CORPORATE GOVERNANCE

Click to edit Master subtitle style By: Hamza Nizam Kazi Sameed Qaiser Ali Asghar Sana Noor Lakhamichand Munesh Kumar

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COMPANY PROFILE

Lucky Cement Limited is sponsored by Yunus Brothers Group (YB Group), which is one of the largest business groups of the Country, based in Karachi and has grown remarkably over the last 50 years

Incorporation

Lucky Cement Limited (the Company) was incorporated in Pakistan on September 18, 1993 under the Companies Ordinance, 1984 (the Ordinance). The shares of the Company 6/13/12 are quoted on all the three stock exchanges

COMPANY PROFILE
Companys Principal Activities:

The principal activity of the Company is manufacturing and marketing of cement.

Production Facilities:
The Company has two production facilities at Pezu, District Lakki Marwat in Khyber Pakhtunkhwa and at Main Super Highway in Karachi, Sind

It is Pakistan's largest cement manufacturing Company

6/13/12 It is also

Pakistan's first and largest exporter of loose

RECENT CHANGES
Just recently Lucky Cement introduced a new identity, which marks a significant milestone in their history. The centerpiece of their identity is logo. The logo represents the core values, one that they uphold and live by. The new identity reflects the acceptance towards modern and innovative business practices, smart investment moves, diversity in human resource and unconventional approaches towards building corporate image.

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CORE VALUES
accountability and integrity are the key foundations of our corporate identity. We believe our social interventions in developmental areas such as educational achievement, health-care services, environmental protection and energy conservation are the fundamental sources to our long lasting commitment towards the communities that we operate in. Our relationship with stakeholders, clients and customers exudes our ability to build families and sustainable systems across Pakistan.
Transparency,

Ethics and Integrity Excellence Innovation

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Customer Focused

VISION STATEMENT
We envision being the leader of the cement industry in Pakistan, identifying and capitalizing on new opportunities in the global market, contributing towards industrial progress and sustainable future, while being responsible corporate citizens.

MISSION STATEMENT
Our mission is to be a premium cement manufacturer by building a professional organization, having state-of-the-art technology, identifying new prospects to reach globally and maintain service and quality standards to cater the 6/13/12international construction needs with an

Holding and Growing Local Dominance Increasing our Share in International Market Efficiency Sustainable Development 6/13/12

BUSINESS STRATEGIES

CORPORATE STRUCTURE

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COMPANY INFORMATION

Board of Directors

Mr. Muhammad Yunus Tabba (Chairman / Director) Mr. Muhammad Sohail Tabba
6/13/12 Mr. Imran Yunus

Director Finance and Company Secretary

Mr. Muhammad Abid Ganatra FCA, FCMA, FCIS

Statutory Auditors

COMPANY INFORMATION

Registered Office

Committees at Lucky Cement Audit Committee Budget Committee Human Resource

Pezu, District Lakki Marwat, Khyber Pakhtunkhwa Head Office 6 A, Muhammad Ali Housing 6/13/12 Society,

BOARD OF DIRECTORS & CEO

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BOARD OF DIRECTORS & CEO

The Company follows a unitary board structure which consists of an optimum combination of executive and non-executive directors. The Company encourages representation of nonexecutive directors on its Board. The Board of Directors comprises eight directors, excluding the Chief Executive Officer (CEO). At present the Board includes six non-executive directors and two of the Code of Corporate As per the Complianceexecutive directors. Governance the Directors are not serving as a director in more than ten listed companies, including this 6/13/12 Company.

BOARD OF DIRECTORS & CEO

Remuneration of Board of Directors

The remuneration of Chairman, Chief Executive and other Executive Directors are linked to their performance. The performance criteria are finalized by the board on the recommendation of HR and Remuneration Committee. These criteria are based on the financial performance and other parameters related to growth of the Company.
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BOARD OF DIRECTORS & CEO

Managing Conflict of Interest

The Company in compliance with the Code of Corporate Governance annually circulates and obtains a signed copy of Code of Conduct applicable to all its employees and Directors. Further, the directors are annually reminded of the insider trading circular issued by the Securities & Exchange Commission of Pakistan to avoid dealing in shares while they are in possession of the insider information The transactions 6/13/12 with all the related parties are

BOARD OF DIRECTORS & CEO

Reporting of Information to the Board The prevailing operational structure of the Company consists of different functional departments each of which is headed by a General Manager.

The following information are provided to the Board of Directors regarding: Economic
6/13/12 Environmental

BOARD OF DIRECTORS & CEO

q

Economic

Annual Operations plans Capital and revenue budgets Quarterly financial results Any sale and / or purchase of material nature of assets not in the ordinary course of business, Proposals for foreign and local 6/13/12 investments to be made,

BOARD OF DIRECTORS & CEO

q

Environmental

Measures to reduce carbon emissions which includes use of alternative fuelling method Operation of waste heat recovery systems.
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BOARD OF DIRECTORS & CEO

q

Compliance

Details of all related party transactions pursuant to sub Regulation (iii) of Regulation 37 of Code of Corporate Governance. Materially important discussion papers issued by regulatory authorities. Minutes of meetings of Board of Directors
6/13/12 Appointment

of External Auditors

BOARD OF DIRECTORS & CEO

Evaluation of Boards Performance The Corporate Governance Committee receives input on the Board's performance from Directors, which are then discussed with the Chairman of the Company in presence of the full board. Based on such discussion, the Board of Directors self evaluates boards performance to determine whether the board and its committees are functioning effectively with sound business principles.
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B O A Orientation Courses R As per the Code of Corporate Governance D All listed companies shall make appropriate arrangements to O F

carry out orientation courses for their directors to acquaint them with their duties and responsibilities and enable them to manage the affairs of the listed companies on behalf of shareholders

D I In April last year Mr. Javed Yunus Tabba was selected R by the Board for the orientation program. Upon the completion of the program certificates were awarded E to all the members C 6/13/12

B O A R D O F

REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

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B O A R D O F

Shareholding Pattern of the Company

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B O A R D C O M M I T 6/13/12 T

B O A R D C O M M I T 6/13/12 T

B O A Audit Committee R As per article 30 (XXX) of the Code of Corporate D Governance

CThe Board of Directors of every listed company Oshall establish an Audit Committee, which shall comprise not less than 3 members, including the M chairman. Majority of the members of the M Committee shall be from among the non Iexecutive directors of the listed company and the chairman of the Audit Committee shall preferably T be a non-executive director. The names of the 6/13/12 T members of the Audit Committee shall be

B O A R D

Audit Committee
At present, the committee comprises of 5 members including the chairman, all of whom are nonExecutive Directors.

C O MThe members names including the chairman are disclosed in the annual report also. M I The terms of reference of audit committee were T presented to the members as required under the 6/13/12 T article 33 (XXXIII) of Code of Corporate Governance

B O A R D

Budget Committee

The core objectives of the Budget Committee are to ensure that the C Companys budget supports the overall O Mission.

M M ITerms of Reference: T Review and analyses the annual and 6/13/12 T

B O A R D

C O Terms of Reference: M M To review and advise on the I T Human Resource policies of 6/13/12 T

Human Resource & Remuneration Committee

B O A R Human Resource & Remuneration D

Committee Cont C

O Market competitive pay scales of Mcomparable size and turnover Mcompanies are determined through independent sources and compared I with Company's existing pay scale. T 6/13/12 T

B O A R Corporate Governance Committee D

The committee rounds out the other three standing committees of board of C directors. It plays a critical role in O overseeing matters of corporate M governance for the board, including M formulation and recommendation of I governance principles and policies.

T 6/13/12 T

B O A R Corporate Governance Committee D

Contd..

C O To Review Report to the Members on MStatement of Compliance with the MBest Practices of the Code of Corporate I Governance issued by the Statutory T auditors. 6/13/12 T

C O M P A N Y S E R E 6/13/12 T

C O M A company secretary acts in the P administration of the affairs of the A company and business of the Board. N Y per the Companies Ordinance 1984 Section 204 A As S E R E 6/13/12 Similarly T
A listed company shall have a whole time secretary and a single member company shall have a secretary possessing such qualifications as may be prescribed.

C O M As per the requirements of Code of Corporate PGovernance section 17 (XVII) A No person shall be appointed as the Company Secretary N of a listed company unless he is: a member of a recognized body of professional Y S E R E T

accountants; or a member of a recognized body of corporate/ chartered secretaries; or A person holding masters degree in Business Administration or Commerce or being a Law Graduate from a University recognized by Higher Education Commission and having at least five years relevant experience. Provided that a person already engaged by a company as 6/13/12

COMPANY SERETARY
Also in section 25 (XXV) of Code of Corporate Governance it is stated that The Company secretary of a listed company shall furnish a Secretarial Compliance Certificate, in the prescribed form, as part of the annual return filed with the Registrar of Companies to certify that the secretarial and corporate requirements of the Companies Ordinance, 1984 have been duly complied with.

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C O M Mr. Abid Ganatra is the Company P Secretary of Lucky Cement Limited A who is a Fellow Chartered N Accountant and Cost Management Accountant and is also a Fellow Y
member of Institute of Corporate Secretaries. S

E R Thus the requirements as per Code of E Corporate Governance are fulfilled by 6/13/12 the T Company.

A U D I T

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A U D Internal auditors I Internal auditors are employed by T the organization they audit. They perform various audit procedures, primarily related to procedures over the effectiveness of the company's internal controls over financial reporting. Internal auditing is an independent, 6/13/12 objective assurance and consulting

A U D Internal auditors I As per the section 35 (XXXV) and 36 T (XXXVI) of Code of Corporate

Governance respectively;

There shall be an internal audit function in every listed company. The head of internal audit shall have access to the chair of the Audit Committee All listed companies shall ensure that internal audit 6/13/12 reports are provided for the review of

A U D I T

Internal auditors
At Lucky Cement Limited the Internal Audit function is outsourced to M/s. M. Yousuf Adil Saleem & Co., Chartered Accountants (A member firm of Deloitte Touch Tohmatsu). Monthly internal audit reports are compiled and on quarterly basis are submitted to Board of Audit Committee (BAC) for evaluation. The Committee takes steps as necessary. 6/13/12

A U D I T

External auditors
As per the Companies Ordinance 1984 section 252

Every company shall at each annual general meeting appoint an auditor or auditors to hold office from the conclusion of that meeting until the conclusion of the next annual general meeting: [Provided that an auditor or auditors appointed
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A U D I T

External auditors

As per section 37 (XXXVII) Code of Corporate Governance

No listed company shall appoint as external auditors a firm of auditors which has not been given a satisfactory rating under the Quality Control Review programme of the Institute of Chartered Accountants of Pakistan.
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A U D External auditors IThe external or statutory auditors of Lucky Cement are T Ernst & Young Ford Rhodes Sidat Hyder M/s.

Chartered Accountants (A member firm of Ernst & Young Global Limited) who has been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan (ICAP), that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by ICAP.
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A U D As per the Code of Corporate Governance I section 24 (XXIV) T

No listed company shall circulate its financial statements unless the CEO and the CFO present the financial statements, duly endorsed under their respective signatures, for consideration and approval of the Board of Directors and the Board, after consideration and approval, authorize the signing of financial statements for issuance and circulation. Similarly As per the Code section 25 (XXV)
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A U D I Complying with the requirements of the Code T of Corporate Governance the Financial

statements of the Company are duly endorsed by the CEO and CFO before approval of the Board.

The above requirements regarding the Secretarial Compliance Certificate have been duly complied with.

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S T A K E H O L D E R S

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S T A K Company follows a symbiotic approach with its The E various stakeholders and believes that if it fulfils their concerns and expectations, the stakeholders will H identify their prosperity and well-being with the growth O the Company and support the Company in ensuring of its term L longby theand sustained growth. The Company is driven needs of its customers, shareholders, D communities and the society at large. local E R S
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S T A K KEY EXPECTATIONS E EMPLOYEES H O L Satisfactory compensation and benefits Congenial work environment D E Job satisfaction R Professional growth and development S Competitive work opportunities

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S T A KEY EXPECTATIONS K E SUPPLIERS H Regular orders OTimely payments - Recognition and feedback L D SHAREHOLDERS AND INVESTORS E R Good returns S Growth

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S T A K KEY EXPECTATIONS E H REGULATORY AUTHORITIES O L Compliance D Active participation E Corporate governance R Companys contribution towards direct and indirect taxation S

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CORPORATE SOCIAL RESPONSIBILITY & ENVIRONMENTAL CONCERNS

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CORPORATE SOCIAL RESPONSIBILITY & ENVIRONMENTAL CONCERNS Across the globe, business leaders have accepted that
only making quality products that satisfy customers is simply not acceptable. Businesses are now required to consider and manage the wider social and environmental consequences of their actions, beyond the requirement of legal settings they operate in. Lucky Cement is an active participant in contributing towards the welfare of the society at large and plays its part. The Company has proudly contributed Rs. 89.8 million in CSR Activities for the year ended June 6/13/12

CORPORATE SOCIAL RESPONSIBILITY & ENVIRONMENTAL CONCERNS EDUCATION

Supporting and promoting educational endeavors has always been at forefront in all the CSR projects Lucky Cement carries out. Karachi School of Business and Leadership (KSBL) Razzak Tabba Academic Block at IBA Construction Material Research Group Fellowship 6/13/12 at NED University

CORPORATE SOCIAL RESPONSIBILITY & ENVIRONMENTAL CONCERNS Scholarships / Educational Assistance

Lucky Cement offers various scholarship programs for the students studying in numerous prestigious institutions across Pakistan to ensure that talented young Pakistanis have access to the quality education regardless of their financial stature. Institute of Business Administration (IBA) Institute of Business Management (IoBM) Lahore University of Management Sciences
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CORPORATE SOCIAL RESPONSIBILITY & ENVIRONMENTAL CONCERNS HEALTH

Lucky Cement is also an active contributor in the development of the health sector. Following are some of the relevant initiatives Memon Medical Institute Lucky Welfare Dispensary Pezu, Khyber Pakhtunkhwa Women and Children Hospital (WCH) Ghazni Khel, Khyber Pakhtunkhwa Maternity and Child Welfare Association Children Cancer Hospital
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CORPORATE SOCIAL RESPONSIBILITY & ENVIRONMENTAL CONCERNS COMMUNITY DEVELOPMENT PROGRAMMES

Lucky Cement is also an active contributor in the development of the community itself which includes efforts towards Flood Relief Efforts Water Supply Scheme at Darra Pezu Electricity Supply at Darra Pezu Model Village in DI Khan DI Khan Airport Renovation
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CORPORATE SOCIAL RESPONSIBILITY & ENVIRONMENTAL CONCERNS Concerns Environmental

As an industrial giant in the country, Lucky Cement plays a significant role in implementing a program that reduces energy consumption and addresses issues of environmental degradation. Over the years, the Company has played a dynamic role in bringing environmental revolution in the Cement industry of Pakistan. The management strongly believes in following environmentally sustainable practices regarding the management of gaseous emissions, particulate matter, 6/13/12

CORPORATE SOCIAL RESPONSIBILITY & ENVIRONMENTAL CONCERNS Concerns Environmental

Waste Heat Recovery (WHR) Plant. Reduction in Carbon Emissions Certified Emission Reduction (CER) Credits ISO 14001:2004 World Environment Day 2011 Supporting the Government for a Greener Pakistan Atmospheric Pollution Control WWF PAKISTAN
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AWARDS / ACHIEVMENTS / AFFILIATIONS

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AWARDS / ACHIEVMENTS / AFFILIATIONS

Brands of the Year Award Lucky Cement was declared as the Brand of the Year 2010 in the category of cement. This award represents our increasing brand popularity, product availability, quality and consistency

National CSR Excellence Award Appreciating and acknowledging Lucky Cement's 6/13/12

AWARDS / ACHIEVMENTS / AFFILIATIONS

Annual Environment Excellence Award

National Forum for Environment and Health (NFEH) awarded Lucky Cement with the Environment Excellence Award 2011 to recognize a number of Lucky Cement's pro environment initiatives including installation of Waste Heat Recovery Plant at its production facilities, active participation in various community based environmental programs including efforts to promote cleaner and greener Pakistan by cycling and beach cleaning initiatives and association with the President of Pakistan's Forestation Program to contribute towards a cleaner environment.
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AWARDS / ACHIEVMENTS / AFFILIATIONS

Recognitions from Chamber of Commerce & Industry

Karachi Chamber of Commerce and Industry awarded the Export Trophy to Lucky Cement for highest exports of cement from Pakistan. Khyber Pakhtunkhwa Chamber of Commerce and Industry awarded the following distinctions to Lucky Cement: Top Sales Tax Payer, Top Income Tax Payer, Top Exporter, Top Importer and Exports Trophy 6/13/12

AWARDS / ACHIEVMENTS / AFFILIATIONS

CORPORATE AFFILIATIONS Corporate memberships are a simple yet meaningful way for companies interacting with other companies with similar interests and investing in its development. Realizing the importance of networking with various international companies, Lucky Cement has obtained the memberships of following elite professional bodies to strengthen its network and reinforce the influence.

World Economic Forum Pakistan Business Council (PBC) Pakistan Institute of Corporate Governance 6/13/12 (PICG)

RECOMMENDATIONS

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RECOMMENDATIONS
As per the Code section 9 (IX) The Chairman of a listed company shall preferably be elected from among the nonexecutive directors of the listed company. The Board of Directors shall clearly defined the respective roles and responsibilities of the Chairman and Chief Executive, whether or not these offices are held by the separate individuals or the same individual The Chairman at Lucky Cement Limited Mr. Muhammad Yunus Tabba is an Executive Director. Although as per Code it is preferred and not 6/13/12 compulsory but it is recommended that the company

RECOMMENDATIONS

As per the Code section 8(e) (VIII) (e) The appointment, remuneration and terms and conditions of employment of the Chief Executive Officer (CEO) and other executive directors of the listed company determined and approved by the Board of Directors

As per information gathered the appointment and remuneration of CEO and executive directors were fixed in the BOD meeting, held on Oct 30, 2009. We recommend that since, the remuneration of Chairman, Chief Executive and other Executive Directors are linked 6/13/12

RECOMMENDATIONS
Risk Management Committee Keeping in view the challenges faced by organization in this technological era, it is highly recommended that Lucky Cement Limited should establish a risk management committee in order to keep itself up to the latest trend and advancement happening and keep itself aware with all the risks and opportunities that can be taken advantage of.

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RECOMMENDATIONS
Succession Planning Keeping in view the importance of succession planning, while discussing this with the management of the company, although the Company has appointed a Chief Operating officer in the previous year we highly recommend that that the Company should keep in mind the succession planning and have a proposed outline for any circumstances.

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CONCLUSION

It was a great opportunity that we benefited from this experience by actually understanding the compliance of Code of Corporate Governance by Lucky Cement Limited. This experience would surely help us in future in determining how Corporate Governance is followed in various companies. 6/13/12