CALCUTTA, February 10: The various Birla factions have begun discussing the feasibility of jointly marketing cement made by the group companies, probably under a "mega" brand. The factions together account for nearly 25 per cent of the country's installed capacity of 90 million tonnes.Top sources confirmed that family members met about a fortnight back to deliberate on the pros and cons of a joint marketing strategy that would pool the human and financial resources of different factions for a major push in different regions.
Sudarshan Kumar Birla told The Financial Express that such a scheme was difficult to implement as each company was a separate legal entity and it would have to overcome several legal hurdles. He added that he was not sure whether such a scheme would be beneficial in the long run, implying that in better times the participants might find staying together less remunerative. At best, it could prove to be a good short-term bet, he explained.
The need for such a strategy hasbecome urgent in a market where volumes are chasing inadequate demand. This phenomenon is evident from the weak prices in almost all regional markets. At present, the cement plants of the Birlas are spread over multiple locations, with several group companies competing with each other.For instance, in Uttar Pradesh, the country's second-largest market after Maharashtra, there are four Birla families competing with each other. The MP Birla group's Birla Corp leads the clan with a 15 per cent market share, followed closely by BK Birla's Century Textiles (14 per cent), SK Birla's Mysore Cement (9 per cent) and AV Birla group's Grasim (6 per cent).
Industrywise, the leader in the state is Jaiprakash Industries with 17 per cent and Associated Cement Companies Ltd with 16 per cent.
If the Birlas work out a joint marketing effort, they would start off with 44 per cent of the UP market.
Similarly, in the cement-surplus Madhya Pradesh, Grasim, Century Textiles and Mysore Cement enjoy market shares of 21 percent, 10 per cent and eight per cent respectively, while ACC and Larsen & Toubro holds 13 per cent each. On an all-India basis, nearly 27 per cent of all the cement sold comes from the Birlas. Individually, however, ACC is the largest cement seller with 13 per cent, followed by L&T with 8 per cent.
Sources explained that the benefits of joint marketing would have to be weighed against the costs, and the entire exercise might take another two to three months before a concrete strategy is worked out.
A senior executive of a Birla group company revealed that the strategy, if implemented, would be a complete reversal of the group's philosophy of treating each unit as an independent profit centre headed by a senior executive.
Within the AV Birla faction, for example, G Jayaraman heads Rajashree Cement and OP Puranmalka is in overall charge of the cement divisions of Indian Rayon. Similarly, BL Jain heads Maihar Cement, a Century unit under the BK Birla clan.
Bagrodia to overseee AV Birla groupoperations
It is reliably learnt that MC Bagrodia, senior advisor to Kumar Mangalam Birla, has been given full charge of AV Birla group's cement operations, which so far had independent executives to oversee operations of various cement plants.
Meanwhile, Grasim Cement recently revamped its marketing department with the appointment of three executives -- PK Ray in Calcutta, Anil Kapoor in Raipur and DJ Mittal in Mumbai. Grasim's senior vice-president for marketing, RM Cursetji, recently quit to join Modi Ambuja, the recent acquisition of Gujarat Ambuja Cements in Madhya Pradesh.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
