Kumar Mangalam Birla, chairman of Aditya Birla Group, spoke after announcing the $2.6 billion acquisition of U.S.-based Aleris Corp. Edited excerpts.
How confident are you in getting approvals in U.S. and China when the first buyer from China could not get government approval to buy Aleris?
There are couple of areas where we are competent than the other company. They had zero presence in the U.S. and we have significant presence in multiple locations.
We have operating facilities across locations. We are constructing a new plant in Kentucky. We have been in business in the U.S. for a decade, building trust. The Chinese company, which was competing with us, had neither presence in the U.S. nor made any investment there.
As an industry, we are making 1.5 MT of sheet that goes into automotive sector and competing with steel. No matter, the process will take time.
How do you see the deal in the light of resistance to foreign companies taking over assets abroad?
Thinking about this acquisition, we are not going to see any redundancy in operations. No job losses. This deal is about growth. We will be taking over certain plants and continue to grow these plants across the world and particularly in the U.S. It is completely about growth than anything else.
It is about making solutions available to customers. It about achieving synergies and cost reduction to make the operations more resilient.
Why are private equity investors quitting when their $900 million investment is going to yield returns?
It is better for them to answer, but I think the private equity investors do not lock their investment in an asset for a long time.
They want to exit after a point of time, booking their profit. This, incidentally, fits into our search for growth.
Vodafone-Idea got DoT’s approval for merger. When do you think the merged Vodafone and Idea will start operations and what would be your strategy when the price war is still on?
We should start operations in next few weeks. We are still in the process of framing the strategy which will be revealed soon. We will make substantial investment in the telecom sector going forward.
Do you think rising lending rates and surging inflation will affect India’s growth story?
Our economists are expecting India to grow at over 8% and it will be one of the fastest growing countries. It is back on strong fundamentals. Some of the sectors are coming back strongly.
Rising lending rates and inflation will have an impact but not much to hamper growth completely. It is part of doing business in any part of the world.
But, you were not very optimistic during the UltraTech AGM?
During UltraTech AGM, I said that the economy is not looking rosy because of structural concerns like oil prices, inflation etc. Cement is looking up, roads and infrastructure sectors are doing well. I don’t see any problems with the economy. I see green shoots coming back, in fact.
What’s the difference between Novelis and Aleris acquisitions?
I think Novelis was driven by the fact that we wanted to move the portfolio to have a share of much higher value added products, higher margins, less volatility.
It’s proven in the last 11 years, I think Novelis today is a well-regarded and valuable company.
Aleris is a step forward in that direction, giving us a wide range of customers, new verticals like aerospace... very significant.
We will make substantial investment in telecom sector going forward