Representative image showing a boardroom meeting lead by a woman.
Credit: iStock Photo
Following 10 years of the Companies Act 2013's implementation, which mandated that firms have a minimum of one female director on their boards, the average number of female board members in Nifty-500 companies is one in five, reports ET.
Prime Database conducted research, which said that, five years ago, one in eight directors and 10 years ago, one out of 20 members were women.
While there has been some progress in improving gender parity at the board level, there is still room for improvement. The legal requirement has defined the presence of women on Indian boards in addition to guaranteeing that nearly all 500 companies have a female director on their boards. As per the legal regulations, 223 out of the Nifty-500 companies, or 45 per cent of them, have just one female director.
Moreover, the dearth of women directors is evidently visible in bigger company boards. 81 companies have one female director out of ten or more members on their boards.
For example, there is just one female director on the 19-member board of L&T.
Preetha Reddy, the vice chair of Apollo Hospitals, which ironically has six female directors out of its eleven members, is the only female director on the L&T board.
Apollo Hospitals is one of the eight businesses that belong to the "50%+ club," which is made up of at least half female board members. Apollo hospitals is a part of the eight businesses belonging to the “50+club,” and half of its board members are female.
Manju Agarwal, an independent woman director on the boards of several listed companies, said, "Company managements hire independent directors, the people with whom they have some earlier interactions which gives them comfort, or the government officials post their retirement."
She further asserted that since most of these people tend to be male officers/entrepreneurs, the boards end up having more male members. One woman director gets hired predominantly because of the legal mandate, she added.
Sutapa Banerjee, who is also an independent woman director on boards of several Indian companies, said that one women representation out of five board members is not great. More affirmative action is required since most people on the boards today are still men who are old, she further added.
“This will hasten the pace of change as there is a reasonable pool of qualified women who take up directorships seriously and perform their role meticulously. Once they become a director on one board, it is a matter of time before they get more such opportunities,” Banerjee added.
On the boards of S&P 500 companies worldwide, women make up one in three directors. But this is not because the law requires women to be on the board; rather, it is a result of investor pressure and corporate efforts to diversify the gender representation on the board.
A higher goal of 40 per cent female representation on the boards of FTSE-350 companies by the end of 2025 was suggested by the UK government-backed Hampton-Alexander Review in its report on FTSE Women Leaders published in February of this year.
The proportion of women on the board of British home developer Barratt Developments dropped below the recommended 40 per cent threshold last year, which prompted protests from the company's shareholders.
22 Indian companies out of the Nifty-500 have at least 40 per cent female representation on their boards. Out of these companies, several have women chairpersons or CEOs. Companies like Colgate Palmolive, Godrej Consumer Products, Jyothy Labs, Vinati Organics, Apollo Hospitals, Sundram Fasteners and New India Assurance, are perfect examples for this.
Vikesh Wallia, managing director Board Stewardship Inc., a research and advisory firm said, “There is no dearth of qualified women but most of them do not have board experience.”
He further asserted that promoters in India are still in the process of settling down with the mandate of one woman director.
He also claimed that women were not pitching themselves hard enough for board seats.
Furthermore, there is a lack of initiative from the government and multinational corporations (MNCs) to guarantee gender diversity on boards, he added.
Wallia also said that there are several PSUs that do not have a single woman on their boards. He also claimed that there are MNCs who have better women representation on their boards overseas, but that is not the case in India.
For instance, PSUs like BEML, UCO Bank, Power Grid Corp, and Bank of Maharashtra do not have any female directors on their boards.
Aon Human Capital Solutions and Nasscom conducted a recent diversity, equity, and inclusion (DE&I) study with 220 participating organizations across 14 industries. The study found that although efforts have been made to improve gender diversity, women's representation is still skewed toward junior and middle management levels, with 70 per cent of the participating organizations reporting less than 20 per cent representation in senior management. When the CEO is directly accountable, women representation is greater, the study shows.