Tatas and their Trusts…

In the case of Tatas, everything is based on trust, or rather trusteeship. Right from the founder down, you will find that people with personal wealth were/are very few, if any. All the directors including the family members of Tatas have, shall we say, devoted their energies towards building up the corpus of the house rather than personal wealth. That’s why you will find very few people, not any, in fact, of our Tata family in the list, which usually comes up, of the wealthiest people. So, as far as the Tatas are concerned there is no personal wealth—all the wealth of the house is in charitable trusts, and they are the real owners of the Tata House. Tata Sons, which is the holding company where I am a director, ploughs back all its earnings from its investments into these trusts, and then these trusts, in turn, give out several hundred crores, in fact, every year to various organizations like the NCPA (National Centre for the Performing Arts) and many areas such as education (the Indian Institute of Science in Bangalore was started by the founder and is still a major beneficiary), sports, etc. At Bombay House itself, there is a very large organization—occupying almost an entire floor—by what is known as the Tata Trust. Managed by professionals, the trust evaluates hundreds of applications that come in seek of support, and after proper verification, the organizations that deserve it get it. Cancer research, cancer hospital…there are so many. I think there are about 500 establishments currently benefiting from the Tata Trust, depending on their need and depending on their objectives. So, the Tata profits are ploughed back into activities concerning the benefit of the nation and the people at large.

Bias towards Parsis?

Totally untrue: In fact, if anything, Parsis now feel that they are getting short shrift. I mean that they must at least get their share, so to speak. I am a Parsi, I got a Tata scholarship—and I would imagine that I got that on merit. If you look at for example the scholars (100 or maybe more every year) that we have supported this year, I don’t think you will find anyone there who is a Parsi.

On Religion…

Tatas don’t necessarily support any religion or religious activity. Tatas will never give to a Hindu temple trust or a Muslim madrasah, and, for that matter, they will not give to a Parsi Agiary also. But they will certainly give for cultural purposes. If there is a cultural heritage to be preserved, the Tata’s trusts will support that.

TISCO and Society…

As far as TISCO is concerned, it is an institution. Apart from what the Tata trusts do, TISCO itself supports a lot of activities that are truly of a social nature. We also do not support any political party or individual, which we have made very clear in the past. But, if there are any social causes like cleaning up cities, digging bore wells for water in arid regions during the summer, children’s hospitals or giving flood relief, building educational institutions, etc., any expenditure that is incurred for the benefit of the society at large rather than the benefit of any particular individual or party will be certainly supported.

Tatas can afford to say no to corruption. Can others?

Don’t forget, for every hand that takes, there is one that gives. The Tatas, also, started somewhere sometime, and I think somewhere somebody has to start saying no, too. In our business world itself, there are many houses in the South that have an excellent record for integrity. People must not look at ‘paying one’s way through’ as a shortcut. Ultimately, I can assure you, it will turn out to be a very tedious and long journey. Because, everywhere you go, somebody expects you to pay. But, when you have a reputation of not paying in the first place, your journey is much shorter and much smoother. Although, we have also suffered by not paying—sometimes sanctions not being given and so on—if you take the overall balance, we have gained much more, both from society as well as from those who want to extract. Because, in a large number of states including Bihar, people know that we just won’t pay, so they just don’t ask. And if they don’t ask, things get done much faster. There are many states where one is advised not to go to just before an election. The reason being ministers and bureaucrats may refuse to meet fearing that people have come with inducements. As far as Tatas are concerned, even if you go one week before the election they will let you in because there is no suggestion of inducement whatsoever. I have personally experienced this many times.

UK days…

I had 10 years in the UK from the age of 20 to 30. Those were, in many ways, my formative years, and I enjoyed Britain. I even voted in their election and still draw a small pension! I also had an offer to apply for British citizenship.

India was not what it is today, then. Post-war London, a vibrant city, you in your 20s—how come you were not interested in staying on?

I had seen England in the 50s also as a student—a bombed out place. In 50-51, everything was rationed, the eggs, chocolates...By the time I went to university in 58, it had recovered, and it was a free society. I never really felt tempted because I always knew that I would come back home.

On being knighted…

I received the knighthood for having helped in British-Indo relationships. In 92-93 when I was the President of CII (Confederation of Indian Industry), John Major visited India. As you know, he is very fond of cricket, and he always talked in terms of cricket. So, I, knowing a little bit of cricket, said that the business relationships between India and the UK were going down year by year. This was just after the liberalisation process had set in. I said that from the position of opening batsman–along with the US–the UK had fallen down the order to 5th or 6th—middle order batting—and if not careful, it may be out of the team totally! After being around India for a few days, John Major said that he liked the wicket very much and added, “I would like to promote myself in the batting order, so how do you propose we do that?” We agreed to forge some form of Indo-British partnership, which was formed in 92-93, and I was asked to lead it from the Indian end. We worked for 3-4 years and put the relationship on an ascending path.

JJ Irani Committee…

I have been one of the most vocal critics of the outdated company law. And when the government decided to have a more modern, up with the times law, in their wisdom or maybe lack of it, they decided to make me the chairman of this committee. The committee was full of experts, and I was the only non-expert! I think my job was to ensure that a balanced and judicious view is taken of all the various facets that were there. There were 900 clauses in the old law: we have reduced them to 290. So, the main objective was to simplify it. We submitted our report on time in May 2005, and the report is being drafted into law. The committee, which was constituted, is now dissolved as the report has been submitted. Now, we have been recalled just to see how our thoughts and our recommendations have been interpreted into law.

Main recommendations…

Our aim was to bring the Company Law into sync with the times and globalisation. When it was last formulated in 1956, there was no software, no e-business, no information technology. We are trying to bring everything now into the modern world—where boards become relevant, shareholders become even more relevant, and the government becomes irrelevant. I must add that the bureaucrats in the Ministry of Company Affairs have been most cooperative and, in fact, supportive. They are prepared to give the power back to the shareholders—where it should belong. Our main job was to say that the company must be run by its shareholders as represented through its board of directors. And the government should have the least to do with it. No keeping on going to the government for sanctions, clearances, etc. This is one aspect. The other aspect is speed. Just now, to liquidate a company in India takes 20 years on average. We have recommended that it should be at maximum 2 years.

One Man Company

Essentially to promote entrepreneurship, we have recommended a one man company. This has been accepted.

Director’s Remuneration

No limit: Go back to the shareholders; no going back to the government.

Pyramidal Structures

We started with the presumption—this was, incidentally, immediately after the Ketan Parekh episode—that we should not have such holdings. Then we realised that if we are going to go out into the world, subsidiaries must be allowed to have subsidiaries also. So, in a way, we would be handcuffing ourselves in the outside world. In India, though, it might be possible to do it with a little bit of restriction or a little bit of inconvenience. But, certainly in the international world, our businesses would suffer if we didn’t have the facility for pyramidal structures. Although, with more authority to corporates, the responsibilities that devolve around them are of accountability, transparency, disclosure and so on. Ways and means need to be found to get people to disclose; and then there is the matter of penalty for those who don’t. Also, those who abide should be encouraged and properly treated. The road is there...