The barbarians are not just at the gate--they are storming the hallowed portals of Delhi's business families. With liberalisation winching open the doors and windows of the generations-old Houses of Shriram, Mansions of Modi and Fortresses of Singhs, the graceful kothis of yore are crumbling under the jackboot of transnational competition. Says Bhai Manjit Singh, managing director of Montari Industries Ltd, ``All business families are getting marginalised by MNCs. That all joint ventures will become a majority stake held by the foreign partner can almost be taken for granted now.'' Consider the swelling mass of disjointed joint-ventures:

* In July 1997, the Honda Motor Company of Japan made clear its intention to acquire a majority stake in Shriram Honda Ltd. Critical for taking its 33 per cent share to 56 per cent, will be acquiring 23 per cent from the Indian partner Siddharth Shriram, whose 33 per cent stake will then be trimmed to just 10 per cent.

* In April 1997, Daewoo of Korea, increased its stake to 91.63 per cent in DCM Daewoo Motors, shaving the stake of the Vivek Bharat Ram-led DCM Group to just 1.65 per cent. Already, Vivek Bharat Ram has been replaced as chairman by Daewoo nominee, S H Park, and the DCM prefix has been scratched out to make room for the new logo, Daewoo Motors India.

* In April 1997, B K Modi relinquished the post of managing director in all group companies, leaving professionals--many of whom are representatives of the multinationals Modicorp has joint ventures with--to manage the day to day affairs of his empire.

* After 18 months of deliberations and negotiations, in March 1997, Delhi-based Montari Industries, flagship of Bhai Manjit Singh, decided to offload its 36 per cent stake in Bausch & Lomb (India). Once the transfer is through, Bausch & Lomb Inc's hold is expected to tighten from 51 per cent to an even firmer 69 per cent.

* In November 1996, the L M Thapar group pulled out of the Thapar-DuPont joint venture set up originally to implement a $200-million nylon 6,6 project in the country. DuPont's 45 per cent grip now tightens to a 100 per cent hold.

* In March 1996, Kelvinator of India became Whirlpool Of India, with J Desai, chairman of Kelvinator Of India, selling a 51 per cent stake in the company to the US-based multinational Whirlpool Corporation, for Rs 300 crore.

Want more? Fortunes are flat at Charanjeet Singh's once-fizzy Pure Drinks, with the company reduced to being a distributing and bottling franchisee of Cadbury India. In 1992, Gillette of USA quietly blunted the edge of Indian Shaving Products Ltd, by buying out the stakes of Harbanslal Malhotra & Sons. And if the Delhi-based Lambhas of Kwality Ice-Creams wilted under the onslaught of Unilever's ice-cream ambitions, Milkfood Ltd, a wholly owned subsidiary of Jagatjit Industries quickly transferred its entire ice-cream business to Brooke Bond Lipton India Ltd. (BBLIL) on April 1, 1995--just months after the Milkfood management announced grand plans to go national.

Says Manoj Badale, who heads Monitor India Pvt Ltd, ``Many of the family owned companies are in the midst of a critical transition.'' Adds D S Mehta, advisor, Assocham, ``The MNCs have much bigger purses to invest and incur losses with. So, when they say that the scale of a project needs to be increased for the sake of viability, either you have to purchase their share--or they purchase yours.''

It's no coincidence that Delhi's business families are besieged on home turf. According to Badale's thesis, what Delhi's business families brought to the table in a joint-venture was access to government, existing networks in India and infrastructure presence, while they looked at multinationals for technology, marketing skills and financial strength. Says Badale, ``While this remains an important exchange, as multinationals develop stronger bases and experiences within the country and government restrictions diminish, the contributions of many family business will be insufficient.''

It isn't just policy which has ebbed away from the clutches of Delhi's old power brokers, but also policy makers. With North Block more interested in attracting FDI, in the last few years, the red carpet has rolled out as fast for a transnational's country head as it once did for the patriarch of a powerful conglomerate. Says Mrityunjay Athreya, management consultant, ``Earlier the business families would have one foot in business and one in politics and there was a good partnership between government and business. But if Harishankar Singhania mixed with politicians, Harsh and Vikram Singhania have learnt to have a different approach.''

With the playing field levelled in more ways than one, it is hardly surprising then that cash-rich transnationals are increasingly jockeying into leadership positions-particularly as laggardly, cash-strapped, bloated family businesses are only just coming to grips with the need to shed fat and develop corporate muscle. Says Bhai Manjit Singh whose revival plans for Montari Industries hinge on focussing on leather and pesticides, ``If I am going to be a minority partner I may as well disinvest and use the funds to consolidate the business in which I can be competitive.''

That still raises one question: why is the petrel of MNC domination particularly sweeping across Delhi's business families like a tornado? One reason could be that in the wake of liberalisation, Delhi's families were the first to jump on the joint-venture bandwagon--and are now the first to outlive their utility. If that is true expect the cycle to repeat itself across the country over the next two to three years with increasing ferocity.

Another premise: while the Southern groups have been conservative in entering into joint-ventures, size is perhaps one temporary saving grace for powerful family groups in the West such as the Tatas. In contrast, the Delhi businesses were in the small to mid-size category and therefore, easier for the MNCs to swallow.

Pertinently, the marginalisation of family businesses is not just restricted to ownership, but also brands, image, the best lawyers and PR consultancies, leverage in industry forums and financial institutions--and of course, attracting talent. Says A K Matta, vice-president of Delhi-based ABC Consultants, ``Professionals certainly prefer MNCs to family companies. Five years ago, they would have loved to work with the Shrirams, now they want to evaluate the company first.''

Still, not all is lost yet. Holding up the Delhi coat of arms are young entrepreneurs like Harish Kumar, CMD of Maharaja Appliances Ltd and vice-chairman of Maharaja International Ltd.-the latter is a joint venture between Electrolux which controls a 51 per cent stake against Kumar's 26 per cent. In the recent rights issue--which closes on July 31, 1997--while Electrolux wants to increase its stake, Kumar is equally determined to retain his 26 per cent.

Says a feisty Kumar, ``Golf-playing chairman may be willing to get out of joint ventures, but a first generation entrepreneur like me has the ability to work hard. I won't allow them to reduce my stake.'' It's a reassuring thought for Delhi's business prospects: the old order may be selling out, but a new generation of entrepreneurs are investing in the future.

Tying themselves in knots

* In April 1997, Daewoo of Korea, increased its stake to 91.63 per cent in DCM Daewoo Motors, shaving the stake of the Vivek Bharat Ram-led DCM Group to just 1.65 per cent. Already, Vivek Bharat Ram has been replaced as chairman and the DCM prefix has been scratched out to make room for the new logo, Daewoo Motors India.

* In April 1997, B K Modi relinquished the post of managing director in all group companies, leaving professionals--many of whom are representatives of the multinationals Modicorp has joint ventures with--to manage the day to day affairs.

* After 18 months of deliberations and negotiations, in March 1997, Delhi-based Montari Industries, flagship of Bhai Manjit Singh, decided to offload its 36 per cent stake in Bausch & Lomb (India). Once the transfer is through, Bausch & Lomb Inc's hold is expected to tighten from 51 per cent to an even firmer 69 per cent.

* In November 1996, the L M Thapar group pulled out of the Thapar-DuPont joint venture set up originally to implement a $200-million nylon 6,6 project in the country. DuPont's 45 per cent grip now tightens to a 100 per cent hold.

* In March 1996, Kelvinator of India became Whirlpool Of India, with J Desai, chairman of Kelvinator Of India, selling a 51 per cent stake in the company to the US-based multinational Whirlpool Corporation, for Rs 300 crore.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.