Corporate Governance Report
Company's Philosophy on Code of Governance
Effective corporate governance practices constitute the strong foundation on which successful commercial enterprises are built to last. The Company's philosophy on corporate governance ensures fiscal accountability, ethical corporate behavior and fairness to all stakeholders comprising regulators, employees, customers, vendors, investors and the society at large.
The Company has a strong legacy of fair, transparent and ethical governance practices. The Company has adopted a code of conduct for its employees including the managing director and the executive directors. In addition, the Company has adopted a code of conduct for its non-executive directors and independent directors. These codes are available on the Company's website. The Company's corporate governance philosophy has been further strengthened by adoption of Code of Conduct for prevention of insider trading and the code of corporate disclosure practices under new PIT Regulation 2015
The Company is in compliance with the requirements stipulated under Clause 49 of the Listing Agreements entered into with the stock exchanges with regard to corporate governance.
DATE OF REPORT
The information provided in the report on Corporate Governance for the purpose of unanimity is as on 31s' March, 2015. The Report is updated as on date of the report wherever applicable.
1. Board of Directors
i. As on March 31st, 2015, the Company has four directors i.e. one Executive Director and three independent directors. The composition of the board is in conformity with Clause 49 of the Listing Agreements entered into with the stock exchanges.
ii.None of the directors on the board hold directorships in more than ten public companies. Further, none of them is a member of more than ten committees or chairman of more than five committees across all the public companies in which he is a director. Necessary disclosures regarding committee positions in other public companies as on March 31,2015 have been made by the directors.
iii. Independent directors are non-executive directors as defined under Clause 49(11) (B)(1) of the Listing Agreements entered into with the Stock Exchanges. The maximum tenure of the independent directors is in compliance with the Companies Act, 2013 ("Act"). All the Independent Directors have confirmed that they meet the criteria as mentioned under clause 49 of the Listing Agreement and Section 149 of the Act.
iv. The names and categories of the directors on the board, their attendance at board meetings held during the year and the number of directorships and committee chairmanships / memberships held by them in other public companies as on March 31st, 2015 are given herein below. Other directorships do not include directorships of private limited companies, Section 8 companies and of companies incorporated outside India. Chairmanships / memberships of board committees shall include only audit committee and stakeholders' relationship committee.
The necessary quorum was present for all the meetings.
vi. The terms and conditions of appointment of the independent directors are disclosed on the website of the Company.
vii. During the year a separate meeting of the independent directors was held inter-alia to review the performance of non-independent directors and the board as a whole.
viii. The Board periodically reviews compliance reports of all laws applicable to the Company, prepared by the Company.
2. Audit committee
I. The Audit Committee of the Company is constituted in line with the provisions of Clause 49 of the Listing Agreements with the Stock Exchanges read with Section 177 of the Companies Act, 2013.
Ii .The terms of reference of the Audit Committee include a review of the following:
¦Overview of the Company's financial reporting process and disclosure of its financial information to ensure that the financial statements reflect a true and fair position and that sufficient and credible information is disclosed.
¦ Recommending the appointment and removal of external auditors, fixation of audit fee and also approval for payment for any other services.
¦ Discussion with external auditors before the audit commences, of the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.
¦ Reviewing the financial statements and draft audit report including quarterly / half yearly financial information.
¦ Reviewing with management the annual financial statements before submission to the Board, focusing on:
1. Any changes in accounting policies and practices;
2. Qualification in draft audit report;
3. Significant adjustments arising out of audit;
4. The going concern concept;
5. Compliance with accounting standards;
6. Compliance with stock exchange and legal requirements concerning financial statements and
7. Any related party transactions
¦ Reviewing the company's financial and risk management's policies.
¦ Disclosure of contingent liabilities.
¦ Reviewing with management, external and internal auditors, the adequacy of internal control systems.
¦ Reviewing the adequacy of internal audit function, including the audit character, the structure of the internal audit department, approval of the audit plan and its execution, 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 the 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.
¦ Looking into the reasons for substantial defaults in payments to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.
¦ Reviewing compliances as regards the Company's Whistle Blower Policy.
iii. The previous Annual General Meeting of the Company was held on 30.09.2014 and Chairman of the Audit Committee, attended previous AGM.
iv. The composition of the Audit Committee and the attendance of each member of the Audit Committee are given below:
The Company has complied with all the requirements of Clause 49 (II) (A) of the Listing Agreement relating to the composition of the Audit Committee. During the financial year 2014-2015, (5) four meetings of the Audit Committee were held on the 29.05.2014, 14.08.2014, 10.11.2014 and 02.02.2015.
3. NOMINATION & REMUNERATION COMMITTEE:
The Committee comprises of three non-executive independent Directors as on 31st March, 2015
i. BRIEF DESCRIPTION OF TERMS OF REFERENCE
• To approve the fixation/revision of remuneration of Executive Directors of the Company and while approving:
a. to take into account the financial position of the Company, trend in the industry, appointee's qualification, experience, past performance, past remuneration etc.
b. to bring out objectivity in determining the remuneration package while striking a balance between the interest of the Company and the Shareholders.
• To identify persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and to recommend to the Board their appointment and /or removal.
• To carry out evaluation of every Director's performance.
• To 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.
• To formulate the criteria for evaluation of Independent Directors and the Board.
• To recommend/review remuneration of the Managing Director and Whole-time Director(s) based on their performance and defined assessment criteria.
iii. REMUNERATION POLICY:
The objectives of the remuneration policy are to motivate Directors to excel in their performance, recognize their contribution and retain talent in the organization and reward merit.
The remuneration levels are governed by industry pattern, qualifications and experience of the Directors, responsibilities shouldered and individual performance.
POLICY FOR SELECTION OF DIRECTORS AND DETERMINING DIRECTORS' INDEPENDENCE
This policy sets out the guiding principles for the Nomination & Remuneration Committee for identifying persons who are qualified to become Directors and to determine the independence of Directors, in case of their appointment as independent Directors of the Company.
B. Terms and References:
B.1 "Director" means a director appointed to the Board of a Company.
B.2 "Nomination and Remuneration Committee means the committee constituted in accordance with the provisions of Section 178 of the Companies Act, 2013 and clause 49 of the Equity Listing Agreement.
B.3 "Independent Director" means a director referred to in sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49(II)(B) of the Equity Listing Agreement.
Qualifications and criteria
C. 1.1 The Nomination and Remuneration Committee, and the Board, shall review on annual basis, appropriate skills, knowledge and experience required of the Board as a whole and its individual members. The objective is to have a board with diverse background and experience that are relevant for the Company's operations.
C. 1.2 In evaluating the suitability of individual Board member the NR Committee may take into account factors, such as:
>• General understanding of the company's business dynamics, global business and social perspective;
> Educational and professional background
> Standing in the profession;
> Personal and professional ethics, integrity and values;
>• Willingness to devote sufficient time and energy in carrying out their duties and responsibilities effectively.
C. 1.3 The proposed appointee shall also fulfill the following requirements:
> shall possess a Director Identification Number;
>• shall not be disqualified under the companies Act, 2013;
> shall endeavor to attend all Board Meeting and Wherever he is appointed as a Committee Member, the Committee Meeting;
> shall abide by the code of Conduct established by the company for Directors and senior Management personnel;
>• shall disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals including his shareholding at the first meeting of the Board in every financial year and thereafter whenever there is a change in the disclosures already made;
> Such other requirements as may be prescribed, from time to time, under the companies Act, 2013, Equity listing Agreements and other relevant laws.
C. 1.4 The Nomination & Remuneration Committee shall evaluate each individual with the objective of having a group that best enables the success of the company's business.
C..2 Criteria of independence
C. 2.1 The Nomination & Remuneration Committee shall assess the independence of Directors at time of appointment/ re-appointment and the Board shall assess the same annually. The Board shall reassess determinations of independence when any new interest or relationships are disclosed by a Director.
C. 2.2 The criteria of independence shall be in accordance with guidelines as laid down in companies Act, 2013 and Clause 49 of the Equity Listing Agreement.
C. 2.3 The independent Director shall abide by the "code for independent Directors "as specified in Schedule IV to the companies Act, 2013.
C. 3 Other directorships/ committee memberships
C. 3.1 The Board members are expected to have adequate time and expertise and experience to contribute to effective Board performance. Accordingly, members should voluntarily limit their directorships in other listed public limited companies in such a way that it does not interfere with their role as director of the company. The NR Committee shall take into account the nature of and the time involved in a director service on other Boards, in evaluating the suitability of the individual Director and making its recommendations to the Board.
C. 3.2 A Director shall not serve as director in more than 20 companies of which not more than 10 shall be public limited companies.
C. 3.3 A Director shall not serve as an independent Director in more than 7 listed companies and not more than 3 listed companies in case he is serving as a whole-time Director in any listed company.
C. 3.4 A Director shall not be a member in more than 10 committees or act as chairman of more than 5 committee across all companies in which he holds directorships.
For the purpose of considering the limit of the committee, Audit committee and stakeholder's relationship committee of all public limited companies, whether listed or not, shall be included and all other companies including private limited companies, foreign companies and companies under section 8 of the companies Act, 2013 shall be excluded.
D. Remuneration policy for Directors, key managerial personnel and other employees:
D.1 This policy sets out the guiding principles for the Nomination and Remuneration committee for recommending to the Board the remuneration of the directors, key managerial personnel and other employees of the company. D.2. Terms and Reference:
In this policy the following terms shall have the following meanings:
D.2.1 "Director" means a director appointed to the Board of the company.
D.2.2 "key managerial personnel" means
(i) The Chief Executive Office or the managing director or the manager;
(ii) The company secretary;
(iii) The whole-time director;
(iv) The chief finance Officer; and
(v) Such other office as may be prescribed under the companies Act, 2013
D.2.3 "Nomination and Remuneration committee" means the committee constituted by Board in accordance with the provisions of section 178 of the companies Act,2013 and clause 49 of the Equity Listing Agreement.
D.3.1 Remuneration to Executive Director and key managerial personnel
D.3.1.1 The Board on the recommendation of the Nomination and Remuneration (NR) committee shall review and approve the remuneration payable to the Executive Director of the company within the overall limit approved by the shareholders.
D.3.1.2 The Board on the recommendation of the NR committee shall also review and approve the remuneration payable to the key managerial personnel of the company.
D.3.1.3 The remuneration structure to the Executive Director and key managerial personnel shall include the following components:
(i) Basic pay
(ii) Perquisites and Allowances
(iii) Stock Options
(iv) Commission (Applicable in case of Executive Directors)
(v) Retrial benefits
(vi) Annual performance Bonus
D.3.1.4 The Annual plan and Objectives for Executive committee shall be reviewed by the NR committee and Annual performance Bonus will be approved by the committee based on the achievement against the Annual plan and Objectives.
D.3.2 Remuneration to Non - Executive Directors
D.3.2.1 The Board, on the recommendation of the NR Committee, shall review and approve the remuneration payable to the Non - Executive Directors of the Company within the overall limits approved by the shareholders.
D.3.2.2 Non - Executive Directors shall be entitled to sitting fees attending the meetings of the Board and the Committees thereof. The Non- Executive Directors shall also be entitled to profit related commission in addition to the sitting fees.
D.3.3. Remuneration to other employees
D.3.3.1. Employees shall be assigned grades according to their qualifications and work experience, competencies as well as their roles and responsibilities in the organization. Individual remuneration shall be determined within the appropriate grade and shall be based on various factors such as job profile skill sets, seniority, experience and prevailing remuneration levels for equivalent jobs.
v. FORMAL ANNUAL EVALUATION:
As per section 149 of the Companies Act, 2013 read with clause VII (1) of the schedule IV and rules made there under, the independent directors of the company had a meeting on 28.03.2015 without attendance of non-independent directors and members of management. In the meeting the following issues were taken up:
(a)Review of the performance of non-independent directors and the Board as a whole;
(b) Review of the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors;
(c) Assessing the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
The meeting also reviewed and evaluated the performance of non-independent directors.
The meeting also reviewed and evaluated the performance the Board as whole in terms of the following aspects
¦ Preparedness for Board/Committee meetings
¦ Attendance at the Board/Committee meetings
¦ Guidance on corporate strategy, risk policy, corporate performance and overseeing acquisitions and disinvestments.
¦ Monitoring the effectiveness of the company's governance practices
¦ Ensuring a transparent board nomination process with the diversity of experience, knowledge, perspective in the Board.
¦ Ensuring the integrity of the company's accounting and financial reporting systems, including the independent audit, and that appropriate systems of control are in place, in particular, systems for financial and operational control and compliance with the law and relevant standards.
It was noted that the Board Meetings have been conducted with the issuance of proper notice and circulation of the agenda of the meeting with the relevant notes thereon.
4. STAKEHOLDER RELATIONSHIP COMMITTEE (SHAREHOLDERS/INVESTOR GRIEVANCE AND SHARE TRANSFER COMMITTEE):
Composition, meetings and the attendance during the year:
The Shareholders/Investors Grievance Committee was constituted to look into the redressing of Shareholders and Investors complaints concerning transfer of shares, non receipt of Annual Reports, and non receipt of Dividend and other allied complaints.
NED (I): Non Executive Independent Director ED (P): Executive Director Promoter
•Appointed w.e.f. 14.08.2014 ** Appointed w.e.f. 10.07.2015
The Committee has been delegated with the following powers:
¦ to redress shareholder and investor complaints relating to transfer of shares, Dematerialization of Shares, non-receipt of Annual Reports, non-receipt of declared dividend and other allied complaints.
¦ to approve, transfer, transmission, and issue of duplicate / fresh share certificate(s)
¦Consolidate and sub-division of share certificates etc.
¦To redress, approve and dispose off any, other complaints, transactions and requests etc., received from any shareholder of the company and investor in general.
The Board has delegated the power to process the transfer and transmission of shares to the Registrar and Share Transfer Agents, who process share transfers within a week of lodgment in the case of shares held in physical form.
The Board has designated Mr. Abhilash T, Company Secretary of the Company as the Compliance Officer.
The Company has designated an e-mail ID called email@example.com for redressal of shareholders' complaints/grievances.
5. RISK MANAGEMENT COMMITTEE
Role and Responsibilities of the Committee includes the following:
>Framing of Risk Management Plan and Policy
>Overseeing implementation of Risk Management Plan and Policy
>Monitoring of Risk Management Plan and Policy y Validating the process of risk management
>Validating the procedure for Risk minimization.
>Periodically reviewing and evaluating the Risk Management Policy and practices with respect to risk assessment and risk management processes.
>Continually obtaining reasonable assurance from management that al known and emerging risks have been identified and mitigated or managed.
ii. Extraordinary general meeting:
No extraordinary general meeting of the members was held during the year 2014-15. B. Special resolutions:
C. Details of special resolution passed through postal ballot, the persons who conducted the postal ballot exercise and details of the voting pattern.
During the year under review, no special resolution has been passed through the exercise of postal ballot. None of the items to be transacted at the ensuing meeting is required to be passed by postal ballot. 7. Disclosures
A. RELATED PARTY TRANSACTIONS
All material transactions entered into with related parties as defined under the Act and Clause 49 of the Listing Agreement during the financial year were in the ordinary course of business. These have been approved by the audit committee. The board has approved a policy for related party transactions which has been uploaded on the Company's website at the following www.msrindia.in
B. VIGIL MECHANISM:
Vigil Mechanism Policy has been established by the Company for directors and employees to report genuine concerns pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013. The same has been placed on the website of the Company i.e. www.msrindia.in
C.COMPLIANCE WITH MANDATORY REQUIREMENTS AND ADOPTION OF THE NON MANDATORY REQUIRMENT
All mandatory requirements of clause 49 of Listing Agreement have been appropriately complied with and the status of non mandatory requirements is given below
i. The statutory financial statements are free from any Audit Qualifications.
ii.Mr. K. V. Rajasekhar Reddy is the Managing Director of the Company. The Company has complied with the requirement of having separate persons to the post of Chairman and Managing Director.
8.MEANS OF COMMUNICATION
The Companys1 quarterly/ Annual Financial Results are generally published in The Indian Mail (All Edition) and prajashakti (Regional) and displayed on the website of the Company www.msrindia.in During the Year under review, the official news had also been displayed on the website.
9.GENERAL SHAREHOLDER INFORMATION
A. ANNUAL GENERAL MEETING:
Date : September 30th, 2015
Time : 10 am.
Venue : Survey No. 658, Bowrampet Village, Qutubullapur Mandal, Ranga Reddy Dist, Telangana -500043
As required under Clause 49(VIII) (E)(1) of the Listing Agreements entered into with the stock exchanges, particulars of directors seeking appointment / re-appointment at the forthcoming AGM are given in the Annexure to the notice of the AGM to be held on30.09.2015
B. FINANCIAL YEAR AND FINANCIAL YEAR CALENDAR 2015-16 (TENTATIVE SCHEDULE)
Financial year to which the Annual General Meeting relates: 2014-15
Financial calendar: 2015-16
Adoption of Quarterly results for the Quarter ending
•30th June, 2015: 14th August, 2015
•30th September, 2015: lst/2ndWeekof November, 2015
•31st December, 2015: 1st/2nd Week of February, 2016
•31st March, 2016: on or before 30th May 2016
Annual General Meeting (Next year): August / September, 2016
C.DATE OF BOOK CLOSURE/RECORD DATE : 26.09.2015 to 30.09.2015
D. LISTING ON STOCK EXCHANGES
BSE Limited (BSE) 25th Floor, P. J. Towers, Dalai Street Mumbai400 001
E. STOCK CODES/SYMBOL
BSE Code : 508922 BSE Symbol: MSRINDIA
Listing Fees as applicable have been paid.
F. CORPORATE IDENTITY NUMBER (CIN) OF THE COMPANY
G.REGISTRARS AND TRANSFER AGENTS NAME AND ADDRESS
Venture Capital And Corporate Investments Private Limited. 12-10-167, Bharat Nagar Hyderabad, 500018, Phone: +91 040-23818475/23818476/23868023 Fax: +91 040-23868024
I. DEMATERIALIZATION OF SHARES AND LIQUIDITY:
The Company's shares are compulsorily traded in dematerialized form. Equity shares of the Company representing 87.95 of the Company's equity share capital are dematerialized as on March 31, 2015.
The Company's equity shares are regularly traded on BSE, in dematerialized form.
Under the depository system, the international securities identification number (ISIN) allotted to the Company's shares are INE331L01026.
K. OUTSTANDING CONVERTIBLE INSTRUMENT
As of 31st March, 2015, there are no outstanding Convertible Instruments. L. Address for correspondence Mr. Abhilash T Company Secretary & Compliance Officer Msr Towers, 3rd Floor, Road No. 36, Jubilee Hills, Hyderabad- 500081.
M. OTHER DISCLOSURES AS PER CLAUSE 49 OF THE LISTING AGREEMENT
i. Code of Conduct
The Company has formulated and implemented a Code of Conduct for Board Members and Senior Management of the Company. Requisite annual affirmations of compliance with the respective Codes have been made by the Directors and Senior Management of the Company.
Certificate of Code of Conduct for the year 2014-15
MSR is committed for conducting its business in accordance with the applicable laws, rules and regulations and with highest standards of business ethics. The Company has adopted a "Code of Ethics and Business Conduct" which is applicable to all director, officers and employees.
I hereby certify that all the Board Members and Senior Management have affirmed the compliance with the Code of Ethics and Business Conduct, under a certificate of Code of Conduct for the year
ii) Disclosure of Accounting Treatment
The Company has complied with the appropriate accounting policies and has ensured that they have been applied consistently. There have been no deviations from the treatment prescribed in the Accounting Standards notified under Section 211 (3C) of the Companies Act, 1956.
iii) Non-Executive Directors' Compensation and Disclosures
None of the Independent / Non-Executive Directors has any pecuniary relationship or transactions with the Company which in the Judgment of the Board may affect the independence of the Directors.
The Managing Director and CEO/ CFO certification of the financial statements for the year 2014-15 is provided elsewhere in this Annual Report. 2014-15.
Sd/- K.V.Rajasekhar Reddy
For and on behalf of the Board of MSR India Limited