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The Aditya Birla group built its businesses from cement to metals to financial services via mergers and acquisitions. Led by Kumar Mangalam Birla, it seldom made bad news. But as bad news pours in for the group — from cash transactions to irregularities in coal-block allocations to illegal iron-ore mining — the group is focusing on its businesses.
The bad news, however, has not stopped investors from pouring money into the group’s listed entities. In the last one year, the market value of all the group's listed companies went up by 50 per cent — adding Rs 76,660 crore (see chart) to the total wealth of shareholders.
On Wednesday, the group’s total market value was Rs 2,31,564 crore.
“Investors are not worried as operationally the companies are doing well and, second, the Modi government is considered business-friendly and will not do anything to harm business interests of any group,” said an analyst.
UltraTech acquired cement plants in Gujarat and Madhya Pradesh from the Jaypee Group. This helped it to consolidate its position in both western and central India. “There is no bad news about the companies, whether UltraTech, Idea or even Hindalco,” he said.
For the last two years, the group was more in the news for the investigations by the Central Bureau of Investigation over coal-block allocation to Hindalco, the recovery of cash from the group’s Delhi offices by the income-tax department and the cancellation of bauxite and coal mines in Jharkhand, Odisha and Madhya Pradesh.
Last October, a panel set up by the Supreme Court recommended the cancellation of two iron-ore mining leases of Kasia and Jilling Langalota of unlisted Essel Mining due to large-scale illegal mining and irregularities.
Essel executives said the allegations of irregularities were not true and it would take up the issue on the right legal forum.
Group insiders say the allotments of coal blocks are legal and honest and their legal team will reply to the investigating agencies and to the court, as and when necessary.
As the group fights the allegations, Birla has written to all employees to focus on work and build businesses. The group is already earning half of its revenues abroad and plans to increase it further.
On Monday, the group applied for a payment bank licence from the Reserve Bank of India and said it wanted to sell a part of its stake in its retail holding company.
UltraTech is investing Rs 10,000 crore to take its capacity to 71 million tonnes a year by 2016. Novelis, a subsidiary of Hindalco, is betting big on recycling and the use of aluminium by the American automobile sector to increase its revenues and profits.
Clearly, the spate news has not stopped the group from aiming big.
