REPORT ON CORPORATE GOVERNANCE
The Company has been practicing the principles of good corporate governance over the years. The Directors present below the Company's report on Corporate Governance for the financial year 2015-16.
1. COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE
The Company as a part of Kirloskar Group, is committed to maintain high standards of Corporate Governance. To us, Corporate Governance means conduct of business with transparency, accountability and business prosperity with the ultimate objective of realising long term shareholder value, whilst taking into account the interest of all other stakeholders as well.
2. BOARD OF DIRECTORS
i. Composition and Category of Directors:
The Board of Directors of the Company represents an optimum mix of professionalism, gender, knowledge and experience, comprising of Executive, Non-Executive and Independent Directors. The Chairman is an Executive Director. In all, there are Eleven Directors including Six (55%) Non Executive & Independent Directors including a Woman Director in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as 'LODR Regulations, 2015'), Three (27%) Non-Executive Directors and Two (18%) Executive Directors. As on 31st March, 2016, the composition of the Board of Directors of the Company meets the stipulated requirements of Regulation 17 of the LODR Regulations, 2015.
None of the Independent Directors of the Company serve as an Independent Director in more than seven listed companies.
In compliance with the Companies Act, 2013 and revised Clause 49 of the Listing Agreement, Dr Aditi Pant has been appointed as an Independent Director for a period of 3 consecutive years upto 28th July, 2018.
The Board of Directors of the Company has also appointed Dr Ajay Kumar Dua as an Additional Director with effect from 14th March, 2016 in the category of an Independent Director in compliance with LODR Regulations, 2015.
The Company issued letter of appointment to all the Independent Directors as per Schedule IV to the Companies Act, 2013 and the terms and conditions of their appointment have been disclosed on the website of the Company namely www.kirloskarkpcl.com .
ii. Board Training and Induction:
The Company had arranged familiarization programmes for all the Directors during the year. The programmes were aimed to acclimatize the Directors with processes, business and actual functioning of the Company so as to enable them to carry out their role effectively. The details of familiarization and training programmes have been posted on Company's website. Weblink: <http://www.kirloskarkpcl.com/Pdf/company-policies/Familiarization%20Program%20for%20> Independent%20Directors.pdf
iii. Number of Meetings:
The Board meets at least once in every quarter to review Company's operations and the maximum time gap between any two meetings is not more than 120 days.
During the year ended on 31st March, 2016, five Board Meetings were held on 7th May, 2015, 29th July, 2015, 27th October, 2015, 22nd January, 2016 and 14th March, 2016. The Annual General Meeting of the Company was held on 29th July, 2015.
iv. Director's attendance record and directorships held:
All Directors as on that date except Mr Vikram S Kirloskar attended the Annual General Meeting held on 29th July, 2015.
v. Meeting of Independent Directors:
Separate meeting of Independent Directors in compliance with Schedule IV of the Companies Act, 2013 was held during the year and all independent directors as on date were present at the said meeting.
vi. Code of Conduct:
The Board has prescribed the Code of Conduct for all its Board Members and Senior Management. The Code of Conduct has been posted on Company's Website at <http://www.kirloskarkpcl.com/Pdf/company-policies/code-for-the-board-of-directors-and-senior-> management-of-kpcl.pdf
The Managing Director has confirmed to the Board that the Company has obtained from all the members of the Board and Senior Management, affirmation that they have complied with the Code of Conduct for Directors and Senior Management in respect of the financial year ended on 31st March, 2016. A declaration to this effect signed by Managing Director has been incorporated in the Annual Report.
3. AUDIT COMMITTEE
The Audit Committee consists of 3 Independent Directors namely Mr A C Mukherji, Mr G Krishna Rao and Mr P S Jawadekar.
Mr A C Mukherji, is the Chairman of the Audit Committee. The Chairman and Members of the Audit Committee are well-versed with the financial matters and are finance literate.
Chairman, Managing Director, Vice President & Chief Financial Officer attend the Audit Committee Meetings. The representatives of the Statutory Auditors, Internal Auditors are also invited to the Meetings. The Internal Auditors submit their report to the Audit Committee. Company Secretary acts as Secretary to the Audit Committee.
ii. Terms of Reference:
The role and terms of reference of the Audit Committee covers the areas as contemplated under
Regulation 18 read with Part C of Schedule II of the LODR Regulations, 2015 and Section 177 of the Companies Act, 2013 read with relevant rules issued thereunder besides other terms as may be referred by the Board of Directors.
Role of Audit Committee
The brief role of the audit committee shall include the following:
1. 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;
2. Recommendation for appointment, remuneration, 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 management the quarterly / half yearly / annual financial statements and auditor's report thereon before submission to the Board for approval;
5. Review and monitor the auditor's independence, performance and effectiveness of audit process;
6. Approval or any subsequent modification of transactions of the Company with related parties;
7. Scrutiny of inter-corporate loans and investments;
8. Valuation of undertakings or assets of the Company, wherever it is necessary;
9. Evaluation of internal financial controls and risk management systems;
10. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
11. Discussion with internal auditors of any significant findings and follow up thereon;
12. 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;
13. 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;
14. 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;
15. To review the functioning of the Whistle Blower mechanism;
16. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
iii. Meetings & attendance of the Audit Committee:
The Audit Committee met five times during the year i.e. on 7th May, 2015, 29th July, 2015, 27th October, 2015, 22nd January, 2016 and 14th March, 2016 which was attended by the members as per the following details:-
The Chairman of the Committee was present in the Annual General Meeting to answer the shareholder queries.
4. NOMINATION AND REMUNERATION COMMITTEE
The Nomination & Remuneration Committee comprises of 3 Independent Directors namely Mr P S Jawadekar who is the Chairman of the Committee, Mr G Krishna Rao and Mr Sunil Shah Singh, all Independent Directors. Company Secretary acts as Secretary to the Committee.
ii. Terms of Reference:
The broad terms of reference of the Nomination and Remuneration Committee are as under:
i) Formulation of the criteria for determining the qualifications, positive attributes and independence of Director;
ii) Devising a policy on Board diversity;
iii) Formulation of Remuneration policy;
iv) Review the structure, size and composition of the Board;
v) Identifying and selection of candidates for appointment as Directors;
vi) Identifying potential individuals for appointment as Key Managerial Personnel and Senior Management;
vii) Formulation of criteria for evaluation of Independent Directors and the Board.
iii. Meetings & attendance of the Nomination & Remuneration Committee:
During the year, two Meetings were held on 6th May, 2015 and 14th March, 2016
The Chairman of the Committee was present in the Annual General Meeting to answer the shareholder queries.
5. REMUNERATION POLICY
The Board determines the remuneration payable to the Executive Directors taking into account their qualification, expertise and contribution and based on recommendations of the Nomination and Remuneration Committee.
Non-Executive Directors are paid sitting fees for attending Board / Committee Meetings as decided by the Board within the limits prescribed under the Companies Act, 2013.
Commission payable to Non-Executive Directors is limited to a fixed amount per year as determined and approved by the Board on their attendance and contribution at the Board and Committee Meetings based on recommendations of the Nomination and Remuneration Committee. The total amount of commission to Non- Executive Directors is within the limit of 1% of the net profits of the Company for the year, calculated as per the provisions of the Companies Act, 2013 subject to necessary approvals, as applicable, if any.
6. STAKEHOLDERS' RELATIONSHIP COMMITTEE
The Committee functions under the Chairmanship of Mr G Krishna Rao, an Independent Director. Mr Sunil Shah Singh, an Independent Director and Mr Rahul C Kirloskar, Executive Director act as its members. Mr Jitendra Shah, Company Secretary is the Compliance Officer.
During the year, three Stakeholders' Relationship Committee meetings were held on 6th May, 2015, 27th October 2015 and 22nd January, 2016
The Company has received 3 complaints during the year and all of them were resolved. There were no complaints pending as on 31st March, 2016.
8. MEANS OF COMMUNICATION
The unaudited quarterly / half yearly results are announced within forty-five days of the close of the quarter. The audited annual results are announced within sixty days from the close of the financial year as per the requirements of the LODR Regulations, 2015.
The aforesaid financial results are sent to BSE Limited where the Company's securities are listed, immediately after these are approved by the Board. The results are thereafter published in the leading English newspaper namely Business Standard and Marathi newspaper namely Loksatta.
The audited financial statements form part of the Annual Report which is sent to the Members well in advance of the Annual General Meeting.
The Company also informs by way of intimation to BSE Limited and placing on its website all price sensitive matters or such other matters, which in its opinion are material and of relevance to the members.
The Annual Report of the Company, the quarterly / half yearly and the annual results of the Company, statement of unclaimed dividend, shareholding pattern, Corporate Governance Report etc. are also placed on the Company's website: www.kirloskarkpcl.com
9. GENERAL SHAREHOLDER INFORMATION
i. Annual General Meeting :
i. Annual General Meeting :
Date : 22 July, 2016
Day : Friday
Time : 2.30 pm
Venue : S M Joshi Socialist Foundation (SM Joshi Hall)S.No. 191/192, Navi Peth, Ganjave Chowk,Near Patrakar Bhavan, Pune 411030
ii. Financial Year :
1 April to 31 March
iii. Book Closure :
16 July, 2016 to 22 July, 2016 (both days inclusive)
iv. Dividend Payment Date :
Interim dividend paid on 29 March, 2016 declared as final dividend
v. Listing on :
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001 Annual Listing Fees for the year 2016-17 has been paid to BSE Ltd
vi. Stock Code :
vii. Depositories :
National Securities Depository Ltd.
Central Depository Services (I) Ltd.
ISIN No. - INE811A01012
x. Registrar & Transfer Agent:
M/s Link Intime India Private Limited is the Registrar & Transfer Agent for shares in physical form as well as electronic mode.
xi. Share Transfer System:
Share Transfers are registered and returned within a period of 10 days from the date of receipt provided the documents are correct and valid in all respects.
xiii. Dematerialisation of Shares & Liquidity:
The name of the Company appears in the compulsory Trading List and 96.70% of Share Capital is in Electronic Form as on 31st March, 2016.
xiv. Company has not issued GDRs / ADRs / Warrants or any convertible instruments.
xv. Details of foreign exchange risk and hedging activities are provided in the notes annexed to and forming part of the financial statements.
xvi. Plant Locations:
Hadapsar Industrial Estate,Pune 411 013
Saswad,Tal.: Purandar, Dist. Pune
Thermal Power Station Road,Nashik Road, Nashik
xvii. Address for Correspondence:
Registered Office of the Company
Kirloskar Pneumatic Co. Ltd.
Hadapsar Industrial Estate, Pune 411013
Phone No. 020 - 26727000 Fax No. 020 - 26870297
Email : firstname.lastname@example.org
Website : www.kirloskarkpcl.com
Registrar & Transfer Agent :
Link Intime India Private Limited Pune Office :
Akshay Complex, No. 202, 2nd Floor,
Near Ganesh Temple, Off Dhole Patil Road, Pune 411 001
Phone Nos.: 020 - 26160084 /1629 /3503 Fax No. 020 - 26163503
Email : email@example.com
Mumbai Office :
C-13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (West) Mumbai 400 078
Phone No. : 022 - 25963838 Fax No. 022 - 25946970
Email : firstname.lastname@example.org
10. OTHER DISCLOSURES:
i. Related Party Transactions:
There are no materially significant related party transactions during the year 2015-16 that has potential conflict of interest with the interest of Company at large.
As required under LODR Regulations, 2015, the Company has formulated a policy on materiality of Related Party Transactions and dealing with Related Party Transactions and placed on website at <http://www.kirloskarkpcl.com/Pdf/company-policies/policy-on-materiality-of-related-party->transactions.pdf
ii. Strictures or Penalties:
There was no non-compliance by the Company, penalties or 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.
iii. Vigil Mechanism / Whistle-Blower Policy:
The Company has a Whistle-Blower Policy for establishing a vigil mechanism for Directors and employees to report genuine concerns regarding unethical behavior, actual or suspected fraud or
violation of the Company's code of conduct and ethics Policy. The said mechanism also provides for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases. During the year, no employee of the Company was denied access to the Audit Committee. The said policy has been uploaded on the website of the Company at <http://www.kirloskarkpcl.com/Pdf/company-> policies/whistle-blower-policy.pdf
iv. The Company has complied with all mandatory requirements as specified in LODR Regulations, 2015.
v. The Company has also complied with the following non-mandatory requirements:
a. The positions of the Chairman and CEO are separate.
b. The Internal Auditor reports to the Audit Committee.
vi. Subsidiary Company:
The Company does not have any material subsidiary whose income or net worth exceeds 20% of the consolidated income or net worth of the Company and its subsidiary in the immediately preceding financial year.
A policy on material subsidiaries has been formulated by the Company and placed on the website of the Company at <http://www.kirloskarkpcl.com/Pdf/company-policies/policy-material-subsidiary-> company.pdf
The Company has one Non-Listed Indian Subsidiary Company namely Kirloskar RoadRailer Limited. The financial statements of the Subsidiary Company are placed before the Audit Committee for their review.
The minutes of the Board Meeting as well as statements of all significant transactions of the Subsidiary Company are placed regularly before the Board of Directors for their review.
vii. The Company has adopted a policy for hedging of Foreign Exchange Risk and accordingly company hedges its foreign exchange risk from time to time.
viii. Company has complied with corporate governance requirements as specified in Regulation 17 to 27 and clause (b) to (i) of Regulation 46 (2) of LODR Regulations, 2015.
ix. Prohibition of Insider Trading:
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The code provides for periodical disclosures from Directors and designated employees as well as pre-clearances of transactions by such persons.
11. RISK MANAGEMENT
The provisions of Regulation 21 of LODR Regulations, 2015 are not applicable to the Company, however the detailed framework relating to the Risk Management has been provided under the Section of Directors' Report in the Annual Report.
12. CEO/CFO CERTIFICATION
The CEO/CFO Certificate signed by Mr Aditya Kowshik, Managing Director and Mr Suhas S Kolhatkar, Vice President & Chief Financial Officer was placed before the meeting of Board of Directors held on 27th April, 2016.
For Kirloskar Pneumatic Company Limited
sd/- Aditya Kowshik
Date : 27th April, 2016
Place : Pune