CORPORATE GOVERNANCE REPORT
1. COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE:
Corporate Governance involves commitment to conduct the business in a fair, transparent and ethical manner, aimed at promoting sustainable business and enhancing shareholders' value in the long term. The essence of Corporate Governance lies in promoting and maintaining integrity, transparency and accountability across all business practices. We believe that Corporate Governance is a continuous journey for sustainable value creation for all the stakeholders driven by our values of integrity, commitment, passion, seamlessness and speed.
2. BOARD OF DIRECTORS:
The Board plays a crucial role in overseeing how the management safeguards the interests of all the stakeholders. The Board ensures that the Company has clear goals aligned to the shareholder value and growth.
The Company has a balanced and diverse board with optimum mix of Executive and Non-executive Independent Directors and confirms to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As at 31st March, 2016, the Board of Directors comprises of 7 Directors, of which 4 are Non-executive and Independent. The present strength of the Board reflects the judicious mix of professionalism, competence and sound knowledge which enables the Board to provide effective leadership to the Company.
None of the Directors is a Director on the Board of more than 10 listed companies or acts as an Independent Director in more than 7 listed companies. Further, none of the Directors on the Board is a member of more than 10 committees and Chairman of more than 5 committees [as specified in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015] across all companies in which he/she is a Director. The necessary disclosures regarding committee positions have been made by the Directors.
The details of composition of the Board as at 31.03.2016, the attendance record of the Directors at the Board Meetings held during the financial year 2015-16 and at the last Annual General Meeting (AGM), as also the number of Directorships held by them in other Companies are given here below:
During the financial year 2015-16, four Board meetings were held on the following dates i.e. on 5th May, 2015, 11th August, 2015, 6th November, 2015 and 20th January, 2016 and the Annual General Meeting was held on 11th August, 2015.
3. CODE OF CONDUCT:
The Company has laid down a Code of Conduct, for all its Board Members and Senior Management Personnel for avoidance of conflicts of interest. The declarations with regard to its compliance have been received for the year 2015-16 from all the Board Members and Senior Management Personnel.
There were no material financial and commercial transactions, in which Board Members or Senior Management Personnel had personal interest, which could lead to potential conflict of interest with the Company during the year. The Code of Conduct is also available on Company's website viz. www.abcbearings.com .
A declaration signed by the Managing Director affirming the compliance with the Code of Conduct by the Board Members and Senior Management Personnel of the Company for the financial year 2015-16, is given below:
As provided under Schedule V(D) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, it is hereby declared that all the Board Members and Senior Management Personnel of ABC Bearings Limited have affirmed the compliance with the Code of Conduct in respect of Financial Year 2015-16.
4. AUDIT COMMITTEE:
Terms of Reference
The terms of reference of this Committee include matters specified in the Companies Act, 2013, Rules made there under, Listing Agreements or Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as may be applicable, and those specified by the Board in writing. Besides having access to all required information within the Company, the Committee may investigate any activity within its terms of reference, seek information from any employee, secure attendance of outsiders with relevant expertise, or obtain legal or other professional advice from external sources, whenever required.
The Committee acts as a link amongst the Management, Auditors and the Board of Directors. The Audit Committee acts in accordance with the terms of reference which, inter alia, include:
1. Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
2. Recommendation for appointment, remuneration and terms of appointment of auditors of the Company;
3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
4. Reviewing, with the Management, the annual financial statements and auditor's report thereon before submission to the Board for approval, with particular reference to:
a) Matters required to be included in the 'Directors' Responsibility Statement'.
b) Changes, if any, in accounting policies and practices and reasons for the same.
c) Major accounting entries involving estimates based on the exercise of judgment by Management.
d) Significant adjustments made in the financial statements arising out of audit findings.
e) Compliance with listing and other legal requirements relating to financial statement.
f) Disclosure of any related party transactions.
g) Qualifications/modified opinion(s) in the draft audit report.
5. Reviewing, with the Management, the quarterly financial statements before submission to the Board for approval;
6. Review and monitor the auditor's independence and performance and effectiveness of audit process;
7. Approval or any subsequent modification of transactions of the Company with related parties;
8. Scrutiny of inter-corporate loans and investments;
9. Valuation of undertakings or assets of the Company, wherever it is necessary;
10. Evaluation of internal financial controls and risk management systems;
11. Reviewing, with the Management, performance of statutory and internal auditors, adequacy of the internal control systems;
12. Discussion with internal auditors of any significant findings and follow up thereon;
13. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board;
14. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
15. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;
16. To review the functioning of the Whistle Blower Mechanism;
17. Approval of appointment of Chief Financial Officer after assessing the qualifications, experience and background, etc. of the candidate;
18. Carrying out any other function as is included in the terms of reference of the Audit Committee.
The composition of the Audit Committee and the attendance of the members at the meeting held during the year are as under:
* Due to unavoidable circumstances, Mr. Jal R. Patel, Chairman of the Audit Committee was not able to attend the meeting held on 20th January, 2016 and accordingly, the meeting was chaired by the other Independent Director Mr. Nalin M. Shah, for effectively discharging the role of the Committee.
During the financial year 2015-16, four Audit Committee Meetings were held on the following dates i.e. on 5th May, 2015, 11th August, 2015, 6th November, 2015 and 20th January, 2016.
All the members on the Audit Committee have the requisite qualification for appointment on the Committee and possess sound knowledge of finance, accounting practices and internal controls.
All the recommendations made by the Audit Committee were accepted by the Board.
The representatives of the Statutory Auditors are permanent invitees to the Audit Committee Meetings. They have attended all the Meetings during the year. The representative of the Cost Auditor is invited to attend the Meeting of the Audit Committee when the Cost Audit Report is tabled for discussion. The Managing Director, the Chief Financial Officer and Internal Auditors are permanent invitees to the Audit Committee Meeting. The Company Secretary acts as the Secretary to the Committee.
The Chairman of the Audit Committee was present at the 54th Annual General Meeting held on 11th August, 2015.
5. NOMINATION AND REMUNERATION COMMITTEE:
The Nomination and Remuneration Committee has been entrusted with the role of formulating criteria for determining the qualifications, positive attributes and independence of the Directors as well as identifying persons who may be appointed at Senior Management levels and also devising a policy on remuneration of Directors, Key Managerial Personnel and other senior employees.
Composition, Meetings and Attendance of Nomination and Remuneration Committee:
The composition of the Committee meets the requirements of Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Committee comprises of 3 members and all being Independent Directors. The Company Secretary acts as a Secretary to the Committee.
Nomination and Remuneration Policy:
The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy on remuneration of Directors and Key Managerial Personnel. Brief objectives of the Nomination and Remuneration Policy are as under:-
1. The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors, Key Managerial Personnel, Senior Management and other employees of the quality required to run the Company successfully.
2. The relationship of remuneration to performance is clear and meets appropriate performance benchmarks.
3. The remuneration to Whole-time Directors is paid subject to the approval of shareholders and the Central Government, wherever necessary. The remuneration to Key Managerial Personnel (KMP) and other employees of the Company involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals.
4. To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-executive) and persons who may be appointed in Senior Management, Key Managerial positions and to determine their remuneration.
5. To determine remuneration based on the Company's size and financial position and trends and practices on remuneration prevailing in peer companies, in the industry.
6. To carry out evaluation of the performance of Directors, as well as Key Managerial and Senior Management Personnel and to provide for reward(s) linked directly to their effort, performance, dedication and achievement relating to the Company's operations.
7. To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.
8. To lay down criteria for appointment, removal of Directors, Key Managerial Personnel and Senior Management Personnel and evaluation of their performance.
The Company has not granted any stock options to any of the Directors during the year.
For Non-executive Directors
The Non-executive Directors are paid remuneration by way of Sitting Fees.
The Non-Executive Directors are paid sitting fee @ T 25,000/- for attending Board Meeting, R 20,000/- for attending Audit Committee Meeting, R 7,500/- for attending Nomination and Remuneration Committee Meeting, R 5,000/- for attending Stakeholders' Relationship Committee Meeting and T 5,000/- for attending Corporate Social Responsibility Committee Meeting. The Non-Executive Directors are also entitled to reimbursement of expenses incurred in performance of the duties as Directors and Members of the Committees.
During the year under review, the Independent Directors met on 5th May, 2015, inter alia, to review -
• the performance of Non Independent Directors and the Board of Directors as a whole;
• the performance of the Chairman of the Company, taking into account the views of the Executive and Non Executive Directors;
• assessing the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
6. CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE:
In compliance with the provisions of Section 135 of the Companies Act, 2013, the Company has constituted the Corporate Social Responsibility Committee (CSR Committee). The CSR Committee evaluates and recommends to the Board the activities to be undertaken during the year and amount to be spent on these activities. The CSR Committee monitors the CSR policy from time to time.
The Composition of Corporate Social Responsibility Committee and their attendance at the meeting are given below:
During the financial year 2015-16, one meeting of the Committee was held on 11th August, 2015. The Corporate Social Responsibility Report for the financial year ended 31st March, 2016 is attached as Annexure A to the Board's Report.
The Company has formulated a CSR Policy and the same is uploaded on the website of the Company, which can be accessed at www.abcbearings.com .
7. STAKEHOLDERS' RELATIONSHIP COMMITTEE:
The Stakeholders Relationship Committee ensures quick redressal of the complaints of the stakeholders and oversees the process of share transfer. The Committee also monitors redressal of shareholders'/investors' complaints/grievances viz. non-receipt of annual report, dividend payment, issue of duplicate share certificates, transmission of shares and other related complaints. In addition, the Committee also monitors other issues including status of dematerialisation.
The Company holds Committee meetings on a periodical basis, as may be required to approve the transfers/transmissions/ issue of duplicate shares, etc. During the year under review, 17 meetings were held on the following dates:
During the year, the Stakeholders' Relationship Committee held its meetings on 10th April, 2015, 25th April, 2015, 22nd May, 2015, 3rd July, 2015, 24th July, 2015, 6th August, 2015, 4th September, 2015, 25th September, 2015, 13th October, 2015, 23rd October, 2015, 4th December, 2015, 20th January, 2016, 12th February, 2016, 26th February, 2016, 11th March, 2016, 18th March, 2016 and 31st March, 2016.
The Company has appointed Bigshare Services Private Limited to act as Registrar and Share Transfer Agents of the Company. To expedite the process of physical transfer of shares, the Board has delegated the authority to Registrar & Share Transfer Agent for physical transfer of shares. The physical transfers of shares approved are ratified at the subsequent Stakeholders Relationship Committee meeting.
Mr. Sanjay B. Desai, Company Secretary, acts as the Compliance Officer of the Company.
During the financial year 2015-16, the complaints and queries received from the shareholders were general in nature and were mainly pertaining to non-receipt of dividend, non-receipt of annual reports etc. All the complaints were resolved to the satisfaction of the investors.
All valid share transfers, received during the year ended 31st March, 2016, have been acted upon and there were no share transfers pending as on 31st March, 2016.
The Committee expresses satisfaction with the Company's performance in dealing with the shareholders' grievances and its share transfer system.
8. RISK MANAGEMENT:
Like any other ongoing business, your company is exposed to a large number of potential risks that can adversely affect the business. Your company has established a comprehensive Risk Management System to ensure that risks to the Company's continued existence as a going concern and to its development are identified and addressed on timely basis.
Related Party Transactions
During the year under review there were no materially significant related party transactions that may have potential conflict with the interests of the Company at large.
The Company has formulated the Policy on dealing with related party transactions and the same is available on the website of the Company viz. www.abcbearings.com .
The Company has followed all relevant Accounting Standards while preparing Financial Statements and no treatment different from that prescribed in an Accounting Standard has been followed.
There are no pecuniary relationships or transactions of Non-Executive Directors vis-a-vis the Company which have potential conflict with the interests of the Company at large.
No penalties or strictures have been imposed on the Company by Stock Exchange or SEBI or any statutory authority on any matter related to capital markets during the last three years.
Prevention of Insider Trading
The Company's Code of Internal Procedures and Conduct for dealing in securities aims at preserving and preventing misuse of unpublished price sensitive information. All the Directors and designated employees have been covered under the Code and provides for periodical disclosures.
Vigil Mechanism/Whistle Blower Policy
The Company has established a Vigil Mechanism/Whistle Blower Policy for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct. The Policy provides adequate safeguards against victimization of Director(s)/employee(s) and direct access to the Chairman of the Audit Committee in exceptional cases.
The Company hereby affirms that no Director/employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.
10. MEANS OF COMMUNICATION:
The Company after approval by its Board of Directors and after submission of the same to Stock Exchange, publishes its Quarterly and Annual Results generally in Free Press Journal and Navshakti. The said results are also available on the website of the Company at www.abcbearings.com .
As the Company publishes the audited annual results within the stipulated period of 60 days, as required by the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the unaudited results for the last quarter of the financial year are not published.
Shareholding Pattern, Corporate Governance Report, Intimation of Board Meetings and other quarterly, half yearly and yearly compliances are posted through the portal <http://listing.bseindia.com>.
Management Discussion and Analysis Report forms part of this Annual Report.
11. GENERAL SHAREHOLDER INFORMATION:
i. Annual General Meeting
Date : 27th July, 2016.
Time : 4.30 p.m.
Venue : Hall of Culture, Nehru Centre, Dr. Annie Besant Road, Worli, Mumbai - 400 018.
ii. Financial Year
The Company follows April-March as its financial year. The results for every quarter are declared in the month following the quarter except for the quarter January-March, for which the audited results are declared in April/May as permitted under the Listing Agreement.
iii. Date of Book Closure
Monday, the 25th July, 2016 to Wednesday, the 27th July, 2016 (both days inclusive).
iv. Dividend Payment Date
After 27th July, 2016.
v. Listing on Stock Exchanges
The Company's shares are listed on BSE Limited, Mumbai.
vi. Stock Code
BSE Limited, Mumbai (BSE) - 505665
Demat International Security Identification Number (ISIN) in NSDL & CDSL for Equity Shares - INE 779A01011
ix. Registrars and Transfer Agents
Bigshare Services Pvt. Ltd.
E-2/3, Ansa Industrial Estate, Sakivihar Road, Saki Naka, Andheri (E), Mumbai 400 072.
Tel.: 022-40430200 Fax: 022-28475207 Efirstname.lastname@example.org Website:www.bigshareonline.com
x. Share Transfer System
Presently, the share transfers received in physical form are processed and the share certificates are returned within a period of 15 days from the date of receipt, subject to the documents being valid and complete in all respects. As required under the listing agreement a certificate on half yearly basis and quarterly report on Reconciliation of Share Capital from a practising Company Secretary has been submitted to Stock Exchange within stipulated time
xii. Dematerialisation of Shares and Liquidity
96.58% equity shares of the Company have been dematerialised as on 31st March, 2016.
xiii. Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, Conversion Date and likely impact on Equity
Company has not issued any GDRs/ADRs/Warrants or any Convertible Instruments.
xiv. Plant Locations
1. Bharuch, Gujarat State.
2. Dehradun, Uttarakhand State.
xv. Address for Correspondence
Shareholders may correspond on all matters relating to transfer/dematerialisation of shares, payment of dividend, and any other query relating to shares of the Company with Registrars and Share Transfer Agents, at the address given below:
M/s. Bigshare Services Pvt. Ltd.
E-2/3, Ansa Industrial Estate, Sakivihar Road, Saki Naka, Andheri (E), Mumbai 400 072.
Tel.: 022 - 40430200 Fax: 022 - 28475207
E-mail: email@example.com Website: www.bigshareonline.com
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Shareholders would have to correspond with the respective Depository Participants for shares held in demat mode.
For and on behalf of the Board
Place : Mumbai
Date : 10th May, 2016