‘Corporate governance better, women representation still abysmal’

The representation of women on boards of top Indian companies continues to remain low even as corporate governance practices across top 150 companies have seen an improvement, says a recent report by Grant Thornton.

Women make up only 7% of total directors in India’s top 150 companies by market cap, according to the report.

Though market regulator Sebi has allowed listed companies an extra six months, till March 31, 2015, to have at least one woman director on board, the advisory firm believes getting a women director on the board is still a challenge for most companies.

The report also shows that out of top 150 listed companies in India, only four have opted for a woman chairperson. A mere 61 women hold the post of independent director while 23 are executive directors. Twenty-seven women are non-executive and non-independent directors.

Harish HV, partner, Grant Thornton India, believes there is need for enabling support mechanisms. “Otherwise, with typical Indian ingenuity, promoters will add a female member of the family to the Board to meet the letter but not the spirit behind the rules,” added Harish.

The study, based on annual reports of last two fiscals and public filings by 150 companies, however shows that India Inc is increasingly accepting the provisions laid down in latest Companies Act 2013 and Sebi’s revised Corporate Governance Code for listed firms.

The need for a whistle-blower mechanism is increasingly getting recognised, with 85% of 150 companies reporting its existence and nearly 40% of them (58 companies) describing the mechanism.

The study reveals that in eight out of 150 companies’ auditor reports, there was reference to the occurence of fraud. The study also shows a rising trend as far as independent directors go, with the fy14 witnessing 43 net additions compared to 17 in FY13.

The study reveals that companies that have a turnover higher than Rs 10,000 crore prefer a larger board size. Thirty-four of these companies have 13-18 directors on their boards, a significant increase from 2013. Further, the manufacturing sector takes the lead with the maximum number of directors on the board.

The study also points out that real estate and infrastructure have an average of 106 related parties per company, double the average of related parties for 150 companies. Further, 52 was the average number of related parties reported by the analysed companies.

The article appeared in Financial Express . The article can be found here.