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India Inc's Absentee Independent Directors

Published on Sat, Sep 15,2012 | 11:14, Updated at Sat, Sep 15 at 11:21Source : CNBC-TV18 |   Watch Video :

The quality of a board of directors is a one important measure of a company's commitment to good governance. Large, diversified boards with fewer family members and more independent directors tell a good story. And if some of those independent directors are well known business leaders of their own standing then the tale gets taller. But here's the twist... how many celebrity independent directors actually turn up to work? We came across a few that rarely attend board meetings. If ever! Here are some of India’s absentee independent directors!

Self made entrepreneur Analjit Singh is the founder and chairman of Max India – a business group with interests in healthcare, IT services and insurance. A Padma Bhushan awardee Singh’s influence runs far and wide. Besides running a group with over 70 billion rupees in revenue, Analjit Singh is a Member of the Prime Minister’s Joint Indo-US CEOs Forum; Executive Board Member of the Board of Governors, Indian School of Business; Chairman of the Board of Governors, Indian Institute of Technology, Roorkee; Chairman, Board of Governors, The Doon School; Chairman, Bhai Mohan Singh Foundation and Member of the Bharti Foundation Governing Board. Maybe that explains Analjit Singh's poor attendance record as independent director on board 3 very well known companies!

Singh has been on the board of FMCG company Dabur since October 2008. In the last 3 years of his tenure as independent director, Dabur held 14 board meetings. Analjit Singh attended 1. This year he finally called it quits.

Analjit Singh On Dabur’s Board

                                      FY10       FY11       FY12
Meetings Held                  4              6              4         
Singh Attended                1              0              0

Total
1/14

AGMs
0

Dabur’s Response to The Firm

“Mr. Analjit Singh is no longer a director on the board of Dabur India Ltd. Mr. Singh had, in early July this year, written to Dabur saying would not be able to continue on the board of directors of Dabur due to his other engagements. The same was also communicated to all shareholders at the company’s AGM held on July 17th.”

Singh may have resigned as director but not before Dabur, undeterred by his long absence, proposed to shareholders this year that Singh be reappointed! When we asked Dabur why it wanted to reappoint a director that rarely attended board meetings; we got silence.

But Hero Motocorp was quick to leap to its own and Analjit Singh's defence. We asked the company to explain why Singh had attended just 3 of a total 16 meetings held in the last 3 years. Hero said he may not make it to meetings but he sure does talk to the chairman!

Analjit Singh On Hero’s Board

                                     FY10       FY11       FY12
Meetings Held                  6              5              5           
Singh Attended                2              1              0

Total
3/16

AGMs
0

Hero Motocorp’s Response to The Firm

"Contrary to your inference, Mr. Analjit Singh was an active and highly-regarded member of the Hero MotoCorp board of directors. During his tenure on the Board, he played an important role by taking the initiative to facilitate separate discussions on key subjects among the Independent Directors. He might not have been able to attend in person some of the board meetings, but always made valuable contributions by sharing his views and thoughts on all items in the agenda including key strategic matters directly with the Chairman before each board meetings. Mr. Singh's low attendance in the board meetings of Hero MotoCorp does not reflect anything other than a frequent clash of dates between that of our board meetings and his unavoidable engagements such as foreign travel or meetings at very high levels of the government."

As we were putting together this story, it emerged that Analjit Singh retired by rotation from the Hero board this year and did not seek re-appointment.

But wait there’s more - another blue chip company, another dismal attendance record. Of the 19 meetings Tata Global Beverages Ltd held in the past 3 years, independent director Analjit Singh attended 4. Tata Global Beverages did not respond to our queries.

Analjit Singh On Tata Global Beverages’ Board

                                        FY10       FY11       FY12
Meetings Held                  5              7              7             
Singh Attended                1              1              2

Total
4/19

AGMs
0

So the final tally - 3 boards, 3 years, 49 meetings held and only 8 attended.  I get that Mr. Singh is a very important and a very busy man. But then why take on directorships, especially independent directorships? A question we have no answer to because Analjit Singh's office refused to comment.

At the other end of the country a similar story comes to light. He's the grandson of TVS founder TV Sundaram Iyengar – one of south India's best known business families. As Chairman & Managing Director of TVS Motors, Venu Srinivasan steers the fortunes of India’s 3rd largest two wheeler manufacturer. In 2009 he also took on the mantle of CII President, one of the country's foremost business chambers. It was during his one year term that CII recommended voluntary corporate governance standards for its member companies. Given his experience Mr. Srinivasan is undoubtedly a big asset to any corporate board. When he attends that is.

Srinivasan joined the board of engine manufacturer Cummins as Independent Director in January 2000. In the last 3 years - of the 16 board meetings held by the company, Venu Srinivasan has attended 5.

Venu Srinivasan On Cummins’ Board

                                       FY10       FY11       FY12
Meetings Held                  6              6              4             
Srinivasan Attended        1              3              1

Total
5/16

AGMs
2

His attendance record as Independent Director on board Tata Coffee is worse. 2 of 20

Venu Srinivasan On Tata Coffee’s Board

                                      FY10       FY11       FY12
Meetings Held                  5              8              7             
Srinivasan Attended       1              1              0

Total
2/20

AGMs
0

Venu Srinivasan’s tally is 7 of 36. Neither the companies nor Mr Srinivasan responded to our queries.

Keeping Analjit Singh and Venu Srinivasan company on the absentees list is Chirayu Amin – a man who straddles two very different worlds...pharmaceuticals and cricket! You may better know him as the man who took over IPL after Lalit Modi but the Vice President of the BCCI is also Chairman and Managing Director of Alembic – a well known, public listed pharmaceutical company. But even in Mr Amin's day there are only 24 hours. Not enough to mark presence as Independent Director at the board meetings of United Phosphorus. So in 3 years and 16 meetings, Chirayu Amin has made it to a grand total of 3!

Chirayu Amin On United Phosphorus’ Board

                                      FY10       FY11       FY12
Meetings Held                  4              5              7             
Amin Attended                1              1              1

Total
3/16

AGMs
0

To be fair...his attendance as Independent Director on Elecon’s Board is far better. He’s been to 8 out of 12 meetings and all 3 AGMs. I wonder if that has anything to do with the other Amin on board?

Chirayu Amin On Elecon’s Board

                                        FY10       FY11       FY12
Meetings Held                  4              4              4             
Amin Attended                 2              3              3

Total
8/12

AGMs
3

Many celebrity independent directors maybe absentees - but not all absentee directors are celebrities.

61 year old Mohan Gyani is a telecoms expert and an Independent Director on the Idea Cellular board. One with a 25% attendance record. Last year he attended 3 of a total 12 meetings. We couldn't reach Mr Gyani and couldn't get Idea to comment.

Mohan Gyani On Idea’s Board

                                      FY10       FY11       FY12
Meetings Held                  4              4              4             
Gyani Attended                0              1              2

Total
3/12

AGMs
0

To be fair – these are just a few names. It’s not our intention to embarrass the personalities mentioned on the company boards they serve on. Besides I’m sure if you did a close inspection of the companies you are invested in you will find many more absentee independent directors in India Inc.  What worries me is that - most companies named in this story are well known, well respected companies. Yet if they can't ensure their independent directors attend then I can only wonder what goes on in lesser known companies. What’s the point of Clause 49 and 50% independent directors if they don’t attend? 

 
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