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A new generation takes over in the corner room

Jan 01 2013, 14:52 IST
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SummaryCyrus Mistry will be at the vanguard of a record number of successors in key Indian industrial groups who will lead their companies in 2013.

Cyrus Mistry will be at the vanguard of a record number of successors in key Indian industrial groups who will lead their companies in 2013.

At least three of the leading industrial groups other than the Tatas including Godrej, Wipro and in the RPG group, the generation next has taken over in the new financial year.

Godrej Industries has announced the appointment of Pirojsha Godrej, son of Adi Godrej as the MD and CEO of Godrej Properties. Nusli Wadia has moved to give his younger son Jeh Wadia the reins at Bombay Dyeing and Go Air, while Anant Goenka, son of Harsh Goenka took over as the managing director of Ceat in 2012, making his entry at the top spot in the group’s premier company.

Similarly, Rishad Premji is expected to join the board of Wipro Enterprises the non IT business arm of the group. The demerger of the business was ratified on 28 December by the shareholders.

These changeovers are at the top of the heap in family business heap in India. An ISB study in 2012 claims 85 per cent of Indian businesses are family run. The new leaders will also run smack into the new Companies Act which sets a huge premium on best practices in corporate governance. While the Act does not have much to say on succession planning, it introduces key clause (Clause 2) that includes whole-time director in the definition of the term ‘key managerial personnel’. This brings the accountability issue more close home for business families.

All these changes then bring into focus the question of whether the new leaders have it in them to face up to the challenges stemming from a difficult domestic and global economy. The same ISB study based on a survey of over 200 business families says while nearly 58 per cent of those business houses said they had a strategic vision, a conflicting 51 per cent acknowledged that business decisions were often reactive.

“While publicly listed companies must have a transparent process for succession, in case of family dominated companies it is generally so that no leader is fit for the position except the family member. Even in many professionally run companies a small group of people control and their nominees are handed over the,” said T Mohandas Pai, former director on Infosys board and currently chairman, Manipal Global Education Services.

Even in case of the Tata Group, while

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