REPORT ON CORPORATE GOVERNANCE
1. Company's philosophy on code of governance
Corporate Governance refers to a combination of regulations, procedures and voluntary practices that enable companies to maximize stake holders' value by attracting financial and human capital and efficient performance.
As a responsible corporate citizen, it is the earnest endeavour of the Company to improve its focus on Corporate Governance by increasing accountability and transparency to shareholders, bankers, customers etc.
The Company has complied with all the guidelines on Corporate Governance laid down by the Stock Exchange.
2. Board of Directors
2.1 As on 31st March, 2013, 71 % of the Board comprises of Non-Executive Directors. 50% of the Board comprises of Independent Directors and the balance 50% represents promoter Directors. Independent Directors do not have any material pecuniary relationship and haven't entered into any transactions with the Company, its promoters & its management, which in the judgement of the Board may affect independence of the judgement of the Directors.
2.2 Attendance at Board Meetings
During the financial year ended 31st March, 2013, four board meetings were held on 29th May, 2012, 11th August, 2012, 29th October, 2012 and 13th February, 2013.
2.3 All the directors have as on 31st March, 2013, filed the requisite declarations stating that :
a) The disqualification contemplated under Section 274(1)(g) of the Companies Act, 1956 do not apply to them
b) The code of conduct for Prevention of Insider Trading in its equity shares has been complied with.
2.4 The Company has framed a Code of Conduct and Ethics for members of the Board and Senior Management personnel of the Company. The said Code of Conduct is available on the website of the Company. The declaration by Chairman & Managing Director is given below. In addition, separate Code of Conduct for dealing in equity shares is also in place. "I hereby confirm:
The company has obtained from all members of the Board and Senior Management Personnel, affirmation that they have complied with the Code of Conduct and Ethics for Directors and Senior Management in respect of financial year 2012-13."
Sd/-Birendra KumarChairman & Managing Director
3. Audit Committee
Brief description of terms of reference
The constitution, role, powers and terms of reference of the Audit Committee are in accordance with those specified in Clause 49 of the Listing Agreement and Section 292A of the Companies Act 1956.
The brief terms inter alia include:
- Overseeing the Company's financial reporting, process and disclosure of financial information to ensure that the financial statement is correct, sufficient and credible;
- Recommending the appointment and removal of external auditor, fixation of audit fee and approval for payment of any other services;
- Reviewing with management the annual financial statement before submission to the Board;
- Reviewing the adequacy of internal audit functions;
- Discussing with internal auditors any significant finding and follow up on such issues;
- Reviewing the findings of any internal investigations by the internal auditors in matters where there is suspected fraud or irregularity, or a failure of internal control system of a material nature and the reporting of such matters to the Board;
- Discussing with external auditors before the audit commences on the nature and scope of audit, as well as having post-audit discussion to ascertain any area of concern;
- Reviewing the company's financial and risk management policies; and
- Examining reasons for substantial default in the payment to depositors, shareholders (in case of non payment of declared dividends) and creditors, if any.
3.1 Composition, names of members and Chairperson as on 31st March, 2013
All the members of the Committee are financially literate within the meaning of explanation 1 to Clause 49(II)(A) of the Listing Agreement. The Statutory Auditors and the Internal Auditors are also invitees to the meeting. The Company Secretary acts as the Secretary to the Committee.
3.3 Meetings and attendance during the last financial year
During the financial year ended 31st March, 2013, four Audit Committee meetings were held on 29th May, 2012, 11th August, 2012, 29th October, 2012 and 13th February, 2013.
The partners of Messrs Ray & Ray, the Statutory Auditors and the partners of Messrs S S Kothari Mehta & Co. & Messrs Haribhakti & Co., the Internal Auditors generally attended the meetings. The Company Secretary acts as Secretary to the Committee.
4. Remuneration Committee
4.1 Terms of reference
The Remuneration Committee has been constituted to review and recommend the remuneration package for the whole-time directors.
4.2 During the year, no meeting of Remuneration Committee was held.
4.3 In addition to sitting fees for attending the meetings of the board and committees thereof, the nonexecutive directors are entitled to commission @ 1% of Net Profit subject to a ceiling of Rs.500,000 to be paid and distributed among them equally and in proportion to the period for which they served as director. However, due to inadequacy of profits , the non-executive directors have not been paid any commission during the financial year 2012-13.
The remuneration to whole-time directors was paid in terms of shareholders' approval dated 28th August, 2010. Due to decline in profitability, the remuneration approved exceeded the limit specified under Section 309 (3) read with Section 198 by Rs.4,787,223. The company is seeking approval of Central Government for waiver of recovery of excess remuneration paid.
4.4 No stock option or performance linked incentive is offered to the directors/executives of the company.
5. Shareholders' Committee :
The Board had constituted a share- holders'/ Investors' Grievance Committee comprising of four Directors namely S/Shri Apurv Kumar, Rupak Gupta, Joint Managing Directors, Mohinder Kapur and Sanjiv Swarup, Directors. Shri Sanjiv Swarup has since resigned from the directorship of the company.
5.1 Name of non-executive director heading the committee : Shri Mohinder Kapur
5.2 Name and designation of compliance officer: Shri Sidharth Ghatak, Company Secretary
5.3 Number of shareholders' complaints received so far :1
5.4 Number of complaints not solved to the satisfaction of the shareholders : Nil
5.5 No. of pending complaints : Nil
6.1 Risk assessment and its minimisation procedures have been laid down by the company and the same have been informed to the Board members. The procedures are periodically reviewed to ensure that executive management controls risk through means of properly defined framework.
6.2 No money, was raised by the Company through public issue, right issue, preferential issues etc. in the last financial year.
6.3 A summary of transactions with related parties in the ordinary course of business is periodically placed before the Audit Committee;
6.4 There were no material individual transactions during the financial year ended 31st March, 2013, with related parties which were not in the ordinary course of business;
6.5 All material transactions during the financial year ended 31st March, 2013, either with related parties or with others were on arms length;
6.6 There were no materially significant transactions during the financial year with related parties such as the promoters, directors, key managerial personnel or relatives that could have potential conflict with the interest of the Company;
6.7 The mandatory disclosure of transactions with related parties in compliance with the Accounting Standards AS - 18 is a part of this Annual Report and disclosed in Notes to Schedule 43;
6.8 In preparing the Annual Accounts in respect of the financial year ended 31st March, 2013, no accounting treatment was different from that prescribed in the Accounting Standards;
6.9. During the last three years, there were no strictures or penalties imposed by either SEBI or the Stock Exchanges or any statutory authority for non-compliance of any matter related to the capital markets. However, the company has received a Show Cause Notice for violation of Clause 40A of the Listing Agreement as regards promoters' shareholding.
6.10 The directors and other identified persons have observed and complied with the requirements of Code of Conduct for Prevention of Insider Trading in Equity Shares of the Company in accordance with Securities & Exchange Board of India (Prohibition of Insider Trading), Regulations 1992.
7. Means of communication.
7.1 Half yearly report sent to each shareholder: No
7.2 Quarterly Results
• Which newspapers normally published in :Financial Express (English) & Jansatta (Hindi)
• Any website where published :The company is complying with Corporate Filing and Dissemination system (CFDS) as per the Listing Agreement. The results are also periodically updated on the Company's web site www.hotelclarks.com
• Whether it also displays official news releases and presentation made to institutional investors/ analyst :No
7.3 Whether management discussion & analysis is a part of annual report or not : Yes, management discussion & analysis is a part of the annual report.
8. General Shareholder information
8.1 The particulars of the directors seeking re-appointment at the forthcoming Annual General Meeting are as under:
• Shri Rajendra Suraiya - (68) BA Economic (Honours). He has 44 years experience in Industry & Business including chemicals, edible oils, export etc. Shri Rajendra Suraiya retires by rotation and being eligible offers himself for re-appointment at the forthcoming Annual General Meeting. The shareholding in the company of Shri Rajendra Suraiya as on 31st March, 2013 is nil.
• Shri Mohinder Kapur - (79) B A (Hons). He is Managing Director of Gowarsons Publishers Pvt.Ltd. He is also on the Board of various companies including Madhu Muskan Publications Pvt.Ltd. and Madhu Muskan Leasing & Financing Pvt.Ltd. Shri Mohinder Kapur retires by rotation and being eligible offers himself for re-appointment at the forthcoming Annual General Meeting. The shareholding in the company of Shri Mohinder Kapur as on 31st March, 2013 is nil.
• Shri Arvind Kumar - (73) B.Com. LLB. He has decades of experience in the textiles and hotel industry. He is also on the Board of various companies including Hotel Clarks Varanasi Ltd., The Indian Textiles Co. Pvt. Ltd. , Indus Textiles Pvt. Ltd., Kalyani Holdings & Finance Ltd, U P Hotel Clarks Ltd., Indus Techpark Pvt. Ltd, Bonita India Ltd, & Banaras International Ltd. Shri Arvind Kumar retires by rotation and being eligible offers himself for re-appointment at the forthcoming Annual General Meeting. The shareholding in the company of Shri Arvind Kumar as on 31st March, 2013 is 29341 equity shares.
8.2 Inter-se relationship of directors:
Shri Rupak Gupta & Smt. Supriya Gupta are related to each other
S/Shri Apurv Kumar & Birendra Kumar are related to each other
S/Shri Arvind Kumar & Birendra Kumar are related to each other None of the other directors are related to each other
8.3 AGM : Date, time & venue
52nd Annual General Meeting
Date : 28th September, 2013
Time : 11.00 a.m.
Venue : PHD House, Opposite Asian Games Village, New Delhi
8.4 Financial Calendar (tentative) for Results :
1st Quarter Mid August, 2013
2nd Quarter Mid November, 2013
3rd Quarter Mid February, 2014
4th Quarter End May, 2014
8.5 Date of Book Closure:
25th September, 2013 to 28th September, 2013
8.6 Dividend :
The company has proposed a dividend of Rs.5/- per equity share i.e. 50% subject to approval of shareholders at the forthcoming Annual General Meeting. The dividend, if declared, will be paid on 7th October, 2013.
8.7 Listing On Stock Exchange
The shares of the company are listed on BSE Ltd., Mumbai (BSE).
Annual Listing fees as prescribed has been paid to the BSE Ltd. (BSE), Mumbai for 2013-2014.
8.8 Stock Code:
8.9 Designated e-mail ID for Investors' Grievances
8.10 Registrar & Transfer Agent :
The company has engaged the services of M/s Skyline Financial
Services Pvt. Ltd. as its Registrar for physical transfer of shares as well as for electronic connectivity with NSDL & CDSL.
8.11 Share Transfer System :
To expedite the transfer in physical segment, authority has been delegated to the Share Transfer Committee of the Board. The Registrar & Transfer Agent ensures that the transferred share certificates are despatched within the stipulated time.
8.12 Dematerialisation of Shares & Liquidity.
The company's shares are traded in dematerialised form and have to be delivered in the dematerialised form to all stock exchanges. The number of shares dematerialised as on 31st March, 2013 was 2,834,215 (52.49% of the total paid up capital) and the balance of 2,565,785 representing 47.51% were held in physical form. Investors may open an account with depository participant registered with either National Securities Depository Ltd. (NSDL) or Central Depository Services (India) Ltd. (CDSL).
Under the Depository System, the International Securities Identification Number (ISIN) allotted to the Company's share is INE726E01014.
8.13 Outstanding GDRs/ADRs Warrants or any convertible instruments, conversion date and likely impact on Equity.
The Company has not issued any GDRs/ADRs/Warrants or any Convertible Instruments.
8.14 Hotel locations
Clarks Shiraz, 54, Taj Road, Agra
Clarks Amer, Jawahar Lal Nehru Marg, Jaipur Clarks Avadh, 8, Mahatma Gandhi Marg, Lucknow Clarks Khajuraho, Bamitha Road, Khajuraho
For any assistance regarding dematerialisation of shares, shares transfer, transmission, change of address and any other query relating to shares, please correspond with
8.15 Address for correspondence
M/s. Skyline Financial Services Pvt.Ltd.
D-153/A, Ist floor Okhla Industrial Area , Phase I New Delhi-110 020. Tel. 26812682
Shareholders holding shares in electronic mode should address all correspondence to their respective depository participant.
9. Management Responsibility Statement
The Directors' Responsibility Statement, in conformity with the requirement of the Companies Act, 1956 has been included in the Directors' Report to the Shareholders. A Management Discussion and Analysis Report has been annexed to the Directors' Report.
The financial accounts are in full conformity with the requirements of the Companies Act, 1956. These accounts reflect fairly the form and substance of transactions and present a true view of the Company's financial condition and the results of its operations.
The Company has a system of internal control which is reviewed, evaluated and updated on an ongoing basis. The Internal Auditor has conducted periodic audit of systems and procedures to provide reasonable assurance that the activities are conducted in a manner not prejudicial to the interests of the Company.
The financial statements have been audited by Messrs. Ray & Ray, Chartered Accountants and have been reviewed by and discussed in the Audit Committee.
10. Compliance Certificate of the Auditors
The Company has obtained a certificate from the Statutory Auditors regarding compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement and the same is annexed.
All material requirements with respect to Corporate Governance as stipulated in the Listing Agreement have been complied with.
For and on behalf of the Board of Directors
Chairman & Managing Director New Delhi 27th May, 2013