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CPEC Ltd.

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CPEC Ltd. Accounting Policy

CORPORATE GOVERNANCE REPORT

In accordance with Clause 49 of the Listing Agreement with BSE Limited (BSE), the report containing the details of Corporate Governance systems and processes at C P E C Limited is as follows:

At C P E C Limited, Corporate Governance is all about maintaining a valuable relationship and trust with all stakeholders. We consider stakeholders as partners in our success, and we remain committed to maximizing stakeholders' value. This approach to value creation emanates from our belief that sound governance system, based on relationship and trust, is integral to creating enduring value for all. We have a defined policy framework for ethical conduct of businesses. We believe that any business conduct can be ethical only when it rests on the six core values of Customer Value, Ownership Mindset, Respect, Integrity, One Team and Excellence.

1. Company's Philosophy on the Code of Governance

Introduction

Corporate Governance essentially is the system by which companies are directed and controlled by the management in the best interest of the stakeholders and others. Corporate Governance ensures fairness, transparency and integrity of the management.

Corporate Governance is a way of life, rather than a mere legal compulsion. It further inspires and strengthens investor's confidence and commitment to the Company.

The corporate governance philosophy of the Company has been further strengthened with the adoption of the Code of Conduct adopted by the company. The Company, through its Board and Committees, Endeavour's to strike and deliver the highest governing standards for the benefit of its stakeholders.

2. Board of Directors

Composition

The Board has an optimum combination of Executive and Non-Executive Directors, and is in conformity with Clause49 of the Listing Agreement entered into with the stock exchange in which the Company's Ordinary Shares are listed.

None of the Directors on the Board is a Member on more than 10 Committees and Chairman of more than 5 Committees {as per Clause 49(IID)}across all the companies in which he/she is a Director. All the Directors have made the requisite disclosures regarding Committee positions held by them in other companies.

Mr. Akbar Shamji (Chairman), Mr. Alim Shamji and Mr. Ryaz Shamji are related to each other

Board Procedure

The Board Meetings are held giving due notice of not less than 7 days in advance to all the Directors. The Agenda is circulated well in advance to the Board members. The items in the Agenda are backed by comprehensive background information to enable the Board

to take appropriate decisions. In addition to the information required under AnnexureX to Clause 49 of the Listing Agreement, the Board is also kept informed of major events/items and approvals taken wherever necessary. The Board is apprised of the overall performance of the Company.

Code of Conduct

The Company had adopted the Code of Conduct for all the employees of the Company including the Wholetime Directors. The Board had also approved a Code of Conduct for Non-Executive Directors. The Code of Conduct for the employees as well as Non- Executive Directors is posted on the Company's website.

Further, all the Board members and senior management personnel (as per Clause 49 of the Listing Agreement)have affirmed the compliance with the respective Code of Conduct. A declaration to this effect signed by the Promoter- Director forms a part of this report.

Directors Familiarization programme

The Company undertakes and makes necessary provision of an appropriate induction programme for new Directors and ongoing training for existing Directors. The new directors are introduced to the company culture, through appropriate training programmes.

Such kind of training programmes helps develop relationship of the directors with the company and familiarize them with company processes. The management provides such information and training eitheratthe meeting of Board of Directors or other wise.

The induction process is designed to:

• build an understanding of the Company processes and

• fully equip Directors to perform their role on the Board effectively

Upon appointment, Directors receive a Letter of Appointment setting out in detail, the terms of appointment, duties, responsibilities and expected time commitments. The details of Director's induction and familiarization are available on the Company's website at www.cpec.in.

Category and Attendance of Directors

The names and categories of the Directors on the Board, their attendance at Board Meetings held during the financial year 2014- 2015 and at the last Annual General Meeting (AGM), as also the number of Directorships and Committee positions held by them in other public limited companies as on March 31,2015 are as follows

Details of the Directors seeking appointment/re-appointment at the Annual General Meeting, pursuant to Clause49 of the Listing Agreement, have been given along with the Notice of Annual General Meeting

3. Audit Committee

Meetings held:

There was no Audit committee meetings held during the year under review ended on 31st March 2015 because committee was constituted on 13th February, 2015.

The composition of the Committee is in conformity with Clause 49 (III) (A) of the Listing Agreement.

Terms of Reference

The terms of reference of the Audit Committee, broadly are as under:

• Oversight of the company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;

• Recommendation for appointment, remuneration and terms of appointment of auditors of the company;

• Approval of payment to statutory auditors for any other services rendered by the statutory auditors;

• 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 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

b. Changes, if any, in accounting policies and practices and reasons for the same

c. Major accounting entries involving estimates based on the exercise of judgment by management

d. Significant adjustments made in the financial statements arising out of auditfindings

e. Compliance with listing and other legal requirements relating to financial statements

f. Disclosure of any related party transactions

g. Qualifications in the draft audit report

• Reviewing, with the management, the quarterly financial statements before submission to the board for approval;

• 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;

• Review and monitor the auditor's independence and performance, and effectiveness of audit process;

• Approval or any subsequent modification of transactions of the company with related parties;

• Scrutiny of inter-corporate loans and investments;

• Valuation of undertakings or assets of the company, wherever it is necessary;

• Evaluation of internal financial controls and risk management systems;

• Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;

• 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;

• Discussion with internal auditors of any significant findings and follow up there on;

• 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;

• 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;

• 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;

• To review the functioning of the Whistle Blower mechanism;

• Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;

• Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

Compliance Officer acts as the Secretary to the Committee.

4. Nomination and Remuneration Committee

Meetings held:

There was no Remuneration committee meeting held during the year under review ended on 31st March 2015 because committee was constituted on 13th February, 2015.

Terms of Reference

• Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees;

• Formulation of criteria for evaluation of Independent Directors and the Board;

• Devising a policy on Board diversity;

• Identifying 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 their appointment and removal. The company shall disclose the remuneration policy and the evaluation criteria in its Annual Report.

Remuneration Policy:

Non-Executive Directors

The remuneration of the Non-Executive Directors (NEDs) of the Company is decided by the Board of Directors. The NEDs are paid remuneration byway of Sitting Fees but during the financial year under consideration, no such sitting fees were paid.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of its Board Committees. A structured questionnaire was prepared after circulating the draft forms, 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 and governance.

The performance evaluation of the Non-independent Directors was carried out by the Independent Directors. The Directors express their satisfaction with the evaluation process.

5. Share Transfer Committee

Meetings held:

There was no Share transfer committee meeting held during the year under review ended on 31st  March 2015 because committee was constituted on 13th  February, 2015.

6. Stakeholder Relationship Committee

Meetings held:

There was no Shareholder Grievance committee meetings held during the year under review ended on 31st  March 2015 because committee was constituted on 13' February, 2015.

Terms of Reference

• Formulation of policies and procedures in line with the statutory guidelines to ensure speedy disposal of various requests received from security holders from time to time;

• Redressal of shareholders and investor complaints/grievancese.g. transfer of shares, non-receipt of balance sheet, non-receipt of declared dividend etc.;

• To approve, register, refuse to register transfer/transmission of shares and other securities;

• To sub-divide, consolidate and / or replace any share or other securities certificate(s) of the Company;

• To authorize printing of Share Certificates post authorization from the Board of Directors of the Company;

• To issue the Share Certificates under the seal of the Company, which shall be affixed in the presence of, and signed by:

(I) any two Directors (including Managing or Whole time Director, if any), and

(ii) Company Secretary/Authorised Signatory;

• To authorize to sign and endorse the Share Transfers on behalf of the Company;

• To authorize Managers/Officers/Signatories for signing Share Certificates;

• To authorize issue of Duplicate Share Certificates and Share Certificates after Split / Consolidation / Rematerialization and in Replacement of those which are defaced, mutilated, torn or old, decrepit, worn out or where the pages on reverse for recording transfers have been utilized

• To issue duplicate share other security(ies) certificate(s) in lieu of the original share/security(ies) certificate(s) of the Company;

• To approve the transmission of shares or other securities arising as a result of death of the sole/any joint shareholder or operation of law;

• To further delegate all or any of the power to any other employee(s), officer(s), representative(s), consultant(s),

professional(s), or agent(s) as it deems necessary;

• Interact with the Registrar and Share Transfer Agent/s of the Company for any security holder's matters to ensure its speedy resolution;

• To monitor and review the performance and service standards of the Registrar and Share Transfer Agents of the Company and provides continuous guidance to improve the service levelsfor investors;

• Monitor and review any investor complaints received by the Company or through SEBI, SCORES and ensure its timely and speedy resolution, in consultation with the Company Secretary and Compliance officer and RTA of the Company

7. Committee of Independent Directors Meetings held:

There was only one meeting held of Committee of Independent Directors on 13' March, 2015 during the year under review ended on 31-March 2015.

Composition:

Name of Director Composition as on March 31,2015

Mr. Ratan Wadhwani Chairman

Mrs. Tavleen Akoi Member

Terms of Reference

• Redressal of shareholders and investor complaints/grievancese.g. transfer of shares, non-receipt of balance sheet, non-receipt of declared dividend etc.;

• Review the performance of the non-independent directors and the Board as a whole;

• Review the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors.

• Assess the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

• Other issues that may involve the management or the executive directors of the company and which is likely to have an impact on the reputation to the company which includes any reporting of deviation in the ethical or governance issues, insider trading issues and critical whistleblower incident.

8. Risk Management Committee Meetings held:

There was no Risk Management Committee meeting held during the year under review ended on 31" March 2015.

• Review Management's plans for mitigation of the material risks faced by the company, evaluating their potential impact, and implementing appropriate strategies to manage those risks.

• Oversight and review of the implementation of risk management as well as internal compliance and control systems.

• Promoting awareness of a risk based culture and the achievement of a balance between risk minimization and reward for risks accepted.

• Review the sufficiency of personnel, systems, procedures and other risk management issues.

• Review and assess the integrity and adequacy of the Risk Management Function, including processes and organizational structure.

9.  Subsidiary Companies

The Company does not have any material subsidiary as defined under Clause 49 of the Listing Agreement. However the Company has formulated policy for "Determining the Material Subsidiaries"

11. Disclosures

Related Party Transactions

During the financial year 2014-2015 there were no materially significant transactions entered into between the Company and its promoters, directors or the management, subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large. Declarations have been received from the senior management personnel to this effect.

Statutory Compliance, Penalties and Strictures

No penalties or strictures have been imposed on the Company by any authorities.

CEO/CFO Certification

Since there was no CEO & CFO appointed during theyear under consideration, the Director and Promoter, Mr. Akbar Shamji, has certified to the Board in accordance with Clause 49(IX) of the Listing Agreement pertaining to CEO/CFO certification for the financial year ended March 31,2015.

Whistle Blower Policy

The Company has adopted a Whistle Blower policy to provide a formal mechanism to the employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company's Conduct or Ethics policy.

The policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.

Non-Mandatory Requirements:

The Company has complied with all the mandatory requirements of Clause 49 of the Listing Agreement relating to Corporate Governance.

Adoption of non- mandatory requirements of Clause 49 of the Listing Agreement of the Listing Agreement is being reviewed by the Board from time-to-time.

Disclosure of Accounting Treatment

In the preparation of the financial statements, the Company has followed the Accounting Standards referred to in section 133 of the Companies Act, 2013. The significant accounting policies which are consistently applied are set out in the notes to the financial statements.

Extra-ordinary General meeting

There were no Extra-ordinary General meetings held during the financial year 2014-15.

12. Means of Communication:

• The quarterly results are published in one English and one vernacular language paper. The newspapers in which they are published are Asian Age and Mumbai Lakshadeep.

The financial results are displayed on www.cpec.in  

• Management Discussion and Analysis forms part of the Annual Report.

13. General Shareholder Information

Annual General Meeting

Date and Time: Thursday, September 24,2015 at 9.00 a.m.

Venue: 12,211/219, Bharti Bhavan, P.D'Mello Road, Fort, Mumbai-400001

Financial year:1-April to 31-March

Financial Calendar:

Financial reporting for the quarter ending:

30th June 2014:8thAugust 2014 (un-audited financial results declared on09"1 August, 2014)

30th September2014:10th November2014(un-audited financial results declared on 11thNovember. 2014)

31st December 2014:13th February 2015 (un-audited financial results declared on 14th Feb. 2015)

31st March 2015:14th May 2015 (audited financial results declared on 15th May 2015)

Book Closure Date:

Friday, September 18,2015 to Thursday, September 24,2015 (both days inclusive)

Dividend Payment:

No Dividend has been recommended

Listing on Stock Exchanges:

The Company's Ordinary Shares are listed on the following Stock Exchanges:

(1) The Bombay Stock Exchange Limited, (BSE),

PhirozeJeejeebhoy Towers, Dalal Street, Mumbai400 001

SCRIP NAME AND CODE- CPEC LTD - 505678

ISIN NO.: INE029P01019

The Company has not paid the Annual Listing fees, for the financial year 2014-15.

Registrar and Transfer Agents.

LINK INTIMEINDIAPVT. LTD

Unit: C P E C Limited

C-13, Pannalal Silk Mills Compound, L.B.S.Marg, Bhandup(West), Mumbai-400078

Tel. : 022-25946970 E-mail : rnt.helpdesk@linkintime.co.in  Website : www.linkintime.co.in  

Business : 10.00a.m.to4.00p.m . Hours : (Monday to Friday)

Share Transfer Process:

Share in physical forms are processed by the Registrar and Share transfer agent within 15-21 days from the date of receipt, if the documents are complete in all respects. The Share Transfer Committee of the company has been empowered to approve transfers.

Share Price Data

Trading in the Company's equity shares have been suspended since March 2012.

Reconciliation of Share Capital Audit Report

As stipulated by SEBI, a qualified Practicing Company Secretary carries out Secretarial audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depositories Services(India) Limited (CDSL) and the total issued and listed capital. This audit is carried out every quarter and the report thereon is submitted to the Stock exchange where the Company's shares are listed.

Address for Correspondence

Compliance Officer: Mrs. Shernaz Master

Director & Compliance officer

Phone: 022-22622141 • E-mail: Shernaz@cpec.in  

Link Intime India Pvt Ltd.:

Unit: C P E C Limited

C-13, Pannalal Silk Mills Compound, L.B.S.Marg, Bhandup (West), Mumbai- 400078

Phone:022 - 25946970

• E-mail: rnt.helpdesk@linkintime.co.in  

Correspondence with the Company: C P E C Limited

12, 211/219, Bharti Bhavan, P.D'mello Road, Opp. GPO, Fort, Mumbai-400001

Phone: 022-22622141 • E-mail: secretarial@cpec.in