CORPORATE GOVERNANCE REPORT
1. COMPANY'S PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE:
Corporate Governance is a set of principles, processes and systems to be followed by the Directors, Management and all employees of the Company for enhancement of shareholder value, keeping in view interests of other stakeholders. Integrity, transparency and compliance with regulations in all dealings with government, customers, suppliers, employees and other stakeholders are the objectives of good corporate governance. These principles and objects are embodied in your Company's philosophy on the Corporate Governance. Your Company continues to adopt and practice these principles of good Corporate Governance while ensuring integrity, transparency and accountability at all levels in the organisation.
Your Company believes that good governance is the foundation for a truly sustainable company. The commitment to do what is right and to do what we will say we will do. This long-standing commitment to integrity provides the framework for all our business activities, and serves as the foundation for the Company's governance policies and procedures. Your Board of Directors represents and protects the interests of the Company's stakeholders, with the legal responsibility for overseeing the affairs of the Company.
2. BOARD OF DIRECTORS:
a) Composition of the Board of Directors:
The Board of Directors of the Company has an optimum combination of executive and non-executive directors, and comprises of 10 directors, with 1 Promoter (executive) Director, 4 Promoter (non-executive) Directors, including one woman director and 5 Independent (non-executive) Directors.
Mr. Anant J. Talaulicar (DIN 00031051), Managing Director is the Chairman of Board of Directors of the Company effective April 25, 2003.
Changes during the year in the composition of the Board of Directors: Appointments:
During the year, Ms. Nicole McDonald (DIN 07369062) has been appointed as an Alternate Director for Ms. Suzanne Wells (DIN 06954891) w.e.f. November 15, 2015.
The Board, at its meeting held on May 28, 2015, noted the presence of Mr. Mark Smith (DIN 06852777) in India during May 26, 2015 to May 28, 2015 and consequent cessation of Mr. Pradeep Bhargava (DIN 00525234) as an Alternate Director for Mr. Smith effective May 26, 2015. The Board confirmed appointment of Mr. Bhargava as an Alternate Director for Mr. Smith effective May 29, 2015 upon return of Original Director (Mr. Mark Smith) to the U.S.A. In its meeting held on August 6, 2015, the Board of Directors noted the presence of Mr. Edward Pence (DIN 06577765) in India during August 3, 2015 to August 6, 2015 and consequent cessation of Mr. J. M. Barrowman (DIN 00668324) as an Alternate Director for Mr. Pence effective August 3, 2015. The Board, at its meeting dated August 6, 2015 confirmed appointment of Mr. Barrowman, as an Alternate Director for Mr. Pence effective August 7, 2015 upon return of Original Director (Mr. Edward Pence) to the U.S.A. The Board, at its meeting held on February 2, 2016, noted the presence of Ms. Suzanne Wells (DIN 06954891) in India during January 30, 2016 to February 3, 2016 and consequent cessation of Ms. Nicole McDonald (DIN 07369062) as an Alternate director for Ms. Wells effective January 30, 2016. The Board confirmed appointment of Ms. McDonald as an Alternate Director for Ms. Wells effective February 4, 2016 upon return of Original Director (Ms. Wells) to the U.S.A.
There was no cessation of any Director of the Company during the Financial Year 2015-2016.
b) Board Meetings:
i. During the Financial Year, the Board of Directors met four times on May 28, 2015, August 6, 2015, November 5, 2015 and February 2, 2016.
The Independent Directors held their separate meeting on February 2, 2016 without the attendance of non-independent directors and members of management.
3. COMMITTEES OF THE BOARD:
a) AUDIT AND RISK MANAGEMENT COMMITTEE:
The Audit and Risk Management Committee consists of 5 Independent Directors - Mr. Nasser Munjee (Chairman), Mr. P. M. Telang, Mr. P. S. Dasgupta, Mr. Rajeev Bakshi and Mr. Venu Srinivasan; 1 Promoter (Executive) Director - Mr. Anant J. Talaulicar and 1 Promoter (Non-Executive) Director - Mr. Mark Smith.
The Committee reviewed the audited financial statement for the year ended March 31, 2016 and un-audited financial results for the quarters ended June 30, 2015, September 30, 2015 and December 31, 2015. The Committee also reviewed (i) appointment of Statutory, Internal and VAT Auditors of the Company; (ii) performance of Joint Ventures & Associates; (iii) reports of the Internal Auditor; (iv) Cost Audit Report for the year 2014-15; (v) acquisition/ sale of assets; (vi) Directors' Responsibility Statement; (vii) Related Party Transactions; (viii) performance of Statutory and Internal Auditors; (ix) Legal Compliance Reports; (x) major litigations; (xi) Monitoring of the Code of Conduct; (xii) Forex Management Policy and (xiii) Ethics and related matters.
The Committee had regular interaction with the Internal, Statutory and Cost Auditors of the Company.
Recommendations of the Committee are accepted by the Board of Directors from time to time.
Broad terms of reference to the Audit and Risk Management Committee in brief:
The Committee primarily act in line with the Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Committee oversees the Company's financial reporting process and internal control system and, ensures that the financial statements are correct, sufficient and credible. The Committee reviews the annual and quarterly financial statements before submission to the Board for approval. The Committee also reviews Related Party Transactions of the Company and approves the transactions which are in line with the Related Party Transactions Policy of the Company. The Related Party Transaction Policy of the Company is available at 'http://www.cumminsindia.com/MAIN/ corporate.html'.
The Committee has been entrusted with the responsibility of reviewing Internal Audit findings and ensuring adequacy of internal control systems. The Committee recommends to the Board, appointment of external auditors and payment of fees. The Committee holds regular discussions with the Internal, Statutory and Cost Auditors about their scope of audit and holds post audit discussions with the Auditors. The Statutory and Cost Auditors, Internal Auditor, the Chief Operating Officer, the Chief Financial Officer and the Business Unit Heads of the Company are invited for the meetings of the Committee
b) NOMINATION AND REMUNERATION COMMITTEE:
The Committee reviews appointment of directors and key managerial persons. The Committee has formulated the criteria for determining qualifications, positive attributes and independence of a director. The Board upon recommendation from the Committee have formulated a policy, relating to the remuneration for the directors, key managerial personnel and other employees. The Nomination and Remuneration Policy of the Company is available at 'http://www.cumminsindia.com/MAIN/corporate.html'
The Committee oversees the following self-evaluation process, used by the Directors, by the Board and by each committee of the Board to determine their effectiveness and opportunities for improvement. Each Board member is requested to evaluate the effectiveness of the Board dynamics and relationships, information flow, value addition, governance, and the effectiveness of the whole Board and its various committees in descriptive manner. Feedback on each Director is encouraged to be provided as a part of survey. Independent Directors have three key roles - governance, control and guidance. Some of the performance indicators based on which the Independent Directors are evaluated include: -
¦ Ability to contribute to and monitor corporate governance practices at the Company;
¦ Active monitoring of the strategic direction and operational performance of the Company; and
¦ Facilitating open and interactive discussion by encouraging diverse perspectives.
At least annually, the Head - HR contacts each director soliciting comments with respect to performance of the directors, Board and its committees on which the director serves as well as director performance and board dynamics. These comments will relate to the large question of how the Board can improve its key functions of overseeing financials, other major issues of strategy, risk, integrity and governance.
The Head - HR then works with the Chairman & Managing Director to organise the comments received around options for changes at either director, board or committee level. At a subsequent board and committee meeting, time is allocated to a discussion of and decisions relating to the actionable items.
REMUNERATION OF DIRECTORS:
The non-executive Independent Directors are paid sitting fees and annual commission. Annual commission is paid on equal basis to all non-executive Independent Directors. The Chairman & Managing Director is paid remuneration as approved by the Shareholders. There is no pecuniary relationship or transactions of any of the non-executive directors, except Mr. P. S. Dasgupta, vis-a-vis the Company, apart from the remuneration as detailed in this Report.
Notes : -
1. The Company does not have a Stock Option Scheme and no severance fees are payable to any Director.
2. There is no notice period for severance of the Managing Director.
3. The Company paid Rs. 76,250/- towards fees for professional services rendered by New Delhi Law Offices, a law firm of which Mr. P. S. Dasgupta is the Managing Partner, during the Financial Year 2015-2016. (Nil during the Financial Year 2014-2015) after obtaining prior approval by the Audit and Risk Management Committee of the Board of Directors of the Company. The same are not material in nature.
4. 'Other Benefits' in the remuneration details provided for Mr. Anant J. Talaulicar consists of expenses related to the car and Communication facilities
a) The Company does not have materially significant related party transactions (i.e. transactions of the Company of material nature with its Promoters, Directors or the Management, or their subsidiaries or relatives etc.) which may have potential conflict with the interest of the Company at large. The Company has disclosed the policy on dealing with Related Party Transactions on its website and is accessible at <http://www.cumminsindia.com/> MAIN/corporate.html
b ) The Company has complied with the requirements of regulatory authorities on capital markets and no penalties/ strictures have been imposed against it in the last 3 years.
c) None of the Directors of the Company are related to each other.
d ) The Company has complied with the mandatory Corporate Governance requirements of Clause 49 of the Listing Agreements with BSE Limited and National Stock Exchange of India Limited up to November 30, 2015, and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and has not adopted any discretionary requirements mentioned in Regulation 27(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
e) The Company follows a Whistle Blower Policy since Financial Year 2003-2004 in line with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the then, Clause 49 of the Listing Agreements with BSE Limited and National Stock Exchange of India Limited). No person has been denied access to the Audit and Risk Management Committee under the Whistle Blower Policy.
f) The Company follows the mandatory Accounting Standards prescribed by the Institute of Chartered Accountants of India (ICAI) and to the best of its knowledge, there are no deviations in the accounting treatments that require specific disclosure.
6. MEANS OF COMMUNICATION:
a ) The quarterly shareholding pattern and quarterly/ half-yearly/ yearly unaudited/ audited financial results were posted on the Company's website www.cumminsindia.com
b) The official news releases of the Company were displayed on the Company's website www.cumminsindia.com
c) The annual audited and quarterly/ half-yearly unaudited financial results for the year ended March 2016 and quarters ended June, September and December 2015 were published in Business Standard (All editions) and Maharashtra Times (Pune Edition).
d ) Transcript of Conference calls with the Analysts held on May 29, 2015, August 7, 2015, November 6, 2015 and February 3, 2016 and the Chairman's Presentation to the Shareholders made at the AGM held on August 6, 2015 were displayed on the Company's website www.cumminsindia.com
7. GENERAL SHAREHOLDER INFORMATION:
Cummins India Office Campus, Tower A, 5th Floor, Survey No. 21, Balewadi, Pune 411045 Maharashtra, India Phone No. : (020) 67067000 Fax No. : (020) 67067015 Website : www.cumminsindia.com
Annual General Meeting
Date and Time : August 4, 2016 at 12:00 noon
Venue : The Multifunctional Hall, Cummins India Office Campus, Survey No. 21, Balewadi, Pune 411045
The Financial Year of the Company is 1st April to 31st March.
¦ Results for quarter ending June 30, 2016 - By first week of August, 2016
¦ Results for quarter and half year ending September 30, 2016 -By second week of November, 2016
¦ Results for quarter and nine months ending December 31, 2016 -By first week of February, 2017
¦ Results for the year ending March 31, 2017 - By second week of May, 2017
Dates of Book Closure
July 30, 2016 to August 4, 2016 (both days inclusive).
Interim dividend payment date : March 1, 2016
Final Dividend payment date : September 1, 2016 (subject to approval of shareholders)
Listing on Stock Exchanges
Name of Exchange
1. BSE Limited (BSE) P. J. Towers, Dalal Street, Mumbai : 400001
Stock Code 500480
2. National Stock Exchange of India Limited (NSE) Exchange Plaza, Bandra - Kurla Complex, Bandra (E), Mumbai : 400051
Stock Code CUMMINSIND
Payment of Listing Fees
The Company has paid in advance the Listing Fees to both the Stock Exchanges for the Financial Year 2016 - 2017.
Registrar and Transfer Agent
The Company has appointed Link Intime India Private Limited, Mumbai as its Registrar and Transfer Agent. Share transfers, dematerialisation of shares, dividend payment and all other investor related activities are attended to and processed at the office of the Registrar and Transfer Agent :-
Link Intime India Private Limited Unit : Cummins India Limited C-13, Pannalal Silk Mills Compound L. B. S. Marg, Bhandup (West) Mumbai 400078 Phone No. (022) 25946970 Fax No. (022) 25946969
Contact Person : Mrs. Maheshwari Patil E-mail:firstname.lastname@example.org / email@example.com Time:- 1000 to 1600 hours (Monday to Friday excluding public holidays)
Share Transfer System
Share Transfer requests in physical form are processed within 15 days from the date of receipt. The requests for dematerialisation of shares are confirmed within 21 days from the date of receipt.
Dematerialisation of shares and liquidity (as on March 31, 2016).
98.82% shares are in demat form.
Sub-divided share certificate in lieu of old certificates
The Company had on February 10, 1987, sub-divided each Equity Share of the face value of Rs. 100/- each into ten Equity Shares of the face value of Rs. 10/- each. Subsequently, on December 4, 2000, the Company sub-divided each Equity Share of the face value of Rs. 10/-each into five Equity Shares of the face value of Rs. 2/- each. The Company has in the past sent reminders to those Shareholders who have not claimed new certificates for sub-divided Shares of the face value of Rs. 2/- each.
Outstanding GDRs/ ADRs/ Warrants or any Convertible instruments, conversion date and likely impact on equity
The Company has not issued GDRs/ ADRs/ Warrants or any Convertible instruments.
1. Kothrud, Pune 411038
2. Plot No. 206/2, Off. Nagar Road, Haveli, Pune 411014
3. Gat No. 311/B &1B, Kasar Amboli 412111 Dist. Pune, Maharashtra.
4. 35A/1/2, Erandwane, Pune 411038
5. MIDC Phaltan, Village Survadi, Dist. Satara, Maharashtra
6. Survey No. 461/2C, Puzhal Village, Saidapet Taluk, Madhavaram Taluk, Thiruvallur District, Chennai 600060
Address for correspondence
Cummins India Office Campus, Tower A, 5th Floor, Survey no. 21, Balewadi, Pune 411045 Maharashtra, India Tel: +91 20 67067000 Fax : +91 20 67067011
1) Ms. Priyanka Shetye, Exe. Manager -Legal & Assistant Company Secretary E-mail - firstname.lastname@example.org
2 ) Mr. K. Venkata Ramana, Group Vice President -Legal & Company Secretary E-mail - email@example.com
Registrar and Transfer Agent :
Link Intime India Private Limited
Please refer details above for address/ contact details etc
8. COMPLIANCE CERTIFICATE OF THE AUDITORS:
The Company has obtained a Certificate from the Statutory Auditors confirming compliance with conditions of the Code of Corporate Governance as stipulated in Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same is appended as Annexure '5' to the Directors' Report.