Professional Documents
Culture Documents
Submitted by -: GROUP -8
Tanvi gupta
Parth Sarthy Garg
Saad Farees (251047)
Charuvi Singhal
Sanat Pandey (251054)
Acknowledgement-:
We would like to thank all of our friends for coming out and giving their individual view
of analysis that could be done to enhance the productivity of this project . Getting time off from their
work and giving us suggestions is highly appreciated
During the course of this project all the help that we have received from our friends, colleagues, teachers
and seniors was truly overwhelming for us as a group. We would like to thank each and every individual
that helped us in any way possible during the course of the project.
BY -:
Group 8
Table of Contents -:
S. No.
Description
Page Number
Introduction
4-5
1.1
5-6
1.2
6-9
1.3
1.4
10
1.5
11
1.6
11
Analysis
12
2.1
12 13
2.2
13
References
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Chapter 1: INTRODUCTION
Financial accounting (or financial accountancy) is the field of accounting concerned with the
summary, analysis and reporting of financial transactions pertaining to a business. This involves
the preparation of financial statements available for public consumption. Stockholders, suppliers,
banks, employees, government agencies, business owners, and other stakeholders are examples
of people interested in receiving such information for decision making purposes.
Financial accountancy is governed by both local and international accounting standards.
Generally Accepted Accounting Principles (GAAP) is the standard framework of guidelines for
financial accounting used in any given jurisdiction. It includes the standards, conventions and
rules that accountants follow in recording and summarising and in the preparation of financial
statements. On the other hand, International Financial Reporting Standards (IFRS) is a set of
passionable accounting standards stating how particular types of transactions and other events
should be reported in financial statements. IFRS are issued by the International Accounting
Standards Board (IASB).
Financial accounting and financial reporting are often used as synonyms
1. According to International Financial Reporting Standards, the objective of financial reporting
is:
To provide financial information about the reporting entity that is useful to existing and potential
investors, lenders and other creditors in making decisions about providing resources to the entity.
2. According to the European Accounting Association:
Capital maintenance is a competing objective of financial reporting.
The communication between a company and the environment is an integral part of corporate
governance, which takes place largely through financial and nonfinancial reporting. It appears,
therefore, that the information presented by companies in the annual reports is the main bond of
accounting and corporate governance. It has been noted in the literature that nowadays a reliable
financial statement becomes a heart of corporate governance.
CORPORATE GOVERNANCE
Corporate governance broadly refers to the mechanisms, processes and relations by which
corporations are controlled and directed. Governance structures and principles identify the
distribution of rights and responsibilities among different participants in the corporation (such as
the board of directors, managers, shareholders, creditors, auditors, regulators, and other
stakeholders) and includes the rules and procedures for making decisions in corporate affairs.
Corporate governance includes the processes through which corporations' objectives are set and
pursued in the context of the social, regulatory and market environment. Governance
mechanisms include monitoring the actions, policies, practices, and decisions of corporations,
their agents, and affected stakeholders.
New Companies Act introduces significant changes to the composition of the boards of
directors.
Listed companies and specified classes of public companies are required to appoint
independent directors and women directors on their boards.
New Companies Act for the first time codifies the duties of directors.
Listed companies and certain other public companies shall be required to appoint at least
1 (one) woman director on its board.
New Companies Act mandates following committees to be constituted by the board for
prescribed class of companies:
o Audit committee
o Nomination and remuneration committee
o Stakeholders relationship committee
o Corporate social responsibility committee
o Listing agreement Applicable to the listed companies
SEBI has amended the Listing Agreement with effect from October 1, 2014 to align it with New
Companies Act.
6
Clause 49 of the Listing Agreement can be said to be a bold initiative towards strengthening
corporate governance amongst the listed companies. This Clause intends to put a check over the
activities of companies in order to save the interest of the shareholders. Broadly, Clause 49
provides for the following:
1. Board of Directors
The Board of Directors shall comprise of such number of minimum independent directors, as
prescribed. In case where the Chairman of the Board is a non-executive director, at least onethird of the Board shall comprise of independent directors and where the Chairman of the Board
is an executive director, at least half of the Board shall comprise of independent directors. A
relative of a promoter or an executive director shall not be regarded as an independent director.
2. Audit Committee
The Audit Committee to be set up shall comprise of minimum three directors as members, twothirds of which shall be independent.
3. Disclosure Requirements
Periodical disclosures relating to the financial and commercial transactions, remuneration of
directors, etc, to ensure transparency.
One or more women directors are recommended for certain classes of companies
The Independent Directors are a newly introduced concept under the Act. A code of
conduct is prescribed and so are other functions and duties
Every company must appoint an individual or firm as an auditor. The responsibility of the
Audit committee has increased
Top management recognizes the rights of the shareholders and ensures strong cooperation between the company and the stakeholders
Additional Provisions
as the Companies Act of 2013. Promoters of the company cannot vote on a resolution for
a related party transaction.
Changes in Clause 35B The e-voting facility has to be provided to the shareholder for
any resolution is a legal binding for the company.
Corporate Social Responsibility The company has the responsibility to promote social
development in order to return something that is beneficial for the society.
company overnight. Dishonest and unethical dealings can cause shareholders to flee out of
fear, distrust and disgust.
10
11
Chapter 2: ANALYSIS
This chapter will analyse the corporate governance practices amongst the sensex companies and
small cap companies which is being done on the basis of collection secondary data.
This chapter focuses mainly on the in-depth analysis of the comparison between sensex
companies and small cap companies based on corporate governance parameters which is based
on the information taken from the annual report of the companies given on their respective
official websites.
Less likely to include a woman on the board Both Small Cap as well as sensex
companies have very less percentage of women in the board. The average percentage of
women in the board comes to about 16%. And it is also evident that about 10% of the
small cap companies have no woman director.
CEO is not an Independent Director None of the companies, whether small cap or
sensex company, has CEO as an independent director.
Size of Board Sensex companies have a larger board size as compared to small cap
companies. The average number of board members in a sensex company is 12 compared
to 8 in case of a small cap company.
Executive Director Executive Directors comprise of a quarter of the total size of the
board i.e. both in case of a small cap as well as a sensex company the average size of the
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executive directors is 25%. Only 30-40% of the companies have more than 25% of the
board members as the executive directors.
OthersSensex companies on an average hold 7-8 board meetings in a year and small
companies hold around 6 of them a year. Also during the study, it was discovered that
most of the directors had missed at least one board meeting.
2.2 Attaching the excel that we have worked on for analysis part -:
Analysis
Working.xlsx
13
References -:
We have collected the information from the annual reports of the companies which
were available on their respective websites , the websites are as follows -:
1- http://www.aimcopesticides.com
2- http://www.carysilkitchens.com
3- http://www.dabur.com
4- http://www.larsentoubro.com
5- http://www.52weeksentertainment.com/
6- http://www.aarccl.in
7- http://www.icicibank.com
8- https://www.onlinesbi.com
9- http://www.aartidrugs.co.in
10-
http://aryaglobal.net
11-
http://www.cipla.com/en
12-
http://www.hdfcbank.com
13-
http://www.kelltontech.com
14-
http://www.jmtauto.com
15-
https://www.infosys.com
16-
http://www.adaniports.com
17-
http://www.atfoods.com
18-
http://www.adityaispat.com
19-
https://www.hul.co.in
20-
http://www.tatasteel.com
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