Piramal, 69, chairman of the Piramal group, was discussing the group’s business succession plan with his daughter Nandini Piramal, chairman, Piramal Pharma Ltd, in the Mint India Investment Summit in Mumbai on Friday.
“Allocation of businesses (among children) should be done on the basis of their interest areas,” Piramal said. “I don’t know if there is a specific time or age. It’s just that when you find that if you are having a succession with your family, they are ready to take up the responsibility. And I find that over time both Nandini and Anand (his son) were getting more and more responsibility, and they were taking it on.”
Piramal added that it’s more important for people like him who are used to running the business, to know when to step away.
Learn from mistakes
Also, Piramal believes that while passing the baton of the group’s business, it is important that scions of the succeeding generation are allowed to make mistakes.
“So what? Even if they do make mistakes, it’s fine. We all have made them in our life, so it’s better to, I think it’s more important yourself to know that you have to step aside and actually do it,” said Ajay Piramal.
Decision-making approaches
Even though both Ajay and Nandini Piramal believe that it is important to stick to values such as integrity and trusteeship while passing on the control of family business to the next generation, the two have different approaches when it comes to decision-making and succeeding as a leader.
Ajay Piramal said his leadership style is to get more people involved in decision making and give young people opportunities even if that means letting them make mistakes. Nandini, on the other hand, said she believes in going by data and numbers and engaging in collaboration with various teams as businesses get more complex.
“I tend to be very structured. I like lots of data and I like to understand and build a framework in my mind, but I think it’s also about collaboration and trusting people who are experts in their area because as businesses become more complex, there’s no way a generalist can really understand and get into the nitty-gritties of manufacturing,” said Nandini. “I think that trusting the people, giving them freedom but also encouraging collaboration are important when it comes to leadership.”
She added that she believes in the necessity of purpose, and the necessity of living life “according to your own personal values. I would agree with dad (Ajay Piramal) on integrity and trusteeship amongst the two that I think make a big difference”.
Balancing family and professionalization
Family-run corporate groups often face the challenge of balancing between family legacy and professionalization of business affairs while drawing succession plans. However, Ajay Piramal believes there is no conflict when it comes to this balancing act.
“I think there is no conflict between the two. First of all, if I look at my own kids, both of them are well qualified. Okay, just because you have been to a Harvard or a Stanford doesn’t make you a good, successful person. But they (Nandini and Anand) have also got the right experience,” said Ajay Piramal.
He added that when it comes to professionalism, employee stock options are key. “Who has the biggest stock option in a company is the family. And if you are a smart family (business) owner, you will realize that it is in your own vested interest to see that you have the best talent. Because who gets the most benefit? The family gets it because you have the largest shareholding. So, I don’t find there is any conflict between professional and family.,” said Ajay Piramal.
For making a company successful, Nandini, who joined the family business in 2006 and took charge as the pharma business’s chairperson in 2022, believes it’s important to have not just a board of advisors, but the right set of people who can be trusted and with whom one can afford to be vulnerable with.
“It may not be your public company board, because they also have other responsibilities, but you have to have mentors, friends, and family that you can be completely honest with. And they can therefore give you good advice. And they have to know you, they have to understand your business, and they have to then also say like, look, this is what you kind of have to put your head to the ground and do,” said Nandini.
Values and trusteeship
Ajay Piramal said it is crucial that every business should be done with a purpose and is able to make a positive difference to the world.
“As far as values are concerned, one is the concept of trusteeship,” he said, adding that family business owners are mere trustees for the benefit of certain beneficiaries. “And who are our beneficiaries? Our beneficiaries are our customers, our employees, shareholders as well as society, so everything we do as trustees to ensure that we work to the maximum long-term benefit of all these stakeholders.”
Nandini said that for a successful business, it is important to assess how people treat each other how one makes values come to life. “One example is when we talk about integrity in pharma companies, what it means ideally is that the regulators should know and your patients should know the data (that is being relied upon),” she said.
“We have probably hundreds of customer audits, double-digit or at least 40-50 regulator audits across our plants, and we’ve never had a warning letter from the FDA (the US Food and Drug Administration) and I think that’s a record that we stand by. And it is because of the intent and the values,” said Nandini.
Facing up to challenges
To become a successful leader, Ajay Piramal said it is important that everybody goes through their own challenges. “When I began my business career, we had a textile business, and I was thrust into leadership at a very young age because of certain family tragedies. My father passed away when I was very young and so did my eldest brother who was the chairman of the group and the textile business was going through a difficult time but that was a different time. I could get into pharma and so on but each one has their own challenges,” said Piramal, adding that in the current succession plan he is not deliberately passing on anything to his kids.
Passing on the baton
Ajay Piramal said his advice to family businesses is to give the choice to their children and that each one must do what they are passionate about.
In his case, Nandini was always interested in the pharma business, and son Anand was interested in real estate, so it worked out well for him.
“Fortunately, (Nandini’s) husband is also somebody who she met at Stanford who also worked in McKinsey in pharma, so he also had a particular knowledge of pharma and an inclination for pharma, so it just worked out,” he said. “On the other hand, Anand wanted to do real estate. He started with real estate and then real estate financial services—to some extent they are very closely related—so that’s how he’s got interest in that.”
The Piramal Group, with interests in pharmaceuticals, financial services, and real estate, operates in over 30 countries with workforce of over 10,000 people. Piramal Pharma alone operates 17 global manufacturing facilities and a vast distribution network. In October 2022, PPL demerged from Piramal Enterprises and was listed on the stock exchanges.
Also Read: Sebi can’t adopt a sledgehammer approach for F&O trading: Tuhin Kanta Pandey
Three years into her tenure, Nandini Piramal’s leadership at Piramal Pharma somewhat indicates a balance of innovation and continuity from her father Ajay. Nandini has set a target to make PPL a $2 billion company by 2030 with a 25% Ebitda margin. Ebitda refers to earnings before interest, tax, depreciation and amortization.
As part of its expansion strategy, Piramal Pharma is investing $80 million to more than double its sterile injectables capacity in Lexington, Kentucky, by Q1 2027. Nandini, after her graduation from Oxford University, completed her MBA from Stanford before joining the family business in 2006.
