REPORT ON CORPORATE GOVERNANCE
Company's Philosophy on Corporate Governance
DBSIL (Dalmia Bharat Sugar and Industries Limited) believes in and remains committed to good Corporate Governance. The spirit of corporate governance has remained imbibed in the Company's business philosophy since long. This philosophy is shaped by the values of transparency, professionalism and accountability. Today, your Company's corporate governance practices are driven by strong Board oversight, timely disclosures, transparent accounting policies and high levels of integrity in decision-making.
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 of the Stock Exchanges. The stipulations mandated by Clause 49 of the Listing Agreement became applicable to your Company in March 2001 and have been fully complied with since then. SEBI, through circulars dated 29th October 2004, 29th March 2005, 8th April 2008, 17th April 2014 and 15th September, 2014 has revised Clause 49 of the Listing Agreement and mandated listed companies to comply with the revised Clause 49 of the Listing Agreement.
This chapter, along with the chapters on Management Discussion and Analysis and Additional Shareholders Information, reports on DBSIL's compliance with the Clause 49 of the Listing Agreement.
Board of Directors Composition of the Board
As on 31st March 2015 the Company's Board comprised eight members — two Executive Directors, and six Non-executive Directors, of which three are Independent and one is a Woman Director. Shri J.S. Baijal, a Non-executive Independent Director, is appointed as the Chairman of the Board. The composition of the Board is in conformity with Clause 49 of the Listing Agreement, which stipulates that if the Chairman is a Non-executive, and is not related to the promoters or persons occupying management positions at the Board level or at one level below the Board, one-third of the Board should comprise of Independent Directors, or else, 50 per cent of the Board should comprise of Independent Directors.
Number of Board Meetings
The Board of Directors met four times during the year on 165-2014, 1-8-2014, 31-10-2014 and 30-1-2015. The maximum gap between any two meetings was less than 4 months.
Directors' Attendance Record and Directorships Held
As mandated by the Clause 49 of the Listing Agreement, none of the Directors are members of more than ten Board level Committees nor are they Chairman of more than five Committees in which they are members. Table 1 gives the details of the composition of the Board, attendance and details of Committee Membership and Committee Chairmanship.
As mandated by the revised Clause 49 of the Listing Agreement, the independent Directors on DBSIL's Board are not less than 21 years in age, and:
? Who in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience.
? Who is or was not a promoter of the Company or its Holding, Subsidiary or Associate Company.
? Who is not related to the promoters or Directors in the Company its Holding, Subsidiary or Associate Company.
? Apart from receiving Director's remuneration, has or had no material pecuniary relationship with the Company, its Holding, Subsidiary or Associate Company or their promoters, or Directors during the two immediately preceding financial years or during the financial year.
? None of whose relatives has or had pecuniary relationship with the Company, its Holding, Subsidiary or Associate Company, or their promoters or Directors amounting to two percent or more of its gross turnover or total income or fifty lakh rupees or such higher amount as may be prescribed, whichever is lower, during the two immediately preceding financial years or during the current financial year.
? Who, neither himself nor any of his relatives -
(i) Holds or has held the position of a key managerial personnel or is or has been employee of the Company or its Holding, Subsidiary or Associate Company in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed.
(ii) Is or has been an employee or proprietor or a partner in any of the three financial years immediately preceding the financial year in which he is proposed to be appointed, of -
(a) A firm of Auditors or Company Secretaries in Practise or Cost Auditors of the Company or its Holding, Subsidiary or Associate Company; or
(b) Any legal or a consulting firm that has or had any transaction with the Company, its Holding Subsidiary or Associate Company amounting to 10% or more of the gross turnover of such firm.
(iii) Holds together with his relatives two percent or more of the total voting power of the Company.
(iv) Is a Chief Executive or Director, by whatever name called, of any non-profit organisation that receives 25% or more of its receipts from the Company, any of its Promoters, Directors, or its Holding, Subsidiary or Associate Company or that holds more than two percent or more of the total voting power of the Company.
(v) Is a material supplier, service provider or customer or a lessor or lessee of the Company.
Information Supplied to the Board
The Board has complete access to all information with the Company. The agenda and papers for consideration of the Board are circulated at least seven days prior to the date of the Board meeting. Adequate information is circulated as part of the agenda papers and also placed at the meeting to enable the Board to take an informed decision. Inter-alia, the following information is regularly provided to the Board as a part of the agenda papers well in advance of the Board meetings or is tabled in the course of the Board meeting.
• Annual operating plans & budgets and any update thereof.
• Capital budgets and any updates thereof.
• Quarterly results of the Company and operating divisions and business segments.
• Minutes of the meetings of the Audit Committee and other Committees of the Board.
• Information on recruitment and remuneration of senior officers just below the level of Board, including the appointment or removal of Chief Financial Officer and Company Secretary.
• Materially important show cause, demand, prosecution and penalty notices.
• Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems.
• Any material default in financial obligations to and by the Company, or substantial non-payment for goods sold by the Company.
• Any issue, which involves possible public or product liability claims of substantial nature, including any judgement or order which, may have passed strictures on the conduct of the Company or taken an adverse view regarding another enterprise that can have negative implications on the Company.
• Details of any joint venture or collaboration agreement.
• Transactions that involve substantial payment towards goodwill, brand equity or intellectual property.
• Significant labour problems and their proposed solutions. Any significant development in human resources/ industrial relations front like signing of wage agreement, implementation of voluntary retirement scheme, etc.
• Sale of material nature of investments, subsidiaries, assets, which is not in the normal course of business.
• Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material.
• Non-compliance of any regulatory, statutory nature or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer, etc.
The Board periodically reviews compliance reports of all laws applicable to the Company, prepared by the Company as well as steps taken by the Company to rectify instances of non-compliances.
Remuneration Paid to Directors and Key Managerial Personnel
The compensation payable to the Executive Directors and Key Managerial Personnel is decided by the Nomination and Remuneration Committee constituted by the Board of Directors. The details of remuneration paid, during the year, to the Executive Directors, Non-Executive Directors and Key Managerial Personnel is presented in Table 2.
Retirement benefits to the Executive Directors comprise the Company's contribution to provident fund and superannuation fund. The payment of retirement benefits is being made by the respective fund(s). In addition to the above the Company also contributes, on actuarial valuation basis, amounts to the Gratuity Fund towards gratuity of its employees including the Vice Chairman and Managing Director. The Company has not provided any stock options to its employees including those at the Board level.
The appointments of Shri Gautam Dalmia, Managing Director, was made for a period of five years with effect from t16th January, 2012. The appointment of Shri Jai H. Dalmia, Vice Chairman, has been made for a period of five years with effect from 1st April, 2012. No severance fees is payable to any of aforementioned persons in respect of their cessation
Code of Conduct
DBSIL's Board has laid down a code of conduct for all Board members and designated senior management of the Company. The code of conduct is available on the website of the Company <http://www.dalmiasugar.com/images/code_> of_conduct.pdf. All Board members and senior management personnel have affirmed compliance with the Code of Conduct. declaration signed by the Chief Executive Officer (CEO) to this effect is enclosed at the end of this report.
Committees of the Board
As on 31st March 2015, the Company has six Board-level Committees for Audit, Nomination and Remuneration, Finance, Stakeholders' Relationship, CSR and Risk Management.
All decisions pertaining to the constitution of Committees, appointment of members and fixing of terms of service for Committee members is taken by the Board of Directors. Details on the role and composition of these Committees, including the number of meetings held during the financial year and the related attendance, are provided below:
a) Audit Committee
As on 31st March 2015, the Audit Committee comprises three members Shri P. Kannan, Shri M. Raghupathy, and Shri J.S. Baijal, all of whom are independent Directors. Shri P. Kannan is the Chairman of the Audit Committee. The Audit Committee met four times during the year on 16-5-2014, 1-8-2014, 3110-2014 and 30-1-2015. The particulars of attendance of the members in the Meetings of this Committee is set out in Tables 3 hereunder:-
The Officer responsible for the finance function, the head of internal audit and the representative of the Statutory Auditors, Internal Auditors and Cost Auditors are regularly invited by the Audit Committee to its meetings. Shri K.V. Mohan, Company Secretary, is the Secretary to the Committee.
All members of the Audit Committee have requisite accounting and financial management expertise. Shri P. Kannan, the Chairman of the Audit Committee attended the Annual General Meeting (AGM) held on 30th August, 2014 to answer shareholders queries.
The functions of the Audit Committee of the Company include the following:
• The recommendation for appointment, remuneration and terms of appointment of Auditors of the company;
• Review and monitor the auditor's independence and performance, and effectiveness of audit process;
• Examination of the financial statement and the Auditors' report thereon;
• Oversight of the company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
• Recommendation for appointment, remuneration and terms of appointment of auditors of the company;
• Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
• Reviewing, with the management, the annual financial statements and auditor's report thereon before submission 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 out of 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 the management, the quarterly financial statements before submission 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 audit process;
• Approval or any subsequent modification of transactions of the company with related parties;
• Scrutiny of inter-corporate loans and investments;
• Valuation of undertakings or assets of the company, wherever it is necessary;
• Evaluation of internal financial controls and risk management systems;
• Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
• Reviewing the adequacy of 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 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 following information is reviewed by the Audit Committee
• Management discussion and analysis of 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;
• Internal audit reports relating to internal control weaknesses; and
• The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee.
b) Nomination and Remuneration Committee
As on 31st March 2015, the Nomination and Remuneration Committee comprise of three members Shri J.S. Baijal, Shri M. Raghupathy and Shri P. Kannan, all independent Directors, with Shri M. Raghupathy as its Chairman. The Committee met thrice during the year on 16-5-2014, 30-1-2015 and 24-3-2015. The particulars of attendance of the members in the Meetings of this Committee is set out in Table 4 hereunder:
The Committee is to carry out the following functions:
i) identify persons who are qualified to become directors and persons who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board their appointment and/or 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 recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees. while formulating the aforesaid policy the Committee shall 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 benchmarks; and
(c) remuneration to directors, key managerial personnel and senior management 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.
The Chairman of the Nomination and Remuneration Committee atteneded the Annual General Meeting held on 30th August, 2014.
c) Stakeholders' Relationship Committee
The Stakeholders' Relationship Committee (earlier known as Shareholders Grievance Committee) comprise of Shri J.S. Baijal, (Independent Director) as its Chairman, and Shri Gautam Dalmia as its member. The Board in its meeting held on 1-8-2014 decided to induct two more Directors, namely, Shri P. Kannan and Shri B.B. Mehta as its members.
Shri P. Kannan, a member of this Committee was authorised to attend the Annual General Meeting held on 30th August, 2014 of the Company instead of the Chairman, who had authorised him to attend the same on his behalf to answer the queries of the Shareholders.
The terms of reference to this Committee is to look into and redress the complaints received from investors, in coordination with the Company's Registrars and Share Transfer Agent. The Committee met once during the year on 30-1-2015 and the attendance of the Directors is given below in Table 5:
The names and designations of the Compliance Officers are as follows: -
• Shri K.V. Mohan, Company Secretary; and
• Shri R. Gururajan, Asst. Executive Director (Accounts)
The Board of Directors has delegated the powers of approving the transfer of shares/debentures to senior executives of the Company.
d) Finance Committee
As on 31-3-2015, the Finance Committee comprises of Shri Jai H. Dalmia, Shri Gautam Dalmia and Shri J.S. Baijal (Independent Director) as its Members. The Committee did not meet at any time during the year.
e) Risk Management Committee
The Board of Directors in its Meeting held on 31-10-2014 formed a Committee named as Risk Management
f) CSR Committee
The Board of Directors in its Meeting held on 16-5-2014 formed a Committee named as CSR Committee with Shri J.S. Baijal, Shri Gautam Dalmia, and Shri B.B. Mehta as its members. The CSR Committee met twice during the year on 1-8-2014 and 30-1-2015 and the attendance of Directors is given in Table 8 below:
Clause 49 of the Listing Agreement defines a "material non-listed Indian subsidiary" as an unlisted subsidiary, incorporated in India, whose turnover or net worth (i.e. paid up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding Company and its subsidiaries in the immediately preceding accounting year. As mandated by Clause 49 of the Listing Agreement, the Company has framed a Policy on Material Subsidiaries and has displayed it on <http://www.dalmiasugar.com/upload/policies/DBSIL-Material-Subisdiary-Policy.pdf>. As on 31st March, 2015, under this definition, DBSIL does not have a 'material non-listed Indian subsidiary'
Management Discussion and Analysis
The Annual Report has a detailed report on Management Discussion and Analysis.
Related party transactions in the ordinary course of business have been disclosed in Note No. 45 of the attached Standalone Financial Statements for the year ended 31st March, 2015. No transactions were made that had the possibility of injuring the Company's interests. The Company complied with the regulatory requirements on capital markets. No penalties/ strictures have been imposed against it.
The Company has complied with the requirements of Section 125 of the Companies Act, 2013 and all amounts due to be credited to the Investor Education & Protection Fund have been duly credited within the time specified under the said section.
Disclosure of Accounting Treatment in Preparation of
DBSIL has followed the guidelines of Accounting Standards laid down by the Central Government under the provisions of section 129(1) of the Companies Act, 2013 in the preparation of its financial statements.
Details of Non-Compliance by the Company
DBSIL has complied with all the requirements of regulatory authorities. No penalties/strictures were imposed on the Company by the Stock Exchanges or SEBI or any Statutory authority on any matter related to capital market during the last three years.
Code for Prevention of Insider-Trading Practices
In compliance with the SEBI regulations on prevention of insider trading, the Company has instituted a comprehensive code of conduct for its management and staff. The code lays down guidelines, which advises them on procedures to be followed and disclosures to be made, while dealing with shares of Company, and cautioning them of the consequences Meeting, Shri B.B. Mehta, Director of the Company retires by of violations. rotation and is eligible for re-appointment.
CEO/ CFO certification
The CEO and CFO certification of the financial statements for the year is enclosed at the end of the report.
Reappointment/Appointment of Directors
Pursuant to the provisions of section 149 of the Companies Act, 2013, the Shareholders have approved the appointment of the three Independent Directors on the Board, namely, Shri J.S. Baijal, Shri M. Raghupathy and Shri P.Kannan, for a period of 5 years with effect from the conclusion of the last Annual General Meeting on 30-8-2014.
Each of the said Independent Directors have given their affirmation of Independence at the beginning of the financial year 2015-16 and have also confirmed that each of them are not disqualified from being appointed as a Director of the Company by furnishing requisite declaration as required under section 164(2) of the Companies Act, 2013.
Pursuant to the Articles of Association of DBSIL, at every Annual General Meeting of the Company, one-third of the rotational Directors retire by rotation or if their number is not three or a multiple of three, the number nearest to one-third retire from office. Accordingly, at the ensuing Annual General
Smt. Himmi Gupta was inducted as a Director effective 26-3-2015. She holds office till the conclusion of the forthcoming Annual General Meeting.
Means of Communication with Shareholders
The Board of Directors of the Company approves and takes on record the unaudited financial results in the format prescribed by the Stock Exchanges within forty-five days of the close of every quarter and such results are published in one financial newspaper, viz., Business Line, and one Regional Newspaper, Dinamani, within the stipulated time. The Company also publishes its annual audited results in these newspapers within the stipulated period.
As required under the Listing Agreement all the data related to quarterly and annual financial results, shareholding pattern, etc., is provided to the web-site of the Stock Exchanges within the time frame prescribed in this regard. All the details required to be forwarded to the Stock Exchanges are being sent by the Company from time to time.
Additional Shareholder Information
Annual General Meeting
Date: 24th August, 2015
Time: 11.30 a.m.
Venue: Community Centre Premises, Dalmiapuram -621651, Dist. Tiruchirapalli, Tamil Nadu Financial Calendar
Financial year: 1st April, 2015 to 31st March, 2016
For the year ended 31st March 2016, results will be announced on:
• First quarter: By mid-August, 2015
• Second quarter: By mid-November, 2015
• Third quarter: By mid-February, 2016
• Fourth quarter: By end May, 2016
Book Closure : The dates of book closure are from 19th August, 2015 to 24th August 2015 inclusive of both days.
Dividend Payment : In view of the inadequacy of profits, the Directors have decided to skip payment of dividend this year.
Listing on Stock Exchanges in respect of the Equity Shares is as under:
a) Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers, Dalal Street, MUMBAI - 400001.
b) The National Stock Exchange of India Limited, Exchange Plaza, 5th Floor, Plot No. C/1, G - Block, Bandra Kurla Complex, Bandra (East), MUMBAI - 400051
The Equity Shares of the Company were voluntarily delisted from dealings on the Madras Stock Exchange effective 21-72014 consequent upon the said Exchange being derecognised by the Central Government.
The Privately placed Non-Convertible Debentures are listed on WDM Segment of the National Stock Exchange of India Limited. Listing fees for the year 2015-16 has been paid to all the above Stock Exchanges. The bills for the annual custodial fees for the year 2015-16 have not been raised by both the Depositories till date.
Bombay Stock Exchange : 500097 (DALMIASUG)
National Stock Exchange : DALMIASUG
ISIN (for Dematerialised Shares) : INE495A01022
(Besides the above the Privately Placed Debentures have also been dematerialised)
Stock Market Data
Table 12,13, Chart A and Chart B gives details
Note: @ The Promoters have not pledged the shares of the Company against any loan drawn by them. This disclosure may be treated as a disclosure as required under Clause 35 of the Listing Agreement and under Regulation 31 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 2011.
Dematerialisation of Shares
As on 31st March 2015, 96.18% shares of the Company were held in the dematerialised form. As on 31-3-2015, all shares are held by the Promoters in dematerialised form.
Outstanding GDRs/ADRs/Warrants/Options : NIL
Details of Public Funding Obtained in the last three years : NIL
Registrar and Transfer Agent
For Equity Shares & Privately Placed Debentures: Karvy Computershare Private Limited, Karvy Selenium Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad - 500 032
Share Transfer System
The share transfers in the physical form are presently processed by the Registrars and Transfer Agents and returned within a period of 15 days. The Company's Equity Shares are tradable in dematerialised form since August, 2000. Under the dematerialised system, the Shareholder can approach a Depository Participant (DP) for getting his shares converted from physical form to dematerialised form. The DP will generate a request for the dematerialisation, which will be sent by him to the Company's Registrars and Share Transfer Agents. On receipt of the same the shares will be dematerialised.
Registered Office Address:
Dalmia Bharat Sugar and Industries Limited Dalmiapuram -621651, Dist. Tiruchirapalli, Tamil Nadu Phone: 04329 - 235131 Fax: 04329 235111
Address for Correspondence
Dalmia Bharat Sugar and Industries Limited Shares Department DALMIAPURAM - 621651 Dist. Tiruchirapalli, Tamil Nadu Phone: 04329 - 235131 Fax: 04329 235111
Magnesite Refractory Products:
Dalmia Magnesite Corporation Salem (Tamil Nadu) Vellakkalpatti, P.O. Karuppur, Salem - 636012.
Sugar Plants :
Dalmia Chini Mills (Unit: Ramgarh) Village Ramgarh - 261403 Tehsil Misrikh, District Sitapur (Uttar Pradesh)
Dalmia Chini Mills (Unit : Jawaharpur) Village Jawaharpur - 261403, Tehsil Sitapur Sadar, District Sitapur (Uttar Pradesh)
Dalmia Chini Mills (Unit : Nigohi) Village Kuiyan, Post Areli - 242407, Tehsil Tilhar, District Shahjahanpur (Uttar Pradesh)
Shri Dutta Sakhar Karkhana Village Asurle Porle - 416005, Panhala Taluka, District Kolhapur (Maharashtra State)
Shri Ninaidevi Sakhar Karkhana Village Karungali Aarala - 415405, Shirala Taluka, District Sangli (Maharastra State)
Wind Farm Unit:
Dalmia Wind Farm Muppandal (Tamil Nadu) Aralvaimozhy -629301 District Kanyakumari (Tamil Nadu)
Dalmia Bharat Sugar and Industries Limited Plot No. 53, 54A, Keonics Electronics City, Phase - 1 Hosur Road, Bangalore - 560100 Karnataka