CORPORATE GOVERNANCE REPORT
COMPANY'S PHILOSOPHY ON CODEOFCORPORATE GOVERNANCE
Corporate governance encompasses a set of systems and practices to ensure that the Company's affairs are being managed in a manner which ensure accountability, transparency and fairness in all transactions in the widest sense. The objective is to meet stakeholders' aspirations and societal expectations. Good governance practices stem from the dynamic culture and positive mindset of the organization. Corporate Governance is not just a destination, but a journey to constantly improve sustainable value creation. It is an upward-moving target that collectively strives Baid Leasing and Finance Company Limited towards achieving.
The essence of Corporate Governance lies in promoting and maintaining integrity, transparency and accountability in the management's higher echelons. The demands of corporate governance require professionals to raise their competence and capability levels to meet the expectations in managing the enterprise and its resources effectively with the highest standards of ethics. It has thus become crucial to foster and sustain a culture that integrates all components of good governance by carefully balancing the complex inter-relationship among the Board of Directors, Audit Committee, Finance, Compliance and Assurance teams, Auditors and the senior management. Our employee satisfaction is reflected in the stability of our senior management.
The Company continues to believe strongly in adopting and adhering to the best corporate governance practices, and benchmarking itself against the industry's best practices. It is the Company's ongoing endeavor to achieve the highest levels of governance as a part of its responsibility towards the shareholders and other stakeholders. Transparency and integrity are the cornerstones for good governance, and the Company is committed to these principles for enhancing stakeholders' value.
BOARD OF DIRECTORS
The Board is in a fiduciary position, empowered to oversee the management function with a view to ensure its effectiveness and enhancement of stakeholder value. The Board decides on the policies to be implemented across the Company, and reviews and monitors its strategic direction and annual business plan and business objectives. Acting as trustees on behalf of the shareholders, the Board ensures that the Company has clear goals in enhancing value and growth for all the stakeholders associated with the Company and follows best governance practices.
Majority of the Board consists of Independent Directors. At Baid Leasing and Finance Company Limited, it is our belief that an enlightened Board consciously creates a culture of leadership to provide a long-term vision and policy approach to improve the quality of governance. The Board's actions and decisions are aligned with the Company's best interests. It is committed to the goal of sustainably elevating the Company's value creation. The Company has defined guidelines and an established framework for the meetings of the Board and Board Committees. These guidelines seek to systematize the decision-making process at the meeting of the Board and Board Committees in an informed and efficient manner.
The Board critically evaluates the Company's strategic direction, management policies and their effectiveness. The agenda for the Board reviews include strategic review from each of the Board committees, a detailed analysis and review of annual strategic and operating plans and capital allocation and budgets. Additionally, the Board reviews related party transactions, possible risks and risk mitigation measures, etc. Frequent and detailed interaction sets the agenda and provides the strategic roadmap for the Company's future growth.
COMPOSITION AS ON 31.03.2014
The composition ofthe Board is in conformity with Clause 49, which stipulates that at least 50 per cent ofthe Board should consist of non-executive Directors and, in case the Chairman is a non-executive Director, at least one-third ofthe Board should be independent and in case he is an executive director, at least half of the Board should comprise of independent directors.
None ofthe Directors on the Board is a member of more than 10 Committees or Chairman of more than 5 Committees (as specified in clause 49 ofthe Listing Agreement) across all Public Limited Companies in which he is a Director(if any).
The non-executive Directors are appointed or re-appointed with the approval ofthe shareholders. All non-executive Directors are liable to retire by rotation, unless otherwise provided by the law in force for the time being. One-third ofthe Directors, who are liable to retire by rotation, retire every year and are eligible for re-appointment. According to the terms ofthe Company's Articles of Association, the strength ofthe Board shall not be less than three and more than twelve.
The members ofthe Board are provided with the requisite information mentioned in the Listing Agreement well before the Board meetings.
The Board considers all the matters, which are statutorily required to be considered by it. In addition the following issues are also discussed at the meetings ofthe Board:
• Annual operating and capital expenditure budgets and periodical review thereof.
• Investment/expansion /modernization /diversification plans ofthe Company.
• Overall strategy and business plans.
• Approval of quarterly /half-yearly /annual results (alter review byAudit Committee).
• Compliance with statutory / regulatory requirements and review of major pending legal cases.
• Major accounting practices, provisions and write-offs.
• Transactions pertaining to acquisition /disposal of fixed assets/related party transactions.
• Review of working of various committees of the Board.
• Significant labor problems, if any.
• Minutes of the meeting of other committee and other committee of board.
• Any material default in financial obligation to and by the Company, or substantial non payment for goods sold by company.
The Company has not issued any shares / debentures during the year.
As per the statutory provisions the Board is required to meet at least once every quarter and minimum 4 (four) times in a year with the time gap between two consecutive meetings not exceeding four months. Additional meetings are held as and when necessary. As against this, during the period under review the Board held 7 (Seven) meetings on 27.04.2013, 29.05.2013, 14.08.2013, 11.11.2013,14.11.2013, 08.02.2014 & 28.02.2014 to consider amongst other business, the quarterly / annual performance of the Company and its financial results. The draft of the minutes prepared by Company Secretary is circulated among the Directors for their comment / suggestion and finally after incorporating their views, final minutes are recorded in the minute's books. Post meeting, important decisions taken are communicated to the concerned officials and departments for the effective implementation of the same.
CODE OF BUSINESS CON DUCT AND ETHICS
The Company has adopted Code of Conduct ("the Code") which is applicable to all the members of the board and senior management personnel of the Company. The Board of Directors and the members of Senior Management Team are required to affirm annual Compliance of this Code. The Code requires Directors and Employees to act honestly, fairly, ethically, and with integrity, conduct themselves in professional, courteous and respectful manner. The Code is displayed on the Company's website: www.balfc.com <http://www.balfc.com>.
CONFLICT OF INTEREST
Each Director informs the Company on an annual basis about the Board and the Committee positions he occupies in other companies including Chairmanships and notifies changes during the year. Members of Board while discharging their duties, avoid conflict of interest in the decision making process. The members of Board restrict themselves from any discussions and voting in transaction that they have concern or interest.
COMPOSITION OFCOMMITTEESOF DIRECTORS
Various Committees of Directors have been appointed by the Board for taking informed decisions in the best interest of the Company. These committees monitor the activities falling within their respective terms of reference. The Board's Committees are as follows:
1. AUDIT COMMITTEE
The Audit Committee comprises of 3 (three) independent Directors and at March 31, 2014 was chaired by Mr. Chandra Bhan Singhi, Independent Director.
Meetings of the Audit Committee
There were 4 (four) Meetings ofthe Committee during the year: 29.05.2013,14.08.2013,14.11.2013 &08.02.2014.
Terms of Reference
The terms of reference ofthe above stated are in accordance with Section 292A ofthe Companies Act, 1956, terms prescribed by RBI and Clause 49 ofthe Listing Agreement entered into with the Stock Exchangesin India and inter-alia include the foil owing:
• 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, re-appointment and, if required, the replacement or removal ofthe statutory auditors and the fixation of audit fees, and confirm their Independence.
• Approval of payment to statutory auditors for any other services rendered by the statutory auditors, if authorized by the Board.
• Review with the management, the quarterly financial statements before submission to the Board for approval and secure the Certificate from CFOintermsof Clause41 ofthe ListingAgreement.
• Any other terms of reference as may be included from time to time in Clause 49 of the Listing Agreement.
Power of Audit Committee
• To investigate any activity with in terms of reference.
• To seek information from anyemployeein respect ofmatterunderitspreview.
• Obtain outside legal or other professional advice.
• To secure attendance of outsiders with relevant expertise, if consider necessary.
The Company promotes ethical behaviour in all its business activities and has put in place a mechanism of reporting illegal or unethical behaviour in compliance with the provisions of Section 177 ofthe Act read with Companies (Meetings of Board and its Powers) Rules, 2014. The Company has a vigil mechanism/whistle blower policy wherein the employees are free to report violations of
laws, rules, regulations or unethical conduct to their immediate supervisor or such other person as may be notified by the management to the workgroups. The confidentiality of those reporting violations is maintained and they are not subjected to any discriminatory practice.
Revised Terms of Reference
In consonance with the requirements of Section 177 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014, the amended Listing Agreement and all other applicable provisions (if any), the Board revised the terms of reference of the Audit Committee as follows:
The composition, powers, role and terms of reference of the Audit Committee covers the areas as contemplated under Clause 49 of the Listing Agreement and Section 177 of the Companies Act, 2013. The purpose of the audit committee is to ensure the objectivity, credibility and correctness of the Company's financial reporting and disclosure processes, internal controls, risk management policies and processes, tax policies, compliance and legal requirements and associated matters. In particular, these include:
• 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, re-appointment and, if required, the replacement or removal of the auditors and the fixation of audit fees.
• Approval of payment to Statutory Auditor for any other services rendered by them.
• Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to:
> 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 CompaniesAct, 1956
> Changes, if any, in accounting policies and practices and reasons forthe same.
> Major accounting entries involving estimates based on the exercise of judgment by managem ent
> Significant adjustments made in the financial statements arising out of audit findings
> Compliance with listing and other legal requirements relating to financial statements
> Disclosure of any related party transactions
> Qualifications in the 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 utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.
• Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the 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 of any significant findings and follow up there on.
• 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 matterto 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 in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors.
• To review the Whistle Blower mechanism of the Company as perthe Whistle Blower Policy
• Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience & background, etc. of the candidate.
• Carrying out any otherfunction as is mentioned in the terms of reference of the Audit Committee.
• Review and monitor the auditor's independence and performance, and effectiveness of audit process;
• Examination of the financial statement and the auditors'report thereon;
• 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;
• The Audit Committee shall have authority to investigate into any matter in relation to the items specified in section 177(4) of Companies Act, 2013 or referred to it by the Board and for this purpose shall have power to obtain professional advice from external sources and have full access to information contained in the records of the company.
• The auditors of a company and the key managerial personnel shall have a right to be heard in the meetings of the Audit Committee when it considers the auditor's report but shall not have the right to vote.
2. SHARE TRANSFER/INVESTOR GRIEVANCE COMMITTEE
The Committee monitors redressal of complaints received from shareholders/investors with respect to transfer of shares, non-receipt of dividend, non-receipt of Annual Reports, etc. It also takes note of number of transfers processed, issue of fresh share certificates, top shareholders, pattern of shareholding, etc. During the year 2013-14, no complaints were received regarding investors. There was no complaint outstanding as on 31s March 2014. Also, no instruments of transfer were pending as on March 31,2014.
Composition and attendance
The Share Transfer/ Investors' Grievance Committee has been constituted as per the provisions set out in the Listing Agreement. It comprises of 2 (two) Non-Executive Independent and 1 (one) Executive Director.
The Committee did not meet during the period under review. Reconstitution of Committee
In consonance with the requirements of Section 178 ofthe Act read with Companies (Meetings of Board and its Powers) Rules, 2014the Board has reconstituted the committee asfollows:
3. REMUNERATION COMMITTEE
The Remuneration Committee currently comprises of 3 (three) independent Directors and at March 31, 2014 was chaired by Shri Chandra Bhan Singhi, an independent Director. Other than the Chairman, Shri Binod Kumar Choraria and Shri Monu Jain were members ofthe committee.
The functions ofthe Committee include recommendation of appointments to the Board, evaluation of the performance ofthe Managing Director and Whole-time Directors on predetermined parameters, recommendation to the Board of the remuneration to Whole-time Directors, and consider and recommend human resource policies relating to compensation and performance management.
No meeting was held during the year of the committee. The company does not have any Employee Stock Option Scheme.
Reconstitution of Committee
In consonance with the requirements of Section 178 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014the Board has reconstituted the committee asfollows:
TERMS OF REFERENCE OF NOMINATION AND REMUNERATION COMMITTEE
Terms of Reference of the Committee, inter alia, includes the following:
1. 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.
2. To carry out evaluation of every Director's perform ance.
3. To formulate the criteria for determining qualifications, positive attributes and independence of a Director, and recom mend to the Board a policy, relating to the remuneration for the Directors, key managerial personnel and otheremployees.
4. To formulate the criteriafor evaluation of Independent Directorsand the Board.
5. To devise a policy on Board diversity.
6. To recommend/review remuneration of the Managing Director(s) and Whole-time Director(s) based on their performance and defined assessment criteria.
7. To perform such other -functions as may be necessary or appropriate for the performance of its duties
There are no materially significant transactions with related parties i.e., directors, management, subsidiaries, or relatives conflicting with the Company's interests.
No penalties or strictures have been imposed on the company by the Stock Exchanges or SEBI or any other Statutory Authorities on matters related to Capital Market.
In terms ofthe Whistle Blower Policy ofthe Company, no employee has been denied access to the Audit Committee.
MEANS OF COMMUNICATION
The Company believes that it is the right of every stakeholder to have access to complete information regarding the company to assess its present position and have an accurate idea of its future potential.
Following such policy, the company regularly intimates all the regulatory information, such as audited/ unaudited financial results, quarterly shareholding pattern, board meeting notices to Stock Exchanges where it is listed along with getting them published in Newspapers having nation wide circulation.
The Company also publishes the same on its website.
The Management's Discussion & Analysis forms part of the Annual Report.
GENERAL SHAREHOLDER INFORMATION
1 Annual General Meeting
Date :Saturday, 16th August 2014.
Time : 11.00 AM.
Venue :Baid House, llnd Floor, 1, Tara Nagar, Ajmsr Road, Jaipur-302006
• Book Closure
13th day of August. 2014 to 16th day of August, 2014
Financial Calendar (Tentative)
> Un-audited Results for the first quarter :Within 45 days from the end of Quarter
> Un-audited Results for the second quarter :Within 45 days from the end of Quarter
> Un-audited Results for the third quarter: Within 45 days from the end of Quarter
> Audited Results for F.Y. 01/04/2014-31/03/2015 :Within 60 days from the end of F.Y.
No dividend being recommended by Board during the year.
4 Listed on Stock Exchanges
Bombay Stock Exchange Ltd. Stock Code: 511724
Delhi Stock Exchange Ltd. Stock Code: 7809
Demat ISIN Exchanae No. in NSDL & CDSL :INE020D01014
The Company has paid annual listing fees on its capital for the relevant periods to BSE and DSE where its eouitv shares are listed.
REGISTRAR AND SHARE TRANSFER AGENT
F-65,1st Floor, Okhla Ind. Area, Phase-l,NewDelhi-110020
SHARE TRANSFER SYSTEM
The Company has appointed M/s MCS Limited, New Delhi as it Registrar and Share Transfer Agents. As on date all the work related to the shares both held in physical and electronic form is handled by the RTA. All correspondences are to be directed to the RTA at their address mentioned above. The correspondences may also be sent at the Company's address, which will be sent by the Company to the RTA.
Share transfer is normally affected within the maximum period of 15 days from the date of receipt, if all required documentation is submitted. In compliance with the Listing Agreement with stock exchanges, a Practising Company Secretary carries out audit of the system of transferand a certificate to that effect is issued.
Individual shareholders holding shares singly or jointly in physical form can nominate a person in whose name the shares shall be transferable in case of death ofthe registered shareholder(s). Nomination facility in respect of shares held in electronic form is also available with the Depository Participants as per the bye-laws and business rules applicable to NSDL and CDSL. Nomination forms can be obtained from the Company's Registrar and Share Transfer Agent.
SERVICE OF DOCUMENTS THROUGH ELECTRONIC MODE
Members who wish to receive notice/documents through e-mail, may kindly intimate their e-mail address to the Company's Registrar and Share Transfer Agent, MCS Limited to their dedicated e-mail id i.e. "firstname.lastname@example.org <mailto:email@example.com>".
RANGE-WISE DISTRIBUTION OFSHAREHOLDING AS ON 31.03.2014
DEBATER IA LIZ ATI ON OF SHARES
The Shares of the company are in compulsory demat segment and are available for trading in the depository systems of both National Securities Depository Limited (NSDL) & Central Depository Services Limited (CDSL).
50,54,360 equity shares of the company forming 82.25% of the total share capital of the company stand dematerialized as on 31stMarch, 2014.
ADDRESS FOR CORRESPONDENCE
Baid House, llnd Floor, 1 ,TaraNagar,Ajmer Road, Jaipur-302006
Ph. No.: +91 9214018855/8866/8877 E-mail Id: firstname.lastname@example.org CIN: L65910RJ1991PLC006391
FOR AND ON BEHALF OF THE BOARD
PANNA LAL BAID
(Managing Director) (Whole-time Director)
RAKESH KUMAR BAID
DIN: 00009897 DIN: 00009926