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L&T Finance Holdings Ltd.
Change Company :  Go
Chairman : Y M Deosthalee Industry : Finance - NBFC
Last Price Today's Change Open Prev Close Day's Range 52 Week Range
72.35 0.00 72.50 72.35 (73.45)   (71.85) (88.35)   (62.30)
BSE Code 533519
ISIN Demat INE498L01015
Book Value (Rs.) 20.48
Dividend Yield (%) 1.04
Market Cap (Rs Mn) 124378.44
P/E 264.35
EPS (Rs.) 0.27
Face Value (Rs.) 10
Volume 851985.00
March 2013 Select Base Year :

REPORT ON CORPORATE GOVERNANCE: 

A. Company's Corporate Governance Philosophy

Fair, ethical and transparent governance practices instituted by the Company shape the Company's Corporate Governance Philosophy.

The Company's policy on Corporate Governance is shaped by the twin objectives of transparency and fairness in its business dealings and an adequate system of checks and controls to ensure that executive decisions benefit all stakeholders. The Company has established systems and procedures to ensure that its Board of Directors is well informed and well equipped to fulfill its overall responsibilities and to provide management with the strategic direction needed to create long-term shareholders' value. The Company has always worked towards building trust with the shareholders, employees, customers, suppliers and other stakeholders.

The Company believes that Corporate Governance is an ongoing process and there is a need to view Corporate Governance as more than just a regulatory requirement as good governance, apart from business results, leads to enhanced shareholder value.

B. Board of Directors

1. Composition of the Board:

The Company has a broad based Board of Directors, constituted in compliance with the relevant guidelines issued by Reserve Bank of India, Companies Act, Listing Agreement and in accordance with best practices in Corporate Governance. The Board functions either as a full Board or through various Committees constituted to oversee specific areas. Policy formulation, setting up of goals and evaluation of performance and control functions vest with the Board.

Currently, the Board comprises of Mr. Y. M. Deosthalee, Chairman & Managing Director, Mr. N. Sivaraman, President & Whole-time Director and nine Non-Executive Directors, of whom eight are Independent Directors.

Mr. R. Shankar Raman, a Non-Executive Director, is the Chief Financial Officer and a member of the Board of Directors of Larsen & Toubro Limited. Mr. A. K. Jain, Mr. S. V. Haribhakti, Mr. B. V. Bhargava, Mr. Subramaniam N., Mr. M. Venugopalan, Mr. P. V. Bhide, Ms. Kamakshi Rao and Mr. R. Gopalakrishnan are Independent Directors as defined in Clause 49 of the Listing Agreement.

With eight Independent Directors on the Board, the Company meets the spirit of Corporate Governance more than that mandated by the law.

2. Meetings of the Board:

The meetings of the Board are generally held at its Corporate Office at City-2, Plot No. 177, C.S.T. Road, Vidyanagari Marg, Kalina, Santacruz (East), Mumbai -400 098. The Board met eight times during the year on April 26, 2012, July 19, 2012, October 01, 2012, October 19, 2012, November 06, 2012, December 14, 2012, January 29, 2013 and March 21, 2013.

The Company Secretary prepares the agenda and the explanatory notes, in consultation with the Chairman & Managing Director or President & Whole-time Director and circulates the same in advance to the Directors. Every Director is free to suggest inclusion of items on the agenda. The Board meets at least once every quarter, inter alia, to review the quarterly results. Additional meetings are held, whenever there are strategic items needing discussions at the Board level. Senior Management Personnel are invited to provide additional inputs for the items being discussed by the Board of Directors as and when necessary.

The Minutes of the proceedings of the meetings of the Board of Directors are noted and the draft Minutes are circulated amongst the members of the Board for their perusal. Comments, if any, received from the Directors are also incorporated in the Minutes, in consultation with the Chairman. The Minutes are approved by the members of the Board prior to the next meeting and noted therein.

With a view to conserve natural resources, provide better operational convenience to the Board members and to ensure security of sensitive information, the Company has, during the year, moved to an electronic system of Board agenda/minutes dissemination through individual devices. 

3. Information to the Board:

The Board of Directors has complete access to the information within the Company, which inter alia includes-

i. Annual revenue budgets and capital expenditure plans of the Company and its subsidiaries.

ii. Quarterly results and results of operations of subsidiaries.

iii. Financing plans of the Company.

iv. Minutes of meetings of the Board of Directors, Audit Committee, Shareholders'/Investors' Grievance Committee, Nomination & Remuneration Committee, Asset Liability Management Committee, Risk Management Committee and Committee of Directors. 

v. Minutes of the Board Meetings of material subsidiaries.

vi. Details of potential acquisitions or collaboration agreement.

vii. Material default, if any, in financial obligations to and by the Company or substantial non-payment for services rendered, if any.

viii. Any issue, which involves possible public liability claims of substantial nature, including any Judgement or Order, if any, which may have strictures on the conduct of the Company.

ix. Developments in respect of human resources.

x. Non-compliance of any regulatory, statutory nature or listing requirements and investor service such as non-payment of dividend, delay in share transfer, etc., if any. 

4. Post-meeting internal communication system:

The important decisions taken at the Board/Committee Meetings are communicated to the concerned departments/ subsidiary companies promptly.

C. Board Committees

The Board has constituted the following committees:

i. Audit Committee;

ii. Shareholders'/Investors' Grievance Committee;

iii. Nomination & Remuneration Committee;

iv. Committee of Directors;   

v. Asset Liability Management Committee; and

vi. Risk Management Committee

1. Audit Committee

(i) Terms of reference:

The role of the Audit Committee includes the following:

a. Holding discussions with the auditors periodically about internal control systems, the scope of audit including the observations of the auditors and review of the quarterly, half yearly and annual financial statements before submission to the Board and also ensuring compliance with internal control systems;

b. Overseeing of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible;

c. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditors and the fixation of audit fees;

d. Approving of payment to statutory auditors for other services of non-routine and material nature rendered by them;

e. Reviewing, with the management, the annual financial statements before submission to the Board for approval, with particular reference to matters required to be included in the Directors' Responsibility Statement to be included in the Board's Report in terms of sub-section (2AA) of Section 217 of the Companies Act, 1956; changes, if any, in accounting policies and practices and reasons for the same; major accounting entries involving estimates based on the exercise of judgement by the management; significant adjustments made in the financial statement arising out of audit findings; compliance with listing and other legal requirements relating to financial statements; disclosure of any related party transactions and qualifications, if any, in the draft audit report;

f. Reviewing with the management, the quarterly financial statements before submission to the Board for approval;

g. Reviewing with the management, the statement of uses/application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice, monitoring the utilisation of proceeds of a public or rights issue, reviewing the report submitted by the monitoring agency, and making appropriate recommendations to the Board;

h. Reviewing with the management, performance of statutory & internal auditors and adequacy of the internal control systems;

i. Reviewing the adequacy of the internal audit function, 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;

j. Discussing with the internal auditors on any significant findings and follow up thereon;

k. 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;

l. Discussing with statutory auditors before the audit commences, about the nature and scope of audit as well as post audit discussion to ascertain any area of concern;

m. Looking into the reasons for substantial defaults in the payment to the debenture holders, shareholders (in case of non-payment of declared dividends) and creditors, if any; and

n. Review of information as prescribed under Clause 49 of the Listing Agreement. 

(ii) Meetings:

The Committee met four times during the year on April 26, 2012, July 19, 2012, October 19, 2012 and January 28, 2013.

All the members of the Audit Committee are financially literate and have accounting or related financial management expertise. The Company Secretary is the secretary to the Committee. 

(iii) Internal Audit:

The Internal Audit department of L&T Finance Limited provides internal audit services to the Company.

2. Shareholders'/Investors' Grievance Committee

(i) Terms of reference:

The role of the Shareholders'/ Investors' Grievance Committee includes the following:

a. Review of cases for refusal of transfer/ transmission of shares and debentures;

b. Redressalofshareholderand investor complaints like transfer of shares, non-receipt of Balance Sheet, non-receipt ofdeclared dividends, etc.;

c. Reference to statutory and regulatory authorities regarding investor grievances; and

d. Otherwise ensuring proper and timely attendance and redressal of investor queries and grievances. 

(ii) Meetings:

The Committee met four times during the year on April 26, 2012, July 19, 2012, October 19, 2012 and January 29, 2013.

(iii) Details of Shareholders' Requests / Complaints:

During the year under review, the Company has resolved investor grievances expeditiously. During the year under review, the Company/ its Registrar received the following complaints from SEBI/Stock Exchanges and queries from the Shareholders, which were resolved within the timeframe laid down by SEBI. 

The Board has delegated the powers to approve transfer of physical shares and to approve remat of shares to a Share Transfer Committee comprising of three Senior Executives. This Committee held nine meetings during the year for conducting the business delegated to it. 

3. Nomination & Remuneration Committee (N&R Committee)

(i) Terms of reference:

The role of the Nomination & Remuneration Committee includes the following:

a. To review the overall compensation policy, service agreements and other employment conditions of Executive Directors and Senior Executives just below the Board of Directors and make appropriate recommendations to the Board of Directors;

b. To review the overall compensation policy for Non-Executive Directors and Independent Directors and make appropriate recommendations to the Board of Directors;

c. To make recommendations to the Board of Directors on the increments in the remuneration of the Directors;

d. To assist the Board in developing and evaluating potential candidates for Senior Executive positions and to oversee the development of executive succession plans;

e. To review and approve on an annual basis the corporate goals and objectives with respect to compensation for the Senior Executives and make appropriate recommendations to the Board of Directors;

f. To evaluate at least once in a year the Senior Executive Officer's performance in the light of these established goals and objectives and based on these evaluations, set the Senior Executive Officer's annual compensation, including salary, bonus and equity and non equity incentive compensation;

g. To review and make appropriate recommendations to the Board of Directors on an annual basis, on the evaluation process and compensation structure for the Company's officers just below the level of the Board of Directors;

h. To evaluate the performance of the Company's Senior Executives just below the level of the Board of Directors and to recommend to the Board of Directors the annual compensation, including salary, bonus and equity and non ­equity incentive compensation, for such Senior Executives, based on initial recommendations from the Managing Director;

i. To provide oversight of management's decisions concerning the performance and compensation of other officers of the Company;

j. To review incentive compensation arrangements to confirm that incentive pay does not encourage unnecessary risk taking and to review and discuss, at least annually, the relationship between risk management policies and practices, corporate strategy and Senior Executive compensation;

k. To maintain regular contact with the leadership of the Company, including interaction with the Company's human resources department, review of data from the employee survey and regular review of the results of the annual leadership evaluation process; and

l. To formulate the Employee Stock Option Scheme (ESOS), decide the terms and conditions, make appropriate recommendations to the Board of Directors and administer and superintend ESOS.

(ii) Meetings:

The Committee met seven times during the year on June 27, 2012, July 18, 2012, September 19, 2012, October 19, 2012, December 14, 2012, January 28, 2013 and March 21, 2013.

(iii) Board Membership Criteria:

While screening, selecting and recommending to the Board new members, the Committee ensures that the Board is objective in its selection, there is absence of conflict of interest and the Board composition ensures availability of diverse perspectives, business experience, legal, financial & other expertise, integrity, managerial qualities, practical wisdom, ability to read and understand financial statements, commitment to ethical standards and values of the Company and ensure healthy debates and sound decisions.

The Independent Directors comply with the definition as given under Clause 49 of the Listing Agreement. While appointing/re-appointing any Non-Executive Directors on the Board, the Committee considers the criteria as laid down in the Listing Agreement.

(iv) Remuneration Policy:

The remuneration of the Board members is based on the Company's size, its economic and financial position, industrial trends and compensation paid by peer companies. Compensation reflects each Board member's responsibility and performance. The level of compensation to Executive Directors is designed to be competitive in the market for highly qualified executives. The Director on the Board who is in the service of Larsen & Toubro Limited draws remuneration from Larsen & Toubro Limited and is not paid any commission, or sitting fees separately for attending the meetings of the Board and/any Committee of the Company.

The Company pays remuneration to Executive Directors by way of salary, perquisites, retirement benefits (fixed components) and variable remuneration, based on the recommendations of the Nomination & Remuneration Committee, approval of the Board and the Shareholders.

The Non-Executive Directors are paid remuneration by way of commission & sitting fees. The Company pays sitting fees of Rs. 20,000 per meeting to the Non-Executive Directors for attending the meetings of the Board and Committees. The commission is paid as per limits approved by the Shareholders, subject to a limit not exceeding 1% p.a. of the profits of the Company (computed in accordance with Section 309(5) of the Companies Act, 1956).

As required by the provisions of Clause 49 of the Listing Agreement, the criteria for payment to Non-Executive Directors is made available on the investor page of the corporate website i.e. www.ltfinanceholdings.com

4. Committee of Directors

(i) Terms of reference:

The Committee of Directors of the Company was constituted to facilitate the operational decisions within the broad framework laid down by the Board such as day to day operational decisions of the Company in terms of borrowing power, additional investment in subsidiaries, etc.

(ii) Meetings:

The Committee met fifteen times during the year on May 28, 2012, August 06, 2012, October 09, 2012, October 31, 2012, November 09, 2012, November 15, 2012, November 27, 2012, December 03, 2012, December 19, 2012, January 02, 2013, February 20, 2013, March 05, 2013, March 20, 2013, March 21, 2013 and March 31, 2013.

5. Asset Liability Management Committee & Risk Management Committee

The aforesaid special purpose committees have been constituted for effective risk management in various portfolios and in compliance with Master Circular of RBI on Corporate Governance. 

(a) Asset Liability Management Committee

(i) Terms of reference:

The role of the Asset Liability Management Committee includes the following:

A. Formalizing the ALM system in the Company;

B. Monitoring market risk management systems, compliance with the asset liability management policy and prudent gaps and tolerance limits and reporting systems set out by the Board of Directors and ensuring adherence to the RBI Guidelines issued in this behalf from time to time;

C. Monitoring the business strategy of the Company (on the assets and liabilities sides) in line with the Company's budget and decided risk management objectives;

D. Reviewing the effects of various possible changes in the market conditions related to the Balance Sheet and recommend the action needed to adhere to the Company's internal limits; and

E. Balance Sheet planning from risk-return perspective including the strategic management of interest rate and liquidity risks.

(ii) Meetings:

During the year, one Meeting was convened on March 28, 2013.

(b) Risk Management Committee

(i) Terms of reference:

The role of the Risk Management Committee includes the following:

A. To manage the integrated risk which would- include Liquidity Risk, Interest Rate Risk, Currency Risk, etc.; and

B. To devise policies and guidelines for identification, measurement, monitoring and controlling all major risk categories.

(ii) Meetings:

During the year, one Meeting was convened on March 28, 2013.

D. Directors on Boards of Material Subsidiaries

The Company has ensured that at least one Independent Director of the Company is a Director on the Board of each Material Subsidiary of the Company. As at March 31, 2013, Mr. P. V. Bhide and Mr. Subramaniam N. are Directors on the Board of L&T Finance Limited; Mr. A. K. Jain and Mr. B. V. Bhargava are Directors on the Board of L&T Infrastructure Finance Company Limited.

E. Other Information

Training of Directors:

All Directors of the Company are aware and are also updated as and when required, of their roles, responsibilities & liabilities.

Information to Directors:

The Board of Directors has complete access to the information within the Company, which inter alia, includes items as mentioned in point no. B3 of the Corporate Governance Report. Presentations are made regularly to the Board and its Committees, where Directors get an opportunity to interact with the management. Independent Directors have the freedom to interact with the Company's management. Interactions happen during Board/ Committee Meetings, when Senior Management Personnel are asked to make presentations about the performance of the Company to the Board.

Risk Management Framework:

The Company has in place mechanisms to inform Board members about the risk assessment and minimization procedures and periodical review to ensure that executive management controls risk by means of a properly defined framework. A detailed note on risk management is given in the Management Discussion and Analysis Report forming part of the Annual Report.

Statutory Auditors:

The Board has recommended to the Shareholders, the re-appointment of Sharp & Tannan (S&T) as Statutory Auditors. S&T has furnished a declaration confirming their independence as well as their arm's length relationship with the Company, also declaring that they have not taken up any prohibited non-audit assignments for the Company. The Company believes that S&T, over a period of time, has gained extensive knowledge of the Company and its business, which is essential to ensure audit quality and audit objectivity. Robust internal control systems and risk management framework, review of Auditors' performance by the Audit Committee and peer review of the Audit firm, are some of the more important factors that prevent audit failures. Mr. Milind P. Phadke has signed the audit report for FY 2012-13 on behalf of S&T.

Code of Conduct:

The Company has laid down a Code of Conduct for all Board members and Senior Management Personnel. The Code of Conduct is available on the website of the Company i.e. www.ltfinanceholdings.com.

Disclosures:

i. During the year, there were no transactions of material nature with the Directors, Management, their relatives or the subsidiaries, that had potential conflict with the interests of the Company.

ii. Details of all related party transactions form a part of the accounts as required under AS 18 and the same forms part of the Annual Report.

iii. The Company has followed all relevant Accounting Standards notified by the Companies (Accounting Standards) Rules, 2011 while preparing the Financial Statements.

iv. There were no instances of non-compliance on any matter related to the capital markets, during the last three years.

Means of Communication:

i. Quarterly Results are communicated through a Press Release and newspaper advertisements in prominent national and regional dailies like The Economic Times, Business Standard, Hindu Business Line, DNA Money, Free Press Journal, Navbharat and Navshakti.

ii. The financial results, official news releases and presentations are also displayed on the website of the Company i.e. www.ltfinanceholdings.com.

iii. General Shareholders' Information: The Annual Report is circulated to all the Shareholders and all others like auditors, equity analysts, etc.

iv. Management Discussion and Analysis forms a part of the Annual Report which is mailed to the shareholders of the Company. 

General Shareholders’ Information:

Annual General Meeting

Thursday, August 01, 2013 at 3.00 P.M. Birla Matushri Sabhagar, 19, Marine Lines, Mumbai - 400 020. 

Financial Year

April 01, 2012 to March 31, 2013 

Date of Book Closure

Tuesday, July 30, 2013 to Thursday, August 01, 2013 (both days inclusive) 

Dividend Payment

The dividend of Rs. 0.75 per Equity Share of face value Rs. 10/- each and Rs. 8.75 on pro-rata basis per Cumulative Compulsorily Redeemable Preference Share of face value Rs. 100/- each, if approved by the Shareholders at the ensuing Annual General Meeting, will be credited/dispatched before August 30, 2013. 

Listing on Stock Exchanges

1. BSE Limited

2. National Stock Exchange of India Limited

The Company has paid the listing fees to the Stock Exchanges. 

Stock Code

BSE: 533519

NSE: L&TFH 

Listing of Debt Securities

The Unsecured, Redeemable, Non-Convertible Debentures issued by the Company are listed on the Wholesale Debt Market (WDM) of National Stock Exchange of India Limited (NSE). 

Debenture Trustees

GDA Trusteeship Limited

GDA House, S.No.94/95, Plot No. 85, Bhusari Colony (Right), Paud Road, Pune - 411 038. 

Financial Calendar 

First quarter*: During 4th week of July, 2013 

Second quarter*: During 4th week of October, 2013 

Third quarter*: During 4th week of January, 2014 

* Tentative date of Meeting

Registrar and Share Transfer Agent

Sharepro Services (India) Private Limited

13 AB, Samhita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange Lane, Andheri-Kurla Road, Sakinaka, Andheri (E), Mumbai - 400 072.

Tel: +91 22 6191 5400/412

Fax: +91 22 6191 5444

E-mail: sharepro@shareproservices.com 

Share Transfer System

The Board has delegated the authority for approving transfer, transmission, etc. of the Company's securities to the Share Transfer Committee.

The Company obtains from a Company Secretary in practice, half-yearly certificate of compliance with the share transfer formalities as required under Clause 47(c) of the Listing Agreement with Stock Exchanges and files a copy of the certificate with the Stock Exchanges. 

Dematerialization of shares and liquidity

As on March 31, 2013 almost the entire equity capital was held in the dematerialized form with NSDL and CDSL. Out of 220,613 shares held in physical form, 206,413 shares allotted on March 21, 2013 upon exercise of ESOPs, have been subsequently credited to the demat accounts of the respective employees. 

Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date and likely impact on equity

The Company does not have any Outstanding GDRs/ADRs/ Warrants or any other Convertible instrument as on date. 

Plant Locations

As the Company is engaged in the business of Non Banking Financial Services, this section is not applicable. 

Address for correspondence

Sharepro Services (India) Private Limited

13 AB, Samhita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange Lane, Andheri-Kurla Road, Sakinaka, Andheri (E), Mumbai - 400 072.

Tel: +91 22 6191 5400/412

Fax: +91 22 6191 5444

E-mail: sharepro@shareproservices.com 

Address of the Compliance Officer

Mr. N. Suryanarayanan, Company Secretary

L&T Finance Holdings Limited

City - 2, Plot No. 177, C.S.T. Road, Vidyanagari Marg, Kalina, Santacruz (East), Mumbai - 400 098.

Phone No.: 022 - 6621 7300

Fax No.: 022 - 6621 7302

E-mail: igrc@ltfinanceholdings.com 

Non-mandatory requirements on Corporate Governance recommended under Clause 49 of the Listing Agreement 

The Company has adhered to most of the non-mandatory requirements of Corporate Governance norms as prescribed under Clause 49 of the Listing Agreement, which are described as follows:

i. Remuneration Committee - Nomination & Remuneration Committee has been formed. The Committee comprises of three Independent Directors and the Chairman & Managing Director of the Company.

ii. Audit Qualifications - All Audit Reports on the financial statements of the Company are unqualified.

iii. Training of Directors - All our Directors are updated as and when required, of their role, responsibilities and liabilities.

Securities Dealing Code

Pursuant to the SEBI (Prohibition of Insider Trading) Regulations, 1992, a Securities Dealing Code for prevention of insider trading is in place. The objective of the Code is to prevent purchase and/or sale of shares of the Company by an Insider on the basis of unpublished price sensitive information. Under this Code, Designated Persons are prevented from dealing in the Company's shares during the closure of Trading Window. To deal in securities beyond specified limit, permission of the Compliance Officer is also required. All the Designated Employees are also required to disclose related information periodically as defined in the Code.

Directors and designated employees who buy and/or sell shares of the Company are prohibited from entering into an opposite transaction i.e. sell or buy any shares of the Company during the next six months following the prior transactions. Directors and designated employees are also prohibited from taking positions in the derivatives segment of the Company's shares.

Mr. Shekhar Prabhudesai, Head - Secretarial & Compliance has been designated as a Compliance Officer for monitoring compliances with this Code.

Secretarial Audit

The Secretarial Audit, at regular intervals, is conducted by the Corporate Secretarial department of Larsen & Toubro Limited, which has competent professionals to carry out the said audit.

As stipulated by SEBI, a Qualified Practising Company Secretary carries out Reconciliation of Share Capital Audit 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. This audit is carried out every quarter and the report thereon is submitted to the Stock Exchanges. The Audit confirms that the total listed and paid-up capital is in agreement with the aggregate of the total number of shares in dematerialized form and in physical form. 

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