Corporate Governance class 2

1. Corporate Governance
______________________________
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2. An Indian Definition
• “…fundamental objective of corporate
governance is the ‘enhancement of the long-
term shareholder value while at the same
time protecting the interests of other
stakeholders.”
– SEBI (Kumar Mangalam Birla) Report on Corporate
Governance, January, 2000
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3. What is Corporate Governance?
• The Manner in which a Corporation is Run
– Achieving its Objectives
– Transparency of its Operations
– Accountability & Reporting
– Good Corporate Citizenship
• The Processes & Operating Relationships that Best
Achieve Organisational Goals
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4. Is There
More to Business
than just the
Financial Numbers?
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5. Environment Social
Economic
An Enterprise’s Triple Effect on Society
Business
Impact
Sustainable Development Equal Opportunities
Waste Control Education &
Culture
Emissions Community
Regeneration
Energy Use Human Rights
Product Employee
Life-cycle Volunteers
Product Wealth Productive Ethical
Value Generation Employment Trading

6. CASE STUDY

7. Do You Know Him ???

8. B. RAMALINGA RAJU
FOUNDER AND FORMER CHAIRMAN OF ONE OF THE BIGGEST I.T.
GIANT OF OUR NATION “SATYAM COMPUTERS”
THE PRIME CONVICT IN ONE OF THE BIGGEST SCAM OF COUNTRY

9.  FOURTH LARGEST
I.T. OUTSOURCING
COMPANY OF INDIA
 EMPLOYEES MORE
THAN 50,000 PEOPLE
IN INDIA
 HIGH GLOBAL
REPUTATION
 OFFERS SERVICES
TO MORE THAN 550
MNC’s

10. What was Scam all about…
 The company’s balance sheet was inflated to Rs.
5,361 Cr at the end of September.
 There is an artificial cash balance of Rs.588 Cr in
September 2008.
 Rs.1,230 Cr was arranged to Satyam, which is not
reflected in its books, to keep Satyam's operations
running.
 Raju also admitted that Satyam's profits were inflated
over several years.

11. HOW DID THE SCAM MATTER TO THE NATION ?
 Job’s of over 50,000 technocrats were at risk.
 Country’s booming economy feared slight
collapse as Country's GDP fell by estimated 0.4%.
 India’s I.T. sector suffered downturn as it’s
image was tarnished globally.

12. How it was caught ?
Satyam Computers had
on December 16, 2008,
announced that it will
acquire two group firms
– Maytas properties and
Maytas Infra for $1.6
billion (about Rs 8,000
cr) as part of its
diversification strategy ,
this created a alleged
violation of corporate
governance laws.

13. SALVAGING SATYAM
To stabilize the sinking Satyam Computers, the
Government nominated Banker Deepak Parekh,
I.T. Expert Kiran Karnik and Former SEBI
Member C. Achutan to the I.T. Company's Board.
KIRAN KARNIK C. ACHUTAN

14. ALL’s WELL THAT’s END WELL
Satyam Computers was took over by Mahindra Group
I.T. Arm , Tech Mahindra on April 13, 2009.

16. ASIAN CASE STUDY
 The World Bank has conducted a number of studies of
corporate governance practices in various countries all
over the world.
 It has conducted Eight Studies of Asian Countries. This
part summarizes some of the components of those studies.
 Noticeably absent are China and Japan.

17. Chart shows the scores for each of the Eight Asian Countries

18. Some Closing Thoughts
• Minimise Conflict of Interest Potential
• Respect Minority / External Shareholders’
Rights (Listed Public Sector Banks)
• Boards to Go That Extra Mile: Go Beyond
What is Prescribed to What is Appropriate –
That Way lies Greater Valuations & Better
Reputations
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19. Thanks for Your Attention
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