Why Indian companies are so tied to their promoters ?

7 09 2017

Narayana Murthy says Infosys is his middle child, because it came into being in between the birth of his daughter and son.

He mentions this obviously to bring out the emotional attachment he has with Infosys, much like a parent with a child.

Not just a parent, an Indian parent. An Indian parent is in control of his child’s life, at least he/she wishes to, a lot longer than a western parent. Children are also comfortable depending on their parents a lot longer than a western child does.

Is that the reason why the western concept of promoters leaving the management control to a board is still not getting firmly established in the Indian corporate sector.?

Perhaps. Just like an Indian parent and his child’s bond is longer and deeper than a western one, the bond between founder and his company may be deeper, leading to such situations as seen in Infy and Tatas.

Promoters like Indian parents are unable to let go and the company just like Indian children are comfortable depending on their promoters. They accept them with all their faults.

Even where promoters are no longer alive or have no second generation to take management position Indian cos are looking at leaders who are more like father figures. Cases in point, AM Naik in L&T and Yogi Deveshwar in ITC.

Western concepts like fixed tenures for Chairman, retirement age are treated by most companies as just rituals. Asking a promoter Chairman when he would retire is as sacrilegious as asking a parent when he/she would die.

With rising life expectancy, even retirement ages get shifted higher and higher. When it reaches unreasonable levels say 75, then there is a brilliant idea increasingly adopted by many , Chairman Emeritus.

It is often said that the role of a parent is to give the child roots and wings. Indian parents often fail in giving wings to their children. Similarly, if the Indian companies want to be tied to the coat tails of their promoters, it is hard to expect them to develop wings and be global in size or make some world beating breakthroughs. They would be limited by the vision and capabilities of the promoter.


PLUs and AC3T

17 04 2011

Ever since the Indian railways introduced the AC 3 -Tier coaches 10-12 years ago, they have become very popular. It started as an experiment to replace the erstwhile 1st class (Non-AC) coaches and priced at the same level. Since then, the railways have replaced all Ist class (Non-AC) coaches with AC 3-Tier coaches. It is not just replacement of the Ist Class (Non-AC) coaches , in all the new trains introduced later such as Durontos, AC 3-Tier coaches have been provided.

AC 3Tier is such a popular class of travel that during the holiday seasons, it is among the first ones to get filled up.  The number of coaches of AC 3-Tier in many long distance trains are continuously being increased to cater to this ever growing demand.

Here is an attempt to analyze why this class of travel has gained popularity. It started as a replacement to the Ist Class ( Non-AC). The traditional Ist Class passengers, such as the government servants, interview candidates  and the families traveling on Leave travel concessions had already shifted to the AC 2 tier/ Air travel as the eligibility shifted. Thus Ist class remained a class of last resort to passengers who were unable to secure  AC 2 Tier or  sleeper class reservations.

As passengers accidentally tried the AC 3 Tier, they started seeing its virtues. T Air conditioning made long distance travel comfortable as opposed to the non-AC first class coaches. Also, the AC environment cut out the dust and noise an inevitable accompaniment in sleeper or Ist class (non-AC) .It may be 3 times costlier than the sleeper class, but it was still 33 % cheaper than the AC 2 Tier. The lesser space and headroom in comparison to the AC 2 tier   was a compromise the value conscious Indians were willing to make for the lower fares. Perhaps, similar reasons make low cost carriers gaining market shares.

Since the 90s, with the prosperity coming to the PLUs ( people like us/urban middle class Indians), who traditionally traveled by sleeper class for family holidays and personal travel, found the AC 3 Tier an affordable and attractive option. Besides, the practical benefits of AC travel, there could be other emotional reasons of choosing to travel by AC 3 tier.

The growth of the 90s and 2000s, led to rising isolation of PLUs with the rest ofIndiaand Indians. As many commentators talk about the rise of gated communities, private schools, private hospitals, AC cars, etc making the yuppies having little contact with the rest ofIndiaand Indians.

The ordinary Indians (aam aadmi)  who PLUs wish to move away from travel by the sleeper class. AC 3 Tier for a small price, isolates PLUs from the ordinary Indians. The glass windows and curtains keep the filth and chaos of Indian stations out of sight. Also, the fellow travelers are PLUs, who have chosen AC 3 Tier for similar reasons.

– G.Mohan

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