REPORT ON CORPORATE GOVERNANCE
[Pursuant to Regulation 34 (3) read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (the Regulations)]
1. COMPANYS PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE:
The Company's philosophy of Corporate Governance aims at establishing and practicing a system of good corporate governance which will assist the management in managing the Company's business in an efficient and transparent manner towards fulfilling the corporate objectives and to meet the obligations and best subserve the interest of the stakeholders.
2. BOARD OF DIRECTORS:
a. Composition of the Board:
The Board of Directors comprises eight Directors as on 31 March 2016. Mr. Tejas P. Deshpande appointed as a Director of the Company with effect from 19 May 2015.
b. Number of Board Meetings:
During the Financial Year under review, six meetings of the Board of Directors were held on 19 May 2015,31 July 2015,28August 2015,26 October 2015,29 January 2016 and 10 March 2016.
c. Directors' attendance record and directorships held:
The information on composition of the Board, category of Directors, attendance of each Director at Board Meetings held during the Financial Year 2015-16 and the Annual General Meeting (AGM) held on 28 August 2015, Directorships and Committee positions in other public companies of which the Director is a Member / Chairman / Chairperson and the shareholding of Non-Executive Directors is as follows:
d. Criteria for performance evaluation:
The Nomination and Remuneration Committee lays down the criteria for performance evaluation of Directors.
The annual evaluation of Directors is made on the following criteria:
i. Attendance for the meetings, participation and independence during the meetings;
ii. interaction with Management;
iii. role and accountability of the Board; and
iv. knowledge and proficiency.
e. Meeting of Independent Directors:
The meeting of Independent Directors was held on Friday, 18 December 2015, 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 of the Company and the Board that is necessary for the Board to effectively and reasonably perform their duties.
f. Familiarisation program 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. Further copies of Code of Conduct and Policies adopted by the Board as per regulatory provisions are made available to Independent Director at the time of joining.
During quarterly Board Meetings, all Board Members are updated on regular basis, by way of presentations where Directors have an opportunity to interact with key managerial personnel. Presentations cover, inter alia, quarterly and annual results, budgets, review of internal audit report, information on business performance, operations, financial parameters, senior management change, major litigations, compliances, risk management and regulatory scenarios and such other areas as may arise from time to time.
The details of such familiarisation programs has been put on the website of the Company at <http://kil.net.in/familiarization-proqramme/familiarisation-proqramme-for-independent-directors.pdf>
g. Code of Conduct:
The Company has laid down a Code of Conduct for all the Board Members and Senior Management Personnel. The Code of Conduct is available on the Company's website viz.. www.kil.net.in
All the Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct. Adeclaration to this effect signed by the Executive Directorforms part of this Report.
h. Information supplied to the Board:
Among others, this includes:
i. Review of annual operating plans of business, capital budgets, updates;
ii. quarterly results of the Company and its operating divisions or business segments;
iii. material important show cause, demand, prosecution and penalty notices;
iv. fatal orserious accidents, dangerous occurrences, any material effluent or pollution problems;
v. details of any joint venture or collaboration agreement;
vi. transactions that involve substantial payment towards goodwill, brand equity or intellectual property;
vii. significant labour problems and their proposed solutions;
viii. significant development in human resources and industrial relation fronts;
ix. non-compliance of any regulatory, statutory provision or listing requirements as well as shareholders service such as non-payment of dividend and delay in share transfer;
x. information on recruitment and remuneration of senior officers just below the Board level, including appointment or removal of Chief Financial Officer or the Company Secretary.
The Audit Committee comprises six Non-Executive Directors, majority of who are Independent. The composition is in conformity with Regulation 18 of the Regulations.
During the Financial Year under review, five meetings of the Committee were held on 19 May 2015,31 July 2015, 28 August 2015,26 October 2015 and 29 January 2016.
The Company Secretary acts as the Secretary of the Committee. The Executive Director and Chief Financial Officer attend the Audit Committee meetings. The representatives of the Statutory Auditors and the Internal Auditors are invited to the meetings.
Mr. Vijay K. Bajhal, Chairman of the Committee, was present at the Annual General Meeting of the Company held on Friday, 28 August 2015.
b. Terms of reference:
The terms of reference of the Audit Committee include the matters specified under Regulation 18 (3) read with Part C of Schedule II of the Regulations as well as those in Section 177 of the Companies Act, 2013 and inter alia include the following:
1. Oversight of the Company's financial reporting process and the disclosures of its financial information to ensure that the Financial Statement is correct, sufficient and credible.
2. Recommendation for appointment, remuneration and terms of appointment of Auditors of the Company.
3. Approval of payment to Statutory Auditors for any other services rendered by the Statutory Auditors.
4. Reviewing, with the management, the Annual Financial Statements and the Auditor's 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, 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 the 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) modified opinion(s) in the draft Audit Report.
5. Reviewing, with the management, the Quarterly Financial Statements before submission to the Board for approval.
6. 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 utilization of proceeds of a public or rights issue and making appropriate recommendations to the Board to take up steps in this matter.
7. Reviewing and monitoring the Auditor's independence and performance and effectiveness of audit process.
8. Approval or any subsequent modification of transactions of the Company with related parties.
9. Scrutiny of inter-corporate loans and investments.
10. Valuation of undertakings or assets of the Company, wherever it is necessary.
11. Evaluation of internal financial controls and risk management systems.
12. Reviewing, with the management, performance of Statutory and Internal Auditors, adequacy of the internal control systems.
13. 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.
14. Discussion with Internal Auditors of any significant findings and follow up thereon.
15. 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.
16. 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.
17. Looking 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.
18. Reviewing the functioning of the Whistle Blower Mechanism.
19. Approval of appointment of Chief Financial Officer after accessing the qualifications, experience and background, etc. of the candidate.
20. Mandatorily reviewing the following information:
A. Management discussion and analysis of financial condition and results of operations;
B. statement of significant related party transactions (as defined by the Audit Committee), 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 shall be subject to review by the Audit Committee;
F. statement of deviations:
A. Quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to the stock exchange(s) in terms of Regulation 32 (1);
B. Annual statement of funds utilised for purposes other than those stated in the offer document / prospectus / notice in terms of Regulation 32 (7).
21. Carrying out any otherfunction as is mentioned in the terms of reference of the Audit Committee.
c. Powers of Audit Committee:
To investigate any activity within its terms of reference. • To seek information from any employee.
To obtain outside legal or other professional advice.
To secure attendance of outsiders with relevant expertise, if it considers necessary.
NOMINATION AND REMUNERATION COMMITTEE: a. Composition:
The Nomination and Remuneration Committee comprises four Non-Executive Directors, majority of whom are Independent. The composition is in conformity with Regulation 19 of the Regulations.
b Terms of reference:
The terms of reference of the Nomination and Remuneration Committee include the matters specified under Regulation 19 (4) read with Part D of Schedule II of the Regulations as well as those in Section 178 of the Companies Act, 2013 and inter alia include the following:
i. 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.
ii. Formulation of criteria for evaluation of performance of independent directors and the board of directors.
iii. Devising a policy on diversity of Board of Directors.
iv. 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.
v. Whether to extend or continue the term of appointment of independent director, on the basis of the report of performance evaluation of independent directors.
c. Remuneration to Directors:
The Board has a 'Nomination and Remuneration Policy' for selection and appointment of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel and their remuneration. The policy is annexed as 'Annexure II' to Directors' Report.
The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and commission (variable component) to its Executive Director. The commission to the Executive Director is recommended by the Nomination and Remuneration Committee on determination of the profits for the Financial Year and based on the performance evaluation of the Executive Director, also approved by the Board of Directors. The remuneration to the Executive Director is in accordance with the provisions of the Companies Act, 2013 and Rules thereof and within ceiling prescribed there under.
The members at the Annual General Meeting of the Company held on 2 September 2014, approved the payment of commission to the Non-Executive Directors, not exceeding 1 % of the net profits of the Company computed in the manner laid down in Sections 197 and 198 of the Companies Act, 2013.
Upon the recommendation of the Nomination and Remuneration Committee and based on the performance evaluation of each of the Non-Executive Directors, the Board of Directors decides the remuneration to them by way of commission
5. SHARE TRANSFER CUM SHAREHOLDERS' / INVESTORS' GRIEVANCE AND STAKEHOLDERS' RELATIONSHIP COMMITTEE:
The Company has a Share Transfer cum Shareholders' / Investors' Grievance and Stakeholders' Relationship Committee, which comprises three Directors, viz., Mr. Anil N. Alawani, Non-independent Director, Ms. Aditi V. Chirmule, Executive Director and Mrs. Priyamvada A. Ranade, Independent Director. Mr. Anil N. Alawani acts as a Chairman of the Committee. The Committee has been constituted to look into investors' complaints like transfer of shares, non-receipt of Annual Report, non-receipt of declared dividends, etc. and redressal thereof.
During the Financial Year under review, one Share Transfer cum Shareholders' / Investors' Grievance and Stakeholders' Relationship Committee meeting was held on 26 October 2015. All the present Committee members attended the said meeting.
Mrs. Ashwini V. Mali, Company Secretary is the Compliance Officer. The Compliance Officer can be contacted at:
Kirloskar Industries Limited
13/A, Karve Road, Kothrud, Pune-411038. Tel.:+91 (20)25452721 Fax: +91(20)25454723 E-mail: Ashwini,Mali(3>kirios kar.com
The Company has designated exclusive email id for the investor as firstname.lastname@example.org to register their grievances, if any. The Company has displayed the said email id on its website for the use of investors.
The total numbers of complaints received and replied to the satisfaction of the shareholders during the year ended 31 March 2016, were 2 and there were no complaints outstanding as on 31 March 2016.
The Company had no share transfer requests pending as on 31 March 2016
7. OTHER DISCLOSURES:
The Company has complied with the other disclosure requirements of Regulation 34 (3) read with Schedule V of the Regulations.
i. Related Party Transactions:
During the Financial Year under review, there was no materially significant related party transaction made by the Company as defined in Regulation 23 of the Regulations that may have potential conflict with the interest of the Company at large. Transactions with the related parties are disclosed in Note 30 to the Financial Statements in the Annual Report.
ii. Details of capital market non-compliance, if any:
There have been no instances of non-compliances by the Company on any matters related to capital markets, during the last three years. Neither penalties have been imposed nor any strictures imposed on the Company by the Stock Exchanges, the Securities Exchange Board of India (SEBI) or any other statutory authority on any matter related to capital markets.
iii. Whistle Blower Policy/Vigil Mechanism:
The Board of Directors has adopted a Whistle Blower Policy / Vigil Mechanism ('the Policy'). This has provided a mechanism for Directors and Employees of the Company and other persons dealing with the Company to report genuine concerns including but not limited to unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct for Board of Directors and Senior Management (the Code) or ethics policy or any other instance, to the Chairman of the Audit Committee. The Policy has also been uploaded on the Company's website at <http://kil.net.in/policies/whistle-blower-policy-vigil-mechanism.pdf>
iv. Policy for determining'material'subsidiaries:
As required under Regulation 16 (1) (c) of the Regulations, the Company has a policy for determining 'material' subsidiaries, which has been put on the website of the Company at <http://kil.net.in/policies/policy-on-material->subsidiaries.pdf
v. Related Party Transactions Policy:
As required under Regulation 23 (1) of the Regulations, the Company has a Policy on Materiality Related Party Transactions and dealing with Related Party Transactions which has been put on the website of the Company at <http://kil.net.in/others/kil> policy-on-materiality-related-party-transactions,pdf
vi. The Company has complied with all the mandatory requirements specified in Regulations 17 to 27 and clauses (b) to (i) of Sub-Regulation (2) of Regulation 46 of the Regulations.
8. DISCRETIONARY REQUIREMENTS:
The Company has complied with the mandatory requirements of Regulation 34 (3) read with Schedule V of the Regulations. The extent of adoption of discretionary requirements as per Regulation 27 (1) read with Part E of Schedule II of the Regulations, is as follows:
1. Shareholder Rights:
Since the Company publishes its quarterly results in newspapers (English and Marathi) having wide circulation and since the results are also displayed on the website of the Company and the Stock Exchanges, the Company does not send any communication of half yearly performance to the shareholders.
2. Modified opinion in Audit Report:
The Company already has a regime of un-qualified Financial Statements. There are no modified audit opinions on the Financial Statements of the Company for the year ended 31 March 2016, made by the Statutory Auditors in their Audit Report.
9. OTHER REQUIREMENTS:
1. Disclosure under Schedule VI of the Regulations in respect of unclaimed shares:
Pursuant to SEBI Circular No. CIR/CFD/DIL/10/2010 dated 16 December 2010 and Regulation 39 (4) read with Schedule VI of the Regulations, the Company has sent reminders 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.
As on 31 March 2016, the total unclaimed equity shares are 38,896.
2. Cost Audit Report:
Pursuant to the Companies (Cost Records and Audit) Rules, 2014, dated 31 December 2014, the Company is neither required to maintain cost records relating to Electricity Industry (Windmills) for the Financial Year 2015-16, in Form (CRA-1) nor is required to get the records audited.
10. PARTICULARS OF APPOINTMENT/ RE-APPOINTMENT OF DIRECTORS:
The brief resumes and other details relating to the Directors who are proposed to be appointed / re-appointed, as required to be disclosed under Regulation 36 (3) of the Regulations, forms part of the Statement setting out material facts annexed to the Notice of the Annual General Meeting.
11. MEANS OF COMMUNICATION:
a. Quarterly results:
The Quarterly and Half Yearly results are published in national and local dailies, namely Financial Express (English) and Loksatta (Marathi), having wide circulation. Since the results of the Company are published in the newspapers, half yearly reports are not sent individually to the shareholders.
The Company's results and official news releases are displayed on the Company's website, viz., www.kil.net.in
b. The NSE Electronic Application Processing System (NEAPS) and BSE Corporate Compliance and Listing Centre (the 'Listing Centre'):
The NEAPS and the Listing Centre of BSE are web based application designed by NSE and BSE, respectively, for corporates. All periodicals compliance filings like shareholding pattern, corporate governance report, quarterly results, etc., are filed electronically on NEAPS and the Listing Centre of BSE.
c. The Management Discussion and Analysis Report forms part of this Annual Report. 12. GENERAL INFORMATION FOR SHAREHOLDERS:
a. Annual General Meeting:
Corporate Identification Number (CIN) : L29112PN1978PLC088972
Annual General Meeting
Date and Day : Thursday, 11 August 2016
Time : 11.30 a.m.
Venue : S.M. Joshi Socialist
Foundation (S. M. Joshi Hall) S. No. 191/192, Navi Peth, Near Ganjave Chowk, Pune 411030
Book Closure : Tuesday, 9August2016to Thursday, 11 August2016
Last date of receipt of proxy forms : Tuesday, 9 August 2016
Financial Year : 2015-16
During the year, the financial results were announced as under:
First quarter : 31July2015
Second quarter : 26 October 2015
Third quarter : 29 January 2016
Annual : 24 May 2016
International Security Identification Number (ISIN) : INE250A1039
BSE Limited (BSE) : 500243
National Stock Exchange of India Limited (NSE) : KIRLOSIND
Payment of annual listing fee
The annual listing fees have been paid to BSE and NSE
Designated e-mail address for investor services : email@example.com
Dematerlallsation of shares and liquidity (as on 31 March 2016) : 94,99,492
Outstanding GDRs / ADRs / Warrants or any convertible instruments, conversion date and likely impact on equity
The Company has not issued GDRs / ADRs / Warrants or any convertible instruments.
Commodity price risk or foreign exchange risk and hedging activities: Not applicable
f. Share Transfer System:
a. The applications for transfer of shares lodged at the Company's Registrar and Share and Transfer Agent in physical form are processed within 15 days of receipt of the documents valid and complete in all respects. After such processing, the Registrar and Share Transfer Agent will issue share certificate to the concerned shareholder with in 15 days of receipt of certificate for transfer. Shares under objection are returned within a stipulated period of time. The transfer applications are approved periodically by the Directors / Key Managerial Personnel of the Company.
b. Pursuant to Clause 47 (c) of the Listing Agreement and Regulation 40 (9) of the Regulations, a certificate on half yearly basis is issued by the Practicing Company Secretary for compliance with share transfer formalities by the Company.
c. Registrarand Share Transfer Agent (R&T Agent)
The entire work of the Company, relating to processing of transfer of shares has been given to an outside agency, i.e., Link Intime India Private Limited, being a SEBI Registered R&TAgent. The contact details are as follows
Link Intime India Private Limited
'Akshay1 Complex, Block No. 202, 2nd Floor, Off Dhole Patil Road, Pune-411001 Tel.: (020)26161629/26160084 E mail: firstname.lastname@example.org.
d. Shareholder References:
• Permanent Account Number (PAN):
Shareholders holding shares in the physical form are informed that as per SEBI's guidelines, it is mandatory to furnish copy of PAN Card in the following cases:
a) Transferees' and Transferors' PAN Cards for transfer of shares,
b) Surviving joint holders' PAN Cards for deletion of name of deceased shareholder,
c) Legal heirs' PAN Cards for transmission of shares,
d) Joint holders'PAN Cards for transposition of shares.
• Email Address:
In order to enable us to further extend our support towards paperless compliance as a part of Green Initiative in the Corporate Governance, which was introduced by the Ministry of Corporate Affairs (MCA) in the year 2011, the shareholders who have not registered their e-mail addresses, so far, are requested to register their e-mail addresses.
In respect of shares held in physical form, shareholders are requested to register their e-mail addresses with the Company / the R & T Agent (with the Depository Participants (DPs) in case of shares held in dematerialised form).
Dematerialisation of shares:
Shareholders are requested to dematerialise their physical shareholdings through any of the nearest Depository Participants (DPs) in order to avoid hassles involved with physical shares such as possibility of loss / mutilation of share certificate(s) and to ensure safe and speedy transaction in securities.
• Register Your National Electronic Clearing Services (NECS) Mandate:
The Reserve Bank of India (RBI) has initiated NECS for credit of Dividend directly to the Bank Account of shareholders. Shareholders holding shares in electronic mode are requested to register their latest Bank Account details with their DP and in physical form with the Company's R & T Agent.
g. Location of Windmills:
7 Windmills owned by the Company are located at Tirade Village, Tal. - Akole, Dist. - Ahmednagar.
h Address for correspondence:
Shareholders' correspondence should be addressed to Link Intime India Private Limited, the R & T Agent, at the address mentioned above. Shareholders can also email their queries / grievances to the following email address: email@example.com
j. CEO/CFO Certification
The CEO / CFO Certificate signed by Ms. Aditi V. Chirmule, Executive Director and Mrs. Jasvandi M. Deosthale, Chief Financial Officer was placed before the meeting of the Board of Directors held on 24 May 2016.