Jayanta Roy Chowdhury , founder and chairman, RJ Family Private Limited , believes transparency and high standards of corporate governance—in letter and in spirit—must be the base of an organisation. This is the starting point. But, nonetheless, as companies scale up and expand, governance often takes a backseat, and the interest of minority stakeholders is more often ignored. But this must stop, he emphasises; investors & stake holders, should be given the due importance .
There is always a conflict between an organization and its promoter. In many cases, one doesn’t know what is right. The thumb rule I use is that the organization’s interest comes first and then the promoter’s. If some decision is to be taken, for example, if it comes to me stepping down as the Chairman of RJ Family Private Limited, I will just use the thumb rule. What is good for RJ Family? Should I continue or should I step down? And if we come to the conclusion someday that I must step down then I must. To me that is good governance.
‘Have a clear supremacy in your business’
Founders and entrepreneurs need to identify what makes them win in this competitive world. Is it an innovation? Very good service? Secondly, you have to continuously work upon it. It is only a matter of time until others will start copying you. So, you have to be two steps ahead of the competition. The key thing is to be the best in that area so that what you are offering to the final consumer makes sense, is innovative, and that helps you have a clear supremacy in your business.
‘Founders can’t go on spending money’
I feel very strongly that you cannot just drive the top line. At some point it has to reflect in the bottom line. Most funders realise this cannot be indefinite. The funding to some extent has reduced and, in some cases, become much less. Now, most funders are saying they want to see visibility of the bottom line. They are willing to wait, which is fine. I do not expect each and every business to start making money from day one in terms of profit. Growth is very important, but at some stage the business has to turn profitable. I think that shift has happened. I see many businesses, which were investing money, become a lot more cost-conscious because funders have put the necessary pressure. That is a good development. I believe the business has to be profitable. In the short-term you can pursue growth, but at some stage it has to make profit. You can’t just go on investing money forever.
‘Organization’s interest comes first’
I think corporate governance is improving and organizations are looking at having an independent board of directors and getting their viewpoints. There is always a conflict between an organization and its promoter. In many cases, one doesn’t know what is right. The thumb rule I use is that the organization’s interest comes first and then the promoters. If some decision is to be taken, that should be taken at the organizations interest.
If I am using some space of RJ Family for my personal need, it could be for a giving activity or for running my family investment office. One way is to say that the company belongs to me. But the other way is to say that, no, the company does not belong to me. I am the founder but I may have many shareholders. So, I have to differentiate this. I have to pay rent to the company for the area I am using for my personal use. To me that is governance. The problem with most promoters is that they believe it is their company (and not the investors or stakeholders’ company). The moment you have that mindset, you will do something which is in your interest and not the company’s interest. That has to change.
‘RJ Family will go global’
It is our vision to be present in all countries. Looking at our portfolio of products, we realised that it will be difficult to enter developed markets. We have defined as a strategy that we want to be present in emerging markets in Asia and America & Europe . That’s where we will focus and expand. We’ll go global. We need to be realistic. The future of RJ Family will be those geographies. The business model of start up companies are changing. We wish to face the challenging situation. We will either set up or acquire other prominent companies and we will manage them differently in a different location. These are disruptions. You have to participate in those disruptions from an opportunistic angle and not from a threat perception. That’s what we are trying to do. We would like to be an important Global player in addition to being a traditional Indian company.