CONTENT

Sl. No.
DESCRIPTION
PAGE NO.
CHAPTER I INTRODUCTION 3-10
CHPATER II COMPANY PROFILE 12-20
CHPATER III ANALYSIS OF THE STUDY 22-46
CHAPTER IV PROECT STUDY 4!-61
CHAPTER V FINDINGS " SUGGESTIONS 63-6#
$I$ILOGRAPHY 6%
1
CHAPTER 1
INTRODUCTION
2
(1.1) INTRODUCTION TO PROECT AT ECIL
In a large Public Sector Undertakings (PUS) like ECIL tere are e!"lo#ee$s
re"resentati%e bodies like &orking unions and o''icers associations &ic call 'or
trans"arenc# in all te (anage!ent transactions. Tis is one o' te !ain reasons &ere
cor"orate go%ernance as to be !ore e''ecti%e in suc organi)ation kee"ing abo%e in te
!ind. I 'elt like coosing ECIL 'or interesting cor"orate go%ernance "ractices in ECIL.
ECIL is one o' te "re!ier organi)ations establised under *e"art!ent O' +to!ic energ#
and is currentl# a &oll# o&ned ,o%ern!ent o' India (,OI) enter"rise- a%ing a strong
base in te 'ield o' Electronics. Te recent *e%elo"!ent and (anu'acture o' I*SN
antenna b# te ECIL as !ade to coose .ECIL. 'or !# (/+ Pro0ect on CO1PO1+TE
,O2E1NENCE.
Te istor# and success'ul "er'or!ance o' te organi)ation since its ince"tion lure !e to
ECIL.
+s I &ant to learn !ore about !# "ro0ect and e3"lore !# kno&ledge in it- I 'elt
Te ECIL is te best "lat'or! to learn and i!bibe "er'ectionis! in !# "ro0ect. Te
strong 41- igl# tecnical and engineering skills o' te ECIL5s 41 and te tecnical
co!"etence o' te organi)ation- !ade !e to coose ECIL.
ECIL "ro0ects are gi%en good ,rades and te learning en%iron!ent in ECIL ,ood 0obs
culture- cli!ate are so!e o' te 'actors &ic !oti%ated !e to do "ro0ect in ECIL. Te
6est and 6eal to de%elo" !# kno&ledge 'orced !e to select a suitable organi)ation &ic
can i!"ro%e !# skills and e3"and te ori)on o' !# kno&ledge. Te li%e "ro0ect in
ECIL can el" !e a lot in securing a ,ood E!"lo#!ent.
7
(1.2) D&'()(*(o) o' Co+,o+-*& Go.&+)-)/&.
Cor"orate go%ernance (C,) is one o' te !ost talked about to"ics in business-
indeed in societ#- toda#. + ,oogle searc re%ealed 817 ne&s citations during a single
&eek in 9une 2::;. (ost acade!ics- business Pro'essionals- and la# obser%ers &ould
agree tat C, is de'ined as te general set o' custo!s- regulations- 4abits- and la&s tat
deter!ine to &at end a 'ir! sould be run.
It is clear tat C, e3ists at a co!"le3 intersection o' la&- !oralit#- and econo!ic
e''icienc#. Less clear- o&e%er- is te e3tent to &ic current (/+ education re'lects tat
co!"le3it#. C, is usuall# not a distinct acade!ic disci"line- but integrated into oter
courses. Considering tat issues o' e3ecuti%e Co!"ensation- 'inancial scandals- and
sareolder acti%is! are all tied u" &it C,- its teacing is a to"ic &ort in%estigation
<
(1.7) NEED FOR THE STUDY0
Tere as been a considerable cange in te attitude o' te cor"orate !anage!ent
in te recent ti!es and te# are co!ing 'or&ard to i!"le!ent good Cor"orate
,o%ernance "ractices- reali)ing teir i!"ortance. To understand te "rocedure o'
"re"aring a cor"orate re"ort and te role o' an inde"endent director in "rotecting te
interest o' te !inorit# sareolders. In te "ast 'e& #ears te stock !arket as
e3"erienced a "er'ect stor! in te con'luences o' stock !arket bubbles- ta3 la&s tat
'a%ored stock based incenti%e co!"ensation increased 'ocus on =uarterl# earnings and
sort ter! stock !arket !o%e!ents. + 'ailure to address tese "roble!s could a%e
indicated a 'ailed s#ste! but ten it corrected =uickl#. >or te !ost "art- te recent
re'or!s re!ind us o' &at &e a%e considered all along to be "riorities- including
accurate books and records? 'ull and 'air disclosure? duties o' care? lo#alt# and good 'ait.
1e'or!s in countries and regions as di%erse as te United states- te Euro"ean Union- te
1ussian >ederation- and e%en India- a%e a re!arkabl# si!ilar e!"asis on director
inde"endence- clari'ication o' board and audit co!!ittee o%ersigt res"onsibilities and
!anage!ent accountabilities 'or accurate disclosure.
@ile re'or!s e''orts are i!"ortant- as a "ractical !atter- Cor"orate ,o%ernance
as to be e3ercised b# indi%iduals &itin a "eri!eter o' a!biguit# and discretion tat is
necessar# to 'oster entre"reneurial acti%ities. In te 'inal anal#sis- in%estors all o%er te
&orld !ust rel# on leading business !en to conduct te!sel%es onestl# in te interest o'
sareolders.
8
4o& to "ut a ceck on suc cor"orate e%ils and o& to "rotect interest o'
co!!on sareolders a%e beco!e !atters o' serious concern 'or bot te regulators and
te go%ern!ent. +ccording to SE/I (securities and e3cange board o' India) guidelines
&ere te cair!an o' te board is non A e3ecuti%e director. +t least one tird o' te
board? and in case cair!an o' te board is e3ecuti%e director- at least al' o' te board
sould consist o' inde"endent directors. Tis ste" b# SE/I is considered to be an
e''ecti%e !ecanis! to reduce "otential di%ergence bet&een te cor"orate !anage!ent
and te sareolders. Tis is so because te inde"endent directors are su""osed to
'unction to "rotect te interest o' te !inorit# sareolders b# regulating te 'unctioning
o' te board I an e''ecti%e and balanced !anner so tat te "ro!oters and te oter
!a0orit# sareolders cannot transact business uneticall#- Cor"orate ,o%ernance is
toda# in sar" 'ocus and te "er'or!ance o' co!"anies on tis 'ront is being closel#
&atced &orld o%er. Let te co!"anies create and accu!ulate &ealt legall#- eticall#
and de!ocrati)e it.
>ro! te ases o' recent cor"orate 'ailures a ne& and better !odel o' Cor"orate
,o%ernance is arising. + &a%e o' creati%it# is dri%en largel# b# board !e!bers "ride and
deter!ination to do te 0ob &ell. Essential 'or an e''ecti%e board include =ualities o'
caracter- inde"endence and abilit# to &ork as a grou". +n i!"ortant re'or! is te
re=uire!ent 'or a sessions attended onl# b# inde"endent directors in con0unction &it te
eac board !eeting. Conse=uent u"on ado"tion o' "olic# econo!ic liberali)ation all o%er
te &orld leading to tu!bling o' trade barriers- 'ree 'lo& o' ca"ital- and globali)ation o'
!arkets- increased econo!ic interde"endencies and transnational acti%ities in e%er#
concei%able sector- in e%er# "art o' te globe Cor"orate ,o%ernance as beco!e igl#
;
co!"le3. Co"ing &it te canges o' sur%i%al and gro&t- calls 'or s&itcing o%er 'ro!
li!ited skills to ne& a""roac &it ne& tecni=ues on one and and canges in te !indB
set o' te !anaging organi)ations on te oter.
11.42 O$ECTIVES OF THE STUDY0
1. To understand te need 'or Cor"orate ,o%ernance in te cor"orate and to
understand te tools &ic are used to !ake it success'ul
2. To a%e an understanding o' te clauses <C o' listing agree!ent o' Cor"orate
,o%ernance i.e. about te res"onsibilities o' te director to&ards te sareolders.
7. To stud# te "ractices o' Cor"orate ,o%ernance in ECIL.
<. To kno& o& te cor"orate acti%ities are 'unctioning es"eciall# in te area o'
Cor"orate ,o%ernance.
D
11.#2 RESEARCH METHODOLOGY
1esearc ob0ecti%esE Te ob0ecti%e o' !# "ro0ect is descri"ti%e and it deals &it
understanding te rules and regulations &ic a co!"an# as to 'ollo& 'or !aking teir
accounts trans"arent 'or te sareolders and te "eo"le interested in te co!"an#. In te
'inal anal#sis te in%estors sould rel# on leading business!an and &o!en to conduct
te!sel%es eticall# and onestl# in te interest o' sareolders. 4o& to "ut a ceck on
suc cor"orate e%ils and o& to "rotect interest o' co!!on sareolders a%e beco!e
!atters o' serious concern 'or bot regulators and go%ern!ent o' India es"eciall# in %ie&
o' te go%ern!ent e''orts to attract 'oreign 'unds and establis in%estors con'idence. +s a
re!edial !easure !ore and !ore e!"asis is being "ut on good Cor"orate ,o%ernance
and cor"orate accountabilit#. In tis "ro0ect SE/I$s rules (securities and e3cange board
o' India)- re%ised Clause <C o' te listing agree!ent are listed b# 'ra!ing strict Cor"orate
,o%ernance regulations &ic re'lects te e!ergence o' Cor"orate ,o%ernance issues.
SE/I too as re%ised clause <C o' te listing agree!ent b# 'ra!ing strict Cor"orate
,o%ernance regulations.
T3,& o' R&4&-+/5 D&4(6)0 Te researc design is "re "lanned &ic is designed 'or
anal#sis. +nd also te data &as collected 'ro! structured and &ell tougt A out
instru!ents.
D-*-0 (# "ro0ect data consists o' bot "ri!ar# and secondar# data.
F
12 P+(7-+3 D-*-0 Collected 'ro! "ersonal inter%ie&- collected under te
guidance o' Sri 9.S.+N+N*- +ddl. ,eneral (anager (>inance) in ECIL
22 S&/o)8-+3 D-*-E Te Secondar# data as been collected 'ro!
1. +nnual re"orts o' organi)ation.
2. Internet (&&&.ecil.co.in).
3. /roacers.
4. 4ouse !aga)ines o' te units.
#. Oter re"orts o' te units.
6. /ooks
11.62 SAMPLE DESIGN0
S-7,l& 9)(*0 Sa!"le unit is te organi)ation te "ro0ect &as co!"leted
C
SOURCES OF
DATA
PRIMARY DATA SECONDARY DATA

i.e. ECIL.
T(7& -)8 ,l-/&0 Pro0ect co!"leted &itin a "eriod o' <8 da#s. Te
Co!"an# is in 4#derabad.
11.%2LIMITATION0
1. (# "ro0ect data is collected onl# 'ro! one single co!"an# i.e. Electronics
Cor"oration o' India Li!ited.
2. Te stud# is li!ited to te in'or!ation !ade a%ailable b# organi)ation
on Cor"orate ,o%ernance "ractices &ic in turn is restricted b#
con'idential nature o' "roduct lines o' te organi)ation. It !a# also be noted
tat te co!"an# is not a listed co!"an#- re=uiring constitution o' audit
co!!ittee under sec 2C2 (+) under co!"anies act. 4o&e%er an audit
co!!ittee is constituted 'or te co!"an#- all re=uired "ractices and
deliberations b# te audit co!!ittee !a# not be in con'or!it# &it tat o' a
listed co!"an#. Tis !a# be anoter i!"ortant 'actor related to te "ro0ect
stud#.
7. +nal#sis done 'or a ti!e "eriod o' <8 da#s.
1:
CHAPTER - 2
COMPANY PROFILE
ELECTRONICS CORPORATION OF INDIA
LIMITED
THE COMPANY
12.12 H(4*o+3
11
O%er te decades tere &as a s"eed# de%elo"!ent in te 'ield o' Science and
Tecnolog#. In earl# 8:$s an ato!ic energ# establis!ent Tro!ba# (no& called
+s /aba ato!ic researc center) initiated te researc and de%elo"!ent in te
brances o' electronics. Tis ga%e te ins"iration in establising an electronics
cor"oration- &ic renders its su""ort in "roducing electronic goods and co!"onents
needed 'or te "roduction o' tese goods.
Te ti!e "assed a&a# &it te "ro"osals but te cor"oration &as onl# on "a"ers.
In due course o' ti!e i.e. in latter ;:$s a Cor"oration 'ul'illing te abo%e re=uire!ents
&as started b# te ,o%t. o' India. Te initial idea &as gi%en b# GSri.Pad!abusan.
*r. +.S.1aoH. 4e took te initiati%e o' establising tis estee!ed organi)ation.
Under te leadersi" and guidance o' *r. 4o!i.9./aba (Cair!an o' /+1C)
Electronic Cor"oration o' India Li!ited (ECIL) &as establised on +"ril 11
t
1C;D
and *r.+.S.1ao &as te 'irst (anaging *irector. 4e &as onoured as G>ater o'
Indian ElectronicsH. Te "roduction &as started and in no ti!e te sales reaced te
eigts and te ob0ecti%e o' establising E.C.I.L &as a grand success. Te co!"an#
&it a igl# skilled u!an resource "ulls o' 8;:: engineers and tecnicians and
&it a current turno%er o' !ore tan I1F: !illion is all set to be a national asset. Te
ard &ork and dedication o' te e!"lo#ees !ade te organi)ation one o' te largest
cor"orations in te &orld. Tis is te 'irst biggest cor"oration &ic &as establised
&itout an# 'oreign collaboration
O%er te #ears- ECIL "ioneered te de%elo"!ent o' %arious co!"le3
electronic "roducts &itout an# e3ternal tecnological el" and scored se%eral J'irsts$
in tese 'ields- "ro!inentl# a!ong te! being countr#$s
12
Control and Instru!entation 'or Nuclear "o&er "lants.
*igital Co!"uter.
Progra!!able Logic Controller.
Eart Station +ntenna.
Solid state T2.
ECIL !a# be su!!ari)ed as JEnsuring Custo!erB centric 'ocus across all "rocesses b#
ada"ting to GTotal Kualit# (anage!ent "rinci"les and "artici"ating.
PRESENT ENVIRONMENT AND ECONOMIC SCENARIO
ECIL started &it an ob0ecti%e o' SEL>B1ELI+NCE under te leadersi" o'
*r.+.S.1ao and cair!an o' +to!ic Energ# *.4o!i 9./aba.
*r.+.S.1ao =uoted &ile starting te co!"an# GSel'B1eliance is not an
e3"edienc# but necessit#. Sel'B1eliance instils sel'Bcon'idence and sel'Bres"ect &ic is
essential 'or ra"id gro&t in te tecnological de%elo"!ent o' a nation- es"eciall# in
electronics. Te current 'ocus is on increasing contributions to +to!ic Energ# Sector-
S"ace *e'ence Sector- Electronics Securit# +""lications- Co!!unications and net&orks-
EB,o%ernance +""lications and E3"orts.
12.22 VISION
To el" te countr# acie%e sel'Breliance in Strategic Electronics.
12.2.12 MISSION
17
To strengten its status as a %alued tecnological asset to te nation in te area o'
strategic Electronics !eeting te re=uire!ents o' +to!ic Energ#- *e'ense- S"ace- Ci%il
+%iation- Securit# and suc oter sectors o' strategic i!"ortance.
12.2.22 O$ECTIVESE
Started &it a !ission o' sel'Breliance in electronics backed u" &it a strong
1L* tea! and !anaged b# igl# "ro'essional "ro0ect !anage!ent grou"s ECIL as
al&a#s been on te to" taking u" Tecnological callenges kee"ing "ace &it te ti!es
and ser%ing a %ariet# o' custo!er$s strateg#
Te ke# &ord o' ECIL is G:HAT INDIA NEEDS MOST; :E MA<E FIRST= :HAT
INDIA NEEDS TOMORRO: :HE MA<E TODAYH. >le3ibilit# to !eet te s"eci'ic
needs and re=uire!ents o' a custo!er as al&a#s been E.C.I.L$s strateg#. E.C.I.L$s
strengt lies in its abilit# to understand tose needs into total s#ste! s"eci'ications tat
e3actl# !atc custo!er re=uire!ents in ter!s o' selected "lat'or!.
Te oter ob0ecti%es o' te organi)ation are
To earn an ade=uate return on in%est!ent so tat it can be "louged back to te
nation.
To de%elo" an indigenous base in te 'ield o' electronics.
To contribute substantiall# to te "rocess o' tecnological sel'Breliance b#
"roducing ig =ualit# electronic goods.
O%er te #ears te co!"an# as success'ull# acie%ed its ob0ecti%es o' sel'Breliance in
!an# areas related to te electronics industr#. Te tecnological ob0ecti%es o' te
co!"an# &ere to de%elo" and "ro!ote indigenous tecnolog# and to blend indigenous
1<
and 'oreign tecnolog# to !eet te custo!er needs due to acie%e!ent o' te registered
targets. 1esearc and de%elo"!ent is an essential "art o' a %iable electronics industr#.
Since it is a 'ield &ere te rate o' obsolescence is e3tre!el# ra"id- E.C.I.L la#s constant
e!"asis on researc and de%elo"!ent. Tis e''ort as el"ed in te introduction o'
se%eral ne& "roducts.
12.32 A:ARDS; RE:ARDS AND ACHIEVEMENTSE
Te (inistr# o' labour ,o%t. o' India as a&arded E.C.I.L te national
sa'et# a&ard in te #ear 1CC< 'or its outstanding "er'or!ance in Industrial
Sa'et# and as a runner u" in acie%ing Glongest accident 'ree "eriodH and
Glo&est +%erage 're=uenc# rateH.
>ra!ed an all ti!e record o' acie%ing ig gross sales o' around <8:
crores during 2::CB2:1: registering a gro&t o' D8M as against 1s.28D
crores during 2::FB:C.
>irst "ri)e 'or E3cellence in 1L* electronics 'ro! !inistr# o' IT in 1CCD.
>irst "ri)e 'or e3cellence in Industrial Electronics 'ro! !inistr# o' IT in
1CCF.
1ecei%ed ISO C::1NC::2 certi'icate 'or all te !anu'acturing di%isions.
Co%ering design o"erations and ser%icing bot in ard&are and so't&are.
Kualit# o' 'uses ackno&ledged as !atcing te best in te &orld.
In te 'ast canging business en%iron!ent te onl# tool tat one as 'or !anaging
co!"letion- co!"le3it# and cange areE

P&o,l&0 E.C.I.L as a strong &ork 'orce o' 8;:: 'ro! re"uted uni%ersities and institutes
&it (ultiBTecnological e3"erience.
18
T&/5)olo630 /eing an 1L* oriented organi)ation E.C.I.L is al&a#s read# to absorb
ne& tecnologies- blend &it in ouse 1L* and tune to te e%er canging custo!er
de!ands.
S3)&+63E Liberali)ation o' business "olicies in India as o"ened u" ne& callenges.
E.C.I.L is agile and "rag!atic to res"ond to tis canging scenario and is geared to 0oin
te !eta!or"ic globali)ation "rocess
12.4.12 FINANCIAL TURNOVER
Initiall# it &as started &it an in%est!ent ca"ital o' 18:crores and &it a "aid u"
ca"ital o' F1.28crores. It is a%ing a stead# gro&t &it its turno%er o' 78<crores in C<B
C8- 7C2 crores in C8BC; and <2:crores in C;BCD.
12.#2 PRODUCT RANGE
Te uni=ue and signi'icant =ualit# o' te E.C.I.L is di%ersit# in "roduction. E.C.I.L$s
"roducts range about <8:. E.C.I.L "roduces di%ersi'ied "roducts use'ul in di''erent 'ields
o' +to!ic Energ#- Steel- Ce!ent- Teleco!!unications- and 1ail&a#s etc. Te =ualit# is
o' international standards. E.C.I.L is also an ISO C::1 certi'ied co!"an#. It is te
"roducer o' te 'irst Indian !ade Co!"uter. It also !akes Satellites- &ic are use'ul in
+to!ic Energ# Cor"orations.
12.62 DIFFERENT $USINESS GROUPS IN E.C.I.L
1. Co779)(/-*(o)4 D(.(4(o)1 CND2
1;
1adio co!!unication s#ste!s co!"rising o' 4>N24>NU4> Transcei%ers
catering to te needs o' te +r!#- Na%#- and +ir 'orce and +ir tra''ic control- Satellite
T2 recei%e onl# s#ste!s 'or TL/ sector.
2. A)*&))- P+o89/*4 D(.(4(o)0
Tis di%ision deals &it design- !anu'acture and co!!issioning o' %arious
t#"es o' +ntenna s#ste!s and TurnBke# S+TCO( Net&ork "ro0ects.
7. S&+.o S34*&74 D(.(4(o)0
It deals &it Precision ser%o s#ste! 'or a""lication in *e'ence and 1ail&a#s.
<. I)4*+97&)*4 -)8 S34*&74 D(.(4(o)0
Nuclear Industrial and +nal#tical instru!ents- Securit# s#ste!s
Co!"ro!ising CCT2- Electronic Energ# (eters- and >ibre O"tic based s#ste!s-
etc.
8. SCADA D(.(4(o)0
TeleB su"er%isor# s#ste!s- Su"er%isor# control L auto!ation "ro0ects and
industrial controls.
;. S*+-*&6(/ El&/*+o)(/4 D(.(4(o)0
S"ecial de'ense "roducts.
1D
D. So'*>-+& Co)49l*-)/3 D(.(4(o)0
So't&are and Consultanc# ser%ices.
F. $94()&44 S34*&74 D(.(4(o)0
Co!"uter 4ard&are "roducts and large net&orking s#ste!s.
C. T&l&/o7 D(.(4(o)0
Teleco!!unications e=ui"!ent like s&itcing "roducts- access "roducts and
teleco! ad!inistration "roducts.
1:. C94*o7&+ S9,,o+* D(.(4(o)0
Su""orts s"ares and !aintenance ser%ices 'or co!"uters.
11. Co7,o)&)*4 G+o9,0
4#brid (icroBcircuits- Se!iBconductors- Cera!ic co!"onents- Printed
circuit boards- Potentio!eters and Ter!al /atteries.
12. S,&/(-l P+o89/*4 D(.(4(o)0
2ariable ti!e 'u))es- Uni%ersal 'u))es and oter t#"es o' 'u))es 'or +r!#
and Na%#.
17. Co)*+ol -)8 A9*o7-*(o) D(.(4(o)0
1F
Sti!ulation 'or Nuclear and Ter!al Po&er Plants- O"erator In'or!ation
S#ste!s- *ata +c=uisition S#ste!s- Control and Instru!entation E=ui"!ent 'or
Nuclear and Ter!al Po&er Plants.
14. I)894*+(-l Co)*+ol4 -)8 Co)497&+ El&/*+o)(/4 G+o9,1 ICG2
18. Co7,9*&+ E89/-*(o) D(.(4(o)1CED20
IT Education Ser%ices.
12.%2 COMPETITOR DETAILS0
Te 'ollo&ing are so!e o' te co!"etitors o' E.C.I.LE
N9/l&-+ I)4*+97&)*40
PL+ Industries ( (u!bai)
Nucleonic Pri%ate Li!ited ( 4#derabad)
Canberra( +ustralia)
Eli co (4#derabad)
Tosiba( 9a"an)
4istrionics ( 9a"an)
12.!2 D&*-(l4=T3,& o' Cl(&)*4 -)8 C94*o7&+40
1C
Saara +ir&a#s
9et +ir&a#s
Indian +ir&a#s
Parlia!ent o' India
Na%#
*e'ense
+r!#
2:
CHAPTER 3
ANALYSIS OF THE STUDY

ANALYSIS OF THE STUDY
21
13.12 D&'()(*(o) o' Co+,o+-*& Go.&+)-)/&
,o%ernance can be de'ined as a control o%er eac acti%it#- &ic &ill result in
o%erall gro&t- i' "racticed "ro"erl#. ,o%ernance is a set o' rules sti"ulated 'or
according due &eigtage to 'oster etical bea%ior &ic &ould el" in enancing te
re"utation. Tus te code o' ,o%ernance is as a""licable to cor"orate. +s suc
Cor"orate ,o%ernance is noting ne& but to sti"ulate boundaries b# la& or b#
regulation 'or te bene'it o' stakeolders. Cor"orate ,o%ernance as succeeded in
attracting a good deal o' "ublic interest because o' its a""arent i!"ortance 'or te
econo!ic ealt o' Cor"orations and societ# in general.
SE/I (securities and e3cange board o' India) de'ines Cor"orate ,o%ernance as a
'ield in econo!ics tat in%estigates o& to secureN!oti%ate e''ecti%e !anage!ent o'
cor"orations b# te use o' intensi%e !ecanis!s- suc as contracts- organi)ations
designs and legislations. Tis is o'ten li!ited to i!"ro%ing 'inancial "er'or!ance- 'or
e3a!"le- o& te cor"orate o&ners can secureN!oti%ate tat te cor"orate !anagers
&ill deli%er a co!"etiti%e rate o' return. It is a s#ste! b# &ic business cor"orations
are directed and controlled. Te Cor"orate ,o%ernance structure s"eci'ies te
distribution o' rigts and res"onsibilities a!ong di''erent "artici"ants in te
cor"oration- suc as- te board- !anagers- sareolders and oter stakeolders- and
s"ells out te rules and "rocedures 'or !aking decisions on cor"orate a''airs. /# doing
tis- it also "ro%ides te structure troug &ic te co!"an# ob0ecti%es are set and te
!eans o' attaining tose ob0ecti%es and !onitoring "er'or!ance. It all de"ends u"on
o& te directors and te !anage!ent de%elo" a !odel o' ,o%ernance tat aligns te
22
%alues o' te cor"orate "artici"ants and ten e%aluate tis !odel "eriodicall# 'or its
e''ecti%eness. In "articular senior e3ecuti%es sould conduct te!sel%es onestl# and
eticall#- es"eciall# concerning actual con'licts o' interest and disclosure in 'inancial
re"orts.
:HY IS IT IMPORTANTO
>unda!entall#- tere is a le%el o' con'idence tat is associated &it a co!"an#
tat is kno&n to a%e good cor"orate go%ernance. Te "resence o' an acti%e grou" o'
inde"endent directors on te board contributes a great deal to&ards ensuring con'idence
in te !arket. Cor"orate go%ernance is kno&n to be one o' te criteria tat 'oreign
institutional in%estors are increasingl# de"ending on &en deciding on &ic co!"anies
to in%est in. It is also kno&n to a%e a "ositi%e in'luence on te sare "rice o' te
co!"an#. 4a%ing a clean i!age on te cor"orate go%ernance 'ront could also !ake it
easier 'or co!"anies to source ca"ital at !ore reasonable costs. Un'ortunatel#- cor"orate
go%ernance o'ten beco!es te centre o' discussion onl# a'ter te e3"osure o' a large
sca!.
13.22 P-+*(&4 *o /o+,o+-*& 6o.&+)-)/&
27
Parties in%ol%ed in cor"orate go%ernance include te regulator# bod# (e.g.
te Cie' E3ecuti%e O''icer- te board o' directors- !anage!ent and sareolders). Oter
stakeolders &o take "art include su""liers- e!"lo#ees- creditors- custo!ers and te
co!!unit# at large.
In cor"orations- te sareolder delegates decision rigts to te
!anager to act in te "rinci"al5s best interests. Tis se"aration o' o&nersi" 'ro! control
i!"lies a loss o' e''ecti%e control b# sareolders o%er !anagerial decisions. Partl# as a
result o' tis se"aration bet&een te t&o "arties- a s#ste! o' cor"orate go%ernance
controls is i!"le!ented to assist in aligning te incenti%es o' !anagers &it tose o'
sareolders. @it te signi'icant increase in e=uit# oldings o' in%estors- tere as been
an o""ortunit# 'or a re%ersal o' te se"aration o' o&nersi" and control "roble!s because
o&nersi" is not so di''use.
+ board o' directors o'ten "la#s a ke# role in cor"orate go%ernance. It is teir
res"onsibilit# to endorse te organi)ation$s strateg#- de%elo" directional "olic#- a""oint-
su"er%ise and re!unerate senior e3ecuti%es and to ensure accountabilit# o' te
organi)ation to its o&ners and autorities.
Te Co!"an# Secretar#- kno&n as a Cor"orate Secretar# in te US and o'ten
re'erred to as a Cartered Secretar# i' =uali'ied b# te Institute o' Cartered Secretaries
and +d!inistrators (ICS+)- is a ig ranking "ro'essional &o is trained to u"old te
igest standards o' cor"orate go%ernance- e''ecti%e o"erations- co!"liance and
ad!inistration.
2<
+ll "arties to cor"orate go%ernance a%e an interest- &eter direct or indirect- in
te e''ecti%e "er'or!ance o' te organi)ation. *irectors- &orkers and !anage!ent
recei%e salaries- bene'its and re"utation- &ile sareolders recei%e ca"ital return.
Custo!ers recei%e goods and ser%ices? su""liers recei%e co!"ensation 'or teir goods or
ser%ices. In return tese indi%iduals "ro%ide %alue in te 'or! o' natural- u!an- social
and oter 'or!s o' ca"ital.
+ ke# 'actor is an indi%idual5s decision to "artici"ate in an organi)ation e.g.
troug "ro%iding 'inancial ca"ital and trust tat te# &ill recei%e a 'air sare o' te
organi)ational returns. I' so!e "arties are recei%ing !ore tan teir 'air return ten
"artici"ants !a# coose to not continue "artici"ating leading to organi)ational colla"se.
13.32 :5-* /-) 6oo8 Co+,o+-*& Go.&+)-)/& ?+()6 *o - /o+,o+-*&@
+s stated earlier Cor"orate ,o%ernance is te "rocedure or te rules laid do&n b#
te Securities and e3cange board o' india 'or "rotecting te interest o' te !inorit#
sareolders. Cor"orate ,o%ernance "ractice as e!erged as an integrated ele!ent 'or
doing business. Te co!"etiti%e en%iron!ent and good Cor"orate ,o%ernance outco!es
a%e been "resented in te diagra! in te ne3t "age. Tis diagra! so&s te internal and
e3ternal en%iron!ent &ic are a''ected b# te decision o' te board. Te /oard o'
*irectors is re=uired to take decisions according to te rules laid do&n b# te SE/I
guidelines. Te inde"endent director sould !ake sure tat all decisions are !ade
kee"ing in %ie& te interest o' te !inorit# sareolders. ,ood Cor"orate ,o%ernance
can !ake te co!"an#5 !ore reliable and !ore in%estors and sareolders &ould be
interested in te co!"an#. 2Nen a co!"an#5s rules and regulations are "racticed in a
28
stronger !anner ten- te "eo"le &o are actuall# interested in te co!"an# sares
&ould belie%e in te co!"an# itsel' and encourage outsiders to bu# tose co!"an#
sares. Tis &ould directl# increase te co!"anies$ good&ill in te !arket and it &ould
'etc !ore nu!ber o' in%estors. Tis so&s tat te co!"an# &ould be bene'ited bot
internall# and e3ternall#. So!e o' te co!"anies &ic a%e teir %ision- !ission and
goals to a%e a strong bounding &it te sareolders and te "eo"le a%ing a sare in
te co!"an#- can easil# do so b# "racticing "ro"er Cor"orate ,o%ernance laid b# SE/I
rules 'or te listed co!"anies. Te Cor"orate ,o%ernance structure s"eci'ies te
distribution o' rigts and res"onsibilities a!ong di''erent "artici"ants in te cor"oration-
suc as- te board- !anagers- sareolders and oter sareolders- and s"ells out te
rules and "rocedures 'or !aking decisions on cor"orate a''airs. . Te 'ocus is on business
"ractices and =ualit# o' disclosure standards &it res"ect to its e=uitable treat!ent o'- and
'airness to- te interest o' te cor"orates5 'inancial sareolders. Te core "rinci"les o'
Cor"orate ,o%ernance "ractices are 'airness- trans"arenc#- accountabilit# and
res"onsibilit#. Tis in turn &ould bene'it te in%estors b# !aking all te accounts
trans"arent and increase te res"onsibilities o' an inde"endent director to&ards te
!inorit# olders as te decisions are taken kee"ing in %ie& teir interest. Tis can be
understood easil# b# looking into te diagra! gi%en belo&.
2;
Te ke# contribution o' good Cor"orate ,o%ernance includesEB
1. C+&-*(o) -)8 &)5-)/&7&)* o' - /o+,o+-*(o)A4 /o7,&*(*(.&
-8.-)*-6&0
Co!"etiti%e ad%antage 'lo&s naturall# &en a cor"oration or its ser%ices a%e ad%antage
in creating %alue 'or its bu#ers. Creating co!"etiti%e ad%antage re=uires bot te %ision
to inno%ate and te strateg# to !anage te "rocess o' deli%ering %alue. +n e''ecti%e board
sould be one tat is 'it business en%iron!ent o' te o""ortunities and treats and to
co!"ete 'or te 'uture cor"orations &ic de%elo" teir strategies b# in%ol%ing all le%els
o' e!"lo#ees- create &ides"read co!!it!ent to !ake te strategies succeed.
2. E)-?l()6 - /o+,o+-*(o) *o ,&+'o+7 &''&/*(.&l3 -)8 ,+&.&)*()6
'+-98 -)8 7-l,+-/*(/&4. Te code o' best "ractices B "olicies and
"rocedures go%erning te bea%ior o' indi%idual o' a cor"oration B 'or! "art o'
Cor"orate ,o%ernance. Tis enables a cor"oration to co!"ete !ore e''icientl# in
te business en%iron!ent and "re%ent 'raud and !al"ractices tat can destro#
business 'ro! inside. >ailure in te !a5 "a%e!ent o' best "ractices5 &itin a
cor"oration as led to crises in !an# instances.
7. P+o.(8()6 ,+o*&/*(o) *o 45-+&5ol8&+4 ()*&+&4*0 Cor"orate ,o%ernance
is a set o' rules tat 'ocuses on trans"arenc# o' in'or!ation and !anage!ent
accountabilit#. It i!"oses 'iduciar# dut# on !anage!ent to act in te best interest
o' all sareolders and "ro"erl# disclose o"erations o' te cor"oration. Tis is
"articularl# i!"ortant &en o&nersi" and !anage!ent o' an enter"rise are in
2D
di''erent ands.
<. A''&/*()6 *5& .-l9-*(o) o' -) &)*&+,+(4&0 I!"ro%ing !anage!ent
accountabilit# and o"erational trans"arenc# 'ul'ill in%estor5s e3"ectations and
con'idence on !anage!ent and cor"orations. +nd in return increase te %alue o'
cor"orate.
E)49+()6 /o7,l(-)/& >(*5 l->4 -)8 +&69l-*(o)40 @it te de%elo"!ent o' te
ca"ital !arkets and te increasing in%est!ents b# te institutional sareolders and
indi%iduals in cor"orations tat are not controlled b# "articular sareolders- 0urisdictions
around te &orld a%e been de%elo"ing co!"reensi%e regulator# 'ra!e&ork to "rotect
in%estors.
(ore rules and regulations addressing Cor"orate ,o%ernance and co!"liance a%e been
and &ill be released. Co!"liance as beco!e a ke# agenda in establising good
Cor"orate ,o%ernance.
+'ter all- Cor"orate ,o%ernance ensures te long ter! sur%i%al o' a cor"oration.
13.42 TOOLS OF CORPORATE GOVERNANCE0
1. Pro"er 'unctioning o' te /oard
2. Trust
7. +udit.
<. Pro'essionali)ation
8. Co!!unication.
2F
12 l. F9)/*(o)4 o' *5& $o-+8 o' D(+&/*o+4
*eter!ination o' te board "olicies.
*eter!ination o' te ,eneral *irections o' te enter"rise.
Establis!ent o' "er'or!ance standards to access te "er'or!ance o' te
!anage!ent.
Succession "lanning.
22 T+94*
Trust is te core o' Cor"orate ,o%ernance. Sareolders "ro%ides 'unds
but te# canto run te a''air o' te co!"an# and tere'ore lea%e it to te
e3ecuti%e !anage!ent to !ake best use o' teir 'unds and ten re"ort
back on o& &ell te task as been acco!"lised.
32 D(4/lo49+&4
*isclosures sould "ro%ide trans"arent and rele%ant data to el"
sareolders- creditors and oter sareolders.
42 A98(*
+udit can act as a sel'Bregulation enabler. Te auditor as to co!!ent on
te trut and 'airness o' te 'inancial "osition as on a certain date and
=uali'# is re"ort i' te laid do&n accounting standards and "rinci"les as
not been 'ollo&ed. Sareolders e3"ect auditors to detect all 'unds and
irregularities in te course o' teir audit &ork.
2C
#2 P+o'&44(o)-l(B-*(o)
I!"erati%e be'ore te Indian co!"anies is to "ro'essionali)e teir
e3ecuti%e !anage!ent. Constant rene&als o' te board ensure energ#-
%ibranc#- creati%it# and !oti%e te !anage!ent tea! to as"ire to beco!e
!e!bers. >res leadersi" creates discontinuit# and ne& a!bition.
62 Co779)(/-*(o)
Consistenc# and continuousl# co!!unicate te cor"orate "ur"ose to te
"eo"le in te organi)ation- so tat e%er#one is !oti%ated to acie%e te co!!on
ai! o' acceleration gro&t and res"onsible "er'or!ance. Tat is o& a co!"an# can
con%ert e%er# e!"lo#ee into a sel' dri%en entre"reneur &illing to take risks- =ualit# so
essential to acie%e long ter! success.
Te board as to be %isibl# trans"arent so tat te e!"lo#ees can read its !ind.
Tis &ill el" in de%elo"!ent o' sel'Bregulated e!"lo#ees- &ic in turn &ill result in
a sel' regulated co!"an#.
13.#2 AN OVERVIE: OF RECOMMENDATIONS OF COMMITTEE
SPECIALLY DR...IRANI COMMITTEE REPORT .
Te securities and e3cange board o' India (SE/I) a""ointed te co!!ittee on
Cor"orate ,o%ernance on (a#s- 1CCC under te cair!ansi" o' sari. Pu!ar (angala!
/irla- !e!ber SE/I board to "ro!ote and raise te standards o' Cor"orate ,o%ernance
in India. Ten in te #ear 2::; anoter co!!ittee &as a""ointed *r.9.9.Irani E3"ert
co!!ittee to gi%e 'res Co!!ents on te "ractices o' te Cor"orate ,o%ernance as a
ne& clause &as included to a""oint an inde"endent director &o &ould be res"onsible to
7:
take decisions 'or te !inorit# olders. Tis co!!ittee on co!"an# la& sub!itted its
re"ort carting out te road !a" 'or a 'le3ible- d#na!ic and user 'riendl# ne& co!"an#
la&. Te co!!ittee as taken a "rag!atic a""roac kee"ing in %ie& te ground realities
and as sougt to address te concern o' all te sareolders to enable te ado"tion o'
international acce"ted best "ractices.
Te e3"ert co!!ittee as reco!!ended tat "ri%ate and s!all co!"anies need to
be gi%en 'le3ibilities and 'reedo! o' o"erations and co!"liance at lo& cost. Co!"anies
&it iger "ublic interest &ic access ca"ital 'ro! "ublic need to be sub0ected to a
stricter regi!e o' Cor"orate ,o%ernance.
T5& /o77(**&& *&+74 o' +&'&+&)/& -+&0
To suggest suitable a!end!ents to te listing agree!ent e3ecuted b# te stock
e3cange &it te co!"anies and an# oter !easures to i!"ro%e te standards o'
Cor"orate ,o%ernance in te listed co!"anies.
To indicate !easures to i!"ro%e te standards o' continuous disclosures o'
!aterial in'or!ation- bot 'inancial and nonB'inancial nature.
To suggest te !anner and 're=uenc# o' suc disclosures o' !aterial in'or!ation.
To indicate te res"onsibilities o' Inde"endent directors.
To suggest sa'eguards to be instituted &itin te co!"anies deal &it te insider
in'or!ation and insider trading.
To dra't a code 'or cor"orate best "ractices.
+ nu!ber o' re"orts and codes on sub0ect a%e alread# been "ublised
internationall#Bnotable a!ong te! areE
71
1. Te re"ort o' te Cadbur# Co!!ittee.
2. Te re"ort o' te ,reenbur# Co!!ittee.
7. Te co!bines Code o' te London Stock E3cange.
<. Te OEC* Code on Cor"orate ,o%ernance.
8. Te /lue 1ibbon Co!!ittee re"ort on Cor"orate ,o%ernance (US+).
;. Te CII Code on Cor"orate ,o%ernance (IN*I+)
*r.9.9.Irani co!!ittee as anal#)ed all te said re"orts and dre& u"on tese
docu!ents to te e3tent a""ro"riate. Te "ri!ar# ob0ecti%e o' Irani co!!ittee &as to
si't 'ro! G,o%ern!ent +""ro%al 1egi!e55 to Gsareolders +""ro%al and *isclosure
regi!eH
Te !ain reco!!endations in res"ect o' *r.9.9.IraniBl co!!ittee re"ort are
as 'ollo&sE
1. A98(* /o77(**&& 'o+ A//o9)*()6 -)8 F()-)/(-l 7-**&+4 >5(/5
()/l98&40
(a0orit# o' directors to be inde"endent- i' te co!"an# is re=uired to
a""oint inde"endent directors.
Cair!an o' te co!"an# to be inde"endent. +t least one !e!ber to a%e
'inancial kno&ledge.
. Cair!an to attend +,( and "ro%ide clari'ications on !atters relating to
audit.
2. S*-C&5ol8&+ +&l-*(o)45(, /o77(**&& to be constituted in co!"anies
a%ing co!bined sareoldersNde"osit oldersNdebenture olders base o' 1::: or
!ore.
72
7. R&79)&+-*(o) /o77(**&& to co!"rise o' nonBe3ecuti%e directors including
abreast one inde"endent director i' a""oint!ent o' inde"endent directors is
re=uired. In suc a case cair!an also to be inde"endent.
<. T+-/C()6 -)8 *+&-49+3 4*o/C4 &ic includes te 'inancial %eicles tat
tracks te "er'or!ance o' a "articular subsidiar# or a di%ision. + ke# ad%antage o'
tracking stock is tat it o''ers di%isional !anagers a degree o' decisionB!aking
autorit# tat !igt oter&ise be attainable. Te "ractical e''ect 5&ould be to
enance 0ob satis'action 'or di%isional !anagers- tus increasing te co!"an#5s
res"onsibilities to canging !arket conditions.
Te co!!ittee as sougt to bring !ulti'arious 5%isionar# conce"ts. It encouraged te
cor"orati)ations o' business and entre"reneursi"- te conce"t o' single "erson econo!ic
entit# in te 'or! o' a Jone "erson co!"an#$. Tis co!"an# !a# be registered as a
"ri%ate co!"an# &it one !e!ber and !a# also a%e at least one director. Te
co!!ittee reco!!ended tat e la& sould "ro%ide a 'ra!e&ork co!"atible to gro&t
o' s!all cor"orate entities and sould unable te! to acie%e trans"arenc# at a lo& cost
troug si!"li'ied re=uire!ents. Te de'inition o' s!all co!"anies !a# be based u"on
te gross assets co!"rising o' 'i3ed assets- current assets an in%est!ents not e3ceeding a
"ractical li!its as also te turno%er o' te co!"an# concerned. Te co!!ittee also
rede'ined te li!ited liabilit# o' "artnersi" 'ir!s. Te Junli!ited liabilit#$ o' "artner as
so 'ar been te cie' reason &# "artnersi" 'ir!s o' "ro'essionals- a%e not gro&n in
si)e to success'ull# !eet te callenges "osed toda# b# international co!"etitions? @TO.
,+TT etc. +s a alternati%e cor"orate business %eicle tat as te bene'its o' li!ited
liabilit# but allo&s its !e!bers to 'le3ibilit# o' organi)ing teir internal structure as a
77
traditional "artnersi"- te co!!itBtee as "ro"osed te conce"t o' li!ited liabilit#5
"artnersi".
Toug te conce"t o' inde"endent directors is not ne&- it as so been ensrined
in te Cor"orate ,o%ernance codes o' %arious countries. Te co!!ittee as o&e%er
suggested tat inde"endent directors are re=uired to be a""ointed onl# in te res"ect o'
listed Co!"anies or te co!"anies &ic a%e acce"ted "ublic de"osits. Te co!!ittee
as "ro"osed tat at east one tird o' te board sould co!"rise o' inde"endent directors
irres"ecti%e o' &eter te co!"an# as an e3ecuti%e or nonBe3ecuti%e cair!an.
Inde"endent directors sould a%e access to citrate- rele%ant and ti!el# in'or!ation in
order to discarge teir duties and res"onsibilities e''ecti%el#.
Te co!!ittee as identi'ied CEON(* and co!"an# secretar# as te ke#
!anagerial "ersonnel 'or all co!"anies- &ose a""oint!ent and re!o%al sall be b# te
/oard o' directors o' te co!"an# concerned. Pe# !anagerial "ersonnel sould be in te
&ole ti!e e!"lo#!ent o' onl# one co!"an# at a ti!e.
(anagerial re!uneration in India as so 'ar been restricted to certain li!its in te
case o' "ublic o' "ublic co!"anies and "ri%ate co!"anies. To ensure trans"arenc#- it is
reco!!ended tat directors$ re!uneration re"ort sould 'or! "art o' te annual re"ort o'
te co!"an# and sould contain details o' re!uneration "ackage o' directors including
co!"an#5s "olic# on directors5 re!uneration- te "er'or!ance gra" o' te co!"an# and
te re!uneration o' directors$ %isB%is te "er'or!ance o' te co!"an#. Te sareolders
a%e been reco!!ended to be e!"o&ered to decide te re!uneration o' nonBe3ecuti%e
directors including inde"endent directors &it no go%ern!ent inter'erence. Tis sould
7<
be done on te base o' teir attendance and contribution and "er'or!ance o' te
co!"an#. Tis !a#be in te 'or! o' sitting 'ees 'or board and co!!ittee !eetings
attended "#sicall# or "artici"ated in electricall# and "ro'it related co!!issions.
To su! u" *r.9.9.Irani re"ort on Cor"orate ,o%ernance re"resents te %alue
art&ork? te etical 'ra!e&ork and te !oral 'ra!e&ork under &ic business decisions
are ken. In oter &ords &en in%est!ent take "lace across national borders- te in%estors
&ant to be sure tat not onl# is teir ca"ital andled e''ecti%el# and adds to te creation
o' &ealt- but te la3ness decisions are also taken in a !anner &ic is not illegal or
in%ol%ing !oral a)ard.
(7.;) CLAUSE 4D OF THE LISTING AGREEMENT ON
CORPORATE GOVERNANCE0
/ased on te reco!!endations o' te co!!ittee and also &it a %ie& to "ro!ote
and raise te standards o' Cor"orate ,o%ernance. SE/I re%ised clause <C o' te listing
agree!ent %ide its ocular dated +ugust 2;- 2::7- te i!"le!entation o' &ic &as
de'erred later. Te securities and e3cange board o' India on October 2C- 2::< again
re%ised te clause <C o' te listing agree!ent.
4o&e%er- noticing tat a large nu!ber o' co!"anies &ere still not in te state o'
rareness to be 'ull# obedient &it te re=uire!ents o' re%ised clause <C o' te listing
agree!ent and e3tended te date 'or ensuring co!"liance &it te re%ised clause <C o'
te listing agree!ent to *ece!ber 71- 2::8. Te co!"an# agrees to co!"l# &it te
'ollo&ing "ro%isions &ic are gi%en in +nne3ure l as 'ollo&sE
78
ANNEEURE I
I. $o-+8 o' D(+&/*o+4-.
(+) Co!"osition o' boardE te /oard o' *irectors o' te co!"an# sall a%e an
o"ti!u! co!bination o' e3ecuti%e and nonBe3ecuti%e directors &it not less tan 'i't#
"ercent o' te /oard o' *irectors co!"rising o' nonBe3ecuti%e directors. @ere te
cair!an o' te board is a nonBe3ecuti%e director- at least one tird o' te board sould
co!"rise o' inde"endent directors.
(/) NonBe3ecuti%e *irectors co!"ensation and disclosuresE +ll te 'ees and re!uneration
i' an# "aid to nonBe3ecuti%e director- including inde"endent director- sall be 'i3ed b# te
/oard o' *irectors and sall ac=uire "re%ious a""ro%al o' sareolders in te general
!eeting.
(C) Oter "ro%isions as to board and co!!itteeE Te board sall !eet abreast 'our ti!es
a #ear &it a !ini!u! ga" o' tree !onts bet&een an# t&o !eetings. + director sall
not be a !e!ber in !ore tan 1: co!!ittee or act as cair!an o' !ore tan 'i%e
co!!ittee across all co!"anies in &ic e is a director.
(*) Code o' conductE Te board sall la# do&n a code o' conduct 'or all board !e!bers
and senior !anage!ent o' te co!"an#. Te code o' conduct sall be "osted on te
&ebsite o' te co!"an#.
7;
II. A98(* /o77(**&&
(+) Kuali'ied and inde"endent audit co!!itteeE Te audit co!!ittee sall
a%e a !ini!u! tree directors as !e!bers. T&oBtird o' te audit co!!ittee sall be
inde"endent directors.
(/) (eeting o' audit co!!itteeE Te audit co!!ittee sall !eet at least 'our ti!es in a
#ear and not !ore tan 'our !onts sall ela"se bet&een t&o !eetings.
(C) Po&ers o' audit co!!itteeE It sall a%e te "o&er to
To in%estigate an# acti%it# &itin its ter!s o' re'erence.
To seek in'or!ation 'ro! an# e!"lo#ee.
To obtain outside legal or oter "ro'essional ad%ice.
(*) 1ole o' audit co!!itteeE 1eco!!ending te board- te a""oint!ent- reBa""oint!ent
or i' re=uired re!o%al o' te statutor# auditor and te audit 'ees. It as te "o&er to
re%ie&ing &it te !anage!ent- te =uarterl# 'inancial state!ents be'ore sub!ission to
te board 'or a""ro%al. It as te "o&er to discuss &it te internal auditors an#
signi'icant 'indings and 'ollo& u" tere on.
(E) 1e%ie& o' in'or!ation b# audit co!!itteeE Te audit co!!ittee sall !andatoril#
re=uire te 'ollo&ing in'or!ation.
(anage!ent discussion and anal#sis o' 'inancial conditions and results o'
o"erations.
State!ent o' signi'icant related "art# transactions.
Internal audit re"ort relating to internal control &eaknesses and
Te a""oint!ent- re!o%al and ter!s o' re!unerations o' te cie' interne auditor
sall be sub0ect to re%ie& b# te audit co!!ittee.
7D
III. S9?4(8(-+3 /o7,-)30
+t least one inde"endent director on te /oard o' *irectors o' te olding
co!"an# sall be a director on te /oard o' *irectors o' a !aterial non listed
Indian subsidiar#.
Te audit co!!ittee o' te listed olding co!"an# sall also re%ie& te 'inancial
state!ents- te in%est!ents !ade b# te unlisted subsidiar# co!"an#.
IV. D(4/lo49+&40
/asis o' related "art# transactions.
*isclosures o' accounting treat!ent.
/oard disclosuresB 1isk !anage!ent.
Proceeds 'ro! "ublic issues- rigts issues- "re'erential issues- etc.
1e!unerations o' te directors.
(anage!ent.
Sareolders.
7F
2. CEO=CFO /&+*('(/-*(o)0
Te CEO- i.e. te !anaging director or !anager a""ointed in ter!s o' te
co!"anies +c 1C8; and te C>O i.e. Te &ole ti!e 'inancial *irector or an# oter
"erson eading te 'inancial 'unction discarging tat 'unction sall certi'# to te
board tat tese state!ent do not contain an# !ateriall# untrue state!ent or o!it
an# !aterial 'act or contain state!ents tat !igt be !isleading.
VI. R&,o+* o) Co+,o+-*& Go.&+)-)/&0
Tere sall be a se"arate section on Cor"orate &it a detailed co!"liance re"ort or
Cor"orate ,o%ernance. NonB co!"liance +lban# !andator# re=uire!ent o' tis
clause &it reasons tereo' and te e3tent to &ic te nonB!andator# re=uire!ent
a%e been ado"ted sould be s"eci'icall# igligted.
VII. Co7,l(-)/&
Te co!"liance sall obtain a certi'icate 'ro! eiter te auditor or "racticing
co!"an# secretar# regarding co!"liance o' conditions o' Cor"orate ,o%ernance as
sti"ulated in tis clause and anne3 te certi'icate &it te directors$ re"ort- &ic is
sent annuall# to all te sareolders o' te co!"an#. Te sa!e certi'icate sall also
be sent to te stock e3cange along &it te annual re"orts 'iled b# te co!"an#.
Te =uarterl# co!"liance re"ort on Cor"orate ,o%ernance sould be in te 'or!at
gi%en belo& &ic is considered as G+nne3ure1/H. +ccording to SE/I rules tere sall
be a se"arate section on Cor"orate ,o%ernance in te annual re"ort o' co!"an#- &it a
7C
detailed co!"liance re"ort on Cor"orate ,o%ernance.
Te co!"an# sall obtain a certi'icate 'ro! eiter te auditor or "racticing
co!"an# secretaries regarding co!"liance o' conditions o' Cor"orate ,o%ernance as
sti"ulated in tis clause and anne3 te certi'icate &it te directors re"ort &ic is sent
annuall# to all te sareolders o' te co!"an#. Te sa!e certi'icate sall also be sent to
te stock e3cange along &it te annual re"ort 'iled b# te co!"an#.
Te in'or!ation to be "laced be'ore te board are gi%en in G+nne3ure I+H &ic is
as 'ollo&s.
<:
ANNEEURE IA
INFORMANTION TO $E PLACED $EFORE $OARD OF
DIRECTORS
1. +nnual o"erating "lans and budgets and an# u"dates.
2. Ca"ital budgets and an# u"dates.
7. Kuarterl# results 'or te co!"an# and its o"erating di%isions or business
seg!ents.
<. (inutes o' te !eeting o' te audit co!!ittee and oter co!!ittee o' te board.
8. Te in'or!ation on recruit!ent and re!uneration o' senior o''icers 0ust belo& te
board le%el- including a""oint!ent and re!o%al o' cie' 'inancial o''icers and te
co!"an# secretar#.
;. So& cause- de!and- "rosecution notices and "enalt# notices &ic are
!ateriall# i!"ortant.
D. Serious accidents- dangerous occurrence- an# !aterial e''luent or "ollution
"roble!.
F. +n# !aterial de'ault in 'inancial obligations to and b# te co!"an#- or substantial
nonB "a#!ent o' goods sold b# te co!"an#.
C. +n# issue &ic in%ol%es "ossible "ublic or "roduct liabilit# clai!s o' substantial
nature- including an# 0udg!ents or order &ic !a# a%e negati%e i!"lications
on te co!"an#.
1:. *etails o' an# 0oint %entures.
11. Transactions &ic !a# in%ol%e substantial "a#!ent to&ards good&ill- brand
<1
e=uit# or intellectual "ro"ert# rigt.
12. Signi'icant labor "roble! and teir "ro"osed solutions. +n# signi'icant
de%elo"!ent in u!an resourcesNindustrial relations- i!"le!entations o'
%oluntar# retire!ent sce!e etc.
17. Sale o' !aterial nature- o' in%est!ents- subsidiaries- assets- &ic is not in nor!al
course o' business.
1<. Kuarterl# details o' 'oreign e3cange e3"osure and te ste"s taken b#
!anage!ent to li!it te risk o' ad%erse e3cange rate !o%e!ent.
18. NonBco!"liance o' an# regulator#- statutor# or listing re=uire!ents and
sareolders ser%ice suc as nonB"a#!ent o' di%idend- dela# in sare trans'er etc.
A))&F9+& IC
1. A ?+(&' 4*-*&7&)* o) /o7,-)3A4 ,5(lo4o,53 o) /o8& o'
Go.&+)-)/&.
2. $o-+8 o' D(+&/*o+40
Co!"osition and categor# o' directors 'or e3a!"le- "ro!oters- e3ecuti%e-
no!inee directors- nonBe3ecuti%e- inde"endent nonBe3ecuti%e- &ic
institution re"resented as lender or a e=uit# in%estor.
+ttendance o' eac director at te board !eetings and te last +,(.
Nu!ber o' oter boards or board co!!ittee in &ic eNse is a !e!ber
or a cair"erson.
Nu!ber o' board !eetings eld- dates on &ic eld.
<2
3. A98(* /o77(**&&0
/rie' descri"tion o' ter!s o' re'erence.
Co!"osition- na!e o' !e!bers and cair"erson.
(eetings and attendance during te #ear.
4. R&79)&+-*(o) /o77(**&&0
/rie' descri"tion o' ter!s o' re'erence.
Co!"osition- na!e o' !e!bers and cair"erson.
+ttendance during te #ear.
*etails o' re!uneration to all te directors- as "er 'or!at in !ain re"ort.
#. S5-+&5ol8&+4 /o77(**&&0
Na!e o' nonBe3ecuti%e directors eading te co!!ittee.
Na!e and designation o' co!"liance o''icer.
Nu!ber o' sareolders co!"laints recei%ed so 'ar.
Nu!ber not sol%ed to te satis'action o' sareolders.
Nu!ber o' "ending co!"laints.
6. G&)&+-l ?o83 7&&*()640
Location and ti!e- &ere last tree +,(s eld.
@eter an# s"ecial resolutions "assed in "re%ious 7 +,(s.
@eter an# s"ecial resolution "assed last #ear troug "ostal ballotB
details o' %oting "atterns.
Person &o conducted te "ostal ballot e3ercise.
<7
@eter an# s"ecial resolution is "ro"osed to be conducted troug
"ostal ballot.
Procedure 'or "ostal ballot.
%. D(4/lo49+&40
*isclosures on !ateriall# signi'icant related "art# transactions tat !a# a%e
"otential con'licts &it te interest o' co!"an# at large.
*etails o' nonBco!"liance b# te co!"an#- "enalties- structures i!"osed on
te co!"an# b# stock e3cange or SE/I during te last tree #ears.
@istle blo&ers "olic# and a''ir!ation tat no "ersonnel as been denied
access to te audit co!!ittee.
*etails o' co!"liance &it !andator# re=uire!ents and ado"tion o' te nonB
!andator# re=uire!ents o' tis clause.

!. M&-)4 o' /o779)(/-*(o)0

Kuarterl# results.
Ne&s"a"er &ere in results nor!all# "ublised.
+n# &ebsites- &ere dis"la#ed.
@eter it also dis"la#s o''icial ne&s releases and
Te "resentations !ade to institutional in%estors or to te anal#sis.
D. G&)&+-l 45-+&5ol8&+4 ()'o+7-*(o)0
+,(? date- ti!e and %enue.
<<
>inancial #ear.
*ate o' book closure.
*i%idend "a#!ent date.
Listing o' stock e3canges.
Stock code.
(arket "rice dataE ig- lo& during eac !ont in last 'inancial #ear.
Per'or!ance in co!"arison to broad based indices suc as /SE Sense3.
1egistrar and trans'er agents.
Sare trans'er s#ste!.
*istribution o' sareoldings.
*e!ateriali)ation o' sares and li=uidit#.
Plant locations.
+ddress 'or corres"ondence.
Tis list o' ite!s &ic are to be sub!itted in te Cor"orate ,o%ernance
re"ort are gi%en abo%e &ic is generall# gi%en as G+nne3ure 1CH
<8
CHAPTER - 4
PROECT STUDY
<;
14.12 D(+&/*o+4G R&,o+*
Co+,o+-*& Go.&+)-)/&
Te Co!"an# continued to take se%eral !easures to enance te o"enness and
trans"arenc# o' all its o"erations.i-e. to user in ,ood Cor"orate ,o%ernance
$o-+8 o' D(+&/*o+4 12011-20122
Te Co!"an# continued to take se%eral !easures to enance te o"enness and
trans"arenc# o' all its o"erations. /oard o' *irectors In ter!s o' Sec ;1D o' te
Co!"anies +ct- 1C8;- ECIL is a ,o%ern!ent Co!"an#. Presentl#- te entire "aid u"
ca"ital o' te Co!"an# is eld b# te President o' India- including 7 sares eld b# is
no!inees. Te /oard- as on date- co!"rises o' ele%en *irectors B Cair!an L (anaging
*irector- tree @oleBti!e *irectors and se%en NonBE3ecuti%e *irectors. Te /oard
!eets at regular inter%als and is res"onsible 'or te "ro"er direction and !anage!ent o'
te Co!"an#. *uring te 'inancial #ear ended 71.:7.2:11- 'i%e /oard (eetings &ere
eld on 18.:8.2:1:- 2<.:D.2:1:- 2;.:C.2:1:- 2F.12.2:1: and 2;.:7.2:11. Te
co!"osition o' te *irectors- teir attendance at te /oard (eetings during te 'inancial
#ear and at te last +nnual ,eneral (eeting is as 'ollo&sE
<D

N-7& " Po4(*(o) -4 o) 31.3.2012
$o-+8 M&&*()64
A**&)8-)/& -* l-4*
AGM 5&l8 o)
26.0D.2011
No. o' o*5&+
D(+&/*o+45(,4
H&l8
89+()6 *5&
*&)9+&
A**&)8&8
<F
:5ol&-T(7& D(+&/*o+4
Sri P S 1a0asekara 1ao-
Cair!an L (anaging *irector.
Sri S 4anu!anta 1ao- *irector
(Personnel) (a""ointed 'ro! 1.<.:D)
Sri U 2isnu!urt#-
*irector(>inance)
(a""ointed 'ro! C.8.:D)
Sri , N 2 Sat#anara#ana
*irector(Tecnical) (u" to 71.F.:D)
Sri Sri Q S (a##a-
*irector(Tecnical)
(a""ointed 'ro! 1.C.:D)
No)-EF&/9*(.& D(+&/*o+4
Sri 2 P 1a0a (u" to 1F.1:.:D)
Sri U!es Candra
*r. / N Sures
*r. ( 9 6arabi
Lt.,en. S P Sree Pu!ar-
P2S(- +2S(- +*C
*r. 1 Sreeari 1ao
(a""ointed 'ro! 12.:<.:D)
Sri 2 1 Sadasi%a!
(a""ointed 'ro! 1C.:D.:D)
(s. 1e%at# I#er
(a""ointed 'ro! 1F.1:.:D)
8
8
8
2
7
7
8
8
8
8
8
<
2
8
8
8
2
7
7
8
7
<
7
<
2
2
Qes
Qes
Qes
B
Qes
Qes
Qes
B
Qes
B
B
Qes
B
Nil
Nil
Nil
Nil
Nil
2
Nil
Nil
7
1
Nil
<
2
(<.2)*I1ECTO1S$ 1EPO1T TO S4+1E4OL*E1S
Cor"orate ,o%ernance
ELECTRONIC CORPORATION OF INDIA LIMITED
PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31
4*
MARCH 2012
S/5&89l& 2011-12 2010-11
<C
I. INCOME
Sales F:88D.;8 F;7<1.FF
Ser%ices 1C77;.8D 17FC1.C;
Lease 1entals 2D:.;F 28;.71
Turno%er (,ross) 1::1;<.C: 1::8C:.18
LessE E3cise *ut# 27<F.C< <FF7.1;
Ser%ice Ta3 178F.;7 112<.CD
Sales Ta3 22D:.C< 2DC1.<1
Turno%er (Net) C<1F;.7C C1DC:.;1
Oter Inco!e M <8C8.<7 7788.1C
CFDF1.F2 C81<8.F
+ccretion (R)N *ecretion(B) in stock o' @IP L >, N -A1A B;11.CC 7788.1C
To*-l I CF1;C.F7 C81<8.F:
II. EEPENDITURE
(aterial Consu!ed N -A2A <7187.11 <D<<;.DF
E!"lo#ee 1e!uneration and /ene'its N -A3A 2<27;.71 1C2C8.:D
(anu'acturing- +d!in. +nd oter E3"enses N -A4A 88;2.D2 8;1C.<F
Selling E3"enses N -A#A 72<D.<2 7;1C.12
1esearc and *e%elo"!ent 217C.;C 71CC.8D
To*-l II DF77C.28 DC1F:.:2
LessE Trans'er to Pro'it and oter +ccounts O 78D<.F 8772.D;
III. NET EEPENDITURE To*-l III D<D;<.<8 D7F<D.2;
IV
PROFIT $EFORE INTEREST "
DEPRECIATION I-III 27<:8.7F 2:D:1.DD
Interest N -A6A 1FF7.:7 ;22.:F
*e"reciation 171F.F2 12:7.2C
V PROFIT FOR THE YEAR 2:2:7.87 1FFD;.<:
(be'ore "rior "eriod N e3traordinar# ad0ust!ents)
+ddN (less) "rior Period Ite!s (Net) P B;F.17 7C.7F
VI PROFIT $EFORE TAE 2:178.<: 1FC18.DF
LessE Pro%ision 'or Ta3ation B >or te #ear D;C8.:: ;C8D.2C
B >or earlier Qears B2C.C7 B2:C.DC
*e'erred ta3 asset(R) N *e'erred ta3 Liabilit# (B) 1:8:.77 D;7.CC
LessE Pro%ision 'or 'ringe /ene'its Ta3 1:;.:: C8.27
VII PROFIT AFTER TAE 17<1<.;; 12F7D.:<
+ddE balance brougt 'or&ard 'ro! Pre%ious Qear 2FDD:.;: 2:F8D.;2
VIII PROFIT FOR APPROPIATIONS <21F8.2; 77;C<.;;
LessE Pro"osed *i%idend 72;D.<2 7:CD.;2
LessE *i%idend Ta3 on Pro"osed *i%idend 888.7: 82;.<<
Less? Trans'er to ,eneral 1eser%e 178:.:: 81D2.D2 17::.:: <C2<.:;
IE $ALANCE CARRIED TO $ALANCE SHEET 7D:12.8< 2FDD:.;:
EARNINGS PER SHARE 1R42 - $ASIC F21.12 F2F.F7
- DILUTED F21.12 F21.77
+ccounting Policies- Scedules + to K 'or! "art o' te +ccounts +s "er our re"ort o' e%en dote attaced
>or and on beal' o' te /oard >o+ LAEMINI:AS " AIN
Cartered +ccountants
U VISHNUMURTHY < S RAASE<HARA RAO LAEMINI:AS SHARMA
*irector (>inance) Caiir!an L (anaging *irector Partner ((.No. :1<2<<)
8:
Place E 4#derabad
*ate E
ELECTRONICSCORPORATION OF INDIA LIMITED
$ALANCESHEETAS AT 314' MARCH; 2012
S/5&89l& A4 -* A4 -*
31.03.2011 31.03.2012
I. SOURCES OF FUNDS
1. Sareolders5 >unds A 1;77D.12 18<FF.12
a) Ca"itol . :.:: F<C.::
b) Sare (one# Pending +llot!ent $ 7C;;2.8< 88CCC.;; 7::D:.; <;<:D.D2
c) 1eser%es and Sur"lus
2. Secured Loons C 1172C.F7 :.::
81
7. Unsecured Loans D ;7;<.1< :.::
To*-l 1I2 D7;C7.;7 <;<:D.D2
II. APPLICATIONOF FUNDS
1. >i3ed +ssets E
a) ,ross /lock 2:7;1.:8 1CF8F.28
b) LessE *e"reciation 1712C.11 127D;.8
c) Net /lock D271.C< D<F1.D8
d) >i3ed +ssetsBinBtransit L F 8FD.11 DF1C.:8 2:8.;8 D;FD.<
Ca"ital @orkBinBProgress
2. In%est!ents G 1;<.;< 1;<.;<
7. *e'erred Ta3 (Net +sset) 27FF.<< 177F.11
<. Current +ssets- Loons and +d%ances
+) Current +ssets
a) In%entories H ;FF<.17 ;F88.F<
b) Sundr# *ebtors I 12D::7.8C CFFD:.C
c) Cas and /ank balances 2;DC<.27 2<811.1<
/) Loans and +d%ances < 2<;1D.1D 1<81D.<;
1F82CC.12 1<<D88.7
8. LessE Current Liabilities and Pro%isions L
a) Current Liabilities C;7D:.:2 FFDCC.<
b) Pro%isions 28;:D.;: 1FD7F.7D
;. Net Current +ssets (<) B (8) ;7721.8: 7D21D.8D
To*-l 1II2 D7;C7.;7 <;<:D.D2
III. NOTES+NNESE*TO+N* >O1(IN,
P+1T O> +CCOUNTS
+ccounting Policies- Scedules + to K 'or! "art o' te +ccounts +s "er our re"ort o' e%en dote attaced
>or and on beal' o' te /oard >o+ LAEMINI:AS " AIN
Cartered +ccountants
U VISHNUMURTHY < S RAASE<HARA RAO LAEMINI:AS SHARMA
*irector (>inance) Caiir!an L (anaging *irector Partner ((.No. :1<2<<)
Place E 4#derabad
*ate E
A98(* Co77(**&&
+ treeB!e!ber +udit Co!!ittee &as constituted b# te /oard in (arc- 2::1
co!"rising o' t&o nonB E3ecuti%e *irectors and a &oleBti!e *irector. @it regard to
ter!s o' re'erence- "o&ers and 'unctions o' te Co!!ittee- te /oard suggested tat te
"ro%isions in Clause <C o' listing agree!ent "rescribed b# SE/I as a""licable to listed
Co!"anies are to be 'ollo&ed as a guideline. Te +udit Co!!ittee "resentl# co!"rises
82
o' t&o NonA E3ecuti%e *irectors- Sri U!es Candra- Sri 2 1 Sadasi%a! and one
&oleBti!e *irector (Tecnical) o' te Co!"an#- Sri Q S (a##a. Sri U!es Candra
is te Cair!an o' te Co!!ittee. *uring te #ear- 'our !eetings o' te Co!!ittee &ere
eld on 2<.:D.2:11- 2;.:C.2:11- 11.12.2:11 and 2;.:7.2:12. Te +udit Co!!ittee
re%ie&ed te i!"le!entation o' +ccounting Standards and +udit Progra!!es. Te
Co!!ittee re%ie&ed te Internal +udit 1e"orts and also te re"ort on te >i3ed +ssets
P#sical 2eri'ication. Te Co!!ittee "erused te +nnual >inancial State!ents and
interacted &it te Statutor# +uditors 'or i!"ro%e!ent in te s#ste! 'or !aintaining
'inancial records as &ell as te data under Cost +ccounts 1ecord 1ules.
I).&4*7&)*4 Co77(**&&
Te /oard constituted an In%est!ent Co!!ittee on 1D.12.2::7 consisting o' Cair!an
L (anaging *irector- *irector (>inance)- ,eneral (anager (>inance) and +ddl.,eneral
(anager (>inance) and a re"resentati%e 'ro! Cor"orate Planning and Pro0ects
(onitoring *i%ision- to consider te "ro"osals 'or in%est!ent o' sur"lus 'unds in
nationali)ed banks or sound rated sceduled banks at te igest and co!"etiti%e rates as
"er *PE guidelines.
Co+,o+-*& M-)-6&7&)* Co77(**&&
Te Cor"orate (anage!ent Co!!ittee is a ig le%el "olic# !aking bod#- eaded b#
te Cair!an L (anaging *irector. Te Co!!ittee consists o' all >unctional *irectors-
E3ecuti%e *irectors- ,eneral (anagers and 4eads o' *i%isions. Te co!!ittee !eets
regularl# and deliberates on te !a0or "olic# issues including "er'or!ance o' te
Co!"an#. Te President and ,eneral Secretar# o' ECEU and President and Secretar# o'
ECO+ are te s"ecial in%itees.
D(.(4(o)-l P+o89/*(o) Co77(**&&4
87
Te *i%isional Production Co!!ittees are constituted under te Sce!e o' @orkers$
Partici"ation in (anage!ent. Te 4ead o' *i%ision concerned is Cair!an 'or te
Co!!ittee and !e!bers are dra&n 'ro! Production so"s- Kualit# Control- (aterials
Planning- Personnel and >inance L +ccounts ,rou"s.
Te !eetings are con%ened "eriodicall# to discuss &orking "lans- to reali)e te
"roduction targets- sales targets and sundr# debts- order booking status etc.
A,&F Co77(**&&
Te +"e3 Co!!ittee is constituted under te Sce!e o' @orkers$ Partici"ation in
(anage!ent. Te Co!!ittee is eaded b# te Cair!an L (anaging *irector and oter
!e!bers include >unctional *irectors on te /oard- E3ecuti%e *irectors- President and
,eneral Secretar# o' ECEU- and President and Secretar# o' ECO+. Te Co!!ittee
!eets "eriodicall# and deliberates on te issues concerning i!"ro%e!ent o' "roduction
and "er'or!ance and oter !a0or "olic# issues 'or s!oot 'unctioning and !aintaining
ar!onious industrial relations in te co!"an# and !ake suitable reco!!endations
!. <&3 7-)-6&7&)* ,&+4o))&l
Sri , P Sri%asta%a- Cair!an L (anaging *irector
Sri P S 1a0asekara 1ao- Cair!an L (anaging *irector
Sri + (urugesan- *irector (')
Sri 1 1 Pandalai- *irector (")
Sri , N 2 Sat#anara#ana- *irector (t)
14.32 CORPORATE GOVERNANCE PRACTICES AT ECIL
ARE REFLECTED THROUGH
12 AUDITORS O$SERVATIONS " COMPANY IS REPLIES0 12010-
112
8<
+uditors 1e"ort on te /alance seet o' ECIL as on 71.:7.11 and "ro'it and loss
account 'or te #ear ended. It is res"onsibilit# o' te auditors to e3"ress teir o"inion on
te 'inancial state!ent based on teir audit.
+uditors in ECIL a%e conducted te audit in accordance &it generall# acce"ted
+uditing Standards in India. +uditors sould "lan and "er'or! te audit to obtain
reasonable assurance- &eter te 'inancial state!ent are "re"ared in all !aterial as"ect-
in accordance &it te identi'ied re"orting 'ra!e&ork and 'ree 'ro! !aterial
!isstate!ents.
+n audit includes e3a!ining on te test basis- e%idence su""orting te a!ounts
and disclosures in te 'inancial state!ent. +n audit also includes assessing te accounting
"rinci"les used and signi'icant esti!ates !ade b# te !anage!ent as &ell as e%aluating
te o%erall 'inancial state!ent.
Te co!"an# as !aintained "ro"er records so&ing 'ull "articulars including
=uantitati%e details o' 'i3ed assets. Te co!"an# as a "ased "rogra! o' te "#sical
%eri'ication o' all 'i3ed assets.
>inancial state!ent and @orkBinBProgress a%e been "#sicall# %eri'ied b# te
!anage!ent at te #ear end. 1a&B!aterials- stores and s"ares e3cluding !aterials l#ing
&it tird "arties and brances a%e been "#sicall# %eri'ies b# te !anage!ent once
during te #ear. Te %aluation o' stock is 'air- "ro"er and is in accordance &it te
nor!all# acce"ted accounting "rinci"les.
Te co!"an# as not taken an# ter!s loans- secured or unsecured 'ro!
co!"anies- 'ir!s or oter "arties. Te co!"an# as not granted an# loans- secured or
unsecured to co!"anies- 'ir!s or oter "arties. Te "arties to &o! te loans and
88
ad%ances in te nature o' loans a%e gi%en b# te co!"an# are re"a#ing te "rinci"le
a!ount as sti"ulated and are also regular in te "a#!ent o' interest &ere%er a""licable.
Te internal control "rocedure 'or "urcase o' stores- ra& !aterials including
co!"onents and 'or sale o' goods are ade=uate and te "rocedure including !aintenance
o' te "rocedure 'or recording o' te recei"ts and issues o' !aterial troug out te #ear-
in general #ear- and transaction in "articular considering teir %olu!e needs to be
torougl# re%a!"ed and strea!lined.
Te co!"an# as not acce"ted an# de"osits 'ro! te "ublic as te "ro%ision o' sec 8F+
o' te co!"anies +ct1C8;. Te co!"an# as no b#B"roducts. Te co!"an# !aintained
reasonable records 'or te sale and dis"osal o' te scar". Te internal audit is not
ade=uate and its sco"e and co%erage need to be &idened so as to be co!!ensurate &it
te si)e i' te co!"an# and nature o' its business. Te co!"an# is regular in de"ositing
te "ro%ident 'und dues &it te a""ro"riate autorities.
14.42 ACCOUNTING POLICIES
1. 1ECO,NITION O> 1E2ENUE
Sales (including ta3es and duties) are set u" and re%enue is recogni)ed on accrual basis
alias in an# o' te 'ollo&ing casesE
8;
a. @en te goods are anded o%er to te carrier 'or trans!ission to te bu#er- e%en
i' te co!"an# undertakes te trans"ort and insurance.
b. On trans'er o' ite!s ('or de'ense) to te bounded stores a&aiting 'ieldBtesting.
c. On co!"letion o' custo!ers "rior ins"ection and acce"tance in case contract so
"ro%ides- e%en i' te goods are retained in te custod# o' te co!"an# at te
re=uest o' te custo!er.
d. >or ser%iceNso't&are against co!"letion o' !ile
stonesNacce"tanceNackno&ledge!ent- &ere breakBu" %alues 'or eac
s#ste!N"ackage are a%ailable in te contract or based on te tecnical esti!ates
&ere suc breaku" %alues are not a%ailable.
e. In te case o' co!"osite contractsNlong "roduction c#cles ite!s- on te basis o'
line entries 'or su""lies and ser%ices co!"leted and acce"ted- or based on
tecnical esti!ates- &ere suc line entries are not a%ailable- sub0ect to "ro%ision
o' antici"ated looses i' an# on inco!"lete "art o' te contract.
2. INTERNAL CAPITALISATION AND INTER GROUP
TRANSFERS
-. I)*&+)-l C-,(*-l(B-*(o)
E=ui"!ent !anu'acture 'or internal use is ca"itali)ed at cost.
?. I)*&+-6+o9, T+-)4'&+4
Inter and intra grou" trans'ers are !ade at agreed trans'er "rice. 4o&e%er- unutili)ed
stock o' suc ite!s at te #earBend l#ing as in%entor# o' ra& !aterial is %alued at cost.
8D
3. INVENTORY
a. 1a& !aterials- stores and s"ares and co!"onents are %alued at &eigted a%erage
cost. Sur"lus !aterials consider use'ul 'or 'uture use are %alued and returned at
18M o' teir book %alue. Stores and s"ares o' co!"uter ser%ices di%isor(CS*) as
at te end o' eac #ear are derated at 77 1N7M on return do&n %alue. Oter ra&
!aterials- stores- s"ares and co!"onents not !o%ed 'or !ore tan tree #ears
(tat is- oter tan derated 77 1N7M on return do&n %alue.
b. @ork in "rogress o' "roducts in %arious business grou" is %alued at G'actor# costH
or Gnet reali)able %alueH &ice%er lo&er.
c. @ork in "rogress o' "ro0ects is %alued at G'actor# costH or Gnet reali)able %alueH
&ice%er is lo&er based on "ercentage co!"letion o' eac "ro0ect as certi'ied b#
co!"an#$s tecnical e3"erts.
d. >inised goods are %alued at G'actor# costH or Gnet reali)able %alueH &ice%er is lo&er.
e.
4. FIEED ASSETS AND DEPRECIATION OF ASSETS
>i3ed assets are stated at istorical cost- net o' CEN2+T i' an#.
a. *e"reciation is carged on straigtBline !etod.
b. *e"reciation is carged on !ontl# "roBdata basis 'or te additionsNdeletions
during te #ear.
c. Cost o' assets is carged in 'ull in te #ear o' ac=uisitionNuse- i' te cost o' an
ite! is less tan 1s.8:::NB
d. Te rates o' de"reciation ado"ted b# te co!"an# are as "er scedule 3i% o' te
Co!"anies +ct- 1C8;- e3ce"ting in te case o' co!"uter s#ste!s ac=uired b#
co!"uter education di%ision and te s#ste!s sent on ire or 'or de!onstration or
'or use outside te 'actor# &ic are de"reciated at a rate o' 8:M &it e''ect
'or! 1.:<.2::1.
8. PRIOR PERIOD ADUSTMENTS
Ite!s o' inco!eNe3"enses a!ounting to 1s.28:::NB and abo%e relating to "re%ious #ears
are accounted as Prior Period +d0ust!ents.
;. PREPAID AND OUTSTANDING INCOME=EEPENSES
8F
Ite!s o' inco!eNe3"enses a!ounting to 1s.28:::NB and abo%e are accounted as
Pre"aidNoutstanding liabilit# as te case !a# be.
D. TECHNICAL <NO: HO:
E3"enditure to&ards tecnical kno& o& 'ees- so't&are- Training o' "ersonnel etc.- and
"a#able as "er te acti%it# co!"leted s"eci'ic to an# "ro0ectN"roduct is a!orti)ed o%er a
"eriod o' 8 #ears or te duration o' te rele%ant agree!ent- &ice%er is less.
E3"enditure on unsuccess'ul "ro0ectsN"roducts are &ritten o'' in te #ear in &ic te#
are 'ound to be co!!erciall# not %iable.
F. DEMURRAGES AND :HAR FAGES
E3"enditure on de!urrages and &ar'ages on all i!"orts- &eter ca"ital or oter&ise- is
carged to re%enue.
C. EECHANGE VARIATION
+ll 'oreign currenc# transactionsNbalances including 'oreign currenc# loans 'or 'inancing
assets outstanding on te date o' /alance seet are con%erted at te rate o' e3cange
"re%ailing on tat date.
1:. EECEPTIONS TO ACCRUAL SYSTEM OF ACCOUNTING
Ite!s o' inco!e and e3"enses accounted on cas basis as e3ce"tion to accrual s#ste! o'
accounting are tose ite!s?
a. @ose e''ect on "ro'itNloss is not e3"ected to be !aterial or signi'icant.
b. O' e3"enses- %alue o' &ic cannot be esti!ated &it a reasonable accurac# 'or
te "ur"ose o' !aking "ro%ision.
c. O' inco!e- reliabilit# o' &ic is uncertain eiter &it res"ect to ti!e or
=uantu!.
d. Insurance clai!s are taken into books in te #ear in &ic te clai!s are acce"ted
b# te insurance co!"an#.
e. @arrant# costs are accounted in te #ear o' actual incurrence.
11. GOVERNMENT GRANTS
,o%ern!ent grants related to s"eci'ic 'i3ed assets as a deduction 'ro! te gross %alue o'
te assets concerned and tose related to re%enue are deducted 'ro! te rele%ant e3"ense
accounts in te #ear in &ic te a!ounts are s"ent.
8C
12. RESEARCH AND DEVELOPMENT EEPENDITURE
1esearc and de%elo"!ent e3"enditure is carged to e3"enditure &en incurred.
E3"enditure incurred on 'i3ed assets is o&e%er ca"itali)ed.
17. PROVISION FOR DOU$TFUL DE$TS.
Pro%ision 'or doubt'ul debts is !ade 'or te debts outstanding 'or !ore tan one #ear-
e3ce"ting tose &ic are contractuall# not due as "er te ter!s o' te contract or tose-
&ic are considered reali)able- based on a case to case re%ie& b# a !anage!ent.
1<. RETIREMENT $ENEFITS
Pro%isions 'or gratuit# and lea%e encas!ent liabilit# to e!"lo#ees are !ade on te basis
o' actuarial %aluation as at te #ear end.
1#. $ORRO:ING COSTS
/orro&ing costs directl# attributable to te ac=uisition- construction or "roduction o'
=uali'#ing assets are ca"itali)ed till te !ont in &ic te asset is read# to use as "art o'
te cost o' tat asset.
16. DIFFERRED TAEES
*i''ered inco!e ta3 is "ro%ided using te liabilit# !etod on all te!"orar# ti!ing
di''erence at te balance seet date bet&een te ta3 bases o' assets and liabilities and
teir carr#ing a!ounts 'or 'inancial re"orting "ur"oses.
1D. INVESTMENT
Long ter! in%est!ents are %alued at cost less an# di!inution in %alue tat is oter tan
te!"orar#.
O9+ Co+,o+-*& Go.&+)-)/& ,5(lo4o,53 (4 ?-4&8 o) *5& 'ollo>()6 ,+()/(,l&40
1. Satis'# te s"irit o' te la& and not 0ust te letter o' te la&. Cor"orate ,o%ernance
standards sould go be#ond te la&.
2. /e trans"arent and !aintain a ig degree o' disclosure le%els. @en in doubt-
disclose.
7. (ake a clear distinction bet&een "ersonal con%eniences and cor"orate resources.
<. Co!!unicate e3ternall#- in a trust'ul !anner- about o& te co!"an# is run internall#.
8. Co!"l# &it te la&s in all te countries in &ic te co!"an# o"erates.
;. 4a%e a si!"le and trans"arent cor"orate structure dri%en solel# b# business.
;:
;1
CHAPTER - #
FINDINGS " SUGGESTIONS
FINDINGS " CONCLUSIONS0
Co!"anies tat coose good Cor"orate ,o%ernance "ractices i!"ose u"on teir
/oard o' *irectors- &ic re"resent te stockolders or stakeolders- te role o'
establising strategies- electing te directors- o%erseeing and e%aluating
!anage!ent "er'or!ance- and coosing te inde"endent auditors. It guarantees to
te "artners tat !anage!ent is trans"arent and accountable 'or resulted &ic is
&at de'ined as good Cor"orate ,o%ernance. Ulti!atel# te s#ste! o' Cor"orate
,o%ernance as te "ur"ose o' adding %alue 'or stockolders.
;2
Te Cor"orate ,o%ernance is concerned &it bot accountabilit# o' te /oard o'
*irectors and &it te board e''ecti%eness. Te 'irst is to strengten te in'luence
o' te sareolders- &ile second is to strengten te control e3ercised b# te
board o%er te co!"anies.
Cor"orate ,o%ernance is e3ercise o' "o&er in a res"onsible &a#. Te istorical
conte3t o' Cor"orate ,o%ernance lies in te se"aration o' o&nersi" and control-
resulting in te e%asion o' rigts o' te sareolders due to de'ecti%e control b#
te !anage!ent. +ligning te interest o' te !anage!ent &it te interest o' te
sareolders beco!es a !atter o' "ara!ount i!"ortance.
Cor"orate e ,o%ernance is te s#ste!- "rocedure and institution &ic ensure tat
te !anage!ent actE in te best interest o' te sareolders na!el#- te
custo!ers- te e!"lo#ees- te su""liers- creditors and te societ# at large. To su!
u" Cor"orate ,o%ernance re"resents te %alue 'ra!e&ork5 te etical 'ra!e&ork
and te !oral 'ra!e&ork under &ic business decisions are taken.
SUGGESTIONS
Te 'irst !a0or re'or! to&ards i!"ro%ing Cor"orate ,o%ernance sould be in te area o'
"rescribing a !ini!u! set o' to"ics and !atters tat !ust be !andator# re"uted to te
directors and discussed at board !eetings. Te !inutes o' te board !eetings sould
record suc discussions to allo& 'or a !easure o' trans"arenc# &it regard to te a''airs
o' te co!"an# and el" te directors in taking in'or!al decisions and o''er 'act board
carries.
;7
EF,-)8 *5& +ol& o' )o)-&F&/9*(.& 8(+&/*o+40 NonBe3ecuti%e directors can bring
%aried e3"ertise- ric e3"erience and a certain degree o'' ob0ecti%it# in !onitoring
cor"orate bea%ior. Teir roles need to be e3"anded to i!"ro%e te =ualit# o'
Cor"orate ,o%ernance.
+""arentl# i' nonB e3ecuti%e directors a%e to "la# an e3"anded role. +) Tere
!ust be a 'airl# stringent li!it to te nu!ber o' boards on &ic a "erson can see.
/) Te# !ust be co!"ensated &ell 'or teir ti!e and e''ort and bulk o' teir
co!"ensation !ust be linked to &ell de'ined !easure o' cor"orate "er'or!ance
and. 5C) Te degree o' teir accountabilit# !ust be iger tan &at it currentl#
is.
L(7(* *5& 4(B& o' *5& ?o-+80 our stud# suggest te #"otesis tat as te si)e o'
te board increases it beco!es less e''ecti%e because te ad%antage o' &ider
"artici"ation is out&eiged b# te "roble! o' coordination. 4ence it is ad%isable
to ordinaril# li!it te si)e o' board to se%en or so. +n# board tat as !ore tan
ten t&el%e directors tends to beco!e un&ield# and ine''icientl#.
E)49+& *5-* *5& ?o-+8 (4 ()'o+7-*(o) -ll3 >&ll &H9(,,&80 Te /oard o'
*irectors sould "eriodicall# recei%e in'or!ation about te "er'or!ance o' te
co!"an# in all i!"ortant areas. Te board- &ell in'or!ed o' longBter! "lans-
o"erating "lans and budgets- =uarterl# di%isional results- co!"etiti%e
de%elo"!ents in %arious "roduct !arket seg!ents "er'or!ance o' te co!"an#
and it5s co!"etiti%e in te ca"ital !arket and so on. Te "o&er o' a board to
e3ercise te o%ersigts 'unction so as to in'luence te course o'B cor"orate a''airs
lies not in legal or organi)ational autorit# but in access to te in'or!ation tat
co!"els attention and de!onstration te need 'or cange.
L()C 7-)-6&+(-l /o7,&)4-*(o) *o ,&+'o+7-)/&0 +genc# "roble!s arise
because o' lack o' align!ent o' te interest o' sareolders and !anage!ent. To
!ake tis interest !ore congruent- a signi'ied "ortion o' !anagerial
co!"ensation sould be linked to te %alue created b# te !anage!ent. >urter
te re&ard to te !anagers !a# be based on relati%e "er'or!ance- rater tan
absolute "er'or!ance.
I9-l(*3 o' ?o-+8 8&l(?&+-*(o)0 To i!"ro%e teir contribution to&ards better
;<
Cor"orate ,o%ernance in teir co!"anies- nonBe3ecuti%e directors sould a%e
access to all te i!"ortant and rele%ant in'or!ation about te co!"an#.
1e"eatedl#- so!e co!"anies do not "ro%ide an# in'or!ation to teir e3ternal
directors tat te# cannot sare &it te "ublic. Te !ain reason 'or tis a""roac
!a# be te concern tat in'or!ation so "ro%ided !a# not re!ain con'idential.
;8
$I$LIOGRAPHY
$I$LIOGRAPHY
La3!inarain- re"ublic Enter"rise (anage!ents and Pri%ati)ation55 sultan Cand
L co!"an#- Ne& *eli.
2.S.*ate#- Jstudents5 ,uide to cor"orate la&s L Secretarial "ractices- Ta3!an5s
Publication- Ne& *eli.
Institute o' Co!"an# Secretaries o' Indian G,uidance note on certi'ication
Cor"orate ,o%ernanceH- Ne& *eli.
;;
:&?4(*&40
2isited tese &ebsites
&&&.google.co!
&&&.icsi.edu
&&&.icai.org
&&&.sebi.go%.in
&&&.icsi.in
;D