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Corp Governance Report

The principles of Corporate Governance introduced by SEBI through Clause 49 of the Listing Agreement with Stock Exchanges and amended from time to time is complied in all respects by the Company. The policies, procedures and processes of the Company are at all times directed in furtherance of following the best practices and institutionalizing the code of corporate governance
 


  Company's philosophy on Corporate Governance

 

The Company belonging to SPB Group, which is professionally managed, is deeply committed to the core values of Corporate Governance concepts. It strives to maintain the highest ethical standards in its conduct of business. Its executive management has the freedom to run the enterprise within the framework of effective accountability and commit its resources in a manner that meets stakeholders’ aspirations and societal expectations. The Company’s objective is to transcend beyond bare compliance of the statutory requirement of the code and be a responsive and responsible entity through transparency, integrity of information and timely disclosures. The Company constantly endeavours to improve on these on an ongoing basis.

  Board of Directors

The composition of the Board is devised in a manner to have optimal blend of expertise drawn from Industry, Management, Finance and Agriculture.

All except the Managing Director are non-executive Directors and thus constitute more than one-half of the total number of Directors. The Managing Director is additionally responsible to continue to discharge the functions of Secretary within the meaning of Section 2(45) of the Companies Act, 1956.
 
The Chairman is non-executive but comes under promoter category. The number of Independent Directors is one-half of the total strength, complying with Clause 49 of the Listing Agreement. Any reduction in the strength of Independent Directors is filled within 180 days to ensure minimum strength of Independent Directors in the Board.
 
All non-executive Directors retire by rotation and in the normal course seek re-appointment at the AGM. Brief resume of Directors seeking appointment / reappointment is given in the Notice of the AGM.
 
No Director holds membership of more than 10 Committees of Board nor is Chairman of more than 5 such Committees as required under Clause 49.
 
No Director is a relative of any other Director. The age of every Director, including Independent Director, is above 21.
Name of Director and category
Date of initial Appointment
No. of Equity Shares held
Attendance at Board meetings during 2010-11
As on 31st March 2011
Attendance at
last AGM
 
Y - Yes
No. of Director-ships
Committee position
No. of meetings
%
Chairman
Member

Non-Executive Chairman, Promoter
26.12.1996
2823
5
100
6
2
1
Y
Independent
26.10.2001
536
5
100
4
--
1
Y
Promoter Group
26.12.1996
100
5
100
4
1
1
Y

Promoter
26.10.2001
NIL
4
80
13
--
4
Y
Promoter 
26.10.2001
500466
1
20
7
--
--
No
Managing Director
01.04.2005
3001
5
100
4
--
1
Y
Independent
26.10.2001
4480
5
100
1
--
--
Y
Independent 
26.10.2001
202
1
100
3
--
1
Y
Independent
 
05.06.2009
NIL
5
100
11
4
5
Y
Independent  
 
05.06.2009
NIL
5
100
6
1
3
Y
Independent  
 
24.12.2010
NIL
2
100
3
--
--
NA

* Retired on 21.07.2010


 Board Meetings

The Board meeting dates for the entire financial year are tentatively fixed before start of the year. An annual calendar of Board / Committee meetings is circulated to facilitate the Directors plan their schedules for attending the meetings. Audit Committee and Board meetings are mostly convened on the same day to obviate avoidable travel and recognizing time constraints of independent directors.
 
During the year, 5 Board meetings were held as against the minimum requirement of 4 meetings on 28.05.2010, 21.07.2010, 26.10.2010, 28.01.2011 and 25.03.2011. Interval between any two meetings was not more than 4 months as stipulated under the Listing Agreement. 

  Board Proceedings

Board meetings are governed by a structured Agenda containing comprehensive information and extensive details that is circulated at least one week in advance. Urgent issues and procedural matters are at times tabled at the meeting with prior approval of Chairman and consent of all present. Powerpoint presentation is made to facilitate pointed attention and purposive deliberations at the meetings.
 
The Board periodically reviews compliance reports of all laws applicable to the Company and takes proactive steps to avert slippages and take remedial measures as appropriate. The Board is apprised of risk assessment and minimization procedures that are periodically reviewed.
 
The governance process includes an effective post-meeting follow-up, review of ATR (Action Taken Report), reporting process for decisions taken pending approval of Board.
 

  Insider Trading

The Company has framed a code of conduct for prevention of Insider Trading based on SEBI (Prohibition of Insider Trading) Regulations, 1992. This code is applicable to all Directors and designated employees. Trading window would remain closed for the above during the period when sensitive information is unpublished. The ‘closed period’ for this purpose has been fixed  by the Board as under:
 
a) From 1st July upto twenty-four hours after communication of the first quarter financial results to the Stock Exchanges.
 
b) From 1st October upto twenty-four hours after communication of the second quarter and half-yearly financial results to the Stock Exchanges.
 
c) From 1st January upto twenty-four hours after communication of the third quarter financial results to the Stock Exchanges.
 
d) From 1st April upto twenty-four hours after communication of the annual / fourth quarter financial results to the Stock Exchanges.
 
e) 30 days immediately preceding the date of Board Meeting at which other proposals listed in para 3.2.3 of the Model Code of Conduct of SEBI (Prohibition of Insider Trading) Regulations,1992.
 
The Trading window shall open 24 hours after communication of the decision of the Board of Directors in respect of the above events to the Stock Exchanges where the company’s securities are listed.
It is hereby affirmed that all Directors and Designated Employees have complied with the Code and a confirmation to the effect has been obtained from them.
The Company Secretary is designated as the Compliance Officer for this purpose. The Audit Committee monitors the adherence to the various requirements as set out in the Code.


  Audit Committee

The Board has constituted an Audit Committee comprising only non-executive Directors with more than two-third being Independent. The Chairman of Audit Committee is an independent director. The Audit Committee meets at regular intervals not exceeding 4 months between any two meetings and subject to a minimum of 4 meetings in a year. CEO, CFO, COO and Internal Auditor are present as invitees while Statutory Auditors and Cost Auditor are also present in most meetings. The Company Secretary acts as the Secretary of the Audit Committee.
 
 The Audit Committee conforms to extant SEBI guidelines and Clause 49 of Listing Agreement in all respects concerning its constitution, meetings, functioning, role and powers, mandatory review of required information, basis of related party transactions, disclosures of accounting treatment. It also fulfills the requirements as set out in The Companies Act, 1956.
 
During the year, the Audit Committee met 5 times on 28.05.2010, 21.07.2010, 26.10.2010, 28.01.2011 and 25.03.2011. Its composition and attendance during 2010-11 is given hereunder:

 
Name of Member Category Attendance at meetings
    No %

Mr V Sridar, Chairman

Independent 5 100
Mr Bimal Poddar Non-Independent 4 80
Dr. L M Ramakrishnan Independent 5 100
Mr N Ravindranathan* Independent 1 100

Mr N R Krishnan

Independent 5 100
Permanent Invitees:
Mr N Gopala Ratnam

Non-Independent,Non Executive

5 100
Mr N Ramanathan Executive 5 100

*ceased from 21.07.2010

Members of the Audit Committee have requisite financial and management expertise. They have held or hold senior positions in reputed organizations.


  Remuneration Committee

The Company has a Remuneration Committee, though this is a non-mandatory requirement under the Listing Agreement. It comprises 4 non-executive Directors of which 3 are independent including its Chairman.
 
After the retirement of Mr N Ravindranathan, the Committee was reconstituted on 28.01.2011 comprising the following members:
Name of Member Category
Mr V Sridar, Chairman Independent, non-executive
Mr N Gopala Ratnam Non-Independent, non-executive
Dr. L M Ramakrishnan Independent, non-executive
Mr N R Krishnan  Independent, non-executive

Its principal scope / role is to recommend remuneration package for Executive directors / Senior management personnel as and when required. The Committee accordingly meets only as per needs. It met once during the financial year on 25.03.2011 to consider the remuneration package for Managing Director. All the members were present at the meeting.

The remuneration policy followed by the Committee aims at attracting and retaining suitable talent and the package is so designed as to be commensurate with competition, size of the Company and its nature of business.

 

 Remuneration of Directors

 

Managing Director is the only Executive Director entitled for monthly remuneration. His remuneration was recommended by the Remuneration Committee and determined by the Board on 28.03.2008 and approved by the Shareholders at the 12th Annual General Meeting held on 18th July 2008. Details of remuneration of Managing Director for 2010-11 are shown in Note 5(d) of Schedule 22 to the Accounts. There is no service contract containing provisions of notice period or severance fees.
The current term of Managing Director expired on the close of 31st March 2011. The Board of Directors of the Company at their meeting held on 25th March 2011 have reappointed Mr N Ramanathan as Managing Director of the Company for a period of three years with effect from 01.04.2011 and approved the revised remuneration package based on the recommendations of the Remuneration Committee meeting held on the same day. Details of same are provided in the explanatory statement for item no 7 of the Notice of the Annual General Meeting. Approval of the shareholders for reappointment and revised remuneration will be obtained at the ensuing Annual General Meeting.
No Director or his relative holds an office or place of profit in the Company. Other than direct or indirect equity holding and sitting fee, there is no pecuniary relationship or transaction between the company and its non-executive directors. No stock option has been issued by the company to executive director.
Non-executive director is paid no remuneration except sitting fees at Rs.5000 per Meeting of Board, Audit Committee and Project Committee and at Rs.2500 for other Committee Meetings. The rates are well within the ceiling permissible under Law and the Articles of Association of the Company.
 Sitting fee for 2010-11

Director Sitting fees for
Board Meeting 
Committee Meeting
Total
Mr N Gopala Ratnam
25000
70000
 95000
Dr. L M Ramakrishnan
25000
27500
 52500
Mr Arun G Bijur
25000
67500
 92500
Mr Bimal Poddar
20000
20000
 40000
Mr C K Pithawalla
 5000
--
  5000
Mr N Ravindranathan
 5000
 5000
 10000
Mr S K Ramasamy 
25000
--
 25000
Mr V Sridar
25000
27500
 52500
Mr N R Krishnan
25000
82500
107500
Dr Nanditha Krishna
10000
--
 10000

 Remuneration Policy
 
Performance is recognized and achievements rewarded so as to motivate and induce concerned employees to put in their best. Remuneration levels, though cannot be in the top-rung in a low-margin industry, are comparable to the industry norms. Remuneration package is transparent, fair and simple to administer, besides being legal and tax compliant. The Company is able to attract and retain talents as it bestows functional autonomy and offers professional challenge at all levels.

 Securities Transactions cum Investors Grievance Committee

The Board has constituted a Securities Transactions cum Investors Grievance Committee. Its role and responsibility is to expeditiously process and approve transactions in securities, complying with SEBI regulations and listing requirements and redressal of investor grievances. The Committee oversees and monitors the performance of the Registrar & Transfer Agents and devises measures for overall improvement in the quality of investor services.
The Committee comprises of 3 Directors, out of which 2 are non-executive directors. The Chairman of the Committee is a non-executive Director. The Committee has met 5 times during the year on 28.05.2010, 21.07.2010, 26.10.2010, 28.01.2011 and 25.03.2011. Its composition and attendance is given hereunder
 
Name of Member Category Attendance at meetings
    No %

Mr N Gopalaratnam
Chairman

Non-Executive 5 100
Mr Arun G Bijur Non-Executive 5 100
Mr N Ramanathan Executive 5 100

Status of investor complaints is shown in the Shareholder Information section of this Report.

The Secretary is the Compliance Officer.


   Nomination Committee

The Board has not formally constituted a Nomination Committee. Considering the size of the Company, composition of Board and periodicity of appointment, this role is directly and collectively played by the Board where decisions are taken with the consent of all.
 

 

Other Committee

The Board has constituted a Finance Committee to facilitate quick response to the financial needs / obligations of the Company. It meets as and when the need to consider any matter assigned to it arises. No meeting was held during the year. The Board has constituted a Project Committee on 28.05.2010.
 
 Committee Minutes


Minutes of all the Committees of the Board are prepared by the Secretary of the Company and approved by the Chairman of the Meeting. These are placed at the succeeding Committee Meetings for confirmation and then circulated to the Board in the Agenda for being recorded thereat.

 Circular Resolution

Recourse to circular resolution is made in exceptional and emergent cases that are recorded at the succeeding Board / Committee Meetings. During the year one circular resolution was passed on 23.12.2010 which was recorded at the Board Meeting held on 28.01.2011.
 

 Cost Audit

Cost Auditors:                                                      M/s S Mahadevan & Co., Coimbatore
 

Filing of Cost Audit Report

2010-11 2009-10
Due Date 30-09-2011 30-09-2010
Actual Date (Target) 31-07-2011  13-09-2011 
Audit Qualification Nill Nill

 Secretarial Compliance Report

Though not legally required, as a measure of good corporate governance practice, a Secretarial Audit on the compliance of corporate laws and SEBI regulations was conducted by Mr B Ravi, Practicing Company Secretary for the financial year ended 31st March 2011. Compliance Certificate issued by him was placed before the Board on 27th May 2011.

 Secretarial Standards

The Institute of Company Secretaries of India has issued nine Secretarial Standards that are presently recommendatory in nature. The company’s practices and procedures mostly meet with these prescriptions, wherever applicable.


Quarterly Compliance Report

The Company has submitted for each of the 4 Quarters during 2010-11 the Compliance Report to Stock Exchanges in the prescribed format within 15 days from the close of the Quarter.


Reconciliation of Share Capital Audit

Description Frequency For the Quarter ended Furnished on
Reconciliation of Share Capital Audit to Stock Exchanges on reconciliation of the total admitted capital with NSDL / CDSL and the total issued & listed capital Quarterly 30.06.2010 12.07.2010
30.09.2010 18.10.2010
31.12.2010 12.01.2011
31.03.2011 11.04.2011

Disclosures

In the preparation of financial statements, no accounting treatment different from that prescribed in any Accounting Standard has been followed.

Related party transactions during the year have been disclosed as required under Accounting Standard 18. Details of related party transactions were periodically placed before the Audit Committee. These transactions are not likely to have a conflict with the company’s interest.

The Company has a procedure to inform the Board about the risk assessment and minimization procedures. The Board of Directors periodically reviews the risk management framework of the Company.

No strictures / penalties have been imposed on the company by the Stock Exchanges or SEBI or any statutory authority on any matters related to the capital market during the last 3 years.


Compliance with other Mandatory requirements: 

 Management Discussion and Analysis

Management Discussion and Analysis Report is made in conformity with Clause 49(IV)(F) of the Listing Agreement and is attached to the Directors’ Report forming part of the Annual Report of the Company.

 Senior Management Declaration

Senior management personnel have declared to the Board that no material financial and commercial transactions were entered into by them during 2010-11 where they have personal interest that may have a potential conflict with the interest of the Company at large.

 Subsidiary Companies
The Company has no subsidiary.

 Code of Conduct

The Board has formulated a Code of Conduct for Directors and Senior Management Personnel of the Company which is posted on its Website. It is hereby affirmed that all the Directors and Senior Management Personnel have complied with the Code and a confirmation to this effect has been obtained from them individually for the financial year ended 31-03-2011.

 CEO/CFO certification

CEO certification by Mr N Ramanathan, Managing Director and CFO certification by Mr K Yokanathan, Chief Financial Officer as required under Clause 49(V) of the Listing Agreement were placed before the Board at its meeting on 27th May 2011.

 Review of Directors' Responsibility Statement

The Board in its Report have confirmed that the annual accounts for the year ended 31st March 2011 have been prepared as per applicable accounting standards and policies and that sufficient care has been taken for maintaining adequate accounting records.

 Auditor's Certificate on Corporate Governance

Certificate of Statutory Auditors has been obtained on the compliance of conditions of Corporate Governance in deference to Clause 49(VII)(1) of the Listing Agreement and the same is annexed. Copy of the certificate is furnished to the Stock Exchanges as required.



Compliance with non-mandatory requirements

 Board

Chairman’s office is separated from CEO. The Chairman is non-executive but does not maintain an office at the Company’s expense.
 
No maximum tenure for independent directors has been specifically determined by the Board but none of them has exceeded 9 years tenure from the date viz., 01.01.2006 when the new Clause 49 became effective.
 
The Board has formulated no formal Policy on the positive attributes of independent directors. But it ensures that every independent director has the requisite qualification and experience that would be of use to the Company and which, in the opinion of the Company, would enable him to contribute effectively to the Company in his capacity as an independent director.
 
 No formal letter of appointment is given to non-executive directors and independent directors but they are fully briefed and made aware of their role and responsibility, remuneration etc.

 Remuneration Committee 
The Company has a Remuneration Committee vide details furnished supra

 Shareholders' Rights

Quarterly Audited Results on the Company’s financial performance are mailed to shareholders on request. These are posted on the Company’s Website and advertised in newspapers.
Clause 32 of Listing Agreement permits circulation of abridged Accounts in lieu of full-fledged Annual Report. The Company has however not exercised this option and continues to send Annual Report in full form to all shareholders.
The Company has sought shareholder’s cooperation to fall in line with the Green Initiatives of the Central Government by way of sending communications in e-mode – Refer page 30 of Annual Report

 Audit Qualification

The Company from inception has ensured to remain in the regime of unqualified financial statement.

Others

(i) Training of Board members
All the Directors are well versed in the business model and are fully briefed on all business related matters, risk assessment and minimization procedures, global/ domestic industry scenario and changes in statutes and economic environment. Detailed presentations are made by Managing Director, Senior Executives and Professionals followed by full-length discussions at Audit Committee/Board meetings.
(ii) Mechanism for evaluation NEDs
 The Board collectively on a continuous basis keeps track of the involvement, participation and contribution of every NED. No formal peer review documentation is however done.
(iii) Whistle Blower Policy
The Company has an informal work atmosphere where employees have direct access to top management including the Chairman and other non-executive Directors. Hence institution of a formal Whistle Blower Policy is not considered warranted.
Additional Disclosures
No loan or advance in the nature of loan was made during or outstanding at the close of the year to Associates or Firms/ Companies in which a director of the company is interested. Accordingly no disclosure in terms of Clause 32 on this score is applicable.
Promoters and Promoter Group have not pledged any part of their shareholding in the Company. This factual position is reflected in the shareholding pattern furnished to Stock Exchanges and Financial Statements published for each quarter.
Clause 41 of the Listing Agreement stipulates that limited review / audit reports shall be given only by an Auditor who has subjected himself to the peer review process and holds a valid certificate issued by the Peer Review Board of the ICAI. The statutory auditors of the Company M/s R Subramanian and Company and M/s Maharaj N R Suresh & Co have undergone the peer review process and been issued requisite certificate that were placed before the Audit Committee.


 Means of Communication 

 

Intimation of Board meeting
The Company publishes Notice of Board Meeting to consider financial results in newspapers.

 Financial Results - All audited 


Period Date of Pub of Notice of Board Meeting Financial Results Newspaper
Date of app. by Board Date of Publication
Quarter ended 30.06.2010

07.07.2010

21.07.2010 22.07.2010

Business line Makkal Kural 

Quarter ended 30.09.2010

07.10.2010

26.10.2010 27.10.2010

Business line Makkal Kural 

Quarter ended 31.12.2010

14.01.2011

28.01.2011  29.01.2011

Business line Makkal Kural 

Year ended
31.03.2011

06.05.2011

27.05.2011 28.05.2011*

Business line Makkal Kural 

* Publication arranged


The results published also show as a footnote relevant additional information and/or disclosures to the investors. Financial results are

(a) faxed to Stock Exchanges immediately after the conclusion of the Board meeting,

(b) posted on the company’s website www.ponnisugars.com which displays official news releases of the company as well and

(c) mailed to shareholders on request.

No presentation was made during the year to institutional investors or analysts. The Company has no agreement with any media company for public dissemination of its corporate information.

 

 

 Electronic mode of communication

A The Ministry of Corporate Affairs has taken a Green Initiative in the Corporate Governance to allow paperless compliances by the corporate sector. After introducing E-filing of various Returns through the MCA portal, MCA by its Circular dt.21.04.2011 has now made permissible the service of documents through electronic mode to shareholders.

As a responsible corporate citizen, the Company shall endeavour to support the Green Initiative of the Government. This however would be possible only with the active support and cooperation of shareholders.

The Company by its mail dt.04.05.2011 has requested its shareholders to send an Email confirmation to its designated ID shares@ponnisugars.com mentioning the name, DP/ Customer ID or Folio number and the Email ID of the shareholder for communication. On this confirmation

(i) The Company would henceforth send all Notices, Annual Report and other communications to these shareholders through Email;

(ii) Copies of same would be available under the ‘investor section’ of our website www.ponnisugars.com for ready access;

(iii) Shareholders will at all times be entitled to receive, free of cost, hard copy (paper version) of Annual Report and other communications on specific request;

(iv) Shareholders are further entitled to change the instructions from time to time.

The Company earnestly appeals to all its shareholders to support the Green Initiative of the Government by opting for electronic mode of receiving our corporate communications.

Website

The Company maintains a functional website www.ponnisugars.com that contains relevant information updated in time and complies with Clause 54 of the Listing Agreement.

General Shareholder Information

A separate section has been included in the Annual Report furnishing various details viz. AGM time and venue, share price movements, distribution of shareholdings etc.

Corporate Governance Voluntary Guidelines 2009

 Ministry of Corporate Affairs (MCA) released in December 2009 the “Corporate Governance Voluntary Guidelines 2009”. While mandatory aspects for adoption by corporates are included in the Companies Bill 2009, the Voluntary Guidelines are intended to serve as a benchmark for corporates to help them achieve the highest standard of corporate governance.

MCA has observed that these guidelines do not substitute any extant law or regulation but are essentially for voluntary adoption by the corporates. It expects more and more corporates to voluntarily go forward to adopt these guidelines. Where there are genuine reasons for companies not being able to adopt some of these provisions, it expects such companies to inform their shareholders of the details of such non adoption.

Our Company has adopted most part of the Voluntary Guidelines.It keeps a constant track of prevalent practices among lead corporates towards formulating and finetuning its response to the remaining areas. It however affirms that there is substantive compliance commensurate with the size, nature of business and governing structure of the Company.

CSR Voluntary Guidelines

MCA in December 2009 has released the “Corporate Social Responsibility Voluntary Guidelines 2009”. This is intended to assist the businesses to adopt responsible governance practices. The guidelines indicate some of the core elements that businesses need to focus on while conducting their affairs. These have been framed, factoring the governance challenges being faced in our country and the expectations of the society.

The Voluntary Guidelines underscore the fundamental principles of business. It further dwells on the core elements, viz. care for all stakeholders, ethical functioning, respect for workers’ rights and welfare, respect for human rights, respect for environment and activities for social and inclusive development. It also outlines implementation guidelines.

Our company has steadfastly stood for the principles stated in these Guidelines. It enjoys considerable goodwill of the neighbourhood residents based on transparency of dealings and fair practices followed all along. It would endeavour further to strengthen its focus and attention to abide by the spirit of these new Guidelines.


For Ponni Sugars (ERODE) Limited

N Gopala Ratnam
N Ramanathan
Chairman
Managing Director
Chennai
27th May 2011
 
   
                                                                                                             
AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE

To the Members of Ponni Sugars (Erode) Limited


We have examined the compliance of conditions of Corporate Governance by Ponni Sugars (Erode) Ltd. for the year ended 31st March 2011 as stipulated in the Clause 49 of the Listing Agreement of the said company with the Stock Exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the company.

In our opinion and to the best of our information and according to the explanations given to us, and the representations made by the Directors and the management, we certify that the company has complied with the conditions of Corporate Governance as stipulated in the abovementioned Listing Agreement.

As required by the Guidance note issued by the Institute of Chartered Accountants of India, we have to state that as per the records maintained and certified by the Company / Registrars and Transfer Agent of the company, there were no investor grievances remaining unattended / pending for more than 30 days as at 31st March 2011.

We further state that such compliance is neither an assurance as to the future viability of company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

 

For R Subramanian and Company  For Maharaj N R Suresh & Co
Chartered Accountants  Chartered Accountants

A Ganesan
 

N R Suresh 
Partner  Partner 
Membership No.21438 Membership No.21661

Chennai
27th May 2011