Mervyn E. King is the Chairman of South Africa's King Committee of Corporate Governance. A former judge of the Supreme Court of South Africa (he resigned in 1980, when he was 41), he has served on the board of several companies and is now chairman of investment bank Brait. King, who was in Mumbai to speak at a seminar on corporate governance, met with BT's Dipayan Baishya. Excerpts:

Isn't it too much to ask the members of the board to monitor social responsibility?

A good corporate citizen can improve its image, motivate its employees, raise capital cheap, and make its business more sustainable. What I am advocating is not a moral crusade, it's good business.

Who is more important to a company, shareholder or stakeholder?

Neither. When you are appointed as a director, your duty is to act in the best interest of the company. The company is a person aside from the shareholders, the employees, the community, and the suppliers.

A recent report on corporate governance in India suggested that independent directors of a company go back to school and get themselves accredited? Are we taking corporate governance too far?

Taking it too far in my judgment. Don't do it, that's my suggestion.

Is your life dominated by an obsession with regulation?

Never. I believe in enterprise. I believe in young people with drive, vision, and ambition, and I enjoy working with them. I don't believe in an overregulated society.

What's your cricketing connection?

I served on the Transvaal Cricket Board and also on the disciplinary committee of United Cricket Board of South Africa; I used to chair it.

And advertising?

I am the President of Advertising Standards Authority in South Africa. Advertising is very much like good governance. It involves accountability, transparency, honesty, decency, and trust.

Cricket, advertising and corporate governance: what's the common thread running through them?

Everything is about human activity. A corporation is a collection of human beings after all.

SELF WORTH
SEBI's Tough Face
Part cop, part missionary, that's G.N. Bajpai.

SEBI's G.N. Bajpai: The tough-guy image suits him

Even his most die-hard detractors will have to admit that Securities and Exchange Board of India (SEBI) Chairman G.N. Bajpai's latest salvo on ethics stamps his credentials as a stockmarket reformer. Even as the Department of Company Affairs was considering diluting some of the more stringent provisions of the Companies (Amendment) Bill, 2003, SEBI directed stock exchanges to amend Clause 49 in their listing agreements with companies to enforce, you guessed it, the very same provisions. Thus, in the next seven months, all listed companies will have to reconstitute their boards to induct more independent directors.

Earlier, when SEBI unearthed a large dabba trading operation (See Dabba Trading 101, BT, August 17, 2003), the regulator lost no time in barring the mastermind behind it, P.K. Bansal from trading.

In his 19 months in office, Bajpai has issued 651 orders, an average of two a day, and personally sat in on 600-700 hearings. One reason for Bajpai's success could be his people-savvy management style. The man, after all, was once chief flak catcher for the Life Insurance Corporation of India, an organisation he went on to head. Soon after taking over, he practised tea-and-biscuits diplomacy with industry leaders, editors, and investor grievances fora. And with the markets in a bull phase, he recently met up with the heads of some media organisations, reportedly to warn them about playing right into the hands of market operators. This magazine has always been critical of SEBI chairmen, and with good reason. There's still work to be done, but we must admit: Mr Bajpai is off to a start.

-Roshni Jayakar

REPORTER'S DIARY
The Network Effect
An online community believes.

Rajesh Khanna (L) and Krishna Unni : 6-degrees-believers

Perish the thought that the gathering of 50-odd-from-Mumbai-and-environs members of e-group Ryze is a fallback to the not-too-long-gone era of dotcom excesses. Ryze is-yes, we thought so-a global online community with some 30,000 members across the globe. But it isn't about dotcoms. Instead, Ryzers, as members call themselves, believe that the community can help them find the one person out there who can help them. With what? Well, soundboard an idea or sell it, facilitate access to knowledge, capital, or customers, or, simply, provide an emotional and ideological support system to one-person enterprises that, so their promoters believe, boast the potential to become the next big thing.

Ryzers meet offline every now and then. The meeting this writer attended happened in late August in Mumbai. There's another scheduled for end-September in Mumbai. The concerns-we've enumerated some of them above-remain pretty much the same wherever you go in the world. If I had any doubts about the excess-thing, the venue of the meet, Hotel Park View, Andheri, the entry fee (Rs 100), and the short-eats on offer, samosas and chutney sandwiches, dispelled them.

So, who did I meet? A clutch of designers running independent design shops (with fancy names such as Idizyn Studio, Visual Trance, Scrabble Media, and more in the same vein) that work on projects for overseas customers. "We easily bag jobs overseas, but local companies are hung up on qualifications," rues one designer, Bhooshan, claiming (this, after I exchange cards with him), that the India Today Group of which Business Today is a part, rejected his CV because he has a diploma in commercial art, not a degree. Time to move on.

Then there's a former colleague from another world who has become a public-figure-of-sorts after a death-defying stunt-she drove a car off a ramp at 100 MPH-in Australia for AXN's Who Dares Win. Sharmila (that's her name) says she was recently approached by a local production house that wanted to do a similar show in India, at as little expense as possible, never mind the safety of participants. "I told them to stick to their saas-bahu stuff." Time to move on again.

Then, there's a former executive from a leading TV channel who now runs her own TV outfit, Cogito. "I had to personally sack over 100 people where I worked earlier," she shudders. "I've never experience(d) anything more traumatic; 'employ'-that's not the word." This, in response to a question from me on how many people Cogito employs.

Did I meet anyone who could have helped me move up the chain? Ryzers, after all, believe in the theory, first propounded by psychologist Stanley Milgram in 1967, that there are six intermediaries on an average between any two people on this planet. Krishna Unni, one of the Ryzers behind the event, says the secret of success lies in locating the six between you and the people who can help you, or the most powerful people in the world. Well, I didn't find any such, but it was still fun.

-Priya Srinivasan

A Coffee-Chain In Hot Water
A messy changeover, turf battles, and losses. Things just got worse for Barista.

A Barista outlet: Central Perk minus the perk? We hope not

The three-year-old Barista Coffee Company (bcc), the flag-bearer of India's café culture, is fast becoming a case study in Murphy's Law. As reported in this magazine (See Storm In The Barista Cup, Business Today, June 22, 2003), Barista's high-profile Managing Director Ravi Deol quit in May 2003, ostensibly to follow his heart. However, BT learns that Deol's contract wasn't renewed: he apparently exceeded his brief and made several strategic blunders.

One senior manager-he is one of four comprising the heads of operations, finance, global business, and quality who quit recently; the other version floating around is that they were asked to leave-claims their departure, and Deol's before that, is just a case of professional managers being caught in the crossfire between shareholders. For the record, Turner Morrison's Amit Judge has the majority stake in Barista and Tata Coffee holds 34.32 per cent of the equity.

The past 13 months have been bad for bcc. In August 2002, it increased prices by 15-20 per cent, a decision that was reversed in April 2003, in light of falling sales. Later in 2002, Barista decided to move to a franchising model to cut capital expenditure; now, this is on go-slow mode. "When your own stores are making losses, how can you convince franchisees to put in money," argues a former employee. The much-talked-about expansion into Sri Lanka, Dubai, and Kuwait is, again, in a go-slow mode. "Knee-jerk reactions such as cutting down on-store repair and maintenance costs, top-management salaries (a 30 per cent reduction between November 2002 and March 2003), and delayed payments to vendors have already started hurting consumer experience," says another former employee.

Yogesh Samat, the coo and the man in the hot seat, admits that the company is paying the price of growing too fast. "We are looking at closing down the grossly under-performing stores," he says. "This is the correction phase." Just how many stores fall under his definition of "grossly underperforming''? Samat wouldn't reveal, but BT learns that out of the 130-something stores, close to 40 make huge losses and another 10-20 barely break-even. Just how fast Barista grew is evident from the fact that it added 45 new stores in the 12 months between August 2002 and August 2003. "Sales per month from operations have stagnated at Rs 4 crore," claims a former senior executive. "Between January and July 2003, footfalls have increased 45 per cent (at our stores)," counters Samat. "Even revenues are higher.''

It wasn't that the company-BT learns it lost Rs 12 crore on Rs 52 crore of revenues in 2002-03- wasn't aware of the extent of its problems. An early 2003 report suggested closing down 25 to 30 stores. Ultimately, however, only three were shut. That's because, claims a former exec, Tata Coffee wished to up its stake to over 50 per cent and ''Judge saw a direct correlation between the number of stores and the valuation he could get". The negotiations failed to result in a deal.

"The business needs Rs 20 crore immediately," claims a former employee but Samat says that "funds aren't an issue; recently, the shareholders invested more money in the business". Samat is unwilling to talk numbers, but what's evident is that the Tata Group is, for the first time, involved in the operations of the company. Two of its appointees, Pratim Banerjee and K. Venkatramanan, have recently taken over as the heads of marketing and finance. Samat insists that the "Tata's interest is purely strategic" and says that Barista is "moving from a personality-driven business to one based on corporate ethos; the business will sort itself out in three to six months". For the sake of the million-plus customers who frequent Barista's cafes every month, we sure hope so.

-Shailesh Dobhal