Family Feuds that Changed Indian Industry

Some Impressionistic takes from the book of
Shyamal Majumdar
“Business Battles “
( Family Feuds That Changed Indian Industry)
by Ramki

About Author
Shyamal Majumdar is
Executive Editor of Business
Standard at Mumbai. He
writes a popular fortnightly
column – The Human Factor
on HR challenges . A
collection of his columns is
published by Business
Standard books. He also co-
authored The Satyam Saga .
He has studied family
businesses in great detail.

 Indian industrial history is full of exciting experiences of
pioneering entrepreneurs who built their empires from humble
beginnings.
 Most of them smartly spotted opportunities with keen eye Y
developed enviable brands.
 But some of them were ground to dust under the weight of ego,
greed and poor communication, never rise again.
 The few lingering vestiges of their glorious past, reinforce the
faith in the popular adage, "Shirt Sleeves to Shirt Sleeves in
Three Generations".
 Shyamal Majumdar has included in this book 10 case studies of
such family businesses that were stars in the 1970s and beyond.
 His puts together the bits and pieces, the told and untold stories
of well-known business families, primarily from northern and
western India, but his focus lies on factors that contributed to
their downfall.
Prelude

❖ The Ambani brothers, once a rock solid unified group,
separated almost immediately after their father’s death.
❖ The Chhabria brothers fought on account of mistrust and
misplaced assumptions.
❖ Tyre major Apollo group and pharma major Ranbaxy, had
similar storylines: differences between father and son /
siblings blowing out of proportion.
❖ The much-publicized battles between the extended families
of Bajaj and Kirloskar from Maharashtra, have some
powerful messages.
Prelude

Founder- History
 Dhirubhai Ambani was born on December 28, 1932, to Hirachand
Govardhandas Ambani and Jamunaben Hirachand Ambani.
 He was middle of five children, three boys and two girls. He
passed his matriculation in1949, Dhirubhai left for Aden (Yemen)
at age of seventeen.
 His first job was to collect money at a Shell Petrol Station, earning
three hundred per month.
 After a few years, he rose to the position of Sales Manager in the
same company.
 After working eight years in Yemen, he decided to come back to
India and on December 31, 1958, he came back to Mumbai and
he started the RELIANCE COMMERCIAL CORPORATION (RCC)
with a borrowed capital of Rs.15000.
 RCC mainly involved into the export of ginger, pepper, turmeric,
cashew nut etc. using his connections in Yemen, he exported the
materials to the same place.

Building Reliance
 Yemen was a center of attractions for the exports because of Yemen being
the free port. Under the export promotion schemes that were laid down by
Indian Government also helped RCC to start the trade in Rayon Fabrics.
 Such a scheme by the Indian Government attracted the attention of the
growing businessman. He then switched from the spices to textiles.
 In the year of 1966, he started a spinning mill at Naroda, Ahmedabad
with a borrowed capital of Rs.2,80,000 and named it as Reliance
Textile Industries.
 The scheme of Government of India, benefited RCC the most & its
export constituted 60% of the exports under this scheme.
 There were rumors that the scheme was totally designed and initiated for
Dhirubhai Ambani and to support his companies. But to protect this hoax,
Dhirubhai came as a shield who stated that no one can blame that
Reliance was only the company which was benefited by the scheme, there
were many competitors who shut their eyes and were sitting those days.

 The High Unit Value Scheme ended in 1978. For this Dhirubhai laid
his focus to the domestic market.
 Till that time Reliance Textiles was not doing much in the market but
Dhirubhai Ambani wanted to establish VIMAL brand in the market
and trade it. This was that brand under which Reliance traded its
fabrics.
 He came up with all the marketing plans and strategies to help
support the sale of fabrics in Indian markets.
 As a partof the business strategy, Dhirubhai knew, that it is
essential to grab the consumer’s confidence prior to sell the
fabrics in the market. Thus they emphasized on the quality and
focused to make the quality of every brand superior.
Building Reliance

Succession
 During his life time, Dhirubhai was reported to have settled by calling a conclave
of the family and indicating what everybody would be getting as their share. But
there was no record. Had he left a will or detailed written instruction, much of the
acrimony between the brothers could have been avoided.
 Normally, a Corporate empire is carved into as many companies as many
inheritors and handed over to each of them.
 Dhirubhai had two major companies in the group.
 The Reliance industries and
 The Reliance Petrochemicals
 There were two brothers to divide it between them, ( since the two daughters
were never involved in the business.
 The daughters would get money and a house each) But Dhirubhai merged the
two companies perhaps with an intentions to prevent division of his legacy.
 Dhirubhai did something that surprised Corporate observers. He merged the two
companies in 2002.
 It was clear that he didn’t want his legacy to be divided up. He had probably also
learnt from experience of the other clans which had divided up its businesses
only to find brothers and cousins fighting each other in the market-place and
destroying value.

Succession
 Divided the shares equally between his children, but he kept control of the
group rested intact with his elder son, Mukesh.
 If somebody else were Chairman (hypothetically, mother Kokilaben), Mukesh
would be on the same footing as Anil, both owning around 1-2% of RIL’s
equity.
 The family members were having only 5% of shares in their names but 20/30
trusts and about 500 investment companies control 29% of RIL. Who ever
was the Chairman of Reliance was having the voting rights of these
companies and trust.
 The precise share of voting rights that Mukesh controlled through these trusts
and companies was open to question-it varied from 12% to 29%- but there
was no doubt that he controlled far more voting rights than his brother.
 Those close to Mukesh say that the brothers made an agreement to this
effect, about the separation of ownership and control, while their father was
alive, though Anil denies this.
 What complicated the matters was Anil’s belief that share transfers that
happened between the trusts and investment companies since his father’s
demise had altered ownership structures to his detriment. This was the nub of
the issue around which the future battle revolved.

Dispute
 At the heart of the dispute between Mukesh Ambani and brother Anil Ambani
lay India’s largest business empire-INR 100,000 crore in market cap 80,000
people as employees—was it not big enough for the two of them?
 Apparently it was not. When you are working in such high places, money is a
given. The key is Power. Ownerships issues between Mukesh, 56, and Anil,
54, had divided the Reliance Empire in 2005 despite Kokilaben’s best efforts
to keep them united.
 Sources say that there were differences earlier but they never came out in the
open because of the overpowering Dhirubhai.
 Anil was uncomfortable playing second fiddle to his brother and suggested
various alternatives a few months after Dhirubahi’s death in 2002: that he be
made co-chairman or Mother Kokilaben be made the non-executive
chairman.
 Apparently, Mukesh did not accept the suggestion to give equal status to Anil.
At the board meeting held on 27th July,2004, the Reliance Industries board
passed a resolution conferring sweeping powers on chairman and managing
director Mukesh-including the authority to ‘countermand’ or ‘modify’ Anil’s
decision.

Dispute
 Anil joined Samrajwadi Party (SP) with out consulting with the
family or Mukesh and and was elected by SP as MP of Rajya
Sabha. The parting of the ways were sealed with Anil’s unilateral
announcement of a INR 11,000 crore Reliance Energy power
project in U.P. without taking the Reliance board’s approval.
 On 17th November, 2004, Mukesh went public about “ownership
issues” in the group in an event organized jointly my Microsoft
and a media channel.
 Though Mukesh’s office latter clarified that his statement had
been used out of context and that the ownership of RIL had been
settled by his father, the breakdown of ties between the two
brothers was obvious and out in the open.
 Even if it has started out as a minor skirmish, the manner in which
it was fought-on prime time TV and through screaming headlines
in newspapers-converted it into the battle of the century.

Split
 The parting of the ways was Anil’s unilateral announcement of a INR.
11,000 crore Reliance Energy power project in U.P. without taking the
Reliance board’s approval (the proposal was placed before the board
two days after the formal announcement had been made in the media).
 The RIL board had given its approval for such investment back in
January, 2004. This was not a fight about splitting the Ambani Empire
and Anil trying to extract the best bargain.
 This was a high-stakes game for the entire Reliance pie. Anil, was
apparently willing to take whatever sensible share Mukesh apportioned
to him (his mother had advised him not to go to court). But, if not he,
people in his camp were working to eject Mukesh totally.
 If Mukesh ceased to be the Chairman, this could be achieved. This
game plan got Mukesh see red. His position appeared to be that Anil
could either take the money (the quantum was not discussed) and
leave. Or he could stay on in Reliance like the other family drones on
the board, enjoying all the fishes and loaves of office but essentially
powerless.

Split
 In July 2009 Anil used RNRL’s annual general meeting to attack his older
brother and the government, saying Mukesh was using every trick in the
book, and some outside the book, to feed his greed, and was firing from the
shoulder of a partisan oil ministry.
 Many court battles later, the matter was finally decided by the Supreme
Court, which shut the door on the issue by saying that only the government,
and nobody else, including either of the Ambani brothers, could decide
prices of natural gas, which is owned by the people of India. This is exactly
the verdict Mukesh wanted because now Anil would no longer have the right
to receive gas at the subsidized price agreed to in a personal memorandum
of understanding.
 At the senior level, executives had begun taking sides. In Mukesh camp
were childhood and college friends-Manoj Modi, executive director of
Reliance Infocomm and Anand Jain, president of RIL. Cousins Nikhil and
Hital Meswani, executive directors of RIL who were on the board of the
company were also on Mukesh’s side along with most of the “independent”
board.
 In Anil’s camp was Amitabh Jhunjhunwala, director of Reliance Capital, and
Satish Seth, executive vice-chairman of Reliance Energy

Differences between Brothers…..
Mukesh Ambani vs. Anil Ambani – Power Tussle
 Anil believed that share transfers that happened between the trusts and
investment companies since his father’s demise had altered ownership
structures to his detriment.
 Ownership issues between Mukesh, 56, and Anil, 54, had divided the Reliance
Empire in 2005.
 Anil was uncomfortable playing second fiddle to his brother and suggested
various alternatives a few months after his father’s death in 2002: that he made
co-chairman or mother Kokilaben be made the non-executive chairman.
 Mukesh saw no reason to accept any of these decisions and he probably also
took offence to Anil’s disinclination to accept the status quo.
 Kokilaben finally agreed to split the companies according to a valuation formula
suggested by family friends KV Kamath, ICICI Bank Chairman, and Nimesh
Kampani, Chairman of JM Financial.

Legal Battles/Splits
Mukesh vs. Anil Ambani
 The brothers at first rejected the formula outright, but on realizing that their
mother was dead serious and not willing to back down, they relented.
 They accepted the four-page agreement under which Mukesh retained the
flagship RIL, while Anil took over Reliance Energy, Reliance Infocomm and
Reliance Capital, apart from getting approximately INR.4500 crore as monetary
compensation.
 Besides both brothers had the right to use the Reliance name in perpetuity and
there was a five-year non-compete agreement.
 Kokilaben, however made a smart move by insisting that while she, Mukesh and
Anil would each have an equal 30 per cent share in the Reliance Group, her two
daughters would each have a 5 per cent share. The message was not lost on the
sons; mother and daughters together would remain the single largest
shareholders in the companies managed by Mukesh and Anil.

Lessons ….
 Dhirubhai created a number of trusts with interlocking holdings so that the
ownership issues was made complex. Whoever was the Chairman of the
trust was the Chairman of the group.
 He wanted Mukhesh to be no 1 and Anil to be deputy in the matter of
control. During his life time Dhirubhai should have written down a will or
succession document.
 Anil joined Samrajwadi party without telling his brother and committed to
build 10,000 mw plant. Such decisions of joining a political party and
investments should not be unilateral. There should be a policy for decision
making and code of conduct.
 A policy for resolving conflicts should have been put in place during the life
time of Dhirubhai. He had excellent team of independent directors and long
time friends and trusted professional like Bhakta and who should have
been empowered to mediate and resolve the disputes.
 Resorting to media and litigations in the court tarnished the image of the
group/ family – this could have been avoided by having a media policy and
code of conduct.

Reflection- What Dhirubhai could have done ..
 It has been proved all over the world that unless conscious efforts were
made to put in place proper Governance structures in place such as
Family Constitution, Values, Conflict resolution systems in business and
family, family bonding, etc., and internalized during the life time of the
founder, the family business could not be sustained.
 He could have done succession planning—settling ownership issues.
Not even leaving a will—was it intentional, as rumored that he was not
so confident of flamboyant younger son -- Anil?
 He could have clearly settled the leadership issues—who will have the
last word. Was it his intention again that his eldest son will implicitly
inherit?
 Was it his intention to favor Mukhesh over Anil Ambani, for reasons of
capabilities. But both his sons have proved themselves. Both are
American University MBAs. Even if it was his intention to crown Mukesh,
he should have made it mutually acceptable and agreed to by the family.
 If father wanted unequal shares for his sons and authority, should he not
have made it clear during his life time his intentions. Was he not aware
after all, after him the sons have to work together?

Reflection- What Dhirubhai could have done ..
 Intention to Perpetuate his family business—passed on from generation to
generation or did he intend by default to let it survive if it has strength or split if it
becomes inevitable— thought why should he bother during his life time?
 Laying down the decision-making process between siblings—on strategy
issues like investments, diversification—by creating a Family Business Board.
 It is necessary to first get the acceptance for any Strategic decision from family
before it goes to the professional business board. Both brothers going their own
way to commit capital according to their will and pleasure, as happened could
have been avoided..
 Consensus decision-making is cardinal principle of the sibling stage. A dead
lock procedure should have been put in place
 Family constitution—not only dealing with the ownership, decision-making,
governance issues—but more importantly the code of conduct, should have
been put in place. For example if the family members working in the business
are prohibited to join active politics, Anil could have been prevented from
becoming MP.
 Was he so simplistic that he could not have imagined or predicted that such a
thing can happen to destroy his dreams of reverting the future generation to
rags to rags due to family disputes.

Sons of Dhirubhai Ambani leads us to the better examples of
pros and cons of family led business, the disruptions in the
reliance due to the conflicts between the brothers and the
overconfidence of Anil Ambani that led him to invest debtors
money in risky projects without having a proper expertise
stands out as an example of some of the cons of family led
business.
On the other hand, the Charisma of Mukesh Ambani that led
Reliance industries into greater heights and the ability to utilize
the opportunities to start the projects like JIO tells us about the
pros of this type of businesses.

 Sardar Raunaq Singh took over Apollo Tyres, earlier known as Ruby
Rubber works, from a gentleman named Mathew Marattukulam.
 The factory was 54-tonnes-a-day capacity factory had been built in
1978 at Perambra, 227 km from Kochi.
 Raunaq Singh was born in Pakistan. Partition led to the failure of his
business of steel pipes and he was forced to come to India as a
refugee. In India, after trying his hands at various jobs and ventures,
he set up his own business called Bharat Steel Tubes, by selling his
wife’s jewelry.
 He was a product of the license quota raj and his success can be
attributed to, apart from his hard work, to his incredible networking
prowess and many political clouts that he got favored from.
 He grew from one business to another like Bharat Gears, Raunaq
Finance Raunaq International, Raunaq Automotive components and
then Apollo Tyres.
 Raunaq Singh did not have any particular knowledge of the tyre
business. He went in for it since, at that time the economic viability of a
new business was not as important as getting a license to set it up.
Founder - History

 The first seeds of discontentment between Onkar Kanwar and
his siblings and his father were first sown over Bharat Steel
Tubes, which failed in the 1980’s under Onkar’s stewardship.
 Raunaq blamed Onkar for the failure, while Onkar said that the
business had done exceptionally well under him and they were
able to meet the demand for agricultural pipes due to the Green
Revolution taking place in India.
 Onkar said, “My father was an ambitious man and wanted to do
many things. I always believed that even if you have all the
people and the recourses, unless you have a management
bandwidth, you will not be able to manage the change.
 Used to a world were obtaining licenses with ease and diverting
cash from one business to another was the main mantra for
success, Raunaq Singh just could not cope with the changing
relationship between politics and business.
Differences

 Differences over Bharat Steel Tubes did not prevent the
father from handing over the day to day operations of Apollo
Tyres to Onkar Kanwar.
 It was only much later when the relations with Onkar
worsened, that Raunaq Singh tried to change things by
involving his other sons in the business, kicking of another
confrontation with Onkar. But it was too late as by then, the
eldest son was firmly in the saddle.
Differences

Differences between Founder ( G1) & Successor ( G2)
Sardar Raunaq Singh (Founder) vs. Onkar Kanwar (Eldest Son)
 Differences in Backgrounds:
 Raunaq Singh - era of License Raj where his focus was on obtaining
licenses as possible & and diverting cash from one business to another.
 Onkar – Studied MBA in the US (Post-liberalization era) whose focus was
on business development
 Differences in Aspirations:
 Raunaq Singh’s aspirations - “to build a conglomerate”; wanted each of
his four sons to be small but successful players within the larger group.
 Onkar’s aspiration - to become the number one tyre maker
 Onkar did not want his brothers claiming a share of Apollo’s good
fortunes which, he felt, was entirely due to his own hard work.

Differences between Brothers
Onkar vs. Narinder – Fight over being given a raw deal
 The founder divided the group’s companies among his 3 sons
 Onkar took charge of Apollo Tyres much before his father’s death
 Surinder Pal Kanwar got Bharat gears Ltd. (BGL) and Raunaq
International. His companies are doing very well.
 The younger son Narinder felt he had been given a raw deal by his
father because he got a relatively unknown company, Panshila
Rubbers, which used to supply tyre tubes to Apollo Tyres.
 Due to this discontentment, he approached the Company Law Board,
alleging that Onkar had fraudulently acquired control of Apollo Tyres.
However, nothing much came out of the complaint.

Raunaq vs. Onkar & Narinder vs. Onkar
❖ Raunaq alleged that Onkar lacked transparency and siphoned off
funds depriving other family members of their share of Apollo
Tyres.
❖ Onkar disputed the accusations and the charges finally did not
stick.
❖ Fourteen years after the fight with his father, Onkar Kanwar faced
a new battle with Narinder, who approached the Company Law
Board, alleging that he had fraudulently acquired control of Apollo
Tyres. But, nothing much came out of the complaint.

 Founder -Raunaq singh was belonging to license permit raj
and did not appreciate his Son Onkar Singh’s professional
approach in building up Ranbaxy.
 Raunaq wanted all his sons to play a role in the Apollo Tyres
after he divided the businesses.
 The succession, business strategy and relationship
problems were not handled properly.
Lessons

 Jamnalal Bajaj had two sons- Kamalnayan (father of Rahul and
Shishir Bajaj) and Ramkrishna (father of Shekhar, Madhur and Niraj
Bajaj).
 The Bajajs had previously gone through a split in the past when they
severed ties with another Pune-based auto major, the Firodia Group
(of Kinetic fame), who were junior partners of the Bajaj brothers in
Bajaj Auto and Bajaj tempo.
 Rahul was the eldest among all the cousins. He was older than
Shishir and Shekhar by 10 years, 14 years older to Madhur and 16
years older than his youngest cousin Niraj.
 The Bajaj Group has been synonymous with Rahul Bajaj. Rahul was
the undisputed patriarch of the Bajaj clan and he ran his business with
autocratic authority.
 Family members were assured their share of wealth from Bajaj Auto
but were given no role in the running of the company. To his credit,
Rahul ran Bajaj Auto quite efficiently for many years (setting up two
factories at Akurdi and Waluj) & made its products a household name.
Founder- History

 Kushagra Nayan Bajaj's -first appointment as a trainee on the shop
floor of Bajaj Auto's Akurdi plant ,under the watchful and, often
critical, eye of his tauji (uncle), Rahul Bajaj.
 Rahul -a hard taskmaster, & he treated his nephew learnt any
other young trainee & Kushagra learnt the ropes under him.
 After training Kushagra left to pursue higher studies at the
Carnegie Mellon University in Pittsburgh, USA.
 Rahul advice to Kushagra- Work hard, read a lot and learn to
think.‘
 Since 2002, when at the age of 25 Kushagra assumed charge of
Bajaj Hindustan, he has done a decent job of piloting the firm which
is now ranked among the world's top five sugar companies.
 Kushagra’s -Master's in marketing from North Western University,
Chicago, USA; and he obviously learnt to think, perhaps
developing an outlook that was a bit too radical and independent
for his tauji's comfort
Multi-generation Succession Issues

 On return from USA Kushagra publicly crossed swords with
his uncle, calling him a 'raja [king]' who does not have the
time to meet his 'prajas [subjects]'.
 He was also vocal about how Rahul Bajaj's 'self-centred and
son-centred' behavior was systematically destroying the
altruistic legacy of his grandfather and founder of the Bajaj
Group, Jamnalal Bajaj.
 He certainly did not see any future for himself if he continued
to be part of the Bajaj Group because he feared that cousins
Rajiv and Sanjiv (Rahul's sons) would get the lion's share of
the business and hog the limelight in the future.
 His fears were not unfounded. Rahul had made it quite clear
to everybody that his sons would run Bajaj Auto and there
was no place for anyone else.

 This squashed any ambition that his brother Shishir had harbored for his
son having a say in the functioning of the company.
 Shishir had suggested that Kushagra be given the reins of Bajaj Auto and
Sanjiv be given charge of Bajaj Hindustan but Rahul shot it down. This was
what many believe triggered the demand for a split in the empire.
 Given the strict code of familial respect that most business families in India
adhere to, Kushagra' s rebellion and his choice of words against the head
of the extended family, who was twice his age, stunned many.
 Kushagra -married to Kumar Mangalam Birla's sister Vasavadatta gave
rise to speculation that the young man's confidence came from the Birla
family's tacit and unstated backing - something that both camps have
strongly denied.
 Outburst in 2007 - when the war of words between uncle and nephew
erupted into the public domain, it threatened to shake the rock-solid
foundation of Bajaj Bhavan at Mumbai's Nariman Point, where the five
protagonists worked under the same roof - Shishir and Kushagra on one
side and Rahul and his three cousins, Shekhar, Madhur and Niraj on the
other.

 The year was 2001. It was almost a picture-perfect setting outside the Bajaj
bungalow in Akurdi: palm trees in the sprawling 225 acres of lush green land
swayed in the soft breeze and the Bajaj Auto factory hummed with quiet
efficiency at a distance.
 Inside, the chandeliers sparkled as the giant-sized rooms resonated with the
laughter of children.
 It was time for yet another Bajaj family function. It was just the way, perhaps,
that patriarch Jamnalal Bajaj had visualized his family getting together. It
seemed like a perfect day in the life of the Bajajs, until Shishir Bajaj walked up to
his elder brother and cousins and called them to an adjoining room, saying he
had something important to discuss.
 A deafening silence enveloped the room after Rahul and his cousins heard what
Shishir had to say: he wanted a division of the family assets; more specifically,
he asked that ownership and control of the two Bajaj companies he managed -
Bajaj Hindustan and Bajaj Consumer Care - should be transferred to him and
his son Kushagra, who was still studying abroad. Rahul was the first to recover
and brushed off Shishir's demand as he thought, erroneously, it was yet another
prank his younger brother was playing - much like the days when both were
growing up together in the leafy by lanes of Mumbai's posh Carmichael Road..

 Shishir did not pursue the matter further, but his missing exuberance
during the rest of the party indicated that his reservations about the way
the Bajaj Group was being run were real and that they had not been
appeased.
 His brothers hoped this was just a passing phase but that proved to be
wishful thinking. Shishir's resentment had been brewing for a while and
he was not ready to bury the hatchet.
 Seven months later, he repeated his demand at another family
gathering - this time in the presence of his son Kushagra.
 The reason for Shishir's determination to part ways with his brother and
cousins became clear to everyone.
 The laughter of the children of the extended family still resonated
outside the room, but for the first time Shishir's brothers felt the mirth
was missing. 'We were shocked. After all, there has been complete
equality in what the brothers and their families did, and we just couldn't
figure out what had gone wrong,' Niraj, the youngest of the brothers,
later said in an interview.

 Rahul vs. Shishir/Kushagra
❖ Rahul did not take his brother seriously when Shishir mooted division of
family assets
❖ Shishir and Kushagra offered to offload their stake in the group
companies, including the flagship Bajaj Auto, in exchange of Bajaj
Hindustan, Bajaj Sevashram and Deccan Ayurvedashram Pharmacy,
under their management
❖ By the end of December 2008, settlement was completed as desired by
Shishir The delay was only procedural as it involved a large number of
listed and unlisted companies in the Bajaj Group, investment companies,
properties, flats, etc. Nearly hundred agreements, vetted by lawyers of
both sides, had to be signed.

Settlement
 Finally, by the end of December 2008, settlement was completed
by which the group shareholding in Bajaj Hindustan and Bajaj
Consumer Care lay exclusively with Shishir and Kushagra, while
the promoter shareholding of all other companies in the Bajaj
Group, including those held by Shishir and Kushagra, lay with the
four brothers.
 This includes Bajaj Auto, Bajaj Electricals, Mukand Ltd, Bajaj
Finserv, Bajaj Holding and Investments and Hercules Hoist.
 The process was delayed because of the extremely complicated
exercise involving a large number of listed and unlisted companies
in the Bajaj Group, investment companies, properties, flats, etc.
There were nearly a hundred agreements, almost 140 transactions-
all of which had to be signed by many people after they were vetted
by lawyers of both sides.

 What brought about the sudden change of heart was the stock
market bears. Between September and December 2008, the stock
market crashed, resulting in lower valuation of all group firms. This
helped implement the settlement as both camps benefitted by way
of lower stamp duty, or tax on transactions. So at the end of the
day, money played the final arbiter.
 Shishir had suggested that Kushagra be given the reins of Bajaj
Auto and Sanjiv be given the charge of Bajaj Hindustan, but Rahul
declined. This is what many believed triggered the demand for the
split in the empire.
Settlement

Shishir Bajaj Group
 Bajaj Hindusthan Sugar
 Bajaj Energy
 Coal Mining
 International Reality
After Split

TPG Nambiar
(Thankam)
Anju
( Rajeev
Chandrasekhar)
Devika Ved Rajeev
Ajit
( Meena)
Shreya
The BPL Family Tree

 TPG had a son, Ajit and a daughter, Anju. Both went to study at Boston
University in the US. There they met Rajeev Chandrashekhar, son of an
Indian Air Force officer from an educated middle-class background.
TPG’s daughter Anju fell in love with Rajeev and sought her father’s
permission and married Rajeev in 1991.
 Rajeev, a post-graduate from Illinois Institute, Chicago was already
considered quite name in the world of CPU architecture. He worked for
Intel and every Intel 486 processor ever manufactured contains his
initials along with 30 other engineers who worked on the project. He had
a brilliant career in the US, but while on a sabbatical in India, he was
persuaded by politician Rajesh Pilot and Rajeev Gandhi to stay back in
India which was then at the cusp of a technological revolution and would
offer enough opportunities to talented technological experts like him.
 TPG was thrilled at Rajeev’s decision to stay in India as this meant that
they could live as one big happy family. TPG knew that Rajeev had fire
in his belly, which would help him grow BPL’s fledgling telecom
business.
Family

Founder -History
 For BPL (the acronym comes from its original name, British
Physical Laboratories), the endorsement marked its emergence
as one of India’s most high-profile companies.
 That year, the Bangalore-headquartered consumer electronics
and durables company had made a group profit of around ₹ 120
crore.
 Dynamic House, on Church street in Bangalore’s central
business district, was the group’s headquarters and the nerve
centre from which BPL plotted its spectacular rise.
 Starting from its core of medical electronics, it expanded into
consumer electronics, telecommunications, soft energy and
electronic components, with peak group revenue of ₹ 4,300
crore in the late 1990s.
 During its prime, BPL would regularly feature among the top 10
brands in the country.

 A combination of circumstances brought this once mighty group to its
knees, with the current entity a pale shadow of its former self.
 The reason for the decline—simultaneous expansion into several
unrelated areas of business, lack of financial discipline, the entry of
the South Korean companies LG and Samsung and dissension in the
family.
 This was definitely not the script which T.P. Gopalan Nambiar, now 82
and the well-respected patriarch of the group, had in mind when he
set out to manufacture panel meters for the defense forces in 1963.
 Initially operating from Palakkad in the decidedly industry-unfriendly
environment prevalent in Kerala at the time, by dint of sheer hard
work and quality products, TPG as he’s widely known, slowly
expanded his range to include electrocardiographs and patient-
monitoring systems.
 The 1982 Asian Games, which introduced color television broadcasts
in India, convinced Nambiar to enter consumer electronics.
Founder -History

 Nambiar had a preference for collaborations with Japanese
companies for technology. Thus, at various points of time, BPL
had collaborations with the likes of Fukuda Electric Co. for
electrocardiographs, Nihon Kohden Kogyo Co. Ltd for patient-
monitoring systems and Gestetner of the UK for manufacturing
paper copiers. However, it was the collaboration and eventual joint
venture with Sanyo of Japan that stood the test of time.
 “Japan dominated the global consumer electronics market at the
time, so we were naturally particular about finding a Japanese
partner," recalls son and heir to what is left of the BPL empire, Ajit
G. Nambiar. “Sadly, at that time, most Japanese companies were
skeptical about even supplying products to India, leave alone
coming to India for any kind of technology collaboration."
 Sanyo was surprised BPL was not seeking the kits like every other
company, but was asking for transfer of technology to fully
manufacture TVs in India.
Founder -History

 That was a tall task considering India had practically no local vendors
to supply most of the components needed to make color TVs, which
was something BPL set out to do. But the entry of LG and Samsung
meant serious competition.
 “The Koreans, with their relentless focus on customizing products for
the local market, cost-cutting and global volumes had a huge edge,"
said a former BPL group senior executive who did not want to be
identified. “Why, the Koreans have even dethroned the Japanese
globally. Today, Samsung which initially copied from Sony, is larger
than that firm."
 BPL should have focused on scale by either going global or sold
when it could get a good price, this executive said.
 But just as competition intensified in the late 1990s, TPG stepped
down, handing the reins to his son.
 K.S. Jayanth Kumar, who worked with the BPL Group for three
decades, including a stint as CEO from 2001 to 2004, disagrees with
this assessment.
Founder -History

 “Technology was a commodity and we could have sourced it.
Where BPL failed was the lack in control on finances," he said.
“There was one milk cow for the group, which was throwing up all
the cash, which was being diverted to manufacturing facilities and
several new ventures in unrelated areas which, while
fundamentally sound, had long gestation periods. The group took
its eye off the threat posed by deep-pocketed Koreans."
 Ajit Nambiar said it was the focus on wrong priorities which let
BPL down.
 “To a great extent, our thinking was ‘inside-out’—products,
technology and manufacturing were our priorities. With economic
liberalization in the early 1990s, very large global brands like
Samsung and LG joined the fray," he said. “With very large
volume global manufacturing bases, these brands were able to put
pressure on Indian brands like BPL. Further, rapid technology
change cycles created immense market volatility."
Founder -History

 By early 2000s, the market dynamics had dramatically changed
across the world.
 China established itself as the “factory of the world" and this
changed business economics globally.
 In electronics, value creation is to be found increasingly at the two
ends of the value chain, Nambiar junior said. At one end is value
created by proprietary technology; this requires large and
continuous investment in R&D (research and development).
Brands such as Intel and Philips extract value through
technological breakthroughs. At the other end, value is created
through a strong brand that connects with customers.
 “For instance, Apple, one of my favorite brands, does extremely
well in applying technology to make a difference in the lives of
their customers," he said. “In the middle sits China, masters at
manufacturing and assembling electronic products at unbeatable
prices but with no brand differentiation; China is the brand."

 BPL didn’t have a clear strategy for growth in consumer durables.
Videocon and Onida were faced with the same competition, but
were able to come back with a more focused strategy.
 Meanwhile, son-in-law Rajeev Chandrasekhar carved out his own
empire using the telecom business of the group, which he had
built up. TPG unsuccessfully went to court against his son-in-law
to assert ownership over the BPL telecom business. All this meant
BPL couldn’t focus on external threats.
 “In business, it is not necessarily nice guys who finish first. A
degree of ruthlessness and ability to take hard decisions is
required to win.
 Manufacturing was run by TPG’s brother-in-law. Rajeev, the son-
in-law, ran a different part of the empire.
 The group was seen as nepotistic with Malayalee's being favored.
So, when the family fortunes frayed, the family was not united."

 “Whenever an entrepreneur starts off, it is usually family and
friends who are the first who join. BPL was run professionally
and attracted topnotch professionals.”.
 “A combination of certain factors led to the group’s decline and
it would be incorrect to attribute it to a single person or a single
reason."
 The split between the Nambiars and son-in-law Chandrasekhar,
who now runs his own Jupiter Group and was a Rajya Sabha
member, Jayanth who continues to be a board member of BPL
Techno Vision said: “Obviously, TPG feels sad about what has
happened. Who will not if they were in his shoes?
 The empire which he built through so much hard work has
diminished. Whenever I meet him, we don’t discuss family
issues. But my own understanding is that they have reconciled,
if not exactly resolved their differences."

Differences between Founder & Successor
TPG Nambiar (Founder) vs. Rajeev Chandrashekhar (Son-in-law)
Struggle for control in Decision-making
TPG – did not let go of the controls of business despite
appointing Rajeev as Exec. Director of BPL’s Telecom Business
This centralized decision-making process stifled Rajeev –
announced strategic partner for BPL communication
TPG was distressed over the sale of one of his companies – he
made legal allegations against Rajeev on account of fraud
Subsequently, TPG withdrew all cases against Rajeev – BPL
communications was sold to Essar.

TPG Nambiar (Founder) vs. Rajeev Chandrashekhar (Son-in-law)
 TPG was distressed over the sale of one of his companies – he
made legal allegations against Rajeev on account of fraud
 Subsequently, TPG withdrew all cases against Rajeev – BPL
communications was sold to Essar.

 TPG made one fundamental mistake- he did not let go of the
controls of the business.
 All financial matters had to be run past him. The centralized
decision-making process stifled Rajeev. Moreover, the
personalities of the two- TPG and Rajeev were poles apart.
 One was a product of the license raj and was unable to adapt to
the fast-changing industrial environment post-liberalization of the
Indian economy, whereas Rajeev was a man of modern times
with love for fast cars and having a variety of hobbies and he had
a stint at politics also.
 Rajeev had conscientiously distanced himself from BPL’s other
businesses. TPG’s reaction to the stake sale made it amply clear
as to how uninvolved the Nambiars had become in the
functioning of BPL Communications, which under Rajeev, had
rapidly grown out of the shadow of the parent group. And the
growth had indeed been spectacular.
What went wrong and what are the lessons

Rajaram
Manohar
( Vidhya)
Komal
( Rajiv
Wazir)
Kanchan
(M H
Godvani)
Kiran
Kishore
( Bina)
Resham Pinky
The Chhabria Family Tree

Founder-History
 Manohar Rajaram a.k.a Manu Chhabria (Chairman of Shaw
Wallace Company-SWC) belonging to the Sindhi community
was born in a large joint mediocre family in Mumbai.
 He dropped out of college and joined his father’s shop
which sold radio parts.
 A few years later in 1973, he set out on his own, borrowing
INR 40,000/ from an investor in Mumbai to set up Jumbo
Electronics in Dubai.
 Jumbo Electronics started out as an importer of Casio
products from Japan, went on to become the largest
distributor of Sony products in the world, and later, the
largest distributor of consumer and professional electronics
in the Gulf.

Founder-History
 Manu went on to become one of the richest expatriates in Dubai.
 He began to look at India as a market as he was eager to get
recognition in his home country.
 Since his ‘corporate pedigree’ did not match that of most of his
contemporaries, he opted for an acquisition-led road to growth, in the
process tread on many toes.
 His biggest enemy was perhaps his image: his being a rich Sindhi
with no academic or family background who wanted to gobble up
reasonably well-managed Indian companies by taking advantage of
their low promoter holdings.
 Shaw Wallace was a classic example. But what he was doing was
perfectly legitimate.
 Manu’s wife Vidya and his three daughters followed him to Dubai.
Manu’s brother Kishore worked for Manu as a senior executive at the
Jumbo Group in Dubai. Manu was able to convince him to come to
India and help him with the takeover of SWC which, Kishore did.

Manu Chhabria vs. Kishore – Fight for stake in SWC
 Kishore helped Manu is acquiring SWC & was appointed as SWC’s MD.
 However, when Manu did not offer him any stake the company, the
fraternal relationship suffered and deteriorated over time.
 BDA was established as an independent entity and three new directors
were appointed by Manu, one of whom was Kishore.
 Kishore held a grudge against his brother for not offering him a stake in
SWC whose acquisition was made possible due to Kishore’s effort.
 Thus, in his new capacity as the chairman of BDA he issued a circular
which in effect meant that BDA would function independently of the
supervision and control of Manu Chhabria and the name of BDA Breweries
and Distilleries was changed to BDA Ltd.
 This started an ugly fight between the brothers.

 Manu vs. Kishore & Ranibai vs. Vidya
 The two brothers had slapped around 140 cases against each
other
 Ranibai Chhabria challenged the merger of SWC with United
Spirits in court, claiming that her son had died intestate seven
years ago, and that under Hindu Law she was entitled to a fifth
of his estate.
 Vidya (Manu’s wife) won the case when the Supreme Court
dismissed Ranibai’s objection to the merger between the two
companies.

Events
 The Kirloskar group was founded in the year 1888 by Late
Mr.L.K.Kirloskar & Rich Engineering heritage over 100 years .
 Counted amongst India’s largest multi-product, multi-location diversified
Engineering Conglomerates.
 At the turn of the millennium, the Kirloskar Group was divided among
family lines following clashes after the group patriarch S L Kirloskar' s
death. Vijay R Kirloskar has exited the group to pursue his own vision
and business goals.
 What started as a feud between the Kirloskar brothers—Sanjay (60) and
Atul (61)—over the construction of a gate at their homestead in Model
Colony in January, 2017, soon snowballed into a fight between the
matriarch, 82-year-old Suman Kirloskar, and her younger son, Sanjay,
with the former claiming that her son had usurped a 10-crore land parcel
at the family’s Lakaki Bungalow.
 In a fresh twist in the family’s bitter dispute, Sanjay Kirloskar has sought
a partition of assets held by Chandrakant Shantanu Kirloskar Hindu
Undivided Family (HUF).

 By the late 1980s, personal tragedies such as his brother (Ravikant)
and two sons (Shrikant and Chandrakanth) and his own advancing
age, had slowed Shantunurao down considerably.
 He drew up a succession plan under which his grandsons Atul,
Sanjay, Rahul (all sons of Chandrakanth) and Vikram (son of
Shrikant) became the Vice Chairman and MDs of Kirloskar Oil
Engines, Kirloskar Brothers and Kirloskar Pneumatic, respectively.
 His nephew Vijay (was the eldest in the third generation of
Kirloskars and the only son of Ravikant) was given independent
charge of Kirloskar Electric, and ultimately group chairmanship, after
his death in 1994.
 The brothers resented their grandfather’s decision but they had no
other option but to mask their feelings and carry on with their
businesses. But the seed of discontent was sown. Shantunurao
probably knew about his grandsons’ reluctance to accept their uncle
Vijay as their boss.

 He believed that if the group had to stay together it needed glue,
which only a designated family patriarch could provide.
 So he went ahead, perhaps, because he thought that Vijay, as
the eldest among the heirs, was best suited for fulfilling his
father’s dream of building a powerful Kirloskar Group with ‘one
vision and one goal’.
 The fortunes of the Kirloskars plummeted with the death of
patriarch Shantunurao. The group did not do enough to pursue
aggressive options even after the license raj ended.
 Overall, the members of the Kirloskar family exuded a sense of
being happy in remaining small.
 The rift between the uncle and nephews made the family more
obsessive with retaining control rather than doing anything
substantial for the growth of their companies, there by letting
opportunities slip by

Attempts to Hold the Family Together
 Nobody can fault Vijay for not trying to fulfill his uncle’s dream of making
the Kirloskars a cohesive unit. He started two things: one, a family council
style of management under which all family members would meet once a
fortnight to discuss group fortunes and strategies; and two, every Diwali, all
the members of the Kirloskar family would meet, without fail, at the
ancestral family home in Pune for a week of togetherness. That was not all.
He also worked towards building better relations among family members
and making them think as a group instead of focusing on their individual
interests.
 Vijay knew that he had to erase the impression that the Kirloskar group had
failed to climb the liberalization bandwagon and had been conservative in
its growth keeping the ownership closely held within the family. He realized
that his nephews and other stake holders would accept his leadership only
if he could bring about a massive makeover which would translate into
success in the market place.
 In his first public announcement in 1994, Vijay announced that the Kirloskar
group would aim for a tenfold increase from the existing numbers within a
decade. But it seemed that his broad guidelines remained only on paper.

Vijay vs. Nephews
 Vijay split the group stating that it was ‘in the interest of the changing
demands of global business’, taking with him the eight companies that
was under his direct control. Kirloskar Electric was one of them.
 The nephews regrouped under Atul. But the peace did not last for long
as the nephews issued a notice to Vijay asking him to stop using the
Kirloskar brand name.
 Vijay moved the company law board ant the courts against this. Vijay
won the case.
 The messy Kirloskar family battle was finally settled after the parties
decided that the vexed issue of cross shareholding needed to be
resolved to make the split complete in all respects.

After the Split
The family developed mechanisms for regular
mutual consultation where members could come
together to compare and exchange notes. While all
this helped build internal synergies, it was found to
be inadequate to build long term business
competitiveness. Even though the Kirloskar group
may not be setting the charts on fire, but the
individual companies have done reasonably well,
with the fifth generation of the Kirloskars slowly
taking charge.

Events
 Way back in 1905, Mafatlal Gagalbhai, a youth hailing from
Ahmedabad, entered into partnership with Shorok, another young
man, for a mill.
 They buy another mill in Nadiyad in 1912 after making some
money. In 1916 they get to own up Surat-based Nawab Jafar Ali
Mill.
 And then starts a series of mill take over in Mumbai.
 By 1960, Mafatlal Group has already made its mark in textile field.
Their descendants change their surname to Mafatlal.
 Over a period of time, son Navinchandra and grandson Arvind too
join the business.
 Upon the arrival of Arvind, Mafatlal group forays into various
enterprises like petrochemicals and chemicals. Companies like
Nocil and PIL do wonders. While Nocil has collaboration with
Royal Dutch Shell, Pil has arrangement with a German company.
A new company called Florin is also floated.

 When Hrishikesh joined the group in 1977 after completing his
education, his group was flourishing well, but as luck would have it, in
1979, they had to encounter an unforeseen crisis.
 Like other family business groups in India, Mafatlal too had to face a
family split in their third-fourth generation.
 Cousins went to courts. The company Hrishikesh was handling went
to his cousin, so he had to learn the new business from scratch.
 Meanwhile, his father Arvind Mafatlal leaned more and more towards
social services as a result of his growing association with Monk
Ramanandi Sadhu Ranchhoddas maharaj.
 Around the same time, his eldest son Padmanabh was down with a
protracted ailment so the responsibility of all major business-related
decisions fell on young and inexperienced Hrishikesh.
 What followed were a string of mistakes, wrong decisions and the
infamous textile mill strike led by notorious union leader Dutta Samant
in the ‘80s.
Events

 The strike proved back-breaking for the group. The main mill got shut
down.
 Taken over a sick national Machinery Man and renamed it Mafatlal
Engineering and invested INR 10 crore in it. That too faced a lock-out.
 The government had promised that it would allow us to sell it but did not
honor the commitment and that ruined them financially.
 Around 1985-86, time began to change again and we won an important
family feud case.
 After the family split, Arvind Mafatlal Group had initiated a few new
ventures, like plastic processing machinery, electronic components,
medical equipment's, software and finance during 1988-1995.
 Hrishikeshbhai however admits that ‘the foreign companies whose
business interests we were looking after in India opened their own units
here following the 1991 liberalization, so we had to go back to our initial
textile-chemical business.
 Started Gujarat Gas at an initial investment of INR 4 crore in 1990, and
sold the shares of the company to British Gas at 128 crores.
Events

The empire declined by 3rd gen but were fighting over the left over crumbs
 Founder, Gagalbhai’s businesses were spilt between the families of his three
sons.
 His grandchildren- Arvind took over the reins of Mafatlal Industries, Yogindra
took charge of IDI (Navinon Industries) and Matulya Mills, while Rasesh took
over Standard Industries and Standard Alkaline.
 Soon after the split, the Group’s fortunes nosedived. Again in the early
1990s, the businesses suffered when low investments in technology and
growth of power loom sector sapped its textile business.
 After Atulya inherited the business from Yogindra, it further declined and
eventually they filed for bankruptcy.
 Now family is fighting over the crumbs: a few apartments, family jewelry and
paintings.

Madhuri vs. Daughter-in-law
 Yogindra’s wife Madhuri, until her death in July 2013,
fought with her daughter-in-law over property rights.

Sungrace Mafatlal Battle
 Yogindra (son of Navinchandra) was the low-profile promoter of the Sungrace
Mafatlal Group, which after the 1979 split comprised of five companies with a
turnover of $93 million.
 Despite his low-key and cautious approach, the group made impressive
progress under Yogindra, doubling the turnover in five years. Then a series of
events took place on the business front which would have made Yogindra give
up and sell both his major companies IDI and Mafatlal Dyes and Chemicals
(formerly known as Hoechst Dyes and Chemicals). Instead, Yogindra showed
courage and bought the German parent company Hoechst AG and announced
his intension to enter new areas.
 By 1984, the Sungrace group was out of the woods, but a series of illogical
acquisitions carried out to achieve Yogindra’ s lofty dream of becoming one of
the largest integrated textile company in India misfired and Yogindra started
losing his fortunes.
 Yogindra had only one son- Atulya and three daughters. The decline was
hastened when Atulya inherited the empire after Yogindra’s death in January
2005. Atulya had married Payal with whom he had a daughter Marushka and a
son Varun. He divorced Payal in 1997 and married Sheetal (daughter of
Manohar Bhagat who was the promoter of conveyor belt maker-Nirlon) in
February 2000.

 His first born was a daughter Aparna who got divorced in 2005 and
soon thereafter had a sex change operation and became Ajay, the
eldest son of the family and thus a claimant to the property and
family fortune-at least whatever was left of it.
 Mafatlal Mills was shut for years and Atulya had to eventually file for
bankruptcy.
 The outcome of all this was a community of frustrated lenders
depressed investors and sacked workers ranged against a few
‘owners’ who had little to cling apart from memories.
 So, all the family does now is fight over the crumbs: a few
apartments, family jewelry and paintings. But the crumbs still seem
to be meaty enough, going by the bitter feud that has erupted
between the family members. The whole saga can be made into a
soap opera.

 This drama had a matriarch (Yogindra’s wife Madhuri) who until her
death in July 2013, at the age of 80 fought with her daughter-in-law
over property rights;
 Son Atulya (46) who was battling colon cancer in a London hospital until
a couple of years ago and his second wife in a Mumbai courtroom;
 A daughter-turned-son Ajay (51) who claims the sex change had
nothing to do with his father’s injustice against daughters as far as
property inheritance is concerned;
 And a daughter-in-law Sheetal (43) who does not mind a bitter fight to
protect what she says is her ‘streedhan’.
 Then there are small players like Marushka (20) Atulya’s daughter from
his first wife.
 The show down has been so unpleasant that none of the players of the
drama, former family friends or even ex-employees are willing to go on
record on the issue. But what they say off-the-record and the contents
of the countless court petitions doing the rounds are mind boggling.

The story of the Mafatlals is yet another saga of one
generation building the business empire while another fritters
it away. Gagalbhai built his business from scratch, Yogindra
attempted to consolidate the business while Atulya preferred
to live off the inheritance.
Today, there is hardly any business left and Atulya lives off
property rents and sales. The coming generation will perhaps
have to depend on the same sources for their income-unless
Atulya does something to change the situation.

Gujarmal
(Dayawati)
Krishan
Kumar
( Bina)
Charu
Lalit
(Minal)
Samir
Vinay Kumar
( Chanderbala)
Alok
Ritika
Satish
Kumar
( Abha)
Bhupendra
Kumar
( Veena)
Dilip
Divya
Ritika
Umesh
Kumar
( Kumkum)
Family Tree

Founder -History
 The group founded in early 1930s by Gujarmal Modi (the young
heir of a business family from Patiala) was among the largest
conglomerates in the early 1980s, with the businesses ranging from
chemicals to sugar, airlines to sponge iron.
 He set up Modi Sugar Mills in 1933 in Begumabad near New Delhi.
 The mill prospered, and subsequently diversified into Vanaspati,
rubber, paper, distillery, sponge iron, chemicals, rice mills and
textile.
 By the late 1970s, Modinagar (an industrial town set up by him)
became the headquarters of the group known as Modi Industries
Ltd.
 Gujarmal’s Father Multani Mal married four times. From his first
wife he had a daughter. Gujarmal was born from his second wife;
the third wife passed away childless and Kedar Nath was born from
his fourth wife. By the time Kedar Nath (16 years younger to
Gujarmal) joined the business the Modi group was already an
established name.

Founder -History
 Gujarmal had five sons - Krishna Kumar (KK), Vinay Kumar (VK),
Satish Kumar (SK), Bhupendra Kumar (BK) and Umesh Kumar
(UK) and six daughters. Kedar Nath had three sons.
 Despite being step brothers Gujarmal and Kedar Nath were close
and the both worked together for a long time.
 After Gujarmal’s death in 1976 (he did not leave behind a will)
Kedar took over as head of the family and steered the empire quite
competently until Gujarmal’s sons grew up and joined the business.
 Around mid-1980s, Kedar started worrying about the future of his
sons.
 Since there was no clear line of ownership, an insecure Kedar
initiated action for a share of the pie for each of his three sons.
 This was resisted by his brother’s sons, who wanted to maintain
status quo, stating that the group had been founded by their father.
And so, quarrelling over the family business began, leading to a
steady decline of what was once a booming empire.

Split
 Kedar Nath used his formidable connections in the
government to sharpen his attacks on the family.
 The brothers retaliated and removed their uncle from the
chairmanship of the group flagship, Modi Rubber, in 1988.
 All hell broke loose after that, and corporate India witnessed
one of the most vicious family battles.
 The brothers sparred in public.
 The prolonged dispute hit Modinagar like a typhoon.
 Business was neglected which led to labor unrest, miss
management, technological obsolescence and a host of other
problems.
 The mills started shutting down one by one (down from 30 to
just 6).

 Dispute for ownership b/w step uncle & nephews
 Despite being step brothers Gujarmal and Kedar Nath were close and the
both worked together for a long time.
 After Gujarmal’s death in 1976 (he did not leave behind a will) Kedar took
over as head of the family and steered the empire quite competently until
Gujarmal’s sons grew up and joined the business.
 Since there was no clear line of ownership, an insecure Kedar initiated
action for a share of the pie for each of his three sons.
 This was resisted by his brother’s sons, who wanted to maintain status
quo, stating that the group had been founded by their father.
 And so, quarrelling over the family business began, leading to a steady
decline of what was once a booming empire.

Kedarnath vs. Nephews
 Kedar Nath used his formidable connections in the government to sharpen
his attacks on the family.
 The brothers retaliated and removed their uncle from the chairmanship of
the group flagship, Modi Rubber, in 1988.
 The prolonged dispute hit Modinagar like a typhoon. Business was
neglected which led to labor unrest, miss management, technological
obsolescence and a host of other problems.
 The mills started shutting down one by one (down from 30 to just 6).
 A compromise formula was worked out under which Gujarmal’s five sons
would get 60% of the assets and Kedarnath’s three sons would get 40%.
 The following year, Kedar Nath’s group rebranded itself as Modi
Enterprises.

Founder - History
 Ranjit Singh & Gurbax Singh (Ranbaxy was a fusion of the owners’ names) –
Founders – 1937- Delhi.
 Business was formed to distribute medicines supplied by overseas companies.
The company was then acquired by Bhai Mohan in August, 1952.
 Bhai Mohan-born in Pakistan’s Rawalpindi (then part of undivided India) & began
his career in the construction business. He became successful due to his skills of
utilizing opportunities and winning prized contracts.
 After the Partition, Bhai Mohan shifted to Delhi. He would also dabble in money-
lending, came upon, and subsequently acquired Ranbaxy for INR 2.5 lakhs after
his cousins,
 Ranjit and Gurbax Singh defaulted on a loan taken from him. Ranbaxy was then
the Indian distributor for a Japanese drug firm called Shionogi.
 Bhai Mohan had no knowledge of the pharmaceuticals business but had the
insight to spot the potential that the industry promised.
 He made some smart moves after the acquisition and soon graduated from
distribution to manufacturing drugs.
 According to the patent regime at that time, it was legal to manufacture copycat
drugs. By doing so, Ranbaxy earned megabucks and became a global name in
the generic business.

Succession
 Bhai Mohan happily handed over the reigns of the company to Parvinder.
 Soon after taking over as Chairman and managing director, Parvinder
defined and articulated Ranbaxy’s vision which involved becoming a
research-oriented global pharmaceutical company with a turnover of
$1billion by 2003.
 Under his leadership, the transformation of Ranbaxy from an Indian-centric
organization to a giant MNC was truly underway. He set up manufacturing
facilities in many countries and at home, he set up its own R&D centers,
manufacturing plants and established a strong distribution and marketing
network. He restructured the company in a way that Ranbaxy started
following a vertically integrated mode.
 Pleased by Ranbaxy’s success under Parvinder, Bhai Mohan went for an
oral family settlement in December, 1989 and divided his property and
businesses among his three sons.
 Parvinder got Ranbaxy, Manjit got Montari Industries and the youngest
Analjit got Max India and the Okhla plant.

Succession
 Bhai Mohan happily handed over the reigns of the company to Parvinder.
 Soon after taking over as Chairman and managing director, Parvinder defined
and articulated Ranbaxy’s vision which involved becoming a research-
oriented global pharmaceutical company with a turnover of $1billion by 2003.
 Under his leadership, the transformation of Ranbaxy from an Indian-centric
organization to a giant MNC was truly underway. He set up manufacturing
facilities in many countries and at home, he set up its own R&D centers,
manufacturing plants and established a strong distribution and marketing
network. He restructured the company in a way that Ranbaxy started
following a vertically integrated mode.
 Pleased by Ranbaxy’s success under Parvinder, Bhai Mohan went for an oral
family settlement in December, 1989 and divided his property and businesses
among his three sons.
 Parvinder got Ranbaxy, Manjit got Montari Industries and the youngest Analjit
got Max India and the Okhla plant.
 The Company achieved tremendous growth during Parvinder’s tenure as
CEO, spanning 17 years. Its turnover increased from Rs.36 crores to Rs.
1,400 crores. The market capitalization of the company went up from Rs.3.5
crore to over Rs. 7,300 crore, during this period.

Succession- 3rd Generation
 After Bhai Mohan was ousted in 1993, Parvinder Singh focused on
bringing in the best managerial talent who could make Ranbaxy a
force to reckon with in the international pharmaceutical world.
 Ranbaxy was separated from the amalgam of businesses that the
parent group was into- chemicals, pesticides, finance, bulk drugs
and pharmaceuticals-so that it could target and utilize its
managerial and financial resources better without having to bother
about constant boardroom skirmishes.
 Parvinder’s illness however, made him fast-track the succession
issue in the company.
 He knew that his end was near. Parvinder knew that his father was
desperate to get back in an executive management role in the
company once he was not there, and his sons were still too young.
 So, he handpicked DS Brar, a talent he had roped in and his close
confidant, as the CEO. He also tutored his sons well enough on
why he was doing this; his sons understood.

 Thus after Parvinder’s death, when Bhai Mohan insisted that
Parvinder’s sons be taken on Ranbaxy’s board, they resisted and
toed their father’s line.
 Bhai Mohan bequeathed most of his assets to his youngest son
Analjit, who was also made heir to carry on his court battles
including the 13 year old litigation against Parvinder and Ranbaxy
over his ouster.
 The fight between father and son was ugly enough, but the second
round between Parvinder’s widow Nimmi and the brothers Manjit
and Analjit took the cake.
 It even involved charges of intimidation by Nimmi against her
younger brother-in-law, in turn, slapped criminal charges against
her. On his part, Manjit indicated that he believed that his father’s
will had been tampered with.

 Parvinder’s sons, Malvinder and Shivinder knew nothing
about the intricacies of the pharma business at the time of
their father’s death and needed time to settle down.
 DS Brar guided the heirs to the Ranbaxy throne until they
were ready to take over the mantle. The moment Malvinder
knew he was ready; he took over as the CMD.

Differences between Founder & Successor
Bhai Mohan (Founder) vs. Parvinder (Eldest Son)
Differences in Business Strategy
 Bhai Mohan had no knowledge about Pharma business but learnt on the job.
 Parvinder studied Pharma & did his doctorate from USA – transformed the
business .
 Parvinder brought in a big change – appointed a team of professionals and
gave them the freedom to run the company. Even the MD and President of
the company were professionals.
 Bhai Mohan, product of license quota raj - believed that networking with the
rich and influential was critical for the business.
 Father and Son could not see eye to eye as each felt they were right in their
own perspective .
 Bhai Mohan had to step down & resign as the Chairman and MD.

 Parvinder vs. Manjit & Analjit
 Bhai Mohan went for an oral family settlement to divide his property and
businesses among his three sons.
 Parvinder got Ranbaxy, Manjit got Montari Industries and the youngest
Analjit got Max India and the Okhla plant.
 Since, Ranbaxy was the jewel in the crown, Manjit and Analjit felt let
down.
 The brothers’ feeling of having been given a bad deal was not entirely
unfounded. Both their businesses were not doing very well.
 Analjit’s Max India received 60% of its business from Ranbaxy which
Parvinder stopped by setting up his own factory to manufacture the same
product, in order to achieve cost efficiency.

 Bhai Mohan vs. Parvinder & Nimmi vs. Brothers-in-law
 Bhai Mohan bequeathed most of his assets to his youngest son Analjit,
who was also made heir to carry on his court battles including the 13
year old litigation against Parvinder and Ranbaxy over his ouster.
 Second round of battle was between Parvinder’s widow Nimmi and the
brothers Manjit and Analjit. It involved charges of intimidation by Nimmi
against her younger brother-in-law who, in turn, slapped criminal
charges against her.
 On his part, Manjit indicated that he believed that his father’s will had
been tampered with.

Lessons
 The case is an illustration of lack of succession planning, business
strategy, and managing and resolving differences amicably.
 Lack of professional approach- Bhai Mohan was belonging to the
license – permit raj where the success of the business was considered
to depend on the political and bureaucratic connections, while
Parvinder believed in professional approach. There is a generation gap
– Mindset which created the differences in thinking.
 Bhai Mohan was interested in all his sons to work in the family business
company which became prosperous under the leadership of Parvinder
who was not interested in giving any role to his brothers. It was not
correct the part of Bhai Mohan to intervene on behalf of his other sons
when the family partition was done.
 Bhai Mohan should not have divided the business between the brothers
if his intention was to keep them all together in joint ownership.
 Bhai Mohan could not have waited till he was thrown out from the
Board. He should have stepped down with honor and resort to court
battle after his forced step down claiming his right to continue.

Lala Shri Ram married Phoolan Devi. They had three sons, Murli Dhar, Bharat Ram and
Charat Ram The eldest son, Murli Dhar managing DCM’s cotton mill at Lyallpur which
eventually went to Pakistan. In 1949, Murli Dhar with his wife Swaroop Devi, died in a
plane crash. Bharat Ram and Charat Ram joined the business in DCM after graduating
from St. Stephen’s College.
Family Tree

Founder -History
 Delhi Cloth Mills or DCM Ltd. was a textile company founded in
Delhi, India by Ram Kishen Das Gurwale, in 1889 in Delhi, India.
 The company was acquired by Lala Shriram (1884-1963) who
joined the company in 1909 and diversified and grown the company
to great heights and became the founder of DCM group.
 Lala brought in talent from outside at a time when most other
businessmen preferred employing their family members, entrusting
key responsibilities to sons, nephews and uncles.
 Business expanded and diversified its activities into a number of
manufacturing activities such as Textiles, Sugar, Chemicals, Rayon,
Tyre Cord, Fertilizers, Information Technology and Engineering
Products etc.
 The name of the Company was changed on October 6, 1983 to
DCM Limited.
 Lala Shriram’s industrial legacy was valued at Rs. 60 crore at the
time of his death in 1963

Succession
 Lala Shriram’s appreciation for professionals appeared to fade away in the
twilight of his life as he let his family take over the business.
 Five years before his death, he sorted out the succession issue.
 With his eldest son no more, he made his middle son, Bharat Ram, then 34,
chairman and managing director of DCM;
 Charat Ram, three years his junior, was made the overall deputy; and
grandson Bansi Dhar (younger son of Murlidhar) was given a substantial role.
 This arrangement worked like a dream. The two brothers worked together as
a close-knit team and celebrated each other’s efforts leading to the prosperity
of DCM.
 Both of them had radically different approaches to the business which
perhaps initially helped in the success of the business. While Charat Ram’s
Skill was in Operations, and project implementation was his forte, Bharat was
the opposite; he excelled as the external face of the group. Together they
took DCM to the heights their father had only dreamed of.
 Relation between the brothers was initially very pleasant, later, by a
concoction of time, growth, progeny, spouses, society and various other pulls
and pressures, a fissure developed between them which foreshadowed the
family split.

Split
 Charat Ram was tired of playing second-fiddle to his brother since he believed that
the businesses under him were doing better than those under his brother.
 This fueled discontent and allowed friends and associates to drive a wedge
between the two, who gradually drifted apart.
 Despite talking about retiring to allow the next generation to run the family
business, one would not go without the other going at the same time. This
continued for another decade until they both finally retired in the early 1980’s when
they were in their mid to late seventies.
 The flashpoint came in 1976 when irregularities were noticed in a new scheme
(changed by the Bharat Ram camp) that had replaced the earlier system of
payment to DCM’s retail store suppliers. Charat Ram saw this as an opportunity
and split from his brother.
 The fight between the two camps intensified and the aborted bid by Swaraj Paul to
take over DCM further added fuel to the fire. The Bharat Ram group blamed Charat
Ram for failing to prevent the promoter family’s stake from falling to just 9%,
thereby making it possible for Swaraj Paul to make a bid for control of DCM with a
mere 13%.

 The bid was foiled due to a timely intervention of the Congress party. After this
crisis, it became almost a free-for-all at DCM as both the camps were warring and
this meant that no one was in charge.
 Eventually, all members of the third generation approached Bharat Ram and Charat
Ram and said that it was time that the family separated.
 In 1984, Bharat Ram had almost decided to give up in favor of his brother when
Vinay, his eldest son, suggested that both his father and uncle should step down
and make Bansi Dhar (son of Murli Dhar who was 55 then) the new chairman of
DCM. Bansi was close to Charat Ram but was chosen by Bharat Ram and his son
Vinay because of his non-controversial stance on issues and competence in running
the companies under his charge.
 Charat Ram tried desperately to block the change but failed. Though Charat blamed
Vinay for playing dirty politics, the actual reason for the board’s decision not to
support Charat Ram was DCM’s disastrous performance which was due to the two
power Centre's working at cross purposes within the organization. What came as a
double shock for Charat Ram was the appointment of Vinay as MD of the company.
The DCM board offered a conciliation price for Charat making his son, Siddharth,
the deputy MD.
 The new arrangement did not help DCM one bit. Business continued its downhill
slide.
Split

Split
 In 1989, nearly 5 years after the change of guard, the DCM Group finally opted
for a three way split. The three-way split became somewhat complicated by the
fact that Murlidhar’s sons (there were two of them) wanted to separate between
themselves. So the family went for a four-way split.
 Rather than engaging consultants, the family members decided to give
themselves a month to sit down as often as necessary to reach a solution to
separate the businesses.
 This took them three months. The reason for not using consultants or
mediators, according to Arun Bharat Ram, was that there was already a desire
for everyone to go through the process and also as a conservative family, they
did not want the media to become aware and play up the fact that the family
was breaking up.
 The business was split in such a way that as far as possible, assets managed
by one family remained under the same management so that there was a
minimum disruption to the business and any significant value difference could
be made good by monetary compensation. Since the families wanted to make
sure it was legally binding, the agreements were approved by the court. Within
five months, the process was completed. There was a huge sense of relief in
the family once the deal was done.

Bharat Ram vs. Charat Ram – 2 opposing power centers
 As part of succession plan, the founder made Bharat Ram, chairman and
managing director of DCM; Charat Ram, three years his junior, was made the
overall deputy; and grandson Bansi Dhar (younger son of late Murlidhar) was
given a substantial role.
 Both of them had radically different approaches to the business which perhaps
initially helped in the success of the business.
 Charat Ram was tired of playing second-fiddle to his brother since he believed
that the businesses under him were doing better than those under his brother.
 This fuelled discontent and allowed friends and associates to drive a wedge
between the two, who gradually drifted apart.
 This led to DCM’s disastrous performance due to the two brothers working at
cross purposes within the organization.

The four way split
 DCM Group opted for a four way split.
 The business was split in such a way that as far as possible, assets
managed by one family remained under the same management so that
there was a minimum disruption to the business and any significant
value difference could be made good by monetary compensation.
 The pie was divided into four smaller companies.
 DCM Limited (went to Bharat Ram’s family)
 DCM Shriram Industries Limited ( went to Shri Dhar’s family)
 DCM Shriram Consolidated Limited (went to Bansi Dhar)
 Shriram Industrial Enterprises Limited (went to Charat Ram’s family)

The Second Split
 Eight years before Bharat Ram’s death in 1999, and a decade after the first
split, DCM suffered a second one.
 After the first split in 1990, Bharat Ram’s sons could hardly check the
continuing decline of the empire. Mounting losses had left their companies
in a financial mess and DCM’s distribution model was in terrible shape,
what with high labor costs, cash blockages and malpractices.
 What proved to be the last straw for DCM, according to Vinay, were the
partially convertible debentures that the company was forced to issue in the
early 1990s. This raised the debt on the company’s books from Rs. 50
crore in 1991-92 to Rs. 400 crore in 1997-98. The pressure, he says came
from Vivek; the debentures too, he further adds, were Vivek’s idea.
 Arun believed, under his guidance, SRF-a leader in the nylon tyre cord and
refrigerant gases businesses-was doing well and he was being made to
suffer the incompetence of his brothers. His brothers accused him of
walking away with the group’s prized companies. It was becoming
increasingly clear that Bharat Ram’s lunches with his sons were not
enough to keep up the public façade of a unified family for long. All of them
agreed that the holding structure of the group had been planned very badly
and that was making it difficult to raise funds.

The Second Split
 Arun was affected most by this faulty planning. DCM, for example, held controlling
stake in SRF and, because of DCM’s cash crunch, these shares were being
pledged to creditors as collaterals. Besides, DCM was unable to subscribe to the
rights issues of SRF, leading to a classical catch 22 situation for Arun’s company.
So the inevitable happened. In 1999, Arun wanted to disassociate SRF from DCM.
Fortunately, his brothers agreed to his demand.
 Shri Ram Fibres (now known as SRF Ltd.), which went to Bharat Ram’s son Arun,
after the second split in the DCM family. And Vinay and Vivek got DCM.
 Under the settlement formula, Arun bought out DCM from his company and took
over some of its liabilities. Vivek took control of DCM Financial Services and DCM
Benetton, while DCM, with its substantial real estate, remained with Vinay. All other
family assets such as farms and properties were equally divided among the three
brothers. Most importantly, Vivek got ownership of Lal Kothi and also some
compensation for parting with his stake in DCM and SRF. Nothing could be more
symbolic of the empire’s disintegration than the fact that Vivek Later sold the family
house, once considered to be the Bharat Ram family’s pride.
 Although still saddled with INR 200-crore debt, Vinay Bharat Ram is confident his
company is back on track with help from a debt restructuring package worked out
by the financial institutions. His son, Hemant Bharat Ram, is the new Chief
Financial Officer of the company.

Split in Charat Ram group
 Even as Bharat ram’s sons distributed the wealth among themselves, the
Charat Ram group was witnessing another battle—between father and son.
The reason for the fight was ironically an outsider, who was once considered
to be a great example of Charat Ram’s penchant for promoting
professionals.
 Charat Ram started out trying to create a professional set-up for his
companies. He also began the management training scheme and gave free
hand to the professionals who joined DCM.
 One executive he was particularly fond of was Neelkanth Ratnakar Dongre,
who had joined DCM in 1964 as a management trainee. Over the next 15
years, Dongre became Charat Ram's most trusted executive. He quickly rose
up the ladder and opted to stay with Charat Ram when DCM split.
 The two soon became business partners and floated several companies, the
most notable of which were Usha Shriram and Shriram Pistons. They also
set up General Sales, a closely held trading company. Charat Ram's younger
son, Siddharth, greatly resented this Guru-shishya bonhomie. He decided to
opt out of running the family business because of differences with his father
and joined Citibank overseas in the U.S. where he worked for eight years.

Split in Charat Ram group
 Siddharth was rankled by the fact that his father had, through various means
and ways, tried to make his protégé, Dongre, his successor at Jay Engineering
and Usha International. So when Charat asked his son to help turn around Jay
Engineering, which was performing badly, the son responded by saying that he
would do so provided Dongre, who had been given a large number of shares
of the company, was removed from the scene. Neither father nor son hesitated
to take their battles into public domain. They fought bitterly over the control of
Jay Engineering.
 Then the inevitable happened. Familial affections won. Charat Ram made
peace with his son and wanted him to take over all the group firms (Siddharth
was already heading Shriram Industrial Enterprises Ltd. SIEL, which had
brought the Honda car to India under a joint venture.) Charat Ram removed
Dongre from the post of deputy chairman of several of his group companies.
But, he had failed to gauge his one-time protégé’s fighting skills. Dongre
refused to let go of the companies under his domain. What followed was a
series of battles in court and the Company Law Board (CLB) where the
Shrirams tried to wrest control of companies from Dongre.
 The curtains finally came down on the third-and thus far, last- battle in the
Shriram family when Dongre lost the court battles, paving the way for father
and son to reunite.

Lessons …
 While the founder was living he should have laid down how the ownership
issues has to be settled. He left it to the second generation of three
brothers to settle among themselves.
 It is always possible that one of the businesses will not be doing as well as
another company for no fault of the family member who is managing the
same. the group spirit will be lost if that family member is blamed without
going into the reasons and finding a solution collectively- since it is a
collective responsibility.
 Ego problems between sibling undermine their team work- which has
happened in the case of Bharat and Charat who were working together
well leveraging their competencies. A system should be in place to sort out
differences like ‘ pipe cleaning’ and put in place governance systems to
take care of the aspirations. Rotation of portfolios will be a good practice.
 Splitting in every generation is not the answer to the conflicts. There should
be mutually agreed succession and business continuity plan.
 There was unilateral decision making when Bharat appointed his son as
CMD without consulting Charat. The decision making policy is a key factor
for sustain family businesses in the long run.

Themes Key Learnings’
Differences
between Founder &
Successor
• Highlights the importance of Aligning a common family vision &
parallel planning of family & business strategy
Differences
between brothers
• Unequal division of the business should be avoided
• A fair process of decision-making involving entire family to avoid
disputes
• Engaging the brothers in different businesses
Multi-generational
Succession
• The importance of Family Constitution to address major
decisions like Family member’s induction into business,
ownership, succession etc.
Legal Battles
• Importance of Family Council/meetings to address & resolve
differences preferably with the support of an external (neutral)
facilitator
Key Learnings’ - Summary

 Most families studied here drifted towards destruction over a period of
time, under the influence of
 Greed
 Poor communication
 Individual ego
 Lack of shared family values and honesty.
 Across the families, two things were common when the fissures started
appearing: affluence and poor family governance.
 This is a deadly combination for family members to pull apart at the drop
of a hat.
 Case after case, these rich families lacked enlightenment and a larger
goal, not for want of education but wisdom and long-term perspective.
 Interestingly, in several cases including BPL and the Modis, personal
relationships seem to have become normal by now, but the price such
families have paid while going through unending emotional trauma, lost
business opportunities and resultant actual depletion in wealth is
phenomenal.

 Some of the case studies show the failure of a family
business leader as a true trustee of the wealth of the family.
 Either because of their love for their children or greed for
money and power, they stooped below socially accepted
norms of behavior of leaders.
 The story of the fall of the once invincible Usha-Shri Ram
group from the pinnacle of success to the bottom of the rung
as a non-entity within a few decades is not only shocking but
humiliating.
 The break-up in the Modi group is like a dynamite that
uprooted the foundation of the group that lavishly flourished
in the Modinagar.

Family Feuds that Changed Indian Industry

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