REPORT ON CORPORATE GOVERNANCE
COMPANY'S PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE
The Company believes in adopting and adhering to the best corporate practices and continuously evaluates it against each of such practices. The Company understands and respects its fiduciary role and responsibility to all stakeholders and strives hard to meet their expectations. We believe that the corporate governance is an important tool for shareholders protection and maximizing their long-term values.
The fundamental objective of Company's Corporate Governance is to adopt a methodology, which enhances effectiveness, better utilization of resources, transparency and harmonious relations between various interested groups. The Company has been regular in sending its quarterly compliance report on Corporate Governance to Stock Exchanges.
The Corporate Governance Report in respect of the year ended 31st March, 2015 is given below:
1. Board of Directors:
Procedure of Board Meeting
The Board Meetings are generally scheduled well in advance and are governed by a structured agenda. The notice of each board meeting is given in writing to each Director within the prescribed time period. The Board members, in consultation with the Chairman, may bring up any matter for the consideration of the Board. The Board papers, comprising the agenda are circulated well in advance before the meeting of the Board.
The gap between the two meetings is not in excess of 120 days. Additional Meetings are held, whenever considered necessary. The draft minutes containing the proceedings of the Meetings of the Board, after incorporating the comments, if any, of the Directors are confirmed by the Board Members at their next Meeting and signed by the Chairman of the meeting thereafter. Senior Management Personnel are called to provide additional inputs for the items being discussed by the Board of Directors whenever necessary.
All statutory, significant and other material information as specified in the Clause 49 of the Listing Agreement executed with the Stock Exchanges are regularly made available to the Board. The Board also reviews periodically the compliances of all laws applicable to the Company.
The Board's role, functions, responsibilities and accountability are clearly defined. In addition to matters statutorily requiring Board's approval, all major decisions involving formulation, strategy and business plans, annual operating and capital expenditure budgets, new investments, compliance with statutory regulatory requirements, major accounting provisions etc. are considered by the Board.
Composition and size of the Board:
The Company has an optimum combination of Executive and Non-executive Directors. None of the Directors of the Company is a member of more than 10 committees or Chairman of more than 5 committees (as specified in Clause 49 of the Listing Agreement). The Chairman of the Board is an Non- executive Director. All the Directors have made necessary disclosures regarding positions occupied by them in other companies. The Board is primarily responsible for the overall management of the Company's business.
Chief Financial Officer (CFO):
The Company, on 30th October, 2014 has appointed Mr. Mukesh Maheshwari as Chief Financial Officer (CFO) of the Company in place of Mr. S. D. Naik, who had resigned from the services of the Company w.e.f 30th September, 2014.
Number of Board Meetings held and attended by Directors:
Number of Meetings :
During the year 2014-15, Four,(4) Board Meetings were held on:
(i) 05th May, 2014,
(ii) 30th July, 2014,
(iii) 30th October, 2014 &
(iv) 12th February, 2015
Code of Conduct for Board Members and Senior Management:
In terms of Clause 49(II) (E) (1) of the Listing Agreement, the Board of Directors has laid down a Code of Conduct for all the Board Members and Senior Management of the Company. The code of conduct is also posted on the website of the Company. A declaration conforming compliance with the code of conduct by all Directors and Senior Management forms part of this report.
2. COMMITTEES OF BOARD:
For effective and efficient functioning of the Company the Board has formed the following committees:
(i) Audit Committee,
(ii) Nomination and Remuneration Committee, and
(iii) Stakeholders Relationship Committee The terms of Reference and other details of Board Committees are given as under:
Constitution of Committee:
The Audit Committee of the Company was constituted in accordance with the provisions of Section 292A of the Companies Act, 1956, and in terms with Clause 49 of the Listing Agreement with Stock Exchanges. The Committee's composition also meets requirements of Section 177 of the new Companies Act, 2013 and amended Clause 49 of the Listing Agreement.
The Audit Committee comprises of two (2) Independent and one Non-executive Director. All the members of the Committee possess financial / accounting expertise / exposure. Composition of Committee and Number of Meetings attended by Members:
Number of Meetings :
During the year 2014-15, four (4) Audit Committee Meetings were held on:
(i) 05th May, 2014,
(ii) 30th July, 2014,
(iii) 30th October, 2014 &
(iv) 12th February, 2015
The composition of Audit Committee and number of meetings
No Sitting Fees was paid to the Members for attending the Committee Meeting.
Role of the Audit Committee inter alia, includes the following:
• 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;
• Recommending to the Board, the appointment, reappointment and, if required, the replacement or removal of statutory auditors, including cost auditors, and fixation of audit fees and other terms of appointment ;
• Approving payment to statutory auditors, including cost auditors for any other services rendered by them;
• Reviewing with the management, 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 Directors' Responsibility Statement to be included in the Directors' Report in terms of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013;
• 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 the 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 related party transactions;
• Qualifications in draft audit report;
• Formulating the Scope, Functioning, Periodicity and Methodology for conducting the Internal Audit
• 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 utilized for purposes other than those stated in the 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;
• Reviewing and monitoring the auditors 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 necessary;
• Evaluation of internal financial controls and risk management systems;
• Reviewing with the management, the performance of statutory auditors, including cost auditors and internal auditors, adequacy of internal control systems;
• Reviewing the adequacy of internal audit function, if any, 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;
• Discussion with internal auditors, any significant finding and follow-up thereon;
• Reviewing the finding 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;
• 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, if any, in the payment to depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;
• To review the functioning of the Whistle Blower mechanism;
• Approval of appointment of the CFO (i.e. the whole-time Finance Director or any other person heading the finance function or discharging that function after assessing qualifications, experience and background of the candidate;
• Carrying out such other functions as may be specifically referred to the Committee by the Company's Board of Directors and/or other Committees of Directors;
• Reviewing the following information:
• The Management Discussion and Analysis of financial condition and results of operations;
• Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;
• Management letters/letters of internal control weaknesses issued by the statutory auditors;
• Internal audit reports relating to internal control weaknesses; and
• The appointment, removal and terms of remuneration of internal auditors / chief internal Auditor.
• To call for comments of the auditors about internal control systems, the scope of audit, including the observations of the auditors and review of financial statement before their submission to the Board and to discuss any related issue with the internal and statutory auditors and the management of the Company.
Powers of the Audit Committee
The Audit Committee is entrusted with the following Powers:-
• To investigate any activity within its terms of reference;
• To seek information from any employee;
• To obtain outside legal or other professional advice;
• To secure attendance of outsiders with relevant expertise, if necessary.
NOMINATION AND REMUNERATION COMMITTEE (NRC)
Constitution of Committee:
The NRC (earlier known as Remuneration Committee) of the Company was constituted in terms of Clause 49 of the Listing Agreement with Stock Exchanges. In the financial year 2014-15, the nomenclature of the Committee has changed from Remuneration Committee to Nomination and Remuneration Committee as per requirements of the Companies Act, 2013 and amended Clause 49 of the Listing Agreement. The Committee's composition is also with requirements of Section 178 of the new Companies Act, 2013 and amended Clause 49 of the Listing Agreement.
No Sitting Fees was paid to the Members for attending the Committee Meeting.
Terms of Reference of the Committee, inter alia, includes the following:
• To identify persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and to recommend to the Board their appointment and/or removal;
• To carry out evaluation of every Director's performance;
• 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;
• To formulate the criteria for evaluation of Independent Directors and the Board;
• To devise a policy on Board diversity;
• To recommend/review remuneration of the Managing Director(s) and Whole-time Director(s) based on their performance and defined assessment criteria
STAKEHOLDERS RELATIONSHIP COMMITTEE (SRC)
Constitution of Committee:
The SRC (earlier known as Shareholders / Investors Grievances Committee) of the Company was constituted in terms of Clause 49 of the Listing Agreement with Stock Exchanges. In the financial year 2014-15, the nomenclature of the Committee has changed from Shareholders / Investors Grievances Committee to Stakeholders Relationship Committee as per requirements of the Companies Act, 2013 and amended Clause 49 of the Listing Agreement. The Committee's composition is also with requirements of Section 178 of the new Companies Act, 2013 and amended Clause 49 of the Listing Agreement.
Terms of Reference:
The SRC looks into member’s services like transfer/transmission of shares, Dematerialization / Rematerialization requests and various investors' complaints like - non-receipt of refund, declared dividends, etc. and takes necessary steps for redressal thereof.
The transactions in the shares and the complaints from the investors, are handled by the Registrar & Share Transfer Agent as well as the Share Department of the Company, and are being quarterly reviewed by the SRC.
The Company has appointed M/s Link Intime India Pvt. Ltd., a SEBI Registered independent agency, as Registrar & Share Transfer Agent for handling Demat as well as Physical Share Transfer and registry work of the Company.
Details of Transactions in shares and Investors Grievances:
As informed by the Registrar and Share Transfer Agent, during the financial year 2014-15 seven dates for approval of Transfer / Transmission of Physical Shares were recorded. The details of these transactions were also taken on record in the Meetings of SRC. Further, details on the transfer of shares approved during the year are as under. The figures in the brackets are for the previous year.
During the year, there were few requests from shareholders for routine corporate actions viz., Change of Address/supply of copy of Annual Report/ Splitting/ Consolidation/ Dematerialization and Dematerialization of Shares etc. All requests were attended promptly and no complaint was pending as at the end of the year.
According to new guidelines of SEBI, the Transfer of Demated Shares is not subjected to approval of any committee or Board of Directors and physical shares are also handled on time by the Registrar and Share Transfer Agent. However, SRC, on quarterly basis takes note of all the transactions held in shares and Stakeholders Complaints and their Grievances.
INDEPENDENT DIRECTORS MEETING:
Company Secretary & Compliance Officer
Mr. Deepesh Kumar Nayak, Company Secretary and Compliance Officer, is responsible for complying with requirements of Securities Laws and Listing Agreements with the Stock Exchanges.
4. Directors / Key Managerial Personnel Appointments / Cessation and Remuneration:
(A) Directors retire by rotation:
Mr. K. N. Garg and Mr. A. R. Mundra Directors are liable to retire by rotation at the ensuing Annual General Meeting and being eligible for re-appointment. A brief profile of Mr. K. N. Garg and Mr. A. R. Mundra is given under explanatory statement annexed with the Notice of Annual General Meeting which forms part of the Annual Report.
(B) Appointment of Additional Directors:
The Board of Directors at its meeting held on 15th May, 2015 appointed Mr. John Mathew & Ms. Prachi Deshpande as Additional Directors on the Board w.e.f. 15th May, 2015. Their appointments as Director are submitted to the shareholders for their approval in the ensuing Annual General Meeting. A brief profile of Mr. John Mathew & Ms. Prachi Deshpande is also given in the explanatory statement as annexed with the notice of Annual General Meeting.
(C) Remuneration to Dr. R. B. Baheti, Chairman:
The Board of Directors, at its meeting held on 30th October, 2014 had approved remuneration of " 1 crore per annum, payable monthly, to Dr. R. B. Baheti w.e.f. 01st November, 2014 to 31st March, 2015.
(D) Cessation and Appointment of Chief Financial Officer:
In place of Mr. S. D. Naik who had resigned from the services of the Company w. e.f. 30th September, 2014, the Board ofDirectors at its meeting held on 30th October, 2014 had appointed Mr. Mukesh Maheshwari, Vice President as Chief Financial Officer of the Company.
Related Party (ies) Transactions:
The Company has entered into transactions with the related parties that may not have any potential conflict with the interests of the Company. The details of such transactions are forming part of "Notes to Accounts & Accounting Policies" attached to the Annual Accounts of the Company.
Compliances by the Company:
The Company has fairly complied with the requirements of the Companies Act, Stock Exchanges, SEBI and other Act. The Shares of the Company are traded on the Bombay Stock Exchange Ltd., Mumbai (BSE) and National Sock Exchange of India Ltd., Mumbai (NSE).
The Company has not accepted any Public Deposit under the Companies Act, 1956 as well as under Companies Act, 2013.
CFO / CEO Certificate and Declaration:
The CFO / CEO certification and declaration as stipulated under Clause 49 of the Listing Agreement is annexed. Compliance Certificate of the Auditor: The Company has obtained a certificate from the Statutory Auditors regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement and the same is annexed.
There are no audit qualifications in the Company's financial statements for the year under review.
The Board periodically reviews the compliance of all applicable laws and gives appropriate directions, wherever necessary.
7. Means of Communication:
• Full Annual Report is sent to each Shareholder every year at his or her registered Address regularly;
• The Company has been regularly sending quarterly/half-yearly/ Annual Financial Results to the Stock Exchanges immediately after approved by the Board.
• The quarterly results are published regularly in one Hindi and one English Newspaper having circulation in the region where the Registered Office of the Company is situated;
• The quarterly financial results and Annual Report are also sent to Financial Institutions/Analysts/Institutional Investors on demand;
• The Management Discussion and Analysis Report forms part of the Annual Report.
8. General Shareholders Information:
Dates of Board Meetings for consideration of Annual Accounts
15th May, 2015 : Consideration and Approval of AnnualAccounts
14th August, 2015 : Approval of Notice of 30th Annual General Meeting.
Date, Time and Venue of 30th Annual General Meeting
Date: Monday, the 28th September, 2015 Time: 11.00 A. M.
Venue: Registered Office of the Company
Last date for receipt of Proxy Form(s)
Saturday, the 26th September, 2015 on or before 11.00A.M.
01stApril, 2014 to 31st March, 2015
Date of Book Closures
Tuesday, the 22nd September, 2015 to Monday, the 28th September, 2015
Registered Office and Works
Rau-pithampur Link Road, Tehsil : Mhow, Distt: Indore, PIN -453 332 (M.P.) India.
Listing on stock Exchanges
(1) National Stock Exchange of India Limited (NSE); and
(2) Bombay Stock Exchange Limited (BSE).
The Company has paid Annual Listing fees for financial year 2015-2016 to both the Stock Exchanges.
NSE: STINDIA BSE: 513151
Corporate Identification Number (CIN)
Tentative calendar of Board Meetings for the financial year 2015-16
Financial reporting for the Quarter ended:
June 30, 2015 By Aug 14, 2015
Sept 30, 2015 By Nov 14, 2015
Dec 31, 2015 By Feb 14, 2016
Mar 31, 2016 By May 30, 2016
10. Registrar and Share Transfer Agent:
For Shares held in Depository Mode:
The Company has engaged the services of Link Intime India Pvt. Ltd., Mumbai, as Registrar & Share Transfer Agent (RTA) for providing national connectivity to deal in shares in depository mode. Their address for communication is as under:
Link Intime India Private Limited Registrar and Share Agent Unit : STI India Limited
C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (W), Mumbai- 400 078 Tel: 022-25946970, 25963838, E-mail: firstname.lastname@example.org .
For Shares held in Physical Mode:
As per SEBI directives with effect from 01st March, 2003, Link Intime India Pvt. Ltd. also handles the transfer of shares in physical mode. All the correspondence with regard to share transfers, change of address, nomination etc. are to be addressed to the Share Transfer Agent i.e., Link Intime India Pvt. Ltd. at their Mumbai address. The Demat request as well as request for transfer/transmission may primarily be sent to the Registrar and Share Transfer Agent as above.
Investors Help - Desk:
Requests or complaint in other matters such as Unpaid/Unclaimed Dividend/Debenture Interest/Debenture Redemption, Change of Address, Splitting of Shares or Conversion of Debentures, copy of Annual Report can also be sent to Company's Secretarial Dept., at
Rau-Pithampur Link Road, Tehsil Mhow, Dist. Indore - 453 332 (M. P.) India. Email: email@example.com
Compulsory Dematerialized Trading
As the Shareholders are aware the Securities and Exchange Board of India (SEBI), has included equity shares of the Company for compulsory dematerialized trading for all investors with effect from 24th July, 2000. The Company has already entered into agreements with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) to enable Members of the Company to select the depository of their choice for holding and dealing in shares in electronic form. The shareholders may also note that 98.23% holding of the Company has already been dematerialized. The shareholders are requested to make use of such facility for maximizing their convenience in the dealing of Company's shares. The ISIN (International Securities Identification
Names of Depositories in India for Dematerialization of Equity shares
National Securities Depository Limited. (NSDL)
Central Depository Services (India) Limited. (CDSL)
Annual Custody fees for the financial year 2015-16 have been paid.
Share Transfer System:
All shareholders' complaints / request received have been cleared within the financial year. The complaints are generally replied within 15 days from their lodging with the Company. The investors/members may write for their queries to Shares Department of the Company and the Registrar and Share Transfer Agent.
The new Certificates after registering transfer / transmission are returned within 15 days period except in the cases that are constrained for technical reasons.
12. Whistle Blower Policy:
The Company promotes ethical behaviour in all its business activities and has put in place a mechanism of reporting illegal or unethical behaviour. The Company has formulated a whistle blower policy which comprehensively provides an opportunity for any employee / director of the Company to raise any issue concerning breach of law, accounting policies or any act resulting in financial or reputation loss and misuse of office or suspected or actual fraud. The policy also provides for mechanism to report such concern to the Audit Committee through specified channels.
The policy will be periodically communicated to the employees and also posted on the Company's website. The Whistle Blower Policy complies with the requirements of Vigil Mechanism as stipulated under Section 177 of the Companies Act, 2013 and amended Clause 49 of the Listing Agreement.
13. Internal Complaints Committee:
The Company is known for developing unique and healthy human development and management policies and their implementation in fair and transparent manner. Considering our responsibility towards employees as well as society and in view of the present scenario of the country wherein number of cases of sexual harassment against women are coming in to light, the Company realizes its social responsibility in ensuring safe environment at the work place free from sexual harassment to its female employees. Accordingly, your Company has constituted an "Internal Complaints Committee (ICC)" as per the Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013, that will ensure a work environment free of all forms of sexual harassment - verbal, written, physical, visual or otherwise.
The Committee is formed as per the statute and the majority of members of the Committee are woman employees including Mr. Mukund Kulkarni who is a prominent social worker from leading NGO "Abhyas Mandal". The sole objective of the Committee is to address cases of sexual harassment against women properly and judiciously. The Committee lays down the whole procedure of filing complaints, enquiry, redressal of grievance and taking action against those who are found guilty by the Committee in a fair and transparent manner.
During the year under review, no incident of sexual harassment was reported.
14. Outstanding Debentures:
The Company had issued 3,21,80,000 Optionally Convertible Debentures (OCDs) to Overseas Private Investors (OPIs) in the financial year 2006-07. On 27th October, 2010 OPIs has transferred said 3,21,80,000 Debentures to Bombay Rayon Fashions Limited
Except above, the Company does not have any other Debentures / GDRs/ ADRs/ Bonds / Warrants.
For and on behalf of the Board of Directors For STI India Limited
Dr. R. B. Baheti
DIN : 00008202
Date: 15th May, 2015