CORPORATE GOVERNANCE REPORT
1. Philosophy on Code of Governance
Rane Group's time tested philosophy of governance is based on principles of integrity, transparency and fairness. The Rane businesses seek enhancement to shareholder value within this framework. Directors code of conduct and employee behaviour is nourished by this culture and is governed through a policy document "Ethical Standards of Behaviour - RANE COMPASS".
Our belief in good corporate citizenship enshrined in the Company's Code of Conduct, its policies, compliance with law and robust internal control systems, which are subjected to regular assessment drives its effectiveness, reinforces integrity of management and fairness in dealing with all the stakeholders. This meets with all statutory and regulatory compliance including those under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR).
2. Board of Directors Composition, Attendance & Meetings
As of March 31, 2016, the Board of the Company consisted of four non-executive directors and two executive directors with majority being independent directors. The composition of the independent directors is in conformity with the Uniform Listing Agreement entered into with stock exchanges. The directorships held by the Directors are within the limits prescribed under Section 165 of the Companies Act, 2013. In compliance with Regulation 25 of SEBI LODR, none of the Independent Directors serve as Independent Directors in more than seven (7) listed companies and where any Independent Director is serving as whole-time director in listed company such director is not serving as Independent Director in more than three (3) listed companies. None of the directors on the Board, is a member of more than 10 committees or chairperson of more than 5 committees across all listed companies in which he/she is a director in terms of Regulation 26 of SEBI LODR.
The board met five (5) times during the financial year on May 26, 2015, August 12, 2015, November 9, 2015, February 9, 2016, and March 28, 2016. The names and categories of the directors on the Board, their attendance at Board meetings and last Annual General Meeting held during the year and the number of directorships in othe public companies and committee chairmanships / memberships held by them in all listed companies are given below:
Mr. L Lakshman is related to Mr. L Ganesh and Mr. Harish Lakshman.
The information as prescribed under PART A of Schedule II pursuant to Regulation 17(7) of SEBI LODR such as annual operating plans and budgets, quarterly results for the Company, minutes of meetings of audit committee and other committees of the board, risk management and mitigation measures etc. are discussed by the Board of Directors.
Annual calendar for the Board and its committee meetings is circulated in advance to the directors, to facilitate them in attending the meetings. The directors are provided with detailed agenda for the meetings along with necessary annexures to effectively participate in discussions. The Company has a post board meeting review mechanism to monitor and follow up the effective execution of the decisions, directions or suggestions of the board and its committees, by the management.
The disclosure regarding meeting of independent directors, Board and directors performance evaluation are discussed in detail in the report of the Board of Directors.
The familiarisation programme for the independent directors is disclosed on the website of the Company and is available at <http://rane.co.in/rhlinvestors.html> .
3. Audit Committee Composition, Attendance and Meetings
The composition of the Audit Committee of the Board is in conformity with the requirements of Section 177 of the Companies Act, 2013 and Regulation 18 of SEBI LODR. The Committee met five (5) times during the year May 26, 2015, August 12, 2015, November 9, 2015, February 9, 2016 and March 28, 2016. The details of members and their attendance are as below:
The Company Secretary acts as the Secretary to the Committee.
The statutory auditors and the internal auditors were present as invitees in all the meetings. The Executive Chairman and
General Manager - Finance & CFO of the Company attended the meetings by invitation. Based on the requirement, other directors attended the meetings by invitation. All the recommendations of the audit committee during the year were considered, accepted and approved by the board.
Overall purpose and terms of reference
The purpose of the Audit Committee is to assist the Board of Directors (the "Board") in reviewing the financial information which is disseminated to the shareholders and others, reviewing the systems of internal controls established in the Company, appointing, retaining and reviewing the performance of internal auditors and overseeing the Company's accounting and financial reporting processes and the audit of the Company's financial statements.
The terms of reference of the Audit Committee are as per the provisions of the SEBI LODR read with Section 177 of the Companies Act, 2013. In line with these provisions the Company has framed an Audit Committee Charter, which is subject to review by the Audit Committee.
The roles of the Audit Committee inter-alia, includes, review of:-
• Quarterly / Annual financial statements with statutory auditors and management before submission to the Board.
• Internal control systems, findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board
• Internal audit function, internal audit reports relating to internal control weaknesses and functioning of whistle blower mechanism.
• Evaluation of internal financial controls and risk management systems
• Management discussion and analysis of financial condition, results of operation financial and risk management policies of the Company.
• Defaults, if any, in payments to depositors, shareholders / creditors and the status of the inter-corporate loans and investments for scrutiny in detail.
• Approve related party transactions, including any subsequent modifications thereto
• Compliance with listing and other legal requirements relating to financial statements
• Changes, if any, in accounting policies and practices and reasons for the same, major accounting entries involving estimates based on the exercise of judgement by management and significant adjustments made in the financial statements arising out of the audit findings.
• Valuation of undertakings or assets of the company, as and when required
As per the charter and the terms of reference, the Audit Committee, also:
• Recommends appointment of Auditors and their remuneration and approves the appointment of CFO
• Discusses the scope of audit and post-audit area of concern and qualifications, if any, with Statutory Auditors / Internal Auditors.
The audit committee reviews the quarterly unaudited / audited annual financial results of the Company. The unaudited results are subjected to limited review by the statutory auditors of the Company. The statutory auditors are eligible to issue limited review report as the audit firm has been subjected to peer review process of Institute of Chartered Accountants of India (ICAI) and hold a valid certificate issued by the Peer Review Board of ICAI. The Audit Committee approves payments to statutory auditors for audit and non-audit services.
In accordance with the provisions of Companies Act, 2013, rules made thereunder and provisions of listing agreement / SEBI LODR, the audit committee accords prior approval for all Related party transactions (RPTs), including any modifications thereto, as per the policy on Related Party Transactions. The audit committee annually grants omnibus approvals for transactions that are routine or repetitive in nature and which are proposed to be undertaken / entered in the ordinary course of business at arm's length basis. While according omnibus approvals, the Audit Committee takes into consideration the following factors viz., maximum value of the transactions, including value per transaction, extent and manner of disclosures made to the Audit Committee. On a quarterly basis the Audit Committee reviews related party transactions entered into by the company pursuant to each of the omnibus approval.
The Audit Committee reviews all mandatory information under Part C of Schedule II pursuant to Regulation 18 SEBI LODR, including review of internal auditor observations, if any, and statutory compliance.
4. Nomination and Remuneration Committee (NRC)
Composition, Attendance and Meetings
The Nomination and Remuneration Committee (NRC) is constituted by the Board in terms of Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI LODR. The Committee met three (3) times during the year May 26, 2015, August 12, 2015 and February 9, 2016. The details of members and their attendance are as below:
Retired effective conclusion of meeting of board of directors held on May 27, 2016 aa Inducted as a member effective conclusion of meeting of board of directors held on May 27, 2016
The NRC members considered inter alia, annual performance evaluation of directors and policy on leadership development and succession management and also policy on performance pay for senior management in accordance with the remuneration policy of the Company and its terms of reference.
Terms of Reference
• To formulate criteria for determining qualifications, positive attributes and independence of director for evaluation of performance of Independent Directors and the Board.
• To approve the remuneration policy of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel (SMP).
• To devise policy on Board diversity.
• To provide guidance to the Board on matters relating to appointment of Directors, Independent Directors, KMP and SMP, i.e., the core management team one level below the Executive Directors.
• To evaluate performance, recommend and review remuneration of the Executive Directors based on their performance.
• To recommend to the Board, the extension/ continuation of term of appointment of Independent Directors based on report of performance evaluation.
• To consider and recommend professional indemnity and liability insurance for Directors,KMP and SMP.
NRC laid down the criteria for evaluation of performance of the board, its committees and directors. In order to align employees with the organizational vision and growth strategies and motivate them to achieve business results, the NRC considered a policy on performance pay laying down the applicability, standards, parameters, methodology and governing rules and approved the policy on leadership development and succession management that focuses on leadership development architecture, leadership assessment across various levels, development plans / programs, human resource systems and processes.
The Policy on appointment and remuneration of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel (SMP) is available as 'Annexure B'.
1. No other remuneration was paid to non-executive director except sitting fees.
2. Remuneration paid to Mr. L Lakshman, Executive Chairman and Mr. L Ganesh, Vice-Chairman are based on recommendation of Nomination and Remuneration Committee and pursuant to approval of the Board of Directors at their meeting held on August 12, 2015. The detailed break-up is provided in extract of Annual Report (MGT-9) in this Annual Report.
3. No shares were pledged by the directors. There is no stock option scheme prevailing in the Company.
5. Stakeholders' Relationship Committee
Composition, attendance and meetings
The Stakeholders' Relationship Committee looks into grievance of shareholders and redresses them expeditiously in accordance with Section 178 of the Companies Act, 2013 and the requirements under Regulation 20 of SEBI LODR. The Company Secretary is the compliance officer of the company.
6. Corporate Social Responsibility (CSR) Committee
The CSR activities of the Company focus on four specific areas of (a) Education (b) Healthcare (c) Community Development (d) Environment. The CSR activities undertaken by the Company are in line with the CSR Policy and recommendations of the CSR Committee. The composition of the Committee is as follows:
The CSR Committee met once during the year on May 26, 2015 and all the Committee members attended the meeting. The Company Secretary acts as the Secretary to the Committee. The Committee approves the annual CSR report, recommends the annual CSR expenditure budget and CSR activities undertaken for the financial year to the Board, as per the CSR policy of the Company.
The terms of reference of the Committee are as follows:
1. Formulate and recommend CSR Policy, for approval of the Board
2. Approve projects that are in line with the CSR policy
3. Have monitoring mechanisms in place to track the progress of each project
4. Recommend the CSR expenditure to the Board of the company for approval
5. Review new proposals and existing projects' status
The report on CSR projects undertaken during the year 201516 as approved by the CSR committee in consultation with the Board is annexed to Directors' Report as Annexure 'D'.
7. Other Committees Share Transfer Committee:
To expedite the process of share transfers, the Board has delegated the power of share transfer, transmission, dematerialization / rematerialization, split/consolidation, issue of duplicate share certificates etc. to a committee comprising of Senior Officials designated from time to time. The Committee meets to approve share transfers and transmissions and reports the details of transfer / transmissions of securities approved by the Committee to the Board at each meeting of the Board.
No sitting fees is payable to the committee members for attending meeting(s) of this Committee.
The Finance Committee has been constituted to exercise the borrowing powers delegated by the Board, to approve the financial facilities in connection with the capital expenditures and working capital expenditures of the Company, as per the Annual Operating Plans approved by the Board. The Committee met once during the year, on June 19, 2015. Leave of absence was granted to Mr. L Lakshman for this meeting.
The Executive Committee has been constituted to carry out activities in connection with change in operation of bank accounts and authorization of officials under various legislations and other administrative matters between two consecutive meetings of the Board. The Committee met once during the year, on June 19, 2015. Leave of absence was granted to Mr. L Lakshman for this meeting.
8. Code of conduct
The board of directors has laid down a code of conduct i.e. "Ethical Standards of Behaviour - RANE COMPASS" for all board members and employees of the Company in furtherance of its emphasis towards good corporate governance practices. The same has been posted on the website of the Company and is available at, <http://rane.co.in/pdf/policies/coc.pdf>. The board members and senior management personnel have affirmed their compliance with the code of conduct. Declaration from the Executive Chairman & Managing Director of the Company to this effect forms part of this report.
Prevention of Insider Trading
The Board of Directors have formulated "Rane Code to regulate, monitor and report trading by insiders and practices and procedures for fair disclosure of unpublished price sensitive information" in accordance with SEBI (Prohibition of Insider Trading) Regulations, 2015 to prevent misuse of any unpublished price sensitive information and prohibit insider trading activity. The code of fair disclosure practices and procedures for unpublished price sensitive information is available at the website of the Company viz., <http://www.rane>. co.in/pdf/policies/rhlcfd.pdf
1. During the year, the Company had not entered into any transaction of material nature with any of the promoters, directors, management or relatives or subsidiaries etc., which were in conflict with the interests of the Company. The details of the related party transactions as per AS 18 as stated in note 30 of the standalone financial statements have been reviewed/ approved by the Audit Committee. The policy on Related party Transaction is available on the website of the Company viz., <http://www.rane.co.in/pdf/> policies/rhlrpt.pdf
2. There was no instance of non-compliance by the Company on any matters relating to the capital markets; nor was there any penalty / strictures imposed by the stock exchanges or SEBI or any other statutory authority on such matters during the last three years.
3. There was no pecuniary relationship or transaction of non-executive directors vis-à-vis the Company which has potential conflict with the interests of the Company at large.
4. The Company has in place a mechanism to inform the board members about the risk assessment and mitigation plans and the periodical reviews to ensure that the critical risks are controlled by the executive management.
. The Company has complied with all the mandatory requirements prescribed under Chapter IV of the SEBI LODR. The Company has complied with the following non-mandatory requirements:-
i. adopting best practices to ensure a regime of unqualified financial statements
ii. individual communication of half-yearly results to shareholders
iii. Internal Auditor directly reporting to the Audit Committee
6. In order to comply with all laws governing the operations and conduct of affairs of the Company in accordance with the highest ethical and legal standards, the Company has adopted a Statutory Compliance Kit (STACK). STACK is a structured process providing comprehensive reference framework to facilitate education to dealing personnel, execution, escalation and regular reviews to strengthen compliance management. The STACK is electronically integrated through an online platform (e-STACK) to improve the compliance management system and its efficiency. The master lists of statutory requirements are effectively complied through practice of Daily Routine Management (DRM) and Vital Activity Monitoring (VAM) charts. Reports relating to the compliance with various laws applicable to the Company are regularly reviewed and the vital issues are presented to the Audit Committee and the Board.
7. The Company has framed a policy for determining "material subsidiary" and the same is available on the Company's website. (Link <http://rane.co.in/pdf/policies/> rhlmsp.pdf.)
8. The Independent Directors have confirmed that they meet the criteria of 'Independence' as stipulated under Sec 149 of the Companies Act, 2013 and Regulation 16 of the SEBI LODR.
9. The CEO and CFO of the Company have certified to the Board on the integrity of the financial statements, effectiveness of internal controls and significant changes in internal control /accounting policies during the year as required under Regulation 17(8) of the SEBI LODR and Companies Act, 2013.
10. The Company has complied with all mandatory requirements specified in Regulation 17 to 27 and Regulation 46(2)(b) to (i) of SEBI LODR.
11. Whistle blower mechanism
The Company has a whistle blower policy, which provides the vigil mechanism for reporting with reliable information on any improper or unethical practices or actions which are violative (actual or potential) of the code of the Company by any employee or others dealing with the Company. It also addresses the protection of whistle blower who makes protected disclosures under the policy and provides for direct access to the Chairman of the Audit Committee.
The policy and the mechanism for reporting has been appropriately communicated across all locations of the Company. The Whistle Blower policy has also been posted in the Company's website URL: <http://rane.co.in/pdf/policies/> rhlwbpolicy.pdf
No person has been denied access to the ombudsperson / audit committee.
12. Means of Communication
The consolidated quarterly / annual financial results were published in "Business Standard" (English) and "Dinamani" (Tamil). The financial results and the shareholding pattern were uploaded in the website of the stock exchanges and the Company viz. <http://www.rane.co.in> . During the year, presentations were made to analysts/institutional investors and was published on the website of the Company.
During last year, the shareholders of the Company whose e-mail addresses were registered with the Company / Depository Participants (DPs) were provided with a link to the annual report of the Company via e-mail and those who opted to receive the documents in physical mode were provided with a physical copy.
13. General Shareholder Information
ii) Annual General Meeting
August 11, 2016 at 10.15 a.m. The Music Academy (Mini Hall) New No.168, TTK Road, Royapettah, Chennai 600 014
iii) Financial Year 1st April - 31st March Financial Calendar:
Board meeting for approval of Tentative Date
Annual Accounts for the year ended May 27, 2016 : March 31, 2016
Un-audited results for the quarter ending June 30, 2016 1st August 11, 2016
Un-audited results for the half year September 30, 2016 By the second week ending of November 2016
Un-audited results for the nine By the second week months ending December 31, 2016 of February 2017
Annual Audited for the year ending March 31, 2017 : By last week of May 2017
During the year 2015 -16, the board of directors declared an interim dividend of 100% (i.e., Rs. 10/- per share) on the equity share capital on March 10, 2016. The interim dividend was paid on March 23, 2016 to all the eligible shareholders whose name appeared in the Registered of members of the Company as on March 18, 2016 (being the Record Date) fixed for this purpose
The Board of Directors did not recommend any final dividend for the year 2015 -16.
v) Listing on Stock Exchanges:
Stock Exchange Stock Code
National Stock Exchange of India Ltd. (NSE)
Exchange Plaza, 5th Floor, Plot No. C/1, G RANEHOLDIN Block, Bandra Kurla Complex, Bandra (E) Mumbai 400 051
BSE Ltd. (BSE)
Phiroze Jeejeebhoy Towers, Dalal Street, 505800 Mumbai 400 001
The shares of the Company are listed on NSE & BSE which provide nationwide access to trade and deal in Company's equity shares across the country. The Company has paid the Annual Listing fee for the financial year 2016 - 17 to NSE & BSE where the shares of the Company continue to be listed.
vi) Unpaid / Unclaimed Dividends:
Pursuant to the provisions of Section 124 of the Companies Act, 2013, dividend for the financial year ended March 31, 2009, which remain unclaimed for a period of seven years, are required be transferred to the Investor Education and Protection Fund (IEPF) of the Central Government within the respective due dates. The Company had transferred to IEPF, an amount of Rs. 2,70,252/- pertaining to the dividend for the financial year ended March 31, 2009.
ix Registrar and Transfer Agent (RTA)
The contact details of the RTA are as follows:-
Integrated Enterprises (India) Ltd.,
II Floor, 'Kences Towers' No.1, Ramakrishna Street, North Usman Road, T. Nagar, Chennai - 600 017. Phone: 28140801 - 03, Fax: 28142479, 28143378. e-mail: firstname.lastname@example.org
Name of the contact person: Mr. Suresh Babu K. Senior Vice-President
x Share transfer system & Share Capital Audit
The power to approve transfer of shares has been delegated by the Board to the Share Transfer Committee which approves the share transfers and de-mat / re-mat requests in coordination with the RTA. Share transfers are approved within fifteen days from date of receipt of valid request. Transmission requests are also processed within time stipulated under SEBI LODR. On a half-yearly basis the compliance with the share transfer / transmission formalities is audited by a Practising Company Secretary (PCS) in terms of clause 47(c) of the Listing Agreement / Regulation 40(10) of SEBI (LODR) with the stock exchanges and a certificate to this effect is filed with the stock exchanges.
A reconciliation of share capital audit in terms of regulation 55A of SEBI (Depositories and Participants) Regulations, 1996 is taken up on a quarterly basis and the report of the
Dematerialisation of shares and liquidity
The Company has entered into the necessary agreements with National Securities Depository Limited and Central Depository Services (India) Limited for dematerialisation of the shares held by investors. As of March 31, 2016, about 97.96% of the shareholdings have been dematerialised.
Comparative chart of physical and demat holdings for the current and previous financial year is given below:
The promoter and promoter group hold their entire shareholding only in dematerialised form.
Reconciliation of share capital audited by practicing company secretary is furnished every quarter to the stock exchanges, where the shares of the Company are listed. Demat ISIN Number: INE384A01010
The Company has not issued any equity share with differential voting rights nor granted stock options nor sweat equity.
xv) Address for communication
The Compliance Officer Rane Holdings Limited Rane Corporate Centre "Maithri" 132, Cathedral Road Chennai 600 086. Phone : 28112472 Fax : 28112449 E-mail: email@example.com
Mr. Suresh Babu K. Senior Vice-President Integrated Enterprises (India) Ltd., II Floor, 'Kences Towers' No.1, Ramakrishna Street North Usman Road T. Nagar, Chennai 600 017 Phone:28140801-03 Fax:28142479 E-mail: firstname.lastname@example.org