The large female contingent at the Republic Day parade was meant to showcase woman power in the country’s armed forces. Though they are still not allowed into combat roles, it represents progress and evolution in worldview. Watching them march smartly past the saluting dais, I couldn’t help draw parallels with the business world. There was a time, not so long ago, when the flagship business was a no-go area for daughters, and only a handful landed any meaningful managerial role. That scenario is now changing.
Experts who work with top families say the daughter is increasingly being given her fair share of the business. Parents no longer cut corners on her education and many families – Godrej, Emami and Lupin, for instance – have elevated their daughters to senior roles along with their sons. Of course, there are instances, like the Reddy family of Apollo Hospitals and the Biyani family of Future Group, where the daughters have been groomed to lead the charge, but that’s because they don’t have sons.
The old mindset hasn’t vanished fully, but is on its way out. A signal of this change can be seen in the Modi family, once amongst the country’s top groups, and now a pale shadow of its old glory. Gujarmal Modi, the founder of the Modi group, had six daughters and five sons. The business (substantial at the time of Gujarmal Modi’s death in 1976) went to the sons, not to their sisters. His eldest son, K K Modi, didn’t want to do that with his business: he felt it was unfair. So he has put all family shares into a trust in which all his three children – two sons and a daughter – are equal partners along with him and his wife. Most of the young businessmen I know who have boys as well as girls say they have no qualms about inducting their daughters into the family business.
In the past, patriarchs willed all core businesses to their son and left some non-core peripheral assets for the daughter: a shop in the family hotel, the contract to organise all travel for the company. This would generate enough cash to help her live comfortably, and at the same time keep her out of the family business. So far as work was concerned, she was at best given the task of doing the office interiors or designing the company’s brochures. At times, she would be asked to look after the social work sponsored by the company. This the families did because they were fearful of unsolicited interference once the daughter got married.
Businesses in India are driven by the entrepreneurial spirit of the owner, and undisputed control is important for that. Businessmen, therefore, have always been paranoid about outsiders poking their nose into their affairs – even if they are the husband and in-laws of their daughter. The only way to keep them at arm’s length was to cut out the daughter completely from the business. It was unfair but worked well: rarely did one hear a daughter grumble about being sidelined.
But that is changing. Apart from the changing mindset, the law has come to the daughter’s rescue. The Hindu Succession Act provides for equal share for sons and daughters, and so does the Muslim succession law and the Indian Succession Act, in all inherited property. Properties that a patriarch has acquired in his lifetime he is free to distribute as he likes.
However, the daughter is still some distance away from becoming a truly equal partner. Those who help businessmen draft wills and do succession planning insist that the fear of in-laws still lurks around. Many families that have decided to give shares to the daughter have also come up with foolproof agreements that are aimed to keep her in-laws away from the business. In quite a few cases, there are restrictions on the daughter to transfer her shares. Some families agree that in case the daughter dies, her shares will go to her brothers and not to her children. Still others have chosen to give an economic interest in the flagship business to the daughter but no voting rights. Thus, while the daughter gets an equal stream of income as the son, the control remains with the latter.
I know of a case where the daughter, not her husband, has been given a decent stake in the family enterprise but it comes with a rider: the family has the right of first refusal in case she wants to sell. Thus, she is not free to transact the shares in the stock market even if she is in dire need of money. Only in a handful of cases are shares vested in a daughter with no strings attached. That is truly equal treatment – it is the norm in the developed world. Experts say such cases are rare in India, though not totally unknown.
Suresh Raju, a partner with PricewaterhouseCoopers who is working with about a dozen families in the south, says most large families are keen to put in place a structure that benefits all, sons as well as daughters, and at the same time ensures there is no split amongst the children. The reason is that a split often destroys value – all families that have gone through acrimonious divisions will vouch for it. Even mid-size families are conscious of it, Mr Raju says. The way to avoid a split is to give the daughter what is rightfully hers and, at the same time, keep all extraneous influences out. That explains the strictures on the shares given to the daughter.
Much like the women in uniform, full reform is still some distance away.