AI investments must be based on returns; capital allocation becoming difficult: Birla

Kumar Mangalam Birla. File picture.

Aditya Birla Group Chairman Kumar Mangalam Birla on Tuesday said the investments in artificial intelligence (AI) should be based on the returns they can generate rather than rushing into adoption with a sense of "FOMO (fear of missing out)", according to news agency PTI.

Companies looking at return on investment

The Group will look at investments in AI "a little more gradually" than what it had envisaged a year ago, he said, while adding that there is a shift from an "AI arms race" for compute and talent to returns on the investment in AI.

"A year ago, we probably thought that AI was a monster sitting there on the last row, and it would eat me up by the time it got here if I didn't know everything about AI," he said at Bloomberg New Economy Forum 2026.

"I think that we're going to take it a little more gradually than we thought a year ago, because it is a large investment. And I don't think we need to act out of a sense of FOMO," Birla said.

With the apprehension waning, he said companies are assessing on what AI could deliver and the returns they could earn after investing in it.

Group assessing impact of AI on productivity

He pointed out that AI-based applications would vary across businesses, with the technology helping improve customer interactions in some areas, manufacturing efficiency in others, and net interest margins in financial services.

"Also for a company like us, which is multi-business, there is no one cap fits all," he said. He added the Group was assessing the impact of AI on the productivity of the entire organisation.

He pointed out that there was excitement around blockchain earlier, and the Aditya Birla Group had adopted the technology in its fibre business to improve traceability in the textile supply chain. He further said consumers and garment manufacturers can scan a label to trace the forests from which cotton or viscose was sourced, he said.

Capital allocation becoming difficult

As companies continue to invest in existing operations while responding to new business opportunities and demands, Birla said capital allocation had become increasingly difficult. He further said the geopolitical tensions and trade uncertainties have an impact on the business.

"You can't stop growing...You either grow, or you go down. You can't stay in a state of equilibrium," he said.

"When I read about a significant global event in the newspapers, I can be sure that it will impact us somewhere," he added.

He further said organisations needed to keep employees motivated, encourage collaboration and facilitate learning across businesses to navigate through an increasingly complex business environment.

Aditya Birla Group has presence in 41 countries across six continents and operates in more than 20 sectors. It employs over 2.27 lakh people and has more than 600 manufacturing units.

For FY26, it had reported a revenue of around USD 72 billion and earnings before interest, taxes, depreciation and amortisation (EBITDA) of USD 8.5 billion.

Manufacturing business aims to among the lowest cost producers

On manufacturing, Birla said the group's focus was on strengthening the underlying competitiveness of its businesses through scale, cost efficiency, stable operations and continuous training, according to PTI.

He said the group's manufacturing businesses aim to be among the 10 per cent lowest-cost producers in the world.

(With inputs from PTI)