United Phosphorus Ltd (UPL) is the world’s third largest generic agriculture chemical company and has businesses in more than 130 countries worldwide. Working from the head office in Mumbai, general counsel Rohit Kumar is party to all of the critical decisions affecting the company’s many bases: “It can be daunting making decisions at head office that need to be sensitive to so many different countries and cultures.”
However, Kumar says such a centralised role is what first attracted him to in-house work. “In private practice – first at J Sagar and then at the former Freehills in Melbourne – I saw plenty of transactions, but I wanted more exposure: to be part of the deal from start to finish.” Such a desire was quickly satisfied by UPL, which made six overseas acquisitions in Kumar’s first year as general counsel in 2010. “UPL is very focused on commercial transactions and M&A; we have made more foreign acquisitions than any other Indian company, and my role is central to that.”
With current plans for expansion focused on Latin America (“We see a lot of potential in Brazil,” says Kumar) the company’s international profile is strong: more than 80 per cent of the company’s revenue comes from outside India. In India, matters are slightly more complicated. “There’s a great deal of regulatory uncertainty in India,” he explains. “It can be hard to close transactions and inefficiencies in the courts can slow things down.” Kumar notes, however, that India’s chemical industry has seen improvements in recent years. “Compliance is more closely monitored now,” he says. “Five years ago companies had few formal compliance measures in place, and there was not much auditing by regulators.”
We caught up with Kumar to discuss these challenges and opportunities in more detail, and to find out about his career to date.
Tell us about a typical day in you role.
I often tell people that we have no dull moments at UPL, largely because of the different geographies we do business in and the unique nature of problems we face.
A typical day for me starts at around 10am. I check my e-mails and reply to the urgent ones, and I mark any messages that need following up. I then spend some time reviewing documents sent to me overnight by my Latin American or US colleagues. Because of the diversified markets in which we operate, a typical day for me also includes talking to my lawyers in places like Paraguay, Brazil and Nigeria on one issue or another. I also spend a good part of my time with our business people, understanding what their expectations are from a particular transaction or arrangement so that the legal department can draft, review and negotiate the documents accordingly.
UPL has historically been very high on inorganic growth and if we have an acquisition going on I tend to get busier. Obviously, if there is an ongoing transaction, a significant portion of my day is spent on that.
Since a large part of our business is in Latin America and North America, I frequently have late evening calls with my lawyers and colleagues from these jurisdictions.
How big is your legal department?
We have a lean team. The total number of lawyers in our company would be around 10, of which most would be at our headquarters. Outside Mumbai we also have lawyers in Brazil and France.
The role and responsibility of the legal team is well defined. Because of the nature of our business, and its complexities, we have a separate team taking care of Indian legal work, a large part of which comprises domestic litigation. There is no direct reporting structure between the headquarters and the company’s lawyers located outside India. They report to the local business heads and that is the way we like it.
Where were you previously employed?
Before joining UPL, I worked with the Melbourne office of Freehills (now Herbert Smith Freehills). Prior to that, I worked with the Delhi office of J Sagar Associates.
What are the advantages of doing work in-house?
The biggest is not filling in time sheets! If you look at my profile, of my 11 years of experience eight were spent working with law firms. Each of them has their own advantages and disadvantages and it is a matter of personal preference. When you work in-house, you get a more complete picture of the advice you render and take more decisions on behalf of the business. My area of practice, while I was in private practice, was corporate – of which a large part was M&A. Similarly, at UPL I’ve ended up spending a significant amount of my time in M&A. You provide far more input as an in-house M&A lawyer than you do when you are advising a client. There are several reasons for that, but the ones that stand out are: you understand the business far better than private practice lawyers; you are not only involved in giving advice, but also in implementing it and taking decisions; and you have much better understanding with the business people within the organisation. Having said that, a lot of it also depends on how much you are trusted within your organisation.
What percentage of UPL’s legal work do in-house lawyers perform?
It is difficult to given even a ballpark number. Typically, all regular work is done in-house. I feel strongly that we know our business better than external lawyers and thus are able to protect the interests of the company better and to be more commercial.
When will you enlist the advice of external lawyers?
We typically engage external lawyers during an acquisition, when we have litigation or when we require a country-specific advice on say, antitrust or labour laws. UPL has historically been very active on M&A and that means a lot of billable hours for the lawyers!
Do you tend to work with the same law firm/firms?
We prefer working with the same lawyer (but not necessarily the law firm) if we like an individual and we do have several lawyers who we engage regularly. A lot depends on the jurisdiction as well. In developed jurisdictions, we are happy to go with law firms with whom we have an established relationship, even if it means going to a lawyer we have never worked with before. However, in other jurisdictions, we have realised that legal practice is more personality-driven and we try picking up the best individual lawyer who fits our criteria.
Do you see yourself hiring the firm primarily, or the individual?
One rule we follow is to always hire the best lawyers. We have learned this – and have in fact paid a price for sloppy work. On hiring lawyers, a lot depends on the jurisdiction. In more developed jurisdictions, we go by the reputation and are comfortable hiring a firm based on the reputation of the law firm. However, in other jurisdictions, we hire individuals and the reason is that the law firms are not standardised and the quality of legal advice can vary depending on who is advising you.
What qualities do you look for in private practice lawyers/teams?
There are a few qualities we look for in a private practice lawyer: commerciality; depth of knowledge; promptness; and good management. This last quality is important, particularly for M&A transactions where the lawyer are expected to manage a deal.
Tell us about any recent notable projects the team has been working on. Which law firms did you work with?
We recently did a securitisation transaction where we securitised the receivables of some of our overseas subsidiaries. It was a very complex, one-of-a-kind transaction and we had seven or so law firms working on it. The documentation was complex, with lots of cross-referencing and at times even those experienced in the law outside of the practice area would find it difficult to understand. Though it was a complex transaction, we did close it. Some of the notable law firms involved in it were Herbert Smith Freehills, Clifford Chance, Mayer Brown and AZB Partners.
Are there any notable challenges – practical, legal or political – currently facing the chemicals sector in India?
I don’t see any notable challenges in the chemical industry per se. However, there are several legal and regulatory issues in India and we have not seen much of an improvement in the last few years.
We do see more uncertainty in India and my personal experience is that it is more difficult to close deals in India than in most other jurisdictions. This is because of the uncertainty and lack of clarity at the policy level, as well as an inefficient court system.
For example, we have been pursuing a couple of acquisition opportunities in India but despite the best endeavours of all concerned we have not been able to close those transactions. We see one hurdle after another. The inefficient court system in India makes matters worse, and means that you don’t have the type of system where you can get your grievances redressed in a timely fashion.
How would you describe the Indian legal marketplace? How competitive is it? And how can firms distinguish themselves?
A large part of India’s legal marketplace consists of litigation lawyers, and a much smaller part consists of corporate lawyers. As far as the litigation lawyers are concerned, the stakes in disputes have gone and the fees charged by senior lawyers have grown exponentially.
On the corporate side, Indian law firms have made a lot of progress in the last five to seven years and I think a large part of it is because of the vastly improved quality of people getting into the profession. The firms are still evolving, and they have some catching up to do with the international peers, but I would say that they are getting there. For someone like me who has worked internationally and currently deals with a lot of international lawyers, I still see more professionalism and depth in international lawyers compared to their Indian counterparts – but that gap is narrowing.
The other important transformation currently happening is that the legal market is becoming more and more competitive. Most Indian law firms have promoted a lot of people into their equity, or into the paid partnership, which has made the firms top heavy and all these people are competing with each other in the same market. The work available in the market has not increased in the same proportion and I think going forward it will get more Darwinian – only the fittest would survive!
As firms evolve and quality gets standardised, commitment, professionalism and personal relationship with clients will become increasingly relevant.
What makes India a good place to do business?
I think India is a tough place to do business. Currently, there are several issues with policy and governance. I keep hearing from my overseas friends how tough it is to do business in India and make money.
India is a long-term play and one needs to be patient. It is a vast market growing at a very fast pace – why should it be easy to do business here? The risk/reward ratio has to be proportionate. If you see the foreign companies having successful operations in India (Coca Cola, Hindustan Unilever, Colgate, Pepsi, Nestle, etc) they have all been here for the long haul, sacrificing short to medium-term profit for the long term. Despite the weakening of Indian rupee and the hue and cry in India about policy paralysis, it still is one of the fastest-growing markets in the world.
All of this makes India a very interesting place to do business.