Corporate Governance


Statement of Directors' Responsibility 

  • The financial statements have been prepared which fairly represent the state of affairs of the company, the result of its operations, cash flows and changes in equity.
  • Proper books of accounts of the company have been maintained as required under Companies Ordinance, 1984.
  • Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable prudent business judgment.
  • International Accounting Standards as applicable in the country have been followed.
  • The system of internal control has been effectively placed.
  • There are no significant doubts upon company's ability to continue as a going concern.
  • There is no material departure from the best practices.

Roles and Responsibilities of the Chairman and Chief Executive

The Chairman and the Chief Executive Officer have separate distinct roles. The Chairman has all the powers vested under the Code of Corporate Governance and presides over all the Board Meetings. The Chief Executive Officer performs his duties under the powers vested by the law and the Board. He is responsible for preparing business strategy, overall control and operation of the company as well as for implementing the business plans approved by the Board.

Business Philosophy

We believe in ethical practices, sustainable manufacturing processes and transparent reporting to the shareholders and that the best practices of Corporate Governance ensure success and better results for all stakeholders. The Board of Directors provides the overall direction for the Company operations, provides oversight for various policies and monitors the management in the light of operational and financial plans. The roles of Board and the Chief Executive Officer have been clearly defined where the Board is responsible for strategic guidance and providing directions for sustainable business while the Chief Executive Officer is responsible for day to day operations and execution of the business strategy by devising business plans and monitoring the same.

Governance Framework

Our Governance strategy is to ensure that the Company follows the direction defined by its Core Values, current regulatory framework and global best practices. The Board, discharges its responsibilities as defined by the “Code of Corporate Governance”, listing requirements of Pakistan Stock Exchange and the Corporate Financial Reporting Framework of Securities & Exchange Commission of Pakistan. Our approach towards corporate governance ensures ethical behaviour, transparency, accountability in all that we do and to attain a fair value for the shareholders.

The Board meets at least once after every quarter to review the financial performance and to provide oversight to the management to achieve key performance indicators. A Board Meeting Calendar is issued annually to reflect the dates planned for the Board and Audit Committee Meetings. All the Board members are given appropriate documentation in advance of each meeting, which normally includes a detailed analysis of business and on matters, where the Board will be requested to make a decision or give its approval.

During the year under consideration, the Board met Seven (07) times and the Directors, like always took active participation in discussions during the Board meetings to add value and to provide strategic leadership to the Company. The average attendance of the directors during the year was 77%.

The Board Committees

The Board has formed four sub-committees to assist its operational functions, which are:

AUDIT COMMITTEE

The Audit Committee comprises of the following:

  • Mr. Tariq Iqbal Khan, Chairman - Independent Director
  • Mr. Kamal A. Chinoy, Member - Non-Executive Director
  • Mr. Kamran Y. Mirza, Member - Independent Director
  • Mr. Usman Ahmad - Secretary – Chief Internal Auditor

Terms of Reference of Audit Committee

The salient features of Audit Committee's Terms of Reference are:

1. Review responsibilities:

  1. Periodically review its Charter and improve/ amend it according to changes in the laws and regulations and global best practices from time to time.
  2. Review from time to time its responsibilities in terms of revisions in the laws, rules, regulations and Code of Corporate Governance.

2. Financial Reporting

  1. Review the quarterly, half yearly and annual financial statements of the company, prior to approval by the Board, focusing on significant issues like:
    1. Disclosures and judgmental areas, used in preparing the same especially those regarding valuation of assets, liabilities,
    2. Significant related party transactions,
    3. Assumptions on the basis of going concern.
    4. Any significant legal matters etc.
  2. Discuss with the management and assess that the financial statements has been prepared in accordance with the prevailing rules and regulations, accounting principles etc., including any significant changes in the accounting policies etc.
  3. Consider and review any material changes in the financial statements which may have any significant effect on the profitability of the company.

3. External Audit

  1. Review the scope of the External Auditors including but not limited to the independence, objectivity and effectiveness of the audit process.
  2. Review and recommend the terms of appointment of the External Auditors annually, ensure that the selection of the audit firm and / or rotation of the partner of such a firm is as per existing rules and regulations.
  3. Review, no less than annually with the External Auditors about significant issues regarding financial reporting and major observations arising from interim and final audits and any matter that the auditors may wish to highlight (in the absence of management, if needed).
  4. Develop and review the policy on engagement of the external auditors in any non-audit services for the company, its associated concerns and subsidiaries.
  5. Review the External auditor’s management letter, any material queries raised by the auditor to management in respect of the accounting records, financial statements or systems of control and management’s response;
  6. Review and discuss with External auditors at least once in a year the major aspects of their report without the management and internal auditors being present.

4. Internal Audit and Risk Controls

  1. Review the scope of the Internal Audit function; ensure that the scope and extent of internal audit has sufficient resources.
  2. Ensure co-ordination between the internal and external auditors.
  3. Ascertain that the internal control systems including financial and operational controls, accounting systems and the reporting structure are adequate and effective.
  4. Review the internal control systems and internal audit report prior to endorsement by the Board of Directors.
  5. Review and ensure that the regulatory compliance system is effective.
  6. Review and prepare report on any investigative matters where flags have been raised by the Board of Directors and/or external auditors and/ or internal auditors and/ or management.
  7. Review and recommend to the Board of Directors, a Policy for transactions with the Related Parties, based on the agreements/ policy already defined and existing between IIL & ISL.
  8. Provide guidance to prepare a Risk Policy; ensure that a robust system is in place in the form of well-defined policies and procedures.
  9. Overview the Risk Policy periodically.
  10. Establish procedures for the receipt, retention and treatment of complaints received by the Company and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. Reporting of all such matters shall be to the Chairman of Board Audit Committee only.
  11. Review and provide oversight to prepare the “Code of Conduct” annually and oversee that the same is properly disseminated and acknowledged by the Directors as well as the employees.
  12. Review and discuss with internal auditors at least once in a year the major aspects of their report without the management being present.

5. Any Other Responsibility

  1. Monitoring compliance with the best practices of corporate governance and identification of significant violations thereof.
  2. Assist the Board in any other task assigned.

The Audit Committee met five (05) times, during the financial year ended June 30, 2016.

HUMAN RESOURCES & REMUNERATION COMMITTEE:

The Human Resources & Remuneration Committee of the Board is as follows:

  • Mr. Kemal Shoaib, Chairman - Independent Director
  • Mr. Towfiq H. Chinoy, Member - Non-Executive Director
  • Mr. Yousuf H. Mirza, Member - Chief Executive Officer
  • Mr. Mustapha A. Chinoy, Member - Non-Executive Director
  • Syed Hyder Ali, Member - Non-Executive Director
  • Mr. Bilal Khawar, Secretary - Head of HR

Terms of Reference of Human Resource & Remuneration Committee [HR&RC]

The role of the Human Resources & Remuneration Committee is to assist the Board of Directors in its oversight of the evaluation and approval of the employee benefit plans etc. The salient features of the terms of HR&RC are as follows:

  1. The HR&RC shall recommend Human Resource Management Policies to the Board.
  2. Recommendations on selection, appointment, remuneration and succession of the CEO, to the Board.
  3. Recommendations on selection, appointment, remuneration and succession of the CEO, CFO and Company Secretary, to the Board.
  4. Set the Policy framework including compensation structures of various levels of executives.
  5. Recommend compensation structure of the Board of Directors and its sub-committees.
  6. Ensure implementation of the development needs of new Directors.
  7. Review and ensure that a robust employee evaluation system is in place.

The Human Resource Committee met three (3) times, during the financial year ended June 30, 2016.

STRATEGIC PLANNING COMMITTEE :

The Strategic Committee of the Board is as follows:

  • Syed Salim Raza, Chairman - Independent Director
  • Mr. Towfiq H. Chinoy, Member - Non-Executive Director
  • Mr. Yousuf H. Mirza, Member - Chief Executive Officer
  • Mr. Mustapha A. Chinoy, Member - Non-Executive Director

The Meetings of this Committee take place as and when the Board desires a focused strategic oversight, while the strategic guideline is discussed in the Board Meetings frequently.

TREASURY COMMITTEE:

The Treasury Committee of the Board is as follows:

  • Syed Salim Raza, Chairman - Independent Director
  • Mr. Towfiq H. Chinoy, Member - Non-Executive Director
  • Mr. Yousuf H. Mirza - Member - Chief Executive Officer
  • Mr. Ali Zaidi, Secretary - Head of Treasury

The objective of the Committee is to set treasury related policies within the overall policy framework established by the Board. The formation of Treasury committee does not impair or limit the management of day to day treasury operations and routine activities. Any deviation arising due to special circumstances or financial market behavior shall be placed in subsequent Committee meeting for ratification. The Committee shall aim to meet each quarter but it is required that a majority of the Committee members shall meet at least two times each financial year and also at other times as the Chairman of the Committee shall require. The Committee shall carry out the following:

  • Will present to the Board, on at least an annual basis, the Treasury Policy Statements (the “policy”), for approval.
  • The Committee shall review, supervise and oversee Treasury activities in implementing the policies approved by the Board or the Committee.
  • The Committee shall review, supervise, consider and as appropriate approve, or where it considers appropriate, propose to the Board for the Board’s approval, revisions to the planned strategies, in relation to inter alia:
    1. 1. Treasury’s role and objectives
      2. Treasury Policies
      2.1 Borrowing Policy
      2.2 Investment Policy
      3. Corporate Funding
      4. Cash Management & Liquidity
      4.1 Liquidity and Cash Forecasts
      4.2 Cash Management
      4.3 Counterparty Risk
      5. Currency/ Commodity Transaction Risk
      6. Foreign Exchange Risk
      7. Interest Rate Risk
      8. Relationship with banks and allocation of business
      9. Treasury Internal Controls - Evaluation and risk mitigation strategies

    The Treasury Committee met twice (2) during the financial year ended June 30, 2016.

    DIRECTORS’ PARTCIPATION IN BOARD AND SUB-COMMITTEE MEETINGS:

    Board / Sub Committee Members Board Meetings Audit Committee HR&R Committee Treasury Committee
    Number of Meetings Held 7 5 3 2
    Mr. Kemal Shoaib 7 - 3 -
    Mr. Towfiq H. Chinoy 5 - 3 2
    Mr. Mustapha A. Chinoy 6 - 2 -
    Mr. Kamal A. Chinoy 5 4 - -
    Mr. Tariq Iqbal Khan 7 5 - -
    Syed Salim Raza 6 - - 2
    Kamran Y. Mirza 6 - - 2
    Mr. Kamran Y. Mirza 6 4 - -
    Syed Hyder Ali 2 - - -
    Mr. Kazuteru Mihara* 1 - - -
    Mr. Yousuf H. Mirza 5 - 3 2
    Mr. Otomichi Yano 2 - - -

    * Mr. Kazuteru Mihara was appointed as director on April 13, 2016 to fill the casual vacancy created by the resignation of Mr. Otomichi Yano.

    Since all the retiring directors were re-elected in the Annual General Meeting held on October 2, 2013, no formal orientation was conducted. Additionally the Board is regularly briefed on various developments in the business fields in each meeting. However, an orientation session was held to share company information and relevant regulations with Mr. Kazuteru Mihara, the newly appointed director.

    Stakeholders and Social Responsibility

    Our role as a corporate citizen is as important to us as satisfaction of our customers and earning a fair return for our shareholders. We are committed to work for the betterment and prosperity of our stakeholders. Management has endeavored to provide a safe and healthy work atmosphere by adopting practices and creating working conditions which are safe and healthy for our employees, vendors, contractors, suppliers and customers. We are committed to provide better educational and health facilities to the less fortunate people especially those who are our stakeholders. In line with our philosophy of CSR we regularly maintain and support TCF school – Amir Sultan Chinoy Campus in the vicinity of Landhi along with offering need based scholarships to NED University students for a better tomorrow of our younger generation. We also support NGOs like SIUT, LRBT, Kidney Center and Amir Sultan Chinoy Foundation to help the deserving patients for their treatment.

    Board Performance Evaluation

    The Board has adopted a mechanism for selfevaluation of its performance evaluation, which encompasses the evaluation of the Board as an entity. The annual review of the Board is aimed at evaluation in the following:-

    • Board composition
    • Skill and experience
    • Board functions
    • Internal controls
    • Statutory obligation
    • Corporate Governance
    • Operational performance
    • Strategic guidance
    • Risk Management etc.

    In order to ensure accountability and integrity in our conduct, we have placed an effective whistleblowing mechanism for sounding of alerts against deviations from policies, applicable regulations or the code of professional conduct.

    Speak-up Policy

    In order to ensure accuntability and integrity in our conduct, we have placed an effective whistlebowing mechanism for sounding of alerts against deviations from policies, applicable regulations or the code of professional conduct.

    Pattern of Shareholding

    A statement on the pattern of shareholding along with a pattern of shareholding of certain classes of shareholders, where disclosure is required under the reporting framework and the statement of shares held by the directors and executives as on June 30, 2016 is placed on Page 95.

    Management Team

    Good corporate governance is the basis of our decision making and control processes. The management’s decision making is based on long term strategic objectives in which the Board, comprising of majority independent directors, provides strategic oversight and guidance to the management and monitors the performance of the company regarding business objectives, share holders’ interests and regulatory compliance.

    The Management Team is headed by the Chief Executive Officer and the Functional Heads are:

    • Mr. Yousuf H. Mirza(Chief Executive Officer)
    • Mr. Samir Chinoy (GM Marketing & Sales)
    • Mr. Rashid Umer Siddiqui (Chief Financial Officer)
    • Mr. Zafar Majeed (GM Manufacturing)
    • Mr. Bilal Khawar (GM Human Resources)
    • Mr. Sohail Ahamad Jilani (Div. Mgr. Supply Chain)
    • Mr. Usman Ahmed (Secretary)

    Organization Chart

    ISL Organization Chart