After a year, two deadlines and a threat of fines, more than 70% of India’s top companies have made only token appointments of women to their boards, indicating a small pool of talent, an inability to retain them in the workforce and plain reluctance to induct them.
An IndiaSpend analysis of the benchmark 50-share Nifty of the National Stock Exchange (NSE) showed that only five companies—Axis Bank Ltd, Bharti Airtel Ltd, Idea Cellular Ltd, Infosys Ltd and UltraTech Cement Ltd—have as many as three women directors on boards that vary from seven to 17 members. IndiaSpend is a data journalism initiative.
The analysis found that five state-owned companies have no women on their boards, namely Bharat Petroleum Corp. Ltd, NTPC Ltd, Oil and Natural Gas Corp. Ltd, Punjab National Bank and GAIL (India) Ltd.
As much as 70% of the companies across 23 sectors have a single board member, including Tata Consultancy Services Ltd, ITC Ltd and Reliance Industries Ltd. Some 12% of companies, all large promoter-driven conglomerates such as Cairn India Ltd, Grasim Industries Ltd and HCL Technologies Ltd, have appointed only women family members as directors and only 20% of company boards have more than the single woman required.
The data holds true for 20 April, 20 days after the deadline to a process started in February was extended by market regulator Securities and Exchange Board of India (Sebi).
On 31 March, 245 of the 1,475 firms listed on NSE did not have any women on their boards, according to Prime Database, a capital market tracker.
Companies that missed the deadline but appoint a woman director before 30 June must pay a fine of Rs.50,000, Sebi said. An additional daily fine of Rs.1,000 per day will be added for companies that comply between 1 July and 30 September. After 1 October, the fine rises to Rs.1.42 lakh plus Rs.5,000 for every day of non-compliance.
Firms seem to be not looking deep enough for diversity. Interviews with some of the women occupying board positions disclosed that even they believe companies need to move beyond token appointments, expand the mid-management female workforce and work harder to provide equal opportunity.
“This is just the beginning,” said Pallavi Shroff, a director on the board of automobile manufacturer Maruti Suzuki India Ltd, and partner at Amarchand and Mangaldas and Suresh A Shroff and Co., India’s largest law firm. “I hope this does not stop at tokenism.”
Appointing just one woman to a company board is tokenism, said Neharika Vohra, an independent director on the board of Zee Entertainment Enterprises Ltd. Companies need to nominate two or three women directors, if not more, she said. “Only then will we see any significant difference,” said Vohra, a teacher of organizational behaviour at Indian Institute of Management, Ahmedabad.
Shroff said companies have not “looked deep enough” to bring real diversity to their boards. This may explain why familiar names from the financial sector find themselves being offered memberships on multiple boards.
That is not surprising, said Rekha Sethi, a director on the board of Sun Pharmaceutical Industries Ltd. Women in finance have had a level playing field and excelled.
It could also be that non-financial companies appoint directors from the financial sector to avoid conflicts of interest.
“The core sector (infrastructure, mining and energy) is the ultimate frontier for women, as it involves working away from metros and in harsh conditions,” said Sethi. “However, it is a matter of time before some spunky women cross that barrier too.”
The attempt to create gender diversity must go beyond company boards and extend across the workforce if the representation of women across corporate India is to improve, women directors said. It may not be quite as easy as a Sebi order.
The larger problem is that many women drop out of the workforce. When it comes to women in middle management—and in the workforce at large—India occupies one of the lowest rungs among Asian countries.
At the entry level, women account for 29% of the workforce, but this drops to 9% at the mid-to-senior management level, according to a 2012 report from consultancy McKinsey and Co. At the level of Indian chief executive officers, less than 1% are women, said the report.
“I would like to see more female representation coming in at not just the top-management level, but also the middle-management level,” said Falguni Nayar, a director on the board of cement maker ACC Ltd. Nayar has spent nearly two decades with Kotak Investment Banking and is the founder and CEO of Nykaa.com, a personal care website.
The prime reasons Indian women tend to drop out between entry and mid-management is marriage and children, said Shroff. “Each company needs to address issues that hamper the process for a female employee to re-join and start a second stint, at every level of management,” she said.
The double burden of a job and family is often too much for women to bear, especially since most Indian men do not help at home, as various studies have shown.
Ensuring diversity through the ranks is the real issue, said Shriram Subramanian, founder and managing director of InGovern Research Services. “Else it becomes a tick box activity due to a regulatory push,” he said. That cannot happen unless companies realize the business case for increasing women in the workplace—studies have shown that India’s gross domestic product could be higher if more women work.
India’s female labour participation rate is 35%, one of the world’s lowest, said the McKinsey report.
“If there were enough women coming through the ranks, the quota (of one director) may become redundant,” said Sethi.
By Amit Bhandari and Amritha Pillay