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India Inc averse to professional boards
Indian industry is still not ready to hand over complete management control of companies to independent boards and professional managers, according to business chamber Assocham.
78% of promoters not willing to cede control: Asscoham study
New Delhi : Indian industry is still not ready to hand over complete management control of companies to independent boards and professional managers, according to business chamber Assocham.
“An overwhelming majority of 78 per cent of the 155 CEOs both from professional and promoter driven firms, answered in the negative when asked whether the promoters are willing to cede complete control of the corporate India to independent boards and CEOs,” an Assocham survey of chief executives said here on Sunday.
Against the backdrop of a tussle between the board and promoters of the iconic Infosys headquartered in Begaluru, Assocham said India Inc is not ready yet to give complete management control to professional boards and managers, as majority of the corporate firms have promoters’ holding well over 50 per cent and even those with much lower stake are not willing to bet fully on professionals.”
Assocham Secretary General DS Rawat said: “One must give credit to NR Narayanmurthy for continuing with his belief that Infosys must be run by the professionals despite the fact that the experiment has failed once.”
“His (Murthy) firm belief in shareholders democracy and high standards of corporate governance would be bearing fruits again now that an iconic Nandan Nilekani has taken charge as the Executive Chairman.”
“On the other hand, over 75 per cent of the CEOs in the survey said, the family dominance is a major factor for keeping the professionals away from the top managements,” it added.
“Trust deficit and the family pre-dominance were the two of the main plausible factors coming in the way of transformation of India Inc where the day to day operations are insulated from the principal shareholders or group of shareholders,” Assocham said.
“Sixty-seven per cent of the respondent CEOs said trust deficit between the promoters and the professionals creep in even among the few promoters who have taken a lead for handing over their companies to the professionals.
