From Overseas Press

No longer all in the family: India Inc steps out

(Agencies)
Updated: 2010-08-16 10:17

When it comes to Indian businesses, The Tata Group is the oldest and best-known: the conglomerate owns the luxury Jaguar car brand, it's made the world's cheapest car, and its chairman, 72-year-old Ratan Tata, oversees an empire that ranges from salt to software.

This month, Tata Group set another milestone: it became the first Indian family-run business to look beyond the family for a successor to Tata, who is due to retire by end-2012.

Tata has no apparent successor, leaving the business founded by his great-grandfather potentially vulnerable.

But his decision to look within the company, as well as abroad, will go some way in dispelling some of the negative notions of family firms in India, highlighted by the bitter five-year feud between the billionaire Ambani brothers.

"Change has taken a while; they're evolving relatively slowly because business is seen as an emotional link between founders and their assets, and they tend to want to pass them on to the next generation," said Frank Hancock, managing director of advisory at Barclays Capital and an India veteran.

The Ambani fued has been held up as an example of how blood ties can affect business: lack of succession planning, opacity, and erosion of shareholder value.

These are perceptions India's top family firms, which have dominated the country's corporate landscape for over a century, are trying to shake off as they face more competition, tighter regulations, and a new generation of leaders takes the reins.