CORPORATE GOVERNANCE RATING OF

BHARTI AIRTEL

Submitted By:

Ankit Mishra
Ankita Bhatia
Ankita Aurora
Anuj Bahl
Arpit Tandon
Arpita Mathur

CONTENTS
TOPIC

PAGE NO

Introduction of Bharti Airtel

2-3

CSR Activities of Bharti Airtel

4-5

Governance Metric International -Introduction

6-7

Corporate Governance Rating for Bharti Airtel

CG Rating for Board Accountability

9-10

CG Rating for Financial Disclosers and Internal Controls

11

CG Rating for Shareholder rights

12

CG Rating for Remuneration

13-14

CG Rating for Market Control and Ownership

15

CG Rating for Corporate Behavior

16

Overall CG Rating

17
18

Learning
19-20
Opinions and Suggestions

BHARTI AIRTEL
Bharti Airtel Limited, commonly known as Airtel, is the largest Indian company providing
telecommunications services, headquartered at New Delhi, India. It operates in 20 countries
across South Asia, Africa and the Channel Islands. Airtel has GSM network in all countries,
providing 2G, 3G and 4G services depending upon the country of operation. Airtel is the world's
third-largest mobile telecommunications company with over 261 million subscribers across 20
1

countries as of August 2012. It is the largest cellular service provider in India, with 186.9 million
subscribers at the end of August 2012.Airtel is the third largest in-country mobile operator by
subscriber base, behind China Mobile and China Unicom.
Airtel is the largest provider of mobile telephony and second largest provider of fixed telephony
in India, and is also a provider of broadband and subscription television services. It offers its
telecom services under the Airtel brand, and is headed by Sunil Bharti Mittal. Bharti Airtel is the
first Indian telecom service provider to achieve Cisco Gold Certification. It also acts as a carrier
for national and international long distance communication services. The company has a
submarine cable landing station at Chennai, which connects the submarine cable connecting
Chennai and Singapore.
It is known for being the first mobile phone company in the world to outsource all of its business
operations except marketing, sales and finance. Its networkbase stations, microwave links, etc.
is maintained by Ericsson, Nokia Siemens Network and Huawei, and business support is
provided by IBM, and transmission towers are maintained by another company (Bharti Infratel
Ltd. in India). Ericsson agreed for the first time to be paid by the minute for installation and
maintenance of their equipment rather than being paid up front, which allowed Airtel to provide
low call rates of 1/minute (US$0.02/minute). During the last financial year (200910), Bharti
negotiated for its strategic partner Alcatel-Lucent to manage the network infrastructure for the
tele-media business. On 31 May 2012, Bharti Airtel awarded the three year contract to AlcatelLucent for setting up an Internet Protocol access network (mobile backhaul) across the country.
This would help consumers access internet at faster speed and high quality internet browsing on
mobile handsets

History
Sunil Bharti Mittal founded the Bharti Group. In 1983, Mittal was in an agreement with
Germany's Siemens to manufacture push-button telephone models for the Indian market. In
1986, Mittal incorporated Bharti Telecom Limited (BTL), and his company became the first in
India to offer push-button telephones, establishing the basis of Bharti Enterprises. By the early
1990s, Sunil Mittal had also launched the country's first fax machines and its first cordless
2

telephones. In 1992, Mittal won a bid to build a cellular phone network in Delhi. In 1995, Mittal
incorporated the cellular operations as Bharti Tele-Ventures and launched service in Delhi. In
1996, cellular service was extended to Himachal Pradesh. In 1999, Bharti Enterprises acquired
control of JT Holdings, and extended cellular operations to Karnataka and Andhra Pradesh. In
2000, Bharti acquired control of Sky cell Communications, in Chennai. In 2001, the company
acquired control of Spice Cell in Calcutta. Bharti Enterprises went public in 2002, and the
company was listed on Bombay Stock Exchange and National Stock Exchange of India. In 2003,
the cellular phone operations were rebranded under the single Airtel brand. In 2004, Bharti
acquired control of Hexacom and entered Rajasthan. In 2005, Bharti extended its network to
Andaman and Nicobar. This expansion allowed it to offer voice services all across India. In
2009, Airtel launched its first international mobile network in Sri Lanka. In 2010, Airtel acquired
the African operations of the Kuwait based Zain Telecom.In March 2012,Airtel launched a
mobile operation in Rwanda.
Organizational Structure
Airtel's initial organizational structure concentrated on the hierarchy of the operations inside the
company as a whole. The structure depicted the corresponding operation/region of different incharges and it didn't hold anyone responsible for each of its services. So, the company found it
better to restructure its organizational chart. The transformed organizational structure has two
distinct Customer Business Units (CBU) with clear focus on B2C (Business to Customer) and
B2B (Business to Business) segments. Bharti Airtel's B2C business unit will comprehensively
service the retail consumers, homes and small offices, by combining the erstwhile business units
- Mobile, Telemedia, Digital TV, and other emerging businesses (like M-commerce, M-health,
M-advertising etc.). The B2C organization will consist of Consumer Business and Market
Operation.

CSR ACTIVITIES OF BHARTI AIRTEL

Corporate Social Responsibility is embedded in, and built upon, the stated values of Bharti
the institution. These values guide all their activities and each employee is encouraged to take
decisions and design business-linked processes that are sensitive to communities and
environment.
We have an obligation to fulfill to society and the communities in which we operate, and help
improve the quality of life for everyone, today and in the future. Based on the basic guidelines
and direction provided in the Code of Conduct, Bharti has undertaken many community
programs.
Bhartis contribution to society is structured through two channels, namely:
(a) Bhartis Corporate Social Responsibility (CSR) Initiatives, including initiatives undertaken
by way of employee mobilization as well as running environment related programs
(b) Bharti Foundation, a separate vehicle established in 2000 to lead the CSR agenda of Bharti
Group of Companies
CSR Initiatives at BHARTI AIRTEL
Bharti Airtel has a nation-wide presence that has grown at an exponential rate in the recent years.
Each local office undertakes special programs for the local community, thereby reaching out to
people. Many projects like material collection drive and blood donation camps are organized for
the welfare of the underprivileged community.
Response to Disaster
Bharti Airtels response to Tsunami Disaster: Bharti Airtel undertook the following
initiatives for immediate relief and rehabilitation to Tsunami victims: Built a mobile
network in Andaman & Nicobar islands in less than 3 months to aid rapid rehabilitation
of the island Donated Rs. 1 Crore to the Prime Ministers Relief Fund, in addition to
contributions from employees Created 29 Airtel Crisis Communications centres in Tamil
Nadu Raised resources for Tsunami victims by initiatives such as a Benefit Cricket
Match.
Bharti Airtel during Mumbai Floods: Bharti Airtel employees climbed up the towers to
restore the networks so that our customers could conveniently reach its employees.
Bharti Airtels response to Kashmir earthquake: Bharti Airtels Rapid Response Team
responded to the Kashmir earthquake by bringing more than 2000 food packets and water
bottles to the affected area. Money, clothes, woolens and blankets were also collected
from employees to distribute among earthquake victims.

Other initiatives of Bharti Airtel

Bharti Airtel employees have undertaken varies initiatives to reach out to

the local community. Some of such initiatives are listed below Airtel Ashiana for
underprivileged children at the Mohali office of Airtel BIL North tied up with an NGO to
distribute daily surplus food to needy children Airtel Experience Centre by Access MP
for the benefit of the benefit of visually impaired people as well as people from deprived
section of society
Mobile Services Jammu & Kashmir donated free medicines, stationery, clothes and other
utility items at the Missionaries of Charity Home for Destitute
Mobile Services MP & CG supported the WalkaThon to create awareness about
diabetes on World Diabetes Day, organized by the Indian medical Association
Airtel Maharashtra & Goa team visited the Thalassemia Ward of Sassoor Hospital to
interact with children as well as the families affected
Airtel Kerala team visited an old age home and shared a day full of fun with the members
of the home
A tree plantation drive was carried out by Access-NCR, Access-North and Access-UP
West Circles, where in free tree saplings were planted. Airtel Madhya Pradesh &
Chhattisgarh planted trees on its fourth Circle Inception Day
In Tamil Nadu, Airtel has adopted a corporation park in Chennai city.
Mobile Services Rajasthan supported the Red Ribbon Caravan initiative of the
Rajasthan State AIDS Control Society, to spread awareness about HIV/ AIDS. During the
month-long campaign a caravan of five vans covered 32 districts of Rajasthan, to spread
the awareness of HIV/ AIDS.
Airtel Delhi organized a Blood Donation Camp in association with Indian Red Cross
Society

Bharti Foundation
Although CSR is executed at all levels in the organization, the Promoters of Bharti Enterprises
established Bharti Foundation in 2000 with a vision, To help underprivileged children and
youth of our country realize their potential. Bharti Foundations mission is to create and support
programs that bring about sustainable changes through education, use of technology and
information and best practice sharing. Bharti Foundation has established itself the goals of
improving accessibility and quality of education at the school level for underprivileged children,
and to provide education and training opportunities to youth.

GOVERNANCE METRIC INTERNATIONALs

5

GMI is a pioneer in providing independent Corporate Governance, ESG and Accounting Risk
ratings. It was the first agency to rate Corporate Governance practices of firms in 2000 and has
been continuing to do so since then. At present it provides CG ratings to 4196 firms worldwide.
The GMI rating report includes a summary of the company's overall governance profile along
with an analysis on each of the six research categories employed by GMI:

Board Accountability

Financial Disclosure and Internal Controls

Shareholder Rights

Executive Compensation

Market for Control and Ownership Base

Corporate Behavior and CSR Issues

In addition to an overall GMI rating the company gives, there is a separate rating given each for
the above mentioned six research categories. Therefore the rating highlights the companies with
good governance attributes, identifies deficient areas in companies with an otherwise acceptable
governance profile and brings to attention those companies with fragile corporate governance
architecture or practices. As an additional tool, GMI provides a "red flag" service to alert
subscribers about a governance issue that has the potential to affect shareholder value.
Methodology
GMI rating methodology is based on securities regulations, stock exchange listing requirements
and various corporate governance codes and principles. GMIs objective rating methodology,
based on yes, no or not disclosed responses to its metrics, measures how companies
compare on standards of corporate governance. The GMI research process starts with a review of
all relevant public data, including regulatory filings, company websites, news services and other
websites. The data collected from all these sources are entered into a relational database. Once
6

the research template answers have been compiled and have been subjected to various quality
control checks, data entry reports are sent to each company in the GMI universe for a final
accuracy check. After any company adjustments are made, the data are locked and GMI runs a
proprietary scoring algorithm that calculates and assigns ratings to each company. The
Companies are scored on a scale of 1.0 (lowest) to 10.0 (highest) and are always scored relative
to the other companies in GMI research universe. The Companies are assigned 14 ratings by
GMI. The first are GMI global ratings. The Global ratings are designed to demonstrate the
comparison of each company's governance profile with all others in the GMI universe. The
Global ratings include an overall GMI score and separate scores for each of GMI's six research
categories. Each company rated by GMI also receives "home market" ratings that shows how
well its governance policies and practices are compared to others in its home country or region.
The Home market ratings also include an overall GMI score and separate scores for each of
GMI's six categories of analysis.
The Ratings is as follows:

A rating of 9.0 or higher is considered to be well above-average.

A rating of 7.5 to 8.5 is considered to be above-average

A rating of 6.0 to 7.0 is considered average

A rating of 3.5 to 5.5 is considered to be below-average

A rating of 3.0 or less is considered well below-average

Corporate Governance Rating for Bharti Airtel

In order to calculate the overall corporate governance ratings of Bharti Airtel, in each of the
6 categories, each question has been given equal weightage. Moreover, since each category has a
different number of questions, it has been scaled down to 10, wherein each favorable answer
attracts 1 point. The category rating has then been calculated as the number of points divided by
the total number of questions multiplied by 10.
In order to arrive at the overall rating, we have assigned weights to each of the above categories.
While assigning these weights we have considered the viewpoint of the investors and generally
accepted corporate governance practices and the kind of industry in which the company is
present. Integrity of financial statements and ethical behavior of the board and top management
are considered to be the key objectives of sound corporate governance. Any kind of fraudulent or
investigation pertaining to accounting irregularities in the case of Bharti Airtel has been
considered a major concern for investors of the company with regard to corporate governance
procedures implement within the company. Also since GMI is involved in providing home
market rating as well as Global rating, in the case of Bharti Airtel we have gone for Home
market rating .The following have been highlighted in the Board Accountability and Financial
Disclosure and Internal Controls category. We have assigned weights of 28% and 32% to each of
the category. The company being a leader in telecom sector, its core business is not related to
environmental issues or any labor related issues , however issues such the overall corporate
culture that is prevalent in the organization and how the work environment motivates employees
to join the organization have been highlighted in this case. Hence we have assigned a weightage
of 10% to the category Corporate Behavior since it would justify reasons why one should work
in Bharti Airtel. Bharti Airtel being a publicly listed company and is expected to have certain
procedures to address shareholder concerns and assure the rights of the shareholders. To
emphasize this point we have assigned 15% weight to the category Shareholder rights.
Remuneration committee and Market for control have been assigned weights of 7% and 8%
respectively.
8

BOARD ACCOUNTABILITY
Combined Chair/CEO

Yes

Non-executive directors have

a formal session without the
executive members at least
once
aBoard
year policy is for the nonexecutive directors to meet in
executive session before or
after every board meeting, time
permitting

Yes

Has a designated "lead" or senior

non-executive director

Ye
s

Non-executive Chair

No

At least one director serves on

the boards of four or more
public companies

No

is

No

Ye
s

Directors subject to annual

election by all shareholders

Yes

Uses, or has adopted, some

form of majority voting in the
election of directors

No

Discloses corporate governance

policies or guidelines

Ye
s

All directors attended at least

75% of the board meetings and
committee meetings in the last
fiscal year
The company discloses an
over-boarding policy limiting
the number of directorships
held by non-executive directors
The company discloses an
over-boarding policy limiting
the number of directorships
held by executive directors

Yes

Executive
Chairman,
Chief
Executive Officer or Managing
Director (as applicable) serves on
the boards of three or more
public companies
Related-party
transactions
involving officers or directors in
the past three years
Related-party
transactions
involving the Chairman, CEO,
President, COO or CFO or a
relative thereof, or the controlling
shareholder, if any, within the last
three years
Discloses a code of ethics
for senior executives or the
employee code of ethics
also
covers
senior
executives
All non-executive directors own
shares after excluding options
held

Non-executive
independent

chair

Yes

Yes
Yes

Yes
Yes

Ye
s

All executive directors own

shares after excluding options
held

No

Ye
s

Within the last three years,

company has failed to adopt the
specific recommendations (or a
comparable alternative) of a
shareholder proposal approved
by a majority vote

Ye
s

Analysis of the rating:

Sunil Bharti Mittal is the Chairman and Managing Director.

Mr. N. Kumar is the lead director since April, 2010.

There are sixteen members on the Airtel Board with an executive Chairman Director,
beside six non-executive and eight non-executive independent directors. Three of the
Board members including Chairman & Managing Director are founder members.

Annual general meetings are being held.

New board members selection is responsibility of the whole board and also approved by
the shareholders at the annual general meeting.

The non-independent directors/shareholders representative directors are nominated by

the respective shareholders; independent directors are selected from diverse academic,
professional or technical business background depending upon the business need.

Airtel has adopted a comprehensive policy on independent directors that sets out the
criteria of independence, age limits, recommended tenure, committee memberships,
remuneration and other related terms of appointment.

All independent directors meet separately prior to the commencement of every Board
meeting and once a year with the statutory and internal auditors, without the presence of
any non-independent director or representatives of management to discuss and form an
independent opinion on the agenda items and other board related matters.

The Board has laid down Code of Conduct for all directors and senior management
personnel of the Company, which is available on the website of the Company
(www.airtel.com).

In the last three years there have been no instances of non-compliances and no penalties
have been imposed on company by stock exchanges or SEBI or any other statutory
authority

The Final Rating for Board Accountability

Rating: (14/20)*10 = 7

10

FINANCIAL DISCLOSURE AND INTERNAL CONTROLS

Audit committee wholly
composed of independent
members
At least one member of the
audit committee serves on
the boards of four or more
public companies
At least one non-executive
member of the audit committee
has expertise in accounting or
financial management
Non-executive members of the
audit committee with expertise
in accounting or financial
management form a majority
of the committee
Chair of the audit
committee
is
nonexecutive
and
has
expertise in accounting
or financial management
At least one non-executive
member of the audit committee
has
substantial
industry
knowledge
Non-executive members
of the audit committee
with substantial industry
knowledge
form
a
majority
of
the
committee
Chair of the audit
committee
is
nonexecutive
and
has
substantial
industry
knowledge
Paid its auditor less for audit
and audit related services
than for other services in the
last year reported

No
Yes
Yes

Yes

Yes

Yes
No

Hada material earnings restatement in the

past three years (greater than five percent
of net income or $25M, whichever is less)
Currently
under
formal
investigation for accounting
irregularities

No
Yes

Has taken two or more unusual and nonrecurring charges (representing five
percent or more of revenue, five percent
or more of shareholders equity (net
assets) or more than $500M in total)
within the last three years
Someone other than senior management
(such as the audit committee,
shareholders or the board) has sole
authority to hire and fire the companys
outside auditor
Audit committee has sole authority to
approve any non-audit services from the
company's outside auditor

No

Yes

Yes

Makes comprehensive disclosures on

its enterprise risk management policies
(ERM) in its annual report or in other
publicly available sources
The board has adopted a separate
committee or subcommittee responsible
for oversight of risk management

Yes

Yes

Yes

At least one non-executive member of

the risk committee or the board has
expertise in risk management

No

No

At least one non-executive member of the

risk committee has substantial industry
knowledge

Yes

Analysis of the Rating:From the table above, there is sufficient amount expertise in the audit committee for Bharti
Airtel, which is a fair indication as far decision making and accuracy of the companys financial
data is concerned. However due to the fact that the company is being investigated by the
government on the basis of improper accounting of License fees and spectrum charges would
raise issues regarding its accounting procedures and overall transparency regarding financial
disclosures .The risk management committee on the other hand lacks expertise in risk
management, and hence Bharti Airtel underscores in risk management. It scores high on this
aspect due to the fact that it gives particular importance to its auditing process.
The Final Rating for Financial Disclosure and Internal Controls
Rating: (14/18)*10 = 7.77
11

SHAREHOLDERS RIGHTS
All common or ordinary
equity shares have oneshare, one-vote, with no
restrictions

N
o

Voting rights capped at a certain

percentage, no matter how many
shares the investor owns

N
o

Voting rights different for

domestic or non-resident investors
Voting rights different depending
on the duration of ownership
Minimum holding period in order
to vote

N
o

Shareholders can convene an

EGM with 10% or less of the
shares
Confidential voting with no or
reasonable exceptions
Cumulative voting in the election
of directors

Ye
s
Ye
s
Ye
s

N
o

All vote results for the last

shareholder meeting disclosed
within 14 calendar days of the
meeting

Ye
s

N
o

Shareowners can act

in concert through
written
communication

Yes

Analysis of the Rating:The shareholding pattern and control appears to be fragmented, as the full control of the
shareholding is not in the hands of few. However, there is considerably large amount of control
dilution describing the reduction in ownership percentage or loss of a controlling share of an
investment's stock high is not a good sign for the company. As far as the topic of fair election of
directors and disclosure of shareholders meeting are concerned, Bharti Airtel has been fully
transparent in these matters .The only grey area that remains is that of control dilution.

The Final Rating for Shareholders Rights

Rating: (8/10)*10 = 8

REMUNERATION
12

Remuneration committee
wholly composed of
independent members

Discloses specific numeric

performance targets for the
upcoming fiscal year for at
least
one
of
the
performance objectives (not
just
a
target
award
percentage of salary)
Theretention period for
some or all shares issued
upon exercise of stock
options is 3 years or longer
Some or all shares issued upon
exercise of stock options are
required to be held until
retirement
Discloses a policy requiring
company executives to retain
some or all of restricted shares
for some time after they have
completed have completed
their performance conditions.
There tention period for some or
all restricted shares that have
met all performance conditions
is 3 years or longer

No

Shareholders have the ability to

affect remuneration policy
through shareholder approval
of the remuneration committee
report,
the
proxy's
Compensation Discussion and
Analysis section or something
comparable ("Say on Pay")
The remuneration committee
has discretion to alter the
criteria and/or incentive targets
for management after being
established or has power to
grant incentives or bonuses on a
discretionary basis.
Claw back policy for any
bonuses, options and/or other
compensation
based
on
accounts that end up being
restated at a later date (beyond
Sarbanes-Oxley
Act
requirements or equivalent)
Discloses
stock
ownership
guidelines for the CEO

Ye
s

Discloses stock ownership

guidelines for the rest of
senior management

Ye
s

Ye
s

Discloses stock ownership

guidelines
for
nonexecutive directors

Ye
s

No

No

Ye
s

Ye
s

Yes

No

Ye
s

Analysis of the Rating:

Remuneration committee consists of six members of which only 5 are independent.

The performance targets with the performance indicators are approved by the HR

committee based on the balanced scorecard only at the beginning of the fiscal year.
The commission as well as the sitting pay is clearly stated by the company non-executive

and independent non-executive directors.

According to clause 45(a) of AOA the remuneration committee has the power to alter, any

remuneration paid to senior management of the company.

The options can be converted into equity shares either in full or in tranches at anytime up
to 7 years from the grant date. The unexercised vested options can be carried forward
throughout the exercise period. The options which are not exercised will lapse after the
expiry of the exercise period.

13

The executive directors remuneration has two components: fixed pay and variable pay.
While the fixed pay is paid to the directors on a monthly basis, the variable pay is paid on

the basis of individual performance after the end of the financial year.
Mr. Manoj Kohliwas awarded 400,000 stock options at a discounted exercise price of

Rs.5 per option, with differential vesting period spread over 5 years.
Remuneration Committee submits its proposal in front of AGM. And shareholders
approve their recommendations.

The Final Rating for Shareholders Rights

Rating :( 9/12)*10=7.5

14

MARKET FOR CONTROL AND OWNERSHIP

Single shareholder controls or

shareholder group acting
together control over 50% of
the company's voting power
("Majority Owner")
Involved in a series of crossshareholdings with other (related
or unrelated) companies
Has a staggered ("classified")
board
Directors can be removed without
cause

Fair price provision is in place or

the company is subject to fair
price protection under applicable
law

No

Has adopted a shareholder rights

plan ("poison pill")

No

Ye
s

Shareholder
rights
plan
("poison pill") has been ratified
by a shareholder vote

No

Ye
s
No

Ye
s

Shareholder rights plan

includes a TIDE provision
or a three-year sunset
provision
Shareholder rights plan includes
a provision allowing it to be
redeemed by a vote of the
majority of shareholders other
than the potential acquirer
("chewable" pill)
The company has a unilateral
right to amend the
by-laws/articles
of
association/constitution without
shareholder approval

N
A
Ye
s

No

Analysis of the Rating:Following is the composition of major shareholding in Airtel:Shareholders

Bharti Telecom Limited
Pastel Limited
Indian Continent Investment Ltd.
Life Insurance Corporation of India
JP Morgan
ICICI Prudential Life Insurance
Aberdeen
Comgest S.A
Emerging Markets
Dodge & Cox

% of Shareholding
45.50
15.57
7.00
5.00
1.20
1.09
1.09
0.93
0.82
0.79

Since most of the factors are acting in favor of the company, the Company has therefore been
rated well by GMI on the grounds of market control and ownership.
The Final Rating for market control and ownership.
15

Rating: (10/10)*10 = 10

CORPORATE BEHAVIOR
Company(or a current or former senior
executive) has pending criminal litigation
against it, has been found guilty within the last
3 years, or has pled the equivalent of no
contest in such litigation in the past three
years, or has been under criminal investigation
within the last 3 years

No

Company(or a current or former senior

executive) has been subject to a formal
regulatory investigation for a material issue
other than for accounting irregularities within
the last year

N
o

Company(or a current or former senior

executive) has been cited, settled, or been
found guilty of by either national or
supranational authorities for some breach of
law involving non-accounting issues within
the last year

No

Has a policy addressing workplace safety

Yes

Discloses its environmental policies

Ye
s

Has been charged with three or more serious

workplace safety violations within the last two
years

N
o

Discloses its environmental performance

Ye
s

Alleged by a responsible party that the company

used child labor (under 14 or the minimum in
market, whichever is higher) within the last three
years

N
o

Specific
targets
for
reducing
environmental exposures are disclosed

Ye
s

Alleged by a responsible party that the

company used child labor as a source for subcontracted work within the last three years

N
o

Analysis of the Rating:Based on information available on the Bharti Airtel official website, we came to know that:

Employees in the company believe in refuse, reduce, reuse and recycle. Company has
taken many initiatives in this regard within as well as outside the company premises for
the benefit of society as well as its employees.
The new Airtel buildings recycle waste water for sanitary and cooling of equipment
purposes also have rain water harvesting systems for ground water replenishment .
As a precautionary measure, periodic fire drills are carried out in Bharti Airtel offices and
all offices have First Aid Boxes and personnel identified as First Aid specialists.
It has finalized its Environment/Health & Safety Policy (EHS) and will apply for ISO
14001 compliance within 3 years for each of its facilities.

We can see that the company has been strictly following CSR and Corporate Behavior issues and
making employees understand its importance towards environmental, social and
economicaspects while taking business decisions. It has performed well in each factor and thus
would be highly rated on these factors.
The Final Rating for Corporate Behavior
Rating: (10/10)*10 = 10
16

OVERALL RATING OF BHARTI AIRTEL

The overall rating considering the six different categories is as follows
28%*{(14/20)*10}+32%*{(14/18)*10}+15%*(8/10)*10+7%*{(9/12)*10}+8%*(10/10)*10
+10*{(10/10)*10} = 7.97
Category

Weight age

Individual CG Score

Board Accountability

28%

Financial Disclosure and Internal Controls

32%

7.77

Rights of the shareholders

15%

Remuneration

7%

7.5

Market for Control

8%

10

Corporate Behavior

10%

10

Overall score

7.97

17

LEARNING
We come to know that the company is considered way above average in terms of overall
rating by GMI.
Also the company has shown excellence in the categories of market for control, corporate
behavior, remunerations and rights of shareholders proving that it has maintained highest
standards of corporate governance and regulatory compliance and has complied with the
necessary norms.

ROOM FOR IMPROVEMENT

In terms of individual corporate governance categories more improvement might be required in
terms of board accountability and financial disclosures and internal controls where currently the
company is facing charges of money laundering market control and financial irregularities in case
of the 2g spectrum allocation.

OPINIONS AND SUGGESTIONS

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Opinions:
Good Corporate Governance practices are characterized by a firm commitment and
adoption of ethical practices by an organization in all its dealing with a wide group of
stakeholders. Corporate Governance goes beyond the practices enshrined in the laws and
is imbibed in the basic business ethics and values that needs to be adhered to in letter and
spirit. However a transparent, ethical and responsible corporate governance framework
essentially emanates from the intrinsic will and passion for good governance ingrained in
the organization.
With the increasing complexity in business of organizations, sound governance practices
are indispensible to build and sustain trust in all its stakeholders. The recent global
phenomenon like the financial meltdown, mega corporate failures and frauds has
heightened the corporate governance practices and the need for transparency and strong
business ethics.
Good corporate governance practices are also essential for a sustainable business model
for generating long term value for all its stakeholders.

Bharti Airtel has very high capability with respect to corporate governance and value
creation for all its stakeholders is the highest.

The rating reflects Bharti Airtels outstanding corporate governance practices. The
company has a well-experienced and very competent board of directors, with expertise
across global finance, telecommunication, banking, and administrative services and
consulting, Crisil said in a statement.
The board has demonstrated exemplary practices in corporate governance, focusing on
strategic oversight and business performance, processes, systems, audits, and disclosures,
and effective functioning of its various sub-committees.
The Bharti Airtel board provides strong strategic direction and management oversight
aided by the meaningful contribution of the independent directors to the boards
functioning, and the strong capabilities of Bharti Airtels operating management. The
company has demonstrated commitment to continuously improve its processes in line
with the increasing complexity of its business, it added.
Another feature of good corporate governance at Bharti Airtel is the fact that independent
directors meet separately before the board meetings. These meetings are presided by a
lead independent director.
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 This gives independent directors a platform to identify areas where they need more
clarity or information, and then put this before the board or management. The
independent directors also meet with statutory auditors without the presence of executive
management.

Suggestions:
The company can adopt some sort of majority voting in the election of directors.
Remuneration committee has 6 members of which only 5 are independent. This should
not be the case and has to be improvised upon.
At least one director should serve on the boards of four or more public companies.
Bharti Foundation was set up in 2000 as the philanthropic arm of the Bharti Group of Companies
to help bridge the education divide between urban and rural India by contributing towards the
education sector in a meaningful and substantial way. With this intent, the Satya Bharti School
Program was launched in 2006 to deliver free quality education to underprivileged children in
the rural pockets, focusing primarily on the girl child and children belonging to the minority
communities. The program aims at holistic development of children, helping them grow into
confident, employable and socially responsible citizens. Currently, more than 33,000 children are
Enrolled in 253 Satya Bharti Schools (including 236 primary, 12 elementary and five senior
secondary schools) across six Indian states. The intent of the program is to develop scalable,
sustainable and replicable components of quality education to make a large scale impact on the
education sector as a whole.
So it can try to improve the base in this area and try to open more schools and institutions
in order to reach out to more and more underprivileged children.
Company has done a lot of contribution in making the environment greener by the day
but it can also look towards activities like waste management and trying to provide
primary as well as secondary incomes through this method.
Hence it can better cater to employment using such initiatives.

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