New Delhi [India], May 19 : Addressing the session on "Securing the future of family businesses: Purpose-driven and Responsible," Ajay S Shriram, Chairman and Senior Managing Director, DCM Shriram Limited, opened up about family businesses and emphasised that the enterprise needs to balance its approach like trustees for the next generation.
He added that family businesses are world-class due to their innovation and the supportive ecosystem in which they operate.
The DCM of Shriram Group underscored the importance of trusteeship and advised to adopt checks and balances in the organisation.
Family businesses are seen to exude a greater sense of commitment and passion in their sphere as they have greater personal stakes involved.
Agility in business decision-making, deep industry insight, mutual trust, employment generation and entrepreneurship development reinforce the dominant position of family businesses. Generally, most family enterprises do not have any direct responsibility to shareholders outside the family, so they have greater flexibility in making decisions that improve the speed of launching new initiatives, changing operations, and evaluating new business opportunities.
He placed importance on corporate governance, laying down objectives, vision and setting value. He emphasised the need for transparency and accountability in family businesses, highlighting the importance of strategic planning in family businesses.
Sriram suggested that family businesses are champions of the environment, sustainability, and governance.
He was speaking at the Annual Business Summit 2024 of the Confederation of Indian Industry (CII) with the theme "Co-creating the future responsibly: Role of business" in New Delhi today.
Speaking during the session, Kulin Lalbhai, Executive Director, Arvind Limited, stated the importance of having core value systems in the organisation. He further said that there is a need to create an Institution which stands for something, while also emphasising that institutions are more important than people. He placed importance on long-term thinking and how to survive on a long-term basis.
Lalbhai further stated that in a country like India, companies have to be a positive force towards change in society. He further added that the government cannot do everything; hence, companies need to make changes in society at large. He emphasised the importance of Diversity, Expansion and Disruption.
Geetanjali Kirloskar, Chairperson and Managing Director, Kirloskar Systems Limited, laid importance on change of path and ownership in Family Business as time moves on.
She stressed the strong relationship between trust and profitability in Family Business.
She said there is a need to integrate value systems in an organisation, emphasising the need for foreign collaboration.
Vir Advani, Chairman and Managing Director, Blue Star Limited, said that India is on its way to a USD 10 trillion economy and hence we should not be complacent.
However, family businesses do face a gamut of challenges - succession has been Achilles heel for many family enterprises, managing diverse opinions of family members, solving internal issues and disputes, differences in approach and viewpoints between the older and young generations, etc.
He said that family businesses started in India during independence. He said that for a family business to thrive, it must focus on strong governance, succession planning, product innovation, digitization, etc. He stated that the family should define the purpose of the organisation. He further emphasised the need to strike a balance between traditional core values and innovation in family business.
To counter such challenges, business houses have incorporated professionals as their board members.
Madhavkrishna Singhania, Deputy Managing Director and CEO of JK Cement Limited, said family businesses are a mix of capitalism and socialism.
He emphasised the importance of involving family members to build trust in the organisation. family businesess needs to keep in mind the needs of society and value system.
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