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Best Managed Boards Interview article

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Hemant M. Nerurkar  

Tata Steel Limited

Q. How has your company ensured good governance at the board level?

A. The Tata Steel board has a very rich tradition and the board in many ways is like a friend, philosopher and guide to the company. It has helped us become a global company by giving us strategic direction. Simultaneously, the board is very particular about the Tata values, tradition and especially ethics. That is something that has always helped us to maintain high standards of governance.

Q. What processes do you follow and what has worked?

A. The Tata group, as you know, has adopted Tata Business Excellence as a model which has its own seven chapters on how to run an organization. That becomes a guiding philosophy and we improve on it. Most important are the Tata values and the Tata conduct. This is what distinguishes us from other companies. For instance, we have given up some lucrative assignments, simply because they did not fit in with our philosophy.

Q. Is there the fear that if independent directors have been on the boards for a long time, their independence could be compromised because of familiarity with the management? It may prevent them from asking uncomfortable questions.

A. Yes, but every coin has two sides. Fortunately, in the Tata group, we have many checks and balances to ensure that we do not interfere with the working of the independent directors. My personal view is that continuity helps.

The checks and balances include that each board member comes prepared, has knowledge on the subject and asks questions that are relevant and helpful to strengthening the business.

Q. Do you think the level of corporate governance in India can be raised?

A. The guiding philosophy of the managements and the boards is what matters. The quality of governance depends on the quality of people who sit on the boards, and the level of confidence they bring to the table.

Hemant M. Nerurkar

Managing Director

Tata Steel has a strong culture of governance built over generations of policies and processes that are strongly entrenched in the company. The sustainability of these processes is one of the key reasons for rating Tata Steel as having a Best Managed Board.

The board processes and constitution is robust and has the potential required for a global board. The board maintains high focus on compliance as well as structured reporting and communication with all the stakeholders which helps self-percolate the good culture of governance to the lowest levels in the organization.

It is one of the two Indian companies on the list of the World's Most Ethical Companies released by the Ethisphere Institute and also one of the first companies to implement social accountability standards.