We like family-owned businesses because they take a long-term view about their business — they think in terms of multiple generations, as good stewards of capital must. They think of long-term headwinds and tailwinds and adjust their business models on that basis, paying attention to capital preservation and staying in the game for decades to come.
“For everything you say about India, the opposite is also equally true,” said a senior corporate executive, paraphrasing a quote from British economist Joan Robinson, when we met him in India recently. This rings true in our minds, particularly these days as the world looks at India’s business families with a tinge of suspicion following the recent wall-to-wall media coverage of a short-seller’s report on a large Indian business group.
For our part, we are quite happy with our investment biases that, in fact, favour backing some of India’s best business families. However, it is true that for every Indian family-owned business that has high standards of governance and has created enduring shareholder value over decades, there are several that we would never think about investing in.
