The Road Ahead for Corporate Governance

In recent times, many cases have come to light where stocks of companies were hammered in a short span of time. Banking and Financial Services sector, IT majors and even a few conglomerates have been all over the headlines throughout the year. Companies like Infibeam, PC Jewelers, Nirav Modi, Fortis, and even stocks of Infosys and Tata group companies were not spared. Reputed financial institutions like ICICI have been accused of allowing transactions which were not in the interest of the bank’s profitability. In case of Infosys, institutions were even worried that the board was allying with the founder-promoters rather than focusing on the shareholders. A common thread between all these events was ‘Weak Corporate Governance’. The vicious cycle which starts with weak corporate governance ultimately ends with the director stepping down from the board. The same has been seen in cases where, as a corrective measure, the RBI had refused to extend the tenure of CEOs.

Corporate governance is all about ensuring that the company’s management is acting in the interest of the shareholders. However, there are many challenges that are prevalent. Firstly, independent directors have failed to make their mark as they are easily pressurized by the majority shareholders and the last thing they want is to be seen as troublemakers for the management. Secondly, institutional shareholders have not been very assertive on the boards. Thirdly, proxy firms are yet to take off in India and a handful of proxy firms, at best, play the role of a sounding board for shareholders. Lastly, managements have not really given much thought to corporate governance, since there is no direct correlation between corporate governance standards and the market value of the stock.

The entire scenario boils down to the following questions: Is there a need for a central regulatory authority to oversee corporate governance issues? Does the board perform in the larger interest of the shareholders? Are the independent directors actually non-partisan? Do the companies have adequate risk management systems in place? What should be the board’s approach towards CSR? It is to address these issues, with the aim of obtaining solutions to these questions, we look forward to SIM’ergence ’19.

Jio GenNext seminar, by Mr. Amey Mashelkar

We recently had a chance to attend Jio GenNext seminar, conducted by Mr. Amey Mashelkar. In the seminar, we got to learn how start-ups are helped by corporates to grow. A few important things that were discussed that were a great learning have been listed below:

1. It is advisable that in the early phase, one should not go for a large scale start-up. It is very important to check the idea first, and the way forward for this can be by taking your start-up as a project in the initial days and then checking the scalability of the idea. Taking a start-up as a project refers to the fact that start-ups should be checked with small customers and response of the customers should be noted down. This gives two advantages, you do not feel the stress of proving your revenue returns to others and this way will be more verified to go forward.

2. Every entrepreneur needs to remember that if he is asking for funds from any person or venture except his/her parents, they expect the return to be three times of the funding given. This may lead to an increased stress of repeatedly proving the worth of the start- up. Therefore, funding should be majorly approached when we have actually seen the growth in the business.

3. When in the initial days of developing the start-up ideas, it is not the presentation skills or the start-up idea that matters to venture capitalists. All they look in an entrepreneur is the passion for the idea i.e. is the entrepreneur of the caliber that he will not give up on his plans.

4. Shark tank is something that people need to watch especially entrepreneurs.

HR Conclave’ 18

HR Conclave’18, the annual HR panel discussion event of SIMSREE, was conducted on 1st November, 2018, at a scale larger than ever before. HR managers from companies spanning across various sectors participated in the discussion. The discussion centred around the theme – “Future Blueprint of Human Capital” and was moderated by Mr. Aniruddha Khekale (Group HR Head, Emerson Automation Solutions). The panel consisted of some eminent speakers like Mr. Shourya Chakravarty (CHRO, Aptech), Mr. Dhruv Anand (Associate VP HR, Laqshya Media Group), Ms. Heather Saville Gupta (Group HR Director, MullenLowe Lintas Group) and Mr. Pradeep Dasan (VP & Head of Talent Acquisition, Nayara Energy) who shared their insights and presented their viewpoints on topics vital gig economy and people analytics which are relatively new to the HR domain but are changing the entire course of HR planning.

Keeping with the tradition at SIMSREE, the event started with the Saraswati Vandana, followed by an enlightening speech by Dr. Sangeeta Pandit, who laid the foundation for the panel discussion. The panel members shared some excellent views on how technology is playing the role of a facilitator and not of a disruptor, the way in which workplaces are changing and what the future holds in store for budding managers like us. The panel discussion was followed by the Q&A session where students asked apropos questions to the panel and gained further insights into the topic.

The panel discussion ended with the Director’s speech, where Dr. Manoj Bhide, applauded the Corporate Relations Committee for successfully pulling off an event of this stature and also appreciated the learning derived which will be beneficial for the students in the future.

A Session on Value Investing

The students of SIMSREE had the opportunity of interacting with Mr. Rajeev Thakkar, CIO and Director, PPFAS (Parag Parikh Financial Advisory Services Ltd.) Mutual Funds, in a Corporate Connect session, organised by the Corporate Relations Committee, at his office on 5th October, 2018. The session, which was fairly interactive and beneficial to the students, delved mainly in the subject of value investing, while shedding some light on several factors to look out for while making investments, while simultaneously explaining the work done at PPFAS, which revolved primarily around value investing.

What is value investing? It is an investment strategy which involves the selection of certain stocks, that trade for values that are less than their intrinsic values. The reason for choosing such stocks is the belief that they have been undervalued by the market.

A few of the factors that Mr. Rajeev revealed, to look out for, while investing in a company were:

  • Leadership competence
  • Management efficiency
  • Debt-equity ratio
  • Leveraging multiple
  • Intrinsic value

Among the aforementioned factors, special focus was given on the management of the firm, and its intrinsic value. Mr. Rajeev ascertained that the stock market was a function heavily reliant on the market sentiment and advised to look beyond the myths or obstacles that usually cloud an investor’s judgement. For this reason, calculation of the intrinsic value plays an instrumental part while carrying out any value investment. The aspect of management efficiency was also drawn, which primarily involved determining the nature of the management, through their relationships with investors and customers.

Mr. Rajeev gave his insights on the current investment scenario in our country, and what could be done differently for us to boost ourselves globally. He also narrated a few of his personal learnings from the late Parag Parikh, Founder, PPFAS, while encouraging the students to actively participate in investing, based on their own research and intuition.

Team CRC

GDP Outlook: A report by CRISIL

GDP: Demonetisation pain, GST anxiety to the fore (A report by CRISIL Ltd)

The Central Statistical Office (CSO) released quarterly estimates of GDP for first quarter of current fiscal. Crucially, the government has also revised down gross value added (GVA) growth for the fourth quarter of last fiscal by 50 basis points (bps) to 5.6%, suggesting that the impact of demonetisation on the economy was more than earlier estimated. In the first quarter, real GDP growth slid to 5.7% from 7.9% in the same quarter last fiscal. The slowdown corroborates with corporate results for the first quarter, which had shown net profits declining for chunk of listed firms. The computation of GDP relies heavily on corporate data from the Ministry of Corporate Affairs database. The slowdown reflects sharp deceleration in exports of goods, and some moderation in consumption growth.

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The Blockchain Technology

What is Blockchain Technology?

Before we talk about Blockchain it is important to know the role intermediaries play in economy. Intermediaries like banks and government facilitate the transaction of goods and services by creating trust and certainty. Like when an individual or business makes an electronic payment, they require a bank to track and record the transaction or when an individual buys a real state property then they need local government body to keep records stored.  What if there was a way of making a transaction that didn’t require the use of trusted intermediaries like banks, government or local body?

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