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Industrialist and chairman of the Aditya Birla Group, Kumar Mangalam Birla, reflected on the year gone by and listed 5 broad trends that he thinks would have a multi-year impact:
Industrialist and chairman of the Aditya Birla Group, Kumar Mangalam Birla, in his reflections for the year gone by, said there is a thin line between hustle and hubris and also that sanity must prevail over vanity in valuations.
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For the 2022-23 year's note, Birla started by going through his reflections of the previous years, an instructive walk through the past. "Some of my beliefs such as sanity over vanity in valuations, the enduring role of large
corporations as engines for growth and societal good, and the decisive return
to office — WFO over WFH — have stayed true. On the other hand, my conviction about the roaring 2020s needs stronger confirmation," he said in his recent note.
Birla started by writing about the COVID-19 pandemic that hit India three years ago and also learning to live with a new geopolitical normal that resulted in the reshaping of everything — from supply chains to relative fortunes of various countries.
Russia invaded Ukraine in February last year, which resulted in many countries in the west including the US and European Union nations, among others, levying sanctions on Moscow. This as well as China's zero-COVID policy caused disruptions in supply chains, and with commodity prices shooting, central banks across the world raised their interest rates to combat inflation. Now, the world is staring at a possible global slowdown and recession, with many large IT firms already starting to cut jobs.
Against the recent backdrop, Birla listed 5 broad trends that he thinks would have a multi-year impact:
India’s rise: Beyond ‘+1’
The industrialist said a decadal reshaping of supply chains is underway. "As global corporations start to look at countries across Asia as part of their China + 1 strategies, India is a clear choice. Supply chain repositioning is complex and needs us to stay the course. However, the path we are charting is bold and certain to yield good outcomes," he said.
As India further opens up to trade and investment, forms new alliances and
reaffirms old ones in the changing world order, it will have a unique place in the
global economy, Birla said, adding, "It is now up to us, its people, its companies, and its leaders to harness these opportunities in India’s favour."
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Clean energy at a tipping point
Governments and large corporations globally finally see a confluence between
what is virtuous and financially prudent. And this convergence will drive a multi-decade transition, said Birla, adding that India has made some bold bets and commitments behind this transition. "As a nation, we aim to generate 50 percent of our power requirements from renewable sources, or put another way, have 500GW of non-fossil fuel based capacity by 2030. India is walking the talk as is evident from its pioneering leadership of the International Solar Alliance," he added.
Earlier this month, India also approved an initial outlay of Rs 19,744 crore for the National Hydrogen Mission, with incentives worth more than Rs 17,000 crore to be allotted for electrolyser and green hydrogen manufacturing in the country, while Rs 400 crore would be spent on developing green hydrogen hubs in the country.
Birla also said that it is heartening to see whole-hearted commitments being made across the business spectrum at the corporate level. "We are making similar investments in green energy, the circular economy and sustainable materials, across a range of our group companies. The pendulum of climate change will swing globally when we can find technology led solutions to marry the material aspirations of current generations with responsibility towards the lives of future generations," he said.
No shortcuts to business building
"The availability of capital, coupled with young talent brimming with ideas, has
meant that we have been witness to a unique explosion of new business
building. There is much to be celebrated and learnt from the raw energy and
hustle of many of these new ventures in the startup ecosystem. At the same
time, it’s also increasingly clear that there is a thin line between hustle and
hubris," Birla said, adding that to balance the same, it is important to get four things right:
Longevity = Reinvention
"Changes in technology, and evolving consumer needs, are creating ever
shorter business cycles. For a group like ours, a unique challenge is to harness
the trust and stability that comes from longevity, while ensuring that we can
continuously reinvent ourselves," Birla said.
The industrialist added that companies across the corporate landscape will be asked pressing questions regarding their own futures such as -- what is the formula that harnesses historic moats that are formed by brand power, distribution might or even technology prowess, with a forward-looking product pipeline, its relevance to consumers and a young, agile workforce? Or what are the bets that see through short-term fads and also translate into a sustainable advantage? "I do not have the answers to all these questions but take heart in some of the unique experiments that we have underway to find solutions," he said.
Purpose as a talisman
The Aditya Birla Group's values are integrity, commitment, passion, seamlessness and speed. It's vision is to be premium global conglomerate with a clear focus on each of its business. Its mission is to deliver superior value to customers, employees, shareholders and society at large.
The industrialist said that in 2022, the group formally put into words its purpose statement "In 2022, we formally put to words our group’s purpose statement which has been an unspoken anchor over the years. At its heart is the aspiration to enrich lives by building dynamic and responsible businesses and institutions that inspire trust. In a world of increasing opportunity, and also accelerating uncertainty, our purpose statement is meant to act as a talisman and remain at the core of our business decisions. As we grow, we expand our capacity to receive. We enhance our absorption of talent, technology, and capital. This, in turn, enables us to increase our ability to give back, create impact, and enrich lives. This virtuous cycle is at the heart of being a successful purpose-driven organisation," he said.