Compliance to the code of Corporate Governance forms an integral part of the Company’s philosophy. Unichem firmly believes that any meaningful policy on Corporate Governance must provide empowerment to the management of the Company and simultaneously create a mechanism of checks and balances that ensure that the decision making powers vested in the management are not misused and are exercised with care and responsibility to meet stakeholders’ aspirations and societal expectations.

The core principles of Corporate Governance i.e. trusteeship, transparency, empowerment, accountability and control form the cornerstone of Unichem corporate governance philosophy.

The Company continues to focus its resources, strengths and strategies to achieve highest standards of Corporate Governance and endeavours to implement the code of Corporate Governance in its true spirit.

In accordance with Clause 49 of the Listing Agreement and applicable provisions of the Companies Act, 1956, a report on Corporate Governance is detailed below:

Board Composition

As on March 31, 2013, Unichem's Board comprised of Six Directors, viz., the Chairman & Managing Director and five Non-Executive and Independent Directors.

All Independent Directors meet the criteria of independence defined in sub-clause (iii) of Clause 49 IA of the Listing Agreement. As per Clause 49 IC of the Listing Agreement, none of the Directors on the Board of Unichem serve as Chairman in more than 5 Committees or have Memberships in more than 10 Committees. In compliance with Section 275 of the Companies Act, 1956, none of the Directors have directorships in more than 15 Companies including Unichem.

Board Meetings

The Board of Directors of Unichem meet at least once in each quarter, interalia for consideration of audited/unaudited financial results. Apart from these meetings, the Board meet as and when the need arises.

Information Placed Before the Board

The Company provides information pertaining to its business activities to the Board or the Committees of the Board as and when required. The purpose of such disclosure and transparency is to enable the Board/Committees to make informed decisions.

In addition to the items enumerated in Annuexure – 1A of Clause 49 of the Listing Agreement and items that are required to be placed before the Board for its noting and/or approval under various other statutes or regulations, information is also provided for the periodic review/information on various significant items.

Post- meeting Procedures

All the deliberations and the decisions taken in every meeting of the Board & its Committees are recorded and minuted. The draft minutes are circulated to the respective members for their comments and suggestions. The minutes are signed in the immediately succeeding Board/Committee meetings.

Directors’ Remuneration

Non-Executive Independent Directors of the Company play a crucial role in the independent functioning of the Board. They bring in an external perspective to decision-making. Non-Executive Independent Directors are paid sitting fees of Rs. 20,000/- for attending Board and Audit Committee Meetings and Rs. 10,000/- for attending other Committee Meetings.

The Company has entered into an agreement with its Managing Director, enunciating terms of employment and remuneration, which is duly approved by the Board of Directors as well as the shareholders. This agreement is for the period of five years and is renewable on mutually acceptable terms and conditions.

There have been no materially significant related party transactions, pecuniary transactions between the Company and its Directors that may have potential conflict with the interests of the Company at large.

Declaration of Independence

As a matter of good corporate governance, the Company has a practice of procuring declaration from the Non-Executive Directors regarding declaration of their independence during the year under review.

Shareholding Pattern

Shares held by the Directors in the Company as on March 31, 2013.

Name Number of shares held %  of total shareholding
Dr. Prakash A. Mody* 4,01,08,032 44.33961
Mr. Prafull Anubhai 5,800 0.00641
Mr. Ramdas Gandhi 36,250 0.04007
Mr. Prafull D. Sheth 5,000 0.00553
Mr. Nasser Munjee 0 0
Mr. Anand Mahajan 11,250 0.01244

*Dr. Prakash Mody holds 2,60,680 shares in his capacity as Trustee to various Family Trusts, which is included hereinabove.

Committees of the Board

In order to ensure that the functions of the Board are discharged effectively and information disclosed in the financial statements are in order besides ensuring stricter implementation of the Corporate Governance Code, the Board has formed several Committees. The Committees appointed by the Board focus on specific areas and make informed decisions within the limits of the authority delegated. The Committees also make specific recommendations to the Board on various matters from time to time. The Vice President - Finance, Chief Internal Auditor and Statutory Auditor are permanent invitees to Audit Committees meetings when it meets to review the quarterly, half yearly and annual results.

All decisions and recommendations of the Committees are placed before the Board for information or for approval. There are three such Committees namely:

  • Audit Committee;
  • Compensation Committee; and
  • Shareholders Grievance Committee

Prohibition of Insider Trading

In adherence with the SEBI (Prohibition of Insider Trading) Regulations, 1992 as amended in 2002, the Company has implemented a policy, prohibiting insider trading. This policy basically prohibits an insider from dealing in the shares and securities of the Company while in possession of unpublished price sensitive information in relation to the Company. The Company Secretary monitors the functioning of the Code.

Internal Control and Audit

Unichem has proper and adequate system of internal controls commensurate with its size and nature of operations to provide reasonable assurance that all assets are safeguarded, transactions are authorized, recorded and reported properly in compliance with applicable laws and regulations.

The internal audit process includes review and evaluation of effectiveness of the existing processes, controls and compliance. It also ensures adherence to policies, systems and mitigation of the operational risks perceived for each area under audit.

The scope of the internal audit activities is broadly guided by the Annual Internal Audit plan prepared by the Internal Audit Department and approved by the Audit Committee. The Audit Committee monitors the performance of Internal Audit on a periodic basis through review of audit plans and its audit findings. The Audit Committee meets on a quarterly basis to review and discuss the reports submitted by the Chief Internal Auditor and also review closure of all agreed actions.

Review of Legal Compliance Reports

The Board periodically reviewed during the year the compliance reports in respect of the laws applicable to the Company as prepared and placed before the Board by the Company Secretary.