'Transparency in governance help firms grow'

The key to success for Indian companies planning to go global is transparency in corporate governance, said S D Shibulal, Co-founder and COO, Infosys Technologies.

According to him, transparency in corporate governance will enhance the reputation of the company apart from raising the confidence level of investors: "It will help the company remain competitive and overcome challenges."

"Corporate governance should be simpler. Disclosures are part of transparent corporate governance. At Infosys, we are following the same standards. Disclosures are vital to any company irrespective of their impact on the performance," Shibulal said in his keynote address during the 8th National Conference of Practicing Company Secretaries on Friday.

He noted that Infosys made three major disclosures which helped the company improve credibility.

"In 1996, we had to part ways with one of our major clients, GE, which accounted for 40 per cent of our revenues then. We disclosed this to our stakeholders. The immediate fallout was negative, but we recovered on time," he said.

When the technology bubble burst in 2003, Infosys, which was growing in the range of 40-45 per cent, said its growth rate would fall to 30 per cent.

"Similarly, when one of our top executives was facing sexual harassment charges, we did not try to hide the issue. We disclosed everything. Being honest will give credibility to any company in the long run. Infosys believes in the same philosophy," Shibulal noted.

He was of the opinion that company secretaries played an important role in implementing corporate governance. "My suggestion is to keep corporate governance as simple as possible. It will ensure sound performance of the company, satisfaction of employees and return on investments for shareholders," he contended.

Quoting a recent survey, he said 60 per cent of the investors evaluated companies for investments by studying their corporate governance standards. "If the corporate governance is top class, investors will be after such companies," he said.

National Law School of India University Vice Chancellor A Jayagovind, in his address, said corporate governance, apart from maximising the interest of shareholders, should also benefit society. "The shareholders too are part of society. They expect the company to serve the social interests in a greater manner," he added.

He said Indian companies were successful in overcoming their challenges by remaining competitive. Referring to the Union government's proposal to open the services sector for investment, he said there was some resistance.

"The legal firms and chartered accountants feel they are under threat. Sooner or later, the arrival of foreign legal firms and chartered accountants to this country is inevitable. We have no option other than competing with them. We cannot shut our doors to them. We have to find ways to overcome fresh challenges," Jayagovind said.