How an ugly marital feud could change Indian business

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A COMMON FEATURE Family matters are frictions, to put it politely, between parents. When the company is worth several billion dollars and the quarrels smack of scandal (think of Paramount Global's Redstones or L'Oréal's Bettencourts), they give rise to best-sellers or Netflix documentaries. India, where family businesses generate around 79% of GDP, has no shortage of similar dramas. The latest could produce something less frivolous: better corporate governance.

The dispute in question involves Gautam Singhania, the classic car enthusiast billionaire chairman of Raymond, a conglomerate from men's suits to auto parts, and his wife, Nawaz Modi, a yoga instructor with Bollywood ties and author of “Pause , Rewind: Natural Anti-Aging Techniques”. The long-running row came to light after Ms Modi was excluded from a Diwali party at the company by Mr Singhania.
in November and talked about it on YouTube. This and other similar videos, including one in which Ms. Modi alleges that her husband physically assaulted her, have racked up more than a million views. In some cases, Ms. Modi enjoys the support of her father-in-law, Vijaypat Singhania, who created Raymond before handing over control to his son in 2015, then being kicked out of the business and the family home.

Although Ms Modi has not filed for divorce, she is seeking 75% of the family's 49% stake in Raymond for herself and the couple's two daughters. In a statement, Gautam Singhania said, “I have chosen not to comment on media reports on matters relating to my personal life as maintaining the dignity of my family is paramount to me. » He assured employees that business would continue as usual. Investors are not convinced that this will be the case. Since September, Raymond's market value has fallen from $1.7 billion to $1.4 billion, even as the Indian market as a whole has soared.

So far, so shockingly familiar. Where the Raymond saga differs from similar episodes, in India and elsewhere, is in its potential impact on business in general. In an unusual move, Institutional Investor Advisory Services (IIAS), an Indian proxy advisory firm, intervened. In the name of protecting minority shareholders, she urged independent directors to ask Mr. Singhania to step aside while the board considers the matter.

This unusual request disrupted a warm atmosphere. Independent directorships in Indian family businesses are often seen as a sinecure offered in exchange for loyalty. THE IIASThe request therefore struck a chord. Serious financial newspapers have spoken out. Financial Express lamented how India Inc's independent board members too often ignore “red flag governance failings”. Raymond's independent directors claim that “such marital disputes…go beyond [their] hand over”. But they nevertheless retained the services of an independent legal advisor to advise them. By Indian standards, this is a bold move.

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