In the early 90s, Enfield India, the maker of the Bullet motorbike, was sold to the Eicher Group. None expected this from its owner, the late S Viswanathan. Though he tried his best to keep Enfield alive, the competition from Japanese automobile firms were intense.
The Eicher Group first acquired 30 per cent equity from Viswanathan and assumed management control. Three years later, it bought out the founders and took full control. They turned around the company focusing on the old war horse, Bullet. One can safely argue that the decision to sell was the best. Today, Royal Enfield is a globally recognised brand.
The Courage to Let Go
Not long ago, the indefatigable N Srinivasan sprang a surprise by selling his family holding in The India Cements Ltd. (ICL) to Aditya Birla owned Ultratech. ICL went through tough times with its legacy plants making it uncompetitive and making fund raising difficult. Yet, for a man like Srinivasan who breathed cement, it was an extraordinary move. Today, ICL is a turnaround story. Had Viswanathan and Srinivasan not done what they did, Enfield India and ICL would have disappeared leaving their staff in the lurch.
In 2018, Satyam Cinemas, one of the largest cinema exhibitors in south India, was sold to PVR, the country’s largest multiplex chain. In this instance, the Satyam owners must have sensed the coming change and smartly exited when the going was good. The fact that these promoters had not hesitated to let go of their ownership must be viewed from a larger and practical prism.
Ownership Must Serve the Enterprise
In an interaction with the Industrial Economist recently, R Thyagarajan, founder of the Shriram group, emphasised the need for transferring ownership to the right people so that the organisations survive and grow beyond the original promoters. Pannerselvam Madanagopal, CEO of Meity Startup Hub, echoed a similar view when queried about the scalability challenges facing startups. The ability to give up control is an art. It is given only to a few gutsy persons. Instances are dime a dozen where entrepreneurship-driven family businesses have disappeared with the founders/promoters. Value creation is unlikely to happen by simply holding on. Pannerselvam Madanagopal may be right when he says business must be viewed only from a business angle and not from an emotional perspective. In the evolving modern business dynamics, this approach appears inescapable. Perhaps it requires a statesman in an entrepreneur to sense and act fast to let the enterprise keep growing.