Institutional EYE

Commentary on Corporate Governance Issues

Selling less while raising more

If the government wants to continue to mobilise resources from divestments, it needs to ask itself three questions. First, is there clarity regarding the objectives in running particular PSU’s. Second, is the current Ministry-PSU linkage the best structure to ensure that PSU’s function efficiently and three is the divestment giving the government most bang for its bucks. Raising money from sale of Public Sector Undertakings (PSU’s) is now a critical item in meeting fiscal targets. This government has raised Rs 2.71 trillion or 84.3% of the targeted Rs 3.21 trillion since 2014-15, meeting its divestment targets in the last two years. The tenacity with which the government is pursuing this one

Rescuing CG Power: Lessons from Fortis’ playbook

It is in the interest of all stakeholders to ensure CG Power and Industrial Solutions Limited (CG Power) remains operational. For the company to continue to run - taking a leaf out of Fortis Healthcare Limited’s (Fortis) playbook - the immediate task is to ensure liquidity does not dry up. For this the company needs to present a true and fair picture to all stakeholders, particularly its lenders. And, to instil confidence regarding the seriousness of purpose, it needs to change its board and management. The buck stops with the board; it is also the starting point from which to rebuild the company. Sever the past and think about the future. That is the only way CG Power is likely to get out

Additional disclosures to be made under SEBI’s revised Corporate Governance Report

The recommendations made by the Committee on Corporate Governance under the Chairmanship of Uday Kotak were incorporated by SEBI as amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. In keeping with these amendments, SEBI released a new format for compliance report on corporate governance to be submitted by listed companies to stock exchanges. The revised formats include disclosures to be made on quarterly basis, annual basis for the whole of financial year and within six months from end of financial year. This will be applicable for reports submitted from the quarter ended 30 September 2019. A quick update regarding the same is attached here.

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