Why Kumar Birla's India investments are still on hold

If you want to know which way the investment winds are blowing, you can’t get a better articulation on it than from Kumar Mangalam Birla, boss of the Aditya Birla group.

In March 2013, Birla said investing abroad made more sense than investing in India. “Country risk for India just now is pretty elevated and chances are that for deployment of capital you would look to see if there is an asset overseas rather than in India. We are in 36 countries around the world. We haven’t seen such uncertainty and lack of transparency in policy anywhere,” he told Bloomberg TV in an interview then.

Three months later, his views were not any more rosier on India. “We have large capex under way, but having said that, I will wait for some time to see how the economy is before putting more large investments in the ground,” Birla had said in June 2013.

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[caption id=“attachment_1212039” align=“alignleft” width=“380”]  Kumar Mangalam Birla[/caption]

Today, six months later, Birla has changed his tune to something more positive, but the purse-strings don’t seem to opening much anyway. In an interview to The Economic Times, he said he was seeing some “green shoots” in the economy, but he gave little hint that he would finally start putting some money into new ideas and projects.

The subtext is one of wait-and-watch, not rush to investment. Here’s what he said:

Despite the green shoots, Birla said that “large investments are not apriorityfor us.” So, the mood his better, but no money, sorry.

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Birla was not gung-ho about new forays either. When asked if he was looking at new areas, he debunked the idea: “It’s not a good idea to look for new frontiers, especially when you haveopportunitiesin yourexistingbusinesses… I don’t see the need for us to enter into new businesses.” So, no new businesses either.

Thirdly, is Birla planning to invest more in existing businesses? Make your own conclusions from this statement on the retail business, where he is looking for a foreign partner. He said: “We would be looking at learning retail processes, retail systems, retail driven profitability, optimisation and getting financial capital.” In short, he wants the partner for knowledge and money (“financial capital”).

Birla ain’t going shopping in the telecom sector either, where his firm Idea is doing well and new M&A guidelines have been announced by Kapil Sibal to enable consolidation in the industry. But Birla said: “The possibility of being a consolidator- I don’t see that very high.”

Last, Birla was clear that the split between foreign and domestic business would be half and half. In short, he would prefer to hedge his bets on India.

The bottomline: like every other businessman, Birla is waiting to see what will happen in 2014 before committing himself to investing more in India.