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Are Business Dynasties More Durable Than Political Ones?

9/08/2022 at 9:15 AM

Sutanu Guru, Executive Director, C Voter Research Foundation

Available data and information suggests that business dynasties face the same fate if inheritors do not keep pace with a changing India

The most visible and striking example of how and why business dynasties both thrive and collapse at the same time can be seen n the career path of Mukesh and Anil Ambani. Their father the late Dhirubhai Ambani was a legendary first generation tycoon who was dismissed as a Johnny come lately upstart by the elite business circles of then Bombay. By the time he passed away in 2002, Dhirubhai Ambani and his Reliance group had left all existing business dynasties, including the Tatas and the Birlas far behind. His two sons Mukesh and Anil Ambani were effectively running the corporate empire by then.

Of the two, Mukesh Ambani was considered to be the more conservative, project execution man while younger brother Anil had acquired a reputation as a swashbuckling finance whiz. By 2005, the empire built by the late Dhirubhai had to be broken up because of irreconcilable differences between his two sons. Elder brother Mukesh kept the petroleum and petrochemicals business while Anil got hold of the rapidly growing telecom and finance wings. Both signed a commitment not to venture into each other’s territory for 10 years. Mukesh focused on consolidation while the swashbuckling Anil not only went on an acquisition spree but also became a Rajya Sabha MP. He planned massive investments in the power and other infrastructure projects.

Today, the empire run by the swashbuckling Anil is virtually defunct and most of his ventures have gone bankrupt. On the other hand, Mukesh has not only expanded the petroleum and petrochemicals business, but also become the largest retail as well as telecom tycoon in the country. He is universally acknowledged as the most spectacular success while his younger brother Anil is universally acknowledged as the most spectacular failure. What are the lessons and what are the similarities with political dynasties? The lessons are very clear: unless you stick to the basics and do not try to fly before you can run, all the advantages bestowed upon you as an inheritor in terms of resources and access to the power centres running the country will be of no use. The meltdown of the empire run by Anil Ambani in just about a decade is a vivid example. It would be interesting to see how the three children of Mukesh Ambani perform as dynasts. They are gradually taking over control of various wings of the empire; but will they stay together or eventually go their own ways?

Like in politics and political dynasties, natural talent and abilities of the inheritors do play a significant role. For instance, it is not a given that the elder sibling will inherit automatically or become more successful. An ageing Lalu Prasad Yadav has designated Tejasvi Yadav, the youngest of his nine children as the inheritor of his political dynasty and legacy. There have been murmurs of protests from elder siblings like Misa Bharti and Tej Pratap Yadav, but it has been clearly settled that Tejasvi will be the leader who will take forward the Yadav dynasty in Bihar, like Akhilesh Yadav in Uttar Pradesh. Down south, the elder brother Alagiri protested vehemently when the late M. Karunanidhi handpicked his younger son M. K. Stalin to lead the DMK. He even declared a revolt, like they used to do in the era when India was a collection of many kingdoms. But Stalin prevailed and is now a popular chef minister of Tamil Nadu.

Natural ability and talent makes a difference even in established business dynasties. Before he died, the legendary G. D. Birla divided his corporate empire to prevent internal family feuds and bickering. When the split happened in the 1980s, no one knew which Birla faction would do well. In about a decade or so, it was clear who inherited the mantle of the Birla legacy. It was the grandson Aditya Birla who delivered the goods while other actions have faded into immensely rich but relative obscurity. Aditya Birla died too young, but his son Kumarmangalam Birla has proven to be immensely successful as a corporate inheritor. Most of the contemporaries of G. D. Birla, the Dalmias, Bangurs, Singhanias et al have left behind business dynasties that have gradually withered away. In some other cases, a formal or informal split in time seems to have benefited everyone. For instance, the late R. P. Goenka split his empire between his two sons Harsh and Sanjeev Goenka who seem to successfully run their own empires now.  Similarly, the two sons of the late Rahul Bajaj, Rajiv and Sanjiv Bajaj successfully run their own empires.

Whether it is a political or a business dynasty, the fundamentals do not change. The first thing is to deliver quality product and service to your customers. In the case of politics, it is the voter. The second thing is to not spread your wings recklessly and stay connected with ground realities. The third, and most important quality is natural ability. A dynasty can never provide that, as we will see in the next column on Bollywood dynasties.

About the Author:

After his master’s degree in economics, Sutanu Guru has been a journalist for more than 30 years in media outlets like Times of India, Economic Times, Business Today, Business World, Business India & others. Currently, he focuses more on research and writing.

DISCLAIMER

This is the personal opinion of the author. The views expressed in this write-up have nothing to do with those of prameyanews.com.

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