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Succession Conundrum at Sri Balaji Assemblies and Plastics Pvt. Ltd.*

CASE STUDY, ENTREPRENEURSHIP & STARTUPS
ET Cases, 12 pages

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Succession Conundrum at Sri Balaji Assemblies and Plastics Pvt. Ltd.

 

D. Parthasarathy and D. Lakshmi Narasimhan had reasons to rejoice. They had quit their jobs and had taken the risk by joining the family business set up by the twin brothers D. Sridhar and D. Sunder. Over the years the sales turnover had increased from 1 lakh in 1988 to 6,500 lakh in 2009 and to 13,000 lakh in 2012. When the entire company was gearing itself to celebrate the silver jubilee year of the company Sri Balaji Assemblies and Plastics Pvt. Ltd. (SBAP), the siblings were nostalgic. They knew that the journey of the company in the last 25 years had been excellent and momentous. The company did not face any serious family disputes due to practicing a simple principle, “Not to mix business with family and family with business”. Nevertheless, they were also anxious to equip SBAP to face the next phase of quantum growth. D.Parthasarathy, the Managing Director, was equally elated but was also preoccupied with the sheets lying on his desk reflecting the growth of the company in the past 25 years.

SBAP Family: Overview

J. Desikan, father of the Directors of SBAP was a government official. S.R. Sheshadri maternal uncle of the brothers, worked as a Deputy Director with the Meteorological Department of Tamil Nadu. J.Desikan had seven sons while S.R.Sheshadri had two sons (Exhibit I). His elder son S Parthasarathy (SP) was working for Kirlosakar Brothers. S Parthasarathy (SP) was the one who sowed the idea of business in the family. In 1972, a small plastic hand molding unit under the name Sri Venkateshwara Plastics was started by S.Parthasarathy and managed by his father S.R.Sheshadri. The firm manufactured a plastic container and a lid with a stick attached (Exhibit II) and supplied these containers to Aravind Laboratories – manufacturers of Eyetex brand Kumkum. In 1973, Sheshadri converted the firm into a partnership firm by inducting his brother S.R .Ranganathan...................

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Abstract


This case study is about a business started by two postgraduate, twin brothers hailing from a middle class family. Although hardworking and sincere they could not land good jobs. Taking the advice given by their maternal cousin - Sridhar and Sunder decided to start a small hand molding plastic manufacturing unit instead of wasting time on searching for a suitable job. The duo managed to find a potential buyer to supply the plastic components -; M/s Aravind Laboratories, manufacturing and marketing kumkum under the brand name 'Eyetex'. Thus, Sri Balaji Assemblies and Plastics Pvt. Ltd., (SBAP) was founded in 1988 as an ancillary unit. From a turnover of ₹1 lakh in 1988, the unit diversified their products and markets and in 2009 had a sales turnover of ₹65 crore which went up to ₹130 crore in 2012. This case study depicts how a company managed their finance, human resources, products and markets to be a leading manufacturer. However, SBAP faces the dilemma about succession, who would take the helm of the company.



Pedagogical Objectives

  • To understand how a family-owned business can establish a niche position with its focused and differentiation strategy
  • To examine how continuous realignment with emerging market realities can keep a family business can enable economic and financial sustainability
  • To discuss and debate on the succession strategies in a family-run business with the relevant cultural context

Case Positioning and Setting
This case study is suited for MBA and Executive Development Programs for any of the following courses/modules:

  • MBA - Entrepreneurship/Family Business Courses - How a focused and differentiated strategy can be used to establish a competitive market position over a period of time in a family-run business
  • MBA - Strategy Course - To discuss and understand Michael E. Porter's Generic Strategies
  • Executive Development Programs - Succession Planning in family-run business



* This case study was presented by the authosr in Family Business Academic Conference held @ ISB on February 1st 2013



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