Aditya Birla Case notes
The Unknown Global Indian Conglomerate Q) After a decade of reform, had the Barilla group done enough to outpace its rivals , or was there another step It had to take to be "Barilla #1"? NAS: Once Kumar Mangle Barilla took over the Barilla group in 1995 after the untimely death of his father, he ushered In an era of reforms and mandated the company be among the top three players In the world or at least in the region for any particular Investment. The renewed focus of the group was in making investments in India, acquiring companies outside India fuelling growth.
One of his notable acquisition was Novels to make the high-risk aluminum business less vulnerable to price fluctuations on the London Metal Exchange. (Novels was acquired by Handball). Mangle Barilla focused on strengthening and consolidating similar businesses together and investing in growth business sectors from the cash generated from the value businesses. His strategy paid off and from being a conglomerate with Just US$I . 5 billion in revenues in 1995 it had grown to a business with revenues of approximately US$40 billion in year 2012.
Though the group has come a long way It Is still at number three amongst the Indian Conglomerates(Number 1 being Data with revenues of US$OHIO billion as of 2012 and RILL with revenues of US$74 billion). In certain businesses the group Is number one Like VS. and cement whereas In certain other sectors like retail It needs to work towards establishing itself amongst the top three. The level of competition has increased both at home and abroad and the Barilla group needs to rethink their strategy to be the number one. The Barilla Financial services can play a major role with insurance company and an asset management fund.
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As a conglomerate it should be able to reap the benefits of distributing its costs across similar businesses and achieve cost leadership to gain a competitive advantage over its rivals. The group is looking at investment opportunities in Africa, South America, East Europe and Central Asia because these geographies present Immense opportunities for the group to do business. The next logical decision of the group would be to Invest in Infrastructure and the group Is actively seeking out opportunities for the same. With the new government In place this might be one of the lucrative business opportunities.
The roof is diversified across many sectors but it should be cautious enough not to spread its wings too thin. Recently the group sold off Ditty Barilla Maniacs as the group wanted to exit the business process outsourcing sector because it lacked scale and was not amongst the top three players in the particular region. The capital raised from the deal was invested in other growth sector opportunities in the group. The group has redefined its business strategy and management practices aimed at becoming the foremost firm in India but it still has a long way to go. According to Kumar Mangle Barilla he has all the large pieces in place.
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