REPORT ON CORPORATE GOVERNANCE
The Company’s philosophy on Corporate Governance is aimed at effective conduct of its operations and in meeting its obligation towards various stake holders such as vendors, employees, shareholders, customers and to the society at large. The Company is in the business of cultivation and production of tea and rubber and is one of the major producers in the country. The Company endeavours to produce quality products that consistently commands respect, trust and loyalty by way of sustained efforts in the plantation and adoption of latest technologies. The company strives for successful management of contingencies like drought. While the company continues to produce quality products to the satisfaction of its customers it also gives due importance to its obligation to large work force that it employs on the plantations. The Company runs a business that has a human face and values environment, people, product, plantations practices, customers and shareholders. The company believes in achieving its goal which result in enhancement of shareholders value through transparency, professionalization and accountability.
The Company is in compliance with the requirements stipulated under Clause 49 of the Listing Agreement entered into with the Stock Exchanges with regard to corporate governance.
BOARD OF DIRECTORS
Composition of the Board
On March 31, 2015, HML’s Board of Directors consisted of nine Directors, of which five were Independent Directors. There are three non-executive non-independent directors and one executive Director, who is the Whole Time Director. The composition of the Board satisfies the requirements of Section 149 of the Companies Act, 2013 (“the Act”) and Clause 49 of the Listing Agreement.
NUMBER OF BOARD MEETINGS
In 2014-15, the Board of the Company met five times, on 30.05.2014, 08.08.2014, 26.09.2014, 11.11.2014 and 11.02.2015. The maximum gap between any two Board meetings was less than one hundred and twenty days.
DIRECTORS’ ATTENDANCE RECORD AND DIRECTORSHIPS
Table 1 Details of the composition and the attendance record of the Board of Directors. None of the Directors is a member of more than ten Board-level Committees of public companies in which they are Directors, nor is Chairman of more than five such Committees.
DIRECTORS WITH MATERIAL PECUNIARY BUSINESS RELATIONSHIP WITH THE COMPANY
As mandated by Section 149 of the Act and Clause 49, an Independent Director on HML’s Board is a person and :
? Is a person of integrity and possesses relevant expertise and experience.
? (i) is or was not a promoter of the Company, its subsidiary or associate company;
? (ii) is not related to promoters or directors in the Company, its subsidiary or associate company;
? Apart from receiving director’s remuneration, has or had no material pecuniary relationship (other than in professional capacity) with the
Company, its subsidiary or associate company, or their promoters, or directors, during the two immediately preceding financial years or during the current financial year;
? None of whose relatives, has or had pecuniary relationship or transactions with the Company, its subsidiary or associate company, or their promoters, or directors, amounting to two per cent or more of its gross turnover or total income of fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year;
? Who, neither himself nor any of his relatives
(i) holds or has held the position of a key managerial personnel or is or has been employee of the Company, its subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;
(ii) is or has been an employee or proprietor, or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed of
? (a) a firm of auditors or company secretaries in practice or cost auditors of the company, its subsidiary or associate company; or
? (b) any legal or a consulting firm that has or had any transaction with the Company, its subsidiary or associate company amounting to ten per cent or more of the gross turnover of such firm;
? (iii) holds together with his relatives two per cent or more of the total voting power of the Company; or is a Chief Executive or director, by whatever name called, of any non-profit organization that receives twenty-five per cent or more of its receipts from the Company, any of its promoters, directors or its subsidiary or associate company or that holds two per cent or more of the total voting power of the Company;
? Is not a material supplier, service provider or customer or lessor or a lessee of the Company;
? Is not less than 21 years of age.
During 2014-15, the Independent Directors met on 11.02.2015 in order to, inter alia, review the performance of non-independent directors including that of the Chairman taking into account the views of the executive and non-executive directors; assess the quality, quantity and timelines of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties and other related matters. Except Mr. HaigreveKhaitan, all the other independent directors attended the said meeting.
The details of the familiarisation programme is disclosed on the Company’s website at www.hml.co.in.
Details of transactions of a material nature with any of the related parties as specified in Accounting Standard (AS)18 issued by the Institute of Chartered Accountants of India are disclosed in Note 38 (b) to the financial statements for the year 2014-15. There has been no transaction of a material nature with any of the related parties which was in conflict with the interests of the Company. There has been no material pecuniary relationship or transaction between the Company and its non-executive Directors during the year. The Company’s policy on dealing with Related Party Transactions is posted at the Company’s website www.hml.co.in
INFORMATION SUPPLIED TO THE BOARD
The Directors are presented with detailed notes along with the agenda papers well in advance of their meeting. Necessary information as required under the statute and in line with the guidelines on Corporate Governance are placed before and reviewed by the Board. The Board periodically reviews compliance reports prepared by the Company regarding all laws applicable to the Company, as well as steps taken to rectify instances of non-compliance, if any.
Important operational matters are brought to the notice of the Board at its meetings held from time to time.
CODE OF CONDUCT
The Code of Business Conduct and Ethics relating to matters concerning Board members and Senior Management Officers and their duties and responsibilities has been meticulously followed. All Directors and Senior Management Officers have affirmed compliance of the provisions of the Code during the year 2014-15 and a declaration from the Manager to that effect is given at the end of this report. The Code is posted on the Company’s website www.hml.co.in. Since the close of this year, a new Code of Business Conduct and Ethics for members of the Board and Senior Management Officers has been adopted by the Board, in supersession of the earlier one, to bring it in line with the revised Listing requirements of the Stock exchanges.
COMMITTEES OF THE BOARD
As on 31st March 2015, Audit Committee of HML’s Board of Directors consisted of Mr. Golam Momen, Mr. Haigreve Khaitan, Mr. Umang Kanoria, Mr. J. M. Kothary and Mr. Sachin Nandgoankar. Mr. Haigreve Khaitan, Independent Director, is the Chairman of the Committee. All members of the Audit Committee have accounting and financial management expertise.
The Committee met four times during the course of the year on 30.05.2014, 08.08.2014, 11.11.2014 and 11.02.2015 The CFO and representatives of the statutory auditors are invitees to the Audit Committee meetings. The Audit Committee also invites the cost auditor and internal auditor in case of necessity. The Company Secretary is the secretary to the Committee.
The functions of the Audit Committee of the Company include the following:
1. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.
2. Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to:
a) Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of Section 134 of the Act.
b) Changes, if any, in accounting policies and practices and reason for the same.
c) Major accounting entries involving estimates based on the exercise of judgment by management.
d) Significant adjustments made in the financial statements arising out of audit findings.
e) Compliance with listing and other legal requirements relating to financial statements.
f) Disclosure of any related party transactions.
g) Qualifications in the draft audit report, if any.
3. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.
4. Reviewing, with the management, performance of statutory and internal auditors and adequacy of the internal control systems.
5. Reviewing the adequacy of 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.
6. Discussion with internal auditors any significant findings and follow up thereon.
7. Investigating into any matter in relation to the items specified in the terms of reference and 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.
8. 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.
9. Reviewing the Company’s risk management policies.
10. 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.
11. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
The auditors and the key managerial personnel have a right to be heard in the meetings of the Audit Committee when it considers the auditor’s report.
The Audit Committee is empowered, pursuant to its terms of reference, to:
a) Investigate any activity within its terms of reference and to seek any information it requires from any employee.
b) Obtain professional advice from external sources to carry on any investigation and have full access to information contained in the records of the company.
c) Discuss any related issues with the internal and statutory auditors and the management of the company.
d) Review and monitor the auditor’s independence and performance, and effectiveness of audit process.
e) Approve subsequent modification of transactions of the Company with related parties.
f) Scrutinize the inter-corporate loans and investments and evaluate internal financial controls and risk management systems.
g) Oversee the vigil mechanism / whistle blower policy of the Company.
The Company has systems and procedures in place to ensure that the Audit Committee mandatorily reviews:
• Management discussion and analysis of financial condition and results of operations.
• Statement of significant related party transactions (as defined by the Audit Committee), submitted by management.
• Management letters / letters of internal control weaknesses issued by the statutory auditors.
• Internal audit reports relating to internal control weaknesses.
• The appointment, removal and terms of remuneration of the chief internal auditor.
• Whenever applicable, monitoring end use of funds raised through public issues, rights issues, preferential issues by major category (capital expenditure, sales and marketing, working capital etc.) as part of the quarterly declaration of financial results.
In addition, the Audit Committee of the Board is also empowered to review the financial statements, in particular, the investments made by the unlisted subsidiary companies, in view of the requirements under Clause 49. No person has been denied access to the Committee.
STAKEHOLDERS RELATIONSHIP COMMITTEE
During the year, the Investors’ Grievance Committee was renamed as Stakeholders Relationship Committee on 30th May, 2014. The Committee looks into redressal of grievances of shareholders and other security holders such as transfer of shares, issue of share certificates, non-receipt of Annual Report and non-receipt of declared dividends.
The Stakeholders Relationship Committee comprises of Mr. G. Momen, Mr. Umang Kanoria and Mr. V. Venugopal. Mr. G. Momen is the Chairman of the Committee. The Committee met once during the year on 11.02.2015. Table 3 gives the details of attendance For expediting the process of registration of transfers of the Company’s securities, the Board has delegated the power of approving share transfers and for dealing with matters connected therewith to a committee comprising of Manager, Chief Financial Officers and the Company Secretary. Mr. Ravi A Company Secretary is the compliance officer of the stakeholder relationship committee. The delegated authority attends to share transfer formalities at least once a fortnight.
NOMINATION & REMUNERATION COMMITTEE
On 30th May 2014 the Remuneration Committee of HML was renamed as Nomination & Remuneration Committee. The Remuneration Committee is comprised of Mr. Haigreve Khaitan, Mr. Umang Kanoria and Mr. Golam Momen.
The role of the Committee, inter-alia, includes
• Identify persons qualified to become directors or hold senior management positions and advise the Board for such appointments/removals where necessary;
• Formulate criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy relating to the remuneration of directors, key managerial personnel and other employees;
• Evaluate the performance of every director;
• Devise a policy on Board diversity.
In accordance with the recommendation of the Committee, the Company has since formulated a Remuneration Policy for directors, key managerial personnel, senior management personnel and other employees of the Company. The Committee is responsible for recommending the fixation and periodic revision of remuneration of the Managing Director / Manager and Whole Time Director of the Company. The performance evaluation criteria for non-executive including Independent Directors laid down by the Committee and taken on record by the Board includes:
a. Attendance and participation in the Meetings
b. Preparedness for the Meetings
c. Understanding of the Company and the external environment in which it operates and contributes to strategic direction
d. Raising of valid concerns to the Board and constructive contribution to issues and active participation at meetings.
e. Engaging with and challenging the management team without being confrontational or obstructionist
During the year, the Committee met twice on 08.08.2014 and 22.12.2014. Table 4 gives the details of attendance:
The payment of remuneration to the Whole Time Director / Manager is governed by the agreements executed by the Company with them and is governed by Board and shareholders’ resolution. The breakup of Salary & Perquisites paid to them is as under:
Mr. Ashok Bachan Goyal, Whole Time Director from 14.04.2014 to 13.07.2014
RISK MANAGEMENT COMMITTEE
A Risk Management Committee of the Board was constituted on 11.02.2015 consisting of Mr.Haigreve Khaitan, Sachin Nandgoankar, Kaushik Roy, Mr. K.N. Mathew (CFO) and Mr. P.A. Krishnamoorthy (CFO). The roles and responsibilities of the committee are as prescribed under Clause 49 of the Listing Agreement as amended from time to time, and includes monitoring and review of the risk management plan and reporting the same to the Board of Directors periodically as it may deem fit, in addition to any other terms as may be referred by the Board, from time to time.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
A Corporate Social Responsibility (CSR) Committee of the Board was constituted on 30th May 2014 to formulate and recommend to the Board a CSR Policy indicating the activities to be undertaken by the Company and to discharge such other responsibilities as required under the Act and the Rules made thereunder. During the year, the Committee met twice on 11.11.2014 and 25.03.2015. The members of the Committee as on March 31, 2015 are Mr.Golam Momen, Mr. Umang Kanoria, Mr. P. Rajagopalan and Mr. N. Dharmaraj.
As on 31st March 2015, HML has four unlisted subsidiaries namely HML Engineering Company Ltd., Enchanting Plantations Ltd., Harmony Plantations Ltd. and Malayalam Plantations Ltd.
MANAGEMENT DISCUSSION AND ANALYSIS
This annual report has a detailed chapter on Management Discussion and Analysis.
DISCLOSURES BY MANAGEMENT TO THE BOARD
All disclosures relating to financial and commercial transactions where Directors may have a potential interest are provided to the Board and the interested Directors do not participate in the discussion nor do they vote on such matters.
DISCLOSURE OF ACCOUNTING CONVENTION IN PREPARATION OF FINANCIAL STATEMENTS
The financial statements have been prepared to comply in all material aspects with the applicable accounting principles in India, including accounting standards notified under Section 133 of the Act and the relevant provisions of the said Act. The financial statements have also been prepared in accordance with relevant presentational requirements of the Act.
CODE FOR PREVENTION OF INSIDER TRADING PRACTICES
In compliance with the SEBI regulation on prevention of insider trading, the Company has in place a comprehensive code of conduct for its Directors and Senior Management Officers.The code lays down guidelines, which advises them on procedures to be followed and disclosures to be made, while dealing with shares of the Company. The code clearly specifies, among other matters, that Directors and specified employees of the Company can trade in the shares of the Company only during “Trading Window Open Period”. The trading window is closed during the time of declaration of results, dividend and material events, as per the Code.
Since the close of the year, a new code, namely - Code of Fair Disclosure, Internal Procedures and Conduct for regulating, monitoring and reporting of trading by insiders- has been adopted by the Board, in supersession of the earlier one in accordance with SEBI (Prohibition of Insider Trading) Regulations, 2015.
Mr. Ravi A, Company Secretary is the Compliance Officer.
WHISTLE BLOWER POLICY
As required under the Act and Clause 49 of the Listing Agreement, the Company has formulated a Whistle Blower Policy for its Directors and permanent employees. Under the Policy, instances of any irregularity, unethical practice and / or misconduct can be reported to the management for appropriate action.
ANTI SEXUAL HARASSMENT POLICY
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 covering all employees of the Company. Internal Complaints Committee set up for the purpose did not receive any complaint for redressal during the year.
The CFO certification of the financial statements for the year has been submitted to the Board of Directors, as required under Clause 49(IX) of the Listing Agreement.
RE-APPOINTMENT / APPOINTMENT OF DIRECTORS
Mr. P. Rajagopalan retires at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment.
Mr. Kaushik Roy who was appointed by the Board as Additional Director on 16.02.2015 shall hold office as such up to the date of the forth coming Annual General Meeting. The Company has received a Notice in writing from a member along with the requisite deposit of money proposing the candidature of Mr. Kaushik Roy for the office of Director under the applicable provision of the Act.
Mr. N Dharmaraj, Whole Time Director of the Company was appointed by the members in the last AGM held on September 26, 2014. His term of office is up to December 31, 2015. The Board has extended his tenure for a further period of nine months ie. From January 1, 2016 to September 30, 2016.
In compliance with Clause 49 VIII (E) of the Listing Agreement entered into with the Stock Exchanges, brief resume, expertise and details of other directorships, memberships in committees of Directors of other companies and shareholding in the Company, of the Directors proposed to be reappointed / appointed are attached to the Notice of the ensuing Annual General Meeting.
COMMUNICATION TO SHAREHOLDERS
HML puts forth key information about the Company and its performance, including quarterly results, official news releases and presentations to analysts, on its website www.hml.co.in regularly for the benefit of its shareholders and the public at large.
The quarterly, half yearly and annual results are published in Business Standard (English) and Deshabhimani (Malayalam) newspapers in the form prescribed in Clause 41 of the Listing Agreement with the Stock Exchanges. These results are also displayed in the Company’s website www.hml.
co.in. Hence, they are not separately sent to the shareholders. However, the Company furnishes the quarterly results on receipt of a request from any shareholder.
INVESTOR GRIEVANCES & SHAREHOLDER REDRESSAL
The Company has appointed a Registrar and Share Transfer Agent, Link Intime India Private Ltd., which is fully equipped to carry out share transfer related activities and redress investor complaints. Mr. Ravi A., Company Secretary is the Compliance Officer overseeing the process of redressal of all shareholders’ grievances.
DETAILS OF NON-COMPLIANCE BY THE COMPANY
HML has complied with all requirements of the regulatory authorities. No penalties / strictures were imposed on the Company by stock exchanges or SEBI or any statutory authority on any matter related to capital markets during the last three years
The Company is fully compliant with the applicable mandatory requirements of Clause 49.
The details of compliance of the non-mandatory requirements are listed below:
SHAREHOLDER RIGHTS – FURNISHING OF QUARTERLY RESULTS
Details of the shareholders’ rights in this regard are given in the section ‘Communication to Shareholders’.
During the current financial year, there are no audit qualifications in the financial statements of the Company. The Company continues to adopt appropriate best practices in order to ensure unqualified financial statements.
PRACTICING COMPANY SECRETARY’S CERTIFICATE ON CORPORATE GOVERNANCE
The Company has obtained a Certificate from a practicing Company regarding compliance of conditions of corporate governance, as mandated in Clause 49. The certificate is annexed to this report.
On behalf of the Board of Directors
Sachin Nandgaonkar Director
Kaushik Roy Director
August 11, 2015
ADDITIONAL SHAREHOLDER INFORMATION
ANNUAL GENERAL MEETING
Date : Monday, September 28, 2015
Time : 10.30 A.M
Venue : Kerala Fine Arts Hall, Fine Arts Avenue, Foreshore Road, Cochin – 16
For the year ended 31 March 2015, results were announced on:
First quarter : 8 August, 2014
Second quarter : 11 November, 2014
Third quarter : 11 February, 2015
Fourth quarter and annual : 28 May, 2015
For the year ending 31 March 2016, results will be announced on:
Quarter ending June 30, 2015 Within August 14, 2015
Quarter ending September 30, 2015 Within November 14, 2015
Quarter ending December 31, 2015 Within February 14, 2016
Year ending March 31, 2016 ( Audited ) Within May 30, 2016
The Company’s Register of Members and Share Transfer Books will remain from September 22, 2015 to September 28, 2015 (both days inclusive) as Annual closure for the Annual General Meeting.
The Board has not recommended any dividend for the FY 2014-15.
Equity shares of HML are listed on the Bombay Stock Exchange Ltd., National Stock Exchange of India Ltd. and the Cochin Stock Exchange Ltd.
Stock Exchanges Stock Code
Bombay Stock Exchange Ltd., Mumbai (BSE) 500467
National Stock Exchange of India Ltd., Mumbai (NSE) HARRMALAYA
Cochin Stock Exchange Ltd., Cochin (CSE) HML
All listing and custodial fees to the Stock Exchanges and depositories have been paid to the respective institutions.
STOCK DATA AND PERFORMANCE
Table 1 below gives the monthly high and low prices of HML equity shares and the volumes traded at the Bombay Stock Exchange and National Stock Exchange for the year 2014-15.
SHARE TRANSFER AGENTS AND SHARE TRANSFER AND DEMAT SYSTEM
The Company processes share transfers through its Share Transfer Agent whose address is as given below.
M/s. Link Intime India Pvt. Ltd.
Surya, 35, May flower Avenue, Behind Senthil Nagar Sowripalayam Road, Coimbatore – 641028.
Ph. 0422-2314792 E-mail: firstname.lastname@example.org
In compliance with the SEBI circular dated 27 December 2002, requiring share registry in terms of both physical and electronic mode to be maintained at a single point, HML has established direct connections with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), the two depositories, through its share transfer agent.
Shares received in physical form are processed and the share certificates are returned within 10 to 15 days from the date of receipt, subject to the documents being complete and valid in all respects.
The Company’s equity shares are under compulsory dematerialised trading. Shares held in the dematerialised form are electronically traded in the Depository. The Registrar and the Share Transfer Agent of the Company periodically receives data regarding the beneficiary holdings, so as to enable them to update their records and send all corporate communications, dividend warrants, etc.
As on March 31 2015, dematerialised shares accounted for 75.04% of total equity. There is no subsisting court order in legal proceedings against HML in any share transfer matter.
Tea Estates: Eleven Estates located in Kerala and two in Tamil Nadu
Rubber Estates: Eleven Estates located in Kerala
INVESTOR CORRESPONDENCE ADDRESS
Company’s Registered Office Address Registrar’s Address
Harrisons Malayalam Ltd.
24/1624, Bristow Road Willingdon Island Cochin-682003
Telephone No: 0484-2668023 E-Mail : email@example.com
M/s. Link Intime India Pvt. Ltd.
Surya, 35, Mayflower Avenue, Behind Senthil Nagar Sowripalayam Road, Coimbatore – 641028.
Ph. 0422-2314792 E-mail: firstname.lastname@example.org
COMPLIANCE OFFICER FOR INVESTOR REDRESSAL
Mr. Ravi A., Company Secretary is the Compliance Officer for investor related matters.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
The due dates on which unclaimed dividends lying in the unpaid dividend accounts of the Company would be credited to the IEPF are stated in the table 6 below. Investors are requested to claim their unclaimed dividends before these due dates.