Venkaiah Naidu calls for better corporate governance
Corporate governance is a key element in improving economic efficiency and growth as well as enhancing investors’ confidence, Naidu said.business Updated: Mar 24, 2018 00:05 IST
Vice-president M Venkaiah Naidu on Friday stressed the need for improving corporate governance, calling it a key element in increasing economic efficiency, boosting growth as well as enhancing investor confidence.
“Good corporate governance should provide proper incentives for the board and management to pursue objectives that are in the interests of the economy and its shareholders and should facilitate effective monitoring,” Naidu said at the ‘Mint Corporate Strategy Awards’ ceremony in Mumbai. “Effective corporate governance system, within an individual company and across an economy as a whole, helps to provide a degree of confidence that is necessary for proper functioning of a market economy.”
Corporate governance standards in India have come under a cloud after recent financial frauds and other issues related to the corporate sector.
“While liberalisation, a digital revolution and reforms like ease of approvals seek to cut down red tape and help promote growth of the corporate sector, ironically some unscrupulous individuals and companies are trying to misuse the system and indulge in fraudulent practices. Of course, some dishonest officials also collude and become party to such unethical practices,” the vice president, who is also chairman of the Rajya Sabha, said.
Naidu said most family-owned companies were unable to distinguish between their business and personal interests. “Thus, decisions are often made to suit the family and not necessarily in the best interest of the firm. This is an important corporate governance issue to be resolved in such a way that family funds and corporate funds are not seen as the same as was revealed in some cases recently,” Naidu said.
Naidu added that reforms in corporate governance would help Indian companies open up new vistas of global opportunities.
Higher corporate governance standards need to be propelled by the larger ethical and environmental concerns as well, he insisted. “Climate change has emerged as a major concern which we cannot afford to ignore. Every investment decision sets in certain processes with demonstrated impact on the climate. So, environmental audit of corporate decisions is essential,” he said.
Naidu presented the awards for the best corporate strategies adopted in India. The awards were to honour companies that have fine-tuned their strategies to address the changing business environment. The awards were divided into four categories -- Classical, Adaptive, Shaping and Renewal.
The winner in the Classical category was Ayesha Motors, and the runners up were Castrol and Pernorica. The winner in the Adaptive category was Tata Sky, and the runners up were Sony Pictures Network India and Edelweiss. The winners in the Shaping and Renewal categories were Bajaj Finance and Tata Steel, respectively.
Torrent Pharma was the runner-up in the Shaping category, and InterGlobe Enterprises, which runs the airline Indigo, and Adani Power were runners up in the Renewal category.