Last Updated on Sep 1, 2022 by Aradhana Gotur

Two decades after taking over Reliance Industries, Mukesh Ambani announced the family succession plan for his group on Monday. He listed the separate businesses his three children would lead:

  • Akash Ambani will head Jio’s digital business
  • Isha Ambani will lead Reliance’s retail division
  • Anant Ambani has joined the new energy business

Reliance founder Dhirubhai Ambani passed away without having a succession plan in place, leading to a dispute between Mukesh and Anil Ambani. To avoid the repetition of history, a proper succession plan has been put into place this time.

Whether to pass the reigns to professionals or insiders is a hotly debated topic, especially since India has several family-controlled listed companies. Precedents in Indian corporate successions show mixed results for both approaches.


Notable succession stories through corporate India

Infosys case: The succession at IT bellwether Infosys needs a look. The founding members agreed in the beginning that everyone will get a term to head the company as one retires. It was also agreed that the company will be handed over to a professional CEO after every founder-member has had his term at the helm. The passing of the baton was smooth. Vishal Sikka, the first outside CEO, took over. Soon rift started over his style of functioning, pay hikes for top executives, the focus of the company, acquisitions, and key appointments. The founders got him removed. Later, an Infoscion long-term Infosys member was given the reins.

Tata case: At the Tata Group too, mistakes happened. After Ratan Rata stepped down the baton was passed on to Cyrus Mistry, who belonged to the extended family (related by marriage). Soon differences cropped up between the Tatas and the new CEO. Court battles followed and finally, N Chandrashekhar, a Tata-bred CEO, was appointed as group head.

Smooth transfer at DRL: Perhaps, succession at Dr Reddy’s Labs is hailed as the best.  Anji Reddy, founder and chairman of DRL, transferred the shares he holds in the company to the Reddy family’s holding entity which controls 23.4% of the pharmaceutical business. The transfer showed Reddy trusted the next generation to run the business and control the family fortune. It also ensured that the wealth goes to the full family and no one else.

Hinduja mess: At the Hinduja family, things got a little messy. The dispute was over control of Hinduja Bank. One brother, Srichand Hinduja, transferred control of the bank to his daughter, which the other three brothers objected to, who contended the asset belonged at all. The issue landed in a court in the UK. The court ruled in favour of Srichand. But bad blood has already spilled.

Raymond’s case: In 2002, Dr Singhania transferred his shares in the Raymond group to his youngest son Gautam. This dispute led to a humiliating legal battle between the father and son.

Kirloskar case in SC: The company was founded by the present generation’s great grandfather Laxman Kirloskar in 1910. Now, the three brothers – Sanjay, Atul, and Rahul – are among the fourth generation of the family. The Group had gone through a split and a restructuring with cross holdings within the group. A dispute arose between the siblings over an acquisition by one company, a firm that competes with pumps made by Kirloskar Brothers. The case went to the Supreme Court.

Different story at Murugappa: At the Murugappa Group the story is different. Valli Arunachalam, the eldest daughter of former Murugappa group chairman M V Murugappan, and her family moved to the National Company Law Tribunal (NCLT), Chennai, alleging gender discrimination. She and her sister were denied a board seat in Ambadi Investments (AIL), the flagship co, for not having a minimum number of shares.  She battles for the right to be recognised as her father’s successor, who passed away without a male heir. Her cousins and uncles now run the company.

The Bajaj Group: At the Bajaj Group, the trouble began when Shishir, brother of Rahul, wanted the empire, started by Jamnalal Bajaj in the 1930s, to split. He wanted to branch out into other businesses. Madhur, Shekhar, and Niraj are their cousins, but the five have always been considered equals. The five grandsons nurtured the business with interests in two-wheelers, insurance, sugar, steel, and household electrical appliances. Today we see different groups handling the various portfolios of the organisation.

Timing is crucial

As Deepak Parekh of HDFC once said: “Timing is critical and tricky – if succession planning starts too late, handover gets more difficult. If one starts too early, there tends to be a lot of market speculation and rumour-mongering. There can be a reluctance to discuss names openly at the board level as things don’t remain secret.”

About the News author: This news post has been contributed by The Boring News Co. which is a free daily email newsletter that gets you updated on the most important events across policy, business, international affairs, legal and sports categories in under 5 minutes. They claim to deliver news with no sensationalism, gossip, political slugfests or opinions – just the facts that matter in bullet points.

Thomas Sampathraj
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