The Life And Times Of G D Birla

Updated: Mar 8 2003, 05:30am hrs
At a time when business families are battling for survival, The Life and Times of GD Birla by Medha M Kudaisya and published by Oxford University Press outlines rich lessons for groups and business leaders that are in the throes of change. Indeed, the book is not only a rare insight into the business life of the legendary leader, but also of the social, political and family aspects of one of the titans of the twentieth century. Even though there have been other books that deal with the life of Ghanshyam Das Birla, this book is based to a large extent on the exclusive GD Birla Private Papers that the author was able to secure. While the entire book spans the life of Mr Birla, his rise in the forefront of the Marwari business community and as a spokesperson of the Indian business community, his involvement with the freedom movement and in mainstream nationalistic politics, what will be of greater relevance to the business leaders today will be the chapter on A Crucial Decade For The Family. Thats because we will find that this chapter brings out nuggets of instances and information on Birlas views on the management and role of women, ethics and values, succession planning, strategy for diversification and focusing on core business and issues of corporate governance. Indeed, managers and leaders will surprisingly find that a number of these issues hold contemporary relevance. Excerpts:

A Crucial Decade For The Family
Birla could play his new public role only because of the strong support network which he enjoyed from within the larger family, especially from his brothers Rameshwardas and Braj Mohan. Birlas most active years in public life were also the most momentous for the family. The children were at a crucial ageall in their early teens were married and the boys were inducted into different branches of the family business. After 1926, following Mahadevis demise, the children were placed under the charge of different branches of the family in Bombay and Calcutta. Birla tried hard to keep track of how they were doing. However, as his public life increasingly grew more hectic and his business commitments multiplied, he was required to spend long periods travelling within the country and to the UK. In view of these circumstances Birla increasingly realised that he could not provide the care which his young children needed and had to depend upon the help of his brothers and their wives.

(L to R) Jugalkishore, Rameshwardas, Ghanshyam Das and Braj Mohan
Responsibility for the children came to be shared by Rameshwardas and Braj Mohan. Rameshwardas lived at Birla house on Mount Pleasant Road in Bombay while Braj Mohan was based at Birla Park, the familys Calcutta home. Birla, as we have noted earlier, had moved to Delhi in 1929 along with Jugalkishore. There were five running establishments which the family maintained by the late 1920sin Banaras, Delhi, Bombay, Calcutta and Pilani to which periodic visits were made. Yet, the geographical distance was not allowed to upset the familys cohesion and solidarity. Over the years, the brothers had assumed well demarcated roles within the family. After Baldeodas retirement, Jugalkishore donned the mantle of the patriarch and his views were considered binding on all. While keeping a sharp eye on what he saw as important family and religious matters, Jugalkishore, however, remained uninvolved with the daily concerns of caretaking and upbringing. Birla could take an interest in the children only when critical decisions were to be made. Rameshwardas and Braj Mohan looked after day-to-day socialisation, education and apprenticeship. Birla could leave all these matters to them because of the manner in which the family functioned.

Business Grooming
An essential element of the family tradition was the initiation and apprenticeship of sons into family business and their grooming for future leadership. Sons were initiated into the business once they finished schooling. Birla and Braj Mohan took active interest in their apprenticeship.

The new apprentice typically underwent initial training for approximately a year. In this period he was put under the charge of a trusted senior manager who regularly reported progress to Braj Mohan and Birla. Having lived with Braj Mohan through their childhood years, the boys found it easier to work with him and felt intimidated if they had to deal with Birla at the work plan. Thus Lakshmi Niwas started his apprenticeship in the jute trade with Braj Mohan Krishna Kumar was initiated into the sugar mills in the late 1930s. Basant Kumar initially began with stock operations and then joined the Kesoram Cotton Mill. Birlas nephews Ganga Prasad and Madho Prasad started out with shipping and jute respectively. Senior managers played a critical role during the apprenticeship years. Basant Kumar, for example, was placed under the charge of Sitaram Khemka, a trusted kinsman and employee. An essential component of the training was in learning financial and accounting matters. Keeping accounts, maintaining cash books, ledgers, vouchers, bills and outstanding accounts, reconciling bank records were part of this preliminary training which also included preparation of duly reports, parta, monthly and annual income and expenditure accounts, sales procedures. Such training continued for as long as it took them to single handedly prepare the entire cash book, balance the receipts and payments, meticulously account for every paisa. This could sometimes even take up to a year. Thereafter they were attached to other departments such as sales and manufacturing.

Perhaps more significant than learning these kills was the inculcation of the familys code of business in the young initiates. This was not difficult to imbibe as it was merely an extension of the code of restraint which they had been taught at home. They were taught that the dignity and status of the family within the community and in the industrial world were the most important. They were repeatedly reminded that the family name must not be dishonoured. It didnt matter, Birla told the younger generation as they took their first steps in the world of business, if we should expand slowly, but we should proceed with abundant caution. The reputation of the family was most important since the community had reposed full faith on us. Even if a single enterprise failed, the blame would fall ... on the entire Birla family.

There were certain fundamental rules which were always to be followed. Foremost was the need to keep a tight control on the finances by monitoring daily financial performance achieved through the parta system which was followed in all Birla enterprises. This entailed the calculation of cost, output and profit on a daily. Their training emphasised an almost obsessive concern with financial performance and control which characterised the Birla business philosophy. Major effort was to go into financial and commercial matters. Each parta statement was looked at on a daily basis and sometimes up to ten to twelve days of each month were spent in examining the accounts of the previous month. Birla himself insisted that daily parta statements from each of the mills under his charge be sent to him each day wherever he might be.

Other principles which were passed on to the next generation related to the extended family. Complete loyalty was expected from senior employees. They were considered to be a part of the extended joint-family staff. Senior employees inevitably came from the Marwari community preferably from the Maheshwari subcaste. Many of them also had a Pilani connection and had spent long years with the business. They were often indebted for help rendered in personal affairs. A prime example was Durge Prasad Mandeliacalled Chachoji by the younger generation. He had started his career with Birla at the age of 14 and had risen to become a key business associate. The new generation was similarly encouraged to select a team of their own and were encouraged to recruit sons of senior employees. This ensured stability and loyalty which was sometimes rewarded by giving away of agency and distribution rights. Thus from within the community satellite groups were created which strengthened the business network, provided managerial talent and enhanced trust.

Once their apprenticeship was completed and real business responsibilities started the younger generation were given charge of the units where they had been trained. By 1940, Birlas three sons and nephews had completed their initial training and taken over individual charge of different factories. Thus Lakshmi Niwas was looking after the New Asiatic Insurance Company and had opened a starch unit in Rangoon. Madhav Prasad had taken charge of the Birla Jute Mill. Basant Kumar had been elevated to become the chairman of the Kesoram Cotton. Krishna Kumar had a number of sugar mills under his control. Ganga Prasad too had begun to take responsibility. It was only Gajanan who had been left out of these business endeavours.

While the new generation had taken charge of different units, Birla and Braj Mohan continued to keep a watchful eye on their progress. They had to be consulted before any major investment decisions were made. As Basant Kumar recalls his early days in the family business. I did have to approach Kakoji for permission whenever I wanted to raise fresh capital. Without his advice and clearance, I did not raise even Rs 50 lakhs from the market. Diversification plans were discussed carefully with the elders and had to be approved by them. Certain areas of business were considered taboo such as the hotel business because it involved drinking and dancing which was not in keeping with the austere tradition of the family.

As they expanded their horizons, the younger generation knew that the family tradition had to be adhered to. For example, in 1938. Basant Kumar started a new company, Kumar Chemical and Pharmaceutical Works Ltd., for the manufacture of pharmaceuticals. He made a substantial investment of over rupees two and a half lakhs and hired a foreign expert from Hungary to help set up the new enterprise. When his plans were well advanced, Jugalkishore was horrified to learn that the manufacturing process would involve the use of animal glands to produce hormone-based medicines. Uncle and nephew argued over the issue for over two months. However, Jugalkishore remained adamant and Basant Kumar ultimately had to give in and abandon the project.

By the early 1940s, the Birla brothers had the satisfaction of seeing the next generation take up business responsibilities. Except for Gajanan, all other sons had successfully completed their apprenticeship, and moved easily into the roles earmarked for them in the business empire. This was welltimed as the business was poised for unprecedented growth thanks to the economic opportunities thrown up by the outbreak of World War II in 1939.