CORPORATE GOVERNANCE REPORT
Corporate Governance is a set of standards which aims to improve the Company's image, efficiency and effectiveness. It is the road map, which guides and directs the Board of Directors of the Company to govern the affairs of the Company in a manner most beneficial to all the Shareholders, the Creditors, the Government and the Society at large.
The status of implementation of Clause 49 of the Listing Agreement with the Stock Exchanges on Corporate Governance in the Company is as under:-
1. HFCL Philosophy on Corporate Governance
The cardinal principles of the Corporate Philosophy of HFCL on Corporate Governance can be summarised in the following words:
"Transparency, professionalism and Accountability With an
Ultimate aim of value creation"
HFCL Corporate Philosophy envisages complete transparency and adequate disclosures with an ultimate aim of value creation for all players i.e. the Stakeholders, the Creditors, the Government and the Employees.
2. Board of Directors
The Board composition is in compliance with the Clause 49 of the Listing Agreement as well as the Companies Act, 2013. As on 31st March, 2015, Company had 6 (six) Directors on the Board. More than fifty percent of the Board comprised of Non-Executive Directors. Out of 6 (six) Directors, 2 (two) are Non-Executive Independent Directors including 1 (one) Woman Director, 2 (two) Non-Executive Directors including 1 (one) Nominee Director and 2 (two) Wholetime Directors including one Promoter Managing Director as on 31st March, 2015. The Chairman of the Board is Non- Executive Independent Director.
The members on the Board possess adequate experience, expertise and skills necessary to manage the affairs of the Company in the most efficient manner.
2.1 Independent Directors
Your Company has at its Annual General Meeting (AGM) held on 30th September, 2014 has appointed Shri Mahendra Pratap Shukla as an Independent Director to hold office for 2 (two) consecutive years for a term up to the conclusion of 29th Annual General Meeting pursuant to Section 152 read with Schedule IV and other applicable provisions of the Companies Act, 2013 and Companies (Appointment and Qualifications of Directors) Rules 2014 (including any statutory modifications or re-enactment thereof for the time being in force). The Board of Directors of the Company at their meeting held on 18th March, 2015 has also appointed Smt. Bela Banerjee as an Independent Director subject to the approval of shareholders in the ensuing Annual General Meeting. Independent Directors have submitted the declaration that they meet the criteria of Independence as per the provisions of Companies Act, 2013 and the Listing Agreement. None of the Independent Directors is holding directorship in more than 7 listed Companies. Company has issued the formal letter of appointments to both the Independent Directors in the manner provided under the Companies Act, 2013 and clause 49 of the Listing Agreement.
2.2 Familiarisation Programme
The Clause 49(II B)7 of the Listing Agreement entered with the stock exchanges, mandates the Company to familiarize the Independent Directors with the Company, their roles, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. through various programmes.
The Company through its Managing Director/ Wholetime Director/ Senior Managerial Personnel conduct programmes/ presentations periodically to familiarize the Independent Directors with the strategy, business and operations of the Company.
Such programmes/presentations will provide an opportunity to the Independent Directors to interact with the senior leadership team of the Company and help them to understand the Company's strategy, business model, operations, services and product offerings, organization structure, finance, sales and marketing, human resources, technology, quality of products, facilities and risk management and such other areas as may arise from time to time.
The above programme also includes the familiarisation on statutory compliances as a Board member including their roles, rights and responsibilities. The Company also circulates news and articles related to the industry from time to time and provide specific regulatory updates.
The Familirisation programme for Independent Directors in terms of clause 49 of the Listing Agreement is uploaded on the website of the Company and can be accessed through the following link:- <http://www.hfcl.com/FAMIUARIZATION%20PROGRAM%20> FOR%20INDEPENDENT%20DIRCTORS.pdf
2.3 Board Meeting
During the financial year 31st March, 2015, 8 (eight) Board Meetings were held on 30.04.2014, 10.07.2014, 14.08.2014, 17.10.2014, 29.11.2014, 19.01.2015, 27.01.2015 and 18.03.2015 . The Last Annual General Meeting was held on 30th September, 2014.
None of the Directors on the Board hold directorships in more than ten public companies and memberships in more than ten Committees and they do not act as Chairman of more than five Committees across all companies in which they are directors.
2.5 Meeting of Independent Directors
The Independent Directors of the Company meet at least once in every financial year without the presence of Executive Directors or management personnels. All Independent Directors strive to be present at such meetings. During the Financial Year ended 31st March, 2015, one meeting was held on 31st March, 2015 .
2.6 Evaluation of Board / Independent Directors Effectiveness
In terms of provision of Companies Act, 2013 read with Rules issued thereunder and clause 49 of the listing agreement, the Board of Directors, on recommendation of Nomination & Remuneration Committee , have evaluated the effectiveness of the Board. Accordingly performance evaluation of the Board, each Director and Committees was carried out for the financial year ended 31st March, 2015. The evaluation of the Directors was based on various aspects which, inter-alia, included the level of participation in the Board Meeting, understanding their roles and responsibilities, business of the Company and also effectiveness of their contribution.
2.7 Information Placed before the Board
In addition to the matters which statutorily requires Board's approval, the following matters as required under Code on Corporate Governance are also regularly placed before the Board :-
• Minutes of Audit Committee Meetings, Nomination & Remuneration Committee Meetings, Stakeholders Relationship Committee Meetings and other Committees of the Board.
• Matters related to accident, dangerous happenings, material effluent and pollution problems etc., if any.
• Details of Joint Venture / Collaboration agreements.
• Significant Labour problem.
• Quarterly/ Yearly financial results of the Company.
• Financial Statements, Audit Report and Board Report.
• Appointment, Remuneration and Resignation of Directors.
• Formation/ reconstitution of Board Committees.
• Disclosure of Directors' interest and their shareholdings.
• Declaration of Independent Directors at the time of appointment /annually.
• Appointment or removal of Key Managerial Personnels of the Company.
• Appointment of Internal Auditor and Secretarial Auditor.
• Secretarial Audit Report submitted by the Secretarial Auditor.
• Appointment and Fixing of remuneration of Auditor as recommended by the Audit Committee .
• Compliance Certificate certifying compliance with all laws as applicable to the Company.
• Declaration of Dividend.
• Issue of securities.
• Proposal for major investments, mergers, amalgamation and reconstructions.
• Reconciliation of Share Capital Audit under SEBI (Depositories and Participants) Regulations, 1996.
• Disclosure of material related party transactions, if any, with potential for conflict of interest.
• Quarterly details of Foreign Exchange exposures.
• Compliance with Regulatory and Statutory requirements including listing requirements and shareholders services.
• Details of show cause, demand, prosecution and penalty notices which are materially important.
• Any material default, in financial obligations to and by the Company or substantial non- payment of goods sold by the Company.
• Details of public or product liability, claims of substantial nature including any adverse judgments.
• Transactions involving substantial payments towards goodwill, brand equity or intellectual property.
• Sale of material nature of investments, subsidiaries and assets which are outside the normal course of business.
• Board minutes of the unlisted subsidiary companies.
• Statement of all significant transactions and arrangements entered into by the unlisted material subsidiary companies.
3. Committees of the Board
In terms of the SEBI Code on the Corporate Governance, the Board of the Company has constituted the following Committees: -
Nomination & Remuneration Committee
Stakeholders Relationship Committee
Corporate Social Responsibility Committee
Risk Management Committee
3.1 Audit Committee
The Composition of the Audit Committee is in line with the provision of Section 177 of the Companies Act, 2013 and clause 49 of the listing agreement. The members of the Audit Committee are financially literate and have requisite experience in financial management.
The followings are the members and their attendance at the Committee Meetings during the financial year ended 31st March, 2015:-
The broad terms of references of Audit Committee are as under: -
• Overseeing the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible.
• Recommending the appointment / re-appointment of external and internal auditors, tax auditors, cost auditors, fixation of statutory audit fees, internal audit fees and tax audit fees and also approval for payment of any other services.
• Review with management, the annual financial statements before submission to the Board.
• Review quarterly un-audited/audited financial results/ quarterly review reports.
• Review the financial statements in particular of the investments made by the unlisted subsidiary companies.
• Review with management, performance of external and internal auditors, adequacy of internal control system.
• To do any internal investigations either departmentally or with the help of internal auditors or any other outside agency into matters where there is suspected fraud or irregularities.
• Discussions with external auditors before the audit commences about nature and scope of audit as well as have post audit discussions to ascertain any area of concern.
• Review the Company's financial and risk management policies.
• Recommend the appointment of Chief Financial Officer.
• To look into the reasons for substantial defaults in the payment to the depositors, debentureholders, shareholders and creditors.
• Review of the use/application of money raised through Public/Rights/Preference Issue.
• Approval or any subsequent modification of transactions of the Company with related parties.
• Review and monitor auditors independence and performance and effectiveness of audit process.
• Scrutiny of inter corporate loans and investments.
• Discussion with internal auditors of any significant findings and follow up thereon.
• 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.
• Valuation of Undertakings or assets of the Company where it is necessary.
• To review the functioning of the Whistle Blower / Vigil mechanism.
• Evaluation of Internal Financial control and risk management system.
Shri Mahendra Pratap Shukla, Non-Executive Independent Director is the Chairman of the Committee. The Company Secretary acts as Secretary to the Committee.
The Audit Committee during the year has approved the overall framework for Related Party Transactions (RPTs), the
Policy on dealing with the RPTs, the policy on materiality of RPTs and the criteria for granting omnibus approval in line with the policy of dealing with RPTs in accordance with provisions of the Companies Act,2013 and Clause 49 of the listing agreement.
3.2 Nomination & Remuneration Committee
The Board of Directors of the Company has constituted a Nomination & Remuneration Committee which amongst others is responsible for determining the Company's policy on specific remuneration package for Executive Directors including any compensation payment. During the financial year ended 31st March, 2015, the Nomination & Remuneration Committee met 3 (three) times on 14.08.2014, 29.11.2014 and 18.03.2015. The following are members of the Committee and their attendance at the Committee Meeting held during the financial year ended 31st March, 2015.
The terms of reference of this Committee amongst others includes the following:-
• To identify persons who are qualified to become Directors and who may be appointed in Senior Management in accordance with the criteria laid down and to recommend to the Board their appointment and/ or removal.
• To carry out evaluation of every Director's performance.
• To formulate the criteria for determining qualification, positive attributes and independence of a director and recommend to the Board a policy relating to the remuneration for directors, key managerial personnel and other employees.
• To carry out any other function as is mandated by the Board from time to time and/or enforced by any statutory notification, amendment or modification as may be applicable.
• To perform such other functions as may be necessary or appropriate for the performance of its duties.
In compliance with the provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors at their meeting held on 27th January, 2015 formulated the Nomination and Remuneration Policy and the policy on Board Diversity of the Company on the recommendation of Nomination & Remuneration Committee.
Nomination & Remuneration Policy of the Company
The Nomination & Remuneration Policy of Himachal Futuristic Communications Ltd. (the "Company") is designed to attract, motivate, improve productivity and retain manpower, by creating a congenial work environment, encouraging initiatives, personal growth and team work, and inculcating a sense of belonging and involvement, besides offering appropriate remuneration packages and superannuation benefits. The Policy emphasize on promoting talent and to ensure long term sustainability of talented managerial persons and create competitive advantage. The policy reflects the Company's objectives for good corporate governance as well as sustained long term value creation for shareholders.
The guiding principle is that the remuneration and the other terms of employment should effectively help in attracting and retaining committed and competent personnel. While designing remuneration packages, industry practices and cost of living are also taken into consideration
3.3 Details of pecuniary relationship/transactions of the Non- Wholetime Directors/ their Firms & Companies vis-a-vis the Company during the financial year 20142015
3.4 Stakeholders Relationship Committee
Pursuant to provisions of Section 178(5) of the Companies Act, 2013, the existing "Share Transfer & Investors Grievance Committee" was renamed as "Stakeholders' Relationship Committee" by the Board at their meeting held on 30th April, 2014. The scope of the Stakeholders' Relationship Committee shall remain the same as that of existing Share Transfer & Investors Grievance Committee.
The Committee consists of one Non-Executive Independent Director, one Non-Executive Director and one Wholetime Director and is chaired by the Non- Executive Independent Director. This Committee looks into transfer and transmission of shares/debentures/bonds etc., issue of duplicate share certificates, issue of shares on rematerialisation, consolidation and sub-division of shares and investors' grievances. This Committee particularly looks into the investors grievances and oversees the performance of the Share Department /Share Transfer Agent and to ensure prompt and efficient investors' services. During the financial year ended 31st March, 2015, the Stakeholders Relationship Committee met 4 (four) times on 16.06.2014, 29.11.2014,
3.5 Corporate Social Responsibility (CSR) Committee
The Board of Directors of the Company at their meeting held on 30th April, 2014 has constituted a Corporate Social Responsibility (CSR) Committee as required under the Companies Act, 2013 and Listing Agreement.
The Board of Directors of the Company at their meeting held on 18th March, 2015 approved the CSR policy of the Company on the recommendations of CSR Committee. The details of the CSR initiatives of the Company have been given in the Directors' Report which forms part of the Annual Report. The CSR policy has been placed on the website of the Company and can be accessed through the following links: <http://www.hfcl>. com/CSR%20Policy.pdf
The composition of CSR Committee is in line with the provision of Section 135 of the Companies Act, 2013.
3.6 Risk Management Committee
The Company has formulated a Risk Management Committee at their Board Meeting held on 17th October, 2014 as required under clause 49 of the Listing Agreement. The Board has defined the roles and responsibilities of the Risk Management Committee in accordance with the provisions of the clause 49 of the Listing Agreement.
Roles and Responsibilities of the Committee includes the followings:
• Framing of Risk Management Policy.
• Overseeing implementation of Risk Management Plan and Policy.
• Monitoring of Risk Management Plan and Policy.
• Validating the process of risk management.
• Periodically reviewing and evaluating the Risk Management Policy and practices with respect to risk assessment and risk management processes.
• Performing such other functions as may be necessary for the performance of its oversight function.
5. Disclosures on materially significant related party transactions that may have potential conflict with the interest of the Company at large.
None of the materially significant transactions with any of the related parties were in conflict with the interest of the Company. Attention of the members is drawn to the disclosures of transactions with related parties set out in note no. 43 of the Standalone Financial Statements forming part of the Annual Report.
6. Details of non-compliance by the Company, penalties, strictures imposed on the Company by Stock Exchange(s) or SEBI or any statutory authorities, on any matter related to capital markets, during the last three years.
7. Vigil Mechanism and Whistle-Blower Policy of the Company
The Board of Directors of the Company has adopted Whistle Blower Policy. The management of the Company, through this policy envisages to encourage the employees of the Company to report to the higher authorities any unethical, improper, illegal or questionable acts, deeds and things which the management or any superior may indulge in. This Policy has been circulated to employees of the Company and is also available on Company's Website.
No employee of the Company is denied access to the Audit Committee.
8. Extent to which mandatory requirements have not been complied with
Company has complied with the mandatory requirements of Clause 49 of the Listing Agreement.
. Extent to which non mandatory requirements have been complied with
i) Separate Post of Chairman and CEO: The Chairman of the Board is Non Executive Independent Director and his position is separate from that of Managing Director.
ii) Reporting of Internal Auditor: The Internal Auditor has direct access to Audit Committee.
10. Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with corresponding Rules framed thereunder, M/s. Baldev Singh Kashtwal, Practising Company Secretary holding Membership no. FCS 3616 and CP no. 3169 was appointed as the Secretarial Auditor of the Company to carry out the secretarial audit for the year ending 31st March, 2015.
A Secretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 is annexed to Director's Report as ANNEXURE - B which forms the part of Annual Report.
There are no qualifications, reservations or adverse remarks made by Secretarial Auditor in their Report.
11. Secretarial Certificates
(i) Pursuant to Clause 47(c) of the Listing Agreement with the Stock Exchanges, certificates, on half- yearly basis, have been issued by a Company Secretary in-Practice for due compliance of share transfer etc. formalities by the Company.
(ii) A Company Secretary in-Practice carries out a reconciliation of Share Capital Audit to reconcile the total admitted capital with National Securities Depository Limited and Central Depository Services (India) Limited ("Depositories") and the total issued and listed capital. The audit confirms that the total issued/ paid-up capital is in agreement with the aggregate of the total number of shares in physical form and total number of shares in dematerialised form held with Depositories.
12. CEO & CFO certification
The Managing Director, Director (Finance) and Chief Finance Officer (CFO) give annual certifications on financial reporting and internal controls to the Board in terms of Clause 49 of the Listing Agreement.
13. Means of Communications
This is being done through quarterly / half yearly and annual results, which are being published in premier English and Hindi daily newspapers. The Company's website www.hfcl.com contains Annual Reports, Financial Results, Shareholding Pattern, various policies etc. All periodical compliance filings like shareholding pattern, corporate governance report etc. are filed electronically on NSE Electronic Application Processing System (NEAPS) and BSE Corporate Compliance and Listing Centre. Management Discussions and Analysis forms part of the Directors' Report, which is posted to the Shareholders of the Company.
14. Code of conduct for Board Members and Senior Management Personnel
The Company has adopted a Code of Conduct for Directors and Senior Management Personnel and the same has been posted on the Company's website. The Directors and the Senior Management Personnel affirm the Compliance of the Code annually. A certificate to this effect is attached to this Report duly signed by the Managing Director.
15. Shares/Convertible Instruments held by Non- Executive Directors
1. Date and venue of Annual General Meeting
30th September, 2015 at 10:00 A.M. at Mushroom Centre, Chambaghat, Solan (H.P.)
2. Financial Year
1st April, 2014 to 31st March,2015
3. Date of Book Closing
24th September, 2015 to 29th September, 2015 (both days inclusive)
4. Dividend Payment Date
5. Listing on Stock Exchanges in India
BSE Ltd Phiroze Jeejeebhoy Towers Dalal Street Mumbai - 400 001 Tel : +91-22-22721233 Fax : +91-22-22723121
National Stock Exchange of India Ltd. Exchange Plaza, 5th Floor Plot No. C/1, G Block
Bandra Kurla Complex Bandra (East) Mumbai - 400 051 Tel : +91-22-26598235 Fax : +91-22-26598237
The Company has paid the listing fees to the above Stock Exchange (s) for the financial year 2015-2016
6. Registered Office
8, Electronics Complex Chambaghat Solan - 173 213 (H.P.) Tel : +91-1792-230642/44 Fax : +91-1792-231902
7. Corporate Office
8, Commercial Complex Masjid Moth, Greater Kailash - II New Delhi - 110 048 Tel : +91-11-30882624 Fax : +91-11-30689013
8. Plant Locations
Telecom Equipment Plant Electronics Complex Chambaghat Solan - 173 213 (H.P.) Tel : +91-1792-230642/44 Fax : +91-1792-231902
Optical Fibre Cable Plant
L 35-37, Industrial Area, Phase - II Verna Electronic City, Salcete Goa - 403 722 Tel : +91-832-6697000 Fax : +91-832-2783444
9. CIN : L64200HP1987PLC007466
www.hfcl.com / firstname.lastname@example.org & email@example.com
11. Name of Newspapers in which results are generally published
Economic Times, Indian Express, Jansatta, Dainik Tribune
National Securities Depository Ltd. 4th Floor, 'A' Wing, Trade World Kamla Mills Compound Senapati Bapat Marg, Lower Parel Mumbai - 400 013 Tel : +91-22-24994200 Fax : +91-22-24972993
Central Depository Services (India) Ltd. Phiroze Jeejeebhoy Towers 28th Floor, Dalal Street Mumbai - 400 023 Tel : +91-22-22723333 Fax : +91-22-22723199
13. ISIN : INE548A01028
14. Share Transfer in physical form and other communication regarding share certificates, dividends and change of address etc., to be sent to:
M/s. MCS Share Transfer Agent Limited F-65, 1st Floor, Okhla Industrial Area, Phase-I New Delhi-110 020 Tel : +91-11-41406149 Fax : +91-11-41709881 Email: firstname.lastname@example.org
15. Share Transfer System:
Shares sent for physical transfers are generally registered and returned within a period of 15 days from the date of receipt if the documents are clear in all respects. The Stakeholders Relationship Committee meets as often as required.
20. Dematerialisation of shares:
The Company's shares are compulsorily traded in dematerialised form as per SEBI Guidelines. As on 31st March, 2015, 99.96% of the equity shares have been dematerialised.
21. Outstanding GDRs / ADRs or any Convertible Instruments, conversion date and any likely impact on equity:
Outstanding GDRs as on 31st March, 2015 : NA
23. Stock Codes:
BSE : 500183 & NSE : HFCL
24. Financial Calendar (tentative and subject to change) 2015-2016:
Financial Reporting for the first quarter ending 30th June, 2015: Second week of August, 2015
Financial Reporting for the second quarter and half year ending 30th September, 2015: Second week of November, 2015
Financial Reporting for the third quarter ending 31st December, 2015 : Second week of February, 2016
Audited Accounts for the year ending 31st March, 2016 : Last week of May, 2016
Annual General Meeting for the year ending 31st March, 2016: September, 2016