REPORT ON CORPORATE GOVERNANCE
COMPANY'S PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE
Corporate Governance at the Aditya Birla Group is a continuing process. The Group is committed to the adoption of best governance practices and their adherence in the true spirit at all times. Your Company continuously strives to achieve excellence in corporate governance through its values — Integrity, Commitment, Passion, Seamlessness and Speed.
In terms of Clause 49 of the Listing Agreement executed with the Stock Exchanges, the details of compliance for the year ended 31st March 2015 are indicated.
I. BOARD OF DIRECTORS
Your Company's Board of Directors comprises of 8 (eight) members, which includes the Managing Director and 4 (four) Independent Directors. Since the Company does not have a Chairman, Directors present in the meeting elect one of them to take the chair and a non-executive Director is appointed as Chairman of the meeting. Out of the total strength of the Board, 50% of the Directors are independent. All the directors are above 21 years of age and are not related to other directors in any manner. None of the Directors of the Company is a relative of any other Director of the Company. The composition of the Board, attendance at Board meetings held during the financial year under review and at the last Annual General Meeting (AGM) and the details of the Directors with regard to outside directorships and committee positions are given below :
• Non-Executive Directors' compensation and disclosures
Only Sitting fees are paid to the Non-Executive Directors and the Independent Directors and these are within the limit prescribed under the Act. The details of sitting fees paid to the Non-Executive Directors and Independent Directors are given separately in this Report.
• Other provisions relating to the Board and the Committees
Your Company's Board plays a pivotal role in ensuring good governance and sound functioning of your Company. The Directors are professionals, have expertise in their respective functional areas and present a wide range of skills and experience.
The Board has unfettered and complete access to any information within your Company. Members of the Board have complete freedom to express their views on agenda items and can discuss any matter at the meeting with the permission of the Chairman. The Board periodically reviews all the relevant information, which is required to be placed before it pursuant to Annexure X to Clause 49 of the Listing Agreement with the stock exchanges and in particular reviews and approves corporate strategies, business plans, annual budgets, projects and capital expenditure etc. The Board provides direction and exercises appropriate control to ensure that your Company is managed in a manner that fulfills stakeholders' aspirations and societal expectations. In addition to the quarterly meetings, the Board also meets to address the specific needs and business requirements of your Company.
• Code of Conduct
The Board of Directors have laid down a Code of Conduct ("the Code") for all Board members and senior management personnel of your Company. The Code is posted on your Company's website at www.adityabirlachemicalsindia.com
All Board members and senior management personnel have confirmed their compliance with the Code. A declaration to that effect signed by the Managing Director is attached and forms part of this Report.
• Board training and Induction
A formal letter of appointment together with an induction kit is given to Independent Directors at the time of their appointment stating their roles, functions, duties and responsibilities. The Independent Directors are familiarised with your Company's business and its operations. Interactions are held between the Independent Directors and senior management of your Company.
• Performance evaluation of Board
A formal evaluation mechanism has been adopted for evaluating the performance of the Board as well as the performance of its Committees and individual Directors. The performance of all the Directors of the Company has been carried out through a structured evaluation process. The criteria for evaluation includes attendance, contribution at the meetings, preparedness for meetings, effective decision making ability etc.
• Independent Directors' meeting
A meeting of the Independent Directors of your Company was held without the presence of Non-independent Directors and the management of your Company. Independent Directors discussed matters relating to functioning of your Company.
• Prevention of Insider Trading
Your Company's Code of Conduct for Dealing in Securities ("the Code") aims at preserving and preventing misuse of unpublished price sensitive information. All the Directors and Designated Employees of your Company have been covered under the Code. This Code also provides for periodical disclosures from Directors and Designated Employees of your Company.
II. AUDIT COMMITTEE
• Composition, meeting, attendance during the year and sitting fees paid
The Audit Committee of the Board comprises of three Non-Executive Independent Directors and one Non-Executive Director. The members of the Audit Committee are financially literate. The composition of the Audit Committee meets the requirements of Section 177 of the Act and Clause 49 of the Listing Agreement. During the year, the Audit Committee met 6 times to deliberate on various matters. The meetings were held on 07.05.2014, 06.08.2014, 08.09.2014, 07.11.2014, 22.01.2015 and 11.02.2015. The composition, attendance and sitting fees paid are as follows
Mr. Biswajit Choudhuri is the Chairman of the Committee. The Company Secretary acts as the Secretary to the Committee and the Managing Director of the Company is permanent invitee to the Audit Committee meetings. The Chief Financial Officer, the Statutory Auditors and the Internal Auditors of your Company attend the Audit Committee meetings.
The Audit Committee acts as a link between the management, the statutory and internal auditors and the Board. The Audit Committee monitors and effectively supervises your Company's financial reporting process with a view to providing accurate, timely and proper disclosure and maintaining the integrity and quality of financial reporting. The Audit Committee also reviews from time to time, the audit and internal control procedures, accounting policies and exercises oversight of the Company's financial reporting process so as to ensure that the financial statements are correct, sufficient and credible.
• To investigate any activity within its terms of reference.
• To seek information from any employee.
• To obtain outside legal or other professional advice.
• To secure attendance of outsiders with relevant expertise, if it is considered necessary
• Oversight of your Company's financial reporting process and disclosure of financial information in order to ensure that the financial statement is correct, sufficient and credible.
• Recommendation in respect of appointment, remuneration and terms of appointment of the auditors of your Company.
• Approval of payment to the Statutory Auditors for any other services rendered by the Statutory Auditors.
• Reviewing, with the management, the annual financial statements and Auditors' Report thereon before submitting those to the Board for approval, with particular reference to:
• Matters required to be included in the Director's Responsibility Statement to be included in the Board's Report in terms of clause (c) of sub-section 3 of Section 134 of the Companies Act, 2013;
• Changes, if any, in accounting policies and practices and reasons for the same;
• Major accounting entries involving estimates based on the exercise of judgment by management;
• Significant adjustments made in the financial statements arising from the audit findings;
• Compliance with listing and other legal requirements relating to financial statements;
• Disclosure of any related party transactions;
• Qualifications in the draft audit report.
• Reviewing, with management, the quarterly financial statements, before submission of those to the Board for approval.
• Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.
• Review and monitor the auditor's independence and performance and effectiveness of the audit process.
• Approval or any subsequent modification of transactions of your Company with related parties.
• Scrutiny of inter-corporate loans and investments.
• Valuation of undertakings or assets of your Company, wherever it is necessary.
• Evaluation of internal financial controls and risk management systems.
• Reviewing, with the management, the performance of statutory and internal auditors and the adequacy of the internal control systems.
• Reviewing the adequacy of the internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and the frequency of internal audit.
• Discussion with internal auditors of any significant findings and follow up there on.
• Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.
• Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.
• To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors.
• To review the functioning of the Whistle Blower mechanism.
• Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate.
• Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
The Audit Committee reviews the following information:
• Management Discussion and analysis of the financial condition and results of operations;
• Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;
• Management letters / letters of internal control weaknesses issued by the Statutory Auditors, if any;
• Internal audit reports relating to internal control weaknesses;
• Appointment, removal and terms of remuneration of the Chief internal auditor.
During the year, the Committee has reviewed the internal controls put in place to ensure that the accounts of your Company are properly maintained and that the accounting transactions are in accordance with prevailing laws and regulations. In these reviews, the Committee found no material discrepancy or weakness in the internal control system of your Company.
The Committee has also reviewed the procedures laid down by your Company for assessing and managing risks.
Your Company has in place a Vigil Mechanism for Directors and employees to report concerns about unethical behaviour, actual or suspected fraud and violation of the Code of Conduct or Ethics Policy. The policy is in line with your Company's Code of Conduct, Vision and Values and forms part of good corporate governance.
III. NOMINATION AND REMUNERATION COMMITTEE
• Composition, meeting, attendance during the year and sitting fees paid
In terms of the provisions of Section 178 of the Act, your Company has re-constituted its existing Remuneration Committee as the Nomination and Remuneration Committee.
Mr.J. C. Chopra, an Independent Director, is the Chairman of the Committee. No sitting fees were paid to the any of Committee members during the year.
• Term of reference of the Nomination and Remuneration Committee
The Nomination and Remuneration Committee is authorised to:
- set the level and composition of remuneration which is reasonable and sufficient to attract, retain and motivate Directors and Senior Management of the quality required to run your Company successfully;
- set the relationship of remuneration to performance;
- check whether the remuneration provided to Directors and Senior Management includes a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of your Company and its goals;
- formulate appropriate policies and institute processes which enable the identification of individuals who are qualified to become Directors and who may be appointed in Senior Management and recommend the same to the Board;
- review and implement succession and development plans for Directors and senior management;
- devise a policy on Board diversity;
- formulate the criteria for determining qualification, positive attributes and independence of Directors. Your Company does not have any Employee Stock Options Scheme.
• Remuneration Policy
Your Company has adopted Executive Remuneration Philosophy/Policy and the same is disclosed in this Annual Report.
Your Company does not have any Indian subsidiary company. Your Company has one unlisted subsidiary company in Belgium. There was no business activity started in the subsidiary in 2014-15 and as such income and expenses are nil. The investment by your Company in that subsidiary has been eliminated against the share capital thereof. Your Company has availed exemption of not preparing and presenting the consolidated financial statement pursuant to section 129(3) of the Companies Act, 2013 with its only overseas subsidiary in terms of MCA notification no. C.S.R 37 (E) dated 16th January 2015. Pursuant to sub-section (3) of section 129 of the Act read with the Companies (Accounts) Rules, 2014, the statement containing the salient feature of the financial statement of the subsidiary of the Company is given as Annexure to the Directors' Report.
V. RISK MANAGEMENT
Your Company has a robust Business Risk Management framework - Enterprise Risk Management System (ERM) to identify, evaluate and mitigate the risks to the business. These risks are reviewed periodically by the Audit Committee and the Board of the Company. The Audit Committee and Board are informed about risk assessment and minimization procedures, and after which steps are taken for framing, implementing and monitoring the risks.
VI. RELATED PARTY TRANSACTIONS
During the year, your Company has entered into related party transactions which were on an arm's length basis and in the ordinary course of business. There are no material transactions with any related party as defined under Section 188 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014. All Related Party Transactions are approved by the Audit Committee and the Board of your Company. The policy on Related Party Transactions, as approved by the Board, is available on the Company's website www.adityabirlachemicalsindia.com
• Disclosures on materially significant related party transaction
All transactions with related parties were at arm's length basis and in the ordinary course of business. The transactions with related parties have been approved by the Audit Committee of your Company. Details of all material transactions with related parties in terms of Clause 49 of the Listing Agreement are disclosed quarterly along with the compliance report on corporate governance and sent to the Stock Exchanges. The particulars of related party transactions are listed out in Note B.39 of the Accounts.
• Disclosure on Accounting treatment
Your Company has followed all relevant Accounting Standards while preparing the financial statements.
• Remuneration of Directors
The Non-Executive and Independent Directors are paid only sitting fees for attending Board/Committee meetings. During the year, the Board has revised the sitting fees for attending Board and Committee meetings. The decision related to sitting fees are taken by the Board in accordance with the Act. The amount of sitting fees paid to Non Executive and Independent Directors during the year under review are as follows :
There was no other pecuniary relationship or transaction of the Non-Executive and Independent Directors with your Company and the Company has not granted any stock option to any of its Directors. As on 31st March 2015, except Mr. A. K Agarwala and Mr. Biswajit Choudhuri, Directors, who hold 8512 and 100 equity shares of the Company respectively, no other Directors of your Company hold any shares in the Company, as reported.
No Salary/ Remuneration/Perquisite/Profit in lieu of Salary/commission have been paid to the Managing Director Mr. K. C.Jhanwarin 2014-15.
The appointment of Mr. K. C.Jhanwar is for a period of three (3) years w.e.f 01.03.2014. He will not be paid any remuneration byyour Company for the time being. Consequently, provisions of Section 202 of the Companies Act, 2013 will not be applicable in the event of the termination of the appointment of Mr.Jhanwar as Managing Director of the Company until the time no remuneration is paid to him and his termination will be subject to the approval of the Board in terms of the Act. However, the Board reserves the right to remunerate him in line with the recommendation of the Nomination and Remuneration Committee of your Company.
The Management Discussion and Analysis forms part of the Annual Report and is in accordance with the requirements laid out in Clause 49 of the Listing Agreement. No material transaction has been entered into by your Company with the Promoters, Directors or the Management, their subsidiaries or relatives etc. that may have a potential conflict with the interests of your Company.
Details of the Directors seeking re-appointment / appointment at the ensuing AGM are provided in the Notice convening the AGM. The Press Release and Financial results are made available on the website of your Company www.adityabirlachemicalsindia.com
• Stakeholders' Relationship Committee
Composition, meeting, attendance and sitting fees paid during the year
In terms of the provisions of Section 178 of the Act and the Listing Agreement, your Company has renamed its existing Shareholders' Grievance Committee as Stakeholders' Relationship Committee. During the year, the Stakeholders' Relationship Committee met on 07.05.2014, 06.08.2014, 07.11.2014 and 11.02.2015. The composition, attendance and sitting fees paid are as follows :
Mr. L. S. Naik is the Chairman of the Committee. The Company Secretary acts as the Secretary to the Committee and is also the Compliance Officer.
Your Company's shares are compulsorily traded in the dematerialised form. To expedite transfers in the physical segment, necessary authority has been delegated to the Officers of your Company and Registrar and Share Transfer Agent to approve transfer /transmission of shares. Details of share transfers / transmissions approved are placed before the Committee and the Board.
The Committee looks into:
- issues relating to shareholders including transfer / transmission of shares;
- issue of duplicate share certificates;
- non-receipt of dividend;
- non receipt of annual report;
- non —receipt of share certificates after transfers;
- delay in transfer of shares;
- any other issues of the stakeholders
Name : Akash Mishra, Company Secretary
Address : Aditya Birla Chemicals (India) Limited Garhwa Road, P.O. Rehla - 822 124 District - Palamau (Jharkhand) 06584-262211/221 06584-262205 firstname.lastname@example.org Phone No. Fax No. E-mail Pursuant to Clause 47(f) of the listing agreement, your Company's E-mail ID for grievance redressal purpose is abcil.investors@/adityabirla.com, where complaints can be lodged by the investors.
• Details of non-compliance by your Company, penalties and strictures imposed on your Company by the Stock Exchanges or Securities and Exchange Board of India (SEBI) or any other statutory authority on any matter relating to capital markets during the year
There has been no instance of non-compliance by your Company on any matter related to capital markets during the year under review and hence no strictures/ penalties have been imposed on your Company by the Stock Exchanges or SEBI or any statutory authority.
• Corporate Social Responsibility Committee
The Corporate Social Responsibility (CSR) Committee was constituted under the mentorship of Mrs. Rajashree Birla -Chairperson (Aditya Birla Centre for Community Initiatives and Rural Development). Dr. Pragnya Ram, Group Executive President, Corporate Communications & CSR is the Permanent Invitee. During the year, the CSR Committee met on 11.02.2015. The composition, attendance and sitting fees paid are as follows :
The CSR Committee recommends to the Board the activities to be undertaken during the year and the amount to be spent on these activities. During the year, your Company has carried out various activities as part of its CSR initiative. The focus areas have been health care, education, sustainable livelihood, infrastructure and social reform.
• Proceeds from public issues, rights issues, preferential issues
During the year, your Company did not raise any funds by way of public issues, rights issues, preferential issues etc.
The Managing Director and Chief Financial Officer of your Company have issued necessary certificate pursuant to the provisions of Clause 49 of the Listing Agreement and the same is attached and forms part of the Annual Report.
IX. REPORT ON CORPORATE GOVERNANCE
The Corporate Governance Report forms part of the Annual Report. Your Company complies with the provisions of Clause 49 of the Listing Agreement with the stock exchanges.
A certificate from the Statutory Auditors, confirming compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement with the Stock Exchanges, forms part of the Annual Report.
GENERAL SHAREHOLDER INFORMATION
Aditya Birla Chemicals (India) Limited 'Ghanshyam Kunj' Garhwa Road, P.O. Rehla - 822 124, Distt. Palamau (Jharkhand)
Annual General Meeting
Date and Time: Thursday, 24th September 2015 at 10:30 A. M.
Venue : Aditya Birla Chemicals ( India ) Limited 'Ghanshyam Kunj' Garhwa Road, P.O. Rehla - 822124 Distt. Palamau (Jharkhand) Dividend payment date : on or after 25th September 2015
Date of Book Closure: Friday 18th September 2015 to Thursday, 24th September 2015 (both days inclusive)
Financial calendar (Tentative)
• Results for the quarter ending 30thjune 2015 : by 14th August 2015
• Results for the quarter ending 30th September 2015 : by 14th November 2015
• Results for the quarter ending 31st December 2015 : by 14th February 2016
• Results for the quarter/year ending 31st March 2016 : by 14th May 2016
• Next Annual General Meeting (next year) : by 30th September 2016
Listing on Stock Exchanges and Stock Code
i) BSE Limited Phirozejeejeebhoy Towers, Dalal Street, Mumbai - 400 001 (Stock Code : 500057)
ii) National Stock Exchange of India Ltd. "Exchange Plaza", Plot No. C-1, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051 (Symbol - "ABCIL")
Annual Listing Fee (as applicable) paid up to 2015-16
Demat ISIN in NSDL and CDSL for Equity Shares
ISIN : INE605B01016
Registrar and Transfer Agent
M/s. C. B. Management Services (P) Ltd. P-22, Bondel Road, Kolkata - 700 019 Phone No.(s): 033-40116728/40116717/ 2280 6692-93-94/ 2486 Fax No. : 033 - 2287 0263, Email: email@example.com
Share Transfer System
To expedite transfers in the physical segment, necessary authority has been delegated to the Officers of your Company and Registrar and Share Transfer Agent to approve transfer /transmission of shares within 15 days.
Dematerialisation of shares and Liquidity as on 31st March 2015
ii) CDSL: 1,749,833
(1.42 % of Company's Equity Shares in physical form) Trading in shares of your Company is permitted only in the dematerialized form.
Outstanding GDR/ADR/ warrants/convertible bonds
Your Company has not issued any GDR/ADR/ warrants/convertible bonds.
Details on use of public funds obtained in the last three years
No public funds have been obtained.
• Garhwa Road, P.O. Rehla - 822 124 District - Palamau (Jharkhand)
• Renukoot Chemical Division, P.O. Renukoot - 231 217 District - Sonebhadra (Uttar Pradesh)
• Karwar Chemical Division, P.O. Binaga - 581 307 District - Uttar Kannada (Karnataka)
Address for correspondence
Garhwa Road, P.O. Rehla - 822 124 Distt. Palamau (Jharkhand) Email: firstname.lastname@example.org email@example.com firstname.lastname@example.org