1. THE COMPANY'S PHILOSOPHY
The Company adheres to good corporate practices and is constantly striving to better them and adopt emerging best practices. It is believed that adherence to business ethics and commitment to corporate social responsibility would help the Company achieve its goal of maximizing value for all its stakeholders. The Company is committed to good corporate governance and continuously reviews various investor relationship measures with a view to enhance stakeholders' value. The Company has adopted a Code of Conduct for top three tier of management including the Whole-time Directors and Managing Directors besides Group Directors and above. The Company's Corporate Governance policy has been further strengthened through the "Rolta Directors and Designated Employees Code of Conduct for Prevention of Insider Trading" which is in line with the Securities and Exchange Board of India (SEBI) Regulations in this regard. We firmly believe that Board independence is essential to bring objectivity and transparency in the management and the dealings of the Company. As on March 31, 2014, the majority of our Board Members — five out of nine - are Independent Directors.The Company provides detailed information on various issues concerning the Company's business and financial performance to the Board. The Company has complied with the requirements as laid down in Clause 49 of the Listing Agreement with the Stock Exchanges as set out below.
2. (A) BOARD OF DIRECTORS
(i) Composition of the Board
The Board of Directors of the Company includes individuals who are professionals in their respective areas of specialization and who have held eminent positions. The Board is broad based and comprises of individuals drawn from management, technical and financial fields. The members of the Board are individuals with leadership qualities and strategic insight. The current policy of the Company is to have an Executive Chairman who is also the Managing Director. Directors including Non-executive Directors are professionally competent. Company has an appropriate mix of Executive and Independent Directors to maintain independence of Board, at present the Board consists of nine members, of which five are Non-executive Independent Directors. None of the Non-executive Independent Directors are responsible for day-to-day affairs of the Company. The Board periodically evaluates the need for change in its composition and size. All Directors informed the Board about the Board Membership and Board Committee Membership they occupy in other companies including Chairmanship in Board / Committee of such companies. They notify Company of any change that take place in these disclosures at the Board Meetings. None of the Directors on the Board of the Company is a member of more than nine committees and Chairman of more than three committees, across all other public companies in which they are Director. The Board's role, functions, responsibilities and accountability are clearly defined.
The Board has unfettered and complete access to all information within the Company and to any of our employees. At Board Meetings, managers who can provide additional insights into the items being discussed are invited.
Regular updates provided to the Board inter-alia, include:
• Quarterly results of our operating divisions or business segments.
• Annual, Mid-Term and Long-Term operating plans and budgets and any updates.
• Minutes of meetings of Audit, Nomination & Remuneration, Stakeholder's Relationship and Management Committees.
• General Notices of Interest received from Directors.
• Dividend data.
• Information on appointment or removal and remuneration of the Key Managerial Personnel (KMP) and officers one level below KMP.
Materially important litigations, show cause, demand, prosecution and penalty notices.
• Any materially relevant defaults in financial obligations to and by us.
• Details of joint ventures, acquisitions of companies or collaboration agreements.
• Any significant development on the human resources aspect.
• Any issue, which involves possible public or product liability claims of substantial nature, including any judgment 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.
• Sale of material nature of investments, subsidiaries and assets, which are not in the normal course of business.
• Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property.
• Details of foreign risk exposure and the steps taken by the management to limit risks of adverse exchange rate movement.
• Status of Compliances, Regulatory, statutory or listing requirements and shareholders service such as Non-Payment of Dividend, Investor Grievances etc.
• Company's annual Financial Results, Financial Statements, Auditors' Report and Board's Report.
• Appointment, remuneration and resignation of Directors.
• Formation/reconstitution of Board Committees.
• Terms of reference of Board Committees.
• Declaration of Independent Directors at the time of appointment/ annually.
• Disclosure of Directors' interest and their shareholding.
• Significant changes in accounting policies and internal controls.
• Internal Audit findings and External Audit Reports (through the Audit Committee).
• Making of loans and investment of surplus funds.
• Borrowing of monies, giving guarantees or providing security in respect of loans.
• Reconciliation of Share Capital Audit Report under SEBI (Depositories and Participants) Regulations, 1996.
• Compliance Certificate certifying compliance with all laws as applicable to the Company.
Information as mentioned in Annexure 1A to clause 49 of the Listing Agreements is being placed before the Board for its consideration.
(ii) Board Meetings:
During the nine months period ended March 31, 2014, Four (4) Board Meetings were held with a minimum of one meeting in each Quarter. The time gap between any two Board meetings did not exceed four months. The dates on which the said meetings were held were as follows:
August 29, 2013; October 24, 2013; November 23, 2013 and February 14, 2014.
The Board Meetings of the Company are prescheduled and adequate notice is given to the members of the Board. Apart from the Quarterly Board Meetings, the Company convenes additional Board Meetings if required by giving appropriate notice to the Directors to consider specific matters related to the business of the Company. Board Meetings are held generally at the Registered Office of the Company at Rolta Tower-A, Rolta Technology Park, MIDC-Marol, Andheri (East), Mumbai - 400093, Maharashtra.
The Non-executive Directors were paid sitting fee for attending each meeting of the Board and Committee meetings respectively. All sitting fees paid to the Non-executive Directors are fixed by the Board of Directors. The Company has not allotted any Employee Stock Option to Non-executive directors during the nine months period ended March 31, 2014 and no commission has been paid to the Non-executive Directors for the period under consideration. Details of the fees paid to the Nonexecutive Directors are disclosed elsewhere in this report.
1. The Directorships held by Directors as mentioned above,do not include Alternate Directorships and Directorships in Foreign Companies, Companies registered under Section 25 of the Companies Act, 1956 and Private Limited Companies. Includes directorships in Public Limited Companies only, excluding directorship in Rolta India Limited.
2. No Director of the Company is a member in more than nine committees or act as Chairman of more than three committees across all other public companies in which they are Director(s). The confirmation in the said regard has been obtained from the Directors. For the purpose of reckoning the limits, Chairmanships/Memberships of Board Committees include only Audit and Shareholders/Investors Grievance Committees.
3. None of the Non-Executive Directors have any material pecuniary relationship or transactions with the Company.
(B) Audit Committee
The Audit Committee of the Company is constituted in line with the provisions of clause 49 of the Listing Agreements entered into with the Stock Exchanges read with section 292A of the Companies Act, 1956 ("Act"). Members of the Audit Committee are financially literate and the Chairman is the Commerce Graduate and a Fellow Member of The Institute of Chartered Accountants of India .
Three (03) Audit Committee Meetings were held during the nine months period ended March 31, 2014 which are as follows: August 29, 2013; October 24, 2013 and February 14, 2014.
The Committee invited the Auditors to be present at each of these meetings. The Company Secretary acts as the Secretary of the Audit Committee. The Audit Committee also advises the management on the areas where internal audit process can be strengthened. The minutes of the meetings of the Audit Committee are circulated to the members of the Committee and placed before the Board.
a. Terms of Reference:
The terms of reference/powers of the Audit Committee have been specified by the Board of Directors and includes all aspects specified under Clause 49 of the listing agreement, as under-
The primary objective of the Audit Committee is to monitor and provide effective supervision of the management's financial reporting process with a view to ensure accurate, timely and proper disclosures and 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 auditor and reviews the processes and safeguards employed by each.
b. The role of the Audit Committee includes the following:
1. The recommendation for appointment, remuneration and terms of appointment of auditors of the Company;
2. Review and monitor the auditor's independence and performance, and effectiveness of audit process;
3. Examination of the financial statement and the auditors report thereon.
4. Approval or any subsequent modification of transactions of the company with related parties;
5. Scrutiny of inter-corporate loans and investments;
6. Valuation of undertakings or assets of the company, wherever it is necessary;
7. Evaluation of internal financial controls and risk management systems;
8. Monitoring the end use of funds raised if any, through public offers and related matters.
9. To call for the comments of the auditors about internal control systems, the scope of audit, including the observations of the auditors and review of financial statement before their submission to the Board and may also discuss any related issues with the internal and statutory auditors and the management of the company.
10. Authority to investigate into any matter in relation to the items specified above or referred to it by the Board and for this purpose shall have the power to obtain professional advice from external sources and have full access to information contained in the records of the company.
11. Authority, powers obligation, responsibilities etc as are stated under the reference of Clause 49 (II)(A)(B)(C) (D) and (E) of the listing agreement entered by and between the company and the BSE Ltd and National Stock Exchange of India Limited
(C) Nomination and Remuneration Committee:
The Committee's constitution and terms of reference are in compliance with provisions of the Companies Act, 2013, Clause 49 of the Listing Agreement and Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended from time to time.
The Board of Directors in its meeting held on November 23, 2013 re-constituted a Nomination and Remuneration Committee which was earlier called "Compensation Committee". Mr. M V Nair, Nonexecutive Independent Director is the Chairman of the Nomination and Remuneration Committee. Other members of the Committee are Mr. Kamal K Singh, Chairman & Managing Director, Mr. K R Modi, Nonexecutive Independent Director and Mr. V K Agrawala, Non-executive Independent Director. The Company Secretary acts as the Secretary of the Nomination and Remuneration Committee.
During the nine months period ended March 31, 2014, One (01) meeting of the Nomination and Remuneration Committee was held on August 6, 2013.All the members except Mr. M V Nair attended the meeting.
The terms of reference of the Committee, inter alia, includes (a) formulation of policy for determining qualifications, positive attributes and independence of a director and remuneration for the directors, key managerial personnel and other employees and recommending the same to the Board and (b) identification of persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria as per the policy approved by the Board. The policy of the Company is to remain competitive in the industry, to attract and retain the best talent and appropriately reward employees for their individual performance and contribution to the business.
The Committee also administers, monitor and formulate detailed terms and conditions of the Employees' Stock Option Scheme including quantum of options, conditions, exercise period, rights of an employee,the granting, vesting and exercising of options, including any other function as is mandated by the Board from time to time and / or enforced by any statutory notification, amendment or modification, as may be applicable.
The Company's remuneration policy is driven by the success and performance of the individual employee and the Company. Through its compensation programme, the Company endeavors to attract, retain, develop and motivate a high performance workforce. The Company follows a compensation mix of fixed pay, benefits and performance based variable pay and employee stock option scheme. Individual performance pay is determined by business performance and the performance of the individuals measured through the annual appraisal process.
The Company pays remuneration by way of salary, benefits, perquisites and allowances (fixed component) and commission (variable component) to its senior management. Annual increments are decided by the Nomination and Remuneration Committee within the salary scale approved by the members and are effective July 1, each year. The Nomination and Remuneration Committee decides on the commission payable to the Managing Directors and the Executive Director(s) out of the profits for the financial year and within the ceilings prescribed under the Act based on the performance of the Company as well as that of the Managing Directors and each Executive Directors.
The terms of remuneration of executive directors are approved by the shareholders at the Annual General Meeting. The remuneration of non-executive directors was decided by the Board of Directors as per the terms approved by the shareholders at the Annual General Meeting. Non-executive Directors are not paid any remuneration. However, Non-executive Independent Directors are entitled to sitting fees for attending meetings of the Committees thereof. The Company did not have any material pecuniary relationships or transactions with the Non-executive Directors, except to the disclosures, if any made in any other part of the Annual Report.
Service Contract, Severance Fee and notice period of the Executive directors
The appointment of the Executive Directors is governed by resolutions passed by the Shareholders of the Company, which covers the terms and conditions of such appointment, read with the service rules of the Company. Services of the Managing Director(s) / Whole time Directors may be terminated by either party giving the other party six calender months' notice or the Company paying six months' salary in lieu thereof. There is no separate provision for payment of severance fees.
(D) Stakeholders Relationship Committee
The Board of Directors in its meeting held on November 23, 2013 reconstituted Stakeholders Relationship Committee which was earlier called "Investors Grievance Committee" comprising of four Directors out of which two are Non-executive and two Executive Directors. The Stakeholders Relationship Committee is chaired by Mr. K R Modi, Non-executive Independent Director and its other members include Mr. V K Agarwala, Non-executive Independent Director, Mr. A D Tayal Executive Non-Independent Director and Mr. Hiranya Ashar, Executive Non-Independent Director. Mr. Verinder Khashu, Company Secretary & Head - Legal / Compliance, acts as the Secretary of the Stakeholder Relationship Committee.
During the nine months ended March 31, 2014, One (01) meeting of the Stakeholder Relationship Committee was held on March 10, 2014.
This Committee's mandate requires it to look into investors' grievances relating to matters such as the transfer of shares, non-receipt of Annual Reports and non-receipt of dividends, and also reviews any cases filed by aggrieved investors before the courts or other forums. It also supervises the Company's in-house Investor Service Cell, which services the shareholders of the Company by monitoring, recording and processing share transfers and requests for dematerialization of shares.
M/s. Link Intime India Pvt. Limited is Registrar and Share Transfer Agent of the Company. The share transfers received by the Company/ Registrar and Share Transfer Agent are generally processed and transferred within 15 days from the date of receipt if the documents are complete in all respects. No valid transfer request remains pending for transfer to the transferees as on March 31, 2014. All requests for dematerialization of shares are likewise processed and confirmation thereof is normally communicated to the concerned depository within 10 working days of receipt of all documents.
The Committee monitors the redressal of Investor Grievances. The total number of complaints received and replied to the satisfaction of the shareholders during the period under review was 120. There are no complaints outstanding or pending with the regulatory authorities as on March 31, 2014 for redressal. The above complaints include 17 (Seventeen) SEBI compliant which is duly redressed by the Company.
The Company is in receipt of 'No Complaint' Certificates as on March 31, 2014 from both the Exchanges where the equity shares are listed namely BSE Limited (BSE) and National Stock Exchange of India Limited (NSE).
(E) Management Committee
The Management Committee is a Committee of the Board and is authorised to deliberate, act and decide on all matters, which the full Board is otherwise empowered to do, except those matters, which are specifically required by law to be considered and decided by full Board. The Management Committee generally meets on monthly basis to deliberate and take decisions on various issues relating to strategic, financial, corporate and legal matters ensuring smooth management of the Company.
The Management Committee comprises of five Directors out of which three are Executive Directors namely Mr. Kamal K Singh, Mr. A D Tayal and Mr. Hiranya Ashar and two Non-executive Independent Directors, namely Mr. V K Agarwala and Mr. K R Modi. Mr Kamal K Singh is the Chairman of the Management Committee. The minutes of the Management Committee and other Committee meetings are placed before the Board for its information and ratification at the immediate following Board Meeting.
Seven (07) Management Committee Meetings were held during the nine months period ended March 31, 2014. August 6, 2013; September 17, 2013; October 16, 2013; November 15, 2013; December 18, 2013; January 23, 2014 and March 10, 2014.
F) Corporate Social Responsibility (CSR) Committee
The Corporate Social Responsibility (CSR) Committee was constituted by the Board on May 24, 2014 considering requirements of the Companies Act, 2013 relating to the constitution of a Corporate Social Responsibility Committee. The Board also empowered the Committee to look into matters related to sustainability and overall governance. The Committee's prime responsibility is to assist the Board in discharging its social responsibilities by way of formulating and monitoring implementation of the framework of 'corporate social responsibility policy', observe practices of Corporate Governance at all levels, and to suggest remedial measures wherever necessary. The Committee's constitution and terms of reference meet with the requirements of the Companies Act, 2013.
3. SUBSIDIARY COMPANIES
As on March 31, 2014, the Company has 5 direct subsidiaries and 7 step down subsidiaries, out of which 11 of them are foreign subsidiaries and 1 is an Indian subsidiary. As on March 31, 2014, the Company does not have any material non-listed Indian subsidiary company and hence, it is not required to have an Independent Director of the Company on the Board of such subsidiary company.
Details of major subsidiaries of the Company and their business operations during the period under review are covered in the Management's Discussion and Analysis Report.
4. MANAGEMENT DISCUSSION & ANALYSIS
A detailed report on the Management Discussion and Analysis prepared in accordance with Sub-clause F (i) of Clause 49 is enclosed and forms part of this Annual Repor
i. Related party Transaction
Related party transactions are defined as transactions of the Company of material nature with Promoters, Directors or the management, their relatives, subsidiaries, etc. that may have potential conflict with the interest of the Company at large. Details of material and significant related party transactions are given in the Notes to the Accounts annexed to the financial statements. Besides the transactions mentioned elsewhere in the Annual Report, there were no other materially significant related party transactions that may have potential conflict with the interests of the Company at large. Necessary approvals, as required are taken before entering into any such arrangements. Register under Section 301 of the Companies Act, 1956 is maintained and particulars of transactions are entered in the register wherever applicable. Such transactions are provided to the Board and the interested Directors neither participate in the discussion, nor do they vote on such matters, where approval of the Board is sought.
ii. Compliances by the Company
The Company has complied with the requirements of the Stock Exchanges, SEBI and other statutory authorities and no penalties or strictures have been imposed on the Company by the Stock Exchange, SEBI or other statutory authorities relating to the capital markets during the last three years.
iii. Share Capital Audit
A qualified practicing Company Secretary has carried out a Reconciliation of Share Capital every quarter to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The Reconciliation confirms that the total issued/paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL.
The Company follows Accounting Standards issued by the Institute of Chartered Accountants of India. In the preparation of the financial statements, the Company has not adopted a treatment different from that prescribed in any Accounting Standard. The Company also publishes its Accounts drawn under International Financial Reporting Standards (IFRS).
iv. Compliance with Mandatory and Non Mandatory requirements of Clause 49
The Company has duly complied with the requirements of the Clause 49 of the Listing Agreement with the Stock Exchanges, as well as with the Regulations of the Securities Exchange Board of India and such other statutory authority relating to the Capital Markets.
The Company is also compliant with some of the non- mandatory provisions such as Nomination and Remuneration Committee and unqualified financial statements.
7. MEANS OF COMMUNICATION
Timely disclosure of consistent, relevant and up-to-date information on corporate matters, financial matters etc. are at the core of good corporate governance. Towards this end, the quarterly results of the Company were published within 45 days of the end of each quarter and the Audited Annual Results within 60 days of the end of the financial year. The Company also ensures that Press Releases are issued on significant developments and the Investors kept informed of important announcements. The Quarterly Financial Results are published in English and vernacular newspapers. These results are generally published in Mumbai Edition of Economic Times and all India editions of Business Standard, Financial Express and Hindu Business Line and other English and vernacular newspapers. The results are posted on the Company's website www.rolta.com. Investor / shareholders may directly address their queries at email@example.com. The results and the various Press Releases issued by the Company are also promptly forwarded to the Stock Exchanges whereat the equity shares of the Company are listed and to London Stock Exchange where GDRs are listed. The Company frequently organizes facilities visits for representatives of institutional investors. These visits are generally accompanied by presentations by the Company's Strategic Business Units and a briefing on the Company's products and services both in the international markets and in India. The entire Annual Report of the Company as well as the Quarterly Results are also available on the Company's website. The Management's Discussion and Analysis (MDA) giving an overview of the Company's business and its financials etc., Risk Management, Shareholders' Information, Ratio and Ratio Analysis, Directors' Profile,are provided separately in this Annual Report.
In terms of the green initiative launched by the Ministry of Corporate Affairs, to allow service of documents to the members through electronic mode, the Company would send the copy of Annual Report for the nine months period ended March 31 2014 along with the Notice convening the Annual General Meeting in electronic form to those shareholders who have registered their email id with the DPs/ R&T Agents, and have opted not to receive Annual Reports in physical form.
8. REPORT ON CORPORATE GOVERNANCE
The Corporate Governance Report forms part of the Annual Report. The Company is fully compliant with the provisions of clause 49 of the Listing Agreement of the Stock Exchanges in India. The Company has submitted the quarterly compliance status report to the stock exchanges within the prescribed time limit.
9. CEO/CFO CERTIFICATION
A certificate from Chairman and Managing Director and Director Finance and Chief Financial Officer on the financial statements of the company and on the matters which were required to be certified according to the clause 49(v) was placed before the Board and accordingly confirmed to the Board that to the best of their knowledge and belief, the financial statements and cash flow statements present a true and fair view of the Company's affairs.
10. CODE OF INSIDER TRADING
The Company has adopted the Code of Conduct for Prevention of Insider Trading in the equity shares of the Company. This code is known as the "Rolta Directors and Designated Employees Code of Conduct for Prevention of Insider Trading". The aforesaid Code, inter-alia prohibits purchase / sale of equity shares of the Company by the Directors and Designated Employees in management position (at the level of Group Directors and above) while in possession of unpublished price sensitive information in relation to the Company. The Company makes disclosures to the Stock Exchanges of transactions covered under the "Rolta Directors and Designated Employees Code of Conduct for Prevention of Insider Trading". This code meets with the regulations stipulated by the Securities and Exchange Board of India (SEBI), on Prohibition of Insider Trading. During the period, there has been no violation of the provision of the said code.
The Company also made disclosures to the Stock Exchanges for transactions covered under the SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 by submitting, from time to time, the requisite reports and applications under the said Regulations.
11. DECLARATION OF COMPLIANCE OF CODE OF CONDUCT
Declaration of Compliance with the Code of Conduct for Board of Directors and Senior Management Personnel
I, Kamal K Singh, Chairman and Managing Director of the Company, hereby declare that pursuant to Clause 49 I (D) of the Listing Agreement, the Board members and Senior Management personnel have given affirmation about their compliance with their respective Code of Conduct of the Company for the nine months period ended March 31, 2014.
Kamal K Singh
Chairman and Managing Director
Date: May 24, 2014
12. CERTIFICATE ON CORPORATE GOvERNANCE
As required under clause 49 of the Listing Agreement, the certificate on compliance of the Corporate Governance norms issued by Practicing Company Secretary is attached with this report.