The battle of the billionaire inheritance highlights the disorderly family succession of India

The sudden death of an Indian magnate in June sparked a fierce inheritance battle with an Indian car giant.

Sunjay Kapur, 53, underwent a heart attack on June 12 while playing Polo in Surrey in the United Kingdom. He was heir to Sona Comstar, a commercial empire of $ 3.6 billion (2.7 billion pounds sterling) which he inherited from his father. The company, among the best manufacturers of automotive components in India, has a global footprint with 10 factories divided into India, China, Mexico and the United States.

Passionate Polo, Kapur has moved to the social circles of elite of the Indian capital Delhi and would have shared a friendship with Prince William. He got married three times – first at the designer Nandita Mahtani, then to the star of the 90s, the Bollywood star Karisma Kapoor, before marrying Priya Sachdev, former model and entrepreneur, in 2017.

But weeks after his death, the question of succession made Kapur and his family the subject of media speculation.

At the center of this is Kapur’s mother, Rani Kapur, former president of Sona Comstar.

On July 24, Rani Kapur sent a letter to the board of directors of Sona Comstar, raising questions about the death and appointments of her son made by the company after that.

In the letter, which the BBC has seen, it alleged that Kapur’s death was in “very suspicious and unexplained circumstances”.

The Coroner office in Surrey told the BBC that after a post-mortem, he had determined that Kapur had died of natural causes. “The investigation was closed,” said the office.

Rani Kapur also claims to have been forced to sign key documents while he was in mental and emotional distress of the death of his son.

“It is regrettable that even if the family and I are still in mourning, some people have chosen this as a timely moment to tear off control and usurp the heritage of the family,” she wrote.

She also asked the SONA COMSTAR Board of Directors to postpone her annual general meeting (AGM) – which was scheduled for July 25 – to decide a new director who would be a family representative.

Rani Kapur did not specify who she meant by “certain people”, but Sona Comstar still held the Aga the next day and appointed the wife of Sunjay Priya as a non -executive director.

In her letter, Rani Kapur said that she was the only beneficiary of the succession of her late husband in a will left in 2015 which included majority participation in Sona Group, including Sona Comstar.

The company firmly denied the claims of Rani Kapur and said that it had “no role, direct or indirect, in Sona Comstar since at least 2019”.

The Board of Directors also said that it had no constraints to rely on it and that AGA had been carried out “in full compliance with the law”. The company has published a legal opinion in Rani Kapur, asking him to stop distributing the declarations “false, malicious and harmful”.

The BBC contacted Sona Comstar, Rani Kapur and Priya Sachdev with questions.

Public shareholders, including banks, investment funds and financial institutions, hold 71.98% of SONA COMSTAR, which is registered in Indian exchanges under the name of SONA BLW.

The remaining 28.02% are held by promoters via a company called Aureus Investments PVT LTD.

According to the files of the company, Sunjay Kapur was the only beneficiary of the RK Family Trust, who controls the participation of promoters in Sona Comstar via Aureus Investments.

“Looking at the structure of the company, at this stage, Rani Kapur does not present a registered shareholder, he will therefore have no right to vote. But there is the question of the RK Family Trust and Aureus Investments. We cannot really know if Rani holds direct interest in hand in the Supreme Court of India.

The quarrel of the Kapur family is not an isolated case.

According to a PWC survey, some 90% of the companies listed in India are controlled by the family, but only 63% have an official succession plan.

Kavil Ramachandran, of the Indian School of Business, said that most Indian family businesses operate with “significant ambiguity”.

“Such such (region) is who has how much and who inherits and when,” he adds.

Experts say that family participation without meritocracy and the absence of formal agreements complicate questions.

“On the disappearance of the patriarch (or even before), disputes arise, both on property and management, and too much water would have flowed under the bridge so that the problems were resolved amicably,” said Ketan Dalal, who advises several Indian commercial families on property structures.

India Inc. is dotted with bitter succession battles that make headlines several times.

Mukesh Ambani, the richest man in Asia, was involved once in a very public struggle with his younger brother against the Empire of sprawling reliance after the death of their father Dhirubhai Ambani in 2002 without leaving a will. It was their mother, Kokilaben, who negotiated the peace of years later.

More recently, family quarrels broke out in the Raymond group, the most famous textile company in India, and among the Lodha brothers, whose company built Trump Tower in Mumbai.

All this has often reached a high cost for Indian shareholders.

“Anyone who has kept infinite control in their hands has suffered. In the end, it is the company that suffers from it, the stock prices fall and (the same goes for) the perception of the way the company will do in the future,” explains Sandeep Nerlekar, founder and managing director of the Térentia inherited planning company.

But some families are now dead, twice shy.

The Bajaj family, one of the largest conglomerates in the country, faced an internal dispute on the succession until a court intervened in the 2000s to resolve the dispute.

The Patriarch has mapped a succession plan for the group, dividing the responsibilities between its sons and its cousin. According to the company’s declaration, the group now operates by consensus via a family council.

Last year, one of the oldest business houses in India, the Gorejer group in Lock-to Real, announced an unusual separation of their business of several billion dollars.

“Families must work on succession planning with governance structures such as a good board that has teeth. They should have some control so that the company can develop in the long term. You must also allow the next generation to take the lead in time and that the patriarch should take the time to prepare them so that family problems do not occur,” said Nerlekar.

The tastes of Mukesh Ambani seem to have taken this seriously, after starting to prepare his three children well in advance.

Mr. Ramachandran says that the succession is not something that can be decided “overnight”.

“The preparation of the family and the operational team during a planned transition period is crucial.”

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