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Table 1:
Composition of the Board of Directors as on 31st March 2007
Sr. Name of the Directors Category No. of outside No. of outside
No. Directorship Committees
Public Private Member Chairman
Notes:
1. The Committees considered for the purpose are those prescribed under Clause 49 (I) (C) of the Listing Agreement.
2. Foreign companies, bodies corporate, private companies and companies under section 25 of the Companies Act, 1956 are excluded
for the above purpose.
* A proposal for increase in overall slab/limit of commission to Rs. 1 Crore is being put up before the shareholders in the ensuing
Annual General Meeting. The Board shall decide the quantum of commission to be paid to eligible Directors, for the year 2006-07,
after the said approval of shareholders. The same shall, then, be disclosed in the Corporate Governance Report of 2007-08.
** Subject to approval of shareholders in ensuing Annual General Meeting.
The performance criteria defined by the Board is as under: ensuing Annual General Meeting with effect from 1st April 2006.
The commission for the year 2006-07 shall, then, be decided and
a) Actual achievement in terms of growth in sales, profit etc. as
paid to the non executive Directors. The payment of commission
compared to the previous year;
is based on certain criteria such as attendance at the Board/ Board
b) Actual achievement of growth as compared to the budget level committee meetings, time devoted, current trends prevailing
approved at the beginning of the year; and in the industry etc.
c) Growth of market share of Company’s products as compared
to key competitors in the Industry. Committees of the Board
No employee of the Company is related to any Director of the 1. Audit Committee
Company.
As on 31st March 2007, the Audit Committee consists of
Non-Executive Directors’ remuneration four non-executive members, of whom three are
independent. Mr. Amal Ganguli, the Chairman of the Audit
Section 309 of the Companies Act, 1956 provides that a Director Committee has expertise in accounting and financial
who is neither in the whole time employment of the Company management. The Director responsible for the finance
nor a Managing Director may be paid remuneration by way of function, the head of internal audit and the representative of
commission, if the Company by special resolution authorizes such the Auditors and Cost Auditors are permanent invitees to
payment. Members of the Company at the Annual General Meeting the Audit Committee. Mr. Anil Rustgi, Company Secretary
held on 29th July 2004, approved payment of remuneration by & Chief Legal Officer acts as the Secretary of the committee.
way of commission to independent Directors at a sum not The Audit Committee met six times in the year under review
exceeding 1% of the net profits of the Company subject to a – on 26th April 2006, 27th July 2006, 1st September 2006, 26th
ceiling of Rs. 40 Lac per annum. It is proposed to enhance the October 2006, 22nd January 2007 and 22nd February 2007.
said limit to Rs. 1 Crore after the approval of shareholders in the Table 4 gives the attendance record.
Name of member/ Status Meetings Attended 8. Reviewing the findings of any internal investigations by the
Director in 2006-07 Internal Auditors into matters where there is suspected fraud
(Total Meetings or irregularity or a failure of internal control systems of a
held: 6) material nature and reporting the matter to the Board.
Mr. Amal Ganguli1 Chairman 6
Mr. Kalyan Bose2 Chariman Nil 9. Discussion with Statutory Auditors before the audit
Mr. Davinder Singh Brar3 Member 4 commences, about the nature and scope of audit as well as
Mr. Shinzo Nakanishi Member 3 post audit discussion to ascertain any area of concern.
Mrs. Pallavi Shroff Member 4
10. Looking into the reasons for substantial defaults, if any, in the
Notes: payment to the depositors, debenture holders, shareholders
1. Appointed with effect from 13th April 2006. (in case of non-payment of declared dividends) and creditors.
2. Ceased to be member with effect from 13th April 2006. 11. Reviewing the functioning of the Whistle Blower mechanism,
th in case the same is existing.
3. Appointed with effect from 27 July 2006.
The role of the Audit Committee includes the following: 12. Carrying out any other function as is mentioned in the 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 13. Reviewing any other matter which may be specified as role of
financial statement is correct, sufficient and credible. the Audit Committee under the amendments, if any, from
time to time, to the Listing Agreement, Companies Act and
2. Recommending the appointment and removal of Statutory other statutes.
Auditors, fixation of audit fee and also approval for payment
for any other services. II. Shareholders’ / Investors’ Grievance Committee
The Shareholders’ / Investors’ Grievance Committee was set up
3. Reviewing, with the management, the annual financial by the Board of Directors on 7th July 2003. The Committee consists
statements before submission to the Board for approval, with of two whole-time executive Directors and three non-executive
particular reference to: Directors, one of whom is independent. The Company Secretary
a) Matters required to be included in the Directors’ & Chief Legal Officer acts as the Secretary to the Committee and
Responsibility Statement to be included in the Board’s is the Compliance Officer.
report in terms of Clause (2AA) of section 217 of the
Companies Act, 1956. During the financial year ended 31st March 2007, the Shareholders’/
b) Changes, if any, in accounting policies and practices and Investors’ Grievance Committee met twice on 26th October 2006
reasons for the same. and 20th January 2007. Table 5 gives the attendance record.
c) Major accounting entries involving estimates based on the
exercise of judgment by the management. Table 5:
d) Significant adjustments made in the financial statements Attendance record of Shareholders’ / Investors’ Grievance
arising out of audit findings. Committee members
e) Compliance with listing and other legal requirements Name of Director Status Meetings attended
relating to financial statements. in 2006–07
f) Disclosure of any related party transactions. (Total Meetings held: 2)
g) Qualifications in the draft audit report. Mr. Shinzo Nakanishi Chairman 2
Mr. Jagdish Khattar Member 2
4. Reviewing, with the management, the quarterly financial
Mr. Hirofumi Nagao Member 2
statements before submission to the Board for approval.
Mr. R. C. Bhargava Member 2
Mr. Davinder Singh Brar1 Member 2
5. Reviewing with the management, performance of Statutory
Mr. Kumar Manglam Birla2 Member N.A.
and Internal Auditors, the adequacy of internal control system.
1. Appointed with effect from 27th July 2006.
6. Reviewing the adequacy of internal audit function including 2. Ceased to be member with effect from 27th July 2006.
the structure of the internal audit department, staffing and The Committee oversees redressal of shareholder and investor
seniority of the official heading the department, reporting grievances, transfer of shares, non - receipt of balance sheet, non
structure coverage and frequency of internal audit. - receipt of declared dividends and related matters. The committee
also oversees the performance of the Registrar and Transfer subsidiaries or relatives etc. that had potential conflict with the
Agents, recommends measures for overall improvement in the interest of the Company. All disclosures related to financial and
quality of investors’ services, approves issue of duplicate/split/ commercial transactions where Directors may have a potential
consolidation of share certificates and reviews all matters interest are provided to the Board, and the interested Directors
connected with the securities transfers. do not participate in the discussion nor do they vote on such
matters. However, none of these transactions have potential
In order to provide efficient and timely services to investors, the conflict with the interest of the Company at large.
Board has delegated the power of approval of issue of duplicate/
split/consolidation of share certificate, transfer of shares, Related Party Transactions
transmission of shares, dematerialisation/rematerialisation of None of the transactions with any of the related parties were in
shares not exceeding 2000 equity shares of Rs. 5 each per conflict with the interest of the Company. Details of transactions
transaction to the Managing Director, Sr. Joint Managing Director, between the Company and its subsidiaries, fellow subsidiaries,
Joint Managing Director and Company Secretary & Chief Legal joint ventures, associates during 2006–07 are given in Note no.
Officer severally. 26 in Schedule 23 to the annual accounts.
During the year, 915 letters/complaints were received and all All related party transactions are negotiated on arm’s length basis
were responded to/resolved. No transfer of shares was pending and are only intended to further the interest of the Company.
as on 31st March 2007.
Code of Conduct for the Board of Directors and Senior
III. Committee for Merger Management Personnel
Your Company has laid down a Code of Conduct for all the Board
During the year, the Board constituted a Committee of Directors
members and identified senior management personnel of the
comprising Mr. J. Khattar, Mr. R. C. Bhargava, Mr. H. Nagao,
Company. The Code of Conduct has been posted on the website
Mr. A. Ganguli and Mrs. P. Shroff as members with following terms
of the Company. All the Board members and the senior
of reference with regard to the merger of Maruti Suzuki
management personnel have affirmed their compliance with the
Automobiles India Limited (MSAIL) with the Company:
said Code of Conduct for the financial year ended 31st March
2007. A declaration to this effect signed by Mr. Jagdish Khattar,
i. to appoint valuer(s), legal counsel and other consultants
Managing Director & CEO of the Company forms part of this
(if any);
report as Annexure - A.
ii. to recommend the purchase price of an MSAIL equity share
from Suzuki Motor Corporation;
CEO/ CFO Certification
iii. to review and recommend the scheme of merger/
amalgamation. Your Company has introduced for the first time a Control Self
Assessment mechanism to evaluate the effectiveness of internal
The Committee met two times. Table 6 gives the attendance controls over financial reporting. Key internal controls over
record of its members. financial reporting were identified and put to self assessment by
control owners in the form of Self Assessment Questionnaires
Table 6: through a web based online tool called “Controls Manager”. The
Attendance record of members of Committee for Merger self assessment submitted by control owners were further
Name of Director Status Meetings attended reviewed and approved by their superiors.
in 2006–07
(Total Meetings held: 2) Enabling controls self-assessments through the Controls Manager
Mr. R.C.Bhargava Chairman 2 Key Steps Process for reporting
Mr. Jagdish Khattar Member 2 Risks & Controls Map
P)
Detect(D) IT***
Frequency:
Prevent( Manual Daily,Weekl
(M) or y, Monthly,
Quarterly
Annually
Key
Contr
ol:
Y/N
Control
performed
by
Control
Document
Sub Process
Activity
Pages: 18
Monitoring Preliminary
Rating****
Version: Final
P)
Frequency:
Prevent( Manual Daily,Weekl
(M) or y, Monthly,
Detect(D) IT*** Quarterly
Annually
Key
Contr
ol:
Y/N
Control
performed
by
Control
Document
Sub Process
Pages: 18
Monitoring Preliminary
Version: Final
Notes reference:
Frequency:
Prevent( Manual Daily,Weekl
P) (M) or y, Monthly,
Detect(D) IT*** Quarterly
Key
Contr
ol:
Y/N
Control
performed
by
Control
Document
Sub Process
Pages: 18
Monitoring Preliminary
Version: Final
Control
Identify
A Allowances/Reserv A Allowances/Reserv Annually
A1 Provision for A1 Provision for
A Allowances/Reserv
Questionnaires
techniques used to based on the last policy has not been techniques used to based on the last policy has not been
assumption or obsolescence is Controller methodology and
determine excess & known movement of formally documented determine excess & known movement of formally documented
obsolete inventory stock and is assessed obsolete inventory stock and is assessed techniques used to based on the last policy has not been
determine excess & known movement of formally documented
reserves are by the logistics team Additionally, it seems reserves are by the logistics team Additionally, it seems
Controls
inappropriate or not that the current inappropriate or not that the current obsolete inventory stock and is assessed
reserves are by the logistics team Additionally, it seems
identified. Note: From Q1 2004, accrual is being made identified. Note: From Q1 2004, accrual is being made
inappropriate or not that the current
the logistics team has for parts and the logistics team has for parts and
equipment to be equipment to be identified. Note: From Q1 2004, accrual is being made
upgraded the SAP upgraded the SAP
the logistics team has for parts and
reports to provide scrapped/cannabilised reports to provide scrapped/cannabilised
. It seems that an . It seems that an upgraded the SAP equipment to be
information about information about
reports to provide scrapped/cannabilised
average consumption assessment of NRV average consumption assessment of NRV
information about . It seems that an
of stock of spares and value for old of stock of spares and value for old
equipment & spares equipment & spares average consumption assessment of NRV
equipment, thereby equipment, thereby
of stock of spares and value for old
enabling a more and End of Life enabling a more and End of Life
equipment, thereby equipment & spares
informed judgement products has not been informed judgement products has not been
enabling a more and End of Life
made made
informed judgement products has not been
made
This Annual Report has a detailed chapter on Management Seek and report
inputs from
Control owners
Legal Compliance Reporting Pursuant to Clause 51 of the Listing Agreement, related to the
As required under Clause 49 (C ) (iii) of the Listing Agreement, Electronic Data Information Filing and Retrieval (EDIFAR), the
the Board periodically reviews compliance reports of all laws Company has filed the requisite information, statements and
applicable to the Company, prepared by the Company as well as reports on-line on www.sebiedifar.nic.in
steps taken by the Company to rectify instances of non-
compliances. General Body Meetings
Table 7 gives the details of the last three AGMs of the Company.
Code for Prevention of Insider Trading Practices The Company had passed certain special resolutions in the
The Company has instituted a comprehensive Code of Conduct previous three AGMs. No special resolutions were required to
for its management staff and relevant business associates in be put through postal ballot last year. No special resolutions on
compliance with the SEBI regulation on prevention of insider
trading.
Table 7:
Last three Annual General Meetings of the Company.
Details of Non–Compliance
No penalties or strictures were imposed on the Company by Financial Location Date Time
year
stock exchanges or SEBI or any statutory authority on any matter
related to capital market since the listing of the Company’s shares 2003-04 Airforce Auditorium, 27.07.2004 10.00 A.M.
on 9th July, 2003. Subroto Park, New Delhi
2004-05 Airforce Auditorium, 9.09.2005 10:00 A.M.
Subsidiary Companies Information Subroto Park, New Delhi
2005-06 Airforce Auditorium, 5.09.2006 10:00 A.M.
Considering the requirement of the Clause 49 of the Listing Subroto Park, New Delhi
Book Closure
The period of book closure is from 24 th August 2007 to
6th September 2007 (both days inclusive).
Dividend payment
A dividend payment of Rs. 4.5 per equity share of Rs. 5 each will
be paid on or after 6th September 2007, subject to the approval of
the members in the Annual General Meeting.
Table 9:
Monthly high & low of quotation of the Company’s equity share
Bombay Stock Exchange National Stock Exchange
Month High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)
April 2006 939.65 814.00 942.00 810.50
May 2006 974.00 698.60 974.95 655.00
June 2006 803.00 670.00 819.40 668.10
July 2006 821.40 691.00 831.20 691.00
August 2006 867.50 762.00 869.00 759.90
September 2006 986.60 852.00 987.80 811.00
October 2006 991.40 930.00 990.70 911.25
November 2006 989.00 865.00 988.90 865.10
December 2006 973.00 859.00 973.75 860.00
January 2007 985.00 875.55 984.90 872.20
February 2007 970.00 830.00 972.85 825.50
March 2007 870.00 755.00 870.40 755.05
Dematerialisation of Shares and Liquidity by the Company at its expense, for use by its non-executive
As on 31 March 2007, 45.79% of the Company’s total paid up chairman.
capital representing 132,284,253 shares was held in dematerialised
form and the balance 54.21% representing 156,625,807 shares Plant Location
were held in physical form. The equity shares of the Company The Company has four plants, three located in Palam Gurgaon
are listed under ‘specified category’ in BSE and are part of Nifty in Road, Gurgaon – 122 015, Haryana and one located at Manesar
NSE. Industrial Town, Gurgaon.
ANNEXURE-A
Declaration of the Managing Director & CEO
This is to certify that the Company has laid down Code of Conduct for all the Board members and senior management personnel of
the Company and the copies of the same are uploaded on the website of the Company – www.marutiudyog.com
Further, certified that the members of the Board of Directors and senior management personnel have affirmed the compliance with
the Code applicable to them during the year ended March 31, 2007.
1. We have reviewed the implementation of Corporate Governance procedures by Maruti Udyog Limited (the Company) during
the year ended March 31, 2007, with the relevant records and documents maintained by the Company, furnished to us for our
review and the report on Corporate Governance as approved by the Board of Directors.
2. 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.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or
effectiveness with which the management has conducted the affairs of the Company.
3. On the basis of review and according to the information and explanations given to us, the conditions of Corporate Governance
as stipulated in Clause 49 of the Listing Agreement(s) with the Stock Exchange(s) have been complied with in all material respect
by the Company.
Anupam Dhawan
Partner
Membership No: F084451
For and on behalf of
Place: New Delhi Price Waterhouse
th
Date: 26 July 2007 Chartered Accountants