Report on Corporate Governance
1. Company's philosophy on Corporate Governance
The Company's philosophy on Corporate Governance has been developed with a tradition of fair and transparent governance and disclosure practices, many of which were in existence even before they were mandated by legislation. Transparency, integrity, professionalism and accountability-based values form the basis of the Company's philosophy for corporate governance. The Company strives to improve the corporate governance practices to meet stakeholders' expectations and strictly complies with regulatory guidelines on corporate governance.
2. Board of Directors
(a) Composition of Board
As on date the Board of Directors have five members and all of them are Non-Executive Directors. The Non-Executive Directors account for 100% of Board's strength against minimum requirement of fifty percent as per Clause 49 of the Listing Agreement. There are three Independent Directors. The Company does not have a regular Non-Executive Chairman and 60% of the Board is comprised of Independent Directors where the minimum requirement is 50% as per Clause 49 of the Listing Agreement. Smt. Mou Mukherjee is Non-Executive Independent Woman Director. The Non-Executive Directors are eminent professionals, drawn from amongst persons with experience in business & industry, finance & law.
Shri Kranti Sinha, Shri Pradip Kumar Khaitan and Shri Gautam Dutta, ceased to be Directors of the Company with effect from 9th May, 2014, 29th May, 2014 and 25th October, 2014 respectively.
Smt. Mou Mukherjee has been appointed as an Additional Director of the Company with effect from 30th March, 2015.
Shri Uttam Bose ceased to be the Managing Director of the Company with effect from the close of business hours on 9th May, 2014 and was appointed as an Additional Director of the Company with effect from 10th May, 2014 and subsequently Shareholders of the Company appointed him Director of the Company at the Annual General Meeting held on 25th September, 2014.
None of the Non-Executive Directors of the Company has any pecuniary relationship or transaction with the Company, except Shri Pradip Kumar Khaitan who was Director of the Company up to 28th May, 2014, is a partner of M/s Khaitan & Co./M/s. Khaitan & Co. LLP, the Company's Solicitors and Advocates. There is no inter se relationship between the Directors.
(b) Board Meetings
During the financial year ended 31st March, 2015, eight meetings of the Board of Directors were held on 9th May, 2014,10th May, 2014, 5th August, 2014,14th August, 2014, 25th September, 2014, 29th September, 2014,11th November, 2014 and 7th February, 2015.
3. Audit Committee
(a) The Audit Committee of Directors was constituted on 15th May, 1987. The terms of reference of the Audit Committee were amended by the Board of Directors of the Company at its meetings held on 25th January, 2000, 31st August, 2000, 29th January, 2005, 27th April, 2006 and on 9th May, 2014 and covers the matters specified for it under Clause 49 of Listing Agreement as well as in Section 177 of the Companies Act, 2013.
(b) The composition of the Audit Committee as on the date is as follows
• Composition of the Committee is in conformity with Clause 49(III)(A) of the Listing Agreement. Three-fourths of the members of Audit Committee are Independent Directors. All the Members of Audit Committee are financially literate and one Member is having accounting or related financial management expertise.
• Shri Sanjay Basu, the then Chairman of the Audit Committee on the date of Annual General Meeting was present at the Annual General Meeting held on 25th September, 2014 to reply to shareholders' queries.
• The Audit Committee provides an overview on the reporting process of the Company's financial and accounting mechanism and ensures that disclosures in its financial statements are correct, sufficient and credible.
• The Committee reviews the efficacy of the internal control mechanism and monitors the risk management policies adopted by the Company. The Committee also reviews the report furnished by the internal auditor and statutory auditors and ensures that suitable follow up actions are taken. Besides, the Committee also examines accounting, taxation and disclosure aspects of all significant transactions.
• At the invitation of the Committee, the Chief Executive Officer, the Chief Internal Auditor, the Statutory Auditor, the Chief Financial Officer and the Company Secretary who was acting as the Secretary to the Audit Committee also attended the Audit Committee Meetings to answer and clarify the queries raised at the Committee Meetings.
(c) During the financial year ended 31st March, 2015, six Audit Committee Meetings were held on 10th May, 2014, 5th August, 2014, 14th August, 2014, 25th September, 2014, 11th November, 2014 and 7th February, 2015 and the attendance of the Audit Committee Members was as under :-
4. Nomination and Remuneration Committee
The Board of Directors of the Company at its meeting held on 14th March, 2003 constituted a Remuneration Committee of Directors mainly for the purpose of recommending the Company's policy on Remuneration Package for the Managing/Executive Directors, reviewing the structure, design and implementation of remuneration policy in respect of such Directors and approving, reviewing and evaluating Employees' Stock Option Plan.
The Remuneration Committee was renamed as "Nomination and Remuneration Committee" and reconstituted by the Board of Directors at its meeting held on 9th May, 2014 for the purpose of recommending the Company's policy on remuneration package for the Directors, Key Managerial Personnel and other employees. In the said Board Meeting, a revised Role and Scope of the Committee was fixed in accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Remuneration Policy is annexed as Annexure-10 to the Directors' Report.
All the four Directors are Non-Executive Directors and 75% are Independent and the Chairman of the Committee is also an Independent Director. The Chairman of the Nomination and Remuneration Committee was present at the Annual General Meeting to answer the Shareholders' queries.
The Chief Financial Officer and Company Secretary acted as the Secretary of the Committee till 9th May, 2014. Thereafter, the Company Secretary acted as the Secretary of the Committee.
During the financial year ended 31st March, 2015, five Nomination and Remuneration Committee Meetings were held on 9th May, 2014, 5th August, 2014, 11th November, 2014, 7th February, 2015 and 21st March, 2015 and the attendance of the Nomination and Remuneration Committee Members was as under :-
In so far as the Chief Executive Officer is concerned, the Company pays remuneration by way of salary, perquisites and allowances (fixed/variable components) within the range approved by the shareholders and subsequently approved by the Central Government, if required. The ceiling on variable pay, perquisites and allowances is as fixed by the Nomination and Remuneration Committee of Directors.
5. Stakeholders Relationship Committee
The Board of Directors at its meeting held on 9th May, 2014 renamed the Shareholders'/Investors' Grievances Committee as Stakeholders Relationship Committee.
Shri Tarun Kumar Kabra, Company Secretary is designated as the Compliance Officer since 10th May, 2014.
The Committee oversees the performance of Karvy Computershare Pvt. Limited, the Registrar and Share Transfer Agents of the Company and recommends measures to improve the level of investor related services. Though the powers to approve share transfer/share transmission are delegated to the Registrar and Share Transfer Agents, all the share transfer/transmission cases approved by the Registrar are reported to the Committee which also keeps a close watch on disposal status of all complaints/grievances of shareholders. During the period under review, 63 complaints were received by the Company/Registrar and Share Transfer Agents from shareholders and/or through regulatory bodies. All these complaints have been redressed during the period under review. There was no share transfer application pending for registration as on 31st March, 2015.
During the financial year ended 31st March, 2015, two Stakeholders Relationship Committee meetings were held on 11th November, 2014 and 7th February, 2015. The attendance of the Members was as under:-
6. Corporate Risk Management Committee
The Board of Directors of the Company at its meeting held on 28th July, 2006 had constituted a committee known as Corporate Risk Management Committee comprising of the Managing Director and six officers to ensure that risks as identified in the risk assessment and minimization policy of the Company are controlled through a properly defined framework. The said Committee was reconstituted and role and responsibilities have been redefined by the Board of Directors at its meeting held on 25th September, 2014. The said Committee was once again reconstituted by the Board of Directors at its meeting held on 7th February, 2015. The terms of reference of Corporate Risk Managment Committee inter alia includes as follows :-
(a) To continuously identify and prioritize the risks associated with the functioning of the Company;
(b) To identify risk exposure and adequately monitor and manage the same;
(c) To develop a well laid down mitigation plan for identified risks with assigned responsibilities to different identified officers;
(d) To review the efficacy of implementation of mitigation plans;
(e) To develop an audit mechanism to verify compliance with mitigation plans as a supplement to self-assessment;
(f) To report to the Board of Directors periodically the followings :-
i) An overview of the risk management process;
ii) Key observations on the implementation of mitigation plan including deficiencies noticed and corrective actions to be taken;
iii) New risks identified and actions taken in relation thereto.
During the period under review, three meetings of such Committee were held on 25th April, 2014, 6th August, 2014 and 6th February, 2015 and the attendance of the Corporate Risk Management Committee Members was as under:-
Chief Internal Auditor of the Company acted as Secretary of the Committee.
7. Meeting of Independent Directors
During the financial year ended 31st March, 2015, the Independent Directors met on 31st December, 2014, inter alia, to:
• Review the performance of Non-Independent Directors and the Board of Directors as a whole;
• Review the performance of the Chairman of the meetings of Board of Directors of the Company, 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 its duties.
All the Independent Directors were present at the Meeting.
Besides the transactions mentioned elsewhere in the Annual Report, there were no materially significant related party transactions during the year conflicting with the interest of the Company.
There were no cases of non-compliance, no penalties or strictures 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 except as follows:-
The Company had to postpone the declaration of its Audited Financial Results for the financial year 201314 (for six month period 1st October, 2013 to 31st March, 2014) in view of the suspension of work at its Uttarpara Plant with effect from 24th May, 2014 since the Company's books of accounts are kept at its Uttarpara Plant. Consequently, the Board Meeting scheduled on 30th May, 2014 for approval of the said Audited Financial Results was postponed and appropriately communicated to the Stock Exchanges. Thereafter, the Audited Financial Results for the said financial year 2013-14 were declared on 5th August, 2014. In view of the said delay in declaring the Audited Financial Results for the financial year 2013-14 under compelling circumstances, Stock Exchanges have levied fine on the Company pursuant to SEBI circular no. CIR/MRD/DSA/31/2013 dated September 30, 2013. The Company has represented before the Stock Exchanges not to impose fine as the situation was beyond the control of the Company. The Company is awaiting the response of the Stock Exchanges.
No personnel has been denied access to the Audit Committee in respect of Whistle Blower Policy and affirmation.
The details of familiarization programme for Independent Directors has been disclosed on the website of the Company www.hindmotor.com and web link thereto is <http://www.hindmotor.com/files/Familiarisation->Programme-for-Independent-Directors.pdf.
The Company has formulated a policy on materiality of related party transaction and also on dealing with related party transaction and the same has been disclosed on the website of the Company www.hindmotor.com and web link thereto is <http://www.hindmotor.com/files/Hindustan-Motors-Ltd-Related-Party-Policy.pdf>
The Company complied with all the mandatory requirements and some of the non-mandatory requirements of Clause 49 of Listing Agreement during the period ended 31st March, 2015.
10. Means of Communication
Published in the newspapers in terms of Clause 41 of the Listing Agreement.
Newspapers wherein results normally published
The Financial Express / Business Standard - Kolkata and Mumbai Dainik Statesman - Kolkata (Bengali Version) - Kolkata Edition
Any website, where displayed
Whether it also displays official news released and presentations made to Institutional Investors/Analysts
Whether MD&A is a part of Annual Report
Yes. The same is as per Annexure 1 to the Directors' Report.
11. General Shareholder Information
Annual General Meeting
Date & time
14th August, 2015 at 11 a.m.
Rotary Children's Welfare Trust 94/2, Chowringhee Road Kolkata - 700 020
Financial Calendar for F.Y. 2014-15 (1st April, 2014 to 31st March, 2015)
a. 1st Quarterly Results - On or before 14th August, 2015
b.2nd Quarterly Results - On or before 14th November, 2015
c.3rd Quarterly Results - On or before 14th February, 2016
d.Annual Audited Results - On or before 30th May, 2016
Date of Book closure
7th August, 2015 to 14th August, 2015 (both days inclusive)
In view of the deficit in the Statement of Profit and Loss after taking into account the results for the year under review, there did not arise any occasion for the Board of Directors to consider recommending any dividend on the equity shares of the Company.
Listing on Stock Exchanges
National Stock Exchange of India Limited "Exchange Plaza", Plot No. C/1, G-Block Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051
Tel : 91-22-2659 8235/36 Fax: 91-22-2659 8237/38
Floor 25, Phiroze Jeejeebhoy Towers Dalal Street, Mumbai - 400 001
Tel : 91-22-2272 1233/1234 Fax: 91-22-2272 1003
National Stock Exchange of India Ltd.HINDMOTORS BSE Ltd.500500
The Registrar and Share Transfer Agents of the Company
Karvy Computershare Pvt. Limited
Plot No 31-32, Karvy Selenium, Tower B, Gachibowli Financial District, Nanakramguda, Hyderabad - 500 032
Phone : (040) 6716 1500 Fax : (040) 2342 0814
E-mail: email@example.comfirstname.lastname@example.org Kolkata Office: (033) 6619 2841, 6619 2842
Share Transfer System
Shares sent for physical transfer, if the documents are clear in all respects, are generally registered within an average time period of not more than 7 days from the date of receipt of the request. The Authorized Officers of the Registrar and Share Transfer Agents meet as often as required. During the year ended 31st March, 2015,11914 shares in physical form were transferred and the transfer process was completed within an average time period of not more than 7 days from the date of lodgement unless notices were required to be sent to the Registered Owners in certain identified categories of cases.
Dematerialisation of Equity Shares and Liquidity
During the financial year ended 31st March, 2015, the Company has allotted 2,38,87,300 Equity Shares in dematerialised form on private placement basis and thereby the paid up equity share capital of the Company has been increased to 104.33 crores.
The Company's shares are currently traded only in dematerialised form at two stock exchanges viz. National Stock Exchange of India Limited and BSE Limited. To facilitate trading in dematerialised form, the Company has tied up arrangements with both the present depositories, i.e. National Securities Depository Ltd (NSDL) and Central Depository Services (India) Ltd. (CDSL). Shareholders can open account with any of the depository-participants registered with any of these depositories. As on 31st March, 2015, about 96.68% of the Company's shares were held in dematerialised form.
As on 31st March, 2015, 11800000 Equity Shares of the Company held by Promoters/Promoter Group companiesare under lock-in period.
Plant Locations (Manufacturing Units)
1.Uttarpara Division (UTP) Hindmotor - 712 233 District - Hooghly, West Bengal
Ambassador, Mini Truck - Winner, Auto Components namely Forgings, Castings, Stampings and Spare parts. (Plant is under suspension of work w.e.f. 24th May, 2014)
Pithampur, Sector III, Sagore - 454 774 District - Dhar, Madhya Pradesh
Mini Truck - Winner and Spare parts.
(Plant is under lay off w.e.f. 4th December, 2014
Address for Correspondence :
• For matters related to shares :
Karvy Computershare Pvt. Limited
Plot No 31-32, Karvy Selenium, Tower B, Gachibowli Financial District, Nanakramguda, Hyderabad - 500 032
Phone : (040) 6716 1500 Fax : (040) 2342 0814
E-mail : email@example.comfirstname.lastname@example.org
• For queries/assistance on issues other than shares (including those related to financial statements):
Shri Tarun Kumar Kabra
Hindustan Motors Ltd
"Birla Building", 14th Floor 9/1, R. N. Mukherjee Road, Kolkata - 700 001
Telephone No : (033) 2242-0932, Fax No. (033) 2248-0055 E-mail : email@example.com
• For share transfer/transmission requests
Any of the local branches of Karvy Computershare Pvt. Ltd., a list of which can be available from Karvy's aforesaid address or from the office of the Company Secretary.
The above report was placed before and approved by the Board at its Meeting held on 25th May, 2015.
For and on behalf of the Board of Directors
Uttam Bose Director
A. Sankaranarayanan Director
25th May, 2015