Corporate Governance

______________________________

1

An Indian Definition

• “…fundamental objective of corporate governance is the ‘enhancement of the long-term shareholder value while at the same time protecting the interests of other stakeholders.”

– SEBI (Kumar Mangalam Birla) Report on Corporate Governance, January, 2000

2

What is Corporate Governance?

• The Manner in which a Corporation is Run– Achieving its Objectives– Transparency of its Operations– Accountability & Reporting– Good Corporate Citizenship

• The Processes & Operating Relationships that Best Achieve Organisational Goals

3

Is ThereMore to Business

than just theFinancial Numbers?

4

Environment Social

Economic

An Enterprise’s Triple Effect on Society

BusinessImpact

Sustainable Development Equal Opportunities

Waste Control Education & Culture

Emissions Community Regeneration

Energy Use Human Rights

Product EmployeeLife-cycle Volunteers

Product Wealth Productive Ethical Value Generation Employment Trading

CASE STUDY

Do You Know Him ???

B. RAMALINGA RAJU

FOUNDER AND FORMER CHAIRMAN OF ONE OF THE BIGGEST I.T. GIANT OF OUR NATION “SATYAM COMPUTERS”

THE PRIME CONVICT IN ONE OF THE BIGGEST SCAM OF COUNTRY

FOURTH LARGEST I.T. OUTSOURCING COMPANY OF INDIA

EMPLOYEES MORE THAN 50,000 PEOPLE IN INDIA

HIGH GLOBAL REPUTATION

OFFERS SERVICES TO MORE THAN 550 MNC’s

What was Scam all about… The company’s balance sheet was inflated to Rs. 5,361 Cr at the end of September. There is an artificial cash balance of Rs.588 Cr in September 2008.

Rs.1,230 Cr was arranged to Satyam, which is not reflected in its books, to keep Satyam's operations running.

Raju also admitted that Satyam's profits were inflated over several years.

HOW DID THE SCAM MATTER TO THE NATION ?

Job’s of over 50,000 technocrats were at risk.

Country’s booming economy feared slight collapse as Country's GDP fell by estimated 0.4%.

India’s I.T. sector suffered downturn as it’s image was tarnished globally.

How it was caught ?Satyam Computers had on December 16, 2008, announced that it will acquire two group firms – Maytas properties and Maytas Infra for $1.6 billion (about Rs 8,000 cr) as part of its diversification strategy , this created a alleged violation of corporate governance laws.

SALVAGING SATYAMTo stabilize the sinking Satyam Computers, the Government nominated Banker Deepak Parekh, I.T. Expert Kiran Karnik and Former SEBI Member C. Achutan to the I.T. Company's Board.

KIRAN KARNIK C. ACHUTAN

ALL’s WELL THAT’s END WELL

Satyam Computers was took over by Mahindra Group I.T. Arm , Tech Mahindra on April 13, 2009.

ASIAN CASE STUDY

The World Bank has conducted a number of studies of

corporate governance practices in various countries all

over the world.

It has conducted Eight Studies of Asian Countries. This

part summarizes some of the components of those

studies.

Noticeably absent are China and Japan.

Chart shows the scores for each of the Eight Asian Countries

Some Closing Thoughts

• Minimise Conflict of Interest Potential• Respect Minority / External Shareholders’

Rights (Listed Public Sector Banks)• Boards to Go That Extra Mile: Go Beyond

What is Prescribed to What is Appropriate – That Way lies Greater Valuations & Better Reputations

18

Thanks for Your Attention

19