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TALK ASIA

Interview with Indian industrialist Kumar Mangalam Birla

Aired April 6, 2011 - 06:30:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


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ANDREW STEVENS, CO-ANCHOR OF CNN "WORLD BUSINESS": One man who is realizing his dreams is Mumbai-based businessman, Kumar Mangalam Birla, an industrialist whose ambitions extend well beyond the city and the country of his birth.

The 43-year-old is at the helm of India's first true multinational company, the Aditya Birla Group, named after his father, who ran the company before his death in 1995. The Birla family business itself goes back four generations. Thrust into the role of chairman at the tender age of 28, Kumar Birla has taken his father's company from $2 billion in revenues to $30 billion as his empire continues to delve into new sectors and new operating centers across the world.

He now sits comfortably on the list of India's top 10 richest people, but it's a wealth he's keen to share, supporting the numerous community development initiatives, kept under the watchful eye of his mother.

Kumar Mangalam Birla, building the family business dynasty, but with a style and direction that's all his own.

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STEVENS: How do you do? Let's get straight down to a very broad question I'd like to start with. You are the head of an Indian dynasty -- a spectacularly well-known Indian dynasty which has done some pretty extraordinary feats of business. What does it feel like to be at the head of all that?

KUMAR MANGALAM BIRLA, CHAIRMAN ADITYA BIRLA GROUP: That's a good question, Andrew. I think that, you know, it's a very proud feeling. One feels very blessed to be born into a family like the Birla family, which is a household name in India, which stands for tradition, is yet contemporary, stands for trust.

It's been such an integral part of the creation of modern India in so many different ways. So, one feels very blessed.

STEVENS: One person I want to focus on immediately is your great grandfather, GD Birla. Quite an extraordinary character. You knew him up to the age of 14, when he passed away. But he was also -- and I don't know how many people know this -- but he was also a very close confidant of Mahatma Gandhi, wasn't he?

BIRLA: That's right, Andrew, he worked very closely with Mahatma Gandhi. He was a confidant of Mahatma Gandhi. He was greatly influenced by his outlook on life. He played a very important role in the freedom movement in India. He was very closely involved with the Indian National Congress. He financially backed several of Gandhi's national movements over a period of two decades.

So, he called his own memoir "In the Shadow of the Mahatma". So, he was clearly very influenced by Gandhi -- his philosophy of life, his philosophy of trusteeship.

STEVENS: And that sits well with his own, obviously, interest in business and making money.

BIRLA: That's right. I mean, he started his first industry in terms of setting up a manufacturing base in 1920, which I think was a jute firm. And by the time the second war came around -- the Second World War came around -- he had quite a flourishing business.

And I think that put him in a sort of advantaged position to play the role of a mediator between the Indian National Congress and India, so to speak, and the British.

STEVENS: And what are your own memories of GD Birla?

BIRLA: I was very fortunate, because I don't think many people get to spend time with their great-grandfathers. So, he passed away when I was 15, so I spent a lot of time with him. We lived together. He traveled a lot, but when he was here, we lived together.

So, for me, he was one of my best friends. I grew up thinking he was one of my best friends, because that's what he always told me he was. So I had no idea that, you know, he was a legend that he was.

STEVENS: Now, he was known as "the big Birla". He was the preeminent industrialist --

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His grandson, your father, assumed that title, "the big Birla", and I think it's safe to say that you now have that title. What's the common thread here? I mean, obviously, blood is a common thread, but what do you think the common thread is between the three of you, which makes you do what you do in business?

BIRLA: I think the only one thing which I can probably think of is a very common -- is a common and strong thread is a sort-of shared value system. And I think that value system that's based on the trusteeship principal. That, you know, a part of the profits that you make get bowed back for the good of society.

STEVENS: On the business side, on the development of your father as a business -- I know that GD was very keen to bring him on board into his own operations. Your father said, "No, I'm going to go my own way". And he built his own company, which you have expanded exponentially. Why did he go his own way?

BIRLA: You know, I think he wanted to, like a lot of people at that age, strike out on his own. In the mid '60s, he was a freshly minted graduate from MIT and he felt as trapped by the tyranny of the License Raj in India.

STEVENS: Just explain to people who aren't familiar with the term, "The License Raj".

BIRLA: The License Raj in India was a time when, to set up an industry, you needed a license. Which made the government an omnipresent and sort of all-pervasive authority. And, unless you had a license, you couldn't set up an industry. You couldn't produce more from a plant unless you had a license to increase your capacity.

If you produced more and increased your productivity, you actually would get fined for it, because, you know, you needed to have a license to do that. So that was, I can imagine and people talk about it, a very stifling time for Indian businessman.

STEVENS: And it went on for a long time as well. You were about to say that your -- Aditya turned outwards, away from India. Why did he choose that path? Purely because of the License Raj?

BIRLA: Sure, he was ambitious. He came back from MIT. He probably thought that the best he could do, rather than waste his time, would be to look overseas. And he set his eyes on Southeast Asia. Over the next three decades, he built up a very successful and respected industrial empire there with very large investments on the ground across the swath of Southeast Asian countries.

And I think that's what made him the pioneer in that he thought about going global much before -- much, much before globalization was a part of our lexicon in India.

STEVENS: We're going to take a short break now. When we come back, we're going to be talking to Kumar Birla about the shocking and sudden death of his father, which propelled him into the chair of the company at the age of just 28. Stay with us.

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STEVENS: Aluminum cans being crushed and melted down at a Novelis plant in Oswego, New York. Novelis is a world leader in aluminum manufacturing. Not only in recycling, but also in rolled sheet products for car makers like BMW, Ford, and Jaguar, electronics giants, Samsung and LG, and soft drink supremo, Coca-Cola.

With global sales of $8.7 billion last year from its 11 operating centers around the world, Novelis has proven itself a profitable purchase for the Aditya Birla subsidiary, Hindalco, which bought the Canadian company in 2007.

This is just one of the 20 companies acquired by Kumar Mangalam Birla since taking the helm in 1995 and turning the Aditya Birla Group into one of India's biggest and most profitable business houses.

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STEVENS: I want to take you back to 1995, which, obviously, must have been shocking. Not just for you, but for your entire family. Indeed, for the nation in many ways. Your father was at the top of his game. 51- years-old. He died suddenly from prostate cancer. You were thrust into the chair, aged 28-years-old.

So, not only did you have to deal with the grief of a child who has lost his father, but also take on enormous responsibilities. Just how difficult was that time for you?

BIRLA: So that, obviously Andrew, was a very difficult time emotionally, because, you know, he passed away almost, you know, unexpectedly. Also, because of the large responsibility. And, at that time, I was pretty much in a fish bowl, as you can imagine.

And I was only 28. Limited experience, but a lot of exposure -- high quality exposure to the world of business. And, you know, at that point in time, the only thought in my mind was to carry forward his work. And I decided that I'd just put my head down, hang in there, and just keep at it.

STEVENS: Did you feel you were prepared? I mean, you had an excellent academic record; you were a chartered accountant at a very early age. You'd done an MBA from the London School of Economics. Did you feel ready for the challenge?

BIRLA: I think I was much better prepared than most people thought I was because of a couple of things -- when you grew up in a business family, I think subconsciously there's a lot of learning that happens. It might just be conversation across the dinner table, for example.

The education was a very strong kind of pillar for me. My education - - I was a qualified chartered accountant. I had also worked with my father for almost seven, eight years before he passed away. I had independent charge of a couple of businesses in the group.

And I sat with him very closely for his meetings. I kind of shadowed him for almost three or four years. So I'm dealing with different business situations.

STEVENS: How old were you when you were shadowing him? This was after you'd returned from the London School --

BIRLA: This was before and after, so it's maybe from the time that I was 23 to the time that he actually passed away.

STEVENS: You took a company from $2 billion turnover in 1996 -- because, really, 1996 was when you started coming to grips with it -- to $30 billion this year. What's the secret?

BIRLA: Well, I think the secret is the fact that I have a team of very competent, dedicated people who invest intellectually, emotionally. They really are the backbone of the success of the group.

STEVENS: You are being modest, I would say. What do you bring to the table?

BIRLA: Well, I think a leader has many roles to play. So, you know, one role is that of incubating talent, the other is that of being a strategist. It's a very interesting job I've got.

STEVENS: One story I heard, which I thought was very enlightening about the acquisition of Novelis. You were told, in no uncertain terms, that this was a deal you should walk away from by one of your senior managers. You overruled him and you were proven right. What did you see that no one else could see?

BIRLA: I think it was just an intuitive call. I think that, you know, it wasn't really clairvoyance. I can't claim it to be that. I think it was just intuitive. It was a gut feeling. It was -- Novelis was a company that I sort of lived with for almost two years in the sense of having talked about it, looked at it very intensely, studied it, looked at the business model.

It also was a part of my vision for Hindalco, which is the company that acquired it, of being a global integrated aluminum player. And I think, like I always said, was pretty much an entrepreneur's call.

STEVENS: You have said -- you're on the record as saying you are going to grow your operations from $30 billion turnover today to $65 billion by 2015. That's less than five years.

BIRLA: Yes, I know that sounds audacious, but, you know, just to put it in context, we were a little under $10 billion four years ago. So, we have a track record of doing audacious things. And I generally believe that the quality of your future is entirely dependent on the quality of your imagination today.

STEVENS: You are very focused on growth. But you're also very focused on giving back. You were saying -- I think it's more than three percent of your net profit goes into charity, which is quite a lot higher than most.

BIRLA: That's right.

STEVENS: Why --

(AUDIO GAP)

STEVENS: Is this a family legacy?

BIRLA: It is. It is pretty much a family legacy. Like I said, it is a sole philosophy of trusteeship -- of buying back part of your profits in terms of giving back to society. So, the social arm, so to speak, of the organization is run by my mother. It is run with the same rigor and intensity and precision as our businesses are.

Essentially, we work out of 3,000 villages. And the work that we do touches about 7 million people every year. It differs from location to location. It is essentially around establishments that we have across the country, and it is catering to the needs of the communities around these establishments.

STEVENS: We're going to take a short break. When we come back -- we've all heard the story of India's extraordinary economic success over the past decade or so, but there is a darker side, which has been emerging. We're going to be talking to Kumar Birla about the recent spate of scandals and his take on where India needs to go and what it needs to do to be a true global player. Stay with us.

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STEVENS: India is a country in demand. In the past eight months, no fewer than five world leaders have visited the South Asian nation for one- on-one talks. The common item on each agenda: trade.

India is now one of the world's fastest growing economies and is expected to expand by a healthy 8.6 percent this year. Its diverse industries and innovations are fast catching the attention of foreign investors.

But the country's Prime Minister fears a recent spate of scams and scandals is tarnishing India's image abroad. A sentiment shared by the thousands who have taken to the streets, calling for an end to corruption.

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STEVENS: How badly damaged is India's public image at the moment, globally?

BIRLA: You know, I talk to CEOs internationally, a lot of bankers who keep visiting India, and the overarching feedback seems to be that it's unfortunate. But the India story remains as strong as ever, completely unblemished. The general sentiment seems to be that, as a nation matures and grows up, these are facets that are bound to get uncovered.

And my own view is that it's unfortunate and, as an Indian, I feel somewhat disenchanted. But the brighter side of things is that you have a spotlight now on decisions that the government is making and people in public life are making much more than in the past, which is why the scams.

But I think that the fact that the media is as widespread as it is in India, and becoming more and more of a watchdog, so to speak, is, I think, a positive thing.

STEVENS: There was an editorial in one of the international business newspapers last week accusing the Prime Minister of being guilty of a lack of leadership on this issue. Not suggesting he is in any way part of it, but saying that he's doing enough to deal with this. Would you agree with that?

BIRLA: Well, I think, like he said -- and I would completely endorse that -- that this is all a fallout of a coalition government. And I think a coalition government clearly, having experienced it quite closely, has its own pushes and pulls and compulsions. And this, unfortunately, is one negative fallout of it.

STEVENS: But is the government doing enough?

BIRLA: I think that they're doing a fair amount. I wouldn't say that they can't do more. But, you know, actually the brass tacks is that it is a coalition government and there are coalition compulsions. I mean, that is something that one, you know, perceives very clearly when one is in Delhi and meeting ministers and bureaucrats -- that they have the compulsion and the restrictions.

STEVENS: What we are also seeing now is many more Indian companies basically following your father's trail -- going overseas, acquiring -- following your trail as well. It has historically been the reverse. When Indian companies are now out on the global stage buying companies, what do they bring to the table, do you think?

BIRLA: Well, that's an interesting question again, Andrew. Just an anecdote: five years ago when we were acquiring -- well, no, eight years ago when we were acquiring a pulp mill in Canada, the locals there wanted to know why an Indian company. And we had to sell our credentials, we had to sell the group, we had to sell India, the India story.

And eventually, the provincial government decided that they'd rather sell the mill to us than to the company that had sort of been instrumental in closing it down and wanted to buy it again. So, I think the India story is now much better known the world over.

I think India, as a nation, is far more respected. It has gained the respect of people as an intellectual powerhouse. As a serious business destination. As a people who are a very enterprising lot. And I think it's the sheer spirit of enterprise that Indians bring to the table.

STEVENS: I'm going to ask you a question, which I expect you don't get asked very often. You've been in charge of the company since the mid 1990s. You're still a young man. You've still got decades ahead of you.

But, I wonder, do you think about succession, given the history of the company? Given the fact that GD was imparting his knowledge, your father was imparting his knowledge to you. Are you -- will you follow the same path, do you think?

BIRLA: Well, you know, I'm just 43, so don't plan that much in advance.

STEVENS: A few years yet.

BIRLA: And also, you know, children now are a very different breed. They have so many more options open to them, which we didn't. And the generations before us certainly didn't. So, that's not something that I've given a thought to at all.

STEVENS: You have a son and two daughters. Obviously, you'd like to see one or all of them in the family business. But, would they have to be?

BIRLA: Absolutely not. I think that -- I think most contemporary parents in India would want their children to follow their passion and do what they enjoy doing and make a living out of that. So, no, absolutely not.

STEVENS: I'm going to finish off by asking you a very simple question. I'd like you to tell us a golden rule -- a simple piece of advice that you would offer a potential businessperson in our audience today about when they are starting up. What's one golden rule that you would offer them?

BIRLA: Well, I think the golden rule I can think of is the fact that you must follow your passion and do something that's close to your heart. And I think that that's very important, well, to be successful and to be happy.

STEVENS: You can't be successful unless you believe in what you're doing?

BIRLA: Absolutely.

STEVENS: Kumar Mangalam Birla, thank you so much for joining us on "Talk Asia".

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