Salzburg Global Forum on Finance in a Changing World » Overview

INTERVIEW

Bharat Doshi – "In changing and turbulent times, life is all about awareness, anticipation and agility”

Chairman of Mahindra Intertrade discusses regulatory economic shackles and corporate governance in India pre- and post-liberalization and his positive memories of Salzburg Global

Bharat Doshi speaking at one of the plenaries during the third session on corporate governance.

Bharat Doshi speaking at one of the plenaries during the third session on corporate governance.

Mirva Villa | 24.10.2017

Having initially worked in a period of strict government economic regulation before experiencing the freedom of competitive markets, Bharat Doshi, chairman of Mahindra Intertrade, has witnessed freedom for business and corporate governance develop in India through changing times.

“Life is all about awareness, anticipation and agility,” said Doshi, speaking to Salzburg Global at Session 582 – The Courageous Director: Can Corporations Better Serve People, Planet, and Profit? This mantra, one which emits a certain air of expertise, is something which Doshi appears to have followed closely.

One look at Doshi’s resume reveals the extent of experience he has amassed and the recognition he’s received along the way. Doshi worked for over 40 years for the Mahindra Group, reputed for its high standards of ethics and values, engaged in the manufacture and provision of products and services including automobiles, farm tractors, IT services, financial services, and holiday timeshare resorts. He served as the executive director and group chief financial officer of Mahindra & Mahindra Limited, the parent company, for 21 years and one year as president of Bombay Chamber of Commerce and Industry. In 2016, he was nominated by the government of India as a director on the central board of the Reserve Bank of India.

At Salzburg Global, Doshi was one was one of 40 corporate leaders and executives from around the world brought together to draw on their internationally diverse business, legal and academic backgrounds and reflect on the challenges facing corporate governance.

In the first 18 years of Doshi’s career, the government in India had a large control over the industrial environment. Licenses were not only needed for the location of the company but were also required to specify how much of a product would be produced and what kind of product it would be.

Doshi said, “Somebody in the government would do supply and demand analysis  and would look at how many players are in the field and decide, ‘Okay, you’re a car company, but you can only manufacture 4-Wheel Drive Utility Vehicles, or you can manufacture only trucks, and you will do no more than 20,000 Vehicles. This was often described as “Licence Raj”.”

For Doshi and others, grabbing a briefcase and taking a trip to Delhi to obtain approval for business plans was a frequent occurrence. This continued even in the eighties when regulations were relaxed for minimum economic size and for the production of exports. In 1991, however, significant economic reforms were launched in India. Industrial licensing was abolished with a strike of a pen and rules on concentration of economic power were relaxed, “liberalizing the whole economic scenario”.

“This was a major change and thereafter we were free to operate, collaborate and proceed with plans that made economic sense,” said Doshi.

From a corporate governance perspective, during the strict licensing period pre 1991, some of the industrial corporations demonstrated undesirable skills to “manage” the government, according to Doshi. This changed completely in the competitive markets post liberalization and benefitted companies like the Mahindra Group which believed in its core values. He added that India, now, despite the competitive market environment, has sufficient labor laws and sufficient mechanisms to encourage social responsibility. For example, the amended Company Law has a new clause on corporate social responsibility, which came into effect in 2014, requiring companies in India to spend at least two percent of their profits on social development monitored under the principle of 'comply or explain'. The law has been criticized by some but the spend for social and environmental causes of the private sector did increase in the two years after its introduction.

In addition to this measure, there are also requirements in place for 50 percent of the company board to be independent – if the chairman is independent, a third will suffice. Doshi sees this measure as a good thing and a sign that the business culture is becoming more transparent. “I believe getting different and external viewpoints on the table improves governance,” said Doshi. On the subject of increase in the level of disclosures in annual reports, Doshi commented that requirement of disclosures leads to discussion and therefore a conversation, which by itself has its merits.  He however cautioned against voluminous disclosures which become ‘weapons of mass distraction’ and may be undesirable.

To stay competitive in a global market, a business director has to adapt with the times and have the courage to change from what they’re familiar with. While it is important to refine practices, Doshi said it is important for professionals to know their core values – values which they won’t give up under any circumstances.

“I learnt in my career that you should be agile, you should be flexible, but your set of values are like the North Star. They should remain steadfast,” said Doshi.

Many participants at this year’s Salzburg Global Forum on Corporate Governance were making their first trip to Schloss Leopoldskron. Doshi, on the other hand, was retracing his steps and following a path trodden twice before.

Doshi had a “wonderful experience” in 2000 as a participant of Session 384 – Asian Economies: Regional and Global Relationship. He said, “I still have a few friends from that group of 30 with whom I am in regular touch with, and that bond and sharing memories also makes a difference.”

In 2015, he made his second visit, attending Salzburg Global’s first session on corporate governance. What makes him keep coming back?

“Salzburg Global Seminar is where your mind is free from your day-to-day world and you are able to concentrate your thoughts on a defined topic, you are able to understand and appreciate global practices and above all, you are able to evolve in your own mind the principles and the theory behind the topic you are discussing.”


Bharat Doshi attended The Salzburg Global program The Courageous Director: Can Corporations Better Serve People, Planet, and Profit?, which is part of the multi-year series, the Salzburg Global Forum on Corporate Governance. The session is being supported by Shearman & Sterling LLP, BNY Mellon, UBS, Barclays, CLP Group, Goldman Sachs, and Teledyne Technologies. More information on the session can be found here.

24.10.2017 Category: FINANCE, JUSTICE, SALZBURG IN THE WORLD, SALZBURG UPDATES
Mirva Villa