REPORT ON CORPORATE GOVERNANCE
1. Company's Philosophy on Corporate Governance:
Alcobex Metals Limited (AML) believes that good Corporate Governance is a basic tool to achieve long term corporate goals and to create shareholders' value on a sustainable basis. The Company's philosophy on Corporate Governance envisages attainment of high level of transparency, accountability and integrity in all its facts including the conduct of its business, its relationship with its stakeholder's viz. shareholders, employees, customers, government and the lenders.
2. Board of Directors:
2.1 The Company recognizes that a strong and effective Board is the pre-requisite for good corporate governance. The Board of Directors comprises of Nine Directors, consisting of Three Nominee Directors of Financial Institutions and Banks, four Promoter Directors and one Independent Directors. Mr. G.C. Kanunga, one of founder Directors of the Company, is the Managing Director. The Directors are eminent individuals, drawn from amongst persons with experience in the field of Finance, Metallurgy and Management. The Board oversees the Company's strategic direction, reviews the performance, authorizes and monitors the utilization of resources, ensures regulatory compliance and safeguards the interest of shareholders on consistent and transparent basis.
2.2 Composition of the Board:
2.1(a) Due to death, ceasation, resignation and of independent and nominee Directors composition of the Board does not comply with the requirement of Clause 49 of the Listing Agreement.
2.2(b) The Company is taking necessary steps to fulfill the vacancies.
None of the Directors is a member of more than ten Board level committees, or a Chairman of more than five such committees, as prescribed under Clause 49 of the Listing Agreement.
2.3 Attendance at Board Meetings:
During the year under review. Six Board Meetings were held on 2nd May, 2009, 30th July, 2009,5th Septemmber,2009,7"'November,2009,24th ecember,2009 and 30th January, 2010. The gap between two meetings was not more than four months. The required information as enumerated in Annexure lA to Clause 49 of the Listing Agreement is made available to the Board of Directors for discussions and consideration at Board meetings. The Board also reviews the declaration made by the Managing Directors regarding compliance with all applicable laws on a quarterly basis. The Board meetings are generally held at the Head Office of the Company at Jodhpur. But in this Financial Year 2009 2010, all the Meetings of Board of Directors were held at Laxmi Vilas Hotel, Jaipur. Agenda for each meeting along with explanatory notes are drafted and distributed well in advance to the
2.4 All the directors have as on 31st March, 2010,filed the requisite declarations stating that:
(a) The disqualification contemplated under Section 274(l)(g) of the Companies Act, 1956 do not apply to them,
(b) The code of conduct for Prevention of Insider Trading in its equity shares has been complied with.
2.5 The Company has framed a Code of Conduct and Ethics for members of the Board and Senior Management personnel of the Compcuiy. The said Code of Conduct is available on the Website of the Company. The decleuration by Chairman & Managing Director is given below. In addition to this, a separate Code of Conduct for dealing in equity shcires saving voting rights is also in place.
"I hereby confirm
The company has obtained from all members of the Board and Senior Management Personnel, affirmation that they have complied with the Code of Conduct and Ethics for Directors and Senior Management in respect of financial year 2009-10.
Chairman & Managing Director"
3. Audit Committee:
3.1 The Audit Committee comprises of three Non-Executive Directors and One Independent Director. All the Directors are financially literate and have the relevant finance and /or audit exposure.
3.2 During the period under review, Five Meetings of the Audit Committee were held on 2nd May, 2009, 30th July,2009, Septemmber,2009,7th November,2009 and 30th January, 2010.
The composition of the Audit Committee and attendance at its meetings is given hereunder:
3.3 (a) Due to death, ceasation and resignation of independent and nominee Directors, the composition of the Audit Committee does not comply with Section 292A of the Companies Act, 1956
3.3(b) Due to above mentioned reasons in the Audit Committee, there are only two independent members instead of three. The Company is taking necesseiry steps to fulfill the vacancy.
3.4.1 The Audit Committee provides assistance to the Board of Directors in fulfilling its responsibility to oversee operations. The powers and role of the members of the committee are in accordance with clause 49 of the Listing Agreement and Section 292A of the Companies Act, 1956.The audit committee has the power to obtain outside legal or other professional advise Secure attendance of outsiders with relevant expertise.
The Committee acts as a link between the management, the statutory and the internal auditors and oversees the financial report in process.
3.4.2 The brief terms 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. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditor and the fixation of audit fees.
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 before submission to the board for approval with particular reference to:
a. Matters required to be included in the Director's Responsibility Statement to be included in the Board's report in terms of clause (2AA) of section 217 of the Companies Act, 1956.
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 statements.
f. Disclosure of any related party transactions
g. Qualifications in the draft audit report.
5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval.
6. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems.
7. Reviewing the adequacy of internal audit function, if any, including the structiire of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.
8. Discussion with internal auditors any significant findings and follow up thereon.
9. 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.
10. 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.
11. 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.
12. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
3.4.3 The Audit Committee mandatorily reviews the following information:
1. Management discussion and analysis of financial condition and results of operations;
2. Statement of significant related party transactions, submitted by management;
3. Management letters / letters of internal control weaknesses issued by the statutory auditors; and
4. Internal audit reports relating to internal control weaknesses.
3.5 The Company Secretary generally acts as the Secretary to the Committee. The Chief Finance Officer and the Finance Consultant are permanent invitees.The Statutory and the Internal auditors are also invited.
4. Remuneration Committee:
4.1 The remuneration committee has been constituted to review and recommend the remimeration package to whole time directors. The remuneration policy of employers largely consists of basic remuneration, perquisites and performance incentive. The objectives of remuneration policy are to motivate employees to excel in their performance, recognize their contribution, retain talent in organization and record merit.
4.2 Composition of the Committee:
The Composition of the Committee at present is as follows:
- Shri D.K. Kankaria
( Death on l7th June,2010)
-Shri D.P. Gogia
-Shri S.K. Bansal
4.2(a) Due to death of independent Director, the Remuneration Committee has only two independent members instead of three. The Company is taking necessary steps to fulfill the vacancy.
4.3 No meeting took place in the Financial Year as the same was not required.
4.4 Non-Executive Directors are paid sitting fees for each meeting attended by them. The appointment and remuneration of the Managing Director is governed by resolutions passed by the Board of Directors and shareholders of the Company, which covers terms of such appointment read with the service rules of the Company. Remuneration paid to the Managing Director is recommended by the Remimeration Committee, approved by the Board and is within the limits set by the shareholders at the General Meetings.
4.6 Presently, the Company does not have any stock option plan or performance linked incentives for its Directors.
4.7 No remuneration other than sitting fees is being paid to the Directors (other than Managing Director). The fees to the Nominee Directors is being paid directly to the respective Bank/ Financial Institution as and when the demand is raised.
4.8 The appointment of Managing Director is contractual. No agreement was executed and there is no clause/stipulation as regards termination, notice period etc.
5. Shareholders / Investor Grievance Committee:
5.1 To expedite the process of share transfer the Board has constituted a Shareholders/Investors Grievance Committee consisting of Shri B.L. Kanunga (Chairman) and Shri S.R. Kanunga. The Company Secretary acts as a Secretary to the Committee. The Committee reviews the matters relating to Shareholders/Investors Grievance for expeditious settlement. The Committee oversees the performance of the Registrar and Transfer Agents and recommends measures for overall improvement in the quality of Investors grievances.
5.2 During the financial year ended 31.03.2010,13 meetings of the Share holders/Investors Grievance Committee were held on 25.04.2009, 25.05.2009, 03.07.2009, 29.08:2009,
03.10.2009, 09.10.2009, 29.10.2009, 17.11.2009, 18.12.2009, 06.01.2010, 29.01.2010,
05.02.2010, and 20.02.2010.
5.3 The Company Secretary is designated as Compliance Officer.
The Committee expresses satisfaction with the Company's performance in dealing with Investors' grievance and its share transfer system.
5.4 Number of Share holders complaints received, not solved and pending during theyear: The total number of complaints received, and replied to the satisfaction of the shareholders during the year ended March 31, 2010 were 08. There were no pending / unattended complaints as on March 31,2010.
5.5.1 No other complaints were received either directly or through the Securities & Exchange Board of India (SEBI) or Stock Exchange. Further, no complaints suits were filed/pending with Consumer Redressal Forum or any Court of law.
6.1 Risk assessment and its minimization procedures have been laid down by the company and the same have been informed to the Board members. The procedure are periodically reviewed to ensure that executive management controls risk through means of properly framed defined framework.
6.2 No money, was raised by the Company through public issue, right issue, preferential issues etc. if any in the last financial year.
6.3 The BIFR at its meeting held on 2nd day of August, 2010 directed the Company to deposit Rs. 5 Crores with IDBI within One Month and if Company does not deposit the said amount within stipulated time the IDBI could file MA for Change of Management. The Company is making efforts to arrange for funds from the Strategic Investor and also will seek extension of time from the BIFR for making such deposit, if necessary.
6.4 A summary of transactions with related parties in the ordinary course of business is periodically placed before the Audit Committee;
6.5 There were no material individual transactions during the Financial Year ended 3st March, 2010, with related parties which were not in the original course of business;
6.6 All material transactions during the Financial Year ended 31st March, 2010, either with related parties or others were on arms length;
6.7 There were no materially significant transactions during the Financial Year with related parties such as the Promoters, Directors, key managerial personnel or relatives that could have potential conflict with the interest of the Company;
6.8 The mandatory disclosure of transactions with related parties in compliance with the Accounting Standards AS 18 is a part of this Annual Report and disclosed in Notes to Schedule 25;
6.9 In preparing the Annual Accounts in respect of the Financial Year ended 31st March, 2010, no accounting treatment was different from that prescribed in the Accounting Standards other than those disclosed in the notes to the accounts.
6.10 During the last three years, there were no strictures or penalties imposed by either SEBI or the Stock Exchanges or any statutory authority for non-compliance of any matter related to the capital markets.
6.11 The directors and other identified persons have observed and complied with the requirements of Code of Conduct for Prevention of Insider Trading in Equity Shares of the Company in accordance with Security & Exchange Board of India (Prohibition of Insider Trading), Regulations 1992.
6.12 In accordance with SEBI (Prohibition of Insider Trading) Regulations, 1992, the Board has adopted the following codes:
a. Code for Prevention of Insider Trading:
Under this code, obligations are cast upon the Directors and Officers to preserve Price Sensitive Information, which is likely to have a bearing on share price of the Company. The Procedure are prescribed to ensure that such information is not misused for any personal advantage. The Compliance officer is responsible for monitoring implementation of the Code across the Company.
b. Code of Corporate Disclosures:
This code lays down principles and procedures with the objective of ensuring that the Price Sensitive Information related to Alcobex Product is handled in prescribed manner. Adequate disclosure of such Information is sought to be made to the Public through Stock Exchanges, and Press in timely manner to enable the investors to take informed investment decisions with regard to the Company's Securities. The Managing Director has been appointed as the Company's Spokesperson under this code.
c. Code of Conduct for Directors and Senior Management Personnel
The Board of Directors of the Company has laid down a Code of Conduct for edl Board Members and Senior Management Personnel of the Company. The Board Members and Senior Management Personnel of the Company have affirmed compliance with the Code. 7.13 Investor may write to the Company's Secreteuried Department for a copy of these Codes.
7. Means of communication:
7.1 The quarterly results of the Company are published in two newspapers in compliance with the provisions of Clause 41 of the listing agreement. Generally, the same are published in The Pioneer (English language) and Veer Arjun (7/mcfi language). As the results of the Company are published in the newspapers, half-yearly reports are not sent to each household of shareholders. The quarterly results as well as the proceedings of the Annual General Meeting had been submitted to the Bombay Stock Exchange limited immediately after the conclusion of the respective meeting. The Company is in the process of complying with EDIFAR requirement as directed by SEBI.
7.2 No presentations were made to the institutional investors or to analysts during the year under review.
7.3 Due to the shortage of staff in the company, the Limited Review Report for the Quarter Ended 31/03/2010 are not prepared within stipulated time by the Statutory Auditors.
7.4 The Management Discussion and Analysis Report as enclosed forms a part of the Annual Report.
8. General Shareholder information:
8.1 The abbreviated resume of the Directors seeking reappointment at the forthcoming AGM and information pursuant to clause 49 of the listing agreement are as under:
Shri S.R. Kanunga
A graduate in commerce from Jodhpur University is looking after Material Management and pxirchase of the Company for the last 25 year. He is also a Director in M/s Alcobex Investment Pvt. Ltd. The Shareholding in the company of Mr. S.R. Kanimga as on 31/03/2010is 2,21,533 Equity Shares.
8.2 (i) Date, time and venue of Annual General Meeting of Shareholders:
30th September 2010 10:00 A.M. Shri Parshva Padmavati Temple & Resort, Mahabalipuram, Village : Bhatti, Opp. Sawan Public School, New Delhi - 1100014.
(ii) Financial Calendar (tentative and subject to change)
Financial Reporting for quarter ended
June 30,2009 : By July 30,2009
September 30,2009 : By October 31,2009
December 31,2009 By January 29,2010
March31,2010 :By May 02,2010
Annual General Meeting for year ended 31 st March 2010 - By September 30,2010.
(iii) Dates of book closures :
22nd September, 2010 to 30th September, 2010 (both days inclusive)
(iv) Dividend Payment
No dividend has been recommended during year because of continuing losses.
(v) Registered Office
4223/1, Ansari Road, Daryaganj, New Delhi- 110 002. Phone: (Oil) 2327 3496,2327 4641 Fax : (011)2328 8565
(vi) Listing on Stock Exchanges
The Bombay Stock Exchange Limited
Annual Listing Fees as prescribed has been paid to the said Stock Exchanges for the year 2010-2011.
(vii) Stock Exchange Code :
8.3 Registrar and ShareTransfer Agents:
M/s Karvy Computershare Private Limited Karvy Computershare Pvt. Ltd. 17- 24 Vithalrao Nagar, Madhapur
Phone: (040) 23312454,23320251,
23320751,23320752 Fax: (040)23311968
They are engaged in processing transfers, splittage of shares, consolidation in physical form on the basis of minutes of transfer committee sent to them. The representatives of Registrar and Share Transfer agents do not attend any meeting.
8.4 Share Transfer System:
To expedite the transfer in physical segment, authority has been delegated to the Share Transfer Committee of the Board. The minutes of the Committee authorizing transfer are sent to the Transfer Agents after which they dispatch the transferred share certificate to the transferees. The Share Transfer Committee and Registrar and Share Transfer agent ensures that the certificates, after transfer, are dispatched within 30 from the date of their receipt.
8.5 Dematerialization of shares and liquidity:
At present the Company's shares are traded in Physical form
Application for conversion of physical shares into electronic form is under consideration with both the agencies (NSDL & CDSL)
No shares have been dematerialized as on 31.03.2010. All the shares are held in physical form.
8.6 Location of Factory:
24/25, Heavy Industrial Area, Jodhpur (Raj.) 342003.
9.10 Address for Correspondence:
4223/1, Ansari Road, Darya Ganj New Delhi 110002.
24/25,Heavy Industrial Area Jodhpur-342 003.
8.7 Company Secretary:
Miss Pooja Bafna, Company Secretary has resigned from 5th December, 2010 and company is taking necessary step to appoint new company secretary
9. The Company is taking steps to implement the non mandatory requirements in a phased manner.
9.1 The CEO/CFO certificate on financial statements is enclosed as part of the report.
9.2 Mr. Piyush Dhosi, CEO of the Company resigned on 2nd of February, 2010, the Company is taking necessary steps to appoint a qualified replacement.
9.3 The Company will intimate BSE (Bombay Stock Exchange) about the resignation of CFO in near future.
10. Management Responsibility Statement
The Directors' Responsibility Statement, in conformity with the requirement of the Companies Act, 1956 has been included in the Directors' Report to the Shareholders.
The Financial Accounts are in full conformity with the requirements of the Companies Act, 1956 except in case of the transactions entered into with a partnership firm in which some of the Directors are interested for which the Company applied for post-facto approval to the Department of Company Affairs, Government of India which has not given the approval and a show cause notice has been served on the company against which the company has sought for extension of time. These accounts reflect fairly the form and substance of transactions and present a true view of the Company's financial condition and the results of its operations.
The Company has a system of internal control which is reviewed, evaluated and updated on an ongoing basis. The Internal Auditor/ Concurrent Auditor has conducted periodic audit of systems and procedures to provide reasonable assurance that the activities sire conducted in a manner not prejudicial to the interests of the Company.
The Financial Statements have been audited by M/s. Ray & Ray, Chartered Accountants and have been reviewed by and discussed in the Audit Committee.
11. Compliance Certificate of the Auditors
The Company has obtained a Certificate from the Statutory Auditors regarding compliance of conditions of corporate Governance as stipulated in Clause 49 of the Listing Agreement and the same is annexed.
For and on behalf of the Board of Directors
(G. C. Kanunga)
Date: 8th September, 2010