'SEBI norms, CII drives, great boon for Indian Cos'

Bangalore, Nov 6: With the Country's economy going global with gumption and guts, CII initiatives and SEBI norms like Clause 49, had proved a boon to Indian Companies in practicing good governance, Tata Consultancy Services CEO S Ramadorai said today.

Delivering his address on 'Corporations of the Future', organised by the CII here, he said for corporate sector, good governance had led to long-term investors coming forward to pay a premium to buy stock in the Indian companies.

''There is no doubt that good governance in corporate sector has gone someway in off-setting our low rankings as a country at the global corruption indices. The Clause 49 SEBI norms, which seeks to improve the governance in Indian corporates, CII initiatives taken in this regard earlier and the interest shown by corporates in Sarbanes Oxley Act (SOX) of the US, has acted as drivers in Indian corporate sector adapting better governance system,'' he said.

Good governance had meant that Indian IT industry earn kudos of the customers globally, despite increased fears of data theft and privacy concerns. ''There is no doubt that good economic governance means that our banking sector is healthier than most globally and our Forex reserves touch 170 billion Dollars,'' he said.

However, he regretted that in other sectors, the governance had not reached the desired levels. The electricity sector, despite soaring demand was still unable to manage to stand on its own feet.

Urban Ceiling Act in Mumbai had created a very poor governance practices in the real estate sector.

''Thankfully, the Indian Railways, under the enigmatic Laloo Prasad Yadav, is improving its governance by leaps and bounds and has not only become profitable but also delighted the travellers,'' he said.

Mr Ramadorai said for private sector too, there were pitfalls along the way when earnings guidance is given and the investors accept it. Though intentions of transparency in private businesses was fair the consequences if the guidance go awry it may spell trouble for the companies. They would be forced to do everything to meet expectations and manage earnings rather than focus on long-term health of the business resulting in good governance suffering.

He said TCS, after much deliberation had decided not to give guidance to analysts. "We wanted to run the business on long-term interests of the stake holders and not be a hostage of market expectations," he said.

He said that Governance and Accountability were the twin and intertwined challenges that had to be tackled by the corporate sector. If governance was defined as a structured, ethical and value based that would benefit stakeholders, accountability was the responsibility to account for one's conduct within a framework.

A great deal of governance would be resolved if firms succeed in correctly establishing the levels of accountability. "I want the corporate sector to study the Tata group's sentiment that +what comes from the community must go back many times over+. Good corporate behaviour and good governance are pre-requisites for creating wealth for all stakeholders," he added.

UNI