The smooth management tapestry of a few consumer goods companies was turned upside down with the appointment of new heads last week.
Harsh Mariwala, chairman and managing director (MD) of Marico, which created two of India's best-loved brands, Saffola and Parachute, stepped down as MD to make way for chief executive officer Saugata Gupta to take over.
At the Nusli Wadia-promoted Britannia, Varun Berry was elevated as MD following incumbent Vinita Bali's decision to leave the company, while consumer durables major Videocon found a new chief operating officer (COO) in Sanjeev Bakshi.
In each of these firms, a professional manager has taken over the day-to-day running of operations, which in some cases (such as Marico) was led by the promoter himself. Does that mean the promoter is out of the reckoning altogether?
In a conversation with Business Standard, Mariwala said he would now manage stakeholders' interest in his capacity as executive director and chairman of the board. "As the chairman, I still retain the responsibility of seeing where the company can go from a long-term point of view," he said. "Of course, day-to-day functioning will be Saugata's responsibility, with the (Marico) team now reporting to him."
In Britannia and Videocon, too, promoter-chairmen Nusli Wadia and Venugopal Dhoot respectively continue to show active interest in the two firms as they fight competition from rivals in their categories. Wadia quietly brought on board ex-PepsiCo hand Berry a year ago as COO, putting him in charge of the India business by May, before elevating him to executive director in November.
Bakshi, on the other hand, will be responsible for pushing the Videocon brand, said company executives, which though a leader in product categories such as colour television sets and direct-cool refrigerators, has not been able to make much headway in premium categories.
"As long as the company is able to deliver value to shareholders, I don't think it matters whether it is run by professionals or otherwise," said Pinaki Ranjan Mishra, partner and national leader (retail and consumer products) at Ernst & Young.
According to E Balaji, an independent human resource expert, the current top-management churn is part of the evolution of the company concerned. "While the promoters may not have the CEO designation, they are still in the know of affairs. That puts them in a very strong position despite the trend of professional CEOs being handed over the baton. But at a broader level, I see companies increasingly professionalising their boards."
The new Companies Act
To improve transparency and corporate governance, the government had on Wednesday notified 183 new sections of the Companies Act, 2013, pertaining to incorporation of a company, management, rotation of auditors and independent directors, making boards accountable for their actions.
Experts said the penalty is now severe in case rules and regulations are not followed, which could partly explain the flurry of changes seen at the top in companies in recent weeks. Arvind Singhal, chairman, Technopak, said: "In many ways, companies have been forced to make changes to their boards. But the question is whether the intent to bring about a change is really there."
