CORPORATE GOVERNANCE REPORT
1. COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE
Corporate Governance has been an integral part of the manner in which we have been conducting our business since inception. The Board of Directors and senior management are directly involved in setting the tone and mode of this philosophy through "Pancha Tatva - 5 values 1 way of life." We believe that good governance emerges from the application of the values of Respect, Responsibility, Passion for Excellence, Integrity and Transparency i.e. Panch Tatva, the foundation on which Greaves' future is recognized.
2. BOARD OF DIRECTORS (BOARD)
2.1 Composition of Board:
The Board is represented by senior and eminent professionals from diverse backgrounds. The Board consists of eight Directors, of whom two are Executive, including a woman Director and five of the six Non-Executive Directors are Independent Directors. The Chairman of the Board is a Non-executive Promoter Director, . Thus, the composition of the Board is in compliance with the statutory requirements in this regard. The Chairman and the Executive Director are liable to retire by rotation. Day-to-day management of the Company, under the superintendence and control of the Board, is vested with the Managing Director & CEO, who is supported by a competent Management Team. Thus, the Company is committed to good corporate governance, based on an effective independent Board, the separation of supervisory role from executive management and the constitution of committees to oversee critical areas.
.2 Attendance of each director at the Board Meetings and the Annual General Meeting
During the financial year 2014-15, the Board met five times i.e. on 30th April, 2014, 31st July, 2014, 4th November, 2014, 5th February, 2015 and 4th March, 2015. The gap between two meetings did not exceed 120 days. The details of the attendance of the Directors at these meetings are as follows:
2.3 Conduct of Board Meetings
The Board meets at least once in a calendar quarter to, inter alia, review the quarterly financial results, the strategic business plan and the annual budget. The annual calendar of meetings is tentatively agreed upon at the beginning of each year. Additionally, meetings are convened to transact special business, as and when necessary.
Agenda papers, containing all relevant information, including information as specified in Annexure X to Clause 49 of the Listing Agreement, are made available to the Board well in advance to enable the Board to discharge its responsibilities effectively and take informed decisions. Presentations are also made to the Board by Business and Function Heads on operations and various issues concerning the Company. The Directors also have independent access to the Senior Management at all times.
As mandated by Clause 49 of the Listing Agreement, the Company has constituted an Audit Committee, a Nomination and Remuneration Committee, a Stakeholders' Relationship and Share Transfer Committee and a Risk, CSR and Strategy Committee. The functioning of each of these Committees is regulated by the specific terms of reference, roles and responsibilities and powers detailed in their respective Charters.
The Company Secretary of the Company acts as the Secretary to these Committees.
The Minutes of the meetings of all these Committees are placed before the Board for discussions / noting. None of the Directors is a member of more than ten committees or Chairman of more than five committees across all companies in which they are Directors. Declarations regarding committee memberships / chairmanships, in other public companies, as on 31st March, 2015 have been received from the Directors.
3.1 Audit Committee:
The Audit Committee (the Committee) monitors and provides effective supervision of the Management's financial reporting process with a view to ensure accurate, timely and proper disclosures and the transparency, integrity and quality of financial reporting.
3.1.1 Terms of reference in brief
The primary role of the Committee is that of:
(i) oversight of the financial reporting process and disclosure of financial information;
(ii) recommending the appointment, remuneration and terms of appointment of the auditors of the Company;
(iii) reviewing with Management the quarterly financial statement and the annual financial statement and auditor's report thereon;
(iv) reviewing and monitoring the auditor's independence and performance, and effectiveness of audit process; (iv) approving the transactions with related parties or any subsequent modification thereof ;
(vii) evaluating internal financial controls and risk management systems;
(viii) reviewing the findings of any internal investigations by the internal auditors;
(ix) reviewing the functioning of the Whistle Blower mechanism;
(x) approving the appointment of Chief Financial Officer; The Committee reviews the following information:
• Management Discussion and Analysis of financial condition and results of operations;
• Statement of significant and related party ran sactions;
• Management letters / letters ofinternal control weaknesses issued by the Statutory Auditors;
• Internal audit reports relating to internal control weaknesses; and
• Appointment, removal and terms of remuneration ofthe Chief Internal Auditor; The Committee also acts as a link between the auditors and the Board.
3.1.3 Meetings and attendance
During the financial year 2014-15, the Committee met four times i.e. on 29th April, 2014, 30th July, 2014, 4th November, 2014 and 4th February, 2015. The gap between any two meetings did not exceed 120 days.
All the members attended all the meetings of the Committee other than Mr. Vijay Rai, who attended three meetings.
The Chairman of the Committee was present at the Annual General Meeting held on 31st July, 2014.
The Managing Director & CEO, the Chief Financial Officer of the Company, the Statutory Auditors and the Internal Auditors are permanent invitees at Audit Committee Meetings. All of them attended all the Audit Committee meetings held during the year.
3.2 Nomination and Remuneration Committee
The Nomination and Remuneration Committee ensures that the Company's remuneration and incentive policies, practices and performance indicators are aligned with the Board's vision, values and overall business objectives and are appropriately designed to motivate the Executive Directors, Key Management Personnel and the Senior Management to pursue the long term growth and success of the Company
3.2.1 Terms of reference in brief
1. To formulate the criteria for determining the qualifications, positive attributes and independence of Directors and recommend to the Board their appointment;
2. To review and approve the Executive Directors' remuneration on behalf of the Board, subject to the approval of the Shareholders, as follows:
(a) Elements of the remuneration package that is salary, perquisites, retirement benefits, separation compensation and the structure of the remuneration package viz. the proportion of fixed and variable component;
(b) Remuneration amount, annual / mid-term increments, merit rewards, special payments, etc.;
(c) Changes in the remuneration package, terms of appointment, notice period, severance fees, recruitment, retention and termination policies and procedures;
(d) Details of stock options and period over which the options are exercisable;
(e) Key performance indicators, the actual performance vis-a-vis the key performance indicators and amount of the annual performance linked incentive;
3. To recommend to the Board a policy, relating to the remuneration of the Executive Directors, Key Managerial personnel and other employees;
4. To devise a policy on Board diversity;
5. To formulate the criteria for evaluation of Independent Directors and the Board.
Meetings and attendance
During the financial year 2014-15, the Nomination and Remuneration Committee met three times i.e. on 29th April, 2014, 31st October, 2014 and 5th February, 2015, where all the members were present.
The Remuneration Policy of the Company is performance driven and is structured to attract and retain talent, motivate employees, recognize their merits and achievements and promote excellence in their performance.
1. For Whole-time Directors
The remuneration of the Whole-time / Executive Directors is determined by the Nomination and Remuneration Committee, subject to the approval of the Shareholders and if required, of the Central Government. The Nomination and Remuneration Committee takes into account the qualification, experience and prevailing industry practices while deciding the remuneration.
The remuneration paid to the Executive Directors comprises of salary and allowances, perquisites, retirement benefits and performance linked incentive. Details of remuneration paid to Mr. Sunil Pahilajani, Managing Director & CEO and Ms. Monica Chopra, Executive Director - Legal & Company Secretary, for the financial year 2014-15 are as follows
2. For Non-executive Directors
The Non-executive Directors are uniformly paid by way of fixed remuneration in the form of sitting fees and commission on the profits, if any, made by the Company.
a. Sitting Fees
The Non-executive Directors are entitled to sitting fees for attending the Board and Committee meetings, as per the details given below:
In terms of the Members 'approval given at the Annual General Meeting held on 30th July, 2012, commission is payable at a rate not exceeding 1% per annum of the Net Profits of the Company. The actual amount of commission payable to each Non-executive Director is decided by the Board on the following criteria:
• Number of meeting sattended
• Role and contribution as Chairman / Member of the Board
• Role and contribution as Chairman / Member of the Committee
• Overall contribution and time devoted outside the meetings
3.3 Stakeholders' Relationship and Share Transfer Committee
The Stakeholders' Relationship and Share Transfer Committee periodically reviews investors' grievance redressal process and evaluates the performance and service standards of the Registrar and Share Transfer Agent of the Company to ensure that the Shareholders' grievances are timely and satisfactorily resolved.
3.3.1 Terms of reference in brief
• To receive the report of the Registrar and Share Transfer Agent about investors' complaints and grievances and follow up for necessary action taken for redressal thereof;
• To review the existing "Investor Redressal System"and suggest measures for improvement in investor relations;
• To note the transfer/transmission/transposition/rematerialisation/dematerialization of shares and consolidation/ splitting of folios as approved by the person duly authorized by the Board in this regard and the issue of share certificates in exchange for sub-divided, consolidated, defaced, torn, etc.;
• To appoint and remove the Registrar and Share Transfer Agent, decide the terms and conditions, remuneration, service charge / fees and review their performance;
• To decide the frequency of audit of the Registrar and Share Transfer Agent and to consider the Auditor's Report thereon.
The members of the Stakeholders' Relationship and Share Transfer Committee are Mr. Vijay Rai, a Non-executive Director as Chairman, Mr. Sunil Pahilajani and Mr. Navneet Singh.
3.3.3 Meetings and attendance
During the year under review, the Stakeholders' Relationship and Share Transfer Committee met twice i.e. on 30th July, 2014 and 5th February, 2015, where all the members were present.
3.3.4 Name and designation of Compliance Officer
Ms. Monica Chopra, Executive Director - Legal & Company Secretary is the Compliance Officer of the Company as required under Clause 47 of the Listing Agreement.
3.3.5 Investor complaints
The Company received two complaints during the year under review which were satisfactorily addressed. There are no pending complaints.
In keeping with the Company's focus on promptly resolving investors' complaints, the Registrar and Share Transfer Agent, strives to attend to all investor complaints with 48 hours of receipt.
The Company has a dedicated email ID firstname.lastname@example.org to which investors can send their grievances. Mr. Bhavesh Shah, GM Legal & Secretarial, is designated as the Investor Relations Officer who may be contacted at the Registered Office of the Company or on Telephone : +91 22 33551700.
As an investor relations initiative, the Company maintains a web-based service Investor Assist to enable shareholders to view the information relating to their shareholding, dividend entitlement, current status of their requests made for transfer / transmission of shares, change of address, complaints, if any, etc. Members can access this service free of cost. Complete details of the past unpaid / unclaimed dividends and fixed deposits lying with the Company have been uploaded on the Company's website www.greavescotton.com under the head "Investor Relations". Shareholders are urged to visit the website and claim their unpaid / unclaimed dividend and fixed deposits before the amount gets transferred to the Investor Education and Protection Fund of the Government. Pursuant to Clause 49 of the Listing Agreement, the details of Directors seeking appointment / re-appointment at the forthcoming Annual General Meeting are provided in the Notice convening the Annual General Meeting.
5.1 Related Party Transactions
During the year under review, no new transactions were entered into with Related Parties. Details of the transactions under the existing contracts with Related Parties were placed before the Audit Committee. These transactions were in the ordinary course of business and at an arm's length. There were no materially significant Related Party transactions that may have a potential conflict with the interests of the Company at large. Details of transactions with Related Parties are disclosed in Notes to the standalone financial statement, forming a part of this Annual Report.
5.1.2 Policy on dealing with Related Party Transactions
The Company has formulated a policy on materiality of related party transactions and also dealing with Related Party transactions and disclosed the same on the website of the Company www.greavescotton.com and can be accessed through the following link http://www.greavescotton.com/Upload/Investor/Related_Party_Transactions.pdf>.
5.2 Accounting treatment
The Company has, in preparation of the financial statement, followed the applicable Accounting Standards.
The Management Discussion and Analysis, as required under Clause 49 of the Listing Agreement, is annexed to the Directors' Report which forms a part of this Annual Report.
5.4 Compliance by the Company
There was no instance of non-compliance wih any requirement of the Stock Exchanges, Securities Exchange Board of India (SEBI) and other statutory authorities on any matter relating to capital market during the last three years.
5.5 CEO/CFO Certification
The Managing Director & CEO and the Chief Financial Officer of the Company have certified to the Board with regard to the financial statements and other matters as required by Clause 49 of the Listing Agreement. The Certificate forms a part of this Annual Report.
5.6 Certificate on Corporate Governance
The Auditors' Certificate on compliance with the conditions of corporate governance, as stipulated in Clause 49 of the Listing Agreement, is annexed herewith.
5.7 Subsidiary Companies
The Company does not have a material non-listed Indian subsidiary as defined under Clause 49 of the Listing Agreement. However, the Company has unlisted subsidiary companies in India and abroad. The Minutes of the Board Meetings of the subsidiary companies are placed at the Board Meetings of the Company. Details of significant transactions and arrangements entered into by the subsidiary companies are noted by the Board. The Audit Committee of the Company reviews the financial statement of the subsidiary companies including investments made.
The Company has adopted a policy for determining material subsidiaries. The said policy has been placed on the website of the Company www.greavescotton.com < and can be accessed through the following link <http://www.greavescotton.com/> Upload/Investor/ policy_on_material_subsidiaries.pdf.
5.8 Code of Conduct for Prevention of Insider Trading
The Company has adopted a Code of Conduct for Prevention of Insider Trading as well as a Code of Corporate Disclosure Practices (Code), as prescribed by the SEBI Regulations in this regard. The Compliance Officer is responsible for monitoring adherence to the rules for the preservation of Unpublished Price Sensitive Information, pre-clearance of trades, monitoring of trades and implementation of the Code for trading in Company's securities, under the overall supervision of the Board. All Directors and employees in the grade of Vice President and above and other Designated Employees, who could be privy to the Unpublished Price Sensitive Information of the Company, are governed by this Code.
Ms. Monica Chopra, Executive Director - Legal & Company Secretary, has been appointed as the Compliance Officer for the purpose of this Code.
5.9 Code of Conduct
The Board is responsible for ensuring that rules are in place to avoid conflicts of interest by members of the Board. The Company has adopted a Code of Conduct for members of the Board and senior management personnel as required under Clause 49 of the Listing agreement. The Code is posted on the Company's website www.greavescotton.com. All the members of the Board and Senior Management personnel have affirmed their compliance with the Code. A declaration to this effect, signed by the Managing Director & CEO, forms a part of this Annual Report. Disclosures have also been received from the Senior Management personnel relating to the financial and commercial transactions in which they or their relatives may have a personal interest. However, no transactions have been reported that could have a potential conflict with the interests of the Company at large.
5.11 Whistle Blower Policy
The Company believes in conducting its affairs in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical behavior. Accordingly, a Whistle Blower Policy has been formulated where employees can voice their genuine concerns about any unethical or unacceptable business practice or any event of misconduct. It provides a mechanism for the employees of the Company to approach the Compliance Officer or the Chairman of the Audit Committee. The Company ensures that genuine Whistle Blowers are accorded complete protection from any kind of unfair treatment or victimisation. The Policy is posted on the website of the Company www.greavescotton.com No personnel has been denied access to the Audit Committee.
6. MEANS OF COMMUNICATION
a) Newspapers: The Company publishes the statement of financial results (quarterly / half yearly / annual) in prominent English & Marathi newspapers likes Business Standard and Navshakti.
b) Press Releases: The Company issues press releases highlighting significant performance and operational milestones. The press releases are sent to, and are displayed by, the Stock Exchanges, where the shares of the Company are listed.
c) Analysts and Investors' Meet / Call: The Company regularly conducts meetings / calls with analysts and investors to brief them of the financial and operational performance.
d) Website: The financial results are also simultaneously posted on the Company's website www.greavescotton.com
7. GENERAL SHAREHOLDER INFORMATION
General Meeting Information
Day and Date : Thursday, 6th August, 2015
Time : 3.00 p.m.
Venue : Hall of Culture, Ground floor, Nehru Centre, Worli, Mumbai - 400 018
Book Closure : Saturday, 1st August, 2015 to Thursday, 6th August, 2015 (both days inclusive)
Dividend and Payment date : Final dividend of Rs. 1.10 per share; that is 55%, payable at par on or after 2nd September, 2015 (if approved
7.2 Financial year of the Company: 1st April to 31st March each year
7.3 Financial Calendar (tentative)
The Company expects to announce the financial results for the year 2015-16, as per the following schedule: 1st quarter ending 30th June, 2015 : on or before 14th August, 2015
2nd quarter ending 30th September, 2015 : on or before 14th November, 2015
3rd quarter ending 31st December, 2015 : on or before 14th February, 2016
4th quarter and financial year ending 31st March, 2016 : on or before 30th May, 2016
97th Annual General Meeting : on or before 30th September, 2016
7.4 Stock Exchange Information
The Company's shares are listed on the following Stock Exchanges, having nation-wide trading terminals:
- BSE Limited (BSE) under Stock Code 501455
- National Stock Exchange of India (NSE) under Stock Code GREAVESCOT
The Company's Shares form part of Group "B" / S&P BSE 500 Index of BSE Limited.
The Listing Fee for the financial year 2015-16 has been paid to both the above Stock Exchanges.
Share Transfer Information
Registrar and Share Transfer Agent: Sharepro Services (India) Private Limited 13 AB Samhita Warehousing Complex 2nd floor, Off. Andheri Kurla Road Sakinaka Telephone Exchange Lane Sakinaka, Andheri (East) Mumbai - 400 072 Telephone Numbers: +91 22- 6772 0344 / 0300/ 0400 Fax Number: +91 22 2859 1568 Email: email@example.com Website: www.shareproservices.com
7.8 Share Transfer System
The Board has delegated the authority for approving transfer, transmission etc. of the Company's shares, excluding issuance of duplicate share certificate, jointly to the Company Secretary and the Deputy Company Secretary of the Company. Share transfer requests accompanied by complete documents are usually approved within 15 days from the date of receipt. Requests received for dematerialization of shares are normally confirmed by the Registrar and Share Transfer Agent within 15 days to the Depositories. A summary of the transfer, transmission etc., as approved, is placed before the Stakeholders' Relationship and Share Transfer Committee. The Company obtains a half yearly compliance certificate as required under Clause 47 (c) of the Listing Agreement from a Company Secretary in whole time practice and files the same with the Stock Exchanges.
7.11 Dematerialization of Shares and Liquidity
The Company's shares can be traded on the Stock Exchanges only in dematerialized form. As on 31st March, 2015, 98.44% of the total Equity Share Capital was held in dematerialized form.
The ISIN number allotted to the Company's shares is INE 224A01026.
7.12 Outstanding GDRS / ADRS / Warrants or any Convertible Instruments, Conversion Date and likely impact on Equity Capital of the Company
The Company has not issued any GDRs / ADRs / Warrants.
7.13 Shares in the Suspense Account
At the time of the split in the face value of the shares from Rs. 10 each to Rs. 2 each in 2010, there were instances where the new shares issued remained undelivered due to various reasons like incorrect / incomplete address, change in address not communicated, address not traceable, etc.
As required by Clause 5A of the Listing Agreement, a demat account for holding these unclaimed shares was opened with Axis Bank Limited in the name and style of "Greaves Cotton Limited - Unclaimed Shares Demat Suspense Account".
7.14 Unit Locations
Unit : Light Engines Unit -I
Address : J-2, MIDC Industrial Area Chikalthana, Aurangabad - 431 210
Unit : Diesel Engine Unit I
Address : Bombay Poona Road Chinchwad Pune - 411 019
Light Engines Unit -II
Plot No.72, Sipcot Industrial Complex Ranipet - 632 403
Genset Unit : Gut No. 123/2 Murhe Vasti Chimbali Phata Kuruli Chakan Tal Khed Pune - 410 501
Light Engines Unit -IV : J-2A, MIDC Industrial Area Chikalthana, Aurangabad - 431 210
Aftermarket Division : Plot No. PAP-K5 and K6 Phase II, Chakan Industrial Area, Chakan, Pune - 410 501
Light Engine Unit -V : A-1/3, Shendra Five Star Industrial Area, Shendra Aurangabad - 431 001
Petrol Engines Unit : F62 and 63, Sipcot Industrial Complex, Puppankuppam Village Gummidipoondi, Chennai - 601 201
7.15 Address For Correspondence
Greaves Cotton Limited 3rd Floor, Motilal Oswal Tower Junction of Gokhale and Sayani Road Prabhadevi Mumbai – 400 025 Telephone number: +91-22-3355 1700 Fax number : +91-22-3381 2799 E-mail: firstname.lastname@example.org Website: www.greavescotton.com