In a rush to meet the 1 April deadline for complying with the new gender diversity norms laid down by the Securities and Exchange Board of India (Sebi),  some firms, particularly those that are promoter-driven, have taken the easy route by appointing women from their immediate or extended family. Photo: Mint (Mint)
In a rush to meet the 1 April deadline for complying with the new gender diversity norms laid down by the Securities and Exchange Board of India (Sebi), some firms, particularly those that are promoter-driven, have taken the easy route by appointing women from their immediate or extended family. Photo: Mint

(Mint)

Firms rush to fill boardroom slots for women

384 out of the BSE 500 firms have a woman on board, but many of them aren’t professionals

Mumbai: Gender diversity in India’s boardrooms is a reality, but that’s just on paper. Three out of four BSE 500 listed firms comply with the new rules on women board members. However, with professionals accounting for only a small portion of these appointments, real gender diversity in the Indian boardroom is still a distance away and many companies may simply be ticking the boxes.

As many as 384 out of 500 companies have already appointed a woman on their board, according to data from Prime Database and Capital Line—both database firms.

However, in a rush to meet the 1 April deadline for complying with the new gender diversity norms laid down by the Securities and Exchange Board of India (Sebi), quite a few of them, particularly those that are promoter-driven, have taken the easy route by appointing women from their immediate or extended family.

Of the 440 directorship positions, 97 are occupied by promoters.

Notable examples of companies with promoter directors are Reliance Industries Ltd, Aditya Birla Group firms and TVS Group firms, Apollo Hospitals Enterprise Ltd, Godfrey Phillips India Ltd and Asian Paints Ltd. All of them have women who are either part of the immediate family or extended families on their boards.

Nita Ambani, wife of Mukesh Ambani, chairman of Reliance Industries Ltd (RIL), for instance, serves on the boards of RIL and East India Hotels. Rajashree Birla, mother of Aditya Birla Group chairman Kumar Mangalam Birla, is a director on most of the group’s firms.

Nawaz Modi Singhania, wife of Gautam Singhania, chairman, Raymond Group, serves as a non-executive director on Raymonds Ltd. Bina Modi, wife of Krishna Kumar Modi, chairman of Modi Group, is an executive director on Godfrey Phillips India Ltd.

The new Companies Act, which came into effect from 1 April 2014, says that every listed company or public company with a minimum paid-up capital of 100 crore or a minimum turnover of 300 crore needs to have at least one woman on its board.

Further, according to the new corporate governance norms finalized by Sebi in February 2014, all listed companies must have at least one woman director on the board.

One person cannot be a director on the boards of more than seven listed companies, Sebi said.

These guidelines come into effect from 1 April.

Not surprisingly, the last 12 months have seen a string of appointments. Out of these 440 directorship positions, 209 were appointed after 13 February 2014.

These include blue chip firms such as Infosys Ltd, Procter and Gamble Hygiene and Health Care Ltd, Bharat Heavy Electricals Ltd, Asian Paints Ltd and Apollo Tyres Ltd.

While the appointment of extended or immediate family members is within the Sebi norms, “it doesn’t help grow the pool", said Pallavi Kathuria, consultant at Egon Zehnder, an executive search firm. Her firm, she added, hasn’t seen many requests for such positions.

This shows that most of the companies are leveraging their own networks to meet the legal requirement. Also, there are very few “unique appointments", meaning those appointed are serving multiple boards. Kathuria also pointed out that there are very few women from non-corporate backgrounds.

As many as 338 women occupy 440 directorship positions. This means some individuals hold multiple positions.

Most corporations approach the few senior women corporate or banking executives who have established a sound reputation for themselves over the years. As a result, many of them—such as Vinita Bali, former managing director at Britannia Industries, Kiran Mazumdar-Shaw, chairperson and managing director at Biocon Ltd, and Chanda Kochhar, managing director at ICICI Bank Ltd—have no choice but to turn down offers, Mint reported in June 2014.

“I would rather not join a board that is inviting me merely to ensure gender diversity," said Meena Ganesh, co-founder and chief executive at Portea Medical, a provider of in-home health care services and former CEO of Tesco India. Ganesh, who has received multiple offers, said what matters is the value one is able to bring with one’s qualification and experience.

Ganesh believes that in the long run, only those boards which are going beyond just meeting the statutory requirements and empowering the appointees in a true sense shall benefit from the move.

Arun Duggal, former chairman at Shriram Capital, who has been mentoring women for board positions, said, “It’s an iterative process."

More than anything else, it’s about social change, which will be gradual. “They not only have to come but also perform," said Duggal.

Experts concede that in the rush to comply with the new norms, some firms might have adopted the tick-the-box approach. But they believe the process will evolve.

“It might be merely tokenism at this stage, but over a period of time, the pool will widen," said Amit Tandon, managing director at Institutional Investor Advisory Services, a proxy advisory firm. “One needs to peel the onion to reach its core," said Tandon.

To be sure, there are others that remain conspicuous due to their absence from the list.

The Tata Group, for instance, has yet to see all its listed entities appoint women directors. Although close to 80% have made the appointments, the ones that are yet to do so include Tata Consultancy Services Ltd, Trent Ltd and Voltas Ltd.

Ashwin Ramarathinam contributed to this story.

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