G d birla

A Presentation on “GD BIRLA” (10 th April 1894 - 11 th June 1983) GD BIRLA (1894-1983)

Why GD Birla; Why not some new enterpreneur??
Its because the similarities in India just before and after independence and India in 21 st century is far greater than b/w Indian in eighties and now..
1)Competition
2)Government
3)Technology

GD BIRLA - Life
GD was born on 10 th April 1894, in a small shekhwati village of Pilani in Rajasthan.
He was a school drop out. Was sent to Bombay to his elder brother to learn business when he was eleven.
Became one of the most successful enterpreneurs of his time.
Was Awarded Padma Vibhushan in 1957.
Died in London on 11 th June 1983.

The Growth of the Empire
The Birlas Worth ` 20 lakhs in 1914
By the end of First World War(1918), the figure quadrapled to ` 80 Lakhs
By 1939, their assets had risen to ` 4.85 crores and they were thirteenth largest managing agency firm in India.
During the thirty-year period between 1939 and 1969, Birlas Shot up from thirteenth place to second. Their assets had increased to ` 456.40 Crores.

Over the next decade they doubled this figure and in 1977 they overtook JRD to become India’s number one business house.(1065 crore as compared to 975 crore.)
By the time GD died in 1983, the aggregate assets of the group’s 200 odd companies had crossed ` 2500 crores and sales were over ` 3000 crores.

The Turning Point
Jugal Kishore, his elder brother in Calcutta had established a name for himself as a daring and skilful speculator in opium, silver and other commodities. At the age of 16, GD joined him.
But the collapse of Indian Specie bank induced an aversion for speculation in him and he decided to become a jute broker instead.

At the age of 16, thus GD started an independent business as broker. And thus began his contact with Englishmen, who were his patrons and clients. He learnt business methods, their organising capacity and other virtues.
But he also suffered their racial arrogance also which nurtured political interests in him.

Learning the tricks
Before setting the shop, he needed to learn the ropes. He went to Narsi Bhatia, a leading Marwari broker to Rallis Brothers, one of the Calcutta’s largest managing agency firm,with interests in jute, railway and a host of other businesses. Realising the potential of GD in the field, Bhatia denied to teach him.
Mahadev Somani, his father in law and a registered agent taught him these skills and let him used his name to buy anything. Thus formed the G.M. Birla company in 1911. ( G for GD and M for Muralidhar Somani, his brother in law).

Right Place at Right Time in Right Business
With the outbreak of WW-I in 1914 and the introduction of trench warfare in Europe, there was a huge demand of jute sandbags and speculators swung into action for anything that has to do with the jute in both ready and future markets. Most major jute shares tripled their value b/w 1915 and 1921.

The Rhoda Cartridge affair(1916)
But in 1916, GD Birla was caught in a terrorist activity and was on run for almost 2 years. But his brother in law Mahadev covered for him then.
After that, he got serious in business and muscled into jute exports. For that he needed an export office in London. Instead of going himself, he sent a representative since he knew the Britishers attitude. And thus in 1919, Birla Brothers Ltd was established with initial investment of ` 50 lakhs. Various listings in Calcutta edition of Commerce , a finance journal show huge profits. By the close of twenties, he was among top 3 exporters of raw jute.

With this he operated along the entire jute chain from beginning to end. But there was only one missing link- “Conversion of Raw jute into gunny”.
He wanted to invest his profits from war to make this transition from trader to industrialist. Jute technology was fairly easy. He convinced his brother easily,tried hard to convice others to place their faith in him and buy shares of Birla Jute. He managed to collect enough money to order machinery and buy land for the plants.

Hurdles
But when it looked that the problems were solved, setbacks started. He was storming a monolpoly. There would be a war.
Imperial Bank refused loan.
Transport charges for river traffic on the Hooghly suddenly shot up.
Whenever he would buy some land, the English and Scots would buy land all around to prevent him.
Exchange rate suddenly changed and the price of the machines ordered from Europe rose considerably. They became more than double.

He decided to sell the factory to Andrew Yule, the Scottish businessman, who had the premier managing agency firm with large number of jute mills. It was a bitter pill for him to swallow as Yule had lead the charge against him, yet there was little he could do.
But at the day of deal was supposed to be finalised, he was assaulted and ridiculed as foolish Indian. In the heat of the moment, he cancelled the deal.
His brother, Jugal Kishore, then supported him and told him not to worry about money but to run the mill as efficiently as he could.
Thus, with his efforts, Birla jute earned profits and it cracked open the door for Indian businessmen in jute processing.

The Cotton Club
During WW I, he bought a small cotton mill in partnership. He worked very hard and spent upto12 hours a day at the factory premises, inspecting each machine diligently, scrutinising entire accounting. This success provided the kind of encouragement he needed.
Meanwhile he was also trying to rejuvenate a run down cotton textile mill in Delhi. So most of 1919 saw him shuttling between Calcutta and Delhi. During and after this takeover, his management acumen sharpened.

Three Principles
Once a major decision is made, it should not remain pending.
The cotton mill was cheap and he needed industrial experience. He could have lost ground if he had waited for the prices to fell down.
It is preferable to build a factory rather than buy one.
It was easier to manage his new jute mill in Calcutta than to nurture small cotton mill in Delhi.That’s how they developed the reputation of being greenfield builders.
Select Reliable people, train them in your own way and then trust them to get on with their job

From Business To Politics
He established Indian Chambers of Commerce and announced its objective as to speak for Indian business and political interests.
Later, this success encouraged him to push for a rival to Assocham which lead to formation of FICCI which remained the apex organization of Indian business and provided an interface between Business and Government for almost half a century.
In 1921-22, he was a member of the Fiscal Commission.
GD Birla was elected a member of legislative assembly in 1926.
He also represented Indian business in Round table conferences.

Thus during 1922-1931, there was not a single Birla floatation. The only activity was acquisition of Hindustan Times in 1924.
The plus point of this inactivity was capital accumulation.
In 1931, after resigning from legislative assembly, he focused again on business and his first step was entry into sugar industry. He built 4 mills in cane rich areas of Bihar and UP.
Birla sugar mills soon became the India’s third largest group in sugar industry.
He learnt two lessons from this:
1) the need of entering constantly into new businesses
2)Whenever he entered any business, he would try to became the biggest in this, however long it takes.

The biggest Birla venture in the next decade (thirties) was Orient Paper. Work on plant began in 1936 and German machinery was used. After the World War II, its capacity became 3 to 4 times and later it became India’s second largest Paper company.
He also promoted Texmaco(1939) and Cimmco(1945) in response to acute shortage of machinery faced by cotton mills during WW II. Later these companies also diversified into railway wagons, boilers and other industrial equipment.

The Forties and Fifties
There were too many people in Birla family to support him. While his younger brother, BM, looked after Diversification into engineering, his elder brother, RD, was engaged in expanding the group’s textile mills.
Lots of companies like Indian Tools, National Engineering, Orient General Industries, Hind Cycles, Baby Hindustan (cars) came up in this period.
The group diversified into ball bearings, fans, non-ferrous metals, rayon. Plastics, plywood, tea, banking (United Commercial Bank in 1942), insurance companies etc.

Rayon and Grasim
Artificial Fibre was untried in those days. But far-sighted GD saw its future because of its toughness and low price.
Thus came Grasim, in August 1947,at Nagda, a village 50 kms from Ujjain.

Project Hindalco
Under the first five year plan of Independent India, there was a project of construction of dam at Rihand. Planners found that 50 MW of power would be wasted and thus a proposal was sent to GD to create a factory there. The timing was perfect. GD was mulling over pros and cons of an entry into Aluminium.
In Collaboration with Kaiser Corporation(an American metallurgical firm) Hindustan Aluminium Company Ltd was formed in 1958.
The capacity of the plant was 20000 tons per annum to which UP govt provided 55MW electricity at the cost of 1.99 paise per second for next 25 years.
The project cost was about ` 14 crore and the commercial production started in 1962.

Soon the capacity was raised to 40000 tons, but the Govt. was unable to provide additional power required abd asked Hindalco to arrange that itself.
Thus came Renusagar power with 2 turbo generators of 67.5 MW in 1967, 40 Kms from the plant.
The cost of this power plant was very huge, about ` 20 Crores. But GD gambled for it for 2 reasons:
1)He didn’t want to depend on Railways
2)The size of other Aluminium plants in India was very small as compared.(2500 tons of Indian Aluminium Company and 2000 tons of JK Singhania group.)
He followed a consistent expansion policy-120000 tons in 1974 and was in middle of expanding to 150000 tons when he died

Top Thirteen pithy tenets
A mistake is blessing if you learn from it and a curse if you don’t.
Hard work never killed anyone.
Time and tide wait for none, opportunities never come again.
He alone is wise who can discriminate between the necessary and the unnecessary.
Do today what you propose to do tomorrow; do now what is meant for today.
Early to bed and Early to rise makes a man healthy, wealthy and wise.
He who thinks he knows everything, knows but little.

Contd..
Miss no opportunity to do good to others.
Real pleasure lies in giving not taking.
Life is like a sea of milk. The more you churn it, the more butter you get from it.
Forget the past, take care of the future.
Transcend your ego and let your speech be pleasant.
To err is human, to forgive is divine.

To sum up:
1)He had clearly defined principles as already stated.
2)He was a very hard working, meticulous man.
3)He was a prompt decision maker.
4) His far sightedness and correct prediction of market was absolutely remarkable.
5)His refusal to think in traditional way helped the group many times to earn huge dividends.
6)Not losing the grounds even in critical conditions.
7)Great leadership skill and full belief in team.
8) Moderate Risk Taker: Dealt with middle ground products. Extremely Cautious and Calculated Risks.

A philanthropist
He and his family built temples, hospitals, schools and colleges all over the country that count among the landmark in many cities.
Built a hospital in Bombay that remains one of the best in the city, provides advanced treatment and remarkably still, 80% of its beds are free.

Established BITS, Pilani as one of the India’s finest complexes in higher education with the help of MIT, USA.
As President of Harijan Sevak Sangh, he fought for the rights of untouchables

REFERENCES
“ Business Legends’’ by Gita Piramal
The life and times of G.D.Birla by Medha M.
Wikipedia, en.wikipedia.org.in
Calcutta.yellowpages.com
Theoriginof.com
Official Website of Aditya Birla group

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G d birla

by Peeyush Agrawal

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