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Pennar Industries Ltd.

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  • 41.25 0.30 (0.73%)
  • Vol: 30967
  • BSE Code: 513228
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  • 40.95 0.00 (0%)
  • Vol: 116056
  • NSE Code: PENIND
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Pennar Industries Ltd. Accounting Policy

REPORT ON CORPORATE GOVERNANCE

In accordance with Clause 49 of the Listing Agreement with the BSE Limited (BSE) and National Stock Exchange Limited (NSE), the report containing the details of Corporate Governance systems and processes at Pennar Industries Limited is as follows:

At Pennar Industries Limited (PIL), Corporate Governance is all about maintaining a valuable relationship and trust with all stakeholders. We consider stakeholders as partners in our success, and we remain committed to maximising stakeholders' value, be it shareholders, employees, suppliers, customers, investors, communities or policy makers. This approach to value creation emanates from our belief that sound governance system, based on relationship and trust, is integral to creating enduring value for all.

1. COMPANY'S PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE:

The Company is committed to ethical values and self-discipline through standards of good governance with transparency, efficiency, efficacy, full disclosure in its dealings and appropriate checks and balances directed at sustaining shareholders' interests and overall organisational goals.

2. APPROPRIATE GOVERNANCE STRUCTURE WITH DEFINED ROLES AND RESPONSIBILITIES:

The Company's shareholders appoint the Board of Directors, which in turn governs the Company. The Board has established six committees to discharge its responsibilities in an effective manner. The Executive Chairman and Vice-Chairman & Managing Director provide overall direction and guidance to the Board

Concurrently, the Vice-Chairman and Managing Director is responsible for overall implementation.

3. BOARD OF DIRECTORS:

The Board of Directors of the Company have an optimum combination of Executive, Non-Executive and Independent Directors who have an in-depth knowledge of business, in addition to the expertise in their areas of specialization. The Board of the Company comprises Ten Directors that includes one Women Director.

None of the Directors on the Board is Member of more than ten Committees or Chairman of more than five Committees across all the public companies in which he/she is a Director. Necessary disclosures regarding Committee positions in other public companies as on 31st March, 2015, have been made by the Directors.

4. INDEPENDENT DIRECTORS:

The Company has complied with the definition of Independence as per Clause 49 of the Listing Agreement and according to the Provisions of section 149(6) Companies Act, 2013. The company has also obtained declarations from all the Independent Directors pursuant to section 149 (7) of the Companies Act, 2013.

(a) Training of Independent Directors:

Whenever new Non-executive and Independent Directors are inducted in the Board they are introduced to our Company's culture through appropriate orientation session and they are also introduced to our organization structure, our business, constitution, board procedures, our major risks and management strategy.

The terms of appointment of Independent Directors has been placed on the Company's website at <http://www.pennarindia.com/> pdf/Investor_presentation/terms-of-appointment-of-independent directors.pdf

(b) Performance Evaluation of non-executive and Independent Directors:

The Board evaluates the performance of Non-executive and Independent Directors every year. All the Non-executive and Independent Directors are eminent personalities having wide experience in the field of business, industry and administration. Their presence on the Board is advantageous and fruitful in taking business decisions.

(c) Separate Meeting of the Independent Directors:

The Independent Directors held a Meeting on 28th March, 2015, without the attendance of Non-Independent Directors and members of Management. All the Independent Directors were present at the meeting. The following issues were discussed in detail:

i) Reviewed the performance of non-independent directors and the Board as a whole;

ii) Reviewed the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non­Executive Directors;

iii) Assessed 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.

5. AUDIT COMMITTEE

(a) Brief description of the terms of reference

The terms of reference of the Audit Committee are comprehensive and cover the matters specified for Audit Committees under the Listing Agreements with stock exchanges. The Committee provides the Board with additional assurance as to the adequacy of Company's internal control systems and financial disclosures. The committee has reviewed the internal audit reports, quarterly, half-yearly and annual financial results before their submission and adoption by the board, internal control systems, Related Party Transactions and all other matters covered in Clause 49 of the Listing Agreement and provisions of the Companies Act, 2013 read with rules made thereunder as and when applicable. In conducting such reviews, the committee found no material discrepancy.

(b) Composition, name of members and chairperson

The Committee comprises of the following:

1. Mr. B Kamalaker Rao -

Chairman (Independent Non-Executive Director)*

2. Mr. C Parthasarathy -

Chairman (Independent Non-Executive Director)©

3. Mr. Varun Chawla -

Member (Independent Non-Executive Director)

4. Mr. Aditya Rao -

Member (Non-Independent Executive)

The Audit Committee was re-constituted on 11th February, 2015. * Mr. B Kamalaker Rao was appointed as Chairman of the Audit Committee; @ Mr. C Parthasarathy was resigned as Independent Director of the Company.

(c) Meetings and attendance during the year

During the year under review, the Committee met four times on 7th May, 2014; 5th August, 2014; 10th November, 2014; and 10th February, 2015. The details of attendance are given below:

M/s. Rambabu & Co., Statutory Auditors, M/s. R Krishna & Associates., Internal Auditors and Mr. Krishna Prasad, Chief Financial Officer of the Company are invited to attend the Audit Committee meetings and the Company Secretary acts as the Secretary of the Committee. The Chairman of the Board will attend the meetings as he deemsappropriate. The minutes of the meetings of the Audit Committee are circulated to all the members of the Board.

The Chairman of the Audit Committee was present at the last Annual General Meeting.

. NOMINATION AND REMUNERATION COMMITTEE

This Committee shall identify the persons, who are qualified to become Directors of the Company / who may be appointed in Senior Management in accordance with the criteria laid down, recommend to the Board their appointment and removal and also shall carry out evaluation of every director's performance. Committee shall also formulate the criteria for determining qualifications, positive attributes, independent of the Directors and recommend to the Board a Policy, relating to the remuneration for the Directors, Key Managerial Personnel and other employees.

(b) Composition, name of members and Chairperson

The Nomination and Remuneration Committee of the Company consists of 2 Non-Executive Independent Directors and 1 Executive Chairman of the Company.

1. Mr. B Kamalaker Rao -

Chairman (Independent Non-Executive Director)*

2. Mr. C Parthasarathy -

Chairman (Independent Non-Executive Director)©

3. Mr. Varun Chawla -

Member (Independent Non-Executive Director)

4. Mr. Nrupender Rao -Member (Chairman - Executive)

The Nomination and Remuneration Committee was re-constituted on 11th February, 2015. * Mr. B Kamalaker Rao was appointed as Chairman and Mr. Nrupender Rao was appointed as Member of the

d) Remuneration policy:

The Company has formulated a Remuneration Policy. It is in consonance with the existing industry practice and also with provisions of the Companies Act, 2013. Following are the objectives covered in the policy:

* Identifying and selection of candidates for appointment as Directors / Independent Directors based on certain laid down criteria.

* Identifying potential individuals for appointment as Key Managerial Personnel and to other Senior Management positions.

* Formulate and review from time to time the policy for selection and appointment of Directors, Key Managerial Personnel and senior management employees and their remuneration.

* Review the performance of the Board of Directors and Key Managerial Personnel based on certain criteria as approved by the Board. In reviewing the overall remuneration of the Board of Directors and Key Managerial Personnel, the Committee ensures that the remuneration is reasonable and sufficient to attract, retain and motivate the best managerial talent, the relationship of remuneration to performance is clear and meets appropriate performance benchmarks and that the remuneration involves a balance between fixed and incentive pay reflecting short term and long term objectives of the Company.

The Board Taken on record the following: $ Resignation of Dr. G Vivekanand on 6th August, 2014; # Resignation of Mr. C Parthasarathy on 11th February, 2015; * Appointment of Ms. Sita Vanka on 11th February, 2014.

Familiarisation programmes for Board Members

The Board members are provided with necessary documents/ brochures, reports and internal policies to enable them to familiarise with the Company's procedures and practices. Updates on relevant statutory changes are circulated to the Directors. The details of familiarisation programmes for Independent Directors are available in the website of the company <http://www.pennarindia.com/> policy-familiarization-programme.html

Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board carried out the annual performance evaluation of its own performance, as well as the evaluation of the working of its Audit, Nomination and Remuneration and Stakeholders Relationship Committees. The evaluation took 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 judgment, safeguarding the interest of the Company 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 at a separate meeting held on 28th March, 2015. The evaluation also assessed the quality, quantity and timeliness of the flow of information between the management and the Board that is necessary for it to effectively and reasonably perform its duties.

7. STAKEHOLDERS RELATIONSHIP COMMITTEE:

In compliance with Section 178 of the Companies Act, 2013 read with rules made thereunder and Clause 49, the Board has renamed the existing Shareholders' / Investors' Grievances Committee to Stakeholders Relationship Committee. The committee meets as and when any complaint is received from the shareholders.

a) Brief description of terms of reference

The Committee focuses primarily on monitoring expeditious redressal of investors / stakeholders grievances and also function in an efficient manner that all issues / concerns stakeholders are addressed / resolved promptly.

b) Name of Non-Executive Director heading the Committee:

The Committee functions under the Chairmanship of Mr. B Kamalaker Rao, a Non-Executive Independent Director.

Other members include Mr. Aditya Rao, Vice- Chairman & Managing Director and Mr. Varun Chawla, Non-Executive Independent Director.

c) Name and designation of Compliance Officer: Mr. Mirza Mohammed Ali Baig, Company Secretary.

d) Number of complaints received from shareholders: During the period under review, the Company has received and resolved 17 complaints and there were no pending complaints as at the year end.

8. CORPORATE SOCIAL RESPONSIBILITY (CSR):

(a) Brief description of terms of reference

The Committee formulate and recommend to the Board, a CSR Policy and recommend the amount of expenditure to be incurred on CSR activities. Committee framed a transparent monitoring mechanism for implementation of CSR projects or programs or activities undertaken by the Company and also monitor CSR policy from time to time.

(b) Composition, name of members and chairperson

The CSR Committee of the Company consists of 2 Non-Executive Independent Directors and 2 Executive Directors of the Company.

1. Mr. B Kamalaker Rao -

Chairman (Independent Non-Executive Director)

2. Mr. Varun Chawla -

Member (Independent Non-Executive Director

3. Mr. Nrupender Rao -Member (Chairman - Executive)

4. Mr. Aditya Rao -

Member (Vice-Chairman & Managing Director)

c) Meetings and attendance during the year

During the year the Committee had 1 meeting i.e., on 10th February, 2015. The details of attendance are given below:

10. DISCLOSURES:

a) Related Party Transactions:

No transaction of material nature that may have potential conflict with the interests of company at large was entered in to by the Company

b) Disclosure of Accounting Treatment:

The Company has followed the applicable accounting standards in the preparation of its financial statements.

c) Details of non-compliance etc.

There has been no instance of non-compliance with any legal requirements nor have there been any strictures imposed by any stock exchange, SEBI on any matters relating to the capital market over the last three years.

d) Whistle Blower Policy:

The Company has a Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The Whistle Blower Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any personfor a genuinely raised concern. Employees may also report to the Chairman of the Audit Committee. During the year under review, no employee was denied access to the Audit Committee. The Policy onvigil mechanism and whistle blower policy may be accessed on the Company’s website at the link: http://www.pennarindia.com/vigilmechanism. html

e) Risk Management:

The Board regularly discusses the significant business risks identified by the Management and the mitigation process being taken. The Company has a robust risk management framework to identify, monitor and minimize risks as also identify business opportunities. At present the company has not identified any element of risk which may threaten the existence of the company.

f ) Code of Conduct:

The Company has adopted the Code of Conduct which is applicable to the members of the Board and senior management of the Company. The Code of Conduct is available on the Company’s website at the link: http://www.pennarindia.com/code-of-conduct. html

g) Policy on Prevention of Insider Trading:

The Company has also adopted a policy for prevention of Insider Trading which is made applicable to all the Directors and other designated employees who may have access to unpublished pricesensitive information, in accordance with SEBI (Prohibition of Insider Trading) Regulations. Accordingly such officials are prohibited from trading in the securities of the Company during the notified “Trading Window” period.

h) Proceeds from public issues, rights issues, preferential issues etc.,

During the financial year ended 31st March, 2015, there were no proceeds from public issues, rights issues, preferential issues, among others.

i) Management Discussion & Analysis is annexed to the Directors’ Report and forms part of the Annual Report.

Details of compliance with mandatory requirements and adoption of the non-mandatory requirements of this clause: The Company has complied with all the mandatory requirements of the Clause 49 of the Listing Agreement.

11. COMPLIANCE WITH NON_MANDATORY REQUIREMENTS:

The Company has complied with all mandatory requirements of Clause 49 of the Listing Agreement. The Company has adopted following non-mandatory requirements of Clause 49 of the Listing Agreement:

(i) The Board - We also ensure that the persons who are being appointed as an Independent Director has the requisite qualifications and experience which would be of use to the Company and contribute effectively to the Company.

(ii) Shareholder Rights - The Company publishes its results on its website at the link http://www.pennarindia.com/un-auditedfinancial- results.html which is accessible to the public at large. A half-yearly declaration of financial performance including summary of the significant events is presently not being sent to each household of shareholders. The Company’s results for each quarter are published in an English newspaper having wide  national circulation and also in a Telugu newspaper having wide circulation in Telangana. Hence, half-yearly results are not sent to the shareholders individually.

(iii) Audit qualifications - During the period under review, there is no audit qualification in Company’s financial statements. The Company continues to adopt best practices to ensure unqualified financial statements.

(iv) Separate of Chairman and Managing Director - The Company has appointed Mr. Nrupender Rao, Executive Director as the Chairman and Mr. Aditya Rao, Executive Director as Vice- Chairman and Managing Director.

(v) Reporting of Internal Auditor - The Internal Auditor submits his report directly to the Audit Committee.

12. MEANS OF COMMUNICATION

(a) The quarterly/half-yearly/annual financial results of the Company are sent to the stock exchanges immediately after they are approved by the Board. The Statutory advertisements and financial results of the company (Quarterly, Half-yearly and Annual) are normally published in ‘Business Standerds’ in English and in ‘Andhra Prabha’ regional language dailies (Telugu) within 48 hours of the conclusion of the Board meeting.

(b) The Company’s website www.pennarindia.com contains a separate dedicated section “Investors” where latest information for shareholders is available. The quarterly/half yearly/ annual financial results of the Company are simultaneously posted on the website.

The Company’s website also displays official news releases related to the activities of the Company.

(c) Scores

The Securities Exchange Board of India has initiated a platform for redressing the investor grievances through SCORES, a web based complaints redressal system. The system processes complaints in a centralized web based mechanism. The company is in compliance with this system. During the financial year 2014-15 there were no complaints.

(d) BSE Corporate Compliance & Listing Centre (the ‘Listing Centre’) BSE’s Listing Centre is a web-based application designed for corporates. All periodical compliance filings like shareholding pattern, corporate governance report, among others are also filed electronically on the Listing Centre.

(e) National Electronic Application Processing System (‘NEAPS’) National Stock Exchange announced a web based application system NEAPS for corporates. All periodical compliance filings like shareholding pattern, corporate governance report, among others are also filed electronically on NEAPS.

13. GENERAL SHAREHOLDERS INFORMATION:

Date, time and venue of Annual General Meeting

30th September, 2015 at 10:00 A.M. at Radisson Hi-Tech City, Gachibowli, Hyderabad - 32

2. Financial calendar (Tentative schedule)

Financial year : 1st April, 2014 to 31st March, 2015

Board meetings for approval of quarterly results:

1st Quarter ended on 30th June, 2015: within 45 days from the close of quarter.

2nd Quarter ended on 30th September, 2015: within 45 days from the close of quarter.

3rd Quarter ended on 31st December, 2015: within 45 days from the close of quarter.

Annual results for financial year ended 31st March, 2016 (audited): Within 60 days of the close of financial year.

Annual general meeting for the year 2015-16 : In accordance with Companies Act, 2013 and amendment if any.

3. Date of book closure (both days inclusive): 23rd September, 2015 to 24th September, 2015 (both days inclusive)

4. Dividend payment due

5 Listing on stock Exchanges The Bombay Stock Exchange Limited P. J. Towers, Dalal Street, Mumbai – 400001 

The National Stock Exchange of India Limited Exchange Plaza, Plot no. C/1, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai – 400051 Metropolitan Stock Exchange Limited 2nd Floor, Exchange Square Suren Road, Chakala, Andheri (East), Mumbai – 400 093 6

Stock Code BSE: Equity- 513228 0.01% cumulative redeemable preference shares- 700107

NSE EQUITY:PENIND

MCX EQUITY: PENIND

7 Electronic connectivity

1. The National Securities Depository Ltd Trade World, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel Mumbai – 400013

2. Central Depository Services (India) Ltd Phiroze Jeejeebhoy Towers, 28th Floor Dalal Street, Mumbai – 400023

8 Registered Office (address for correspondence)

Floor No. 3, DHFLVC Silicon Towers, Kondapur, Hyderabad – 500084 Telangana. India, Tel.No: +91 40 40061621 E-mail:pilhyd@bsnl.in, corporatecommunications@pennarindia.com

9 Registrar and Transfer Agents Communication regarding share transfers and other related correspondence

M/s. Karvy Computershare Private Limited Karvy Selenium Tower B, Plot No. 31 & 32 Gachibowli Financial District Nanakramguda, Seriligampalli Hyderabad - 500008, Phone: 040 67131524 E-mail: mailmanager@karvy.com/ksreddy@karvy.com

Note: Shareholders holding shares in electronic mode should address all correspondence to their respective depository participants.

10 Share transfer System Shares lodged for physical transfer at the Registrar’s address are normally processed within a period of 15 days from the date of lodging, if the documents are clear in all respects. The shares duly transferred would be dispatched to the concerned shareholders within a week from the date of approval of transfers by the Share Transfer Committee..

15. DEMATERIALISATION OF SHARES AND LIQUIDITY:

(a) Equity shares:

The Company's equity shares are in compulsory demat list. The International Securities Identification Number (ISIN) allotted to the Company's scrip is INE932A01024. 98.50% of equity shares are held in dematerialised form as on 31st March, 2015.

(b) Preference shares:

The Company's 0.01% cumulative redeemable preference shares issued as per the scheme of reconstruction and arrangement approved by Hon'ble High court of Andhra Pradesh are listed on the Bombay Stock Exchange. International Securities Identification Number (ISIN) allotted to these preference shares is INE932A04010. 84.97% of 0.01% cumulative redeemable preference shares are held in dematerialised form as on 31st March, 2015.

(c) Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion date and likely impact on equity.

During the financial year 2014-15, the Company has not issued any GDRs/ADRs and there are no outstanding warrants or any convertible instruments.

16. PLANT LOCATIONS:

a) Patancheru unit : IDA, Patancheru, Medak (Dist.), T.S.

b) Isnapur unit : Isnapur Village, Medak (Dist.), T.S.

c) Tarapur unit : MIDC, Tarapur, Maharashtra

d) Chennai unit : Kannigaipair Village, ThiruvelloreDist, T.N.

e) Hosur unit : SIDCO Industrial Estate, Hosur, T.N.

Comparison is done between the Share price- High and Nifty index close price.

18. UNCLAIMED DIVIDEND AMOUNTS:

Pursuant to the provisions of Section 123 of the Companies Act, 2013, the dividend for the following years, which remain unclaimed for seven years, will be transferred to Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 125 of the Companies Act, 2013.

Members who have not so far encashed their dividend warrant(s) are requested to seek revalidation of dividend warrants in writing to the Company's Registrar and Transfer Agents, M/s. Karvy Computershare Private Limited, immediately. Members are requested to note that  no claims shall lie against the Company in respect of any amounts which were unclaimed and unpaid for a period of seven years from the dates that they first became due for payment and no payment shall be made in respect of any such claims.

Members are also advised to update their correspondence address in their demat accounts in case of their holdings in electronic form or inform their latest correspondence address to the Registrars in case of holdings in physical form. Information in respect of such unclaimed dividends due for transfer to the Investor Education and Protection Fund (IEPF) is as follows.

20) RECONCILIATION OF SHARE CAPITAL AUDIT:

As stipulated by SEBI, a qualified Practicing Company Secretary carries out the Reconciliation of Share Capital Audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSIL) and the total issued and paid-up capital. This audit is carried out every quarter and the report thereon is submitted to the stock exchanges and is placed before the board of directors of the Company. The audit, inter alia, confirms that the listed and paid up capital of the company is in agreement with the aggregate of the total number of shares in dematerialized form held with NSDL and CDSIL and the total number of shares in physical form.

21) CORPORATE IDENTITY NUMBER (CIN):

Corporate Identity Number (CIN) of the company, allotted by the Ministry of Corporate Affairs, Government of India is L27109AP1975PLC001919.

22) MANAGING DIRECTOR CERTIFICATION:

As required by Clause 49 of the Listing Agreement, the Managing Director Certification is provided in the Annual Report.

23) GREEN INITIATIVE IN THE CORPORATE GOVERNANCE:

As part of the green initiative process, the company has taken an initiative of sending documents like notice calling Annual General meeting, Corporate Governance Report, Directors Report, audited Financial Statements, Auditors Report, Dividend intimations etc., by email. Physical copies are sent only to those shareholders whose email addresses are not registered with the company and for the bounced-mail cases. Shareholders are requested to register  their email id with Registrar and Share Transfer Agent / concerned depository to enable the company to send the documents in electronic form or inform the company in case they wish to receive the above documents in paper mode.

24) DECLARATION OF CODE OF CONDUCT:

The Board of Directors of M/s. Pennar Industries Limited, at their meeting held on 11th February, 2015, adopted the Code of Conduct for the Directors and also for the Company's senior management personnel, which was posted on the Company's website. In accordance with Clause 49 II E 3 of the Listing Agreement with the stock exchanges, we here by confirm that, all the Directors and the senior management personnel of the Company have affirmed compliance with the aforesaid Code of Conduct as applicable to them for the financial year ended 31st March, 2015.

for Pennar Industries Limited

Aditya Rao

Vice-Chairman & Managing Director

Place : Hyderabad

Date : 12.08.2015