Corporate India hit by several untimely high-level deaths. Are companies prepared?
The second wave of Covid-19 pandemic is not only wreaking havoc in the streets of Delhi, Uttar Pradesh and other states but is also taking its toll on boardrooms of India Inc.Key executive and board members of at least 20 listed companies in India have lost their lives since March in an untimely fashion, according to an Economic Times report.These deaths include key managerial positions at listed companies which are required to be reported by the companies under corporate governance norms. Several top executives not part of key managerial positions also lost died in the past few weeks, the report added. Notably, several top executives are currently undergoing treatment for Covid-19.A chartered accountant on board of a leading financial services told ET most companies called their staff back after November when it seemed that the pandemic was behind us. However, the fatalities are also related to age since board members in most cases are older than 60 years.The untimely deaths have placed several listed companies in a quandary. The situation is especially bad for smaller companies and family promoted businesses which tend to rely heavily on its top employees.The commercial relationships at some companies especially suppliers, creditors or distributors tend to revolve around promoter groups. Lack of a clear succession plan could significantly affect such companies.These deaths also worry shareholders as it is bound to impact the company in the short term.Among top executives who recently succumbed include MG George Muthoot, Chairman of Muthoot Finance in March; B Gururaj, compliance officer at engineering firm ABB, Bharat Dave, CFO of Gujarat Apollo Industries and Dinesh Ranjan Mishra, compliance officer of Mangalore Refinery and Petrochemicals. Some independent directors who also died recently include Partho Datta of Endurance Technologies, Premesh Kumar Jain of Mahanagar Gas and Ravinder Nagpal of Sandhar Technologies. Notably, companies are not required to disclose the cause of death. RELATED NEWS COVID scare at G7 meeting after Indian delegates test positive; EAM S Jaishankar not among them Govt allocates additional foodgrains to NFSA beneficiaries for May-June as relief amidst local Covid lockdowns Second Covid wave will dampen India Inc's recovery: Report Experts say companies need to put in place well-defined succession plans to face such contingencies. One such suggestion is a larger board so that the absence of one individual does not impact the functioning of the company.Several companies are also at a loss as independent directors are either quarantined or in some cases dead. Board meetings and audit committee meetings are being rescheduled in such a scenario.Companies need to put in place plans for unexpected departures and place contingency plans for departures at the CXO level, say proxy advisory firms.