REPORT ON CORPORATE GOVERNANCE
1. COMPANY'S PHILOSOPHY
Senior Management initiates the Corporate Governance standards and ensures that it is percolated throughout the organization. Your Company firmly believes in the importance of ethics among the employees and strives for developing a work culture that fosters accountability, fairness, integrity and transparency in its dealings, while adhering to the fundamental principle of enhancing the trust and value of all stakeholders.
Your Company has a 'Code of Conduct and Business Ethics for Board Members and Senior Management', i.e., Directors, Key Managerial Personnel, Executive Directors and Chief General Managers. In addition, there is a 'BEML Code of Conduct to regulate, monitor and report trading by Insiders' to avoid unlawful enrichment by the connected persons based on unpublished price sensitive information.
Your Company is in compliance with the requirements of the Corporate Governance standards as stipulated under Clause 49 of the Equity Listing Agreement and the Department of Public Enterprises Guidelines on Corporate Governance for Central Public Sector Enterprises (DPE Guidelines).
2. BOARD OF DIRECTORS
As at 31.03.2015, the Board consisted of 6 Whole-time Directors including the Chairman & Managing Director, 2 Government Nominee Directors and 3 Independent Directors. There are 5 vacancies for Independent Directors on the Board. Appointment for these vacancies is under consideration of Government of India.
(ii) Meetings and Attendance:
During the year, 6 meetings of the Board were held on 27.05.2014, 28.05.2014, 12.08.2014, 18.09.2014, 14.11.2014 and 13.02.2015. Requirements on number and frequency of meetings, in terms of Clause 49(II)(D)(1) of the Equity Listing Agreement and Para 3.3.1 of the DPE Guidelines, were complied with in full.
(iii) Directors retiring by rotation
In terms of the provisions of the Companies Act, 2013, the Directors, S/s P Dwarakanath, C Balakrishnan, Suhas Anand Bhat and N P Gupta will be retiring by rotation and being eligible, offer themselves for re-appointment at the ensuing AGM. Further, in terms of Clause 49(VIII)(E) of the Equity Listing Agreement, brief resume of the said Directors are appended to the notice of the AGM. The Board commends the re-appointment of the said retiring directors.
(iv) Directors' Shareholding
Shri Aniruddh Kumar, Director (Rail & Metro Business), holds 15 equity shares in his personal capacity. No other Director is holding equity shares or debt securities in your Company as on 31.03.2015.
(v) CEO / CFO Certification
In terms of Clause 49(IX) of the Equity Listing Agreement, Chief Executive Officer (Chairman & Managing Director) and Chief Financial Officer (Director-Finance) have issued necessary certificate to the Board of Directors with respect to the financial statements for the year 2014-15. The said certificate was reviewed and recommended by the Audit Committee in terms of Para 4.5(vi) of the DPE Guidelines and taken on record by the Board at its 322nd meeting held on 29.05.2015.
(vi) Review of Compliance of Laws
In terms of Clause 49(II)(D)(3) of the Equity Listing Agreement, Para 3.3.3 of the DPE Guidelines and applicable provisions of the Companies Act, 2013, the Board reviewed the compliance reports relating to various laws applicable to the Company for the year 2014-15 and noted that there was no instance of non-compliance. There was no significant or material order passed during the year by any regulator or court or tribunal impacting the going concern status and company's operations in future.
(vii) Training of Board Members
In terms of Clause 49(II)(B)(7) of the Equity Listing Agreement, Para 3.7 of the DPE Guidelines and applicable provisions of the Companies Act, 2013, a 'Policy on Familiarization / Training Programmes to Board Members' was formulated and approved by the Board as placed on the Company's web-link at http://www.bemlindia.com/documents/Financials/Policy_Trg_Board.pdf.
As per the terms of the said policy, the new Board members are provided with the familiarization programmes on Company's business model, procedures and practices and also provided with necessary documents, brochures
and reports to keep the Directors abreast of the necessary information relating to the Company. Further, the Board members are nominated for various outside training programmes on corporate governance and other
Board related topics from time to time.
(viii) Code of Conduct
In terms of Clause 49(II)(E) of the Equity Listing Agreement and Para 3.4 of the DPE Guidelines, Board of Directors of your Company has laid down a 'BEML Code of Conduct and Business Ethics for Board Members and Senior Management' of the Company as placed on the Company's web-link at http://www.bemlindia.com/ documents/about us/Code%20of%20 Conduct.pdf. Board Members and Senior Management, i.e., Directors, Key Managerial Personnel, Executive Directors and Chief General Managers have affirmed compliance with the said Code. A declaration to this effect signed by the Chairman and Managing Director/CEO is produced hereunder:
(ix) Code of Conduct to regulate, monitor and report trading in securities by Insiders
Pursuant to regulation 8 and 9 of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, Board of Directors of your Company has approved "BEML Code of Conduct to regulate, monitor and report trading by Insiders" in the securities issued by the Company on the basis of unpublished price sensitive information as placed on the Company's web-link at http://www.bemlindia.com/documents/aboutus/ Code%20of%20Conduct%20insider%20Trading.pdf.The connected persons as defined under the Code should obtain permission from the Competent Authority to deal in securities during the trading window beyond the specified limits. Periodical disclosures are also required to be made as provided under the Code to prevent the instance of insider trading.
(x) Whistle Blower Policy
In terms of the provisions of the Companies Act, 2013, Clause 49(II)(F) of the Equity Listing Agreement and Para 4.3 of the DPE Guidelines, your Company is in the process of formulating necessary "Whistle Blower Policy" to provide a framework to the employees for reporting to the management instances of unethical behaviour, actual or suspected, fraud, or violation of the matters concerning the Company.
3. BOARD COMMITTEES:
(i) Audit Committee:
The Audit Committee complies with the terms of reference as enumerated under the applicable provisions of the Companies Act, Listing Agreement, DPE Guidelines as amended from time to time and also complies with the directives of the Board of Directors, Department of Defence Production, Central Vigilance Commission, and such other competent authority.
The Audit Committee met six times on 27.05.2014, 11.08.2014, 17.09.2014, 13.11.2014, 29.01.2015 and 12.02.2015 thereby complied with the requirements on number and frequency of meetings under Clause 49(III)(B) of the Listing Agreement and Para 4.4 of the DPE Guidelines.
The Company Secretary acts as Secretary of the Committee. The Chairman of the Audit Committee attended the 50th AGM of the Company.
(ii) Nomination and Remuneration Committee
Pursuant to the provisions of Chapter 5 of the DPE Guidelines, your Company had constituted Remuneration Committee of the Board with the terms of reference that the Committee would decide, inter-alia, the annual bonus / variable pay pool and policy for its distribution across the executives and non-unionized supervisors of the Company.
Further, pursuant to the provisions of Clause 49(IV) of the Equity Listing Agreement, the Remuneration Committee has been rechristened as "Nomination and Remuneration Committee" and constituted with the following members:
(iii) Stakeholders Relationship Committee
Investor Grievances Committee as originally constituted was rechristened as "Stakeholders Relationship Committee" in terms of Clause 49(VIII)(E)(4) of the Listing Agreement. The Committee consists of following Directors / Compliance Officer:
The terms of reference shall include considering and resolving the grievances of the security holders of the Company including complaints on transactions relating to securities, non-receipt of annual reports and non-receipt of benefits like dividend, interest, bonus and rights.
The Company has designed an exclusive e-mail ID email@example.com to enable the investors to register their complaints, if any. The Company endeavour to reply to the complaints within a period of 3 working days.
Further, pursuant to SEBI Circulars dated 03.06.2011 and 18.12.2014, M/s Karvy Computershare Pvt. Ltd., the Share Transfer Agent of the Company (STA), is authorized to monitor the on-line complaints placed by SEBI on SEBI Complaints Redress System (SCORES). From the inception of the said system, there were 21 complaints placed by SEBI, out of which 1 complaint was pending redressal as on 31.03.2015 for want of necessary details from the investor/complainant. Accordingly, the status of total complaints and redressal thereon are as under:
No. of complaints received during the year No. of complaints resolved during the year No. of complaints pending resolved at the end of the year 46 45 1
(iv) Corporate Social Responsibility & Sustainability Committee
In terms of DPE Guidelines on MoU and Section 135 of the Companies Act, 2013, the Corporate Social Responsibility & Sustainability Committee (CSRS) has been constituted to examine the proposals for the approval of CSRS plan and review the implementation / execution of the plan and steering the CSRS agenda of the Company.
Board of Directors of your Company has approved a "Policy on Corporate Social Responsibility and Sustainability" to ensure commitment at all levels in the organization, operate the Company's business in an economically, socially and environmentally responsible and sustainable manner, while recognizing the interests of all stakeholders. The CSR activities are monitored periodically by the Committee and an annual report on CSR activities undertaken during the year 2014-15 is enclosed at Annexure-III. Further, the CSR policy of the Company and the activities undertaken are placed on the Company's web-link at http://www.bemlindia.com/documents/aboutus/BEML CSR Policy 19092014.pdf and http://www.bemlindia.com/documents/ aboutus/ BEML_CSR_SD_A~ctivitie~s_2014-f5.pdf, respectively.
(v) Procurement Committee
Procurement Committee comprising one Independent Director, Director (HR), Director (Finance) and respective Business Group Director for considering and approving the procurements / award of contracts on open / limited tender for value exceeding Rs.5 crores and on single tender basis for value exceeding Rs.50 lakhs.
(vi) Independent Directors' Meeting
As per requirements of the Companies Act, 2013, Independent Directors met on 24.03.2015 and all the Independent Directors were present at the meeting.
4. REMUNERATION OF DIRECTORS
Your Company being a Central Public Sector Enterprise, the appointment, tenure and remuneration of Directors are decided by the President of India. The Government communication appointing the Functional Directors indicate the detailed terms an d conditions of their appointment including a provision for the applicability of the relevant rules of the Company.
(ii) Government Nominee / Independent Directors' compensation:
Government Nominee Directors are not paid any remuneration including sitting fee for attending Board / Committee meetings. Further, none of the Government Nominee Directors had any pecuniary relationship or transactions with the Company during the year.
Independent Directors are paid sitting fee of Rs.20,000 per meeting of the Board / Committee of the Board attended by them. Further, if there are more than one such meeting on the same day, sitting fee @ Rs.10,000 is paid for the second and subsequent meeting/s.
Neither there was payment of commission to the Board of Directors nor any stock option scheme offered to them during the year.
6. SUBSIDIARY COMPANIES
In terms of Clause 49(VI) of the Listing Agreement and Chapter 6 of the DPE Guidelines, none of the subsidiary companies would be defined as a'Material Non-listed Subsidiary Company'. However, the Audit Committee periodically reviews the financial statements of the subsidiaries of the Company. Further, the minutes of the meetings of Board of subsidiary companies are also periodically placed before the Board of the Company along withsignificant transactions and arrangements entered between the subsidiaries and Company.
7. ENTERPRISE RISK MANAGEMENT
Establishment of Risk Management System in terms of Clause 49(VI) of the Listing Agreement and theprovisions of the Companies Act, 2013 is under process.
In terms of Clause 49(VIII) of the Listing Agreement and also Chapter 7 of the DPE Guidelines, the
following disclosures are made:
a) Your Company has formulated a "Policy on Related Party Transactions" to regulate transactions entered into between the Company and its related parties. The said policy is placed on the web-site of the Company http://www.bemlindia.com/ documents/Financials/Policy_RPT.pdf. During the year 2014-15, all transactions that were entered into with the related parties were fair, transparent and at arm's length basis and also in the ordinary course of business of the Company. The said related party transactions were duly considered and approved by the Audit Committee. Further, details of related party transactions as per Accounting Standard-18 issued by the Institute of Chartered Accountants of India is given in Note No.31(C) of the Notes forming part of Accounts. It may be noted that there was no related party transaction reported during the year involving the Directors, Key Managerial Personnel and other Designated Executives under Related Party Transactions Policy.
b) The Company has prepared stand-alone and consolidated financial statements based on the applicable Accounting Standards issued by the Institute of Chartered Accountants of India from time to time.
c) The Company has complied with the requirements of the Stock Exchanges, SEBI and other statutory authorities on all matters relating to capital markets during the last three years. No penalties or strictures have been imposed on the Company by the Stock Exchanges, SEBI or other statutory authorities during the last three years.
d) Senior management personnel have affirmed to the Board that their personal interest in all material financial and commercial transactions had no potential conflict with the interest of the Company at large.
9. MEANS OF COMMUNICATION
a) The quarterly, half-yearly and annual financial results of the Company are sent to the Stock Exchanges by e-mail immediately after the same are approved by the Board.
b) Financial results of the Company are normally published in a leading National Daily and a Kannada daily circulated in Bengaluru and the same are simultaneously posted on the Company's website www.bemlindia.com .
c) BEML NEWS - a House Journal brought out periodically is sent to the Stock Exchanges.
d) Corporate announcements and press releases are promptly notified to the Stock Exchanges.
e) Company's Website - The website of the Company, www.bemlindia.com gives comprehensive information including the management, vision, mission, policies, corporate governance, sustainability, investor relations, sales network, updates and news.
The section on 'Financials' provides necessary information to the shareholders/ investors.
10. GENERAL SHAREHOLDER INFORMATION
(i) The 51st Annual General Meeting for the year 2014-15 is scheduled on Tuesday, the 15th September, 2015, at 11.30 hours at API Bhavana, No. 16/F, Millers Tank Bed Area, Vasanthanagar, Bengaluru - 560 052.
(vii) Custodial Fees to Depositories
Your Company has paid custodial fees for the year 2014-15 to National Securities Depository Limited (NSDL) and CentralDepository Services (India) Limited (CDSL).
(ii) Tentative calendar for declaration of results for 2015-16 is given as below:
For the quarter ending 30.06.2015 On or before 13.08.2015
For the quarter ending 30.09.2015 On or before 13.11.2015
For the quarter ending 31.12.2015 On or before 12.02.2016
For the year ending 31.03.2016 On or before 30.05.2016
52nd Annual General Meeting On or before 30.09.2016
(iii) The Register of Members and Share Transfer Books shall remain closed from 09.09.2015 to 15.09.2015 (both days inclusive).
(iv) Your Board of Directors has recommended dividend of Rs.1.00 per share, i.e., 10% on the equity shares of Rs.10 each (par value) for the year ended March 31, 2015. Dividend, if approved at the 51st annual general meeting, will be distributed among the shareholders within the due date.
(v) Company's equity shares are listed on the following stock exchanges :
Bombay Stock Exchange Limited ('BSE') National Stock Exchange of lndia Limited (NSE') Listing fee up to the year 2015-16 has been paid to BSE and NSE.
(vi) Stock Code:
Bombay Stock Exchange 500048
National Stock Exchange BEML
(vii) Registrar and Transfer Agent:
M/s Karvy Computershare Private Limited, a SEBI registered Category-I Registrar & Share Transfer Agent, is engaged as the Company's Share Transfer Agent (STA) of the Company. The contact details of the STA are as under:
Karvy Computershare Private Limited
Karvy Selenium Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad - 500 032. Ph : 040 - 67161526, Fax: 040-23001153 E-mail :firstname.lastname@example.org, email@example.com Website : www.karvy.com
(viii) Share Transfer System
For shares transferred in electronic form, after confirmation of sale/purchase transaction from the broker, shareholders should approach their respective depositary participant (DP) with a request to debit or credit the account for the transaction. The DPwill immediately arrange to complete the transaction by updating the account. There is no need for separate communication to either the Company or STA. For matters regarding shares transferred in physical form, share certificates, dividends, change of address, etc. the shareholders should communicate with the STA.
(ix) Details of Shares held in Unclaimed Suspense Account Company made FPO during 2007 and certain shares could not be delivered/credited to investors due to reasons such as incomplete / wrong / invalid Demat Account details, incomplete address etc. In terms of Clause 5A(I) of the Listing Agreement, these unclaimed shares are kept in a separate Suspense Account and the same will be transferred to the rightful holders as and when they approach the Company/ STA. The voting rights on these shares shall remain frozen till the rightful owners of such shares claim the shares ;
(x) Dematerialization of shares and liquidity
The Company's shares are admitted into both the depositories i.e. National Securities Depository Limited ('NSDL') and Central Depository Services (India) Limited ('CDSL'). As on 31.03.2015, 99.51% of the equity shares of the Company are in electronic form. The Company's shares are being traded under International Securities Identification Number (ISIN) - INE258A01016.
The Equity Shares of the Company are traded on the Stock Exchanges only in dematerialized form. Considering the advantages of scrip-less trading, including enhanced marketability of the shares and security of the investments, shareholders holding shares in physical form are requested to consider dematerializing their shareholding so as to avail the advantages of dematerialisation of shares.
(xi) There are no outstanding GDRs/ ADRs/ Warrants or any Convertible instruments,conversion date and likely impact thereon on equity shares.
(xii) Listing of Debt Securities :
3000 Secured Redeemable Non-convertible Debentures of face value of Rs.10 lakh each aggregating to Rs.300 crores as allotted by the Board on 18.05.2012 on private placement basis to M/s Axis Bank Ltd are listed on BSE Debt Segment with effect from 02.07.2012.
Your Company is regularly servicing the interest charges to the security holders.
(xiii) Plant Locations
1. Bengaluru Complex, New Thippasandra Post, Bengaluru - 560 075.
2. KGF Complex, BEML Nagar, Kolar GoldFields - 563 115.
3. Mysuru Complex, Belavadi Post,Mysuru - 571 186.
4. Palakkad Complex, Kinfra Park,Kanjikode, Palakkad - 678 007
(xiv)Address for correspondence with the Company:
Company Secretary, M/s BEML Limited,
BEML Soudha, No. 23/1, 4th Main, S.R. Nagar, Bengaluru - 560 027, Karnataka State, India.
(xv) National Electronic Clearing Service /Mandates / Bank Details
Shareholders may note that Bank Account details given by them to their Depository Participants (DP) would be used for payment of dividend under National Electronic Clearing Service facility. Shareholders are advised to ensure that their banking particulars are properly recorded in the DP account for timely crediting of dividendpayments made by the Company.
(xvi) Green Initiative
As part of the Green Initiative, the Ministry of Corporate Affairs (MCA), Government of India, has permitted companies to send official documents to their shareholders electronically. The Company has already embarked on this initiative.
In accordance with MCA Circular No.17 / 2011 dated 21.04.2011, the Company provides an opportunity to shareholders to register their email address and changes, if any, from time to time, with the STA/ DP. This would enable the Company to send notices and documents to the shareholders through email. There are about 34,745 shareholders as on 31.03.2015 consented to receive the notice, annual reports, etc., in e-mode.
We are confident that the shareholders will appreciate the "Green Initiative" taken by MCA and more and more would give consent for this noble cause of conservation mother earth with 'green cover'.
(xvii) Unclaimed Dividends
Under the provisions of the Companies Act, 1956, any amount that remains unclaimed in the Unpaid Dividend Account of the Company for a period of 7 years from the date of transfer to the said account, has to be transferred to the Investor Education and Protection Fund (IEPF) administered by the Central Government. Accordingly, all the unclaimed dividend amounts declared prior to 31.03.2008 were transferred to IEPF.
(I) Your Company submitted quarterly compliance report on Corporate Governance as per prescribed format to the MoD and Stock Exchanges within 15 days from the close of each calendar quarter.
(ii) Further, your Company submitted grading reports on the compliance with the Corporate Governance with MoD and Department of Public Enterprises on annual basis. As per the self-grading report for the year 2014-15, your Company has scored 'Excellent' rating in adhering to the Corporate Governance standards by achieving 94.47% of the compliances.
Members who have not encashed their dividend warrants pertaining to the aforesaid years may