CORPORATE GOVERNANCE REPORT
The Director Present the Company's Report on Corporate Governance in compliance with Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited for the Financial Year 31st March, 2015
COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE
The Company's Management acknowledges that corporate governance is a set of laws, regulations and good practices that enable an organization to perform efficiently and effectively. The philosophy of the Company towards good corporate governance is to enhance the long-term economic value of the Company, its shareholders and other stakeholders at large by adopting better corporate practices in fair and transparent manner. The Company believes that Corporate Governance is an ongoing process and there is a need to view Corporate Governance as more than just a regulatory requirement as good governance, apart from business results, leads to enhanced shareholders value.
The Corporate Governance Structure of Garware Polyester Limited is as follows:
1. Board of Directors: The Board is entrusted with the ultimate responsibility of the management, directions and performance of the Company. As its primary role is fiduciary in nature, the Board provides leadership, strategic guidance, objective and independent view to the Company's management while discharging its responsibilities, thus ensuring that the management adheres to ethics, transparency and disclosures.
2. Committees of the Board: The Board has constituted the following Committees viz. Audit Committee, Remuneration and Nomination Committee, Corporate Social Responsibility (CSR) Committee and Stakeholders Relationship Committee. Each of the said Committee has been mandated to operate with a given framework.
The Report on Corporate Governance is divided into six parts: -
I. Board of Directors - Composition & Meetings
II. Committees of the Board
III. Remuneration of Directors
V. Means of Communication
VI. General Shareholder Information I.
BOARD OF DIRECTORS:
a) COMPOSITION OF THE BOARD OF DIRECTORS:
The Company has a broad based Board of Directors, constituted in compliance with the relevant guidelines issued under Companies Act, 2013, Listing Agreement and in accordance with the best practices for Corporate Governance. The Board functions either as a full Board or through various Committees constituted to oversee specific areas. Policy formulation, setting up of goals and evaluation of performance and control functions vest with the Board. Currently, the Board comprises of the following:
The Non-Executive Independent Directors fulfill the conditions of independence specified in Section 149(6) of the Companies Act, 2013 and Rules made there under and meet with requirement of Clause 49 of the Listing Agreement entered into with the Bombay Stock Exchange. A letter of appointment to Independent Director as provided in Companies Act, 2013 and the Listing Agreement has been issued and disclosed on the website of the Company viz. www.garwarepoly.com
b) MEETING OF THE BOARD OF DIRECTORS:
The Company Secretary prepares the agenda and the explanatory notes, in consultation with the Chairman and Managing Director, Whole-time Directors and other departmental heads and circulates the same in advance to all the Directors. The Company places before the Board all the relevant and necessary data/information at it's meetings related to production, sales, exports, review of business, any legal proceedings by/against the Company, share transfers, quarterly financial results, minutes of: (a) previous Board Meetings, (b) Audit Committee Meetings, (c) Stakeholders Relationship Committee Meetings (d) Nomination and Remuneration Committee Meeting and such other relevant information. The information as specified in Annexure 1A of Clause 49 of the Listing Agreement is regularly made available to the Board, whenever applicable for discussion and consideration.
The Board meets at least once every quarter (at interval of less than 120 days), inter alia, to review the quarterly results. During the year under review commencing w.e.f. April 1, 2014, four Board Meetings were held. The gap between any two Board Meetings did not exceed 4 months. The details of Board Meetings held during financial year 2014-15 are given below:
Post Meeting Mechanism
The important decisions taken at the Board/Board Committee meetings are communicated to the concerned departments/ divisions.
The Company Secretary attends the Board/Board Committee meetings and advises on compliances with applicable laws and governance.
FAMILIARISATION PROGRAMME FOR DIRECTORS
At the time of appointing a Director, a formal letter of appointment is given to him, which inter alia explains the role, function, duties and responsibilities expected of him as a Director of the Company. The Director is also explained in detail the Compliance required from him under the Companies Act, 2013, Clause 49 of the Listing Agreement and other relevant regulations and affirmation taken with respect to the same. The Chairman and Managing Director also have one to one discussion with the newly appointed Director to familiarise him with the Company's operations. Further the Company has put in place a system to familiarise
the Independent Directors about the Company, its products, business and the on-going events relating to the Company.
COMMITTEES OF THE BOARD
The Board has constituted Committees of Directors to take informed decisions and to oversee the activities falling within the purview of their terms of reference. The following are the various Committees of the Board:
(A) Audit Committee
(B) Stakeholders Relationship Committee
(C) Nomination and Remuneration Committee
(D) Corporate Social Responsibility Committee
Audit Committee is also made responsible for overseeing, monitoring and implementation of policies related to Vigil Mechanism and Business Risk Management.
(A) AUDIT COMMITTEE:
(ii) Terms of Reference:
The powers and terms of reference of the Audit Committee are as mentioned in Clause II (C), (D) & (E) of the Listing Agreement and Section 177 (4) of the Companies Act, 2013. The brief descriptions of terms of reference are:
• Overseeing and ensuring the adequacy and compliance of internal control systems.
• Reviewing the quarterly, half-yearly and annual financial statements with special emphasis on accounting policies and practices, compliance with accounting standards and other legal requirements concerning financial statements before submission to the Board.
• Reviewing the adequacy of the Audit and Compliance, including their policies, procedures, techniques and other regulatory requirements.
• Undertaking periodical review of Internal Audit Reports and appraising and reviewing the scope of Internal Audit functions from time to time.
• Interacting effectively with the Statutory Auditors, Secretarial Auditor and Cost Auditor from time to time and to discuss about finalisation of annual financial statements, secretarial and cost audit reports.
• Approval of appointment of CFO after assessing the qualifications, experience & background, etc. of the candidate.
• Considering any other matter, which may be referred to them by the Board of Directors of the Company.
• The Minutes of the Audit Committee Meetings are placed at the Meeting of the Board of Directors.
• Review of the following information:
> Management discussion and analysis of financial condition and results of operations;
> Statement of significant related party transactions;
> Management letters/letters of internal control weaknesses issued by the Statutory Auditors;
> Internal audit reports relating to internal control weaknesses; and
> The appointment, removal and terms of remuneration of the Chief Internal Auditor.
> The appointment of Statutory Auditors for services other than Statutory Audit.
ii) Terms of Reference:
Brief descriptions of terms of reference are:
• To consider and approve transfer/transmission of shares and issuance of duplicate share certificates etc.
• Redressal of shareholder's/investor's complaints relating to transfer / transmission of shares, non-receipt of annual report, dividends, transmission, transposition, splitting, consolidation and dematerialisation of shares, etc.
(iii) Details of complaints received and redressed during the year from 1st April, 2014 to 31st March, 2015.
During the year under review, the Company has resolved investor grievances expeditiously. As per information received from Registrar M/s. Link Intime India Private Limited, during the year, the Company received 98 complaints from shareholders, which were resolved. The details are as under:
(ii) Terms of Reference:
Brief descriptions of terms of reference are:
• Recommend to the Board the set up and composition of the Board and its Committees including the "formulation of the criteria for determining qualifications, positive attributes and independence of a director". The Committee will consider periodically reviewing the composition of the Board with the objective of achieving an optimum balance of size, skills, independence, knowledge, age, gender and experience.
• Recommend to the Board the appointment or reappointment of Directors.
• Devise a policy on Board diversity.
• Recommend to the Board appointment of Key Managerial Personnel ("KMP" as defined by the Act) and executive team members of the Company (as defined by this Committee).
• Carry out evaluation of every Director's performance and support the Board and Independent Directors in evaluation of the performance of the Board, its Committees and individual Directors.
• This shall include "formulation of criteria for evaluation of Independent Directors and the Board".
• Recommend to the Board the remuneration policy for Directors, Executive team or Key Managerial Personnel.
• To review the overall compensation policy and remuneration payable to Managing / Whole-time Directors and Key Managerial Personnel.
• To make recommendations to the Board of Directors on the increments in the remuneration of the Directors and Key Managerial Personnel.
• Performing such other duties and responsibilities as may be consistent with the provisions of the Committee Charter.
(D) CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Pursuant to the provisions of the Section 135 of the
Companies Act, 2013, the Board has constituted a Corporate Social Responsibility Committee on 29th May, 2014. Mrs. Sarita Garware Ramsay is the Chairperson and Mr. B. Moradian and Dr. M. C. Agarwal are the other two members of the Committee and defined the role of the Committee.
The Company Secretary acts as Secretary to the Committee.
The Company formulated CSR Policy, which is uploaded on the website of the Company www.garwarepoly.com
(ii) Terms of Reference
The Committee is inter-alia authorized to formulate and recommend to the Board a CSR Policy, the amount of expenditure to be incurred on the permissible activities as prescribed under Schedule VII of the Companies Act, 2013. The Committee shall be responsible for monitoring the CSR Policy.
(iii) Meeting and Attendance during the year:
During the year Corporate Social Responsibility Committee met once on 31.07.2014. The necessary quorum was present at the meeting. Mrs. Sarita Garware Ramsay - Chairperson of the Committee and Mr. B. Moradian - Member of the Committee were present at the Meeting.
(E) INDEPENDENT DIRECTORS' MEETING
During the year under review, the Independent Directors met on March 19, 2015, inter-alia, to discuss:
> Evaluation of the performance of Non-Independent Directors and the Board of Directors as a whole;
> Evaluation of performance of the Chairman of the Company, taking into account the views of the Executive and Non-Executive Directors.
> Evaluation of the quality, content and timelines of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
Mr. B. Moradian, Dr. M. C. Agarwal, Mr. T. M. Parikh and Mr. Nilesh R. Doshi, Independent Directors were present for this meeting.
III. POLICY FOR SELECTION AND APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION:
(A) Remuneration to Non-Executive Directors
The Non-Executive Directors are paid remuneration by way of sitting fees. The Non-Executive Directors are paid sitting fees for each meeting of the Board or Committee of Directors attended by them. The total amount of sitting fees paid during the Financial Year 2014-15 was Rs. 3,74,000/-. The Non Executive Independent Directors do not have any material pecuniary relationship of transactions with the Company.
(B) Remuneration to Executive Directors
The appointment and remuneration of Executive Directors including Chairman and Managing Director and Whole time Directors is governed by the recommendation of the Nomination and Remuneration Committee, resolutions passed by the Board of Directors and shareholders of the Company. The remuneration package of the Chairman and Managing Director and Whole-time Directors comprises of salary, perquisites, allowances and contributions to Provident Fund and other Retirement Benefits Funds as approved by the shareholders at their General Meetings.
The remuneration of the Board members is also based on the Company's size, its economic and financial position, industrial trends and compensation paid by the peer companies. Compensation reflects each Board member's responsibility and performance. The remuneration to Managing Director, Joint Managing Directors and Director-Technical are paid as per the Agreements entered into between them and the Company. Whenever necessary, Company seeks approval of Central Government for their remuneration.
(A) Compliances with Governance Framework
(i) The Company is in compliance with all mandatory requirement of Clause 49 of the Listing Agreement.
(ii) All transactions entered into with the 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 at arm's length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with related parties during the financial year. Related party transactions have been disclosed under the Note No. 35 of significant accounting policies and notes forming part of the financial statements in accordance with 'Accounting Standard 18'. A statement in summary form of transactions with related parties in the ordinary course of business and arm's length basis is periodically placed before the Audit Committee for their review and their recommendations to the Board for their approval.
As required under Clause 49, the Company has formulated a policy on dealing with Related Party Transactions. The Policy is available on the website of the Company www.garwarepoly.com
(iii) None of the transactions with related parties were in conflict with the interest of the Company. All the transactions are in the normal course of business and have no potential conflict with the interest of the Company at large and are carried out on an arm's length basis or fair value.
(iv) No penalties/strictures have been imposed on the Company by Stock Exchange or SEBI or other statutory authority on any matters related to capital markets, during the last three years.
(v) During the financial year 2014-2015, in accordance with the revised clause 49 (II) (F) of Listing Agreement and pursuant to section 177(9) read with Rule 7 of Companies (Meetings of Board and its Powers) Rules, 2014 of the Companies Act, 2013, the Company has adopted a whistle blower policy, the employees are free to report violations of law, rules, regulations or un-ethical conduct to their immediate superior. The confidentiality of those reporting/violations is maintained and they are not subjected to any discriminatory practice.
The Ethics Helpline can be contacted to report any suspected or confirmed incident of fraud/misconduct on: Email: email@example.com Telephone No: 0240-2567400
vi) 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 Financial Statements.
(vii) The Company recognizes the "Risk Management" as an . integrated, forward-looking process oriented approach for managing "Enterprise Wide Risks". The Company has in place a mechanism to inform the Board about the risk assessment and minimization procedures and periodical review to ensure that management controls risk through means of properly defined frame work.
(viii) Adoption of non-mandatory requirements of clause 49 of the Listing Agreement is being reviewed by the . Board from time-to-time.
(B) Code of Conduct
The Board has formulated a code of conduct for the Board Members and Senior Management Personnel of the Company. All the Board Members and Senior Management •
Personnel have affirmed their compliance with the code for the financial year ended 31st March, 2015. A Declaration to this effect signed by the Chairman of the Company is given elsewhere in the Annual Report.
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of . the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the trading window is closed. The Company Secretary & Head Compliance is responsible for implementation of the Code. VI.
All Board of Directors and the designated employees have confirmed compliance with the code.
Company has adopted new ''Code of Fair Disclosure Conduct' and 'Code for prevention of Insider Trading' for regulating, monitoring and reporting of trading by Insider as stated under SEBI (Prohibition of Insider Trading) Regulation 2015. Pursuant to provision of Regulation 8 and 9 of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulation 2015 ("Insider Regulations"), a code of Practices and Procedures for fair disclosure of unpublished price sensitive information of the Company (The Code) has been formulated.
(C) Subsidiary Companies
The Company does not have any material subsidiary company as defined under clause 49 of the Listing Agreement.
V. MEANS OF COMMUNICATION
• The unaudited quarterly / half yearly results are announced within forty-five days of the close of the quarter. The audited annual results are announced within two months from the close of the financial year as per the requirements of the Listing Agreement with the Stock Exchange. The aforesaid financial results are sent to BSE Limited (BSE) where the Company's securities are listed, immediately after these are approved by the Board. The results are published within forty-eight hours in leading English and Marathi daily newspapers. The audited financial statements form a part of the Annual Report which is sent to the Members well in advance of the Annual General Meeting.
The Company also informs by way of intimation to BSE all price sensitive matters or such other matters, which in its opinion are material and of relevance to the members and subsequently issues a Press Release in regard to the same.
In Compliance with Clause 52 of the Listing Agreement, the quarterly results, shareholding pattern, quarterly compliances and all other corporate communication to the Stock Exchange viz. BSE Limited is filed electronically on BSE's online portal and through Corporate Filing and Dissemination System (CFDS) website www.corpfiling.co.in The Company has complied with filing submissions through BSE's Online Portal.
The Board of Directors of the Company approves and takes on record the unaudited quarterly financial results in the format prescribed by the Stock Exchange, and discloses the said financial results to the Bombay Stock Exchange Limited, where the shares of the Company are listed.
Further, the said results in the prescribed format are published in the leading newspapers.
Periodic information relating to shareholding pattern and quarterly financial results are also made available on the Company's web-site immediately after the conclusion of respective Board Meeting. The Company's website is: www. garwarepoly.com
Report on Management Discussion and Analysis forms part of this Annual Report.
The quarterly results. Shareholding pattern, quarterly compliances and all other corporate communication to the Stock Exchange viz. BSE Limited are filed electronically. The Company has complied with filing submissions through BSE's Listing Centre.
GENERAL SHAREHOLDER INFORMATION
(i) Annual General Meeting
Date, Time and Venue:
29th September, 2015 at 11.30 a.m. at Registered Office of the Company - Naigaon, Post Waluj, Aurangabad - 431 133.
(ii) Financial Year: 1st April to 31st March.
(iii) Financial Calendar (tentative)
Financial Year : 1st April, 2015 to 31st March, 2016
Unaudited Financial Results for the Quarter ending:
1) 30th June 2015;
2) 30th September 2015;
3) 31st December 2015 and
4) 31st March 2016.
Within 45 / 60 days from the end of reporting quarter.
Annual General Meeting for year ending - 31st March, 2016 : Before the end of September 2016.
Date of Book Closure for the current financial year : 22nd September, 2015 to 29th September, 2015.
Email address for Investor Complaints
nimeshshah@ garwarepoly.com and pranav@ garwarepoly.com
(iv) Listing on Stock Exchange
• Shares of the Company are listed on the Bombay Stock Exchange (BSE Ltd.), under Stock Code No. 500655.
• ISIN No. for dematerialised shares is INE 291A01017.
• The Company has paid Annual Listing Fees for the year 2015-16 to the above Stock Exchange.
• The Company has paid custodial charges to National Securities Depository Limited and Central Depository Services (India) Limited
(vii) Registrars and Share Transfer Agents:
Link Intime India Private Limited, C-13, Pannalal Silk Mill Compound, L.B.S. Marg, Bhandup (West), Mumbai - 400 078. Tel. No.: 022 - 25946970 Fax No.: 022 - 25946969 e-mail : firstname.lastname@example.org Contact Person: Mr. Mahesh Masurkar
(viii) Share Transfer System
The Share Transfer requests received in physical form are registered and transferred within 15 days from the date of lodgement by the Registrars and Share Transfer Agents if the same are valid and complete in all respects and thereafter the same are duly approved by Stakeholders Relationship Committee. Since the Company's shares are compulsorily traded in demat segment on the Stock Exchange, Mumbai, bulk of the transfers takes place in electronic form.
xi) Dematerialisation of Shares and Liquidity
Company's shares are available for dematerialisation on both the Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), for which purpose the Company has entered into Agreements with the respective Institutions. The Shares of the Company are compulsorily to be delivered in the demat form to the Stock Exchanges by all investors. Nearly 94.47% of the equity shares of the Company have been dematerialised by investors and bulk of transfers take place in the demat form.
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 Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit is carried out every quarter and the report thereon is submitted to the Bombay Stock Exchange Limited where the Company's shares are listed. The audit confirms that total Listed and Paid-up Capital is in the agreement with the aggregate of the total number of shares in dematerialized form (held with NSDL and CDSL) and total number of shares in physical form.
(xii) Outstanding GDRs/ADRs/ Warrants or any convertible instruments and conversion date and likely impact on equity : Not Applicable
(xiii) Plants Locations :
Waluj, Chikalthana and Nasik.
(xiv) Address for Correspondence: Garware Polyester Limited, Garware House, 50-A, Swami Nityanand Marg, Vile Parle (East), Mumbai-400 057. Tel No: 022-6698 8000 - 15 Fax No: 022-2824 8155 / 66 e-mail: email@example.com
(xv) Reappointment / Appointment of Directors
• Information on Directors retiring by rotation and directors seeking re-appointment, subject to members approval at the ensuing Annual General Meeting is provided in the Notice.
• Ms. Sonia Garware relinquished from the post of Jt. Managing Director of the Company w.e.f. 30th September, 2014, and has continued to be on the Board as a Non-Executive & Non-Independent Director of the Company.
• Mr. Nilesh R. Doshi Joined the Board w.e.f. 12th November, 2014 as an Independent and Non-Executive Director of the Company.
(xvi) CMD/CFO CERTIFICATION
The Chairman & Managing Director and Chief Financial Officer of the Company give annual certification on financial reporting and internal controls to the Board in terms of Clause 49. The Chief Financial Officer also gives quarterly certification on financial results while placing the financial results before the Board in terms of Clause 41.
During the year, pursuant to the provisions of the Section 110 of the Companies Act, 2013, read with Companies (Management and Administration) Rules, 2014, the Company has passed certain resolutions through Postal Ballot, as per the details mentioned below:
The Company as per the Postal Ballot Notice dated November 12th, 2014, passed three resolutions: (1) Appointment of Mr. Nilesh R. Doshi as an Independent Director of the Company (2) Increase in borrowing limits of the Company and (3) Creation of Charge on the movable and immovable properties of the Company situated at Aurangabad and Nashik in respect of the borrowings