Voices of Change 11: CA Sanjib Kumar Pani, Certified Independent Director
Sanjib Kumar Pani is a CA with a passion for Startups, Sustainability and Art. He holds several prestigious qualifications including FCA, FAFD, FCMA, DISA (ICAI). He is also a Certified Independent Director (empaneled with MCA), Certified ESG expert, and has BRSR certification from ICAI.
Our team spoke to him recently on corporate governance and independent directorship. Here are the excerpts from the interview:-
- How can independent directors improve corporate governance practices in India? Please share anecdotes/examples if possible
This is a simple question, and one might expect a straightforward answer. But let me share a different perspective on the role of independent directors in corporate governance, based on what I have observed in Indian boardrooms.
In India, most corporations are family-driven, government-promoted, or foreign-origin MNCs. While these businesses often start with the simple goal that is growing a successful enterprise then some become powerful conglomerates, and some fail, illustrating poor governance. Cases like Satyam in 2009 and, more recently, Byju’s, highlight this trend. Many of these boards consist of promoters and their families, eventually joined by investors. While a successful company can thrive regardless of its board structure, conflicts can arise when different interests of promoters, families, and investors clash, threatening the organization’s stability. This is where an independent director becomes essential, someone unaffiliated with any of the stakeholders, often referred to as the “conscience-keepers” of corporate India.
Imagine the Satyam boardroom in 2009. A proactive, engaged independent director could have potentially steered the company towards integrity, not just revealed the fraud. This example has always stood out to me as a reminder of the impact an effective independent director can make.
An independent director must have the judgment to know when to challenge decisions and the skill to do so constructively. Appointing independent directors merely for compliance is a missed opportunity. In my view, independent directors wear three essential hats throughout their tenure. The first is the hat of a vigilant guardian, watching over the company’s threats and opportunities. The second is the counselor, who brings fresh perspectives and expertise to the board. The third is the governance champion, ensuring that compliance is embedded into the company’s core values not just a checkbox exercise. In this role, they serve as the company’s moral compass.
If independent directorship is seen purely as an oversight role, it risks becoming dull. The role becomes engaging when it finds a balance between oversight and partnership firm enough to raise red flags yet collaborative enough to contribute to the board effectively. Think of it as being a good guardian, supportive of growth yet willing to set boundaries when necessary.
Success in this role isn’t just about following rules. It’s about the wisdom to know when to support and when to challenge, the courage to “speak up”, and the integrity to prioritize stakeholder interests above all.
2 You are a respected figure in Finance & Audit. Please share your contributions as a senior leader.
After my long corporate years, I am now a consultant providing virtual CFO services. As a Virtual CFO and chartered accountant, I have the privilege of working with a range of businesses, including those in their growth stages as well as startups. This is where my seniority and experience come into play, as a one-size-fits-all solution is not suitable for clients at different stages of their business journey.
Working with startups presents unique challenges. I help them navigate these by mentoring them on strategic business structuring, preparing them for financial hurdles, and setting a sustainable growth path. My role extends beyond managing numbers, it is about empowering founders and leadership teams to make the best decisions for their future. This approach benefits both startups and established businesses as the formula of growth remains almost similar.
Many of my most rewarding experiences have been with businesses that have a promising product or service but struggle with organizing their financials. As these businesses grow, their focus often shifts towards turnover, market share, and achieving ambitious valuations. In this pursuit, they sometimes overlook the essential financial figures in their books that should guide their growth. Implementing strong processes and controls is critical in such scenarios, as is leveraging the power of digital bookkeeping.
Part of strengthening these processes involves developing a solid Management Information System (MIS) and conducting regular cash flow reviews. These reviews help identify where cash is tied up and where receivables need streamlining. This disciplined approach to reviewing financials significantly improves processes and enhances business efficiency.
Supporting startups also brings unique opportunities. Founders often focus intently on their product or concept, which can lead to a unidirectional approach. Many startups are influenced by the pursuit of high valuations and may lose sight of building a sustainable business. When they concentrate on fundraising and scaling, they face resource constraints. My role involves providing them with the right financial insights and helping them establish proper governance structures and financial models. This support ensures they carefully select funding options while retaining control over their business. Many startup founders possess strong technical skills but may lack financial expertise. Guiding them to prioritize spending, optimize cash flow, and secure necessary funding is an exciting aspect of my work. I find great fulfillment in offering guidance that helps turn their vision into reality while navigating the demands of rapid growth.
Compliance and governance are also areas that I deeply value. In today’s regulatory landscape, especially for startups that aim to scale rapidly, there is no room for errors in financial integrity. I work closely with clients to ensure that their financial practices are robust and adhere to high standards. This meticulous approach not only safeguards their reputation but also builds a foundation of trust that is essential for long-term sustainable success.
In every engagement, I strive to be more than just an advisor, I aim to become a true partner. I challenge decisions constructively, celebrate achievements, and provide support during difficult times. This blend of financial expertise, strategic insight, and genuine partnership forms the core of my approach, enabling clients to build resilient and thriving businesses from the ground up.
3) How can overall board governance and board leadership be enhanced in the Indian corporate world?
I will address this question differently, governance and leadership has been always a point of discussion right from the ancient Chanakya time to the modern time. Chanakya’s “Saptanga,” or seven pillars, offers a powerful framework for successful modern corporate governance. Fundamentally, governance principles remain unchanged; it’s how we practice them that determines success or failure. True governance and board leadership come from playing each role with integrity, in the spirit of protecting the organization.
Let me explain in my way how these seven pillars align with modern management needs.
First, every company needs strong leadership (Swami) the leaders who demonstrate integrity, set a clear vision, and lead by example. Strong leaders foster a culture of responsibility that aligns the organization with its mission and drives ethical standards.
Next is the board (Amatya), which should be enriched with diverse expertise. A well-rounded board brings varied perspectives, enabling sound decision-making. This need to bring experts aligned to the different needs of the corporate so that they are true Amatyas rather than being poster boys and girls on the corporate website. Many corporates have misunderstood the board’s diversity requirement and created a family and friends’ room or a club of celebrities. Amatya/ board can give direction to the business of the corporate. This highlights the need for a good selection of board that can help the business and to achieve this a careful selection process is necessary. The law can be enforced through more detailed structuring of the board and defining an ideal structure of the board.
Stakeholder focus (Janapada) is also essential, including customers, employees, and shareholders. Modern governance calls for policies that align with environmental and social goals (ESG), making it essential to balance profit with these priorities. Stakeholders’ definition is expanding and corporates need to align themselves with these new stakeholders requirement so that the value maximisation can be more focused.
Risk management (Durg) is critical. Today, a “fortress” encompasses cybersecurity, regulatory compliance, and crisis preparedness. Strong risk management helps companies navigate economic shifts, cyber threats, and other challenges, safeguarding stakeholders. In the modern world with changing way of working and dependency on the technology the risk definition need to wider and more dynamics to anticipate and prevent risk applicable to the organisation.
Financial prudence (Kosha) is another focus. Chanakya values a healthy treasury, and in today’s context, disciplined finance practices like accurate accounting, budgeting, and regular audits are essential. Board members should have strong financial understanding to accurately assess and steer business stability.
Ethical enforcement (Danda) is a cornerstone of trust. Corporate governance must uphold ethical standards with robust compliance frameworks and fair processes for addressing misconduct. Statutes should support penalties for wrongdoing to act as a deterrent, ensuring ethical governance.
Lastly, strategic alliances (Mitra) are vital for resilience and growth. Modern governance must nurture relationships with stakeholders, partners, and regulators. Governance has shifted from being solely shareholder-focused to a broader stakeholder approach, including all those who are affected by the business. Maximizing stakeholder value is essential, and aligning strategy with this purpose helps achieve it.
I hope that gives a little different perspective to this question. Let me conclude, aligning governance and leadership with these timeless principles enhances the board’s effectiveness. Chanakya’s insights remain highly relevant today, guiding Indian boards to navigate challenges while staying true to their values and purpose. We need to follow what is already established as good governance for the betterment of governance and searching for new answers or new thoughts will not change the basic needs of good governance.
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Brief Profile
Sanjib Kumar Pani is a CA with a passion for Startups, Sustainability and Art. He holds several prestigious qualifications including FCA, FAFD, FCMA, DISA (ICAI). He is also a Certified Independent Director (empaneled with MCA), Certified ESG expert, and has BRSR certification from ICAI.
He has 26+ years of Corporate exposure in Finance, Commerce, Financial Audits, Operational Audit, ERP implementations, Service delivery, Large Programs and Projects, controllership, Financial Reporting, Setting up with end to end management of Budgeting and planning processes.
