Institutional EYE

Commentary on Corporate Governance Issues

A social board: Why India Inc’s boards can’t ignore social media

Online presence is not enough; boards should stay updated about social media strategies and how best to use them. Each minute there are over 4.1 million likes on Facebook, 347k tweets being posted on Twitter, 300 hours on new video being uploaded on YouTube. So, it’s important that Boards appreciate the role social media plays. Twitter was launched in 2006, YouTube in 2005 and Facebook the oldest among these three in 2004. Given that average age on the Indian Board is just over 59, this can be difficult bridge to cross. But ‘socialize’ themselves, they must. Let me take a recent example. Kiran Mazumdar Shaw tweeted, disparaging an equity report that had put a sell call on her company. This i

73 companies can pay over Rs.200 bn more in dividends

India Inc can pay more dividends: IiAS’ study (based on FY15 financials) shows that at least 73 of the S&P BSE 500 companies can double the amount of dividends. This is despite the fact that companies increased dividend payouts following IiAS’ 2014 study (based on FY13 financials): IiAS had identified at least 77 of the S&P BSE 500 companies that could pay more, of which 64 companies did increase dividends in FY15. Nevertheless, India Inc. is stockpiling cash and must return it to shareholders if it does not have productive use for it. IiAS recommends companies disclose a retention policy – how much money they want to retain and why, rather than a dividend policy to provide investors clarity

Corporate Social Responsibility: Taking root

IiAS studied the FY15 Corporate Social Responsibility (CSR) initiatives and disclosures of the S&P BSE 100 companies. The disclosures show that corporates are embracing CSR enthusiastically. The CSR spend of these 100 companies, aggregated to Rs.52.4 bn for FY15. Although the spend was 26% lower than the prescribed amount, it is up almost 75% from Rs.30.0 bn in FY13. This amount is further expected to increase to Rs.85.0 bn in the current financial year. Data reveals that even before the statutory CSR norms were put in play, the larger companies were spending on social and environmental causes: evidence that companies in India recognize the need for undertaking socially responsible activitie

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