K.T. Jagannathan

Chennai: In what is seen as a significant move to facilitate transparency in the induction of GenNext into the family business, the Hyderabad-based Amara Raja Group of Gallas is embarking upon a host of initiatives that will include, among others, the setting up of a holding company and creation of a business code for family members.

The Group has just breached the Rs.1,400-crore turnover mark and is hoping to scale the $2-billion mark in five years. The flagship company of the Group Amara Raja Batteries Ltd. (ABL), a leading maker of industrial and automotive batteries, alone has crossed the Rs.1,000-turnover mark during 2007-08. ABL has set a turnover target of $1 billion, to be hit in five years.

Jay Galla, Managing Director of ABL, said that the Group was in the process of transferring all the family holdings in various outfits into a yet-to-be-formed holding company. ``The consolidation of holdings can happen in a year,'' he said. The Group was currently looking into the legal, tax and related angels. ``Strategically, we will like to do this way,'' Mr. Galla said. To a question, he said, `` we are taking inputs from various consultants.''

In the flagship company ABL, the Gallas have Johnson Controls of the U.S. as equal equity partner. Mr. Galla said the promoters would take the foreign partner into confidence while transferring the family holding into the proposed holding or investment company of the Group.

Besides ABL, the Group has Galla Foods, a 100 per cent export-oriented unit; Amara Raja Power Systems Private Ltd., which is engaged in the design and development of power electronic products; Amara Raja Electronics Ltd., makers of battery chargers, digital inverter and trickle chargers; and Mangal Precision Products Private Ltd., which is engaged in the fabrication of advanced sheet metal products and fasteners, plastic component and compounds.

Mr. Galla also hinted at the possibility of a corporate board for the Amra Raja Group as a whole. Answering a range of questions on family business and consolidation exercise, he said that as the family expanded and GenNext waited in the wings, there was a definite need for a codified rule book for members to get in and get out of the family business. Mr. Galla said that the Amara Raja Group was taking a proactive step to secure the family's business interest in the evolving environment by inculcating a sense of responsibility and spirit of bonhomie among the members of the family. ``We are going in for this exercise at a time when the family members are regularly talking to each other,'' he pointed out. In this context, Mr. Galla said that the Group had benefited a lot from its interactions with M.V. Subbiah, former Chairman of the Murugappa Group. In fact, according to Mr. Galla, the Amara Raja Group had become a part of the family business association formed under the auspices of the Confederation of Indian Industry (CII) thanks to the initiative of Mr. Subbiah.