ROLL NO.ROLL NO. NAME OF STUDENTNAME OF STUDENT COURSECOURSE

1313 Mr. Pratik ThakkarMr. Pratik Thakkar MMMMMM

BUSINESS ENVIORNMENTBUSINESS ENVIORNMENT Project Name:Project Name:

PRESENTED BY

TOPICS COVEREDTOPICS COVERED

DEFINITION & OVERVIEWDEFINITION & OVERVIEW

ROLES & RESPONSIBILITIES OF DIRECTOR, ROLES & RESPONSIBILITIES OF DIRECTOR, DISCLOSURES & TRANSPERANCYDISCLOSURES & TRANSPERANCY

MISCONDUCTS & SCAMSMISCONDUCTS & SCAMS

COMPANIES THAT SET AN EXAMPLE OF COMPANIES THAT SET AN EXAMPLE OF BEST CORPORATE GOVERNANCEBEST CORPORATE GOVERNANCE

11STST PART PART DEENITION , MEANING & OVER VIEWDEENITION , MEANING & OVER VIEW

About Corporate GovernanceAbout Corporate Governance

Governance Concept in ‘Ramayana’Governance Concept in ‘Ramayana’

To provide To provide “the maximum happiness for the “the maximum happiness for the

maximum number of people for the maximum maximum number of people for the maximum

period, based on the principles of Dharma – period, based on the principles of Dharma –

righteousness and moral values.”righteousness and moral values.”

- Ayodhya Kand

Corporate GovernanceCorporate GovernanceWhat is Governance?What is Governance?

““Corporate governance is the system by which Corporate governance is the system by which companies are directed and controlled”companies are directed and controlled”    Cadbury Code 1992  Cadbury Code 1992

“Corporate Governance is the application of best management practices, Compliance of law in true letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders”.

-The Institute of Company Secretaries of India

Driving Forces of CG in IndiaDriving Forces of CG in India1)1) Unethical Business PracticesUnethical Business Practices

Unethical Business Practices is the Unethical Business Practices is the Quickest Way to Your DownfallQuickest Way to Your Downfall

Security Scams ---Harshad Mehtha Security Scams ---Harshad Mehtha Security ScamSecurity Scam

Equity allotments at discount rates to Equity allotments at discount rates to the controlling groupsthe controlling groups

Disappearance of Companies (1993-Disappearance of Companies (1993-94) - around 4,000 94) - around 4,000

companies with 25,000 crores companies with 25,000 crores without starting businesswithout starting business

Misdeed of CompaniesMisdeed of Companies

Plantation, Sheep rearing, etc.Plantation, Sheep rearing, etc.

2) 2) Impact of Impact of GlobalizationGlobalization Integration with Foreign MarketIntegration with Foreign Market Foreign Investors expectationsForeign Investors expectations New Business Opportunities --- New Business Opportunities ---

IT & ITES, BPO etc.,IT & ITES, BPO etc., New Capital formation – FII, FDINew Capital formation – FII, FDI

3) 3) Impact of Impact of PrivatisationPrivatisation New structure of ownershipNew structure of ownership Multinational CompaniesMultinational Companies

The initiative in India was initially driven by The initiative in India was initially driven by an industry association, the Confederation an industry association, the Confederation of Indian Industry (CII)of Indian Industry (CII)

In December 1995, CII set up a task In December 1995, CII set up a task force to design a voluntary code of force to design a voluntary code of corporate governance.corporate governance.

The final draft of this code was widely The final draft of this code was widely circulated in 1997.circulated in 1997.

In April 1998, the code was released. It In April 1998, the code was released. It was called was called Desirable Corporate Desirable Corporate Governance: A Code.Governance: A Code.

Between 1998 and 2000, over 25 leading Between 1998 and 2000, over 25 leading companies voluntarily followed the companies voluntarily followed the code: Bajaj Auto, Hindalco, Infosys, Dr. code: Bajaj Auto, Hindalco, Infosys, Dr. Reddy’s Laboratories, Nicholas Piramal, Reddy’s Laboratories, Nicholas Piramal, Bharat Forge, BSES, HDFC, ICICI and Bharat Forge, BSES, HDFC, ICICI and many othersmany others

Brief history of Corporate Governance in India

Following CII’s initiative, the Securities and Exchange Board of India Following CII’s initiative, the Securities and Exchange Board of India (SEBI) set up a committee under Kumar Mangalam Birla to design a (SEBI) set up a committee under Kumar Mangalam Birla to design a mandatory-cum-recommendatory code for listed companiesmandatory-cum-recommendatory code for listed companies

The Birla Committee Report was approved by SEBI in December 2000The Birla Committee Report was approved by SEBI in December 2000

Became mandatory for listed companies through the listing Became mandatory for listed companies through the listing agreement, and implemented according to a rollout plan:agreement, and implemented according to a rollout plan:

2000-01: All Group A companies of the BSE or those in the S&P 2000-01: All Group A companies of the BSE or those in the S&P CNX Nifty index… 80% of market cap.CNX Nifty index… 80% of market cap.

2001-02: All companies with paid-up capital of Rs.100 million or 2001-02: All companies with paid-up capital of Rs.100 million or more or net worth of Rs.250 million or more.more or net worth of Rs.250 million or more.

2002-03: All companies with paid-up capital of Rs.30 million or 2002-03: All companies with paid-up capital of Rs.30 million or more more

Brief history of Corporate Governance in India

Following CII and SEBI, the Department of Company Following CII and SEBI, the Department of Company Affairs (DCA) modified the Companies Act, 1956 to Affairs (DCA) modified the Companies Act, 1956 to incorporate specific corporate governance provisions incorporate specific corporate governance provisions regarding independent directors and audit regarding independent directors and audit committees.committees.

In 2001-02, certain accounting standards were In 2001-02, certain accounting standards were modified to further improve financial disclosures. modified to further improve financial disclosures. These were:These were:

Disclosure of related party transactions.Disclosure of related party transactions. Disclosure of segment income: revenues, profits Disclosure of segment income: revenues, profits

and capital employed.and capital employed. Deferred tax liabilities or assets. Deferred tax liabilities or assets. Consolidation of accounts.Consolidation of accounts.

Initiatives are being taken to (i) account for ESOPs, Initiatives are being taken to (i) account for ESOPs, (ii) further increase disclosures, and (iii) put in place (ii) further increase disclosures, and (iii) put in place systems that can further strengthen auditors’ systems that can further strengthen auditors’ independence.independence.

Brief history of Corporate Governance in India

Scope of Corporate Scope of Corporate GovernanceGovernance ““Corporate Governance is concerned with holding Corporate Governance is concerned with holding

the balance between economic and social goals the balance between economic and social goals and between individual and communal goals. The and between individual and communal goals. The aim is to align as nearly as possible the interest aim is to align as nearly as possible the interest of individuals, corporations and society.of individuals, corporations and society.

The foundation of any structure of corporate The foundation of any structure of corporate governance is disclosure. Openness is the basis of governance is disclosure. Openness is the basis of public confidence in the corporate system and public confidence in the corporate system and funds will flow to centers of economic activity funds will flow to centers of economic activity that inspire trust.”that inspire trust.”

-Sir Adrian Cadbury.-Sir Adrian Cadbury.

““Shareholders role in governance is to Shareholders role in governance is to appoint the directors and the auditors. appoint the directors and the auditors. Poor corporate governance has ruined Poor corporate governance has ruined companies, sent directors to jail, and companies, sent directors to jail, and destroyed a global accounting firm and destroyed a global accounting firm and threatened economies and governments.”threatened economies and governments.”

Cadbury Report (1992)Cadbury Report (1992)

Wider use of INDEPENDENT DIRECTORWider use of INDEPENDENT DIRECTOR

Introduction of AUDIT COMMITTEEIntroduction of AUDIT COMMITTEE

Separation between CHAIRMAN and CEOSeparation between CHAIRMAN and CEO

Adherence to detailed code of BEST Adherence to detailed code of BEST PRACTICES.PRACTICES.

2 ND PART2 ND PART

DISCLOSURES , DISCLOSURES , ROLES & ROLES & RESPONSIBILITIES RESPONSIBILITIES OF DIRECTOR, & OF DIRECTOR, & TRANSPERANCYTRANSPERANCY

Board of Directors: frequency of meetings Board of Directors: frequency of meetings and compositionand composition

Board must meet at least four times a Board must meet at least four times a year, with a maximum time gap of four year, with a maximum time gap of four months between two successive meetings.months between two successive meetings.

If the chairman of the Company is a non-If the chairman of the Company is a non-executive then one-third of the board executive then one-third of the board should consist of independent directors, should consist of independent directors, and 50% otherwise.and 50% otherwise.

‘‘Independent’ defined as those directors Independent’ defined as those directors who, apart from receiving director’s who, apart from receiving director’s remuneration do not have any other remuneration do not have any other monetary relationship or transactions with monetary relationship or transactions with the company, its promoters, management the company, its promoters, management or subsidiaries, which in the view of the or subsidiaries, which in the view of the board may affect independence of board may affect independence of judgment. judgment.

Mandated CG Guidelines and Disclosures

Scope of Code of Corporate Scope of Code of Corporate Governance, 2002Governance, 2002

The code provides a framework for The code provides a framework for efficient and transparent running of efficient and transparent running of

listed companies to enhance listed companies to enhance shareholder value. The regulators shareholder value. The regulators need to be vigilant to enforce the need to be vigilant to enforce the

code in its true spirit.code in its true spirit.

  

The Code of Corporate The Code of Corporate GovernanceGovernance

Non Executive DirectorNon Executive Director Qualification of a DirectorQualification of a Director Tenure of DirectorTenure of Director Governance Policies of Governance Policies of

the Directorsthe Directors Information to DirectorsInformation to Directors Orientation CoursesOrientation Courses CFO/ Co. SecCFO/ Co. Sec Corporate and Financial Corporate and Financial

ReportingReporting Audit CommitteesAudit Committees

Qualification and Eligibility to Act as a DirectorQualification and Eligibility to Act as a Director

Director, not to be a director in more Director, not to be a director in more than ten other listed companies.than ten other listed companies.

ii. Director needs:ii. Director needs: a. to be registered as a National Tax a. to be registered as a National Tax

Payer Payer

b. Not to a defaulter as convicted by b. Not to a defaulter as convicted by court of a banking company, court of a banking company, development financial institution, or a development financial institution, or a non-bankingnon-banking

financial institution or as a member by financial institution or as a member by the Stock Exchange.the Stock Exchange.

iii Not to be director if spouse is iii Not to be director if spouse is engaged in the business of Stock engaged in the business of Stock Brokerage (voluntary)Brokerage (voluntary)

TENURE OF OFFICE OF DIRECTORTENURE OF OFFICE OF DIRECTOR    iv. Three years, vacancy to be iv. Three years, vacancy to be

filled in 30 daysfilled in 30 days

Responsibilities, Powers and Responsibilities, Powers and Functions of Board of DirectorsFunctions of Board of Directors

Every listed company shall ensureEvery listed company shall ensure

a. Statement of Ethics and Business practices is a. Statement of Ethics and Business practices is preparedprepared

b. Board of directors to adopt vision statement, and b. Board of directors to adopt vision statement, and overall corporate strategy; formulate significant overall corporate strategy; formulate significant policies (for the purpose of risk management, policies (for the purpose of risk management, marketing, etc.) marketing, etc.)

c. Establish internal controlc. Establish internal control

d. Documentation by resolutions passed in meetings d. Documentation by resolutions passed in meetings on all serious issues. i.e. investment and dis-on all serious issues. i.e. investment and dis-investment of funds, loans, write-off of bad debts etc.investment of funds, loans, write-off of bad debts etc.

ee. Appointment etc. of Chief Executive to be . Appointment etc. of Chief Executive to be determined by the board.determined by the board.

f. Investment policy of modaraba institution to f. Investment policy of modaraba institution to be approved and reported in annual report.be approved and reported in annual report.

Significant issues to be placed for decision by Significant issues to be placed for decision by the board of directors (i.e. annual business the board of directors (i.e. annual business plan, budgets, joint ventures etc.) plan, budgets, joint ventures etc.) 

Orientation courses for directorsOrientation courses for directors..

Responsibilities, Powers and Responsibilities, Powers and Functions of Board of DirectorsFunctions of Board of Directors

Qualification of CFO and CSQualification of CFO and CS

CFO has to be:CFO has to be: a. professional accountant ; ora. professional accountant ; or

b.   graduate with 5 yrs experience in handling b.   graduate with 5 yrs experience in handling financial financial affairs in a listed company or a bank.affairs in a listed company or a bank.

CS has to be:CS has to be: a. professional accountant ; ora. professional accountant ; or b.   member of a recognized body of b.   member of a recognized body of

corporate/charteredcorporate/chartered secretaries orsecretaries or c.  lawyer ; c.  lawyer ; oror d.  a graduate with 5 yrs experience of handling d.  a graduate with 5 yrs experience of handling

corporate corporate affairs.affairs.

Financial ReportingFinancial Reporting

CORPORATE AND FINANCIAL REPORTINGCORPORATE AND FINANCIAL REPORTINGFRAMEWORKFRAMEWORKDirectors report to shareholders. Give complete and Directors report to shareholders. Give complete and candid position of the company. candid position of the company.

RESPONSIBILITY FOR FINANCIAL REPORTINGRESPONSIBILITY FOR FINANCIAL REPORTING i.i. Financial statements to be duly endorsed by CEO Financial statements to be duly endorsed by CEO

and CFOand CFOii.ii. Secretarial compliance certificate required with Secretarial compliance certificate required with

annual returnsannual returns

DISCLOSURE OF INTEREST BY A DIRECTOR.DISCLOSURE OF INTEREST BY A DIRECTOR.

AuditorsAuditors

AUDITORS NOT TO HOLD SHARESAUDITORS NOT TO HOLD SHARES

External Auditors and their spouse External Auditors and their spouse restricted to purchase shares in the restricted to purchase shares in the company they are auditing.company they are auditing.  

AUDIT COMMITTEEAUDIT COMMITTEE

i.i. not less than three member not less than three member committee preferably from non-committee preferably from non-executive directors. executive directors. 

ii. Committee to meet at least once every ii. Committee to meet at least once every quarter.quarter.

iii. CFO to attend meetings of Audit iii. CFO to attend meetings of Audit committeecommittee. .

Enforcement issues of the CodeEnforcement issues of the Code

INTERNAL DISCIPLINEINTERNAL DISCIPLINE Restricted to listed companiesRestricted to listed companies Regulation under section 34(4) of the Regulation under section 34(4) of the

Securities Exchange Ordinance, 1969 - Securities Exchange Ordinance, 1969 - structurally flawedstructurally flawed

Penalty- section 9(4) of the S.E. Ord, Penalty- section 9(4) of the S.E. Ord, 19691969

Soft lawSoft law Voluntary in natureVoluntary in nature

Based on self regulationBased on self regulation Drivers: Drivers: Incentive for better performance Incentive for better performance higher profits for the shareholders higher profits for the shareholders attracts more investmentattracts more investment Shareholders (minority rights under Shareholders (minority rights under

the Companies Ordinance, 1984 - the Companies Ordinance, 1984 - sections 263, 265, 290, 305)sections 263, 265, 290, 305)

Institutional investors- eg. Institutional investors- eg. Mutual Mutual funds, financial institutions, insurance funds, financial institutions, insurance companies (Calpers, etc)companies (Calpers, etc)

External DisciplineExternal Discipline

DriversDrivers Stakeholders (financial and community)Stakeholders (financial and community) Regulators (SECP Act, 1997/ CO Ord, Regulators (SECP Act, 1997/ CO Ord,

1984)1984) Institutional shareholdersInstitutional shareholders environmental lawenvironmental law labour and taxation laws.labour and taxation laws. Stock exchangesStock exchanges International credit rating firmsInternational credit rating firms MediaMedia NGOsNGOs

Key Areas to ConsiderKey Areas to Consider Shareholders rightsShareholders rights

Stakeholders rights (financial Stakeholders rights (financial institutions, employees, institutions, employees, Community) Community)

Corporate Social Responsibility Corporate Social Responsibility (CSR)(CSR)

Public sector corporations – new Public sector corporations – new legislations provide better legislations provide better governance structure.governance structure.

Other corporate vehicles: Other corporate vehicles: cooperative societies ?cooperative societies ?

Other vehicles of business: Other vehicles of business: Partnerships – no mention – doing big Partnerships – no mention – doing big businessbusiness

Corporate Governance:Corporate Governance:not limited to Companiesnot limited to Companies

3 RD PART3 RD PART Misconducts & ScamsMisconducts & Scams

Incredible India - The Land of ScamsIncredible India - The Land of Scams

Internal or Occupational FraudInternal or Occupational Fraud

DefinitionDefinition Violates the employee’s Violates the employee’s

responsibility to employerresponsibility to employer Is done secretly and is concealedIs done secretly and is concealed Is done to achieve a direct or indirect Is done to achieve a direct or indirect

benefitbenefit Costs the organization assets, Costs the organization assets,

revenue, or opportunityrevenue, or opportunity

Fraud CategoriesFraud CategoriesCategoriesCategories ExamplesExamples

Asset Misap-Asset Misap-propriationpropriation

Theft Theft of checks, cash, money orders, inventory, equipment, of checks, cash, money orders, inventory, equipment, supplies, infosupplies, info

Bribery & Bribery & CorruptionCorruption

BribeBribe to accept contractor bid or to accept contractor bid or Kickback, Collusion, Bid Kickback, Collusion, Bid riggingrigging..

ExtortionExtortion: threat of harm if demand not met; : threat of harm if demand not met;

False BillingFalse Billing: Providing lower quality, overcharging: Providing lower quality, overcharging

Conflict of interestConflict of interest in power decision in power decision

Corporate espionageCorporate espionage: Sell secrets: Sell secrets

Financial Financial Statement Statement

FraudFraud

Revenue OverstatementRevenue Overstatement: False sales: False sales

Understating ExpensesUnderstating Expenses: Delayed or capitalization of expenses: Delayed or capitalization of expenses

Overstating AssetsOverstating Assets: No write down of uncollectable accounts, : No write down of uncollectable accounts, obsolete inventory, …obsolete inventory, …

Understating LiabilitiesUnderstating Liabilities: Not recording owed amounts: Not recording owed amounts

Misapplication of Accounting RulesMisapplication of Accounting Rules, etc., etc.

VocabularyVocabularySkimmingSkimming: Taking funds before they are recorded into company : Taking funds before they are recorded into company

records.records.

Check TamperingCheck Tampering: Forged or altered check for gain.: Forged or altered check for gain.

Shell CompanyShell Company: Payments made to fake company.: Payments made to fake company.

Payroll ManipulationPayroll Manipulation: Ghost employees, falsified hours, : Ghost employees, falsified hours, understatedunderstated

leave/vacation time.leave/vacation time.

Fraudulent Write-offFraudulent Write-off: Useful assets written off as junk.: Useful assets written off as junk.

CollusionCollusion: Two or more employees or employee & vendor defraud : Two or more employees or employee & vendor defraud together.together.

False Shipping OrdersFalse Shipping Orders or or Missing/Defective Receiving RecordMissing/Defective Receiving Record:: Inventory theftInventory theft

How Fraud is DiscoveredHow Fraud is Discovered

Some fraud is discovered via multiple reporting methods,

Thus results do not sum to 100% Tips come from Employee 64%, Anonymous

18%, Customer 11%, Vendor 7%

How Fraud is Discovered

05

10152025303540

Tip By Accident Internal Audit InternalControls

External Audit Notified byPolice

%

After Fraud DiscoveredAfter Fraud Discovered

Why Fraud not Reported to Law Enforcement

0

10

20

30

40

50

Fear of bad publicity Internal disciplinesufficient

Private settlement Too costly to pursue

%

Discipline -May includerepayment

Terminationof Employment

Civil or Criminallegal action

Greed, graft, Greed, graft, politics, bribery, politics, bribery, dirty money. Just dirty money. Just another day in the another day in the life of a nation still life of a nation still rated among the rated among the most corrupt in the most corrupt in the world. Scan the world. Scan the scams that have scams that have grabbed headlines, grabbed headlines, destroyed destroyed reputations and left reputations and left many people many people poorer. poorer.

Who Does Fraud?Who Does Fraud? Most internal frauds committed by longer-Most internal frauds committed by longer-

tenured, older, and more educated stafftenured, older, and more educated staff Executives commit most expensive fraud Executives commit most expensive fraud

4-5 times more expensive than managers4-5 times more expensive than managers Men & women commit fraud in nearly Men & women commit fraud in nearly

equal proportions, but men’s are more equal proportions, but men’s are more expensiveexpensive

92% have no criminal convictions related 92% have no criminal convictions related to fraudto fraud

To steal a lot of money, you must have a To steal a lot of money, you must have a position of power and access: highly position of power and access: highly degreed olderdegreed older

CISA Review Manual 2009

Segregation of DutiesSegregation of Duties

Origination Verification

Authorization Distribution

Double-checks

Approves

Acts on

Red flags software can detectRed flags software can detect

Out-of-sequence checksOut-of-sequence checks Large number of voids or refunds made by Large number of voids or refunds made by

employee or customeremployee or customer Manually prepared checks from large Manually prepared checks from large

companycompany Payments sent to nonstandard (unofficial) Payments sent to nonstandard (unofficial)

addressaddress Unexplained changes in vendor activityUnexplained changes in vendor activity Vendors with similar names or addressesVendors with similar names or addresses Unapproved vendor or new vendor with high Unapproved vendor or new vendor with high

activityactivity

Encourage Security in IT Encourage Security in IT DepartmentsDepartments

Physical securityPhysical security Segregation of Segregation of

dutiesduties Employee Employee

monitoringmonitoring Surprise auditsSurprise audits Job rotation Job rotation

Examination of Examination of

DocumentationDocumentation

Quality Assurance

ProgrammerAnalyst

BusinessAnalyst

44THTH PART PART

Companies that set an example of best Companies that set an example of best Corporate GovernanceCorporate Governance

TATA Steel TATA Steel Corporate Governance Corporate Governance

IntroductionIntroduction Jamshetji Tata, the founder of the Tata Group Jamshetji Tata, the founder of the Tata Group

(1839-1904) and his son, Sir Dorab Tata were (1839-1904) and his son, Sir Dorab Tata were belief that business enterprises are created belief that business enterprises are created to to serve people and share their wealth as equitably serve people and share their wealth as equitably as possibleas possible. .

It manufactures products including It manufactures products including rods, pipes, rods, pipes, tubes and ringstubes and rings. However it also provides . However it also provides servicesservices such as such as personnel and technical trainingpersonnel and technical training, , IT and IT and Design and Engineering. Design and Engineering.

These products areThese products are exports exports primarily to primarily to Japan, Japan, USA, Middle East and South East AsianUSA, Middle East and South East Asian countries. countries.

The Company’s Corporate The Company’s Corporate Governance PhilosophyGovernance Philosophy

It introduced the It introduced the 8 hour working day in 19128 hour working day in 1912 an an amazing 36 years before the Indian government. amazing 36 years before the Indian government.

Welfare Department was introduced in 1917 and Welfare Department was introduced in 1917 and enforced by law in 1948 and enforced by law in 1948 and Maternity Benefit was Maternity Benefit was introduced in 1928introduced in 1928 and enforced by law in 1946. and enforced by law in 1946. Apart from Maternity benefits there are Apart from Maternity benefits there are schooling schooling facilities and leave with payfacilities and leave with pay..

The Company The Company emphasises the need for full emphasises the need for full transparency and accountabilitytransparency and accountability in all its in all its transactions, in order transactions, in order to protect the interests of its to protect the interests of its stakeholdersstakeholders..

Board of DirectorsBoard of Directors Ratan Tata has carried forward the Ratan Tata has carried forward the

legacy of his forefathers in legacy of his forefathers in maintaining higher degree of maintaining higher degree of transparency, accountability and transparency, accountability and corporate social responsibilitycorporate social responsibility. .

Apart from him there are several Apart from him there are several Board of director Mr. B. Board of director Mr. B. Muthuraman, Mr. Nusli N. Wadia Muthuraman, Mr. Nusli N. Wadia (well-known Indian Industrialist), (well-known Indian Industrialist), Mr. S. M. Palia, Mr. Suresh Krishna, Mr. S. M. Palia, Mr. Suresh Krishna, Mr. Ishaat Hussain, Dr. Jamshed J. Mr. Ishaat Hussain, Dr. Jamshed J. Irani, Mr. Subodh Bhargava, Mr. Irani, Mr. Subodh Bhargava, Mr. Jacobus Schraven, Mr. Andrew Jacobus Schraven, Mr. Andrew Robb, Mr. Hemant M. Nerurkar, Dr. Robb, Mr. Hemant M. Nerurkar, Dr. Karl-Ulrich KoehlerKarl-Ulrich Koehler

Corporate GovernanceCorporate Governance

As per SEBI’s guideline, the Company has As per SEBI’s guideline, the Company has adoptedadopted

Tata Code of Conduct, Tata Code of Conduct, Tata Business Excellence Model, Tata Business Excellence Model, Global Reporting Initiatives, Global Reporting Initiatives, Core valuesCore values

The Corporate Governance Model The Corporate Governance Model at the Tata Groupat the Tata Group

CG Model is based on the 3 CG Model is based on the 3 important foundations viz. important foundations viz. The Baldrige modelThe Baldrige model, from which , from which

the Tata Business Excellence the Tata Business Excellence Model (TBEM) is evolved, Model (TBEM) is evolved,

Tata ValuesTata Values, which are followed , which are followed by the Tata group companiesby the Tata group companies

The Indian Management The Indian Management PracticesPractices

CorporateGovernance

BaldrigeModel

Tata Values

The IndianManagement

Practices

Tata Steel Baldrige model

Five Core ValuesFive Core Values

ExcellenceExcellence : To achieve : To achieve the the highesthighest standards in standards in work and in the quality work and in the quality of the goods and of the goods and servicesservices..

Core Values

Integrity

Understanding

ExcellenceUnity

Responsibility

Integrity : Believe that conduct the business with : Believe that conduct the business with honesty and honesty and transparencytransparency..

Understanding Understanding : Believe in showing : Believe in showing care, respect, compassion care, respect, compassion

and humanity for its colleagues and customersand humanity for its colleagues and customers

UnityUnity : Work with customers and partners, building strong : Work with customers and partners, building strong relationships based on tolerance, understanding and mutual relationships based on tolerance, understanding and mutual cooperation.cooperation.

ResponsibilityResponsibility : Responsible, sensitive to the countries, : Responsible, sensitive to the countries, communities and environmentcommunities and environment

CommitteeCommitteeThe Company had constituted The Company had constituted Audit Committee, Audit Committee, Remuneration Committee, Remuneration Committee, Investors’ Grievance Committee (for Shareholders)Investors’ Grievance Committee (for Shareholders) Executive Committee of the Board, Executive Committee of the Board, Nomination Committee, Nomination Committee, Committee of Directors, Committee of Directors, Ethics and Compliance Committee and Ethics and Compliance Committee and Safety, Health and Environment CommitteeSafety, Health and Environment Committee

General Shareholder InformationGeneral Shareholder InformationPerformance of TATA Steel share price to BSE Sensex 2010-11Performance of TATA Steel share price to BSE Sensex 2010-11

Unclaimed DividendUnclaimed Dividend Global Depository Receipts (GDRs) Global Depository Receipts (GDRs) Market Information (2010-2011)Market Information (2010-2011)

Registrar and Transfer Agents Registrar and Transfer Agents Distribution of Shareholding – Ordinary Distribution of Shareholding – Ordinary

sharesshares Categories of Shareholders – Ordinary Categories of Shareholders – Ordinary

Shares Shares

Company’s shares are Company’s shares are regularly regularly traded on Bombay traded on Bombay Stock Exchange Limited and Stock Exchange Limited and National Stock Exchange of National Stock Exchange of India LimitedIndia Limited..

More information of More information of shareholders are also shareholders are also available on webavailable on web

General Shareholder InformationGeneral Shareholder Information

Means of CommunicationMeans of CommunicationThe quarterly/half-yearly results of the Company are publishedThe quarterly/half-yearly results of the Company are published Indian Express, Indian Express, Financial Express, Financial Express, Nav Shakti, Nav Shakti, Free Press JournalFree Press Journal Displayed on the website of the Company.Displayed on the website of the Company.

Also quarterly results are sent by email to ShareholdersAlso quarterly results are sent by email to Shareholders whose whose email ids are registeredemail ids are registered

Presentation to Institutional Investors or to analysts –Presentation to Institutional Investors or to analysts – Official news releases and presentations made Official news releases and presentations made Analysts are posted on the Company’s website.Analysts are posted on the Company’s website.

Corporate GovernanceCorporate Governance

IntroductionIntroduction Infosys had accepted the Infosys had accepted the recommendationsrecommendations of of

both the both the CII and Kumar Mangalam Birla committeeCII and Kumar Mangalam Birla committee

Infosys provided details on high or low Infosys provided details on high or low monthly monthly averages of share pricesaverages of share prices in in all the stock exchanges all the stock exchanges on which the companies share were listedon which the companies share were listed

As per the Credit Lyonnais Securities Analysis As per the Credit Lyonnais Securities Analysis (CLSA), the corporate governance ratings of the (CLSA), the corporate governance ratings of the Software firms are higher than those of other Software firms are higher than those of other Indian firmsIndian firms and ranked and ranked second in corporate second in corporate governancegovernance among 495 emerging companiesamong 495 emerging companies as as per the surveyper the survey

Infosys Technologies: The Best Infosys Technologies: The Best among Indian Corporateamong Indian Corporate

Infosys, based in Infosys, based in BangaloreBangalore, is a publicly held, , is a publicly held, ISO 9001 certified company offering ISO 9001 certified company offering information information technology consulting & software servicestechnology consulting & software services

RespectedRespected across the country, with very strong across the country, with very strong systems, systems, high ethical values & a nurturing high ethical values & a nurturing working atmosphereworking atmosphere..

Net income of USD 349 million and revenue of Net income of USD 349 million and revenue of USD 1.3 billion .USD 1.3 billion .

Market capitalization (June 30, 2011) Rs.159,429 Market capitalization (June 30, 2011) Rs.159,429 CroreCrore

AchievementsAchievements Voted as the Voted as the Best Managed Company Best Managed Company in in

AsiaAsia

Biggest exporters of SoftwareBiggest exporters of Software

First to follow the US Generally Accepted First to follow the US Generally Accepted Accounting Principles before going for Accounting Principles before going for Nasdaq listing in 1991Nasdaq listing in 1991

Championed Corporate Governance in Championed Corporate Governance in IndiaIndia

Narayana Murthy’s Global Strategy Narayana Murthy’s Global Strategy

Global Delivery ModelGlobal Delivery Model – – Producing where it is most Producing where it is most cost effective to produce & cost effective to produce & selling where it is most selling where it is most profitable to sell.profitable to sell.

Moving up the Value ChainMoving up the Value Chain – – Getting involved in a software Getting involved in a software development project at the development project at the earliest stage of its life cycle.earliest stage of its life cycle.

PSPD ModelPSPD Model – Predictability of – Predictability of Revenues, Sustainability of Revenues, Sustainability of Revenues, Profitability, De-Revenues, Profitability, De-risking.risking.

`Some Companies who have won `Some Companies who have won “Institute of Company Secretaries of India's”“Institute of Company Secretaries of India's” (ICSI) ICSI)

National Award for Excellence in Corporate GovernanceNational Award for Excellence in Corporate Governance

Dr. Reddy’s Lab. Ltd. Dr. Reddy’s Lab. Ltd. (2010)(2010)

BSESBSES Larsen & Toubro Ltd. Larsen & Toubro Ltd.

(2010)(2010) Maruti Suzuki India Ltd. Maruti Suzuki India Ltd.

(2009)(2009) Mahindra & Mahindra Ltd Mahindra & Mahindra Ltd

(2008)(2008) Tata Consultancy Services Tata Consultancy Services

(TCS) (2007)(TCS) (2007) Trident Group (2006)Trident Group (2006)

Dabur India Ltd.(2005)Dabur India Ltd.(2005) Infosys Technologies Infosys Technologies

Ltd. (2005)Ltd. (2005) Hero Honda Motors Ltd Hero Honda Motors Ltd

(2004)(2004) Wipro Ltd (2004)Wipro Ltd (2004) HDFC (2003)HDFC (2003) Tata Iron and Steel Tata Iron and Steel

Company Ltd (TISCO) Company Ltd (TISCO) (2002)(2002)

ConclusionConclusion From this project we get to learn what is basically From this project we get to learn what is basically

Corporate Governance and why is it actually needed in Corporate Governance and why is it actually needed in companies. We also learnt about the guidelines set by SEBI companies. We also learnt about the guidelines set by SEBI for Corporate Governance. We studied a company Tata for Corporate Governance. We studied a company Tata Steel and Infosys especially the section on Corporate Steel and Infosys especially the section on Corporate Governance and tried to understand as to how compliant Governance and tried to understand as to how compliant they are in following the SEBI guidelines. they are in following the SEBI guidelines.