CORPORATE GOVERNANCE REPORT
Corporate Governance is the framework of rules, principles and practices to ensure accountability, fairness, and transparency in a company's relationship with all its stakeholders such as the investors, customers, employees, government and the community. Corporate Governance encompasses a set of systems and practices to ensure that the Company's affairs are being managed in a manner which ensures accountability, transparency and fairness in conduct of the business operations. Corporate Governance includes the combination of voluntary practices and compliance with laws and regulations leading to effective control and management of the organisation. Good Corporate Governance leads to long-term shareholder value and enhances interests of all stakeholders.
The Company is committed to good corporate governance and ensures transparency in all its operations, timely disclosures and accurate dissemination of information, thereby enhancing shareholder value without compromising the compliance with laws and regulations.
The Company's 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.
Board of Directors - The 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, Stakeholders value and societal wealth. The Board operates within the parameters of applicable laws 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.
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 various committees viz., Audit Committee, Stakeholders' Relationship Committee, Nomination and Remuneration Committee, Finance / Operations Committee, Corporate Social Responsibility (CSR) Committee and Selection Committee. Each of these Committees has been mandated to operate within a given framework.
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 Executive Directors are 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 decisions of the Board of Directors and its various committees.
In accordance with Clause 49 of the Listing Agreement, the details required are set forth.
2. Board of Directors
The principal role of the Board of Directors as representatives of the shareholders, is to oversee the function of the Company and ensure that it continues to operate in the best interests of all stakeholders. The Board of Directors acknowledges that it has a fiduciary relationship and a corresponding duty towards the stakeholders to ensure that their rights are protected.
An active, well informed and independent Board is necessary to ensure high level of corporate governance.
(i) Composition of the Board
The Board of Directors of the Company comprising executive, non-executive and independent Directors are properly blended with in-depth knowledge and expertise accelerating the growth of the Company.
The Board comprises of 9 Directors of which 5 (Five) Directors are Independent, 1 (One) Director is Additional Director and 3 (Three) Directors are Executive.
The Composition of Board and category of Directors are as follows
As prescribed under Clause 49 of the Listing Agreement, none of the Directors are a member of more than ten Committees nor are any of them a chairman of more than five committees in which they are members.
The Company has an Executive Chairman. According to Clause 49, in case a company does not have a regular Non-Executive Chairman, at least half of the Board should comprise of Independent Directors. Table given above shows that the Company is in compliance with the requirements.
(ii) The dates of Board Meetings, record of attendance, directorships of public limited companies & Membership / Chairmanship are as follows:
Board Meetings / Procedure
During the financial year, four board meetings were held on May 30, 2014, August 5, 2014, November 11, 2014 and February 13, 2015. A separate meeting of the Independent directors was held on March 24, 2015.
Proper notices and detailed agenda papers for the Board / Committee meetings along with all material information are sent well in advance to enable Directors to study, deliberate, suggest and guide the Company in its decisions.
The Board at its meetings reviews various management aspects such as performance of the Company, business plans, annual budgets, capex plans, appointment / remuneration of senior management, general economic conditions, functioning of foreign subsidiaries, foreign exchange exposures, details of investor grievances and major legal issues.
Further, the Board also periodically reviews the compliance reports of laws applicable to the Company as well as steps taken to rectify instances of non-compliances, if any.
The following table provides the attendance record at the Board Meeting and Annual General Meeting of the Company during the financial year 2014-15 and directorships, memberships and chairmanships in other public limited companies at the end of the financial year 2014-15:
Performance Evaluation of the Board
The Independent Directors of the Company evaluated the performance of the Non Indepdendent Directors and the Chairman, who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The Directors expressed their satisfaction with the evaluation process.
3. Committees of Board of Directors
The Board of Directors presently has Six Committees viz., Audit Committee, Stakeholders Relationship Committee, Nomination and Remuneration Committee, Corporate Social Responsibility (CSR) Committee, Finance/ Operations Committee and Selection Committee. The composition of committees is in accordance with the Companies Act, 2013 and the Listing Agreement.
The Audit Committee inter-alia reviews financial statements, compliance with Accounting Standards and listing agreement with stock exchange and other legal requirements covering financial statements, related party transactions, internal audit reports by the independent internal auditors, recommends appointment and scope of internal auditors and appointment of statutory auditors and recommending their remuneration to the Board.
The composition and terms of reference of Audit Committee are in accordance with the Companies Act, 2013 and Clause 49 of the Listing Agreement.
The Committee met four times during the financial year 2014-15 viz., May 30, 2014, August 5, 2014, November 11, 2014 and February 13, 2015. The detailed constitution and attendance at the Committee meetings which were held during the year are as follows:
The Chairman of the Audit Committee attended the Annual General Meeting of the Company held during the year under review.
The Statutory Auditors and Chief Financial Officer are invitees to the Audit Committee Meetings. The Company Secretary acts as the Secretary to the Committee.
Nomination and Remuneration Committee
The name of the Remuneration Committee has been changed to Nomination and Remuneration Committee as per the provisions of Companies Act, 2013. This Committee was constituted to consider / review the managerial remuneration.
The Committee performs functions enumerated in Clause 49 of the Listing Agreement and Schedule V of the Companies Act, 2013. The Committee inter-alia reviews as well as recommends to the Board the remuneration payable to Executive Directors, the remuneration package after considering the factors such as experience, expertise, position, responsibilities shouldered by the individual and leadership qualities, and the Committee also approves and oversees the operation of Employee Stock Option Plans.
It comprises of three Directors all of them are independent. The composition of Nomination and Remuneration Committee is in accordance with Clause 49 of the Listing Agreement and the Companies Act, 2013.
The Committee met four times during the financial year 2014-15 viz. May 30, 2014, August 5, 2014, November 11, 2014 and February 13, 2015. The detailed constitution and attendance at meetings of the Committee is as under:
Remuneration Policy of the Company is appended as annexure 2 to the Directors' Report. The non-executive Directors are paid sitting fees as per the provisions of the Companies Act, 2013, the rules made there under and Articles of Association of the Company for attending the Board / Committee meetings.
The members of the Company at the 31st Annual General Meeting held on September 9, 2014 have approved the payment of commission upto 1% of profits payable to Non-Executive Directors of the Company and authorised the Board to determine such commission.
Stakeholders Relationship Committee
The name of the Shareholders / Investors Grievance Committee has been changed to Stakeholders Relationship Committee in line with the provisions of Companies Act, 2013. The Committee, inter-alia, oversees transfer of shares in physical form, transmission of shares, issue of duplicate share certificates, depository operations and compliances of regulatory provisions etc. and evaluates investor grievances redressal system.
The Stakeholders Relationship Committee comprises of 3 Directors, of which one is independent director, one executive director and one additional director. The Chairman of the committee is an Independent Director
Mrs. Urja Shah was inducted in the Committee as a member w. e.f. February 13, 2015. No meeting of the Stakeholders Relationship Committee were held during her tenure in the financial year 2014-15.
Mr. Harshal Shah resigned as a Director w.e.f. November 11, 2014. Only two meeting of the Stakeholders Relationship Committee were held during his tenure in the financial year 2014-15.
Mr. Naveen Manghani, Company Secretary is designated as the Compliance Officer of the Company.
The Finance / Operations Committee is empowered to borrow funds, invest surplus funds, decide / modify operations of bank accounts and other routine administrative and management functions.
The Committee comprises of Mr. Harish Sheth, Chairman and Managing Director, Mr. Udit Sheth, Joint Managing Director & Mr. Shvetal Vakil, Executive Director and Mr. Bhalchandra L. Naik, Independent Director
The Committee met Five times during the financial year 2014-15.
The Selection Committee has been constituted during the financial year 2013-14 to consider appointment of the Directors / relatives of Directors for place of profit, to recommend remuneration / perquisites payable to them and to review/ recommend / approve increment / revision in the remuneration / perquisites payable to them.
The Committee comprises of Mr. Arun Arora, Mr. Ashok Kumar Jha and Mr. B. L. Naik, Independent Directors and Mr Pradip C. Shah, outside Expert.
Corporate Social Responsibility (CSR) Committee
The CSR Committee has been constituted during the financial year 2014-15, inter-alia, to formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall define the activities to be undertaken by the Company, recommend the amount of expenditure to be incurred on the CSR activities, and monitor the Corporate Social Responsibility Policy of the company from time to time.
The Committee comprises of Mr. Udit Sheth, Joint Managing Director, Mrs. Urja Shah, Executive Additional Directors and Mr. Arun Arora and Mrs. Suhasini Sathe, Independent Directors
4. Means of Communication:
The Company publishes its quarterly, half-yearly and yearly financial results in leading English and Gujarati newspapers. The results are also posted on Company's website viz. www.setcoauto.com and website of the stock exchange. Information relating to shareholding pattern and compliance on corporate governance norms are also posted on Company's website.
All price sensitive information are immediately informed to the Stock Exchange before the same is communicated to general public through press releases, if any, and / or other communications.
5. Details of Non-Compliance with Capital Markets
The Company has complied with all the requirements of regulatory authorities on matters relating to capital markets and no penalties / strictures have been imposed on the Company by the Stock Exchange or SEBI or any other authority.
6. Compliances with Mandatory / Non Mandatory requirements of the Listing Agreement
A certificate from the Statutory Auditor of the Company certifying compliance of Corporate Governance under Clause 49 of the Listing Agreement is annexed herewith.
Clause 49 also states that the non-mandatory requirements may be implemented as per the discretion of the Company. The Company complied with majority of such non mandatory requirements, details of which are as follows:
a. Non Executive Chairman's office: The Chairman of the Company is Executive Chairman and as such, this provision is not applicable.
b. Shareholder Rights: The quarterly, half yearly and annual financial results are published in newspapers having wide circulation in English and Gujarati and are also available on Company's website. The Annual Report is sent to all shareholders of the Company.
7. Disclosure of materially significant Related Party Transactions
The Company did not enter into any materially significant transactions with Promoters, Directors or the Management, their subsidiaries or relatives etc., which were in conflict with the interest of the Company. Details of Related Party Transactions are provided in Note 29 of notes forming part of financial statements. Necessary approvals have been obtained wherever required.
8. Management Discussion and Analysis Report
Management Discussion and Analysis Report forms part of this Annual Report.
9. Risk Management
The Company has laid down the procedures to inform the Board members about effective risk assessment and risk mitigation.
10. Code of Conduct
Pursuant to Clause 49 of the Listing Agreement, the Board of Directors has laid down a 'Code of Conduct' for all Board and Senior Management Members and they have affirmed compliance with the Code of Conduct of the Company for the Financial Year 2014-15.
The declaration pursuant to Clause 49(II)(E) of the Listing Agreement stating that all the Board Members and Senior Management Members have affirmed their compliance with the said code of conduct for the year ended March 31, 2015 is annexed to this Report.
The Code of conduct is also placed on the Company's website.
11. Insider Trading:
The Company has also laid down a Code for Prevention of Insider Trading as required under SEBI (Prohibition of Insider Trading) Regulations, 1992. The Directors and Senior Management affirmed compliance of the said Code. The Company has amended and adopted the Code for Prevention of Insider Trading, 2015 as required under SEBI (Prohibition of Insider Trading) Regulations, 2015.
12. Whistle Blower Policy:
The Whistle Blower Policy of the Company, which also incorporates the vigil mechanism, has been framed by the Company. No personnel has been denied access to the audit committee of the Company.
14. General Shareholder Information:
(i) 32nd Annual General Meeting
Day & date : Monday, September 28, 2015
Time : 3.00 p.m.
Venue : Vadodara - Godhra Highway, Kalol, District - Panchmahal, Pin Code - 389 330, Gujarat.
(ii) Financial Year : April 1, 2014 - March 31, 2015
(iii) Dates of Book Closure : September 21, 2015 - September 28, 2015
(iv) Dividend Payment Date : On or after September 29, 2015
(v) Listing on Stock Exchange: The Bombay Stock Exchange Limited
Demat ISIN in NSDL & CDSL : INE878E01013
Stock Code 505075
(vi) Financial Calendar:
The Board of Director of the Company approves unaudited results for each quarter within such number of days as may be prescribed under Listing Agreement from time to time.
(ix) Registrar and Share Transfer Agents
Link Intime India Private Limited, Unit: Setco Automotive Limited, C-13, Pannalal Silk Mill Compound, L.B.S. Marg, Bhandup (West), Mumbai 400 078
(x) Share Transfer System
Shareholders are requested to communicate with Link Intime India Private Limited, Company's Registrar and Share Transfer Agents for matters related to share transfers in physical form, dividend, share certificates and change of address.
The Company ensures that the Registrar processes all the requests received from shareholders within maximum three weeks from the date of receipt provided the documents are in order. The Registrar also updates the Company on action status.
The shares held in dematerialized form are electronically traded in the depository and the Registrar & Share Transfer Agents receives from Depositories periodical details of beneficiary holdings to update their records and registers.
The Stakeholders Relationship Committee of the Board of Directors of the Company at its meetings held periodically reviews the investors' grievances / correspondences received during the quarter and also ratifies transfers affected during the quarter
(xii) Dematerialisation and Liquidity
The Company from time to time advocates its equity shareholders possessing shares in physical form to have the same dematted for their benefit. The process of dematerialization is as follows:
• Share Certificate(s) alongwith Demat Requisition Form (DRF) is to be submitted by the shareholder to the Depository Participant (DP) with whom he/she has a demat account.
• DP processes the DRF and generates a unique number known as DRN.
• DP forwards the DRF and share certificates to the Company's registrar and share transfer agents.
• The Company's registrar and share transfer agents after processing the DRF confirms or rejects the request to the depositories.
• Upon confirmation, the Depository credits the shareholder's demat / depository account maintained with DP.
The process of dematerialization takes approximately 15-20 days from the date of receipt of DRF by the Registrar and Share Transfer Agent of the Company.
As on March 31, 2015, 96.94% of Equity Shares (i.e. 2,59,01,960 Equity Shares) were held in dematerialized form and the rest in physical form. Trading in Company's equity shares is permitted only in dematerialized form.
(xiii) Outstanding GDRs / ADRs / Warrants or any Convertible Instruments
There were no outstanding GDRs / ADRs / Warrants or any convertible instruments as at March 31, 2015.
(xiv) Plant Locations in India
Gujarat: Vadodara - Godhra Highway, Kalol, District Panchmahal, Pin Code 389 330, Gujarat.
Uttarakhand: Plot No. 196/A Phase 1, Eldeco Sidcul Industrial Park (E.S.I.P), Village Lalarpatti, PO. Sia Camp, Udham Singh Nagar, Pin Code - 262 403, Uttarakhand.
(xv) Address for correspondence
The members are requested to write to the Registrar & Share Transfer Agents of the Company, Link Intime India Private Limited for any query related to share transfers, dematerialization, transmissions, change of address, non-receipt of divided or any other related queries.
The address of Link Intime India Private Limited is as follows:
Unit: Setco Automotive Limited,
C-13, Pannalal Silk Mill Compound, L.B.S. Marg, Bhandup (West), Mumbai 400 078
The members can also send their grievances, if any, to the Company Secretary at the Corporate Office of the Company at 2/A, Ground Floor, Film Centre Building, Tardeo Road, Mumbai - 400 034 or email at investor. email@example.com
Other useful information for Shareholders
Dividend: Electronic Clearing Services (ECS)/ National Electronic Clearing Services (NECS) facility. The dividend remittances to shareholders will happen through ECS/NECS as per the locations approved by RBI from time to time. If you are located at any of the ECS/ NECS centers and have not registered your ECS/NECS mandate, please arrange to forward your ECS/NECS mandate to your depository participant if the shares are held in demat form, or to the Company/Registrars, if the shares are held in physical form, immediately.
It may be noted that any dividend amount remaining unclaimed for a period of 7 years from the date of transfer to unpaid dividend account shall be transferred to the Investor Education & Protection Fund as required under Section 125 of the Companies Act, 2013. Due dates for Transfer of Unclaimed Dividend to Investor Education and Protection Fund (IEPF) are as under:
Auditors' certificate on Corporate Governance
The Auditors Certificate certifying the Company's compliance with the requirements of Corporate Governance in terms of Clause 49 of the Listing Agreement is attached and forms part of this Annual Report.