Analysis of Corporate Governance

1532 WordsAug 26, 20127 Pages
Analysis of Corporate Governance of BAJAJ AUTO LTD. Company Profile Bajaj Auto Limited is one of India’s premier two and three wheeler automobile manufacturing companies. It was founded in the year 1945. For the financial 2009-10, the company had sales of Rs. 12152.74 crores and net income of Rs. 1597.22 crores. It exports its two and three wheeler vehicles to more than 50 countries. The company as of 2010 accounts for 24.3% of the Indian motorcycle market. Corporate Governance practices of Bajaj Auto Ltd. Here are the significant points regarding the corporate governance of Bajaj Auto followed by an analysis of their effectiveness and impact. * The company has stated that its corporate governance policy is centered on 4 concepts…show more content…
* The governance practices of the company indicate that it is following the stakeholder theory when it comes to running its business. The company believes that it has a responsibility not only to its shareholders but also to other various stakeholders such as employees, communities, customers, suppliers, environment etc. The company has shown commitment to improving the stakeholder’s welfare and not just focusing on the company profits. * The company faces a vertical challenge in its corporate governance. The chairman of the board is also an executive. Also the board consists of several members of the promoter family who own substantial part of the company. The promoter family members all occupy key positions in the company and on the board. This may pose significant challenges for effective corporate governance as the owners and management are the same, it may result in conflict of interest situations where the resulting action would benefit the promoter family more than the company and other company stakeholders. * The company also faces a horizontal challenge in its corporate governance as the promoter family and group own 49.69% of the company. Hence the promoters can significantly influence the working of the company to their own benefit. * The financial statements that the company provides every year to its shareholders conform to all the
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