CORPORATE GOVERNANCE PHILOSOPHY
The philosophy of Corporate Governance as manifested in the Company's functioning is to achieve business excellence by enhancing long term shareholders value and interest of all its stakeholders. Efficient conduct of its business through commitment to transparency and business ethics in discharging its corporate responsibilities are hallmarks of the best practices already followed by the Company.
Good corporate governance has always been an integral part of the Company's business philosophy. The Company attaches significant importance to issues of Corporate Governance and has always focused on good corporate governance. Your Company has consistently made efforts in ensuring transparency, accountability and responsibility in dealing with its employees, stakeholders, customers and the community at large.
Your Company fundamentally believes that good corporate governance should be an internally driven need and is not to be looked upon as an issue of compliance dictated by statutory requirements. Your Company has systems and procedures in place to ensure that it remains fully compliant with all mandated regulations. The stipulations mandated by Clause 49 on the mandatory requirements of the erstwhile Listing Agreement up to 30th November, 2015 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) with effect from 1st December, 2015 have been complied with.
I. BOARD OF DIRECTORS:
A. Composition of Board:
The composition of the Board is in conformity with Listing Regulations which stipulates that the Board should have optimum combination of Executive and Non-Executive Directors with at least one women Director and not less than fifty percent of the Board should comprise of Non-Executive Directors. Further if the Chairman of the Board is an Executive Director then at least half of the Board of Directors should consist of Independent Directors.
All the Directors possess the requisite qualifications and experience in general corporate management, finance, insurance, law and other allied fields enabling them to contribute effectively in their capacity as Directors of the Company.
As on 31st March, 2016, the total strength of the Board is ten Directors including two women Directors, out of which there are six Independent Directors, two Executive Directors and two Non-Executive Non-Independent Directors.
The management of the Company is headed by the Chairman & Managing Director and Executive Director who operates under the supervision and control of the Board. The Board reviews and approves strategy and oversees the actions and results of management to ensure that the long term objectives of the organisation are achieved successfully.
C. Number of Board Meetings
The Board of Directors met 6 times during the financial year 2015-16. The meetings were held on 7th May, 2015, 28th May, 2015, 4th August, 2015, 28th October, 2015, 29th January, 2016 and 11th March, 2016. The maximum time gap between any two consecutive meetings did not exceed one hundred and twenty days.
D. Disclosure of Relationships between directors inter-se
Mr. Rajas R. Doshi, Chairman & Managing Director, Ms. Jyoti R. Doshi, Non-Executive Non-Independent Director and Mr. Mayur R. Doshi, Executive Director of the Company are related to each other and belong to the Company's Promoter group. The shareholding of Promoter group is given elsewhere in the report.
None of the other Directors of the Company are related to each other.
Ms. Anima B. Kapadia, Non-Executive Non-Independent Director of the Company, is a sole proprietor of M/s. Daphtary Ferreira & Divan, Solicitors & Advocates, one of the Solicitors & Advocates of the Company having 40 years' experience as a Solicitor & Lawyer.
F. Familiarisation Programme for Independent Directors
The Independent Directors are provided with necessary documents and policies to enable them to familiarize themselves with the Company's procedures and practices.
The details of such familiarization programme for Independent Directors of the Company are posted on the website of the Company www.indianhumepipe.com
G. Information to the Board
A detailed agenda folder is sent to each Director seven days in advance of the Board Meetings. As a policy, all major decisions involving investments and capital expenditure, in addition to matters which statutorily require the approval of the Board are put up for consideration of the Board. All the agenda items are backed by necessary supporting information and documents (except for the critical price sensitive information, which is circulated separately or placed at the meeting) to enable the Board to take informed decisions.
The Board periodically reviews compliance reports of all laws applicable to the Company, as well as steps taken by the Company to rectify instances of non-compliances. It monitors overall operating performance and reviews such other items which require Board's attention. It directs and guides the activities of the Management towards the set goals and seeks accountability. The Agenda for the Board Meeting covers items as set out in erstwhile Listing Agreement and the Listing Regulations, 2015 (w.e.f. 01/12/2015) to the extent these are relevant and applicable. All agenda items are supported by relevant information and documents to enable the Board to take informed decision.
H. Code of Conduct
The Board of Directors had laid down three separate categories of Code of Conduct for all its Executive Directors and Senior Management Personnel, Non-Executive Non-Independent Directors and Independent Directors. The Codes of Conduct are available on the website of the Company: www.indianhumepipe.com All the Board members and Senior Management Personnel have affirmed compliance with the Code of Conduct. A declaration to this effect signed by Mr. Rajas R. Doshi, Chairman & Managing Director is given in this report.
I. Performance Evaluation and Independent Directors Meeting
Pursuant to the provisions of Section 134(3)(p), 149(8) and Schedule IV of the Companies Act, 2013 and Regulation 17 of SEBI Listing Regulations, annual Performance Evaluation of the Directors as well as of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee, CSR Committee and Risk Management Committee has been carried out.
The Performance Evaluation of the Independent Directors was carried out by the entire Board and the performance Evaluation of the Chairman and Non-Independent Directors was carried out by the Independent Directors.
J. Director seeking re-appointment
Mr. Mayur R. Doshi, Executive Director retire by rotation and being eligible offer himself for re-appointment.
The resume of the Director seeking re-appointment is given in the Notice of AGM and Explanatory Statement.
II. AUDIT COMMITTEE
The Audit Committee acts as a link between the statutory and internal auditors and the Board of Directors. Its purpose is to assist the Board in fulfilling its oversight responsibilities of monitoring financial reporting processes, reviewing the Company's established systems and processes for internal financial controls, governance and reviewing the Company's statutory and internal audit activities. The Committee acts in accordance with the terms of reference which is in line with the regulatory requirements mandated by the Companies Act, 2013, erstwhile Clause 49 of the Listing Agreement and Listing Regulations.
The Audit Committee was constituted by the Board of Directors at its meeting held on 25th October, 2001. Presently it has 4 members. Mr. Rajendra M. Gandhi, is the Chairman, Mr. Rameshwar D. Sarda, Mr. Vijay Kumar Jatia and Mr. P. D. Kelkar, Directors are Members of the Audit Committee. All members of the Committee are Independent Directors.
The Company Secretary acts as the Secretary to the Committee.
Besides having access to all the required information of the Company, the Committee can obtain external professional advice whenever required. The Committee acts as a link between the Statutory and the Internal Auditors and the Board of Directors of the Company.
I t is authorised to select and establish accounting policies, review reports of the Statutory and the Internal Auditors and meet with them to discuss their findings, suggestions and other related matters. The Committee is empowered to review the remuneration payable to the Statutory Auditors and to recommend a change in Auditors, if felt necessary. It is also empowered to review and approve Financial Statements, Management Discussion & Analysis Report and related party transactions. Generally all items listed in erstwhile Listing Agreement and the Listing Regulations and Section 177 of the Companies Act, 2013 are covered in the terms of reference. The Audit Committee has been granted powers as prescribed under Listing Regulations.
Five committee meetings were held during the year from 1st April, 2015 to 31st March, 2016 on following dates:
- 28th May, 2015 - 29th January, 2016
- 4th August, 2015 - 11th March, 2016
- 28th October, 2015
Company held on 4th August, 2015 to answer members' queries.
All the Members of the Audit Committee have the requisite qualification for appointment on the Committee and possess sound knowledge of finance, management, accounting practices and internal controls.
The meetings of the Audit Committee were also attended by the Chairman & Managing Director, Executive Director, Operating Executives, Company Secretary, Chief Financial Officer, Chief Internal Auditor, Statutory Auditor and Cost Auditor.
I n accordance with Section 177 of the Companies Act, 2013 and Listing Regulations the Board of Directors of the Company has specified following terms of reference for the Audit Committee.
The Terms of reference of the Audit Committee:
• Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible;
• Recommendation for appointment, remuneration and terms of appointment of auditors of the company;
• Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
• Reviewing, with the management, the annual financial statements and auditor's report thereon before submission to the Board for approval, with particular reference to:
a. Matters required to be included in the Directors' Responsibility Statement to be included in the Board's Report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013.
b. Changes, if any, in accounting policies and practices and reasons 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.
• Reviewing, with the management, the quarterly financial statements before submission to the Board for approval;
• Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency, monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;
• Reviewing and monitoring the auditor's independence and performance, and effectiveness of audit process;
• Approval or any subsequent modification of transactions of the company with related parties;
• Scrutiny of inter-corporate loans and investments;
• Valuation of undertakings or assets of the company, wherever it is necessary;
• Evaluation of internal financial controls and risk management systems;
• Reviewing, with the management, performance of statutory and internal auditors and adequacy of the internal control systems;
• 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;
• 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;
• 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;
• To 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;
• To review the functioning of the Whistle Blower mechanism;
• Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;
• Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
Review of Information by Audit Committee:
Besides the above, the role of the Audit Committee includes mandatory review of the following information
• 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, if any;
• Internal audit reports relating to internal control weaknesses; and
• The appointment, removal and terms of remuneration of the Chief Internal Auditor;
III. NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee comprises of Mr. N. Balakrishnan, Chairman, Independent Director, Mr. Vijay Kumar Jatia and Mr. Rajendra M. Gandhi, Independent Directors, Ms. Anima B. Kapadia, Non-Executive Non-Independent Director and Mr. Rajas R. Doshi, Chairman & Managing Director of the Company
The terms of reference of the Nomination and Remuneration Committee, inter-alia, includes the following:
• Formulation of the criteria for determining qualifications, positive attributes and independence of a Director and recommend to the Board a policy, relating to the remuneration of the Directors, Key Managerial Personnel and other employees;
• Formulation of criteria for performance evaluation of Independent Directors and the Board;
• Devising a policy on Board diversity;
• Identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board, their appointment and removal.
The Remuneration Policy of the Company has been provided in the Directors' Report forms part of this Annual Report.
IV. REMUNERATION OF DIRECTORS
A. Remuneration to Non-Executive Directors for the year ended 31st
Non-Executive Directors are paid sitting fees of Rs. 40,000/- each for every meeting of the Board or Committee attended by them.
In the Annual General Meeting held on 4th August, 2015, the members had approved payment of commission, not exceeding 1% of the net profits of the Company or an amount not exceeding Rs. 32 Lacs in aggregate, whichever is less, per financial year, to Non-Executive Directors for a further period of three financial years commencing from the year 2015-16 to 2017-18.
B. (i) Remuneration of the Managing Director for the year ended 31st March, 2016.
Remuneration payable to the Managing Director for the period of 5 years w.e.f. 1st July, 2013 to 30th June, 2018 had been recommended by the Nomination and Remuneration Committee and approved by the Board at their meetings held on 29th May, 2013 and Shareholders at the Annual General Meeting held on 25th July, 2013.
(ii) Remuneration of the Executive Director for the year ended 31st March, 2016.
Remuneration payable to the Executive Director w.e.f. 28th May, 2012 to 31st March, 2016 had been recommended by the Nomination and Remuneration Committee and approved by the Board at their meetings held on 28th May, 2012 and Shareholders at the Annual General Meeting held on 25th July, 2012.
The Committee deals with the following matters:
Noting transfer/transmission of shares.
Review of dematerialised/ rematerialised shares and all other related matters.
Monitors expeditious redressal of investor grievance matters received from Stock Exchanges, SEBI, ROC, etc.
Monitors redressal of queries/complaints received from members relating to transfers, non-receipt of Annual Report, dividend etc.
All other matters related to shares.
VI. CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE
The Corporate Social Responsibility (CSR) Committee was constituted by the Board of Directors at their meeting held on 27th May, 2014. Mr. Rajas R. Doshi, Chairman & Managing Director, Ms. Jyoti R. Doshi and Mr. Rameshwar D. Sarda, Directors are Members of the CSR Committee.
The terms of reference of the Corporate Social Responsibility Committee (CSR) is as under:
To formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified in Section 135 of Companies Act, 2013, Companies (Corporate Social Responsibility Policy) Rules, 2014 and Schedule VII;
To recommend the amount of expenditure to be incurred on the activities in terms of the CSR Policy;
VII. RISK MANAGEMENT COMMITTEE
Risk Management Committee was voluntarily constituted by the Board of Directors at their meeting held on 27th May, 2014, headed by Mr. Rajas R. Doshi, Chairman & Managing Director, Mr. Mayur R. Doshi, Executive Director, Mr. P. D. Kelkar, Director, Mr. P. R. Bhat, Vice President and Mr. M. S. Rajadhyaksha, Chief Financial Officer of the Company. No committee meeting was held during financial year 2015-16.
XI. GENERAL SHAREHOLDER INFORMATION
(i) Annual General Meeting
The Ninetieth Annual General Meeting of the Company will be held on Wednesday, 27th July, 2016 at 4.00 p.m. at Walchand Hirachand Hall, 4th Floor, Indian Merchants' Chamber Building, Churchgate, Mumbai - 400 020 to transact such business as stated in the Notice of the Meeting.
(ii) Financial Calendar 2016-17
Financial year: 1st April to 31st March.
Unaudited Financial Results with Limited Review for quarter ended :
June, 2016 - by 14th August, 2016.
September, 2016 - by 14th November, 2016.
December, 2016 - by 14th February, 2017.
Audited financial results for the year ended 31st March, 2017 - by end of May, 2017.
AGM for the year ended 31st March, 2017 - by end of July/August, 2017.
Note : The above dates are indicative.
(iii) Book Closure
Wednesday, 20th July, 2016 to Wednesday 27th July, 2016 (both days inclusive).
(iv) Listing of Equity Shares on Stock Exchanges, Stock Codes and
BSE Ltd. (BSE) : 504741
National Stock Exchange of India Ltd. (NSE) : INDIANHUME
International Securities Identification Number (ISIN) No. : INE 323C01030
The Company has paid Listing Fees to BSE and NSE for financial year
(viii) Registrar and Share Transfer Agent
M/s. Link Intime India Pvt. Ltd. Unit: The Indian Hume Pipe Company Limited. C-13, Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (West), Mumbai - 400 078. Tel. No. 022-25946970-78 Fax No. 022-25946969 Email: email@example.com
(ix) Share Transfer System
All the transfers received in physical form are processed by the Registrar and Share Transfer Agent of the Company and approved weekly by the Chairman & Managing Director/Executive Director and noted in the Meetings of the Board of Directors
xii) Dematerialization of Shares and Liquidity as on 31st March, 2016.
Physical Form : 2.45%
Dematerialised Form : 97.55%
Trading in equity shares of the Company is permitted in dematerialized form only as mandated by Securities and Exchange Board of India.
(xiii) Transfer of unclaimed physical share certificates to unclaimed suspense account in demat mode.
Pursuant to the erstwhile Listing Agreement / Listing Regulations, the unclaimed share certificates of the shareholders on account of subdivision of face value of share of Rs. 10/- each to Rs. 2/- each lying with the Company were transferred to 'IHP-Unclaimed Shares Suspense Account' after giving three reminders to these shareholders requesting them to claim their shares. Thereafter few shareholders had claimed their shares.
Accordingly the Company had opened a demat account in the name of 'IHP-Unclaimed Shares Suspense Account' with Stock Holding Corporation of India Ltd (DP) and dematted 1,49,370 Equity Shares belonging to 180 shareholders
As per the Listing Regulations the voting rights on the shares outstanding in the above Unclaimed Suspense Account shall remain frozen till the rightful owners of such shares claim the shares.
Any corporate benefits in terms of securities accruing on such shares viz. bonus shares, split etc., shall also be credited to above IHP-Unclaimed Shares Suspense Account, as applicable for a period of seven years and thereafter shall be transferred to IEPF by the Company in accordance with provisions of the Companies Act, 2013 and rules made thereunder.
Nomination facility for Shares
As per the provisions of the Companies Act, 2013, facility for making nomination is available for Members in respect of shares held by them. Members holding shares in physical form may obtain nomination form, from the Share Department of the Company or download the same from the Company's website. Members holding shares in dematerialized form should contact their Depository Participants (DP) in this regard.
Permanent Account Number(PAN)
Members who hold shares in physical form are advised that SEBI has made it mandatory that a copy of the PAN card of the transferee/s, members, surviving joint holders/legal heirs be furnished to the Company while transfer, transposition, transmission and issue of duplicate share certificates.
(xvi) Outstanding ADRs / GDRs / Warrants or any Convertible Instruments, conversion date and likely impact on equity.
The Company has not issued any ADRs / GDRs / Warrants or any convertible instruments.
(xvii) Plant Locations
There are 22 factories. The locations are indicated in the MAP at the end of the Annual Report.
(xviii) Address for correspondence
Share Department Construction House, 2nd floor, 5, Walchand Hirachand Road, Ballard Estate, Mumbai - 400 001 Tel. : 022-22618091 / 22618092 / 40748181 Fax : 022-22656863 E-mail : firstname.lastname@example.org / email@example.com
Any Member/Investor whose grievance has not been resolved satisfactorily, may kindly write to the Company Secretary at the Registered Office with a copy of the earlier correspondence.
(xix) Reconciliation of Share Capital Audit
As required by the Securities & Exchange Board of India (SEBI) quarterly audit of the Company's share capital is being carried out by an independent Chartered Accountant with a view to reconcile the total share capital admitted with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and held in physical form, with the issued and listed capital. The certificate from Chartered Accountant with regard to the same is submitted to BSE Ltd. and National Stock Exchange of India Limited and is also placed before Stakeholders' Relationship Committee and the Board of Directors.
XII. OTHER DISCLOSURES
A. Related Party Disclosures
Details of related party transactions i.e. transactions of the Company of material nature with its promoter, the Directors or the management, their subsidiaries or relatives, etc. are presented in the Notes to the Financial Statements. All details on the financial and commercial transactions, where Directors may have a potential interest, are provided to the Board. The interested Directors neither participate in the discussion, nor vote on such matters. During the financial year 2015-16, there were no material related party transactions entered by the Company that may have a potential conflict with in interests of the Company
As required, the Company has formulated a Related Party Transaction Policy which is available on the website of the Company i.e. www.indianhumepipe.com (<http://www.indianhumepipe.com/Portals/0/images/pdf/Corporate_> Governance/Related%20Party%20Policy.pdf).
B. Code for Prevention of Insider-Trading
In compliance with SEBI's regulation on prevention of insider trading, the Company had instituted a comprehensive Code of Conduct for prevention of Insider Trading for its Directors and Designated Employees and their dependents. The Code lays down guidelines, which regulates Trading Window period, seeks disclosures of annual holdings and prohibits dealing in shares of the Company during the closure of Trading Window, besides compliance with other related matters.
I n accordance with the newly notified SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company has laid down new model Code of Conduct for its Directors, KMP and employees in terms of these regulations. Mr. S. M. Mandke, Company Secretary has been designated as Compliance Officer under the Code.
C. Vigil Mechanism /Whistle Blower Policy
The Company promotes ethical behaviour in all its business activities. The Company has Vigil Mechanism administered by the Audit Committee. The Vigil Mechanism Policy is posted on the website of the Company www.indianhumepipe.com
D. CEO/CFO Certification
As required under Listing Regulations, the Chairman & Managing Director and the Chief Financial Officer of the Company have issued a certificate to the Board of Directors, for the year ended 31st March, 2016, which is annexed to this report.
E. Details of non-compliance etc.
The Company has complied with all the requirements of regulatory authorities. During the last three years, there were no instances of non-compliance by the Company and no penalty or strictures were imposed on the Company by the Stock Exchanges or SEBI or any statutory authority, on any matter related to the capital markets.
F. Management Discussion & Analysis Report
The Management Discussion & Analysis Report has been attached to the Directors' Report and forms part of this Annual Report.
G. Compliance with mandatory & non-mandatory requirements
The Company has complied with all the mandatory requirements of erstwhile Clause 49 of the Listing Agreement/Listing Regulations relating to Corporate Governance.
Further, the Company has adopted following non-mandatory requirement of the erstwhile Clause 49 / Listing Regulations.
During the year under review, there is no audit qualification in the Auditor's Report. The Company continues to adopt best practices to ensure a regime of unqualified financial statements.
Auditors' Certificate on Corporate Governance
The Company has obtained a Certificate from its Statutory Auditors regarding compliance of the conditions of Corporate Governance, as stipulated in erstwhile Clause 49 of the Listing Agreement and Listing Regulations, which together with this Report on Corporate Governance is annexed to the Directors' Report and shall be sent to all the members of the Company and the Stock Exchanges along with the Annual Report of the Company