COMPLIANCE REPORT ON CORPORATE GOVERNANCE
1. A brief statement on the Company's philosophy on code of governance.
Your Company believes in conducting its affairs with the highest levels of integrity, with proper authorisations, accountability and transparency. The business operations of your Company are conducted not to benefit any particular interest group but for the benefit of all stakeholders.
2. Board of Directors
The Board comprises members having varied skills, experience and knowledge. The Board has a mix of both Independent and Non-independent directors where Independent directors constitute more than half the strength of the Board, which is in conformity with Regulation 17 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (Listing Regulations) 2015, read with Section 149 of the Companies Act, 2013. The Chairman of the Company is Non-Executive, Non-Independent. None of the Directors on the Board is a Member on more than 10 Committees and Chairman of more than 5 Committees as specified under Regulation 26 (1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, across all the companies in which they are Directors. Necessary disclosures regarding Committee positions have been made by the Directors.
Performance evaluation of Board and Directors:
The Company has laid down a process for evaluation of the Board and Committee of Board as also evaluation of the performance of each of the directors. The evaluation is conducted and monitored by the Chairman, Nomination & Remuneration Committee (NRC) in consultation with the members of the committee. Each of the Directors are given a self-assessment Questionnaire, covering Degree of Fulfillment of their responsibilities, Board structure and Composition, responsibilities of Committee, effectiveness of Board process, information and functioning, Board culture and Dynamics, quality of relationship between the Board and Management etc. The Chairman, NRC on the basis of the Feedback received from each of the Directors has one to one meeting with them. At the end, He/She briefs the Chairman of the Board on the outcome, which was in turn discussed in the Board meeting. The performance of the Independent Directors was also reviewed at the Board meeting.
Meeting of Independent Directors: Separate meetings of Independent Directors for the Financial Year 2015-16 as per Clause VII (1) of Schedule IV under Section 149 (8) of the Companies Act, 2013 were held on 28th April, 2015 and 15th May, 2015 wherein the Independent Directors reviewed the performance of the Managing Director, Non-Independent directors and discussed other matters. The Independent Directors have confirmed that they satisfy the criteria of Independence as stipulated under Section 149 (6) of the Companies Act, 2013.
Familiarisation: The Independent Directors immediately on appointment are issued a formal letter of Appointment covering their Rights, Roles, Committee Positions etc. The Independent Director/s on appointment are also provided with a folder containing the detailed Business overview of the company, all relevant policies, past year Annual reports and the financial results, the rights and duties of the Independent Directors amongst others. The directors before their appointment are also briefed about the Company by the Chairman and the Managing Director individually. At each of the Business plan meeting, normally held in the month of March every year, the Directors are briefed about the different business units of the company, the industry as a whole and other details like customers, market etc. During the year the Annual Business Plan meeting was held on 30th March, 2016. The Board has adopted a Governance guideline, enumerating the rights and roles of the Directors. A copy of the same has been circulated to all the directors. The in-house magazine of the Company is also sent to the Directors periodically keeping them abreast with the recent happenings and developments. The familiarization program for the Independent Directors is available at: <http://www.tataelxsi.com/company/board-of-directors.html>
Six Board Meetings were held during the year 2015-16 and the gap between two meetings did not exceed four months. The dates on which the Board Meetings held were 28th April, 2015; 24th July, 2015; 28th October, 2015; 4th January, 2016; 20th January, 2016 and 30th March, 2016.
3. Audit Committee
The Audit Committee of the company constituted, is in line with the provisions of Regulation 18 of SEBI (Listing Regulations) 2015, read with Section 177 of the Companies Act, 2013. The terms of reference of the Audit Committee are broadly as under:
1. 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;
2. Recommendation for appointment, remuneration and terms of appointment of auditors of the company;
3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
4. Reviewing, with the management, the annual financial statements and auditor's report thereon before submission to the board for approval, with particular reference to:
a. 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 Companies Act, 2013.
b. Changes, if any, in accounting policies and practices and reasons for the same.
c. Major accounting entries involving estimates based on the exercise of judgment by management.
d. Significant adjustments made in the financial statements arising out of audit findings.
e. Compliance with listing and other legal requirements relating to financial statements.
f. Disclosure of any related party transactions.
g. Qualifications in the draft audit report, if any.
5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval;
6. 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 utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;
7. Review and monitor the auditor's independence and performance, and effectiveness of audit process;
8. Approval or any subsequent modification of transactions of the company with related parties;
9. Scrutiny of inter-corporate loans and investments;
10. Valuation of undertakings or assets of the company, wherever it is necessary;
11. Evaluation of internal financial controls and risk management systems;
12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
13. 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;
14. Discussion with internal auditors of any significant findings and follow up there on;
15. Reviewing the 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;
16. 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;
17. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;
18. To review the functioning of the Whistle Blower mechanism;
19. Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;
20. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
Review of information by Audit Committee
The Audit Committee reviews the following information:
1. Management discussion and analysis of financial condition and results of operations;
2. Statement of significant related party transactions (as defined by the Audit Committee) submitted by management;
3. Management letters / letters of internal control weaknesses issued by the statutory auditors;
4. Internal audit reports relating to internal control weaknesses;
5. The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee.
6. statement of deviations:
(a) quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of Regulation 32(1) of SEBI (Listing Regulations), 2015.
(b) annual statement of funds utilized for purposes other than those stated in the offer document/ prospectus/notice in terms of Regulation 32(7) of SEBI (Listing Regulations), 2015.
The Audit Committee is also responsible for giving guidance and directions under the SEBI (Prohibition of Insider Trading) Regulations, 2015.
The Audit Committee reviewed the reports of the internal auditors, the reports of the statutory auditors arising out of the quarterly, half-yearly, and annual audit of the accounts; considered significant financial issues affecting the Company and held discussions with the internal and statutory auditors and the Company Management during the year.
Six Audit Committee Meetings were held during the year 2015-16. The dates on which the Audit Committee Meetings held were 28th April, 2015; 23rd July, 2015; 24th July, 2015; 28th October, 2015; 20th January, 2016 and 30th March, 2016.
4. Nomination and Remuneration Committee
The Nomination and Remuneration Committee constituted is in line with the provisions of Regulation 19 of SEBI (Listing Regulations) 2015, read with Section 178 of the Company's Act, 2013. The terms of reference of the Committee are as under:
1. Formulation of the criteria for determining qualifications, positive attributes and independence of a director. Recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees;
2. Formulation of criteria for evaluation of Independent Directors and the Board;
3. Devising a policy on Board diversity;
4. Identifying 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.
5. The Nomination and Remuneration Committee is responsible for Board composition, succession related and Evaluation of every Director.
6. To oversee familiarization programme for Directors, Review of HR strategy, Philosophy and Practices and any other activities related to change as requested by the Board from time to time.
The Board has also adopted a charter for the Nomination and Remuneration Committee covering its rights, roles and responsibilities.
All Non-Executive Directors of your Company receive sitting fees for each meeting of the Board or Committee thereof attended by them. The net profits of the Company, not exceeding 1%, are distributable, as commission, amongst the Non-Executive Directors considering the special services and efforts rendered.
Other than sitting fees and commission on the net profits of the Company, no other remuneration is payable to the Non-Executive Directors for 2015-16.
The service of Managing Director may be terminated by either party giving other party six months' notice or the Company paying six months' salary in lieu thereof.
The Board on the recommendation of the Nomination & Remuneration Committee adopted the Remuneration policy for Directors, Key Managerial Personnel (KMP) and other employees of the company. The Board has also adopted a policy on Board diversity. The said Policies are available at <http://www.tataelxsi.com/company/board-of-directors.html>.
5. Stakeholders' Relationship Committee
The Stakeholders' Relationship Committee constituted is in line with the provisions of Regulation 20 of SEBI (Listing Regulation) 2015, read with Section 178 of the Company's Act, 2013. The terms of reference of the Stakeholders' Relationship Committee are as under:
• To look into the Redressal of grievances of shareholders, debenture holders and other security holders; To expedite the process of share transfers;
To look into the complaints related to transfer of shares, non receipt of balance sheet, non receipt of declared dividends.
6. Risk Management Committee
The Board has constituted a Risk Management Committee (RMC) in line with the Provisions of Regulation 21 of SEBI (Listing Obligations) 2015, which is responsible to provide oversight in achieving the Company's Enterprise Risk Management (ERM) objectives. The ERM helps these objectives by creating a comprehensive approach to anticipate, identify, prioritize and manage material risks attached to the Company's operations.
The primary responsibility of the Committee is to ensure that sound policies, procedures and practices are in place for the enterprise-wide management of the Company's material risks and to report the results of the Committee's activities to the Company's Audit Committee. The terms of reference of the Committee are as under:
1. Provide ongoing guidance and support for the refinement of the overall risk management
2. Ensure that management understands and accepts its responsibility for identifying, assessing and managing risk.
3. Determine which enterprise risks are most significant.
4. Assign risk owners and approve action plans.
5. Approve company-wide Risk Assessment & Risk Profile.
6. Update the leadership team from time to time on the on-going ERM progress/changes.
7. Review & report to the Company's Audit Committee/Board
One Risk Management Committee (RMC) meeting was held during the year 2015-16 on 20th January, 2016.
7. Corporate Social Responsibility (CSR) Committee
The Board has constituted Corporate Social Responsibility (CSR) Committee in line with the Provisions of Section 135 of Company's Act, 2013 with maximum members being Independent Directors, to recommend to the Board the CSR initiatives of the Company and also to monitor the implementation of the CSR initiatives.
Two Corporate Social Responsibility (CSR) Committee Meetings were held during the year 2015-16. The dates on which the Corporate Social Responsibility (CSR) Meetings held were 28th April, 2015 and 9th November, 2015.
• There are no materially significant related party transactions during the year that have potential conflict with the interests of the Company at large;
• The Company has formulated a policy on Related Party Transactions and the same is available on company's website www.tataelxsi.com/investors/corporate governance/policies.
• The guidelines/accounting standards laid down by the Institute of Chartered Accountants of India (ICAI) and prescribed under Section 133 of the Companies Act, 2013 have been followed in preparation of the financial statements of the Company.
• There has been no non-compliance or penalties, or strictures imposed on your Company by any of the Stock Exchanges or SEBI, or any statutory authority on any matter related to capital markets during the last three years;
• The Company has adopted a Whistle Blower Policy and has established the necessary mechanism in line with the requirements under the Companies Act, 2013, Listing Agreement and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
a) For employees to report concerns about unethical behavior;
b) To establish a mechanism to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the integrity policy;
c) To ensure that adequate safeguards shall be provided to the whistle blowers against any victimization or vindictive practices like retaliation, threat or any adverse (direct or indirect) action on their employment. The Policy also ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern.
No personnel/person has been denied access to the Audit Committee.
• Your Company has comprehensive guidelines on prohibiting Insider trading and the Company has adopted the code of internal procedures and conduct for listed Companies notified by SEBI.
The Company has formulated a policy on determination of materiality of event/information as required under Regulation 30 (1) of Listing Regulations, 2015. The same is available on company's website at: <http://www.tataelxsi>. com/investors/investor-relations.html
• The Company has complied with all the mandatory requirements and most of the non-mandatory requirements specified in Part E of Schedule II under Regulation 27 (1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
10. Means of Communication
Your Company uses several modes for communicating with its external stakeholders, such as announcements and press releases in newspapers, circular letters and other reports to the members, posting information on its Website (www.tataelxsi.com), intimation to the Stock Exchanges, responding to analyst's queries etc. Your Company's quarterly results are disseminated through all the modes mentioned above. Financial Express (English daily) and Sanjevani (vernacular daily) are usually the papers in which the quarterly results are published.
• Your Company's Management Discussion & Analysis of the Business for the year ended 31st March, 2016 forms part of the Directors' Report and is given under the Section so captioned.
• The transcripts and audio of the Company's investors/analysts concalls are available at: <http://www.tataelxsi.com/> investors/investor-relations.html
11. General Shareholders Information
. No. Salient Items of Interest Particulars
i. AGM Date, Time, and Venue
Tuesday, 26th July, 2016 at 12:30 pm at St. John's Auditorium, John Nagar, Koramangala, Bangalore - 560 034, Karnataka.
ii. Financial Year
28th April, 2016 - Q4 & FY15 Results
26th July, 2016- Q1 Results & AGM
26th October, 2016 - Q2 Results
25th January, 2017 - Q3 Results
iii. Date of Book Closure
19th July to 26th July, 2016 (both days inclusive
iv. Dividend Payment Date
On and after 26th July, 2016
v. Listing on Stock Exchanges
Bombay Stock Exchange Limited
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001, India Tel. : +91-22-22721234 Fax : +91-22-22722041
The National Stock Exchange of India Limited
Exchange Plaza Plot No.C/1, G Block Bandra-Kurla Complex Bandra (East) Mumbai - 400 051, India Tel. : +91-22-26598100 Fax : +91-22-26598237
vi. Listing Fees
The listing fee has been paid to BSE & NSE for the FY 2015-16.
vii. Stock Code
Bombay Stock Exchange Ltd.: 500408 National Stock Exchange Ltd.: TATAELXSI
viii. Registrar & Share transfer Agent
TSR Darashaw Limited, 6-10, Haji Moosa Patrawala Ind. Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai - 400 011
ix. Share Transfer System
Shares lodged in physical form with the Company/its Registrars & Share Transfer Agents are processed and returned within 15 days normally, except in cases where litigation is involved.
In respect of shares held in dematerialised mode, the transfer takes place instantaneously between the transferor, transferee, and the Depository Participant through electronic debit/credit of the accounts involved.
x. Dematerialisation of shares and liquidity
2,96,92,943 shares were held in dematerialised mode, as at 31st March, 2016. The Company's equity shares are actively traded on BSE and NSE.
xi. Outstanding GDRs /ADRs / Warrants or any convertible instruments, conversion date and likely impact on equity
There are no outstanding instruments and hence there will be no dilution of the equity.
xii. Development Centre Locations
Your Company's software development centers are located at the following addresses:
a. ITPB Road, Whitefield, Bangalore - 560 048;
b. Crescent-4, 9th Floor, Prestige Shantiniketan, Whitefield road, Bangalore - 5600 48
c. IITM Research Park, 4th Floor, Kanagam Road, Taramani, Chennai - 600 113;
d. Giga Space IT Park, No. 201, 2nd Floor, Alpha - 1 Building, Viman Nagar, Pune - 411 014;
e. Giga Space IT Park, No. 201, 3rd Floor, Alpha - 2 Building, Viman Nagar, Pune - 411 014;
f. SEZ Tower IX, A Wing, Level - 2, Magarpatta City, Hadapsar, Pune - 411 013;
g. Gayathri, 1st Floor, Technopark Campus, Kariyavattom, Thiruvananthapuram- 695 581;
h. Neyyar, Technopark Campus, Kariyavattom, Thiruvananthapuram- 695 581;
i. LeelaInfopark, 5th Floor, Plot No. 2, Technopark Campus, Thiruvananthapuram- 695 581;
j. Boston House, 2nd Floor, No. 201, Suren Road, Gondivali, Village, Off Andheri- Kurla Road, Andheri East, Mumbai - 400 093
xiii. Address for correspondence
ITPB Road, Whitefield, Bangalore - 560 048
xiv. CIN L85110KAI989PLC009968