New Delhi - The Indian industry is still not ready to hand over complete management control of companies to independent boards and professional managers, business chamber Assocham said.
"An overwhelming majority of 78% of the 155 CEOs both from professional and promoter-driven firms, answered in the negative when asked whether the promoters are willing to cede complete control of the corporate India to independent boards and CEOs", an Assocham survey of chief executives said.
Against the backdrop of a tussle between the board and promoters of the Bengaluru-headquartered Infosys, Assocham said that the India Inc. was "not yet ready to give complete management control to professional boards and managers, as majority of the corporate firms have promoters' holding well over 50% and even those with much lower stake are not willing to bet fully on professionals".
"Trust deficit and the family pre-dominance were the two of the main plausible factors coming in the way of transformation of India Inc where the day-to-day operations are insulated from the principal shareholders or group of shareholders," it said.
"Sixty-seven per cent of the respondent CEOs said trust deficit between the promoters and the professionals creeps in even among the few promoters who have taken a lead for handing over their companies to the professionals."
"On the other hand, over 75% of the CEOs in the survey said the family dominance is a major factor for keeping the professionals away from the top managements," Assocham added.
Assocham's Secretary General D.S. Rawat said: "One must give credit to N.R. Narayanmurthy for continuing with his belief that Infosys must be run by the professionals despite the fact that the experiment has failed once."
"His firm belief in shareholders democracy and high standards of corporate governance would be bearing fruits again now that an iconic Nandan Nilekani has taken charge as the Executive Chairman."
According to the industry chamber, the Indian economy is yet to catch up with developed nations, as a large part of it is still to join the formal sector.
"Even those joining the formal sectors from the informal segments would take time to adopt to the global standards."