Family business: United we stay, better we gain

When shall we three meet again in thunder, lightning, or in rain? When the hurlyburly’s done, When the battle’s lost and won
---Macbeth (Act I, Scene I)

NEW DELHI: Their saga is as intriguing as a Shakespearean play. The characters equally fascinating, each with a distinct style. Cut to modern times, the kings and the lords have made their exit and today it’s the business tycoons who hold the power to taper the economies of nations or make markets swirl and dance on their boardroom decisions.

They belong to the brave new world and like the kings of yesteryears the world belongs to them. But like the bard’s characters, they too are prone to nemesis — treason and plotting among family members to take over an empire, sometimes leading to a split.

Often, in boardrooms, office cubicles, lounges you may have found yourself debating, discussing and perhaps relating your fortunes with their success. Wondering about the cash-laden barrels stored in their vaults, and what if they were together, united.

SundayET brings to you some families, who if they had not parted ways, today would have been a larger force to reckon with globally. It’s another thing that most analysts say that they have grown only because they have parted. In calculating the net worth of families, we have only taken into account the listed companies.

The first case in point is obviously the Ambani family that easily could have been the world’s richest family. If you sum up the wealth of the Ambani brothers (Rs 419949.50 crore) on current market prices, they are almost double the size of the wealth owned by Bill Gates (Rs 220052 crore).

When the feud was settled between the two brothers in 2005, it left a big scar on the brand Reliance and subsequently group’s performance in the stock markets dipped for a while. Both the brothers today are back on the forefront of the bourses and doing fabulously well.

The Jamanlal Bajaj family case is similar where the entry of a new generation led to ideological differences and dispute reached the Company Law Board. Today if we combine the wealth of Jamanlal Bajaj family, a whopping Rs 9,655.60 crore is what their worth is. The family has stakes in Bajaj Hindustan, Bajaj Electricals, Bajaj Auto, Bajaj Auto Fin, Maharashtra Scooters.

The same stands true for the Birlas’, who as of now are fighting together to claim a stake in the disputed Priyamvada Birla’s Rs 5,000-crore estate, which includes the flagship Birla Corporation and several other companies of the M P Birla group. If the Birla empire, was today united, they could have been worth Rs 53056.94 crore.

Take the Mittal family too. If not for the split in ‘94 between Lakshmi Mittal & Vinod and Pramod Mittals, L N Mittal would have not chased success on international shores. Today, L N Mittal stands proud on the fourth pedestal of Forbes’ richest. The split in the family, which arose due to differences between the father and brothers (Vinod and Pramod), forced him to take over the international wing of Mittal steel business.

Today, if the family had been together, they would have amassed 127929.75 crore, almost all of it belonging to the better known L N Mittal. Would they’ve ruled the world? Well, there’s no answer and though the assumption is hypothetical, the implications surely cannot be discounted.

Another business family, the Mumbai-based Piramals decided to walk separate paths recently, with a large part of the chunk going to chairman Ajay Piramal and a relatively smaller portion to his sister-in-law Urvi and her three sons.

Similarly, the DCM group, one of India’s leading industrial groups for many decades, lost a lot of its lustre in the late 80s, partly because of a family feud which resulted in the group being divided between various family members.

There are many other examples of business families in India — Mirchandani brothers (Mirc Electronics, owners of brand Onida), Modi family, Mafatlal family, Goenka family (RPG group), Raunaq Singh family (Apollo Tyres), Bhai Mohan Singh (Ranbaxy/Max) — where infighting hampered the performance of the businesses as a unit. Some of these battles are still being resolved by courts. Maybe the statistics on the Forbes list of richest people would have been vastly different and there would have been more Indian business families making their presence felt. Well who knows...

Ashwin Parekh, national leader (financial services), Ernst and Young India feels that though no one can say for sure whether they would have performed exceedingly well, but being together certainly could have given them an added advantage.

“In each of these families, there have been individual leaders, and they with their leadership qualities re-defined the performance of the companies. If they would have been together, they could have exploited each others talent and done exceedingly well. But it could also have been the other way around as the individualistic differences could have bogged them down,” he says.

A renowned international consultant cites the example of companies in the West such as Dow Jones. “If you are a large group, it definitely helps as the global markets see what your market worth is. Also, the financial institutions will back you readily,” he says. Agrees, Alpesh Shah, director, Boston Consulting Group (BCG). He feels that if these families were united, they could have leveraged their financial strength and made a bigger impact on the global scenario.

But he believes that the break-up was also beneficial. “From the society’s point of view, it has helped to create more jobs, more business and more money flowing into the economy. For instance, Anil Ambani’s business is today growing at a fast pace, which may not have been the case if the two brothers were together. He is trying to prove a point to Mukesh Ambani that he is equally capable of doing what he can or may be better. That may not have been the case had he been in the larger umbrella of the Reliance group,” he says.

Sunil Sinha, senior economist and head, Crisil feels that if a family-owned conglomerate can maintain its professionalism in the long run, they are in a better position to dictate the market dynamics. “But if there is no pre-planned hierarchical structure, such disputes are bound to happen because once the patriarch dies the new generation wants to steer the ship on their own.

All individuals are looking for personal success as well and this stands true not only for business families but also for a common man,” he says. The debate may rage on for long, but the question which you may still ask and ponder upon is — what if they were together?