“Independent directors have to safeguard the interest of not just the investors and promoters but also other stakeholders like minority shareholders, bankers, employees and the customers,” said N K Ranganath, Managing Director, Grundfos Pumps India and former Chairman of Confederation of Indian Industry (CII) - Tamil Nadu.
He was delivering a theme address at the inaugural session of the first edition of Directors’ Conclave organised by the Institute of Directors (IOD) - Tamil Nadu and Puducherry Region here today.
Speaking on the theme of the event, ‘Boardroom challenges in the VUCA world’, Ranganath said, the concept of VUCA - volatility, uncertainty, complexity and ambiguity, is not new to India which has been facing some kind of new laws, new policies and new kinds of business every single day over the last 70 years.
Nothing that there are many inconsistencies in policy, Ranganath said it has become an ‘ominous responsibility’ to be a member of the board after the advent of Companies Act 2013. “No wonder people are running away because the legal issues of being on a board even if your are independent or non-executive director can get you,” he added.
Ranganath also said that there is clearly a trust deficit between the government and corporates where each of them looks at the other with suspicion. “Today, having been on Boards for a long time, I cannot take a decision without calling lawyers and Chartered Accountants because there are around 250 Acts to understand,” Ranganath said.
Ranganath also highlighted the need to have a code of ethics and good whistleblower policy to bring greater transparency in the business.
Disruption and Compliance
In his special address, R Srinivasan, Editor, The Hindu BusinessLine said, "Today, more than ever in the past, managements are facing a kind of electric shock from the environment in what I call a DC shock.”
Elaborating, he said, DC stands for Disruption and Compliance - which are the two biggest challenges faced by the Board members across the world. “So, in order to survive, you should become a disruptor before getting disrupted,” Srinivasan said.
Emphasising on the need to bring diversity in the boardrooms, Srinivasan said, “Women on board should not be a legal compulsion but it should be in your DNA.”
He also highlighted that the percentage of non-performing assets (NPAs) in India is among the highest in the world because in many cases companies have adhered to the letter of the law but failed to adhere to the spirit of the law.
Three points to success
In his special address, Darrel Huntsman, CEO, Frost & Sullivan said, a company’s long term share value is mostly driven by its growth more than market share, profitability and its competitive advantage.
“If you think about Amazon, it was unprofitable for years and years and they plough back all money into the business so once there is profitability there is growth. The shareholder value of Amazon is pretty good,” Huntsman said.
Sharing his three points to success, Huntsman said resources (not just capital but also intellectual and people resources), Making decisions today (in a very uncertain & ambiguous future) and adaptability are the three things that will decide the growth of any organisation.
Spirit of the law
PH Arvindh Pandian, Senior Advocate and Additional Advocate General, Government of Tamil Nadu, in his special address said that the word ‘spirit of the law’ has been going on for thousands of years.
“Be it technology, artificial intelligence (AI), laws, changes in the systems..it all brings us back to something called ethics and for Indians, ethics comes from our oldest of our texts,” Pandian said.
He also said that, in a court of law, the Judges look only at the spirit of law which is implemented while keeping the letter of the law slightly aside. “So it only affects the administrators of the institutions first who are essentially directors or board of directors taking decisions,” Pandian said.
Unpredictable change
In his introductory address, MS Sundara Rajan, Chairman IOD Chennai Region and Former CMD, Indian Bank said, a lot of turbulence is taking place in the boardrooms these days.
“We live in a world which is constantly changing and unstable everyday. Changes are becoming unpredictable and faster thereby making historical forecast and predictions less relevant,” Rajan said.
While setting the context of the all-day event, Rajan said that people are scared of taking the role of independent directors.
“The number of independent directors who have submitted resignations during the relevant year is much more than the past year or in the historical past,” he added.
The Directors’ Conclave will also deliberate on a wide range of topics from data privacy to Artificial Intelligence and Blockchain for Future Boards. The multiple plenary sessions spread throughout the day will see directors, corporate professionals and senior government officials share their thoughts and experiences on topics such as Risk Mitigation for Directors – Directors & Officers Liability Insurance, Responsibilities of Independent Directors in a VUCA world, Wealth and Treasury Management and much more topics of relevance and interest to corporate India.
The Institute of Cost Accountants of India (ICAI) is the Conference Partner while Hindustan Chamber of Commerce, Indo-German Chamber of Commerce, Indo-Australian Chamber of Commerce and Software Process Improvement Network (SPIN) - Chennai will be the supporting partners.
The Hindu BusinessLine will be a media partner for the event.