CORPORATE GOVERNANCE REPORT
Corporate governance is about promoting corporate fairness, transparency, accountability and ethical business conduct The ambit of governance involved all the stakeholders and how the corporation deals with those stakeholders, including the shareholders, employees, regulators, customers, suppliers and society. It is the combination of voluntary practices and compliance with laws and regulations leading to effective control and management of the organization.
This corporate governance report sets out the governance framework adopted by the Board of Ester Industries Limited and highlights the key activities during the year.
In its approach to governance, the Board embraces best practices in the area of Corporate Governance to ensure the attainment of highest levels of transparency, accountability and equity in all the facets of its operations and in all its interactions with its stakeholders The Board continues to hold and augment the standards of Corporate Governance by ensuring that the Company pursues policies and procedures to satisfy its legal and ethical responsibilities.
1. Board of Directors
The Board of the Company is constituted in compliance with the Companies Act, 2013, Listing Agreement with the Stock Exchange(s) and in accordance with best practices in Corporate Governance with an optimum combination of Executive, Non-executive and Independent directors, having a pool of collective knowledge from various disciplines, Engineering,Finance, Legal, Business Management, Corporate Planning etc on its board .
Number of Board Meetings held and the dates on which held
The Board of Directors and its committees meet at regular intervals . 6 (Six) Board Meetings were held during the year 2014-15. The dates on which the meetings were held are 11th April, 2014, 21st May, 2014, 13th June, 2014, 4th August, 2014, 14th November, 2014 and 11th February, 2015 .
Information provided to the Board of Directors
The Board of Directors has unrestricted access to the information within the Company, which inter alia includes -
I Annual operating plans of the business, capital budgets, acquisitions etc .
2. Quarterly results of the company.
3 . Quarterly Operational Performance Report of the Company
4 Minutes of the Board Meeting and all Committee Meetings
5 The information on recruitment and remuneration of Senior Management Personnel including appointment or removal of Chief Financial Officer and the Company Secretary.
6 Quarterly report on fatal or serious accidents or dangerous occurrences, any material effluent or pollution problems
7 Information related to the shareholder services and share transfers .
8 . Significant development on the human resources and industrial relations front .
9 . Details of any investment, merger, joint venture or collaboration agreement, if any.
10 Sale of material nature, of investments, subsidiaries assets, which is not in normal course of business.
II Compliance or Non-compliance of any regulatory, statutory nature or listing requirements and investor service such as nonpayment of dividend, delay in share transfer, etc. , if any
12 Transactions that involve substantial payment towards goodwill, brand equity, or intellectual property.
As per the requirement of Clause 49 of the Listing Agreement which inter-alia stipulates that the Company shall familiarize the independent directors, the Company undertakes various initiative to familiarise the Independent Directors with the Company, its business, operations, risks, nature of industry, their roles and responsibilities etc The Independent Directors of the Company are given every opportunity to familiarize themselves with the Company, its management and its operations so as to understand the Company, its operations, business, industry and environment in which it functions
Details of familiarization programs is uploaded on Company's website at the following link : <http://esterindustries.com/ester_cms/userfiles/file/policies/> Familiarisatin_programme.pdf
The Board quarterly reviews the Compliance Report of the law applicable to the Company as well as the steps taken by the company to rectify the instances of non-compliance, if any.
Compliance of Code of Conduct
We have laid down a code of conduct for all Board Members and senior management of the Company. The code of conduct is available on the website of the Company viz www.esterindustries.com . All Board members and senior management personnel of the Company have affirmed their adherence to the code The declaration to this effect from Mr Arvind Kumar Singhania, Chairman & CEO forms a part of this report .
2. Audit Committee
The Audit Committee formed in pursuance of compliance with clause 49 of the listing agreement and Section 177 of the Companies Act, 2013 is instrumental in overseeing the financial reporting besides reviewing the quarterly, half yearly, annual financial result of the company. It reviews the company's financial and other management policies and the internal control system, internal audit system etc through discussion with internal and external auditors All members of the audit committee are knowledgeable in project finance, accounts and company law matters Minutes of each audit committee meeting are placed before the board and discussed in depth .
The terms of reference stipulated by the Board to the Audit Committee inter-alia includes the following:
1 The recommendation for appointment, remuneration and terms of appointment of auditors of the company;
2 Review and monitor the auditor's independence and performance, and effectiveness of audit process;
3. Examination of the financial statement and auditors' report thereon;
4. Approval or any subsequent modification of transactions of the company with related parties;
5 . Scrutiny of inter-corporate loans and investments;
6 Valuation of undertakings or assets of the company, wherever it is necessary;
7. Evaluation of internal financial controls and risk management systems;
8 Monitoring the end use of funds raised through public offers and related matters
9. 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;
10 Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
11. 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 sub-section 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. Disclosure of any related party transactions
g . Qualifications in the draft audit report
12 . Reviewing, with the management, the quarterly financial statements before submission to the board for approval;
13 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;
14 . Approval or any subsequent modification of transactions
of the company with related parties;
15 Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
16 . Discussion with internal auditors of any significant findings and follow up there on;
17 . 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;
18 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;
19 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; 20 To review the functioning of the Whistle Blower mechanism;
21. 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;
22 Reviewing following matters -
a. Management discussion and analysis of financial condition and results of operations;
b. Statement of significant related party transactions (as defined by the Audit Committee), submitted by management;
c Management letters / letters of internal control weaknesses issued by the statutory auditors;
d Internal audit reports relating to internal control weaknesses; and
23 . The appointment, removal and terms of remuneration of the internal auditor
24 . Any other matter as referred by the Board time to time
During the year 2014-2015, the Audit Committee has met on 21st May, 2014, 4th August, 2014, 14th November, 2014 and 11th February, 2015 .
Mr. Sandeep Dinodia & Mr. Dinesh Chandra Kothari are qualified Chartered Accountant having rich experience in Accounting and Finance. Other members of the Committee also have the knowledge of accounting and finance with wide exposure in their relevant areas . The composition of the Committee is in conformity with Clause 49 and Section 177 of the Companies Act, 2013 .
The Chairman of the Board and CFO are invited to the meetings.
Representatives of Statutory Auditors and Internal Auditors are also being invited to the meetings All the Meeting of Audit Committee are attended by Statutory Auditors . Cost Auditors also attend the meeting when the Cost Audit Report is discussed . Mr. V. B. Haribhakti, Ex Chairman of the Audit Committee could not attend the last Annual General Meeting held on 22nd September, 2014 due to cancellation of flight from Delhi to Pant Nagar at last moment .
3. Nomination and Remuneration Committee
The Nomination and Remuneration Committee is formed in pursuance of compliance with clause 49 of the listing agreement and Section 178 of the Companies Act, 2013 Minutes of each Nomination and Remuneration committee meeting are placed before the board and discussed in depth .
Terms of reference of the Committee inter-alia include the following:
• to identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down,
• to recommend to the Board their appointment and removal
• to carry out evaluation of every director's performance, formulate the criteria for determining qualifications, positive attributes and independence of a director
• to recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees,
• to devise a policy on Board diversity;
• to perform any other function, duty as stipulated by the Companies Act or under any applicable laws, as amended from time to time .
Remuneration Policy & Criteria of making payment to Executive and Non Executive Directors
Remuneration Policy of the Company is designed to act as a guideline for determining, inter-alia qualification, positive attributes and independence of a Director, matters relating to the remuneration, appointment, and removal of the Directors, Key Managerial Personnel, Senior Management Personnel and other employees .The objectives of the policy are as stated below
• To formulate the criteria for identification of the persons who are qualified to become directors and who may be appointed in senior management
• To formulate the criteria for determining qualifications, positive attributes and independence of a director
• To lay down a policy for remuneration of the Directors, Key Managerial Personnel, Senior Management Personnel and other employees of the Company;
• To ensure that 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;
• To ensure that relationship of remuneration to performance is clear and meets appropriate performance benchmarks;
• To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage
• To ensure that the 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 .
This policy is divided into three parts The salient aspects of the same are as stated below -
A. Appointment of Director, KMP and Senior Management Personnel
The Policy prescribes the criteria for determination of positive attributes, independence and qualifications of Directors and the criteria for appointment of Senior Management Personnel.
The Nomination and Remuneration Committee has the responsibility to identify and ascertain the integrity, qualification, expertise and experience of the person for appointment as Director and KMP and recommend to the Board his / her appointment The Committee is required to ensure that the person should possess adequate qualification, expertise and experience for the position The Committee has discretion to decide whether qualification, expertise and experience possessed by a person is sufficient / satisfactory for the concerned position .
B. Board Diversity
All Board appointments are based on the skills, diverse experience, independence and knowledge which the Board as a whole requires to be effective. The Nomination and Remuneration Committee seeks to address Board vacancies by actively considering candidates that bring a diversity of background and opinion from amongst those candidates with the appropriate background and industry or related expertise and experience The candidates are considered against objective criteria, having due regard to the benefits of diversity on the Board
C. Remuneration to Director, KMP, Senior Management Personnel and other employees
The Company strives to provide fair compensation to Directors, KMP, Senior Management Personnel and other employee, taking into considerations factors like Industry benchmark, Company's' performance vis a vis industry, scope of duties, roles and responsibilities, skill, knowledge, performance/track record, core performance requirements and expectations of individuals, legal and industrial obligations .
Details of Remuneration to Non-Executive Directors
Non-Executive Directors are paid sitting fees of Rs 10,000/-for attending each meeting of the Board of Directors and the Committee thereof (except Stakeholders' Relationship Committee and Borrowing Committee) . The Shareholders have approved at the AGM of the Company on September 28, 2012, the payment of commission to the non-executive directors within the ceiling of 1% of the net profits of the Company as computed under the applicable provisions of the Companies Act, 2013 The quantum of the commission may be recommended by the Committee on year to year basis based on the profitability of the Company and on such recommendation, the Board may decide to pay commission to the directors . During the year no commission was paid to any director.
Details of remuneration to Executive Directors
Managing Director/ Whole-time Director are eligible for remuneration as may be approved by Shareholders of the Company on the recommendation of the Committee and the Board of Directors The remuneration payable to any one managing director or whole-time director does not exceed 5% of the net profits of the company and if there is more than one such director, remuneration don't exceed 10% of the net profits to all such directors taken together.
The break-up of the pay scale and quantum of allowances, performance linked incentives, perquisites including, employer's contribution to P F, pension scheme, medical expenses, car & driver facility etc is decided and approved by the Board on the recommendation of the Committee
4. Stakeholders' Relationship Committee
The present constitution of the Committee is as follow -1. Mr. A. K. Newatia, Chairman of Committee
2 Mr Arvind Singhania
3 Mr Pradeep Kumar Rustagi
Mr. Diwaker Dinesh, Company Secretary, acts as Compliance Officer. The terms of reference of the Committee which inter-alia includes the following:
1. To review and redress complaints from various shareholders which includes, such as non-receipt of dividend, non-receipt of interest on debentures, non-receipt of annual report, transfer of shares or debentures, issue of duplicate share / debenture certificates, etc.
2. To oversee and review all matters connected with transfers, transmissions, dematerialization, rematerialization, splitting and consolidation of securities issued by the Company.
3 . To oversee the performance of the Registrar and Transfer Agent of the Company and recommends measures for overall improvement in the quality of investor services .
4. To review/take note of various investors presentations / communication with stakeholders
5 . To affix or authorise affixation of the Common Seal of the Company on Share Certificate of the Company.
6 To perform any other function, duty as stipulated by the Companies Act or under any applicable laws, as amended from time to time .
During the year 11 meetings of the Committee were held.
The Company has received 51 Complaints from the shareholders and all of them have been resolved by furnishing requisite information/ documents .There was no complaint pending as on 31st March, 2015 .
The Company gives utmost priority to the redressal of Shareholders Grievances which is evident from the fact that all complaint received from the shareholders are resolved expeditiously to the satisfaction of the shareholders .
5. Borrowing Committee
The Company has a Borrowing Committee, authorized and empowered to borrow such amount as Company may require for the operations and business of the company within the limits approved by the Board and the Shareholders of the Company.
The Composition of Borrowing Committee is as follows:
1 Mr A K Newatia, Chairman
2. Mr. Arvind Kumar Singhania, Member
3 . Mr. Pradeep Kumar Rustagi, Member
During the year 4 meetings were held .
The Company Secretary of the Company acts as the Secretary to the Committee .
6. Corporate Social Responsibility Committee
The Committee is constituted in terms of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 .
The terms of reference of the Committee includes -
• formulation and recommendation to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII of the Companies Act, 2013;
• to recommend the amount of expenditure to be incurred on CSR activities as indicated in the CSR Policy;
• to monitor the CSR Policy of the Company from time to time;
• to institute a transparent monitoring mechanism for implementation of CSR projects or programs or activities undertaken by the Company;
• to perform any other function or duty as stipulated by the Companies Act, Stock Exchanges and any other regulatory authority or under any applicable laws, as may be prescribed from time to time
7. Risk Management Committee
During the year, the Risk Management Committee was constituted to review and monitor the Risk Management Plans .
The terms of reference of the Committee includes -
• To frame, implement and monitor the risk management plan for the company.
• To ensure that the appropriate systems for risk management are in place .
• To review progress of Risk Mitigation Plan
Related Party Transactions
During the financial year 2014-15, there was no materially significant related party that may have potential conflict with the interests of the Company at large .
Compliance by the company
The Company has complied with the requirement of the Stock Exchange, SEBI and other statutory authorities relating to the capital market during the last three years . No penalties or Strictures have been imposed on the company by the Stock Exchange, SEBI and other statutory authorities relating to the above .
Whistle Blower Policy
Brief details about the Whistle Blower Policy of the Company has been provided in the Directors' Report which forms part of this Annual Report .
Certification in terms of Clause 49 (IX) of the Listing Agreement
Certification by Chairman & CEO and Executive Director & CFO as stipulated in the Clause 49 (IX) of the Listing Agreement was placed before the Board along with the financial statement for the year ended 31st March 2015, and the Board reviewed the same .
The said Certificate is annexed with the Corporate Governance Report.
10. Means of communication
• The quarterly and yearly financial results are generally published in the following newspapers: Economic Times, Times of India, Financial Express, Dainik Najariya, Dehradun .
• Website - Ester's website www.esterindustries.com contains a separate dedicated section 'Investor Relations' which provides shareholders information like quarterly financial results, annual reports, shareholding patterns, news and announcements and other shareholder information. Further as all such information are also filed/ intimated to BSE and NSE, the shareholder can also obtain information from their website viz www.bseindia.com and www.nseindia.com respectively .
• NSE Electronic Application Processing System (NEAPS)- NEAPS is a web based application designed by NSE for corporate . All intimations, compliance filings like corporate action, financial results, shareholding pattern, corporate governance report, Reconciliation of Share Capital Audit etc . are intimated/filed electronically on NEAPS .
• BSE Listing Centre - BSE has launched web based application for compliances and intimation under Listing Agreement for companies Listed in BSE . All intimations, compliance filings like corporate action, financial results, shareholding pattern, corporate governance report, Reconciliation of Share Capital Audit etc. are intimated/filed electronically on Listing Centre.
• Designated e-mail address for investor services- In terms of Clause 47(f) of the Listing Agreement, the designated e-mail address for investor complaints is email@example.com .
11. General Shareholder Information:
11.1 Forthcoming Annual General Meeting
Date and Time
10:30AM, 28th September, 2015
Sohan Nagar, P. O. Charubeta, Khatima - 262308, District Udhamsingh Nagar, Uttarakhand
Financial Calendar (Tentative and subject to change):
Financial Results for the Quarter ending 30th June 2015 July - 2015
Financial Results for the Quarter ending 30th September 2015 November - 2015
Financial Results for the Quarter ending 31st December 2015 February - 2016
Financial Results for the Quarter and year ending 31st March 2016 May - 2016
Annual General Meeting Any date between August 2016 -September 2016
Books closure date :
22nd September, 2015 to 28th September, 2015 (both days inclusive)
No Dividend has been recommended for the financial year 2014-15
Listing of Equity Shares on Stock Exchanges
Ester Industries Limited is presently listed on Bombay Stock Exchange and National Stock Exchange the details of the same are mentioned as under:
Address of Stock Exchanges
Bombay Stock Exchange Limited
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai- 400001
Listed Capital 83393759 Equity Shares of Rs. 5/- each*
Website of Stock Exchanges www.bseindia.com
Scrip Code 500136
National Stock Exchange of India Limited
Exchange Plaza, Plot no. C/1, G Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400051
Listed Capital 83393759 Equity Shares of Rs . 5/- each*
Website of Stock Exchanges www.nseindia.com
Scrip Code ESTER
Registrar and Share Transfer Agents: MAS Services Limited,
T - 34, Okhla Industrial Area Phase - II, New Delhi - 110 020
Phone No. - 011-26387281/82/83 Fax No.- 011-26387384
E-Mail : firstname.lastname@example.org
Share Transfer System:
Presently, the share transfer which are received in physical form are processed and the share certificates are returned within a period of 10 to 15 days from the date of receipts, subject to the documents being valid and complete in all respects.
Dematerialisation of Shares:
As on 31st March 2015, 96.87% of the Company's shares were held in dematerialised form.
Outstanding GDRs/ ADRs/ Warrants or any Convertible Instruments and their likely impact on equity:
As on 31st March, 2015, there were 20750000 Zero Coupon Convertibles Warrants were pending for conversion. However, they were converted into 20750000 Equity Shares on 25th May, 2015 . Further the Company has not issued any GDR/ADR.
Sohan Nagar, P. O. Charubeta, Khatima - 262 308, District Udham Singh Nagar, Uttarakhand
i) Investor Correspondence
(For transfer / dematerlisation of shares and any other query related to the shares of the Company)
For shares held in physical form
To Registrar & Transfer Agent (RTA)
MAS Services Limited,
T - 34, Okhla Industrial Area Phase - II, New Delhi - 110 020
Phone No.- 011-26387281/82/83 Fax No .- 011-26387384
E-Mail : email@example.com
For shares held in Demat form
To the respective Depository Participant
ii) Any query on Annual Report
Legal & Secretarial Department
Plot No.11 , Block-A, Infocity-I, Sector 33 & 34, Gurgaon, Haryana - 122 001
Phone: 0124-4572100 Fax : 0124-4572199
E-Mail: firstname.lastname@example.org Web site: www.esterindustries.com
(iii) Investor Grievances Redressal Mechanism –
In case of any complaint, the Investor can contact the Company or our Registrar & Transfer Agent. Further the Company process investor complaints through a centralized web based "SEBI complaints redress system" (SCORES) also . Investor can check online status of complaint and action taken on the same . It assists in speedy resolution of complaint in more transparent manner.