The problems that the Bangurs face today are perhaps good indicators of the challenges Indias established family-owned groups are up against, as economic reforms start taking effect in corporate India. The Bangurs split into five groups in 1991. The group with interests in almost every industry in India was carved up between the grandsons of Mungee Ram and Ram Coowar Bangur, the brothers who had set up the empire sometime towards the end of the 19th century.
The five inheritors were: Balbhadra Das, Shree Niwas, Shree Kumar and Purshottam Das-Benu Gopal (all grandsons of Mungee Ram) and Laxmi Niwas (grandson of Ram Coowar). Since then, analysts have tracked each of the factions closely to come up with a winner in the pack.
So far, only Krishna Kumar Bangur has been able to rise above his cousins. He has steered the engineering companies under his control towards the growth path. Apart from him, none of the heirs have expanded the businesses they inherited and some of them have dragged the companies into controversial deals. The Bangur group as a whole needs to refocus itself to come out of the stagnating performance before it is too late, says a leading chartered accountant.
The most controversial has been the Shree Niwas Bangur group. His second son, Keshav, is under fire for the cash crunch his companies face and the deals that clinched the take-over of Bank of Rajasthan a couple of years ago. He has reportedly borrowed heavily from the inter-corporate deposit market at high rates of interest and has defaulted in repaying the debts and been pulled by the Reserve Bank of India for alleged irregularities in the running of the largest private sector bank in Rajasthan.
Ironically, Keshav Bangur was tipped to be the most successful among the heirs at the time of the split. And ironically again, Bank of Rajasthan is his groups flagship accounting for nearly 60 per cent towards the S N Bangur groups total turnover of Rs 525 crore. Keshav Bangur and his family hold close to 60 per cent of the stake in Bank of Rajasthan and are said to considering selling part of this to tide over the funds crunch.
The second largest company in the group, BFL Software which accounts for nearly 30 per cent to the groups bottomline is also up for sale. He is said to be negotiating its sale with the Business India group. Ashok Advani, the groups promoter is reportedly close to picking up a majority stake at Rs 70 per share (the market price is around Rs 55).
The other branches of the Bangur family have also done little better in the businesses they inherited. Also, the various sub-groups have failed to tear themselves away from the tradition and the problems they inherited. At the time of the split, it was believed that the businesses of the Bangur family would take off after the divide. We expected a resurgence after the split, pointed out analysts. On the contrary, at this point, only few companies have managed to carve a niche and come out of the traditional mould.
This is true even of the relatively more successful K K Bangur group. Its flagship, Graphite India had a turnover of Rs 154.3 crore for the year ended March 31, 1996. This has increased from Rs 113.98 crore in 1994-95 to Rs 148.16 crore in 1995-96 and the net profit from Rs 10.89 crore to Rs 17.23 crore.
KK Bangur has also been able to put GKW Ltd on the growth path. When he acquired the company in 1994, turnover was stagnant at Rs 215 crore with net profit at Rs 7.6 crore. Within a year, the company bounced back with turnover of Rs 247 crore with a net profit of Rs 12.2 crore. Analysts say all the acquisitions undertaken by this group have been well calculated. GKW was followed by Carbon Everflow and the loss-making Powmex Steel in 1996, which and was subsequently, merged with GKW in fiscal 1996-97.
Both GKW Ltd and Graphite India, which have traditionally been extremely strong, are also companies that have been challenged in recent years by increasing competition in the engineering businesses. In Graphite India, he has been able to stay on even keel because spiralling global prices of graphite electrodes has worked in his favour.
But equally, K K Bangur has gone in for some amount of technology upgradation, expansion and modernisation at its various units. Graphite India is revamping operations at its Durgapur and Karnataka units. As a backward integration exercise, the company acquired two calcination units.
A cursory glance at the performance of the other Bangur groups, including Purshottam Das-Benu Gopal combine, the S N Bangur, Shree Kumar and Laxmi Niwas show marginal profits and efforts to expand and modernise. The companies, currently controlled by various factions of the Bangur group are financially strong and can easily strengthen themselves in their own fields if professionals are employed, said a leading analyst.
A major reason for the split six years ago was that the tenuous ties that held the Bangur group, controlling numerous companies, acres of land and huge building complexes worth crores of rupees and sprawled across the country, was impeding growth. The family split into five factions due to differences among members of the younger generation.
When the group split, Balbhadra Das, father of K K Bangur, retained control of Graphite India, Graphite Vicarb, Carbon Corporation, Carbo Ceramics and about 50 per cent of cement and jute of Shree Digvijay Cement. Shree Niwas, father of Keshav Bangur, got charge of Shree Synthetics, Fort William Jute, the asbestos division of Shree Digvijay Cement and Shriram Silk, a division of Shree Digvijay Cement. The group also has BFL Software and Uxhar Bharat, a multilingual weekly that is yet to make profits. Shree Kumar got West Coast Paper, the cable division of Fort Gloster Industries, Jayshree Chemicals, nearly 50 per cent of the cement and jute divisions of Shree Digvijay Cement, Kil Kotagiri Tea & Coffee Estate and Thirumbadi Rubber Co.
Laxmi Niwas, son of Gokul Chand and grandson of Ram Coowar, was given the control of Andhra Pradesh Paper Mills, Bowreah Cotton, Dunbar Cotton Mills, Maharaja Shree Umaid Mills Ltd and the Peria Karamalai Tea Estates. The Purshottam Das-Benu Gopal group, son of Narain Das, acquired Shree Cement, Phosphate Company, Gloster Jute, Joonaktollee Tea, Kalasa Tea, Cowcoody Estates and NBI Finance.
Under the terms of seperation, the cross holdings of the companies were to be transferred at zero-value. Each group would have unencumbered control of the companies under it as well as have the best option to plan, programme and coordinate future activities. And the group would be bound together by old ties and their joint holdings in real estate, charitable and religious trusts.
But with no perceptible change in management practices within the second generation, corporate watchers feel that a total recast of the management system within the organisation and at the plant level, along with an improvement in the work ethos and productivity would benefit the strife-torn group to a large extent.
This is unlikely to happen in the near future because the factions are racked by internal rivalries. And while analysts are close to crossing the group companies off their investment lists, the Bangurs remain tightlipped about their problems. That, quite like the businesses, is a family tradition.
Laxminivas Andhra Pradesh Paper, Bowreah cotton, Dunbar Cotton Mill,
Maharaja Shree Umaid Mills, Peria Kara Malai Tea
Shree Kumar West Coast Paper, Fort Gloster Industries (Cable division),
Jayshree Chemicals, Shree Digvijay Cement (50 per cent of cement & Jute)
Kil Kotagiri Tea & Coffee Estate,Thirumbadi Rubber
Balbhadra Das Graphite India, Graphite Vicarb, Carbon Corporation Carbo Ceramics,
Shree Digvijay Cements (50 per cent of cement & jute)
Shree Niwas Shree Synthetics, Fort Willam W Rope, Shree Digvijay Cement
(Asbestos division ), Shriram Silk (A division of Shree Digvijay Cement)