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Corporate Excellence Through Corporate Governance

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Corporate Excellence Through Corporate Governance

  1. 1. C orporate E xcellence through C orporate G overnance
  2. 2. <ul><li>Corporate Governance rests with the Vision and Perception of the Leadership </li></ul>
  3. 3. <ul><li>and </li></ul><ul><li>A Leader need to adopt a </li></ul><ul><li>Vision for Corporate Governance </li></ul>
  4. 4. The Institute of Company Secretaries of India Corporate Governance “ The application of best management practices , compliance of law in letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders .”
  5. 5. &quot;Corporate governance is the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs.”
  6. 6. Corporate Governance Framework Output – Input = Wealth Created ? Sustainability Happiness and Prosperity of all Stakeholders Reinvestment Distribu- tion <ul><li>Research and </li></ul><ul><li>Development </li></ul><ul><li>HR Development </li></ul><ul><li>Infrastructure </li></ul><ul><li>Risk Management </li></ul><ul><li>SUPPLIERS </li></ul><ul><li>Adequate Returns </li></ul><ul><li>HUMAN ASSETS </li></ul><ul><li>Adequate </li></ul><ul><li>Remuneration </li></ul><ul><li>CUSTOMERS </li></ul><ul><li>Affordable Prices </li></ul><ul><li>PUBLIC </li></ul><ul><li>Payment of Taxes and Partnership in National Development Projects </li></ul>Wealth Creation Wealth Management Wealth Sharing Enhanced Capabilities Best Management Practices are Vital Here Law and Ethics are Vital Here
  7. 7. Stakeholders in Value Chain SUPPLIERS CUSTOMERS HUMAN RESOURCE Supply Funds, Materials and Services Value Addition and Management of Resources Give Opportunity to Co. to Satisfy their Needs Adequate Returns for Funds, Material and Services Supplied Adequate Salary and Security for leading a Happy Life Best Quality Products and Customer Care at Minimum Prices ROLE OF STAKEHOLDERS EXPECTATIONS OF STAKEHOLDERS Potential Suppliers, Human Resources and Customers Biological, Economic and Cultural Environment PUBLIC PUBLIC EXPECTS PARTNERHIP FOR SUSTAINABLE DEVELOPMENT
  8. 8. Principles of Corporate Excellence Fairness to all stakeholders Mutual Trust, Transparency and Togetherness Unrestricted Communication and Continuous Feedback Sharing Knowledge, Success Stories and Experience Sharing Happiness and Concerns Helping Each Other – Round the Clock
  9. 9. Infact, these principles are the foundation of Best Governed Organisations irrespective of their form and size
  10. 10. 7 Deadly Sins <ul><li>Avoid </li></ul><ul><li>Wealth without Work </li></ul><ul><li>Pleasure without Conscience </li></ul><ul><li>Knowledge without Character </li></ul><ul><li>Science without Humanity </li></ul><ul><li>Religion without Sacrifice </li></ul><ul><li>Politics without Principle </li></ul><ul><li>Commerce (Business) Without Morality (Ethics) </li></ul>
  11. 11. THE GLOBAL AGENDA 2010 The Issues <ul><li>Rethink 20 th century Institutions – redesign them to meet 21 st century demands </li></ul><ul><li>Need to adapt new models of cooperation – to reconsider ‘one-size-fits-all’ model </li></ul><ul><li>New matrix needed to integrate social goals and values. </li></ul><ul><li>Need to protect rights of people – to minimize global systematic risks </li></ul>
  12. 12. <ul><li>Advantages of applying </li></ul><ul><li>Best Corporate Governance Practices </li></ul>
  13. 13. <ul><li>Growth </li></ul>Growing Revenues Growing Profits Growing Market Value
  14. 14. <ul><li>Widespread Goodwill and Brand Reputation </li></ul>Access to Global Markets Better Access to Human Capital Ready Market for New Products Widening Customer Base
  15. 15. <ul><li>Enhanced Trust and Confidence of all Stakeholders </li></ul>EMPLOYEES INVESTORS CUSTOMERS SUPPLIERS GOVERNMENT AND REGULATORS SOCIETY
  16. 16. <ul><li>Leading to… </li></ul>
  17. 17. Environment Civil Society Business Society SUSTAINABLE DEVELOPMENT
  18. 18. <ul><li>Commitment to well-being and progress of all stakeholders is our age old mantra </li></ul>
  19. 19. Satyam Vada Dharmam Chara - Taittariya Upanishad
  20. 20. <ul><li>“ Forever speak the truth and follow the dharma ” </li></ul>
  21. 21. <ul><li>Truth : Disclosure of Actual State of Affairs (Transparency in operations and transactions) </li></ul>
  22. 22. <ul><li>Dharma : “Dharma is for the stability of society, the maintenance of social order and the general well-being and progress of humankind .” </li></ul><ul><li>- Karna Parva of the Mahabharata. Verse-58 in Chapter 69 </li></ul>
  23. 23. <ul><li>Corporates are also expected to use their </li></ul>Capacity, Knowledge and Resources Maximization of stakeholders’ value and well-being and progress of humankind TOWARDS THROUGH Transparency, accountability and truthful disclosure of state of affairs Dharma Truth
  24. 24. Governance Concept in ‘Ramayana’ <ul><li>To provide “the maximum happiness for the maximum number of people for the maximum period, based on the principles of Dharma – righteousness and moral values.” </li></ul>- Ayodhya Kand
  25. 25. <ul><li>“ The Customer is King” </li></ul>- Mahatma Gandhi
  26. 26. <ul><li>This is the soul behind modern </li></ul><ul><li>Marketing Management </li></ul>
  27. 27. Worshipping 33 Crore Godheads signifying various species, plants, cosmic elements, …
  28. 28. <ul><li>Care for Panchtatvas - Prithvi , Jal , Vaayu , Akaash and Agni that make a human being </li></ul>
  29. 29. <ul><li>This is our approach to </li></ul><ul><li>Environment Protection </li></ul>
  30. 30. The four essential principles of Mahatma Gandhi's philosophy Truth , Ahimsa , Trusteeship and Constructive Action
  31. 31. Outstanding Performance, Higher Profits, Expanded Market Reach and the like FAILS to protect a company which has put good governance & ethics at the back burner…. History is Witness S U C E S S D I S A S T E R
  32. 32. Common Factors behind such events
  33. 33. Emerging Issues
  34. 34. Secret behind building foundations ..…Only the culture of strict adherence to good compliance can keep a company ahead on sustainable basis , bring in larger profits…
  35. 35. Corporate Governance and Valuation Effect… Few Examples… A Comparison within companies in FMCG Industry with their P/E multiple 41.39 37.36 36.70 31.93 28.79
  36. 36. Corporate Governance and Valuation Effect… Few Examples… A Comparison within companies in Pharma Industry with their P/E multiple 19.37 14.81 14.7 5.35
  37. 37. Corporate Governance and Valuation Effect… Few Examples… A Comparison within companies in Banking Industry with their P/E multiple 6.13 6.2 5.97 4.81
  38. 38. Corporate Governance and Valuation Effect… Few Examples… A Comparison within companies in IT Industry with their P/E multiple Companies with better governance is presumed to have a better face and thus greater P/E Multiple and Enhanced Valuations... Source: Economic Times, dated 1 st July, 2010 19.79 19.58 15.85 7.43 9.78
  39. 39. <ul><li>Corporate Social Responsibility is not philanthropy. It is not charity. It is an investment in our collective future </li></ul><ul><li>- Dr. Manmohan Singh </li></ul>
  40. 40. <ul><li>Companies that have followed these </li></ul><ul><li>principles of </li></ul><ul><li>Corporate Governance </li></ul><ul><li>have </li></ul>
  41. 41. <ul><li>Consistently earned high returns, </li></ul><ul><li>increased their net worth and </li></ul><ul><li>enhanced their shareholders wealth </li></ul>
  42. 42. <ul><li>Invested significantly in proactive research and development </li></ul>
  43. 43. <ul><li>Developed people into ‘ achievers’ than just ‘ performers’ </li></ul>
  44. 44. <ul><li>Dealt ethically with customers, government and business partners </li></ul>
  45. 45. <ul><li>Maintained and updated their professional management culture, system and processes </li></ul>
  46. 46. <ul><li>..and accomplished </li></ul>
  47. 47. WINNING EMPLOYEES XCELLENCE GROWING INVESTORS DELIGHTED CUSTOMERS TRUSTED SUPPLIERS SATISFIED GOVERNMENT AND REGULATORS HAPPY SOCIETY
  48. 48. Excellence in Corporate Governance Corporate Excellence Social Excellence National Excellence Excellence in Corporate Governance leads to National Excellence
  49. 49. <ul><li>Crux of our own age old mantra of </li></ul><ul><li>Good Governance </li></ul>
  50. 50. <ul><li>Corporates should act like honeybee which suck the nectar of the flowers without effecting its fragrance and produce honey for the well –being of society . </li></ul>Rig Veda
  51. 51. Thank You Pavan Kumar Vijay Managing Director Corporate Professionals India Pvt. Ltd. D – 28, South Ext- I, New Delhi 1100049 Tel: +91.11.40622200, Fax: +91.11.40622201 Email : info@indiacp.com Visit us at: www.corporateprofessionals.com

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