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  • CSR Audit vs Corporate Responsibility Index

    The Government of India is in the process of overhauling the Corporate Social Responsibility (CSR) framework. To ensure better compliance of CSR provisions, it is planning to move to an audit regime soon. While traditionally the role of the Ministry of Corporate Affairs has been that of a Facilitator and a Regulator, with the coming of the CSR mandate, it has now become a Developer as well, and through CSR investments it is taking part in socio-economic development of the country. And in doing so, it now wants to move from the softer to the stricter regime. It may be noted that for CSR violations during the year 2014-15 only, 254 companies are facing prosecutions as of now. This shows the commencement of a stricter regime. The idea is to add quality dimension to CSR investment of companies to ensure that there is actually a social impact of projects undertaken. In the recent times a lot of changes have been introduced in CSR-related law in the country. Spending on CSR is now mandatory and any amount remaining unspent has to be mandatorily transferred to the Government-designated funds. Henceforth there is no escaping the liability to spend on social causes for companies hitting the eligibility criteria u/s 135 of the Companies Act 2013. In addition, Impact Assessment (which is very much in the nature of a social audit), has already been prescribed for certain companies. Further, CSR 1 and CSR 2 forms have been introduced in order to bring more clarity and transperancy and in order to ensure due diligence with CSR provisions by eligible companies. To add to all these, penal provisions have also been introduced for non-compliant companies. To further give a fillip to all these initiatives, SEBI has also proposed Social Audit and Social Stock Exchange to list social entities carrying on social developmental activities. Furthermore, there are also discussions about introducing a public rating-based evaluation of CSR performance of companies, which seems to be somewhat in the line of Corporate Responsibility Index. In this article I have discussed both CSR Audit and Corporate Responsibility Index in some detail. What is CSR Audit? Corporate social audit is an assessment of a company's performance on its corporate social responsibility objectives. In a company’s CSR activities bucket if there are measurable goals, the CSR Audit helps it measure the extent to which the goals were successfully achieved and how far the company succeeded in meeting the expectations of its stakeholders w.r.t. its social and environmental responsibilities. It helps measure the company’s actual social performance against the social objectives it had set for itself, and how the management’s decision making, mission statement and business conduct are aligned with social responsibilities. CSR audit also helps in discovering the interests and objectives of a company’s employees and stakeholders. In other words CSR Audit measures the social return on CSR investment. Companies that give importance to their social responsibility would like to know how well they have performed. In such cases CSR Audit can help it measure its actual social performance against the social objectives it had set for itself. Research has shown that integrating CSR in business strategy contributes to the following: Positive brand awareness Increased employee satisfaction Reduced operating costs Improved community relations Corporate accountability Enhanced investor reliance While day to day monitoring of CSR activities may be difficult for organisations, evaluation of its social responsibilities vis-à-vis activities undertaken are also important. This is due to many reasons. First, the management wants to assure itself that activities as planned are being rightfully taken up and effectively implemented. Second, because governmental priorities and social needs change, which calls for attention of corporate citizens. Third, social responsibilities and activities are open to intense public scrutiny. Fourth, it involves money and the investment in social responsibility should not go wrong. Hence it becomes important to do periodic evaluation to know whether the company is hitting the mark, or falling short of the expectations of stakeholders and its own objectives. Such periodic evaluation would be termed as CSR Audit. It is not mandatory in India, but many companies do voluntarily go for such evaluation and impact assessment of its social initiatives. How and where to start? As long as CSR Audit is not mandated, a company may choose to have the auditing process conducted internally by the employees. To have an independent opinion, a company may also go for audit by an outside consultant who has relevant expertise. This will also add value and bring credibility to the evaluation. Stakeholders and the public in general will also have more reliance on an outsider’s audit and opinion. CSR Audit stages The following would be the suggested steps for CSR Audit: Definition of the depth and scope of the audit assignment based on the goal of audit Launching the assignment to employee(s) or an external agency Interviews of all the CSR stakeholders to understand the impact Analysis of all the CSR activities and assessment of social performance Comparison with benchmarks laid by leaders in the industry as also companies in other industries that are complying with similar social responsibilities If some projects have failed, the reason therefor Where projects have been successfully executed, how they could be made better Delivery of the Audit Report Does Your Company ‘Walk-the-Talk?’ This would mean evaluating whether the company strictly follows the CSR guidelines and objectives laid by it (as also the legal requirements in the Indian context). CSR Stakeholders Government – Adherence to legislations, Information Disclosure, & Environment Protection Employees – Safety, Health & Environment Customers – Quality control & Customer satisfaction Shareholders – Proactive communication & Information disclosure Suppliers – market information exchange (valued business partners) CSR Audit framework To demonstrate good corporate citizenship, companies in India can voluntarily go for CSR Audit and in the absence of any specific Audit guidelines or auditing standards, companies may report in accordance with a number of globally accepted CSR reporting standards that include: AccountAbility’s AA100 standard Global Reporting Initiative’s Sustainability Reporting Guidelines Verite’s Monitoring Guidelines Social Accountability International’s SA8000 standard Green Globe Certification / Standard The ISO 14000 environmental management standard The FTSE Group – FTSE4GOOD Index The United Nations Global Compact – Communication on Progress (COP) Report The Audit Report On completion of the CSR audit, a company may choose to keep the report for use of the management only, or make it public. Some companies come up with a periodic CSR Report and they may choose to publish the audit report in it. The same may also be made available on the website for the knowledge of all the stakeholders in general. For listed companies this report is all the more important to make public. For some companies the audit report may be just a document helpful in monitoring and evaluating the company’s social performance, for others it may be a means of judging the external environment to find out as to how vulnerable the company is. For yet others the audit report is helpful in gaining an edge over competitors. Some companies may decide to exclusively use the Audit report for internal training purposes only towards the end of bettering its future social performances. Based on a company’s audit findings, the management may brainstorm on how to do the CSR projects better in order to have greater impact and how to select projects in order to strategically set the company apart. It may focus on areas that need improvement and those that may be carried on the way they have been done. The audit report may also focus on the community issues that are likely to affect the company’s business and what role the company would like to play in resolving them. The management may also like to rework the timeline for project implementation. Benefits of CSR Audit There are many benefits of getting a CSR Audit done, even if not required by law. Not only does CSR Audit provide information to analyse the performance of the company’s social projects it also helps to single out the areas that need improvement to achieve the desired organizational goals. The cost incurred in getting the audit done may thus be rightfully treated as business expenditure. The following are some of the key benefits a company may derive from the audit: Helps lower the chances of failure of CSR projects Helps plan the proper implementation of the programme Determines the long term impact of social projects Assesses the impact of the organization on the society Provides important data to communicate to the stakeholders for positive impact Enhances the efficiency of operations by lowering loopholes, bureaucracy and corruption Helps to ensure optimum utilisation of available resources including manpower Brings awareness among management and employees for using sustainable approach in their work Helps reduce the operation costs in the long term Serves as a way of communicating with various stakeholders Helps identify unproductive projects vis-à-vis the productive ones Ensures that CSR projects are not duplicated CSR Audit in India As of now the CSR Audit is not mandatory in India. But discussions are going on in this line for introducing CSR Audit. Audit of welfare projects have already been initiated with teams headed by eminent persons. A Government level CSR Committee is expected to be formed in this regard and it is expected to have eminent person, technology experts and NGO representatives on board. The Committee will ensure compliance of CSR law. Since discussions are at the very initial stage, it is not clear as to what type of audit will be proposed for CSR. It may be in the form of an audit by third party agencies (like Statutory Audit, Secretarial Audit and Cost Audit) or a Social Audit in the form of projects rating by the society. Further, it is yet to be seen whether the audit will be in the form of a compliance audit like the examples stated earlier, or will it be audit of impact assessment of projects only. Ideally, it should be a combination of both. What is Corporate Responsibility Index? It is a strategic management tool that is aimed at enhancing the capacity of businesses to develop, measure and communicate best practice in the field of corporate social responsibility. This is done through benchmarking corporate social responsibility strategy and implementation process. The CR Index was created by more than eighty leading businesses in the UK and Business in the Community, which is a unique movement of 700 member companies committed to continually improving their positive impact on society. Launched in 2002, the CRI provides a standardized method and question set through which companies can report on their ethical and environmental performance, and the extent to which responsible business is integrated into their strategy. It does not cover the normal business operations of the company. At present the CRI is in the form of an online questionnaire, where the index covers four areas: corporate strategy, integration, management and impact (which covers six environmental and social impact areas) with questions on everything from diversity policies to carbon emissions reduction goals. Points are awarded to companies for individual questions from which they are given percentage scores for each area. Then the total is drawn to find the company’s overall percentage score. Thereafter the performance bands, viz. Bronze, Silver, Gold, Platinum or Platinum Big Tick, are awarded to the companies. Continued high scoring year after year would suggest that a company is maintaining commitment to a responsible business agenda. The Questionnaire is devised in such a manner that it would encourage more and more companies to participate. It is a big challenge to keep the questionnaire detailed enough and at the same time not making it boring. While the existing CRI is a questionnaire-based, the same may also be made social audit-based. Similar data about a company’s performance may be gathered from the public which can rate the projects of companies on the lines of hotel or film ratings online. The government of India is probably looking at introducing this kind of a rating at the moment as per the latest reports published. Benefits of Corporate Responsibility Index Whether incorporating the Corporate Responsibility Index in Annual Financial Statements would be beneficial for a company or not needs to be seen. But apparently, the following would be the benefits of CRI: Simple exercise resulting in evaluation of CSR projects The index is easy for stakeholders to understand and have an idea about the company’s performance Involvement of the public at large indicates zero bias Companies will tend to be more responsible if the grading is in the hands of the society Duplicity, delay and inefficiency of projects may be checked Chances of failure of CSR projects will be lowered Long term impact of social projects can be assessed The impact of the organization on the society can be evaluated Optimum utilisation of available resources including manpower will be ensured There will be awareness among management and employees for using sustainable approach in their work. There will be reduction in the operation costs in the long term Conclusion For a country like India, mandatory CSR seems to be a step in the right direction. But the codification is definitely poor. We are in a Trial and Error phase with not much of specific guidelines to follow. The coming years will see a lot more stringency and clarity of provisions. If any monitoring mechanism like CSR Audit or Corporate Responsibility Index is introduced, CSR law compliance will also shoot up. Until then we can ‘Wait and Watch’.

  • Professional Liability Insurance for Company Secretaries

    Introduction Professional liability insurance is a type of commercial liability insurance. It is meant for the protection of professionals from any probable claims of clients or third parties in future. Such insurance is for services exactly what product liability insurance is for products. It insures an individual or company in case of any claim raised by a third party for negligent work, errors or omissions, or any wrongful deed in the course of providing any professional services. Like other insurance products, such insurance also comes with the guarantee of hedging against all uncertain risks and contingencies. The idea is to protect professionals from liability arising from an unintentional error or negligent act, inadequate and not up to the mark work as conceived by the client and it provides coverage of the defense cost in case a client or third party brings up any litigation. Various nomenclatures In various fields different nomenclatures have been used for #ProfessionalLiabilityInsurance. It is more popularly known as Errors and Omissions insurance or simply E&O insurance, but when it relates to professionals from the medical industry, it might also be called Medical Malpractices Insurance. In India, some insurance providers call it Professional Indemnity Insurance. Because of the identicalness of meaning, the terms professional liability insurance and #E&O insurance have been used interchangeably in this article. Professional liability insurance: The Rationale behind Professionals have specialised knowledge and expertise to deliver services in a specific area and for that they are hired by clients. They are expected to take due care and exercise proper diligence and produce the best results for the clients by using the highest level of efficiency in conduct of their duties. But no one is perfect and therefore mistakes will be committed. So they say “To err is human…” and the same holds true almost in every business transaction. The chances of errors, mistakes, omissions, negligence etc. are not ruled out in such transactions and such an act may cause financial losses to the client. Consequently the aggrieved client may sue the professional, who may be an individual or a company, for damages. Such insurance cover saves the insured from bearing this cost and the loss is transferred from his balance sheet to that of the insurer. After all even if the professional is not guilty, litigation is not only expensive but also time consuming. Time is money. Hence, not buying an E&O insurance implies he is taking a serious financial risk. Examples of Professional error The number of possible professional errors is infinite. While some of them may be insignificant some might have grave consequences. The following are some examples of professional error from various fields with varying degrees of implication: A transporter sending a valuable and time sensitive consignment to a wrong destination. There is an intangible loss of reputation for both the professional and the client. In such case, who will pay for the loss? And what about the loss of future business from this client. A plastic surgeon destroying the face of a client. This need not be intentional; there is nevertheless huge loss to the client. Selling a virus affected software to client and causing break down of his entire computer system. A wedding manager booking the reception hall on the wrong day and guests turning up on the wrong day. If so happens it costs the client not only money but also injury to reputation. That apart, the mental distress of the bride and the groom is beyond repair. A financial adviser advising a client to buy certain stock stating that its price is likely to increase, but the stock price decreases and the client loses a lot of money. Out of the above cases of professional errors, while some of the professionals might just be lucky to escape a lawsuit from client, others may not be. It is possible that some clients will at least sue the professional. Professionals covered Generally professional liability insurance covers professionals like Chartered Accountants, Company Secretaries, lawyers, financial planners, accountants, doctors, dentists, physiotherapist, insurance brokers, real estate brokers and agents, investment advisors, computer hardware and software professionals, website developers, surveyors, advertising professionals, architects etc. A professional should consider buying such insurance policy if there is the slightest possibility of his clients or third parties suing him in the court for damages against wrongful commission of his duty or any error or omission or negligent work. Costs that are covered by the insurance E&O #insurance covers the entire cost of defense or settlement including legal fees and court cost up to the limit specified in the insurance policy. However fines and penalties are not covered. Again only civil liability claims are entertained by such insurance and any liability arising from an act of criminal nature, like something illegal, is not covered. Also not covered is any claim arising from a mala fide act or an intentional wrong committed. Like all other insurance policies, the E&O #insurancepolicies also cover a certain period of time and claims made during the policy period only are entertained. Claims from any services rendered before the commencement of the policy are not accepted. This concern acts as a positive incentive for the insured professional or company to keep renewing the policy from time to time. E&O Insurance Exclusions In general, a professional liability insurance (PLI) policy does not cover the following: Intentional wrongs and intentional violation of law. Dishonest acts Services provided by insured under the name of another entity not named in the policy When one insured person sues another co-insured Infringement of copyright, patent or trademark infringement Physical harm or injury to another person Damage to property Defamation - Libel or slander Act creating pollution Malicious prosecution A liability undertaken in a contract that would not have been there without the contract Fines, penalties or damages Cost of premiums The #premium cost of E&O insurance policies will vary from professional to professional and from insurance company to insurance company and factors like type of business, location, claims history of the individual as well as the industry in general etc. Claims history is important, but equally important is the fact that the professional might not have had any claims earlier merely because he was lucky with clients. Therefore it is equally important to see why a person did not have any claims. Was it because he was really providing good services? And if he has had claims, what steps were taken to ensure non-repetition of similar errors. For this depending upon provider, a provider may ask for copies of contracts, details of quality control measures adopted, method of documentation etc. or just nothing but a properly completed application. PLI in the presence of Business General Liability insurance General liability insurance policies entertain claims with respect to physical loss or damage to property or personal injury only. But a loss arising from a professional service taken does not necessarily take any of these forms. Example of a loss arising out of #professionalservice taken but not belonging to any of the above classes is the loss of expectation. When a professional had promised or purported his services to achieve a certain pre-specified standard and the client to achieve a certain result based on that but due to negligence of the professional, the result was under-achieved, there is loss of expectation on the part of the client. Similarly if an investment consultant advises a client to buy a certain stock because he thinks that these stock prices are likely to go up substantially and on faith of his expertise, a client invests a lot of money but the stock prices come down, the disappointed client feels cheated. He has not suffered any bodily injury. To take another example, a website designed may not be as effective as expected, but it does not cause any damage to property or body of the client for whom it has been designed. But nevertheless, there might be financial losses to the clients due to poor quality of services rendered by the professional. The general liability insurance will not come to help the insured when he makes a claim for neglect or improper advice. #BusinessGeneralLiabilityInsurance also does not cover disputes relating to desired contract performance nor any claims giving rise to professional liability while the chances of suits by aggrieved clients against professionals for the mere reason that an act could not fetch the desired or promised outcome are not ruled out in today’s professional scenario. Needless to say, business houses and individual professionals not taking such a cover do take up huge personal risk. The rationale is simple, despite undertaking due care and exercising proper diligence, chances of inadvertent mistakes and unnoticed errors are never wiped out. This insurance cover also protects an individual or company from claims arising out of errors or omissions of any employee or independent contractor hired. These apart, the insurance also protects professionals from loss of clients or loss of reputation and goodwill. Professionals who are most prone to risks are those from the financial sector. When advising a client to invest in certain funds, a financial consultant or investment advisor makes them aware of the risks involved, but in reality no matter how diligent he has been and no matter how good advices he has given to his clients, disappointed clients always come up with lawsuits even if there be no strong ground. If the decision of the court goes against the professional, the financial cost to him is likely to be exorbitant. Even if the court’s decision is in his favour, the court fees may swallow up his entire professional earnings from the particular assignment. E&O insurance is therefore vital. While pricing the premiums, the insurance company pays attention to litigation history of the insured and accordingly insurance premiums may be quite on the higher side for those with a track record of many claims. They are also likely to have less favourable policy terms from the provider. Appropriate time to buy the policy Buying PLI insurance policy is an effective way of risk management. The ideal time to take such a policy is at the time of commencement of rendering professional services. Every business is exposed to some kinds of risk. It is definitely worth the pain to identify all those risks afore-hand and formulate an ideal risk management strategy. For professionals belonging to certain areas, e.g. the medical professionals, the errors and omissions insurance is compulsory in some countries. Before starting to render professional services against fees, a professional has to check up the legal provisions to see whether or not he needs a compulsory E&O insurance. If they forget, there are no worries at all as most clients are quite aware of their rights and before starting to do business with a company or professional, they generally put a condition on them to take the insurance. Taking up E&O coverage is also an important criterion for bidders of various government contracts. However, even if a company or individual is not legally required to have this insurance coverage, it is nevertheless wise to do so. Insurance is definitely expensive for individual practising professionals. If they are working with micro level clients that entail limited risks they do not need to bother about E&O insurance. But those working with big clients on high risk projects definitely need cover. So the test is if the professional is aware of and comfortable with risks associated with his services, he/she may do without insurance. However, as business grows, it is important to make fresh necessity analysis for insurance. Standard Policy Format There is no standard policy format for PLI or E&O insurance policies. A lawyer, a doctor, a #companysecretary and a software engineer – all as professionals are exposed to risk, but their individual risks are different from each other’s. Therefore, the same ‘standard’ policy will not work for all these professionals. In other words there is no ‘Free Size’ policy fitting all. Each policy has to be read carefully to see that the specific risks of the professional are covered. For this a professional needs a clear understanding of what kind of risks he is exposed to. He then has to find a policy that addresses most of the risks, if not all. Those risks that do not get covered should be regarded as a part of business risk or managed in some other way. A word of caution Buying professional liability insurance is not a license to start neglecting one’s professional duty. A professional needs to diligently follow certain steps to prevent the problems before they occur. This will help mitigate claims: The need for written contracts cannot be undermined. A professional should always stress upon having a written contract clearly specifying the standard of service, what will be done, what will not be and what the fees for the service will be. This will leave no room for abnormal expectation. Keep communication alive with the client throughout the assignment and help the client keep the expectations realistic. For assignments having a larger financial implication, it is better to have quality control in place by using internal and external audits regularly. False promises, misleading information or abnormal guarantees by professionals are the cause behind the majority of lawsuits against professionals. A professional should never guarantee anything over which he does not have complete control. And finally, there is nothing like keeping a check on errors and omissions. It is necessary to reduce everything into writing and getting them authenticated. This will substantially reduce risk of lawsuits. Company Secretaries in Practice The profession of company secretaries entails a lot of risk and there is hardly any doubt on that point. It is possible for aggrieved clients to litigate. Suits may also be brought up for errors and omissions leading to financial losses of clients. To take examples of a few areas of work of #practisingcompanysecretaries that bear chances of risk: secretarial audit reports, compliance certificates, corporate governance reports, certificate issued for the purpose of issuing prospectus by a company, certification of e-forms etc. In these documents and certificates there are definitely chances of negligence, oversight, errors, unintentional misstatement and omissions and the same might create ground for suits in future from clients and third parties. From the above discussion it is clear that Practising Company Secretaries also need protection with such insurance cover. Until the publication of my first article in this regard (2011), a cause for concern for our fellow professionals was that the profession of company secretaries was not recognized by any of the India based insurance providers as a profession bearing business risk and that an aggrieved client may sue the practising company secretary for negligence in his work. Almost all the providers of Professional Liability Insurance in India at that point of time provided the cover to chartered accountants, lawyers, engineers, architects, financial and management consultants, doctors, dentists, and other medical professionals like physiotherapists, but none of them had enlisted company secretaries as beneficiaries. I am happy to see that my work in this field and many articles relating to the need of such insurance cover for CS (2009-2012) has borne fruit and today many Insurance providers provide coverage to Company Secretaries also. That’s indeed good news! Concluding remarks Developed countries of the world have been much creative and have gone a long way in devising newer and more useful insurance products that have been launched from time to time with much success. In India, Insurance companies have done their best to mimic them with more or less success. For a decent number of years numerous articles in a plethora of journals and newspapers have boldly stated that “insurance market in India is still at a nascent stage…” and that we have a long way to go. But we do not any longer need to take cover under this blissful ignorance. The insurance market in India has come a long way in the last decade introducing many customized products for various types of beneficiaries. However, there is still a long way to go as far as awareness about them is concerned. The Professional Liability Insurance schemes have been launched by many premier insurance providers in India, but the list of beneficiaries is still far less exhaustive as compared to their western counterparts. Many professions still do not feature in the list of people eligible to take the cover. Such schemes have, therefore, to go a long way before they gain the required popularity. So said, we professionals also need the foresight to understand the risks we are likely to face in future and take steps ahead of time. Such type of insurance is a necessity for professionals like us. An institutional approach by #ICSI to getting its members insured in a structured manner may also go a long way in strengthening the profession. _____ More than a decade ago two master articles were authored by me on the same topic as follows: "Hedging against contingencies with Professional Liability Insurance" in EIRC Newsletter, October 2010 "Professional Liability Insurance - Desideratum for Company Secretaries" in Chartered Secretary, July 2011 Both these articles have have played a major role in the expansion of beneficiaries by most Insurance companies to include Company Secretaries.

  • Social Stock Exchanges: Scope for Professionals

    Social Stock Exchange (SSE) is one of the newest concepts introduced in India by SEBI recently. It opens up a whole new horizon for Social Entreprises (SEs), gives more scope of creative investment to socially aware investors and also increases the scope for professionals apart from being a step in the right direction for social development. Listing in a stock exchange provides transparency and this helps investors to make informed decisions about where to invest through public scrutiny. When it comes to disclosure of necessary information, good governance, due diligence and transparency, there is a huge difference between a listed and an unlisted entity. For unlisted entities not enough information is available in public domain. Social enterprises (SE) comprise a very large part of the ecosystem in the country. But these non-profit organisations are unlisted entities resulting in their inability to tap the capital market. There are investors interested in contributing towards social causes in such entities, but due to information about these entities being in the oblivion, such noble intentions often do not see the light of the day. To fill this gap, the Securities and Exchange Board of India (SEBI) has recently come up with the idea of creating a Social Stock Exchanges. The #SSEs will operate like other stock exchanges and SEs will be allowed to list their securities in this exchange. These securities can then be traded by the public and investors interested in investing in social entities will have the information and clarity about them. From the point of view of financial inclusion this initiative is in the right spirit. Social entities literally struggle to get funding for their activities. It may be noted that the idea of encouraging impact investment and getting social returns was introduced in the country by the 2019-20 Finance Budget. During the two years of pandemic that followed the massive work of the social enterprises were brought to the fore and concern about their need for funding got importance thus resulting in this new initiative launched by #SEBI. For investors with social awareness, it is going to be a new investment opportunity. SEBI’s Report on Social Stock Exchanges In 2021, SEBI’s Technical Committee came up with the Technical Group Report on Social Stock Exchange. Annexure I to that Report contained the Taxonomic classification of areas and sub-areas for social objectives. It contained 15 broad categories of social welfare activities. Some of these are eradication of hunger, poverty, malnutrition and inequality, promotion of healthcare, gender equality, education, employability, ensuring sustainability, protection of natural heritage, promoting rural livelihoods and so on. Listed SEs may choose from equity, zero-coupon bonds, mutual funds, social impact funds and development impact bonds to raise capital through the SSE. The social entities will be required to make necessary initial disclosures in order to get listed. Once listed, they will be required to submit financial statements, reports and social impact disclosures on a regular basis in order to provide the much needed clarity to their investors. SEBI will monitor the due diligence, reporting and disclosures of the listed SEs. There will be strict governance norms for them to comply. Although the listed SEs will enjoy tax benefits, they would be subjected to increased compliances, mandatory social audits and continuous disclosures encompassing financial, governance and social impact aspects. The detailed SEBI guidelines on listing and trading of such securities are awaited. But it is expected that they will be pretty much similar to normal securities in the normal stock exchanges. Only that since these are not-for-profit enterprises, the securities listed and issued by them will probably bear no dividend or interest. So an investor who has invested in some zero-dividend securities can get them redeemed at face value or traded value whenever he/she wants to and the same may be purchased by another trader. And the cycle goes on. It may also be possible for an investor to make a one-time donation without expecting anything in return. The SSEs will guarantee social investors the liquidity they desire. Only the detailed SEBI guidelines will be able to clarify these nitty-gritties. SEs eligible to get listed The question arises as to which SEs will be listed in these SSEs. The answer is simple. Entities with various social causes as their primary objective who are in need of funds will list themselves in SSEs. It may be noted that both non-profit organisations and for profit organisations with social objectives can get listed. In order to be listed, 67% of an SE’s activities should be eligible social welfare activities. Foundations owned by companies, political or religious organisations, professional or trade associations etc. will not be permitted to list their securities on SSE. SEs and their current funding As of now SEs mainly receive their funding from the CSR budget of eligible companies u/s 135 of the Companies Act, 2013. They also receive other philanthropic donations, both from institutions and individuals. The introduction of SSEs will mean that SEs will now be subjected to stricter regulation and closer monitoring and required to make regular disclosures w.r.t. to their activities and transactions entered into. This move will be a blow to corporates who form trusts in order to evade taxes. Diversion of funds to trusts in the name of mandatory CSR will now be under strict watch of #SEBI for listed SEs. However, for unlisted SEs, there’s no change except that some serious investors will now prefer only listed SEs for routing their social investment. Scope for professionals #Professionals will have a big role to play in the coming days in work related to the Social Stock Exchange, Social Entities, listing and the related #compliances. Social Audit is being introduced for SEs, both as a precondition for listing and as a part of regular reporting with the SSE. What is Social Audit? As per the report of SEBI’s Technical Committee as stated above, Social Audit refers to the part relating to financial audit, and the part relating to non-financial audit of the Report pertaining to Social Enterprises governed by SEBI. A more detailed definition is available from UN’s Food and Agricultural Organisation (FAO). According to it ‘Social Audit is a way of measuring, understanding, reporting and ultimately improving an organization’s social and ethical performance. A social audit helps to narrow gaps between vision/goal and reality, between efficiency and effectiveness’. It values the voice of the stakeholders and creates an impact upon governance. It focuses on the ever neglected issue of social impact. It aims at creating awareness among beneficiaries and providers of local social services. It promotes collective decision making, shared responsibility and creation of social capital. Who is a Social Auditor? A #SocialAuditor (SA) is a person, firm or institution for the purpose of #SocialAudit of a Social Entreprise governed by SEBI. As for the financial part of the Social Audit it implies a person who is a member of the Institute of Chartered Accountants of India (ICAI), holding a Certificate of Practice. With respect to the non-financial part of the Social Audit it includes a person who is a post-graduate from a university recognized by the UGC with 3 years’ experience in development sector or a graduate from a university recognized by UGC with 6 years’ experience in development sector, or a #CharteredAccountant, a #CompanySecretary, or #CostAccountant, or any other accredited person/agency meeting the eligibility criteria as specified. Global scenario #SocialStockExchanges have been set up in the past in countries like the UK, Canada, Singapore, South Africa, Brazil, Portugal, Jamaica etc. As on date only the SSEs in the UK, Canada, Singapore and Jamaica are still operating. The Technical working group at SEBI has, while preparing the Report, addressed the various regulatory loopholes and drawbacks that led to the downfall of the SSEs in other countries. Hence, we must keep our fingers crossed for success of SSEs in India. However, there is no denying the fact that the measurement of social impact in numbers while analyzing the Social Return on Investment (SRoI) for investors, auditors and regulators continues to be a big challenge. Grey areas Most NGOs today are either trusts, societies or section 8 companies. Whether Trusts and Societies will also be allowed to list themselves on the SSE or they will need to convert themselves into a section 8 company is not clear. Since the concept is in a nascent stage, it is difficult to assume anything with much precision now. There are several grey areas that need elaboration, but that does not take away the credit from SEBI for coming up with this fantastic new concept that will bring in the much needed creative financing support to this segment that will directly impact the society in a positive manner. Conclusion In my opinion, this new initiative will also achieve another objective - exposing NGOs with financial irregularities. Since the process of listing will be tedious and elaborate with huge documentation and disclosures it is expected that only those NGOs that have clean books and record will finally get listed in the SSE. This will also help investors to put their money in the right place.

  • Corporate Governance - An Economic Perspective

    “In a more globalized, interconnected and competitive world, the way that environmental, social and corporate governance issues are managed is part of companies’ overall management quality needed to compete successfully. Companies that perform better with regard to these issues can increase shareholder value by, for example, properly managing risks, anticipating regulatory action or accessing new markets while at the same time contributing to the sustainable development of the societies in which they operate. Moreover these issues can have a strong impact on reputation and brands, an increasingly important part of company value.”- reported in UN Global Compact Financial Sector Initiative, 2004. There is an abundance of write-up on corporate governance in various journals and newspapers particularly in the wake of major corporate frauds and scandals across the past one and half decades. Conventionally, corporate governance is understood as the plethora of rules, regulations, customs, policies, laws and guidelines the compliance of which is vital as they affect the way of administration of a company to a great extent. It binds the company in a relationship with the stakeholders like the shareholders, directors, employees, customers, creditors, suppliers and the society at large. Because the directors and officers of a company are bound by their fiduciary duty towards the stakeholders in general, in controlling the management of the company they need to use good business practices and have accountability and integrity. However, while the above is the traditional way of defining corporate governance, a large many other viewpoints of corporate governance is also available and a lot of research work has been involved on the same over the years. In the following paragraph I have taken a different view of the concept and made a modest attempt at analyzing good corporate governance as an indicator of economic efficiency. Economic theories of Corporate Governance Ideally, to narrow down the meaning of the term ‘corporate governance’ into a bunch of mere rules, regulations, policies and laws would be doing injustice to this much researched concept. The boundary of this topic is vast. An economic analysis of it has led to a great debate between two conflicting notions of corporate governance and accordingly two theories have evolved: the shareholder theory and the stakeholder theory. While the former is a narrower version, the latter is much wide in scope. As per the restricted shareholder theory the main aim of an organisation is to maximise the wealth of shareholder who are the real owners of it. This theory stems from the traditional economic concept of ‘principal-agent’ or ‘Agency contract’ as the source of existence of companies. A ‘principal-agent’ relationship arises when the owner of an organisation does not manage it himself. In case of companies the owners or shareholders appoint persons to manage and control the affairs. Here the shareholders are the principals and they appoint directors as agents to run the company on their behalf. The arrangement is mutually beneficial. Shareholders in general lack specialized business knowledge that goes behind generating large returns on their investment and maximising their wealth, and managers may lack the fund which the former provide them with. For maximisation of shareholder net wealth what is required is the optimum allocation of resources, putting them to most productive uses, etc. Hence, it is the duty of the directors and management of the company to see that the organisation is run on the best possible manner in the interest of shareholders. However, due to this separation of ownership and control, shareholders who are the true owners of a company, do not control it, the control rather lies in the hands of the managers and directors who do not own the organization. Under this theory, the main problem in corporate governance is this separation that fuels divergence of interests and the directors may divert from the profit maximising aim and be rather interested in maximising their self interest like increasing their perks and salaries, their reputation (which may be at the cost of shareholder benefit), diversion of company assets for personal uses etc. Such a divergence of interest can be the root cause of bad corporate governance. While the shareholder theory of corporate governance attaches supreme importance to the shareholders as owners of the company, the much wider view presented by the stakeholder theory takes into account all the formal and informal, written and unwritten relations of a company viz., creditors, employees, suppliers, customers, other contractual parties, members of the society, institutions with various interests like those for environmental health hazards, governments and so on. This theory takes a broader notion of corporate governance and holds companies to be “socially responsible” organisations that are typically to be managed in the interest of the public. Thus, the performance of a company is not only to be judged by the increase in shareholder value but also from timely creditor payments, enhancement of employee salaries and betterment of job conditions, increase in market share, better relations with suppliers, customers, the government (which would encompass the better compliance with rules and regulations part) etc. Therefore, companies with better corporate governance are those that have dedicated and long standing suppliers, customers, creditors and employees, and those with good compliance record and little or no litigation against. There are problems with both the theories as also with the principal-agent concept. In a company, the principal-agent problem and the divergence of interests would not have arisen if it were possible to write ‘complete contracts’ at the very inception of the company. A complete contract in this case would have meant a contract specifying every contingency and every single mandatory act for the agents or directors in every possible situation. The problem is, it is not possible to foresee every contingency ex-ante, and that is why contingencies are contingencies and not certainty. A complete contract could have ensured that there is no divergence of interests. Hence there would have been no need to worry about corporate governance problems. We do worry because complete contracts are not feasible and it is impossible to predict everything the future holds for us. The incompleteness provides the scope of ‘residuals’ and the question arises as to ‘how to efficiently allocate those residuals’. It is because of this that we need a mechanism that provides for efficient decision making in situations that were not foreseen at the inception of the contract. Such efficient decision making would imply efficient use of discretion and accountability of directors. Thus good corporate governance is required to reduce the chances of ex-post opportunistic behaviour by directors and managers and divergence of their interest from the real owners of a company so that investors do not shy away their investment in companies due to non-reliance on directors. This would result in a hold-up situation and adversely affect the economy. It is to check the occurrence of such situations that the shareholder theory of corporate governance has developed. As in the shareholder theory, even in the stakeholder theory there are chances that all ‘investors’ (meaning all ‘stakeholders’ here) shy away their investment because they do not get proper returns on their investment. To take an example, there may be a non-optimum investment of employees into the human capital of the company, the suppliers may under-invest in the form of low quality raw-materials and customers may under-invest by buying less of the company products. Similarly creditors may under-invest by unfavourable credit terms, while underinvestment from distributors may take the form of inefficient distribution network and so on. The basic idea of corporate governance is to ensure the most optimum investment from all stakeholders and optimum allocation of all types of resources and that there is continuity and sustainability of efficient business relationship amongst all components of a company that make firm specific investment. The right corporate governance strategy suitable for an enterprise can provide solutions to most of these problems of divergence of interest, hold-up, inefficient allocation of financial and other resources, unproductive uses of resources, diversion of company’s assets for personal use etc. Meanwhile, before proceeding further into discussing what will be an ideal corporate governance mechanism, it is worthwhile to have a quick look at the various methods to align the directors’ and managers’ interest with those of the shareholders: - To give more power to shareholders for overseeing and controlling management activity. This can take the form of certain legal protection in the form of minority rights, prohibitions of insider-dealing, increase of disclosure norms etc. - To try and give incentives to managers for efficient management and accountability in the form of attractive perks, stock options, sweat equity etc. - To make laws stricter with respect to compliances and norms to be followed (the kind of corporate governance us professionals are more inclined to think of) - To use the markets for corporate control like take-overs etc. Shareholder theory vs. Stakeholder theory Both the shareholder theory and stakeholder theories of corporate governance have come in for criticisms. The following criticisms are often labeled against the shareholder theory: - There is an overemphasized and practically baseless presumption of strong managers vs. weak shareholders conflict which has paved the way for all the corporate governance theories of resolving monitoring and diverse interest problems. The argument in favour of this is that widely dispersed ownership in companies is not the general norm but more like an exception, and it would be erroneous to think that corporate governance is just meant for large public listed companies only. Each small company is a unit in the economy and each make fractional contribution towards the betterment of the economy. After all, the sea is made up of millions and billions of drops of water. One drop of contaminated water can bring down the quality of water of the entire sea. Unlike the widely-held companies where managers enjoy greater control rights vis-à-vis the shareholders, in closely held companies, the greatest power is generally in the hands of controlling shareholder, usually some individuals or a family, or a group of companies. There is no reason to think that these companies do not need to put emphasis on corporate governance. Even in such companies due to dominance of majority shareholders, the minority shareholders’ rights might suffer. - The shareholder theory gives a narrow view of corporate governance in the sense that it overemphasizes shareholders though they are not the only ones who make investments in a company. A company is the outcome of a bundle of people who make specific investments in their capacity as customers, employees, creditors, suppliers and distributors apart from shareholders. Corporate success is thus a team effort. Any good governance system cannot have optimum output unless it takes into account all the parties involved, in other words, all the stakeholders. As against the above, the stakeholder theory is also not free from criticisms. The following are some criticisms labeled against it: - This theory is criticized by many as being too wide for companies to ensure compliance with. It is difficult to consider the incentives and disincentives of all stakeholders involved. It is equally difficult to set the efficient levels of investment by all stakeholders. - The stakeholder theory leaves scope for the directors or managers of a company to take shelter under the wider coverage of the term stakeholder to avoid questions about company’s bad results. The right approach What follows from the above is that both theories have drawbacks, but both equally have benefits. The shareholder theory helps directors and managers fix the target for efficiency levels to be reached based upon single criteria of shareholder wealth maximisation while the stakeholder theory helps them avoid underinvestment from a number of business components and thereby aids long-term growth of the company and ultimately paces up economic growth. However considering the greater economic benefits to the nation, the stakeholder theory definitely gains an edge over the shareholder theory. In order to make the stakeholder theory more suitable, therefore a new stakeholder approach has developed and this new approach narrows down the meaning of a stakeholder and considers only those parties as stakeholders who have direct firm specific investment in the company. The contributions of all stakeholders are important and go hand in hand to increase shareholder net wealth. Hence the shareholders have incentive to take into account other interest groups in overall corporate governance and the importance of developing long term relations with various components by companies. In this way not only is wealth maximized, but also jobs are secured and business becomes more sustainable. As the views on corporate governance differ, for making effective policy recommendations for corporate governance best practices, the proponents need to have an insight into the various theories developed and their relative merits and demerits. It is only then that we can have the best corporate governance structure. It is not just about having a fixed set of rules and regulations and making proper compliances with them, it is much more. It is about putting the economy forward in the path of growth. Competition vs. Corporate Governance While discussing corporate governance and its wider implications for the economy and the right approach to corporate governance, a question that arises is whether corporate governance is at all necessary in the presence of appropriate competition in the product market. Such competition would provide positive incentives for companies to take care that it has the best governance structure in place. Companies that are uncompetitive because of bad cost structure would automatically be wiped out of the market. This would mean that no external regulatory intervention would be necessary. Things like market for corporate control, managerial stock options, etc. are some recent developments that are fueled by this idea. Nonetheless, good corporate governance mechanism is a combination of many things including competition in the product, capital and labour market, economic efficiency, and the legal set up. These together provide a systematic approach to corporate governance. However, the problem with such a systemic approach is that it is not a very easy task to develop such a mechanism after taking into consideration so many aspects. How bad corporate governance affects the economy While discussing corporate governance as a contributor to economic efficiency, it is worthwhile to take up the point raised by Professors Merritt B. Fox and Michael A. Heller, of the Columbia Law School in their much referred to study “Corporate Governance Lessons from Russian Enterprise Fiascoes” published in the New York University Law Review in 2000. In analyzing the connection between economic efficiency and corporate governance, these researchers took up the example of Russian economy immediately after its transition into privatization. Researching into the poor performance of the Russian corporate sector and the fall of the Russian economy after its transition while most authors and researchers noted such causes like unwanted bureaucratic interference and poor economic policies, they noted bad corporate governance in the corporations as the reason and linked it with the failure of the economy. In their view, an in-depth knowledge of the circumstances that arose in Russia does not only give an idea of the transition policy, it also sheds important light on the theory of corporate governance in general. The crash of communism in Russia saw a rapid privatization of erstwhile state owned enterprises following. This was accompanied by creation of the Russian stock markets and formulation of major business, corporate and labour laws. In the opinion of these authors, the low stock price showed poor corporate governance and was an indicator of the fact that the assets of the enterprises were being mismanaged and misutilised and put to less productive uses for the sole benefit of insiders. Rather than elaborating on good corporate governance practices, the authors have identified how ‘bad corporate governance’ by a company can adversely affect the economy of a country. The authors have raised two pertinent questions: The one as to what are the consequences of corporate governance problems for the economy of a country and the second as to why these problems are so widespread. They have identified two economic functions of the firm, namely, maximising the firm’s wealth and in case of enterprises owned by shareholders, distributing the wealth so gained on a pro rata basis to them. In their view, companies will have good corporate governance if they are characterised by both the aim of maximising shareholders’ wealth and making a pro rata distribution of that wealth amongst the shareholders. This implies that bad corporate governance in a firm at the micro level might arise from its inability to fulfill any one or both of these economic functions. While failure to meet these objectives might be due to a variety of reasons, only one such reason may be the existing legal set up, quite in contrary to the more popular viewpoint. These authors have identified seven symptoms of diseased corporations which go in to point towards their bad corporate governance. Out of these the first five relate to maximisation of wealth and the last two relate to pro rata distribution of this wealth and according to them these are the seven ways by which, in their words “loosely constrained and poorly incentivised managers cause social welfare losses” and all seven of which can be identified with poor corporate governance. Accordingly inability of firms to maximise wealth may be deduced from the following five symptoms that point towards its inefficient and non-incentivised managers: - a firm’s continued operation even though it should be shut down immediately, - inefficient capacity utilization by viable firms, - inefficient investment in negative present value projects, - failure to implement positive net present value projects - failure to identify positive net present value projects. Two symptoms that indicate the firm’s inability to make pro rata distribution of wealth generated are: - diversion of claims of the corporation - diversion of the assets and opportunities belonging to the firm by the managers. These seven symptoms go in to show how the economy of a country suffers due to the bad corporate governance in firms. Thus, in their study of the state of corporate governance in Russian enterprises, Professors Fox and Heller have made an analysis of economic functions of a firm and the various ways in which poor corporate governance in companies can inflict damages to the economy of the country. For economically less developed countries like India the analysis of Professors Fox and Heller seems to be an eye opening one. Does the company secretary fit in to the economic efficiency theories? From the above discussion on the point raised by Professors Fox and Heller, it is easy to link that the company secretary can make a difference. Non-pro rata distribution of wealth generated by firms to the shareholders resulting from diversion of claims of the company by the managers from rightful claimants can definitely be put to check by the presence of a company secretary in the organisation. A company secretary can ensure that managers do not divert claims of the company by refusing to give effect to share purchases by outsiders, or by refusing to accept board directors lawfully elected by such shareholders, or by issuing shares to insiders against inadequate consideration and so on. It is the job of the company secretary to ensure that such malpractices do not occur, and he is the compliance officer of the company charged with ensuring proper compliance with all legal requirements. These fall within the purview of his day to day activities. The company secretary can therefore be instrumental in effecting pro rata distribution of residuals generated by a firm and thereby make his contribution towards the economy. Similarly, the company secretary may also be instrumental in ensuring that the company has a long lasting relation with all its stakeholders and thereby increase the sustainability of the organisation for greater economic benefit. Conclusion Developing an all-proof framework for efficient corporate governance that ensures complete legal compliance, efficient allocation of resources, optimum level of investment from all stakeholders in a company, long-lasting business relationship and sustained business and economic growth and which at the same time ensures that directors and managers remain accountable to the shareholders is a herculean task. And if developed, such a corporate governance mechanism would be an ideal one. The reason is simple, quite contrary to the popular belief, corporate governance does not start and end with merely a set of rules, guidelines and policies to be complied with. It is much more with much wider implication and good corporate governance has its positive impact on the economy of the entire nation. It is not just about directors and managers remaining accountable to shareholders, or even the wider version that targets the stakeholders as the beneficiaries of good governance. It is rather about treating a company as an economic unit at the minimum and that what it does, does not merely affect its employees, creditors, investors, competitors, customers and the government, the impact is on the entire economy. For economically developing countries like India, this consideration gains all the more importance and we are compelled to think that the rightly planned corporate governance structure in companies that puts due emphasis on economic development of the country is the demand of the hour. Originally Published in Chartered Secretary, April 2011 issue. The Chartered Secretary is a monthly magazine of The Institute of Company Secretaries of India

  • ESG Compliance: Battle in the Boardroom

    Oscar Wilde once aptly said “I forgot that little action of the common day makes or unmakes character, and therefore what one has done in the secret chamber one has someday to cry aloud on the house-tops”. The same thought was resonated in the famous 2019 movie ‘Last Christmas’ [based on the famous song by George Michael of the same name]. When I mention ESG, let me clarify, I do not mean to refer to Christmas or any other festival, as it doesn’t have any link with the latter, and is definitely not related to any movie either. It rather relates to what an entity has done or not done in the last financial year with respect to compliance of certain non-financial parameters as mandated by SEBI to be reported by certain entities as a step forward towards serious sustainability movement in India. The Voluntary Guidelines on Corporate Social Responsibility was issued by Ministry of Corporate Affairs (MCA) in 2009. It, for the first time, introduced some form of ESG reporting in India. The voluntary guidelines encouraged businesses to adopt responsible business practices. But the framework of these guidelines were very basic, and so #MCA replaced it with a more comprehensive set of guidelines. The National Voluntary Guidelines on Social, Environmental and Economical Responsibilities of Business (#NVGs) were issued by MCA in July 2011. Soon thereafter in 2012 the SEBI mandated the #BRR for the top 100 listed entities by market capitalisation as part of their annual report. Hence, just like every governmental framework evolves through many processes, ESG was no exception. The Business Responsibility Reporting (BRR) has evolved to Business Responsibility and Sustainability Report (#BRSR) as mandated by SEBI in its circular dated 10th May 2021 following the National Guidelines on Responsible Business Conduct (#NGRBC) issued by the MCA in 2019. Starting from FY 2022-23 organisations were expected to voluntarily disclose their Environmental, Social and Governance (ESG) performance through the new framework provided by the NGRBC. Now with SEBI’s mandate of BRSR, this transitional reporting regime for ESG is mandatory for the top 1000 listed companies based on market capitalisation for the next financial year 2023-24. Going by structural overview the BRSR has three components a) General Disclosure - It includes disclosure about many things starting from the listed entity’s products and services to its CSR spend. b) Management and Process disclosure - This section involves a questionnaire related to the leadership of the company, policy, management processes etc. c) Principle-wise performance disclosure - This section investigates into the alignment of the companies Key Performance Indicators (KPIs) with 9 principles mentioned in the NGRBC. These KPIs are divided into 2 categories: (i) essential indicators like energy consumption, emissions, water footprints and the training programs organised by the companies; (ii) leadership indicators which are the indicators of responsibility and accountability of the management of the company. Energy efficiency initiatives, diversity and life cycle assessment data etc. are also included in these KPIs. Issues pertinent to the compliance requirements of the listed companies are increasingly being debated among various stakeholders. While some opine that small and medium listed entities might be under massive pressure due to the integration of ESG in the business processes and strategies, many are also considering the ESG compliance as an extension of board level CSR committee. As a matter of fact, for the purpose of corporate clarity, ESG can never be seen as an extension of an ambit of the CSR committee. In fact, there should be a separate ESG committee which may oversee the other committees in regard to the ESG objectives and their respective compliance taking into account the clear #KPIs and metrics to track across the teams who constitute it. Ideally a top down approach might produce the right kind of efficacy for the judicious implementation of #ESG, be it for water footprint or for carbon footprint or gender diversity. In this regard it is to be noted that the Kyoto Protocol was the only international level protocol by the United Nations Framework Convention on Climate Change (#UNFCCC) which included a financial implication in emission trading mechanism [Certified Emissions Reduction (#CER)]. In colloquial language it is called #CarbonCredit. Whether or not businesses adhering to Clean Development Mechanism (#CDM) become revamped and vibrant global #CarbonExchanges give you better trade, unlike in the current scenario, the cost of compliance of ESG will only add value to the entity, be it financial or social or environmental. Given this, Corporate India must take this governmental ESG compliance requirement as a new ‘HEART’ and transplant it into the system. Entities have to consider this new heart as the heart of their business, which, for its survival in the long run, has to be kept safe in any case. [Opinions expressed are author’s personal] Author Profile: Dr. Paritosh Nandi holds a Ph.D. degree in Solar Energy Engineering. He is also a Certified Energy Manager and Certified Energy Auditor by Ministry of Power, Government of India. He has been instrumental in developing Clean Development Mechanism (CDM) projects in organisations for the last eleven years and has hands on expertise in ESG. For more detailed profile visit Author can be reached at

  • Orangutan in the Board: A step further towards Board Diversity

    In a path-breaking step towards increased Board-level diversity, Mun Kee Ma-Jik Bhd, a palm oil company in Malaysia recently appointed an orangutan to its Board of Directors. This is a historical step towards Board Diversity and globally the first instance of appointment of a ‘non-human’ Director to the Board of a company. The Orangutan’s appointment takes effect on 1st April 2022. The Malaysian company believes that the great ape will help the company in managing the long debated human-animal conflict in the palm oil industry. This step is further expected to guide the company in its responsible expansion strategy. Meet the new Board Member Aman, is a seven year-old Bornean orangutan. She was orphaned as an infant when her parents died in forest fires. Aman has gained huge popularity over the years due to her socializing skills and her unique calm demeanour. She can show empathy towards stressed orangutans and this, according to the company, is a big asset to it. Aman will act as a Special Advisor to the Board and will help the company manage its human-animal conflict in areas where it is expanding its plantations. Remuneration and Leave Aman, the Director, will be paid his remuneration in bananas. He will be granted leave on International Orangutan Day which happens to be celebrated on 19 August. Orangutans are not known to destroy their own environment, like us the humans, the company officials stated. So there have been numerous incidents of orangutan attacks on company officials as they perceive a threat to their homes. By bringing one of their representatives into the Board the company hopes for ‘greater profitability by helping us to sensitively manage conflict areas’. The company’s Chief Sustainability Officer Dr. Gurin Woscher has quoted: “Aman will help develop our stakeholder engagement and responsible growth plans and will add another dimension to our free, prior and informed consent (FPIC) policy”. It may be mentioned here that #FPIC principle is used by companies to ensure bottom-up participation with local communities before developing land. The principle has been used for the first time in history to gain consent from non-human communities through Aman’s appointment. It is worth noting here that orangutans are the only known non-human mammals that are capable of communicating about the past. Humans and orangutans share 97% of the DNA and the latter are said to have a very high IQ too. They have proved to use their intelligence in many ways similar to human beings. Study has revealed that they can recognise words and understand speech. So, the company hopes #Aman can communicate to other orangutans in order to understand their past experiences and make the same known to the company. In turn the company can use this information to make amends for its past harms and plan more sustainable steps for future, keeping the wellbeing of the primates under consideration. Arrangements have been made for Aman to share her point of view in the board meetings by using a touch screen. Orangutans are the world’s largest tree-dwelling primates and call the tropical forests their home. The Borneo Island (shared by Malaysia, Indonesia and Brunei) and the Sumatra Island are the only two places on earth where orangutans can be found. They spend most of their lives in these canopies, climbing from one branch to another. They disperse the seeds from the various fruits they eat and thereby help maintain the health and thickness of the rain forests. The palm oil producers, for the sake of increasing their production and expansion of activities, are clearing the forests resulting in illegal logging and loss of habitat for these orangutans. The population of #orangutan in the Malaysian Borneo has dwindled over the last half century falling by about two-thirds due to logging and palm oil cultivation. This is the human-animal conflict under study here. On the one hand humans are expanding their businesses for more profits, on the other hand these endangered animals are losing their habitat as a result. #Palmoilproducers in the region have for long been under growing pressure to stop clearing forests and also make up for their past deforestation by reforesting those areas. Many companies have undertaken to do so. This step by the company in appointing an orangutan in the Board apparently seems to be a step in that direction. In this connection it is worth noting that this Sabah-based company, #MunKeeMaJikBhd, which has an annual capacity of 140,000 tonnes of crude palm oil that is produced from over 6,000 hectares of plantations. The company has cleared an estimated 4,000 hectares of orangutan habitat since its incorporation. Board Diversity #BoardDiversity is a hot topic even in India now. All companies required to have women directors in their Board have also not been compliant so far. Yet, the presence of women in Indian Boards is more visible than that in many countries including many developed countries of the West. It may be noted that as compared to 17.1% women holding Board positions in India, in Malaysia only 7% of board members are women. But the Sabah-based palm oil company claims to have achieved a rare feat in Board Diversity by going beyond just gender, age or even race by appointing a non-human to the Board. Conclusion This is the latest development and the reaction of worldwide #CorporateGovernance researchers and think-tanks in this connection is still awaited. But in my opinion, this appointment has to be strictly monitored by the government in order to ensure that this does not become another novel means of exploitation of voiceless stakeholders. Image: Representative Image only

  • From ‘Comply or Explain’ to mandatory spending regime - A Paradign shift in Indian CSR law

    When the concept of Corporate Social Responsibility was introduced in the Indian legal system through section 135 of the Companies Act, 2013, it was presented as a mandate, yet the spending on CSR activities was not really mandatory. Instead, the eligible companies were given the liberty to explain the reasons for not spending in a given financial year in its Board’s Report and get away with no CSR spending on sufficient causes being shown therein. Nonetheless, the newly introduced CSR law did set the ball rolling in the country for expenditure by corporates on activities with a social or environmental cause. Fast forward seven years, and the ‘seemingly’ voluntary regime is gone and ‘actual spending’ on CSR activities as prescribed in Schedule VII of the Companies Act, 2013 is the rule of the day. Companies that do not fulfil their obligations will be paying hefty penalty that will be twice the amount of shortfall in spending or Rs. 1 crore, whichever is less, and for every officer of the company who is in default the penalty amount will be one-tenth of the amount of shortfall in spending or Rs. 2 lakhs, whichever is less. CSR Reporting Until recently, the only mandatory reporting requirement of the CSR activities of a company was in its Board’s Report. The concept of Annual CSR Report has not been done away with. But with the recent introduction of form CSR-2, there is a definite paradigm shift towards stricter monitoring of CSR spending by companies by the MCA with the help of data analytics and artificial-intelligence. So now, companies that have hence before been putting off the CSR provisions as unimportant, need to awaken from their slumber, fasten their seat belts and get started with strict compliance of the CSR provisions. The introduction of the form CSR-2 is a great step towards introducing a regime of strict monitoring of CSR activities of corporates by the MCA. This will increase the seriousness and adeptness of companies towards compliance of CSR provisions both in law and in spirit. However, utmost care and diligence is required while filling up and filing this form. CSR-2 form is an elaborate reporting of CSR activities and is definitely not one to be put aside until the last date for filing. The following paragraphs contain more about the form. The Notification The MCA had, vide notification no. G.S.R. 107(E) dated 11th February, 2022 notified the Companies (Accounts) Amendment Rules, 2022 which came into force from 11th February 2022. In the original Companies (Accounts) Rules, 2014, after Rule 12 (1A) the following clause (1B) was inserted by the notification: “(1B) Every company covered under the provisions of sub-section (1) to section 135 shall furnish a report on Corporate Social Responsibility in Form CSR-2 to the Registrar for the preceding year (2020-2021) and onwards as an addendum to form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be: Provided that for the preceding year (2020-2021), Form CSR-2 shall be filed separately on or before 31st March, 2022, after filing form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.” About CSR-2 form CSR-2 is a web based form available on the online portal of MCA. It requires filling in the details pertaining to the company, the eligibility criteria, constitution of CSR committee, disclosure of details about its CSR committee, CSR policy and CSR projects on its website, impact assessment, calculation of CSR obligation, details of amount spent in the preceding financial years, unspent amount of CSR, details about ongoing projects, transfer of unspent amount of CSR, creation of capital assets, reasons for failure to spend as required and so on. Who is required to file CSR 2? The newly introduced form CSR-2 (report on Corporate Social Responsibility) is required to be filed by the companies which fall under the purview of Section 135 of the Companies Act, 2013, meaning that they meet any one of the criteria (a) Turnover ≥ Rs. 1,000 Crores, (b) Net Worth ≥ Rs. 500 Crores or (c) Net Profit ≥ Rs. 5 Crores. Due Date of filing Due date of filing CSR-2 is as follows: For FY 2020-21: On or before 31st March, 2022 For FY 2021-22 onwards: As an addendum to form AOC-4 (hence will depend on the due date of AOC-4) Objective of CSR-2 form The data gathered with the help of this form will help the government in generating an extensive database of CSR activities, sectors getting the funds, actual amount of spending, implementation agencies, unspent fund and capital assets created. This will help the lawmakers to ensure that the CSR funds are rightfully spent, the unspent funds are not ploughed back to the company and to penalize those who are misusing the CSR provisions. Conclusion Ever since the CSR mandate was introduced in the Companies Act, 2013, it has been observed that while certain companies were taking the provisions very seriously, a majority of the others were not. CSR funds were not being spent properly and CSR provisions were not being complied with in spirit by such companies. Some organisations were even using the CSR provisions for their own benefit. The total absence of a monitoring framework for overseeing the CSR activities and spending by eligible companies led most companies to shirk their responsibilities. All these necessitated the introduction of more stringent laws on CSR. The first step towards this was through introduction of very high penalties and the next, through overhauling of the reporting framework. Provisions with respect to transfer of capital assets created using the CSR Fund, mandatory transfer of unspent CSR funds, compulsory registration of implementation partners (CSR-1), introduction of Impact Assessment and so on have also highly strengthened the CSR law framework. The form CSR-2 has been introduced for the purpose of annual reporting of CSR activities by companies coming within the purview of sec 135(1). This is a step in the right direction as it will help the government to monitor the compliance of CSR law by eligible companies in the country from now on. It is worth mentioning here that when CSR provisions were first introduced in FY 2014-15, government had expected a minimum annual CSR spending of RS. 25,000 crores by eligible companies in the first few years and that the same would progressively increase over the next few years. But because the provisions have for long been non-mandatory (in terms of actual spending) and due to the fact that many eligible companies had shortfall in spending and some did not spend at all, the cumulative CSR spend of companies for the last 7 years of implementation of the provisions as per the National CSR portal is only Rs. 1,21,412 Crores meaning an average of Rs. 17,344 crores per year only. With the requirement of compulsory transfer of unspent CSR fund to a Fund specified in Schedule VII and the introduction of the mandatory reporting of CSR activities in CSR-2 form now it is expected that total CSR spend in the country would drastically improve.

  • Corporate Governance in Family Businesses

    What is Corporate Governance? Corporate governance essentially involves balancing the interests of a company's many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community. It is all about a company promoting corporate fairness and transparency w.r.t. its responsibilities to stakeholders. What is family business? A Family-owned business is one that is owned, managed and controlled by two or more family members. In such a business two or more extended family members influence the directions of the business through the exercise of kinship ties, management roles, or ownership rights. The majority of the ownership or control lies within a family. There is an element of dualism in the concept of family businesses – on the one hand persons involved in the business are part of the core team that directs the business and on the other hand they have a family bond or tie (which of course may not always be rosy). The importance of family-owned businesses in the economic growth and development of the country can hardly be over-exaggerated. An environment that is conducive to such businesses can go a long way in encouraging such businesses to come up. In the Family Business Governance Handbook prepared by International Finance Corporation under the World Bank Group, it has gathered important information, facts and suggestions on how to develop a family business. The Handbook states that: "Family businesses constitute the world's oldest and most dominant form of business organizations. In many countries, family businesses represent more than 70 percent of the overall businesses and play a key role in the economy growth and workforce employment. In Spain, for example, about 75 percent of the businesses are family-owned and contribute to 65 percent of the country's GNP on average. Similarly, family businesses contribute to about 60 percent of the aggregate GNP in Latin America." Corporate Governance in family business – whether an impossibility Good corporate governance and family-run businesses are not necessarily opposed to each other. They may happily co-exist. However, understanding Corporate Governance in the context of family businesses turns out to be a little more complex task for the following 2 reasons: Family businesses are of diverse types. There are no two identical family businesses. So a unique model of CG applicable to all family businesses does not exist. Over and above commercial elements in family businesses there are other important governance elements like emotion, family bond, rigid conventions, culture and so on. In theory it is not difficult to incorporate good corporate governance practices in family businesses. But in practice, in majority of family-run businesses, the above elements act as hindrances towards growth and development of these businesses. So said, despite this difficulty, some family businesses around the world have successfully implemented formal structures for both, corporate and family aspects thus making way for good corporate governance practices within. However, in many such family businesses, a question mark still hovers around the ease of implementation of these structures. Family Businesses of global repute In this section I will throw some light on some of the oldest and largest family-run businesses and corporations around the world. The point I want to drive home is the sustainability of such business and their capability of peaceful co-existence with good corporate governance. A. Oldest family businesses worldwide Kongō Gumi Co. Ltd. is a construction company of Japan that is said to be the oldest company of the world with a history of more than 1400 years. Founded in 578 AD it was also the oldest (and longest-running) family-run company in the world and is currently managed by the 40th generation of the Kongō family of Osaka, Japan. The company historically built wooden temple architecture. In 2006 however, the company lost its family-run business status as due to extreme difficulties faced by the company for its survival, the family ownership was divested and it became a subsidiary of the Takamatsu Construction Group. Nishiyama Onsen Keiunkan is the world’s oldest hotel and spring bath company dating from 705 AD and run by a family for more than 1300 years. Following closely another hotel company, Sennen-no Yu Koman, was founded in 707 AD in Japan. It is a traditional Japanese Ryokan-style hotel located in Toyooka city in Japan. It is a family run business with a history of more than 1300 years. Hōshi Ryokan, formed in 718 AD, is a hotel company in Ishikawa Prefecture in Japan that is more than 1300 years old. It is currently run by the 46th generation of the same family. Genda Shigyo, founded in 771 AD, is a company producing ceremonial paper used for weddings, funerals and other occasions. Based in Kyoto, Japan, this family run company is more than 1250 years old. Stiftskeller St. Peter founded in 803 AD in Salzburg in Austria is the oldest company in the world outside Japan. It is a restaurant run by a family for more than 1200 years. Staffelter Hof dates from 862 AD. It is a family-run wine company in Kröv, Germany and has a history of more than 1150 years. Tanaka-Iga Butsugu, another Japanese family-run business was founded in 885 AD. The company based in Kyoto produces religious good and has been continuously in operation for more than 1130 years. Sean’s Bar is an Irish pub located in Athlone, Ireland. Established in 900 AD, this is another very old family-run business. The Bingley Arms is another pub established in 953 AD in Leeds, UK. The 1069-years-old family-run pub is almost like a public house and not just pub. B. Oldest family businesses in India Wadia Group founded in 1736 by Lovji Nusserwanjee Wadia RPG Group founded in 1820 by Ramdutt Goenka P.N. Gadgill Jewellers founded in 1832 by Ganesh Gadgil Aditya Birla Group founded in 1857 by Shiv Narayan Birla Shapoorji Pallonji Group founded in 1865 by Pallonji Mistry Tata Group founded in 1868 by Jamsetji Nusserwanji Tata C. Largest family businesses worldwide Walmart Inc Cargill Inc Ford Motor Company BMW AG Aldi Group Dell Technologies Inc Volkswagen AG ArcelorMittal S.A. Reliance Industries Tata Group Aditya Birla Group IKEA Group Nike Inc L’Oreal Group LG Group Family businesses in India India is also one of those countries where the highest generator and creator of wealth are family-run businesses. The issues faced by these businesses are more or less the same all over the world. Such businesses are like extended units of the family and reflect the culture and values of the family owning it and the employees are expected to adopt the same. The thin line that divides the family and the business is rather blurry. However, there is no denying the fact that India has had, and still has some very big families in business. They have helped put the name of the country in the global business scenario. Some of these family-run businesses have existed for centuries and considerably influenced the economic and political scenario of the country. Bottomline The success and proven sustainability of all the family-run businesses in India and worldwide discussed hereinbefore go to show that good governance or ‘Corporate Governance’ is not against family businesses. Corporate Governance is not an obstacle to growth of family businesses, nor a threat. Family businesses that can incorporate good corporate governance practices in their systems survive, for centuries.

  • 10 steps to self publish your first book

    Writing book you have had in mind for long and then sending the manuscript to publishers for traditional publishing, waiting months for their response, and finally getting rejected, not only takes time, it drains out a lot of your energy and enthusiasm. So, before one has made a name for oneself as an author, and as long as the enthusiasm is at the peak, self-publishing the first book is a great idea. Whether or not to self-publish your book, the pros and cons of self-publishing vs. traditional publishing etc. are some of the topics that have been widely discussed already and at the click of a button several pages open up on the internet for your reading in this regard. So I am not going into the details of any of that. All I want to say is that for a first time author, self-publishing is a great idea. Writing book you have had in mind for long and then sending the manuscript to publishers for traditional publishing, waiting months for their response, and finally getting rejected, not only takes time, it drains out a lot of your energy and enthusiasm. So, before one has made a name for oneself as an author, and as long as the enthusiasm is at the peak, self-publishing the first book is a great idea. Today there are so much of technical help available for self-publishing your book. So, go, grab the opportunity. “Do you have a design in mind for your blog? Whether you prefer a trendy postcard look or you’re going for a more editorial style blog - there’s a stunning layout for everyone.” You’ll be posting loads of engaging content, so be sure to keep your blog organized with Categories that also allow visitors to explore more of what interests them. The 10 steps to self-publish The following are 10 suggestive steps that one might follow for self-publishing a book: Step 1: Develop the idea. The first step is to decide a topic and genre and how one wants to go about it. This is when the author should ideally decide the mode of publication also, i.e. whether to self-publish, or go for traditional publishing. Step 2: Write the book. This step is always the most difficult step. Once you have decided to write a book and selected the topic, the most important step is to write it down. Depending upon the subject, this step may take a long time, months or even years. Step 3: Edit the manuscript. A book full of typos, grammatical errors, spelling mistakes etc. is received very poorly by readers. Hence editing the book is an important step. A thorough editing of the manuscript is crucial to the success of a book and must never be done in a hurry. An important thing to remember while editing is to do it through the eyes of a third person. Spell-check, correcting grammatical errors and paraphrasing are some of the important things to do during editing. Many times authors also feel like introducing new text and even chapters during this editing phase. Hence, take it very seriously. Read out the text loud when in doubt. A good idea is to hire a professional editor to do the job. Step 4: Get feedback from others. When the author is editing the book himself/herself, the feedback of a third-party becomes all the more invaluable. So, starting from the later stages of development of the manuscript an author may share the same with trusted friends/advisers whose inputs he/she thinks may be beneficial. Step 5: Choose an appropriate title. The importance of a catchy title in enhancing the appeal of a book can n ever be exaggerated. The title should ideally be kept short, simple and yet intriguing. A title too similar with an already existing book must be avoided. One may also try an online title generator. Step 6: Format the book. Formatting a book professionally is of utmost importance. This stage ideally involves assigning chapter headings, aligning text, paragraphing and inserting page numbers. Formatting is crucial as it gives the book its look and poor formatting may result in bad impression amongst readers. Writing and formatting skills are two entirely different skills and hence an author may consider using an online book editor or hire a professional typesetter to do the formatting. Step 7: Design an attractive cover. The cover provides the first impression about the book to readers and hence it must be designed with much care. The cover should be capable of drawing attention of the target audience and make them know instantly that the book is for them. The cover must be ideally professionally done as it is an important marketing tool for the book and hence, must not be taken lightly. Step 8: Write an appropriate book description. The book description is crucial for getting readers to buy and read the book. The idea is to introduce the main idea of the book, not the whole thing, and leave them wanting more. The type of description an author must write depends on the genre one is writing. One may start by looking at the descriptions of some bestsellers in the particular genre. Step 9: Publish the book finally. This step would ideally involve uploading the final manuscript. Platforms like Amazon (CreateSpace for print books and Kindle Direct Publishing for e-books), Apple iBooks, Barnes & Noble Press, Kobo, IngramSpark, Smashwords and Lulu are some of the popular online self-publish options. These platforms guide the first time authors through their step-by-step uploading process, which is user friendly. Step 10: Launch and market the book. Once the book has been published, sitting idle will not help it sell. An author must take active steps to market the title and this ideally starts with a launch event, but then it also depends on what one’s budget is. A proper physical launch event may be expensive, hence a digital launch followed by active marketing on the social media (including nook reviews from contacts with followers) during the first few days is a good way to let the world know about the book.

  • 10 reasons to publish a book

    For academicians and researchers, traditionally the motivating factor behind publishing books and articles in journals of acclaim is securing a better Academic Performance Index (API) score over others as well as an increased Impact Factor (IF). In this blog I have shared a list of 10 main reasons that act as my motivator for publishing Some time back, one of my senior colleagues in the Board of a company asked me a rather unexpected question. “What's your motivation to publish?” I was slightly caught off-guard in the beginning as I hadn't seen this coming. This got me thinking as I wanted to give him a concrete answer. What motivates me? After some musing I have prepared a list of 10 main reasons to publish, which are as follows: Publishing a book is a great way of sharing one’s knowledge with the world Publishing can be an important means for advancement of one’s career. Publishing a book can increase one’s visibility amongst other professionals, researchers, academicians apart from students outside one’s immediate circle of contacts and colleagues. Publishing increases the chances of one coming in contact with like-minded people. Publishing a book helps one contribute to research in a particular area Publishing a book or an article in an acclaimed Journal helps preserve one’s work permanently and leave one’s trace in the world in a tangible form Publishing helps add one’s name in the active research community, thus expanding one’s professional network and providing increased potential for collaboration. Publishing helps others to learn and be benefitted by your data and contributes to the corpus of information in the core matter. Publishing can be an important way to ensure being taken seriously Last, but not the least, publishing can earn the author some royalties. What's your motivator? While the above are my main motivators, I must mention here that for academicians and researchers, traditionally the motivating factor is securing a better Academic Performance Index (API) score over others as well as an increased Impact Factor (IF). If you think that there’s something more that can be added to the list above, do share with me.

  • The World, a melting pot of cultures

    We live in a world that has 196 countries and hundreds of regions with distinct cuisines. The world is a melting pot of so many cultures, ethnic backgrounds, different geographical terrains, climate, weather and the resulting agricultural produces, forest products, marine resources, livestock, nutrition requirement and so on. We live in a world that has 196 countries and hundreds of regions with distinct cuisines. The world is a melting pot of so many cultures, ethnic backgrounds, different geographical terrains, climate, weather and the resulting agricultural produces, forest products, marine resources, livestock, nutrition requirement and so on. The scarcity as well as abundance of resources in a particular place depends on these and they in turn also dictate the cuisine of the region. The occupation of people, wealth and affordability also influence food habits. Cuisine also largely depends on the access to cooking techniques and amenities as well as type of oil used, fuel available, storage facilities, religious practices, eating customs and the associated rituals. Historical influences as a result of invasions, commercial link, being on the trade route and colonialization also tend to have a permanent impact on the cuisine of a place. Last but not the least the taste inherited from our ancestors seems to stay in the tongue genetically, and based on the same the cuisine of a place gets improvised with the help of newer technologies and amenities with time. All these shape the cuisine of a place making it unique and distinct from all others. The contiguity of regions with distinct cuisines of their own also lead to hybrids, thus enriching the world cuisine all the more. The best part is that the evolution of cuisines continues with introduction of newer ingredients and technology and this is great news for foodies like me who love to travel and explore delicacies around the world. “The occupation of people, wealth and affordability also influence food habits. Cuisine also largely depends on the access to cooking techniques and amenities as well as type of oil used, fuel available, storage facilities, religious practices, eating customs and the associated rituals. Historical influences as a result of invasions, commercial link, being on the trade route and colonialization also tend to have a permanent impact on the cuisine of a place.” The need of the hour The world is in the middle of a pandemic and the scenario in India is far from being worry-free. The restrictions on travel, eating out and socialising has been there for a while, paralysing our lives. But the good side is that we are able to spend more time at home, doing things we never got the time to do otherwise. While travel itself is not possible, planning about future trips can go on and a virtual food tour of the world is exactly what food enthusiasts need now to cheer themselves up. That’s also how I am staying cheerful, drawing up a checklist of places I want to visit around the world when it is no more in shackles. It’s so important to stay optimistic in order to maintain the sanity of mind. All will be well soon, and when it indeed is, we all must be ready to set sail immediately. I once again reiterate that’s it is important to stay at home, as far as possible, eat healthy, do regular exercises, get vaccinated at the first available opportunity, avoid social gatherings and travel for some more time, keep maintaining the Covid-19 protocols and take all necessary safety measures. Let us hope that the pandemic will soon be over and we will be able to get on with our normal lives again. As of now I feel so thankful for the services and dedication of the frontline warriors, volunteers for social work and other professionals and service providers who are toiling day in and day out to minimise the hardships the society as a whole is facing. I pray for their health and safety.

  • Culinary diversity of India

    Diversity is the true essence of India. There’s so much diversity in people, our languages, caste and communities, races and religion, physical attributes, geography and climatic condition. The culinary traditions of the diverse groups of people also differ based on a variety of many other factors, including the availability of natural resources, which in a country like India, drastically varies from region to region. To add to this is the great variety of spices and herbs grown in various parts of the country that go to render each dish uniquely flavourful. Colonialization and foreign influences have also largely impacted the regional cuisines. Then again you have different foreign powers that have set up their colonies in different parts of India at different times in history, and brought along their gastronomic traditions and ingredients to this land. The uniquely diverse culinary portfolio that has resulted from all these makes the country an interesting one to visit and explore. For, after all, food is an indispensable part of travel. And India is a country of food lovers. So for an average Indian, culinary exploration of other regions also brings great pleasure due to the sheer diversity and magnitude that each regional cuisines presents. But with hundreds of thousands of varieties of different foods to try in various parts of each Indian state, a single lifetime seems not enough. Nonetheless, there again one can find the beauty of the country, in its limitless attractions. Gastronomic trips “For foodies, gastronomic tours bring utter delight. It also often exposes us to unusual food habits of people in various regions which may not go well with our taste. But it is important to show the respect for people’s culture and traditions. One should not openly express disgust at other people’s food habits and cuisines. It is important to travel with an open mind.” With the pandemic scenario in India not much improved yet, and with the existing restrictions on movement and socializing, many of us are spending time at home, planning about future trips and praying that the pandemic be soon a thing of the past. Many of us are also busy experimenting with good food in our kitchens. The abundant leisure time that we have now can be gainfully utilised in learning new things, one of them being the culinary traditions of various regions of India. This will also help us make a checklist of places to visit in India and delicacies to try once the world is COVID-free. This is also a great way to let one’s imaginations travel, while physically this may not be possible, to far off lands in different corners of the country. This will definitely help us stay optimistic and maintain our sanity. After all, in these difficult times, staying happy, busy and hopeful is crucial. In the current situation it is important to stay at home, continue to maintain the Covid-19 protocols, avoid gatherings and holidaying at the moment. In addition, each one of us must get vaccinated and take all necessary safety measures. Let us hope that the pandemic is soon over. I pray for the health and safety of all and once again convey my heartfelt gratitude to the frontline warriors, volunteers for social work and other professionals and service providers who are toiling day in and day out to minimise the hardships the society as a whole is facing.

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