Institutional EYE

Commentary on Corporate Governance Issues

IDFC Bank finds itself a new suitor

IDFC Bank rested its survival on obtaining a bank licence. Having gotten one, it failed to capitalize on its this and for the past two quarters has scrambled for a fix. Six months ago, the Shriram group was the placebo, now its Capital First Limited (Capital First). The haste with which IDFC Bank has changed partners, begs the question whether IDFC Banks’ and IDFC’s board have understood the contours of what has been proposed, and asked the managements the right questions. 1. IDFC had a board meeting on 12 January in which this transaction was discussed. Given that this is a material subsidiary, why were the stock-exchanges not informed? 2. I banking license requires IDFC to hold 40%

Dividends: 92 companies can pay Rs.340 bn more

Despite a muted earnings growth in FY17, Indian companies can pay higher dividends from their existing cash piles. IiAS’ research has identified 92 of the S&P BSE 500 companies hold about Rs.1.85 bn in aggregate cash and cash equivalents – of which, conservatively, almost Rs.340bn can be paid out in incremental dividends. SEBI’s mandate to the top 500 companies for an articulated dividend policy has helped to some extent, but cash hoarding continues to plague listed companies in India. Indian companies continue to maintain large cash balances. IiAS’ study based on FY17 financials shows that there are at least 92 companies that can potentially return cash to its shareholders in the form of di

The aftermath of Satyam

Nine years after the shenanigans in Satyam Computer Services Ltd (Satyam) came to light, SEBI has found Price Waterhouse (PwC) and its network firms guilty. This is one of the most stringent orders passed by any regulator against a Big Four auditor and might appear salutary, but all the players – Satyam itself, PwC, regulators and even companies other than Satyam, have muddled through this saga. Nine years after the shenanigans in Satyam Computer Services Ltd (Satyam) came to light, SEBI in its order has found Price Waterhouse (PwC) and its network firms guilty. The firm and its network entities have been barred them from issuing audit certificates to any listed company and SEBI registered e

Corporate India Commits to its Social Responsibilities

The Companies Act 2013 expects businesses to spend 2% of their three-year average profits on social initiatives. Even before the Act was put in place companies recognized they need to think about more than just profits – and did so. But since CSR has become mandatory, companies have embraced social causes with a fervour. They now apply the same rigour to causes as diverse - as hunger, poverty, healthcare, education, environmental sustainability, and rural development, as they bring to their business. IiAS has been tracking the developments in this sphere since 2013, and has most recently studied the spend by the S&P BSE 100 companies in FY17. The IiAS study of the FY17 Corporate Social Respo

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