CORPORATE GOVERNANCE REPORT
The Company practices principles of good corporate governance, disclosure and transparency giving high priority to core values and ethics. It considers itself custodian and trustee for all its stake-holders. It seeks corporate excellence by offering quality vehicles and service to customers, fostering team spirit amongst employees by continuous involvement and participation in decision making processes placing high emphasis on their integrity and loyalty to the Company.
COMPOSITION OF THE BOARD
The composition of the Board of Directors ("Board") conforms to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") with five independent Directors, including the Chairman, and a woman Director, three whole-time Directors and four non-executive Directors from the Promoter group, Sumitomo Corporation of Japan. Another non-executive director is from Isuzu Motors, Japan, the Company's technical partners. All the non-executive Directors are qualified professionals with expertise in their own fields and have knowledge and experience in business and administration. No Directors are inter-se related to each other.
All independent Directors, appointed in accordance with the Companies Act, 2013 and the Listing Regulations, were issued formal letters of appointment and details are disclosed on the Company's website. All the independent Directors have declared to the Company that they meet the criteria of 'independence' set out in the Listing Regulations and the Companies Act, 2013.
The Managing Director & CEO and the two whole-time Directors are all professionals. The Managing Director & CEO has been an employee of the Company's Promoter group and Director R&D, an employee of Isuzu Motors.
The Board periodically reviews and approves overall strategy, gives guidelines and directions to and oversees the functioning of the Management to ensure that the objectives of the Company are met and its core values sustained.
MEETINGS OF THE BOARD
Annual calendar of Board meetings is agreed at the beginning of the year.
Detailed agenda is sent to each Director or Committee member prior to a meeting, including, as appropriate, operating and financial performance statements of the Company. The Board reviews strategy and business plans, annual operating and capital expenditure budgets, investment and exposure limits, quarterly / half-yearly / annual accounts and results, compliance reports of all laws applicable to the Company and minutes of meetings of the Committees of the Board and other significant developments.
INFORMATION ON MEETINGS, ATTENDENCE AND MEMBERSHIP
During the year, the Company held 5 Board Meetings on 8th May 2015, 7th August 2015, 6th November 2015, 5th February 2016 and 25th March 2016. The maximum interval between any two meetings was well within the maximum allowed gap of 120 days.
CODE OF CONDUCT
The Board has laid down a well-defined Code of Ethics & Conduct (the "Code") to be followed by Board members and senior employees of the Company for ethical professional conduct. Duties of independent Directors as specified under Companies Act, 2013 have been incorporated in the code.
The Code is available on the website of the Company www.smlisuzu.com . In accordance with the Listing Regulations all Directors and senior management personnel have affirmed compliance with this Code. A declaration signed by the Managing Director & CEO to this effect forms part of this report.
As required under the Listing Regulations, the Managing Director & CEO and Whole-time Director & CFO have certified to the Board regarding Financial Statements for the year ended 31st March, 2016, which was placed before the Board of Directors at their meeting held on 10th May, 2016 and forms part of this report.
SEPARATE MEETING OF INDEPENDENT DIRECTORS
A separate meeting of Independent Directors was held in accordance with the Companies Act and Listing Regulations, to review performance of non independent Directors, the Chairman and the Board as a whole and assess the quality, quantity and timeliness of flow of information between the Management and the Board. All independent Directors attended the meeting.
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
The familiarisation programme for Independent Directors can be accessed from the website of the Company at weblink <http://smlisuzu.com/Financials/FamiliarisationProgramme.aspx>.
Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, the Board has carried out an annual evaluation of its own performance and that of its Committees after seeking inputs from all the Directors and members of relevant Committees. The Board also carried out performance evaluation of each Director based on the evaluation carried out by the Nomination and Remuneration Committee (NRC).
The criteria for performance evaluation was set out by NRC and adopted by the Board. These included composition and structure of the Board and its Committees, effectiveness of the Committees, knowledge of the Company's operations by the members, their participation at meetings including preparedness for issues for consideration, level of contributions in assessing and improving performance of the Company and interactions amongst themselves and with senior management. Adherence to Code of Conduct of the Company, fiduciary and statutory obligations, continuing maintenance of independence by independent Directors were a part of the performance evaluation.
The Board was satisfied with its composition and its diversified nature and that all Directors upheld the highest standards of integrity and probity, adhered to the Company's code of conduct, made constructive and effective contribution at meetings and generally carried out their responsibilities well in the interest of the Company and its stakeholders.
A separate meeting of independent Directors was held to review the performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman of the Company, taking into account the views of other Directors. That review was most satisfactory.
COMMITTEES OF THE BOARD
The Audit Committee, all members of which possess vast experience in and knowledge of corporate affairs and finance, held four meetings on 7th May 2015, 6th August 2015, 5th November 2015 and 4th February 2016. The Chairman of the Audit Committee was present at the last Annual General Meeting of the Company held on 24th September 2015.
The Committee also met on 9th May 2016 prior to the finalization of the Accounts for fiscal 2015-16.
Audit Committee meetings are usually attended by the Managing Director & CEO, the Head of Internal Audit, the Company Secretary and a representative of Statutory Auditors. Senior Executives are also invited to participate in the deliberations as appropriate.
Terms of reference of the Audit Committee inter alia include:
• Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible;
• Review with the management, the annual and quarterly financial statements and auditor's report thereon before submission to the Board for approval;
• Review with the management, statutory and internal auditors, adequacy of the internal control systems;
• Evaluation of internal financial controls and risk management systems;
• Recommendation for appointment, remuneration and terms of appointment of Auditors of the Company;
• Discussion with statutory auditors the nature and scope of audit as well as post-audit areas of concern;
• Review and monitor the Auditor's independence and performance, and effectiveness of audit process;
• Review adequacy of internal audit function including structure of the internal audit department, staffing and seniority of the official heading the function, reporting structure, coverage and frequency of internal audit;
• Discussion with internal auditor of any significant findings and follow up thereof;
• Review 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;
• Approval (or any subsequent modification) of transactions of the Company with related parties;
• Review functioning of the Whistle Blower mechanism;
Stakeholders Relationship Committee
Stakeholders Relationship Committee is headed by Mr. S.K. Tuteja, Independent Director, and consists of two executive Directors as its members.
Terms of Reference of the Committee are as follows:
• Consider and resolve grievances of the shareholders of the Company including complaints related to transfer of shares, non receipt of Annual Report, non receipt of declared dividends, etc.
• Transfer / transmission of shares, Issue of duplicate share certificates and such other functions as may be stipulated under Listing Regulations and the Companies Act, 2013.
The Committee meets at frequent intervals to review status of investors' grievances and the functioning of the Registrar and Transfer Agent to render effective and quality services to investors. During the financial year ended 31st March, 2016, 18 meetings of the committee were held.
Mr. Parvesh Madan, Company Secretary, is the Compliance Officer of the Company.
The Company received 299 queries / requests from shareholders which inter-alia included non-receipt of dividend, annual reports, transfer of shares and revalidation of dividend, etc. which were duly attended to and the Company has furnished necessary documents / information to the shareholders. No share transfers pertaining to the year under review were pending on 31st March 2016.
7 complaints received during the year from shareholders, through SCORES / NSE, were resolved to the satisfaction of shareholders. As on 31st March, 2016, no complaint was pending.
Nomination & Remuneration Committee
This Committee was constituted in compliance with the requirements of the Companies Act, 2013. Terms of Reference of the Committee are as follows:
• Identify persons who may be appointed Directors in accordance with the criteria laid down, recommend to the Board their appointment and removal.
• Evaluation of performance of Directors including independent Directors and the Board.
• Formulate criteria for determining qualifications, positive attributes and independence of a Director and recommend to the Board a policy relating to remuneration for the Directors, Key Managerial Personnel (KMP) and other employees.
Nomination & Remuneration Policy:
The Company has Nomination and Remuneration policy for Directors, KMP and other employees, in accordance with the provisions of the Act and Listing Regulations. The policy is part of Directors' Report.
The criteria for performance evaluation of Directors is covered in Nomination and Remuneration Policy of the Company.
Remuneration of Directors:
Remuneration paid to Whole-time Directors is decided by the Board on the recommendation of the Nomination & Remuneration Committee and approved by the shareholders at Annual General Meeting. Independent Directors are paid sitting fee of Rs. 30,000 per meeting for attendance at Board meetings and Committees thereof (within the prescribed limits as decided by the Board) and reimbursement of expenses incurred for attending such meetings.
At the 28th AGM, held in July 2012, the shareholders had authorized the Board of Directors for payment of commission, not exceeding one percent of the net profits of the Company, computed in accordance with provisions of the Companies Act, 1956, each year to the Independent Directors of the Company till fiscal 2015-16.
The approval of Shareholders is being sought at the forthcoming Annual General Meeting of the Company for the payment of commission to Independent Directors, within the limits prescribed under the Companies Act, 2013, for each financial year commencing from 1st April, 2016.
Further, there has been no other material pecuniary relationship or transactions by the Company with Non-executive directors.
Corporate Social Responsibility Committee
The Company has constituted a Corporate Social Responsibility (CSR) Committee as required under Section 135 of the Companies Act, 2013.
The role of the CSR Committee, inter alia, is to:
• Formulate and recommend to the Board, a CSR Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII of the Companies Act 2013;
• Recommend the amount of expenditure to be incurred on the CSR activities;
• Monitor the CSR Policy of the Company from time to time and for this purpose institute a transparent monitoring mechanism
The Board has adopted a Policy on CSR recommended by the Committee and is placed on Company's website www.smlisuzu.com .
The annual report on CSR activities, for fiscal 2015-16, forms a part of Directors Report.
Risk Management Committee
The Committee is entrusted with the functions of overseeing the efficacy of risk management framework of the Company, including mitigation measures taken by management, advising thereon and appropriately reporting to the Board.
During the year, two meetings were held on 6th August, 2015 and 4th February, 2016.
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, effective from 1st December, 2015, the Company has entered into new Listing Agreements with BSE Limited and the National Stock Exchange of India Limited during the month of January, 2016.
1. Transactions with related parties
The Company has adopted a policy to deal with related party transactions and during the year there were no material related party transactions made by the Company that would have required shareholders approval under the Listing Regulations. The Company has not entered into any transaction of material nature that may have any potential conflict with the interest of the Company. The details of the related party transactions as per Accounting Standard 18 are set out in note 32 to the Financial Statements.
The Policy on Related Party Transactions is uploaded on the Company's website and can be assessed at the web link: <http://smlisuzu.com/Financials/RPTPolicy.aspx>
2. Details of non-compliance
There has neither been any non-compliance of any legal provision of applicable law nor any penalty, stricture imposed by the Stock Exchanges or SEBI or any other authorities, on any matters related to capital market during the last three years.
3. Whistle Blower Policy/Vigil Mechanism
The Company has adopted a whistle blower policy, to provide formal mechanism to the Directors and employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy. It provides for adequate safeguards against victimization of employees who avail of the mechanism and provides for direct access to the Chairman of the Audit Committee. No instance has been reported when any person was denied access to the Audit Committee.
4. Code for prevention of Insider Trading Practices
In compliance with SEBI's Regulations on prevention of insider trading, the Company has instituted a comprehensive Code of Conduct for prevention of insider trading. The Code lays down guidelines and procedures to be followed and disclosures to be made, by Designated Persons, while dealing with shares of the Company and cautioning all concerned of the consequences of violations.
5. Accounting Treatment
In preparation of the Financial Statements, the Company has followed the Accounting Standards as prescribed under section 133 of the Companies Act, 2013 read with rule 7 of Companies (Accounts), Rules 2014 to the extent applicable, as adopted consistently by the Company. The significant accounting policies which are consistently applied are set out under Note 3 of the Financial Statements for the year ended 31st March 2016.
6. Means of Communication
(a) Publication of results
Quarterly, half-yearly and annual financial results of the Company are published in leading English and vernacular language newspaper, viz., Financial Express, Indian Express and Punjabi Tribune.
(b) Website and News Releases:
The Company's website www.smlisuzu.com displays the information, prescribed to be made available on website of the Company under the Listing Regulations, which inter alia includes - details of business of the Company, terms & conditions of independent directors, composition of board committees, policies
adopted by the Company, shareholding pattern, presentations made to the Analysts / Institutional investors, announcements / disclosures made by the Company, notices published in the newspapers, status of unclaimed dividend, Annual Reports, quarterly & Annual Financial results, contact for investor grievances, etc
(c ) Stock Exchange
Company makes timely disclosures of necessary information to BSE Limited and the National Stock Exchange of India Limited, where Company's shares are listed, in terms of the Listing Regulations and other Rules and regulations issued by SEBI, electronically through at their respective web-based portals - BSE Listing center and NEAPS.
7. Management Discussion and Analysis Report
Management Discussion and Analysis Report has been attached to Directors Report and forms part of this Annual Report.
8. Compliance with Mandatory Requirements
The Company has complied with all the mandatory requirements of the Code of Corporate Governance as stipulated under Listing Regulations.
In addition to the above, Company has also complied with the requirements specified in Regulations 17 to 27 and clauses (b) to (i) of the Regulation 46(2) of the Listing Regulations.
9. Adoption of discretionary requirements
i) The Board
The Company does not maintain the office of the Non-Executive Chairman but he is allowed reimbursement of expenses incurred in performance of his duties.
ii) Shareholder Rights
The Company regularly publishes its quarterly and annual results in the leading national / regional newspapers as required under the Listing Regulations. These results are also available on the Company's website www.smlisuzu.com . Annual Report containing Audited Financial Statements, Directors' Report, Auditor's Report and other important information is circulated to the Members and is also displayed on the Company's website www.smlisuzu.com .
iii) Modified opinion(s) in Audit Report
For the financial year under review, there is no audit qualification in the Company's financial statements. The Company continues to adopt best practices to ensure regime of unqualified financial statements.
iv) Separate posts of Chairman and CEO
The post of the Non-Executive Chairman of the Board is separate from that of the Managing Director & CEO.
v) Reporting of Internal Auditor
The Internal Auditor of the Company periodically reports to the Audit Committee.
10. Policy on determining Material Subsidiary
The Company has no subsidiary.
1. Annual General Meeting
Date : 5th August, 2016 (Friday)
Time : 3:30 P.M.
Venue : SML Isuzu Limited
Village Asron, Distt. Shahid Bhagat Singh Nagar, (Nawanshahr), Punjab-144 533
2. Financial Calendar (tentative)
The Financial year covers the period from 1st April to 31st March
Quarter ended 30th June, 2016: 1st/2nd week of August, 2016
Quarter ending 30th Sept., 2016 :1st/2nd week of November, 2016
Quarter ending 31st Dec., 2016 :1st/2nd week of February, 2017
Year ending 31st March, 2017 :May, 2017
3. Book Closure
30th July, 2016 to 5th August, 2016 (both days inclusive)
4. Dividend Payment date
16th August, 2016
5. Listing on Stock Exchanges
BSE Limited (BSE)
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai-400 001
National Stock Exchange of India Limited (NSE)
Exchange Plaza, 5th Floor, Plot no. C/1, G Block Bandra- Kurla Complex Bandra(E) Mumbai - 400051
Listing fee for FY 2016-17 for both these stock exchanges has been paid.
6. Stock Code :
BSE -505192 NSE - SMLISUZU
7. CIN :
8. Dematerialisation and Liquidity of Shares:
The trading in Equity shares of SML ISUZU Limited is permitted only in dematerialized form. The Company has joined National Securities Depository Limited (NSDL) and Central Depository Services (India) Ltd. (CDSL) to avail of this facility.
As on 31st March 2016, 96.39% of the Company's shares were held in electronic form. International Securities Identifications Number: INE294B01019 (with NSDL and CDSL)
For Shares held in electronic form, all instructions regarding change of address, nomination, power of attorney etc., should be given directly to their Depository Participants and the Company will not be able to entertain any such requests directly from shareholders
9. Transfer System for physical shares:
Share transfers are being registered and returned within the stipulated timeline from the date of receipt, if the documents are clear in all respect. The Company obtains from a Company Secretary in Practice half yearly certificate of compliance with respect to issue of share certificates as required under Regulation 40(9) of the Listing Regulations and files a copy of the said certificate with Stock Exchanges.
Total number of shares transferred during 2015-16 was 6,151 (Previous Year 5,500)
Income-tax PAN mandatory for Transfer / Transmission / Deletion / Transposition of securities held in physical form.
10. Registrar and transfer Agents
M/s MCS Share Transfer Agent Limited Sri Venkatesh Bhavan, F - 65, 1st Floor, Okhla Industrial Area, Phase - I, New Delhi - 110020
Contact person : Mr. S. Biswas Tele: 011-41406149 Fax: 011-41709881
Email address : firstname.lastname@example.org
All communication regarding Share Certificates, share transfers, dividends and change of address etc. may be addressed to the Registrar, M/s MCS Share Transfer Agent Limited or to the Share Department of the Company at SCO: 204-205, Sector-34 A, Chandigarh-160 135.
11. The Company has not issued any GDRs/ADRs/ Warrants or any convertible instruments.
12. The Company being a user of commodities (raw material & components procured for manufacturing of vehicles) is exposed to commodity price risks.
Risk associated with foreign exchange transactions for the Company is not material. Particulars of the foreign currency exposures have been covered in Note 43 to Financial Statements.
13. Disclosures with respect to the Demat Suspense Account / Unclaimed Suspense Account
As on 31st March 2016, no shares were lying under the Demat Suspense Account/Unclaimed Suspense Account.
14. Plant Location :
SML Isuzu Limited
Registered Office & Works : Village Asron, Distt. Shahid Bhagat Singh Nagar, (Nawanshahr), Punjab - 144 533
15. Address for correspondence (for Investor queries etc.)
Registrar and Share Transfer Agents
M/s MCS Share Transfer Agent Limited
Unit : SML Isuzu Limited Sri Venkatesh Bhavan, F-65, 1st Floor Okhla Industrial Area, Phase-1 New Delhi-110 020
Phone : 011-41406149 Fax:011-41709881
Email : email@example.com
Compliance Officer & Company Secretary
Mr. Parvesh Madan
SML Isuzu Limited SCO: 204-205 Sector 34 - A Chandigarh - 160 135
Tele : 0172-2647700-10 Fax : 0172-2615111 Email : firstname.lastname@example.org email@example.com
16. Website Address : www.smlisuzu.com