Due to their own faults, several Indian business families went down
The restructuring became so tedious and stretched that the group lost focus on its core competence and was forced to either divest its stake or completely sell units like RPG Life Science, RPG Cellcom, et al. JK Group of the Singhania Empire (which owns brands like JK Tyres and Raymonds), on the other hand, was not prepared for competition from professionally managed domestic companies and didn’t meet global standards. And in their efforts to lure loyalists, a lot of siphoning of funds into personal accounts took place with no records; which led to their doom. Gruesome family feuds over succession worsened matters.
Take, for instance, the Thapar family, whose 38-year-old family feud ended in 2002, and the Rs.50 billion group was divided among four brothers. Family feuds and flawed strategies together led to the decline of the Nambiars. Ajit Nambiar, owner of British Physical Laboratories (BPL), married off his daughter to Rajeev Chandrasekhar, and soon made him the ED, BPL Mobile. Originally, Nambiar was the majority stake holder in BPL Mobile, with a stake of 61.43%. But in 2002, amidst a host of allegations & murky manouevers, Chandrasekhar somehow managed to become the majority shareholder. In July 2005, he sold his entire stake in BPL Mobile to Essar for Rs.15 billion, leaving behind a dumbstruck Nambiar, who only got Rs.1.25 billion for his stake of 13%. Moreover, tough price competition and aggressive marketing by foreign giants like Akai, Samsung and LG in the consumer electronics segment, gave sleepless nights to BPL and eventually led to its decline. Stories like these abound in the history of India Inc. post liberalisation. Together, they provide a plethora of knowledge on how not to run a business empire in a free market economy.
Take, for instance, the Thapar family, whose 38-year-old family feud ended in 2002, and the Rs.50 billion group was divided among four brothers. Family feuds and flawed strategies together led to the decline of the Nambiars. Ajit Nambiar, owner of British Physical Laboratories (BPL), married off his daughter to Rajeev Chandrasekhar, and soon made him the ED, BPL Mobile. Originally, Nambiar was the majority stake holder in BPL Mobile, with a stake of 61.43%. But in 2002, amidst a host of allegations & murky manouevers, Chandrasekhar somehow managed to become the majority shareholder. In July 2005, he sold his entire stake in BPL Mobile to Essar for Rs.15 billion, leaving behind a dumbstruck Nambiar, who only got Rs.1.25 billion for his stake of 13%. Moreover, tough price competition and aggressive marketing by foreign giants like Akai, Samsung and LG in the consumer electronics segment, gave sleepless nights to BPL and eventually led to its decline. Stories like these abound in the history of India Inc. post liberalisation. Together, they provide a plethora of knowledge on how not to run a business empire in a free market economy.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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