Governance

Governance Structure

Atlas Honda’s governance framework provides a sound structure for effective and responsible decision-making within the organization. The highest decision-making is carried out at the shareholders’ meetings, supported by the Board of Directors. The Board has an oversight of the risks and opportunities arising from the Company’s activities and is responsible for identifying the direction, strategies & objectives and for monitoring the implementation of the same by management.

Board of Directors

The Company has an experienced and dynamic Board with the right blend of skills to develop strategies. Presently, the Board comprises of eight Directors, including four non-executive Directors, three executive Directors and one independent Director. Non-executive Directors are elected to enhance objectivity. The Company does not have a defined quota for Board of Directors based on gender, ethnicity or age group. The Chairman is responsible for the overall discharge of the Board’s duties. The office of the Chairman and the Chief Executive Officer (CEO) are separate and the Chairman is a non-executive Director.

The Chairman of the Board of Directors is selected from within the Board. The statute requires the Board to formulate Audit Committee and Human Resource & Remuneration Committee. Additionally, the Board may from time to time establish committees, to assist it by focusing on specific responsibilities in greater detail than is possible for the Board as a whole, reporting to the Board and making any necessary recommendations.

All the matters including election, appointment and disclosure of interest are governed by the statutory requirements and regulations laid down by SECP and PSX. There were no non-compliances identified during the year. Further details about the Directors and matters carried out during the year can be found in the Director’s profile and Statement of Compliance with the Code of Corporate Governance on page 16 and 116 respectively.

Representation of Female Director on the Board

The new Code of Corporate Governance requires listed companies to have representation of female directors on Board from the date of next election. Accordingly, the Company will have at-least one female member after the forthcoming election of Directors.

Roles and Responsibilities of the Board

The Board provides leadership to the Company in a manner that promotes its long-term success, thereby maximizing value for the stakeholders. It also sets the direction for the Company’s values, ethics & business policies and practices. The Board exercises all powers granted to it by the Companies Act, 2017 with responsibility, diligence, and in compliance with the legal framework after due deliberations in its meetings. These include but are not limited to, appointment of key management positions, approval of annual budgets including capital expenditures, investments in new ventures and approval of related party transactions. Financial statements of the Company, including interim and final dividends and review of internal / external audit observations regarding the overall control environment including effectiveness of the control procedures, are also approved by the Board. An independent Internal Audit department ensures continuous compliance and monitoring of formal policies and effectiveness of the internal control framework, designed by the Board for the conduct of the Company’s business. The Audit Committee is tasked to report compliance thereof to the Board, at least once every quarter of the year.

Formal Orientation and Director’s Training Program

On appointment, Directors take part in an “Induction Program” which is aimed at broadening their knowledge and understanding regarding the Company’s business. The orientation program is designed to apprise the Directors regarding the expectations of the majority shareholders and their responsibilities. The Directors are also encouraged to attend courses which provide information and training relating to their duties, responsibilities, powers and potential liabilities. The Chairman, in collaboration with the Company Secretary and senior management, is responsible to ensure that the Board members are provided, at all times, with the information necessary for them to effectively discharge their duties and responsibilities. The Company Secretary also arranges an appropriate Director’s Training Program in line with the mandatory requirements of the Code of Corporate Governance.

Committees of the Board and Terms of Reference

Each committee of the Board has a written ‘Terms of Reference’ outlining their duties and responsibilities. The committees report on their activities and results to the Board. The table below summarizes the terms of reference, number of members and frequency of meetings of the committees.

Remuneration of Executive, Non-Executive and Independent Directors

The Company has a comprehensive policy for fixing executive Directors’ remuneration. In order to attract well qualified and experienced Directors, the Company’s remuneration policies are structured in line with prevailing industry trends and business practices. As per the applicable legal and regulatory requirements, the remuneration of the Board members is approved by the Board itself. However, in accordance with the Code of Corporate Governance, it is ensured that no director takes part in deciding their own remuneration. The Company does not pay remuneration to non-executive Directors including independent directors except a fee for attending meetings of the Board. For information on remuneration of the Directors and CEO in 2018-19, please refer note 35 to the Financial Statements on page 153.

Policy for Retention of Fee Earned by Executive Directors for Services in Other Companies as Non-executive Directors

The Company’s CEO is treated as an executive Director on the Board by virtue of the Companies Act, 2017. In addition, he holds position as a non-executive Director on the Boards of Pakistan Cables Limited, Cherat Packages Limited and eleven private companies of Atlas Group. Fee paid, if any, by these companies are in compliance with policies of respective companies which have been approved by their Board of Directors. Executive directors other than CEO of the Company do not hold directorship position in any other company.

Security Clearance of Foreign Directors

Every foreign Director who is nominated for election on the Board of Directors of the Company is required to furnish documents which are then submitted to the Ministry of Interior for security clearance.

Board’s Performance Evaluation

The evaluation of Board’s role of oversight and its effectiveness is a continual process, which is appraised by the Board itself. The core areas of focus are:

  • Alignment of corporate goals and objectives with the vision and mission of the Company;
  • Strategy formulation for sustainable operation;
  • Board’s independence; and
  • Evaluation of the Board’s Committees’ performance in relation to discharging their responsibilities set out in respective terms of reference.

The Company does not have a policy to involve an external consultant to carry out an evaluation of the Board’s performance.

Chairman’s Review on the Performance of the Board

Review by the Chairman on the Company’s performance, which is derived through the guidance received by the management from the Board of Directors, has been outlined in Chairman’s Review. Further detailed explanations have been covered throughout the Annual Report.

Roles & Responsibilities of Chairman & CEO

The Chairman’s role is primarily to guide long-term strategic planning of the Company including:

  • Presiding over the Board and ensuring that all relevant information has been made available to the Board;
  • Defining the Company’s philosophy and objectives;
  • Safeguarding shareholders’ interest in the Company;
  • Responsible for building the Company’s image nationally and globally;
  • Ensuring the appropriate recording and circulation of the minutes of the meeting to the Directors and officers entitled to attend the Board meetings;
  • Major spokesman of the Company, responsible for liaison with the senior most levels of the Federal and Provincial Governments;
  • Overseeing the Company’s macro approaches and public relations in the broad sense, including its relations with public organizations and other companies; and
  • Commitments and de-commitments of strategic investments.

The CEO is responsible for reporting the Company’s performance to the Board of Directors. He is also responsible for all matters pertaining to operations of the Company under directions of the Board of Directors. His responsibilities include:

  • To plan, formulate and implement strategic policies;
  • To build and maintain amicable relations with government departments, trade associations and regulatory bodies;
  • To ensure the achievement of productivity and profitability targets and that the Company operates efficiently;
  • To ensure that the chain of command in the Company is clear to facilitate the maintenance of discipline, the roles and duties of all managers clearly define their functions to ensure accountability;
  • To maintain a regular review of duties and functions of the staff to ensure that there are no duplications of efforts in office methods and procedures and that all operations are carried out efficiently and economically;
  • To chalk out human resource policies for achieving high professional standards, overall progress/betterment of the Company as a whole;
  • To ensure that proper succession planning for all levels of hierarchy exists in the Company and is constantly updated;
  • To ensure welfare and training of the staff in accordance with the Company’s policy and government regulations which are applicable from time to time;
  • To ensure that open and progressive atmosphere is created among employees giving them a sense of participation and providing them with an opportunity to give their best;
  • To ensure that every employee is treated equally as an individual regardless of his designation; career development is on merit basis and each employee is helped to develop their performance through continuous study and training so as to form a team in which all levels of employees work together with common goals to strengthen the position of the Company;
  • To ensure that necessary coordination exists between various departments of the Company to achieve smooth and effective operations;
  • To ensure that technical information made available to the Company under Technical Service or Royalty Agreements are used solely in the manufacturing of approved products and the staff of the Company maintains strict confidentiality of such information;
  • To ensure that the Company’s interests and assets are properly protected & maintained and all the required Government obligations are complied with in a timely manner;
  • To maintain close liaison with the Government, customers, suppliers and sales offices;
  • To pay all Government dues on or before due date and obtain all refunds due from the Government;
  • To ensure proper functioning of the Management Committees of the Company of which he is the Chairman;
  • To prepare and present personally to the Board of Directors the following reports/details:
    • Annual business plan, cash flow projections and long term plans.
    • Budgets including capital, manpower and overhead budgets along with variance analysis.
    • Quarterly operating results of the company in terms of its operating divisions & segments.
    • Promulgations or amendment of the law, rules or regulations, accounting standards and such other matters as may affect the Company.
    • Reviewing performance against budgets / targets, revenue and capital expenditure, profits, other administration, commercial, personnel and other matters of importance to the Company
  • To always keep the line of communication open with the competitors for taking joint actions for mutual benefits;
  • To be responsible for publicity of the Company’s products consistent with the company’s image and with a view to maximizing sales;
  • To ensure that the Company operates with minimum staffing and paperwork.
CEO’s Performance Review

The performance of the CEO is formally appraised through the evaluation system which is based on quantitative and qualitative values. It includes the performance of the business, the accomplishment of objectives with reference to profits, organization building, succession planning and corporate success.

Committees Reporting to the CEO

The CEO is supported by committees that facilitate him in the performance of his duties. These committees meet frequently and ensure implementation of sustainability framework in various aspects of Atlas Honda’s operations. The implementation of the framework is ensured by various departmental heads who report the activities and progress to these committees. Input is also acquired from associated third parties through the Company’s process of stakeholders’ engagement. The implementation of sustainability framework is frequently monitored by Internal Audit function along with the annual assurance from an independent expert before reporting the results to the stakeholders.

Governance Practices Exceeding Legal Requirements

The Company’s commitment to the highest levels of moral and ethical values is demonstrated by voluntary adoption of best business practices in addition to the stipulated regulatory requirements. Some of the governance practices exceeding legal requirements that have been adopted by the Company include:

  • Best reporting practices recommended by ICAP/ICMAP;
  • Adoption of Pakistan Stock Exchange criteria for selecting top companies;
  • Disclosure of various financial analysis including ratios, reviews, risk matrix and graphs etc., and
  • Implementation of aggressive Health, Safety and Environment strategies to ensure safety of employees and equipment.
Related Parties

The Company maintains a comprehensive and updated list of all related parties. Names of all such related parties along with whom the Company had entered into transactions during the year, along with the nature of their relationship and percentage holdings have been appropriately disclosed in Note 36 of the Financial Statements.

As per the requirements of fourth schedule of the Companies Act 2017, detailed disclosure regarding related party transactions have been presented in note 36 to the Financial Statements.

Risk Management

The Company has an entity-wide risk management processes for identifying, evaluating and managing the principal risks. The Board is responsible for the systems of internal control and risk management and for reviewing each year the effectiveness of those systems. The key features of the Company’s entity-wide risk management and internal control process include:

  • The Audit Committee, on behalf of the Board, considers the effectiveness of the internal control procedures during the financial year. It reviews reports from the internal and external auditors and reports its conclusions to the Board.
  • A Risk Management Committee is responsible for reviewing the key risks and the strategies to mitigate/counter these risks.
  • The Company’s Internal Audit function carries out the continuing assessments of the quality of risk management and control, reports to the management and the Audit Committee on the status of specific areas identified for improvement and promotes effective risk management in the lines of business processes.

During the year, the Committee discharged its responsibilities and reported the matters in Report of the Audit Committee.

Compliance and Integrity Management

The Company’s Code of Conduct (the Code) provides guidelines on ethical standards. It covers issues such as bribery and corruption, fraud, insider trading, legal compliance, conflicts of interests, human rights and discrimination. The Code includes a commitment to conduct the Company’s business with due regard to the interests of all stakeholders and the environment. The Code requires compliance with all applicable laws and regulations as a minimum standard. In essence, the guidelines to the Code outline the Company’s approach to ethics management, which includes all elements recognized as best practices in ethics management. The Code guides interactions with all the stakeholders, including employees, vendors and customers.

The Code is reviewed annually and any changes therein are approved by the Board. The same is communicated to all the employees, vendors, service providers and customers and is available on the Company’s website.

Whistleblower Policy

The Company’s purpose and values set the standard for how it does business and actively encourage openness, integrity and accountability. The Company’s Whistleblower Policy has been developed to ensure that concerns are raised regarding actual or suspected contraventions of the Company’s ethical and legal standards freely and without fear of repercussions. The policy provides a number of avenues for disclosure including internally through managers and Business Ethics Committee. Matters reported are investigated by the Internal Audit function and it is determined whether there is evidence to support the matter raised or to refute it. Information regarding any incident is reported to the Audit Committee. The reports include details of the matter, measures taken and the status of any investigation. During the year, no such incidences were reported.

Privacy and Data Protection

The stakeholders are understandably concerned about how their personal information is used and shared and they want to feel confident that data communicated or stored online is secure. The Company works regularly to enhance robust processes and systems that protect customers’ and employees’ data and to raise awareness about the importance of data protection and privacy through the Company’s IT Governance Policy which is summarized below:

  • The members of Management Committee are responsible for required compliance in their respective functional areas, at all locations.
  • The General Manager Systems is responsible for its implementation, maintenance, compliance and for suggesting new areas as per technology enhancement.
Conflict of Interest Policy

The Company has a policy in place to ensure that any conflict of interest is properly disclosed, recorded and addressed, upholding the interests of the company. In line with the provisions of Companies Act, 2017, every Director is required to disclose his interest in writing to the Company Secretary, in respect of any contract/appointment, etc. Such disclosures are circulated to the Board. Interested Directors do not participate in voting on the said resolution and it is properly recorded in the minutes of the Board meeting and also entered in the statutory register maintained for this purpose.

Insider Trading

The Company has a clearly defined policy relating to insider trading which requires all the relevant employees to maintain confidentiality of inside information at all times. The purpose of this policy is to set forth guidelines on purchase or sale of securities while in possession of inside information. The Company is in compliance with the requirements issued by SECP relating to maintenance of register of persons having access to inside information by designated senior management officer in a timely manner and maintained proper record including basis for inclusion or exclusion of names of persons from the said list.

Anti-corruption and Human Rights

Analysis of risks related to corruption is a continual process at Atlas Honda and no corrupt practices are tolerated. The Company’s Code of Conduct contains explicit requirement about Business Integrity and Anti-corruption, which every employee is required to adhere to. The Company has a dedicated internal audit department to implement the risk management systems. The department directly reports the findings to Audit Committee for taking appropriate action. No incidence of corruption was reported during the year.

Grievance/Feedback System

The Company believes in protecting interest of its investors and shareholders. The shareholders give their feedback in General Meetings and are encouraged to do so. It allows the Company to have a good understanding of their views on operations and decisions. Accordingly, a “Grievance/ Feedback System” has been established that provides an avenue for reporting and resolution of all complaints/queries on timely basis.

A designated e-mail address has been created which is investor.relations@atlashonda.com.pk to facilitate investors for submission of queries/grievances and feedbacks. In addition, complaints and suggestions can also be received in writing, duly addressed to Company Secretary. All grievances/queries are resolved and communicated to the investors on timely basis after due verification procedures.

Board’s Role in Shaping Sustainability Policy

The Board provides direction on sustainability policy and initiatives to enhance the positive impacts and reduce the negative impacts on the economy, environment and society. The execution of the Board’s directives and policies is carried out by the respective management teams and performance is reviewed by the Board. The Board also oversees operating & financial performance, risk management & internal controls and compliance with legal requirements.

Sustainability Strategy Framework

The Company’s sustainability strategy focuses on crafting long-term value and providing a level playing field for future generations to meet their needs. This goal can only be attained through the efficient use of available resources, commitment to creating sustainable products and solutions and treating the environment and people equitably and with respect. The commitment of doing business in a sustainable way sets the Company apart from its competitors, leading to customer satisfaction, appreciation, brand recognition and increasing product demand. The Company’s Sustainability Strategy Framework supports its business strategy and is aligned with the Company’s purpose. The framework has five key areas of focus:

  1. Environmental Protection
  2. Product Responsibility
  3. Corporate Citizenship
  4. Employee Management
  5. Vendor Management

The Company is guided by its sustainability framework while making efforts for creating sustainable value for all its stakeholders. This framework is a product of Atlas Group’s fundamental business doctrine – the “ATLAS WAY”. It comprises of the principles of the “ATLAS CULTURE” and the “ATLAS SYSTEMS”. The principles of the Atlas Way cover all departments, operations, activities and aspects of business and provide ideal guidelines for their progressive development. The ultimate goal is to obtain excellence in operations and quality in products without compromising on protection of environment and interest of society at large.

Grievance/Feedback System

We believe in protecting interest of our investors and shareholders. The shareholders give their feedback in General Meetings and we encourage them to do so to have a good understanding of their views on our operations and decisions. Accordingly, a “Grievance/ Feedback System” has been established that provides an avenue for reporting and resolution of all complaints/queries on timely basis.

A designated e-mail address has been created which is investor.relations@atlashonda.com.pk to facilitate investors for submission of queries/grievances and feedbacks. In addition, complaints and suggestions can also be received in writing, duly addressed to Company Secretary. All grievances/queries are resolved and communicated to the investors on timely basis after due verification procedures.

Sustainability Strategy Framework

Our sustainability strategy focuses on crafting long-term value and providing a level playing field for future generations to meet their needs. This goal can only be attained through the efficient use of available resources, commitment to creating sustainable products and solutions and treating the environment and people equitably and with respect. The commitment of doing business in a sustainable way sets us apart from our competitors, leading to customer satisfaction, appreciation, brand recognition and increasing product demand. Our Sustainability Strategy Framework supports our business strategy and is aligned with the company’s purpose. The framework has five key areas of focus:

  • Environmental Protection
  • Product Responsibility
  • Corporate Social Responsibility
  • Employee Management
  • Vendor Management

We are guided by our sustainability framework while making efforts for creating sustainable value for all our stakeholders. This framework is a product of Atlas Group’s fundamental business doctrine – the “ATLAS WAY”. It comprises of the principles of the “ATLAS CULTURE” and the “ATLAS SYSTEMS”. The principles of the Atlas Way cover all departments, operations, activities and aspects of business and provide ideal guidelines for their progressive development. The ultimate goal is to obtain excellence in operations and quality in products without compromising on protection of environment and interest of society at large.

The Company ensures adherence to best practices for reporting sustainability issues through application of its framework and GRI Standards. The Company’s sustainability framework defines the way it conducts business which is supported by policies, guidelines, values and management tools. It commits the Company to consider and take responsibility for the long term economic, social and environmental implications of the Company’s decisions and to work in partnership with all stakeholders across its value chain to maximize positive impacts.

The following diagram summarizes the Company’s framework and approach to sustainability:

Stakeholder Engagement

Being the largest manufacturer of motorcycles in the country, both the Company’s manufacturing activities and its products have significant effect on the environment as well as on diverse groups of stakeholders. Simultaneously, the views, decisions and actions of these groups have an impact on the success of the Company’s business. The Company, therefore, engages in an ongoing dialogue regarding sustainability topics with its stakeholders in relevant markets and at all locations. This allows the Company to understand the issues, formulate strategies and deliver according to their expectations.

The engagement process starts with the identification of stakeholders. The Company defines stakeholders as those who are potentially affected by the Company’s operations or who have an interest in or influence on the Company’s business. Stakeholders are identified and then prioritized on the basis of nature of relationship, influence, responsibility, dependency proximity and willingness & ability to engage. Consultation is then carried out with the identified stakeholders to gain input on topics which are of interest to stakeholders or which can significantly affect us. The Company’s range of stakeholders includes shareholders/investors, employees, customers, dealers, vendors, local community, government & regulators, industry associations & representative bodies and media. Process and frequency of consultations with stakeholders, topics identified and the Company’s responses to the same are as follows:

Materiality Analysis

The Company uses GRI Standard GRI 101 Foundation 2016 reporting principles of sustainability context, materiality, completeness and stakeholder inclusiveness, for defining report content. These principles have been consistently applied at varying degrees during identification, prioritization and validation steps, while defining material topics for this report.

The Company maintains an up to date understanding of its material topics through engagement and dialog with key stakeholders, as well as by monitoring the Company’s business context and the relevant trends. This approach helps the Company understand stakeholder perception and the Company’s ability to evaluate its ability to create and sustain value. Based on the results of the stakeholder engagement, review of industry specific issues and internal analysis, following materiality matrix has been developed.

The matrix divides up the topics to show those which have high impacts and those which have moderate impacts of Atlas Honda’s activities and which are highly relevant and those which are moderately relevant to its stakeholders. The prioritization of topics is based on materiality analysis for non-financial risks as per GRI standards. The severity, likelihood and relevance to business objectives and stakeholder’s interests were the guiding principles during this analysis. The risks associated with each material topic are analyzed and actions are recommended for prevention or mitigation of negative impacts and maximization of positive impacts. The content and scope of this report is also derived from this matrix.

The boundaries for material topics have been identified on the basis of their impacts whether lying within the organization or outside the organization. The reporting principles for defining report content from GRI Standard GRI 101 Foundation 2016 have been used while identifying the boundaries for material topics.

Governance Structure

Atlas Honda’s strong governance framework provides a solid structure for effective and responsible decision-making within the organization. The highest decision making is carried out at the shareholders’ meetings, supported by the Board of Directors. The Board has oversight of the risks and opportunities arising from the company’s activities and is responsible for setting the direction, strategies & objectives and for monitoring the implementation of the same by management.

Board of Directors

We have an experienced and dynamic Board with the right blend of skills to deliver and further develop strategies. Presently, the Board comprises of eight Directors, including four non-executive Directors, three executive Directors and one independent Director. Non-executive Directors are elected to enhance objectivity. We do not have a defined quota for Board of Directors based on gender, ethnicity or age group. The Chairman is responsible for the overall discharge of the Board’s duties. The office of the Chairman and the Chief Executive Officer (CEO) are separate and
the Chairman is a non-executive Director.

The Chairman of the Board of Directors is selected from within the Board. The Board may from time to time establish committees, to assist it by focusing on specific responsibilities in greater detail than is possible for the Board as a whole, reporting to the Board and making any necessary recommendations. The statute requires the Board to formulate Audit Committee and Human Resource & Remuneration Committee.

All the matters including election, appointment and disclosure of interest are governed by the statutory requirements and regulations laid down by SECP and PSX.No non-compliances were identified during the year. Further details about the directors and matters carried out during the year can be found in the Director’s profile section and Statement of Compliance with the Code of Corporate Governance in the Annual Report 2018.

Committees of the Board

Each Committee of the Board has a written ‘Terms of Reference’ outlining their duties and responsibilities. The Committees report on their activities and results to the Board. The table below summarizes the terms of reference, number of members and frequency of meetings of the Committees.

Board’s Role in Shaping Sustainability Policy

The Board provides leadership to the Company in a manner that promotes its long-term success, thereby maximizing value for the stakeholders. It also sets the direction for the Company’s values, ethics & business policies and practices. All the strategic plans, budgets, capital expenditures, investment proposals and matters of strategic importance are approved by the Board. However, some of the decisions are taken in the
General Meetings of the Company as per the requirements of Companies Act, 2017. The Board also provides direction on sustainability policy, and sustainability initiatives to enhance the positive impacts and reduce the negative impacts on the economy, environment and society. The execution of the Board’s directives and policies is carried out by the respective management teams whose performance is reviewed by the Board. The Board also oversees operating & financial performance, risk management & internal controls and compliance with legal requirements.

The Chairman, in collaboration with the Company Secretary and senior management, is responsible to ensure that the Board members are provided, at all times, with the information necessary for them to effectively discharge their duties and responsibilities. On appointment, Directors take part in an “Induction Program” to broaden their knowledge and understanding of the business. The Directors are also encouraged to attend courses which provide information and training relating to their duties, responsibilities, powers and potential liabilities. The Company Secretary arranges an appropriate Director’s Training Program in line with the mandatory requirements of the Code of Corporate Governance.

Management Remuneration

The remuneration of the Board members is approved by the Board itself. However, in accordance with the Code of Corporate Governance, it is ensured that no director takes part in deciding his own remuneration. We do not pay remuneration to non-executive directors except fee for attending meetings of the Board. In order to retain the best talent, our remuneration policies are structured in line with prevailing industry trends and
business practices. For information on remuneration of the Directors and CEO in 2017-18, please refer note 35 of Financial Statements.

Board’s Performance Evaluation

The evaluation of Board’s role of oversight and its effectiveness is a continuous process, which is appraised by the Board through Human Resource & Remuneration Committee. The core areas of focus are:

  • Alignment of corporate goals and objectives with the vision and mission of the Company;
  • Strategy formulation for sustainable operation;
  • Board’s independence; and
  • Evaluation of the Board’s Committees’ performance in relation to discharging their responsibilities set out in respective terms of reference.

The performance of the CEO is formally appraised through the evaluation system which is based on quantitative and qualitative values. It includes the performance of the business, the accomplishment of objectives with reference to profits, organization building, succession planning and corporate success.

Roles & Responsibilities of Chairman & CEO

The Chairman’s primary role is to guide long-term strategic planning for Atlas Honda including:

  • Presiding over the Board and ensuring that all relevant information has been made available to the Board;
  • Defining the Company’s philosophy and objectives;
  • Safeguarding shareholders’ interest in the Company;
  • Responsible for building the Company’s image nationally and globally;
  • Ensuring the appropriate recording and circulation of the minutes of the meeting to the Directors and officers entitled to attend the Board meetings;
  • Major spokesman of the Company, responsible for liaison with the senior most levels of the Federal and Provincial Governments;
  • Overseeing the Company’s macro approaches and public relations in the broad sense, including its relations with public organizations and other companies; and
  • Commitments and de-commitment of strategic investments.

The CEO is responsible for reporting the Company’s performance to the Board of Directors. He is also responsible for all matters pertaining to operations of the Company under direction of the Board of Directors. His responsibilities include:

  • To plan, formulate and implement strategic policies;
  • To build and maintain amicable relations with government departments, trade associations and regulatory bodies;
  • To ensure the achievement of productivity and profitability targets and that the Company operates efficiently;
  • To ensure that the chain of command in the Company is clear to facilitate the maintenance of discipline, the roles and duties of all managers clearly define their functions to ensure accountability;
  • To ensure that necessary coordination exists between various departments of the Company to achieve smooth and effective operations;
  • To maintain a regular review of duties and functions of the staff to ensure that there are no duplications of efforts in office methods and procedures and that all operations are carried out efficiently and economically;
  • To ensure that technical information made available to the Company under technical service or royalty agreements is used solely in the manufacturing of approved products and the staff of the Company maintains strict confidentiality of such information;
  • To ensure that the Company’s interests and assets are properly protected and maintained and all the required Government obligations are complied in a timely manner;
  • To maintain close liaison with the Government, customers, suppliers and sales offices;
  • To chalk out human resource policies for achieving high professional standards, overall progress / betterment of the Company as a whole;
  • To pay all Government dues on or before due date and obtain all refunds due from the Government
  • To ensure that proper succession planning for all levels of hierarchy exist in the Company and is constantly updated;
  • To ensure proper functioning of the Management Committees of the Company of which he is the Chairman;
  • To prepare and present personally to the Board of Directors the following reports/details:
    • Annual business plan, cash flow projections and long term plans.
    • Budgets including capital, manpower and overhead budgets along with variance analysis.
    • Quarterly operating results of the Company in terms of its operating divisions & segments.
    • Promulgations or amendment of the law, rules or regulations, accounting standards and such other matters as may affect the Company.
    • Reviewing performance against budgets / targets, revenue and capital expenditure, profits, other administration, commercial, personnel and other matters of importance to the Company.
  • To ensure welfare and training of the staff in accordance with the Company’s policy and government regulations that are applicable from time to time;
  • To always keep the line of communication open with the competitors for taking joint actions for mutual benefits;
  • To be responsible for publicity of the Company’s products consistent with the Company’s image and with a view to maximizing sales;
  • To ensure that open, progressive and game free atmosphere is created among employees giving them a sense of participation and providing them with an opportunity to give their best;
  • To ensure that every employee is treated equally as an individual regardless of his designation; career development is on merit basis and each employee is helped to develop pride of performance through continuous study and training so as to form a team in which all levels of employees work together with common goals to strengthen the position of the Company;
  • To ensure that the Company operates with minimum staffing and paperwork.
Committees Reporting to the CEO

The CEO is supported by Committees that facilitate him in the performance of his duties. These Committees meet frequently and ensure implementation of sustainability framework in various aspects of Atlas Honda’s operations. The implementation of the framework is ensured by various departmental heads who report the activities and progress to these Committees. Input is also acquired from associated third parties through our process of stakeholders’ engagement. The implementation of sustainability framework is frequently monitored by Internal Audit function along with the annual assurance from an independent expert before reporting the results to the stakeholders.

Risk Management

We have entity-wide risk management processes for identifying, evaluating and managing the principal risks. The Board is responsible for the systems of internal control and risk management and for reviewing each year the effectiveness of those systems. The key features of our enterprise risk management and internal control process include:

  • The Audit Committee, on behalf of the Board, considers the effectiveness of the internal control procedures during the financial year. It reviews reports from the internal and external auditors and reports its conclusions to the Board.
  • A Risk Management Committee is responsible for reviewing the key risks and the strategies to mitigate/ counter these risks.
  • Our Internal Audit function carries out the continuing assessments of the quality of risk management and control, reports to the management and the Audit Committee on the status of specific areas identified for improvement and promotes effective risk management in the lines of business processes.

During the year, the Committee discharged its responsibilities and reported the matters in Report of the Audit committee included in the Annual Report.

Compliance and Integrity Management

Our Code of Conduct (the Code) provide guidelines on ethical standards. It cover issues such as bribery and corruption, fraud, insider trading, legal compliance, conflicts of interests, human rights and discrimination. The Code includes a commitment to conduct our business with due
regard to the interests of all our stakeholders and the environment. The Code requires compliance with all applicable laws and regulations as a minimum standard. In essence, the guidelines to the Code outline our approach to ethics management, which includes all elements recognized as best practices in ethics management. The Code guides interactions with all the stakeholders, including employees, vendors and customers.

The code is reviewed annually and any changes therein are approved by the Board. The same is communicated to all the employees, vendors, service providers and customers and is available on our website.

Whistle blower Policy

Our purpose and values set the standards for how we do business and actively encourage openness, integrity and accountability. Our Whistle blower Policy has been developed to ensure that concerns are raised regarding actual or suspected contraventions of our ethical and legal standards freely and without fear of repercussions. The policy provides a number of avenues for disclosure including internally through managers and Business Ethics Committee. Matters reported are investigated by the Internal Audit function and it is determined whether there is evidence to support the matter raised or to refute it. Information regarding any incident is reported to the Audit Committee. The reports include details of the matter, measures taken and the status of any investigation. During the year, no such incidences were reported.

Privacy and Data Protection

The stakeholders are understandably concerned about how their personal information is used and shared and they want to feel confident that data communicated or stored online is secure. We work regularly to enhance robust processes and systems that protect customers’ and employees’ data and to raise awareness about the importance of data protection and privacy through our IT Governance Policy which is summarized below:

  • The members of Management Committee are responsible for required compliance in their respective functional areas, at all locations.
  • The General Manager-IT is responsible for its implementation, maintenance, compliance and for suggesting new areas as per technology enhancement.
Conflict of Interest Policy

We have a policy in place ensuring that any conflict of interest is properly disclosed, recorded and addressed, upholding the interests of the Company. In line with the provisions of Companies Act, 2017, every Director is required to disclose his interest in writing to the Company Secretary, in respect of any contract/appointment, etc. Such disclosures are circulated to the Board. Interested Directors do not participate in voting on the said resolution and it is properly recorded in the minutes of the Board meeting and also entered in the statutory register maintained for this purpose.

Insider Trading

We have a clearly defined policy relating to insider trading which requires all the relevant employees to maintain confidentiality of inside information at all times. The purpose of this policy is to set forth guidelines on purchase or sale of securities while in possession
of inside information. We have complied with the requirements issued by SECP, relating to maintenance of register of persons having access to inside information by designated senior management officer in a timely manner and maintained proper record including basis for inclusion or exclusion of names of persons from the said list.

Anti-corruption and human rights

Analysis of risks related to corruption is a continual process at Atlas Honda and no corrupt practices are tolerated. Our Code of Conduct contains explicit requirement about Business Integrity and Anti-corruption, which every employee is obliged to adhere. We have a dedicated Internal Audit department to implement the risk management systems. The department directly reports the findings to Audit Committee for taking appropriate action. No incidence of corruption was reported during the year.

Grievance/Feedback System

We believe in protecting interest of our investors and shareholders. The shareholders give their feedback in General Meetings and we encourage them to do so to have a good understanding of their views on our operations and decisions. Accordingly, a “Grievance/ Feedback System” has been established that provides an avenue for reporting and resolution of all complaints/queries on timely basis.

A designated e-mail address has been created which is investor.relations@atlashonda.com.pk to facilitate investors for submission of queries/grievances and feedbacks. In addition, complaints and suggestions can also be received in writing, duly addressed to Company Secretary. All grievances/queries are resolved and communicated to the investors on timely basis after due verification procedures.

Sustainability Strategy Framework

Our sustainability strategy focuses on crafting long-term value and providing a level playing field for future generations to meet their needs. This goal can only be attained through the efficient use of available resources, commitment to creating sustainable products and solutions and treating the environment and people equitably and with respect. The commitment of doing business in a sustainable way sets us apart from our competitors, leading to customer satisfaction, appreciation, brand recognition and increasing product demand. Our Sustainability Strategy Framework supports our business strategy and is aligned with the company’s purpose. The framework has five key areas of focus:

  • Environmental Protection
  • Product Responsibility
  • Corporate Social Responsibility
  • Employee Management
  • Vendor Management

We are guided by our sustainability framework while making efforts for creating sustainable value for all our stakeholders. This framework is a product of Atlas Group’s fundamental business doctrine – the “ATLAS WAY”. It comprises of the principles of the “ATLAS CULTURE” and the “ATLAS SYSTEMS”. The principles of the Atlas Way cover all departments, operations, activities and aspects of business and provide ideal guidelines for their progressive development. The ultimate goal is to obtain excellence in operations and quality in products without compromising on protection of environment and interest of society at large.

We ensure adherence to the best practices for reporting sustainability issues through application of our framework and GRI Standards. Our sustainability framework defines the way we do business which is supported by policies, guidelines, values and management tools.

It commits us to consider and take responsibility for the long term economic, social and environmental implications of our decisions and to work in partnership with all stakeholders across our value chain to maximize positive impacts.

The following diagram summarizes our framework and approach to sustainability:

Stakeholder Engagement

Being the largest manufacturer of motorcycles in the country, both our manufacturing activities and our products have significant effect on the environment as well as on diverse groups of stakeholders. Simultaneously, the views, decisions and actions of these groups have an impact on the success of our business. We, therefore, engage in an ongoing dialogue regarding sustainability topics with our stakeholders in relevant markets and at all locations. This allows us to understand the issues, formulate strategies and deliver according to their expectations.

The engagement process starts with the identification of stakeholders. We define stakeholders as those who are potentially affected by our operations or who have an interest in or influence on the Company’s business. Stakeholders are identified and then prioritized on the basis of nature of relationship, influence, responsibility, dependency, proximity ,willingness and ability to engage. Consultation is then carried out with the identified stakeholders to gain input on topics which are of interest to the stakeholders or which can significantly affect us. The Company’s range of stakeholders includes shareholders/investors, employees, customers, dealers, vendors, local community, Government & regulators, industry associations & representative bodies and analysts. Process and frequency of consultations with stakeholders, topics identified and our responses to the same are as follows:

Materiality Analysis

Taking into account the key topics identified by our stakeholders, we clearly understand our current status and necessary improvements we should make. We used GRI Standard GRI 101 Foundation 2016 reporting principles of sustainability context, materiality, completeness and stakeholder inclusiveness, for defining our report contents. These principles have been consistently applied at varying degrees during identification, prioritization and validation steps, while defining material topics for this report. Based on the results of the stakeholder engagement, review of industry specific issues, and internal analysis, a materiality analysis was carried out to produce a materiality matrix containing the material sustainability issues for our operations.

The materiality matrix below provides the necessary framework for organizing these issues. By creating and employing this matrix, we confirm the coverage of each issue and clarify where it is positioned.

The matrix divides up the topics to show those which have high impacts and those which have moderate impacts of Atlas Honda’s activities and which are highly relevant and those which are moderately relevant to its stakeholders. The prioritization of topics is based on materiality analysis for non-financial risks as per GRI standards. The severity, likelihood and relevance to business objectives and stakeholder’s interests were the guiding principles during this analysis. The Social Responsibility Committee analyzes the risks associated with each material topic and recommends actions for prevention or mitigation of negative impacts and maximization of positive impacts. The content and scope of this report is also derived from this matrix.

The boundaries for material topics have been identified on the basis of their impacts whether lying within the organization or outside the organization. The reporting principles for defining report content from GRI Standard GRI 101 Foundation 2016 have been used while identifying the boundaries for material topics.

Corporate Governance Structure

The corporate governance structure of AHL provides a comprehensive framework to enhance accountability to shareholders and other stakeholders, ensures timely and accurate disclosures of all material matters, deals fairly with shareholders’ and other stakeholders’ interests, and maintains high standards of business ethics and integrity. The highest decision making is carried out at shareholders’ meetings, supported by the Board of Directors which performs an oversight and supervision of management’s execution of duties.

Structure of the Board

The Company has a strong and dynamic Board with the right blend of skills to deliver and further develop its strategies. Presently, the Board comprises of eight Directors, including four non-executive Directors, three executive Directors and one independent Director. Non-executive Directors are elected to enhance the supervisory function of the Board from an objective standpoint, for increasing transparency of the management advise by utilizing their management experience from different industries. Out of the eight, six Directors have either obtained certificate of Directors’ Training Program or are exempted from the requirement of Directors’ Training Program as per the clause 5.19.7 of the Code. Whereas, the remaining two Directors will undertake the Directors’ Training Program within the stipulated time.

The Chairman is responsible for the overall discharge of the Board’s duties. The office of the Chairman and the Chief Executive Officer (CEO) are separate and the Chairman is a non-executive Director.

The Chairman of the Board of Directors is selected from within the Board. The Board may from time to time establish committees, to assist it by focusing on specific responsibilities in greater detail than is possible for the Board as a whole, reporting to the Board and making any necessary recommendations. The statute requires the Board to formulate Audit Committee and Human Resource & Remuneration Committee.

The Company has not defined any quota for women, ethnic majorities or age group for the Board of Directors. The members of the Board hold significant position in other companies, the details of which can be found in the Director’s profile section of the Annual Report 2017. The Directors are elected for the period of three years by the shareholders in General Meeting of the Company. The Board may also appoint any individual as a Director to fill a casual vacancy occurring among the Directors. The process of election and appointment is governed in accordance with the statutory requirements laid down by SECP and regulations of the Pakistan Stock Exchange.

Prior to appointment, each Director is required to disclose, to the Board their other significant commitments. This disclosure facilitates the assessment of their capacity to effectively discharge their duties and responsibilities. Each Director undertakes that they are able to discharge the assigned responsibilities in an efficient manner.

Directors are required to seek consent from the Board prior to being appointed to, or acquiring any material financial interest in, any enterprise which competes, likely to compete or has a significant business relationship with the Company, unless that situational conflict can be managed as per provision of the Companies Ordinance, 1984 and rules and regulations of the SECP and the Pakistan Stock Exchange. During the year, there were no such transactions of material nature with the Directors which are in conflict of interest with the Company.

Committees Reporting to the Board

Each Board Committee has a written Terms of References outlining its duties and responsibilities. The Committees report on their activities and results to the Board of Directors.The table below summarizes the terms of reference, number of members and frequency of meetings of the Committees of the Board.

Board’s Role in Shaping Sustainable Policies

The principal purpose of the Board is to provide leadership to the Company in a manner that promotes its long-term success, thereby maximizing value for the stakeholders. The Board sets the direction for the Company’s values, ethics & business policies and practices leading to strategy development, growing shareholder value, oversight & control and corporate governance. All the strategic plans, budgets, capital expenditures, investment proposals and matter of strategic importance are approved by the Board. However, some of the decisions are taken in the General Meetings of the Company as per the requirement of the Companies Ordinance, 1984. The Board also provides direction on sustainability policy, and sustainability initiatives to enhance the positive impacts and reduce the negative impacts on economy, environment and society. The execution of Board’s directives and policies is carried out by the respective management teams and performance is reviewed by the Board. The Board also oversees operating & financial performance, risk management & internal controls and compliance with legal requirements.

The Chairman, in collaboration with the Company Secretary and senior management, is responsible to ensure that the Board members are provided, at all times, with the information necessary for them to effectively discharge their duties and responsibilities.

On appointment, Directors take part in an “Induction Program” to broaden their knowledge and understanding of the business. Directors are also encouraged to attend courses which provide information and training relating to their duties, responsibilities, powers and potential liabilities. The Company Secretary arranges an appropriate Director’s Training Program in line with the mandatory requirements of the Code of Corporate Governance.

Management Remuneration

The remuneration of the Board members is approved by the Board itself. However, in accordance with the Code of Corporate Governance, it is ensured that no Director take part in deciding his own remuneration. The Company does not pay remuneration to non-executive Directors except fee for attending the meetings. In order to retain the best talent, the Company’s remuneration policies are structured in line with prevailing industry trends and business practices. For information on remuneration of Directors and CEO in 2016-17, please refer note 34 of the Financial Statements.

Board’s Performance Evaluation

The evaluation of Board’s role of oversight and its effectiveness is continual process, which is appraised by the Board itself. The core areas of focus are:

  • Alignment of corporate goals and objectives with the vision and mission of the Company;
  • Strategy formulation for sustainable operation;
  • Board’s independence; and
  • Evaluation of Board’s Committees’ performance in relation to discharging their responsibilities set out in respective terms of reference.

The performance of the CEO is formally appraised through the evaluation system which is based on quantitative and qualitative values. It includes the performance of the business, the accomplishment of objectives with reference to profits, organization building, succession planning and corporate success.

Roles and Responsibilities of Chairman and CEO

The Chairman’s role is primary to guide long-term strategic planning for the Company including:

  • Presiding over the Board and ensuring that all relevant information has been made available to the Board;
  • Defining the Company’s philosophy and objectives;
  • Safeguarding shareholders’ interest in the Company;
  • Responsible for building the Company’s image nationally and globally;
  • Ensuring the appropriate recording and circulation of the minutes of the meeting to the Directors and Officers entitled to attend the Board meetings;
  • Major spokesman of the Company, responsible for liaison with the senior most levels of the Federal and Provincial Governments;
  • Overseeing the Company’s macro approaches and public relations in the broad sense, including its relations with public organizations and other companies; and
  • Commitments and de-commitment of strategic investments.

The CEO is responsible for reporting the Company’s performance to the Board of Directors. The CEO is responsible for all matters pertaining to the operations of the Company under the overall direction of the Board of Directors. His responsibilities include:

  • To plan, formulate and implement strategic policies;
  • To build and maintain amicable relations with government departments, trade associations and regulatory bodies;
  • To ensure the achievement of productivity and profitability targets and that the Company operates efficiently;
  • To ensure that the chain of command in the Company is clear to facilitate the maintenance of discipline, the roles and duties of all managers clearly define their functions to ensure accountability;
  • To ensure that necessary coordination exists between various departments of the Company to achieve smooth and effective operations;
  • To maintain a regular review of duties and functions of the staff to ensure that there are no duplications of efforts in office methods and procedures and that all operations are carried out efficiently and economically;
  • To ensure that technical information made available to the Company under Technical Service or Royalty Agreements are used solely in the manufacturing of approved products and the staff of the Company maintains strict confidentiality of such information;
  • To ensure that the Company’s interests and assets are properly protected and maintained and all the required Government obligations are complied in a timely manner;
  • To maintain the close liaison with the Government, customers, suppliers and sales offices;
  • To chalk out human resource policies for achieving high professional standards, overall progress / betterment of the Company as a whole;
  • To pay all Government dues on or before due date and obtain all refunds due from the Government.
  • To ensure that proper succession planning for all levels of hierarchy exist in the Company and is constantly updated;
  • To ensure proper functioning of the Management Committees of the Company of which he is the chairman;
  • To prepare and present personally to the Board of Directors following reports/details:
    • Annual business plan, cash flow projections and long term plans.
    • Budgets including capital, manpower and overhead budgets along with variance analysis.
    • Quarterly operating results of the Company in terms of its operating divisions & segments.
    • Promulgations or amendment of the law, rules or regulations, accounting standards and such other matters as may affect the Company.
    • Reviewing performance against budgets / targets, revenue and capital expenditure, profits, other administration, commercial, personnel and other matters of importance to the Company.
  • To ensure welfare and training of the staff in accordance with the Company’s policy and government regulations that are applicable from time to time;
  • To always keep the line of communication open with the competitors for taking joint actions for mutual benefits;
  • To be responsible for publicity of the Company’s products consistent with the Company’s image and with a view to maximizing sales;
  • To ensure that open, progressive and game free atmosphere is created among employees giving them a sense of participation and providing them with an opportunity to give their best;
  • To ensure that every employee is treated equally as an individual regardless of his designation; career development is on merit basis and each employee is helped to develop pride of performance through continuous study and training so as to form a team in which all levels of employees work together with common goals to strengthen the position of the Company;
  • To ensure that the Company operates with minimum staffing and paperwork.
Committees Reporting to the CEO

The CEO is supported by four functional committees that facilitate him in the performance of his duties. These committees meet frequently and ensure implementation of sustainability framework in various aspects of the Company’s operations. The implementation of the framework is ensured by various departmental heads who report the activities and progress to these committees. Input is also acquired from associated third parties through the Company’s processes of stakeholders’ engagement. The implementation of sustainability framework is frequently monitored by Internal Audit function along with the annual assurance from an independent expert before reporting the results to stakeholders.

Risk Management

The Company has enterprise-wide risk management processes for identifying, evaluating and managing the principal risks faced by the Company. The Board is responsible for the Company’s systems of internal control and risk management and for reviewing each year the effectiveness of those systems. The key features of the enterprise-wide risk management and internal control process includes:

  • The Audit Committee, on behalf of the Board, considers the effectiveness of the internal control procedures during the financial year. It reviews reports from the internal and external auditors and reports its conclusions to the Board.
  • A Risk Management Committee is responsible for reviewing the key risks and the strategies to mitigate/ counter these risks.
  • The Company’s Internal Audit function carries out the continuing assessments of the quality of risk management and control; reports to the Management and the Audit Committee on the status of specific areas identified for improvement and promotes effective risk management in the lines of business processes. During the year, the Committee discharged its responsibilities and reported the following:
    • The Company’s internal audit function which reports to the Audit Committee, performed independent audits of selected controls through desktop reviews and on-site re-performance of tests to ensure compliance with pre-defined policies and procedures.
    • The composition of the Audit Committee meets all applicable independence requirements.
    • Each member is equipped with professional qualifications and skillful experience and one member has expert knowledge of finance and accounting.
    • The Audit Committee has approved the annual audit plan for the internal audit function and reviewed its reports. Audit Committee also assisted in overseeing relevant manuals, policies and important accounting principles applied by the Company.
    • The Audit Committee reviewed all interim and annual financial reports before they are published.
    • The Audit committee also ensured that all new and relevant International Accounting Standards were duly adopted and all applicable International Accounting Standards were duly followed in the preparation of Financial Statements of the Company.
    • The Audit Committee monitored the effectiveness of the internal controls, including risk management, concerning the financial reporting and proactively proposed improvements to the control environment.
    • The Audit Committee has implemented a procedure to review and approve all transactions with the related parties.

The Company’s risk management system helps in timely identification, prioritization and management of sustainability impacts, risks and opportunities. The Company’s sustainability efforts are focused in areas wich have significant impacts on economy, environment and society, are important according to business objectives and identified through stakeholders consultation. These areas include health and safety, emissions, energy usage, community investments and economic impacts. The Social Responsibility Committee regularly reviews the topics identified by risk management system and takes necessary actions, if required.

Compliance and Integrity Management

The Company’s policy requires all their Directors and employees to comply with all applicable laws. Legal compliance systems and processes have been intensified during the year to mitigate the risk of non-compliance with the laws.

The Company’s Code of Conduct (the Code) provides guidelines on 14 ethical standards. It covers issues such as bribery and corruption, fraud, insider trading, legal compliance, conflicts of interests, human rights and discrimination. The code includes a commitment to conduct our business with due regard to the interests of all our stakeholders and the environment. The Code requires compliance with all applicable laws and regulations as a minimum standard. In essence, the guidelines to the code of ethics outline The Company’s approach to ethics management, which includes all elements recognized as best practice in ethics management. The Code guides interactions with all the stakeholders, including employees, vendors and customers.

The Code is reviewed annually and any changes therein are approved by the Board. The Code is communicated to all employees, vendors, service providers and customers and is available on the Company’s website.

Whistle Blowing Policy

The Company values an open dialog on integrity and responsibility in its actions with its employees. The Company investigates all alleged breaches of the Code and applies appropriate measures when complaints turn out to be substantiated. The Company encourages employees to report their views on processes and practices to their manager or the Business Ethics Committee. These reporting mechanisms are part of the complaints procedure and are described in the Company’s Code of Conduct.

Violations reported through the whistle blower procedure are investigated by internal audit function. Information regarding any incident is reported to the Audit Committee. Reports include measures taken, details of the responsible Company function and the status of any investigation. During the year 2016-17, no alleged breaches of the Code of Conduct were reported.

Privacy and Data Protection

Stakeholders are understandably concerned about how their personal information is used and shared, and they want to feel confident that data communicated or stored online is secure. The Company works regularly to enhance robust processes and systems that protect customers and employees data and to raise awareness about the importance of data protection and privacy through its IT Governance Policy which is summarized below.

  • The members of Management Committee are responsible for required compliance in their respective functional areas, at all locations.
  • The General Manager-IT is responsible for its implementation, maintenance, compliance and for suggesting new areas as per technology enhancement.
Conflict of Interest Policy

The Company has a policy in place ensuring that any conflict of interest should be properly disclosed, recorded and addressed, upholding the interests of the Company. In line with the provisions of Companies Ordinance, 1984, every Director requires to disclose his interest in writing to the Company Secretary, in respect of any contract/appointment, etc. Such disclosures are circulated to the Board, interested Directors do not participate in voting on the said resolution and it is properly recorded in the minutes of the Board meeting and also entered in the statutory register maintained for this purpose. More details are available in the Code of Conduct.

Insider Trading

The Company has a clearly defined policy relating to the insider trading which requires all the relevant employees to maintain confidentiality of inside information at all times. The purpose of this policy is to set forth guidelines on purchase or sale of securities while in possession of inside information. The Company has complied with the requirements issued by SECP, relating to maintenance of register of persons having access to inside information by designated senior management officer in a timely manner and maintained proper record including basis for inclusion or exclusion of names of persons from the said list. Moreover, according to the policy, no employee shall transact directly or indirectly in the Company’s securities while in possession of inside information.

Stakeholder Management

Embedding sustainability has consciously evolved through a systemic engagement with stakeholders. Atlas Honda Limited defines stakeholders as those who are potentially affected by its operations or who have an interest in or influence the Company’s business.

Stakeholders are identified prioritized on the basis of number of factors including the nature of relationship, proximity, willingness to engage etc. The identified stakeholders are then consulted through respective departments for gaining input on topics which are of prime interest to stakeholders or which can significantly affect the stakeholders. The Company’s range of stakeholders includes employees, customers, suppliers, investors, non-governmental organizations, governmental institutions, analysts, media, education & research institutes and society at large. It is crucial for AHL to engage with these groups to understand their expectations and concerns.

Atlas Honda Limited deepens its relationship with stakeholders by considering their interest and engaging them by following methods:

Influence on Stakeholder Assessment and Decisions

The stakeholders’ engagement is carried out throughout the year by respective departments. The outcomes of the engagement along with internal analysis from the AHL risk management system form the basis for materiality determination for the sustainability report. Above mentioned table shows the topics identified as material based on the materiality analysis.

The matrix is divided into areas to demonstrate the topics which can highly/moderately influence the stakeholder assessment and decisions and have significant/moderate impacts on the economy, environment and society.

The prioritization of the topics is based on materiality analysis for non-financial risks as per GRI G4 guidelines. The severity, likelihood, and relevance to business objectives and stakeholder interests were the guiding principles in materiality analysis. The Social Responsibility Committee analyzes the risks associated with each material topic and recommends actions for prevention, mitigation or maximization of the positive impacts.

Grievance/feedback System

The Company believes in protecting interest of its investors and shareholders. The shareholders can give their feedback in the General Meetings of the Company. In addition, the Company also encourages their feedbacks and suggestions to have a good understanding of the shareholder’s view on different operations and decisions of the Company. Accordingly, it has constituted a “Grievance/ Feedback System” that aims to resolve all of their complaints/queries on timely basis.

A designated e-mail address has been created namely investor.relations@atlashonda.com.pk to facilitate investors in submitting their queries/grievances and feedbacks. In addition to the aforementioned email address, complaints and suggestions can also be received in writing, duly addressed to the Company Secretary. All grievances/queries are resolved and communicated to the investors on timely basis after due verification procedures.

Stakeholders Engagement

Sustainability Governance Model

Corporate governance at Atlas Honda goes beyond an interest in governance or need to fulfill regulatory requirements. The Company’s corporate governance embraces the processes through which the corporate objectives are set and pursued in the context of the social, regulatory and market environment

The governance of Atlas Honda is grounded on the basis of effective management policies and conforms to the accepted guidelines of Pakistan Stock Exchange as well as the Code of Corporate Governance issued by SECP.

The Chief Executive Officer (CEO) is responsible for reporting the Company’s performance on sustainability to the Board of Directors. CEO is supported by four functional committees that facilitate him in the performance of his duties. These committees meet frequently and ensure implementation of sustainability framework in various aspects of the Company’s operations. The implementation of the framework is ensured by various departmental heads who report the activities and progress to these committees. Input is also acquired from associated third parties through Company’s processes of stakeholders’ engagement. The implementation of sustainability framework is frequently monitored by Internal Audit function and annual assurance is also obtained from an independent expert before reporting of results to stakeholders.

Balanced Governance Structure

The corporate governance structure of AHL provides a comprehensive framework to enhance accountability to shareholders and other stakeholders, to ensure timely and accurate disclosures of all material matters, to deal fairly with shareholders and other stakeholder interests, and to maintain high standards of business ethics and integrity. With the General Shareholders’ Meetings, as its highest decision-making body, AHL‘s corporate governance system centers on the oversight and supervision of management’s execution of duties by the Board of Directors (the Board).

Board and its Committees

The Company has a strong and dynamic Board with the right mix of skills to deliver and further develop its strategies. As of March 31, 2016, the Board comprises of eight directors, including four non-executive directors, three executive directors and one independent director. Non-executive directors are elected to enhance the supervisory function of the board from an objective standpoint, for increasing transparency of the management, and gain good advice by utilizing their management experience from different industries.

The Chairman is responsible for the overall discharge of Board’s duties. The office of Chairman and Chief Executive Officer (CEO) are separate and the Chairman is a non-executive director.

The Chairman of the Board of Directors is selected from within the board. The Board may from time to time establish committees, to assist it by focusing on specific responsibilities in greater detail than is possible for the Board as a whole, reporting to the Board and making any necessary recommendations. The statute requires the Board to formulate Audit Committee and Human Resource & Remuneration Committee.

Each Board Committee has a written Terms of References outlining its duties and responsibilities. The Committees report on their activities and results to the Board of Directors. The Committees also prepare the business of the Board of Directors in their assigned areas. The executive management has been delegated to the CEO for smooth operation of the Company’s business who is also assisted by various Committees. The table below summarizes the terms of reference, number of members and frequency of meetings of the Committees of the Board and CEO.

Board Committees

CEO Committees

AHL has not defined any quota for women, ethnic majorities or age group for the Board of Directors. The members of the board hold significant position in other companies, the details of which can be found in Director’s profile section of the Annual Report 2016.

The directors are elected for the period of three years by the shareholders in Annual General meeting. The Board may also appoint any individual as a director to fill a casual vacancy occurring among the directors. The process of election and appointment is governed in accordance with the statutory requirements laid down by SECP and regulations of the Pakistan Stock Exchange.

Prior to appointment, each director is required to disclose to the Board their other significant commitments so as to enable an assessment of their capacity to effectively discharge their duties and responsibilities. Each director has undertaken that they are able to meet the time commitment expected of them for the purpose.

Directors are required to seek consent from the Board prior to being appointed to, or acquiring any material financial interest in, any enterprise which competes, likely to compete or has a significant business relationship with the Company, unless that situational conflict can be managed as per provision of the Companies Ordinance, 1984 and rules and regulations of the SECP and Pakistan Stock Exchange. During the year, there were no such transactions of material nature with the Directors which are in conflict of interest with the Company

Board Role in Shaping Sustainability Policy

The principal purpose of the Board is to provide leadership to the Company in a manner that promotes its long-term success, thereby maximizing value for its stakeholders. The Board sets the direction for the Company’s values, ethics & business policies and practices leading to strategy development; growing shareholder value; oversight & control; and corporate governance. All the strategic plans, budgets, capital expenditures, investment proposals and matter of strategic importance are approved by the Board. However, some of the decisions are taken in Annual General Meeting of the Company as per the requirement of the Companies Ordinance 1984. The Board also oversees operating & financial performance; risk management & internal controls and compliance with legal requirements.

The Chairman, in collaboration with the Company Secretary and senior management, is responsible to ensure that the Board members are provided at all times with the information necessary for them to effectively discharge their duties and responsibilities.

On appointment, directors take part in an induction program to broaden their knowledge and understanding of the business. Directors are also encouraged to attend courses providing information and training relating to their duties, responsibilities, powers and potential liabilities. The Company Secretary arranges an appropriate director’s training program in line with the mandatory requirements of the code of corporate governance.

Management Remuneration

The remuneration of the Board members is approved by the Board itself. However, in accordance with the code of corporate governance, it is ensured that no Director take part in deciding his own remuneration. The Company does not pay remuneration to non-executive directors except fee for attending the meetings. In order to retain the best talent, the Company’s remuneration policies are structured in line with prevailing industry trends and business practices. For information on remuneration of Directors and CEO in 2015-16, please refer note 34 of the Financial Statements.

Corporate Performance Evaluation

The evaluation of Board’s role of oversight and its effectiveness is continual process, which is appraised by the Board itself. The core areas of focus are:

  • Alignment of corporate goals and objectives with the vision and mission of the Company;
  • Strategy formulation for sustainable operation;
  • Board’s independence; and
  • Evaluation of Board’s Committees performance in relation to discharging their responsibilities set out in respective terms of reference.
CEO’s Performance Review

The performance of the CEO is formally appraised through the evaluation system which is based on quantitative and qualitative values. It includes the performance of the business, the accomplishment of objectives with reference to profits, organization building, succession planning and corporate success.

Role and Responsibilities of the Chairman & CEO

The Chairman’s role is primary to guide long-term strategic planning for the Company including:

  • Presiding over the Board and ensuring that all relevant information has been made available to the Board;
  • Defining the Company’s philosophy and objectives;
  • Safeguarding shareholders’ interest in the Company;
  • Responsible for building the Company’s image nationally and globally;
  • Ensuring the appropriate recording and circulation of the minutes of the meeting to directors and officers entitled to attend Board meetings;
  • Major spokesman of the Company, responsible for liaison with the senior most levels of Federal and Provincial Government;
  • Overseeing the Company’s macro approaches and public relations in the broadest sense, including its relations with public organization and other companies; and
  • Commitments and de-commitment of strategic investments.

The CEO is responsible for all matters pertaining to the operation of the Company under the overall direction of the Board of Directors. His responsibilities include:

  • To plan, formulate and implement strategic policies;
  • To build and maintain amicable relations with government departments, trade associations and regulatory bodies;
  • To ensure the achievement of productivity and profitability targets and that the Company operates efficiently;
  • To ensure that the chain of command in the Company is clear to facilitate the maintenance of discipline, the remits of all managers clearly define their functions to ensure accountability;
  • To prepare for the approval of the Board of Directors annual forecasts of plans for production, sales, profit, revenue & capital expenditure, manpower, which fit into the long-term business objectives and the overall strategic direction of the Company;
  • To ensure that necessary coordination exists between various departments of the Company to achieve smooth and effective operations;
  • Maintain a regular review of duties and functions of the staff to ensure that there is no duplications of efforts in office methods and procedures and that all operations are carried out efficiently and economically;
  • Ensure that technical information made available to the Company under Technical Service or Royalty Agreements are used solely in the manufacture of approved products and the staff of the Company maintains strict confidentiality of such information;
  • To ensure that the Company’s interests and assets are properly protected and maintained and all the required Government obligations are complied;
  • To maintain the close liaison with the Government, customers, suppliers and sales offices;
  • To chalk out human resource policies for achieving high professional standards, overall progress / betterment of the Company as a whole.
  • To pay all Government dues on or before date and obtain all refunds due from the Government.
  • To ensure that proper succession planning for all levels of hierarchy exist in the Company and is constantly updated;
  • To ensure proper functioning of the Management Committees of the Company of which he is the chairman;
  • To prepare and present personally to the Board of Directors following reports/details:
    • Annual business plan, cash flow projections and long term plans.
    • Budgets including capital, manpower and overhead budgets along with variance analysis.
    • Quarterly operating results of the Company in terms of its operating divisions & segments.
    • Promulgations or amendment of the law, rule or regulation, accounting standards and such other matters as may affect the Company.
    • Reviewing performance against budgets / targets, revenue and capital expenditure, profits, other administration, commercial, personnel and other matters of importance to the Company.
  • To ensure welfare and training of the staff in accordance with the Company’s policy and government regulations that are applicable from time to time;
  • To always keep the line of communication open with the competitors for taking joint actions for mutual benefits;
  • To be responsible for publicity of Company products consistent with the Company image and with a view to maximizing sales;
  • To ensure that open, progressive and game free atmosphere is created among employees giving them a sense of participation and providing them with an opportunity to give their best.
  • To ensure that every employee is treated equally as an individual regardless of his designation; career development is on merit basis and each employee is helped to develop pride of performance through continuous study and training so as to form a team in which all levels of employees work together with common goals strengthen the position of the Company;
  • To ensure that the Company operates with minimum staffing and paperwork.

Grievance/Feedback System

The Company believes in protecting interest of its investors and shareholders. The shareholders can give their feedback in the General Meetings of the Company. In addition, the Company also encourages their feedbacks and suggestions to have a good understanding of the shareholder’s view on different operations and decisions of the Company. Accordingly, it has constituted a “Grievance/ Feedback System” that aims to resolve all of their complaints/queries on timely basis.

A designated e-mail address has been created namely investor.relations@atlashonda.com.pk to facilitate investors in submitting their queries/grievances and feedbacks. In addition to the aforementioned email address, complaints and suggestions can also be received in writing, duly addressed to the Company Secretary. All grievances/queries are resolved and communicated to the investors on timely basis after due verification procedures.

Compliance and Integrity Management

Atlas Honda policy requires all their directors and employees to comply with all applicable laws. Legal compliance systems and processes have been intensified during the year to mitigate the risk of non-compliance with the laws.

The Company’s Code of Conduct (the Code) provides guidelines on 14 ethical standards. It covers issues such as bribery and corruption, fraud, insider trading, legal compliance, conflicts of interests, human rights and discrimination. The code includes a commitment to conducting our business with due regard to the interests of all our stakeholders and the environment. The Code requires compliance with all applicable laws and regulations as a minimum standard. In essence, the guidelines to the code of ethics outline Atlas Honda’s approach to ethics management, which includes all elements recognized as best practice in ethics management. The Code guides interactions with all stakeholders, including employees, suppliers and customers.

The Code is reviewed annually and any changes therein are approved by the Board. The Code is communicated to all employees, suppliers, service providers and customers and is available on the Company’s website.

Whistle Blowing Policy

Atlas Honda Limited values an open dialog on integrity and responsibility in its actions with its employees. The Company investigates all alleged breaches of its code and apply appropriate measures when complaints turn out to be substantiated. The Company encourages employees to report their views on processes and practices to their manager or the Business Ethics Committee. These reporting mechanisms are part of the complaints procedure and are described in Company’s Code of Conduct.

Violations reported through the whistle blower procedure are investigated by internal audit function. Information regarding any incident is reported to the Audit Committee. Reports include measures taken, details of the responsible Company function and the status of any investigation. During the year 2015-16, no alleged breaches of the Code of Conduct were reported.

Privacy and Data Protection

Stakeholders are understandably concerned about how their personal information is used and shared, and they want to feel confident that data communicated or stored online is secure. Atlas Honda works regularly to enhance robust processes and systems that protect customer and employee data and to raise awareness about the importance of data protection and privacy through its IT Governance Policy which is summarized below.

  • Members of Management Committee are responsible for required compliance in their respective functional areas, at all locations.
  • The General Manager-IT is responsible for its implementation, maintaining compliance and for suggesting new areas as per technology enhancement.

Sustainability Impacts, Risks and Opportunities

The Company has enterprise-wide risk management processes for identifying, evaluating and managing the principal risks faced by the Company. The Board is responsible for the Company’s systems of internal control and risk management and for reviewing each year the effectiveness of those systems. The key features of the enterprise-wide risk management and internal control process includes:

  • The Audit Committee, on behalf of the Board, considers the effectiveness of the internal control procedures during the financial year. It reviews reports from the internal and external auditors and reports its conclusions to the Board.
  • A Risk Management Committee is responsible for reviewing the key risks and the strategies to mitigate/ counter these risks.
  • The Company’s Internal Audit function carries out the continuing assessments of the quality of risk management and control, reports to the Management and the Audit Committee on the status of specific areas identified for improvement and promotes effective risk management in the lines of business processes.

During the year, the Committee discharged its responsibilities and reported the following:

  • The Company’s internal audit function which reports to the Audit Committee, performed independent audits of selected controls through desktop reviews and on-site re-performance of tests to ensure compliance with pre-defined policies and procedures.
  • The composition of the Audit Committee meets all applicable independence requirements.
  • Each member is equipped with professional qualifications and skillful experiences and one member has expert knowledge of finance and accounting.
  • The Audit Committee has approved the annual audit plan for the internal audit function and reviewed its reports. Audit Committee also assisted in overseeing relevant manuals, policies and important accounting principles applied by the Company.
  • The Audit Committee reviewed all interim and annual financial reports before they are published.
  • The Audit committee also ensured that all new and relevant International Accounting Standards were duly adopted and all applicable International Accounting Standards were duly followed in the preparation of Financial Statements of the Company.
  • The Audit Committee monitored the effectiveness of the internal controls, including risk management, concerning the financial reporting and proactively proposed improvements to the control environment.
  • The Audit Committee has implemented a procedure to review and approve all transactions with the related parties.

AHL risk management system helps in timely identification, prioritization and management of sustainability impacts, risks and opportunities. The Company’s sustainability efforts are focused in areas which are important according to business objectives and identified during stakeholders consultation. These areas include health and safety, emissions, energy usage, community investments and economic impacts. The CSR committee regularly reviews the topics identified by risk management system and takes necessary actions, if required.

Influence On Stakeholder Assessment And Decisions

The materiality matrix lists the sustainability topics identified by the company risk management system and stakeholder consultation. The matrix is divided into areas to demonstrate the topics which can highly influence the stakeholder assessment and decisions and highly significant to AHL and moderately influence the stakeholder assessment and decisions and moderately significant to AHL.

The prioritization of the topics is based on materiality analysis for non-financial risks as per GRI G4 guidelines. The severity, likelihood, and relevance to business objectives and stakeholder interests were the guiding principles in materiality analysis. The CSR committee analyzes the risks associated with each material topics and recommends actions for prevention, mitigation or maximization of the positive impacts.