Hyderabad-based Natco Pharma won the Moneylife Foundation’s Corporate Governance award, with Chennai-based Thejo Engineering coming in second place. The foundation, started by Sucheta Dalal and Debashis Basu, placed Natco Pharma on top in the inaugural edition of the award. TS Krishnamurthy, trustee of Moneylife Foundation and former Chief Election Commissioner of India presided over the award function.
A first shortlist was created by the jury, following which analysts at Moneylife did a round for any regulatory action that the jury might have missed. Following this, there were five finalists — KPR Mill, Laurus Labs, Natco Pharma, Suven Pharma and Thejo Engineering. The results were announced by former SEBI chairman M Damodaran.
"What gives me the greatest happiness is that in a universe of companies, big and small, we do not have any of the usual suspects in the shortlist by Moneylife Foundation. This also shows, perception management lasts only for some time and then the truth takes over, like what happened in the case of Satyam Computers,” the former SEBI chairman said.
He added that it’s not the size of the Board but the kind of people who are in it that matters. “If a promoter has courage to bring into the boardroom people who can ask tough questions, no board will extract value from management and vice versa. Peaceful co-existence does not work in board rooms," M Damodaran said.
He also raised the issue of representation on Boards, pertaining to the appointment of independent woman directors. He questioned if women were only being appointed to Boards as a tokenism, and if there was talent, why companies have taken so long to recognise it.
“There are only directors in a company, not man or woman directors. Are women being appointed on company Boards because of their talent or as tokenism? Most are doing it to just tick the regulatory check box. Some claim they are doing to give justice to the talent of women, but why did they take so much time to recognise the talent and board resolution?" he asked.
Natco Pharma CEO Rajeev Nannapaneni said that most investors look at quarterly performance, which leads to decision making to please people, adding that the quarter-on-quarter narrative must change.
Debashis Basu, founder-trustee of Moneylife Foundation and editor of Moneylife outlining the criteria on the basis of which companies were shortlisted, pointed out: ”Just as bad governance with good financial performance is suspect, good governance without sustained long-term financial performance is of no use. As investors and analysts, we realise that wealth creation and good governance are not strictly correlated. Wealth creation depends a lot on sector tailwinds, an external factor. Governance, on the other, is wholly internal - how a company chooses to behave. This is what we have focused on.”