REPORT ON CORPORATE GOVERNANCE
(Pursuant to Schedule V of the SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015)
In accordance with Schedule V of the SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 and some of the best practices followed internationally on Corporate Governance, the report containing the details of corporate governance systems and processes at Indag Rubber Limited is as under:
I. Company’s Philosophy on Code of Governance
The Company recognizes the importance of good Corporate Governance, which is a tool for building a strong and everlasting beneficial relationship with the customers, suppliers, bankers and more importantly with the investors.
The Company believes that its key decisions must serve the underlying goals of enhancing shareholders’ value over a sustained period of time, and achieving the definite and measurable performance targets.
II. Board of Directors
(a) Composition of the Board
The Company’s policy is to maintain optimum combination of Executive Directors, Non-Executive Directors and Independent Directors.
The Board comprises of seven directors, which include two executive directors and five non-executive directors as on March 31, 2016. The Board is in the process of appointing an Independent Director in place of Sh.K.M.S.Ahluwalia who had resigned w.e.f. February 10, 2016. The Board is primarily responsible for the overall management of the Company’s business. The Directors on the Board are from varied fields with wide range of skills and experience.
The non-executive directors including Independent Directors bring statutory and wider perspective in the Board’s deliberations and decisions.
All the Independent Directors of the Company at the time of their first appointment to the Board and thereafter at the first meeting of the Board in every financial year give a declaration that they meet with the criteria of independence as provided under Companies Act, 2013 and Reg. 16 of SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015.
(b) Board Meetings
Five meetings of the Board of Directors were held during the year, viz. on April 11, 2015, May 21, 2015, August 14, 2015, November 4, 2015 and February 10, 2016. Agenda papers were circulated to the Directors in advance for each meeting. All relevant information as required under Schedule II of the SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 was placed before the Board from time to time.
(c) Separate Meeting of Independent Directors
As stipulated by the Code of Independent Directors under the Companies Act, 2013 and the Listing (Obligation and Disclosure Requirements) Regulation, 2015, a separate meeting of the Independent Directors of the Company was held on February 10, 2016 to review the performance of Non-independent Directors (including the Chairman) and the Board as whole. The Independent Directors also reviewed the quality, content and timeliness of the flow of information between the Management and the Board and its Committees which is necessary to effectively and reasonably perform and discharge their duties. The Independent Directors found the performance of Non-Independent Directors (including Chairman) and the Board as well as flow of information between the Management and the Board to be satisfactory. All independent directors were present in the meeting.
(d) Induction & Training of Board Members (Familiarisation programme for Independent Directors)
Letter of Appointment(s) are issued to Independent Directors setting out in detail, the terms of appointment, duties, responsibilities and expected time commitments. Each newly appointed Director is taken through a formal induction program including the presentation from the Chairman cum Managing Director and CEO & Whole Time Director on the Company’s manufacturing, marketing, finance and other important aspects. The web link for the Familiarisation Programmes for Independent Directors is http://indagrubber.com/demoversion/ wp-content/uploads/Familiarization-Programme-for-Independent-Directors.pdf.
(e) Evaluation of the Board’s Performance
The Board has a formal mechanism for evaluating its performance and as well as that of its Committees and individual Directors, including the Chairman of the Board based on the criteria laid down by Nomination and Remuneration Committee which included attendance, contribution at the meetings and otherwise, independent judgement, safeguarding of minority shareholders interest, adherence to Code of Conduct and Business ethics, monitoring of regulatory compliance, risk assessment and review of Internal Control Systems etc.
III. Audit Committee
(a) The Audit Committee comprises of two non-executive (independent) directors and one executive director having financial management expertise. The Chairman of the committee is an independent director, elected by the Members of the Committee.
Sh. R. Parameswar, Chairman of the Audit Committee was present at the last Annual General Meeting.
Five meetings of the Audit Committee were held during the year viz. on April 11, 2015, May 21, 2015, August 14, 2015, November 4, 2015 and February 10, 2016 respectively.
(b) Terms of reference: The Audit Committee assists the Board in its responsibility of overseeing the quality and integrity of the accounting, auditing and reporting practices of the Company and its compliance with the legal and regulatory requirements. The Committee’s purpose is to oversee the accounting and financial process of the Company, the audits of the Company’s financial statements, the appointment, independence, performance and remuneration of the statutory auditors including the Cost auditors, the performance of internal auditors and the Company’s risk management policies. The terms of reference of Audit Committee cover the areas mentioned under Part C of Schedule II of the SEBI (Listing Obligation and Disclosure Requirement) Regulation, 2015 as well as Section 177 of the Companies Act, 2013.
(c) The Audit Committee invites CEO & Whole Time Director, Chief Financial Officer, representative of Statutory Auditors and Internal Auditors for each meeting, to provide inputs on issues relating to accounts, taxation, internal audit finding, internal controls, risk managements etc.
IV. Nomination and Remuneration Committee
(a) The Board has framed Nomination and Remuneration policy, which is generally in line with the existing industry practice and applicable laws. The policy has been displayed on the company’s website viz., www.indagrubber.com.
Three meetings of the Nomination and Remuneration Committee were held during the year viz. on April 11, 2015, May 21, 2015, and August 14, 2015. The composition of the Nomination and Remuneration Committee and details of their attendance at the meetings are as follows:
(b) Terms of reference: The Nomination and Remuneration Committee assist the Board in overseeing the method, criteria and quantum of compensation for directors and senior management based on their performance and defined assessment criteria. The Committee formulates the criteria for evaluation of the performance of Independent Directors & the Board of Directors; identifying the persons who are qualified to become directors, and who may be appointed in senior management and recommend to the Board their appointment and removal.
The terms of the reference of Nomination and Remuneration Committee covers the areas mentioned under Part D of Schedule II of SEBI (Listing Obligation and Disclosure Requirement) Regulation 2015 as well as section 178 of the Companies Act, 2013.
(c) Performance evaluation criteria for Independent Directors-
The Nomination and Remuneration Committee has laid down the criteria for performance evaluation of Independent Directors which are as under-
AREAS OF EVALUATION
1 Frequency of meetings attended
2 Timeliness of circulating Agenda for meetings and descriptiveness
3 Quality, quantity and timeliness of flow of information to the Board
4 Promptness with which Minutes of the meetings are drawn and circulated
5 Opportunity to discuss matters of critical importance, before decisions are made
6 Familiarity with the objects, operations and other functions of the company
7 Importance given to Internal Audit Reports, Management responses and steps towards improvement
8 Avoidance of conflict of interest
9 Exercise of fiscal oversight and monitoring financial performance
10 Level of monitoring of Corporate Governance Regulations and compliance
11 Adherence to Code of Conduct and Business ethics by directors individually and collectively
12 Monitoring of Regulatory compliances and risk assessment
13 Review of Internal Control Systems
14 Performance of the Chairperson of the company including leadership qualities.
15 Performance of the Whole time Director
16 Overall performance of the Board/ Committees.
V. Remuneration of Directors
(a) There was no pecuniary relationship or transaction between the Non-Executive Directors and the company during the financial year 2015-2016.
(b) Criteria of making payments to Non-Executive Directors:
Overall remuneration (sitting fees and commission) decided by the Board is reasonable and sufficient to attract, retain and motivate Directors aligned to the requirements of the Company (taking into consideration the challenges faced by the Company and its future growth imperatives).
a) Remuneration / Commission:
The remuneration / commission shall be fixed as per the slabs and conditions mentioned in the Articles of Association of the Company and the Act.
b) Sitting Fees:
The Non- Executive / Independent Director may receive remuneration by way of fees for attending meetings of Board or Committee thereof. Provided that the amount of such fees shall not exceed Rs. One Lac per meeting of the Board or Committee or such amount as may be prescribed by the Central Government from time to time.
Commission may be paid within the monetary limit approved by shareholders, subject to the limit not exceeding 1% of the profits of the Company computed as per the applicable provisions of the Act.
d) Stock Options:
An Independent Director shall not be entitled to any stock option of the Company.
Payment criteria of Non-Executive directors are the given in the Nomination and Remuneration Policy.
The web link for the same is http://indagrubber.com/demoversion/wp-content/uploads/NRC-policy.pdf.
(c) Details of Remuneration to Directors: The Company has paid the following remuneration to Directors during the year under review, which is in accordance with the section 177(4) of the Companies Act, 2013.
(i) Non-Executive Directors
The remuneration of Non-Executive Directors of the Company is decided by the Board of Directors based on the recommendation of the Nomination and Remuneration Committee. The Non-Executive Directors are paid remuneration by way of Commission and Sitting fee. In terms of approval of the members at the 34th Annual General Meeting of the Company held on July 19, 2013, Commission is paid at the rate not exceeding one percent of the net profits of the Company calculated in accordance with the provisions of section 197 and 198 of the Companies Act, 2013. The distribution of Commission amongst the Non-Executive Directors is determined by the Board broadly on the basis of contribution made at the Board meeting(s) as well as various Committee meeting(s) and the time spent on operational matters.
The Non-Executive Directors are paid sitting fee of Rs. 20,000/- per meeting for attending the meetings of Board and Audit Committee and Rs. 10,000/- per meeting for attending other Committee meetings. However, the Board has decided that no sitting shall be paid for attending the meeting of CSR Committee (w.e.f. 21st May, 2015) and Stakeholder Relationship Committee (w.e.f. 4th November, 2015).
VI. Stakeholder Relationship Committee
(i) The Stakeholder Relationship Committee looks into shareholders’ and investors’ grievances. Sh. R. Parameswar, Non-Executive Independent Director is the Chairman of the Committee. The Board has designated Mrs. Manali D. Bijlani, Company Secretary as the Compliance Officer.
(iii) No. of investors’ complaints received by the RTA/ Company during the year: 1
No. of complaints not solved to the satisfaction of shareholders during the year: Nil
No. of complaints pending as at 31st March, 2016: Nil
Warning against Insider Trading
Comprehensive guidelines advising and cautioning the management, staff and other relevant business associates on the procedure to be followed while dealing with the securities of the company have been issued and implemented.
VII. Means of Communication
Quarterly, half-yearly and annual financial results are communicated to the Bombay Stock Exchange at Mumbai immediately after these are considered and approved by the Board; and thereafter regularly published in the prominent newspapers like Business Standard (both English & Hindi), Financial Express etc. as required. Quarterly and annual financial statements, along with presentation on financial results and official news releases, are posted on our website: www.indagrubber.com. Further, all other price sensitive and other information is sent to the Stock Exchange where shares of the Company are listed, enabling them to display the same on their website.
VIII. General Shareholders’ Information
(i) Annual General Meeting to be held:
Day : Friday
Date : 27th May, 2016
Time : 10:00 A.M.
Venue : Sai International Centre, Pragati Vihar, Lodhi Road, New Delhi
(ii) Financial Year :
1st April, 2015 to 31st March, 2016
(iii) Dividend Payment Date :
(iv) Stock Exchanges on which the Company’s Shares are listed:
The Bombay Stock Exchange,
Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai – 400 001
The Listing Fees as applicable have been paid within prescribed time period.
(v) Stock Code:
ISIN under depository system INE802D01023
The Stock Exchange, Mumbai 509162
(vi) Registrar & Share Transfer Agent:
Skyline Financial Services (P) Limited, D-153/A, 1st Floor, Okhla Industrial Area, Phase-1, New Delhi-110020.
(vii)Share Transfer System:
In order to expedite the process of share transfers, the Board has delegated the power to approve share transfers to senior executives, who attend to share transfer formalities fortnightly. The Company has appointed Skyline Financial Services (P) Limited as Registrar and Share Transfer Agents for physical transfer of securities as well as dematerialization/ rematerialization of securities.
(xi) Dematerialization of shares:
The Company has established connectivity with both the depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) to handle dematerialization of shares.
As on March 31, 2016, a total of 2,55,40,415 equity shares which form 97.30% of the share capital stand dematerialized.
(xii) Outstanding GDRs/ ADRs/ Warrants/ Convertible instruments
The Company has not issued Global Depository Receipts or American Depository Receipt or Warrants or any Convertible instruments.
(xiii)Commodity Price Risk/ Foreign Exchange Risk and Hedging
The Company did not engage in hedging activities.
(xiii) Plant Location :
(a) Plot No. 86, Industrial Area, Bhiwadi – 301019, Dist.Alwar, Rajasthan (India) – (DORMANT)
(b) Village Jhiriwala, Hadbast No. 73, Nalagarh, District Solan, (Himachal Pradesh)
(xiv) Address for Correspondence:
(a) For Transfer of physical shares, request for dematerialization of shares, change of mandates/ address or any other query:
Skyline Financial Services (P) Limited
D-153/A, 1st Floor, Okhla Industrial Area, Phase-1, New Delhi-110020 firstname.lastname@example.org
(b) For any investor grievance :
The Company Secretary
Indag Rubber Limited
11, Community Centre, Saket, New Delhi – 110 017
Phone no.: (011) 26963172, 26963173 email@example.com
(i) During the financial year ended 31st March, 2016 there were no materially significant related party transactions that may have potential conflict with the interests of the Company at large.
(ii) Neither were any penalties imposed, nor were any strictures passed by Stock Exchange or SEBI or any statutory authority on any capital market related matters during the last three years.
(iii) The Company has announced Whistle Blower policy. All the personnel of the company have the access to the Audit Committee.
(iv) The Company has complied with the mandatory requirements of the Listing Regulation. The Company has adopted various non-mandatory requirements as well, as discussed under relevant headings.
(v) The Company has framed a Material Subsidiary Policy and the same is placed on the Company’s website and the web link for the same is http://indagrubber.com/demoversion/wp-content/uploads/Policy-for-determining- Material-Subsidiary.pdf.
(vi) The company has framed Related Party Transaction Policy and is placed on the Company’s website and the web link for the same is http://indagrubber.com/demoversion/wp-content/uploads/Policy-on-materiality-of- Related-Party-Transaction.pdf.
(vii) During the financial year ended 31st March, 2016 the company did not engage in commodity hedging activities.
XI. There has been no instance of non-compliance of any requirement of Corporate Governance Report.
XII. ADOPTION OF NON-MANDATORY REQUIREMENTS
I. The Board
Since the Company does not have a Non-Executive Chairman, it does not maintain such office.
II. Shareholder Rights
Half yearly financial results are forwarded to the Stock Exchanges and uploaded on the website of the Company like quarterly results.
III. Audit Qualifications
During the year under review, there was no audit qualification in the Auditors’ Report on the Company’s financial statements.
IV. Separate posts of Chairman and CEO
The post of the Chairman of the Company and the CEO are held by different persons.
V. Reporting of Internal Auditor
The Internal Auditor of the Company is a permanent invitee to the Audit Committee Meeting and regularly attends the Meeting for reporting their findings of the internal audit to the Audit Committee Members.
XII. The Company has fully complied with the applicable requirement specified in Reg. 17 to 27 and clause (b) to (i) of sub-regulation (2) of regulation 46.
Disclosure of Accounting Treatment
The Company has followed the treatment laid down in the Accounting Standards prescribed by the Institute of Chartered Accountants of India, in the preparation of financial statements. There are no audit qualifications in the Company’s financial statements for the year under review.
Demat Suspense Account/Unclaimed Suspense Account
Pursuant to Regulation 39 (4) read with Schedule VI of the Listing Regulations, 2015, the company is required to send at least three reminders at the last available address as per the records to the shareholders whose certificates were undelivered and returned to the Company.
The Company has sent first reminder to the shareholders on 29 January, 2016 whose physical share certificates, after split, were undelivered and returned to the Company. Second reminder will be sent in April/ May 2016 and last reminder will be sent in July/ August 2016.
Thereafter, in case of non-receipt of response to the reminders, unclaimed physical shares will be dematerialized and will be held in “Unclaimed Suspense Account”, with details of shareholding of each individual allottee whose shares are credited to such unclaimed suspense account. All corporate benefits shall also be credited to such suspense account for a period of 7 years and thereafter shall be transferred to IEPF.