Thursday 29 August 2013

Human Resource Practices in Aditya Birla Group




 

Project Report on HR-Human Resource Management Practices in Aditya Birla Group



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The roots of Aditya Birla Group can be traced back to the 19th century, when Seth Shivnarain Birla began trading in cotton in the picturesque town of Pilani in the Rajasthan Desert. It was here that Seth Shiv Narayan
Birla started trading in cotton, laying the foundation for the House of Birlas. Through India’s arduous 1850s, the Birla business expanded rapidly. In the early 20th century, the Group’s founding father, Ghanshyamdas
(G. D.) Birla, set up industries in [F]ew of the studies tried to understand and elaborate on two critical issues:
(1) the peculiarities and defining characteristics of HR models that are unique to a particular country or environment and (2) the main factors that shape  people management policies and practices within the
context of a specific macroenvironment.

As a close confidante of Mahatma Gandhi, he played an active role in the Indian freedom struggle. The luminaries of the Indian freedom struggle often met at Birla House in Delhi to plot the downfall of the British Raj. G. D. Birla found no contradiction in pursuing his business goals with the dedication of a saint, emerging as one of the foremost industrialists of preindependence India. His grandson, Aditya Vikram
Birla, the Group’s legendary leader, soaked up the principles by which G. D. lived. A formidable force in Indian industry, Mr. Aditya Birla dreamed of setting up a global business empire at age 24. He was the first to put Indian business on the world map as far back as 1969. In the then vibrant and free market Southeast Asian countries,  he created world-class production bases, setting up 19 companies outside India in  Thailand, Malaysia, Indonesia, the Philippines, and Egypt. Interestingly, for Mr. Aditya Birla, globalization meant more than just geographic reach. He believed that a business could be global even while based in
India. Back in his home territory, he singlemindedly put together the building blocks to make his Indian business a global force.

Under his stewardship, his companies rose to be the world’s largest producer of viscose staple fiber, the largest refiner of palm oil, the third largest producer of insulators, and the sixth largest producer of carbon
black. In India, the company attained the status of the largest single producer of viscose filament yarn, apart from being a producer of cement, gray cement, and rayon grade pulp. The Group was also the largest producer of aluminium in the private sector, the lowest first-cost producer in the world, and the only
producer of linen in India’s textile industry. At the time of his untimely death from prostate cancer in 1995 at age 52, the Group’s revenues topped $1.5 billion globally; assets, comprising 55 plants, were $1.5 billion; employees numbered 75,000; and there were 600,000 shareholders. Most important, his companies had earned the people’s respect and admiration as one of India’s finest business houses. Through this outstanding
record of enterprise, he helped create enormous wealth for the nation and respect for Indian entrepreneurship in Southeast Asia. In his time, his success was unmatched by any other industrialist in India.
After the untimely death of Aditya Vikram Birla in 1995, Kumar Mangalam Birla (Mr. Birla) started shaping, reshaping, and redesigning his companies relentlessly (see Table I).

From its diverse portfolio of textiles, cement, tea, sponge iron, aluminum, fertilizers, shipping, carbon black, palm oil refining, chemicals, and a clutch of small businesses, Mr. Birla decided to focus on cement, aluminum, viscose staple fiber, and carbon black, which he regarded as value businesses, along
with knowledge sector industries such as telecom, software, insurance, and branded apparel. The Group grew and consolidated its portfolio through a spate of acquisitions and greenfield projects. About 25% of the revenues came from textiles, a highly regulated and fragmented sector with margins as low as 8% to 10%. In cement, there were two separately listed companies where lack of synergies was adding to the costs. The Group had no competencies in refining and had made a half-hearted foray into it. Mr. Birla could not
grow the fertilizer business because it was highly regulated, obstructing plans of expansion. The high cross-holdings within the Group and the unplanned diversification that came from the opportunistic responses
of the license raj made capital allocation highly complex. Within 10 years, he steered the Group to an $8.3 billion conglomerate by focusing on market leadership and size in its chosen sectors. It institutionalized the rule of three—to be within the top three players in the world or at least the region—in each of its
businesses (see Table II). It considerably reduced its dependence on its fiber business. Today, the Group is a dominant player in all of the sectors in which it operates, which include viscose staple fiber, nonferrous metals, It institutionalized the rule of three—to be within the top three players in the world or at least the
region—in each of its businesses.



Source - Ashok Som-Emerging Human Resource Management Practices at  Aditya Birla Group-Human Resource Management, May–June 2010, Vol. 49, No. 3, Pp. 549– 566


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