When Dhirubhai Damani decided on a goods wagon clearance

business in 1949, his father gave him 8 annas as startup capital. With that, Dhirubhai and his brothers built an empire with revenues worth Rs 1,000 crore at present.

“You have to keep doing new things in business to grow… Every few years, you have to start new business verti-cals,” says Ashwin, younger brother of the now-deceased Dhirubhai. “As more family members came into the business, we started verticals. We even started a ‘steel cutting centre’, as an auxiliary service,” says the family patriarch who is a qualified mechani-cal engineer.

The Damanis provide assistance in sea, rail, roadways and air cargo. They offer port equipment such as forklifts, cranes and bulk movers on hire and charter ships for cargo. Last fiscal, Mitsutor Shipping Agency, a Damani group com-pany, led the ‘agents chart’ by handling 7.39 lakh tonnes of cargo at Mumbai port. Ashwin Damani is assisted by three nephews, his son and daughter.

“I accept changes as they come. I give my family members all freedom

they want to try out newer businesses. Their lone mandate is to help the group grow,” says Damani.

Flipping his Rubik’s cube, he adds, “I won’t be a ship owner ever. It’s a bad place to be. There are better things to do in shipping. I can be a big-volume freight forwarder. I can also turn a fi-nancier. This playground is very big.”

SHIP CHANDLERS Trivia: A normal ship order would be 100-200 kg of meat and 300 kg of fishCurrently: Ship stores suppliesFamily: The Gondalias

The Gondalias started chandling in 1979 – supplying fresh veggies,

fruits and meat to ships in transit. Over the years, ‘Shipchan’ expanded to include over 1,300 items – from anti-piracy equipment to safety tools, kitch-

en stores and packaging material. The company also offers ship repair solu-tions and fumigation services. “We’ll keep expanding services. There’s lot to be done in shipping,” says Karan, son of Shipchan founder Harish Gondalia.

Most ship captains prefer to source fruits, vegetables, liquor and ciga-rettes from India and the orders can be as large as 20,000 cigarette sticks for a mid-sized ship. Beer and whisky stocks are also replenished at Indian ports.

Shipshape is not a phrase one can apply to the domestic shipping industry, which managed a mere 0.7% uptick with its Rs 8,455-crore rev-enue in the previous fiscal.

Lower freight rates, higher running costs and a ‘ship glut’ have landed it in the proverbial stormy waters.

“Shipping is capital-intensive and cyclical. It can get very volatile,” says Captain NV Mudaliar, senior vice-president, Five Stars Shipping. “Manpower accounts for close to 60% of our cost and this has been rising consistently.”

No owner can afford to keep his ves-sel idle for long and must sail or char-ter. A handymax — the smallest in its class at 40,000-65,000 deadweight tonnage (DWT) — bills close to $5,000 per day for upkeep and maintenance.

“Maintenance cost goes up as ships

get older. So it’s better to own a rela-tively young f leet,” says Mangesh Sawant, managing director, Chowgule Steamships, which has a fleet of five. “Insurance, stores, repairs and crew costs form a lion’s share of mainte-nance … You don’t make supernormal profits in shipping. When good years come, you make the best of it – and in bad times, you simply try to survive.”

CARE Ratings pegs India’s merchant navy fleet at 1,389 vessels. Over 40% are 20 years old or more. This does not bode well considering the 50% increase in ‘new ship additions’ in-ternationally.

The slowdown is not only hurting shipping but scores of allied services too, including ship handlers, charter-ers, agents, chandlers, surveyors and stevedores. Every few years, the ship-ping industry bottoms out to protract-ed low-growth phases. Several simply cut their losses and down shutters. But some persevere to become ‘captains’ of industry.

FIVE STARS SHIPPING COMPANYCredentials: Ship repairers since 1930sCurrently: Own 4 shipsFamily: The Dhunjibhoys

The Dhunjibhoys of Mumbai are widely known for racehorses bred at their Nanoli

Stud Farm in Pune. A lesser known fact is that they are among India’s oldest shipping families, having started off as ship repairers in the 1930s.

Sometime in the 1940s, their company re-paired and refitted an empty British troop ship in seven days. “This ship had come to us via the Suez Canal… Our company employed over 2,000 people then to finish the job on time,” recalls Hanoz Mistri, senior official, Five Stars.

After this assignment, the Dhunjibhoys turned owners. They started South East Asia Shipping Company (SEAS), which owned nine ships at its peak. For the next four decades,

SEAS hired out ships for exports and cargo and wound up operations prior to the big shipping downturn of the 1980s.

They waited for the storm to pass before start-ing again in 1985, with Five Stars Shipping. The company moved up the value chain slowly – first into ship management and in 2005, into ship-owning. Currently, Five Stars Shipping owns four vessels – all offered on hire.

“We’ve always ensured we don’t take shortcuts in business,” says family patriarch Khushroo Dhunjibhoy, who is also managing director, Five Stars. “We don’t want to take any chances with the quality of the ship or management… We never forget there are men’s lives at stake. We only work with top-notch, triple-A rated line charterers.”

The company is now co-helmed by and entrust-ed for modernisation to Zahir, son of Khushroo Dhunjibhoy. Five Stars has taken the ubiquitous

loans (to buy ships) and this eats into profitability. As per regis-trar filings, Five Stars Shipping logged losses of Rs 71 lakh in 2015. Contrast this with the bourse-listed Chowgule Steamships, which reported Rs 4 crore loss last fiscal.

“We could have made a little more money by taking short-cuts but in the long run, short-cuts don’t pay,” says Khushroo Dhunjibhoy. “Ours is a tough in-dustry… You need to adopt an or-thodox approach to stay relevant in this volatile and competitive business. The very fact that we have sustained is due to our tal-ent and discipline.”

AS MOLOOBHOY GROUPCredentials: In shipping since 1890sCurrently: Sales and service of nautical electronic gadgets, fire and safety equipment, crew training Family: The Moloobhoys

When Adil Moloobhoy took charge of his family business in 1977, he

was confronted with some tough deci-sions.

The family managed passenger ships of The Mogul Line, which carried Haj pilgrims to Saudi Arabia, and had always offered subsidised rates. But their charges were 30–50% below cost and Adil decided to raise rates. This did not go down well with his father (and group chairman) Shareef Moloobhoy. “I value the family legacy and I know the importance of serving Haj pilgrims, but those subsidies had begun to leave us out of pocket,” Adil recollects. “After some discussion, we decided to take a middle path; we raised our cost a wee bit.”

Adil is the third gen-eration to take charge of the AS Moloobhoy Group, which started with shipbreaking and chandling and has seen changes whenever a new family member has taken the helm. When Shareef

took over from Ahmed Moloobhoy (the founder) in 1955, the company diversi-fied to sale and upkeep of safety equip-ment. When Adil took over, the com-pany branched out to maritime elec-tronics and training. When Nafeesa (wife of Adil) took over reins from Adil in 2000, the company diversified into newer product/service lines and ge-ographies.

The couple’s daughters, Ghazalah and Tehzeeb, have also joined busi-ness a few years ago.

“We have a great company here… We’ve always been profitable and we’re a zero-debt group. Our foray into the Gulf Cooperation Council will speed up growth,” says Nafeesa, managing director. “Our daughters are privi-leged to have a business with such a long history. But they won’t have it easy… They’ll have to go through the grind to master the trade.”

The ongoing drama in the Ranbaxy family is the topic of discussions in the corridors of power. Malvinder

and Shivinder Singh, the two brothers who once stood for solidarity, are now ac-cusing each other in a public fight.

Rana Kapoor and Madhu Kapur of YES Bank have also gone to court, taking a family-related ownership matter into public domain. In yet another instance in the recent past, Pankaj Oswal, son of late Abhey Oswal, had taken his mother and brother-in-law to court over business ownership and control.

Successful family business owners are smart and intelligent people. This is a ba-sic assumption, as otherwise, they would not have built such large businesses! Most also guard their privacy fiercely. Business details — especially financial — are shared on a need-to-know basis. They employ PR firms to help build the right public profile and try to keep their family away from the paparazzi.

It is perplexing to find them washing their dirty linen in public when it comes to fighting over matters of business.

Family businesses are the best examples of flourishing paradoxes as there is usu-ally a trade-off required between perspec-tives of the family and that of the business.

However, the family is a dynamic body, as is the business. In the best of circum-stances, these dynamic natures create tensions within the family. The ‘win-win’ solutions found by the family are, at best, a compromise for the foreseeable future. The solutions often drag unsuspecting and unrelated outsiders and non-family members in their wake.

Adolf and Rudolf Dassler, two German brothers, founded a shoe company in the 1920s. As their business grew, so did the tension between them. Their conflict ended up not only splitting their shoe company but also Herzogenaurach, the town in which they lived. The townsfolk now had to be aligned to one brother and shoe company – Adidas or Puma.

Frequently, it is asked why families in business fight. Harvard Business Review has a pithy answer – ‘Because they can’!

Unlike non-family businesses, there are no barriers to keep personal fights from escalating and affecting business. Most

corporates use their HR function to act as a buffer between conflicting colleagues. Unfortunately, the drama in the family, which affects the business, cannot be com-mented upon by the HR unit. The mind boggles at the mere thought of the head of HR at Reliance group trying to resolve the public conflict between the brothers!

It is interesting to note that the reasons for the dramatic conflict are a handful, though there may be millions of families in business around the world. Researchers point out that the most common fights are over money; control between and within generations; sense of entitlement; mis-match between expectations and reality; heightened or suppressed emotions.

The reasons for conflict may be the same but there is no template for each family to follow. Each family is likely to resolve their conflict in their own manner, which depends on their family dynamics and in-dividual personalities involved.

The starting premise to address conflict in family businesses is to understand that conflict can best be managed but it cannot be prevented. According to research at the Family Firm Institute, US, 20% of family businesses report a weekly conflict, 20% a monthly conflict and 42% report at least three to four conflicts in a year. The good news from the world of research, however,

is that conflict can indeed be managed and that there are proven resolution mecha-nisms at the disposal of the families.

Effective communication is a simple tool that families can use to prevent mere dis-agreements blowing up into full-fledged conflicts. Moreover, this tool is available for free! However, the part played by com-munication within relationships is often overlooked. When two brothers sit in a board meeting and the younger one makes a point – does the elder brother snap an-grily and reply as a sibling or as a busi-ness associate? Does the younger brother have the ‘freedom’ to contradict the elder in public or private? Due to the family re-lationships being enmeshed in the family business, innocuous miscommunication can lead to more serious conflict.

Families need a safe and structured en-vironment to facilitate communication between members. Emotions simmering under the surface must be aired without relationships being impacted.

Family councils or family boards are structured bodies that encourage conver-sations without anyone being judgemen-tal. Councils provide a framework within which family members need to operate at meetings. Further, councils facilitate formation of a family charter, which is a document that sets out the relationship

between the business and family. The Munjal family, owners of the Hero

group, have said at various public fora that it was their family council, along with the family charter, that enabled the amicable separation of the family business.

A family retreat is one more way. By defi-nition, a retreat is an act of withdrawal. A family retreat involves the family with-drawing into a place away from the day-to-day environment. The advantage is that unlike a family council, it can involve

all family members – those in the family business, those not and even young adults. There is something about a break from the routine, away from normal surroundings, that gets people to open up and let their guard down. Patriarchs can use the re-treats to spot issues early enough. Even corporates use these retreats, called off-sites, to get senior leaders to bond better.

Family councils and retreats notwith-standing, sometimes communication does break down and the threat of a con-flict looms large. Mediation, as a process, is useful at times like these as it can direct ugly energy away from old grievances and channelise it into finding business solu-tions and preserving relationships.

A mediator is a neutral outsider and, unlike an arbitrator, does not mandate a settlement. The role of a mediator is to help members communicate and develop mutually-acceptable solutions. The other advantage is that the process is internal, f lexible and, most importantly, confi-dential. Since mediation is informal and mutual, the settlement has a higher prob-ability of soothing personal relationships along with business matters.

Malvinder and Shivinder have opted for a process of mediation. Rana Kapoor and Madhu Kapur seem to be heading towards a similar process. In both cases, sanity has prevailed and all parties are seeking to protect not only their organisation’s interest, but also their own.

As it was said earlier, family business owners are smart and intelligent people.

Sonu BhasinFounder, Families And Business

Family Business Deep Dive

Very often, it is asked why families in business fight. The Harvard Business Review has a pithy answer – ‘Because they can’

Shailesh Menon

Of Family Councils, Charters & Retreats

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There are several methods for con� ict resolution in family-run businesses and it’s important to keep space for the appropriate mechanism

Harish and Karan Gondalia of Ship Chandlers

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Capt Behram Aga of Ericson & Richards with his sons Kersi, Xerxes and Cyrus

Ashwin Damani of Damani shipping

The Moloobhoys

Family Business Ahoy!

ERICSON & RICHARDS Trivia: Founded by a Swedish captain in 1878 Currently: Ship and cargo surveyors, flag state inspectors, magnetic compass adjustors Family: The Agas

Three generations of the Aga family have served on merchant ships before taking charge of their family business. Captain

Sam B Aga joined as a partner in 1953; a few years later, his son Captain Behram marched in as did Behram’s sons Kersi, Xerxes and Cyrus. “You get sea-weary after a few years,” says Kersi, who rose to be a chief engineer on a merchant ship.

Ericson & Richards (E&R) are mainline surveyors and assess (and certify) ships and cargo they ferry. They come into the picture when ships/cargo undergo physical damage due to mishandling. They also evaluate personal injuries to crew and dock workers. The surveyor’s report becomes the basis for an insurance claim. E&R annually surveys over 350 ships in Mumbai Port alone, and is present in all ports across India.

E&R is also a ‘flag state inspector’ — certifying the sea-worthi-ness of ships domiciled in different countries.

E&R is a magnetic compass adjustor of international repute, one of the few Indian firms that do it manually. Though most ships have GPS navigation these days, it is mandatory to keep a magnetic compass in the shipmaster’s cabin. These have to be adjusted pe-riodically, as bearings go awry when ships carry iron or iron ore. “We’re a profitable company,” says Kersi. “But more than money, reputation is our number one priority.”

DAMANI SHIPPINGTrivia: Started business with a capital of 8 annas in 1949Currently: Charter, custom house agent, warehousing, air cargo and logisticsFamily: The Damanis

JB BODA GROUPTrivia: First Indian reinsurance broking firm Currently: Insurance services, insurance surveyors and loss assessors, offshore and onshore surveysFamily: The Bodas

In 1943, Boda brothers Jagmohandas and Dhirajlal set out from Porbandar, Gujarat, to

start a reinsurance broking business in Mumbai. In those days, reinsurance was mostly the pre-

serve of European and American insurance gi-ants. However, the Bodas persevered and later, diversified into protection and indemnity insur-ance, various types of marine, fire and engineer-ing appraisals and oil and gas-related surveys. It’s the largest Indian multinational insurance and reinsurance broking house.

Atul Boda, son of Dhirajlal, manages JB Boda Group at present. He took over from Bharat, son of Jagmohandas, who passed away in 2011. Two others — cousin Gautam and son Rohit — help him out.

Atul has two priorities — the customer and his staff. “We’re in the service business and operate in 90 countries,” he says, “So I advise my colleagues to stay committed to clients’ re-quirements. Clients have to be satisfied first.” He adds, “We’re a family business and we’ve close to 1,000 employees in India in our 23 branches. If you have to stay in business for long, you’ll have to take care of your employees.”

Anchoring the Industry China, Korea and Japan are the largest shipbuilders

Greece has ships with highest cargo carrying capacity

9 of 12 major Indian ports regis-tered positive traffic growth in the previous fiscal

Kandla Port handled the highest volume of cargo last year

1,389 vessels comprise India’s merchant navy fleet

$5,000 per day is the cost to maintain a mid-sized ship

Petroleum, coal, automobile and iron ore top India’s port cargo volumes

Zahir and Khushroo Dhunjibhoy of Five Stars Shipping

Atul Boda of JB Boda Group