MULUND COLLEGE OF COMMERCE

S.N.Road, Mulund-west, Mumbai-80

Academic year
2015-16

Topic- Corporate governance in Asian paints.

Rohit Kiran Pooja Keluskar

Roll no-1510726

Semester-VI

Subject-Ethics

Faculty Name-Prof. Alpa Kataria.

1

INDEX

particulars

Page no.

Corporate governance

Introduction

Corporate framework

3-7

Board of directors

8-9

Board Procedures

10-12

Reference

12

What Is Corporate Governance?

The tug of war between individual freedom and institutional power is a continuing
theme of history. Early on, the focus was on the church; more recently, it is was on
the civil state. Today, the debate is about making corporate power compatible with
the needs of a democratic society. The modern corporation has not only created
untold wealth and given individuals the opportunity to express their genius and
develop their talents but also has imposed costs on individuals and society. How to
encourage the liberation of individual energy without inflicting unacceptable costs
on individuals and society, therefore, has emerged as a key challenge.
Corporate governance lies at the heart of this challenge. It deals with the systems,
rules, and processes by which corporate activity is directed. Narrow definitions
focus on the relationships between corporate managers, a companys board of
directors, and its shareholders. Broader descriptions encompass the relationship of
the corporation to all of its stakeholders and society, and cover the sets of laws,
regulations, listing rules, and voluntary private-sector practices that enable
corporations to attract capital, perform efficiently, generate profit, and meet both
legal obligations and general societal expectations. The wide variety of definitions
and descriptions that have been advanced over the years also reflect their origin:
lawyers tend to focus on the contractual and fiduciary aspects of the governance
function; finance scholars and economists think about decision-making objectives,
the potential for conflict of interest, and the alignment of incentives, while
management consultants tend to adopt a more task-oriented or behavioral
perspective.

Corporate governance is the system by which companies are directed

and controlled. Boards of directors are responsible for the governance of
their companies. The shareholders role in governance is to appoint the
directors and the auditors and to satisfy themselves that an appropriate
governance structure is in place.

IntroductionThe philosophy of governance has been deeply rooted in the culture of Asian
Paints over a long period of time. The Company continues to deliver value to
its various stakeholders. The practice of responsible governance has
enabled The Company to achieve sustainable growth, while meeting the
expectations of all stakeholders and the society at large. Besides complying
with Clause 49 of the Listing Agreement, The Company has adopted various
practices and set responsible standards of business. The Company endeavors to
improve upon aspects like transparency, professionalism, a c c o u n t a b i l i t y
and fair discl osures , on an ongoing basis and takes necessary steps towards
growth and enhancing value for its shareholders. The Company has complied
with all the regulations stipulated by the Securities Exchange Board of India
(SEBI) in the Listing Agreement(s).

GOVERNANCE FRAMEWORK
The Companys Governance structure consists of Board of Directors, its
Committees and the Management.

Board Structure:
Board Leadership: The Company has a well-balanced Board of Directors with
members from diverse backgrounds who have years of experience and expertise
in various fields. Out of 14 members on the Board, 7 are Independent Directors
who are well known for their wealth of experience, high standards of
governance and independence. 6 out of 14 members are NonExecutive/Promoter Directors. The Managing Director & CEO is responsible
for the overall management of the affairs of the Company under the
supervision of the Board of Directors. The Board over the period of years, has
created a culture of leadership to provide long- term vision and policy
approach to improve performance and quality of governance in The
Company. It has played a primary role in providing strategic direction to the
management coupled with giving responsibility and accountability to deliver
value with highest level of transparency and integrity.

Board

Committees: Committees have been

constituted by the Board

with specific terms of reference and have an optimum representation of

Board members. These Committee members meet at such frequency as is
necessary to address the responsibilities and tasks assigned to them. Presently
there are six (6) Committees of the Board viz., Audit Committee, Nomination

and Remuneration Committee, Stakeholders Relationship Committee, CSR

Committee, Shareholders Committee and Risk Management Committee.

Management Structure:
The Company has a management structure which is divided into Executive
Council (EC) and Operating Council (OC). This has brought comprehensive
perspective, agility and responsiveness within the organization and built
the existing capabilities to enhance value creation.

Managing Director & CEO: The Managing Director & CEO is responsible
for the overall management of the affairs of the Company under the
supervision of the Board. He drives the initiatives as approved by the Board of
Directors of the Company and provides direction to achieve the same.

Executive Council (EC): This Council is led by the Managing Director &
CEO and consists of Business heads who are in charge of the different
functions in the organization such as the Sales & Marketing, Supply Chain,
Research & Technology, Finance,

Information Technology,

International

Operations, Home Improvement, Industrial Business, Human Res Theses and

Chemical Business. It is in charge of driving strategic initiatives of the
Company, reviewing the overall performance including risk management,
compliance and taking decisions on major investments of the Company. The
EC meets on a regular basis to deliberate and discuss on various matters

including effectiveness of the businesses/functions reporting to them. The

members of the EC report to the Managing Director & CEO.
Operating Council (OC): This Council consists of heads of
businesses/functions within the Company who report to the EC
members. The OC members meet at frequent intervals to discuss and
deliberate on the day to day operating efficiency and effectiveness. They meet
and discuss issues on improvement initiatives in various areas like quality,
cost efficiency, building capabilities, improving responsiveness and
responsibility towards customers and other stakeholders. This governance
structure has led to higher level of integration and cohesion within yThe
Company, while continuing to enhance The Companys ability to respond to
emerging challenges.

BOARD OF DIRECTORS
Composition:
The composition of the Board is in conformity with Clause 49 of the Listing
Agreement as well as the Companies Act, 2013. The Company has a NonExecutive Chairman and an optimum representation of Independent Directors
on the Board of Directors of the Company The composition of the Board of
Directors of the Company as on
31st March, 2015 is as follows:

No. of
Non-

7
Directors

Executive/Independent
Directors NonExecutive/Promoter
Total

Name of the

6
1
14

Nature of Directorship

Relationship with each

other
Director

Directorship

Membership and

in other

Chairmanship of the

Companies

Committees of the Board

Member
ofChairman
other companies
(**)

(*)
Ashwin Choksi

Non-Executive Chairman/Promoter Brother of Mahendra Choksi

Non-Executive Vice

Ashwin Dani

Chairman/

Promoter

Father of Malav Dani

Brother of Amar Vakil &

Non-Executive Director/ Promoter

Abhay Vakil

Uncle of Amrita Vakil

(w.e.f. 22nd July,

Managing Director & CEO

2014) K.B.S. Anand

***

Mahendra Choksi

Non-Executive Director/ Promoter

Malav Dani

Non-Executive Director/ Promoter

Non-Executive Director/ Promoter

Amar Vakil

Son of Ashwin Dani

Brother of Abhay Vakil &

(upto 26th June, 2014)

Amrita Vakil

Brother of Ashwin Choksi

Father of Amrita Vakil

Non-Executive Director/ Promoter

Daughter of Amar Vakil &

NA

NA

NA

Niece of Abhay Vakil

Dipankar Basu
Deepak Satwalekar
R. A. Shah

***
Non-Executive Director/ Independent
Non-Executive Director/ Independent

***

(upto 26th June, 2014) Non-Executive Director/ Independent ***

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Board Procedures
The board meets at least once in a quarter to review financial results and
operations of the company. In addition to the above the board also meets as and
when necessary to address specific issues concerning the businesses of your
company. The tentative annual calendar of board meetings for the ensuing year is
decided in advance by board. The Board, inter alia, reviews annual operating
and capital expenditure plans and budgets, financial statements of business
segments, compliance report(s) of all laws applicable to the Company,
major legal and tax issues, policies/charters of committees of the Company,
appointment and remuneration to Directors, minutes of the Board Meetings
of the

Companys subsidiary companies, significant transactions and

arrangements entered into by the unlisted subsidiary companies, significant

labour

issues,

presentations on Environment

initiatives, risk management,

Health and

Safety (EHS)

transactions involving sale of material

investments, subsidiaries, assets, which are not in normal course of business,

foreign currency exposure, status of all investments made by the Company,
details of joint ventures or collaborations, minutes

of meetings

of the

Committees of the Board, declaration of dividend, issue of securities, shortterm borrowings, any other proposal from the management regarding mergers,
acquisitions and restructuring of investments, etc.
Familiarization Programme
Your Company has put in place a structured induction and familiarisation
programme for all its Directors including the Independent Directors. The
Company through such programme familiarizes not only the Independent
Directors

but

any

new appointee

on

the

Board,

with

brief
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background of the Company,

their roles, rights, responsibilities in the

Company, nature of the industry in which the Company operates, business

model,

operations

of the Company,

etc. They are also informed of the

important policies of the Company including the Code of Conduct for Board
Members and Senior Management Personnel The Managing Director & CEO,
CFO & Company Secretary, business heads and other senior officials of the
Company make presentations to the Board members on a periodical
basis, briefing them on the operations of the Company, strategy, risks, new
initiatives, etc.
Independent Directors Meeting
In accordance with the pr o v i s i o n s of Schedule IV (Code for
Independent Directors) of the Companies Act, 2013 and Clause
49 of the Listing Agreement, a meeting of the Independent Directors of
the Company was held on 23rd March, 2015, without the attendance of NonIndependent Directors and members of the management.

Evaluation of Board Effectiveness

In terms of provisions of the Companies Act, 2013 read with Rules issued
thereunder and Clause 49 of the Listing Agreement, the Board of Directors, on
recommendation of the Nomination and Remuneration Committee, have
evaluated the effectiveness of the Board. Accordingly, the performance
evaluation of the Board, each Director and the Committees was carried out
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for the financial year ended 31st March, 2015. The evaluation of the Directors
was based on various aspects which, inter alia, included the level of
participation in the Board Meetings, understanding of their roles and
responsibilities, business of the Company along with the environment and
effectiveness of their contribution.

REFERENCE
1) Corporate Governance report of Asian Paints.

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