Akash has been the chairman of Reliance Jio Infocomm for over a year. Isha runs Reliance Retail, while Anant is in charge of RIL’s energy businesses, and its global operations in green and renewable energy. In August this year, when the siblings were recommended for appointment to the RIL board as non-executive directors, Mukesh Ambani said he would “groom and empower all the next-gen leaders at Reliance…(and) especially mentor Akash, Isha, and Anant”.

Why Does A Succession Plan Matters?

Reliance and Mukesh Ambani carry bitter memories of the time when the group was divided between Mukesh and his brother Anil Ambani in 2006 following a public spat. One of the main reasons for the dispute was that patriarch Dhirubhai Ambani had passed away in 2002 without leaving a will. Mukesh Ambani is 66 years old now, RIL is India’s most-valuable company with a current market cap of more than Rs 15.5 lakh crore (trillion), and he has taken proactive steps on succession planning and division of responsibilities among his three children.

While succession planning in itself is not new in Indian family businesses, several recent high-profile cases have spotlighted the exercise. Apart from RIL, these cases include Bisleri International, Mahindra & Mahindra, Kotak Mahindra Bank, and the Godrej group.

Sample this:

*At the Godrej group, the next generation took charge some years ago after Adi Godrej stepped down as group chairman. Recent reports have said the Rs 1.76 trillion group is close to finalising a formal division of its diverse businesses between Adi Godrej and his brother Nadir on one side, and their cousins Jamshyd Godrej and Smitha Crishna Godrej on the other. A planned division of the business is a new facet in succession planning exercises.

*Ramesh J Chauhan, 83, the chairman of Bisleri International, started negotiations to sell the iconic packaged water company last year. Tata Consumer Products Ltd was the leader to close the deal; however, the proposed acquisition fell through at the last minute, one of the main reasons being the lack of clarity on the direction of succession at the group. Chauhan’s only daughter and vice-chairperson Jayanti was reportedly not keen to lead and manage the group — even though she subsequently did take charge.

*At Mahindra & Mahindra, group chairman Anand Mahindra’s two daughters Divya and Aalika have married non-Indians, and chosen not to join the family business. Therefore, as part of the succession planning at the group, ownership and management have been separated, and a group of professionals run the show.

* At Kotak Mahindra Bank, Ashok Vaswani has just been appointed managing director and CEO after Uday Kotak stepped down from the post at the beginning of September. Vaswani, formerly the chief digital officer of the UK-based Barclays and an outsider to the group, was appointed ahead of prominent internal candidates.

Why This Focus On Succession Now?

There are several reasons why India Inc. has been paying attention to succession planning at the moment.

• First, several Indian family business groups are going through a generational shift. The last round of high-profile generational leadership changes happened a decade or more back, in groups like Bajaj, RPG, Murugappa and TVS.
• Second, there is greater accountability for businesses today with regulatory bodies like the Securities and Exchange Board of India (SEBI) and proxy institutional investors taking an active interest in promoting better corporate governance.
• Third, in the past, succession planning often got a go-by because the founders or patriarchs refused to make way for the next generation. But with the induction of the family constitution in many business groups, the older generation necessarily has to step aside for GenNext.
• Fourth, according to Anil Sainani, family business advisor and managing partner at BAF Consultants, the younger generation in family businesses often has interests that are different from that of the family business. “Therefore,” Sainani says, “it is good to separate ownership and management.”

Finally, as Prof Kavil Ramachandran, senior advisor at the Thomas Schmidheiny Centre for Family Enterprise at the Indian School of Business (ISB), puts it, “There is greater awareness and recognition of the importance of succession planning and governance at family businesses today. In the past, corporate boards used to be filled with family well-wishers. Today, that is changing with professional board members exerting pressure on the family towards succession planning.”

Clearly, this is a new era for Indian family businesses.