Corporate Governance
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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
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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
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Is ThereMore to Business
than just theFinancial Numbers?
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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
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Thanks for Your Attention
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