REPORT ON CORPORATE GOVERNANCE
1. The Company's philosophy on Code of Corporate Governance:
The Company strongly believes that the system of Corporate Governance protects the interest of all the stakeholders by inculcating transparent business operations and accountability from management towards fulfilling consistently the high standard of Corporate Governance in all facets of the Company's operations.
2. Board of Directors:
As on March 31, 2016, there were seven directors on the Board, comprising of a Managing Director and six (85.71%) Non-Executive Directors of whom five (83.33%) were Independent Directors including a Woman Director.
On April 27, 2015, Mr. Kishor Anant Chaukar was appointed as an Additional Director. The shareholders in the previous Annual General Meeting (AGM) confirmed his appointment as an Independent Director with effect from April 27,2015.
Mr. Vikram S. Kirloskar resigned as a Non-Executive Director of the Company with effect from May 26,2015. During the year under review, Mr. Jayant Sapre, ceased to be a Whole Time Director of the Company on completion of his term. He also resigned as a Director of the Company with effect from May 31,2015.
The Board of Directors recommended for approval of shareholders, the re-appointment of Mr. Sanjay C. Kirloskar as a Managing Director for a period of 5 (five) years up to November 18,2020.
The Board's composition is an optimal complement of independent professionals as well as Company executives having an in-depth knowledge of business.
During the year under review, 5 (five) Board meetings were held on the following dates:
April 27,2015, July 27,2015, October28,2015, January 25,2016 and March 14,2016. None of the Directors on the Board holds the office of director, including an alternate directorship if any, in more than 20 companies at the same time. None of the Directors are directors in more than 10 public companies or holding membership of committees of the board in more than 10 committees or chairpersonship of more than 5 committees across all listed entities in which he/she is a Director.
The above limits are determined as follows:
a) the limit of the committees on which a director serving in all public limited companies, whether listed or not, are included and all other companies including private limited companies, foreign companies and companies under Section 8 of the Companies Act, 2013 are excluded;
(b) for the purpose of determination of limit, chairpersonship and membership of only Audit and the Stakeholders' Relationship Committees were considered.
None of the Independent Directors are Independent Directors in more than 7 listed companies.
@ CMD-Chairman and Managing Director, NED-Non Executive Director, INED - Independent Non Executive Director and P-Promoter,
(1) Directorships in private limited companies, foreign companies are included in the above table excluding Kirloskar Brothers Limited and Section 8 companies.
(2) Company while selecting Independent Directors on the Board, inter-alia, considers his/herqualification, experience, age and other directorships etc. All the Independent Directors have provided declaration affirming that they meet the criteria of independence.
(3) All the relevant information suggested under Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations)isfurnishedtothe Board from time to time
The details of familiarisation programme imparted to the Directors is available at <http://www.kirloskarpumps.com/pdf/Familarisation.pdf>
Audit and Finance Committee:
The Audit and Finance Committee is in compliance with the requirements under Regulation 18 of the Listing Regulations read with Section 177 of the Companies Act, 2013.
The terms of reference of the Audit and Finance Committee include the matters specified in Schedule II (Part C) of the Listing Regulations. The terms of reference of the Audit and Finance Committee include the following:
A) > Overseeing the Company's financial reporting process and disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
> Recommending for appointment, remuneration and terms of appointment of auditors of the Company;
> Approving payment to statutory auditors for any other services rendered by the statutory auditors;
> Reviewing with the management, the annual financial statements and auditors' report thereon before submission to the Board for approval, with particular reference to:
a. Matters required to be included in the Director's 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, ifany, in the accounting policies & practices and reasons for the same
c. Major accounting entries involving estimates based on exercise of judgement 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 utilised 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;
> Review and monitor 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 management, performance of statutory and internal auditors, adequacy of 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 auditor 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 for 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 Committee by the Board and to carry out investigation in relation to items specified above.
> To review the following information:
1) management discussion and analysis of financial condition and results of operations;
2) statement of significant related party transactions (as defined by the audit committee), submitted by management;
3) management letters/ letters of internal control weaknesses issued by the statutory auditors;
4) internal audit reports relating to internal control weaknesses;
5) The appointment, removal and terms of remuneration of the chief internal auditor shall be subject to review by the audit committee,
6) statement of deviations:
(a) quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s).
(b) annual statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice.
> Power to investigate any activity within its terms of reference;
> Power to seek information from any employee;
> Power to obtain outside legal other professional advice;
> Power to secure attendance of outsiders with relevant expertise, if considered necessary.
The Committee comprises of Mr. S. N. Inamdar - Chairman, Mr. R S. Jawadekar, Mr. Pratap B. Shirke and Mrs. Lalita D. Gupte. Mr. S. N. Inamdar is an Independent Non-Executive Director. Mr. Inamdar was present at theAGM of the Company held for the year 2014-15.
During the year, 5 (five) Audit and Finance Committee meetings were held on April 27, 2015, July 27, 2015, October 28,2015, January 25,2016 and March 14,2016
Nomination and Remuneration Committee:
The Nomination and Remuneration Committee is in compliance with the requirements under Regulation 19 of the Listing Regulations read with Section 178 of the Companies Act, 2013.
The terms of reference of the Committee are as follows:
> Regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes;
> To identify and nominate for the approval of the Board, candidates to fill Board vacancies as and when they arise;
> To evaluate the balance of skills, knowledge, experience and diversity of the person to be appointed on the Board and in the light of this evaluation prepare a description of the role and capabilities for a particular appointment;
> To make recommendations to the Board concerning suitable candidates for the role of Senior Independent Director;
> To formulate policy relating to the remuneration of the Directors and Key Managerial Personnel;
> To exercise its powers to create, offer, issue and allot at any time to or to the benefit of such person(s) in terms of ESOS and regulations, the stock options under the ESOS, in one or more tranches, and on such terms and conditions as may be fixed or determined by the Board in accordance with the provisions of the lawor guidelines issued by the relevant authority;
> To amend the terms of the scheme as may be directed by the Board for the implementation and administration of the scheme;
> Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the board of directors a policy relating to, the remuneration of the directors, key managerial personnel and other employees;
> Formulation of criteria for evaluation of performance of independent directors and the board of directors;
> devising a policy on diversity of board of directors;
> 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 of directors their appointment and removal.
> Whether to extend or continue the term of appointment of the Independent Director, on the basis of the report of performance evaluation of Independent Directors.
> To do all such acts as may be authorised by the Board from time to time.
The Committee comprises of Mr. R S. Jawadekar - Chairman,Mr. S. N. Inamdar, Mrs. Lalita D. Gupte and Mr. Sanjay C. Kirloskar. On April 27, 2015 the Committee was reconstituted in view of resignation of Mr. A. N. Alawani with effect from April 23, 2015 and Mr. Sanjay C. Kirloskar was co-opted as a member of the Committee.
Mr. R S. Jawadekar is an Independent Non-Executive Director. He was present at the Annual General Meeting of the Company for the year 2014-15.
Criteria for performance evaluation of Independent Directors
As required under Regulation 19 (4) & Schedule II Part D of the Listing Regulations and in terms of Companies Act, 2013, the criteria for performance evaluation of the Independent Directors and Board of Directors has been laid down in the 'Board Evaluation Policy' formulated by the Company. This policy evaluates the performance of the Board, its committees and individual directors. In terms of the policy, performance evaluation of the directors has been done by each director individually scoring each other director on the basis of guidelines of professional conduct, role, functions and duties performed by him/her which in turn are based on numerous parameters. Criteria include director's level of ethical conduct, objectivity, value addition, participation level, attendance and various other qualitative as well as quantitative parameters which have had an impact on the Board process becoming more and more effective.
5. Remuneration to Directors:
Remuneration policy has been formulated for the directors, Key Managerial Personnel (KMP) and senior managerial personal. The major objectives of the policies are transparent process of determining remuneration at Board and Senior Management level of the Company would strengthen confidence of stakeholders in the Company and its management and help in creation of long term value for them and appropriate balance between the elements comprising the remuneration so as to attract potential high performing candidates for critical position in the Company for attaining continual growth in business. The revisions in the remunerations of the KMP and senior management personal will be made as per the terms of the policy.
> There are no pecuniary relationships or transactions of the non-executive directors vis-a-vis the Company except a payment of professional fees to Mr. S. N. Inamdar, Non Executive Independent Director for which shareholders approval is sought at the ensuing AGM.
> The payment made to Executive Director have been reviewed by the Nomination and Remuneration Committee from time to time and confirmed by the Board of Directors.
> The Committee recommended for approval of the Board, re-appointment of Mr. Sanjay C. Kirloskar as Managing Director of the Company with effect from November 19,2015 for a period of 5 (five) years. The Board approved the same, subject to approval of shareholders at the ensuing Annual General Meeting.
> The sitting fees paid to Non-Executive Directors for attending the Board and Committee meetings is Rs. 75,000/- for every meeting of the Board and Committee.
> All elements of remuneration package for all Directors have been provided in the statement hereinafter.
> The remuneration policy of the Directors, Key Managerial Personnel and Senior Management has been included in the Annual Report elsewhere.
> Except whatever is stated in the statement, there is no other fixed component or performance linked incentives to any director.
Criteria of making payment to Non-Executive Directors
Non Executive Directors have been paid sitting fees for attending Board / Committee meetings. On recommendation of NRC, the Board has also recommended a payment of commission to Non Executive Director subject to approval by the shareholders. There has been no payment apart from this to any Non Executive Director except to Mr. S. N. Inamdar, purely on account of professional services.
The Board of Directors of the Company shall decide the remuneration of Directors on the basis of recommendation from Nomination and Remuneration Committee (N&RC) subject to the overall limits provided under the Companies Act, 2013 and rules made there under, including any amendments, modifications and re-enactments thereto ('the Act') and compliance of related provisions provided therein
* This is subject to shareholders approval at the ensuing AGM. Three years or unexpired period, whichever is less.
Particulars of Directors to be re-appointed at an ensuing Annual General Meeting:
Mr. Alok S. Kirloskar is a Non-Executive Director on the Board of Kirloskar Brothers Limited with effect from July 18, 2012. He is a Bachelor of Science in Business Administration with concentration in Finance from Carnegie Mellon University, Pittsburgh, PA, USA. He had the honour to be on the Dean's list for his academic excellence throughout the course.
Mr. Alok Kirloskar is with the organization from September, 2007. During his tenure with the Company, Mr. Alok Kirloskar was first entrusted with responsibilities of International Marketing Business and he acquainted himself with the functioning of various departments / sectors. Later, he was the head of the Industry Sector of the Company.
Before joining the Company, he had worked with Sonasoft Corporation (Microsoft GPC) at San Jose, California, USA as Business Development Manager. He had also interned at NASA Girvan Institute of Technology, Santa Clara, USA and Toyota Motor Corporation, Torrance, USA in the summers of 2003 and 2004.
Mr. Alok S. Kirloskar is presently working as Managing Director of SPP Pumps Limited, United Kingdom, Company's step down subsidiary company and he is also on the Board of Kirloskar Brothers International BV, and few other step- down subsidiaries. He is not a member of any other Committees of the Board.
He holds 6,187 (0.01 %) equity shares of Rs. 21- each of the Company. He is not related to any other director of the Company except Mr. Sanjay Kirloskar.
6. Stakeholders' Relationship Committee:
The Committee comprise Mr. Kishor A. Chaukar, Mrs. Lalita D. Gupte and Mr. Sanjay C. Kirloskar. Mr. Kishor A. Chaukar, a Non-Executive Director is a Chairman of the Committee. Mr. A.N. Alawani resigned on April 23, 2015 and Mr. J. R. Sapre, Whole Time Director, ceased to be the member of the Committee with effect from May 31, 2015.
Mr. Kishor A. Chaukar has been co-opted as a member & thereafter elected as the Chairman of the Committee with effect from April 27,2015. Mrs. Lalita D. Gupte was co-opted as a member with effect from October 28,2015.
The Company Secretary is designated as a "Compliance Officer" who oversees the redressal of the investors' grievances.
Name and designation of Compliance Officer: Mr. Sandeep A. Phadnis, Company Secretary, Associate Vice President and Head-Secretarial
> Looks into the redressal of investors' complaints relating to transfer/transmission of shares, non-receipt of Annual Reports, non-receipt of declared dividends;
> Considers and resolves the grievances of security holders of the Company;
> Approves transmission of shares held in physical mode beyond threshold limit of 1500 shares of Rs. 21-each without the succession certificate, probate, letter of administration or Court Decree, subject to fulfilment of other conditions as may be deemed necessary;
> Approves transfer of more than 10,000 shares held under a single folio in physical mode;
> Considers the issue of duplicate share certificates under the Common Seal of the Company in terms of the requirements of the Companies (Share Capital and Debenture) Rules, 2014. During the year under the report, Committee met two times on April 27,2015 and January 25,2016. Attendance at Stakeholders' Relationship Committee meetings:
The Company has always valued its relationship with its stakeholders. This policy has been extended to investor relationship. The Company's secretarial department is continuously monitoring the complaints / grievances of the investors and is always taking efforts to reduce the response time in resolving the complaints / grievances.
No. of Shareholders' complaints received:
There was one compliant received during the year and which was resolved. No complaint is outstanding / pending as on March 31,2016.
With reference to Regulation 13 of the Listing Regulations 2015, the Company is registered on the SCORES platform which enables handing of Investor Complaints electronically.
The Company has also designated an exclusive e-mail ID grievance.redressal(5>kbl.co.in for investors to register their grievances, if any. This helps the Company to resolve investors' grievances immediately. The Company has displayed the said e-mail ID on its website.
The 'Frequently Asked Questions' by the shareholders along with requisite formats are placed under the Investor Section of the website of the Company at: <http://www.kirloskarpumps.com/pdf/information-for->shareholders/lnfotoshare.pdf.
General Shareholders information:
96th Annual General Meeting
Day & Date : Thursday, July 21 , 2016
Time 11.00 A.M.
Venue "Yamuna" Survey No.98 (3-7) Baner, Pune-411 045
Financial Year 1st April to 31st March
Dates of book closure N.A.
Dividend payment date N.A.
Listing on Stock Exchanges The Company's equity shares are listed on BSE Limited and National Stock Exchange of India Limited, Mumbai.
Corporate Identification No. (CIN) Stock codes / Symbol L29113PN1920PLC000670
BSE Limited-500241 National Stock Exchange of India Limited -KIRLOSBROS-EQ
Addresses of stock exchanges
PhirozeJeejeebhoy Towers, Dalai Street, Mumbai - 400 001 Tel. No. (022)2272 1233/34 Fax No. (022)22721919
National Stock Exchange of India Limited
Exchange Plaza, Plot No. C/1 ,G Block Bandra-Kurla Complex,Bandra (East) Mumbai - 400 051 Tel. No. (022) 2659 8100/8114 Fax No. (022)2659 8120
The annual Listing fees have been paid to both BSE Limited and National Stock Exchange of India Limited.
Registrar and Transfer Agent:
The Company has appointed Linklntime India Private Limited as its Registrar and Transfer Agent (R &T Agent). Share Transfers, dematerialisation of shares, dividend payment and all other investor related activities are attended and processed at the office of the R &T Agent at the following address:-
Linklntime India Private Limited, (Unit: Kirloskar Brothers Limited), Block No. 202,2nd Floor, Akshay Complex, Near Ganesh Temple, Off Dhole Patil Road, Pune-411 001 Tel. No. (020) 2616 0084 Fax No. (020) 2616 3503 E-mail: pune(5)linkintime.co.in
Share transfer system:
The authority to approve transfer of shares upto 10,000 shares has been delegated to the Company Secretary. The proposals for transfer of shares above 10,000 shares are placed before the Stakeholders' Relationship Committee/Board. The share transfers received are processed within 15 days from the date of receipt subject to the transfer instrument being valid and complete in all respects. In compliance with the Listing Regulations, 2015, every six months, a Practising Company Secretary audits the system of transfer and a certificate to that effect is issued.
Out of total paid-up share capital, 94.22% share capital is held in dematerialised form with National Securities Depository Limited and Central Depository Services (India) Limited as on March 31,2016.
The Company has established connectivity with both the Depositories through its Registrar, Link Intime India Private Limited.
Shareholders are advised to notify to the Company or R&T Agent, any change of address and bank details immediately.
Outstanding GDRs/ADRs/warrants or any convertible instruments etc.:
As of date, the Company has not issued these types of Securities.
Foreign Exchange risk
During the year 2015-16, the Company had managed the foreign exchange risk and hedged to the extent considered necessary. The details of foreign currency exposure are disclosed in Note No. B-9 and C-20 to the Financial Statements.
1. Kirloskarvad Dist. Sangli - 416 308 Maharashtr Tel No. (02346) 222301 - 05, 222361 – 222365
2. Dewas Station Road, Dewas - 455 001 Madhya Pradesh Tel No. (07272) 227397, 22740114051409
3. Shirwal Gat No. 117, Shindevadi, Tal. Khandala Dist. Satara- 412 801 Maharashtra Tel No. (02169) 244360 I 244370 I 244322
4. Kondhapuri Gat No. 25212 + 25412, Kondhapuri, Tal. Shirur, Dist. Pune- 412 208 Maharashtra Tel No. (02137) 24002510411047
Kaniyur Village S. F. No. 32411, Moperipalayam Road, Thattampudur Kaniyur Village, Karumathampatti - PO Coimbatore - 641 659 Tamil Nadu Tel No. (0421) 2904699
San and Sr. No. 25411 Ahmedabad-Viramgam Highway Village Chharodi Tal. Sanand, Dist. Ahmedabad - 382 170 Tel No. (02717) 273310
Secretarial Department, Kirloskar Brothers Limited, "Yamuna", Survey No. 98 (3-7) Baner, Pune - 411 045 Tel. No. (020) 27211030 Fax No. (020) 27211136 E-mail: arievance.redressal(5>kbl.co.in
Registrar and Transfer Agent:
Link Intime India Private Limited, (Unit: Kirloskar Brothers Limited), Block No. 202, 2nd Floor, Akshay Complex, Near Ganesh Temple, Off Dhole Patil Road, Pune - 411 001 Tel. No. (020) 26160084 Fax No. (020) 26163503 E-mail: pune(5)linkintime.co.in
Depositories for equity shares
National Securities Depository Limited Trade World - A Wing, 4,h & 5,h Floor, Kamala Mills Compound, Lower Parel, Mumbai-400 013 Tel. No. (022) 2499 4200 Fax No. (022) 2497 6351
Central Depository Services (India) Ltd. Phiroze Jeejeebhoy Towers, 17th Floor, Dalai Street, Fort Mumbai - 400 001 Tel. No. (022) 2272 3333 Fax No. (022) 2272 3199
i. There are no materially significant transactions made by the Company with its promoters, directors or the management, their subsidiaries or relatives etc. any related parties which have potential conflict with the interests of the Company at large.
ii. There are no non-compliance by the Company, no penalties and strictures imposed on the Company by Stock Exchange(s) or SEBI or any statutory authority on any matter related to capital markets, during the last three years.
iii. a. Whistle Blower Policy:
The Company has already in place and implemented a Whistle Blower Policy ("the Policy"). This inter alia provides a mechanism for employees of the Company and other persons dealing with the Company to report to the Chairman of the Audit and Finance Committee; any instance of unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct. Thus, any employee / stakeholder have an access to the Audit and Finance Committee.
The Policy has been communicated to all the employees of the Company and other persons dealing with the Company, through circular/display on the Notice Board/ display on the Intranet and through training programmes from time to time. The Policy has also been uploaded on the Company's website.
b. Policy for prevention of sexual harassment at work:
The Company has also in place and implemented a policy for prevention of sexual harassment at work. This provides a mechanism to prevent or deter the commission of acts of sexual harassment or inappropriate behaviour at work and to ensure that all employees are treated with respect and dignity. Under the said policy, the procedures for the resolution, settlement or prosecution of acts or instances of sexual harassment have also been provided for.
Disclosure under the "Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013":
In terms of Section 22 of the above mentioned Act, read with Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rule, 2013, during the year ended on March 31, 2016, we report as follows:
1. No. of Complaints received in the year: Nil
2. No. of complaints disposed off in the year: Nil
3. Cases pending for more than 90 days: Nil
4. No. of workshops and awareness programmes conduced intheyear: 8
5. Nature of action by employer or District Officer, if any: NA c. Code of Ethics:
The Company released its "Code of Ethics" on December 7, 2009. This is one of the most important documents of the Company and a guide to ethical behaviour for personnel with the Company.
iv. All mandatory requirements of the Listing Regulations, 2015 have been complied with by the Company and the extent of adoption of non-mandatory requirements is given hereunder:
Discretionary requirements as per Schedule II Part E:
1. The Board:
The Company has an Executive Chairman and the office with required facilities is provided and maintained at the Company's expenses for use by the Chairman.
2. Shareholders 'Rights:
The half-yearly financial results are published in the English and Vernacular newspapers and are also displayed on the Company's website. No separate circulation of the financial performance was sent to shareholders for the year under consideration.
3. Audit qualifications:
The Company is already in the regime of unqualified financial statements.
4. Separate posts of Chairman and CEO:
There is no separate post for CEO. The Chairman of the Company is also Managing Director of the Company.
5. Reporting of Internal Auditor:
The Internal Auditor's reports are presented to the Audit and Finance Committee.
In order to achieve excellence in the Corporate Governance, certain additional disclosures have been given elsewhere in the Annual Report viz. Top ten shareholders, Change in Equity Capital during the Financial Year. Further, the Board has adopted certain policies viz. Code of Corporate Governance, Corporate Disclosure Policy, Dividend Policy and Policy for placing Action Taken Report/Implementation Reportatthe Board Meeting.
6. Web links for following on www.kirloskarpumps.com
Familiarisation programme of Independent Directors: <http://www.kirloskarpumps.com/pdf/Familarisation.pdf>
Policy for determining'material'subsidiaries:
<http://www.kirloskarpumps.com/investors-investor-information-policies.aspx> Policy on dealing with related party transactions:
7. Separate meeting of Independent Directors
Independent Directors of the Company met on March 14, 2016 to review and discuss on the matters required under Listing Regulations, 2015.