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