Conversation with Bharat Vasani Tata Chief Legal and Group General Counsel

Bharat Vasani, one of the most experienced General Counsels in India, advises the top management team of India’s largest conglomerate, Tata Group. Bharat Vasani has more than 30 years of experience and having been an in-house counsel throughout his career, he is in the unique position of having seen the sector evolve from its early obscurity into the important position it commands today. He is the first General Counsel at Tata Group and has been with Group for more than 12 years now..Bar & Bench’s Pallavi Saluja spoke to Bharat Vasani on initial years of his career, his experience working at Tata, challenges he faces in his role, evolving role of GCs and differences between the role of a lawyer in a law firm and an in-house counsel. In this Interview, Bharat also shares his thoughts on liberalization of the Indian legal market, investor sentiments currently for the Indian market and the changes needed in Indian legal system..Bar & Bench: You have been in the profession for more than 30 years. What made you choose law as a career?.Bharat Vasani: I must tell you that I did both company secretaryship and law. In the beginning, I had not decided whether I wanted to be a hard-core lawyer or wanted to be a corporate executive (as a corporate secretary) with a legal background. But within a couple of years, it was very clear to me that my skills lie in hard-core corporate legal function and I would not like to be just a corporate secretary. I stood first in India in the company secretary exam and also got a first class in Bombay University’s law exam. I started my career with Phillips India as a law officer..Bar & Bench: Initial years of your career. How did Tata happen?.Bharat Vasani: After working with Phillips India as a law officer, I moved to NOCIL where I worked for 15 years. I joined NOCIL at middle management level and when I left, I was the departmental head (Chief Lawyer) for the group. Then, I worked for an American multinational Dow Chemical International for about 4 years. While I was still working at Dow Chemicals, I got these feelers from Tata that they were looking for a General Counsel role for the first time for the entire group and asked me if I would be interested. The kind of job description, which some of the senior Tata Directors gave, fascinated me a lot (not the monetary issue but the profile itself). I was told that the Tata group plans to go international and become an Indian multinational. They said there would be lot of M&A transactions, which all turned out to be true..I had almost five rounds of interview with them. Initially, they were also in a dilemma as to whether such a young boy would be able to manage the legal functions of such a large group and I was in a dilemma too as to whether I was making the right decision as I was already working for very high profile American company..But the profile really fascinated me and I was looking for a larger role. So, I accepted it and joined the Tatas on December 1, 2000..Bar & Bench: What were the initial years at Tata like? .Bharat Vasani: First, when I joined Tata, I was a little taken aback because Dow Chemicals was a paperless office unlike Tata. Also, the Tata headquarters at Bombay House is a more subdued office with elderly people and I was quite young at that time. I was 42 and, I didn’t know what I would face in terms of issues and challenges..As soon as I started my career with Tata and before I could even settle down there was a massive Tata Finance fraud in 2001. We had the problem of a rogue managing director who had swindled money of the company and I was asked by Mr. Tata to investigate as a chief investigating officer with a team of people. That was a very fascinating experience. Before I could get into M&A, I started with a criminal investigation! That’s what I have realized over the last three decades: if you are an in-house lawyer, the kind of talents which are demanded from you are very multifarious while in a law firm you can afford to be a competition lawyer or a M&A lawyer or a private equity lawyer, or a securities lawyer. In an in-house role you have to be very versatile..For example the job which I am currently handling, I need to have a fairly sound understanding of the mother document i.e. Constitution of India, because we keep on challenging government actions. I need to be updated on entire gamut of corporate law, whether it is the Company Act or SEBI Regulations or Takeover Code or the FDI policy or the Competition Law, in fact criminal law also. I do a lot of criminal and civil litigation, constitutional writs etc. So it’s a huge challenge..Bar & Bench: You have been with Tata Group for 12 years. How has the experience been so far? Also, what are the challenges that you face in your role as the Group General Counsel?.Bharat Vasani: It has been a very exciting journey so far. We have done almost 36 major cross border deals and a large number of Indian deals. Every minute of my time is a different experience. I start at 9 o’clock in the morning and at first I may be discussing the Insecticide Act issues with lawyers from Rallis India, and within next 15 minutes I may be discussing the 2G issues and the policy regarding the spectrum pricing and then twenty minutes later I may be discussing a M&A transaction and issues under the Takeover Code and half an hour later there is a Competition law issue. So, it’s very exciting..The legal and regulatory environment in India in the last ten years has become extremely complex. Every week I carry large amount of papers for reading while in the car and also on the weekends. I think if you don’t read for 15 days, you are out of touch so it becomes very challenging. I travel extensively outside India and when you come back you realize that you have lost out on all the critical developments in India. SEBI would have come out with 3 new circulars, the Competition Commission would have come out with something, and the Ministry of Corporate Affairs would have issued some clarifications. So catching up with those changes and managing your information is very challenging. There is an information overflow. Fortunately, I have a team, which puts the relevant detail together so I can focus only on the relevant parts. It’s a very challenging task, finding time to ensure that you are completely up to date as your credibility is as good as your last email. I am telling you in this profession your credibility is as good as your last legal opinion. Your past track record can be washed out within no time, if you give wrong advice. Everything depends on your integrity and your credibility, people lose confidence in you, if they find that Bharat is bit out of touch or he is not up to the speed on issues..The other perspective, which I want to tell you about is the difference in the role of an in-house lawyer vis a vis an external lawyer. The external lawyer who is advising the company need not understand the business nuances of the clients too much. You come for specific opinion on say Section 372A of the Company Act and the lawyer examines the relevant provisions and gives the opinion. While as an in-house lawyer when you are doing distributorship arrangements and negotiating joint ventures, your understanding of business nuances is extremely critical. Business people will not trust you unless they get a comfort that you understand their business perspective. In my case I need to understand varied kind of business. The Tata’s are virtually everywhere. We are more like the GE of India in terms of what we call from salt to software. Tata Chemicals manufactures common salt and TCS is the largest software company. So it’s a very wide range of businesses and you are required to keep an eye on it all. If there are no rains I am worried whether my pesticides will sell. I am also on board of Tata Sky, if there is too much of rain my signals will go away. Telecom has a different set of challenges in India. So understanding business nuances is a very critical distinction..Another huge challenge is that in the market when you hunt for talent, what I find is that you get a very narrow specialist. People would apply saying, “I want to only be an IPR lawyer”, or “I want to only be a competition lawyer”. In an in-house function, the way the businesses are structured you can’t afford to be a very narrow specialist. I can do M&A financing; I can negotiate joint venture agreements. You need to have people who are versatile and capable of doing multifarious activities; that is the biggest challenge. I can’t even hire from the law firms because invariably people from law firms are getting very specialized in India, particularly the large firms which have come up. So I don’t need that kind of talent..One task, which I find is becoming very important for me in my role, is handling people issues, people skills,.and managing people and their personalities. Corporate India has its own senior executives and they have their own egos and their own personalities and you have to manage a large in-house department. The biggest challenge I find is managing different people, keeping them continuously motivated with high quality work and feed them with intellectual inputs, because the corporates can never afford to pay the remuneration, which law firms pay. So we need to retain this talent within in-house by giving them that quality of work, which they can’t get with the law firms..Also, we lawyers are very good solo workers. There may be a very bright counsel arguing a number of cases in the Supreme Court but would like to work alone. While, when you are working for a corporate there are large M&A transactions and there may be a 100 lawyers working together on a transaction at one point of time. So, you need to work as a team and working as a cohesive group is a big challenge..I spend about 30 to 40 per cent of my time on these issues. .Bar & Bench: We believe that you were the first General counsel at Tata Group. How has this role of General Counsel evolved over the years?.Bharat Vasani: I would like to believe that. There was nobody at that time. There were in-house lawyers. But I will tell you how the profession of General Counsel has evolved. I started my career way back in 1979–80 when the in-house lawyer was one small thick-glassed law officer essentially looking at property documents, coordinating the litigation between the external lawyers and the internal business people. He just acted as a postman taking the problem to a big law firm (like Crawford Bayley in Bombay). The in-house lawyer was more of an intermediary, collecting the facts from the business people and getting an opinion from external lawyers. Since India had not liberalized, business transactions were more focused on what I would say property litigations, civil litigations, criminal litigation and not so much on M&A, private equities, FIIs etc..The entire landscape completely changed once we started liberalizing particularly post-2000. The Indian corporates started growing and not only that, the FEMA regulations permitted Indian corporates to go abroad and invest which was never possible before and that too in most cases without government approval on an automatic basis. Even the inward investment got significantly liberalized because they were duly permitted 100% FDI in most sectors, except very few select sectors..So the entire complexion changed and then the corporates started realizing that they need a person who is trustworthy, who is available all the time, who quickly understands their needs and things are kept confidential. So may be that was the reason one fine day I got a call from the Tata group saying they are looking for one such person, and if I would like to join them..I would obviously like to believe that it worked out well for both Tata group and me. I am very happy with the group and they have given me a very challenging role..So, the role of the General Counsel has changed dramatically. I would say a General Counsel is an integral part of the top management team. He is key advisor in the decision-making process unlike in the past where he was considered as a necessary evil required to take care of litigation. Now, the General Counsel is involved in structuring of transactions, negotiating the transactions etc. He is like a public face of the group in many ways..Bar & Bench: Can you share with us your current responsibilities as a GGC? Also, what is your role in the legal function of the Tata Group?.Bharat Vasani: I, as Group General Counsel have a much larger role and I don’t get involved in the operational issues of the company. I get involved in all policy issues at a group level, which I communicate, to all the operational legal heads of various Tata companies. All group level strategic issues and large M&A transactions I get involved. I am also involved in high profile litigations that are currently going in the Supreme Court, which I directly deal with Mr. Harish Salve and others. I also take care of the issues relating to corporate governance in the group. I also get involved in issues relating to negotiating major JVs, major capital raising program. It’s a fairly exciting job..My job involves a huge amount of travel both domestic and international. There is a significant amount of interface with the legal community both in India and abroad. It’s a very taxing job. I work about 14 to 15 hours a day, which has been continuous for the last several years, and it’s not only me, all my colleagues work like this. Unlike in the past, where people accepted the in-house role to take up a lighter job so they can take care of family etc it has completely changed now. Also, the disconnect which many people still have is that if you join a law firm, it’s a very demanding job compared to an in-house job, but I think it is just the opposite..Bar & Bench: Can you tell us about the legal department at Tata Group – in terms of size; structure; kind of work profile etc.?.Bharat Vasani: Most of the large Tata companies have their own legal team. For example, TCS has about. 71 lawyers, Tata Steel has about 40 lawyers, Tata Motors has 35 lawyers, and Tata Chemicals has 15 lawyers. So each major Tata Company has its own large team of lawyers to take care of the day-to-day issues..I sit at the apex level. Tata Sons is the holding company for the entire group and I am the Group General Counsel at the Tata Sons level. I advise the top management team of Tata, which sits at the corporate headquarters Bombay House, on all strategic and legal issues. I also act as a mentor to all the legal teams, across various companies. If there is a vacancy of a legal head in Tata Steel or in any other company, I would get involved in the selection of the successor..We are more than 400 lawyers in total and my own team in Bombay House, which is a central group team, has 11 lawyers, which helps me directly in my role..Bar & Bench: How do you differentiate between the role a lawyer working in a law firm and an in-house counsel? .Bharat Vasani: Both are very different roles. The difference is like chalk and cheese. Law firms act as externaladvisors and don’t really need to understand the business nuances. Legal advice is very specific and highly specialized. While an in-house lawyer needs to know and understand the business, he can’t afford to specialize and has to be very versatile..In-house lawyers have to work under high pressures and are accountable while a law firm can send an invoice even if the advice given is wrong. The maximum you will do is not use the law firm again but an in-house lawyer has to face the business people day in and day out and if they find out that legal advice has gotten them grief, he will lose his job..Bar & Bench: What factors do you take into consideration while appointing external legal advisors?.Bharat Vasani: Competence is the obvious factor. The other thing that we consider is whether they are suitable for a particular assignment. So, depending on the nature of the transaction, we make our choice. If it is a cross border transaction I have to obviously select a law firm from London or wherever the transaction is located. If it’s an India-centric transaction then of course we have preferred law firms with whom we have strategic relationship for years, which includes Amarchand, AZB etc. We also recently used Luthra & Luthra for the Starbucks transaction..The selection is purely based on what we believe would be the best for a particular type of transaction and we have a fair idea what is the in-house strength of those law firms..Bar & Bech: Do you consider smaller firms or boutique firms for Tata transactions?.Bharat Vasani: We definitely consider them. In fact, many Tata companies go to boutiques firms or specialist law firms. You cannot afford these big firms all the time. We have been extensively using the smaller firms also..Bar & Bench: What are your thoughts on the liberalization of the Indian legal market? .Bharat Vasani: I have always supported opening up of any sector of the economy whether it’s the legal profession or anything else. I believe it will do a lot of good to India in terms of enhancing the legal skills and the practice. I would like to believe that for young lawyers of India, it would be a great experience. Currently their choices are limited to Indian law firms. If international law firms come, they will also bring with them a lot of expertise and lot of international best practices. They spend a huge amount of money on IT and document management systems and they would bring with them that expertise. And obviously they will have to use Indian lawyers to advise on Indian law. I don’t know when will it open up, but I am all for opening up of the legal sector..Bar & Bench: Will the liberalization of the Indian legal sector have any perceptible impact on your choice of external counsel?.Bharat Vasani: Perhaps it may, perhaps it may not. It entirely depends on how things open up and what kind of expertise they bring. I find that London law firms are keener to come to India while US-based law firms have not expressed a significant desire so far..Bar & Bench: In terms of quality of client service and work product, do you think the Indian law firms can face competition from the international firms?.Bharat Vasani: Yes, they can. We are second to none. Some of the top corporate lawyers in India are second to none internationally. In fact, internationally one of the limitations they have is they are very narrowly specialized. It’s a kind of left nose right nose specialization. The arbitration lawyers don’t do litigation, litigation lawyers don’t do arbitration, M&A lawyers don’t do corporate advisory work, and corporate advisory lawyers don’t do M&A work. So, unlike India, where specialization is there but it’s not to such a miniscule extent. We have some of the finest brains in the country. The only thing is these international law firms have much larger financial resources so they may try to attract good talent from Indian law firms. They are very structured and organized and bring with them a lot of best international practices. One thing I have seen about these international firms is once they promise a particular document on a particular dead line, it’s always met..Bar & Bench: What are your thoughts on the merger control regime?.Bharat Vasani: As of now CCI has been clearing the proposals but most of the transactions, which have been filed with them are Form I transactions necessarily intra group kind of mergers. I am still of the view that at the current stage of the India’s economic development we have to be very flexible in this regard. We can’t adopt a very restrictive regime, where it takes several months to get a CCI clearance. I would like to re-emphasize that CCI has to align itself to the realities of the modern world. The entire world and the national economy is going through a down turn. We are on the verge of a deep recession and at that time if you block M&A transactions, it’s a cause for worry..I would also like to believe that for Form I, they should not be charging a Rs. 10 lakh filing fee, which they are currently charging. I am all for a more pragmatic balanced merger control regime, which looks at the fact that the Indian corporations are still small when compared to their counterparts in the west. In those economies, capitalism is being practiced for the last 300 years and we are just 20 years into this. So, size should not be a matter of big concern. I am of the view that the merger control regime should be administered very cleverly and wisely and the CCI should not act as a gatekeeper to stop the transaction. Its only in an extremely problematic cases where they genuinely feel that it is going to have a significant adverse effect on the competition in the relevant market, that they should get in. Otherwise they should allow the M&As to happen. It’s not a bad thing..Bar & Bench: Have you seen any impact on your transactions/Tata Group? .Bharat Vasani: Not so far. We have been able to get the clearance pretty fast..Bar & Bench: Your thoughts on the retrospective amendments and the proposed introduction of General Anti-Avoidance Rules (GAAR)..Bharat Vasani: I am not in favor of retrospective tax amendments. Every investor wants a predictable tax regime. They do not like uncertainty. Tell them that you will be taxed at 10%, 20% and they would prefer to pay the tax. But once you have won the battle at the Supreme Court level, it’s unfair to amend the law retrospectively and tell them “Sorry we will deny you the tax benefit.”.GAAR, the concept is fantastic but the practice….. I am not so sure. with the remarkable reputation of tax officers for their fairness, how it will be implemented. Let me tell you I travel quite a lot and I found that there is a lot of apprehension in the minds of international investors as to how the GAAR will be implemented..Bar & Bench: From being one of the most attractive investment destinations in emerging markets, India now seems to be losing its sheen as an attractive destination primarily due to regulatory uncertainty and policy gridlock. Foreign investors have become skeptical about India’s growth prospects. What are your thoughts as a leading Indian corporate?.Bharat Vasani: I would like to say that the perception is worst than reality. There is too much of media hype created by 24 x 7 news channel that everything has come to a grinding halt. I don’t think it’s so bad that there is a complete policy paralysis. You have to understand that this government doesn’t have the numbers in the Rajya Sabha so they can’t push through certain legislative reforms unless they have support from the opposition parties. Even the opposition parties have not behaved very pragmatically in supporting the right economic legislations. So many legislations are stuck but I believe now and I have reasons to believe that new laws like the Companies Bill 2011 and many of the other pending reforms will come through..Bar & Bench: Since you mentioned that you travel a lot, what are the investor sentiments currently for the Indian market?.Bharat Vasani: Currently, they are confused though they still believe that India has strong fundamentals. However, for a short term they are a bit worried about things that are happening in India including retrospective tax changes, GAAR, the slowdown of the economy, the GDP growth rate, inflation etc. So unfortunately there is a convergence of bad factors, which have come together at the same time. This has undoubtedly caused some amount of concern, but by and large they are waiting and watching the situation. Once things will stabilize, I am sure they will come back. See, we have a very strong educated middle class with a significant surplus of disposable income and they like to spend. So the demand, which is there in India for the kind of goods, which are produced in the world, is so high that nobody can afford to ignore India. We have arrived! It is just a question of the temporary bleep on the radar screen because of some of the things which all came together including the Supreme Court’s 2G judgment, the tax changes, GAAR etc.Bar & Bench: Do you think the decision of the Supreme Court cancelling 122 licenses has affected plans of foreign telecom companies coming to India?.Bharat Vasani: They are all concerned right now. They still believe that India is a great story to tell. The tele-density is still low in India though it has grown high in the last 10 years. Because of this uncertainty in policies, there is lot of concern amongst investors. There is a concern that reserve prices, which are currently being announced for the spectrum and what is being recommended by TRAI, are unrealistic..Bar & Bench: If you were to bring changes in our Indian legal system, what would those be?.Bharat Vasani: I can give you a list of things but judicial reforms is one of the most important factors. We have a very paradoxical situation that we have a hyper active higher judiciary. You can file a PIL and get a stay order and stop a large project, you can get 122 licenses cancelled etc. This is only for the elite. But the mainstream system of justice where the population is directly concerned is in complete chaos..Nothing gets decided for 20 -25 years. I am talking of the grass root judicial system at the district level and the Taluka level, the district courts, and the panchayats. Particularly, the criminal justice system is in a very bad shape. I think the earlier we wake up to this reality it will be better. We need to spend a huge amount of money to develop our judicial infrastructure, train the judges, increase their salaries, get better talent attracted to the Bench, which is currently at the Bar, and have better quality judges. I think you just cannot afford to have an inefficient mainstream system of justice where you file a suit in the Bombay High Court for recovery of money and it takes about 20 years for the court to decide the matter; it is just unacceptable in this modern world..Bar & Bench: What are your long-term plans and goals?.Bharat Vasani: I have played a long innings already. I would like to be known as one of the finest in-house lawyers India had. I would like to pursue excellence in terms of my skills where I should be regarded as second to none. My management should continuously find me a very useful resource. Most importantly, if I get a chance to transform some of the India’s legislations I would be very delighted to do it, because we deal with it on day to day basis and we know where the problems are. I wish I get that opportunity..Bar & Bench: With your busy schedule how do you unwind?.Bharat Vasani: Music! I am very fond of old Hindi film music. I have large collection of CDs and cassettes in my house. I know about 3,000 songs of the golden era (50’s, 60’s and 70’s). I sometimes relate some of the songs to corporate situations. I would say that’s my specialty. I can relate the song to a situation and it constantly keeps playing in my mind. And that gives me a lot of relaxation..I also like traveling and going for long walk with friends. I like going to the hills. But music is my biggest relaxation..Bar & Bench: Who has been your mentor? .Bharat Vasani: Well, I was very fortunate to have worked with bosses who were very exceptionally talented and capable which led to my being currently where I am..I get very inspired when I meet Harish Salve. He is an outstanding lawyer. It’s very inspirational to see the way his mind works on diverse issues. Janak Dwarkadas in Bombay is another amazing lawyer. Every interaction with him is a learning experience. So there are multiple people around me. Mr.Tata himself is a big inspiration, the way he goes about things, even at the age of 75 in terms of dealing with various situations..My juniors also inspire me.