By Kollengode S Venkataraman Written in Jan 2005
The Indian intelligentsia wants to believe that India is on a roll, with its IT Pros solving problems for the industrialised societies; its three hundred million affluent jet-set middle class having large purchasing power, with USA-style malls sprouting all over the country……
But behind the facade of all development stories, India is still a feudal country not capable of managing its affairs intelligently. Consider the latest infighting in the Reliance Group of companies built by Dhirubhai Ambani, who passed away 2 years ago. Reliance is not a small company. According to the Reliance website, the group has a dominant presence in India. The Reliance Group:
- Is India’s largest highly diversified business house with revenues over 100,000 crore rupees (22 billion dollar); net profit of 6,000 crores rupees (1.4 billion dollars) and export of 15,000 crores rupees (3.5 billion dollars).
- Has over 80,000 people work at the Reliance Group of companies.
- Exports its products to more than 100 companies.
- Has its revenue equivalent to 3.5 % of India’s GDP and contributes to 10% of the country’s indirect tax revenues.
- Over 3.1 million people — it is India’s largest for any single company — are Reliance shareholders.
- Is the only Indian company in the list of global companies that create more value for their shareholders.
- Accounts for 7% of profits of the entire Indian corporate sector.
After the death of Mr Dhirubhai, the company is run by his two sons, Mukesh, Chairman and Managing Director, and Anil, the Vice Chairman and managing Director of the corporate giant. The brothers are MBAs from Stanford and Harvard. With all the case studies the Ambani brothers did in their MBA assignments, if you expect modern management principles in Reliance Group, perish the thought.
Recently the two brothers are at each other’s throats, bar-room style for controlling the empire, with Mukesh issuing statement to his employees, “There is no ambiguity in Dhirubhai Ambani ‘s legacy that the Chairman and Managing Director is the final authority on all matters concerning Reliance.”
Who do you think is sorting out their ego clash? Not the board of directors, not the 1.3 million shareholders, not the institutional investors, not the mavens of Dalal Street, not even the Indian courts. The dispute is treated as a family feud mediated by the brothers’ widowed mother Kokila Bank, and their two sisters Deepti Salgaonkar and Nina Kothari. Which begs these questions: what is the role of the board of directors other than being potted plants decorating the boardroom table? Where are the 3.1 million shareholders, the nominal owners of the company?
The dispute over the leadership of the 23-billion-dollar joint stock company is treated as a quarrel between two brothers fighting over their favorite Christmas toys. How much more pathetic can India Inc be?
The dispute only tells us how feudal India is even in the day and age. In India, leadership transitions are hereditary. Motilal Nehru to Jawaharlal Nehru to Indira Gandhi to Rajiv Gandhi to Rajiv Gandhi’s Italian widow Sonia, who is grooming her son and daughter to be the inheritors of the party’s (and by implication, the nation’s) helm. The story is the same in Tamil Nadu, the Land of the Rationalists, where Karunanidhi’s extended family treats the whole state as a fiefdom. Bollywood is no different, and so are the performing arts.
Maybe Ambani brothers should read the rise and fall of their fellow Sindhi enterprise Kamanis, which brings to mind the Urdu saying: haveli ka Umar sath saal. The lifespan of a hereditary enterprise is 60 years.
India is a regional superpower? Yeah, keep dreaming.