"Economists were throwing many letters at us -- V, W, X -- all sorts of things to describe the possible
For us, its pretty much been a V," said Birla, the chairman of the group. "It’s been a very sharp recovery, a very huge surprise for all of us."
Birla’s expectations for a rebound echo those of India’s central bank, as some of the nation’s key indicators, including manufacturing, demand for loans and consumer purchases, showed signs of strengthening. The $2.9 trillion economy is set to shrink 7.7 per cent in the year through March, its first full-year contraction in more than four decades, according to government estimates.
The International Monetary Fund forecast an almost 12 per cent gain in gross domestic product for Asia’s third-largest economy in 2021, albeit on a low base owing to the pandemic. Barring a second wave, the "worst is behind us" with India kicking off a vaccination drive against Covid-19, the Reserve Bank of India said in its January bulletin.
"There are signs of recovery in certain sectors," said Sandeep Gupta, managing director at consultancy Protiviti India. Pent up demand, low interest rates and expectations of government spending on infrastructure have spurred some private sector investments, he said.
Grasim Industries Ltd., Birla’s flagship firm, said last week that it was entering the paints business and plans to invest Rs 5,000 crore ($685 million) over three years. UltraTech Cement Ltd. said in December that it will spend Rs 5,477 crore to increase capacity by 12.8 million tons annually while the group’s metals unit, Hindalco Industries Ltd. will spend Rs 7,000 crore to double its aluminum downstream capacity over the next few years.
Just in June last year, Hindalco said it was slowing down its expansion plans, while Novelis Inc., Hindalco’s US-based aluminum unit, also delayed the ramp up of new finishing facilities in Guthrie, US and Changzhou, China, until the second half of the fiscal year to align with demand.
The group, with roots dating back to 1857, has seen strong growth in its financial services, fashion retail, cement and metals businesses, according to Birla. "We are looking to grow very large in these companies," he said, adding that he was open to growing them organically or through acquisitions. "For Aditya Birla Group, the fizz is back."
The traction in other businesses is helping offset challenges in reviving Vodafone Idea Ltd. -- an indebted wireless carrier Birla jointly owns with UK’s Vodafone Group Plc. The local operator has reported nine straight quarters of losses amid intense price competition and faces $8 billion in government dues and has been losing subscribers to rivals.
The Aditya Birla Group
employs more than 120,000 employees across 36 countries and earns over 50 per cent of its revenues from overseas, according to its website.
"The recovery will be a little patchy," Birla said. China could race ahead to surpass European Union this year, while the US, Japan and some countries in Europe are unlikely to bounce back to pre-pandemic levels this year, he said.
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