CORPORATE GOVERNANCE REPORT
1. COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE:
Aravali Securities & Finance Ltd (ASFL) governance philosophy is that the policies and procedures should be so strong that they don't leave any room for mistakes or manipulations. ASFL emphasis is on providing complete transparency in management and fixing authority and responsibility of every person in the organisation. This enables every person in the organisation to work for the achievement of the Company's goal and thereby maximising the return to the Company as also to the members of the Company.
ASFL's Corporate Governance is based on two core principles:
I. Management must have the executive freedom to drive the enterprise forward without undue restraints; and
II. This freedom of management should be exercised within a framework of effective accountability.
ASFL believes that any meaningful policy on Corporate Governance must provide empowerment to the executive management of the Company, and simultaneously create a mechanism of checks and balances which ensures that the decision making powers vested in the executive management are not misused, and used with care and responsibility to meet stakeholders' aspirations and societal expectations.
The above belief and core principles of Corporate Governance adopted by ASFL lead to Company's governance philosophy, trusteeship, transparency, accountability and responsibility which in turn are the basis of public confidence in corporate system.
2. BOARD COMMITTEES, MEETINGS AND PROCEDURES
I. AUDIT COMMITTEE
The Audit Committee was re-constituted as per the requirements of Companies Act, 2013 on 28th May, 2014. As on 31st March, 2015, the Audit Committee comprises of one executive and three non executive directors.
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
Terms of reference 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 to the Board, the appointment, reappointment and, if required, the replacement or removal of statutory auditors, including cost auditors, and fixation of audit fees and other terms of appointment
• Approving payment to statutory auditors, including cost auditors for any other services rendered by them
• Reviewing with the management, 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 Directors' Report in terms of the Companies Act, 1956/New 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 related party transactions
> Qualifications in draft audit report
• Reviewing with the management the quarterly financial statements before submission to the Board for approval
• 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, including cost auditors and internal auditors, adequacy of internal control systems
• 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, 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 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 of the candidate
• Carrying out such other functions as may be specifically referred to the Committee by the Company's Board of Directors and/or other Committees of Directors.
• 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
> The appointment, removal and terms of remuneration of internal auditors / chief internal auditor
• To call for comments of the auditors about internal control systems, the scope of audit, including the observations of the auditors and review of financial statement before their submission to the Board and to discuss any related issue with the internal and statutory auditors and the management of the Company
II. NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors has constituted a Nomination & Remuneration Committee in its meeting held on May 28, 2014 as per the requirements of Companies Act, 2013 and formulates the terms of reference in conformity with the revised Clause 49 of the Listing Agreement.
The Committee comprise of three non-executive directors. The Committee met twice during the year i.e. August 13, 2014 and February 12,2015 and the attendance of the members at the meeting was as follows:
Name of member Status No. of meetings attended
Mr. Devashish Poddar Chairman One
Mr. Naresh Birla Member Two
Mr. Ashok Kumar Sharma Member One
The role of the Committee shall, inter-alia, include the following:
• Laying down criteria, to identify persons who are qualified to become directors and who can be appointed in senior management.
• Recommending to the Board, appointment and removal of Directors and senior management.
• Carrying out evaluation of every director's performance.
• Formulating criteria for determining qualification, positive attributes and independence of directors.
• Recommending to Board, a policy relating to remuneration of directors, key managerial personnel and other employees.
• Devising a policy on Board diversity.
III. STAKEHOLDERS'RELATIONSHIP COMMITTEE '—
The Committee was renamed by the Board of Directors in its meeting held on May 28, 2014 as per the requirements of Companies Act, 2013.
Terms of Reference
• Monitor redressal of investors'/shareholders'/security holders' grievances
• Oversee the performance of the Company's Registrars and Transfer Agents
• Recommend methods to upgrade the standard of services to investors
• Monitor implementation of the Company's Code of Conduct for Prohibition of InsiderTrading
• Carry out any other function as is referred by the Board from time to time or enforced by any statutory notification /amendment or modification as may be applicable
> To look into redressing of shareholders' and investors' complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividend etc.
> To do all other acts or deeds as may be necessary or incidental thereto. The main object of the committee is to strengthen the investor relations.
The Board requested the Committees to follow the revised terms of reference in conducting the proceedings and authorised the Company Secretary to take necessary action in this regard.
The Shareholders' Grievance Committee as on 31st March, 2015 comprises of one executive and two non-executive directors. The Company Secretary is entrusted with the responsibility to look into the redressal of the shareholder's complaints and report the same to the Committee.
During the year, the Committee held two meetings and the attendance of the members was as follows:
Name of Members- Status -No. of meetings attended
Mr. Devashish Poddar -Chairman -One
Mr. Ranjan Kumar Poddar –Member- Two
Mr. Naresh Birla -Member -Two
During the year, five letters/complaints were received from the shareholders. The same were replied/resolved to the satisfaction of the shareholders.
As on date, no requests involving transfer of shares is pending.
In order to expedite the process of shares transfers, the Board has delegated the powers of approving transfer of shares to the Skyline Financial Services Private Ltd., Registrar & Share Transfer Agent of the Company. The delegated Authority is attending to share transfer formalities at least once in a fortnight, as required.
IV.BUSINESS RISK MANAGEMENT COMMITTEE
The Ccompany has formed a business risk evaluation/ management committee consisting of Mr. Naresh Birla, Independent Director (Chairman), Mr. Ashok Kumar Sharma, Independent Director (Member), Mr. Ranjan Kumar Poddar, Executive Director (Member), Mr. Sushil Kumar, CFO (Member).
Business Risk Evaluation and Management is an ongoing process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks as also identify business opportunities.
The objectives and scope of the Risk Management Committee broadly comprise of
1. Oversight of risk management performed by the executive management;
2. Reviewing the risk management policy and framework in line with local legal requirements and SEBI guidelines;
3. Reviewing risks and evaluate treatment including initiating mitigation actions and ownership as per a pre-defined cycle;
4. Defining framework for identification, assessment, monitoring, mitigation and reporting of risks.
5. Within its overall scope as aforesaid, the Committee shall review risks trends, exposure, potential impact analysis and mitigation plan.
V. MEETING 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 informally to enable Independent Directors to discuss matters pertaining to the Company's affairs and put forth their views to the Chairman and Managing Director. One meeting of Independent Directors was held during the year.
3. CODE OF CONDUCT
The Board of directors has adopted the Code of Business Conduct and Ethics for Directors and Senior Management.The said code has been communicated to the directors and members of the senior management.
1. During the year, there were no transactions of material nature with the promoters, directors or the management or their subsidiaries or relatives etc. that had potential conflict with the interest of the Company.
2. In the preparation of the financial statements, the Company has followed the Accounting Standards issued by the Institute of Chartered Accountants of India. The significant accounting policies, which are consistently applied, are disclosed in Note No. 1 to the accounts in the annual report.
3. Business risk evaluation and management is an ongoing process within the Company. During the year under review a detailed exercise on 'Risk Assessment & Management' was carried out covering the entire gamut of business operations and Board was informed of the same.
4. Adoption of non-mandatory requirements of Clause 49 of the Listing Agreement is being reviewed by the Board from time to time.
5. MEANS OF COMMUNICATION
1. Quarterly un-audited results and the Annual Audited financial results are sent to the stock exchanges immediately after they are approved by the Board and published in one vernacular newspaper viz. Veer Arjun and one English newspaper viz.The Pioneer. Also they are uploaded on the Company's website www.aravalisecurities.com .
2. In line with the existing provisions of the Listing Agreement, the Company has created a separate e-mail address viz. firstname.lastname@example.org to receive complaints and grievances of the investors.
3. Management discussion and analysis is included in Directors' Report which is sent to the shareholders of the Company individually.
4. The Company maintains the official website www.aravalisecurities.com to display the results and other official news
6. GENERAL SHAREHOLDERS INFORMATION
1. Annual General Meeting will be held on Monday, the 29th day of June, 2015 at Institutional Area, Plot no. 39, Sector 44, Gurgaon-122003, Haryana, at 10.00 A.M.
2. Financial calendar 1st April to 31st March
First Quarter results Before 15th August
Annual General Meeting First Quarter of the Financial Year
Second Quarter results Before 15th November
Third Quarter results Before 15th February
Fourth Quarter results Before 30th May
3. Dates of book closure
25.06.2015To 29.06.2015 (both days inclusive)
4. Dividend payment date
No dividend is recommended for payment
5. Listing of equity shares on Stock Exchanges at:
BSE Limited, Mumbai
Delhi Stock Exchange Ltd., New Delhi
Calcutta Stock Exchange Ltd., Kolkata
'Application for delisting of shares of the Company has been moved to Delhi Stock Exchange and Calcutta Stock Exchange
6. Stock Code at Bombay Stock Exchange :
7. Share Transfer System:
The Company's shares are traded in the Stock Exchanges compulsorily in demat mode. In compliance with the SEBI directions, the Company has appointed the following registrar as common agency to handle both physical and demat share work w.e.f. 151 April, 2003. The shares which are lodged for transfer with the Registrar and Transfer Agent of the Company are processed and returned to the shareholders within stipulated time. The address of the Registrar and Transfer Agent for correspondence is as under:
Skyline Financial Services Pvt. Ltd
D-153/A, 1st Floor, Okhla Industrial Area, Phase-I New Delhi-110 020
8. Dematerialisation of shares and liquidity
Trading in shares of ASFL is permitted only in dematerialised form as per circular issued by the Securities and Exchange Board of India (SEBI) and 83.46% of the Equity shares of the Company have been dematerialised upto 31st March, 2015.
9. The address for correspondence is as mentioned below:
ARAVALI SECURITIES & FINANCE LIMITED
Institutional Area, Plot No. 39, Sector 44, Gurgaon-122003, Haryana
By Order of the Board of Directors
Sd/- Ranjan Kumar Poddar
Chairman & Managing Director
Date: 21st May, 2015