Voices of Change 17: Balachandran Dharman, Board Member & Independent Director
Balachandran Dharman is an Independent Director at Honda India PP, Independent Director at RR Global & Head-Business Development at RR Kabel Ltd.. He is also Chairman of MCCI- Energy Comm & Hindustan Chamber — Co-Chair, Energy, and Member-CII TN Infra Panel.
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.
Balachandran Dharman: The role of Independent Directors was long dependent on the likes & dislikes of the Promoter or Senior Management on being offered these roles.
The first step has been towards the induction of Independent Directors and giving them more leeway in the working of the Board.
The responsibilities of independent directors are huge and not commensurate with the rewards or remuneration. There is a wrong notion of equating the time spent in Board Meetings with the rewards or remuneration without actually understanding the enormous risk of being placed on independent directors in their roles.
That said, MCA will have to look into the reward-to-responsibility equation which is currently lopsided.
Post 2013 and Satyam, with the MCA coming up with mandatory norms, has opened up the pathway for safeguarding stakeholders interests.
The role of ID’s is to safeguard the wealth of all stakeholders by ensuring processes, procedures, and compliances are followed /met by everyone in the organization. There is still the question of time that is being spent on the role, typically 6 to 10 board meetings which is an incorrect perception of the role that is being carried out.
Independent Director’s role is invisible but encompassing all activities of the organization.
To share an experience, the secretarial department needs to file numerous statutory compliances and reports, which include ticking the boxes on attachments enclosed for online filing with MCA.
Our Secretarial team member by oversight forgot to tick a box but attached the relevant document.
This oversight was pointed out by MCA ( though informally acknowledging that the attachment was there ) and notice was issued, the penalty imposed, and went up to issue of warrants to all Directors including ID’s.
This just shows how lapses ( however small ) or human error will impact Independent Directors also even though they may not have contributed directly or even unknowingly to compliance defaults.
Increasing meaningful interactions with the Management Team can add more depth to the understanding of the operations of the organization. This can also help better comprehension of the reports that are sent as a part of the agenda to the Board or Audit or Nomination & Remuneration Committee meetings and add more value inputs.
2) You are a respected figure in marketing and board leadership domains. Pease share your contributions as a senior leader in your domain.
Balachandran Dharman: Today marketing has changed dramatically from what it was over the last decade. It is data-driven and personalized to the end user.
But before one gets to sit in an office and crunch numbers, it is essential that extensive fieldwork is done in the initial phases of one’s career. There is no greater learning place than the market. Keeping an eye & ear on the happenings on the ground is a great learning experience.
In one such casual discussion with the retailer, happened to hear about the plight of electricians who meet in accidents at their workplace.
This segment is unorganized with no formal employment but on a contractual basis. Work is hard to come by and hence there can be no question of additional benefits that can be demanded. But a bulk of the work is done by them.
So I initiated a few measures ( that were considered pre-mature at that point in time ) which looked at addressing this lower most rung of our end users. We initiated a pro bono insurance plan to take care of any untoward incident that may occur during the course of their work provided they use our range of products.
Initially, it was viewed with circumspection but it gained traction over a period of time and it was widely adopted by other competing organizations also. Today, the same practice which was limited to the electrical industry has been adapted to other sectors where workmen are involved in plumbing, erection & carpentry activities.
Similarly, in area of wiring practices in the Electrical industry, safety was often ignored as the product ran behind walls.
We had identified Specifiers as a key element in ensuring the safety of installations. Teams were trained to connect with Specifiers and promote the safety of the installations rather than pitching the products.
It gained widespread recognition for the brand that cared for Safety and it continues to build on its market share.
In both these initiatives, personalized communication through efficient data management was used to target the respective audiences and gain their trust. This was followed up by efficient sales management techniques to manage the resultant volumes.
3) How can overall board governance and board leadership be enhanced in the Indian corporate world?
Balachandran Dharman: Board governance today stands at an inflection point where shareholder activism, whistle-blowers’ involvement, and mandatory requirements are playing a major role.
SEBI has become very vocal and strong in its action against erring functionaries which place the faults right at the door of the Board.
We have recent examples of Zee, Raymond, Britannia etc where the roles of Governance have become more visible.
Where once the role of the Promoter or promoter-aligned groups were instrumental in pushing through their own agenda, are now increasingly being questioned by Independent Directors on issues related to Governance & related party transactions.
Still, it is early days but we have a host of Shareholder activists who have taken up issues in listed companies and are actively giving their inputs on Board resolutions.
So the Boards are forced to deeply study the merits of every resolution that is placed before them and to take a critical view before they pass the same.
We have more representation of qualified Independent Directors who value their personal reputation and are fearless in expressing their opinions ( even in dissent ).
Another important feature is the conduct of AGM’s. Pre-pandemic, we were not accustomed to virtual meetings.
However, Covid changed everything and we see many shareholders too making their presence felt through virtual attendance in AGMs and questioning the rationale behind many resolutions ( one can quote a recent Eicher AGM, where the annual remuneration of the MD was questioned and the resolution did not pass through. It’s a different story on how it finally ended ). But the point that is being made is that there are stakeholders who will question, and the Board is only getting prepared to answer them, unlike earlier days.
We are only seeing the start of this good change and will need to gather momentum over the next few years where a large number of startups are on the horizon who will need to be directed on the right path to growth without sacrificing ethics.
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Brief Profile
Balachandran Dharman is an Independent Director at Honda India PP, Independent Director at RR Global & Head-Business Development at RR Kabel Ltd. He is also Chairman of MCCI- Energy Comm & Hindustan Chamber — Co-Chair, Energy, and Member-CII TN Infra Panel.
