REPORT ON CORPORATE GOVERNANCE
FOR THE YEAR ENDED 31ST MARCH, 2015
1. Corporate Governance Philosophy
The philosophy of Corporate Governance is a principle based approach as codified in Clause 49(i) of the Listing Agreement, encompassing the fundamentals of rights and roles of various shareholders of the Company, disclosure transparency and board responsibility.
Your Company is in compliance of Clause 49 on Corporate Governance as they stood during the relevant period o Financial Year 2014-15.
A report on the matters mentioned in the said clause and the practices / procedures followed by your Company for the year ended 31st March, 2015 is detailed below.
Board of Directors
Your Company has the combination of Executive and Non-Executive Directors in conformity with Clause 49 of the Listing Agreement. The Non-Executive Directors are having diverse backgrounds with considerable professional proficiency, with expertise and experience in technical, general corporate management, finance, banking, legal and other allied fields which enables them to contribute effectively to the Company in their capacity as member of the Board.
The present strength of the Board of Directors is a mix of six Non-Executive Directors and four Executive Directors. Of the six Non-Executive Directors, five are Independent Directors. The Chairman of the Board is an Executive Director.
As per the declarations received by the Company from each of the Directors, none of them are disqualified under Section 164(2) of the Companies Act, 2013.
The Independent Directors of the Company are in compliance with the provision of Clause 49(II)(B)(2). Further, disclosures have been made by the Directors regarding their Chairmanship / Membership of the mandatory Committees of the Board and that the same are within the maximum permissible limit as stipulated under Clause 49(II)(D)(2) of the listing agreement.
The Non-Executive Directors are having diverse backgrounds with considerable professional proficiency, with expertise and experience in technical, general corporate management, finance, banking, legal and other allied fields which enables them to contribute effectively to the Company in their capacity as member of the Board.
Transactions with related parties are disclosed in Note No.28 of 'Notes to the Financial Statements' for the year ended 31st March, 2015. There has been no material pecuniary transaction or relationship between the Company and its Non-executive and/or independent Directors during the year 2014-15.
The Senior Management have made disclosures to the Board confirming that there are no material, financial and/or commercial transactions between them and the Company, which could have potential conflict of interest with the Company at large.
The Board oversees the entire functioning of the Company and is involved in strategic decision-making on a collective basis. The Board meets at least four times a year and the interval between any such two meetings has not been more than one hundred and twenty days. The Company Secretary under the direction of the Chairman and in consultation with Chief Financial Officer (CFO) prepares the agenda along with the explanatory notes thereto and circulates it to the Directors, along with the notice of the meeting.
During the year under review, 6 Board Meetings were held on 28/05/2014, 18/06/2014, 13/08/2014, 08/11/2014, 11/02/2015 and 18/03/2015.
(c) Board Meeting Procedures
The agenda papers with relevant explanatory notes and material documents relating to matters for perusal of the Board / Committee are circulated in advance, so as to facilitate discussion and informed decision-making in the meeting. The routine business brought to the relevant meetings includes, inter alia Annual business plans and budget, Quarterly results and update on operations, Financial results for the relevant period along with limited review report thereon, Minutes of various committee meetings, Shareholding pattern as per clause 35of the listing agreement, the information on recruitment and remuneration of senior officers just below the Board level and approval of Related PartyTransaction etc.
The information as required to be placed before Board of Directors as per Code of Corporate Governance is being made available to the Board as and when applicable. The Board periodically reviews compliance reports of all laws applicable to the Company as well as steps taken by the Company to rectify instances of non-compliance.
Directors' Tenure, Appointment / Re-appointment and Remuneration
During the year under review, Shri Suhail P. Shah was re-appointed as Wholetime Director designated as Executive Director of the Company for a term of three years commencing from 1st December, 2015. He is being paid remuneration in accordance with the provisions of the Companies Act and the approval of the Central Government for the designated tenure of his appointment.
In terms of Section 152 read with Section 149(13) of the Companies Act, 2013 Shri Alok P. Shah is liable to retire by rotation. The said Director has offered himself for reappointment and resolution for his reappointment is incorporated in the Notice of the ensuing Annual General Meeting.
Shri Sunil Sheth and Smt. Anita Mandrekar have been appointed as an Additional Director and in terms of Section 161(1) of the Companies Act, 2013 they will hold office till the date of ensuing Annual General Meeting. In terms of Section 160(1) of the Companies Act, 2013, the Company has received a notice from a member intending to propose Shri Sunil Sheth and Smt. Mandrekar as candidates for the office Director of the Company. The Independent Directors are paid sitting fees for attending meetings of Board / Board Committees.
The brief profile and other information as required under Clause 49(VIII)(E) of the Listing Agreement relating to Directors being appointed / reappointed, forms part of the Notice of ensuing Annual General Meeting.
Meeting of Independent Directors
During the year, a meeting of Independent Directors was held on 18th March, 2015 to review the performance of the Board as a whole on parameters of effectiveness and to assess the quality, quantity and timeliness of flow of information between the management and the Board. Shri Yatish Parekh, Chairman of the Meeting presented the views of the Independent Directors on matter relating to Board processes and overall affairs of the Company to the full Board. Four members out of six Independent Directors attended the said meeting.
The Board has, after the close of the financial year 2014-15, appointed one new Additional Director who is non-executive independent director Smt. Anita Mandrekar, the further details of Mrs. Mandrekar is mentioned in the notice convening Annual General Meeting wherein her appointment as independent director has been proposed.
Familiarization Program for Independent Directors
The Board members are provided with the necessary documents and reports etc. to enable them to familiarize with the Company's procedures and practices. Periodic disclosures are made on business and performance updates of the Company, business strategy and risks involved. Quarterly updates on relevant statutory change; encompasses important laws are also circulated to the Directors. The details of such familiarization programmes for Independent Directors are posted on the website of the Company.
3 BOARD COMMITTEES:
During the financial year under review, the Board had five committees viz., Audit Committee, Stakeholders' Relationship Committee, Corporate Social Responsibility Committee, Nomination & Remuneration Committee and Managemen Committee. The Board decides the term of reference of these committees and assignment of its Members thereof.
(a) Audit Committee
Presently the Audit Committee comprises of Shri Arunchandra N. Jariwala, Independent Director as Chairman, Shri Rajen P. Shah, Non-Executive Director and Shri Yatish C. Parekh and Shri Sunil S. Sheth, Independent Director as Members. All the members of the Committee are professionals and financially literate within the meaning of Clause 49 of the Listing Agreement.
The terms of reference of the Audit Committee includes the matters specified under Clause 49(III)(D) of the Listing Agreement with the Stock Exchanges as well as Section 177 of the Companies Act, 2013.
The Audit Committee may call for the Comments of the Auditors about internal control systems, the scope of Audit, including observations and review of financial statements before their submission to the Board and any related issues with internal and statutory auditors and management of the Company.
The Finance Head, Internal Auditor and Statutory Auditors are invitees to the Meeting.
The Chairman of the Audit Committee was present at the 35th Annual General Meeting of the Company held on 30th July, 2014. The Minutes of the Audit Committee Meetings were noted at the Board Meetings.
Meetings and attendance
During the financial year 2014-15, the Audit Committee of the Company met four times on 28/05/2014, 13/08/2014, 08/11/2014 and 11/02/2015. The gap between two Audit Committee meetings did not exceed four months. The Committee, in its meeting held on 28/05/2014 reviewed the Annual Accounts for the year ended 31st March, 2014.
Stakeholders' Relationship Committee
In line with the Companies Act, 2013 / Clause 49 of the Listing Agreement, the nomenclature of the ! Transfer and Investor Grievances Committee has been changed to Stakeholder Relationship Committee.
The committee's constitution and terms of reference are in compliance with provisions of the Section 178(5) of the Companies Act, 2013 and it further covers the matters specified under Clause 49(VIII)(E)(4) of the Listing Agreement with the Stock Exchanges. The minutes of the Stakeholders' Relationship Committee were noted at the Board Meeting.
The broad terms of reference of the said committee comprises to look into the redressal of grievances such as transfer of security, non-receipt of annual report, dividends etc. of various stakeholders of the Company and to approve and monitor transfers, transmission, splitting, consolidation, dematerialization of securities issued by the Company and issue of duplicate security certificates.
It also carries out the functions as envisages under the Code of Conduct to regulate, monitor and report trading by insiders and code of practices and procedures for fair disclosures of unpublished price sensitive information adopted by the Company in terms of Regulations 8(1) and 9(2) of SEBI (Prohibition of Insider Trading) Regulations, 2015.
Presently, the Stakeholder Relationship Committee comprises of Shri Yatish Parekh, Independent Director as Chairman, Shri Rajen P. Shah, Non-Executive Director, Shri Arunchandra Jariwala, Independent Director and Shri Sanjay Shah, Wholetime Director as its Members.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee is fully empowered to determine / approve and revise, subject to necessary approvals, the remuneration of managerial personnel including Managing Director after taking into account the financial position of the Company, trends in the industry, qualifications, experience, past performance and past remuneration etc. The terms of reference of the Nomination and Remuneration Committee includes the matters specified under Clause 49 of the Listing Agreement with the Stock Exchanges as well as under Section 178 of the Act.
Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors have formulated and adopted Nomination and Remuneration Policy. The details of the remuneration policy are available on the website of the Company www.gardenvareli.com The Non-Executive Directors are paid sitting fees for every meeting of the Board and its Committees attended by them.
Presently the Nomination and Remuneration Committee comprises of Shri Arunchandra N. Jariwala, as Chairman, Shri Yatish Parekh and Shri Sunil Sheth, Independent Director as its Members. One meeting of Nomination and Remuneration Committee was held on 28/05/14. All the members were present at the meeting
Payment of remuneration to the Managing Director / Whole-time Directors is governed by the Agreement executed between them and the Company. Their Agreement is approved by the Board and by the shareholders. Their remuneration structure comprises salary, incentive, bonus, benefits, perquisites and allowances, contribution to provident fund, superannuation and gratuity. The Non-Executive Directors do not draw any remuneration from the Company other than sitting fee as may be determined by the Board from time to time. The remuneration policy as approved by the Board is placed on the website of the Company www.gardevareli com.
Remuneration to Directors
There has been no materially significant related party transactions, pecuniary relationships or transactions between the Company and its Directors for the financial year under review that may have a potential conflict with the interest of the Company at large.
Remuneration paid to Non-Executive Directors
The Company has paid sitting fees to Non-Executive directors for attending meetings of the Board, Audit Committee and Share Transfer Committee meetings. The aggregate amount of sitting fees paid during the financial year 2014-15 was Rs. 4,74,000/-.
The Company has no stock option plans and hence such instrument does not form part of the remuneration package to any Executive Director and/or Non-Executive Director.
Pursuant to the provisions of the Companies Act, 2013 ("Act") and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Equity Listing Agreement ("Clause 49") as may be applicable, the Board of Directors ("Board") has carried out an annual evaluation of its own performance and that of its committees and individual directors.
The performance of the Board and individual directors was evaluated by the Board seeking inputs from all the Directors. The performance of the committees was evaluated by the Board seeking inputs from the committee members. The Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors. A separate meeting of Independent Directors was also held to review the performance of non-independent directors; performance of the Board as a whole and performance of the Chairperson of the Company, taking into account the views of executive directors and non-executive directors. This was followed by a Board meeting and discussed the performance of the Board, its committees and individual directors.
The criteria for performance evaluation of the Board included aspects like Board composition and structure; effectiveness of Board processes, information and functioning etc. The criteria for performance evaluation of committees of the Board included aspects like composition of committees, effectiveness of committee meetings etc. The criteria for performance evaluation of the individual directors included aspects on contribution to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc. In addition the Chairperson was also evaluated on the key aspects of his role.
(d) Other Committees of Directors
Management Committee of the Board
The Board of Directors has constituted Management Committee of Directors to approve routine and specific matters delegated by the Board. The composition of the Committee of Directors comprises Shri Alok P. Shah, Joint Managing Director as Chairman, Shri Sanjay S. Shah, Wholetime Director, Shri Rajen P. Shah, Non-Executive Director and Shri Yatish C. Parekh and Shri Sunil S. Sheth, Independent Director as Member. During the year 2014-15 the Committee met on 19/06/2014, 16/07/2014, 07/10/2014 and 13/01/2015 to discuss the matters coming within the Committee's purview.
(e) Corporate Social Responsibility Committee
The Committee's constitution and terms of reference are in compliance with provisions of the Section 135 of the Companies Act, 2013 and Clause 49 of the listing agreement.
The Corporate Social Responsibility Committee was constituted on 13th August, 2014. The composition of the Committee of Directors comprises Shri Yatish Parekh, Independent Director as Chairman, Shri Arunchandra Jariwala, Independent Director and Shri Suhail P. Shah, Wholetime Director as as Members. During the year 2014-15 the Committee met once on 8th November, 2014 to discuss the matters coming within the Committee's purview.
The Committee's prime responsibility is to assist the Board in discharging its social responsibility by way of formulating and monitoring implementation of the framework of corporate social responsibility policy. The terms of reference of the Corporate Social Responsibility are in accordance with the provisions of the Companies Act, 2013 and Rules made there under.
The Company has also adopted CSR policy in compliance with the aforesaid provisions and the same is placed on the Company's website at www.gardenvareli.com
As required under Clause 49(IX) of the Listing Agreement, the CEO and CFO certification of the Financial Statements, the Cash Flow Statement and the Internal Control Systems for financial reporting for the financial year ended was placed before Board of Directors at its Meeting held on 30th May, 2015
(a) Related Party Transactions
All transactions entered into with Related Parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year were in the ordinary course of business and on an arm's length pricing basis and do not attract the provisions of section 188 of the Companies Act, 2013.
There were no materially significant transactions with related party during the financial year which were in conflict with the interests of the Company at large.
Suitable disclosure as required by the Accounting Standard (AS)18 has been made in the notes to the Financial Statement.
As required under clause 49(viii) of the listing agreement with Stock Exchanges, the Company has formulated a policy on Related Party Transactions which has been put up on the website of the Company.
Your Company has formulated a Policy on materiality of Related Party Transactions and also dealing with Related Party Transactions. The policy on Related Party Transactions is hosted on the website of the Company.
(b) Disclosure of Accounting Treatments
Your Company has not adopted any alternative accounting treatment prescribed differently from the Accounting Standards.
(c) Material Subsidiary Company
The Company does not have any material unlisted Indian subsidiary, and hence, is not required to nominate an Independent Director of the Company on the Board of any subsidiary. Your Company formulated a Policy on Material Subsidiary as required under Clause 49(V)(D) and the Policy is hosted on the website of the Company.
(d) Risk Management
Your Company has laid down procedure to inform Board members about risk assessment and minimization and has implemented the Risk Management plan and continuously monitors it. A detailed review of business risks and the Company's plan to mitigate them is presented to the Audit Committee towards risk identification, analysis and development of risk mitigation plan and reporting to the Board periodically.
(e) Compliance by the Company
The Company had complied with the requirements of the Stock Exchanges, SEBI and other statutory authorities on all matters relating to capital market during the last 3 years. No penalties or strictures have been imposed on the Company by the Stock Exchanges, SEBI or other statutory authorities relating to the above.
Code of Conduct:
The Company's Board has laid down a code of conduct for all Board members and senior management of the Company. The code of conduct is available on the website of the Company. All Board members and senior management personnel have affirmed compliance with the code of conduction during the year 2014-15. A declaration signed by the Managing Director to this effect is enclosed at the end of this report.
Prevention of Insider Trading Code
The Company has adopted a Code of Conduct to regulate, monitor and report trading by insiders and code of practices and procedures for fair disclosures of unpublished price sensitive information in terms of Regulations 8(1), 9(1) and 9(2) of SEBI (Prohibition of Insider Trading) Regulations, 2015.
All the Directors, employees at senior management level and other specified persons who could have access to unpublished price sensitive information of the Company are governed by this code.
Whistle Blower Policy / Vigil Mechanism:
In conformity with the requirements of Section 178 of the Companies Act, 2013 read with provisions of Clause 49 of the Listing Agreement, the Company has devised Whistle Blower / Vigil Mechanism through which its Directors, Employees and Stakeholders can report their genuine concerns about unethical behaviors, actual or suspected fraud or violation of the Company's code of conduct or ethics policy.
The said policy provides for adequate safeguard against victimization and also direct access to the higher levels of supervisors. No employee of the Company / no other person has been denied access to the Audit Committee of the Board of Directors of the Company. During the year under review, no complaints have been received from any whistle blower. The Whistle Blower Policy of the Company has been posted on the website of the Company www.gardenvareli.com
Preventing Conflict of Interests
Members of Board and Senior Management Team while discharging their duties, avoid their conflict of interest in the decision making process. The members of Board refrain themselves from any discussions and voting in transactions where they have concern or interest.
Reconciliation of Share Capital Audit
As stipulated by Securities and Exchange Board of India (SEBI), a qualified Practicing Company Secretary carrying out the Share Capital Audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), shares held physically as per the register of members and the total issued and listed capital. The audit is carried out every quarter and the total issued and listed capital. This audit is carried out on quarterly basis and the report thereon is submitted to the Stock Exchanges and is also placed before the Stakeholder Relationship Committee and the Board of Directors.
7. MEANS OF COMMUNICATION:
(a) The Quarterly (Unaudited) Financial Results are sent to Stock Exchanges where the Company's shares are listed and are normally published in The Time of India (English) and Dhabkar (Vernacular), both Surat editions.
(b) Management Discussion and Analysis report forms part of the Directors Report.
8. GENERALSHAREHOLDER INFORMATION:
(a) 36th Annual General Meeting:
Date : Wednesday, 9th September, 2015 Time : 11:00 a.m.
Venue : Tulsi Krupa Arcade, Puna-Kumbharia Road, Dumbhal Surat 395010.
(b) Financial Calendar (2014-15):
Results for the quarter ending June 30, 2015 : July/August, 2015.
Results for the quarter ending September 30, 2015 : October/November, 2015
Results for the quarter ending December 31, 2015 : January/February, 2016
Results for the year ending March 31, 2016 : April/May, 2016
Book Closure Date : Thursday, 3rd September, 2015 to Wednesday, 9th September, 2015: (both days inclusive)
Listing on Stock Exchanges: The Company's Equity Shares are listed on the following stock Exchanges:
(1) The Ahmedabad Stock Exchange Limited (ASE),
(2) The Bombay Stock Exchange Limited (BSE)
(3) National Stock Exchange of India Limited (NSE).
The Company has paid the Annual Listing fee for the year 2015-16.
As on 31st March 2015, there were 72954 shareholders of the Company.
(d) Stock Code:
The Ahmedabad Stock Exchange Limited (Physical Segment) : 18350
The Bombay Stock Exchange Limited (Physical Segment) : 155
The Bombay Stock Exchange Limited (Demat Segment) : 500155
National Stock Exchange of India Limited : GARDENSILK(EQ)
Demat ISIN in NSDL and CDSL for Equity Shares : INE526A01016.
Corporate Identity Number (CIN): L17111GJ1979PLC003463
(f) Registrar and Share Transfer Agents:
Karvy Computershare Private Limited, (Unit: SuratTextile Mills Limited), Karvy Selenium, Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad 500032. Toll Free No. (India) : 1800 345 4001 Phone No. 040 67162222 Fax No. 040 23001153 Email: email@example.com
(g) Share Transfer System:
All the share related work is being undertaken by the company's Registrar & Transfer Agent. A Share Transfer Committee of two Directors has been constituted to approve the share transfer, transmission, split, consolidation etc. of shares. The transfers which are complete in all respects are taken up for approval at least once in a fortnight and the transferred securities dispatched to the transferee within 21 days. The details of transfer / transmission approved by the Board are noted by the Board at its next meeting.
h) Depository Services:
The Equity Shares of your Company are traded in compulsory dematerialised form by all the investors. The company has entered into agreements with both the depositories viz., National Securities Depositories Ltd.
NSDL) and Central Depository Services (India) Ltd. (CDSL), enabling the investors to hold shares of the Company in electronic form through the depository of their choice.
Dematerialisation of Shares:
38348671 Equity Shares aggregating to 91.10% of the total Equity Capital is held in dematerialized form as on 31/03/2015. All shares held by Promoters / Promoter Group Companies have been dematerialized. Trading in equity hares of the Company is permitted only in dematerialized form as per notification issued by the Securities and Exchange Board of India (SEBI).
Individual shareholders holding shares singly or jointly in physical form can nominate a person in whose name the shares shall be transferable in case of death of the registered shareholder(s). Nomination facility in respect of shares held in electronic form is also available with the depository participants as per the bye-laws and business rules applicable to NSDL and CDSL. Nomination form can be obtained from the Company's Registrar and Transfer Agent.
Address for Correspondence:
For Transfer / Dematerialisation of Shares, Payment of Dividend on Shares and any other query relating to the shares of the Company.
(i) For Shares held in Physical Form Karvy Computershare Private Limited, (Unit: Garden Silk Mills Limited), Karvy Selenium, Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad 500032. Toll Free No. (India) : 1800 345 4001 Phone No. 040 67162222 Fax No. 040 23001153 Email: firstname.lastname@example.org
(ii) For Shares held in Demat Form Respective Depository Participants of the shareholders.
(iii) For query on Annual Report
Secretarial Department, Tulsi Krupa Arcade, 3rd Floor, Puna-Kumbharia Road, Dumbhal, Surat 395010As required in terms ofClause 47(f) of the Listing Agreement, the Company has designated an e-mail ID exclusively for the purpose of registering complaints by investors. The e-mail ID is sharedepartment@ gardenvareli.com
Eliminate Duplicate Mailing
If you hold the Equity Shares of the Company in more than one Folio in your name or with the same address as other shareholders of the Company, you may authorize the Company to discontinue mailing of multiple Annual Reports.
By virtue of Ministry of Corporate Affairs ("MCA") Circular Nos.17/2011 and 18/2011 dated April 21, 2011 and April 29, 2011 respectively, read with Rule 11 of the Companies (Accounts) Rules, 2014, service of documents may be made to members through electric mode.
We therefore appeal to the members to be a part of the said "Green Initiative" and request the members to register their name in getting the said documents in electronic mode by sending an email giving their Registered Folio Number and/or DP Id/Client ID to the dedicated email address email@example.com or login at the R&TA's website www.gardenvareli.com and register their request.
Those members, who want the above documents in physical form, must indicate their option by sending a letter or an email to the Registrar at the specially created e-mail ID firstname.lastname@example.org or login at the R&TA's website www.gardenvareli.com quoting their DP ID & Client ID and/or Registered Folio Number.
9. Non-Mandatory Requirements Shareholders' Rights
The half yearly financial results are published in the newspapers as mentioned above and also they are displayed under the investor relations section on the Company's website 'www.gardenvareli.com' Therefore, the results were not separately circulated to all shareholders.
Praful A. Shah
Chairman & Managing Directo
Date: 5th June, 2015