CORPORATE GOVERNANCE REPORT
1. CORPORATE GOVERNANCE PHILOSOPHY
Chowgule Steamships Limited (CSL) believes that good corporate governance is essential to achieve long term corporate goals and to enhance shareholder value. Your Company believes in functioning in a transparent manner and believes in proper accountability, auditing, disclosure and reporting. CSL's operations and accounts are audited at two levels - Internal Audit and External Audit. CSL continues to follow procedures and practices in conformity with the Principles of Corporate Governance as enunciated in the listing agreement. The Board has also laid down a Code of Conduct for all the Board Members and Senior Management personnel of the Company.
2. AUDIT COMMITTEE
The Audit Committee comprises of Mr. Dhananjay N. Mungale, as its Chairman and Mr. Vijay V. Chowgule, Mr. Sanjiv N. Shah and Mr. Farokh Guzder as members. Mr. Dhananjay N. Mungale and Mr. Sanjiv N. Shah have the requisite financial and accounting background. The Audit Committee met on five occasions during the financial year on May 7, 2015, July 16, 2015, October 16, 2015, January 15, 2016 and March 18, 2016.
Mr. Mangesh Sawant, Managing Director & CFO attended all the meetings of the Audit Committee as invitee. The representatives of External
Auditors attended four meetings, whereas the representative of Internal Auditor attended two meetings. The Company Secretary of the
Company assumes the role of Secretary to the Audit Committee.
Terms of Reference of the Audit Committee
The brief terms of reference of Audit Committee are as under:
A. The role of the audit committee shall include the following:
1. Oversight of the listed entity's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
2. Recommendation for appointment, remuneration and terms of appointment of auditors of the listed entity;
3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
4. Reviewing, with the management, the annual financial statements and auditor's report thereon before submission to the board for approval, with particular reference to:
a. matters required to be included in the director's responsibility
b. 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;
c. changes, if any, in accounting policies and practices and reasons for the same;
d. major accounting entries involving estimates based on the exercise of judgment by management;
e. significant adjustments made in the financial statements arising out of audit findings;
f. compliance with listing and other legal requirements relating to financial statements;
g. disclosure of any related party transactions;
h. modified opinion(s) in the draft audit report;
5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval;
6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the board to take up steps in this matter;
7. Reviewing and monitoring the auditor's independence and performance, and effectiveness of audit process;
8. Approval or any subsequent modification of transactions of the listed entity with related parties;
9. Scrutiny of inter-corporate loans and investments;
10. Valuation of undertakings or assets of the listed entity, wherever it is necessary;
11. Evaluation of internal financial controls and risk management systems;
12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;
14. Discussion with internal auditors of any significant findings and follow up there on;
15. 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;
16. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
17. 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;
18. To review the functioning of the whistle blower mechanism;
19. Approval of appointment of chief financial officer after assessing the qualifications, experience and background, etc. of the candidate;
20. Carrying out any other function as is mentioned in the terms of reference of the audit committee.
21. Review the following information:
a. Management discussion and analysis of financial condition and results of operations;
b. Statement of significant related party transactions (as defined by the audit committee), submitted by management;
c. Management letters / letters of internal control weaknesses issued by the statutory auditors;
d. Internal audit reports relating to internal control weaknesses; and
e. The appointment, removal and terms of remuneration of the chief internal auditor shall be subject to review by the audit committee.
f. Statement of deviations:
i. quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of Regulation 32(1).
ii. annual statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice in terms of Regulation 32(7).
4. VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company in order to maintain highest standards of ethical, moral and legal conduct, adopted Vigil Mechanism/ Whistle Blower Policy to provide an avenue to its employees to raise concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports, etc. The Audit Committee of the Company oversees the said mechanism from time to time.
None of the Company personnel has been denied access to the Audit Committee.
5. NOMINATION/ REMUNERATION COMMITTEE
In terms of provisions of Section 178 of the Companies Act 2013, the Board of Directors, has constituted the Nomination / Remuneration Committee comprising Mr. Dhananjay N. Mungale as its Chairman and Mr. Vijay V. Chowgule, Mr. Ravindra Kulkarni and Mr. Farokh Guzder as its members.
During the year only one meeting was held on April 17, 2015, at which all the members were present. The role of the Remuneration Committee is to determine and recommend the Company’s policy on specific remuneration package for Managing/Whole-time Directors and Senior Management personnel, Key Managerial Personnel, evaluation of performance of the Directors. The brief terms of reference of Remuneration Committee are as under:
Terms of reference of Nomination / Remuneration Committee
A. Terms of Reference
a. Formulate criteria for determining qualifications, positive attributes and independence of Directors and recommend to the Board
a policy relating to the remuneration for the Directors, Key Managerial Personnel, and other personnel.
b. Identifying and assessing potential individuals with reference to their expertise, skills, qualifications, attributes and personal and professional standing for appointment/ re-appointment as Directors/Key managerial Personnel in the Company.
c. Support the Board of Directors for formulating policies for evaluation of performance of directors.
d. Recommend compensation payable to the Managing / Executive Directors, Directors and Senior Managerial Personnel.
B. Remuneration Policy
a. Non Executive Directors
1. The Non Executive Directors are entitled to receive sitting fees for attending each meeting of the Board of Directors or any committee thereof.
2. The amount of sitting fees shall not exceed the fees prescribed under the Companies Act, 2013.
3. The Non-executive Directors are also entitled to be reimbursed all expenses incurred by them for attending such meetings.
b. Managing Director & CFO
1. Managing Director & CFO is paid remuneration as may be mutually agreed between the Company and the Managing Director within the limits prescribed under the Companies Act, 2013.
2. The Remuneration is subject to approval by the members of the Company.
3. The remuneration is determined on the basis of recommendation of the Nomination & Remuneration Committee. While determining the remuneration, the Nomination and Remuneration Committee shall consider the following aspects:
i. The relationship of remuneration with performance benchmarks established.
ii. Responsibility required to be shouldered
iii. Industry benchmarks and prevalent market trends.
c. Senior Management Personnel
i. The relationship of remuneration with performance benchmarks established.
ii. Criticality of roles played and responsibility shouldered
iii. Overall experience, expertise and personal traits
iv. Annual increments are determined based on Individual performance vis-a-vis targets/ KRA set.
d. While determining the remuneration, the Nomination and Remuneration Committee shall also consider the
i. Level and composition of remuneration to be reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully.
ii. Remuneration payable or paid should meet performance benchmarks
iii. Ensure that remuneration payable or paid to Directors, key managerial personnel and senior management is appropriate to the working of the Company and its goals.
e. While determining the candidature for appointment of Director, senior management personnel, the Nomination and Remuneration Committee shall also consider:
i. Qualification, experience and expertise required for the role being filled up.
ii. Ability to assimilate with the overall ethos of the Company.
iii. Ability to lead and also work as a team members etc.
iv. In case of directors and independent directors, Independence of judgment.
C. REMUNERATION OF DIRECTORS:
a. Non-Executive Directors
The Non-Executive Directors are entitled for payment of sitting fees and reimbursement of expenses for attending each meeting of the Board of Directors, its Committees and other such meetings. The sitting fee payable is within overall limits as laid down under the Companies Act, 2013 and the Rules made there under.
b. Managing / Executive Directors
The remuneration payable to the Managing Director is determined by the Board of Directors on the basis of recommendations received from Remuneration & Nomination Committee. The remuneration is subject to approval of the shareholders at a general meeting.
6. STAKEHOLDERS' RELATIONSHIP AND SHAREHOLDERS'/INVESTORS' GRIEVANCE COMMITTEE
In terms of provisions of listing agreement the Board has constituted Stakeholders' Relationship and Shareholders' / Investors' Grievance Committee. The said committee functions under the Chairmanship of Mr. Vijay V. Chowgule and other members are Mr. Sanjiv N. Shah, Prof. Rohini V. Chowgule and Mr. Ravindra Kulkarni. Mr. Suhas Joshi, Company Secretary, is the Compliance Officer. The Committee meets periodically to deal with share-related matters like transfers, transmission etc., and monitor redressal of complaints from the shareholders. The functions of transfer of shares were delegated to the Committee of Officers with effect from November 2001, which meets fortnightly for considering applications for share-related matters. This Committee reports to the Stakeholders' Relationship and Shareholders' / Investors' Grievance Committee.
At its meetings, the Committee goes into the details of the grievances, if any and, verifies that they have been attended to. Between April 1, 2015 and March 31, 2016, the Company received 18 complaints / queries from shareholders. As at March 31, 2016, all the complaints / queries were resolved. There were no shares pending for transfer from the shareholders as at March 31, 2016. The brief terms of reference of Stakeholders Relationship Committee and Shareholders' / Investors' Grievance Committee are as under:
1. To oversee the share transfer process
2. To monitor the redressal of stakeholders' grievances
3. To consider and approve issue of share certificates on requests for duplicate certificates, consolidation of folios etc.
4. To do all such acts, deeds, matters and things as may be necessary or expedient for performing any of the above acts.
7. RISK MANAGEMENT COMMITTEE
Though not mandatory as per the Listing Agreement, the Board of Directors has formed a Risk Management Committee comprising three NonExecutive Directors and an Independent Director as its Chairman. The purpose of the Risk Management Committee (the "Committee") is to identify, assess, monitor and manage risk. The scope, role and responsibilities of Risk Management Committee are as under: The Risk Management Committee:
1. Shall approve the Risk Management Policy of the Company and related processes and practices of the Company from time to time.
2. Shall ensure that the Company is taking appropriate measures to ensure prudent balance between risk and reward in the activities of the Company.
3. Shall evaluate significant risk exposures of the Company and assess management's actions to mitigate the exposure in timely manner
4. Shall co-ordinate its activities with Audit Committee where there is overlap of functionalities.
5. Can delegate authority to sub-committee where there is such occasion.
6. Shall have access to any internal information to enable it to meaningfully perform the oversight function.
The Risk Management committee identifies/ reviews the risk trends and exposure of the Company from time to time. The Committee also verifies the plans made by the Management for mitigation risks and also corrective measures, if any, required for avoidance or reducing of risks. The Risk Management committee meets at least once in a year to review the position.
Mr. Vijay V. Chowgule and Mr. Mangesh Sawant will retire at the ensuing Annual General Meeting and being eligible seek re-appointment. The approval of members is being sought for re-appointments of above Directors. A brief resume of the above Directors is as under:
A) Mr. Vijay V. Chowgule
Mr. Vijay V. Chowgule is the Chairman of the Company and head of the Chowgule Group. Mr. Vijay V. Chowgule has extensive management experience in production and service industries. He provides the vision to the Company, which helps it in charting its progress efficiently. He is B.S. in Textile Chemist and Industrial Management. Mr. Vijay V. Chowgule is a member of Audit Committee, Stakeholders' Relationship and Shareholders' / Investors' Grievance Committee and Nomination and Remuneration Committee of the Board of Directors of the Company. Mr. Vijay V. Chowgule holds 11,54,455 shares in the Company. Mr. Vijay V. Chowgule is relative of Prof. Rohini V. Chowgule, Director. Mr. Vijay V. Chowgule is a Director in the following companies.
i. Chowgule And Company Private Limited
ii. Chowgule Steamships Overseas Limited
iii. Chowgule And Company (Salt) Private Limited
iv. Chowgule Shipbuilding Private Limited
v. Chowgule Construction Chemicals Private Limited
vi. Dolphin Extrusions Private Limited
vii. Dolphin Ore Extraction Private Limited
viii. Dolphin Mining Services Private Limited
ix. Spandan Eco Foundation
x. Chowgule Ports & Infrastructure Private Limited
xi. Chowgule Mining Private Limited
xii. Chowgule ABP Coatings (India) Private Limited
xiii. Chowgule Construction Technologies Private Limited
xiv. Angre Port Private Limited
xv. Chowgule Centre for Applied & Professional Studies
xvi. Chowgule Mediconsult Private Limited
xvii. Lavgan Dockyard Private Limited
xviii. Blue Mountain Tankers AS
xix. Allied Construction Technologies Inc Virginia
B) Mr. Mangesh Sawant
Mr. Mangesh Sawant is a Commerce Graduate & Chartered Accountant. He is also and Associate Member of Institute of Cost & Management Accountants of India and has passed LLB (Gen) from Mumbai University. Mr. Sawant joined the Company in 1986 as an Accounts Officer and rose to the level of CFO & Director (Operations) in 2007. In 2009, the Board appointed him as the Manager which position he held till April 22, 2010 when he was appointed as Whole-time Director. Mr. Sawant was subsequently elevated to the position of Managing Director effective April 1, 2015. Mr. Sawant has been involved in the business of the Company for more than two decades at senior management positions and thus has gained experience and expertise in various aspects of shipping business. Before joining the Company, Mr. Sawant was employed with A.F. Fergueson & Co., Chartered Accountants, as Assistant Audit Manager since 1985. Mr. Sawant is a director on the Board of following companies:
i. Jaigad Logistics Private Limited
ii. Lavgan Dockyard Private Limited
He is not on the Board of any public limited company. Mr. Sawant holds 133 equity shares in the Company.
9.. RELATED PARTY TRANSACTION
All Related Party Transactions are entered in to at arm's length price and are in compliance with the applicable provisions of the Companies Act, 2013 (Act) and the Listing Agreement with the Stock Exchange. The Company has entered into a contract to acquire River Sea Vessel from Chowgule And Company Private Limited, a related party pursuant SEBI (Listing Obligations & Disclosure Requirements) 2015. The said transaction is at Arm's Length Price and in the ordinary course of business. Pursuant to the above SEBI Regulations, approval of Members is being sought at the ensuing Annual General Meeting. There have been no other materially significant related party transactions entered into by the Company with the Promoters, Directors and Key Managerial Personnel, which may have potential conflict with the interest of the Company at large.
In accordance with the requirements of Listing Agreement, the Company has inter alia formulated a Policy on Related Party Transaction and Material Subsidiaries. The said Policy is available on the Company's website.
10. MEANS OF COMMUNICATION
The quarterly / annual financial results are published in the Free Press Journal, Navshakti, Gomantak & Gomantak Times. The results are also hosted on the Company's Web Site: www.chowgulesteamships.co.in The Management Discussion and Analysis is a part of this Annual Report.
The Company has complied with the mandatory requirements in terms of the Corporate Governance guidelines. However, the Company has not yet adopted the non-mandatory requirements.
There were no materially significant related party transactions save as disclosed as above paragraphs and in notes to accounts. There was no non-compliance by the Company of any of the regulations pertaining to the capital market during the previous three years.
13. GENERAL SHAREHOLDER INFORMATION
53rd Annual General Meeting
Date & Time : Friday, July 29, 2016 at 11.00 a.m.
Venue : Chowgule House, Mormugao Harbour, Goa- 403803
Financial Year : 2015-2016
Book Closure Date : July 22, 2016 – July 29, 2016 (both days inclusive)
Dividend Payment Date : N.A.
Listed at the Bombay Stock Exchange Ltd. (Stock Code 501833), Rotunda Building, Dalal Street, Mumbai 400 001 (Tel. 2272 1233).
Share Transfer Process
The Company's shares are under compulsory dematerialized list hence the shares traded on the stock exchange are transferable through depository system. Shares in physical form are processed for transfer by the share transfer agent viz. Link Intime India Pvt Ltd (Earlier known as Intime Spectrum Registry Limited) and are approved by the share transfer committee. The share transfers are processed within a period of 15 days from the date of its receipt.
Address for Correspondence:
Chowgule Steamships Limited
Bakhtawar, 4th Floor, Nariman Point, Mumbai - 400 021.
Email : email@example.com
Link Intime India Pvt. Ltd.
C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai - 400 078.
Email : firstname.lastname@example.org
For and on behalf of the Board
VIJAY V. CHOWGULE
Date : May 06, 2016