Corporate Governance Rating of

Jet Airways

By : Group 7

Dipesh S Jain
Manmeet Gandhi
Minesh Shah
Mohit Dubey
Saurabh Bajaj
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Corporate Governance
Rating

Jet Airways – A Profile

• Industry – Aviation (Service)

• Listed on – BSE and NSE

• Market Cap. – INR 6,472 Cr.

• Registered Office – Mumbai (India)

• Auditors – Deloitte Haskins & Sells,Chaturvedi & Shah

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Corporate Governance
Rating

Board of Directors Composition

13%

25%

63%

Executive Directors
Non-Executive, Non-Independent Directors
Independent Directors
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Corporate Governance
Rating

Comparison of BOD of Jet with Industry

Industry
Particulars Company
Average
Number of Directors 8 7
Percent Independent 63% 74%
Percent Women 0 5%
Percent Substantial Industry Knowledge 25% 40%
Average number of other public company 1.5 2.3
board seats
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Corporate Governance
Rating

Corporate Governance Ratings

Home Rating
Particulars
Absolute Relative

Overall Rating 5.7 8.1

Board Accountability 6.7 10.0

Financial Disclosure & Internal Controls 5.6 8.2

Shareholder Rights 8.2 10.0

Remuneration 2.1 4.4

Market for Control 5.7 7.1

Corporate Behavior 5.9 8.9

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Corporate Governance
Rating

Methodology for Rating

2 methods - Relative Rating & Absolute Rating

1.Identify Categories & Sub-sections of the categories.

2.Assign weights between 0 & 1 to each sub – section of the category & also to the
Categories.

3.Score for each parameter of the sub-section is determined, either 0 or 1 based on the
information from the Annual Report.

4.Weighted Score is determined.

5.Done for 3 companies in the Aviation industry.

6.Absolute and Relative % of compliance are determined.

GMI_Rating_metrics.xlsx
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Corporate Governance
Rating

Board Accountability 6.7

Sub – sections considered : 20

Scored – 11.9 out of 17.8

Absolute Rating – 6.7

Relative Rating – 10

Observations & Opinion :

1. The board primarily comprises of Independent directors (5/8).It

is a positive governance practice as the board is potentially able
to execute adequate independent oversight.
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Corporate Governance
Rating

Financial Disclosure & Internal

Controls
5.6
Sub – sections considered : 16

Scored – 9 out of 16

Absolute Rating – 5.6

Relative Rating – 8.1

Observations & Opinion :

1.There is no risk management committee in place.

2.The Audit committee reviews and discusses the company's policy with respect to risk
assessment and risk management.
3.The company does not make comprehensive disclosure on its risk management policies.
4.The remuneration and fees for Auditors (Delloite Haskins and Sells, Chaturvedi & Shah
was about INR 2.39
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Corporate Governance
Rating

Shareholder Rights 8.2

Sub – sections considered : 6

Scored – 4.6 out of 5.6

Absolute Rating – 8.2

Relative Rating – 10

Observations & Opinion :

1.Routine proxy voting is available in person.

2.There is no cumulative voting permitted in election of directors.

3.There is only a single class of shares with equal voting rights per share.
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Corporate Governance
Rating

Remuneration 2.1
Sub – sections considered : 4

Scored – 0.8 out of 3.8

Absolute Rating – 2.1

Relative Rating – 4.44s

Observations & Opinion :

1.The company does not have an scheme for Stock Options of its shares either
for the director or for the employee. Hence there is no potential dilution which
could devalue currently outstanding stock.
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Corporate Governance
Rating

Market for Control 5.7

Sub – sections considered : 5

Scored – 2.4 out of 4.2

Absolute Rating – 5.7

Relative Rating – 7.1

Observations & Opinion :

1.The company has a single entity or shareholder group with voting

power of 80% held by Chairman Naresh Goyal.We consider such large
ownership positions to be a deterrent, severely weakening the market
for control.

2.Company has not employed any unilateral takeover defense.

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Corporate Governance
Rating

Corporate Behavior & CSR 5.9

Sub – sections considered : 14

Scored – 4.1 out of 7

Absolute Rating – 5.9

Relative Rating – 8.9

Observations & Opinion :

1.The company in its annual report boasts of having workplace safety policy in place
but not much is disclosed to that effect.

2.Also environmental disclosures are not made.

3.Company's code of ethics does not address whether company funds may be used to
fund the political parties.
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Corporate Governance
Rating

Overall Rating 5.7

The Overall rating is done only in the home market.

The Home ratings are as follows –

Absolute : 5.7

Relative : 8.1

This is the weighted average of the ratings of the 6 categories

with each category having equal weights.
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Corporate Governance
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Limitations
1.Weights assigned are subjective.

2.For relative rating, number of companies considered is very

small.

3.Sub-sections in each categories and Categories in themselves

may not be exhaustive.

4.The tools applied may not be scientific in nature though

appealing.
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Corporate Governance
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