Corporate Governance Report
Company’s Philosophy on Corporate Governance
Mindtree Limited (hereinafter referred to as 'Mindtree' or the 'Company'), looks upon good Corporate Governance practices as a key driver of sustainable corporate growth and long term stakeholder value creation. Good Corporate Governance Practices enable a Company to attract financial and human capital. In turn, these resources are leveraged to maximize long-term stakeholder value, while preserving the interests of multiple stakeholders, including the society at large.
Your Company and its employees (Mindtree Minds) are guided by the values of collaborative spirit, unrelenting dedication and expert thinking. These values are core to our operations. All Mindtree Minds are expected to adhere to the highest standards of integrity. Your Company has a clearly articulated Integrity Policy which is applicable to all Mindtree Minds globally.
In the conduct of your Company's business and its dealings, it abides by the principles of honesty, openness and doing what is right and fair. Your Company is committed to doing things the right way, which means, taking business decisions and acting in a way that is ethical and is in compliance with the applicable legislation. These principles guide our behavior at all times.
Your Company practices the highest standards of corporate behavior towards everyone it works with, be it the communities or the environment. This is the road to responsible, sustainable and profitable growth and creates long term value for your Company’s stakeholders, people and our business partners.
In the current year, the Company has been adjudged as the ‘Most Promising Company of the Year’ Award by CNBC TV 18 and ranked number 1 under the categories ‘Best Managed IT/Software/Technology Company in Asia’ and the ‘Best Managed Company in India’ for 2013 by Euromoney’s Annual Asia Company Ranking. Mindtree is also in the top 3 ranking companies in India, on all categories related to Corporate Governance and Investor Relations by Asiamoney.
Following are the salient features of your Company’s Corporate Governance Philosophy:
- Act in the spirit of law and not just the letter of law;
- Do what is right and not what is convenient;
- Provide complete transparency on our operations; and
- Follow openness in our communication to all our stakeholders.
The 3-Tier Corporate Governance Structure at Mindtree includes
- Shareholders appoint and authorize the Board of Directors ('Board') to conduct business with objectivity and ensure accountability;
- Board leads the strategic management of the Company on behalf of the Shareholders, exercises supervision through direction and controls and appoints various Committees to handle specific areas of responsibilities; and
- The Committees of the Board and Executive Management appointed by the Board take up specific responsibilities and day-to-day tasks to ensure that the activities of the Company run according to the strategies and targets set by the Board.
The above principles have been the guiding force for whatever your Company does and shall continue to be so in the years to come. The Company is committed to adopting to the best global practices in Corporate Governance and Disclosure.
We engineer meaningful technology solutions to help businesses and societies flourish.
Your Company believes in the power of people and the impact people can have on technology. Your Company’s roots grew from this belief that people with diverse points of view could come together to build a different kind of technology company. This belief drives its vision for tomorrow to build technology experts who are focused on one goal, helping its clients succeed.
Today, a wealth of information is opening up a world of possibilities. Realizing those possibilities takes more than numbers. It takes more than technology. It takes people. People who can turn the potential of information into meaningful solutions. Solutions that simplify businesses, improve governments and propel societies forward.
Your Company’s values reinforce the organizational spirit. Your Company’s values reflect what it believes in, guides and drives its behavior, defines its role and enables it to deliver customer success. Your Company’s values, which are given below, inspire action and set us apart.
Your Company believes in developing true partnerships. Your Company fosters a collegial environment, where individual perspectives and honest dialogue is respected.
Your Company is driven to meet client needs with determination and grit. Your Company embraces tough challenges and does not rest until the problem is solved, the right way.
Your Company brings robust skills and forward looking perspectives to solve customer challenges. Your Company uses proven knowledge to make recommendations and provide expert guidance to its customers.
Your Company's ability to devise solutions is equally matched by its ability to execute. Your Company’s differentiation stems from a unique balance of human perspective with deep strategic thinking. Your Company sees possibilities where others see a full stop and as expressed in our tagline -Welcome to possible.
I. The Board of Directors (The Board)
Your Company has a balanced mix of Executive and Non-Executive Directors. The Board consists of 10 Directors comprising four Executive Directors, five Non-Executive and Independent Directors and a Non-Executive Director, as on March 31, 2014. The Board has one lady Member. The composition of the Board represents the finest blend of professionals from various backgrounds which enables the Board to discharge its responsibilities more efficiently and provide effective leadership by taking the Company’s business to achieve greater heights.
The Chairman of the Board for the financial year 2013-14 was Mr. Subroto Bagchi, an Executive Director and half of the Board comprised of Independent Directors. Therefore, the composition of the Board is in compliance with Clause 49 of the Listing Agreement.
(a) Composition and Category of Directors
The details of each Member of the Board along with number of Directorship(s)/Committee Membership(s) held by Directors in companies other than Mindtree, along with age of the Director, date of appointment to the Board of Mindtree and Director Identification Number (DIN) are provided below for the period ended March 31, 2014:
1 Reappointed as CEO & Managing Director w.e.f. April 1, 2014.
2 Appointed as an Executive Director w.e.f. January 1, 2014.
3 Resigned as an Executive Director w.e.f. May 6, 2013.
4 Appointed as an Independent Director w.e.f. January 1, 2014.
5 Retired as an Independent Director w.e.f. July 19, 2013.
6 Appointed as an Alternate Director to Mr. N.S.Parthasarathy w.e.f. January 17, 2014.
- None of the Directors are related to each other;
- Number of Directorship held in other companies includes all public limited companies, whether listed or unlisted and excludes private limited companies, foreign companies, companies established under Section 25 of the Companies Act, 1956 and alternate Directorships, Membership of Managing Committees of Chambers of Commerce / Professional Bodies; and
- The necessary disclosures regarding Committee positions have been made by all the Directors. None of the Directors is a Member of more than 10 Committees or Chairman of more than 5 Committees across all Indian public limited companies in which he is a Director. Number of Chairmanships/Memberships of Committees covers Chairmanships/Memberships of Audit Committee and Shareholders’/Investors’ Grievance Committee.
(b) Attendance of the Directors at the Board Meetings and the Fourteenth AGM
The calendar of Board Meetings is decided in consultation with the Board and the schedule of such meetings is communicated to all Directors well in advance. Generally, the Board Meetings are held in Bangalore where the Registered Office of your Company is situated. The agenda for the Board Meeting includes applicable matters as per Annexure IA of Clause 49 of the Listing Agreement and is generally circulated few days prior to the date of the Meeting and includes detailed notes on the items to be discussed at the meeting to enable the Directors to take informed decisions on behalf of the esteemed Shareholders.
In case of special and urgent business needs, the Board’s approval is taken by passing resolutions by circulation, as permitted by law.
Your Board met four times during the financial year 2013 -14 on April 18-22, 2013, July 18, 2013, October 16, 2013 and January 16, 2014. The Board passed 2 (two) matters through Circular Resolutions during the financial year 2013-14.
The necessary quorum was present for all the Board Meetings and the fourteenth Annual General Meeting. The maximum interval between any two Board Meetings was well within the maximum allowed gap of four months.
After each Board Meeting, your Company has a well-articulated system of follow up, review and reporting on actions taken by the Management on the decisions of the Board and sub-Committees of the Board.
The Attendance Record of the Directors at the Board Meetings held and the Fourteenth AGM for financial year 2013-14
1 Appointed as an Executive Director w.e.f. January 1, 2014. Mr. N.S. Parthasarathy attended the fourteenth AGM as an Alternate Director.
2 Resigned as an Executive Director w.e.f. May 6, 2013.
3 Appointed as an Independent Director w.e.f. January 1, 2014, only one Board meeting was held after her appointment.
4 Retired w.e.f. July 19, 2013.
Directors’ Shareholding Details in the Company as on March 31, 2014
1 Appointed as an Executive Director w.e.f. January 1, 2014.
2 Resigned as an Executive Director w.e.f. May 6, 2013.
3 Retired w.e.f. July 19, 2013.
4 Appointed as an Alternate Director to Mr. N.S.Parthasarathy w.e.f. January 17, 2014.
Apart from the above, none of the Non-Executive Directors including Independent Directors hold any Equity Shares (as own or on behalf of any other person on beneficial basis) in the Company.
II. Governance by the Sub-Committees of the Board
The Board has constituted the following Committees and each Committee has its terms of reference. The Chairman of each Committee along with the other Members of the Committee and if required, other Members of the Board, decide the agenda, frequency and the duration of each meeting of that Committee. Currently, the Board has seven Committees:
- Audit Committee;
- Compensation Committee
- Investors’ Grievance Committee;
- Administrative Committee;
- Strategic Initiatives Committee;
- Nomination and Corporate Governance Committee; and
- Corporate Social Responsibility Committee.
(a) Audit Committee
The Audit Committee was constituted in accordance with the requirements of the Listing Agreements.
The Audit Committee reports to the Board and is primarily responsible for:
- Oversight of the Company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
- Recommending to the Board, the appointment, re-appointment, replacement or removal of the Statutory Auditor and the fixation of audit fees.
- Approval of payment to Statutory Auditors for any other services rendered by the Statutory Auditors.
- 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 as required under 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 judgment by Management;
- Significant adjustments made in the financial statements arising out of audit findings;
- Compliance with listing and other legal requirements relating to financial statements;
- Disclosure of any related party transactions and review and approval of any transactions with related parties;
- Dealing with qualifications in the draft audit report;
- Review of any concerns raised by Mindtree Minds or others about possible improprieties in financial reporting, including Management override of internal controls and financial irregularities involving Management team members;
- Review of Management Discussion and Analysis of financial condition and results of operations; and
- Review of Management letters / letters of internal control weaknesses issued by the Statutory Auditors.
- Reviewing, with the Management, the quarterly financial statements before submission to the Board for approval.
- Reviewing, with the Management, performance of Statutory and Internal Auditors, adequacy of the internal control systems.
- Reviewing the adequacy of internal audit function, if any, 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.
- Discussion with Internal Auditors on any significant findings and follow up there on.
- Reviewing the findings of any internal investigations by the Internal Auditors in 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.
- Discussion 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.
- Looking into the reasons for substantial defaults in the payment to the depositors, debenture holders, Shareholders (in case of nonpayment of declared dividends) and creditors.
- Review of the functioning of the Whistle Blower Mechanism, in case the same is existing.
- Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc., of the candidate.
- Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
The Audit Committee has four Directors, as per the details given below. All Members are financially literate and have the required accounting and financial management expertise.
The past Chairman of the Audit Committee was an Independent Director. Mr. R. Srinivasan, Chairman of the Audit Committee, who retired with effect from July 19, 2013 was present at the last Annual General Meeting to answer the Shareholders’ queries. Mr. Ramesh Ramanathan, Independent Director, was appointed as the Chairman of the Audit Committee with effect from July 22, 2013. The Company Secretary of the Company acts as the Secretary to the Audit Committee.
The Audit Committee met four times during the financial year 2013-14 on April 18, 2013, July 17, 2013, October 16, 2013 and January 16, 2014 and not more than four months had elapsed between two Audit Committee Meetings. The necessary quorum was present for all the Audit Committee Meetings.
Details of Composition and Attendance of the Audit Committee Meetings
1 Retired as the Chairman of the Audit Committee w.e.f. July 19, 2013. Only two Audit Committee Meetings were held during his tenure.
2 Appointed as the Chairman of the Audit Committee w.e.f. July 22, 2013.
3 Appointed as the Member of the Audit Committee w.e.f. January 1, 2014. Only one Audit Committee Meeting was held since her appointment, till March 31, 2014.
(b) Compensation Committee
The Compensation Committee was constituted to fix specific remuneration packages for Executive Directors and Senior Management including, pension rights and any compensation payment and for determining the remuneration packages of the Executive Directors and implementing stock based compensation plans of the Company.
The Compensation Committee is primarily responsible to:
- Assist the Board in ensuring that, affordable, fair and effective compensation philosophy and policies are implemented;
- Approve and make recommendations to the Board in respect of salary structure and actual compensation (inclusive of performance based incentives and benefits) of the Executive Directors, including the Chief Executive Officer;
- Review and approve the compensation and grant of options under ESOP/ESPS to Senior Executives;
- Review and approve the overall budgetary increment proposals for annual increase of compensation and benefits for the employees;
- Criteria for selection and appointment of Non-Executive Directors;
- Review and approve the change in terms and conditions of the ESOP/ESPS;
- Review and approve any disclosures in the annual report or elsewhere in respect of compensation policies or Directors' compensation;
- Any other matter referred to the Compensation Committee by the Board of the Company.
The Compensation Committee met two times during the financial year 2013-14 on April 19, 2013 and July 18, 2013. The Committee also passed 2 (two) matters through Circular Resolutions, dated October 7, 2013 and January 8, 2014 during the said period.
Details of Composition and Attendance of the Compensation Committee Meetings
1 Retired as the Member w.e.f. July 19, 2013.
2 Appointed as the Member w.e.f. July 22, 2013.
The Company's Remuneration Policy is driven by the success and performance of the individual employee and the Company. Through its compensation programme, the Company endeavors to attract, retain, develop and motivate a high performance workforce. The Company follows a compensation mix of fixed pay, benefits and performance based variable pay. Individual performance pay is determined by business performance of the Company. The Company pays remuneration by way of salary, benefits, perquisites and allowances (fixed component) and performance incentives, commission (variable component) to its Chairman, Managing Director and other Executive Directors. Annual increments are decided by the Compensation Committee within the salary scale approved by the Board and the Shareholders.
Remuneration of the Executive Chairman, CEO & Managing Director and Executive Directors is determined periodically by the Compensation Committee by keeping in view the industry benchmark, the relative performance of the Company vis-a-vis the industry and subject to the permissible limits under the applicable provisions of law and as approved by the Shareholders. Perquisites and retirement benefits are paid according to the Company’s Remuneration Policy as applicable to all the other employees.
Details of Remuneration paid to Executive Directors during the financial year 2013-2014.
1 Appointed as Executive Director w.e.f. January 1, 2014
2 Resigned w.e.f. May 6, 2013
No stock options have been granted to any of the Executive Directors during the financial year 2013-14.
Criteria for making payment to Non-Executive/Independent Directors
Section 309 of the Companies Act, 1956, provides that, a Director who is neither in the whole-time employment of the Company nor a Managing Director may be paid remuneration by way of commission, if the Company by special resolution authorizes such payment. Members th of the Company at the 10 Annual General Meeting of the Company held on July 3, 2009, have approved payment of remuneration by way of commission to Independent and Non-Executive Directors, a sum not exceeding 1% per annum of the net profits of the Company for all Independent/Non-Executive Directors in aggregate for one financial year subject to an individual limit for each of the Non-Executive/Independent Directors. These limits have been adhered to.
Remuneration paid to Non-Executive/Independent Directors
The Non-Executive/Independent Directors of the Company are paid remuneration by way of commission for their efforts. No sitting fees were paid to them for attending any meeting of the Board and or its Committees.
During the year, there were no pecuniary relationships or transactions between the Company and any of its Non-Executive/Independent Directors apart from commission.
The details of remuneration paid and stock options made to Non-Executive/Independent Directors during the financial year 2013- 2014 are provided hereinafter:
Details of Remuneration of Independent Directors during the financial Year 2013-2014
1 The Commission for the financial year ended March 31, 2014 will be paid to Independent Directors, subject to deduction of tax and service tax on reverse charge mechanism for service tax.
2 Appointed as an Independent Director w.e.f. January 1, 2014.
3 Retired w.e.f. July 19, 2013.
Stock Options to Non-Executive/Independent Directors
No stock options were granted to Non-Executive/Independent Directors during the year ended March 31, 2014.
During the financial year 2013-14, the Company has not advanced any loans to any of its Directors.
Service Contracts, Notice Period and Severance Fees
Chairman, Managing Director and the Executive Directors
There is no specific period of contract of service for Executive Chairman – Mr. Subroto Bagchi. He holds office until retirement and the notice period for resignation is six months.
There is no specific period of contract of service for Executive Director – Mr. Janakiraman S. He holds office until retirement and the notice period for resignation is three months. His term of office as a Director shall be liable to determination by retirement by rotation.
Mr. Krishnakumar Natarajan has been re-appointed as the CEO and Managing Director from April 1, 2014 to June 30, 2017, subject to the consent and approval of the Shareholders in the ensuing fifteenth AGM. He holds office until retirement and the notice period for resignation is twelve months.
Mr. N.S. Parthasarathy, Executive Director has been appointed for a period of five years with effect from January 1, 2014 to December 31, 2018, subject to the consent and approval of the Shareholders in the ensuing fifteenth AGM. He holds office until retirement and the notice period for resignation is three months. His term of office as a Director shall be liable to determination by retirement by rotation.
The appointment of the Managing Director and Executive Director/Whole-time Director(s) is governed by the Articles of Association of the Company, the Resolutions passed by the Board/Circular Resolutions and the Members of the Company along with Service/Employment Contracts.
One of our large investors have nominated their representatives to our Board.
Details of shareholding by investors who have nominee/s on our Board as on March 31, 2014 are given below:
Independent Directors/Non-Executive Directors
Period of contract and notice pay is not applicable to the Independent Director/Non-Executive Directors. There is no severance pay to any of the Independent Director/ Non-Executive Directors.
(c) Investors’ Grievance Committee
The Investor Grievance Committee is responsible for:
- Redressal of Shareholders' grievances in general and relating to non-receipt of dividends, interest, non-receipt of balance sheet, for approval of the share transfers, transmissions and transpositions, etc.; and
- Such other matters as may, from time to time, be required by any statutory, contractual or other regulatory requirements to be attended to by such Committee.
Details of Composition and Attendance of the Investors’ Grievance Committee
Mr. Rajesh S Narang, Vice President - Legal &Company Secretary acts as the Compliance Officer and Secretary to the Investor Grievance Committee.
The Investor Grievances Committee met twice on April 16, 2013 and October 16, 2013 during the financial year 2013-14. Both the Members of the Committee were present at the Meetings.
The Compliance Officer monitors the share transfer process and reports to the Company’s Board in each meeting and the Compliance Officer also directly liaises with the authorities such as SEBI, Stock Exchanges, RoC etc., and investors with respect to implementation of various Clauses, rules, regulations and other directives of such authorities and investor service and complaints related matters. There is no share transfer pending for more than 15 days.
Your Company has a designated e-mail ID, firstname.lastname@example.org for the redressal of any Shareholders’ related grievances exclusively for the purpose of registering complaints by Members/Shareholders. Your Company has also displayed the said email ID under the investors section at its website, www.mindtree.com and other relevant details prominently for creating investor awareness.
Your Company maintains a functional website containing necessary information about the Company e.g. details of its business, financial information, shareholding pattern, compliance with corporate governance, contact information of the designated officials of the Company who are responsible for assisting and handling investor grievances, details of agreements entered into with the media companies and/or their associates, etc., at http://www.mindtree.com/company/investors and the contents of the said website are updated regularly as per Clause 54 of the Listing Agreement.
Details of complaints/requests etc., received and resolved during the financial year 2013-14 are as below:
* Resolved as on April 15, 2014
(d) Administrative Committee
The Board has constituted an Administrative Committee. The purpose of the Administrative Committee is to authorize and manage the day-today business transactions like, opening/closure of the Company’s bank accounts, grant and revocation of general/specific powers of attorney, to consider and approve allotment of equity shares pursuant to exercise of stock options, to set up branch offices, to issue authority letters/affidavits for the purpose of institutional business/government and to approve such other matters as may be required for the administrative purposes of the Company and other administrative matters as delegated by the Board from time to time, which would then be ratified by the Board.
Details of Composition and Attendance of the Administrative Committee
This Committee meets as and when there is a need to carry out any urgent business transactions.
(e) Strategic Initiatives Committee
The Board constituted the Strategic Initiatives Committee to handle any merger and acquisition opportunities and other key strategic activities of the Company.
Strategic Initiatives Committee is responsible for:
- Approval for entry into new business areas;
- Approval for setting up new delivery centres outside India;
- Investment in the equity or warrants of any other company, other than routine investments in mutual funds or bank deposits or the like;
- Approval for any merger or acquisition opportunities, including any funding arrangements entered into by the Company for such activities; and
- Any other matter that may be entrusted to the Committee by the Board.
Details of Composition and Attendance of the Strategic Initiatives Committee
The frequency, notice, agenda, duration, etc., for meetings of the Strategic Initiatives Committee shall be set by the Chairman of the Committee.
(f) Nomination and Corporate Governance Committee
The Board has constituted this Committee to:
- Identify potential candidates to become Board Members;
- Recommend nominees to various Committees of the Board;
- Recommend remuneration for non-Executive/Independent Directors;
- Ensure that appropriate procedures are in place to assess Board's effectiveness; and
- Developing an annual evaluation process of the Board and its Committees.
Details of Composition and Attendance of the Nomination and Corporate Governance Committee
The frequency, agenda, duration, etc., are as set by the Chairman of the Committee
(g) Corporate Social Responsibility Committee (CSR Committee)
The Board has constituted the CSR Committee as per the requirements of the Companies Act, 2013 along with the applicable Rules.
Details of Composition and Attendance of the CSR Committee
The frequency, notice, agenda, duration, etc., for meetings of the CSR Committee shall be set by the Chairman of the Committee.
III Governance to Shareholders
General Body Meetings
Annual General Meetings of the earlier three years
Extra-Ordinary General Meetings (EGM) of the earlier three years
No Postal Ballot was conducted during the financial year ending March 31, 2014.
(i) Disclosure of Related Party Transactions
During the financial year 2013-14, no materially significant related party transactions have been entered into by the Company with the Promoters, Directors or Management or their relatives that may have a potential conflict with the interest of the Company. None of the Non-Executive Directors/Independent Directors have any pecuniary material relationship or transactions with the Company for the year ended March 31, 2014 and they have given undertakings to that effect as per Clause 49 of the Listing Agreement. Details of all related party transactions are disclosed in the Notes to Accounts in the Annual Report as required under Accounting Standard 18 issued by the Institute of Chartered Accountants of India. The transactions with the companies, where the Directors of the Company were interested, were in the normal course of business and such transactions did not have any potential conflict with the interests of the Company.
Register under Section 301 of the Companies Act, 1956 is maintained and particulars of transactions are entered in the Register, wherever applicable. Such transactions are provided to the Board and the interested Directors neither participate in the discussion, nor do they vote on such matters, when such matters come up for approval.
(ii) Details of non-compliance by the Company, penalties, strictures imposed on the Company by the Stock Exchange/s or SEBI or any statutory authority, on any matter related to capital markets, during the last three years
No penalty, or stricture was imposed by the Stock Exchanges or SEBI or any other authority, during the last 3 (three) years, since all applicable requirements were fully complied with.
(iii) Accounting treatment in preparation of Financial Statements
The guidelines/accounting standards laid down by the Institute of Chartered Accountants of India (ICAI) and notified by the Companies (Accounting Standards) Rules, 2006 have been followed in preparation of the financial statements of the Company in all material respects.
(iv)Whistle Blower Policy
The Company has adopted a Whistle Blower Policy and has established the necessary mechanism in line with the requirements under the Listing Agreements:
- For employees to report concerns about unethical behavior;
- To establish a mechanism to report to the Management, concerns about unethical behavior, actual or suspected fraud or violation of theIntegrity Policy; and
- To ensure that adequate safeguards shall be provided to the Whistleblowers against any victimization or vindictive practices likeretaliation, threat or any adverse (direct or indirect) action on their employment.
No personnel/person has been denied access to the Audit Committee.
(v) Details of compliance with mandatory requirements and adoption of the non-mandatory requirements of Clause 49 of the Listing Agreement
The Company has disclosed and complied with all the mandatory requirements under Clause 49 of the Listing Agreement. The details of these compliances have been given in the relevant sections of this Annual Report. This Annual Report also includes the disclosures recommended under National Voluntary Guidelines for the Social Environmental and Economic Responsibilities of Business, 2012 issued by the Ministry of Corporate Affairs, Government of India under the Section on Business Responsibility Report as prescribed by SEBI.
Among the non-mandatory requirements of Clause 49 of the Listing Agreement, the Company has set up Compensation Committee and has a Whistle Blower Policy in place.
Compliance of Prohibition of Insider Trading Regulations
Your Company has comprehensive guidelines on prohibiting insider trading and the Company has adopted the code of internal procedures and conduct for listed companies notified by the SEBI.
Declaration as required under Clause 49 (I)(D)(ii) of the Listing Agreement of the Stock Exchange
Your Company has laid down a Code of Conduct (“Code”) for all the Board Members and Senior Management Personnel of the Company. The Code is available on the website of the Company at www.mindtree.com. All Directors and Senior Management Personnel of the Company have affirmed compliance with the Company’s Code of Conduct for the financial year ended March 31, 2014. A declaration signed by the Chief Executive Officer (CEO) to this effect is attached as Annexure - A to this Corporate Governance Report.
Board Disclosures - Risk Management
The Company has established effective risk assessment and minimization procedures, which are reviewed by the Board periodically. The procedures comprise an in-house exercise on Risk Management, carried out periodically by the Company, including the functioning of a structure to identify and mitigate various risks faced by the Company from time to time.
The structure also comprises risk identification and assessment by the concerned departments, identification of controls in place/mitigation process in place, updating of risk registers by various departments if required.
These reports are consolidated and presented by the Chief Risk Officer (CRO), to the Board of the Company. Your Company adopts the methods and process to assess and analyze risk holistically, identifies all compliance requirements and proactively develops measures to comply with such requirements.
Your Company by identifying and proactively addressing risks and opportunities, protects and creates value for stakeholders, including owners, employees, customers, regulators and society. A detailed report on Risk Management is provided herewith in this Annual Report.
Information provided to the Board or the relevant Committees
- All matters as stated in Annexure– I A under Clause 49 of the Listing Agreement;
- Annual operating plans and budgets including capital budgets and any updates thereof;
- Quarterly results for the Company and its business segments;
- The information on recruitment and remuneration of senior officers just below the Board level, including appointment or removal ofChief Financial Officer and the Company Secretary;
- Show cause, demand, prosecution notices and penalty notices which are materially important;
- Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems;
- Any material default in financial obligations to and by the Company or substantial non-payment for services rendered by the Company;
- Any issue, which involves possible public or product liability claims of substantial nature, including any judgment or order which mayhave passed strictures on the conduct of the Company or taken an adverse view regarding another enterprise that can have negativeimplications on the Company;
- Details of any joint venture or collaboration agreement and any acquisitions;
- Transactions that involve substantial payment towards goodwill, brand equity or intellectual property;
- Significant development on human resources front;
- Sale of material nature of investments, subsidiaries and assets, which is not in normal course of business;
- Quarterly details of foreign exchange exposures and the steps taken by Management to limit the risks of adverse exchange ratemovement, if material; and
- Non-compliance of any regulatory, statutory or listing requirements and Shareholders' services such as non-payment of dividend, delayin share transfer, etc.
Appointment and Re-appointment of Directors
Appointment of Ms. Apurva Purohit as an Independent Director of your Company for a period of five years with effect from January 1, 2014 till December 31, 2018, not liable to determination by retirement by rotation, appointment of Dr. Albert Hieronimus as an Independent Director till March 31, 2017 by altering the term of his office as an Independent Director, appointment of Mr. Parthasarathy as an Executive Director from January 1, 2014 till December 31, 2018, liable to determination by retirement by rotation, re-appointment of Mr. Krishnakumar Natarajan as Managing Director & CEO from April 1, 2014 till June 30, 2017, be passed. Mr. S.Janakiraman, Executive Director and Mr. V.G. Siddhartha, Non-Executive Director will be retiring by rotation and being eligible, offer themselves for re-appointment before the Shareholders at the ensuing fifteenth AGM for approval. The brief resumes of these Directors are furnished along with the Explanatory Statement to the notice to the fifteenth AGM pursuant to the provisions of Clause 49 of the Listing Agreement. The Board has recommended the same and seeks Shareholders' approval. Mr. Rostow Ravanan has been appointed as an Alternate Director to Mr. N.S.Parthasarathy, effective from January 17, 2014. The other changes in the Board during the year were Mr. Anjan Lahiri resigned as an Executive Director w.e.f. May 6, 2013 and Mr. R. Srinivasan retired as an Independent Director w.e.f. July 19, 2013.
Recognition and Awards
Your Company believes in ethical business conduct, integrity, transparency and commitment to values which in turn enhance and retain stakeholders' trust. The details of various recognition and awards received by the Company are provided in other sections of the Annual Report.
Secretarial Standards and Secretarial Audit Report
The Institute of Company Secretaries of India (ICSI) has issued Secretarial Standards on various important facets of corporate functioning and management. Although these standards are recommendatory in nature, as a measure of good governance, the Company has voluntarily adopted and substantially complied with the ICSI’s Secretarial Standards on meetings of Board, general meetings, dividend, registers and returns, minutes, transmission of shares, passing of resolutions by circulation, affixing of common seal and Boards Report.
As a measure of good Corporate Governance and as recommended by the MCA Corporate Governance Voluntary Guidelines, 2009, your Company has voluntarily got a Secretarial Audit done for the financial year 2013-14. In this regard, the Company has appointed Mr. Shanker Prasad G, Practicing Company Secretary (PCS), to conduct the Secretarial Audit of records and documents of the Company. The Secretarial Audit Report confirms that the Company is in compliance with all the applicable provisions of the Companies Act, 1956 (as re-enacted and all statutory modifications thereto) and Rules under the said Act, Listing Agreements with the Stock Exchanges, Depositories Act, 1996 and all the Guidelines and Regulations prescribed by the Securities and Exchange Board of India (SEBI). The 'Reconciliation of Share Capital Audit' was also undertaken on a quarterly basis and the audit covers the reconciliation of the total admitted capital with NSDL, CDSL and shares held in physical form and also the total issued and listed capital with NSE and BSE.
The audit has also confirmed that the aggregate of the total issued/paid up capital is in agreement with the total number of shares in physical form, shares allotted and advised for demat credit but pending execution and the total number of dematerialized shares held with NSDL and CDSL.
Compliance with Clause 49 of the Listing Agreement
The Auditor’s Certificate obtained from M/s. BSR & Co. LLP, (previously, BSR & Co.,) Chartered Accountants, (Firm Registration No. 101248W) is provided as Annexure-B to this Corporate Governance Report for compliance with Clause 49 of the Listing Agreement.
Governance by the Management
Management Discussion and Analysis
As required by Clause 49 of the Listing Agreement, the Management Discussion and Analysis is provided separately in this Annual Report.
CEO and CFO’s Certification
As required by Clause 49 of the Listing Agreement, the CEO and CFO’s Certification is provided as Annexure-C to this Corporate Governance Report.
As required under Clause 49 (V) of the Listing Agreement, the CEO and CFO’s Certification of the Financial Statements, the Cash Flow Statement and the Internal Control Systems for financial reporting for the financial year ended March 31, 2014, was placed before the Board at all their Meetings held.
Means of Communication
Your Company would like to constantly communicate to its Investors and stakeholders about its operations and financial results. The transcripts of the quarterly earnings calls with analysts have also been published on its website. Your Company had also sent quarterly financial updates to all Investors and Shareholders whose e-mail ids/addresses are registered/made available to us.
General Shareholders’ Information
Fifteenth Annual General Meeting
The fifteenth Annual General Meeting (AGM) of the Company for the financial year 2013-14 is scheduled on Friday, July 18, 2014 at 10.30 a.m. at 'The Chancery Hall', Hotel Atria, #1, Palace Road, Bangalore - 560 001, Karnataka, India.
In compliance with the provisions of Section 108 of the Companies Act, 2013 read with Rule 20 of the Companies (Management and Administration) Rules, 2014 and Clause 35B of the Listing Agreement with the Stock Exchanges (NSE & BSE), the Company has also extended e-voting facility, for its Members to enable them to cast their votes electronically on the proposed resolutions in the Notice of the fifteenth AGM, instead of voting in the AGM. Instructions for e-voting are listed under the segment “Notes” in the Notice to fifteenth AGM.
Those of the Shareholders/Members, who cannot attend the AGM in person, can appoint a proxy to represent them in the AGM, for which the Shareholder/Member needs to fill in a proxy form and send it to the Company, to its Registered Office address, on or before 10.00 a.m. on July 16, 2014.
Financial Calendar: Financial Year from April 1, 2014 to March 31, 2015
Date of Book Closure
The dates of book closure shall be from Friday, July 11, 2014 to Friday, July 18, 2014 (both days inclusive).
Details of Dividend for the Financial Year 2013-14
Your Directors had declared a first interim dividend of Rs. 5/- per share on the equity shares of Rs. 10/- each (par value) on October 16, 2013 which was paid to the Shareholders who were on the Register of Members of the Company as on the record date at the closing hours of October 22, 2013.
Your Directors had also declared a second interim dividend of Rs. 5/- per share on the equity shares of Rs. 10/- each (par value) on January 16, 2014 and were paid to the Shareholders who were on the Register of Members of the Company as on the record date at the closing hours of January 22, 2014.
Your Directors had also declared a third interim dividend of Rs. 5/- per share on the equity shares of Rs. 10/- each (par value) for the year ended March 31, 2014 which shall be payable to the Shareholders who would be on the Register of Members of the Company as on the record date at the closing hours of April 22, 2014.
Your Directors have also recommended for a final dividend and a special dividend for the financial year ended March 31, 2014 which is payable on obtaining the Shareholders’ approval in the fifteenth AGM:
*The Board has recommended a final dividend of 50% (Rs. 5 per equity share of par value Rs. 10/- each) for the financial year ended March 31, 2014 and a special dividend of 50% (Rs. 5 per equity share of par value Rs. 10/- each) for completion of 15 years in business. If the proposed 1:1 bonus equity share issue is approved by the Shareholders prior to the date of the AGM, the final dividend and special dividend amount would be accordingly reduced to 25% (Rs. 2.5 per equity share of Rs. 10/- each).
Listing on Stock Exchanges
Your Company's equity shares are listed on the following Stock Exchanges as on March 31, 2014:
(i) Bombay Stock Exchange Limited (BSE), Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001
(ii) National Stock Exchange of India Limited (NSE) Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai 400 051.
Listing fees for the financial year 2013-14 has been paid within the stipulated time to both NSE and BSE wherein the equity shares of the Company are listed.
NSE - Series: EQ
BSE - Scrip Code: 532819
Corporate Identity Number (CIN)
The Corporate Identity Number (CIN) allotted to the Company by the Ministry of Corporate Affairs, Government of India, is L72200KA1999PLC025564 and the Company’s Registration No. is 08/25564 of 1999. Your Company is registered in the State of Karnataka, India.
International Securities Identification Number (ISIN)
ISIN is an identification number for traded shares. This number needs to be quoted in each transaction relating to the dematerialized equity shares of the Company. Your Company’s ISIN number for its equity shares is INE018I01017.
Market Price Data: High, Low during each month of the Financial Year 2013-14
The Company’s monthly high and low quotations as well as the total turnover at NSE and BSE are given herein;
The equity shares of the Company were listed in the Stock Exchanges for financial year 2013-14. Share price data for each month during the financial year 2013-2014 on NSE are as mentioned below:
Share price data for each month during the financial year 2013-2014 on the Bombay Stock Exchange Limited are as mentioned below:
Performance in comparison to broad-based indices such as NSE Nifty, BSE Sensex, index etc.
Mindtree’s Share Price Movement Compared to CNX Nifty and BSE Sensex
CNX Nifty & Mindtree Share Price
BSE Sensex & Mindtree Share Price
List of Top Ten Shareholders of the Company as on March 31, 2014
Registrar and Share Transfer Agent
All work related to Share Registry, both in physical form and electronic form, is handled by the Company’s Registrar and Share Transfer Agent, Link Intime India Private Limited. The communication address of the Registrar and Share Transfer Agent is given hereunder.
Link Intime India Pvt. Ltd. C-13, Pannalal Silk Mills Compound, LBS Marg, Bhandup (W), Mumbai 400 078, India.
Share Transfer System
We have an Investor Grievances Committee represented by the Board to examine and redress Shareholders' and Investors' complaints. The process and approval of share transfer has been delegated to the Company Secretary and Share Transfer Agent by the Board. The Company Secretary approves the share transfers and reports the same to the Board at every quarterly meeting as may be applicable.
The share transfer system with respect to physical shares consists of activities like, receipt of shares along with transfer deed from transferees, its verification, preparation of Memorandum of Transfers, its approval by the respective Committee and dispatch of duly endorsed share certificates to the respective transferees within the prescribed time as per the Listing Agreement. In line with SEBI’s Circular dated July 5, 2012, share certificates are being issued within 15 days of date of lodgment for transfer, sub-division and consolidation. Adequate care is taken to ensure that no transfers are pending for more than a fortnight. As bulk of the Company's shares are currently traded in dematerialized form, the transfers are processed and approved in the electronic form by NSDL/CDSL through their depository participants. Link Intime India Private Limited is the common Share Transfer Agent for both physical and dematerialised mode.
Share transfer related activities under physical segment like receipt/dispatch of documents, their verification and preparation of Memorandum of Transfers are being carried out by Link Intime India Private Limited alongwith confirmations in respect of the requests for dematerialisation of shares are being sent to the respective depositories i.e. NSDL & CDSL expeditiously.
Details of transaction requests received and processed during the financial year 2013-14
Distribution of Shareholding
Shareholding Pattern as on March 31, 2014 under Clause 35 of the Listing Agreement
Categories of Shareholders as on March 31, 2014
Dematerialization of Shares and Liquidity
The Company's shares are admitted into by both the Depositories i.e., National Securities Depository Limited ('NSDL') and Central Depository Services (India) Limited ('CDSL') by the Company’s Registrar and Share Transfer Agent, Link Intime India Private Limited. 99.65% of the Company's shares are held in electronic/demat form as on March 31, 2014.
As on March 31, 2014, the number of shares held in dematerialized and physical mode are as under:
* As on March 31, 2014, 35,000 equity shares of Rs. 10/- each, were under temporary ISIN.
Shares held in Demat or Electronic Form
For shares transferred in electronic form, after confirmation of sale/purchase transaction from the Broker, Shareholders should approach their respective Depository Participant (DP) with a request to debit or credit the account for the transaction. The DP will immediately arrange to complete the transaction by updating the account. There is no need for separate communication to either Company or Share Transfer Agent to register such share transfers in electronic/demat form. For matters regarding shares held in demat/electronic form and for matters related to dividends, change of address, change of bank mandates, etc., Shareholders should communicate directly with their respective DPs.
Shares held in Physical Form
For matters regarding shares transferred in physical form, share certificates, dividends, change of address, etc., Shareholders should communicate with Link Intime India Private Limited, our Registrar and Share Transfer Agent.
Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date and likely impact on equity
There are no outstanding GDRs / ADRs / Warrants / Convertible Instruments of the Company and hence, the same is not applicable to the Company
Branch Locations of the Company
The branch locations consisting of address and other contact details have been provided separately in this Annual Report and the same is also available at http://www.mindtree.com/contact-us
Address for Correspondence
Shareholders can also send their correspondence to the Company with respect to their shares, dividend, request for annual reports and shareholder grievance. The contact details are provided below:
Mr. Rajesh Srichand Narang
Vice President – Legal and Company Secretary
Mindtree Limited, Global Village, RVCE Post, Mysore Road, Bangalore - 560 059, India. Ph: + 91 80 33955118 | Fax: + 91 80 6706 4100
Analysts can reach our Investor Relations Team for any queries and clarifications on Financial/Investor Relations related matters at the contact details as given below:
Mr. Sushanth Pai
General Manager-Treasury and Investor Relations
Mindtree Limited, Global Village, RVCE Post, Mysore Road, Bangalore - 560 059, India. Ph: + 91 80 33955458 | Fax: + 91 80 6706 4100
Global Village, RVCE Post, Mysore Road, Bangalore 560 059, Karnataka, India. Ph: +91-80-6706 4000 | Fax: +91-80-6706 4100