INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Do you know Indian family-owned companies have delivered an average 13.9 per cent annual return since 2006 compared with 6 per
cent retu rns generated by their non-family-owned peers
Well, family matters
Who better knows this than India which ranks third in terms of the number of family-owned businesses, according to the Credit Suisse Family
1000 study done this year.
The findings hold well not only for India, but also for other Asian markets, excluding Japan
But what makes India stand out is the fact that more than 50 per cent of the top 30 best performing family-owned companies in Asia,
excluding Japan, are from India.
Among them, 12 Indian family-owned companies with a total market capitalisation of $192.2 billion generated
an average annual CFROI (cash flow return on investment) of 22.7-43 per cent in three years.
As many as 12 of Indian businesses made it to
the list of 50 most profitable family-owned businesses in Asia, excluding Japan
They include Emami, Bajaj, Godrej Consumer Products, Eicher, Symphony, HCL Technologies, Page Industries, Marico, Hero MotoCorp and
$633 billion.
Family businesses outstrip their non-family-owned peers in Asia with superior financial performance and more robust share
price returns, largely due to their longer-term focus.
Technology (18 per cent), consumer discretionary (16 per cent) and materials (15 per
cent) emerged the biggest wealth creators in terms of their contributions to total market capitalisation.
Financial performance of the
family-owned businesses was superior than that of non-family-owned businesses
Revenue growth was stronger, earnings before interest, tax, depreciation and amortisation (Ebitda) margins were higher, cash flow returns
in every region, every sector, whatever their size
This is due to the longer-term outlook of family-owned businesses relying less on external funding and investing more in research and
outside of Japan generated 25.63 per cent more cash flow return on investment (CFROI) than that of their non-family owned counterparts, and
right structures perform relatively in line with those with ordinary shares, contrary to the fears expressed by many investors.
China, India
and Hong Kong alone comprise 65 per cent of the non-Japan Asia section of the database
The three countries enjoyed a market capitalisation of $2.85 trillion, or 71 per cent of the total market share of these family-owned
businesses in Asia, excluding Japan.
