Good results buoy family businesses
India’s third-largest software exporter, family-controlled Wipro, announced on 26 April that its total revenues for 2010 saw a rise of 15% year-on-year, while fellow family-controlled automobile maker Ford reported its best first quarter results in 13 years.
Wipro, which also manufactures consumer goods and electrical products, said that its total sales rose to $6.98 billion from $6.11 billion the year before. The company’s consumer care segment contributed 9% to the total revenue, while its IT services sector accounted for 76% of the revenues.
But despite the overall growth, the group’s IT products division saw a 3% decline in revenues. This drop came even with measures taken by the family to improve the sector’s performance – the group was forced to realign its technology operations into six business units last year. The family business also underwent a restructuring, which saw the exit of the two co-chief executives of the IT segment, who were replaced by one person.
Headed by second-generation chairman Azim Premji, the decline was attributed to limited exposure to the finance and healthcare sectors, and stiff competition from fellow family-controlled Tata Group.
But Premji remained positive about the company’s outlook. He said in a statement: “We have made good progress in creating a leaner, simpler and more customer centric organisation structure. We believe our business strategy along with the new structure will deliver industry leading growth.”
Founded in 1945 by his father as a company producing hydrogenated cooking fat, Premji was instrumental in pushing the Bangalore-based group towards diversification and expansion. He took over Wipro at the age of 21 after the sudden death of his father, and revamped the company to make it one of India’s biggest family-controlled businesses. Premji, through a number of partnerships, controls 78.91% of the company.
On the other side of the world, Dearborn, Michigan-based automobile manufacturer Ford announced its largest first-quarter profit in 13 years. Controlled by the founding Ford family, the group said in a statement that its pre-tax profit for the first quarter 2011 were $2.1 billion, up by more than $900 million compared with the first quarter of 2010.
Non-family president and chief executive Alan Mulally said: “Our team delivered a great quarter, with solid growth and improvements in all regions.”
The group attributed the strong results to a surge in consumer spending in the US, where sales rose by 16% in the quarter. Its European operations saw growth too, with pre-tax profits doubling to $293 million.
The Ford family control the company through its 40% ownership of voting rights. Founded in 1903, fourth-generation Bill Ford Jr is the current chairman of the company and he works alongside four other family members, including fifth-generation cousins.
