CORPORATE GOVERNANCE REPORT
Corporate Philosophy: Mukand continues to uphold its commitment to adhere to high standards of Corporate Governance. The Company strives to ensure transparency in all its operations, make disclosures and comply with various laws and regulations. Emphasis therefore, is on adding value to its shareholders, investors, employees, suppliers, customers and the community.
I. THE BOARD OF DIRECTORS:
1.1 Composition and size of the Board:
The Board at present consists of 11 directors, including the Executive Chairman. Out of these 11 Directors, 8 are Non-Executive Directors, which include 6 Independent Directors (including one woman director). The Company has had no pecuniary relations or transactions with the Non-Executive Directors.
1.2 Board Meetings:
During the year under review, five Board Meetings were held on May 29, 2014; August 13, 2014; November 10, 2014; December 22, 2014 and February II, 2015. The Board was presented with relevant, statutory and necessary information at these meetings. The attendance of each Director at the Board Meetings during the year and at the last Annual General Meeting along with details of number of other public limited companies and committees where he /she is a director and member/chairman respectively is tabulated below
1.3 Information supplied to the Board
In advance of each meeting, the Board is presented with relevant information on various matters related to the working of the Company, especially those that require deliberation at the highest level. Presentations are also made to the Board by different functional heads on important matters from time to time. Directors have separate and independent access to officers of the Company. In addition to items which are required to be placed before the Board for its noting and /or approval, information is provided on various significant items. In terms of quality and importance, the information supplied by management to the Board of the Company is far ahead of the list mandated under clause 49 of the Listing Agreement.
1.4 Orderly succession to Board and Senior Management
The Board of the Company satisfied itself that plans are in place for orderly succession for appointments to the Board and to senior management.
1.5 Review of legal compliance reports
During the year, the Board periodically reviewed compliance reports with respect to the various laws applicable to the Company, as prepared and placed before it by the management.
1.6 Maximum tenure of independent directors
The maximum tenure of independent directors is in accordance with the Companies Act, 2013 and clause 49 of the Listing Agreement.
1.7 Formal Letter of Appointment to independent directors
The company issues a formal letter of appointment to independent directors in the manner as provided in the Companies Act, 2013 and clause 49 of the Listing Agreement. The terms and conditions of appointment of independent directors are placed on the Company's website www.mukand.com
1.8 Re-appointment of Directors:
Shri Narendra J. Shah and Shri Niraj Bajaj retire by rotation and are eligible for re-appointment. Smt Bharti R Gandhi was appointed as an additional nonexecutive independent director at the Board Meeting held on 11th February, 2015 and holds office upto the date of the ensuing Annual General Meeting. Their brief resumes are as under :-
Shri Narendra J. Shah; born in 1928, is an Arts Graduate. He joined the Company in the year 1948 as a Management Trainee and has held different managerial positions at different times. He was initially posted in Batala as Chief Executive of Batala Engineering Co. Ltd., which was transferred to Mukand Ltd. during the financial year 1949-50. He was Assistant Chief Executive when he left the Company in 1969. He has been on the Board of our Company since January 16, 1990.
Shri Niraj Bajaj; born in 1954,did his B.Com, from Sydenham College of Commerce and Economics, Mumbai. He acquired his Masters in Business Administration from Harvard Business School, Boston, U.S.A. After doing a short stint at Bajaj Auto Ltd. and Bajaj Electricals Ltd., he has been associated with Mukand Ltd., in various positions and is now the Chairman and Managing Director.
He was selected by World Economic Forum, as one of the 'Global Leaders for Tomorrow', in 1993. He was the President of the Indian Merchants' Chamber for the centenary year 2007-08. He was President of the Alloy Steel Producer's Association and Indian Stainless Steel Development Association.
He represented India in table tennis for 7 years between 1970-77 and was three-times All-India Table Tennis Champion and ranked India No.1, four times. He is the Recipient of: Arjuna Award, India's highest Sport's honour, Shiv Chhatrapati award, Maharashtra's highest sport's honour and awarded the Maharashtra Gaurav Puraskar.
He provides valuble inputs, advice, guidance on matters relating to strategic planning and performance, expansion, diversification, new business decisions in his position as Chairman & Managing Director of the Company subject to the superintendence, control and directions of the Board of Directors of the Company. He has been on the Board of our Company since July 3, 1989.
The directorships/ committee positions in other public limited companies :
Bajaj Auto Ltd. Mukand Engineers Ltd. Bajaj Allianz General Insurance Company Ltd. Bajaj Allianz Life Insurance Company Ltd. Hospet Steels Ltd. Jeewan Ltd.
Committee positions: Nil
Smt. Bharti R. Gandhi; is a Masters in Applied Biology from Mumbai University. She founded the Bacteriology Department at Tata Memorial Hospital. She holds directorship in YoungBuzz India Ltd., India's Premier Career Guidance & Manpower Development Company; Beacons Private Limited, a leading International Trading Company engaged in a range of products from Industry to Micro-Tunneling Machines to Chemicals & Pharmaceuticals; and Pravinchandra Pvt. Ltd.. She is a past President of the Ladies' Wing of the Indian Merchants' Chamber. She has been a Special Executive Magistrate and was also on the Managing Council of Sir Harkisondas Hospital. She had previously served on the Tourism Committee of Assocham for 2 Years and also served on the Script Committee of Children's Film Society India (CFSI). She was the Founder President of Inner Wheel Club of Bombay Central. She is a 'Sangeet Visharad' from Bhatkhande University, Lucknow. She has been on the Board of our Company since February 11, 2015.
2. AUDIT COMMITTEE :
The Audit Committee consists of Dr. N. P. Jain, IFS (Retd.), Chairman, Shri Dhirajlal S. Mehta, Shri N.C. Sharma and Shri Praka sh V. Mehta all of whom are Independent Directors. Terms of Reference of the Audit Committee have been broadened by the Board and are as per the requirements of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges, as amended by the Securities and Exchange Board of India vide circular dt. 17th April, 2014.
During the year under review, five meetings of the Audit Committee were held. All the members viz. Dr. N. P. Jain, IFS (Retd.), Chairman, Shri Prakash V. Mehta, Shri N.C. Sharma and Shri Dhirajlal S. Mehta attended all the five meetings of the Committee. In addition to Statutory Auditors, Chairman & Managing Director, Co-Chairman & Managing Director, Joint Managing Director, Chief Financial Officer, who being permanent invitees attend Audit Committee Meetings. The Cost Auditors attend where Cost Audit Report is considered at such Committee Meetings. The Internal Auditors attend where internal audit controls are discussed. Shri K. J. Mallya - Company Secretary acts as Ex-officio Secretary to the Audit Committee.
Apart from considering un-audited and/or audited financial results for the relevant quarters and for the year prior to adoption/ approval by the Board, the Committee focused its attention on key areas impacting the overall performance of the Company, Operations of Plants, Cost Audit, Review of Internal Control System, Energy Conservation/Saving and Cost Control measures, I.T. Security and Management Information System, Major Accounting Policies and Practices, Current Assets Management, Performance Reviews, Related Party Transactions, Annual Budget and Annual Internal Audit plan. Based on the Committee's discussions and review of the observations of the reports submitted by the Company's Internal Auditors on Systems and Controls, Cost Control measures and Statutory Compliance in various functional areas, the Audit Committee advises the management on areas where greater internal control and internal audit focus was needed and on new areas to be taken up for audit.
3. NOMINATION AND REMUNERATION COMMITTEE:
Terms of Reference:
The Committee shall identify the persons who are qualified to become directors and who may be appointed in senior management and recommend to the Board their appointment and removal. The Committee shall also carry out evaluation of every director's performance, including independent directors and formulate the criteria for overall evaluation of Independent Directors & the Board of Directors and devise a policy on Board Diversity.
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 as required by the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. 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 was devised and was provided by the Directors.
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.
Remuneration Policy for Directors, Key Managerial Personnel and other employees:
The Nomination & Remuneration Committee has formulated a Policy for Directors, Key Managerial Personnel and other employees, as follows:
A. NON-EXECUTIVE DIRECTORS (NEDs)
NEDs shall be paid -
(i) a sitting fee of Rs.50,000/- for every meeting of the Board or Audit Committee thereof attended by them as a member; and
(ii) a sitting fee of Rs.20,000/- for every meeting of Committee of the Board other than that of Audit Committee Meeting.
The Company has no stock options plans and no payment by way of bonus, pension, incentives etc. shall be paid.
B. MANAGING DIRECTORS & KEY MANAGERIAL PERSONNEL & OTHER EMPLOYEES
The objective of the policy is directed towards having a compensation philosophy and structure that will reward and retain talent. The Remuneration to Managing Directors shall take into account the Company's overall performance, MDs contribution for the same & trends in the industry in general, in a manner which will ensure and support a high performance culture.
The Company has no stock options, plans and hence such instruments do not form part of their remuneration package.
The Remuneration to others will be such as to ensure that the relationship of remuneration to performance is clear and meets appropriate performance benchmarks.
Remuneration to Directors, Key Managerial Personnel and Senior Management will involve a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.
The Nomination & Remuneration Committee at present consists of Dr. N. P. Jain, Chairman, Shri Dhirajlal S. Mehta, Shri N. C. Sharma and Shri Prakash V. Mehta as members, all of whom are Independent Directors.
The Shareholders vide Postal Ballot Resolutions passed on 8th August, 2014, re-appointed Shri Niraj Bajaj as Chairman & Managing Director, Shri Rajesh V. Shah as Co-Chairman & Managing Director and Shri Suketu V. Shah as Joint Managing Director for a period of 3 years w.e.f. July 5, 2014 on remuneration as per the recommendation of the Nomination and Remuneration Committee and approval of the Board of Directors. During the year under review three meetings of the Nomination & Remuneration Committee of the Company were held on 29th May, 2014, 10th November, 2014 and 11th February, 2015.
The details of remuneration of Shri Niraj Bajaj - Chairman & Managing Director, Shri Rajesh V. Shah - Co-Chairman & Managing Director and Shri Suketu V. Shah - Joint Managing Director paid for FY 2014-15 are given below:
The Chairman & Managing Director, the Co-Chairman & Managing Director and the Joint Managing Director have agreements with the Company for a period of 3 years which can be terminated by giving 6 months' notice in writing. There is no provision for severance fees in the employment contracts of the Managing Directors
The Company does not pay any remuneration to the Non-executive Directors of the Company except for the payment of sitting fees for attending Board / Committee meetings and meeting of Independent Directors. The Company has not issued stock options to any of its Directors.
4. SHAREHOLDERS' / INVESTORS' GRIEVANCES :
The Stakeholders Relationship Committee consists of Shri N. C. Sharma -Chairman, Shri Dhirajlal S. Mehta and Dr. N. P. Jain, IFS (Retd.) all of whom are Independent Directors. The meeting of the Committee was held on May 29, 2015. As on March 31, 2015, no request for transfer of shares and for dematerialization/ rematerialisation of shares was pending for approval. Shri K. J. Mallya, Company Secretary is the Compliance Officer.
There were no major complaints from the investors. Routine complaints relating to non-receipt of annual report, details of shares offered, payment of dividends, transfer of shares, dematerialisation of shares and request for change of address, etc. were attended generally within 3 / 4 days. The Company has not received any complaints from shareholders through the Securities and Exchange Board of India (SEBI) during the year under review. There were no complaints pending as at end of the year.
6.1. Related Party Transactions:
There were no materially significant related party transactions made by the Company with its promoters, directors or their relatives during the year, which may have potential conflict with the interest of the Company at large. The details of transactions with related parties are disclosed in the Accounts.
6.2. Compliance with Regulations:
There were no non-compliance matters related to capital markets by the Company during the last three years, nor did the Company attract any penalties or strictures passed by the stock exchanges, SEBI or any other statutory authority.
6.3. Risk Management:
The process of identification and evaluation of various risks inherent in the business environment and the operations of the Company and initiation of appropriate measures for prevention and/or mitigation of the same are dealt with by the concerned operational heads under the overall supervision of the Managing Directors of the Company. The Audit Committee periodically reviews the adequacy and efficacy of the overall risk management system.
7. CODE OF CONDUCT:
Revised Clause 49 of Listing Agreement requires listed companies to lay down a code of conduct for its directors and senior management, incorporating duties of directors as laid down in the Companies Act, 2013.
All directors and senior management personnel have affirmed compliance with the code of conduct for 2014-15. A declaration to this effect signed by the Managing Director is given in this Annual Report.
8. CODE FOR PREVENTION OF INSIDER TRADING:
The Company had in place a 'Code of Conduct for Prevention of Insider Trading and Corporate Disclosure Practices', in accordance with the SEBI (Prohibition of Insider Trading) Regulations, 1992 as amended. These regulations have been substituted by SEBI with a new set of Regulations, which were to be complied by May 15, 2015.
Regulation 8 of the newly introduced Regulations, required the Company to formulate a 'Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (UPSI)', which the Company needs to follow in order to adhere to each of the principles set out in Schedule A to the said Regulations.
Further, Regulation 9(1) of these Regulations required a listed company to formulate a 'Code of Conduct to Regulate, Monitor and Report Trading by its employees and other connected persons', towards achieving compliance with the said Regulations, adopting the minimum standards, set out in Schedule B to the Regulations.
Accordingly, the Board, vide circular resolution dated 8th May, 2015, approved and adopted:
a. Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information; and
b. Code of Conduct to Regulate, Monitor and Report Trading by its employees and other connected persons.
The said codes are being adhered to with effect from 15 May, 2015.
9. CEO AND CFO CERTIFICATION:
In accordance with the requirement of Clause 49 of the Listing Agreement, the CEOs i.e., Chairman & Managing Director and Co-Chairman & Managing Director and CFO i.e., Chief Financial Officer have furnished the requisite certificates to the Board of Directors of the Company.
10. MEANS OF COMMUNICATION:
The quarterly un-audited and yearly audited financial results are published in English and regional language newspapers. The financial results, shareholding pattern and other corporate communication to stock exchanges, filed in compliance of clause 52 of the Listing Agreement, under Corporate Filing and Dissemination System (CFDS) are available at the website www.corpfiling.co.in and on the corporate website of the Company www.mukand.com. Likewise, the said information is also filed electronically with NSE through NSE's NEAPS portal. The Company has complied with filing submissions through BSE's BSE Online Portal. The Management Discussion and Analysis is a part of the Annual Report. All financial and other vital information is promptly communicated to the Stock Exchanges where the Company's shares are listed.
Information, in words and visuals, about the Company and its businesses, including products manufactured, projects executed, facilities and processes, quality policy, financial results, shareholding pattern, code of conduct, press releases etc. is available at the corporate website: www.mukand.com
11. SHAREHOLDERS' INFORMATION:
11.1 Annual General Meeting:
Date : Wednesday, August 12, 2015
Time : 4.00 p.m.
Venue : Kamalnayan Bajaj Hall, Bajaj Bhawan, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai 400021
11.2 Financial calendar:
Financial Year: April 1 to March 31
First quarter [unaudited] second week of August.
Second quarter [unaudited] second week of November.
iii. Third quarter [unaudited] second week of February.
iv. Annual [audited] last week of May
11.3 Date of Book Closure and Dividend Payment:
The Register of Members and Share Transfer Books of the Company will remain closed from Saturday, the 1st August, 2015 to Wednesday, the 12th August, 2015 (both days inclusive) for the purpose of payment of Dividend on 0.01% Cumulative Redeemable Preference Shares.
The Preference Dividend as recommended by the Board of Directors, if declared at the ensuing Annual General Meeting, will be paid at par on or after August 17, 2015 to those members whose names appear on the Company's Register of members as holders of equity / preference shares in physical form as at the end of the day on Friday, 31st July, 2015. In respect of shares held in dematerialised form, the dividend will be paid on the basis of beneficial ownership details to be furnished by the National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL) for this purpose
11 .4 Stock Exchange Listing:
Equity Shares and 0.01% Cumulative Redeemable Preference Shares
(CRPS) of the Company are listed on BSE Ltd. (BSE) and National Stock
Exchange of India Ltd. (NSE) and the applicable listing fees have been duly paid to the Exchanges.
11.5 Stock Code
BSE : 500460 : 700087
2. NSE : MUKANDLTD : MUKANDCRPS
3. ISIN : INE 304A01026 : INE 304A04012
11.8 Share Transfer Agents:
M/s. Karvy Computershare Private Limited are the Share Transfer Agents of the Company for carrying out work relating to Share transfers of the Company.
11.9 Share Transfer System:
The Share transfers are approved by a Committee of Directors, which is normally done once in 10 days. Share transfers are registered within a
* Refer Note No. 10 of the Notice convening 77th Annual General Meeting in connection with withdrawal of this recommendation in view of amendment to Section 123 of the Companies Act, 2013. period of 15 days from the date of receipt, if the documents are complete in all respect. The Company has followed the guidelines issued by SEBI for dematerialisation of Shares.
During the year, 6,763 Equity Shares and 1,232 CRPS were transferred in physical (non-dematerialized) form.
11.10 Distribution of Shareholding:
The Company had 43,289 Equity Shareholders and 41,939 CRPS holders as on March 31, 2015. Distribution of shareholding is given in the table hereunder:
11.11 Dematerialization of Shares and liquidity:
The Company's Shares are dealt with at both the depositories viz. NSDL and CDSL. The Company for the benefit of the Shareholders has made one time payment to NSDL towards custodial charges. During the year, 50,244 Equity Shares and 3,145 CRPS were dematerialised in respect of 341 and 148 requests respectively. The dematerialisation level as on March 31, 2015 stood at 98.84% of total paid-up Equity Share capital and 92.49% of the total paid-up 0.01% Cumulative Redeemable Preference Share Capital. As on March 31, 2015, 26,776 Shareholders held 13,97,70,739 Equity Shares and 17,943 Shareholders held 52,03,965 CRPS in demat form.
11.12 Plant Locations:
Dighe, Thane, Maharashtra- 400 605 Ginigera, Karnataka- 583 228
11.13 Address for Correspondence:
(i) Physical Shares (Equity and Preference):
Share Transfer Agents :
M/s. Karvy Computershare Private Limited Karvy Selenium Tower B, Plot 31-32 Gachibowli Financial District, Nanakramguda, Hyderabad 500032 Tel: (040) 6716 2222 Fax: (040) 2300 1153 E-mail : email@example.com Website : www.karvycomputershare.com
(ii) Demat Shares (Equity & Preference) : Respective Depository Participants of Shareholders
(iii) Shares & Fixed Deposits :
Bajaj Bhawan, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai 400021 Tel: Shares: 022 - 6121 6666 Fixed Deposits: 022 - 6121 6629 Fax: 022-2202 1174 E-mail : Shares: firstname.lastname@example.orgFixed Deposits: email@example.com
12. ADOPTION OF MANDATORY & NON-MANDATORY REQUIREMENTS Mandatory
The Company has fully adopted the mandatory requirements of clause 49 of the Listing Agreement.
i) Shareholder rights :
Quarterly financial results were published in one English newspaper and in one Marathi newspaper. These were not sent individually to the shareholders.
ii) Audit Qualifications :
The auditors' report does not contain any qualification.
iii) Separate post of Chairman and CEO :
The Company has same person as Chairman & Managing Director.
iv) Reporting of Internal Auditor :
Internal Auditors are invited to the meetings of the Audit Committee wherein they report directly to the Committee.
13. CERTIFICATE ON CORPORATE GOVERNANCE:
The Company has obtained a certificate from M/s. Haribhakti & Co. LLP, Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in the Listing Agreement with the Stock Exchanges. This is annexed to the Directors' Report. The certificate will be sent to the Stock Exchanges along with the Annual Report to be filed by the Company.
On behalf of the Board of Directors,
Chairman & Managing Director
Rajesh V. Shah
Co-Chairman & Managing Director
Place : Mumbai,
date : May 29, 2015