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Birla GroupThe Legacy

Founded in 1857 by Seth Shiv Narayan Birla

3rdLargest Indian Conglomerate after Tata and Reliance with USD 40billion revenue (2012 figures)

Deemed Best Employer in India in 2007 Flagship Companies: Grasim, Hindalco, AB Nuvo

KEY PEOPLE

Ghanshyamdas Birla Aditya Vikram Birla Kumar Mangalam Birla

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Business Timeline

1857: Initial business based around cotton trading in Pilani, Rajasthan

Early 1900s: Ventured into manufacturing with 1stJute Mill

1970s: Aditya Birla expanded business in South-East Asia

Expanded Birla Group to be worlds largest refiner of Palm Oil and VSF and Indias only Linen Producer

Early 1990s: Group ranked among top producers of aluminum, cement, rayon grade pulp

1995: KM Birla invested in cement, textiles, aluminum, fertilizers, tea, carbon black, shipping, chemicals

2005: Merging of medium sized firms led to creation of AB Nuvo

Principles of Operation

Rule of ThreeGrowth inDominant

Presence Business

Increased Verticalintegration

AchievingEconomies of

Scale

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Strategic Vision of Aditya BirlaInvestment in fewer business

Focus shifted from market size to profitability and growthStrategic shift from global to consolidating and reforming the entire business

Policy reforms Eg Retirement policy

New talent acquisition

Management style

Defining process and adapting change

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Structure and Systems

Aditya Birla Management Corporation as the central body for decision makingand to give strategic direction to the Birla Group

An internal consulting firm for various divisions of the Birla Group , a staffstrength of 350

The issues addressed were to define the organizational goals, mergers andacquisitions knowledge sharing and implementing best practices across thesubsidiaries

ABMC consisted of 14 Corporate Cells in different functional areas like HR,

Finance, Legal, Economics , Manufacturing etc.

The primary responsibilities of these cells were to identify new areas ofinvestment, research regarding portfolio decisions, set goals, track thecompetitive landscape etc.

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Corporate Cell Structure

Technology Strategyand Services Safety, Health andEnvironment Cell

CommunicationsCell

Strategy and BusinessDevelopment

HR Cell ManufacturingServices

InformationTechnology Cell

World ClassManufacturing Cell

Finance Cell Corporate Affairs andDevelopment Cell

Legal Cell Economics Cell

Management AuditCell

Central Cell

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Corporate Cell ResponsibilitiesStrategy and Business

Development

Create action plansfor new ventures

Formulation andimplementation of

strategies

Identifyopportunities fororganic growth

Central Cell

Long term planning

Capital Budgeting

Evaluation of

businessperformance

Portfolio planning

Technology Strategyand Services Cell

Automatemanufacturingprocesses

Facilitate research

and best practices

Provide expertise onmanpowerutilization andenergy conservation

Information Technology Cell to provide strategies for IT initiatives ,formulate IT policy andKnowledge Management

World Class Manufacturing Cell to look after Quality Standards through TQM, Six Sigma

Finance Cell functioned as an in-house investment bank, advice on mergers and acquisitions

HR Cell responsible for Intellectual Capital which aligned with the organizational strategic goals

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Total assets held by Hindalcoincreased by 137 % in last 4years and by more than 7200% in last 20 years

Hindalcos annual turnoverincreased by 197 % in last 4years and by more than 3600% in last 20 years

PBT increased by 180 % in last4 years and by approx. 9129%

in last 20 years

377

11724.313574.3

16606.8

20933.4

27804

516

6400.97902.3

9877.811802.1

19058.9

311020.2 1485.4

1847 2030.43661.6

0

5000

10000

15000

20000

25000

30000

1989 2003 2004 2005 2006 2007

Hindalco Figures (Cr )

Asset Turnover PBT

-20000

2000400060008000

1000012000

Turnover(Aluminium)

Turnover(Copper)

PBT(Aluminum)

PBT(Copper)

TotalAssets(Alu)

TotalAssets(Cop

per)

Margins(Al)

Margins(Copper)

2003 3267 2610 748 384 5158 3217 22.9 14.7

2004 4502 3584 1092 367 6075 4252 24.3 10.2

2005 5321 4547 1620 174 6310 6140 30.4 3.8

2006 6064 5702 2130 -86 7310 8487 35.1 -1.5

2007 7367 11527 2927 588 8763 8523 39.7 5.1

Hindalco Major Business Analysis

2003 2004 2005 2006 2007

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0

5000

10000

15000

Garments Rayon Carbon Black Insulators Textiles Insurance Software BPO Telecom Fertilizers Financial

Services

Total

Turnover

Aditya Birla Nuvo Businesses

2004 2005 2006 2007 2008

-600

-400

-200

0

200

400

600

800

Garments Rayon Carbon Black Insulators Textiles Insurance Software BPO Telecom Fertilizers FinancialServices

Total

PBT

Segment wise PBT

2004 2005 2006 2007 2008

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

Garments Rayon Carbon Black Insulators Textiles Insurance Software BPO Telecom Fertilizers FinancialServices

Total

Margins

Segment Wise Margin

2004 2005 2006 2007 2008

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Sales 3757 4273 4453 4372 4606 5213 6229 6653 852 10215

PBT 172 245 409 467 713 1077 1361 1202 2189 2964

0

2000

4000

6000

8000

10000

12000

Grasim Industries (Cr)

Grasim industrys Total Salesincreased by 171 % over the last

10 years

Grasim industrys total ProfitBefore Tax (PBT) increased by171 % over the last 10 years

2004 2005 2006 2007 2008 2009 2010

Cement 14.6 13 15.7 35.2 30.9 23.1 15.8

Fibre & Pulp 31.2 58.3 40.9 54.7 57.2 23.3 24.9

Sponge Iron 44.9 71 1.6 9.3 24.8 41.1 51

Chemicals 28.3 41.5 50.8 23.3 35.8 21.6 25.6

Textile -0.2 -0.4 -3.1 -4.2 -1.9 1.3 1.4

-100

1020304050607080

ROCE on all segments in Grasim Industries