CORPORATE GOVERNANCE REPORT
Pursuant to Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Regulations") read with Schedule V thereto, compliance with the requirements of Corporate Governance is set out below:
1. Company's Philosophy on Corporate Governance
Corporate Governance is based on good principles and practices such that the affairs of the Company are being managed in a way which ensures accountability, transparency and fairness in all its transactions in the widest sense and meet its stakeholder's aspirations and societal expectations. Effective corporate governance practices constitute the strong foundation on which successful commercial enterprises are built to last. Amara Raja Batteries Limited ("Amara Raja" or "the Company") is committed to the adoption of best governance practices and to its adherence in the business of the Company. The Company's corporate governance practices are driven by timely disclosures, transparent accounting policies, internal control on operations and high levels of integrity in decision making with an objective to enhance the value to the stakeholders. The Company is in compliance with the mandatory requirements with regard to corporate governance under the Regulations.
2. Board of Directors
i) Presently the Board comprises of nine Directors of which Vice Chairman and Managing Director is an Executive Director. Out of eight (8) Non-Executive Directors, five (5) including one woman director are Independent Directors and three (3) are Non Independent Directors. The Board has an optimum combination of Executive, Non-Executive and Independent Directors. The composition of the Board is in conformity with Regulation 17(1) of the Regulations.
viii) Familiarisation Programme
In addition to giving a formal appointment letter to newly appointed Directors on the Board, a handbook covering the role, function, duties and responsibilities and the details of the compliance requirements expected from the Directors under the Companies Act, 2013 and relevant Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 were given and explained to the new Directors.
The newly appointed directors are given induction and orientation with respect to Company's Vision, Core purpose, Core Values and business operations. In addition detailed presentations are made by Senior Management Personnel on business environment, performance of the Company at every Board Meeting.
The above initiatives help the Directors to understand the Company, its business and the regulatory framework in which the Company operates and enables the Directors to fulfill their role/responsibility. The details of the familiarisation programme is available on the Company's website www.amararaja.co.in
ix) The Company has proper systems to enable the Board to periodically review compliance reports of all laws applicable to the Company, as prepared by the Company as well as steps taken by the Company to rectify instances of non-compliances on a yearly basis.
x) The Board had approved code of conduct in compliance with the Regulations. The said code is applicable for all the Directors and the Senior Management Personnel of the Company and the same is posted on www.amararaja.co.in All the members of the Board and the Senior Management Personnel of the Company have affirmed compliance with the code of conduct for the financial year ended March 31, 2016. In terms of Schedule V to the Regulations, a declaration signed by the Vice Chairman and Managing Director is enclosed to this report.
xi) During the financial year 2015-16, information as specified in Part A of Schedule II to the Regulations such as annual operating plans and budgets, capital budgets, financial results of the Company, foreign currency exposures on quarterly basis and such other information as and when applicable were placed before the Board for its consideration.
xii) Mr. Jayadev Galla, Vice Chairman and Managing Director and Mr. S V Raghavendra, Chief Financial Officer of the Company have submitted a certificate to the Board on the fairness of the financial statements and other matters as specified in Part B of Schedule II of the Regulations.
xiii) All Independent Directors are persons of eminence and bring a wide range of expertise and experience to the Board. The Independent Directors have confirmed that they satisfy the criteria of independence as stipulated in Regulation 16(1)(b) of the Regulations. The tenure of the Independent Directors is in accordance with the Companies Act, 2013 and rules made thereunder. The Independent Directors at their meeting, reviewed the Performance of the Board as a whole, Non independent Directors and the Chairman of the Board.
xiv) During the year, all the Independent Directors had met separately on March 19, 2016 without the attendance of non-independent directors and members of the management.
xv) None of the Directors serve as an Independent Director in more than seven (7) listed Companies and Mr. Jayadev Galla, Vice Chairman and Managing Director is not serving as an independent Director in any listed company.
xvi) None of the Directors on the Board are Members in more than ten Committees or Chairman of more than five Committees across all the public limited companies in which they are Directors. For this purpose Audit Committee and the Stakeholders Relationship Committee only are considered. The Directors disclosed their positions held in committees and directorships held in other public limited companies as on March 31, 2016.
xvii) The senior management personnel confirmed that they don't have any personal interest in respect of all material financial and commercial transactions entered into by the Company, which may have a potential conflict with the interest of the company at large.
xviii)The brief particulars of the directors proposed for re-appointment/appointment at the Annual General Meeting are given in the notes to the notice of the ensuing Annual General Meeting.
3. Audit Committee
i) The constitution and terms of reference of the Audit Committee are in accordance with and covers all the matters specified under Section 177 of the Companies Act, 2013 and Regulation 18 of the Regulations read with Part C of Schedule II of the Regulations.
ii) The Company Secretary acts as the Secretary to the Audit Committee. Mr. Nagarjun Valluripalli, Independent Director and Chairman of the Audit Committee was present at the Annual General Meeting of the Company held on August 14, 2015.
iii) During the financial year 2014-15, five (5) meetings of the Audit Committee were held on May 28, 2015, August 14, 2015, October 28, 2015, February 2, 2016 and March 19, 2016. The maximum time gap between any of the two consecutive meetings was not more than 120 days. The necessary quorum was present in all the meetings.
iii) Nomination and Remuneration Policy
The Board of Directors at its meeting held on March 28, 2015 approved the Nomination and Remuneration policy. The said policy is applicable to all Directors, Key Managerial personnel and senior management personnel of the Company.
Remuneration to Directors
The remuneration structure of Managing Director/Executive Director comprises of basic salary, commission, perquisites and allowances, contribution to provident fund etc. The remuneration is determined considering various factors such as qualification, experience, expertise, prevailing remuneration in the industry and the financial position of the Company. The Directors from Galla Family and the representative Directors of Johnson Controls Inc., USA are not paid sitting fees for attending any Board/Committee meetings.
The Non-Executive Independent Directors are entitled to sitting fee for attending the Board/Committee meetings and also for reimbursement of out of pocket expenses for attending the meetings. A sitting fee of Rs. 20,000/- for attending each meeting of the Board and Rs. 10,000/- for attending each meeting of any Committee(s) of the Board was paid to the Directors during the year under review.
The shareholders at the 30th annual general meeting held on August 14, 2015 approved payment of Commission to Dr. Ramachandra N Galla, Non- Executive Chairman @ 3% of the net profits of the Company and other Non-Executive Independent Directors @ 1% of the net profits of the Company in such sum and proportion as the Board may deem fit and proper for a period of five years commencing from September 1, 2015 to August 31, 2020.
(v) Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board had carried out an annual evaluation of its own performance, the directors individually and of the committees of the Board.
A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering aspects of the Board's functioning such as adequacy of the composition of the Board and its committees, execution and performance of specific duties, obligations and governance.
A separate exercise was carried out to evaluate the performance of Individual Directors including the Chairman of the Board. The Directors performance was evaluated on parameters such as level of engagement and contribution in safeguarding the interest of the Company etc.
The performance of every Director was evaluated by the Nomination and Remuneration Committee. The performance evaluation of the Independent Directors was carried out by the entire Board. Further, the performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors
Mr. Raphael John Shemanski, additional director did not participate in the evaluation process or being evaluated, as he was appointed at the end of financial year 2015-16
5. Share Transfer and Stakeholders Relationship Committee
i) The constitution and terms of reference of the Share Transfer and Stakeholders Relationship Committee are in accordance with and covers all the matters specified under Section 178 of the Companies Act, 2013 and Regulation 20 of the Regulations read with Part D of Schedule II of the Regulations. The said Committee attends to the redressal of complaints of shareholder's.
ii) During the financial year 2015-16, one meeting of the Committee was held on February 2, 2016.
iv) The Committee is headed by Dr. Ramachandra N Galla, Non-Executive Chairman.
v) Mr. M R Rajaram, Company Secretary and Compliance Officer of the Company acts as Secretary to the Committee.
vi) During the year 2015-16 four(4) complaints pertaining to non-receipt of shares/share certificates were received and redressed to the satisfaction of the shareholders. There are no pending complaints as on March 31, 2016.
9. General shareholders information
Day, Date, time and venue of Annual General Meeting
Saturday, August 6, 2016 at 2:30 p.m. at the Registered Office of the Company i.e Renigunta - Cuddapah Road, Karakambadi, Tirupati, Andhra Pradesh - 517 520
Financial calendar (tentative):
Financial Year - April to March
First Quarter Results -Mid of August 2016*
Half-yearly Results - Mid of November 2016*
Third Quarter Results -Mid of February 2016*
Results for the year ending March 31, 2017 - last week of May 2017*
Listing of shares on stock exchanges
National Stock Exchange of India Limited (NSE) Exchange Plaza, Bandra Kurla Complex Bandra (E), Mumbai 400 051
BSE Limited (BSE) Phiroze Jeejeebhoy Towers, Dalal Street Mumbai 400 001
Listing fees for the financial year 2016-17 have been paid to all the above stock exchanges
Stock Code / Scrip Code
NSE : AMARAJABAT
Corporate Identification Number (CIN) : L31402AP1985PLC005305
International Securities Identification Number (ISIN) for equity shares of Rs. 1/- each under Depository System : INE885A01032
Market Price Data High, Low during each month in last Financial year : Please see Annexure A
Performance of the Company's share price vis-à-vis-Sensex
Please see Annexure A
Registrar and Share Transfer Agents (RTA)
For shares related matters, the shareholders are requested to correspond with the RTA of the Company quoting their Folio Number or Client ID and DP ID at the following address:
Cameo Corporate Services Limited V Floor, Subramanian Building No.1, Club House Road Chennai - 600002 Tel : 91 44 28460390 Fax : 91 44 28460129 E-mail : firstname.lastname@example.org Website : www.cameoindia.com
Share Transfer System
All the valid transfers received are processed and approved by the Share Transfer and Stakeholders Relationship Committee by circular resolutions.
Distribution of Shareholding and Shareholding Pattern as on March 31, 2016
Please see Annexure B
Dematerialization of Shares and Liquidity
97.04% of the equity shares of the Company were dematerialized as on March 31, 2016.
Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion date and likely impact on equity
The Company has not issued any GDR/ ADR/Warrants and convertible instruments.
The Company's plants are located at
a) Renigunta - Cuddapah Road, Karakambadi, Tirupati Andhra Pradesh 517 520
b) Nunegundlapalle Village Bangarupalayam Mandal, Chittoor District Andhra Pradesh 517 416
Address for correspondence
Amara Raja Batteries Limited Terminal A 1-18/1/AMR/NR Nanakramguda Gachibowli, Hyderabad 500 032 Tel : 91 40 23139000 Fax : 91 40 23139001 E-mail : email@example.com Website : www.amararaja.co.in
10. Other Disclosures
Disclosure of related party transactions
All transactions entered into with related parties during the financial year were on arm's length basis and in the ordinary course of business. The transactions with the related parties are in compliance with Section 188 of the Companies Act 2013 and Regulation 23 of the Regulations.
There were no materially significant transactions entered into by the Company with the related parties which might be deemed to have had a potential material conflict with the interests of the Company at large.
The details of the related party transactions entered during the year and disclosures as required by the Accounting Standards (AS 18) were made in note 25.13 of notes forming part of the financial statements.
The Board of Directors at their meeting held on November 11, 2014 approved a policy on dealing with related party transactions. The policy lays down the criteria for determining the materiality of transactions. The said policy has been posted on the Company's website at the following link <http://www.amararaia.co.in/policies/ARBL-Policy-on-dealing-with-Related-Party-Transactions.pdf>
The members at the annual general meeting held on August 14, 2015 approved and authorised the Board to enter to transactions with Mangal Industries Limited (MIL) upto a cumulative value of transactions of Rs. 600 crores in each financial year. During the financial year 2015-16, the transactions entered into with MIL (including dividend paid) are Rs. 520.13 crores, a material transaction under the Regulation 23 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2016 ("Regulations") and the policy adopted by the Company under said Regulations.
Compliance(s) of matters relating to Capital Market
The Company has complied with all applicable rules and regulations prescribed by stock exchanges (NSE/BSE), Securities and Exchange Board of India (SEBI) or any other statutory authority relating to the capital markets. No penalties or strictures have been imposed on the Company in the last 3 years.
Whistle Blower Policy/Vigil Mechanism
The Company has established a whistle blower policy/vigil mechanism to provide an avenue to raise concerns. The mechanism provides, for adequate safeguards against victimization of employees who avail of it, and also for appointment of an Ombudsperson who will deal with the complaints received. The policy also lays down the process to be followed for dealing with complaints and in exceptional cases, also provides for direct appeal to the Chairperson of the Audit Committee. No personnel had been denied access to the Audit Committee. The said policy has been posted on the Company's website at the following link <http://www.amararaja.co.in/policies/ARBL-Whistle-Blower-Policy.pdf>
Code of conduct for prevention of insider trading
The Company has adopted a code of conduct for prevention of Insider Trading (Insider Trading Code) in accordance with the requirements of SEBI (Prohibition of insider trading) Regulations, 2015. The insider Trading code which is applicable to all directors and designated employees lays down guidelines and procedures to be followed and disclosures to be made while dealing in the securities of the Company and non-consequences of violation. Mr. M R Rajaram, Company Secretary was appointed as the Compliance Officer by the Board to ensure compliance and effective implementation of the Insider Trading Code. Reports on matters related to insider trading code are reported to the Audit Committee on a quarterly basis.
Disclosure of commodity price risks and commodity hedging activities
During the year 2015-16, the Company had managed the foreign exchange risk and hedged to the extent considered necessary. The Company enters into forward contracts for hedging foreign exchange exposures against imports. The details of foreign currency exposure are disclosed in Note 25.3 of the notes forming part of the financial statements
11. The Company has Complied with the requirements of the Schedule V Corporate Governance report sub-paras (2) to (10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015.
12. Details of compliance with mandatory requirements and adoption of Discretionary Requirements
The Company has complied with the mandatory requirements of the Corporate Governance as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. With regard to the non-mandatory requirements, the Company has complied to the extent stated below:
a. Board: The Company has a separate office maintained for the Non-Executive Chairman.
b. Audit Qualifications: There are no qualifications on the financial statements for the financial year ended March 31, 2016 by the Statutory Auditors of the Company
c. Other Non-Mandatory Requirements: The Company would be progressively adopting the other non-mandatory requirements
14. Disclosure of Accounting Treatment
The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013 ('the Act') as applicable, and the provisions of the Act/Companies Act, 1956, as applicable. The significant accounting policies, which are consistently applied, have been set out in the notes forming part of the audited financial statements for the financial year ended March 31, 2016.
15. Risk Management
During the year, the risk assessment parameters were reviewed and modified, wherever needed. The audit committee reviewed the element of risks and the steps taken to mitigate the risks. In the opinion of the Board, there are no major elements of risk which has the potential of threatening the existence of the Company.
16. During the year under review, the Company had not raised any money from public issue, rights issue, preferential issue or any other issues.
17. The Management Discussion and Analysis Report have been included separately forming part of the Annual Report.
18. Compliance on Corporate Governance
The quarterly compliance report has been submitted to the stock exchanges where the Company's equity shares are listed in the requisite format duly signed by the Company Secretary. Pursuant to Schedule V of the Listing (Obligations and Disclosure Requirements) Regulations, 2015 the Practising Company Secretary's Certificate regarding compliance of conditions of Corporate Governance is annexed to this report.
20. Other requirements/Information Dividend Policy
Dividends, other than interim dividend(s), are to be declared at the Annual General Meetings based on the recommendation of the Board of Directors. The Board of Directors at its meeting held on May 19, 2010 had adopted a policy for distributing dividend upto 15% of the profit after tax (PAT). Accordingly, every year the Company would pay the dividend amount upto 15% of the profit after tax (PAT) to all the eligible shareholders.
Transfer of unclaimed dividend
During the year under review, an amount of Rs. 4,17,520/- pertaining to unpaid/unclaimed dividend for the financial year 2007-08 has been transferred to Investor Education and Protection Fund (IEPF) on October 7, 2015.
Members who have not yet encashed their dividend from the financial year 2008-09 onwards are requested to make their claims without any delay to M/s. Cameo Corporate Services Limited, Registrar and Share Transfer Agents (RTA) of the Company for claiming the unclaimed/unpaid dividends.
Following table gives information relating to due dates for transfer of dividends to IEPF:
As required under the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules 2012, (rules) the Company uploaded on the Company's website www.amararaja.co.in the particulars of unclaimed dividend as on August 14, 2015 with information containing the names, addresses of the person entitled to receive the amount, nature of amount, due date for transfer to IEPF and such other information as required by the rules. The same is also available on the website www.iepf.gov.in
All shareholders, whose dividend remains unpaid/ unclaimed, are requested to refer the same on the Company's website or on www.iepf.gov.in and lodge their claim to RTA by submitting an application in writing and supported by a deed of indemnity immediately.