BFA has conducted a survey on Corporate Governance for selected CFOs spread across India. The survey samples covered companies of varying sizes. About 48% companies had revenue of Rs 10 cr. to Rs 100 cr. About 26% firms reported revenues between Rs 100 cr. to Rs 1000 cr. About 7% had revenues more than Rs 1000 cr. The Survey Results are published at www.bfa-india.org. Key Findings of the BFA survey are as follows.
Highly Promoter driven firms The survey indicates, almost 60% firms have promoters stake more than 74%. In just 15% of the companies, the promoters held less than 49%. About 68% Companies, with sales between Rs 100 cr. to Rs 1000 cr., have promoters share over 74%. The results thus will be somewhat biased towards the views of promoters.
Composition of Board According to BFA Survey, more than 43% firms do not have any independent directors. About 10% have one independent director. About 28% have more than three independent directors. Considering the sample, this implies that the Indian firms have started appointing more and more independent directors.
SME don’t want Independent Directors However, it may be kept in mind that 68% companies with sales over Rs 1000 cr. have more than three independent directors. However, 67% of SME with sales of less than Rs 10 cr. have NO independent directors. Almost 80% SME don’t plan to appoint independent directors.
Independent Directors helpful? More than 50% CFOs feel that the independent directors are helpful in decision making process. 18% however feel that presence of independent directors delays the decision-making. Almost one third are however not sure.
Will you appoint more? If the regulation did not require any independent directors, the CFOs were asked if they plan to voluntarily increase the number of independent directors. Almost 41% replied with emphatic ‘No’. About 24% were not sure. Only one third felt they would try to have more number of independent directors. Almost 80% of SME do not intend to appoint independent directors, if not mandated by law.
Should Independent Directors take care of minority shareholders’ interests? About 48% said yes. 27% CFOs replied in negative. Rest of them felt it is not feasible.
Mandatory CSR - Good or Bad? The recent Companies Act makes 2% net profit contribution to CSR mandatory for companies. The debate is wide open with some feeling that the government should increase the tax rate by 2% and not get into corporate decisions on CSR. BFA survey finds that 60% corporate India welcomes the mandatory CSR. (Who said that the Indian corporate don’t have much social bent of mind?) About 20% don’t like the mandatory nature. Another 20% are not sure.
Too much regulation? BFA asked corporates to answer if they felt present regulation a bit too much. The answers are mixed. About 30% felt regulation is too much. Another 30% felt regulation has to be increased. Around 40% felt the present level of regulation is appropriate. However, 20 % of CFO in large corporates of more than Rs 1000 cr. sales felt that regulation is too much.
Brickwork Finance Academy conducts many public interest surveys and publishes them for general discussion and for class room training. All are welcome to suggest any new surveys as well as feedback on our surveys to
info@bfa-india.org About Brickwork Finance Academy – www.bfa-india.org Brickwork Finance Academy is a registered non-profit organisation based in Bangalore. Brickwork’s primary vision is to propagate financial literacy in India. Brickwork can provide the impetus to CSR initiatives of companies, through distinctive, holistic financial literacy programs which have a high degree of societal impact and meet stakeholder expectations. The financial literacy programs are designed for all sections – school children, college students, young professionals, women and seniors. In addition, special programs are delivered for SME audience.
Mission India suffers from acute financial illiteracy. Even educated professionals from well to do families may have no idea of savings, banks accounts and property matters. Women in particular suffer from trusting the rest of family in financial matters. Young professionals don’t have any idea of financial planning. The illiterate and poor are blind to financial knowledge and hence suffer the most. They lose their hard earned savings in chit funds and collective investment schemes. Brickwork’s mission is to conceive, develop and deliver training programs for schools children, college students, young professionals, women, SMEs etc. and
Spread Global Financial Literacy. To engage Brickwork for CSR, visit www.financial-literacy.in Contact: Raghavendra: +91 97434 37999; Anitha +91 99002 68535
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