REPORT ON CORPORATE GOVERNANCE
Company's Philosophy on Corporate Governance
"Trust builds quality. Quality builds satisfaction. Satisfaction builds relationships. Relationships build trust. We at Bajaj Electricals believe in....A Tradition of Trust."
The ethical values is the foundation of Company's governance philosophy which over the past 76 years of the Company's existence has become a part of its culture. We believe that in business, there is something more important than just top line and bottom line and hence, each of us needs to strive towards producing our very best in all we do so that, we not only fulfill the needs of each and every consumer, but also far exceed their expectations. This is what has set us apart and this may be the very reason that we have been able to enjoy a very special relationship with our consumers. After all, when you strive, with every sinew to be the best you can be, it will show.
Corporate Governance is about commitment to values and ethical business conduct. Transparency and accountability are the two basic tenets of Corporate Governance. The Company firmly believes in and has consistently practiced good Corporate Governance for the past several years for the efficient conduct of its business and in meeting its obligations towards all its stakeholders including amongst others, shareholders, customers, employees and the community in which the Company operates. The Company's focus on sustainable development, its customer centric approach to creating value for the customers by ensuring product quality and service offerings together with its outreach to communities it impacts through CSR activities has enabled your Company to earn the trust and goodwill of its investors, business partners, employees and other stakeholders.
SEBI vide its Notification No.SEBI/LAD-NRO/GN/2015-16/013 dated 02 September 2015 notified the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR Regulations") to be applicable with effect from 01 December 2015.
This Report on compliance with the principles of Corporate Governance as prescribed by SEBI in Chapter IV read with Schedule V of SEBI LODR Regulations is given below :
Corporate Governance Structure
The Company has three tiers of Corporate Governance structure, viz.:
(i) Strategic Supervision - by the Board of Directors and the Committees of the Board at the apex level.
(ii) Executive Management - by the Corporate Management comprising the Executive Directors.
(iii) Operational Management - by the Strategic Business Unit (SBU) Heads.
The three-tier corporate governance structure not only ensures greater management accountability and credibility but also facilitates increased business autonomy, performance, discipline and development of business leaders and brings about a conducing environment for value creation through sustainable profitable growth.
Roles of various constituents of Corporate Governance in the Company
a. Board of Directors (Board):
The Board is entrusted with the ultimate responsibility of the management, general affairs, direction and performance of the Company and has been vested with the requisite powers, authorities and duties. The Board reviews and approves management's strategic business plan & business objectives and monitors the Company's strategic direction. The Board composition and size is robust and enables it to deal competently with emerging business issues and exercise independent judgement. The majority of the Directors on the Board are Independent Directors who have considerable expertise and experience in their respective fields.
b. Corporate Management Committee (CMC):
The main function of the CMC is strategic management of the Company's businesses within the Board approved direction and framework, ensuring that effective systems are in place for appropriate reporting to the Board on important matters. The CMC is headed by the Chairman & Managing Director and has business & functional heads as its members, which looks after the management of the day-to-day affairs of the Company.
c. Chairman & Managing Director (CMD):
The CMD is the Chairman of the Board as also the Chief Executive Officer of the Company. His primary role is to provide leadership to the Board and CMC for realizing the approved strategic business plan and business objectives. He presides over the meetings of the Board and the Shareholders.
d. Joint Managing Director (JMD):
The JMD, as the member of the Board and CMC, contributes to the strategic management of the Company's businesses within Board approved direction and framework. He assumes overall responsibility for strategic management of business and corporate functions including its governance processes and top management effectiveness.
. Non-Executive Directors (NEDs):
NEDs play a vital role in improving the Board effectiveness with their independent judgment on issues of strategy, performance, resources, standards of conduct, etc., besides providing the Board with valuable inputs.
THE BOARD OF DIRECTORS
In keeping with the commitment of the management for the principle of integrity and transparency in business operations for good corporate governance, the Company's policy is to have an appropriate blend of executive and independent directors to maintain the independence of the Board and to separate the Board functions of governance and management.
Composition and Category of Directors
The Board comprises such number of Executive, Non-Executive and Independent Directors including one Woman Director as required under applicable legislation. The Board of Directors of the Company comprises of ten directors, of whom one is Executive Chairman & Managing Director, one is Executive Joint Managing Director and eight Non-Executive Directors of which seven Directors are Independent (including one woman director).
During the year under review, Shri Anant Bajaj was re-appointed as the Joint Managing Director of the Company for a further period of five years w.e.f. 01 February 2016. His appointment was approved by the shareholders by way of a special resolution passed through postal ballot.
Further, the Board of Directors has, in its meetings held on 30 May 2016, appointed Shri Anuj Poddar and Shri Siddharth Mehta, as Additional Directors of the Company in the category of Non-Executive Independent Directors.
According to Regulation 17 of the SEBI LODR Regulations, in case the Company does not have a regular non-executive Chairman, at least half of the Board should consist of independent directors. Table 1 below shows that the Company is in compliance with the requirements.
Meetings of the Board
The Board meets at regular intervals to discuss and decide on business policy and strategy apart from other business. The Board/Committee meetings are pre-scheduled and a tentative annual calendar for the meetings of the Board and Board Committee(s), is circulated to the Directors well in advance in order to facilitate and assist the Directors to plan their schedules for the meetings. Additional meetings are held, when considered necessary. However, in case of a special and urgent business need, the Board's approval is taken by passing resolution(s) by circulation, as permitted by law, which is/are confirmed in the next Board Meeting.
During FY 2015-16, the Board met 7 times, viz. 28 May 2015, 06 August 2015, 05 November 2015, 23 November 2015, 10 February 2016, 10 March 2016 & 30 March 2016. The interval between any two meetings was well within the maximum allowed gap of one hundred and twenty days.
Pecuniary relationship or transactions of non-executive directors
During the year under review, there were no pecuniary relationships or transactions with any non-executive directors of the Company except for the sitting fees and commission paid/payable to them for the Board and the Committee Meetings attended by them, wherever applicable.
The register of contracts is maintained by the Company under Section 189 of the Companies Act, 2013 ("the Act") and the same is signed by all the directors present at the respective Board meetings.
A statement showing the disclosure of transactions with related parties as required under Accounting Standard - 18 is set out separately in this annual report..
Information supplied to the Board
The notice of the Board Meeting is given to all the Directors at least fifteen days before the meeting. Meetings of the Board are held in Mumbai. The Agenda for Board/Committees Meetings are set by the Company Secretary in consultation with the Chairman of the Board/Committees. In advance of each meeting, the Board is presented with relevant information on various matters related to the working of the Company, especially those that require deliberation at the highest level. Presentations are also made to the Board by different functional heads on important matters from time to time. Directors have separate and independent access to officers of the Company. In addition to items which are required to be placed before the Board for its noting and/or approval, information is provided on various significant items. In terms of quality and importance, the information supplied by the management to the Board of the Company is far ahead of the list mandated under Schedule II of the SEBI LODR Regulations. In addition to the matters statutorily required to be placed before the Board for its approval, all other matters of significant importance are also considered by the Board.
The Board periodically reviews the items required to be placed before it and in particular reviews and approves quarterly/half yearly unaudited financial statements and the annual audited financial statements, corporate strategies, business plans, annual budgets, projects and capital expenditure. It monitors overall operating performance and reviews such other items which require Board's attention. It directs and guides the activities of the management towards the set goals and seeks accountability. It also sets standards of corporate behaviour, ensures transparency in corporate dealings and compliance with laws and regulations.
The draft minutes of the proceedings of the meetings of the Board/Committees are circulated amongst the members of the Board/Committees. Comments and suggestions, if any, received from the Directors/Members of the Committees are incorporated in the minutes, in consultation with the Chairman of the Board/Committees. The minutes are confirmed by the members of the Board/Committees at the next Board/Committees meeting.
Orderly succession to Board and Senior Management
The Board of the Company satisfied itself that the plans are in place for orderly succession for appointments to the Board and to the Senior Management.
Directorships and memberships of Board/Committees
• None of the directors holds office as a director, including as alternate director, in more than 20 Companies at the same time. None of them has Directorships in more than 10 public companies. For reckoning the limit of public companies, directorship of private companies that are either holding or subsidiary of a public company is included.
• As per declarations received, none of the Directors serves as an Independent Director in more than 7 listed companies. Further, none of the Directors serving as a whole-time director in any listed company serves as an Independent Director in more than 3 listed companies.
• None of the Directors was a member in more than 10 committees nor a Chairman in more than 5 committees across all companies, in which he/she was a director.
• Private limited companies, foreign companies and companies under Section 8 of the Act are excluded for the above purposes. Only Audit Committee and Stakeholders' Relationship Committee are considered for the purpose of reckoning committee positions.
Board Diversity Policy
In compliance with the provisions of Regulation 19 of the SEBI LODR Regulations, the Nomination and Remuneration Committee of the Board has devised a policy on Board Diversity with the objective to ensure that the Board is comprised of adequate number of members with diverse experience, knowledge, skills, perspective, background, gender, age and culture, such that it best serves the governance and strategic needs of the Company and the said Policy is approved by the Board. Your Company has over the years been fortunate to have eminent persons from diverse fields as Directors on its Board and therefore, the composition of the Board of the Company at present meets with the above objective.
Under the said Policy, the Committee while recommending appointment of Directors shall keep in view the following:
i) The persons being recommended are persons of eminence in areas such as profession, business, industry, finance, law, administration, research etc., and bring with them experience/skills which add value to the performance of the Board with greater diversity.
ii) Recommendations shall be purely on merit and no discrimination shall be made based on race, colour, religion or gender. The Board Diversity Policy is placed on the Company's website: www.bajajelectricals.com
Independent Directors play an important role in the governance processes of the Board. They bring to bear their expertise and experience on the deliberations of the Board. This enriches the decision making process at the Board with different points of view and experiences and prevents conflicts of interest in the decision making process.
The appointment of the Independent Directors is carried out in a structured manner. The Nomination & Remuneration Committee identifies potential candidates based on certain laid down criteria and takes into consideration the diversity of the Board.
The Independent Directors have been appointed for a fixed tenure of five years from their respective dates of appointment.
None of the Independent Directors serve as "Independent Directors" in more than seven listed companies.
The Independent Directors have confirmed that they meet with the criteria of independence laid down under the Act and the SEBI LODR Regulations.
In compliance with Schedule IV to the Act & Regulation 25 of the SEBI LODR Regulations, during the year under review, one separate meeting of the Independent Directors was held on 30 March 2016, inter-alia, to :
(a) review the performance of non-independent directors and the Board as a whole;
(b) review the performance of the Chairperson of the Company, taking into account the views of executive directors and nonexecutive directors; and
(c) 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.
Induction programme for new Directors and familiarisation programme for Independent Directors
An appropriate induction programme for new Directors and ongoing familiarisation with respect to the business/working of the Company for all Directors is a major contributor for meaningful Board level deliberations and sound business decisions.
At the time of appointing a Director, a formal letter of appointment is given to him/her which, inter alia, explains his/her role, function, duties and responsibilities and the Board's expectations from him/her as a Director of the Company. The Director is also explained in detail the compliances required from him/her under the Act, SEBI Regulations and other relevant regulations and his/her affirmation taken with respect to the same.
By way of an introduction to the Company, the Director is shared with the organisation structure of the Company, the functioning of various business units and department, the Company's market share and the markets in which it operates, latest Annual Report, a house magazine on the CSR activities pursued by the Company and other relevant information pertaining to the Company's business.
The above initiatives help the Director to understand the Company, its business and the regulatory framework in which the Company operates and equips him/her to effectively fulfil his/her role as a Director of the Company.
As required under Regulation 25 of the SEBI LODR Regulations, the Company held various familiarisation programmes for the Independent Directors throughout the year on an ongoing and continuous basis with a view to familiarising the independent directors with the Company's operations. The familiarisation programmes carried out during the year include:-
1. Presentations made by business and functional heads of the Company from time to time on different functions and areas.
2. Presentations made and deliberations held from time to time on major changes and developments in the Act and SEBI LODR Regulations.
The familiarisation programme of the Company for its Independent Directors has been disclosed on the Company's website: www.bajajelectricals.com
Performance Evaluation of the Board/Committees and Individual Directors
Pursuant to the provisions of the Act and the SEBI LODR Regulations, the Board has carried out an annual performance evaluation of its own performance, and that of its Committees and individual directors based on the following criteria for performance evaluation laid down by the Nomination & Remuneration Committee:
Part A: For Board & Committees of Board
1. Composition with requisite number of Independent Directors (and woman director in the case of Board);
2. Frequency of meetings;
3. Discharge of the key functions prescribed under law;
4. Discharge of the other responsibilities prescribed under law;
5. Monitoring the effectiveness of corporate governance practices;
6. Ensuring the integrity of the Company's accounting and financial reporting systems, independent audit, internal audit and risk management systems (for Board and Audit Committee);
7. Working in the interests of all the stakeholders of the Company. Part B: For Directors
1. Attendance and participation;
2. Pro-active and positive approach with regard to Board and Senior Management particularly the arrangements for management of risk and the steps needed to meet challenges from the competition;
3. Maintaining confidentiality;
4. Acting in good faith and in the interests of the Company as a whole;
5. Exercising duties with due diligence and reasonable care;
6. Complying with legislations and regulations in letter and spirit;
7. Openness to ideas, perspectives and opinions and ability to challenge old practices and throwing up new ideas for discussion;
8. Maintaining relationships of mutual trust and respect with Board members;
9. Capacity to effectively examine financial and other information on operations of the Company and the ability to make positive contribution thereon.
Manner in which such formal annual evaluation was done is given below:
• Based on the annual performance evaluation criteria approved by the Board, rating sheets were filled in by each of the directors towards the end of the year with regard to evaluation of performance of the Board, its Committees and Directors (except for the director being evaluated) for the year under review.
• A consolidated summary of the ratings given by each of the directors was then prepared, based on which a report of performance evaluation was prepared by the Chairman in respect of the performance of the Board, its Committees and Directors during the year under review.
• The report of performance evaluation so arrived at was then discussed and noted by the Board at its meetings held in March
• As per the report of performance evaluation, the Board shall determine inter-alia whether to continue the term of appointment of the director. During the year under review, there was no occasion to decide on the continuance of the term of appointment of any of the directors and hence the question of taking a decision on their re-appointment did not arise.
Review of legal compliance reports
During the year, the Board periodically reviewed compliance reports with respect to the various laws applicable to the Company, as prepared and placed before it by the management.
Constitution and composition
The Company set up its independent Audit Committee way back in 1998. Since then, the Company has been reviewing and making appropriate changes in the composition and working of the Committee from time to time to bring about greater effectiveness and to comply with various requirements under the Act and SEBI Regulations.
All members of the Audit Committee are independent, non-executive directors and possess the requisite qualification for appointment on the Committee and have sound knowledge of finance, accounting practices and internal controls. The Company Secretary acts as the secretary to the Audit Committee.
The terms of reference of the Audit Committee are extensive and as stated below, go beyond what is mandated in Regulation 18 of the SEBI LODR Regulations and Section 177 of the Act.
Role & Responsibilities of Committee:
a) Hold discussions with the Auditors periodically about internal control systems, the scope of audit including the observations of the auditors and review the quarterly, half yearly and annual financial statements before submission to the Board and also ensure compliance of internal control systems;
b) To oversee the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible;
c) Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of statutory auditor and their terms of appointment;
d) Reviewing with the management the quarterly, half-yearly and annual financial statements before submission to the Board, focusing primarily on -
• Matters required to be included in the Director's 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
• Any changes in accounting policies and practices and reasons for the same.
• Major accounting entries involving estimates based on exercise of judgement by management.
• Qualifications in draft audit report.
• Significant adjustments made in the financial statements arising out of audit findings.
• The going concern assumption.
• Compliance with accounting standards.
• Compliance with listing and other legal requirements concerning financial statements.
• Disclosure of any related party transactions, i.e. transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives, etc., that may have potential conflict with the interests of the Company at large.
e) Monitoring the end use of funds raised through public offers and related matters;
f) Review and monitor the auditor's independence and performance, and effectiveness of audit process;
g) Approval or any subsequent modification of transactions of the Company with related parties;
h) Scrutiny of inter-corporate loans and investments;
i) Valuation of undertakings or assets of the Company, wherever it is necessary;
j) Reviewing with the management, the performance of statutory and internal auditors, adequacy of the internal control systems;
k) Reviewing the adequacy of internal audit function, 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;
l) Discussion with internal auditors on any significant findings and follow up thereon;
m) 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;
n) Discussion with the statutory auditors before the audit commences on the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
o) Reviewing of Company's financial controls and risk management systems;
p) 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;
q) Review the functioning of the whistle blower mechanism;
r) 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 and background, etc. of the candidate;
s) Carrying out any other function as may be required by the Board.
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 (as defined by the Audit Committee) submitted by management;
3. Management letters / letters of internal control weaknesses issued by the statutory auditors;
4. Internal audit reports relating to internal control weaknesses; and
5. The appointment, removal and terms of remuneration of the Chief Internal Auditor.
During FY 2015-16, the Audit Committee met 5 (five) times i.e. on 28 May 2015, 06 August 2015, 05 November 2015, 23 November 2015 and 10 February 2016. The meetings were scheduled well in advance. In addition to the members of the Audit Committee, these meetings were attended by other Directors as invitees, the heads of finance, internal audit functions and the statutory auditor of the Company and those executives who were considered necessary for providing inputs to the Committee
NOMINATION AND REMUNERATION COMMITTEE
The Nomination & Remuneration Committee is governed by a Charter. All the Members of the Committee are Independent Directors. The Terms of reference of the Committee are as under:
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, recommend to the Board their appointment and removal;
2. To carry out evaluation of every director's performance;
3. 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;
4. While formulating the policy, to ensure that -
a. the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company successfully;
b. relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and
c. remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals.
5. To take into account financial position of the Company, trend in the industry, appointees qualifications, experience, past performance, past remuneration, etc., and bring about objectivity in determining the remuneration package while striking a balance between the interest of the Company and the shareholders;
6. To lay down/formulate the evaluation criteria for performance evaluation of independent directors and the Board;
7. To devise a policy on Board diversity;
8. To undertake specific duties as may be prescribed by the Board from time to time;
9. To engage/retain advisors, at the expense of the Company, to assist in connection with its functions, if necessary;
10. To determine the quantum of Employee Stock Options to be granted to the employees under Company's ESOP Plans; determine eligibility for grant of ESOPs; decide the procedure for making a fair and reasonable adjustment in case of corporate actions; procedure and terms for the grant, vest and exercise of Employee Stock Option; procedure for cashless exercise of Employee Stock Options, etc.
STAKEHOLDERS' RELATIONSHIP COMMITTEE
The Stakeholders' Relationship Committee comprises two members, both Independent Directors.
The Committee is entrusted with the responsibility of addressing the shareholders' and investors' complaints, if any, with respect to transfer and transmission of shares, non-receipt of annual report, non-receipt of declared dividend, payment of unclaimed dividends, to facilitate better security holders services and relations, etc
Mangesh Patil, Vice President - Legal & Company Secretary has been designated as Compliance Officer of the Company.
V.B. Haribhakti, Chairman of Stakeholders' Relationship Committee was present at the AGM of the Company held on 06 August 2015, to answer shareholders' queries
At every meeting of the Board, the Compliance Officer provides to the Directors, status as to the shareholders' grievances, which is taken on record by the Board.
Since all the complaints of the shareholders were resolved at the executive level, the Committee had no occasion to consider the unresolved complaints from the shareholders during FY 2015-16.
CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE
The Company has always been mindful of its obligations towards the communities it impacts and has been pursuing various CSR activities long before it became mandatory by law. As required under the Act, a formal Committee of the Board was constituted in March, 2014 to oversee and give directions to the Company's CSR activities.
The Committee's responsibilities with regard to corporate social responsibility matters include:
a) formulation and recommendation to the Board CSR policies and programs;
b) oversee and implement CSR projects or programmes or activities;
c) review of annual budgets with respect to CSR programs;
d) work with the management to establish and develop the Company's strategic framework and objectives with respect to CSR matters;
e) receive reports from management on the Company's CSR programs, including significant sustainable development and community relations;
f) receive reports from the management on current and emerging issues and trends in the field of CSR, including a discussion on the potential impact thereof on the Company;
g) receive reports from the management on the Company's CSR performance to assess the effectiveness of the CSR programs;
h) review the findings and recommendations from the auditors or by regulatory agencies or consultants concerning the Company's CSR matters; and
i) review the Company's disclosure of CSR matters in the Board's Report.
Remuneration Policy / Remuneration of Directors
The Board on the recommendation of the Nomination and Remuneration Committee has framed a Remuneration Policy, providing (a) criteria for determining qualifications, positive attributes and independence of directors; and (b) a Policy on Remuneration for directors, key managerial personnel and other employees. The detailed Remuneration Policy is placed on the Company's website: www.baiajelectricals.com
a) Non-executive Directors' compensation
Non-executive Directors of the Company play a crucial role in the independent functioning of the Board. They bring in an external perspective to decision-making and provide leadership and strategic guidance while maintaining objective judgment. They also oversee corporate governance framework of the Company.
The remuneration of the Non-executive Directors is determined within the limits prescribed under Section 179 read with the rules framed thereunder and Schedule V to the Act and SEBI LODR Regulations.
The Non-executive Directors of the Company receive remuneration by way of sitting fees for attending the Board / Committee Meetings and Commission as detailed below :
(i) Sitting fees of Rs. 50,000/- for each meeting of the Board and Audit Committee, and Rs. 20,000/- for each meeting of other Committees attended by the Director, as approved by the Board of Directors within the overall limits prescribed under the Act. In view of the increased demands on non-executive directors' participation in Board and Committee meetings, the Board of Directors at its meeting held on 30 March 2016, has revised the sitting fees effective 01 April 2016 to Rs. 1,00,000/-for each meeting of the Board and Audit Committee, and Rs. 50,000/- for each meeting of other Committees attended by the Director;
(ii) Pursuant to the approval of the Members in AGM held on 31 July 2014, payment of commission on an annual basis, of Rs. 50,000/- for each meeting of the Board and Audit Committee attended by the Director, subject to the ceiling of 1% of the net profits of the Company prescribed under the Act. The Board of Directors at its meeting held on 30 March 2016 has approved revision in Commission payable to non-executive directors effective 01 April 2016 to Rs. 1,00,000/- per meeting of the Board and Audit Committee attended by the Director.
(iii) Reimbursement of traveling and other related expenses incurred by the Non-executive Directors for attending the Board and Committee meetings;
(iv) The Independent Directors of the Company are not entitled to participate in the Stock Options Scheme of the Company. The service contract, notice period and severance fees are not applicable to Non-Executive Directors
b) Executive directors' remuneration
The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and commission (variable component) to the Executive Director(s). Salaries paid to Executive Directors namely Shri Shekhar Bajaj, Chairman & Managing Director and Shri Anant Bajaj, Joint Managing Director of the Company are within the range approved by the Shareholders. The Commission paid/payable to the Chairman & Managing Director and Joint Managing Director is calculated at the rate of 2% and 1%, respectively, with reference to the net profits of the Company in a particular financial year and is determined by the Board of Directors at the end of the financial year, subject to the overall ceilings stipulated in Section 197 of the Act.
Executive Directors are entitled to superannuation benefits payable in the form of an annuity from an approved life insurance company, which forms part of the perquisites allowed to them. The terms of Managing Director and Joint Managing Directors do not exceed five years.
The Company has no stock option plans for the promoter executive directors/non-executive directors and hence, it does not form part of the remuneration package payable to them.
During FY 2015-16, the Company did not advance any loans to any of the non-executive directors and/or executive directors.
Details of Remuneration paid/payable to directors during FY 2015-16 are provided in the Annexure to the Directors' report in 'Form MGT-9'.
c) Remuneration Policy for the Key Managerial Personnel and the Corporate Management Committee members
Remuneration of Key Managerial Personnel and the Corporate Management Committee members largely consists of basic salary, perquisites, allowances and performance incentives. The components of the total remuneration vary for different grades and are governed by industry patterns, qualifications and experience of the employee, responsibilities handled by him/her, his/her annual performance, etc. The performance pay policy links the performance pay of each officer to his/her individual, business unit and overall Company's performance on parameters aligned to the Company's objectives.
Shareholding of Directors
Information on Shares held by directors in the Company as on 31 March 2016 is provided in the Annexure to the Directors' Report in 'Form MGT - 9'.
The Company has no subsidiary as on 31 March 2016. Also, the Company does not have any material subsidiary whose net worth exceeds 20% of the consolidated net worth of the holding company in the immediately preceding accounting year or has generated 20% of the consolidated income of the Company during the previous financial year.
However, as an abundant precaution, on the recommendations of the Audit Committee, the Board of Directors in its meeting held on 31 July 2014 adopted a policy for determining 'material' subsidiaries and its approval/reporting mechanism ('Policy'). The said Policy has been displayed on the Company's website: www.bajajelectricals.com
Related Party Transactions
All Related Party Transactions (RPTs) which were entered into during the financial year were on an arm's length basis and were in the ordinary course of business and do not attract provisions of Section 188 of the Act and are also not material RPTs under SEBI LODR Regulations.
During FY 2015-16, the RPTs were placed before Audit Committee for prior approval. A summary statement of transactions with related parties was placed periodically before the Audit Committee during the year. Suitable disclosures, as required by the Accounting Standard - 18 have been made in the financial statements.
Details of 'material' transactions, if any, with the Related Parties are disclosed quarterly along with the Compliance Report on Corporate Governance.
There were no material transactions entered into with related parties, during the year under review, which may have had any potential conflict with the interests of the Company.
A Policy on materiality of RPTs and also on dealing with RPTs has been formulated by the Board and the same is placed on the Company's website www.bajajelectricals.com
Disclosure of material transactions
Under the provisions of the SEBI LODR Regulations, senior management personnel are required to make periodical disclosures to the Board relating to all material financial and commercial transactions where they had (or were deemed to have had) personal interest that might have been in potential conflict with the interest of the Company. Provision regarding the above has been adhered to during the year.
Code of Business Conduct & Ethics
The Board of Directors has approved a Code of Business Conduct & Ethics ("the Code") which is applicable to the Members of the Board and to all employees. The Code is the Company's statement of values and represents the standard of conduct which all the Directors and employees are expected to observe in their business endeavors and reflects the Company's commitment to principles of integrity, transparency and fairness.
The Code is available on the website of the Company www.bajajelectricals.com . All directors and senior management personnel have affirmed compliance with the code for FY 2015-16. All employees were required to confirm on e-module compliance to the Code. A declaration to this effect signed by the Chairman & Managing Director is given below:
To the Members of Bajaj Electricals Limited
Sub: Compliance with Code of Business Conduct & Ethics
As provided under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, I hereby declare that, to the best of my knowledge and belief, all the Board Members and the Senior Management Personnel have affirmed compliance with the Code of Business Conduct & Ethics for the year ended 31 March 2016.
Date: 30 May 2016 Shekhar Bajaj
Place: Mumbai Chairman & Managing Director
Code for Prevention of Insider Trading Practice
The Company had in place a 'Code of Conduct for Prevention of Insider Trading', amended up-to-date, in accordance with the SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended. These regulations have been substituted by SEBI with a new set of Regulations, which came into effect from 15 May 2015.
Regulation 8 of the newly introduced Regulations, requires the Company to formulate a Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (UPSI), which the Company needs to follow in order to adhere to each of the principles set out in Schedule A to the said Regulations.
Further, Regulation 9(1) of these Regulations require a listed company to formulate a Code of Conduct to regulate, monitor and report trading by its employees and other connected persons, towards achieving compliance with the said Regulations, adopting the minimum standards, set out in Schedule B to the Regulations.
Accordingly, the Board at its meeting held on 23 March 2015, approved and adopted,
a) Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information; and
b) Code of Conduct to Regulate, Monitor and Report Trading by its employees and other connected persons.
The said Codes are posted on Company's website: www.bajajelectricals.com <http://www.bajajelectricals.com> and are being adhered to with effect from 15 May 2015.
Internal Controls and Risk Management Framework
The Company has robust systems for internal audit. The internal audit covers all the factories, branch offices, warehouses and businesses and functions controlled centrally. The annual internal audit cover plan is approved by the Audit Committee at the beginning of every year. Every quarter, the Audit Committee of the Board is presented with key control issues and actions taken on past issues.
Pursuant to Regulation 21 of the SEBI LODR Regulations, the provision in respect of forming Risk Management Committee is not applicable to the Company. However, the Company also has in place a mechanism to inform Board about the risk assessment and minimisation procedures and periodical review to ensure that executive management controls risk through means of a properly defined framework.
A detailed note on risk management is given in the Financial Review section of the Board's Report.
Whistle Blower Policy/Vigil Mechanism and affirmation that no personnel have been denied access to the Audit Committee
The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. The Company is committed to developing a culture where it is safe for any Whistle Blower to raise concerns about any poor or unacceptable practice and any event of misconduct.
Pursuant to Section 177(9) of the Act, the Board of Directors at its meeting held on 12 February 2015, amended the existing Whistle Blower Policy to extend its applicability to other persons dealing with the Company viz. contractors, vendors, customers and business consultants in addition to employees and directors.
The Whistle Blower Policy/Vigil Mechanism provides a mechanism for the directors, employees or such other persons having dealings with the Company to report to the management, without fear of victimisation, any unethical behavior, suspected or actual fraud, violation of the Code of Conduct, etc. which are detrimental to the Company's interest. This mechanism provides safeguards to the Whistle Blower from any kind of discrimination, harassment, victimisation or any other unfair employment practice.
A high level Committee has been constituted which looks into the complaints raised. The Committee reports to the Audit Committee and the Board. The Directors in all cases & employees in appropriate or exceptional cases will have direct access to the Chairman of the Audit Committee. The Policy has been appropriately communicated to the employees within the organisation and posted on the Company's website: www.bajajelectricals.com <http://www.bajajelectricals.com>.
i. Accounting treatment
In the preparation of financial statements, the Company has not followed a treatment different from that prescribed in the Accounting Standards
ii. Audit qualifications
The Company always endeavors to present unqualified financial statements. There are no audit qualifications in the Company's financial statements for the year under review.
iii. Disclosure of pending cases and instances of non-compliance
There were no instances of non-compliance by the Company, nor has there been any penalties and strictures imposed on the Company by the stock exchanges or SEBI or any statutory authority/regulatories on any matter related to capital markets, during the last three years.
iv. CEO/CFO Certification
The CEO and CFO have certified to the Board with regard to the financial statements and other matters as required under Regulation 17(8) of the SEBI LODR Regulations. The joint certificate from CEO and CFO is contained in this Annual Report.
v. Report on corporate governance
This section, read together with the information given in the Directors' Report containing the Management Discussion and Analysis and General Shareholder Information, constitute the compliance report on corporate governance during FY 2015-16.
vi. Auditors' certificate on corporate governance
The Company has obtained the certificate from its statutory auditors regarding compliance with the provisions relating to corporate governance laid down in Regulation 34 of the SEBI LODR Regulations. This Certificate is contained in this Annual Report and will be sent to the stock exchanges along with the Annual Report to be filed by the Company.
vii. Compliance of discretionary requirements specified under Regulation 27 of the SEBI LODR Regulations
The Company is complying with all the mandatory requirements of the SEBI LODR Regulations. The Company has also complied with the discretionary requirement with respect to the regime of financial statements with unmodified audit opinion.
Means of Communication
(i) Quarterly Results: Quarterly Results of the Company are submitted to Stock Exchanges, published in newspapers namely 'Free Press Journal' and 'Navshakti' and are displayed on the Company's website www.bajajelectricals.com The official press release is also issued.
(ii) Audited Annual Financial Results: The Company publishes the audited annual financial results within the stipulated period of 60 days from the close of the financial year as required under the SEBI LODR Regulations and hence, the un-audited results for the last quarter of the financial year are not published.
The annual financial results are also communicated to the Stock Exchanges where the Company's shares are listed and displayed on the Company's website; whereas extracts thereof are published in the newspapers.
(iii) News Releases, Presentations, etc.: Official news releases and media releases are sent to the Stock Exchanges.
(iv) Presentation to Institutional Investors / Analysts: Detailed presentations are made to Institutional Investors and Financial Analysts, on the un-audited quarterly financial results as well as the annual audited financial results of the Company.
(v) Electronic communication to promote green initiatives: Sections 20 & 129 of the Act read with Companies (Accounts) Rules, 2014 permit companies to service delivery of documents electronically on the registered members'/shareholders' email addresses.
The Company, during the year under review, sent documents, such as notice calling the general meeting, audited financial statements, directors' report, auditors' report, etc. in electronic form at the email addresses provided by the shareholders and made available by them to the Company through the depositories. Shareholders desiring to receive the said documents in physical form continued to get the same in physical form, upon request.
(vi) Website: The Company's website www.bajajelectricals.com contains a separate dedicated section 'Investor Relations' where shareholders information is available.
Amongst others, the Company also files the information, statements and reports on its website as specified by SEBI under Regulations 46 and 62 of the SEBI LODR Regulations.
(vii) Annual Report: Annual Report containing, inter alia, audited annual accounts, directors' report, auditors' report and other information is circulated to members and others entitled thereto.
(viii) Reminder to Investors: Reminders for unclaimed dividend/unclaimed interest are sent to the shareholders/ fixed deposit holders as per records every year.
(ix) NSE Electronic Application Processing System (NEAPS): NEAPS is a web based application designed by NSE for corporates. All periodical compliance filings like shareholding pattern, corporate governance report, media releases, etc. are filed electronically on NEAPS.
(x) BSE Corporate Compliance & Listing Centre (the "Listing Centre"): The Listing Centre of BSE is a web based application designed by BSE for corporates. All periodical compliance filings like shareholding pattern, corporate governance report, media releases, etc. are also filed electronically on the Listing Centre.
(xi) SEBI Complaints Redress System (SCORES): The investor complaints are processed in a centralised web based complaints redress system. The salient features of this system are: Centralised Database of all complaints, online upload of Action Taken Reports (ATRs) by the concerned companies and online viewing by investors of action taken on the complaint and its current status.
Foreign currency exposure and its hedging:
The Company has following foreign exchange exposure in its books
a) Liability towards imports for purchases for goods and services.
b) Liability towards foreign currency loans such as Buyers Credit, Foreign Currency Term Loans, etc.
c) Liability towards royalty payable for use of MR brand.
d) Forex exposure in terms of receivables against its exports made to various countries.
The Company has EEFC account with bank to reduce the impact of foreign exchange exposure to a certain extent. For other liabilities and loans, the Company takes forward cover, either in part or in full, to hedge the liability as and when it deems fit appropriate to do so.
Commodity Price Risk
The Company deals in the lighting products, small consumer durables appliances and fans which it largely procures from other vendors, while a small quantity of ceiling fans are produced in-house. The terms of payment with vendors is on cost plus basis. The Company is also into EPC segment, wherein it takes turnkey contracts for transmission line towers, high masts and poles, Street Lighting, etc. This exposes the Company to commodity price risk for products such as copper, aluminium, plastic, steel, zinc, etc.
Presently, the Company does not hedge its exposure to commodity price risks.
Individual shareholders holding shares singly or jointly in physical form can nominate a person in whose name the shares shall be transferable in the case of death of the registered shareholder(s). The prescribed nomination form (SH-13) will be sent by the share transfer agent of the Company upon such request and is also available on the Company's website. Nomination facility for shares held in electronic form is also available with depository participant as per the bye-laws and business rules applicable to NSDL and CDSL.
Voting through electronic means
Pursuant to Section 108 of the Act and the rules made thereunder, every listed company is required to provide its members facility to exercise their right to vote at general meetings by electronic means.
The Company has entered into an arrangement with CDSL, the authorised agency for this purpose, to facilitate such e-voting for its members.
The shareholders would therefore be able to exercise their voting rights on the items put up in the Notice of AGM, through such evoting method. Further, in accordance with the amended Companies (Management & Administration) Rules, 2014 ("Amended Rules"), the Company shall also be making arrangements to provide for voting facility at the venue of the AGM to those shareholders who have not cast their vote through remote e-voting or through post.
Shareholders who are attending the meeting and who have not already cast their votes by remote e-voting shall only be able to exercise their right of voting at the meeting.
Cut-off dates for e-voting, as per the amended Rules shall be 29 July 2016 and the remote e-voting shall be open for a period of three (3) days, from 01 August 2016 (10.00 a.m.) till 03 August 2016 (5.00 p.m.). The Board has appointed M/s. Anant B. Khamankar & Co., Practicing Company Secretaries as scrutinizer for scrutinizing the remote e-voting process as well as voting through physical ballot form by post and through ballot paper at the AGM, in a fair and transparent manner.
Detailed procedure is given in the Notice of the AGM. Shareholders may get in touch with the Company Secretary for further assistance.
General Shareholder Information
(a) Company Information Details
The Company is registered in the State of Maharashtra, India. The Corporate Identity Number (CIN) allotted to the Company by the Ministry of Corporate Affairs (MCA) is L31500MH1938PLC009887.
(b) Information on General Body Meetings
i. Seventy Seventh Annual General Meeting:
Day, Date, Time and Venue
Thursday, the 04 August 2016 at 11.00 A.M. at Walchand Hirachand Hall, 4th Floor, Indian Merchants' Chamber, IMC Marg, Churchgate, Mumbai 400 020
Last date for receipt of Proxy forms
Tuesday, the 02 August 2016 (before 11.00 A.M. at the Registered Office of the Company)
Book Closure Dates
30 July 2016 to 04 August 2016 (both days inclusive
ii. Previous three Annual General Meetings:
iii. Details of special resolution(s) passed during the previous three AGMs:
No special resolution was passed at the general meetings held during the years 2013 and 2015. At the 75th AGM held on 31 July 2014, special resolution was passed for approval of payment of remuneration to non-executive directors.
None of the businesses proposed to be transacted in the ensuing AGM require passing a special resolution through postal ballot.
The Company conducted the postal ballot exercise in the manner provided under the provisions of Section 110 and other applicable provisions, if any, of the Act read together with Rule 22 of the Companies (Management and Administration) Rules, 2014. The Company had provided Electronic Voting ("remote e-voting") facility as an alternate, to all its Members, to enable them to cast their votes electronically instead of dispatching the physical Postal Ballot Form by post. The Company had engaged the services of CDSL to provide e-voting facility to its Members.
The notice of postal ballot was accompanied with detailed instructions kit to enable the members to understand the procedure and manner in which postal ballot voting (including remote e-voting) to be carried out.
c) Financial calendar: Financial Year - 01 April to 31 March
The tentative dates of Board Meetings for consideration of financial results for FY 2016-17 are as follows:
First Quarter Results : Second Week of August 2016
Second Quarter and Half Yearly Results : Second Week of November 2016
Third Quarter Results : Second Week of February 2017
Fourth Quarter and Annual Results : Fourth Week of May 2017
The Board Meetings for approval of financial results during the year ended 31 March 2016 were held on the following dates:
First Quarter Results : 06 August 2015
Second Quarter and Half Yearly Results : 05 November 2015
Third Quarter Results : 10 February 2016
Fourth Quarter and Annual Results : 30 May 2016
(d) Dividend, Dividend payment date & mode of payment
The Board, in its meeting held on 10 March 2016, declared an interim dividend of Rs. 2.80 per share on 10,09,48,976 equity shares of Rs. 2 each for FY 2015-16 as compared to final dividend of Rs. 1.50 per share for the previous year.
(ii) Dividend payment date:
Dividend was credited/dispatched within 30 days from 10 March 2016 :-
a) to all those beneficial owners holding shares in electronic form, as per the ownership data made available to the Company by NSDL and CDSL as of the close of business hours on Friday, 18 March 2016; and
b) to all those shareholders holding shares in physical form, after giving effect to all the valid share transfers lodged with the Company on or before the close of business hours on Friday, 18 March 2016.
(iii) Mode of Payment:
SEBI vide its Circular No. CIR/MRD/DP/10/2013 dated 21 March 2013 has stipulated that all listed companies shall use approved electronic mode of payment viz., ECS, NECS, NEFT, etc., for the purpose of making payments to the shareholders.
As notified by SEBI through the stock exchanges, the dividend was paid by account payee/non-negotiable instruments/ National Electronic Clearing Service (NECS).
In view of the significant advantages and the convenience, the Company will continue to pay dividend through NECS/ NACH in all major cities to cover maximum number of shareholders, as per applicable guidelines. Shareholders are advised to refer to the Notice of the AGM for details of action required to be taken by them in this regard.
All the shareholders are requested to immediately update their bank account details, if the same have not been updated, with the Company's Registrar & Share Transfer agent or the depository participant, as the case may be.
(e) Unclaimed Dividends
The shareholders who have not encashed their dividend warrants for the years 2008-09 onwards are requested to claim the amount from the Company.
As per Section 124 of the Act any money transferred by the Company to the unpaid dividend account and remaining unclaimed for a period of seven years from the date of such transfer shall be transferred to Investor Education and Protection Fund (IEPF) set up by the Central Government. Accordingly, the unpaid/unclaimed dividend for 2008-09 shall become transferable to the IEPF in August 2016. Shareholders are requested to verify their records and send claims, if any, before the amount becomes due for transfer to the IEPF.
Further, the Ministry of Corporate Affairs (MCA) vide its notification dated 10 May 2012 prescribed the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012 which mandates all the companies to file the particulars of all the unclaimed and unpaid amounts through 'e-Form 5INV' on the web portal of MCA www.iepf.gov.in and subsequently also upload the data on the website of the Company. During the year under review, the Company has accordingly filed the necessary 'Form-5INV' on 22 August, 2015 for the financial year ended 31 March 2015. The details of unclaimed dividends for the financial years 2008-09 to 2014-15 have been uploaded on the Company's website: www.baiajelectricals.com
(f) Listing on stock exchanges & stock code
Shares of the Company are currently listed on the following stock exchanges:
Name : 1. BSE Ltd. (BSE)
Address : Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001
Stock Code : 500031
Name : 2. National Stock Exchange of India Ltd. (NSE)
Address : Exchange Plaza, Bandra - Kurla Complex, Bandra (E), Mumbai 400 051
Stock Code : BAJAJELEC
The shares of the Company were listed on Delhi Stock Exchange Ltd. (DSE), DSE House, 3/1, Asaf Ali Road, New Delhi 110 002 under the Stock Code - 02031. However, SEBI vide its order No.WTM/PS/45/MRD/DSA/NOV/2014 dated 19 November 2014 withdrew the recognition granted to the said stock exchange.
The ISIN Number allotted to the Company's equity shares of face value of Rs. 2 each under the depository (NSDL and CDSL) system is INE193E01025.
For FY 2016-17, the Company has paid annual listing fees to all the stock exchanges and annual custody/issuer fees to both the depositories.
(h) Share Transfer system
Share transfers received by the Share Transfer Agent/Company are registered within 15 days from the date of receipt, provided the documents are complete in all respects and the shares under transfer are not under any dispute.
(i) Reconciliation of Share Capital Audit
As required by SEBI, quarterly audit of the Company's share capital is being carried out by an independent external auditor with a view to reconcile the total share capital admitted with NSDL and CDSL and held in physical form, with the issued and listed capital. The auditors' certificate in regard to the same is submitted to BSE and NSE and is also placed before the Board of Directors
Dematerialisation of shares and liquidity
As on 31 March 2016, 9,87,79,305 (97.85%) equity shares of the Company were held in dematerialised form, compared to 9,83,63,920 (97.62%) equity shares as on 31 March 2015. Shares held in physical and electronic mode as on 31 March 2016 are given in Table 12 hereinbelow.
(k) Outstanding global depository receipts or american depository receipts or warrants or any convertible instruments, conversion date and likely impact on equity : Not Applicable
(l) Address for Correspondence
All Shareholders' correspondence should be forwarded to Link Intime India Private Limited, the Registrar & Share Transfer Agents of the Company or to the Legal & Secretarial Department of the Company at the following addresses:
Link Intime India Private Limited C-13, Pannalal Silk Mills Compound L B S Marg, Bhandup (West) Mumbai 400 078 Tel.No.: 022-2596 3838 Fax No.: 022-2594 6969 E-mail: email@example.com Website: www.linkintime.com
Mangesh Patil, Compliance Officer Legal & Secretarial Department Bajaj Electricals Limited 45/47, Veer Nariman Road, Mumbai 400 001 Tel.No.: 022-2204 3841/3780, 6110 7800 Fax No.: 022-2285 1279 E-mail: firstname.lastname@example.org Website: www.bajajelectricals.com
(m) Debenture Trustee : Axis Trustee Services Limited 2nd Floor 'E', Axis House, Bombay Dyeing Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai - 400 025 Tel. No.: 022-2425 5215/5216, Fax: 022-2425 4200 Email: email@example.com Website: www.axistrustee.com
Chakan Unit : Village Mahalunge, Chakan, Chakan Talegaon Road, Tal: Khed, Dist: Pune Maharashtra – 410 501
Ranjangaon : Unit MIDC – Ranjangaon Village : Dhoksanghavi Tal: Shirur, Dist: Pune Maharashtra – 412 210
Wind Farm: Village Vankusawade Tal: Patan Dist: Satara Maharashtra – 415 206
Kosi Unit : 109 KM Stone NH 2, Dautana Chhata – 281 403 District: Mathura, U.P