REPORT ON CORPORATE GOVERNANCE
1. Company's Philosophy on Corporate Governance:
The Company's endeavour is to maximize shareholder value. Nesco is committed to adopt the best governance practices and its adhérence in true spirit at all times. It has strong legacy of fair, transparent and ethical governance practices.
The Company has adopted a code of conduct which is applicable to all employees and is posted on the website of the Company. The Company also has in place a code for preventing insider trading.
The Company is fully compliant with the requirements of the listing regulations and applicable corporate governance norms and is committed to ensuring compliance with all modifications within the prescribed time.
2. Board of Directors:
The present strength of the Board of Directors is six. The Board comprises of the Chairman & Managing Director, Joint Managing Director and four non-executive Directors, out of which three are Independent Directors.
The day to day management is conducted by the Chairman and Managing Director along-with the Joint Managing Director of the Company subject to superintendence, control and direction of the Board of Directors.
3. Training of Board Members:
All the Non-Executive Directors are associated with the Company for several years, besides regular presentations are made to all Non-Executive Independent Directors to give an update and details of Company's operations, including new activities undertaken and the proposed activities.
4. Mechanism for evaluating Board Members:
One of the key functions of the Board is to monitor and review the Board evaluation framework. The questionnaire of the survey is a key part of the process of reviewing the functioning and effectiveness of the Board and for identifying possible paths for improvements.
Each Board member is requested to evaluate the effectiveness of Board dynamics and relationships, information flow, decision making of Directors, relationship to stakeholders, Company performance, Company strategy, and the effectiveness of the whole Board and its various committees.
Independent Directors have three key roles i.e. governance, control and guidance. The performance indicators on which the independent directors are evaluated include:
• Ability to contribute to and monitor our corporate governance practice
• Ability to contribute by introducing international best practices to address top management issues
• Active participation in long term strategic planning
• Commitment to the fulfillment of Directors' obligations and fiduciary responsibilities, which include participation in Board and Committee meetings.
5. Number of Board Meetings and Attendance Record of Directors:
The meetings of the Board are scheduled well in advance. The Board meets at least once in a quarter to consider amongst other business the performance of the Company and financial results. Each time, a detailed agenda is prepared in consultation with the Chairman & Managing Director.
6. Vigil Mechanism/Whistle Blower Policy:
The Company has a vigil mechanism to deal with fraud and mismanagement, if any. The policy is on the website of the Company.
7. Board Committees:
The Board has constituted six committees i.e. Audit Committee, Nomination & Remuneration Committee, Stakeholder Grievances Committee, Corporate Social Responsibility Committee, Risk Management Committee and Sexual Harassment Committee.
The Committee comprises of Mr. Mahendra K. Chouhan as Chairman, Mr. K. S. Srinivasa Murty, Mr. Jai S. Diwanji and Mr. Krishna S. Patel as members.
During the year the Committee met 4 times on 23.05.2015, 03.08.2015, 03.11.2015 and 09.02.2016. The attendance of each director at the meeting was as follows:
Scope of Audit Committee:
The terms reference are broadly as under:
a. Overall assessment of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
b. Recommending the appointment of external auditor, fixation of audit fee and also approval for payment for any other service rendered by the Auditors.
c. Reviewing with management the annual financial statement before submission to the board, focusing primarily on:
• Matters required to be included in the Director's Responsibility Statement to be included in the Board's report in terms of Companies Act, 2013.
• Changes if any, in accounting policies and practices.
• Major accounting entries based on exercise of judgment by management.
• Observations if any, in draft audit report.
• Significant changes/amendments, if any, arising out of audit.
• The going concern assumption.
• Compliance with accounting standards.
• Qualification in the draft audit report.
• Compliance with stock exchange and legal requirements concerning financial statement.
• Any related party 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 interests of Company at large.
d. Review of quarterly / half yearly unaudited financial results before submission to the auditors and the Board.
e. Reviewing with the management and external and internal auditors, the adequacy of internal control systems.
f. Reviewing the adequacy of internal audit functions, including the structure of internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.
g. Discussion with internal auditors, any significant finding and follow up thereon.
h. Reviewing the findings, if any, of any internal investigation by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of material nature and reporting the matter to the Board.
i. Discussions with external auditors before the audit commences. Nature and scope of audit as well as have post- audit discussion to ascertain any area of concern.
j. Reviewing the Company's financial and risk management policies.
k. To look into the reasons for substantial defaults, if any, in the payment to the shareholders (in case of non payment of declared dividends) and creditors.
l. Financial Statements and Investments made by subsidiaries. m. The Audit Committee also reviews:
• 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
• The appointment, removal and terms of remuneration of the Chief Internal Auditor shall be subject to review by the Audit Committee.
The Chairman of the Audit Committee briefs the Board about the significant discussions held at the Audit Committee Meetings.
Nomination and Rémunération Committee
The committee comprises of Mr. Jai S. Diwanji as Chairman, Mr. Mahendra K. Chouhan and Mrs. Sudha S. Patel as members
During the year under review the committee met two times on 23.05.2015 and 03.11.2015.
Scope of Nomination and Remuneration Committee:
The following matters are referred to the Nomination and Remuneration Committee,
• Fixing the remuneration payable to the Managing Director/ Joint Managing Director within the overall limits approved by the members.
• Determining the remuneration policy of the Company and
• Reviewing the performance of employees and their compensation. Remuneration Policy:
Remuneration policy in the Company is designed to create a high performance culture. It enables the Company to attract, retain and motivate employees to achieve results.
Company pays remuneration by ways of salary, benefits, perquisites and allowances (fixed components) and commission (variable components) to its Managing Director and Joint Managing Director. Annual incréments are decided by the Nomination and Remuneration Committee within the salary scale approved by the members of the Company. Nomination and Remuneration Committee decides on the commission payable to the Managing Director and Joint Managing Director as a percentage of profits for the financial year and within the ceiling limits prescribed under the Act based on the performance of the Company as well as that of the Managing Director and Joint Managing Director.
Stakeholder's Relationship Committee
The Committee comprises of Mrs. Sudha S. Patel as Chairperson, Mr. K. S. Srinivasa Murty and Mr. Jai S. Diwanji as members.
Scope of Stakeholder's Relationship Committee: The Committee administers the following activities:
• Transfer of shares
• Transmission of shares
• Issue of duplicate share certificates
• Change of status
• Change of Name
• Transposition of shares
• Sub-division of shares
• Consolidation of folios
• Shareholders requests for dematerialization / rematerialisation of shares
The Board has delegated the power of share transfer to registrar & share transfer agents, who process the transfers and the same is approved by the Board in their meeting as well as in the Stakeholders' Grievance Committee. The Committee also looks after redressal of investor's grievances and performance of the registrar and share transfer agents of the Company.
At present there are no pending cases wherein adverse claims are made against the Company.
Corporate Social Responsibility Committee
The Committee comprises of Mr. Sumant J. Patel as Chairman, Mr. Krishna S. Patel, Mr. Mahendra K. Chouhan and Mr. Jai S. Diwanji as members.
Scope of Corporate Social Responsibility Committee:
The Committee administers the following activities:
• Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company.
• Recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and
• Monitor the Corporate Social Responsibility Policy of the Company time to time.
Risk Management Committee
During the Financial Year, your Company constituted a Risk Management Committee to monitor and review the Risk Management Policy and plans of the Company.
The Committee comprises of Mr. Jai S. Diwanji, Independent Director, Mr. Mahendra K. Chouhan, Independent Director, Mr. Krishna S Patel, Joint Managing Director and Mr. Dipesh R. Singhania, Chief Financial Officer.
Scope of Risk Management Committee
Risk Management Committee aims to create a standard, structured and efficient approach to identify, assess and mitigate risks. Our Company meetings are structured to plan, assess and mitigate risks.
8. Independent Directors Meeting:
During the year under review, a meeting of the Independent Directors of the Company was held on 23.05.2015 in accordance with provisions of Schedule IV (Code of Independent Directors), without the attendance of non-indepedent directors and members of management inter-alia to discuss:
• To review the performance of non-independent directors and the Board as a whole.
• To review the performance of the Chairman of the Company, taking into account the views of executive director and non-executive directors.
• To assess 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.
• All the Independent Directors were present in the meeting.
9. Subsidiary Company:
Nesco Hospitality Private Limited is a wholly owned subsidiary of Nesco Limited.
The audited Annual Financial Statements of Subsidiary Company are tabled at the Audit Committee and Board Meetings.
Copies of the Minutes of the Board Meetings of Subsidiary Company are also tabled at the subsequent Board Meetings.
10. Related Party Transactions:
All the transactions entered into with Related Parties as defined under the Companies Act, 2013 and Regulation 23 of the Listing Regulations during the financial year were in the ordinary course of business and on an arms length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013.
There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company. Suitable disclosures as required by Accounting Standard (AS 18) have been made in the notes to the Financial Statements.
11. Compliance with Accounting Standards:
In the preparation of the financial statements, the Company has followed the Accounting Standards notified pursuant to Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 2013 and the general circulars issued by the Ministry of Corporate Affairs from time to time. The significant accounting policies which are consistently applied have been set out in the notes to the Financial Statements.
12. Compliance Officer:
Ms. Jinal J. Shah is the Compliance Officer of the Company with effect from 09 February 2016.
13. Secretarial Audit:
Pursuant to Section 204 of the Companies Act, 2013 and Rules there under, the Board of Directors of the Company appointed M/S. ND & Associates, Practicing Company Secretaries, to conduct Secretarial Audit of records and documents of the Company. The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 2013, Depositories Act, 1996, Listing Agreements and Listing Regulations with the Stock Exchanges, and all the Regulations and Guidelines of the Securities and Exchange Board of India (SEBI), as applicable to the Company. Report on Secretarial Audit is annexed and forms part of Directors Report as "Annexure B".
14. Code of Practices and procedures for fair disclosures of unpublished price sensitive information:
As per the requirements of Regulation 8(1) of Securities and Exchange of Board India (prohibition of Insider Trading) Regulation, 2015, the Company has formulated Code of fair disclosures of unpublished price sensitive information and has uploaded the same on the official website of the Company. The Company's Code of Conduct to regulate, monitor and report trading by employees and other connected persons is already in place.
There are no penalties or strictures imposed on the Company by the Stock Exchange or SEBI or any statutory authorities for non compliance by the Company or on any other matter related to capital markets, during last three years.
16. CEO/CFO Certification:
The Chairman and Managing Director and Chief Financial Officer have certified to the Board of Directors, compliance in respect of all matters pursuant to Regulation 17(8) of the Listing Regulation. The certificate is annexed and forms part of this Annual Report as "Annexure G"
17. Means of Communication:
The Company regularly intimates unaudited as well as audited financial results to the Stock Exchange as soon as these are taken on record / approved. These financial results are published in dailies having wide circulation. The results are also displayed on the website of the Company -www.nesco.in .
The Company has designated the following email-id exclusively for investor servicing for Annual Report and other queries: firstname.lastname@example.org
For and on behalf of the Board of Directors
Sumant J. Patel
Chairman & Managing Director
Mumbai, 30 May 2016