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Tuesday, Feb 01, 2011
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Corporate - Interview
Getting project clearances, a real concern: Kumar Mangalam Birla
Mr Kumar Mangalam Birla, Chairman, Aditya Birla Group
Suresh P Iyengar
Mumbai, Jan. 31
After formally announcing the acquisition of the US-based Columbian Chemicals Company for $875 million by two overseas group companies of the AV Birla Group, the Chairman, Mr Kumar Mangalam Birla, spoke to Business Line about the acquisition and the group's other plans.
Basically this acquisition does not touch India at all. The target company is overseas, the acquiring companies are overseas.
Yes, except that we have a carbon black business in India under AB Nuvo. But this particular acquisition does not involve any Indian company.
But could it eventually?
No plans as of now. I don't rule out the possibility completely for the future. But as of now, we don't see it.
Are there concerns about getting clearances for projects in India?
I think that is a real concern. We have to find a way of according some premium to speed, for example in acquiring land. We need to revamp our system so that we can become speedier and projects can get off the ground and get commissioned.
Are any of your projects held up for want of clearances
Recently many industrialists had written to the government on the issue of corruption. What are your views?
I don't want to make a comment.
There is concern over high inflation and increased cost of borrowing for companies, especially those planning major expansions? What is it going to be like?
(Interest) Rates will go up, obviously, that is a given. But beyond that we would still be the most competitive in terms of the rates at which we can raise funds.
Competitive against whom?
Against others who are raising funds of similar size, in terms of order of magnitude, given the fact that our businesses have very strong financials, very strong track records.
You have said you are open to acquisitions. What areas are you looking at?
We have grown each of our businesses, at different points, through acquisition... So in each of our businesses we are open to acquisitions if they are value accretive. We are always looking at different acquisitions…well not acquisitions… but studying the competitive space. But I don't think there is anything as of now.
There is a lot of overcapacity in cement and you are one of the larger players. The larger brands have been losing market share to smaller players.
We are the largest in terms of capacity in the country. There is overcapacity and I think that will last another year. We have a strong customer franchise and very strong distribution network across the country that have been with us many, many years. At times like this in the commodity cycle, this is what actually comes to the fore and stands us in good stead.
Do you think there will be a slowdown in the economy?
I don't see the economy slowing down, I think we will grow at 8-9 per cent. That is my own subjective view. I don't see us grow too much beyond the range of 8-9 per cent.
Do you have any plans to raise funds through equity or debt.
Debt is something that we keep raising, we are raising debt for Hindalco as of now. There are no plans on the equity front.
What direction will Birla financial services take?
A Birla financial services is poised to become a full service provider. The larger value creating businesses are life insurance and mutual funds. We are also looking at other potential areas for example, health. We don't have a presence in health insurance. If I remember right, I think our insurance business will start to make profits in FY '13.
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