Birla & Malay rubber

When a tycoon finds he has three businesses, out of which one isn’t doing too well, what does he do? Just what Kumaramangalam Birla is ...

When a tycoon finds he has three businesses, out of which one isn’t doing too well, what does he do? Just what Kumaramangalam Birla is doing. Bowing out of one of them very gradually, very slowly. The tycoon who possesses three businesses in Malaysia, of rubber, edible oil and oleo chemicals, found that his rubber sector which he had acquired in the mid 1990s, accounted for only 0.5% of his revenues from Malaysia.

And after taking into account the amounts spent on overheads the venture was rather unprofitable. Another reason maybe was the fact that the government of Malaysia was planning to scale down on rubber planting in order to encourage the agricultural sector. Whatever the case the tycoon is seriously contemplating the next move, which will be an exit from the country. There seems to be a new strategy brewing in the tycoon’s head. With his rubber business out of the way Birla will be able to focus on his other two areas better, out of which he wants to increase the capacity utilization of his palm oil plant. Though this is the world’s largest single location palm oil refinery, due to extreme competition it has been working at only 70% of capacity, which the tycoon wants to improve. A new country head has already been chosen to foresee the operations of Malaysia.

Get rid of the unprofitable, and improve the profitable, a simple lesson to be learnt from the tycoon!

Empee beer’s return

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MP Purushothaman of the Empee Group, who left the beer business two years back due to problems like high costs of refrigeration and power, is now back to what he does best — his beer business. The tycoon will spend the next few years getting into manufacturing pacts with two breweries. One in Madhya Pradesh and the other in Haryana, thus targeting both Central and North India. The reason for his concentration on these regions alone is because the demand for beer consumption in the Northern markets has increased tremendously over the past few years. Also the tycoon had signed an agreement with the UB Group, (to whom he sold his brewing assets) containing a no-competition clause in the South. With that market being out of bounds, the tycoon has few options but to head for the others if a comeback is to be achieved. Many have already declared the tycoon’s decision to come back a silly one, as now the market is dominated by the UB Group and SAB Miller, so there seems very little hope for him.

But nevertheless a 7,000 tonne cane crushing sugar mill as well as a grain-based alcohol plant, (where ethanol will be made from the distillation of fermented grains and contain approximately 10% of water) in Bangalore is also part of the tycoon’s plans. Here again the tycoon feels that his is a good move as grain alcohol is becoming increasing popular due to a shift in the tastes of drinkers. He even expects to double his sales from the present 3 mn to about 6 mn in the next two years. Trying to make up for lost time it seems, but will it work? We’ll have to wait and watch.

Shalimar moves faster

The last we heard of Amiya Gooptu he was busy getting his company Shalimar Paints back into the automotive paints segment. But now he is absorbed in his decorative paints business, after his recent attempts at colour tinting got him good returns. His secret seems to be, to avoid starting form scratch. Instead he believes in acquiring readymade plants from others, which require simpler investments. The tycoon has invested too small in boosting the capacity of his Nashik, Howrah and Ghaziabad plants as well as his newly acquired paints plant in UP.

In April the tycoon will finally be all set to shift his corporate office from Kolkata to Mumbai. This is part of a plan he made last year to strengthen his marketing efforts in the Western region. With the shift, Gooptu obtains for himself a strong presence in the North, East and the West of India.

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Dilip Cherian runs Perfect Relations. He is an economy watcher and tycoon tracker. The people he writes about are not clients. Send your insider dope to dilipcherianexpressindia.com