Known and unknown

INDEPENDENCE SPECIAL/ BUSINESS BARONS

Keeping it low...
In 1939, the Tatas were the largest business group in India, foreigners and locals included, with assets worth Rs 62 crore. Martin Burn was a distant second with an asset size of Rs 18 crore. The Birla clan was ranked 13th and had assets worth just Rs 4.85 crore.

By 1978, the Birlas had emerged on top with their asset base rising to Rs 1,171 crore as compared to the Tatas's Rs 1,102 crore. When the numbers came out, there was speculation that the Tatas had deliberately under-reported the numbers to escape the clutches of the dreaded Monopolies and Restrictive Trade Practices Commission.

In 1979, the government had estimated the Tata assets at Rs 1,309 crore but an advertisement put out by the group in the International Herald Tribune claimed assets of Rs 2,340 crore. After the domestic uproar, the group put out a subsequent advertisement in The Economist claiming assets of Rs 1,000 crore.

...on largesse
Right through the 1960s and the 1970s, the Birlas were under attack in Parliament and outside for currying favours from the government. The Monopoly Inquiry Commission reported in 1965 that financial institutions had lent 56 per cent to large business houses and a quarter of that money had gone to the Birlas alone.

The Hazari report said the Birlas hadn't implemented even 50 per cent of the licences handed out to them. And the Industrial Licensing Policy Inquiry Committee noted that the Birlas were sitting on 166 unutilised licences.

Interestingly, Ghanshyam Das Birla chose to publish his autobiography, In the Shadow of the Mahatma, which detailed the financial aid he gave to Mahatma Gandhi, in 1968 just before the MRTP Commission was set up. In 1977, shortly after the Hazari report came out, he wrote Bapu, A Unique Association.

commissions ...
In 1970, the Indira Gandhi government abolished the managing agency system, robbing Indian business houses of a steady and assured source of income.

As many as 82 per cent of the Birla companies, 74 per cent of the Tata companies, 58 per cent of the Thapar companies and 45 per cent of the Bangur companies were run by managing agencies at that time.

While some like the Tatas used the opportunity to appoint professionals on top, most others responded by putting family members on key managerial posts.

...and Omissions
In the mid-1960s, Dhirubhai Ambani, a young yarn trader in Mumbai, approached businessman Viren Shah for a loan of Rs 4 lakh for a spinning mill at Naroda near Ahmedabad. There weren't many people around to invest in the proposed unit.

Ambani went to Shah because he came from the largest landowner family of his native village of Chorwad in Gujarat and was, therefore, likely to look at his project favourably.

But the young trader failed to make an impact and Shah refused to lend him the money. Shah couldn't have made a bigger error in judgement.

In 1966, in its very first year of operation, the mill turned in a profit of Rs 13 lakh on sales of Rs 9 crore. Ambani went on to set up the biggest corporate dynasty the country would ever get to know.

Bailed out
After showing Coca-Cola and IBM the door, George Fernandes, the industry minister during the Janata Party regime (1977-79), wanted to nationalise Tisco (now Tata Steel) at the instigation of Biju Patnaik, the fiery businessman-politician from Orissa and then steel minister.

J R D Tata, still smarting from the nationalisation of Air-India in 1953, didn't take kindly to the proposal. Workers at the Jamshedpur plant rose in protest. Morarji Desai intervened and the move was scuttled.

Fernandes also had plans to nationalise the country's automobile industry and had offered the chairmanship of the entity to Rahul Bajaj. Fortunately for Bajaj, the whole exercise came to naught.