The Birla Family Crisis


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:
Case Code : BSTA034 For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 500 + Rs. 25 for Shipping & Handling Charges

Themes

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Case Length : 23 Pages
Period : 2004
Organization : Birla Group
Pub Date : 2004
Teaching Note : Not Available
Countries : India
Industry : Diversified

Abstract:

The Birla Group is one of India's oldest business families. The MP Birla Group is one of the seven distinct groups within the Birlas. The combined family assets are estimated to be in the region of $8.8 billion. Priyamvada, widow of MP Birla, who died in 1990, administered the MP Birla group of companies until her death. Through a will, she has passed on her assets worth $1.1 billion to her auditor and faithful associate, RS Lodha. This has created a major stir in the Birla family. In an episode that has implications for longer issues such as corporate governance reform, the Birlas are locked in an acrimonious legal battle with Lodha. At stake are key assets such as Pilani Investments, which has holdings in major Birla companies such as Grasim.

The Birlas would not like these assets to fall into 'outsider' hands under any circumstances. As the court battle intensifies, several issues have become relevant:

(1) Why did Priyamvada do what she did?;
(2) Was she trying to punish her family/safeguard her husband's legacy or, acting under pressure?;
(3) Could Priyamvada have prevented such a situation?;
(4) What was the role of the extended family and friends?; and
(5) Did Lodha act ethically?

Contents:

  Page No.
Introduction 1
The Birlas 2
The MP Birla Group 2
Priyamvada Birla 3
R S Lodha 3
Priyamvada's Death 4
The Legal Battle 5
Legal opinions 7
The Road Ahead 8
Exhibits 10

Keywords:

Birlas, RS Lodha, Priyamyada Birla, Family business, MP Birla Group, GD Birla, Bequeathed, Will, Legal battle, Auditors, Legal opinion, Kumaramangalam Birla, Yashoverdhen Birla, Hindu Succession Act

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