The Bajajs want children to carry on common ownership

The Bajajs will be exceptions to the view that family businesses break up beyond the third generation, Niraj Bajaj, a spokesperson for the family, said in an interview. Edited excerpts:

Why do business families separate ownership and control of businesses?

A wide variety of reasons may lead to separations. It could be personal aspirations to grow or gain greater control; sometimes a person could seek more freedom than one normally gets in a joint family; sometimes wives play a key role; and sometimes a person could feel the extended family isn’t doing justice to him. Even a clash of egos could lead to a split.

It’s normally a combination of these factors that leads to separations—it’s impossible to pinpoint which of these were at play in our case. When one of the brothers wanted to separate business interests, we were unhappy but there was no alternative to agreeing. I believe there is so much wealth in business families that money is not one of the major reasons for separation.

Did it hurt?

It was painful for all of us—the entire family—even for Shishir Bajaj, who asked for the separation. It eventually happened very amicably, and we continue to have good relations. Our emotional bonds are still strong; time, I believe, is a great healer.

How much autonomy do members in your extended family have in running businesses?

There are clearly defined responsibilities for each of us. For instance, I have been looking after the family’s treasury and have been the common wealth manager for each one in the extended family for the last 15 years or so. But while we are doing our jobs pretty much independently, we work under a family oversight. This handholding is a source of great support, but to enjoy it, you need to appreciate other’s viewpoints as well—you cannot say ‘I don’t care for anybody’s advice’ and take decisions entirely on your own.

So does this mean that you have to get all decisions vetted by the elders in the family?

No, it’s only key decisions that we discuss among ourselves. Among the men, there are four brothers in our generation and three in the next generation—my son is still very young. So, essentially, we have to build a consensus among seven persons.

At times there are disagreements—it’s healthy for different people in a joint family to have different views—but almost always we manage to reach a consensus. It happens because we trust each other a great deal.

Only if a consensus does not emerge on an issue, the head of the family, or Rahul Bajaj, decides, but I cannot immediately recall a situation where he had to use his overriding power to enforce a decision. The hallmark of a good leader is his ability to guide people to a consensus—he should avoid using his overriding powers. We have had great leadership in the family even before: from my grandfather Jamnalal Bajaj (to) my uncle Kamalnayan Bajaj and my father Ramakrishna Bajaj.

So, in your mind, leadership is the key to keeping families together?

Yes, of course. Also important are constant communication within the family and transparency in dealings. You have to constantly demonstrate the advantages of staying together.

So what’s the way going forward?

Our well-wishers told us that the best thing to do is to separate our business interests and ownership voluntarily while the going was good and there was no bitterness in personal relations—that’s the conventional wisdom. But we decided not to follow their advice.

If four people in our generation could do business together, why couldn’t four more in the next generation stay together, we asked ourselves. People told us that most family businesses haven’t stayed together beyond the third generation, but I am confident we will be exceptions.

We control our businesses mainly through a web of closely held investment companies such as Bajaj Sevashram (Pvt. Ltd), Jamnalal Sons (Pvt. Ltd), Baroda Industries (Pvt. Ltd), Bachhraj and Co. (Pvt. Ltd). We also own shares in personal names. It’s a very tax-efficient way of holding our shares in the listed companies. It’s been there for decades.

Even when carving out a portion for our brother, we decided not to disentangle the cross-holdings in the investment companies. Instead, we bought out his shares in the listed companies controlled by us, and sold our shares in the companies that went to him and his family. We don’t want to disentangle the cross-holdings in the investment companies because we want to make sure that separating isn’t easy for our children.