Birla1
Describe the methods the Birla Group could use to unlock possible “conglomerate discount”.
Unlocking conglomerate discount would need more focused approach on the businesses. We see that even in the case of Birla group. Idea cellular which when it was started was a Joint venture but later on it was separated. This more focused approach has enabled it to grow phenomenally. Idea in 2008 also acquired Spice Communications adding broadening its grip.
Grasim
Grasim was founded in 1947 as a textile manufacturer. It had expanded into VSF, cement, sponge iron and chemicals. Grasim should look to focus more on the businesses which are its cash-cow rather than focusing on everything. From the case we see that Grasim has a market share of 20% in cement market and 22.5% in apparel market. While 11% in others. So Birla Group can actually opt out of these markets so as to focus more on cement and VSF. This will also decrease the pressure on the management and will help them unlock conglomerate discount.
Hindalco
Hindalco was founded in 1962 mainly as an aluminum and copper producer. From the case we see that neither the copper nor the aluminum market is doing that well. Increased operational costs, environmental issues and shortage of sufficient power are the major issues that the company faces.
To tackle the power issue the company can actually make use of the in house production that they have set in for Grasim. Also they can outsource some of the production to countries where the availability of raw material is there as well as the costs are cheaper. In order to make the operations optimal Birla Group needs a more focused approach in this company and have to invest in R&D to build technology that could optimize and reduce the costs.
Aditya Birla Nuvo
AB Nuvo is another company that was 1st established basically as a textile manufacturer. It then diversified itself into many other sectors. It currently ventures into Financial services, Telecoms, IT, Textiles, Rayon, Carbon
Unlocking conglomerate discount would need more focused approach on the businesses. We see that even in the case of Birla group. Idea cellular which when it was started was a Joint venture but later on it was separated. This more focused approach has enabled it to grow phenomenally. Idea in 2008 also acquired Spice Communications adding broadening its grip.
Grasim
Grasim was founded in 1947 as a textile manufacturer. It had expanded into VSF, cement, sponge iron and chemicals. Grasim should look to focus more on the businesses which are its cash-cow rather than focusing on everything. From the case we see that Grasim has a market share of 20% in cement market and 22.5% in apparel market. While 11% in others. So Birla Group can actually opt out of these markets so as to focus more on cement and VSF. This will also decrease the pressure on the management and will help them unlock conglomerate discount.
Hindalco
Hindalco was founded in 1962 mainly as an aluminum and copper producer. From the case we see that neither the copper nor the aluminum market is doing that well. Increased operational costs, environmental issues and shortage of sufficient power are the major issues that the company faces.
To tackle the power issue the company can actually make use of the in house production that they have set in for Grasim. Also they can outsource some of the production to countries where the availability of raw material is there as well as the costs are cheaper. In order to make the operations optimal Birla Group needs a more focused approach in this company and have to invest in R&D to build technology that could optimize and reduce the costs.
Aditya Birla Nuvo
AB Nuvo is another company that was 1st established basically as a textile manufacturer. It then diversified itself into many other sectors. It currently ventures into Financial services, Telecoms, IT, Textiles, Rayon, Carbon