The country was on way to gain the overdue freedom. European businessmen knew their game was over and they would have to leave India. They started winding up their works and selling. The native industrialists had golden chance to aquire companies. In this respect Birlas were the biggest gainers. They bought a number of enterprises owned by Europeans. G.D. Birla strengthened his jute segment by buying up ‘Bally Jute’, ‘Rameshwara Jute’ and ‘Soorah Jute Co’. In tea almost all the tea gardens were owned by Europeans. Birla bought several of them and entered the business under ‘Jayshri Tea’ trade name. The other major bugs were ‘Century Spining and Weaving’, ‘Sirpur Paper Mill’, ‘Hyderabad Asbestos’ and ‘Digivijay Woolen Mill’.
In the early years of independence aquirements were made to greatly enlarge the size of Birla Industries. Beside this Birlas expanded their existing industrial works. Many enterprises were technologically modernised and upgraded. Birlas stepped into some new fields as well. Birlas spent big sums on new machinaries to remain competitive. Wherever it was possible collaboration with foreign companies was made and joint ventures started.
Hindustan Motors went for collaboration with British Tycoon and Morris Minor. Birlas expanded in the fields of Cast Iron, Forging, Tools and V-8 engine manufacture to set themselves firmly in the Automobiles sector. In 1949 G.D. Birla himself went to USA to study the working of Staple Fibre Production Complex. Upon returning he set up a plant with 2.5 crores capital and later spent 4 crores in upgrading it. On G.D. Birla’s suggestion and inspiration Maharaja of Travancore and Cochin also stepped into the production of Staple fibre. G.D. kept an careful eye on the new technologies.
G.D. Birla was interested in rayon pulp too that is used for paper manufacture. The pulp was made from pinewood and it was imported into India. As an alternative source Birla decided to depend on Eucaliptus and bagasse. For this purpose Birlas bought 15,000 acres of cultivable land in Mysore. Then aquired technical cooperation from USA and Europe. In 1950 Birla gained remarkable success in rayon pulp production in good quantities.
For a long time Birla had his eyes fixed on the steel industry which was till then exclusive preserve of Tata Group. Birla had foreseen the heavy demand of iron and steel in developing India. The Planning Commission had also submitted a document on the steel short fall. In the beginning Birlas started productive of ferrous compounds. Then began to draw up plans for steel plant. In 1951 chief minister of W. Bengal, B.C. Roy suggested to Birla that he could set up his steel plant at Durgapur where the government was setting up coke oven and gas production plants. The power would be easily available from there for Birla’s steel plant. Birla accepted the offer gratefully.
Independence had come. New industrial policy was in and steel plant could be set up according to its stipulations. For industries permits and licences were required. Birla was able to get a licence. To start with Birla planned iron compounds production capacity of 2-5 lac m.t. and steel production a 10 lac tonnes per year. G.D. and Brijmohan sought technical and capital investment guidance from British experts. Licensing Committee approved their steel production plan. Durgapur Iron and Steel Co. was proposed to be registered with an authorised capital of Rs. 50 crores.
In 1954 after his China visit Jawaharlal Nehru was shown the Birla proposal for the steel plant. He refused to approve it. His reasoning was that according to 1948 Bill passed by the parliament steel production was to be exclusively in public sector. Birla requested that his proposal be viewed in the holistic context of national progress instead of private sector-public sector considerations. Industrialisation needed to be encouraged and not eliminated.
The minister of industries, T.T. Krishnamachari supported Birla’s view. He pleaded with Nehru that besides public sector if private player also contributes to national steel production, there was no harm. T.T.K. resigned from the cabinet. As a compromise move Nehru gave Iron & Steel ministry to TTK. But the problem did not go away since the parliament had reserved steel for public sector only. Then, in 1955 Birla got a chance to raise his finger when Tata’s Steel Co. Tisco was allowed to double its production capacity. But the request for reconsideration bore no fruit. Finally in 1958 Durgapur project was scrapped.
In 1957 Birla has started to consider venturing into Aluminium production. In this context G.D. visited USA and studied aluminium production and prospects in Indian situation. All the possibilities were explored. He met George Woods, the president of World Bank on whose suggestion Birla met Edger Ceasar who was an expert on metallurgical industries. Birla’s plan impressed Edger and in 1957 they signed a MoU for a joint undertaking. The public declaration of it was made only in 1958.
Then, to set up a plant with a production capacity of 20,000 tonnes required a capital investment of Rs. 15 crores. It was decided to buy plant and other infrastructure from the foreign suppliers. The capital investment ratio was kept 26:25:49. Ceasar Corporation, Birla and Public Issue form long term loan from bank was proposed. The plant was to came up in UP near Rihand Dam for easy energy supply. The plant was to use 48,000 KW energy. For contracted metal mining rights were aquired from the M.P. government. The company Hidalco (Hindustan Aluminium Corporation Ltd.) started production in 1962 within a record time of 18 months. When the company wanted to increase its production from 40,000 to 60,000 tonnes U.P. government expressed its inability to supply the additional power. Then Birla set up Renusagar Power Plant having 67.5 MW capacity of production.
In 1950 Birla had realised the future necessity of the fertilizers and their shortage in the country. In 1960 the work began on the projects to produce chemical fertilizers. Zuari Agro Chemicals, a Birla enterprise started production of urea and amonia in its plant in Goa. During this period Birla met some setbacks also. In 1953 the government nationalised the air services. Thus, Birla’s Bharat Airways was taken away by the government at a very small compensation. Durgapur Steel Plant never came up after huge investment in planning, surveys and ground work. In 1956 life insurance business was nationalised to the loss of Birla.
In that period of corrupt licence-permit regime Birla played several tricks like all other were doing to survive. The sytem had created a nexus between the industrialists and unscrupulous officials. It was a time consuming exercise in hide and seek game in maze parks of secretariates. Birla managed to get through due to his inherited business sense and the unstinted cooperation he got from his brothers and the family. The ratio of Birla’s pre-independence and post-independence given below proves his business acumen:
❑ Before independence Birla had a share capital of 24.8 crores only.
❑ After independence by 1958 it had swelled to Rs. 68.6 crores which was a tremendous jump taking into account the fact that compared to some other business houses it was disadvantaged in the socialist system. Compared to Tatas the Birla Group had only 1/5 of the total assets of the former.
