The ‘ratnas’ of India’s public sector may be shining lights of corporate excellence and profitability, but perhaps not as much when it comes to progressive norms of gender and diversity. That seems to be the takeaway from a survey on corporate governance at India’s Maharatna and Navratna companies conducted by former SEBI chief M. Damodaran-led Excellence Enablers on the ratna PSUs.
The study found that while the ratna PSUs have strong fundamentals and great bottom lines, they are not similarly at the top of their game when it comes to anything from women representation to diversity inclusion to even employee satisfaction.
For example, the percentage of women directors on the Ratna boardrooms could well do better. As at the end of the last financial year, there were just 11 per cent women directors amongst the total number of directors.
In fact, when it came to independent women directors, the number comes down a further notch, to just 10 per cent.
Even more worrisome is the data: the number of women directors had gone up to 17 per cent in financial year 2023, while it was 15 per cent the next year. In other words, not only is there very low representation of women in board rooms, there is a definite decline in gender representation as well seen in recent years (the pattern is worse when it came to independent women directors, which had peaked at 22 per cent in 2022, before steadily dropping to 20 per cent, then 17 per cent to finally rest at just 10 per cent last year.
Is gender something of just a lip service for corporate PSUs? Companies that conducted POSH (prevention of sexual harassment) workshops are also abysmal—while 8 companies said they had programmes related to POSH, as many as 21 companies do not refer to it in their annual reports.
“There is a major lack of awareness in the workforce regarding what constitutes an offence under POSH,” the survey noted.
While diversity & inclusion is referred to by at least 28 companies in their annual reports, it is not clear what criteria and areas they have adopted.
Another area of concern is age diversity. While rules stipulate that non-official directors should be between 45 and 65 (which can be relaxed to 70 years for eminent professionals), it was noted that a large chunk of these directors were primarily in the 50-to-65 age band—both older and younger age bands seemed to have gotten the short end of the stick.
“Given the pace and the nature of change in the economy and in the corporate world, induction of some younger persons on the Boards will increase the contextual relevance of Boards,” the survey remarked.
The study, done by Damodaran’s Excellence Enablers, a corporate governance body, relies on annual reports, stock exchange filings and website disclosures of these companies to examine parameters that impact and manifest the Corporate Governance standards of companies. Many compliance requirements come from the Companies Act, 2013 and the Rules thereunder, like SEBI LODR Regulations, 2015 and DPE Guidelines.
This is the fifth edition of the study by Excellence Enablers. “In our view, good Corporate Governance is no more than doing the right things, without having the lawmakers or the Regulators laying down what requires to be done,” says Damodaran’s report, “Good governance practices by a handful of entities have often resulted in laws and regulations on the same lines for other entities in a similar universe. It is our belief that the factual position brought out in this Survey will form the basis for enlightened discussions on governance in the public sector.”
