REPORT ON CORPORATE GOVERNANCE
Kalyani Steels has always focused on good Corporate Governance, which is a key driver of sustainable corporate growth and long-term value creation. The basic philosophy of Corporate Governance is to achieve business excellence and dedicate itself for increasing long-term shareholder value.
This chapter of the report, along with the information given under 'Management Discussion and Analysis' and 'Shareholder Information' constitutes the compliance report of the Company on Corporate Governance during the year 2015-16.
1. BOARD LEVEL ISSUES
COMPOSITION OF THE BOARD
As on 31st March, 2016, the Board of Directors of Kalyani Steels comprised ten Directors. The Board consists of the Chairman, who is Promoter Non-Executive Director, one Executive Director and eight Non-Executive Directors, of which five are Independent. Details are given in Table 1.
NUMBER OF BOARD MEETINGS
During the year 2015-16, the Board of the Company met six times on 21st May, 2015, 22nd July, 2015, 13th August, 2015, 30th October, 2015, 13th February, 2016 and 2nd March, 2016. All the meetings were held in such manner that the gap between two consecutive meetings was not more than one hundred and twenty days.
• none of whose relatives has or had pecuniary relationship or transaction with the Company, its holding, subsidiary or associate company, or their promoters, or directors, amounting to two per cent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed from time to time, whichever is lower, during the two immediately preceding financial years or during the current financial year;
• who, neither himself nor any of his relatives :
(i) holds or has held the position of a key managerial personnel or is or has been employee of the Company or its holding, subsidiary or associate company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed;
(ii) is or has been an employee or proprietor or a partner, in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of :
(A) a firm of auditors or company secretaries in practice or cost auditors of the Company or its holding, subsidiary or associate company; or
(B) any legal or a consulting firm that has or had any transaction with the Company, its holding, subsidiary or associate company amounting to ten per cent or more of the gross turnover of such firm;
(iii) holds together with his relatives two per cent or more of the total voting power of the Company; or
(iv) is a Chief Executive or director, by whatever name called, of any non-profit organisation that receives twenty-five per cent or more of its receipts from the Company, any of its promoters, directors or its holding, subsidiary or associate company or that holds two per cent or more of the total voting power of the Company;
(v) is a material supplier, service provider or customer or a lessor or lessee of the Company;
• is not less than 21 years of age.
None of the Directors is a member of more than ten Board level Committees of public limited companies in which they are Directors or a Chairman of more than five such Committees.
Information Supplied to the Board
Among others, information supplied to the Board includes :
• Annual operating plans and budgets, capital budgets and any update thereof.
• Quarterly results for the Company.
• Minutes of meetings of Audit Committee and other committees of the Board and minutes of meetings of Subsidiary Company.
• The information on recruitment and remuneration of senior officers just below the level of the Board, including the appointment or removal of Chief Financial Officer and Company Secretary.
• Show cause, demand, prosecution notices and penalty notices, if any, which are materially important.
• Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.
• Any material default in financial obligations to and by the Company, or substantial non-payment for goods sold by the Company.
• Any issue, which involves possible public or product liability claims of substantial nature, including any judgement or order which, may have passed strictures on the conduct of the Company or taken an adverse view regarding another enterprise that can have negative implications on the Company.
• Details of any Joint Venture / Collaboration Agreement.
• Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property.
• Significant labour problems and their proposed solutions. Any significant development in Human Resources / Industrial Relations front like signing of wage agreement, implementation of Voluntary Retirement Scheme etc.
• Sale of investments, subsidiaries, assets which are material in nature and not in normal course of business.
• Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material.
• Non-compliance of any regulatory, statutory or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer etc.
• General Notices of interest by Directors.
• Formation / Reconstitution of Committees of the Board.
• Dividend declaration.
• Appointment and fixing remuneration, of the Auditors as recommended by the Audit Committee.
• Annual Financial Results of the Company, Auditors' Report and the Report of the Board of Directors.
• Compliance certificates for all the laws as applicable to the Company.
The Board of the Company is presented with all the relevant information on various vital matters affecting the working of the Company, as well as those matters, which require deliberation at the highest level. Board Members are given appropriate documents / detailed notes and information in advance of each Board and Committee Meeting.
CEO AND CFO CERTIFICATION
The Managing Director and the Chief Financial Officer of the Company give annual certification on financial reporting and internal controls to the Board in terms of Regulation 17(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Managing Director and the Chief Financial Officer also give quarterly certification on financial results, while placing the financial results before the Board in terms of Regulation 33(2)(a) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
CODE OF CONDUCT
The Company has adopted a Code of Conduct for Directors and Senior Management of the Company. The Code has been circulated to all the members of the Board and Senior Management and the same is available on the Company's website. (Web-link : <http://www.kalyanisteels.com/profile/code-of-conduct/>)
The Board members and the senior management have affirmed the compliance with the Code. A declaration to that effect signed by the Managing Director of the Company is contained in this Annual Report.
DIRECTORS WITH MATERIALLY PECUNIARY OR BUSINESS RELATIONSHIP WITH THE COMPANY
There has been no materially relevant pecuniary transactions or relationship between the Company and its non-executive and / or independent Directors for the year 2015-16.
COMMITTEES OF THE BOARD
As on 31st March, 2016 the Company has Audit Committee, Stakeholders Relationship Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee. The Board Committees are set up under the formal approval of the Board to carry out clearly defined role which are considered to be performed by the members of the respective Board Committees. The Company's guidelines relating to Board Meetings are applicable to the Committee Meetings, as far as may be practicable. Minutes of the proceedings of the Committee Meetings are placed before the Board Meeting for perusal and noting. The Company Secretary acts as the Secretary of all Committees.
As on 31st March, 2016, the Audit Committee of Kalyani Steels comprised four Directors, of which three are Independent Directors. All the members have accounting and finance management expertise. The Chairman of the Audit Committee is Mr.S.S. Vaidya. Mr.B.N. Kalyani, Mr.B.B. Hattarki and Mr.M.U. Takale are the other members of the Committee. The Annual General Meeting of the Company held on 13th August, 2015 was attended by the Chairman of the Audit Committee, Mr.S.S. Vaidya, to answer the shareholders' queries.
The representatives of the Statutory Auditors, Internal Auditors and remaining Board Members are permanent invitees to the Audit Committee Meetings.
The Role of the Audit Committee of the Company includes of the following :
• 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.
> Modified opinion(s) 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 utilised for the 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.
• Reviewing and monitoring 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.
• Discussions with internal auditors on any significant findings and follow up thereon.
• 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.
• Discussions with statutory auditors before 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 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 Chief Financial Officer after assessing the qualifications, experience and background etc. of the candidate.
• Carrying out any other function as is mentioned in the terms of reference of the Audit Committee. Review of Information by the Audit Committee :
• 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.
• The appointment, removal and terms of remuneration of the chief internal auditors
STAKEHOLDERS RELATIONSHIP COMMITTEE
As on 31st March, 2016, Stakeholders Relationship Committee comprised of three Directors viz. Mr.S.M. Kheny (Chairman), Mr.R.K. Goyal, Managing Director and Mr.B.B. Hattarki, Director. During the year 2015-16, the Stakeholders
Relationship Committee met on 21st May, 2015, 22nd July, 2015, 30th October, 2015, and 13th February, 2016
Mrs.Deepti R. Puranik, Company Secretary is the Compliance Officer for complying with requirements of Securities Laws and Listing Agreement with Stock Exchanges.
STATUS OF INVESTORS' COMPLAINTS
During the year five complaints were received, which were redressed. The status of complaints is also reported to the Board of Directors, as an agenda item.
SEBI COMPLAINTS REDRESS SYSTEM (SCORES)
The investor complaints are processed in a centralised web-based complaints redress system. The salient features of this system are : Centralised database of all complaints, online upload of Action Taken Reports (ATRs) by the concerned companies and online viewing by investors of action taken on the complaints and its current status.
DESIGNATED EXCLUSIVE E-MAIL ID
The Company has also provided separate E-mail ID : firstname.lastname@example.org exclusively for investor servicing.
NOMINATION AND REMUNERATION COMMITTEE
As on 31st March, 2016, Nomination and Remuneration Committee comprised of three Directors viz. Mr.M.U. Takale, Chairman, Mr.Amit B. Kalyani and Mr.B.B. Hattarki. During the year 2015-16, the Nomination and Remuneration Committee met on 21st May, 2015 and 30th October, 2015.
Role of Nomination and Remuneration Committee :
• Formulation of the criteria for determining qualifications, positive attributes and independence of Directors and 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.
• Devising a policy on Board diversity.
• Identifying the 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.
• Whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors.
BOARD DIVERSITY AND REMUNERATION POLICY
The Board on recommendation of the Nomination and Remuneration Committee, has approved Board Diversity and Remuneration Policy and the same is available on the Company's website. (Web-link: <http://www.kalyanisteels.com/> profile/code-of-conduct/board-diversity-remuneration-policy/). The Policy provides for criteria for determining qualifications, positive attributes & independence of director as well as remuneration policy for directors, key managerial personnel and other employees.
In terms of the said Policy, a director shall be a person of integrity, who possesses relevant expertise and experience and who shall uphold ethical standards of integrity and probity; act objectively and constructively; exercise his responsibilities in a bona-fide manner in the interest of the Company; devote sufficient time and attention to his professional obligations for informed and balanced decision making; and assist the Company in implementing the best corporate governance practices. An independent director should also meet the requirements of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Remuneration to Non-Executive Directors
The Non-executive Directors are paid sitting fees for attending each meeting of the Board and of the Committees thereof as specified by the Board. Each of the Non-Executive Directors is paid sitting fee of Rs. 2,000/- per meeting attended by him. The Non-Executive Directors also draw remuneration in the form of commission, upto an aggregate amount not exceeding 1% of the net profits of the Company for the year, as may be decided by the Board of Directors from time to time.
Remuneration to Managing Director, Key Managerial Personnel and other Employees
The Remuneration to Managing Director shall take into account the Company's overall performance, Managing Director's contribution for the same & trends in the industry in general, in a manner which will ensure and support a high performance culture.
The Managing Director is paid remuneration as per the terms approved by the Nomination and Remuneration Committee and the Board and confirmed by the Shareholders of the Company. The remuneration of the Managing Director comprises of Salary, Commission and Perquisites besides contributions to provident fund, superannuation and gratuity and leave encashment facility. The Company does not have any stock option scheme.
Remuneration to Key Managerial Personnel and Senior Management involves a balance between fixed and incentive pay reflecting short and long term performance objectives, appropriate to the working of the Company and its goals. The Remuneration will be such, so as to ensure that the relationship of remuneration to performance is clear and meets appropriate performance benchmarks.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Corporate Social Responsibility (CSR) Committee comprises of three Directors viz. Mr.B.B. Hattarki, Chairman, Mr.M.U. Takale and Mr.R.K. Goyal, Managing Director. During the year 2015-16, the Corporate Social Responsibility Committee met on 30th October, 2015.
Role of CSR Committee :
• Formulation and recommendation to the Board, CSR Policy, which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013.
• Recommend the amount of expenditure to be incurred on the activities referred in CSR Policy.
• Monitor CSR Policy of the Company from time to time.
The Committee's core responsibility is to assist the Board in discharging its social responsibility by formulating and monitoring implementation of the framework of the CSR Policy. The CSR Policy of the Company is available on the Company's website. (Web-link : <http://www.kalyanisteels.com/profile/code-of-conduct/corporate-social-responsibility->csr/)
Particulars relating to the attendance at the CSR Committee meetings held during the year are given below
RISK MANAGEMENT COMMITTEE
The Company recognises that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and efficient manner. The Company has formulated Risk Management Policy to identify and then manage threats / risks that could have impact on the goals and objectives of the Company.
Within the framework of the Risk Management Policy, the Risk Management Committee reviews risks trends, exposure, potential impact analysis and mitigation plan. The Committee comprises of Mr.R.K. Goyal, Managing Director and Mr.Amit B. Kalyani, Director. During the year 2015-16, the Risk Management Committee met on 30th October, 2015. The Board of Directors in their meeting held on 2nd March, 2016, have dissolved the Risk Management Committee, as the provisions of formation of Risk Management Committee, prescribed by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, are not applicable to the Company.
INDEPENDENT DIRECTORS' MEETING
During the year under review, the Independent Directors met on 13th February, 2016, inter alia to discuss :
• Evaluation of the performance of Non-Independent Directors and Board of Directors, as a whole.
• Evaluation of the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors.
• Evaluation of the quality, quantity and timeliness of flow of information between the Company Management and the Board of Directors, that is necessary for the Board of Directors to effectively and reasonably perform their duties.
All the Independent Directors were present at the meeting. The Directors expressed their satisfaction with the evaluation process.
MANAGEMENT DISCUSSION AND ANALYSIS
This Annual Report has a detailed chapter on Management Discussion and Analysis.
RELATED PARTY TRANSACTIONS
None of the transactions with any of the related parties were in conflict with the interest of the Company. Attention of the members is drawn to the disclosure set out in Notes to Financial Statements forming part of the Annual Report.
DISCLOSURES BY MANAGEMENT TO THE BOARD
All disclosures relating to financial and commercial transactions where Directors may have a potential interest are provided to the Board and the interested Directors do not participate in the discussions nor do they vote on such matters.
WHISTLE BLOWER POLICY
The Company has vigil mechanism named 'Whistle Blower Policy', wherein the employees / directors can report the instances of unethical behavior, actual or suspected fraud or any violation of the Code of Conduct and / or laws applicable to the Company and seek redressal. This mechanism provides appropriate protection to the genuine Whistle Blower, who avails of the mechanism. The details of establishment of Whistle Blower Policy / Vigil Mechanism have been disclosed on the website of the Company. (Web-link : <http://www.kalyanisteels.com/profile/code-of-conduct/> whistle-blower/)
INDEPENDENT DIRECTORS' TRAINING AND INDUCTION
The Independent Directors' are provided with necessary documents / brochures and reports to enable them to familiarise with the Company's business, procedures and practices. Along with role, function, duties and responsibilities expected from Director, the Director is also explained in detail the compliances required from him under the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other relevant regulations and his affirmation is taken with respect to the same.
Further, with a view to familiarise Director with the Company's operations, plant visit is scheduled and the Managing Director also has one-to-one discussion with the newly appointed Director. These initiatives help the Director to understand the Company, its business and the regulatory framework in which the Company operates and equips him to effectively fulfill his role as a Director of the Company. The details of this familiarisation programme are available on the website of the Company. (Web-link : <http://www.kalyanisteels.com/profile/code-of-conduct/terms-of-the-appointment-of->independent-directors-of-kalyani-steels-limited/)
DISCLOSURES REGARDING APPOINTMENT OR RE-APPOINTMENT OF DIRECTORS
Mr.B.N. Kalyani, Chairman and Mr.S.M. Kheny, Director of the Company are retiring by rotation at the ensuing Annual General Meeting and being eligible, offers themselves for re-appointment. Mr.R.K. Goyal, has been re-appointed as Managing Director of the Company for the period of five years w.e.f. 17th January, 2016 to 16th January, 2021. Details of directors to be re-appointed / appointed, are given below :
• Mr.B.N. Kalyani is Chairman and Managing Director of Bharat Forge Limited. Mr.Kalyani, born on 7th January, 1949, is a Mechanical Engineer from the Birla Institute of Technology & Sciences, Pilani, Rajasthan. He has done his M.S. from the Massachusetts Institute of Technology, U.S.A. Mr.Kalyani holds 1,118 Equity Shares of Rs. 5/- each of the Company.
COMMUNICATION TO SHAREHOLDERS
Kalyani Steels puts all vital information relating to the Company and its performance, including quarterly, half yearly, yearly financial results, official announcements and communication to the investors and analysts on its website www.kalyanisteels.com regularly for the benefit of the public at large.
Quarterly, half yearly, yearly financial results are published in leading newspapers such as Business Standard (All Editions) and Loksatta (Pune) and are also sent to the Stock Exchanges immediately after they are approved by the Board.
Letters and Transfer Deeds received from shareholders are acted upon and replied promptly.
The Company has constituted the 'Share Transfer Committee', to approve share transfers, transmissions, consolidation, sub-division and issue of duplicate certificates. The Committee comprises of Mr.B.N. Kalyani, Chairman, Mr.B.B. Hattarki, Director and Mr.R.K.Goyal, Managing Director.
DETAILS OF NON-COMPLIANCE
Kalyani Steels has complied with all the requirements of regulatory authorities. No penalties were imposed on the Company by Stock Exchanges or SEBI or any statutory authority on any matter relating to the capital market during the period under report.
COMPLIANCE WITH MANDATORY AND DISCRETIONARY REQUIREMENTS
The Company is fully compliant with the applicable mandatory requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. It has not adopted any discretionary requirements.
SHAREHOLDER INFORMATION COMPANY REGISTRATION DETAILS
The Company is registered in the State of Maharashtra, India. The Corporate Identity Number (CIN) allotted to the Company by the Ministry of Corporate Affairs is L27104MH1973PLC016350.
ANNUAL GENERAL MEETING :
Day and Date : Thursday, 11th August, 2016 at 11.00 a.m.
Venue : Registered Office of the Company at Mundhwa, Pune - 411 036
FINANCIAL CALENDAR :
1st April to 31st March BOOK CLOSURE :
The books will be closed on Thursday, 11th August, 2016, as an Annual Closure for the Annual General Meeting.
National Stock Exchange of India Limited (NSE) BSE Limited (BSE)
STOCK CODES :
NSE : KSL BSE : 500235
ISIN in NSDL and CDSL: INE907A01026
REGISTRAR AND TRANSFER AGENTS AND SHARE TRANSFER SYSTEM
M/s. Link Intime India Private Limited, Block No.202, Akshay Complex, 2nd Floor, Off Dhole Patil Road, Near Ganesh Mandir, Pune - 411 001 are the Registrar and Transfer Agents of the Company and carry out the share transfer work on behalf of the Company. The Equity Shares of the Company are traded on the Stock Exchanges compulsorily in demat mode.
The Company's Equity Shares are under compulsory Demat Trading. As on 31st March, 2016, dematerialised shares accounted for 93.54% of the total Equity.
SITE LOCATION :
The integrated steel plant of the Company is located at Village Ginigera, Taluka and District Koppal, in the State of Karnataka.
INVESTORS CORRESPONDENCE ADDRESS :
Link Intime India Private Limited Registrar & Transfer Agent Block No.202, Akshay Complex, 2nd Floor, Off Dhole Patil Road, Near Ganesh Mandir, Pune - 411 001 Phone No. : 020 - 26161629 / 26160084Telefax : 020 - 26163503 E-Mail : email@example.com
2) Kalyani Steels Limited Secretarial Department Mundhwa, Pune - 411 036 Phone No. : 020 - 26715000 / 66215000 Fax No. : 020 - 26821124 E-mail : firstname.lastname@example.org