REPORT ON CORPORATE GOVERNANCE
A) MANDATORY REQUIREMENTS:
1. Company's philosophy on Corporate Governance:
Your Company affirms that adoption of the good Corporate Governance practices in all its dealings, operations and actions is sine qua non for enhancement of overall shareholder value and protection of interests of all its stakeholders including customers, employees, lenders, suppliers, government and the community in which it operates.
2. Board of Directors:
Information given to the Board:
The Company provides the information as set out in Clause of 49 the Listing Agreement to the Board and Board Committees to the extent it is applicable and relevant. Such information is submitted either as part of agenda papers in advance of the meeting or by way of presentations and disclosures during the meeting.
Post Meeting Mechanism:
The important decisions taken at the Board / Board Committee Meetings are communicated to the concerned departments.
Familiarisation Programme for Directors:
The newly appointed Director is explained in detail the compliance required under the provisions of the Companies Act, 2013, Listing Agreement and other relevant regulations and his / her affirmation is taken with respect to the same. The Managing Director also has one-to-one discussion with the newly appointed Director to familiriase him / her with the Company's operations. The details of the familiarisation programmes undertaken by the company are provided in the website of the company at the web link <http://www.andhrapetrochemicals.com/> FAMILIARISATION%20PROGRAMME.pdf
The Non-Executive Independent Directors fulfil the conditions of the independence specified in Section 149(6) of the Companies Act, 2013 and the rules made thereunder and meet with requirement of Clause 49 of the Listing Agreement entered into with The Bombay Stock Exchange Ltd. A formal letter of appointment as provided in the Companies Act, 2013 and the Listing Agreement has been issued to each Independent Director and placed on the website of the Company. These appointment letters can be accessed at the web link: <http://> www.andhrapetrochemicals.com/idal.pdf <http://www.andhrapetrochemicals.com/idal.pdf>
Orientation programme to Independent Directors was organised at the Plant premises to familiarize them about the Plant operations of the Company. All the Directors participated in the programme and acquainted themselves with the entire operations of the Company.
3. Code of Conduct:
The Board of Directors has adopted the Code of Conduct for Board Members and Senior Management Personnel of the Company. The said Code has been communicated to the Directors and the Senior Managers from whom the necessary affirmation has been received with regard to the compliance of the Code. A declaration in this regard by the Managing Director is furnished at the end of the report. The Code has been posted on the Company's website -www.andhrapetrochemicals.com <http://www.andhrapetrochemicals.com>.
Code of Conduct for Directors also contains their duties approved by the Board to be in line with the provisions of Listing Agreement and the same has been posted on the Company's website at the link: <http://> www.andhrapetrochemicals.com/CODE OF CONDUCT FOR DIRECTORS.pdf
4. Audit Committee:
A qualified and independent Audit Committee, meeting the requirements of Clause 49 of the Listing Agreement and Section 177 of the Companies Act, 2013, has been constituted.
As on 31.3.2015, the Audit Committee consists of three Non-Executive Independent Directors - (i) Sri A A Krishnan, Chairman, (ii) Sri M R B Punja and (iii) Sri Surinder Kumar Kapoor. Members of the Audit Committee have considerable experience and expertise in the field of Industrial, Financial and Corporate Business Management.
Sri K Raghu Ram, Manager (Finance) & Asst. Company Secretary, acts as the Secretary to the Audit Committee.
Statutory, Internal and Cost Auditors, Key Managerial Personnel and Senior Executives attend the meetings to answer the queries raised by the Committee.
During the Financial Year 2014-15, four Audit Committee Meetings were held on: (i) 24.5.2014, (ii) 21.7.2014, (iii) 5.11.2014 and (iv) 21.1.2015
Attendance of Directors at the Audit Committee Meetings:
Broad terms of reference of the Audit Committee are as under:
i. the recommendation for appointment, remuneration and terms of appointment of auditors of the company;
ii. review and monitor the auditor's independence and performance, and effectiveness of audit process;
iii. examination of the financial statement and the auditors' report thereon;
iv. approval or any subsequent modification of transactions of the company with related parties;
v. scrutiny of inter-corporate loans and investments;
vi. valuation of undertakings or assets of the company, wherever it is necessary;
vii. evaluation of internal financial controls and risk management systems;
viii. monitoring the end use of funds raised through public offers and related matters.
? The Audit Committee also reviews the following information as and when required:
> Management Discussion & Analysis of financial condition and results of operations
> Statement of significant Related Party Transactions (as defined by the Audit Committee)
> Management letters / letters of internal control weaknesses issued by the Statutory Auditors
> Internal Audit Reports relating to internal control weaknesses
5. Nomination and Remuneration Committee: Composition:
The Nomination and Remuneration Committee comprises three Directors. Sri Surinder Kumar Kapoor, Non-Executive Independent Director, is the Chairman of the Commiittee. The other members are Sri M R B Punja and Sri P Narendranath Chowdary. The composition of this Committee is pursuant to the provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
Meetings and attendance:
The Nomination and Remuneration Committee met 3 times during the year on 20.7.2014, 20.1.2015 and 27.3.2015. The necessary quorum was present at all the meetings. The Chairman of the Nomination and Remuneration Committee was present at the last Annual General Meeting of the Company.
Broad terms of reference of Nomination and Remuneration Committee are as under:
i. identify persons who are qualified to be Directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal
ii. carry out evaluation of every Director's performance
iii. formulate the criteria for determining qualifications, positive attributes and independence of a Director and
iv. recommend to the Board a Policy relating to the remuneration for the Directors, Key Managerial Personnel (KMP) and employees one level below the KMP.
While formulating the said Policy the Committee should ensure that
a. the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully
b. relationship of remuneration to performance is clear and meets appropriate performance bench marks and
. remuneration to Director, Key Managerial Personnel and employees one level below the KMP involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals.
Nomination and Remuneration Policy:
Remuneration to Non-Executive Directors:
The Non-Executive Directors are paid remuneration by way of sitting fees. They are paid sitting fees for each meeting of the Board or Committee thereof. Details of sitting fees paid to them during the year 2014-15.
Sri M R B Punja - Rs.1,30,000/-; Sri A A Krishnan - Rs.1,10,000/-; Sri Anirudha Behera - Rs.10,000/- and Sri A Mallikarjun - Rs.10,000/- (as they are the nominees of IDBI Bank Ltd., sitting fees payable to them was paid to IDBI Bank Ltd.); Smt. Anita Rajendra, I.A.S., - Rs.30,000/-and Sri K. Rajendra Prasad - Rs.60,000/- (as they are nominees of APIDC Ltd., sitting fees payable to them was paid to APIDC Ltd.); Sri Surinder Kumar Kapoor - Rs.80,000/- and Sri Ravi Pendyala -Rs.90,000/-. Sri P Narendranath Chowdary and Sri Mullapudi Thimmaraja, Directors, did not draw any remuneration including sitting fees from the Company.
There were no pecuniary relationship or transactions of the NonExecutive Directors vis-a-vis the Company during the Financial Year ended 31.3.2015.
Remuneration to Managing Director:
Managing Director does not draw any remuneration from the Company.
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual evaluation of its own performance, performance of the Directors individually as well as the evaluation of working of its Committees.
The performance evaluation of Chairman and the Non-Independent Directors was carried out by the Independent Directors. The Board of Directors expressed its satisfaction over its own performance, performance of its Committees and all the Directors individually.
The criteria for nomination of Directors, KMP, Senior Management Personnel and their remuneration including criteria for promotion is described in Nomination and Remuneration Policy of the Company which can be accessed at the weblink: NOMINATION REMUNERATION POLICY.pdf
The Company has no subsidiary.
Management Discussion & Analysis forms part of the Annual Report.
10. CEO/CFO Certification:
In accordance with the requirements of Clause 49(IX) of the Listing Agreement, the Board of Directors of the Company, the Audit Committee and the Auditors have been furnished with the requisite certificate from the Managing Director.
11. Stakeholders Grievance / Relationship Committee:
a) The existing "Shareholders / Investors Grievance Committee" has been re-named as "Stakeholders Grievance / Relationship Committee". Presently this Committee comprises Sri P Narendranath Chowdary (Chairman of the Committee - Non-Executive Director), Sri Mullapudi Thimmaraja and Sri Ravi Pendyala as Members of the Committee. The Committee looks into the redressal of the shareholders' complaints like transfer of shares, non-receipt of Annual Report and declared Dividend and other matters.
b) The Board has designated Sri K Raghu Ram, Manager (Finance) & Asst. Company Secretary, as the Compliance Officer.
c) Investor complaints received and redressed during the year ended 31.3.2015:
12. Corporate Social Responsibility (CSR) Committee:
Pursuant to Section 135 of the Companies Act, 2013 and the Companies (CSR Rules), 2014, CSR Committee was constituted on 24.5.2014. Presently, it comprises three Directors viz., Dr. B B Ramaiah, Managing Director, is the Chairman of the Committee and Sri A A Krishnan and Sri P Narendranath Chowdary (from 5.11.2014) are the other members of the Committee. Smt. Anita Rajendra, I.A.S., was the member of the Committee till 19.10.2014.
The terms of reference of the CSR Committee broadly comprises:
> To formulate and recommend to the Board, a Corporate Social Responsibility (CSR) Policy indicating activities to be undertaken by the Company in compliance with provisions of the Companies Act, 2013 and rules made thereunder
> To recommend the amount of expenditure to be incurred on the CSR activities
> To monitor the implementation of the CSR Policy of the Company from time to time.
Meeting and attendance:
The CSR Committee met once during the year on 20.7.2014. The necessary quorum was present at the meeting. All the members of the Committee attended the said meeting.
The Company formulated CSR Policy which is uploaded on the website of the Company (weblink: <http://> www.andhrapetrochemicals.com/csr policy.pdf)
13. Independent Directors Meeting:
During the year under review, the Independent Directors met on 27th March, 2015, inter alia, to discuss:
> Evaluation of performance of Non-Independent Directors and the Board as a whole
> Evaluation of performance of the Chairman of the Company, taking into account the view of the Executive and Non-Executive Directors
> Evaluation of the Quality, content and timeliness of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform its duties. Details of familiarisation programme for Independent Directors is placed at weblink: <http://www.andhrapetrochemicals.com/> FAMILIARISATION%20PROGRAMME.pdf
14. Affirmations and Disclosures:
i) Compliance with governance frame work:
The Company has complied with the mandatory requirements of Clause 49 of the Listing Agreement.
ii) Related Party Transactions:
All transactions entered into with the Related Parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the Financial Year were in the ordinary course of business and on arm's length basis and do not attract the provisions of the Section 188 of the Companies Act, 2013. There were no materially significant transactions with the Related Parties during the Financial Year. Related Party Transactions have been disclosed under the Note No.2.30 of the Financial Statements in accordance with Accounting Standard-18. A statement in summary form of transaction with related parties in the ordinary course of business and on arm's length basis, is periodically placed before the Audit Committee for review and recommendation to the Board for their ratification.
As required under Clause 49, the Company formulated a Policy for dealing with Related Party Transactions. The Policy is available on the website of the Company (weblink: <http://www.andhrapetrochemicals.com/POLICY> ON RELATED PARTY TRANSACTIONS.pdf )
None of the transactions with Related Parties were in conflict with the interest of the Company. All the transactions are in the normal course of business and have no potential conflict with the interest of the Company at large and or carried out on an arm's length basis or fair value.
iii) Details of Non-compliance by the Company, penalties and strictures imposed on the Company by Stock Exchange or SEBI or any statutory authority on any matter related to capital markets during the last three years:
No penalties or strictures were imposed on the Company for non-compliance by Stock Exchange / SEBI or any authority on any matter related to capital markets during the last 3 years.
iv) Whistle Blower Policy:
Pursuant to Section 177(9) and (10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has formulated Whistle Blower Policy for vigil mechanism for Directors and employees
to report to the management about the unethical behaviour, fraud or violation of Company's Code of Conduct. The mechanism provides for adequate safeguards against victimisation of employees and Directors who use such mechanism and makes provision for direct access to the Chairperson of the Audit Committee in exceptional cases.
v) Disclosure of Accounting Treatment:
In the preparation of the financial statements, the Company has followed the Accounting Standards referred to in Section 133 of the Companies Act, 2013. The significant Accounting Policies which are consistently applied are set out in the Notes to the Financial Statements.
vi) Risk Management
Board periodically reviews the compliance of all laws, regulations and various risks affecting the Company. Various Risk Management Systems adopted to mitigate the risks are also reviewed by the Board. Risk Management Policy approved by the Board can be accessed at the weblink: <http://www.andhrapetrochemicals.com/POLICY> ON CORPORATE RISK MANAGEMENT.pdf
16. Means of Communication:
i) Quarterly financial results are published in "The Hindu Business Line" (English) and "Andhra Bhoomi" (Telugu). Copies of the Results published are forwarded to Stock Exchange and the results are displayed on the Website of the Company www.andhrapetrochemicals.com .
ii) The Company has not issued any press release or made any presentations to the institutional investors or analysts about its financial results during the year.
17. General Shareholder Information:
i) Annual General Meeting :
— Date and Time
Tuesday, 29th September, 2015 at 3:00 p.m.
— Venue : Regd.Office: Venkatarayapuram, TANUKU - 534215, West Godavari Dist., Andhra Pradesh
ii) Financial Year
1st April to 31st March
iii) Dates of Book Closure
Saturday, 19th September, 2015 to Tuesday, 29th September, 2015 (both days inclusive)
iv) Listing on Stock Exchange and Stock Code:
The Bombay Stock Exchange Ltd.
Physical Stock Code: 12
Demat Stock Code: 500012
v) Share Transfer System:
Transfers of Equity Shares in physical mode are effected within the statutory time limit from the date of receipt. Share transfers are approved weekly.
Dematerialisation of shares is attended by M/s XL Softech Systems Ltd., Hyderabad.
vi) Reconciliation of Share Capital Audit Report:
As stipulated by SEBI, a qualified Practising Chartered Accountant carries out Secretarial Audit to reconcile the total admitted capital with National Securities Depository Ltd., (NSDL) and Central Depository Services (India) Ltd., (CDSL) and the total issued and listed capital.
This audit is carried out every quarter and the report thereon is submitted to the Stock Exchange where the Company's shares are listed. The audit confirms that the total Listed and Paid-up Capital is in agreement with the aggregate of the total number of shares in dematerialised form (held with NSDL and CDSL) and total number of shares in physical form.
vii) Share Transfer System:
Share transfers are processed and share certificates duly endorsed are delivered within a period of 15 days from the date of receipt, subject to documents being valid and complete in all respects. The Board has delegated the authority for approving transfer, transmission etc., of the Company's securities to the Managing Director and or Company Secretary. The Company obtains from a Practising Company Secretary half-yearly certificate regarding compliance with the share transfer formalities as required under Clause 47(c) of the Listing Agreement and files a copy of said certificate with Stock Exchange.
viii) Plant location:
Opp: Naval Dockyard
VISAKHAPATNAM - 530014 Andhra Pradesh
ix) Address for correspondence:
Manager (Finance) & Asst. Company Secretary The Andhra Petrochemicals Limited Venkatarayapuram, TANUKU - 534215 West Godavari District, Andhra Pradesh
Phone Nos. 08819-224075 08819-220975 (Shares Dept.)
Fax: 08819-224168 CIN: L23209AP1984PLC004635
E-mail: firstname.lastname@example.org email@example.com
B) NON-MANDATORY REQUIREMENTS:
The Company has complied with the following non-mandatory requirements of Clause 49 of the Listing Agreement:
i) Separate posts of Chairman and CEO
Sri M R B Punja is the Chairman, Dr. B B Ramaiah is the Managing Director and Dr. V N Rao is the Chief Executive & Chief Operating Officer.
ii) Reporting of Internal Auditor
Internal Auditors directly report to the Audit Committee.
iii) Audit qualification
The Financial Statements of the Company are free from any qualification by the Auditors.
The other non-mandatory requirements will be adopted as and when considered necessary.