REPORT ON CORPORATE GOVERNANCE
1. Company's philosophy on Corporate Governance:
The Company's philosophy on Corporate Governance is aimed at assisting the management of the Company in the efficient conduct of the business and to meet its obligations to the stakeholders. The Company firmly believes that practice of Corporate Governance inter alia should aim at meeting the aspirations of the stakeholders and the expectations of the society at large. Accordingly, the Company believes in and has consistently practiced good Corporate Governance. In pursuance of this philosophy, the management adheres to transparency, professionalism and accountability in performance of its role.
2. Board of Directors:
Composition and Category of Directors:
The Board of Directors Comprises of 2 Executive Directors and 4 Non-Executive Directors of which 3 are Independent Directors. The Composition of the Board is in conformity with the listing requirements.
The details of the Directors being appointed/ re-appointed on retirement by rotation at the ensuing Annual General Meeting, as required pursuant to Clause 49(IV)(G) of the Listing Agreement, are mentioned in the Directors' Report, forming part of the Annual Report.
The names and categories of the Directors on the Board, their attendance at Board Meetings held during the year and the number of Directorships and Committee Chairmanships/ Memberships held by them in other companies is given below. Other Directorships do not include alternate directorships, directorships of the private limited companies, section 8 companies and of companies incorporated outside India. Chairmanship/Membership of board Committees includes only Audit, Stakeholders Relationship and Nomination and remuneration committee.
Pecuniary relationship or transaction of the Non-executive Directors vis-a-vis the company:
None of the Non-executive Directors has any pecuniary relationship or transactions with the company. Meetings of the Board:
During the Year under review 5 Board Meetings were held on 26.05.2014, 13.08.2014, 11.11.2014, 14.02.2015 and 28.03.2015
The maximum gap between two meetings was less than 120 days as stipulated under the Clause 49 of the Listing Agreement.
Board Meetings/ AGM - Attendance and Directorships / Committee Memberships:
The compositions of the Board of Directors and their attendance at the meeting during the year and at the last Annual General Meeting as also number of other Directorship of committees are as follows: v
3. Audit Committee:
I. The composition of the Audit Committee is in compliance with the clause 49 of the Listing Agreement and the terms of reference, role and scope are in line with those prescribed by clause 49 of the Listing Agreement with the Stock Exchanges.
II. The terms of reference of the audit committee are broadly as under.
• Oversight of the company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
• Recommend the appointment, remuneration and terms of appointment of auditors of the company
• Approval of payment to statutory auditors for any other services rendered by the statutory Auditors.
• Reviewing, with the management, the annual financial statements and auditors' report thereon before submission to the Board for approval with particular reference to:
• Matters required to be included in the director's responsibility statement to be included in the board's report in terms of clause (c) of sub section 3 of section 134 of the Act.
? Changes, if any, in accounting policies and practices and reasons for the same.
? Major accounting entries involving estimates based on the exercise of judgment by management.
? Significant adjustments made in financial statements arising out of Audit Findings.
? Compliance with listing and other legal requirements relating to financial statements.
? Disclosure of any related party transactions.
? Qualifications in the draft audit report.
• Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.
• 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 utilised for purpose other than those stated in the offer document / prospectus / notice and the report submitted by themonitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the board to take up the steps in this matter.
• Review and monitor the Auditors' independence and performance, and effectiveness of Audit process.
• Approval of any subsequent modification of transactions of the company with related parties.
• Scrutiny of inter corporate loans and investments.
• Valuation of undertaking or assets of the company, wherever it is necessary.
• Evaluation of internal financial controls and risk management system.
• Reviewing with the management performance of statutory and internal Auditors, adequacy of the internal control systems.
• Reviewing the adequacy of internal audit functions, if any, including the structure of internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.
• Discussion with internal auditors of any significant findings and follow up there on.
• Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or failure of internal control systems of a material nature and reporting to the matter to the Board.
• Discussion 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 look into the reasons for substantial defaults in the payment to Depositors, debenture holders, share holders (in case of non-payment of declared dividends) and creditors.
• Establish a vigil mechanism for directors and employees to report genuine concerns in such manner as may be prescribed.
• To Review the functioning of whistle blower mechanism.
• Approval of appointments of CFO.
• The Audit committee may call for the comments of the Auditors' about internal control system, the scope of audit, including the observations of the Auditors' and Review of financial statement before their submission to the Board and may also discuss any related issues with the internal and statutory auditors' and the management of the company.
• Carrying.out any other function as is mentioned in the terms of reference of the audit committee.
• Oversee financial reporting controls and process for material subsidiaries.
• Oversee compliance with legal and regulatory requirements including the code of conduct for the company and its associated companies. ,
• To mandatorily review following information.
? Management discussion and analysis of the financial condition and results of operations
? Statement of significant related party transactions, (as defined by Audit Committee) submitted by the management.
? Management letters / letter of internal control weaknesses issued by statutory auditors'
? Internal audit reports relating to internal control weaknesses; and
? The appointment, removal and terms of remuneration of Chief internal Auditor.
III. The Audit Committee invites executive, as it considers appropriate (particularly the head of finance function), representatives of the statutory auditors and representatives of the internal auditors to be present at its meetings. The Company Secretary acts as a Secretary to the audit committee.
IV. The previous Annual General Meeting (AGM) of the Company was held on 30th September, 2014 and was attended by Mr. Mr. G. Raghavendra Rao, Chairman of the Audit Committee,
V. The Audit Committee comprises of 3 (Three) Independent Directors and 1 (One) Executive Director. The Audit Committee met 4 (Four) times during the year under review on 26.05.2014, 13.08.2014, 11.11.2014 and 14.02.2015
4. Stakeholders' Relationship Committee:
The company had a shareholders / investors grievance committee of directors to look into the redressal of complaints of investors. The nomenclature of the said committee was changed to stakeholders' relationship committee in the light of the provisions of the act and revised clause 49 of the iisting agreement. The responsibilities of the committee include:
(a) to approve share transfers and transmissions and '
(b) to look into the redressal of complaints of investors such as transfer or credit of shares, non receipt of dividend/ notice annual reports etc.
(c) to approve splitting of share certificates, consolidation of share certificates and related matters including issue of fresh share certificates in lieu of the split / consolidated certificates and redressal of all share holders' queries and grievances. The Committee has been meeting as required to resolve the complaints and replied / resolved to the satisfaction of the investors
5. Nomination and remuneration committee:
The terms of reference stipulated by the board of directors to the nomination and Remuneration committee as contained in Clause 49 of the listing agreement and sub-section (1) of Section 178 of companies Act, 2103, are as follows:
• Formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the appointment and remuneration of the directors, key managerial personnel and other employees.
• Formulation of criteria for evaluation of independent Director and the Board.
• Devising a policy on Board diversity
• Indentify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board their appointment and removal. The company shall disclose the remuneration policy and the evaluation criteria its Annual report.
During the year the committee met on 13.08.2014
During the year, the Board adopted a formal mechanism for evaluation its performance and as well as that of its committees and individual directors, including the chairman of the Board. Separate exercise was carried out to evaluate the performance of individual director including the Board, chairman who were evaluated on parameters such as attendance, contribution at the meeting and other wise. The guidelines for evaluation of Board and committee are available at the registered of the company.
The nomination and remuneration policy of your company is a comprehensive policy which is competitive, in line with the industry practices and reward good performance of employee of the company. The policy is available at the registered office of the company.
The objectives and Board framework of the remuneration policy is to consider and determine the remuneration based on the fundamental principles of payment for performance, for potential, and for growth and to provide to Key Managerial personnel and Senior Management reward linked directly to their effort, performance, dedication and achievement relating to the company operations.
Your company endeavours to attract, retain, develop and motivate a high performance workforce. Your company follows a compensation mix of fixed and variable pay. Individual performance pay is determined by the business performance and the performance of the individuals measured through the annual appraisal process.
The remuneration policy of the company for managerial personnel is primarily based on the performance of the company, performance and potential of individual managers, and External competitive environment.
6. Risk management:
The risks faced by the Chemical Industry and the Company along with risk mitigation measures are elaborately discussed in Management Discussion & Analysis forming part of the Annual Report.
8. Code of Conduct for Directors and members of senior management:
The Company adopted a Code of Business Conduct and Ethics for its Directors and members of senior management. The Code is available at the registered office of the company. The Managing Director has given a declaration that all the Directors and members of senior management have affirmed compliance with the Code of Conduct.
9. CEO/CFO Certification:
A certificate duly signed by Chairman & Managing Director and CFO relating to financial statements and internal controls and internal control systems for financial reporting as per the format provided in Clause 49 of the Listing Agreement was placed before the Board and was taken on record.
10. Whistle Blower:
The Company has formulated Whistle Blower Policy and established a mechanism for directors and employees to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the company's code of conduct or ethics policy. This mechanism provides for adequate safeguards against victimization of director(s)/employee(s) who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The Whistle Blower Policy is available at the registered office of the company.
11. Postal Ballot:
No special resolution was passed through postal ballot during the financial year ended March 31, 2015.
(a) There were no significant related party transactions that may have potential conflict with the interests of the Company at large.
(b) In the preparation of financial statements, no treatment materially different from that prescribed in Accounting Standards had been followed.
(c) There were no penalties or strictures imposed on the Company by the Stock Exchanges or SEBI or any statutory authority on any matter related to capital markets at any time during the last 3 years.
(d) Managing Director of the Company has furnished the requisite Certificates to the Board of Directors under Clause 49 of the Listing Agreement.
12. Means of communication:
The Quarterly Financial Results and Share Holding Pattern of the Company are furnished to the Stock Exchange and are also published in the newspapers as prescribed in the Listing agreement
13. GENERAL SHARE HOLDERS INFORMATION:
i. Annual General Meeting:
Date & Time : Monday, 30.09.2015 at 11.30 A.M.'
Venue . : Hotel I. K. London, 6-3-656, Kapadia Lane, Somajiguda, Hyderabad - 500 082
ii. Financial Calendar (Tentative):
Financial Year April 2015- to March, 2016
First Quarter Result: 03.08.2015
Second Quarter Result: 11.11.2015
Third Quarter Result: 13.02.2016
Fourth Quarter Result: 30.05.2016
iii. Book Closure Dates ; 23.09.2015 to 30.09.2015
iv. Listing on Stock: BSE Limited
Listing Fees : 2,24,720/- is paid
Stock Code . : For equity shares: BSE: 513498
ISIN No. : For equity shares: - INE308N01012
vi. Registrar and Share Transfer Agents:
Aarthi Consultants Private Limited, 1-2-285, Domalguda Hyderabad-500029 Ph.Nos.040-27638111/27634445 Email : firstname.lastname@example.org
vii. Share Transfer System:
The Physical shares transfers are processed and the share certificates are returned to the shareholders within a maximum period of 15 days from the date of receipt, subject to the document being valid and complete in all respects.
Any transferee who wishes to demat the shares may approach a Depository Participant along with a duly filled Demat Request Form, who shall, no the basis of the Share Certificate, generate a demat request and send the same to the Registrar and Share Transfer Agents (RTA). On receipt, the Depository Registrar confirms the request.
All the requests for dematerialization of shares are processed and the confirmation is given within 21 days on receipt.
vii. Name & Details of Compliance Officer:
Mr. N. Rajender Prasad, Jt. Managing Director and CFO Deccan Chambers, 5th Floor, 6-3-666/B, Somajiguda, Hyderabad - 500 082 Ph: 040-23311789 Fax No: 040-23319871 Email Id : email@example.com
x. Dematerialization of Shares and Liquidity:
The Company has obtained demat connectivity with CDSL and the ISIN is INE308N01012. All the shareholders are requested to contact Registrars and Share transfer Agents at the above mentioned address for Dematerialization of shares.
xi. Address for Investor correspondences:
Mr. N. Rajender Prasad, Jt. Managing Director and CFO Deccan Chambers, 5th Floor,6-3-666/B, Somajiguda, Hyderabad - 500 082 Ph: 040-23311789 Fax No: 040-23319871 Email Id: firstname.lastname@example.org
For and on behalf of the board of Directors
Southern Magnesium and Chemicals Limited
Stil- (N.Ravi Prasad)
Managing Director and CEO