FAMILY BUSINESS MANAGEMENT Presented by: Sanya Arora (20172053)

Succession Planning: Infosys Vs Sanya Bindra (20172322)

Ranbaxy
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 CONTRIBUTION BY EACH MEMBER

SANYA ARORA SANYA BINDRA

 Introduction  What makes both businesses different
 What is Succession Planning  About Ranbaxy
 What makes both businesses different  Application of theories
 About Infosys  Contribution to loss
 Application of theories  Comparison
 Contribution to Growth  Inferences
 Comparison  Suggestion
 Inferences  Conclusion
 Suggestions
 Conclusion

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 SUCCESSION PLANNING
• A process by which individuals are scanned to pass on the leadership role so that business continues to operate
efficiently.
• There are four main stages in the succession planning process, which involve transition, initiation, selection, and
education.
• Succession planning can be broken down into three distinct categories: ownership management tax savings.

• Rationale for selecting: Developing a successor plan allows the business time to grow, evolve into an even
stronger entity, and succeed after the owner’s planned exit. Appointing a formal successor also helps give peace of mind
while running the business. Failure to determine the right, and appropriately grooming, the successor could result in poor
company performance, potentially placing undue risk on the owner’s retirement income. 
• Ugly myths:
• It is easier to sell the company.
• The successor will be ready when I am.
• Giving up ownership means losing control .

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RATIONALE FOR CHOOSING COMPANY

INFOSYS RANBAXY

• Poor Corporate Governance • Rags to Riches

• Agency Conflict • Variety of Conflicts due to multiple
• Unwillingness to share control with an reason
outsider. • Governance of third generation

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 What makes both the businesses different?

INFOSYS
 Lack of clarity on the role that different stakeholders
play in a company
 promoters overstep their roles
 Murthy's vocal interference in the company's workings
 unwillingness of handing over control to an 'outsider’.
 decisive leadership
 Corporate governance seems to be quite problematic
among Indian firms.
 acquisition of Israeli solutions provider Panaya was
questioned
 call for an independent inquiry into the matter and found
no wrongdoing.
 Could not prove spending's with reasonings as demanded
by Murthy.
RANBAXY
 Interference of the founder in the company
 Engagement in Malpractices
 Flaws in Sibling Partnership
 Adoption of consensus-driven method from an
authoritarian approach
 Evaluation of potential candidates for successors of the
key position
 Strong commitment of senior managers
 unwillingness to give the reigns of the business to an
'outsider’ raising conflicts
 The role of the whistle blower
 Problematic family governance

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Vision:  ‘To be a globally respected
corporation that provides best-of-breed
business solutions, leveraging
technology, delivered by best-in-class
people.’
• Infosys is an IT services company headquartered in Bangalore and one of the
largest IT companies in India.
• Founded in 1981 by seven entrepreneurs.
• Pro-active approach: It is a proactive approach to create a talent pool of
candidates with the required potential and competencies to take the high
positions in future and help in the growth of the organization.
• Process of Grooming future Leaders: This is where the Infosys Leadership
Institute at the company’s Mysore campus comes into the picture, where the
next generation of Infosys leaders is being primed.. The pool of 400 leaders
has been identified from across the globe and does not comprise Indians alone
keeping with the company’s multi-national, multi-cultural image.
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OWNERSHIP STRUCTURE OF INFOSYS

Shareholders (as of 30 June

Shareholding
2017)
Promoters group 12.75%
Foreign institutional investors 37.47%
ADR 16.70%
Individual shareholders 09.83%
Banks, financial institutions and
insurance companies 11.24%
Mutual funds 08.97%
Others 03.04%
Total 100.00%

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Vision:  ‘'Achieve significant business in
proprietary prescription products with a
strong presence in developed markets'.
• Unlike many Indian companies, Ranbaxy has an interesting and
eventful history. 
• Started as a drug distribution firm in 1937 in Amritsar by two
cousins Ranjit and Gurbax , was acquired by Bhai Mohan Singh
in 1947 as the owners of the firm failed to repay the money lent
by Singh.
• It was under Mohan Singh that the company was incorporated in
1961 and launched its first blockbuster drug, Calmpose, in 1969.
• Ranbaxy grew with liberal regime
• It tapped the potential market with it’s vision and recognized the
market need and worked towards it.
• Multi-generational planning: Parvinder singh was suffering and
was in his last stage of cancer however, despite that he laid out a
succession plan for the smooth functioning of the company after
his death.
• Growing Inside-Outside Leaders: When it came to choosing the
CEO after Parvinder Singh’s death, he chose an outsider and not
a family member because of Dr. Brar’s competence.
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OWNERSHIP STRUCTURE OF RANBAXY

CEO Period
Mohan Singh 1961-1982
Parvinder Singh 1982-1999
Dr. Brar 1999-2004
Brian Tempest 2004-2005
Malvinder Singh  2005-2009

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APPLICATION OF THEORIES
INFOSYS
1. Agency Conflict
2. Resource Dependence Theory
RANBAXY
1.Agency Conflict
2. Diversifciation Conglormite
3. Stewardship Theory
4.Resource Dependency
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 CONTRIBUTION TO GROWTH (INFOSYS)
• INFY Stock Vs Similar Market Cap Stocks Infosys Limited (INFY) Stock Performed Against Large Cap
Stocks

I have compared closing prices of Infosys Limited against the

Shree Renuka Sugars Limited(RENUKA), PTC India I have compared the closing prices of Infosys Limited
Limited(PTC) stocks. It has returned 134% Higher compared to against the Nifty 50. Infosys Limited (INFY) has
Shree Renuka Sugars Limited(RENUKA),  201% Higher returned 23% Higher compared to Nifty 50.
compared to PTC.
Company Name 10- Year Return (%) Company Name 10- Year Return (%)
Infosys Limited (INFY) 7.41% Infosys Limited 7.41%
Shree Renuka Sugars Limited(RENUKA) -21.88% Nifty 50 (NSEI) 6.03%
PTC India Limited(PTC) -7.34%

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Revenue and Net Income, EPS Growth Rate (INFOSYS)

1 year

Revenue 9.82%
Net Income 8%
EPS Basic 10%

Pros:
• Company is virtually debt free.
• Company has been maintaining a healthy dividend
payout of 54.56%
Cons:
• The company has delivered a poor growth of
11.23% over past five years.
• Promoter holding is low: 13.21%

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INFERENCES
• EPS is greater than 1.
Hence, sounds good.
• A good ROE is between
15-20%. Hence sounds
good.
• Debt to equity should
not exceed 2%. Hence,
it also sounds fine.

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Ranbaxy Stock pertaining to the
Scandals/Investigation

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 COMPARISION
INFOSYS RANBAXY
Three-tier mentoring process at Infosys 1) Despite the fact that Ranbaxy had a proper
succession plan lined up, there were a lot of conflicts
 Tier-1 mentors Tier-2 leaders in implementing the succession plan which led to
 Tier-2: Members of Infosys Management Council, consists
discord among the family members of the company
company’s board of directors with 45 members.
 Tier-3: leaders in turn guide the Tier-3 group. 2) Despite the fact that Ranbaxy believed in outside
Leaders undergoes exhaustive training through the company’s potential as much as the potential of family members
personal development program – PDP at the end of the day Mr. Parvinder’s eldest son
ended up being the CEO of the company and
Nine pillars for leadership development in Infosys everything went downhill from there which is often
seen in 3rd generation of family businesses, due to a
lot of conflicts as well as different values of
1. 360-degree feedback 6. Feedback intensive individuals.
2. Development assignments programs
3. Infosys Culture workshops 7. Systematic process learning
4. Development relationships 8. Action learning
5. Leadership skills training 9. Community empathy

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INFERENCES
INFOSYS
 Poor Corporate Governance has negative
influence on the business market and the larger
economy
 Conflict is invincible when sharing control with an
outsider.
 Myths related to Succession Planning often
disrupts the smooth functioning of business.
RANBAXY
 Consider the whole perspective
 Tackle tough decisions and discussions
 Mitigate differences
 Engagement of a third party
 Be clear, authentic and look at the bigger picture
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SUGGESTIONS

• Reduce Conflict by Involving an Agent

• Avoid Engaging in Malpractices
• Disengagement of Favoritism
• Have common ideologies and goals
• Encourage good conflict and resolve bad conflict
• The founder/ owner of the company should not be unwilling to share the
control.
• Succession planning is very crucial, and the heir or the successor should
be thoughtfully chosen.
• There should be harmony among principals and agents for smooth
functioning of business.

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 Conflict is Inevitable.
 Succession Planning is critical yet important.
 Sibling Rivalry will occur if Succession plan is not laid out
properly.
 It’s essential to chose the candidates for succession based on
merit and not bias.
 The successor should not rely on favorites because that is
one of the biggest conflicts in family business.
 A right successor can make or break the company.
 The roles and positions of family members in the business
should be clear.

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References
• https://simplywall.st/news/infosys-ltd-adr-nyseinfy-turning-into-a-classic-example-of-agency-prob
lem/
• https://www.screener.in/company/INFY/consolidated/
• https://craytheon.com/financials/fundamental_stock_analysis_cagr_annual_growth_rate_trend_ch
art.php?company=INFY

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THANK YOU!!!

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