REPORT ON CORPORATE GOVERNANCE
Clause 49 of the listing agreement with the Indian Stock Exchanges stipulates the norms and disclosure standards that have to be followed on the Corporate Governance front by listed Indian companies.
1. THE COMPANY'S PHILOSOPHY
The Company is a part of the Godrej Group which has established a reputation for honesty and integrity. The Company's philosophy of corporate governance is to achieve business excellence by enhancing the long-term welfare of all its stakeholders. The Company believes that corporate governance is about creating organisations that succeed in the marketplace with the right approach and values. This will enhance the value for all its stakeholders.
THE GOVERNANCE STRUCTURE
2. BOARD OF DIRECTORS
a) Board Structure
The Board of Directors of the Company comprises twelve Directors, which includes a Managing Director i.e. Mr. N. B. Godrej and two Whole-time Executive Directors, i.e.
Ms. T. A. Dubash and Mr. N.S. Nabar. The remaining nine are Non-Executive Directors, with six of them being Independent Directors. No Director is related to any other Director on the Board in terms of the definition of "relative" given under the Companies Act, 2013, except (1) Mr. A. B. Godrej and Mr. N. B. Godrej, who are brothers, (2) Ms. T. A. Dubash who is the daughter of Mr. A. B. Godrej. The details are given in Table 1 and 2 respectively:
b) Board meetings held and Directors' attendance record
The Board meets atleast once in a quarter to consider among other businesses, quarterly performance of the Company and financial results. To enable the Board to discharge its responsibilities effectively and take informed decisions, necessary information is made available to the Board. During the year Six Board meetings were held on May 28, 2014, August 9, 2014, October 6, 2014 November 10, 2014, December 12, 2014 and February 11, 2015. The details are given in Table 1:
(i) $ Alternate Directorships and Directorships in private companies, Section 8 companies, foreign companies are excluded.
(ii) Figures in ( ) denote listed companies.
(iii) Board Meetings held during the year represent the number of meetings held during the tenure of that director.
(iv) @ In accordance with Clause 49, Membership / Chairmanship of only the Audit Committees and Shareholders Committee in all public limited companies (except Godrej Industries Limited) have been considered.
None of the Directors is a member of more than 10 Board-level committees, or a Chairman of more than five such committees, as required under Clause 49 of the listing agreement
) Information supplied to the Board
Among others, this includes:
• Annual operating plans and budgets, capital budgets, and any updates thereon,
• Quarterly results of the Company,
• Minutes of meetings of audit committee and other committees,
• Information on recruitment and remuneration of senior officers just below the Board level,
• Materially important show cause, demand, prosecution and penalty notices,
• Fatal or serious accidents or dangerous occurrences,
• Any materially significant effluent or pollution problems,
• Any materially relevant 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 a substantial nature,
• 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,
• Sale of material nature of investments, subsidiaries, assets, which is not in the normal course of business,
• Quarterly details of foreign exchange exposure and the steps taken by management to limit the risks of adverse exchange rate movement,
• Non-compliance of any regulatory, statutory nature or listing requirements as well as shareholder services such as non-payment of dividend and delays in share transfer.
The Board of the Company is presented with all information under the above heads, whenever applicable. These are submitted either as part of the agenda papers well in advance of the Board meeting or are tabled in the course of the Board meeting.
d) Directors with materially significant related party transactions, pecuniary or business relationship with the Company
Except for drawing remuneration, none of the Independent Directors have any other materially significant related party transactions, pecuniary or business relationship with the Company. Attention of Members is drawn to the disclosures of transactions with related parties set out in note no. 46, to the Standalone Financial Statements forming part of the Annual Report.
e) Remuneration of Directors: sitting fees, salary, perquisites and commissions and Number of Shares held by Non-Executive Directors
The details of remuneration package of Directors and their relationships with each other are given in Table 2. The number of shares held and dividend paid are given in Table 3.
1. Remuneration to Mr. N.B. Godrej and Ms. T.A. Dubash includes a performance linked variable remuneration (PLVR) of ~ 41,44,500 each for the year ended March 31, 2015 payable in 201516.
2. The service contract of Mr. N. B. Godrej is for a period of three years beginning from April 1, 2014. The service contract of Ms. T. A. Dubash is for a period of three years beginning from April 1, 2013. The service contract of Mr. N.S. Nabar is from May 1, 2013 for a period upto March 31, 2016.
f) Stock Options
The Company has not granted any Stock Options to any of its Promoter Directors and Independent Directors. Mr. N.S. Nabar, Executive Director & President (Chemicals) was allotted 1 1,537 equity shares under the Employee Stock Grant Scheme.
3. COMMITTEES OF THE BOARD
The Company has set up an Audit Committee in accordance with Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Stakeholder's Relationship / Shareholders Committee and Nomination and Compensation Committee are formed in accordance with Section 178 of the Companies Act, 2013 and clause 49 of Listing Agreement. The Company also introduced Risk Management Committee which is in accordance with provisions of Clause 49 of Listing Agreement.
• Audit Committee meetings were held on May 28, 2014, August 9, 2014, November 10, 2014 and February 11, 2015.
• Nomination and Compensation Committee meetings were held on May 28, 2014, October 6, 2014 and February 11, 2015.
• Stakeholders' Relationship / Shareholders Committee meetings were held on April 16, 2014, May 29, 2014, June 30, 2014, July 15, 2014, August 12, 2014, September 12, 2014, October 14, 2014, November 18, 2014, December 19, 2014, January 09, 2015, February 17, 2015, and March 5, 2015.
• Risk Management Committee meeting was held on January 27, 2015.
• Leave of absence was granted to the Directors whenever they could not be physically present for the Committee meetings.
• NA indicates not a member of the Committee.
(C) Terms of reference of Board Committees
The terms of reference for Audit Committee include the matters specified in Section 177 of the Companies Act, 2013 as well as clause 49 of Listing Agreement as follows:
(1) Audit Committee
• Overview 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.
• Recommending the appointment/removal of external auditor, fixation of audit fees and approval for payment for any other services.
• Reviewing with management the annual financial statements before submission to the board for approval with particular reference to:
» Matters that needs to be included in the Director's Responsibility Statement to be included in the Board's Report in terms of Section 134 of the Companies Act, 2013.
» Change, if any, in accounting policies and practices and reasons for the same.
» Major accounting entries involving estimates based on exercise of judgement by the management.
» Significant adjustments made in the financial statements arising out of audit findings.
» Compliance with listing and other requirements relating to financial statements.
» Disclosure of any related party transactions.
» Any qualification in the draft audit report.
• Reviewing with the management, the quarterly/annual financial statement before submission to the Board for approval. auditors, and adequacy of the internal control system.
• Reviewing the adequacy of internal audit function, if any, including the structure of Internal Audit Department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.
• Discussion with internal auditors any significant findings and follow up thereon.
• Reviewing the findings of any internal investigation by the internal auditors into matters where there is suspected fraud or irregularity or 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 discussions to ascertain any area of concern.
• Evaluation of internal financial controls and risk management systems.
• Looking into the reasons for substantial defaults in payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividend) and creditors.
• Reviewing the functioning of Whistle Blower mechanism.
• Approval of appointment of CFO (i.e. the person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate.
(2) Nomination and Compensation Committee
The terms of reference of Nomination and Compensation Committee are as below.
• review the human resources policies and practices of the Company and in particular, policies regarding remuneration of Whole-Time Directors.
• 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 Board their appointment and removal, and evaluate every Director's performance.
• Formulate the criteria in determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to remuneration of Directors, key management personnel and other employees.
• Matters required under Securities and Exchange Board (SEBI) of India (Share Based Employee Benefits) Regulations.
• Such other matters as may be required under
Companies Act, 2013/SEBI Regulations/ Listing Agreement.
The remuneration Policy of the company has been provided in the Directors' Report section of the Annual Report as 'Nomination & Remuneration Policy for Senior Management'.
(3) Stakeholders Relationship / Shareholders Committee
This committee looks into redressal of shareholder complaints regarding transfer of shares, non-receipt of Balance Sheet and non-receipt of declared dividends, as required in Clause 49 of the Listing Agreement as well as those required under Companies Act, 2013.
4) Risk Management Committee
The Risk Management Committee was constituted by the Board on November 11, 2014 adhering to the requirements of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Committee shall have the following role, duties, responsibilities and authority:
This Committee shall be responsible to monitor and review the risk management plan of the Company and the existing Forex Committee and the Business Risk Committee of the Company shall report to this Committee.
a) Risk Policy and its periodic review
b) Ensuring appropriate risk management systems and controls are in place and its evaluation and review
c) Risk assessment and risk minimisation procedures.
a) Materially significant related party transactions that may have potential conflict of interests of Company at large
During the year 2014-15, there were no materially significant related party transactions, i.e. transactions of the Company of material nature, with its promoters, the Directors or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large. Attention of Members is drawn to the disclosures of transactions with related parties set out in Notes to Financial Statements, forming part of the Annual Report.
b) Whistle Blower Policy
With a view to establish a mechanism for protecting the employees reporting unethical behaviour, fraud, violation of Company's Code of Conduct, the Board of Directors has adopted a Whistle Blower Policy. During the year 2014-15, no personnel has been denied access to the Audit Committee.
c) Policy to Prevent Sexual Harassment at the work place
The Company is committed to creating and maintaining an atmosphere in which employees can work together, without fear of sexual harassment, exploitation or intimidation. Every employee is made aware that the Company is strongly opposed to sexual harassment and that such behaviour is prohibited both by law and by the Godrej group. The Company has formed an Internal Complaints Committee headed by Ms. T.A. Dubash, Executive Director & Chief Brand Officer, pursuant to the provisions of Sexual Harassment of Women at Workplace (prevention, Prohibition and Redressal) Act, 2013. While the Act is applicable only to the women employees, our company policy covers all employees
e) Details of Non-compliance
There has not been any non-compliance by the Company and no penalties or strictures were imposed on the Company by the Stock Exchanges or SEBI or any statutory authority, on any matter related to capital markets.
f) Declaration by Managing Director
The declaration by the Managing Director stating that all the Board Members and senior management personnel have affirmed their compliance with the laid down code of conduct for the year ended March 31, 2015, is annexed to the Corporate Governance Report.
Shareholders and Means of communication
a) Disclosures regarding appointment or reappointment of Directors
Mr. A.B. Godrej and Mr. V.M. Crishna both Directors, retire by rotation at the Annual General Meeting and being eligible offer themselves for reappointment. Information about the Directors who are being appointed/are eligible for reappointment is given as an annexure to the Notice of the AGM.
b) Communication to shareholders
All vital information relating to the Company and its performance, including quarterly results, official press releases are posted on the website of the Company. The Company's web-site address is www.godrejinds.com. The quarterly and annual results of the Company's performance are published in leading English dailies like Economic Times, Business Line, etc. and regional language daily, Maharashtra Times. The quarterly results of the Company are also available on the websites of BSE Ltd. and National Stock Exchange of India Ltd viz. www.bseindia.com and www.nseindia.com respectively.
The Company files electronically the quarterly results, Corporate Governance report, Share holding pattern, etc in the BSE Listing Centre and NSE Electronic Application Processing System (NEAPS).
a) Management discussion and analysis
This annual report has a detailed chapter on Management Discussion and Analysis.
b) Disclosures by management to the Board
All details relating to financial and commercial transactions where Directors may have a potential interest are provided to the Board, and the interested Directors neither participate in the discussion, nor do they vote on such matters.
c) The Code of Conduct for the Board of directors and the senior management has been disclosed on the website of the company
7. CORPORATE GOVERNANCE VOLUNTARY GUIDELINES - 2009
iii. Record Date/Book Closure
Your Company is committed to maintaining highest standards of Corporate Governance by adhering to the requirements set out by SEBI.
With a view to strengthening the Corporate Governance framework, the Ministry of Corporate Affairs has issued voluntary guidelines in December 2009 for adoption by the companies. These guidelines are intended to serve as a benchmark for Corporates to help them to adopt the highest standards. Corporate Governance guidelines do not substitute any extant law or regulation but are essentially for voluntary adoption by Corporates.
Your Company is already in compliance with most of these requirements and continually reviews for enhancements as appropriate.
8. AUDITOR'S CERTIFICATE ON CORPORATE GOVERNANCE:
As stipulated in Clause 49 of the Listing Agreement, the auditor's certificate regarding compliance of conditions of corporate governance is annexed to the Directors' Report.
9. GENERAL SHAREHOLDER INFORMATION
i. Annual General Meeting
Date : August 11, 2015
Time : 3.30 p.m.
Venue : Auditorium, Godrej One, Pirojshanangar, Vikhroli (East), Mumbai - 400079.
ii. Financial Calendar :
Financial year: April 1 to March 31
For the Year Ended March 31, 2015, results announced on:
• August 9, 2014 : First quarter
• November 10, 2014 : Half year
• February 11, 2015 : Third quarter
• May 27, 2015 :Annual104
iii. Record Date/Book Closure
A dividend of ~ 1.75 per equity share of ~ 1 each has been recommended by the Board of Directors of the Company. For payment of dividend, the book closure is from August 4, 2015 to August 11, 2015 (both days inclusive).
iv. Listing information
The Company's equity shares are listed on The Bombay Stock Exchange Ltd. and The National Stock Exchange of India Ltd. The ISIN Number of the Company for both NSDL and CDSL is INE233A01035.
v. Stock Data
Tables 1 and 2 respectively give the monthly high and low prices and volumes of equity
Name of the Stock Exchange
BSE Ltd. (BSE): 500164
National Stock Exchange of India Ltd. (NSE): GODREJIND
shares of the Company at BSE and the NSE for the year ended March 31, 2015. Chart A compares the Company's share price at the BSE versus the Sensex.
vii. Outstanding GDRs/ADRs/Warrants/Convertible instruments and their impact on equity
The Company does not have any outstanding GDRs / ADRs / warrants / convertible instruments. vii. Share Transfer
Share transfers and related operations for the Company are conducted by Computech Sharecap Limited, which is registered with the SEBI as a Category 1 Registrar. Share transfer is normally effected within the maximum period of 30 days from the date of receipt, if all the required documentation is submitted.
ix. Plant locations
Ambernath : Plot No. N - 73, Additional Ambernath Industrial Area, Village Jambivali, Taluka Ambernath East, District Thane, Maharashtra. 421 506.
Valia : Burjorjinagar, (DTA & EOU) Plot No. 3, Village Kanerao, Taluka - Valia, District Bharuch, Gujarat 393 135.
Wadala : L.M. Nadkarni Marg, Near M.P.T. Hospital, Wadala (East), Mumbai 400 037.
xi. Investor correspondence should be addressed to:
Computech Sharecap Limited 147, M.G. Road, Opp. Jehangir Art Gallery, Fort, Mumbai 400 001. Tel: 022-22635000 to 22635002; Fax: 022-22635001 Email: firstname.lastname@example.org