Different Strokes by Sucheta Dalal

June 26, 2000

Women directors quota

The Department of Company Affairs’ (DCA) order to pack 20 per cent of corporate boardrooms with women has evoked mixed reactions among the beneficiary sex — particularly those women who have already made a difference in their organisations on merit. Many suspect that their presence on boards, insignificant as it is, will immediately become suspect and be seen a ‘quota’ presence. On the other hand some women could use the ‘quota’ to engineer undeserved promotions. A third and equally disquieting prospect is that industrialists’ wives who had until now busied themselves with charities or patronage of art would sashay into board rooms but merely to approve of management decisions by family or friends. It would indeed be tragic if a decision which is supposed to help women break glass ceilings ends up making them ridiculous.

Alternative suggestions

Instead of absurd quotas for women, the DCA could have been better occupied working on disclosures which are more important to investors. Let’s look at a couple of annual reports and the leads that the provide. For example, HDFC’s annual report is out this week. These days when corporate remuneration has gone through the roof, the origami of HDFC’s report hides employee salaries required under Sec. 217 (2A) even though its salaries are not even high enough to hide. It offers to provide this data only on request. Would it not make sense if the DCA demanded that the remuneration of at least the top 50 employees be published in the annual report? Then there is the newsreport on Grasim which says that none one of the 12 directors of this Birla company attended its AG M held at Nagda in Madhya Pradesh last September. Establishing registered offices at remote places was a trick to avoid uncomfortable questions from investors, but when directors too refuse to make the AGM trip, then its time to shift these offices back to cities with the highest shareholder concentration.

Yehi hai India

A top international management consultant who was in India last week was completely flummoxed at the open offer for BSES by Reliance. ‘It is amazing’, he says, ‘Here is a company whose management is under threat, the open offer itself is below the ruling market price and yet its management is completely silent.’ This is not entirely accurate. The management has in fact declared that it does not consider the Reliance bid a hostile one. Does that mean it is a friendly bid and good for BSES? The management then needs to write to investors and say so. But the point is that the open-offer opened last week and no investor has asked any questions. The consultant shakes his head disbelievingly and says that in the USA, company shareholders would have sued the management if it sat back and did not put up a fight or get the best deal for them. Sure, that may be true of the US, but yeh hai India. Indian investors are a far more tolerant lot. Look at how no investor — either individual or institutional has objected to the Tatas selling their own stake of 14.5 per cent at over three times the ruling market price while a loophole leaves the public shareholders high and dry.

Not a private club

A recent decision of the Chennai High Court has unnerved stock exchanges across the country. The Court has slapped, what is probably an unprecedented punishment for failing to comply with court orders, on the main office bearers of the Madras Stock Exchange. The President, Executive Directors — past and present — have been asked to pay a fine of Rs 10 lakhs to the petitioner. The two executive directors have also been slammed with three months simple imprisonment. The message to all stock exchanges clearly is that they are not running a cushy little clubs anymore and they simply ignore court orders either deliberately or inadvertently.

Updated weekly.

The author's e-mail address is: suchetadalal@yahoo.com

Other columnists:

M.V.Kamath

Shashi Tharoor

SuchetaDalal

Shobha De

Amrita Shah

Nina Pillai

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