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- Title
The Challenges at JSW Steel: Brand Valuation and Corporate Governance Issues.
- Authors
Mohanty, Pitabas; Stephen, Tina
- Abstract
The shareholders of JSW Steel received a list of 24 items that would be put to vote in the AGM of the company, to be held on 31 July, 2014 along with the annual report of the company for the 2013-14 fiscal year. Item No. 23 of this list was a surprising addition, as the company stated that the brand name 'JSW' belongs to a private company called JSW Investments Private Limited (JSWIPL), promoted by Ms. Sangeeta Jindal, the wife of Mr. Sajjan Jindal, the Managing Director of JSW Jindal. It further stated that henceforth JSW Steel would pay 0.25% of the net consolidated turnover to JSWIPL for the use and promotion of the brand. The stock price fell in reaction to this news. JSW Steel justified its move by arguing that payment of royalties for the use of brand name is a common practice followed by Indian business groups. Many corporate governance experts, however, called this an abusive transaction and advised the shareholders to vote against the proposal. This case allows the examination of issues such as related party transactions and their corporate governance implications and the relevance of brand valuation for a steel company.
- Subjects
INDIA; JSW Steel Ltd.; BRAND image; CORPORATE governance; RELATED party transactions; STOCK prices; STEEL industry
- Publication
Asian Case Research Journal, 2017, Vol 21, Issue 1, p231
- ISSN
0218-9275
- Publication type
Article
- DOI
10.1142/S0218927517500080