The Beautiful Fabric – Govt & Businesses

Anil Agarwal of Vedanta Resources Plc (Image: The Hindu Businessline)
Anil Agarwal of Vedanta Resources Plc (Image: The Hindu Businessline)

With waters getting polluted, small and big fishes are affected equally. Perhaps in proportion to their size. It appears quite similar in business as well, where a stifling, unsupportive and corrupt operating environment of a country affects its own potential as well the businesses operating in that country. Last week I wrote of how we could improve our chances as a small Indian company in Sri Lanka if we can also find a supportive Indian government. I spent the entire morning reading this interesting and refreshingly candid interview with Vedanta’s Anil Agarwal. He notes that “the structure of our public sector is a beautiful fabric. We must have 250 to 300 huge private sectors.” What follows next is in my opinion a very progressive view which is also not so common among Indian business leaders. He says,

Government may divest, but why divest to the industrialists? It can divest 51% in the market and let the shareholder drive the company. We have intellectual CEOs. They will come in as CEO, take quarter or 1% in stock options, and will make it a world-class company and these 250 companies have the potential.

During our undergraduate years, a bunch of us frequently discussed his audacious business moves, his company’s acquisitions (and 13 of them in 10 years!) and his rise from a scrap merchant to a formidable natural resources mining and processing giant. Ambition at this scale is our generation’s weak point. In this generation we see safer dreams. These dreams are laden with dotcom gentleness and a certainty that they can always manage a good ‘valuation’ at the end of 2-3 years even when the company would not even produce an ounce worth of real value. The targets are always about getting ‘covered’ by the magazines and leading websites. Without scorn, I find that this has moved the new breed of entrepreneurs in India away from raising some hardcore, value creating businesses which have the potential of reinforcing core sectors of the economy without which the service led growth can do practically nothing. Several of these well performing managers, engineers and professionals occupying the Indian and global boardrooms were kids of parents who worked in several public sector enterprises in the numerous nondescript towns of the country – Bhilai, Raipur, Rourkela, Durgapur, Ranchi, Vizag, Salem… the list is endless. Yet what we now see is that right from the parents to the working kids themselves loathing public sector as a career option. They have their reasons in place. And this is not unidirectional. The problem is on both the fronts.

Anil Agarwal to us at the company has made a lot of sense. This is of course to those who have cared to listen to him beyond the usual allegation of Vendanta’s apparently exploitative business moves which many dub as criminal neglect of indigenous people’s rights in states like Odisha. The other side of the coin are these views, which should be noticed with equal keenness as those reports which vilify mining and natural resources extraction. On this he adds,

I am against illegal mining but the legitimate businesses have to go on. As far as iron ore is concerned, I really felt bad when Goa mining was banned and with what happened in Karnataka. The Supreme Court gave the order six months back but we are still going from table to table. The entire economy of the area and 7,000-8,000 people are just sitting idle and waiting for the mine to open.

The collapse of mining towns like Bellary are well documented by several magazines and activists groups, but with an intention of it being a trophy article for the respective magazine. What is ignored is that the situation is as observed because mining is a legitimate enterprise and that businesses must be extended proactive support in terms of clearances and licenses from the government. Agarwal’s thoughts on working with the government are pretty much the same that have driven us at our company in the past five years i.e. align oneself according to what the government wants and keep giving suggestions as you go along doing your business. In our work we have followed it. We have picked up contracts with state governments, followed them through and tried improving their processes wherever we got an opportunity. This we find is a constructive approach than going out in a direction which refuses to acknowledge the reality of the presence and role of governments. That is naivete.

The larger observation that is being driven here is about seeing government not as those sitting across the table with sanctioning powers to bring upon. As Agarwal says and we reasoned earlier, “we have to sit on the same side of the table.” What follows is also the reason I have often cited for why there isn’t any difference between a “business” and a “social enterprise” and that businesses are social anyway. Agarwal puts it assertively,

It is very important because we (business) create the value, we crate the revenue, we pay huge taxes, and we create employment on a large scale. It is important that we all sit together.

So, just as it is for the big fish, so it is for the smaller, that, we are in the same waters. What affects us, is also echoed by one of the largest Indian corporation. That for us is an affirmation.


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