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Tisco bags Corporate Governance Award for 2000

Priya Ganapati in Bombay

And the winner is...Tata Iron & Steel Company Limited (Tisco). The flagship company of the Tata group was, on Tuesday, conferred the Corporate Governance Award for the year 2000.

Instituted by the Ministry of Finance and announced in the Budget speech for 1999 by Union Finance Minister Yashwant Sinha, the award is aimed at boosting investor confidence in the capital markets. The award has been sponsored by Unit Trust of India for the first five years.

The second recipient of the award, Tisco, was given a citation and trophy by the Reserve Bank of India Governor Bimal Jalan at an award ceremony held in downtown Bombay.

The award was accepted by Ratan Tata on behalf of Tisco. Infosys Technologies Limited was the winner of the first award for 1999.

Though the occasion was supposed to be graced by the Finance Minister Yashwant Sinha and the finance secretary Ajit Kumar both dropped out at the eleventh hour citing "unscheduled meetings in Delhi".

Justice M N Venkatachaliah, former Chief Justice of India, who headed the panel that selected Tisco as the winner too was indisposed and could not attend the ceremony.

The result: a lacklustre event that was otherwise redeemed by enthusiastic UTI and Tata group employees who had been invited to the ceremony. However, officials of the ministry of finance were conspicuous by their absence.

The absence of finance ministry officials was compensated by Bimal Jalan who said that he had to attend to the event because the finance minister had requested him. "We are forever cleaning up the central government's deficit," laughed Jalan.

Jalan, who presided over a function to present the award called for greater transparency in India's corporate sector and said that it was crucial for carrying out reforms.

He said that the issue of corporate governance had come to the fore because of certain events that have taken place in the financial sector this month.

"Corporate governance is important for everybody...for shareholders and for the economy. Corporate governance is important if we have to move of the path of economic reform. It is inextricably linked with the reforms that we so strongly want in our economy," he declared.

The corporate governance award is decided by a panel of judges, comprising professionals from the financial markets and chaired by a retired judge from Supreme Court. The committee is formed by the Ministry of Finance and the logistics are provided for by the Unit Trust of India.

This year's panel was headed by Justice Venkatachaliah and included Y H Malegam, one of the directors of RBI, P S Subramanyam, chairman of UTI and Terjani Vakil, former chairperson, Exim Bank of India.

The screening of companies for excellence in corporate governance is based on both quantitative and qualitative factors.

The quantitative factors include adequate representation of independent directors on the board, existence of prudential checks like audit committee which enable the board to adequately guide the management, adherence to prescribed accounting standards and quality of disclosures relating to financial and other information provided to shareholders in the annual reports, frequency and content of communication of financial and operating data to the shareholders and to the public, investor-friendly procedures.

This year 63 companies were shortlisted for the award and were rated on the basis of the above mentioned factors.

Some qualitative factors like enhancement of shareholder value vis-à-vis the industry performance, discharge of social obligations and obligations related to employee welfare, general concern for the environment, ethical code of conduct, HRD policies for succession, delegation, and empowerment of employees and innovative practices to improve quality of life for other stakeholders of the company were also considered.

While companies today have an option, with March 2001, it would become mandatory for them to adopt corporate governance.

"Economic reforms mean de-regulation and less control. But it also implies that there has to be some framework of standards by which each company can work," Jalan said.

Sounding a cautionary note to enthusiasts advocating total economic liberalisation, Jalan said that it is important for companies to first come clean and avoid growth through deception and falsity. Only then can economic reforms succeed, he said.

"In the last few years we have been trying to move towards de-regulation and a more competitive system. But how do you avoid micro-regulation if there is no self-regulation present? If somebody diverts money that is to be used for one purpose to another or if somebody does not do what he says he will, then there is an outcry. At that time, in a liberalised economy where will there be a regulator or a government that can step in?" he questioned.

Incorporated in 1907, Tisco is one of the oldest Indian companies and was established by J N Tata. One of the earliest corporates to adopt social responsibility, Tisco maintains townships for its employees and takes care of the employees even after their retirement and has one of the longest zero-strike record in Indian corporate sector.

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