CORPORATE GOVERNANCE REPORT
COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE
Your Company continuously strives to enhance the stakeholders' relationship, e-governance initiatives, while upholding the core values of integrity, transparency, fairness, responsibility and accountability.
Your Company is also guided by the principles laid down by the principal shareholders, CMI Group in the conduct of its business, which aim to generate sustainable industrial progress for the benefit of its customers, employees, stakeholders and the communities. This determination constitutes the backdrop of all the CMI Group's decisions based on the six cornerstones of its commitment.
1. Provide quality jobs.
2. Reinforce governance and promote responsible behaviour.
3. Encourage the development and production of "green" technologies.
4. Reduce the Group's own environmental footprint.
5. Support local developments in communities where CMI is established.
6. Guarantee the Group's growth and viability in the long term.
Corporate Safety Policy
The CMI Group firmly believes that safety of its employees and all the stakeholders associated with our project sites and manufacturing facilities is of utmost importance. Safety is an essential and integral part of all our work activities. Your Company had achieved 1000 continuous accident free days at its workshop situated at Taloja on April 18, 2016.
Safety awareness programs were regularly conducted for all the stakeholders to ensure a safe and accident-free work place.
I. BOARD OF DIRECTORS
(i) Composition of the Board
The Company has a very balanced and diverse Board of Directors ("Board"), which primarily takes care of the business needs and stakeholders' interest. The Non Executive Directors including the Independent Directors on the Board are experienced, competent and highly renowned persons from various fields. They take active part at the Board and Committee Meetings by providing valuable guidance to the
Management on various aspects of business, policy direction, governance, compliance, etc. and play critical role on strategic issues, enhancing transparency and adding value to the decision-making process of the Board.
The composition of the Board is in conformity with the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). Throughout the financial year, the Board of the Company comprised of 8 (eight) directors. The Non-Executive Chairman of the Company represents the Promoters and the number of Independent Directors is one-half of the total number of Directors. The number of Non-Executive Directors (NEDs) is more than one-half of the total number of Directors.
Presently, the day-to-day management of the Company is handled by Mr. Raman Madhok, Managing Director, under the supervision and control of the Board.
Apart from reimbursement of expenses incurred in the discharge of their duties and the remuneration for Independent Directors as entitled under the Companies Act, 2013, none of these Directors has any other material pecuniary relationships or transactions with the Company, its Promoters, its Directors, its Senior Management, which in their judgment would affect their independence.
All the Independent Directors of the Company furnish declarations annually that they satisfy the conditions of their being independent. All such declarations are placed before the Board. Further, pursuant to Section 164(2) of Companies Act, 2013, all the Directors have provided declarations annually in Form DIR-8 that they have not been disqualified to act as Director. No Director is related to any other Director on the Board in terms of the definition of 'relative' given under the
Companies Act, 2013.
All members of the Senior Management have confirmed to the Board that there are no material, financial and / or commercial transactions between them and the Company, which could have any potential conflict of interest with the Company at large.
None of the Directors held Directorships in more than 10 public limited companies. All Directors are also in compliance of the limit on Independent Directorships of listed companies as prescribed in Regulation 25(1) of the Listing Regulations. Further, none of the Directors on the Board is a Member of more than 10 Committees and / or Chairman of more than 5 Committees (Committees being Audit Committee and Stakeholders Relationship Committee, as per Regulation 26(1) of the Listing Regulations) across all the Companies in which he / she is a Director. The necessary disclosures regarding committee positions have been made by all the Directors.
At the time of appointing a Director, a formal letter of appointment is given to the Director, which inter alia explains the role, function, duties and responsibilities expected of him / her as a Director of the Company. New
of the Company, earlier Minutes of the Board of Directors Meetings, Audit Committee Meetings with a view to get familiar with the Company's operations, organizational structure of the Company, the functioning of various divisions / departments, the Company's market share and the markets in which it operates, governance and internal control processes and other relevant information pertaining to the Company's business. The above initiatives help the Director to understand the Company, its business and the regulatory framework in which the Company operates and equips him / her to effectively fulfill his / her role as a Director of the Company.
(ii) Board Procedure
All meetings are conducted as per well designed and structured agenda circulated well in advance to the Board members. All the agenda items are backed by comprehensive background information and documents (except for the critical price sensitive information, which is circulated separately or placed at the meeting) to enable the Board to arrive at appropriate decisions. The information as required under Regulation 17 read with Part A of Schedule II of the Listing Regulations is made available to the Board. The Managing Director apprises the Board at every Meeting of the overall performance of the Company, followed by presentations by the Chief Operating Officer and the Chief Financial Officer and, as necessary, by the other heads of departments.
The Board also inter-alia reviews strategy and business plans, annual operating and capital expenditure budgets, investment and exposure limits, compliance reports of all applicable laws, as well as steps taken by the Company to rectify instances of non-compliances, review of legal issues, adoption of quarterly / half yearly / annual results,
significant labour issues, transactions pertaining to purchase / disposal of property(ies), major accounting provisions and write-offs, corporate restructuring, Minutes of Meetings of the Audit and other Committees of the Board and information on recruitment of Officers just below the Board level, including the Chief Financial Officer and Company Secretary & Compliance Officer.
Post meetings, all important decisions taken at the meeting are communicated to the concerned officials and departments. Action Taken Report is prepared and reviewed periodically by the Board.
(iii) Number of Board Meetings held, Attendance of the Directors at the Board Meetings and at the Annual General Meeting
During the year under review, 4 (four) meetings of the Board of Directors were held on the following dates - May 29, 2015, July 30, 2015, October 30, 2015 and January 22, 2016.
The interval between two Meetings did not exceed four months. These Meetings were well attended. The Twenty-Ninth Annual General Meeting (AGM) of the Company was held on July 31, 2015.
(iv) Directors seeking appointment / re-appointment
Mr. Fabrice Orban retires by rotation and, being eligible, has offered himself for re-appointment.
The term of Mr. Raman Madhok as the Managing Director of the Company expires on October 8, 2016. The Board of Directors at its meeting held on May 19, 2016, on the recommendation of the Nomination and Remuneration Committee, had approved the re-appointment of Mr. Raman Madhok as Managing Director of the Company for
a period of 3 (three) years w.e.f. October 9, 2016 subject to the approval of the shareholders of the Company and Central Government, if required.
Details of Directors seeking appointment / re-appointment at the forthcoming Annual General Meeting have been furnished in the Notice convening the Annual General Meeting of the Shareholders.
(v) Separate Meeting of Independent Directors
As required under Schedule IV of the Companies Act, 2013 and Regulation 25(3) of the Listing
Regulations, a separate meeting of the Independent Directors of the Company was held on January 20, 2016 to review the performance of non-independent directors, Board as a whole, the performance of the Chairman of the Company (taking into account the views of executive and non-executive directors) as well as for assessing the quality, quantity and timeliness of flow of information between the Company management and the Board. All the Independent Directors attended this meeting.
(vi) CEO / CFO Certification
The Managing Director and the Chief Financial Officer of the Company have issued a certificate pursuant to the provisions of Regulation 17(8) of the Listing Regulations certifying that the financial statements do not contain any materially untrue statement and that these statements represent a true and fair view of the Company's affairs.
(vii) Code of Conduct
The Company had adopted a Code of Conduct ("Code") for the Board Members and Senior Management Personnel of the Company. The Code aims at ensuring consistent standards of conduct and ethical business practices across the Company.
All the Board Members and Senior Management Personnel have affirmed compliance with this Code. A declaration signed by the Managing Director to this effect is attached at the end of this Report. This Code has also been posted on the Company's website - www.cmifpe.com
II. REMUNERATION TO DIRECTORS
(i) Remuneration Policy
While deciding on the remuneration for Directors, the Board and the Nomination and Remuneration Committee ("Committee") consider the performance of the Company, the current trends in the industry, the qualifications of the incumbents / appointee(s), their experience, past performance and other relevant factors. The Board / Committee takes into account the market trends in terms of compensation levels and practices in relevant industries.
(ii) Remuneration to Non-Executive Directors for the year ended March 31, 2016
The eligible Non-Executive Directors may be paid commission upto an aggregate maximum of 1% of the net profits of the Company as specifically computed for this purpose. The criteria of making payments to Non Executive Directors cover, inter-alia, the number of meetings attended, Chairmanship of Committees of the Board, time spent in deliberations with the senior management and contribution at the Board / Committee(s) levels.
(iii) Remuneration paid / payable to Managing Director for the year ended March 31, 2016
Remuneration to Managing Director is fixed by the Nomination and Remuneration Committee, and subsequently approved by the Board of Directors and the Shareholders at a General Meeting. The remuneration paid / payable to the Managing Director for the year ended March 31, 2016 is as under
III. RISK MANAGEMENT
The Company has a well-defined risk management framework in place, which provides an integrated approach for identifying, assessing, mitigating, monitoring and reporting of all risks associated with the business of the Company. The Audit Committee reviews the risk assessment and minimization procedures and ensures that executive management controls risk through means of a properly defined framework.
The risk management framework adopted by the Company is discussed in detail in the Management Discussion and Analysis Report forming part of this Annual Report.
IV. COMMITTEES OF THE BOARD
(i) Audit Committee
Composition of the Committee, Meetings and attendance:
The Audit Committee of the Company comprises of Non-Executive Directors with majority of them, including the Chairman, being Independent Directors. Mr. D. J. Balaji Rao is the Chairman of the Committee and Mr. Yves Honhon and Mr. N. Sundararajan are the other Members of the Committee. The composition of the Audit Committee is in compliance with Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations. All the Members of the Committee possess accounting and financial management knowledge. Mr. D. J. Balaji Rao was present at the last Annual General Meeting of the Company held on July 31, 2015.
The Company Secretary functions as Secretary to the Committee.
The Statutory Auditors are always invited to attend meetings of the Committee. The Committee also invites such of the executives, viz. Managing Director and Chief Financial Officer and also Internal Auditors, Cost Auditors and consulting firms as it considers appropriate, to be present at the meetings of the Committee, but on occasions it also meets without the presence of any executives of the Company.
4 (four) meetings of the Committee were held during the year ended March 31, 2016. These meetings were held on May 29, 2015, July 30, 2015, October 29, 2015 and January 22, 2016.
The gap between two Meetings did not exceed four months.
Terms of Reference:
The terms of reference of the Audit Committee conform to the guidelines set out in the Listing Regulations read with Section 177 of the Companies Act, 2013. The Committee acts as a link between the Statutory and Internal Auditors and the Board. The responsibilities of the Audit Committee include overseeing of the financialreporting process to ensure fairness, adequate disclosures and credibility of financial statements, recommendation of appointment and removal of Statutory Auditors, Internal Auditors, Cost Auditors, review of the adequacy of internal control systems and the internal audit function.
The Audit Committee functions in accordance with the terms of reference, which inter-alia includes :
(i) the recommendation for appointment, remuneration and terms of appointment of auditors of the Company (Statutory Auditors, Internal Auditors and Cost Auditors);
(ii) review and monitoring of the auditor's independence and performance, and effectiveness of audit process;
(iii) examination of the financial statements and the auditor's report thereon;
(iv) approval or any subsequent modification of transactions of the Company with related parties;
(v) scrutiny of inter-corporate loans and investments;
(vi) valuation of undertakings or assets of the Company, wherever it is necessary;
(vii) evaluation of its internal financial controls and risk management systems;
(viii) monitoring the end use of funds raised through public offers and related matters.
(ii) Nomination and Remuneration Committee
Composition of the Committee, Meeting and attendance:
The Nomination and Remuneration Committee comprises of Mr. Raman M. Madhok as the Chairman of the Committee. Mr. Jean Jouet, Mr. Yves Honhon and Mr. D. J. Balaji Rao are the other Members of the Committee. One half of the Members of the Committee are Non-Executive Independent Directors. One meeting was held on May 28, 2015, during the year under review
Terms of reference:
The terms of reference of the Committee is in line with the provisions of Companies Act, 2013 and Regulation 19 of the Listing Regulations and as may be specified by the Board from time to time, and inter alia includes :
(i) to identify persons who are qualified to become directors and to be appointed in senior management positions, (directly reporting to the Managing Director) and recommend to the Board their appointment and removal;
(ii) to formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board policy relating to the determination of remuneration for the directors, and key managerial personnel;
(iii) to formulate the criteria for evaluation of Independent Directors and Board; and
(iv) to devise a policy on Board diversity.
In determining the remuneration package of the Managing Director, it evaluates the remuneration paid by comparable organisations and thereafter makes its recommendations to the Board. It also reviews the performance of the Managing Director and recommends to the Board the quantum of performance incentives, annual increments / commissions.
(iii) Stakeholders Relationship Committee
The Committee presently comprises of Mr. Raman M. Madhok (Chairman of the Committee), and Ms. Roma Balwani, Director and Mr. Raman Madhok, Managing Director of the Company, as the other members.
Mr. Haresh Vala, Company Secretary is the Compliance Officer of the Company.
The Committee functions in accordance with the terms of reference as specified in Section 178 of the Companies Act, 2013 and Regulation 20 of the Listing Regulations and as may be specified by the Board from time to time, which inter alia includes to consider and resolve the grievances of the shareholders of the Company including complaints related to transfer of shares, non-receipt of Annual Report, non-receipt of declared dividends, etc.
During the year under review, 2 (two) complaints were received from the Shareholders, both of which have been attended to / resolved promptly. As of date, there are no pending share transfers pertaining to the year under review.
The Committee meets as and when required, to deal with, inter alia, matters relating to transfer / transmission of shares, issue of duplicate share certificates and to monitor redressal of complaints from Shareholders relating to transfers, non-receipt of Annual Report, non-receipt of dividends declared, etc. With a view to expedite the process of share transfers, necessary authority has been delegated to the Share Transfer Committee to approve the transfers of equity shares of the Company. The Share Transfer Committee meets on a fortnightly basis to attend to the share transfer formalities.
Securities and Exchange Board of India vide its order No. WTM/RKA/MIRSD2/41/2016 dated March 22, 2016 had, inter alia, advised the Companies who were clients of Sharepro Services (India) Private Limited ("Sharepro") to conduct an audit of the records and systems of Sharepro with respect to dividends paid and transfer of securities to determine whether the dividends have been paid to actual / beneficiary holders and whether securities have been transferred as per the provisions of the law. In view of the same, the Company had assigned the task of audit to M/s. VKM & Associates, Practising Company Secretary and they had issued a report mentioning there are no areas of default or concern relating to your Company. The Stakeholders Relationship Committee at its meeting held on May 18, 2016 reviewed the report of M/s. VKM & Associates.
(iv) Corporate Social Responsibility Committee
The Company has constituted a Corporate Social Responsibility ("CSR") Committee in line with the requirements of the provisions of Section 135 of the Companies Act, 2013. The Committee comprises of Ms. Roma Balwani as the Chairperson, and Mr. Yves Honhon and Mr. Raman Madhok as the other members.
The Corporate Social Responsibility Committee functions in accordance with the terms of reference, which inter aliaincludes :
(a) to formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013;
(b) to recommend the amount of expenditure to be incurred on the CSR activities; and
(c) to monitor the Corporate Social Responsibility Policy of the Company from time to time.
The Committee met 2 (two) times during the year on May 28, 2015 and January 22, 2016. All the members of the Committee attended both the meetings.
(v) Risk Management Committee
In compliance with the provisions of the Listing Regulations and the Companies Act, 2013, the Company has constituted a Risk Management Committee. The Committee comprises of Mr. N. Sundararajan as the Chairman and Mr. Raman Madhok as member of the Committee. Mr. Vijay Karayi acts as the Secretary to the Committee.
The Risk Management Committee monitors and reviews the risk management processes or such other functions as may be specified by the Board from time to time.
During the year under review, the Committee had 2 (two) meetings on September 23, 2015 and January 20, 2016. All the members of the Committee attended both the meetings. The Committee reviewed the risk trend, exposure and potential impact analysis carried out by the management. It was confirmed by the Committee that the mitigation plans are finalized and upto date, owners are identified and the progress of mitigation actions are monitored.
(vi) Borrowings Committee
The Borrowings Committee presently comprises of Mr. Raman Madhok, Managing Director (Chairman of the Committee), Mr. D. J. Balaji Rao, Director and Mr. Akash Ohri, Chief Financial Officer, as the other members. This Committee reviews, considers and approves borrowing of moneys within the overall limits and guidelines approved by the Board from time to time.
(vii) Banking Operations Committee
The Banking Operations Committee presently comprises of Mr. Raman Madhok, Managing Director (Chairman of the Committee) and Mr. Akash Ohri, Chief Financial Officer, as the other member. This Committee approves from time to time, the availing of specific banking services with the Banks and nominates / amends the list of signatories for operating of bank accounts, on behalf of the Company.
(i) Disclosure of transactions with Related Parties
The Company follows the following system in disclosing the related party transactions to the Audit Committee.
A statement in summary form of transactions with related parties in the ordinary course of business is placed periodically before the Audit Committee.
Details of material individual transactions with related parties, which are not in the normal course of business, if any, are placed before the Audit Committee.
Details of material individual transactions with related parties or others, which are not on an arm's length basis, if any, are placed before the Audit Committee, together with management's justification for the same.
The details of related party transactions are presented in Note No. 29.5 in Notes forming part of the Financial Statements for the year ended March 31, 2016.
All transactions entered into with the Related Parties as defined under the Companies Act, 2013 and Regulation 23 of the Listing Regulations during the financial year were in the ordinary course of business and at arm's length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with the related parties during the financial year.
As required under Regulation 23 of the Listing Regulations, the Board has approved a policy for related party transactions which has been uploaded on the Company's website and can be accessed through the following link : <http://> cmifpe.com/financialreport.aspxRs.Subcat=RPT Policy as per LODR&InvestorType=Policies.
(vii) Management Discussion and Analysis
A Management Discussion and Analysis (MDA) has been attached and forms part of this Annual Report.
VI. MEANS OF COMMUNICATION
The Company regularly informs its unaudited as well as audited Financial Results to the Stock Exchange, as soon as these are taken on record / approved by the Board. These are published in leading English and Marathi dailies, viz. The Economic Times and Maharashtra Times. The Company's results and official news releases are simultaneously posted on the Company's website www.cmifpe.com The Company's presentations to institutional investors and analysts, if made, would be put up on the website of the Company. The quarterly results, shareholding pattern, quarterly compliances and all other corporate communication to BSE Limited are filed electronically. The Company has complied with filing submissions through BSE's Listing Centre.
VII. GENERAL SHAREHOLDER INFORMATION
(a) 30th Annual General Meeting
Date: July 29, 2016
Time: 2.30 p.m.
Venue: Mehta House, Plot No. 64, Road No. 13,
MIDC, Andheri (East), Mumbai - 400 093
(b) Date of Book Closure : Dates of Book Closure will be from July 25, 2016 to July 29, 2016 (both days inclusive).
(c) Last date of receipt of Proxy Forms
Wednesday, July 27, 2016 before 2.30 p.m. at the Registered Office of the Company
(d) Financial year of the Company
The financial year covers the period from April 1 of every year to March 31 of the next year.
Financial Reporting for:
First Quarter ending June 30, 2016 on or before : August 14, 2016
Half-year ending September 30, 2016 on or before November 14, 2016
Third Quarter ending December 31, 2016 on or before February 14, 2017
Year ending March 31, 2017 before the end of May, 2017
The above dates are indicative.
(e) Listing on Stock Exchange
The Company's Shares are listed on BSE Limited (BSE).
The Company has paid the annual listing fees for the financial year 2016-2017.
Scrip Code: 500147 Scrip Name: CMIFPE
The ISIN no. for dematerialization of the Company's shares with NSDL and CDSL is INE515A01019.
(h) Corporate Identification Number (CIN)
The Company's CIN as allotted by the Ministry of Corporate Affairs is L99999MH1986PLC039921.
(k) Registrar and Share Transfer Agent
Bigshare Services Private Limited Unit: CMI FPE Limited E-2/3, Ansa Industrial Estate, Saki Vihar Road, Saki Naka, Andheri (East), Mumbai - 400 072 Tel. No.: 022-40430200 Fax No.: 022-28475207 Email: email@example.com
Note: Pursuant to the SEBI Order dated March 22, 2016, we wish to inform you that the Company had terminated the agreement with M/s. Sharepro Services (India) Private Limited ("Sharepro") as Registrar and Share Transfer Agent of the Company effective from the closing hours of April 30, 2016. The Board vide circular resolution, had approved the appointment of M/s. Bigshare Services Private Limited ("Bigshare") as the new Registrar and Share Transfer Agent in place of Sharepro effective from May 1, 2016.
(o) Share Transfer System
Trading in Equity Shares of the Company through recognized Stock Exchange is permitted only in dematerialised form. Shares sent for transfer in physical form are registered and returned within a period of fifteen days from the date of receipt of the documents, provided the documents are valid and complete in all respects. With a view to expedite the process of share transfers, necessary authority has been delegated to the Share Transfer Committee to approve the transfers of equity shares of the Company. The Share Transfer Committee and Stakeholders Relationship Committee meet as and when required to consider the transfer proposals and attend to Investors' grievances.
(p) Outstanding GDR / ADR / Warrants or any convertible instruments, conversion date and impact on equity.
The Company has not issued any GDRs / ADRs / warrants or any other convertible instruments.
(q) Plant Locations Unit No. I
A-84, 2/3 MIDC, Taloja Industrial Area, District Raigad - 410208, Maharashtra
Unit No. II
Gat No. 21,41 and 61, Village Hedavali, Khopoli-Pali Road, Taluka Sudhagad, District Raigad- 410205, Maharashtra
(r) Address for correspondence:
Shareholders may correspond with the Registrar and Share Transfer Agent on all matters relating to transfer / dematerialisation of shares, payment of dividend and any other query relating to Equity Shares of the Company at:
Bigshare Services Private Limited Unit: CMI FPE Limited E-2/3, Ansa Industrial Estate, Saki Vihar Road Saki Naka, Andheri (East), Mumbai - 400 072 Tel. No.: 022-40430200 Fax No.: 022-28475207 Email: firstname.lastname@example.org
The Company has designated investors@cmifpe. com as an exclusive email ID for Investors for the purpose of registering complaints, and the same email ID has been displayed on the Company'swebsite. Shareholders would have to correspond with the respective Depository Participants for shares held in demateralised form. For all investor related matters, the Company Secretary & Compliance Officer can be contacted at:
Mehta House, Plot No. 64, Road No. 13, MIDC, Andheri (East), Mumbai - 400 093 Tel. No.:022-66762727 Fax No.:022-66762737/38 Email: email@example.com
Shareholders are requested to quote their folio nos. / DP ID & Client ID, Email address, telephone numbers and full address while corresponding with the Company and its Registrar and Share Transfer Agent.
IX. DISCRETIONARY REQUIREMENTS UNDER REGULATION 27 OF LISTING REGULATIONS
The status of compliance with discretionary recommendations of Regulation 27 of the Listing Regulations is provided below :
The Board of Directors
The present Chairman is a foreign national and a Non-Executive Director. All Independent Directors significantly contribute to the deliberations of the Board and provide valuable inputs in directing the Company. The Board carefully evaluates the qualifications and experience of every Independent Director at the time of the appointment, and also involves the Independent Directors in various Business Committees, to enable them to contribute to the Company.
During the year under review, there is no audit qualification on the Company's financial statements. The Company continues to adopt best practices, and has ensured a track record of unqualified financial statements.
Reporting of Internal Auditor
The Internal Auditor reports directly to the Audit Committee