THE ECONOMIC WEEKLY
Hindustan Lever Limited
Management Development In Hindustan Lever
Speech delivered by Mr. P. L. Tandon, Chairman, at the Annual General Meeting of Hindustan
Lever Limited held at Bombay on Tuesday, 28th April 1964:
E V E N more than capital and raw
materials has a rapidly develop-
i n g "economy to t h i n k of its resources
of management. F o r u l t i m a t e l y how
Well the economy grows w i l l depend
upon the calibre of its managers
and their attitudes. We, in India,
have been fortunate in this respect.
G r o w t h of trained management has
been rapid and much attention has
been paid to this need, and how big
is the problem may w e l l be judged
f r o m a simple calculation. Out of
t w o m i l l i o n jobs estimated to be
created in each year of the T h i r d
Plan, ^even at a ratio of 2 per cent of
them being managers we shall need
to t r a i n 40,000 new managers every
year. This is indeed no small task,
more so when it is considered that
a manager not only m u s t possess a
basic discipline such as engineering,
accountancy or m a r k e t i n g b u t to be
really effective also receive t r a i n i n g
in how to be a manager: we have to
develop in h i m besides his function
the skills and attitudes of manage-
ment,
We have always been conscious of
this task, and how we view it and
what we do about it is the subject
of my speech today, as I feel you
may be interested in k n o w i n g some-
t h i n g about this most i m p o r t a n t as-
pect of our Company.
A l t h o u g h founded by the genius
of one man, our parent company has
always been professionally managed.
This has been a strong t r a d i t i o n w i t h
us and one we have valued in Hindus-
t a n Lever. We have always bestow-
ed a lot of care on the proper selec-
tion, t r a i n i n g , development and pro-
m o t i o n of men and women; we have
looked ahead at our needs foreseeable
and unforeseeable, and tried to provide
for them before they arise. Nearly
t w e n t y years ago, as an instance,
we appreciated the need for Indianis-
i n g our management, and the process
was handled w i t h care b u t w i t h bold-
ness t i l l i t ceased to need any further
impetus some years ago. Over t w e n t y
years ago we began our Manage-
ment Trainee selection scheme, w h i c h
over the years has w i t h attention and
assimilation of new techniques i m -
proved u n t i l today it stands h i g h by
international standards. O p p o r t u n i t y
for men f r o m the general staff to rise
to management has been another of
our conscious efforts.
We have today 341 managers, of
whom 178 or 52 per cent have risen
f r o m the ranks; a t o t a l of 11 or 3.2
per cent are expatriates; our selec-
t i o n and t r a i n i n g department in 1963
recruited 26 managers and put
through training courses 25 managers
as w e l l As 17 non-management stair;
5 from the staff were promoted to
management. Our management
strength forms 5.2 per cent of our
total employees. A l t h o u g h essen-
t i a l l y a manufacturing and m a r k e t i n g
company, we have 27 women mana-
gers, who interestingly possess a
diversity of specialised skills like
psychology, operational statistics,
scientific research, accountancy and
home economics.
Management development w i t h us
is a complex of activities whose pur-
pose, simply stated, is to ensure
three things. F i r s t , to anticipate our
requirements over the next five to
ten years; second, to select, recruit
and t r a i n men and women to fill
those requirements; t h i r d , to develop
attitudes and values in individuals
t h a t prepare them to meet their res-
ponsibilties at the standards we con-
sider desirable. A l l this, ultimately,
like capital expenditure, budgeting.
annual estimates and operational
plans, is the responsibility of the
Board, assisted by the active p a r t i c i -
pation of a l l our managers and ope-
rated by the Personnel Department,
w h i c h has a member on the Board.
Management Forecasting
It takes time to make managers,
especially to befit them for higher
responsibilities; but we do not believe
in age as a determining or even a
May 2, 1964
p a r t i c u l a r l y important factor, in fact
it seldom enters our calculations. It
is our experience that it takes about
ten years to prepare a young manager
to take over senior responsibility. If
he has the a b i l i t y and responds to de-
velopment, w i t h the opportunites that
are constantly opening up in a grow-
i n g and decentralised concern like
ours, we would in fact be disappoint-
ed were he not able to receive his
first shot of a senior independent
charge in his early thirties. F o r a l l
this much f o r w a r d planning is neces-
sary, especially where the future w i n -
ners are concerned, for they have to
be picked, groomed and trained for
t w e n t y years or more. A n d we may
lose some in the process.
The instrument of forecasting is
the Management Review w h i c h is
prepared every year for the next
five years. It is much like the Cash
Forecast. It evaluates in terms of
managers the needs of our business
which w i l l arise out of expansion, new
projects, new products and orga-
nisational changes. This need is then
equated w i t h cur internal resources,
what w i l l be generated by w a y of
promotions f r o m the staff to manage-
ment, the losses that are l i k e l y to
occur t h r o u g h retirements and losses
t h r o u g h anticipated and unexpected
separations. The exercise u l t i m a t e l y
throws up our net requirement, w h i c h
in a g r o w i n g country and an expand-
i n g business.must happily be always
on the plus side.
The advantages of this exercise are
three. In analysing our needs we
make sure t h a t they are genuine and
not Parkinsonian; and in q u a n t i f y i n g
them we k n o w when they are likely
to arise and how we w i l l meet them.
Otherwise it can easily become a
case of people r e t i r i n g or new vacan-
cies a r i s i n g w i t h o u t their having
been provided for w e l l in advance.
We begin t h i n k i n g of the replacement
of r e t i r i n g men some years ahead of
the event. M e n are nominated and
tried, more so for senior positions.
779
 May 2, 1964
Planned transfers and cross-postings
are also a p a r t of development, often
i n t o functions different f r o m their
original s k i l l or t r a i n i n g . The t h i r d
and i m p o r t a n t advantage is t h a t the
p r o m o t i o n potential w i t h i n the A r m
gets carefully looked at. As it is the
f i r s t p r i o r i t y t o promote from w i t h -
i n , each department in s t a t i n g its
needs w i l l carefully consider how i t
can meet them f r o m its own re-
sources.
The Management Review is nor-
m a l l y brought up to date every
year, but sometimes circumstances
may need an ad hoc study. I t s pre-
paration and follow-up, like the Cash
Flow, keep our management resour-
ces under constant study.
Selection and Recruitment
The five-year plan is reduced to an
annual operating plan of recruitment
and the Board is kept in touch w i t h
its progress. E v e r y quarter a state-
ment of the t o t a l s t r e n g t h of the
Company is prepared showing staff
m each category, retirements, separa-
tions, promotions and recruitment,
and this is examined by each depart-
ment, its director and finally by the
Board.
F r o m where do we get our mana-
gers? F i r s t , always, we look w i t h i n .
Who is ready to be made a manager
and who is ready to move up? The
profess of f o l l o w i n g i n i t i a l selection
of staff w i t h a good original record,
observation, t r a i n i n g and grooming
should ensure a regular flow from
w i t h i n and a. ladder for the men and
women w i t h the r i g h t qualities to
climb to the higher levels.
Secondly, we recruit young trainees,
fresh f r o m the Universities w i t h good
degrees in humanities or sciences
for the general side, in engineering
and technology for production, quali-
fied accountants f o r finance and
audit. Experience m a y help, but we
p r i m a r i l y look f o r a good m i n d and
a l i k e l y a b i l i t y to possess and develop
the set of attitudes t h a t we consider
i m p o r t a n t for our business. These
m a y be called "management-like
qualities"; not easy to define but
meaningful when they are there, and
780
the cause of management failure
when they are missing.
We resort to direct recruitment
when it is necessary. In actual prac-
tice this is mostly confined to spe-
cialists as in our a g r i c u l t u r a l opera-
tions, animal feeding-stuffs, research,
economics. statistics, engineering,
medical and legal fields where we
do not have specialist resources
w i t h i n the Company. B u t sometimes
even in non-specialist jobs if we have
not got a suitable qualified person,
rather than lower the standard we
w i l l go outside.
Despite a i l the care we take in
selecting, 20 per cent of our trainees
do not make the grade. This may,
sound a high proportion and is costly,
but one we would not like to see
reduced t h r o u g h a sacrifice in our
standards or t h r o u g h over-caution.
These are young men w h o are basi-
cally able and w e l l qualified but have
either not taken to business or have
not developed the attitudes we need.
The answer perhaps lies in a keener
follow-up on our part; to carefully
isolate these attitudes; to t r y and
build them into our t r a i n i n g and of
course to ensure t h a t those t r a i n i n g
the trainees are themselves con-
scious of them.This is a task t h a t we
are now attending to. Were I to at-
tempt defining them I w o u l d say that
they are, positively and negatively,
a dedication to our business, keenness
for achievement w i t h o u t a desire for
power for its own sake, a deep social
sense, and a b i l i t y to get on w i t h the
job w i t h o u t w a s t i n g t i m e or the frills.
In short, we prefer solid a b i l i t y to
just v i r t u o s i t y . I am of course f a k i n g
for granted the usual qualities of
intelligence, industry, i n t e g r i t y , self-
confidence, etc. We like poise and
ease but put no p r e m i u m on back-
ground as a veneer. We have also
managed to be respected by those who
recommend candidates to us, for we
w i l l carefully look at everyone who
knocks on our door because we are
anxious to take in talent, but we
make no concessions to influence.
Some interesting features of our
selection procedure may be w o r t h
mentioning. A l l applications—and
THE ECONOMIC WEEKLY
we receive nearly 1,000 f o r every
person selected—are screened for
conforming to basic requirements
of age and qualifications. Those who
meet the requirements are sent a
printed application f o r m w h i c h , apart
f r o m details of the school and uni-
versity career and any jobs held,
asks for some data t h a t w o u l d throw
up academic and e x t r a - c u r r i c u l a r i n -
terests and hobbies, ideas about his
career and any leadership experience
at school and college. These are
again screened by experienced per-
sons, and the promising candidates
are invited for a p r e l i m i n a r y inter-
view at the Head Office or one of our
branches. Those who show promise
are then invited to our Head Office at
Bombay for final selections, which
are held in t w o parts.
In the first part of final selections,
a group of six to eight candidates is
brought together to a conference
table and given a choice of subject
and a case study which they discuss
in the presence of four senior mana-
gers, who however only act as ob3er-
vers. The group is "leaderless" and
has to organise its--, own discussion and
provide o p p o r t u n i t y to each member
to display his qualities of m i n d as
well as leadership and being led. Our
consulting psychologist, w h o knows
us and our requirements w i l l , is also
present at these group discussions,
which he follows up w i t h an inter-
view at which each candidate is put
through some psychological tests.
in the second part of final selec-
tions the most p r o m i s i n g candidates
are put up before a senior board of
at least two directors, the Personnel
Director and some senior managers.
F r o m this group we finally select
and offer appointments to as many
as reach our standards, though we
are always w i l l i n g to take some risk
w i t h otherwise p r o m i s i n g m a t e r i a l .
This must account f o r some of our
Josses. I should like to add t h a t we
t r y to make our selection procedure
as objective and i m p a r t i a l as pos-
sible, p a r t i c u l a r l y so t h a t it leaves
those who are not selected w i t h a
feeling t h a t the process was fair.
Secondly, the psychologist has not
a decision m a k i n g function; his role
THE ECONOMIC WEEKLY
is confined to the use of technical
methods of assessing such aspects of
personality requirements as are rele-
vant to the job. The i n f o r m a t i o n t h a t
is gained t h r o u g h his tests is consi-
dered along w i t h other impressions
formed of the candidate. The psycho-
logist's opinions are helpful to the
selection B o a r d b u t not decisive.
A l l opinions of the psychologist are
treated as confidential.
We find f r o m experience t h a t the
group method of selection has seve-
r a l advantages. I t provides for grea-
ter scope for s t u d y i n g the different
aspects of a candidate's personality.
A group can be given certain tasks
w h i c h cannot be given to an i n d i v i -
dual. The men are seen together and
are therefore easier to compare.
Rejection is also less painful in a
group method, and although the u n -
successful m a y not always agree
w i t h the decisions of the selectors,
group inter-action w i l l usually m a k e
it abundantly clear as to w h o stands
out. In fact the candidates, when
questioned individually, w i l l usually
p i c k the r i g h t ones themselves.
L a s t l y , the procedure is economical.
Training
Whatever the methods and techni-
ques followed in the selection proce-
dure, personnel interviews, group dis-
cussions, psychological test, etc., se-
lection is only the first stage in the
t o t a l process of a c q u i r i n g and deve-
loping managers. A f t e r selection
begins our real task.
T r a i n i n g is given i n d i v i d u a l l y and
on the job. We have found f r o m ex-
perience t h a t y o u n g i n t e l l i g e n t t r a i -
ness do not l i k e to spend months in
c i r c u l a t i n g around the various de-
partments of the Company w a t c h i n g
how others do t h e i r jobs; instead
they l i k e to get down to a job them-
selves and so our t r a i n i n g pro-
gramme is now job-oriented. Also,
this is the best w a y of j u d g i n g their
performance and p o t e n t i a l at an early
strge. A f t e r a v e r y quick f a m i l i a r i -
sation p r o g r a m m e l a s t i n g only about
four weeks in a D i v i s i o n , they are
p u t t o w o r k i n i t . L e t u s take the
m a r k e t i n g side, w h i c h absorbs the
largest number of trainees. The
young man w i l l go into the field and
w o r k under a salesman for a m o n t h ,
after w h i c h he w i l l w o r k indepen-
dently as a salesman f o r three to
four months. He then w o r k s under
a sales supervisor f o r a m o n t h and
then independently as a supervisor
for another three months or so. By
now he has been "blooded" and can
hold his own .in the field. The men
who w o r k under h i m later should
recognise t h a t behind w h a t he ex-
pects them to do lies experience and
a b i l i t y to do it himself, and w e l l .
A f t e r this spell of about nine months
in the field be w o r k s in a j u n i o r
management capacity in branch
a d m i n i s t r a t i o n where he learns to
deal w i t h the field w o r k f r o m the
office end. A f t e r some months of this
he is seconded to a sales manager
and helps h i m r u n an area. At the
end of one and h a l f years of all this
t r a i n i n g he is given his first mana-
g e r i a l responsibility and appointed
an A r e a Sales Manager. F r o m then
on he w i l l go as far as he deserves.
A l l t h r o u g h the t r a i n i n g his seniors
devote a good deal of t h e i r t i m e and at-
tention to his progress, and the Board
constantly receives reports on his
progress. H i s D i r e c t o r w i l l meet h i m
regularly, and the C h a i r m a n occa-
sionally. The progress reports are
discussed in detail in a committee of
the Vice-Chairman, his own D i r e c t o r
and the Personnel Director. His
t r a i n i n g finished, a recommendation
w i l l be put up for confirming h i m
in the covenanted grade of manage-
ment; and the C h a i r m a n w i l l usually
personally hand h i m the covenant.
He is f r o m now on the Company's
most valued investment, and we arc
deeply disappointed at our occasional
failures, though they have to be
faced in the interests of the Com-
pany as much as for his own sake.
T r a i n i n g never really stops. We
'lave designed our own courses, p r i n -
cipally to give the managers a broa-
der picture of cur operations and its
environments and to sharpen t h e i r
managerial skills. These courses are
always residential and there they
meet men and w o m e n f r o m other
sides of our business. The courses can
M a y 2, 1964
be general or functional, as in mar-
keting, finance, O. & M. To m a n y of
them we i n v i t e as p a r t i c i p a n t s men
f r o m our associate Unilever com-
panies in A f r i c a and A s i a . We also
send our managers to courses, semi-
nars and conferences held outside the
Company to provide the stimulus of
meeting people f r o m other organisa-
tions and p a i t i c u l a r l y f r o m Govern-
ment and its undertakings. We send
them to the A d m i n i s t r a t i v e Staff
College at Hyderabad, the new I n -
stitutes of Management of Calcutta
and Ahmedabad, the regional and
the A l l I n d i a Management Associa-
tions, the N a t i o n a l P r o d u c t i v i t y
Council and to other more s t r i c t l y
functional courses.
Unilever's t r a i n i n g facilities i n t o e
U n i t e d K i n g d o m and i t s specialist
courses in A u s t r a l i a and A m e r i c a
are also open to us. We have also sent
men to Henley and H a r v a r d . L a s t l y ,
we send a few men every year to the
U n i t e d K i n g d o m for specialised t r a i n -
i n g w i t h Unilever companies i n t h a t
c o u n t r y and on the Continent.
We find all this training, carefully
planned for both its content and
t i m i n g , an integral p a r t of the g r o w t h
of a manager. It has to be judiciously
controlled though, to stop it f r o m
becoming a fad Each name f o r out-
side t r a i n i n g is examined carefully
by the Board and each manager is
made to realise t h a t he can get out
of a course only in p r o p o r t i o n to
w h a t he himself puts i n .
A very useful aspect of t r a i n i n g
is the encouragement we give to our
managers to accept various e x t r a -
m u r a l responsibilities. In a develop-
i n g economy, it is n a t u r a l t h a t de-
mands should be made on our mana-
gers by Government and other or-
ganisations and it is o n l y right t h a t
we should make our contributions In
the fields in w h i c h we have special
knowledge or experience. We are,
therefore, always prepared to help
as l o n g as the demands made on us
are consistent w i t h the priorities and
requirements of our o w n business.
We believe t h a t this k i n d of assistance
is to m u t u a l advantage and, in the
u l t i m a t e analysis, we gain as much
781
May 2, 1964
from such efforts as we give because
it adds to the knowledge and experi-
ence of our managers.
Promotion
P r o m o t i o n is always and i n v a r i -
ably on merit, irrespective of age or
length of service. We f r a n k l y believe
in the logic of the best man f o r the
Job because only then w i l l the job
be done best. Rut evaluating m e r i t
us not an easy task. We therefore do
not leave such evaluation entirely to
the time when the need for promo-
tion arises but make it a continual
process so that when the t i m e comes
it is quite "obvious who the m a n is;
in fact n o r m a l l y he has already been
groomed for i t . E v a l u a t i o n w i t h us is
a. constant process, consisting of pro-
gress reports, thorough t r a i n i n g , per-
sonal contacts by the seniors and by
annual personnel reports, discussions
at the m o n t h l y Board meetings, job
evaluations, short lists of promising
men: all this helps to ensure unbiass-
ed and objective j u d g m e n t .
How do our managers respond to
this system w h i c h takes a w a y the
c r u t c h of "automatic" p r o m o t i o n ?
They accept it i m p l i c i t l y when they
j o i n us and, in fact, they often t e l l
as t h a t they regard this as one of
the best reasons for j o i n i n g us. The
system, w h i c h they themselves w i l l
have the responsibility to operate,
assures a f a i r assessment, and cases
of unfair promotions are almost un-
k n o w n . There m a y be t w o views on
a quick or unexpected p r o m o t i o n but
nearly always the sense behind the
decision soon becomes obvious. The
capable rise rapidly, so that they
don't lose the fine c u t t i n g edge; some
are inevitably left behind—arith-
metic must w o r k inexorably, for after
all the shape of a management struc-
ture must be p y r a m i d i c a l . Those left
are w e l l looked after and have a very
useful function in w h i c h their interest
is kept alive t h r o u g h t r a i n i n g and
sometimes a change of job. In fact it
is not that m a n y are left behind but
that some must get f u r t h e r and faster.
To use an A m e r i c a n phrase: There
cannot be all ''Chiefs and no Indians"
(the A m e r i c a n k i n d ) .
THE ECONOMIC W E E K L Y
You may have noticed t h a t I have
frequently mentioned the B o a r d in
connection w i t h selection, t r a i n i n g
and promotions of managers. This i n -
dicates not the control the Board
exercises over these processes b u t the
interest it takes in w h a t I have a l -
ready referred to as our most valuable
asset. Management Development, as
I have tried to describe i t , is an inte-
grated operation w h i c h has a q u a l i t y
of wholeness l i k e m a r k e t i n g or manu-
f a c t u r i n g ; and not merely the appli-
cation of a series of isolated techni-
ques. H o w w e l l we grow, how success-
f u l l y we meet the challenges w i l l de-
pend in the end on how w e l l we select
and prepare each m a n f o r his job
and inculcate the r i g h t attitudes. 1
have t r i d to present to you the t h i n k -
i n g and practice on this subject, b u t
let me be clear. We are, of course,
aware that what we are t r y i n g to do
can be improved upon. To effect such
an improvement is our constant
endeavour.
Note: This does not p u r p o r t to be
a report of the proceedings of
the A n n u a l General Meeting.
THE ECONOMIC W E E K L Y
Managing Director's Speech
The Dunlop Rubber Co. ( I n d i a ) L t d .
Speech of Mr. M. L. Bexon, M. C.
The following is the Speech delivered by M r . M. L. Bexon, M. C., Managing Director of The
Dunlop Rubber Co. (India) L t d , , at the 38th Annual General Meeting of the Company held in Calcutta
on the 22nd April, 1964:
I H A V E much pleasure in welcom-
i n g you to the 38th A n n u a l Gene-
r a l M e e t i n g of the Company. The D i -
rectors' Report and Accounts have
been in y o u r hands for some time, and
w i t h your permission I should l i k e to
take t h e m as read. Y o u w i l l have
noticed t h a t the Accounts this year
are being presented in the modern
columnar f o r m . This outlines the
h i g h l i g h t s of the Prefit and Loss A c -
count and Balance Sheet more clear-
ly, w h i l e the details ore given in the
f o r m of notes and schedules.
The Year's Trading
In 1963 the Company maintained
its predominant position in the car,
t r u c k and motorcycle t y r e replace-
ment m a r k e t , and as suppliers to the
automobile m a n u f a c t u r i n g industry.
We were called upon to make sub-
s t a n t i a l l y increased supplies of tyres
for Defence purposes i n v o l v i n g a
complicated range of specialised
sizes for m i l i t a r y use, and t a x i n g our
technical and production resources
heavily. It is a source of satisfaction
t h a t we managed to m a i n t a i n
increase our overall level of sales in
spite of the supply problems
created.
D u r i n g the year three new t y r e
manufacturers began marketing
their products, and the Company's
success in holding its position was
a t t r i b u t e d to the continued public de-
mand for our products based on their
h i g h reputation, to the l o y a l support
of dealer friends and to the efforts of
our sales and depot organisation in
giving first-class service to fleet
owners and the trade. Distribution
has become more complicated as the
result of the increase in the rate of
tax on inter-state t r a d i n g and dispa-
rities between sales t a x in various
States r e s u l t i n g in price differentials.
Our sales of large earthmover cov-
ers continue to be satisfactory altho-
ugh somewhat affected by capacity
p a r i t i e s for Defence. I t i s our inten-
t i o n to expand our production to i n -
corporate larger sizes to meet the
increasing demand f r o m n a t i o n a l
multi-purpose and major irrigation
schemes, w h i c h should result in a
saving of valuable foreign exchange.
Our cycle tyres continue to be ex-
t r e m e l y popular and we are unable
to meet the demand f o r our brand.
We continue to supply the o r i g i n a l
equipment requirements of b o t h
large and small scale cycle manufac-
turers.
The turnover c o n t r i b u t i o n by the
non-tyre range, i.e. I n d u s t r i a l Rubber
Products and Dunlopillo, increased
substantially over the previous year.
This was m a i n l y due to the increase
of the conveyor b e l t i n g business re-
s u l t i n g f r o m the implementation of
some Plan projects. Generally, the
demand for all items of our range
continued to rise and our selling
efforts were, in some measure, l i m i t e d
b y production capacity. I t m a y i n -
terest you to k n o w t h a t non-tyre
and business represents about 10% of
t o t a l turnover, and f u r t h e r diversifi-
cation is constantly being explored.
thus
Conveyor belting, the largest t u r n -
over i t e m in our non-tyre range, en-
gaged our attention on increased
p r o d u c t i v i t y , technological develop-
m e n t and expansion of the range.
The scheme for manufacture of P. V.
C. B e l t i n g is being implemented and
supplies are expected to be available
towards the end of the year.
We are also expanding the range
of braided hose by f u r t h e r specialised
developments.
Dunlopillo sales showed an increase
over 1962, and the requirements of
the r a i l w a y s and the automobile i n -
dustry, w h i c h geared i t s output to
the defence effort, necessitated our
special attention.
Exports
Our t o t a l exports in 1963 regis-
May 2, 1904
tered a 17% increase over 1962 m
spite of the setback suffered as a
result of the sudden ban on exports
d u r i n g the l a t t e r p a r t of 1962, and
also capacity l i m i t a t i o n s due to our
heavy defence commitments.
A significant feature of our export
achievement d u r i n g this year has
been our success in the export of
special service off-the-road tyres to
Europe. The value of these made a
substantial c o n t r i b u t i o n to our over-
a l l exports.
There was, however, a drop in our
cycle t y r e exports w h i c h has been
p r i m a r i l y due to unsettled p o l i t i c a l
conditions in South East A s i a .
W h i l e we hope to be able to m a i n -
tain, if not better our exports d u r i n g
1964, it w i l l not be out of place to
mention t h a t the export m a r k e t f o r
products t h a t we manufacture is fast
s h r i n k i n g w i t h the setting up of local
manufacture i n m a n y neighbouring
Asian Middle Eastern and A f r i c a n
countries.
Raw Materials
The r a w m a t e r i a l supply position
in 1963 was reasonably satisfactory,
although i m p o r t licence delays again
caused some difficulties.
We started using large quantities
of Indian-made rayon, synthetic rub-
ber and carbon black, and are plan-
n i n g for a f u r t h e r increase in con-
sumption d u r i n g this year in substi-
t u t i o n for i m p o r t e d materials, w i t h
a corresponding saving in foreign ex-
change. The generally higher prices
of indigenous materials are h a v i n g a
serious effect on the cost of produc-
tion, w h i c h can only be p a r t i a l l y off-
set by our planned increase in pro-
duction efficiencies.
Productivity
Once again I can report t h a t the
o u t p u t f r o m both factories in the last
year was a record. The A m b a t t u r
f a c t o r y increased its output by nearly
783
THE ECONOMIC WEEKLY
17% over the preceding year and a
slight increase was recorded at
Sahaganj, despite the severe power
cuts w h i c h affected f a c t o r y opera-
tions d u r i n g the greater p a r t of the
year. This achievement reflects great
credit on the factories' management
and labour, and their j o i n t effort
continues f u r t h e r to improve produc-
t i v i t y . I am confident t h a t n o t h i n g
w i l l be spared towards the achieve-
ment of the higher production t a r -
gets set for this year.
Expansion
L a s t year I had to t e l l you that,
f o l l o w i n g the i n t r o d u c t i o n of Super
Profits tax, we were reviewing our
expansion schemes and t h a t no
positive report on their progress could
be given. Indeed, 1963 l a i d increased
financial burdens on y o u r Company
as a result of additional taxation,
e x t r a costs arising f r o m the use of
indigenous r a w materials, premia
payments in respect of Emergency
Risks Insurance, and the tie-up of
more capital f o l l o w i n g the f u r t h e r sur-
charge on Excise duties.
New t e m p o r a r y and permanent
sources of finance had to be explored
if we were to avoid abandoning or
c u t t i n g back some of our schemes.
Three measures were successfully
negotiated in the l a t t e r half of the
year w h i c h have enabled us to em-
bark once more on a full-scale ex-
pansion programme. These were,
first, negotiation of additional bank
overdraft facilities to tide over our
t e m p o r a r y requirements, second, a
decision to proceed w i t h our applica-
t i o n for a r i g h t s issue and the agree-
ment of the Dunlop Rubber Company
L i m i t e d , U . K . , to advance meanwhile
the necessary sterling for expansion
by w a y of a loan, and t h i r d , a mode3t
increase in t y r e prices of 3% f r o m
the end of September, 1963.
Our expansion schemes are now
well in hand and we anticipate in-
creased production in m a n y of our
products d u r i n g the l a t t e r half of this
year, although the complete ex-
pansions w i l l not be finally imple-
mented u n t i l about the middle of
1965. The r i g h t s issue is now being
processed and is expected to be made
towards the end of this year.
784
Profit and Loss Account
The m a i n features are given in
the Directors' Report, f r o m w h i c h
you w i l l have seen t h a t the profit be-
fore tax remains m u c h the same as
the previous year, this despite an i n -
crease in sales of a p p r o x i m a t e l y
Rs. 3.61 crores. The additional pro-
fit w h i c h would n o r m a l l y have arisen
as a result of the increased sales was
more t h a n absorbed by additional
costs, p a r t i c u l a r l y those arising
t h r o u g h the use of indigenous r a w
materials.
The net p r o f i t for disposal after
tax — Rs. 1,68,86,953 — is substan-
t i a l l y higher than last year, entirely
due to t a x a t i o n adjustments as a l -
ready explained in the Directors' Re-
port. A f t e r the compulsory transfer
to Development, Rebate Reserve of
Rs. 10,25,000, and p r o v i d i n g for Pre-
ference Share dividend of Rs. 4,00,000,
a balance of Rs 1,54,01,953 remains.
The Directors propose to transfer
to General Reserve Rs. 75,26,953 of
this balance and recommend a dividend
for 1963 on the O r d i n a r y Share Ca-
p i t a l of 17½%:, subject to tax. T h i s
w i l l absorb Rs. 78,75,000 and com-
pares w i t h 15% paid in respect of
1962.
Balance Sheet
A concentrated effort was m a i n -
tained to contain Inventories despite
the higher volume of o u t p u t and I
am pleased to say this was successful.
Debtors are substantially higher
m a i n l y due to the larger volume of
business, most of w h i c h took place in
the latter p a r t of the year.
B a n k borrowings are also higher,
reflecting heavier t a x a t i o n payments
d u r i n g the year and also the higher
w o r k i n g capital required to sustain
the increased volume of business.
F u t u r e Prospects
The 1964 Budget proposals reduced
the incidence of t a x payable by your
Company t h r o u g h the abolition of
the Super Profits tax and the substi-
t u t i o n of a Surtax on excess profits.
However, Increased tax arises f r o m
the 7.5% t a x on dividends.
M a y 2, 1964
D u r i n g the closing stages of 1963
Government made the welcome an-
nouncement t h a t Emergency Risks
Insurance p r e m i a w o u l d not be pay-
able for the first quarter of 1964, and
t h a t price control over our products
was discontinued. T y r e prices were
increased by 6% at the beginning of
1964, which w i l l help to offset the i n -
creased costs imposed on the i n d u s t r y
d u r i n g the course of last year.
T w o years ago I referred to the
increasingly competitive conditions
in the t y r e industry. This t r e n d was
slowed down by the Emergency and
subsequent r i t e in Government pur-
chases, but is now again v e r y evi-
dent, There is now no overall short-
age of tyres of any type, but we are
confident of our a b i l i t y to achieve
the targets we have set ourselves for
1964, both in the sales field and in the
factories, t h r o u g h the wholehearted
efforts of a l l concerned. We look
f o r w a r d to another year's satisfac-
t o r y w o r k i n g , although the t r e n d of
r i s i n g costs is a d i s t u r b i n g factor.
In conclusion, I am sure you w o u l d
l i k e me to associate you w i t h the
Directors in expressing our thanks
to al employees for their l o y a l efforts
d u r i n g the past year.
N O T E — T h i s does not purport to
be a record of the proceed-
ings of the annual general
meeting.
S Anantharamakrishnan
WITH the deuth of Shri S A n a n t h a -
" r a m a k r i s h n a n in Madras on
A p r i l 18, the country has lost a lead-
i n g industrialist. S h r i A n a n t h a r a m a -
k r i h n a n was C h a i r m a n c f the Simp-
son Group of companies. He started
his career as a Chartered Accountant,
j o i n i n g Simpson and Company asits
Secretary. It is a t r i b u t e to his abi-
l i t y t h a t he rose to the highest posi-
tion in the concern.
Shri A n a n t h a r a m a k r i s h n a n was
the architect of the present Simpson
Group of industries. In addition to
his efforts on behalf of his o w n en-
terprises, he took an active interest
in the i n d u s t r i a l development of
Madras. He served on a number of
official and private committees and
was also a member of the Regional
Board of the Reserve B a n k of I n d i a ,
THE ECONOMIC WEEKLY
Mahindra & Mahindra Limited
Speech of the Chairman, Mr. Keshub Mahindra
The following is the Speech delivered by the Chairman, M r . Keshub Mahindra, at the 18th Annual
General Meeting of the Shareholders of Mahindra & Mahindra L t d . , held in Bombay on 23rd A p r i l , 1964:
Ladies and Gentlemen,
It is a proud privilege for me to
be addressing y o u for the first t i m e
and to be able to extend to you a
w a r m welcome to the Eighteenth
A n n u a l Meeting. I n their report t o
you, your Directors have expressed
t h e i r deep feelings at the sad find
sudden death of our Founder Chair-
man, the late M r . K. C. M a h i n d r a .
M a n y of you in this room who knew
h i m i n t i m a t e l y over the years, w i l l
agree w i t h me, t h a t his greatness
l a y in his sensitivity towards people
— w h i c h produced in all of us a deep
sense of affection for h i m . He looked
f o r w a r d to meetings such as these,
for they provided h i m an o p p o r t u n i t y
to share his thoughts w i t h you on
m a n y issues. H i s speeches were the
products of a m i n d w h i c h had an
unique appreciation of knowledge
and a remarkable g i f t of language
and judgement. H i s appraisals inva-
r i a b l y germinated food f o r thought.
Today I can t h i n k of no better
w a y of p a y i n g adequate t r i b u t e to
his m e m o r y and to the m e m o r y of
the late M r . J. C. M a h i n d r a , t h a n to
narrate to you the s t o r y of the g r o w t h
of your Company. It was in 1945—
t h a t our late C h a i r m a n together w i t h
his brother, l a i d the foundations of
your Company. The first ten years
were spent in f o r m u l a t i n g l o n g
t e r m objectives, p r o c u r i n g talent,
l a y i n g d o w n sound management con-
t r o l s and t r a i n i n g technical and
managerial personnel. This was the
t i m e spent in e x p l o r i n g and choos-
i n g . F i n a n c i a l resources were being
harnessed for the period of g r o w t h .
These were the foundations laid for
establishing m a n u f a c t u r i n g indus-
tries basic to the country's econo-
mic development. The record of the
last eighteen years bear testimony
to t h e i r zeal, devotion and tireless
efforts.
Machinery Manufacturers Corporation
M a c h i n e r y M a n u f a c t u r e r s Corpora-
t i o n was the fir st venture w i t h public
p a r t i c i p a t i o n . T h i s Company was
formed w i t h the object of manufac-
t u r i n g carding engines for the textile
i n d u s t r y . The h i s t o r y of this Com-
pany m a y be k n o w n to m a n y of you.
In the years t h a t followed serious
setbacks had to be faced and met.
The lack of a w e l l defined protec-
tive policy, an well as i n i t i a l resis-
tance to an indigenously manufac-
t u r e d produce aggravated the situa-
t i o n . It is, therefore, of considerable
satisfaction, t h a t after years of
struggle for survival, today the Com-
pany continues to be the largest pro-
ducer of c a r d i n g engines in the
country. A f t e r fifteen years of ope-
r a t i o n , the maiden dividend was
declared t w o years ago. It was per-
haps this experience w h i c h made
the Founders hesitate i n i t i a l l y m i n -
v i t i n g public participation In 3ur
new ventures.
Over the years a wide range of
products were chosen for manufac-
ture. The A u t o m o b i l e Division w h i c h
forma the p r i n c i p a l a c t i v i t y of the
Company, now has an installed capa-
city to manufacture 10,000 Jeeps per
year. This has been possible t h r o u g h
an association w i t h a large group
in the U . S . A . and we have, the p r i -
vilege of h a v i n g their President on
our Board of Directors. The depend-
ence on i m p o r t s for components is
fast diminishing; and w i t h continu-
i n g progress in the field of ancillary
production, it is anticipated that an
indigenous content of 90% w i l l soon
be achieved. The Division is fully
staffed w i t h skilled technicians, and
t h r o u g h its intensive t r a i n i n g pro-
grammes f o r operators and engineers,
it is to a great extent self-generat-
i n g in i t s requirements of personnel.
New factories are under construc-
tion at K a n d i v i l i , and it is envisaged
that w e l l integrated units w i l l be
ready for occupation by early next
year.
Other Companies
Recognising the advantages of
l i n k i n g substantial investment w i t h
the procurement of technical " k n o w -
h o w " f r o m abroad, your Company
May 2, 1964
promoted a number of other units,
w h i c h today serve our economy. In
partnership w i t h organisations i n
the U . K . , various companies were
formed to manufacture a range of
products such as trailers, sintered
products, air-cooled diesel engines,
w a t e r meters and instruments. In col-
laboration w i t h a German firm, a
company was formed to produce
synthetic resins, enamels and var-
nishes, w h i l e in association w i t h an
A m e r i c a n company a u n i t has been
set up to produce elevators.
Steel has always played an i m -
p o r t a n t role in the affairs of your
Company, and w h i l e the i m p o r t of
steel sustained the Company d u r i n g
Its f o r m a t i v e years, a need was f e l t
to establish a m a n u f a c t u r i n g u n i t
in the country. To this end in col-
laboration w i t h a. leading French firm
a Company has been floated for the
manufacture of alloy steels. This,
as you are all aware, is a large pro-
ject i n v o l v i n g considerable c a p i t a l
outlay. A second large project is
the manufacture of t r a c t o r s in col-
laboration w i t h one of the largest
corporations i n U . S . A . This Com-
pany has been formed and shaves
w i l l be offered to the public m the
course of this year.
Capital and Labour
L o o k i n g back, it was in 1955 t h a t
shares were offered to the public for
.subscription. At t h a t t i m e the Com-
pany was p r i v a t e l y owned by the
family. Before the public issue, an
offer was made to a l l employees or
the Company w h o had five years
service or more, to participate in
t h e share capital. I t i s g r a t i f y i n g t o
remember that nearly a l l employees
took advantage of the offer.
The F i r s t Public Issue was made
w i t h an offer of about 47 lacs of
capital. The response from the i n -
vesting public was overwhelming,
Over the years, there have been t w o
f u r t h e r r i g h t s issues, incidentally
b o t h were over-subscribed, b r i n g i n g
the capital of the Company to the
785
 May 2, 1964
present level of Rs. 253 lacs and
number of shareholders has increas-
ed f r o m 1860 to over 5500 today.
W h i l e the role of capital is not to
be underestimated, it is labour w h i c h
gives it a meaning in industry. I
t h i n k of labour in its integrated
sense, embracing a l l members of an
industrial enterprise, whatever t h e i r
functions. W i t h o u t the effort of la-
bour to plan and to execute, capital
remains stagnant. Corresponding
w i t h the increase of capital, our
own labour strength in the parent
Company has increased from 1200
in 1955 to nearly 5000 today. Labour
in the Company looks to the future
for increased earnings, for opportu-
nities to better their w a y of l i v i n g
and for chances if p r o m o t i o n . Over
the last four years, over 800 vacancies
have been filled t h r o u g h promotions
f r o m w i t h i n - sufficient assurance
t h a t ample opportunities exist in
your Company for advancement.
Better pay, good service conditions
and a share in the prosperity of the
Company have been the benefits
accrued to labour. In response, the
Company has their assured l o y a l t y
and a desire end enthusiasm to meet.
the ever g r o w i n g need for better
skill and more productivity.
Quality Control
In all our varied m a n u f a c t u r i n g
activities we have always laid em-
phasis on qualify control and I can
.say, that the quality of our products
has ensured consumer satisfaction.
Nor does our responsibility end w i t h
the .vale of the product -the i m p o r t -
once we have given to after Ces-
ser vice has instilled a sense of con-
fidence in the consumers, which
must reap rich dividends in the
future.
It is your faith and confidence that
has made possible this g r o w t h . Great
care has been exercised by your d i -
rectors to ensure fair' and reasonable
dividends. Keeping in m i n d the need
for liquid funds for expansion and
diversification, your Directors have
favoured a stable policy of dividends.
The operations of the Company over
the years have f u l l y justified expec-
tations, reflected by the profits
earned from year to year. The share-
holder's enjoy an added sense of
security that the reserves of the
Company have increased to 80 less
786
while the investment portfolio stands
at 63 lacs. In conformity w i t h the
views expressed by m a n y of you, a
modest beginning was made in offer-
i n g you shares in the new steel com-
pany. I hope that w i t h continuing
g r o w t h , there w i l l be further oppor-
tunities for you to invest in new com-
panies or in the expansion of the
existing units so t h a t you may
share in the prosperity of your Com-
pany— a share w h i c h r i g h t l y belongs
to you.
Confidence in Future
The economy has reached a diffi-
cult stage in its development. The
country t h r o u g h the Five-Year Plans
is in the process of reappraising the
methods by w h i c h desired social ob-
jectives can be achieved. You may
w e l l ask whether this transitional
period w i l l have any effect on our
industrial philosophy. I can only
answer you by affirming t h a t p r a c t i -
cally every u n i t in the group is in the
process of expansion and t h a t we
have our sights fixed on more ambi-
tious targets in the future. We
would be f a i l i n g in our d u t y if we
did not. continue to contribute to the
g r o w t h of the community to which
we belong. In these endeavours we
do not doubt that there w i l l be vast
difficulties. The large commitments
we have already undertaken are a
measure of the confidence we have
in the future.
In r e m i n i s i n g over the past, I
m a y have taxed your patience. The
encouraging and the g u i d i n g hand of
the late Chairman is no longer w i t h
us. I am, however, fortunate in
h a v i n g the wise counsel of my col-
leagues on the Board w h i c h will
make my task less burdensome. I
have the l o y a l t y of our employees
and I hope your confidence. I am
sure that you would like to join me
in welcoming our t w o new Directors,
M r . lengar ano M r . Hydari— they
need no introduction from me.
You w i l l be glad to know that for
the five months of the current
financial year t h a t is to the end of
M a r c h 1964 our operations in all
divisions of our Company have been
satisfactory. Production of Jeep
vehicles averaged 900 vehicles per
m o n t h and deliveries have kept pace
w i t h this production. The Steel
Division has, maintained its rate of
THE ECONOMIC WEEKLY
booking and the Machine Tool D i v i -
sion anticipates a considerable
volume of business d u r i n g the yearly
I would not like to conclude before
t h a n k i n g a l l the staff f o r their l o y a l t y
and devotion to w o r k d u r i n g the
year.
I t h a n k you.
Note: This does not purport to be
the record of the proceedings
of the E i g h t e e n t h A n n u a l
General Meeting of the Com-
pany.
Sanforized and Cloth Exports
I N D I A N cotton textile exports last
year totalled 531.2 m i l l i o n yards, a
bare 4.5 per cent higher than in 1902
— but w e l l below the 582.4 m i l l i o n
yards exported in 1961. Price-wise
the situation was even more disap-
pointing. The 1963 exports were
w o r t h a t o t a l of Rs 41.2 crores, only
3.3 per cent greater than in 1902.
Looked at another way, the price
per y a r d of cotton fabric exports has
been going down : f r o m 80 nP in 1901.
to 79 nP i n 1962, to 77 nP i n 1903.
B u t although t o t a l exports of I n -
dian cottons have been on an irregular
decline, shipments of S a n f o m e d -
labelled fabrics to a large number of
foreign countries have shown a steady
rise. I n d i a n m i l l s last year exported
a total of 10.3 nin yards of Sanforizei-
labelled fabric. This was 31.2 per-
cent higher than in 1902; the 1962
figures were themselves 41.07 per
cent higher than those for 1901.
E x p o r t s of Sanforized-labelled fab-
ric were w o r t h , on a per y a r d basis,
nearly twice as much as the export
price of all cotton fabrics. Last year
the value of Sanforized-labelled fab-
ric exports averaged Rs 1.33 per yard.
This compares w i t h the 77 nP per
yard general, figure mentioned pre-
viously.
Contacts that the Sanforized Com-
pany has in 19 countries on a l l five
continents have helped I n d i a n export-
ers to achieve this enviable record. The
Company's world-wide experience in
textiles has also led it to suggest a
number of ways for I n d i a n textile ex-
porters to meet the export challenge
and improve their own and their
country's foreign currency earnings.
THE ECONOMIC WEEKLY
The Central Bank of India Ltd.
Speech of the Chairman, Sir Homi Mody
T HE f o l l o w i n g is the summary of
the Speech delivered by Sir H o m i
Mody, Chairman, Central B a n k of
I n d i a L t d , at the A n n u a l General
M e e t i n g of the Shareholders held on
Tuesday, A p r i l 28, 1964:
"On the whole, it would be correct
to describe the year under review as
one of economic stagnation", observed
Sir H o m i Mody, Chairman of the
Central B a n k of I n d i a L i m i t e d , at the
A n n u a l General Meeting of the B a n k
on Tuesday, the 28th A p r i l . There was
a decline of a l i t t l e over 3% in the
t o t a l a g r i c u l t u r a l production, the set-
back in the m a i n cereals like rice and
wheat being as much as 7 . 5 %
which, viewed against the background
of a relentless g r o w t h in the popula-
t i o n , was a m a t t e r f o r m u c h concern.
Sir H o m i said t h a t this cannot be
allowed to be explained away by
casual references to n a t u r a l pheno-
mena. The f a u l t really lay in the doc-
t r i n a i r e land policies forced on the
country, m a i n l y for ideological rea-
sons. Some hundreds of crores of
rupees had been spent in the last ten
years on C o m m u n i t y Development
and Extension Projects. T h a t they
should have yielded next to no results
indicated the failure of b o t h planning
and execution.
Mid-Plan Appraisal
A l t h o u g h i n d u s t r i a l production had
recorded an improvement of about
8,5%, it was loss t h a n the rate of i n -
crease envisaged in the T h i r d Plan.
The g r o w t h of national income was
feeble and h a l t i n g and there was an
u p w a r d pressure on the general price
level. The m i d - t e r m appraisal of the
T h i r d P l a n had come as a rude re-
minder of the basic defects of Govern-
ment's p l a n n i n g policies. Undue con-
centration on heavy industry, Sir
H o m i remarked, had become an obses-
. sion w i t h the architects of our Plans
and had imposed on the common m a n
a heavy burden of privations, w h i c h
he was required to p u t up w i t h in the
present, in the fond hope t h a t some
day, his progeny w o u l d enjoy the
f r u i t s of his sacrifices.
T u r n i n g to the Budget of the Cen-
t r a l Government, Sir H o m i recalled
how at the last A n n u a l General Meet-
i n g he had emphasised t h a t any
scheme of fresh t a x a t i o n based on the
grossly inaccurate estimates w h i c h
were being presented annually to Par-
liament could not but be unfair and
oppressive. Last year's figures, he
said, told the same old tale, an esti-
mated deficit of Rs. 16 "crores h a v i n g
been converted i n t o a surplus of
Rs. 88 crores! Yet, every Budget i g -
nored this trend and proceeded to
levy fresh burdens on the helpless
tax-payers. Meanwhile, Government's
administrative expenditure, not all of
w h i c h could be considered productive,
mounted, and inflation and the re-
sultant f a l l in the real value of the
rupee continued to inflict greater and
greater hardship on the common
man.
Budget Proposals
When the present Finance M i n i s t e r
assumed office, m u c h was expected of
h i m and it was believed t h a t he w o u l d
make a realistic approach to the
whole scheme of t a x a t i o n and give
substantial reliefs. Instead, the pre-
sent Budget proposals merely recti-
fied some anomalies, p u t the income-
t a x rate structure on a somewhat
more scientific basis, leaving the
t o t a l i t y of the burden alone and
actually increasing it by Ra. 40 crores,
of w h i c h the share of the Corporate
Sector was estimated to be Ra. 11
crores. It is impossible to understand
how the economy of the c o u n t r y could
recover and how the capital m a r k e t
w h i c h had dried up could ever come
to life in these conditions. "When one
comes to the specific proposals for
t a x a t i o n , " observed Sir H o m i , "one
does need to be an economist to ap-
preciate the dire consequences of
some of the burdens the Finance
M i n i s t e r is seeking to impose. The
grand design is becoming clear—the
f u r t h e r c r i p p l i n g of the P r i v a t e Sec-
tor, and the elimination, by r a p i d
stages, of whatever remains of the
much-abused Capitalist class, to
May 2, 1964
which I n d i a owes so much of her
economic development. He w o u l d i n -
deed be a very foolish person who w i l l
not see in these drastic socialist
moves a grave t h r e a t to the s t a b i l i t y
and progress of the country."
Dealing w i t h the monetary and
banking spheres, Sir H o m i referred
to the impressive increase of Ra. 430
crores in the volume of money supply
w i t h the public. Scheduled Banks'
deposits had also increased by Rs. 210
crores to touch Rd. 2,252 crores at the
end of the year, the major p o r t i o n of
such increase being accounted for by
Demand Deposits. Similary, Schedul-
ed Bank credit w h i c h stood at
Rs. 1,422 crores in December 1962
expanded by as much as Rs, 158 crcres
d u r i n g the year under review. To en-
able the banking system to meet the
ever-increasing demand for credit
f r o m a l l sectors of the economy, the
Reserve Bank found it necessary, at
the commencement of the c u r r e n t
busy season, to liberalise the b o r r o w -
i n g quotas allowed to Scheduled
Banks. Unfortunately, this f a c i l i t y
turned out to be short-lived. The pace
at w h i c h Scheduled Banks' advances
have moved upwards has been so
rapid t h a t the Reserve B a n k has now
thought it necessary to apply the axe
somewhat ruthlessly. N o t only have
the basic b o r r o w i n g quotas been re-
duced, but the rate of interest has
been so stepped up on each successive
slab, t h a t the effective cost of the
t o t a l borrowings f r o m the Reserve
Bank has risen substantially. Coming
as it has done, when the busy season
has reached the highest peak, his ac-
t i o n has placed the Banks in a difficult
position.
Interest Rates Controversy
The suggestion made by the Re-
serve B a n k that, in their efforts to
mobilise deposits, Banks should re-
examine the pattern of interest rates
had created a controversy in b a n k ' n g
circles. The I n t e r - B a n k Agreement
on m a x i m u m rates of interest on de-
posits had been w o r k i n g satisfacto-
r i l y and had helped to keep down the
general cost of deposits f o r the bank-
787
 THE ECONOMIC WEEKLY M a y 2, 1964

u t i l i s i n g manpower resources w i l l be the business c o m m u n i t y and if a l l of holds in the b a n k i n g system of the

a large share of the Bank's t o t a l earn- us give of our best to the service of country."
ings, the p r o p o r t i o n being as h i g h aa the i n s t i t u t i o n , we have every hope
Note: This does not p u r p o r t to be a
34% i n 1963. t h a t the Central Bank w i l l long con-
record of the proceedings at
tinue to occupy the proud position it
Mechanisation Resisted the A n n u a l General Meeting.
S i r Homi also voiced his concern at
the rate at w h i c h overtime allow-
ances paid to the Bank's staff were
going up in spite of additions to the
staff. In Western countries, Banks
had achieved a considerable measure
of advance by modern methods and
machinery. I n India, apart f r o m the
difficulty of i m p o r t i n g accounting
machines and t h e i r components in
sufficient quantities, there was a stiff
resistance on the p a r t of large sec-
tions of Bank employees to any at-
tempts at mechanisation. The fear
t h a t machines w o u l d displace men
and result in the retrenchment of staff
arose f r o m a short-sighted view.
B a n k i n g business in I n d i a is constantly
expanding and a c q u i r i n g new dimen-
sions, and even if mechanisation was
introduced on a substantial scale,
there w o u l d s t i l l be a g r o w i n g demand
for more and more men. Sir H o m i
hoped t h a t the staff w o u l d give dis-
passionate consideration to this aspect
of the m a t t e r and co-operate w i t h the
Management in i n t r o d u c i n g new
methods so essential for the stream-
l i n i n g of the Bank's manifold opera-
tions.
Besides the i n t e r i m dividend of
Rs.. 2.40 per share already paid out, it
was recommended that a final d i v i -
dend of Rs 2.60 per share, subject to
tax, be paid out of the Special Re
serve, as was done last year.
Sir H o m i paid a g l o w i n g t r i b u t e to
the services rendered b y M r . N . K .
K a r a n j i a w h o had retired after a long
and distinguished career of 45 years.
H e welcomed M r . P . C Cooper w h o
was appointed General Manager on
M r . K a r a n j i a ' s retirement and w i s h -
ed h i m a successful t e r m of office.
Sir H o m i also expressed his w a r m ap-
preciation of the very valuable ser-
vices rendered by the Vice-Chairman,
M r . C . H . Bhabha, i n l o o k i n g after
the affairs of the B a n k and in deve-
l o p i n g i t s business. Sir H o m i ended by
observing that "the c o n t r i b u t i o n
w h i c h a B a n k of our size and status
can make to the economic g r o w t h of
the c o u n t r y is immense, and if we
continue to enjoy the confidence of
 THE ECONOMIC WEEKLY M a y 2, 1964

u t i l i s i n g manpower resources w i l l be the business c o m m u n i t y and if a l l of holds in the b a n k i n g system of the

a large share of the Bank's t o t a l earn- us give of our best to the service of country."
ings, the p r o p o r t i o n being as h i g h as the i n s t i t u t i o n , we have every hope
Note: This does not p u r p o r t to be a
34% i n 1963. t h a t the Central B a n k w i l l long con-
record of the proceedings at
tinue to occupy the proud position it
Mechanisation Resisted the A n n u a l General Meeting.
S i r H o m i also voiced his concern at
the rate at w h i c h overtime allow-
ances p a i d to the Bank's staff were
g o i n g up in spite of additions to the
staff. In Western countries, Banks
had achieved a considerable measure
of advance by modern methods and
machinery. I n India, apart f r o m . the
difficulty of i m p o r t i n g accounting
machines and t h e i r components in
sufficient quantities, there was a stiff
resistance on the p a r t of large sec-
tions of Bank employees to any at-
tempts at mechanisation. The fear
t h a t machines w o u l d displace men
and result in the retrenchment of staff
arose f r o m a short-sighted view.
B a n k i n g business in I n d i a is constantly
expanding and acquiring new dimen-
sions, and even if mechanisation was
introduced on a substantial scale,
there w o u l d s t i l l be a g r o w i n g demand
for more and more men. Sir H o m i
hoped t h a t the staff w o u l d give dis-
passionate consideration to this aspect
of the m a t t e r and co-operate w i t h the
Management in i n t r o d u c i n g new
methods so essential for the stream-
l i n i n g of the Bank's m a n i f o l d opera-
tions.
Besides the i n t e r i m dividend of
Rs.. 2.40 per share already paid out, it
was recommended that a final d i v i -
dend of Rs 2.60 per share, subject to
tax, be paid out of the Special Re-
nerve, as was done last year.
Sir H o m i paid a g l o w i n g t r i b u t e to
the services rendered b y M r . N . K .
K a r a n j i a w h o had retired after a long
and distinguished career of 45 years.
H e welcomed M r . F . C Cooper w h o
was appointed General Manager on
M r . K a r a n j i a ' s r e t i r e m e n t and w i s h -
ed h i m a successful t e r m of office.
Sir H o m i also expressed his w a r m ap-
preciation of the v e r y valuable ser-
vices rendered by the Vice-Chairman,
M r . C . H . Bhabha, i n l o o k i n g after
the affairs of the B a n k and in deve-
l o p i n g i t s business. Sir H o m i ended by
observing t h a t "the c o n t r i b u t i o n
w h i c h a B a n k of our size and status
can m a k e to the economic g r o w t h of
the c o u n t r y is immense, and if we
continue to enjoy the confidence of