Documente Academic
Documente Profesional
Documente Cultură
Proxy Advisory
Corporate Governance Research
Corporate Governance Scores
Stakeholders Education
SES RECOMMENDATIONS
TABLE 1 - AGENDA ITEMS AND RECOMMENDATIONS
S. No.
1
Resolution
Adoption of Accounts
Type
O
Recommendation
FOR
2
3
Declaration of dividend
Re-appointment of Mr. K.M. Sheth as director
O
O
FOR
FOR
4
5
6
O
O
O
FOR
FOR
FOR
7
8
O
S
9
10
11
12
O
S
O
S
FOR
FOR
FOR
FOR
FOR
FOR
Focus
KEY ISSUES
Adoption of Accounts: Shareholders may note that the Company is seeking shareholders approval for adoption of
standalone accounts and consolidated accounts in the same resolution. SES is of the opinion that these are two different
items and the shareholders should be given the choice/ right to consider these items independent of each other,
separately. SES does not consider bunching of resolution as a good governance practice.
Payment of commission to Non-Wholetime Directors: The resolution seeks approval of shareholders for perpetuity,
providing unfettered power to the Board to determine the commission to each NED. (View Details)
2 | PAGE
COMPANY BACKGROUND
TABLE 2 - MARKET DATA (As on 30th July, 2015)
Price (`)
344.10
M Cap (` Cr.)
5,188.24
Shares*
15,07,77,065
PE Ratio"
(In ` Crores)
2015
Revenue
2014
2013
16.35
S C I Ltd
1,734.08
1,492.58
1,735.19
4,310.97
392.16
278.61
287.67
298.60
276.65
9.52
2,012.69
1,780.25
2,033.79
4,587.62
401.68
PBDT
656.73
568.69
520.59
1,046.29
-1,086.75
Net Profit
317.30
204.68
146.26
200.93
-897.70
EPS (`)
21.04
13.50
9.60
4.31
-172.91
11.00
9.00
7.50
##
##
60.77
77.49
90.80
##
##
OPM (%)
48.92
52.57
42.05
28.43
-71.89
NPM (%)
18.30
13.71
8.43
4.66
Other Income
Total Income
-228.91
30th
July, 2015
6.98%
9.83%
3.65%
9.53%
3.18%
3.07%
2.31%
1.41%
1.37%
2.3%
1.99%
Sachin Mulji
0.77%
1.68%
0.77%
DISCUSSION
27.74
28.56
29.30
31.62
18.98
15.44
16.72
16.03
22.87
25.50
24.12
22.49
30.41
30.50
29.86
29.86
2015
2014
2013
Others
DII
FII
Graph 1: Yearly Shareholding Pattern
2012
Promoter
3 | PAGE
BOARD OF DIRECTORS
TABLE 7 - BOARD PROFILE
Classification
Company
SES
Director
Expertise/Specialization
Tenure
(Year)
[2]
[1]
Directorship
Committee
Membership
Pay(`
Lakh)
K. M. Sheth
NEDP(R)(C)
NEDP(R)(C)
General Management
45
1(1)
232.06
Ravi K. Sheth
NEDP(R)
NEDP(R)
General Management
3(4)
1(0)
**0.00
Cyrus Guzder
ID
NID
General Management
12
4(18)
3(2)
18.70
ID
ID
2(2)
2(1)
2.76
Vineet Nayyar
ID
NID
Administration
11
5(11)
1(0)
12.15
ID
ID
Legal
10(15)
7(2)
14.90
Farrokh Kavarana
ID
ID
Accountancy
2(4)
2(0)
8.39
Rita Bhagwati
ID(W)
ID(W)
Banking
2(2)
1(0)
5.01
Bharat K. Sheth
MDP
MDP
Strategic Management
26
3(3)
1(0)
802.34
Tapas Icot
ED(R)
ED(R)
Finance
1(1)
192.46
G. Shivakumar
ED(R)
ED(R)
Finance
1(2)
1(0)
206.60
Reference: ED - Executive Director, NED- Non-Executive Director, ID - Independent Director, NID- Non-Independent Director, P- Promoter, W - Woman
Director, R- Liable to retire by Rotation, U- Up for Re-appointment, N- New Appointment, MD- Managing Director, C- Chairman, CMD- Chairman and
Managing Director
[1] Directorships show Directorships in Public Companies (Total Directorships which include Directorships in both Public and Private Companies)
[2] Committee memberships include committee chairmanships
Note: Directorships, committee membership and committee chairmanship includes such positions in Great Eastern Shipping Company Limited
Items deserving attention due to contentious or governance issues
Mr. K. M. Sheth, Whole Time Director and Executive Chairman of the Board of Directors relinquished the office of the Whole Time
Director and accordingly ceased to be the WTD of the Company w.e.f. September 01, 2014. Mr. Sheth has been associated with the
Company since 1952 in various capacities as MD, Deputy Chairman and Executive Chairman and has contributed to the growth and
progress of the Company for more than 6 decades. Mr. K. M. Sheth is now serving as the Non-Executive Chairman of the Company.
**Considering the time and efforts spent by Mr. Ravi K. Sheth for the business of Greatship (India) Limited (GIL) and its subsidiaries,
entire remuneration to Mr. Ravi K. Sheth is paid by GIL.
80.00%
63.64%
54.55%
60.00%
6
4
44.45%
20.00%
1
Retiring
40.00%
36.36%
Non Retiring
0.00%
ID
SES
Company
ID
NID
Graph 3: Board Composition
4 | PAGE
#
4
3
4
3
3
Chairman's Classification
Company
SES
ID
NID
ID
NID
ID
NID
ID
NID
ND
ND
Overall Independence
Company
SES
100%
75%
33%
0%
100%
75%
67%
33%
0%
0%
Number of
Meetings
5
2
5
ND
ND
Reference: ED - Executive Director, NED- Non-Executive Director, ID - Independent Director, NID- Non-Independent Director, P- Promoter, C- Chairman, #Number of Members, ND- Not Disclosed
Response
36%
2
0
No
No
0
Yes
Yes
3
Yes
Score
0
7
5
0
0
10
10
0
8
10
Maximum
10
10
5
10
10
10
10
10
15
10
50
100
5 | PAGE
REMUNERATION ANALYSIS
TABLE 10 - EXECUTIVE DIRECTORS' REMUNERATION
In ` Crore
Bharat K. Sheth
G. Shivakumar
Tapas Icot
P
NP
NP
2015
Fixed Pay
Total Pay
3.52
8.02
1.74
2.07
1.40
1.92
2014
2013
Fixed Pay
Total Pay
Fixed Pay
Total Pay
2.83
6.16
3.01
5.89
Not Applicable
Not Applicable
Ratio
242:1
62:1
58:1
Note: Fixed pay includes basic pay, perquisites & allowances. P- Promoter, NP- Non- Promoter, Ratio- Ratio of ED's remuneration to Median
Remuneration of Employees, ND- Not Disclosed
The Ratio of remuneration of Promoter Executive Director to Non-Promoter Executive Directors is almost 4. While this
indicates skewed remuneration structure, SES is not raising any concern as Non-Promoter Executive Director is on the
Board for last one year as compared to 26 years in case of Promoter Executive Director.
100
126.48
92.11
89.86
5.78
5.60
50
10
8
84.01
5.89
138.67
8.02
6.16
6
4
2
0
2011
2012
2013
2014
2015
MD (RHS)
Indexed TSR (LHS)
Graph 4: Executive Compensation vs. Total Shareholders Return
10.00
8.02
8.00
In Crores
Indexed TSR
150
Director Remuneration
6.00
4.00
2.00
2.00
1.16
0.10
0.00
Executive
Non-Executive
Promoter
Non-Promoter
Graph 5: Average Director Remuneration
Note: Indexed TSR (Total Shareholders Return) represents the value of ` 100 invested in the Company at beginning of a 5-year period starting 1st April,
2011. One period return is calculated as (Final Price - Initial Price + Dividend) / Initial Price.
The remuneration paid to managing director of the Company is reasonable given the size and performance of the
Company. It can be inferred from the graph that the growth in total shareholders' return is almost aligned with the
growth in remuneration of Mr. Bharat K Sheth (Managing Director) as CAGR of his remuneration is 8.53% whereas CAGR TSR is 10.76%.
6 | PAGE
DISCLOSURES
DISCLOSURE REQUIRED IN DIRECTOR'S REPORT
The Companies Act, 2013 requires the listed companies to make certain disclosures in Board's Report. The table below
shows the status of compliance of such some important requirements, by the Company
Content of Corporate Social Responsibility Policy in
prescribed format (if applicable)
Extract of the Annual Return as per Form No. MGT 9
Company's policy on appointment of directors and
criteria for determining qualifications, positive
attributes, directors independence
Policy on remuneration of Directors, KMP and other
employees
7 | PAGE
RESOLUTION ANALYSIS
RESOLUTION 1: ADOPTION OF ACCOUNTS
Adoption of audited standalone and consolidated financial statements for the financial year ended March 31, 2015, the
reports of the Board of Directors and Auditors thereon
SES RATIONALE
Unqualified Accounts, Compliant with Accounting Standards
SES RECOMMENDATION
No concern has been identified. The Auditors have not made any qualifications in their Report. SES recommends that
shareholders vote FOR the resolution.
SES ANALYSIS
Note: Detailed analysis of the accounts is not within the scope of SES activities. SES accepts the Report of the Directors and the Auditors
to be true and fair representation of the companys financial position. The analysis below is aimed at enabling shareholders engage in
discussions with the Board/ Management during the AGM.
AUDIT QUALIFICATIONS
The Auditors have not made any qualifications in their Report.
AUDITORS COMMENTS ON STANDALONE ACCOUNTS
The Auditors have stated that financial statements give a true and fair view in conformity with the accounting principles
generally accepted in India, of the state of affairs of the Company as at 31 st March, 2015, and its profit and its cash flows
for the year ended on that date.
AUDITORS COMMENTS ON CONSOLIDATED ACCOUNTS
The Auditors have stated that consolidated financial statements give a true and fair view in conformity with the
accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2015, and its
profit and its cash flows for the year ended on that date.
ACCOUNTING POLICIES
The financial statements have been prepared and presented under the historical cost convention on an accrual basis of
accounting, and in accordance with the Generally Accepted Accounting Principles (GAAP) in India. The accounting policies
adopted in the preparation of the financial statements are consistent with those followed in the previous year.
FINANCIAL INDICATORS
FY 14/15
FY 13/14
Shift
Companys Discussion
Debtors Turnover
12.95
34.87
-62.87%
Inventory Turnover
32.82
20.90
57.08%
4.33
3.63
19.12%
Current Ratio
1.74
1.73
0.63%
0.52
0.58
-10.73%
8 | PAGE
FY 14/15
FY 13/14
Shift
Companys Discussion
48.92
52.57
-6.94%
18.30
13.71
33.43%
30.57
28.77
6.25%
SES is of the opinion that board should take note of structural shift (positive and negative both) in various financial parameters which
have a bearing on companys future performance and positioning in market place and disclose an analysis of the same to shareholders.
SES believes that 25% change either way should be the threshold for triggering analysis and disclosure requirements.
CONTINGENT LIABILITIES
(All figures in ` Crore)
FY 14/15
FY 13/14
122.07
219.49
4,930.76
4,806.32
2.47%
4.57%
Major portion of contingent liabilities is constituted by Guarantees given by banks counter guaranteed by the Company.
RELATED PARTY TRANSACTIONS
FY 14/15
FY 13/14
Receivables
0.15
0.36
-58.33%
Payables
1.39
0.64
117.18%
Outstanding (` Crore)
Comments
Shift
FY
14/15
FY
13/14
FY
12/13
FY
14/15
FY
13/14
FY
12/13
Consolidated Accounts
FY
14/15
FY
13/14
FY
12/13
1,734
1,493
1,735
1,704
1,599
1,272
3,438
3,092
3,007
317
205
146
431
369
392
748
574
538
Total Assets
9,336
9,390
9,745
6,200
4,987
4,704
15,535
14,377
14,449
Net Worth
4,931
4,806
5,001
2,500
1,967
1,341
7,431
6,773
6,342
18.30
13.71
8.43
25.29
23.09
30.79
21.76
18.56
17.89
ROA (%)
3.40
2.18
1.50
6.95
7.41
8.32
4.82
3.99
3.72
RONW (%)
6.44
4.26
2.92
17.24
18.78
29.20
10.07
8.47
8.48
Net Profit
Profitability and Return Ratios of subsidiaries are better compared to operations at Standalone accounts.
9 | PAGE
25
20
90.80%
13.50
15
10
77.49%
7.50
9.60
21.04
60.77%
11.00
9.00
100%
80%
60%
40%
20%
0
2013
Dividend (LHS)
0%
2014
2015
EPS (LHS)
Payout (RHS)
10 | PAGE
K. M. Sheth
None
B.Com
Served as the Executive Chairman for more than 20 years of Great
Eastern Shipping Co Ltd
None
Yes
Yes
FOR
Mr. K. M. Sheth
1
0
0
0
DIRECTORS PERFORMANCE
Attendance record
Last 3 AGMs
Board meetings held last year
Board meetings in last 3 years (avg.)
Mr. K. M. Sheth
3/3
100%
100%
No concern has been identified with respect to profile, time commitments and performance of Mr. K M Sheth.
11 | PAGE
AUDITORS' INDEPENDENCE
Auditors
M/s. Kalyaniwalla & Mistry
17 years
Audit Partners
Daraius Z. Fraser
6 years
Daraius Z. Fraser is associated with 6 years. SES is of the opinion that the audit partner should be rotated on a regular
basis. As per Section 139(3) of the Companies Act, 2013 shareholders may resolve to provide that the auditing partner
and his terms shall be rotated at regular intervals.
Section 139(3) Subject to the provisions of this Act, members of a company may resolve to provide that
(a) in the audit firm appointed by it, the auditing partner and his team shall be rotated at such intervals as may be
resolved by members; or
(b) the audit shall be conducted by more than one auditor
TERM OF APPOINTMENT
The provisions of the Act are effective from 1st April, 2014. Section 139 of the Companies Act, 2013 and the Rules made
thereunder, provide for the appointment and rotation of auditors. As per this section, a company can appoint a firm as
auditors for maximum two terms of five consecutive years each. An audit firm which has completed its term of 10
consecutive years shall not be eligible for re-appointment as auditors in the same company for 5 years from the
completion of such term. For the purpose of calculating period of 10 consecutive years, the period for which the auditor
firm has held office prior to the commencement of the Act (i.e. 1st April, 2014), shall be taken into consideration.
However, a transition period of 3 years from the commencement of the Act has been prescribed to comply with the
provisions of rotation of auditors.
12 | PAGE
The current Auditors, M/s. Kalyaniwalla & Mistry were appointed for a term of three years in the AGM held last year on
25th September, 2014 subject to ratification by the shareholders every year. SES is not raising any concern as the
Auditors were appointed by the shareholders.
AUDITORS' REMUNERATION
Auditors' Remuneration
0%
FY14/15
0%
43%
34%
66% 57%
FY13/14
Remuneration components
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
0.75
0.62
0.62
0.46
0.38
0.00
FY 12/13
Audit
Audit-Related
Non Audit
0.46
Audit Fee
0.00
FY 13/14
Audit Related Fee
0.00
FY 14/15
Non Audit Fee
13 | PAGE
Yes
Yes
Yes
Yes
Yes
DIRECTORS PROFILE
Criteria
Current full-time position
Rita Bhagwati
None
Farrokh Kavarana
None
MA in Economics, MBA
Audit (Member)
Audit (Member)
FOR
FOR
Education
Past Experience
Shankar Acharya
None
B.A. (Hons.), Ph.D.
(Economics)
Years of experience in
various fields of
economics and finance
Nomination &
Remuneration (Member)
FOR
DIRECTORS INDEPENDENCE
Criteria
Current tenure/association
Directorships at group companies
Relationships with the Company
Nominee director
Shareholding / ESOPs
Remuneration (` Lakhs)
SES Classification
Rita Bhagwati
9 months
None
None
No
Nil
5.01
Independent
Farrokh Kavarana
9 months
None
None
No
3,153 equity shares
8.39
Independent
Shankar Acharya
6 months
None
None
No
Nil
2.76
Independent
14 | PAGE
Rita Bhagwati
2(2)
1
0
0
Farrokh Kavarana
2(4)
2
0
0
Shankar Acharya
2(2)
2
1
0
No concern has been identified with respect to the profile and time commitments of the directors.
15 | PAGE
SR Stakeholders Relationship Committee, CSR Corporate Social Responsibility Committee, RM Risk Management Committee, M
Member
FY 14/15
Executive Director
Fixed Pay
Bharat K. Sheth
3.52
FY 13/14
Total Pay
Fixed Pay
8.02
FY 12/13
Total Pay
2.83
Fixed Pay
6.16
Total Pay
3.01
5.89
Bharat K Sheth
Company
GE Shipping Co
Ltd
Promoter
Yes
A K Gupta
Shipping
Corporation of
India
No
Remuneration
(` Cr) (A)
8.02
0.27
Net Profits
(` Cr) (B)
317.30
-274.66
A/B*100
2.52%
NA
10
9
8
7
6
5
4
3
2
1
0
ED Remuneration (` Crore)
Director
200
126.48
92.11
89.86
138.67
84.01
150
100
50
-19.82
-32.67
-63.78 -63.04
-48.28
0
-50
-100
MD
Indexed TSR
Indexed Net Profit
Graph 8: Executive compensation vs. Total shareholders return
16 | PAGE
DIRECTORS PERFORMANCE
Attendance record
Last 3 AGMs
Board meetings held last year
Board meetings in last 3 years (avg.)
Stakeholders Relationship Committee meetings held last year
REMUNERATION PACKAGE
Component
Basic Pay
Perquisites/
Allowances
Proposed Remuneration
Proposed salary: ` 330 lakhs p.a. to ` 485 lakhs p.a.
Comments
-
Variable Pay
Notice Period/
Severance Pay
Not Disclosed
Minimum
Remuneration
Shareholders should note that the Company has disclosed that in case of inadequate profits, the Company will pay the
entire fixed remuneration to the director subject to approval of central government if required.
17 | PAGE
Mr. G. Shivakumar
Whole-time director at Great Eastern Shipping Company Limited
B.Com, Post Graduate in Management from IIM Ahmedabad
Yes
Joined Great Eastern Shipping Co. Ltd as a management trainee in 1990 and
associated with the Company since then
Stakeholders Relationship (Member)
FOR
Mr. G. Shivakumar
1(2)
1
0
1
REMUNERATION PACKAGE
Component
Basic Pay
Perquisites/
Allowances
Proposed Remuneration
Proposed salary: ` 120 lakhs p.a. to ` 195 lakhs p.a.
Comments
-
Variable Pay
Notice Period/
Severance Pay
18 | PAGE
1.16
0.10
Promoter NED
Independent
Directors
0.00
Other NEDs
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
63.10
50.00
43.25
50.45
FY12/13
FY 13/14
36.25
FY10/11
FY11/12
FY 14/15
Mr. K. M. Sheth, Whole Time Director and Executive Chairman of the Board of Directors relinquished the office of the
Whole Time Director and accordingly ceased to be the WTD of the Company w.e.f. September 01, 2014. Mr. K. M. Sheth
is now serving as the Non-Executive Chairman of the Company. Promoter NED average commission in the graph is more
because of the remuneration of Mr. K M Sheth.
The Company has proposed the resolution in supersession of the earlier resolution passed at the AGM held on 29th July,
2010 for payment of commission to non-executive directors a sum not exceeding 1% of the net profit of the Company for
2012 | Stakeholders Empowerment Services | All Rights Reserved
Report Release Date:
19 | PAGE
a period of 5 years from the financial year 2010-11. By superseding the earlier resolution passed at the AGM held in 2010,
the Company is seeking fresh approval of shareholders for payment to non-executive directors, in accordance with
Section 197 of the Companies Act, 2013, in order to continue the payment of commission to NEDs for each year,
commencing from the financial year 2015-2016.
SES VIEW
Shareholders may note that the proposed resolution seeks approval of shareholders for payment of commission to NEDs
for perpetuity, without any requirement for further approval of the shareholders. SES believes that as owners of the
Company, shareholders have full right to approve or disapprove payment of remuneration/ commission to directors of
the Company. Such resolutions with perpetual approval provide unfettered power to the Board of Directors, even if the
Companys performance changes in future in any manner. Therefore, SES believes that as a good governance practice,
the Company must take such approval of the shareholders on yearly basis. However, since the Company has disclosed the
objective criteria for determining the quantum of commission payable to individual NEDs and it has been fair in
remunerating its directors in the previous years, SES is not raising any concern.
20 | PAGE
21 | PAGE
DISCLAIMERS
Sources
Company Information
Only publicly available data has been used while making the report. Our data
sources include: BSE, NSE, SEBI, Capitaline, Moneycontrol, Businessweek, Reuters,
Annual Reports, IPO Documents and Company Website.
Analyst Certification
The analysts involved in development of this report certify that no part of any of
the research analysts compensation was, is, or will be directly or indirectly
related to the specific recommendations or views expressed by the research
analyst(s) in this report.
CAUTIONARY STATEMENT
The recommendations made by SES are based on publicly available information
and conform to SES's stated Proxy-Advisory Guidelines. Further, SES analysis is
recommendatory in nature. SES understands the different investment needs of
our clients. Therefore, SES expects that the clients will evaluate the effect of their
vote on their investments independently and diligently and will vote accordingly.
Subscribers may also carry out an impact analysis of their votes and keep the
same as an addendum for their records. In our opinion, Institutional investors are
positioned significantly differently from other shareholders due to their ability to
engage the board and the management to bring out desired result. As a firm, it is
our endeavour to improve the level of corporate governance while not causing
any disruption in company's proceedings and therefore we respect the
independence of investors to choose alternate methods to achieve similar results.
Contact Information
Stakeholders Empowerment
Services
A 202, Muktangan,
Upper Govind Nagar,
Malad East,
Mumbai 400 097
Disclaimer
While SES has made every effort and has exercised due skill, care and diligence in
compiling this report based on publicly available information, it neither
guarantees its accuracy, completeness or usefulness, nor assumes any liability
whatsoever for any consequence from its use. This report does not have any
approval, express or implied, from any authority, nor is it required to have such
approval. The users are strongly advised to exercise due diligence while using this
report.
This report in no manner constitutes an offer, solicitation or advice to buy or sell
securities, nor solicits votes or proxies on behalf of any party. SES, which is a notfor-profit Initiative or its staff, has no financial interest in the companies covered
in this report except what is disclosed on its website. The report is released in
India and SES has ensured that it is in accordance with Indian laws. Person
resident outside India shall ensure that laws in their country are not violated while
using this report; SES shall not be responsible for any such violation.
research@sesgovernance.com
info@sesgovernance.com
www.sesgovernance.com.
22 | PAGE