What's behind Apollo Hospital's shake up? Entrepreneurship, strategy and governance

Apollo Hospitals Enterprise has reorganised its top management and redefined the roles of the four daughters of chairmanPrathap C Reddy.

"This [shake-up] is all about entrepreneurship, strategy and governance," says professor Kavil Ramachandran, Thomas Schmidheiny Chair Professor of Family Business and Wealth Management and Clinical Professor of Entrepreneurship at the Indian School of Business.

With the reorganisation, Preetha Reddy, the current managing director has taken on a wider role as executive vice chairperson. Her sister, Suneeta Reddy will step into her shoes as the MD. The other daughters-Shobhana Kamineni will be the executive vice-chairperson in the consultancy space, while Sangita Reddy has become the Joint MD, Apollo Health and Lifestyle and The Cradle, the childcare brand.

The company had announced Rs 2,170 crore expansion plan, last year. Will this latest move of defining their roles and elevating them make way for the company to pursue new projects? Ramachandran notes, the daughters have been playing an executive role for many years now.

Moreover, Ramachandran also believes the new roles being given to the daughters will impact the organisation. "The new designations are going to have a major influence in the company. I think it is being done to develop the organisation and strengthen the next line of management," he adds.

"Dr Reddy has a succession plan ready. Preetha Reddy is the eldest of the sisters and the heir apparent. She was the MD and accepted by all the other 3 sisters."

By elevating both Shobhana and Preetha, what Prathap Reddy is doing, Ramachandran believes, is developing and moving them (the daughters) into strategic roles and reducing their operational involvement. This means the day-to-day functioning will now be handled by non-family members or by professionals. So their new roles will let them focus on new projects, he says.

"I think the reorganisation has been undertaken because as a family the sisters have been working well harmoniously, the business is expanding and Dr Reddy's involvement has reduced over the years. This move is all about entrepreneurship, strategy and governance. By redefining the roles of the daughters, Apollo Hospitals is creating more space for non-family members to take on professional roles," reiterates Ramachandran.

Arvind Singhal of Technopak, a management advisory firm, disagrees and feels it is a matter that concerns the board and does not affect the operations of the organisation. "The companies are being managed by professionals anyways. Each of the daughters are married into business families. This reorganisation and naming some of them as MDs and vice-chairpersons is about who has the time to invest in the firm."

Preetha Reddy has been named by Prathap Reddy as the heir apparent, to take on his role when he retires. "But he has to name one of them," argues Singhal. "So, he has named the eldest."

Prathap Reddy is not a practicing medical professional and none of his children are doctors. "I don't see anything changing with regard to investors. I don't think it will have any impact on the investors," says Singhal.

Updated Date: Dec 21, 2014 10:07:56 IST