The Hindu Business Line : ‘Talent infusion, governance key challenges for family businesses’

Talent infusion, grooming, improving governance and building a global organisation are the challenges in the transition from family-owned business to a professionally managed company, according to Mr G.V. Prasad, Vice-Chairman and CEO, Dr Reddy’s Laboratories Ltd.

In his presentation on ‘Managing Transition’ at the first Asian Invitation Conference on Family Business’ at Indian School of Business (ISB) here on Saturday, Mr Prasad said Dr Reddy’s could successfully transform itself from family run business to a global pharmaceutical company.

Narrating the history of the Hyderabad-based company, he said after the merger of Dr Reddy’s Laboratories and Cheminor Drugs Ltd into a single entity in 2000, the transformation began in a phased manner.

“We retained the key strengths in R&D expertise, ability to attract resources and a strong pipeline of products. This resulted in the growth for the company from $234 million in 2001 to $1.5 billion revenue at the end of March 2007.” Mr Ashwin Choski, Chairman, Asian Paints, India, said transparency, trust and accommodation were vital for a family business to succeed.

“Asian Paints was set up in 1942 by four families and till 1997, there were no major challenges from the family side. We had taken professional help to face the situation in 1997 when a family, which was the face of the company, decided to exit by selling their shares in the market,” he recalled.

At any point of time, family business is a natural evolution and with the passage of time and business growth the challenges would come up. “The biggest challenge always is arriving at a common understanding at the family level,” he felt.

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