Birla family

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Birla Family

The Birla family is one of the foremost business houses in India. Their businesses vary from commodities and textiles to automobiles and telecom. The founder of the Birla Group was Baldeo Das Birla, a member of the successful Maheshwari Marwari community from Pilani, in the westerly state of Rajasthan. He moved to Calcutta to set up the family business during the late nineteenth century, and with it established close ties to the freedom movement of the time.

The Birla's are known for their work and support of the nation during the freedom struggle, and the family were close friends of Mahatma Gandhi. Even today, the Birla name is considered synonymous with wealth, dignity and power in India.

The presitigious Birla Institute of Technology and Science was founded by them.

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The Birlas created the empire pretty much under a protective environment of closed door economic policy of the Indian Government (Govt). They controlled the businesses basically as “use the technology till it runs down and then import a new one”. They were very successful at that, because there was no competition; the businesses were very much for those who could afford the license.

As such, the Birla management is archaic with hardly any professionals; the top management lacks technical background and consists mostly of accountants, thus lacks the combination of financial and technical vision. To add to this the management is by nepotism, if you were/are not a marwadi, and again not from Jhunjunu or Pilani you could/cannot not go anywhere in the company. This was typically the dominant management style during the license raj (rule) and has not changed much.

A classic example is the MP Birla group. The entire plant was on strike for several years precisely due to unprofessional management; the workers lost everything, their savings were washed away as they could not sustain the lock out. The Birlas denied the few lakhs that the workers were asking and ultimately lost several thousand crores to the Lodha family. This management was a good example of how removed they are from the people. The people (all skills) that made the organization were not considered as an asset, the management style (full of nepotism authoritarianism) was responsible for such a disaster.

Somehow, the Birla management has yet to learn what the Ambanis learnt about professional management in one generation. It is surprising to see that hardly any money is spent on R&D and almost no professional engineering exists in a plant. There are no standards nor design practices. The evidence of this is shown in their failure at running a refinery; it will take the Birlas many years before they turn to professional management and hi tech. Their archaic style is deeply ingrained in the successive Birla generations and unless some of the Birlas younger generation spend time as interns for ten to fifteen years in corporations of the likes of ExxonMobil or Shell such a change is remote.