1. Promoters reluctant to cede management control of firms: Assocham survey

Promoters reluctant to cede management control of firms: Assocham survey

Promoters seem to be reluctant to cede complete management control of Indian companies to professional boards and managers, says an Assocham survey of 155 chief executive officers.

By: | New Delhi | Published: September 10, 2017 1:44 PM
Promoters, Indian Company, promoter management, trust deficit, n r narayana murthy, us The survey also found that a significant number of promoters having more than 50 per cent stake in companies are not willing to bet fully on professionals. (Website screenshot)

Promoters seem to be reluctant to cede complete management control of Indian companies to professional boards and managers, says an Assocham survey of 155 chief executive officers. Against the backdrop of instances of promoter-management tussle coming to the fore, the survey also found that a significant number of promoters having more than 50 per cent stake in companies are not willing to bet fully on professionals. “78 per cent of the 155 CEOs both from professional and promoter driven firms, answered in the negative to when asked whether the promoters are willing to cede complete control of corporate India to independent boards and CEOs,” the survey said.

It said promoters who are holding over 50 per cent or even lower stakes are not willing to bet fully on professionals. “Trust deficit and the family pre-dominance were the two of the main plausible factors coming in the way of transformation of India Inc where the day to day operations are insulated from the principal shareholders or group of shareholders like in the US,” it added. Assocham Secretary General D S Rawat said that “one must give credit to N R Narayana Murthy for continuing with his belief that Infosys must be run by professionals despite the fact that the experiment has failed once”.

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