Indian tycoon Birla seeks more purchases based on rationale, value

[MUMBAI] Kumar Mangalam Birla, chairman of the Aditya Birla Group, said that his group is always looking to acquire companies in the US, Europe and India.

"The business rationale is most important," Mr Birla said at Bloomberg's India Economic Forum on Sept 18 in Mumbai. "The basic question remains whether a deal will add value."

Mr Birla's US$44 billion conglomerate that sells insulators-to-insurance closed a merger to create India's top wireless carrier and aggressively pursued a distressed local cement maker, apart from acquiring a US aluminium producer this year. Mergers and acquisitions will pick up pace in India as banks tackle bad loans by putting companies owned by defaulters on the block.

Transactions involving Indian companies have reached a record US$104.5 billion in 2018 for Asia's No 3 economy, data compiled by Bloomberg shows. The tally may surpass US$100 billion in the next year as well, according to PwC India.

A new bankruptcy law implemented by Prime Minister Narendra Modi's government has led to several banks attempting to clean up their balance sheets. The deadline set by the central bank to restructure an estimated US$49.3 billion of soured loans under a new bankruptcy code expired on Aug 27.

"This government is starting to address it and taking the bull by the horns," Mr Birla said. "Bad loans have been around for a long time and just got brushed under the carpet."

Birla-controlled Idea Cellular Ltd completed its merger with the local unit of Vodafone Group in August to tackle a tariff war unleashed by the entry of billionaire Mukesh Ambani's Reliance Jio Infocomm Ltd.

Mr Birla said he expects the price war to ease as Idea and Vodafone work out a strategy.

In July, Mr Birla's Hindalco Industries Ltd announced the purchase of Aleris Corp for about US$2.6 billion helping the billionaire tap global automotive metal demand. His UltraTech Cement Ltd is locked in a legal wrangle to acquire distressed Binani Cement Ltd after it raised its offer to lenders, who had initially picked a Bain Capital-backed consortium as the winning bidder.

Separately, Birla said the Indian economy is an elephant that's starting to run. Gross domestic product grew 8.2 per cent in the three months ended June from a year earlier, the government said last month.