Everyone a Hero in Munjal settlement

BM Munjal Family Keeps Hero Honda

 THE Munjals of Hero Honda have a habit of doing things differently, even if it is slicing the family cake. The businesses born out of the partition of the nation, have been partitioned, of course without the bad blood.
   Twenty companies, billions of dollars of businesses and investments, and much more have all been assigned to different Munjals, without a whimper. The entire cashless settlement was completed by May 31, avoiding higher tax rates that came into effect afterwards, said people familiar with the development.
   As a result, the Delhi-and-Ludhiana-based Munjals, who own the world's largest-selling motorcycle company Hero Honda, have successfully disentangled their cross-holdings in more than 20 group companies. This has been done in such a way that each family member or faction gets ownership of the businesses they currently manage.
   Hero Honda Motors, the flagship of the Munjal family and the most valuable company in the group, will be owned and managed by Brijmohan Lall Munjal family with all the 26% stake in the company. His sons Pawan Kant, Sunil Kant, Suman Kant and late Raman Kant's family will have a combined ownership.
   Brijmohan's three brothers and their kin get to control and manage firms such as Hero Cycles and Munjal Showa, according to the settlement.
   `The idea was to make sure the arrangement causes minimum management disruption in group companies,'' said a person with a knowledge of the arrangement. "The employees, suppliers, clients of every group company will face no changes."
   Sunil Kant Munjal, son of patriarch Brijmohan and the family spokesman, declined comment. So did some others.
   Management of Indian businesses becomes difficult by the time the third generation takes charge. The cobweb of holding companies and the many siblings often indulge in acrimony, at times even sinking businesses. Any peaceful settlement between brothers and cousins has become a rarity.
   Om Prakash Munjal and his family now control and manage Hero Cycles. Brijmohan's other brother Satyanand Munjal's sons have got Majestic Auto, Highway Cycle, Munjal Auto and Munjal Showa. Ashok Munjal, son of late Dayanand Munjal, the eldest of the first generation, gets Sunbeam Auto while his brother Vijay gets Hero Exports.

Realignment after 60 years


FAMILY members, who hold shares in group companies, have already transferred their stakes to the respective business heads through internal as well as stock market transactions. Under the family settlement, Brijmohan's family will also own Rockman Cycle, Hero Corporate Service, Hero ITES, Hero Mindmine, Hero Soft and Easybill.
   The exercise, which started with unlisted firms, has culminated recently with listed firms Hero Honda and Munjal Showa transferring shares through a series of stock market transactions. Only five companies in the group are listed—Hero Honda, Majestic Auto, Munjal Showa, Munjal Auto and Shivam.
   Shardul S Shroff of law firm Amarchand Mangaldas advised the family in the settlement process. Shardul Shroff's younger brother Cyril was also the key person behind the settlement between the Ambani brothers. The realignment has happened more than 60 years after the four Munjal brothers started their business by supplying component to bicycle makers in the bylanes of Amritsar. The group hammered out the final contours of the settlement after detailed deliberations at family conclaves. "It was discussed threadbare at family gatherings and the patriarchs wanted to do it amicably," said a management consultant close to the Munjal family. "It's a smooth and dignified decision," said a legal expert close to the settlement. The family was clear it did not want to either restrict growth and entrepreneurship or become divisive. As a result, the settlement has been arrived at without acrimony. The Munjals are one of the few business families that remain united even after the third-generation members have entered the business.