29 Apr 2017 | Livemint.com

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E.I.D. Parry (India) Ltd.

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E.I.D. Parry (India) Ltd. Accounting Policy

REPORT ON CORPORATE GOVERNANCE

Pursuant to Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations)

I. COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE

E.I.D.-Parry, a member of the Murugappa Group of Companies, believes in high standards of governance and adheres to good corporate practices and is constantly striving to improve them and adopt the best practices. Adherence to business ethics, transparency in dealings with all stakeholders, adequate and timely disclosure of information and commitment to corporate social responsibility are the basic elements of the governance policy of the company. The board recognises that governance expectations are constantly evolving and it is committed to keeping its standards of transparency and dissemination of information under continuous review to meet both letter and spirit of the law and its own demanding levels of business ethics. The Company is committed to the spirit of Murugappa Group by upholding the core values of integrity, passion, responsibility, quality and respect in dealing with all stakeholders of the Company.

II. BOARD OF DIRECTORS

The Board provides leadership, strategic guidance and objective judgement on the affairs of the Company. The Board comprises of persons of eminence with excellent professional achievements in their respective fields. The independent Directors provide their independent judgement, external perspective and objectivity on the issues which are placed before them.

The Company has an appropriate mix of Executive, Non-Executive and Independent Directors with expertise in the fields of business strategy, finance, marketing and business management. As on March 31, 2016 the Company's Board had seven Directors with a Non -Executive Chairman, part of the Promoter Group. There were four Independent Directors including a woman director, a Non Executive Non Independent Vice Chairman and a Managing Director. The composition of the Board is in conformity with the Companies Act, 2013 and Listing Regulations.

Board Meetings

The Board meets at regular intervals with an annual calendar and a formal schedule of matters specifically reserved for its attention to ensure that it exercises full control over significant strategic, financial, operational and compliance matters. The board is regularly briefed and updated on the key activities of the business and is provided with presentations on operations, quarterly financial statements and other matters concerning the company.

Adequate notice is given to the directors for the meetings and detailed notes on agenda sent well in advance in compliance with Secretarial Standard. The information made available includes all items stipulated in the Listing Regulations. The Company has proper systems to enable the Board to periodically review compliance reports of all laws applicable to the Company, as prepared by the Company as well as steps taken by the Company to rectify instances of non-compliances. The Board reviewed compliance reports prepared by the Company on quarterly periodicity.

The Board met six times during the Financial Year 2015-16 i.e., 29.05.2015, 04.08.2015, 27.08.2015, 13.11.2015, 01.02.2016 and 28.03.2016. The maximum gap between any two meetings was less than 120 days as stipulated under the Listing Regulations.

Information on the Directors of the Company, their attendance at Board Meetings & Annual General Meeting of the Company held during the year and the number of Directorships in other Companies and Committee positions held by them in other Public Limited Companies as on March 31, 2016 are given below:

Shareholding

The terms and conditions of the appointment of Independent Directors are disclosed on the Company's website at www.eidparry  com.

All the four Independent Directors have confirmed that they satisfy the criteria of independence as stipulated under Section 149(6) of the Companies Act, 2013. None of them is a whole time director in any listed entity nor serving as an independent director in more than seven listed entities.

The familiarization process followed by the Company for familiarising the Independent Directors on their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, the business models of the Company etc. is disclosed at the weblink:<http://www.eidparry.com/ContentFiles/Downloads/> financialresults/FamiliarisationProgramme.pdf

During the year, the Independent Directors had a separate meeting without the presence of Non-Independent Directors and the management team. All the independent directors were present in that meeting.

Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, the Board has carried out an evaluation of its own performance, the individual Directors as well as an evaluation of the working of its Committees viz., Audit, Nomination and Remuneration, Stakeholders Relationship, Risk Management and Corporate Social Responsibility Committees. Structured questionnaires were prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance. A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as attendance, level of participation in the meetings and contribution, independence of judgement, safeguarding the interest of the Company and other stakeholders etc.

The performance evaluation of the Independent Directors was carried out by the entire Board.

The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors. Chairman of the Nomination and Remuneration committee anchored the session on chairman evaluation. Inputs from the Non-Independent Directors were also considered by the Independent Directors while evaluating the performance of the Chairman.

III. Audit Committee Terms of Reference

The terms of reference of the Audit Committee includes matters which are set out in Regulation 18 read with Part C of Schedule II of the Listing Regulations and Section 177 of the Companies Act, 2013 and inter alia includes

a) oversight the company's financial reporting process and the disclosure of its financial information

b) examination of the financial statement and the auditor's report thereon

c) recommendation for appointment, remuneration and terms of appointment of auditors of the company

d) review and monitoring the auditor's independence and performance, effectiveness of the audit process

e) approval or any subsequent modification of the transactions of the company with related parties

f) scrutiny of inter corporate loans and investments

g) valuation of undertakings or assets of the company, wherever it is necessary

h) evaluation of internal financial controls and risk management system

i) monitoring the end use of funds raised through public offers and related matter

Meetings of the Committee

The Company Secretary acts as the Secretary to the Committee. The Managing Director, Head of Internal Audit, Chief Financial Officer, Senior Management team members and the Statutory Auditors are invited to attend all the meetings of the Committee. The Cost Auditors are invited to the meeting as and when required. The Committee members also have separate discussions with the statutory auditors as well as internal auditors without the presence of the management team.

Mr.M.B.N. Rao, Chairman of the Committee was present at the Annual General Meeting held on August 4, 2015.

IV. Nomination & Remuneration Committee Terms of Reference

The terms of reference of the Nomination and Remuneration Committee include:

• formulation of criteria for determining qualifications, positive attributes and independence of a director

• recommending to the Board a policy, relating to the remuneration of the Directors, Key Managerial Personnel and other employees;

• formulation of criteria for evaluation of Independent Directors and the Board;

• devising a policy on Board diversity;

• identification of persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appointment and removal

Meetings of the Committee

The Committee held three meetings during the year on 25.05.2015, 04.08.2015 and 01.02.2016.

Mr M.B.N Rao, Chairman of the Committee was present at the Annual General Meeting held on August 4, 2015.

V. Remuneration of Directors

Remuneration Policy

The Remuneration Policy provides the framework for remuneration of members of the Board of Directors, Key Managerial Personnel and other employees of the Company

The Policy is guided by the principles and objectives as enumerated in Section 178 of the Companies Act, 2013 to ensure reasonableness and sufficiency of remuneration to attract, retain and motivate competent resources, a clear relationship of remuneration to performance and a balance between rewarding short and long-term performance of the Company.

There were no pecuniary relationship / transactions between non­executive directors and the Company.

The policy reflects the remuneration philosophy and principles of the Murugappa Group and considers the pay and employment conditions with peers / competitive market to ensure that pay structures are appropriately aligned.

Remuneration of Non-Executive Directors

• Non-Executive Directors ("NEDs") are paid remuneration by way of Sitting Fees and Commission.

• As approved by the shareholders, Commission is paid at a rate not exceeding 1% per annum of the profits of the Company computed in accordance with Section 198 of the Companies Act, 2013. The Commission paid is restricted to a fixed sum within the above limit annually on the basis of their tenor in office during the financial year.

• The payment of the Commission to the NEDs is placed before the Board every year for its consideration and approval.

• The sitting fee payable to the NEDs for attending the Board and Committee meetings is fixed subject to the statutory ceiling. The fee is reviewed periodically and aligned to comparable best in class companies.

• Keeping with evolving trends in industries and considering the time and efforts spent by specific non-executive directors, the practice of paying differential commission is considered by the Board.

Remuneration of Executive Director

• The compensation paid to the Executive Directors (including Managing Director) is within the scale approved by the Shareholders. The elements of the total compensation are approved by the Nomination & Remuneration Committee within the overall limits specified under the Companies Act, 2013.

• The elements of compensation of the Executive Director include the following:

• fixed compensation

• variable compensation in the form of annual incentive

• benefits

• work related facilities and perquisites

• The Nomination & Remuneration Committee determines the annual variable pay compensation in the form of annual incentive and annual increment for the Executive Director based on Company's and individual's performance as against the pre-agreed objectives for the year.

• The Executive Director, except a promoter director, is also eligible for ESOPs as per the scheme in force from time to time. Grants under the Scheme shall be approved by the Nomination & Remuneration Committee.

• In case of inadequacy of profit in any financial year, the remuneration payable to the Executive Director shall be further subject to the relevant provisions of the Companies Act, 2013.

• Executive Directors will not be paid sitting fees for any Board/ Committee meetings attended by them

VI. Stakeholders Relationship Committee

The role of the Stakeholders Relationship Committee shall, inter-alia, include the following:

1. Dealing with the investors complaints like delay in transfer of shares, non receipt of balance sheet, non-receipt of declared dividends / share certificates, dematerialization of shares, replacement of lost/stolen/mutilated share certificates, etc.

2. Reviewing of investors complaints and take necessary steps for redressal thereof.

3. To perform all functions relating to the interest of the stakeholders of the Company as may be required by the provisions of the Companies Act., 2013 and the rules made thereunder, Listing Agreements and the guidelines issed by SEBI or any other regulatory authority.

4. Approval of the share transfers and /or delegation thereof.

Meetings of the Committee

The committee held four meetings during the year ended March 31, 2016 on 29.05.2015, 04.08.2015, 13.11.2015 and 01.02.2016. Mr. Anand Narain Bhatia, Chairman of the Committee was present at the Annual General Meeting held on August 4, 2015.

Risk Management Committee

Terms of reference

The Company has laid down procedures to inform Board members about the risk assessment and minimisation procedures. The Board periodically discusses the significant business risks identified by the management and the mitigation measures to address such risks. The role of the Committee includes review of the Risk Management strategy developed by the Management for approval by the Board, advise the Board on the prioritisation of Risk Management issues, report the effectiveness of the Company's Risk Management Systems and carries out additional functions and adopt additional policies and procedures as may be appropriate in the light of changes in business conditions legislative, regulatory, legal and other conditions.

Composition of the Committee

As at March 31, 2016, the Committee comprised of Mr. M.B.N. Rao as Chairman and Mr. V. Ramesh as a member. Members of the senior management team attend the meetings of the Committee as permanent invitees.

There was no meeting held during the year 2015 -16.

Corporate Social Responsibility Committee (CSR) Terms of reference

The role of CSR Committee is to formulate and recommend to the Board, a CSR Policy which shall indicate the activities to be undertaken as specified in schedule VII of Companies Act, 2013 and to recommend the amount of expenditure to be incurred on the CSR activities, to monitor the CSR Policy of the Company from time to time and to prepare a transparent monitoring mechanism for ensuring implementation of the projects/programmes/ activities proposed to be undertaken by the Company and to do all such acts, deeds and things as may be required in connection with the CSR activities.

Composition of the Committee

The Committee has an Independent Director as Chairman and two non independent directors as members. Meetings of the Committee

The Committee met once during the financial year ended March 31, 2016, on 28.05.2015

VIII. MEANS OF COMMUNICATION

The quarterly unaudited financial results and the annual audited financial results are normally published in a leading business daily, Business Standard (English) and in Dinamani (Tamil). Intimation of Board Meeting Date, Record Date, Book Closure and dividend declaration notices are normally published in Business Standard (English) and Makkal Kural (Tamil). The financial results and press releases are placed on the Company's website at www.eidparry.com

Details of Investor / Analysts / Brokers meetings / Concall transcripts whenever held are also posted on the Company's website at www.eidparry.com

IX. GENERAL SHAREHOLDER INFORMATION

A separate section has been included in the Annual Report furnishing details required under the Listing Regulations.

X. OTHER DISCLOSURES & AFFIRMATIONS Related Party Transactions

During the year, there were no materially significant related party transaction considered to have potential conflict with the interests of the Company at large. The Company has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions. The policy is available on the web link: <http://www.eidparry.com/ContentFiles/Downloads/Policy/RPT_Policy>.

pdf

Details of non- compliance

During the last three years, there were no strictures or penalties imposed on the Company either by Stock Exchanges or by SEBI or any statutory authority for non-compliance on any matter related to capital markets.

Whistle Blower Policy and Vigil Mechanism

The company has established a whistle blower mechanism to provide an avenue to raise concerns about unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The mechanism provides for adequate safeguards against victimisation of directors / employees / customers who avail of the mechanism and also for appointment of an ombudsperson who will deal with the complaints received.

The Company has laid down a Whistle Blower policy which contains the process to be followed for dealing with complaints and in exceptional cases, also provides for direct access to the chairperson of the audit committee. The Company affirms that no person has been denied access to the Audit Committee.

The policy is available on the Company's website at www.eidparry.com

Compliance with mandatory requirements

The Company has complied with all mandatory requirements as laid down in the Listing Regulations.

Compliance with Accounting Standards

The Company has followed the Guidelines of Accounting Standards laid down by the Institute of Chartered Accountants of India (ICAI) in preparation of its financial statements.

Disclosure from Senior Management

Periodical disclosures from Senior Management relating to all material financial and commercial transactions, where they had or were deemed to have had personal interest, that might have had a potential conflict with the interest of the Company at large were placed before the Board.

During the year under review, the Company has not raised any funds from public issue, rights issue or preferential issue.

Commodity price risk and commodity hedging activities

The Company enters into Derivative Contracts such as Forwards, Swaps, etc., to hedge its foreign currency fluctuation risks for underlying assets/liabilities and high probable transactions at appropriate times, as per policy.

The Company enters into Forward Contract with NCDX and reputed institutional buyers for a reasonable quantity to mitigate commodity risks.

XI. SUBSIDIARY COMPANIES

The Company does not have any material non listed Indian Subsidiary Company. The Audit Committee reviews the financial statements and in particular, the investments made by unlisted subsidiary companies. The minutes of the Board meetings as well as statements of all significant transactions of the unlisted subsidiary companies are placed before the Board of Directors of the Company for their review. The Company has formulated a policy for determining material subsidiaries and the policy is available at the weblink: <http://www.eidparry.com/ContentFiles/Downloads/Policy/> PolicyOnMaterialSubsidiary.pdf

XII. Prevention of Insider Trading

As per the requirement in the SEBI (Prohibition of Insider Trading) Regulations, 2015 the Company has formulated a Code of practices and procedures for fair disclosure of unpublished price sensitive information and the same has been published on the Company's website www.eidparry.com A Code of Conduct to regulate, monitor and report trading by insiders in securities of the Company has also been formulated.

XIII. Compliance with the Code of Conduct

The Board has laid-down a "Code of Conduct" (Code) for all the Board members and the senior management of the Company. Annual declaration regarding compliance with the Code is obtained from every person covered by the Code of Conduct. A declaration to this effect signed by the Managing Director is forming part of this report. The Code is available on the Company's website at www.eidparry.com

XIV. Compliance with Corporate Governance Norms

The Company has complied with 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.

The Statutory Auditors have certified that the Company has complied with the conditions of corporate governance as stipulated in the Listing Regulations. The said certificate is annexed to this Report and will be forwarded to the Stock Exchanges and the Registrar of Companies, Tamilnadu, Chennai, along with the Annual Report.

As regards the non-mandatory requirements, the following have been adopted

1. Shareholder Rights

The quarterly financial results are published in leading financial newspapers, uploaded on the Company's website and any major developments are covered in the press releases issued by the Company and posted in the Company's website. The Company has therefore not been sending the half yearly financial results to the shareholders.

2. There are no audit qualifications on the Company's financial statements.

3. The Company has separate persons for the post of Chairman and Managing Director.

GENERAL SHAREHOLDER INFORMATION

I. Annual General Meeting

Day, Date and Time Venue

Wednesday, 5th August 2016 at 4.30 p.m.

The Music Academy, New No.168 (Old No.306), T.T.K Road, Royapettah, Chennai - 600 014

II. Financial Year : 1st April 2015 to 31st March 2016

III. Date of Book closure : 29th July, 2016 to 05th August 2016 (Both days inclusive)

IV. Dividend Payment Date : Not applicable

V. Listing on stock exchanges

Equity shares:

National Stock Exchange of India Limited, Exchange Plaza, Plot No.C/1, G. Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051.

BSE Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001. (The Listing fees for the financial year 2015-2016 were paid to both the Stock Exchanges).

VI. Stock Code

Name of the Stock Exchange/Depository Code/ISIN

National Stock Exchange of India Limited (NSE) EID PARRY EQ

BSE Limited (BSE) : 500125

NSDL & CDSL : INE126A01031

VII. Debenture Trustees

IDBI Trusteeship Services Limited Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai - 400 001. Tel : +91 22 4080 7000 Fax : +91 22 6631 1776 Email : itsl@idbitrustee.com

X. Investor Contacts

(a) Registrar and Transfer Agents Karvy Computershare Private Limited, Unit: E.I.D.-Parry (India) Ltd., Plot No : Karvy Selenium Tower B, Plot number 31 & 32, Gachibowli, Hyderabad 500 008 Tel : + 91-040- 6716 2222 Fax : + 91-040- 2342 0814 E-Mail : einward.ris@karvy.com subrahmanyam.mrv@karvy.com ; Contact Person: Mr. M R V Subrahmanyam, General Manager

(b) Company

E.I.D.-Parry (India) Limited, Secretarial Department, 3rd Floor, Dare House, Parrys Corner, Chennai - 600 001. Tel : +91-044-25306789 Fax : +91-044-25341609 E-Mail : investorservices@parry.murugappa.com jalajag@parry.murugappa.com Contact Person : Ms. G. Jalaja, Company Secretary

XI. Share Transfer System Share Transfers in Physical Form

Share transfers are approved by Stakeholders Relationship Committee.

Managing Director / Vice Chairman are individually authorised to approve transfers up to 5,000 shares (Face value of Rs. 1 each) per transferor / transferee.

Certain senior executives along with a director have been authorised to approve request for transfers up to 1,000 shares (Face value of Rs. 1 each) per transferor / transferee.

Certain senior executives have also been authorised to approve transfers up to 500 shares (Face value of Rs. 1/- each) per transferor / transferee.

XIII. Dematerialisation of Shares and Liquidity

The Company's shares are compulsorily traded in dematerialized form and are available for trading on both the depositories in India viz. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Equity shares of the Company representing 97.80% of the Company's share capital are dematerialized as on March 31, 2016. The Company's shares are regularly traded on NSE and BSE, in electronic form.

XIV. Outstanding GDR / ADR / Warrants or any Convertible instruments, conversion date and likely impact on equity

As on March 31, 2016, 71,930 (0.04%) GDR are outstanding. Each GDR represents one underlying equity share.

. Commodity price risk and commodity hedging activities

The Company enters into Derivative Contracts such as Forwards, Swaps, etc., to hedge its foreign currency fluctuation risks for underlying assets/liabilities and high probable transactions at appropriate times, as per policy.

The Company enters into Forward Contract with NCDEX and reputed institutional buyers for a reasonable quantity to mitigate commodity risks

XVI. Plant Locations

12 Sr. No.79/2, Shed No.5, Near Agarwal Godown, Shivane, Warje - NDA Road, Pune - 411 023 Maharashtra

R&D Facility Sugarcane R&D Centre

13 43, Annai Nagar Pugalur - 639113 Karur Dt., Tamil Nadu 14 Sugarcane R&D Centre D.No.23, Morai Campus Nellikuppam - 607105 Cuddalore Dt., Tamil Nadu 15 Research Farm Edayanvalli Melpattambakkam Post - 607104 Cuddalore District, Tamil Nadu 16 45/1, Shree Rama Layout Behind Subramanya Temple Cheemasandra Virgo Nagar Post Bengaluru - 560 049

Nutraceuticals R&D Centre

17 655, T.H. Road Thiruvottiyur Chennai - 600019

Bio - Products R & D Centre

18 Alapakkam R S Thyagavalli - 608003 Cuddalore Dt., Tamil Nadu

XVII. Address for correspondence

E.I.D.-Parry (India) Limited, Secretarial Department, 3rd Floor, Dare House, Parrys Corner, Chennai - 600 001. Tel :+91-044-25306789, Fax :+91-044-25341609 E-Mail:investorservices@parry. murugappa.com

OTHER INFORMATION FOR SHAREHOLDERS DIVIDENDS

Shareholders who have not encashed their dividend warrants (for earlier periods) may approach our Registrar and Transfer Agent M/s. Karvy Computershare Private Ltd., Hyderabad for issue of cheques / demand drafts in lieu of dividend warrants quoting the Folio Number/ Client ID. Dividends remaining unclaimed for a period of 7 years will be transferred by the Company to the Investor Education & Protection Fund (IEPF). Due dates on which the unclaimed dividends would be transferred are given below:

NOMINATION FACILITY

Section 72 of the Companies Act, 2013 provides inter alia, the facility of nomination to shareholders. This facility is mainly useful for all holders holding the shares in single name.

In case where the securities are held in joint names, the nomination will be effective only in the event of the death of all the holders. Shareholders are advised to avail of this facility.

BENEFITS OF DEMATERIALISATION

2.20% of the shares are still in physical form. Shareholders who are holding shares in physical form are advised to convert their holdings into demat form, since the Company's equity shares are under compulsory demat trading.

GENERAL

Members are requested to quote their Folio No./DP & Client ID Nos, Email ids, telephone/Fax numbers for timely investor servicing by the Company/ Registrar and Transfer Agent. Members holding shares in electronic form are requested to update with their depository participant their present address, e mail ids and bank particulars (9 digit MICR code).

UNCLAIMED SUSPENSE ACCOUNT

In accordance with Regulation 39(4) read with Schedule VI of Listing Regulations, after sending three reminders to the shareholders to claim their respective shares, the Company has dematted all physical shares which remained unclaimed by shareholders to an "Unclaimed Suspense Account" which was opened by the Company for this purpose. As per Regulation 34(3) read with Clause F of Schedule V of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015 all corporate benefits that accrue on these shares such as bonus shares, split, etc. shall also be credited to the Unclaimed Suspense Account and the voting rights on such shares shall remain frozen till the rightful owner of such shares claim the shares. Shareholders are requested to write to the Registrar & Transfer Agent and provide the correct details to enable the Company to transfer the unclaimed share certificate directly to the Shareholders demat account.