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Asian Paints Corporate Governance Analysis

In: Business and Management

Submitted By kuchikoo75
Words 505
Pages 3
Share holding Pattern of APL

Analysing the shareholder’s pattern from the above data, we can clearly see that promoter holding in the company is more than 50%
Under Non Promoter holding (B1 and B2), there are two categories – Institutional investors and others.
In case of APL, Institutional investors include – Govt owned financial institutions, public and private sector commercial banks, insurance companies, mutual funds and FIIs. Together Institutional investor stake is around is 26.91
In the others category – Private corporate bodies, Non-resident Indians and overseas corporate bodies etc. comprises 20.30 % stake.
It would be interesting to analyse the shareholding pattern in light of the fact that role of any large shareholder in corporate governance is to the extent which outsiders block holders can mitigate agency costs arising from insider control. So in case of APL it would be of interest to measure the extent of control exerted by particularly institutional investors relative to that exercised by insiders.
As FIIs, insurance companies hold a major chunk of institutional investors and also as constituents of this group of investors are considered to have similar interests and objectives, they are likely to coordinate their decision and actions while the investors under Non-institutional are primarily dispersed shareholders making coordinated decisions costly.
The potential for institutional activism therefore in APL, is limited to some extent where through their block holding they can act as countervailing force against promoter. But when we see the ownership structure in contrast to its primary competitor BPL, Asian paints presents a much better picture in terms of any governance issues which may arise.

Major Stock Events:
1. May 2010 – Robust volume growth with substantial improvement in operating margins ~ 19% (best in last 6 years…...

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