Round Table Conferenceon

Corporate Governance Practices in Family Managed Companies

16 February 2013

S P Jain Institute of Management & Research

Ashwin C. Shroff

Role of an Entrepreneur

The pioneering efforts of an entrepreneur in setting up of any business are most important of the business. Eg. Shri C C Shroff, my father invited his brothers Shri G C Shroff, Shri Kantisen Shroff and Shri Devidas Shroff to set up Excel. Later members of the younger generation, myself, Shri Atul Shroff and Dipesh Shroff joined the business and are currently heading Excel Industries, Excel Crop Care and Transpek Industries respectively.

As the business grows, the entrepreneur needs helping hands. Some of the large MNCs were started as a family business. Infact, even today, large business houses in countries like US are

owned by family members It is but natural that the entrepreneur looks forward to receiving

such help from the family members. However, as the business grows and acquires certain size and

complexity, it becomes very difficult as the number of family members and their skills will have limitations.

Role of an Entrepreneur

Ultimately, the entrepreneur will have to look outwards to obtain the required professional skills.

When this happens, there are marked pulls of interests from family members’ personal interest and the professional requirements of the business.

For continued success of the family business, it is most essential that the head of the family is able to maintain an amicable balance between two above needs.

Fundamental Questions What is Governance?

A set of Rules and Practices, which are followed to administer an entity consisting of several constituents.

What is Good Governance?

Governance in which the rules and practices are followed uniformly, consistently and without fear of anyone or favour to anyone.

The decisions are taken and implemented for the welfare of the entity and its constituents. These decisions in addition have to take care of welfare of society and surroundings.

What is Good Corporate Governance?

It is the spirit which is more important in corporate governance, not mere compliance to statutory requirements. It comes from within.

Excel’s way of Governance

Excel since its inception in 1941 has followed the path of Good Governance at corporate level or towards FAMILY MEMBERS as a part of the larger entity called EXCEL.

Blending between tradition set by the pioneers and aspirations of the younger generation of the family members.

All stakeholders of the organization are taken care of in a balanced manner.

Important Issues to be addressed in a family business

Induction – All Shroffs were inducted at young age and were grounded into company’s value systems.

Training Work allotment Responsibility – Family members are given responsibility and then authority.

Even though family members carry implicit authority, they are taught how to use it judiciously.

Career path – Hrishit Shroff after completing his professional education is getting experience at shop floor on our manufacturing site at Gajod, Kutchh

Team work : within family and with other members of excel Dispute resolution : within family and with other members of Excel Passing of baton on issues like empathy, environment, society, innovation and

work ethics. Differentiating between family related personal issues and corporate level issues

Important Issues to be addressed in a family business

Pujya Kaka and Kaki while being away from normal functioning of various Excel group of organizations are vital source of guidance, inspiration and motivation for implementation of different projects, be it commercial or social.

Under their stewardship, starting from myself to other family members like Atulbhai, Dipesh, Usha, Preeti, Ravi, Hrishit, Ami, Chaitanya play active role in implementing and overseeing different commercial as well as social projects.

In fact Ami and Anshul have managed canteen in the harsh environment of Dhordo, Kutchh.

Hrishit and other family members have extensively worked in areas affected by natural calamities like cyclone and earthquake

Individual’s role and style of functioning may differ but, the objectives and values are common.

Balancing Act A fine balance between sharing and demarking the

boundary of Purely family related issues Family related issues linked to business Purely business related issues like growth and profit of the

business, legal and statutory requirements and CSR related to business. Promoters of the group companies along with seniors jointly meet regularly to evoke better synergy between various organizations within the group. Eg. Acid Chloride business

This calls for excellent balance between emotions, relationships and business sense.

Corporate Governance towards Employees (including family members)

Payment of right compensations – Due care is taken while deciding the compensation of all employees including those of promoters so that the ratio of the compensation of highest paid to the lowest paid members of the company is not unduly high.

Social Justice Mutual respect Provision of proper facilities eg. Canteen, Proper service

contract Proper personnel policies relating to promotion, performance

appraisal, transfers etc.

Our Founder Shri C C Shroff

Shri Champraj C Shroff, a graduate in Chemistry, established Excel with a small capital of Rs. 10000 in a kitchen laboratory. He developed more than 100 products and processes. He invented and produced many import substitution chemicals for the first time in India. His motto was, “If it can be made abroad, why cannot we make it here?’. Even today Excel tells its customers, “You name it, we will make it”.

His dream was to produce chemicals and make India self-reliant in this field. The extent of his ambition can be gauged from the fact that, many of Excel’s plants had no roofs above them for a number of years. The reason being his words “ If your ambition is to reach the sky, why build roofs over the plants?” He loved to conquer the hurdles and obstacles that cropped up in his path. The challenge of making hair-oil or pain balm was as interesting for him as making a multi-million rupee chemical.

Values from Shri C C Shroff

Do unto others as you would have others do unto you

Karmanye vadhika raste ma phale shu kadachana

Results Growth Innovative, participative people & organization Respect, Credibility Customer loyalty Good Industrial Relation

Our Founder Shri G C Shroff

Shri Govindji C Shroff, younger brother of Late Shri C C Shroff was the co-founder of Excel. Born in 28 February 1911, Shri Govindjibhai was affectionately called “Bhai” by all the employees of Excel. He took over the reins of office at Excel in 1968. He guided the company for seventeen long years. It was he who decided that Excel should become a public limited company. He helped the employees to form the Union, something unusual for a Managing Director of a company. In 1985 Govindjibhai retired and moved to Vadodara to help nurture the Shroff Foundation Trust. In February 1996 he passed away at the age of 85

Values from Shri G C Shroff

Trusteeship Courage Support to right institutions Social and political engagement

Our Founder Shri K C Shroff

Shri Kantisen C. Shroff, younger brother of Late Shri C C Shroff and Shri G C Shroff is the co-founder of Excel. Born on 3rd January, 1923, Mr. Kantisen C. Shroff - Kaka (meaning paternal uncle in the local language) as he is profoundly addressed by his affectionate workforce, is a simple, unassuming personality, with a characteristic style of his own.

Shri K.C. Shroff has been a guiding force behind many technical breakthroughs in the field of Agrochemicals crusading the cause of indigenisation and import substitution. The innovative in-house first-time development in Asia of Endosulfan, Aluminum Phosphide, Zinc Phosphide, Butene Diol and Phosphorus & Phosphorus Pentasulphide was done  under his able guidance.

After being associated with Chemical Industry for nearly half a century, and retiring as the Managing Director of Excel Industries Ltd., Mumbai, since 1995 he has moved over to Kutch to focus on issues of national significance such as rural development, non-conventional technology, etc. Keenly interested in rural development work, Shri Shroff has devoted his time and attention for almost three decades to the drought prone areas of Kutch including activities like cattle care, social forestry, watershed management, drought-proofing and employment generation through Excel-sponsored NGOs like Shree Vivekanand Research & Training Institute and Shrujan.

Values from Shri K C Shroff

Pure love Team building through commitment Employing disabled, diseased and outlaws Intense involvement with social, rural,

community issues – VRTI, Shrujan Abhiyan Rolex award to Shrujan

Our VisionWe the Members of Excel Parivaar

VisualiseExcel as a Responsible, Respected and Sound

Corporate CitizenServing India and World through

Its knowledge, Services, Products and SolutionsThrough holistic approach

IntegratingChemistry, Chemical Technology,

Pharma Technology,Biology, Soil Management, Water Management,

City and Farm Waste ManagementTo serve

Industry, Agriculture and HorticultureWith

Growth, Value Addition, Wealth Generation, Customer Joy,

Investor fulfillment, Society Satisfaction and Enrichment of its people.

Our Work Ethics

Time, Punctuality Work honestly Comply with rules and procedures Whether involved in high, middle or junior position, work

diligently Learning attitude Balance authority, rights with responsibility If you have a problem or complaint, convey it to superiors,

in an objective and balanced manner, along with positive, constructive solution

Use facilities and resources provided by company judiciously

Treat internal and / or external customers with respect

Grooming of the Younger Generation

Younger generation of the family are groomed to understand and practice the values of the organization.

They are moved from one department to other to understand various facets of the business.

They are mentored by the professionals of the organization.

Only when they acquire sufficient knowledge and experience, they are moved up the ladder.

They are exposed to different terrains and different levels of people to get in-depth experience of the environment and organization.

They are treated like any other employee of the company.