Good corporate governance is good business
3 min read 09 Dec 2012, 11:39 PM ISTN. Chandrasekaran, MD & CEO, TCS, in an interview talks about issues related to corporate governance
Premium(Abhijit Bhatlekar/Mint)
How have you a fostered a culture of corporate governance in TCS?
I’m very pleased that TCS has been chosen as one of the best-governed companies in the country. We have a great record of corporate governance. First, we have the unique advantage of being part of the Tata group which has a long history of managing very ethically, with the highest standards of corporate governance. Hence, to begin, we have a set of best practices from the group that we have been able to adopt.
From then on, we have been continuously evaluating different best practices from the industry—from our own sector and from other sectors too. Also, from India and abroad. We periodically include them and integrate them with our best practices, as and when we feel the need to do so.
Hence, it’s not about being leading edge always. It’s about choosing the right best
practices and developing the systems, processes and procedures and implementing them, while continuously improving upon them.
We also have one of the finest set of independent directors who have enormous experience, great credibility and subject matter expertise in their chosen field. So we have the benefit of their counsel, their advice and their support. Our whole philosophy has been to get the right expertise, to have the right practices, and then follow it up with systems and processes which will help us to keep on driving excellence.
Finally, as a company, we try to be the best in our industry and also the best to our employees, shareholders and clients.
How do you facilitate participation of other stakeholders?
We have a very strong audit committee and there is a lot of rigour that goes into our annual reports. This automatically drives the need for transparency and excellence. The main thing about corporate governance is that it has to be continuously evaluated in the light of changing circumstances. It cannot be a one-time effort.
How are these best practices translating into good business?
Good corporate governance is good business automatically. First, because there is a tremendous amount of trust that gets developed—first as being part of the Tata group and then as TCS. The trust trickles down not only to investors and employees but also to our customers.
Has corporate governance become difficult over the years?
As long you have clarity of thought and do due diligence, you should not have a problem. TCS has always been working in a global environment. There’s a culture in the company to do things for the global market.
The average age of your independent directors is 65 and average age of your employees is around 28. Does it create a mismatch in thinking?
Not at all. The experience that our board members bring to the table is very valuable not only in governance matters but also while taking strategic decisions. They are a great sounding board for us.
Do you have any formal evaluation for the effectiveness of these board members?
This is an area that is evolving and there are different practices. As of now we have no formal evaluation method, though.
The new Companies Bill, when it eventually comes into force, is expected to reduce the tenure of independent directors while ushering in some more changes in the corporate governance space.
As and when the Bill comes up, we will adopt it. From a group point of view, we get an opportunity to represent our views. But compliance with any government rule is important to us.
What should Indian companies do to raise their standards of corporate governance?
We have a lot of rules that enforce standards. Also, companies are scaling up and going global. So there is scope for all of us to learn from each other.
Are Indian corporate standards on par with those of global companies?
I’m no expert to comment on this subject. All I can say that there are very good companies both in India and abroad that have excellent standards of corporate governance.
Similarly, we have examples of companies that lack good practices both in India and abroad. If we want to figure among the best companies globally in terms of doing business, why should it stop us from being the best when it comes to treating our employees, shareholders and customers well? We at TCS take pride not only in running TCS as a global company but also as one that is among the best governed companies.
Do regulatory bodies in the country need more teeth to ensure good corporate governance?
They have done a good job. They have done their job whenever the situation has called for it.
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