A statement to reconcile the share holder v/s the stake holder debate

Firms operate within the framework of rules created by the interaction of the industry and the government to maximise share holders wealth within the constraints imposed by the need to be socially responsible with respect to job security, product safety, environment, cultural sensitivities and economic impact on the poor.

Most SMEs are destined to stay small

Given M2i’s positioning we get to work with a variety of small businesses – some fairly large small businesses attracting private equity and commercial funding, and some really small-small businesses backed by subsidies and donor funds. Among the latter, some are formally organized with appropriate registrations while many, in fact most, are informal enterprises with minimal registration – although a return is filed with the Income Tax Department. Business failure appears to be higher in those cases which have registrations and are required to comply with a number of regulations. Also, there is a reluctance among the entrepreneurs to grow a single enterprise, they’d rather divide their business and have several sole-proprietorships under various names, all engaged in the same business.

Public Sector Companies and Value Creation (Erosion)

This is from the ICAI journal- The Chartered Accountant, (Dec -09 issue) "According to the latest report of C&AG of India for the year 2009-10, 103 government companies and corporations (including 11 listed companies) had accumulated losses of Rs. 96,992.49 crore. Equity capital of 72 government companies (out of 103) had been completely eroded. The accumulated losses in these 72 companies were Rs.94,428.27 crore against equity investment of Rs. 15,762.83 crore, making their combined net worth negative at Rs. 78,665.44 crore. At the state level, the position is even more alarming. Most of these had not prepared their financial statements for more than 10 years."

Available at - http://www.ejournal.icai.org/CA/CA/2009/12/01/index.shtml