CORPORATE GOVERNANCE REPORT
Governance provides the structure through which corporations set and pursue their objectives, while reflecting the context of the social, regulatory and market environment. Governance is a mechanism for monitoring the actions, policies and decisions of corporations. Governance involves the alignment of interests among the stakeholders. Corporate governance is the system of structures, rights, duties, and obligations by which corporations are directed and controlled, keeping in mind long-term interest of stakeholders, which encourages and moves a viable and accessible financial reporting structure and which enables a transparent system. The governance structure specifies the distribution of rights and responsibilities among different participants in the corporation, such as the board of directors, employees, shareholders, creditors, auditors, regulators, and other stakeholders, and specifies the rules and procedures for making decisions in corporate affairs.
We, at AGC, are driven by the six major characteristics of Corporate Governance which are Transparency, Independence, Accountability, Responsibility, Fairness and Social Responsibility.
1. CORPORATE GOVERNANCE AT AGC NETWORKS
The Company's philosophy of Corporate Governance is aimed at maximizing the shareholders' interest and protection of the interest of other stakeholders. The Company aims to achieve this through proper & full disclosure of material facts and achievement of the highest levels of transparency, accountability and equity in all facets of its operations.
Over the years, we have strengthened governance practices. These practices define the way business is conducted and value is generated. Stakeholders' interests are taken into account, before making any business decision.
We believe, Corporate Governance is not just a destination, but a journey to constantly improve sustainable value creation. It is an upward-moving target that we collectively strive towards achieving. Our multiple initiatives towards maintaining the highest standards of governance are detailed in the following pages.
2. BOARD OF DIRECTORS
As on March 31, 2015, the Board comprises 7 members and is responsible for management of the Company's Business. The Board's role, functions, responsibility and accountability are clearly defined and are as per Clause 49 of the Listing Agreement and Companies Act, 2013. In addition to its primary role of monitoring corporate performance, the functions of the Board also include:
• Approving corporate philosophy and mission
• Participating in the formulation of strategic business plans
• Reviewing and approving financial plans and budgets
• Monitoring and reviewing corporate performance vis-a-vis the business plans
• Ensuring compliance of laws and regulations
Details of Directors being re-appointed and appointed
Two of the existing Directors who retire by rotation are proposed to be re-appointed as Directors at the ensuing Annual General Meeting. Details with regard to the same are provided in the notice of the ensuing Annual General Meeting.
Familiarization programmes for Board Members
The Board members are provided with necessary documents/brochures, reports and internal policies to enable them to familiarize with the Company's procedures and practices. Periodic presentations are made at the Board and Board Committee Meetings, on business and performance updates of the Company, global business environment, business strategy and risks involved.
Quarterly updates on relevant statutory changes and landmark judicial pronouncements encompassing important laws are regularly circulated to the Directors.
Meetings of Independent Directors
The Company's Independent Directors meet at least once in every financial year without the presence of Executive Directors or management personnel. Such meetings are conducted to enable Independent Directors to discuss matters pertaining to the Company's affairs and put forth their views, to Review the performance of non-independent directors and the Board as a whole, to review the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors and to assess 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.
3. BOARD COMMITTEES:
As of March 31, 2015, the Company has following Board Committees.
1. Audit Committee
2. Nomination and Remuneration Committee
3. Ethics and Compliance Committee
4. Stakeholders Relationship Committee
5. Corporate Social Responsibility Committee
6. Risk Management Committee
7. Executive Committee
Powers of the Audit Committee
• To investigate any activity within its terms of reference
• To seek information from any employee
• To obtain outside legal or other professional advice
• To secure attendance of outsiders with relevant expertise, if it considers necessary
Role of the Audit Committee, inter alia, includes the following:
• 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
• Recommending the appointment, remuneration and terms of appointment of statutory auditors including cost auditors of the Company
• Approving payment to statutory auditors, including cost auditors, for any other services rendered by them
• Reviewing with the management, the annual financial statements and auditors report thereon before submission to the Board for approval, with particular reference to:
- Matters required to be included in the Directors' Responsibility Statement to be included in the Board's Report in terms of clause (c) of sub-section 3 of Section 134 of the Companies Act, 2013;
- Changes, if any, in accounting policies and practices and reasons for the same;
- Major accounting entries involving estimates based on the exercise of judgment by the management;
- Significant adjustments made in financial statements arising out of audit findings;
- Compliance with listing and other legal requirements relating to financial statements;
- Disclosure of any related party transactions; and
- Qualifications in draft audit report.
• Reviewing, with the management, the quarterly financial statements before submission to the Board for approval
• Monitoring and reviewing with the management, the statement of uses/ application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilised for
purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter
• Reviewing and monitoring the auditors independence and performance, and effectiveness of audit process
• Approval or any subsequent modification of transactions of the Company with related parties
• Scrutiny of inter-corporate loans and investments
• Valuation of undertakings or assets of the Company, wherever it is necessary
• Evaluation of internal financial controls and risk management systems
• Reviewing, with the management, the performance of statutory auditors and internal auditors, adequacy of internal control systems
• Formulating the scope, functioning, periodicity and methodology for conducting the internal audit
• Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit
• Discussion with internal auditors of any significant findings and follow-up thereon
• 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
• 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
• To look into the reasons for substantial defaults, if any, in the payment to depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors
• To review the functioning of the Vigil Mechanism and Whistle Blower mechanism
• Approval of appointment of the CFO (i.e. the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing qualifications, experience and background, etc. of the candidate
• Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
• Reviewing financial statements, in particular the investments made by the Company's unlisted subsidiaries
• Reviewing the following information:
- The Management Discussion and Analysis of financial condition and results of operations;
- Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;
- Management letters/letters of internal control weaknesses issued by the statutory auditors;
- Internal audit reports relating to internal control weaknesses; and
- Reviewing the appointment, removal and terms of remuneration of the Chief internal auditor / internal auditor(s).
Terms of Reference of the Committee, inter alia, includes the following
• To identify persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and to recommend to the Board their appointment and/or removal
• To carry out evaluation of every Director's performance
• To formulate the criteria for determining qualifications, positive attributes and independence of a Director, and recommend to the Board a policy, relating to the remuneration for the Directors, key managerial personnel and other employees
• To formulate the criteria for evaluation of Independent Directors and the Board
• To devise a policy on Board diversity
• To recommend/review remuneration of the Managing Director(s) and Whole-time Director(s) based on their performance and defined assessment criteria
• To administer, monitor and formulate detailed terms and conditions of the Employees' Stock Option Scheme including:
- the quantum of options to be granted under Employees' Stock Option Scheme per employee and in aggregate;
- the conditions under which option vested in employees may lapse in case of termination of employment for misconduct;
- the exercise period within which the employee should exercise the option, and that the option would lapse on failure to exercise the option within the exercise period;
- the specified time period within which the employee shall exercise the vested options in the event of termination or resignation of an employee;
- the right of an employee to exercise all options vested in him at one time or various points of time within the exercise period;
- the procedure for making a fair and reasonable adjustment to the number of options and to the exercise price in case of corporate actions, such as rights issues, bonus issues, merger, sale of division and others;
- the granting, vesting and exercising of options in case of employees who are on long leave; and
- the procedure for cashless exercise of options.
The Stakeholders Relationship Committee's composition and the terms of reference meet with the requirements of Clause 49 of the Listing Agreement and provisions of the Companies Act, 2013.
The Committee looks into redressing investors' grievances pertaining to Transfer of Shares, Dividends, De-materialization of Shares, Replacement of lost/stolen/mutilated share certificates, Non-receipt of right/ bonus/split share certificates, Non Receipt of Annual Report and any other related issues
The Board has designated Mr. Pratik Bhanushali, Company Secretary, as the Compliance Officer.
The total number of correspondence (including complaints / queries) received and replied to the satisfaction of shareholders during the period April 01, 2014 to March 31, 2015, was 85. There was no outstanding complaint / query or request for transfer as on 31st March, 2015.
The Committee's prime responsibility is to assist the Board in discharging its social responsibilities by way of formulating and monitoring implementation of the framework of 'corporate social responsibility policy', observe practices of Corporate Governance at all levels, and to suggest remedial measures wherever necessary. The Board has also empowered the Committee to look into matters related to sustainability and overall governance.
The Committee's constitution and terms of reference meet with the requirements of the Companies Act, 2013.
Terms of Reference of the Committee, inter alia, includes the following:
• To formulate and recommend to the Board, a Corporate Social Responsibility (CSR) Policy indicating activities to be undertaken by the Company in compliance with provisions of the Companies Act, 2013 and rules made there under
• To recommend the amount of expenditure to be incurred on the CSR activities
• To monitor the implementation of the CSR Policy of the Company from time to time
Risk Management Committee
Constitution of the Risk Management Committee as on 31st March, 2015
The Risk Management Committee was constituted by the Board adhering to the requirements of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Committee's prime responsibility is to implement and monitor the risk management plan and policy of the Company. The Committee's constitution meets with the requirements of Clause 49 of the Listing Agreement.
Role and Responsibilities of the Committee includes the following:
• Framing of Risk Management Plan and Policy
• Overseeing implementation of Risk Management Plan and Policy
• Monitoring of Risk Management Plan and Policy
• Validating the process of risk management
• Validating the procedure for Risk Minimization
• Periodically reviewing and evaluating the Risk Management Policy and practices with respect to risk assessment and risk management processes
• Continually obtaining reasonable assurance from management that all known and emerging risks have been identified and mitigated or managed
• Performing such other functions as may be necessary or appropriate for the performance of its oversight function
a. Disclosure of material financial and commercial transactions where management has personal interest that may have a potential conflict with the interest of the company at large.
During the year, there were no material financial and commercial transactions where management had personal interest that may have a potential conflict with the interest of the company at large. Details with regards to Related Party Transactions are provided under Financial section of this report.
b. Details of non-compliance by the Company, penalties, strictures imposed on the Company by Stock Exchanges or SEBI, or any statutory authority, on any matter related to capital markets, during the last three years. None.
c. Disclosure of number of shares held by non-executive directors.
None of the directors of the Company (including executive director) hold any equity shares in the Company.
d. Disclosure relating to Whistle Blower Policy and affirmation that no personnel have been denied access to the audit committee.
The Company has implemented a Whistle Blower Policy in the Company and no personnel have been denied access to the audit committee of the Company.
e. Details of compliance with mandatory requirements and adoption of the non-mandatory requirements.
The Company has complied with all the mandatory requirements of Clause 49 (Corporate Governance) of the Listing Agreement. Further, the Company has adopted the following non-mandatory requirements of Clause 49:
(i) Separate personnel are appointed to the post of Chairman and Managing Director/CEO, (ii) Company strives to move towards a regime of unqualified financial statements, and (ii) Internal Auditor of the Company reports directly to Audit Committee of the Company.
Means of Communication
The quarterly results (including half-yearly and annual results) are usually published in 'The Economic Times' / 'Freepress Journal' (English Daily) and 'Maharashtra Times' / 'Nav Shakti' (Marathi Daily). The results are also promptly forwarded to the Bombay Stock Exchange and National Stock Exchange where the scrip of the Company is listed. The Company has developed a section dedicated for Investors on the Company's website (www.agcnetworks.com >) to display latest annual, half-yearly & quarterly results. The official news releases and the presentations made to the Investors / Analysts are also displayed on the website. The Management Discussion and Analysis Report is attached to and forms part of the Annual Report.
5. GENERAL SHAREHOLDER INFORMATION Annual General Meeting (AGM)
The AGM of the Company for the financial year ended 31st March, 2015 shall be held on Thursday, 6th August, 2015 at 11.00 A.M. at Banquet Hall, Equinox Business Park, Off B.K.C, LBS Marg, Kurla West, Mumbai 400070
Following are the other general shareholder information
Financial Year :April 1 to March 31
Dates of Book Closure : 31.07.2015 (Friday) to 06.08.2015 (Thursday) (Both days inclusive)
Dividend Payment Date : Not applicable
Listing on Stock Exchanges
Bombay Stock Exchange (BSE) & National Stock Exchange (NSE)
Stock Code / Symbol
BSE - 500463
NSE - AGCNET
Demat ISIN Numbers in NSDL & CDSL for Equity Shares
ISIN - INE676A01019
Market price Data : High, Low during each month in the financial year 2014 - 2015 and stock performance comparison with BSE Sensex
See Table No.1 below
Registrar and Share Transfer Agents
Datamatics Financial Services Limited, Plot No. B-5, MIDC, Part B Cross Lane, Andheri (East), Mumbai - 400 093 to whom the authority has been delegated by the Board to attend share transfer formalities etc.
Share Transfer System
Share Transfers are registered and returned within the specified period from the date of receipt, if the documents are clear in all respects
Distribution of shareholding & Category - wise distribution : See Table No. 2 & 3
Dematerialization of shares and liquidity : See Table No. 4
Shed No, A - 78/4/3, A - 78/4/4, A - 78/5/3, A - 78/5/5, A - 78/3/4, A -78/4/6, GIDC Electronics Estate, Sector No. 25, Gandhinagar, Gujarat
Address for correspondence :
Registered Office : Equinox Business Park (Peninsula Techno Park), Off Bandra Kurla Complex, LBS Marg, Kurla West, Mumbai – 400 070