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ISSN 2231-279X

INDIAN JOURNAL OF MANAGEMENT SCIENCE Volume II Issue 1 February 2013

EDITORIAL BOARD

Editor-in-Chief : Dr. V. S. More (India)

Rohaizat bin Baharun Department of Management Faculty of Management Universiti Teknologi Malaysia

Managing Editor: Dr. Arif Anjum (India)

Yasser Mahfooz, PhD Department of Marketing, College of Business Administration, King Saud University, Riyadh, Saudi Ara

Guest Editors: Dr. Mrs. Praveena S. Muley (India) Dr. Prashant B. Suryawanshi (India) Dr. Mrs. Jayashree V. Bhalerao (India) Dr. Ashutosh V. More (India)

Edhi Juwono Perbanas Economics School for Manage Information Systems, Indonesia Dr.Mu.Subrahmanian Professor & Head, Department of Management Studies, Naya Engineering College, Chennai

E-Mail: infoijms@gmail.com

Prof. D. P. Singh Delhi college of engineering, Delhi Disclaimer: The views expressed in the journal are those of author(s) and not the publisher or the Editorial Board. The readers are informed, authors, editors or the publisher do not owe any responsibility for any damage or loss to any person for the result of any action taken on the basis of the work. Š The articles/papers published in the journal are subject to copyright of the publisher. No part of the publication can be copied or reproduced without the permission of the publisher.

Dr. Nafis Alam, School of Business, University of Nottingham, Malaysia Michael Sunday Agba, Department of Public Administration, Federal Polytechnic, Nigeria

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INDIAN JOURNAL OF MANAGEMENT SCIENCE (IJMS)

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INDEX 1.

Principles And Practices Of Corporate Governance Dr. V. S. More & Dr. Apoorva Hiray

01-04

2.

Corporate Governance and Stakeholder Striving towards Business Excellence Prof. Shuchi Gautam & Dr Praveena S Muley

05-11

3.

Study of Perception on Business Ethics while Financial Decision Making among the Finance Managers of Selected Private Limited Companies in and Around Pune City Prof. Ca Pradeep Ramchandra Thite

12-22

4.

Use of Computer and Management Education in Corporate Governance and It Need for Society: A Review Nandre Deepak Vishwasrao & Dr. S. P. Girase

23-26

5.

Corporate Social Responsibilities in India – Issues and Challenges Mrs. Urvashi Garud

27-32

6.

Corporate Governance in Brics Countries

33-39 Yashashri Mayuresh Rahalkar

7.

Integrating Corporate Social Responsibility with Business objectives: A Study of State Bank of India Mrs. Archana K. Prabhudesai

40-45

8.

Stewardship and Corporate Governance–An Indian Historical Emperor Perspective Ms Sunetra Jain & Dr.Mrs. Jayashree V Bhalerao

46-50

9.

Business Excellence and Corporate Governance Frame Work

51-56 Dr. S.D. Khairnar

10.

A Literature Review of Corporate Governance Dr. Prashant B. Suryawanshi & Dr. Ashuotosh V. More

57-59

11.

Corporate Governance and Company Secretary Dinesh Dadasaheb Borse & Dr. D.M. Gujarathi

60-65

12.

A Study of Development of Corporate Governance Practices in India with Special to Various Committees Recommendation Prof. Ajay Shukla & Prof. Sagar Jadhav

66-74

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13.

Corporate Governance in Management Education Mrs. Jyoti V.Kowjalgi & Mr. Teltumbade Ganesh R.

75-79

14.

An Organization with Business Excellence in Rural Area – A Case Study of V. P. Food & Herbals Pvt. Ltd., Akole.

Prof. Kiran Gonte & Dr. Kirti Dang

80-86

15.

Business Excellence Models - A Review

87-95 Akshay Damani

16.

The Myth Called Corporate Governance with Special Reference to India Prof . Hemant Wanjare

96-100

17.

Optimization of Available Resources in Present Market Scenario Magar Sharadkumar Dattatraya

101-104

18.

Business Excellence Model – Indian Perspective

105-109 Ajay Sampat Shinde

19.

110-116

Innovative Entrepreneurship – Challenges & Perspectives Dr. S. K. Wadekar

20.

Corporate Governance in India : Contemporary Issues Prof. Rahul G.Thorat & Prof. Trupti N. Kharche

117-125

21.

Business Excellence Models

126-130 Prof. Smt. B. D. Patil

22.

Role of Comptroller and Auditor General of India in Meeting Challenges of Good Governance Ms Gauri Rathi

131-135

23.

Importance of English Communication Proficiency for Business Excellence Ms.Suhasini Uttam Jadhav

136-141

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PRINCIPLES AND PRACTICES OF CORPORATE GOVERNANCE Dr. V. S. More,

Dr. Apoorva Hiray,

Director, MGV’s Institute of Management & Research, Panchavati, Nashik, India.

Principal, MGV’s Panchavati College of Management & Computer Science, Panchavati, Nashik, India.

ABSTRACT Corporate governance refers to the set of systems, principles and processes by which a company is governed. They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others. This paper reviews the extensive literature of corporate governance, principles & practices to find out the effectiveness of corporate governance mechanism in the companies.

Keywords: Corporate Governance, corporate governance mechanism

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Introduction: Corporate Governance is a broad term defines the methods, structure and the processes of a company in which the business and affairs of the company managed and directed. Corporate governance also enhances the long term shareholder value by the process of accountability of managers and by enhances the firm’s performance.

It also eliminate the conflict of ownership and control by separately defines the interest of shareholders and managers (Huma, 2011). Corporate governance involves regulatory and market mechanisms, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed (OECD, 2004). Corporate Governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned committees for the company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals (Guide, 2012).

According to Cadbury (1992) Corporate Governance refers to a whole system of controls, financial and otherwise, which ensure that a firm is directed in the right way and towards the right direction. The Cadbury Committee‟s definition focused on the ways in which organisations are controlled and managed so as to achieve their main objectives. It also suggested that Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The Corporate Governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources.

The aim is to align as nearly as possible the interests of individuals, corporations and society. (Cadbury, 2000).

Corporate governance has been comprehensively defined as "a system of law and sound approaches by which corporations are directed and controlled focusing on the internal and external corporate structures with the intention of monitoring the actions of management and directors and thereby mitigating agency risks stemming from the devious deeds of these corporate officers (Sifuna, 2012).

Literature Review Of Corporate Governance: (Walter, 2010) studied Corporate Governance: Principles and Practices and focuses on the theory and practice of balancing power among corporate directors, officers, shareholders, and stakeholders and explanations of contrasting schools of thought, including contractarianism, communitarianism, and the strengths and limitations of emerging academic approaches, such as empiricism, behavioral economics, and the study of international "convergence" of corporate governance an accessible selection of excerpts from the classic and the latest judicial decisions. (Monks, 1995) defined Corporate Governance in terms of interactions between various players in the corporate environment and the processes used in achieving consensus in the allocation of corporate resources and in the determination of corporate direction to ensure improved performance. Since organisations‟ resources are limited and have alternative uses, their allocation deserves considerable attention in order to optimise returns from such usage. This definition can be said to link Corporate Governance with the strategic position of organisations and perhaps sees Corporate Governance as the preserve of strategic level management. Corporate governance as system can provide the corporation with a sufficient degree of independence and efficiency to enable it to operate with a clear understanding and implementation of rights and responsibilities. There is yet no universally accepted or definite meaning of corporate governance. Many scholars and organizations have their own definition. Each such definition has been founded according to the understanding or the interests of the person provided the definition (Spedding, 2004).

(John, 2005) done research work on corporate governance its theories, principles and practice. He studied corporate Governance in Australia and New Zealand 2e is a fully updated, comprehensive study of the law and practice of corporate governance in an international setting but with particular reference to Australia and New Zealand. Taking an international perspective, (Tricker, 2012) examines different models and theories of corporate governance and applies them in a real world context. He explained corporate governance theories, the governance of corporate risk, and corporate social responsibility and sustainability are all now more prominent. In addition, more emphasis is given to the BRIC nations to reflect their growing importance.

Methodology: The authors did the search using the online databases. The google scholar search engine was used and several databases of the publishers like Science Direct, Online Wiley, Elsevier and Sage Publications were also reviewed.

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The following are identified journals, conference proceedings in the field of management and corporate governance by various authors i.e. International Conference on E-Business, Management and Economics, Singapore, Journal of International Banking Law and Regulations, United Nations Conference on Trade and Development, Corporate Governance Asia, International Journal of Corporate Governance, Indian Journal of Corporate Governance etc.

Principles of Corporate Governance: The Cadbury Report 2000 present general principals around which businesses are expected to operate to assure proper governance.

• Rights and equitable treatment of shareholders: Organizations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by openly and effectively communicating information and by encouraging shareholders to participate in general meetings.

• Interests of other stakeholders: Organizations should recognize that they have legal, contractual, social, and market driven obligations to non-shareholder stakeholders, including employees, investors, creditors, suppliers, local communities, customers, and policy makers.

• Role and responsibilities of the board: The board needs sufficient relevant skills and understanding to review and challenge management performance. It also needs adequate size and appropriate levels of independence and commitment • Integrity and ethical behaviour: Integrity should be a fundamental requirement in choosing corporate officers and board members. Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making.

• Disclosure and transparency: Organizations should clarify and make publicly known the roles and responsibilities of board and management to provide stakeholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company's financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information.

Practices In Corporate Governance Disclosure: The conference proceeding of United Nations Conference on Trade and Development defines the practices in Corporate Governance Disclosure (UN, 2006); A) Financial Disclosures: a. Enterprises should disclose their financial and operating results. One of the major responsibilities of the board of directors is to ensure that shareholders and other stakeholders are provided with highquality disclosures on the financial and operating results of the entity that the board of directors have been entrusted with governing. b. Enterprises should fully disclose significant transactions with related parties. Many shareholders and stakeholders would be interested in information that would help them determine that management is running the enterprise with the best interest of all shareholders and stakeholders in mind and not to unduly benefit any related parties. Members of the board and managers should disclose any material interests in transactions or other matters affecting the company.

B) Non-Financial Disclosures: a. The objectives of the enterprise should be disclosed. There are two general categories of company objectives: the first is commercial objectives, such as increasing productivity or identifying a sector focus; the second is much more fundamental and relates to governance objectives. b. The beneficiary ownership structure should be fully disclosed to all interested parties. Changes in the shareholdings of substantial investors should be disclosed to the market as soon as a company becomes aware of them. c. Rules and procedures governing the acquisition of corporate control in the capital markets and extraordinary transactions such as mergers and sales of substantial portions of corporate assets should be disclosed. d. The composition of the board should be disclosed, in particular the balance of executives and nonexecutive directors, and whether any of the non-executives have any affiliations (direct or indirect) with the company. Where there might be issues that stakeholders might perceive as challenging the

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independence of non-executive directors, companies should disclose why those issues do not impinge on the governance role of the non-executive directors as a group e. Governance structures should be disclosed. In particular, the board should disclose structures put in place to prevent conflicts between the interests of the directors and management on the one side, and those of shareholders and other stakeholders on the other. f. The number, type and duties of board positions held by an individual director should be disclosed. An enterprise should also disclose the actual board positions held, and whether or not the enterprise has a policy limiting the number of board positions any one director can hold. g. The board should disclose whether there is a mechanism protecting the rights of other stakeholders in a business. h. The board should give appropriate disclosures and assurance regarding its risk management objectives, systems and activities. The board should disclose existing provisions for identifying and managing the effects of riskbearing activities. The board should report on internal control systems designed to mitigate risks. Such reporting should include risk identification mechanisms. i. The board should disclose that it has confidence that the external auditors are independent and their competency and integrity have not been compromised in any way. The process for the appointment of and interaction with external auditors should be disclosed. j. Enterprises should disclose the scope of work and responsibilities of the internal audit function and the highest level within the leadership of the enterprise to which the internal audit function reports.

Enterprises with no internal audit function should disclose the reasons for its absence.

Conclusion: Corporate Governance has a buzzword in the corporate world. It is the most happening area where several bodies across several countries are trying to improve the standards of governance in corporate world. The other aspect which is required to be looked into is whether standard of governance affect the performance of the company on financial parameters or not. The aim of the review done is to check the effectiveness of corporate governance and its effective mechanism in running and managing the business operations. The issue of ownership and control and the principal-agent problem and its effect on corporate governance is the main area of research in this review. The findings of the most studies show that effective corporate governance reduces the ownership and control problems and draws a clear line between the shareholder and the manager.

References: [1] Cadbury, S. A. (2000). www.emeraldplanet.asia.com/corporate -governance-html. Retrieved from www.emeraldplanet.asia.com.

[2] Guide, M. (2012). http://www.managementstudyguide.com/corporate-governance.htm. Retrieved from http://www.managementstudyguide.com.

[3] Huma, K. (2011). A Literature Review of Corporate Governance. International Conference on Ebusiness, Management and Economics (pp. 1-5). Singapore: IACSIT Press.

[4] John, H. F. (2005). Corporate governance: theories, principles, and practice. Oxford University Press.

[5] Monks, R. a. (1995). Corporate Governance. Cambridge: Blackwell Publishers .

[6] OECD. (2004). http://www.oecd.org/corporate/corporateaffairs/corporategovernanceprinciples/31557724.pdf.

Retrieved from http://www.oecd.org.

[7] Sifuna, A. (2012). Disclose or Abstain: The Prohibition of Insider Trading on Trial. Journal of International Banking Law and Regulation , 12(9).

[8] Spedding, L. S. (2004). Due Diligence and Corporate Governance. UK: LexisNexis.

[9] Tricker, B. (2012). Corporate Governance: Principles, Policies and Practices. Oxford University Press.

[10] UN. (2006). CORPORATE GOVERNANCE DISCLOSURE. United Nations Conference on Trade and Development . New York: United Nations.

[11] Walter, E. (2010). Corporate governance: Principles and Practices. Aspen Publishers. ****

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CORPORATE GOVERNANCE AND STAKEHOLDER STRIVING TOWARDS BUSINESS EXCELLENCE Prof Shuchi Gautam,

Dr Praveena S Muley,

Faculty Finance, SITRC, Nashik, India.

Professor, MGV Institute of Management, Nashik, India.

ABSTRACT

"Corporate governance is about maintaining an appropriate balance of accountability between three key players : the corporation's owners, the directors whom the owners elect, and the managers whom the directors select. Accountability requires not only good transparency, but also an effective means to take action for poor performance or bad decisions."

Mary L. Schapiro, Chairperson, Securities and Exchange Commission, USA, Corporate governance refers to the set of systems, principles and processes by which a company is governed. They provide the guidelines as to how the company can be directed or controlled such that it can fulfill its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society.

The management of the company hence assumes the role of a trustee for all the others.

It ensured that the Governance of the company should be through these three things Systems, Principles and process which should be based upon Integrity, Fairness, Transparency then the Outcome is Satisfied Stake holder.

Keywords: Stakeholders, Business Excellence, Process,Performance

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Introduction: "Corporate governance is about maintaining an appropriate balance of accountability between three key players : the corporation's owners, the directors whom the owners elect, and the managers whom the directors select. Accountability requires not only good transparency, but also an effective means to take action for poor performance or bad decisions."

Mary L. Schapiro, Chairperson, Securities and Exchange Commission, USA, Objectives: 1. To study the basic frame work of corporate Governance 2. To study how the stakeholders are related to corporate governance.

3. To study the relationship of corporate governance and Business Excellence Research Methodology: The search for this paper has been done using the online databases, Online Journal and the report of Corporate Governance of three companies and Business excellence model report of Tata and then the review of all these research paper and the reports was done All the views and relationships expressed in this paper is through the review of paper ,article and the reports.

Corporate governance refers to the set of systems, principles and processes by which a company is governed.

They provide the guidelines as to how the company can be directed or controlled such that it can fulfill its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others.

It ensured that the Governance of the company should be through these three things Systems, Principles and process which should be based upon Integrity, Fairness, Transparency then the Outcome is Satisfied Stake holder.

Benefit of Corporate Governance: 1. Good corporate governance ensures corporate success and economic growth.

2. Strong corporate governance maintains investors’ confidence, as a result of which, company can raise capital efficiently and effectively.

3. It lowers the capital cost.

4. There is a positive impact on the share price.

5. It provides proper inducement to the owners as well as managers to achieve objectives that are in interests of the shareholders and the organization.

6. Good corporate governance also minimizes wastages, corruption, risks and mismanagement.

7. It helps in brand formation and development.

8. It ensures organization in managed in a manner that fits the best interests of all.

How Foundation of Corporate Governance Laid Down in India

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Principles of corporate governance: 1.Rights and equitable treatment of shareholders Organizations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by openly and effectively communicating information and by encouraging shareholders to participate in general meetings.

2. Interests of other stakeholder Organizations should recognize that they have legal, contractual, social, and market driven obligations to nonshareholder stakeholders, including employees, investors, creditors, suppliers, local communities, customers, and policy makers 3. Role and responsibilities of the board: The board needs sufficient relevant skills and understanding to review and challenge management performance. It also needs adequate size and appropriate levels of independence and commitment 4. Integrity and ethical behavior: Integrity should be a fundamental requirement in choosing corporate officers and board members.

Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making.

5. Disclosure and transparency Organizations should clarify and make publicly known the roles and responsibilities of board and management to provide stakeholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company's financial reporting.

Corporate Governance and the stakeholders: As M Mary L. Schapiro Has said "Corporate governance is about maintaining an appropriate balance of accountability between three key players :

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Managers

OWNERS Directors

Other Stakeholders are 1.Customers 2.Employess 3.Government and Taxation Authorities 4.Vendors 5.Bankers and Lenders The Anglo-American "model" tends to emphasize the interests of shareholders. The coordinated or Multistakeholder Model associated with Continental Europe and Japan also recognizes the interests of workers, managers, suppliers, customers, and the community. Indian Corporate Governance model is also based upon the The Anglo-American "model" India's SEBI Committee on Corporate Governance defines corporate governance as the "acceptance by management of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company.” It has been suggested that the Indian approach is drawn from the Gandhian principle of trusteeship and the Directive Principles of the Indian Constitution, but this conceptualization of corporate objectives is also prevalent in Anglo-American and most other jurisdictions.

Good corporate governance helps… to ensure that corporations take into account the interests of a wide range of constituencies, as well as of the communities within which they operate, and that their boards are accountable to the company and the shareholders. This, in turn, helps to assure that corporations operate for the benefit of society as a whole.

For the benefit of the stakeholders the corporate governance should satisfy these four criteria’s.

1.Transparency: Full disclosure of financial and non-financial information 2.Accountability: Ensuring that management is effectively overseen 3.Fairness: Equitable treatment of investors 4.Responsibility: Ensuring the corporation fulfills its proper role in society Corporate governance systems vary in how they achieve these goals, but by focusing on one group --in this case employees-- we can further develop the notion of how a stakeholder group can strengthen the corporate governance system.

A board of directors is expected to play a key role in corporate governance. The board has the responsibility of endorsing the organization's strategy, developing directional policy, appointing, supervising and remunerating senior executives, and ensuring accountability of the organization to its investors and authorities Investors expect to receive financial returns For lenders, it is specified interest payments, while returns to equity investors arise from dividend distributions or capital gains on their stock. Customers are concerned with the certainty of the provision of goods and services of an appropriate quality; suppliers are concerned with compensation for their goods or services, and possible continued trading relationships. These parties provide value to the corporation in the form of financial, physical, human and other forms of capital. Many parties may also be concerned with corporate social performance.

Ethics tend to be something that pervades our organisation’s total culture. You don’t get unethical boards running ethical companies, or vice versa. However, barring a few villains, the question of ethics is not always straightforward. Situations are not black and white, they’re usually grey. The ethical dimension is not always apparent; or if it is, there are conflicting sides to the argument: not in terms of whether to make the right ethical decision or not, but what is the right ethical decision.

A Corporation is a social institution whose responsibilities extend far beyond the well being of its equity

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owners to giving security and a good life to its employees, dealers, customers, vendors, and subcontractors.

Their whole life hinges on the well-being of the corporation.”

Corporations are the powerhouses that generate employment, provide education and health care, and give sustenance to the society. Globalisation has given multinationals overwhelming power at the expenses of democratically elected governments. Good governance needs to ensure that the corporations take in to account the interests of all constituencies in which they operate. A business enterprise’s corporate actions must be compatible with long term societal needs such as the quality of environment and welfare of local community.

It has been increasingly demonstrated that the ultimate competitiveness and corporate success is dependent as much on investors, employees, customers, creditors and suppliers as on shareholders.

Good governance of corporations is a source of competitive advantage and critical to economic and social progress.

It not only attracts long term patient foreign capital but also helps to broaden and deepen local markets.

It must be remembered that the biggest brunt of poor Corporate Governance practices is borne by the poor.

Corporate scams can set back social and economic gains by as much as a generation. Similarly good governance can have a transformational effect on the life of poor, especially in developing and transition economies. A healthy growth of competitive corporate governance is fundamental for sustained and shared growth – sustained in the sense that it withstands the shocks of market volatility; shared in the sense that it delivers benefits to all of society. Poverty persists because the gains of growth are not equitably distributed.

Striving Towards Business Excellence: The fundamental concept of business excellence is leadership which leads to continuous improvement innovation which should be customer focused. Business Excellence should be aimed to satisfy these: 1. It should inspire for the high performance 2. Achieving results that delight all the organization's Stakeholders 3. Maximizing the contribution of employees through their development and involvement 4. Partnership Development: Developing and maintaining value-adding partnerships with all the stakeholders.

5. Impact on Society Strive to understand and respond to the expectations of the society at large.

Business Excellence Model by European Foundation for Quality Management (EFQM):

The Business Excellence Model is a nine-box model, originally developed by the European Foundation for Quality Management (EFQM). Its purpose is to "support the management of Western European organizations in accelerating the process of making quality a decisive influence for achieving global competitive advantage" (EFQM publication).

The business excellence model emphasizes that the business through Leadership .People management through policies and strategies and transparent process should emerged with the following outputs 1. People satisfaction 2. Customer satisfaction 3. Societial Benefit 4. Business performance and results

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And on the above all Corporate governance Ensures that all these inputs should adhered to ethics ,systems and process which are transparent fair and by following them the output should be achieved. .

The ‘role of non-financial capital’ such as ‘human capital’, ‘social capital’ and ‘cultural capital’ was particularly emphasized. It was felt that there needs to be a greater recognition of the importance of ‘intellectual and reputation capital’ and the tectonic shift in public values with the onset of knowledge economy.

A primary goal of good corporate governance ought to be to foster a culture of creativity, innovation and entrepreneurship to protect the business from irrelevance and obsolescence. Markets and make it move to business excellence.

To strengthen Boards of Directors and in order to induct people of eminence and ability into the Boards to discharge the functions as watch dog of other stakeholders’ interests on Audit Committee, on Remuneration Committee etc., these people should be insulated from the failings of the day – to - day management.

It is vital that a Minimal Training Programme should be designed and administered for all Directors, both Executive and Non-executive, covering key aspects of good corporate governance and directorial responsibilities - statutory, environmental and social. There should be a compulsory induction programme for institutional nominees. The most important aspect in Corporate Governance is the effectiveness of the boards Example of Satyam: If see the controversies of Satyam if can analyze how the failure to corporate governance can deteriorate your outputs of business excellence. This can be better understand by the example of Corporate Governance.

Year 2008 High Price Low Price

Received the Golden Peacock Awards for the Best Corporate Governance 544 114

Year 2009 High Price Low Price

Satyam Scandal Come in LightViolates the Corporate Governance 188.10 11.40

And the Gist of Corporate Governance as explained by Corporate Affairs Minister Prem Chand Gupta “The current board has failed to do what they are supposed to do. The credibility of the IT industry should not be allowed to suffer."

And the other impacts which the company has to face was; 1.Satyam's shares fell to 11.50 rupees on 10 January 2009, their lowest level since March 1998, compared to a high of 544 rupees in 2008.

2.Merrill Lynch (now a part of Bank of America) and State Farm Insurance terminated its engagement with the company.

3.Credit Suisse suspended its coverage of Satyam.

4.Any many more which has deteriorate its tangibles and intangibles in a deeper way.

This is the Price and value which the corporate governance carries.

Conclusion: Corporate Governance is concerned with empowering people, spurring and pursuing innovation and improving efficiency. It also addresses conflicts of interest which can impose burdens on the enterprise. Ensuring transparency and probity in corporate affairs can make a major contribution to improving business standards, public accountability and consequently increase its market capitalization.

We are on the threshold of a profound transformation. The gap between what can be imagined and what can be achieved could never have been smaller. The key constraint to achieving our ambitions is no larger the financial capital. It is the limitation of our own imagination and attitude. Our governance systems whether in public or corporate must foster innovation, nurture creativity and build trust, transparency and a sense of sharing. We must recognize that we are living today not in an economy of hands or heads but the economy of hearts. Our governance systems need to be recast in a way that they touch the hearts and not only the minds.

Harnessing the full potential of knowledge economy requires understanding of how knowledge works. The collaboration between the corporation and its stakeholders can be beneficial to both sides. The end result is not one plus one equals two, but much more.

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For the Better corporate Governance in the companies the reforms should be in such manner 1. The reform process needs champions - a stakeholder group that is deeply interested in the long term health of the company and has an undeniable right to speak out to management on improving the corporation.

2. The reform process must also be governed by clear rules. But this is not all.

3. Rules must be enforced. And it should be the Access to information should be made more easily accountable and authenticated Employees an other stakeholders can play an active role in strengthening corporate governance Systems.

4. Above all its the responsibility of Owners and Directors and the auditors to ensure the corporate governance being intact in their organization because it is the soul of the organization that should be clean and in high spirits When all the inputs, resources and process are ensured regarding the following of governance in best way then definitely the outcome will be satisfied stakeholder multiplying the value of company ,then who can stop them from Business excellence.

References: [1] Research paper “The role of stakeholders “ October 2000 in website OECD.org by Olivier Fremond’ [2] Business Ethics and Value System by Singh Anand “Himalaya Publishing House Page no 121 chapter Corporate Governance [3] Corproate Governance Report 2009 of Infosys .

[4] Business Excellence Report of TATA Chemicals Ltd [5] Corporate Governance Report of Satyam 2008 &2009 “Status of Corporate Governance Research on India: An Exploratory Study” by Srinivasan Padmini & Srinivasan Vasanthi published in IIM Bangalore Magazine working paper 334.

[6] Speech of Dr Madhav Mehra on Corporate Governance A Road Map to achieve Excellence ****

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STUDY OF PERCEPTION ON BUSINESS ETHICS WHILE FINANCIAL DECISION MAKING AMONG THE FINANCE MANAGERS OF SELECTED PRIVATE LIMITED COMPANIES IN AND AROUND PUNE CITY

Prof. CA Pradeep Ramchandra Thite, Asst. Professor Smt. Hiraben Nanavati Institute of Management and research for Women, Pune, India.

ABSTRACT Ethics is concerned with human behavior that is either acceptable or unacceptable based on conventional morality. General ethical norms cover truthfulness, honesty, integrity, respect for others, fairness, and justice. They relate to all aspects of life, including business and finance.

Financial ethics is, therefore, a subset of general ethics. Ethical dilemmas can arise when those personal values conflict directly with the company’s practices. People often act unethically due to the constant pressure to increase profits. More ethical misconduct is done to benefit organizational performance rather than to satisfy personal greed. A finance manager must remain impartial and loyal to ethical guidelines but he frequently encounters ethical issues regardless of the industry which could lead to both ethical and criminal violations. This paper is an attempt to gain an understanding of the perception of finance managers of selected private limited companies in and around Pune City about financial ethics, being a categorical imperative to business excellence, while financial decision making.

Keywords: Financial ethics, Ethical dilemma, financial decision making.

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Introduction: "It's not hard to make decisions when you know what your values are."

Roy Disney Ethics is a very sensitive topic universally. One area of ethics that has received much attention in recent time is business ethics due to the effect business has on the lives of the people. Business ethics is a form of applied ethics that examines rules and principles within a commercial context; the various moral or ethical problems that can arise in a business setting; and any special duties or obligations that apply to persons who are engaged in commerce (Ahmed, 2003). Ethics is the integrity measure, which evaluates the values, norms and rules that constitute the base for individual and social relationships, from a moral perspective (Smith and Smith, 2002). Business ethics is a form of applied ethics that examines ethical principles and ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations.

Ethical dilemmas and ethical violations in finance is an outcome of inconsistency in the conceptual framework of modern financial-economic theory and the use of a principal-agent model of relationship in financial transactions.

The principal-agent model of relationships refers to an arrangement whereby one party, acting as an agent for another, carries out certain functions on behalf of that other. Such arrangements are an integral part of the modern economic and financial system, and it is difficult to imagine it functioning without them. The behavioral assumption of the modern financial-economic theory runs counter to the ideas of trustworthiness, loyalty, fidelity, stewardship, and concern for others that underlie the traditional principal-agent relationship. The traditional concept of agency is based on moral values. But if human beings are rational maximizers, then agency on behalf of others in the traditional sense is impossible. According to Duska, "To do something for another in a system geared to maximize self-interest is foolish. Such an answer, though, points out an inconsistency at the heart of the system, for a system that has rules requiring agents to look out for others while encouraging individuals to look out only for themselves, destroys the practice of looking out for others" A finance manager working in the public or private sector must remain impartial and loyal to ethical guidelines when reviewing a company or individual's financial records for reporting purposes. A finance manager frequently encounters ethical issues regardless of the industry and must remain continually vigilant to reduce the chances of outside forces manipulating financial records, which could lead to both ethical and criminal violations. The burden for public companies to succeed at high levels may place undue stress and pressure on finance managers preparing balance sheets and financial statements. The ethical issue for these accountants becomes maintaining true reporting of company assets, liabilities and profits without giving in to the pressure placed on them by management or corporate officers. Unethical accountants could easily alter company financial records and maneuver numbers to paint false pictures of company successes. This may lead to short-term prosperity, but altered financial records will ultimately spell the downfall of companies when the frauds are unearthed.

A survey of 179 CFOs published in May 2004 has shown that only 38% of the respondents believed that pressure to use aggressive accounting techniques to improve results had lessened relative to three years earlier.

20% of the respondents said the pressure had increased over the past three years. Where did the respondents say the pressure was coming from? Personal greed, weak boards of directors, and overbearing Chief Executive Officers (CEOs) topped the list. Who is to blame? Perhaps that question is less important than focusing on what is needed—greater personal integrity and less emphasis on meeting quarterly earnings estimates.

(Sources: Jeremy Kahn, “The Chief Freaked Out Officer,” Fortune, December 9, 2002, pp. 197–202, and Don Durfee, “After the Scandals: It’s Better (and Worse) Than You Think,” CFO, May 2004, p. 29.)

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According to Rest (1984), all four components in this decision-making process must be present to result in ethical behavior are a) Ethical sensitivity – to identify or acknowledge an ethical problem exists; b) Ethical priorities – to appreciate values and priorities through an understanding of principles, rules, norms and theories that may apply to the situation rather than competing priorities or preferences; c) Ethical judgment – to develop their reasoning and judgment so as to evaluate a resolution of the dilemma in accordance with the most ethical choice; and d) Ethical courage – to develop the strength of character to act upon such decisions and work through the challenges and frustrations inevitably connected with ethical decision-making Objectives: The objective of this paper is to study the perception of business ethics among the finance managers. Ethical dilemma for a finance manager is one when the finance manager is directed or asked to undertake a course of action which conflicts with his code of ethics.

The paper aims to get an understanding whether the perception about financial ethics about financial decision making is same among male finance managers and female finance managers.

Objective 1: What is the perception of Male finance managers and female finance managers about money making as the only drive of business?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about the only drive of business is money making.

H1 = there is significant difference in perception of male finance mangers and female finance managers about the only drive of business is money making.

Objective 2: What is the perception of Male finance managers and female finance managers about the relevance of issues related to financial ethics for the companies which are doing business well?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “A company doing business well need not worry about issues related to financial ethics.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “A company doing business well need not worry about issues related to financial ethics.”

Objective 3: What is the perception of Male finance managers and female finance managers about the requirement of ethical practices for business sustainability?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Business sustainability requires Ethical practices.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “Business sustainability requires Ethical practices.”

Objective 4: What is the perception of Male finance managers and female finance managers about increase in chances of ethical behavior, with increase in the monetary reward to finance managers?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Higher the monetary reward to managers more chances of ethical behavior.”

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H1 = there is significant difference in perception of male finance mangers and female finance managers about “Higher the monetary reward to managers more chances of ethical behavior.”

Objective 5: What is the perception of Male finance managers and female finance managers about the existence of difference between what businesses communicate and what they actually do?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “There is always difference between what businesses communicate and what they actually do.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “There is always difference between what businesses communicate and what they actually do.”

Objective 6: What is the perception of Male finance managers and female finance managers about whether the Business ethics and business profitability / bottom-line go hand in hand?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Business ethics and business profitability / bottom-line go hand in hand.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “Business ethics and business profitability / bottom-line go hand in hand.”

Objective 7: What is the perception of Male finance managers and female finance managers about Unethical business decisions by finance managers lead to financial losses?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Unethical business decisions by managers lead to financial losses.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “Unethical business decisions by managers lead to financial losses.”

Objective 8: What is the perception of Male finance managers and female finance managers about more ethical decision making by female finance managers as compared to male finance managers?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Female finance managers take business decisions ethically as compared to male finance managers” H1 = there is significant difference in perception of male finance mangers and female finance managers about “Female finance managers take business decisions ethically as compared to male finance managers.”

Objective 9: What is the perception of Male finance managers and female finance managers about more ethical decision making by experienced managers than young managers?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Experienced managers make business decisions more ethically than young managers.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “Experienced managers make business decisions more ethically than young managers.”

Objective 10: What is the perception of Male finance managers and female finance managers about decision making

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behavior of finance manager as per moral principles whether he is aware of it or not.?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Every manager acts as per moral principles whether he is aware of it or not.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “Every manager acts as per moral principles whether he is aware of it or not.”

Objective 11: What is the perception of Male finance managers and female finance managers about the compromise of ethical values against organizational interests by finance managers?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Ethical values are compromised against organizational interests by finance managers.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “Ethical values are compromised against organizational interests by finance managers.”

Objective 12: What is the perception of Male finance managers and female finance managers about justification of means by the purposes while financial decision making?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “While financial decision making, the purpose justifies the means” H1 = there is significant difference in perception of male finance mangers and female finance managers about “While financial decision making, the purpose justifies the means.”

Objective 13: What is the perception of Male finance managers and female finance managers about the conflict between Finance manager’s Ethical Values and organizational interests?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Finance manager’s Ethical Values and organizational interests always conflict with each other.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “Finance manager’s Ethical Values and organizational interests always conflict with each other..”

Objective 14: What is the perception of Male finance managers and female finance managers about whether the Manager’s ethical values and business knowledge are two different worlds?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Manager’s ethical values and business knowledge are two different worlds” H1 = there is significant difference in perception of male finance mangers and female finance managers about “Manager’s ethical values and business knowledge are two different worlds.”

Objective 15: What is the perception of Male finance managers and female finance managers about the existence of ethical code of conduct in every organization?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “The organizations should have ethical code of conduct.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “The organizations should have ethical code of conduct.”

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Objective 16: What is the perception of Male finance managers and female finance managers about the punishment of any unethical decision?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “All Unethical decisions should be punishable.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “All Unethical decisions should be punishable.”

Objective 17: What is the perception of Male finance managers and female finance managers about whether Business ethics can be taught?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Business ethics can be taught.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “Business ethics can be taught.”

Objective 18: What is the perception of Male finance managers and female finance managers about the pressure on finance managers when they are engaged in what they perceive to be an unethical behavior?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Finance managers personally feel pressure when they are engaged in what they perceive to be an unethical behavior.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “Finance managers personally feel pressure when they are engaged in what they perceive to be an unethical behavior.”

Objective 19: What is the perception of Male finance managers and female finance managers about the inevitability of ethical dilemma for finance managers?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “Ethical dilemma for finance managers is inevitable.”

H1 = there is significant difference in perception of male finance mangers and female finance managers about “Ethical dilemma for finance managers is inevitable.”

Objective 20: What is the perception of Male finance managers and female finance managers about requirement of compromise with one’s ethics in order to succeed in business?

H0 = there is no significant difference in perception of male finance mangers and female finance managers about “In order to succeed in business, it is often needed to compromise one's ethics” H1 = there is significant difference in perception of male finance mangers and female finance managers about “In order to succeed in business, it is often needed to compromise one's ethics.”

Methodology: The primary data has been collected by conducting survey among finance managers of randomly selected Private limited companies in and around Pune City area of Maharashtra state in India using a well structured

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questionnaire. The finance managers were asked to respond to the questionnaire based on their experience over their career and not be confined to their current position. It was also made clear that the survey was not intended to identify ethical issues in any particular company.

The sample size was 60 finance managers of 60 Private limited companies in and around Pune city. The questionnaires were distributed among the finance managers the response rate was 88.33%. Only 53 filled questionnaires were received. For the purpose of final analysis 50 questionnaires were used after rejecting 3 questionnaires which were not completed properly. Each statement was treated as a separate variable. The responses were encoded by assigning a value to each response as 1 = strongly disagree to 5= strongly agree.

Findings: Independent Samples Test Levene's Test for Equality of Variances F Equal variances The only drive of assumed business is money Equal variances not making assumed A company doing Equal variances business well need assumed not worry about Equal variances not issues related to assumed financial ethics.

Equal variances Business assumed sustainability requires Ethical Equal variances not practices assumed Higher the Equal variances monetary reward to assumed managers more Equal variances not chances of ethical assumed behavior There is always Equal variances difference between assumed what businesses communicate and Equal variances not what they actually assumed do Business ethics and Equal variances business assumed profitability / Equal variances not bottom-line go assumed hand in hand. variances Unethical business Equal decisions by assumed managers lead to Equal variances not financial losses assumed Female managers Equal variances take business assumed decisions ethically Equal variances not as compared to assumed male managers Experienced Equal variances managers make assumed business decisions Equal variances not more ethically than assumed young managers.

Every manager acts Equal variances as per moral assumed principles whether Equal variances not he is aware of it or assumed not.

Ethical values are Equal variances compromised assumed

Sig.

4.679

2.259

4.803

3.174

1.208

.012

1.017

.181

.014

4.819

7.399

.036

.139

.033

.081

.277

.914

.318

.673

.907

.033

.009

t

1.148

df

t-test for Equality of Means Sig. (2tailed)

Mean Std. Error Difference Difference

95% Confidence Interval of the Difference Lower Upper

48

.257

.299

.261

-.225

.824

1.412 47.857

.165

.299

.212

-.127

.726

48

.117

-.437

.274

-.987

.114

-1.475 26.399

.152

-.437

.296

-1.045

.171

48

.178

.396

.289

-.186

.978

1.189 22.868

.247

.396

.333

-.293

1.085

48

.369

.346

.381

-.420

1.112

.963 38.102

.342

.346

.359

-.381

1.073

48

.749

-.153

.477

-1.112

.805

-.333 35.844

.741

-.153

.460

-1.086

.779

-.809

48

.422

-.255

.315

-.888

.379

-.829 34.625

.413

-.255

.308

-.880

.370

48

.553

.130

.218

-.308

.568

.656 41.678

.515

.130

.198

-.270

.530

48

.126

.558

.358

-.162

1.278

1.540 31.434

.134

.558

.362

-.181

1.296

-.091

48

.928

-.027

.294

-.617

.564

-.091 32.058

.928

-.027

.295

-.628

.574

48

.218

-.406

.325

-1.061

.248

-1.423 44.968

.162

-.406

.286

-.982

.169

.015

.756

.298

.156

1.355

-1.595

1.367

.908

-.321

.597

1.558

-1.249

2.534

48

Vol.– II, Issue – 1, February 2013

INDIAN JOURNAL OF MANAGEMENT SCIENCE (IJMS) against organizational interests by managers While financial decision making, the purpose justifies the means Finance manager’s Ethical Values and organizational interests always conflict with each other Finance manager’s ethical values and business knowledge are two different worlds

Equal variances not assumed Equal variances assumed Equal variances not assumed Equal variances assumed

.419

30.943

.520

.000

Equal variances not assumed Equal variances assumed

.902

.347

Equal variances not assumed

Equal variances The organizations assumed should have ethical Equal variances not code of conduct. assumed Equal variances All Unethical assumed decisions should be Equal variances not punishable. assumed Equal variances Business ethics can assumed be taught.

Equal variances not assumed Finance managers Equal variances personally feel assumed pressure when they are engaged in Equal variances not what they perceive assumed to be an unethical behavior. variances Ethical dilemma Equal for finance assumed managers is Equal variances not inevitable. assumed In order to succeed Equal variances in business, it is assumed often needed to Equal variances not compromise one's assumed ethics

12.555

2.557

.813

11.869

4.129

3.986

.001

.116

.372

.001

.048

.052

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19

2.143 21.551

.044

.756

.353

.024

1.488

1.805

48

.077

.537

.297

-.061

1.134

1.760 30.300

.088

.537

.305

-.086

1.159

2.935

48

.005

.467

.159

.147

.787

2.320 18.916

.032

.467

.201

.046

.888

-.862

48

.393

-.223

.258

-.742

.297

-.902 36.661

.373

-.223

.247

-.723

.278

2.086

48

.042

.465

.223

.017

.914

1.775 21.821

.090

.465

.262

-.079

1.009

2.376

48

.022

.663

.279

.102

1.224

2.106 23.875

.046

.663

.315

.013

1.313

48

.674

.116

.274

-.434

.666

.448 37.921

.656

.116

.258

-.407

.639

48

.009

.877

.322

.230

1.524

2.237 20.321

.037

.877

.392

.060

1.694

2.179

48

.034

.599

.275

.046

1.152

1.933 23.919

.065

.599

.310

-.041

1.239

-.238

48

.813

-.059

.247

-.556

.438

-.297 47.293

.768

-.059

.198

-.457

.340

.423

2.723

Objective 1 With a mean for male managers = 2.18 and for female managers = 1.88, the Levene’s Test for Equal variances yields a p-value of .036. Hence the difference between the variances is statistically significant. Using the statistics in the row “Equal variances not assumed”, the two tailed significance shows p-value 0.299 > 0.05 indicating that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 2 The Levene’s Test for Equal variances yields f value 2.259 with a p-value of .139. Hence the difference between the variances is statistically insignificant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.117 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 3 The Levene’s Test for Equal variances yields f value 4.803 with a p-value of 0.033. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances not assumed”, the two tailed significance shows p-value 0.247 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

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Objective 4 The Levene’s Test for Equal variances yields f value 3.147 with a p-value of 0.081. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.369 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 5 The Levene’s Test for Equal variances yields f value 1.208 with a p-value of 0.277. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.749 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 6 The Levene’s Test for Equal variances yields f value 0.12 with a p-value of 0.914. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.422 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 7 The Levene’s Test for Equal variances yields f value 1.017 with a p-value of 0.318. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.553 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 8 The Levene’s Test for Equal variances yields f value 0.181 with a p-value of 0.673. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.126 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 9 The Levene’s Test for Equal variances yields f value 0.014 with a p-value of 0.907. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.928 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 10 The Levene’s Test for Equal variances yields f value 4.819 with a p-value of 0.033. Hence the difference between the variances is statistically insignificant Using the statistics in the row “Equal variances not assumed”, the two tailed significance shows p-value 0.162 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 11 The Levene’s Test for Equal variances yields f value 7.339 with a p-value of 0.009. Hence the difference between the variances is statistically insignificant Using the statistics in the row “Equal variances not assumed”, the two tailed significance shows p-value 0.044 being lower than 0.05 indicates that there is significant difference existing. Hence null hypothesis is rejected.

Objective 12 The Levene’s Test for Equal variances yields f value 0.419 with a p-value of 0.520. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.077 being higher than 0.05 indicates that there is no significant

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difference existing. Hence null hypothesis is accepted.

Objective 13 The Levene’s Test for Equal variances yields f value 30.943 with a p-value of 0.000. Hence the difference between the variances is statistically insignificant Using the statistics in the row “Equal variances not assumed”, the two tailed significance shows p-value 0.032 not being higher than 0.05 indicates that there is significant difference existing. Hence null hypothesis is rejected.

Objective 14 The Levene’s Test for Equal variances yields f value 0.902 with a p-value of 0.347. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.393 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 15 The Levene’s Test for Equal variances yields f value 12.555 with a p-value of 0.001. Hence the difference between the variances is statistically insignificant Using the statistics in the row “Equal variances not assumed”, the two tailed significance shows p-value 0.090 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 16 The Levene’s Test for Equal variances yields f value 2.557 with a p-value of 0.116. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.022 not being higher than 0.05 indicates that there is significant difference existing. Hence null hypothesis is rejected.

Objective 17 The Levene’s Test for Equal variances yields f value 0.813 with a p-value of 0.372. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.674 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Objective 18 The Levene’s Test for Equal variances yields f value 110869 with a p-value of 0.001. Hence the difference between the variances is statistically insignificant Using the statistics in the row “Equal variances not assumed”, the two tailed significance shows p-value 0.037 not being higher than 0.05 indicates that there is significant difference existing. Hence null hypothesis is rejected.

Objective 19 The Levene’s Test for Equal variances yields f value 4.129 with a p-value of 0.048. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances not assumed”, the two tailed significance shows p-value 0.065 being higher than 0.05 indicates that there is significant difference existing. Hence null hypothesis is accepted.

Objective 20 The Levene’s Test for Equal variances yields f value 3.986 with a p-value of 0.052. Hence the difference between the variances is statistically significant Using the statistics in the row “Equal variances assumed”, the two tailed significance shows p-value 0.768 being higher than 0.05 indicates that there is no significant difference existing. Hence null hypothesis is accepted.

Conclusion: Financial managers take the financial decisions on the basis of factual information and impartial analysis of the facts.

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Developing a code of conduct is one thing, but actually putting it into practice is a much more challenging exercise.

Establishing a code of ethical conduct is meaningless if employees and in particular top managers do not adhere to it when making decisions. If top managers continue to say that they will only be satisfied with bottom-line results and will accept no excuses, they are building a culture that implicitly pressurize employees to engage in unethical behavior to get ahead. Ethical behavior is difficult for any researcher to measure and analyze, especially in real-life situations. Results are often imprecise due to the challenges inherent in quantifying what is ethical and what is not.

True role of ethics in finance is to be found in the acceptance of "internal goodness" If the attainment of internal goodness becomes generally accepted as the ultimate objective of all businesses then they would become truly ethical. For the good of all business entities it becomes vitally important that business be conducted within an ethical framework that builds and sustains trust.

References: [1] Storey, D.J. (1985). "THE PROBLEMS FACING NEW FIRMS ". Journal of Management Studies 22 (3): 327.

[2] Pennington, A. H.; Macklin, R.; Campbell, T. (2007). Human Resource Management: Ethics and Employment. Oxford: Oxford University Press. ISBN 0-19-920379-2 [3] Texas A&M University: Business and Accounting Ethics; Dr. Katherine T. Smith, et al.

[4] Duska, Ronald R. (1992). "Why Be a Loyal Agent? A Systematic Ethical Analysis." In Ethics and Agency Theory: An Introduction. Norman E. Bowie and Edward R. Freeman, eds., New York: Oxford University Press.

[5] Dobson, John. (1993). "The Role of Ethics in Finance." Financial Analysis Journal. November-December: 57-61.

[6] Michael K. McCuddy, Karl E. Reichardt, and David Schroeder, “Ethical Pressures: Fact or Fiction?”

Management Accounting 74, no. 10, pp. 57–61.

[7] Ahmed, K (2003): The Effect of Ethics on Banking Business, The Ethics Resource Centre.

[8] http://www.succezz.com/Articles/business-ethics-dilemma-reason2.html [9] Smith, K.T, and Smith, L.M (2003): Business and Accounting Ethics, T&M University, Texas [10] http://businesscasestudies.co.uk/cadbury-schweppes/ethical-business-practices/the-importance-ofethics-in-business.html#axzz2Joon24ge [11] http://businessethicsreview.wordpress.com/2011/06/21/the-importance-of-business-ethics/ [12] http://www.mindfountainnlp.com/index.php/why-is-running-an-ethical-business-so-important/ [13] http://www.icaew.com/en/technical/ethics/practice-business-ethics/business/ethical-behaviour-in-business [14] http://smallbusiness.chron.com/importance-ethical-conduct-business-25163.html [15] http://www.wisegeek.com/what-is-the-importance-of-business-ethics.htm [16] http://source.southuniversity.edu/ethical-principles-for-business-38725.aspx [17] http://old.cba.ua.edu/~aturner/MGT341/MGT341%20Readings/Business%20Ethics%20A%20Managers %20Primer.pdf ****

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USE OF COMPUTER AND MANAGEMENT EDUCATION IN CORPORATE GOVERNANCE AND IT NEED FOR SOCIETY: A REVIEW Nandre Deepak Vishwasrao,

Dr. S. P. Girase,

Research Scholar, NMU Jalgaon.

MVP’s Institute of Management, Research and Technology, Nashik, India.

Director, S.T.Co.Op.Edu.Society’s IMRD. Dondaicha Rd., Shahada, India.

ABSTRACT The introduction of the computer and advent of the Internet has changed the way we live in the modern world. This spans across every aspect of human life. Modern innovations have led to the description of the age in which we live as “the Information age”. Information technology and management therefore plays a vital role to the extent that timely access to Information could save a life while improper management of Information could lead to huge problems and losses of opportunities. Management education is truly at crossroads especially after scandals like Enron, which have put corporate reputation at great stake. Are Business Schools failing in training the future managers in their legal and ethical responsibilities to society? Can teaching Corporate Governance (CG) to business students help to develop a CG culture in business organizations.

Taking up this issue, the study investigates the perception of future managers towards CG and explores its scope in the courses of business schools. In terms of corporate governance and financial reporting, the financial implications of these losses could be great on corporate entities when quantified in monetary terms and this has led several companies to invest in finding better ways of improving on Information systems.

Keywords: Computer, Internet, Corporate Governance, Management Education, Information System.

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Introduction: Managing risks with the aid of information technology will help organisations deliver on corporate governance, says Sunil R Chandiramani, Partner-National Director Risk & Business Solutions Ernst & Young India.

Corporate governance has taken centre-stage across boardrooms around the world. The term applies to all aspects of a business. Given the fact that technology is expected to play a key role in helping organisations achieve their business objectives, it is imperative to discuss the role of corporate governance over technology. Risk management is a critical component of corporate governance. Risk management helps organisations recognise the wide spectrum of risks that they are exposed to. It aims to help them prioritise risks based on their potential impact, put mitigation plans in place, and monitor them so that they don’t become hurdles in achieving corporate objectives. Information technology is a key support function in any business, and regulation requires the board and the management to report key risks, and their assessment of how these risks are being managed. The Chief Information Officer (CIO) needs to play a significant role in supporting boards, audit committees and the management, in first understanding, and then implementing, good governance over IT. Corporate governance is defined as the formal system of accountability and control for legal, ethical and socially responsible decisions and use of resources in business organizations. It is based on certain institutions like; laws, contracts, norms and regulations that create self-governing system in the organization. A corporation has various stakeholders, internal and external groups whose support is essential for the survival and growth of any corporation (Freeman 1984; Lozano 2000; Mitroff 1983).

A business organization frequently interacts with commonly acknowledged stakeholders who include employees, customers, shareholders, suppliers, government agencies, managers, creditors and community groups. Business students could also be treated as stakeholders, who collectively constitute the future leadership of corporations and will eventually become members of all stakeholder groups (R.A. Peterson and G. Albaum, 2005). Therefore, the concept of corporate governance has direct implications for both businesses and business education. This increasing need for corporate governance in business sector has actually trigged out minds of business schools’ deans to get academia involved in the practices of this recommended model. “After a year of high-profile corporate scandals and bankruptcies, including big names, professors at business schools have reinvigorated their ethics instruction by turning headlines into lecture fodder and paper topics” (J.K. Wall 2002).

Business institutions have to play their role more actively by nurturing the codes of good governance in the minds of business graduates resulting in turning them from pre-conventional and conventional phases to a post-conventional stage in moral development and enabling them to respect the rights of other stakeholders (Kohlberg 1976). Therefore, business schools are one of the best places to encourage this type of value development culture (White 1980).

It assumes that business schools as supplier of business managers can produce well-trained and ethically responsible managers, who can act as change agents and ensure best practices of corporate governance in their organizations.

The Government of India has liberalized the business education in 1990s, which has resulted in a rapid growth of Business Schools offering the programmes both at graduate & undergraduate levels. Indian B-Schools are almost a replica of US Business education particularly in the area of pedagogy, curricula, industry interface & academic research models, but it is observed that Indian B-Schools are struggling hard to introduce several adaptations because of differences in the work culture system. That made Indian Business education to face several issues in the area of academics, development of infrastructure & financial support. The Govt. of India had also appointed various committees to take a critical review & the over all growth of Business Education in the country. Owing to the intense competition at the global level lot of changes are taking place in the industries. In turn there is a need to make the changes in the Business education system all over the world.

Corporate scandals and failures across the globe including Enron, Worldcom, Daewoo Group (in Korea) and HIH (a major insurance group) in Australia and the latest Satyam Computers in India, has raised serious questions about the way public corporations are governed around the world. This is usually characterized by managers who have been trusted with company control but due to conflicting/self interest, sometimes engage in actions that are profoundly detrimental to the interests of shareholders and other stakeholders. When managerial self-dealings are excessive and left unchecked, they often have serious negative effects on corporate values and the proper functions of capital markets. Around the world there is growing consensus that it is vitally important to strenghten corporate governance to protect the rights of shareholders, curb managerial

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excesses, and restore confidence in capital markets.

Research Issues: Corporate governance aims to minimize chances of corruption, malpractices, financial frauds and misconduct of management. Ethically trained and morally strong business graduates can ensure implementation of corporate governance in business organization by supplying well-trained and ethically responsible managers, which ensure the best practices of corporate governance in their organizations. Training graduates and teaching corporate governance in their courses can help to develop corporate governance culture in the organizations. The study collects the perceptions of business graduate about the different issues related to corporate governance. The issues taken into study include: management issues, shareholder issues, customer issues, social issues, corporate governance and personal preparation. The study investigates the level of understanding and learning experiences related to corporate governance issues in business education. It highlights the role of business schools in promoting the culture of corporate governance while training the future executives to apply good governance. The study develops an estimate of the perception of corporate governance in India and Pakistan and generalizes its findings over the population of developing countries.

The study tries to address the following questions: 1. What is the understanding level of business graduates about corporate governance?

2. What are the sources of learning corporate governance for business graduates?

3. What are the overall perceptions of business graduates about corporate governances?

4. Do business schools play any role to promote corporate culture?

5. Are business graduates ethically competent to apply corporate governance in real business world?

Corporate Governance Of B-Schools: As indicated by S.L.Rao, a major weakness is the lack of a Corporate Governance system in B-schools. This issue needs careful Consideration. There is a need to have independent Directors as well as to implement independent Audit Committee for managing the B-schools. The B-schools should become process driven. Corporate governance has to be made an element of accreditations. Faculty development as well as faculty involvement in the administration needs to be a part of the corporate governance agenda. Issues like Qualifications of faculty members, Size of libraries, & other academic as well as infrastructural facilities must also become a part of governance.

Importance Of Information Technology: Technology and Corporate Governance is a subject that has received a vast amount of attention, most of which has been directed toward relatively unimportant issues. Technology not only creates new risks, but also plays an important role in mitigating risk. As such, IT executives must now work closely with business unit leaders and executive managers to adopt a formalised set of reproducible and scalable risk and compliance management technologies and techniques.

Security and disaster recovery used to be major risk factors, but today, IT risk management covers a range of factors such as runaway projects, global sourcing, regulatory compliance, privacy, trans-border data flow, export control, financial disclosure, certifications, business continuity, fraud detection,protection of intellectual property and shortage of skilled resources. The list is endless, and promises to keep growing.

What is IT risk management? Simply put, it is the identification, assessment and mitigation of risks related to information technology. The growing importance of IT for successful execution of business goals calls for an effective risk management programme. Corporate reliance on IT raises the stakes in terms of the importance of maintaining 24x7 business continuity.

Need Of Corporate Governance For The Society: Corporate governance is an important subject and of growing concern, especially since society's needs are not being adequately met. Governance of our public institutions is important and of growing concern. They continue to grow to monstrous proportions even though they are unable to cope adequately with major problems of society that are approaching disastrous dimensions. The list of problems is long. It includes alternate and cheaper sources of domestic energy; greater energy conservation; the rebuilding of blighted cities; more environmental protection; better conservation of natural resources; lower food and housing costs; easing the plight of small business; more

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available health care; more available, lower cost, higher quality education and training, especially for the disadvantaged; and to top it all off—more jobs, especially skilled jobs.

Solutions are critical to our future, and they are interrelated because the problems are interrelated. For example, vast numbers of new jobs will come from the development and production of new energy sources, from programs for energy conservation, environmental protection and city building and rebuilding.

What we need is a fundamental change in which business takes the initiative and provides the leadership for planning and managing the implementation of solutions—in cooperation with government, labor unions, universities, churches and all other major segments of society. The major problems of our society are massive, and massive resources are required for their solution. The best approach is to view them with the strategy that they can be profitable business opportunities with an appropriate sharing of cost between business and government. Where the resources for solving problems are beyond those of a single company, as most are, they should be pooled through cooperative projects or joint venture companies.

Conclusion: This study assumes that ethically and socially responsible management can practice and implement good governance in the organization and Business schools as supplier of business managers can produce welltrained and ethically responsible managers, who ensure best practices of corporate governance in their organizations. It analysis the understanding level of business graduates about corporate governance; their main sources of learning corporate governance; their overall perception about corporate governances and the role played by business schools in promoting good corporate culture. The issues studied were classified into various dimensions, taken from the literature about corporate governance: management issues, shareholder issues, customer issues, social issues, and personal issues.

Suggestions: Future research needs to be conducted on the possibility of separate course or specialization on corporate governance. The future research can also collect the perception of faculty members, deans and management about the role of business schools in developing the corporate governance culture in the organization. A comparison between industry and business schools can also provide the insights about corporate governance developments.

References: [1] Ararat, Melsa (2008), A development perspective for “corporate social responsibility”: case of Turkey, Emerald Group Publishing Limited, Vol. 8 No. 3, pp. 271-285. pp. 271.

[2] Borkowski, Susan C, & Yusuf J Ugras. (1998), Business students and ethics: A meta-analysis, Journal of Business Ethics. Dordrecht: Aug 1998.Vol.17, Issue. 11; pg. 1117, 11 pgs [3] Donaldson, L. (2002). Damned by our own theories: contradictions between theories and management education, Academy of Management Learning and Education, Vol. 1 No. 1, pp. 96-106.

[4] Ghoshal, S. (2003). Business schools share the blame for Enron, Financial Times, 18 July [5] J.K. Wall (2002). Business Professors in Indiana Put Ethics Back in Curricula, Business News.

Washington: Sep 16, 2002. pg. 1 [6] Kohlberg, L. (1976). Moral Stages and Moralization: The Cognitive Developmental Approach, in Lickona T, ed, Moral Development and Behavior: Theory, Research, and Social Issues, Holt, Rinehart, and Winston: New York.

[7] Rao S.L, Report of the working group on management education formed by National Knowledge Committee, 2005 [8] Vinten, Gerald. (2000). corporate governance: the need to know. Industrial and Commercial Training, Volume 32, Number 5, 2000. pp. 173 [9] White, B.J., and Montgomery, B.R. (1980). Corporate Codes of Conduct, California Management Review, 80-87.

[10] http://computer.financialexpress.com ****

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CORPORATE SOCIAL RESPONSIBILITIES IN INDIA – ISSUES AND CHALLENGES Mrs. Urvashi Garud, Research Scholar, Institute of Commerce & Management Jiwaji University, Citycenter, Gwalior, M.P., India.

ABSTRACT In recent times, the issue of corporate social responsibility (CSR) has been given a lot of attention by both Dutch business and various stakeholders. Corporate social responsibility (CSR) is a form of corporate self-regulation integrated into a business model. It is also called as corporate conscience, citizenship, social performance, or sustainable responsible business. CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. CSR is the deliberate inclusion of public interest into corporate decision-making that is the core business of the company or firm, and the honouring of a triple bottom line: people, planet, profit.

Keywords: corporate social responsibility (CSR),Triple Bottom Line

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Introduction: Corporate Social Responsibility (CSR) is the responsibility of the corporate entity towards the society in consideration of the support given and sacrifices made by the society. The corporations exploit the natural resources of the country, cause incidental damage to environment and inconvenience to the people of the project area. Therefore, they have a responsibility towards the society to share a part of their profit. In India CSR is at a evolving stage and there is no such specific Act, Rule or Regulation relating to CSR, except certain guidelines issued by the Government of India. Public Sector Corporations have played an important role in CSR although private sectors entities have to go a long way to come up to expectation. The concept of Corporate Social Responsibility (CSR) has been developing since the early 1970s. There is no single universally accepted definition of CSR, though there are some definitions given by certain authorities. CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large. The well accepted definition of CSR is not a common term; MNC’s prefers sustainable development or sustainable business while several Indian companies talk about responsible business or Triple P (People, Planet, and Profit). It is important to note that Indian companies and stakeholders give a broader definition of CSR then MNC and stakeholders. According to the Indian Corporate: “Sustainable development implies optimizing financial position while not depleting social and environmental aspects and CSR implies supporting issues related to children, women and environment” Evolution of Corporate Social Responsibility: To understand the current state of Indian CSR, including the role of the UNGC, India’s long tradition must be taken into account. Its CSR approach is closely linked to its political and economic history, in which four phases can be distinguished: During the first phase (1850-1914) CSR activities were mainly undertaken outside companies and included donations to temples and various social welfare causes. The second phase (1914-1960) was largely influenced by Mahatma Ghandi’s theory of trusteeship, the aim of which was to consolidate and amplify social development. The reform programmes included activities geared particularly to abolishing untouchability, empowering women and developing rural areas. The third phase (1960-1980) was dominated by the paradigm of the “mixed economy”.

In this context, CSR largely took the form of the legal regulation of business activities and/or the promotion of public-sector undertakings (PSUs). The fourth phase (1980 until the present) is characterized partly by traditional philanthropic engagement and partly by steps taken to integrate CSR into a sustainable business strategy.Contrary to various expectations that India would follow the global agenda, its current approach still largely maintains its own features, elements of the global CSR mainstream being only marginally integrated.

Specifically, the philanthropic approach is still widespread: while the Indian understanding of CSR shows a slight shift from traditional philanthropy to sustainable business, philanthropic CSR patterns are still apparent in many Indian companies. In addition, the imbalance between the internal and external CSR dimensions is still huge.

An overview of corporate social responsibility: “Social responsibility (is the) responsibility of an organisation for theimpacts of its decisions and activities on society and the environmentthrough transparent and ethical behaviour that is consistent with sustainable development and the welfare of society; takes into accountthe expectations of stakeholders; is in compliance with applicable lawand consistent with international norms of behaviour; and is integratedthroughout the organisation.” Corporate social responsibility (CSR) is also known by a number of other names. Theseinclude corporate responsibility, corporate accountability, corporate ethics, corporatecitizenship or stewardship, responsible entrepreneurship, and “triple bottom line,” toname just a few. As CSR issues become increasingly integrated into modern businesspractices, there is a trend towards referring to it as “responsible competitiveness” or“corporate sustainability.”

A key point to note is that CSR is an evolving concept that currently does not have a universally accepted definition. Generally, CSR is understood to be the way firms integratesocial, environmental and economic concerns into their values, culture, decision making,strategy and operations in a transparent and accountable

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manner and thereby establish better practices within the firm, create wealth and improve society. As issues of sustainable development become more important, the question of how the business sector addresses them is also becoming an element of CSR. The key drivers for CSR: A traditional view of the corporation suggests that its primary responsibility is to its owners, or stockholders.

However, CSR requires companies to accept a broader view of its responsibilities that includes not only stockholders, but many other stakeholders as well, such as employees, suppliers, customers, the local community, state, and federal governments, environmental groups, etc.

Corporate social responsibility is related to, but not identical with, business ethics. Business ethics usually focuses on the moral judgments and behavior of individuals and groups within organizations. The rationale for CSR has been articulated in a number of ways. In essence it is about building sustainable businesses, which need healthy economies, markets and communities.

• Ethical consumerism - over the last two decades can be linked to the rise of CSR. Industrialization in many developing countries is booming as a result of technology and globalization. Consumers are becoming more aware of the environmental and social implications of their day-to-day consumer decisions and are beginning to make purchasing decisions related to their environmental and ethical concerns.

• Transparency and trust - business has low ratings of trust in public perception. There is increasing expectation that companies will be more open, more accountable and be prepared to report publicly on their performance in social and environmental arenas.

• Increased public expectations of business - globally companies are expected to do more than merely provide jobs and contribute to the economy through taxes and employment. As corporations pursue growth through globalization, they have encountered new challenges that impose limits to their growth and potential profits. Global competition forces multinational corporations to examine not only their own labour practices, but those of their entire supply chain, from a CSR perspective.

• Employee motivation. A KPMG survey of 1600 of the world's largest companies across 16 industrialized countries, including Australia, examined why they are committed to corporate responsibility and what influenced the content of the reports. By the survey almost half of the world's largest companies believe employee motivation is a key driver when it comes to corporate social responsibility.

• Laws and regulation - independent mediators, particularly the government, ensuring that corporations are prevented from harming the broader social good, including people and the environment. Governments should set the agenda for social responsibility by the way of laws and regulation that will allow a business to conduct themselves responsibly.

• Crises and their consequences : Often it takes a crisis to precipitate attention to CSR. One of the most active stands against environmental management is the CERES Principles that resulted after the Exxon Valdez incident in Alaska in 1989 . Other examples include the lead poisoning paint used by toy giant Mattel, which required a recall of millions of toys globally and caused the company to initiate new risk management.

• Stakeholder priorities : Increasingly, corporations are motivated to become more socially responsible because their key stakeholders expect them to understand and address the social and community issues that are important to them. Companies have their own ideas about corporate social responsibility - and how much of a commitment they make to it. It can range from "going green" to supporting local charities. But one thing is increasingly clear. It is not a choice any longer. CSR extends to the bottom line. Corporate Social Responsibility is no longer optional.

The Key issues of CSR: The business case for CSR within a company will likely rest on one or more of the following arguments which are a combination of risk management and strategic advantage approaches: • Human Resources: Corporate Social Responsibility can be an important aid to recruitment and retention, particularly within the competitive graduate market. CSR can also help to build a ‘feel good’ atmosphere among existing staff.

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• Risk Management: Managing risk is a central part of many corporate strategies. Reputations that take decades to build up can be ruined in hours through incidents such as corruption scandals or environmental accidents. These events can also draw unwanted attention from regulators, courts, governments and media.

Building a genuine culture of ‘doing the right thing’ within a corporation can offset these risks.

• Brand Differentiation: In crowded marketplaces companies strive for ‘X Factors’ which can separate them from the competition in the minds of consumers. Several major brands, such as The Body Shop are built on ethical values.

• License to operate: Corporations are keen to avoid interference in their business through taxation or regulations. By taking substantive voluntary steps they can persuade governments and the wider public that they are taking current issues like health and safety, diversity or the environment seriously and so avoid intervention.

• Diverting Attention :Major corporations which have existing reputational problems due to their core business activities may engage in high-profile CSR programs to draw attention away from their perceived negative impacts. Thus British American Tobacco (BAT) will take part in health initiatives and the petroleum giant BP has installed very visible wind-turbines on the roofs of some petrol stations in the UK. Challenges of CSR: Many companies think that corporate social responsibility is a peripheral issue for their business and customer satisfaction more important for them. They imagine that customer satisfaction is now only about price and service, but they fail to point out on important changes that are taking place worldwide that could blow the business out of the water. The change is named as social responsibility which is an opportunity for the business.

Some of the drivers pushing business towards CSR include: • The Shrinking Role of Government: In the past, governments have relied on legislation and regulation to deliver social and environmental objectives in the business sector. Shrinking government resources, coupled with a distrust of regulations, has led to the exploration of voluntary and non-regulatory initiatives instead.

• Demands for Greater Disclosure: There is a growing demand for corporate disclosure from stakeholders, including customers, suppliers, employees, communities, investors, and activist organizations.

• Increased Customer Interest: There is evidence that the ethical conduct of companies exerts a growing influence on the purchasing decisions of customers. In a recent survey by Environics International, more than one in five consumers reported having either rewarded or punished companies based on their perceived social performance.

• Growing Investor Pressure: Investors are changing the way they assess companies' performance, and are making decisions based on criteria that include ethical concerns. The Social Investment Forum reports that in the US in 1999, there was more than $2 trillion worth of assets invested in portfolios that used screens linked to the environment and social responsibility. A separate survey by Environics International revealed that more than a quarter of share-owning Americans took into account ethical considerations when buying and selling stocks.

• Competitive Labour Markets: Employees are increasingly looking beyond paychecks and benefits, and seeking out employers whose philosophies and operating practices match their own principles. In order to hire and retain skilled employees, companies are being forced to improve working conditions.

• Supplier Relations: As stakeholders are becoming increasingly interested in business affairs, many companies are taking steps to ensure that their partners conduct themselves in a socially responsible manner.

Some are introducing codes of conduct for their suppliers, to ensure that other companies' policies or practices do not tarnish their reputation.

Examples of CSR in India: • Tata Group Tata Group in India has a range of CSR projects, most of which are community improvement programs. For example, it is a leading provider of maternal and child health services, family planning, and has provided 98 percent immunization in Jamshedpur. The company also endorses sports as a way of life. It has established a

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football academy, archery academy, and promotes sports among employees. It offers healthcare services all over the country with programs like rural health development.

Tata Group also has an organized relief program in case of natural disasters, including long-term treatment and rebuilding efforts. It did laudable work during the Gujarat earthquakes and Orissa floods. It also supports education, with over 500 schools, and also is a benefactor of the arts and culture. It has done abundant work in improving the environment and local populations around its industries.

• Aptech Aptech a leading education player with a global presence that has played a broad and continued role in encouraging and nurturing education throughout the country since its inception. As a global player with complete solutions-providing capabilities, Aptech has a long history of participating in community activities.

It has, in association with leading NGOs, provided computers at schools, education to the deprived, and training and awareness-camps.

• Infosys Infosys is aggressively involved in a variety of community growth programs. In 1996, the company created the Infosys Foundation as a not-for-profit trust to which it contributes up to 1 percent of profits after tax every year. Moreover, the Education and Research Department at Infosys also works with employee volunteers on community development projects.

The management team at Infosys continues to set examples in the area of corporate citizenship and has involved itself vigorously in key national bodies. They have taken initiatives to work in the areas of research and education, community service, rural outreach programs, employment, healthcare for the poor, education, arts and culture, and welfare activities undertaken by the Infosys Foundation.

• Mahindra & Mahindra At Mahindra & Mahindra, The K. C. Mahindra Education Trust was established in 1953 with the purpose of promoting education. Its vision is to renovate the lives of people in India through education and financial assistance across age groups and across income strata. The K. C. Mahindra Education Trust undertakes a number of education plans, which make a difference to the lives of worthy students. The Trust has provided more than Rs. 7.5 crore in the form of grants, scholarships and loans. It promotes education mostly by the way of scholarships. The Nanhi Kali (children) project has over 3,300 children under it and the company aims to increase the number to 10,000 in the next two years by reaching out to the underprivileged children, especially in rural areas.

Recommendations: It is found that there is a need for creation of awareness about CSR amongst the general public to make CSR initiatives more effective. This awareness generation can be taken up by various stakeholders including the media to highlight the good work done by corporate houses in this area. This will bring about effective changes in the approach and attitude of the public towards CSR initiatives undertaken by corporate houses.

This effort will also motivate other corporate houses to join the league and play an effective role in addressing issues such as access to education, health care and livelihood opportunities for a large number of people in India through their innovative CSR practices. Thus, the social justice agenda of the day would be fulfilled more meaningfully.

It is noted that partnerships between all stakeholders including the private sector, employees, local communities, the Government and society in general are either not effective or not effectively operational at the grassroots level in the CSR domain. This scenario often creates barriers in implementing CSR initiative.

It is found that there are approximately 250 corporate houses in the country that are directly involved in various CSR initiatives. These companies continue to decide their own projects depending on a number of parameters. These efforts are driven purely by the company’s operational perspectives and ease of implementation of their CSR projects. As there are a number of companies involved in CSR activities, it is recommended that an accreditation mechanism should be put in place for companies through an independent agency for mainstreaming and institutionalizing CSR in the main business framework of the companies.

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Conclusion: The concept of corporate social responsibility is now firmly rooted on the global business agenda. But in order to move from theory to concrete action, many obstacles need to be overcome. A key challenge facing business is the need for more reliable indicators of progress in the field of CSR, along with the dissemination of CSR strategies. Transparency and dialogue can help to make a business appear more trustworthy, and push up the standards of other organizations at the same time. There is a need to promote a drive in Government Companies towards greater accountability on Corporate Social Responsibility (CSR).

In order to attain the social objectives, there is a need for framing a CSR Policy in every company, as given under voluntary guidelines by Ministry of Corporate Affairs, for prioritization of activities for social spending and allocation of separate funds for this purpose.

CSR can play a valuable role in ensuring that the invisible hand acts, as intended, to produce the social good.

In addition, it seems clear that a CSR program can be a profitable element of corporate strategy, contributing to risk management and to the maintenance of relationships that are important to long-term profitability.

References: [1] [2] [3] [4] [5] [6] [7] [8] [9]

Retrieved from www.enwikipedia.org/wiki/corporate_social_responsibility.

Retrieved from www.indianet.nl/csrindia_cremfinal.pdf Retrieved from www.zinearticles.com/?The Growing-importance-of-CSR&id= 4787936.

Retrieved from www.simplycsr.co.uk/the-benefits-of-csr.html.

Retrieved from www.ssrn.com www.scribd.com Dr.Sanjeev Verma, Rohit Chauhan (2007) “Role of CSR in Developing Economies”.

Khanna, Parul; Gitika Gupta (January 2011) Corporate Social Responsibilities.

Chahoud, Dr. Tatjana; Johannes Emmerling, Dorothea Kolb, Iris Kubina, Gordon Repinski, Catarina Schläger (2007). Corporate Social and Environmental Responsibility in India - Assessing the UN Global Compac's Role ****

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CORPORATE GOVERNANCE IN BRICS COUNTRIES Yashashri Mayuresh Rahalkar, Assistant Professor, Matoshri College of Management & Research Centre, Ekalahare, Nasik, India.

ABSTRACT Corporate governance in a developing-country setting takes on additional importance. Good corporate governance is vital because of its role in attracting foreign investment. The extent of foreign investment, in turn, shapes the prospects for economic growth for many developing countries. This is a comparative analysis of BRICS‘s corporate governance. This study describes the corporate governance system in BRICS countries namely Brazil, India, Russia, China, South Africa. This study examines the difference between BRICS corporate governance systems as well as some factors those are special features of that corporate governance.

In recent years, corporate governance has attained significance all over the world. Two important factors have lead to rapid developments in the field, namely the integration and globalization of financial markets and a surge of corporate scandals such as Enron, World Com and others. Lately, Brazil, Russia, India and China (BRIC) countries have emerged as an influential economic power in the global economy.

Keywords: Corporate Governance, Brazil, India, Russia, China, South Africa

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Introduction: “Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society.”1 Investors primarily consider two variables before making investment decisions--the rate of return on invested capital and the risk associated with the investment. Good corporate-governance practices reduce this risk by ensuring transparency, accountability, and enforceability in the marketplace. The presence of a good corporate-governance framework ensures neither stability nor success, it is widely believed that corporate governance can "raise efficiency and growth," especially for countries that rely heavily on stock markets to raise capital.

While corporate governance may not dictate the economic prospects of developing countries, it certainly plays an integral role in shaping them. BRIC is an acronym that refers to the economies of Brazil, Russia, India, and China, which are seen as major developing economies in the world. According to Forbes, "The general consensus is that the term was first prominently used in a Goldman Sachs report from 2003, which speculated that by 2050 these four economies would be wealthier than most of the current major economic powers." In March 2012, South Africa appeared to join BRIC, which thus became BRICS. The BRICS countries include more than 40% of the world's population and occupy over a quarter of the world's land area. Brazil, Russia, India, China, and South Africa together are a powerful economic force.2 Objectives: 1. To study Corporate Governance in BRICS countries.

2. To compare & analyze corporate governance of BRICS countries.

Research Methodology: The research design is based on various Research papers, articles available on net as well as reference books.

Data collection took place with the help of secondary data method. As the basic aim of this research work is to study Corporate Governance in BRICS countries secondary data collected from • By reference books & websites • By Research Papers- International and National • By Essays, Articles Scope & Limitation: The Research work covers study of corporate governance system of only in BRICS countries (Brazil, India, Russia, China, South Africa) Due to time & other constraints it is not possible to study & cover each & every aspect of corporate governance system of BRICS countries. The above research work highly based on secondary data so there might be question raised on genuineness of records. This Research paper does not claim that any one Corporate Governance is best or better than other.

Corporate Governance: An understanding: Before delving further on the subject, it is important to define the concept of corporate governance. “The King Commission describes Corporate Governance simply as “ the system by which companies are directed and controlled.”3 “Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society.”4 Corporate governance is concerned with set of principles, ethics, values, morals, rules regulations, & procedures etc. Corporate governance establishes a system whereby directors are entrusted with duties and responsibilities in relation to the direction of the company’s affairs. The term “governance” means control i.e. controlling a company, an organization etc or a company & corporate governance is governing or controlling

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the corporate bodies i.e. ethics, values, principles, morals. For corporate governance to be good the manager needs to meet its responsibilities towards its owners (shareholders), creditors, employees, customers, government and the society at large. Corporate governance helps in establishing a system where a director is showered with duties and responsibilities of the affairs of the company.

Corporate governance generally refers to the set of mechanisms that influence the decisions made by managers when there is a separation of ownership and control. Some of these monitoring mechanisms are the board of directors, institutional shareholders, and operation of the market for corporate control. The importance of this topic is obvious from an examination of the considerable growth in the empirical literature on corporate governance across accounting, economics, finance, management, and corporate strategy literatures.

For effective corporate governance, its policies need to be such that the directors of the company should not abuse their power and instead should understand their duties and responsibilities towards the company and should act in the best interests of the company in the broadest sense. The concept of ‘corporate governance’ is not an end; it’s just a beginning towards growth of company for long term prosperity.

Brazil: Brazil, officially the Federative Republic of Brazil, is the largest country in South America and in the Latin America region. It is the world's fifth largest country, both by geographical area and by population with over 193 million people. Bounded by the Atlantic Ocean on the east, Brazil has a coastline of 7,491 km (4,655 mi).

Independence was achieved in 1822 with the formation of the Empire of Brazil, a unitary state governed under a constitutional monarchy and a parliamentary system. The country became a presidential republic in 1889, when a military proclaimed the Republic, although the bicameral legislature, now called Congress, dates back to the ratification of the first constitution in 1824. Its current Constitution, formulated in 1988, defines Brazil as a federal republic. The Federation is formed by the union of the Federal District, the 26 States, and the 5,564 Municipalities.5 Corporate Governance in Brazil: Important Features: • Transparency of ownership & control at general Shareholder meetings. There should be clear regulations laid down about the process for voting on general meeting agenda items.

• ‘One share–one vote’ concept implemented. Every shareholder is company owner.

• The Board of Directors should safeguard the assets of the business ensuring that the company’s goal & objectives are met.

• The board should comprise five to ten directors, elected by owners, at least two of whom have appropriate experience of finance/accounting. There are three categories of employees internal, external & independent.

• Minority Shareholders are specially protected with right to vote &should be paid the same price.

• Quarterly financial statements should be published along with details of the factors that have affected business performance over the quarter.

• There should be adequate disclosure & annual report should include company’s corporate governance practices.

• The CEO is accountable to board of directors & both are accountable for a transparent relationship with Stakeholders.

• Every organization should have an independent auditor who should express clearly their opinion on financial statements.

• Each organization should have a code of conduct covering areas of conflicts at workplace.

• Fiscal council is an essential but non mandatory part of Brazilian Companies Governance system.6 Russia: Russia also officially known as the Russian Federation is a country in northern Eurasia. It is a federal semipresidential republic, comprising 83 federal subjects. At 17,075,400 square kilometers (6,592,800 sq mi), Russia is the largest country in the world, covering more than one-eighth of the Earth's inhabited land area.

Russia is also the world's ninth most populous nation with 143 million people as of 2012. Extending across the

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whole of northern Asia, Russia spans nine time zones and incorporates a wide range of environments and landforms. Russia has the world's largest reserves of mineral and energy resources and is the largest producer of oil and natural gas globally. Russia has the world's largest forest reserves and its lakes contain approximately one-quarter of the world's fresh water.7 Corporate Governance in Russia: Important Features: The Russian Code of Corporate Governance was issued by the Federal Securities Commission in2001.It has support of both government officials & private groups & it is hoped that compliance with the code will be at high level.

• There are clear set of key principles of corporate governance. There should be equal treatment of shareholders, including minority & foreign investors.

• There should be transparent procedure for nomination & election of board members.25 % of board should be independent.

• The key function of board includes strategic aspect while executive bodies are responsible for day to day operations.

• In every organization there should be a company secretary appointed by board of directors & have adequate powers to perform his duties.

• The company secretary is identified as key person for determining & monitoring conflicts between the company & its shareholders.

• Appropriate information should be disclosed to current & potential shareholders in prospectus, quarterly report & annual report.

• Dividends should be paid in cash only and company has to set clear deadline for payment.

• In order to ensure that the company is operating according to plan & mechanisms are appropriate & transparent supervision is carried out by board of directors & audit committee which comprised of only independent directors.8 India: India officially the Republic of India, is a country in South Asia. It is the seventh-largest country by area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world.

Home to the ancient Indus Valley Civilization and a region of historic trade routes and vast empires, the Indian subcontinent was identified with its commercial and cultural wealth for much of its long history. The Indian economy is the world's tenth-largest by nominal GDP and third-largest by purchasing power parity (PPP).

Following market-based economic reforms in 1991, India became one of the fastest-growing major economies; it is considered a newly industrialized country. However, it continues to face the challenges of poverty, illiteracy, corruption, malnutrition, inadequate public healthcare, and violence against women. A nuclear weapons state and a regional power, it has the third-largest standing army in the world and ranks ninth in military expenditure among nations. India is a federal constitutional republic governed under a parliamentary system consisting of 28 states and 7 union territories. India is a pluralistic, multilingual, and multiethnic society. It is also home to a diversity of wildlife in a variety of protected habitats.9 Corporate Governance in India: Important Features: • The board provides leadership & strategic guidance for company, comprises not less than 50% non executive directors where there is non executive chairman.(one third of board-independent director)In case when there is an executive chairman this will be at least half of board will be independent.

• Roles of CEO & Chairman may be combined & may be performed by one individual. Nominee Directors are permissible & adopted in practice.

• There are number of mandatory recommendations i.e. audit committee, its structure, members etc.

• There should be special remuneration committee to make recommendations on executive director’s remuneration.

• Board meetings should be held 4 times in a year with maximum 4 months duration between two meetings.

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• Every material fact regarding performance of company should be disclosed in annual report.

• Shareholders are entitled to be able to participate effectively in annual general meeting. Company should disclose quarterly results & other essential information to them.

• A company should obtained compliance certificate from its auditors & it should be sent each year to all the shareholders& to stock exchange with directors’ report.10 China: China officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population of over 1.3 billion. The PRC is a single-party state governed by the Communist Party of China with its seat of government in the capital city of Beijing. It exercises jurisdiction over 22 provinces, five autonomous regions, four direct-controlled municipalities (Beijing, Tianjin, Shanghai, and Chongqing), and two mostly self-governing special administrative regions (Hong Kong and Macau).

Covering approximately 9.6 million square kilometers, China is the world's second-largest country by land area, and the third- or fourth-largest by total area, depending on the definition of total area.11 Corporate Governance in China: Important Features: • The company should ensure that all shareholders are treated fairly specially minority shareholders.

• Companies should established communication channels with shareholders & should be informed with significant matters that affect the company.

• Special status, recommendations & protocol how controlling shareholders behave at time of restructuring, explains in detailed in code.

• The controlling shareholders initially nominate the candidate for directors & supervisors on basis of their skill knowledge & experience.

• Directors should attend appropriate training sessions to familiarize with their duties, role & responsibilities.

• Board should establish various committees such as audit, strategic, remuneration; nomination &majority of the directors should be independent.

• Supervisory board should comprise individuals with professional knowledge & work experience in law & accounting & they are accountable to shareholders.

• Directors, supervisors & management’s performance should be appraised through a fair & transparent procedure by appraisal & remuneration committee. Accordingly incentives or disciplinary action will be taken.

• Company should respect legal rights of various stakeholders groups & provide them appropriate information.

• Mandatory disclosure should be there & in it specification of corporate governance should be included in detail.

• Apart from maximizing benefits of shareholders listed company shall be concerned with welfare, environmental protection, & public interest of community.12 South Africa: South Africa, officially the Republic of South Africa, is a country located at the southern tip of Africa. It is divided into nine provinces and has 2,798 kilometers (1,739 mi) of coastline. South Africa is the 25th largest country in the world by area and the 24th most populous country with over 51 million people. South Africa is a multi-ethnic nation and has diverse cultures and languages. Eleven official languages are recognized in the constitution. Two of these languages are of European origin: Though English is commonly used in public and commercial life, it is only the fifth most-spoken home language. All ethnic and language groups have political representation in the country's constitutional democracy comprising a parliamentary republic; unlike most parliamentary republics, the positions of head of state and head of government are merged in a parliamentdependent President.13

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Corporate Governance in South Africa: Important Features: • The board is focal point of corporate governance & remuneration of director should be transparent process which should be based on policies formulated by remuneration & audit committee.

• Board should preferably comprise a majority of non executive directors with sufficient of these being independent.

• The roles of chair should be separated. The chair is an independent non executive director.

• Companies should established internal audit function with reporting line directly between the head of internal audit & CEO. • Audit committee should comprise a majority of independent non-executive director majority of them are financially literate.

• Management is accountable to board for day to day risk management & overall risk management process is responsibility of board.

• Each company should repot of Integrated Sustainability every year which includes nature & extend of social, ethical, safety, health, environment management policies & practices.

• Companies have meaningful dialogue with institutional investors.

• Company should ensure adequate information is provided in advance to all shareowners about annual general meeting agenda items.

• Company should provide a balanced view of company’s position to stakeholders. Reporting should be clear & include financial as well as non financial matters.14 Summary of Key Characteristics Influencing BRICS Corporate Governance: Comparative Study: Feature

Brazil

India

Russia

China State –owned enterprises, joint stock companies

South Africa

Main Business Form

Public Limited Company

Public Limited Company

Mass privatization via voucher

Predominant Ownership Structure

Controlling owner (corporation or individual)

Corporate Bodies, Families, but institutional investor’s ownership increasing

Insider(managers & workers)although outsiders increasing

State

Institutional investors

Common Law

Civil Law

Civil Law

Common Law

Unitary Some Aspects of Code are Mandatory Recommendations

Dual

Dual

Unitary

Covers dividend payment

Influence of communist Party

Inclusive Approach

The Russian Code of Corporate Governance, 2001

The Code of Corporate Governance for listed Companies in China,2001

Code of Corporate Practices & Conduct, 2002

Legal System

Civil Law

Board Structure

Dual

Important Aspect

Fiscal Councils

Code of Corporate Governance

Code Of Best Practice of Corporate Governance, 2001

SEBI Code of Corporate Governance

Public Limited Company

Above Table is collection of various aspects illustrated in various chapter of Corporate Governance by Christine A. Mallin, Third Edition, Oxford University Press publication, New York Findings: 1. Most of the BRICS countries are well aware with social & environmental protection & it is responsibility of companies as well as part of corporate governance.

2. BRICS Countries wants to protect rights of minority shareholders.

3. Complete disclosure of performance of corporate governance to shareholders through annual or quarterly reporting is mandatory for all BRICS countries corporate governance.

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4. There is a predefined structure for board of directors, auditing, meeting etc. & it is special laid down by all BRICS Countries.

5. In every BRICS Country, there is a special code which governs corporate governance & unique in nature.

Most of the countries of BRICS, (especially China & India) took initiatives for these codes after suffering from huge scams & scandals.

6. Countries like Russia, South Africa, India & Brazil had painful history of social & political imbalanced.

Impacts of these are found in Corporate Governance.

7. Legal, social, political & environmental system is differ from one another in BRICS countries but there is common thread in between them that is maximization benefits of shareholders.

8. Transparency & fairness are soul of corporate governance of BRICS countries.

Conclusion: Above all, the corporate governance of five very different countries has been discussed. Brazil, India, Russia, China, South Africa have different cultural influences, legal systems, political environment and different corporate governance structures. But these appear to be certain commonality of approach to their corporate governance code. We cannot claim that one system is well balanced corporate governance & other’s not. All of the above countries have already published corporate governance codes of best practices. It has been noted that BRICS countries are keen to improve protection of minority shareholders rights & to establish more confidence in their capital markets top attract foreign direct investment.

References: [1] Corporate Governance: Global Concepts & Practices by Dr. S. Singh, First Edition, Excel Books publication New Delhi.

[2] Corporate Governance by Christine A. Mallin, Third Edition, Oxford University Press publication, New York [3] Corporate Governance Is The Problem, Not The Solution: A Critical Appraisal Of The European Regulation On Credit Rating Agencies By Andrew Johnston, Journal of Corporate Law Studies, University of Queensland.

[4] Corporate Governance And Globalization: Arguments And Evidence Against Convergence By Mauro F. Guillén, The Wharton School and Department of Sociology University of Pennsylvania Philadelphia.

[5] Corporate Governance in India By Rajesh Chakrabarti & William L. Megginson Forthcoming, Journal of Applied Corporate Finance [6] Corporate governance research on the free web: a selected annotated guide By Sophie Bury & Richard Leblanc [7] Corporate Governance in Asia: A Survey By Stijn Claessens and Joseph P.H. Fan University of Amsterdam, Roetersstraat.

[8] Corporate Governance in India – Evolution and Challenges By Rajesh Chakrabarti College of Management, Georgia Tech, USA. [9] Status of Corporate Governance Research On India: An Exploratory Study ByPadmini Srinivasan & Vasanthi Srinivasan Indian Institute of Management Bangalore [10] Does Corporate Governance Really Matter? By David F. Larcker, Scott A. Richardson & Irem Tuna, The Wharton School University of Pennsylvania, Philadelphia.

[11] “INDIACSR Essay Writing Competition on Corporate Governance in India”. By Sonali Soni [12] en.wikipedia.org ****

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INTEGRATING CORPORATE SOCIAL RESPONSIBILITY WITH BUSINESS OBJECTIVES: A STUDY OF STATE BANK OF INDIA

Mrs. Archana K. Prabhudesai, Asst. Professor, Dept. of Commerce, Joshi-Bedekar College. Thane(W), India.

ABSTRACT Profit is considered as a basic necessity to survive & to succeed in today’s competitive business world. Many times corporate adopt different fraudulent practices to maximize their profits. This results in the exploitation of stakeholders.

Business ethics, Corporate Governance and Corporate Social Responsibility are the interrelated terms which focus on the issue of unfair, unethical , fraudulent business practices.

CSR(Corporate Social Responsibility) is a relatively new concept which is company’s sense of responsibility towards the community and environment (both ecological and social ) in which it operates. The study focuses on the integration of CSR with business strategy by the biggest commercial bank in India –State Bank of India(SBI). It is an attempt to study the role, importance of CSR and to know the contribution of SBI towards CSR. Keywords: Corporate Social Responsibility, Business ethics, Corporate Governance

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Introduction: In the emerging world economy, the activities of corporate worldwide are under strict inspection of different groups i.e. activists, media and the investors. Under the changing market conditions it is imperative for the corporate to closely monitor the social, environmental & overall effects of their activities. Although for long back period, business groups have demonstrated varying degree of responsibility to the society, it is only since the late 1990s there is a strong inclusion of the concept of CSR in the objectives for management.

In recent years, increasing attention has been given to the concept of Corporate Social Responsibility (CSR), defined in terms of the responsiveness of businesses to stakeholders’ legal, ethical, social and environmental expectations. CSR has generally been a pragmatic response to consumer and civil society pressures.

Accusations by governments and civil society of environmental pollution, human rights abuses and exploitation of labour in supply chains, have pressured companies to become more environmentally and socially responsible. However, the business community has also quickly recognized the strategic value of being more responsible and is beginning to align products and business relationships, in particular through their supply chains, accordingly.

Objectives of the study: The objectives of the study are twofold: • To present an array of importance of CSR in todays competitive business world • To suggest some ways of integrating CSR initiatives with a company's business strategy through a case of State Bank of India.

Importance of CSR: CSR is the way that businesses manage the economic, social and environmental impacts of their operations into their values, culture, strategy and operations to maximise the benefits and minimise the downsides. It is driven by both Government looking for businesses to make positive contributions and the costs and benefits of the business and may involve new approaches in their activities of: • governance • ethics • health and safety • environment • human rights, labour, culture, minorities • sustainability • accountability • customer satisfaction.

An effective approach to CSR can enhance brand and company reputation by improving efficiency, reducing the risk of business disruptions, and open up new opportunities driving innovation.

The ‘triple bottom line’ more commonly known as ‘people, plant, profit’ is also known as the three pillars of sustainability as put forward by Philips in 2005.

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Corporate Social Responsibility (“CSR”), as a strategic practice, is key to organizational success because it is one of the few practices that can positively impact all three elements of the Triple Bottom Line, contributing to a healthy bottom line and long-term sustainability.

Because CSR can influence economic, environmental and social factors in a variety of ways, there is no “one size fits all” approach. An effective CSR strategy must consider alignment with the organizational strategy, commercial added value, and have sustainable impact.

The benefits of an effective CSR approach to an organization can include: 1. Stronger performance and profitability 2. Improved relations with the investment community and access to capital 3. Enhanced employee relations and company culture 4. Risk management and access to social opportunities 5. Stronger relationships with communities and legal regulators Hierarchy of responsibilities under CSR:

Different approaches to CSR: 1.Community Based Development Approach: In this corporations work with local communities to better themselves.Many companies participating in establishing educational facilities for adults.

2. Philanthrophy Approach: It includes monetary donations and aid given to local organisation & communities in developing countries.

3. Incorporate CSR strategy with Business strategy: It includes integration of business plan with CSR strategy. Eg. Procurement of tea or coffee by many KPMG. 4.Creating share value Approach: It is based on the idea that corporate success & social welfare are interdependent.

5.Benchmarking Approach: Many companies review the competitors’ strategies related to CSR and try to follow it.

CSR and Sustainable development: Sustainable development is a pattern resource use, that aims to meet human needs while preserving the environment. So that these needs can be met not only in the present but also in the generations to come.

The field of sustainability can be conceptually broken into three constituents They are-

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1. Environmental Sustainability 2. Economic Sustainability 3. Socio-political Sustainability 4. Sustainable Development is a development that meet the needs of the present without compromising the ability of future generation to meet their own needs.

CSR AND SUSTAUNABLE DEVELOPMENT Case Study- State Bank of India An example of integration of CSR with Business The stated CSR Philosophy is as follows: The Bank is a corporate citizen, with resources at its command and benefits which it derives from operating in society in general. It,therefore, owes a solemn duty to the less fortunate and under-privileged members of the Pension related information to pensioners .

During the financial year 2010-2011, numerous welfare and social activities were implemented both in Banking and Non-Banking areas with the basic aim of raising the quality of life in the community, especially in and around the area of operation of the branches. Particular attention was given to ameliorating the condition of the downtrodden and under- privileged common man Currently, the focus areas under Community Service Banking are: • • • • • • • • • • •

Education Adoption of the Girl Child Women’s empowerment Child development Welfare and rehabilitation of poor and handicapped Assistance to poor and under privileged Entrepreneur development programmes Vocational guidance Thrust for assistance to IT education in Rural/Tribal/unreached areas Environment Protection Assistance during natural calamities

Projects during 2010-11 1.Natural Calamities: Donations amounting to 2 crores were made to UP Chief Minister’s Relief Fund for providing relief and rehabilitation to victims of NaturalCalamities.

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2.Community Service Banking: 2547 projects have been assisted with ` 25.95 crore covering the areas of Health, Education, Assistance for Sports, Handicapped, to tribals & other underprivileged members of society.

3.Adoption of the Girl Child: Society’s preference for the boy child has resulted in a large number of instances when the girl child is deprived of familial attention, education, affection, healthcare and in extreme cases, even food. In order to supplement the efforts of the Govt., to change this concept, branches adopt Girl Children in the age group of 6 to 14 years, who orphans / destitute / physically handicapped belong to poor families.

This initiative started in 2008 with 8,338 children has in its role 17,627 girl children at present with an assistance of ` 3 .49 crores extended during the year 2010-11 under community service banking.

Apart from financial assistance, individual employees from the Bank / spouses of employees adopt one or two children for care,mentoring, counselling, to try and fulfil the role of a guide.

This includes periodic visits to the schools by Staff Members, talking to the girl child to understand her difficulties, academic or otherwise, and offering solutions. A close liaison is also maintained with the teachers and the academic progress of the girl child is monitored. If felt necessary, timely corrective action is suggested.

While gradually increasing the coverage, the Bank has emphasised that individual care and attention to the adopted children as originally envisaged, should not be diluted.

4. Research and development fund: 5. SBI Children’s Welfare Fund: The Fund was set up with donations from the Project Work employees of SBI with matching contributions from the Bank to assist underprivileged and poor children in their overall development. During the year 201011, 6 projects were assisted with ` 5.62 lac.

6.Education Partnering with MCGM: The Municipal Corporation of Greater Mumbai (MCGM) has launched a project to transform and upgrade the outcome of education in schools run by the Municipal Corporation. The Bank has agreed to support this project as a partner for a period of 2 years as this project may evolve as a model for replication across the country. Contribution to the tune 3.97 crores has been made by the Bank towards this project in 2010-11.

7.SBI Youth for India: (Harnessing youth Power for rural development) SBI Youth for India is a fellowship programme initiated, funded and managed by the State Bank of India in partnership with reputed NGOs. The programme seeks to help india secure sustainable path by: 1.Providing educated Indian youth with an opportunity to touch lives and create positive change at the grass root level in rural India.

2.Providing NGOs working on development projects in rural India with educated manpower whose skill sets can be used to catalyze rural development.

3.Promoting a forum for the Programme alumni to share ideas and contribute to rural development throughout their professional life.

Project work: 1.The selected candidates are assigned a project according to their interest/skill and as per the need of the respective NGO. 2.Throughout the project, they will be provided a mentor from the partner NGO who will help them to address the challenges in the project assigned.

3.In consultation with their mentor, they will have to define an outcome that they intend to achieve at the end of the project and will then have to work towards it.

4. The programme offers the candidates a wide the country. of variety of projects to choose from

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The project will cover a whole gamut of areas like Cluster Development, Watershed Development, Environment Protection, Biotechnology,Computer Literacy, Women’s Empowerment,Dairy Husbandry,BioDiversity, Eco-Technology, Insurance, Coastal Research Development Systems etc. The Bank seeks to make a lasting impact in the rural scenario through this program.

References: [1] Dan O’Brien(2001) Integrating Corporate Social Responsibility with competitive Strategy.” The Centre for Corporate citizenship, Boston College.

[2] Leiv Lunde (2003) “Corporate Social Responsibility: Scope, opportunities and challenges” CSRconcepts and cases, vol. 1, IUP. [3] Justine k and David B (2003)”The Business Case for Corporate Citizenship” CSR- concepts and cases, vol. 1 ,IUP. [4] www.competitionreview.com [5] www.csr.com ****

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STEWARDSHIP AND CORPORATE GOVERNANCE – AN INDIAN HISTORICAL EMPEROR PERSPECTIVE

Ms Sunetra Jain,

Dr.Ms. Jayashree V ,

Assistant Professor, MGV’s IMR, Panchvati , Nashik, India.

Bhalerao,Associate Professor, MGV’s IMR, Panchvati , Nashik, India.

ABSTRACT Corporate governance is the technique by which the businesses are expected to run smoothly.

With the continuous governance it is expected that the businesses can make optimum use of resources and get the best output.

Right from union carbide to satyam computers scam have emphasized the necessity of better governance. It is not a coincidence that what is felt or realized by businesses now was known the kings in the historical time. They have run and sustained their empires with the help of better governance and governors i.e. their stewards.

This paper tries to bring about such examples from Indian history which are iconic examples for governance.

Keywords: Corporate Governance, Stewards, Indian History.

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Introduction: Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships of stewards among the many stakeholders involved and the goals for which the corporation is governed. It assumes that managers are good & trustworthy. They are appointed mainly due to their good reputation. This is done with the intention to cut bureaucracy & increase motivation, which will help the managers take quick decisions.

Stewards believe their interests are aligned with that of the corporation and its owners, they realizes the tradeoff between personal needs and organizational objectives and believes that by working towardsorganizational and collective ends, personal needs are met, the stewards opportunity set is constrained by the perception that the utility gained from pro organizational behaviour is higher than the utility that can be gained through individualistic, self serving behaviour Objectives: • To understand the concept of Corporate governance • To know the meaning stewardship and its importance • To link the stewardship with Indian historical era Concept of Corporate governance: As globalisation of business corporations is on full flow, business empires are budding and growing like mushroom.To control business activity , to maintain global standards and to be a part of competition corporate world need to maintain governance which means designing best of policies within the framework of law to avoid fraud, unfair practices etc.

Corporate governance is primarily concerned with managing the top management of a corporation by introducing checks and balances to ensure that the senior executives pursue strategies aimed at achieving the corporate mission It is regulatory control of a corporation, in particular for the relationship between the owners and management.The interactionbetween all stakeholders including employees, clients and local governments.

Definition: CII Code :- Corporate Governance deals with laws , procedures, practices and implicit rules that determine a company’s ability to take managerial decisions vis-a-vis its claimants- in particular ,its shareholders, creditor’s ,the state and employees in general The Cadbury Committee: It is the system by which companies are directed and controlled .BOD are responsible for the governance of their companies. The shareholder’s role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure in place. The responsibilities of board include setting the strategic aims, providing the leadership to put them in to effect, supervising the management of the business and reporting to shareholders on their stewardship . The board’s actions are subject to laws regulations and the shareholders in general meetings.

Purpose of Corporate governance: It is mainly used for; • For the clarity, transparency and fairness in running business, property.

• Effective & optimum utilizationof resources like man(unskilled), mind(skilled),material, money, machine • Making unbeatable combination of two types of personalities one those with ideas and ethos and the others with money.

• Doing everything better for the business in the framework of laws and ethics

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Corporate Governance focuses mainly on theory of ownership and stewardship: Stewardship Steward is a man who takes care of assets, property and business practices of his king/owner/boss.Further he is a man recruited to fulfil his owners business objectives by understanding business ethics keep in mind that should not spoil it.

The idea of steward better expresses the aim of CG to have the owners at the center of all aims and objectivesand to ensure that their goals are attained.

Stewardship can produce the spiritual connection with the other people and environment and thus create an organization that effectively employs the present resources today without harming the needs of the future and thus providing consciousness about need to have sustainability and conserve resources for the future.The stewardship theory is a management oriented theory and has its basis in management rather than in economic theory.

Thus steward can be looked upon as man who is recruited to implement corporate governance and safeguard the interest of king, business owner or boss.

Assumptions of the stewardship/ stewardship theory: • It does not own anything and has belief of self-worth • A man should be interested, proactive, opportunistic, who needs to be controlled ,has delegated power • The main assumption, thus there is no conflict and that directors interests are consistent with the interests of shareholders means that the contract is mature and complete needing no further mechanism of CG Human assumption • Organizational assumption • Information assumption Legacy of stewardship is very ancient in India where people known for ethics,As India is a land of kings , preacher and great leaders. To run an empire smoothly, which might be spread across the wide geographical area with diversified cultures, religions and people, steward was vital part of the governing body. Thus stewardship has strong roots in India from ancient time. This paper tries to bring out this perspective.

1. King Chandra Gupta Mourya : In the kingdom of Mourya, Chanakya fits in the definition of Stewardship ,originally a professor of economics and political science at the ancient Takshashila University, Chanakya managed the first Maurya emperor Chandragupta's rise to power at a young age. He is widely credited for having played an important role in the establishment of the Maurya Empire, which was the first empire in archaeologically recorded history to rule most of the Indian subcontinent. Chanakya served as the chief advisor to both Chandragupta and his son Bindusara.

He understand the objectives of Chandragupta mourya,behind the running its empire according to that design rules , policies and advices n the same which help in governing in the empire 2. Tipu Sultan‘The tiger of Mysore’: His main steward ‘Kazi Baba’ who is called as Right hand of Tipusultan ,Kazi Baba design war strategies and help and guide emperor TIPu how to win ethically war.

As per Tipu proclamation in 1786.

"No man shall be punished save in accordance with law.

The law of immemorial custom and as enshrined in our traditions shall be honoured by us. So that people may know the extent and the rigour of the law, as also their rights, duties, obligations and responsibilities. We have decided that codification of law be undertaken... Accordingly, we have established a committee of Ministers.....

From the above proclamation we can come to know theTiger of Mysore i,e. Tipu is very well following corporate governance while running its state Apart from his love of land and love of liberty, he is known for various welfare measures he took for the well-being of his people. His encouragement of agriculture and industry, promotion of trade and commerce, novel system of administering justice, building up of a navy, opening of factories far and near, and linking of Mysore with outside

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world are regarded as progressive steps indicating his inexhaustible energy and fertility of mind. His reforming zeal touched almost every department of life including coinage and calendar, weights and measures, banking and finance, social ethos and cultural affairs. His seventeen years of regime witnessed such innovative measures as to make his State a humming center of great industrial activity and implemented good governance His ministry( Majorstewards which help Tipu in Running his Empire) for this governance included.

Purnaiahwho was the Dewan; Krishna Raowho was incharge of Finance; Shamaiah looked after the intelligence and postal department; Appaji Ram, SubbaRao, SrinivasaRao, SajjanLala and Moolchand were in the Diplomatic services.

Hari Singh, Rama Rao and SripatRao were in military services.

The accounts department was entirely manned by Hindu officials( Basically hard-corekarnataki and maharastrian Brahmins) 3. Shenshah Akbar: The Mughal ruler Akbar, despite his illiteracy, was a great lover of the artists and intellectuals. His passion for knowledge and interest in learning from great minds led him to attract men of genius to his court, known as the nine courtiers of Emperor Akbar or Navratnas. Akbar is famous for his justice , decision making His NavartnaGoverning stewards were AbulFazl : He was the chronicler of Akbars rule. He authored the biographical Akbarnama, which was the result of seven years of painstaking work. He documented the history meticulously, giving a full and accurate picture of the prosperous life during the monarchs reign. His account also shed light on the brilliant administrative capacity of the Emperor.

Birbal:He was a poor Brahmin who was appointed to the court of Akbar for his wit as well as wisdom.

Born by the name Maheshdas, he was conferred the name Raja Birbal by the Emperor. A man of tireless wit and charm, he enjoyed the Emperors favor in administration as his trusted minister, and for his entertainment as his court jesterThe stories are thought provoking, intelligent as well as educational.

Raja TodarMal : He was Akbars finance minister, overhauled the revenue system in the kingdom. He introduced standard weights and measurements, revenue districts and officers. His systematic approach to revenue collection became a model for the future Mughals as well as the British. Raja Todar Mal was also a warrior who assisted Akbar in controlling the Afghan rebels in Bengal. Raja Todar Mal had learnt his craft from another able administrator Sher Shah.

Raja Man Singh : He was the Kacchwaharajput raja of Amber. This trusted lieutenant of Akbar was the grandson of Akbars father-in-law. His family had been inducted into Mughal hierarchy as amirs (nobles).

Raja Man Singh assisted Akbar in many fronts including holding off advancing Hakim (Akbars halfbrother, a governor of Kabyul) in Lahore FagirAziao Din and Mullan Do Piaza were two policy advisors belonging to Akbarsinnercircle.( private confidential ,matters) 4. RajaVikramaditya : Heis one of the oldest king in Indian History Major stewards were ; VetalaBhatta:VetalaBhatta was a Maga Brahmin. He was one of Gem in Navratnas during the reign of Vikramaditya. Navaratnas was a term applied to a group of nine extraordinary people in a king's court in India. He is known to have attributed the work of the sixteen stanza "Niti-pradeepa (Niti-pradīpa, literally, the lamp of conduct) to Vikramaditya.

Varahamihira : was an Indianastronomer, mathematician, and astrologer who lived in Ujjain.He was Shrigaud Brahmin. He is considered to be one of the nine jewels (Navaratnas) of the court of legendary ruler Vikramaditya (thought to be the Gupta emperor Chandragupta II Vikramaditya).

Vararuchi :In ancient India, grammar was the first and most important of all sciences. When one had first studied grammar, he could go in for learning any other science. To understand other kutnities of enemies and war vararuchi is trained. He was expert in understanding coding and decoding the confidential matters.

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The other stwards are; 1. Amarasimha 2. Dhanvantari 3. Kshapanaka 4. Shanku 5. Ghatakarpura 5. RajeShivajiBhosale: Shivaji was an able administrator who established a government that included modern concepts such as cabinet (Ashtapradhanmandal composed of eight ministers), foreign affairs (Dabir) and internal intelligence.

The AshtaPradhan was designed to encompass all the primary administrative functions of the state, with each minister being given charge of one role in the administration. Ministerial designations were drawn from the Sanskrit language; the eight ministerial roles were as follows: Pantpradhan or Peshwa - Prime Minister, general administration of the Empire.

Amatya - Finance Minister, managing accounts of the Empire.

Sacheev - Secretary, preparing royal edicts.

Mantri - Interior Minister, managing internal affairs.

Senapati - Commander-in-Chief, managing the forces and defence of the Empire.

Sumant - Foreign Minister, to manage relationships with other sovereigns.

Nyayadhish - Chief Justice, dispensing justice on civil and criminal matters.

Panditrao - High Priest, managing internal religious matters.

Conclusion: From the historical examples it can be seen that to maintain governance kings or owners or bosses do require steward. In the framework of corporate governance also is expected that there must be Board of Directors who is looking after the governance i.e. running of a business in welfare of shareholders, building sustainability and maintaining ethics of the business.

References: [1] Bajaj PS and Raj Agrawal 2004 , Business Ethics : An Indian perspective, New Delhi,Dreamtech Press [2] www.tipusultan.net [3] Maxims of Chanakya the crystallised wisdom of the Indian Machiavelli, Kautilya V. K. Subramanian, Abhinav Publication, India [4] RajeShivajiBhosale- Autobiography, By Babasaheb Purandare, Sahayadri Prakashan [5] www.wikipedia.org ****

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BUSINESS EXCELLENCE AND CORPORATE GOVERNANCE FRAME WORK Dr. S.D. Khairnar Associate Professor & Head , Deptt of Commerce L.V.H. College, Panchavati, Nashik, India.

ABSTRACT Corporate Governance is primarily concerned with managing the top management of a corporation by introducing checks and balances to ensure that the senior executives pursue strategies aimed at achieving corporation mission and excellence . The efficiency and excellence of business depends much on quality administration and management . All troubles in modern organizations are due to ignoring basic human values. Corporate governance is an important concept to achieve corporate excellence.

This article describes the concept of corporate governance , its objectives, principles , features significance & mechanism . Also includes the suggestions thereon.

The discussions of corporate governance tend to refer principles of corporate governance, which business are expected to operate to assure proper governance . In all aspects, there is a respect for corporate governance but there is a need for preventive or proactive approach to corporate governance which can guide ethically responsible corporate governance. Lastly, the article deals with important suggestions for the good corporate governance.

Keywords: corporate governance , business excellence

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Introduction : Corporate governance is primarily concerned with managing the top Management of a corporation by introducing checks and balances to ensure that the senior executives pursue strategies aimed at achieving the corporation mission and excellence. The prime task of the board is to formulate in consultation with others, the ethical mission of the corporation.

The purpose of this article is to describe the principles, features, significance and mechanisms of corporate governance and the same thing applies to every business organization also . All troubles in modern organizations are due to ignoring basic human values . The efficiency and excellence of business depends much on quality of administration. If employees are good, full virtues imbibed with self respect, self discipline and self control, with the knowledge of what is good and bad for the society and business, the organization will always prosper and succeed . Corporate Governance is an important concept to achieve corporate excellence . Management should pursue the path of dynamic success to achieve corporate excellence. Ethics of success is entwined in corporate governance.

Concepts Defined: Governance can be defined as : the combination of policies, systems, structures and strategic / operational frame work, which the governing body puts in place to ensure the leadership of the organization makes appropriate decisions, and takes appropriate actions to deliver services in an effective and accountable manner.

This includes transparent and equitable stewardship of resources which will sustain the organization and keep it relevant to both the community in which it operates and the clients / customers it serves. Today and into the future, the standards for what makes governance " good " are rising and demanding more time and attention from those serving as Board members.

Corporate governance is " the system by which, companies are directed and controlled. ". It involves regulatory and market mechanisms and the roles and relationships between a company's management, its board, its shareholders, and other stakeholders, and the goals for which the corporation is governed.

Corporate governance has been comprehensively defined as " a system of law and sound approaches by which corporations are directed and controlled focusing on the internal and external corporate structures with the intention of monitoring the actions of management and directors and thereby mitigating agency risks stemming from the devious deeds of these corporate officers.

India's SEBI Committee on Corporate Governance defines Corporate governance as the " acceptance by management of the inalienable rights of share holders as the true owners of the corporation and of their own role as trustees on behalf of the share holders. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company" . It is clear that the Indian approach is drawn from the Gandhian principle of trusteeship and the directive principles of Indian constitution, Corporate governance is concerned with external stake holder groups like share holders, debt holders , trade creditors, suppliers, customers and communities affected by the corporation activities. Internal stake holders are the board of directors, executives and other employees.

An important theme of corporation governance is the nature and extent of accountability of people in the business. In short, corporate governance is a frame work of policies and processes which determine how companies and business are managed and controlled. Accountability relates with the willingness to accept responsibility while carryon business.

Objectives of Corporate Governance: Corporate governance is not just only for the share holders, but it is as much important for the corporations themselves . The following are the basic objectives of corporate governance. i. To provide stability and growth to the companies. ii. To build confidence to the stakeholders by adopting good corporate practices. iii. To leverage competitive advantage in the financial market. iv. To promote stability and long-term sustenance of stakeholders, relationship.

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v. To enhance the reputation of a business organization . vi. To make the business organization more efficient.

Principles of Corporate Governance : As success depends on corporate governance , management must believe in and practice good governance principles. The discussions of corporate governance tend to refer to principles of corporate governance which business are expected to operate to assure proper governance . These are as follows. i. Rights and equitable treatment of share holders : Organizations should respect the rights of share holders and help share holders to exercise those rights. They can help share holders exercise their rights by openly and effectively communicating information and by encouraging Share holders to participate in general meetings. ii. Interests of other stakeholders: Organisation should recognize that they have legal contractual, social and market driven obligations to nonshare holder, stake holders, including employees, investors, creditors, suppliers, local communities, customers and policy makers. iii. Role and responsibilities of the Boards: The board needs sufficient relevant skills and understanding to review and challenge management performance. It also needs adequate size and appropriate levels of independence and commitment. iv. Integrity and ethical behaviour: Integrity should be fundamental requirement in choosing corporate officers and board members.

Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making. v. Disclosure and transparency: Organisations should clarify and make publicity known the roles and responsibilities of board and management to provide stake holders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company's financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information. vi. Share holders role: Share holders must accept their own responsibilities to achieve a truly robust governance system. They should vote on important resolutions by attending members meeting .

Features of Corporate Governance: The features of corporate governance are as follows; 1.Transparency : This means that the Board of Directors must release all relevant information to the stake holders. They must show all the necessary financial and operational data to the stake holders. They must not hide any important information or maintain any secrecy.

2.Protection of Share holders ' Right - The Board of Director must protect the rights of all the stake holders especially the minority stake holders.

3.More powers to CEO - The CEO must be given more powers so that he can approve the companies plans and strategies independently.

4.Accountability - The CEO and the Board of Directors must be made accountable, for their actions to the

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stake holders and to the entire society.

5.Based on Ethics Corporate Governance is based on ethics. Moral principles, and values. So, the Board of Directors must avoid unfair practices.

6.Universal Application - Corporate governance has universal application .

That is, it is used by companies all over the world. All companies must use corporate governance voluntarily.

7.Systematic - Corporate governance is very systematic It is based on laws, procedures, practices, rules etc. All these laws are made to increase the wealth of the stake holders and to protect the rights of all the stake holders of the company.

Significance of corporate governance: The need of corporate governance is as follwers.

1.Changing ownership structure: In recent years the ownership structure of the companies has changed a lot, public financial institutions, mutual funds etc. are the single largest share holder in most of the large companies. So, they have effective control on the management of the companies. They force the management to use corporate governance That is , they put pressure on management to become more efficient, transparent accountable etc. They also ask the management to make consumer- friendly policies, to protect all social groups and to protect the environment. So, the changing ownership structure has resulted in corporate governance.

2.Importance of Social Responsibility: Today, social responsibility is given a lot of importance. The Board of directors have to protect the rights of the customers , employees, shareholders, suppliers, local communities etc. This is possible only if they use corporate governance.

3.Growing numbers of scams.: In recent years, many scams, frauds and corrupt practices have taken place.

Misuse and misappropriation of public money are happening every day in India and worldwide. It is happening in the stock market, banks financial institutions , companies and government offices. In order to avoid these scams and financial irregularities , many companies have started corporate governance .

4.Indifference on the part of share holders: In general shareholders are inactive in the management of their companies. They only attend the Annual General Meeting. Postal ballot is still absent in India in many companies, proxies are not allowed to speak in the meetings. Shareholders Association are not strong.

Therefore, directors misuse their power for their own benefits. So, there is a need for corporate, governance to protect all the stake holders of the company.

5.Globalization : Today most big companies are selling their goods in global market. So, they have to attract foreign investor and foreign customers. They also have to follow foreign rules and regulations . All this requires corporate governance . Without corporate governance, it is impossible to enter, survive and succeed in the global market.

6.Takeover and Mergers : Today there are many takeovers and mergers in the business world. Corporate governance is required to protect the interest of all parties during take overs and mergers.

7.Role of SEBI : SEBI has made corporate governance compulsory for certain companies. This is done to protect the interest of the investors and other stakeholders.

To remain competitive in changing world, corporations must innovate and adopt their own corporate governance practices so that they can meet new demands and grasp new opportunities.

Mechanisms Of Corporate Governance: In India following are the important mechanisms to ensure good corporate governance.

1. Companies Act; 1956: In India companies are regulated by this legal Act. The Act confers the following rights to share holder. i. To vote on every resolution placed before annual general meeting. ii. To elect directors who are responsible for specifying objectives and laying down policies. iii. To determine remuneration of directors and the C.E.O. iv. To remove the directors. v. To take active part in the annual general meeting.

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2. SEBI Act, 1992: SEBI Act is the primary securities law in India. The SEBI has taken a number of initiatives towards investors' protection. Under this Act disclosure of certain information in prospectus and in annual accounts is mandatory.

3. The Capital Market: Capital market has considerable impact on corporate governance. The minority share holders can refuse to subscribe to the capital of the company, in the primary and secondary market, they can sell their shares, thus depressing the share prices.

4. Nomination on company Boards: Financial institutions and development banks hold large blocks of shares in companies. These are equally big debt holders too. Being equity these investors have their nominees in the Boards of the Company.

5. Statutory Audit: This mechanism is directed to ensure good corporate governance . Auditors are the conscious - keepers of the share holders, lenders and others who have financial stakes in companies . Auditing enhances the credibility of financial reports prepared by any business organization. The auditing process ensures that financial statements are accurate and complete, thereby enhancing their reliability and usefulness for making investment decisions.

Conclusion and Suggestions : In all aspects. there is respect for corporate governance but there is need for preventive or proactive approach to corporate governance which can guide ethically responsible corporate governance. Business have to be innovative, have to ensure sustainable growth, have to be more transparent and disclose any conflict of interest its directors, have to be, environmentally sensitive, have to respond quickly in competitive world to secure certain advantages. It is important to grasp the socio - economic and politico -cultural aspects to corporate governance . So it is the task of the Corporation and its, board and management to specify the core values, so that its corporate governance is value - based. It is usually more praise worthy, when the core values on which it seeks to base its corporate governance are also universal values. That adds strength to corporate governance practice and provides it local and global expanse at the same time.

Following suggestions are given for good corporate governance. i. Independent directors need to spend more time in understanding various business opportunities. There should always be a substantial majority of these directors i.e. 75% . ii. Companies should screen customers, vendors, joint venture partners with whom it does business for their commitment. iii. The board holds regularly scheduled meetings six times annually. In addition, additional meetings may be hold by the needs of business. Each director must attend all meetings of the board. iv. Board members can provide advocacy to politicians speak to media, and build relationships with key influences or alliance partners. v. C.E.O. and the board chair roles should be isolated. vi. Annual reporting of performance against clear outcomes and goals is provided to members and the public with specific, meaningful measures cited. vii. Investors, Lenders, analysts should proactively question management on areas pertaining to corporate governance.

References: [1] Aswathappa. K. Essentials of Business Management. Himalaya Publishing House Delhi - 2006 [2] Cadbury committee, Report 1992.

[3] Fernands A.C. " Corporate Governance: Need of the Hour, Management Matters, September 2002.

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[4] OECD principles of Corporate Governance 2004 : OECD http:www. oecd.org.

[5] Pawankumar Vijay. Corporate Governance - Module of Best practices - Taxman publication, 2nd Edition, December 2003 [6] Report of the Kumar Mangalam Birla committee on corporate Governance.

[7] Report of SEBI committee on corporate governance - February 2003. http:wwcosebi.gov.in.commreport / corp gov.

[8] Sifuna, Annazett (2012) Disclose or Abstain - Journal of Information Banking Law and Regulation.

[9] Samantary D.P. Patnaik A Patra K. Corporate Governance in India - Issues & Challenges- productivity, January - March 2003.

[10] Srivastava R.M.- Management policy and strategic management, Himalaya publishing house, Delhi - 2005

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A LITERATURE REVIEW OF CORPORATE GOVERNANCE Dr. Prashant B. Suryawanshi, Associate Professor MGV’s Institute of Management & Research, Panchavati, Nashik, India.

Dr. Ashuotosh V. More Assistant Professor MGV’s Institute of Management & Research, Panchavati, Nashik, India.

ABSTRACT Corporate governance is defined as the system by which companies are directed and controlled.

Sound corporate governance is an important element of sustainable private sector development not only because it strengthens businesses’ ability to attract investment and grow, but also because it makes them, stronger, more efficient, and more accountable. Corporate governance involves a set of relationships between a company’s management, its board, its shareholders and other stakeholders. Corporate governance also provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined. This paper reviews the theoretical and empirical literature on issues of corporate governance.

Keywords: Corporate Governance, review

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Introduction: According to the Journal of Finance “Corporate governance deals with the ways in which suppliers of finance to corporations assure themselves of getting return on their investment.” L.V.V. Iyer, defines “Corporate governance can be defined as a set of system and processes which ensure that a company is managed in the best interests of all the stake holders. The set of systems that help the task of corporate governance should include certain structural and organizational aspect; the process that helps corporate governance will embrace how things are done within such structure and organizational systems. Corporate governance involves regulatory and market mechanisms, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed (OECD, 2004). Corporate Governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned committees for the company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals (Guide, 2012).

Methodology: The basic research objective of this study is to examine the conceptual framework of corporate governance.

The secondary date is used for data collection. The research journals, books, conference proceedings, reports related to corporate governances are reviewed.

Literature Review of Corporate Governance: Corporate Governance is a broad term defines the methods, structure and the processes of a company in which the business and affairs of the company managed and directed. Corporate governance also enhances the long term shareholder value by the process of accountability of managers and by enhances the firm’s performance.

It also eliminate the conflict of ownership and control by separately defines the interest of shareholders and managers (Huma, 2011).

(Walter, 2010) studied Corporate Governance: Principles and Practices and focuses on the theory and practice of balancing power among corporate directors, officers, shareholders, and stakeholders and explanations of contrasting schools of thought, including contractarianism, communitarianism, and the strengths and limitations of emerging academic approaches, such as empiricism, behavioral economics, and the study of international "convergence" of corporate governance an accessible selection of excerpts from the classic and the latest judicial decisions.

(La Porta, 1998) view corporate governance as a set of mechanism through which outside investors protect themselves against expropriation by insiders i.e. the managers and controlling shareholders. They then give specific examples of the different forms of expropriation. The insiders may simply steal the profits; sell the output the assets or securities in the firm they control to another firm they own at below market prices; divert corporate opportunities from firms; put unqualified family members in managerial positions; or overpay managers.

(Monks, 1995) defined Corporate Governance in terms of interactions between various players in the corporate environment and the processes used in achieving consensus in the allocation of corporate resources and in the determination of corporate direction to ensure improved performance. Since organisations‟ resources are limited and have alternative uses, their allocation deserves considerable attention in order to optimise returns from such usage. This definition can be said to link Corporate Governance with the strategic position of organisations and perhaps sees Corporate Governance as the preserve of strategic level management. Corporate governance as system can provide the corporation with a sufficient degree of independence and efficiency to enable it to operate with a clear understanding and implementation of rights and responsibilities. There is yet no universally accepted or definite meaning of corporate governance. Many scholars and organizations have their own definition. Each such definition has been founded according to the understanding or the interests of the person provided the definition (Spedding, 2004).

(John, 2005) done research work on corporate governance its theories, principles and practice. He studied corporate Governance in Australia and New Zealand 2e is a fully updated, comprehensive study of the law and practice of corporate governance in an international setting but with particular reference to Australia and New Zealand. Taking an international perspective, (Tricker, 2012) examines different models and theories of

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corporate governance and applies them in a real world context. He explained corporate governance theories, the governance of corporate risk, and corporate social responsibility and sustainability are all now more prominent. In addition, more emphasis is given to the BRIC nations to reflect their growing importance.

According to Cadbury (1992) Corporate Governance refers to a whole system of controls, financial and otherwise, which ensure that a firm is directed in the right way and towards the right direction. The Cadbury Committee‟s definition focused on the ways in which organisations are controlled and managed so as to achieve their main objectives. It also suggested that Corporate Governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The Corporate Governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society.

(Cadbury, 2000). Corporate governance has been comprehensively defined as "a system of law and sound approaches by which corporations are directed and controlled focusing on the internal and external corporate structures with the intention of monitoring the actions of management and directors and thereby mitigating agency risks stemming from the devious deeds of these corporate officers (Sifuna, 2012).

(John & Senbet, 1998) propose the more comprehensive definition that “corporate governance deals with mechanisms by which stakeholders of a corporation exercise control over corporate insiders and management such that their interests are protected.

(Ashish, 2010) Corporate governance is the practice, which requires transparency, accountability and good performance from the corporate executives. It has, its strong base from the internal management of company, to the shareholders’ value as well as corporate social responsibility. Reasons for selecting corporate level units which are functioning in India is to find out whether corporate governance is actually being practiced by the corporate level executives or not.

Conclusion: Corporate governance refers to the set of systems, principles and processes by which a company is governed.

They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others. The findings of the most studies show that corporate governance reduces has impact on control of companies.

References: [1] Ashish, J. (2010). A study on Corporate Governance and the Financial Performance". Saurashtra University.

[2] Huma, K. (2011). A Literature Review of Corporate Governance. International Conference on Ebusiness, Management and Economics (pp. 1-5). Singapore: IACSIT Press.

[3] John, H. F. (2005). Corporate governance: theories, principles, and practice. Oxford University Press.

[4] John, K., & Senbet, L. (1998). Corporate Governance and Board Effectiveness. Journal of Banking and Finance .

[5] La Porta, R. &.-D.-S. (1998). Law and Finance. Journal of Political Economy .

[6] Monks, R. a. (1995). Corporate Governance. Cambridge: Blackwell Publishers .

[7] OECD. (2004). http://www.oecd.org/corporate/corporateaffairs/corporategovernanceprinciples/31557724.pdf.

Retrieved from http://www.oecd.org.

[8] Sifuna, A. (2012). Disclose or Abstain: The Prohibition of Insider Trading on Trial. Journal of International Banking Law and Regulation , 12(9).

[9] Spedding, L. S. (2004). Due Diligence and Corporate Governance. UK: LexisNexis.

[10] Tricker, B. (2012). Corporate Governance: Principles, Policies and Practices. Oxford University Press.

[11] UN. (2006). CORPORATE GOVERNANCE DISCLOSURE. United Nations Conference on Trade and Development . New York: United Nations.

[12] Walter, E. (2010). Corporate governance: Principles and Practices. Aspen Publishers. ****

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CORPORATE GOVERNANCE AND COMPANY SECRETARY Dinesh Dadasaheb Borse,

Dr. D.M. Gujarathi,

Research Student, MGV’s IMR, Nashik, University of Pune, India.

Member of BOS, Cost and Works Accounting University of Pune, India.

ABSTRACT

Most of the giant corporations are joint stock companies, whose share capital is divided into large number of shareholders who are scattered around the globe. As there is a change in ownership & management pattern now the organization structure are more complex. Because of complex management, capital and organizational structure for any organization trust worthiness in external and internal environment is the key of success. All the organizations are aspiring to achieve excellence in all their operations and attend sustainability. This is something because of which the potential investors invest their funds in the organization, the creditors offer products on credits, employees render their services to the organization, and government and other organizations provides various benefits and time to time consult in various decision making process. This trust worthiness comes with the transparency of the day to day working of the organization. Therefore the concept of corporate governance emerged. It not only insures the safety to the shareholder’s investment but also the efficient utilization of resources &attainment of overall corporate objective.

Regulators has defined framework for corporate governanceunder Clause 49 of the listing agreement. Company Secretary plays a key role in promoting and implementing good corporate governance in listed companies.Company Secretary is a vital link between the company and its Board of Directors, shareholders, government and regulatory authorities and all other stakeholders. Ensures that board procedures are followed and regularly reviewed and provides guidance to Chairman and the Directors on their responsibilities under various laws.

Keywords: Corporate governance, Company secretary, Business excellence, sustainability.

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Introduction: Corporate governance is "the system by which companies are directed and controlled". It involves regulatory and market mechanisms, and the roles and relationships between a company’s management, its board, its shareholders and other stakeholders, and the goals for which the corporation is governed.

Corporate governance is a set of systems and practices to ensure that the affairs of the company are managed in a way which ensures accountability, transparency, and fairness in all its transactions in the widest sense and meet its stakeholder’s aspirations and societal expectations. In contemporary business corporations, the main external stakeholder groups are shareholders, debt holders, trade creditors, suppliers, customers and communities affected by the corporation's activities. Internal stakeholders are the board of directors, executives, and other employees.

In large firms where there is a separation of ownership and management and no controlling shareholder, the principal–agent issue arises between upper-management (the "agent") which may have very different interests, and by definition considerably more information, than shareholders (the "principals"). The danger arises that rather than overseeing management on behalf of shareholders, the board of directors may become insulated from shareholders and beholden to management.

SEBI has issued Clause 49 of the Listing Agreement pertaining to corporate governance. All listed companies have to ensure implementation of norms as per SEBI framework.There shall be a separate section on Corporate Governance in the Annual Report of company, with a detailed compliance report on Corporate Governance. Non- compliance of any mandatory requirement of this clause with reasons and the extent to which the non-mandatory requirements have been adopted should be specifically highlighted all board members and senior management personnel shall affirm compliance with the code on an annual basis. The annual report of the company shall contain a declaration to this effect signed by the CEO. It includes framework for many key issues like remuneration of board, independence of Directors, audit committee (roles, responsibilities and powers) , performance evaluation of non-executivedirectors, mandatory training of nonexecutive directors, whistle blower policy etc.

Though there are many regulatory provisions in the Indian legislation still there actual implementation is poor and a debatable issue.

The last few years have seen some major scams and corporate collapse across the globe. In India, the major example is Satyam which is one of the largest IT companies in India. In September 2008 the World Council for Corporate Governance honored the now-beleaguered Indian outsourcer Satyam with a "Golden Peacock Award" for global excellence in corporate governance. The Satyam debacle has exposed the chinks in Indian corporate governance mechanism and the monitoring authorities. It has raised many questions about corporate governance in India—the role of boards, of independent directors, of the auditors, of investors and of analysts.

Unanimously it has been a gross failure of corporate governance standards in India and protection of rights of minority investors.

All these events have caused the pendulum of public faith to shift away from free market to a more closely regulated one.

The demands of corporate governance require professionals to raise their competency and capability levels to meet the expectations in managing the enterprise and its resources effectively with the highest standards of ethics. It has thus become crucial to foster and sustain a culture that integrates all components of good governance by carefully balancing the complex inter-relationship among the board of directors, audit committee, accounting, corporate secretarial team, auditors and senior management- the CEO and CFO. The company secretary plays a key role in ensuring that the broad procedures are followed and regularly reviewed.Pursuant to section 383A of the companies Act, 1956, companies with a paid-up share capital of Rs. 5 crore or more are legally obliged to appoint a whole-time Company Secretary who must be a member of the Institute of Company Secretaries of India. The company secretary ensures that all relevant information, details and documents are made available to directors and senior management for effective decision making. The company secretary is primarily responsible to ensure compliance with applicable statutory requirements and the interface between the management and regulatory authorities for governance matters. All the directors of the company have access to the advice and services of the company secretary. After Satyam fiasco, it is confirmed that corporate governance is not only about regulatory compliance but more of a culture in an organization. Corporate governance is a concept, rather than an individual instrument. Itaddresses topics such

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as publication of important information; protection ofshareholders´ rights; promotion of the balance of interests between managers,shareholders and other stakeholders, the independence of the board of directors;internal controls (committees of the board of directors); and the function of audits.

Company secretary is one such person who can inculcate the culture of good governance and ensure its sustainability. Over recent years, responsibility for developing and implementing processes to promote and sustain good corporate governance has fallen largely within the remit of the company secretary.Corporate governance is at the heart of all key responsibilities of company secretary and it is still evolving as the business environment is becoming more dynamic.

Business Excellence: Today’s competitive market place needs all organizations to follow processes and regulations to achieve excellence. Business excellence will ensure long term sustainability, retention of all stakeholders. Business excellence has become need of the hour.

Business excellence refers to "outstanding practices in managing the organization and achieving results, all based on a set of eight fundamental concepts." These concepts are: 1. Achieving Balanced Results 2. Adding Value for Customers 3. Leading with Vision, Inspiration & Integrity 4. Managing by Processes 5. Succeeding through People 6. Nurturing Creativity & Innovation 7. Building Partnerships 8. Value creation for all stakeholders and 9. Taking Responsibility for a Sustainable Future Business excellence is also an ever evolving concept like corporate governance. Lot of work is currently happening in the field of business excellence. Many models have been developed on business excellence.

Company secretary can play major role in implementing framework of corporate governance. Most effective company secretary is one who is regarded by the Board as its trusted adviser.

Objectives of the Study: 1. To study role of company secretary in implementing and driving corporate governance within the organization.

2. To ascertain areas of improvement in corporate governance framework.

3. Recommendations to implement corporate governance in Indian business scenario.

Research Methodology: Secondary data from various sources is used for the purpose of this research work. Various internet websites are used as data source. This data helped to understand current situation of corporate governance in India and practices followed. Clause 49 on listing agreement has also given brief idea on corporate governance. Few cases on corporate governance gave insight on areas of improvement in the area of corporate governance. Together all this has helped to ascertain pivotal role of company secretary in corporate governance and way forward.

Roles of Company Secretary: The Combined Code on Corporate Governance gives explicit recognition to the role of the company secretary in promoting good corporate governance in listed companies.

‘Under the direction of the chairman, the company secretary’s responsibilities include ensuring goodinformation flows within the Board and its committees, between senior management and nonexecutivedirectors, as well as facilitating induction and assisting with professional development.’ The company secretary should be responsible for advising the Board through the chairman on all governance matters.

The detailed responsibilities of company secretary in line with corporate governance regulatory framework are

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as follows1. Audit and internal control: • Company secretary having a detailed knowledge of various norms of audit and internal control. He can guide and keep the audit committee on requirements and changes • Ensuring the implementation of and monitoring the effectiveness of the whistle blowing procedures approved by the audit committee.

2. Disclosure and reporting: • Company secretary needs to ensure that the necessary disclosures on corporate governance and the workings of the board and its committees are included in the annual report.

• The requisite types of governance are made available, either on the company’s website or in documents circulated to shareholders.

3. Board composition and procedures: • Establishing a summary of matters reserved for decision by the Board.

• Scheduling meetings, assisting with the preparation of agendas, providing guidance on board paper content, ensuring timely delivery of papers; recording board decisions clearly and accurately, pursuing follow up actions and reporting on matters arising.

• Ensuring board committees are constituted in compliance with the Code and that their membership is regularly reviewed and refreshed.

• Supporting Board succession planning and overseeing non-executive director rotation.

4. Board information, development and relationships: • Building non-executive director induction programs which provide a full, formal and tailored introduction to the business.

• Arranging for major shareholders to be offered the opportunity to meet new non-executive directors.

• Facilitating good information flows between board members and fostering effective working between executive and non-executive directors.

• Establishing and communicating procedures for directors to take independent professional advice at the company’s expense if required.

• Developing a proactive relationship with Board members, providing a source of information and advice, and acting as the primary point of contact with non-executive directors.

• Helping develop and support board performance evaluations which are tailored to the company’s particular needs.

5. Remuneration: • Ensuring that the remuneration committee is familiar with the Code principles and provisions on remuneration, including the provisions on the design of performance related remuneration.

• Non-executive remuneration is determined in line with Code provisions and within the limits set by the articles of association.

• All new long-term incentive schemes and significant changes to existing schemes are submitted to shareholders for approval, subject to the listing rules and other scheme rules.

• Contributing to the drafting of the directors’ remuneration report and ensuring its compliance with the full range of disclosure requirements.

6. Relationship with shareholders: • Ensuring the board keeps in touch with shareholder opinion on a continuing basis.

• Managing the convening and conduct of the AGM in line with statutory and regulatory requirements and using it as an opportunity to communicate with retail investors.

• Managing relations with institutional investors on corporate governance issues and board procedures.

7. Responsible release of market information: • Developing a formal policy and established procedures on the disclosure of inside information to satisfy Disclosure Rules requirements.

• Ensuring that there is appropriate and timely consultation with the company’s brokers and other advisers on the release of significant information about corporate performance and developments, whenever the company is in any doubt.

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• Establishing procedures to ensure the timely disclosure of share dealings by directors and persons discharging managerial responsibilities in compliance with the disclosure rules.

Corporate Responsibility: As part of the growing awareness and debate on corporate responsibility in recent years, some institutional investors have issued guidelines and disclosure principles to highlight those issues on which shareholders place particular importance. There are many guidelines which contain guidance for investors on how to incorporate environmental, social and governance issues into investment decision making.

The company secretary should share responsibility with relevant specialist functions forensuring that the board is aware of current guidelines in this area and that it identifies and takes account of the significance of corporate responsibility issues in its stewardship and oversight of the company.

Directors’ duties: • Implementing procedures to help directors discharge their statutory duties as codified under Companies Act, in particular their specific duties to promote the success of the company taking account of a wide range of stakeholder interests and to avoid conflicts of interest.

Share dealing: • Communicating and implementing procedures for listed company directors and any other ‘person discharging managerial responsibilities.

Protection of inside information: • Implementing procedures to comply with the provisions of the Disclosure Rules on the protection of ‘inside information’ and on the maintenance of ‘insider’ lists.

Verification of published information: • Implementing a ‘verification and approval’ process to review and confirm the accuracy of allsignificant company statements prior to publication and to authorize their release to the market.

Areas of improvement for Corporate Governance in India: 1. The problem in the Indian corporate sector (be it the public sector, the multinationals or the Indian private sector) is that of disciplining the dominant shareholder and protecting the minority shareholders. Clearly, the problem of corporate governance abuses by the dominant shareholder can be solved only by forces outside the company itself.

2. It is difficult to appoint truly independent directors. This is particularly hard to achieve in countries such as India where family ownership is widespread and there is a close-knit group of corporate leaders. It is difficult for non-executive directors to perform a scrutiny objective at the best of times, but it is particularly difficult to do so when faced with a dominant CEO who expects support not criticism from the company’s board.

3. Non-executive directors are supposed to give an independent assessment of the quality of management. But time and time again, failures of corporate governance suggest that they do not.

4. Rigid focus on the stock market has its own set of problems, as Satyam Computer Services Ltd’s founder B. RamalingaRaju said in his confession. The apparent reason why he inflated earnings was because he feared that bad results would lead to a fall in the stock and a takeover attempt.Too much of a focus on quarterly earnings and the linking of executive compensation with the stock market via stock options could act as powerful incentives for inflating earnings.

5. Many regulations and norms are in place, but they are not followed in letter and spirit. Regulations are just followed as tick box exercise. Very few corporates are going taking a step ahead and making regular improvements.

Recommendations to implement corporate governance: After a slew of scandals, politicians and regulators, executives and shareholders are all preaching the governance gospel. Corporate governance has come to dominate the political and business agenda.

Regulations are only one part of the answer to improved governance. Corporate governance is about how companies are directed and controlled. The balance sheet is an output of manifold structural and strategic decisions across the entire company, from stock options to risk management structures, from the composition of the board of directors to the decentralisation of decision-making powers. As a result, the prime responsibility for good governance must lie within the company rather than outside it.

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Following are the major recommendations to implement corporate governance: 1. A key lesson from the Enron experience, where the board was an exemplar of best practice on paper, is that governance structures count for little if the culture isn’t right. Designing and implementing corporate governance structures are important, but instilling the right culture is essential.

2. The right structures, policies and processes must also be in place. Transparency about a company’s governance policies is critical. Where ever investors and shareholders are given clear and accessible information about the policies, it helps to attract more investors. Few companies are genuinely transparent, however, and this is an area where most organizations can and should do much more.

3. Scheduling regular meetings of the non-executive board members from which other executives are excluded.

Non-executives are there to exercise “constructive dissatisfaction” with the management team. They need to discuss collectively and frankly their views about the performance of the executives, the strategic direction of the company and worries about areas where they feel inadequately briefed.

4. At the root of most company failures are ill-judged management decisions on risk. Non-executives need not be risk experts. But it is paramount that they understand what the company’s appetite for risk is—and accept, or reject, any radical shifts.

5. Checking that non-executive directors are independent. Weed out members of the controlling family or former employees who still have links to people in the company. Also raise awareness of “soft” conflicts.

6. Auditing non-executives’ performance and that of the board. The attendance record of non-executives needs to be discussed and an appraisal made of the range of specialist skills. The board should discuss annually how well it has performed.

7. Broadening and deepening disclosure on corporate websites and in annual reports. Websites should have a corporate governance section containing information such as procedures for getting a motion into a proxy ballot.

8. Corporate governance is not just a box ticking exercise, companies need an exchange of practical guidance in order to conceive and implement successful governance mechanism. Instead of a menu of corporate governance options it would be more appropriate to present best practice guidelines applicable to businesses.

These will serve as a benchmark for appropriate customization in different companies. Corporate governance should be considered as an obligation not a luxury. Its spirit is going to expand further and deeper in the future.

Conclusions: Corporate Governance, the buzzword in today's business environment is a combination of legal practices, ethics, best management practices, wealth creation management and foresight. Company Secretary is the key person, who implements all these in an encouraging environment. Besides, he plays a vital role in planning Company's future. A Company Secretary, who represents a company to the internal and external stakeholders, coordinates the management functions and company policies, keeps an eye on ethics and mutual trust, and helps in strategic decisions - aligning the company towards excellence. He is a true multifaceted, who executes the day to day activities encompassing all the key areas of Corporate Governance, all the way to corporate growth through foresight and professional dexterity.

References: [1] BijalwanJyotsanaGhildiyal, June 2012,Corporate Governance Failure in India: Satyam Fiasco“A Case Study”,IJMRS’s International Journal of Management Sciences, Vol. 01, Issue 02, pp.109-113.

[2] SenDilip Kumar, December 2004, “Clause 49 of Listing Agreementon Corporate Governance”, THE CHARTERED ACCOUNTANT, pp.806-811.

[3] VarmaJayanth Rama, October-December 1997, Corporate Governance in India: Disciplining the Dominant Shareholder,IIMB Management Review,issue 9(4), pp. 5-18.

[4] KumarNaveen; Singh J. P.;April - June 2012, “Corporate Governance in India: Case for SafeguardingMinority Shareholders Rights”,International Journal of Management & Business Studies,Vol. 2, Issue 2, pp. 7-11. ****

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A STUDY OF DEVELOPMENT OF CORPORATE GOVERNANCE PRACTICES IN INDIA WITH SPECIAL TO VARIOUS COMMITTEES’ RECOMMENDATION Prof. Ajay Shukla,

Prof. Sagar Jadhav,

Asst. Professor, Dept. of Finance Ashoka Business School, University of Pune, India.

Asst. Professor, Dept. of Finance Matoshri College of Management & Research Center, University of Pune, India.

ABSTRACT Corporate governance is based on principles such as conducting the business with all integrity and fairness, being transparent with regard to all transactions, making all the necessary disclosures and decisions, complying with all the laws of the land, accountability and responsibility towards the stakeholders and commitment to conducting business in an ethical manner.This paper is intent to study and sum up the work done by various committees & agencies as CII, SEBI to enhance understanding of concept of corporate governances.

Keywords: Corporate Governance, Committees, SEBI

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Introduction: Meaning: Corporate governance refers to the set of systems, principles and processes by which a company is governed.

They provide the guidelines as to how the company can be directed or controlled such that it can fulfill its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others.

Corporate Governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders’ desires. It is actually conducted by the board of Directors and the concerned committees for the company’s stakeholder’s benefit. It is all about balancing individual and societal goals, as well as, economic and social goals.

Corporate Governance is the interaction between various participants (shareholders, board of directors, and company’s management) in shaping corporation’s performance and the way it is proceeding towards. The relationship between the owners and the managers in an organization must be healthy and there should be no conflict between the two. The owners must see that individual’s actual performance is according to the standard performance. These dimensions of corporate governance should not be overlooked.

Corporate Governance deals with the manner the providers of finance guarantee themselves of getting a fair return on their investment. Corporate Governance clearly distinguishes between the owners and the managers.

The managers are the deciding authority. In modern corporations, the functions/ tasks of owners and managers should be clearly defined, rather, harmonizing.

Corporate Governance deals with determining ways to take effective strategic decisions. It gives ultimate authority and complete responsibility to the Board of Directors. In today’s market- oriented economy, the need for corporate governance arises. Also, efficiency as well as globalization are significant factors urging corporate governance. Corporate Governance is essential to develop added value to the stakeholders.

Corporate Governance ensures transparency which ensures strong and balanced economic development. This also ensures that the interests of all shareholders (majority as well as minority shareholders) are safeguarded. It ensures that all shareholders fully exercise their rights and that the organization fully recognizes their rights.

Corporate Governance has a broad scope. It includes both social and institutional aspects. Corporate Governance encourages a trustworthy, moral, as well as ethical environment Importance: Fundamentally, there is a level of confidence that is associated with a company that is known to have good corporate governance. The presence of an active group of independent directors on the board contributes a great deal towards ensuring confidence in the market. Corporate governance is known to be one of the criteria that foreign institutional investors are increasingly depending on when deciding on which companies to invest in. It is also known to have a positive influence on the share price of the company. Having a clean image on the corporate governance front could also make it easier for companies to source capital at more reasonable costs. Unfortunately, corporate governance often becomes the centre of discussion only after the exposure of a large scam.

Objectives of Study: • To study relevance of corporate governance issues in current scenario • To analyze the recommendation of various committee report and come up with common suggestion.

Research methodology: “All progress is born of inquiry. Doubt is often better than overconfidence, for it leads to inquiry, and inquiry leads to invention” Basically this is an conceptual study based on secondary collected from authentic sources. We hav collected data from;

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Journals & Magazines Reports published by government and other authorities.

Newspaper Articles Books on related topics

Corporate Governance in India – A Historical Background: The historical development of Indian corporate laws has been marked by many interesting contrasts. At independence, India inherited one of the world’s poorest economies but one which had a factory sector accounting for a tenth of the national product. The country also inherited four functioning stock markets (predating the Tokyo Stock Exchange) with clearly defined rules governing listing, trading and settlements, a well-developed equity culture (if only among the urban rich), and a banking system replete with welldeveloped lending norms and recovery procedures.15 In terms of corporate laws and financial system, therefore, India emerged far better endowed than most other colonies. The 1956 Companies Act built on this foundation, as did other laws governing the functioning of joint-stock companies and protection of investors’ rights. Early corporate developments in India were marked by the managing agency system. This contributed to the birth of dispersed equity ownership but also gave rise to the practice of management enjoying control rights disproportionately greater than their stock ownership. The turn towards socialism in the decades after independence, marked by the 1951 Industries (Development and Regulation) Act and the 1956 Industrial Policy Resolution, put in place a regime and a culture of licensing, protection, and widespread redtape that bred corruption and stilted the growth of the corporate sector. The situation worsened in subsequent decades and corruption, nepotism, and inefficiency became the hallmarks of the Indian corporate sector.

Exorbitant tax rates encouraged creative accounting practices and gave firms incentives to develop complicated emolument structures with large “under-the-table” compensation at senior levels. In the absence of a stock market capable of raising equity capital efficiently, three central (federal) government development finance institutions (the Industrial Finance Corporation of India, the Industrial Development Bank of India and the Industrial Credit and Investment Corporation of India), together with about thirty other state-government owned development finance institutions, became the main providers of long-term credit to companies. Along with the central government-owned and managed mutual fund, the Unit Trust of India, these institutions also held (and still hold) large blocks of shares in the companies to which they lent, and invariably had representations on their boards in the form of nominee directors, though they traditionally played very passive role Recent Developments in Corporate Governance in India: Liberalization of the Indian economy began in 1991. Since then, we have witnessed wide-ranging changes in both laws and regulations, and a major positive transformation of the corporate sector and the corporate governance landscape. Perhaps the single most important development in the field of corporate governance and investor protection in India has been the establishment of the Securities and Exchange Board of India in 1992 and its gradual and growing empowerment since then. Established primarily to regulate and monitor stock trading, it has played a crucial role in establishing the basic minimum ground rules of corporate conduct in the country. Concerns about corporate governance in India were, however, largely triggered by a spate of crises in the early 1990’s—particularly the Harshad Mehta stock market scam of 1992--followed by incidents of companies allotting preferential shares to their promoters at deeply discounted prices, as well as those of companies simply disappearing with investors’ money.

These concerns about corporate governance stemming from the corporate scandals, coupled with a perceived need of opening up the corporate sector to the forces of competition and globalization, gave rise to several investigations into ways to fix the corporate governance situation in India. One of the first such endeavors was the Confederation of Indian Industry Code for Desirable Corporate Governance, developed by a committee chaired by Rahul Bajaj, a leading industrial magnate. The committee was formed in 1996 and submitted its code in April 1998. Later the SEBI constituted two committees to look into the issue of corporate governance--the first chaired by Kumar Mangalam Birla, another leading industrial magnate, and the second

by Narayana Murthy, one of the major architects of the Indian IT outsourcing success story17. The first

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Committee submitted its report in early 2000, and the second three years later. These two committees have been instrumental in bringing about far reaching changes in corporate governance in India through the formulation of Clause 49 of Listing Agreements (described below).

“Indian Regulators Tackle Corporate Governance Reforms in the New Year-2013” The Companies Bill 2012, which seeks to replace the 55-year-old Indian Companies Act, was passed in December 2012 by the Lok Sabha (the lower house of the Indian Parliament) and now proceeds to the upper house (the Rajya Sabha) for approval. Various new provisions are included in the bill, aimed at improving the governance of public companies. In the meantime, SEBI issued a concept paper last week to encourage a wider debate on governance requirements for listed companies and the adoption of better global practices, in accordance with Organisation for Economic Co-operation and Development (OECD) principles of governance.

Meanwhile, SEBI is planning a hybrid approach to Clause 49 of its guidelines on corporate governance, meaning it will adopt a “principle-based” or “comply-or-explain” approach for some codes while other mandatory compliance may require a “rule-based” approach. We agree that the “hybrid” approach to corporate governance rules has the potential to work well, though care must be taken to choose which standards become mandatory and which are left to the company’s discretion.

Concurrent with these initiatives by the SEBI, the Department of Company Affairs and the Ministry of Finance of the Government of India also began contemplating improvements in corporate governance. These efforts included the establishment of a study group to operationalize the Birla Committee recommendations in 2000, the Naresh Chandra Committee on Corporate Audit and Governance in 2002, and the Expert Committee on Corporate Law (J.J. Irani Committee) in late 2004.

Clause 49 of the Listing Agreements: 16 See Omkar Goswami, 2002, “Corporate Governance in India,” Taking Action Against Corruption in Asia and the Pacific (Manila: Asian Development Bank), Chapter 9. Importantly, Narayan Murthy has been the Chair of Infosys, a company that built its success on a widely held ownership structure rather than the traditional family-controlled Indian model; and he has led key corporate governance initiatives in India.

The SEBI implemented the recommendations of the Birla Committee through the enactment of Clause 49 of the Listing Agreements. Clause 49 may well be viewed as a milestone in the evolution of corporate governance practices in India. It is similar in spirit and in scope to the Sarbanes-Oxley measures in the United States. The requirements of Clause 49 were applied in the first instance to the companies in the BSE 200 and S&P C&X NIFTY stock indices, and all newly listed companies, on March 31, 2001.

These rules were applied to companies with a paid up capital of INR 100 million (≈ $2.5 million) or with a net worth of INR 250 million (≈ $6.3 million) at any time in the past five years on March 31, 2002, and to other listed companies with a paid up capital of over INR 30 million (≈ $0.75 million) on March 31, 2003. The Narayana Murthy Committee worked on further refining the rules, and Clause 49 was amended accordingly in 2004.

The key mandatory features of Clause 49 regulations deal with the following: (i) composition of the board of directors; (ii) the composition and functioning of the audit committee; (iii) governance and disclosures regarding subsidiary companies; (iv) disclosures by the company; (vi) CEO/CFO certification of financial results; (vi) reporting on corporate governance as part of the annual report; and (vii) certification of compliance of a company with the provisions of Clause 49.

The areas where Clause 49 stipulates specific corporate disclosures are: (i) related party transactions; (ii) accounting treatment; (iii) risk management procedures; (iv) proceeds from various kinds of share issues; (v) remuneration of directors; (vi) a Management Discussion and Analysis section in the annual report discussing general business conditions and outlook; and (vii) background and committee memberships of new directors as well as presentations to analysts. In addition, a board committee with a non-executive chair is required to address shareholder/investor grievances. Finally, it is mandated that the process of share transfer (that had been a long-standing problem in India) be expedited by delegating authority to an officer or committee or to the registrar and share transfer agents.

All of these efforts were aimed at reforming the existing Companies Act of 1956 that still forms the backbone of corporate law in India.

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Finding & Recommendation: The study of committee reports mention above lead us to following findings and corresponding recommendation (s).

1. Appointment of independent directors: An active, well-informed and independent Board is necessary to ensure highest standards of corporate governance. Getting the right people is crucial; as is the process of seeking, vetting and appointing such people.

Good Boards have a Nomination Committee typically comprising entirely of independent directors (or where independent directors constitute the majority), with the Committee chairman being an independent director. The Board as a whole decides the skill sets that are needed going forward, keeping in mind the present and the desired composition; and the specialised oversight needs of the company in the foreseeable future. The Nomination Committee then takes up the task of seeking such directors - either through its own network of contacts or by a formal search process with the help of external consultants. The shortlist, along with the CVs, is then discussed in the full Board, and the final candidate(s) is/are recommended to the Chairman of the Board. The Chairman, then, gets in touch with the selected people and invites them to join the Board as additional directors - after which their appointment is sought to be ratified by shareholders in the next shareholders’ meeting.

Recommendation 1: Nomination Committee: The Task Force believes that having a well functioning Nomination Committee will play a significant role in giving investors substantial comfort about the process of Board-level appointments. It, therefore, recommends that listed companies should have a Nomination Committee, comprising a majority of independent directors, including its chairman. This Committee’s task should be to: • Search for, evaluate, shortlist and recommend appropriate independent directors and NEDs, subject to the broad directions of the full Board; and • Design processes for evaluating the effectiveness of individual directors as well as the Board as a whole.

The Nomination Committee should also be the body that evaluates and recommends the appointment of executive directors.

A separate section in the chapter on corporate governance in the annual reports of listed companies could outline the work done by the Nomination Committee during the year under consideration.

Duties, liabilities and remuneration of independent directors: The Task Force felt that there must be some formality in the appointment of NEDs and independent directors that goes beyond the ratification by the shareholders. It thus makes the following recommendation.

Recommendation 2: Letter of Appointment to Directors: • The Task Force recommends that listed companies should issue formal letters of appointment to NEDs and independent directors - just as it does in appointing employees and executive directors. The letter should: • Specify the expectation of the Board from the appointed director; • The Board-level committee(s) in which the director is expected to serve and its tasks; • The fiduciary duties that come with such an appointment; • The term of the appointment; • The Code of Business Ethics that the company expects its directors and employees to follow; • The list of actions that a director cannot do in the company; • The liabilities that accompany such a fiduciary position, including whether the concerned director is covered by any Directors and Officers (D&O) insurance; and • The remuneration, including sitting fees and stock options, if any.1 The letter stating the terms and conditions of appointment of any NED or independent director should form a part of the disclosure to shareholders at the time of the ratification of his/her appointment or re-appointment to the Board.

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The Companies Act, 1956, prescribes the ceiling on remunerations that can be paid to NEDs and independent directors, including stock options, restricted stocks, sitting fees and commissions on net profit, if any, subject to approval of shareholders. Currently, NEDs, including independent directors, may be paid compensation within the limit of 1% of the company’s stand-alone net profits for the year (or 3% in case it does not have any whole-time director). While such remunerations are eventually approved by shareholders, the task is usually delegated to the Board. Since propriety demands that the NEDs and independent directors recuse from discussions regarding their remunerations, in practice the remunerations are actually approved by the promoters or management.

The Task Force felt that linking the remuneration of NEDs and independent directors to the net profit of the stand-alone company has problems. Well oiled, 1 More on this is in Recommendation 3.

Remuneration Committee of the Board: All over the developed world, a major source of shareholder grievance has been the levels, structures and payouts of executive compensation. Although Indian senior executive pay has been significantly lower than those who occupy top slots in the Fortune 500 companies — even when calculated in terms of purchasing power parity — there is a case for creating a sound Board-level process for approving 2 Paying a fixed contractual amount is, indeed, the practice in most OECD countries, such as the USA, UK, Australia, France, Germany, Italy, Spain, the Netherlands, the Scandinavian countries, and others. remunerations to executive directors and for those who are one level below the Board. The basic principle is best stated in the Combined Code of the UK: “There should be a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors. No director should be involved in deciding his or her own remuneration.”

4. Audit Committee of the Board: In its present form, Clause 49 of the Listing Agreement contains detailed mandatory provisions for the Audit Committee of the Board. Even so, it has one flaw that needs immediate remedy. In the earlier version of Clause 49, only NEDs could be members of the Audit Committee. The revised Clause 49 omitted this requirement. Under the present dispensation, two-thirds of the members of the Audit Committee must be independent directors as must the chairman, but the rest may be either NEDs or executive directors. This is clearly a mistake, and runs counter to a fundamental operating principle of good corporate governance, namely that the Audit Committee must comprise entirely of non-executive directors with independent directors forming the majority.

Another counter-view that the Task Force also considered was that the presence of executive directors on the audit committee needs to be appreciated since they are well versed with the internal working of the company and bring first hand information to the table which helps an objective and meaningful analysis of the discussions by the Committee.

The Task Force, however, suggests that for bolstering the independence of the internal as well as the external auditors and ensuring a free and frank discussion with the audit committee, it is important that the Audit Committee must necessarily constitute of NEDs. The executive directors can be invited to attend the audit committee meetings to provide the necessary clarifications.

Recommendation 3: Audit Committee Constitution: Listed companies should have at least a three-member Audit Committee comprising entirely of non-executive directors with independent directors constituting the majority.

5. Separation of the offices of the Chairman and the Chief Executive Officer: (CEO) The Task Force deliberated at length on whether it is desirable to separate the offices of the Chairman of a publicly listed company from that of the CEO. While it was observed that there is no obvious causality between such a separation and better corporate governance or performance, it was nevertheless true that there is a growing trend internationally of separating the offices of the Chairman and the CEO.3

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It is the dominant practice in the UK; increasingly so throughout continental Europe; and even the USA — which has had a long tradition of having the same person as Chairman and CEO — is increasingly moving towards a separation of offices.

This trend towards separation of the role of Chairman and the CEO has never been mandated by the legislation or regulation — which is exactly as it should be. Instead it has been driven either voluntarily or by major longterm institutional investors such as pension funds.

Recommendation 4: Separation of Offices of Chairman & Chief Executive Officer: The Task Force recognised the ground realities of India. Keeping these in mind, it has recommended, wherever possible, to separate the office of the Chairman from that of the CEO. 6. Attending Board and Committee Meetings through Tele-conferencing and 1video conferencing: E-presence of a director would ensure larger participation at Board/Committee meetings and shall also step up the frequency of such meetings as well as the interaction of Board members, while at the same time bringing down the cost of holding physical meetings. The Companies Bill, 2009 has also proposed participation of Directors in board meetings through electronic means. Even prior to the adoption of the Companies Bill, in a meeting in relation to matters which do not require a physical meeting, directors ought to be able to participate through epresence (where they would otherwise not be able to attend). The decisions may be subsequently recorded as a circular resolution signed by the directors physically present and those participating through audio or video-conferencing.

Recommendation 5: Board Meetings through Tele-conferencing: If a director cannot be physically present but wants to participate in the proceedings of the board and its committees, then a minuted and signed proceeding of a teleconference or video conference should constitute proof of his or her participation.

Accordingly, this should be treated as presence in the meeting(s). However, minutes of all such meetings or the decisions taken thereat, recorded as circular resolutions, should be signed and confirmed by the director/s who has/have attended the meeting through video conferencing.

7. Executive Sessions of the Independent Directors: While the independent directors are kept updated of all business-related issues and new initiatives by the management, it is imperative that the independent directors have executive sessions (as their internal discussion and debating process to evolve a consensus among independent directors). Having such interactions without the presence of any of the non-independent directors would promote open discussions among independent directors and also assist in independent appraisal of corporate performance, strategic issues, determining a “smell test” for “grey” or “border line” proposals.

Recommendation 6: Executive Sessions: To empower independent directors to serve as a more effective check on management, the independent directors could meet at regularly scheduled executive sessions without management and before the Board or Committee meetings discuss the agenda.

The Task Force also recommends separate executive sessions of the Audit Committee with both internal and external Auditors as well as the Management.

8. The role of the board and shareholders in related party transactions: The Audit Committee members, at a meeting held prior to the Board Meeting in which related party transaction shall be discussed, should be given access to the contract / terms of all proposed related party transactions, before they are entered into. In the event of the Company proposing to enter into or amending an existing related-party transaction which is not in the ordinary course of business or not on “arms length’ basis,

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the management shall present it to the Audit Committee. The Committee should discuss all related party transactions which are not in the ordinary course of business or not on “arms length” basis and, in approving or rejecting the transactions shall consider all relevant facts and circumstances including (i) risks, costs and benefits to the Company (ii) impact on a director's independence, if such related party contract concerns an independent director (iii) availability of other sources /unrelated third parties for comparable services or products - and shall approve only those transactions that are in the best interests of the Company.

The Task Force also noted that the J J Irani Committee had considered that, any contract by an independent director or his firm, which exceeds 10% of the director’s or the firm’s turnover renders such director dependent and shall be presumed to affect the independence of such a director.

Recommendation 7: Related Party Transactions: Audit Committee, being an independent Committee, should pre-approve all related party transactions which are not in the ordinary course of business or not on “arms length basis” or any amendment of such related party transactions. All other related party transactions should be placed before the Committee for its reference.

The Role of Auditors: 9. Auditor – Company Relationship: The report of the Naresh Chandra Committee on Corporate Audit and Governance had suggested that auditors should refrain from providing non-audit services to their audit clients and had recommended an explicit list of prohibited non-audit services. The Task Force, noted that the recommendation was endorsed by the Ministry of Corporate Affairs and has also been proposed under the Companies Bill, 2009. The Task Force concurred with the recommendation that legislation should expressly prohibit auditors from rendering certain services to their audit clients. Audit firms should have to mandatorily disclose network agreements between audit firms and non-audit companies, pecuniary interests exceeding 2% between the audit firm and its affiliate non-audit service firm or company and measures of Chinese walls and data protection/confidentiality that are in place between them. The Task Force noted the existing practice in this regard. And found it to be sufficient.

10. Independence of Auditors: In order to build capacity, consulting firms undertake audit assignments through their associate/affiliates organisations. However, such affiliations could lead to too much revenue dependence on a particular client causing potential threats to auditor independence. While a blanket ban cannot be imposed on such business relationships, in case more than 10% of consolidated revenue of a firm or its network affiliate emanates from a single client, with whom there is also an audit engagement, the auditor should not be construed as independent of its client. However, to help newer and smaller audit firms, this requirement should not be applicable to audit firms for the first five years from the date of commencement of their activities, and for those whose total revenues are less than Rs.15 lakhs per year.

Recommendation 8: Auditors’ Revenues from the Audit Client: No more than 10% of the revenues of an audit firm singly or taken together with its subsidiaries, associates or affiliated entities, should come from a single corporate client or group with whom there is also an audit engagement.

Conclusion: The recommendations discussed above if implemented will result in following outcomes Good corporate governance ensures corporate success and economic growth. Strong corporate governance maintains investors’ confidence, as a result of which, company can raise capital efficiently and effectively. It lowers the capital cost. There is a positive impact on the share price.

1. It provides proper inducement to the owners as well as managers to achieve objectives that are in interests of the shareholders and the organization.

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2. Good corporate governance also minimizes wastages, corruption, risks and mismanagement.

3. It helps in brand formation and development.

4. It ensures organization in managed in a manner that fits the best interests of all.

References: [1] Subhash Chandra, PHI Publication “Corporate Governance in India : an Evaluation” [2] Vasudha Joshi, Foundation publication “Corporate Governance: The Indian Scenario” [3] Brian R. Cheffins, University of Cambridge and ECGI, Law Working Paper °.184/2012n, January 2012 “The History of Corporate Governance” [4] R. Chakrabarti, W. Megginson, P. Yadav CFR-Working Paper NO. 08-02, “Corporate Governance in India” [5] Reserve bank of India, December- 2004 bulletin on “Corporate Governance in Banks” [6] Jayanth Rama Varma, IIMB Management Review, the journal of the Indian Institute of Management, Bangalore October- December 1997, 9(4), 5-18) “Corporate Governance in India” [7] http://articles.economictimes.indiatimes.com/2009-01-18/news/28462497_1_corporate-governance satyam-books-fraud-by-satyam-founder [8] http://business.gov.in/corporate_governance/kumarmangalam.php [9] http://www.sebi.gov.in/commreport/corpgov.html [10] http://tejas-iimb.org/interviews/23.php [11] http://en.wikipedia.org/wiki/Corporate_governance ****

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CORPORATE GOVERNANCE IN MANAGEMENT EDUCATION

Mrs. Jyoti V.Kowjalgi,

Mr. Teltumbade Ganesh R.,

Asst. Professor MGV’s Institute of Management and Research Panchvati Nashik, India.

Asst. Professor MGV’s Institute of Management and Research Panchvati Nashik, India.

ABSTRACT Corporate governance is becoming buzz word in corporate now a days. Sustain and protect the interest of stakeholders in global competitive environment is challenging task for the organisation.

If companies implement corporate governance, they can ensure their stakeholders that their business practices are transparent and accountable. These corporate can attract stakeholders and satisfy them with good returns.

This article highlights the concept of corporate governance, tries to understand the governance in management education and then matches the framework of governance in corporate and management education. And finally shows the SWOT elements of management education for achieving excellence.

Keywords: Corporate governance, management education, governance framework, elements of SWOT.

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Introduction: In the era of industrialization there was a landmark development in business sector & it resulted in the formation of joint stock companies/corporate form of organization. Joint stock companies were created as economic entity having ability to raise resources by selling shares to the general public and that’s how it can grow size wise. This form was also by the general public as they also could participate in the growth of business & in turn they can get returns. This further posed to the conflict between large & minor shareholders.

In companies where large shareholdings is concentrated on one or few hands (shareholders) with shareholdings is spread across minority share holders who are widely spread. This has resulted in the benefit of few shareholders who were controlling, influencing the decision makers & also getting more profits. Some times in countries like India these large shareholders exploited minors by taking higher salaries , benefits like commission as a result the profit left for dividend was less. This way the only avenue open was to resort to laws and regulations.

The scandals those happened in early 2000 like Enron, Lehman Brothers, Satyam computers services have emphasized the need of better governance in corporate to protect the interest of shareholders. Many decades before the frame work of Corporate Governance was introduced by various organization for e.g. General Motors from U.S Cadbury committee from U.K CII in India. Even other countries have created regulation for practicing better Corporate governance process. But this mechanism was not encouraged by firms. The main reason for not following corporate governance was that the minority shareholders are widely dispersed. Now once again this concept is becoming buzz word in corporate.

Objectives: 1. To study the concept of Corporate Governance.

2. To understand governance in management education 3. To identify elements of SWOT using corporate governance frame work for management education.

Concept of Corporate Governance: The concept of corporate governance is in limelight all over the world because of the changing business regulatory bodies like EEC,GATT & WTO have compelled to follow good governance practices. The concept of corporate governance highlights on effective accountability of organization. Basically it aims at following best practices, transparency, & fair accountability in business activities.

In 1988, two American scholars Philip Cochran & Steven Wartick defined corporate governance as an umbrella that includes specific issues arising from interaction among senior management, shareholders, board of directors & other corporate shareholders.

Bob Garrat has defined it in more specific way in more recent after the failure of high profiled co prorates.

Corporate governance deals with the appropriate board structure, process & values to cope up with the rapidly changing demands of both shareholders share holders in and around their enterprises.

The simple definition of corporate governance is “ it is not just corporate management but it is something much broader to include a fair ,efficient & transparent administration to meet certain well defined objectives.

It is a system of structuring operating and controlling a company with a view to achieve long term strategic goals to satisfy shareholders, creditors employees, customers and suppliers and complying with the legal & regulatory requirements, apart from meeting environmental and local community needs, when it is practiced under well laid out system, it leads to the building of a legal commercial and institutional framework and demarcates the boundaries within which these functions are performed.”

The management of corporate and governance of corporate differs. Managing the enterprise means ensuring fulfillment of functional and operational objectives where as , governance means ensuring that organization runs well on the guidelines and directions which is the main purpose or goal of the enterprise. While managing the organization, there is hierarchy in the organization chart which shows the delegation of authority and responsibility at various levels for performing the functions and its accountability, but in case of governance board of directors are responsible persons, who are not even present in organization chart. The board of directors do not have any hierarchy. Every director has equal duties, responsibilities and powers.

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Source: Tricker 2001unitary board Corporate Governance has following objectives: 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

The organization must acknowledge the rights of shareholders and they must help shareholders in exercising their rights effectively. Shareholders must be encouraged to participate in general meeting of organization.

Organization should recognize the legal & other obligations of certain shareholders.

For dealing various issues the members of board must possess wide range of skills, and they must work with great responsibility.

4. Organization must develop code of conduct for directors to promote ethical and responsible decision making.

5. Organization must implement certain procedure in order to verify and safeguard the integrity of the organization. It must disclose the financial information to the investors and shareholders.

Good governance ensures value addition to the business which leads to the various advantages like stability, growth, confidence among shareholders and prospective stakeholders. Effective governance reduces cost of capital, long term sustenance, stakeholders relationship and finally leads to leverage competitive advantage.

Due to its multiple benefits, all types of business including service sector, education sector, manufacturing sector, public sector charitable and social organization etc. are also planning to implement corporate governance for fulfilling their own objectives.

Governance in management Education: Management education is becoming very popular now a days in education field. Number of institutes imparting management education as well as intake is increasing year by year. Management education has become a buzz word these days, hence it is the sole responsibility of the organizations to enhance the quality of the education, the infrastructure the facilities and every other related aspect to protect the interest of their stakeholders. These stakeholders could be the management of the institute, the faculty, the students, the parents, the industry by and large the society. To safeguard the interests of all these stakeholders it is very much necessary to have governance. To sustain the competition of growing management institutes one has to be very careful in running their own institute. If one looks at the governance framework of education from the corporate governance perspective, it can be observed that there are various similarities in these two. As shown in fig 1 in which educational governance has six different dimensions. These are very much similar to the characteristics of corporate governance. One may notice that the corporate governance frame work matches to the governance frame work of education.

Strategy and direction Compliance and accountability Transparency and disclosure Structure and relationship Corporate citizenship Performance monitoring

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Education governance frame work:

Fig. 2 If institutes in management education try to apply these principles they are expected to concentrate on to various areas shown in the table below.

Table.1 Governance Principles Mission, vision, governance and leadership of institute.

Organization values & Faculties, Quality assurance policies leadership & governance policies principles Global inputs to students, placement, Research & development activities, Standards, criteria & national and international networking MDP & consultancy students overall benchmarks development through co-curriculum Risk management Finance, Research & development activities, faculty development program Student evaluation process, feedback system, organization chart, faculty Governance Structure and appraisal, promotion and retention policies, formation of committees for reporting various activities Quality management Physical infrastructure IT infrastructure Library facility ,finance process To have competitive edge all the regulatory bodies like Govt. AICTE,NBA Universities are also tightening the norms day by day. The institutes to display better governance are expected to work on the areas shown in the table. If they are well furnished by institutes it is very easy to attract its stakeholders.

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But the main question is, are the institutes really ready for the same? Or they have certain strong and weak points on to which they can encash or improve respectively. Here are the SWOT factors classified for the general management institutes Elements of SWOT for management education using corporate governance framework: Table.2 Strengths

Goodwill/brand image of institute/trust Faculties Students Management support Value added activities Alumni base Infrastructure and other facilities

Weakness

Threats

Opportunities

Signing memorandum of association Industrial growth Professional approach Practical orientation Educational scenario

Lack of competent Faculties Lack of quality Students /less admission Lack of Management support Lack of Value added activities Deficiency in infrastructure

International Institutes Quality institutes Deemed universities Autonomous universities Other post graduate professional degrees Distant education for professional courses

From the SWOT table it can be seen that similar points can be considered under strengtgs and weakness. If the basic input i.e. students are of good quality it becomes strength on the contrary no students or low quality students puts question mark on sustainability. The better governance attract good students. Being stakeholders they also look onto the quality of faculties, infrastructure, facilities, facilitators attitude, extra or additional objectives they get into the institutes being Alumni being the brand ambassadors, constitute strong base and standing for the institute.

To face cutthroat competition in the today’s world institutes are trying to achieve excellence through industry academic interaction field work live projects, practical orientation, etc. The institutes who lead to do all these things definitely have better opportunity to sustain their existence and survive in better manner.

Looking at the result of globalization e learning to becoming very common. Virtual classes are no longer rare.

People can learn while earn. The international universities, the deemed universities and the autonomous bodies are providing better learning process to the students and thus they are creating the challenges in front of the traditional educational institutes.

Conclusion: Overall it can be seen that there are various dimension common to corporate governance and education governance. If institutes really explore & use their strengths, overcome the weakness, grab the opportunities and their by gain the edge over others to face threats, i.e. in short if better governance is implemented the management education institutes can also become excellent and gain corporate culture which could be initial lesson to its new entrants and the budding managers.

References: [1] [2] [3] [4]

Corporate governance by T.N. Satheesh Kumar ( Oxford university press) 2010 https://www.google.co.in/search?q=corporate+governance+framework&hl=en&tbo=u&tbm http://en.wikipedia.org/wiki/Corporate_governance NBA Manual ****

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AN ORGANIZATION WITH BUSINESS EXCELLENCE IN RURAL AREA – A CASE STUDY OF V. P. FOOD & HERBALS PVT. LTD., AKOLE

Prof. Kiran Gonte,

Dr. Kirti Dang,

Assistant Professor Abhinav Education Society’s, Institute of Management & Business Administration, Akole, India.

Associate Professor Abhinav Education Society’s, Institute of Management & Business Administration, Akole, India.

ABSTRACT Organizations worldwide have been exploring ways to improve business practices to gain competitive edge. An organization’s long-term viability and competitiveness should not be evaluated solely in terms of financial measures. Investors, policy makers, and other stakeholders increasingly seek to evaluate performance with respect to sustainability—the environmental, social, and economic performance of an organization.

The paper is the case study about various management issues in agro food chains & network. The Case covers production, excellence in quality, information exchange, safety assurance & chain performance. Other issues covered overall performance & shared responsibility for the sustainability in agro food supply chains.

An organizations long term achievement and growth with excellence in business is studied. V. P. Foods a agro food production unit has a success story from starting a small unit started in Gardhani with just 2 tons of Production to V. P. Foods & Herbals Pvt Ltd with 200 tons of production.

Keywords: Sustainability, Competitiveness

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Introduction: Business excellence is the systematic use of quality management principles and tools in business management, with the goal of improving performance based on the principles of customer focus, stakeholder value, and process management. Key practices in business excellence applied across functional areas in an enterprise include continuous and breakthrough improvement, preventative management and management by facts.

Sustainability benchmarking is gaining importance within industry. Expanding the boundaries of benchmarking for sustainability beyond the organization and across the supply chain is a necessity, as stakeholders demand that organizations consider the broadened lifecycle influences of products and processes.

The process for internal organizational performance evaluation, which includes internal sustainability benchmarking, has made some relatively well-established headway.

V P Foods started manufacturing Amla products since 2001. After long efforts & research considering importance of Amla for the health of human being as testified by the Ayurveda. Products are made in a manner to retain maximum nutritional, Ayurvedic medicinal properties of Amla under the guidance of an expert having 25 years world wide experience of processing & preservation of fruits, vegetables & herbs. All products are made from carefully selected varieties of Amla fruits.

V P foods & Herbal Pvt Ltd has also started with production of Aloe vera juice and looking in market for Aloe Vera by products.

Agro Processing Industry: Agriculture and industry have traditionally been viewed as two separate sectors both in terms of their characteristics and their role in economic growth. Agriculture has been considered the hallmark of the first stage of development, while the degree of industrialization has been taken to be the most relevant indicator of a country’s progress along the development path. Moreover, the proper strategy for growth has often been conceived as one of a more or less gradual shift from agriculture to industry, with the onus on agriculture to finance the shift in the first stage. This view, however, no longer appears to be appropriate. On the one hand, the role of agriculture in the process of development has been reappraised and revalued from the point of view of its contribution to industrialization and its importance for harmonious development and political and economic stability. On the other hand, agriculture itself has become a form of industry, as technology, vertical integration, marketing and consumer preferences have evolved along lines that closely follow the profile of comparable industrial sectors, often of notable complexity and richness of variety and scope. This has meant that the deployment of resources in agriculture has become increasingly responsive to market forces and increasingly integrated in the network of industrial interdependencies. Agricultural products are shaped by technologies of growing complexity, and they incorporate the results of major research and development efforts as well as increasingly sophisticated individual and collective preferences regarding nutrition, health and the environment. While one can still distinguish the phase of production of raw materials from the processing and transformation phase, often this distinction is blurred by the complexity of technology and the extent of vertical integration: the industrialization of agriculture and development of agro processing industries is thus a joint process which is generating an entirely new type of industrial sector.

Indeed, a very large part of agricultural production undergoes some degree of transformation between harvesting and final use. The industries that use agricultural, fishery and forest products as raw materials comprise a very varied group. They range from simple preservation (such as sun drying) and operations closely related to harvesting to the production, by modern, capital-intensive methods, of such articles as textiles, pulp and paper.

The food industries are much more homogeneous and are easier to classify than the non-food industries since their products all have the same end use. Most preservation techniques, for example, are basically similar over a whole range of perishable food products, whether they be fruit, vegetables, milk, meat or fish. In fact, the processing of the more perishable food products is to a large extent for the purpose of preservation.

Food-processing industry is significant for India’s development because it has important link and synergy with industry and agriculture, the two main support of the economy. Total size of food-processing industry is around US $40 billion growing at 10% and the size of processing sector is estimated to be US $2.53 billion. The industry is mainly unorganized with 75% of the processing units belonging to the unorganised category, the

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organized category though small, is growing fast. The food production is expected to double in the next 10 years and the consumption of value added food products is expected to grow at a much faster pace. This growth will benefit the economy, increase agricultural yields, create employment and raise the standard of living of various associated people. Rising consumer affluence and economic liberalization is opening up new opportunities in the sector.

The food-processing industry has been identified as a focus area for development and has been included in the priority-lending sector. Most of the food-processing industries with the exception of beer & alcoholic drinks and items reserved

Source: FAIDA / Ministry of Food Processing Industries Food-processing- a growing market: With rapid increase in the per capita income and purchasing power along with increased urbanization, improved standards of living, there lies a large untapped opportunity to cater to 1000 million domestic consumers. It is estimated that 300 million upper and middle class consume processed food. With the convenience needs of dual income families, 200 million more consumers are expected to move to processed food by 2010. The market size for the processed foods is thus bound to increase from US $102 billion currently to US $330 billion by 2014-15 assuming a growth of 10%. The share of the value added products in processed foods would almost double from US $44 billion currently to US $88 billion during the same period, growing at the rate of 15%. This presents enormous opportunities for investment in processed food sector.

Several global food giants and leading Indian industrial enterprises are already making their presence felt in a big way in the sector. Some of them are Nestle India, Cadbury's India, Kelloggs, Hindustan Unilever, ITCAgro, Godrej Foods and MTR Foods.

The Food Supply Chain: Production and distribution of food could be viewed as a supply chain (Barrett et al. 1999;Marsden et al. 1999), which is a system of stages that represent a sequence of economic activities, through which resources, materials and information flow downstream and upstream for production of goods and services for ultimate consumption by a consumer (Stevens 1989).

The food supply chain is also seen as a network of organisations that do not necessarily map directly on to economic stages of the food supply chain as they often integrate several stages in the food supply chain .This paper adopts a definition of the agro food supply that comprises the following stages: agricultural production, food processing, food wholesaling, food retailing and distribution, The food supply chain has significant implications for sustainability such as the fulfilment of human needs, provision of employment and economic growth, and impacts on the natural environment specially in rural area.

Growing environmental, social and ethical concerns and increased awareness of effects of food production and consumption on the natural environment and developing world have led to increased pressure from consumer

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organisations, environmental advocacy groups, policy makers and other stakeholders on food companies and food retailers to assess and improve environmental and social performance within product lifecycles from ‘farm to folk’ (Courville 2003; Weatherell et al. 2003; Ilbery and Maye 2005; Maloni and Brown, 2006; Matos and Hall 2007).

The food supply chain is pervasive and is one of the most globalized supply chains. In the food supply chain, sustainability is clearly seen in terms of the wider production and consumption system that has broad implications for the economy, health, development, communities and the environment (Marsden et al. 1999; Hinrichs and Lyson 2008; Roth et al. 2008 Chronological Development of the Organization: The Organization started with an great idea in the mind of V. S. Padekar to have products from the very herbal medicinal product Awala in the year 2001 with only 3 persons working . V P Foods started manufacturing Amla products since 2001 with only capacity of 50 ton. After long efforts & research considering importance of Amla for the health of human being as testified by the Ayurveda.

Products are made in a manner to retain maximum nutritional, Ayurvedic medicinal properties of Amla under the guidance of an expert having 25 years world wide experience of processing & preservation of fruits, vegetables & herbs. All products are made from carefully selected varieties of Amla fruits & other healthy ingredients.

VP’s Amla Products are very well known in the selected market because of its superior quality only. The “Nutramla” brand is very famous in the market and pick up the valuable response from customer in a short period. Now V P FOODS expand their production and product range for that it was started a new sister consent company V P FOODS AND HERBAL PVT. LTD. at new place with enhance qualitative production practices with a production capacity of 200 tons. This unit is going toward ISO 22000-2005 certification process which includes the HACCP procedure for quality products. The Managing Director of V P FOODS & HERBALS PVT. LTD. Mr.V.S.Padekar has 25 years world wide experience in food processing sector. He research out various food and herbal products especially in Amla fruit by knowing the rich Ayurvedic medical properties of this fruit as Amurut. He already started research on various herbal and food products for improving nutritional and healthy life style.

How does the Organization Work?

Nutramla products are made in a manner to maintain maximum nutritional value of fruits & herbs. The herbals with Amla based juices made a effective Ayurvedic herbal medicine. The production plant of V P FOODS & HERBALS PVT. LTD. will shortly certify by HACCP certification.

Specifications: 1. Hygienic processing/production plant 2. Processing plant shortly HACCP certified 3. Experts having 25 years world wide food processing experience.

4. Amla fruit having rich in Natural Vitamin “C” & Ayurvedic medicinal properties.

5. No any artificial colours and flavors used in any Nutramla products.

6. Result oriented products.

7. Products are made in mind for all age person.

8. Aim: Tandurusti Aunder se Aur Bahar Se...

9. Strive toward continues improvement in all products and services 10. Products that rejuvenate your life 11. Environment friendly production plant Organizational Structure and Management: By getting valuable response and demand from market V P FOODS has Expanded their self into V P FOODS & HERBALS PVT. LTD. as a sister consent company. Aiming to increase

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production capacity, maximize qualitative standard and serve more Herbals and food products.

Mr. V. S. Padekar (Chairman & Managing Director) who looks after new product development and complete management of the company, Mr. Y. S. Padekar (Secretary) who looks after overall Distribution of the Products & total Accounts of the Company. Mr. Rajesh Padekar (Director) and responsible for the complete production process and Mr. Hrushikesh Padekar ( Director) who goes for all the legal matters of the company and complete Packaging system of all Products.

V. P. Foods & Herbal Pvt Ltd Production and Distribution: V. P. Foods started its production in the year 2001 under Khadi & Village Gram Udyog with a production capacity of 2 tons. The family itself was engaged in the production process and marketing Process. For marketing of its product at very initial stage they used a Maruti Van and went to Pune, Ahmednagar and Nashik Region alongwith its product samples for marketing. Later on as customers preferred the brand due to its quality & taste, the demand increased. Then they also increased the production capacity to 50 tons with very little manpower.

V P Foods slowly captured the market in different regions of Maharashtra state. Nutramla has many competitions but due to good quality and taste the product sustained and got a good growth in market.

By mouth Publicity and increasing awareness of quality of products of V. P. Foods, they soon got a big orders from several distributors and retailers. Hence the Board of Directors decided to go for Pvt Ltd. Company and soon V. P. Foods and its V. P. Foods & Herbal Pvt Ltd company with four members responsible for its operations.

Now the company had to shift at new location due to increase in production capacity. Company took a new place for its production near Akole and set up a plant of 200 tons capacity and started its operation with complete capacity. Now company aims for setting more 200 tons capacity plant due increasing demand for the products.

The distribution now have entered several regions of Maharashtra State. Not only Maharastra but Nutramla entered in different states specially in South India with same speed. Now Nutramla has market in India & also in abroad in different countries like Dubai, UK, Netherland, South Africa, Russia, Maritius & South East Asian Countries. Nutramla Supplies different countries with their different agents. But soon Nutramla will start with exporting products themselves as they have coded the products in different countries and got Export License.

Amla (Awla/Anola) : Biological Name of Amla » Emblica officinalis English Name of Amla » Indian gooseberry Company now manufactures Thirteen different products such as; ♦ AloeVera Juice: New Product ♦ NutrAmla Amla Juice ♦ NutrAmla Amla Candy ♦ NutrAmla Sugar Controller : ♦ NutrAmla Panchamrut ♦ NutrAmla Ginger Squash ♦ NutrAmla Lemon Squash ♦ NutrAmla Activo Sharbat ♦ NutrAmla Amla Pickle ♦ NutrAmla Amla Chatni ( Chunda)

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♦ NutrAmla Amla Murabba ♦ NutrAmla Amla Appetizer (Supari) ♦ NutrAmla Amla Powder

Core Values and Organizational Culture: 1) V. P. Foods story shows how an organization can grow in Rural area.

2) V. P. Food is synthesis of three different concepts viz.

Concept of Business Concept of Family Togetherness Concept of Devotion and hardwork.

3) The Chief Value that holds the Organization firmly is sense of hardwork and devotion.

4) Motive of generating employment in rural area.

Few Functions to indicate Uniqueness and Excellence of the Organization: 1) V. P. Foods & Herbal Pvt. Ltd do not have any kind of its own distribution channel or marketing Channel. It completely works and believes on the system of mouth publicity. It alternatively saves all the cost of Marketing.

2) From family business to a Pvt Ltd Company 3) Thirteen Products under one brand.

4) Managed by only Family members.

5) Quality of product with hygiene measures in the production unit.

Awards received by VP foods: V P FOODS was awarded in 2003 with First Award of KVIC & Ministry of Agriculture & Village Ind. Government of India.

Also selected to participate in the international trade fair held at Italy in 2003, Poland in 2004 & Foodex, Japan in 2008.

It also awarded with Rashtriya Udyog Ratna Award in Jan 2009 & Best entrepreneurs from local Governments.

Concluding remarks: Exclusiveness, absence of formal departments, following of great philosophy of supporting rural employment & their self-reliance, record maintenance, hygienic production unit, strict quality control and personnel norms, no marketing strategies, minimal distribution channels and formalities hassles, are the key features of V. P. Foods & Herbals Pvt Ltd. making its presence in the global market. A success story of development and growth of small household unit to a Private Ltd in rural and tribal area like Akole.

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References: [1] One to one interaction with Y.S Padekar, secatory and Mr Rajesh Padekar production head V. P. Foods & herbals Pvt Ltd. [2] Website: https:/www.nutramla.com [3] Indian Processed Food Industry Opportunities Galore by Way to Wealth Sector Coverage April 15, 2008.

[4] FAIDA / Ministry of Food Processing Industries [5] Booklets of V. P. Foods & herbals Pvt Ltd. [6] The Agroprocessing Industry and Economic Development Produced by: Economic and Social Development Department ****

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BUSINESS EXCELLENCE MODELS - A REVIEW Akshay Damani Assistant Professor – Finance Thakur Institute of Management studies and Research, Mumbai, India.

ABSTRACT Every business organisation desires, strives and aims to achieve business excellence for its growth and success. The Ever changing business environment, changing expectations of shareholders and other stakeholders along with increasing competition and changing technologies has forced business organisation to continously innovate and develop strategies in order to stay competitive and excel in the business world. With increasing complexities of modern day life, business face challenges of all sorts including, increasing costs, increasing shareholders expectations, changing consumer behaviour and demands, government policy adversities, growth in local and global competition as well internal issues related to the work force. This forces organisations to look within it as well as beyond it and go beyond financial numbers to succeed. With the revolution in the Information Technology sector globally, the list of corporate houses with success has increased multi-fold, with the Fortune 500 companies being highly successful globally.

This paper aims to discuss the different Business models for achieving excellence. In the last few decades several business excellence models have developed and have enabled organisations to understand the same and customise and implement them in their respective organisations in order to survive and succeed. A lot of research has been done to understand the Fortune 500 companies and their contributors and polices for business excellence. Models have been developed and inspired from their success. Some models which the paper aims to discuss include the European Foundation for Quality Management (EFQM model), the Deming Prize model, MBNQA, Mckinsey seven S-model, Kanji`s BE model, Balanced Scorecard, Lynch and Cross Performance Pyramid, Standards of ISO 9000 series and Six Sigma which can serve as guides for business excellence in the corporate world.

Keywords: Business Excellence, EFQM, Mckinsey Seven S-model, MBNQA

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Introduction: Businesses and the way organisations conduct business has changed since the last two centuries. Two major factors that have accounted for such change are Innovation in Technologies (especially Information technology) and emphasis on Globalisation of Trade and Commerce. These have created opportunities for businesses to grow and expand beyond domestic frontiers. Organisations now have to operate at the domestic as well as at the global level and therefore are facing increasing competition. The challenges that existed for organisations have kept changing over the last century. With Economic development and Growth in Business gaining significance not only at the government levels but also at global levels, businesses now have to perform much more to satisfy the needs of all kinds of stakeholders. Today apart from profit as a factor for the modern day business another objective that has gained prominence is maximizing shareholders wealth. To achieve this business excellence plays an important role. Business Organisations across the globe are exploring and developing ways to improve business practices to gain the competitive edge. Businesses have to excel in all its aspects. Challenges to excel come from within the organisation as well from outside the organisation. To satisfy all stakeholders on a consistent basis is a prerogative for all business organisations.

"The pursuit of business excellence was not an extraneous activity; there was a close link between progress on business excellence and a company's results, as Tata Steel had shown."

- Dr JJ Irani, Chairman, Executive Committee, Tata Quality Management Services (TQMS).

"We seemed to have changed our mindset from thinking that we are the best and we have nothing to learn and in bringing this about a great deal of credit goes to the TBEM." - Ratan Tata, Chairman, Tata Group Literature Review: According to Kanji (2002), over the last few decades, the term ‘business’ and organisational ‘excellence’ has become frequently used in the quality and management literature. Business excellence as used by many authors of TQM, equate business excellence with TQM. He states that a poorly defined performance measurement system can impede an organisation`s ability to adapt successfully in a competitive environment.

He further states that there are different views on how organisational performance should be measured.

According to Oakland (1993) the following are the essential requirements for a business excellence model: a)) to ensure customer requirements have been met b)) to be able to set sensible objectives and comply with them c)) to provide standards for establishing comparisons d)) to provide visibility and provide a ‘score-card’ for people to monitor their own performance levels. e)) to highlight quality problems and determine which areas require priority attention f)) to give an indication of the cost of poor quality According to Joshi and Jha (2007), in today’s global competition and economic liberalization, quality has become one of the important factors for achieving competitive advantage. A good quality product or service enables an organization to add and retain customers. Poor quality leads to discontented customers, so the costs of poor quality are not just those of immediate waste or rectification but also the loss of future sales.

Technological innovations have diffused geographical boundaries resulting in more informed customers. The business environment has become increasingly complex and the marketplace has changed from local to global.

There is an ever increasing demand for quality product and services. This forces organisations to develop strategies in order to satisfy all stakeholders and thus excel in the competitive business environment.

Yearwood and Gestsson, (2010) proposed that there was a need for a broad-based business excellence model for businesses that should focus on an organization-wide thrust to improve quality. They further state that there are eight attributes to achieve business excellence namely: a)) A bias for action, active decision making- ‘getting on with it’ b)) Close to the customer – learning from the people served by the business c)) Autonomy and Entrepreneurship – fostering innovation and nurturing champions d)) Productivity through people – treating rank and file employees as source of quality e)) Hands-on, Value driven – management philosophy that guides everyday practice – management showing its

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commitment f)) Stick to the knitting – stay with the business that you know g)) Simple form, lean staff: some of the best companies have minimum HQ staff h)) Simultaneous loose-tights properties –autonomy in shop floor activities plus centralised values. (unuftp.is) They further state that the following factors support excellence: alignment, distributed leadership, integration, being out front, resourcing the medium term, being time-based, implementation excellence, have a learning focus, being disciplined, reporting, driving customer value and capabilities creation.

According to Ackroyd et al (2003) the business excellence through resource efficiency (betre) project aimed to increase awareness of the benefits of waste minimisation for SMEs in West Sussex, South East England. The programme was run by the West Sussex Sustainable Business Partnership, a collaboration of all West Sussex Local Authorities, the Environment Agency and Eco Sys (a service provider). Over half of the business members became actively involved and attended training events or had environmental audits. There were over 200 improvement actions identified by 64 of the participating companies. These resulted in estimated cost savings of at least £215 000 per annum. In addition, actions taken to prevent pollution and ensure compliance with environmental legislation have the potential to save businesses a further £204 000 in possible penalties.

The environmental impact of the project has been significant, with reductions identified in waste (1437 tonnes), water (62 933 m3) and energy (15 million kW h—equivalent to 668 tonnes CO2). In addition to actions with directly measurable results, betre has stimulated long-term benefits by addressing pollution prevention and compliance, through the formulation of environmental policies and from the adoption of Environmental Management Systems.

According to Boys et al (2005), the use of business excellence programs by Canadian organizations appears to be related to the size and location of the organization. Organization size and location also appear to be related to the sequence in which businesses choose to implement various components of business excellence as well as the difficulty they experience with that implementation. There may be differences in the use of business excellence programs between organizations within different industry sectors, and those with different organizational structures. Finally, the use of business excellence programs was found not to affect organizations' self-reported level of excellence According to Jankalova (2012), the notion of Business excellence, currently so frequent, is subject to discussions of executive bodies and management representatives since 1980s with intensive discussions between American government experts, scientists and industrialists for the purpose to achieve a competitive advantage for American enterprises and their products on domestic and foreign markets. She further states that there are it is an important method of acting in the area of the whole enterprise management, the process of constant improvement of all aspects important for individual stakeholders, i.e. employees, shareholders, customers and society. The practice is the evidence of the fact that currently there are methods enabling the assessment of the achieved status of the Business Excellence. The question is which of those methods is the right one, as its choice depends mainly on the degree of its usability for the needs of the complex assessment of an enterprise, on the determination "whom and to what purpose the assessment serves", on the object and subject of the assessment, as well as on the knowledge of current trends in the Business Excellence status assessment. Models of Business Excellence; Mckinsey seven S-model, Standards of ISO 9000 series; sector standards; individual systems of indicators; Six Sigma and TQM-controlling with Continous improvement can serve as guides.

Models for business excellence: According to Kanji (2002), these models are tools for measuring and evaluating organisational performance and guide organisations to focus their improvement efforts on the right areas. To a large extent, these models are based on theories of TQM but they differ in scope and approach. Some models are more result oriented while some are process oriented. Multiple models have developed across global business houses for understanding business excellence. In Europe, the EFQM model, in Japan the Deming Prize model and in USA the Malcolm Baldrige model, Mckinsey Seven S-model, Kanji`s Business excellence model, Balanced Scorecard and Lynch-Cross Performance pyramid and ISO 9000 standards are other prominent models and they add to the TQM model.

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A) EFQM Model: The EFQM model is the most popular quality tool in Europe used by more than 30,000 organizations to improve performance. It enables the organisations to move from rigid corporate structures to more agile ones that are better suited to the rigours of today`s global economic environment. The EFQM model is used for (self) assessment based on nine criteria based on the eight fundamental concepts of excellence namely; Adding Value for Customers : Excellent organisations consistently add value for customers by understanding, anticipating and fulfilling needs, expectations and opportunities.

Creating a Sustainable Future: Excellent organisations have a positive impact on the world around them by enhancing their performance whilst simultaneously advancing the economic, environmental and social conditions within the communities they touch.

Developing Organisational Capability: Excellent organisations enhance their capabilities by effectively managing change within and beyond the organisational boundaries.

Harnessing Creativity & Innovation: Excellent organisations generate increased value and levels of performance through continual improvement and systematic innovation by harnessing the creativity of their stakeholders.

Leading with Vision, Inspiration & Integrity: Excellent organisations have leaders who shape the future and make it happen, acting as role models for its values and ethics.

Managing with Agility: Excellent organisations are widely recognised for their ability to identify and respond effectively and efficiently to opportunities and threats.

Succeeding through the Talent of People: Excellent organisations value their people and create a culture of empowerment for the achievement of both organisational and personal goals.

Sustaining Outstanding Results: Excellent organisations achieve sustained outstanding results that meet both the short and long term needs of all their stakeholders, within the context of their operating environment.

What does EFQM do?

It is a framework to: a)) Assess your performance, to identify key strengths and improvement areas b)) Integrate existing tools, procedures and processes, to align all and remove duplicates c)) Introduce a way of thinking that encourages reflection and stimulates continuous improvement d)) identify what actions are really driving your results, which areas need more attention, and which approaches should be made redundant.

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What are the benefits? (i) Guarantee to address the needs of all stakeholders (ii) Ensure that initiatives don’t run on a stand-alone basis but rather interlinked towards same goal (iii) Show your stakeholders that you are a credible, trustworthy partner achieving sustainable results (iv) Achieve your results faster, more effectively and efficiently. (v) Define solutions tailored to your specific organisation and situation (vi) It’s easy to use and understand, as it is developed by organisations for organisations

Source: www.efqm.org B) Deming Prize Model: Sallis (2002) states that ‘The Deming Prize’ is the Japanese national prize for quality and it is not available internationally. It is associated with total quality control. Pfeifer (2002) enlists the ten criteria for an organisation in order to be eligible for the Deming Prize for business excellence: a) Top Management Leadership, Vision, Strategies b) TQM frameworks c) Quality Assurance system d) Management systems for Business elements e) Human Resources Development f) Effective Utilization of Information g) TQM Concepts and Values h) Scientific Methods i) Organisational Powers j) Contribution to realization of corporate objectives With the help of Deming`s Plan-Do-Check-Act (PDCA) cycle, an organisation can identify the effectiveness of its system and thereby take preventive and corrective measures in order to succeed (Mohanty, 2008).

C) Malcolm Baldrige National Quality Award (MBNQA): A modern day organisational marvel in India is the Tata group which has implemented the Continous Improvement model successfully. The Tata group has implemented the Tata Business Excellence Model for its companies to achieve organisation-wide business excellence through continuous improvement of quality in business process and by focusing on other areas of management including leadership, customer and market focus, strategic planning, business performance, information management, and so on (icmrindia.org).

According to a report by World Steel dynamics (WSD) in April 2001, Tata Steel (TISCO) was ranked as the world`s lowest cost producer of steel. TISCOs operating cost at the ‘hot metal’ stage was $75 per tonne. The Company`s cost per tonne of Finished steel stood at $152 in the financial year 2001. The ranking was based on several factors including low operating costs, special company culture, good profitability, skilled and productive workforce, high quality and nice products and proactive and experienced management. TISCO`s achievement was mainly attributed to the company`s successful implementation of the Tata Business Excellence Model (TBEM). Based on the Malcolm Baldrige Award, TBEM aimed at establishing a link between business performance and individual performance. TISCO was the first and only Tata group company to achieve the JRD QV award in 2000, having scored 616 points out of 1000 points on the TBEM scale. The adoption of TBEM had helped not only TISCO, but also several other companies in the Tata group in enhancing the quality of their business processes (icmrindia.org). TISCO`s case highlights that focusing only on a single aspect was considered insufficient in improving the overall organizational performance. Joshi and Jha (2007) state that by applying the Business Excellence Model, called the Tata Business Excellence Model (TBEM) based on the American Model for Business Excellence Model, MBNQA, and forming it as a part of Corporate Strategy from 1989 onwards, as explained in the context of one of the first steel companies, Tata Steel of Asia, having started in India, in 1907 has become the lowest cost producer of steel in the world in 2001, and is now counted among the top steel companies in the world. This company in the Steel Industry is

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the only company in the world, which has never made any loss since its inception. Through three Indian case studies, where the Japanese Model for Business Excellence, the Deming Prize and the Application of TBEM, based on the American Model for Business Excellence, MBNQA, Jha has shown how the companies can gain competitive advantage, using the philosophy of TQM in Indian Companies. Jha has argued through the proposition as given in the Criteria for Business Excellence, whether it is the American Model for Business Excellence (MBNQA) or Business Excellence Model based on the European Model based on European Foundation for Quality Management (EFQM) has interlinked the concept of Technology Management ingrained in the Criteria for Business Excellence in the major process of Strategic Planning (MBNQA) and Policy Management (EFQM - [31]).

D) The Mckinsey Seven S-model for business excellence: According to Egner (2009), R. Pascale and Athos developed a framework that is known as the Mckinsey Seven S-model, which ensures the consideration of hard and soft company factors, when a re-organisation takes place, in order to unify and to align the strength of the single factors. The model states and overview of the on seven company factors that make up the elements of success for a firm. The Mckinsey Seven S-model frame work outlines the importance of aligning all company factors to the same direction and to mitigate conflicts between the factors to ensure a maximum output process. The model provides a toolkit for the planning and evaluation of strategies and organisations by taking both kinds of factors into account, in order to guarantee a successful realisation of the targets.

The model is an outline for analysing organisations and their effectiveness. It looks at seven important elements of an organisation as shown above. The model depicts the interconnectivity of all the seven elements and each link is important for a business to succeed. It is a managerial tool and aids in taking decisions to increase the effectiveness of an organisation. It also describes an organisations ability to change with changing business environment. Strategy, Structure and Systems are considered as the hard core elements and the others are considered as Soft core elements (tompeters.com) E) Kanji`s business excellence model: Grigoroudis and Siskos (2010) state that the EFQM model is based on the premise that excellent results with respect to performance, customers, people and society are achieved through leadership driving policy and strategy, people, partnerships and resources and processes. It is underpinned by the fundamental concept of Continous improvement and the PDCA cycle of Deming. An alternative business excellence, model has been proposed by Kanji (2002) who applied a structural modelling approach in order to establish a Business Excellence Index (BEI). This Index is a means of measuring customers, employees, and shareholders satisfaction simultaneously with an organisation, so as to obtain a comprehensive evaluation of the organisational performance (Kanji, 2002).

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The structural model links together the prime (leadership), the four principles (delight of customer, management by fact, people based management and Continous improvement) and the four core concepts (customer focus, process performance, people performance and improvement culture) to provide forces of excellence in an organisation.

F) Balanced Scorecard: The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and non-profit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. The balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve centre of an enterprise (balancedscorecard.org) G) Lynch and Cross Performance pyramid: Tonchia and Quagini (2010) state that Performance measurement systems may be considered as one of the most interesting managerial innovations over recent years due to the fact that they pose themselves as the important link between strategic planning and operational control. They suggest that Pyramid models aim to synthesise low-level measurements, typically operating measurements in to higher level aggregate measures which translate into economic financial results. The most preferred model in this regard is the Lynch and Cross Performance Pyramid Model. Also known as SMART (Strategic Measurement Analysis and Reporting Techniques) as depicted below:

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They further state that the pyramid bricks represent the core performances to be measured. The different levels depict different performance measurement tools as depicted above.

H) ISO 9000 Standards: The ISO 9000 family addresses various aspects of quality management and contains some of ISO’s best known standards. The standards provide guidance and tools for companies and organizations who want to ensure that their products and services consistently meet customer’s requirements, and that quality is consistently improved.

There are many standards in the ISO 9000 family, including: ISO 9001:2008 - sets out the requirements of a quality management system ISO 9000:2005 - covers the basic concepts and language ISO 9004:2009 - focuses on how to make a quality management system more efficient and effective ISO 19011:2011 - sets out guidance on internal and external audits of quality management systems.

Source: http://www.iso.org/iso/iso_9000

I) Six Sigma Model: Six Sigma at many organizations simply means a measure of quality that strives for near perfection. Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving toward six standard deviations between the mean and the nearest specification limit) in any process – from manufacturing to transactional and from product to service (www.isixsigma.com) No business excellence discussion can be complete without the linkages of the above models with Total Quality Management (TQM). All the above models aim at bringing about TQM. The concept of TQM has been defined, covered and debated over many corporate and academic platforms across the globe. Several individuals like Deming, Juran, Crosby, Ishikawa and Feigenbaun have defined the concept in different ways but the crux and idea remains the same. Business excellence is a Continous process and every organisation seeks the same.

Conclusion: Today as the world becomes a global village in terms of trade and commerce, business that follow and integrate excellence practices would succeed. Business excellence would befit those organisations where communication channel is open and informal, managers and leaders are visible, solutions are found for problems promptly, emphasis is on learning and training of resources, there is a will to experiment and simplicity is an ingrained tool.

With many models to look forward for development, business houses can customise their needs and challenges and accordingly evaluate the application of the right model to achieve business excellence.

References: [1] Ackroyd, J., Coulter, B., Philips, P., and Read, A., (2003). Business excellence through resource efficiency (betre): An evaluation of the UKs highest recruiting facilitated self-help waste minimisation project. Elsevier. Volume 38. Issue 4. PP271-299. [Online] Available from:

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[2] http://www.sciencedirect.com/science/article/pii/S092134490200157X [Accessed date: 05/1/2013] [3] Boys, K., Wilcock, A., Karapetrovic, S., and Aung, M., (2005) "Evolution towards excellence: use of business excellence programs by Canadian organizations", Measuring Business Excellence, Vol. 9 Iss: 4, pp.4 – 15. [Online] Available from: http://www.emeraldinsight.com/journals.htm?issn=13683047&volume=9&issue=4&articleid=1529808&show. [Accessed date: 15/1/2013] [4] Egner, T., (2009). Mckinsey Seven S-model. Scholarly Research Paper. Germany: GRIN Verlag. ISBN 978-3-640-44325-3 [5] Jankalova, M., (2012). “Business excellence evaluation as the reaction on changes in global business environment”. Sciverse Science Direct. Procedia Social and Behavioural sciences. Vol. 62 (2012), pp 1056-1060.

[Online] Available from: http://ac.els-cdn.com/S187704281203621X/1-s2.0S187704281203621X-main.pdf?_tid=af3fdb1a-689c-11e2-832c00000aacb362&acdnat=1359303473_84c0e1a1f348873aea3946e0e257415b [Accessed date: 11/1/2013] [6] Jha, V., and Joshi, H., (2007). Relevance of TQM or Business Excellence Strategy Implementation for Enterprise Resource Planning – A Conceptual Study. [Online] Available from [7] http://mitiq.mit.edu/iciq/pdf/relevance%20of%20total%20quality%20management%20(tqm)%20or%20 business%20excellence%20strategy%20implementation%20for%20enterprise%20resource%20planning %20(erp)%20a%20conceptual%20study.pdf [Accessed date:27.1.2013] [8] Kanji, G., (2002). Measuring business excellence. First edition.

London: Routledge.

[9] Oakland, J., (1993). ‘Total quality Management - the route to improving performance’. Second Edition.

Oxford: Butterworth Heinemann Ltd. [10] Mohanty, R., (2008). Quality Management Practices. First Edition. New Delhi: Excel Books [11] Grigoroudis. and Siskos, Y., (2010). Customer Satisfaction Evaluation: Methods for measuring and Implementing Service Quality. International Series in Operations Research and Management Science.

Springer.

[Online] Available from: http://books.google.co.in/books?id=WsFigUeZO1YC&pg=PA61&dq=kanji's+business+excellence+mod el&hl=en&sa=X&ei=cicFUZmKNoj_rAeU_oDoBA&ved=0CDwQ6AEwAg#v=onepage&q=kanji's%2 0business%20excellence%20model&f=false. [Accessed date: 19/12/2012].

[12] Pfeifer, T., (2002). Quality Management - Strategies, Methods and Techniques. USA: HanserGardner Publications, Inc. [13] Sallis, E., (2002). Total Quality Management in Education. Third Edition. London: Kogan Page Ltd. [14] Tonchia, S., and Quagini, L., (2010). Peformance Measurement. New York: Springer. [Online] Available from: [15] http://books.google.co.in/books?id=jk84zLsXT0sC&pg=PA44&dq=lynch+and+cross+pyramid&hl=en& sa=X&ei=yEAFUfbYB5HqrQfo4YCYAg&ved=0CDAQ6AEwAA#v=onepage&q=lynch%20and%20cr oss%20pyramid&f=false. [Accessed date: 11/1/2013] [16] Yearwood and Gestsson (2010).

UN Lecture Series.

[Online]: http://www.unuftp.is/static/files/short_courses/Leadership_CRFM_2010/D1P3_Handout_Building%20E xcellence.pdf [Accessed date: 20/12/2012] [17] http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx [18] http://www.efqm.org/en/tabid/132/default.aspx [19] http://www.icmrindia.org/casestudies/catalogue/Operations/OPER021.htm [20] http://www.icmrindia.org/casestudies/catalogue/Operations/Implementing%20Tata%20Business%20Exc ellence%20Model%20in%20Tata%20Steel.htm [21] http://www.isixsigma.com/new-to-six-sigma/getting-started/what-six-sigma/ [22] http://www.iso.org/iso/iso_9000 [23] http://www.tompeters.com/docs/7SHistory.pdf ****

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THE MYTH CALLED CORPORATE GOVERNANCE WITH SPECIAL REFERENCE TO INDIA Prof : Hemant Wanjare, Sandip Institute of Technology and Research Center, Mahiravani, Tirmbak Road, Nashik, India.

ABSTRACT The present paper aims at critically reviewing the Corporate Governance in India. Corporate Governance has gained a lot of importance and momentum the world over, But in India particular lost its relevance. The objective of any corporate governance system is to simultaneously improve corporate performance and accountability as means of attracting financial and human resources on the best possible terms and of preventing corporate failure. In short Corporate Governance is about promoting corporate fairness, transparency and accountability. But on a contrary has turned out to be just a new buzz word which when introspected means nothing but a formality Keywords: Corporate Governance, Corporations.

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Introduction: Definition and meaning of corporate governance: “Corporate governance is not a matter of right or wrong - it is more nuanced than that.”

Advocate Johan Myburgh “Corporate governance is about owners and the managers operating as the trustees on behalf of every shareholder – large or small.”

N. R. Narayana Murthy,Chief Mentor, Infosys Technologies Limited As Mr. Myburgh rightly says that Corporate Governance is not just a matter of right or wrong, rather it has much broader & different implications. Let us first define corporate governance in the light of available literature, it says: “Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, the board of directors, employees, customers, creditors, suppliers, and the community at large.”

From the above definition, we can easily say that corporate governance is a multi-faceted subject. One of the important tasks of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem.

As we are studying the scenario of corporate governance in the Indian context, let us consider the definition of corporate governance given by Securities & Exchange Board of India (SEBI) as well. According to them, corporate governance is: “The acceptance, by management, of the inalienable rights of shareholders as the true owners of the corporation and of their own role as trustees on behalf of the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal & corporate funds in the management of a company.”

This definition has been drawn from the Gandhi an principles of trusteeship and the Directive Principles of the Indian Constitution where Corporate governance is viewed as business ethics and a moral duty. We can understand that corporate governance needs a proper framework of the following items for its proper implementation & safeguarding the interests of all associated parties: Board of Directors Business Practices and Ethics Legal and Regulatory policies Disclosure and Transparency Proper Communication Legal Aspects of Corporate Governance: A. Committee on Corporate Governance: There are various committees formed with a view to reforming the Corporate Governance in India since 1990s.

Some of the recommendations of these committees are highlighted below.

1. Confederation of Indian Industries (CII) set up a task force in 1995 under Rahul Bajaj, a reputed industrialist. In 1998, the CII released the code called “Desirable Corporate Governance”. It looked into various aspects of Corporate Governance and was first to criticize nominee directors and suggested dilution of government stake in companies.

2. SEBI had set up a Commission under Kumarmanlagam Birla. This committee covered issues relating to protection of investor interest, promotion of transparency, building international standards in terms of disclosure of information.

3. The Department of Companies Affairs (DCA) modified the Companies Act, 1956. It undertakes periodic review and brings about amendments in the Companies Act, 1956. In 1999, the Act introduced the provision relating to nomination facilities for shareholders and share buybacks and for formation of Investor education and protection fund.

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4. The Department of Corporate Affairs constituted Naresh Chandra Committee in 2002. The committee talks extensively about the statuary auditor-company relationship, rotation of statutory audit firms/partners, procedure for appointment of auditors and determination of audit fees, true and fair statement of financial affairs of companies.

5. SEBI appointed Narayan Murthy Committee in 2002.Its report mainly focuses on and makes mandatory recommendations regarding responsibilities of audit committee, quality of financial disclosure, requiring boards to assess and disclose business risks in the company’s annual reports.

B. Clause 49 of the Listing Agreement: After liberalization serious efforts have been made towards overhauling the system with SEBI formulating the Clause 49 of the Listing Agreements dealing with corporate governance.

Clause 49 of the Listing Agreement to the Indian stock exchange comes into effect from 31 December 2005. It has been formulated for the improvement of corporate governance in all listed companies. Clause 49 of Listing Agreements, as currently in effect, includes the following key requirements.

• Board Independence: Boards of directors of listed companies must have a minimum number of Independent Directors. Where the Chairman is an executive or a promoter or related to a promoter or a senior official, then at least one-half the board should Directors should be restricted to six-year terms. They must leave for three years before serving another term, and they may not serve more than three tenures for a company.

Apart from this various provision have been made for effective corporate governance they as stated Remuneration of Directors: • Independent Directors should have the ability to meet with managers and should have access to information.

Remuneration of Directors • NEDs should be paid either a fixed fee or a percentage of profits. Whichever payment method is elected should apply to all NEDs. NEDs paid with stock-options should hold onto those options for three years after leaving the board.

• Independent Directors should not be paid with stock options or profit-based commission.

• The Remuneration Committee should have at least three members with the majority of NEDs, and at least one Independent Director. Their decisions should be made available in the Annual Report.

Duties of the Board: • • • • •

The Board should provide training for the directors.

The Board should enable quality decision-making by giving the members timely access to information.

The Board should put in systems of risk management and review them every six months.

The Board should review its own performance annually and state its methods in its Annual Report.

The Board should put in a system to ensure compliance with the law, which should be reviewed annually.

All agenda items should be assessed for its impact on minority shareholders.

Audit Committee of Board: • The Audit Committee should be composed of at least three members, with Independent Directors in the majority and an Independent Director as the chairperson.

• The Audit Committee is responsible for reviewing the integrity of financial statements, the company’s internal financial controls, internal audit function and risk management systems. The Audit Committee should also monitor and approve all Transactions.

Auditors: o The Audit Committee should be consulted on the selection of auditors. The committee must be supplied with relevant information about the auditing firm. o Every auditor should provide a certificate stating his/her/its arm’s length relationship with the client

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company. o The audit partner should be rotated every three years; the firm should be rotated every five years. Audit partners should have a cooling off period of three years before they work with the client company again; the firm should have a cooling off period of five years.

To summarize corporate governance is about commitment to values, about ethical business conduct and about making a distinction between personal and corporate funds in the management of a company.

1. Corporate Governance consists of procedures and processes according to which an organization is directed and controlled.

2. The Corporate Governance structure specifies the distribution of rights and responsibilities among the different participants in the organisation such as the board, managers, shareholders and other stakeholders and lays down the rules and procedures for decision-making 3. Corporate Governance is about promoting corporate fairness, transparency and accountability 4. In simple terms Corporate Governance can be defined as a set of laws, rules, regulations, systems, principles, process by which a company is governed The Major Frauds and Corruption Scandal in India: The power of compounding seems to be working overtime when one counts the addition of zeroes to the size of scams hitting India. Over the past 4 years, the numbers have been mind boggling! Corruption has been a menace that has hit the Indian economy harder than any natural disaster. Unfortunately, the roots of the same have been so widespread over the decades that tackling it has been a tall order An interesting article in the Wall Street journal had put into perspective how the government could have utilized the funds from the 2G spectrum had no scandal taken place. Food for every destitute Indian for the next decade. Funding of the flagship employment program for India's marginalized for the next five years.

Primary schooling for every Indian girl for the next three years. The reduction in every Indian's tax rate by 15% for the next year, or the reduction of India's outstanding debt by 10%. Thus the absence of the scams over the past 2 decades could have meant a huge boost to the Indian economy. But the chronology of scams shows that policy inaction has left the culprits more confident over the years. In fact, in the biggest scam in Indian history that was uncovered in 2010, members of the government itself were found responsible.

Chronology of scams in India Size* (Rs m) Bofors scam, 1989 400 Harshad M scam, 1992 6,000 Telgi scam, 1995 20,000 Hawala scandal, 1997 1,000 Ketan P scam, 2001 50,000 Satyam scam, 2008 90,000 CWG scam, 2010 80,000 2G spectrum scam, 2010 1,760,000 Overall corruption 15,550,000 Money laundering 18,860,000 Data source: Wikipedia, Equitymaster *Estimated numbers The synonymy of corruption with India has indeed left a bad taste in moth of global investors. Indian stocks witnessed a huge downgrade in valuations when the CWG and 2G scam were uncovered. Since then, investors have dumped every stock that has been even remotely in the news for being associated with a scam. But the problem does not end there. There's another scam that dwarfs absolutely everything that has occurred so far.

And this scam answers to the name of money laundering. As per the results of a study on corruption, published

by Rediff, the size of money laundered by Indians stands at staggering Rs 18.8 trillion. The same is apparently 1.2 times the overall size of corruption menace in the country.

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Conclusion: Since the late 1990s, significant efforts have been made by the Indian Parliament, as well as by Indian corporations, to overhaul Indian Corporate Governance. But hardly any action has been taken; the current Corporate Governance regime in Indian straddles both voluntary and mandatory requirements like Voluntary Guidelines by Ministry of Corporate Affairs. And for listed companies, the vast majority of Clause 49 of the listing agreements requirements is mandatory. The voluntary guideline on Corporate Governance by Ministry of Corporate Governance is a benchmark for the Corporate Governance practices in the Indian corporations, and hopefully the corporate world has made the best misuse of it. Which is evident but the size of the scams that have taken place? With the Latest amend of the Companies Act, 1956 (1 of 1956), by the parliament, India has one of the best Corporate Governance legal regimes but poor implementation. An effective & efficient structure for implementation and monitoring is the need of the hour or corporate governance would be just another dream which never came true References: [1] Colin Mayer, Corporate Governance, Competition, and Performance, Journal of Law and Society Volume 24, Issue 1, pages 152–176, March 1997.

[2] Simon Deakin, Alan Hughes, Comparative Corporate Governance: An Interdisciplinary Agenda, Journal of Law and Society Volume 24, Issue 1, pages 1–9, March 1997.

[3] Organization for Economic Development and Co-operation, European Central Bank, 2004, Annual Report: 2004, ECB, Frankfurt, Glossary.

[4] World Bank, Managing Development - The Governance Dimension, 1991, Washington.

[5] Voluntary Guidelines on Corporate Governance, The Ministry of Corporate Affairs, December 2009.

[6] Afra Afsharipour, A Brief Overview of Corporate Governance Reforms in India, UC Davis Legal Studies Research Paper Series. April 2011.

[7] Dimple Grover, Amulya Khurana, Ravi Shankar, The Regulatory Norms of Corporate Governance in India.

[8] Sadhalaxmi Vivek Rao, Legal Framework and corporate Governance: An Analysis of Indian Governance System [9] Prabhash Dalei, Paridhi Tulsyan and Shikhar Maravi :Corporate Governance in India: A legal Analysis [10] Website – Data source: Wikipedia, Equitymaster. ****

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OPTIMIZATION OF AVAILABLE RESOURCES IN PRESENT MARKET SCENARIO Magar Sharadkumar Dattatraya, Manager (Maintenance & EHS) Hoganas India Pvt. Ltd. Ahmednagar, India.

ABSTRACT Today’sbusiness environment is very different compared to past recessions, it is slow poisoning.

Everybody have business but nobody operating at its full capacity. Hence onward this will periodically bound to come after specific revolutionary period. Though this is temporary phase, we have to remain cautious to maintain our business for expected opportunities to utilize our full capacity in future. I have tried to compile simple steps to tackle present situation for better future.

Most of the remedies are observed effective in past, so it’s better to share them with all. Many of the controls are related to operational excellence as it has prime importance in the recession.

Keywords: Operational excellence,Optimization

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Introduction: Optimization of Available Resources in Present Market Scenario: How to maximize operational efficiency? Is a question that always becomes serious when recession in market.

We are going thru serious recession at present. We experienced same in Q4 2008, Q1 2009. Only difference between past and present situation is, we came out of situation in 2008-2009 within six months. Present situation is slow poisoning. At present we can’t stop our production,we have to run our business with certain decreased market.

It’s better to see, why this situation came?

• Rupee is weak for longer duration compared to dollar.

• Govt went on side track due to coalition at center. They were not able to force reforms in between for around one year.

• Energy prices are continuously rising.

• Greece and other European countries problem still on.

• Gulf crises and revolutions in various countries.

• China’s economy is also down compared to boom observed before Binging Olympics.

• Small investors don’tbelieve yet on our share market. People are not openly doing investments.

• Foreign direct investment is declining compared to previous track record.

• Draught situation in our state.

As a manager, what is in my hand? Answer is “nothing”!!!

It’s better to accept the situation and come out of it. We can do lot in operations for saving and helping ourselves to come out of situation. In my opinion following are the solutions, 1. Stop investing in new assets: For coming 3 to 4 quarters it is better, not to invest in new machines and buildings. Cash is very important we have to preserve it in good way. In new investments huge amount of money always gets blocked and its benefit starts after certain period. It’s always not possible that any new project will perform100% from the day first. Practically speaking you will not get benefit as expectation from day first.Depreciation affects seriously to cash flow. Cash inflow affects because of reduced market.

It is better to invest money in short term fixed deposits for investing in good assets when right time comes.

While accessing new investment many times proposer shows very bright future in it but in operation things happen differently because of pinholes in FMEA. It’s always better to maintain present by preserving for future. When economy is in boom condition, many times investment returns are with short span and profitable.

2. Resolve safety issues: Accidents and incidents takes organization back on moral of people. Don’t let them happen always be cautious. Record incidents and try to solve the issue from root. Decreased moral damages willingness of people and equally damages asset. It’s better to have regular interactions with operational people on dangerous acts and conditions. You have to invest essentially on safety measures because that pays in recession period to upgrade moral of people for efficient operations. They access management as a “Caring” though these periods affect salaries because of reduction in overtimes and incentives. Instead of accessing safety measures by management people, a meeting not more than an hour gives you lot of feedbacks on safety issues. It is important that management should have willingness to solve safety issues in a systematic manner and by prioritizing them.

3. Small improvements are better: Encourage people for coming up with new ideas. Small ideas received from operators and supervisor’s doesn’t require big investments. A person feels pride of their implemented idea. Don’t encourage cash prizes at all. Dinner with family, presentation in front of top management, and display of good ideas on notice board helps encouraging people for doing good work and continual improvements in operations.

4. Cross functional team’s (CFT’s) formation: Focused improvement programmes to be carried out for removing bottlenecks in operations. Many times ithelps to raise moral of people and production flow becomes smooth. Small improvements suggested earlier also can be done with CFT’s. CFT’s solutions are always fool proof and obtained by studying various angles of the production process. CFT’s should present their improvements in front of top management is systematic way. Whatever small saving archived

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by CFT count big in recession period. One percent saving on INR 500 is just INR 5 but in INR 5 Crore it is 5 Lakh. It helps in a great way to organization in recession period.

Alternative products: try to manufacture alternative products. It helps in improving product base.

Nobody knows which product will help you. It is not mean that one should always go for diversified product range. You have to utilize your strength to overcome on weakness. In this period we should relook at the product that we were not supplying customers because of production pressure in earlier days. This will help in utilization of plant and machinery to overcome the situation.

Saving target to all: All persons should work on savings independently in departments and combine for organization. People should be forced on that line to think and implement the things. Unnecessary overtimes and travels cost lot to organization. Target for its reduction is necessary. Savings in spares and raw material gives far better results than overtimes and travels. While dealing with supplier go with definite target price in mind, try to get desired price with good payment terms. Try to stretch supplier payment terms in line with customer payment terms. This reduces in-process capital investment.

Inventory reduction:Always think when rupee invested will be back. While controlling inventory one should consider raw material, in process material, finished goods as well as stock lying at warehouses. Lot of literature is available on inventory so we will not talk much about this in this paper. Thing to remember is it has prime importance in operational excellence.

Plan operations:one should plan operations by looking it into tariff structure of electricity board. All over world there is trend for good incentives on energy charges for night shift operations. Many times this saving contributes 7 to 8% of total electricity bill. Expenses made on man power to run night shift are many times negligible compared to benefit achieved out of it.

Understand the Govt schemes: one should always study Govt schemes available on taxation. On new investments state Govt gives good incentives thru tax benefits. There are many schemes available for giving training to people to encourage employment in future. Even we can go for bank guarantee instead of cash deposits with Govt authorities; only thing is it requires continuous follow up with the authorities.

Alternative sources for energy: With some modifications in present set up one can try alternative sources in fuel. Since we have recession we can do some trials in it. This is possible because much time there is no production pressure in day shifts because of recession.

Clear communication: With our behavior we have to communicate clear message on savings. Don’t go for big expensive nonproductive functions like annual day. Off course don’t avoid employee moral development programmes.

Not to launch new schemes: Don’t launch new schemes which are adding overhead cost without serious demand from employees. Try to cut possible expenses from present schemes for which people’s sentiment is not attached in larger dimension.

Check real need:In operations always ask why this process is essential? Is there any alternative way of doing this? And try to find loss in process. On equipment front always think, why equipment is placed? Is it with over capacity? Is this consuming proper electrical or any other energy? Is the conveyor route is proper? Definitely one can find lot of ways for savings in operation.

Technology Application: Try to utilize available technology of drives, sensors, process controllers in good way. Measurement of correct parameters is the key for success in saving in machines. “Whatever is measured can only be corrected” is the key for success in process control.Technologies like thermography, furan analysis in transformers are worth in recession because it shows the path for saving as well as correction in equipment ultimately resulting in rise of profit thru reliable and efficient operations.

Attack on waste:Ever waste costs. Try to analyze waste in your process. Act on it. Huge amount of saving is there thru waste reduction, which we not consider in high rate of production. There are examples of Lakhs of rupees saving even managing scrap yard properly. In waste reduction try to optimize byproduct production, study the percentage of it. Find out customers for byproduct. Many times product we are disposing without price may be valuable for somebody. Controlling process thru instrumentation always helps us to reduce the waste in process. When process is okay, your product is bound to be okay on all tests, so concentrate deeply on process. Even repetitive checking of final product is waste. Process control is more important because more samples than required cost us considerably in lab along with chances of passing non confirming product in-between thru running continuous process.

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There are many more remedies for getting success in recession. We have to attack above said primary happenings at day to day operations. We can control said remedies for getting benefits of coming better future to us and our country.

References: [1] [2] [3] [4]

Energy Blitz Bi Monthly Magazine Bureau of Energy Efficiency text books “The Goal” book written by Dr. Eli Goldratt Kobetsu Kaizen Manual by CII ****

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BUSINESS EXCELLENCE MODEL – INDIAN PERSPECTIVE Ajay Sampat Shinde, SNJB’s KBJ COE MBA Department, Neminagar, Chandwad, India.

Prof. U. S. Kasar,

Dr. V . J . Gond.,

HOD SNJB’s KBJ COE MBA Department, Neminagar, Chandwad, India.

Principal, SNJB’s ,KBJ COE, MBA Department, Neminagar,Chandwad, India.

ABSTRACT Business today is being impacted by multiple forces and is under unprecedented pressure to perform. This paper examines the Indian Perspective in the manufacturing and services sector .The key to performance lies in anticipating the future and working towards it. This gives us a clear cut question-How much of its resources is the company putting in renewal and innovation, i.e., in activities like R&D, quality and process improvement, industrial design, market research and so on.? This paper briefly surveys the Indian perspective and quotes examples of innovation, or lack of it, in sectors such as automobiles , FMCG, telecom etc.

Keywords: Perspective, innovation, Business excellence, process improvement

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Introduction: Business today is being impacted by multiple forces- economic shocks, atomization of markets, and demand, borderless commerce, advances in technology, a sense of acceleration, and deconstruction of business.

Moreover, from a monolithic markets of pre- nineties, the status has now shifted to that of micro segmentation, multiple competitors, and short product cycles.

Of the 100 largest US companies in the beginning of 1990’s , only 16 exist now. Of the Fortune 500 companies , only 15 figured in the top 100 list in 2010 as compared to the fifties. Obviously size does not guarantee continued success nor does agood reputation. This applies equally well to India. We have seen the disappearance of reputed companies like Metal Box and Western TV in the eighties and overnight collapse of an industry leader like Pertech Computers in the nineties.

Clearly, business is under an unprecedented pressure to perform. The time to repair the roof is when the sun is shining. So innovative activities are best carried out when the business is going fine rather than as a knee jerk reaction to market forces.

There have been some Indian companies doing a good job but the majority seems to be ill-prepared to meet the global onslaught. In this context this paper examines the following issues, What is the concept of innovation?

How do Indian companies achieve a grasp of it?

Is innovation an ongoing process?

Should companies strive for breakthrough innovations and developments or focus on continuous improvements.?

“It is not the strongest who survive nor the most intelligent- but those most responsive to change” ( Charles Darwin). If this is true, are the Indian companies doing enough to respond to the changing times? While many companies are adapting fast, there are many that are still to awake to the changing times.

Total Quality Management has made impressive inroads in to manufacturing and service sectors.

Organizations have finally realized the difference between seeking as ISO certification and launching a process to improve continuously. The manufacturing and service sector are focusing on aspects like lean management, TQM, Quality circles, six sigma, kaizen and benchmarking to drive improvement. Organizations have also been using various business excellence models to drive their improvement. There are many reasons that go into making process improvement the most challenging exercise.

As we have moved into 21st century , what are the key traits required in an organization to achieve excellence?

These are as follows, Having key customer insights Focusing business strategies on customer value Upgrading knowledge and processes Management by facts, figures and feedback.

In the Indian perspective, it is mainly the MNCs , driven by their global presences, that are driving business excellence. The same culture need to be cultivated by the Indian companies be they large or medium ones.

Innovation: What is the past record of Indian companies when it comes to innovation? We have seen design improvements in the B car segment with Santro taking a clear lead on the basis of its superior industrial design. Similarly there have been plenty of feature improvements in almost all brands of refrigerators like LG, Godrej, Kelvinator etc. The FMCG sector has not lagged behind either. There have been packaging innovations like the jar for Parachute coconut oil for winters; improved keep fresh packaging in some tea brands; new pack of Bisleri; and the virtual small pack revolution in the entire FMCG sector with most branded shampoos, soft drinks, and other products including Vaseline joining the bandwagon.

While the impressive strides have been made by certain companies, the same can not be said of the entire Indian industry. It is mostly the MNCs driven by their worldwide processes that have been on the forefront of innovation. There have been some Indian companies too doing a good job but the majority seems to be illprepared to meet the global onslaught.

Nevertheless, what is an innovation? How do Indian companies achieve a grasp of it? Is innovation an ongoing

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process? Should companies strive for breakthrough developments or should be focus on continuous improvements? Many of us believe that it is the latter that is the key to sustained growth. Nestle, for instance, is an unabashed practitioner of continuous improvements in small measures and is quite cynical about revolutionary breakthroughs.

Many Indian companies are focusing on innovation through the design or R & D route. Whatever route companies may take , innovation is a discipline that needs to be studied and deployed in a systematic way .Companies can gain a better understanding on this subject by attending training seminars on subjects like Six Sigma, TQM and innovative seminars organized by Industry associations and management institutions.

Responsiveness to Change: As we know the world is changing. If this is true, are the Indian companies doing enough to respond to the changing times.? The marketplace does not provide adequate evidence to that effect.

Chinese goods with their good quality and competitive prices are capturing the market but the Indian industry is yet to catch on. The e-revolution is gaining ground but we are yet to see a widespread e-commerce here. A few companies that have tried it out have not been successful. One example of a successful e-commerce is the online ticket reservation system of the Indian railways. Its website www.irctc.com provides complete information train time table, PNR status, ticket availability and fare. The site also offers facilities like online payment through cards and prompt delivery of tickets.

Responsiveness to change is evident in telecom and banking sector .While the anytime money concepts of ATMs has mushroomed in a big way, the new emphasis is on sharing of ATMs by the banks to manage the cost and speed aspects of this service.

Technology and competition are making sure that the service providers continually stay in tune with the changing requirements of the consumers.

Responsiveness to change and respect for India’s market is most evident in the latest launch of an “Indian Specific” Vector shaving system by Gillette which promises to overcome the problem of cleaning between twin blade edges in a market where running water is a luxury.

Total Quality Management: TQM has made impressive inroads in the manufacturing and service sectors. The shape of TQM in different organizations may be different but there are obvious similarities in terms of three basics factors: Demonstration of management’s commitment Involvement of employees across the organization Building of support systems to help continuous improvement The TQM initiative has been moving forward under different banners but, faced by different competition, demanding consumers, and the needs of global customers, it has gathered momentum in last few years.

The service sector has been using the Six sigma banner to further its movement. Benchmarking is common thread between the two sectors to drive improvement. Organizations have also been using variations of business excellence models to drive their improvement.

A business excellence model like the EFQM can serve as effective guide for companies seeking to enhance their quality(Exhibit 1).The models focus on results and enablers. Customer satisfaction and business results are the two critical aspects of results while business processes are the key enabler to drive excellence.

Moreover, it is this component in particular that prove to be the waterloo for most companies.

Personal involvement of CEO in building an organizational culture conducive to business excellence.

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Total, visible and emphatic commitment from senior management to TQM. Strong employee motivation.

Unique and successful application of tools such as policy management, measurement of customer satisfaction, and people satisfaction.

Integration of total quality principles in the business philosophy of the company.

Process Improvement: Why Is It So Difficult?

There are many reasons that go into making process improvement the most challenging exercise . First of all, a new process can be generated only after a thorough study of existing processes has been undertaken and by taking inputs from the entities that are touched by process. Secondly, a new process needs to be conceptualized and a buy-in taken from all the stakeholders including top managers across the departments. This itself would mean a substantial amount of work. Next the technology change , small or big, required for setting up the new process needs to be implemented. Then, several employees in various departments and in the field including even the customers sometimes need to be trained on the new process.

Apart from resistance to change, gaps in their understanding or absenteeism –in training can undermine the implementation of the new process.

Finally, the process needs to go through a trial and error method of testing before it may find a place in the scheme of things. Each of these steps may take weeks, and not surprisingly, only a few companies have the perseverance to pursue the process improvement. Yet, if properly implemented, this is one activity that will directly impact customer satisfaction in big way.

Success Mantra For Business Excellence: As we move into the 21st century , the mantra for eternally successful organization in my opinion needs to have following components., Special Insights Into need the needs of the customers: At times, the customer problem stares in the face of a company and so is the solution. However , the company continues to remain a prisoner of its ways. Because most of the companies are reluctant to go in for innovative solutions which comes in their way.

Business Strategies Focus on Customer Value: Many large companies remain stuck in their operating models and real change comes only with the new generation of entrepreneurs. For instance, Michael Dell pioneered the direct ordering model for PCs and reaped huge profits. Till today, his competitors are finding it difficult to adopt this proven model.

Quality Commitment At All Levels: Quality is mainly a matter of practice and requires implementation of proper principles. Production should be done on the philosophy,” Quality is obtained by doing our work carefully and not quickly” Constantly Updating Products And Processes: Customer feedback can be a powerful input to spot areas where the company needs to work. For instance, we have all bought a cassette recorder but how many of us have used its recording head? If the manufacturers can drop the recording head from the product, the customers can save up to five percent of cost.

Similarly there are components in processes which adds to delays rather than solving a customer’s problem quickly.

Management by figures, facts and feedback: Most large companies, including HP , conduct periodic satisfaction surveys among customers, channel and employees. These serves as a useful feedback mechanism for course of action and correction. Indian companies of all sizes would do well to emulate this practice.

Conclusion: In the Indian perspective, it is mainly the MNCs driven by their global processes that are driving the business excellence successfully.

The same need to be cultivated by the Indian companies be they large or medium ones.

They need to focus on innovation and responsiveness to change, quality and process improvement, adoption

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of sound values, and management by facts and feedback.

In the global scenario, this may well turn out to be the difference between survival and demise.

References: [1] [2] [3] [4]

‘Measuring Business Excellence’ by Gopal A Kanji.

Total Quality Management, L. Suganthi a.Samuel Mastering Change, Sarah Sutton.

Jain Ankur, Business excellence through integration of TQM ****

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INNOVATIVE ENTREPRENEURSHIP – CHALLENGES & PERSPECTIVES

Dr. S. K. Wadekar,M.Com., M. Phil, Mba, Ph.D. Asso. Prof. & Hod. (Insurance &Transport) Dept. Of Commerce, Msg College, Malegaon Camp Nashik, India.

ABSTRACT True entrepreneurs are resourceful, passionate and driven to succeed and improve. They're pioneers and are comfortable fighting on the frontline. The great ones are ready to be laughed at and criticized in the beginning because they can see their path ahead and are too busy working towards their dream. An entrepreneur is a businessperson who not only conceives and organizes ventures but also frequently takes risks in doing so. Not all independent business people are true entrepreneurs, and not all entrepreneurs are created equal. Different degrees or levels of entrepreneurial intensity and drive depend upon how much independence one exhibits, the level of leadership and innovation they demonstrate, how much responsibility they shoulder, and how creative they become in envisioning and executing their business plans. This paper focuses and provides an insight into the meaning, qualities required for an entrepreneur, opportunities and challenges faced by them and at last with a small discussion on entrepreneurship as a career.

Keywords: passionate, innovation, intra-preneurship, corporate venturing, Global Entrepreneurship Monitor, venture capital

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Introduction: Entrepreneurship comes from the French verb 'entreprendre' which means 'To undertake', is the act and art of being an entrepreneur or one who undertakes innovations or introducing new things, finance and business acumen in an effort to transform innovations into economic goods. This may result in new organizations or may be part of revitalizing mature organizations in response to a perceived opportunity. The most obvious form of entrepreneurship is that of starting new businesses (referred as Startup Company); however, in recent years, the term has been extended to include social and political forms of entrepreneurial activity. When entrepreneurship is describing activities within a firm or large organization it is referred to as intra-preneurship and may include corporate venturing, when large entities spin-off organizations.

According to Paul Reynolds, entrepreneurship scholar and creator of the Global Entrepreneurship Monitor, "by the time they reach their retirement years, half of all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business creation is a common activity among U.S. workers over the course of their careers." And in recent years has been documented by scholars such as David Audretsch to be a major driver of economic growth in both the United States and Western Europe. "As well, entrepreneurship may be defined as the pursuit of opportunity without regard to resources currently controlled (Stevenson, 1983)" Entrepreneurial activities are substantially different depending on the type of organization and creativity involved. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many "high value" entrepreneurial ventures seek venture capital or angel funding (seed money) in order to raise capital to build the business. Angel investors generally seek annualized returns of 20-30% and more, as well as extensive involvement in the business. Many kinds of organizations now exist to support would-be entrepreneurs including specialized government agencies, business incubators, science parks, and some NGOs. In more recent times, the term entrepreneurship has been extended to include elements not related necessarily to business formation activity such as conceptualizations of entrepreneurship as a specific mindset (see also entrepreneurial mindset) resulting in entrepreneurial initiatives e.g. in the form of social entrepreneurship, political entrepreneurship, or knowledge entrepreneurship have emerged.

History: The entrepreneur is a factor in microeconomics, and the study of entrepreneurship reaches back to the work of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries, but was largely ignored theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in business and economics in the last 40 years.

In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. In Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship employs what Schumpeter called "the gale of creative destruction" to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including new business models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. The supposition that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory and as such is hotly debated in academic economics. An alternate description posited by Israel Kirzner suggests that the majority of innovations may be much more incremental improvements such as the replacement of paper with plastic in the construction of a drinking straw.

For Schumpeter, entrepreneurship resulted in new industries but also in new combinations of currently existing inputs. Schumpeter's initial example of this was the combination of a steam engine and then current wagon making technologies to produce the horseless carriage. In this case the innovation, the car, was transformational but did not require the development of a new technology, merely the application of existing technologies in a novel manner. It did not immediately replace the horse drawn carriage, but in time, incremental improvements which reduced the cost and improved the technology led to the complete practical replacement of beast drawn vehicles in modern transportation. Despite Schumpeter's early 20th-century

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contributions, traditional microeconomic theory did not formally consider the entrepreneur in its theoretical frameworks (instead assuming that resources would find each other through a price system). In this treatment the entrepreneur was an implied but unspecified actor, but it is consistent with the concept of the entrepreneur being the agent of x-efficiency.

Different scholars have described entrepreneurs as, among other things, bearing risk. For Schumpeter, the entrepreneur did not bear risk: the capitalist did.

Concept: It has assumed super importance for accelerating economic growth both in developed and developing countries.

It promotes capital formation and creates wealth in country. It is hope and dreams of millions of individuals around the world. It reduces unemployment and poverty and it is a pathway to prosper. Entrepreneurship is the process of exploring the opportunities in the market place and arranging resources required to exploit these opportunities for long term gain. It is the process of planning, organizing, opportunities and assuming. Thus it is a risk of business enterprise. It may be distinguished as an ability to take risk independently to make utmost earnings in the market. It is a creative and innovative skill and adapting response to environment.

Promotion Given entrepreneurship's potential to support economic growth, it is the policy goal of many governments to develop a culture of entrepreneurial thinking. This can be done in a number of ways: by integrating entrepreneurship into education systems, legislating to encourage risk-taking, and national campaigns. An example of the latter is the United Kingdom's Enterprise Week.

Outside of the political world, research has been conducted on the presence of entrepreneurial theories in doctoral economics programs. Dan Johansson, fellow at the Ratio Institute in Sweden, finds such content to be sparse. He fears this will dilute doctoral programs and fail to train young economists to analyze problems in a relevant way.

Many of these initiatives have been brought together under the umbrella of Global Entrepreneurship Week, a worldwide celebration and promotion of youth entrepreneurship, which started in 2008. Empirical evidence obtained from real-world data also suggests that in transition economy and in troubled times, entrepreneurship and creativity are factors that can save the corporate sector from plunging into a downward spiral of unemployment, downsizing and further chaos.

What is entrepreneurship?

Who is an entrepreneur?

An entrepreneur is a person who develops a new idea and takes the risk of setting up an enterprise to produce a product or service, which satisfies customer needs. All entrepreneurs are businesspersons, but not all businesspersons are entrepreneurs. Let us now think of why all businesspersons are not entrepreneurs. Think of a woman who sits by the roadside leading to your home and who has been selling the same type of food, from the same size of saucepan or pot, from the same table top, and may not have been able to change her standard of living to any appreciable extent. Such a woman may be a businessperson but not an entrepreneur. The entrepreneur, on the other hand is the businessperson who is not satisfied with his/her performance and therefore always finds ways to improve and grow.

Now let us consider the characteristics or some special qualities and strengths, which make an entrepreneur different from a businessperson. It is important for us to note that a successful entrepreneur possesses the following characteristics.

Initiative: An entrepreneur takes actions that go beyond job requirements or the demand of the situation. They Crate ideas that bring about phenomenal changes

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Opportunity seeking: An entrepreneur is quick to see and seize opportunities. He/she does things before he/she is asked to work by people or forced by situation.

Persistence An entrepreneur is not discouraged by difficulties and problems that come up in the business or his/her personal life. Once she sets a goal she is committed to the goal and will become completely absorbed in it.

Information seeking: An entrepreneur undertakes personal research on how to satisfy customers and solve problems. He/she knows that different people have different capabilities that can be of help to them. He/she seeks relevant information from his/her clients, suppliers, competitors and others. He/she always wants to learn things, which will help the business to grow.

Demand for quality and efficiency: An entrepreneur is always competing with others to do things better, faster, and at less cost he/she strives to achieve excellence.

Risk taking: Are you afraid of uncertainties? Then you cannot be an entrepreneur. Entrepreneurs are not high-risk takers.

They are also not gamblers; they calculate their risks before taking action. They place themselves in situations involving moderate risk so they are moderate risk takers.

Goal setting: An entrepreneur sets meaningful and challenging goals for him/herself. An entrepreneur does not just dream.

Him/she thinks and plans what he/she does. He/she is certain or has hope about the future.

Commitment to work: An entrepreneur will work long hours after into the night just to be able to keep his/her promise to his/her client. He/she does the work together with his/her workers to get a job done. He/she knows how to make people happy to work for him/her due his/her dynamic leadership.

Systematic planning and monitoring: An entrepreneur plans for whatever he/she expects in the business. He/she does not leave things to luck.

He/she plans by breaking large tasks down into small once and puts time limits against them. Since and entrepreneur knows what to expect at anytime he/she is able to change plans and strategies to achieve what he/she aims at.

Persuasion and networking: An entrepreneur acts to develop and maintain business contacts by establishing good working relationship.

Uses deliberate strategies to influence others.

Independence and self-confidence: Most entrepreneurs start business because they like to be their own boss. They are responsible for their own decisions.

Characteristics of an entrepreneur Entrepreneurs have many of the same character traits as leaders, similar to the early great man theories of leadership; however trait-based theories of entrepreneurship are increasingly being called into question.

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Entrepreneurs are often contrasted with managers and administrators who are said to be more methodical and less prone to risk-taking. Such person-centric models of entrepreneurship have shown to be of questionable validity, not least as many real-life entrepreneurs operate in teams rather than as single individuals. Still, a vast literature studying the entrepreneurial personality argues that certain traits seem to be associated with entrepreneurs: • ¥ Bird - mercurial, that is, prone to insights, brainstorms, deceptions, ingeniousness and resourcefulness.

They are cunning, opportunistic, creative, and unsentimental.

• ¥ Busenitz and Barney - prone to overconfidence and over generalizations.

• ¥ Cole - found there are four types of entrepreneur: the innovator, the calculating inventor, the overoptimistic promoter, and the organization builder. These types are not related to the personality but to the type of opportunity the entrepreneur faces.

• ¥ Collins and Moore - tough, pragmatic people driven by needs of independence and achievement. They seldom are willing to submit to authority.

• ¥ Cooper, Woo, & Dunkelberg - argue that entrepreneurs exhibit extreme optimism in their decisionmaking processes.

• ¥ John Howkins - focused specifically on creative entrepreneurship. He found that entrepreneurs in the creative industries needed a specific set of traits including the ability to priorities ideas over data, to be nomadic and to learn endlessly.

• ¥ David McClelland - primarily motivated by an overwhelming need for achievement and strong urge to build.

Qualities: 1. Disciplined: These individuals are focused on making their businesses work, and eliminate any hindrances or distractions to their goals. They have overarching strategies and outline the tactics to accomplish them. Successful entrepreneurs are disciplined enough to take steps every day toward the achievement of their objectives.

2. Confidence: The entrepreneur does not ask questions about whether they can succeed or whether they are worthy of success.

They are confident with the knowledge that they will make their businesses succeed. They exude that confidence in everything they do.

3. Open Minded: Entrepreneurs realize that every event and situation is a business opportunity. Ideas are constantly being generated about workflows and efficiency, people skills and potential new businesses. They have the ability to look at everything around them and focus it toward their goals.

4. Self Starter: Entrepreneurs know that if something needs to be done, they should start it themselves. They set the parameters and make sure that projects follow that path. They are proactive, not waiting for someone to give them permission.

5. Competitive: Many companies are formed because an entrepreneur knows that they can do a job better than another. They need to win at the sports they play and need to win at the businesses that they create. An entrepreneur will highlight his or her own company’s track record of success.

6. Creativity: One facet of creativity is being able to make connections between seemingly unrelated events or situations.

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Entrepreneurs often come up with solutions, which are the synthesis of other items. They will repurpose products to market them to new industries.

7. Determination: Entrepreneurs are not thwarted by their defeats. They look at defeat as an opportunity for success. They are determined to make all of their endeavors succeed, so will try and try again until it does. Successful entrepreneurs do not believe that something cannot be done.

8. Strong people skills: The entrepreneur has strong communication skills to sell the product and motivate employees. Most successful entrepreneurs know how to motivate their employees so the business grows overall. They are very good at highlighting the benefits of any situation and coaching others to their success.

9. Strong work ethic: The successful entrepreneur will often be the first person to arrive at the office and the last one to leave. They will come in on their days off to make sure that an outcome meets their expectations. Their mind is constantly on their work, whether they are in or out of the workplace.

10. Passion: Passion is the most important trait of the successful entrepreneur. They genuinely love their work. They are willing to put in those extra hours to make the business succeed because there is a joy their business gives, which goes beyond the money. The successful entrepreneur will always be reading and researching ways to make the business better.

Successful entrepreneurs want to see what the view is like at the top of the business mountain. Once they see it, they want to go further. They know how to talk to their employees, and their businesses soar as a result.

India Specific Entrepreneurship Challenges are; Family Challenges: Convincing to opt for business over job is easy is not an easy task for an individual. The first thing compared is – Will you make more money in business of your choice or as a successor of family business. This is where it becomes almost impossible to convince that you can generate more cash with your passion than doing what your Dad is doing.

Social Challenges: Family challenges are always at the top because that is what matter the most but at times social challenges also are very important. Let us say you and your friend graduated at the same time. You opted for entrepreneurship and your friend opted for a job. He now has a flat, car and what not because he could easily get those with a bank loan but you still have nothing to show off and this is where challenge comes.

Technological Challenges: Indian education system lags too much from the Job industry as a whole but then it lags even more when it comes to online entrepreneurship. What technology would be ideal and how to use that technology effectively?

Financial Challenges: (Difficulty in borrowing fund): Financial challenges are a lot different in India especially for online entrepreneurs. When you are starting out as an entrepreneur you don’t opt for venture funding but try to go with funding from small to medium business people. Many such non-technical business people don’t understand the online business models as a whole and so getting an initial business funding from them becomes challenging. The other option you can think of is loan but bank loan is not at all an option in India for new online entrepreneurs.

Policy Challenges: Now and then there is lot of changes in the policies with change in the government.

Problems of TRIPS and TRIMS. Problems of raising equity capital Problems of availing raw materials. Problems of obsolescence of indigenous technology Increased pollutions Ecological imbalanced. Exploitation of small and poor countries, etc.

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Opportunities: Improved risk taking ability. Governments of nations withdrawn some restrictions Technology and inventions spread into the world. Encouragement to innovations and inventions. Promotion of healthy completions among nations Consideration increase in government assistance for International trade. Establishment of other national and international Institutes to support business among nations of the world. Benefits of specialization.

Social and cultural development Conclusion: “(Most entrepreneurs) simply got tired of working for others, had a great idea they wanted to commercialize, or woke up one day with an urgent desire to build wealth before they retired. So they took the big leap.”

The country’s economic policy environment must be Favorable for organizations to achieve efficiencies in todays Global market. It should enable the entrepreneurs to provide a Magical touch to an organization, whether in public or private or joint sector, in achieving speed, flexibility, innovativeness, and a strong sense of self-determination. They bring a new Vision to the forefront of economic growth of a country. The Study of entrepreneurship has relevance today, not only Because it helps entrepreneurs better fulfill their personal needs but because of the economic contribution of the new Ventures. More than increasing national income by creating New jobs, entrepreneurship acts as a positive force in Economic growth by serving as the bridge between innovations and market place.

References: [1] [2] [3] [4]

Michael Lynchey R.V. Bedi & N.V. Bedi Selichro Yonekura Vasant Desai

Entrepreneur & Organization Entrepreneurship Development Entrepreneur & Organization Dynamic Entrepreneurial Development & Management ****

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CORPORATE GOVERNANCE IN INDIA : CONTEMPORARY ISSUES Prof. Rahul G.Thorat,

Prof. Trupti N. Kharche,

Assistant Professor Brahma Valley College of Engineering & Research Institute, Anjaneri, Nashik, India.

Assistant Professor Brahma Valley College of Engineering & Research Institute, Anjaneri, Nashik, India.

ABSTRACT Corporate governance plays an important role in company’s growth and expansion. It has direct impact on company’s share prices and cost of Capital, because corporate governance deals with the stakeholder’s interest.

This research paper reveals the concept & importance of corporate governance in the progress of a company. The objective of any corporate governance system is to simultaneously improve corporate performance and accountability as a means of attracting financial and human resources on the best possible terms. Corporate governance is not only about the looking for the share holder’s interest but also thinking about the supplier, consumer, employees or the Community at large means economy as whole. In short Corporate Governance is about promoting corporate fairness, transparency and accountability.

In this paper researchers are focusing on the Framework of Corporate Governance which is helpful to the system and it also the important constituents of Capital Market in economy.

Keywords: Corporate Governance, Human Resource, Investors, Supplier, Stakeholders.

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Introduction: Corporate governance …And economic developments are intrinsically linked. Effective corporate governance systems promote the development of strong financial systems-irrespective of whether they are largely bankbased or market-based –which, in turn, have an unmistakably positive effect on economic growth and poverty reduction1.

Corporate governance refers to the set of systems, principles and processes by which a company is governed.

They provide the guidelines as to how the company can be directed or controlled such that it can fulfill its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others. Corporate Governance refers to the structures & processes or the efficient & proper direction & control of companies (both private and public) in the interest of all stakeholders2.

“Corporate Governance is the application of best Management Practices, Compliance of Laws in true letter and spirit and adherence to ethical standards for effective management and distribution of wealth and discharge of social responsibility for sustainable development of all stakeholders.3” Objectives Of The Study: 1. To understand the concept of Corporate Governance framework.

2. The fundamental objective of corporate governance is to enhance shareholders' value and protect the interests of other stakeholders by improving the corporate performance and accountability.

3. To analyze the importance of Corporate Governance Framework in India.

4. To highlight the role of Corporate Governance in value creation and.

5. To discuss the requirement of Unique Code of Conduct for implementing CG in India.

1. “Growth and dynamics of corporate governance in India”, Dr. Iti Bose Indian Institute of Technology, Bombay 2. “ What is Corporate Governace” -Lisa Mary Thomson, ET Bureau Jan 18, 2009 3. Institute of Company Secretaries of India- Statutory Body of India Data Source And Methodology: This Research study is in explorative nature, the study depended on Primary sources as well as secondary Sources of data. It uses both primary and secondary data for analysing the background and adoptability of good codes of Corporate Governance in the Indian context. The primary data to the extent of Corporate Governance practices and reporting in Infosys, an Indian IT company, was collected and the secondary data were collected through various published and unpublished reports and websites available on the subject.

Importance Of Corporate Governance: Corporate Governance is aimed at creating an organization which maximizes the wealth of shareholders. It envisages an organization in which emphasis is laid on fulfilling the social responsibilities towards the stakeholders in addition to the earning of profits. The objective of Corporate Governance is to ensure the following: 1.

2.

3.

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5.

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Properly constituted Board capable of taking independent and objective decisions.

Board is independent in terms of Non-Executive and Independent Directors.

Board adopts transparent procedures and practices.

Board has an effective machinery to serve the concerns of the Stakeholders.

Board to monitor the functioning of the Management Team.

Properly constituted Board capable of taking independent and objective decisions.

Board is independent in terms of Non-Executive and Independent Directors.

Board adopts transparent procedures and practices.

Board has an effective machinery to serve the concerns of the Stakeholders.

Board to monitor the functioning of the Management Team.

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11. Board remains in effective control of the affairs of the Company.

Elements Of Good Corporate Governance: 1.

2.

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5.

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10.

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Role and Powers of the Board.

Legislation Management Environment Board Skills Board Appointments Board Induction and Training Board Independence Board Meetings Board Resources Code of Conduct Strategy setting Financial and Operational Reporting Monitoring the Board Performance Audit Committee Risk Management

Figure1. Framework of Corporate Governance Secretarial Standards: The Institute of Company Secretaries of India has issued the following Standards in order to maintain the uniformity of procedure with regard to the Board Meetings, General Meetings, Payment of Dividend, Maintenance of Registers and Records, Recording of Minutes and Transfer and Transmission of Shares.

A brief detail of these standards is given as under : SS1 – Meetings Of Board Of Directors: The Secretarial Standard –1 deals with the meetings of the Board of Directors. It deals with the various aspects of the conducting the Board Meetings, the frequency of such meetings in an year, Quorum required for the meeting, powers of the Chairman in such meetings, and recording of minutes of such meetings.

SS2 - General Meetings: The Secretarial Standard –2 deals with the General Meetings. It explains the procedure of conducting the General Meetings, the frequency of meetings in an year, Quorum required for the conduct of the meeting, powers of the Chairman in such meetings, recording of minutes of such meetings, procedure of voting, etc.

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SS3 – Dividend: This Secretarial Standard pertains to Dividend. It illustrates the calculation of amount payable as dividend, declaration of dividend, Treatment of Unpaid Dividend, and Transfer of Dividend to Investor Education and Protection Fund(IEPF).

SS4 – Registers And Records: This Secretarial Standard enumerates the various Registers required to be maintained as per statutory requirements. It requires the following registers to be maintained : Register of members and Debenture holders.

Register of Contracts u/s 301.

Register of Directors u/s 303.

Register of Transfer of Shares.

SS5 – Minutes: This Secretarial Standard deals with the recording and signing of Minutes of the Meetings.

Minutes should contain : (a) The appointment of the Chairman of the meeting. (b) The presence of Quorum. (c) The fact that certain registers and documents were available for inspection. (d) The number of members present in person including representatives. (e) The number of proxies and the number of shares represented by them. (f) The presence of the Chairman of the Audit Committee at the Annual General Meeting. (g) The presence if any, of the Auditors, the Practising Company Secretary who issued the Compliance Certificate, the Court appointed observers or scrutineers. (h) Reading of the notice of the meeting. (i) Reading of the report of the auditors. (j) Summary of the opening remarks of the Chairman. (k) Summary of the clarifications provided. (l) In respect of each resolution, the type of the resolution, the names of the persons who proposed and seconded and the majority with which such resolution was passed. Resolutions should be written in the present tense.

SS6 – Transfer And Transmission Of Shares: This Secretarial Standard deals with the procedure of Transfer and Transmission of shares held singly and jointly. The register and records pertaining to transmission should be preserved permanently and kept in the custody of the secretary of the company or any other person authorized by the Board for the purpose.

Factors Influencing The Quality Of Corporate Governance: 1.

2.

3.

4.

5.

6.

Integrity of the Management Ability of the Board Adequacy of the Process Quality of Corporate Reporting Participation of Stakeholders Quality of Corporate Reporting

Committee Reports On Corporate Governance: Narayana Murthy Report On Corporate Governance: Corporate Governance is beyond the realm of Law. It stems from the culture and mindset of management and cannot be regulated by legislation alone. Corporate Governance is all about openness, integrity and accountability.

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It is a key element in improving the economic efficiency of the firm. Credibility offered by Corporate Governance also helps in improving the confidence of the investors – both domestic and foreign. It involves a set of relationships between a company’s management, its Board, shareholders and Stakeholders.

Kumarmangalam Birla Committee On Corporate Governance: All companies are required to submit a quarterly Compliance Report to the Stock Exchanges within 15 days from the end of financial reporting quarter.

The Report has to be submitted by Compliance Officer or by the Chief Executive Officer after obtaining due approvals, on the following clauses :

Board of Directors Audit Committee Shareholders/ Investors Grievance Committee Remuneration of Directors Board Procedures Management Shareholders Report on Corporate Governance

CII – Desirable Corporate Governance: Corporate Governance helps in maximizing the long-term shareholder value. It is more a way of business life than a mere legal compulsion. Four ideals , which should be the guiding force of company’s philosophy on Corporate Governance are :-

Transparency Accountability Disclosure Value Creation.

The Code of Business Conduct and Ethics helps ensuring compliance with legal requirements and other standards of Business Conduct. All company Employees and Trainees are expected to read and understand this code of ethics, comply with all applicable policies and procedures, and ensure that all agents and contractors are aware of, understand and adhere to these standards.

Current State Of India On Unique Corporate Governance Code: The Indian corporate governance code is based on the Anglo-Saxon model. Some experts believe that India needs to develop its own corporate governance code because business groups – business families and the government --dominate the Indian corporate sector unlike the corporate sectors in the USA and UK, where concentration of shareholding is less prominent and shares are widely held by geographically dispersed investors. They also argue that culture is one of the important factors that influence the corporate governance system and the Indian culture differs from that of those countries where the Anglo-Saxon model is working effectively. In fact, the debate on whether the convergence of corporate governance model will deepen further or greater differences in corporate governance practices in different countries will emerge is gaining momentum. This question arises in the backdrop of the trend towards convergence of corporate governance code (mechanism) across the globe towards the Anglo-Saxon model.

There are many forces that are driving convergence of corporate governance models in different countries. For example, the model codes published by international bodies, such as the World Bank, the Commonwealth of Nations, and OECD and the corporate governance policies and practices of major corporations operating around the world, are driving convergence. The International Organisation of Securities Commissions (IOSCO) encourages convergence. Similarly, adoption of the International Financial Reporting Standards (IFRS) by different countries and the need for countries to attract foreign capital have pushed the movement

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towards the convergence of corporate governance models.

In spite of the visible trend towards convergence, differences in corporate governance models exist. For example, the dual board system still exists in continental European countries and the corporate governance mechanism in Japan significantly differs from the Anglo-Saxon model.

However, the influence of the market has definitely diluted the corporate governance structures that have prevailed for a very long period. Over the past two decades fundamental corporate governance principles have been established. Those principles are separation of management from governance, transparency, accountability, strategic risk management, corporate responsibility to contribute towards the sustainability of the natural environment and corporate responsibility towards stakeholders.

These fundamental principles cannot be ignored while developing a corporate governance structure. If, India has to develop its own corporate governance model it should be based on these fundamental principles.

Therefore, it will be a great challenge to develop an alternative model which will be substantively different from the existing model.

Does India really need to develop a model significantly different from the Anglo-Saxon model? Postliberalisation, India has adopted the market model, framed policies and regulations for the development of the capital market and liberalized foreign investment in Indian companies. This has led to increasing public investment, directly and through institutional investors, in the equity capital of companies. As a result, the question of protecting non-controlling shareholders gained prominence and the need for developing and implementing a corporate governance model was felt. Initially, the primary aim of the corporate governance mechanism was to protect the interest of non-controlling shareholders. Now, the focus is equally on the monitory shareholder’s interest, enterprise performance and corporate social responsibility. Globally, the focus is on these three dimensions of corporate governance. If, the issues are the same, the Anglo-Saxon model should work well In India, irrespective of the ownership structure. Therefore, there might not be any need for developing a unique corporate governance model for India.

Ownership structure affects the implementation of the code. Concentrated ownership has certain positive and certain negative influences on corporate governance. Tunneling is one of the negative influences. Researches have established tunneling of resources from a group company in which the promoter group has low cash flow right to a company in which it has high cash flow right. This happens more in business groups that have a pyramid structure, which allows the parent at the apex of the structure to control the company at the bottom with a very low percentage of voting rights. In practice, independent directors are appointed by the incumbent management and therefore, it is likely that they will be loyal to the business family. Therefore, they may not stop tunneling through inter-corporate loan, related party transactions and other means. Tunneling can be reduced by prohibiting the pyramid structure and by strengthening other institutions like Serous Fraud Investigation Office (SFIO).

India is weak in the implementation of rules and regulations. Endeavour on the part of the government to improve the same is discernible.

However, there is a need to speed up the process of implementation by strengthening existing institutions and creating new institutions, if required.

New Paradigm In Corporate Governance Towards CSR Activity: Companies have to make money. They need to generate surplus for sustainability and growth and to ensure adequate return on capital and return of capital to attract capital. Therefore, it is not surprising that shareholders’ interest gets priority over interests of other stakeholder groups. Accordingly, the primary role of independent directors is to protect the interest of non-controlling shareholders.

There is a wind of change. The new paradigm on corporate governance is evolving.

More and more companies are adopting sustainable reporting guidelines issued by the organisation called Global Reporting Initiative (GRI). The government has issued voluntary guidelines on social, environmental and economic responsibilities of companies. The Companies Bill 2011 requires independent directors to safeguard interests of all stakeholders and to balance the conflicting interests of the stakeholders. Every company is engaged in some CSR activities.

The new paradigm, while maintaining the supremacy of shareholders, pushes the interests of non-core stakeholders by a few notches. Companies are expected to meet the reasonable expectations of all stakeholders

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and address their concern. They are also expected to create positive externalities and reduce negative externalities. Ideally, they should absorb all the costs of operation, including social costs.

There are two ways to look at the sustainability issue. One is to take it as a constraint within which to create shareholder value. The second is to consider participation in improving the living of this and future generations as a corporate responsibility and to embed sustainability in decision-making processes.

Responsible companies are expected to adopt the second approach.

In the extant corporate governance model, the primary role of independent directors is to protect the interest of non-controlling shareholders. In the new paradigm, independent directors are expected to take two additional responsibilities. They have to ensure that the executive management is making serious endeavour to meet the societal expectations and to act as arbitrator in a dispute between stakeholders groups. In the present formulation independent directors might not be able to discharge their existing and additional responsibilities effectively.

The Companies Bill 2011 requires that at least one-third of the board members should be independent directors. Thus, a company has the option to constitute a board with majority of functional directors. For example, if the board has ten members, the minimum number of independent directors required by law will be four. The company can fill up six positions with functional directors. In this board structure, independent directors can bring objectivity to board room deliberations but, they cannot stop the board from taking decisions, which will hurt the interests of one or more stakeholder groups. At best, independent directors can ensure that their dissent is recorded in the minutes of the meeting. But most independent directors would not like to press for the same as that goes against the boardroom decorum. If an independent director does not get support from other non-functional directors, he/she will feel shy even to pursue his/her point.

Some experts argue that the current corporate governance model will be more effective if the board is barred from taking decisions without the presence of independent directors and if decisions on certain critical issues can be implemented only if approved by majority of independent directors. Experts who bring such propositions assume that all independent directors are individuals with higher level of integrity and enjoy higher professional or social stature than the CEO, who is usually the Chairperson of the board, and that they are more knowledgeable than functional directors. Those are simplistic assumptions. Therefore, such models are not workable.

The board should be independent. It should act without bias towards shareholders or any other stakeholder group. The board can function independently only if all the directors, including functional directors, are committed to sustainability. This will happen only when the principles of sustainability are embedded in decision-making processes. Board’s review of various decisions should be similar to the peer review process.

The chairperson should empower the board by providing full information and encouraging open discussions. A committee of independent directors may be formed to ensure implementation of voluntary guidelines and sustainability reporting. It should post-audit decisions with the support of outside consultants. The audit findings should be discussed in the board and with senior executives freely. This will help to strengthen systems and to create awareness across the organisation.

Those CEOs, who are ignoring various voluntary guidelines issued by the government and other institutions will be caught napping when the new paradigm will gain momentum. Ultimately investors will suffer.

Role Of Government In Corporate Governance: • NFCG : With the goal of promoting better corporate governance practices in India, the Ministry of Corporate Affairs, Government of India, on 1st October 2003 set up National Foundation for Corporate Governance (NFCG) in partnership with Confederation of Indian Industry (CII), Institute of Company Secretaries of India (ICSI) and Institute of Chartered Accountants of India (ICAI). In the year 2010, a stakeholder in NFCG has been expanded with the inclusion of ICWAI and the National Stock Exchange.

• Government Bodies who are watching the activities of business enterprises regarding Corporate Governance • MCA (Ministry of Corporate Governance • Institute of Chartered Accountants of India (ICAI) • Institute of Company Secretaries of India (ICSI): • Institute Of Cost And Works Accountants Of India (ICWAI) • National Stock Exchange of India Limited (NSE)

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Recent News On Corporate Governance: 1] 200 Listed Firms Flouting Corporate Governance Norms:

By FP Staff Jan 10, 2013 #Corporate governance #India Inc #SEBI #ThatsJustWrong Nearly 200 listed firms have come under regulatory scanner for discrepancies in their quarterly Corporate Governance Reports, wherein they are required to provide details of compliance with norms governing board of directors, use of public funds and CEO salaries.

Besides, hundreds of other companies have been found to be late in submission of these reports, which are required to be submitted to the stock exchanges within 15 days from the end of every quarter.

2] Corporate Governance Awards 2012 From World Finance: MindTree -Best Corporate Governance, India Mindtree adjudged best Indian company in Asia in corporate governance by Asiamoney Ranked No. 2 in Asia, MindTree sweeps all the categories in India to emerge the winner; MindTree CFO Rostow Ravanan adjudged Best Investor Relations Officer in India MindTree Ltd., a global IT Solutions Company, announced today that it has been ranked 2nd in Asia in the Corporate Governance Poll 2009 conducted by Asiamoney magazine. MindTree is ranked No. 1 Best Overall For Corporate Governance in India. In addition to being picked up as the second best company overall in Asia, MindTree is ranked No. 1 in the continent (excluding Japan) in the two categories of 'Responsibilities of Management and the Board of Directors' and 'Shareholders' Rights and Equitable Treatment'. MindTree is ranked among the top three in the categories of 'Disclosure and Transparency' and 'Investor Relations'.

1) India Ranks 7th In Corporate Governance In Asia-Pacific: Report: Press Trust of India | Updated On: September 23, 2012 17:09 (IST) Corporate Governance – Access best practices, training, publications, and toolkits www.gcgf.org India has been ranked in the seventh place in terms of corporate governance score in Asia Pacific region, says a report by global brokerage firm CLSA. According to the CLSA Corporate Governance Watch 2012 list, produced in collaboration with the Asian Corporate Governance Association, India's corporate governance score has improved by 3 percentage points but ranking has remained the same.

The report which analysed as many as 864 listed companies across Asia-Pacific markets, including Japanese and Australian firms, said that Infosys was the only Indian company that was featured in the top 20 corporate governance large caps.

Moreover, there were just five Indian companies which got featured in the top 50 league table. Besides, Infosys the other four include HUL, Wipro, Titan Industries and Yes Bank.

Future of Corporate Governance In India: The issues of governance, accountability and transparency in the affairs of the company, as well as about the rights of shareholders and role of Board of Directors have never been so prominent as it is today. The corporate governance has come to assume a centre stage in the Board room discussions.

India has become one of the fastest emerging nations to have aligned itself with the international trends in Corporate Governance. As a result, Indian companies have increasingly been able to access to newer and larger markets around the world; as well as able to acquire more businesses. The response of the Government and regulators has also been admirably quick to meet the challenges of corporate delinquency. But, as the global environment changing continuously, there is a greater need of adopting and sustaining good corporate governance practices for value creation and building corporations of the future.

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Conclusion: Corporate Governance Provides us a desired level of comfort in compliance with the code, principles and requirements of corporate governance; as well as provide relevant information to all stakeholders regarding the performance, policies and procedures of the company in a transparent manner. There should be proper financial and non-financial disclosures by the companies, such as, about remuneration package, financial reporting, and auditing, internal controls.

Corporate Governance provides Transparency, Accountability in records and enhance credibility of the company which increase company market value and provide better access of domestic ass well as global Capital market to the company in future capital generation activity.

After 1990, post Liberalisation policies by Indian Government, most Indian Corporations has gaining momentum in Corporate Governance field and performing very well and achieving good level/rank internationally. Infosys, Mind Tree got worldwide Recognition and win Awards global level.

Profit is important but making them by following a proper ethical code of conduct is really what the business needs. It will not only assure them the sustainability in the market but will also not affect their trust among its customers.

References: [1] Prabhash Dalei, Paridhi Tulsyan and Shikhar Maravi (March 12), International Conference On Humanities, Economics and Geography (ICHEG’2012),Bangok. Pages 196-198 [2] Hossam Zeitoun & Margit Osterloh:“Corporate Governance and Stakeholder Relations” (CREMA 2011)Center for Research in Economics, Mangements and Arts , University of Zurich , (Switzerland) Pages - 19 [3] Lisa Mary Thomson, (Jan 18, 2009), Economics Times Bureau .

[4] Prof. Ashish K. Bhattacharya (Oct 29, 2012) “Does India need a unique corporate governance code?”

Business Standard.

[5] Colin Mayer, Corporate Governance, Competition, and Performance, Journal of Law and Society Volume 24, Issue 1(March1997), pages 152–176.

[6] Prof. Ashish K. Bhattacharya (June 10, 2012) “Winds of Change in Corporate Governance”, INDIACSR. [7] Kumar Mangalam Birla Committee Report, on Corporate Governance, 2000 [8] Narayana Murthy Committee Report, “Report on Corporate Governance”, 2003.

[9] OECD Report, “Principles of Corporate Governance: A Report by OECD Task Force on Corporate Governance of Law and Economics”, 42, 209-238, 1999.

[10] Voluntary Guidelines on Corporate Governance, The Ministry of Corporate Affairs, December 2009.

[11] http://www.nfcgindia.org.in [12] http://www.business.gov.in [13] www.gcgf.org.in [14] www.buniss-standard.com/india/prof_page.php [15] http://www.indiacsr.in/en/?p=6706 ****

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BUSINESS EXCELLENCE MODELS Prof. Smt. B. D. Patil, Associate Professor, Dept. of Economics, K.S.K.W. College, Cidco, Nashik, India.

ABSTRACT Business Excellence (BE) is about developing and strengthening the management systems and processes of an organization to improve performance and create value for stakeholders. BE is much more than having a quality system in place. BE is about achieving excellence in everything that an organization does (including leadership, strategy, customer focus, information management, people and processes) and most importantly achieving superior business results.

Business Excellence Models (BEMs) were first called Total Quality Management models. Today they are usually referred to as Business Excellence Models – this term helps to communicate the importance of “excellence” in all aspects of a business, not only product and process quality.

The Business Excellence Model (BEM) is a widely used framework that helps companies to review their performance and practices in a number of areas and identify targetsand actions for improvement. It is a benchmarking and audit framework originally developed in the European Foundation for Quality Management (EFQM) but based on the philosophy of total quality management seesthe need for holistic development and growth of the organization.

Regardless of sector, size, structure or maturity, to be successful, organizations need to establish an appropriate management system. The BUSINESS EXCELLENCE Model is a practical tool to help organizations do this by measuring where they are on the path to excellence, helping them understand the gaps, and then stimulating solution.

Keywords: Business excellence, EFQM, BE, BEM, Enablers.

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Introduction: The BUSINESS EXCELLENCE Model is presented in diagrammatic form below:

The arrows emphasize the dynamic nature of the model. They show innovation and learning helping to improve enablers that in turn lead to improved results. The model's 9 boxes, shown in the diagram, represent the criteria against which to assess an organization's progress towards excellence. Each of the nine criteria has a definition, which explains the high level meaning of that criterion. To develop the high level meaning further each criterion is supported by a number of criterion parts. Criterion parts pose a number of questions that should be considered in the course of an assessment. Finally below each criterion part are guidance points.

Uses of these guidance points is not mandatory nor are the lists exhaustive but are intended to further exemplify the meaning of the criterion part.

Criterion 1 Leadership: Excellent leaders develop and facilitate the achievement of the mission and vision. They develop organizational values and systems required for sustainable success and implement these via their actions and behaviors. During periods of change they retain a constancy of purpose. Where required, such leaders are able to change the direction of the organization and inspire others to follow.

• Leaders develop the mission, vision, values & ethics and are role models of a culture of excellence • Leaders are personally involved in ensuring the organization's management system is developed, implemented and continuously improved • Leaders interact with customers, partners and representatives of society • Leaders reinforce a culture of excellence with the organization's people • Leaders identify and champion organizational change Criterion 2 Policy And Strategy: Excellent organizations implement their mission and vision by developing a stakeholder focused strategy that takes account of the market and sector in which itoperates. Policies, plans, objectives, and processes are developed and deployed to deliver the strategy. Policy and strategy are based on: • Present and future needs and expectations of stakeholders • Based on Information from performance measurement, research, learning and external related activities.

• Policy and strategy are developed, reviewed and updated and are communicated and deployed through a framework of key processes Criterion 3 People: Excellent organizations manage, develop and release the full potential of their people at an individual, teambased and organizational level. They promote fairness and equality and involve and empower their people.

They care for, communicate, reward and recognize, in a way that motivates staff and builds commitment to

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using their skills and knowledge for the benefit of the organization.

• People resources are planned, managed, improved, involved and empowered • People's knowledge and competencies are identified, developed and sustained • People and the organization have a dialogue Criterion 4 Partnerships and Resources: Excellent organizations plan and manage external partnerships, suppliers and internal resources in order to support policy and strategy and the effective operation of processes. During planning and whilst managing partnerships and resources they balance the current and future needs of the organization, the community and the environment.

• External partnerships are managed • Finances are managed • Buildings, equipment and materials are managed • Technology is managed • Information and knowledge are managed Criterion 5 Processes: Processes are systematically designed, managed, improved, as needed, usinginnovation in order to fully satisfy and generate increasing value for customers and other stakeholders • Products / services are designed & developed based on customer needs and expectations • Products and services are produced, delivered and serviced • Customer relationships are managed and enhanced Criterion 6 Customer, Criterion 7 People and Criterion 8 Society Results: Excellent organizations comprehensively measure and achieve outstanding results with respect to their customer, People and Society. The results are based on Perception Measures and Performance indicators.

Criterion 9 Key Performance Results: Excellent organizations comprehensively measure and achieve outstanding results with respect to the key elements of their policy and strategy. These elements include both financial and Non-financial performance indicators.

Radar Logic: At the heart of the model lies the RADAR logic consisting of four elements • Results • Approach • Deployment • Assessment and Review This logic states that an organization needs to: • Determine the Results it is aiming for as part of its policy & strategy making process. These results cover the performance of the organization, both financially & operationally, and the perceptions of its stakeholders.

• Plan and develop an integrated set of sound Approaches to deliver the required results both now and in the future • Deploy the approaches in a systematic way to ensure full implementation.

• Assess and Review the approaches followed based on monitoring and analysis of the results achieved and on ongoing learning activities.

Based on this RADAR logic each area is assessed for Results, Approach, Deployment, assessment and review.

Based on this identify, prioritize, plan and implement improvements where needed.

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The BUSINESS EXCELLENCE Scoring Tree - is a handy aid to calculate and visualize model points, starting from the percentage scores awarded to the criterion parts.

Business Excellence Assessments: BEMs are essentially assessment models. They are used to assess an organization’s strengths and areas for improvement. From this information, senior management can make sensible decisions on the actions needed to achieve the desired results.

There are many different ways that organizations can assess their systems and performance against BEMs. The five principal ways are: (1) A questionnaire approach: Consists of a set of questions to assess an organization’s performance for each category item. The results can then be analyzed to determine appropriate actions.

(2) A pro forma approach: This involves forms being designed for all of category items. Each form would require the organization to record how it addressed that particular item, its strengths, weaknesses, and actions for improvement.

(3) A workshop approach: This approach usually involves a senior management team gathering data and evidence to present to peers at a workshop. At the workshop, performance against the model is scored and action plans are agreed upon.

(4) A matrix chart approach: This involves the creation of a company specific achievement matrix within the framework of a BEM. It typically consists of a series of statements of achievements for each category using a scale of 1-10 points. Individuals or teams use the matrix to score their business processes/organization.

(5) An award approach: This approach involves writing a full submission document along the lines described by the administrators of a country’s national BE award. Based on the evidence within the submission document and supporting evidence from a site visit, internal or external assessors evaluate the organization and provide feedback.

The decision of which approach to use depends on the company's objectives and level of BE maturity. In general, it is recommended that companies in the first instance use a questionnaire approach and then develop, once they are more mature, a more sophisticated approach. Whichever assessment approach is used it is recommended that all the senior management team are involved and at least a cross-section of employees so that a consensus view on the state of the organization and the actions required is obtained. Involving a widegroup of participants will help everyone to understand the issues the organization is facing and lead to a greater level of buy-in to any actions that follow.

EFQM: EFQM is the most widely-used Business Excellence Framework in Europe, with over 30,000 businesses using the Excellence Model to improve performance and increase their bottom-line. Quality Scotland is the National Partner Organization for delivering and promoting EFQM in Scotland.

The Excellence Model takes a holistic view of an organization and, when used as a diagnostic tool, it allows your organization to assess its strengths and areas for improvement in detail across nine key areas. There is an overarching philosophy of continuous improvement that is applicable to all sectors: The Excellence Model is a non-prescriptive framework that allows for enough flexibility to be adapted to any type of organization, regardless of size or sector. In addition, the Excellence Model is considered an overarching framework that can be used alongside other tools and standards such as IIP, Charter Mark, and Balanced Scorecard and so on.

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How does EFQM Work?

A key feature of the Model is its use as a diagnostic tool for self-assessment, where organizations grade themselves against a set of detailed criteria under each of the nine headings. The overall score acts as a European benchmark and helps organizations identify areas for improvement. It is then possible to develop and implement improvement plans that deliver sustainable growth and enhanced performance for the organization.

Conclusion: The BUSINESS EXCELLENCE Model is a non-prescriptive framework based on nine criteria. Five of these are 'enablers' and four are 'results'. The 'enabler' criteria cover what an organization does. The 'results' criteria cover what an organization achieves. 'Enablers' cause 'results' and 'enablers' are improved using feedback from 'results'. The model, which recognizes there are many approaches to achieving sustainable excellence in all aspects of performance, is based on the premise that: Excellent results with respect to performance, customers, people and society are achieved through leadership driving policy and strategy, people, partnerships and resources, and processes.

References: [1] [2] [3] [4]

Baldrige Performance Excellence Program (http://www.nist.gov/baldrige/) http://www.saferpak.com/business_excellence.htm Bhatia S.K. (2004), Business Ethics and Corporate Governance ‘Deep & Deep Publi -cationPvt.Ltd. New Delhi” Corporate Governance (modules of best practices) 3rd edition, the institute of company secretaries of India ****

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ROLE OF COMPTROLLER AND AUDITOR GENERAL OF INDIA IN MEETING CHALLENGES OF GOOD GOVERNANCE

Ms Gauri Rathi, Asst Professor MGV’s Institute of Management & Research, Panchavati, Nashik, India.

ABSTRACT The Comptroller and auditor general of India(CAG) is mentioned in the constitution of India under article 148-151.The CAG is ranked 9th and enjoy the same status as a judge of supreme court of India in Indian order of precedence .The CAG has played a major role in Indian governance. and help to achieve good governance .Recently CAG limelight for its reports exposing mega corruptions .particularly in 2G Spectrums scam, CWG Scam and coal mining scam. But there are some limitation of CAG.Therefore our government must make some reform to achieve objectives of establishing CAG. This paper highlights Role of CAG in Indian governance and its challenges in achieving good governance.

Keywords: CAG, Good Governance, Challenges, Indian Governance.

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Introduction: The Comptroller and Auditor General (CAG) of India is an authority, established by the Constitution of India, who audits all receipts and expenditure of the Government of India and the state governments including those of bodies and authorities substantially financed by the government The CAG is also the external auditor of government-owned companies. The reports of the CAG are taken into consideration by the Public Accounts Committees, which are special committees in the Parliament of India and the state legislatures.

The CAG of India is also the head of the Indian Audit and Accounts Department.

IAAS or Indian Audit and Accounts Service is an Indian Central Government service, free of control from any executive authority, under the Comptroller of Auditor General India. The officers of the Indian Audit and Accounts Department serve in an audit managerial capacity. IAAS is responsible for auditing the accounts of the Union and State governments and public sector organizations, and for maintaining the accounts of State governments. IAAS is the government's financial watchdog, and is a critical element in checks on the government.

This paper is divided into seven parts. The first part explains the concept of governance and good governance.

The second part shows role of CAG in meeting challenges of good governance. The third part enumerates role of CAG in India governance . The fourth part depicts how CAG helps in achieving good governance? The fifth part points out its limitations. The sixth part proposes recommendations. Finally, the seventh part concludes.

Governance and Good Governance : What is governance?

“The exercise of economic, political, and administrative authority to manage a country’s affairs at all levels. It comprises mechanisms, processes, and institutions, through which citizens and groups articulate their interests, exercise their legal rights, meet their obligations, and mediate their differences.” – UNDP. Simply put “governance” means: the process of decision-making and the process by which decisions are implemented (or not implemented). Governance can be used in several contexts such as corporate governance, international governance, national governance and local governance.

What is Good Governance?

Good governance has 8 major characteristics. It is participatory, consensus oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive and follows the rule of law. It assures that corruption is minimized, the views of minorities are taken into account and that the voices of the most vulnerable in society are heard in decision-making. It is also responsive to the present and future needs of society

Characteristics of good governance Figure 1: Characteristics of good governance Participation: Participation by both men and women is a key cornerstone of good governance. Participation could be either

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direct or through legitimate intermediate institutions or representatives. It is important to point out that representative democracy does not necessarily mean that the concerns of the most vulnerable in society would be taken into consideration in decision making. Participation needs to be informed and organized. This means freedom of association and expression on the one hand and an organized civil society on the other hand.

Rule of law: Good governance requires fair legal frameworks that are enforced impartially. It also requires full protection of human rights, particularly those of minorities. Impartial enforcement of laws requires an independent judiciary and an impartial and incorruptible police force.

Transferancy: Transparency means that decisions taken and their enforcement are done in a manner that follows rules and regulations. It also means that information is freely available and directly accessible to those who will be affected by such decisions and their enforcement. It also means that enough information is provided and that it is provided in easily understandable forms and media.

Responsiveness : Good governance requires that institutions and processes try to serve all stakeholders within a reasonable timeframe.

Consensus oriented : There are several actors and as many view points in a given society. Good governance requires mediation of the different interests in society to reach a broad consensus in society on what is in the best interest of the whole community and how this can be achieved. It also requires a broad and long-term perspective on what is needed for sustainable human development and how to achieve the goals of such development. This can only result from an understanding of the historical, cultural and social contexts of a given society or community.

Equity and inclusiveness : A society’s well being depends on ensuring that all its members feel that they have a stake in it and do not feel excluded from the mainstream of society. This requires all groups, but particularly the most vulnerable, have opportunities to improve or maintain their well being.

Effectiveness and Efficiency: Good governance means that processes and institutions produce results that meet the needs of society while making the best use of resources at their disposal. The concept of efficiency in the context of good governance also covers the sustainable use of natural resources and the protection of the environment.

Accountability : Accountability is a key requirement of good governance. Not only governmental institutions but also the private sector and civil society organizations must be accountable to the public and to their institutional stakeholders. Who is accountable to whom varies depending on whether decisions or actions taken are internal or external to an organization or institution. In general an organization or an institution is accountable to those who will be affected by its decisions or actions. Accountability cannot be enforced without transparency and the rule of law.

Role of CAG in Meeting Challenges of Good Governance: The importance of CAG is easily understood by the following words of B.R. AMBEDAKAR: “I am of the opinion that this dignitary or officer (C&AG) is probably the most

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important officer of the Constitution of India. He is the one man who is going to see that the expenses voted by parliament are not exceeded, or varied from what has been laid down by Parliament in what is called appropriation Act. If this functionary is to carry out the duties- and his duties, I submit are far more important than the duties than the duties of the Judiciary.”

Challenges of good governance for CAG: At the obvious risk of generalization, I would like to refer to criminalization of politics and corruption as major challenges to good governance. Though there are few specific challenges being faced by CAG while assuring good governance: -Denial of timely and complete access to records for audit. While the RTI Act provides for specific penalties for non-production of records/reply in the stipulated period, there is no mechanism for timely production or in the failure to do so, awarding deterrent penalties for non-furnishing or incomplete production of records to CAG’s audit.

-Audit can be used for tracking policymaking and implementation from the Centre and states to urban local bodies and Panchayati Raj Institutions (PRIs). In recent years, there has been a paradigm shift in the manner in which public funds are generated, expended and managed. About 67 per cent of Central Plan and non-Plan grants have been disbursed directly to implementation agencies like NGOs; developmental funds are directly transferred to urban local bodies; and PRIs and infrastructure projects are substantially financed through public private partnerships.

-It is quite disconcerting to come across increased instances of central ministries seeking exclusion from the audit by CAG of new institutions created or being created. Regulators like the TRAI, Petroleum and Natural Gas Regulatory Board etc. have been kept fully or partially out of the audit mandate of CAG through their respective Acts.

Role of CAG in Indian Governance: Major Functions of CAG 1. To prescribe, with the approval of president, the form in which the accounts of union and states are to be kept 2. To perform such duties and exercise such powers in relations to accounts of union or states or any other body, as many prescribed by any law made by parliament.

3. To report the president or governor of the state on the account of country or state.

The CAG as Auditor General: It plays double role, firstly it check the extend of application by the government servants ,of rules and regulations issued on behalf of the administration and secondly it ensure ,on behalf of the legislature, that the actions of the government have been in accordance with the views and the requirements of the legislature The purpose of audit is to ‘offer financial criticism’ and it’s value lie in its report pointing out there some impropriety of certain transaction and so the suitable action rectify it.

According to Herbert Britain “What one department is publically pilloried for today all other departments will try to avoid tomorrow” Audit of Revenue-C&AG after some initial resistance on the part of revenue department was able to extend its dimension to audit of revenues which includes audit of tax assessment such as Income tax, Central Excise and Customs, Sales tax etc. The audit of receipts has helped bringing considerable revenue for the government by pointing out cases of under assessment of tax, and also assisted in better functioning of tax administration machinery by pointing out lacunae or loopholes in the Act/ Rules and deficiencies in the functioning of tax administration.

Audit of Commercial Enterprises: The audit of government companies was brought within the purview of C&AG’s audit at the insistence of then CAG by introducing a suitable provision in the Companies Act 1956, although there were initial attempts to exclude his jurisdiction. Thus, while Chartered Accountants are required to certify Annual Accounts of government companies, C&AG has been granted right to conduct supplementary audit.

Audit of Public Sector Undertakings: Under Section 619 of the Companies Act, 1956, the auditor (statutory auditor) of a CAG conducts the audit of accounts of the companies. On the basis of supplementary and it conducted thereafter, the CAG issues

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comments upon or supplements the Audit Report of the statutory auditor.

How CAG Help in Achieving Good Governance: “The role of audit report is very important as transparency and accountability are being established in different sectors of the country through it”, the CAGB. Good governance has eight major characteristics. These characteristics coincide with Mission, Vision and Core values of CAG. This could be better explained using examples: Participation: to understand contemporary concerns about the developmental interaction undertaken by the government, they have increased, and institutionalized their interaction with public and civil society for providing inputs for audit prioritization and benchmarks for evaluation. They have built synergies with social audit groups and other stakeholders.

Transparency: generally the reports of government agencies are lengthy and technical, which makes them opaque for general public. But CAG office has made out reports more concurrent and reader friendly. A reader now has the option to go through our full reports or get a bird’s eye view of their findings through the slim booklets and brochures prepared by them.

Responsiveness: While reporting audit findings they highlight the good practices and innovations of the executive and make constructive recommendations for mid-course corrective action in respect of deficiencies pointed out.

Limitations: In spite of the various safeguards provided by the Constitution to maintain the independence of Comptroller and Auditor General from the Executive and Parliament, his/ her independence appears to be limited by four factors viz., (a) restraint of the Executive on his/ her budgetary autonomy (b) block of control overstaff (c) indirect accountability to the Finance Ministry of the Union and the Finance Department of the State Government for handling accounting duties (d) absence of direct access to Parliament (unlike the Attorney General) in defense of his/ her official conduct, if and when questioned on the floors of Parliament.

Recommendations : In this case CAG (Duties, Powers and Conditions of services) Act, 1971 is the mould and if CAG exceeds the boundaries set by the mould (the Act), then it would be ultra vires. If CAG has to be effective in discharging its responsibilities and has to play an important role in promoting good governance, wider powers of access to information would be necessary at par with other prominent democracies in the world.

Conclusion: To conclude, notwithstanding these limitations, the Comptroller and Auditor General plays a unique role in Indian democracy, by upholding the Constitution and the laws in the field of financial administration. CAG office can access any office under government of India. But CAG’s access to secret service is limited. Now a day we feel that that is too be audited by CAG. Huge amounts are stolen in 2G, CWG, arms deals etc. As we know India is a developing country, it requires huge investments in infrastructure. So there should have appropriate measures to protect our money. And our government must make reforms to achieve the objectives of establishing CAG. References: [1] Corporate Governance. The Indian Scenario, Vasudha Joshi (Foundation Books Pvt Ltd) 2004 [2] http://en.wikipedia.org/wiki/Comptroller_and_Auditor_General_of_India [3] http://www.cag.gov.in/ ****

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IMPORTANCE OF ENGLISH COMMUNICATION PROFICIENCY FOR BUSINESS EXCELLENCE Ms.Suhasini Uttam Jadhav, Department of English HPT Arts and RYK Science Collge, Nashik, India.

ABSTRACT English is a global language for doing business. It is the official standard language. There is ever growing need for good communication skills in English. The opportunities to learn English are provided through formal instruction. High level of accuracy and fluency in English is necessary for success and advancement in many fields of employment in today’s world. For business excellence English communication skills are helpful. It develops the personality and make the person fluent and confident. Effective communication is directly connected to strong financial performance. Effective verbal and nonverba communication provide opportunities to the person.

Keywords:Business excellence,Effective communication,power

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Introduction: Across the world everyone realizes that language is essential for communication. As all countrie come under one umbrella of the world. English as an international language gained wide currency particularly among professionals. Language become an essential mode through which one can propagate ideas, thoughts, and feelings effectively.

Due to globalization, most of the students realized the value of the English language. Moreover, many Indians migrate to foreign countries for higher studies and in search of career opportunities , and this requires them to communicate in English fluently. To meet these requirements, everyone wants to master the language skills such as listening ,reading, speaking and writing.

In the modern world English is an important language for trade and commerce. Due to Internet English continues to spread as the major medium through which both small businesses and large corporations do business.

English is a common Business language. In the 12th century England began to develop the colonies in Ireland and America. India ,the African continent, such as South Africa, the Middle East, Australia and Hong Kong were the other key colonies under the control of the British Empire. English was the official language in these areas and later it became the main language of communication in shipping, travel and commerce.

There are 27 member states in the European Union (E U), and 54 in the Commonwealth of Nations. English is one of the main official language in the EU, through which all trade and business is conducted .

It is necessary to have excellent command of English for key jobs. English has emerged as a major language for finance and the stock markets around the world.

Modern society is a written language society. Some people feel written media are in the process of being overtaken by visual media in ‘late modernism’ or ‘postmodern society’. But important parts of societal communication are still in a written form. It is the need of the hour for everyone to learn to express himself/herself in writing correctly. E-mails, presentations and marketing to important business contracts are written in English. For Global communication the Internet and Cell phones have become more convenient across the world. Laptops are useful to work from any location in the world. Social, political communication with the help of internet is very effective and geographically more mobile without losing social connections.

Cultural communication can exchange global exposure to other cultural practices and modes of thoughts.

Good corporate communication is helpful to mould and shape corporate identity reputation of their presence in the minds of customers. It is important for an organization to create its brand identity and long term corporate image. So it is necessary to invest in corporate communication. It involves a series of well coordinated and planned activities and programmes. It highlights a company’s products, services, annual achievements, philanthropy and social development efforts.

It is the communication related with internal employees and also externally with customers, business partners and other stockholders.

For well-managed enterprise or business sensible, thoughtful, consistent and well-articulated communication is required. Governance is an act of governing. It relates to decisions that define expectations, grant power or verify performance through business communication.

To build brand identities in the market some of the top American brands become more successful because of corporate communication. Example:-Coca-Cola, Pepsi, McDonald’s, Wal-Mart, IBM, Microsoft, HP, Apple, Google, General Electric and others. In India HDFC, Maruti-Suzuki, Tata Motors, Hero Honda, Taj Group, Oberoi Group and others have well reputed brands in the market.

In the organization various departments like marketing, advertising employee communications, public relations, investor relations and community, government relations are considered very important departments.

Marketing plays an important role for “putting the face” on a company’s offerings and products and itself.

For effective communication oral and written communication creates a good ambience and relationship with everyone in every organization. Even though people study Basic English in schools as a subject they face various communication related problems.

The globalization of modern business has ensured that more opportunities are available for individuals to build a career. In order to be competitive in an international business market you should have fluency in English language to state your ideas/views clearly.

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Key Words: [1] [2] [3] [4] [5]

Communication:-It is the process of influencing others to achieve common ‘shared’ objectives.

Power:-It is the process of influencing others.

Oral communication- Messages through word , phrases and idioms from the mouth of the speaker.

Written communication- Require preparations and are more accurate.

Non verbal communication or Business communication- Humans send out by using signs, signals, gestures, expression and sounds and convey meanings.

[6] Business Governance - is a set of policies and business processes that set the way the organisation’s business are run.

Objectives: [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11]

To appreciate the vast scope of communication in modern world.

To distinguish between the process of communication and exercise of power.

To Identify different types of communication .

To grasp the importance of communication skills in the life of an individual and enterprise.

To acquire effective communication skills.

To built the capacity of teachers on communication skills in English for their effective transaction of English language at elementary level.

To focus on enhancing the specific proficiencies related to pronunciation understanding and articulation in English language.

To develop analytical ability using English, so as to express social concerns.

To facilitate teachers in organizing classroom activities related to language learning in general and English as particular.

To understand the power of speech and its characteristics.

To understand the unique features of written communication.

Scope of Communication: Communication means when people exchange thoughts, messages and information. It can be exchange by speech, gestures and by the use of writing.

Communication is a word derived from the word ‘common’ in English or ‘communis’ from Latin. It means shared by a ‘concerning all’. Communication is ‘a process of influencing others’ to achieve common shared objectives. Communication is a two-way process.

Business English is communication with other people within a specific context. It comprises of; General everyday English General business English English for specific purpose Business communication is the channel between the different departments of a business or market. Business communication allows producers and consumers to conduct efficient business dealings with satisfactory results.

It is must for a person to acquire a powerful communication to become efficient managers and effective leaders. A sensitive speaker is able to judge the reaction of his audience from the gestures, sounds and expressions of the audience.

Language is a means of communication. English language is considered the global language of business, politics, international relations, culture and entertainment. English is a way to start a career. To improve Business English correct use of vocabulary, grammar and pronunciation is helpful so we can express properly in a professional manner. Appropriate use of communication is required in the international business world. It is more professional, proper and polite. Being polite includes addressing someone as Mr. and Mrs. Even in Emails using thank you and sincerely is more polite. Slang or informal words must not be used.

Business English is not being formal but being able to understand the use of formal and informal expressions in the correct manner social conversation and telephone etiquette are included. Business Conversation, proper

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use of idioms and phrases, vocabulary, grammatical structures improves one’s business English.

To understand what others say is also important. English also focus an improving listening comprehension.

Ability to listen is very difficult skill which required in managers and leaders. It is said, “If you listen to people well, they will tell you things that you have not ever thought of yourself!”

Communication is also the most powerful input resource in an enterprise. Varied techniques to learn and teach English have been tried out in different context. For correct pronunciation, articulation and understanding the skills required for both print and non-print media.

Types of Communication: Communication is classified as:

1] Verbal communication: - With the help of words verbal communication can be form. To express likes and dislikes, offering and accepting apologies, introducing someone, giving explanations must be effective because effective communication is directly connected to strong financial performance. Internal business communication is very important to company’s success. Communication between a manger and employee is important in the development of the employee to maintain the positive morale and also helpful to create more efficient job processes. Example -The great entrepreneur like Tata, Ambani, Birla have effective communication with their companies people.

Oral and written communications are the two forms of Verbal communication.

1] Oral Communication:-Oral communication is the most common and powerful form of business communication. It is also called face to communication. Oral communication is expressed with signs, signals, gestures, expressions and sounds of body language. Oral communication means words , phrases and idioms form the mouth of the speaker. It is very convenient form of expression and presentation. Speakers appearance, body language, mannerism and the way he throw his voice can make significant difference . Tone and inflection convey a great deal of information to the listener. It is necessary to be accurate to the message. In Latin America people normally talk loudly not because they are angry. But in Canada and Japan people generally speak very smoothly in normal conversation. If words are not use properly they may destroy relationship. A good speech should have clarity, be informal, personal and conversational. One must acquire the right tone, pitch and speed articulation and pronunciation. While speaking Good orators like Pandit Jawaharlal Nehru Dr. S Radhakrishnan had certain magic while Adolf Hitler’s speeches inspired people to take wrong actions. A good speech should be like a conversation between two good friends. It has to be a heart to heart dialogue.

Plato has said, “Wise men speak because they have something to say; fools because they have to say something.”

Written Communication: Writing is the most demanding language skills. It has to be deliberately cultivated. Unlike listening and speaking it is not something which is natural to humans. It is a skill which has been developed in civilized society to pass on knowledge or messages. All writing aims at clear and efficient communication. Anne Raimes (1983:6) has diagrammatically represented this as follows :

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Producing A Piece of Writing: Written communication enables a person to express and convey his/her ideas, views, values and beliefs to a person or a group of persons across the barrier of space and time Since written form of communication results a product, it holds a social and legal commitment. The writing skill for specific need based purposes has generally seen neglected in the curriculum and in the classroom practice.

Written Communication makes a person perfect. There is a famous saying, “ Reading a full man, conference a ready man and writing an exact man”.

Written communication involves learning at three levels- choosing the right word, constructing good sentences and designing appropriate paragraphs. Proper words and use of correct grammar is must for effective writing.

Jonathan Swift the famous British author said, “ proper words in proper places”. For the desire outcome proper use of words and the ability to code the thoughts and emotions are require for business communication because vocabulary is the important tool of thoughts.

Writing style reflects the personality of the writer. Letter is important form of business communication. It is the backbone of all successful enterprises. With technological advancement in our ability to send/ receive emails, fax , messages, short messaging service (SMS) on mobile phones have become very much common and popular. In the 21st century sending online reports across continents become popular. In the contemporary business scenario translation is a major challenge to translate the product catalogue, literature and advertisement in other languages.

Writing usually requires , formal, organized, explicit instructions. Since it helps in enhancing analytical thinking and sharpening communication skills, developing of writing skills is a matter of great importance in education.

Non-Verbal Communication: It uses signs, signals gestures expressions and sounds. It is also called body language. People could observe from the body language of the person’s mood. Eg. Teacher’s body language must be perfect for the control of the class.

Without confidence leaders are not able to influence the attitude and behaviour of people to achieve the common objectives. Eye contact is one of the most evident methods of non verbal communication. Eyes are window to the soul. Our eyes, our body gestures and even tone of voice often qualify our verbal response. Our body language reflects how we feel about. If we stand or sit straight it says we have confidence. Crossing our arms in front of our body says, “I am in charge here’. Keeping your arms to your site and standing up straight says I am open minded about this particular situation.

How we say things such as sarcasm, anger, intimacy or expression is depends on our voice. Our facial expression tell a lot about how we feel about, what we are hearing or saying. While listening if you smiles says, “I agree”. A slight frown and lowered eyebrows says- ‘I don’t quite understand!’

Non verval communication is very important in order to have productive personal and professional relationships with others. People may fold their arms or look at the ground if they are shy or not interested in the conversation. Notice how close a person is standing to you. The appropriate amount of body space can vary from one culture to another. An enthusiastic handshake can express sincerity and affection. It must be understood that the body movements are the reflections of one’s feelings, emotions, thoughts and position in a given situation. Face is the index of heart. Smile is a messenger of your goodwill. According to an old Chinese proverb, “A man without a smiling face must not open a shop”. In a classroom a teacher without a smile can’t win the hearts of students.

Objective of learning body language is to gain knowledge and modify own behavior. Besides body parts, clothing, hair styles, jewelry, accessories, cosmetics perfumes and even pair of spectacles play important role in body language. A person is also known by his dress and address.

Body language is an important parameter for judging you in an interview. Your attitude, confidence, enthusiasm, energy levels are reflected in your body language.

Poor Communication: Poor communication threatens innovation, customer satisfaction, profitability and other key measures of success. It builds the company’s culture, facilitating team-building and enabling knowledge sharing.

Due to lack of proper communication it may create a conflict or create misunderstanding or ambiguity.

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Building vocabulary is primarily a function of reading. So the student should read well written books and articles. Use of dictionary reading is helpful for improving vocabulary.

Conclusion: For effective English communication proficiency, oral and written communications create a good ambience. To build a career many opportunities are available. It is not enough to know and understand the basic words and sentences structure of the English language. For effective use of English, Internet, reference books reading and watching English programmes and movies on television is helpful. Ability to express powerfully is very important skill. To develop and cultivate powerful body language is one of the skill. If you have better communication skills you will be successful in politics or in business. Informative and effective communication skills propel them to positions of leadership. ****

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