When a Series Became My Unexpected Lifesaver

Picture this: you’re drowning in an ocean of thoughts, and the shore is nowhere in sight. It’s not the majestic kind of ocean we see on Instagram reels. No, this is the relentless, chaotic sea of an overactive, restless mind. Concentration slips away, irritability grows claws, and your favorite books, shows, and even people seem unappealing, distant. You’re caught somewhere between anxiousness and inertia—trapped in a limbo of your own making. And, honestly, you’re not sure what it will take to break free.

Then, as if sensing the tides within, someone close nudges (okay, more like pushes) you to watch a particular series. You roll your eyes, but something in you listens. “Fine,” you think. “It’s just one episode.” At first, you watch with reluctance, slightly annoyed even—why this, of all things, when you can’t focus on anything else? But for the love of that person, you start watching. Soon enough, episode one turns into episode two. Somewhere around episode three, you start noticing the quiet hum of calm returning. And with that, you realize the chaos in your mind is slowly retreating to the background. Healing, as reluctant as it began, is underway.

For me, that healing came through watching Kabhi Main Kabhi Tum, which quickly became my accidental anchor. This show isn’t just a romantic drama; it’s a world of characters who, despite their flaws, grapple with love, ambition, and vulnerability with heart and humor. Sharjeena, a character full of practicality and intellect, somehow managed to soothe my own scattered thoughts with her steady resilience. Mustafa, the somewhat laid-back, unhurried spirit, was like that reminder to breathe when life feels like it’s rushing too fast. Their interactions—a blend of wit, misunderstanding, and undeniable chemistry—brought a lightness to my mind, making me smile when I hadn’t for a while. Together, they began to replace my own overthinking with their messy, real, yet endearing way of stumbling through life.

What’s intriguing is that this effect, as life-changing as it feels, isn’t just in my head. Psychologists call it Distraction Theory, which is the concept of redirecting the mind’s focus away from troubling thoughts by giving it something else to engage with. Distraction theory isn’t about avoiding problems forever—it’s a way to create mental breathing room. When I immersed myself in Kabhi Main Kabhi Tum, my mind had something new to chew on, and the noise began to fade. The series became an emotional palate cleanser, helping me return to myself a little steadier than before.

Then there’s Narrative Transportation Theory, a fascinating idea that explains what happens when we become fully absorbed in a story. Imagine watching a show so captivating that, for a while, your worries feel like they’re part of a different reality. As I delved into the world of Kabhi Main Kabhi Tum, its drama, characters, and plot twists became a world where I could rest my own worries. Psychologically, this immersion is powerful—it’s almost like visiting a world outside of your own, offering a refreshing mental reset without the need for elaborate escapes or forced relaxation.

In the realm of management, there’s also the concept of Emotional Resilience—the ability to recover from life’s challenges with a sense of calm and adaptability. Watching the characters in Kabhi Main Kabhi Tum stumble, recover, and find joy despite their own issues had a subtle effect on me, like a gentle reminder of my own ability to bounce back. It was as if their resilience reminded me of my own, and with each episode, I felt better equipped to face my own day. The show built my resilience, episode by episode, encouraging me to regain balance with a little less effort than before.

And then there are friends who are our lifelines, sometimes in understated ways. They may not storm in with grand gestures or “fix” everything, but they are there, unwavering and patient. The friend who nudged me toward Kabhi Main Kabhi Tum was exactly this kind of presence: always there, quietly persistent, and deeply intuitive. She knew that words or advice weren’t what I needed—just a nudge, a push to something soothing and steady. These friends are the kind of people you reach out for in life’s storms, a steady hand when everything else feels like it’s slipping. They may not be shouting encouragement, but they’re like the firm stick you hold onto, even when you’re not quite sure how to keep going. I can’t help but feel grateful for the simplicity and depth of that kind of support.

What’s magical about moments like these is how they remind us that healing doesn’t always come in grand gestures or planned retreats. Sometimes, it arrives quietly, disguised as a beloved series that makes you laugh, cringe, or even cry a little. In a safe space, without pressure or expectations, you can start finding pieces of yourself again.

Kabhi Main Kabhi Tum didn’t just give me an escape; it gently encouraged me to re-engage with the world outside my thoughts. It was a lifeline that reminded me of the comfort in storytelling, the power of stepping back, and the beautiful surprise of discovering healing in the most unexpected places.

In short, sometimes it’s not about facing your problems head-on. Sometimes, it’s about sitting back, turning on a good series, and letting your mind wander just enough to come back to you, lighter and a little more at peace. So, here’s to the shows that save us—and to the friends who know exactly what we need—even when we don’t know it ourselves.

Breaking the Cycle: Business Families Must Lead in Safeguarding Women

This article was first published in Business Standard on September 12, 2024; https://www.business-standard.com/opinion/columns/breaking-the-cycle-business-families-must-lead-in-safeguarding-women-124091201362_1.html

The recent tragedy at RG Kar Medical College has once again thrust the issue of women's safety into the national spotlight. As the horrific details emerge, the frustration and anger felt by many are palpable. For those of us who vividly recall the outcry following the Nirbhaya case, this feels all too familiar. Despite the countless articles, protests, and promises of reform, here we are again, grappling with another atrocity that shakes our collective conscience.

Frankly, I don’t want to write this article. After Nirbhaya, there was an outpouring of words, and yet, what has changed? The news of another young woman brutalized makes my blood boil, and it’s hard to see how more words will prevent the next tragedy. But there is something I can say, something I can urge: Business families, the backbone of our economy, it is time to take a stand. The nation needs you to be the change.

The Potential Power of Business Families

Business families wield immense power—not just in terms of economic capital, but also in shaping societal norms. The decisions made within these families often set the tone for how women are perceived and treated, not just within the family business, but in society at large. Unfortunately, these decisions are too often swayed by outdated cultural norms, where women are relegated to the background, serving as silent supporters rather than active participants.

Take a moment to reflect: how many women in your family are truly involved in the decision-making processes of your business? Are they empowered to lead, to innovate, to drive change? Or are they merely rubber stamps, there for the sake of appearances?

The Case for Inclusion: A Lesson from Apollo Hospitals

Consider the example set by the women of the Apollo Hospitals family, who recently released a powerful video message pledging to ensure a safe working environment for all women within their organization. These women, who are not just figureheads but active leaders, understand the impact they can have in creating a culture of safety and respect. Their commitment sends a clear message: when women are empowered, they can drive meaningful change.

Business families have the unique ability to foster gender-neutral environments, where women are given equal opportunities to lead and influence. Yet, many remain bound by the constraints of tradition—whether it’s the expectation that daughters will leave the family business upon marriage, or the belief that sons are the rightful heirs to leadership.

But imagine the impact if business families across the nation decided to break free from these constraints. Imagine if they championed their daughters, daughters-in-law, wives, sisters, and mothers, encouraging them to take on leadership roles, to be the voices of reason and compassion in boardrooms dominated by patriarchal norms.

The Responsibility to Lead by Example

The onus is on business families to lead by example. By promoting women within their own ranks, they not only strengthen their businesses but also contribute to a broader cultural shift. A woman who is empowered in her family business is likely to advocate for the safety and well-being of all women in the workplace. She is likely to challenge norms that have long gone unchallenged and to inspire others to do the same.

It’s easy to feel powerless in the face of such heinous crimes as the one at RG Kar, but business families are anything but powerless. You have the resources, the influence, and the platform to effect real change. You have the ability to make your businesses not just profitable, but also pillars of safety and equity.

A Call to Action

I urge you—business families, family businesses—don’t let this moment pass without taking action. Empower the women in your family to be leaders, not just in name but in deed. Create policies that protect all employees, particularly women, from harm. Use your influence to advocate for a society where safety is a given, not a privilege.

Be the change. The nation is watching, and it needs you to lead.

Build a legacy where names like Nirbhaya and Abhaya are never repeated, and candles are lit only in celebration, not in mourning. Pass your enterprises from one generation to the next, while ensuring that what we women hand down to our daughters is empowerment and safety, not candles.

Strategies for Effective Implementation of Family Business Constitutions

This article was first published in the Economic Times on May 22, 2024. Co-authors: Anil Sainani & Kavil Ramachandran. The article can be accessed here: https://economictimes.indiatimes.com/news/company/corporate-trends/strategies-for-effective-implementation-of-family-business-constitutions/articleshow/110339892.cms

The awareness and prevalence of Family Business Constitutions (FBCs) amongst the business families in India is rising. While many families boast of meticulously crafted constitutions, a significant gap often exists between aspiration and reality. Despite their existence, these documents frequently remain dormant, failing to permeate at the strategic, operational, and even familial dynamics level. This article explores strategies for the effective implementation and bridging the divide between the aspirational ideals outlined in the constitution and the lived reality of day-to-day interactions, long-term strategies, decision-making processes, and familial aspects of harmony and togetherness.

Strategies for Effective Implementation

Cultivating Mindset and Behavioural Shifts: Central to successful implementation is a paradigm shift in mindset and behaviour. Embracing new modes of thinking and interaction aligned with constitutional principles demands investment in communication skills, conflict resolution techniques, and emotional intelligence. This shift is not merely about compliance with rules but about cultivating a culture of trust, collaboration, and shared purpose within the family and across the business.

Fostering Structured Meetings and Support Systems: Structured gatherings, such as family council and family business board meetings, provide dedicated spaces for reflection, dialogue, and decision-making. These meetings serve as platforms for discussing key issues, reviewing progress, and making strategic decisions in line with the constitution's principles. Establishing a family office can further streamline the implementation process by providing logistical support for scheduling, agenda creation, documentation, and follow-up actions. This centralized hub ensures continuity and focus, freeing up family members to focus on substantive issues rather than administrative tasks.

Clarifying Roles and Responsibilities: Clarity in roles within the various institutions of family governance, such as the family council, family business board, next-gen council, or the family office, is pivotal. Designating individuals to lead specific institutions/committees fosters accountability and progress. By delineating responsibilities and expectations, families can ensure that everyone understands their role in upholding the constitution and contributing to its effective implementation. This clarity promotes alignment and coordination, minimizing misunderstandings and conflicts arising due to ambiguity.

Leveraging External Guidance and Expertise: In navigating the complexities of family governance and conflict resolution, seeking external guidance from experts can provide invaluable insights and support. External advisors with experience in family business dynamics can offer impartial perspectives, facilitate constructive dialogue, and provide best practices tailored to the unique needs of the family enterprise. Their guidance can help families navigate challenges more effectively and enhance the likelihood of successful implementation.

Embracing Specific Practices: Embedding practices into daily routines reinforces commitment and values alignment. Initiatives like starting meetings with a family prayer and regular updates on personal and business developments promote cohesion and shared understanding. Additionally, incorporating rituals and traditions that reflect the family's values and heritage can foster a sense of identity and belonging, reinforcing the importance of the constitution in guiding family affairs.

Continual Revision and Adaptation: Finally, continual revision and adaptation are essential to ensure the constitution remains relevant amidst evolving family dynamics and external influences. As family members grow and change over time, so too must the constitution evolve to reflect their needs, aspirations, and values. Regular reviews and updates ensure that the document remains a living, breathing framework that guides the family's collective journey towards sustainable growth and prosperity.

A Breathing and Evolving Document

Implementing a FBC transcends the mere creation of a document; it embodies a transformative journey of commitment, patience, and collective effort. By embracing proactive strategies and recognizing challenges as opportunities for growth, families can breathe life into their constitution, shaping a legacy of sustainable prosperity amidst an ever-evolving landscape. Ultimately, the true test of its efficacy lies not in its existence but in its embodiment in every facet of family and business life, enriching relationships, fostering trust, and paving the way for a future filled with promise and possibility.

An exemplary instance of successful implementation can be found in the GMR Group, one of India's leading infrastructure conglomerates. By embedding their core values and principles into their operational framework, the GMR family has demonstrated a steadfast commitment to their constitution, fostering a culture of integrity, innovation, and sustainable growth across generations.

The FBC is a journey rather than a destination. Its implementation must acknowledge the dynamic nature of family businesses, emphasizing resilience and adaptability in navigating inevitable challenges. As the world around us continues to change, the constitution serves as a beacon of clarity and stability, binding the family together and guiding them through both calm seas and stormy waters. By embodying these principles, families can ensure their constitution is a living document that supports sustainable growth and cohesion across generations.

Writing is Easy, not Living: Challenges in Implementing Family Business Constitutions

This article was first published in the Economic Times on May 22, 2024. Co-authors: Anil Sainani & Kavil Ramachandran. The article can be accessed here: https://economictimes.indiatimes.com/news/company/corporate-trends/writing-is-easy-not-living-challenges-in-implementing-family-business-constitutions/articleshow/110339950.cms

Drafting a constitution for the family business has gained popularity, with many wishfully viewing it as a cure-all for their current and future challenges. While creating a constitution is essential, families should understand it merely marks the initial phase in fostering a cohesive family business. In reality, numerous families face difficulties in actualizing the principles outlined in the document into practical, everyday reality. We discuss here the key challenges encountered in implementing a family business constitution.

Concept of Family Business Constitution (FBC): There are fundamental differences in the two systems of family and business, necessitating clarity across various levels to ensure the enduring strength of the combined entity. Serving as a guiding document, the FBC is instrumental in preserving harmony, values, wealth, and the long-term sustainability of the family business. It establishes a foundational framework governing diverse aspects of family dynamics and their interplay with business operations, encompassing pivotal areas such as decision-making processes, roles and responsibilities of family members, and mechanisms for conflict resolution spanning multiple generations. While many families opt for a written constitution for its clarity and specificity, an unwritten constitution relies on shared understandings and traditions transmitted across generations.

The Implementation Conundrum: Despite recognizing the importance of a FBC, many families struggle with its implementation. They often follow a familiar pattern: first creating the constitution, then faltering in translating its provisions into lived experience. The reasons for this failure are multifaceted and complex.

Lack of Comprehensive Understanding and Preparation: Family members often lack a comprehensive understanding of the need for a constitution, its significance, and the importance of strategic planning for family resources. Without proper education and preparation, they may view the constitution as merely a document for wealth preservation and management rather than a guiding framework for family governance and sustainability. The absence of formal education on these matters, often overlooked by consultants, results in a lack of preparedness to adapt to changing situations, ultimately impacting the implementation of the constitution. Multiple family businesses in Europe and US invest in regular educational sessions amongst family business members, spanning over 6-12 months, before creating their FBC.

Underestimation of Challenges: Families may grossly underestimate the complexities involved in implementing the constitution, leading to disillusionment and disengagement. Initially, there is often a sense of optimism and enthusiasm about drafting the document. However, as the realities of implementation set in, families realise the magnitude of the task at hand, covering careers, performance, rewards, resource allocation, power, and accountability. Without proper preparation and realistic expectations, they struggle to navigate the intricate web of family dynamics and business operations.

Length and Complexity: The length and complexity of FBCs pose challenges for family members in remembering and adhering to key provisions. The extensive nature of these documents can overwhelm stakeholders, fostering confusion and ambiguity, particularly when FBCs are rules-based rather than principles-based. Moreover, the legal and technical language complexity tends to estrange family members not proficient in such matters, impeding effective implementation. Encouraging a focus on the spirit of the constitution rather than fixating solely on its literal interpretation is crucial for fostering a shared understanding among family members.

Lack of Guidance: Families may lack the necessary expertise to effectively plan, conduct, document, and follow up in organizing effective meetings of Family Council and Family Business Board. In many cases, family members are not adequately trained or educated in governance practices and conflict resolution strategies. Without access to external resources and guidance, they struggle to navigate complex issues and make informed decisions, leading to inefficiencies and roadblocks in the implementation journey.

Scheduling Difficulties: Finding time to convene meetings and discussions amidst busy schedules proves to be a significant hurdle. Family members are often involved in various personal and professional commitments, making it challenging to prioritize constitution-related activities. After all, the impact of any delay in business decisions is felt immediately, whereas delays in non-adherence to a constitutional policy may not! Consequently, important discussions and decisions are delayed or postponed, impeding progress and momentum in the implementation process.

Communication Barriers: Lack of a tradition of open discussion where members express diverse ideas, disagreements, and concerns openly and listen to others intently are major challenges, leading to communication breakdowns, misunderstandings, and conflicts.  All these undermine effectiveness of the implementation efforts.

Fear of Conflict: Family members may avoid challenging conversations for fear of hurting feelings or creating tension within the family. Conflict avoidance becomes a barrier to addressing critical issues and making difficult decisions. As a result, underlying tensions and disagreements remain unresolved, simmering beneath the surface and impeding progress towards implementing the constitution effectively.

Neglect and Discrediting: Over time, when people do not follow the provisions of the constitution and the same goes unchallenged, the document loses its sanctity and relevance in guiding family dynamics and business operations. Neglecting to uphold the principles and values outlined in the constitution undermines its credibility and effectiveness. Without accountability and enforcement mechanisms in place, family members may disregard the constitution's provisions, leading to erosion of trust and cohesion within the family business.

The Beginning. Not the End: Implementing a Family Business Constitution demands unwavering commitment, diligent effort, and a profound understanding of its significance from all family members. Yet, the journey doesn't end with the drafting of the document; it begins there. It's about translating words into action, turning intentions into reality, and upholding the values enshrined within. The proof of its efficacy lies not in its existence but in its embodiment in every facet of family and business life. As exemplified by visionary families like GMR, who have embraced their constitutions as guiding beacons, let us heed their example and embark on a journey of transformation, where the constitution isn't just a document but the cornerstone of a legacy, ensuring enduring prosperity for generations to come.

Navigating the Crossroads

This article was originally published in Business Standard, May 07, 2024; Co-author: Kavil Ramachandran

https://www.business-standard.com/opinion/columns/impact-of-divisions-in-family-businesses-motivations-and-consequences-124050601237_1.html

The recent trend of ownership restructuring and vertical splits amongst prominent Indian family businesses, exemplified by the division within the Godrej Group, has brought to the forefront the complexities and challenges associated with managing large, multi-generational enterprises. While opting to split the business may appear as a strategic manoeuvre to navigate differing visions and aspirations within the family, it necessitates a thorough examination of both the potential benefits and drawbacks. This article delves into a comprehensive perspective on family business divisions, scrutinizing both the motivations propelling such decisions and the adverse consequences they may entail at both familial and corporate levels.

The Positive Aspects

Complexity of Managing Large Conglomerates: As family businesses expand and diversify, managing the intricate web of operations and stakeholders becomes increasingly challenging. Formations of smaller clusters, each having its own strategic business units, allows for streamlined management structures and clearer accountability, leading to enhanced efficiency and agility in decision-making. For instance, the Adi-Nadir and Jamshed-Smita clusters will enable the entities to focus on their core competencies and strategic priorities, driving operational excellence and value creation in their respective sectors.

Unlocking Value and Growth Potential: A split can unlock the individual value and growth potential of different business segments. Specialized focus allows each entity to tailor strategies, attract specific talent, and pursue targeted investments, ultimately leading to greater success and profitability. The division of the Godrej Group into separate entities controlled by different family members should enable each cluster to capitalize on their respective strengths and market opportunities, drive innovation, and value creation.

Accommodating Growth and Aspirations of the Family: As family businesses expand across generations, differing opinions on strategy and management can arise, leading to conflict. Dividing the business offers autonomy to individual branches, fostering ownership and accountability while reducing discord. For example, the Birla Group split allowed each faction to pursue independent growth, leveraging diverse skills. Additionally, younger generations may seek opportunities aligned with their interests, driving innovation. For instance, the Bajaj Group's diversification into finance empowered the next generation to pursue their entrepreneurial vision.

Learning from Past Experiences: Observing the challenges faced by other business families during succession or disputes can serve as valuable lessons. Proactively choosing to divide the business allows for a planned and amicable transition, ensuring the preservation of family relationships and the brand's reputation. The Bajaj family's decision to split the Bajaj Group into separate entities facilitated a smoother transition of leadership and ownership, mitigating the risk of future legal battles and reputational damage, while preserving the family's unity and legacy.

Ownership and Rewards: A strategic and amicable split within a family business can enable individuals to have greater "skin in the game" and receive rewards commensurate with their contributions and aspirations, ultimately fostering harmony and prosperity within the family. The Mittal family, for example, founders of the Mittal Steel Company, decided to amicably split the business to align ownership with individual aspirations and rewards.

Moreover, the division of the business not only aligns ownership with individual aspirations and rewards but also serves to minimize politics in decision-making processes. By decentralizing control and empowering each cluster within the family, quicker decision-making is facilitated, eliminating the need for seeking approval from numerous stakeholders.

While the preceding discussion highlights reasons that motivate families to split, it's essential to recognize that divisions entail inherent risks and complexities too. Below, we discuss some negative impacts of splitting.

Unintended Downsides

Loss of Synergy and Economies of Scale: A unified conglomerate often benefits from synergies between diverse business segments, leading to cost efficiencies, shared resources, and heightened bargaining power. For instance, the Tata Group's diversified portfolio leverages synergies across industries, bolstering its competitive edge and financial performance, including a cohesive brand identity. However, the division of such conglomerates, as seen in the case of the Ambani family's split of the Reliance Group and the TVS group, risks diluting these synergistic advantages, thereby impacting profitability and competitiveness.

Potential for Family Conflict and Rivalries: While division may aim to address existing disagreements or differing aspirations within the family, it can inadvertently give rise to new challenges and rivalries between the separated entities. The battle between two hero group entities, post the split, regarding the use of the brand name ‘Hero’, highlights the potential for discord arising from family business divisions. Such conflicts can impede decision-making processes, hinder strategic alignment, and erode shareholder value.

Challenges in Succession Planning and Leadership Development: Staying unified provides access to a broader talent pool, both from within the family and externally, ensuring continuity and strength in leadership across the organization. The Murugappa Group's robust leadership development programs serve as a prime example, facilitating seamless succession planning and talent pipeline management across its diverse business verticals. However, splitting the business may curtail these opportunities, making it more challenging to ensure a seamless succession process and maintain robust leadership across the separated entities.

Emotional and Cultural Impact: Family businesses often pride themselves on strong cultural identities and shared values that underpin their success. The Murugappa Group exemplifies this with its deep-rooted cultural ethos of trust, integrity, and entrepreneurship, which has fostered a cohesive organizational culture and sustained business performance over generations. However, division poses a risk to this unity and shared purpose, potentially leading to emotional challenges and a loss of cultural cohesion within the family.

Growing Wealth Disparity: Past business splits have revealed that while divisions may start out equitable, over time, one faction often amasses more wealth and resources. For example, the Ambani brothers' feud over the Reliance Group's assets led to a significant wealth gap between Mukesh and Anil Ambani. These disparities can fuel family tensions and perpetuate financial inequalities, highlighting the socioeconomic impact of family business divisions.

Harmonizing Family and Corporate Choices

In navigating the complex terrain of family business divisions, it becomes imperative to acknowledge the nuanced interplay of motivations and consequences. While the prospect of splitting a conglomerate may offer avenues for addressing immediate challenges and accommodating evolving aspirations, it also entails significant risks and losses, both at the familial and corporate levels. The case studies of prominent Indian business families, such as the Ambanis, Birlas, and Munjals, underscore the intricate dynamics and far-reaching implications of such divisions, ranging from wealth disparities to emotional upheavals.

By embracing a proactive stance towards addressing emerging challenges, family conglomerates like Godrej could potentially have emerged as global powerhouses, wielding not just economic influence but also shaping the broader political and societal landscape. However, by choosing to split, these conglomerates risk diluting their legacies and missing out on transformative growth opportunities. Ultimately, the path forward for family businesses lies in striking a delicate balance between tradition and innovation, unity and autonomy, to ensure sustained success and relevance in an increasingly competitive global landscape. We can only hope that the sum of the parts is eventually greater than the whole, in numbers, as well as in family harmony, togetherness, and impact.

A Country Called Childhood

When reading "A Country Called Childhood- A Memoir" by Deepti Naval, I became nostalgic and reminisced about my childhood. I recall the Shree Ji stores in Ramgarh which used to be my favorite shop. It rented out comics for Re 1 a day. Sometimes 4-5 Amar Chitra Katha or other comic books would be bound together and they would charge a slightly higher amount for renting it. Ramgarh did not have a library and that store filled the gap for me. They also had various candies and gift items that used to fascinate me.

I also recall the samosas and sweets of Rajasthan Kalewalaya and their dahi kachori on special occasions. Later, when I was slightly older, they started selling a sweet called Madhuchakra that became my favorite.

Priya Sweets was for special occasions. Especially when I went to the main road and the elder accompanying me was in a good mood and had a few extra rupees to indulge me. There used to be the occasional curry puff, pineapple pastry, and beetroot cutlet.

Then Mangal Singh's shop was perhaps the most aspirational shop. You went there to buy an odd pencil box or water bottle. But there were so many things I liked. There used to be games, fancy tiffin boxes, or water bottles, that were often out of bounds.

For as long as I recall, we bought dresses only from National Stores. It was a very fancy store for it's times. It looked glossy, clean, and neatly arranged. We bought very few dresses but bought only from there. In hindsight, it seems like a lesson in quality over quantity.

One distinct memory I have of Ramgarh during my growing up years is the mela that used to be put up every year during December and would go on till Jan 26th. It used to have the Maut ka kuan, the Ferris wheel, a circus, and various shops selling toys, clothes, utensils, etc. There is a memory of buying iron utensils such as kadhai and tawa from there on more than one occasion and getting the knives sharpened. I also remember buying Khaja- a sweet- that I used to love eating, from there. Mounds of colourful sweets on both sides of the road. But we would buy the Khaja and occasionally Balushahi. I remember going to this mela 3-4 times during the one month that it was there, every year.

Another favorite shop of mine was Sishu Gyan Kendra, and later its sister concern, Gyan Bharti. We would go there for all our stationery, notebooks, and books. I remember the rolls of brown covers and the carefully selected book-label stickers. It used to be a big exercise before the beginning of every new class and before the summer vacations ended. 3-4 people at home would be involved in covering all books and notebooks with those brown papers. I still remember the feel and the smell of the newly covered books and notebooks.

Another place I remember is the fruit market, just off the main road. I remember going to that market with my father on the bike and occasionally with my mother or aunts on rickshaw.

There was one dosa wala on Main Road. I recall everyone saying that his sambhar was awful. It used to look a dirty yellowish brown rather than a bright yellowish-reddish-brownish that good sambhars are supposed to look. I also remember it used to have mashed pumpkin. And I hated pumpkin. But somehow, the taste of that sambhar lingers in my mind. Fondly. I used to finish it. Perhaps because eating outside food was a rare treat. And dosa in Ramgarh was a rare treat, unlike in the South of the country where it is a staple.

Another vivid memory is the movie dialogues echoing from a shop behind our home in Saudagar Mohalla. Now, as I listen to books on Audible, I appreciate that even movie dialogues can be listened to. Back then, however, I couldn't fully understand why anyone would want to listen to movie dialogues.

The Deepti Naval memoir sent me down my own memory lane. I am surprised at the memories that the mind stores. 

And of course, I also revisited the three all-time favorite movies of her- Chashme Buddoor, Saath Saath, and Kisi se na Kehna. She will always be Miss Chamko for me.

Harmonizing Family Business Dynamics: The Role of Mediation in Sibling Rivalry

This article was first published in the Financial Express on April 22, 2024. Co-authors: Sougata Ray, Tara Ollapally; https://www.financialexpress.com/opinion/harmonising-family-business-dynamics-the-role-of-mediation-in-sibling-rivalry/3464998/ 

Sibling rivalries within family businesses have historically posed significant challenges, often leading to adverse outcomes for these enterprises. The ongoing dispute between Baba Kalyani and his sister Sugandha, of the prominent Kalyani Group in India, highlights the complexities and repercussions of such conflicts. This case mirrors the damaging effects witnessed in other renowned family businesses globally, such as the Ambani brothers' feud and the Rothschild brothers' dispute in the 19th century, underscoring the pervasive nature of these challenges and their potential impact on business sustainability and growth.

Moreover, countless family businesses have been entangled in protracted court battles, resulting in stagnation or downfall, due to sibling rivalries. In this context, mediation emerges as a compelling alternative, offering a structured, constructive, fast, and economic approach to resolving intra-family conflicts, thereby safeguarding the longevity and prosperity of these enterprises. This article explores the transformative power of mediation in resolving such conflicts, using a real-life case as a backdrop to illustrate its efficacy and process.

Sibling Rivalries: In family businesses, conflicts between siblings can simmer beneath the surface, exacerbated by competing visions and divergent paths. Many a times, the rivalries often stem from deeply ingrained dynamics forged during childhood or formative years, which resurface when challenges arise in adulthood, particularly during discussions surrounding succession, inheritance, or leadership responsibilities within the family enterprise. These conflicts are exacerbated by a myriad of factors, including disparate personalities, ambitions, perceptions of fairness among siblings, and unequal roles, responsibilities.

Additionally, competition for control, recognition, or individual legacies within the business context further fuels discord among siblings. Generational transitions and divergent visions for the future direction of the enterprise also contribute to clashes over strategic decisions and succession planning.

Take, for instance, the case of a successful automobile parts manufacturing business led by two brothers, each with distinct roles and aspirations. Tensions escalated during discussions on business expansion, culminating in a grave altercation where the older brother inflicted severe injury upon the younger. Legal proceedings ensued, charging the older brother with "Attempt to Murder" under Sec 307 of the Indian Penal Code.

Understanding the Dynamics: Delving deeper into the roots of the conflict unveils a narrative shaped by patriarchal influences and familial expectations. The father, a revered figure in the industry, imposed his aspirations upon his sons from an early age. While the older brother adhered to the path laid out for him, the younger pursued higher education and personal aspirations. Eventually, the younger brother returned and joined the family business. Soon, disagreements over business strategies and asset ownership started to surface between the siblings, threatening both familial bonds and business stability. Legal proceedings followed.

The Role of Mediation: Amidst the legal proceedings, the court recognized the scope for resolution in this deeply personal dispute and referred the case to mediation. Here, the mediator embarked on a journey to unravel the intricacies of the brothers' relationship and unearth the underlying emotions fueling the conflict. The older brother’s feeling of entitlement to the larger share was driven by a strong sense of ‘giving up’ earlier to comply with the father’s wishes. By fostering empathy and compassion the mediator was able to help the younger brother see his older brother’s struggle and invoke his own higher wisdom.  The mediator facilitated transformative dialogue, transcending legal entanglements, and preserving familial bonds.

Key Learnings from the Mediation Process: The process allows the participation of other key members. This brought greater understanding of the emotional and mental landscape of the two brothers as well as the dynamic between them.  Insights gleaned by the mediator through numerous conversations helped the brothers see their realities more effectively, which was critical for informed decision making. The mediator's ability to connect with the parties on a human level paved the way for reconciliation. By delving into the parties' emotional landscapes and fostering empathy, the mediator transformed the conflict into an opportunity for healing and growth.

Implications for Family Businesses: Family business disputes are as driven by the emotional experience of the family members as the financial and professional pulls of the business. The case study serves as a testament to the transformative power of mediation in harmonizing family business dynamics. The ability of the process to focus on resolution over legal victory allowed the brothers to not only preserve the legacy of their ancestral enterprise but also reaffirmed the bonds of kinship. This highlights the importance of proactive conflict resolution strategies in fostering sustainable business continuity and nurturing harmonious relationships for generations to come.

In conclusion, mediation is an alternative way of navigating sibling rivalries within family businesses. Mediation offers a transformative path towards resolution, transcending legal entanglements and preserving familial bonds. As family businesses continue to grapple with conflicts, embracing mediation as a proactive conflict resolution strategy can pave the way for healing, growth, and harmonious coexistence.

Two is Company

This Book Review was first published in the Business Standard on March 25, 2024; https://www.business-standard.com/book/two-is-company-124032500642_1.html

Book: An Uncommon Love: The Early Life of Sudha and Narayana Murthy

Author: Chitra Banerjee Divakaruni

Price: 799/-

Pages: 352

Year: 2023

Publisher: Juggernaut Books, India

Chitra Banerjee Divakaruni's latest, a non-fiction, "An Uncommon Love: The Early Life of Sudha and Narayana Murthy," unveils the captivating narrative of two eminent figures, Sudha Murty and Narayana Murthy. It offers an exploration of their formative years. Divakaruni's adept narrative style, characterized by poetic simplicity and robust character portrayals, particularly resonates with aficionados of profound storytelling.

Departing from the world of mythological heroines, the book unfolds the ordinary yet remarkable lives of the Murthys before the establishment of Infosys, portraying their journey as an allegorical epic awaiting narration. Vividly depicted are the everyday trials and triumphs of a working couple, encapsulating the essence of support, sacrifice, and solidarity, compelling readers to root for their success.

Their story reminded me of the scenes from Basu Chatterjee’s 1976 classic Choti si Baat, starring Amol Palekar and Vidya Sinha. A simple boy. In love with a simple cotton saree-clad girl. Enjoying small things such as holding hands, walking on the roads, and eating at Poona Coffee House. “With her [Sudha] by his [Narayana] side, he felt he could take on even the toughest challenges” (p85).

You want them to succeed. You cheer for them. You feel for them. Sudha and Narayana Murthy's early life experiences together are relatable and Divakaruni captures them in the most endearing manner.

The narrative poignantly addresses the dilemma faced by individuals who find themselves overshadowed or relegated to supporting roles, despite possessing substantial capabilities and accomplishments—a sentiment to which Sudha Murty's journey lends credence. It would have been easy to portray Sudha Murty as the victim, as someone who had to give up her career to support Narayana Murthy’s passion, and it would have been largely true. However, it would do grave injustice to Sudha’s resilience and commitment to personal growth, exemplified through her writings, contributions to the Infosys Foundation, and her subsequent foray into public service [the recent nomination to the Rajya Sabha]. Divakaruni maintains a fine balance that never lets Sudha’s character slide into being inconsequential.  Rather she serves as a beacon of inspiration.

Another aspect that touched a chord with me was the challenge of imparting values amidst prosperity, as Sudha navigates the complexities of instilling humility and “living withing one’s means and not trying to keep up with the ‘neighbours’…the importance of being practical in matters of spending, recognizing wasteful behaviour, and getting good value for your money” (p309-310) in her children. This segment will resonate deeply with individuals who have experienced economic scarcity and now grapple with the task of nurturing similar sensibilities in their offspring.

On the professional development side of the couple, of notable significance is the portrayal of Narayana Murthy's evolution from a socialist idealist to a compassionate capitalist, alongside the inception of Infosys, underscoring the fervour, altruism, and perseverance that culminated in its establishment.

Unlike conventional biographies of business luminaries, which frequently overlook the intricacies of personal challenges and emotions, Divakaruni's portrayal transcends superficiality, reveals the interplay of relationships among its seven founders and elucidates the philosophical underpinnings of the compassionate capitalism intrinsic to Infosys's corporate ethos. Furthermore, the narrative sheds light on Sudha Murty's sacrifices and her steadfast support of Narayana Murthy's endeavours, emblematic of the pivotal role spouses play in each other's professional pursuits.

The exemplary financial stewardship demonstrated by the Murthys underscores a vital lesson for startup founders and business owners: the importance of judiciously managing company and investor funds. In an environment rife with instances of poor companies- rich promoters, the Murthys' narrative serves as a beacon of integrity and foresight, illustrating the enduring value of principled financial management for long-term sustainability. By assimilating these invaluable insights, aspiring entrepreneurs can play a pivotal role in cultivating a culture of accountability and integrity within India's corporate landscape, thus fostering a legacy of responsible entrepreneurship and sustainable growth.

I am reminded of an incident when I accompanied my brother to the optician, a family friend, shortly after his graduation from an IIT. Upon learning of my brother's employment at a multinational corporation, the optician remarked, "We heard so much about you. That you are so good in studies and all. And you still didn't get a job in Infosys?" This anecdote encapsulates the profound impact of the Murthys' creation, Infosys, on the national consciousness. It was a pleasure to delve into the lives of this extraordinary couple, whose visionary leadership catalyzed the information technology wave in the country, capturing the imagination of a nation and leaving an indelible mark on the annals of Indian business history.

In sum, "An Uncommon Love" is a testament to Divakaruni's narrative prowess and her ability to unravel the complexities of human experience. Through meticulous storytelling and emotional depth, the book illuminates the transformative journey of two icons, offering readers a compelling narrative of love, sacrifice, and resilience amidst the backdrop of nascent entrepreneurship in India. 

Navigating Succession Storms: A Mediation Odyssey in Family Business

This article was first published in the Financial Express, March 11, 2024; Co-authors: Ray, Sougata & Ollapally, Tara; https://www.financialexpress.com/opinion/navigating-succession-storms-a-mediation-odyssey-in-family-business/3421424/

Succession continues as a paramount challenge for the sustainability of family enterprises, compounded by gender dynamics within India's patriarchal society. Deeply entrenched norms frequently impede the seamless transfer of leadership within these businesses. In recent times, dissatisfaction with succession outcomes has prompted many families to pursue legal actions, resulting in intra-family lawsuits. Such disputes not only exacerbate rifts within the family but also put the business at risk.

In such a context, mediation emerges as a crucial and constructive alternative to adversarial legal battles. By providing a structured yet adaptable platform, mediation facilitates constructive dialogue among family members, allowing them to navigate emotional complexities and collaboratively craft succession plans that honour both familial expectations and business needs. imperatives. This approach, rooted in open communication and understanding, offers a viable path to preserving both family harmony and the continuity and longevity of the family business.

This article delves into a real-world case study where mediation played a pivotal role in resolving succession-related issues and fostering family harmony. The backdrop is a family enterprise spanning several generations, where traditional roles, evolving dynamics, and unforeseen challenges converged, leading to a complex web of emotions and legal intricacies. This article seeks to offer insights into the mediation process, the intricacies of family dynamics, and the crucial role it plays in preserving businesses and relationships.

The Genesis of Conflict: The roots of this family conflict trace back to a business founded by a patriarch with a vision, whose descendants navigated divergent paths. One son separated and built a successful business, while the rest of the family continued the ancestral business. The patriarch's egalitarian upbringing of his four children—two daughters and two sons—set the stage for contrasting expectations and interpretations of their roles in the family business.

The Unforeseen Downturn: Several decades later the family business faced a downturn, burdened by debts and an aging patriarch. His desire to bequeath a generous share to his daughters clashed with the encumbrances on the immovable properties. The sudden demise of the patriarch without a written will intensified the complexity of the situation.

The Catalyst: Mother's Terminal Diagnosis: As the sons stepped in to navigate the business through its challenges, the mother, aware of her husband's intentions, grappled with the urgency of settling the inheritance matter. Terminal cancer heightened the need for resolution. A mediator was engaged in the eleventh hour, with limited time to convene and gather essential documents due to the mother's deteriorating health.

Mediation Dynamics: The mediation process commenced with an air of cordiality, swiftly evolving into a storm of disappointment, anger, and disbelief as the daughters confronted the reality that the business was intended for the sons. Legal rights clashed with perceived fairness, and negotiations became tense. The imminent passing of the mother forced reluctant concessions from the daughters, resulting in a settlement just days before her demise.

Post-Mediation Journey: The mediator's role extended beyond the settlement, addressing unresolved emotions and rebuilding fractured relationships. The brothers, now in control of the business, upheld their promises, clearing debts, and ensuring the business thrived. The subsequent generosity towards the sisters and the continued success of the business underscored the effectiveness of mediation in preserving both familial bonds and business prosperity.

Focus of the Mediator: The mediator's primary challenges included communicating the father's intentions to the daughters, managing their emotions of disappointment and anger, and facilitating constructive negotiations. Cognitive biases, particularly the sisters' refusal to acknowledge the business's depreciated value, posed negotiation challenges that required the mediator's adept handling.

Mediation vs. Legal Battles: Had the dispute entered the court system, the potential consequences loomed large. The family business risked collapse under the weight of litigation, endangering the financial solvency necessary for addressing liens on immovable properties. Inter-sibling relationships stood at risk of irreparable fracture, with the brothers facing uncertain prospects within the business.

Observations and Ripple Effects: The mediation's instructional value extended beyond the immediate case. The brothers, understanding the necessity for a proactive stance, opted to independently and amicably divide their properties, drawing upon insights gained from prior mediation experiences. Their respective sons now oversee separate divisions, operating independently. The arrangement has fostered a harmonious continuity and coexistence.

Conclusion:

In the realm of family businesses, the intersection of tradition, emotions, and legal complexities demands delicate navigation. This case study illustrates the transformative potential of mediation in averting protracted legal battles, preserving harmonious family ties, and safeguarding the sustainability of the business. As family businesses continue to grapple with succession challenges, the lessons gleaned from this mediation odyssey serve as a beacon for those seeking a harmonious transition between and even within generations.

Mediation in Family Business Disputes: A Holistic Approach Beyond Failed Negotiations

This article was first published in the Financial Express, March 03, 2024; Co-authors: Ollapally, Tara & Ray, Sougata; https://www.financialexpress.com/opinion/mediation-in-family-business-disputes-a-holistic-approach-beyond-failed-negotiations/3411920/

Family businesses, which hold a significant role in the global economic landscape, are inherently prone to conflicts due to the intricate interplay of familial and business dynamics. Disputes can arise from succession planning, divergent business visions, or conflicts of interest among family members. Globally, illustrious family enterprises, such as the feud between the Ambani brothers in India and the disputes over the distribution of the family wealth and control of the business in the Pritzker family, exemplify how conflicts can lead to the dissipation of wealth and fracture familial bonds.

Resorting to traditional litigation often exacerbates these conflicts and underscores the critical need for effective dispute-resolution mechanisms. When traditional negotiations fail, mediation, as a facilitated negotiation, proves to be a compelling alternative.

What is Mediation: Mediation is a nuanced and strategic facilitated negotiation process wherein a professionally trained neutral third person helps families in dispute find their own solutions through a better understanding of their own needs, the other party’s needs as well as the reality that they face. It distinguishes itself by transcending traditional approaches in its focus on understanding the needs of the parties and emerges as a highly effective and efficient mechanism for achieving harmonious resolutions in family business disputes. In family businesses, where personal and professional lives intertwine, a process that addresses emotions, business realities and the law become paramount. The expertise of the neutral mediator in managing the multiple facets of the dispute becomes the guiding force in steering disputing parties towards mutually acceptable solutions This nuanced approach not only facilitates meaningful and sustainable resolution but also cultivates an environment conducive to preserving relationships and the long-term health of the business entity.

Why mediation Works: Beyond the resolution of disputes, mediation offers a myriad of advantages, making it an attractive choice for family businesses. The ability to exercise control over outcomes is crucial, empowering parties to shape resolutions that align with their unique circumstances. Confidentiality in mediation safeguards against the potentially detrimental impact of public disclosures, recognizing the sensitivity of family matters.

Mediation's efficiency is a key differentiator, offering a swift and cost-effective resolution compared to the protracted timelines of traditional legal avenues. The high degree of compliance stems from the active involvement of parties in crafting the agreement during the mediation process, fostering a sense of ownership. The focus on a win-win scenario becomes paramount, preserving both familial harmony and the health of the business.

How mediation Works: Mediation helps parties move from entrenched positions to underlying interests, fostering constructive communication. The mediator's role is pivotal, reframing communication dynamics and guiding parties toward a more holistic and meaningful interest-based negotiation.

Flexibility is a defining feature of mediation, allowing the inclusion of the right individuals and information in the negotiation. This inclusivity ensures that all pertinent perspectives are considered, contributing to the improved quality of negotiation. The process is party-centered, allowing the outcome to be determined by the parties themselves, promoting a voluntary and confidential environment.

The Legal Framework: The Indian Parliament passed The Mediation Act in September 2023, recognizing the value of mediation in promoting and facilitating the resolution of disputes. Mediation is now a recognised legal process wherein the fundamental tenets of confidentiality, self-determination and voluntariness are legally protected. A mediated settlement agreement has the same validity as a court decree, that cannot be appealed except under rare circumstances.

Other legislations like the Commercial Courts Act have also been amended to endorse mediation as a prerequisite for commercial disputes before resorting to court litigation. This reflects a growing acknowledgment of the efficacy of mediation in achieving swift and amicable resolutions.

Conclusion

To ensure the longevity and harmony of family enterprises, mediation must not be a mere consideration but an unequivocal imperative. It is the proactive and strategic approach that transforms disputes into opportunities for constructive dialogue, steering family businesses away from the destructive path of litigation.

Promoting a culture of collaboration, where mediation becomes embedded in dispute resolution clauses, charts a course towards efficient resolutions. By immersing themselves in the lessons drawn from successful cases, family businesses can elevate their acumen, becoming not just resolution seekers but architects of a 'dispute-wise' culture. In this transformative journey, disputes cease to be stumbling blocks; instead, they become the catalysts for innovation and lasting familial and business success. Embracing mediation can open doors for family business longevity and harmonious legacies.

India’s cherished “joint families” system is under threat. What can be done to preserve its values?

 This article was originally published in Family Capital, January 24, 2024;

https://www.famcap.com/2024/01/indias-cherished-joint-families-system-is-under-threat-what-can-be-done-to-preserve-its-values/

In India's business world, the Marwari community is a formidable force. A part of its success is often attributed to the system of “joint families", which has created many great business dynasties. But the system is in decline, leading to concerns that its advantages may be irreplaceable and thus pose challenges to the business dominance of communities like the Marwaris.

The “joint families” concept is based on the idea of living together of and shared business responsibilities among grandfather, father, sons, their sons, and other family members or close relatives.

Marwaris, which originally come from Marwar, a region of western Rajasthan state- has given rise to great family business dynasties such as the Birlas, the Mittals, and the Agarwals.

The resources created by joint families, including the pooling of financial resources, collective decision-making, and shared responsibilities, have provided a robust foundation for entrepreneurship in India.

The joint family system facilitated a collaborative approach to business, where the collective wisdom of the family contributed to strategic decision-making and sustainable growth.

Assessing the impact of joint family disintegration on businesses remains elusive and largely anecdotal. Hence, there is a pressing need to investigate the mechanisms that fostered familial cohesion and identifying critical factors that facilitated harmonious coexistence among family members.

By gaining insights into these dynamics, contemporary families may incorporate pertinent traits to preserve the advantages of a diversified resource pool while upholding individuality and freedom.

Basant Hetamsaria, the head of the Hetamsaria family, shares a compelling narrative of the organic evolution of their joint family in Ramgarh, in the state of Jharkhand. From a small family of three, the family expanded to 30 members across four generations, diversifying economic pursuits while remaining tightly united. His unexpected role as the family head at a young age underscores the indispensable need for a universal head.

"In the familial framework, I emphasize the pivotal role of a universal head—a unifying force offering direction and leadership, even within collective decision-making. The essence of prudence, fairness, and transparency in our decision-making cannot be overstated. We must strike a delicate balance between authority and respect, endorsing an informal code of conduct that nurtures mutual respect and consideration among us, the family members," says Basant.

The challenges of decision imposition and the necessity for transparency underscore the importance of a unified approach within joint families. “Every adult and youth in the family must have a voice, preventing unnecessary controversies and promoting a harmonious environment. Furthermore, ensuring suitable opportunities for education and employment aligned with individual abilities is crucial for the collective well-being of the joint family,” says Basant.

Strong family values, including familiarity, love, affection, harmony, and cooperation, are essential for the success of joint families. Basant's insights highlight the need for an adaptable family dynamic that can navigate changing environments, ensuring the continued relevance and resilience of joint families.

However, the disintegration of joint families, which was considered one of the strengths of business families in India, poses certain challenges for contemporary business families, such as communication and bonding. Despite the array of communication tools available, such as instant phone calls, WhatsApp, and emails, the absence of physical proximity can lead to communication and personal challenges.

Face-to-face interactions in joint families foster a deeper understanding of individual strengths, preferences, and challenges, which is often difficult to achieve through virtual means. The nuances of non-verbal communication and the daily interactions that build personal bonds are diminished when family members are geographically dispersed.

“In today's era, the concept of joint families may be considered unconventional, and a more open and liberal model should be explored as a potential sustainable family solution amidst the challenges of modern relationships, increasing tensions, growing distances between spouses, and fractured relationships,” says Basant.

Perhaps, establishing a structured leadership model within the family, designating a family leader who plays a pivotal role in providing direction, fostering transparency, and ensuring fair decision-making would help the business families, despite not being in a joint family system.

This leader should embody the qualities of prudence, fairness, and transparency, striking a delicate balance between authority and respect. This structured approach would help maintain a cohesive family unit and facilitates effective decision-making.

Similarly, a culture of collaborative decision-making where the opinions and perspectives of every family member, both adults and youth, are valued, should be encouraged.

Families should develop a framework that ensures active participation from all members, preventing unnecessary controversies and promoting a harmonious environment. By integrating diverse viewpoints, families can tap into the collective wisdom of individual talents, similar to the collaborative approach seen in joint family systems.

The success of many business families that were joint families, lies in their unique ability to create a rich resources basket, fostering collaboration, and providing a robust foundation for entrepreneurial endeavours.

Basant Hetamsaria's insights underscore the importance of a universal head, prudence, fairness, transparency, and commitment in maintaining the resilience of joint families.

Despite the challenges posed by modernity and the disintegration of joint families, its principles continue to be of relevance. It offers valuable lessons for contemporary business families. Incorporating what joint families offered in a modern setting would retain entrepreneuring families and their rich resources basket.

Nurturing diversity and women’s leadership in family enterprises: A call to action

This article was first published in the Economic Times, December 24, 2023; Co-author: Sougata Ray; https://economictimes.indiatimes.com/news/company/corporate-trends/nurturing-diversity-and-womens-leadership-in-family-enterprises-a-call-to-action/articleshow/106247865.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst 

Introduction

In a world where 50% of the population, representing 3.95 billion individuals, is women, it is both a moral imperative and an economic necessity to address the pervasive exclusion of this substantial talent pool from the workforce. The Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business recently convened a roundtable addressing the pressing issue of Women in Family Business. In the intricate realm of family enterprises, the strategic imperative of empowering women's active involvement goes beyond mere progressive ideals; it is the key to sustainable success.  

Against the backdrop of India's low female labour force participation rate of 24% in 2022, one of the lowest globally, the discussion aimed to explore strategies within family businesses to empower women, thus contributing to elevating this rate and advancing Sustainable Development Goal 5. The focus encompassed nuanced considerations, including factors enabling women's engagement, impediments they face, self-preparation for leadership roles, and the pivotal characteristics of a gender-inclusive family structure.

Drawing from the discussions of the roundtable, this article aims to delve into the critical aspects of promoting women's leadership within family businesses. By focusing on dual role balancing, the importance of support networks, gender inclusivity, and drawing lessons from successful women peers, we can unravel a comprehensive roadmap for transformative change.

Empowering Women's Leadership: Balancing dual roles within the family and the business remains a pivotal concern for women leaders in family enterprises. Successful strategies encompass the delineation of clear boundaries, fostering open communication channels, and implementing flexible work structures. Recognizing and actively addressing these challenges not only promotes women's leadership but also enhances the overall performance of family businesses by tapping into a broader talent pool.

Case studies of successful women leaders navigating the delicate balance between familial responsibilities and professional commitments provide actionable insights. The implementation of flexible work arrangements, tailored mentorship programs, and a commitment to work-life integration emerges as a recurring theme. These strategies empower women within family enterprises, contributing to a more inclusive and adaptive organizational culture that recognizes and values the diverse contributions of women leaders.

The Importance of Support Networks: Building robust support networks is foundational to nurturing the active involvement of women in family enterprises. Research underscores the positive correlation between support systems and the professional advancement of women. Establishing mentorship programs, peer networks, and targeted development initiatives creates a conducive environment that empowers women to overcome challenges, fostering a culture of inclusivity and shared success.

Further exploration into the concept of support networks reveals their impact beyond individual empowerment, influencing the overall resilience of the family enterprise. Mentorship programs, where seasoned women leaders guide the next generation, accelerate leadership development and facilitate the transfer of tacit knowledge and values across generations. Peer networks, characterized by shared experiences and collaborative problem-solving, emerge as dynamic catalysts for innovation and adaptability, creating a vibrant ecosystem for women's active participation.

Promoting Gender Inclusivity: A call to action for family enterprises involves deliberate efforts to dismantle gender stereotypes and promote the active involvement of women. Rigorous adherence to merit-based practices, equal opportunities, and policies addressing gender bias are pivotal in creating an environment where women's talent thrives. The economic and social benefits of gender diversity are well-documented, reinforcing the urgency for family enterprises to prioritize and champion this cause.

The strategic importance of promoting gender inclusivity is underscored by research indicating a direct correlation between diverse leadership teams and enhanced business performance. Fostering an organizational culture that actively seeks and values diverse perspectives positions family enterprises for innovation and resilience in a complex and competitive global landscape. The integration of gender-inclusive practices becomes not only a moral imperative but a strategic imperative for long-term success and relevance.

Leadership Lessons from Successful Women Peers: Drawing lessons from successful women leaders within family enterprises provides invaluable insights. Their journeys serve as blueprints for navigating challenges and seizing opportunities. Documenting and disseminating these narratives not only highlights the transformative power of women's leadership but also inspires the next generation. By fostering a culture of shared experiences and mentorship, family businesses can cultivate a reservoir of women leadership talent poised for sustained success.

In examining leadership lessons from successful women peers, it becomes evident that these narratives extend beyond individual accomplishments to embody collective wisdom. The power of storytelling in transmitting organizational values and fostering a sense of shared identity cannot be overstated. By documenting and disseminating these narratives, family enterprises create a repository of knowledge that transcends generations, ensuring a seamless transfer of women's leadership acumen and a perpetuation of the values that underpin the business.

Conclusion

In conclusion, the imperative for empowering women's active involvement in family enterprises transcends mere rhetoric; it is a strategic imperative for long-term viability. As we embark on this transformative journey, let us remember that embracing women's leadership is not just a moral obligation but a sound business strategy. By fostering a culture that values and empowers every woman member, family enterprises can harness the full spectrum of talent, ensuring a legacy that stands resilient against the test of time. The future of family businesses lies in the hands of leaders who recognize the power of women's active involvement, making it not only a call to action but a commitment to lasting prosperity.

Pledging of Shares by Promoters of Family Firms in India: Regulatory Concerns and Recommendations

This article was first published in the The Prime Directory 2023, Prime Database Group, September 2023. Co-aurthors: with Ray, Sougata & Ramachandran, Kavil; https://www.primedatabase.com/article/2023/Article-Nupur_Pavan_Bang.pdf 

Introduction

The practice of pledging of shares has existed in the Indian financial system for a long time. However, it gained significant disrepute during the Satyam Corporate Governance scandal in 2009. Since then, the Securities and Exchange Board of India (SEBI) mandated the promoter shareholders of firms to declare their pledging activities to the stock exchanges within seven days.

Regulatory bodies such as SEBI and RBI have continually highlighted their concerns around pledging. As pledging-induced corporate governance scandals have seen stock prices plummet, investors too have called for pledging to be curtailed via the introduction of stringent regulations. Academics and corporate governance experts have associated share pledging with several detrimental firm-level outcomes. Some of these concerns are highlighted below.

Concerns

Health of the financial system: In India, financial institutions have seen a considerable rise in their exposure to debt backed by pledged shares in the past decade. Often, the asset cover set by lending institutions may be too small to cover the price risk associated with shares as collateral. Where pledging loans are non-recourse (i.e., the borrower is not personally liable for the loan apart from the provision of collateral), there is a possibility of the lender not recovering the principal amount in the event of a sudden downturn in the stock price and loan default.

Loss of control of the firm for controlling shareholders: In the hunt for wealth diversification and legacy building, controlling shareholders may be tempted to over-pledge their shares with a lack of provisions to repay the loan or answer margin calls. There have been numerous instances where margin calls have led to controlling shareholders losing control of the firm. These disruptions result in a significant loss in market capitalization of the firm and raise considerable doubt over its future.

Underinvestment in innovation and risk-aversion: While innovation is a strategic driver of long-term growth and firm value, investment in innovation is much riskier than the firm’s business-as-usual activities. Post pledging, there may be a strong incentive for the promoters to underinvest in R&D activities to reduce the possibility of future margin calls.

Impact on accounting practices: To reduce the risk of a decline in the firm’s share price and subsequent margin calls, promoters may attempt to falsely present a positive picture of the firm. Consequently, firms where controlling shareholders pledge shares have a higher propensity to indulge in inferior accounting practices such as earnings management and choose lower-quality auditors to continue earnings management and navigate through the regulatory requirement of a financial audit.

Decline in Firm Value: Following a share pledge by a controlling shareholder, increased risk-aversion and a rise in the firm’s equity risk is likely to contribute to a decline in firm value in the longer term. Thus, while insiders pledging shares receive benefits in the form of a loan, outsiders must face a decline in firm value with no associated upsides, if the loan amount is not used for the same firm and with a judicious strategic plan.

Theoretically, there is a divergence in risks and rewards of the promoters who pledge their shares and other shareholders of a firm. This may act as an incentive for the promoters to pledge their shares despite all the concerns mentioned above. In the next section, the authors enumerate a few recommendations for the regulators that should help minimize the negative impact of pledging, while retaining the tool to access funds when in need.

Recommendations

Awareness and information dissemination: Despite concerns from all quarters over the negative implications of pledging, SEBI has indicated that it does not intend to prohibit the pledging of shares. SEBI believes that it should be the right of the owner of equity to decide the best possible way of utilizing it. Hence, given its positioning as a relatively accessible form of financing for shareholders, pledging of shares is expected to remain in the financial markets as a popular form of raising capital. Moving forward, it is critical for the regulators to create awareness and disseminate information about pledging of shares to all key stakeholders (including minority shareholders and financial institutions).

Integration and standardization: As of now, the disclosures on pledging by promoters to SEBI and the information available to RBI regarding the lending by financial institutions are not integrated. Both the regulators should jointly seek information from the promoters and disseminate the information in a consolidated manner to the investors. In addition, rules surrounding adequate cover for share pledges (and provision of the maintenance margin) must be standardized and ensured that they are implemented across all financial institutions uniformly.

End-use of pledging capital: SEBI has been considerably proactive in monitoring the pledging of shares and introducing stricter regulations around the same. We feel that these are steps in the correct direction. However, disclosure of the reasons for pledging must be mandated against all share pledges irrespective of the size of the pledge to further protect the interest of the minority shareholders. SEBI must actively mandate the precise destination of the funds obtained through pledging, as several promoters provide vague reasons for pledging in the disclosure reports. 

Control and cash flows: In an ideal scenario, the associated risks, returns and control should be homogenous across the firm’s shareholders. That is, the promotors, institutional investors and the retail investors should receive returns (in the form of capital gains and dividends), face risks and exercise control in accordance with the size of their shareholding in the firm. However, pledging may alter this homogeneity associated with stock ownership. While the shares are used as a collateral to raise funds, the promoters continue to enjoy all cash flows associated with those shares as well as their control and voting rights. In a way, this incentivizes the promoter to pledge their shares since there is no immediate negative consequence of doing so.

While, in a situation where the firm is close to default or needs immediate cash, the promoters might have no choice but to use pledging as a tool to access immediate capital, the promoters should have a plan to pay back the loan to the financial institution. Checks and balances are required to ensure that due to asymmetry of information, the promoters do not “cash out” of firms in distress leaving the financial institutions (lenders) and other shareholders to take the fall. A negative spiral in the stock price will most significantly impact the minority shareholders and leave the lenders with a collateral that may not cover the value of the loan extended. Such divergence can be checked by the SEBI by bringing in clauses such as deferred dividend payments until the shares are pledged or suspending the voting rights in proportion to the extent of shares pledged.

Guidance to the board: The role of the board of directors is critical in the event the promoters pledge their shares due to its far-reaching implications. The Ministry of Corporate Affairs may stress of the benefits of an empowered board of directors. It may also lay out the responsibilities of the board if a promoter wants to pledge its shares. The directors must caution the promoters from over pledging and should shield the firm from the promoters if they try to manage the margin calls by taking hasty or short-term view decisions in the firm. In addition, the board of directors should also evaluate if pledging is indeed the best option for the firm. Independent directors to be more vigilant and check that decision making at firm level is not impacted. In addition, they should be made more accountable for lack of carrying out their fiduciary duties.

Guidance to promoters: The Companies Act should also detail the expectations from the promoters when deciding to raise capital via pledging, viz. the promoters should be cognizant of the risks that this form of financing carries, the promoters should be reasonably confident of the cash-flow generation abilities of the investments made by them in the future. Overtly wishful and hopeful thinking by promoters without due diligence has indeed impacted many business barons in making over-optimistic bets. Also, the impact of variations in stock price of the firm observed in the short-term on the pledging contract should be manageable. The promoter should also have a contingency plan to answer margin calls made to the firm and they should disclose it to SEBI.

Compliance: Disclosure by the promoters and the companies should be monitored stringently with strict action for delays and non-compliance. For a better governed and efficient running of the market, there must not be any slip between the cup and the lip.

Conclusion

When we study individual cases of pledging of shares, we find that in conjunction with bad business decisions, pledging has had dire consequences for the promoters and other stakeholders. Such companies are many. They include Satyam, Future Group, and Zee Entertainment. However, there are also companies that have created long-term wealth for all shareholders by using pledging as a strategic tool to raise funds for expansion and growth. Examples include Apollo Hospitals and Granules Pharmaceuticals.

Therefore, all cases of pledging of shares should not be painted with the same stroke of negative. Rather, responsible pledging should be promoted, with appropriate checks and balances, transparent motivations to pledge, and a plan to revoke the pledge.