REPORT ON CORPORATE GOVERNANCE
1. Company's Philosophy on Corporate Governance:
As per Clause 49 of Listing Agreement entered with Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE) in India and some of best practices followed on Corporate Governance, this report, being a part of Annual Report, ensures that the Company has complied with all the regulations which cast upon the Board of Directors and the Audit Committee, onerous responsibilities to improve the Company's operating efficiencies. This report ensures fairness, transparency and integrity of the management of Malwa Cotton Spinning Mills Limited. Corporate Governance Report besides being in compliance of Listing Agreement gives an insight into the functioning of Company and it meets its obligations to provide timely and balanced disclosures of all material information concerning the Company to all stakeholders.
•Faith in individual potential and respect for Human Values.
•Accepting change as a way of life.
•Assignment of authority and responsibility to Board of Directors and its Committees and executive management, senior management, employees etc.
•Comply with legal and ethical responsibilities.
•Maintain high level of transparency
•Timely flow of information to Board and its Committees to enable them to discharge their functions effectively.
2. BOARD OF DIRECTORS a) Size & Composition of Board
The Board is in conformity with clause 49 of listing agreement and the composition as on 31.03.2015 was as under:
The Chairman of the Board of Directors is a Whole-Time-Director.
None of the Directors on the Board is a Member on more than 10 Committees and Chairman of more than 5 Committees (as per Clause 49(I)(C)(ii)) across all the companies in which he is a Director. All the Directors have made the requisite disclosures regarding Committee positions held by them in other companies. The detail of the Composition of the Board, number of directorship and committee position held by each of the directors are given here under:
3. COMMITTEES OF THE BOARD
With a view to have a more focused attention on business and for better governance and accountability, the Board has constituted the following mandatory committees viz. Audit Committee, Stakeholders' Relationship Committee, Nomination and Remuneration Committee, Risk Management Committee. The terms of reference of these Committees are determined by the Board and their relevance reviewed from time to time. Meetings of each of these Committees are convened by the respective Chairman of the Committee, who also informs the Board about the summary of discussions held in the Committee Meetings. The Minutes of the Committee Meetings are sent to all Directors individually and tabled at the Board Meetings.
A. TERMS OF REFERENCE AND OTHER DETAIL OF AUDIT COMMITTE
The audit committee has been constituted as per Section 177 of the Companies Act, 2013 and Clause 49 of the listing Agreement. Composition and Attendance
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. Role of the Audit Committee, inter alia, includes the following:
•Oversight of the Company's financial reporting process and disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
•Recommending the appointment and removal of external auditors, fixation of audit fee and also approval for payment for any other services.
•Approve the payment to statutory auditors for any other services rendered by the statutory auditors.
•Reviewing the management, the annual financial statements and report thereon before the submission to the Board for approval, with particular reference to:
>Matters required to be included in the Director's Responsibility Statement to be included in the Board's report.
>Any changes in accounting policies and practices.
>Major accounting entries based on exercise of judgment by management
>Qualifications in draft audit report
>Signification adjustments arising out of audit.
>The going concern assumption
>Compliance with accounting standards.
>Compliance with Stock Exchange and legal requirements concerning financial statements.
>Any related transactions i.e. transactions of the company of material nature, with promoters or the management, their subsidiaries or relatives, etc., that may have potential conflict with the interest of company at large.
•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 utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.
•Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems.
•Reviewing with the management, external & internal auditors, the adequacy of internal control system.
•Reviewing the adequacy of internal audit function, including the structure of the internal audit department, staffing & seniority of the official heading the department, reporting structure coverage and frequency of internal audit.
•Discussions with internal auditors 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 matter to the Board.
•Discussions with the external auditors before the audit commences nature and scope of audit as well as to have post- audit discussion to ascertain any area of concern.
•Reviewing the Company's financial and risk management policies.
•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.
•Discussions with the auditors periodically about internal control system , the scope of audit including the observations of the auditors and review the quarterly, half yearly, and annual financial statements before submission to the Board.
•Ensure compliance of internal control systems.
•To review the functioning of the Whistle Blower mechanism, in case the same is existing.
•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 & background, etc. of the candidate.
•Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
•Review the following information:
>Management discussion and analysis of financial condition and results of operations;
>Statement of significant related party transactions (as defined by the audit committee), submitted by management;
>Management letters / letters of internal control weaknesses issued by the statutory auditors;
>Internal audit reports relating to internal control weaknesses; and
>Reviewing the appointment, removal and terms of remuneration of the Chief internal auditor(s)
The chairman of the Audit Committee shall attend the Annual General Meetings of the Company to provide any clarification on matters relating to audit sought by the members of the company.
B. SHAREHOLDERS' RELATIONSHIP COMMITTEE -
The Company has constituted a Shareholders'/Investors' Grievance Committee for the redressal of Investors' Complaints on various issues. The Committee also monitors and reviews the performance and service standards of Registrars and Share Transfer Agents of the Company and provides continuous guidance to improve service levels to the investors.
Following Directors of the Company are Members of the said Committee: Mr. Rahul Oswal - Chairman (Non-Executive Non-Independent Director)
Mr. Gyaneshwar Bansal - Member (Non-Executive Independent Director) Mr. Surinder Kumar Vig. - Member (Non-Executive Independent Director)
A Meeting of the Committee was held on 11.11.2014 and same was attended by Mr. Gyaneshwar Bansal and Mr. Surinder Kumar Vig. Mrs. Pooja Damir Miglani, Company Secretary of the Company, is the Compliance Officer of this Committee. During the year 2014-2015, the company has not received anycomplaint from its Shareholders No complaint was pending as on 31st March, 2015.
Roles, responsibilities and powers of the Committee are as follow:
i.To authorize printing of Share Certificates post authorization from the Board of Directors of the Company;
ii.To issue the Share Certificates under the seal of the Company.
iii.To effect transfer, transmission, Dematerialization of Shares
iv.To monitor redressal of stakeholder's complaints/grievances including relating to non receipt of allotment / refund, transfer of shares, nonLreceipt of balance sheet, non receipt of declared dividends etc.
v.To authorize to maintain, preserve and keep in its safe custody all books and documents relating to the issue of share certificates, including the blank forms of share certificates.
vi.To oversee the performance of the Register and Transfer Agents and to recommend measures for overall improvement in the quality of investor services.
C.Nomination and Remuneration Committee -
In compliance with Section 178 of the Companies Act, 2013, the Board has constituted the "Nomination and Remuneration Committee" comprising of the following members:
1.Mr. Rishi Oswal
2.Mr. Gyaneshwar Bansal
3.Mr. Surinder Kumar Vig
The objectives of constituting of Nomination and Remuneration Committee are as follow:
1.The Nomination and Remuneration Committee shall 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 and other employees.
2.The Nomination and Remuneration Committee shall, while formulating the above policy shall ensure that—
(a)The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;
(b)Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and
(c)Remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.
3. The details relating to Remuneration Policy and remuneration to Directors as required under Clause 49 of the Listing Agreement, have been given under a separate Section below i.e. POLICY FOR SELECTION AND APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION.
D.Corporate Social Responsibility Committee - Not Applicable
E.Risk Management Committee
Business Risk Evaluation and Management is an ongoing process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks as also identify business opportunities.
The Committee comprises of following members:-
1.Mr. Rishi Oswal
2.Mr. Rahul Oswal
3.Mr. Surinder Kumar Vig
The objectives and scope of the Risk Management Committee broadly comprises:
•Oversight of risk management performed by the executive management;
•Reviewing the BRM policy and framework in line with local legal requirements and SEBI Guidelines; Reviewing risks and evaluate treatment including initiating mitigation actions and ownership as per a pre-defined cycle;
•Defining framework for identification, assessment, monitoring, mitigation and reporting of risks.
•Within its overall scope as aforesaid, the Committee shall review risks trends, exposure, potential impact analysis and mitigation plan.
F.Independent Directors' Meeting
During the year under review, the Independent Directors met on March 13, 2015, inter alia, to discuss:
•Evaluation of performance of Independent Directors and the Board of Directors as a whole;
•Evaluation of performance of Chairman of the Company, taking into account the views of the Executive and Non Executive Directors.
•Evaluation of the quality, content and timelines of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
All the Independent Directors were present at the Meeting.
G.Finance Committee - Non Mandatory Committee
The Company has not formed such committee.
4. POLICY FOR SELECTION AND APPOINTMENT OF DIRECTORS AND THEIR REMUNERATION
The Nomination and Remuneration (N&R) Committee has adopted a Charter which, inter alia, deals with the manner of selection of Board of Directors and CEO & Managing Director and their remuneration. This Policy is accordingly derived from the said Charter.
1. Criteria of selection of Non Executive Directors
a.The Non Executive Directors shall be of high integrity with relevant expertise and experience so as to have a diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, law, governance and general management.
b.In case of appointment of Independent Directors, the N&R Committee shall satisfy itself with regard to the independent nature of the Directors vis-a-vis the Company so as to enable the Board to discharge its function and duties effectively.
c.The N&R Committee shall ensure that the candidate identified for appointment as a Director is not disqualified for appointment under Section 164 of the Companies Act, 2013.
d.The N&R Committee shall consider the following attributes / criteria, whilst recommending to the Board the candidature for appointment as Director.
i.Qualification, expertise and experience of the Directors in their respective fields;
ii.Personal, Professional or business standing;
iii.Diversity of the Board.
e.In case of re-appointment of Non Executive Directors, the Board shall take into consideration the performance evaluation of the Director and his engagement level.
1.REMUNERATION OF DIRECTORS:
The Non Executive Independent Directors shall be entitled to receive remuneration by way of sitting fees, and Non Executive Nominee Directors shall be entitled to reimbursement of expenses for participation in the Board / Committee meetings as detailed hereunder:
i.A Non Executive Independent Director shall be entitled to receive sitting fees for each meeting of the Board or Committee of the Board attended by him, of such sum as may be approved by the Board of Directors within the overall limits prescribed under the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014;
ii.The Independent Directors of the Company shall not be entitled to participate in the Stock Option Scheme of the Company, if any, introduced by the Company.
2.Managing Director - Criteria for selection /appointment
For the purpose of selection of the MD, the N&R Committee shall identify persons of integrity who possess relevant expertise, experience and leadership qualities required for the position and shall take into consideration recommendation, if any, received from any member of the Board. The Committee will also ensure that the incumbent fulfills such other criteria with regard to age and other qualifications as laid down under the Companies Act, 2013 or other applicable laws.
Remuneration for Managing Director
i.At the time of appointment or re-appointment, Managing Director shall be paid such remuneration as may be mutually agreed between the Company (which includes the N&R Committee and the Board of Directors) and the CEO & Managing Director within the overall limits prescribed under the Companies Act, 2013.
ii.The remuneration shall be subject to the approval of the Members of the Company in General Meeting.
iii.In determining the remuneration (including the fixed increment and performance bonus) the N&R Committee shall ensure / consider the following:
a.the relationship of remuneration and performance benchmarks is clear;
b.balance between fixed and incentive pay reflecting short and long term performance objectives, appropriate to the working of the Company and its goals;
c.responsibility required to be shouldered by the CEO & Managing Director, the industry benchmarks and the current trends;
d.the Company's performance vis-a-vis the annual budget achievement and individual performance.
Remuneration Policy for the Senior Management Employees
I. In determining the remuneration of the Senior Management Employees (i.e. KMPs and Executive Committee Members) the N&R Committee shall ensure / consider the following:
i.the relationship of remuneration and performance benchmark is clear;
ii.the balance between fixed and incentive pay reflecting short and long term performance objectives, appropriate to the working of the Company and its goals;
iii.the remuneration including annual increment is decided based on the criticality of the roles and responsibilities, the Company's performance vis-a-vis the annual budget achievement, individuals performance.
5. PERFORMANCE EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and Compliance Committees.
A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.
A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Secretarial Department. The Directors expressed their satisfaction with the evaluation process.
6. TERMS OF APPOINTMENT & REMUNERATION -Managing Director Details of remuneration paid to the Directors are given in Form MGT - 9. 7. DISCLOSURES
A.Related Party Transactions - Not applicable.
B.Compliances by the Company
a)During the last three years, no penalties or strictures have been imposed on the Company by the Stock Exchange or SEBI or any other statutory authorities on matters related to capital markets.
b)Company has not denied any personnel, access to Audit Committee for informing unethical or improper practice.
c)Company has complied with all the mandatory requirements of corporate governance.
8.CODE OF CONDUCT
The Company had adopted the Code of Conduct for all the Board members and senior management personnel. Further all the Board members and senior management personnel (as per Clause 49 of the listing Agreement) have affirmed the compliance with the respective Code of Conduct. A declaration to this effect signed by the Managing Director forms part of this report.
9.VIGIL MECHANISM / WHISTLE BLOWER POLICY
In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility.
The Company has a Fraud Risk of fraud and mismanagement Policy (FRM) to deal with instances of fraud and mismanagement, if any. The FRM Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern.
A high level Committee has been constituted which looks into the complaints raised. The Committee reports to the Audit Committee and the Board.
10.PREVENTION 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 requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Company Secretary & Head Compliance is responsible for implementation of the Code.
All Board Directors and the designated employees have confirmed compliance with the Code.
11.COMMUNICATION WITH THE MEMBERS/SHAREHOLDERS
•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 two months from the close of the financial year as per the requirements of the Listing Agreement with the Stock Exchanges. The aforesaid financial results are sent to BSE Limited (BSE) and The National Stock Exchange of India Limited (NSE) where the Company's securities are listed, immediately after these are approved by the Board. The results are thereafter given by way of a Press Release to various news agencies/analysts and are published within forty-eight hours in English and Punjabi newspaper. The audited financial statements form a part of the Annual Report which is sent to the Members well in advance of the Annual General Meeting.
•The Annual Report of the Company, the quarterly / half yearly and the annual results and the press releases of the Company are also placed on the Company's website: www.malwagroup.com and can be downloaded.
•In compliance with Clause 52 of the Listing Agreement, the quarterly results, shareholding pattern, quarterly compliances and all other corporate communication to the Stock Exchanges viz. BSE Limited and National Stock Exchange of India Limited are filed electronically on BSE's and NSE.
•A separate dedicated section under 'Corporate Governance' on the Company's website gives information on quarterly compliance reports/communications with the Stock Exchanges and other relevant information of interest to the investors / public.
1. Name and Address of the Compliance Officer: Ms. Pooja Damir Miglani83, Sant Fateh Singh Nagar,
GENERAL INFORMATION FOR SHAREHOLDER Annual General Meeting
The Annual General Meeting will be held on 30th September, 2015 at Oswal Knit India Ltd, 230, Industrial Area-A, Ludhiana.
Date of Book Closure
27th day of September, 2015 to 29th day of September, 2015.
(Both days inclusive - for the purpose of AGM/Annual closure of books).
The share of the company is listed on Bombay Stock Exchange Limited, Mumbai National Stock Exchange of India Limited
Scrip code 502995 Symbol MALWACOTT Series EQ
Company has a weak financial position and being a BIFR registered Company, Annual Listing Fees for both the Exchange is pending for the year 2014-15 and 2015-16. Company is in the process of arranging funds and will pay the fee in due course of time.
Registrar and Transfer Agent:
Shares are transferred through the under noted agent only: Name & Address : M/s Mas Services Ltd T-34, 2nd Floor, Okhla Industrial Area, Phase-II, NEW DELHI-110020 Phone Number Fax Number E-Mail 91 11 26387281-82 91 11 26387384 info @masserv.com
Dematerialization of shares and liquidity:
Percentage of Shares as on 31.03.2015 held in
Physical form : 22.20%
Electronic form with NSDL and CDSL : 77.80%
The Company's shares are traded on the Bombay Stock Exchange Limited and on The National Stock Exchange of India Limited.
h) Financial Calendar : 2015-16 (Tentative)
Adoption of Results for the period ended: Date of Submission to Stock Exchange
30th June, 2015(Quarter): Second week of August, 2015
30th September, 2015(Quarter): Second week of Nov., 2015
31st December, 2015(Quarter): Second week of February, 2016
31st March, 2016(Yearly); Last week of May, 2016
i) The financial year of the company under review is from 1st April 2014 to 31st March 2015.
j) Plant Location:
Company's plants are located at:-
1)Village Harigarh, Raikot Road, Distt. Barnala (Punjab)
2)Village Patlian, Teh. Paonta Sahib, Dist. Sirmour (Himachal Pradesh)
3)Village Harrian, Kohara- Machhiwara Road, Distt. Ludhiana, Punjab
k) Address for the Correspondence:
Malwa Cotton Spinning Mills Limited Industrial Area-A, Ludhiana -141003. Phones: 0161-2224201-209 Fax: 0161-5013623, 5026778 E-mail: company. secretary @ malwagroup.com Website: www.malwagroup.com.