Lawyers are working on the documents related to forming a trust and other legal formalities
Apollo Hospitals Group, India's one of the largest healthcare enterprises, is creating a trust as part of its plan to form a family constitution to ensure smooth succession of the management at a time when the promoter family is becoming larger.
A preamble of the constitution was signed by all the family members earlier this year, said a senior member of the family.
The lawyers are working on the documents related to forming a trust and other legal formalities.
The chairmanship is expected to go to the four daughters of the founder Prathap C Reddy and each is expected to hold the position for a fixed period in rotation, as per the discussions now. Four of the third generation are already fully involved in the business activities related to Apollo Hospitals Group.
"It (family constitution) is pretty much finalised. The preamble has been signed by everybody on my parent's 60th wedding anniversary. Now the lawyers are working on the documents on the trust and other things such as the structuring," said Shobana Kamineni, a member of the founding family and the executive vice chairperson of Apollo Hospitals.
The founder has been working towards ensuring the continuity of the company and the family constitution is to provide continuity to the company. The founder has four children and ten grandchildren in the family and it is envisioned to avoid any disruption in the business.
The family would put their shares in a trust, mostly in the name of the founder (PCR), which would ensure that everyone votes together on the decisions for better stability for the company.
The family constitution, in its preamble discusses the story of the chairman, how he started the hospital and how the company grew, so that three to four generations from now the family members should know the founder's mentality.
Being in the healthcare sector, the company should continue to have an element of service along with taking care of the profitability of the business.
The role of chairman is to coordinate the group's activities and give a guidance to its future and this role would be taken by the four daughters - Preetha Reddy, Suneeta Reddy, Shobana Kamineni and Sangita Reddy — in rotation for fixed period.
It would be mostly in the range of three years for one person to hold the position, to make sure that no one would have absolute power for a long period of time.
After this, the position would be held by those who are eligible in the family or another individual depending on the merit. This is in a way to foster the spirit of quality and meritocracy in the management.
Sindoori Reddy, daughter of Suneeta Reddy, is focusing on hospitals business while Shobana Kamineni's daughter Upasana Kamineni (into CSR activities of the group ) and Anushpala Kamineni, another daughter into pharmacy and private label, Preetha Reddy's son Karthik Reddy into education and insurance.
Three of the next generation are doing business outside the group, such as in defence and power generation, and healthcare application start up, while others are into ancilliary business.
The constitution allows them to go out to explore other businesses and come back. The positioning of them in the family business depends on the interest and achievements they show in the relevant business. A family business council will discuss such topics.