I would bring a board the working knowledge of a CFO who has presented to an Audit Committee in a promoter-led listed company for seven years, after five years reporting to a private equity investor that read every figure twice. I know the judgements that most often decide a manufacturer's results because I have had to make them: revenue recognised over time on long contracts, expected-credit-loss allowances on contract assets, variable consideration such as delay penalties, hedge accounting for currency, and the capitalisation of costs someone hopes to recover. I also know the parts of a manufacturer's risk that sit outside the balance sheet until they arrive: bank instruments, commodity commitments and dependence on a promoter group's other companies.
Under the SEBI Listing Regulations, all Audit Committee members must be able to read financial statements and at least one must bring expertise in accounting or financial management; two-thirds of the members, including the chair, must be independent. Section 177 of the Companies Act sets its own requirements. I would meet the expertise test. Even so, I would want a year as a member before chairing, because a new chair who does not yet know the company's businesses, auditors and control weaknesses depends on management for exactly the knowledge the role exists to test.
I would also bring a habit of disagreeing in writing. At Ilvara I have argued against a chairman's offer of his own collateral, put a promoter-group supplier into open tender and declined a request that the company stand surety for a promoter-group loan. At Varunika I lowered the EBITDA our own investor wanted to sell. Each relationship survived because the disagreement was argued on paper, with evidence, and decided by those entitled to decide it. An independent director in a promoter-led company needs the same discipline, with less information and more distance than a CFO has.
Judgement in practice
01
A delay penalty recognised before the client deducted it
In 2024 a refinery package in our Projects division finished seven months late. The contract allowed the client liquidated damages of 0.5 per cent of the ₹460 crore price for each week of delay, capped at 10 per cent. Our Projects team argued that most of the delay came from the client's slow approval of drawings, and proposed only disclosing a contingent liability while we pursued an extension of time. Under Ind AS 115 a penalty of this kind is usually variable consideration, so the real question was how much revenue we could recognise with confidence. After reading the correspondence, I judged that about thirteen weeks of the delay were ours and recommended reducing revenue by ₹30 crore while we pressed the extension claim. The Audit Committee agreed and the auditors concurred. The client settled in 2025 at ₹26 crore, and we reversed ₹4 crore. As a director I would ask to see the penalty clause and the delay record well before such a claim is settled.
02
A promoter-group supplier put into open tender
Until 2021 Rajyaguru Structurals, a promoter-group company, supplied all the fabricated steel structures for our projects, about ₹190 crore a year, under an omnibus approval the Audit Committee renewed annually against a benchmark built from its own past prices. I proposed that the committee approve a procurement method instead: the related party would bid on the same drawings against at least three unrelated fabricators, and the committee would see every bid. Our executive chairman considered the change unnecessary and said so at the board. The committee adopted it. In the first year Rajyaguru Structurals won 58 per cent of the work instead of all of it, average prices fell by about 7 per cent, saving roughly ₹13 crore, and one new vendor's late deliveries cost a project six weeks. I learnt that a committee protects minority shareholders better by approving how a price is found than by approving the price itself.
03
An error taken to the committee before the auditors found it
In the second quarter of 2023–24 my team's review of a Projects site found that ₹23 crore of bought-out equipment, delivered to site but not yet installed, had been counted in our cost-based measure of progress. Under Ind AS 115, costs that do not depict progress, as uninstalled materials often do not, should not inflate that measure, and the effect had been to recognise about ₹26 crore of revenue early. The amount was not material to the year, and it could have been corrected quietly in the next quarter. I told the Audit Committee chair the week we found it, with the cause, the correction and the controls we would change, before the statutory auditors' limited review began. The committee asked for a review of every site, which found two smaller cases. On a board I would expect management to bring me its errors this way, and I would make sure nobody was punished for doing so.
My first year on a board
My first year would start where a manufacturer's commitments are made. Within the first quarter I would ask to walk one plant and one project or customer site, and to observe a bid committee or a capital review, because a manufacturer's balance sheet is decided in those rooms before it reaches a board pack. I would also work through the papers a newcomer needs: minutes going back three years, the key audit matters, open internal audit findings, the related-party register and the banks' sanction letters with their covenants. Early on I would ask for time alone with the company's auditors, both statutory and internal.
I would then spend the rest of the year as a member rather than seeking the chair. I keep a running list of the questions I find myself asking twice, because a repeated question usually means a paper is missing something, and I would share that list with the committee chair at the half-year. At the end of the year I would ask the board chair and the committee chair for blunt feedback and compare it with the board evaluation.
Conflicts and their management
Ilvara employs me full time, and that comes first. I would not join the board of any company that makes process equipment or builds industrial projects, or of any supplier, customer, competitor or lender of Ilvara, and I would decline any company with a material relationship with the Rajyaguru family's other businesses. Before accepting a seat I would disclose my Ilvara shares and options, my directorship of our UAE subsidiary and any relationship with the company's auditors or banks, and I would seek the consent of Ilvara's board.
Should a relationship develop after I joined, for instance if the company started buying from Ilvara or bidding against it, I would tell the chair immediately, leave the room for the relevant items and offer to step down if the relationship looked lasting. Calendars can conflict as well. Ilvara's quarter-end will fall close to the other company's results meetings, so I would fix the year's dates in advance and protect twenty-eight days, preparation included, rather than promise more than I can give.
My independence statement
I work full time for Ilvara Engineering and own its shares and employee stock options. I would consider an independent seat only where neither Ilvara, the Rajyaguru family nor I have any material business, financial or personal tie to the company, its promoters or its auditors, and I would set out every relevant fact in writing first. The judgement on independence under section 149(6) of the Companies Act and the Listing Regulations belongs to the appointing board, not to me.
Board and committee exposure
Presented to the Board or a committee
Ilvara Engineering Limited
Board of directors: quarterly results, annual budget, capital allocation, large bids and banking arrangements
June 2019–present
Takes management's finance papers to each board meeting as a non-voting presenter; holds no directorship of the company.
Presented to the Board or a committee
Ilvara Engineering Limited
Audit Committee: financial results, Ind AS 115 judgements, related-party approvals and internal financial controls
June 2019–present
Attends every meeting as an invitee and presents results, contract-accounting judgements and related-party papers; not a committee member.
Reported to a committee
Ilvara Engineering Limited
Risk Management Committee: commodity, currency and bank-capacity exposure
April 2021–present
Reports each quarter on open plate and currency positions, utilisation of bank limits and counterparty exposure to mills.
Served as a director
Ilvara Engineering FZE
Board of the wholly owned UAE subsidiary
January 2020–present
Director in an executive capacity, approving the subsidiary's accounts, contract authorities and local banking arrangements.
Presented to the Board or a committee
Varunika Castings Private Limited
Board, including two investor-nominee directors, and its audit sub-committee set up under the shareholders' agreement
March 2014–May 2019
Presented monthly and quarterly results, the 2016 refinancing and the financial information for the 2019 sale; not a director.