Ambani: Your place or mine
The BPL saga: Divided family
Birlas vs. Lodha: Battle of wills

If a family business scion has a passion for golf (and not business), gift him a golf club and a smart caddie. Just keep him away from the boardroom.

Unsurprisingly these days-when the odds on any random Indian business family announcing a division of assets (or, worse, being rumoured to be working on a split) are not too dissimilar to the odds on a domestic company raising money overseas or making a cross-border acquisition-it's become fashionable to talk about the growing divorce between ownership and management. Such a demarcation between those who inherit and those who run the business will doubtless go a long way in protecting the interests of shareholders and succeed in eliminating any potential distractions in the quest for growth.

But how successful really is the Indian business family in its avowed intention of staying a safe distance away from the day-to-day running of its operations? A few like the Ambanis and the Piramals have recently (for obvious reasons) stressed on the strong management teams that run each of their respective businesses, but a cursory glance through family-run Indian companies-they make up close to two thirds of the BT 500's top 50-would reveal that the chairman (the owner) is more often than not a synonym for the CEO (the manager).

What a divorce from ownership and management essentially means is that if the son of a business family member wants to pursue his passion and apparent aptitude for, say, the 50-km walk, he should go ahead and do so, assured that the business (and the shareholding) passed down to him is safe-in the hands of a professional CEO. As Pallavi Jha, Chairman and Managing Director, Walchand Capital, points out: "If a family member is less equipped to run a business, he should have the courage to stay away." The lesson for the Indian business family from the recent messy conflicts for assets and power-which overnight cause irreparable damage to relationships nurtured over decades-is clear: Build an institution that doesn't need your surname to grow. Do that, and your shareholders (including your sons and daughters) won't forget you in a hurry.

-Brian Carvalho

Government Spending
Razor's Edge

In an ideal situation, the government of a booming economy (and India can well qualify as one) has little cause for worry on the financial front. As the economy grows, companies will post higher revenues and earnings, individuals will earn more, and, by extension, buy more, and foreign trade, in terms of both imports and exports, will zoom. Ergo, the government can simply sit back and count its money: increased income tax collections from corporates and individuals, and higher revenues from import and excise duties. And much of the money can be ploughed back into developmental projects targeted at the under-privileged. Utopia, here we come.

Unfortunately, reality is different, as the numbers presented in the government's Mid-year Review would suggest. The revenue deficit, according to estimates, should have been less than Rs 35,000 crore for the first six months of 2004-05; instead, it stands at Rs 59,591 crore. The culprit: poor tax collection (after all, if imports grow by 34 per cent in a certain period of time, there is nothing that can explain how revenues from import duties grew only 9 per cent). With the government's poor-friendly face likely to result in significant expenditure in the coming months, the trend doesn't bode well.

-Ashish Gupta

Healthcare
Point Of Inflection?

Fast forward: They're preparing for the boom

Healthcare has been the next big thing for so long that this writer is hesitant to say things will come together for the sector in 2005. Yet, that's exactly what CEOs of healthcare companies are predicting. Shivender M. Singh, Joint Managing Director, Fortis Healthcare, which runs hospitals in Mohali and in and around Delhi, claims 2005 will be "an action-packed year" for the $17-billion (Rs 74,800-crore) Indian healthcare industry, that according to a CII-McKinsey report will grow at the rate of 13 per cent a year for the next five years. Singh's claim is based on his belief that "the sunrise sector will see new ventures and people". That's an opinion echoed by Analjit Singh, Chairman, Max India, which runs five clinics in Delhi alone. "2005 will flag the entry and advent of competition in the healthcare space." The activity in the sector will be spurred by a demand for organised healthcare services, in one part a function of rising incomes, and in another the demise of the family-GP system prevalent in the country. The growing maturity of the industry is evident in the fact that the Confederation of Indian Industry's Indian Healthcare Federation (IHCF) is working on uniform minimum optimum standards for hospitals, and that rating agencies ICRA and CRISIL offer healthcare audits as part of their services. Actually, 2005 could well be it.

-Supriya Shrinate

Infrastructure
Land Ho!

Nation building: Not yet, but we're getting there

It is evident from numbers laid out in the government's Mid-year Review that the infrastructure sector is on a roll. An impressive 56 per cent of the 5,846-km Golden Quadrilateral is complete; the quantum of goods carried by rail and handled at various ports grew 6.9 per cent and 9.8 per cent respectively between April and September 2004 as compared to the previous year; and in the same period, electricity generation increased by 7.8 per cent and the shortage of power came down from 6.9 per cent to 6 per cent.

In the next 10 years, the government has planned infrastructure investments to the tune of Rs 20,00,000 crore; more importantly, it is focussing its efforts on creating an enabling regulatory environment. "Across infrastructure, we will witness predictability and certainty in policy, and that's what investors love," says Jayesh Desai, Director, Transaction Advisory Services, Ernst & Young India. The man is right: the Power Appellate Tribunal will be instituted in 2005, though there is still a question mark on the announcement of a National Power & Tariff Policy as envisaged in The Electricity Act. The Delhi, Bangalore and Hyderabad airport projects will see some action. As will urban infrastructure, integrated townships and special economic zones, with close to $1-billion equity investments expected to pour in 2005.

-Shailesh Dobhal

Joint Ventures
18 No More?

Not really; press note 18, a policy that denies those foreign companies that already have a joint venture or a technology transfer agreement with an Indian company permission to set up a differently-structured subsidiary is not being scrapped. However, realising that some Indian partners are using the policy to greenmail their partners, Industry Minister Kamal Nath has announced that Press Note 18 will be amended to protect the interests of Indian businesses without being unfair to foreign companies. He also added that the two parts of Press Note 18, one which looks at the existing ventures and the other at the future ones, "would be looked at differently". That implies that the sections related to the existing ventures will be diluted, while for new ventures no such permission will need to be taken. About time.

-Ashish Gupta