CORPORATE GOVERNANCE REPORT
I. Our Corporate Governance Philosophy
We believe that we must so govern our affairs as to optimise satisfaction amongst all our stakeholders, which includes the esteemed customers, providers of capital, employees, those from whom we buy and through whom we sell, the communities in which our primary activities take place and the society at large. We attach equal importance to both means and ends - the results sought to be secured and the methods used to achieve them.
As rightly said, Board of Directors is Center for good corporate Governance; at VAMA we practice a simple and transparent Corporate Structure and believe in well informed, active and Independent Board to ensure best standards of corporate Governance.
The Securities and Exchange Board of India (SEBI) amended the Listing Agreement effective October 1, 2014, to bring in additional corporate governance norms for listed entities. These norms provide for stricter disclosures and protection of investor rights.
The amended norms require the companies to get shareholders approval for Related Party Transactions, establish whistle blower mechanism, elaborate disclosures on pay packages and have at least one women director on their Boards. The amended norms are aligned with the provisions of the Companies Act, 2013, and are aimed to encourage companies to 'adopt best practices on corporate governance'.
Our Corporate governance framework has helped us be aligned with the new guidelines of the Companies Act,
2013. We believe that good ethics need good business sense and our business practices are in line with this spirit by following the Code of Conduct thereby maintaining high ethical standards. Our Board is actively involved in all important policy matters, guidelines, timely and accurate disclosures, financials, business performance, leadership and Governance to ensure shareholders welfare and easy going of the operations of the Company.
II. Board of Directors
(a) Composition of the Board
During the financial year under review, it was ensured that an appropriate mix of Executive, Non- Executive and Independent Directors is maintained and the functions of the Board with regard to its Governance and Management are kept separate from each other. Our Board consists of 6 Directors, 2 of whom are executive or whole time directors and 3 are Independent Directors and 1 is Non-Executive Woman Director. The said two executive Directors are also promoters of the Company.
The Board composition is in conformity with clause 49 of the Listing Agreement and the provisions of Companies Act, 2013 and the Nomination and Remuneration Committee periodically evaluates the need for change in composition of its size.
During the financial year 2014-2015 , 6 (Six) Board Meetings were held on the following dates : 29th day of May,
2014, 13th day of August, 2014, 02nd day of October 2014, 08th day of October, 14th day of November, 2014 and 12th day of February, 2015. The maximum time-gap between any two consecutive meetings did not exceed 120 days
(e) Responsibilities of the Chairman & Managing Director and Whole Time Director of the Company.
In short, the Chairman & Managing Director and the Executive Director are the mentors of the Management and responsible for Corporate Strategy, Planning, Internal & External Controls.
They also take care of business operations and targets, new initiatives and investments and planning for achieving targets.
They also overview customer service & support operations new advancements, in addition to governance, compliances and guidance on day to day challenges.
(f) Independent Directors:
i. Our Independent Directors comply with the requirements as stipulated under Section 149 of the Companies Act, 2013 as well as that of Clause 49 of the listing agreement,
As mandated under Clause 49, the following are the Independent Directors on our Board G Mr. R. Venkateswara Rao G Mr. K Vara Prasad Raju G Mr. V. Ramakrishna Rao
ii. Meeting of Independent Directors:
During the year under review, the Independent Directors met on 4th day of March 2015, inter alia, to discuss:
a Evaluation of the Performance of Non-Independent Directors and the Board of Directors as a whole;
b. Evaluation of the Performance of the Chairman of the Company, taking into account the views of the Executive and Non-Executive Directors.
c. Evaluation of the quality, content and timelines of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
All the Independent Directors were present at the Meeting.
iii. Familiarisation Programme For Independent Directors :
a. The Company through its Managing Director / Executive Director / Key Managerial Personnel conducts programmes / presentations periodically to familiarize the Independent Directors with the strategy, operations and functions of the Company.
b. The Board members are provided with necessary documents/brochures, reports and internal policies to enable them to familiarise with the Company's procedures and practices.
c. Quarterly updates on relevant statutory changes and landmark judicial pronouncements encompassing important laws are regularly circulated to the Directors.
d. The Familiarisation Programme is posted on the company's website of the Company and can be accessed at <http://www.vamaind.com/Policies/Familiarisation_Programme_for_Independent_> Directors.pdf
(g) Code of Conduct:
In tune with the revised Clause 49 of the Listing Agreement entered with the Stock Exchange, the Board has laid down a code of conduct for all its members, Senior Management Personnel and Designated Employees of the Company, including the duties of Independent Directors. The code of conduct is posted on the website of the Company. All Board members and Senior Management Personnel affirm compliance with the code on an annual basis and the declaration to the effect by Mr. V A Rama Raju, Chairman & Managing Director, is attached to this report.
(h) Vigil Mechanism / Whistle Blower Policy:
As referred in the Directors Report, the vigil mechanism for its Directors and employees also incorporates a Whistle Blower Policy, basically enabling the seamless flow of grievances from the victims / observers to the redressal authority.
The Company Secretary of the Company has been made the nodal officer to receive the complaints / concerns / grievances of employees, who in turn escalates the matter to the Audit Committee who oversees the vigil mechanism.
The nodal officer, upon receipt of any complaints / concerns / grievances, process the same and does the preliminary investigation and then present the facts of the case to the Audit Committee.
The employee, in exceptional cases, can directly access the Chairman of the Audit Committee by any available mode of communication.
The Vigil Mechanism and Whistle Blower Policy is attached at Annexure VIIIto the Board's Report and may also be accessed on the Company's Website at <http://www.vamaind.com/Policies/Vigil_Mechanism_> Whistle_Blower_Policy.pdf
It is hereby affirmed that no personnel has been denied access to the audit committee.
(i) Board Evaluation
As mentioned in the Directors Report, the Companies Act, 2013 as well as the Listing Agreement envisage a performance evaluation framework whereby the performance of Directors, committees and the Board as a whole is subject to evaluation from time to time which in turn helps the Company to address several issues such as appointment / reappointment of Directors, improving the quality of performance of the Directors at individual level and the Board as a whole, effective discharge of duties by the Directors, optimum utilization of Board level resources, determining suitable remuneration / compensation packages etc.,
With the aforesaid objective in mind, the Board, based on the recommendations of the Nomination and Remuneration Committee, has devised a policy for performance evaluation of Directors, committees and the Board, which include criteria for determining qualifications, positive attributes and independence of Directors.
The Company has also surveyed on the best practices prevalent in the Industry with respect to evaluation of the performance of the Board and its members. The Company has also availed the services of professionals seeking their suggestions on the said matter. Based on the inputs received from the aforesaid sources and in accordance with the Policy of the Company, evaluation process has been undertaken.
The Board works with the nomination and remuneration committee to lay down the evaluation criteria for the performance of executive / non-executive / independent directors through a peer-evaluation excluding the director being evaluated through a Board effectiveness survey. The questionnaire of the survey is a key part of the process of reviewing the functioning and effectiveness of the Board and for identifying possible paths for improvement. Each Board member is requested to evaluate the effectiveness of the Board dynamics and relationships, information flow, decision-making of the directors, relationship to stakeholders, company performance, company strategy, and the effectiveness of the whole Board and its various committees. Feedback on each director is encouraged to be provided as part of the survey.
Independent directors have three key roles - governance, control and guidance. Some of the performance indicators based on which the independent directors are evaluated include :
• Ability to contribute to and monitor the corporate governance practices of the Company
• Ability to contribute by introducing best practices to address top-management issues
• Active participation in long-term strategic planning
• Commitment to the fulfillment of a director's obligations and fiduciary responsibilities; these include participation in Board and committee meetings.
(ii) Transactions with Related Parties
The Company has not entered into any related party transactions which are not on arms length basis or not in the ordinary course of business. All the related party transactions were in the ordinary course of business and at arms length. The Audit Committee has approved all the related party transactions entered during the FY 2014-15.
There were no material transactions with the Related Parties during the year.
Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions, as approved and adopted by the Board of Directors may be accessed on the Company's Website at <http://> www.vamaind.com/Policies/Related_Party_Transactions_Policy.pdf
III. COMMITTEES OF THE BOARD
Currently, there are Four Board Committees - Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Risk Management Committee. The terms and reference of the Board Committees are determined by the Board from time to time. Meetings of each Board Committee are convened by the Chairman of the respective Committee.
The role and composition of these Committees, including the number of Meetings held during the financial year and the related attendance are provided below
1. AUDIT COMMITTEE
The primary objective of the committee is to monitor and provide effective supervision of the Management Financial Reporting process to ensure accurate and timely disclosures, with the highest levels of transparency, integrity and quality of financial reporting. The committee oversees the work carried out in the financial reporting process by the Management, the internal auditors and the independent auditors. The committee has the ultimate authority and responsibility to select, evaluate and wherever required, replace the independent auditor in accordance with the law. All possible measures are kaken by the committee to ensure the objectivity and independence of the Independent auditor
B. Terms of Reference:
The terms of reference of our Audit Committee are in accordance with the Listing Agreement entered with Stock Exchange read with Section 177 of the Companies Act, 2013 and includes such other functions as may be assigned to it by the Board from time to time.
C. Role of the Audit Committee includes:-
1. Overseeing the Company's Financial Reporting Process and disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible.
2. Recommending to the Board, the appointment, re-appointment and if required, the replacement or removal of the statutory auditor and the fixation of audit fees.
3. Reviewing with the Management, the Annual financial statements before submission to the Board for approval, with particular reference to:
(i) Matters required to be included in the Director's Responsibility Statement to be included in the Board's Report in terms of provisions of the Companies Act.
(ii) Changes, if any, in Accounting Policies and practices and reasons for the same.
(iii) Major accounting entries involving estimates based on the exercise of judgment by the management.
(iv) Significant adjustments made in the financial statements arising out of audit findings.
(v) Compliance with listing and other legal requirements relating to financial statements.
(vi) Disclosure of any related party transactions.
(vii) Qualifications in the draft audit report.
4. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.
5. Reviewing, with the management, performance of the statutory and internal auditors and adequacy of the internal control systems.
6. To discuss with statutory auditors before the audit commences, the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.
7. Reviewing the adequacy of the 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.
8. Discussion with the internal auditors of any significant findings and follow up there on.
9. Reviewing the risk management policies, practices and 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.
10. Review and monitor the auditor's independence and performance and effectiveness of audit process.
11. Approval or any subsequent modification of transactions of the Company with related parties.
12. Evaluation of internal financial controls and risk management systems.
13. To look into the reasons for substantial defaults in the payment to the depositors, if any, shareholders (in case of non-payment of declared dividends) and creditors.
14. 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 utilised 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 public issue or rights issue and making appropriate recommendations to the Board to take up steps in this matter.
15. To review the functioning of Whistle Blower Mechanism.
16. Approval of appointment / reappointment / remuneration of CFO (or any other person heading the finance function or discharging that function) after assessing the qualifications, experience & background, etc. of the candidate.
17. Carrying out any other function as may be mentioned in the terms of reference of the Audit Committee. The Audit Committee discharges its functions and obligations on regular basis and on the occurrence of the events.
Powers under Clause 49 of the Listing Agreement:
(i) Investigate any activity within its terms of reference.
(ii) Seek information from any employee
(iii) Obtain outside legal or other professional advice.
(iv) Secure attendance of outsiders with relevant expertise, if it considers necessary.
NOMINATION AND REMUNERATION COMMITTEE
B. Terms of Reference:
The terms of reference of our Nomination and Remuneration Committee are in accordance with the listing Agreement entered with Stock Exchange read with Companies Act, 2013 and includes such other functions as may be assigned to it by the Board from time to time.
C. The Role of the Nomination and Remuneration Committee includes:-
1. Formulation of criteria for determining qualifications, positive attributes and independence of a director and 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. To recommend/review remuneration of Key Managerial Personnel i.e. salary, benefits, bonus etc.
6. Recommendation of Fee/compensation , if any, to be paid to Non-Executive Directors, including Independent Directors of the Board.
7. Payment / revision of remuneration payable to Managerial Personnel.
8. While approving the remuneration, the committee shall take into account the financial position of the Company, qualification, experience and past performance of the appointee.
9. The committee shall be in a position to bring about objectivity in determining the remuneration package while striking the balance between the interest of the Company and shareholders.
10. Any other functions / powers / duties as may be entrusted by the Board from time to time.
D. Remuneration policy
The Remuneration Committee recommends to the Board the compensation package of the Executive / Non-Executive Directors of the Company. The remuneration of the Executive Directors is within the ceilings laid down by Schedule V of the Companies Act, 2013.
Our remuneration policy is driven by the success and performance of the managerial person. Our Remuneration Policy for Directors, Key managerial Personnel and other employees forms part of the Annual Report and marked as Annexure - VII to the Board Report.
While reviewing the remuneration of management personnel, the committee takes into account the following:
(i) Financial position of the Company
(ii) Trends in the Industry
(iii) Appointee's qualification and experience
(iv) Past performance
(v) Past remuneration etc.
3. STAKEHOLDERS RELATIONSHIP COMMITTEE A. Composition & Attendance in Meetings
The Stakeholders Relationship Committee is responsible for resolving investor's complaints pertaining to share transfers, non-receipt of Annual Reports, Dividend Payments, Issue of Duplicate share certificates, Transmission of shares and other related complaints.
B. Terms of Reference
The terms of reference of the Stakeholders Relationship Committee are as under :
1. Redressal of grievances of shareholders and other security holders
2. Transfer and transmission of securities
3. Dealing with complaints related to transfer of shares, non-receipt of declared dividend, non-receipt of Balance Sheet etc.
4. Issuance of duplicate shares certificates
5. Review of dematerialisation of shares and related matters
6. Performing various functions relating to the interest of shareholders/investors of the Company as may be required under the provisions of Companies Act,2013, Listing Agreement with the Stock Exchange and regulations/guidelines issued by the SEBI or any other regulatory authority
In order to expedite the process and for effective resolution of grievances/complaints, the Committee has delegated powers to the Registrar and Share Transfer Agents i.e., M/s. Bigshare Services Pvt Ltd., to redress all the complaints/grievances/enquiries of the shareholders/investors. It redresses the grievances/complaints of shareholders/investors under the supervision of Company Secretary & Compliance officer of the Company.
The Committee, along with the Registrar and Share Transfer Agents of the Company follows the policy of attending to the complaints, if any, within seven days from the date of its receipt.
As mandated by SEBI, the Quarterly Reconciliation of Share Capital Audit, highlighting the reconciliation of total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) vis-a-vis the total issued and listed capital is being carried out by a Practicing Company Secretary. This Audit confirms that total issued and paid up capital is in agreement with the total number of shares held in physical and dematerialized form with NSDL and CDSL.
4. RISK MANAGEMENT COMMITTEE
The primary function of the Risk Management Committee is to assist the Board to manage the risk appetite of the Company in order to promote a balanced business model and growth. The committee oversees the identification of major areas of risk being faced by the Company, the development of strategies to manage those risks and reviews the risk management policies and their implementation.
B. Functions, Roles and Responsibilities
1. To approve structures, analyse risks and benefits, seek independent opinion with regard to structure or views.
2. Assisting the Board in fulfilling its oversight responsibilities with regard to Enterprise Risk Management.
3. Reviewing and approving risk related disclosures.
4. Responsible for day to day oversight risk management including identification, impact assessment, monitoring, mitigation and reporting.
5. Formulation and implementation of risk management policies and procedures.
6. Providing updates to the Board on enterprise risk and action taken.
7. Ensure compliance with policies and procedures laid down by the Company for specific business units.
8. Maintenance and development of our supportive culture , in relation to the management of risk appropriately embedded through procedures ,training and leadership actions so that all employees are alert to the wider impact on the whole organisation of their actions and decisions.
9. Advising Board on all high level risk matters.
10. To review the effectiveness of the internal control.
(b) Postal Ballot
During the financial year under review, no postal ballot process was taken up and hence No Special Resolution was passed through Postal Ballot. Therefore providing details of person who conducted the Postal Ballot exercise does not arise. However, subsequent to the close of FY 2014-15, i.e., during the FY 2015-16, we conducted Postal Ballot process to transact the following business.
(i) Increase in the Authorised Share Capital from Rs.9 Crores to Rs.11 <http://Rs.11> Crores
(ii) Adoption of new set of Articles of Association
(iii) Re-appointment of Mr. V. A. Rama Raju to the office of Managing Director of the Company
(iv) Re-appointment of Mr. V. Rajam Raju to the office of Executive Director of the Company
(v) Appointment of Mrs. R. Rama Sravanthi as Director of the company
(vi) Borrowing powers of the Board
(vii) To create charge/mortgage on the assets of the Company
(viii) Preferential issue of Equity Shares
(ix) Preferential issue of Warrants
Mr. Vikas Sirohiya, Practicing Company Secretary was appointed as Scrutinizer to conduct the said Postal Ballot process in a fair and transparent manner. The said process was completed on 15th July, 2015, wherein all the resolutions as proposed were passed by way of requisite majority. The result was announced on 15th July, 2015.
As of now, there is no proposal to pass any Special resolution through Postal Ballot process. Special resolutions, if required to be passed in the future, will be decided at the relevant time. The procedure for postal Ballot is / shall be as per the provisions contained in this behalf in the Companies Act, 2013 and rules made there under.
(c) Annual General Meeting
Date &Time: September 29, 2015 at 10.00 A.M
Venue : Inner Circle, Raj Bhavan Road, Somajiguda, Hyderabad-500082.
(d) Financial Year (2014-2015)
The Financial year under review is 2014-2015 [01st April, 2014 to 31st March, 2015.
(e) Book Closure
September 23, 2015 to September 29, 2015 [both days inclusive]
Board of Directors at its Meeting held on May 29, 2015 recommended the dividend of Re.0.20 (2%) per equity share of Rs. 10/- each for the financial year 2014-15 subject to the approval of shareholders at the ensuing Annual General Meeting. If approved, the dividend will be paid on or before 27 October, 2015 to such shareholders whose names appear on the Company's Register of Members on Tuesday, September 22, 2015 and in respect of the shares held in dematerialized form, the dividend will be paid to members whose names are furnished by National Securities Depository Limited [NSDL] and Central Depository Services (India) Limited [CDSL] as beneficial Owners as on that date.
(g) Listing Details
At present, the Equity Shares of the Company are listed on BSE Limited (BSE).
The Annual Listing fees for the financial year 2015-16 on equity share capital has been paid to BSE.
(h) Stock Information
BSE Scrip Code Scrip Name Symbol Series
(i) Market Price Data
BSE Scrip Code : 512175
Scrip Name : VAMA Industries Ltd.,
Symbol : VAMA IND
Series : EQ
ISIN : INE685DO1014
(k) Dematerialization of shares and liquidity
As at March 31, 2015, 8210478 equity shares representing 99.67% of the total equity capital of the company were held in dematerialized form and the rest in the physical form.
(m) Designated email Id for Investor Services
In terms of Clause 47(f) of the Listing Agreement, the designated email ID for investor's complaints is email@example.com
(n) Registrar and Share Transfer Agents
The Board of Directors of the Company has delegated the power of share transfer and related operations to M/s. Big Share Services Private Limited, registrar and Share Transfer Agents.
All the correspondence relating to the shares of the company should be addressed to Bigshare at the address given below.
Bigshare Services Private Limited
306, Right wing, Amruthaville OppYashoda Hospital Somajiguda, RajbhavanRoad Hyderabad 500 082.
Share Transfer System:
All the physical transfers are noted by the Stakeholders relationship Committee. Share transfer requests which are received in physical form are processed and the share certificates returned within a period of 15 days in most cases and in any case within 30 days from the date of receipt, subject to the documents being in order and complete in all respects.
The Company obtains from a Company Secretary in practice Half-Yearly Certificate of compliances with the share transfer formalities as required under Clause 47 (c) of the Listing Agreement with the Stock Exchanges and files a copy of the Certificate with the Stock Exchange.
(p) Outstanding GDRs/ ADRs/ warrants or any convertible instruments, conversion date and likely impact on Equity
The Company has not issued any of these instruments till date.
(q) Plant Location(s): Not applicable
(r) Communication Address for Investors:
Company Secretary & Compliance Officer
Ms. Shilpa Kotagiri VAMA Industries Limited Ground Floor, 8-3-191/147/24, Plot No. B-12, Madhura Nagar, S.R. Nagar [Post], Hyderabad 500 038, A.P, India.
(s) CEO & CFO Certification
As required by Clause 49 of the Listing agreement, the CEO certification is attached to the Annual Report.
(t) Code of Conduct
In compliance with revised Clause 49 of the listing agreement, the company has adopted a code of conduct. This code is applicable to the members of the Board, Senior Management Personnel and Designated Employees of the Company. The code of conduct is available on our website, www.vamaind.com
All the members of the Board and the Senior Management Personnel and Designated Employees of the Company have affirmed compliance to the code of conduct, as at March 31, 2015. A declaration to this effect, signed by the Managing Director is attached to this Report".
(u) Capital Reconciliation Audit
A qualified Company Secretary carries out Capital Reconciliation Audit every quarter to reconcile the total admitted capital with national Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The Audit confirms that the total issued/ paid up capital is in agreement with the aggregate number of shares in physical form and the total number of dematerialized shares held with NSDL & CDSL.
(v) Other Information
Nomination in respect of shares held in Physical form
Section 72 of the Companies Act, 2013 extends nomination facility to individuals holding shares in Physical form in companies. Members, in particular those holding shares in single name may avail this facility by furnishing the particulars of their nomination in applicable Form for this purpose.
(a) Related Party Transactions
Details of materially significant related party transactions i.e., transactions of the company of material nature with its promoters, the Directors or the management or relatives etc., that may have potential conflict with the interests of the Company at large: Nil
(b) Details of Non- compliance
No Penalty / strictures were imposed on the company by the stock Exchange or SEBI or any statutory Authority or any matter related to the Capital market during the last 3 (Three) years.
(c) Details of Compliance of Mandatory requirements
We have complied with all the applicable mandatory requirements of clause 49 of the Listing Agreement entered into with the stock Exchange
(d) Adoption of Non Mandatory requirements
i.Our Financial Statement are free from any Audit qualification. ii.Our Internal Auditor reports directly to the Audit Committee.
(e) Prevention of Insider Trading
In accordance with the requirements of SEBI(Prohibition of Insider Trading) Regulations, 1992, the Company has instituted a comprehensive code of conduct for prohibition of insider trading in the Company's shares.
(f) Auditors Certificate on Corporate Governance
We have obtained a certificate from its Statutory Auditors certifying its compliances with the provisions relating to Corporate Governance laid out in clause 49 of the listing agreement executed with the stock exchanges. The certificate is attached to this report.
VI. Means of Communication
We regularly interact with the shareholders through multiple channels of communication such as publication of notices, results, annual Reports and the company's website.
(a) All the communication, may it be results or notices etc, by way of News Papers is published in Business Standard (English) and Andhra Prabha (Telugu) dailies.
(b) Financials are furnished to BSE Ltd. within the time specified under clause 41 of the Listing Agreement.
(c) No presentations were made to institutional investors or to the analysts during the financial year under review.
(d) The company promptly informs Stock Exchange about all the price sensitive information and all such other matters which in our opinion are material and relevant for the shareholders.
(e) The Company's website :www.vamaind.com Contains separate section for investors where shareholders information is made available .