Institutional EYE

Commentary on Corporate Governance Issues

75 companies can distribute almost Rs.1.1 trillion more

Based on FY18 financial statements of the BSE 500 constituents, IiAS’ study this year identifies 75 that can return cash of up to Rs. 1.1 trillion to shareholders. These companies have large cash holdings and can distribute about half of their on-balance-sheet cash (including cash equivalents) to shareholders, as dividends or buybacks. The cash available for distribution approximates one year’s profit after tax for these companies. IiAS study of the BSE 500 companies FY18 financials, highlights 75 companies that can pay Rs. 1.1 trillion immediately (see Annexure A). This Rs. 1.1 trillion equals the aggregate post-tax profits reported by the 75 companies and is in addition to the Rs. 621 bn p

CEO remuneration: Competition to pay more

Investors are getting increasingly concerned with CEO remuneration levels in Corporate India. A recent IiAS study reveals that median CEO pay of BSE 500 companies has outpaced corporate performance over the past five years. Investors are voicing their opinions through their votes – it is time boards listen to this outcry. Indian companies are not of the same size as the S&P 500 constituents, but they seem to be emulating global pay standards. While we don’t have a Nikesh Arora with an annual remuneration of over USD 100 million, we do have remuneration levels that stand out. A Wall Street Journal study showed that S&P 500 company CEOs get paid about USD 1 million a month – for India, that nu

Are your shareholders in your deal equation?

Prabhat Diary Limited’s (Prabhat), is selling its dairy business to Groupe Lactalis, a French dairy company. The postal ballot seeking approval for the transaction was on 26 March 2019. If a ‘promoter’ has decided to exit a business, the shareholders are usually the last to ask them to continue to run it and certainly not the institutional investors. Yet 99.52% of the institutional investors who cast their vote, voted against the sale. This transaction holds lessons for managements and board, which they will do well to embrace going into the new financial year. When finalizing a transaction, they need to ask themselves: Are shareholders in the deal equation? To read the full report, click he

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