Home » Significant Policies

RISK MANAGEMENT

Purpose

There is always an element of risk is associated with business activities performed at any organization. Risk categories and their level of exposure are different for different businesses. At Leiner Pak, the exposure to the business risks is managed through the practice of Enterprise Risk Management (ERM) which includes the methods and processes used by the company to identify potential risks and to formulate the strategy to manage the impact of these risks along with monitoring and evaluation of these strategies.

It is the policy of Leiner Pak Gelatine Limited to view ERM as integral to the creation, protection and enhancement of shareholder’s value by managing the uncertainties that could influence the achievement of corporate goals and objectives. To achieve this, an appropriate framework is adopted by the management and approved by the Board.

Responsibility for Managing Risks

Company’s higher management is responsible for managing business risks. Appropriate measures will be taken by the management to mitigate the risk factors in performing following obligations:

Smooth and efficient operations;

Compliance with statutory and regulatory obligations;
Safeguarding of company’s assets, employees and environment.
Safeguarding against frauds;
Safeguarding against effects of natural hazards;
Reliability of financial reporting;
Protecting the company’s reputation;

Process

Chief Executive and Chief Financial Officer will be responsible for the ERM activity where all management teams will be periodically engaged in identifying, assessing, controlling and monitoring the risks faced by the business in accordance with the adopted ERM framework.

Monitoring/ Review

The Board Audit Committee will review the effectiveness of the ERM process and advise the Board of Directors in this regard.

Enterprise Risk Management (ERM)

Enterprise risk management in business includes the methods and processes used by organizations to manage risks and seize opportunities related to the achievement of their objectives.

COMPANY’S LEVEL OF RISK TOLERENCE

Risk tolerance level with respect to each goal determined by the management can be different, which may be low risk tolerance, high risk tolerance, moderate tolerance risk and zero tolerance level. Company’s risk tolerance levels are as under:

Smooth and efficient operations; (low risk tolerance)

Compliance with statutory and regulatory obligations; (zero risk tolerance)
Safeguarding of company’s assets, employees and environment. (low risk tolerance)
Safeguarding against frauds; (low risk tolerance)
Safeguarding against effects of natural hazards; (low risk tolerance)
Reliability of financial reporting; (zero risk tolerance)
Protecting the company’s reputation; (zero risk tolerance)

HUMAN RESOURCE MANAGEMENT

Human Resource Management (HRM) is an important faction of management that deals with most valuable assets of an organization which is human resource. Human Resource Management committee has recommended following policies with respect to human resources of the company to achieve sustainable development in company’s culture and its business:

Board of Directors of Leiner Pak Gelatine Limited has developed, implemented and maintain procedure for Human Resource which describes the hiring and training of all personnel and maintain their record.

Scope

Policy of Human Resource management is applicable to all employees of the company for hiring, their training, performance appraisal and any disciplinary action

Hiring

The vacant posts will be advertised in the news papers indicating job title, qualification and experience. After receiving the applications, suitable applicants will be selected and called for interview. The interviews of the candidates will be conducted by the senior management comprising Head of human resource, personnel manager and relevant departmental heads. On completion of interviews the recommendation of selection personnel, through head of head of human resource will be sent to chief executive officer for final approval. After final approval successful candidate will be called to join the organization.

Training

Every departmental head identify training need of the employees of his particular department. Level of training and its duration depend upon the cadre and qualification of the employees. Training requirements and estimated schedules are provided to head of human resource. After getting approval (with or without change) from human resource department, training schedules are sent to the office of Chief Executive Officer for final approval.

Performance Appraisal

Performance appraisal is prepared by head of human resource department on receiving input from head of each department and personnel manager. Appraisals are finally approved by Chief Executive Officer of the company.

Disciplinary Action

Personnel manager is authorized to initiate disciplinary action against any employee on receiving valid and actionable complaint from its own department or other sources. Any deviation from code of conduct adopted by the company will come under the ambit of actionable act.

Employee - Wellbeing

To make sure the payments of different monitory benefits as per agreements with combined bargaining agent of the employees without any delay which may include Bonus, Fair price shop, Behbood Funds, Eidis and other agreed benefits.
Equal contributory Provident Fund to be provided to the permanent employees as retirement benefit.
Workers Profit Participation shall be paid in accordance with the companies profits (workers’ Participation) act, 1968.

Succession Plan

Rotation of employees in different departments.
Proper on job training in different sectors of each department.
Capacity Building courses / workshops for the employees.

REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT

Board has decided that remuneration of executive Directors and meeting fee for non-executive and independent Directors shall be fixed by the Board as provided in the code of corporate governance. In every financial year new scales for meeting fee and entitlement of Directors can be determined in the first meeting of the financial year. It is also decided that remuneration of senior management will be decided by Chief Executive Officer.

COMMUNICATION AND DISCLOSURE

Communication and disclosure of the company’s information with the investing public and regulatory authorities must be :

Timely, factual and accurate;
In accordance with applicable laws, rules, regulations and in the lines of code of corporate governance;
Dissemination at large to relevant persons and authorities;
This extends to all employees, management and Board of Directors.

Company’s disclosure include:

Disclosure of documents filed with Securities and Exchange Commission of Pakistan, Pakistan Stock Exchange Limited and other regulators including financial and non financial documents, forms , policies, quarterly and annual reports;
Documents issued in connection with offering of company’s securities;
News releases;
Notices to the shareholders;
Presentations by the management;
Company’s website and other communications facilitated by regulatory authorities.

INTERNAL CONTROLE

Internal control policy at Leiner Pak Gelatine Limited is meant procedures, checks and balances that protect the company from internal threats, such as theft, embezzlement and mismanagement of funds by employees, suppliers or customers.

To safeguard the company from these threats, following controls/procedures are implemented throughout the company:

Creation of internal audit department

Separation of duties
Access controls on accounting system
Prior approval before occurrence of transaction
Physical audit of assets
Standardized documentation
Periodic reconciliations
Data backups

CREATION OF INTERNAL CONTROL DEPARTMENT

Company will establish an internal audit department. Head of internal audit department will be appointed in accordance with directives contained in Code of Corporate Governance. Internal audit department will carry out its function as watchdog to check the adherence of internal controls devised by the company in performance of any specific job/transaction. Internal audit department is reportable to audit committee of the company constituted under the provisions of Code of Corporate Governance.

SEPARATION OF DUTIES

Separation/segregation of duties is the concept of having more than one person to complete a task/job. At Leiner Pak Gelatine Limited separation of duties for a single task (material in nature) is necessary and it will be used as a tool of internal control to prevent fraud and errors.

ACCESS CONTROLS ON ACCOUNTING SYSTEM

Accounting system of the company will not be freely accessed by all staff members. Access to different parts of accounting system will be controlled through passwords, lockouts and electronic access logs. Every single employee will be allotted with certain level of accounting system access relevant to his assigned job and it will be protected through password. Management will keep unauthorized users out of the system and it will provide a way to audit the usage of system to identify the source of errors or discrepancies.

PRIOR APPROVAL BEFORE OCCURRENCE OF TRANSACTION

Prior approval or ratification is necessary to carry out business transactions. Certain level of authorization will be granted to first layer of management. Any business transaction within their limit shall bear their prior approval.

PHYSICAL AUDIT OF ASSETS

It is part of internal audit practices to carry out physical audit of company assets after certain intervals. Physical audit of company assets can be carried out quarterly or half yearly basis and report of physical audit be compiled and submitted to audit committee.

STANDARDIZED DOCUMENTATION

Standardized documentation in the support of any business transaction is highly valuable. Management will develop certain standardized documents for each class of transaction to facilitate proper recording in the system with complete accuracy and information.

PERIODIC RECONCILIATIONS

Members of accounts department will review accounts and validate that balances are correct. Periodic reconciliations with bank statements, vendors and customers account balances will be carried out to maintain the reliability and accuracy of business transactions.

DATA BACKUPS

Data backup is the copy of computer data taken and stored elsewhere. Data backup activity the prime responsibility of Information Technology department/personnel on daily basis so that it may be used to restore the original after a data loss event.

WHISTLE BLOWING

Whistle blowing means the reporting of suspected misconduct, illegal acts, acts against the company’s interest and any failure to act within the company.

This policy applies to employees, management, Board and other associated persons including contractors, vendors, customers and share holders.

CONFIDENTIALITY

Company employees and other concerned associates are encouraged to participate in whistle blowing without fear, in confidentiality against any legitimate complaint to the immediate officer of the section or directly to the management. Management viewed whistle blowing as a positive act that can make a valuable contribution to the company’s efficiency and sustainable growth.

SCOPE

Whistle blowing factors may relate to:

Conduct of an offence or a breach of law
Fraud and corruption
Racial, gender and any other discrimination
Noncompliance of company policies
Health and safety of the employees and public at large
Damage to the environment
Miscarriage of justice
Un authorized use of company’s assets
Other unethical conduct

PROTECTION OF WHISTLE BLOWER AGAINST VICTIMISATION

Any true complaint raised by the employees or other associated persons with positive intention will not lead to any victimization. Company will take appropriate measures to safeguard the interests and properties of the whistle blower.

PROCEDURE

Employees of company or other associated persons shall raise their concern with immediate supervisor/officer/manager of the section/unit. Higher management can directly be approached for reporting any issue of highly sensitive nature. Management will constitute an inquiry committee to conduct the inquiry of the matter and fate of complaint be decided in the light of inquiry report in accordance with company policies.

CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) refers to the way in which company’s business regulate itself in order to ensure that all its activities positively affect society as a whole.

Company (Leiner Pak Gelatine Limited) is committed to strive for uplift of the communities. Management believes that we are an integral part of the society in which we operate and our continuous support to the community can bring the radical change in the life of a common citizen.

Considering the financial resources of the company and its size of business, management has decided to undertake following steps towards CSR:

Donations to hospitals and other approved health organizations;
Contribution on educational front (payment of school fees of deserving students within a budgeted amount;

Working for the rehabilitation of disabled persons (close working with Lahore Businessmen Association for Rehabilitation of Disabled (LABARD).

PROCUREMENT OF GOODS AND SERVICES

For procurement of products relating to product made, following procedure shall be completed.

Vendor’s evaluation and registration as per ISO procedure.
Approval of the vendor by MD / DMD or resident Director.
Registration of the vendor and updation of the list of vendors as per ISO procedures.
Vendor records shall be maintained as per ISO requirements and procedures.
Agreement will be signed for Crushed Bone supply both by buyer and seller. MD / Director shall sign the agreement on behalf of the company.
Requirement and schedule of supply of Hydrochloric Acid and Caustic Soda shall be disseminated to bonified supplier.

GENERAL STEPS

Proper purchase indents shall be intimated by store department keeping in view the re-ordering levels.
Purchase indent shall carry all relevant information relating to items, its previous rate, quantity required and present stock level along with other information noted on the purchase indent.
Purchase indent shall be approved by head of Department / GM and the resident director or MD / DMD.
For major contracts for supply, contract work or services all the quotations shall be approved by the MD / DMD or Director.
On arrival of the goods proper goods receiving and inspection report shall be prepared on the basis of inspection.

IMPORTABLE GOODS

Quotations shall be approved MD / DMD or Director and be imported through regular banking channels.

MARKETING

All Queries relating to the export and local supplies shall be disseminated to the MD / Directors.
Replies relating to the inquiries (export and local) shall be made keeping in view the stock levels of the products, expected production and already committed stocks.
All correspondence with the potential buyers shall be approved by the MD / Directors.
Advance payments from local buyers shall be preferred.
Export market for lower blooms shall be searched out for better sale rates.
More efforts shall be exerted for premium price for high blooms in Export and local market.
Any commitment with the buyers shall be honored.
All expenses relating marketing shall be properly approved by the MD / Director of the company.

WRITE-OFF BAD / DOUBT FULL DEBTS, ADVANCES AND RECEIVABLES

Age analysis of the debts, receivable and advances shall be conducted by Chief Financial Officer and information relating to the aging shall be discussed in Audit committee.
Age analysis sheets shall also be disseminated to the MD / Chief Executive for his review.
Amounts due for the last three years but not received despite of reminders shall be sorted out by the Accounts Department.
Proposed allowances for doubtful receivable shall be approved by the board of Directors.
Provision for doubtful debts does not restrict the company for further pursuing for realization of debts:

DETERMINATION OF TERMS OF CREDIT AND DISCOUNT

At present company is not extending any credit facility and discounts to its buyers for both of its products (Gelatine and Di-Calcium Phosphate). However, any credit and discount can only be offered in the following manners:-

It shall be approved by Chief Executive.
Only one delivery credit can be extended to trust worthy buyers.
Discounts can not be extended beyond the reasonable limit i.e. 5 % - 10%.
Credit period shall not exceed One month for local sales in any case.
No any discount be offered to the foreign buyers.
For permanent credit periods and discounts only one time approval is needed from the Chief Executive and it shall be enforceable untill and unless rescined by the management.

ACQUISITION / DISPOSAL OF FIXED ASSETS

Acquisition and disposal of the assets including the leasing transactions shall be in accordance with section 183 of the Companies Act, 2017 and rule 14 A Cos rules 1985 and other limits disseminated / notified by the Companies Act, 2017.

All other acquisitions and disposals shall bear the approval of MD / DMD or director. This means signing of the documents by MD / DMD or director shall be assumed their approval.

INVESTMENTS

If the company has got supplies funds and directors are seeking for some investment then all matters shall be discussed in board meetings at prime level. It shall also be decided whether the investment is to be made in associated company (if any) or in same other company / financial Institution / organization.

If the company manages samples funds and management is intended to invest this amount then investment Committee will be formed / Constituted which shall include the Chief Executive, Chief Finance Officer and any other Director.
Committee shall work out investment possibilities in different sectors keeping in view security, rate of return and tenure of the investment. Committee shall also consider the possibility of investment in associated Under Taking (if any).
All investment related matters shall be discussed in Board Meetings backed (by detailed working on different Comparisons (sector wise) rate of return, security and time for investments.
A resolution is required for an investment.
If the investment is made in associated under taking all the requirements of Section 199 of the Companies Act, 2017 shall be complied.
Statement U/S 134 of the Companies Act, 2017 shall be forwarded with notice of the meeting to the members of the company.
All SROS issued by SECP shall be observed and complied with including the SRO 865 dated December 6, 2000.
Proper disclosure shall be made in accounts and returns / information to be disseminated to SECP be well in time.

BORROWING OF MONEY

All borrowing proposals / requirements shall be approved by the Board of Directors.
Borrowing proposal shall backed by proper working of its usage, rate of interest, security to be offered and time required for its repayment.

DONATIONS, CHARITIES, CONTRIBUTIONS AND OTHER PAYMENTS OF SIMILAR NATURE

A limit for bonafied donations shall be sanctioned in BOD meetings.
Company shall adhere to the maximum limit sanctioned.
For some special cases of donations like donations for natural disaster and donations on Governmental appeal, a seprate board resolution shall be required for the approval or such emergency donations shall be ratified by the Board of Directors in next coming Board meeting.
While paying the donations, Charities, Contributions and other payments of similar nature, provisions of section 184 of the Companies Act, 2017 shall be followed in letter and spirit and contravention be avoided.

DETERMINATION AND DELEGATION OF FINANCIAL POWER

Every financial agreement with financial institutions, renewal of existing financial limits, financial lease transaction and even for opening the bank accounts and operating authorities shall be decided in meetings of the Board of Directors. Any two or more directors shall be authorized to sign, execute and operate the Bank accounts maintained with final institutions and to enter in to agreements on behalf of the Company.
At present financial powers are vested to Chief Executive, Khwaja Imtiaz

Ahmed and some other directors as deemed necessary.

TRANSACTIONS OR CONTRACTS WITH ASSOCIATED COMPANIES AND RELATED PARTIES

All transactions, agreements or contracts with associated companies and other related parties shall be carried out at arms length and without discrimination.
Transactions / investment in associated companies shall be in accordance with the regulations / provision of Companies Act, 2017.
Transactions with associated companies and related parties shall be approved from Chief Executive, Board of Director or in general meetings for special resolutions as required by the related provisions and SROs of the Companies Act, 2017.

HEALTH, SAFETY AND ENVIRONMENT

Medical (6% of gross pay) facility shall be extended to employees (senior staff.
Social Security facility shall be provided to junior staff as per Social Security rules which also include contract employees.
Group life insurance facility be provided as per workmen’s compensation Act, 1923.
All safety measure be adopted for the employees while they are on job at plant site.
Proper arrangements for first Aid shall be provided at factory site.
Working safe uniforms shall be provided to the employees.
Proper installation of fire extinguishers.
Working environment for employees shall be clean and conducive.
Environment protection laws shall be followed.
Environmental certification i.e. ISO 14001 be obtained and procedures laid down shall be followed in letter and spirit.
Plantation and green belts shall be prepared at factory site.
Transport facility shall also be provided to the employees of the company.

MATERIALITY

Keeping in view the nature of the business of the company and prevailing circumstances, rules and regulations and subject to recommendations of the board, following matters can be treated as material in their nature:

Legal notice issued by the Government authorities (other than Revenue Departments) creating demand of Rs. 500,000/= or more in respect of non compliance to certain regulations.

Certain measure adopted by the Authorities which may halt production process of the Company.

Legislation in the Country which may cause the closure of certain segment of the Company.

Any matter of violation of Environment Protection rules of the country.

Any Non-arms length transaction with associated undertakings.

Reductions in the production upto 10% of the last financial year.

Increase in taxation rate by the Revenue Departments.

Any matter which may arise the question of going concern of the Company.

Inability to pay back financial loans and facilities in time.

Any suit filed by the creditors for non payment of their bills.

Last date updated 2020-09-22 02:28:22