The ongoing legal ownership dispute between Vijaypath Singhania and his son Gautam Singhania is a grim reminder of the succession issues that plague family-owned businesses in India.
The 80-year old Vijaypat Singhania is devastated by an ‘emotional decision’ that he took in 2015 of giving 37% controlling stake in the billion-dollar Raymond Group to his son Gautam. In fact, he calls it the height of stupidity. Since then, the father-son relationship has only gone south.
The father claims that he was supposed to get an apartment in the family’s 36-storey JK House under an agreement over a family dispute in 2007. The JK House is a prime property in the upmarket Malabar Hill area of Mumbai. The sale was agreed at a price much below the flat’s market value, which falls in ‘tens of millions of dollars’, but Gautam advised the board of Raymonds against the sale.
As matters went from bad to worse, the board snatched the ‘chairman emeritus’ title from Vijaypat, accusing him of abusive language in letters written to the firm. Vijaypat claims that he was also physically removed from his office and some of his prized assets including a Padma Bhushan were stolen.
Vijaypat is now planning to go to court and cite a recent ruling that permits parents to get back gifted property from their children according to a 2007 law if their basic needs are not met. He would like all parents to learn from his experience as he states, “I would advise parents everywhere not to make the mistake of giving away all your savings to your children during your lifetime.”
It’s a sad phase for Vijaypat in his twilight years. An accomplished aviator, Vijaypath is responsible for building the Raymond group from a small textile business to the world’s largest producer of high-quality worsted wool suits (as claimed by the company). He is also reportedly writing a book titled ‘The Incomplete Man’ which his son sought an injunction against for allegedly defamatory content.
Gautam has a different perspective on the dispute, and stated to ET last year, “It was the right thing to do. My responsibility as a son is different from as chairman of Raymond. Here is a board member (Vijaypat) who is using his position of the board to take company assets.” He also claimed that taking the Chairman Emeritus title away from his father was a Board decision and he has nothing to do with it.
The group is going strong irrespective of the father-son dispute, and posted a 50% growth in profit during Q2, 2018. But the ownership dispute is yet another wake-up call on the need for clear succession planning in family-owned businesses in India. Several such cases have come to light in the recent past, including Mukesh Ambani & Anil Ambani as well as Malvinder & Shivinder Singh. In the case of Hardeep and Ponty Chadha, the outcome was even worse, as they killed each other in 2012.