The conventional wisdom about a family business is that the first generation starts a business, the second generation runs it and the third generation ruins it. However, many of the Chennai-based family business groups have not only survived the third generation, but are seeing the fourth and fifth generations making their entries into the family business.
A recent announcement from TVS Motor Company says that Sudarshan Venu, 23, son of Venu Srinivasan (fourth generation), has joined the board of the company as its additional director. He comes with high academic qualifications. He graduated with honours at the Jerome Fisher programme in management and technology at the University of Pennsylvania. He has also completed his masters in international technology management from Warwick manufacturing group, at the Warwick University in the UK. He has been appointed as a whole-time director.
Older sister Lakshmi, 29, joined as a management trainee in Sundaram Clayton in 2003 after finishing her doctorate in engineering management from the University of Warwick. She joined the board in 2009 and is now vice-president, global business development and strategy. She is responsible for developing strategies and administering operations in the US. She is married to Rohan, Infosys founder NR Narayanamurthy?s son, who is doing his doctorate at Harvard.
Both TVS Motor and Sundaram Clayton belong to the TVS Group, which turned 100 last year. The group, with a turnover of around R35,000 crore, is India?s largest manufacturer of auto components. TVS Motor is the only company in consumer products, manufacturing two- and three-wheelers. Although Madurai headquartered TVS & Sons is the holding company,?all the group companies are run quite independently by the family members. Some of the well known companies in the group are Wheels India, Brakes India, Lucas TVS, Sundram Fasteners, Sundaram Brake Lining and TVS Logistics. Today, they are all being run by the fourth generation. The latest entrants are Venu Srinivasan?s children, who are being groomed to take over at some point.
Srinivasan is married to Mallika, who is the vice-chairman of the Amalgamations group, whose flagship company is Tafe, the second-largest tractor manufacturer in the country. Mallika is founder S Anantharamakrishnan?s granddaughter. Her father A Sivasailam set up TAFE, which is expected to touch a turnover of $2 billion this year. The group turnover last year was R8,021 crore. Sivasailam passed away last year and Mallika is now TAFE?s chairman. Her father?s younger brother, A Krishnamurthi, is chairman of the group. This Chennai-based company had a turnover of R85 crore when Mallika joined the family business in 1986. The Amalgamations Group is closely held and its activities fall under four broad categories ? engineering, including auto-related manufacturing activities, trading & distribution and plantations services. Some of the companies like Simpsons, the diesel engine manufacturer, was actually founded in the 19th century. Stanes, the plantation company recently celebrated its centenary. They have all survived quite comfortably so far. There are less family members in the Amalgamations group unlike the TVS or the Murugappa group. ?We are a small united family. The family board will decide on succession and we will announce it when the time is right,? Mallika has said. It will be interesting to see what her children choose to do as they are inheritors of the two large legacies.
The fourth generation is firmly in control of the $4-billion Murugappa group. The group is governed by the Murugappa Corporate Board (MCB), headed by A Vellayan as executive chairman and M M Murugappan, vice-chairman. Former chairman MV Subbiah?s son Vellayan Subbiah runs the group?s financial services company, Cholamandalam. Vellayan?s two young sons and vice-chairman MM Murugappan?s son have joined the business. Arun Vellayan has a masters in finance and worked for DBS and Karma Capital in Mumbai. Narayan Vellayan studied law and charted accountancy and joined KPMG before entering the group. Muthu Murugappan completed his bachelor?s in business management from Warwick and worked in Chennai-based FMCG major Cavincare.
Apollo Hospitals Group has set up a family council that will provide suitable guidelines for the organisation as the third generation is stepping into the family business. The company has appointed an outside advisor, who will join the group?s founder/patriach and chairman Pratap C Reddy in defining the responsibilities and draw a blueprint for future growth. Currently, the group business is run by Pratap Reddy?s four daughters ? Preetha Reddy (managing director), Suneeta Reddy (joint MD and director, finance), Sangita Reddy (ED, operations) and Shobana Kamineni (ED, new initiatives). A few of the third generation are already in the business. There are more grandchildren waiting in the wings.The fourth generation is beginning to call the shots in smaller family groups such as Rane (Harish lakshman) and Sanmar (Vijay Sankar) as well.
The earlier generation had to navigate their businesses in a controlled economy with limited markets and opportunities. Then they had to make the overnight transition to liberalisation. The new generation are not mere inheritors. Almost all of them have enviable qualifications; have worked in non group companies abroad and in India. They now face a different set of challenges. They not only have to battle internal competition, but strong external as well. They have to manage to deploy funds more carefully than the previous generation. They also have to deal with attrition, which their predecessors did not have to. Will they also succeed in taking their groups forward as their fathers and grandfathers did?