CORPORATE GOVERNANCE REPORT
The Corporate Governance Report, for Financial Year 2015-16, which forms a part of Boards Report, is prepared pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations"). This report is for compliance with the Listing Regulations.
I. COMPANY PHILOSOPHY
The Company's philosophy on Corporate Governance mirrors its belief that principles of transparency, fairness and accountability towards the stakeholders are the pillars of a good governance system. The Company believes that the discipline of Corporate Governance pertains to systems, by which companies are directed and controlled, keeping interests of members, while respecting interests of other stakeholders and society at large. It aims to align interests of the Company with its Members and other key stakeholders. Accordingly, this Company's philosophy extends beyond what is being reported under this Report and it has been the Company's constant endeavour to attain the highest levels of Corporate Governance.
II. BOARD OF DIRECTORS
The Board of Directors ensures that the Company runs its business on fair and ethical principles and plays an important role in creation of value for its stakeholders, in terms of the Company's Corporate Governance and Ethics Policy. All statutory and other significant and material information including information mentioned in Regulation 17(7) read with Part A of Schedule II the Listing Regulations, is placed before the Board of Directors to enable it to discharge its responsibilities of strategic supervision of the Company with due compliance of laws and as trustees of stakeholders. The Managing Director and Executive Director are responsible for the day-to-day management of the Company, subject to the supervision, direction and control of the Board of Directors. The Executive Directors are ably assisted by the Management Committee and Operating Committee, which implement the decisions and the strategic policies of the Board of Directors.
As on March 31, 2016, the Board of Directors of the Company consisted of 13 (thirteen) Directors of whom, 2 (two) were 'Executive' Directors and 11 (eleven) were 'Non-Executive' Directors.
The Chairman, Mr. H. V. Goenka is a Non-Executive Director. Mr. Anant V. Goenka, Managing Director and Mr. Arnab Banerjee, Whole-time Director (designated as the Executive Director- Operations) are the Executive Directors. Mr. H. V. Goenka, Chairman is the father of Mr. Anant V. Goenka, Managing Director of the Company.
The Directors are eminent industrialists/ professionals with experience in industry/business/ finance/law and bring with them the réputation of independent judgment and experience, which they exercise and also satisfy the criteria of independence. However, the Board of Directors, adopting a more exacting view, has decided to treat only the Directors, as indicated in the para (2) below, as Independent Directors.
2. Board Meetings held during the year and attendance thereat:
During the Financial Year ended March 31, 2016, 6 (six) meetings of the Board of Directors were held on May 22, 2015; July 22, 2015; September 7, 2015; October 27, 2015; February 12, 2016 and March 16, 2016. Details of Directors and their attendance in the said Board Meetings and also at the last Annual General Meeting are given below:
Details of the Directors proposed for Appointment/ Re-appointment at the ensuing Annual General Meeting of the Company:
i) Mr. Arnab Banerjee:
Mr. Arnab Banerjee, 52 years, is the Executive Director -Operations of the Company w.e.f. May 7, 2013.
Mr. Banerjee comes with a vast experience and knowledge of FMCG and Paints sector and has more than 25 years of experience having worked in diverse industries at various locations. Mr. Banerjee completed graduation from Indian Institute of Technology, Kharagpur in Mechanical Engineering in 1985. Subsequently, he did PGDM from Indian Institute of Management, Calcutta in 1987. Prior to joining CEAT Limited, Mr. Banerjee worked with Berger paints and Marico Limited.
At CEAT, Mr. Banerjee spearheads the Sales and Marketing and Manufacturing functions and is responsible for driving revenue in Domestic, Exports and OE market and developing CEAT as the most Premium, Dynamic and Youthful Brand. He also handles integrated supply chain of CEAT.
Apart from his career in Sales and Marketing, Mr. Banerjee has a keen interest in photography, running and high altitude treking. He is also director of following companies / Body Corporates:
• CEAT Specialty Tyres Limited, India
• Associated CEAT (Pvt.) Limited, Sri Lanka
• CEAT-Kelani International Tyres (Pvt.) Limited, Sri Lanka
• CEAT Kelani Holdings (Pvt.) Limited, Sri Lanka
• CEAT Kelani Radials Pvt. Limited, Sri Lanka
• Associated CEAT Holdings Company (Pvt.) Limited, Sri Lanka
Mr. Banerjee is neither a Member nor Chairman of any of the committee of any other company.
Mr. Paras K. Chowdhary:
Mr. Paras K. Chowdhary, 65 years, holds a Bachelors degree in Physics (Hons.) and has over 36 years of experience in senior management positions in the tyre industry. He has been the Managing Director of CEAT Limited for more than 11 (eleven) years. Prior to joining the Company, he spearheaded the Telecom Business of RPG Enterprises from July 1997 to December 2000. Earlier, he was employed with Apollo Tyres Limited,where he started his career from junior management position and reached to the position of President and Whole-time Director within a very short time. He was instrumental in the turning around of that Company. Mr. Chowdhary is one of the few experts of the tyre industry in India.
• RPG Enterprises Limited, India
• Philips Carbon Black Limited, India
• CEAT Kelani Holdings (Pvt.) Limited, Colombo, Sri Lanka
• Associated CEAT Holdings Company (Pvt.) Limited, Colombo, Sri Lanka
Mr. Chowdhary is a Member of Audit Committee of Phillips Carbon Black Limited
III. COMMITTEES OF THE BOARD
(i) Audit Committee:
The Company has complied with the requirements of Section 177 of Companies Act, 2013 ("the Act") and Regulation 18(1) of the Listing Regulations, applicable to the composition of the Audit Committee. The Board at its meeting held on May 22, 2015, reconstituted the Audit Committee in which Mr. Vinay Bansal was inducted as a member on the said Committee. Accordingly, the Audit Commitee curently has 4 (four) members, viz Mr. Mahesh S. Gupta; Mr. S. Doreswamy; Mr. Hari L. Mundra and Mr. Vinay Bansal. All the members of the Audit Committee are financially literate.
Mr. Mahesh S. Gupta is the Chairman the Audit Committee, who is an Independent Director.
During the financial year ended March 31, 2016, 5 (five) meetings of the Audit Committee were held on May 22, 2015; July 22, 2015; October 27, 2015; February 12, 2016 and March 16, 2016.
The requisite quorum was present at all meetings.
The terms of reference of Audit Committee included the matters specified under Regulation 18 of the Listing Regulation as well as in Section 177 of the Act. The terms of reference of the Audit Committee, inter-alia, include the following:
(a) To recommend the appointment/re-appointment/ re-placement, remuneration and terms of appointment of the Auditors of the Company.
b) To review and monitor Auditor's independence and performance and effectiveness of audit process.
(c) To approve payment to Statutory Auditors for any other services rendered by Statutory Auditors.
(d) To review effectiveness of the audit process and adequacy of the internal audit function, if any, including structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of the internal audit.
(e) To examine Financial Statements and Auditors' Report thereon and for this purpose, to call, if necessary, the comments of the Auditors about the following:
(i) Internal control systems;
(ii) Scope of audit, including observations of Auditors.
(f) To recommend the Financial Statement to the Board for approval, after carrying out the procedure mentioned at (e) above.
(g) To approve transactions of the Company with Related Parties, including any subsequent modifications.
(h) To scrutinize inter-corporate loans and investments made by the Company.
(i) To carry out valuation of undertakings and the assets of the Company, wherever it is necessary.
(j) To evaluate the Internal Financial Controls and Risk Management Systems.
(k) To review, with the management, performance of Statutory and Internal Auditors, adequacy of the Internal Control System.
(l) To investigate into any matter specified under serial nos. (a) to (k) above and for this purpose to obtain advise of external professionals, if necessary, and accord them full access to the information contained in the records of the Company.
(m) To give personal hearing to the Auditors and Key Managerial Personnel, if necessary, while reviewing the Auditor's Report.
(n) To oversee the Company's financial reporting process and disclosure of the financial information to ensure that the financial statements are correct, sufficient and creditable.
(o) To review the Annual Financial Statements with the Management before submitting the same to theBoard particularly the following:
I. 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 Act;
II. Changes, if any, in accounting policies and practices and reasons for the same;
III. Major accounting entries involving estimates based on the exercise of judgment by management;
IV. Significant adjustments made in the financial statements arising out of audit findings;
V. Compliance with listing and other legal requirements relating to financial statements;
VI. Disclosure of any related party transactions;
VII. Modified opinion(s) in the draft Audit Report.
(p) To review with the Management the Quarterly Financial Results before submission to the Board for approval.
(q) To review, 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 on the offer document/prospectus/ notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.
(r) To discuss with the Internal Auditors any significant findings and follow-up thereon.
(s) To review findings of any internal investigations, by the internal auditors into matters where there is suspected frauds or irregularities or a failure of internal control systems of a material nature and reporting the matter to the Board.
(t) To discuss 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.
(u) To discuss with the Statutory Auditors the nature and scope of internal audit before commencement of the internal audit and also after completion of the internal audit, to ascertain any internal area of concern.
(v) To look into the reasons for substantial defaults in the payment to the depositories, shareholders (in case of non-payment of declared dividends), deposit holders, debenture holders and creditors.
(w) To review the functioning of the Whistle Blower Mechanism.
(x) To approve appointment of Chief Financial Officer, including the whole-time Finance Director, after assessing the qualifications, experience and background etc. of the candidate.
(y) To carry out any other function, as may be assigned to Audit Committee pursuant to any amendments to the Listing Regulations and the applicable provisions of the Act.
(z) To review the following information/document:
i. Management Discussion and Analysis of financial condition and results of operation;
ii. Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;
iii. Management letter/letters of internal control weakness issued by the Statutory Auditors;
iv. Internal audit reports relating to internal control weakness;
v. The appointment, removal and terms of remuneration of the Chief Internal Auditor shall be subject to review by the Audit Committee; and
vi. Statement of deviations:
a) Quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of Regulation 32(1) of the Listing Regulations.
b) Annual statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice in terms of Regulation 32(7) of the Listing Regulations.
The Audit Committee Meetings are also generally attended by the representatives of Statutory Auditors, Internal Auditors, the Managing Director, the Chief Financial Officer, Head-Internal Audit and the Vice President-Accounts.
The Company Secretary functions as the Secretary of the Committee.
The Minutes of the Meetings of the Audit Committee are discussed and taken note of by the Board of Directors.
As per Regulation 18(1) (d) of the Listing Regulations, the Chairman of the Audit Committee shall be present at the Annual General Meeting (AGM) to answer shareholder queries. Mr. Mahesh S. Gupta, the Chairman of the Audit Committee has attended the Annual General Meeting of the Company held on August 12, 2015 to answer the queries of the shareholders.
(ii) Nomination and Remuneration Committee (NRC):
The Company through its Board of Directors have constituted Nomination and remuneration Committee (hereinafter referred as "NRC") in terms of Regulation 19(1) of the Listing Regulations. The terms of reference of NRC include the matters specified under Regulation 19(4) of the Listing Regulations as well as Section 178 of the Act.
The Committee comprises of 3 (three) members, Mr. Mahesh S. Gupta; Mr. Paras K. Chowdhary and Mr. S. Doreswamy. Mr. Mahesh S. Gupta is the Chairman of the NRC who is an Independent Director. The committee meets the criteria laid down in Section 178 of the Act and Regulation 19 of the Listing Regulations.
During the financial year ended March 31, 2016, 3 (three) meetings of NRC were held on May 22, 2015; July 03, 2015 and July 22, 2015.
The terms of reference of NRC, inter-alia, include the following:
a) To lay down criteria for determining qualifications, positive attributes and independence of a Director and recommend to the Board of Directors a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees.
b) To formulate a criteria for evaluation of performance of Independent Directors and the Board of Directors.
c) To devise a policy on diversity of the Board of Directors.
d) 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 recommend to the Board of Directors their appointment and removal.
e) To decide whether to extend or continue the term of appointment of the Independent Director, on the basis of the report of performance evaluation of Independent Directors.
f) To recommend to the Board the appointment and removal of the Directors, including Independent Directors.
g) To recommend to the Board, a policy relating to the remuneration for Directors including Managing Director(s) (MD) and Whole-time Director(s) (WTD), Key Managerial Personnel (KMP) and other employees. While formulating the policy, NRC shall ensure that:
(i) 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;
(ii) Relationship of remuneration to performance is clear and meets appropriate performance benchmarks;
(iii) 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.
h) To recommend remuneration to be paid to a Director for any service rendered by him to the Company which are of a professional nature and provide an opinion, whether such Director possess the requisite qualification for the practice of such profession.
i) Carrying out functions as delegated by the Board of Directors from time to time.
As per Regulation 19(3) of the Listing Regulations, the Chairman of NRC shall be present at the Annual General Meeting (AGM) to answer shareholder queries. Mr. Mahesh S. Gupta, the Chairman of NRC has attended the Annual General Meeting of the Company held on August 12, 2015, to answer the queries of the shareholders.
NRC reviews the remuneration payable to the MD/WTD/ KMP(s) and Commission payable to the Non-Executive Directors and recommends it to the Board.
On the recomendations of the NRC, the Board has formulated a Policy on Appointment, Training, Evaluation and Remuneration of Directors and Senior Management Personnel (SMP).
Training and Evaluation:
Pursuant to provision of the Act, the NRC has carried out the evaluation of performance of every Director as under:
(a) Before re-appointment of Executive and Non-Executive Directors (NEDs);
(b) At the time of recommendation of remuneration payable to Executive and Non-Executive Directors or changes therein;
(c) At such other time, as the applicable laws or the circumstances may require.
(ii) In addition, the Board of Directors have also evaluated the performance of the individual directors including Independent Directors, its own performance and also of its Committees. For this purpose, a questionnaire inter-alia covering the following parameters were circulated to NEDs and their feedback was obtained through an online platform by an Independent Agency.
(a) Attendance at meetings of the Board and Committees thereof,
(b) Participation in Board meetings or Committee thereof,
(c) Contribution to strategic decision making,
(d) Sharing of domain knowledge and experience to bear on the critical areas of performance of the organization and keeps updated in the areas of expertise,
(e) Communication and contribution in the discussions in a positive and constructive manner,
(f) Review of risk management framework, risk assessment and risk mitigation,
(g) Review of financial statements, business performance,
(h) Contribution to the enhancement of brand image of the Company etc.
(iii) The performance of Executive Directors i.e. Managing Director/Whole-time Director, are evaluated, in addition to aforesaid parameters, taking into account the appropriate benchmarks set as per industry standards, the performance of the Directors and also of the Company.
Remuneration policy for SMPs and KMPs (other than MD/WTD):
In determining the remuneration packages for SMP and KMPs, the Committee shall ensure:
(i) Remuneration shall be competitive and comprising of both fixed and variable components, performance incentives and other benefits such as retiral benefits, health care insurance and hospitalisation benefits, telephone reimbursement etc.
(ii) Performance of the individual and also of the Company and given due consideration to industry practices/trends,
(iii) The benchmark of international and domestic companies of similar in size and complexity to the Company,
(iv) Relevant qualification and experience of the individual as well as the prevailing market condition,
v) Attractive to high-flier executives in a competitive global market and commensurate with the roles and responsibilities.
NRC may consider grant of Stock Options to KMPs and SMPs pursuant to any Stock Option Plan adopted by the Company, if any.
Remuneration policy for MD/WTD:
(i) Remuneration to the MD and WTD shall be proposed by the NRC and subsequently approved by the Board of Directors and the shareholders of the Company, whenever required.
(ii) Remuneration shall be evaluated annually against performance and a benchmark of International and Domestic Companies, which are similar in size and complexity.
(iii) Total remuneration for the MD and WTD shall be comprised of the following:
(a) Salary (both fixed and variable),
(b) Perquisites like house rent allowance, domiciliary medical expenses and club memberships etc,
(c) Retiral benefits in accordance with applicable laws and policies of the Company,
(d) Performance Bonus linked to the individual performance vis-à-vis performance of the Company,
(e) Total remuneration payable to MD/WTDs shall be within the limit in accordance with Section 198 of the Act.
Remuneration policy for Non-Executive Directors (NEDs):
(i) NEDs shall be entitled to such sitting fees as may be decided by the Board of Directors from time to time for attending the meeting of the Board and of the Committee thereof.
(ii) NEDs shall also be entitled for payment of commission upto the limits permitted in Section 197 of the Act and approved by the shareholders from time to time and shall be payable on pro-rate basis.
(iii) Independent Directors shall not be eligible for any Stock Options, pursuant to any Stock Option Plan adopted by the Company.
The NEDs shall be eligible for remuneration of such professional services rendered if in the opinion of the NRC, the NED possesses the requisite qualification for rendering such professional services
The Company has Remuneration policy for Non-Executive Directors (NEDs) and the same has been displayed on the Company's website www.ceat . com at the link <http://www.ceat.com/Investors_> intimation.aspx.
Details of remunerations paid to the Directors are given in Form MGT-9, Annexure C to the Board's report.
The remuneration paid to the MD and the WTD was duly recommended by NRC and approved by the Board of Directors. The Members have also accorded their approval to the said remuneration vide a special resolution passed at the Annual General Meetings on August 10, 2012 for Mr. Anant V. Goenka and August 22, 2013 for Mr. Arnab Banerjee.
Pursuant to the provisions of the Act and Regulation 25(4) of the Listing Regulations, the Board has carried out the annual performance evaluation of its own performance, individual Directors and working of its Audit Committee, Nomination and Remuneration Committee, Risk Management Committee, CSR Committee, Special Investment/Project Committee, and Finance and Banking Committee. The Company had appointed HR Craft Business Consulting Private Limited (HR Craft) for carrying out the said evaluation process in a transparent manner by using the questionnaire considered/approved by the Board after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations, compliance and governance.
The performance of individual Directors including the Chairman of the Board was evaluated on parameters such as active and consistent participation in the meeting, adequate preparation thereof, level of engagement and contribution to Company's Strategy, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board excluding the Directors being evaluated. The performance evaluation of the Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction with the evaluation process.
FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS:
The Company has prepared familiarization programme for its Independent Directors on their roles, rights, and responsibilities in the Company, nature of its industry and the business model of the Company, etc and the same was approved by the Board of Directors at their meeting held on February 5, 2015.
The said programme has been uploaded on the Company's website <http://www.ceat.com/Investors_> intimation.aspx.
Stakeholders Relationship Committee (SRC):
The Company has formed a Stakeholders' Relationship Committee ("SRC") in compliance with Regulation 20 of the Listing Regulations and Section 178 of the Act. The Committee reviews and deals with complaints and queries received from the investors. It also reviews and deals with responses to letters received from the Ministry of Corporate Affairs, the Stock Exchanges and Securities and Exchange Board of India (SEBI).
SRC comprises of 3 (three) members, Mr. S. Doreswamy; Mr. Mahesh S. Gupta and Mr. Paras K. Chowdhary. Mr. S. Doreswamy is the Chairman of the Committee.
Mr. H. N. Singh Rajpoot, Company Secretary functions as the Secretary of the Committee.
During the financial year ended March 31, 2016, 4 (four) meetings of the Stakeholders' Relationship Committee were held on May 22, 2015; July 22, 2015; October 27, 2015 and January 28, 2016.
v) Risk Management Committee (RMC):
The Board of Directors of the Company, at it's Meeting held on February 5, 2015, have constituted the Risk Management Committee(RMC) in compliance with Regulation 21 of the Listing Regulations, comprising of Mr. Mahesh S. Gupta; Mr. S. Doreswamy and Mr. Hari L. Mundra as its members. Mr. Mahesh S. Gupta is appointed as Chairman of the Committee. The Board of Directors at its meeting held on July 22, 2014 delegated the function of risk management to the Audit Committee. Further Board of Directors of the Company reconstituted the Risk Management Committee at its meeting held on May 22, 2015 in which Mr. Vinay Bansal was inducted in the said Committee. On constitution of the Risk Management Committee, the Board has delegated the said function to the Risk Management Committee thereby deleting the said function from terms of reference of the Audit Committee.
During the financial year ended March 31, 2016, 3 (three) meetings of the RMC were held on May 22, 2015; July 22, 2015 and February 12, 2016
The scope & duties / functions of RMC, inter-alia, include the following:
i. To identify and review the actual risks and the control deficiencies in the organization.
ii. To assist the Board of Directors in defining the risk appetite of the Company.
iii. Framing of risk management and mitigation plan inter-alia to ensure that risk is not higher than the risk appetite determined by the Board of Directors.
iv. Implementing the risk management and mitigation plan approved by the Board through periodical reviews.
v. Monitor the effectiveness of risk management and mitigation plan.
vi. Ensure that infrastructure, resources and systems are in place for risk management and mitigation and ensure their adequacy to maintain a satisfactory level of risk management discipline.
vii. Review the strategies, policies, frameworks, models and procedures for the identification, measurement, reporting and mitigation of risks.
Business Risk Evaluation and Management is an ongoing process within the Organization to identify, monitor and minimize risks associated with the business.
Finance & Banking Committee (Non-Mandatory Committee):
The Board of Directors of the Company has constituted this Committee to delegate some of its powers, mentioned under terms of reference below.
The Finance & Banking Committee comprises of 3 (three) members, Mr. Anant V. Goenka; Mr. Arnab Banerjee and Mr. Paras K. Chowdhary. Mr. Anant V. Goenka is the Chairman of the Committee.
During the financial year ended March 31, 2016, 12 (twelve) meetings of the Finance Banking Committee were held on April 20, 2015; May 22, 2015; June 26, 2015; July 22, 2015; July 27, 2015; July 31, 2015; September 1, 2015; September 29, 2015; October 27, 2015; December 1, 2015; January 14, 2016 and February 12, 2016.
The terms of reference of the Finance & Banking Committee, inter-alia, include the following:
a. To Approve fresh borrowing(s) to be obtained by the Company.
b. To approve the documents; such as Loan Agreements, Deed of Hypothecation, Agreements for security creation, and other Deeds, Indemnities, Undertakings, letters, writings and any other document required to be executed on behalf of the Company; for the purposes mentioned at (a) above and also compliance of the terms and conditions so approved by the Committee while approving the borrowings referred to in (a) above.
c. To authorise the Company's officials to execute the documents mentioned at (b) above.
d. To approve short term investments in the units of Mutual Funds and/or in the fixed deposits of Scheduled Banks up to an aggregate limit of Rs. 100 Crores. However, the investment in the units of Mutual Fund shall be restricted to short term debt funds only.
e. To authorise the officials of the Company to sign any bills of exchange or hundis that may be required for any temporary borrowing.
f. To review the Foreign Exchange (Forex) Policy and approve any modification(s) therein, as and when necessary, in the interest of the Company. Also, to approve changes in signatories for executing the Forex transactions and agreements/documents etc. from time to time within the ambit of Forex Policy/ RBI guidelines.
g. To authorise opening of bank account(s) with any bank and to close any existing bank account(s).
h. To authorise opening of Demat Account(s) with any Depository Participant and close any existing Demat Account(s) with any Depository Participant.
i. To authorise change in authorised signatories of the existing bank accounts and demat accounts and delegate this power to Key Managerial Personnel, if required.
j. To authorize the Company's officials to execute, sign, submit and file any applications, affidavits, undertakings or any other writings before any Magistrate, Court of Law, Tribunal, Government Authorities and Judicial/Non-Judicial Bodies and any other authority and also to represent the Company before the said Magistrate, Court of Law, Tribunal, Government Authorities Judicial/Non-Judicial bodies and other Authority.
k. To consider and grant Power of Attorney or authorisations in favour of the Company's officials or any other person for management of its day to day affairs.
l. To approve execution of any agreements, undertakings, letters, writings, deeds, contracts and any document, (other than that mentioned at (b) above) which may be required to be executed by the Company from time to time for management of its day to day affairs.
m. To approve affixation of the Common Seal on any document required to be executed by the Company for management of its day to day affairs.
n. To grant such other authorisations and approvals to any official of the Company or any other person on behalf of the Board of Directors as may be required for day to day management of the Company's business.
vi) Corporate Social Responsibility (CSR) Committee:
The Board of Directors has formed a committee on Corporate Social Responsibility (CSR) in accordance with Section 135 of the Act. The CSR Committee comprises of 3 (three) members, Mr. Anant V. Goenka, Mr. Hari L. Mundra and Mr. Vinay Bansal. Mr. Anant V. Goenka is the Chairman of the Committee
A brief on the activities undertaken by the Company during the year forms part of the Board's Report.
The terms and reference of the Committee of the CSR include the following:
a. To formulate and recommend to the Board the Corporate Social Responsibility Policy (CSR Policy) as specified in Schedule VII of the Act ("the Act") read with Companies (Corporate Social Responsibility) Rules, 2014 and Schedule VII.
b. To recommend to the Board the amount of expenditure to be incurred on the activities undertaken by the Company as per the CSR Policy within the overall limit specified in Section 135 (5) of the Act, as amended from time to time, but not less than 2% of the average net profits of the Company during the 3 (three) immediately preceding financial years, (calculated pursuant to Section 198 of the Act) or any other sum, as may be prescribed under Section 135 of the Act from time to time.
c. To monitor the CSR Policy of the company from time to time.
vii) Special Project / Investment Committee (Non-Mandatory Committee)
The Special Project / Investment Committee comprises of 3 (three) members, Mr. H. V. Goenka; Mr. Anant V. Goenka and Mr. Paras K. Chowdhary. Mr. H. V. Goenka is the Chairman of the Committee. No fees are paid for attending the meetings of the Special Project / Investment Committee.
No meetings of Special Project / Investment Committee were held during the year under review.
The terms and reference of the Committee, inter-alia, include the following:
1. Evaluate the viability report(s) presented on the overseas projects and approve the same.
2. Decide the location and to approve the initial capacity and cost of project.
3. Approve funding options of the projects, including the option of forming a joint venture.
4. Approve initial investment in the approved overseas project
IV. INDEPENDENT DIRECTORS MEETING:
As per Regulation 25(3) of the Listing Regulations as well as pursuant to Section 149(8) of the Act read with Schedule IV and in accordance with the Policy on Appointment, Training, Evaluation and Remuneration of Directors and Senior Management Personnel, the Independent Directors have at their meeting held on
March 16, 2016:
a) Reviewed the performance of Non-Independent Directors and the Board as a whole;
b) Reviewed the performance of the Chairperson taking into account the views of Executive Directors and Non-Executive Directors;
c) Assessed the quality, quantity and timelines of flow of information between the Company Management and the Board.
7 (seven) Independent Directors out of 8 (eight) were present at the said meeting.
During the year under review, the Company had passed a following resolution as Special Resolution through Postal Ballot in accordance to the procedure prescribed in Section 110 of the Act read with the Companies (Management and Administration) Rules, 2014:
• Offer and Issue of Non-Convertible Debentures on private placement basis for an aggregate amount up to Rs. 500 Crores, in one or more tranches.
Procedure of Postal Ballot:
1. The Board of Directors of the Company, vide a resolution dated May 22, 2015, had appointed Mr. P. N. Parikh, Practicing Company Secretary as the Scrutinizer for conducting the postal ballot/ e-voting process.
2. The Company had completed the dispatch of the Postal Ballot Notice dated May 22, 2015 together with the Explanatory Statement on June 05, 2015, along with forms and postage prepaid business reply envelopes to all the Members whose name(s) appeared on the Register of Members/list of beneficiaries as on May 22, 2015.
3. The voting under the postal ballot was kept open from 9.00 a.m. on Sunday, June 7, 2015 to 5.00 p.m on Monday, July 6, 2015 (either physically or through electronic mode).
4. Particulars of postal ballot forms received from the Members using the electronic platform of CDSL were entered in a register separately maintained for the purpose.
5. The postal ballot forms were kept under Scrutinizer's safe custody in sealed and tamper proof ballot boxes before commencing the scrutiny of such postal ballot forms.
6. All postal ballot forms received/receivable up to the close of working hours on Monday, July 6, 2015 the last date and time fixed by the Company for receipt of the forms, had been considered for his scrutiny
7. Envelopes containing postal ballot forms received after close of business hours on Monday, July 6, 2015 had not been considered for the scrutiny.
8. Mr. H. N. Singh Rajpoot, Company Secretary announced that said resolution was passed as a Special Resolution on July 9, 2015 with the votes casted in favour of the resolution being 99.995% as against 0.005% votes against the resolutions.
Scrutinizer for e-voting and vote on ballot paper:
Mr. P N. Parikh, Practicing Company Secretary was appointed as Scrutinizer for conducting electronic voting and the postal ballot process in a fair and transparent manner and to give his report to the Chairman of the Company.
Proposed Postal Ballot:
The Company has not made any plans till date, to pass any special resolution through postal ballot.
1. Disclosures on materially significant related party transactions that may have potential conflict with the interests of Company at large
There were no material and/or significant related party transactions during FY 2015-16 that were prejudicial to the interest of the Company.
2. Whistle Blower Policy (Vigil Mechanism)
The Company has also adopted a "Whistle Blower Policy" for its employees and Directors to report to the Chairperson of the Audit Committee instances of unethical behaviour, actual or suspected fraud or violation of the Company's Corporate Governance and Ethics policy and the policy is displayed on the website of the company www.ceat <http://www.ceat>. com at the link intimation.aspx. No personnel/employee of the Company has been denied access to the Audit Committee for reporting instances of unethical behaviour or suspected fraud or violation of the policy.
Disclosure of Related Party Transactions
The Company follows the policy on Related Party Transactions in disclosing the related party transactions to the Audit Committee:
a) A statement in summary form of transactions with related parties in the ordinary course of business and on arms length basis is placed before the Audit Committee.
b) The transactions entered into with Related Parties as defined under the Act, and Regulation 23 of the Listing Regulations during the financial year which were in the ordinary course of business and on an arms' length basis placed before the Audit Committee and those related party transactions which were in the ordinary course of business but not on arms' length basis placed before the Board.
c) There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company.
d) Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements.
e) Transactions with related parties, if any, which are:
i. not in the normal course of business;
ii. not at arms' length basis;
iii. exceeding the threshold limits prescribed under the Act and the Rules made there under or the Listing Regulations are placed before the Audit Committee, Board and Members for their approval.
The Company has formulated a policy on Related Party Transactions and the same has been displayed on the Company's website www.ceat.comat the link intimation.aspx.
Disclosure of Accounting Treatment
The Company has followed the Accounting Standards specified under Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules, 2014, to the extent applicable, in the preparation of the financial statements.
5. Disclosure of Risk Management
The Company has laid down procedures to inform the Board members about the risk assessment and minimisation procedures. These procedures are periodically reviewed to ensure that executive management controls risks through means of a properly defined framework.
6. Offer and Issue of Secured Redeemable Non-Convertible Debentures
During the year under review, the Company has pursuant to the special resolution under Sections 42 and 71 of the Act passed by the Members on July 9, 2015 through postal ballot, approved the offer, issue of Non-Convertible Debentures on private placement basis for an aggregate amount upto Rs. 500 Crores in one or more tranches. Further, the Company on July 31, 2015 allotted 2,000 Secured Redeemable Non-Convertible Debentures (NCDs) of Rs. 10 Lacs each for cash at par aggregating to Rs. 200 Crores on private placement basis. The said NCDs are listed on BSE Limited. The proceeds of the same had been utilised for Company's various expansion projects and also for the augmentation of the long term working capital required for business growth.
7. Details of non-compliance by the Company, Penalties, Strictures imposed on the Company by Stock Exchange(s) or Securities and Exchange Board of India (SEBI) or any other statutory authority or any matters related to Capital Markets during the last 3 (three) years
The Company has complied with all the requirements of the Stock Exchanges, SEBI and Statutory Authorities on all matters related to the capital markets during the last 3 (three) years. There are no penalties or strictures imposed on the Company by the Stock Exchanges or SEBI or any statutory authorities relating to the above.
There were no instances of non-compliance of any matter related to the capital market during the last 3 (three) years.
8. Details of compliance with mandatory requirement
Regulation 34(3) read with schedule V of the Listing Regulations mandates the Company to obtain a certificate from either the Auditors or Practicing Company Secretaries regarding compliance of conditions of Corporate Governance as stipulated in the said Regulation and annex the certificate so obtained with the Boards' Report. The Company has obtained a certificate from its Statutory Auditors to this effect and the same is annexed to the Boards' Report.
9. Adoption of the non-mandatory requirements
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 states that the non-mandatory requirements may be implemented as per the discretion of the Company. The disclosures of compliance with other non-mandatory requirements and adoption/non-adoption of the non-mandatory requirements shall be need based.
10. Compliance with Discretionary Requirements
a. There are no audit qualifications for the Standalone and Consolidated Financial Statement for the year ended March 31, 2016.
b. The Position of Chairman of the Board of Directors and Managing Director are separate.
c. Internal Auditors report to the Audit Committee directly in all the functional matters.
11. Material Subsidiary:
The Company does not have any material subsidiary whose income or net worth exceeds 20% of the consolidated income and net worth respectively of the holding company in immediately preceding accounting year. A policy on subsidiaries has been formulated by the Company and posted on website of the Company at the link <http://www.ceat.com/> Investors_intimation.aspx.
VII. MEANS OF COMMUNICATION
Quarterly Results are announced within 45 (forty-five) days from the end of the quarter and the annual audited results are announced within 60 (sixty) days from the end of the financial year as per the Listing Regulations. The aforesaid financial results are announced to Stock Exchanges within 30 (thirty) minutes from close of the Board meeting at which these were considered and approved. Quarterly Results of the Company are published in a major English Daily as well as in a Marathi Daily.
The Quarterly Results of the Company are normally published in the following newspapers:
• The Free Press Journal
• The Economic Times
• Maharashtra Times
The Annual Report of the Company, the Quarterly / Half yearly Results and the Audited Financial Statements, the press releases of the Company, the Investors Presentations are also placed on the Company's website www.ceat.com
The Company also provides information to Stock Exchanges where the shares of the Company are listed as per the Listing Regulations.
The Company has provided an email address on its website 'firstname.lastname@example.org' whereby investors can directly contact the Company.
VIII.GENERAL SHAREHOLDER INFORMATION
AGM: Date, Time and Venue
As indicated in the notice accompanying this Annual Report the Fifty-Seventh Annual General Meeting of the Company will be held on Tuesday, August 9, 2016 at 3.00 p.m. at Ravindra Natya Mandir, P. L. Deshpande Maharashtra Kala Academy, Sayani Road, Prabhadevi, Mumbai - 400 025.
Financial Year : The Company follows April 1 to March 31 as the financial year.
Date of Book Closure : August 2, 2016 to August 9, 2016 (both days inclusive).
Dividend Payment Date
The Board has not recommended any final dividend.
Listing on Stock Exchanges
The Equity shares of the Company are listed on the BSE Limited and the National Stock Exchange of India Limited. The Listing fees have been paid to both the Stock Exchanges for FY 2015-16.
BSE Limited - 500878
National Stock Exchange of India Limited - CEATLTD
Market Price Data for Equity shares of face value of 10/- each
Registrar and Transfer Agents
[A] For equity shares:
The share management work, both physical and demat, is handled by the Registrar and Share Transfer Agent of the Company whose name and address is given below:
TSR Darashaw Limited 6-10, Haji Moosa Patrawala Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai - 400 011 Email: email@example.com Web: www.tsrdarashaw.com Tel.: 022-66568484; Fax: 022-66568494
[B] For Privately placed Redeemable Non-Convertible Debentures:
TSR Darashaw Limited 6-10, Haji Moosa Patrawala Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai - 400 011 Email: firstname.lastname@example.org Web: www.tsrdarashaw.com Tel.: 022-66568484; Fax: 022-66568494
TSR Darashaw Limited 503, Barton Centre (5th Floor) 84, Mahatma Gandhi Road, Bangalore - 560 001 Email: email@example.com Tel: 080 - 25320321 Fax: 080 - 25580019
TSR Darashaw Limited "E" Road, Northern Town, Bistupur, Jamshedpur - 831 001 Email: firstname.lastname@example.org Tel: 0657-2426616
TSR Darashaw Limited Tata Centre, 1st Floor, 43, J. L. Nehru Road, Kolkata - 700 071 Email: email@example.com Tel: 033-22883087 Fax: 033-22883062
4. New Delhi
TSR Darashaw Limited 2/42, Ansari Road, 1st Floor Daryaganj, Sant Vihar, New Delhi - 110 002 Email: firstname.lastname@example.org Tel: 011-23271805 Fax: 011-2327180
Shah Consultancy Services Limited 3, Sumatinath Complex, 2nd Dhal Pritam Nagar, Ellisbridge, Ahmedabad 380 006 Email: email@example.com Telefax: 079-26576038
[C] For Deposits:
KISU CORPORATE SERVICES PVT.LTD. 186, Khetwadi Main Road, (8th Lane Corner) First Floor, Nr. Pitale Maruti Temple Mumbai - 400 004 Tel. No.: 022-23810486, 23886255, Email: firstname.lastname@example.org
[D] Debenture Trustee:
Axis Trustee Services Limited Ground Floor, E wing, Axis House Bombay Dyeing Mills Compound Pandurang Budhakar Marg Worli, Mumbai - 400 025 Tel. No.: 022-24252425 Fax: 022-43253000 Email: email@example.com Web: www.axistrustee.com
Share Transfer System
All valid requests for transfer of equity shares in physical mode received for transfer at the office of the Registrar and Share Transfer Agents or at the Registered Office of the Company are processed and returned within a period of 15 (fifteen) days from the date of receipt. The Board of Directors have delegated the power of approval of share transfers to the Company Secretary.
Every effort is made to clear transmissions and split and consolidation requests within 21 (twenty-one) days.
Dematerialisation of shares
The Company has an arrangement with National Securities Depository Limited (NSDL) as well as Central Depository Services (India) Limited (CDSL) for dematerialisation of shares with ISIN No. INE482A01020 for both NSDL and CDSL.
93.84% of equity share capital corresponding to 3,79,57,702 equity shares is held in dematerialised form as of March 31, 2016.
Outstanding GDRs/ADRs/Warrants/Any other Convertible Instruments:
The Company do not have any outstanding GDRs/ ADRs/ Warrants/Any other Convertible Instruments as on March 31, 2016.
Commodity Price Risk or Foreign Exchange Risk and hedging activities:
Volatility in commodity prices are managed by combining a robust price forecast mechanism with a buying model comprising of spot buying, forward buying and strategic long term contracts. Inventory levels are maintained in alignment to this. Since a significant quantum of raw materials are procured from international sources, appropriate hedging mechanisms are in place to insulate forex fluctuations.
The Company manages the volatility in the foreign currency prices through hedging mechanisms. The exposure risk arises primarily due to the import and export activities of the Company as well as short term and long term borrowings in foreign currency. The Company has put in place a Policy for Foreign Exchange and Interest Risk Management which is duly approved by the Board of Directors of the Company. The Foreign Exchange Risk Management programme of the Company is carried out as per the said Policy and the Company uses forward contracts, derivatives, structured derivatives and swaps as hedging instruments. The Company is suitably insulated against the risk arising out of foreign currency fluctuations through appropriate hedging mechanisms and the same is monitored by the Board of Directors on a timely basis. The Company is in fully compliance with the rules, regulations and guidelines, as may be applicable, prescribed by the Reserve Bank of India, from time to time in this behalf.
Plant Locations Mumbai Plant
Village Road, Bhandup, Mumbai
Nashik Plant : 82, MIDC Industrial Estate Satpur,
Nashik - 422 007.
Halol, Gujarat Plant : Village Gate Muvala, Halol, Panchmahal - 389 350.
Nagpur Plant : Plot No.SZ-39, Butibori MIDC, Nagpur - 441 108.
National Electronic Clearing Service (NECS) Facility
With respect to payment of dividend, the Company provides the facility of NECS to Members residing in the cities where such facility is available. In order to avoid the risk of loss/ interception of Dividend Warrants in postal transit and/or fraudulent encashment of Dividend Warrants, Members are requested to avail of facility whereby the dividends will be directly credited in electronic form to their respective bank accounts. This will ensure speedier credit of dividend and the Company will duly inform the concerned Members when the credits are passed to their respective bank accounts. The requisite application form can be obtained from the office of TSR Darashaw Limited, the Registrar and Share Transfer Agents, of the Company.
The Company proposes to credit dividend to the Member's bank account directly through NECS where such facility is available in case of Members holding shares in demat account and who have furnished their MICR Code to their Depository Participant (DP).
Members located in places where NECS facility is not available, may kindly submit their bank details to enable the Registrars to incorporate the same on the Dividend Warrants, in order to avoid fraudulent encashment of the Dividend Warrants.
CEO and CFO Certification
The CEO i.e. the Managing Director and the Chief Financial Officers (CFO) have issued a certificate pursuant to theprovisions of Regulation 17(8) of the Listing Regulations certifying that the financial statements do not contain any untrue statement and these statements represent a true and fair view of the Company's affairs.
Code of Conduct
The Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company, which is posted on the Company's website www.ceat.com at the link <http://www.ceat.com/Investor_code_of_conduct.aspx>.
All Board Members and Senior Management Personnel have affirmed compliance with the Code for the financial year ended March 31, 2016. A declaration to this effect signed by the Managing Director forms part of this Report.
Prevention of Insider Trading
The Company has formulated a Code of Fair Disclosure and Conduct (For Regulating, Monitoring and Reporting of Trading by Insiders) ('Code') in accordance with provisions of SEBI (Prohibition of Insider Trading) Regulations, 2015 with a view to regulate trading in securities by the Directors and Designated Employees of the Company.
Mr. H. N. Singh Rajpoot, Company Secretary as the Compliance Officer of the Company is responsible for complying with the procedures, monitoring, adherence to the rules for the preservation of price sensitive information, pre-clearance of trade, monitoring of trades and implementation of the Code of Conduct under the overall supervision of the Board.
The Code requires pre-clearance for dealing in the Company's shares and prohibits purchase and/or sale of the Company's shares by the Directors and Designated Employees while in possession of unpublished price sensitive information in relation to the Company.
Mr. H. N. Singh Rajpoot, Company Secretary CEAT Limited, CIN: L25100MH1958PLC011041 463, Dr. Annie Besant Road, Worli, Mumbai 400 030 Tel: 91-22-2493 0621, Fax: 022-25297423 Email: firstname.lastname@example.org