Corporate Governance Report
Company's Philosophy on Corporate Governance
GlaxoSmithKline Consumer Healthcare Limited is committed to following best global corporate governance practices in all its pursuits. The guiding principle for the Company has always been to achieve shareholders' satisfaction and maximise shareholders' value by following best corporate governance norms in true letter and spirit. The Company aims at achieving this objective by ensuring transparency in its functioning by truthful and complete communication to all its stakeholders and by inculcating a culture of ethical business conduct in all its operations.
Board of Directors Composition
The composition of the Board of Directors of the Company is in complete conformity with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The composition of the Board represents an optimal mix of professionalism, knowledge and experience which enables the Board to discharge its responsibilities and provide effective leadership to the business. The positions of the Chairman of the Board and the Chief Executive Officer of the Company are held by separate individuals, where the Chairman of the Board is a Non-Executive Director. None of the Directors of the Company are related inter-se.
Details of Board Meetings during the year ended March 31, 2016
The Board of Directors of the Company met five times during the period from April 1, 2015 to March 31, 2016 on May 8, 2015; August 5, 2015; November 6, 2015; February 8, 2016 and March 22, 2016. The Independent Directors met on March 21, 2016.
Information to the Board
The Company holds at least four Board Meetings in a year with at least one meeting in each quarter to review the quarterly financial results. The maximum gap between two Board Meetings is not more than 120 days. Agenda papers are circulated to the Board members and other permanent invitees to the Board Meeting well in advance. In addition to the specific matters which are taken at the Board Meetings, the following information is also placed before the Board for its review as per Schedule II Part A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:
• Annual Operating Plans and Capital budgets and any updates in connection therewith.
• Quarterly results of the Company.
• Minutes of the meetings of the Audit Committee and all other Committees of the Board.
• Terms of reference of the Committees of the Board.
• Statutory Compliance Certificate.
• Information on appointment and resignation of senior officers of the Company.
• Significant labor problems, if any, at any of the plant/locations of the Company.
• Significant development on the Human Resources/Industrial Relations front like signing of wage agreement, implementation of Voluntary Retirement Scheme etc.
• Information on strikes, lockouts, retrenchment, fatal accidents, dangerous occurrences, any material effluent or pollution problems or any other materially important incident, if any.
• Show cause, demand, prosecution notices and penalty notices of material importance.
• Any material default in financial obligations to and by the Company, or substantial non recovery for sale of goods by the Company.
• Non-compliance of any regulatory, statutory or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer, etc.
• Details of any joint venture or collaboration agreement.
• Sale of a material nature, of investments and/or assets, which are not in the normal course of business.
• Any issue involving possible public or product liability claims of a substantial nature, including any judgment or order which may have passed strictures on the conduct of the Company.
• Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material. Transactions that involve substantial payment towards goodwill, brand equity or intellectual property.
The Familiarisation programme along with the details of the same imparted to the Independent Directors during the year are available on the website of the Company i.e. www.gsk-ch.in .
Committees of the Board
The Board of Directors decides the composition and terms of reference of the Board Committees. The composition, terms of reference and the dates of these Committee meetings is given below:
a) Audit Committee
The Audit Committee comprises of four members, most of who are Independent Directors and possess financial and/or accounting knowledge. The Committee comprised of Mr. Mukesh H. Butani as the Chairman and Mr. Kunal Kashyap, Ms. Sangeeta Talwar and Mr. Jonathan Box as the other three members. Ms. Sonali Khanna, Company Secretary acts as Secretary to the Committee.
The Chairman, Managing Director, Finance Director and Operations Director are permanent invitees to the Audit Committee meetings. The Head of Internal Audit, the concerned partner of Price Waterhouse, the Statutory Auditors and KPMG Representatives (co-sourced internal auditors) are also invited to the Audit Committee meetings.
The Company has an Internal Audit Team which submits its report directly to the Audit Committee on a quarterly basis. The Head of the Internal Audit Department reports to the Audit Committee. The Chairman of the Audit Committee Mr. Mukesh Butani attended the last Annual General Meeting held on August 6, 2015 to answer shareholders queries.
Terms of reference:
The functioning and terms of reference of the Audit Committee including the role, powers and duties, quorum for meetings and frequency of meetings have been devised keeping in view the requirements of the Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Audit Committee has the following powers:
1. To investigate any activity within its terms of reference.
2. To seek information from any employee.
3. To obtain outside legal or other professional advice.
4. To secure attendance of outsiders with relevant expertise, if it considers necessary. The terms of reference of the Audit Committee shall include the following:
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 auditor and the remuneration and terms of appointment of auditors.
3. Review and monitor the auditor's independence and performance and effectiveness of audit process.
4. Approval of assignments and the payment thereof to statutory auditors for any other services rendered by the statutory auditors.
5. Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to:
a) Any subsequent modification of transactions of the Company with related parties.
b) Scrutiny of inter- corporate loans and investments.
c) Matters required to be included in the Director's Responsibility Statement to be included in the Board's report.
d) Changes, if any, in accounting policies and practices and reasons for the same.
e) Major accounting entries involving estimates based on the exercise of judgment by management.
f) Significant adjustments made in the financial statements arising out of audit findings.
g) Compliance with listing and other legal requirements relating to financial statements.
h) Disclosure of any related party transactions.
i) Qualifications in the draft audit report.
6. Reviewing and examining, with the management, the quarterly/annual financial statements and the auditors' report thereon before submission to the Board for approval.
6A. 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, with the management, performance of statutory and internal auditors, and adequacy of the internal financial control systems and risk management systems.
8. Reviewing the adequacy of the internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.
9. Discussion with internal auditors on any significant findings and follow up thereon.
10. 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.
11. 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.
12. Look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.
13. Valuation of undertakings or assets of the Company, wherever it is necessary.
14. To review the functioning of the Whistle Blower mechanism/vigil mechanism, address genuine concerns and:
(a) To ensure the action taken on the alleged complaints received under this mechanism.
(b) To review the adequacy of the final outcome of such complaint and ensure that the reward/punishment is commensurate with the final outcome.
(c) To get an independent expert opinion, if need be, on the alleged complaint.
15. To ensure that the vigil mechanism provides for adequate safeguards against victimisation of persons who use such mechanism and have direct access to the Chairperson of the Audit Committee in appropriate/exceptional cases.
16. Approval of appointment of CFO (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.
17. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
18. The Audit Committee mandatorily reviews the following information:
a) Management discussion and analysis of the financial conditions and results of operations;
b) Statement of significant related party transactions (as defined by the Audit Committee), submitted by management, and any modification of the transactions;
c) Management letters/letters of internal control weaknesses issued by the statutory auditors;
d) Internal audit reports relating to internal control weaknesses;
e) Reviewing the appointment, removal and terms of remuneration of the Chief internal auditor/Internal Auditors;
f) Monitoring the end use of funds raised through public offers and related matters;
g) Inter-corporate loans and investments; and
h) Any other matter the Board may request/authorise the Audit Committee to perform/review.
b) Nomination & Remuneration Committee
The Company has a Remuneration Committee which comprises of three members. The Committee presently comprises of Mr. Kunal Kashyap as the Chairman and Mr. P. Dwarakanath and Mr. Mukesh H. Butani as the other two members. Ms. Sonali Khanna, Company Secretary acts as Secretary to the Committee.
Terms of reference:
The functioning and terms of reference of the Committee have been devised in line with the recommendations as prescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013. The terms of reference of the Committee are as follows:
1. To identify persons qualified to become directors and persons appointed in the senior management.
2. To recommend to the Board the criteria for appointment and removal of persons eligible for directorship/senior management.
3. To carry out the evaluation of every directors' performance.
4. To determine the Company's policy on all elements of remuneration packages of all the Directors including salary, benefits, bonuses, stock options, pension rights and compensation payment, etc.
5. Details of fixed component and performance linked incentives along with performance criteria.
6. Service contracts, notice period, severance fees, etc.
7. Stock option details, if any - and whether issued at a discount as well at the period over which accrued and over which exercisable.
8. To formulate the criteria for determining qualifications, positive attributes and independence of a Director.
9. To recommend to the Board a policy relating to the remuneration for the directors, key managerial personnel and other employees. The Committee shall ensure the following while formulating a policy and such Policy shall be disclosed in the Board's Report.
10. Level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company successfully.
11. Relationship of remuneration to performance is clear and meets appropriate performance benchmarks.
12. Remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.
13. All other aspects of benefits and compensation to employees.
14. To determine the remuneration of the Non Executive Directors, which shall, finally be decided by entire Board of Directors.
15. To review and advise the Company on the succession planning for the senior management and ensure the organisation's readiness for continuing leadership.
16. Any other matter the Board may request/authorise the Committee to perform/review.
Payment of Commission and Sitting Fees to the Non Executive Directors and payment of Salary, Commission and Perquisites to the Whole-time Directors are as per the structure determined by the Nomination & Remuneration Committee and the Board, and subject to the overall ceilings imposed by the Companies Act, 2013 and other applicable statutes, if any. The basis is also determined by carrying out an annual analysis of the industry trends by an independent and reputed HR Management Consultant firm, which is scrutinised and recommended by the Remuneration Committee. Performance linked incentives and bonus paid to the Whole-time Directors are determined on the basis of achievement of overall financial and other objectives set for the Company at the beginning of the year and the achievement of individual objectives. The retirement age of the Whole-time Directors of the Company is 60 years while for Non Executive Directors it is 75 years. The Notice period for the Whole-time Directors is three months' notice on either side. The Service contracts are in the range of 3 to 5 years.
Criteria for making payment to the Non-Executive Directors:
The Company has a separate Policy for Remuneration of Non- Executive Directors and Employees and the same is available on the Company's website i.e. www.gsk-ch.in .
Performance Evaluation Criteria for Independent Directors
The Company has adopted a robust process for the performance evaluation of the entire Board including the Independent Directors. Please refer to the Directors' Report for details on the Performance Evaluation of the Board.
Shareholding of Non executive directors:
None of the Directors of the Company is holding any shares in the Company as on March 31, 2016.
c) Investor Grievance & stakeholders Relationship Committee
The Investor Grievance & Stakeholders Relationship Committee of the Company comprises of four members. The Committee comprised of Mr. P. Dwarakanath as the Chairman, Mr. Subodh Bhargava, Mr. R. Subramanian and Mr. Naresh Dayal as the other three members. The Committee was reconstituted with effect from August 6, 2015 and Mr. Vivek Anand was appointed as the member of the Committee in place of Mr. R. Subramanian consequent to the resignation of Mr. R. Subramanian from the Company. Ms. Sonali Khanna, Company Secretary acts as Secretary to the Committee and also as the Compliance Officer.
Terms of reference:
The functioning and terms of reference of the Committee are in conformity with the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013.
1. Redressing/Resolving of security holders complaints/grievances
• Number of complaints received
• Transfer of shares, any pending transfers etc.
• Non-receipt of Balance Sheet
• Non-receipt of dividends, bonus, rights etc.
• Complaints with regards to dematerialisation
• Number of pending complaints and reasons therefor
• Number of complaints not solved to the satisfaction of the security holder
• Any other complaint
2. Any other matter the Board may request/authorise the Committee to review/perform.
The total numbers of complaints received and replied to the satisfaction of the shareholders during the year ended March 31, 2016 under review were 137. The Company ensures that the investor's correspondence is attended expeditiously and endeavour is made to send a satisfactory reply within three days of receipt, except in cases that are constrained by disputes or legal impediments. There are no pending share transfer complaints as on March 31, 2016. The Company has advised Karvy Computershare Pvt. Ltd., its Registrar and Share transfer Agent to dispatch the shares after transfer within three days from their approval at the Share Transfer Committee.
d) Corporate social Responsibility Committee
The Corporate Social Responsibility Committee (CSR) of the Company comprises of four members. The Committee comprises of Mr. P. Dwarakanath as the Chairman and Mr. Mukesh H. Butani, Mr. Naresh Dayal and Mr. R. Subramanian as the other three members. The Committee was re-constituted on August 6, 2015 and Mr. Vivek Anand was appointed as the member of the Committee in place of Mr. R. Subramanian consequent to the resignation of Mr. R. Subramanian from the Company. Ms. Sonali Khanna, Company Secretary acts as Secretary to the Committee.
Terms of reference:
The role and terms of reference of the CSR Committee shall include the following:
1. Formulate, implement and monitor the CSR Policy of the Company from time to time.
2. Specify the projects and programmes that are to be undertaken.
3. Recommend the amount of expenditure to be incurred on the activities to be undertaken as per the CSR Policy.
4. Approve the list of CSR projects/programmes which the Company plans to undertake during the year, specifying modalities of execution in the areas/sectors chosen and implementation schedules for the same.
5. Ensure that the CSR projects/programmes of the Company also focus on integrating business models with social and environmental priorities and processes in order to create shared value.
6. Ensure that the CSR Policy of the Company provides that surplus arising out of the CSR activity will not be part of business profits of the Company.
7. Ensure that the CSR Policy specifies that the corpus would include the following:
a. at least 2% of the average net profits during the three immediately preceding financial years;
b. any income arising therefrom;
c. surplus arising out of CSR activities.
8. Monitor the implementation of the projects/programmes/activities proposed to be undertaken by the Company.
9. Ensure that the following broad activities will be undertaken under CSR:
a. eradicating hunger poverty and malnutrition, promoting preventive healthcare and sanitation and making available safe drinking water;
b. promoting education including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects;
c. promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centers and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups;
d. ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agro-forestry, conservation of natural resources and maintaining quality of soil, air and water;
e. protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional arts and handicrafts;
f. measures for the benefit of armed forces veterans, war widows and their dependents;
g. training to promote rural sports, nationally recognised sports, Paralympic sports and Olympic sports;
h. contribution to the Prime Minister's National Relief Fund or any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, Other Backward Classes, minorities and women;
i. contributions or funds provided to technology incubators located within academic institutions which are approved by the Central Government;
j. rural development projects;
k. such other area as may be prescribed or any other area the Board may authorise the Committee to include.
Means of communications
Wide publicity is accorded to the Quarterly Results by publishing them in widely circulated English daily (Financial Express) and a Punjabi daily (Punjabi Tribune) as per the requirements of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The results are also e-mailed to the Stock Exchanges where the Company is listed. The Company also has its own official press releases in various newspapers through its Public Relations agency.
The Quarterly results of the Company are also displayed on the website of the Company at www.gsk-ch.in .
Half-yearly Report to each household of shareholders
Half-yearly reports are provided to shareholders on a request being made to the Company in this regard.
Presentations made to Institutional Investors or to Analysts
Regular meetings and teleconferences were held with the Financial Institutions, Foreign Institutional Investors and Analysts. Six (6) Meetings and Three (3) Analyst Telecoms were held during the year with different Financial Analysts. They are also provided with a copy of the quarterly results after the same have been e-mailed to the Stock Exchanges. A copy of the presentations made to Financial Analysts is also made available on the website of the Company at www.gsk-ch.in <http://www.gsk-ch.in>.
General shareholder information
Annual General Meeting:
Date: The Fifty Seventh Annual General Meeting is scheduled to be held on Friday, August 5, 2016 Time: 9.00 a.m.
Venue: Punjab Public School Auditorium, The Punjab Public School (Senior Wing), Nabha, 147 201 (Punjab)
April 1, 2015 to March 31, 2016
Particulars Date of Board meeting Particulars Date of Board meeting
1. Quarter ending June 30, 2016 August, 2016
2. Quarter ending September 30, 2016 November, 2016
3. Quarter ending December 31, 2016 February, 2017 March, 2017
4. Quarter ending March 31, 2017 May, 2017
The Register of Members will be closed from July 28, 2016 to August 5, 2016 (both days inclusive).
For the year ended March 31, 2016, the Directors have recommended a dividend at the rate of Rs. 70 per equity share, subject to approval of the Members at the ensuing Annual General Meeting. If approved, the dividend shall be paid on or before September 4, 2016 to all the Members.
Listing on Stock Exchanges and Stock Code:
The shares of the Company are listed at two Stock Exchanges in India, the addresses of which are given below:
Stock Exchange Stock Code
Bombay Stock Exchange Limited,
Stock Exchange Towers, Dalal Street, Fort, Mumbai – 400 023
Stock Code -Demat 500676
National Stock Exchange of India Limited,
Exchange Plaza, Bandra - Kurla Complex, Bandra (East), Mumbai – 400 051
Stock Code -GSKCONS
Registrar and Transfer Agents:
Karvy Computershare Pvt. Limited,
Karvy Selenium Tower B, Plot No 31 & 32, Gachibowli, Financial District, Nanakramguda, Serilingampally, Hyderabad - 500 008; E-mail:-email@example.com
Share Transfer System:
Share transfers, where transfer documents are found in order, are registered and returned in the normal course within a period of 15 days from the date of receipt of the documents. Any requests for dematerialisation/rematerialisation of shares are processed and confirmation is given to depositories i.e. National Securities Depositories Limited (NSDL) or Central Depositories Services (India) Limited (CDSL), as the case may be, within 15 days from the date of receipt.
Outstanding GDRs/ADRs/warrants or any convertible instruments, conversion date and likely impact on equity:
We have no GDRs/ADRs or any commercial instrument.
Commodity price risk or foreign exchange risk and hedging activities
The Company monitors the price of key commodities closely and formulates the procurement strategies basis actual price movements / trends / projections in India and Global Markets. The Company has adequate governance structure of aligning and reviewing the procurement strategies in line with external and internal dynamics.
The Company does not hedge foreign exchange risk as the exposure is not material.
Nabha Plant: GlaxoSmithKline Consumer Healthcare Limited, Patiala Road, Nabha - 147 201 (Punjab)
Rajahmundry Plant: GlaxoSmithKline Consumer Healthcare Limited, Industrial Area, Dowleswaram - 533 124 (Andhra Pradesh)
Sonepat Plant: GlaxoSmithKline Consumer Healthcare Limited, 14 km Stone, Sonepat - Meerut Road, Village Khewra, P.O. Bahalgarh - 130 121, District Sonepat (Haryana)
Address for correspondence:
GlaxoSmithKline Consumer Healthcare Limited, Patiala Road, Nabha - 147 201 (Punjab) CIN: L24231PB1958PLC002257
GlaxoSmithKline Consumer Healthcare Limited, 24th & 25th Floor, One Horizon Centre, DLF Phase 5, Golf Course Road, Gurgaon - 122 002 (Haryana)
Registrars and share transfer Agents:
Karvy Computershare Pvt. Limited, Karvy Selenium Tower B, Plot No 31 & 32 Gachibowli, Financial District, Nanakramguda, Serilingampally, Hyderabad - 500 008
Name, address and Contact Numbers of the Compliance officer and Company secretary:
Ms. Sonali Khanna, Company Secretary, 24th Floor, One Horizon Centre, DLF Phase 5, Golf Course Road, Gurgaon - 122 002 (Haryana) Telephone: 0124-4336500; Facsimile: 0124-4336600; Email: firstname.lastname@example.org
Email for Investors:
email@example.com , firstname.lastname@example.org
Company's website address:
• Materially significant Related Party Transactions that may have potential conflict with the interests of Company at large - during the year ended March 31, 2016, the Company has Related Party Transactions as envisaged under the Corporate Governance Code which have been mentioned in Notes 34 to the Accounts.
• There have not been any non-compliances, penalties or strictures imposed on the Company by any Stock Exchange or SEBI or any statutory authority on any matter related to capital markets, during the last three years.
Whistle Blower Policy and Vigil Mechanism
The Company has formulated a Whistle Blower Policy and Vigil Mechanism, with an aim to deter and detect misconduct and to ensure that genuine concerns of misconduct/unlawful conduct, which an individual believes may be taking place, are raised at an early stage in a responsible and confidential manner.
It is also affirmed that no member has been denied access to the Audit Committee and the Whistle Blower Committee.
The members of the Whistle Blower Committee for the year ended March 31, 2016 were Managing Director, Finance Director, Operations Director, Legal Head and HR Head. Apart from these members, the Company Secretary acts as the Co-ordinator of the Committee. The Audit Committee reviews the mechanism and all Whistle Blower complaints and investigations of the Whistle Blower Committee, at all its meetings. The Whistle Blower Policy has also been posted at the website of the Company www.gsk-ch.in.
Code of Conduct
The Board of Directors has adopted a Code of Conduct for Directors and Senior Management of the Company. An annual affirmation of compliance with the Code of Conduct is taken from all the Directors and Senior Management members of the Company to whom the Code applies. The Code of Conduct has also been posted at the website of the Company www.gsk-ch.in . CEO's affirmation that the Code of Conduct has been complied with by the Board of Directors and Senior Management is given at the end of this report.
The Company is complying with the following discretionary requirements prescribed under Schedule II Part E of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:
1. Separate posts of Chairman and CEO: The Company already has separate persons to the post of Chairman and Managing Director/CEO. Mr. Subodh Bhargava is the Non Executive Chairman and Mr. Manoj Kumar is the Managing Director.
2. Reporting of Internal Auditor: As per Audit Committee's terms of reference.
CEO & CFO Certification
The Certificate issued by the Managing Director (CEO) and Director - Finance (CFO) certifying the accuracy of the financial statements and adequacy of internal controls for financial reporting, as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Annual Report.
The Company has complied with all the mandatory requirements as specified in Regulation 17 to 27 and Regulation 46 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 regarding maintenance of functional website containing basic information about the Company and the necessary information as required to be uploaded on the Company's website.
Management Discussion and Analysis Report setting out Opportunities and Threats and also Risks and Concerns forms part of the Directors Report and is reported in this Annual Report.
For and on behalf of the Board
Manoj Kumar (DIN: 07177262) Managing Director
Place : Gurgaon
Dated : May 17, 2016