CORPORATE GOVERNANCE REPORT
THE COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE IS AIMED AT:
(a) Enhancing long term Shareholder value through
• Assisting the top management in taking sound business decisions; and
• Prudent financial management.
(b) Achieving transparency and professionalism in all decisions and activities of the Company.
(c) Achieving excellence in Corporate Governance by
• Conforming to the prevalent guidelines on Corporate Governance, and excelling in, wherever possible.
• Reviewing periodically the existing systems and controls for further improvements.
BOARD OF DIRECTORS
The Board of Directors of the Company consists of professionals from varied disciplines. The day to day management of the affairs of the Company is entrusted with the senior management personnel, headed by the CEO and Managing Director, who functions under the overall supervision, direction and control of the Board of Directors of the Company. The Board meets regularly to discuss, review and decide upon the matters such as policy formulation, setting up of goals, appraisal of performances with the goals and control functions, etc. Some of the powers of the Board have also been delegated to Committee(s), which monitors the day-to-day affairs relating to operational matters. The Board thus exercises close control over the overall functioning of the Company with a view to enhance the Shareholder value.
The Independent Directors have made disclosures confirming that there are no material, financial and/or commercial transactions between Independent Directors and the Company which could have potential conflict of interest with the Company at large.
During the year under review, six meetings of the Board of Directors were held on April 30, 2015, June 18, 2015, June 26, 2015, July 31, 2015, October 29, 2015, and January 30, 2016.
The maximum gap between any two meetings was not more than one hundred and twenty days. The thirty six Annual General Meeting was held on July 31, 2015.
As of March 31, 2016, the Company's Board comprised of nine directors. The Chairman of the Board is independent, nonexecutive director. The CEO and Managing Director is an executive of the Company.
As mandated by Regulations 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Regulation) as of March 31, 2016, none of the independent directors of the company served as an independent director in more than seven listed entities and as per Regulation 26 of SEBI Regulation none of Directors is a member of more than ten committees or acting as Chairperson of more than five committees of the companies in which he is a Director. The necessary disclosures regarding Committee positions have been made by the Directors.
The Agenda setting out the business to be transacted at the meeting alongwith the explanatory notes are sent to the directors seven days before the Board Meeting date. In some instances, documents are tabled at the meetings and the presentations are also made by the respective executives on the matters related to them at the Board or Committee Meetings.
The Company has put in place a system to familiarise its Independent Directors about the Company, its financial products, the industry and business model of the company and its subsidiary. In addition, the Company also keeps the independent directors, updated on the events and developments in the industry and business environment.
During the Financial Year 2015-16 a Familiarisation Programme was conducted on January 30, 2016 which was attended by the Independent Directors of the Company. At the Familiarisation Programme a presentation was given by the Partner of a well-known reputed firm of Solicitors and Advocates from Mumbai. The details of Familiarisation Programme is uploaded on the Company's website at the web link: <http://stfc.in/pdf/Familiarisation-Programme-2016->STFC.PDF
The Board has carried out evaluation of its own performance, the directors individually and evaluation of working of the committees of the Board during the financial year 2015-16. The structured evaluation process contained various aspects of the functioning of the Board and its committees, number of committees and their roles, frequency of meetings, level of participation, and independence of judgement, performance of duties and obligations and implementation of good corporate governance practices.
The Board expressed its satisfaction of the performance of all the directors, Board and its committees which reflected the overall engagement of the directors, the Board and its committees with the Company.
MEETING OF INDEPENDENT DIRECTORS
A separate meeting of the Independent Directors of the Company was held on April 29, 2016 to evaluate their performance of Non-Independent Directors and the Board as a whole and performance of Chairperson, who were evaluated on paramaters such as attendance, level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and it's stake holders. The Independent Directors expressed their satisfaction on the performance and effectiveness of the Board, individual Non-Independent Board members, Independent Directors and the Chairman. They also expressed satisfaction with the quality, quantity and timelines of flow of information between the Company management and the Board.
Policy for prohibition of Insider Trading: In compliance with the provisions of SEBI (Prohibition of Insider Trading) Regulations, 2015 as amended and to preserve the
confidentiality and prevent misuse of unpublished price sensitive information, the Company has adopted a Code for Prohibition of Insider Trading for Directors/ Designated persons of the Company, relating to dealings by them in the securities of the Company.
The Code also provides for periodical disclosures from Directors/ Designated persons as well as pre-clearance of transactions by such persons.
COMMITTEES OF DIRECTORS
(A) Mandatory Committees
The Audit Committee of the Company is constituted in line with the provisions of Regulation 18 of the SEBI Regulation read with Section 177 of the Companies Act, 2013 ('the Act')
Terms of Reference
The terms of reference of the Audit Committee, inter alia includes:
• Overseeing the financial reporting process.
• To ensure proper disclosure in the quarterly, half yearly and Annual Financial Statements.
• To recommend appointment, re-appointment of auditors and the fixing of their remuneration. Approval of payment to statutory auditors for any other services rendered by them.
• Reviewing, with the management, the Financial Statements before submission to the Board.
• Reviewing, with the management, performance of statutory and Internal auditors, adequacies of the internal control systems.
• Reviewing the adequacy of internal audit function including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit.
• Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the shelf prospectus/ offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.
• Discussing with Internal auditors on any significant findings and follow up there on.
• Reviewing the findings of any internal examinations 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.
• Discussing 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.
• To discuss with the management, the senior internal audit executives and the statutory auditor/s the Company's major risk exposures and guidelines and policies to govern the processes by which risk assessment and risk management is undertaken by the Company, including discussing the Company's major financial risk exposures and steps taken by management to monitor and mitigate such exposures and from time to time conferring with another Committee/s of the Board about risk exposures and policies within the scope of such other Committee's oversight.
• To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors, if any.
• To review the functioning of the Whistle Blower Mechanism.
• Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience & background, etc. of the candidate.
• Review and monitor the Auditor's independence and performance and effectiveness of audit process.
• Approval or any subsequent modification of transactions of the Company with related parties.
• Scrutiny of inter-corporate loans and investments.
• Valuation of undertakings or assets of the Company, wherever it is necessary.
• To review the financial Statements, in particular, the investments made by the unlisted subsidiary company/ies.
• Granting omnibus approval to 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.
• Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
During the year under review, five meetings were held on April 30, 2015, June 26, 2015, July 31, 2015, October 28, 2015, and January 30, 2016. The maximum gap between any two meetings was not more than one hundred and twenty days.
NOMINATION REMUNERATION AND COMPENSATION COMMITTEE
The "Nomination Remuneration and Compensation Committee" (NRC Committee) has been constituted by the Board as per the requirements of the provisions of Section 178 (1) of the Companies Act, 2013 and Regulation 19 of the SEBI Regulation.
Terms of Reference
The terms of reference of the NRC Committee, inter alia includes:
1. To identify 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 to carry out evaluation of every director's performance.
2. To formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees after ensuring 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; and
• 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.
3. Such other matters as may be stipulated under the relevant Regulations.
4. To devise a policy on Board diversity.
Remuneration of independent directors:
The Company is being benefited from the expertise, advise and inputs provided by the independent directors.
The independent directors devote their valuable time in deliberating on the strategic and critical issues in the course of the Board and Committee meetings of the Company and give their valuable advice, suggestion and guidance to the management of the Company from time to time.
Non Executive independent directors of the company are paid following remuneration:
Rs. 50,000/-for every meeting of board and Rs. 25,000/- for every Committee meeting attended by them. No sitting fees is paid to Non-Independent Director.
Equal commission is being paid to all Non-Executive independent directors. However, independent directors who hold office for part of Financial Year are paid commission on pro-rata basis. The shareholders of the Company in their 34th Annual General Meeting held on July 05, 2013 have approved payment of commission to independent directors for a period of five years ending March 31, 2017 subject to the limit of 1% of net profits of the Company as calculated pursuant to the Companies Act. The amount of commission for every financial year will be decided by the Board of Directors.
In compliance with the provisions of Section 178 of the Companies Act, 2013 , Mr S. M. Bafna, an independent director, has been appointed as Chairman of the Committee.
The details of criteria of making payments to Non-Executive Directors are mentioned in the Nomination Remuneration and Compensation Committee Policy/Charter forming part of Directors' Report.
Remuneration of CEO and Managing Director :
The NRC Committee is responsible for assisting the Board of Directors in the Board's overall responsibilities relating to determination on their behalf and on behalf of the shareholders with agreed terms of reference, the company's policy on specific remuneration package for CEO and Managing Director including pension rights and any compensation payment. The following shall be the principal recurring processes of the NRC Committee in carrying out its responsibilities relating to CEO and Managing Director 's Compensation. The processes are set forth as a guideline with the understanding that the NRC Committee may supplement them as appropriate.
1. Provide independent oversight of and consult with Company management regarding the Company's compensation, bonus, pension, and other benefit plans, policies and practices applicable to the Company.
2. Develop guidelines for and annually review and approve (a) the annual basic salary, (b) the annual incentive and bonus, including the specific goals and amount, and (c) equity compensation, for the CEO and Managing Director .
3. Review and approve (a) employment agreements, severance arrangements, and change in control agreements / provisions, and (b) any other benefits, compensation or arrangements, for the CEO and Managing Director .
4. Prepare an annual report regarding CEO and Managing Director 's compensation for inclusion in the Company's financial statements as required under any Applicable Rules.
For the purpose of this policy/charter, "Applicable Rules" means applicable laws, regulations, rules, policy statements or guidelines or notifications, of or issued by any Government /Quasi Government Authorities including The Securities and Exchange Board of India, and the Stock Exchanges.
In consultation with outside consultants, evaluate and recommend the form and amount of compensation to the director and make recommendations to the Board.
Details of shares / Warrants held by the Directors as on March 31, 2016 are as below:
Except Mr.Umesh Revankar and Mr. S.M.Bafna no other Director was holding any Equity shares of the Company as on March 31,2016. Mr.Umesh Revankar and Mr. S.M.Bafna were holding 18450 equity shares and 1200 equity shares of the Company respectively.
STAKEHOLDERS' RELATIONSHIP COMMITTEE
The "Stakeholders' Relationship Committee" is constituted in line with the provisions of Section 178 (5) of the Companies Act, 2013 and Regulation 20 of SEBI Regulation.
Terms of reference
The Committee is responsible for assisting the Board of Directors in the Board's overall responsibilities relating to attending and redressal of the grievances of the security holders of the Company.
The Committee in particular looks into:
• The listing of securities on stock exchanges.
• The security holders complaints on matters relating to transfer of securities, non-receipt of annual report, non-receipt of dividends/interests and matters related thereto and resolve the grievances of security holders of the company.
• The matters that can facilitate better investor services and relations.
• Attending to complaints of security holders routed by SEBI (SCORES)/Stock Exchanges/RBI or any other Regulatory Authorities.
• The amounts transferable to Investor Education and Protection Fund.
• The profile of security holders.
• Taking decision on waiver of requirement of obtaining the Succession Certificate /Probate of Will on case to case basis within the parameters set out by the Board of Directors.
• Taking decisions in connection with issue of global depository receipts, and
• The secretarial audits
Mr. Vivek Achwal, Company Secretary also acts as the Compliance Officer of the Company.
The status of security holders grievances is monitored by the Committee periodically and the minutes of the Committee are made available to the Board. The complaints received from the security holders, SEBI (SCORES), Stock Exchanges and any other Regulatory Authorities are reviewed and they are replied to by the Company/ Registrar & Share Transfer Agents regularly. The status of the pending complaints as well as the system of redressal mechanism is reviewed by the Committee periodically.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
The terms and reference of the Corporate Social Responsibility (CSR) Committee broadly comprises of:
1. Formulating and recommending to the Board of Directors the CSR policy and monitoring the same from time to time.
2. The Committee will review and evaluate the sustainability agenda, suggest modifications and discuss and recommend action plan to take the CSR activities forward.
3. CSR Committee will monitor the spend on CSR activities by the Company as well as ensure that the Company spends atleast the minimum sum as may be prescribed from time to time pursuant to Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014 or such higher sum as may be decided by the Board of Directors of the Company.
RISK MANAGEMENT COMMITTEE
The Risk Management Committee has been constituted by the Board as per Listing Agreement as amended.
The terms of reference of the Risk Management Committee are as follows:
1. Review of Risk Management Policy.
2. Approval of Risk Management Plan, implementing and monitoring the Risk Management Plan.
3. Such other matters as may be delegated by Board from time to time.
ASSET LIABILITY MANAGEMENT COMMITTEE
The terms of reference of Asset Liability Management Committee are as follows:
The Committee is responsible for assisting the Board of Directors in Balance Sheet planning from risk-return perspective including the strategic management of interest and liquidity risk. Its function includes -
• Liquidity risk management
• Management of market risks
• Funding and capital planning
• Profit planning and growth projection
• Forecasting and analysing future business environment and preparation of contingency plans
NON-MANDATORY COMMITTEES BANKING AND FINANCE COMMITTEE
TERMS OF REFERENCE
The Banking and Finance Committee has been formed to monitor resources mobilisation and to ensure efficient and timely decisions on the matters relating to banking and finance activities of our Company. The Committee meets regularly to discharge its functions.
• There are no materially significant related party transactions with the Company's promoters, directors, key managerial personnel or their relatives, which may have potential conflict with the interests of the Company at large. Disclosures on transactions with related parties, as required under the Indian Accounting Standard 18, have been incorporated in the notes to the financial statements. The statement of RPTs is placed before the Audit Committee and the Board on quarterly basis. Omnibus approval was obtained for the transactions of repetitive nature.
The Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions as approved by the Board is uploaded on the Company's website at the web link: <http://stfc.in/pdf/Policy-on-Materiality-of-Related-Party->Transactions-and-dealing-with-Related-Party-Transactions-v1.pdf
None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company save and except the payment of sitting fees and commission to independent directors. The details of the transactions with Related Party are provided in the notes to the financial statements.
• There are no instances of non-compliance by the Company, penalties or strictures imposed on the Company by the Stock Exchanges and SEBI, or any statutory authority on any matter related to capital markets during the last three years.
• The Company has adopted Code of Conduct ('Code') for the Members of the Board and Senior Management Personnel as required under Regulation 17(5) of the SEBI Regulation. All the Board Members and the Senior Management Personnel have affirmed compliance of the Code. The Annual Report of the Company contains a declaration to this effect signed by the CEO and Managing Director. Further, the Code of Conduct of the Company applicable to the Board and Senior Management Personnel is also posted on the website of the company.
• The Company has adopted the Whistle Blower Policy and has established the necessary mechanism for employees to report concerns about unethical behavior. No person has been denied access to the Audit Committee. The Vigil Mechanism as per Regulation 22 of SEBI Regulation ensures standards of professionalism, honesty, integrity and ethical behavior. The Whistle Blower Policy/Vigil Mechanism is uploaded on the Company's website at the web link: <http://stfc.in/pdf/whistle-blower-policy-> may-2016.pdf
• The Company does not have any material listed/unlisted subsidiary company as defined in Regulation 24 of SEBI Regulation. However, the Company has framed process the Policy on Material Subsidiaries and the same is uploaded on the Company's website at the web link: <http://stfc.in/pdf/Policy-on-Material-Subsidiaries-v1>.
• The Company has complied with all the mandatory requirements as stipulated in SEBI Regulation and fulfilled the non-mandatory requirements as prescribed in discretionary requirements as specified in Part E of the Schedule II of SEBI Regulation of the following:
Separate posts of Chairperson and CEO: The Chairman of the Board is a Non-executive Director and his position is separate from that of the CEO and Managing Director.
The Company has complied with all the corporate governance requirements specified in Regulation 17 to 27 and clauses (b) to (i) of sub-regulation (2) of Regulation 46 of SEBI Regulation.
share Capital Audit
The Share capital audit as required under Regulation 55A of SEBI (Depositories and Participants) Regulations, 1996 read with SEBI Circular No. D&CC/FITTC/CIR-16/2002 dated December 31, 2002 and SEBI Circular No. CIR/MRD/ DP/30/2010 dated September 6, 2010 a Qualified Practicing Company Secretary carries out Share Capital Audit to reconcile the total admitted equity capital with National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL) and the total issued and listed equity capital. This audit is carried out every quarter and the report thereon is submitted to the Stock Exchanges and to the Board of Directors.
CERTIFICATION BY CEO AND MANAGING DIRECTOR AND CHIEF FINANCIAL OFFICER
In terms of SEBI Regulation, the certification by the CEO and Managing Director and the Chief Financial Officer is annexed to this Annual Report.
MEANS OF COMMUNICATION
The audited financial results, the quarterly results and half-yearly results of the Company are published in English (The Economic Times) and Tamil newspapers (Makkal Kural). Press release is also given in the leading newspapers. Up-to-date financial results, press releases, quarterly investors' presentations and presentations made to institutional investors or to the analysts, official news releases and other general information about the Company are also available on the Company's website www.stfc.in
Our Company submits to NSE all compliances, disclosures and communications through NSE's NEAPS Portal. The company has also complied with filing submissions through BSE's BSE online portal
GENERAL SHAREHOLDER INFORMATION
37th Annual General Meeting Particulars
As at March 31, 2016
a. Date, Time and Venue ; July 27, 2016 at 11.00 A.M, Narada Gana Sabha (Main Hall), No.314, TTK Road, Alwarpet, Chennai - 600 018.
b. Financial Year : 2015-16
c. Dividend Payment Date
An Interim Dividend of 40% was declared by the Board of Directors at its meeting held on October 29, 2015 and the payments thereof were effected on November 17, 2015. The payment of final dividend, upon declaration by the shareholders at the Annual General Meeting, will be made on or after August 01, 2016
d. The name and address of each stock exchange(s) at which the listed entity's securities are listed and a confirmation about payment of annual listing fee to each of such stock exchange(s)
P J Towers, Dalal Street, Mumbai - 400 001.
National Stock Exchange of India Limited
Exchange Plaza, 5th Floor, Plot no. C/1, G Block, Bandra- Kurla Complex, Bandra (East), Mumbai - 400 051
The Company has paid the annual listing and custodian fees for the financial year 2016-17 to the Stock Exchanges and Depositories
BSE Limited : 511218
National Stock Exchange of India Limited :SRTRANSFIN
Demat ISIN in NSDL & CDSL : INE721A01013
h. No equity shares are suspended from trading during the Financial Year 2015-16.
i. Registrar & Share Transfer Agents
The Registrar and Share Transfer Agents of the Company: Integrated Enterprises (India) Limited 2nd Floor, Kences Towers, No. 1,
Ramakrishna Street, North Usman Road, T Nagar, Chennai - 600 017 Ph: 044 - 2814 0801 - 03 Fax no: 044 - 28142479 Email: email@example.com Website :www.integratedindia.in
j. Share Transfer System:
The authority to approve share transfers has been delegated by the Board of Directors to the Securities Transfer Committe. Shares sent for transfer in physical form are registered and returned by our Registrar and Share Transfer Agents in fifteen days of receipt of documents, provided the documents are found to be in order. The Securities Transfer Committee considers the transfer proposals generally on a weekly basis
l. Dematerialization of shares and liquidity
The Company's scrip forms part of the compulsory Demat segment for all investors effective from July 24, 2000. To facilitate the investors in having an easy access to the demat system, the Company has signed up with both National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). The connectivity has been established through Integrated Enterprises (India) Limited. As on March 31, 2016, the total of 221827843 equity shares constituting 97.77% of the paid up capital, have been dematerialized.
m. The Company has not issued any outstanding global depository receipts or american depository receipts or warrants or any convertible instruments, conversion date and likely impact on equity.
n. Commodity price risk or foreign exchange risk and hedging activities : Not Applicable
List of branches are mentioned in the "Our Reach" Section on page no. 6 in the Annual Report.
p. Address for correspondence : Registered Office:
Mookambika Complex, 3rd Floor, No.4, Lady Desika Road, Mylapore, Chennai - 600 004, Tamil Nadu, India. Tel.: 91-44-24990356, Fax: 91-44-24993272
Wockhardt Towers, Level-3, West Wing, C-2, G-Block, Bandra-Kurla Complex, Bandra - (East), Mumbai - 400 051. Phone: 91-22 - 40959595, Fax: 91-22 - 40959596/97, Website: www.stfc.in
Email ID for Investor Grievance:
The following email ID has been designated for communicating investors' grievances.
• For Equity Shares related queries/complaints: firstname.lastname@example.org
• For Public Issue of Non Convertible Debentures 2010 related queries/complaints: email@example.com
• For Public Issue of Non Convertible Debentures 2011 related queries/complaints: firstname.lastname@example.org
• For Public Issue of Non Convertible Debentures 2012 related queries/complaints: email@example.com
• For Public Issue of Non Convertible Debentures 2013- July related queries/complaints: firstname.lastname@example.org
• For Public Issue of Non Convertible Debentures 2013- September related queries/complaints: email@example.com
• For Public Issue of Non Convertible Debentures 2014- related queries/complaints: firstname.lastname@example.org
q. Unclaimed Shares in physical Form
As required under Schedule V of SEBI (LODR) Regulations, 2015 the Company had sent three reminders to the shareholders whose shares where lying unclaimed/undelivered with the Company. The Company has opened "STFC - Unclaimed Suspense Account" with the Depository Participant for the purpose of transferring unclaimed equity shares held in physical form. The Company will transfer the shares lying unclaimed to the eligible shareholders as and when the request for the same has been received after proper verification. As on March 31, 2016 there were 341587 unclaimed equity shares in the Unclaimed Suspense Account