Shareholder activism on the rise in India

Tamal Majumder, who has authored the book along with Wizen, told Bizz Buzz that "when we were proposing the format of the book with the publishers, many of them thought it was an impossible alchemy. Some of them wanted fiction, some of them wanted a diluted version of hard-core investigative work. We thought we would try our hands at something which is somewhat a genre-bending work."

Mumbai: Shareholder activism in India is likely to become even more pronounced in the years to come, according to corporate leaders.

"We have already started seeing several signs of shareholder activism in recent times. In western countries, some activist funds are increasingly being aggressive and in certain instances threatening corporates with proxy fights if they don't get what they want," says Deepak Parekh, Chairman, HDFC.

Companies will need to ensure that their corporate governance standards are frequently evaluated and strictly followed to prevent activists from exploiting weaknesses or inconsistencies. Further, constant communication with investors will be vital in maintaining shareholder confidence, he said in an interview, which forms part of the content of the yet to be released book, 'The Undercover Monk: A Journey into Corporate Accounting'. The book will be released in Mumbai on September 14.

According to Parekh, "My only concern is that proxy advisors need to understand that corporate governance in India has a unique flavour in the sense that Indian companies are divided into various categories such as family controlled, professionally managed companies that do not have a dominant promoter, public-sector enterprises, etc., each with their own characteristics. So, investors and proxy advisors need to factor in these considerations."

"An independent director can't be held accountable for the performance of functions which are typically the responsibility of the executive management. Further, an independent director in a holding company can't be held responsible for what happens in multiple subsidiaries that have their own boards", says Parekh.

Expressing his view on sustainable business model in another interview in the book, N Chandrasekaran, Chairman of Tata Sons, says: "Businesses will only lead the future if they factor in sustainability. Every business needs to have time-bound goals and move towards sustainability by design."

Companies, he goes on, would need to move towards greener business models including electric vehicles, recycling and circular economies and using new technologies for green energy, battery and energy storage solutions including for 24x7 availability, blue/green hydrogen, electronics waste management.

A key challenge would be solving for the financing of research & development in such new technologies along with financing/incentivizing businesses to make this transition towards greener businesses, Chandrasekaran added.

Talking to Bizz Buzz, Tamal Majumder, who has authored the book along with Wizen, says: "When we were proposing the format of the book with the publishers, many of them thought it was an impossible alchemy. Some of them wanted fiction, some of them wanted a diluted version of hard-core investigative work. We thought we would try our hands at something which is somewhat a genre-bending work."

'The Undercover Monk' is not a self-improvement book, neither is it any treatise on philosophy. The book provides readers with perspectives to find the real amid the dazzle of unreal makeovers. Throughout the book, we have narrated small stories from the lives of monks and sages that provide different perspectives in the jungle of corporate accounting. We are not here to preach. We are here to present to you an alternative approach towards everything around us that makes the world more sustainable. The list obviously includes the world of finance, capital, stocks and corporations, he said.

Companies will need to ensure that their corporate governance standards are frequently evaluated and strictly followed to prevent activists from exploiting weaknesses or inconsistencies. Further, constant communication with investors will be vital in maintaining shareholder confidence, said Deepak Parekh, chairman of HDFC, in an interview, which forms part of the content of the yet to be released book, 'The Undercover Monk: A Journey into Corporate Accounting'. The book will be released in Mumbai on September 14