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Letter to BS: Nothing wrong in dynastic governance in the corporate world

Roshni Nadar Malhotra has rightfully found her place as the Chairman of HCL with her father as the chief strategist

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Mahindra | Tata

Business Standard 

business leaders, corporates

This refers to the editorial “The family way” (July 24). I disagree on your core conclusion. Your observation that the perils of dynastic succession of a political party should be a lesson for the family-owned firms is simply wrong. A political party and a firm are not the same. To begin with, a party is not owned. But a firm is owned as the controlling shares belong to the promoter. Almost all the family-owned firms —Tata, Birla, Wipro (Premjis), Bajaj, Hero (Munjals), etc. — have done well in India. I have been an independent director of a company for a long time after my retirement and I say this from my experience. The fact is that since the promoter — who may be the non-executive chairman of his company — owns major shares, the control remains with him even if the managing director is an outsider. Wipro, and among others are examples. I have found that the promoter chairman, even if non-executive, along with a competent managing director, can run companies very well.
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So my conclusion is that there is nothing wrong in dynastic governance in the corporate world. Roshni Nadar Malhotra has rightfully found her place as the Chairman of HCL with her father as the chief strategist, which is a wonderful development.

First Published: Fri, July 31 2020. 00:55 IST
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