Ashneer Grover, co-founder and managing director of BharatPe, resigned on February 28 after he went on \u201cvoluntary leave\u201d in January until end-March. This followed an expletive-laced tirade on Twitter. The alleged phone conversation, which happened in October, was with a private bank employee, regarding funding for buying shares of Nykaa during the beauty retailer\u2019s initial public offering. He resigned after BharatPe sacked his wife Madhuri Jain Grover, head of controls at the company, over allegations of misappropriation of funds, and Singapore International Arbitration Centre rejecting Ashneer\u2019s petition against the company for initiating an investigation against him.<\/p>\n
In his first no-holds-barred media interview,\u00a0RAJNISH KUMAR<\/strong>, chairman of BharaPe, tells\u00a0TAMAL BANDYOPADHYAY\u00a0<\/strong>about what went wrong with the company and the road ahead.<\/p>\n Edited excerpts:<\/p>\n It seems that the Ministry of Corporate Affairs (MCA) is looking into the conduct of BharatPe board \u2014 how it handled the Ashneer issue. What\u2019s wrong with the board?<\/strong><\/p>\n You are questioning me after reading a media report. But the company has not received any communication from MCA so far. It\u2019s a private limited company. The board consisted of shareholders or their nominees like Ashneer (he has resigned), Shashvat Nakrani, Harshjit Sethi of Sequoia\u00a0Capital. There was only one professional non-executive director Kewal Handa before I joined the board\u00a0as\u00a0<\/em>non-executive chairman\u00a0in October 2021. The proceedings of the board and the decisions\u00a0taken by it have been recorded and any agency is welcome to see them.\u00a0<\/em>There\u2019s nothing to hide.<\/p>\n Why did you join BharatPe when so many companies were wooing you to be on their boards?<\/strong><\/p>\n It\u2019s true many companies\u00a0<\/em>have\u00a0approached me to join their boards. I have been very selective about accepting board directorship and have accepted board positions from highly reputed companies like HSBC Asia Pacific, Larsen & Toubro Infotech, and Hero MotoCorp, apart from BharatPe.<\/p>\n I have always been an admirer of start-ups and fintechs because of innovation and the positive contribution these companies are making towards making India a new-age economy.<\/p>\n BharatPe is one of the most successful fintech companies. It is very innovative, with marquee investors\u00a0backing it.\u00a0My desire to be part of the emerging ecosystem had led me to accept the board position at BharatPe.<\/p>\n In view of the recent controversies, you must be regretting joined its board.<\/strong><\/p>\n Whatever has happened is unfortunate and an aberration. The media glare on the company has also come as a surprise to me. I am not new to handling difficult situations. There is no question of any regret because I joined the company with a certain purpose and will make every effort to ensure it becomes a role model for start-ups.<\/p>\n Now both Ashneer and his wife Madhuri are no longer with the company. But she has alleged conspiracy and accused the board of male chauvinism and a biased attitude.<\/strong><\/p>\n I would not like to respond to any individual. I can only say that the corporate governance review is being carried out by\u00a0reputed firms like Shardul Amarchand Mangaldas & Co, assisted by Alvarez and Marsal (A&M) and PricewaterhouseCoopers (PwC).\u00a0Do you want to say that these firms will join in any conspiracy, putting their independence and reputation at stake?<\/p>\n What is the future of BharatPe after the exit of Ashneer? He was the man behind everything the company was doing \u2014 in terms of products and processes.<\/strong><\/p>\n Haven\u2019t I already answered this? There is no denying the role of a leader in building an organisation. But it\u2019s always teamwork that makes the organisation successful. We cannot belittle the contribution of other team members.<\/p>\n BharatPe is a technology (tech) company. What about the contribution of the information tech team and its leader? This is just\u00a0one example<\/p>\n As far as the future of the company is concerned, the board and the management are aligned to the glide path for listing the company in the next 18-24 months.\u00a0The company\u2019s transition from an individuals-driven\u00a0private form to a board-driven listed public one will be carried out in a well-thought-through and well-executed manner.<\/p>\n What\u2019s going to happen to Ashneer\u2019s 9 per cent (or, is it 8.5 per cent) stake? He claims to be the single-largest shareholder in the company. Will existing investors buy him out? If yes, at what price? His resignation letter claims the company\u2019s value is $6 billion. If not, is he free to sell it to whosoever he wants?<\/strong><\/p>\n This is a matter to be dealt with under the shareholders agreement. The secondary sale of shares is allowed with the consent of existing investors whenever a fresh round of funding happens.<\/p>\n I am not aware of any plan of existing shareholders to buy out shares from Ashneer.<\/p>\n Is the board united in its agenda? How about investors? I believe they are a divided lot\u2026<\/strong><\/p>\n Let me repeat, the company is on a growth path with a time frame in mind to get it listed.<\/p>\n The board is completely aligned and committed to\u00a0ensure\u00a0a robust governance infrastructure, meeting the desired standards of listed companies well in advance, even if it’s a private limited company and no public money is involved.<\/p>\n The consultants are giving finishing touches to the governance\u00a0review report after identifying the\u00a0gaps that existed. It\u2019s a comprehensive exercise and a blueprint will be ready in about a week.<\/p>\n I don\u2019t know where you have received information about investors being divided. All decisions are taken unanimously by investors and the board.<\/p>\n There have been reports that Ashneer doesn\u2019t own the entire stake he claims to hold. Its original founder Bhavik Koladiya stake is part of his 9 per cent. How much stake do Ashneer, co-founder Nakrani, and Koladiya each hold in the company?<\/strong><\/p>\n I have no idea where these reports have originated from.<\/p>\n Ashneer\u2019s resignation letter talks about \u201cbaseless and targeted attacks\u201d on him and his family by a few individuals. How do you react to it?<\/strong><\/p>\n Do you seriously want me to react to it?<\/p>\n Are you convinced about his family siphoning off funds? What steps do you plan to take to improve corporate governance at BharatPe? What has gone wrong and who do you blame for it?<\/strong><\/p>\n It\u2019s not a question of me or anyone else being convinced. I have already said that firms like A&M and PwC are reputed, professional outfits and the board of BharatPe has no reason to not believe their findings.<\/p>\n The process of improving the corporate governance structure, including reviewing and updating all policies, procurements, oversight by the internal audit, broad-basing the board, constitution of board committees (even if not mandated for private companies), and conducting related party transactions at arm\u2019s length, etc, is progressing well.<\/p>\n I have seen in the past that when a business is on a growth path, there is little attention to the governance structure, and many businesses have failed eventually after showing good progress. BharatPe is no exception to this set of companies and this could be a problem with other fast-growing companies.<\/p>\n BharatPe is a big investor in Unity SFB. The fintech unicorn holds 49 per cent stake in it. Its current state of affairs must have an impact on Unity SFB and the regulator\u2019s way of looking at it. Have you heard from the Reserve Bank of India (RBI)?<\/strong><\/p>\n BharatPe is only an investor in Unity SFB and has made the required investment\u00a0and is not a promoter.<\/em>\u00a0In my view, there is no regulatory challenge. It\u2019s for the promoters and the board of Unity SFB to run the bank in compliance with the regulatory framework and expectations.<\/p>\n Rest assured that the relationship between BharatPe and Unity SFB will be conducted at arm\u2019s length, protecting the value of stakeholders of respective organisations,\u00a0and the RBI will have nothing to complain about.\u00a0We have not heard anything from the RBI.<\/p>\n More importantly, what impact will it have on the fintech and start-up ecosystem and the flow of investments? Talking about investors, Ashneer has said: \u201cYou treat us founders as slaves, pushing us to build multi-billion-dollar businesses and cutting us down at will. Investor-founder relation in India is one of master-slave\u201d.<\/strong><\/p>\n The start-up and fintech ecosystem is being driven by venture capital and investors. It\u2019s a high-risk, high-reward game.\u00a0A lot of foreign capital has been attracted into India because of tech talent and high-market potential with a very supportive government. India is among the leading\u00a0countries when it comes to digitisation and the new-age economy.<\/p>\n I have no doubt in my mind that India\u2019s start-up ecosystem will continue to flourish and attract investment \u2014 both domestic and foreign.<\/p>\n A few aberrations cannot change the narrative. The relationship between founders and investors has to be one of mutual trust, with the core objective of creating value for all stakeholders. I don\u2019t believe it\u2019s a master-slave or any other type of relationship, but the will of the majority prevails.<\/p>\n Ashneer also attacked you, saying you were leaking information about the ongoing review against him to the media. How do you react to it?<\/strong><\/p>\n I wouldn\u2019t like to comment on what an individual says.\u00a0That\u2019s beneath my dignity and ethics.\u00a0I am a strong believer in transparency and openness. If I have to say something, I will say it openly.<\/p>\n Questions are being raised about granting employee stock ownership plan (ESOP) and the compensation being paid to you\u2026\u00a0<\/strong><\/p>\n I have been appointed non-executive\u00a0director, strictly in accordance with the relevant provisions of the\u00a0Companies Act. The compensation structure, including ESOP, has been approved by the board.\u00a0I can also mention to you honestly that BharatPe is not an outlier, compared to my other engagements.<\/p>\n As chairman of India\u2019s largest lender, you were instrumental in rescuing YES Bank. After this, is BharatPe the second toughest assignment for you? Do you regret taking up the offer?\u00a0Or enjoying this?<\/strong><\/p>\n It\u2019s not as tough as it seems to be. YES Bank was a much larger issue having implications for the huge number of depositors and the impact on the entire banking system and economy of the country. BharatPe is a relatively small entity getting disproportionate attention from the media.<\/p>\n Having said that, I see\u00a0a big opportunity where BharatPe can be a torchbearer for the entire start-up ecosystem and enhance investor confidence, benefiting innovators, young entrepreneurs, and the country\u2019s reputation as the start-up capital of the world.<\/p>\n The question of regret\u00a0arises\u00a0when you have done something wrong which you should have not done.<\/p>\n Once the clean-up task is accomplished, will you step down? If yes, what\u2019s the time frame you have in mind?<\/strong><\/p>\n Why should I resign? I will be there for three years \u2014 which is my term. There is no fun if there is no challenge in life. Right?<\/p>\n In fact, at the first board meeting I\u00a0chaired,\u00a0I sensed that corporate governance is an issue in this company. I made it clear that the standards of governance\u00a0should be the same as expected of a listed company and meet all regulatory expectations.\u00a0I started taking steps that may have aggrieved a few.\u00a0<\/em>This has now become a mission I intend to accomplish before I step down.<\/p>\n","protected":false},"excerpt":{"rendered":" Ashneer Grover, co-founder and managing director of BharatPe, resigned on February 28 after he went on \u201cvoluntary leave\u201d in January until end-March. 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