Financial Daily from THE HINDU group of publications
Sunday, Jun 19, 2005
Financial Daily from THE HINDU group of publications Sunday, Jun 19, 2005 |
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Corporate
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Corporate Disputes `Business empires will witness splits much earlier' Gaurav Raghuvanshi
Ahmedabad , June 18 GONE are the days when family-run businesses split when third generations take charge. The Reliance episode has shown that in a strongly competitive world, family ties hold lesser pull and business empires will split much earlier, according to a leading business historian. "Empiricists tell us that family-run businesses split in their third generation. I guess it is time we revisited that hypothesis. As the Indian economy joins the global mainstream, individuals will find it difficult to reconcile their aspirations with family ties. Business houses should be prepared for it," according to a former Indian Institute of Management (Ahmedabad) professor, Dr Dwijendra Tripathi. On the Ambani brothers parting ways, Dr Tripathi, who has authored the Oxford History of Indian Business, said that peace would be lasting and the Reliance Group would be able to retain its place in Indian business. The Ambani split, said Dr Tripathi, has been resolved amicably within six months of the two brothers going public with their differences. In contrast, other high-profile splits such as those in the houses of Birlas and Bajaj took several years and happened in the third generation. "One cannot deny that the mother, Kokilaben, has played a pivotal role in bringing about an amicable solution to the problem. She has clearly taken help from people who understand the complex structure of the Reliance empire. One would like to believe that she must have ensured that both the brothers got a fair deal," Dr Tripathi says. Moreover, the legacy of their father, the late Dhirubhai Ambani, should make the two brothers respect each other's turf. "The two brothers have been squabbling for several months. But both of them have always spoken about protecting their father's legacy, and that should hold the peace," he told Business Line. Asked if the split will pull down Reliance from its place of pre-eminence in the Indian corporate set-up, Dr Tripathi said that minor ups or downs notwithstanding, the group would retain its place. "When the Birlas split into six parts, they were the second largest business empire. Today, the AV Birla group is still at the same place. What ranking the Reliance splinter groups under Mukesh and Anil get will be known only later, but I believe that the place of Reliance in Indian corporate history is safe," he said. Finally, the professional corporate management structure created under Dhirubhai's leadership will ensure that the group companies survive. "Dhirubhai knew much lesser about professional management than the foreign-educated scions of many other business houses. He gave a free hand to professional managers to build structures that are the strength of the group," Dr Tripathi said.
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