Tata Steel: annual general meeting or annual grievance meeting?

By Rajas Kelkar and Sanjit Oberai

The coupon says I get a snack and a hot beverage. I want a cold drink," yelled a shareholder of Tata Steel. He shot this one straight at Ratan Tata, chairman, Tata Steel, at the annual general meeting (AGM) of shareholders in Mumbai on Wednesday. Tata patiently heard him out and eventually Tata Steel officials sorted out the situation.This is not new and Tata did not show any surprise or a reaction.

Ratan Tata was a picture of calm as he heard out shareholders patiently at the Tata Steel AGM on Wednesday. Vivek Prakash/Reuters

Year after year, annual general meetings are turning out to be annual 'grievance' meetings of shareholders. One shareholder wanted to visit a plant, another one wanted binoculars or glasses to read the fine print of the annual report. Another one asked the company to change the financial year so that the AGM was held in a season when it does not rain. (For a detailed list of queries asked in the Tata Steel AGM on Wednesday, see below.)

The agenda of the meeting are not meaningful anymore. For important things like a nod for capital raising plan or a business recast, companies resort to a postal ballot these days. For any significant corporate development like M&A, the company convenes an extra-ordinary general meeting. Hence, the purpose of the annual general meeting of shareholders is simply to ratify the annual accounts for the year gone by.

The financial year usually ends in March. The monsoon months of August and September form the peak AGM season. This means the shareholders' meet is held five months after the financial year is over to discuss the year gone by.

Besides, the chairman makes a speech on the year that was. Shareholders certainly are not interested in knowing about the past. With the massive explosion in communication and media, shareholders already know about the financial performance of the company for each quarter. In fact, analysts churn out research reports every month on top companies.

The company managements do not make any forward-looking statements or lay down the vision ahead. They say regulators do not allow them to make any such statements or they cite competitive reasons.

Hence, what is the big idea about the AGM? In the US, Warren Buffet writes once a year to shareholders each year. Berkshire Hathaway can release a set of letters made over the years as a book. The agenda for the Berkshire Hathaway annual shareholder meeting are spread over the weekend. The company management interacts with each and every shareholder till it is satisfied with responses all through a day and not for just one hour.

In India, the copy of chairman's speech is used to scribble down notes. Nobody really thinks anything transformational is said to shareholders of the company. In the past, we had speakers like Nani Palkhiwala, former chairman of ACC, then a Tata company, chairmen of companies like Hindustan Unilever (formerly HLL) and ITC chairman K L Chugh making path-breaking speeches. Infosys Technologies chairman N R Narayana Murthy kept the interest in these speeches alive in recent times.

It must also be mentioned that those were the days when media coverage of these events was limited. Also, companies did not announce quarterly results and disclosed information to stock exchanges instantly as there was no Internet.

Today, information is available on demand. Companies are making disclosures for all corporate developments. If it serves the purpose of simply finalising annual accounts, why waste money on even samosas and hot beverages?

Here is a list of questions that were directed at the Tata Steel management on Wednesday.

Why do you have the AGM during the monsoon period? Can it be shifted to some other time?

Tata: Not possible.

Why don't you use recycled paper?

Tata: It is already being used.

Will you be discontinuing paper-based annual reports, and what is the cost of distribution?

Tata: Both options are available and the cost is Rs 24 per copy.

Why don't you provide binoculars or glasses with your annual report?

Tata laughs and suggests this question be asked in the AGM of Titan Industries.

Why don't independent board members and other senior people hold shares in the company?

Tata: We had problems in the past and hence, this is not encouraged and we are cautious due to insider trading regulations.

Who pays for the AGM meet?

Tata: Shareholders pay for the expenses.

When will you appoint your successor? Who is it going to be?

Tata: We are looking into it.

Can we go for a plant visit?

Tata: There are safety issues and not possible.

Updated Date: Dec 20, 2014 04:08 AM

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