Corporate Governance Report
1. COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE
The Company believes that sound corporate practices based on transparency, credibility and accountability are essential to its long-term success. These practices will ensure the Company, having regard to competitive exigencies; conduct its affairs in such
a way that would build the confidence of its various stakeholders in it, and its Board's integrity.
2. BOARD OF DIRECTORS
The current policy is to have an appropriate mix of Executive, Non-Executive and Independent Directors to maintain the independence of the Board of Directors (hereinafter referred to as 'Board') and to separate the Board functions of governance and management.
The Board has an optimum combination of Executive and Non-Executive Directors and comprises of 11 Directors as on March 31, 2016 of which 8 are Non-Executive Directors. The Company has 6 Independent Directors.
Mr. K. M. Sheth is the father of Mr. Bharat K. Sheth and Mr. Ravi K. Sheth.
Attention of the members is invited to the relevant item of the Notice of the Annual General Meeting seeking their approval for the appointment of Director. The information as required under Schedule V (C) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to the Notice of the Annual General Meeting.
Familiarization programmes for Independent Directors
The Company has a policy to keep the Independent Directors informed and updated about the business and the operations of the Company as well as the shipping industry, on a continuous basis.
Details of familiarization programmes for Independent Directors are available on website of the Company: www.greatship.com/ investors.
Code of Conduct
All personnel to whom the Code of Conduct is applicable have affirmed compliance with the Code of Conduct for the financial year ended March 31, 2016. A declaration to this effect, duly signed by the Deputy Chairman & Managing Director, is annexed hereto.
The Board Meetings of the Company are governed by a structured agenda. The Board members, in consultation with the Chairman, may bring up any matter for the consideration of the Board.
All items on the Agenda are backed by comprehensive background information to enable the Board to take informed decisions. The Company, even prior to the requirements of the Companies Act, 2013 and the Secretarial Standards prescribed by the Institute of Company Secretaries of India, voluntarily circulated all Agenda papers well in advance of the meeting of the Board.
To focus effectively on the issues and ensure expedient resolution of the diverse matters, the Board has constituted a set of Committees with specific terms of reference/scope. The Committees operate as empowered agents of the Board as per their charter/terms of reference. The inputs and details required for their decisions are provided by the executives/management. Targets set by them, as agreed with the management, are reviewed periodically and mid-course corrections are also carried out. The minutes of the meetings of all Committees of the Board are placed before the Board for discussions/noting.
A) AUDIT COMMITTEE
The management is primarily responsible for internal controls and financial reporting process. The Board of Directors have entrusted the Audit Committee to supervise these processes and thus ensure accurate and timely disclosures that maintain transparency, integrity and quality of financial controls and reporting.
Terms of Reference of the Audit Committee are as follows:
¦ 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;
• Recommendation for 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 auditor's 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 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 management
• Significant adjustments made in the 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 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;
Review and monitor the auditor's 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 it is necessary; Evaluation of internal financial controls and risk management systems;
Reviewing, with the management, performance of statutory and internal auditors, adequacy of the 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 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 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 postaudit discussion to ascertain any area of concern;
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;
To review the functioning of the Whistle Blower mechanism;
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;
To review the following information:
• 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; n Internal audit reports relating to internal control weaknesses;
• The appointment, removal and terms of remuneration of the Chief internal auditor; and
• The financial statements, in particular, the investments made by the unlisted subsidiary company; Examination of financial statements and the auditors' report thereon;
Carrying out any other function as may be required by the Board of Directors of the Company from time to time or under any law for the time being in force.
Composition of Audit Committee
The Committee comprises of 4 Independent Directors, namely, Mr. Cyrus Guzder (Chairman), Mr. Berjis Desai, Mr. Farrokh Kavarana and Mrs. Rita Bhagwati.
During the year, the Committee met six times on April 30, 2015, May 07, 2015, August 12, 2015, October 21, 2015, November 06, 2015 and February 04, 2016.
The Audit Committee Meetings are attended by the Chief Financial Officer, representatives of Internal Auditors and Statutory Auditors. Whenever required, the Deputy Chairman & Managing Director and other senior officials of the Company are requested to attend the meetings.
Mr. Jayesh M. Trivedi, Company Secretary, is the Secretary of the Committee.
B) NOMINATION & REMUNERATION COMMITTEE
Terms of Reference of the Nomination and Remuneration Committee are as follows:
• 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;
• Formulation of criteria for evaluation of performance of Independent Directors and the Board; g Devising a policy on Board diversity;
• 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;
• Carry out evaluation of every Director's performance;
v Approval of payment of remuneration to Managing or Wholetime Directors including pension rights;
• Decide and settle remuneration related matters and issues within the framework of the provisions and enactments governing the same.
• Carrying out any other function as may be required by the Board of Directors of the Company from time to time or under any law for the time being in force.
Composition of Nomination & Remuneration Committee
The Committee comprises of 4 Independent Directors, namely, Mr. Cyrus Guzder (Chairman), Mr. Berjis Desai, Mr. Farrokh Kavarana and Dr. Shankar Acharya.
During the year, the Committee met two times on May 07, 2015 and February 04, 2016
The Nomination & Remuneration Committee of the Board is constituted in compliance with SEBI guidelines. The Committee is fully empowered to frame the compensation structure for the Directors and review the same from time to time based on certain performance parameters, growth in business as well as profitability and also align the remuneration with the best practices prevailing in the industry.
Remuneration to Directors is paid as determined by the Board / Nomination & Remuneration Committee in accordance with the Remuneration Policy of the Company, which is disclosed as a part of Board's Report.
• Presently, the Company does not have a scheme for grant of stock options.
• The Company has no pecuniary relationship or transactions with its Non-Executive Directors other than payment of commission, retirement benefits and dividend on equity shares held by them.
• The Remuneration Committee has formulated a Retirement Benefit Scheme for the Wholetime Directors. The Board approved Scheme has been made effective from January 01, 2005. The Scheme provides for provision of pension, medical reimbursements and other benefits to the eligible retiring Wholetime Directors. On the basis of an actuarial valuation, an amount of 0.97 crore (previous year Rs. 9.81 crores) was provided during the year for pension payable to Wholetime Directors on their retirement. During the year Rs. 10,473,655/- was paid to Mr. K.M. Sheth towards pension and other retirement benefits as per the Scheme.
• The Company or Mr. Tapas Icot/ Mr. G. Shivakumar shall be entitled to terminate their respective appointments by giving three months' notice in writing.
C) STAKEHOLDERS RELATIONSHIP COMMITTEE
The Stakeholders Relationship Committee oversees redressal of shareholders and investors grievances.
Terms of Reference of the Stakeholders' Relationship Committee are as follows:
• Consider and resolve the grievances of the security holders of the Company including complaints related to transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends.
• Carrying out any other function as may be required by the Board of Directors of the Company from time to time or under any law for the time being in force.
Composition of the Committee
As on date the Committee comprises of 1 Non-Executive Director and 2 Executive Directors namely Mr. Cyrus Guzder (Chairman), Mr. Bharat K. Sheth and Mr. G. Shivakumar.
Mr. Jayesh M. Trivedi, Company Secretary, is the Compliance Officer of the Company.
During the year under review, 15 complaints were received. 13 complaints were replied / resolved to the satisfaction of the investors. 2 complaints were pending as on March 31, 2016. Out of the two pending complaints, one was resolved after March 31, 2016 and an interim reply for the other one has been sent to the complainant (Court case). 1 request for transfer involving 144 shares and 9 requests for dematerialization involving 1,893 shares were pending for approval as on March 31, 2016. These pending requests were duly approved and dealt with by the Company.
4. RISK MANAGEMENT
The Company has laid down procedures to inform Board members about the risk assessment and minimization procedures. These procedures are periodically reviewed to ensure that executive management controls risk through means of a properly defined framework.
Detailed note on Risk Management is given in the Board's Report.
The details of the commodity price risk and foreign exchange risk and related hedging activities are as follows:
Commodity price risk is the risk of financial performance being adversely affected by fluctuations in the prices of commodities. In the shipping industry, bunker fuel is a major component of operating costs and hence risks arising out of volatility in oil prices in general and bunker fuel in particular needs to be managed. The Company manages this risk by bunker hedging and reduce the exposure to fluctuating bunker costs using swaps, call options and fixed price forward contracts.
Foreign exchange fluctuation risk arises from having revenues, expenses, assets, or liabilities in a currency other than the reporting currency. In the case of the Company, a large part of revenues are denominated in US Dollars. Some part of this risk is compensated by having expenses, interest costs, and loan repayments also in US Dollars. For the remaining, the Company hedges its risk using various instruments such as plain forward sales and range forwards.
5. GENERAL MEETINGS
Next Annual General Meeting and date of Book Closure
Date August 11, 2016
Time 3.00 p.m.
Venue Rama and Sundri Watumull Auditorium, K. C. College, Churchgate, Mumbai 400 020
Date of Book closure August 05, 2016 to August 11, 2016 (both days inclusive)
The Company shall provide to its members facility to exercise their right to vote on items listed in the Notice of the 68th Annual General Meeting by electronic means. Procedure for the same is set out in the Notice of Annual General Meeting.
None of the items to be transacted at the ensuing Annual General Meeting are required to be transacted only by means of voting through Postal Ballot.
a) There were no transactions of material nature with its Promoters, the Directors or the Management, their subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large. However, the Company has annexed to the accounts a list of related parties as per Accounting Standard 18 and the transactions entered into with them.
b) There were no instances of non-compliances nor have any penalties, strictures been imposed by Stock Exchanges or SEBI or any statutory authority during the last 3 years on any matter related to capital markets.
c) The senior management has made disclosures to the Board relating to all material financial and commercial transactions stating that they did not have personal interest that could result in a conflict with the interest of the Company at large.
d) The Deputy Chairman & Managing Director and the Chief Financial Officer have issued a certificate to the Board in compliance with the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 for the Financial Year ended March 31, 2016.
e) The "Policy for determining Material subsidiaries" and "Policy for dealing with Related Party Transactions" are available on the website of the Company: www.greatship.com
7. MEANS OF COMMUNICATION TO SHAREHOLDERS
Half-yearly report sent to each household of shareholders
No. As the Results of the Company are published in the newspapers, uploaded on the Company’s website and press releases are also issued.
Quarterly, half yearly and annual results
Published in Business Standard, Free Press Journal and Navshakti.
Whether Company displays official news releases and presentations made to institutional investors or to the analysts on its website
Whether Management Discussion & Analysis Report is a part of Annual Report
Website of the Company: www.greatship.com
Your Company’s official press releases are available and archived on the corporate website www.greatship.com. Presentations made to analysts, institutional investors and the media are posted on the website. The Company holds conference calls on declaration of its quarterly results, the transcripts of which are also posted on the website. The shareholders and general public visiting the website have greatly appreciated the contents and user friendliness of the corporate website.
8. SH AREHOLDERS INFORMATION
1st Quarterly Result Second week of August 2016
2nd Quarterly Result Second week of November 2016
3rd Quarterly Result First week of February 2017
4th Quarterly Result April / May 2017
Listing on Stock Exchanges
Stock Exchange Stock Code ISIN NO.
Phiroze Jeejeebhoy Towers, Dalal Street Mumbai-400001 500620 INE 017A01032
National Stock Exchange of India Ltd.
Exchange Plaza, Bandra-Kurla Complex, Bandra (E),Mumbai – 400 051
GESHIP INE 017A01032
Global Depository Receipts
Euro MTF Market-Luxembourg Stock Exchange, Kredietbank S.A. Luxembourgeoise Societe Anonyme 43, Boulevard Royal, L-2955 Luxembourg, R. C. Luxembourg B 6395
Wholesale Debt Market - National Stock Exchange of India Ltd.,
Exchange Plaza, Bandra-Kurla Complex, Bandra (E),Mumbai - 400 051
The Company has paid the requisite Annual Listing Fees to all Stock Exchanges for the financial year 2015-16.
Share Transfer System
Share Transfer requests received in physical form are registered within a period of 15 days. A Share Transfer Committee comprising of members of the Board meets once in a week to consider the transfer of shares. Requests for dematerialization (demat) received from the shareholders are effected within an average period of 15 days.
94,615 GDRs (equivalent to 4,73,077 equity shares) were outstanding as on March 31, 2016.
No Warrants were outstanding as on March 31, 2016.
The Company has no plants.
IL&FS Trust Company Ltd.
The IL&FS Financial Centre, Plot C- 22, G Block Bandra Kurla Complex, Bandra(E), Mumbai 400051
Tel : 022 - 26593927
Fax : 022 - 26533297 Web : www.itclindia.com <http://www.itclindia.com>
Address for correspondence
Ocean House, 134-A, Dr. Annie Besant Road, Worli, Mumbai - 400 018
Tel : 022-66613000/24922100 Fax : 022-24925900 E-mail : email@example.com
Transfer Agent *
Sharepro Services (India) Pvt. Ltd.
13A/B, Samhita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange Lane,
Off Andheri-Kurla Road, Sakinaka, Andheri (E), Mumbai - 400 072
Tel : 022-67720300/67720400 Fax : 022-28591568 E-mail: firstname.lastname@example.org
912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai - 400 021
Tel : 022-22881569 / 66134700 Fax : 022-22825484
* The Company is in the process of appointing new Registrar and Share Transfer Agent in place of Sharepro Services (India) Pvt. Ltd. pursuant to the order issued by the Securities and Exchange Board of India.
9. ADDITIONAL SHAREHOLDERS INFORMATION
Under the Companies Act, 1956, dividends that are unclaimed for a period of seven years are required to be transferred to the Investor Education and Protection Fund (IEPF) administered by the Central Government. An amount of Rs. 68,25,023 and Rs. 28,66,355 being unclaimed 54th (3rd interim) and 55th (1st Interim) dividend was transferred on June 23, 2015 and December 14, 2015 respectively to the IEPF. The Company is in the process of transferring the 55th 2nd interim dividend to the IEPF.
Electronic Clearing Services for payment of dividend in case of shares held in physical form
To avoid the risk of loss/interception of dividend warrants in postal transit and/or fraudulent encashment, shareholders are requested to avail of NECS/ECS facility – where dividends are directly credited in electronic form to their respective bank accounts. This also ensures faster credit of dividend. The NECS/ECS application form can be obtained either from the Company’s Share Transfer Agent’s Office or the Registered Office of the Company.
Shareholders located in places where NECS/ECS facility is not available, may submit their bank details. This will enable the Company to incorporate this information on the dividend warrants and thus prevent fraudulent encashment
Shareholders holding shares in dematerialized form may note that:
g Instructions regarding bank details which they wish to have incorporated on their dividend warrants must be submitted to their depository participants. As per the regulations of NSDL and CDSL, the Company is obliged to print the bank details on the dividend warrants, as furnished by these depositories to the Company.
g Instructions already given by them for shares held in physical form will not automatically be applicable to the dividend paid on shares held in electronic form.
Instructions regarding change of address, nomination and power of attorney should be given directly to the depository participants. The Company cannot entertain any such requests directly from the shareholders.
g The Company provides NECS/ECS facility for shares held in electronic form and for reasons mentioned earlier, shareholders may wish to avail of this facility.
10. STATUS OF COMPLIANCE WITH NON-MANDATORY REQUIREMENTS
Your Company continuously strives towards improving its Corporate Governance practices. Whilst your Company is fully compliant with the mandatory requirements of Regulation 17 to 27 and Regulation 46(2) and other applicable regulations of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the status of compliance of non-mandatory requirements is as follows:
Mr. K. M. Sheth, Chairman of the Company, is entitled to maintain a Chairman's office at the Company's expense and also allowed reimbursement of expenses incurred in performance of his duties.
The financial results of the Company for every quarter are extensively published in the newspapers and are also uploaded on the Company's website. These are also available on website of the stock exchanges. In view of the same half yearly communication on financial results is not sent to each household of shareholders.
During the year under review there was no audit qualification in the Company's financial statements. The Company continues to adopt best practices to ensure the regime of financial statements with unmodified audit opinion.
Separation of Offices of Chairman and Deputy Chairman & Managing Director
Mr. K. M. Sheth holds the office of Chairman of the Company and Mr. Bharat K. Sheth holds the office of Deputy Chairman & Managing Director of the Company.
Reporting of Internal Auditor
The internal auditor reports directly to the Audit Committee.