'I am confident the SEBI code will be effective'

Age doesn't seem to encumber his zest to impart knowledge and to educate companies across the globe. At 71, Sir Adrian Cadbury travels from one country to another to attend seminars and give lectures on corporate governance, a subject he has mastered over the years.

Appointed by Margaret Thatcher, Sir Adrian was the man behind the code of corporate governance for companies in England. He retired as chairman of Cadbury Schweppes PLC, a position he had held for 24 years, in 1989. And since then, as part of his endeavour to spread awareness on the subject of corporate governance, has toured 27 countries around the world.

Sir Adrian -- a fourth generation Cadbury -- has more than ten publications to his credit and is now in the process of writing yet another book. This one is on the family enterprise, Cadbury Schweppes.

After the Priyadarshni Awards held this week in Mumbai, where he was the recipient of the Lifetime Achievement Award for excellence in corporate governance, Sir Adrian spoke to Kanchana Suggu.

How does it feel to receive this award?

It is indeed a great honour. What I particularly appreciate is the fact that corporate governance is being recognised today. A few years ago, it was not a subject that would have attracted international attention. And I think the Academy, by choosing this subject for an international award, has helped promote the whole idea of corporate governance, for which I am really grateful.

Would you say that Britain has been able to implement corporate governance 100 per cent?

I think the reason why we are so well recognised is because the report of the committee I chaired was the first real statement on corporate governance that went into any depth on the subject. I have been asked to go to 27 different countries to talk about corporate governance.

I came to India for the first time when the CII was developing its code on corporate governance and I spoke at conferences in Mumbai and Delhi. This was at a time when the desirable corporate governance code was being formed. Now, of course, India has moved on from there with the SEBI code which is more firm and mandatory.

To what extent are you involved with the SEBI code on corporate governance?

They sent me a draft of their code and I wrote back to them with my comments. How far they took my comments into account, I don't know.

Do you have any comments to make on the SEBI guidelines?

What is essential in corporate governance is that not only do you have to make guidelines, but you also have to make sure that they get implemented. The real test, in that sense, is yet to come. SEBI has set out the guidelines very well. They have divided them into those that are mandatory and those that are not. I have been speaking at various seminars in the past two days. I think there is certainly a willingness in India to implement corporate governance. So I am confident that the SEBI code will be effective.

What are the kinds of companies you see as being more willing to implement corporate governance?

In Britain, we see companies of different sizes listed on the London Stock Exchange. Inevitably, it was the smaller companies that took to corporate governance. And these are not family owned enterprises; they are all publicly quoted companies.

The point was that at the time we produced our guidelines, if I remember correctly, the capital value of the largest company on the London Stock Exchange was fifteen-and-a-half billion pounds, the smallest was 375,000 pounds. Now, that's the enormous difference in the sizes of the companies.

So you cannot expect the smaller companies to implement in full the kind of code where we suggested that there should be independent directors, board of committees etc., because some of the smaller companies have smaller boards. But that doesn't matter.

The essential point of our code was that companies have to disclose in their annual report and accounts, how far they have complied with the code and explain areas of non-compliance. Now, if the areas of non-compliance are acceptable to the shareholders, then we have no problem. Because companies are different and one has to accept that there will be differences in the kinds of structures that will be relevant to them.

What do you see as the immediate benefits corporate governance will have on India?

I think there are two major benefits and I personally believe that boards of companies who follow the kind of guidelines SEBI has set, will run the business better. So, first of all, I see an advantage to the company itself.

Good governance assists the board in doing its job better and in fact improves the focus of the company. That is one plus. I think the second plus is really that investors obviously have confidence in companies which are open and transparent, which is one of the aims of all of these codes. So you are likely to get greater investor interest in your company and you may well in fact get a lower cost of capital as a result of this.

More and more dotcom companies are coming up in India. Do you think they are less willing to adopt corporate governance?

I am not in a position to judge that because I don't know enough about dotcom companies, I'm afraid. It is 11 years since I retired from my company, so I am in a way out of touch with what has been happening around.

Have you been watching Indian companies to see how well they have been adopting corporate governance?

I have been traveling to 27 countries and talking to them about corporate governance, so I don't really know much about companies in each of these countries. But what I do know about India is that there is now an award for corporate governance and I think the award was won by Infosys. It is therefore clear that a company that has won an award for corporate governance is doing the right things and is setting a very good example for the others.

You have worked with the Bank of England in the past. Do you think it is difficult for central banks like BOE and the Reserve Bank of India to adopt corporate governance?

I don't think it ought to be difficult. Again, I obviously wouldn't know much about the way it works here. But in Britain for example, the Bank of England has become far more open and transparent. We have a monetary policy committee that sets the interest rates and they make all this information public. The same could happen in India as well. I don't think government banks will be unable to practice corporate governance

Do you plan to write any other books?

I would like to have more time to write. I would really like to write something about the history of our company, which goes back to 1831. I am the fourth generation in my family to be in the business. I think there are some very interesting aspects to this; the way in which the family has continued to be involved in the business for that long a period and the way in which the firm grew. I would like to write about all this.

Do you keep yourself abreast with what is happening in your company?

I am a shareholder of Cadbury Schweppes, so I get the reports. In fact, my second son, who is a management consultant, was used by the company a while ago and now they have given him a job. He has taken up the job, so I get a bottom up view from him and as a shareholder I get a top down view from the reports.

An inevitable question: Do you have a sweet tooth?

(Laughs) Well, I am the perfect living example of how one can eat chocolates and yet remain slim.

Photographs: Jewella C Miranda

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