Sunday, May 09, 2010

Ambanis are just the typical Indian Brothers

Yeah !! I know everyone worth his/her salt will write about the Judgement on the Ambani bros case - an analysis of how much gas (literally) was wasted - apart from air time, talk time, reams of print, share holders' and tax payers' money. Lamenting will be done (has already been done) on the excruciatingly slow pace of justice delivery costing a few percentage points slip/miss in the GDP (really !!?). Then analysis for future will be rolled out. 

So are we missing the obvious. That the Ambani brothers fight was just another episode of the great gala show which is - the Indian Family managed business.

If you have anything to do with India - you would know what I am talking about. A brilliant entrepreneurial mind (and no one would contest that Dhiru Bhai was) would create a business from nowhere. The mind would have married in the meantime in true Indian tradition. The business would grow big and successful. The family would also grow in the meantime. The mind finally retires (or dies) - the sons (now also daughters) would inherit the successful business. They will then fight with each other and the booty will eventually be distributed amongst them - sometimes after a bitter fight which might drag in courts for years. What happens next is legendary in Indian tradition : 

A bitter competition among siblings erupt because most probably they are in the same business (their father's) and probably in the same region too. Also their relatives, friends, business associates everyone is similar, and hence come what may, they will be compared for every step they take, for every failure they face or every success they achieve. An ego tussle follows. Sometimes, scheming against each other happens. One of them could turn out to be a winner. Most often however - the two (or more) survive but each of them smaller, weaker and more tired. The business in the meantime suffers. (sounds familiar - ahhm. In fact, you have seen this being played out in the media in the present case).

The division of business leaves the business weaker. Resources shrink, debts grow, synergies dilute. The team (father's) is dismayed, confused due to divided loyalties. Some leave - others go into a shell. New core team arrives - often with those who wish to cash in on opportunity making it all worse.

These brothers reach retirement and the next generation is ready - history repeats - businesses gets further divided - fights intensify. Gradually, it reaches a stage where the all important question - so gruellingly discussed in B-Schools - is forgotten. What business are we in? I have cut the juicy - soap stuff where the wives, the vamps and the uncles/aunts/jijas and Bahus play their role in the mess.

All across India in every village, from farmers to merchants, from mill owners to Business groups - this drama has been played out year after year, generation after generation. Ambanis just happen to be the most rich family out there.

Now !! if Ambanis is the typical Indian Gujarati family - and I think they are, every bit of them - this drama is far from over. Among friends and public - Mukesh and Nita have played the archtypical avancular big brother claiming that - "The bitterness should now be put to rest". What the other camp will most probably read this as (no matter what the true intentions of Mukesh are) - "See they are saying - accept that you have beend defeated".

Anil might not have the system to digest what can only be called a clear slap in the face. He went to great extent coming up with front page ads claiming loss of shareholder value & national treason in the brother's companies. Now his compnies lost 10000 crores in market cap in just one day. It is tough to believe that he will keep quiet. He is only waiting for the negotiations on the Gas deal to pan out.

Mukesh has managed his image quite well till now. So he will keep playing the smart backdoor manouverer. Anil should now learn that too much exposure is a risky game and so most of this story will now be played out more quietly.

Sadly, the shareholders remain at the mercy of these brothers, their moods and tantrums. Despite being the largest shareholder business - the Reliance group is managed in the purely Indian family managed business style. Not many think of questioning the competence of the two brothers to manage these businesses. Not one would bother to question the competence of the next generation.

So do you think I am wrong if - I plan my retirement as shareholder of Tatas, Infosys, ITC or/and Wipros rather then of Reliance?