Business Today

Driven by values

This year, the TVS Group completes 100 years. BT looks at what has kept this family business strong and growing.

N. Madhavan        Print Edition: March 7, 2010

It all began in 1911 when T.V. Sundram Iyengar started a rural transport service in Tamil Nadu. Three generations and 100 years later, the TVS Group today is $5-billion conglomerate, with over 25,000 employees across 43 companies, and operations in over 10 countries. The group's expertise includes manufacture of a wide spectrum of auto components (brakes, brake linings, wheels, fasteners, radiator caps, tyres, electronic ignition switches, and electrical parts, to name some), two-and three-wheelers, apart from financial services (NBFC, insurance and mutual fund) and logistics.

Over the years, the TVS family has grown in size, too. Its third generation, which is making its way out for the next generation, is almost 20-strong. The fourth generation is even bigger at over 25, and 11 of them have already been initiated into the business (see TVS' GenNext). Typically, in a family business, larger the family, the greater the complexities. But the TVS Group has not only survived the third generation syndrome, it continues to expand. A close look at how the family operates reveals a distinct set of rules that the family members strictly adhere to and this may well be the secret of the family's success.

TVS' GenNext

Fourth generation members in business.

  • R. Naresh (Sundaram Industries)
  • R. Haresh (TVS and Sons)
  • R. Dinesh (TVS Logistics)
  • Shobana Ramachandran (Srichakra Tyres)
  • Arathi Krishna (Sundram Fasteners)
  • Arundhati Krishna (Sundram Fasteners)
  • Mridula Ramesh (Sundaram Textiles)
  • Arvind Balaji (Lucas-TVS)
  • Srivats Ram (Axles India/Brakes India)
  • Harsha Viji (Sundaram Finance)
  • Lakshmi Venu (TVS Motor Company)
SHAREHOLDING:
The family members, as a norm, have no personal shareholding (apart from qualification shares) in the companies they manage. (There have been certain exceptions to this rule, but these have been made with the approval of the other family members). Each family holds proportionate shares in the holding company TVS and Sons, which, in turn, has the stake in various group companies. This structure has suppressed individuality and kept alive the group identity among the family members.

COMMUNICATION: The family has adopted formal and informal means of communication to share ideas and developments. The formal forum is the Board meeting of TVS and Sons, where each family is represented by three members. It is used to discuss group strategy, new opportunities and conflicts of interest (if any) with existing business. Informal meetings happen at family get togethers such as marriages, where the discussion invariably turns to business. Such a system is crucial to maintain a commonality in thinking among the family as its members grow in size, and unlike some family groups, which operate under the same roof, the TVS family is scattered around Chennai and Madurai.

OPERATIONAL FREEDOM: Each family member, who heads a particular business, has complete freedom to run it. Other family members cannot, directly or indirectly, interfere. If they do have any concerns or objections, they can raise it at the Board meeting of the holding company. Also, public criticism of family members or the business they head is strictly prohibited. These have ensured that there is no bad blood within the family.

VALUES: The TVS Group companies are well-known for certain attributes whatever be the industry they operate in. They are quality (five of the group companies have won the coveted Deming Award for quality given by the Union of Japanese Scientists and Engineers), strong legacy of accountability, integrity, strong people focus (TVS companies have many second and third generation employees working for them), customer service and social responsibility. These values are ingrained into the family members fairly early in their life. Thus, when the next generation comes into business, their value system is in sync.

SIMPLICITY: The TVS family members are taught to be simple and conservative. In fact, one unwritten rule among the members (and has been followed till now) is that they should not own a Mercedes Benz — a sign of opulence. This value has had a rub off effect on the business too. Most TVS Group companies are either debt-free or very low on debt. Their growth has been measured but consistent. This conservative thinking or rather lack of aggression, some argue, has slowed down the pace of growth of the group.

That may not be entirely true considering that companies like TVS Motor, Sundram Fasteners and TVS Logistics have shown considerable aggression in terms of acquisition, large scale investments abroad and a rapid pace of growth.

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