Aditya Birla Group Chairman Kumar Mangalam Birla.
| Photo Credit: PTI

Aditya Birla Group has invested about $20 billion, mainly in manufacturing space, as it looks to be among the top two players across the segments it operates in, a top company official said on Saturday (November 16, 2024).

Speaking at the Hindustan Times Leadership Summit, Aditya Birla Group Chairman K.M. Birla said the group firm has taken tough decisions, including the acquisition of Novelis by Hindalco, to build scale and aims to expand cement business from 100 million tonnes to 200 million tonnes over the next 10 years.

He said most of the group’s investments are long-term, with a business outlook over the next 15-20 years, while consumer businesses have a shorter span.

“We have $20 billion of announced investments that are on the ground. Obviously, you look at it because a lot of them are in the manufacturing space. You would look at the next 15-20 years. Shorter than that doesn’t make sense in that kind of business… If, on the other hand, you’re looking at fashion retail or jewellery retail or financial services, then you are looking at a much shorter time frame,” Mr. Birla said.

He noted that values, people, scale and running businesses for the long term are key strategies that define a group’s way of doing business.

“We want to be number one or two in every business that we are in or get into. So, like they say, scale is in everything, but it’s the only thing. Without scale, I think it’s very difficult to survive today unless you have something very unique, very high technology, which gives you very high margins. So, scale is very important,” Mr. Birla added.

He said the company has built 100 million tonnes of cement capacity over 36 years but will be scaling it up to 150 million tons in the next 5 years and 200 million in the next 10 years.

Mr. Birla also pointed out that Hindalco acquired Novelis for $6 billion to build scale.

“In fact, I acquired a company [Novelis] which was much larger…The stock took a beating, investors wrote us off. It took about a year to come back. 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. So, running businesses for the long run is something that is a culture with us,” Mr. Birla said.

When asked about business alignment with national priorities, Birla said the Grasim and metals businesses of the group were set up by his great grandfather GD Birla, who was a close associate of Mahatma Gandhi, to make the nation self-reliant and self-sustaining after the Independence.

However, things have changed now, and businesses are not set up based on the growth curve the nation is in, he added.

“I think there is an intrinsic involvement of what national priorities are. For example, when we started financial services. It was a nation coming of age financialisation. The average person was becoming more aware about his or her savings, and becoming more financially literate. So, there is always, always an element of the phase of the country’s growth curve that you are in (and) that will determine which business you want to get into,” Mr. Birla said.

He said investments in infrastructure, digital technology, consumer etc provide a lot of opportunities but depend on one’s appetite as there is no dearth of growth opportunities in the country.

Aditya Birla Group Chairman Kumar Mangalam Birla. File
| Photo Credit: Shashi Ashiwal

Aditya Birla group-owned UltraTech on July 28 entered into a share purchase agreement with the promoters and their associates of India Cements Ltd to purchase 10,13,91,23 equity shares or 32.72% stake for ₹390 apiece totalling to ₹3,954 crore, subject to regulatory approvals.

In June, Ultra Tech acquired 7,05,64,656 equity shares or 22.77% stake at a price of ₹268 per share. Post the acquisition, UltraTech’s stake in India Cements will increase to 55.49%, triggering an open offer. It will become a subsidiary of UltraTech Cement Ltd.

There will not be any change in management of the company till the completion of the acquisition, as per share purchase agreements, India Cements said in a separate filing.

“Post this financial investment, the promoter group approached us as they wanted to sell their holding in the company, and we found it appropriate to acquire their stake in the company,” UltraTech said in a regulatory filing.

Given the limited availability of limestone in Tamil Nadu, it has resulted in restrictions on setting up of new integrated units in Tamil Nadu. The Company’s last integrated unit in Tamil Nadu was acquired by the Company’s parent, Grasim Industries Ltd in August 1998. The proposed transaction is therefore an endeavour to extend the Company’s footprint and presence in the highly fragmented, competitive and fast-growing Southern market in the country, particularly Tamil Nadu, where it has limited presence, UltraTech said.

The operational efficiencies arising out of acquiring ready to use assets will reduce time to market vis-a-vis greenfield projects and will also provide the Company with the opportunity to evaluate the optimization/ deferment of the Company’s existing capacity expansion plans in the Southern market, given the ready to use assets of the target.

This will help augment the Company’s only integrated unit in Tamil Nadu, Reddipalayam Cement Works (1.4 MTPA), which has paucity of limestone with limited lifecycle availability.

India Cements has a total capacity of 14.45 million tonnes per annum (MTPA) of grey cement. Of this, 12.95 MTPA is in the South (particularly Tamil Nadu) and 1.5 MTPA in Rajasthan, while UltraTech is the third largest cement producer in the world, outside of China, with a total Grey Cement capacity of 154.86 MTPA.

“The India Cements opportunity is an exciting one as it enables UltraTech to serve the Southern markets more effectively and also accelerates our path to over 200 MTPA capacity,” said Aditya Birla Group Chairman Kumar Mangalam Birla.

A logo is pictured on the facility of flat-rolled aluminium producer Novelis, part of Aditya Birla Group.
| Photo Credit: REUTERS

 Novelis Inc., a sustainable aluminium solutions provider and the world leader in aluminium rolling and recycling, has announced that it has filed a registration statement with the Securities and Exchange Commission relating to the proposed initial public offering of its common shares.

 The common shares are expected to be offered by Novelis’ sole shareholde Hindalco Industries Lid of the Aditya Birla Group. 

Novelis will not receive any proceeds from the sale of common shares by its sole shareholder, the company said in statement. 

Novelis intends to list its common shares on the New York Stock Exchange under the ticker symbol “NVL.”

The number of shares to be offered and the price range for the proposed offering have not yet been determined. 

The company is expected to complete the public offering after the SEC completes its review process, subject to market and other conditions. 

“There can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering,” it said in the statement.

Kumar Mangalam Birla. File.
| Photo Credit: PTI

Aditya Birla Group’s Hindalco Industries Ltd. will invest ₹2,000 crore in a railway related green-transportation project, Chairman Kumar Mangalam Birla informed the shareholders at the company’s AGM held here.

“Indian Railways has the laudable goal of becoming Net Zero while concurrently doubling freight capacity,” Mr. Birla said. “Hindalco is going all out to support the Railway’s carbon goals. We have already commercialised India’s first all-aluminium light-weight rake which is not just enabling higher speed and more payload per trip but will save over 14,500 tonnes of CO2 over its lifetime,” Mr. Birla said.

“We plan to introduce three more designs of freight wagons in the coming months targeting specific end use applications, including bagged cement, and foodgrains. We are even more excited to partner the Indian Railways and the passenger coach manufacturing ecosystem for the ambitious high speed Vande Bharat trains,” he added.

“An investment of ₹2,000 crore is planned for the project and technology tie-ups are in place to bring new extrusion and fabrication technologies to India,” Mr. Birla further said.  

Hindalco has no plans for fabrication of coaches. The investment is likely in a facility for making extrusions that would be used by railway coach manufacturers, an official clarified.

For the electric-vehicle (EV) sector the company’s projects for battery foils, coated aluminium fins, aerospace grade extrusions were also on track “to make Hindalco an ideal partner for multiple industries to support their new product development and make in India initiatives,” he said. 

Mr. Birla said Hindalco had embarked on a growth phase at Novelis and India business with a total capital expenditure of $4.63 billion for India and Novelis in projects that were under execution. 

“Novelis has growth projects totaling $3.5 billion underway in the U.S., South Korea, and Brazil to serve the increasing demand for sustainable aluminium products. Hindalco’s India business has ongoing growth projects of around $1.13 billion under execution which include high-growth downstream projects in e-mobility, packaging, building and construction, consumer durables, and resource securitisation,” he told shareholders.