REPORT ON CORPORATE GOVERNANCE FOR THE YEAR ENDED MARCH 31, 2016
1. COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE:
Your Company's philosophy on Corporate Governance envisages the attainment of high level transparency and accountability in the functioning of the Company and the efficient conduct of its business, including its interaction with employees, shareholders, depositors, creditors, consumers, financial institutions and other lenders. Accountability improves decision making and transparency helps to explain the rationale behind decisions which in turn helps in building confidence in the Company.
Your Company firmly believes that for a company to succeed on a sustained basis, it must maintain global standards of Corporate Conduct. It also believes that Corporate Governance is not simply a matter of creating checks and balances; it is about creating an outperforming organisation, which leads to increasing employee and customer satisfaction.
2. BOARD OF DIRECTORS:
Composition and Category of Directors
The Board of Directors is headed by the Non-Executive Chairman. As on March 31, 2016, the strength of the Board was eleven members comprising of three Executive Directors and eight Non-Executive Directors. Out of Eight Non-Executive Directors, Seven are Independent Directors. Accordingly, the composition of the Board is in conformity with the provisions of Corporate Governance under SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. The Directors of the Company are highly experienced professionals in their fields and bring in a wide range of skills and experience to the Board.
During the year under review, five Board Meetings were held on May 13, 2015, July 24, 2015, August 7, 2015, November 6, 2015 and February 5, 2016. The maximum time gap between the two Board Meetings was not more than one hundred twenty days as prescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('LODR' or 'Listing Regulations').
Attendance of Directors at the Board Meetings held during the year ended March 31, 2016, and at the last Annual General Meeting and their directorship, chairmanship and membership in committees of other Companies as on March 31, 2016:
Selection of Independent Directors
The selection of eminent people for appointment as Independent Directors on the Board is considered by the Nomination and Remuneration Committee. The Committee, inter alia, considers qualification, positive attributes, area of expertise and number of Directorships and Memberships held in various committees of other companies by such person and recommend the same to the Board. The Board considers the Committee's recommendation and takes appropriate decision.
Disclosure of relationships between Directors inter-se
Shri C. K. Mehta is the father of Shri D. C. Mehta and Shri A. C. Mehta. None of the other Directors have any relationships inter-se.
Familiarisation program for Independent Directors
The details of familiarisation program for Independent Directors have been disclosed on the website of the Company at <http://deepaknitrite.com/pdf/investor/DNL_Familiarisation%20program.pdf>.
A duly constituted Nomination and Remuneration Committee of Directors has laid down criteria for performance evaluation of Independent Directors and the same has been approved by the Board of Directors. The criteria for performance evaluation of Independent Directors has been disclosed in the Directors' Report.
Separate Meeting of Independent Directors
As per requirements of the Secretarial Standard-1 on Meetings of the Board of Directors, a separate meeting of Independent Directors is required to be held once in a calendar year.
Accordingly, a meeting of Independent Directors was held on March 4, 2015, inter alia to:
- Review performance of Non-Independent Directors for the calendar year 2015 and the Board of Directors as a whole;
- Review performance of the Chairman, taking into account the views of the Executive and Non-Executive Directors;
- Assess the quality, quantity and timelines of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
All Independent Directors were present at the meeting.
A meeting of Independent Directors for the calendar year 2016 will be held in due course.
3. COMMITTEES OF BOARD OF DIRECTORS:
(i) Audit Committee:
Composition of Audit Committee
The Statutory Auditors, Internal Auditors and other relevant Senior Management persons are invited to attend the meetings of the Audit Committee. Shri Sudhin Choksey, Chairman of the Audit Committee, was present at the last Annual General Meeting held on August 7, 2015.
The Company Secretary acts as the Secretary to the Committee.
Brief Description of Terms of Reference of the Audit Committee
The terms of reference of the Audit Committee are wide enough to cover the matters prescribed under provisions of section 177(4) and under Part C of Schedule II of the Listing Regulations viz. Recommendation for appointment, remuneration and terms of appointment of auditors of the Company; Approval and subsequent modification of transactions of the Company with related parties; Scrutiny of Inter-Corporate Loans and Investments; Evaluation of Internal Financial Control and Risk Management Systems; Oversee the Vigil Mechanism; Monitoring the end use of funds raised through public offers and related matters; Recommend remuneration of Cost Auditor of the Company; 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; 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: (a) 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 subsection 3 of section 134 of the Companies Act, 2013 (b) Changes, if any, in accounting policies and practices and reasons for the same (c) Major accounting entries involving estimates based on the exercise of judgment by management (d) Significant adjustments made in the financial statements arising out of audit findings (e) Compliance with listing and other legal requirements relating to financial statements (f) 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; Valuation of undertakings or assets
of the Company, wherever it is necessary; 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 thereon; 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.
Meetings and Attendance thereat
Four meetings of the Audit Committee were held during the year under review on May 12, 2015, July 24, 2015, November 5, 2015 and February 4, 2016.
Terms of Reference
The terms of reference of the Nomination and Remuneration Committee are as under:
• to identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and carry out evaluation of every Director's performance.
• to 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.
• such other functions as may be prescribed under the Companies Act, 2013 and Rules made there under and the Listing Agreement with the Stock Exchanges.
Meetings and Attendance thereat
During the Financial Year 2015-16, the Nomination and Remuneration Committee met on May 13, 2015 and all the members of the Committee were present at the said meeting.
Shri Sudhir Mankad, Chairman of the Nomination and Remuneration Committee, was present at the previous Annual General Meeting of the Company held on August 7, 2015.
Terms of Reference
The brief terms of reference of the Committee are to look into redressal of complaints like transfer of shares, non receipt of dividends, non-receipt of Annual Report etc. received from shareholders/investors, and improve the efficiency in stakeholders and investors services, wherever possible.
Continuous efforts are being made to ensure that investor's grievances are more expeditiously redressed to the satisfaction of the investors.
All the grievances of the investors are being attended promptly on their receipt, whether received directly or through SEBI, Stock Exchanges, Ministry of Corporate Affairs etc.
(iv) Corporate Social Responsibility Committee: Composition
Pursuant to the requirement of Section 135 of the Companies Act, 2013, a duly constituted Corporate Social Responsibility Committee is in place.
Terms of Reference
The terms of reference of Corporate Social Responsibility Committee are as under:
• To formulate and recommend to the Board a Corporate Social Responsibility ("CSR") Policy of the Company.
• Recommend the amount of expenditure to be incurred on the activities listed in CSR Policy
Monitor the CSR Policy of the Company from time to time.
• Such other roles and functions as may be prescribed in the Companies Act, 2013 and Rules made thereunder.
Report on CSR activities
As required under the Companies Act, 2013 and Rules made thereunder, the information on the CSR activities undertaken by the Company during the year ended March 31, 2016 is annexed to the Directors' Report.
(v) Project Committee: Composition
The Project Committee has been constituted by the Board inter alia to evaluate the proposed projects / expansion plans and recommend them to the Board for approval and also to review the progress of ongoing projects.
(vi) Risk Management Committee: Composition
The Company has a comprehensive Risk Management Framework and the same is periodically reviewed by the Board of Directors of the Company. A Risk Management Committee has been constituted by the Board to monitor and review the Risk Management Framework of the Company
Terms of Reference
The terms of reference of the Risk Management Committee are inter alia to ensure that appropriate methodology, processes and systems are in place to monitor, evaluate and report risks associated with the business of the Company; to review the adequacy of the existing measures in place to mitigate risks covering various functions of the Company; to evaluate and approve mitigation measures that may be recommended by the Risk Manager(s) in respect of any function and review the action taken for its implementation on an ongoing basis; to review and recommend to the Board, amendment of any of the provisions of the Risk Management Framework.
4. REMUNERATION OF DIRECTORS:
The Company's Nomination and Remuneration Policy for Directors, Key Managerial Personnel and other employees is annexed to the Directors' Report. The said Policy is directed towards rewarding performance based on review of achievements periodically and is in consonance with the existing industry practice.
There is no provision for payment of severance fees. The Company does not have any Stock Options Scheme.
The remuneration of Managing Directors comprises of salary, allowances, perquisites and other benefits. In addition, the Managing Directors are also paid a Commission, calculated with reference to the Net Profits of the Company in a particular Financial Year, as may be determined by the Board of Directors, subject to the overall ceiling stipulated in Section 197 and other relevant provisions of the Companies Act, 2013.
The remuneration of Executive Director comprises of fixed pay and variable pay. The variable pay ranges from 80% to 125% of the variable pay fixed for a particular Financial Year based on the performance rating depending upon his individual and also the Company's performance as per policy of the Company.
The Non-Executive Directors of the Company are paid sitting fees for attending the meetings of the Board or Committees thereof. Apart from the sitting fees, the Non-Executive Directors are also paid Commission not exceeding 1% of the Net Profits of the Company for the particular year, computed in accordance with the provisions of Companies Act, 2013. The amount of Commission is determined on the basis of the attendance of the Non-Executive Director at the Board, Committee or General Meeting(s) of the Company during the particular year, the number of memberships/ chairmanships held of Committees of the Board and the time devoted on various matters of the Company.
Related Party Transactions
There are no materially significant Related Party Transactions of the Company which have potential conflict with the interests of the Company at large. However, normal trade transactions, in the ordinary course of business and on arm's length basis or for which shareholders' approval were obtained, were entered into by the Company with the Related Parties. Disclosure on Related Party Transactions as per Accounting Standard 18 issued by the Institute of Chartered Accountants of India, are given in Note No. 32 in the Notes to the Financial Statements for the year ended March 31, 2016.
The Board has approved a policy on materiality of Related Party Transactions which has been uploaded on the Company's website.
The weblink to the said policy is as under:
Details of non-compliance
There is no non-compliance by the Company nor any penalty or stricture imposed on the Company by any Stock Exchanges, SEBI or any other statutory authority on any matter relating to capital markets during the last three years.
The Company has complied with the Corporate Governance Requirements specified in Regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of Regulation 46 of the Listing Regulations.
Whistle Blower Policy
The Company promotes ethical behaviour in all its business activities and has put in place a mechanism for reporting illegal or unethical behaviour. The Company has established a vigil mechanism for Directors and employees to report concern about unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. During the year under review, no personnel was denied access to the Audit Committee.
The Whistle Blower Policy is placed on the website of the Company and weblink to the same is as under: <http://deepaknitrite.com/pdf/investor/DNL_Whistle%20Blower%20Policy.pdf>
Details of Compliance with Mandatory requirements and adoption of Non-mandatory / discretionary requirements:
The Company has complied with all the mandatory requirements of the Listing Regulations. The Company has adopted Non-Mandatory / discretionary requirements to the extent that it has separate posts of Chairman and CEO.
Policy for Material Subsidiaries
In accordance with the provisions of the Listing Regulations, the Company has framed a policy for Material Subsidiaries in order to determine the Material Subsidiaries and to provide governance framework for such subsidiaries. The said policy has been placed on the website of the Company and weblink to the same is as under: <http://deepaknitrite.com/pdf/investor/DNL_Policy%20on%20Material%20Subsidiaries.pdf>
Disclosure of Commodity price risks and commodity hedging activities
Please refer to Management Discussion and Analysis Report.
Details of Directors seeking appointment or re-appointment:
The details of Directors seeking appointment or re-appointment are disclosed in the Explanatory Statement annexed to the Notice convening the ensuing Annual General Meeting.
Demat Suspense Account - Unclaimed Share Certificates
In terms of the provisions of the Listing Regulations, during the year under review, the Company has transferred the shares issued pursuant to the public issues or any other issue, the certificates of which remained unclaimed, to an Unclaimed Suspense Account and these shares are being held by the Company in Demat form on behalf of the beneficial owners of the said shares.
7. MEANS OF COMMUNICATION:
The Quarterly and Half yearly results are published in widely circulating national and local dailies such as, The Economic Times (English and Gujarati); The Indian Express and The Financial Express (English and Gujarati). These are not sent individually to the shareholders.
The Company's results are displayed on the Company's website at www.deepaknitrite.com the website also displays official news releases.
No presentations were made to the institutional investors; however, presentations were made to Analysts and Brokerage Firms during the year under review.
8. CODE OF CONDUCT:
The Company has framed and adopted a Code of Conduct for the members of the Board and the Senior Management ("the Code") in terms of requirements of the Listing Regulations. The Code has been circulated to all the members of the Board and Senior Management and the same is also posted on the Company's website at www.deepaknitrite.com The Code lays the general principles designed to guide all Directors and members of the Senior Management for ethical conduct of business and compliance of laws.
10. GENERAL SHAREHOLDER INFORMATION:
Annual General Meeting:
Day & Date : Friday, August 5, 2016
Time : 10:30 a.m.
Venue : Hotel Surya Palace, Opp. Parsi Agiyari, Sayajigunj, Vadodara 390 005.
Financial Year : April 1 to March 31
Date of Book Closure : Saturday, July 30, 2016 to Friday, August 05, 2016 (both days inclusive)
Dividend payment date :Within the statutory time limit of 30 days, subject to Shareholders' approval.
Results for the Quarter ending Tentative Time of Reporting
June 30, 2016 : On or before August 14, 2016
September 30, 2016 : On or before November 14, 2016
December 31, 2016 : On or before February 14, 2017
Audited Annual Accounts for the year ended March 31, 2017 : On or before May 30, 2017
Listing on Stock Exchanges:
The Company's Equity Shares are listed on the following Stock Exchanges:
Name: BSE Limited (BSE)
Address: Pheroz Jeejibhoy Towers, Dalal Street, Fort, Mumbai.
Name: National Stock Exchange of India Limited (NSE)
Address: Exchange Plaza, Bandra Kurla Complex, Bandra (E) Mumbai.
Listing fees for Financial Year 2016-17 has been paid to both the Exchanges.
The securities of the Company have not been suspended from trading during the Financial Year.
Stock Code for Equity Shares (BSE): 506401
Stock Symbol for Equity Shares (NSE): DEEPAKNTR
ISIN Number for Equity Shares (NSDL & CDSL): INE288B01029
Dematerialisation of Equity Shares:
Electronic holding by Members comprises 98.30 % of the paid up equity capital of the Company as on March 31, 2016 held through National Securities Depository Limited and Central Depository Services (India) Limited.
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. All requests for dematerialisation of securities are processed and the confirmation is given to the depositories within 15 days.
Pursuant to Regulation 40(9) of the SEBI (Listing Obligations and Disclosures Requirements), Regulations, 2015 with Stock Exchanges, certificates, on half yearly basis have been issued by a Company Secretary-in-Practice for due compliance of share transfer formalities by the Company. Pursuant to SEBI (Depositories and Participants) Regulation, 1996, certificates have been received from a Company Secretary-in-Practice for timely dematerialisation of shares and for reconciliation of the share capital of the Company on a quarterly basis.
Registrar and Share Transfer Agent:
The Shareholders are requested to note that the Company has changed its Registrar and Share Transfer Agent from M/s. Sharepro Services (I) Private Limited to M/s. Link Intime India Private Limited with effect from May 1, 2016.
Therefore, the Shareholders are requested to forward their communications to M/s. Link Intime India Private Limited or to the Registered Office of the Company only.
Contact details of Link Intime India Mumbai Office:
C-13, Pannalal Silk Mills Compound, L.B.S.Marg, Bhandup (West), Mumbai - 400078. Tel: 022 - 2594 6970 Toll free number: 1800 2208 78 Email: email@example.com
Investor Relation Centre :
B-102-103, Shangrila Complex, 1st Floor, Opp. HDFC Bank, Near Radhakrishna Chhar Rasta, Akota, Vadodara 390020. Tel: 0265 - 2356 573 / 2356 794 Fax: 0265 - 2356 791 E-mail : firstname.lastname@example.org
Address for Correspondence and Investor Assistance:
Deepak Nitrite Limited Telephone Numbers : (0265) 235 1013, 9/10, Kunj Society 233 4481, 233 4482 Alkapuri Fax No. : (0265) 233 0994 Vadodara - 390 007 E-mail : email@example.com Contact Person: Mr. Shailesh Vaidya Website : www.deepaknitrite.com
As per the provisions of Section 205A of the Companies Act, 1956 (Section 124 of the Companies Act, 2013), the Company is required to transfer unclaimed dividends, matured deposits and interest accrued thereon remaining unclaimed and unpaid for a period of seven years from the due date to the Investor Education and Protection Fund (IEPF) set by the Central Government.
Given below are the due dates for transfer of unclaimed and unpaid dividend to the Investors Education & Protection Fund (IEPF) by the Company:
1. Nitrite & Nitroaromatics Division 4/12 GIDC Chemical Complex Nandesari - 391 340.
2. Taloja Chemical Division Plot Nos. K/9-10, MIDC Taloja, Dist. Raigad - 410 208
3. APL Division Plot Nos. 1, 2, 26 & 27 MIDC Dhatav, Roha - 402 116, Dist. Raigad
4. Hyderabad Specialities Division : Plot Nos. 70 A&B, 90-F/70-A and 22, Phase I, Industrial Development Area, Jedimetla, Tal. Qutbyullapur Mandal, Dist. Ranga Reddy, Hyderabad 500 055
5. Dahej Division: 12/B, GIDC, Dahej, Dist. Bharuch, Gujarat – 392 130