Old boys and their eternal values

India is one of the youngest countries in the world. A little under half its population are women. Yet here’s the remarkable thing about India Inc. Its top leadership does not reflect those demographics at all.

A quick recce of the ten largest corporations by revenues as listed in the latest annual BS 1000  survey only emphasises the somewhat derisive description of Indian business as an old boys’ club. Of the five private companies in the top 10 corporations by revenues, no CEO or executive chairman is below 45 years of age (public sector firms have been excluded because they do not conform to conventionally understood corporate paradigms). The youngest among this group is Rajesh Gopinathan, CEO and managing director of Tata Consultancy Services (TCS). At 48 years, he is described as one of the youngest chief executives in the group. The oldest among this top 10 cohort is Mukesh Ambani, chairman and managing director of Reliance Industries, India’s largest private corporation by revenues, at 61 years.

This assessment excludes such enduring influencers as Larsen & Toubro’s group Chairman A M Naik, now 77, who took such an age to relinquish his formal executive role that it became a sotto voce joke in corporate circles. He eventually stepped aside in 2017, at age 75, but no one is surprised that it is his voice that is being heard in the takeover controversy involving L&T and Mindtree. At 81, Ratan Tata also remains extremely influential within the Tata group as chairman emeritus, after ousting his designated successor Cyrus Mistry, then 46, following an acrimonious falling out, in favour of a Tata lifer, former TCS chief N Chandrasekaran, now 55 years. “I don’t have to be on the board to be active,” Mr Tata once said.

If young(er) managers are at a premium in large corporations, women are all but invisible. All large, self-respecting corporations have duly appointed the mandatory woman board member in accordance with regulations (many smaller listed companies remain in breach of this provision). But within the hands-on senior leadership team, women are hard to find, and no woman appeared to be part of any core advisory role within these companies. The picture on age and gender scarcely changes down the ranks. Within the top 50 largest companies — public or private — there is no woman CEO or chairman, and conspicuously few in the senior management teams.  

The common denominator among these giants is that they are mostly in old-school, manufacturing businesses — barring TCS, Infosys and the Jio portion of RIL’s portfolio. The obvious point is to compare the old boys at the top with the relative youthfulness of the e-commerce gang — Sachin Bansal (42), his former partner Binny Bansal (37), Ritesh Agarwal (26), Bhavish Aggarwal (33), Vijay Shekhar Sharma (40) and so on. Note, however, that no woman figures among this lot either.

These founders and their creations attract a disproportionate amount of publicity in the pink press principally because of their apparent honest-to-goodness “People Like Us” culture.  They tend not to be of the “suit-boot” predilection and are rarely spotted in ornate business clubs or industry associations, but they accrue enviable personal wealth from generous valuations of their companies when deep-pocketed majors such as Walmart, AirBnB or Alibaba invest in them or buy them out.

Amusingly, the age difference between the new and old businesses shows most when it comes to exercising control over their companies when new investors step in. The younger lot tend to be less sentimental or, at any rate, more realistic. Sachin Bansal stepped out of Flipkart after Walmart bought a majority stake to pursue other interests. His partner Binny Bansal stayed on as group CEO, willing to work under the direction of the new owners, until he was forced out on allegations of personal misconduct. Ritesh Agarwal appears to have no problem delegating to Aditya Ghosh, the IndiGo Airlines whiz who has signed on with OYO.

Contrast this with Naresh Goyal of Jet Airways. Even as he piloted his airline into disaster, the 69-year-old clung to power until irate lenders forced him out and halved his shareholding. MindTree’s co-founders Subroto Bagchi and Krishnakumar Natarajan (also executive chairman), both 62, have expressed almost comical chagrin at L&T’s hostile bid. Essar’s Prashant Ruia (a relatively youthful 50) is trying all sorts of permutations and combinations to regain control of Essar Steel, which is in the throes of the insolvency process.

Having operated in an environment in which management control was considered an eternal value, the older generation of businessmen (and they are mainly men) have yet to understand the dynamics of a business world in which ownership is transitory and survival cannot be taken for granted. Had they ceded control to younger executives, they may have learnt that lesson earlier.