REPORT ON CORPORATE GOVERNANCE
COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE
1. Corporate Governance is the application of best management practices, compliance of laws, rules, regulations and adherence to ethical principles in all its dealings, to achieve the object of the company, enhance stakeholder value and discharge its social responsibility. Your company is committed to good Corporate Governance, based on an effective independent Board, separation of supervisory role from the executive management and the constitution of committees to oversee critical areas thus upholding the standards practically at every sphere ranging from action plan to performance measurement and customer satisfaction.
Pitti Laminations Ltd's (PLL) philosophy on Corporate Governance is led by a strong emphasis on transparency, accountability and integrity and the company has been practicing the principles of Corporate Governance over the years. Your company firmly believes that Corporate Governance is an important instrument of investor protection, and essentially a system by which Companies are directed and controlled by the management in the best interest of all stakeholders.
The company's legacy of fair, transparent and ethical governance practices is strengthened by adoption of Code of Conduct for its Directors and senior management.
Your company has complied with the requirements of Corporate Governance stipulated in Clause 49 of the Listing Agreements executed with the Stock Exchanges.
The company's framework on Corporate Governance has helped it to align with the new guidelines of the Companies Act, 2013, as it believes that an active, well- informed and independent board is necessary to ensure the highest standards of corporate governance.
2. Board of Directors
The Board of Directors of the company has an optimum combination of executive and non-executive directors with not less than fifty percentage of Board of Directors comprising of non-executive directors.
The Chairman of the Board is an executive director with more than half of the Board comprising of Independent Directors.
All Directors possess relevant qualifications and experience in general corporate management, finance, banking and other allied fields which enable them to effectively contribute to the company in their capacity as Directors. Together they bring diverse experience, varied perspectives, complementary skills and vast expertise.
All Independent Directors of the company have been appointed as per the provisions of the Companies Act, 2013. Formal letters of appointment have been issued to the Independent Directors. The abridged terms and conditions of their appointment are disclosed on the Company's website.
None of the Directors on the Board is a member of more than 10 committees and chairman of more than 5 committees (committee being Audit Committee, Stakeholders Relationship Committee, as per Clause 49 II (D)(2) of the Listing Agreement), across all the companies in which he / she is a Director. The necessary disclosures regarding committee positions have been made by all the Directors. None of the Director holds office in more than specified nos. of Companies as stipulated in the Companies Act, 2013 and Listing Agreement.
c. Board Meetings
The Chairman of the Board and the Company Secretary draft the agenda for each meeting of the Board. The agenda is circulated well in advance to the Board members, along with comprehensive background information on the items of the agenda to enable the Board to arrive at an appropriate decision. Every Board member can suggest the inclusion of additional items in the agenda. The Board meets at least once a quarter to review the quarterly results and other items on the agenda.
Five Board Meetings were held during FY2015 and the gap between two meetings did not exceed 120 days. The dates on which the Board Meetings were held are 26th May, 2014; 11th August, 2014; 03rd November, 2014, 28th January, 2015 and 30th March, 2015
d. Availability of information to Board members
The Board has unrestricted access to all company related information. The regular updates provided to the Board includes:
Annual operating plans
Minutes of meetings of various committee meetings including audit committee and abstracts of circular Resolutions wherever passed
General notice of interest received from Directors
Information on recruitment and remuneration of senior officers below the Board level
Details of foreign exchange exposure and the steps taken by the Management to limit risks of adverse exchange rate movements
Non-compliance with any regulatory, statutory or listing requirements
Risk management measures and steps to mitigate the same
Details of borrowings made by the company
e. Independent Directors
Your company appointed Independent Directors who are renowned people having expertise / experience in their respective field / profession. The Board consists of Directors having rich and varied experience in corporate administration, Government interaction relevant to the needs and effectiveness of company's business and growth. None of the Independent Directors are Promoters or related to Promoters. They do not have pecuniary relationship with the company and further do not hold two percent or more of the total voting power of the company.
Every Independent Director, at the first meeting of the Board in which he / she participates as a Director and thereafter at the first meeting of the Board in every financial year, gives a declaration that he / she meets the criteria of independence as required under Section 149(7) of the Companies Act, 2013. Declaration of independence and all requisite declarations have been placed before the Board.
All Independent Directors maintain their limits of directorships as required under Clause 49 of the Listing Agreement.
f. Performance evaluation of Directors and Board
The Nomination and Remuneration Committee of the Board laid down the criteria for performance evaluation of all Directors.
The criteria for Board Evaluation include inter alia, degree of fulfilment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning.
Criteria for evaluation of individual Directors include aspects such as attendance and contribution at Board / Committee meetings and guidance / support to the management outside Board / Committee meetings / Risk Management / Strategy.
g. Meeting of Independent Directors
Pursuant to Schedule IV of the Companies Act, 2013 and the Rules made thereunder and Listing Agreement, the Independent Directors of the Company shall hold at least one meeting in a year, without the attendance of non-independent directors and members of the management. All the independent directors of the Company shall strive to be present at such meeting. The meeting shall review the performance of non-independent directors and the Board as a whole, review the performance of the chairman of the Board, taking into account the views of the executive directors and non-executive directors, assess the quality, quantity and timelines of flow of information between the Management and the Board that is necessary for it to effectively and reasonably perform its duties.
During the year, meeting of Independent Directors was held to review the performance of the Board, performance of the Company and risks faced by it, flow of information to the Board, competition, strategy, leadership strengths and weaknesses, governance, compliance, Board movements, HR matters and performance of executive members of the Board including the Chairman.
Shri M Gopalakrishna, IAS (Retd) was appointed as the lead Director to conduct the proceedings of the said meeting. He has also presented the views of the Independent Directors on matters relating to the Board processes and the overall affairs of the Company to the full Board.
h. Familiarisation Programme
Your Company follows a structured orientation and familiarisation programme through various reports / codes / internal policies for all the Directors with a view to update them on the Company's policies and procedures on a regular basis.
Periodic presentations are made at the Board meetings and audit committee meetings on business and performance, long term strategy, initiatives and risks involved.
i. Code of conduct
Your Company has adopted a Code of Conduct for members of the Board (incorporating duties of Independent Directors) and the Senior Management. The code aims at ensuring consistent standards of conduct and ethical business practices across the Company. Your company has received confirmations from all concerned regarding their adherence to the said code.
Pursuant to Clause 49(II)(E) of the Listing Agreement, the Chairman & Managing Director of the Company confirmed compliance with the Code by all the members of the Board and the Senior Management.
3. Code of conduct for prohibition of insider trading
Your company has adopted a Code of conduct as per Securities and Exchange Board of India (SEBI) (Prohibition of Insider Trading) Regulations, 2015. All Directors, Designated Employees who could have access to the unpublished Price Sensitive Information of the Company are governed by the Code. During the year under review, there has been due compliance with SEBI (Prohibition of Insider Trading) Regulations, 1992, as the new code of SEBI (Prohibition of Insider Trading) Regulations is effective from May, 2015.
4. Whistle Blower Policy
Your Company has established a Vigil Mechanism / Whistle Blower Policy to enable stakeholders (including Directors and employees) to report unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct. The Policy provides adequate safeguards against victimisation of Director(s) / employee (s) and direct access to the Chairman of the Audit Committee in exceptional cases. The protected disclosures, if any reported under this policy will be appropriately and expeditiously investigated by the Chairman.
Your Company hereby affirms that no Director / employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year under review.
The Whistle Blower Policy has been disclosed on the Company's website www.pitti.in <http://www.pitti.in>
5. Materially significant related party transactions
There have been no materially significant related party transactions, monetary transactions or relationships between the Company and Directors, the Management, or relatives. All the related party transactions are strictly done on arm's length basis. The Company presents a statement of all related party transactions before the Audit Committee on a quarterly basis, specifying the nature and value of the transaction.
Disclosure on materially significant related party transactions is made in Note 2.37 under Notes forming part of the accounts in accordance with provisions of Accounting Standard 18. Register under section 189(1) of the Companies Act, 2013 is maintained and particulars of transactions are entered in the Register, wherever applicable. Such transactions are provided to the Board, and the interested Directors neither participate in the discussion, nor do they vote on such matters, wherever approval of the Board is sought.
6. Audit Committee
Audit committee is responsible for overseeing the Company's financial reporting process by providing direction to audit, function and monitoring the scope and quality of internal and statutory audits. It acts as a link between the management, external, internal auditors and the Board of Directors of the Company.
The Audit committee functions according to its charter that defines its composition, authority, responsibilities and reporting functions.
a. The terms of reference of the Audit Committee, inter alia, are as follows:-
1. Oversight 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;
2. Recommendation for appointment, remuneration and terms of appointment of auditors of the Company;
3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
4. Reviewing, with the management, the annual financial statements and auditor's report;
5. Matters required to be included in the Director's Responsibility Statement to be included in the Board's report;
6. Changes, if any, in accounting policies and practices and reasons for the same;
7. Major accounting entries involving estimates based on the exercise of judgement by management;
8. Significant adjustments made in the financial statements arising out of audit findings Compliance with listing and other legal requirements relating to financial statements;
9. Approval of Related party transactions as per policy of the Company;
10. Review and monitor the auditor's independence and performance, and effectiveness of audit process;
11. Approval or any subsequent modification of transactions of the Company with related parties;
12. Scrutiny of inter-corporate loans and investments;
13. Evaluation of internal financial controls and risk management systems;
14. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
15. Reviewing the adequacy of internal audit function, if any, including frequency of internal audit;
16. Discussion with internal auditors of any significant findings and follow up there on;
17. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern;
18. To review the functioning of the Whistle Blower mechanism;
19. Management discussion and analysis of financial condition and result of operation.
Composition and Attendance during the year
The Audit Committee of the Company is constituted in accordance with the provisions of Clause 49 of the Listing Agreement and the provisions of Section 177 of the Companies Act, 2013.
The Audit Committee met four times during the year under review.
During the year, the Audit Committee reviewed key audit findings covering operational, financial and compliance areas. Risk mitigation plans covering the key risks affecting the Company were presented to the Committee. The Chairman of the Committee briefs the Board members about the significant discussions at Audit Committee Meetings.
The meetings of the Audit Committee are usually attended by the Chief Financial Officer, Internal Auditor, Company Secretary and Statutory Auditors. The Company Secretary acts as the secretary to the Committee.
7. Nomination and Remuneration Committee a. Terms of Reference
The terms of reference of the "Nomination & Remuneration Committee" shall inter-alia include the following:- management in accordance with the criteria laid down and to recommend to the Board their appointment and removal.
2. To formulate criteria for evaluation of Independent Directors and the Board
3. To formulate criteria for determining qualifications, positive attributes and independence of a Director and recommend to the Board a policy, relating to the remuneration for Directors, key managerial personnel and other employees.
4. Devising a policy on Board diversity.
b. Composition and Attendance during the year The "Nomination & Remuneration Committee" of the Company is constituted in accordance with the provisions of Section 178 of the Companies Act, 2013.
8. Share Transfer and Stakeholders Relationship Committee
The terms of reference of the Share Transfer & Stakeholders Relationship Committee, inter alia, are as follows:-
a. Terms of Reference
1. Oversee and review all matters connected with the transfer of the Company's securities
2. Approve issue of the Company's duplicate share / debenture certificates
3. Monitor redressal of investors' / shareholders' / security
4. Oversee the performance of the Company's Registrars and Transfer Agents
5. Recommend methods to upgrade the standard of services to investors
6. Monitor implementation of the Company's Code of Conduct for Prohibition of Insider Trading
7. Carry out any other function as is referred by the Board from time to time or enforced by any statutory notification / amendment or modification as may be applicable.
The "Share Transfer and Stakeholders Relationship Committee", facilitates prompt and effective redressal of shareholders' complaints and reporting of the same to the Board periodically.
b. Composition and Attendance during the year
The "Share Transfer and Stakeholder Relationship Committee" of the Company is constituted in accordance with the provisions of Clause 49 of the Listing Agreement and provision of Section 178 (5) of the Companies Act, 2013.
All the queries and complaints received during the financial year ended 31st March, 2015, were duly redressed and no complaints were pending at the year end.
All requests for dematerialization of shares were carried out within the stipulated time period and no share certificate was pending for dematerialization.
The no. of pending share transfers and pending request for dematerialization as on 31st March, 2015 were NIL. No investor grievances remained unattended pending for more than thirty days as on 31st March, 2015. There are no pending complaints during the period under review.
Investor grievances are being redressed on an on-going basis and reporting is done while releasing the quarterly financial results to the stock exchanges.
9. Corporate Social Responsibility Committee a. Terms of reference
To formulate and recommend to the Board, a Corporate Social Responsibility (CSR) Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013.
To recommend the amount of expenditure to be incurred on the activities for the above said purpose.
To Monitor the Corporate Social Responsibility Policy of the Company from time to time.
The Board has adopted The CSR Policy as formulated and recommended by the Committee. The same is displayed on the website of the Company. The Annual Report on CSR activities for FY2015 forms a part of the Directors' Report.
10. Subsidiary Companies
The Company does not have any material non-listed Indian subsidiary as defined under Clause 49 of the Listing Agreement. The Company has formulated a policy for determining material subsidiaries and the policy is disclosed on the Company's website.
1. There were no materially significant related party transactions of the Company which have potential conflict with the interests of the Company at large. The Company has formulated a Related Party Transactions Policy and the same is displayed on the Company's website.
2. During the year, there were no materially significant related party transactions i.e. transaction of the Company of material nature with its promoters, the Directors or the management or relatives, etc that may have potential conflict with the interests of the Company at large. Declarations have been received from the senior management personnel to this effect.
3. The Company has complied with the requirements of the Stock Exchanges / SEBI and statutory authorities on all matters related to the capital markets during the last three years. No penalty or strictures were imposed on the Company by these authorities.
4. The Chairman & Managing Director and the Chief Financial Officer have certified to the Board in accordance with Clause 49 IX of the Listing Agreement, pertaining to CEO / CFO certification for the financial year ended 31st March, 2015.
5. The Company periodically places before the Audit Committee and the Board, the key risks and the risk assessment and mitigation procedures followed by it.
6. The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct or ethical policy. The policy provides for adequate safeguards against victimisation of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.
14. Means of Communication
Quarterly results: Results have been published in Business Line (English) newspaper and in Andhra Prabha (Telugu) newspaper. The quarterly results and presentation are also displayed on the Company's website www.pitti.in
Website: The Company's website contains a dedicated section " News & Investors" which displays details / information to various stakeholders.
Presentations to institutional investors / analysts: Detailed presentations are made to institutional investors and analysts on a quarterly basis.
Green Initiative in Corporate Governance: To support the green initiative of the Government, the Company requests its members to register / update the e-mail Ids for communication purpose thereby contributing to the environment and it forms part of the notice.
15. General Shareholder Information
The Company is registered with the Registrar of Companies, Hyderabad, Telangana. The Corporate Identity Number (CIN) allotted to the Company by the Ministry of Corporate Affairs (MCA) is L29253TG1983PLC004141.
a. Annual General Meeting date, time and venue
Monday, the 28th September, 2015 at 4.00 p.m at The West Minister Hall, The Central Court Hotel, 6-1-71, Lakdikapool, Hyderabad - 500 082, Telangana.
Financial Year : April to March
c.. Financial Calendar Tentative
First quarter & Limited review : Second week of August 2015
Second quarter & Limited review : Second week of November 2015
Third quarter & Limited review : Second week of February 2016
Audited Annual results (2014-15) : Mid May 2016
Date of book closure : 22nd September, 2015 to 28th September, 2015
e. Dividend Payment Date : 5th October, 2015
Listing on Stock Exchange
National Stock Exchange of India Ltd
The Company has paid the listing fees to these Stock Exchanges for the financial year 2014-15
Stock Code on BSE Ltd : 513519
Stock Code on the National Stock Exchange of India Ltd : PITTILAM Demat International Security Identification Number (ISIN) : INE450D01021
k. Share Registrars and Transfer Agents (RTA)
M/s. XL Softech Systems Limited Plot No.3, Sagar Society Road No.2, Banjara Hills Hyderabad - 500034 Telangana
l. Share Transfer System
All shares transfers and related operations are processed by RTA and approved by authorised officials of the Company.
The Company, as required under Clause 47(f) of the Listing Agreement, has designated the following e-mail IDs, namely firstname.lastname@example.org for the purpose of registering complaints, if any, by the investors and expeditious redressal of their grievances.
Shareholders are therefore requested to correspond with the Share Transfer Agents for transfer / transmission of shares, change of address and queries pertaining to their shareholding and dividend.
m. Unclaimed Securities Suspense Account
As per SEBI directive, outstanding share will be transferred to Unclaimed Securities Suspense Account and the voting rights on these shares will be frozen till the rightful owner claims such shares.
Shares arising out of the certificates that have been returned undelivered to the Company are lying in the unclaimed securities suspense account. In view of the same, shareholders shall approach the Company / Registrar and Share Transfer Agents (RTA) with proper supporting documents for claiming such shares.
n. Secretarial Audit
M/s. K Swamy & Co, Practising Company Secretaries have conducted a Secretarial Audit of the Company for FY2015. Their Audit Report confirms that the Company has complied with the applicable provisions of the Companies Act and Rules made there under, Listing Agreements with the Stock Exchanges, applicable SEBI Regulation and other laws applicable to the Company. The Secretarial Audit Report forms part of the Directors' Report.
o. Dematerialisation of shares and liquidity
The shares of the Company are compulsorily traded in dematerialized form and are available for trading on both the depositories of India - National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). As on 31st March 2015, 97.1% shares of the Company were held in dematerialized form.
Your Company confirms that the entire Promoter's holding are in electronic forms and the same is line with the direction issued by SEBI.
Shareholders holding shares in physical form are requested to convert their physical holdings to demat / electronic form through any of the registered Depository Participants (DPs) to avoid the hassles involved in dealing in physical shares such as possibility of loss, mutilation, etc. and also to ensure safe and speedy transaction in respect of the shares held.
p. Timely encashment of dividends:
Shareholders are requested to encash their dividends promptly to avoid hassles of revalidation / losing their right of claim owing to transfer of unclaimed dividends beyond seven years to Investor Education and Protection
As required by SEBI, shareholders are requested to furnish details of their bank account number, name and address of the bank to avoid wrong credits being obtained by unauthorized persons.
Shareholders, who have not encashed their dividend warrants, in respect of dividends declared for the year ended 31st March, 2008 and for any financial year thereafter may contact the Company and surrender their warrants for payment.
Shareholders are requested to note that the dividends, not claimed for a period of seven years from the date they first became due for payment, shall be transferred to IEPF in terms of Section 124 (5) of the Companies Act, 2013.
Plant location Telangana (Plant I & II)
Nandigaon Village, Kottur Mandal Mahaboobnagar District Telangana - 590233
Pune (Plant III)
Plot No. PAP - K - 11, Chakan Industrial Area, Phase - II, Village Khalumbre, Tal Khed, District Pune, Maharashtra
Address for investor correspondence
Pitti Laminations Ltd Secretarial Department 6-3-648/401, IV Floor Padmaja Landmark Somajiguda Hyderabad - 500082 Telangana Email: email@example.com Website: www.pitti.in
XL Softech Systems Limited Plot No.3, Sagar Society Road No.2, Banjara Hills Hyderabad - 500034 Telangana Email: firstname.lastname@example.org
Name of the Compliance Officer
Shri Satyabrata Padhi, Company Secretary