valueaddn through cg indore 29.06.08
TRANSCRIPT
![Page 1: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/1.jpg)
VALUE ADDITION TO ENTERPISE THROUGHCORPORATE GOVERNANCE
Pavan Kumar VijayManaging Director
29/06/2008
![Page 2: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/2.jpg)
What is Corporate Governance???
![Page 3: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/3.jpg)
Corporate Governance rests with the Vision and Perception of the Leadership
![Page 4: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/4.jpg)
and
A Leader need to adopt a
Vision for Corporate Governance
![Page 5: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/5.jpg)
Corporate Governance Framework
Output – Input = Wealth Created ?
Sustainability
Happiness andProsperity of all
Stakeholders
Reinvestment
Distribu- tion
Research and DevelopmentHR DevelopmentInfrastructureRisk Management
SUPPLIERS Adequate ReturnsHUMAN ASSETS Adequate RemunerationCUSTOMERS Affordable PricesPUBLIC Payment of Taxes and Partnership in National Development Projects
Wealth Creation Wealth Management Wealth Sharing
EnhancedCapabilities
Best Management Practices are Vital Here Law and Ethics are Vital Here
![Page 6: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/6.jpg)
Principles of Corporate Excellence
Fairness to all stakeholders
Mutual Trust, Transparency and Togetherness
Unrestricted Communication and Continuous Feedback
Sharing Knowledge, Success Stories and Experience
Sharing Happiness and Concerns
Helping Each Other – Round the Clock
Fairness to all stakeholders
Mutual Trust, Transparency and Togetherness
Unrestricted Communication and Continuous Feedback
Sharing Knowledge, Success Stories and Experience
![Page 7: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/7.jpg)
Infact, these principles are the foundation of
Best Governed Organizations'
irrespective of their form and size
![Page 8: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/8.jpg)
Commitment to well-being and progress of all stakeholders is our age old mantra
![Page 9: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/9.jpg)
Satyam Vada Dharmam Chara
- Taittariya Upanishad
![Page 10: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/10.jpg)
“Forever speak the truth and follow the dharma”
![Page 11: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/11.jpg)
Truth : Disclosure of Actual State of Affairs (Transparency in operations and transactions)
![Page 12: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/12.jpg)
Dharma : “Dharma is for the stability of society, the maintenance of social order and the general well-being and progress of humankind.”
- Karna Parva of the Mahabharata. Verse-58 in Chapter 69
![Page 13: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/13.jpg)
Corporates are also expected to use their
Capacity, Knowledge and Resources
Maximisation of stakeholders’ value and well-being and progress of humankind
TOWARDS
THROUGH
Transparency, accountability and truthful disclosure of state of affairs
Dharma
Truth
![Page 14: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/14.jpg)
This is our own age old mantra of
Good Governance
![Page 15: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/15.jpg)
Companies that have followed these
principles of
Corporate Governance
have
![Page 16: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/16.jpg)
Consistently earned high returns,
increased their net worth and
enhanced their shareholders wealth
![Page 17: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/17.jpg)
Invested significantly in proactive research and development
![Page 18: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/18.jpg)
Developed people into ‘achievers’ than just ‘performers’
![Page 19: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/19.jpg)
Dealt ethically with customers, government and business partners
![Page 20: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/20.jpg)
Maintained and updated their professional management culture, system and processes
![Page 21: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/21.jpg)
..and accomplished
![Page 22: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/22.jpg)
WINNINGEMPLOYEES
WINNINGEMPLOYEES
GROWINGINVESTORS
GROWINGINVESTORS
DELIGHTEDCUSTOMERS
DELIGHTEDCUSTOMERS
TRUSTEDSUPPLIERS
TRUSTEDSUPPLIERS
SATISFIEDGOVERNMENT AND
REGULATORS
SATISFIEDGOVERNMENT AND
REGULATORS
HAPPYSOCIETY
HAPPYSOCIETY
![Page 23: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/23.jpg)
The Institute of Company Secretaries of India
”Corporate Governance is theapplication of best
management practices,compliance of law in letter
and spirit and adherence to ethical standards
for effective management and distribution of wealth
and discharge of social responsibilityfor sustainable
development of all stakeholders”
![Page 24: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/24.jpg)
Advantages of applying Best Corporate Governance Practices
![Page 25: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/25.jpg)
Growth
Growing Revenues
Growing Profits
Growing Market Value
![Page 26: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/26.jpg)
Widespread Goodwill and Brand Reputation
Access to Global Markets
Better Access to Human Capital
Ready Market for New Products
Widening Customer Base
![Page 27: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/27.jpg)
Enhanced Trust and Confidence of all
Stakeholders
EMPLOYEESEMPLOYEES
INVESTORSINVESTORS CUSTOMERSCUSTOMERS
SUPPLIERSSUPPLIERS
GOVERNMENT AND REGULATORS
GOVERNMENT AND REGULATORS
SOCIETYSOCIETY
![Page 28: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/28.jpg)
Leading to…
![Page 29: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/29.jpg)
Environment
Civil SocietyBusiness Society
SUSTAINABLEDEVELOPMENT
![Page 30: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/30.jpg)
Corporate Value without Corporate Governance – The Past
COMPANY
• Loss of reputation in International Market
• Loss of Moral Fibre of Corporataions.
![Page 31: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/31.jpg)
Corporate Value without Corporate Governance – The Past
STAKEHOLDERS
• Auditors - Independence compromised to
obtain lucrative consulting assignments
• Employees - Large disparity between the
highest and lowest paid employee
• Analysts - Ever-greening of Corporate &
Stock reports.
![Page 32: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/32.jpg)
Corporate Value without Corporate Governance – The Past
STOCKHOLDERS:
• Loss of Investors Confidence.
• Difficulty in further raising of capital.
• Investor Complaints
![Page 33: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/33.jpg)
Corporate Value without Corporate Governance – The Past
PRACTICES:
• Aggressive accounting practices.
• Incompetence of board members and
overriding of audit committees .
• Dividend linked to short-term revenue
growth, EPS and stock price.
![Page 34: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/34.jpg)
Vs.
![Page 35: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/35.jpg)
Reactions in Legal Framework
Clause 49 of Listing Agreement.
Section 192A, 292A etc. in the Companies
Act
![Page 36: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/36.jpg)
Legal Norms of CG
Concept of Independent Directors & Audit Committees
Stricter independence standards for Audit Committees
Board Professionalism
Whistle Blower Policy
Certifications and disclosures
Real time disclosure & Shortened deadlines
![Page 37: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/37.jpg)
ARE
SHAREHOLDERS THE
ONLY
STAKEHOLDERS ?
![Page 38: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/38.jpg)
Stakeholders in Value Chain
SUPPLIERS CUSTOMERSHUMAN RESOURCE
Supply Funds, Materials and Services
Value Addition and Management of Resources
Give Opportunity to Co. to Satisfy their Needs
Adequate Returns for Funds, Material and Services Supplied
Adequate Salary and Security for leading a Happy Life
Best Quality Products and Customer Care at Minimum Prices
ROLE OF STAKEHOLDERS
EXPECTATIONS OF STAKEHOLDERS
Potential Suppliers, Human Resources and Customers
Biological, Economic and Cultural EnvironmentPUBLIC
PUBLIC EXPECTS PARTNERHIP FOR SUSTAINABLE DEVELOPMENT
![Page 39: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/39.jpg)
Corporate Governance Value Chain
“Corporate Governance is not related to investors only, though they are most
important Beneficiary.”
![Page 40: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/40.jpg)
Stakeholders’ Stake in Corporate Governance Value Chain
2 : 1 Debt –
Equity Ratio
2 : 1 Current Ratio
![Page 41: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/41.jpg)
What CG Brings…
![Page 42: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/42.jpg)
Value Addition through CG
CORPORATE GOVERNANCE
INVESTORS LENDERS CUSTOMER EMPLOYEESUPPLIER
•Confidence•Security of Funds
•Safety of interest & principal.•Better & Favorable Credit Terms
•Value Creation•Better quality of Products/ Services•Cheaper prices
•Value Creation•Favorable terms of supplier agreements
•Better quality of HR•Better Salary•Benefits•Stability
Govt./Regulator
•Tax•Compliance•Employment•Social Commitment
![Page 43: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/43.jpg)
Measurement of Value Addition
![Page 44: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/44.jpg)
Benefits As To Value Addition
![Page 45: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/45.jpg)
Corporate Governance Enhances Brand Value
Quality in Board Structure
Better Board Management and Practices
Contribution of Independent Directors
Successful Strategies
Adequacy of Controls
Independence of Auditors
![Page 46: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/46.jpg)
Outstanding Performance, Higher Profits,
Expanded Market Reach and the like FAILS
to protect a company which has put good governance &
ethics at the back burner….
History is Witness
S
U
C
E
S
S
D
I
S
A
S
T
E
R
![Page 47: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/47.jpg)
..…Only the culture of strict adherence to good
compliance can keep a company
ahead on sustainable basis , bring in larger profits…
Secret behind building foundations
![Page 48: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/48.jpg)
Present Status of CG Practices – The CRISIL Experience
Practice Status
Equitable Treatment of
Shareholders
Moderate
Transparency and Disclosure
Relatively
strong
Composition of Board Scope for improvement
Functioning of Board Moderate
![Page 49: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/49.jpg)
Value Addition - The CRISIL Experience
Stakeholders Status
Share Holders High
Debt Holders Highest
Employees Moderate
Customers High
Suppliers Scope for improvement
Society Scope for improvement
![Page 50: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/50.jpg)
Thus, Although a lot has been done, but a lot needs to be done.
![Page 51: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/51.jpg)
CORPORATES SHOULD ACT LIKE HONEY BEE WHICH SUCK THE NECTAR OF THE FLOWER
WITHOUT EFFECTING ITS FRAGRANCE AND PRODUCE HONEY FOR THE WELL –BEING OF SOCIETY .
![Page 52: Valueaddn through cg indore 29.06.08](https://reader036.vdocument.in/reader036/viewer/2022070318/557872b3d8b42a14628b4b2c/html5/thumbnails/52.jpg)
THANK YOU