Corporate duels, court battles and family splits can be the grist for the case study mill of business schools. So, it’s no surprise that IIM Kozhikode has published a case study on the parting of ways of the 110-year-old TVS group family. 

The case study, titled ‘Splitting the century-old TVS Group - The Family Arrangement’ is by S. Subramanian, Associate Professor, Strategic Management Area, Indian Institute of Management Kozhikode. 

As the case abstract says, in late 2020, the group, which comprises 50 companies, and run by the third and fourth generation of the family, announced that the various streams of the family are formally splitting the group businesses. By early 2022, the split was legally complete, and the different streams of TVS family started running their businesses as separate groups. The case describes the path taken by TVS group since its beginning and the events leading the formal and amicable split. It explains the framework adopted by the group for the split, in detail. This case highlights the governance issues in the group companies, following the split and the potential future conflicts between various streams of the family. 

As the case explains, starting from 1975, the TVS group saw some conflict situations emerge between the third-generation family members, leading to legal proceedings. The discontent within the family business group became explicit in 1982 after the death of TS Rajam. The family appointed Ramachandran Haresh, TS Rajam’s grandson, as executive director of the holding company TVS & Sons, in place of Rajam. Suresh Krishna, eldest son of TS Krishna went to court challenging the appointment. Though Suresh Krishna withdrew the case later, it became clear that the third-generation family members had disagreements between them about running the various businesses. 

By late 2010s, the family members felt that the ownership of shares in various companies should align and synchronise with the management of the respective companies. Hence, in late 2020, the TVS Group decided to formally divide the empire among the fourth-generation family members. They decided to restructure the ownership structure of the group by scrapping the common holding companies. This would formally split the group and give each family group complete ownership of businesses they manage. The family also decided to unwind the crossholdings to avoid future discontent. Post restructuring, existing management of the various listed and unlisted businesses in the group would continue to be managed by the same family members. The TVS brand and Sundaram brand would be allotted to each family group for their use in their lines of business on a perpetual, royalty-free basis, the case elaborates. 

The case ends by saying there might also be potential problems regarding the usage of the brand name. TVS is very powerful household brand name with credibility. As per the arrangement, the TVS Brand can be used by all the family groups. The family agreement also had no royalty or brand usage payments from the operating companies to the TVS Family members or the holding companies. However, in future, it might create rift between the different TVS family groups, if their business interests clashes. The experts pointed out that there was an agreement between Munjal family regarding the ‘Hero’ brand. Despite that, two Munjal family groups got into a fight regarding the use of the ‘Hero’ brand for electric vehicles. TVS Group may also face similar troubles in the future, warned the experts.