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Voltas Ltd.A TATA ENTERPRICE

A Corporate Governance ReportBy:- Vishal Mansukh ShahPG- B - 113

23/2/2012

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Voltas ltd.About Voltas Ltd.Voltas, a Tata Group company, offers engineering solution for a wide spectrum of industries in areas such as HVAC, electro-mechanical projects, water management & treatment, cold chain solutions, etc and holds sizable market share in AC market. Given its order book together with the planned expansion in healthcare sector, the robust growth in the cooling segment, improvement in Capex cycle, Voltas is likely to register strong growth going ahead. Voltas Limited is an engineering, air conditioning and refrigeration company based in Mumbai, India. It makes equipments for industries in areas such as heating, ventilation and air conditioning, refrigeration, construction equipment, materials handling, water management, building management systems, indoor air quality and chemicals. The Company was incorporated on 6th September 1954 at Mumbai. The Company was promoted in 1954 by M/s. Volkart Brothers and Tatas Voltas is a part of the Tata Group. The managing director is Mr. Sanjay Johri. Its shares are traded on the Bombay Stock Exchange under symbol 500575 with a turnover of 4300 Crore ($920,200,000 USD) in 2008-09. Voltas provided the air-conditioning for the world's biggest ocean liner, the RMS Queen Mary 2 and also the world's tallest building, the Burj Khalifa.[3] Voltas have large Service Network. Voltas have own service center in each major city. The List is below:

Grewal Cooling Solutions, Ludhiana. Kool Master, Ram Darbar, Chandigarh

What is corporate governance?Corporate governance refers to the set of systems, principles and processes by which a company is governed. They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others.

What are the principles underlying corporate governance?Corporate governance is based on principles such as conducting the business with all integrity and fairness, being transparent with regard to all transactions, making all the necessary disclosures and decisions, complying with all the laws of the land, accountability and responsibility towards the stakeholders and commitment to conducting business in an ethical manner. Another point which is highlighted in the SEBI report on corporate governance is the need for those in control to be able to distinguish between what are personal and corporate funds while managing a company.

Why is it important?Fundamentally, there is a level of confidence that is associated with a company that is known to have good corporate governance. The presence of an active group of independent directors on the board contributes a great deal towards ensuring confidence in the market. Corporate governance is known to be one of the criteria that foreign institutional investors are increasingly depending on when deciding on which companies to invest in. It is also known to have a positive influence on the share price of the company. Having a clean image on the corporate governance front could also make it easier for companies to source capital at more reasonable costs. Unfortunately, corporate governance often becomes the centre of discussion only after the exposure of a large scam.

Report on Corporate Governance Of Voltas Ltd.Companys philosophy on code of governanceGood Corporate Governance is an integral part of the Companys Management and business philosophy. The Company subscribes fully to the principles and spirit of good Corporate Governance and embeds the principles of independence, integrity, accountability and transparency into the value system driving the Company. The Board of Directors exercise their fiduciary responsibilities towards all stakeholders by ensuring transparency and independence in the decision making process. The Company has adopted the Tata Business Excellence Model as a means of driving excellence and the Balanced Scorecard methodology for tracking progress on long term strategic goals. The Company has also adopted the Tata Code of Conduct which serves as a guide to each employee including the Managing Director, on the standards of values, ethics and business principles. The Whistle Blower Policy of the Company provides a mechanism for the employees to approach the Chairman of Board Audit Committee/Ethics Counsellor and disclose information that may evidence unethical or improper activity concerning the Company.

Board of Directors(a) Composition The present Board comprises 10 members: 9 Non- Executive Directors (NEDs) and the Managing Director. Of the 9 NEDs, 5 are Independent Directors. All the Directors of the Company are liable to retire by rotation and there is no permanent director. The Company has a Non-Executive Chairman and the number of Independent Directors is 50% of the total Number of Directors. The Company is in compliance with the requirements relating to the composition of Board of Directors, in line with Clause 49 of the Listing Agreement. (b) Non-Executive Directors compensation and disclosures The Sitting fees paid to Non-Executive Directors, including Independent Directors for attending Board/ Committee Meetings are within the limits prescribed under the Companies Act, 1956 (the Act). The shareholders have at the 55th Annual General Meeting (AGM) held on 10th August, 2009 passed the Special Resolution approving payment of commission to Non-Executive Directors not exceeding 1% per annum of the net profits of the Company, to be calculated in accordance with the provisions of the Act. The aforesaid Resolution was passed for a period of five financial years, commencing from 1st April, 2010. (c) Other provisions as to Board and Committees During the year 2010-11, eight Board Meetings were held on the following dates and the gap between two consecutive Board Meetings did not exceed the statutory requirement of 4 months. 19th April, 2010; 28th May, 2010; 28th July, 2010; 2nd September, 2010; 26th October, 2010; 23rd December, 2010; 2nd February, 2011 and 19th March, 2011. The Annual Calendar of Board Meetings is agreed upon at the beginning of the year and the Notice for Board Meetings and detailed agenda papers are circulated to all the Directors well in advance to enable them to attend and take informed decisions at the Meetings. The information as required under Annexure - IA to Clause 49 of the Listing Agreement is made available to the Board. In addition, all proposals of investments, divestments and decisions in respect of properties of the Company, execution

of overseas projects and credit facilities in respect thereof are placed before the Board for its consideration and appropriate decision in the matter. The annual budgets Revenue, Capital as well as the Divisional Budgets/Strategic Business Plans are presented in detail to the Directors and their valuable inputs/suggestions are taken. Similarly, actions in respect of suggestions made/decisions taken at Board/ Board Audit Committee Meetings are reported and reviewed by the Directors, periodically. Considerable time is spent by the Directors on discussions and deliberations at the Board Meetings and their active participation is reflected by the number of meetings held during the year and attended by the Directors. None of the Directors on the Board hold directorship in more than 15 companies and no Director is a Member of more than 10 Committees and Chairman of more than 5 Committees (as specified in Clause 49), across all the companies of which he is a Director. The necessary disclosures regarding Committee positions have been made by the Directors. The Board periodically reviews compliance of all laws applicable to the Company, based on a certificate given by the Managing Director including the steps taken, to rectify instances of noncompliances, if any. (d) Code of Conduct The Board has adopted the Code of Conduct for the Directors and senior management of the Company and the same has been posted on the website of the Company. All the Board members and senior management of the Company have affirmed compliance with their respective Code of Conduct as on 31st March, 2011. A declaration to this effect, signed by Managing Director of the Company is annexed hereto. Senior management comprises the Division/Department/Functional Heads, General Managers and the CFOs of the respective business clusters.

Audit Committee(a) Composition, name of Members and Chairman The Company has a Board Audit Committee comprising Non-Executive Independent Directors Mr. Jimmy S. Bilimoria (Chartered Accountant by qualification), Mr. Nasser Munjee, Mr. Nani Javeri and Mr. R. N. Mukhija. Mr. N. J. Jhaveri ceased to be the Chairman of the Board Audit Committee upon his retirement effective 9th August, 2010 and Mr. Jimmy S. Bilimoria was appointed as the Chairman of the Board Audit Committee. Mr. Nani Javeri and Mr. R. N. Mukhija were nominated members of the Board Audit Committee with effect from 28th July, 2010 and 2nd February, 2011, respectively. All members of the Board Audit Committee are financially literate and have relevant finance and/or audit exposure. The Managing Director, the Executive Vice President (Finance), the Executive Vice President Corporate Affairs & CFO (designate), the Chief Internal Auditor and the Statutory Auditors attend the meetings as Invitees. The Business Heads (COOs) and other Operating people also attend the Meetings, when required. The 25 Cost Auditor attends the meetings at which C