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Munjals must go by family separation pact in staking claim for brand Hero

The father-son duo of Vijay and Naveen Munjal has reportedly claimed that a family separation agreement settled years ago, gave them the ownership of Hero Electric.Premium
The father-son duo of Vijay and Naveen Munjal has reportedly claimed that a family separation agreement settled years ago, gave them the ownership of Hero Electric.

  • Hero Motocorp may have compelling market reasons to seek the use of the Hero brand name for its e-vehicles. But it will do well to stick to the agreement. The other option for it is to seek updation of the agreement, which could require fresh negotiations

The legal dispute among the Munjals being heard in the Delhi High Court over the use of the Hero brand has once again brought into focus the type of friction typical to Indian business conglomerates owned by large families. Notwithstanding a legal separation, the Munjal family’s skirmishes continue primarily because, as happens in such cases, the brand has become big and enjoys recall value in the consumer market. The promoters of Hero Electric have moved the Delhi High Court to restrain Hero Motocorp from using the Hero brand name for its upcoming electric scooter.

The father-son duo of Vijay and Naveen Munjal has reportedly claimed that a family separation agreement settled years ago, gave them the ownership of Hero Electric. Along with that, they claim, they were given the right to use the Hero brand for selling electric vehicles in India and abroad.

At the time the family partition was signed a decade ago, did the splitting members not recognise sufficiently that e-vehicles were going to be the big new opportunity just ten years down the line? Even if they didn’t, once an agreement is signed and in place, should it not be incumbent on all stakeholders to respect it in letter and spirit? It has been reported that Hero Motocorp has registered ‘Vida’ as a brand name for its proposed electric scooters and bikes. Now ‘Hero’ already commands brand equity that Hero Motocorp is, perhaps, keen on encashing. That may be the reason for the bid to bag the Hero brand for its e-vehicles.

Hero Motocorp may have compelling market reasons to seek the use of the Hero brand name for its e-vehicles. But it will do well to stick to the agreement. The other option for it is to seek updation of the agreement, which could require fresh negotiations.

Down south, TVS is a classic case of managing family separations. Though the four families in the group went independent of each other a long time back, they have carried on in a “live and let live’’ spirit by agreeing that they can all use the ‘TVS’ brand. They did engage in a legal fight in the early 90s when a dispute broke out between the late Mahesh Krishna (brother of Suresh Krishna) and the Sundaram Finance group founded by late T.S. Santhanam. Ostensibly, the dispute related to the setting up of an allegedly ‘competing venture’. That was a different era when family business thrived on informal arrangements. Much water had flown under the bridge since then; the four groups in the TVS family, all independent, all use the TVS brand. All the same, there are also sections – like the Sundaram Finance group – that have long stopped using the TVS brand.

The Ambani brothers had ensured a water-tight deal that did not allow for any ambiguity in their separation agreement. Lack of clarity or full-proof agreement appears to be the reason for Valli Arunachalam, daughter of late M.V. Murugappan of the Chennai-based Murugappa group, taking recourse to moving court for not being allowed a seat on the board of the group’s holding company. She, her sister and mother together hold a significant chunk of shares in the holding company. Another business family going through a separation process is the Godrej family. As families grow, and new members want to be part of the business, separations will take place. Neat business separation plans prepared with foresight and followed diligently are key to avoiding disputes.

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