The Satyam turbulence is spreading fast, with independent directors of 70 companies including Zee News, EID Parry India, Bharat Electronics, Dr Reddy's Labs, Coromandel Fertilisers and TVS Motors, exiting their respective firms. "The independent director's role is not very well defined and this could give rise to complications," said one of the directors who have put in their papers.
Considering the uncertainties in their duties, prominent independent directors have relinquished their posts, reported Business Line. Some of the directors include V.V. Ranganathan of Zee News, Umesh Kumar Khaitan of Indo Rama Synthetics, Lt. Gen. R.S. Nagra of Empee Sugars & Chemicals and T.R. Prasad, who had quit from the Satyam board. He has also resigned from TVS Motors, Nelcast, Taj GVK Hotels and GMR Infrastructure. "If an independent director has to check the bank balance of the company, the profit margin of different verticals and other financial aspects, then he will be playing the role of an auditor," he said.
Analysts feel it will become increasingly difficult for companies to find suitable replacements within the six-month time-frame stipulated by the Securities and Exchange Board of India. According to D.R. Dogra, Deputy Managing Director, Care Ratings the infamous Satyam episode has now made financial officers and directors more diligent. They will be more cautious in their approach while signing up as independent directors in the future.
The Government has estimated that India Inc will require 3,000-4,000 independent directors within the next few months so that companies may comply with SEBI's listing requirements. Over a period of time nearly 18,000 people would be required to work as independent directors in over 4,500 listed companies.