Volkswagen, toshiba and industrivärden a way to go

Volkswagen,
Toshiba and
Industrivärden
- A way to go!

Volkswagen, Toshiba and Industrivärden - A way to go! what gets measured gets managed - IV
Copyright
Inactivity Based Cost Management -
Copyright c REGN. NO. L- 27490/2006
DATED December 1, 2006
Govt. of India, Copyrights Office, by the
Author, Jayaraman Rajah Iyer
IBCM© Research 2016
IBCM© Research 2016 CREAM™ Report – Corporate Rating Page 2 of 22

Executive Summary
In continuation of my offering a measuring device for Corporate Management
Operating System I am pleased to post this fourth paper in the series what gets
measured gets managed.
This post offers the measuring device, under the banner Volkswagen, Toshiba,
Industrivärden - A way to go!
Reference to earlier papers:
VW#1: Article in Slideshare: Can VW fiasco be avoided? Nope, Not with a
spreadsheet organisation structure.i
Q: Non-financial material events were not part of a measuring device and there was
never a need that existed. Material events were noted but never was measured.
Several committees were formed mandatory or ad hoc but was not measured.
Corporate structure stops with that, merely a spreadsheet corporate structure. UQ:
It exhorted: The spreadsheet structure is limited to transactions and crucial material
events do not get measured. Volkswagen needs to establish a corporate structure
encompassing wide area of policy making to practices to covering mandatory
regulatory requirements to non-mandatory initiatives. Secondly, current corporate
structure is entirely Object oriented. Volkswagen structure is not designed to deliver
and measure what the Subject does or doesn't do.
It also brought to notice the gridlock Corporate have pit themselves into: Q: In a
survey of 378 global companieson Corporate Sustainability - A Progress Report by
KPMG International in cooperation with Economist Intelligence Unit on Corporate
Sustainability - KPMG – EIU a Progress report12 – there is a stunning statement –
Many firms are grappling with the problem of deciding exactly what and how to
measure - page 16; Deciding how to measure is more difficult than deciding what to
measure. page 29- (EIU report findings): UQ.
It went on to suggest adoption of Corporate Atomic Structure, that satisfies what
Kant had raised the question whether a science of metaphysics with a logical
structure like that of the well-established mathematical and natural sciences would

be possible? The article addressed these issues as to how and what Corporate
Atomic Structure is made up of, by defining Return on Intangible.
VW#2: Article in Slideshare : Who failed Volkswagen, is it Corporate Governance or
Management Quality?ii
This paper gave insight into the Management Quality of an organisation
differentiating from the humdrum of Corporate Governance. The Corporate Atomic
Structure is well structured to give a specific slot to Corporate Governance. It
highlighted the two processes, two processes alone that make up Corporate Atomic
Structure, Creative Process and Action Process. With only two processes the data is
organised and with the Subject-Object distinction of Qualitative and Quantitative
elements of management the data contracts to the lowest possible level. Data
becomes manageable and measurable. That's the Ockham's razor for you.
Sustainability of Value system is highlighted so as to give prominence to Ethical
Responsibility being measured. Toshiba fiasco was also brought to focus vis-à-vis
Volkswagen placing the fiascos to their respective slots.
VW#3: Article in Slideshare : Can Matthias Müller's top priorities steer Volkswagen
back on track?iii
Mathias Müller's top priorities were:
1. “Our customers are at the core of everything that our 600,000 employees
worldwide do”, he said. According to Müller, Volkswagen is working intensively to
develop effective technical solutions. In contact with the Kraftfahrtbundesamt (KBA -
German Federal Motor Transport Authority) the implementation is set to begin in
January 2016.
2. “We must uncover the truth and learn from it”, he said, adding that Volkswagen is
being extremely thorough in its analysis.
3. Müller’s third priority is to introduce new structures in the Volkswagen Group.
“The key point is that Group management will be decentralized to a greater extent in
the future”, he said, with more independence for the brands and regions.
4. As his fourth priority, Müller is driving forward a realignment of the Group’s

culture and management behavior. He noted that the pursuit of perfection, the
employees’ commitment and social responsibility in the Volkswagen Group must be
retained.
5. The Volkswagen CEO announced that the fifth priority will be to transform the
Group’s Strategy 2018 into a Strategy 2025. “Many people outside of Volkswagen,
but also some of us, did not understand that our Strategy 2018 is about much more
than production numbers. A lot of things were subordinated to the desire to be
“Faster, Higher, Larger”, especially return on sales.”
The Article referred was very well received from Germany as well as USA, for it
pinpointed the pitfalls of these statements and suggested the means to get going by
the Subject-Object Distinction of Qualitative and Quantitative elements of
Management. The 5 top priorities were analysed as to fit in the three categories the
paper highlighted: 1. Sustainability of efficiency - i. effective technical solutions; 2.
Sustainability of value system - ii. uncovering the truth and learning from it, iii.
realignment of culture and management behaviour; and 3. Sustainability of profits -
iv. introduce new structures and v. Shifting focus from Strategy 2018 to strategy
2025. Central theme of the paper published emphasised sustainability of efficiency
would being about profits but sustainability of values alone can ensure sustainable
profits.
Two important points were derived in order to achieve the 5 top priorities:
1. From Return on Investment as a management tool change to Return on Intangible
as the primary tool of management operating system that converts n-dimensional
problems to n-problems of one dimension.
2. Self-governance is the ultimate in decentralisation.
The three articles emphasise the need to restructure an organisation In dealing with
the Subject, that is crucial to bring the abstractions into reality, acknowledge value
where value is due, and deconstruct what is valueless. This is the major problem
companies are grappled with.
Now the fourth article brings into focus continued struggle of companies and
provides an extensive analysis of a major MNC in India Hindustan Unilever Ltd. [HUL]
with data obtained from the public domain.

The fourth article:
VW#4: Volkswagen, Toshiba and Industrivärden - A way to go!
Corporate history since the industrial revolution has been an enormous growth in
freedom of enterprise, economic prosperity, innovation, technical and intellectual
advancement but it has also been, stoking the passions of greed, a slow and sure
decay of morality and social order. The achievements have been par excellence and
companies like Volkswagen are a necessity in the global economic growth that the
third article concluded. Lack of Corporate Governance results in transgression of
Policies whereas lack of a Policy leads to vacuum in Management Quality. In case of
Volkswagen it was a lack of a Policy that would not have permitted for a cheat
software ever to emerge. Whereas for Toshiba it was transgression of policies that
led to lack of Corporate Governance. Corporate Governance as a nomenclature used
liberally needs correction, as the previous articles elaborated. But how?
This article has added another number Industrivärden to the ever growing list of
companies in the onslaught on ethical responsibility. In an editorial New Brooms:
Sweeping away the corporate scandals: VW, Toshiba and Industrivärden need to
tackle tarnished reputations FTiv
rather commends Sweden for an image of being
egalitarian and ethical country. Corporate jet scandal that rocked Industrivärden
possibly was a mere traffic offence compared to what Volkswagen and Toshiba did.
Amidst the addition of advancement in many a field, Corporate has failed to contain
its greed. Corporate tries to rule its conduct by means internal to itself, by technique
not self control. Profits not morality dominate corporate objectives and power to
operate them. Tarnished reputations stick with the companies like Volkswagen,
Toshiba and Industrivärden whereas Matthias Müller, Masashi Muromach, Helena
Stjernholm are individuals entrusted with the task of sweeping away the corporate
scandals. How would they succeed?
The three CEOs have their jobs cut out, tossing between the speculators in the
market, legislature, regulatory authorities and at the same time trying to convince
the consumers. In this context what I had pointed out of Siemens whose Code of
conduct was described as the ― read, laughed and filed code is pertinent. If
Volkswagen, Toshiba and Industrivärden are going to be a repeat of Siemens, a
closely guarded secretive management internal to themselves, then the three CEOs
have lost their lifetime opportunity for a change management that manufacturing
industry warrants. What Siemens did to erase the tarnished reputation ought to

have been a good benchmark for others to follow, but not to be so. Internal
technique is of the Object whereas Self-control is of the Subject. The advancement
in technology is of the Object, begging for advancement in management is of the
Subject. Many a technique is available for Sustainability of Efficiency but not for
Sustainability of Value System.
When Corporate tries to rule its conduct by means internal to itself, by technique
not self control, means ethical responsibility is not assumed. Industrivärden
Corporate Governance Report sounds good. Quote: Promoting sustainable business
in the form of environmental responsibility, corporate social responsibility and
business ethics is a strategic ownership issue. For us, this is an important area, and
as owners we attach great importance to ensuring that our portfolio companies
have the boards, the leadership, the organisation and the resources needed to
integrate sustainable value creation into their business models, strategies and
product offerings. Unquote. However, to reiterate what KPMG-EIU survey findings:
Deciding how to measure is more difficult than deciding what to measure, does
Industrivärden form part of the 378 global companies that KPMG-EIU survey report
mentions? Good intentions however well written they are have to be replayed to its
performance like Beethoven's 9th Symphony backed up by the Notes he had written.
Industrivärden statement on sustainability and environmental responsibility need
measurement.
Before going to address How to measure one has to look at what to measure? A
case-study of a major MNC by the measuring device Return on Intangible would help
the three companies Volkswagen, Toshiba and Industrivärden to effectively
implement the value system that would enhance their reputations. This article
appends below the calculations of 170 process blocks arriving at a single rating for
each year beginning 2007 to the current status 2015 Q2 September results, on three
issue areas - Sustainability of Value System, Sustainability of efficiency and
Sustainability of Profits.
Jayaraman Rajah Iyer
CEO, Founder
IBCM© Research
+919487390439
jayar@ibcm.in

CREAM Report - a case-study
The following CREAM Report is on Hindustan Unilever Ltd. India. The figures
mentioned therein are from published material in the public domain in HUL
India website. The report is for the period of 2007 and Sep. 2015 Q2 results.
The annual figures are reduced to a daily figure based on the number of days
during the period in question: 365, 366 or 457 as the case maybe.
The notes herein shall be useful to the readers but full description please refer
to the articles mentioned above. CREAM Report is the basis of construction of
value and at the same time a basis of deconstruction of valueless, identifying
with a binary value of 1 and 0 respectively.
The analysis encompasses the CREAM Report consisting of C - Corporate
Governance, R - Risk Management, E - Earnings - P&L and Balance Sheet, A -
Accounting Quality and M - Management Quality, as illustrated below:

Intangible defined
1. Intangible is an effort,
2. Initiated for a specific task, creative as well as action,
3. Having an identifiable goal,
4. Enabled by the factors for the task accomplishment, and
5. Measured by defined performance criteria.
• Intangible is the pulsating energy force of the Subject with a value of 1.
• Action or Inaction of the Subject with a value of 1 or 0.
• There are two Processes: Creative Process and Action Process.
• There are 6 stages during Creative Process that starts from the state of
Quiescence to end up as a substance as illustrated below.

• Accounting Quality and Management Quality belong to Creative Process
consisting of Policies. So is the case of Patent, IPR etc.
• Creative Process starts from subtler than the subtle, ends in gross. The starting
point is Quiescence and the ending point Substance.
• Every Substance Natural or man-made goes through the same 6 stages and
the process is identical. A baby takes 9 months a diamond many years.
• Action process begins with the gross substance. Goes through the same 6
stages from being insentient to task accomplishment.
• A Substance is Qualitative and the Action process is unique to the respective
substance.
• The Quality of a substance cannot be separated from it, nor the work
associated with it.
• Intangible to action is what anti-matter to matter that collides to transform
into pure energy.
Rating
Effort - Creative Process Effort - Action Process
Description Stage Description Performance - Range Stage
Non-existent 0 Insentient 0.00% 0
Conceptualisation 1 Conceptualisation >0% < 25% 1
Communication 2 Communication >25% < 50% 2
Formation 3 Formation >50% < 75% 3
Formulation 4 Formulation >75% < 100% 4
Substance [ready for action] 5 Task Accomplishment >100% 5
During the creative process the stage indicates the Object in-making. The
status would indicate the stage it has reached. Once Patent is obtained it can
be called a Substance, till then the stage status would be taken into account.
In case of say Policy under preparation for Code of Conduct till the final stage
is reached the status would be according to the stage reached above. Once
the Code is released it becomes a Substance of Quality. Then how would
Quality be determined? Consider say Musical notes of Beethoven 9th
Symphony, that is an Object, as a benchmark. The Object created should be of
excellent quality. For Corporate Management preparing a Policy on Ethical
Responsibility you may consider UNCAC document as an ideal Object.
During Action Process the substance used ends in tasks completed enabling
accomplishment of infinite succession of finite purposes by controlling each

goal. In the case-study attached 15% growth is fixed as the benchmark and the
entire 170 process blocks are measured as to the stage it has reached.
The ratings are for 15%:
Rating
< 0% 0
>0% <3.75% 1
>3.75% <7.50% 2
>7.50% <11.25% 3
>11.25% <15% 4
>15% 5
Creative Process would also be at the same rating as to arrive at the growth
rate. Final combined rating would indicate the growth rate with a target of
15% as above.
Return on Intangible Measured
RoI = (Action or Inaction) / Intangible
Intangible has a value of 1. Action or Inaction gets a value of
1 and 0 respectively. The resultant binary value is 1 or 0.
Index of Inactivity
IBCM stands for Inactivity Based Cost Management. The exercise appended
here derives Inactivity by each process block by each member of a team albeit
yoked together to perform each works independently., to accomplish the task
entrusted.
The optimum level an Object reach is 5 during Creative Process becoming a
Substance and the same 5 during Action Process accomplishment of the task
entrusted with.
Inactivity = (Optimum level to reach - Active status). If Active status reached is

2 the Index of Inactivity is 3 in either of the processes.
In the ensuing CREAM Report you may observe why Fiscal Responsibility
valuation is distributed in equal measures to each of the 4 members of the
group?
By introducing the Return on Intangible with work assigned to each person at
the micro-level the creative process as well as Action Process end with the
Accountability factor embedded. The reason why the ensuing CREAM Report
distributes the Fiscal Responsibility group Ratings equally is because it is not
designed as such, the lacuna Return on Intangible avoids.
Who is responsible for the cheat software? Well, by Return on Intangible there
can never be a cheat software and by Return on Investment you can never
pinpoint!
The Team
Each process block is is made up of several goals and each goal is owned by 5
members who are given independent KPIs to perform as a team to accomplish
the goal set.
The team members are 1. Ethical Responsibility and four from Fiscal
Responsibility: 2. Managerial Force, 3. Operational Force, 4. Technology and 5.
Finance.
Corporate Atomic Structure
• Q: Learning from Nature we have atomic structure well defined made up of
Protons, Electrons and Neutrons, whereas Corporate Atomic Structure is
created in the same pattern of Policies, Practices and the Public respectively.
Every corporate process block consists of three elementary particles - Policies,
which has a positive charge;
• Practices which has a negative charge and the Public which has no charge.
• Policies and the Public are packed into the nucleus, in the same pattern as
Protons and Neutrons, whereas Practices spin around outside the nucleus.
The nucleus is by far the most significant factor in corporate management. the
Public like neutron does not influence the identity of the company but adds

mass to it. Regulatory framework, mandatory policies, human rights, labor
rights, environmental rights, anticorruption have let the company move on
with a freedom of enterprise but add mass to the Company by compliance
interventions. A CREAM report for each process block ensures the corporate
atomic nucleus is well respected by the Executive wing of the corporate
structure, manning Practices. Each process block consists of the three Ps of
Corporate Structure - Policies, Practices and the Public. what gets measured
gets managed, says KPMG-EIU Progress report, so Volkswagen shall institute
measuring of its corporate structure. UQv
CREAM Report Process Blocks
The ensuing CREAM Report analysis of HUL has the following process blocks
measured, in bracket the number of.
C - Corporate Governance [19]
• Practices. Since the disclosures are reluctant to come by Management
Quality process blocks far exceed Corporate Governance Process Blocks.
R - Risk Management [7]
• Assessed as per disclosures
E - Earnings [12]
• As reported between the period 2007 and Q2 ending Sep. 2015.
A - Accounting Quality [16]
• As per disclosures.
M - Management Quality: [116]
• A policy determines the quality. For rating the optimum level is 5. On account
of Ethical Responsibility not yet defined and aligned to Fiscal Responsibility
Rating is below the optimum level. The rating varies from process block to
process block.

• Number of process blocks assessed 170.
Looking at the number of Process Blocks one would wonder whether so many
of Management Quality issue areas would have come forth but for the Public
intervention. Corporate Governance is but a few process blocks. It is because
of non-disclosures with a window-dressing of a few. The reporting system
should first rate the process blocks under Management Quality and then rate
as to its corresponding action process. In VW#2: Article in Slideshare : Who
failed Volkswagen, is it Corporate Governance or Management Quality?vi
please refer how Volkswagen Group has merely listed a number of
International Convention on Code of Conduct that it follows. What use is of
such listing unless it is measured and reported to the public.
We are living in a primitive society comparable to the Middle Ages where
freedom of enterprise means a few cannot be questioned. Not that what to
measure is known and how to measure is unknown but the willingness to
public scrutiny is absent. Reporting system is so designed. Matthias Müller,
Masashi Muromach, Helena Stjernholm all have a way to go!, taking charge of
Ethical Responsibility.
A number of Organisations including London School of Economics and Political
Science, The Nottingham Trent University, University of Hawaii, Syracuse
University, Heilbronn University, UNU-WIDER UN University - World Institute
of Development Economics and Research and a host of others including Apple,
HP, IBM Research Zurich USA, Microsoft Redmond from US and Germany have
evinced some interest in my three articles referred above. Universities can
look at Return on Intangible as an alternative to Return on Investment. The
data cloud companies can realise the contraction of data at the root level.
Management Quality consisting of 170 process blocks extensively discusses on
Board of Directors mainly. Board with the Society form a nucleus whereas
Executive Directors function as the electron spinning around the nucleus.
While working on Management Quality I found the goodness of empowering
the Independent Directors of many areas including Audit Committee and
Nomination and Remuneration Committee besides number of other
committees, each one of them being measured herein. But how vulnerable
are they? Remembered the fate of Keshub Mahindra non-executive Chairman
of Union Carbide at the time of Bhopal gas tragedy who had his days troubled

by the courts. So was the case of Warren Andersen of Union carbide. In the
case-study referred herein please see the rating of 0 in one case in particular.
The Independent Directors can face the same consequence as Keshub
Mahindra and Warren Andersen. That is besides the point. What is important
for the Independent Directors is to ensure the company where they are given
such a position of Executive authority in Audit Committee and Nomination
and Remuneration Committee is run ethically? How would they ensure?
I am making the document file in spreadsheet form available for free
download. I am keen to interact with organisations and companies on Return
on Intangible. The spreadsheet document [.ods file as I use openoffice not MS
Office] can be downloaded and tested with your own figures to find out how
Return on Intangible would help to achieve Sustainable profits.
CEO, Founder
IBCM© Research
Mumbai, 7th January 2016.
+919487390439
jayar@ibcm.in

CREAM™ Report
The process Blocks measured:
Corporate Governance
14.0.1. to 14.0.3: Affirmation
And Disclosure:
15.0.1. to 15.0.3: Disclosure Of Pending
Cases / Instances Of Non-Compliance:
Material Loss
16.0.1. to 16.0.2: Compliance With
The Governance Framework
17.0.1. to 17.0.2. Secretarial Standards
And Secretarial Audit Report:
18.0.1. to 18.0.2: Communication
To Shareholders
19.0.1. to 19.0.3. Investor Services
20.0.1 to 20.0.4. Consumers / Customers:
[19]
Risk Management
3.0.1. to 3.0.7:Internal
Controls
and
Risk Management:
[7]
Earnings
25.0.1. to 25.0.7. P&L Account
26.0.1. to 26.0.5. Balance Sheet
[12]
Accounting Quality
Significant Accounting Policies:
21.0.1. to 21.0.3. Basis for preparation of accounts:
22.0.1. to 22.0.4 .Revenue Recognition:
23.0.1. to 23.0.7. Expenditure:
by Business Segments
24.0.1. to 24.0.2. Intangible Assets
[16]
Management Quality
1.0.1 to 1.0.9 Board of Directors:
[incl. 1.0.6.1 to 1.0.6.19 Board Business:]
2.0.1. to 2.0.13:Audit Committee:
4.0.1. to 4.0.9 Nomination &
Remuneration Committee
5.0.1.: 5.0.12. Reward Policy
6.0.1. to 6.0.3. Stakeholders'
Relationship Committee
7.0.1. to 7.0.7. CSR and
other functional Committees:
:8.0.1. to 8.0.19. Unilever CoBP[UL]:
9.0.1: 9.0.7. CoBP[HUL]:
10.0.1. to 10.0.7.Preventing
Conflict of Interests
11.0.1. to 11.0.5.Whistle Blower Policy
12.0.1. to 12.0.4.Share Dealing Code
13.0.1. to 13.0.3.UN Global Compact:
[116]

CREAM Report - Consolidated Rating - Examples
C - Corporate Governance [19]
There are 19 process blocks under 7 categories.
The Active Ratings
They are:
14.0.1. to 14.0.3: Affirmation And Disclosure: 15.0.1. to 15.0.3: Disclosure Of Pending Cases / Instances Of
Non-Compliance: Material Loss, 16.0.1. to 16.0.2: Compliance With The Governance Framework, 17.0.1.
to 17.0.2. Secretarial Standards And Secretarial Audit Report: 18.0.1. to 18.0.2: Communication To
Shareholders 19.0.1. to 19.0.3. Investor Services 20.0.1 to 20.0.4. Consumers / Customers: [19]
For each category a final rating emerges a sum of 19 process blocks by
reached by each member of the team, as to how they have functioned. Index
of Inactivity is derived from two sources independently: By Resource Area or
the owners of the process block and 2. By Process Area: By each process.
Index of Inactivity by Resource Area itemises each Resource Owner: ER
Management, FR - Managerial Force, FR - Operating Force, FR - Technology
and FR - Finance.
Decision Criteria Title: Corporate Governance Value Chain: PRACTICES
Particulars Fiscal Responsibility
SUMMARY CORPORATE GOVERNANCE
1. ER Force 5. Finance Total Rating Stage Reached
2007 2 3 3 3 3 16 3 Formation
2008-09 2 3 3 3 3 16 3 Formation
2009-10 2 3 3 3 3 16 3 Formation
2010-11 3 4 4 4 4 18 3 Formation
2011-12 3 4 4 4 4 18 3 Formation
2012-13 3 4 4 4 4 18 3 Formation
2013-14 3 4 4 4 4 18 3 Formation
2014-15 3 4 4 4 4 18 3 Formation
0 0 Non-Existent
Inactive elements are identified with an Index of Inactivity, as below: Level -> 3
Process Identifier: CREAM
Ethical
Responsibility
Process
Blocks:
SUMMARY CORPORATE
GOVERNANCE
2.
Managerial
Force
3.
Operating
Force
4.
Technology
Consolidated Rating CREAM
Report Corporate Governance:
Summary: 14.0.1- 14.0.3; 15.0.1
to 15.0.3; 16.0.1 to 16.0.2;
17.0.1 to 17.0.2; 18.0.1 to
18.0.2; 19.0.1 to 19.0.3; and
20.0.1 to 20.0.4 19 Process
Blocks under 7 categories:
2015-16 Q2
Sep.

For each year Active Ratings followed by Inactive ratings by each Resource
Area brings in the Inactivity % to the total Active targeted level.
Stage Reached relates to the Active Net Rating followed by description of
Rating. In this case it is i Formation stage. One major Resource Area
responsible for 36.84% of Inactivity is Ethical Responsibility Management
people. Some of them find themselves a 0 point structural weakness having
not infused enough of Ethical Responsibility. These areas are unforced errors
of management. can be corrected once Ethical Responsibility is set in motion
for all the people, process block by process block. That remains with Fiscal
Responsibility group Inactivity % who can be put on heels to get the optimum
level. The over all results could put the company as a whole in a stage of
optimised level of functioning.
Index of Inactivity by Resource Area:
The checksum ensures the Rating between Summary Corporate Governance
rating and by Resource Area Ratings are accurate.
INDEX OF INACTIVITY
INDEX OF INACTIVITY: By Resource Area 2007 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
1. ER Management: Active 44 44 44 54 54 54 54 54
Inactive 51 51 51 41 41 41 41 41
Inactivity % 10.74% 10.74% 10.74% 8.63% 8.63% 8.63% 8.63% 8.63%
Active 64 64 64 74 74 74 74 74
Inactive 31 31 31 21 21 21 21 21
Inactivity % 6.53% 6.53% 6.53% 4.42% 4.42% 4.42% 4.42% 4.42%
Active 64 64 64 74 74 74 74 74
Inactive 31 31 31 21 21 21 21 21
Inactivity % 6.53% 6.53% 6.53% 4.42% 4.42% 4.42% 4.42% 4.42%
Active 64 64 64 74 74 74 74 74
Inactive 31 31 31 21 21 21 21 21
Inactivity % 6.53% 6.53% 6.53% 4.42% 4.42% 4.42% 4.42% 4.42%
Active 64 64 64 74 74 74 74 74
Inactive 31 31 31 21 21 21 21 21
Inactivity % 6.53% 6.53% 6.53% 4.42% 4.42% 4.42% 4.42% 4.42%
ER+ FR: Resource Area Active 300 300 300 350 350 350 350 350
Inactive 175 175 175 125 125 125 125 125
Inactivity % 36.84% 36.84% 36.84% 26.32% 26.32% 26.32% 26.32% 26.32%
Net Rating 3 3 3 3 3 3 3 3
STAGE REACHED Formation Formation Formation Formation Formation Formation Formation Formation
checksum 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
SUMMARY CORPORATE
GOVERNANCE
Process
Blocks:
SUMMARY CORPORATE
GOVERNANCE
2. FR: Managerial Force:
3. FR: Operating Force:
4. FR: Technology:
5. FR: Finance: Active

Then the following statement gives the break-up of Index of Inactivity % by
Resource Area.
That is to say, persons in each of the categories of process blocks have a job to
accomplish which is to narrow the gap between Activity and Inactivity.
Index of Inactivity by Process Area:
The checksum ensures the Inactivity % between Resource Area and Process
Area.
Return on Intangible by each Process Block
The following calculations are derived for each process block according to task
accomplishments. There are process blocks with a sweeping 0. Explanation for
each block is given.
INDEX OF INACTIVITY: By Process Area 2007 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Active 40 40 40 40 40 40 40 40
Inactive 35 35 35 35 35 35 35 35
Inactivity % 46.67% 46.67% 46.67% 46.67% 46.67% 46.67% 46.67% 46.67%
Active 46 46 46 46 46 46 46 46
Inactive 29 29 29 29 29 29 29 29
Inactivity % 38.67% 38.67% 38.67% 38.67% 38.67% 38.67% 38.67% 38.67%
Active 50 50 50 50 50 50 50 50
Inactive 0 0 0 0 0 0 0 0
Inactivity % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Active 0 0 0 50 50 50 50 50
Inactive 50 50 50 0 0 0 0 0
Inactivity % 100.00% 100.00% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Active 40 40 40 40 40 40 40 40
Inactive 10 10 10 10 10 10 10 10
Inactivity % 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%
Active 60 60 60 60 60 60 60 60
Inactive 15 15 15 15 15 15 15 15
Inactivity % 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%
Active 64 64 64 64 64 64 64 64
Inactive 36 36 36 36 36 36 36 36
Inactivity % 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00% 36.00%
Active 300 300 300 350 350 350 350 350
Inactive 175 175 175 125 125 125 125 125
Inactivity % 36.84% 36.84% 36.84% 26.32% 26.32% 26.32% 26.32% 26.32%
checksum: Resource area ~ Process Area 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1] 14.0.1. to 14.0.3: Affirmation
And Disclosure:
2] 15.0.1. to 15.0.3: Disclosure Of
Pending Cases / Instances Of Non-
Compliance: Material Loss
3] 16.0.1. to 16.0.2: Compliance
With The Governance Framework
4] 17.0.1. to 17.0.2. Secretarial
Standards And Secretarial Audit
Report:
5] 18.0.1. to 18.0.2:
Communication To Shareholders
6] 19.0.1. to 19.0.3. Investor
Services
7] 20.0.1 to 20.0.4. Consumers /
Customers:
SUMMARY CORPORATE
GOVERNANCE

For each process block Gap Analysis indicate the shortfall an the reason for
lower rating. The lower or higher rating is related to where the Object moved
into, its current status. There is nothing subjective about the rating system
both in Creative Process and Action Process, as can be seen from one of the
process blocks from Segment Reporting, as below:
Particulars Fiscal Responsibility
1.0.6.18 risk evaluation and internal controls 1. ER Force 4. Technology 5. Finance Total Rating Stage Reached
2007 0 4 4 4 4 16 3 Formation
2008-09 0 4 4 4 4 16 3 Formation
2009-10 0 4 4 4 4 16 3 Formation
2010-11 0 4 4 4 4 16 3 Formation
2011-12 0 4 4 4 4 16 3 Formation
2012-13 0 4 4 4 4 16 3 Formation
2013-14 0 4 4 4 4 16 3 Formation
2014-15 0 4 4 4 4 16 3 Formation
Ethical
Responsibility
Process Blocks: 1.0.6.18 risk evaluation and
internal controls
2. Managerial
Force
3. Operating
Force
The normal business of the Board includes:
reviewing details of risk evaluation and internal
controls
Ethical Responsibility is a self-governance and self-evaluation process in Risk management.
Strengthening Risk Management by top-down risk based approach does limit the number of controls, yet falls short of discharging ethical obligation by individuals.
Conflicts of Interests Policy for Directors is Object oriented stabilisation of Fiscal Responsibility whereas Share Dealing Code is a Subject oriented issue area of Conflicts of personal interests
Reliance on internal controls and external auditor does exacerbate focusing on Ethical Motive that Ethical Responsibility by each Process Block liberates individuals focusing on Profits motive -
enhance self-governance.
5-member team for each Process Block means, 5-KPIs each in control of its own domain for a single Process Block, enabling spread out risk evaluation process independently.
In essence the Board in reviewing details of risk evaluation and internal controls shall keep Intangible as the denominator.
Gap Analysis: 1.0.6. Board Business: 18 risk evaluation and internal controls
Soaps and Detergents 2007 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Q2
Segment Revenue 6399.93 9880.56 8265.64 8791.56 10636.28 12701.82 13683.41 14876.61 7670.98
per day Rev. Soaps & Detergents 17.53 21.62 22.65 24.09 29.06 34.80 37.49 40.76 41.92
per day/revenue from ops. 37.47 44.29 48.01 54.07 60.43 70.71 76.76 84.40 87.76
% Soaps& Revenue/ ops. Revenue 46.80% 48.82% 47.17% 44.55% 48.09% 49.21% 48.84% 48.29% 47.76%
(+Inc.) (-Dec) % ptp -7.09% 4.32% -3.38% -5.56% 7.96% 2.33% -0.76% -1.11% -1.10%
Rating: [A] 0 2 0 0 3 1 0 0 0
Revenue + is a + Insentient Communication Insentient Insentient Formation Conceptual Insentient Insentient Insentient
operating expenses 5414.67 8483.60 7200.02 7943.41 9409.65 11084.32 11875.23 12848.84 6582.72
operating expenses per day 14.83 18.56 19.73 21.76 25.71 30.37 32.53 35.20 35.97
% op. exps./ Revenue from ops 39.59% 41.92% 41.09% 40.25% 42.55% 42.95% 42.38% 41.71% 40.99%
(-Inc.) (Dec) % ptp -5.13% -5.87% 1.98% 2.04% -5.71% -0.94% 1.31% 1.59% 1.73%
Rating: [B} 0 0 1 1 0 0 1 1 1
Soaps & Det. segment Assets 1877.93 2535.80 2221.37 2593.22 2584.77 2914.64 3122.51 3233.82
0.93% 0.85% 1.02% 0.93% 1.12% 1.19% 1.20% 1.26%
Inc. % p-to-p -8.68% 19.57% -8.89% 21.05% 6.19% 0.56% 4.98%
Rating: [C] 0 0 5 0 5 2 1 2
Assets Turnover + is a + Insentient Insentient Task Done Insentient Task Done Conceptual
Soaps & Det. segment Liabilities 1751.69 1942.31 2516.09 2969.45 2625.55 2874.37 3353.42 3357.15
0.85% 0.96% 0.78% 0.73% 0.98% 1.06% 0.97% 1.05%
Inc. % p-to-p 12.86% -17.97% -6.52% 33.61% 7.90% -8.17% 8.08%
Rating: [D] 4 0 0 5 3 0 3
Liabilities Turnover + is a + Formulation Insentient Insentient Task Done Formation Insentient Formation
Segment Rating [A] +[B]+[C]]+[D] 0 1 1 0 3 1 0 1 0
% per day segment revenue/Soaps & Det.
segment Assets
Communicatio
n
Communicatio
n
% per day segment op. exps/Soaps & Det.
segment Liabilities

Readers shall download the complete analysis. Corporate Atomic Structure -
Measuring by Return on Intangible - IBCM Research.ods: the link is:
https://drive.google.com/file/d/0B-jjOvN8JgoPZWk1UWRadl9aUWc/view?
usp=sharing
It is editable file that you can feed in your figures and enjoy the ratings. I see
Google format on figures by default shows decimals than what I had restricted
in my file. You can make use of it anyway. The figures are displayed well
anyway.
Happy New Year 2016
Let us collaborate.
CEO, Founder
IBCM© Research
+919487390439
jayar@ibcm.in

i http://www.slideshare.net/jayaraman.18/can-volkswagen-fiasco-be-avoided-nope-not-with-a-spreadsheet-org-
structure?utm_source=slideshow&utm_medium=ssemail&utm_campaign=post_upload
ii http://www.slideshare.net/jayaraman.18/who-failed-volkswagen-is-it-corporate-governance-or-management-
quality?utm_source=slideshow&utm_medium=ssemail&utm_campaign=post_upload
iii http://www.slideshare.net/jayaraman.18/can-matthias-mllers-top-priorities-steer-volkswagen-back-on-track
iv http://www.ft.com/intl/cms/s/2/fbf374e6-aa4b-11e5-955c-1e1d6de94879.html?
ftcamp=social/free_to_read/new_brooms_corporate_scandals/twitter/awareness/editorial&segid=0100320#axzz3
wGj02Dac
v Quote from VW#1: Article in Slideshare: Can VW fiasco be avoided? Nope, Not with a spreadsheet organisation
structure.
vi http://www.slideshare.net/jayaraman.18/who-failed-volkswagen-is-it-corporate-governance-or-management-
quality?utm_source=slideshow&utm_medium=ssemail&utm_campaign=post_upload

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