One reason why the uncompetitive chunk of Indian family businesses is that way is because the man at the top reached there too late. Indeed, in the pre-liberalisation era, a 40-something scion taking over the mantle was considered 'young' for the job. Often, however, the heir apparent had little choice but to keep waiting in the wings-and then perhaps ponder about his own succession plan a few years later-since the patriarch was in no mood to let go. R.P. Goenka was close to 50 before he took over the reins. Ratan Tata too was in his fifties when he took charge, and the late Parvinder Singh got a chance to articulate his pharma vision for Ranbaxy only in 1993, when his father Bhai Mohan Singh finally stepped down.

Rajiv and Sanjiv Bajaj: tandem-ride

These days, mercifully, 40 is considered embarrassingly old an age to be taking over. And the results turned out by CEOs who have been inducted early make a clear case for fossilised family managements-who still manage to get entangled in operational and administrative issues-to pass on the baton when they are in a cerebral condition to do so. Worldwide, tycoons like Bill Gates and Ted Turner are perfect examples of those who started early and went on to create huge wealth.

Pawan Kant Munjal: early ascension

Prashant Ruia: baptism-by-fire

In India, Kumar Mangalam Birla is unarguably the best manifestation of the speed and aggression youth brings along with it. Birla might have been pitchforked into the action a few years too early (by circumstance)-he was only 28 when he had little choice but to assume charge-but in a couple of years he succeeded in leaving his own indelible mark on the empire his father built. The Ambani brothers too were anointed early-Anil was put at the deep end in Reliance's Ahmedabad textiles unit after returning from Wharton University, and Mukesh, after his stint at Stanford, cut his teeth at the Patalganga plant. Rajiv and Sanjiv Bajaj, Pawan Kant Munjal and Sulajja Firodia-Motwani are other examples of scions blooded young, educated abroad, sent to the shopfloor and now showing swifter decision-making and higher risk-taking qualities than the earlier generation.

It hasn't, however, been smooth sailing for all. The Ruia brothers, Prashant and Anshuman, had a veritable baptism of fire, being inducted into the Essar Group when its mega-steel plant ran into time and cost overruns, even as the global steel industry sank into a depression. Vinay Rai's steel ventures-Usha (India), Usha Ispat, Malvika Steel-too are in the wars. And the Wadia sons, Jeh and Ness, make more news with their fast-track lifestyle rather than for their initiatives at Neville House.

Then there is that breed of entrepreneur that prefers that the offspring earn their spurs in a newly-created enterprise. That's what Zee's Chairman Subhash Chandra has decided for his sons: 29-year-old Puneet Goyal is learning the ropes in the satellite communications business (under the able guidance of a hardnosed professional in the business, J.P. Singh), and the two other brothers, Atul and Amit, are spearheading a foray into data centres. Chandra, whose penchant for sensing high-risk opportunities is now legendary, has promoted both these businesses.

-Brian Carvalho

Of Owners, Managers, And Controllers

M.V. Subbaiah: letting go

When French media giant Vivendi acquired Seagram, the Canadian spirits, music, films, and television major, last year, it marked yet another marriage between content creators and its distributors, pretty similar to the AOL-Time Warner merger. Yet, Vivendi's purchase of Seagram was significant from another point of view,: it marked the end of family control at the Canadian behemoth.

The Bronfman family owned closed to 24 per cent in Seagram- enough to give it undisputed control over the spirits and media colossus. Yet, the family had little choice but to look for a buyer. Reason? The markets weren't happy with the company's performance. Seagram is just one example of such ''investor capitalism'', a phrase coined by Michael Useem, author of Investor Capitalism: How Money Managers are Changing the Face of Corporate America, to explain scenarios where the family has to give up control because of under-performance.

In India, such stockmarket-initiated acquisitions might haven't yet happened, but the spate of attempts by relatively unknown predators-Arun Bajoria, Abhishek Dalmia, and Bahubali Shah for family-run businesses like Bombay Dyeing, Gesco Corp, and Voltas-will ensure that the controllers are always on alert. ''Families have to prove that they're eligible for the job,'' points out Shailesh Haribhakti, Managing Partner, Haribhakti Group.

Non-performing assets (NPA)-plagued financial institutions (FIs), for their part, are finally beginning to exercise their rights in companies in which they own a chunk of the equity. Modi Rubber, in which the FIs control 44.5 per cent as against the Modis' 23.4 per cent, is a case in point.

Many family businesses, to their credit, are revamping their act. M.V. Subbiah, former chairman of the Murugappa board for instance, stepped down and brought in a former Infosys md, N.S. Raghavan, as non-executive chairman. Ranbaxy has non-family members at the top, with Tejinder Khanna as chairman and D.S. Brar as CEO.

The family may step back, but that doesn't mean that the professional has a free rein. Remember Jacques Nasser? The Ford family gave the marching orders to the CEO of Ford Motor Co. His replacement? Family scion William Clay Ford Junior, the great grandson of the company's founder.

-Brian Carvalho

Corporate governance: Fad Or Fiction?

In the 1980s, Ashwini Puri, Head (Corporate Finance and Recovery), PricewaterhouseCoopers, India, went to conduct a due diligence exercise on a Delhi-based businessman who wanted to tie-up with a foreign company. When Puri went to the man's house, he was astonished to see his wealth. ''It was all black money.''

Things have changed since then. Thanks to lower tax rates, competition, and a code on corporate governance. The latter appears to be a fad amongst family-run businesses. Ask any chief executive of a family-run business, and you'll get a list of a dozen initiatives the group is undertaking. And the Securities and Exchange Board of India's (SEBI) code leaves little option.

As per SEBI guidelines, all Group A entities of the BSE or those in the S&P CNX Nifty index as on January 1, 2000, had to comply with the corporate governance norms by March 31, 2001. By March 31, 2002, all listed entities that have a paid-up share capital of Rs 10 crore have to meet the corporate governance norms and by the end of the next financial year (2002-3), all listed entities have to follow suit.

Amongst the first few companies to take corporate governance seriously, according to the Confederation of Indian Industry (CII) are Hindalco, Bajaj Auto, Nicholas Piramal, and Infosys. These constituted their boards in line with today's corporate governance norms.

But according to analysts, real corporate governance means that companies become truly transparent. This means that they issue profit warnings during a bad phase. As of now, companies that are listed on overseas exchanges are doing so. The Indian stock markets today don't punish companies that don't practice the corporate governance code. Only when the markets mature will family-run businesses begin to practise corporate governance in the real sense.

-Swati Prasad

Family-Man Vs Professional Manager

Yet another fine Indian business family

Ultimately it's the stockmarket that passes the verdict. And the family's job is to do what it takes to keep the equity analysts, fund managers and the small investor in good spirits-not by making grandiose projections and giving good sound bytes but by adopting good governance practices, being transparent with information, and hiring the best people. ''The market supports stocks of family-owned businesses when they perceive that the family involvement adds value and maximises very shareholder's wealth,'' explains, Anand Mahindra, Vice Chairman, Mahindra & Mahindra. So, if a family is committed to improving and maximising shareholder wealth, it will ensure that it has the best qualified people for the job-be they family members or professionals.

There's little doubt that for decades now, there have been plenty of business families that have treated their empires like personal property, other shareholders be damned. Clearly, it's time for family members to get detached from their enterprises, but that hardly means that they have no role to play. ''The family has to play the role of the entrepreneur, outlining the vision, providing the motivation. But it's the professionals who have to run the company,'' points out Nimesh Kampani, Chairman, JM Morgan Stanley. Mahindra uses the phrase ''aggressive venture capitalists'', to describe what Indian business families have to transform themselves into-the key decisions about where capital should be allocated lies with the family.

Mahindra adds that there are certain roles that a family just can't abdicate. In corporate level jobs, for instance, where plenty of communication is required, family members enjoy an edge over hired professionals. He cites the example of the Firestone crisis at Ford in 2000-Firestone decided to recall 14.4 million tyres (most on the Ford Explorer) as they were unsafe-when Chairman William Clay Ford Junior was used as the spokesman rather than CEO Jacques Nasser. ''The image of Bill Ford, given that he was a respected as a professional clearly lent more credibility to the situation.''

To decide who is the best man for the job is the task of the board. But for that, the board itself needs to be fiercely professional and independent. For the many Indian groups that have more family members on the board than external directors, that should indeed be the first move.

-Brian Carvalho