REPORT ON CORPORATE GOVERNANCE FOR THE YEAR ENDED 31ST DECEMBER 2011
Corporate Governance Philosophy
Corporate Governance, in essence, is a set of systems and procedures, which aims to ensure that the Company is managed to suit the best interest of all its stakeholders with an objective to maximise their wealth. The stakeholders may be Promoters, Shareholders, Customers, Lenders, Dealers, Vendors, Government or Employees. Your Company is committed for implementation of good corporate governance practices in the interest of its stakeholders.
Composition of Board of Directors
The Board of Directors of the Company comprises 7 Directors. The number of Non-Executive Directors is more than fifty per cent of the total number of directors. Independent Directors are atleast one-half of the total strength.
During the 15 months period ended 31st December 2011 (hereinafter referred to as 'the period under review'), 10 Board Meetings were held on 15.11.2010, 12.02.2011, 21.03.2011, 12.05.2011, 25.06.2011, 12.07.2011, 29.07.2011, 12.08.2011, 14.11.2011 and 9.12.2011. The maximum time gap between any two Board Meetings was not more than four months. The Company did not have any pecuniary relationship or transactions with Non-Executive Directors except for payment of sitting fees during the period under review.
The Board reviews Compliance Report of all laws applicable to the Company, prepared by the Company as well as steps taken by the Company to rectify instances of non-compliance.
Code of Conduct
The Board has laid down a code of conduct for all Board members and senior management of the Company.
All Board Members and senior management have affirmed compliance with the code of conduct on an annual basis and the Annual Report contains declaration to that effect signed by the Managing Director of the company.
The Company has laid down procedures to inform Board about risk assessment and minimization procedures. These procedures are periodically reviewed by executive management to control the risks.
The Audit Committee consists of 4 members viz Mr. R. J. Kabra as Chairman, Mrs. Sulajja Firodia Motwani, Mr. M. Venkataiah and Mr. S. R. Kotecha. Two-third of the members of the Audit Committee are Independent Directors. All members of the Audit Committee are financially literate and one member has accounting and related management expertise. The terms of reference of Audit Committee include reviewing the Quarterly and annual financial statements before submission to the Board, to take note of report on statutory compliance, ensure compliance of timely payment of statutory dues and review other matters as per requirements of Corporate Governance. The Audit Committee reviews Internal Control reports of the Internal Auditor and meets Internal and Statutory Auditors periodically for discussions and suggestions. Disclosures were made to Audit Committee about uses/application of funds raised by the Company through Preferential issues of securities.
During the period under review, 5 Audit Committee Meetings were held on 15.11.2010, 12.02.2011, 12.05.2011, 12.08.2011 and 14.11.2011. The time interval between two meetings was not more than four months.
The Remuneration Committee consists of 3 Non-Executive Independent Directors viz Mr. Dinesh Munot as Chairman, Mr. R. J. Kabra and Mr. S. R. Kotecha, as Members. The terms of reference of the Remuneration Committee include fixation of salary, perquisites etc to Executive Directors.
For the purpose of fixing the amount of remuneration of Executive Director, the Remuneration Committee takes into account various factors viz. remuneration package offered to senior directors in the automobile and engineering industry, trends in industry, financial position of the Company, performance of the Executive Director, his qualification, experience and past remuneration, terms of employment etc.
Non-Executive Directors of the Company are paid sitting fees @ Rs. 2,000 per meeting of the Board/ Committee attended by them. No commission is paid to Non-Executive Directors.
No Remuneration Committee Meeting was held during the year.
The above remuneration excludes liability for leave encashment as the same is provided for on an actuarial basis for the Company as a whole.
Mr. A H Firodia is appointed for a period of 5 years and Mrs Sulajja Firodia Motwani is appointed for a period of 1 year w.e.f. 04.05.2011. However, Mrs. Sulajja Firodia Motwani is continued as Managing Director only upto 31st December, 2011 and is a Director with effect from 01-01-2012. The Company has filed relevant Form 25A with the Central Government, seeking approval for the abovesaid appointments
Shareholders' Grievance Committee
Shareholders' Grievance Committee consists of Mr. M. Venkataiah as its Chairman and Mr. R. J. Kabra as Member, to look into redressing of shareholders complaints like transfer of shares, non-receipt of Annual Report, non-receipt of declared dividend etc. No Shareholders' Grievance Committee Meeting was held during the year.
During the period under review, the Company has received NIL Complaints.
The Board of Directors have delegated authority for approval of share transfers to Mr. A. H. Firodia, Chairman and Mrs. Sulajja Firodia Motwani, Managing Director.
The Company has approved all valid applications for transfer of shares received during the period ended 31st December 2011.
(i) Disclosure on materially significant related party transactions i.e. transactions of the Company of material nature with its promoters, the directors or management, their subsidiaries or relatives etc. that may have potential conflict with interests of Company at large :
Normal trade transactions were entered into by the Company with the related parties. The Executive Directors are paid remuneration. The disclosures on related party transactions as per Accounting Standard 18 issued by the Institute of Chartered Accountants of India, are given in Notes to the Accounts, Note No. 17 to 21.
(ii) Details of non-compliance by the Company, penalties, strictures imposed on the Company by Stock Exchange or SEBI or any statutory authority, on any matter related to capital markets, during the last three years : None
(iii) Company has in place a Suggestion Box system for free communication between workers staff and management. No employee has been denied access to the audit committee.
(iv) The Company has not adopted any Whistle blower policy.
(v) The status of implementation of non-mandatory requirements on Corporate Governance recommended under clause 49 of the Listing Agreement is as under :
The Board has set up Remuneration Committee comprising of 3 non-executive Independent directors.
Means of Communication
The Company's Quarterly Financial Results were published in leading English newspaper (Free Press Journal- Mumbai Edition) and also in regional language Hindi / Marathi newspaper (Swadesh- Indore Edition / Loksatta, Pune Edition). The results of the company are displayed on the website www.bseindia.com . The website also displays official news releases. No presentation was made to Institutional Investors and Analysts.
Management Discussion and Analysis is forming part of Directors' Report.
General Shareholders Information
The 26th Annual General Meeting is proposed to be held on 20th October, 2012 at 11 a.m. at D-1 Block, Plot No.- 18/2, Chinchwad, Pune- 411019,
Dates of Book-Closure :
18th October,2012 to 20th October, 2012 (both days inclusive).
Dividend Payment Date:
Listing of Shares on Stock Exchanges:
The shares of the Company are listed on National Stock Exchange of India Limited "Exchange Plaza" Bandra Kurla Complex, Bandra East, Mumbai - 400 061, Madhya Pradesh Stock Exchange (Regional Stock Exchange), 201 Palika Plaza II, MTH Compound, Indore - 452001 and Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers, Dalal Street Mumbai- 400 001.
Registrar and Transfer Agents:
The Company's equity shares are compulsorily traded in Demat mode and hence transferable through the depository system. Link Intime India Pvt. Limited, Block No. 202, 2nd Floor, Akshay Complex, Off. Dhole Patil Road, Pune 411 001 have been appointed as Company's Registrar and Transfer Agent as per SEBI's Circular for appointment of common agency to carry physical and electronic share registry work.
Share Transfer System:
All the transfers received are processed by the Registrar and Transfer Agent and approved by the authorised Directors of the Company.
Dematerialization of shares:
As of 31st December, 2011 the Company had processed the Dematerialization Request Forms for 20117880 shares representing 73.03% of the total number of shares issued by the Company.
The Company has not issued any GDRs / ADRs.
Convertible Securities outstanding at the end of the financial year: Nil
Address for correspondence:
Shareholder's correspondence may be addressed to, Link Intime India Pvt. Limited, Block No. 202, 2nd Floor, Akshay Complex, Off. Dhole Patil Road, Pune 411 001. Shareholders holding shares in electronic mode should address all their correspondence to their respective Depository participants.
Declaration by the Managing Director under Clause 49(1D)
"Pursuant to Clause 49(1D) of the Listing Agreement with the Stock Exchanges, I hereby declare that all Board Members and Senior Management Personnel of the Company have affirmed Compliance with the respective provisions of the Code of Conduct of the Company for the year ended 31st December 2011.
By Order of the Board of Directors
Sulajja Firodia Motwani
Pune : February 29, 2012