01 May 2017 | Livemint.com

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Force Motors Ltd.

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  • BSE Code: 500033
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Force Motors Ltd. Accounting Policy

REPORT ON CORPORATE GOVERNANCE

STATEMENT ON COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE

1. The Company's decision making process and operational methods are guided by the philosophy of "creating low cost, hi-tech products, which are suitable for Indian markets". Simplicity, self-reliance, social responsibility, trust and transparency in dealings with all stakeholders, the ethos on which this business was started by Late Mr. N. K. Firodia, the founder of the Company, continues to be the guiding principles for the Organization, in arranging the activities. The Company's philosophy on the 'Code of Governance' is based on compliance of applicable provisions and requires exchange of relevant information and appropriate disclosures to each group of stakeholders, connected with the area of common interest/stake between the Company and the Stakeholder.

BOARD OF DIRECTORS

2. The Board of Directors of the Company (as of 31st March 2015) ('the Board' for brevity) consisted of 10 Directors. 07 Directors were Non-Executive Directors and 03 Directors were Executive Directors. 05 Directorswere Independent Directors.

The Company's Board did not consist of any Nominee Directors appointed by lender(s) or equity investor(s). Mr. Abhaykumar Firodia, Chairman and Mr. Prasan Firodia, Managing Director of the Company represent Promoters of the Company.

6. The Board is presented with all the relevant information in various matters affecting the working of the Company and which requires deliberation at the highest level. Besides key operational and financial information, the Board is presented with information relevant to strategy formulation, for deliberations. This includes information as per annexure to Clause 49 of the Listing Agreement. At each meeting, the Managing Director presents an elaborate report on the operations of the Company, including an assessment of the market, operational issues, operating profitability and various risks associated with the Company's business. Also presented are assessments of the strategic and technological issues enabling a discussion on the strategy, projects and tactics employed in the management of the Company'saffairs.

7. The Directors made all disclosures as per the requirement of the Companies Act, 2013 (the Act for brevity) from time to time to the Board of Directors regarding their financial interest in the transactions with the Company. The related party disclosure forms part of the Notes to Financial Statements as per the disclosure requirement of Accounting Standard 18 issued by the Institute of Chartered Accountants of India. The Directors have informed the Company about the Committee positions occupied by them in other Companies and changes therein.

8. The Independent Directors held their separate Meeting on 26th February 2015 as mandated by the provisions of the Act and Listing Agreement. The details of the familiarization programme can be accessed at the weblink : <http://> www.forcemotors.com/page/index/shareholders_ information

9. Pursuant to the provisions of the Act 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 the Chairman. The criteria for Performance Evaluation of Directors and the Board, as approved by the Board of Directors of the Company are placed on the Company's website www.forcemotors.com Based on this, a separate exercise was carried outto evaluate the performance of the Board, the individual Directors including the Chairman of the Board.

14. The value of purchases and sales from/to Jaya Hind Industries Limited, which is a company deemed to be a Promoter as per the provisions of the Securities & Exchange Board of India (Substantial Acquisition of Shares) Regulations, 2011 were Rs. 74,64,44,413 and Rs. 7,69,97,561 respectively.

15. Mr. Vinay Kothari (DIN 00337134), Director of the Company, retires by rotation and being eligible offers him self for reappointment.

16. The requisite information about Directors is as under: -

Mr. Vinay Kothari

Mr. Vinay Kothari (DIN 00337134), 51, is a Commerce Graduate and holds MBA Degree from IESE Business School, Spain. He has business interest in Real Estate, Autoparts Industry, Retail Solutions manufacturing, Elevator Components and Construction.

He holds directorships in the following Companies: -

Savera India Riding System Co. Private Limited, Savera Kothari India Private Limited, RAK Realty Private Limited, Barca iTechnologies Private Limited, Dihatex India Private Limited, Lumaran Technologies Private Limited, Caveo Pinnacle India Private Limited, Indaux India Private Limited, Kider India Private Limited and EMESA India Elevator Components CompanyPrivateLimited.

The Company has received intimation in the prescribed form as per the provisions of Section 164(2) of the Act and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014 from him.

Mr. Kothari holds 101 equity shares of the Company.

Mr. Prashant V. Inamdar

Mr. Prashant V. Inamdar (DIN 07071502), 50, is a diploma holder in Mechanical Engineering. Mr. Inamdar started his career at Force Motors Limited as a Junior Engineer in 1984. Since, then he has worked and proven his mettle in different divisions. During his tenure in Corporate Controlling he worked across Industrial Engineering, Management Information Services, Industrial Relations, Human Resource Development and SAP

Implementation Projects. Special highlights in his career include the setting up of Engine Shop for MAN Trucks at Pithampur (Madhya Pradesh) and setting up a Plant in Chennai. At present, Mr. Inamdar is Executive Director (Operations) of the Company and responsible for Operations of all the Plants of Force MotorsLimited.

The Company has received intimation in the prescribed form as per the provisions of Section 164(2) of the Act and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014 from him.

COMMITTEES

17. The reconstituted Nomination and Remuneration Committee of the Board consists of Mr. S. Padmanabhan, Mr. Pratap Pawar, Non-Executive Independent Directors, and Mr. Vinay Kothari, Non­Executive Director. Mr. S. Padmanabhan, is the Chairman of the Nomination and Remuneration Committee. The Committee met on 26th July 2014, 11th August 2014 and 14th January 2015. Mr. Vinay Kothari is a member of the Committee w.e.f. 18th October 2014. Mr. S. Padmanabhan and Mr. Pratap Pawar, attended all the meetings. Mr. Pratap Pawar, previous Chairman of the Committee, was present in the lastAnnual General Meeting.

Terms of reference of Nomination and Remuneration Committee includes -

(i) 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.

(ii) Formulation of criteria for evaluation of Independent Directors and the Board.

(iii) Devising a policy on Board diversity.

(iv) 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.

On the recommendation of Nomination & Remuneration Committee, the Board has adopted the policy on appointment of Directors/ Independent Directors and Key Managerial Personnel and remuneration payable to them. As mandated, the said policy is posted on the website of the Company www.forcemotors.com

18. The Audit Committee consists of four Directors -Mr. Pratap Pawar, Mr. Vinay Kothari, Mr. S. Padmanabhan and Mr. Arun Sheth. Mr. S. A. Gundecha was the Audit Committee Member till 7th August2014.

Mr. Pratap Pawar, Mr. S. Padmanabhan and Mr. Arun Sheth are Non-Executive Independent Directors, whereas Mr. Vinay Kothari is a Non-Executive Director. Mr. Pratap Pawar, Chairman of the Audit Committee, specializes in marketing and finance.

The Audit Committee met on 24th May 2014,26th July 2014, 20th September 2014, 18th October 2014 and 16th January 2015. Mr. Pratap Pawar, Mr. S. Padmanabhan, Mr. Arun Sheth and Mr. Vinay Kothari attended all the five meetings. Mr. S. A. Gundecha attended twomeetings.

The terms of reference of the Audit Committee includes oversight of Company's reporting processes and financial information, review of Financial Statements, both audited and unaudited, review of accounting policies and practices, review of compliance with accounting standards, discussion with statutory auditors before the audit commences and post audit, recommendation of appointment and remuneration of statutory and cost auditors, internal auditors, approval of appointment of Chief Financial Officer, review and approval of related party transaction(s), decide the principles for grant of omnibus approval for related party transaction(s), review of auditors' independence and performance, oversee the vigil mechanism, evaluation of internal financial controls and risk management systems, and other areas indicated in Clause 49 of the Listing Agreement executed by the Company with Stock Exchanges and as perthe provisions of Section 177 of the Act.

The Audit Committee reviewed the Unaudited Financial Results (Provisional) for the three quarters and Audited Annual Accounts for the Financial Year 2014-15 in its meetings.

During the year under Report, the Audit Committee interacted with the Statutory Auditors, Cost & Management Consultants and Internal Auditors of the Company regarding internal control systems, discussed the financial results/cost accounting records, and also held a post statutory audit review of the financial/cost accounts. This Committee also interacted with the executives of the Company on finance related matters including officials of Internal Audit department of the Company. The Committee reviewed the risk management policies, insurance cover sought by the Company, purchase procedures of raw materials and components for manufacture of various types of motor vehicles and also the foreign exchange exposure of various transactions. The remuneration of the Auditors was decided in consultation with the Audit Committee. Extensive data/details connected with the financial management of the Company and on other related aspects were submitted to the Committee in each of the meetings. The Certificate from the Managing Director and the Chief Financial Officer was also submitted to the Audit Committee and to the Board. The Audit Committee is empowered to require presence of any of the employee of the Company. No employee has sought access to the Audit Committee during the year under Report.

19. The "Stakeholders' Relationship Committee" of the Board consists of Mr. Sudhir Mehta, Non-Executive Director, Mr. Vinay Kothari, Non-Executive Director and Mr. Prasan Firodia, Managing Director. Mr. Sudhir Mehta is the Chairman of the Stakeholders' Relationship Committee. This Committee met from time to time for approval of transfer of shares, issue of duplicate share certificates, approval of transmission and to deal with non-routine shareholders' complaints.

Mrs. Aparna G. Lambore, Company Secretary, is the designated Compliance Officer. During the year under Report,15 shareholders' complaints were received and all these complaints were resolved to the satisfaction of the concerned Members. As of 31st March 2015, no complaint was pending.

20. The Board has also constituted a Committee, as per the provisions of Section 135 of the Act, viz. Corporate Social Responsibility Committee consisting of Mr. S. Padmanabhan, Mr. Nitin Desai, Non-Executive Independent Directors and Mr. Sudhir Mehta, Non­Executive Director. Mr. S. Padmanabhan is the Chairman ofthe Committee.

21. The Risk Management Committee of the Board consists of Mr. Prasan Firodia, Managing Director, Mr. Sudhir Mehta, Non-Executive Director, Mr. Prashant V. Inamdar, Executive Director (Operations), Mr. R. B. Bhandari, Officer on Special Duty, and Mr. Pradeep Dhadiwal, Vice President. Mr. Prasan Firodia is the Chairman of the Committee. The role of Committee is to implement and monitor the risk management plan/framework of the Company.

SHAREHOLDERS

22. The Unaudited Financial Results for the first, second and third quarters and Audited Results for the last quarter were made available to the Stock Exchanges, where the shares of the Company are quoted, on the same day on which they were approved and taken on record by the Board. The Unaudited Financial Results for the quarter ended on 30th June 2014, 30th September 2014, 31st December 2014 were published in Financial Express and Loksatta and the Audited Financial Results for the Financial Year 2014-15 were published in Financial Express, Loksatta and Business Standard after the information was made available to the Stock Exchanges in the prescribed format. The working results of the Company are available on the Company's website www.forcemotors.com The Quarterly Unaudited Financial Results were subject to limite dre view by the Statutory Auditors of the Company. The appropriate certificates for each quarter were filed with the Stock Exchanges on 26th July 2014,18th October 2014 and 16th January 2015 respectively.

23. No presentation was made to any institutional investors or analyst during the year 2014-15.

25. There was no matter, required to be dealt by the Company, by passing a resolution through postal ballot as per the provisions of Section 110 of the Act, read with Companies (Management and Administration) Rules, 2014.

26. The Company has paid penalty of Rs. 17,977 (including service tax) to BSE Limited for delay in submission of Report on Corporate Governance as per Clause 49 of the Listing Agreement. However, no penalties were imposed by the Stock Exchanges or SEBI on the Company in any manner related to capital markets.

27. No materially significant related party transactions that may have potential conflict with the interests of the Company at large was entered into.

28. Annual General Meeting

Time : 11.30a.m.

Date : 26th September2015.

Venue : Registered Office of the Company at Mumbai - Pune Road, Akurdi, Pune-411 035.

29. Financial Year:

The financial year observed by the Company is 1st April of a year to 31st March ofthe following year.

30. Financial Calendar

Unaudited Financial Results will be published on or before

ForQuarter1 : 14thAugust

ForQuarter2 : 14th November

ForQuarter3 : 14th February

Audited Results : 30th May

31. Period of bookclosure : Saturday, 19th September 2015 to Saturday, 26th September 2015 (both days inclusive).

32. The Board has recommended a payment ofdividend of Rs. 5 per share on 1,31,76,262 equity shares of

Rs. 10 each fully paid up. The dividend, if declared, by the Members of the Company will be paid after 26th September2015.

33. Shares of the Company are listed on the Pune Stock Exchange Limited and BSE Limited. Annual Listing fee for the Financial Year 2014-15 has been paid to both the Exchanges. Pune Stock Exchange Limited has been voluntarily derecognized as Regional Stock Exchange by the Securities Exchange Board of India vide SEBI order WTM/RKA/MRD/28/2015 dated 13th  April 2015.

34. The Stock Code allotted by BSE Limited is 500033.

37. The Company has appointed Registrar and Share Transfer Agent - Link Intime India Private Limited, Block No. 202, Akshay Complex, Near Ganesh Temple, Off Dhole Patil Road, Pune - 411 001, to handle demat and physical share transfers as well as other shares related activities of the Company.

38. Share Transfer System: Applications for transfers, transmission, are received by the Company at its Registered Office or at the office of its Registrar and Share Transfer Agents and are processed by the Registrar and Share Transfer Agents on regular basis. Request for transfer of shares in dematerialized form are duly processed by National Securities Depository Limited / Central Depository Services (India) Limited in the electronic form through the respective depository participants.

As on 31st July 2015, no transfer and transmission request of shares held in physical form is pending. During the year under Report, the Company processed 35 share transfers, 11 transmission and 146 requests for dematerialization / re-materialization of shares.

39. The shares ofthe Company are available for trading in depository system of both National Securities Depository Limited and Central Depository Services (India) Limited. The International Securities Identification Number code allotted to the shares of the Company is INE451A01017.

As of 31st March 2015, the number of equity shares of the Company held, through depositories were 1,25,35,533 (95.14 % of the total paid up capital ofthe Company).

40. Unclaimed Share Certificate and Suspense Account:

Share certificates in respect of 3229 shares earlier issued as right shares or bonus shares were returned undelivered. The Company intimated the fact to the concerned Members from time to time including reminders issued as per the provisions of the Listing Agreement. List of these Members is hosted on the website of the Company. The said unclaimed shares will be transferred to the 'Force Motors Limited-Unclaimed Suspense Account'. As per the Listing Agreement, all corporate benefits in terms of securities accruing on such shares shall also be credited to such account. Voting rights on such shares shall remain frozen till the rightful owner claims the shares.

41. The Company has not issued any GDRs, ADRs or Warrants or Convertible Instruments.

42. The Corporate Identity Number allotted to the Companyis L34102PN1958PLC011172.

43. The Company's registered address is Mumbai - Pune Road,Akurdi, Pune-411 035.

44. The Company's plants are located at (a) Mumbai -Pune Road, Akurdi, Pune - 411 035 (b) Plot No.3, Sector No.1, IndustrialArea, Pithampur, District Dhar-454 775, Madhya Pradesh (c) Gat no. 3,4,5, Village Urse, Tal. Maval, District Pune - 410 506 (d) Mahindra World City, Panchayat Anjur, Taluk Chengalpattu, District Kancheepuram-603 004,Tamilnadu and (e) Gat no. 330 (P),331,332,333,312/5/6/7 and 355 Village Nanekarwadi, Chakan, Taluka Khed, District Pune.

The address for correspondence is -

Ms. Aparna G. Lambore

Company Secretary & Compliance Officer Secretarial Department

Force Motors Limited

Mumbai - Pune Road, Akurdi, Pune-411 035. Phone: (020) 27476381 e-mail: compliance-officer@forcemotors.com or

Link Intime India Private Limited

Block no. 202, Akshay Complex, Near Ganesh Temple, Off Dhole Patil Road, Pune - 411 001. Phone : (020) 26161629 / 26160084 / 26163503 Telefax No. : (020) 26163503 e-mail : pune@linkintime.co.in

45. COMPLIANCES

The certificate obtained from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement is attached to the Report. The Code of Conduct approved by the Board is available on the website of the Company. The confirmation about compliance of the code is being obtained on annual basis. A declaration signed by the Managing Director to that effect is obtained. The Company has complied with the mandatory requirements of Clause 49 of the Listing Agreement executed by the Company with the Stock Exchanges.