Tata group's succession efforts sets the right example

Of late there has been a lot of comparison between the top business leaders in India with those of the West, especially the US. With good reason. Firstly, India businessmen lag behind their US counterparts when it comes to charity. Secondly, and more importantly for investors, they tend to restrict the upper echelons of management to only their family members. We have very few Indian examples like the Rothschilds, Rockefellers and Vanderbilts, who gave up management. 

But that seems to be changing. And the example is being set by the best known Indian business house of them all - the Tatas. Ratan Tata, who is due to retire by the next fiscal year, has indicated that he is open to looking at a successor beyond his family. This is an important development for Indian investors because it shows the maturing of India Inc. Large Indian companies have long been marred by succession issues and infighting over ownership of the family jewels. The uncertainty and acrimony only hurts the interests of shareholders who end up as hapless bystanders in such important matters. Hence, we hope more and more family run businesses take a cue from Mr. Tata and become rational about management competence. The interests of the company and its shareholders must take precedence over family ties. That would provide an additional assurance for the small investor to buy into such companies.