“Committed to innovative growth, Essar Group speaks the new language of success.

The Group is judiciously invested in the commodity, annuity and services

businesses”

Genesis and evolution

The Essar Group was founded in 1969, by brothers Mr Shashi Ruia and
Mr Ravi Ruia. The 21st century for the Group has been all about consolidating
and growing the businesses.

The Ruia family’s origins are in Rajasthan. Sometime in the 19th

century, they moved to Mumbai and set up their own business. In 1956, Mr
Nandkishore Ruia, father of Mr Shashi Ruia and Mr Ravi Ruia, moved to
Chennai, capital of the south Indian state of Tamil Nadu, to begin independent
business activities. He mentored his two sons in the intricacies of business.
When Mr Nandkishore Ruia passed away in 1969, the brothers laid the
foundation of the Group.

The Essar Group began its operations with the construction of an outer
breakwater in Chennai port. It quickly moved to capitalize on every emerging
business opportunity, becoming India’s first private company to buy a tanker
in 1976. The Group also invested in a diverse shipping fleet and oilrigs, when
the Government of India opened up the shipping and drilling businesses to
private players in the 1980s.

Then, in the 1990s, Essar began its steelmaking business by setting up

India’s first sponge iron plant in Hazira, a coastal town in the western Indian
state of Gujarat. The Group went on to build a pellet plant in Visakhapatnam,
and eventually a fully integrated steel plant in Hazira.

Through the 1990s, with the gradual liberalization of the Indian

economy, Essar seized every opportunity that came its way. It diversified its
shipping fleet, started oil & gas exploration and production, laid the
foundation of its oil refinery at Vadinar, Gujarat, and set up a power plant near
the steel complex in Hazira.
 The construction business helped the Group build most of its business
assets. Essar also entered the GSM telephony business, establishing India’s
first mobile phone service in Delhi (branded Essar Cellphone) with Swiss PTT
as the joint venture partner.

The 21st century for the Essar Group has been all about consolidating
and growing the businesses, with mergers and acquisitions, new revenue
streams and strategic geographical expansion.

The Essar Spirit

Essar Group has been foraying into new international markets, and
exploring new business areas in a bid to keep its entrepreneurial spirit alive,
and to keep growing.

Our vision
We will be a respected global entrepreneur, through the power of
positive action.

Our mission
We are committed to innovative growth, through our personal passion,
reinforced by a professional mindset, creating value for all those we touch.

Our spirit
The Essar Group has changed significantly in recent years and
continues to evolve, to keep pace with the changing times. We have
undertaken a sustainable journey of transformation by foraying into new
international markets, and exploring new business areas in a bid to keep our
entrepreneurial spirit alive, and to continue growing.

To mark the phenomenal growth witnessed over the last four decades,
the Group recently unveiled its new brand identity marking a very important
milestone in its journey and reflecting a new beginning for the Group. A new
brand identity reinforces all the positives to fulfill our vision to be a global
entrepreneur through the power of positive action.
 We aim to have a robust value system comprising positive attitude,
positive action and positive achievement.

We endeavor to create enduring value for customers and stakeholders in

core manufacturing and service businesses, through world-class operating
standards, state-of-the-art technology and the ‘positive attitude’ of our people.

Privately owned and professionally managed, the Group is judiciously

invested in the commodity, annuity and services businesses. Forward and
backward integration, the use of state-of-the-art technology, in-house research
and innovation have made Essar Global a force to reckon with in each of its
businesses.

Finally, the Essar way is all about keeping its entrepreneurial spirit
alive, and to keep growing with a passion to progress and the power to
succeed with a renewed strength of purpose and commitment.

Corporate profile
Moving beyond Indian frontiers, the Essar Group continues to grow
internationally through focused strategies

The Essar Group is a multinational conglomerate and a leading player

in the sectors of Steel, Oil & Gas, Power, Communications, Shipping Ports &
Logistics, Construction and Minerals. With operations in more than 20
countries across five continents, the group employs 60,000 people, with
revenues of about USD 15 billion.

Essar began as a construction company in 1969 and diversified into

manufacturing, services and retail. Over the last decade, it has grown through
strategic global acquisitions and partnerships, or through Greenfield and
Brownfield development projects, capturing new markets and discovering
new raw material sources.

Today, the Group continues to expand its global footprint, focusing on

markets in Asia, Africa, Europe, the Americas and Australia. Essar invests
significantly in the latest technology to drive forward and backward
integration in its businesses, and on leveraging synergies between these
businesses. It also focuses on in-house research and innovation to be a low-
cost manufacturer with high quality products and innovative customer
offerings.
 Alongside its ambitious business pursuits, Essar has been committed to
its social responsibility. The Group runs community outreach initiatives in all
its plant locations, with a focus on education, healthcare, environmental and
agricultural development, and self-employment.

Essar is committed to sustainable business practices. Our HSE (Health,

Safety and Environment) management system is on par with global standards.
We are also taking climate change initiatives to reduce our carbon footprint.
This includes several CDM (Clean Development Mechanism) projects that
can earn the company CER (Certified Emission Reduction) credits. A growing
number of our businesses with new businesses joining the list every year are
certified to international environment standards, like ISO 9001 / 14001, and
health and safety standards, like OHSAS 18001.

The Essar Group is widely regarded as a responsible and conscientious

global employer. It has experience in managing businesses in different
geographies with a culturally diverse workforce. This is why its people
practices are sensitive to cross-cultural nuances. The Group’s people strategy
is focused on promoting a learning culture that continually enhances the
professional skills of its employees.
 Corporate social responsibility (CSR)
Corporate social responsibility (CSR), also known as corporate
responsibility, corporate citizenship, responsible business, sustainable
responsible business (SRB), or corporate social performance,[1] is a form of
corporate self-regulation integrated into a business model. Ideally, CSR policy
would function as a built-in, self-regulating mechanism whereby business
would monitor and ensure its support to law, ethical standards, and
international norms. Consequently, business would embrace responsibility for
the impact of its activities on the environment, consumers, employees,
communities, stakeholders and all other members of the public sphere.
Furthermore, CSR-focused businesses would proactively promote the public
interest by encouraging community growth and development, and voluntarily
eliminating practices that harm the public sphere, regardless of legality.
Essentially, CSR is the deliberate inclusion of public interest into corporate
decision-making, and the honoring of a triple bottom line: people, planet,
profit.

The practice of CSR is much debated and criticized. Proponents argue

that there is a strong business case for CSR, in that corporations benefit in
multiple ways by operating with a perspective broader and longer than their
own immediate, short-term profits. Critics argue that CSR distracts from the
fundamental economic role of businesses; others argue that it is nothing more
than superficial window-dressing; others yet argue that it is an attempt to pre-
empt the role of governments as a watchdog over powerful multinational
corporations. Corporate Social Responsibility has been redefined throughout
the years. However, it essentially is titled to aid to an organization's mission as
well as a guide to what the company stands for and will uphold to its
consumers.

Development business ethics is one of the forms of applied ethics that

examines ethical principles and moral or ethical problems that can arise in a
business environment.

In the increasingly conscience-focused marketplaces of the 21st

century, the demand for more ethical business processes and actions (known
as ethicism) is increasing. Simultaneously, pressure is applied on industry to
improve business ethics through new public initiatives and laws (e.g. higher
UK road tax for higher-emission vehicles).
 Business ethics can be both a normative and a descriptive discipline. As
a corporate practice and a career specialization, the field is primarily
normative. In academia, descriptive approaches are also taken. The range and
quantity of business ethical issues reflects the degree to which business is
perceived to be at odds with non-economic social values. Historically, interest
in business ethics accelerated dramatically during the 1980s and 1990s, both
within major corporations and within academia. For example, today most
major corporate websites lay emphasis on commitment to promoting non-
economic social values under a variety of headings (e.g. ethics codes, social
responsibility charters). In some cases, corporations have re-branded their
core values in the light of business ethical considerations (e.g. BP's "beyond
petroleum" environmental tilt).

The term "CSR" came in to common use in the early 1970s, after many
multinational corporations formed, although it was seldom abbreviated. The
term stakeholder, meaning those on whom an organization's activities have an
impact, was used to describe corporate owners beyond shareholders as a result
of an influential book by R Freeman in 1984.

ISO 26000 is the recognized international standard for CSR (currently a

Draft International Standard). Public sector organizations (the United Nations
for example) adhere to the triple bottom line (TBL). It is widely accepted that
CSR adheres to similar principles but with no formal act of legislation. The
UN has developed the Principles for Responsible Investment as guidelines for
investing entities.
Importance of CSR Ratings

Corporates and their activities are connected to a large number of

people, directly and indirectly. These include employees, suppliers,
consumers/customers, government, investors, citizens/community and the
environment. Each of these has a role to play to make CSR effective and
sustaining, and the CSR Ratings helps to identify their individual and
collaborative roles.

For Companies

• To sensitize their directors and their employees about their

responsibility towards society.
• To identify CSR activities they can and should undertake.
• To understand the various international guidelines and norms for CSR
and to effectively implement these.
• To learn about and from the CSR initiatives of other companies.

For Industry and trade associations

• To get a snapshot of the state of CSR in India.

• To set benchmarks of CSR for companies to follow.
• To prepare case studies and highlight best practices of CSR.
• To provide consultation on CSR.
• To work with Government and NGOs and international organizations to
upgrade and improve CSR activities in India and to set milestones for
companies.
• To recognize companies doing good CSR activities by instituting
awards based on these parameters.
• To understand the huge scale and magnitude of the benefits that are
possible if an entire sector spends at least the recommended minimum
amount on CSR.
For Government bodies

• To make industry wise guidelines and to introduce legislations that

cause companies to work effectively towards reducing environmental
damage, and restoring damage done (in the areas of raw material
sourcing and usage, by product and waste disposal, product usage and
end disposal).
• To make legislation that rewards CSR and penalizes damage to the
environment.

For NGOs and consultants

• To know about the areas of CSR work undertaken by companies thus

enabling partnerships with them.
• To be able to identify companies which are not doing CSR or doing in a
token manner, so as to approach these companies to initiate meaningful
projects.
• To assist companies to formulate CSR objectives, implement CSR
activities and monitor and evaluate their CSR activities.

For Media

• To stop eulogizing corporate leaders whose companies are damaging

the environment and harming lives.
• To present a clear view of CSR that is separate from philanthropy,
charity, marketing, advertising, or expanding business scope and to
sensitize the public about this.
• To highlight companies which are practicing good CSR, and to negate
those companies which are actually engaged in marketing or advertising
their products or services under the guise of CSR.
• To encourage and enable business publications to have a regular feature
or column dedicated to CSR initiatives along with feedback from NGOs
and other stakeholders.

For researchers

• To study CSR practices and results.

• To influence the shaping of CSR policy and regulations.
For students and colleges/ institutions

• To become sensitized about the role and responsibility of companies

and to understand the impact and consequences of everyday processes
and actions.
• To join a company that is working to benefit society and not one that is
harming it.
• To develop a holistic view of life and living.

For citizens, shareholders and investors

• To understand that as consumers and stakeholders of companies , we

can and need to influence companies to change harmful policies and
adopt CSR practices due to the huge impact and power that companies
have on people and the environment.
To ensure that through our purchase choices we get desirable values for
society to be reflected in how companies do business.

The Essar Foundation spearheads all Corporate Social Responsibility

(CSR) related activities of the Essar Group namely in Education, Welfare,
Environment .The Foundation, through its outreach program “Education &
Welfare”, acts as a catalyst to provide education and currently runs schools in
Hazira, Jamnagar and Lonavala.

The Essar Group is both a people-driven and people-centric

organization. It understands the value that people deliver in the making of a
great company. The Group’s spirited involvement in community service is
inspired by these beliefs.

The Group’s ethos on social responsibility focuses on not just taking

care of its own employees but enabling and enriching the communities around
the areas where its plants are located. In addition, the Group has been at the
forefront in rendering aid and assistance by way of donations as well as relief
supplies in times of national calamities, such as the Tsunami, earthquakes and
floods. Essar has made significant contributions to the Prime Minister’s and
Chief Ministers’ relief funds in the past several years to alleviate suffering and
help rehabilitation.
 During the trauma of the 2001 earthquake and the drought of 2000
in Gujarat, Essar responded with providing doctors, critical life saving drugs
and drinking water, apart from long-term rehabilitation programmes. Essar
also supplied material and assistance to Gujarat Electricity Board for
recommissioning a number of distribution stations in Bhuj after the
devastating earthquake. At the same time, the Group helped in the
rehabilitation of Surendranagar by building schools and drilling community
bore-wells.

Employee involvement

The underlying objectives of Essar’s activities is to motivate employees

to participate in and contribute to the activities initiated by the Community
Relations Centre, to create self-help groups for village women, to further
overall development of children and women, and to spread awareness about
AIDS and de-addiction.

Essar has outlined seven focus areas where employee involvement can make a
difference to the lives of the community:

• Education
• Self-employment
• Training
• Infrastructure development
• Medical
• Health & hygiene
• Recreation and welfare

In every quarter, specific tasks have been lined up and are being
conducted with a high success rate, with the involvement of community
leaders.

Special focus on Hazira, India

The Group has transformed Hazira and its neighbouring areas by

planting thousands of trees and laying water pipelines. Self-supporting
schemes for women, schools, roads, and playgrounds and out-reach
programmes have established Essar as a committed corporate citizen
of Gujarat. What’s more the company’s businesses have generated direct and
indirect employment opportunities for thousands of people in Gujarat.
The Group has supported and continues to support Hazira and surrounding
villages through the following activities:

• Built a water pipeline to carry 0.7 million cubic metres of drinking

water everyday to the villages near Hazira
• Organising weekly recreational programmes for children between the
ages of 9 and 12 at Ankur Bal Kendra, Hazira
• Providing subsidised medical care at the Essar Hospital at Nand
Niketan for the local population
• Providing subsidised education facilities at Nand Vidya Niketan for
children of nearby communities
• nfrastructure development; building of overhead water storage tank at
Matafalia village
• Maintaining water pipelines, community wells, etc.
• Worked on the electrification of the 7-km stretch of road from L&T to
Mandali Gate
• Building and laying of an approach road to the village crematorium
• Donated an ambulance to the Arogya Samiti of Hazira village

Activities at Vadinar, India

• Two major ponds have been deepened in Kathi Devaria & Kajurda
villages for rain water harvesting Water tankers are sent periodically to
Kajurda, Vijaynagar and Bharana villages to help them deal with water
shortage.
• Two school buildings at Bharana & Jankhar villages have been
renovated.
• More than 150,000 kg of fodder has been supplied to 14 surrounding
village gaushalas. August 2007 onwards a Fodder Financial Assistance
is provided to villages near the refinery.
• Around 12,000 patients from the refinery’s 10 surrounding villages
benefited from an arogya vahini (mobile clinic)’ around 3,000 patients
benefited at our Mother & Child Centre at Vadinar, a joint venture with
the District Panchayat, Jamnagar.
• Four eye camps were organised in 2007-08, with 500 patients receiving
treatment and 25 patients being operated free of cost.
 • A skin treatment camp was also organised at Timbdi village whereby
100 patients were diagnosed and necessary medicine distributed.
• Since November 2007, a 24-hour Essar Community Health Centre
started in Jankhar village, with three doctors, three paramedics and an
ambulance. The centre also has a full-fledged laboratory that is
available round the clock.
• Two medical camps were organised in 2007-08 at Jankhar and Kajurda
villages where 1,100 people from 10 – 12 villages were treated.
• At the Primary School Mahotshav 2007, 1,450 school bag kits were
distributed to students from 74 villages of Khambhalia and Lalpur
talukas.

Corporate Philanthropy and Community Involvement

As a founding industry and the largest employer in Sault Ste.

Marie, Ontario, Essar Steel Algoma has a direct interest in advancing and
preserving the quality of life in our community. In addition to a sustainable
approach to minimizing environmental impact, the Company has a long
history of charitable giving and corporate sponsorship with numerous
community-based causes.

Essar Steel Algoma's history with the United Way dates back more than
50 years as both a founder and a leading corporate supporter. Essar has
become the largest United Way campaign contributor through combined
corporate, employee and retiree contributions. In 2007 we collectively
pledged $272, 300 in support of 23 community agencies that address
community issues with health, employment, poverty and youth.

In the spring of 2005 Essar Steel Algoma established a Community

Investment Fund for the purpose of formally administering financial
contributions to charitable and non-profit causes within the City of Sault Ste.
Marie and surrounding area. The $6 million fund addresses community needs
in the following areas of focus:

1. Healthcare
2. Education
3. Sports & Recreation
4. Social Service
5. Arts, Culture and Environment
 The Community Investment Fund has a five year term, expiring
December 31, 2009 and administers both cash donations and in-kind
contributions of product or service. Leading contributions to date include the
Sault Area Hospital Build Campaign ($4M), the Sault Ste. Marie Sports &
Entertainment Centre ($300K) and the Algoma Residential Community
Hospice ($120K).

On the sponsorship side, Essar Steel Algoma is an annual supporter of

key community events and initiatives including the Bon Soo Winter Carnival,
the Dragon Boat Festival, the Algoma Fall Festival, and the Superior Health
and Safety Conference. In addition, the Company is always an active
participant in RotaryFest, Sault Ste. Marie’s summer festival. In 2008 Essar
was the presenting sponsor for the Festival which featured the ESSAR Steel
Algoma Stage with free, live entertainment over three days and the
Community Day Parade where the ESSAR float earned first prize in the
professional division.

In 2008 Essar Steel Algoma won the bid for the Naming Rights for the
Sault Ste. Marie Sports & Entertainment Centre. Now the ESSAR Centre, this
premier sports and entertainment complex lies at the heart of the community
and is home to the Soo Greyhounds, members of the Ontario Hockey League.

Essar Steel Algoma is an integral part of the Sault Ste. Marie business
community as demonstrated through active membership with the Chamber of
Commerce, the Community Quality Initiative, Destiny Sault Ste. Marie and
the Safe Communities Partnership. The people at Essar continually strive to
offer a responsible balance of time and resources to the community where we
work and live.

Community and Social Development

The Essar Group strives to enrich and support the communities in and
around its plants. The Group has transformed Hazira and its neighbouring
areas by planting thousands of trees and laying pipelines that supply over 7
lakh cubic metres of water per day to the people of Hazira. Self-supporting
schemes for women, schools, roads, and playgrounds and out-reach
programmes have established Essar as a committed corporate citizen of
Gujarat.
 The Group supports Hazira and surrounding villages through:

Educational

• Scholarship Scheme for meritorious students of the community

• Motivational rewards for teachers who deliver 100% results in SSC in
individual subjects
• Encouragement for graduate and post graduate studies
• Recreational programmes for children between the ages of 9 and 12 at
Ankur Bal Kendra, Hazira, once a week

Infrastructures

• Building of Overhead tank for storage of water at Matafalia village

• Maintaining water pipelines, community well etc
• Electrification of the 7 Km stretch of road from L&T to Mandali Gate
• Building and laying of approach road to the village crematorium
• Donation of an Ambulance to the Arogya Samiti of Hazira Village
• Earthquake relief - Provided heavy equipment, food, clothes and other
essential items, reconstruction of school at Duhrej Nagar Palika School
under Surendranagar district
• Provision of 950 m3 / day drinking water to the community
• Construction of community lake at Gundadi village
• Extending Fire fighting help & training to neighbouring industries
• Dwelling units

Socio-Economic

• Subsidised medical care at the Essar Hospital at Nand Niketan for the
local population
• Subsidised education facilities at Nand Vidya Niketan for children of
nearby communities
• ncome generation for village women by encouraging them to vocational
work
• Working opportunities for qualified youth
• Creation of business opportunities for the community in vicinity of
Hazira.
Corporate governance

Corporate governance is the set of processes, customs, policies, laws,

and institutions affecting the way a corporation (or company) is directed,
administered or controlled. Corporate governance also includes the
relationships among the many stakeholders involved and the goals for which
the corporation is governed. The principal stakeholders are the shareholders,
the board of directors, employees, customers,creditors, suppliers, and the
community at large.

Corporate governance is a multi-faceted subject.[1] An important theme

of corporate governance is to ensure the accountability of certain individuals
in an organization through mechanisms that try to reduce or eliminate
the principal-agent problem. A related but separate thread of discussions
focuses on the impact of a corporate governance system in economic
efficiency, with a strong emphasis on shareholders' welfare. There are yet
other aspects to the corporate governance subject, such as the stakeholder
view and the corporate governance models around the world (see section 9
below).

There has been renewed interest in the corporate governance practices

of modern corporations since 2001, particularly due to the high-profile
collapses of a number of large U.S. firms such as Enron Corporation and MCI
Inc. (formerly WorldCom). In 2002, the government passed the Sarbanes-
Oxley Act, intending to restore public confidence in corporate governance.

Definition

In A Board Culture of Corporate Governance, business author Gabrielle

O'Donovan defines corporate governance as 'an internal system encompassing
policies, processes and people, which serves the needs of shareholders and
other stakeholders, by directing and controlling management activities with
good business savvy, objectivity, accountability and integrity. Sound
corporate governance is reliant on external marketplace commitment and
legislation, plus a healthy board culture which safeguards policies and
processes.
 O'Donovan goes on to say that 'the perceived quality of a company's
corporate governance can influence its share price as well as the cost of
raising capital. Quality is determined by the financial markets, legislation and
other external market forces plus how policies and processes are implemented
and how people are led.

External forces are, to a large extent, outside the circle of control of any
board. The internal environment is quite a different matter, and offers
companies the opportunity to differentiate from competitors through their
board culture. To date, too much of corporate governance debate has centred
on legislative policy, to deter fraudulent activities and transparency policy
which misleads executives to treat the symptoms and not the cause.

It is a system of structuring, operating and controlling a company with a

view to achieve long term strategic goals to satisfy shareholders, creditors,
employees, customers and suppliers, and complying with the legal and
regulatory requirements, apart from meeting environmental and local
community needs.

Report of SEBI committee (India) on Corporate Governance defines

corporate governance as 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 is about commitment to
values, about ethical business conduct and about making a distinction between
personal & corporate funds in the management of a company.” The definition
is drawn from the Gandhian principle of trusteeship and the Directive
Principles of the Indian Constitution. Corporate Governance is viewed
as business ethics and a moral duty. See also Corporate Social
Entrepreneurship regarding employees who are driven by their sense of
integrity (moral conscience) and duty to society. This notion stems from
traditional philosophical ideas of virtue (or self governance) and represents a
"bottom-up" approach to corporate governance (agency) which supports the
more obvious "top-down" (systems and processes, i.e. structural) perspective.
Impact of Corporate Governance

The positive effect of corporate governance on different stakeholders

ultimately is a strengthened economy, and hence good corporate governance
is a tool for socio-economic development.

Role of Institutional Investors

Many years ago, worldwide, buyers and sellers of corporation stocks

were individual investors, such as wealthy businessmen or families, who often
had a vested, personal and emotional interest in the corporations whose shares
they owned. Over time, markets have become largely institutionalized: buyers
and sellers are largely institutions (e.g., pension funds, mutual funds, hedge
funds, exchange-traded funds, other investor groups; insurance
companies, banks, brokers, and other financial institutions).

The rise of the institutional investor has brought with it some increase
of professional diligence which has tended to improve regulation of the
stock (but not necessarily in the interest of the small investor or even of the
naïve institutions, of which there are many). Note that this process occurred
simultaneously with the direct growth of individuals investing indirectly in the
market (for example individuals have twice as much money in mutual funds
as they do in bank accounts). However this growth occurred primarily by way
of individuals turning over their funds to 'professionals' to manage, such as in
mutual funds. In this way, the majority of investment now is described as
"institutional investment" even though the vast majority of the funds are for
the benefit of individual investors.

Program trading, the hallmark of institutional trading, averaged over

80% of NYSE trades in some months of 2007. (Moreover, these statistics do
not reveal the full extent of the practice, because of so-called 'iceberg' orders.
See Quantity and display instructions under last reference.)

Unfortunately, there has been a concurrent lapse in the oversight of

large corporations, which are now almost all owned by large institutions.
The Board of Directors of large corporations used to be chosen by the
principal shareholders, who usually had an emotional as well as monetary
investment in the company (think Ford), and the Board diligently kept an eye
on the company and its principal executives (they usually hired and fired
the President, or Chief Executive Officer— CEO).
 A recent study by Credit Suisse found that companies in
which "founding families retain a stake of more than 10% of the company's
capital enjoyed a superior performance over their respective sectorial
peers." Since 1996, this superior performance amounts to 8% per year. Forget
the celebrity CEO. "Look beyond Six Sigma and the latest technology fad.

One of the biggest strategic advantages a company can have, [Business

Week has found], is blood lines." In that last study, "BW identified five key
ingredients that contribute to superior performance. Not all are qualities
unique to enterprises with retained family interests. But they do go far to
explain why it helps to have someone at the helm— or active behind the
scenes— who has more than a mere paycheck and the prospect of a cozy
retirement at stake.” See also, "Revolt in the Boardroom," by Alan Murray.

Nowadays, if the owning institutions don't like what the President/CEO

is doing and they feel that firing them will likely be costly (think "golden
handshake") and/or time consuming, they will simply sell out their interest.
The Board is now mostly chosen by the President/CEO, and may be made up
primarily of their friends and associates, such as officers of the corporation or
business colleagues. Since the (institutional) shareholders rarely object, the
President/CEO generally takes the Chair of the Board position for his/herself
(which makes it much more difficult for the institutional owners to "fire"
him/her). Occasionally, but rarely, institutional investors support shareholder
resolutions on such matters as executive pay and anti-takeover, aka, "poison
pill" measures.

Finally, the largest pools of invested money (such as the mutual fund
'Vanguard 500', or the largest investment management firm for
corporations, State Street Corp.) are designed simply to invest in a very large
number of different companies with sufficient liquidity, based on the idea that
this strategy will largely eliminate individual company financial or other risk
and, therefore, these investors have even less interest in a particular company's
governance.

Since the marked rise in the use of Internet transactions from the 1990s,
both individual and professional stock investors around the world have
emerged as a potential new kind of major (short term) force in the direct or
indirect ownership of corporations and in the markets: the casual participant.
 Even as the purchase of individual shares in any one corporation by
individual investors diminishes, the sale of derivatives(e.g., exchange-traded
funds (ETFs), Stock market index options, etc.) has soared. So, the interests of
most investors are now increasingly rarely tied to the fortunes of individual
corporations.

But, the ownership of stocks in markets around the world varies; for
example, the majority of the shares in the Japanese market are held by
financial companies and industrial corporations (there is a large and deliberate
amount of cross-holding among Japanese keiretsucorporations and within S.
Korean chaebol 'groups') , whereas stock in the USA or the UK and Europe
are much more broadly owned, often still by large individual investors.

Parties to corporate governance

Parties involved in corporate governance include the regulatory body.

Other stakeholders who take part include suppliers, employees, creditors,
customers and the community at large.

In corporations, the shareholder delegates decision rights to the

manager to act in the principal's best interests. This separation of ownership
from control implies a loss of effective control by shareholders over
managerial decisions. Partly as a result of this separation between the two
parties, a system of corporate governance controls is implemented to assist in
aligning the incentives of managers with those of shareholders. With the
significant increase in equity holdings of investors, there has been an
opportunity for a reversal of the separation of ownership and control problems
because ownership is not so diffuse.

A board of directors often plays a key role in corporate governance. It is

their responsibility to endorse the organisation's strategy, develop directional
policy, appoint, supervise and remunerate senior executives and to ensure
accountability of the organisation to its owners and authorities.

The Company Secretary, known as a Corporate Secretary in the US and

often referred to as a Chartered Secretary if qualified by the Institute of
Chartered Secretaries and Administrators (ICSA), is a high ranking
professional who is trained to uphold the highest standards of corporate
governance, effective operations, compliance and administration.
 All parties to corporate governance have an interest, whether direct or
indirect, in the effective performance of the organization. Directors, workers
and management receive salaries, benefits and reputation, while shareholders
receive capital return. Customers receive goods and services; suppliers receive
compensation for their goods or services. In return these individuals provide
value in the form of natural, human, social and other forms of capital.

A key factor is an individual's decision to participate in an organisation

e.g. through providing financial capital and trust that they will receive a fair
share of the organisational returns. If some parties are receiving more than
their fair return then participants may choose to not continue participating
leading to organizational collapse.

Principles

Key elements of good corporate governance principles include honesty,

trust and integrity, openness, performance orientation, responsibility and
accountability, mutual respect, and commitment to the organization.
Of importance is how directors and management develop a model of
governance that aligns the values of the corporate participants and then
evaluate this model periodically for its effectiveness. In particular, senior
executives should conduct themselves honestly and ethically, especially
concerning actual or apparent conflicts of interest, and disclosure in financial
reports.

Commonly accepted principles of corporate governance include:

• Rights and equitable treatment of shareholders: Organizations should

respect the rights of shareholders and help shareholders to exercise
those rights. They can help shareholders exercise their rights by
effectively communicating information that is understandable and
accessible and encouraging shareholders to participate in general
meetings.
• Interests of other stakeholders: Organizations should recognize that
they have legal and other obligations to all legitimate stakeholders.
• Role and responsibilities of the board: The board needs a range of skills
and understanding to be able to deal with various business issues and
have the ability to review and challenge management performance. It
 needs to be of sufficient size and have an appropriate level of
commitment to fulfill its responsibilities and duties. There are issues
about the appropriate mix of executive and non-executive directors.
• Integrity and ethical behaviour: Ethical and responsible decision
making is not only important for public relations, but it is also a
necessary element in risk management and avoiding lawsuits.
Organizations should develop a code of conduct for their directors and
executives that promotes ethical and responsible decision making. It is
important to understand, though, that reliance by a company on the
integrity and ethics of individuals is bound to eventual failure. Because
of this, many organizations establish Compliance and Ethics
Programs to minimize the risk that the firm steps outside of ethical and
legal boundaries.
• Disclosure and transparency: Organizations should clarify and make
publicly known the roles and responsibilities of board and management
to provide shareholders with a level of accountability. They should also
implement procedures to independently verify and safeguard the
integrity of the company's financial reporting. Disclosure of material
matters concerning the organization should be timely and balanced to
ensure that all investors have access to clear, factual information.

Issues involving corporate governance principles include:

• internal controls and internal auditors

• the independence of the entity's external auditors and the quality of their
audits
• oversight and management of risk
• oversight of the preparation of the entity's financial statements
• review of the compensation arrangements for the chief executive officer
and other senior executives
• the resources made available to directors in carrying out their duties
• the way in which individuals are nominated for positions on the board
• dividend policy
 Nevertheless "corporate governance," despite some feeble attempts
from various quarters, remains an ambiguous and often misunderstood phrase.
For quite some time it was confined only to corporate management. That is
not so. It is something much broader, for it must include a fair, efficient and
transparent administration and strive to meet certain well
defined, written objectives. Corporate governance must go well beyond law.
The quantity, quality and frequency of financial and managerial disclosure,
the degree and extent to which the board of Director (BOD) exercise
their trustee responsibilities (largely an ethical commitment), and the
commitment to run a transparent organization- these should be constantly
evolving due to interplay of many factors and the roles played by the more
progressive/responsible elements within the corporate sector. John G. Smale, a
former member of the General Motors board of directors, wrote: "The Board
is responsible for the successful perpetuation of the corporation. That
responsibility cannot be relegated to management." However it should be
noted that a corporation should cease to exist if that is in the best interests of
its stakeholders. Perpetuation for its own sake may be counterproductive
mechanisms and controls.

Corporate governance mechanisms and controls are designed to reduce

the inefficiencies that arise from moral hazard and adverse selection. For
example, to monitor managers' behaviour, an independent third party
(the external auditor) attests the accuracy of information provided by
management to investors. An ideal control system should regulate both
motivation and ability.

Internal corporate governance controls

Internal corporate governance controls monitor activities and then take
corrective action to accomplish organisational goals. Examples include:

• Monitoring by the board of directors: The board of directors, with its

legal authority to hire, fire and compensate top management, safeguards
invested capital. Regular board meetings allow potential problems to be
identified, discussed and avoided. Whilst non-executive directors are
 thought to be more independent, they may not always result in more
effective corporate governance and may not increase
performance. Different board structures are optimal for different firms.
Moreover, the ability of the board to monitor the firm's executives is a
function of its access to information. Executive directors possess
superior knowledge of the decision-making process and therefore
evaluate top management on the basis of the quality of its decisions that
lead to financial performance outcomes, ex ante. It could be argued,
therefore, that executive directors look beyond the financial criteria.
• Internal control procedures and internal auditors: Internal control
procedures are policies implemented by an entity's board of directors,
audit committee, management, and other personnel to provide
reasonable assurance of the entity achieving its objectives related to
reliable financial reporting, operating efficiency, and compliance with
laws and regulations. Internal auditors are personnel within an
organization who test the design and implementation of the entity's
internal control procedures and the reliability of its financial reporting
• Balance of power: The simplest balance of power is very common;
require that the President be a different person from the Treasurer. This
application of separation of power is further developed in companies
where separate divisions check and balance each other's actions. One
group may propose company-wide administrative changes, another
group review and can veto the changes, and a third group check that the
interests of people (customers, shareholders, employees) outside the
three groups are being met.
• Remuneration: Performance-based remuneration is designed to relate
some proportion of salary to individual performance. It may be in the
form of cash or non-cash payments such as shares and share
options, superannuation or other benefits. Such incentive schemes,
however, are reactive in the sense that they provide no mechanism for
preventing mistakes or opportunistic behaviour, and can elicit myopic
behaviour.
External corporate governance controls
External corporate governance controls encompass the controls external
stakeholders exercise over the organisation. Examples include:

• competition
• debt covenants
• demand for and assessment of performance information
(especially financial statements)
• government regulations
• managerial labour market
• media pressure
• takeovers

Systemic problems of corporate governance

• Demand for information: In order to influence the directors, the

shareholders must combine with others to form a significant voting
group which can pose a real threat of carrying resolutions or appointing
directors at a general meeting.
• Monitoring costs: A barrier to shareholders using good information is
the cost of processing it, especially to a small shareholder. The
traditional answer to this problem is the efficient market hypothesis (in
finance, the efficient market hypothesis (EMH) asserts that financial
markets are efficient), which suggests that the small shareholder will
free ride on the judgements of larger professional investors.
• Supply of accounting information: Financial accounts form a crucial
link in enabling providers of finance to monitor directors. Imperfections
in the financial reporting process will cause imperfections in the
effectiveness of corporate governance. This should, ideally, be
corrected by the working of the external auditing process.
 "Education is an infinite passion for life …there is no beginning, there is no
end!”
Many of us, while carrying on with our academic careers and
professional occupations - or being home makers - would like to educate
ourselves in areas of a long-cherished passion and interests or simply expose
ourselves to things we would like to learn .
Learning is ageless and the mind continues to grow as we educate ourselves.
Now, AVID, the school of continuous learning brings you an opportunity to
fulfill your quest, delve into unknown areas and embark on A Voyage
into Insatiable Discovery.

The seed of AVID was sown with the commencement of a very

successful and interactive women’s study group. This forum has helped
women from different fields to develop a basic understanding of economics
and given them confidence to correlate current economic trends and be able to
converse on related subjects. Similarly, AVID will also be a resource for
students of any age desirous of learning various topics which are not taught
formally in regular curriculums.

Taking a cue from the other well established institutes of continuing

education in US, UK and other parts of the world, AVID, an initiative of the
Essar Foundation, plans to provide a general yet comprehensive overview on
diverse subjects. AVID's programmes and modules are tailored as part-time
compact learning capsules, which help in connecting knowledge seekers to
recognized and renowned experts. AVID will be piloted initially in Mumbai
and later extended to other cities in a phased manner. Plans are underway to
join hands with reputable international and local institutions.
By making learning a pleasant, progressive and rewarding journey and by
enriching, students with a holistic development, AVID strives to whet and
satisfy the appetite of Aspiring, Venturesome, Insatiable and Dynamic
knowledge seekers.

• Aspiring – thinking out of the box; a yearn for knowledge

• Insatiable – constantly evoke a thirst for more
• Venturesome – to do something beyond the norm, being adventurous
• Dynamic – continually changing to offer more

Within a short span of 9 months since its inception, AVID has ‘made a
positive impact’ on over 640 people from diverse backgrounds, through
various highly popular, innovative and enlightening learning experiences.

The Avid Mission

To create customized novel short duration courses beyond the

vocational ambience, providing local communities of all demographics a
platform to broaden their horizons and enrich their knowledge through skilled
faculty from around the world, at convenient locations, in a fun environment
within minimal budgets.

Objectives of AVID
• Spread learning
• Mix of theory and practical’s
• Interactive & experimental
• Expose creativity
• Help pursue a passion
• Encourage out of the box thinking
• Reasonable comprehensive overview
Avid Target Audiences

NON CSR RELATED

• The Youth (18-25 age group)

Final year students and young executives/entrepreneurs, looking for
suitable avenues for their energy and enthusiasm.

• Middle Level Executives

Executives/Business persons, eager to expand their knowledge base
beyond profession/business, within the time constraints.

• Senior Citizens
After a satisfying career, looking for avenues to pursue their
interests/hobbies, to rekindle the childhood passions.

• Home Makers
Eager to expand their horizons for their own passion and for the
benefit of the whole family.

• Expatriates and NRIs

With genuine interest to learn about the local culture, traditions, and
societal issues.

CSR RELATED

• Essarites and Their Families

Who may come under any of the above categories.

• Specific Programs for School Children

Specific value-added courses for the Schools at Hazira, Jamnagar,
Lonavla and other locations.
 Avid Course Streams

• Culture and Heritage

Understanding the rich and varied cultural heritage of India

Appreciating finer aspects of other civilizations across the world.

• Arts

Paintings : history, appreciation and valuation.

• Music and Dance

Understanding/appreciation of Indian/Western Music and Dance forms –

classical as well as modern.

• Current Affairs

Bird’s eye view of international political, economic, environmental, social,

technological developments and their impact on our lives.

• Soft Skills Enhancement

Personal development like dramatics, photography, film making etc.

• Special Interests

Subjects of Special interest to any of the target audiences.

Benefits

INDIVIDUAL BENEFITS:

• Exposing Hidden Talent

• Fun & New Learning
• Post Course Activities
• Novel/ Unique Courses
• Attractive Offers through AVID Membership Card
• Affordable Courses
• Advanced Courses at Regular Intervals

CORPORATE BENEFITS:

• Way of Encouraging Employee Engagement

• Exposing Hidden Talent – Beneficial to the Company
• Constant Engagement with Employees – Post Course Activities
• All Year Round Courses
• Time Sensitive Courses
• Learning in New Areas outside of Work Environment
• Attractive Offers through AVID Membership card – For Employees &
Corporates.
• Fun & Different Courses.

Conclusion

Thus we see that apart from being one of the biggest Conglomerates in
the world, Essar is also a fulfilling its responsibility to society by its various
CSR initiatives in varied fields.