Billionaire inheritance battle puts spotlight on India’s messy family succession

An Indian tycoon’s sudden loss of life in June has triggered a fierce inheritance battle at an Indian automotive big.

Sunjay Kapur, 53, suffered a coronary heart assault on 12 June whereas enjoying polo in Surrey within the UK. He was an inheritor to Sona Comstar, a $3.6bn (£2.7bn) enterprise empire he inherited from his father. The corporate, amongst India’s prime auto part makers, has a world footprint with 10 vegetation unfold throughout India, China, Mexico and the US.

A polo fanatic, Kapur moved within the elite social circles of Indian capital Delhi, and reportedly shared a friendship with Prince William. He was married 3 times – first to designer Nandita Mahtani, then to 90s Bollywood star Karisma Kapoor, earlier than marrying Priya Sachdev, a former mannequin and entrepreneur, in 2017.

However weeks after his loss of life, the query of succession has made Kapur and his household the topic of media hypothesis.

On the centre of it’s Kapur’s mom Rani Kapur, former chairperson of Sona Comstar.

On 24 July, Rani Kapur despatched a letter to the board of Sona Comstar, elevating questions on her son’s loss of life and appointments made by the corporate after that.

Within the letter, which the BBC has seen, she alleged that Kapur’s loss of life was beneath “extremely suspicious and unexplained circumstances”.

The coroner’s workplace in Surrey advised the BBC that after a postmortem, it had decided that Kapur died of pure causes. “The investigation has been closed,” the workplace mentioned.

Rani Kapur additionally claims to have been coerced into signing key paperwork whereas beneath psychological and emotional misery from her son’s loss of life.

“It’s unlucky that whereas the household and I are nonetheless in mourning, some individuals have chosen this as an opportune time to wrest management and usurp the household legacy,” she wrote.

She additionally requested Sona Comstar’s board to postpone its annual common assembly (AGM) – which was set for 25 July – to resolve on a brand new director who could be a consultant of the household.

Rani Kapur did not specify who she meant by “some individuals”, however Sona Comstar held the AGM the following day anyway and appointed Sunjay’s spouse Priya as a non-executive director.

In her letter, Rani Kapur claimed she was the only beneficiary of her late husband’s property in a will left behind in 2015 which included a majority stake in Sona Group, together with Sona Comstar.

The corporate has strongly denied Rani Kapur’s claims and mentioned that she has had “no position, direct or oblique, in Sona Comstar since at the least 2019”.

The board additionally mentioned it had no compulsion to defer to her discover and that the AGM was carried out “in full compliance with the legislation”. The corporate has issued a authorized discover to Rani Kapur, asking her to cease spreading “false, malicious and damaging” statements.

The BBC has contacted Sona Comstar, Rani Kapur and Priya Sachdev with questions.

Public shareholders, together with banks, mutual funds and monetary establishments, maintain 71.98% of Sona Comstar, which is listed on Indian exchanges as Sona BLW.

The remaining 28.02% is held by promoters by way of an organization referred to as Aureus Investments Pvt Ltd.

In keeping with the corporate’s filings, Sunjay Kapur was the only beneficiary of the RK Household Belief, which controls the promoters’ stake in Sona Comstar by way of Aureus Investments.

“Wanting on the firm construction, at this level of time, Rani Kapur does not function as a registered shareholder so will not have any voting rights. However there may be the matter of the RK Household Belief and Aureus investments. We won’t actually know if Rani holds any direct curiosity there until the settlement is made public,” says Tushar Kumar, a company litigator at India’s Supreme Court docket.

The Kapur household’s feud is not an remoted case.

Some 90% of listed corporations in India are family-controlled, but solely 63% have a proper succession plan in place, in line with a PwC survey.

Kavil Ramachandran of the Indian Faculty of Enterprise says most Indian household companies function with “vital ambiguity about specifics”.

“One such [area] is who owns how a lot and who inherits and when,” he provides.

Consultants say household involvement with out meritocracy and absence of formal agreements complicate issues.

“On the demise of the patriarch (and even earlier than), disputes come up, each on possession and on administration, and an excessive amount of water would have flowed beneath the bridge for points to be resolved amicably,” mentioned Ketan Dalal, who advises a number of Indian enterprise households on possession buildings.

India Inc. is strewn with bitter succession battles that repeatedly seize headlines.

Mukesh Ambani, Asia’s richest man, was as soon as embroiled in a really public power struggle together with his youthful brother over the sprawling Reliance empire after their father Dhirubhai Ambani died in 2002 with out leaving a will. It was their mom, Kokilaben, who brokered peace years later.

Extra lately, household feuds have erupted on the Raymond Group, India’s most well-known textiles firm, and among the many Lodha brothers, whose firm constructed the Trump tower in Mumbai.

All of this has typically come at a fantastic value to Indian shareholders.

“Anybody who has stored infinite management of their palms has suffered. In the long run it is the corporate that suffers, the inventory costs go down and [so does] the notion of how the corporate will do sooner or later,” says Sandeep Nerlekar, founder and managing director of legacy planning agency Terentia.

However some households at the moment are as soon as bitten, twice shy.

The Bajaj household, one of many nation’s largest conglomerates, confronted inner wrangling over succession till a courtroom stepped in in the course of the 2000s to resolve the dispute.

The patriarch mapped out a succession plan for the group, dividing obligations between his sons and cousin. As per the corporate’s assertion, the group now operates by way of consensus by way of a household council.

Final 12 months, considered one of India’s oldest enterprise homes, the locks-to-real property Godrej Group, introduced an uncharacteristically amicable separation of their multi-billion greenback enterprise.

“Households must work on succession planning with governance buildings like board that has tooth. They need to be given some management in order that the enterprise can develop long run. Additionally you might want to permit the following era to take the lead properly in time and the patriarch ought to take the time to groom them in order that household points do not occur,” says Mr Nerlekar.

The likes of Mukesh Ambani seem to have taken that critically, having begun grooming his three children properly upfront.

Mr Ramachandran says that succession just isn’t one thing that may be determined “in a single day”.

“Making ready each the household and the working group over a deliberate transition interval is essential.”

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