MUMBAI: The worry about economic uncertainty notwithstanding, Indian family-owned businesses are upbeat about their prospects in 2021-22.
In a study of over 100 family-owned businesses by Executive Access India, conducted exclusively for TOI, 64% companies said they are optimistic in their outlook for the current financial year. A majority (51%) of such businesses see opportunities for growth in the domestic market with the focus on expansions, while 22% are contemplating diversification and 10% looking at growing business overseas.
Executive Access India MD Ronesh Puri said, “Indian family businesses feel the Covid crisis will soon pass as vaccination gains steam. They are more optimistic (64%) and feel Indian businesses have huge resilience and are quick to adapt. They feel supply chain constraints are temporary and will not impact business as there has been huge learning on the same since last year.” Nevertheless, there is unpredictability about the near future and 79% of the companies surveyed felt this could be the biggest pain point.
Emami Group’s director Aditya Agarwal said, “I do believe that the inherent instinct for survival is very strong in Indian family businesses. The business is an essential part of the family and they will do whatever it takes to sustain it, even if it means working doubly hard for small earnings.”
According to the study, cash crunch, which was a big constraint last year, does not appear to be a major concern this year with only 9% of the responding companies terming it is as a worry, even though economic uncertainty is the top challenge mentioned by 68% of the respondents. In the advertising and marketing sector, however, 50% respondents see cash crunch as a pain point in FY22. Irrespective of this concern, advertising and marketing players said they want to expand their business in India and oversees.
Gautami Gavankar, CEO of estate planning & trusteeship and head of Kotak Mahindra Group’s family office, said family business owners have realised the importance of liquidity, personal wealth and planning a safety pot during these tough times. Many family businesses have either set up family offices to manage their investment portfolio and other needs, or are taking steps to set up appropriate structures to take care of family requirements.
“In our interactions with family businesses, we find that many of them are taking proactive steps to perpetuate the family business in this time of uncertainty. These include planning with respect to business succession versus ownership succession, preparing the next generation to run the business, creating safety pots, etc. Family businesses are putting a plan in place through a combination of instruments such as a will, trust, family charter, shareholding agreements, etc. These are all steps in the right direction and would help family businesses navigate these unpredictable times,” said Gavankar.
Leveraging technology continues to be the top priority for 61% of the companies. “While the family businesses are quite strong in most areas, the pandemic has made it necessary for these to evolve with the dynamic environment and focus on digitisation. Additionally, family businesses should also fortify their role in the matters of ESG (environment, social and governance). These are key steps to strengthen and grow the existing business,” said Agarwal.
In this atmosphere, while hiring talent, the top priority for companies is the competency of the candidate (56%) and cultural fitment (30%). These beat traditional priorities like track record and educational qualifications of the individual. “India Inc feels that in these challenging times, it is even more important to hire the best talent as demands and expectations from candidates have grossly increased. They need candidates to hit the ground running, fast. In the talent-hiring process, low energy (36%) and arrogance (33%) seem to be the biggest put-offs for employers. It is an action-oriented world with far more emphasis on teamwork and hence much less tolerance for arrogance,” said Puri.
On future plans, almost all companies in the real estate sector, and 50% in automotive and logistics sectors, said they would cut costs this year.