A new generation is being groomed to take over some of the top companies in India. They are savvy, well-educated, and their induction reflects the new complexities of business.
In November 2008, Pallavi Gopinath joined Deccan 360, the cargo airline, as associate manager (ground operations). Her credentials were impressive: an MPhil in media and film studies from the University of Birmingham, she had interned with the BBC and worked with Airbus and later ATR, which had also sponsored her MBA at the Toulouse Business School. Was she too qualified for the startup? Maybe, but when G R Gopinath, the man behind Deccan 360 and earlier Air Deccan, suggested she join him, it was an offer she found difficult to turn down. After all, she is his daughter.
Contrast this with Gopinath’s life and his initiation into business. More than four decades ago, Gopinath trudged barefoot for miles and often swam across streams to reach school in rural Karnataka. It was a Kannada school, which meant that for a long time his English remained sketchy. Subsequently he joined the army, but resigned his commission to try his hand at various ventures — farming, restaurants, motorcycle dealership, etc. — before starting a helicopter charter business and later Air Deccan. Gopinath learned how to do business on the job. His daughter, in contrast, is well versed in the nuances of business beforehand, with its dos and don’ts.
A new crop of youngsters like Pallavi Gopinath is being broken into business. Conventional wisdom says that a change of guard happens every 30 years or so. Thus, Vijay Mallya can be found grooming his son Siddharth; Kishore Biyani has inducted his daughter Ashni into his retail empire; Vikram Thapar is training his son Varun in the business of coal; Habil Khorakiwala has asked his daughter Zahabiya to look after the family’s hospitals; Ajay Shriram is preparing his sons Aditya and Anand to run his diversified business portfolio in the future; and Anand Burman is readying his son Aditya to take the family business into uncharted waters.
Winds of change are blowing through the House of Godrej too. Adi Godrej’s daughter Tanya Dubash is now president, marketing, and executive director of Godrej Industries. She has spearheaded the recent GoJiyo initiative on the web. Her younger sister Nisa, educated at Wharton and Harvard, heads HR and innovation. The youngest sibling Perojsha is executive director, Godrej Properties. Navroze, the son of Jamshyd Godrej, manages special projects at Godrej & Boyce...the list is long.
But the current generation is being inducted into the family business in a way that’s very different from how the previous one was inducted. This is primarily because business realities have changed radically in the last 30 years. India was a closed economy at that time, shackled by the licence raj. The core competence of a business house then was to secure licences to put up factories and block rivals from getting the same. Whatever was produced got sold; whoever could manufacture at the lowest cost got the best profits. So sons were dispatched to engineering colleges in India and abroad, since the key was to run a tight operation on the shopfloor.
Early starters
Ajay Shriram of DCM Shriram Consolidated remembers that while at Doon School in the late 1960s, he was sent to the family-owned factories in Kolkata during vacations. The idea was to expose him early to how factories worked. The first Naxalite movement was at its peak then and well-wishers cautioned his father not to send the young lad to the works, but Shri Dhar was undeterred. Not only was Ajay Shriram made to sweat it out on the shopfloor, he also had to attend weddings and feasts in the families of workers. After school, he went to Sydenham College in Mumbai, followed by a four-month stint with a company called Ina in the US, which had a joint venture with the Shriram group in India. Then it was back to the heat and dust of Daurala in Uttar Pradesh where the family owned a sugar mill. Four years later, Ajay Shriram was asked to run that factory.
Contrast this with the path his son has taken. Aditya Shriram, too, was sent to the family’s factories in Kota, Rajasthan, during summer breaks from Modern School, New Delhi. In school he fancied himself a tennis player but was packed off to study industrial engineering at Cornell. He then worked for a trading firm called Optiver in Amsterdam for a year, where he traded options in European indices. In 2006, he was back in Kota where, for over a year, he was made to work alongside the labourers with wrenches, tools and screwdrivers. He was then given the responsibility of buying limestone for the cement plant. Three years after his return from Amsterdam, he was made head of the cement business.
The career paths of father and son have a similar trajectory, one would think, except that Aditya Shriram is better educated, has a wider world view, and his climb to a position of responsibility has been faster. “The difference between then and now is competition,” says Ajay Shriram. “The children understand the nuances of business better because of their education and exposure.” The one thing that hasn’t changed over the years is the early lessons in the virtues of thrift. While in Sydenham College, Ajay Shriram travelled in local buses; a request for a car was sternly turned down by Shri Dhar. At Cornell, Aditya Shriram shared a flat with two others; his pocket money was fixed. And he too didn’t have a car.
Exposure to the competitive world of business happens early for the baba log. Being the scion of a business family means shorter school holidays, fewer parties and serious hard work, an atmosphere at home heavy with business talk, and dinner table discussions centred around financials, deals and business rivalries.
Thus, as a student, Malvinder Singh — earlier of Ranbaxy and now of Religare, Fortis and Parkway — rode pillion with Ranbaxy salesmen on scooters when they did their rounds of pharmacies and doctors. The idea was to learn firsthand how the trade works. The medical representative, after all, is the most vital link in the pharmaceutical chain. Also, he was made to rough it out like the common folk so that he could face the rough and tumble of business. Though his father Parvinder Singh was one of the wealthiest men in the country, Malvinder went to college in a bus; in the final year he made it to a car pool! On graduation, he was given the paltry sum of Rs 100,000 by his father to build a portfolio in the stock markets! (Of course, he made over Rs 10,000 crore along with his brother Shivinder when they sold Ranbaxy to Daiichi Sankyo of Japan in 2008.)
Manager by birth?
Education and training have come to be valued highly in business families. If a family member joins the business as a senior executive, he had better be as qualified and well trained as the executive who could have done the job. In these days of corporate governance, the realisation has sunk in that a senior managerial position is no longer the promoter family’s birthright. It has to be earned. Some families, like that of Arun Bharat Ram, have gone to the extent of putting down the norms for education, training, induction and compensation of members in a ‘constitution’.
Also, businesses today are far more complex than ever before. They need special skills to manage and grow. There is an army of professionals who can do that. This makes the need to train children all the more acute. As the first step, Siddharth Mallya has been co-opted onto the board of UB Holdings, the holding company for United Spirits. His presence at Indian Premier League parties with Bollywood actresses notwithstanding, he has trained abroad for a while, first with Diageo and then with group company Whyte & Mackay. But then the Mallya business is complicated: it is spread out in India and abroad, has a presence in beer as well as hard liquor; there’s an airline to run, an IPL team and a Formula One team to manage. There are local and international regulations to navigate. It’s not something for the faint-hearted.
Varun Thapar, son of Vikram Thapar, grandson of Inder Mohan Thapar and great-grandson of Karam Chand Thapar, is wealthy enough to put up his feet and enjoy the rest of his life; still, he was put through a rigorous education and training regimen before his induction. After Modern School, New Delhi, he went to Brown University in the United States, an Ivy League college, where he double-majored in European history and economics. “My father was very strict about academics. ‘You need professional qualification,’ he always said, ‘Work with the best minds and know enough so that you can keep pace with them,’” says Thapar. After graduation, he spent a year working for The Exeter Group in New Orleans, implementing ERP systems in higher education institutes. “I wanted the experience of the consulting lifestyle,” says he.
The Thapars are a family of beautiful people. His older sister, Ayesha, has appeared on the cover of Maxim. Thapar himself was persuaded into a photo-shoot with his sisters for Christian Dior. Despite all that, when he returned to India, his father and grandfather insisted that he start the hard way — visiting coal dispatch centres (this branch of the Thapar family owns the closely held, hugely profitable KCT & Bros (Coal Sales) Ltd) in places like Bilaspur, Talcher, Paradip, Ranchi and Dhanbad.
For Thapar, small town India was an eye-opener. For instance, when he first went to Bilaspur, travelling by the overnight train from Kolkata, and alighted at the railway station in the T-shirt and shorts he’d slept in, he found a reception party waiting to welcome him, comprising the manager, deputy manager and a few others, complete with a garland. “It was a culture shock,” he recalls. On his daily commute from home in tony Ballygunje in south Kolkata, through the chaotic BBD Bag central business district to the company’s head office on Brabourne Road, Thapar gets to see first-hand the grim realities of India.
Thapar is not involved in the day-to-day affairs of business. “Business strategy is more my area,” says he. Two and a half years since his return, he’s hard at work giving shape to a new business venture, his very own — a factory to make containers near Ranchi.
This is important. It is now universally recognised that companies driven by promoters are more competitive and innovative than those run by professionals. There is acknowledgment of the impetus that promoters can give to a business. Families need not lose themselves in mundane jobs. This has begun to shape the training that the youngsters are put through.
Learning the hard way
The best example is the Mittal family. Aditya Mittal, the son of Lakshmi Niwas Mittal, earned a name for himself as a takeover specialist when Mittal Steel bid for Arcelor. It wasn’t by accident that he developed these talents. L N Mittal had sent his son to the Wharton School of Business in the University of Pennsylvania. Legend has it that so upset was he at the parting that he didn’t go to the airport to see off his son. But Aditya Mittal came out with flying colours three years later. He was then sent to work at Credit Suisse. There his lineage worked against him and he was given menial assignments. But he worked hard, often over 100 hours a week, to understand the world of mergers and acquisitions. L N Mittal saw the talent and made him the head of mergers and acquisitions at Mittal Steel (as the company was called then) right away. The company has grown to what it is — by far the largest producer of steel in the world — through mergers and acquisitions. And Aditya Mittal has played a key role there.
No other family probably has the appetite for or guts to buy assets like the Mittals do. Most parents, therefore, put their children through various sections of the business so that they get the big picture and can take on roles that require a wide knowledge of the business. Take the example of Zahabiya Khorakiwala. After getting a bachelor’s degree in psychology from New York University, she joined Wockhardt, the family’s pharmaceutical company. For a few months she worked with the field force, simultaneously partnering with a friend to start Tapioca Bar in Mumbai, which introduced bubble tea to the city. She then got to work on different business development projects at Wockhardt — a contract research organisation, and the aesthetic and plastic surgery service line for Wockhardt Hospitals. In 2009, she did her MBA from the Indian School of Business, Hyderabad.
Now 29, Zahabiya Khorakiwala is responsible for strategic decisions and the overall operations of Wockhardt Hosiptals (these were not sold by the Khorakiwalas to Fortis). “I see myself contributing towards the strategic direction Wockhardt Hospitals takes, as well as in the area of developing leadership at every level within the organisation,” she says. But is she on her own, or does her father (Habil Khorakiwala) lend her a helping hand? “I seek his advice. He has so much wisdom and experience behind him that his inputs are invaluable,” says she.
Family traditions
Pallavi Gopinath is going through something similar. While her primary work-brief concerns ground operations, “in a start-up”, says she, “your job opportunities go much beyond what is strictly defined”. So she also gives feedback on sales, business development and branding; hand-holds franchisees; and functions as their interface with the Deccan 360 top management. It is tricky, of course, being the boss’s daughter. “Especially with your colleagues, how you are perceived can be very sensitive,” she says. But the way she is being groomed leaves no one in any doubt as to who will succeed Gopinath in the corner office.
Of course, a lateral entry means more hard work. Lakshmi Venu, Venu Srinivasan’s daughter, has worked double shifts in the last five years: office in the morning — she is director (strategy) at Sundaram Clayton — and college in the evening for her doctorate. “Being the boss’s daughter means extra work as everyone looks up to you,” Venu recently told the Business Standard. She did her doctorate “to prove that she had the credibility to own the job”.
A big comfort for the new generation is that it starts with a readymade business, nurtured by its parents and grandparents. The challenges are easier than starting from scratch, the risk of loss of reputation lesser.
Aditya Burman’s case is different. By the time he returned from the University of Kansas in 2004, the Burmans had decided that no Burman would have an executive position in Dabur. So there was no comfort zone from which to learn the tricks of the trade. Aditya Burman had the option of working elsewhere, but he chose to join Onquest, the cancer diagnostics business his father Anand Burman had just started. “The rules of a startup are different; you have to bet your house and take risks,” says Aditya Burman. What’s the bottom-line? Does Onquest make money? “Somewhat,” says he. “He is being modest,” says his father. But does he miss not joining a large company, a well-known brand? “I would be equally happy anywhere,” says Aditya Burman. “I see no reason why one day Onquest can’t be as large as Dabur,” adds Anand Burman.
The father knows that this is the best way to learn in business — throw the children in at the deep end. If they survive, a bright future is assured. Anand Burman’s own induction had, of course, been very different. A week after he completed his PhD in pharmaceutical chemistry from the University of Kansas in 1980, he was given a chair and a desk in a corner of the office of his uncle, Gyan Chand Burman. For the next year and a half, he learnt the ropes by observation. His son will cut his teeth right away.
