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Amrit Singh Deo
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Amrit currently advises a portfolio of global private equity clients, financial services players & select global companies seeking growth in India. An Economics graduate from Delhi University, Amrit is an alumnus of ESADE Business School, Barcelona, Spain. Financial Communications advisor;... More
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  • Institutional Money & ESG Disclosure In India

    Over 650 global institutional Investors have signed the Priciples of Responsible Investing (PRI) about factoring in ESG (Environmental, Social, Governance) disclosure when making portfolio investment decisions. Simply put - if you want our money, be good (& show us how). Something like Santa.

    The kicker being, this Santa has always symbolized Capitalism. And he wants you to be Good. If you've only been a student of classical economics & considered profit-maximization as the holy grail, its time to enrol back into school. The incredulous reception to the centre mandating CSR spending & reporting is similarly, understandable. Not to speak of the Indian metals & mining companies - crying themselves hoarse with an 'its all mine' argument like a petulant child.

    Its time to acknowledge the broader trend. Corporates are being asked to pitch in as social citizens. And pitching in pennies/ paisas isn't enough.

    To be fair, there are plenty of role models in India - the Tatas, Birlas, Godrejs - have made significant contributions towards social institutions. The required mandate has just widened. Its not longer patronage, but a responsibility. For corporates, big or small.

    This means the CFO has to expand the definition of Financial and Investor Communication, to include ESG spending & its governance. This is a management mind shift as well as an organizational change - strategic in nature. ESG spending needs to be considered compliance & brought into the ambit of 'Risk Management' (the absence of ESG being the risk here). It's a long journey for Indian companies - we have industries/sectors which have thrived under the radar, without much scrutiny on their environmental or social impact. As cross-border M&As pick up, and international companies bring with them a more heightened awareness of their social & environmental responsibilities into India - it could re-position many Indian players who are ill prepared to adapt.

    Progressive Indian companies, who embrace this earlier, will be better placed to attract talent, supporters, customers & investments. Resistance is futile.

    Jan 26 3:34 AM | Link | Comment!
  • India‚Äôs Listed Companies & Disclosure

    India’s BSE has the most number of listed entities in the world (8500 - more than the Top3 market capitalized exchanges, NYSE, Tokyo Stock Exchange & London Stock Exchange, put together), in an under US$ 1 trillion capitalized equity market – that’s a lot of mid and small cap-Indian companies. In fact, mostly micro-caps when seen in dollar terms.

    Why would a small company in India rush to raise public money? Asked another way – we may ask what keeps micro/small companies from accessing the public equity markets in other markets? Cost of adequate disclosures & compliance seems to be single most significant factor. Continuing with the same thread, Indian managements of small companies are finding it simpler to raise public money, at a fraction of the associated costs in other markets. The pertinent question – is this a sign of efficiency or inefficiency?

    We take pride as an entrepreneurial people, creating value and building profitable businesses in hyper-competitive markets. This is the necessity that has spawned innovations like the Nano, the Akaash tablet & the lowest telecom tariff structure. Must this creative & exploratory streak continue into the capital markets & management of public money by management – this too is a pertinent question.

    To quote a distinguished management practitioner, what got us here is not going to take us ‘there’. Judging by the actions of the markets regulator, this is a more widely shared sentiment. For Indian managements, this is worth a pause. To ponder on the future. We are not going to grow by fighting over scraps. Cutting corners. If Indian companies are serious about seeing the Recession as a growth opportunity, to grow in international markets, raise their stature & command the respect of international institutional money – we have ‘open up’ and be a lot more communicative – raise disclosure standards, governance practices & engage more with investors. The traditional view has been to disclose only as much as mandated by regulation. This is a woefully inadequate view when global investors, international joint venture partners & even key talent are considering a long-term partnership with the company.

    Yes, there is an additional cost to greater disclosure & compliance. It’s a leadership requirement if Indian managements want to think beyond India. Ask $INFY.

    Jan 09 3:42 AM | Link | Comment!
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