CALCUTTA, Feb 10: The various Birla factions have begun discussing the feasibility of jointly marketing the cement made by group companies, probably under as "mega" brand. The various factions together account for nearly 25 per cent of India'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 said 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 has become urgent in a market wherevolumes 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 Birla 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 M P Birla group's Birla Corp leads the clan with a 15 per cent market share, followed closely by B K Birla's Century Textiles (14 per cent), S K Birla's Mysore Cement (nine per cent) and A V Birla group's Grasim (six per cent).
Industry-wise, 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 state of Madhya Pradesh, Grasim, Century Textiles and Mysore Cement enjoy market shares of 21 per cent, 10 percent and eight per cent respectively while ACC and Larsen & Toubro have market shares of 13 per cent each.
On an all-India basis, nearly 27 per cent of all the cement sold comes from the Birla companies. Taken separately, however, ACC is the largest cement seller with 13 per cent, followed by L&T with eight 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.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
