Core corporate governance values on trial
Thanks to the intrigues for which the Indian bureaucracy is famous, there is a highly questionable move to remove an independent director, a retired IAS officer himself, from the board of a Tata company, Titan Industries Ltd.
The independent directors on the board of Titan, (a Tata Group and Tamil Nadu Industrial Development Corporation joint venture), include Mr T. K. Balaji from the TVS group (there since inception in 1984), Britannia MD Ms Vinita Bali, HR consultant Ms Hema Ravichandar and retired TN cadre IAS officer, Mr R. Poornalingam.
The last two were appointed in 2009 and come up for re-appointment at Titan’s AGM on July 31. Business Line has learnt that specific directions have gone to the Tata group from TIDCO, which holds 28 per cent stake in the company, against Tata’s 26 per cent, saying Mr Poornalingam should not be reappointed and that the TIDCO representatives on Titan’s Board will vote against him. No word on Ms Ravichandar, which indicates she may be reappointed.
According to a TIDCO source, feelers have also been sent to Mr Poornalingam, suggesting he should resign “to save himself embarrassment”. Normally, independent directors resign when a company’s affairs are murky, as happened with Satyam, triggering a spate of resignations of this category, or are removed if they face grave charges.
“In this case”, pointed out the source, “a very senior IAS officer wants him out of the Titan Board”.
When contacted, TN Industries Secretary Mr N. Sundaradevan, who is Chairman of both TIDCO, and Titan, said: “I cannot discuss this matter.”
Titan MD Mr Bhaskar Bhat declined comment “as this is the silent period for us, but I am not aware of any such move.”
Mr Poornalingam, known for his integrity, has held posts such as Health Secretary, TNEB Chairman in Tamil Nadu, and Textiles Secretary, Government of India.
He too refused comment, only saying, “I cannot imagine anybody in the TN IAS circle harbouring such a huge grudge against me, that too seven years after retirement.”
All eyes are on the Titan AGM tomorrow to see how a Tata company that brought about “a paradigm shift in the Indian watch market” reacts to a missive from a government promoter, run by IAS officers, that goes against its core ideology of corporate governance.
The outcome is bound to have serious implications on the office of independent directors in listed companies. This comes close on the heels of the RBI Governor, Dr D. Subbarao, frowning on Financial Services Secretary D. K. Mittal’s frequent “directives” to PSU banks.
And Titan is not even a PSU!