Thirteen years ago, Business Today compiled a list of the country's 50 top business families. Were a similar list to be compiled today, it would include a host of names that had not been heard of then.
The Mittals of Bharti Group, the Raos of GMR Group, the GVK Group's Reddys, Biyanis of Future Group, Vedanta's Agarwals... In this issue, we have put together a list of first generation entrepreneurs who have not only made good in the post-reforms period, but have also drawn one or more members of their immediate family into the business. The idea is not just to look at entrepreneurs themselves but also their families, who will likely endure far beyond the individual.
There are many who think inducting family members into a business comes at the cost of meritocracy but there are others, several featured in the pages that follow, who insist that 'business families' and 'professionalism' are not necessarily polar opposites. They believe they have the best of both worlds by ensuring first, that the family members they induct in senior positions are both qualified and experienced, and second, by employing professionals alongside who are given substantial decision making powers.
Indeed, working in the new, emerging sectors where most of the new business families have made their mark - telecom, power, roads and ports, all of which were opened to private players only after liberalisation - calls for deep domain knowledge, which often only professionals possess. Some of the professionals employed by successful new business families have themselves become household names, so crucial are they to these enterprises.
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Anil Agarwal, for instance, has Tarun Jain, Sunil Mittal has Manoj Kohli, and Gautam Adani has Malay Mahadeva. "Mahadeva helped us build the Mundra port when we had no idea of how to build one," Adani says candidly. So what do the new business families have in common? They all prospered in a new era that left behind the three per cent Hindu rate of growth, the Licence Raj and old ways of doing business. "They all pounced on the opportunities provided by economic liberalisation," says K.Ramachandran, a professor at Indian School of Business, Hyderabad. Plus, they expanded super-quick.
Certainly the pace at which the Indian economy has expanded in the 1990s and the first decade of the 21st century, has helped. But attitudinal change has been equally responsible. "The ambitions and aspirations of the new breed of entrepreneurs are high even by global standards," says Rajiv Memani, country managing partner at consultancy firm Ernst & Young India. Confidence and risk appetite are high, as well. Adds Chintan Parekh, a friend of Adani, who features in our list: "Pre-reform entrepreneurship was licence driven, post reforms it is vision driven."
It was probably this vision that impelled many middle class professionals, whose forefathers had never looked beyond a salaried job, to take to business. Elder Group's Jagdish Saxena quit a cushy job as a drugmaker's managing director to start his own pharmaceutical unit. Rana Kapoor, who set up YES Bank, prepared for years to start his own venture, even as he held top jobs in foreign banks. The rapid growth of the capital market since the 1990s also helped the new entrepreneurs rise. "These are all men who understand the market's dynamics and have focused very intensely on creating shareholders wealth," says Memani. That, in turn, brought in high standards of governance. Challenges remain for the new business families in the years to come.
Rapidly turning technology cycles in almost every field have increased business risk and, in turn, the mortality rate of business families. As have new business models and foreign competitors with deep pockets. There is also the succession challenge, especially when more than one second generation family member is involved in the business. "Today, the family looks closely aligned, but you never know what will happen when the next generation takes charge," says a professional who works with one of the new business families.Subscribe to the Business Today magazine in print, on iPad or Kindle for the full list and much more.