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Director TodayJuly 2015 A Journal of the INSTITUTE OF DIRECTORS India Pages:60

IOD Celebrates 25th ANNIVERSARY an overview 12 Interview This Month's Articles tailored for you of the Month 32

Directors’ Dilemmas: Why integrity is Board Opportunities in Reconciling Competing Claims good for business the United States?

Prof. Colin Coulson-Thomas 6 Richard Leblanc 16 Dr. Larry Taylor 18

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S 2years5 Since 1990 Contents Director Today FEATURES A Journal of the INSTITUTE OF DIRECTORS India July 2015 Directors’ Dilemmas: 6 Reconciling Competing Claims EDITORIAL BOARD Prof. Colin Coulson-Thomas Lt Gen JS Ahluwalia, PVSM (Retd.) Manoj K. Raut What Sets IOD Apart: Pradeep Chaturvedi 12 Ashok Kapur, IAS (Retd.) IOD’s 25 YEARS - An Overview Lt Gen J.S. Ahluwalia, PVSM (retd) Prof. Colin Coulson-Thomas Dr Graham Wilson

EDITOR Why integrity is good for business 16 Manoj K. Raut Richard Leblanc

SUB EDITOR Reji Mathew Board Opportunities in the United States? Dr. Larry Taylor 18 GENERAL MANAGER PUBLICATIONS Joel Shalom Aligning Corporate Social 20 MANAGER DESIGN Responsibility with Affirmative Action Teena Lejo Soumitro Chakraborty

IOD (HEAD OFFICE) New Delhi Environmental Sustainability M-56 A, Greater Kailash - II, (Market) J.S.Ahluwalia 22 New Delhi - 110048 Tel: +91-11-41636294, 41636717, 41008704 • Fax: +91-11-41008705 Felicitations E-mail: [email protected] 27 Website: www.iodonline.com REGIONAL OFFICES The Compliance Confusion - 28 Mumbai Obscure Indian acts you Need to Comply with 1092-C Wing Oberoi Garden Estate, Suryaprakash Kukyan Chandivali Andheri – East, Mumbai - 400072 Sustainability Focus Case Study Tel : +91- 22-40238141 / 42 / 43 34 E-mail: [email protected] Marks and Spencer Group PLC, UK

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From the PRESIDENTS DESK

As it completes it's 25th year, IOD is proud to have made its mark on the corporate landscape in many ways. It's mission has been to lead a holistic transformation of boardrooms, through a spate of initiatives and corporate strategies. IOD has been preparing Directors for the turbulent business of tomorrow's world, and believes that business should be put centre stage, to drive social, environmental and ethical agenda, treating it as a competitive differentiator. IOD's business plan includes a strategic networking component that helps directors grow their business. Conferences provide opportunities for networking with a diverse range of industries and experiences. Boards must also actively engage with how the issues of climate change impact their operations, risk, and strategy. SMEs growing at the rate of 8% per year have an immense potential to bolster India's economic progress to contribute 15% of India's GDP, by 2020. The present Modi government's plan to build a strong business eco- system for SMEs provides a single point of reference for the industry, and it is also pushing PSU banks to connect with SMEs for their loan requirements. Corporate governance is the key to determine the effectiveness and sustainability of a company. Too often governance debates have been dominated by the concerns of MNCs. There is a need to put more emphasis upon the governance of family owned companies, and SMEs. The Organization for Economic Cooperation and Development (OECD) came out with a revised set of 'Principles of Corporate Governance' in November 2014,with greater emphasis on 'Comply or explain' approach, (no 'one size fits all'). IOD supports the OECD 'Principles of Corporate Governance', rather than the 'Rules'. Appraisal of Board Performance includes defining individual and collective roles and responsibilities of it's directors, and creating awareness about their expected levels of performance. An annual board evaluation will contribute significantly to improved performance at organizational, board and individual director levels. IOD will be building on it's success so far. It's strategy will be to influence government and industry alike, to deliver significant improvements in the functioning and effectiveness of corporate boards. We plan to continually work closely with leading professional organizations, to drive responsible performance. At present, there is no institution in India to speak up collectively for the community of company directors, and represent their distinct interests and concerns. IOD as a professional organization of directors now plans to fill this gap. IOD Publications have played an important role in providing well researched, peer reviewed informative surveys and reports, in the form of a series of books, handbooks and monographs. IOD's monthly journal 'Quality Times' has been one of the leading corporate periodicals in India. It has now been replaced by 'Directors Today', a larger professional version, coinciding with the Silver Jubilee year of the IOD. It covers professional events, seminars, workshops, and includes articles on corporate governance from eminent industry and thought leaders. I thank you for your continued patronage of 'Quality Times', for the past 25 years. I am sure 'Directors Today' shall open still wider avenues for our communication, to promote higher J.S. Ahluwalia President, IOD standards of skill knowledge, and professionalism in directors. Article

Directors’ Dilemmas: Reconciling Competing Claims

Prof. Colin Coulson-Thomas Director General, UK and Europe Operations, IOD India

Directors face challenges and dilemmas in and out of the boardroom. High among them is achieving a balance between Directors have to think competing claims and/or contending forces. Boards have to simultaneously create opportunities and avoid risks. They must about both the structural and be both commercial and responsible, and consider the demands the behavioural aspects of of different stakeholders. Directors have to think about both the structural and the behavioural aspects of governance. They governance. need to juggle priorities in relation to what is possible with [ Our focus will be upon balancing opposing forces and different accessible resources. considerations, rather than achieving a balance in the Striking the right balance between different considerations can membership of the board in terms of factors such as age, sex, result in harmony, progress and satisfied stakeholders. Putting experience, nationality and length of service. The choices we too much emphasis upon particular requirements can lead to will consider are those that may face most directors at some frustration and disappointment. Indicators of imbalance could point in their board-level careers. Their relative importance include frustration and alienation. Responses can range from will vary according to situation and circumstances and the opposition to revolt from staff, customers and investors. challenges & opportunities facing a particular board. DBoards that fail to achieve the required balance often have to work harder and the more they struggle, the deeper into the Width versus Depth mire they may sink. A key issue for both individuals and nominations committees is Making the Right Call the number of boards a director should sit on. Holding more than one directorship, and a series of directorships over time, In this article we will examine some of the areas in which can result in a rich diversity of experience, especially if the directors have to make choices such as deciding how far to appointments are complementary and past lessons are relevant travel in certain directions rather than others in a multi-polar to future aspirations. Too few external commitments can situation, or along a bipolar spectrum. An example of the narrow a perspective, while too many at the same time can former is a project manager's juggling of cost, time and quality. result in insufficient time to give proper attention to the affairs My 2001 book Shaping Things to Come identified a number of of any one board. Put simply, a director has to achieve a balance bipolar situations in which a balance has to be achieved between width and depth. between different factors. Examples include activity and While insufficient effort may create certain problems, going reflection, change and continuity, and risk and return. beyond a tipping point might trigger other adverse consequences. One can devote too much time to details and DIRECTORS WHO ACHIEVE AN become so involved in them as to lose sight of the whole and the EQUILIBRIUM IN THEIR “big picture”. Directors should know enough to be accountable and answerable for their decisions. They need sufficient WIDER LIFE ARE THE ONES WHO MAKE engagement to be aware of what is going on, but not so much as to risk “going native”, losing objectivity and ending up not BALANCED JUDGEMENTS IN being able to see the wood for the trees. THE BOARDROOM. Width versus Depth Experience of serving on boards and working with boards suggests that often the directors who achieve an equilibrium in Individuals vary in their motivation for seeking boardroom their wider life are the ones who make balanced judgements in appointments and deciding whether or not to join particular the boardroom. Work-life balance, sound personal finances and boards. Some people like to “be things”. Especially when a settled family situation can give individuals sufficient time young, they may be concerned to build a CV that lists various and emotional space to reflect on strategic issues, choices that offices held that seem impressive. Others are more concerned have to be made and decisions that need to be taken. with “doing things”. They look for opportunities where they could add the most value. They want to contribute and make a

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Article difference as well as attend meetings. Executives are not always meticulous in discharging their One needs to balance giving and receiving. Prof. Andrew responsibilities and board members may be held to account by Kakabadse has remarked that older directors may be less owners, whether individual and institutional shareholders or a interested in themselves and more focused upon the prospects family group. of companies when attending board meetings. The first duty of Directors should concentrate upon fundamentals and not be a director should be to promote the interests of the company. distracted by fads. They need to avoid the distrust that other Excessive concern with ones own remuneration and benefits occupational groups create, such as politicians who focus upon can result in allegations of greed and suggestions that directors wealth distribution but overlook the importance of wealth are feathering their own nests. It contributes to cynicism and creation. Substance can be much more important than surface harms the reputation of boards. appearances. Effective directors challenge and probe in order A related issue is striking the right balance between thinking to move beyond the discussion of symptoms and identify and and doing. Inadequate thought can lead to inappropriate action address root causes. and unintended consequences. However, there is little point Creativity and Compliance taking the time to craft a potentially winning strategy if one does not have the will or energy to make it happen. Many On occasion, different requirements may appear to be in boards formulate strategies, hand them over to an executive conflict. Thus customers may demand greater variety or more team and hope for the best. Thinking through whether the creative responses tailored to their individual requirements, capabilities and support are in place to achieve them is not while executives point out the risks and costs involved, the interfering in operational matters. The “new leadership” I need to avoid process problems and resulting delays and the advocate in reports such as Talent Management 2 and imperative of complying with existing laws, regulations or Transforming Knowledge Management puts more emphasis license conditions. Entrepreneurial approaches have to be upon implementation. reconciled with prudence and control. Where risk and return are related tight controls to avoid risks may also reduce returns. Present and Future Hence, the importance of discussing risk appetite. Directors need to be aware of both internal and external issues, There are a number of aspects to balance. A board seeking and short-term pressures and longer-term trends and greater certainty of outcomes may be tempted to adopt a top- developments. They must be able to read the road ahead and down or command and control approach, agree detailed engage in forward looking activities such as visioning and policies and issue prescriptive guidelines. This might inhibit providing strategic direction. They have to plan for the future innovation and reduce flexibility as situations and while being flexible when changes are required. At the same circumstances change. Specifying desired outcomes in general time, a board may have to address certain current issues in order terms and giving more discretion as to how best to achieve them to remain competitive. In short, a director has to get the right may encourage exploration of alternatives and new balance between today and tomorrow. approaches, but will stakeholder groups welcome the greater When visioning a board has to decide what to change and what uncertainty that might result? to retain. Changing too many things at once and change for One can overdo consensus and conformity. Being a team player changes sake can be detrimental. A balance has to be struck is not incompatible with raising questions in the boardroom. between change and continuity. For many people the latter is While a board riven with endless differences and very important. Stakeholders may have expectations and disagreements may struggle to provide strategic direction, a requirements they would like to see met. Certain changes might degree of friction may be required to progress. Without be unwelcome, or even harmful and prejudicial of a continuing challenge, a rubber-stamp board and group-think can result in relationship. ineffective governance. Rhetoric and Reality Complexity and Simplicity Rousing rhetoric can restore confidence, raise spirits, inspire Some boards are simply not up to the job. They lack the and motivate. However, if words are not matched by deeds, and experience, expertise and/or the intellect to comprehend issues achievements are not in line with aspirations and expectations, and risks in the market sectors in which their companies the effect can wear off and become counter productive. operate. One may need sufficient understanding to receive and Corporate communications need to avoid extremes such as appreciate specialist counsel. On the other hand, some directors selling short, or exaggeration that misleads or constitutes lies. go so deeply into technical details that they miss strategic Realism and delivery can build the credibility and trust that considerations. may give a board the benefit of the doubt in difficult situations. The ability to communicate complex matters so that they can be Directors also need to strike a balance between trust and understood by fellow board members and investors is a challenge in relation to matters delegated to a chief executive valuable quality in directors. One needs to get the right balance officer and management team that is accountable to the board. between complexity and simplicity. Sometimes issues before a Excessive probing and detailed questioning may suggest a lack board appear excessively complex because the essence of a of trust, but inadequate monitoring can also involve risk. situation, root causes or fundamental drivers are not fully

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Article understood. Excessive use of quantitative measures can lead to the Directors should question the value of business models that distortions of the command economy and target cultures, but cannot be quickly communicated. In sectors such as hospitality the naïve use of qualitative indicators can result in fudge and and travel significant market shares have been quickly gained disputes over what has been achieved. Can one go too far in by new players who have understood the importance of key seeking to achieve a balance? In an effort not too miss a significant factor, some adopters of balanced scorecards factors such as occupancy and introduced simpler business include so many different measures that people fail to focus on models. what is most important. Targets may overlook or conflict with Individuals and Organisations customer requirements and client needs. Some directors put so much stress upon Balancing Stakeholder achieving corporate objectives that they BOARD MEMBERS SHOULD and Corporate Interests overlook the importance of individual CONCENTRATE UPON WHAT IS aspirations, whether of customers, The alignment of the interests of employees, suppliers, business partners or IMPORTANT RATHER THAN different stakeholders may be members of other groups. Relationships WHAT IS EASY. possible but cannot be assumed. that last tend to be those which benefit all Over-performance in meeting some parties. Directors should not assume that[ [ requirements of particular others will obediently follow them. Questions need to be asked stakeholders can harm one's ability to satisfy others. Directors such as why should people be interested in this, or buy this, or are in a position to benefit each interest group, for example support this? What is in it for them? better products and services at lower prices for customers, more dividends for investors, higher salaries for employers or raised In books from Transforming the Company onwards I put the prices for suppliers. case for achieving a balance between individuals and organisations. One can only achieve so much by squeezing Deciding to what extent to meet the expectations or demands of more out of people and turning up the speed of the treadmills different stakeholders, while retaining enough to develop a they are on. Much better to pursue mutually beneficial company's capability to compete and win in its chosen sectors outcomes and an alignment of interests. While a vision holder and target markets, is a judgement call. Each group will have of major transformation programmes I worked hard to ensure expectations. Not meeting them could lead to adverse that changes being sought would also offer tangible advantages reactions, whether the loss of customers, investors selling to those involved in the processes concerned, or impacted by shares, staff resignations or supplier boycotts. them. If engagement, active support and legitimacy are to be Abolishing Trade-offs achieved, a new initiative may need to be perceived as balanced and fair. Sometimes directors and boards try too hard. Where courses of Some directors are primarily concerned with organisational action are failing, rather than redouble efforts directors should interests because they instinctively focus upon so called “hard” reflect whether they are achieving the right balance, or missing factors such as technology considerations, processes and a particular piece of the jigsaw puzzle needed to succeed. systems. Softer “people” issues may be regarded as less Corporate objectives are sometimes like the end of rainbows. If tangible and more difficult to influence. Board members should one goes straight for them they seem to move away and prove concentrate upon what is important rather than what is easy. forever elusive. In contrast, achievement can be the consequence of putting all the elements required in place. Action and Reaction Increasingly, boards need ways of simultaneously achieving Stakeholders might expect a board to give a lead. They may multiple objectives. For example, replacing various single- hope that it is proactive and takes steps to achieve a corporate issue initiatives with new leadership's emphasis upon the vision and agreed goals and objectives. They may also expect it provision of better support can help people to become and to be responsive to their changing requirements and emerging remain competitive, while delivering benefits for different challenges and opportunities. Competitive success in business stakeholders. Better performance support can abolish certain - as in some sports - can demand both attack and defence. Too traditional trade-offs by increasing productivity, enhancing much of one and too little of the other can result in problems. understanding and capability, encouraging innovation and speeding up responses, while at the same time reducing costs Some boards are status-quo oriented. They might be satisfied and stress and ensuring compliance. with a company's existing market positioning. They may appear defensive and focused upon defending its interests. In relation to boards upon which you sit or deal with, are Overly protective approaches can lead to complacency. They directors aware of competing demands and conflicting forces? can stifle innovation and change. However, out and out Are they achieving the right balance between contending revisionism that challenges everything and sets too many hares considerations? Do reviews of board performance include an running in the search for renewal and new offerings can result assessment of choices being made and positions being in confusion, chaos and threats not being addressed. adopted? Are practical steps being taken to avoid trade-offs and introduce quicker and more affordable ways of delivering Many boards debate how best to measure performance. various outcomes simultaneously to multiple stakeholders?

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Overview

What Sets IOD Apart

IOD’s 25 YEARS An Overview

Bharat Ratna Dr APJ Abdul Kalam President of India and IOD’s Ist Distinguished Fellow at the IOD Foundation Day

Introduction enhancing TQM and Sustainability of the enterprise, through a

th constructive engagement with stakeholders, focusing on As it completes its 25 year, IOD is proud to have made its mark candour, transparency, equity, participation, accountability, on the corporate landscape in many ways; not just in India, but integrity and social responsibility, in corporate decision now increasingly internationally. It's mission has been to lead a making. IOD believes that business should be put centre stage, social, environmental, and economic revolution, and a holistic to drive social, environmental and ethical agenda, treating it as transformation of boardrooms, through a spate of initiatives a competitive differentiator. Thus, corporate approach towards and corporate strategies, focusing on issues of Governance, stakeholder engagement, full disclosure, corporate Transparency, Accountability, Sustainability, and professional governance, and corporate social responsibility has all become development of Directors. very important part of their sustainability strategy. The The Institute of Directors (IOD) was established on 12th July Ultimate purpose of an organization is to create tangible and 1990, as an independent, non-profit apex association of intangible values, for its stakeholders. directors, to spearhead India's corporate revolution, and build The greatest challenge before business in 21st Century is to Brand India. IOD played a stellar role in outlining and bridge the gaps between rich and poor, which have widened propagating the concept of Quality, inside the corporate since the advent of globalization. IOD strongly believes that corridors, to coincide with India's Economic Reforms of 1991. networking has become the greatest competitive differentiator, It focused on directors training and development, by inviting in 21st century. Though conferences are not IOD's business, it Quality Gurus from around the world, like Dr. Taguchi and Dr. holds each year over half a dozen international conferences on Kondo from Japan and experts from USA and UK. It's focus has diverse range of subjects like corporate governance, CSR, been on Building Tomorrow's Boards, by realigning their moral environment, climate change, boardroom practices, risk Acompass, and making them more ethical, transparent, management, stakeholder engagement, sustainability, and accountable and equitable. competition law, etc. Its resolve is to reach out, and involve IOD is a professional organization of directors, catering to their everyone in the movement. These have become the most increasing needs for updating through training, publications, prestigious annual events in India's corporate calendar, with the seminars and networking. IOD views business problems not in largest gathering of business and professional leaders. These isolation, but as a microcosm of the society at large, and offer an unrivalled networking opportunity with movers and advocates integrated solutions.IOD advocates a holistic shakers from across the globe, for sharing the state of the art approach to business, advocating 'Triple Bottom Line' benefits knowledge and experience. by focusing on people, profit and planet, in an integrated way. IOD has been engaged in the transformation of India's IOD was founded at a time when customers, employees, corporate leadership. It has been aggressively focusing on suppliers and the community at large were not part of the putting India's boardrooms at the heart of the 'Change Agenda'. corporate governance equation. It was one of the first to think of IOD has promoted ethics as the defining characteristic of

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products and production. IOD helped set up the World successful leadership, and long-term Environment Foundation in 1997, and introduced special sustainability. Our programmes have been environment related Golden Peacock Awards, to promote this packaged to provide a clear understanding concept. to business leaders that ethical behavior, combined with spirituality, make good In this fiercely changing world, our complicated laws often business sense. 'Business Ethics' determine make things worse. Trapped in a time warp, they become an the responsibility, reputation and ethical instrument to perpetuate injustice by maintaining the status obligations of the board and the quo. There is an urgent need to overhaul the legal system, and organization. To add a spiritual dimension introduce laws that are drivers of change and innovation. That to work, HH the Dalai Lama, HH Sri Sri was the vision behind IOD's support for establishment of the Ravi Shankar (Art of living), Swami International Academy of Law in Delhi, chaired by Justice PN Ramdev, Baba Hardev Singh (Nirankari) Bhagwati, former Chief Justice of India. amongst others, have addressed our MoUs international Conferences, in the past. IOD works closely with several national and international What sets IOD apart, is the belief that the professional bodies, to share events and publications from time

Networking conundrums confronting humanity, such as to time, to enrich our corporate governance framework. It has peace, poverty and pollution have a better entered into a 'Memorandum of Understanding', with a number chance of resolution, when addressed in a of professional bodies holistic and integrated manner. Secondly, for this purpose, like business alone has the power and technology with IOD (UK), Institute to make a difference, and therefore needs to of Company Directors be on the table and not in the menu. The (Australia), Swedish business valuations today are determined by Society for Quality the public perception of how sustainable it is. Control, Institute of We believe that free market economy is the Quality Assurance best human innovation, but like parachutes (UK), Israel foundation they cannot function, unless they are open for Quality and transparent. Management, South The IOD's annual 'London Sustainability African Quality Summit' has set up new milestones. These Institute, Chinese have been the culmination of IOD's radical, Society for Quality, 'out of box' and holistic approach, changing Austrian consultancy corporate psyche by demonstrating how ethical, responsible, organization, Dubai 'Quality Group, ACCA (UK), ICAEW transparent and equitable agenda has become the competitive (UK), Institute of Company Secretaries India, Institute of Cost differentiator. It has challenged the conventional wisdom on Accountants, India, BIS and so on. sustainable development, and redefined sustainability as a Golden Peacock Awards 'process of creative destruction that continually disrupts the status quo'. Sustainability is often adversely impacted by our The Golden Peacock Awards have played a crucial role in culture of short-termism, fuelled by 'groupthink', which create India's Corporate Transformation. The former President, late a delusion of invulnerability .Social Responsibility has now Dr. Shankar Dayal Sharma had mentioned “the institution of gained tremendous momentum, and business goals are no National Quality Awards, by the Institute of Directors is longer inseparable from those of the societies and environment, commendable, as it enhances corporate commitment to within which it operates. Quality”. Rules encourage defiance. Corporate governance codes have Golden Peacock National and Global institutional Awards, in changed vastly, due to migration of public values. IOD through 13 different functional disciplines, and individual 'Leadership' its programmes and conferences has sought to transform and 'Distinguished Fellow' Awards, aim to improve the boardrooms, to make them more responsible. In 2000, the IOD competitiveness of individual directors and their organizations. held the first International Conference on Corporate These have by now become global benchmarks, and a holy Governance in Delhi, which led to the formation of the World grail of corporate excellence, helping companies to become Council for Corporate Governance, registered in London, worldclass. under the chairmanship of Lord Swaraj Paul, to look globally None of the IOD's initiatives has achieved as much recognition into the wider stakeholder issues, such as equity, transparency, and, admiration from the industry, as Golden Peacock Awards. corporate citizenship etc. Business leaders have commended the independence and IOD is working with Indian companies to dematerialize impartiality of these Awards, their transparent criteria, and a growth, by minimizing the material and energy intensity of meticulous three level process, through which comparative

Director Today July • 2015 14 www.iodonline.com Overview assessments are done. The Golden Peacock Awards Secretariat board and corporate functional areas. has been working under the Chairmanship of Justice PN Bhagwati, former Chief Justice of India, with Justice (Dr) Arijit Conclusion Pasayat, former Justice of Supreme Court of India, as the IOD has been preparing Directors for the turbulent business of chairman of the Awards Jury. tomorrow's world and bringing a silent revolution for national Training Focusing on today's potential for tomorrow's performance, IOD's Directors Development Programmes (DDPs) align with IOD strongly believes that IOD's mission, to enhance the leadership performance and networking has become a greatest competitiveness of Indian directors. Training is no longer a luxury. An Organization's ability to learn faster than the competitive differentiator, in the competition, has become it's most sustainable competitive 21st century. advantage. [ IOD, as a pioneer in the field of Director's training, conducts numerous comprehensive training programmes for directors, transformation through boardrooms for the past 25 years. From including the flagship 'Masterclass for Directors'. This 3 days personal development of directors, it embraced boardroom intense weekend programme for directors, has become a development as a whole, and then took up organization- wide- powerful weapon for corporate survival and success in the transformation. Corporates are no longer mere economic Chaos, and is like an 'entry certificate' for independent entities, but are becoming engines of national transformation directors. It has become one of the most sought after Directors and growth. Directors can't afford to be passive or pliant, but training programmes, in the industry. It covers subjects such as enlightened radicals, facing increasing scrutiny of stake- Corporate Governance, Company Law, CSR, Managing holders, including civil societies. Innovation, Corporate Transformations, Finance, Board's Role Over the past 25 years, IOD has developed scores of initiatives, in Strategic Planning, and Environmental Management not only in the field of Quality and competitiveness, but also Systems, etc. It trains directors on leadership, ethics, duties and towards social transformation of corporate India. IOD believes responsibilities, and boardroom practices, not simply from the that the role of business has changed profoundly, since the point of view of conformance to statutory requirements, but advent of knowledge economy. Companies have to be driven, also for achieving superlative performance to remain ahead of not only by the shareholder's expectations of making quick the competition. profits - but satisfy aspirations of all stakeholders. IOD works IOD's 'Masterclass for Directors', provides a whole vista of closely with a large number of national and international opportunities, especially for those who wish to join the pool of professional organizations, and has widely expanded it's 'Independent Directors'. IOD maintains database of eligible international portfolio, over the years. Successful businesses qualified professionals, with relevant experience, are increasingly adopting the 'Triple Bottom line' approach that specialization and expertise, to assist their selection and takes care of people, planet and profits, as India gets into the suitable placement. IOD has set up a separate wing to handle all process of integrating with the global order, to become the 3rd activities concerning Independent Directors, called ONEID largest economy in the world. (Organization for Non-Executive Independent Directors). I have had the great pleasure of being involved in initiating and Publications widening the range of IOD activities, since inception. I have walked the centre. It has provided me tremendous professional IOD Publications have played an important role in providing impulse, to be part of these most creative boardroom well researched, peer reviewed informative surveys and transformational initiatives, led by stalwarts including Dr. reports, in the form of a series of books, handbooks and Madhav Mehra and assisted by young IOD team led by its CEO monographs, on different topics related to directors and Manoj K Raut, for bridging the gaps, breaking the traditional Corporate Governance. IOD's monthly journal 'Quality Times' mindsets, and ethical leadership in today's knowledge has been one of the leading corporate periodicals in India. It has economy. now been replaced by 'Directors Today', a larger professional version, coinciding with the Silver Jubilee year of the IOD. It None of the IOD's achievements of the last 25 years would have covers professional events, seminars, workshops, and includes been possible without valued guidance, advice and support of articles from eminent industry and thought leaders. IOD our friends and supporters like you. IOD takes this opportunity continues to be at the forefront, in driving industry and research to salute you all, for your unflinching support and based surveys and reports, on topical subjects, concerning encouragement. board room functioning. It also publishes sets of proceedings Lt Gen J.S. Ahluwalia, PVSM (retd) and Souvenirs on six different areas, each year. It also publishes President, Institute of Directors a series of Handbooks to guide Directors, covering various

www.iodonline.com 15 Director Today July • 2015 Article Why integrity is good for business and the role that boards play Richard Leblanc Governance Consultant, Lawyer, Academic, Speaker and Advisor to Leading Boards of Directors.

“We didn't know.” “We missed it.” “It was a rogue employee.” not effective. Whistle blowing, culture surveys, and ethics There is not an excuse I have not heard for ethical failure. But audits should be conducted independently and reported directly when I investigate a company after allegations of fraud, to the board without management interference. corruption or workplace wrongdoing, almost always there is a Frequently, I find ethical design and implementation failure are complacent, captured or entrenched board that did not take the culprits, with codes of conduct, conflict of interest policies, corrective action. In a few cases, boards actually encouraged whistle-blowing procedures, culture and workplace audits, and the wrongdoing. education and communication being perfunctory at best, The first myth is that the board is a “good” board. There is no overridden by management at worst, and not taken seriously by relationship between the “glow” or profile of directors and employees or key suppliers, with minimal assurance and whether the board is “good.” Often times, there is an inverse oversight by the board. relationship, as trophy or legacy directors typically lack industry and risk expertise in recognizing fraud or understanding what proper compliance looks like, are not Wreally independent, are coasting and not prepared to put in the THIS LAX CONTROL work, or they themselves may not possess integrity. ENVIRONMENT, How important is integrity? Extremely. Three factors make for a good director or manager: competence, commitment and WHERE SELF-INTERESTIS integrity, with integrity ranking first. Otherwise, you have the first two working against you. PURSUED AND WHERE Integrity needs to be defined, recruited for, and enforced. “Does your colleague possess integrity?” “Yes” is an answer to this PRESSURE IS APPLIED, perfunctory question. Full marks. But when I define integrity to IS THE HEART OF include avoiding conflicts of interest, consistency between what is said and done, ethical conduct, and trustworthiness – ETHICAL FAILURE. and guarantee anonymity, I get a spread of performance scores. Those who do not possess integrity in the eyes of their colleagues are poison and should be extracted from any board Complacent boards and executives are the last to know and or a senior management team. They never should have been deny any wrongdoing, having creating the conditions for fraud elected or hired in the first place, which is a recruitment failure. to flourish. Shockingly, lacking any pride, in full denial, and Fraud, toxic workplaces, bullying, harassment and pressure do further reinforcing their entitled self-serving mind set, they not occur in a vacuum. Many people in the company know. The refuse to resign. issue will not go away, will only get worse, and is a latent legal, After ethical failure happens, executives argue that it is a lone financial and reputation risk. rogue employee or an isolated incident. Nothing could be For bad news to rise, boards need to ensure that protected further from the truth. It is an employee who reflects the true channels exist and are used – including for a director or and actual culture, internal control environment, and practices executive to speak up in confidence, and for an independent of the organization, and who is attracted to and flourishes consequential investigation to occur. within them. There is no such thing as a rogue employee. It is a Ethical reporting also needs to assure anonymity to the fullest board that approved the conditions that management proposed possible extent to receive reliable information. If a whistle- within which employees operate. The board's leverage of blowing program has any manager as the point of contact, it is approval, documentation and questions went unused and unasserted. They are the very people who should not be

Director Today July • 2015 16 www.iodonline.com Article

overseeing subsequent reforms, as they are assessing their own and contracts. shoddy work. This is why Western governments are seeking to put their This lax control environment, where self-interestis pursued and countries and companies in the most competitive position where pressure is applied,is the heart of ethical failure. possible. They are enforcing anti-corruption laws using long There is a shocking lack of internal controls over employee and arms of justice to prosecute bribery. They are also debarring agent behavior that I have found in corrupt jurisdictions in companies from government contracts who commit ethical which Western firms do business. This means, not only is the breaches. This debarment is a powerful motivator to spur potential for fraud rampant, but also that costs of compliance investment to internalize the costs of internal controls over are being borne by companies who do not bribe and have proper integrity. controls. They are penalized for doing things right. Western industry will mistakenly argue that integrity laws will Furthermore, there are corrupt jurisdictions whose companies disadvantage them or cost their industry jobs, but the reality is and government officials offer and receive bribes and the opposite. Tough integrity laws will prevent substandard advantage themselves over Western counterparts, including in competitors from offering bribes, will disincent recipients from Russia, China, India and MENA. The most recent example is receiving bribes, and will strengthen Western companies who bribery allegations at FIFA. This unequal playing field puts compete on the basis of price, quality and service. Western companies – in the US, UK, Canada and elsewhere– at He can be reached at [email protected] or followed on Twitter a disadvantage, when competing for business, opportunities @drrleblanc.

New members of the month June 2015 MEMBER

?

INDIVIDUAL MEMBERS • Air Vice Marshal Pradeep Ranjan Sinha, Asst Chief of Air Staff, Indian Air Force • Mr N. Sri Krishna, Partner, Brahmayya & Co. • Ms. Dipika Tuteja, Editor/Architect, In Awe • Mr Navin Kapoor, Owner And Managing Director, Xpertize United • Ms. Rita Handa, GM, Rites Ltd • Mr Anjani Kumar Tiwari, General Manager (F&A), Gail ( India ) Limited • Mr. Santosh Keladi, Director, COM DEV Services India Pvt Ltd • Mr Ratan Khubchandani, Managing Director, Spectrum Trading Co Llc • Mr. Arun Jayarame Gowda, Director, Pharmax Analytic Resources Pvt. Ltd • Mr Pooran Chand Kukreja, Chief Executive Officer, Abc Capital Bank Ltd • Mr. Jayachandra Reddy, Director, Pharmax Analytic Resources Pvt. Ltd • Mr Amit Kumar Agrawal, Senior Chief Engineer, Samsung India • Mr. Brahmanand Reddy Patil, MD, Vector Informatik India Pvt. Ltd. Electronics Pvt Ltd • Ms. Hema Shah, Director, IBM • Mr Dhian Ubhi, Chief Executive, Reliability Networking Limited • Mr. Promod Kumar Nigam, CEO/Partner, Acuite Consulting • Mr Sanjay Kaul, Director, Suyog Projects Pvt Ltd • Mr. V Moorthy, Cluster Project Manager, L&T Construction • Mr. Sanjeev Ahuja, Director, Grenoble Consultants P. Ltd • Mr. Veeranan Narayanasamy, Director, Accord Software & Systems Pvt Ltd • Mr Jitendra Nath Prasad, Retired General Manager, Indian Overseas Bank • Mr. Balaji Kumar A, Senior Director - HR, Metric Stream • Mr. Shubhojit Chatterjee, Head Marketing and Business Development, Weg Electric India Pvt. Ltd • Mrs. Kamal Deep Peter, Sr. Program Manager, APAC ORACLE India Pvt Ltd • Mr. Raminder Singh Gujral Retd, Finance Secretary, GOI • Mr. KS Srinivasa, Director, ADD Technologies (India) Ltd • Mr. Sunil Duggal Dy, CEO, Hindustan Zinc Ltd (Vedanta) • Mr. William D'Souza, Director, ADD Technologies (India) Ltd • Mr. Abhijit Pati, CEO - Aluminium, Vedanta Ltd. • Mr. Muniraju Pulipalyam, Sr.Architect, Microsoft • Ms. Pooja Malik, GM- HR, Anand Automotive Ltd • Mr. Pankaj Jain, Director - Projects, OLX Indi Pvt Ltd • Mr. Ashok Tayal, Independent Director, Shubh Consultants • Mr. Sudhir YR, General Manager, Kisan Kraft Machine Tools Pvt ltd • Dr. Hanumanthu Purushottam, CMD, National Research Development Corporation • Mr. Ashok Nayak, Independent Director, Goa shipyard Ltd • Mr. Anil Mahajan, Director, Kriti Advisory Services Pvt Ltd • Mr. K Vijay, MD, AJAX FIORI • Mr. Akshaya Kumar Sahoo, GM - Finance, MRPL • Mr Mohan Pailoor, General Manager (Ms), Kribhco Associate Life

www.iodonline.com 17 Director Today July • 2015 Article

Board Opportunities in the United States?

Dr. Larry Taylor Chairman, Creighton Group, USA

In all countries the government creates the rules in which the For large-cap, mid-cap and small-cap publicly traded companies must operate. Essentially a company's government corporations in the U.S. there are three required board is the Board of Boards because the public sector government committees: the audit committee, the compensation committee has oversight responsibilities over the private sector and the nominating-governance committee. Unlike the companies. To be an effective independent corporate director, nominating-remuneration committee in Indian, compensation a director must understand the nuances of how the Board of is housed in a separate committee. In addition to the three Boards operates for the country in which their corporation does standard committees, special committees for risk oversight, business. cyber-security or technology might be established. Corporate As the corporate operations become more global, corporate social responsibility committees are rare, but are slowing boards are seeking independent corporate directors from all becoming more common. parts of the world. Geographical diversity is a competitive In my book entitled “The New Breed of Independent Corporate advantage. As a result, many Indian companies seek United Director” (available at www.tone-at-the-bottom.com and States-based directors; likewise United States companies seek www.amazon.com) , I outline the critical corporate governance Indian-based directors. Indian directors who want to serve on issues in the United States. Each of these issues is a standard corporate boards in the United States must understand the discussion item in boardroom discussions, especially in large Board of Boards, i.e., the United States government. Further, and mid-cap corporate board rooms. Some of the key board Indian corporate directors whose companies seek U.S. based topics and the most common position of U.S directors are customers and suppliers are more effective when they shown in the chart below. understand the U.S. Board of Boards. Common Corporate Governance Issues in U.S. Boardrooms

IOD-India is taking steps to bridge the gap and fulfill Most Common U.S. Director director's needs. Board Issue Position or Perspective

Understanding the U.S. Corporate No mandates; however, there increasing Diversity pressure to accommodate. Governance Market CEO salaries are too high; Executive Compensation but must paid to key the talent As in most countries, corporate governance community in the Not talked about enough; too Succession Planning often not prepared for transition U.S. is complex. It can be segmented by company size, by Shareholder Engagement Activism is increasing; too often it bad sector and by business structure. Independent corporate forcing short term profit taking Risk Oversight Increasing complexity; always a directors have opportunities to participate in all the segments of top priority discussion Talent Management Beginning to spend more time developing the market, depending on their career experiences. Independent executives for promotions Independent Directors Creates value if they are dedicated learners corporate directors are increasingly serving on private (i.e., tone-at-the-bottom) Corporate Control Interlocking directorships are decreasing; company boards, in addition to publicly traded boards. but high speed trading rising Political Campaign Spending A necessary evil; necessary to participate In the U.S., there are really only two types of directors: in crony-capitalism executive directors and Independent (i.e., non-executive) Increasing every year because of increased Director time commitment regulation and complexity directors, where independence is defined in similar terms as Corporate Social Responsibility The marketplace is demanding it; may create a competitive advantage India's regulations. The terms nominee director, managing Non-financial Reporting Growing in importance; regulators want to director and whole time director are not formal types of see more information Proxy Plumbing Unnecessarily complex; digital voting directors in the U.S. as they are in India. Further, only the CEO mechanism on the rising Believe that it is not necessary; is a required board member. In many cases, the CEO is the only Auditor Rotation unnecessarily increases cost Undermines loyalty; provides little executive director. Other than the CEO and CFO, rarely do Whistleblower Programs benefit for corporate ethics Just one measure of corporate performance; other members of the “C-Suite” (i.e., COO, CTO, CIO, etc.) Total Shareholder Return too much focus on it serve on the board. The typical corporate board has less than Proxy Advisors Too often misleads investors; however, getting better eleven board members, small than the Indian boards.

Director Today July • 2015 18 www.iodonline.com Article

The above list of issues provides a profile the U.S. corporate priorities, but nominating criteria is changing. It makes more governance community. Many of the issues are a direct opportunities for the innovative and well connected Indian outcome from the two private governance regulations: the 2002 directors. Are you ready? Sarbanes-Oxley Act and the 2010 Dodd-Frank Act. Corporate Governance Risks Pathways to the U.S. Boardroom In addition to the typical board functions such as strategy Opportunities to serve on corporate boards are slowing development, succession planning, risk oversight, executive increasing for a number of reasons: 1) The good old boy compensation, corporate social responsibility, sustainability, network is slowing fading away as older directors retire; 2) regulatory compliance, and operational performance, board independent corporate directors are increasingly serving on a candidates should be aware of the geo-political environment. wider variety of company boards, including private and nano- They must understand the impact of the Dodd-Frank regulation cap (very small) companies; and 3) corporate governance of 2010 and the Sarbanes-Oxley regulation of 2002. How did changes in term limits are forcing more many directors to move these regulations come about? What problems did they seek to off comfortable boards seats. U.S. corporations are beginning resolve? How successful have the regulations been at curbing to fill these open positions with diversity candidates, including corporate abuses? Answers to these questions frame the geographically diverse candidates. director's perspective and impact their effectiveness through In the United States there are six primary pathways to the the candidate interview and on-boarding processes. boardroom. They include: Corporate directors struggle with dealing with asymmetric • Become Founder your own company information risks, tone-at-the-bottom risks, shareholder activism risks and cyber-security risks in addition to human • Private equity firm appointments capital risk. They are beginning to realize that the education of • Executive search firm recommendation the populous significantly impacts the corporation's long term • Shareowner Recommended Candidates sustainability. Many are seeking to influence the Board of • Board Director Referrals and networking Board through education programs to their employees who are voters. In the long run it may be a more effective strategy for • Professional Database Searches the corporation's long term sustainability. Corporate campaign By far the most common pathways to the boardroom are last spending is on the rise, but its benefits to the private sector are two – director referrals and database searches. However, dubious at best. Supposedly corporations spend money on shareowner recommendations and private equity firm political campaigns to get politicians elected who are more appointments are on the rise. Much fewer board seats are sensitive to corporate needs. Unlike violations of the Foreign gained from executive search firm (typically the large-cap Corrupt Practices Act (FCPA), this form of influence peddling firms) and founding the company (typically the very small is perfectly legal in the U.S. Indian board candidates must be firms). prepared to walk that thin line. The profile of the typical board director is changing. The new Directors serving on U.S. based firms are not required to have a breed of independent corporate director is younger, more tech Director Identification Number (DIN), but some type of savvy, more diverse with global experience. Industry corporate governance training is highly preferred. Again, the experience and corporate governance expertise are still high question to Indian director board candidates is: Are you ready? LEADERSHIP When leaders fail to share their thoughts, it can lead to turmoil among the troops. In the absence of clear communication that satisfies the urgent desire to know what the boss is really thinking, people imagine all kinds of motives. The result is often sloppy behavior and misalignment that can cost a company dearly. So why don't leaders spell things out? The standard answer is “They don't want to feel that they are talking down to people by providing what seems like unnecessary detail or context”. A leader who communicates a good strategy clearly stands a much better chance of success than one who communicates a brilliant strategy poorly. But a leader who can clearly convey what he is thinking and feeling stands the best chance of all. Passion, emotion, and conviction are essential parts of the vivid description, that move people to action. Those things transform a leader's message from everyday to extraordinary- just as they can turn a run-of the-mill concert into a bravura performance.

www.iodonline.com 19 Director Today July • 2015 Article Aligning Corporate Social Responsibility with Affirmative Action S. Chakraborty Chief Executive, Innovative Financial Advisors (Fiinovation)

Corporate Social Responsibility and Affirmative Action are very much coherent in nature and should exist in alignment “Corporate Social Responsibility in with each other for peaceful and harmonious corporate and social balance. Specifically speaking about India's perspective, The Indian Perspective has now been Corporate Social Responsibility has always been a kind of an Narrowed Down to a Percentile of intervention that organizations and institutions wanted to the Profit that is Derived and here venture once they realized that they have excess of revenue and Lies the Dichotomy between the some sort of a will to do some good for the society. Of late, because of the Company's Act 2013, it has become a matter Global and the Indian Perspective”. which is now discussed, a matter that is now regulated, a matter that has now shifted from back rooms to the board rooms. Corporate Social Responsibility in its global perspective is Act and can result in building of a broader and larger basically an understanding of an institutional process, not framework of social good that will in turn result in socio - merely based upon a percentile of the profit that is being economic good for the businesses as well. Cextended for social venture or social good but is, by large, the When we talk of Corporate Social Responsibility, the ethical and institutional processes in which the revenues are enablement of the procedures/processes to mobilize the earned. Corporate Social Responsibility in the Indian investment into the social arena, the action that needs to be perspective has now been narrowed down to a percentile of the contemplated/ demonstrated on the ground is by far the process profit that is derived and here lies the dichotomy between the of enabling Affirmative Action and herein lies the link between global and the Indian perspective. The India perspective Affirmative Action and Corporate Social Responsibility. through this bill has narrowed down to 2% of the profit that is In a country like India where the demography and geography earned before tax somewhat diluting the overall concept of divides the population/the country into various sets, castes and Corporate Social Responsibility or Corporate Responsibility economic capacities, it is even more necessary that we should towards social environment. Therefore, taking the effect and create an atmosphere where economically and socially the sting and the very ethos of Corporate Social responsibility backward communities are given an equal opportunities to out of the processes to the outcomes. But on one hand if, we are come up and challenge in merit the very existence of the so critical about this new concept of Corporate Social called upper strata of the society. We cannot deny the fact that Responsibility then on the other hand it was of much need that for ages now these communities have been outlined from the a developing country like India where markets are emerging, mainstream of the Indian Society. Even today, the disparity where financial growth is becoming a part of the growth story, it exists in the rural areas of the country. Even now we come to is all the more required to understand the quality of work that is know that there are dedicated wells for the dalits to drink water required to be done under Corporate Social Responsibility and and a separate well for the upper castes. It is therefore an to make it more easier for the corporations to get into the role eminent requirement of today to understand that unless and therefore it was a necessity to get it quantified as well, to which until you carry out such an extensive programme of affirmative accolades should be given to the government for enabling such action it is difficult for the country to align itself with the an act and creating an atmosphere conducive for inspiring agenda and purpose of overall inclusive growth. Corporate Social Responsibility for at least making the first If, I understand, in the post independence era we have tried to push towards the Corporate Responsibility agenda. mitigate the effect of casteism, elitism in various strata of the We should not therefore limit ourselves only to the basic society but we have only attained limited success. To translate minimum of the 2% that is required. In fact we should look and convert this success into a national phenomenon we have now at larger perspective of how this 2% can be implemented to give some sort of an incentive to these backward under the given Schedule VII of the Governments Company's

Director Today July • 2015 20 www.iodonline.com Article communities in order for them to come ahead and fight on merit Therefore if the corporations decide to implement the for equal opportunities in financial processes, educational affirmative action roadmap that they have pre-decided, it is processes and industrial processes. relatively easy to route it through the Corporate Social It gives me immense pride and joy to realize that an institution Responsibility channel, not only because it has dedicated road like CII has been able to institutionalize the action on map but also it has a dedicated team, the deliverables are affirmative lines in the long run. We now have the Dalit accounted for and their is a specific roadmap for the Chamber of Commerce and Industry as well. It is for the achievement of the same. Keeping in mind that when the various players of the society and industry to realize that these beneficiary scales of these institutional processes may not be are some of the examples that we need to emulate, there is a lot limited only to one specific category but stressing on the fact of to be done yet. But I am sure that these actions will go a long the backward castes and classes wherein the whole issue of way, in order to meet the deadlines, in order to meet the Affirmative Action can be addressed with much more solidity purposes, that we have lined up our society's with. and intent. Affirmative action by industry is a part of Corporate Social Responsibility implemented in the very rightful essence that it exists in the global prospective. It is for us to realize within our institutional processes how can we enable processes which can lead to affirmative action which can create strength and opportunities for the backward communities of the society. It is for there financial and social good that we have to understand and elucidate the various opportunities that are available for backward communities to be integrated into the political, social and economical mainstream of the country. The whole context of understanding in the new paradigm, the future of Corporate Social Responsibility and Affirmative Action is very simple. Lets understand the issue in the simplistic manner. Corporations and institutions are already involved and are mandated to be involved in the social responsible arena by the mandate of Company Act 2013, Section 135. These institutions are on the ground working with community to implement the socially responsible initiatives on behalf of the parent corporations they represent or belong to directly or in directly. At a juncture when the community is directly engaging with the institutions it becomes relatively easier for the institutions in the private sector to involve themselves into affirmative action through the corporate social Grab Your responsibility initiatives. Copy This linkage of implementation between the affirmative action and the corporate social responsibility wherein Affirmative www.iodonline.com Action is implemented, is enforced through the tool of corporate social responsibility by the private sector, it not only increases the chances of the projects addressing the issue of This Hand Book seeks to demystify affirmative action through corporate social responsibility but it apparently complex financial statements, and help create a finance-savvy executive also increases the effectiveness and sustainability of the class, the key to fiscally sound and projects on ground which are specifically run with an aspect of successful business. The guide sets out finance consideration and option for affirmative action at the backend. businesses at various stages, providing advice and sources of information to help The whole contextual problem that exists between the them start, grow and prosper. 1st Edition - June 2015 affirmative action and the private sector is the fact the community has to own up to actions of the private sector and the private sector has to own up to its actions and be Prepared by : Mr. Rajangam Jayaprakash, accountable for adhering to the promises and the commitments Partner, DH Consultants Pvt. Ltd. that it beholds on the community at large. on behalf of IOD India

www.iodonline.com 21 Director Today July • 2015 Article Environmental Sustainability

Lt. Gen. J.S.Ahluwalia PVSM (Retd.) President, IOD

Introduction global temperatures and greater volatility of weather patterns are leading to more frequent heat waves, The twentieth century was marked by both the recognition and droughts, floods and other extreme weather events. creation of a host of environmental problems. The twenty-first century bears the burden of resolving these problems, and From an ecological perspective, human society has preventing the emergence of more. Optimistically, it would inexorably pushed nature, beyond the means of the appear that many solutions for prevention and resolution of earth's life support system, transgressing critical environmental issues could lie in the same direction. A growing ecological thresholds. Environmental issues are world population - to more than 7000 million is exacerbating intertwined with social, cultural and socio-economic the demand on resources and services, and increasing the issues, and in certain cases may far outweigh all other generation of wastes. The challenge is to break with the factors. There's a need to harness, both global and destructive hegemonic technological paradigm, whilst community sensibilities of environmental concerns. orchestrating a just transition within the economic and political World population must stabilize at a level within the spheres. carrying capacity of the earth's finite resources. We have to live off nature's income, not it's capital by practicing Today's corporate landscape is vastly different, than what it was T sustainability in all spheres. two decades ago. Current, Complex, non-liner changes in the earth's system is unprecedented in human history. On the face The conservation of nature and protection of our of it, India's per capita Carbon foot-print looks benign. It's per environment is a collective task, in involving citizens capita GHG emission is a quarter of the global average, and is and government, the corporate sector and all other almost negligible compared to USA, which is 16 times. A stake- holders in our complex and diverse society. fragmented and piecemeal approach to climate change can be a Today, we face unprecedented environmental recipe for disaster. World leaders have concluded that challenges such as climate change, biodiversity loss, environmental concerns cannot be viewed in isolation. We pollution, and resources scarcity. The green space is ripe need to reconcile economic and environmental interests. for consumer engagement. Going green has assumed a whole new meaning with companies adopting Green National sovereignty - the power of a country to control events Marketing, and using social media to reach out to their within its territory has not much of its meaning in today's world, consumers. where borders are routinely breached by pollution, international trade, financial flows, and refugees. Increasingly, While the economy of a country relies critically on they may be eroded by such forces as climatic warming, environment, its national accounts do not reflect this. migrations, and the depletion of the earth's ozone shield. Decisions are made on the basis of gross domestic Nations are in effect ceding portions of their sovereignty to the product (GDP). But in most countries, GDP does not international community, and beginning to create a new system take into account natural capital, apart from the usual of international environmental governance, as a means of minerals and timber kind of resources that are solving otherwise unmanageable problems. The social conventional inputs in industry. What about the rest of networking sites are creating platforms, that advocate and the capital that makes up global ecosystems? Natural focus on green issues. Capital Accounting would include ecosystem services and other natural resources that are not traded or Green Economy and Natural Capital marketed, and are therefore harder to measure. This The world's population is predicated to rise to 9.3 billion by would take into account the “regulating” services of 2050, Coupled with the growth of the global middle class by ecosystems, such as forests for pollination and wetlands almost 3 billion, resulting in large scale increases in resource for reducing the impact of floods. However, would such consumption. The current water scarcity, and demand could an accounting system be accurate, considering it's outstrip supply of accessible water by 40% by 2050, similarly subjective nature? agricultural production will need to increase by 70%. Rising

Director Today July • 2015 22 www.iodonline.com Article

A robust natural resources management strategy, will Environmental Challenges have following key aspects: In our complex environmental challenges, we can detect four • Identifying all critical natural resources in the entire possible etiological categories of concern:- supply chain, and not limiting to water and fossil - Eco-metabolism or eco systemic changes, including land fuels. degradation, natural resources, eco systemic hazards, global • Elevating natural resources management as warming and climatic anomalies, soil exhaustion, governance priority, for Board members and desertification or sea level rise; executives - Human-induced disasters, including industrial disasters and • Conducting scenario analysis for natural resource the effects of public projects such as dams, environmental stressed future, to define technologies, products, despoliation, resource exploitation and degradation markets and locations. including, deterioration of major watersheds, deforestation, • Boosting engagement with key stakeholders, such as etc.; local communities, shareholders, suppliers, - Eco-political upheavals including shifting, fading, and government regulators and employees disputed frontiers, confrontations, revolutions and wars, • Going beyond normal routine compliance business collapse of regimes, or centrifugal forces of nationalism; mind-set to a natural resource compliance business Socio-economic dislocations, including collapse of mind-set, and to natural resource leadership by expectations, shifts in the international economy, bad adopting international best practices for natural development strategies, resource scarcity, access to resources resources management. and social turmoil. Pricing is key for regulating supply and demand of Himalayas are the world's youngest mountain range, located in natural capital i.e. values of earth's eco- system services. an eco-sensitive and fragile zone, prone to seismic activity, Business still behaves as if relatively people were cloud bursts, erosion and landslides. Mindless development scarce, and not nature. None can run business without and 250% increase in tourist inflow have adversely affected the accounting it's capital out lay, to increase resource Himalayan footprint. The recent Nepal earthquake disaster has efficiency and reduce waste. In the age that we now live, taken over 7000 lives. The 2013 catastrophe in Uttrakhand had conservation of our natural resources has become an been an alarming reminder to all of us, that the country has to important aspect that we as inhabitants of earth have to focus on sustainable development in an eco-friendly manner. be aware of. If we aim to conserve our environment, we Thoughtless development and natural disasters had combined must focus on the 3R's: Reduce, Reuse and Recycle. to bring about the worst tragedy of recent times. This Green is the most bandied word today. Going green has Himalayan Tsunami caused heavy rains and flash floods in assumed a whole new meaning, with corporate adopting Kedarnath - Badrinath sector leaving over 1000 dead, over green marketing and using social media to reach out to 2000 houses wiped out, 147 bridges and 1307km road network their consumers. National Carbon budget alone will destroyed. Disaster management failed, and showed gaping safeguard the ecological health of the planet; eradicate holes in shoddy relief and rescue work. poverty to transform world economy. We need to There is the obduracy of the environmentalists, creating an concentrate on vulnerable forest areas, wildlife atmosphere of distrust and antagonism, while the business corridors and critical, biodiversity habitats, in special community takes environment for granted. To business, the production areas and important water sources. environmentalist is a headache to be managed or co-opted. The green economy is built upon the three pillars of Very few have done justice to the environment, that too less out sustainable development: Environmental protection, of conviction and more out of compulsion. Predictability social progress, and economic growth with equity and comes through laws; it can't come from precedent, as each case inclusion. Being green is no longer a choice, but a is unique. It also comes from extreme transparency, which is required catalyst of constant innovation, and an the only antidote for aphorism and discretion. That is why there opportunity to ensure indefinite support of planet. is a need to make public, the background to every decision. Green manufacturing is not a technology, rather it is a National Green Tribunal (NGT) and the National Environment philosophy used to describe manufacturing practices Assessment and Monitoring Authority – are now functionally that do not harm the environment. Green manufacturing in place. The NGT is expected to replace the complex judicial addresses a number of manufacturing matters, system for environment-related grievances: a three-tier judicial including recycling, conservation, waste management, reprisal process, an appellate authority against ministry water supply, environmental protection, regulatory decision, and a Supreme Court forest bench dealing with compliance, pollution control and a variety of other clearance issues. The NGT will replace two tiers of court, and related issues. the appellate authority. www.iodonline.com 23 Director Today July • 2015 Article

Energy Climate change would aggravate these existing disparities, by impacting the hydrological parameters that govern the In an expanding economy and growing population, the major availability of water, and also exacerbating the vulnerabilities challenge is to provide the energy needs for accelerated growth, of the poor. in a reliable, cost- effective and sustainable manner. Fossil fuels have brought the planet to precipice of changes that are The sustainability of the very sources of freshwater supplies irreversible and catastrophic. We need green, renewable energy including precipitation, water storages, and flows has come at a price low enough to help the poor leapfrog on to a under severe threat. Consequently, long – term sustainable sustainable path, and avoid socio- economic dislocations. The adaptation strategies must deal with root causes, even while world demand for primary energy will be 40 percent higher in providing short-term pacifiers. Thus, addressing the basic 2030, than it was in 2007. For oil, this would mean adding the issues of greenhouse emissions and global warming are equivalent of 4 Saudi Arabia's to production, half to meet the inextricably related to finding realistic and sustainable decline in existing oil fields, and half to meet the increase in solutions to the water crisis. demand. Managing Waste Energy scenario for India shows that large-scale investments in The indiscriminate littering and dumping of waste causes energy efficiency measures could limit the increase in energy severe health risk to people, either through direct exposure or demand to just one-third above the current level by 2050, rather indirectly through contamination of surface and groundwater. than see it triple, according to conventional wisdom. By mid- Solid waste dumps also impact the global environment by century, 60 per cent of India's electricity could be produced releasing methane, which is a highly potent greenhouse gas. from renewable sources, keeping India's CO2 emissions at the Besides environmental concerns, the social dimension of the level of 2010 levels, instead of trebling, as they do under the problem also needs due attention IEA projections. The critical issue regarding solid waste management is lack of Water proper disposal facility, to prevent pollution from waste Water resources in India are under unprecedented stress, disposed on land. Solid waste generation is predominantly an massive over- exploitation of surface water sources and industrial and urban problem, which has exacerbated over the aquifers, have reduced the carrying capacity of the most years due to changing lifestyles and increasing consumerism, abundant natural resource. Setting the right price for water will resulting from rapid urbanization, and economic growth. There encourage people to waste less, and use it efficiently. Because is a need to set up adequate waste collection, processing, and of overstressed groundwater in various regions – we must go disposal facilities, to cope with the rising levels of waste for drip irrigation, low water requirement crops, recharging of generation to protect human health and the environment. groundwater through rainwater harvesting, and use of treated Managing the exponential growth of e- waste by putting in wastewater levels, by way of artificial aquifer recharge. place a separate regime of regulatory framework, and To shift the fundamental emphasis in water management from channelizing e-waste from the informal sector to the formal the existing supply-side approach to a demand led strategy; sector to ensure recycling. The world has largely gotten from the erstwhile technocratically oriented uni-dimensional accustomed to a throwaway lifestyle, but that's neither healthy mindset to much more multidisciplinary and holistic solutions. nor sustainable. Waterways are choked with trash and

Combating Climate Change

Director Today July • 2015 24 www.iodonline.com Article modernized nations ship their undesirable leftovers to the ensure that least developed and small countries are included in developing world. the response. World leaders are now to meet in Paris in December 2015, to finalize a legally binding agreement for all Combating Climate Change to tackle climate change after 2020. Global Climate Change posing the largest single threat to humanity, Global Climate Change is a complex and multi- Governance for Sustainability faceted issue. Solutions are not easy, and will require a long Corporate Sustainability is a term that does not stand alone. It term commitment and adequate resources to address relates to growth of the corporate in a situation that the effectively. The truism that the world has become a global corporate ensures both growth of society and protection of village, finds the greatest relevance, in respect of the Climate environment. A new term now in vogue is “sustainable green change agenda. The world's natural environment belongs development”. Sustainability management theory has always firmly on the international political agenda, and it is talked about elevating climate change and sustainability to the appropriate to discuss the environment and development, as Board level. The assumption was that companies where Boards one single issue. and top management take interest in these issues are able to Both mitigation and adaptation for climate change pose a great, manage them consistently over time. The key to successful technological, social and economic global challenge. Climate governance is translating sustainability performance change calls for a holistic approach, ensuring an 180o shift in improvement goals into executive targets. lifestyles. However, most often adaptation involves changes in The biosphere, and that delicate membrane of life that covers the behavior of affected households, such as switching of crops, the earth, represents the ultimate battlefield on which the fate of livelihood diversification, and migration. A fragmented and the world will be decided. Today's business environment piecemeal approach to climate change can be a recipe for provides a multitude of new challenges to manage, but also disaster. Climate change is an opportunity for innovation and a significant opportunities for those who can master its social change, that we have been waiting for. dynamics. Sustainability Report based on Global Reporting Long-term Cooperative Action (LCA) in broad terms, is set on initiative is now the normal practice of measuring, disclosing the principles of “common but differentiated and being accountable for organizational performance, while responsibilities” of the contracting parties of working towards the goal of sustainable development. UNFCCC. These principles, the most Governance has a crucial role to play in identifying distinctive feature of the UN framework, intervention measures, and facilitating the coping capacities require advanced nations to bear the burden of of the vulnerable, especially those exposed to the adjustment for ushering in a low-carbon manifestations of climate change, like extreme weather economy. The developed countries are required conditions. To manage them all parts of society -must act in to vacate some “carbon space” in the concert, but business with its financial and material resources atmosphere, which would be needed by the and unique innovativeness and talent, must lead the way. The developing countries to pursue their environment- related problems can no longer be viewed, as development objectives. This re-calibration of the side-effects of the development process. Conservation of carbon dioxide emissions is imperative for the environment requires the participation of multiple ensuring that the increase in earth's temperature stakeholders. Each of these plays an important role in the is kept within bounds, thus averting the risk to formulation, implementation, and promotion of measures for future generations arising from global environmental conservation. warming. Achieving goals and targets for sustainable development The Durban Pact of 2011 talked about require innovative responses at all levels. In order to be intensifying efforts to address climate change effective, action should be based on strategic insights: in pre-2020 period, with the onus of reducing • A compelling vision of sustainable future - building goals carbon footprint on developed nations, while and targets for all levels of the organization. the developing nations could take these steps • Reversing what is unsustainable - Innovative measures voluntarily. Lack of attention to the pre-2020 consistent with a vision of and pathway to sustainability, efforts will put additional burden on developing nations. Therefore, India is pressing to also must be accompanied by identifying and redirecting or seek measures to be spelt out to tackle global reversing policies that are unsustainable. warming in the period up to 2020 also in the • Applying leverage- a successful transition will require a agreement. Addressing the unresolved issues diverse array of measures that:- and finding global solutions to climate change, • Strengthen a sustainability mindset in society, through under the auspices of the UN is critical. Finding education and awareness raising. solutions under the UN, is the only way to Sustainablity

www.iodonline.com 25 Director Today July • 2015 Article

• Change the rules and incentives, to advance sustainable comprehensive policy approach is needed. The approach must practices. recognize the country-specific and sector-specific challenges. The conservation of nature and protection of our environment • Create feedback and make adjustments, in the physical is a collective task involving citizens and government, the processes and structures of organizations, to keep corporate sector and all other stake-holders in our complex and environmental pressures at acceptable levels. diverse society. Sustainable Development with social inclusion • Adaptive management and governance - governments and and a transition to a greener economy is indispensable. other entities need capacity to manage processes, through Green building is simply increasing the efficiency with which continuous monitoring, learning and course correction to buildings use resources in terms of natural elements, energy reduce the costs of not meeting the internationally agreed and material, while improving human health through goals. architecture, design, construction and operation. The Indian Study of boardroom directors, leaders who influence social Green Building Council (IGBC) has licensed the Leeds Green responsibility and sustainability policies at board level, show Building standard of USA and is responsible for certifying that only a small minority are concerned with behavior beyond LEED for new construction in India. It ensures natural lighting that of achieving stakeholder value. A board level and fresh air on all floors. More people are getting aware of Sustainability Committee reviews, monitors and provides green principles, and the several benefits in reducing strategic direction to the company's sustainability practices, operational costs. We need to develop a new generation of towards fulfilling its bottom line objectives. resilient regionally appropriate, low impact buildings, powered Directors and boards have to weigh a variety of contending by clean renewable energy. Sustainable is not about fashion and factors, when formulating visions and values and discussing style: but about performance, resilience and reliability. and deciding corporate goals, objective and policies, including those relating to environmental challenges and opportunities. Conclusion Choices have to be made and there may be difficult trade-offs to The need to live within the Earth's resources is a concept that is consider at times of competitive pressure, uncertainty and already 'out there'. The challenge is not just to reduce our insecurity. But the fact of the matter is that green, sustainable ecological footprint, but to do so in ways that help tackle growth has not yet become the global norm. Sustainability and persistent societal problems. Climate change is an opportunity climate are not factored into measurements of how much for social change that we have been waiting for. Stabilizing the economies have grown or how healthy they are. And the price earth's climate would unleash a new trajectory of unifying and of oil still has far too great an impact, on the well- being of inclusive growth that would trigger explosive innovations for economies. products that enhance the human experience rather than acquisition, thus saving the planet from the proliferation of Sustainable Infrastructure unneeded products. Sustainability is traditionally defined, as the capacity of an eco- There is the obduracy of the environmentalists, creating an system to endure. Exploiting the carrying capacity of the planet atmosphere of distrust and antagonism. While the business wantonly, impoverishes future generations. The word community takes environment for granted, to business, the "wantonly" is critical, because you could add to future capital environmentalist is a headache to be managed or co-opted. by innovating new models of production and consumption. The Very few have done justice to the environment, that too less out capacity depends on the degree of human ingenuity and of conviction, and more out of compulsion. Predictability innovation. This is what has enabled Homo-sapiens to thrive on comes through laws; it can't come from precedent, as each case this planet, and take gigantic leaps despite monumental natural is unique. It also comes from extreme transparency, which is handicaps. the only antidote for aphorism and discretion. That is why there In the new millennium our increased attention and concerns is a need to make public, the background to every decision. have concentrated on the state of the environment as well as on National carbon budgets alone will safeguard the ecological attempts for planning and management, on an expanded scale health of the planet, enable eradication of poverty and be a and within an eco -systemic context. One may actually talk stronger driver than market mechanisms for the transformation about a planet that is characterized by three particular of the world economy. Green is the most bandied word today. “vulnerabilities” i.e., an ecological vulnerability having to do The Institute Of Directors, India has a vision that we believe is with environmentally sensitive regions and limited resources; possible with bold, and collaborative corporate leadership. A economic vulnerability having to do with past practices of vision for a healthy, peaceful, socially just, economically traditional exploitation and state economics; and finally, social secure and environmentally sustainable world. The 'not in my vulnerability having to do with people over- utilizing backyard' attitude, does not help. Our current efforts have been resources, as well as complex social, economic, and ecological piecemeal. IOD has been converging the themes of leadership, forces affecting natural equilibria. quality, environment, governance and Sustainability , in all its To ensure that the momentum towards a greener economy is directors training and conferences, held globally. sustained, and a new sustainability model realized, a

Director Today July • 2015 26 www.iodonline.com Felicitations IOD Congratulates

Shri Pradeep Kumar Sinha IOD Distinguished Fellow on his taking over as Cabinet Secretary of India

he Union power secretary Pradeep Kumar Sinha, the senior most serving IAS officer in Tthe country took over as cabinet secretary on 13 June 2015. He succeeds Ajit Seth who retired after 4 years tenure as Cabinet Secretary. Sinha is a 1977 batch Uttar Pradesh cadre Indian Administrative Service officer. He served as secretary, Ministry of Power, since July 2013. Sinha had earlier served as secretary in the Ministry of Shipping, and additional secretary & financial advisor in the Ministry of Petroleum and Natural Gas, and has held several other important positions in the Union and Uttar Pradesh government. Born on 18 July 1955, Sinha is an MPhil in Social Sciences and a post graduate in Economics from Delhi School of Economics in 1976. Shri P K Sinha is also a 'Distinguished Fellow' of IOD.

Shri. N. Gopalaswami Distinguished Fellow on his conferment of Padma Bhushan by Govt of India

Gold Medallist post-graduate in Chemistry from Delhi University, he joined the Indian AAdministrative Service in 1966. For the next twenty-five years, he served in the State of Gujarat in various capacities. He has held many senior positions - in Municipal Commissioner Chairman, Surat, State Electricity Board and later in the State Government. He was the Managing Director of Gujarat Communications and Electronics Limited, a leading Public Sector Company of Gujarat. Later in Govt. of India (Aug.1992 till Feb.2004), he served in the Department of Electronics (in charge of Software Development in the Planning Commission as Advisor (Education) in the National Human Rights Commission as its Secretary General ; in the Ministry of Culture as Secretary and finally as the Union Home Secretary. He served in the Election Commission of India for 5 years. He resigned as the Chief Election Commissioner of the India, in 2009.

4 www.iodonline.comDirector Today July • 2015 27 Directorwww.iodonline.com Today July • 2015 Article

The Compliance Confusion - Obscure Indian acts you Need to Comply with

Suryaprakash Kukyan CFO and Co-Founder at ComplyGlobal

As everywhere else even in India keeping track of the long list • Any non-flammable, non toxic gas when the total no. of of regulations a business has to consider is almost an unending such cylinders does not exceed 50 at any one time game of tag. One way of managing this compliance challenge is • Any toxic gas when the total quantity of such cylinders to take a proactive approach to compliance through does not exceed 5 at any one time automation. However, while putting together the list of regulations that your business needs to follow, watch out for • Acetylene gas contained in cylinders in dissolved state those obscure Indian laws that you must follow in order to when the total quantity of such cylinders does not exceed ensure complete compliance. Almost all compliance laws are 15 at any one time drafted keeping particular industries in mind however, Indian Boilers Act sometimes these laws can be applicable to other industries in India as well. This blog highlights four such obscure laws that You'll probably link huge industrial steam boilers to large though are industry specific are more widely applicable than industrial units churning out giant pieces of machinery. you would think. Remember the cost for such non-compliance However, the steam boilers have found their application in will be just as high even though the law may be obscure – many industries. Food and beverage, textile, pharmaceuticals, Aignorance of the law is no excuse after-all. cosmetics, paper and printing, wood and hospitals and hotels are just some of the industries that see an extensive use of steam Explosives Act 1884 and Gas Cylinder Rule boilers. 2004 The Indian Boiler Act came into effect in 1923, but has seen a The Explosives Act 1884 and Gas Cylinder Rule 2004 was series of updations, the last one being in 2009. This act was brought into force with the objective of securing the security brought into effect to provide safety of the life and property and safety of the people and of property from fire and "from the danger of explosions of steam boilers and achieving explosion. With illegal units of LPG refills mushrooming all uniformity in registration and inspection during operation and over the place, the government is compelled into taking strict maintenance of boilers in India". action. However all those businesses where a large number of So if your business is using a boiler with "a capacity exceeding gas cylinders have to be used, 22.75 litres which is used expressly for including several different type of generating steam under pressure and services, healthcare and some types “REMEMBER THE includes any mounting or other fitting of manufacturing need to adhere to COST FOR SUCH attached to such vessel, which is wholly or this rule when the establishment is NON-COMPLIANCE partly under pressure when is shut off", in possession make sure all the boxes in the Indian Boiler • Of cylinders filled with WILL BE JUST AS Act are ticked. liquefied petroleum gas when HIGH EVEN Companies (Profits) Surtax the total quantity of gas does THOUGH THE Act, 1964 not exceed 100 kg. at one time LAW MAY BE • Any other flammable but The Companies (Profits) Surtax Act, non-toxc gas when the total OBSCURE – 1964 is an Act to impose a special tax on no. of cylinders containing IGNORANCE OF the profits of companies other than those which have no share capital. If your such gas does not exceed 15 THE LAW IS NO or the total weight of gas does establishment falls in this category then not exceed 125 kg. whichever EXCUSE AFTER-ALL”. this Act dictates that "every person by is less, at any one time whom surtax or any other sum of money is payable under this Act and includes every

Director Today July • 2015 28 www.iodonline.com

Article person in respect of whom any proceeding under this Act has been taken for the assessment of his chargeable profits or, of the amount of refund due to him or of the chargeable profits of any other person in respect of which he is assessable or of the amount of refund due to such other person". Essentially this IOD’s Trained Participants means that anyone who gets a share of the profit is liable to pay for the month June 2015 the Surtax on in and in line with the other provisions of the Act may have to pay this is advance too. This would apply in cases where a refund has been provided too. Noncompliance with this Act can result in heavy fines and also lead to imprisonment. Copyright Act 1957 134th Masterclass for Directors, If you thought that the Copyright Act of 1957 was to just stop 12 - 14 June 2015, New Delhi plagiarism of dramatic, literary or artistic work, you may be mistaken. The 'Broadcast' segment of this Act makes it • Mr. Raminder Singh Gujral, Ex Secretary, Ministry of Finance, Govt of India "mandatory for all those who play Pre-recorded music in the • Mr. Sunil Duggal, Dy CEO, Hindustan Zinc Ltd (Vedanta) form of Gramophone Records, Music cassettes or CDs or • Mr. Abhijit Pati, CEO - Aluminium, Vedanta Ltd. Radio or TV or Audio-visual etc. for non-private purpose or in • Ms. Pooja Malik, GM - HR, Anand Automotive Ltd public places and/or commercial establishments and/or non- • Mr. Ashok Tayal, Independent Director, Shubh Consultants commercial establishments, to take prior license from • Dr. Hanumanthu Purushottam, CMD, National Research Development Phonographic Performance Limited (PPL)'. Corporation The compliances under this • Mr. Sanjay Kaul, Chief Promoter, Sanmarg Projects Pvt. Ltd. • Mr. Anil Mahajan, Director, Kriti Advisory Services Pvt. Ltd. “THE LAWS TO act kick in when "in any establishment Pre-recorded • Mr. Akshaya Kumar Sahoo, GM - Finance, MRPL COMPLY WITH music in the form of • Air Vice Marshal Pradeep Ranjan Sinha, Asst Chief of Air Staff, Indian Air Force Gramophone Records, ARE THICK ON • Ms. Dipika Tuteja, Editor/Architect, In Awe Music cassettes or CDs or • Mr. Kapil Gupta, Project Coordinator, Safe Blood Organisation THE GROUND Radio or TV or Audio-visual • Ms. Rita Handa, GM, Rites Ltd IN INDIA AND etc. is played for non-private ORGANIZATIONS purpose or in public places and/or commercial 135th Masterclass for Directors, HAVE NO OPTION establishments and/or non- 19 - 21 June 2015, Bangalore BUT TO ENSURE commercial establishments". This may mean that if you • Mr. Santosh Keladi, Director, COM DEV Services India Pvt Ltd THAT THEY ARE have a restaurant or you play • Mr. Arun Jayarame Gowda, Director, Pharmax Analytic Resources Pvt. Ltd piped music in your offices ON THE RIGHT • Mr. Jayachandra Reddy, Director, Pharmax Analytic Resources Pvt. Ltd then you may have to SIDE OF ALL • Mr. Brahmanand Reddy Patil, MD, Vector Informatik India Pvt. Ltd. consider if you are in OF THEM” • Ms. Hema Shah, Director, IBM violation of this Act. • Mr. Promod Kumar Nigam, CEO/Partner, Acuite Consulting Noncompliance with the PPL • Mr. V Moorthy, Cluster Project Manager, L&T Construction laws can earn jail term of not less than six months extending to • Mr. V Narayanasamy, Director, Accord Software & Systems Pvt. Ltd. three years and a fine of not less than fifty thousand rupees. • Mr. Balaji Kumar A, Senior Director - HR, Metric Stream There is really no way around this – the laws to comply with are • Mrs. Kamal Deep Peter, Sr. Program Manager, APAC, ORACLE India Pvt Ltd. thick on the ground in India and organizations have no option • Mr. Krishnamurthy B, CEO, Best Known methods & Solutions Pvt. Ltd. but to ensure that they are on the right side of all of them. To • Mr. KS Srinivasa, Director, ADD Technologies (India) Ltd ensure that you avoid nasty last minute surprises it may make • Mr. William D'Souza, Director, ADD Technologies (India) Ltd sense to invest in a 'smart compliance' calendar, one which is • Mr. Muniraju Pulipalyam, Sr.Architect, Microsoft capable of auto populating existing and emerging compliance • Mr. Pankaj Jain, Director - Projects, OLX Indi Pvt Ltd. demands. It is worth it to stay compliant and to keep the • Mr. Sudhir YR, General Manager, Kisan Kraft Machine Tools Pvt Ltd. authorities and the auditors happy. • Mr. Ashok Nayak, Independent Director, Goa shipyard Ltd. • Mr. K Vijay, MD, AJAX FIORI

Director Today July • 2015 30 www.iodonline.com

Interview

Mr. Kapoor's Interview with D rector Today

Q1. As the founder of YES BANK, are you satisfied with its progress and 'March Forward', so far? Over the past 5 years of our 11-year journey to date, YES BANK has grown from a small sized bank and emerged as a meaningful medium sized bank on the back of our highly successful, aptly titled growth-strategy 'Version 2.0 – the RRana Kapoor is the Managing Director & CEO of Vertical Take-off.' The bank has achieved robust financial YES BANK. As a professional entrepreneur, since 2003, he is performances and business outcomes. These achievements progressively establishing a high quality, state-of-the-art are a testimony of the confidence of our various stakeholders, private Indian Bank with a vision of “Building the Best Quality clients and long term investors. Bank of the World in India” by 2020. Under his leadership, YES In the third (and current) phase of growth, YES BANK aims BANK has steadily evolved as the “Professionals’ Bank of to become the Finest Large Bank in India by 2020. The India” with exemplary business and financial outcomes as strategy will include consolidating the bank's presence in evidenced in the financial results since inception, with highest existing strongholds like Corporate and SME banking, while RoA/RoE, and the best asset quality amongst leading Public significantly pushing the Bank's presence in Retail and and Private Banks in India. augmenting the overseas foray with a measured approach. Prior to establishing YES BANK, Rana Kapoor was CEO & Successfully building an institution is a highly satisfying Managing Director, and main Managing Partner of Rabo India endeavor; and though we still have many miles to go before Finance (RIF) Pvt. Ltd. (a corporate finance and investment we rest, with over 630 branches and over 11,000 YES Bankers, the journey so far has been extremely exciting and banking organisation). Prior to starting Rabo India, he was the rewarding to say the least. General Manager & Country Head: ANZ Grindlays’ Investment Bank (ANZIB, from 1996-98). He spent 15 years at Q2. What were the main vision, mission and Bank of America (1980-1995), where he last headed the Bank’s objectives for setting up YES BANK? Did you Wholesale Banking businesses take any bank as a role model for this task? Rana Kapoor received an Honorary Fellowship from All India The reason behind naming the Bank 'YES BANK' was my Management Association (AIMA), Doctorate in Science firm belief that our bank's differentiation begins with its (Honoris Causa) from G.B. Pant University of Agriculture & service and trust mark 'YES' – which represents our true spirit Technology. He holds an MBA degree from Rutgers’ University of becoming a high quality, customer centric, service driven, in New Jersey, U.S.A. (1980), and a Bachelor’s degree in Indian Bank. Economics (Honours) from the University of Delhi (1977). He Built on the principles of Professional Entrepreneurship, has also received the prestigious President’s Medal from YES BANK today is India's fastest emerging Bank. Since Rutgers University. inception in 2004, our bank has created a paradigm in Indian Rana Kapoor was recently felicitated for his ‘Contribution Banking through Innovation & Excellence. We have strived towards promoting India-Canada bilateral relations’ by The to become the 'Professionals Bank of India' and also, over the High Commission of Canada & The Indo-Canadian Business years, taken definite strides forward in our quest to become Chamber (ICBC). Amongst other recognitions Mr. Kapoor was the Finest Large Bank in India. also presented the first ever ‘C Rangarajan Award for We have had the unique distinction of building our brand on Excellence in Banking’ at the 38th SKOCH Summit. Mr. the five key pillars of Growth, Trust, Human Capital, Kapoor received 'Visionary Business Leader of the Year' at the Technology, and Transparency & Responsible Banking. The Legal Era Business Excellence Award 2015 Bank has evolved into a world-class institution, which delivers superior, customer centric financial products and Director Today had an opportunity to speak to differentiated services. Mr. Kapoor about his ambitions for YES Bank

Director Today July • 2015 32 www.iodonline.com Interview

Q3. How does the board's leadership and Banking. The Bank's sustainability strategy is largely driven by its Responsible Banking philosophy which has produced strategy promote business excellence and credible and tangible results for the Bank and the wider innovation at all levels? stakeholder community. The Bank is committed to adding Since inception, YES BANK has strived to promote the values long term value to society by deeply integrating the concepts of professional entrepreneurship across ranks, and this has been of CSR and Sustainability into our business ethos and has instrumental in our approach to promote business excellence received several national and global recognitions for and innovation. One of the key pillars of our approach to contributing to sustainable development. For this year and the institution building, as I've mentioned, is human capital. A next few years, the bank's mandated focus in terms of CSR couple of key initiatives that we have undertaken are the YES will be: Professional Entrepreneurship Programme (Y-PEP) and the Livelihood and water security: Supporting health through YES School of Banking. Y-PEP has been designed around the community interventions by providing water solutions and concept of talent development, aimed at ensuring and creating livelihood opportunities experienced, dynamic, energetic and driven team of Skill Building and Entrepreneurship: To provide support professionals across junior, middle and upper-middle to local youth by making them employable through tailored management to implement the bank's strategic growth plans. training programs The bank has a laser focus on achieving excellence across all fields, and we believe our human capital base has all the Environmental Sustainability: Promote positive required ingredients to achieve the highest levels of excellence. environmental impact through policy-level interventions and focus on renewable energy YES BANK has been at the cutting edge of innovation in Indian Banking, with various firsts to our credit; from the first mobile Women Safety: Ensure safety of women by conducting payments service of its kind (in partnership with Nokia and awareness workshops, self-defence workshops and related Obopay in 2010) to successfully launching India's first Green activities for their protection Bond to raise money to finance clean energy projects. Arts and Culture: Promote Arts and Culture through several Q4. What are the main priority sectors of YES positive interventions making India the cultural hotspot of the world BANK for financial lending, and why? YES BANK is an institution that has been seasoned through the vagaries of economic conditions globally and domestically, with the ability to preserve asset quality and build a strong risk culture, the ability to build a pan-India model with a distribution network of 630 branches, 11000 YES Bankers, and an investment, which reflects a new basket of growth in India; across sunrise sectors like agribusiness, healthcare, lifesciences and renewable energy. RANA KAPOOR Managing Director These are sectors where YES BANK has built differentiation as & CEO a key strength. The bank has been able to face the onslaught of the global crisis, and demonstrate to markets -- both domestic and international—that it can raise capital from quality global investors. In addition to this, as we enter the next stage of growth, our ? focus will be on growing our retail portfolio with granularity. We have already adopted a measured approach to ramp up our retail presence and offerings across the country and we intend to ramp this up further. Q5. What 'Corporate Social Responsibility' areas are proposed to be taken up by 'Yes Bank' in the coming years? Since inception in 2004, YES BANK has adopted a differentiated banking approach and an ethos of Responsible

www.iodonline.com 33 Director Today July • 2015 Case Study

The Plan A Advisory Board is made up of CEO level external committee members which include our biggest private investor (Wellcome Trust), Professor Muhammad Yunus, non-exec Director Martha Lane Fox Sustainability and representatives from organizations such as Oxfam, focus WWF and Unilever. The Plan A Advisory Board give recommendation and advice to our CEO, exec board and Marks and Spencer Group PLC, UK Plan A team. Economic Performance • Group revenue £10.3 bn • Underlying Group profit before tax £622.9m • Group profit before tax £580.4m • Interim + final dividend = 17p Organizational Description • Underlying group earnings per share 32.2p • Closing net debt £2,103.8m Marks & Spencer Group PLC is a holding company that sits on the London Stock Exchange. The Company, through its • Invested in local community programmes £14.2m subsidiaries, provides retail of clothing, food and home We have several charity partner organisations which we products. raise money for directly and through leverage. This Over the last 129 years M&S has grown from a single represents roughly 1.7% of pre-tax profits. market stall to become an international multi-channel We do not support or align ourselves to political parties retailer. We now operate in over 50 territories worldwide and make no political donations. and employ almost 86,000 people. Remaining true to our founding values of Quality, Value, Service, Innovation and Social Programs Trust, we work hard to ensure our offer continues to be We depend on the consistent availability of high quality, relevant to our customers. Through diversifying our store good value raw materials that can be efficiently locations, channels and product ranges we are reducing our manufactured into finished products. Deforestation, dependence on the UK and broadening our international overfishing, drought, flood and soil loss are all growing focus. environmental threats to the availability of raw Our UK turnover is split between Food and General materials. Rising energy costs threaten the whole supply Merchandise. With 766 stores across the UK and a growing chain. In some regions, governments are already limiting e-commerce business, we sell high-quality, great value food the use of gas and water for industrial purposes at periods and remain the UK market leaders in women's wear, lingerie of peak demand. Migration, wellbeing, skills, diversity and men' s wear. and worker perception of an industry are some of the social challenges. Plan A is Marks & Spencer's 100 commitment eco and ethical programme that tackles both today's and tomorrow's Economic pressures and new opportunities are causing sustainable retail challenges. Launched in 2007, the plan has farmers to question what crop to grow based on the price helped M&S send no waste to landfill, become carbon they receive – in some cases moving away from wheat neutral and win 190 industry awards. Organised around four for milling or cotton if they can receive higher prices for pillars – Inspiration, In Touch, Integrity and Innovation – it other crops. Attracting skilled workers to careers in aims to make M&S the world's most sustainable major agriculture and manufacturing is a challenge for retailer. industries in all geographical regions. Plan A is helping us anticipate these challenges and cost Corporate Governance effectively mitigate their impact. Compared to many The Plc Board (Led by our Chairman) is supported by retailers we already go to considerable lengths to trace Group committees on remuneration, audit, nominations and and manage our supply chain. 'How We Do Business' which covers CSR and Nevertheless, we know we need to extend our sustainability. The How We Do Business Executive understanding in order to secure the best raw materials committee is chaired by the CEO, comprises all Executive and manufacturing sites. Directors and is supported by an independent Plan A The Plan A team plays an important role in the wider Advisory Board.

Director Today July • 2015 34 www.iodonline.com ® Golden Peacock Awards A Strategic tool to Lead the Competition

UPCOMING AWARDS

Global Awards • Golden Peacock Global Award for Excellence in Corporate Governance (GPGAECG) • Golden Peacock Global Award for Sustainability (GPGAS)

National Awards • Golden Peacock Award for Excellence in Corporate Governance (GPAECG) • Golden Peacock Award for Sustainability (GPAS) WHY IT IS SO SPECIAL?

• Golden Peacock Innovation Management Award (GPIMA) • The only Award, which has a meticulously defined and transparent selection criteria and is implemented by a highly elaborate and independent assessment process

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LAST DATE FOR SUBMISSION 14-August-2015

Guidelines and Application forms can be downloaded from www.goldenpeacockawards.com

Instituted by ® Details: Building Golden Peacock Awards Secretariat Tomorrow’s INSTITUTE OF DIRECTORS Registered Trademark Registered IOD M-56 A, Greater Kailash Part - II (Market), New Delhi-110048 India, Tel: +91-11- 41636717, 41636294, 41008704 Institute Of Directors Boards ® Fax: +91-11- 41008705 • Email: [email protected] • www.goldenpeacockawards.com Case Study global sustainability movement, being on the board of the construction was halved compared to equivalent projects. And Roundtable on Sustainable Palm Oil (RSPO) and Co-chairing the combination of the hemp and local procurement saw the Consumer Goods Forum, publishing thought papers such as embodied carbon reduced by 20 per cent, beating the target Fortune Favours the Brave and Plan A business case and significantly. regularly posting topical blogs on sustainability issues. Energy One of the main ways M&S employees gives back to the public Direct energy consumption by primary energy source. is that every single employee is allocated one working day a year to volunteer themselves and their skills to a community 100% of the energy we buy is from renewable sources – 25% is project they want to be part of. from small scale sources including our own farmers. One example of this was when over 600 IT experts from our IT Grid electricity 702 gWhs (of which 678 gWh - 97% from department volunteered to help local community projects certified renewable sources) across London and the South East which included: Grid gas 206 gWhs 75 volunteers mentoring 200 residents from 24 Abbey field care Initiatives to provide energy-efficient or renewable energy homes helping them enjoy the social benefits of going online; based products and services, and reductions in energy 400 volunteers planting 10,000 new trees at Heartwood Forest requirements, as a result of these initiatives. in St Albans with the Woodland Trust; M&S does not sell a large volume of electric devises. We do 140 recently trained STEM (Science Technology and Maths) however work hard to help our customers reduce their energy Ambassadors promoting IT to the next generation in 15 schools. usage via campaigns such as Wash at 30c for clothing and by developing products which do not require ironing. Hundreds of laptops were also collected, recycled and left with the schools and care homes the teams visited. Our IT Director at Our Energy business in the UK is designed to help our the time said: “Today's seen a superb effort from the team in customers reduce energy usage, with incentives and we have what must be one of the biggest ever volunteering events in the distributed over 40,000 free energy monitors. IT industry. Our people and suppliers have inspired both young Internally we have a Plan A commitment to improve energy and old using their IT skills and we've made a difference where efficiency in UK and RoI stores, offices and distribution it matters, in local communities. For me personally, to get a centres by 50% per sq ft by 2020. This year, we've improved group of 90 year olds surfing the internet with an iPad was a total energy efficiency across our stores, offices and great experience and something that will stay with me for some warehouses by 34% to 37.6 kWh per sq ft (2006/07: 57.4 kWh time.” per sq ft). Major Environmental Initiatives We improved store energy efficiency by 33% to 45.3 kWh per sq ft compared to 2006/07 (67.9 kWh per sq ft). Gas usage Our products, packaging and stores are made with a significant included in our calculation has been adjusted using standard amount recycled material. Our Ecommerce packaging is in part degree days to reflect changes in the number of cold days (48.9 made from recycled board which is collected from our own kWh per sq ft before adjustment). In 2013/14 we installed stores back of house cardboard recycling. The label on our improved lighting schemes in over 60 stores and carried out a garments and the lining in some of our suits is made with series of 'small but significant' improvements in around 180 recycled PET. Through the clothes we collect through stores. Shwopping we are respinning the materials and creating new jumpers and coats. We improved energy efficiency in our warehouses by 37% at 16.6 kWh per sq ft (2006/07: 26.4 kWh per sq ft). Much of this Our stores; around 20 per cent of our Cheshire Oaks store is improvement is due to the opening of a large new General recycled content: roof insulation is made from recycled bottles, Merchandise warehouse. Energy use in our offices was the aluminium roof itself is 100 per cent recycled, while internal improved by 20% at 39.6 kWh per sq ft (2006/07: 49.4 kWh per walls use 100 per cent recycled boards. Even the ceramic tiles sq ft). on sales floor are 40 per cent recycled. Around 54,000 tonnes of construction rubble was shared with Renewable Energy local projects, including a golf course and a BMX track, while • The food which cannot be sold or passed onto food banks is cables wheels were given to a nearby rabbit sanctuary. Even sent to anaerobic digestion to create renewal energy, we buy coffee grinds from the café are being put to use in a garden back the energy created from two of the plants to power our centre. Other unneeded resources were redistributed via stores Freecycle and Gumtree. • We have 600 photovoltaic panels between two of our The overall effect was that no waste was sent to landfill and existing stores Muswell Hill and Monks Cross

Director Today July • 2015 36 www.iodonline.com 37 Case Study

• Two of our largest stores have biomass boilers, burning By May 2014 we had provided training or education to 506,000 sustainably source wood pellets to generate heat for the workers since 2010. stores Customer and Society's Response We have recently agreed a landmark deal with Future Biogas for Working closely with our suppliers is hugely important to us – the purchase of 35,000 Mega-Watt hours of biomethane these relationships underpin the trust in our brand. We certificates, a move which will reduce our carbon footprint by collaborate with them on every step of a product's journey to over 6,400 tonnes and source the equivalent amount of energy ensure that we have a healthy, efficient and mutually-beneficial to heat 15 M&S Simply Food stores all year round. relationship. Biomethane gas is 50 per cent more carbon efficient than M&S has over 3,000 product, raw material and service average gas supplies and is generated by anaerobic digestion, suppliers with current social compliance assessments covering fuelled by farm waste. The biomethane gas will be produced at many aspects of human rights listed on the Supplier Ethical the Vulcan Anaerobic Digestion (AD) plant near Doncaster Data Exchange (SEDEX). We are long-standing members of using break crops (non-commercial crops used for soil the UK-based Ethical Trading Initiative (ETI) and Global regeneration) from farms across Yorkshire and the North East. Social Compliance Programme. We work with our partners and The gas is then pumped into the national grid. We' deal with suppliers to assess performance and enact corrective action Future Biogas funds the production and we benefits from the against our Global Sourcing Principles. carbon reduction through the certification scheme. It also provides significant revenues for farmers, giving break crops a commercial route to market not previously available. V O L U M E - I , I S S U E - I - 0 7 / 2 0 1 5 ` 50/-

R Building Water IOD Tomorrow’s Institute Of Directors Boards Total water withdrawal by source - 1,145,016 m3, down by 10% DirectorA Journal of the INSTITUTE OF DIRECTORS India (2006/07: 1,266, 704 m3). Today We have installed rain water harvesting solutions at a number of Registered under the Press our stores. At Cheshire Oaks store we have installed an 80,000 & Registration of Books Act, 1867 litre rainwater harvesting tank which supplies a third of the Government of India store's water. RNI No.: DELENG/2015/61886 Human Rights ADVERTISEMENT TARIFF

All suppliers must comply with our Global Sourcing Principles Size No. of Insertions Rate which clearly states the legal obligations they must meet (inc. 1 INR 100000 3 INR 95000 each insertion human rights) and the actions taken should they not comply. Back Cover 6 INR 90000 each insertion Production sites are visited and assessed regularly by our 12 INR 85000 each insertion suppliers and by our own people. Together we strive for 1 INR 75000 3 INR 71250 each insertion continual improvement. Front Inside Cover 6 INR 67500 each insertion Suppliers must apply these principles at all times, and must also 12 INR 63750 each insertion be able to demonstrate that they are doing so. We will work with 1 INR 65000 3 INR 61750 each Insertion suppliers to support any necessary improvements but we will Back Inside Cover 6 INR 58500 each Insertion also take action, which may involve cancelling contracts and 12 INR 55250 each Insertion ceasing to trade, if suppliers are not prepared to make 1 INR 50000 appropriate changes. 3 INR 47500 each insertion Full Page Colour 6 INR 45000 each insertion We have teams in our regional offices who visit supplier 12 INR 42500 Per insertion factories to train staff and ensure policies and procedures are being adhered to. Last year we launched the Supplier Training Advertising Specifications and Education Programme (STEP) on our Supplier Exchange Line Screen - Black and 2 Colour: 120 or 133 Lines, website. STEP provides training materials for suppliers, 4 colour: 133 lines. Covers only: 150 lines, Bleed - covering a wide range of topics, including health and wellbeing, Trim size: 8 x 10¾, Page - 8¼ x 11, trims to 8 x 10¾, Keep live matter ¼" away from all trim. financial literacy for those unfamiliar with bank accounts and The artwork could be sent through email in an Effective Worker Management certification programme for HR teams and factories, which is being run in India with support PDF / JPG/ Tiff file. ( A-4 Size) from the Centre for Responsible Business India. www.iodonline.com

Director Today July • 2015 38 www.iodonline.com

Case Study

“everything we do leads to a cleaner, healthier, safer environment.” Cummins believes good governance is a key part of a Corporate truly sustainable company. The Company constantly Governance updates the policies and procedures guiding not only focus employee conduct, but the conduct of the companies that supply Cummins. Cummins, Inc., USA The Company's policies and procedures are built on a foundation established by Cummins' Vision, Mission and Values. These were formally adopted in 2000 but reflect practices dating back more than 30 years to legendary Chairman and Chief Executive Officer J. Irwin Miller. Mr. Miller believed strongly that a company was only as strong as the community where its employees lived and worked. He helped support Dr. Organizational Description Martin Luther King Jr.'s 1963 March on Washington Cummins Inc. is a global power leader consisting of while leading the National Council of Churches in the complementary business units that design, manufacture, United States. distribute and service diesel and natural gas engines and Mr. Miller's words on issues such as diversity and related technologies, including fuel systems, controls, air corporate responsibility can still be found in Cummins' handling, filtration, emission solutions and electrical power locations around the world. generation systems. Vision, Mission, Values and Headquartered in Columbus, Indiana (USA), Cummins employs about 48,000 people worldwide and serves Sustainability customers in approximately 190 countries and territories Here's a look at Cummins' Vision, Mission and Values: through a network of about 600 company- owned and Vision independent distributor locations and approximately 6,500 Making people's lives better by unleashing the Power of dealer locations. The company's largest customers are Cummins engaged in a wide range of industries from on-highway Mission transportation, to mining, rail transportation, marine transportation and more. We unleash the Power of Cummins by: Cummins, a publicly traded company, had sales of $17.3 · Motivating people to act like owners, working billion in 2013, up from $10.8 billion in 2009. Cummins is together. unique in that it is the only company that produces all of the · Exceeding customer expectations by always being critical subsystems required to build an engine or generator the first to market with the best products. in-house. Cummins' experience with making components · Partnering with our customers to make sure they work together has established it as the industry leader in succeed. systems integration. The Company has enjoyed significant growth in recent years. Since 2009, net income has increased · Demanding that everything we do leads to a cleaner, from $428 million to $1.48 billion. healthier, safer environment. The Company is governed by an eight-member board with · Creating wealth for all stakeholders. seven of the eight members coming from outside Cummins. Values Chairman and Chief Executive Officer Tom Linebarger is the · Integrity – Strive to do what is right and what we say only Cummins employee on the Board. The Board represents we will do. and protects the interests of the Company's stakeholders with the legal responsibility for overseeing the affairs of the · Innovation – Apply the creative ingenuity necessary Company. to make us better, faster, first. Cummins has long believed in a sustainable approach to · Deliver Superior Results – Exceed expectations business, reflected in the Company's mission to demand that consistently.

Director Today July • 2015 40 www.iodonline.com

Case Study

· Corporate Responsibility – Serve and improve the performance of the Company from Cummins' Internal Audit communities in which we live. department. · Diversity – Embrace the diverse perspectives of all people The Vice President – Internal Audit reports to the Audit and honor both with dignity and respect. Committee of the Board of Directors. The Internal Audit group published 82 audit reports and memos in 2013. To ensure · Global Involvement – Seek a world view and act without management has addressed and identified risks and boundaries. implemented corrective action, Internal Audit has a formal Sustainability follow-up process. Cummins is currently working on its definition of The responsible business or functional leader must present a sustainability, but generally speaking, the Company takes a corrective action plan to the Audit Committee of the Board of broad view, believing sustainability goes beyond Cummins' Directors when a function or business receives an actions on the environment and in corporate responsibility. “unacceptable” audit grade. Cummins believes safety, diversity and employee and leadership development are also critical to a truly sustainable Shareholders company. Cummins Inc. is a publicly-traded company owned primarily Board and Organizational Structure by institutional investors, the largest of which currently owns 7.4 percent of the Company. The Board of Directors at Cummins is charged with exercising All shareholders are encouraged to contact the Company to independent and sound business judgment regarding discuss any concerns and our Investor Relations team engages significant strategic and operational issues. It advises senior management and adopts governance principles consistent with frequently with shareholders of all sizes. As stated in Cummins' Vision, Mission and Values. Cummins' 2014 Proxy Statement, shareholders and other interested parties may communicate with the Board, including The Board reflects the Company's commitment to diversity its Lead Director and other non-management directors, by with two women and one Latino man within its ranks. The sending written communication to the directors care of our Board monitors a number issues including: Secretary, 500 Jackson Street, Mail Code 60903, Columbus, · The performance of the Company Indiana 47201. · The performance of senior management In addition, any shareholder entitled to vote for the election of · Compliance with applicable laws and regulations directors at a meeting may nominate a person or persons for · Communications and relationships with stakeholders election as director in accordance with the procedures set forth in the Company's bylaws and in our 2014 Proxy Statement. · The effectiveness of internal controls and risk management Shareholders may also submit proposals (other than practices nominations for the election of directors as discussed above) to The Board of Directors has six standing committees to help it be considered for shareholder action at Cummins' annual meet its responsibilities: the Executive Committee, meetings of shareholders and for inclusion in our proxy Compensation Committee, Governance and Nominating statement and proxy card if they do so in accordance with the Committee, Audit Committee, Finance Committee and the appropriate regulations of the U.S. Securities and Exchange Safety, Environment and Technology Committee. Commission (SEC). Cummins complies with all New York Stock Exchange and For such proposals to be considered for inclusion in Cummins' regulatory requirements concerning the membership of certain proxy statement, such proposals must be received by our committees. Secretary within 120 days of the first anniversary of the The Board does not have a separate Sustainability Committee, mailing/release date of the prior year's shareholders' meeting. believing sustainability is the concern every committee. The If such proposals are not timely submitted, then the shareholder Company approaches sustainability in much the same way. It must follow the procedures set forth in our bylaws. does not have a separate sustainability leader, believing it is the Finally, our bylaws provide that special meetings of responsibility of every senior leader. shareholders shall be called upon written request to the Audit Committee Secretary by one or more "Eligible Holders" (as defined in our To help manage risks, the Board and senior leaders of the bylaws) representing not less than 25 percent of the voting power of all outstanding shares of capital stock. Company get independent and objective information on the

Director Today July • 2015 42 www.iodonline.com RA EB TI L N E G C

years

2

5

Institute Of Directors, India presents 15th LONDON

GLOBAL CONVENTION 2015 7 - 9 October, London (UK)

Theme: Effective Corporate Governance and Sustainability: Mandate of the Board

Incorporating Global Business Meet at House of Lords, UK Parliament on 7th October 2015 Also presentation of 15th International Conference on Golden Peacock Awards Corporate Governance, Sustainability, (both National & Global) Corporate Governance & Sustainability & Innovation Management at Millennium Hotel London Mayfair, 44 Grosvenor Square, London W1K 2HP on 8th - 9th October 2015

Hon’ble Mrs Nirmala Sitharaman, The Rt Hon Theresa May MP, Secretary of State for the Home Department, Govt. of UK presenting the Golden Peacock Awards in London, last year. Union Minister for Commerce and Industry, From L to R: Nikhil Sahni, Senior President, YES Bank Ltd., The Rt Hon Alok Sharma, MP , House of Commons, UK, Lt Gen J S Ahluwalia, PVSM (Retd.), Govt. of India inaugurating the London Global Convention at House of Lords, UK, last year. President, Institute of Directors, India, Rt. Hon. Baroness Verma, Parliamentary Under Secretary of State for Energy & Climate Change, Govt of UK, Rt. Hon. Sir Richard Needham, Chairman, Golden Peacock Global Awards, The Rt Hon Shailesh Vara MP, Parliamentary Under-Secretary of State, Ministry of Justice, Govt of UK.

Key Topics Block Your • Global perspectives on Corporate Governance • Corporate Governance : Re-Structuring Boardroom Leadership Diary • The Role of the Board in Promoting Sustainability • Corporate Fraud, Audit & Vigil Mechanism • CSR as a tool for Sustainable Business Development • Principled Corporate Governance: A Game Changer • Corporate Governance and Business Ethics in Public Sectors • Emerging Role of Company Secretaries in the Boardrooms

In association with Supported By

Institute Of Directors Scan with Smart Phone M-56 A, Greater Kailash Part - II (Market), New Delhi-110048 QR Reader Board Nos.: +91-11- 41636294, 41636717, 41008704 App: Fax: +91-11- 41008705 • Email: [email protected], [email protected] www.iodonline.com Case Study

Code of Conduct and approve corrective actions. Each quarter, business unit leaders receive an update on reports in their region or business. Board members and employees alike pledge to uphold the Chairman and CEO Tom Linebarger also receives updates and Company's Code of Conduct, another key component of an annual update is reviewed by the Audit Committee of Cummins' efforts in governance and ethics. Cummins' Board of Directors. The Code of Conduct, updated in 2012, is built around 10 No one's career can be negatively affected by reporting principles: suspected Code violations made in good faith. Cummins uses a • We will follow the law everywhere. third party company for reporting concerns and notifying the • We will embrace diverse perspectives and backgrounds, appropriate people up to and including the chief executive and treat all people with dignity and respect. officer. • We will compete fairly and honestly. Training • We will avoid conflicts of interest. Cummins puts its Code of Conduct principles into practice • We will demand that everything we do leads to a cleaner, through comprehensive compliance training, targeting healthier and safer environment. appropriate employee groups. Cummins Ethics and • We will protect our technology, our information and our Compliance staff coordinates the training on topics such as intellectual property. conflicts of interest, intellectual property, export compliance, • We will demand that our financial records are accurate and fair competition and treatment of others. that our reporting processes are clear and understandable. The Company in 2013 updated its online training on anti- • We will strive to improve our communities. bribery through Cummins' new in-house learning management • We will communicate honestly and with integrity. system, the Cummins Learning Center. About 22,000 employees received the training in 19 languages to help • We will create a culture where employees take facilitate understanding of this critical issue. responsibility for ethical behavior. About the same number of employees received Code of Cummins' Code of Conduct protects and promotes the ethical Business Conduct training in 16 languages in 2013. behavior that makes Cummins a special place to work. The Company's 28-page Code is translated into 16 languages and Ethics Certification includes Frequently Asked Questions with each principle to Cummins employees annually certify their compliance with provide context and help guide Cummins employees. the Company's Code of Business Conduct and related policies Code Enforcement/Whistleblower Policy and report any exceptions. Any effective code of conduct must have an enforcement In 2013, 18,034 employees and officers – up from 17,666 in mechanism. Cummins has a team of master investigators 2012, completed their annual Ethics Certification including all stationed around the world to investigate reported abuses. members of the Board of Directors. Employees have multiple ways to report suspected violations of Internal Audit and Cummins Law Department reviewed all the Code, including by talking with their supervisor or Human exceptions to ensure they were documented and investigated, Resources representative, or by contacting a member of the according to Company policy. Cummins legal staff. Cummins employees can also report their Supplier Code of Conduct concerns through the Company's ethics website or by calling Cummins updated its Supplier Code of Conduct in 2013 to the Cummins Ethics Help Line. make it more global in scope while addressing new regulatory Phone numbers for different locations around the world are issues such as conflict minerals. The Supplier Code of listed on the ethics website. Employees can report suspected Conduct, which Cummins first established in 2005, is today violations anonymously where permitted by law. built around seven principles: In 2013, Cummins investigated 1,367 reported Code violations, · Suppliers must follow the law. up from 1,196 in 2012. About 50 percent of the total reports were ultimately substantiated, compared to 54 percent in 2012. · Suppliers must treat all people humanely and with dignity Around 33 percent of the substantiated reports resulted in and respect. terminations compared to 40 percent in 2012. The average time · Suppliers must do business fairly and honestly and avoid to close a case was 14 days, up one day from 2012. conflicts of interest. Cummins' senior leaders closely monitor reported violations · Suppliers must protect the environment.

Director Today July • 2015 44 www.iodonline.com

Case Study

· Suppliers must provide a safe and healthy working risks in advance and prepare for major events that could impact environment. their sites, employees, and ultimately their ability to serve Cummins customers. The goal of Business Continuity Plans is · Suppliers must protect Cummins technology, information to limit business exposure to risks and speed recovery to and intellectual property. normal operation. Each site with a plan is required to update it · Suppliers must assist Cummins in enforcing this Code. annually and also run a scenario exercise to test the resilience of Each principle includes compliance guidelines to make the the plan. Code more user-friendly. For example, under the principle The team is looking for opportunities to streamline the regarding treating people with dignity and respect, the Code Business Continuity Planning Process for sites. In addition, it is states: “Suppliers should have formal policies prohibiting also looking at locations where Cummins has clusters of sites harassment, discrimination and ensuring fair treatment of all such as Columbus, Indiana, and San Luis Potosí, Mexico. employees.” It also states suppliers must respect employees' There might need to be a shared response to an emergency in right to bargain collectively and bans forced or child labor. those places. The Code has been translated into 14 languages and is The Risk Management team also continues to prepare a prominently posted on the Company's Supplier Web Portal. A dashboard for the Cummins Board of Directors and senior link is available on Cummins' homepage at www.cummins.com. leaders outlining the biggest risks facing the Company. The The Company sent the updated Code to its top suppliers dashboard is updated to reflect changes in risks both in and representing 80 percent of Cummins' total spending and has outside Cummins. launched a new certification process in which those suppliers Global Security will commit to comply with the Code. Cummins Global Security is chartered to protect employees, On conflict minerals, the Code states that Cummins will work facilities and information assets by implementing risk with suppliers “and strive to ensure that minerals in our reduction strategies across the globe. products come from conflict-free sources and that all suppliers are required to supply information about their use of these Achieving this requires a sustainable security program that is minerals to Cummins.” collaborative in nature and delivers services that are aligned with the Company's strategic growth objectives. Beginning in 2014, U.S. laws require companies that are publicly traded on U.S. exchanges to disclose whether they use In early 2013, Global Security identified the need for a the specified minerals in their products and the source of those mechanism that would allow Cummins to share intelligence minerals. Cummins has developed a process to analyze the use and respond to security requests around the world. By October and source of the conflict minerals in Company products and 2013, it introduced a virtual operations center known as the will continue to refine and enhance its conflict minerals Cummins Response Center (CRC). program in 2014 and beyond. The CRC provides around-the-clock capability for medical, Risk Management security, travel assistance requests, or emergency team activation. The response center puts employees and Cummins Sustainable risk management is more than just protecting a entities first, providing the right tools and people to deliver company's critical assets. It is actively managing risks to protect sound security support across the Company. the company's business, its people and its reputation. Risk The response center maintains a unified system for management is also about taking acceptable risks to pursue communication that can handle a vast array of intelligence. opportunities that allow a company to deliver business This system allows decision-makers to share information and objectives and strategies, and increase stakeholder value. connect from any location at any time. Helping Cummins' leaders evaluate and manage risk, in all its Real-time information can be easily transformed into forms and from all perspectives, is the goal of the Company's actionable intelligence that is accurate and relevant to the Risk Management team. customer. The team has been evolving in recent years since its shift in Through the CRC, Cummins has a flexible and virtual solution 2012 to the Corporate Strategy function. It is wrapping up work that yields the following benefits to its employees and on establishing Business Continuity Plans for nearly every businesses and meets unique operational challenges: Cummins location, about 500 sites in all, including all wholly owned and joint venture Distribution Business Unit (DBU) · Shared access to security resources across the Company; sites by the end of 2014. transparency and virtually accessible communication Business Continuity Plans allow site leaders to recognize key services.

Director Today July • 2015 46 www.iodonline.com ‘India Inc faces shortfall of over 1,600 ‘India needs over Women Directors' 20,000 Independent Directors' from this fiscal

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INSTITUTE OF DIRECTORS M-56 A, Greater Kailash Part - II (Market), New Delhi-110048 Why do Board Nos.: +91-11- 41636294, 41636717, 41008704 Fax: +91-11- 41008705 • Email: [email protected] Directors and Boards Join IOD Web: www.iodonline.com Discover the reasons Case Study

· Improved operational efficiency; enhanced collaboration add knowledge, skills and passion: across corporate entities and Area Business Organizations. · Education Global Security is looking to build a security culture where · Environment employees take personal responsibility not only for their own security, but the security of their fellow employees and the · Social justice / Equality of opportunity Company. Cummins employees invested a record number of hours in community service in 2013, making a difference in Environment communities around the world. Cummins also lives out its vision, mission and values in its Total hours for the year in community improvement activities aggressive approach to environmental protection. increased from 222,617 in 2012, the previous record, to After two years of study, the Company in 2013 adopted a 308,783 in 2013 – a nearly 40 percent jump and the new record comprehensive environmental sustainability plan to further for the Company's EEEC program. reduce its carbon footprint. The plan builds on past successes to The percentage of employees participating in EEEC activities address Cummins' biggest environmental opportunities – from increased from 63 percent in 2012 to 67 percent in 2013. Under the materials it buys to its products in use. the EEEC initiative, employees can work for at least four hours The plan calls for Cummins to continue designing for the on a community improvement project on Company time and efficient use of fuel and raw materials as it did on the Cummins- more if they have the approval of their supervisor. Peterbilt “SuperTruck,” praised by the President of the United One of Cummins' most innovative community service States Barack Obama in February 2014 for achieving a 75 programs is the Environmental Challenge competition. The percent improvement in fuel economy during real world testing. Company's Community Involvement Teams compete to have The Company will also continue addressing its global supply their projects selected one of the 15 best environmental efforts chain to more efficiently use raw materials, packaging and of the year. More than 11,000 employees invested more than transportation. 60,000 hours in 2013, reducing 19,000 tons of GHGs, more But the biggest opportunity involves working more closely with than four times the reduction from last year's contest. customers when Cummins engines, generators and other The GHG reduction is equivalent to taking 3,950 vehicles off products are in use around the world. This has the potential to the road for a year and conserving 2 million gallons of gasoline. save customers money while reducing greenhouse gas (GHG) The 15 projects judged to be the best won $10,000 each from emissions. the Cummins Foundation to be spent on the community not- Cummins is also setting specific goals for its own facilities for-profit or non-governmental organization of their choice. including: Three projects were signaled out for special attention: · Completing an earlier goal to reduce energy use and GHG · A project by Cummins employees in Shanghai, China, emissions by 25 percent and 27 percent, respectively, helped farmers find a better use for agricultural waste such compared to a 2005 baseline and adjusted by sales, by as straw. Instead of burning the waste, participants used it 2015. as fertilizer to grow mushrooms. · Reduce direct water use by 33 percent by 2020, adjusted by · Employees in another part of China helped a middle school hours worked and compared to a 2010 baseline. purify its water supply while helping teach students about · Increase the Company's recycling rate from 89 percent to water protection and management. 95 percent by 2020. · Cummins employees in South Korea helped organize Corporate Responsibility other companies to join them in cleaning the banks of a Corporate Responsibility is one of the Company's six core popular stream. values, calling on Cummins and its employees to “serve and In addition to the community service projects undertaken improve the communities in which we live.” around the world, the Cummins Foundation, one of the oldest corporate foundations in the United States, donated about $7.4 The Company has more than 200 employee-led Community million in grants to a wide variety of causes in 2013. The Involvement Teams that organize the majority of the Every Foundation's primary goal is to support employee led Employee Every Community (EEEC) service projects at community service projects. Cummins. The Company encourages employees to focus their efforts on three global priority areas where they can especially

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This Handbook provides the BoD, guidelines, check- This handbook can be used as a primer on Corporate lists and action points towards achieving the aim of Social Responsibility. As such, it contains information on reinventing and rejuvenating their own organisation, by how to assess the effects of business activities on resorting to a smart management of creativity and stakeholders, develop and implement a Corporate Social innovation in their organisation or even boosting the same Responsibility strategy and commitments, and measure, to a greater level, in order to stay ahead of the evaluate and report on performance and engage with competition. stakeholders, in the context of the Companies Act, 2013.

ENTERPRISE RISK MANAGEMENT EMOTIONAL INTELLIGENCE This handbook is a valuable guide at corporate level, on FOR ORGANIZATIONAL EXCELLENCE Enterprise Risk Management. It provides a structured The Handbook on Emotional Intelligence is a brief integrated, holistic approach towards a sustainable condensed account of what Emotional Intelligence is, system of Managing Risks. For an organization to build a how it is related to Organizational Excellence, and how it sustainable model for creating long term shareholder affects corporate strategy. It covers the multidisciplinary value, effective management of these risks is of and multifaceted nature of Emotional Intelligence. significant importance.

BOARDROOM DYNAMICS TOTAL QUALITY MANAGEMENT & COMMUNICATION FOR BOARDROOM This handbook can be used as a reference on There is no single route to quality; there is no standard Boardroom Dynamics. It covers basic information on operating procedure for Total Quality Management. A lot how to make Boardroom communication effective, how depends on where a company is on the TQM Scale and to negotiate effectively. Directors are expected to have where it wants to be. The quality journey, again, begins certain communication skills, both personal and with identification of the critical problems faced by the professional. company.

STRATEGY THROUGH FINANCIAL MANAGEMENT BALANCED SCORECARD This Hand Book seeks to demystify apparently complex It Covers the multi-disciplinary and multi-faceted nature financial statements, and help create a finance-savvy of performance management, its criteria, its executive class, the key to fiscally sound and successful development and management. It gives broad insights business. The guide sets out finance consideration and into the field of strategy building and performance option for businesses at various stages, providing advice measurement through various facets of Balanced and sources of information to help them start, grow and Scorecard. prosper.

INSTITUTE OF DIRECTORS Buy it Now M-56 A, Greater Kailash Part - II (Market), New Delhi-110048, India Board Nos.: +91-11- 41636294 / 41636717, 41008704 • Mob: 09871390417 Fax: +91-11- 41008705 • Email: [email protected] www.iodonline.com Appointments IOD announces appointment of Chairman for UAE & QATAR CHAPTERS

Dr. Tayeb Kamali Currently he is with Ministry of Culture, Youth and Community Development, Govt. of UAE before he served as the Vice Chancellor of The Higher Colleges of Technology, (HCT) in Dubai, the largest higher educational institution in United Arab Emirates. Currently Dr. Kamali also serves as the Chairman at Emirates Driving Company PJSC and Vice Chairman of Centre of Excellence for Applied Research and Training (CERT) the first Technology Park in the UAE. He is a leader in developing and managing organizational change. As part of the senior management team of the Higher Colleges of Technology he worked with global leaders to create a world leading eLearning institution through strategic implementation of laptop learning programs, wireless campus infrastructure, online learning programs and knowledge management programs. Dr. Kamali is the Founder and Chair of numerous international conferences on eLearning and entrepreneurship taking place in the United Arab Emirates. Dr. Kamali holds a Doctorate in Engineering from George Washington University and an MBA and Bachelor of Science degrees in both Dr. Tayeb Kamali Aeronautical Engineering and Aircraft Engineering from Embry Riddle Chairman, IOD India, UAE Chapter Aeronautical University, USA.

Dr. R. Seetharaman Group Chief Executive Officer, Doha Bank, Qatar Dr. R. Seetharaman, Group Chief Executive Officer of Doha Bank, is a recipient of multiple doctorates from leading universities of the world, including a Doctorate in Global Governance by European University and Doctorate of Laws by Washington College. He is a Chartered Accountant and holds certificates in IT Systems and Corporate Management. He has been named “Best CEO in Middle East” and “World Leader Business Person” and is a recipient of “The Gullands Excellence Award as a Phenomenal Banker”. Recently, he also received the “Life Time Achievement Award” from the Institute of Directors' at the Global Summit 2014 in Chennai. A regular commentator on international finance in global media outfits such as BBC, CNN, FOX, CNBC, Sky News, ABC, and Bloomberg, he has transformed Doha Bank as one of the best performing Banks in the Middle East region.

Dr. R. Seetharaman Chairman, IOD India, Qatar Chapter

Director Today July • 2015 50 www.iodonline.com

News & Views

basic fact that nobody can take inducement unless it is offered. Involve NRIs more for Talk of low-level corruption being endemic is I'm afraid often development the case, but it is encouraged by businesses looking for a quick fix. If people lower down see those at the top openly engaging in corrupt activities then The Narendra Modi they say to themselves, “why not, I'm just a government has made a poor man.” The Finance Minister is taking action to promising start in the last confront this by introducing new measures year, writes like simplifying tax systems and avoiding SWRAJ PAUL from London unnecessary litigation. I am particularly glad that he has made it very clear that while India seeks inward investment we should not The Rt Hon Lord Swraj Paul of Marylebone, PC, become a tax haven or a host for hot money. Founder & Chairman, The Caparo Group Plc , UK He is determined to remove all obstacles. NRIs can be a great source of investment in A year in the life of a nation is the briefest of moments. But a India. They are the face of India around the world. Many have year in politics is quite enough to make evaluations and earned great respect internationally in their respective fields. measure indications of progress. I think a very promising start They should be encouraged in the same way that China has been made to revitalise the potential of India by Mr Modi encourages its expats – and it is they who have made China and his government. I hope that, in the years to come, this such an attractive destination for international investors. enthusiasm and this activism will be sustained. It will take much more to move forward. In the early 1980s the late Mrs Indira Gandhi and the then Finance Minister Mr Pranab Mukherjee made concerted efforts But all journeys start with a beginning and the past year has to bring NRIs into the mainstream of the Indian economy. been a very good beginning that gives us high expectations for Sadly, their vision was sabotaged by vested interests in the the future, particularly in the area of business and economics. Indian business community. From the perspective of one based abroad but who has invested in India over the years, there are some concrete steps the At that time, I was one of the first to substantially invest in government can take to further involve the large NRI India. But the business community was frightened as my community. investment and interest exposed the fact that corporate abuse was rampant in most of their enterprises. They were running Economically, 'Make in India' is a great initiative with every public companies like private fiefdoms. No corporate chance of success because India has the skills and resources to governance, no shareholders interest, no transparent financial make it happen. Hopefully we will never again see the reporting. The so-called owners actually had very small speculative, casino type stock market ventures like those of the shareholdings of their own and felt threatened when this was early 1990s. made public. Their lobbying campaigns to keep NRIs out has For over 30 years, in fact since 1982, I have been urging the largely succeeded since then. introduction of clear-cut policies, with transparent rules and A few simple things can be done to mobilise large amounts of consistency in application – no special breaks for anyone. NRI capital for India's benefit: Foreign investment is essential for India's development. Those • When NRIs invest they should be treated at par with who want to invest in India should be able to see what it entails. resident Indians. Not just for the money that they If they can abide by the rules, they are welcome. If they can't, invest but because NRIs are just as loyal and often they are free to go elsewhere. Until now investment rules have display greater pride in their Indian heritage than been made in favour of India's business community, who have residents. demanded special terms for themselves and stifled competition. That has scared off people who want to make an • Fix a minimum investment figure for NRIs. Any honest investment. Not only has the country lost out on that amount above that entitles the investor to an Indian investment but this 'kissing by favour' approach has been a passport. Granting an Indian passport would not cost major source of corruption. the country anything and doesn't confer any benefits on the holder Many business people and commentators have forgotten the

Director Today July • 2015 52 www.iodonline.com

News & Views

other than a great sense of pride. smooth implementation of Companies Act, 2013. These • Indian PIO card holders are expected to carry it in notifications have received wide appreciation in the corporate addition to their passport, even though their passport world. To derive greater benefits of outcomes of CSR contains a Visa based on the PIO. The PIO is an initiatives, relevant rules have been amended enabling wider unnecessary document and serves no purpose. I have spread of CSR funding; new items eligible for funding have seen people who have forgotten or mislaid it lose their also been added to provide impetus to sanitation and flight because the airlines won't carry them. environment-related concerns. I mention all this because if the Modi policies are to succeed, Providing Greater Clarity in Companies Act, 2013 for Ease they require large amounts of international investment – and NRIs are an obvious source of it. of Doing Business - to make Company Law even more business and growth friendly, amendments have been moved Internationally, India now has a higher profile than in recent and already approved by the Lok Sabha to: decades and our global esteem has been enhanced. Largely due to the Prime Minister's personal efforts, the world's eyes are (a) Bring provisions for minimum capital and company now on India. seal at par with international best practices. Last year I was in India just before the election. When I visited (b) Make approval for related party transactions again last month I observed a sea-change in attitudes and simpler without unduly diluting safeguards for minority atmosphere. There was a positive aura and a new confidence shareholders. in the future. As a consequence, British Indian business should prosper. (c) Provide explicit penalties for failure to honour terms There is now the desire on both sides to do more, especially in and conditions of deposits. technical transfers, IT and education. Many British universities (d) To retain stringent bail provision only for the serious would like to be more involved in India. India should bear in offences of fraud. mind that there are several institutions of higher learning who are geared to their expectations, especially those that have close (e) To rationalize procedural aspects to deal with frauds associations with industry. detected during the course of audit. India has a large reservoir of talented and hardworking young Simplification of forms and procedures for Easy people who want and need to be better trained in order to Compliance - To make compliance and reporting easy and develop their skills. They could become a great asset to India convenient to companies, the following major initiatives have and to the world. Establishing links with UK universities that been taken: are keen to do more in India would help achieve that. (a) Four prescribed forms have been discontinued along with substitution of a simple declaration instead of Initiatives and salient affidavits for several purposes. achievements done by the (b) Procedural requirements for foreign nationals to be Ministry of Corporate Affairs Directors in Indian Companies have been drastically reduced. in last 6 months (c) Arrangements have been completed for integration of Enhancing Efficacy of Companies Act, 2013 - After Name Availability, allotment of Direct Identification consultations and interactions with business chambers, Number (DIN), Company Incorporation and corporate and accounts professionals, nearly 40 Commencement of Business with the unified e- clarifications/elaborations have been made in the form of business portal being developed by the Ministry of circulars. These have removed doubts and facilitated a smooth Industries and Commerce. implementation of Companies Act, 2013. Fifteen such (d) Fee payable by small companies for various services amendments in various Companies Rules have also been significantly reduced. carried out to achieve similar objectives. In seven instances statutory orders to 'remove difficulties' have been issued for (e) Arrangements to enable Indian companies to follow

Director Today July • 2015 54 www.iodonline.com MANY THINK ABOUT CHANGING THE WORLD WE ARE ACTUALLY DOING IT Transforming Corporations through our holistic programmes . Together we can create a better world Why we focus on Conferences ?

Conference creates understanding • Understanding creates networking • Networking creates experience Experience creates knowledge • Knowledge creates technology • Technology creates convenience Convenience creates well being • Well being creates feelings • Feelings create motivation Motivation creates involvement • Involvement starts a movement • Movement leads to desired behaviour

Mark the following Dates in your Diary (Dates are tentative as today please confirm from the website www.iodonline.com when required ) UPCOMING EVENTS 2015

17th World Congress on LONDON GLOBAL IOD SILVER JUBILEE ENVIRONMENT CONVENTION 2015 MANAGEMENT Incorporating 15th International DINNER Conference on CORPORATE Also presentation of GOVERNANCE & SUSTAINABILITY & Golden Peacock Awards for GLOBAL BUSINESS MEET Environment Management Also presentation of Golden Peacock Occupational Health & Awards for Corporate Governance, 10 July 2015 Safety and Eco-Innovation Sustainability, (both National & Global) at Hotel Le Meridien, & Innovation Management New Delhi (India) 10 - 11 July 2015 at Hotel Le Meridien, 07 - 09 October 2015 New Delhi (India) London (UK)

Golden Peacock Awards 10th International DUBAI GLOBAL Last Date of Submission of Applications for Conference on CONVENTION 2016 Global Awards CORPORATE SOCIAL Leadership for Business • Golden Peacock Global Award for Excellence in Corporate Governance (GPGAECG) RESPONSIBILITY Excellence & Innvoation • Golden Peacock Global Award for Sustainability (GPGAS) Also presentation of Also presentation of National Awards Golden Peacock Awards for • Golden Peacock Award for Excellence in Golden Peacock Awards for Quality, Business Excellence, Corporate Governance (GPAECG) Corporate Social Responsibility Training & Innovative Product/ • Golden Peacock Award for Sustainability (GPAS) (both National & Global) and • Golden Peacock Innovation Management HR Excellence Service. Award (GPIMA) 20th August 2015 5 - 6 February 2016 20 – 22 April, 2016 Dubai For more information visit us at: www.goldenpeacockawards.com

Details: INSTITUTE OF DIRECTORS: M-56 A, Greater Kailash Part - II (Market), New Delhi-110048 Board Nos.: +91-11- 41636294, 41636717, 41008704 Fax: +91-11- 41008705 • Email: [email protected] Web: www.iodonline.com News & Views

new Accounting Standards, i.e. IndAS (compatible with The regulator had asked all companies to comply to the International Financial Reporting Standards – IFRS) this guideline last year and had given an extension till th completed. This will facilitate access for Indian June 30 . Failure to comply to this will result in a heavy companies to international capital markets. penalty to companies of upto Rs. 50,000/- and an additional penalty levied on daily basis. 4. Dealing with Corporate Delinquency - SFIO Any company that fails to comply to SEBI's completed the investigations in the affairs of 17 so called guidelines by September 30, will face more harsher 'Chit Fund Companies' unravelling their modus operandi. penalties. Details of these have not yet been disclosed as Apart from prosecuting such companies for failure of yet by SEBI officials. – IOD Buerau complying to Companies Act, evidence gathered has been shared with the CBI which is looking into criminal offences of these companies. Initial steps have been taken to cause merger of NSEL Limited with its parent company Financial Technologies (India) Limited to protect the SEBI introduces new interest of investors in NSEL on account of its regulatory initiatives for raising defaults and the failure of the holding company to exercise investments by start-ups oversight. This is the first ever initiative. Investigation in serious cases of online fraud have been completed. Security and Exchange Board of India (SEBI), recently announced some new wave technology driven reforms Lessons learnt in this investigation should play a positive which allowed start-up companies to raise funds and also role in checking such frauds. investments would be cheque free for all Initial Public 5. Investor Education initiatives - 1380 programs Offer (IPO). were conducted in various locations to familiarize Apart from this, SEBI also fast-tracked the procedure small investors of the opportunities and pitfalls in time to 6 days instead of 12 days for start-up companies making investments. Conclusion of the same are yet to raise funds through IPOs' to be gathered and declared. This comes as a welcome relief for startups as SEBI Courtesy – http://www.mca.gov.in welcomed more and more companies to avail this fast- track feature to raise investments. "With this issuers will have faster access to the capital raised and investors will have early liquidity” said Mr. U.K. Sinha, Chairman, SEBI Companies to face penalties Currently, it takes 12 days after the Initial Public Offer for non compliance of (IPO) for a company to list on the exchanges, thus SEBI guidelines keeping investors' funds locked in for a longer period. SEBI also recently cleared a new set of norms for re- classification of promoters in a company. The new norms state that the outgoing promoter would have to forego all control and special rights alongwith a dilution of 10% Securities and stake to become a public investor. This would not allow Exchange Board of India giving any board any undue advantage while any board (SEBI) had imposed member or promoter is moving out of the board. guidelines to all companies listed on the National Stock Exchange to have at least 1 woman director on its board apart from one third of its members as independent directors.

Director Today July • 2015 56 www.iodonline.com A&M Appointments & Movements

Private Sector Public Sector German banking giant DeutscheBbank has B Gopakumar has been Shri Umang Narula has appointed John Cryan as appointed as the Chief been appointed as the its new Chief Executive Executive of Reliance Chairman and Managing Officer. This was resultant Capital Broking and Director (C&MD) of India executives Anshu Jain and Distribution business. He Tourism Development Juergen Fitschen succeeds Vikrant Gugnani Corporation (ITDC). He resignation as a and has over 20 years of succeeds Shri Girish consequence of criticism experience. He has managed various Shankar, Additional from investors. Cryan, 54, assignments which includes direct sales, Secretary, Ministry of was on the bank's priority banking, marketing, product Tourism who was also supervisory board since development, broking and distribution. holding additional charge of 2013. He will become the Managing Director, ITDC. sole CEO replacing Jain B.L. Bengnani CMD of and Fitschen from July 1. Uniply Industries resigned from his post recently and Keshav Khethernneni has Kiran Visweswaraiah takes Tom von Bonsdorff has been inducted as Additional charge as the new General been appointed as the Director of Uniply. Managpublic sector Bharat Managing Director of Electronics Ltd (BEL). He Volvo Auto India Vinayak Bahuguna had joined the components replacing Tomas Ernberg has been appointed as division of BEL-Bengaluru who moves out. the Chief Executive in December 1982.er - Officer & Managing International Marketing of Director with Asset public sector Bharat Government Sector Reconstruction Electronics Ltd (BEL). He Company (India) Ltd. had joined the components Devendra Choudhary, (Arcil). He succeeds division of BEL-Bengaluru 1981 batch UP cadre IAS, Mr. P Rudran who had in December 1982. has been appointed as completed his term in special secretary in the April 2015. Department of Administrative Reforms JK Tyre and Public Grievances Nikon (DARPG). He will take JK Tyre announced the over as DARPG secretary Kazuo Ninomiya will be the new Nikon appointment of Vivek once incumbent Alok India MD from June 2015. Prior to this he Kamra as President Rawat retires. was General Manager Nikon Singapore. following Arun K Bajoria's He takes over from Hiroshi Takashina. elevation to the role of Takashina moves to China as MD Nikon 'Director and President – Imaging (China) Sales Co. Ltd, Shanghai. International Operations'. International Placements Bajoria will be directing JK Tyre's International Operations including 'JK Tornel, Mexico

Nikon India said that it has appointed Hero MotoCorp Ltd Kazuo Ninomiya as the Managing Director announced the appointment effective June 15. He was earlier serving of Pawan Munjal as the Vinita Bali takes over as as the General Manager, International new Chairman, Managing the Chair of the Global Planning Division of Nikon Singapore. Director and CEO of Hero Alliance for Improved The company said that Ninomiya is taking MotoCorp. Brijmohan Lall, Nutrition (GAIN) from Jay over the roles and responsibilities from Chairman since inception Naidoo, She had been on Hiroshi Takashina, who will now be in 1984, will continue to the board of GAIN since managing Nikon's China business guide in the form of 2010. operations. Chairman Emeritus.

(Please send us any new board level appointments in your organization to [email protected] to be included in this section)

www.iodonline.com 57 Director Today July • 2015 Company Profile

Suzuki Motor Corporation

Suzuki Motor Corporation is a leading manufacturer of automobiles , motorcycles ,outboard motors etc.

Starting business in 1909 as Suzuki Loom Works, the firm was incorporated in 1920. Since its foundation in Hamamatsu, Japan, SUZUKI has steadily grown and expanded. The company began with manufacture of looms and then diversified into automobiles , motorcycles and industrial equipment. Today, constantly going forward to meet changing lifestyles, the SUZUKI name is seen on a full range of motorcycles, automobiles, outboard motors and related products such as motorized wheelchairs and industrial equipment. The Suzuki trademark is recognized by people throughout the world as a brand of quality products that offer both reliability and originality.

Suzuki Motor Corporation has Manufacturing facilities in 15 countries across 5 continents (apart from 6 facilities in Japan) , which has produced over 2.85 million units in FY 2013. The established network enables Suzuki to operate as a global organization serving 200 countries and regions. This has enabled Suzuki to be amongst the top 10 automobile manufacturers in the World.

The Suzuki product lineup in the car segment ranges from 'Kei' small cars to SUV models & is the manufacturer of the globally acclaimed Swift car , which has won numerous awards across the globe.

Suzuki Motor Corporation has carried out its operations on the basis of manufacturing of "value- packed products" to satisfy customers since its establishment with the motto "Develop products of superior value by focusing on the customer".Applying this philosophy and approach to R&D, the Suzuki teams cover a wide range of the latest advances in such fields as energy, environmental, electronics, communication, information and control applications. All this R&D energy is devoted to the output of products that meet the challenge of the next generation.

The Group commits itself to make efforts to promote the “production of small and subcompact vehicles” and the “development of environmentally benign products” needed by customers, with the slogan, "Small Cars for a Big Future" Let our Dynamic Strategy have a Day to Day Execution

Institute of Directors is a non-profit apex body of Directors, registered under the Indian Societies Registration Act XXI of 1860, vide Regd. No. S21169 on 12th July1990

MANY THINK ABOUT CHANGING THE WORLD WE ARE ACTUALLY DOING IT Transforming Corporations through our holistic programmes. We together can create a better world

India needs over 40,000 Independent Directors JOIN OUR as per the New Companies Act 2013 NETWORK Are you a Connect with Golden Peacock Awards Certified Corporate Director ? A Strategic Tool to Lead the Competition over 30,000 Sr. Executives

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INSTITUTE OF DIRECTORS, INDIA Scan with Why do M-56 A, Greater Kailash Part - II (Market), New Delhi-110048 Smart Phone Directors and Corporates Join us India, Tel. +91-11- 41636294, 41636717, QR Reader Discover yourself ? Fax:+91-11-41008705, Email: [email protected] App:

Bengaluru • Canada • Chennai • Dubai • London • Mumbai • Trivandrum Date Publication: 6th July 2015 Postal Registration No.: DL (S)-01/3485/2015-2017 Date of Posting: 7th - 8th July 2015 RNI: DELENG/2015/61886

Printed and published by Manoja Kishore Raut on behalf of Institute of Directors (owner) and printed at Maximus Packers. 49 - DSIDC Okhla Phase - 1, New Delhi and published at M-56 A, Greater Kailash Part - II (Market), New Delhi-110048. Editor: Manoja Kishore Raut