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Corporate Governance

 

 

  1. Company's philosophy on code of governance
  2. The Company believes that corporate governance is directing and controlling the business with the overriding objective of optimizing return for the shareholders. The Company aims to achieve this by providing long-term visibility of its business, ensuring effective relationship with stakeholders, establishing systems that help the Board in understanding risk appetite and monitoring risk at every stage of corporate evolution process.

    The Company further believes in values such as fairness, kindness, efficiency, transparency, accountability and integrity in Corporate Governance.



  3. Board of Directors

    • Composition and category of Directors
    • As on 31 March 2011, the Board comprises of ten members, of whom four are whole-time directors, viz., Chairman & Managing Director, Executive Director, Technical Director and Director (Mines) and the remaining six are independent non-executive directors. Chairman & Managing Director is one of the promoters of the Company. All the directors are highly qualified, professional and have vast experience in industry.

    • The particulars of directors, their attendance at Board meetings during the financial year and at the last annual general meeting are as under :
    Name of Directors Category / Designation
    Attendance
    Board meetings Last AGM
    S. Y. Ghorpade Chairman & Managing Director 5 Yes
    Nazim Sheikh Executive Director 5 Yes
    S. H. Mohan Technical Director 4 Yes
    Syed Abdul Aleem Non-Executive & Independent 4 Yes
    M. S. Rama Rao Non-Executive & Independent 3 No
    E. B. Desai (upto 24 December 2010) Non-Executive & Independent 3 No
    Sushiladevi Ghorpade (upto 29
    June 2010)
    Non-Executive & Promoter - NA
    S. R. Sridhar Director (Mines) 3 Yes
    N. C. Viswanathan Non-Executive & Independent 5 No
    R. Subramanian Non-Executive & Independent 4 No
    V. Balasubramanian* Non-Executive & Independent 2 NA
    P. Vishwanatha Shetty**

    Non-Executive & Independent 2 NA

    * appointed as Additional Director w.e.f. 3 November 2010

    ** appointed as Additional Director w.e.f. 4 December 2010

    • Number of directorships and committee memberships held by the directors in domestic public companies as at 31 March 2011 are as indicated below::
    Name of Directors Directorships (Excluding this Company)
    Committee Memberships (Excluding this Company)
    As Chairman As Member
    S. Y. Ghorpade - - -
    Nazim Sheikh - - -
    S. H. Mohan - - -
    Syed Abdul Aleem - - -
    M. S. Rama Rao - - -
    S. R. Sridhar 1 - -
    N. C. Viswanathan 1 - -
    R. Subramanian 2 2 -
    V. Balasubramanian* 4 - 3
    P. Vishwanatha Shetty**

    - - -

     

     

    • Board meetings
    • Meetings of the Board of Directors are generally held at the Company’s Corporate Office in Bangalore and are scheduled well in advance. The Board meetings are held at least once in a quarter to review the quarterly performance and the financial results apart from transacting other items of business requiring the Board’s attention. The Company Secretary in consultation with the Chairman & Managing Director and Executive Director prepares agenda for the meetings. The Board papers are circulated to directors in advance. Senior management personnel are invited to attend the Board meetings and provide clarifications as and when required.

      The Company has an Executive Chairman and half of the Board comprise of independent directors. The Company had no pecuniary relationship or transactions with any of the non-executive directors during the year under review.

      The information as required under Annexure 1A to Clause 49 of the listing agreements is being regularly placed before the Board. The Board also reviews the declaration made by the Chairman & Managing Director and the Company Secretary regarding compliance with all laws applicable to the Company on a quarterly basis.

      The Board of Directors met five times during the financial year on 30 April 2010, 28 May 2010, 29 July 2010, 3 November 2010 and 12 February 2011. The interval between any two successive meetings did not exceed four months.

       

  4. Audit Committee

  5.  

    Powers of the Audit Committee:
    a) to investigate any activity within its terms of reference.
    b) to seek information from any employee.
    c) to obtain outside legal or other professional advice.
    d) to secure attendance of outsiders with relevant expertise, if it considers necessary.


    Terms of reference of the Audit Committee:

    1. Oversight 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.


    2. Recommending the appointment and removal of external auditor, fixation of audit fee and also approval for payment for any other services.

    3. Reviewing with the management the annual financial statements before submission to the Board, focusing primarily on:
      • any changes in accounting policies and practices
      • major accounting entries based on exercise of judgement by management
      • qualifications in draft audit report
      • significant adjustments arising out of audit
      • going concern assumption
      • compliance with accounting standards
      • compliance with stock exchange and legal requirements concerning financial statements
      • any related party transactions i.e., transactions of the Company of material nature, with promoters or the management, their subsidiaries or relatives etc., that may have potential conflict with the interests of the Company at large

    4. Reviewing with the management matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (2AA) of Section 217 of the Companies Act, 1956.

    5. Reviewing with the management and external and internal auditors, the adequacy of internal control systems.

    6. Reviewing the adequacy of 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.

    7. Discussion with internal auditors of any significant findings and follow up there on.

    8. 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.

    9. Discussion with external auditors before the audit commences of the nature and scope of audit as well as having post-audit discussion to ascertain any area of concern.

    10. Reviewing the Company’s financial and risk management policies.

    11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.

    12. Reviewing Management Discussion and Analysis of financial condition and results of operations.

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

    Composition, names of the members and their attendance at meetings during the financial year are as under:

    Name Designation Category No. of meetings
    attended
    R. Subramanian Chairman Non-Executive & Independent 4
    Syed Abdul Aleem Member Non-Executive & Independent 3
    M. S. Rama Rao Member Non-Executive & Independent 2
    N. C. Viswanathan Member Non-Executive & Independent 4

    The Company Secretary acts as Secretary to the Committee.

    The meetings are scheduled well in advance and the whole-time directors and senior management personnel of the Company, the statutory auditors and internal auditors are invited to attend the meetings.

    The Audit Committee members are financially literate and have relevant finance and/or audit exposure. R. Subramanian, a financial expert, is the Chairman of the Committee. Pursuant to the provisions of clause 49(II)(A)(iv) of the Listing Agreements, the Chairman of the Audit Committee was required to be present at the Annual General Meeting to answer the queries of the shareholders. However, for reasons beyond his control, R. Subramanian was not present at the Annual General Meeting but Syed Abdul Aleem another member of the Audit Committee was present at the Annual General Meeting to answer the queries of the shareholders.

    Meetings held during the year 2010-11:

    The Audit Committee met four times during the financial year on 28 May 2010, 29 July 2010, 3 November 2010 and 12 February 2011. The interval between any two successive meetings did not exceed four months. The quorum as required under clause 49(II)(B) was maintained at all the meetings.





  6. Remuneration Committee

    • Brief description of terms of reference:
    • Remuneration Committee was constituted in April 2002 to consider and recommend to the Board, appointment, re-appointment and remuneration payable to whole-time directors.

    • Composition, names of members and Chairman and their attendance:
    • Remuneration Committee was constituted in April 2002. The Committee was reconstituted at the Board Meeting held on 12 February 2011 owing to the death of E. B. Desai - Chairman of the Committee on 24 December 2010. As on 31 March 2011, the Committee consisted of six independent non-executive directors. P. Vishwanatha Shetty is the Chairman of the Committee w.e.f. 12 February 2011. Apart from the existing Members Syed Abdul Aleem and M. S. Rama Rao, N. C. Viswanathan, R. Subramanian and V. Balasubramanian were included to be Members w.e.f. 12 February 2011.

      The Company Secretary acts as Secretary to the Committee.

      No meeting of the Remuneration Committee was held during the FY 2010-11.

    • Remuneration policy:

    • The remuneration policy is to pay salary / compensation and benefits adequately so as to attract, motivate and retain talent.

      The remuneration payable to the whole-time directors was approved by the members at the 54th Annual General Meeting of the Company held on 25 September 2008.

       Details of remuneration paid to the whole-time directors for the year 2010-11:

    Name of Director

    Salary
    (in Lakh)
    Perquisites
    (in Lakh)
    Contributions*
    (in Lakh)
    Term
    S. Y. Ghorpade
    Chairman & Managing Director
    18.75 30.70 5.06 3 years from
    1 July 2008
    Nazim Sheikh
    Executive Director
    17.25 27.19 4.66 3 years from
    1 July 2008
    S. H. Mohan
    Technical Director
    17.25 27.09 4.66 3 years from
    1 July 2008
    S. R. Sridhar
    Director (Mines)
    10.80 18.04 2.91 3 years from
    1 October 2008

    *includes contribution to Provident and other funds but does not include contribution towards Gratuity and Leave salary, as these are determined on an actuarial basis for the Company as a whole.




    The Company does not have stock option scheme, there is no variable component in the remuneration and there is no severance fee. Service contracts exist with the whole-time directors which contain their terms and conditions including remuneration, notice period etc., as approved by the members. The agreements may be terminated by either party at any time by giving three months’ notice to the other party.

    Remuneration to non-executive directors for the financial year 2010-11:

    The non-executive directors do not receive any remuneration from the Company other than sitting fee for attending meetings of the Board and its Committees thereon and reimbursement of expenses incurred on travelling and stay in case of outstation directors. 

    Details of sitting fee paid to non-executive directors during the financial year 2010-11:

    Name of director (in Lakh)
    Syed Abdul Aleem 85,000
    M. S. Rama Rao 60,000
    E. B. Desai 30,000
    N. C. Viswanathan 90,000
    R. Subramanian 80,000
    V. Balasubramanian 20,000
    P. Vishwanatha Shetty 20,000

    R. Subramanian holds 100 equity shares in the Company.

     

  7. Investors’ Grievance & Share Transfer Committee

  8. Investors’ Grievance and Share Transfer Committee was constituted on 26 July 2006 to oversee the redressal of shareholders’ and investors’ complaints, if any, and to consider and approve transfer and transmission of shares and issue of duplicate share certificates. The Committee consists of four directors and is headed by Syed Abdul Aleem who is an independent non-executive director. S. Y. Ghorpade, Nazim Sheikh and M. S. Rama Rao are its members. The Company Secretary acts as Secretary to the Committee.

    To expedite the process of share transfers / transmissions, authority has been delegated by the Board severally to the Chairman & Managing Director, Executive Director and the Company Secretary who will be regularly attending to share transfers and transmissions, issue fresh share certificates in lieu of old share certificates lost / mutilated or on transfer, sub-division, consolidation, renewal, exchange etc., subject to the related deeds / documents being in order.

    Venture Capital and Corporate Investments Private Limited (VCCIPL), one of the leading SEBI registered Category - I Registrar and Transfer Agents has been appointed as Share Transfer Agent of the Company to process share transfer requests on behalf of the Company with effect from 18 January 2008. The Chairman & Managing Director or Executive Director or Company Secretary approves the share transfer registers and a statement of share transfers / transmissions effected, share certificates issued in each quarter are placed before the Investors’ Grievance & Share Transfer Committee for approval and are also placed before the Board of Directors for ratification at their next meeting.

    The Investors’ Grievance & Share Transfer Committee met four times during the financial year on 30 April 2010, 29 July 2010, 3 November 2010 and 12 February 2011.  The interval between any two successive meetings did not exceed four months.



  9. General Body Meetings

    • Location and time of the last three AGMs: The Annual General Meetings for the last three years were held on 29 September 2010 at 11.00 a.m., 25 September 2009 at 11.00 a.m. and 25 September 2008 at 11.00 a.m. The meetings were held in Anuradha Hall, Shivapur, Sandur - 583 119. Eleven special resolutions were passed at the past three Annual General Meetings.

    • No special resolution has been passed through postal ballot last year.

    • The Company has not proposed to pass any special resolution through postal ballot.






  10. General Body Meetings
  11. Star Metallics and Power Private Limited (SMPPL) is a subsidiary of the Company with 74.29% of its paid up equity share capital held by the Company. 

    SMIORE, being a major shareholder, has nominated four of its directors as directors on the Board of SMPPL.  S. Y. Ghorpade, Chairman & Managing Director of SMIORE is the non-executive chairman of SMPPL, S. H. Mohan, Technical Director of SMIORE is a wholetime director of SMPPL, Nazim Sheikh - Executive Director and M. S. Rama Rao - Independent Director of SMIORE are the non-executive directors of SMPPL.

    The operations of SMPPL are being controlled and monitored by SMIORE, inter alia, by the following means:

    • Financial statements, in particular the investments made by SMPPL, are being reviewed by the Audit Committee of the Company.

    • Minutes of the meetings of SMPPL’s Board are being placed before the Company’s Board regularly.

    • Financial statements showing all significant transactions and arrangements entered into by SMPPL are placed before the Company’s Board.



  12. Disclosures

    • Related Party Transactions: During the year under review, besides the transactions reported in Note 12 of Schedule 9 to the Financial Statements in the Annual Report, there are no other related party transactions of the Company with its promoters, directors or the management or their relatives and associates. These transactions do not have any potential conflict with the interest of the Company at large. The material related party transactions, if any, are placed before the Audit Committee periodically. Further there are no material individual transactions that are not in normal course of business and not on an arm’s length basis.

    • Disclosure of Accounting Treatment: The Company follows Accounting Standards notified by the Central Government under the Companies (Accounting Standards) Rules, 2006 and in the preparation of financial statements, the Company has not adopted a treatment different from that prescribed in any Accounting Standard.

    • Disclosure by Senior Management: Senior management has made disclosures to the Board confirming that they have not entered into material financial and commercial transactions with the Company wherein they have personal interest that could result in a conflict with the interest of the Company at large.

    • Details of Non-Compliance: There have been no instances of non-compliance by the Company except for the Chairman of Audit Committee not being present at the last Annual General Meeting as required under the provisions of Clause 49(II)(A)(iv) of the Listing Agreement, and no penalties, strictures have been imposed on the Company by Stock Exchange or SEBI or any statutory authority, on any matter related to capital markets, during the last three years.


    • Risk Management: The Company is committed to strengthen its risk management capability in order to protect and enhance shareholder value. Accordingly, the Company has laid down procedures to prevent the risk from occurring and if it cannot be prevented, to minimize the adverse impact of such risk. The Board responds to the Executive Management’s need for enhanced risk information and improved governance and has an effective internal control and management reporting system. The Audit Committee of the Board reviews Internal Audit findings, if any, and provides strategic guidance on internal controls. The Company follows the framework to attain a balanced approach that considers risk and return.

  13. Means of Communication
    • Quarterly financial results are being regularly sent to Bangalore Stock Exchange Limited and Bombay Stock Exchange Limited.
    • Quarterly financial results are generally published in The Financial Express and Sanjevani newspapers.

    • No presentation has been made to institutional investors or to the analysts.

    • Management Discussion and Analysis is forming part of this Annual Report.


  14. General Shareholder Information
    1. Date, Time and Venue of the Annual General Meeting:
    2. 10 September 2011 at 11.00 a.m. at Anuradha Hall, Shivapur, Sandur - 583 119.

    3. Financial Year: 1 April 2010 to 31 March 2011.

    4. Financial Calendar: (tentative and subject to change):
    5. Financial Reporting for the quarter ending 30 June 2011 Before 14 August 2011
      Financial Reporting for the quarter ending 30 September 2011 Before 14 November 2011
      Financial Reporting for the quarter ending 31 December 2011 Before 14 February 2012
      Financial Reporting for the quarter ending 31 March 2012 By end of April/May 2012

    6. Dates of Book Closure: 3 September 2011 to 10 September 2011 (Both days inclusive)

    7. Dividend Payment Date: On or after 10 September 2011

    8. Listing on Stock Exchanges:
      The Company’s shares are listed on:

      1) Bombay Stock Exchange Limited P. J. Towers, Dalal Street MUMBAI - 400 001

      2) Bangalore Stock Exchange Limited No.51, 1st Cross, J. C. Road BANGALORE - 560 027

      Listing Fee:
      The Company has paid annual listing fee for the year 2011-12 to both the Stock Exchanges where the securities of the Company are listed.

    9. Stock Code: Bombay Stock Exchange Limited (BSE) - 504918 Bangalore Stock Exchange Limited (BgSE) - SM


    10. Monthly High and Low Quotation of Company’s shares traded on BSE:


      Month Open
      (in Rs)
      High
      (In Rs)
      Low
      (in Rs)
      Close
      (in Rs)
      No. of Shares No. of Trades

      BSE Sensex

      (Average)
      Apr 2010 724.20 777.10 650.05 695.35 548020 16033 17662
      May 2010 696.00 770.00 612.00 619.65 735840 22571 16749
      Jun 2010 620.00 644.40 575.00 582.70 273799 10055 17119
      Jul 2010 582.00 669.05 543.05 669.05 351565 9738 17817
      Aug 2010 700.00 725.00 595.10 622.95 588160 21832 18148
      Sep 2010 625.00 694.00 600.00 627.00 334894 13176 19148
      Oct 2010 620.00 679.75 605.00 614.15 317973 9845 20312
      Nov 2010 626.00 1097.70 605.00 810.20 1839193 62195 20032
      Dec 2010 810.00 869.50 652.00 723.25 776375 31467 19813
      Jan 2010 730.00 797.40 613.70 628.60 522182 21442 19352
      Feb 2010 634.00 685.90 532.40 581.90 264262 11565 17993
      Mar 2010 593.00 630.00 547.10 596.45 546693 11410 18684



    11. Comparison of Company’s share price movement with BSE Sensex:





    12. Distribution of Equity Shareholding as on 31 March 2011:

      Shareholding of Nominal value of Rs No. of shareholders No. of Shares % to total Capital
      Upto 5000 7083 670285 6.94
      5001 10000 239 190151 2.17
      10001 20000 137 205754 2.35
      20001 30000 43 104760 1.20
      30001 40000 25 87546 1.00
      40001 50000 16 75199 0.86
      50001 100000 25 174569 2.00
      100001 Above 45 7304736 83.48
      Total 7,613 87,50,000 100.00



    13. Shareholding pattern as on 31 March 2011:



    14. Categories No. ofShares % to Total
      Promoters, Directors and their relatives and associates 64,97,300 74.26
      Banks and Financial Institutions 52,500 0.60
      Mutual Funds 1,250 0.01
      Insurance Companies 1,00,000 1.14
      Foreign Institutional Investors 11,926 0.14
      Other bodies corporate 4,97,896 5.69
      Public                         15,89,128 18.16
                                TOTAL 87,50,000 100.00


    15. Registrar and Transfer Agents:
      Venture Capital and Corporate Investments Private Limited, 12-10-167, Bharatnagar, Hyderabad - 500 018.

    16. Share Transfer System:
      Venture Capital and Corporate Investments Private Limited (VCCIPL), one of the leading SEBI registered Category - I Registrar and Transfer Agents had been appointed as Share Transfer Agent of the Company to process share transfer requests on behalf of the Company with effect from 18 January 2008. The Chairman & Managing Director or Executive Director or Company Secretary approves the share transfer registers and a statement of share transfers / transmissions effected, share certificates issued in each quarter are placed before the Investors’ Grievance & Share Transfer Committee for approval and are also placed before the Board of Directors for ratification at their next meeting.

    17. Dematerialization of Shares and Liquidity:
      As on 31 March 2011, 26,49,985 equity shares have been dematerialized.

    18. There are no outstanding GDRs / ADRs / Warrants or any Convertible Instruments due for conversion.

    19. Directors seeking appointment / re-appointment: As required under Clause 49(IV)(G), particulars of Directors seeking appointment / re-appointment are given in the Explanatory Statement of the Notice of the Annual General Meeting to be held on 10 September 2011.

    20. There is no stock option scheme.

    21. Plant location: Mines at Deogiri and Metal & Ferroalloys plant at Vyasankere.

    22. Address for correspondence:

      Registered Office: Lakshmipur, Sandur, Bellary District, Karnataka - 583 119

      Corporate Office: ‘Sandur House’, No.9 (Old No.217), Bellary Road, Sadashivanagar Bangalore - 560 080



  15. CEO / CFO Certification
    The Chairman & Managing Director, being the Chief Executive Officer (CEO) and the Director (Finance), being the Chief Finance Officer (CFO) have certified to the Board in accordance with clause 49 (v) of the Listing Agreement pertaining to CEO/CFO certification for the financial year 2010-11, which is annexed thereto.

  16. Affirmation of compliance with code of conduct
    The Chairman & Managing Director of the Company has given a certificate confirming that the Company has obtained from all the members of the Board and senior management, affirmation of their compliance with the Code of Conduct for directors and senior management in respect of the financial year 2010-11 and the same were placed before the Board at its meeting held on 9 April 2011. A copy of the said certificate is annexed hereto.


  17. Status of compliance with the non-mandatory requirements of clause 49 of the listing agreement is given below:

    1. Non-Executive Chairman’s Office: The Chairman of the Company is an Executive Chairman and hence this provision is not applicable.

    2. Tenure of Independent Directors: The Board has not specifically determined the maximum tenure for independent directors. They are liable to retire by rotation as per the applicable provisions and, if eligible, may be re-appointed at the annual general meeting of the Company.

    3. Remuneration Committee: Details are given under the heading ‘Remuneration Committee’.

    4. Shareholder Rights: The quarterly and annual financial results of the Company are published in leading newspapers and are provided to stock exchanges in compliance with the provisions of listing agreements. A copy of complete Annual Report is sent to each and every shareholder of the Company.

    5. Audit qualifications: During the year under review, there was no audit qualification in the Company’s financial statements.

    6. Training of Board Members: At the meetings of the Board and the Committees thereon, directors are extensively briefed on all business related matters, risk assessment and minimization procedures, developments and trends in the market, new initiatives and statutory amendments etc.

    7. Mechanism for evaluating non-executive Board Members: The role of the Board of Directors is to provide direction and exercise control to ensure that the Company is managed in a manner that fulfils shareholders’ aspirations and the societal expectations. The performance of the non-executive directors is discussed during their re-appointment. Other than the above the Company does not have a mechanism for evaluating non-executive Board members.

    8. Whistle Blower Policy: The Company does not have any specific whistle blower policy as such but encourages an open door policy where employees have access to the heads of the departments and also to the wholetime directors, including the Chairman, during their visit to the respective departments wherein they have been provided with the liberty to report matters pertaining to unethical behavior, actual or suspected fraud. The management and the promoters provide absolute and adequate safeguards against victimization of employees who avail of opportunity to report the same.

 

 

 

corporate governance report 2011
corporate governance report 2010

 

 

 

 

 

 

 

 

 

 

 

 

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