Name: Tenzin Tselek

Course with code: M.com (3402)

Registration number: 11012624

Roll number: RS1010A012

Corporate Governance has become an

important buzz word.

The infrastructure development in

Bengaluru city during the last 10 years and
its brief report, stating how infrastructure
development helps to promote business
activities.

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Introduction

The word Corporate Governance has become a "Buzzword" these days because of two
factors. The first is that after the collapse of the Soviet Union and the end of the cold war in
1990, it has become the conventional wisdom all over the world that market dynamics must
prevail in economic matters. The concept of government controlling the commanding heights
of the economy has been given up. This, in turn, has made the market the most decisive factor
in settling the economic issues.

Corporate Governance

First of all, I would like to throw a light on the corporate governance. It is a concept, rather
than an individual instrument. It includes debate on the appropriate management and control
structures of a company. And in other words, the Corporate Governance is a set of process,
customs, policies, laws and institutions affecting the way a corporation is directed,
administered or controlled. It includes the rules relating to the power relations between
owners, the board of directors, management and the stakeholders such as employees,
suppliers, customers as well as the public at large.

Corporate governance also includes the relationships among the many players involved (the
stakeholders) and the goals for which the corporation is governed. The principal players are
the Shareholders, management and the board of directors. Other Stakeholders include
employees, suppliers, customers, banks and other regulators, the environment and the
community at large. And moreover corporate governance continuously look forward in
increasing the recognition which enables in sustaining the growth of their organization which
requires cooperation of all stakeholders. In this regard, the management needs to act as
trustees of the shareholders at large and prevent asymmetry of benefits between various
sections of shareholders, especially between the owner-managers and the rest of the
shareholders.

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Corporate governance; the multi- facet concepts

The Corporate Governance is a multi-faceted subject or in other words, corporate governance

is the multi-aspects subjected. An important concept of corporate governance deals with
issues of accountability and fiduciary duty, essentially advocating the implementation of
guidelines and mechanisms to ensure good behaviour and protect shareholders. Another key
focus is the economic efficiency view; through which the corporate governance system
should aim in optimize economic results, with a strong emphasis on shareholder welfare. And
further, it is about promoting corporate fairness, transparency and accountability. In other
words, 'good corporate governance' is simply 'good business'.

So far as India is concerned, corporate governance initiatives have been

undertaken by the Ministry of Corporate Affairs (MCA) and the Securities and Exchange
Board of India (SEBI). The first formal regulatory framework for listed companies
specifically for corporate governance was established by the SEBI in February 2000,
following the recommendations of Kumarmangalam Birla Committee Report. It was
enshrined as Clause 49 of the Listing Agreement. Further, SEBI is maintaining the standards
of corporate governance through other laws like the Securities Contracts (Regulation) Act,
1956; Securities and Exchange Board of India Act, 1992; and Depositories Act, 1996. The
Ministry of Corporate Affairs had appointed a Naresh Chandra Committee on Corporate
Audit and Governance in 2002 in order to examine various corporate governance issues. It
made recommendations in two key aspects of corporate governance: financial and non-
financial disclosures: and independent auditing and board oversight of management. It is
making all efforts to bring transparency in the structure of corporate governance through the
enactment of Companies Act and its amendments. The fundamental causes for the corporate
burdens are more complex. Accounting, or, more accurately, the misuse of accounting, was
not the main problem. Rather the uncontrolled pursuit of flawed strategies, coupled with
greed on the part of many, were the real reasons for the downfall of household names and
previous stock market favourites.
So broadly, corporate governance ensures the following things:

 Adequate disclosures and effective decision making to achieve corporate objectives;

 Transparency in business transactions;
 Statutory and legal compliances;

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  Protection of shareholder interests;
 Commitment to values and ethical conduct of business.

In other words, corporate governance is the acceptance by management of the inalienable

rights of shareholders as the true owners of the corporation and of their own role as trustees
on behalf of the shareholders. It deals with conducting the affairs of a company such that
there is fairness to all stakeholders and that its actions benefit the greatest number of
stakeholders. In this regard, the management needs to prevent asymmetry of benefits between
various sections of shareholders, especially between the owner-managers and the rest of the
shareholders.

It is about commitment to values, about ethical business conduct and about making a
distinction between personal and corporate funds in the management of a company. Ethical
dilemmas arise from conflicting interests of the parties involved. In this regard, managers
make decisions based on a set of principles influenced by the values, context and culture of
the organization. Ethical leadership is good for business as the organization is seen to conduct
its business in line with the expectations of all stakeholders.

Objectives of Corporate governance

The aim of "Good Corporate Governance" is to ensure commitment of the board in managing
the company in a transparent manner for maximizing long-term value of the company for its
shareholders and all other partners. It integrates all the participants involved in a process,
which is economic, and at the same time social.

The fundamental objective of corporate governance is to enhance shareholders' value and

protect the interests of other stakeholders by improving the corporate performance and
accountability. Hence it harmonizes the need for a company to strike a balance at all times
between the need to enhance shareholders' wealth whilst not in any way being detrimental to
the interests of the other stakeholders in the company. Further, its objective is to generate an
environment of trust and confidence amongst those having competing and conflicting
interests.

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It is integral to the very existence of a company and strengthens investor's confidence by
ensuring company's commitment to higher growth and profits. Broadly, it seeks to achieve
the following objectives:

 A properly structured board capable of taking independent and objective decisions is

in place at the helm of affairs;
 The board is balance as regards the representation of adequate number of non-
executive and independent directors who will take care of their interests and well-
being of all the stakeholders;
 The board adopts transparent procedures and practices and arrives at decisions on the
strength of adequate information;
 The board has an effective machinery to sub serve the concerns of stakeholders;
 The board keeps the shareholders informed of relevant developments impacting the
company;
 The board effectively and regularly monitors the functioning of the management
team;
 The board remains in effective control of the affairs of the company at all times.

The overall endeavour of the board should be to take the organisation forward so as to
maximize long term value and shareholders' wealth.

Its benefit and limitation

The concept of corporate governance has been attracting public attention for quite some time.
It has been finding wide acceptance for its relevance and importance to the industry and
economy. It contributes not only to the efficiency of a business enterprise, but also, to the
growth and progress of a country's economy. Progressively, firms have voluntarily put in
place systems of good corporate governance for the following reasons:

1. Several studies in India and abroad have indicated that markets and investors
take notice of well managed companies and respond positively to them. Such
companies have a system of good corporate governance in place, which allows
sufficient freedom to the board and management to take decisions towards the

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 progress of their companies and to innovate, while remaining within the framework of
effective accountability.
2. In today's globalised world, corporations need to access global pools of capital as well
as attract and retain the best human capital from various parts of the world. Under
such a scenario, unless a corporation embraces and demonstrates ethical conduct, it
will not be able to succeed.
3. The credibility offered by good corporate governance procedures also helps maintain
the confidence of investors – both foreign and domestic – to attract more long-term
capital. This will ultimately induce more stable sources of financing.
4. A corporation is a congregation of various stakeholders, like customers, employees,
investors, vendor partners, government and society. Its growth requires the
cooperation of all the stakeholders. Hence it imperative for a corporation to be fair
and transparent to all its stakeholders in all its transactions by adhering to the best
corporate governance practices.
5. Good Corporate Governance standards add considerable value to the operational
performance of a company by:
a) improving strategic thinking at the top through induction of independent
directors who bring in experience and new ideas;
b) rationalizing the management and constant monitoring of risk that a firm faces
globally;
c) limiting the liability of top management and directors by carefully articulating
the decision making process;
d) Assuring the integrity of financial reports, etc.

It also has a long term reputational effects among key stakeholders, both internally and
externally.

6. Also, the instances of financial crisis have brought the subject of corporate
governance to the surface. They have shifted the emphasis on compliance with
substance, rather than form, and brought to sharper focus the need for intellectual
honesty and integrity. This is because financial and non-financial disclosures made by
any firm are only as good and honest as the people behind them.
7. Good governance system, demonstrated by adoption of good corporate governance
practices, builds confidence amongst stakeholders as well as prospective stakeholders.

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 Investors are willing to pay higher prices to the corporates demonstrating strict
adherence to internally accepted norms of corporate governance.
8. Effective governance reduces perceived risks, consequently reduces cost of capital
and enables board of directors to take quick and better decisions which ultimately
improves bottom line of the corporates.
9. Adoption of good corporate governance practices provides long term sustenance and
strengthens stakeholders' relationship.
10. A good corporate citizen becomes an icon and enjoys a position of respects.
11. Potential stakeholders aspire to enter into relationships with enterprises whose
governance credentials are exemplary.
12. Adoption of good corporate governance practices provides stability and growth to the
enterprise.

Effectiveness of corporate governance system cannot merely be legislated by law neither can
any system of corporate governance be static. As competition increases, the environment in
which firms operate also changes and in such a dynamic environment the systems of
corporate governance also need to evolve. Failure to implement good governance procedures
has a cost in terms of a significant risk premium when competing for scarce capital in today's
public markets.

Future prospects of corporate governance

The issues of governance, accountability and transparency in the affairs of the company, as
well as about the rights of shareholders and role of Board of Directors have never been so
prominent as it is today. The corporate governance has come to assume a centre stage in the
Board room discussions.

India has become one of the fastest emerging nations to have aligned itself with the
international trends in Corporate Governance. As a result, Indian companies have
increasingly been able to access to newer and larger markets around the world; as well as able
to acquire more businesses. The response of the Government and regulators has also been
admirably quick to meet the challenges of corporate delinquency. But, as the global

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environment changing continuously, there is a greater need of adopting and sustaining good
corporate governance practices for value creation and building corporations of the future.

It is true that the 'corporate governance' has no unique structure or design and is largely
considered ambiguous. There is still lack of awareness about its various issues, like, quality
and frequency of financial and managerial disclosure, compliance with the code of best
practice, roles and responsibilities of Board of Directories, shareholders rights, etc. There
have been many instances of failure and scams in the corporate sector, like collusion between
companies and their accounting firms, presence of weak or ineffective internal audits, lack of
required skills by managers, lack of proper disclosures, non-compliance with standards, etc.
As a result, both management and auditors have come under greater scrutiny.

But, with the integration of Indian economy with global markets, industrialists and corporates
in the country are being increasingly asked to adopt better and transparent corporate
practices. The degree to which corporations observe basic principles of good corporate
governance is an increasingly important factor for taking key investment decisions. If
companies are to reap the full benefits of the global capital market, capture efficiency gains,
benefit by economies of scale and attract long term capital, adoption of corporate governance
standards must be credible, consistent, coherent and inspiring.

Quality of corporate governance primarily depends on following factors, namely:- integrity of

the management; ability of the Board; adequacy of the processes; commitment level of
individual Board members; quality of corporate reporting; participation of stakeholders in the
management; etc. Since this is an important element affecting the long-term financial health
of companies, good governance framework also calls for effective legal and institutional
environment, business ethics and awareness of the environmental and societal interests.

Hence, in the years to come, corporate governance will become more relevant and a more
acceptable practice worldwide. This is easily evident from the various activities undertaken
by many companies in framing and enforcing codes of conduct and honest business practices;
following more stringent norms for financial and non-financial disclosures, as mandated by
law; accepting higher and appropriate accounting standards; enforcing tax reforms coupled
with deregulation and competition; etc.

However, inapt application of corporate governance requirements can adversely affect the
relationship amongst participants of the governance system. As owners of equity, institutional

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investors are increasingly demanding a decisive role in corporate governance. Individual
shareholders, who usually do not exercise governance rights, are highly concerned about
getting fair treatment from controlling shareholders and management. Creditors, especially
banks, play a key role in governance systems, and serve as external monitors over corporate
performance. Employees and other stakeholders also play an important role in contributing to
the long term success and performance of the corporation. Thus, it is necessary to apply
governance practices in a right manner for better growth of a company.

The Strategic Failures

The companies often fail to understand the relevant business drivers when they expand into
new products or geographical markets, leading to poor strategic decisions. The board of
directors did not understand how the derivatives market worked, and therefore did not
comprehend the risks associated with it. Often a lack of adequate due diligence, whether
building a new plant or making an acquisition, exacerbates problems.

Over Expansion Driven by Greed

The companies are frustrated by their inability to grow organically sufficiently quickly, turn
to acquisitions. Despite many empirical academic studies showing that less than half of all
acquisitions deliver the sought-after or promised returns, this tendency shows little sign of
abating. High achievers, such as top executives, are particularly ambitious and eager for more
power and wealth. CEO's have every incentive to grow their companies. Since the quickest
way to grow a company is often by acquisition, the greed CEO's needed little encouragement
to embark on a spending spree. Very often, the desired synergies are ephemeral, and the
integration costs far exceed the anticipated benefits. Furthermore, cultural differences and
lack of management capacity often add to the problems.

The Domination of CEOs

The CEOs are the individuals usually emerge after a period of successful management. The
company becomes packed with like-minded executives who owe their position to (usually)
him and are reluctant to challenge his judgement. A complacent board, lulled by past
achievements, stops scrutinizing detailed performance indicators and falls into the habit of
rubber-stamping the CEO's decisions. With no challenges and critics within the company, the

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dominant CEO may begin, perhaps unconsciously, to behave as though it is his own creation.
Shareholders and the board became irrelevant. Seduced by the prospects of yet more power
and wealth and with his strong belief in his own infallibility, he goes all out for growth.

The Failure in Control of Corporate Governance

The blurred reporting lines leave holes in control systems. Dispersed departments add to the
problems: it is more difficult to pool knowledge of goings on when departments do not work
closely together. Remote operations, far from head office, are often difficult to manage since
head office is heavily reliant on local management and cannot always judge whether correct
and sufficient information has been transmitted. This is particularly a problem with new or
unfamiliar operations. A fundamental contributor to control failure is a weak, or ineffective,
internal audits with the objective of uncovering potential cost savings, rather than financial
audits with the objective of uncovering potential cost savings, rather than financial audits
with the objectives of safeguarding company assets. A CFO without a professional
accounting qualification is a significant additional risk factor. Bankers, or for the matter
MBAs do not have the broad range of skills to oversee the finances of a large company and
certainly not ones as complex. In many cases in appropriate financial structures have played a
part? Thereafter companies suffered under heavy debt burdens and manipulated their
accounts to disguise the effects of this illogical behaviour.

Independent Directors

A board is supposed to provide a non-partisan judgement of the senior management's action

and strategic proposals and to look after the interests of shareholders. Directors with strong
financial or other links to the company may well find their judgement clouded. Even where
directors were formerly classified as independent, they may not have been so independent
after all. Many audit committee members have too little financial expertise, making it
difficult for them to understand complex accounting matters. Instead, they have tended to go
through the motions of reviewing controls rather than undertaking a much more detailed
study, which would involve posing challenging questions.

Complacency

A background of raising share prices and earnings may have lulled boards into thinking that
all was well, that management was doing its job and may explain, if not excuse, the "hands
off" approach that many adopted in the late 1990s. But once share prices started to fall and

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the companies came under pressure, there was no excuse for directors to sit back. Many
boards failed to question management; failed to assess their competence. The directors have
not had the necessary knowledge or specific industry experience required to make an
effective contribution and in most cases have allowed themselves to be dominated by CEO.
This must be wrong. The CEO should be the servant of the shareholders and board

Suggestions and Opinions

Corporations are the prominent players in the global markets. They are mainly responsible for
generating majority of economic activities in the world, ranging from goods and services to
capital and resources. The essence of corporate governance is in promoting and maintaining
integrity, transparency and accountability in the management of the company as well as in
manifestation of the values, principles and policies of a corporation.

Many efforts are being made, both at the Centre and the State level, to promote adoption of
good corporate governance practices, which are the integral element for doing and managing
business. However, the concepts and principles of good governance are still not clearly
known to the Indian business set up.

Hence, there is a greater need to increase awareness among entrepreneurs about the various
aspects of corporate governance. There are some of the areas that need special attention,
namely:-

A. Quality of audit, which is at the root of effective corporate governance;

B. Role of Board of Directors as well as accountability of the CEOs and CFOs;
C. Quality and effectiveness of the legal, administrative and regulatory framework; etc.

That is, it is necessary to provide the corporates desired level of comfort in compliance with
the code, principles and requirements of corporate governance; as well as provide relevant
information to all stakeholders regarding the performance, policies and procedures of the
company in a transparent manner. There should be proper financial and non-financial
disclosures by the companies, such as, about remuneration package, financial reporting,
auditing, internal controls, etc.

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To reduce the Burdens of the Corporate Governance

• At practical level, the chairman should set the agenda for board meeting, in
consultation with the CEO, and appropriate papers should be sent out to directors in good
time so that they can properly prepare for the meeting, which would make for more
constructive use of time.

• An effective board which reviews strategy plans and questions management

thoroughly should act, at the very least, as a brake on poor decision-making and at best be a
positive force, using its wider vision experience, to direct the company onto the most
profitable path.

• As part of a necessary system of checks and balances, the roles of chairman and CEO
should be separate in all cases. Each has a separate and distinct contribution to make
furthermore, a retiring CEO should not step up to the chairman position as that risks
emasculating or at least overshadowing the new incumbent.

• A competent audit committee is essential to ensure that the appropriate internal

controls are in place and working adequately; to ensure that company’s financial statements
give a true and fair view of the company's affairs; and to appoint, oversee and, if necessary,
remove external auditors.

Re-Align Executive Compensation

The granting of share options, which are just a one-way bet, should be avoided or, at the very
least, expensed immediately. A better incentive scheme would involve restrictive shares
whose value can go down as well as up. Any share awards should be conditional on their
being held for a minimum of a year after the beneficiary (CEO or other senior executive) has
left the company (apart from any sale necessary to pay tax on the award) or, if still with the
company, until a suitable period, perhaps three years, has elapsed. Company perks such as
private use of aeroplanes should be disclosed in annual reports at their pre-tax value.

Epilogue

The passing of legislation will do little to prevent future failures (while in the process
undeservedly enriching the very accounting firms who were, in part, culpable in the recent

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disasters), as it cannot address the underlying causes. What directors, managers and others
need to remember is that ethics matter and must be demonstrated from the top; That it is
better to manage market expectations rather than to manage earnings to meet expectation; and
that it is false economy to scrimp on information and control systems. None of this will
prevent companies pursuing flawed strategies or making poor acquisitions. Nor will it rein in
the overly ambitious and greedy CEO unless there is a strong, knowledgeable and
challenging board.

Economy of Bangalore

Bengaluru (also known as Bangalore) evolved into a manufacturing hub for heavy industries
such as Hindustan Aeronautics Limited, Indian Telephone Industries (ITI), Hindustan
Machine Tools and Bharat Electronics Limited (BEL) after India gained independence from
Great Britain in 1947. In the past three decades, the establishment and success of high
technology firms in Bengaluru has led to the growth of Information Technology (IT) in India.
IT firms in Bangalore employ about 35% of India's pool of 10 lakh (1 million) IT
professionals and account for the highest IT-related exports in the country. One of the
important factors spurring Bengaluru's growth was heavy central government investment in
Bengaluru's public sector industries, partially because it is geographically out-of-reach from
India's rivals Pakistan and China. This led to the concentration of technical and scientific
navigator in Bengaluru, and is a factor in leading the "IT revolution" in Bengaluru.
Karnataka's political leaders such as D. Devaraj Urs, Ramakrishna Hegde, Gundu Rao,
Veerappa Moily, J. H. Patel and S.M. Krishna each played a pivotal role in the development
of Information Technology and Business Process Outsourcing (BPO) in Bengaluru. When R.
K. Baliga, Founder of the Electronics City proposed the concept of developing the electronic
city in the early 1970s it was met with skepticism but Chief Minister D. Devaraj Urs at that
time supported him and approved the project. This initial seed investment by the Karnataka
State Government in 1976 laid the foundation for the Electronics City.

Silicon Valley of India

The Silicon Valley of India is a nickname of the Indian city of Bengaluru. The name signifies
Bengaluru's status as a hub for information technology (IT) companies in India and is a

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comparative reference to the original Silicon Valley, based around Santa Clara Valley,
California, a major hub for IT companies in the United States. Bengaluru, however, is located
on a plateau and not in a valley; the use of the term in reference to Bengaluru is not truly
toponymous. One of earliest mentions of this sobriquet occurred in late 1980s in the Indian
Express.[2] The more prevalent application of the nickname Bengaluru began in the 1990s[3]
based on a concentration of firms specialising in Research and Development (R&D),
electronics and software production.

The Electronics City was the brainchild of R. K. Baliga, the first Chairman and Managing
Director Karnataka State Electronics Development Corporation, a government owned agency
aimed at expanding the electronics industry in the state of Karnataka established in 1976.
Baliga proposed the concept of developing the electronic city in the 1970s. The agency
purchased 335 acres (1.36 km2) of land 18 km south of Bengaluru for its Electronics City
project, which was meant to establish an industrial park in Bengaluru. Notwithstanding
complaints by the industrial park's tenants on the condition of the roads, power and water
availability, KEONICS claimed initially that the title of Silicon Valley of India belonged to
the city's Electronics City campus.[3] As part of its promotion of this concept, KEONICS
distributed reprints of an article entitled Can Bengaluru become India's Silicon Valley" that
first appeared in "Plus: The Total Computer Magazine".

The article made references to studies of Bengaluru published by United States Agency for
International Development (USAID) that favourably evaluated Bengaluru's capacity to grow
into a high technology hub, similar to the Silicon Valley. The publication also published
interviews with IT industry professionals on the state of the IT industry in Bengaluru and
their perceptions of what lay ahead in the future. Selected quotes from the interviews
included:

If the Centre looks at Bengaluru to be made into Silicon Valley, it would certainly become
the Silicon Valley; If you are talking of a Silicon Valley kind of atmosphere, then Bengaluru
already has it, but if you are talking of a product a day, then we are far from it; Bengaluru is
certainly emerging as a software and R&D subcontracting centre for multinationals; It is not
an unreasonable comparison to make between Bengaluru city and Silicon Valley; Bengaluru
has the ingredients to become Silicon Valley... It is probably the only city in India that could
become one.[3]

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The turn of the millennium witnessed the growth of internet based technologies which
resulted in the dotcom boom. Bengaluru's IT industry grew during this period with the
establishment of local and foreign IT companies. In 2001, BusinessWeek published an article
entitled "India's Silicon Valley" which traced the growth of the IT industry in India and
particularly in Bengaluru. The use of the term "Silicon Valley of India" to refer to Bengaluru
grew in local media and as time progressed, in international media too. An article entitled "Is
the Next Silicon Valley Taking Root in Bangalore?" appeared in the New York Times in
2006[4] Indeed, some articles in the western media wondered if the original Silicon Valley
would one day be functionally replaced by Bangalore[5]

Shashi Tharoor has suggested that in place of the cliché of Silicon Valley of India, Silicon
Plateau of India would be appropriate.

Infrastructure in Bangalore

Aerospace and Aviation industries

The Sukhoi-30MKI is a dual-role fighter that is manufactured under license of Sukhoiby

Bengaluru-based Hindustan Aeronautics Limited for the Indian Air Force.

Long before Bengaluru was called the Silicon Valley of India, the city made its name as
headquarters to some of the largest public sector heavy industries of India. The Hindustan
Aeronautics Limited (HAL) headquarters was based in Bengaluru, and was dedicated to
research and development activities for indigenous fighter aircraft for the Indian Air Force.
With over 9,500 employees, it is one of the largest public sector employers in Bengaluru.

Today, HAL manufactures, under license, various fighter aircraft for the Indian Air Force
(IAF) including Sukhoi 30 Flankers and Jaguars. HAL also develops indigenous products for
the IAF such as HAL Tejas, HAL Dhruv and HAL HF-24 Marut.

The National Aerospace Laboratories (NAL) is also headquartered in Bengaluru and is

dedicated to the development of civil aviation technologies. Incorporated in 1960, NAL often
works in conjunction with the HAL and has staff strength of over 1,300 employees. NAL also
investigates aircraft malfeasance.

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A 1,000-acre (4.0 km2) special economic zone for the aerospace industry is being setup near
the Bengaluru International Airport. Bengaluru is also home to large domestic airlines -
Simplify Deccan and Kingfisher Airlines.

Manufacturing Industries

Other heavy industries in Bengaluru include Bharat Electronics Limited, Bharat Heavy
Electricals Limited (BHEL), Indian Telephone Industries (ITI), Bharat Earth Movers Limited
(BEML), Hindustan Machine Tools (HMT) and Hindustan Motors (HM).

Bengaluru is also becoming a destination for the automotive industry. Toyota has a
manufacturing plant in Bengaluru while Daihatsu is planning on building a factory soon.
Hindustan Motors also has a manufacturing facility in Bengaluru as does Volvo Trucks.

Bengaluru houses many small and medium scale industries in its Peenya industrial area that
claimed to be one of the biggest in Asia 30-years ago.

Space technology

In June 1972, the Government of India set up the Space Commission and Department of
Space (DOS). India's premier space research organization, the ISRO was created under the
DOS and headquartered in Bengaluru. The main objective of ISRO includes development of
satellites and launch vehicles. Aryabhata, India's first satellite was developed and
successfully launched by ISRO. Since then, the organization has successfully launched
numerous other satellites such as Bhaskara, Rohini, APPLE, and the INSAT series, and
successfully deployed PSLVs and GSLVs. ISRO also heads India's ambitious moon program.

Information Technology

Infosys Technologies headquarters

Bengaluru is called the 'Silicon Valley of India' due to the large number of information
technology companies located there. Many multinational corporations, especially computer
hardware and software giants, have operations in Bengaluru.

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Bengaluru's IT industry is divided into two main "clusters"[7] — Electronics City and
Whitefield. New clusters in Bellandur and Challaghatta have emerged in the last few years
along the Outer and Inner Ring Roads and in C. V. Raman Nagar near Old Madras Road.

Electronics City, located in the southern outskirts of Bengaluru, is an industrial park spread
over 330 acres (1.3 km2). Electronics City was formed in 1978.[8]3M, Hewlett Packard and
Siemens are some of Electronic City's clients. Infosys and Wipro, India's second and third
largest software companies, are headquartered in Electronics City. The Software Technology
Parks of India, Bengaluru (STPI) was started at Electronics City in 1991 by the Ministry of
Information Technology. STPI Bengaluru counts among the premier and oldest Internet
Service Providers (ISP) in India. It was the first centre to be Internet-enabled in India. Nortel
Networks is a prominent client of STPI Bengaluru.

Whitefield cluster is home to the International Technology Park Bengaluru. It was created as
a result of a joint venture between India and Singapore in January 1994. It is a large facility,
comprising 6 buildings — Discoverer, Innovator, Creator, Explorer, Inventor and Navigator.
The 7th building, belonging to TCS, is in the process of being built. The Export Promotion
Zone (EPIP) in Whitefield provides campus facilities for SAP, iGATE, Dell, TCS, Unisys,
Delphi, Huawei, Oracle, Perot Systems. Captive centres of Tesco, Shell, Aviva, GM,
Schneider Electric, GE and DaimlerChrysler are also located in Whitefield. Flowserve, a
100% subsidiary of Flowserve Corp (NYSE:FLS) also has a Manufacturing Plant and R&D
centre located in EPIP Area.

The Inner Ring Road cluster near the HAL Airport in Challaghatta includes Dell, Microsoft,
IBM, Yahoo, NetApp, McAfee, Bearing Point, Fidelity, ANZ, LG, Covansys, Synergy, PSI
Data, Target, Misys, Dendrite, Sasken, BPL Sanyo, Open Silicon and Lenovo.

The Bellandur Outer Ring Road cluster houses Accenture, Intel, Aricent, Symbol, Cadence,
Cisco, Nokia, Honeywell, ARM, Cummins, JP Morgan Chase, Oracle, Logica CMG and i2
Technologies.

Bagmane Tech Park located in C. V. Raman Nagar off Old Madras Road, houses Oracle
(formerly i-flex Solutions), Motorola, Texas Instruments, Samsung, Dell and Cognizant,
among other companies. Old Madras Road also hosts C-DAC,one of the premier Govt of
India's IT R&D institute.

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Manyata Technology Park is a SEZ (special economy zone) in Nagawara along the outer ring
road where many MNCs have put office. IBM, Philips, NXP, Alcatel-Lucent, Nokia-
Siemens, Cognizant Technology Solutions are some of the major companies in this area.

In August 2005, the Bengaluru Forum for IT (BFIT), which consists of 18 major
multinational IT firms including Sun Microsystems, Texas Instruments, Philips, Novell,
vMoksha, Synopsis, Hewlett-Packard and Motorola, threatened to boycott the Bengaluru IT
convention. The proposed boycott was designed to indicate the displeasure of local and
international technology companies with the city's lack of progress on the infrastructural
front. Increasingly, new IT centres are being built away from this city due to long inner-city
commute times, poor infrastructure, high land and labour costs, increasing environmental
problems and labour retention issues.

Biotechnology

Biocon, headquartered in Bengaluru, is one of India's largest biotechnology companies.

Biotechnology is a rapidly expanding field in the city. Bengaluru accounts for at least 97 of
the approximately 240 biotechnology companies in India. Interest in Bengaluru as a base for
biotechnology companies stems from Karnataka's comprehensive biotechnology policy,
described by the Karnataka Vision Group on Biotechnology.[9] In 2003-2004, Karnataka
attracted the maximum venture capital funding for biotechnology in the country - $8 million.
Biocon, headquartered in Bengaluru, is the nation's leading biotechnology company and
ranks 16th in the world in revenues.

Institute of Bioinformatics and Applied Biotechnology (IBAB), initiated by Biotechnology

vision group, ICICI and Biocon (located at ITPL) is trying to shape revolutionary scientists in
the field.

Like the software industry which initially drew most of its workforce from the local public
sector engineering industries, the biotechnology industry had access to talent from the
National Centre of Biological Sciences (NCBS) and the Indian Institute of Science (IISc).

And Indian Biotechnology Research Organisation (IBRO) is recently under process of

development to boost Biotechnology Growth in India, providing the Advanced Research and

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Talent pool to India from IBRO, whose mission and vision is Research and Development in
Biotechnology to make India as a Global Leader in Biotechnology.

Other Major Biotechnology company based out of Bengaluru is Advanta India.

Other industries

Bengaluru accounts for 70% of all rose exports from India and leads in floriculture business.
Karuturi Global Limited located in Bengaluru is world's largest grower of cut roses.

Some of the other major companies headquartered in Bengaluru are: Canara Bank, United
Breweries Group and GMR Group

A majority of the 3500 crore silk industry in India is headquartered in Karnataka State,
particularly in the North Bengaluru regions of Muddenahalli, Kanivenarayanapura, and
Doddaballapura the upcoming sites of a 70 crore "Silk City".[12] Muddenahalli-
Kanivenarayanapura, in the outskirts of Bengaluru, are the sites of the upcoming Sri Sathya
Sai Baba University and College of Medicine, Indian Institute of Technology Muddenahalli,
and 600 crore Visvesvaraya Institute of Advanced Technology.[12][13][14] Devanahalli is
set to be the site of a 9500 crore Devonahalli Business Park, near the Bengaluru International
Airport.[15] These developments are set to contribute significantly to Bengaluru's economy
by creating jobs, expanding educational opportunities, and spurring infrastructure.

. Business and Bangalore-Engineered for growth

The cantonment history of Bangalore is long lost.

Bangalore developed its Engineering Educational Institutions over the last century and
formed the Hindustan Machine Tools, Bharat Electronics Limited and Indian Telephone
Industries. In the private sector, Motor Industries Company better knew as MICO the
automotive components manufacturer, a subsidiary of Robert Bosch GmbH of Germany and
WIDIA the machine tool manufacturer. These companies employing together over 50,000
skilled employees developed their ―old economy‖ products with great success. However, the

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last ten years-possibly less-have seen the emergence of the new economy. Bangalore is
leading the country in the development of software companies of world class. The two stars
are Infosys Technologies and WIPRO. These companies have drawn from the same source-
the excellent educational centres of Bangalore. Where the engineering companies looked
primarily for male employees, the new software companies have opened up a whole new
field of opportunity for the women employees- their percentage in the software companies
being as high as 25%. These companies have also through their rapid growth developed a
number of highly rewarded employees through their generous stock option schemes. A first
in India and an important part in the democratization process of industrial ownership in India.

Bangalore is also a leader in exports to different parts of the world. Its textile exports,
especially silk are very high and account for a large portion of state revenue. Due to a large
number of granite quarries in and around the city granite exports are also very high. Then
there is sandalwood and agarbattis (incense sticks) that are also thriving businesses and
international exports. Clearly, these are areas of high growth that will see significant
developments in the years to come.

Bangalore sees this rapid growth cause some problems-affluence bringing heavy pressure on
the infrastructure-in particular the roads over-burdened with a range of new cars and two-
wheelers. But the corporate citizens of Bangalore have been a concerned lot and support the
development of infrastructure with an active State Government leadership.

It is imaginable that the next phase of development in Bangalore will marry both software
and engineering hardware skills to produce intelligent products like the new generation of
white and brown goods, electronic controlled components to make cars and driving safe and
more economical.

Bangalore has the foundation to be the industrial leader in India for the new millennium.

Bangalore Development Authority (BDA)

Bangalore Development Authority is the Planning Authority for Bangalore Metropolitan

area. As a Planning Authority, BDA has to prepare the Comprehensive Development Plan
(CDP) for Bangalore Metropolitan area. CDP will be revised once in ten years as per section

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25 of the Karnataka Town and Country Planning Act 1961. The first Comprehensive
Development Plan for Bangalore Metropolitan area was approved on 12.10.1984.
Subsequently Revised CDP was approved on 05.01.1995 which is still in force. The total
jurisdiction of BDA as per Revised CDP is 1279 Sq. Kms. area. Out of this, the Green Belt
area covers 682 Sq. Kms. The conurbation area (urbanisable area) is 597 Sq. Kms. including
spotted development. Out of this conurbation area, about 225 Sq. Kms. areas is the Bangalore
Mahanagara Palike area. BDA has now taken up re-revision of CDP, which is under progress.

Metropolitan area of BDA covers the following taluks as per 1995 Revised CDP.

Bangalore North, Bangalore South, Bangalore East (Now called), Anekal (Part), Hoskote
(Part)

Devanahalli (Part) Magadi (Part) and Nelamangala (Part)

The main activities of the section are as follows:

• Preparation of Comprehensive Development Plan for the Bangalore Metropolitan

Area.

BDA is the Planning Authority for Bangalore Metropolitan Area. Comprehensive

Development Plan will be revised once in 10 years as per section 25 of K.T. & C.P. Act
1961. The first Comprehensive Development Plan for Bangalore Metropolitan Area was
prepared and approved on 12.10.1984. Subsequently Revised Comprehensive Development
Plan was approved on 05.01.1995 which is still in force. As per Section of 25 KT & CP Act
1961. BDA has taken up revision of Comprehensive Development Plan which is under active
progress.

• Preparation of schemes and layouts plans for BDA schemes.

After acquisition of lands by BDA, Town Planning Section will prepare for BDA lands under
section 16(d) of BDA Act 1976. At present Authority has taken up Arkavathy scheme
providing for 20,000 sites.

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• Approval of residential Industrial & Commercial Layouts in favour of House Building Co-
Operative Society (HBCS) / Institutions and individuals and also approval of development
plan for Group Housing Scheme.

After receipt of applications from HBCS, individuals and institutions, proposal will be
examined as scrutinised with reference to the Zoning of Land use regulations of RCDP and
also land use of RCDP. No Objection Certificates from BWSSB, Bescom, and Pollution
Control Board are required in addition to other documents such as ownership conversion of
land etc. Likewise authority also receives application for approval of development of plan for
group Housing. In this case if it is more than Ground + Four and above Floors, No Objection
Certificates from Air Port Authority, Telecom (BSNL) Fire-force are required in addition to
BWSSB and KPTCL. No Objection Certificates. Both layout and Development Plan are
considered as per norms are as prescribed in the Zoning Regulations.

• Change of Land Use.

Authority receives applications for change of land use from Residential to Commercial,
Industrial to Residential, Public and Semi Public to Residential etc. This application will be
processed under section 14: A of KTCP Act 1961. Objection from the public will be invited
from calling objections, if any within16 days from the notification published in the New
Papers. After this subject will be placed before the Committee for taking a decision. The
cases which are approved by the Committee will be sent to the Government for according
approval for Change in Land Use. After seeking Government Approval, a necessary fee is to
be collected and Commencement Certificate will be issued.

• Scrutiny of Multi Dwelling Apartments.

Town Planning Section furnishes opinion for sanctioning Multi Dwelling Apartments when
cases referred by the Engineering Section.

• Approval of Bifurcation & Amalgamation of Plots.

Approval granted as per the provisions of Zoning Regulations.

• Furnishing Technical opinion on planning matters to various other sections of

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BDA, Government department, agencies, and town Planning Section furnishes opinion in
respect of Town Planning matters, both within the state and outside the State Government
and other agencies.

Second Revision of comprehensive development plan:

Under Section 25 of the KTCP Act, 1961 Revision of Comprehensive Development Plan
(CDP) activity is periodic, once in ten years. The CDP of Bangalore, which was originally
prepared and approved by Government in 1984 and later revised (first revision) and approved
in 1995, needs second revision based on up to date physical developments and trends in
growth of the Metropolis. Also, it is mandatory, under Section 25 of the KTCP Act to revise
the CDP within 10 years after it is approved by Government.

Accurate, comprehensive and scientifically prepared base maps at different scales were
necessary to commence the work on Second Revision to CDP. For this purpose Government
in December 1998 approved the proposal of BDA for getting maps prepared from Aerial
Photography by the NRSA of Hyderabad. NRSA had delivered first proof plots at scale
1:2,000 by July 2002. The proof plots were checked and returned to NRSA. NRSA was to
effect corrections to maps and deliver second proof plots. Digital data and hard copies of the
corrected maps are adequate to carry out planning surveys and planning studies. Therefore,
work on Second Revision to CDP could commence from April, 2003. For the second revision
of CDP and other services under the Indo - French Protocol, arrangement was being made to
engage a French consultant. In this connection, a Memorandum of Understanding was signed
in February 2003 with the BDA and M/S Strategic Conseil Etudes (SCE) consortium
comprising the City Government of Paris (APUR) - the Greater Paris Development and
Planning Authorities (IAURIF), the Sorbonne University and the Group 8; in the presence of
French Prime Minister and the Hon'ble Chief Minister of Karnataka.

The commercial contract was finalised and signed on the 2nd of June 2003, officially
launching the MSDI project, comprising among other activities, the 95 CDP revisions.

To tackle the CDP revision exercise in the time frame and legal frame work (section 25 of the
KTCP Act), four main components have been initiated in parallel:

a. A holistic data collection process among the main private and public stakeholders.

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b. A comprehensive ground Existing Land Use Survey including the CMC's and the BCC
areas

c. "Urban diagnosis" and furnishing the "scientific" elements for 2020 "Bangalore vision"

d. The mapping and data consolidation activities, comprising of the preparation of the spatial
data for urban planning and city management perspectives (data modelling, detailed data base
and GIS design, etc.)

City diagnostic surveys have been completed by the consultant which covers major areas like
population structure, urban pattern, social development, socio-economic matters, housing,
civic amenities, infrastructure, traffic and transportation and institutional efficiency etc.

The map supplied by the NRSA in the scale of 1:2000 comprising of 699 tiles which was
delivered to the consultants have been corrected for Geometrical consistency and
standardization and all the maps are made GIS enabled.

In addition, ward maps have been prepared for all the CMCs after collecting data from the
concerned CMCs.

The complete integration of survey numbers along with the existing village boundaries has
been completed and exact boundaries of all the administrative limits of CMCs within BDA
limits are marked. The digital version of the existing land use is prepared for all the
agglomeration areas covering an extent of more than 500 sq.km

Establishment of Survey Control Points:

Scientifically prepared large-scale topographical maps have reference to the World Geodetic
System. Maps need updating by survey for new developments after the survey (Aerial
Photography) for initial mapping. To carryout field survey manually, reference points, which
are connected to the reference for initial mapping are required. For this purpose, the
Authority had constructed during the year 2000, 600 survey monuments with specified
metallic markers. The position of the points, with reference to the World Geodetic System in
terms of co-ordinates was to be determined using Global Position System (GPS) receivers by
observing satellites. This work had been entrusted to the Survey of India considering the
technical, operational and cost parameters. The Survey of India has commenced the

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reconnaissance work in December 2002. GPS observation work was commenced on Jan. 27,
2003 and was completed for 510 points in the first week of March 2003. The second phase of
work to fix additional control points to fill up gap areas and to re-establish disturbed points
was taken up by BDA in June 2003 and additional points were fixed. Survey of India
completed the GPS and Levelling work in October 2003. The final data for a total of 714
survey control points covering the entire Bangalore Metropolitan Area has been received
from Survey of India in November 2003.

Airfield Environmental Management Committee:

1. Government vide its order no. HUD 98 TTP 80 dt. 26.08.1980 has constituted a Committee
for Airfield Environmental Management under the Chairmanship of the Chairman, BDA. For
this Committee the Town Planner Member of the Authority is the Member Secretary. Now,
the Government is pleased to reconstitute the Committee for Environmental Management of
Bangalore Airfields including the areas of the proposed International Airport at Devanahalli
vide Govt. Order No. UDD 115 BEM RUPRA 2002 Bangalore dated 12th August 2002.
Newly reconstituted committee held its 1st meeting on 7.9.2002 under the chairmanship of
BDA Chairman.

As per the proceedings of the meeting, it was decided to write to the Government to include
the a. Commissioner, BDA; b. Commissioner, BMRDA; c. Chairman, BIAAPA; d. Chief
Manager (Air Traffic Control), HAL, Bangalore and e. Principal Secretary to Govt. Animal
Husbandry Dept. as members in the committee. And it was felt that a Sub-Committee may be
set up to look into the implementation of all the decisions taken in the past meetings.

The sub-committee conducted a meeting and joint inspection of problematic areas around
HAL Airport on 7.5.2003 under the leadership of Sri Rin Sanga, the Chairman, BDA and
Airfield Environment Management Committee. The concerned authorities were intimated to
take appropriate action. This Committee is conducting meetings from time to time in addition
to above all.

2. Within the LPA, land use violations are being identified and in such cases suitable action is
being initiated under K.TCP Act 1961.

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3. Technical opinion is being furnished by the Town Planning Section to the Government,
local bodies and to other agencies as and when referred to.

Warning to land developers

The land owners /developers are hereby warned not to form unauthorised layouts in the
Bangalore Metropolitan Area and cheat the public. Formation of unauthorised layouts
without approval by BDA will attract penalty as well as imprisonment on conviction under
the KTCP Act 1961. Further, BDA is constrained to acquire the lands where such
unauthorised layouts are formed.

Conclusion

Nowadays, corporate governance has become an important subject. It is common that the
minority investors rarely attend the meeting where it is pretty clear as to who has the power
to implement changes. In the capital market, large investment banks particularly, foreign
institutional investors perform the function of making a judgement about the company and its
management. There is a strong incentives for corporate management s themselves to adopt
transparent processes and good governance practices. They have sought to cultivate an image
of being honest with their investors and of being concerned about the shareholder value
maximization. The situation is changing in India and the more progressive companies are
voluntarily accepting tougher accounting standards and more independent directors than are
mandated by law. They are also adopting more healthy governance practices.

In India, the Confederation of Indian industry took the lead in

framing a desirable code of conduct in corporate governance in April 1998. This was
followed by the recommendations of the Kumar Mangalam Birla committee on corporate
governance appointed by the securities exchange board of India (SEBI). The recommendation
was enshrined in Clause 49 of the listing agreement of every Indian stock exchange. An
important decision taken in this regard in India is that all listed companies should have 50%,
independent directors on their board. In addition, the department of company affairs,
government of India had constituted a nine member committee under the chairmanship of Mr

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Naresh Chandra, the former Indian ambassador to the US, to examine various corporate
governance issues, and the major recommendation have been implemented.

Reference

 www.business.gov.in
 www.bda.in
 Business Environment by Justin Paul

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