It was a masterstroke by OP Jindal. The late industrialist and politician knew how business families in India behaved into their second and third generation. Few have been able to keep their flock together.
The Birlas had split after three generations and the Ambani brothers’ separation was public, coming not long after their father Dhirubhai Ambani passed away. In the case of the Bajajs, simmering differences erupted by the third generation and the family formally split in 2008.
But Jindal made sure his family was different. Even before he died in 2005 in a helicopter crash, the patriarch had put in a unique structure. First he divided his empire between his four sons - Prithviraj, Sajjan, Ratan and Naveen. Then in a move that was a masterstroke in many ways, Jindal ensured that each son had a cross-holding in his brother’s company.
This ensured that all the four benefited from each other’s growth, especially in good times. In 2010, Naveen’s JSPL, which was riding the commodity boom, was ranked one of the top wealth creators in the world by BCG. Its market cap had touched $14 billion.
In bad times too, the brothers chipped in. In 2010, Sajjan purchased his elder brother Prithviraj’s loss-making pipe mills company in the US for Rs 3,400 crore. Analysts say that the younger brother never made money out of the deal. Surely, it was not just business. Earlier this year, the sibling act was again on when Prithviraj, Sajjan and Naveen chipped in with their personal money to save Ratan’s JSL, which was deep in debt.
Split-proof
Secondly, Jindal had ensured that his sons never split. His wife Savitri Jindal chaired each of the companies and the OP Jindal Group. For the past many years, she has been the richest woman in India. She was ranked 12{+t}{+h} on the Forbes India Rich List last year.
But that won’t be the case any longer. The Economic Times earlier this week reported that the brothers have decided to unravel the cross holdings. It was time for each to tread his path, especially now that the third generation was beginning to make its presence felt.
It was inevitable. When Jindal gave Sajjan the facility in Karnataka and Naveen the power and mine operations in Raipur, the tacit understanding had a geographical aspect. In future, Sajjan will limit his expansion to the south and Naveen to the northern part of the country.
Of late, this hasn’t been the case. Easily the most aggressive of the brothers, Sajjan and Naveen have bid for the same companies (Sesa Goa and Stemcor). The retail networks of their respective steel companies have also blurred the boundary lines.
Publicly, the four brothers have always displayed bonhomie. They would be together at least twice a year on their father’s birth and death anniversaries. And Holi would see the brothers and their families celebrating in their Delhi mansion. The Delhi mansion interestingly has separate quarters for all the brothers.
Varying fortunes
But the industry grapevine has always been ripe with rumours of the ‘healthy competition’ between Sajjan and Naveen. While Naveen benefited from having coal mines to feed his power plants in Raipur, Sajjan’s entrepreneurial journey had many false starts. The Karnataka facility was the first in the country to use the Corex technology in steel-making and it was not a smooth operation. And Sajjan rued the lack of mines, especially when the commodity prices boomed.
Their personas also differed. Naveen’s public life as a National Flag crusader and politician has always preceded his business. He was following the footsteps of Jindal, who was a politician and a Minister. Sajjan, on the other hand, is not a natural when it comes to being in the limelight.
But the fortunes have changed. Naveen is now being investigated for alleged irregularities in mines allocation. He lost in the 2014 General Elections. And his company JSPL is no longer a darling with the stock markets. Sajjan, on the other hand, has emerged as the most successful entrepreneur in the family. His JSW Steel has the largest capacity for a private steelmaker in India.
Reports say that the unravelling of the cross holding will take more than a year. While it was tried earlier and disbanded, the brothers would be more serious this time. And if they agree on valuations amicably, the brothers would have created a model for the rest of the business families in India to follow.