KOLKATA: Consumer electronics and smartphone giant Samsung Electronics India has taken a decision that all financial transactions undertaken by the company need to be signed and executed by the managing director, chief financial officer or an expatriate working in finance appointed by the board.
The company has altered its article of association in this regard, as per its latest regulatory filings in India made to the Registrar of Companies (RoC). Financial experts say this means the Korean top management wants greater control on all financial transactions which could be to further tighten processes amidst a push towards cost-cutting and drive greater profit from India.
In the RoC filings, Samsung India added one new clause in its article of association for all financial transactions undertaken by the company.
Accordingly, such transactions shall be “executed and signed by the following – (i) jointly by the MD and CFO or an expatriate working in finance department of the company, authorised by the board; or (ii) either by the MD or CFO or an expatriate working in finance department of the company, authorised by the board jointly with a person specifically authorised by the board in this regard.”
An email sent to Samsung India did not elicit any response till filing this story.
Mohit Yadav, founder at Veratech Intelligence, who analysed the RoC filing, said since CFO is not subservient to the MD, it follows that the consent of CFO or equivalent will be needed from now onwards.
“Good corporate governance requires that for a mature company such as Samsung, the MD takes into consideration advice given by the CFO or its equivalent but making such decisions contingent on CFO’s consent is highly unusual,” he said.
Samsung India is currently undertaking multiple initiatives to boost profit which declined three-fifths in the past two fiscals due to the price war it entered with Chinese companies like Xiaomi, OnePlus, Oppo and Realme in smartphones and televisions.
In FY19, Samsung India’s net profit was Rs 1,540 crore, down from its recent peak of Rs 4,156 crore in FY17. Samsung India’s revenue last fiscal crossed the $10 billion mark (Rs 73,086 crore). The company is India’s biggest consumer electronics and smartphone maker by sales.
As part of this, ET recently reported that Samsung has initiated cost-cutting across functions, has decided to move away from price wars, reducing the number of branch offices and frozen hiring except to fill vacant critical roles.
Samsung India is also redeploying manpower whereby some 600 jobs could disappear in sales support functions such as sales planning, market hygiene and order punching at shops, with the core sales team taking over such tasks, as ET reported recently.
Source: Economic Times
