Forbes India 15th Anniversary Special

How Dabur's Burmans Segregated Family and Business

The Burmans were among the first business families in India to segregate family and business when they handed over the management of the company to professionals in 1998. Dabur Chairman Anand Burman recollects the crucial pre-requisites for making this a success

Published: Nov 28, 2012 07:47:28 AM IST
Updated: Nov 26, 2012 02:54:56 PM IST
How Dabur's Burmans Segregated Family and Business
Image: Amit Verma
ANAND BURMAN ‘Professionalisation’of Dabur helped keep family conflicts at bay

Name: Anand Burman
Designation: Chairman, Dabur India Ltd
The Challenge: To professionalise the company by giving up executive positions to professionals and thereby ensuring growth and unity of family
How The Family Did It: Get the right people to manage the company. Second, align family members on the same page

I joined Dabur in 1980 after completing my PhD in pharmaceutical chemistry in the US. Dabur’s revenue at that time was about Rs 20 crore. I was groomed by my uncle, the late GC Burman, and gradually learnt the ropes.  By the 1990s, we had grown to more than Rs 100 crore in revenue. We realised that the company was now in a position from where it could grow exponentially. We roped in McKinsey to help devise a strategy for the future.  

There were two motives in strategising for the future. One was to grow the company and attract good talent. The second was to avoid conflict within the family. The easiest way to bring in conflict is to bring in a bunch of family members to work together, especially when there are uncles and cousins. For these two motives, if we needed to bring in systems and processes, we were ready for it. And if this needed ‘professionalisation’ of the company—the consulting company said the family members should give up executive roles—we were ready for that too.  

You need to understand that we were a family-run company with a heritage that is now 128 years old. I belong to the fifth generation of the family. Dabur’s operations were completely hands-on.  I remember the first time we ever made a budget was when we had revenues of about Rs 25 crore. In the 1990s, we realised that to scale up the business, we needed to change. And this kind of a change doesn’t happen overnight but over 10 years. Luckily, there was a lot of maturity in the family, led by my father AC Burman and uncles, and we were ready for it.

We were not a very big company. In professionalising a company of our size, we had to keep in mind two things. One was to get the right people. While we were open to recruiting from outside, mostly we looked into our own talent pool as it was important to maintain the culture within the company. If you try to get someone from a multinational, very often they come with an attitude of “in my earlier company, we used to do like this”. We were ready to learn from their experience and also make changes. But first, a company’s culture should be understood. Also, if one is used to working in large companies, then you tend to go strictly by processes and systems.

You have a manual for everything. But, in a small company like ours in the 1990s, we needed people who had multiple talents and could bring in changes within the company culture. In the process, there were a few incompatibilities and some executives left us. We have had a great success in nurturing talent from within the company. Most of the seniormost executives in the company today, including wholetime directors PD Narang and Sunil Duggal (also the CEO), have been with us for almost 20 years. Mohit Malhotra, who joined us as a management trainee, is today the CEO of Dabur International.

How Dabur's Burmans Segregated Family and Business
Image: Amit Verma
“While maintaining individual interests [in the operations], we make sure not to interfere”

The second important thing is to align all the family members on the same page.  There were a few apprehensions within the family on how this will pan out. How is the company going to run without us being involved? How will we keep track of developments? We had to get over these concerns and, for that, we put in certain processes and checks and balances.  That time, my father and uncles got together and said this is the best way to go forward, and the whole family went along.

As part of the process and to keep the flock together, we created a family constitution and a family council. The constitution has guidelines with respect to our responsibilities towards the various businesses that we have. For instance, we can’t occupy executive positions in Dabur. Family council is a very valuable institution. It is a cohesive body that determines what happens within the family. Everyone above the age of 25 is part of it. The constitution and the council do not govern personal matters. But if someone has a proposal to start a new venture, he can present it to the council and discuss it.  It is not mandatory. For instance, when my cousin Amit Burman set up Lite Bite Foods, he said he wanted to do it himself.  But if he wanted financial help or involvement from other members, he could ask for it. We invite senior executives like Narang or external advisors to the meetings when there is a need.

I have a five-year term as the chairman. Other than me, three more members from the family are present on the board of Dabur.  The family owns more than 60 percent of Dabur and even though we’re not involved in the daily operations, we’re completely clued on to what is happening.  We are there for the quarterly reviews. If a family member needs to know something specific, we ask the senior professionals for answers.

While maintaining our individual interests, we make sure not to interfere. I’m very passionate about R&D but you will never find me calling up a junior chemist.  If I need to know something, I ask Sunil (Duggal). Then there are certain pet projects of mine, which I like to monitor very closely. If you have the competence, there should not be a problem.

There are certain decisions in which the family is always involved.   For instance, I’m involved in personnel (recruitment) above a certain level. Other areas include acquisition and disposals (of an asset above certain value) and capital expenditure above a certain limit. I don’t get involved if an old machine has to be sold. But if it is a factory, then I do. Every three or four years, we have a strategy review, which has to be cleared by the family.

A lot of things have changed in 15 years. The way the company is looking at new product ideas, consumer, marketing, manufacturing…everything is different now.  Each and every project is now scrutinised thoroughly. Especially in these turbulent times, these changes are required and costs need to be lowered.

Today, we have a completely different set of processes and systems, otherwise the company wouldn’t have progressed the way it has. We have crossed a billion dollars in turnover in the last financial year.

(As told to Prince Mathews Thomas)

(This story appears in the 02 November, 2012 issue of Forbes India. To visit our Archives, click here.)