Global investors should not see Satyam as a 'red flag': Nath | business | Hindustan Times
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Global investors should not see Satyam as a 'red flag': Nath

The regulatory mechanism in India may be strengthened in view of the Satyam episode, Commerce and Industry Minister Kamal Nath said, but added that the global economy should not view this single incident as a 'red flag'.

business Updated: Jan 28, 2009 12:56 IST

The regulatory mechanism in India may be strengthened in view of the Satyam episode, Commerce and Industry Minister Kamal Nath said, but added that the global economy should not view this single incident as a "red flag".

In an interview to BBC Hardtalk, Nath said the edifice of India is based on its performance over the last 10-12 years. There are huge investments from all parts of Europe and the US, and the investors are not looking at this as a red flag.

Nath further said the reconstituted board of the company comprises experts and eminent persons and the regulatory mechanism could be strengthened based on the investigations in Satyam. He, however, disagreed that the fraud was being perpetrated for too long.

When pointed out that the previous board also had very eminent people, Nath said, "They depended on the auditors and I don't think the board can get into the micro (management) of a company ... No board in the world is engaged in micro management of (a) company."

Asked whether the Satyam episode would dampen investor sentiment across the world, he said around 60 per cent of the Fortune 500 companies are invested in India. "I think it's (because of) the confidence that they have in India ...," he added.

On the point that independent directors and shareholders are reluctant to raise issues before the company's founder, Nath said, "It's as true as false as it is in Europe and the US. In fact, the Indian Companies Act is tougher ... Besides we have to prove more as an (up-and-coming) economy."The regulatory mechanism in India may be strengthened in view of the Satyam episode, Commerce and Industry Minister Kamal Nath said, but added that the global economy should not view this single incident as a "red flag".

In an interview to BBC Hardtalk, Nath said the edifice of India is based on its performance over the last 10-12 years. There are huge investments from all parts of Europe and the US, and the investors are not looking at this as a red flag.

Nath further said the reconstituted board of the company comprises experts and eminent persons and the regulatory mechanism could be strengthened based on the investigations in Satyam. He, however, disagreed that the fraud was being perpetrated for too long.

When pointed out that the previous board also had very eminent people, Nath said, "They depended on the auditors and I don't think the board can get into the micro (management) of a company ... No board in the world is engaged in micro management of (a) company."

Asked whether the Satyam episode would dampen investor sentiment across the world, he said around 60 per cent of the Fortune 500 companies are invested in India. "I think it's (because of) the confidence that they have in India ...," he added.

On the point that independent directors and shareholders are reluctant to raise issues before the company's founder, Nath said, "It's as true as false as it is in Europe and the US. In fact, the Indian Companies Act is tougher ... Besides we have to prove more as an (up-and-coming) economy."