a meritocracy and a focus on building star teams rather than individual stars. Few organisations can boast of the competency, passion and commitment that our people show.
After 20 acquisitions in 15 years, and after shedding unproductive assets and divesting businesses that eroded shareholder value, we have emerged fitter, stronger and a leader in many ways. For a group that traditionally followed the organic route to expand, the inorganic stairway to growth through acquisitions was a major departure that has served us well.
Just two examples. Our group's flagship, Hindalco, through a slew of buyouts coupled with expansion at existing sites, has risen to become a metals powerhouse, ranked among the world's top five aluminium majors, with 33 plants in 13 countries. The acquisition of Novelis catapulted Hindalco to the top of the league in the rolled products segment. Hindalco today has become a truly global corporation.
In cement, after a spate of acquisitions and the consolidation of the cement business of Grasim with UltraTech, we are now India's largest cement producer. With the acquisition of ETA Star Cement Company in Dubai along with its operations in the UAE, Bahrain and Bangladesh, UltraTech is now the world's eighth-largest cement producer. From a bit player in 1995 with a capacity of 8.5 million tonnes per annum, we have a capacity of 52 MTPA today.
From being primarily in manufacturing, today we also have a considerable footprint in services. Idea is the fastest-growing major telecom player in the world's fastest-growing market. In retail, "more" is the second-largest supermarket chain. In financial services, Aditya Birla Financial Services is a significant non-bank player. Our BPO is among the global top-10 in the non-captive space.
On the back of strong fundamentals and the gains from our restructuring and consolidation exercise, I believe this is the right time for us as a group to make a quantum leap. It has become imperative for us to view growth from an altogether higher and different plane and to dream of a bolder future. We have every reason to be upbeat, especially if we look back at our past. In 1995, we reported revenues of $2 billion. In these 15 years we have grown 15 times with revenues of nearly $30 billion.