REPORT ON CORPORATE GOVERNANCE
I. Company's Philosophy on Corporate Governance
Corporate Governance may be defined as a set of systems, processes and principles, which ensure that a Company is governed in the best interest of all stakeholders. It is the system that directs and controls respective companies. It is about promoting corporate fairness, transparency and accountability. In other words, 'Good Corporate Governance' is simply 'good business'.
In India, the question of Corporate Governance has emerged mainly in the wake of economic liberalisation and deregularisation of industry and business. The objective of any Corporate Governance system is to simultaneously improve corporate performance and accountability. These, in turn, help to attract financial and human resources on the best possible terms and prevent corporate failure.
Corporate Governance consists of procedures and processes, according to which an organisation is directed and controlled. Its structure specifies the distribution of rights and responsibilities among different pan-organisational participants, such as the Board, managers, shareholders and other stakeholders. The system helps to lay down the rules and procedures for decision making.
The objective of Good Corporate Governance is to ensure the Board's commitment towards transparent management to maximise long-term value for the Company's shareholders and other partners. It integrates all the participants involved in a process, which is economic and at the same time, social.
A well-defined and enforced Corporate Governance benefits everyone concerned by ensuring that the enterprise adheres to accepted ethical standards and best practices, as well as to applicable laws.
Corporate Governance goes beyond the practices enshrined in the laws and is imbibed in the basic business ethics and values that needs to be adhered to in letter and spirit. However a transparent, ethical and responsible Corporate Governance framework essentially emanates from the intrinsic will and passion for good governance ingrained in the organisation.
Good Corporate Governance practices are also essential for a sustainable business model for generating long term value for all its stakeholders.
At Escorts Finance Limited, Corporate Governance practices aim to adhere to the highest governance standards through continuous evaluation and benchmarking.
II. Board of Directors
Composition and Category of Directors
The composition of the Board is in conformity with Clause 49 of the Listing Agreement as amended from time to time. The Board of Directors alongwith its Committees provide leadership and guidance to the Company's management and direct, supervises and controls the performance of the Company. As on March 31, 2015, the Company's Board comprised of four (4) Directors out of which two (2) are Independent Non-Executive Directors. Chairman of the Board is also a non-executive Director. All Independent Non-Executive Directors are compliant with the requirements of the Listing Agreement for being an Independent Director and have confirmed that they meet the 'Independence' criteria as mentioned under Clause 49 of the Listing Agreement.
As mandated by Clause 49, the Independent Directors on the Board of the Company:
• are persons of integrity and possesses relevant expertise and experience in the opinion of the Board;
• are or were not promoter of the Company or its holding, subsidiary or associate Company;
• are or were not related to promoters or directors in the Company, its holding, subsidiary or associate Company;
• apart from receiving director's remuneration, do not have any material pecuniary relationships with the Company, its holding Company, its subsidiaries and associates, or its promoters or directors during the two immediately preceding financial years or during the current financial year;
• none of their relative have any pecuniary relationship or transaction with the Company, its holding, subsidiary or associate Company or its promoters or directors, amounting to 2% or more of its gross turnover or total income or fifty lakh rupees during the two immediately preceding financial years or during the current financial year;
• neither himself/ themself nor their relative -
o are or were holding the position of key managerial personnel or are or were employee of the Company or its holding, subsidiary or associate Company in immediately preceding 3 financial years;
o have been an employee or proprietor or a partner in immediately preceding 3 financial years of
a) a firm of auditors or company secretaries in practice or cost auditors of the Company or its holding, subsidiary or associate Company; or
b) any legal or a consulting firm that has or had any transaction with the Company, its holding, subsidiary or associate Company amounting to 10% or more of the gross turnover of such firm;
o hold together with their relatives 2% or more of the total voting power of the Company;
o is a Chief Executive or Director by whatever name called, of any non-profit organization that receives 25% or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate Company or that holds 2% or more of the total voting power of the Company;
o are material supplier, service provider or customer or lessor or lessee of the Company.
• are not less than 21 years of age.
During the year ended on March 31, 2015 the Board of Directors met four (4) times on May 21, 2014, August 12, 2014, November 7, 2014 and February 12, 2015.
The gap between any two Board meetings did not exceed four months.
Code of Conduct
The Company has adopted a Code of Conduct for Directors and Senior Management of the Company. The Code has been circulated to all the members of the Board and Senior Management and the same is available on the Company’s website: www.escortsfinance.com.
Whistle Blower Policy
The Company has adopted a Whistle Blower Policy to report instances of unethical behavior, fraud or violation of the Ethic Policy of the Company. The Whistle Blower Policy has been circulated to all the employees and directors of the Company and the same is available on the Company's website: www.escortsfinance.com .
III. Audit Committee Constitution
All the members of the Audit Committee have accounting, economic and financial management expertise. The composition of the Audit Committee meets with the requirements of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
The Audit Committee assists the Board in its responsibility to oversee the quality and integrity of the accounting, auditing and reporting practices of the Company and its compliance with the legal & regulatory requirements. The Committee's purpose is to oversee the accounting and financial reporting statements, the appointment, independence, performance and remuneration of the Statutory Auditors and the performance of Internal Auditors of the Company.
Terms of Reference
The Charter of the Committee is as prescribed under Section 177 of the Companies Act, 2013 read with Clause 49 of the
Listing Agreement viz.:
1. 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.
2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditors and the fixation of audit fees.
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 Directors' Responsibility Statement forming part of 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 audit findings.
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.
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 utilised 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 auditors independence & performance, and effectiveness of audit process.
8. Approval or any subsequent modification of transactions of the Company with related parties.
9. Scrutiny of inter-corporate loans and investments.
10. Valuation of undertakings or assets of the Company, wherever it is necessary.
11. Evaluation of internal financial controls and risk management systems.
12. Reviewing, with the management, performance of statutory & internal auditors, adequacy of the internal control systems.
13. Reviewing the adequacy of internal audit function, if any, including the structure of 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 thereon.
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. Investigating 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. Approving the appointment of Chief Financial Officer (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience & background, etc. of the candidate.
20. Reviewing any changes in the accounting policies or practices as compared to the last completed financial year and commenting on any deviation from the Accounting Standards.
21. Carrying out any other function as may be referred to the committee by the Company's Board of Directors and/ or other Committees of Directors of the Company from time to time.
22. Recommending to the Board, the terms of appointment, re-appointment and, if required, the replacement or removal of the Cost Auditors.
23. The Committee has systems and procedures in place to ensure that the Audit Committee immediately reviews:
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, if any;
e. Appointment, removal and terms of remuneration of the Chief Internal Auditor;
f. The Financial Statements, in particular, the investments made by the unlisted subsidiaries of the Company, in view of the requirements under Clause 49.
g. Details of material individual transactions with related parties, which are not in the normal course of business; and
h. Details of material individual transactions with related parties or others, if any, which are not on arm's length basis, along with management's justification for the same.
The Audit Committee is endowed with the following powers:
a) To investigate any activity within its terms of reference.
b) To seek information from any employee.
c) To obtain outside legal or other professional advice.
d) To secure attendance of outsiders with relevant expertise, if it considers necessary.
e) To invite such of the executives, as it considers appropriate (and particularly the head of the finance) to be present at the meetings of the committee.
Meeting & Attendance
During the financial year 2014 -15, Audit Committee met four (4) times on May 21, 2014, August 12, 2014, November 7, 2014 and February 12, 2015.
Mr. Vicky Chauhan, Company Secretary is acting as Secretary to the Audit Committee. Annual General Meeting held on Friday, September 26, 2014 was attended by the Chairman of the Committee Mr. Rochak Puri, to answer shareholders query.
IV. Nomination & Remuneration Committee
During the financial year 2014-15 ended on March 31, 2015, the Nomination and Remuneration Committee has been constituted by inducting Mr. Rochak Puri as Chairman, Ms. Preeti Chauhan and Mr. Pritam Narang as members of the Committee w.e.f. November 7, 2014.
The Nomination and Remuneration Committee comprises of following Non-Executive Directors:
1. Mr. Rochak Puri - Independent Director - Chairman
2. Ms. Preeti Chuahan - Independent Director
3. Mr. Pritam Narang - Non Independent Director
Terms of Reference
The Charter of the Committee is as prescribed under Section 178 of the Companies Act, 2013 read with Clause 49 of the Listing Agreement viz.:
1. 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;
2. Formulation of criteria for evaluation of Independent Directors and the Board;
3. Devising a policy on Board diversity;
4. 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. The remuneration policy is placed on the Company's website www.escortsfinance.com .
During the period under review there are no pecuniary relationships or transactions of the Non-Executive Directors viz-a-viz the Company.
Meeting & Attendance
During the financial year 2014-15, one meeting of Nomination and Remuneration Committee was held on February 12, 2015 which was attended by all the members of the Committee.
Remuneration of Directors
The Company has not paid any remuneration to any of its Directors, except sitting fees for attending Board and Audit Committee Meetings for which Rs. 2,000 per meeting had been paid.
Shareholding of Non-Executive Directors of Company
As on March 31, 2015, none of the Non-Executive Directors of the Company held any share in the Company.
V. Stakeholders' Relationship Committee
Terms of Reference
The Committee looks to redress shareholders and investors complaints relating to share transfer, Demat, Remat, non- receipt of declared dividends or Annual Reports etc.
The Committee additionally oversees the performance of Alankit RTA and recommends measures for overall improvement in the quality and promptness in investors services.
Meetings and Attendance
During the financial year 2014-15, 4 (Four) meetings of the Stakeholders' Relationship_Committee were held on May 21, 2014, August 12, 2014, November 7, 2014 and February 12, 2015.
Mr. Vicky Chauhan, Company Secretary the Compliance Officer of the Company as per the requirements of the Listing Agreement
Mr. P.K. Marwah is the Manager of the Company as per Section 203 of the Companies Act, 2013.
Complaints received / resolved
During the year under review, three (3) complaints were received from investors, which were replied/ resolved to the satisfaction of the investors. No complaint(s) were pending for redressal for the year 2014-15 as on the date of this report.
Pending Share Transfer
No request for transfer and/ or dematerialization was pending for redressal as on March 31, 2015.
VI. Functional Committee
The Board is authorised to constitute one or more functional committees delegating thereto powers and duties with respect to specific purposes. Meeting of such committees are held, as and when the need arises. Time schedule for holding such functional committee meetings are finalised in consultation with the Committee members.
Procedure of Committee Meetings
The Company's guidelines relating to Board Meetings are applicable to Committee Meetings, as far as may be practicable. Each Committee has the authority to engage outside experts, advisors and counsels, to the extent it considers appropriate, to assist in its work. Minutes of the proceedings of the Committee Meetings are placed before the Board Meeting for perusal and noting.
a. There are no materially significant related party transactions of the Company which have potential conflict with the interests of the Company at large.
b. Details of non-compliance by the Company, penalties, strictures imposed on the Company by Stock Exchanges or SEBI or any statutory authority, on any matter related to capital markets, during the last three years:
The Company has complied with the statutory rules and regulations of SEBI and Stock Exchanges. However, the
Company has not been able to comply with the Prudential Norms Direction relating to maintenance of liquid assets and Capital Adequacy Ratio, provision for doubtful trade receivable and advances as required by the Reserve Bank of India's Rules and Regulations.
c. Whistle Blower policy and affirmation that no personnel has been denied access to the Audit Committee:
The Company has adopted Whistle Blower Policy during the financial year 2014-15. However, no person has been denied access to the Audit Committee.
d. Details of the compliance with mandatory requirement of Clause 49. The details of mandatory requirements are mentioned in this Report.
IX. Means of Communication
Key Financial reporting dates during the financial year 2014-15.
The Company has published its Financial results in the following national newspapers:
• For Quarter ended 30.06.14: Financial Express (English), Jansatta (Hindi).
• For Quarter ended 30.09.14: Financial Express (English), Jansatta (Hindi).
• For Quarter ended 31.12.14: Financial Express (English), Jansatta (Hindi).
• For Year ended 31.03.15: Financial Express (English), Jansatta (Hindi).
The Quarterly/ yearly Results were displayed on Company's website viz. www.escortsfinance.com in accordance with the requirement of Listing Agreement.
X. General Shareholder Information
(i) Company Registration Details
The Company is registered in the Union Territory of Chandigarh, India. The Corporate Identity Number (CIN) allotted to the Company by the Ministry of Corporate Affairs (MCA) is L65910CH1987PLC033652.
(ii) Annual General Meeting
Day & Date : Tuesday, September 29, 2015
Time : 3:00 P.M.
Venue : Hotel KC Residency, SCO 377-380, Sector - 35B, Chandigarh - 160 035
(iii) Financial year :
April 1 to March 31
(iv) Appointment/ Reappointment of Directors
In accordance with the provisions of Companies Act, 2013 and Articles of Association of the Company, Mr. Inder Mohan Sakhuja, Director retires by rotation at the ensuing Annual General Meeting of your Company and being eligible, offers himself for re-appointment.
(v) Financial Calendar 2015-16 (tentative)
Meetings of Board/ Committee thereof to take on record :
Financial results for quarter ended June 30, 2015 : By August 14, 2015
Financial results for quarter ended September 30, 2015 : By November 14, 2015 Financial results for quarter ended December 31, 2015 : By February 14, 2016
Financial results for quarter ended March 31, 2016 : By May 15, 2016
If unaudited quarterly results or alternatively by May 30, 2015, in case of audited results for the year.
(vi) Annual General Meeting for the Financial Year ending March, 2016:
By September 30, 2016.
(vii) Book Closure
The members register will be closed from September 22, 2015 to September 29, 2015 (both days inclusive) for the purpose of Annual General Meeting.
The Board of Directors have not recommend any dividend for the current year.
(ix) Cut-off Date for e-voting
September 22, 2015 has been fixed as the cut-off date to record entitlement of the shareholder to cast their vote electronically.
The Securities of the Company are listed on the following Stock Exchange:
Stock Exchange Stock Code
BSE Limited: 511716
Demat ISIN no. in NSDL & CDSL :INE359A01012
The Company has paid the Annual Listing Fees till date.
(xi) Registrar & Share Transfer Agent
In terms of SEBI circular dated December 27, 2002, the share transfer work in both physical as well as electronic modes has been carried on by Alankit Assignments Ltd., Category I Registrar and Transfer Agents having office at
Alankit House, 1E/13, Jhandewalan Extension, New Delhi - 110 055.
(xii) Share Transfer System
The Company has appointed Alankit Assignments Ltd. as Share Transfer Agents and all work relating to share transfers is executed by them. The authority relating to share transfer has been delegated to Share Transfer
Committee of the Board of Directors for the approval of Transfer, Transmission, Remat, Split & Consolidation of share certificates etc., which periodically meets to approve the requests of the Investors.
Share Transfer Committee ensures the approval of share transfer/ transmission/ spliting and consolidation of valid request within a period of 15 days from their receipt.
As on March 31, 2015 dematerialised shares accounted for 95.53% (95.48% up to March 31, 2014) of the total equity shares.
(xvii) Outstanding GDRs/ ADRs/ Warrants etc.
The Company has not issued any GDRs/ ADRs/ Warrants.
(xviii) Plant Location
There is no manufacturing location for the Company.
(xix) Address for correspondence: Company Secretary
Escorts Finance Limited Escorts Corporate Centre
15/5, Mathura Road Faridabad - 121 003 Tel:(0129) 2564116 Fax:(0129) 2250060 Email id:- firstname.lastname@example.org
(xx) Registrar and Transfer Agents: Alankit Assignments Limited
Alankit House, 1E/13 Jhandewalan Extension New Delhi - 110055
Tel.- +91-11-42541953 Fax: +91-11-23552001
Email id:- email@example.com
For and on behalf of the Board of Directors
Sd/- Inder Mohan Sakhuja
Dated: August 13, 2015