Beyond Three Generations: Making business future-proof

We have heard the success stories of Indian business Maharajas. Their victories, at home and across the world, are well documented. The families that own these conglomerates are celebrated and venerated for their longevity. But on the flip side, the salacious details of the fratricide or familial fracas make for good headlines.

However, the Indian business scene is not all about the Tatas, the Birlas or the Ambanis (or the Adanis, Iyengars, Mahindras, or Piramals for that matter). While family businesses add up to 75 per cent of the enterprises in India, 90 per cent of them are MSMEs (or micro, small and medium enterprises). These are companies with an annual turnover between Rs 5 crore and Rs 250 crore.

While they collectively contribute towards 29 per cent of the country’s GDP and 49 per cent of exports, they find it difficult to scale up to become Rs 500-crore or Rs 1,000-crore companies or keep on growing like larger conglomerates.

This is where the detailed analysis of the 12 successful family-owned companies, co-written by brothers Navas and Firoz Meeran, management expert and author M S A Kumar and senior journalist George Skaria, comes in handy.

‘Beyond Three Generations – The definitive guide to building enduring Indian family businesses’ details how a dozen companies grew in challenging circumstances but also passed on to the new generation without a break. (Wondering why three generations? The authors quote a study by the Parampara Family Business Institute that states how only 13 per cent of family businesses survive till the third generation and only 4 per cent go beyond it. Thirty-three per cent of such enterprises disintegrate before the second generation passes it to their successive generation, the study says.)

It is commendable how the authors have collated data from 11 different companies apart from Eastern Condiments and Meeran Group to make a perfect case study that business houses can refer to. Not restricting themselves to describing the travails and success of Eastern Condiments or how M E Meeran, who began his business life from a 'small grocery shop in the unexceptional village of Nellimattom near Kothamangalam in Kerala' made 'Eastern' a world-famous brand, the authors have succeeded in presenting a comprehensive analysis of family-owned MSMEs.

Beyond Three Generations features, apart from Eastern Condiments and Group Meeran, Sandu Pharmaceuticals of Mumbai, Aravind Eye Care System of Madurai, Gera Developments of Pune, Evolve Back (formerly Orange County Resorts & Hotels) of Bengaluru, Bhima Jewellers of Kochi, OmniActive Health Technologies of Mumbai, IBS Software of Kochi, Elico Ltd of Hyderabad, House of Anita Dongre of Mumbai, Popular Automobiles, Kochi and Dodla Dairy of Hyderabad.

In 13 detailed chapters, the book looks back at the beginning, how they have strategised to take the business for the long haul and how they have smoothly transitioned from purely owned to include professionals in key decision-making areas. As Prof. Kavil Ramachandran says, these businesses 'have shown the importance of developing policies and practices to emerging challenges.'

They are not shy in describing the changes in the company constitution, as in the case of Eastern when Orkla Foods acquired 67.8 per cent of the shares in Eastern valuing the company at a whopping Rs 2,000 crore 'an unenviable accomplishment hitherto unheard of in the corporate history of Kerala', and PE fund infusion (OmniActive) which helped Sanja Mariwala to 'improve margin and profitability; recruit better and look at an international acquisition'.

Mind you, this is a 'definitive guide'. Hence each chapter has an expert take by M S A Kumar. You could argue that it brings a touch of textbooky features, but it does add value as extends the discussion with his immeasurable experience as an independent director.
Beyond Three Generation will not only add value to the business literature but also as a go-to tome for business leaders and students.