Itc: Failure Of Governance

It is clear that nominees on the ITC board were either unable or unwilling to act as a check on the powers of the operating management, which led to the companys misadventures. Merely having an independent board, therefore, does not seem to be enough. The key issue is the control of management by the boards, and that is likely to be best served if the functions of the chairman and the chief executive are separated. In Germany, for instance, all big companies have a management board, which carries on the management and operations of the company, and a supervisory board, composed of the shareholders and employees representatives. The supervisory board is responsible for appointing the management board.

 

The ITC scrip has already found stockmarket support, attributed to FII buying, possibly with BATs blessings. If ITCs current problems result in an increase in BATs stake, it would be of immense benefit to the company and its shareholders. With financial institutions apparently realising this at long last, the stockmarkets anticipate BAT taking over the management. This could well be the time to buy ITC stock.