“Family first, then business and profits. This has been the guiding principle we have clung on to and grew our family business over three generations,” says Paru Jaykrishna, Chairperson of Asahi Songwon Colours.

In 1955, the family had to close down the seven mills they had started a few years ago in Ahmedabad — that was the time when mills across the country were closing down, as the entire industry went through a period of crippling losses.

And that was the time when Jaykrishna started a dye manufacturing unit, with an investment of Rs 1 crore. “I borrowed Rs 75 lakh and also availed a Rs 5 lakh Government subsidy for women entrepreneurs. We clocked a turnover of Rs 3 crore in the first two years. Today, our turnover is Rs 350 crore and the plant capacity is 21,000 tonnes annually,” she says.

The BSE-listed company is in the process of setting up a Rs 50-crore plant to manufacture special silica used for tyre and toothpaste making. “More than the profits we are generating, what we cherish is that as a family we have grown together. In family businesses there will be differences in opinions, but once you set your long-term goals clearly, these can be easily sorted out,” says Jaykrishna.

Similar sentiments are echoed by V.P. Mahendru, Chairman and Managing Director of Indo Asian Fusegear Ltd. After Partition, he landed up in Jalandhar with few belongings. “I had two sons and had to do something to earn money. I did not want to hunt for jobs, which was what most did at that time. I quickly realised that there was a demand for sports goods and I took a saw mill on rent to manufacture cricket bats and hockey sticks under the brand name Standard,” he recalls.

Subsequently, the company diversified into switch-gears and circuit breakers and today it is a Rs 270-crore turnover company. “What we savour the most is that the business was run by our family for four generations. And we are all equal stakeholders and we jointly arrive at all business-related decisions,” says Mahendru.

Indeed, the two-day third Asian Conference on Family Business being held in Hyderabad vindicated the strengths and successes of family-run businesses. “Family businesses that have lasted multiple generations follow ten principles for success, such as trust, conduct, retirement and succession and early grooming,” says K. Ramachandran, Thomas Schmidheiny Chair Professor of Family Business and Wealth Management.

He offers the example of the Murugappa Group that has evolved as an institution over five generations. “They may not have a written constitution, but they do practice unwritten rules of engagement that ensure business dealings are in the interest of all,” he said.

Speakers at the conference emphasised the importance of succession in family-run businesses. Advance planning is critical in succession, as in the case of Preetha Reddy succeeding Dr Prathap Reddy of the Apollo Hospital Group.

There have been instances when family businesses have run into trouble for fuzzy ownership clarity. “A family-level holding model is the best structure to address this challenge. The GMR Group has followed this model and that has enabled it go grow exponentially through new investments, without worrying about the complex issues of ownership,” feels Ramachandran.

Adds Vallabh Bhanshali, Chairman of Enam Securities: “There is clearly now greater awareness on how family can stay and grow together across the country.”

It is common for family businesses to be rocked by conflicts among family members. But, as Aditya Malkani, Director of Ador Welding Ltd points out, sometimes conflicts are important for progress, and without conflicts, there will be no innovation. “ What is important is management of conflict. Keep emotions aside and you can manage conflicts easily,” he says.

A majority of speakers at the conference felt that the role of women was vital in family businesses. Also, complexities are relatively easier to manage when the business is smaller.

Despite their different approaches to running their respective businesses, the speakers all agreed that togetherness was vital to the success of a family-run business.

Related Topics
comment COMMENT NOW