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No plan to acquire cos with global supply chain: Kumar Birla on protectionism & Covid

Birla conglomerate has acquired around 40 companies in past 25 years but group has changed its strategy now. It wants to focus on creating regional strongholds to avoid uncertainty in increasingly divided world

Aditya Birla Group chairman Kumar Mangalam Birla Aditya Birla Group chairman Kumar Mangalam Birla

The $46 billion Aditya Birla Group has no plans to acquire companies with global supply chain in future as Covid-19 pandemic has changed the dynamics of doing business amid growing protectionism, says chairman Kumar Mangalam Birla.

During the Qatar Economic Forum, the 54-year-old businessman said a reset has happened as the world is faced with the worst pandemic and countries resort to protectionism.

"We wouldn't look at a company or a business where you source in one corner of the world and sell in another corner of the world," Birla told Bloomberg.

The Birla conglomerate has acquired around 40 companies in the past 25 years but the group has changed its strategy now. It wants to focus on creating regional strongholds to avoid uncertainty in the increasingly divided world.

Also read: Indian economy normalising after Q1 slump; growth potential intact: Kumar Mangalam Birla

Birla said that even cross-border mergers and acquisitions have a "strong element of regionalisation".

China's rapid rise in the world economic order and the pandemic have exposed vulnerabilities in the global supply chain. This has triggered all economic superpowers to make changes in their macroeconomic policies. This has also created problems for multinational conglomerates and they have to adapt to the new normal.

Birla said all companies are formulating different policies as they plan to create regional champions. The business giant believes companies need a "sharp dimension of regionalisation" even to realise global dreams.

Also read: Vodafone Idea crisis: 'Will shut shop if we don't get relief,' says Kumar Mangalam Birla

That is why, Birla thinks, his conglomerate is looking at "regionalism" as a very big theme.

He said the Birla group wants to pivot towards creating a global business house rooted in local economics. The one that believes in creating "regional hubs, regional presence, regional employment, and catering to regional demand".

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