General mgmt

Management of Corporate governance issue by Ratan Tata and Narayana Murthy
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INTRODUCTION OF THE PROJECT
General introduction of the project
The meaning of the term corporate governance is a subject of considerable debate. The
concept has been defined in many ways. Organization for Economic Co-operation and
Development (OECD) has defined corporate governance as, “procedures and processes
according to which an organisation is directed and controlled. The corporate governance
structure specifies the distribution of rights and responsibilities among the different
participants in the organisation – such as the board, managers, shareholders and other
stakeholders – and lays down the rules and procedures for decision-making.”
Corporate governance is intended to increase the accountability of the company and to
avoid massive disasters before they occur. Failed energy giant Enron, and its bankrupt
employees and shareholders, is a prime argument for the importance of solid corporate
governance. Well-executed corporate governance should be similar to a police
department's internal affairs unit, weeding out and eliminating problems with extreme
prejudice.
The title of this project is Management of Corporate governance Issue by Ratan Tata
and Nrayana Murthy. This project is based the corporate governance issue in Tata and
Infosys about Cyrus Mistry and Vishal Sikka.and how the former CEO’S of both the
companies have resolved the issue
Objectives of study
 To know about corporate governance.
 To know about the corporate governance issue in Tata (Cyrus Mistry)
 To know about the corporate governance issue in Infosys (Vishal Sikka)
 To know how the qualities of Ratan Tata and Narayana Murthy were used to
solve the corporate governance issue

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Corporate Governance
Corporate governance is the system of rules, practices and processes by which a company
is directed and controlled. Corporate governance essentially involves balancing the
interests of a company's many stakeholders, such as shareholders, management,
customers, suppliers, financiers, government and the community. Since corporate
governance also provides the framework for attaining a company's objectives, it
encompasses practically every sphere of management, from action plans and internal
controls to performance measurement and corporate disclosure.
Corporate Governance refers specifically to the set of rules, controls, policies and
resolutions put in place to dictate corporate behavior. Proxy advisors and shareholders are
important stakeholders who indirectly affect governance, but these are not examples of
governance itself. The board of directors is pivotal in governance, and it can have major
ramifications for equity valuation.
Corporate Governance refers to the way a corporation is governed. It is the technique by
which companies are directed and managed. It means carrying the business as per the
stakeholders’ desires. It is actually conducted by the board of Directors and the concerned
committees for the company’s stakeholder’s benefit. It is all about balancing individual
and societal goals, as well as, economic and social goals.
Corporate Governance is the interaction between various participants (shareholders,
board of directors, and company’s management) in shaping corporation’s performance
and the way it is proceeding towards. The relationship between the owners and the
managers in an organization must be healthy and there should be no conflict between the
two. The owners must see that individual’s actual performance is according to the
standard performance. These dimensions of corporate governance should not be
overlooked.
Corporate Governance deals with the manner the providers of finance guarantee
themselves of getting a fair return on their investment. Corporate Governance clearly
distinguishes between the owners and the managers. The managers are the deciding
authority. In modern corporations, the functions/ tasks of owners and managers should be
clearly defined, rather, harmonizing.
Corporate Governance deals with determining ways to take effective strategic decisions.
It gives ultimate authority and complete responsibility to the Board of Directors. In
today’s market- oriented economy, the need for corporate governance arises. Also,
efficiency as well as globalization are significant factors urging corporate governance.
Corporate Governance is essential to develop added value to the stakeholders.
Corporate Governance ensures transparency which ensures strong and balanced
economic development. This also ensures that the interests of all shareholders (majority
as well as minority shareholders) are safeguarded. It ensures that all shareholders fully
exercise their rights and that the organization fully recognizes their rights.

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Pillar
The three pillars of corporate governance are: transparency, accountability, and security.
All three are critical in successfully running a company and forming solid professional
relationships among its stakeholders which include board directors, managers,
employees, and most importantly, shareholders.
 Transparency
In simplest terms, transparency means having nothing to hide. For a company, this means
it allows its processes and transactions observable to outsiders. It also makes necessary
disclosures, informs everyone affected about its decisions, and complies with legal
requirements. After the financial scandals in the early 2000s, transparency has played a
bigger role in preventing fraud from happening again, especially at such a large scale. But
aside from stopping the next illegal moneymaking scheme, transparency also builds a
good reputation of the company in question. When shareholders feel they can trust a
company, they are willing to invest more, and this greatly helps in lowering cost of
capital. Therefore, a company gets its ROI on the money it spent on improving
transparency.
Transparency is a critical component of corporate governance because it ensures that all
of a company’s actions can be checked at any given time by an outside observer. This
makes its processes and transactions verifiable, so if a question does come up about a
step, the company can provide a clear answer. And after the Enron scandal in 2001,
transparency is no longer just an option, but a legal requirement that a company has to
comply with.
But although transparency is a necessity for the whole company, its presence is even
more important at the top where strategies are planned and decisions are made.
Shareholders expect that the corporate board is open about their actions; otherwise,
distrust will form. And when trust breaks, shareholders tend to stay away and invest
somewhere else.
How transparent is your corporate board? Are directors’ actions readily verifiable by
internal and external audit? Is their leadership visible from the top to all the way down? Is
transparency applicable to everyone? Transparency should have no exceptions, especially
when your company’s goals are involved. All stakeholders — from employees to
investors — have the right to know about the direction your company is headed for.
For easy implementation of a transparency policy, consider using board portal software
that doubles as corporate governance software.

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 Accountability
It takes more than transparency to build integrity as a company. It also takes
accountability, which can also mean answerability or liability. Shareholders are deeply
interested in who will take the blame when something goes wrong in one of a company’s
many processes. And even when everything goes smoothly as expected, knowing that
someone will be held accountable for future mishaps increases shareholders’ confidence,
which in turn increases their desire to invest more. Again, this concern over
accountability goes back to the financial scandals in the early 2000s, in which there had
been a lot of money stolen, but not enough people to answer for the crime.
Accountability can have a negative connotation because many people associate it with
blame. “Who’s responsible for when something goes wrong?” is just one of the many
questions that accountability seeks to answer. But accountability is more than that. It’s
about having ownership over one’s actions whether the consequences of those actions are
good or bad. Thus, accountability covers not only failings, but also accomplishments.
When the idea of accountability is approached with this positive outlook, people will be
more open to it as a means to improve their performance. This applies from the staff all
the way up to the corporate board.who have no sense of ownership over their tasks don’t
feel the motivation to do more than what’s expected of them. There’s no incentive to
work hard and achieve something. But when they understand the weight of their
responsibilities, they’re more inclined to make sure that they carry out their tasks
properly. And when they’re successful in this regard, they’re likely to feel a sense of
accomplishment, and this further fuels their desire to do better.
 Security
A company is expected to make their processes transparent and their people accountable
while keeping their enterprise data secure from unauthorized access. There is simply no
compromise for this. Companies that experience security breaches involving the exposure
of their clients’ personal information quickly lose their credibility. To get back the
public’s trust, extensive damage control is called for — just look at what had to be done
after Neiman Marcus and Target suffered from data leakage Thus, even with
accountability and transparency, a company without inadequate security measures will
have a hard time attracting shareholders. After all, any scandal — even a breach caused
by third-party hackers — can have a negative effect on a company’s stock market
performance.
The increasing threat of cyber crime in recent years puts security at a high priority for
many companies. Complying with security standards isn’t enough — a company needs to
imbibe a culture of security to ensure that trade secrets, corporate data, and client
information are all kept safe from unauthorized access from inside and out. Security is
not just an IT concern anymore, unlike in the past.

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Nowadays, everyone in a company has a responsibility to adhere to strict security
standards. Even entry-level staff members usually have their own company email
addresses. But are they trained enough to conscientiously keep their accounts safe? And
that’s just scratching the surface. Think of how much confidential data there is at the
hands of directors in the corporate board, and suddenly, the stakes are much higher.
Thus, directors should be made aware of the seriousness of cyber crime and the gravity of
its consequences. A security breach — especially involving client information — can
make the public easily lose their trust. Trust is a big factor would-be shareholders
consider before making an investment in a company.
How high is the awareness level of company’s directors when it comes to security? Don’t
let them take their chances — make sure that they’re using board portal software and
board governance software to keep meeting documents secure all the time, even when
they’re using their iPads or Android tablets for virtual collaborative sessions and
electronic board meetings. The system does away with paper-based board packs and
board books and digitizes everything, making encryption (both in transmission and
storage) as a means of protection possible.
Taken together, transparency, accountability, and security define a company’s integrity.
Achieving all three isn’t an easy thing to do, but fortunately, companies now have an
partner in board portal software that also doubles as corporate governance software. A
board portal doesn’t just digitize the whole board meeting process; it also makes the
process more transparent by keeping clear and complete documentation at all times. For
example, a director who wants to review the details surrounding the decision for a recent
merger can pull out the meeting minutes from the archive. An outside auditor authorized
to request the same kind of documentation will have access to it, too. In short,
information needed by anyone with authorization — whether they’re part of the company
or an outsider — can get what they need quickly and easily.
Aside from being readily available, documents and other meeting files are version-
controlled and comes with audit trails. This means that when different versions of a file
exist, each version carries a record of what changes were made and who made those
changes. This feature of board portals address the need for accountability.

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Eight Elements of Good Governance
Good governance has 8 major characteristics. It is participatory, consensus oriented,
accountable, transparent, responsive, effective and efficient, equitable and inclusive, and
follows the rule of law. Good governance is responsive to the present and future needs of
the organization, exercises prudence in policy-setting and decision-making, and that the
best interests of all stakeholders are taken into account.
1. Rule of Law
Good governance requires fair legal frameworks that are enforced by an impartial
regulatory body, for the full protection of stakeholders.
2. Transparency
Transparency means that information should be provided in easily understandable forms
and media; that it should be freely available and directly accessible to those who will be
affected by governance policies and practices, as well as the outcomes resulting
therefrom; and that any decisions taken and their enforcement are in compliance with
established rules and regulations.
3. Responsiveness
Good governance requires that organizations and their processes are designed to serve the
best interests of stakeholders within a reasonable timeframe.
4. Consensus Oriented
Good governance requires consultation to understand the different interests of
stakeholders in order to reach a broad consensus of what is in the best interest of the
entire stakeholder group and how this can be achieved in a sustainable and prudent
manner.
5. Equity and Inclusiveness
The organization that provides the opportunity for its stakeholders to maintain, enhance,
or generally improve their well-being provides the most compelling message regarding
its reason for existence and value to society.
6. Effectiveness and Efficiency
Good governance means that the processes implemented by the organization to produce
favorable results meet the needs of its stakeholders, while making the best use of
resources – human, technological, financial, natural and environmental – at its disposal.

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7. Accountability
Accountability is a key tenet of good governance. Who is accountable for what should be
documented in policy statements. In general, an organization is accountable to those who
will be affected by its decisions or actions as well as the applicable rules of law.
8. Participation
Participation by both men and women, either directly or through legitimate
representatives, is a key cornerstone of good governance. Participation needs to be
informed and organized, including freedom of expression and assiduous concern for the
best interests of the organization and society in general.

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Features
 Discipline
Corporate discipline is a commitment by a company’s senior management to
adhere to behavior that is universally recognized and accepted to be correct and
proper. This encompasses a company’s awareness of, and commitment to, the
underlying principles of good governance, particularly at senior management
level.
“All involved parties will have a commitment to adhere to procedures, processes,
and authority structures established by the organization.”
 Transparency
Transparency is the ease with which an outsider is able to make meaningful
analysis of a company’s actions, its economic fundamentals and the non-financial
aspects pertinent to that business. This is a measure of how good management is
at making necessary information available in a candid, accurate and timely
manner – not only the audit data but also general reports and press releases. It
reflects whether or not investors obtain a true picture of what is happening inside
the company.
“All actions implemented and their decision support will be available for
inspection by authorized organization and provider parties.”
 Independence
Independence is the extent to which mechanisms have been put in place to
minimize or avoid potential conflicts of interest that may exist, such as dominance
by a strong chief executive or large share owner. These mechanisms range from
the composition of the board, to appointments to committees of the board, and
external parties such as the auditors. The decisions made, and internal processes
established, should be objective and not allow for undue influences.
“All processes, decision-making, and mechanisms used will be established so as
to minimize or avoid potential conflicts of interest.”
 Accountability
Individuals or groups in a company, who make decisions and take actions on
specific issues, need to be accountable for their decisions and actions.
Mechanisms must exist and be effective to allow for accountability. These
provide investors with the means to query and assess the actions of the board and
its committees.

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“Identifiable groups within the organization - e.g., governance boards who take
actions or make decisions - are authorized and accountable for their actions.”
 Responsibility
With regard to management, responsibility pertains to behavior that allows for
corrective action and for penalizing mismanagement. Responsible management
would, when necessary, put in place what it would take to set the company on the
right path. While the board is accountable to the company, it must act
responsively to and with responsibility towards all stakeholders of the company.
“Each contracted party is required to act responsibly to the organization and its
stakeholders.”
 Fairness
The systems that exist within the company must be balanced in taking into
account all those that have an interest in the company and its future. The rights of
various groups have to be acknowledged and respected. For example, minority
share owner interests must receive equal consideration to those of the dominant
share owner(s).
 Social responsibility
A well-managed company will be aware of, and respond to, social issues, placing
a high priority on ethical standards. A good corporate citizen is increasingly seen
as one that is non-discriminatory, non-exploitative, and responsible with regard to
environmental and human rights issues. A company is likely to experience
indirect economic benefits such as improved productivity and corporate
reputation by taking those factors into consideration.

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Different generation Entrepreneur clashes
It means different associates come of age during different time periods (thus different
social, economic, and cultural contexts), and as a result, they end up with noticeably
different values. The values then clash in the way entrepreneur do work, and they end up
getting angry and blaming, rather than just working it out. When faced with the conflict,
they too often choose to escalate and assert their position, rather than seek to understand
and find common ground.
For example, the Baby Boomer generation tends to place high value the group or team
(or cause, or movement), and Generation X, a much smaller generation that had been
left to their own devices as they grew up, came into the workplace with an emphasis on
independence and work-life balance. This prompted a lot of conflict, with Boomers
grumbling about these new employees not being “team players,” and Xers complaining
about the nonstop supervision.

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Tata groups corporate governance
 Purposeand Values
 Mission
To improve the quality of life of the communities we serve globally through long-term
stakeholder value creation based on Leadership with Trust
 Purpose
At the Tata group we are committed to improving the quality of life of the communities
we serve. We do this by striving for leadership and global competitiveness in the business
sectors in which we operate.
Our practice of returning to society what we earn evokes trust among consumers,
employees, shareholders and the community. We are committed to protecting this
heritage of leadership with trust through the manner in which we conduct our business.
This Code sets out how we behave with:
 Our employees
 Those who work with us
 Our customers
 The communities and the environment in which we operate
 Our value-chain partners, including suppliers and service providers, distributors,
sales representatives, contractors, channel partners, consultants, intermediaries
and agents
 Our joint-venture partners or other business associates
 Our financial stakeholders
 The governments of the country which we operate; and
 Our group companies.
In this Code, “we or us” means our company, our executive directors, officers, employees
and those who work with us, as the context may require. The term “our group
companies” in this Code typically means companies Tata Sons intends for this Code to
apply to, and / or to whom Tata Sons has issued this Code.

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This Code sets out our expectations of all those who work with us. We also expect those
who deal with us to be aware that this Code underpins everything we do, and in order to
work with us they need to act in a manner consistent with it
 Core Values
Tata has always been values-driven. These values continue to direct the growth and
business of Tata companies. The five core Tata values underpinning the way we do
business are:
 Integrity: We will be fair, honest, transparent and ethical in our conduct;
everything we do must stand the test of public scrutiny.
 Excellence: We will be passionate about achieving the highest standards of
quality, always promoting meritocracy.
 Unity: We will invest in our people and partners, enable continuous learning, and
build caring and collaborative relationships based on trust and mutual respect.
 Responsibility: We will integrate environmental and social principles in our
businesses, ensuring that what comes from the people goes back to the people
many times over.
 Pioneering: We will be bold and agile, courageously taking on challenges, using
deep customer insight to develop innovative solutions.
 Tata Codeof Conduct
This comprehensive document serves as the ethical road map for Tata employees and
companies, and provides the guidelines by which the group conducts its businesses
Tata companies have consistently adhered to the values and ideals articulated by the
Founder for over 150 years. The Tata Code of Conduct was first formalized by Mr Ratan
Tata. It articulates the Group's values and ideals that guide and govern the conduct of our
companies as well as our colleagues in all matters relating to business. Today, the Code is
a bedrock on which we base our individual, as well as leadership commitments to core
Tata values.
The Tata Code of Conduct outlines our commitment to each of our stakeholders,
including the communities in which we operate, and is our guiding light when we are
sometimes faced with business dilemmas that leave us at ethical crossroads. The Code is
also dynamic in that it has been periodically refreshed in order to remain contemporary
and contextual to the changes in law and regulations. However it remains unaltered at its
core.

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Our stellar reputation and success as a business entity has been defined by the powerful
commitment and adherence to the core values and principles expressed in this Code, by
all our employees, directors and partners. I trust every Tata colleague and Tata company
will continue to not only comply with the laws and regulations that govern our business
interests around the world, but will continue to set new standards of ethical conduct that
will generate deep respect and inspire emulation by others.
 CORE PRINCIPLES
 We are committed to operating our businesses conforming to the highest moral
and ethical standards. We do not tolerate bribery or corruption in any form. This
commitment underpins everything that we do.
 We are committed to good corporate citizenship. We treat social development
activities which benefit the communities in which we operate as an integral part
of our business plan.
 We seek to contribute to the economic development of the communities of the
countries and regions we operate in, while respecting their culture, norms and
heritage. We seek to avoid any project or activity that is detrimental to the wider
interests of the communities in which we operate.
 We shall not compromise safety in the pursuit of commercial advantage. We shall
strive to provide a safe, healthy and clean working environment for our
employees and all those who work with us.
 When representing our company, we shall act with professionalism, honesty and
integrity, and conform to the highest moral and ethical standards. In the countries
we operate in, we shall exhibit culturally appropriate behaviour. Our conduct shall
be fair and transparent and be perceived as fair and transparent by third parties.
 We shall respect the human rights and dignity of all our stakeholders.
 We shall strive to balance the interests of our stakeholders, treating each of them
fairly and avoiding unfair discrimination of any kind. 8. The statements that we
make to our stakeholders shall be truthful and made in good faith.
 We shall not engage in any restrictive or unfair trade practices.

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 We shall provide avenues for our stakeholders to raise concerns or queries in
good faith, or report instances of actual or perceived violations of our Code.
 We shall strive to create an environment free from fear of retribution to deal with
concerns that are raised or cases reported in good faith. No one shall be punished
or made to suffer for raising concerns or making disclosures in good faith or in
the public interest.
 Employees
“Once you got the best people, the people who shared our values and ideals, we left them
free to act on their own. We do not fetter them. We encourage them and give them
opportunities for leadership.” J.R.D. Tata Chairman, Tata Sons (1938 – 1991)
 Equal opportunity employer
We provide equal opportunities to all our employees and to all eligible applicants for
employment in our company. We do not unfairly discriminate on any ground, including
race, caste, religion, colour, ancestry, marital status, gender, sexual orientation, age,
nationality, ethnic origin, disability or any other category protected by applicable law.
When recruiting, developing and promoting our employees, our decisions will be based
solely on performance, merit, competence and potential. 3. We shall have fair,
transparent and clear employee policies which promote diversity and equality, in
accordance with applicable law and other provisions of this Code. These policies shall
provide for clear terms of employment, training, development and performance
management.
 Dignity and respect
Our leaders shall be responsible for creating a conducive work environment built on
tolerance, understanding, mutual cooperation and respect for individual privacy. 5.
Everyone in our work environment must be treated with dignity and respect. We do not
tolerate any form of harassment, whether sexual, physical, verbal or psychological. 6. We
have clear and fair disciplinary procedures, which necessarily include an employee’s
right to be heard. 7. We respect our employees’ right to privacy. We have no concern
with their conduct outside our work environment, unless such conduct impairs their work
performance, creates conflicts of interest or adversely affects our reputation or business
interests.

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 Human rights
We do not employ children at our workplaces. 9. We do not use forced labour in any
form. We do not confiscate personal documents of our employees, or force them to make
any payment to us or to anyone else in order to secure employment with us, or to work
with us.
 Bribery and corruption
Our employees and those representing us, including agents and intermediaries, shall not,
directly or indirectly, offer or receive any illegal or improper payments or comparable
benefits that are intended or perceived to obtain undue favours for the conduct of our
business.
 Gifts and hospitality
Business gifts and hospitality are sometimes used in the normal course of business
activity. However, if offers of gifts or hospitality (including entertainment or travel) are
frequent or of substantial value, they may create the perception of, or an actual conflict of
interest or an ‘illicit payment’. Therefore, gifts and hospitality given or received should
be modest in value and appropriate, and in compliance with our company’s gifts and
hospitality policy.
 Freedom of association
We recognise that employees may be interested in joining associations or involving
themselves in civic or public affairs in their personal capacities, provided such activities
do not create an actual or potential conflict with the interests of our company. Our
employees must notify and seek prior approval for any such activity as per the ‘Conflicts
of Interest’ clause of this Code and in accordance with applicable company policy
 Working outside employment with us
Taking semployment, accepting a position of responsibility or running a business outside
employment with our company, in your own time, with or without remuneration, could
interfere with your ability to work effectively at our company or create conflicts of
interest. Any such activity must not be with any customer, supplier, distributor or
competitor of our company. Our employees must notify and seek prior approval for any
such activity as per the ‘Conflicts of Interest’ clause of this Code and in accordance with
applicable company policies and law.

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 Integrity of information and assets
Our employees shall not make any wilful omissions or material misrepresentation that
would compromise the integrity of our records, internal or external communications and
reports, including the financial statements.
 Insider trading
Our employees must not indulge in any form of insider trading nor assist others,
including immediate family, friends or business associates, to derive any benefit from
access to and possession of price sensitive information that is not in the public domain.
Such information would include information about our company, our group companies,
our clients and our suppliers.
 Prohibited drugs and substances
Use of prohibited drugs and substances creates genuine safety and other risks at our
workplaces. We do not tolerate prohibited drugs and substances from being possessed,
consumed or distributed at our workplaces, or in the course of company duties.
 Conflicts of interest
Our employees and executive directors shall always act in the interest of our company
and ensure that any business or personal association including close personal
relationships which they may have, does not create a conflict of interest with their roles
and duties in our company or the operations of our company. Further, our employees and
executive directors shall not engage in any business, relationship or activity, which might
conflict with the interest of our company or our group companies
 Customers
 Products and services
We are committed to supplying products and services of world-class quality that meet all
applicable standards. The products and services we offer shall comply with applicable
laws, including product packaging, labeling and after-sales service obligations.
 Export controls and trade sanctions
We shall comply with all relevant export controls or trade sanctions in the course of our
business.

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 Fair competition
We support the development and operation of competitive open markets and the
liberalization of trade and investment in each country and market in which we operate.
 Dealings with customers
Our dealings with our customers shall be professional, fair and transparent. We respect
our customers’ right to privacy in relation to their personal data. We shall safeguard our
customers’ personal data, in accordance with applicable law.
 Communities and the environment
 Communities
We are committed to good corporate citizenship, and shall actively assist in the
improvement of the quality of life of the people in the communities in which we operate.
 The environment
In the production and sale of our products and services, we strive for environmental
sustainability and comply with all applicable laws and regulations. 5. We seek to prevent
the wasteful use of natural resources and are committed to improving the environment,
particularly with regard to the emission of greenhouse gases, consumption of water and
energy, and the management of waste and hazardous materials. We shall endeavour to
offset the effect of climate change in our activities
 value -chain partners
We shall select our suppliers and service providers fairly and transparently. We seek to
work with suppliers and service providers who can demonstrate that they share similar
values. We expect them to adopt ethical standards comparable to our own.
 Financial Stakeholders
We are committed to enhancing shareholder value and complying with laws and
regulations that govern shareholder rights. 2. We shall inform our financial stakeholders
about relevant aspects of our business in a fair, accurate and timely manner and shall
disclose such information in accordance with applicable law and agreements.

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 Governments
 Political non-alignment
We shall act in accordance with the constitution and governance systems of the countries
in which we operate. We do not seek to influence the outcome of public elections, nor to
undermine or alter any system of government. We do not support any specific political
party or candidate for political office. Our conduct must preclude any activity that could
be interpreted as mutual dependence/favour with any political body or person, and we do
not offer or give any company funds or property or other resources as donations to any
specific political party, candidate or campaign. Any financial contributions considered by
our Board of Directors in order to strengthen democratic forces through a clean electoral
process shall be extended only through the Progressive Electoral Trust in India, or by a
similar transparent, duly-authorized, nondiscriminatory and non-discretionary vehicle
outside India.
 Government engagement
We engage with the government and regulators in a constructive manner in order to
promote good governance. We conduct our interactions with them in a manner consistent
with our Code.
 Group companies
We seek to cooperate with our group companies, including joint ventures, by sharing
knowledge, physical resources, human and management resources and adopting leading
governance policies and practices in accordance with applicable law including adherence
to competition law, where relevant. We shall have processes in place to ensure that no
third party or joint venture uses the TATA name/brand to further its interests without
proper authorisation.

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 TATA SAFETY AND HEALTH POLICY
The Tata Group is committed to providing a safe and healthy working environment and
achieving an injury and illness free work place. Economic considerations will not have
priority over implementation of safety and health protection measures. While safety is
everyone’s prime responsibility, senior leaders are expected to demonstrate visible
commitment through their behaviour. To meet our commitment, we will;
 Recognize safety and health as an integral part of our operations; consider Safety
and Health in every decision we make and in every activity we perform.
 Comply and Endeavour to exceed applicable regulatory safety and health
requirements and set the highest standards.
 Impart appropriate training and develop skills by engaging employees to help
them work safely.
 Assess risks and provide controls for safety and health hazards in our operations
and activities and use audits to check compliance.
 Promptly report incidents, investigate for root causes and ensure lessons learnt are
shared and deployed across the Group companies.
 Set Safety and Health metrics as indicators of excellence, monitor progress and
continually improve performance.

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Qualities of Ratan Tata
 True Visionay
The Tata Group today includes India's largest private steel company, the biggest
auto manufacturer and the largest IT outsourcing firm. At Rs. 3.46 lakh crore, the
Tata Group revenue is 40 times the 1991 level (60% of which comes from
overseas), while its net profit has gone up four times.  It is Ratan Tata’s path
breaking vision that has led Tata Group to become one of India’s largest
conglomerates with 98 operating companies spread across 56 countries.
 Initiator
Tata Global Beverages formed a joint venture with Starbucks i.e. Tata Starbucks
Ltd, and helped Starbucks launch themselves in India by opening their first store
in Mumbai. Tata Tea, now Tata Global Beverages, acquired the Tetley group in
2000, the world's second largest manufacturer of tea.  He successfully introduced
the first indigenously developed passenger car Indica in India in 1998. It became
the no. 1 car in its segment in two years.
 A man of values
He is known to be an industrious man with global aspirations, and commitment to
quality work that gives real value of money as is amply demonstrated by his
interest in frugalal engineering ventures like Tata Indica and Tata Nano. He holds
the chairmanship of the Tata Trusts and is known to promote financial
transparency and intense vetting for grants for projects that claim to help the
needy.  The leadership qualities of Ratan Tata are coupled with his commitment
to social service, justice and responsibility.
 Handling human relations
He expanded CEO’s concept of community philanthropy to be included in the
workplace, as evidenced by the Tata Group’s steadfast commitment to social
service. (Jaago Re campaign) The Tata group instituted an eight hour workday
before nearly any other company in the world.  Ratan Tata working style is that
of working together with all officers by using unity of command and unity of
direction.  He is a man who is known to give great importance to Human
Relations.

21
 Firm determination
He was given charge of the Empress Mills in 1977 which was in bad shape. Due
to a weak economy and a prolonged workers’ strike, the Empress Mills
floundered and was finally closed.  Ratan Tata was appointed the director-in-
charge of National Radio and Electronics Company (NELCO). The company held
barely 2% of the market share which ultimately led to its collapse.
 Creative & Innovative
The Tata group also developed Tata Swach-a home water purification device at
low cost that operates without electricity. Ratan Tata used his excellent
innovative vision in Titan Edge watches which developed the thinnest watch in
the world and in Nano, the cheapest car in the world
 Strategist
He is credited with conceptualizing Nano, the cheapest car in the world. Under
his leadership, 32 companies were acquired worldwide.  He is a deep thinker and
an extremely strategic person. He is always thinking 2 steps ahead of his
competitors
 Risk Taker
It was said that the Jaguar and Land Rover deal would be disastrous: the brands
were troubled and demand was low. But Tata went on to prove everyone wrong
and today, both companies are doing really well. The critics declared that “the
Corus deal would lead the group to bankruptcy”. But Ratan Tata took the risk and
today, it is considered one of the most successful acquisitions.

22
Corporate governance issue in Tata Group
In November 2011, amid much speculation, Mistry was declared Ratan Tata’s
handpicked successor as the chairman of Tata Sons, the holding company of the
sprawling Tata Group. It was also announced that the Irish citizen of Indian origin would
have the luxury of shadowing Tata for a year before filling in the rather large shoes of the
veteran businessman starting December 2012.
Reasons behind the removal of Cyrus Mistry:
 Negative Growth
During the reign of Rata Tata between 1991 to 2012, Tata Sons grew from $6
billion business to $100 billion business conglomerate. Cyrus Mistry was
expected to fill the void created by Ratan Tata, but he failed to impress the
stakeholders and Ratan Tata himself. During his tenure, Ratan Tata bought tea
maker Tetley for $450 million; Corus Group, Jaguar Land Rover for $2.3 billion,
besides increasing the group’s overall income. On the other hand, with Cyrus at
the help, the group’s turnover decreased to $103 billion in 2015-16, compared to
$108 billion previous year.
 Increase in Debt
Under Cyrus, net debt of Tata Sons increased to $24.5 billion compared to $23.4
billion previous year. Hence, performance is one of the major issues in the case of
Cyrus Mistry, and his sudden removal. Insiders say that when Cyrus was brought
in as Chairman, his first and foremost task was to bring down debts of the
company, a task he miserably failed.
 Questions over Mistry’s Management Style
Friction was clearly visible when an article from The Economist questioned the
ability of Tata Sons to ensure a respectable return for their shareholders, due to
woeful performance in the last few years. Cyrus Mistry was not known as an
‘expansionist’ within the company, and his management style was questioned by
one and all, as he preferred to write down the value of an asset, and then sell them
off to bring in money to the table. An approach resented by Ratan Tata and other
board members.
 Ignoring Ratan Tata’s Advice
Mistry ignored Ratan Tata’s advice and suggestions on some crucial matters, and
this was not taken lightly by the Board members. His decision to sell off loss
making UK Steel plants was considered a blunder, and the ongoing legal issues
related with DOCOMO from Japan was something which never happened before

23
in Tata Sons. The way non-profit businesses were being killed by Mistry irked
Ratan Tata and the board members.As of now, Mistry (via family firm Shapoorji
Pallonji Group) holds 18.4% equity in Tata Sons, which makes him the single
largest individual shareholder of the business empire. Sir Dorabji Tata Trust and
Sir Ratan Tata Trust, on the other hand, has a controlling stake of 51.6% in Tata
Sons.
 Failed to turn around Tata Steel UK, rushed for sale. The acquisition price
was $12 billion in 2007
 Tried to rope in his team in group companies and on its boards, changing
the existing practice
 In combating mood with some of the executives at the group companies
 Aggressively pursued disposal of non-profitable businesses
 More keen to build new businesses--- e-commerce, defence and
infrastructure--- rather than consolidating existing businesses

24
Ratan Tata Dealing with this Issue
Ratan Tata’s Intervene
 Cyrus Mistry was selected after a careful process that took over a year, and by
assuming the role at the age of 46, he was expected to serve between 20-30 years.
In general, the Tata group is renowned for its values, which did not encompass a
“hire and fire” policy. Most senior Tata executives were consummate insiders,
having usually served their entire career with the Group.
 The main aim of Tata is to generate employment and give a helping hand to the
society. But this was not happening from the time when cyrus has been appointed
as CEO
 For this very reason Ratan Tata had to intervene in this issue, he asked for the
removal of Cyrus Mistry and asked the shareholders and the senior members of
the group to continue to work without any panic
 There was a board meeting arranged for the removal of Cyrus Mistry.
 Cyrus Mistry was removed as CEO on 24 th oct 2016. The removal of Cyrus
Mistry is termed to be legal as per the provisions of the Indian law.

25
What wrong Ratan Tata Did?
 Cyrus was not allowed to run the group as per his own; rather it was interfered by
the members of the Tata Trust Group which hold almost 66% of the shares of the
group’s parent company.
 Ratan Tata interfered a lot in the running of the company and Cyrus was not
allowed to work freely rather he was at all times put under the pressure of
working as per the wishes of Ratan Tata.
 Cyrus Mistry has provided the documents as evidence to prove that there was a lot
of interference by Ratan Tata in working of his office. As evidence, he had
provided the messages which were exchanged between him and Ratan Tata which
is more than 555 in number, which very clearly proves that there was a lot of
interference on the part of Ratan Tata.
 Nano Car which according to Cyrus was doing no good for the company rather it
was becoming a burden on the company but as the car was the dream project of
Ratan Tata Cyrus was not willing to stop its production which was costing the
company and the entire group at large.
 When Cyrus was appointed as CEO in the 2013 he was given suggestions but
later on these suggestions became assertions of rights under the Article of
Associations.

26
Against Ratan Tata’s Qualities
 Good Strategist
Mistry was appointed Tata Sons chairman in November 2011 on the basis of his
representation from Shapoorji Pallonji, the single largest shareholder in Tata
Sons.Ratan Tata is known to be a good strategist but he failed in the selection of
Cyrus Mistry.
 True Visionary
He has the quality of True Visionary but when Nano car was not giving any
returns he should have stop the production to save Tata’s from entering into
losses. This was done by Cyrus but Cyrus was not appreciated for that.
 Human relation
Cyrus Mistry was suppose to be given some freedom as he says that he was been
interfered by Ratan Tata in his work this effects Ratan Tata’s Human relation
quality unity of command and unity of direction.
 Cyrus Mistry was not a insider but the outsider, so he was not that much
acquainted with the TATA’S culture. Ratan should have taught about it before
appointing his as CEO.

27
Corporate governance in Infosys
Corporate governance is about maximizing shareholder value legally, ethically and on a
sustainable basis. At Infosys, the goal of corporate governance is to ensure fairness for
every stakeholder – our customers, investors, vendor-partners, the community, and the
governments of the countries in which we operate. We believe that sound corporate
governance is critical in enhancing and retaining investor trust. It is a reflection of our
culture, our policies, our relationship with stakeholders and our commitment to values.
Accordingly, we always seek to ensure that our performance is driven by integrity.
Our Board exercises its fiduciary responsibilities in the widest sense of the term. Our
disclosures seek to attain the best practices in international corporate governance. We
also endeavor to enhance long-term shareholder value and respect minority rights in all
our business decisions.
We continue to be a pioneer in benchmarking our corporate governance policies with the
best in the world. Our efforts are widely recognized by investors in India and abroad. We
have been audited for corporate governance by the Investment Information and Credit
Rating Agency (ICRA) and have been awarded a rating of Corporate Governance Rating
1 (CGR 1).
We are also in compliance with the recommendations of the Narayana Murthy
Committee on Corporate Governance, constituted by the Securities and Exchange Board
of India (SEBI).
Corporate governance philosophy
Our corporate governance philosophy is based on the following principles:
 Satisfying the spirit of the law and not just the letter of the law
 Going beyond the law in upholding corporate governance standards
 Maintaining transparency and a high degree of disclosure levels
 Making a clear distinction between personal convenience and corporate resources
 Communicating externally in a truthful manner about how the company is run
internally
 Complying with the laws in all the countries in which the company operates
 Having a simple and transparent corporate structure driven solely by business
needs
 Embracing a trusteeship model in which the management is the trustee of the
shareholders' capital and not the owner
 Driving the business on the basis of the belief, 'when in doubt, disclose'

28
Board composition
At the core of our corporate governance practice is the Infosys Board, which oversees
how the management serves and protects the long-term interests of all our stakeholders.
The majority of the board, seven out of 10, is independent members. As active and well
informed members of the board, they are fully committed to ensuring the highest
standards of corporate governance. In addition, the independent directors make up the
audit, compensation, investor grievance, nominations, and risk management committees,
bringing their valuable perspective to the board.
As a part of our commitment to follow global best practices, we comply with the Euro
shareholders Corporate Governance Guidelines 2000, and the recommendations of the
Conference Board Commission on Public Trusts and Private Enterprises in the US. We
also adhere to the UN Global Compact Program.

29
Qualities of Narayana Murthy
 NeverGive up attitude
In 1976, Murthy founded Softronics, a company that lasted a year and a half.
When he realised that his first venture wasn’t taking off, he moved on.
 Think Big
In 1981, a determined Murthy started Infosys with Rs 10,000 he borrowed from
his wife. In few years, Infosys went on to become one of the largest wealth
creators in the country.
 Concern for Employees
After the IPO, Infosys decided to share a portion of its equity with employees.
This helped them retain talent and gave employees a sense of ownership. Murthy
is proud of having given away stocks worth over Rs 50,000 crore to employees.
Make hay while the Sun Shines
 Giving opportunity for Juniors
Murthy’s decision to not allow founders to continue with the company after the
age of 65 set another standard for the company. This way, younger leaders at
Infosys had a greater chance at the top positions.
 Honest
Rich businesses were considered to be dirty in the days when the country had a
socialist bent. Infosys was a company which got rid of this sentiment. Murthy,
with his ‘no compromise’ policy on greasing palms and doing ethical business, set
the standards.
 Visionary
Murthy knew the importance of creating an image for Infosys. He invested in
creating a sprawling, world class campuses early on, bigger than any other
company’s headquarters in the country, that would make his global customers feel
like they were in a global office.

30
Corporate governance issue in Infosys
 Sikka, who had joined Infosys in August 2014, said that some distractions were
preventing the management's ability to accelerate the company's transformation.
 He did not mentions what those distractions were, Some of Infosys founders,
including N R Narayana Murthy, have alleged corporate governance lapses at the
firm and questioned the high compensation paid to Sikka and severance package
extended to certain former executives.
 The stand-off between the founders and management has been on for a few
quarters with both sides making public statements on these issues.
 Also, a letter was sent to the Securities and Exchange Board of India and the US
Securities and Exchange Commission alleging that the Israel-based Panaya
acquisition was overvalued and that some Infosys executives may have benefited
from the deal.
 Sikka, in a letter said that false, baseless, malicious and increasingly personal
attacks have been made over the last many quarters and these allegations have
been repeatedly proven false by multiple independent investigations. But despite
this, the attacks continued.
 He said that this issue has consumed hundreds of hours.
 A sharp increase in Sikka's compensation said to be the biggest flash-point. The
company says Sikka's cash compensation had actually gone down and the
increase has been primarily in RSUs (restricted stock units) and stock options,
which are directly linked to incredibly steep goals. The Infosys founders' policy of
low compensation worked as they had huge equity stock in the company which
paid handsome dividend.

31
Narayana Murthy dealing with this issue
Narayana Murthy Intervene
N.R. Narayana Murthy, the man who’s been asking all the uncomfortable questions,
poking around corners best avoided and in general making a nuisance of himself. At 71,
six years after hanging up his boots at the company he co-founded over three decades
ago, he was expected to switch off from Infosys and spend his days doing all the things
septuagenarians do, tending to their plants or reading to their grand children and be happy
with his multi-billion dollar holding that others were helping grow for him. Murthy was
always different from your average food-and-travel entrepreneur softened on a liberal
diet of easy money from VCs.
The salaries and privileges of top managers, There were salary hikes of 50-60% for top
managers at a time when the average increment in the company over the previous three
years had hovered around 6%. In most companies, these are accepted as a given without
any questions.
But Narayana Murthy did not overlook this situation he asked for investigation on this
matter of salary hikes of top management
He also asked to publish four reports in full and provide straight answers to the question
on the website of the company so that the shareholders who have paid for these legal
investigations have full access to the output of these legal firms

32
What wrong Narayana Murthy Did?
 Sikka is the first non-founder chief executive of Infosys; this is the first
mistake that Narayana Murthy has done.
 As per Sikka he was under continuous assault and made inappropriate
demands by Narayana Murthy such as asking for the appointment of specific
individuals to the board. In fact, employees said that 49-year-old Sikka was
stressed and that he was found with less joking and laughing in office.
 There were malicious and increasingly personal attacks on Sikka instead of
most steadfast support.
Against Narayana Murthy Qualities
 Visionary
Sikka was not a insider but the outsider, so he was not that much acquainted with the
Infoys culture.Narayana Murty should have taught about it before appointing his as CEO.
 Concern for Employees
Narayana Murthy did not give freedom to Sikka in his work. There was a constant
interference. This has lead Sikka to resignation.

33
Comparision
There is a crucial comparison between the two corporate governance issues.
 In the case of Tata Sons, the target was the chairman Mr Mistry .At Infosys the
whole board or the senior management, were the target for the founders.
 The Tata issue turned legal because there was definite action by the controlling
shareholders. In Infosys it was about the founders expressing their dissent on
certain decision them by the board.
 Tata Sons, the owner and quality shareholder Mr. Tata was pitched against In the
case of Tata Sons, the owner and quality shareholder Mr. Tata was pitched against
a chairman Mr. Mistry
 In Infosys, Narayana Murthy-led founders were largely responsible for
professionalising the organisation right from the time of inception.
 The issues were handled differently, what is to be appreciated is how quickly the
problems were resolved. At Tatas, the leader had to be replaced because of lack of
confidence.
 Infosys board was quick to address issues raised by the founders.

34
Conclusion
 Both the former CEO’S had good leadership qualities .They should have modify
their qualities as per the situation. As it can be observed in both cases that Mistry
and Sikka complained that they were not given freedom in taking their decision.
This mostly occurs because of different generation entrepreneur clashes.
 Boards should develop specific processes to address critical situations such as
leadership succession. Leadership succession is not an event but a process that
continues well beyond the entry of the new leader. It is succession management of
which succession planning is only one part. This is lacking in both the companies
as both former CEO’S were not able to appoint a perfect succession for their
companies. This is particularly important if the CEO is an outsider.
 An organization such as Tata and Infosys are built on a number of a core values.
CEO’S of the organisations should be those who believe in those core values and
who can stoutly protect them at any cost.

35
BIBLIOGRAPHY
Websites:
 http://www.managementstudyguide.com/business-ethics.htm
 https://www.azeusconvene.com/three-pillars-of-corporate-governance/
 http://www.tata.com/pdf/tcoc-booklet-2015.pdf
 https://www.slideshare.net/rahulkumar28c/ratan-tata-a-great-leader
 http://www.thehindu.com/business/Industry/corporate-governance-a-tale-of-two-
titans/article17408937.ece
 https://indiacorplaw.in/2017/09/tata-corporate-governance-episode-india-specific-
issues-concerns.html
 http://www.businesstoday.in/current/corporate/9-possible-reasons-behind-the-
removal-of-cyrus-mistry/story/238901.html
 http://trak.in/tags/business/2016/10/25/reasons-cyrus-mistry-removed-chairman-
tata-sons/
 http://www.businesstoday.in/current/corporate/9-possible-reasons-behind-the-
removal-of-cyrus-mistry/story/238901.html
 https://blog.ipleaders.in/a-case-study-on-the-ouster-of-cyrus-mistry-as-chairman/
 https://economictimes.indiatimes.com/tech/ites/five-reasons-why-ceo-vishal-sikka-
had-to-leave-infosys/articleshow/60114080.cms
 https://www.td.org/insights/conflict-and-generations-in-the-workplace

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