"The directors on the board have been voted to power by the shareholders, and they need to have faith in the board on the business decisions taken. In case, a shareholder feels that the decision is wrong, they may vote against the directors concerned at the annual general meetings," said a legal expert, terming the Tata-TTL deal as "democratic" and "a prerogative of the board". According to a head of a consulting firm, however, while the deal has been undertaken well within the rules, it makes the issue of corporate governance much more complicated. "Corporate governance is a complicated issue in itself, and when it comes to differences of opinion among shareholders, it further complicates the issue," the consulting firm head added.
Concurred a senior non-executive director: "It may not have been done in a transparent manner, so to speak, as the fellow shareholder (the government) does not seem to have been taken into confidence before putting up such a proposal to the board." He added that since the open offer had just been concluded, the company should have kept shareholders in the know of what could be expected as business decisions/plans in the near future.
Telecom industry observers point out that there has been no detail on the valuation of TTL.
This company provides basic telephony services in the Andhra Pradesh circle and will commence services in four other circles shortly.
"Fundamentally, there has been nothing wrong about the investment and it is really a normal investment decision," these observers said. The real issue, they explained, is the rationale to put it in a company which is unlikely to register any profit for the next three years at least. "With the impending launch in the new circles, this period can only can get extended," they added.