REPORT ON CORPORATE GOVERNANCE
[Pursuant to Regulation 34(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations')]
1. Company's philosophy on Code of Governance
Corporate Governance contains a set of principles, process and systems to be followed by Directors, Management and all Employees of the Company for increasing the shareholders' value, keeping in view interest of other stakeholders. While adhering to the above, the Company is committed to integrity, accountability, transparency and compliance with laws in all dealings with the Government, customers, suppliers, employees and otherstakeholders.
2. Board of Directors
(a) Composition of the Board
The Board of Directors comprised of ten Directors as on 31st March, 2016. Out of these, there is one Managing Director, three Non Independent Directors and six Independent Directors, which includes one woman Director.
The Board of Directors is duly constituted pursuant to the provisions of Section 149 of the Companies Act, 2013 and Regulation 17(1) of the Listing Regulations.
(b) Number of Board meetings
During the financial year 2015-2016, six meetings of the Board of Directors were held on 28th April, 2015; 30th July, 2015; 26th October, 2015; 28th January, 2016, 24th February, 2016 and 10th March, 2016.
(c) Directors' attendance record
Details on composition and category of Directors, attendance of each Director at the meeting of the Board of Directors, number of other Board of Directors or committees in which a Director are a member or chairperson are as under-
1. Directorships held in foreign companies, private limited companies, one person companies and companies under Section 25 of the Companies Act, 1956 / under Section 8 of the Companies Act, 2013 have not been considered.
2. For the purpose of reckoning the limit on committee positions, chairmanship / membership of the Audit Committee and the Stakeholders Relationship Committee are considered.
3. Mr. C. V. Tikekar ceased to be a Director with effect from 13th August, 2015 on expiry of his tenure. During the financial year 2015-2016, he attended two Board Meetings and the Annual General Meeting priorto his cessation as Director.
Mr. Atul C. Kirloskar and Mr. Rahul C. Kirloskar, being brothers, are related to each other.
No other Director is related to any other Director of the Company within the meaning of Section 2(77) of the Companies Act, 2013 and rules thereof
Meeting of Independent Directors:
The meeting of Independent Directors was held on Thursday, 28th January, 2016 to discuss, inter-alia:
(a) the performance of Non Independent Directors and the Board as a whole;
(b) the performance of the Chairman of the Company, taking into account the views of Executive Director and Non Executive Directors;
(c) the quality, quantity and timeliness of flow of information between the Management and the Board that is necessary forthe Board to effectively and reasonably perform its duties.
All Independent Directors were present at the meeting.
Criteria for performance evaluation of Directors is specified under the heading Nomination and Remuneration Committee mentioned in item 4 below.
Familiarization programme for Independent Directors:
Independent Directors of the Company are made aware of their role, rights and responsibilities at the time of their appointment, through a formal letter of appointment, which also stipulates various terms and conditions of their engagement.
The Company has conducted various familiarization programmes and presentations for Independent Directors. Details of familiarisation programmes and presentations made are disclosed on the website of the Company, viz. www.kfil.com
3. Audit Committee (a) Composition
The Audit Committee comprises of five Directors, out of which four are Independent Directors. Mr. S. N. Inamdar, an Independent Director is the Chairman of the Audit Committee. Other Members of the Committee are Mr. A. R. Jamenis; Mr. S. G. Chitnis; Mr. A. N. Alawani and Mr. R. Sampath Kumar.
The Company Secretary acts as the Secretary of the Committee.
During the financial year 2015-2016, five Audit Committee meetings were held on 28th April, 2015; 30th July, 2015; 26th October, 2015; 28th January, 2016 and 24th February, 2016.
The Managing Director and the Chief Financial Officer attended the meetings of the Audit Committee. The representatives of the Statutory Auditors, the Cost Auditors and the Internal Auditors were invited and attended the meetings of the Audit Committee.
Mr. S. N. Inamdar, Chairman of the Audit Committee, was present at the 24th Annual General Meeting of the Company held on Thursday, 30th July, 2015.
The Audit Committee acts as a link between the Management, the Statutory Auditors, Internal Auditors and the Board of Directors.
The Audit Committee has been vested with the following powers:
a) To investigate any activity within its terms of its reference;
b) To seek information from any employee;
c) To obtain outside legal or other professional advice;
d) To secure attendance of outsiders with relevant expertise, if it considers necessary,
(b) Terms of Reference
The terms of reference of the Audit committee include the matters specified in Part II of Schedule II of the Listing Regulations as well as those specified in Section 177 of the Companies Act, 2013 and inter-alia, includes the following -
• Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
• Recommendation for appointment, remuneration and terms of appointment of auditors of the Company.
• Examination of the financial statement and the auditor's report thereon.
• Approval of 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 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 auditfindings.
e) Compliance with listing and other legal requirements relating to financial statements.
f) Disclosure of any related party transactions.
g) Modified opinions 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 / applications 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. 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, 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 matterto the Board.
Discussion with statutory auditors before the audit commences about 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. Reviewing the following information:
a. Management discussion and analysis of financial condition and results of operations;
b. Statement of significant related party transactions submitted by the Management;
c. Management letters / letters of internal control weaknesses issued by the statutory auditors;
d. Internal audit reports relating to internal control weaknesses and
e. The appointment, removal and terms of remuneration of the Chief Internal Auditor.
f. Statement of deviations:
i. Quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of Regulation 32(1).
ii. Annual statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice in terms of Regulation 32(7).
Carrying out any other function as mentioned in terms of reference of the Audit Committee, as amended from time to time by the Companies Act, 2013 and the Listing Regulations.
4. Nomination and Remuneration Committee
The Nomination and Remuneration Committee comprises of four Directors, out of which two Directors are Independent Directors.
Mr. A. R. Jamenis, an Independent Director is the Chairman of the Nomination and Remuneration Committee. Other Members of the Committee are Mr. Atul C. Kirloskar, Mr. A. N. Alawani and Mr. S.G. Chitnis.
The Company Secretary acts as the Secretary of the Committee.
1. Mr. S. G, Chitnis has been appointed as a Member of the Nomination and Remuneration Committee with effect from 30th July, 2015.
2. Mr. C. V. Tikekar has ceased to be a Member of the Nomination and Remuneration Committee with effect from 30th July, 2015.
The Board of Directors has, on the recommendation of the Nomination and Remuneration Committee adopted the Nomination and Remuneration Policy for selection and appointment of Directors, Senior Management and their remuneration. The copy of the same has been attached as Annexure B to the Directors' Report.
The terms of reference of the Nomination and Remuneration Committee are as follows:
(a) identify persons, who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down,
(b) recommend to the Board the appointment and/or removal of Directors and senior management,
(c) carry out evaluation of every Director's performance,
(d) formulate the criteria for determining qualifications, positive attributes and independence of a Director and recommend to the Board a policy, relating to the remuneration for the Directors, key managerial personnel, senior management personnel and other employees,
(e) formulation of criteria for evaluation of performance of independent directors and the board of directors;
(f) devising a policy on diversity of board of directors;
(g) 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,
(h) 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.
(i) perform such functions as may be assigned by the Board of Directors from time to time, and
(j) perform such functions as required as per the provisions of the Companies Act, 2013, rules thereof and the Listing Regulations
Criteria for performance evaluation of Directors:
Performance evaluation of each Director was carried out based on the criteria as laid down by the Nomination and Remuneration Committee.
Criteria for performance evaluation included aspects such as attendance at the meetings, participation and independence during the meetings, interaction with management, role and accountability, knowledge and proficiency.
Further, performance evaluation of the Managing Director was also based on business achievements of the Company.
Remuneration of Directors
a) Remuneration to Managing Director
The Company pays remuneration by way of salary, perquisites, allowances and commission to the Managing Director. The commission to the Managing Director is decided by the Nomination and Remuneration Committee on determination of the profits for the financial year and is also approved by the Board of Directors. The remuneration to the Managing Director is in accordance with the provisions of the Companies Act, 2013 and rules thereof and within the ceiling prescribed there under.
The Members at the Twenty Second Annual General Meeting held on 26th July, 2013 approved the re-appointment and the terms of remuneration of Mr. R. V. Gumaste as the Managing Director for a period of 5 years with effect from 1st July, 2013. The Company had entered into an agreement dated 8th May, 2013 with the Managing Director for a period of 5 years. No notice period and severance fees have been prescribed in the agreement.
Pursuant to the terms of the aforesaid agreement, the Board of Directors at its meeting held on 28th April 2015 has revised the basic salary from Rs. 5,00,000 to Rs. 5,50,000 per month payable to Mr. R. V. Gumaste, Managing Director with effect from 1st April, 2015, upon the recommendation of the Nomination and Remuneration Committee. All other terms and conditions of the agreement remain unchanged
b) Remuneration to Non Executive Directors
Section 197 of the Companies Act, 2013 and rules thereof state that, except with the approval of the members in the general meeting, the remuneration payable to Directors, who are neither managing directors nor whole time directors, shall not exceed one percent of the net profits of the Company, if there is a Managing Director.
Upon the recommendation of the Nomination and Remuneration Committee and based on the performance of the Company, the Board of Directors decides the remuneration to Non Executive Directors by way of commission
6. Stakeholders Relationship Committee
The Company has a Stakeholders Relationship Committee, which comprises of four Directors, viz. Mr. Atul C. Kirloskar, Mr. A. R. Jamenis, Mr. A. N. Alawani and Mr. S. G. Chitnis.
Mr. Atul C. Kirloskar acts as the Chairman of the committee. The committee has been constituted to consider and resolve the grievances of the security holders of the Company, including complaints related to transfer of shares, non-receipt of annual report and non-receipt of declared dividends.
Mr. C. S. Panicker, Company Secretary has also been authorised by the Board of Directors to expedite the process of transfer / transmission of shares. The details of transfer / transmission of shares are placed before the meeting of the Board of Directors on a regular basis.
The Compliance Officer can be contacted at-
Mr. C. S. Panicker, Company Secretary Kirloskar Ferrous Industries Limited 13, Laxmanrao Kirloskar Road, Khadki,Pune411003 Tel (020) 66084664 direct Fax(020)25813208/25810209
The Company has designated an exclusive email ID investor®.kfil.com forthe investors to register their grievances, if any. The Company has also displayed the said email ID on its website for the use of investors.
The total number of complaints received and redressed during the year ended 31st March, 2016 were 7 and there was no complaint pending as on 31 st March, 2016.
8. Means of Communication
In compliance with the requirements of the Listing Agreement / the Listing Regulations, the Company regularly intimates financial results to BSE Limited immediately after they are approved by the Board of Directors. The financial results of the Company are also available on the website, viz, www.bseindia.com
Quarterly and half yearly results are published in national and local dailies such as Financial Express (English newspaper) and Loksatta (Marathi newspaper), having wide circulation. Since the results of the Company are published in national and regional newspapers, the results are not sent individually to each member.
The financial results and official news releases of the Company are also displayed on the website of the Company, viz, www.kfil.com
9. General Shareholders' Information
Day, Date and Time
Thursday, 28th July, 2016 at 12.00 noon
Venue : Pudumjee Hall, Mahratta Chamber of Commerce, Industries and Agriculture, Tilak Road, Near Nehru Stadium, Swargate Corner, Pune 411002.
Financial Year : 1st April, 2015 to 31st March, 2016
During the year under review, the results were announced as under -First Quarter 30th July, 2015 Second Quarter 26th October, 2015 Third Quarter 28th January, 2016 Annual 29th April, 2016
Dates of Book Closure
19th July, 2016 to 28th July, 2016 (Both days inclusive).
Dividend payment date
Interim Dividend was paid on 29th March, 2016.
Listing on stock exchange
BSE Limited, P. J. Towers, Dalai Street, Fort, Mumbai 400001.
Stock Code : 500245
ISIN : INE884B01025
Registrar and Share Transfer Agent -
The Company entrusted the entire work relating to processing of transfer of securities to M/s. Link Intime India Private Limited, a SEBI Registered Registrar and Share TransferAgent.
The Registrar and Share TransferAgent can be contacted at-
Link Intime India Private Limited Akshay Complex, Block No 202, Second Floor, Off Dhole Patil Road, Near Ganesh Temple, Pune411001 Tel No. (020) 26161629/26163503 Fax No. (020) 26163503 Email: firstname.lastname@example.org
Share Transfer System
The applications for transfer of shares in physical form are processed by the Registrar and Share TransferAgent of the Company and are returned after the registration of transfers within 15 days from the date of receipt, subject to the validity of all documents lodged with the Company. The applications for transfer of shares under objection are returned within a week. The transfer applications are approved at regular intervals.
Equity Shares in electronic form
As on 31st March, 2016, 95.97 percent of paid-up equity share capital of the Company was held in electronicform.
Outstanding GDR/ADR/Warrants or any convertible instruments, conversion date and impact on equity.
There are no convertible instruments outstanding as on 31st March, 2016 for conversion into equity shares.
Commodity price risk or foreign exchange risk and hedging activities
During the financial year 2015-2016, the Company had managed the foreign exchange risk and hedged to the extent considered necessary. The Company enters into forward contracts for hedging foreign exchange exposures against imports. The details of foreign currency exposure are disclosed in Note No. 38 forming part of the Financial Statements.
1. Bevinahalli Village, P.O. Hitnal, Taluka and District Koppal, Karnataka 583234
2. Hotgi Road, Shivashahi, Solapur, Maharashtra 413224
Address for correspondence
Kirloskar Ferrous Industries Limited 13, Laxmanrao Kirloskar Road, Khadki, Pune 411 003 Tel (020) 66084664 direct Fax(020)25813208/25810209
Link lntime India Private Limited Akshay Complex, Block No 202, Second Floor, Off Dhole Patil Road, Near Ganesh Temple, Pune 411001 Tel No. (020) 26161629/26163503 Fax No. (020) 26163503 Email : email@example.com
10. Other Disclosures
a) Related Party Transactions
During the financial year, there were no materially significant transactions with the related parties. The Board of Directors has adopted the policy on related party transactions. The copy of the same has been uploaded and is available at the website of the Company, viz. www.kfil.com
b) There have been no instances of non-compliance by the Company on any matters related to capital markets during last three years. Neither penalties nor any strictures have been imposed on the Company by the Stock Exchange, SEBI or any other statutory authority, on any matter related to capital markets.
c) Vigil Mechanism / Whistle Blower Policy
The Board of Directors has adopted the Vigil Mechanism / Whistle Blower Policy. The policy has provided a mechanism for Directors, Employees and other persons dealing with the Company to report to the Chairman of the Audit Committee, any instance of unethical behaviour, actual or suspected fraud or violation of the Code of Conduct of the Company.
The details of the policy has been uploaded at the website of the Company, viz. www.kfil.com
d) The Company has no subsidiary company. Hence, no policy for determining material subsidiaries is adopted
e) Details of the Cost Auditor
With reference to the General Circular No. 15/2011-52/5/CAB-2011 dated 11th April, 2011 issued by the Government of India, Ministry of Corporate Affairs, Cost Audit Branch, New Delhi following are the details of Cost Auditor and filing of cost audit report with the Central Government :
M/s. Parkhi Limaye and Co, Cost Accountants (Firm Registration No. 000191) Aabha', Plot No. 16, Siddhakala Society, Warje, Pune 411058 Email ID: parkhilimaye©.hotmail.com
The Cost Audit Report for the financial year ended 31st March, 2015 has been filed with the Central Government on 29th September, 2015.
f) The Management Discussion and Analysis Report forms part of the Annual Report and is in accordance with the requirements laid out in Schedule V of the Listing Regulations.
g) The status of adoption of non-mandatory requirements as specified in sub-regulation 1 of Regulation 27 of the Listing Regulations are as follows:
i. The Board:
Mr. Atul C. Kirloskar is Non Executive Chairman. The Company does not bearthe expenses for maintaining the office of the Chairman.
ii. Shareholder Rights:
As the quarterly and half yearly financial results are published in the newspapers and are also posted on the website of the Company, viz. www.kfil.com the same are not being sent to the shareholders.
iii. Modified opinion(s) in audit report:
The Financial Statements of the Company for the financial year ended 31st March, 2016 does not contain any modified audit opinion.
iv. Separate posts of Chairperson and CEO:
The Chairman of the Board is a Non Executive Director and his position is separate from that of the Managing Director.
v. Reporting of Internal Auditor:
The Internal Auditors report to the Audit Committee and have direct access to the Audit Committee.
Disclosure in respect of unclaimed shares
The Company had sent reminder letters to those shareholders, whose share certificates have returned undelivered by the postal authorities due to insufficient / incorrect information and are lying with the Company. These share certificates will be sent to eligible shareholders, if these shareholders submit necessary documents to the Company.
Nominations in respect of shares held in physical form/electronic form
Individual shareholders holding shares singly or jointly in physical form can nominate a person in whose name the shares shall be vested in the event of death of the registered shareholder(s). The prescribed nomination form can be obtained from the Company or the Registrar and Share Transfer Agent.
Nomination facility for shares held in electronic form is available with the depository participant as per the bye laws and business rules applicable to NSDL and CDSL.
Payment of Dividend by electronic means
As per Regulation 12 of the Listing Regulations, the Company shall use electronic modes of payment such as electronic clearing services, direct credit, real time gross settlement, national electronic funds transfer, etc. for making payment of dividend.
Accordingly, shareholders holding shares in electronic mode are requested to register latest bank account details with their Depository Participants and those holding shares in physical form are requested to register latest bank account details with the Company's Registrar and Share Transfer Agent, viz. Link Intime India Private Limited.
Income Tax PAN mandatory for Transfer of securities
As per Regulation 40(7) read with Schedule VII of the Listing Regulations, for registration of transfer of securities, the transferee(s) as well as transferor(s) shall furnish a copy of their PAN card to the listed entity for registration of transfer of securities