Indian Family Businesses: A Story Of A Daughter Who Dared To Apply For A Director's Role

Valli Arunachalam: When every other family branch was represented by a son, why couldn’t our family be represented by a daughter? Is gender still a consideration in current times for a board position?

On Sept 21, 2020, at 3am (USA time), I was awakened with shocking news. It was the day after the board meeting of Ambadi Investments Ltd, the holding company of the Murugappa family’s INR 3 billion industrial conglomerate. The majority shareholders, represented by the sons of different branches of the family, had stuck together to unanimously reject a board position to the first daughter who dared to apply for a director role in the company. Coincidentally, and to the best of my knowledge, it was also the first time that the Ambadi board had voted against a nominated board member. This was rather peculiar, as I was asked by the family members to apply for the board position in the AGM.

My late father, Shri MV Murugappan, had served on the board of the holding company for decades. After his death, our family branch (my mother, sister and I) became the only branch without a male heir, but we continued to have the same shareholding. Little did we know that the archaic principles practiced by the family over the last 100 years would haunt us so badly in this century.  When every other family branch was represented by a son, why couldn’t our family be represented by a daughter? Is gender still a consideration in current times for a board position?

Why would board members of a closely held family enterprise put forth the nomination of another family member only to subsequently reject it? Did I not have the educational qualifications and experience to be on the board? With my doctorate in nuclear engineering, 23 years work experience in Fortune 500 companies, and numerous patents and research papers to my credit, I am certain that I could have brought different perspectives to the Board and made significant contributions to the business.  My lack of board experience couldn’t be an issue because the family refuses to involve their daughters in business. However, for the sons of the family, the principles change drastically. There are numerous instances of sons being elected as board members without consideration of their educational and professional experience. In one instance, a 23-year-old masters graduate with little to no professional experience was inducted to the Ambadi board a few months after his father’s untimely passing.

For the sons of the family, the principles change drastically. There are numerous instances of sons being elected as board members without consideration of their educational and professional experience.

In the present day and age, it is important to recognise that daughters are in no manner handicapped compared to sons, be it in the business arena or, as we are now seeing, in the Olympic arena. Indeed, the achievements of PV Sindhu, Mirabai Chanu and boxing medal hopeful Lovlina Borgohain, showcase to the nation that daughters are equally, if not in some cases, more capable than sons to perform and succeed at the highest level.

Indian business houses, including the traditionally patriarchal ones, have all moved in the positive direction of including gender diversity at the top management, board and decision-making level. As early as the 1920’s, Sumathi Morarjee was groomed into her husband’s family business, the Scindia Steam Navigation Co. She steered it through challenging times to be India’s largest shipping firm. In the 1960’s Simone Tata, wife of Naval Tata, founded the cosmetics company, Lakme, and went on to serve on the board of Tata Industries. Presently, the number of women at the helm of Indian family businesses has grown significantly. Both sons and daughters have been groomed into many family businesses such as Reliance Industries, Godrej and TVS. In others, such as the KK Birla Group and Apollo Hospitals, with only female heirs, the daughters have taken over the mantle from their fathers, and have since expanded and diversified the business.  These remarkable women have all blazed an indelible trail in India Inc. They affirm the findings of numerous studies conducted by renowned universities and consulting firms that women bring unique strengths and values to the business such as diversity of thought & experience, collaboration, communication, empathy and critical thinking.

Women have been propelled to the forefront of family business since the advent of the information age, globalisation, liberalisation and a growing emphasis on education.  Additionally, smaller family size necessitates the involvement of both sons and daughters. In India, while the individual circumstances that led to the inclusion of women in family businesses are varied, the contributions of these women are outstanding.

Women have been propelled to the forefront of family business since the advent of the information age, globalisation, liberalisation and a growing emphasis on education.

Why have some families refused to open the doors of family business to women? Entrenched and outdated mindsets, stubborn, egotistical, regressive thinking, and a sense of entitlement are some of the primary reasons. It is ironic that while such families have diversified and grown their businesses by incorporating the latest business practices, technological advances in manufacturing and digitization trends in business, they have not diversified their board representatives.  Despite being educated in elite international universities, they have stubbornly refused to keep up with the social changes in business. Some even consider the statutory appointment of one women director in listed entities as their gender and diversity inclusion. How can such people look international companies in the eye and yet at the same time refuse to let women enter their own boardrooms?

Globally, family businesses and multinational corporations have made concerted efforts to bring gender parity at all levels of the organization, and they are reaping the benefits. Given the high percentage of family-owned businesses in India, if India Inc. is to keep pace with the rest of the world, it is critical that family businesses have progressive mindsets. They need to implement both social and economic change for the benefit of the business, shareholders, and society.

A good starting point needs to be succession planning. It should be clearly defined and gender neutral. It is the responsibility of each generation to ensure that the family’s legacy not only reflects the principles and values of the family and the business, but is also enduring and in sync with current norms. As my late father said, “The important thing is to be flexible, just like a tree. There are heavy winds; there are storms blowing. The trees that are flexible survive. The trees that are rigid do not.”

A good starting point needs to be succession planning. It should be clearly defined and gender neutral.

Additionally, legislative mandates, government-mandated social changes or quotas, corporate governance reforms, and grassroots level support for change and activism are needed.  Several landmark rulings by the Supreme Court have already put daughters and sons on equal footing with respect to coparcener and ancestral property rights in the Hindu Undivided Family (HUF). While they are commendable first steps towards gender equality, rulings in other areas will serve as a deterrent to power plays by patriarchal systems, and will ensure that those who seek to flaunt the norms of gender equality are held accountable. There is an urgent need for activism in this space. Unless we have enough women directors in the boards of companies, and at different senior-management levels we cannot bring about meaningful change. No matter how educated, competent and capable women are, these archaic systems will not allow them to get a foot in the door and fulfil their true potential.

It is high time that family business houses who believe that their sons are well equipped to run the family business extend the same belief and opportunity to their daughters.  We are all born equal, it is societal beliefs and practices that make us unequal. The litmus test for entry into the family business should be the same for male and female heirs. It should be based on credentials and capability, not gender. We must all join forces to change the paradigm. We must do it for our daughters, our nieces, and our grand-daughters. They deserve better, they deserve to be treated as equals.

The views expressed are the author's own and not that of SheThePeople.