The Steel Brothers Saga:  IBP Co. Limited

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We looked at the story of Sir Karim Jamal, the founder of IBP Co. Limited in an earlier blog.

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The Steel Brothers Company Limited is an equally important component of the IBP story.

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Much of the history of the company is lost as its headquarters in London were bombed and Rangoon was occupied during WW2.

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The story begins with a young Scottish gentleman who went to Burma, in 1857, as a manager for Wyllie and Co., consignment agents who traded in and around Burma

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By 1859, this young man, named William Strang Steel, was made a partner in Wyllie and Co.

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In 1870 William decided he wanted a free hand and he resigned and struck out on his own. He set up his own firm in Rangoon.

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He began by importing piece goods but saw an opportunity in the Rice trade. He built his first rice mill in 1871. The firm would build on this first step and become the largest shippers and millers of rice in the world.

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In 1873 William left for England and there he formed a partnership with his elder brother James Alison Steel and Steel Brothers was born. The Company would repose faith in its managers and over the years, even after William left the active management of the firm, Steel Brothers would thrive.

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Trading in rice brought Steel Brothers in touch with another remarkable man, Abdul Karim, Abdul Shakoor Jamal.

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Abdul Jamal was an optimist who took risks and they came off. He had started from humble beginnings as a stallholder in the Rangoon Bazaar. But he was a man with great ambitions with the ability and talent for organizing and managing a business.

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Abdul Jamal had diversified into Oil from trading without any background in petroleum. What he lacked in experience and knowledge he made up with his optimism and energy. He bought and leased drilling sites at Yenangaung. He hired Percy Corey, an ex-Burmah Oil drilling expert. So great was his confidence in his new business and in Mr. Percy, that he even built a refinery at Seikkyi that could refine 2000 barrels in a day, before production started at the oil fields. This was on the Rangoon River. All this exhausted Abdul Jamal’s cash as well as credit reserves. A shrewd judge of men, Abdul approached Steel Brothers for a partnership. Thus, the Indo-Burma Petroleum Company Limited with Abdul Jamal and Steel Brothers as equal partners.

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Steel Brothers was a conservative firm dealing in rice and timber mainly from Burma. There would have been opposition from the Board to venturing into such a risky business. Sir Robert McCraken was the Chairman of Steel Brothers in 1908 when the firm was formed.

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The partnership was successful. Abdul Jamal was a genius at Marketing with a strong sales network already in place in India due to his rice business. Steel Brothers had access to capital and credit and managed the operational side.

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IBP went from strength to strength. Obstacles were challenges to be overcome. Production was booming and the refinery capacity was expanded to meet it. Tin production was stepped up. A plant that was supposed to make 8000 tins a day was made to produce 20000 tins a day! Petroleum products were sold in tins in those days.

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When IBP’s storage godowns were full and overflowing,  rice godowns were used. Storage facilities at Bombay and Calcutta were built. These storage locations are still in use by Indian Oil.

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In 1912 the Company acquired its own Oil tanker the “Shwedagon”. This iconic ship would see continuous service from 1912 to 1952 and survive two world wars.

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The Attock Oil Company was started in 1913 in what is now Pakistan and Steel Brothers were appointed the Managing Agents. Based on their experience Steel Brothers started to build up the Attock Oil Company which would become one of the largest Petroleum Companies of Pakistan. The drilling equipment was loaned from IBP Co. Limited and the foundations of the Attock Oil were laid by Steel Brothers. But that’s another story.

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In 1923 Sir Abdul Jamal died and IBP was taken over fully by Steel Brothers. The marketing staff of IBP were absorbed into Steel Brothers. 

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WW 2 marked a turning point for Steel Brothers.

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The refinery in Burma was destroyed as per the scorched earth policy of the British, and the Chittagong facilities were removed and shifted to Calcutta. Rangoon was lost to the Japanese who occupied the Company’s Burma headquarters. Steel Brothers shifted into the Calcutta headquarters of IBP Co. Limited. The London headquarters was destroyed by the German bombing and much of the Company records were lost.

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The end of the war meant taking stock of what was left. The old order was changing and a fresh outlook was needed.

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The war had destroyed IBP in Burma and it had lost its oil fields and refinery. But its Indian Operational structure was intact.

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With backing from the Burma Oil with whom it was a partner in operations in Burma and in Chittagong, IBP sourced products from where it could, mostly the Middle East. This was rationed or supplied as the need be and IBP became a part of the overall distribution network in India during the post-war years.

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The decline of the British Empire and the newly Independent States also had their challenges.

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The 1950s saw the hegemony of Burmah Shell being challenged by the American Oil giants. IBP with its experience in Oil marketing was used by Burmah Shell to market its products. IBP bought products on Consignment from Burmah Shell. IBP had bases in Bombay and Calcutta but now felt the need to open an office in Delhi to cater to the north Indian markets. All the expansion and modernization meant an outlay of capital and the cost was not cheap.

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In newly independent Burma the Government finalized new arrangements and took a one-third stake in the Burmese part of IBP. The cash received by Steel Brothers from this disinvestment they used to purchase a twenty-five percent share in Balmer Lawrie and Company Limited which was an old and well-known industrial and agency house in Calcutta. Thus IBP became diversified from Oil.

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Steel Brothers continued to try and diversify and maintain IBP on their own. The tin manufacturing facility in Bombay was repurposed to manufacture varied products like bottle-washing equipment, electronic components, relays etc.

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But events were moving fast and Steel Brothers understood that IBP could not survive if they continued and an Indian partner or owner was needed for IBP to survive. In 1970 Steel Brothers sold IBP Co Limited to the Indian Oil Corporation Limited.

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How Indian Oil acquired IBP by overcoming political pressure and found the money for the purchase is another story. However, it ensured that IBP would survive as a petroleum company for some time and later merge with Indian Oil.

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It meant that the facilities built by Sir Abdul Jamal and the pioneering engineers of Steel Brothers would continue to be in use even today more than a 100 years after it all began.

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Namaste till the next time. 🙏

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