Moneycontrol PRO
you are here: HomeNewsBusiness

Podcast | The business of family: Building with the Birlas

In common parlance, the phrase “Tata Birla” evokes images of unimaginable wealth. It did decades ago; it does today.

May 14, 2018 / 07:04 PM IST

Kumar Mangalam Birla, chairman of Aditya Birla Group

Our journey with you and the great Indian business families continues with yet another story of a grand old family that exemplifies Indian aspirations. The common thread in all the stories we have told you so far is unmistakable. In all of them, you will find continuity and growth, adherence to tradition, and relentless aspiration – to do better for themselves, and in the process, build a better and more self-reliant India. Nationalism, with a global perspective. And lastly, not just business acumen but also trusteeship.

Today we will talk about a name that represents all of the above and also a certain resonance in the popular imagination. In common parlance, the phrase “Tata Birla” evokes images of unimaginable wealth. It did decades ago; it does today. We have already told you the Tata story but the Birlas too played a key role in India's emergence as an entrepreneurial power to reckon with. And the Indian mind equated both brands with an impossible dream and also its fulfilment. The roots of the term 'Tata Birla' can be traced back to a plan that was developed by a group of industrialists in 1944. It was termed as the Tata-Birla plan and went on become the blue print for independent India's first five year plan.

In the Birla story too, as was the case in the business empires that were founded in the era before independence, the twin strains of nationalistic fervour and ambition were intertwined as well. All that and more, we will find out on yet another edition of our ongoing series on the business of family. My name is Rakesh, this is Moneycontrol. And you are listening to our latest spotlight on the business of family – building with the Birlas.

How it all began

Let’s start at the very beginning – a very good place to start. When you read, you begin with A B C; when you start the story of great Indian Business Families, you begin with Tata-Birla-Ambani.

Today, it’s B for Birla. The story of The story of the Aditya Birla Group began in the 19th century in Pilani, Rajasthan.

It was here that a pioneer named Seth Shiv Narayan Birla began trading in cotton and through the tumultuous 1850s, the business thrived. This was the time, when Ahmedabad was a key railhead in servicing trade. It was the conduit via which goods would be sent to Bombay and then were exported to England and other countries. Many cotton ginning units were set up around this time in Ahmedabad, to clean the cotton for export and Shiv Narain Birla sensed an opportunity. He was among the first traders to participate in the cotton trade. The initial fortune however came from another insightful decision. Britain at the time was trading opium with China and started cultivating poppy in India. Shiv Narain and his adopted son, Baldeo Das Birla, used this opportunity and even engaged cargo ships in partnership with other tradesmen to trade opium with China.

In 1887, Baldeo Das moved to Calcutta to set up business. He was succeeded by four sons– Jugal Kishore, Rameshwar Das, Ghanshyam Das and Braj Mohan.

The next significant surge in the Birla empire came from Ghanshyam Das or GD Birla who established the GM Birla Company in 1911. He traded primarily in jute. When the First World War began in 1914, the company benefitted from the increased demand for jute sacks. Hence, a mill, Birla Jute was opened.  Along with several cotton mills, he also opened many sugar mills.
An important milestone was that Hindustan Times was co-founded by GD Birla in 1924 and fully acquired by him in 1933. Hindustan Motors was established in 1942.

As the 20th century unfurled, GD Birla pushed the envelope a bit more and founded businesses also in aluminium, cement, and chemicals.
This was also a time when nationalistic fervour against the British was at its peak, and as a close confidante of Mahatma Gandhi, GD Birla blended entrepreneurship with activism. He had the privilege of representing India at the first and second round-table conferences in London, along with the Mahatma. In time, Birla house became the hub where legends at the helm of the struggle for freedom often met to brainstorm.

Outside of the involvement in activism, the tradition of Birla philanthropy had already begun in earnest in 1900, when the Birlas initiated educational charities in Kolkata and in Mumbai in synergy with another pioneering entrepreneur Jamnalal Bajaj. In 1918, the family established the first high school in Pilani which evolved into BITS Pilani, a prestigious institution which now has branches in Hyderabad, Goa and Dubai.

The osmotic transference of values

The osmosis of values always begins from the top and Ghanshyamdas Birla's socially enlightened entrepreneurial acumen was inherited by his grandson Aditya Vikram Birla, who then went on to make the company's brand name global without losing touch with the vision of the founding fathers.

In a letter, Ghanshyam Das is supposed to have advised Aditya in these words, "eat only vegetarian food, never drink alcohol or smoke, keep early hours, marry young, switch-off lights when leaving the room, cultivate regular habits, go for a walk every day, keep in touch with the family, and above all, don’t be extravagant.” He even advised his son Basant Kumar and we quote him, to 'never utilize wealth only for fun and frolic,' to 'spend the bare minimum on yourself,' and to deride 'worldly pleasures.'

We don't know if the advice was followed meticulously but Aditya embodied the best of his forefathers – their foresight, tenacity and nationalism in their purest sense.

It was Aditya, who as a 24-year-old began to dream of international success much before Indian business houses began to go global. Astutely, he looked at the open markets of  South East Asia and set up production bases there 22 years before economic liberalisation was initiated by the former Prime Minister, Mr. Narasimha Rao, and the former Union Finance Minister, Dr. Manmohan Singh. In an unprecedented sweep, he set up 19 companies in countries like Thailand, Malaysia, Indonesia, the Philippines and Egypt.

His companies went on to become the world's largest producer of viscose staple fibre, the largest refiner of palm oil, the third-largest producer of insulators and the sixth-largest producer of carbon black. In India, the Birlas acquired the status of the largest single producer of viscose filament yarn and oversaw prolific production of cement, grey cement, and rayon grade pulp. The Group also became the largest producer of aluminium in the private sector, the lowest first-cost producers in the world and the only producer of linen in the textile industry in India. When Aditya passed away in 1995, the Group's revenues had crossed Rs.8,000 crore globally, with assets of over Rs.9,000 crore, comprising 55 benchmark quality plants, an employee strength of 75,000 and a shareholder community of 600,000.

His lasting legacy though is the respect that the House of Birla enjoys as the first Indian brand to go global. In time the company has only consolidated its strengths and contributed enormously to nation building.

In fact, former Prime Minister , Dr. Manmohan Singh, had this to say about Aditya Birla, "In any Hall of Fame, among the best and the brightest of the century, one name that would shine in resplendent glory is that of Aditya Vikram Birla. He belonged to that rare breed of industrialists who achieved so much in so short a span of life.  He was a great visionary who himself set out a bold, uncharted path that proved that Indian businessmen are second to none when it comes to creativity and adventure. That Indian industry can compete in the face of all odds. The lives of great men, leave behind footprints on the sands of time for others to follow. Aditya Birla's was a great life. His vision was to help build a new India. An India free from fear, free from want and free from exploitation."

The family tree expands

Today the different branches of the Birlas are financially independent even though the family name represents a unified front. The Aditya Birla Group today operates in 40 countries with more than 120,000 employees worldwide.

The next generation of the Birla empire is now identified with Kumar Mangalam Birla who is the Chairman of the Aditya Birla Group. A commerce graduate from Mumbai University, Kumaramangalam Birla studied to be a Chartered Accountant and then acquired an MBA from the London Business School. Interestingly, he never wanted to become a CA but went along with his father's wish. The experience trained him to keep personal emotion out of the disciplined regimen of what needs to be done. He proudly shared with an interviewer once that in 20 yearshe has lost his cool perhaps just three times at work. Work, he has come to believe can do without displays of unwieldy behaviour. Dissent is not an issue with him, indiscipline is.

He took over as Chairman of the Group in 1995, at the age of 28, after the demise of his father Aditya. And in keeping with the family tradition, he has grown the empire exponentially and expanded its scope further. His focus has been on growth, on building meritocracy and enhancing benefits for stakeholders. In the process, the Group’s turnover has increased from US $2 billion in 1995, to US $43 billion. He has also made 36 acquisitions in 19 years in India and globally and this is the highest number by an Indian multinational in India.

Kumar Mangalam Birla like his predecessors, has made the most of the changing economic climate. He commented once," In 1991, the government unleashed the power of India and created a partnership between itself and industry. As a result, India has emerged as an economic success story, and that is a matter of pride for all of us." He of course, had a lot to do with this resurgence.

His acquisition of Novelis, a global metals major, in 2007, was the second largest acquisition ever by an Indian company. Then the subsequent acquisition of US based Columbian Chemicals,  the world’s third largest carbon black manufacturer positioned the Group as the No. 1 player in this sector.

Over the years, the Aditya Birla Group has been ranked fourth in the world and the first in Asia Pacific in the ‘Top Companies for Leaders’ study 2011, conducted by Aon Hewitt, Fortune Magazine and RBL (a strategic HR and leadership advisory firm). The Group also topped Nielsen's Corporate Image Monitor 2014-15 and emerged as the Number 1 corporate, the 'Best in Class', for the third successive year.

Alongside these advances, Kumaramangalam has continued to adhere to the idea of trusteeship and has supported  welfare driven activities not just in India but also in Thailand, Indonesia, Philippines and Egypt.

In India alone, the Aditya Birla Group is engaged in working with 5,000 villages, in the process touching the lives of over  7.5 million people annually with projects focusing on health care, education, sustainable livelihood, infrastructure and more. The Group runs currently 56 schools which educate 46,500 children. Of these, over 18,000 children receive free education. Additionally, over  100,000 youngsters  are impacted by bridge educational programmes and vocational training. 20 hospitals tend to more than a million villagers.The Group has also partnered with Columbia University and established the Columbia Global Centre’s Earth Institute in Mumbai to research sustainable development. Some other notable initiatives by the family include:

Birla Planetariums
Aditya Birla Memorial Hospital
Birla Institute of Management Technology (BIMTECH), Greater Noida
Birla Global University Bhubaneswar, Odisha
And K. K. Birla Foundation, established in 1991 by Krishna Kumar Birla, which gives out annual awards like Saraswati Samman, Vyas Samman and G.D. Birla Award for Scientific Research.

Like his grandfather, Kumaramangalam also believes that  money isn't something one can solely live for. He concedes that he is not as frugal as the previous generations of Birlas but also adds that beyond his passion for art and travel, he does not need money for much else. But to those who are striving to build empires from a scratch, he advocates a mindful creation of wealth because without that you cannot fuel your dreams. But yes, in his book, dreams come first. Then finance. And then sustenance to the point when the creative and financial investments begin to fructify.

He is also grateful that the next generation of the Birlas are branching out beyond their legacy. Birla and wife Neerja have three children, daughters Ananyashree and  Advaitesha and  son Aryaman Vikram. Aryaman loves cricket and Ananyashree runs her own microfinance organisation, meaningfully named Svatantra that denotes freedom in more ways than one. She has reached out to about 65,000 women in Maharashtra and Madhya Pradesh at last count and her father could not be prouder.

From the idealism of Swadeshi and Swaraj to the self-assurance of Swatantrata, the Birlas indeed have come a long way.

Moneycontrol News
first published: May 14, 2018 06:41 pm