Case Study on Aditya Birla Group

Introduction about Aditya Birla group

About Birlas Aditya Birla Group started at 1857.Shiv narayan Birla started cotton trading operation in the small town of pilani in rajasthan.Ghyanshyamdas Birla(GD birla)-1919-he set the manufacturing company.Grandson of G.D.Birla is Aditya Vikram Birla(A.V.Birla)-1964-Son of A.V.Birla is Kumar mangalam Birla(K.M.Birla)-1995.

Aditya Birla Companies and Brands.

COMPANY: HINDALCO Everlast aluminium roofing sheetsFreshwrapp aluminium foilFreshpakk semi-rigid containersPermashield waterproofing Aluminium foilAura alloy wheelsHindalco extrusions

COMPANY: HINDALCO Birla CopperBirla Gold Birla Silver

COMPANY: ADITYA BIRLA NUVOBirla Carbon

COMPANY: GRASIMBirla SuperUltraTech Cement (formerly Birla Plus)Birla Ready MixBirla WhiteCOMPANY: ULTRATECH UltraTech cement

COMPANY: GRASIMBirla Cellulose

COMPANY: INDO GULFBirla Shaktiman UreaCOMPANY: HINDALCOBirla Balwan

COMPANY: ADITYA BIRLA NUVOLinen ClubPyroguardRay One KoloroneCOMPANY: GRASIMIce Touch UncrushablesPuristaClean FabCOMPANY: THAI ACRYLIC FIBRE Texlan

COMPANY: ADITYA BIRLA NUVOLouis PhilippeVan HeusenAllen Solly Peter EnglandEsprit

COMPANY: BIRLA NGK INSULATORS PVT. LTD. Aditya Birla Insulators

COMPANY: ADITYA BIRLA CHEMICALS (THAILAND) LTD. Polyphos EpotecBirlasulf-SSBirlasulf-SM Birlasulf 35COMPANY: THAI PEROXIDE CO. LTD. EcareEncareAqua XOCAREBirloxHerlisil

key products and brandscapacitiescountryPSI Data Systems Ltd. (subsidiary of Aditya Birla Nuvo Ltd.)IT solutions (banking, finance and insurance)India

key products and brandscapacitiescountryAditya Birla Minacs Worldwide Limited (subsidiary of Aditya Birla Nuvo Ltd.)BPO / ITES9,089 seatsIndia

COMPANY: IDEA CELLULAR LTD. Idea

COMPANY: ADITYA BIRLA RETAIL LIMITEDmore.

Kumar mangalam Birla can he manage the mandate?Case Study

About k.M.BirlaKumar Mangalam Birla is a chaiman of aditya birla who is son of A.V.Birla.K.M.Birla done C.A and MBA from london business school, at the age of 28 taken responsibility towards business having total revenue of INR 15,000 crores with assets of INR 16,000 crores.It had a strength of 75,000employees and 6,00,000 shareholders.

K.M.Birla(the reason for change in management style) After taking up the change,K.M.Birla decided to consolidate entire entire groups companies under one umbrella of the Adithyas birla group.Many critics were opinion that K.M.Birla would unable to manage the group successfullyWhen k.M.Birla handovered business from his father in 1995,his critics dismissed him as a soft and shy person. who lacked the business expertise and assertiveness of his father A.V.Birla.An unapproachable management style and misplaced priorities the result was the investors started selling off their shares .In 1996 the market value of groups four largest companies grasim ,indian rayon ,hindalco & indo gulf fertilizer suddenly decreased by $1billion or 37%.So K.M.Birla took several initiatives to prove his critics wrong.

Changes taken by K.M.Birla to prove that the critics are wrong..

1.Retirement policyHe introduced a retirement policy in 1995,on the basis of which around 325 senior emplayees,who were there early 60s,had quit the organization in the next five years .subsequently about 400 young employees replaced them.Meanwhile ,answering the critics he said, "people in the group about twice my age when I took over as chairman. I had great respect for them personally, but I also feel the need for change.

2.Corporate logoIn 1996,he launched for the first time a corporate identity that would serve a corporate logo. The group selected the rising sun as the logo, which signified optimism and served as a unification symbol for the group.K.M.Birla said, The new corporate logo helped in bringing various companies of the group together. This helped the organization to reenergize and get started to the path of change.

3.Recruitment processK.M.Birla also changed the groups policy in house recruitment. In 1996,he also made changes in groups HR system. He hired professionals from other companies into his management team

4.Change in decision makingThe partha system of daily financial reporting which focused mainly on production was replaced with an Economic value added model. This model focuses on the aspects of profitability, asset productivity and growth.K.M.Birla also established aditya birla management corporation limited, the strategic decision making for ensuring the best practices across the group companies.K.M.Birla decided to reduce the groups dependence on fiber based business where its market share was low. Instead he decided to concentrate on non-ferrous metals as there was less competition and hindalco already had a big presence in the aluminum sector

5.360 degree appraisalK.M.Birla introduced a 360 degree feedback program in 1999 that permitted managers to raise questions over his leadership style, managerial ability and also personal traits but he could not define what he expected from his employees.After the feedback, he issued each senior manager a six page letter mentioning the areas of improvement and his expectations.

6.Scholarships to students and Awards to employeesIn 1999 K.M.Birla launched the aditya birla scholarship to promote excellence among students community to cultivate the leaders of tomorrow.He said, "cultivating a new generation of managers and cultivating a participative culture are keys to the increasingly energetic, people centered, and performance focused culture we aspire for.He also launched Aditya Birla awards in 1999 where team achievements recognized every year .

7.Happiness at workBirla had also implemented the organizational health survey by the late 1990s, which measured the Happiness at work index. This was carried out to track the employees satisfaction.

8.Hierarchy based on performance of employeesK.M.Birla also brought in some managerial changes in the group. Before K.M.Birla took the chairmanship, the hierarchy in the group was determined by seniority instead of merit. He instituted a performance appraisal system. He decided to implement performance management systems,reviwed compensations and accentuated on training to bring meritocracy.He personally led the recruitment program from business schools.

9.Changes in reportingHe also brought about changes in reporting system being followed at the group. The top 20 executives of the group, who had greater responsibilities in the group, could report directly to K.M.Birla, thereby giving them complete freedom to run their businesses and same holding the more accountable for their performance.

Analysts opinion Several analysts also praised KM Birlas style of functioning.Analysts believed that K.M.Birla has began to think big in recent times. He usually used to focus more on extracting rather than betting big on growth.Despite remaining profitable the companys growth has been slower as compared to its peers in the recent past. It has been reflected in the stock market. where its market capitalization of INR30,000 crores is less than its total turnover.

Questions

Why analysts thought that there should be growth?

Why analysts thought that there should be growth?K.M.Birla mainly focused on the performance of a company by implementing.1)Retirement policy.2)Recruitment process.3)360 degree appraisal.4)Scholarship to students and awards to employees.5)Happiness at work.6)Hierarchy based on performance of employees.7)Changes in reporting system. By seeing all these things he mainly concentrated on the performance but not the R&D so there is less in growth.

Why market cap is less than turnover?

Why market cap is less than turnover?Market cap=share price*no of shares.He is not focused on shareholders.He should focus on shareholders by giving dividends and more benefits.

which concept is this case related?

which concept is this case related?This case is related to performance management and decision making.

By Indira Priya Darshini

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