Introduction of CII

The Confederation of Indian Industry (CII) is a non-government, not-for-profit, industry-led and industry-managed organisation, seeking to play a proactive role in Indias development process. The organisation works to create and sustain an environment conducive to the growth of industry in India, partnering industry and government alike through advisory and consultative processes. The confederation is headquartered in New Delhi. B. Muthuraman is the President and Chandrajit Banerjee is the Director General of the confederation. National Theme CII has taken up the agenda of Business for Livelihood for the year 2011-12. This converges the fundamental themes of spreading growth to disadvantaged sections of society, building skills for meeting emerging economic compulsions, and fostering a climate of good governance. In line with this, CII is placing increased focus on Affirmative Action, Skills Development and Governance during the year.

Function
CII aims to usher change by working closely with government on policy issues, enhancing efficiency, competitiveness and expanding business opportunities for industry through a range of specialised services and global linkages. It also provides a platform for sectoral consensus building and networking. Major emphasis is laid on projecting a positive image of business, assisting industry identify and execute corporate citizenship programmes. CII undertakes research, interacts with key government officials and disseminates information through publications, seminars and events.

With 64 offices in India, 9 overseas in Australia, Austria, China, France, Germany, Japan, Singapore, UK, USA and institutional partnerships with 223 counterpart organisations in 100 countries, CII aims to serve as a reference point for Indian industry and the international business community.

History
CII was established in 1895. The initial partners were five engineering firms, all members of the Bengal Chamber of Commerce and Industry. In the beginning, the name of the organisation was Engineering and Iron Trades Association (EITA). EITA was set up with a goal to pressurise the British government to place government orders for iron and steel and engineering goods with companies based in India (the practice then was to place government orders with firms based in UK). The name was subsequently changed to Indian Engineering Association (IEA), Engineering Association of India (EAI), Association of Indian Engineering Industry (AIEI), Confederation of Engineering Industry (CEI) and finally to Confederation of Indian Industry in 1992.

Membership
CII has direct membership of over 6,600 organisations and indirect membership of over 90,000, from around 250 national and regional sectoral associations.

CII-Yi
Young Indians (Yi) is an integral part of the CII, Indias premier business association, formed in the year 2002, with an objective of creating a platform for young Indians to realize the dream of a developed nation. Yi has over 1200 direct members in 25 city chapters. Yi engages another 12,000 members through its Farmer Nets, Student Nets and Corporate chapters. The Yi membership includes young progressive Indians between the age group of 25 & 40 years. The members include entrepreneurs, professionals and progressive achievers from different walks of life. To become the voice of young Indians globally being the vision of Yi, it provides a platform for young Indians to participate in and contribute by becoming an integral part of the Indian growth story. Yi works effectively for promoting leadership skills for the development of its members through the learning programs; the development and engagement of students in schools and colleges through its 59 Student Net platforms which engage more than 4000 students from various educational institutions across India; and two Farmers Net platform that has enrolled 8500 young & progressive farmers from all across the country, providing them with real time agricultural inputs and know-how. Yi has successfully conducted campaigns and developed successful projects across the focus areas of primary education, environment, primary healthcare and employability, contributing positively to its surrounding eco-system and the nation. Through its initiatives like Akshara, Yi has impacted 15000 students across 50 centers, skilled & placed

1300 youth under the aegis of its Yi labs employability program. Under the healthcare initiative, over 170000 children have been dewormed in addition to the many health awareness programs that have been conducted, across the community in different cities. Yi organises an annual national summit with themes relevant to India and its youth. The national summits include sessions and interactions with some of the finest and eminent personalities from various fields, across India and the world. 6 editions of the National Summit have been organised to

Centres of excellence
One of the USPs of CII has been the uncanny ability of its membership to perceive global trends, build technical capabilities and then spread the trend among the industry members. The centres of Excellence were set up specifically for this purpose. The first of the centres to be established was the Institute of Quality in Bangalore. The CII - Sohrabji Godrej Green Business Centre was established in Hyderabad to bring in focus on "Green Business" - Green Buildings, Energy Efficiency,Environment & incubation. The CII ITC Centre for Excellence for Sustainable development in Delhi focuses on promoting Tripple bottom line concept. Institute for Logistics, Chennai, Naroji Godrej Centre of Excellence on corporate governance Mumbai, L M Thapar Centre for Competitiveness, Chandigadh for Cluster initiatives, Water Institute Jaipur are the other Centres of Excellence. The technical expertise available with the centres, coupled with dedicated industry membership makes the institution an ideal medium to reach out to the industry

Library
Central Library & Information Centre of CII headquarters has prime objective of supporting information needs of its members and staff. Library's main objective is to acquire, maintain and enhance access to business information available in print and non-print formats relevant to the research needs of users. Library has collection on various segments of Indian industry. The collection comprises mainly books, journals, CDs, audio-visuals, photographs and grey documents. Resources include CII publications and conference proceedings, national & international statistics, national & international directories and databases, exhibitor catalogues, corporate laws, and other documents such as Working papers, Govt. reports, annual reports of Companies, Ministries and Govt. Departments. Digital collection includes documents such as proceedings, presentations, statistical databases, industrial directories, digital books, annual reports and online databases. Services offered are reference and referral, document delivery, current awareness and database search. Library caters to the information needs of all those interested in business and industry: Entrepreneurs, Government officials, students, researchers, librarians, analysts, investors, and journalists. Customised information is also provided on request.

Trade fair
CII organises trade fairs to promote Indian industry. Some of the flagship trade fairs are: IETF, Auto Expo, Agrotech, IMME, etc. Auto Expo is the largest auto show in Asia. CII has been organizing a biannual trade fair called IETF. CII held the first Indian Engineering Trade Fair in 1975 to showcase the emerging capabilities of the Indian engineering industry. At a time when Indian industry was still at a fledgling stage, the event served to stress its growing capabilities. Today, under its new nomenclature of International Engineering and Technology Fair, IETF, with large international participation, covers a wide range of industry sectors under its main umbrella of engineering and technology. Held every two years, the fair has expanded to become among the largest such events in the Asian region. A wide range of products are exhibited at the show, highlighting the best of quality and standards across a spectrum of industry sectors. Large as well as small companies take part, with a special platform for small and medium enterprises. Each IETF includes focus industry sectors for displaying new and emerging trends across sub sectors. In the past, focus industry pavilions have included environmental and green products, water and sanitation machinery, safety and security equipment, etc. A number of countries, both developed and developing, turn out in strength to take part in the IETF, setting up dedicated country pavilions to showcase the diverse strengths and capabilities of their manufacturing industries. Each edition of the IETF since 1985 has spotlighted a special partner country as the largest overseas participant, exhibiting products, technologies, and investment opportunities. The event is an occasion for the Partner Country to engage in bilateral economic partnership with India and delegations are usually led by a top minister. Cultural events too are hosted by the Partner Country to give a lighter side to the more serious business of doing business. Over the years, Partner Countries have included Germany, Japan, South Africa, Italy and many others. IETF attracts large numbers of top representatives from industry, government, and media from India and overseas. IETF 2007 saw the participation of nearly 55,000 business visitors including government and business delegates from 24 countries. The IETF offers a one-stop platform to industry members to disseminate information about themselves, learn about others, and interact with other businesses to expand their global presence. Many concrete business deals are finalized during the days of the exhibition. While business networking is the highlight of the show, the general public too displays keen interest in the exhibits and turns out in large numbers to learn more about other countries and different goods. The Partner Country concept was introduced with Italy as the first Partner Country at IETF 1985. Since then, Canada, USA, United Kingdom, Germany, Italy(twice), Japan(three times), Korea, Spain, China, and South Africa (twice) have participated as Partner Countries at the IETF till date.

IETF 2009 the 18th edition of the event attracted participation of around 200 exhibitors from 17 countries with South Africa as Partner Country for the second time. South Africa had showcased an impressive Pavilion with 70 South African Companies from sectors ranging from Aerospace, Marine, Defense, Steel, Electro technical, Manufacturing Technologies, Food & Beverages, Wines. Japan being the Guest country at 18th IETF, also been the Partner country at 17th IETF, was primarily focusing on the New and Non - Renewable sources of energy with around 50 exhibitors in an exclusive pavilion. Sector Specific concurrent shows focusing on Manufacturing Technologies, Energy & Environment, Robotics & Automation, Safety & Security were held during IETF 2009. IETF 2011 the 19th edition of International Engineering & Technology Fair was held from 10 to 12 February 2011 at Pragati Maidan, New Delhi, India covering an area of 25,000 sqmtrs, IETF 2011 hosted around 250 exhibitors from 11 countries China, France, Germany, Italy, Japan, Malaysia, Thailand, Singapore, Slovak Republic, South Africa and United Arab Emirates (UAE) displaying the latest products and technologies on offer.

CII Task Force on Corporate Governance Members of the Task Force 1. MrNaresh Chandra, Chairman, Task Force on Corporate Governance, CII 2. Dr J JIrani, Director, Tata Sons Ltd 3. MrUday S Kotak, Chairman, CII Corporate Governance Council & Executive Vice Chairman and Managing Director, Kotak Mahindra Bank Limited 4. Mr Y H Malegam, Chairman Emeritus, S B Billimoria& Co 5. DrOmkarGoswami, Chairman, CERG Advisory Pvt Ltd 6. Mr Deepak M Satwalekar, Independent Director 7. MrShardulShroff, Managing Partner, Amarchand&Mangaldas& Suresh A Shroff& Co. 8. MrAmalGanguli, Independent Director 9. Mr Ajay Bahl, Partner, AZB & Partners

Recommendation of CII
Recommendation 1. Appointment of independent directors An active, well-informed and independent Board is necessary to ensure highest standards of corporate governance. Getting the right people is crucial; as is the process of seeking, vetting and appointing such people. Good Boards have a Nomination Committee typically comprising entirely of independent directors (or where independent directors constitute the majority), with the Committee chairman being an independent director. The Board as a whole decides the skill sets that are needed going forward, keeping in mind the present and the desired composition; and the specialised oversight needs of the company in the

foreseeable future. The Nomination Committee then takes up the task of seeking such directors - either through its own network of contacts or by a formal search process with the help of external consultants. The shortlist, along with the CVs, is then discussed in the full Board, and the final candidate(s) is/are recommended to the Chairman of the Board. The Chairman, then, gets in touch with the selected people and invites them to join the Board as additional directors - after which their appointment is sought to be ratified by shareholders in the next shareholders meeting.

Recommendation 2: Nomination Committee The Task Force believes that having a well functioning Nomination Committee .3will play a significant role in giving investors substantial comfort about the process of Board-level appointments. It, therefore, recommends that listed companies should have a Nomination Committee, comprising a majority of independent directors, including its chairman. This Committees task should be to: Search for, evaluate, shortlist and recommend appropriate independent directors and NEDs, subject to the broad directions of the full Board; and Design processes for evaluating the effectiveness of individual directors as well as the Board as a whole. The Nomination Committee should also be the body that evaluates and recommends the appointment of executive directors. A separate section in the chapter on corporate governance in the annual reports of listed companies could outline the work done by the Nomination Committee during the year under consideration.

Recommendation 3. Duties, liabilities and remuneration of independent directors The Task Force felt that there must be some formality in the appointment of NEDs and independent directors that goes beyond the ratification by the shareholders. It thus makes the following recommendation. Recommendation 4: Letter of Appointment to Directors The Task Force recommends that listed companies should issue formal letters of appointment to NEDs and independent directors - just as it does in appointing employees and executive directors. The letter should: Specify the expectation of the Board from the appointed director; The Board-level committee(s) in which the director is expected to serve and its tasks; The fiduciary duties that come with such an appointment; The term of the appointment; The Code of Business Ethics that the company expects its directors and employees to follow; The list of actions that a director cannot do in the company Recommendation 5: Fixed Contractual Remuneration The Task Force recommends that the Companies Act, 1956, be amended so that

companies have the option of giving a fixed contractual remuneration to NEDs and independent directors, which is not linked to the net profit or lack of it. Therefore, companies should be given the option to choose between: a. Paying a fixed contractual remuneration to its NEDs and IDs, subject to an appropriate ceiling depending on the size of the company; or b. Continuing with the existing practice of paying out upto 1% (or 3%) of the net profits of the stand alone entity as defined in the Companies Act, 1956. For any company, the choice should be uniform for all NEDs and independent directors, i.e. some cannot be paid a commission of profits while others are paid a fixed amount. If the option chosen is (a) above, then the NEDs and independent directors will not be eligible for any commission on profits. Recommendation 6: Structure of Compensation to NEDs The Task Force recommends that listed companies use the following template in structuring their remuneration to NEDs and independent directors Fixed component: This should be relatively low, so as to align NEDs and independent directors to a greater share of variable pay. Typically, these are not more than 30% of the total cash remuneration package. Variable Component: Based on attendance of Board and Committee meetings (at least 70% of all meetings should be an eligibility pre-condition) Additional payment for being the chairman of the Board, especially if he/she is a non-executive chairman Additional payment for being the chairman of the Audit Committee Additional payment for being the chairman of other committees of the Board Additional payment for being members of Board committees: Audit, Shareholder Grievance, Remuneration, Nomination, etc. The Task Force also recommends that if such a structure (or any structure) of remuneration is adopted by the Board, it should be disclosed to the shareholders in the annual report of the company. Recommendation 7: Remuneration Committee The Task Force recommends that listed companies should have a Remuneration Committee of the Board. The Remuneration Committee should comprise at least three members, majority of whom should be independent directors. It should have delegated responsibility for setting the remuneration for all executive directors and the executive chairman, including any compensation payments, such as retiral benefits or stock options. It should also recommend and monitor the level and structure of pay for senior management, i.e. one level below the Board. The Remuneration Committee should make available its terms of reference, its role, the authority delegated to it by the Board, and what it has done for the year under review to the shareholders in a separate section of the chapter on corporate governance in the annual report. Recommendation 8: Audit Committee Constitution

Listed companies should have at least a three-member Audit Committee comprising entirely of non-executive directors with independent directors constituting the majority. Recommendation 9: Separation of Offices of Chairman & Chief Executive Officer The Task Force recognised the ground realities of India. Keeping these in mind, it has recommended, wherever possible, to separate the office of the Chairman from that of the CEO. Recommendation 10: Board Meetings through Tele-conferencing If a director cannot be physically present but wants to participate in the proceedings of the board and its committees, then a minuted and signed proceeding of a teleconference or video conference should constitute proof of his or her participation. Accordingly, this should be treated as presence in the meeting(s). However, minutes of all such meetings or the decisions taken thereat, recorded as circular resolutions, should be signed and confirmed by the director/s who has/have attended the meeting through video conferencing. Recommendation 11: Executive Sessions To empower independent directors to serve as a more effective check on management, the independent directors could meet at regularly scheduled executive sessions without management and before the Board or Committee meetings discuss the agenda. The Task Force also recommends separate executive sessions of the Audit Committee with both internal and external Auditors as well as the Management. Recommendation 12: Related Party Transactions Audit Committee, being an independent Committee, should pre-approve all related party transactions which are not in the ordinary course of business or not on arms length basis or any amendment of such related party transactions. All other related party transactions should be placed before the Committee for its reference. Recommendation 13: Certificate of Independence Every company must obtain a certificate from the auditor certifying the firms independence and arms length relationship with the client company. The Certificate of Independence should certify that the firm, together with its consulting and specialised services affiliates, subsidiaries and associated companies or network or group entities have not / has not undertaken any prohibited non-audit assignments for the company and are independent vis--vis the client company, by reason of revenues earned and the independence test are observed. Recommendation 14: Harmonization of Corporate Governance Standards The Task Force suggests that the Government and the SEBI as a market Regulator must concur in the corporate governance standards deemed desirable for listed companies to ensure good corporate governance.

Recommendation 15: Effective & Credible Enforcement The Task Force recommends that instances of investigations of serious corporate fraud must be coordinated and jointly investigated. Joint investigations / interrogation by the regulators for example, the SFIO and the CBI should be conducted in tandem. Recommendation 16: Liability of Directors & Employees Personal penalties should be imposed on directors and employees who seek unjust enrichment and commit offence with such intentions. Such punishments should be commensurate with the wrongful act and be imposed in addition to disgorgement of wrongful gains. Further, non-executive directors cannot be made to undergo the ordeal of a trial for offence of non-compliance with a statutory provision unless it can be established prima facie that they were liable for the failure on part of the company. Recommendation 17: Media as a stakeholder The Task Force recommends that media, especially in the financial analytics and reporting business should invest more in analytical, financial and legal rigour and enhance their capacity for analytical and investigative reporting.