Soriano: India’s 117-Year-Old Conglomerate: A Model Family Business

Soriano: India’s 117-Year-Old Conglomerate: A Model Family Business

By: PROF. ENRIQUE M. SORIANO

THE Godrej Group is a public company and a conglomerate based in Mumbai, Maharashtra, India. It was founded by two brothers: Ardeshir Godrej and Pirojsha Godrej in 1897. The story behind the success began when Ardeshir came about his creation and selling of locks as a response to the alarming citywide crime rates. He also made vegetable oil-based soaps, which was a hit at that time. Pirojsha helped in developing the business into an enterprise that carried an extensive line of industries.

Today, the Godrej Group spans several industries that include chemical and commodities, agriculture, precision engineering, fast moving consumer goods (FMCG), services and real estate. It markets furniture, security, home appliances, and agricultural care products and its expansion extends to three consumer sectors: personal wash products, haircare and household products in Asia, Latin America and Africa.

The family-run conglomerate handles its operations through two holding companies, namely Godrej Industries Limited, and Godrej & Boyce Mfg. Co. Limited. Other subsidiary and affiliate companies are Godrej Consumer Products Limited (GCPL), Godrej Sara Lee, Godrej Hershey Foods & Beverages Limited, Godrej Infotech Limited, Godrej Properties, Godrej Agrovet, Godrej Hi Care (pest management services), and Godrej Global Solutions (ITES).

The third generation as change agent

The amazing transformation of Godrej Group from manufacturing locks and soaps to different industries during the time of liberalization to the current globalization is the result of the ingenuity and innovativeness of its present chairman, Adi Godrej, who hails from the third generation of the family business (following the second generation, which was led by Pirojsha’s grandsons Naval, Sohrab, and Burjor).

Adi is known as a business icon, an Indian industrialist who embraces change. He initiated appointing non-family members as CEOs because the management of the Godrej Group then was not flexible. He initiated and put in place a system in the management structure to make it flexible. He then moved to modernize the management of the group and incorporated new business processes. The inclusion of technology immensely benefited the family business because of his inclination to it. The Godrej Group reached the completion of its restructuring process in 2000-–10 years in the making. Now it prides itself to have formed a stand-alone company per business handled.

Adi and family are considered one of the richest in India. Their estimated net worth–a whopping $11.6 billion as of 2014! What is great about this family is their wisdom towards money. Having wealth that could afford any person almost whatever material possession they want, the patriarch at the helm of the family business has always taught the value of money to his children. As a result, the abounding wealth is from the combined effort of the family.

Adi leads Godrej Group with his brother Nadir Godrej and cousin Jamshyd Godrej. Nadir is the managing director of Godrej Industries and chairman of Godrej Agrovet. Jamshyd is the managing director and chairman of Godrej & Boyce. The 72-year-old chairman’s three children are also working and continuing the family business. Tanya, who is his eldest daughter, oversees the marketing of the Godrej Industries Limited as the executive director and president. Pirojsha, his son, serves the family business as the chief executive officer of Godrej Properties, which is considered one of the fastest growing property arms and one of the largest in terms of revenue (if not the largest). Nisaba, his second daughter, is the executive director of Godrej Consumer Products and is part of the boards of GCPL, Godrej Agrovet and Teach for India.

As we could imply, nepotism comes to mind when we see the members of the family heading the business. So, how does the group face the issue? There simply is the rule that allows the members of the family to join the group, provided they have professional training. The Godrej Group’s chairman values the importance of training his children.

Godrej Group employs 28,000 people. What does the chairman say about his people? “My grandfather, father and uncle placed a lot of emphasis on building housing and schools for employees, which have paid good dividends. Making sure your employees are properly taken care of is a strong lesson we’ve learnt from previous generations,” Adi says. The conglomerate’s chairman values the welfare of their employees, gives financial reward, and opens a world of opportunities to those who display promising performance.

117 years and going forward

That is really something for family businesses. The group is not shy of any track record, and is looking for further expansion at its fourth generation phase.

So, to those who doubt and believe that family succession is impossible for the long haul, take inspiration from the Godrej family.

Prof. Soriano is a National Agora Awardee, an ASEAN Family Business Advisor, Book Author and Executive Director of ASEAN-based Consulting group, W+B Strategic Advisory based in Manila with branch in Cebu.   Prof. Soriano is  set to deliver a talk entitled  “Creating A World-Class SME “Family Business Governance is key” on Feb. 18, 2017/Sat., from 1-5pm at Cebu Parklane International Hotel.

To reserve slots,  please call Cherryl/Pauline at : (02)556-9707/0915-9108686/0917-8947635.

You can also grab a copy of Prof. Soriano’s book entitled “Ensuring The Family Business Legacy”, please call Wong + Bernstein Advisory Group at (02) 730-3237/ 0925-5224713  and look for Ms. Jenny Arebado.  Prof. Soriano’s  business articles can also be accessed at www.faminbusiness.com

 

LINK: http://www.sunstar.com.ph/cebu/business/2015/08/17/soriano-indias-117-year-old-conglomerate-model-family-business-425156

image source:https://upload.wikimedia.org/wikipedia/commons/thumb/9/97/Godrej_Logo.svg/1280px-Godrej_Logo.svg.png

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