Corporate Governance

Company's Philosophy on Corporate Governance

Good Corporate Governance practices stem from the culture and mindset of an organization. As stakeholders across the globe evince keen interest in the practices and performance of companies, Corporate Governance has assumed lot of importance. Corporate Governance is based on the principles of integrity, fairness, equity, transparency, accountability and commitment to values.

Datamatics continues to focus on good Corporate Governance, in line with local and global standards. Its primary objective is to observe the highest level of ethics in all its dealings, create and adhere to a corporate culture of conscience and consciousness, integrity, transparency and accountability for efficient and ethical conduct of business for meeting its obligations towards its shareholders and other stakeholders.

Corporate Governance is an integral part of the philosophy of Datamatics in its pursuit for excellence, growth and value creation. Apart from complying with the statutory requirements, effective systems and practices towards improving transparency, internal controls and promotion of ethics at work place have been institutionalized.

Board of Directors

The Board of Directors provides leadership and strategic guidance to your Company’s management. In addition to the skill and expertise of the executive directors, the non-executive directors bring an external and wider perspective in Board deliberations and decisions. Your Company believes that an active, expert and well informed team of directors is necessary to ensure highest standards of Corporate Governance.

The Board of your Company comprises of experts from diverse fields and professions. In order to maintain independence of the Board, your Company has a balanced combination of executive and independent directors.

The current strength of the Board is eight (8) directors out of which, four (4) are executive directors and four (4) are non-executive independent directors.

The composition of the Board is in conformity with the requirement of Clause 49 of the Listing Agreement in this regard.

Board Meetings

The Board meets atleast once in every quarter to review the quarterly results alongwith other matters. Whenever it is felt necessary, additional meetings are also held. The Board meetings are generally held at Mumbai. The dates of the Board Meetings are fixed well in advance and intimated to the Board members in order to ensure their availability. The agenda papers are circulated to the directors well in advance before the meeting to enable the directors to take an informed decision. Every board member is free to suggest any item(s) to be included in the agenda. The agenda items are comprehensive and informative in nature to facilitate deliberations and decisions at the Board Meeting. Where it is not practicable to attach or send the relevant information as part of the agenda papers, the same are tabled at the meeting or presentations are made by the concerned persons.

During the financial year 2009-2010, six (6) Board Meetings were held on May 20, 2009; June 8, 2009; July 21, 2009; September 15, 2009; October 27, 2009 and January 27, 2010. The gap between two meetings did not exceed four months.

The composition as on date, the changes during the year under review, number of meetings attended and Directorships/Committee Memberships in other companies are as follows:

The particulars of the Directors, their attendance, and other directorship, membership of committees are given below:

Name	Designation	Category	Attendance		Other Directorships*	Other Committee Memberships$	Committees’ chairmanship
			Board Meeting	Last AGM
Dr. Lalit S. Kanodia	Chairman & Whole time director	Promoter Executive	6	Yes	3	Nil	Nil
Rahul L. Kanodia	Vice Chairman & CEO	Non-Independent Executive	6	Yes	2	Nil	Nil
Vidur Bhogilal	Executive Director & CFO	Non-Independent Executive	6	Yes	1	Nil	Nil
Sameer Kanodia	Whole time director	Non-Independent Executive	6	Yes	Nil	Nil	Nil
Habil Khorakiwala	Director	Independent Non-executive	3	No	6	Nil	Nil
Shahzaad Dalal	Director	Independent Non-executive	3	No	13	7	3
R. K. Saraswat	Director	Independent Non-executive	6	Yes	2	1	1
Sudhir Deshpande	Director	Independent Non-executive	6	Yes	Nil	Nil	Nil

Notes:

Code of Conduct:

The Company has laid down a code of conduct namely, "Datamatics - Code of Conduct" for the members of the Board and the Senior Management. All the Board members and the Senior Management personnel have affirmed compliance with the code for the year 2009-2010. A declaration to this effect signed by the Chief Executive Officer is given in this report. The Code has also been posted on Company’s website, www.datamatics.com.

CEO & CFO Certification:

As required under Clause 49 of the Listing Agreement, the CEO and CFO certification on the Financial Statements and other matters has been obtained from Mr. Rahul L. Kanodia (CEO) and Mr. Vidur V. Bhogilal (CFO).

Prohibition of Insider Trading Policy:

The Company has comprehensive guidelines on prevention of insider trading in line with the SEBI (Prohibition of Insider Trading) Regulations, 1992. The Company’s code of conduct for prevention of insider trading, inter-alia, prohibits purchase/sale of shares of the Company by certain employees [identified as designated employees] and directors while in possession of price sensitive information in relation to the Company. The Company announces closure of trading windows, free period, declaration of prohibited period etc. The Company takes quarterly and annual disclosure from the designated employees as mentioned in the Insider Trading Policy. The said Code of Conduct for Prevention of Insider Trading is also posted on the website of the Company, www.datamatics.com.

Appointment/Re-appointment of Directors

The Directors who retire by rotation and who are eligible for re-appointment or newly appointed are:

Dr. Lalit S. Kanodia

Dr. Lalit Kanodia received his B. Tech. (Hons.) from IIT, Mumbai. He completed his MBA and consequently Ph.D. in Management from Massachusetts Institute of Technology, USA(MIT). He taught statistical decision theory at MIT during 1964-65. He was also the visiting faculty for MBA students at the Jamnalal Bajaj Institute of Management, Mumbai during 1968-1970. He is a recipient of the FORD Foundation Fellowship and Distinguished Aluminous Award IIT, Mumbai. He is currently a member of the regional board of his alma mater, the Massachusetts Institute of Technology (MIT).

During his student days at the MIT, Dr. Kanodia was a member of the team that developed and designed the first two multi-user operating systems (CTSS & MULTICS), which were precursors to UNIX. His pioneering streak continued and, in 1967, Dr. Kanodia founded and headed Tata Consultancy Services (1967). History was created again when Dr. Kanodia founded Datamatics in 1975.

Under Dr. Kanodia's dynamic leadership, the Company has grown from a team of 10 to strength of over 2,500 (in addition to more than 1,000 Associates) across the globe. Datamatics has executed over 2,100 projects in 60 countries for some of the world's largest organizations, including five of the top ten Fortune 500 companies.

The Government of Chile has designated him as the Honorary Consul General of Chile in India.

*Dr. Lalit S. Kanodia is also a director in the following companies:

As on March 31, 2010 Dr. Lalit S. Kanodia holds 3,384,230 equity shares of the Company.

ii) Mr. Vidur V. Bhogilal

Mr. Vidur V. Bhogilal is a qualified Chartered Accountant (CA) and Cost Accountant (ICWA) from India & Certified Public Accountant (CPA) from the U.S. He is also a law graduate. Mr. Bhogilal stood first in India in the CPA Examination. He was also a rank holder in the CA and ICWA examinations. He was awarded a gold medal for securing the highest scores in the ICWA final examination for the Quantitative Techniques and Management Information Systems subject. He has over 16 years of rich experience in audit, taxation, accounting, legal and acquisitions.

Mr. Bhogilal has earlier held the post of Chief Financial Officer (CFO) of Datamatics Technologies Inc., a wholly owned subsidiary of Datamatics Technologies Limited in the U.S. During his tenure with Datamatics Technologies Inc. he was actively involved in acquisitions of US companies and had played a key role in the merger of the US entities. He has also worked with JM Morgan Stanley and Arthur Anderson, amongst other organizations.

Mr. Vidur V. Bhogilal is also a director in the following companies:

As on date Mr. Vidur V. Bhogilal holds 1,769,821 equity shares of the Company.

(iii) Mr. Sudhir C. Deshpande

Mr. Sudhir Deshpande is an engineer from University of London – Civil Engineering Branch. Mr. Deshpande completed his mechanical engineering (M. Phil) from King’s College, University of London. He has obtained certificate of post graduate study in engineering from University of Cambridge, UK. He has over 40 years of experience in design engineering. Moreover, he specialized as a soil consultant especially in soil testing techniques. He is neither a director* nor a member of any board committees in any other public limited companies. As on date, Mr. Sudhir Deshpande does not hold any shares of the Company.

*Alternate directorship, directorship in private limited companies and membership in governing councils, chambers and other bodies not included.

Audit Committee

The Audit Committee comprises of three (3) Independent Directors, namely:

Ms. Divya Kumat, Vice President–Legal & Company Secretary acts as the secretary of the Audit Committee. The Audit Committee of the Company is constituted in accordance with the provisions of Clause 49 of the Listing Agreement with the Stock Exchanges read with Section 292A of the Companies Act, 1956.

The Audit Committee meetings are attended by invitation by the Chief Executive Officer, Chief Financial Officer and representatives of the Statutory Auditors and internal auditors of the Company.

During the financial year ended March 31, 2010, five (5) Audit Committee meetings were held respectively on May 20, 2009, June 8, 2009, July 21, 2009, October 27, 2009 and January 27, 2010. The number of meetings attended by each member are as follows:

Committee Members	Designation	No. of Meetings attended
Mr. R. K. Saraswat	Chairman	5
Mr. Shahzaad Dalal	Member	3
Mr. Sudhir Deshpande	Member	5

The role of the Audit Committee is to monitor and provide effective supervision of the Company’s financial reporting process with a view to ensure that the financial statements are accurate, sufficient and credible. The terms of reference of the audit committee as defined by the Board are: a. The scope of the Audit Committee includes: i. Review of financial statements before they are submitted to the Board for adoption. ii. Recommending the appointment or removal of statutory auditors, fixation of audit fees and approval for payment for other services provided by the auditors. iii. Review of quarterly, half yearly and yearly financial statements before they are presented to the Board, focusing inter alia upon – • Accounting Policies and any changes thereto. • Ensuring compliance with the Accounting Standards. • Compliance with the laws, rules, regulations and notification issued by the Stock Exchange and other regulatory authorities relating to the preparation and disclosure of financial statements. • Significant issues arising out of audit. • The going concern assumption. • Major accounting entries based upon exercise of judgement by the management. • Any related party transactions i.e. transactions of the Company of material nature, with promoters or the management,

Remuneration/Compensation Committee

The Remuneration/Compensation Committee of the Board comprises four directors of the Company, of which three are independent directors and one is non-independent. Mr. Sudhir C. Deshpande (Independent Director) is the Chairman of this Committee. The other members of the Committee are Dr. Lalit S. Kanodia (Non-independent), Mr. Shahzaad S. Dalal (Independent Director), and Prof Dr. Uday N. Salunkhe (Independent Director).

The Committee has been entrusted with following responsibility:

1. All matters relating to compensation (including annual increments and revision in salary) payable by the Company to the senior executives in the Company’s grade M 11 and above as also the remuneration payable to the Directors.
2. Appointment and transfers of employees in the Company’s grade M 11 and above shall require prior approval of the committee.
3. Administration of ESOP schemes of the Company and allotment of shares under the ESOP schemes.

During the year ended March 31, 2008, four remuneration/ compensation committee meetings were held viz. May 26, 2007, July 31, 2007, September 12, 2007and January 30, 2008. The numbers of meetings attended by each member were as follows:

Committee Members	Designation	No. of Meetings attended
Mr. Sudhir Deshpande	Chairman	4
Dr. Lalit S. Kanodia	Member	3
Mr. Shahzaad Dalal	Member	2
Prof Dr. Uday Salunkhe	Member	4

 

Non-Executive Directors

The Company paid sitting fees of Rs. 10,000/- per board and Rs. 5,000/- per audit committee meeting to the nonexecutive directors of the Company. Apart from the sitting fees, the Company also pays commission to all non-executive Directors within the limits prescribed under the Companies Act, 1956 and as approved by the shareholders. Shareholders in their annual general meeting held on June 28, 2005 have approved the limit of 0.25% of the net profits of the Company computed in the manner laid down in Section 198 read with Sections 349 and 350 of the Companies Act, 1956 to be paid as commission to all the non-executive directors of the Company. The total commission payable for the financial year ended March 31, 2008 amounted to Rs. 324,000/- and was paid as under:

Name of Director	Commission (Rs.)
Mr. Shahzaad Dalal	50,000
Mr. Sudhir Deshpande	60,000
Mr. R. K. Saraswat	65,000
Mrs. Asha L. Kanodia	54,000
Mr. Habil Khorakiwala	30,000
Prof Dr. Uday Salunkhe	65,000

Details of the number of shares held by all the non-executive directors of the Company:

Name of the Director	No. of equity shares held (As on March 31, 2008)
Mr. Shahzaad Dalal	2,000
Mr. Sudhir Deshpande	Nil
Mrs. Asha L. Kanodia*	26,820
Mr. Habil Khorakiwala	Nil
Prof Dr. Uday Salunkhe	Nil
Mr. R. K. Saraswat	1,000

* Resigned with effect from 30th January 2008.

No convertible instruments / employee stock options have been granted by the Company to the non-executive directors of the Company.

 

Executive Directors

Dr. Lalit S. Kanodia
Dr. Lalit S. Kanodia was appointed as a Whole-time Director of the Company effective May 16, 2005 for a period of five years. Dr. Lalit S. Kanodia being a promoter of the Company is not eligible to participate in the employee stock option schemes of the Company.

Mr. Rahul L. Kanodia
Mr. Rahul L. Kanodia was appointed as a Vice Chairman & CEO of the Company for a period of five years effective from February 22, 2007. He is not eligible to participate in the employee stock option scheme of the Company.

Mr. Sameer L. Kanodia
Mr. Sameer Kanodia was appointed as an Executive Director of the Company for a period of five years effective from January 30, 2008 subject to the approval of shareholders in the ensuing Annual General Meeting. He is not eligible to participate in the employee stock option scheme of the Company.

Mr. Vidur Bhogilal
Mr. Vidur Bhogilal was re-appointed as an Executive Director & Chief Financial Officer of the Company for a period of five years effective May 12, 2008 subject to the approval of shareholders in the ensuing Annual General Meeting. He is not eligible to participate in the employee stock option scheme of the
Company.

Following are the details of the remuneration paid to the executive directors of the Company during the year ended March 31, 2008:

(Amount in Rs.)
Particulars	Dr. Lalit S. Kanodia	Mr. Rahul L. Kanodia	Mr. Sameer Kanodia*	Mr. Vidur V. Bhogilal
Salary	1,800,000	1,800,000	720,000	1,915,200
Estimated monetary value of perquisites	636,630	630,000	1,613,508	3,783,690
Commission**	2,378,850	247,650	–	–
PF Allowance	216,000	216,000	86,400	229,824
Total	5,031,480	2,893,650	2,419,908	5,928,714

** Commission relates to the financial year ended March 31, 2007, which was paid during the year 2007-2008.

* Mr. Sameer L. Kanodia was appointed w.e.f. January 30, 2008.

 

Amalgamation Committee

The Board of Directors of your Company, in their meeting held on 25th June 2008, has constituted a committee titled “Amalgamation Committee” consisting of Mr. R. K. Saraswat, Dr. Lalit S. Kanodia and Mr. Sudhir Deshpande. Mr. R. K. Saraswat is the Chairman of this Committee. The committee will look into all relevant aspects of the proposed scheme of arrangement of your Company with group companies. The committee is empowered to take all decisions in this regard.

 

Shareholders' Grievance Committee

The Board has constituted a Shareholder's Grievance Committee, consisting of two non-executive, independent directors - Mr. R. K. Saraswat and Mr. Sudhir Deshpande. Mr. R. K. Saraswat is the Chairman of the Committee. Ms. Divya Kumat is the Compliance officer. During the year ended March 31, 2008 the Company received 24 complaints. None were pending resolution as on March 31, 2008.

 

General Body Meetings

Annual General Meetings

a. Location, time and date where last three Annual General Meetings were held are given below:

Financial Year	Date	Time	Venue
2004-05	June 28, 2005	11.00 a.m.	Knowledge Center, Plot No. 58, MIDC, Andheri (E), Mumbai 400 093.
2005-06	July 26, 2006	11.30 a.m.	Knowledge Center, Plot No. 58, MIDC, Andheri (E), Mumbai 400 093.
2006-07	September 28, 2007	11.00 a.m.	Knowledge Center, Plot No. 58, MIDC, Andheri (E), Mumbai 400 093.

b. The following Special Resolutions were passed at the previous three Annual General Meetings:

1. AGM held on June 28, 2005: Resolution for revising the limit of commission to be paid to the non-executive directors of the Company.
2. AGM held on June 26, 2006: Resolution for revising the remuneration of Mr. Sameer L. Kanodia, who is a relative of Dr. Lalit S. Kanodia, Mrs. Asha L. Kanodia and Mr. Vidur V. Bhogilal, directors of the Company.
3. AGM held on September 28, 2007:

   (i) Resolution for alteration of Articles of Association for modifying clause 109(a). The name of Mrs. Asha L. Kanodia as a permanent director of the Company was replaced by the name of Dr. Lalit S. Kanodia.
   (ii) Resolution for revision in commission payable to non-executive directors.
   (iii) Resolutions for approving Datamatics Key Employee Stock Option Plan 2007 and General Employee Stock Option Plan 2007 for the employees of Datamatics Technologies Limited and its subsidiaries.
   

The special resolutions moved at all the above meetings were passed on a show of hands by the shareholders present at the meeting and not by postal ballot. No special resolution is proposed to be conducted by postal ballot.

 

Management Discussion & Analysis Report

The Management Discussion & Analysis Report for the year ended March 2008 is published separately in this Report.

 

Other Disclosures

Related party transactions, utilisation of proceeds of public issue have been disclosed in the annual report.

The Company has complied with all the statutory formalities.

The Company does not have a whistle blower policy.

The Company has a Risk Management Policy covering Risk Assessment & Minimization procedure.

The Company has laid down a “Datamatics – Code of Conduct” for the members of Board of Directors and the Senior Management. The Code has being posted on the website of the Company. All the Board members and Senior Management personnel have affirmed compliance with the code for the year 2008. A declaration to this effect signed by the CEO is given in this report.

The CEO & CFO have certified to the Board with reference to the Financial Statement and other matters as required in clause 49 of the listing agreement.

 

Means of Communications

The financial results of the Company are published in The Free Press Journal and Navshakti. The financial results are displayed on the Company's website – www.datamatics. com.

 

General Shareholders' information

 

Annual General Meeting

Date and Time: September 30, 2008 at 11.00 a.m.
Venue: Knowledge Centre, Plot no. 58, Street
No. 17, MIDC, Andheri (E), Mumbai 93.

Financial year

The Company follows April – March as its financial year. The results for every quarter beginning from April will be declared within the time period prescribed under the Listing Agreement.

Book Closure Date

September 26, 2008 to September 30, 2008 (both days inclusive)

Listing on Stock Exchanges

The Company's shares are listed on the Bombay Stock Exchange Limited, and the National Stock Exchange of India Limited. The Company has paid the listing fees to both the stock exchanges for the year 2008-2009.

Stock Code/Symbol

BSE-532528, DATATECH
NSE: DATATECH EQ

Market price data

 

Month	BSE		NSE
	High	Low	High	Low
April 2007	57.00	49.00	57.45	49.70
May 2007	56.80	50.00	55.20	50.15
June 2007	59.95	51.60	59.80	51.85
July 2007	56.45	45.25	56.85	45.10
August 2007	47.90	39.25	48.45	40.00
September 2007	49.60	42.40	50.00	42.00
October 2007	46.80	38.00	46.50	38.05
November 2007	44.40	34.35	45.70	34.30
December 2007	63.50	39.00	63.70	39.45
January 2008	64.90	29.10	66.00	29.45
February 2008	39.35	33.20	39.35	33.25
March 2008	35.70	23.50	35.00	23.50

Relative movement chart

The chart below gives the relative movement of the Company’s shares and BSE & NSE relative to the closing price. The period covered is April 2007 to March 2008.

Registrars and Share Transfer Agents

Datamatics Financial Services Limited
Plot No. B-5, MIDC,
Part B Cross Lane,
Andheri (East) Mumbai - 400 093.
Ph. No.: 91-22-6671 2001
Fax No.: 91-22-2821 3404

Share Transfer System

The Company has appointed Datamatics Financial Services Limited as Registrars and Share Transfer Agents. The shares lodged for physical transfer/transmission / transposition are registered within the prescribed time period if the documents are complete in all respects. The shares in dematerialized form are admitted for trading with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).

Category wise distribution of equity shares as of March 31, 2008:

 

Category	No. of shares	Percentage Holding
Promoters	27,968,456	68.69
Mutual Funds	650,000	1.60
Banks & Insurance Companies	186,090	0.46
Private Corporate Bodies	2,855,238	7.01
Indian Public	8,701,935	21.37
NRIs / OCBs / Foreign Nationals	355,118	0.87
Total	40,716,837	100.00

Distribution of shareholding as on March 31, 2008:

Share holding of nominal value	Share Holders		Share Amount
Rs.	Number	% to total	Rs.	% to total
Upto 5000	20,523	94.22432	19,364,815	9.51
5001-10000	669	3.07148	5,165,680	2.54
10001-20000	291	1.33603	4,139,960	2.03
20001-30000	120	0.55094	2,971,155	1.46
30001-40000	49	0.22497	1,708,220	0.84
40001-50000	33	0.15151	1,536,690	0.75
50001-100000	48	0.22038	3,237,505	1.59
100001 and above	48	0.22038	165,460,160	81.27
Total	21,781	100.00	203,584,185	100.00

 

Dematerialisation of shares and liquidity

About 99.04 % shares were held in dematerialized form as of March 31, 2008.

 

Plant Locations

The Company's facilities are located at:

Mumbai:

1. Unit No. 117-120, SDF IV,
   SEEPZ, Andheri (E),
   Mumbai - 400 096, India.
   
2. Unit No. 110, SDF IV,
   SEEPZ, Andheri (E),
   Mumbai - 400 096, India
   
3. Knowledge Centre,
   Plot No. 58, Street No. 17,
   MIDC, Andheri (E),
   Mumbai - 400 093, India.
   
4. Technology Centre,
   Plot No. 57, Street No. 17,
   MIDC, Andheri (E),
   Mumbai - 400 093, India.

Chennai:

1. Crompton House,
   3 M.G.R. Salai (K. H. Road),
   Nungambakkam,
   Chennai - 600 034, India.

Nashik:

1. Suyojit Datamatics Knowledge Centre
   Survey No. 804/A-1, Unit No. S1-3
   Bombay–Agra Road
   Nashik – 422 002
   Tel: +91 (253) 6617 222 / 333

 

Address for Investor Correspondence

For any assistance regarding dematerialization of shares, share transfer, transmission, change of address, non-receipt of dividend or any other query relating to shares, please write to:

Datamatics Financial Services Limited
Plot No. A 16 & 17, MIDC,
Plart B Cross Lane,
Andheri (East), Mumbai - 400 093.
Ph. No.: 91-22-6671 2001
Fax No.: 91-22-6671 2011
e-mail: depository@dfssl.com

For general correspondence:
Datamatics Global Services Limited
Knowledge Centre, Plot No. 58,
Street No. 17, MIDC, Andheri (East),
Mumbai - 400 093.
Ph. No.: 91-22-6753 5555
Fax No.: 91-22-2834 3669
e-mail: investors@datamaticstech.com

 

Declaration regarding code of conduct by CEO

I hereby declare that all the members of the Board and the senior management personnel of Datamatics
Technologies Limited have affirmed compliance with the Datamatics Code of Conduct.

Rahul L. Kanodia
Vice Chairman & CEO

Place: Mumbai
Date: July 28, 2008

Click here to read the Datamatics Technologies Limited Code of Conduct.