Governance is the foundation of ESG, and also the most historic of all the 3 components. Rewinding to India’s rich history and several ancient scriptures such as the Arthashastra and the Manusmriti, both explain the core principle of governance. One such principle being from Kautilya - Yatha Raja (Ruler) Thatha Praja i.e., subjects are the replica of its rulers, which if applied to today’s corporate governance will connotate, Raja to mean boards, being the custodians of governance in an organisation and Praja to mean its stakeholders, such as customers, employees, vendors, government, investors etc. The impact of a top- down approach to governance can be experienced by all stakeholders. Whilst environment and society in ESG are equally critical, governance plays an integral role of binding all the ESG components. Governance determines whether a business is being run sustainably, is behaving ethically, that it balances the interests of its stakeholders and that is has a positive influence on the environment it occupies. Therefore, without the G, merely the E or S could end up being standalone elements of any business model. Governance provides tools to bring in transparency and accountability in the functioning of an organisation’s ESG framework.

Over the years, Corporate Governance has captured a spot of prominence in the corporate world. The first ever regulatory framework was enacted in India through the Companies Act in the year 1866, which was later altered in 1882, 1913, 1932 and post-independence amendments to the Indian Companies Act, 1956. The concept of Governance in India finds its footprint in literature during the 1970’s where corporate governance reforms were undergoing a significant overhaul. With the exponential growth of the Indian capital markets in the l990’s, SEBI was established as a statutory authority in 1992 to oversee regulate and govern the securities market in India. Since then, SEBI set up various committees such as the Kumar Mangalam Birla Committee, the Murthy Committee etc. In a nutshell, the reports of these committees emphasised the need for increased importance of auditors independence, Audit Committees, Independent Directors, quality of financial disclosures etc., thereby giving birth to the Listing Agreement.

However, due to increasing instances of some Indian corporations misusing and abusing its resources and shunning its obligations, for example cases of the biggest corporate governance failures in India like the Satyam scam, DHFL scandal, Café coffee day etc, SEBI’s Committee on Corporate Governance headed by Uday Kotak (the Kotak Committee) undertook a comprehensive review of extant corporate governance norms in India. The committee considered several aspects of corporate governance, including corporate purpose and stakeholder interests, and focused on the business realities of Indian corporations, including the dominance of controlling-stockholders.

Over the next decade, after much debate, voluntary guidelines and lessons learnt through the numerous scandals, the government reacted to the fraud and corrupt practices by overhauling the regulatory framework, with the new Companies Act 2013, which fixed liabilities of auditor and independent directors, among other changes. The passage of the 2013 Act was followed by new rules thereunder as well as separate SEBI administered regulations for listed companies in the form of Listing Obligations and Disclosure Requirements Regulation (LODR). SEBI’s amended listing regulations reflect many of the recommendations of the Kotak Committee, Insider Trading, Unfair Trade Practices, amongst other regulations playing a significant role in implanting, monitoring and stabilising the framework.

Founded in 1916, the J M Baxi group has constantly kept pace with the developing regime of governance in sync with the historic evolution of India’s corporate governance structure. While it may have not been cloaked or categorised under ESG in the early days, our group has always believed in a top-down approach which flows in the form of its moral core values of honesty, humility, innovation and perseverance. Our group’s morality has remained consistent throughout its existence, earning the trust of the entire maritime and shipping fraternity and all its stakeholders. Amongst others, this can be witnessed by various well- renowned global groups/companies, confidence in choosing J M Baxi as a partner such as Bain Capital, CMA Group etc. J M Baxi’s governance standards, including its ESG practices have withstood stringent scrutiny of various multilateral organisations such as International Finance Corporation - a sister organisation of the World Bank and member of the World Bank Group. Right from being a previously independently managed private limited entity until attaining the status of a public limited company, we have always adhered and committed ourselves to a robust governance framework, thus leading to long-term stakeholder value creation.

J M Baxi has always taken the responsibility of fair and transparent conduct from the time we were a privately held entity till recent time being an unlisted public entity. We have constantly recognised the role of the board of directors as that of guardians and trustees of the company in addition to helping protect its integrity. J M Baxi’s board consists of accomplished individuals from diverse backgrounds, with decades of rich experience. Apart from the promoters, who have over the years continued to guide and serve the board of the company and add value as industry experts, our board has a variety of expert members including experts in the field of finance, industry and business allowing for the flow of multiple perspectives. These experts are positioned as independent directors on the Board of J M Baxi Ports & Logistics Limited which is the flagship holding entity. The board panel acts as an in-house regulator and navigator for strategic decisions, for not only our flagship entity but all of our subsidiaries including our step- down subsidiaries. Whilst the board forms the highest level of scrutiny, different sub-levels of internal controls are being added at committee level and at senior leadership level. In other words,
J M Baxi’s board is assisted by separate committees and the structure is designed to help the board stay focused on strategy, yet allow in-depth scrutiny and focused attention, which will lead ultimately to evolve appropriate strategies. The committee structure at J M Baxi Ports & Logistics is so potent that not only all of our committees are chaired by independent directors but also consist only of non-promoter directors. These distinct statutory as well as voluntary, specific purpose committees derive their powers from the board in the form of terms of reference of those respective committees and add another layer of internal control measures. The group has always believed in securing the structure by adding layers of caution by voluntarily adopting the aforesaid procedures amongst others in order to maintain the highest standards of internal control mechanisms.

An added layer of accountability at the group is vested with the key managerial personnel and senior leadership of the group. These executive leadership positions hold accountability and responsibility for the execution of the board’s decision. These positions are vested with powers for supervising their respective functions. Collectively, these voluntary practices are aimed at sustainable growth of its business, in a manner that protects the interests of all stakeholders. At J M Baxi group, training and development of all employees are an integral part of its governance framework, to inculcate the spirit of curiosity, learning and reading in the individual. JMB Uni-E (Universal Education) has been launched with the intent to create a structured platform for sharing organisational updates to encourage creative thinking in order to apply the learnings from training modules.

The governance structure is backed by a strong internal control structure including risk management, robust annual budgeting processes linked to measurable objectives, indicating how the group’s resources shall be allocated until its end use. J M Baxi is a promoter of taking accountability in reporting and ensures high level of fairness and transparency in reporting, highlighting compliance with laws and regulations as well as initiatives taken by the group. The group’s financials undergo a dual layer of external verifications by internal as well as statutory auditors of the group, appointed by the Board only after recommendations of the audit committee. The recommendations are based on tallying scope of work with the requirement of the group, verification of background and experience of the shortlisted firms in the industry amongst other factors. With the chairman of the group vested personally in driving the compliance function, the group has implemented various internationally accepted standards of policies such as anti- bribery and anti-corruption policy, code of conduct for employees, a robust whistle blower policy, sanctions and trade control norms etc. which are strictly adhered to.

Good governance is in a state of vast transformation which is demonstrated by our technological advancement and how we develop our terminal assets and each of the facilities we offer. We value our legacy, deep domain expertise in the terminals and logistics ecosystems, operational excellence, robust planning, cost and capital discipline, technology adoption, values and purpose, ESG focus, people practices and emphasis on developing strong stakeholder relationships. Additionally, we take pride in the deployment of terminal operating systems, digitalisation strategy for each of our terminal assets and the deployment of experienced and professionally managed team of industry experts.

Although not new, governance at J M Baxi has been long standing, and kept evolving with the times. As the company looks to make the next big leap, it aims to shape new contours not just for the maritime industry but for industries in general as well. At J M Baxi, apart from measurable performance parameters, we have always prioritised to uphold the repute of being reliable custodians of moral and sustainable growth.