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Ballarpur Industries Ltd.

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Ballarpur Industries Ltd. Accounting Policy

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE PHILOSOPHY

Ballarpur Industries Limited ('the Company' or 'BILT') has always been a responsible corporate citizen adhering to sustainable business practices that are tuned to long term value creation. To fulfill this objective, it is important to adhere to a strong set of values and continuously engage with all its stakeholders including shareholders, customers, partners, employees and the society at large. The Company's corporate governance systems are structured to deliver these goals. It provides the fundamental systems, processes and principles that promote objective decision making, performance based management and a corporate culture that is characterized by integrity and fairness in all dealings. Critical to this, is the high degree of transparency in disclosures across all levels of stakeholder engagement, which are periodically done while maintaining the importance of reserving competitive information from being disseminated. In this endeavor, BILT is led by a strong and independent Board of Directors providing the Company strong oversight and strategic counsel. The Company has well established systems and procedures to ensure that the Board remains well-informed and well-equipped to fulfill its governance responsibilities and provide management with the strategic direction required to create long-term shareholder value.

The corporate secretarial department and the internal audit function of the Company are ISO 9001:2008 certified and remain committed to adopting best-in-class practices of corporate governance and internal controls. In FY2015, as BILT focused on executing its well crafted business plans, the Company remained focussed on regular monitoring of strategic issues and risk management, which included both evaluation and mitigation.

In India, corporate governance standards for listed companies are regulated by the Securities and Exchange Board of India (SEBI) through Clause 49 of the Listing Agreement with the Stock Exchanges. BILT remains committed to maintaining strict compliance with the letter and spirit of Clause 49.

This chapter, along with the chapters on Management Discussion & Analysis and Additional Shareholders' Information, reports BILT's compliance with Clause 49.

BOARD OF DIRECTORS COMPOSITION

As on 31 March, 2015, the Company had eight members on the Board of Directors. The Board comprises a non­executive Chairman, Mr. Gautam Thapar, who is a Member of the Promoter Group; one executive director — Mr. B. Hariharan, who is Group Director — Finance; four Non Executive Independent Directors including Mr. Sanjay Labroo, Mr. A. S. Dulat, Mr. Ashish Guha and Ms. Nandini Adya; and two non-independent non-executive Directors including Mr. R. R. Vederah — non-Executive Vice Chairman, an ex-employee and Mr. A. P. Singh {Nominee Director of the Life Insurance Corporation of India (LIC)}. All the Directors are eminent personalities and experienced professionals in business, law, finance and corporate management. The composition of the Board of the Company is in conformity with Clause 49 of the Listing Agreement. Table 1 gives the details of the Directors on the Board. None of the Directors of the Company are related to each other.

The Independent Directors meet the criteria of Clause 49(II)(B)(1) of the Listing Agreement entered into with the Stock Exchanges and Section 149(6) of the Companies Act, 2013.

BOARD MEETINGS

There were three Board Meetings held in the financial year 2014-15 (1 July, 2014-31 March, 2015): 27 August, 2014, 11 November, 2014 and 5 February, 2015. The Board of Directors of the Company is provided with all the statutory and other significant and material information to enable it to discharge its responsibilities as trustees of the Shareholders.

Table 1 gives the details of Directors' attendance at the Board Meetings and Annual General Meeting held during the year, the number of Directorships and Committee Chairmanships / Memberships held by them in other public limited companies. Other directorships do not include alternate directorship, directorship of private limited companies, Section 8 companies and companies incorporated outside India.

The Board meetings calendar of the Company is scheduled in advance and appropriate notice is being served for convening Board meetings. Although the Directors are familiar with the operations of the Company, the Company arranges plant visit, presentation on different operation's function by functional heads from time to time which further provides better insight to the Board on the Company's operations and interaction with the management.

The Board regularly discuss & review the Company's strategy, risks and opportunities, management reports, operational & financial performance, annual budget, compliance, internal control systems etc. besides other agenda items.

INDEPENDENT DIRECTORS' MEETING

A meeting of the Independent Directors was held on 26 May, 2015 to discuss the current strategic and operational position of the Company, assess information flows from Management to the Board and performance evaluation of the Board and Chairman.

DIRECTORS' COMPENSATION

The Directors are paid compensation, as approved by the Board and Shareholders within the ceilings prescribed under the Companies Act, 1956 / Companies Act, 2013.

The Executive Director of the Company is paid salary, perquisites and other retiral benefits. The Non Executive Directors are paid sitting fees for attending meetings of the Board and its Committees and profit related commission, if any. In addition, the Chairman of the Audit Committee and the Stakeholders Relationship Committee are paid a variable component, over and above the aforesaid normal commission, for their guidance, expertise and valuable contribution.

The Shareholders, at the 66th Annual General Meeting held on 16 December, 2011, approved payment of remuneration by way of commission and/or other means to the Non Executive Directors including Independent Directors of the Company (as a percentage of profits or otherwise, prescribed from time to time), in addition to fees for attending the meetings of the Board of Directors and/or duly authorised Committees thereof, for each of the five financial years commencing from 1 July, 2011 as may be permitted pursuant to Section 309 & any other applicable provisions, if any, of the Companies Act, 1956 (or other equally applicable provisions). The remuneration paid/payable to the Directors for the financial year 2014-2015 is given in Table 2.

NON EXECUTIVE DIRECTORS' SHAREHOLDING

As on 31 March, 2015,

Mr. Gautam Thapar held 1,161,216 Equity Shares and Mr. Sanjay Labroo held 495,802 Equity Shares in the Company. The Company has not issued any convertible instrument to any Non Executive Director.

CODE OF CONDUCT

The Company has a Code of Conduct for its Directors and designated senior management personnel. The Code of Conduct is available on the website of the Company (www.bilt.com ). All Board members and designated senior management personnel have affirmed compliance with the Code of Conduct for the financial year 2014-2015. A declaration signed by Mr. Anup Kansal, Chief Executive Officer to this effect is annexed to this Report.

COMMITTEES OF THE BOARD

The composition of BILT's Audit Committee, Nomination and

Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee as on 31 March, 2015 are given in Table 3.

Apart from the above, BILT also has other Board level committees to manage the day to day decisions pertaining to operations / business of the Company. All decisions pertaining to the mandate of these Committees and appointment of members are taken by the Board of Directors.

AUDIT COMMITTEE

During the year, the Committee met three times: 27 August, 2014, 11 November, 2014 and 5 February, 2015. The all attendance record is given in

Table 4. All members had attended all meetings, as held during their tenure.

All members of the Audit Committee have accounting and financial management expertise. The Committee acts as a link between the Management, Auditors and the Board of Directors of the Company and has full access to financial information. The Company Secretary of the Company acted as the Secretary to the Committee. The Non Executive Vice Chairman, Chief Executive Officer, Head of Internal Audit, other relevant officials of the Company and the representatives of the Statutory Auditors had attended the meeting(s) as invitees, whenever required.

In addition to review of the financial results of the Company, update on internal audits of various functions, review of internal control systems, applicability and compliance of various laws, related party transactions, reappointment and remuneration of statutory auditors / branch auditors / cost auditors, cost accounting systems and audit reports features on the Audit Committee's Agenda.

Further, the Committee also oversees the vigil mechanism, as required by the provisions of the Companies Act, 2013.

NOMINATION AND REMUNERATION COMMITTEE

The Board has constituted the Committee, with the composition as provided in Table 3 with the mandate in compliance the requirements of the provisions of the Companies Act 2013 and Clause 49 of the Listing Agreement with Stock Exchanges. The Committee has formulated criteria and policy for the identification / appointment / removal of directors, key managerial personnel & senior management, their remuneration and evaluation. An excerpt of the said policy is annexed herewith.

RISK MANAGEMENT COMMITTEE

The Board had constituted the Committee to understand and assess various kinds of risks associated with the running of business and suggesting / implementing ways and means for eliminating / minimising risks to the business of the Company and periodic review of the management control procedures / tools used to mitigate such risks.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Company has Stakeholders Relationship Committee (earlier known as Investors' / Shareholders' Grievance Committee), details of which are given under the Section 'Shareholders' in this Report.

A meeting was held on 1 May, 2015 and was attended by all its members.

During the financial year ended 31 March, 2015, 6 complaints were received from the Investors / Shareholders and all of them were redressed / resolved.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Board has constituted the Committee, with the composition as provided in Table 3 with the mandate in compliance the requirements of the provisions of the Companies Act 2013. The Committee has formulated and recommend to the Board, a Corporate Social Responsibility Policy to indicate the activities to be undertaken by the company, amount to be spent and shall monitor from time to time.

MANAGEMENT

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

This is given as a separate Chapter in the Annual Report.

DISCLOSURES OF MATERIAL TRANSACTIONS

Considering the size and nature of operations, there were no related party transactions of a materially significant nature in terms of the Listing Agreement with Stock Exchanges that could have a potential conflict with the interests of the Company at large. Other related party transactions, which were in ordinary course of business and on arm's length basis, are provided in the financial statements.

ACCOUNTING POLICIES

The Company has adopted accounting treatments, which are in conformance with those prescribed by the applicable Accounting Standards.

INSIDER TRADING

In compliance with the SEBI regulations on prevention of insider trading, the Company has a Code on Insider Trading for its Directors, Management and Designated Executives. The Code lays down guidelines, which advise them on procedures to be followed and disclosures to be made, while dealing in securities of the Company.

SHAREHOLDERS

DISCLOSURE REGARDING APPOINTMENT AND / OR RE- APPOINTMENT

As per the provisions of the Companies Act, 2013, Mr. Gautam Thapar retires by rotation at the forthcoming Annual General Meeting.

In terms of Section 149 and other applicable provisions of the Companies Act, 2013, all Independent Directors of the Company were appointed for a period of five years at the last Annual General Meeting of the Company held on 19 December, 2014.

A brief profile of Mr. Gautam Thapar is given hereunder.

Mr. Thapar, aged 54 years, is Founder and Chairman of India's foremost diversified corporation, the Avantha Group. The Avantha Group is one of India's leading business conglomerates. Its successful entities in diversified sectors include Crompton Greaves (power transmission and distribution equipment and services), BILT (paper and pulp), The Global Green Company Limited (food processing), Biltech Building Elements Limited (infrastructure), Avantha Power (energy), Avantha Business Solutions Limited (IT and ITES), Jg Glass (glass containers) and Avantha Ergo Life Insurance.With a global footprint, the Group operates in 90 countries with more than 25,000 employees worldwide.

He began his education at the prestigious Doon School, where he imbibed a liberal education based on the ideals of secularism, discipline and equality. After studying chemical engineering in the U.S.A., he returned to India and started his career as a factory assistant in one of the organisation's manufacturing companies. He rose steadily and steered the organisation through a strategic and visionary turnaround, involving resilience and restructuring, ensuring that the Group attained dominant status in key operating sectors.

Mr. Thapar became Group Chairman on 1 July, 2006. He sits on the boards of various companies in India and overseas. In 2008, he received the Ernst & Young Entrepreneur of the Year Award for manufacturing.

Mr. Thapar is widely recognized and acknowledged for his thought leadership. He has been appointed Board Member of the National Security Advisory Board, a key component of the National Security Council of India, the apex agency looking into the nation's political, economic, energy and strategic security concerns.

Keen on giving back to society, Mr. Thapar takes his social responsibilities very seriously. This is manifested in his involvement across three sectors: education, leadership development and sports. He is President of Thapar University, one of the top ten technical schools in India, and Chairman of the Board of Governors, National Institute of Industrial Engineering (NITIE). He is Chairman of The Ananta Aspen Centre, which aims to internationalise India's business, political and cultural leadership, Chairman of the CII-Avantha Center for Competitiveness for SMEs, and is Past President of All India Management Association (AIMA), the apex body of professional management in India. He was awarded AIMA Honorary Life Fellowship in February 2013. He also takes an avid interest in promoting golf, and is President of the Professional Golf Tour of India (PGTI). In July 2013, King's College, London conferred an Honorary Fellowship in recognition of his 'exceptional achievements in the fields of industry and philanthropy'.

Details of his directorships and memberships of committees of boards are given in Table 5.

COMMUNICATION TO SHAREHOLDERS

Full and complete disclosure of information regarding the Company's financial situation and performance is an important part of the Company's Corporate Governance ethics. The Company has demonstrated this commitment by sending its Shareholders a full version of its Annual Report, despite a regulatory exemption.

The Company sends its Annual Report including Standalone and Consolidated financials as well as other shareholder correspondence by email, to those shareholders whose e-mail addresses are registered with the Company / their depository participants. However, in case Shareholders desire to receive a physical copy of the Annual Report, the Company will be happy to provide the same upon request.

The financial results of the Company are usually published in The Financial Express (all editions) & Loksatta (Nagpur: Marathi edition) and are simultaneously uploaded on the Company's website (www.bilt.com ). The Company also sends the results and announcements to the Luxembourg Stock Exchange for the benefit of the GDS holders.

GENERAL BODY MEETINGS

Table 6 gives the details of General Meetings, held in the last three years. The following Special Resolutions were taken up in the previous AGMs and approved by Shareholders with requisite majority.

2012

Re-appointment of Mr. R. R. Vederah as Managing Director & Executive Vice Chairman and approval for payment of remuneration w.e.f 1 July, 2012 for a period of 2 years, not liable to retire by rotation.

2013

Approval for borrowings under Section 180(1)(c) of the Companies Act, 2013

2014

• Offer, issue and allot, in one or more tranches, upto 2.50 crore Cumulative Non-Convertible Compulsorily Redeemable Preference Shares of the face value of Rs. 100 each for cash at par or at a premium aggregating upto a nominal value of Rs. 250.00 crores on a private placement basis.

• Offer, issue and allot secured and/or unsecured redeemable Non-convertible Debentures (NCDs), in one or more series/tranches upto an aggregate amount of Rs. 250.00 crores, on a private placement basis.

• Mortgage and /or charge, in addition to the mortgages /charges created / to be created by the Company, amounting in aggregate to a sum not exceeding the paid-up Share Capital of the Company and its free reserves by Rs. 1,600 crores on all or any of the movable and/or immovable properties of the Company. The said limit remained unchanged,

as approved by the Members at the Extraordinary General Meeting held on 7 November, 2001 by an ordinary resolution.

POSTAL BALLOT

No resolution through postal ballot has been passed during the year under review.

CAPITAL MARKET COMPLIANCE

The Company has complied with all requirements of the Listing Agreement with Stock Exchanges as well as the regulations and guidelines prescribed by SEBI. There were no penalties or strictures imposed on the Company by any statutory authorities for non compliance on any matter related to capital markets, during the last three years.

UNCLAIMED SHARES

The Company has completed the process of intimation to shareholders, as per Clause 5A of the Listing Agreement with Stock Exchanges, for unclaimed shares for transfer in the Unclaimed Suspense Account. The Company is in the process of transferring unclaimed shares to a separate dematerialised account viz. Unclaimed Suspense Account and voting rights shall be suspended thereon. The rightful members would be entitled to claim their shares from the Unclaimed Suspense Account after submission of the requisite documentary proof of their identity to the Company.

GOVERNANCE OF SUBSIDIARIES

The subsidiaries of the Company are managed by an experienced Board of Directors. The minutes of the subsidiaries are reviewed by the Board of Directors of the Company on a regular basis. In compliance with Clause 49 of the Listing Agreement, Ms. Nandini Adya, Independent Director of the Company is a Director on the Board of Directors of BILT Graphic Paper Products Limited (BGPPL), a material non-listed Indian subsidiary.

CEO/CFO CERTIFICATION

The Group Director (Finance) and Chief Executive Officer have certified to the Board with respect to the financial statements, internal controls and other matters, as required by Clause 49 of the Listing Agreement with Stock Exchanges.

REPORT ON CORPORATE GOVERNANCE

This chapter, read with the information given in the section titled Additional Shareholders' Information, constitutes the compliance report on Corporate Governance for the FY2014-15.

AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE

The Company has obtained a certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance for the FY2014-15, as prescribed by Clause 49 of the Listing Agreement with Stock Exchanges, which is attached herewith.

ADDITIONAL SHAREHOLDERS' INFORMATION

ANNUAL GENERAL MEETING

Date 30 September, 2015

Time 12:00 noon

Venue P.O. Ballarpur Paper Mills - 442901, Distt. Chandrapur, Maharashtra

FINANCIAL CALENDAR 2015-16

Financial year

April-March.

Financial results

Normally within 45 days of end of the Quarter, except last Quarter and audited annual results which shall be published within 60 days.

BOOK CLOSURE

The dates of book closure are from 24 September, 2015 to 30 September, 2015, both days inclusive.

UNCLAIMED DIVIDENDS

Dividends pertaining to the financial years 2007-08 onwards, as detailed in Table 7, which remain unclaimed and unpaid for a period of seven years, will be transferred to the Investor Education and Protection Fund (IEPF), as required statutorily. To enable the members to claim their dividend before its transfer to the above Fund, the tentative schedule for transfer is given in Table 7. The details are also available on the website of the Company i.e. www.bilt.com under the Investor relations section.

UNCLAIMED BUY BACK

CONSIDERATION

The shareholders, who have not received their buy back consideration are requested to notify the Company of non-receipt and claim the same.

LISTING DETAILS

At present, the Equity Shares of the Company are listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) in India. The annual listing fee for the financial year 2014-15 has been paid to both the Stock Exchanges. The Company's stock codes at various exchanges are given in Table 8. Table 9 gives the details of monthly price and volumes traded of BILT's shares at the BSE and the NSE, while Charts A and B compare the price movements of BILT's share with respect to the BSE SENSEX and the NSE NIFTY, respectively.

NON CONVERTIBLE DEBENTURES (NCDS)

The unsecured NCDs of Rs. 250 Crores are in dematarilized form and are listed on BSE Limited. These NCDs were rated as A+(ind) with stable outlook by India ratings (FITCH group). As on date of this Report, NCDs of Rs. 50 Crore are outstanding.

The Company had raised Rs. 150 Crores by private placement of Secured redeemable non-convertible debentures (NCDs) of face value of Rs. 10 lac each in 2014. These NCDs are rated as A+(ind) with stable outlook by India ratings (FITCH group) which are in dematerialised form and listed on BSE Limited. As on the date of this Report, the same are outstanding.

REGISTRAR AND TRANSFER AGENT

The Registrar and Transfer Agent for the Equity Shares, both in physical and electronic form and NCDs of the Company is:

M/s. RCMC Share Registry (P) Limited

B-25/1, First Floor, Okhla Industrial Area,

Phase II, New Delhi-1 10020 Tel +91 11 26387320, 26387321, 26387323 Fax +91 11 26387322

SHARE TRANSFER SYSTEM

The Committee of Directors for Shares approves the transfer of shares and other related issues regularly on a weekly  basis. The share transfer is processed within 15 days, from the receipt of complete documents.

DEMATERIALISATION OF SHARES

The Equity Shares of the Company are compulsorily traded on the Stock Exchanges, only in dematerialised form and are available for holding in the depository systems of National Securities Depository Limited and Central Depository Services (India) Limited. As on 31 March, 2015, 98.45 percent of the total Equity Shares of the Company were held in dematerialised form, as compared to 98.42 percent last year.

OUTSTANDING GLOBAL DEPOSITARY SHARES (GDS)

As on 31 March, 2015, there were 41 outstanding GDS which represent 123 underlying equity shares.

DISTRIBUTION OF SHAREHOLDING

Tables 10 and 11 give the distribution of shareholding of the equity shares of the Company by size and ownership as on 31 March, 2015.

REGISTERED OFFICE

Ballarpur Industries Limited

P.O. Ballarpur Paper Mills-442901 Distt. Chandrapur, Maharashtra

Tel +91 7172 240262 / 200 Extn. 234 / 339 Fax +91 7172 240548 Email sectdiv@bilt.com

PLANT LOCATIONS

UNIT SHREE GOPAL

P.O. Yamunanagar, Distt. Yamunanagar, Haryana - 135001

UNIT KAMALAPURAM

Mangapet Mandal, Distt. Warangal -506172, Telangana

ADDRESS FOR CORRESPONDENCE

For share transfer, dematerialisation of shares, payment of dividend and any other related queries of Analysts, FIIs, Institutions, Mutual Funds, Banks and Fixed Deposits is:

Corporate Secretarial Department, Ballarpur Industries Limited, First India Place, Tower-C, Block-A, Sushant Lok-1, Mehrauli-Gurgaon Road, Gurgaon - 122002.

Tel +91 124 2804242 / 43 Tel +91 124 4099208 Fax +91 124 2804261

Email sectdiv@bilt.com

For and on behalf of the Board of

Directors

GAUTAM THAPAR

Chairman

DIN 00012289

B. HARIHARAN

Group Director (Finance)

DIN 00012432

Date 26 May, 2015

Place New Delhi