The Hindu : Tamil Nadu / Chennai News : “Family businesses relevant in India”

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Sunday, Nov 08, 2009
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“Family businesses relevant in India”

Staff Reporter

Conference organised by Madras Round Table 30 and Chennai Business School

“Only if one can sell off a business easily will there be more readiness to start new ventures”

— Photo: Bijoy Ghosh

Quick response: Srini Srinivasan, Consultant, Global Business Strategy, responding to a query from the floor at a seminar on family business in Chennai on Saturday. Gopal Srinivasan (centre), CMD of TVS Capital Funds and J.N.Amrolia, Executive Director (Construction and Allied Business) Ashok Leyland are in the picture.

CHENNAI: “Family businesses are very relevant in the Indian context. Schools and colleges do not pay much attention to develop the spirit of entrepreneurship. Nurturing happens within the family,” said Srini Srinivasan, Consultant, Global Business Strategy and former CEO of HAY group.

According to him, though family-run businesses provide a set of opportunities, they have inherent weaknesses as well.

“They are prone to nepotism, centralised decision making and conflict within the family. We are also living in an era of multiple owners. It is no longer passing the baton from one person to the next. Succession has to be carefully thought out.”

Dr. Srinivasan added that close to 95 per cent of all registered businesses in India, East Asia and the Middle East were family owned.

He was speaking at a conference on ‘Family Business’ jointly organised by Madras Round Table 30 and Chennai Business School (CBS) here on Saturday. The aim of the conference was to understand the challenges faced by family owned businesses and evolving solutions to make them sustainable. The conference featured presentations and panel discussions by those heading family businesses, professionals, academics and experts from a various backgrounds providing a platform for dialogue and sharing of experiences.

Several sessions, including those on managing transition across generations, separating ownership and management, and retaining tradition while managing change were held.

Delivering the keynote address, Gopal Srinivasan, Chairman and Managing Director, TVS Capital Funds, said that the influx of private equity has opened up a lot of opportunities for family run businesses.

Transition

Pointing out that the business environment was going through a phase of change and transition, he said that exit barriers still remained and had to be brought down. “Keeping the spirit of entrepreneurship alive in family businesses is very critical. Only if one can leave or sell off a business easily will there be more readiness to start new ventures.”

In spite of the changing landscape of business and organisational structures, Mr. Srinivasan said that certain facets like ethics and a commitment to values remained as relevant as ever.

“Trust is a very fragile flower and it has to be nurtured carefully for a business to bloom. Writing a code of conduct is not as important as living by that code,” he said. “Each member in senior managerial positions has to live by the values of a family business.”

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