Theme: Lead Corporate India - Role of Company Secretary

37th National Convention of Company Secretaries

Board as a Strategic Asset – Company Secretary, The Custodian

Ravi KastiaGroup Executive President & Business Head Aditya Birla Group05th November 2009

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Turbulence in Global Economy

Board of Directors as a Strategic Asset

Company Secretary as a Custodian

Managing Growth in Turbulent Times

Contents

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Prices peaked and collapsed across asset classes

Sub-prime crisis spreads globally

Credit markets seized post Lehman collapse

Distress sale of stressed companies

Unprecedented Government bail-outs

Banks forced to de-leverage

Major developed economies slipped into recession

Unemployment rates increased

Turbulence in Global Economy – 2008

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Unprecedented global monetary and fiscal stimulus

Growth has rebounded in emerging economies

Major economies coming out of recession

Asset prices have rebounded from 2008 low levels

De-leveraging process continued

Significant belt tightening in the first half

Focus on Corporate Governance

Turbulence in Global Economy – 2009

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Where do your Board Stands ?

Source - Deloitte

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Members have requisite experience

Members are placed in appropriate roles

Roles are clearly defined and deliverables understood

There is effective group dynamics

Purposeful dialogue occurs in Board meetings

Independent Directors contribute

Information is shared in time with members

Assessment mechanisms are in place to evaluate effectiveness

Board - A Strategic Asset

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Board as a Strategic Asset plays a role towards ensuring

Management strategy is grounded in reality

Management decisions are well thought out and based on balanced

perspectives

Shareholder and Stakeholder value continues to increase

Robust Corporate Governance structures are in place and

functioning

One individual or faction within the Board cannot steer the Board’s

and the organization’s efforts too far in one direction

Role of Board as a Strategic Asset

The enormous uncertainty in today's environment makes strategic intervention in stakeholder value management all the more important for the

Board

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Role of Company Secretary

Source - ICSI

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As a Custodian, the Company Secretary "protects the value" that the

Board "creates" by –

Ensuring Corporate Compliance

Developing good governance structures

Coordinating the functioning of the Board

Ensuring ethical corporate practices

Facilitating smooth communication between the Board and Management

Providing administrative support to the Board

Role of Company Secretary - The Custodian

Effective functioning of Company Secretary ensures that Board of Directors can focus on important business issues and not on peripheral issues

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An effective Company Secretary:

Ensures good Corporate Governance

Maintains confidentiality, accountability and independence

Ensures fool proof documentation

Safeguards assets and properties of the Company

Optimizes utilization of Board’s expertise and competence

Role of Company Secretary - The Custodian

Behind great corporate progress – there is a strong backbone –the Company Secretary

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Board comprises of Eight independent directors of a total 15.

Institutionalized concept of lead independent director with clear mandate of responsibilities

Robust criteria and framework for selection of independent directors

Clear demarcation of responsibility and authority of the Board

Retirement Policy

Board Compensation Policy

First Company in India to be assigned the highest Corporate Governance Rating (CGR) by ICRA

Case Studies 1 - Infosys

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Transitioned from niche player in low growth low margin Computer

market to Consumer Electronics major

Key Strategy of the Board – Innovation and Sustained Value Creation

Product Innovation -iPod and iPhone

Business Model Innovation – iTunes online music service was

something that had eluded music industry for years

Innovation helped the company to become a player at the centre of a

market 30 times its original market

Apple has comprehensively beaten the current market downturn

Case Studies 2 – Apple Inc.

Source - BCG

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Case Studies Contd….

When the Board fails ??

Board failures will in all likelihood result in the company’s demise

Enron saga: Enron's audit committee reportedly didn’t have the technical knowledge to properly question the auditors on accounting related to the company's special purpose entities.

Radio Corporation of America fiasco:Board judgment on investments into television networks and electronic products turned into heavy money losers, eventually bringing the company to the brink of collapse

Pan American Airlines disaster:Board could not manage the airline market dynamics

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Managing Growth in Turbulent Times

Turbulent Times

4. Rationalize Capex

5. Manage Risk

3. Debt reduction

1. Conserve Cash

2. Cost Optimization

6. Formulate Strategies for Growth

8. Strengthen Corporate Governance

7. Stay Focussed

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Thank you!