REPORT ON CORPORATE GOVERNANCE
CORPORATE GOVERNANCE PHILOSOPHY
Corporate Governance is essentially an ethos which guides and directs the management of a company in handling its affairs in the best interest of all the stakeholders and promotes fairness, transparency and integrity.
The Clause 49 of the Listing Agreement with the Stock Exchanges deals with Corporate Governance requirements. Also the Department of Public Enterprises (DPE) of the Government of India has issued Guidelines on Corporate Governance which are applicable to all Central Public Sector Enterprises (CPSEs) so as to achieve the highest standards of fairness, transparency, trust, integrity, responsibility and accountability with a strong emphasis on ethical and professional conduct.
STC believes that Corporate Governance is not a mere legal compliance but rather a prerequisite to maximize value for all stakeholders. It strives to adopt such corporate practices that are based on transparency and proper disclosures and ensure accountability of the persons in key positions thereby benefiting investors, customers, creditors, employees and the society at large.
As a first step towards Corporate Governance, the Company has laid down desirable codes and policies such as Code of Conduct for Board Members and Senior Management Personnel, Code of Conduct for Prevention of Insider Trading, Whistle Blower Policy, Anti-Fraud Policy, Related Party Transactions Policy etc.
The internal control systems and their adequacy is overseen by the Audit Committee so as to bring transparency in decision making. A consolidated compliance report of all laws applicable to the Company is periodically put up to the Board.
The Company adheres to good corporate practices and constantly strives to improve the same. 1. BOARD OF DIRECTORS
1.1 The Company is managed by the Board of Directors, which formulates strategies and policies, oversees their implementation and also reviews Company performance periodically. Board of Directors is at core of the Company's corporate governance practices and oversees how the management serves and protects the long term interest of the stakeholders.
STC being a Government Company, all its Directors are appointed by the President of India, through the Ministry of Commerce & Industry. Articles of Association of the Company stipulate that the number of Directors shall not be less than four and more than sixteen. As on 31st March, 2015, there were eight Directors on the Board comprising Chairman & Managing Director, three whole time Functional Directors, two part-time official Directors, who are the Government nominees and two part-time non-official Directors (Independent Directors). All the Directors except CMD and Independent Directors are liable to retire by rotation. At least one third of the Directors retire every year and if eligible, qualify for reappointment.
Apart from CMD and Functional Directors, who receive directors' remuneration, other Directors of the Board do not have any material pecuniary relationship or transactions with the Company, its promoters or its subsidiary, which in judgment of the Board may affect independence of Directors.
1.3 Board Meetings
The meetings of the Board are generally held at the registered office of the Company and are convened by giving appropriate advance notice after approval of the Chairman of the Board. The Board of STC meets regularly at least once in a quarter. The meetings of the Board are conducted as per a structured agenda and members of the Board have complete access to all information of the Company and are also free to recommend inclusion of any subject matter in the agenda for discussion. Detailed agenda containing the management reports and other explanatory statements are circulated in advance amongst the members of the Board for facilitating meaningful, informed and focussed decisions at the meetings. Where it is not practicable to circulate any document or the agenda note for a particular item of business, the same is tabled with the approval of Chairman of the Board. Senior officials are called to provide additional inputs to the items being discussed by the Board, as and when necessary.
1.4 Changes in the Board of Directors
Since the last Annual General Meeting, Shri Rajani Ranjan Rashmi, Additional Secretary, Department of Commerce, Ministry of Commerce and Industry was appointed as Part-time Official Director on the Board of STC vice Shri Madhusudan Prasad w.e.f. 24.02.2015. Subsequently, Shri Ajay Kumar Bhalla, Additional Secretary, Department of Commerce, Ministry of Commerce and Industry was appointed as Part-time Official Director on the Board of STC vice Shri Rajani Ranjan Rashmi w.e.f. 29.04.2015.
Shri Jitendra Kumar Dadoo, AS&FA, DoC was appointed as Part-time Official Director on the Board of STC vice Shri Bhagwati Prasad Panday w.e.f. 06.08.2015.
The terms of appointment of Shri Uday N. Abhyankar, Shri S.C. Tripathi, Shri Subhash Chandra Saraf, Dr.(Smt.) B. Kinnera Murthy and Shri Jayendra N. Shah, Independent Directors expired on 09.10.2014, 13.10.2014, 27.03.2015, 17.04.2015 and 17.04.2015 respectively.
The Board places on record its deep appreciation for the valuable contributions made by Shri Madhusudan Prasad, Shri Bhagwati Prasad Panday and Shri Rajani Ranjan Rashmi, Part-time Official Directors and Shri Uday N. Abhyankar, Shri S.C. Tripathi, Shri Subhash Chandra Saraf, Dr.(Smt.) B. Kinnera Murthy and Shri Jayendra N. Shah as Part-time Non-official (Independent) Directors on the Board of the Corporation.
2. RESUME OF DIRECTORS PROPOSED TO BE APPOINTED/ RE-APPOINTED
The brief resume of Directors retiring by rotation and seeking re-appointment indicating nature of their experience in specific functional areas, names of Companies in which they hold directorship and membership/ chairmanship of Boards/ Committees are appended to the notice calling the Annual General Meeting.
3. BOARD COMMITTEES
The Company has the following Committees of the Board:
3.1 Audit Committee
The terms of reference of the Audit Committee are in accordance with Section 177 of the Companies Act, 2013, revised Clause 49 of the Listing Agreement and the Guidelines on Corporate Governance for CPSEs issued by DPE in May, 2010. The Audit Committee is responsible for the effective supervision of the financial reporting processes to ensure proper disclosure of financial statements, their credibility, compliance with the accounting standards, stock exchanges and other legal requirements, reviewing internal control systems, reviewing findings of internal audit and ensuring follow up action on significant findings, and reviewing quarterly, half yearly and yearly accounts.
The Audit Committee re-constituted by the Board in its 595th meeting held on 12th August, 2014 comprised three Independent Directors and one Part-time Official Director (Govt. Nominee), one of the Independent Directors being the chairperson of the Committee. Company Secretary is the Secretary of the Committee. All the members of the Committee have requisite financial and management experience.
Besides the above, Director (Finance) and Head of Internal Audit are permanent invitees to the meetings. Representatives of Internal Auditors and Statutory Auditors are invited to attend and participate in the meetings. Functional Directors, Executives of Finance and other departments are invited on need basis.
Chairperson of the Audit Committee was present at the AGM of the Company held on 25th September, 2014. With the expiry of tenure of some Directors on the Board, the Audit Committee was re-constituted by the Board in its meeting held on 06.05.2015.
3.2 Nomination and Remuneration Committee
The Remuneration Committee was re-named as Nomination and Remuneration Committee and reconstituted by the Board on 12.08.2014 comprising three Independent Directors viz. Dr. (Mrs.) B. Kinnera Murthy, Chairperson and Shri Jayendra N. Shah and Shri Subhash Chandra Saraf, as members. Director (Personnel) and Director (Finance) are the permanent invitees to this Committee.
The term of reference of the Nomination and Remuneration Committee is as per Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered into with the Stock Exchanges.
STC being a Government company, terms and conditions of appointment and remuneration of whole-time Functional Directors including CMD are determined by the Government through administrative ministry, the Ministry of Commerce and Industry. Non-Executive part-time official Directors (Government nominees) do not draw any remuneration or sitting fee. Non-executive part-time non-official Directors (Independent Directors) are paid sitting fees of Rs.20,000/- for each Board/ Committee meeting attended by them.
3.3 Stakeholders Relationship Committee:
The Company has a "Stakeholders Relationship Committee" at the Board level to deal with various matters relating to redressal of grievances of the shareholders' including complaints related to transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends. The Committee is headed by Shri Rajani Ranjan Rashmi, Additional Secretary, MOC, Part-time Official Director/ Government Nominee. Shri Manoj Mishra, Director (Finance) and Shri Rajiv Chopra, Director (Marketing) are the other members of the Committee
3.3.1 Compliance Officer
Shri R.K. Gogia, Company Secretary is the Compliance Officer. The Company Secretary is primarily responsible to ensure compliance with applicable statutory requirements and is the interface between the management and the regulatory authorities for governance matters.
3.3.2 Redressal of Investors' Grievances
The Company addresses all complaints, suggestions and grievances of the investors expeditiously and usually resolves the issues within 7-10 days except in case of dispute over facts or other legal constraints.
No request for share transfer is pending beyond 30 days except those that are disputed or sub-judice. All requests for de-materialization of shares are likewise processed and confirmation communicated to investors and Depository Participants within 10 working days
3.4 CSR Committee of Directors
Board in its meeting held on 12.08.2014 re-constituted the CSR Committee comprising three Directors viz. Dr. (Smt.) B. Kinnera Murthy, Independent Director as Chairperson, Shri Manoj Mishra, Director (Finance) and Shri S.K. Sharma, Director (Personnel) as members. The terms of reference of the Committee include formulating and recommending to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company, recommending the amount of expenditure to be incurred on such activities and monitoring the implementation of Corporate Social Responsibility Policy of the Company from time to time.
3.5 Separate Meeting of Independent Directors
Pursuant to the Provisions of Section 149(6) read with Schedule IV to the Companies Act, 2013, a separate meeting of the Independent directors was held during the year to inter-alia review the performance of non-independent directors and the Board as a whole, review the performance of the Chairperson of the company, taking into account the views of executive directors and non-executive directors and to assess the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
.1 CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING
In pursuance of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, as amended from time to time, the Board has approved the Code of Conduct for Prevention of Insider Trading in dealing with securities of STC. The objective of the Code is to prevent purchase and/ or sale of shares of the Company on the basis of unpublished price sensitive information. Under this Code, all Directors and employees are prohibited to deal in the Company's shares during the closing of Trading Window and other specified period(s). To deal in securities beyond specified limit, permission of Compliance Officer is required. All Directors and employees are required to disclose related information periodically as stipulated in the Code. The Code has been circulated to all Directors and Employees and has been hosted on the Company website.
4.2 CEO/ CFO CERTIFICATION
In terms of revised Clause 49(IX) of the Listing Agreement, the certification by the CEO/CFO on the financial statements and internal controls relating to financial reporting for the year 2014-15 was submitted to the Board on 25.05.2015 and is annexed to this report.
5 SUBSIDIARY COMPANY:
The Company has one wholly owned unlisted subsidiary Company, STCL Limited. The said subsidiary is a Board managed company with its Board having the rights and obligations to manage the Company in the best interest of its stakeholders. The Directors on the Board are appointed by the President of India through Administrative Ministry, Ministry of Commerce and Industry. The present composition of the Board is as follows:
(i) Chairman STC - Part-time Chairman of the Board
(ii) Director - FT(ST) , Department of Commerce, Ministry of Commerce and Industry, Government of India - Part-time Official Director/ Government Director
(iii) Director (Finance) STC - Part-time Director
(iv) Managing Director - STCL (Whole-time)
The performance of the subsidiary is reported to the Board every quarter. However, as per decision of the Union Cabinet, STCL has filed a winding up petition in the High Court of Karnataka.
• During the year, there were no transactions of material nature with the Directors or the Management or the subsidiary or relatives that had potential conflict of interest with the company.
• The details of "Related Party Disclosures" have been disclosed at serial no. 52 in the Notes Forming Part of Accounts in the Annual Report.
• The applicable accounting standards have been followed in the preparation of financial statements along with proper explanation relating to material departures.
• None of the non-official part-time Directors had any pecuniary relationship or transactions with the Company during the financial year ending 31st March, 2015.
• No items of expenditure have been debited in the books of accounts, which are not for the purpose of business. No expenses, which are personal in nature, have been incurred for the Board of Directors and top management.
• There has been no instance of non-compliance by the Company on any matter related to capital markets, during the last three years. No penalties or strictures have been imposed by SEBI, the Stock Exchange or any Statutory Authority on the Company.
• The Company has complied with the mandatory requirements of revised Clause 49 of the Listing Agreement except in-adequate number of Independent Directors on the Board towards the later part of the year.
• Directors are nominated on training programmes organized by DPE & SCOPE from time to time.
8 MEANS OF COMMUNICATION
• Quarterly/Annual Results: The Company regularly intimates un-audited as well as audited financial results to the stock exchanges immediately after these are approved by the Board. These financial results are normally published in the leading English and vernacular dailies having wide circulation across the country. The results are also displayed on the web site of the Company www.stc.gov.in.The results are not sent individually to the shareholders.
• Limited Review Reports: "Limited Review" reports of the unaudited financial results for the respective quarter(s) obtained from statutory auditors of the Company are filed with the Stock Exchange(s) from time to time.
• News Release: The official news releases are displayed on the Company's website www.stc.gov.in
• Website: The Company's website www.stc.gov.in contains a separate section where the shareholders information is available. Full Annual Report, Shareholding Pattern and Corporate Governance Report etc. are also available on the website in a user friendly manner.
• Annual Report: Annual Report containing inter-alia, Audited Accounts, Directors' report, Management Discussion and Analysis (MD&A) Report, Auditors' Report, Corporate Governance Report including information for the Shareholders and other important information is circulated to the members and others entitled thereto.
9 SHAREHOLDERS' INFORMATION
9.1 Forthcoming AGM - Date, Time and Venue
The Annual General Meeting for the Financial Year ending 31st March, 2015 is scheduled to be held on 28t
Adoption of Quarterly results for the quarter ending : Last date for adoption of Financial Results
June 30, 2015 ; 15th August, 2015
September 30, 2015 : 15th November, 2015
December 31, 2015 : 15th February, 2016
March 31, 2016 (Audited) : 30th May, 2016
Book Closure Period:
The Register of Members shall remain closed from 21.09.2015 to 28.09.2015 (both days inclusive) for the purpose of Annual General Meeting and Dividend, if any.
9.4 Listing on Stock Exchanges
The equity shares of the Company are listed on the following Stock Exchanges:
Name, address and contact details Security Code
The Bombay Stock Exchange Limited (BSE) P.J. Towers, Dalal Street, Mumbai - 400 001 Telephone: 022-22721233/4 Fax: 022-22723121/3719/2037/2039 E-mail: email@example.com Website: www.bseindia.com
Security Code 512531
Type of Security Equity
National Stock Exchange of India Limited (NSE)
Exchange Plaza, Plot No. 1, G- Block, Bandra- Kurla Complex, Bandra (East), Mumbai - 400 051. Telephone: 022-26598100-8114 Fax: 022-26598237/38 E-mail: firstname.lastname@example.org Website: www.nseindia.com
Security Code STCINDIA-EQ
Type of Security Equity
9.5 Listing Fee
The Annual Listing Fee for the listed equity shares pertaining to the year 2015-16 has been paid to the concerned Stock Exchanges.
9.6 Payment of Annual Custody Fee to NSDL and CDSL
Stock code: INE655A01013
The Company has not yet received Annual Custody Fee bill from National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) for the financial year 2015-16 based on the Folio/ISIN positions as on 31.03.2015. The same will be paid in due course on receipt of the bill.
9.8 Share Transfer System
M/s MCS Share Transfer Agents Limited is the Registrar and Share Transfer Agent (RTA) for the physical shares. MCS Share Transfer Agents Limited is also the depository interface of the Company with both National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).
The shares of the company are traded compulsorily in dematerialized form. Shares received for transfer in physical form are normally processed within a period of 30 days from the date of lodgment of valid share transfer deed along with share certificate. A Share Transfer Committee comprising of two whole time Directors and the Company Secretary is empowered to approve the transfers. No transfer was pending as on 31.03.2015.
Pursuant to the Clause 47-C of the Listing Agreement, certificates from practicing Company Secretary confirming due compliance of share transfer formalities by the Company, certificates for timely dematerialization of the shares as per SEBI (Depositories and Participants) Regulations, 1996 are sent to Stock Exchanges on quarterly basis.
9.13Transfer of Unpaid/ Unclaimed Dividend to Investor Education and Protection Fund (IEPF)
During the year, amounts of Rs.39,376/- and Rs.1,44,375/- pertaining to unclaimed/unpaid final dividend for the year 2006-07 and interim dividend for the year 2007-08 respectively were transferred to the Investor Education and Protection Fund (IEPF) set up by the Central Government. This is in accordance with the Section 124 of the Companies Act, 2013 requiring transfer of dividend remaining unclaimed and unpaid for a period of 7 years from the due date to the IEPF.
10. OUTSTANDING GDRs/ADRs/ WARRANTS OR CONVERTIBLE INSTRUMENTS
No GDRs/ADRs/ Warrants or Convertible Instruments have been issued by the Company.
11. ADDRESSES FOR SHAREHOLDERS' CORRESPONDENCE
These have been given at 3.3.3 above.
12. RISK MANAGEMENT
A Risk Management Framework has been instituted to add further objectivity to the process of risk assessment while considering trade proposals. The Risk Management Framework measures the risk involved in a business proposal in the form of a total risk score which is weighed vis-a-vis available risk mitigation measures. An Enterprise level Risk Assessment system has also been put in place.
13. WHISTLE BLOWER POLICY
Clause 49 (II) (F) of the Listing Agreement provides that a listed company shall establish a vigil mechanism for directors and employees to report concern about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. Also, in terms of Clause 8 of the DPE Guidelines on Corporate Governance for CPSEs issued in 2010, Company may establish a mechanism for employees to report to the management concerns of unethical behavior etc. Accordingly, the Company has framed a Whistle Blower Policy with the approval of the Board and the same has been implemented w. e. f. 10th May, 2012.
A suitable mechanism has been put in place to protect the whistle blowers from any kind of harm or harassment.
14. COMPLIANCE CERTIFICATE FROM AUDITORS
A Certificate from the Practicing Company Secretary, confirming compliance with the conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is annexed to the Directors' Report forming part of the Annual Report ( Annexure V). The Certificate has also been forwarded to the Stock exchanges where the securities of the Company are listed.
15. ADOPTION OF NON-MANDATORY REQUIREMENTS OF CLAUSE 49
The Company is examining the implementation of non-mandatory requirements, wherever possible.
16. GUIDELINES ON CORPORATE GOVERNANCE BY DPE
The Board of Directors of STC has adopted Guidelines on Corporate Governance, 2010 for CPSEs issued by Department of Public Enterprises (DPE) on mandatory basis as the Board approved policy on Corporate Governance.
17. SECRETARIAL AUDIT REPORT
Secretarial Audit was got conducted from M/s Chandrasekran Associates, Company Secretaries confirming compliance to the applicable provisions of the Companies Act, 2013, Listing Agreement, SEBI guidelines, DPE guidelines and all other related rules and regulations relating to Capital Market. The Certificate issued by the Secretarial Auditors confirming all compliances was noted by the Board and forms part of the Directors' Report (Annexure VI).