Kanorias move company ownership to trust

The decision will smoothen succession issues

Kolkata-based Kanorias, the owners of Srei Infrastructure among other business entities, have formulated a holding structure whereby all companies are held by a trust, the Kanoria Foundation, which aims to smoothen succession.  

The trustees of the foundation, inducted in 2014, include Kanoria patriarch H P Kanoria, who is the chairman of the Trust, and his four sons — Hemant, Sanjeev, Sunil and Sujit.  

“We’ve been thinking of it for many years. We were a part of a large joint family. In the mid-80s, we split after my grandfather died. We didn’t want the same thing to happen. We wanted to create a structure that takes care of everyone and goes beyond us. That’s how this model has been designed. Globally, all businesses are owned by foundations or trusts. In India, it has been slow,” Sunil Kanoria told Business Standard. 

Advisors who helped Kanorias to formulate the trust include Professor Ram Charan, business advisor, author and speaker. 

The Kanorias studied different models, including the Tatas. In the Tata group, Tata Sons is the promoter of the major operating Tata firms, while about 66 per cent of the equity capital of Tata Sons is held by philanthropic trusts. 

“We took lessons from Tatas but theirs is a charitable trust. This is a normal trust, basically to take care of the family and future generations,” Kanoria said.

The trustees of the Kanoria foundation would essentially work as investment manager, overseeing the various initiatives and investments of the group companies. The day-to-day workings would be managed by the operational manager or the chief executive officers of the group companies.

“Operationally, there is a concept of investment manager and operating manager. Our role is more of an investment manager. Ten years back, we were operating managers. Now, that role has been delegated to other people. We are developing more and more leaders. Our roles are changing; we are wearing different hats,” added Sunil Kanoria. 

The business interests of Kanorias span across segments like finance, power, technology, education, media and health care. The asset base of Kanoria Foundation is $10 billion.

Hemant Kanoria is the chairman and managing director (MD) while Sunil Kanoria is the vice-chairman of Srei Infrastructure. Sanjeev Kanoria is a doctor by profession, and runs a health care venture in the UK and is currently developing a multi-speciality ‘hospicity’ in Navi Mumbai. Sujit Kanoria is the MD of Shristi Hotel and responsible for establishing the group’s presence in information technology, construction, hospitality and lifestyle business. 

The three major listed companies held by the trust include — the financial services vertical Srei Infrastructure, power sector arm India Power, and housing and hospitality venture Shristi Infrastructure Development. 

According to filing with the stock exchanges, as on December 31, 2016, promoters' holding in Srei Infrastructure was around 60.80 per cent, that in India Power was 68.31 per cent and in Shristi was 74.95 per cent (see chart). The entire promoters' holdings is with the trust.