REPORT ON CORPORATE GOVERNANCE
[Pursuant to Clause 49 of the Listing Agreement entered into with the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) and forming part of the Directors' Report for the year ended 31st March, 2015]
1. COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE
Morepen Laboratories Limited (MLL) strongly believes in adopting and adhering to the best corporate governance practices and benchmarking itself against the industry's best practices. Corporate Governance encompasses a set of systems and practices to ensure that the Company's affairs are being managed in a manner which ensures accountability, transparency and fairness in all transactions. The objective of corporate governance is to meet stakeholders' aspirations as well as expectations of the Society. It ensures greater transparency and timely reporting of the affairs of the Company to its stakeholders. The element of Corporate Governance contributes in generating the value for its Stakeholders at large. The Company conducts its business affairs in compliance of the principles of Corporate Governance and in the process strives to adopt various legal and regulatory measures with the ultimate objective of creating and maximizing stakeholders' wealth.
2. BOARD OF DIRECTORS
Composition and Category of Directors as on March 31, 2015
The Board consists of 5 Directors consisting of 2 Executive Directors and 3 Non-Executive Independent Directors.
Your Directors have rich and diversified experience in the fields of managerial entrepreneurship, management, administration, pharmaceuticals, banking, finance and taxation.
Pursuant to the provisions of Section 149(1) of the Companies Act, 2013, Rule 3 of Companies (Appointment and Qualification of Directors) Rules, 2014 and revised Clause 49 of Listing Agreement it was mandatory for the Company to appoint a Woman Director on the Board of the Company on or before March 31, 2015. However, Hon'ble Supreme Court of India, vide its order dated July 16, 2007, in respect of petition filed by the Company before it, challenging the appointment of Special Directors by Hon'ble High Court of Himachal Pradesh, Shimla, has ordered status quo to be maintained. Therefore, the Board in its meeting held on March 31, 2015 took note of the same and felt that since the matter is sub-judice and the status quo order is still in force, as on date, the composition of the Board should remain unchanged. The Company has also apprised of the matter to both the stock exchanges i.e. NSE and BSE. The Company is willing and ready to appoint a Woman Director on the Board of the Company as soon as the above matter is resolved.
Board Meetings, attendance of each Director at the Board Meetings and the last Annual General Meeting (AGM), Membership / Chairmanship of Boards or Board Committees
The Board meets at least once every quarter to review the quarterly results and other items of the agenda and if necessary additional meetings are held. The gap between two Board meetings does not exceed one hundred and twenty days. Board meeting dates are finalised in consultation with the directors and agenda with notes and other background information, which is essential for the Board to effectively and reasonably perform their duties and functions, are circulated well in advance thereby enabling the Board to take informed decisions.
During the financial year under review five Board Meetings were held i.e. on May 21, 2014, August 09, 2014, November 13, 2014, February 11, 2015 and March 31, 2015 as against the minimum requirement of four meetings.
Independent Directors Meeting
During the year under review a separate meeting of the Independent Directors of the Company was held on February 11, 2015, without the presence of Non - Independent Directors and members of the Management. The Independent Directors reviewed the performance of Non-Independent Directors and the Board as a whole, performance of Chairperson of the Company and assessed the quality, quantity and timelines of flow of information between the Company management and the Board. All the Independent Directors of the Company were present in the meeting.
Familiarisation programme for Independent Directors
The Company has put in place a system to familiarise the Independent Directors about the Company, its products, business and the on-going events relating to the Company. The details of such familiarization programme for Independent Directors have been posted on the website of the Company and can be accessed at (http://www.morepen.com/pdf/Familiarisation-programme-for-Independent-Directors.pdf).
Evaluation of the Board's performance
During the year, the Board adopted Criteria for Performance Evaluation of Board, Committees & Directors of the Company, including the Chairman of the Board. The Board Evaluation was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations, governance issues, etc. Separate exercise was carried out to evaluate the performance of individual Directors including the Board Chairman who were evaluated on parameters such as attendance, contribution at the meetings and otherwise, independent judgement, safeguarding of minority shareholders interest, etc.
The evaluation of the Independent Directors was carried out by the entire Board, excluding the director being evaluated and that of the Chairman and the Non-Independent Directors were carried out by the Independent Directors. The Directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company.
3. AUDIT COMMITTEE
The Company has an Audit Committee, as per the requirements of both Clause 49 of the Listing Agreement and Section 177 of the Companies Act, 2013. The terms of reference of the Audit Committee includes the matters specified under Clause 49 (III) of the Listing Agreement and Section 177 of the Companies Act, 2013, as amended from time to time, and other matters referred by Board.
Compositions of the Committee:
The Audit Committee comprises of Mr. Manoj Joshi, as the Chairman and Mr. B. R. Wadhwa and Mr. Sukhcharan Singh as the members of the Committee. All the members of the Committee are Non-Executive Independent Directors and are financially literate, i.e. have the ability to read and understand financial statements. One member of the Audit Committee possesses accounting or related financial management expertise. The Chief Financial Officer, Statutory Auditors and Internal Auditors are the invitees to the meeting. The Company Secretary of the Company acts as the Secretary of the Committee.
Meetings and attendance during the year:
During the period under review, four meetings were held i.e. on May 21, 2014, August 09, 2014, November 13, 2014 and February 11, 2015.
4. NOMINATION AND REMUNERATION COMMITTEE
The Company has a duly constituted Nomination & Remuneration Committee. The Committee's constitution and terms of reference are in compliance with the provisions of Clause 49 of the Listing Agreement and Section 178 of Companies Act, 2013, as amended from time to time and other matters referred by the Board.
Compositions of the Committee:
The Nomination & Remuneration Committee comprises of Mr. Manoj Joshi, as the Chairman and Mr. B. R. Wadhwa and Mr. Sukhcharan Singh are the members of the Committee. All the members of the Committee are Non-Executive Independent Directors. Further, no remuneration is paid to the Non-Executive Directors except sitting fees. The Company Secretary of the Company acts as the Secretary of the Committee.
Meetings and attendance during the year:
During the financial year under review,four meetings were held, i.e. on August 09, 2014, November 13, 2014, February 11, 2015 and March 31, 2015.
The Company has adopted a Nomination and Remuneration Policy for Directors, Key Managerial Personnel (KMP), Senior Management and other employees of the Company as formulated by Nomination and Remuneration Committee, pursuant to provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, which shall act as a guideline for determining, inter-alia, qualifications, positive attributes and independence of a Director, matters relating to the remuneration, appointment, removal and evaluation of performance of the Directors, Key Managerial Personnel, Senior Management and other employees.
5. STAKEHOLDERS RELATIONSHIP COMMITTEE
The Company's Stakeholders Relationship Committee's constitution and terms of reference are in compliance with the provisions of Clause 49 of the Listing Agreement and Section 178 of the Companies Act, 2013, as amended from time to time and other matters referred by Board.
The Stakeholders Relationship Committee is headed by Mr. Manoj Joshi, Chairman of the Committee, who is a Non-Executive Director, while Mr. Sushil Suri and Mr. Sukhcharan Singh are its Members. Mr. Thomas P. Joshua, Company Secretary of the Company, has been designated as Compliance Officer of the Company and acts as the Secretary of the Committee.
The Committee specifically looks into the redressal of shareholders and investors complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc., and ensures that share transfers are processed well within the stipulated time period. The Company's Registrar and Transfer Agent 'MAS Services Limited' redresses the Investor Complaints with respect to shares, dividend etc.
Four meetings of the Stakeholders Relationship Committee were held during the period under review i.e. on May 21, 2014, August 09, 2014, November 13, 2014 and February 11, 2015.
a) Disclosures on Materially significantly related party transactions that may have potential conflict with the interests of Company at large:
During the period under review, the Company had not entered into any materially significant related party transaction with any of its related partiesi.e. transactions of the Company of material nature with its promoters, the directors or the management, their subsidiaries or relatives etc. Further, none of the transactions with any of the related parties were in conflict with the interests of Company at large.
The Company has formulated and adopted a Policy on Dealing with Related Party Transactions and the same is displayed under the 'Investors' section on the Company's website 'www.morepen.com'. The weblink for the policy is (http://www.morepen.com/ pdf/Policy-on-Dealing-with-Related-Party-Transactions.pdf).
The related party transactions are entered into based on considerations of various business exigencies such as synergy in operations, sectorial specialization, etc.
The Company has made requisite disclosure with respect to related party transaction in the significant accounting policies and note to accounts to the financial statements. Transactions with the related parties as per the requirements of AS 18 are disclosed in Note no. 31to the Financial Statements of the Company for the year ended March 31, 2015 forming part of this Annual Report.
The Audit Committee has reviewed the related party transactions as mandatorily required under relevant provisions of the Listing Agreement and the Companies Act, 2013. All the related party transactions are done in the ordinary course of business and at arm's length basis with prior approval of the Audit Committee.
b) Details of non-compliance by the Company, penalties, and 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:
During the last 3 years there were no penalties or strictures imposed on the Company by Stock Exchange(s), SEBI or any other statutory authority, on any matter related to capital markets.
The Company strives to adhere to rules and regulations framed by Stock Exchanges(s), SEBI and other Govt. Authorities on matters relating to capital markets. However, the Company's application for listing of equity shares issued on preferential basis to Banks & Financial Institutions, Foreign Investors and Promoters under the approved Corporate Debt Restructuring (CDR) Scheme is pending disposal.
c) Whistle Blower policy and affirmation that no personnel has been denied access to the audit committee:
The Company has adopted a Whistle Blower Policy / Vigil Mechanism as per the requirements of Companies Act, 2013 and Clause 49 of the Listing Agreement and affirms that during the year under review, no person has been denied access to the to the audit committee.
d) Details of compliance with mandatory requirements and adoption of the non-mandatory requirements of this clause:
The Company to the best of its knowledge and belief has complied with and adopted the mandatory requirements and some of the non-mandatory requirements of the Code of Corporate Governance as stipulated under the Clause 49 of the Listing Agreement with the Stock Exchanges.
e) Compliance with Non-mandatory Requirements:
The Company has adopted the following non-mandatory requirements of Clause 49 of the Listing Agreement: Reporting of Internal Auditor:
The Internal Auditor of the Company periodically reports directly to the Audit Committee. Audit Qualifications:
There are no qualification in the Independent Auditors Report on the Company's financial statements. The Company wishes to continue in the regime of unqualified financial statements.
f) Disclosure of accounting treatment, if different, from that prescribed in Accounting Standards with explanations:
The financial statements are prepared under the historical cost convention, in accordance with the Indian Generally Accepted Accounting Principles (GAAP), Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) and the provisions of the Companies Act, 2013, as adopted and followed consistently by the Company.
The Company has made requisite disclosure with respect to contingent liabilities in the significant accounting policies and notes to accounts, where necessary.
g) Code of Conduct
Code of Conduct and Ethics for Directors and Senior Management Personnel:
Pursuant to the Clause 49 of the Listing Agreement executed with the Stock Exchanges, the Company has adopted Morepen's Code of Conduct for Board Members and Senior Management Personnel which is also posted on the website of the Company www.morepen.com.
All the Board Members and Senior Management Personnel have confirmed compliance with the Code. A declaration to that effect signed by the Managing Director & CEO is attached and forms part of the Annual Report of the Company.
Code of Conduct to Regulate, Monitor and Report Trading by Insiders:
Pursuant to Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 and with a view to regulate trading in securities by the Promoters, Directors, Designated Persons, Employees and other connected persons, the Company has adopted a Code of Conduct to Regulate, Monitor and Report Trading by Insiders.
h) CEO/CFO Certification
The MD and CFO of the Company have certified to the Board with regard to the compliance made by them in terms of Clause 49 (IX) of the Listing Agreement and the certificate forms part of the Annual Report.
7. SUBSIDIARY MONITORING FRAME WORK
All the subsidiary companies of our Company are Board managed having the rights and obligations to manage the Company in the best interest of their stakeholders. The Company monitors the performance of such companies by reviewing the financial statements, minutes, etc.
The Company has one material non-listed subsidiary Company Dr. Morepen Limited. Pursuant to the requirements of Clause 49 of the Listing Agreement and the Company's policy for determining 'material' subsidiaries the Company has appointed one of its Independent Directors on the Board of Directors of the aforesaid material non-listed subsidiary company. The web link for the policy is (http://www.morepen.com/pdf/Policy-for-Determining-Material-Subsidiary.pdf).
8. MEANS OF COMMUNICATION
The Board of Directors approve and take on record the Unaudited Quarterly Results and Audited Annual Results and forthwith sends the results to both Stock Exchanges, i.e. NSE and BSE, where the shares of the Company are listed. The same are published within 48 hours in various newspapers like Financial Express (English) and Jansatta (Hindi) having wide coverage, with a view that results are communicated to maximum number of stakeholders, and are also displayed on the website of the Company www.morepen.com. On the happening of any material event an official news release is made to the Newspapers/Press, Stock Exchanges and the same are also displayed on the Company website.
In accordance with the provisions of the Companies Act, 2013 and Clause 32 of the Listing Agreements with the Stock Exchanges, the Company sends Annual Reports and Notice of Annual General Meeting along with Proxy Form electronically/physically to its stakeholders. Management Discussion and Analysis Report of the Company forms part of the Annual Report.
9. GENERAL SHAREHOLDER INFORMATION
i. Date, Time and Venue of Annual General Meeting (AGM) September 18, 2015 at 10:30 a.m. at Morepen Village, Nalagarh Road, Near Baddi, Distt. Solan, Himachal Pradesh-173 205
ii. Financial Year April, 01 to March, 31
iii. Date of Book Closure Saturday, September 12, 2015 to Friday, September 18, 2015 (both days inclusive) for AGM
iv. Listing on Stock Exchanges
National Stock Exchange of India Limited (NSE)
Exchange Plaza, Bandra-Kurla Complex, Bandra(E), Mumbai 400051
BSE Limited (BSE)
Floor 25, Phiroze Jeejeebhoy Towers,Dalal Street, Mumbai 400001
v. Stock code
ISIN No. INE083A01026 RIC Code Morl.ns
Scrip Code 500288
ISIN No. INE083A01026
RIC Code Morl.ns
vi. Listing Fees
Listing fees for the year 2015-2016 has been duly paid to NSE & BSE.
vii. Registered Office
Morepen Village, Nalagarh Road, Near Baddi, Distt. Solan, Himachal Pradesh-173 205
viii. Corporate Office
409, Antriksh Bhawan, 22, K.G. Marg, New Delhi-110 001
ix. Registrar and Transfer Agents
MAS Services Limited, T-34, 2nd Floor, Okhla Industrial Area, Ph.- II, New Delhi - 110 020 Tel. No.: 011-26387281/82/83; Fax. No.: 011-26387281 e-mail id: firstname.lastname@example.org ; website: www.masserv.com
x. Share Transfer System
Share Transfer System of the Company is computerized. The Share transfers are processed and share certificates duly endorsed are returned within the prescribed time period, subject to documents being valid and complete in all respects. In compliance with the clause 47(C) of the Listing Agreement,the Share Transfer system is audited by a firm of Practicing Company Secretaries and a half-yearly certificate of compliance with the share transfer process, issued by it, is submitted to the stock exchanges.The Company Secretary acts as the Compliance Officer of the Company, who oversees the process of share transfer/transmission, re-mat/de-mat, etc. on regular basis and reports to the Board of Directors/Stakeholders Relationship Committee of the Directors.
M/s. MAS Services Limited is the Company's Registrar and Transfer Agent (RTA) for equity shares (kept in physical as well as electronic mode).
10. DEMATERIALIZATION OF SHARES AND LIQUIDITY
The Equity Shares of the Company are in compulsory demat segment and are available for trading in the depository systems of both the National Securities Depository Limited and the Central Depository Services (India) Limited. The ISIN Number of Company on both the NSDL and CDSL is INE083A01026. 19,81,82,925 Equity Shares of Rs. 2/- each (44.06%) are held in electronic/ de-mat form as on March 31, 2015.
11. DEPOSITORY SERVICES
Shareholders may write to the Company or to the respective Depositories for any guidance on depository services:
National Securities Depository Ltd.
Trade World, 4th Floor, Kamla Mills Compound, Lower Parel, Mumbai - 400 013
Telephone : 022 - 24972964-70 Fax : 022 - 24972993022 - 24976351
Central Depository Services (India) Ltd.
Phiroze Jeejeebhoy Towers,28th Floor, Dalal Street, Senapati Bapat Marg,Mumbai- 400 023
Telephone : 022 - 2272 3333-3224Fax : 022 - 2272 3199
12. PLANT LOCATIONS
Baddi : Morepen Village, Nalagarh Road, Near Baddi, Distt. Solan, Himachal Pradesh
Parwanoo : Sector-2, Parwanoo, District Solan, Himachal Pradesh
Masulkhana : Village Masulkhana, District Solan, Himachal Pradesh
16. ADDRESS FOR INVESTOR CORRESPONDENCE
Morepen Laboratories Limited
409, Antriksh Bhawan, 22, K.G. Marg,New Delhi - 110 001
Tel No.: 011 - 23324443/23712025Fax No.: 011 – 23722422 Email id: email@example.com MAS Services Ltd.
Unit : Morepen Laboratories Limited
T-34, 2nd Floor, OkhlaI Ind. Area, Ph.II New Delhi-110 020
Tel No.: 011 - 26387281/82/83 Fax No.: 011 26387281 Email id: firstname.lastname@example.org
(REGISTRAR AND TRANSFER AGENT)