Economic Undertakings

Airtel, Cipla, DRL Among Top 20 BSE100 Companies with Strong Corporate Governance Practices: IiAS

S&P BSE100 constituents represent about 67% of the companies’ total market capitalization, and the valuation is a “reasonable representation of market practice,” the proxy advisory firm said.

By Rajesh Kurup

Telecommunications giant Bharti Airtel, pharmaceutical companies Cipla and Dr Reddy’s Laboratories (DRL) were among the top 20 BSE100 companies with strong corporate governance practices, according to a 2021 scorecard compiled by the proxy advisory firm Institutional Investor Advisory Services India (IIAS).

Hindustan Unilever, HDFC, HDFC Bank, HDFC Life, Crompton Greaves Consumer Electricals, ICICI Lombard, ICICI Prudential Life Insurance and Infosys were among others in the IiAS assessment of Corporate Governance Scores, 2021, components of the S&P BSE100 index.

S&P BSE100 constituents represent about 67% of the companies’ total market capitalization, and the valuation is a “reasonable representation of market practice,” the proxy advisory firm said.

Kotak Mahindra Bank, Mahindra & Mahindra, Marico, Tata Consumer Products, Tata Motors, Tata Power, Tata Steel, Titan Company and Wipro were the other companies in the “Leadership” category. There were 20 companies in the leadership category, up from 11 last year and six in 2019.

“In 2021, the continued volatility due to the Covid-19 pandemic has exposed businesses to unique circumstances and risks. This report shows that most companies continued to improve their governance practices even during the pandemic years. Boards of directors are responsible for setting the corporate governance agenda, which is why the composition and structure of the board of directors is of crucial importance,” said the Managing Director and Chief IiAS director, Amit Tandon.

The Indian Corporate Governance Scorecard Framework was developed earlier in 2015 and 2016 jointly by the International Finance Corporation, a member of the World Bank Group, the BSE and the IiAS. The scorecard is based on widely accepted G20 and Organization for Economic Co-operation and Development principles for corporate governance.

“Our analysis this year also shows that inclusion in the index may have tacitly taken into account the quality of corporate governance – companies that entered the major indexes have higher median scores than those that left. these clues,” said Hetal Dalal, president and chief operating officer of the IiAS. .

Median scores increase

Median BSE100 company scores rose slightly to 62 from 61 the previous year, despite the pandemic, as Indian companies continued to focus on improving their governance practices. This was also due to better disclosures and improved stewardship practices, and is an improvement from 2019’s median score of 58, he said.

However, governance in public sector enterprises (USPs) continues to drive down overall median scores.

Many PSUs do not even meet basic regulatory requirements for board composition. Additionally, the regulation itself has built-in exceptions for several of the disclosure regulations that are otherwise mandatory for the remaining listed companies in India. These practices will weigh on the attractiveness for investors of UAPs whose divestments are planned, he added.

Investors observe how Indian companies manage their stakeholders, and a focus on environmental, social and governance (ESG) practices has become a central part of their engagement with companies. In addition, investors are increasingly vocal, reflected in the increased pushback in shareholder resolutions of late, as several resolutions have passed due to sponsor votes, despite dissent, a- he added.

This is the sixth edition of the S&P BSE100 Index Component Corporate Governance Scores.