Mumbai, Jan. 13: Indian industrialists need to be ready to face the unexpected when they decide to prowl the world and snap up companies abroad. Not everyone has the stomach for it — and globalisation can bring about gut-wrenching change.
Kumar Mangalam Birla found that out the hard way.
Birla has finally spoken about how and why one of the last bastions of vegetarianism crumbled around five years ago under relentless pressure from his closest lieutenants to allow meat and chicken to be served in office canteens across the $40-billion group that today sprawls across 36 countries in five continents.
In a short article titled Butter chicken at Birla, the 46-year-old chairman of the Aditya Birla group of companies explains why he broke with a tradition and a core family value to take a step that he thought “was going to be multi-dimensionally disastrous for me”.
The finely worded piece appears in McKinsey and Company’s publication called Reimagining India — Unlocking the Potential of Asia’s Next Superpower, which came out last month.
“When I took over the company in 1996 at age 29, after the sudden death of my father, no meat was cooked in Birla cafeterias; no wine or whiskey was served at company functions,” writes Birla.
The first pangs of a dietary dilemma began seven years later — in 2003 — when the AV Birla group acquired a small copper mine in Australia. It wasn’t a big deal: just worth about $12.5 million. But it placed a distasteful challenge on the young Birla scion’s plate.
“Our newest (Australian) employees were understandably worried about how life might change under Indian ownership. Would they have to give up their Foster’s and barbecues at company events? Of course not, we reassured them,” says Birla.
But Birla hadn’t counted on the massive challenge that he would now have to face at home because of the policy of dietary discrimination between offices at home and abroad.
“At Marwari business houses, including Birla, the top ranks of executives traditionally have been filled with other Marwaris. I had introduced some managers from other firms and other communities, and they had a valid point…. I had never faced a situation where my own people felt so strongly about something,” he says.
Birla was more worried about what the family would say about the unpalatable decision that he was being forced to make.
“Fortunately, my grandparents merely laughed when I approached them with the dilemma: they understood better than I did that our company had to change with the times,” Birla writes. “If we wanted to make our mark on the world, we had to be prepared for the world to leave its mark on us.”
Birla, who is in Calcutta to celebrate grandfather Basant Kumar Birla’s 93rd birthday, could not be reached for comment.
But Pragya Ram, group executive president and spokesperson for the group, threw in a few more titbits. “The office cafeterias are run by Sodexo; so they prepare the menus. At the headquarters, people can bring in non-vegetarian food and microwave it before they eat.”
Globalisation has taught Birla several lessons. The whole process is fraught with risks — and the biggest question managers need to ask themselves is why they are going down that rocky road. “To globalize for the sake of globalizing — as a matter of ego — is perilous,” writes Birla. “When I look around me, I see too many Indian companies eager to simply be written about as global players.”
Birla believes that the AV Birla group expanded for many reasons — either to spread its bets or simply because it wasn’t “possible to open a plant in India as fast and as cheaply as we could abroad”. But the decision to buy was always governed by the desire to increase shareholder value.
“As I was reminded the first time I saw butter chicken being served in a Birla canteen, the most difficult challenges turn out to be the ones you least expect.”
But a takeover can bring with it its own pangs. “The process of building trust does not end once the deal goes through… the new employees watch for signals to see if you are walking the talk, if your decisions match your promises.”
Workers’ attitudes towards a takeover — what Birla calls the “soft” concerns — are just as important as the hard-headed financials and all the number-crunching that goes with every deal. This was especially true when the group decided to buy out aluminium giant Novelis for $6 billion — its biggest purchase to date.
“I don’t know if I’ll ever write a check that big again; I certainly didn’t want it to buy me a hostile, disgruntled workforce,” says Birla.
Paradoxically, going global also helped Birla finally shake off his instinctive admiration for people “who could speak the Queen’s English” rather than a chartered accountant from Jodhpur “whose spoken English required some effort to understand”.
It’s when he stamped across the group’s operations in Brazil and Thailand — where he met a whole host of people who weren’t comfortable in English but were very good at their work — that he came to respect the unnamed accountant from Rajasthan.
“If you can get your point across, if you are adding value, if you are competent, then bloody hell to your English,” says Birla.
The AV Birla group remains a protean establishment — constantly changing with the flux of time. “For the moment, our top management remains all Indian, even if not all all-Marwari. But I would guess that within a decade, half of our senior-most staff will be non-Indian,” says Birla.
When the board undergoes such a drastic change, how can the cuisine on the table remain the same?