Business Mandate fountainhead of excellence
I
feel truly privileged to address all
Singh, who was a member of the same
degree in Mechanical Engineering, like
of you as MMA is considered one
body. Without going into those details,
my grandfather, father, uncles and
of AIMA’s best Local Management
all I will say is that my grandfather was
siblings before me, I joined the family
Associations. I had agreed to deliver the
thrilled when Mr. PV Narsimha Rao and
business. Like them, sweeping the
speech in person in Chennai, but things
Dr. Manmohan Singh started the
factory shopfloor was my first job after
being the way they are, I am compelled
process of economic liberalisation. At
getting an American degree, followed by
to address you online. I have decided to
that time, he told us, his grandchildren,
running almost every type of machine
speak on “Ethics”, as I think ‘ethics’
that he wished he were 60 years
the company owned. We were expected
forms a part of Managerial Excellence.
younger. What I would also mention is
to produce more than the norms set by
that after this speech, the then
the Industrial Engineering department
MMA speech and a storm
Government rejected every licence the
of the company. More than anything
MMA has stuck in my mind since March
Kirloskar group had applied for and my
else, I got an education on what it feels
1981, when your Association conferred
grandfather, for a few years at least, was
like, to be on the other side of the table.
its Business Leadership Award upon my
persona nongrata in certain parts of the
Grandfather, Mr. SL Kirloskar. At that
A few years later, again like for all
national capital. This is why I remember
time, he told the members that he was
members of my family, I was given the
MMA, more than anything else.
responsibility to set up a project and
glad that the occasion presented him an
I would say that I am blessed to
soon ran into Indian bureaucracy, as the
have been born in a family like this,
project needed approval from what was
because we too could speak our minds
called the MRTP Commission. That was
to our elders. As I grew up, I also learnt
when I learnt that the Kirloskar Group,
the life my forefathers had lived. Part of
unlike a few others, had never opposed
the family was intensely capitalist, but
any project promoted by other industrial
Educated at MIT in the 1920s and
few people outside Maharashtra know
groups to enter businesses it was in; that
having grown up and started working in
that the company I now run also
my grandfather always held that
preIndependent India, he was a firm
published three magazines from
competition would make one better.
believer in Free Enterprise. During his
the1920s. They were known to be
This attitude actually made us ready to
speech, he proposed a 14point
extremely progressive for their times,
face global competition when India
programme for successfully meeting the
and possibly would be considered that
opened up in 1991 and our exports went
challenges of the 1980s, which included
even today, with articles promoting
up to 28% of our revenues soon after
doing
Planning
education of the girl child and widow re
liberalisation. It helped us to become a
Commission.My grandfather was known
marriage on one hand and writing
true MNC within 10 years. Step by step
for calling a spade a spade, and as you
against blind superstition on the other.
I learnt the family traditions.
could well imagine, all hell then broke
Many people credit these magazines for
loose. There were responses in
modernising Maharashtrian society.
opportunity to express his views on what he saw as problems of grave concern, and on our economy which was degenerating, even after three decades of Independence.
away
with
the
Times change but stick to values My father passed away as I turned 30
newspapers by Dr. DT Lakdawala, then Dy. Chairman of the Planning
US degree and a sweeping task
years of age. One evening, a few years
Commission, as well as Dr. Tarlok
Returning from the US after getting my
earlier, he had asked my brother and me AUGUST
2020
27
Business Mandate fountainhead of excellence
a question; He mentioned that until
work done by many individuals and
Some more have fled the country and
then, our businesses had grown on the
companies that have contributed to the
are resisting return. While they are
quality and reliability of our products
healthcare effort. Unfortunately, ICU
there, dirty linen about their business
and our allIndia marketing network.
bed and ventilator allocation have also
practices and the enabling environment
But times were changing and now there
raised questions about the ethics of
is being washed in public as foreign
were other expectations which clashed
many hospitals around the country.
courts consider their applications.
with family values. He asked both of us
Even the odd medical research firm has
We live in an interconnected and
whether we should join the bandwagon
been found to be fudging data at a time
globalised world, with information
to grow quickly, or should we be known
the world is desperate for answers to the
available at one’s fingertips. This was
as a group that stopped growing because
pandemic. Quite often, we fail to realise
the case before Covid, and we will still
we did not change our principles with
that behaviour during a crisis can make
be interconnected but possibly less
the times.
or mar the public perception of
globalised after Covid. But with the way
individuals and businesses forever.
technology has moved since Covid, one
Since then, my father’s query has always been at the back of my mind. As
Wherever it happens, a crisis like
can safely assume that information will
the company grew over time, many an
this exposes the faults and frauds of a
just reach faster. One only needs to
opportunity was missed or not grabbed.
business. A jolt to the system rattles
Google an individual or a business to get
And at the end, when things turned
skeletons in the cupboard and dodgy
more knowledge on that individual or
impossible, we gladly moved out from
deals and practices become hard to
business. Forget spreading like wildfire,
large business opportunities when we
cover up. The last couple of decades
now it will go viral. Each and every one
realised that other than good products
have seen multiple booms and busts,
of these scandals have tarnished the
and service, we could not deliver what
and unfortunately, business scandals
reputation of Indian businesses around
was being demanded. After that, the
have become ever more frequent and
the world. Imagine meeting a new
company changed its profile as a
bigger.
customer in a foreign land and hoping
business, and the part that just 10 years
he or she isn’t aware of our business
earlier had contributed to over 75% of
Scams galore
practices back home. Going forward,
our turnover, now contributes around
In the past few years, India has seen a
how much respect will outsiders,
4%. Yes, turnover stagnated, dipped
spate of corporate frauds, mainly
including those of Indian descent, have
with attendant hardships, and then rose
involving poor business practices and
for Indian business practices? To my
again to levels of 10 years ago, but we
bank loans. The unravelling of the
mind, if we desire to grow and be
are a stronger company as a result. As
Indian economy and the resulting
respected around the world, our
the company continues to be No. 1 in its
pressure on banks to collect overdue
businesses desperately need to re
business, I certainly have no regrets.
loans have uncovered a lot more muck.
establish our credentials for ethical
Many icons and superstars of Indian
behaviour and practices.
Crisis—The litmus test of character
business, including those given awards
The Covid crisis has put attention back
by respected institutions have been
on business ethics. Gouging of medical
disgraced, and some have even ended up
supplies and food has tainted the good
getting arrested in India and overseas.
28
AUGUST
2020
Forget what people will think when we go out of the country to do business or to invest; think of what foreigners will
Business Mandate fountainhead of excellence
need to consider when they want to
huge sums of money cannot be accepted
replaced with a new, more intrusive one.
come into India for business. As we all
without an assurance of enforceability,
This has followed “DieselGate” where
know, we need trillions of dollars to
and more importantly, the trust in the
Volkswagen was caught fudging
build our infrastructure to compete in
other party’s character, business
emission data, and ended up giving
the modern world.
practices and culture. A company’s
German businesses a bad name, a
wealth depends on stakeholders’ trust,
reputation that had been built up by two
Exit China, but why not India?
in the legality of its business, veracity of
generations of Germans after WW2.
As all of us are aware, there is also an
its accounts, reliability of its products,
Just like Indira Gandhi had famously
urge on the part of Japanese and
and fairness of its dealings. Just imagine
remarked about corruption, this too it is
Western firms to move out of China so
the number of people in India who have
a global phenomenon.
that all their eggs are not in one basket.
lost their lives’ savings because of these
We are concerned why people are not
Corporate scandals do not affect the
scandals. Companies that demonstrate
rushing in to invest in India but are
involved parties alone. They tar
high standards of ethics tend to have
going to other countries around us.
everybody, and governments have to
more stable businesses and deliver
With such a reputation, what incentive
respond to the cries for doing something
greater shareholder value over time.
about it. The most famous case of a
do foreigners have to invest here despite Corruption—A global syndrome The point I would also make is that it is Trust, business ethics and rule of
not just Indian Business which is giving
law are essential ingredients of a
its country a bad name. There are frauds
vibrant
Long‐term
around the world; Japanese companies
contracts involving huge sums of
have been caught for giving false
money cannot be accepted without
material quality assurance certificates
an assurance of enforceability, and
and French companies for bribery.
more importantly, the trust in the
Imagine the loss of reputation these
other party’s character, business
companies and countries face, leaving
market.
practices and culture.
our
attractive
market
aside the fact that world over, buyers and
the
opportunities that we can offer? People
strict regulatory response to a business scam is the SarbanesOxley Act in America that followed the Enron scandal. It substantially increased the scrutiny of accounting practices and the responsibility of boards for listed companies.
The
unintended
consequence of this regulation was that companies began to avoid listing on stock exchanges to save compliance efforts and costs.
would be wary of dealing with such
No better substitute for ethics
companies.
In India, the Satyam scandal is the
Wirecard, a German electronics
equivalent of the Enron affair. It
payment multinational, has been caught
involved a company fabricating accounts
fudging revenues for a bluechip status.
and supporting documents. The fallout
The result is that the reputation of
was that the new Companies Act in 2013
German financial sector and regulators
made auditors and independent
Trust, business ethics and rule of
has been tainted. The German
directors liable for the management’s
law are essential ingredients of a vibrant
government is axing the existing
errors and omissions. SEBI too
market. Longterm contracts involving
financial regulator, who would be
amended the listing conditions. Now,
do understand the environment that they will have to operate in, before they invest. When will we improve our environment and our governance?
AUGUST
2020
29
Business Mandate fountainhead of excellence
auditors have to be changed every few
Myths on ethics
there was a whistleblower who took a
years and internal audits have been
However, one’s stand on ethics should
stand to expose the rot at the top.
made more intense and intrusive.
not depend on where one sits. People with advantage expect integrity from
Practise, rather than preach
others
own
No number of rules and regulations can
“pragmatism”. Many see ethics as trading
stop greed; only each one of us as an
—one rate for buying and another for
individual who understands, and is true
selling. Another popular belief is that
to his or her responsibilities, can. It
one can have only as much ethics as one
requires special strength of character
can afford. Then, there are people who
and conviction to adhere to business
consider ethics as the crutch of the weak
ethics, especially in the policy and
While stricter regulation has largely
and the unimaginative. Many see
regulation sensitive markets. Where
improved corporate governance, it
winning at all costs as the only ethic.
companies jostle for access to land,
has
box‐ticking
They argue that winning cleanses
utilities, licences, permissions and for
approach to ethics. Regulations are
everything and public adulation is the
protection from inspection and taxation,
expensive substitutes for ethics, and as
only measure of ethics. Today, it seems
practicing ethics can get very tough.
While stricter regulation has largely improved corporate governance, it has introduced a boxticking approach to ethics. Regulations are expensive substitutes for ethics, and as the compliance burden grows, the focus
introduced
a
the compliance burden grows, the focus shifts to avoiding getting caught rather than doing the right thing in the first place.
but
justify
their
that quite a few people had been valued
Companies routinely face a choice
for what they seemed to be, not for what
between ingratiating themselves with
they really were.
powerful people or getting pushed to the
And it is not like there was a
periphery of the market. Executives from
shortage of regulations when all our
top to bottom are expected to bring
frauds came to light. To my mind, these
increasing revenues, and the pressure to
shifts to avoiding getting caught rather
company frauds have taken place thanks
win business obstructs the desire to do
than doing the right thing in the first
to an enabling environment, with so
the right thing. Therefore, leaders who
place. Litigation is becoming the way to
called independent directors turning a
are serious about building strong and
prove integrity, by both the government
blind eye, and a fear of taking a stand
longlasting organisations must make
and the companies. Moreover, the fear
against wrongdoers. All company
ethics integral to business strategy. To
of retrospective blame is deterring
directors are meant to act as trustees,
my mind, a welldocumented Code of
business initiative and innovation.
looking out for the best interest of the
Ethics must be adopted by organisations
organisation, not those of the Chairman
to ensure that our colleagues understand
and MD, or for that matter, the
how to behave and what has to be done
promoters of the company. Quite often
in various situations they could
I am reminded of what my late father
encounter in the course of business.
The public sector is a great example of regulation killing entrepreneurship. However, the responsibility of creating and maintaining a reputation for ethics is on management. It is easier to bear the cost of ethics than the cost of regulation. As can be seen, industries suffer when there is overregulation. 30
AUGUST
2020
inlaw would say, “The cemeteries are full of indispensable people.” Because many times people stay quiet so as not to lose perks. Fortunately, in one case,
Justice delayed is justice denied I have always marvelled at the American justice system; especially yesterday,
Business Mandate fountainhead of excellence
when a majority of Supreme Court
times whether the order would be
Justices nominated by the current
reversed if they made that list. When
President’s
told
one reads newspapers, one comes across
We have seen similar cases of
President Trump, that no one, including
cases of Americans catching Europeans
financial conditions sustained by an
him, was above the law. There, Justice
doing naughty things across the world;
is dispensed quickly.
I am not saying Americans are saints,
political
party,
If you remember the fraud that was Enron, once the case was made in the court, I think sentences were passed within 18 months. Despite being a friend of the then President George W. Bush, Kenneth Lay the Chairman of Enron, was found guilty of conspiracy and fraud. We have seen similar cases of financial conditions sustained by an institutionalized,
systemic
and
creatively planned accounting fraud in India. One wonders how long our system will take to decide the cases before it, because Justice delayed, is Justice denied. And lakhs of crores have been lost by individual citizens and the banks. When Justice is delayed, a fraud enabling environment is created, as individuals realise that there is no one
institutionalized,
systemic
and
creatively planned accounting fraud in India. One wonders how long
either.
our system will take to decide the cases before it, because Justice
Covid: The boon and bane to nature
delayed, is Justice denied.
The Covid crisis has also highlighted environmental issues. Lockdowns have brought great relief to Mother Nature by shutting down human activities. Air
technologies and making consumption
and water quality have improved all
less resource intensive.
over the planet, especially in the big
The Covid crisis has put a spotlight
cities. Carbon emission dropped as coal
on
based electricity production reduced,
businesses. Plastic has made a roaring
planes were grounded, and vehicles
come back during the pandemic, as
were parked. Water quality improved as
contamination aversion has taken
fishing and shipping became minimal.
priority
Animals and birds returned as humans
sensitivities. The crash in oil prices has
were locked in. Clean air improved
also made plastics a lot cheaper. Plastic
human health and reduced routine
consumption has once again become
sickness.
rampant in singleuse applications. The
However,
it
seems
the
environmental
demand
over
for
practices
of
environmental
disposable
masks,
environment’s brief recovery was
protective suits, packaging etc., is
celebrated only by those who could
booming. Businesses have settled for the
Corrupt nations vs. Corrupt
afford lockdowns. Lockdowns were not
cheapest and easiest material in the rush
companies
all good for Mother Nature. In Brazil,
to meet this demand.
Every year, I never fail to be amused by
deforestation of the Amazon area was
While the environment has been
a list made by a German NGO called
accelerated while the world focused on
cleaned up by lockdowns and travel
Transparency International of the most
the pandemic. In Africa, poachers had a
bans, air and water quality is de
corrupt countries in the world; amused,
free run as governments deployed their
teriorating again as economic activity
because while they do tell us which
resources on enforcing lockdowns.
resumes. Businesses must be conscious
countries are corrupt, they never make
Nevertheless, the deep cleansing of the
of
a list of countries whose companies
environment
environment in order to avoid health
corrupt others. I have wondered many
strengthened the case for using clean
or nowhere to go to.
during
lockdown
their
responsibility
to
calamities in the future. AUGUST
2020
31
the
Business Mandate fountainhead of excellence
As the pandemic continues, one seriously needs to consider how the world will be, once it is over. What will be the new normal?
As the pandemic continues, one seriously needs to consider how the world will be, once it is over. What will be the new normal? Will we be going back to office every single day of work? On a humorous note, how many spouses will believe we are going to be actually working? How will work from home impact people in the transport, restaurant and real estate sectors? How much of the planned infrastructure will really be required? Will people again fill up malls, stadia and theatres, or will they develop a taste for online shopping, sports
and
pandemic, there would be a shift to
in the morning to birdsong rather than
minimalism as a lifestyle and the
the sound of traffic.
competition to claim status through
I believe every generation should leave the world a better place for our next
What will be the New Normal?
virtual
have returned; it is beautiful to wake up
streaming
entertainment? Will people still travel long distances and across borders for work? There is a lot that is up in the air and we cannot know where everything will settle when this pandemic eventually subsides or is subdued.
generation and we should make all out efforts to support clean technologies once business starts moving again. Now that we have the wherewithal, we must make the right selections to ensure that nature too can recover, rather than trying for easy but shortterm monetary gains. Here too, there is an opportunity for a principled or ethical choice to be made.
pomp and possessions will become less severe. My spectacular role model As managers, each one of us is a role model, not only to our subordinates, but to society at large. People almost worship successful managers and want to imitate them. They tell their children that these are ideals to be emulated. There are so many examples around us of how people have grown large
In my case, this lockdown has led to
businesses while following their
introspection on the life that I have lived
consciences. Companies like Infosys and
and what to do about the future. It has
Wipro almost immediately come to
shown me what I need to survive and
mind. I have no hesitation in saying that
given me an idea of what real happiness
the role model for me has been Mr.
could mean. Actually, the only thing I
Azim Premji, who grew an edible oil
really miss is being close to my son, who
business into one of India’s largest and
has decided to continue running all our
most admired tech companies. To me,
overseas businesses from London where
what he is doing now is even more
he and his team are based. I must accept
spectacular, to ensure that the next
that my child has grown to become a
generation of our fellow citizens has a
leader in his own right. It has brought
far better future.
home the fact, that my own happiness and health is dependent on that of the
Finally, I agree with the saying that a true measure of one’s worth must
Leave the world a better place
community, and that to become rich in
This brings to my mind the kind of
the face of disease and hunger is of no
world we want to leave for our children.
use; my father would often say, one
So many of my friends have remarked
cannot have a skyscraper in a slum. We
that the skies looked blue again, like
must think in terms of the social whole
they did when we were young and a few
—of what is best for the community, of
So, take care and stay safe. I hope
circulated pictures on WhatsApp of
the common or public good. Each of us
that whenever the country opens up for
clean streams and the Himalayas from
should stop doing what is best only for
travel again, I shall have the privilege of
tens of miles away. Birds also seem to
ourselves. I hope at the end of this
meeting you in Chennai.
32
AUGUST
2020
include all the benefits that others have received from his or her success. Like respect, success, wealth and power are to be earned, and not to be demanded.