CORPORATE GOVERNANCE REPORT
1. Company's Philosophy on Corporate Governance
Sri Arumuga Enterprise Limited ("The Company") adopts good practices that enable an organization to perform efficiently and ethically, and to generate long term wealth and create value for all its stakeholders. The Company is committed to conduct its business in accordance with applicable laws, rules and regulations and the highest standards of business ethics and ethical conduct. At the highest level, the Company continuously endeavours to improve upon these aspects on an ongoing basis and adopts innovative approaches for leveraging resources, converting opportunities into achievements through proper empowerment and motivation.
2. Board of Directors Composition and size of the Board
The Company's policy is to have an appropriate mix of Executive and Non- Executive Directors. As on date, the Board comprises a Chairman & Managing Director and 3 Non-Executive Directors who bring in a wide range of skills and experience to the Board. The composition of the Board is in conformity with Clause 49 of the Listing Agreement.
The Board of Directors and its Committees meet at periodic intervals. Policy formulation, setting up of goals, evaluation of performance and control functions vest with the Board. The Board has constituted four Committees, namely, Audit Committee, Nomination and Remuneration Committee, Share Allotment Committee, Shareholders' / Investors' Grievance Committee.
None of the Directors on the Company's Board is a member of more than ten Committees and Chairman of more than five Committees across all Companies in which he is a Director. The necessary disclosures regarding committee positions have been made by the Directors.
Number of Board Meetings held during the year
The Meetings of the Board are generally held at the Registered Office of the Company. During the year under review, 9 Board Meetings were held on 30th May 2013, 28th June 2013, 15th July 2013, 10th August 2013, 04th October 2013, 1st November 2013, 10th January 2014, 5th February 2014 and 12th March 2014 and the gap between two meetings did not exceed four months. The Board meets at least once every quarter inter alia to review the quarterly results. Additional meetings are held, when necessary. The information as required under Annexure - IA to Clause 49 of the Listing Agreement is being made available to the Board for discussion and consideration at Board Meetings. The Board has also taken on record the certificates given by the senior management personnel regarding compliance with the applicable laws on quarterly basis.
Attendance and other Directorships
The composition of the Board of Directors, category and relationship with other Board Members, attendance at board meetings held during the financial year and at the last Annual General Meeting, number of other directorships and committee Chairmanship / Membership held are given below. Other directorships do not include alternate directorships, directorships of private limited companies, Section 25 companies and of companies incorporated outside India. Chairmanships / Memberships of Board Committees include only Audit and Shareholders / Investors Grievance Committees.
Code of Conduct
As per requirement of Clause 49 of the Listing Agreement with the Bombay Stock Exchange, the Board has laid down a Code of Conduct ("the Code") to ensure compliance with the legal requirements and standards of business conduct. The Code applies to all Directors and members of Senior Management of the Company. All Board Members and Senior Management personnel of the Company have affirmed compliance with the Code. A declaration to this effect, signed by Chairman & Managing Director is attached to this report.
3. Committees of the Board Audit Committee
The scope of the activities of the Audit Committee is as set out in Clause 49 of the Listing Agreement read with Section 292 A of the Companies Act, 1956.
The terms of reference of the Audit Committee are broadly as follows :
a. To review the Quarterly and the Annual financial statements before they are submitted to the Board of Directors;
b. To review the compliance with Listing Agreement and various other legal requirements concerning financial statements and related party transactions;
c. To make recommendations to the Board on any matter relating to the financial management of the Company;
d. Any other matters that are relevant.
The Committee consists of 3 non-executive directors, of which 2 are independent directors.
The Committee met four times during the financial year on 30th May 2013, 10th August 2013, 1st November 2013 and 1st February 2014.
All members of Audit Committee are financially literate. The minutes of the Audit Committee are placed before the Board of Directors at their meetings. The Chairman of Audit Committee was present at the last Annual General Meeting.
Nomination and Remuneration Committee
The Company has set up a Nomination and Remuneration Committee with Independent Directors as its members. The Nomination and Remuneration Committee determines and recommends to the Board, the appointment of independent directors to the Board. It also recommends remuneration including commission, perquisites and allowances payable to Chairman & Managing Director. The Company has complied with the non-mandatory requirement of Clause 49 regarding Nomination and Remuneration committee. The Composition of the Nomination and Remuneration Committee as on 31st March 2014 is given below:
Sri S Sanjai, Chairman
Sri Vaibhav Duvvur, Member
The Committee did not meet during the year.
Remuneration policy of the Company is given below: For Chairman & Managing Director
The total remuneration, subject to members' approval, consists of a fixed component of salary as per Company's Rules.
For Non-Executive Directors
At present, no Non-Executive Director is paid any sitting fees for attending the Board and Audit Committee meetings. Non-executive directors are not being paid any commission. Notes :
1. The appointment of Chairman & Managing Director is governed by the Articles of Association of the Company and the resolutions passed by the Board of Directors. Sri T Rajkumar was appointed as a Managing Director of the Company for a period of 5 years with effect from 1st April 2011 by the Board of Directors. He will hold office up to 31st March 2016. The Company does not have any service contract with Chairman & Managing Director.
2. No severance fee is payable to the Directors on termination of employment.
3. The company has no stock option scheme either to its directors or to employees.
4. None of the non-executive directors have any pecuniary relationship or transactions with the company.
Shareholders' / Investors' Grievance Committee
The function ofthe Committee is to redress the grievances of Shareholders' / investors' and to create and review the systems for improving the services.
The composition of the Shareholders'/Investors' Grievance Committee as on 31st March 2014 is given below:
Sri K Dhanakumar, Chairman
Sri S Sanjai, Member
Sri Vaibhav Duvvur, Member
Ms Sangeetha C , Company Secretary, is the Compliance Officer w.e.f.17th March 2014
The Committee meets periodically to attend to transfer / transmission of shares, issue of duplicate share certificates and other grievances of shareholders. During the year, the Committee met three times on 22nd June 2013, 20th July 2013 and 08th March 2014.
During the year, the Company received 18 complaints regarding investor grievances from shareholders in addition to the requests for transfer / transmission of shares and issue of duplicate share certificates. They were expeditiously attended to the satisfaction of shareholders. No complaint was pending as at the close of the financial year.
4. Subsidiary Company
The Company has two Indian subsidiary companies. The details of the Subsidiary Companies are as follows:
1. Sri Mahasakthi Mills Limited
2. Sri Arumuga Cottspin Private Limited
The Company has appointed Sri S Sanjai, Independent Director of the Company as Director in its subsidiaries as per requirement of Listing Agreement. The Audit Committee reviews the financials of the subsidiary companies. The minutes of the meeting of Board of Directors of subsidiaries are being placed before the Board of Directors of the Company.
Related Party Transactions
During the financial year 2013-14, there were no materially significant transactions entered into between the Company and its promoters, directors or the management or relatives etc., that may have potential conflict with the interest of the Company at large. Declarations have been received from the senior management personnel to this effect.
Statutory Compliance, Penalties and Strictures
The Company has complied with the requirements of the Bombay Stock Exchange/SEBI and Statutory Authority on all matters related to capital markets during the last three years except during the period of suspension of the scrip from trading for procedural reasons.
Accounting police The Company follows Accounting Standards notified by the Central Government under the Companies (Accounting Standards) Rules, 2006 and in the preparation of financial statements, the Company has not adopted a treatment different from that prescribed in an Accounting Standard.
6. Means of communication
The quarterly/half-yearly and annual results are published in the newspapers and posted on the website of the Company. The quarterly / half-yearly and annual results are generally published in Business Standard, Trinity Mirror, Malai Malar and Makkal Kural and also displayed on the website of the Company www.arumugaenterprise.com . The quarterly / half-yearly results are not individually sent to the shareholders.
A detailed Management Discussion and Analysis Report forms part of the Annual Report.
8. Directors' reappointment
Details of disclosure regarding re-appointment of directors liable to retireby rotation are given in the Annexure to the Notice.
9. General Shareholder Information
Annual General Meeting
Date and Time :29th September 2014 at 10.00 a.m
Venue :#1, Sundaram Brothers Layout, Opp. All India Radio, Trichy Road Coimbatore - 641 045
Financial year :
April to March
Book Closure Date
22nd September 2014 to 29th September 2014 (both days inclusive)
Dividend Payment Date
On and from 03rd October 2014
Bombay Stock Exchange, Mumbai
Scrip Code & ID
507918 & ARUMUGA
Registrars and Share Transfer Agents
For Share related matters, Members are requested to correspond with the Company's Registrar & Transfer Agents-Purva Sharegistry (India) Private Limited quoting their folio no./DP ID & Client ID at the following address:-
Purva Sharegistry (India) Private Limited
Unit: Sri Arumuga Enterprise Limited
No.9, Shiv Shakti Industrial Estate Ground Floor, J. R. Boricha Marg Opp. Kasturba Hospital, Lower Parel Mumbai - 400 011
Fax: 022-2301 2517 Email: email@example.com
Share Transfer System
All transfers received are processed by the Registrars and Share transfer agents and are approved by the Share Transfer Committee of the Company. Share transfers are registered and returned to the shareholders within the stipulated time if the documents are in order.
Pursuant to Clause 47(c) of the Listing Agreement with the Stock Exchanges, certificates, on half yearly basis, have been issued by a Company Secretary in practice for due compliance of share transfer formalities by the Company. Pursuant to SEBI (Depositories and Participant's) Regulations 1996, certificates have also been received from a Company Secretary in Practice for timely dematerialisation of shares of the company and for conducting a secretarial audit on a quarterly basis for reconciliation of the share capital of the Company.
Dematerialisation of shares
The Company's shares are compulsorily traded in dematerialized form and are admitted for trading under both the depositories of India viz. National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL).
The Company is accepting nomination forms from shareholders in the prescribed Form No.2B. Any member, who is desirous of making a nomination, is requested to contact the Registrar and Share Transfer Agents. Members holding shares in dematerialised form are requested to forward their nomination instructions to the depository participant concerned. Nomination is only optional and can be cancelled or varied by the member at any time.
Address for correspondence
Sri Arumuga Enterprise Limited #1, Sundaram Brothers Layout Opp. All India Radio, Trichy Road Coimbatore - 641 045
Tel: 0422 - 2322340 / 4227300 Fax: 0422 - 4365828
All shareholders' correspondence should be addressed to the Company's registrars and share transfer agents at the address mentioned above.
Shareholders may also contact Ms. Sangeetha, Company Secretary and Compliance Officer at the Registered Office of the company for any investor grievance related matters.
Tel: 0422 - 2322340 / 4227300 E- mail : firstname.lastname@example.org
Pursuant to Clause 47(f) of the Listing Agreement, the Company has designated the following exclusive e-mail id viz. email@example.com to enable the investors to register their grievance.
Compliance with Non-mandatory requirements
The Company has adopted all mandatory requirements of Clause 49 of the Listing Agreement and the status of compliance in respect of non-mandatory requirements stipulated by the said clause is as under:
* The Company has set up a Nomination & Remuneration committee pursuant to Clause 49 of the Listing agreement.
* The half-yearly financial results are published in newspapers as mentioned above. Therefore, the results are not being separately circulated to the shareholders.
* The Company takes concrete and conscious steps in ensuring that the Auditors do not have any qualifications on the financial statements. Queries and suggestions on financial statements, if any, are addressed by the Company officials to the satisfaction of auditors.
For and on behalf of the Board
Chairman & Managing Director
30th May 2014