Mumbai: Companies in the Reliance-Anil Dhirubhai Ambani Group (R-Adag) were among the laggards in a snap poll conducted by Mint on Thursday to judge how fund managers, stock brokers and market analysts assessed corporate governance standards in the 50 companies that comprise Nifty, the main index of the National Stock Exchange. The 20 respondents were asked to judge companies and corporate groups on three criteria: who sits on their board of directors, the perceived quality of corporate governance and ethics. This was a day after the accounting scandal at Satyam Computer Services Ltd was made public.
Also rated poorly by the respondents were Delhi-based real estate companies DLF Ltd and Unitech Ltd, which were seen to have too many cash dealings which were opaque in nature.
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The companies controlled by Mukesh Ambani—Reliance Industries Ltd and Reliance Petroleum Ltd—did not fare well in the perception audit either. The group was third from the bottom. Mint reported in its Friday edition that Infosys Technologies Ltd, five companies in the Tata group, Housing Development Finance Corp. Ltd (HDFC) and HDFC Bank got the best reviews. Participants in the poll were allowed multiple responses on each of the three parameters. Some companies were rated individually by the 20 respondents and some jointly as part of a corporate group.
“We follow global best practices and adhere to the highest standards of ethics, corporate governance and accounting principles. It is unfortunate that false and malicious rumours on such matters are being spread by unscrupulous business rivals to tarnish the external perception of our group,” said an R-Adag spokesperson in an email response.
The email said the group companies’ boards comprise “the most distinguished individuals”, including, among others, General Ved Malik, former chief of the Indian Army, Prof. S.L. Rao, former director general of National Council of Applied Economic Research, Prof. Bakul Dholakia, former director of Indian Institute of Management (IIM) Ahmedabad, S.P. Talwar, former deputy governor of Reserve Bank of India, A.K. Purwar, former chairman and managing director of State Bank of India, Dr V.K. Chaturvedi, former director general of the Nuclear Power Corp. of India Ltd, C.P. Jain, former chairman and managing director of NTPC Ltd, and Rajendra Chitale, an eminent chartered accountant.
“The fact that we have 11 million loyal shareholders (the largest in the world) is the greatest testimony to our exacting standards of performance and corporate governance, and demonstrates that your survey is neither correct nor widespread nor representative,” said the spokesperson.
An email sent to Unitech’s public relations agency and to R. Nagaraju, Unitech’s head of planning and strategy, did not elicit a response. Its managing director Sanjay Chandra did not answer calls made to his mobile phone.
A Reliance Industries spokesperson declined comment.
In an emailed response, a DLF spokesperson said that the results came “rather as a shock than surprise”.
He added, “DLF had been known as a company with maximum transparency and disclosures. After our listing, we have actually set standards in terms of the disclosures made by a real estate company... As far as our board of directors is concerned, none of our independent directors are related to each other and are extremely proficient members from diverse areas of experience. These include eminent people such as the former chairman and managing director of NTPC (D.V. Kapur), the chairman and country managing partner of Ernst and Young, India, and member of the National Advisory Committee on Accounting Standards (K.N. Maemani), an active practitioner in the Supreme Court and high court of India (Ravinder Narain), among others. With such a diverse and professional mix at the board, it would be a misjudgement to downplay the standards of our corporate governance and ethics as in your survey.”
Ashwin Ramarathinam, Ravi Krishnan and Bhuma Shrivastava contributed to this story.