Emami for family-run succession

Marico and Dabur have opted to stick to professionals to run their operations

Kolkata-based edible oil to consumer goods major Emami's decision to set up a family advisory board to firm up its succession planning indicates where it wishes to go. The Rs 9,000-crore group will be family-driven.

In a way, the Rs 2,217-crore fast moving consumer goods (FMCG) group is swimming against the tide. Peers such as Marico and Dabur have turned to professionals to run operations, with minimal involvement of promoter family members, who at best sit as chairmen or vice-chairmen on the board.

R S Agarwal, chairman, Emami, on his views on succession planning and management, said: "How you chose to run a company is a call you take. It varies from company to company. We have a mix of professionals and family members running the operations of Emami. We also have external agencies and advisors guiding us. This is something that works for us."

This is not the first shot at succession planning here. A 10-member advisory board was set up in 2011 to look at this issue. It had leading names from the corporate world, including former chairman and managing partner of consulting firm Ernst & Young, K N Memani; Anand Rathi; Mudra Communications founder A G Krishnamurthy and advertising guru Alyque Padamsee. The aim was to help Emami promoters Agarwal and R S Goenka on who should take over the baton.

A member of that advisory board, on condition of anonymity, says he was clueless of this new board set up by the patriarchs. “A committee was formed but then it was dissolved. We came to know only from newspapers that a new committee has been set up."

Agarwal says members of the erstwhile high-powered advisory board continue to be associated with the group guiding them on matters pertaining to day-to-day operations and management.

The current family-run board will see each member responsible for certain segments and products, with their actions governed by a “well-structured manual”. Agarwal says this structure is something they wish to have, rather than nominating one or two members as successors and creating differences.

“Emami has always been family-driven. In a way, the current step has formalised what it had been doing informally . But I am of the view that rather than having so many people in contention for the top job, there should be a single power centre, as it increases accountability,” said Pankaj Dutt, partner at Alexander Hughes Managing, an international executive search consultancy.

There is equal representation of both promoter families on key businesses of the group. While the flagship FMCG business has Harsh Agarwal and Mohan Goenka from the two families, group companies Emami Biotech and Emami Paper has representation of Aditya Agarwal and Manish Goenka.

On speculation Agarwal's son, Harsh, is a likely contender for the chairman's position, Agarwal said: “Who from the Agarwals or Goenkas will be appointed to which position and when is something I do not want to get into. At the moment, both me and R S Goenka are joint chairmen.”

HERITAGE RUN

• There is equal representation of both promoter families on key businesses of the group
   
• FMCG business has Harsh Agarwal & Mohan Goenka from the two families
   
• Group firms Emami Biotech and Emami Paper has representation of Aditya Agarwal & Manish Goenka