Introduction

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.

Corporate Governance has a broad scope. It includes both social and institutional aspects.
Corporate Governance encourages a trustworthy, moral, as well as ethical environment.

Benefits of Corporate Governance

1. Good corporate governance ensures corporate success and economic growth.

2. Strong corporate governance maintains investors’ confidence, as a result of which,
company can raise capital efficiently and effectively.
3. It lowers the capital cost.
4. There is a positive impact on the share price.
5. It provides proper inducement to the owners as well as managers to achieve objectives
that are in interests of the shareholders and the organization.
 6. Good corporate governance also minimizes wastages, corruption, risks and
mismanagement.
7. It helps in brand formation and development.
8. It ensures organization in managed in a manner that fits the best interests of all.

Need for CG in Telecom

Competition, deregulation and the technological revolution continue to change the way the
telecommunication sector functions. As a study commissioned by ITU and the World Bank
states: “Old business models and commercial arrangements are being abandoned or bypassed
while new ones emerge. An era characterized by regional monopolies providing plain old
telephone service is colliding with one that has multiple ICT [information and communication
technologies] service providers using IP [Internet Protocol], wireless and broadband
technologies.” [1] These trends, along with increasing globalization, unleashing market forces
and emerging and varying customer needs are changing the nature and complexity of disputes
that arise in the telecommunication sector.

Corporate Governance Practice in Idea Cellular

The Company is committed to maintain the highest standards of Corporate Governance. Your
Directors adhere to all the requirements as provided in Clause 49 of the Listing Agreement
which relates to Corporate Governance. The Ministry of Corporate Affairs has issued a set of
Voluntary Guidelines on ‘Corporate Governance and ‘Corporate Social Responsibility . These
guidelines are to serve as a benchmark for the corporate sector, and also help in achieving the
highest standard of Corporate Governance.
Board of Director

In accordance with the Articles of Association of your Company, Mrs. Rajashree Birla, Mr. M.R.
Prasanna and Mr. Arun Thiagarajan retire from office by rotation, and being eligible, offer
themselves for re-appointment at the ensuing Annual General Meeting of the Company. Brief
resumes of the Directors proposed to be re-appointed as required under Clause 49 of the Listing
Agreement are provided in the Notice of the Annual General Meeting forming part of the Annual
Report.

COMMITTEES OF THE BOARD

A. Audit Committee

The Company has in accordance with the requirements of Clause 49 of the Listing Agreement
and Section 292A of the Companies Act, 1956, constituted an Audit Committee for overseeing
the accounting, auditing and overall financial reporting process of the Company. The Audit
Committee acts as a link between the Management, the Statutory Auditors, Internal Auditors and
the Board of Directors to oversee the financial reporting process of the Company. The
Committee's purpose is to oversee the quality and integrity of accounting, auditing and financial
reporting process. The Committee also oversees the performance of the internal and statutory
auditors and reviews the internal audit reports and action taken report. The Committee also gives
directions to the management in areas that needs to be strengthened. The recommendations of the
Audit Committee are binding on the Board.

B. Remuneration Committee

The Remuneration Committee has been constituted for reviewing and recommending the
remuneration payable to the Directors and senior officials of the Company.

C. Shareholders'/Investors' Grievance Committee

In order to ensure quick redressal of the complaints of the stakeholders, Company has in due
compliance with Clause 49 of the Listing Agreement constituted a Shareholders'/Investors'
Grievance Committee. The Committee oversees the process of share transfer and monitors
redressal of shareholders'/ investors' complaints/ grievances viz. non-receipt of annual report,
dividend payment, issue of duplicate share certificates, transmission of shares and other related
complaints. In addition, the Committee also monitors other issues including status of
dematerlisation / rematerialisation of shares issued by the Company.

D. Compensation Committee

A Compensation Committee known as "ESOS Compensation Committee" has been constituted

in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999, for formulating and implementing an Employee Stock Option
Scheme of the Company.

The Committee oversees the formulation of ESOP plans, the implementation of the Scheme, its
administration, supervision, and formulating detailed terms and conditions in accordance with
the SEBI Guidelines.

The Compensation Committee comprises three Non-Executive Directors, of whom two members
are Independent Directors. As on March 31, 2010, the Committee comprised of Mr. Kumar
Mangalam Birla, Mr. Arun Thiagarajan and Ms. Tarjani Vakil. During the financial year 2009-
10, no meetings of the Committee were held. Circular Resolutions were passed for re-pricing of
options granted and allotment of shares.

E. Finance Committee

The Company has constituted a Finance Committee to approve matters relating to availing of
financial / banking facilities. The Committee comprises of two Directors, one of whom is a Non-
Executive Director. As on March 31, 2010, the Committee comprised of Dr. Rakesh Jain and Mr.
Sanjeev Aga. During the financial year 2009-10, four meetings of the Finance Committee were
held on April 24, 2009, July 23, 2009, October 26, 2009 and December 28, 2009.
The composition of the Finance Committee and the attendance of the members at the meetings
held during the year are as under:

F. IPO Committee

The IPO Committee of the Company was constituted to give effect to the Initial Public Offering
of the Company and issue of further equity shares. The Committee comprises of two Directors,
one of whom is a Non-Executive Director. As on March 31, 2010, the Committee comprised of
Dr. Rakesh Jain and Mr. Sanjeev Aga.

Awards

IDEA wins prestigious Golden Peacock Award 2008 for 'My Gang' (Mumbai, January 20, 2009)
Hon'ble Governor of Maharashtra Shri. S. C. Jamir and Former Prime Minister of Sweden Dr.
Ola Ullsten presented The Golden Peacock Award to Mr. Pradeep Shrivastava, Chief Marketing
Officer, IDEA Cellular. IDEA was selected as the winner under the "Innovative Product &
Services' category after an extensive quality audit of its processes, research and development,
and systems. Golden Peacock Awards, instituted by the Institute of Directors (IOD) are the
holy grail of corporate excellence in quality, corporate governance, corporate social
responsibility, innovation, training, environment management, ecological leadership and
business leadership.