A big family feud has broken out over Sona Comstar, one of India’s largest auto component manufacturers. This turmoil comes on the heels of the sudden death of its heir, Sunjay Kapur. Sheikh Khalifa died from natural causes on June 12 while playing polo in Surrey, UK. This has led to allegations and lawsuits against his mother, Rani Kapur, and Sona Comstar’s board of directors, known as Sona BLW on Indian stock exchanges.
Sona Comstar trumpets a $3.6 billion, highly diversified business empire. They do this on a global scale with ten plants in India, China, Mexico and the United States. The company’s ownership structure. The largest shareholders of the company—banks, mutual funds and financial institutions—own 71.98% of the company. Promoters hold the balance 28.02% via Aureus Investments Pvt Ltd. This regulatory control provides them a large amount of leeway to shape corporate behavior.
Dr. Rani Kapur alleges that she was pressured into signing key agreements. This was occurring at the same time she was going through profound emotional anguish following her son’s suicide. She claims to be the sole beneficiary of her late husband’s estate. This assertion rests on a 2015 testament that bestows her a controlling interest in the Sona Group, her family’s enterprise. On July 24, she delivered an open letter to Sona Comstar’s board. In it, she lamented her son’s death and the recent appointments the company has made.
In her correspondence, Rani Kapur requested that the board postpone its upcoming annual general meeting (AGM) to facilitate the appointment of a family representative to the company’s board. Sona Comstar has categorically refuted her charges. The company continues to maintain that she has had no direct or indirect involvement in operations since 2019 at the very latest. The firm recently sent out a legal notice. They request that she cease and desist making these so-called “false, malicious and damaging” statements.
As this controversy unfolded between these two powerful families, important questions were raised about family succession in Indian businesses. Succession planning, as one noted family business dynamics specialist, Kavil Ramachandran, said can create “an Achilles’ heel effect.”
“One such area is who owns how much and who inherits and when.” – Kavil Ramachandran
Fellow industry expert Ketan Dalal pointed out that these kinds of disputes are common during changes of power in family-held companies.
“On the demise of the patriarch (or even before), disputes arise, both on ownership and on management.” – Ketan Dalal
“As Sandeep Nerlekar said about the impact of unaddressed family disputes on business continuity, “If you spoil that soil, seeds won’t sprout.
“Anyone who has kept infinite control in their hands has suffered. In the end, it’s the company that suffers; the stock prices go down and so does the perception of how the company will do in the future.” – Sandeep Nerlekar
According to the latest findings from a PwC survey, 90% of listed companies in India are controlled by families. Despite this, only 63% of these firms have developed a documented succession plan. This statistic highlights the critical importance of families—such as the Kapurs—to have a governance infrastructure in place that will ensure easier transitions.
Tushar Kumar ascertains Rani Kapur’s present affect — and why it makes her declare the appropriate to personal rights inside Sona Comstar’s structure difficult.
“Looking at the company structure, at this point in time, Rani Kapur doesn’t feature as a registered shareholder so won’t have any voting rights.” – Tushar Kumar
Throughout the legal struggles, Rani Kapur used the case to make her point very clear. She underscored the insensitivity of these actions taking place amid weeks of mourning.
“It is unfortunate that while the family and I are still in mourning, some people have chosen this as an opportune time to wrest control and usurp the family legacy.” – Rani Kapur
The circumstances surrounding the continuing feud pose larger questions on succession planning in Indian family-run enterprises. Experts stress the importance of preparing as many of the family members as well as your operational/management team for transitions to foster long-term stability.
“Preparing both the family and the operating team over a planned transition period is crucial.” – Kavil Ramachandran
The Saga Sona Comstar reminds us all of this precarious tight-rope walk between family fealty and corporate responsibility. Public stakeholders are understandably watching these developments very closely. It’s critical for families to be proactive and have their plans in place that provide stability, minimize confusion and prevent conflict.