CORPORATE GOVERNANCE REPORT
The Directors' Report on the compliance of the Corporate Governance Code is given below.
1) CORPORATE GOVERNANCE
1.1 Company's Philosophy on Corporate Governance
Corporate Governance is about commitment to values and ethical business conduct. We look upon good corporate governance practices as a key driver of sustainable corporate growth and long-term shareholders value creation. Good Corporate Governance is about enhancing value for all our stakeholders. The Company is committed to adopt best practices in corporate governance and disclosures. This includes its corporate and other structures, its culture, policies and the manner in which it deals with various stakeholders. Accordingly, a timely and accurate disclosure of information regarding the financial situation, performance, ownership and governance of the Company is an important part of corporate governance.
The Company places great emphasis on values such as empowerment and integrity of its employees, safety of the employees & communities surrounding our place of work, transparency in decision making process, fair & ethical dealings with all, pollution free clean environment and last but not the least, accountability to all the stakeholders. These practices being followed since the inception have contributed to the Company's sustained growth.
The Company believes that sound corporate governance is critical to enhance and retain investors' trust. The Company's corporate governance philosophy is based on the following principles:
1. Primary responsibility of a good corporate entity is maximizing shareholders value.
2. Be transparent and maintain a high degree of disclosures level
3. Sound system of risk management and internal control.
4. Principles of integrity, transparency, disclosures, accountability and fairness.
5. Upholding the highest standards of professionalism
6. Management is the trustee of the shareholders' capital and not the owner.
The Company has adopted the compliance of Corporate Governance on voluntary basis. Wherever the company does not comply due to its size of operation, the same shall be optional and pursuant to Regulation 15 of SEBI (LODR) Regulations, 2015. A Report on compliance with the principles of Corporate Governance as prescribed by the Securities and Exchange Board of India (SEBI) in Chapter IV read with Schedule V of SEBI (LODR) Regulations, 2015 (hereinafter referred to as "SEBI Regulations") is given below:
1.2 The Governance Structure
Punit Commercials Governance structure broadly comprises the Board of Directors and the Committees of the Board at the apex level and the Management structure at the operational level. This layered structure brings about a harmonious blend in governance as the Board sets the overall corporate objectives and gives direction and freedom to the Management to achieve these corporate objectives within a given framework, thereby bringing about an enabling environment for value creation through sustainable profitable growth.
a. Board of Directors - The Punit Commercials Board plays a pivotal role in ensuring that the Company runs on sound and ethical business practices and that its resources are utilized for creating sustainable growth and societal wealth. The Board operates within the framework of a well defined responsibility matrix which enables it to discharge its fiduciary duties of safeguarding the interest of the Company; ensuring fairness in the decision making process, integrity and transparency in the Company's dealing with its Members and other stakeholders.
b. Committee of Directors - With a view to have a more focused attention on various facets of business and for better accountability, the Board has constituted the Stakeholders' Relationship Committee which has been mandated to operate within a given framework.
c. Management Structure- Management structure for running the business as whole is in place with appropriate delegation of powers and responsibilities to the functional heads. The Managing Director and CFO arc in overall control and responsible for day-to-day working of the Company. They give strategic direction, lay down policy guidelines and ensure implementation of the Board of Directors and its various committees.
2) BOARD OF DIRECTORS
2,1 Composition and Category of Directors
The Company has received declaration from independent directors that they meet the criteria of independence as provided in section 149(6) of the Companies Act, 2013.
The paid up share capital of the Company is Rs. 24 Lacs as on 31" March, 2016. The reserve and surplus is Rs. 105.58 Lacs. Accordingly the paid up capital and net worth is below the prescribed limit for mandatory applicability of Corporate Governance regulation. The present composition of the Board of directors is two third Promoter Directors and one-third is Independent Directors. The said composition is in compliance with Section 149 of the Companies Act, 2013 but under SEBI Regulations, the company is short of one Independent director. The Company has decided not to opt for appointment of one more Independent director due to its size of business, in pursuance of Non-Mandatory Requirements of SEBI Regulations.
The Company is also compliant with composition of Board of Directors with minimum two independent directors as prescribed under section 149(4) of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014.
2.2 Board Training and Induction
At the time of appointing a Director, a formal letter of appointment is given to him, which inter alia explains the role, function, duties and responsibilities expected of him as a Director of the Company. The Director is also explained in detail the compliances required from him under the Companies Act, SEBI Regulations and other relevant regulations and his affirmation taken with respect to the same. The CFO & MD also has a one to- one discussion with the newly appointed Director. The above initiatives help the Director to understand the Company, its business and the regulatory framework in which the Company operates and equips him to effectively fulfill his role as a Director of the Company.
2.3 Board Meetings held during the Year
The Board periodically reviews the items required to be placed before it and in particular reviews and approves quarterly/half yearly unaudited financial statements and the audited annual financial statements, corporate strategies, business plans, annual budgets, projects and capital expenditure. It monitors overall operating performance, and reviews such other items which require Board's attention. It directs and guides the activities of the Management towards the set goals and seeks accountability. It also sets standards of corporate behavior, ensures transparency in corporate dealings and compliance with laws and regulations. The Agenda for the Board Meeting covers items set out as guidelines in SEBI Regulations to the extent these are relevant and applicable. All agenda items are supported by relevant information, documents and presentations to enable the Board to take informed decisions.
3) COMMITTEES OF THE BOARD
With a view to have a more focused attention on business and for better governance and accountability, the Board has constituted the following mandatory committees viz. Audit Committee, Stakeholders' Relationship Committee, Nomination and Remuneration Committee. The terms of reference of these Committees are determined by the Board and their relevance reviewed from time to time. Meetings of each of these Committees are convened by the respective Chairman of the Committee, who also informs the Board about the summary of discussions held in the Committee Meetings. The Minutes of the Committee Meetings are sent to all Directors individually and tabled at the Board Meetings.
3.1 Audit Committee
The Audit Committee acts as a link between the statutory and internal auditors and the Board of Directors. Its purpose is to assist the Board in fulfilling its oversight responsibilities of monitoring financial reporting processes, reviewing the Company's established systems and processes for internal financial controls, governance and reviewing the Company's statutory and internal audit activities. The Committee is governed by Terms of Reference which is in line with the regulatory requirements mandated by the Companies Act, 2013 and SEBI Regulations. Some of the important functions performed by the Committee are:
3.1.1 Financial Reporting and Related Processes
• Oversight of the Company's financial reporting process and financial information submitted to the Stock Exchanges, regulatory authorities or the public.
• Reviewing with the Management the quarterly unaudited financial statements and the Auditors' Limited Review Report thereon/audited annual financial statements and Auditors' Report thereon before submission to the Board for approval. This would, inter alia, include reviewing changes in the accounting policies and reasons for the same, major accounting estimates based on exercise of judgement by the Management, significant adjustments made in the financial statements and / or recommendation, if any, made by the Statutory Auditors in this regard.
• Discuss with the Statutory Auditor its judgement about the quality and appropriateness of the Company's accounting principles with reference to the Generally Accepted Accounting Principles in India (GAAP).
• Review the investments made by the Company.
3.1.2 Internal Controls and Governance Processes
• Review the adequacy and effectiveness of the Company's system and internal controls.
• Review and discuss with the Management the Company's major financial risk exposures and steps taken by the Management to monitor and control such exposure.
• To oversee and review the functioning of a vigil mechanism (implemented in the Company as a Whistle Blower Policy) and to review the findings of investigation into cases of material nature and the actions taken in respect thereof.
• Review the scope of the Statutory Auditors, the annual audit plan and the Internal Audit Plan with a view to ensure adequate coverage.
• Review the significant audit findings from the statutory and internal audits carried out, the recommendations and Management's response thereto.
• Review and recommend to the Board the appointment/re-appointment of the Statutory Auditors and Cost Auditors considering their independence and effectiveness and their replacement and removal.
• Approve such additional services to be rendered by the Statutory Auditors except those enumerated in Section 144 of the Companies Act, 2013 and payment for such services.
• To recommend to the Board the remuneration of the Statutory Auditors/Cost Auditors.
• To discuss with the Statutory Auditors/Chief Internal Auditors any significant difficulties encountered during the course of the Audit.
• Review annual Cost Audit Report submitted by the Cost Auditor.
3.14 Other Duties
• To approve the appointment, removal and terms of remuneration of the Chief Internal Auditor and to approve the appointment of the Chief Financial Officer.
• To grant omnibus approval for related party transactions which are in the ordinary course of business and on an arm's length pricing basis and to review and approve such transactions subject to the approval of the Board.
The present constitution of the audit committee is compliant with section 177(2) of the Companies Act, 2013.
The Company has adopted at its Board meeting held on May 30, 2014 the terms of reference of Audit Committee as prescribed under section 177(4) of the Companies Act, 2013 w.e.f. 1" April, 2014. All the Members on the Audit Committee have the requisite qualification for appointment on the Committee and possess sound knowledge of finance, accounting practices and internal controls.
During the year under review, the Audit Committee held a separate meeting with the Statutory Auditors and the Internal Auditor to get their inputs on significant matters relating to their areas of audit.
3.2 Stakeholders’ Relationship Committee
In compliance with the provisions of Section 178 of the Companies Act, 2013 and the SEBI Regulations, The Stakeholders' Relationship Committee comprises three Members of which one Member is an Independent Directors.
3.2.1 Terms of Reference of the Committee
• transfer/transmission of shares/debentures and such other securities as may be issued by the Company from time to time;
• issue of duplicate share certificates for shares/debentures and other securities reported lost, defaced or destroyed, as per the laid down procedure;
• issue new certificates against subdivision of shares, renewal, split or consolidation of share certificates / certificates relating to other securities;
• issue and allot right shares / bonus shares pursuant to a Rights Issue / Bonus Issue made by the
Company, subject to such approvals as may be required;
• to grant Employee Stock Options pursuant to approved Employees' Stock Option Scheme(s), if any, and to allot shares pursuant to options exercised;
• to issue and allot debentures, bonds and other securities, subject to such approvals as may be required;
• to approve and monitor dematerialization of shares / debentures / other securities and all matters incidental or related thereto;
• to authorize the Company Secretary and Head Compliance / other Officers of the Share Department to attend to matters relating to non receipt of annual reports, notices, non receipt of declared dividend / interest, change of address for correspondence etc. and to monitor action taken;
• monitoring expeditious redressal of investors/ stakeholders grievances;
• all other matters incidental or related to shares, debentures and other securities of the Company.
The composition of the Stakeholders' Relationship Committee as at 31st March, 2016
3.2.2 Compliance Officer
As required by the 1isting Agreement, the Company has appointed Mrs. Fatima D*Souza as the Compliance Officer. Email address of Compliance Officer is fatimad@punitcommercials .com
33 Nomination and Remuneration Committee (NRC)
In compliance with Section 178 of the Companies Act, 2013 and SEBI Regulations, The Nomination and Remuneration Committee (NRC) comprise two Members of which one Member is an Independent Directors.
3.3.1 Terms of Reference
• The Committee shall identify the persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the board their appointment and removal and shall carry out evaluation of every directors performance.
• Lay down the criteria for determining the qualifications, positive attributes and independence of a Director and further recommend to the Board the policy for remuneration of Director Key Managerial Personnel and Employees.
3 3 . 2 Remuneration P o l i c y
While formulating the policy the Committee has to ensure that:
• The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the Company successfully.
• Relationship of remuneration to performance is clear and meets appropriate performance benchmarks.
• Remuneration to directors, Key Managerial Personnel and senior management involves 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 composition of the Nomination and Remuneration Committee as at 31R March, 2016 and the details of Members participation at the Meetings of the Committee are as under.
3.4 Corporate Social Responsibility (CSR) Committee
The criteria prescribed for the applicability of Corporate Social Responsibility under Section 135 of the Companies Act, 2013 is not applicable to the Company.
3.5 Risk Management Committee (Non-Mandatory)
The paid up share capital of the Company is Rs. 24 Lacs as on 31st March, 2016. The reserve and surplus is Rs. 105.58 Lacs. Accordingly, the paid up capital and net worth is below the prescribed limit for mandatory applicability of Corporate Governance clause. The Company has decided not to opt for compliance of Risk Management policy of Regulation 21 read with regulation 15 of SEBI Regulations for the time being due to the size of the business and the Company has not formed Risk Management Committee as it is not applicable under regulation 21 of the SEBI (LODR) Regulations, 2015.
3.6 Independent Directors* Meeting
The Company has not hold Independent Directors meeting and considered it as optional item under Regulation 15 of SEBI Regulations.
3.7 Policy for Selection and Appointment of Directors and their Remuneration
The Board of Directors has constituted Nomination and Remuneration Committee (NRC). But the size of the company and operation does not require the policy for selection and appointment of Directors and their remuneration. Accordingly the policy will be formulated as when required.
3.8 Performance Evaluation
The size of the company and operation does not permit the performance evaluation of Non-independent Directors. The same will be carried out as and when required.
4) SUBSIDIARY COMPANIES
The Company does not have any Subsidiary Company.
5 ) DISCLOSURES
5.1 Related Party Transactions
Transactions with related parties, as per requirements of Accounting Standard 18, are disclosed in notes to accounts annexed to the financial statements.
There are no materially significant transactions with the related parties viz. Promoters, Directors or the Management, or their relatives or Subsidiaries that had potential conflict with the Company's interest. Suitable disclosure as required by the Accounting Standard (AS 18) has been made in the Annual Report.
The Board has approved a policy for related party transactions.
5.2 Strictures and Penalties
No strictures or penalties have been imposed on the Company by the Stock Exchanges or by the Securities and Exchange Board of India (SEBI) or by any statutory authority on any matters related to capital markets during the last three years.
5.3 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 provision of the Companies Act, 2013. The significant accounting policies which are consistendy applied have been set out in the Notes to the Financial Statements.
5.4 Internal Controls
The Company has a formal system of internal control testing which examines both the design effectiveness and operational effectiveness to ensure reliability of financial and operational information and all statutory / regulatory compliances.
5.5 MD & CFO Certification
The MD & CFO have issued certificate pursuant to the provisions of SEBI Regulations certifying that the fjnanrial statements do not contain any untrue statement and these statements represent a true and fair view of the Company's affairs. The said certificate is annexed and forms part of the Annual Report
5.6 Code of Conduct for the Board Members and Senior Management
The Board has formulated a code of conduct for the Board Members and Senior Management Personnel of the Company. All Board Members and Senior Management Personnel have affirmed their compliance with the code for the financial year ended 31st March, 2016. A declaration to this effect signed by the Chairman of the Company is given elsewhere in the Annual Report.
5.7 Vigil Mechanism / Whisde Blower Policy
During the financial year 2015 - 2016, in accordance with the regulation 22 of SEBI Regulations and pursuant to section 177 (9) read with Rule 7 of Companies (Meetings of Board and its Powers) Rules, 2014 of the Companies Act, 2013, the company has adopted a whisde blower policy. The Company promotes ethical behavior in all its business activities and has put in place a mechanism of reporting illegal or unethical behavior.
As per the whistle blower policy, the employees are free to report violations of laws, rules, regulations or unethical conduct to their immediate superior. The confidentiality of those reporting / violations is maintained and they are not subjected to any discriminatory practice.
5.8 Prevention of Insider Trading
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires preclearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Company Secretary & Head Compliance is responsible for implementation of the Code.
All Board Directors and the designated employees have confirmed compliance with the Code.
5.9 Communication with the Members/ Shareholders
• The unaudited quarterly / half yearly results are announced within forty-five days of the close of the quarter. The audited annual results are announced within two months from the close of the financial year as per the requirements of the Listing Agreement with the Stock Exchanges. The aforesaid financial results are sent to BSE Limited (BSE) where the Company's securities are listed, immediately after these are approved by the Board. The results are published within forty-eight bours in leading English and Marathi daily newspapers. The audited financial statements form a part of the Annual Report which is sent to the Members well in advance of the Annual General Meeting.
• The Company also informs by way of intimation to BSE all price sensitive matters or such other matters, which in its opinion are material and of relevance to the members and subsequendy issues a Press Release in regard to the same.
• The Annual Report of the Company, the quarterly / half yearly and the annual results and the press releases of the Company are also available at the registered office of the Company.
• In compliance with SEBI Regulations, the quarterly results, shareholding pattern, quarterly compliances and all other corporate communication to the Stock Exchange viz. BSE Limited are filed electronically on BSE's on-line portal and through Corporate Filing and Dissemination System (CFDS) website www.corpfiling.co.in. The Company has complied with filing submissions through BSE's BSE Online Portal.
6 ) GENERAL INFORMATION TO SHAREHOLDERS
Financial Year Ended: 31" March, 2016
6.1 Investor Services
The Company has appointed Sharex Dynamic (India) Private Limited, Registrar and Share transfer Agent which offers all share related services to its Members and Investors.
These services include transfer / transmission / dematerialization of shares, payment of dividends, subdivision / consolidation / renewal of share certificates and investor grievances.
6.2 Registered Office
Punit Commercials Limited
AW 2022, "A" Tower, Bharat Diamond Bourse, Bandra Kurla Complex, Bandra (E), Mumbai- 400 051
Phone No: 022 4210 6999 Fax: 022 4002 1401
Contact Person: Mrs. Fatima C D'Souza, Compliance Officer
Email Address: fatimad@punitcornmercials. Com
Members who hold shares in dematerialized form should correspond with the Depository Participant with whom they maintain Demat Account/s, for their queries relating to shareholding, change of address, credit of dividend through NECS. However, queries relating to non-receipt of dividend, non-receipt of annual reports, or on matters relating to the working of the Company should be sent to the Company.
Members who hold shares in physical form should address their queries to the Company.
Members are requested to ensure that correspondence for change of address, change in bank details, processing of unclaimed dividend, subdivision of shares, renewals / split / consolidation of share certificates, issue of duplicate share certificates should be signed by the first named Member as per the specimen signature registered with the Company. The Company may also, with a view to safeguard the interest of its Members and that of the Company, request for additional supporting documents such as certified copies of PAN Cards and other proof of identity and/or address.
Members are requested to indicate their DP ID & Client ID/ Ledger Folio number in their correspondence with the Company and also to provide their Email addresses and telephone numbers/Fax numbers to facilitate prompt response from the Company.
6.3 Plant Location
Factory of the Company to manufacture and polishing of Diamonds is located at the registered office of the Company.
6.4 Market Information
Listing on Stock Exchanges
The Company's shares are listed on the following Stock Exchanges and the Listing Fees have been paid to the Exchanges:
Name & Address of the Stock Exchanges Stock Code/ Scrip Code
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400001
ISIN Number for CDSL (Dematerialised shares)
7) SHARE TRANSFER SYSTEM AND OTHER RELATED MATTERS
7.1 Share transfers
Share transfers in physical form are processed and the share certificates are generally returned to the transferees within a period of fifteen days from the date of receipt of transfer provided the transfer documents lodged with the Company are complete in all respects.
7.2 Nomination facility for shareholding
As per the provisions of the Companies Act, 2013, facility for making nomination is available for Members in respect of shares held by them Members holding shares in physical form may obtain nomination form, from the Share Department of the Company. Members holding shares in dematerialized form should contact their Depository Participants (DP) in this regard.
7.3 Permanent Account Number (PAN)
Members who hold shares in physical form are advised that SEBI has made it mandatory that a copy of the PAN card of the trans feree/s, members, surviving joint holders / legal heirs be furnished to the Company while obtaining the services of transfer, transposition, transmission and issue of duplicate share certificates.
7.4 Transfer of 'Underlying Shares' into Investor Education and Protection Fund (IEPF) (in cases where unclaimed dividends have been transferred to IEPF for a consecutive period of seven years)
Members attention is invited to Regulation 39(4) and Schedule VI of the SEBI Regulations. As per the said Regulations, in cases where unclaimed dividends have been transferred to Investor Education and Protection Fund (IEPF) for a consecutive period of seven years, the underlying shares are also required to be transferred to IEPF, The said Regulation has come into effect from December 1, 2015.
7.5 Dealing with securities which have remained unclaimed
Members are hereby informed that as per Regulation 39(4) read with Schedule VI of the SEBI Regulations, the Company is in the process of dematerialmng unclaimed shares which are retained with the Company. These shares would be held by the Company on behalf of the holders of such shares in an "Unclaimed Suspense Account" to be opened with a depository. At the end of seven years, hereof, these shares shall be transferred by the Company to the IEPF. Dividends remaining unclaimed in respect of such shares shall also be held in a separate suspense account and would likewise be transferred to IEPF at the end of seven years.
The Company has sent out reminders to those Members whose share Certificate have remained unclaimed, to contact the Company immediately in the matter.
Members may note that the lawful claimant in respect of these shares will be able to claim such shares from the Company till such time they remain in the Unclaimed Suspense Account as aforesaid.
7.6 Pending Investors' Grievances
Any Member / Investor, whose grievance has not been resolved satisfactorily, may kindly write to the Company Secretary and Head Compliance at the Registered Office with a copy of the earlier correspondence.
7.7 Reconciliation of Share Capital Audit
As required by the Securities & Exchange Board of India (SEBI) quarterly audit of the Company's share capital is being carried out by an independent external auditor with a view to reconcile the total share capital admitted with Central Depository Services (India) Limited (CDSL) and held in physical form, with the issued and listed capital. The Auditors' Certificate in regard to the same is submitted to BSE Limited and is also placed before Stakeholders' Relationship Committee and the Board of Directors.
Outstanding GDRs / ADRs / Warrants or any Convertible instruments, conversion date and likely impact on equity:
There are no outstanding GDRs/ ADRs/ Warrants or any Convertible instruments. Hence there will not be any impact on the equity of the company.
D E C L A R A T I O N S
FINANCIAL CALENDAR 2016
Board Meeting for consideration of Accounts for the financial year ended 31st March, 2016 and recommendation of dividend
30th May, 2016
Posting of Annual Reports
Monday, 20th June, 2016
Book Closure Dates
Saturday, 09th July, 2016 to Saturday, 16th July, 2016
Last date for receipt of Proxy Forms
Thursday, 14th July, 2016 upto 10.00 a.m.
Date, Time & Venue of the 31st Annual General Meeting
Saturday, 16th July, 2016 at 10.00 a.m. at AW 2022,
"A" Tower, Bharat Diamond Bourse, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051
Dividend Payment Date
Probable date of dispatch of warrants Not Applicable
Board Meeting for consideration of unaudited quarterly results for the financial year ended 31st March, 2016
Within forty five days from the end of the quarter, as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges
Audited results for the current financial year ending 31st March, 2016
Within sixty days from the end of the last quarter, as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges
Fox and on behalf of the Board of Directors
Sd/- (Nirav Mehta)
Date: 30th May, 2016