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Gujarat NRE Coke Ltd.

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Gujarat NRE Coke Ltd. Accounting Policy

Report on Corporate Governance

1. Philosophy on Corporate Governance:

Gujarat NRE Coke Limited defines Corporate Governance as a systematic process by which companies are directed and controlled keeping in mind the long term interest of the stakeholders. It firmly believes that good Corporate Governance is the foundation of corporate excellence and strengthens the investors' trust and ensures a long term partnership which helps in achieving Company's objectives. The Company's philosophy on Corporate Governance lays strong emphasis on transparency, accountability and integrity. This philosophy is manifested in its operations through exemplary standards of ethical behavior.

Gujarat NRE Coke is committed to good Corporate Governance by creating an environment based on entrepreneurship, professionalism and pursuit for excellence. The company's corporate governance is based on two core principles:

i Management must have executive freedom to drive the enterprise forward without undue restraints; and

ii This freedom of management must be exercised within a framework of effective accountability.

The above belief and core principles of Corporate Governance adopted by Gujarat NRE Coke leads the company's governance philosophy, trusteeship, transparency, independence, fairness, accountability and social responsibility, which in turn is the basis of public confidence in corporate system.

A Report in line with the requirement of clause 49 of listing agreement with Stock Exchange for the year ended 31st March, 2015 is given below.

2. Board of Directors:

Composition, Category & Independence etc.

The Board of Directors of the Company represents an appropriate mix of executive and Non-executive Directors. The Board consists of six members - (1) One Executive, Non- Independent Director, (2) One Non-executive Non-Independent Director, (3) Three Non Executive Independent Directors and (4) One Nominee Director.

All the Independent Directors satisfies the criteria of independence as provided in the Companies Act, 2013 and Clause 49 of the Listing Agreement. All the Non-Executive Directors are eminent professionals and bring their professional expertise and experience to the management of the Company.

The Chairman & Managing Director has been appointed by the shareholders on terms and conditions including remuneration as per the recommendation of the Board of Directors. The Non-Executive Directors are appointed or reappointed with the approval of the shareholders.

Meetings and Attendance Record of Directors.

The Board meets on a regular basis to ensure overall focus on preserving and increasing stakeholders' value. This includes review of Company strategy and performance, management oversight, ethical business practices and legal compliance, accounting and financial controls, financial structure, preservation of assets and Board effectiveness. The required information as enumerated in Annexure IA of Clause 49 of the Listing Agreement is made available to the Board of Directors for discussion and consideration at the Board Meeting. The Chairman & Managing Director keeps the Board apprised of the overall operations & performance of the Company and about the market of the products of the Company.

During the year ended on March 31, 2015, 10 (Ten) Board Meetings were held on 24 April, 2014, 25 May 2014, 30 June 2014, 14 August 2014, 30 September 2014, 3 November 2014, 23 November 2014, 8 February 2015, 9 March 2015 and 30 March 2015. The time gap between any two consecutive board meetings did not exceed four months. The last AGM was held on 30 September, 2014.

3. Code of Conduct

The Company's Board has laid down a Code of Conduct for all Board members and senior management personnel for avoidance of conflict of interest. This Code inter alia requires the Board members and senior management personnel to comply with the Code of Conduct for Insider Trading as laid down by Securities & Exchange Board of India (SEBI). The Company has received necessary confirmations affirming compliance of the Code from all of them during the year 1.4.2014 to 31.3.2015. A declaration to this effect, duly signed by the Chairman & Managing Director and Chief Financial Officer of the Company, is given in CEO & CFO's Certificate as annexed hereto and forms a part of this Report.

4. Board Committees:

To focus effectively on the issues and ensure expedient decision making/resolution of diverse matters, the Board has constituted various Committees with specific terms of reference/ scope. The Committees operate as empowered agents of the Board as per their Charter/terms of reference. Targets set by them as agreed with the management are reviewed periodically and mid-course corrections are also carried out.

As on 31st March 2105, there are 6 (six) Committees of the Board namely Audit Committee, Stakeholder Relationship Committee, Nomination & Remuneration Committee, Corporate Social Responsibility Committee, Management Committee and Risk Management Committee. The scope of the said Committees and its memberships etc. are as follows:

(a) Audit Committee

i) Terms of Reference. The primary objective of the committee is to monitor and provide effective supervision of the Management's financial reporting process to ensure accurate and timely disclosures, with the highest levels of transparency, integrity and quality of financial reporting. The terms of reference of the Audit Committee are in conformity with the requirements of Clause 49 of the Listing Agreement and Section 177 of the Companies Act, 2013. These broadly cover the following:

1) To oversee the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient and credible.

2) To review and recommend to the Board the appointment, re-appointment, remuneration and terms of appointment and if required, the removal of statutory auditors.

3) To review and monitor the auditor's independence and performance and effectiveness of audit process.

4) To review and examine with the management, the financial statements before submission to the Board, focusing primarily on Directors Responsibility Statement which forms part of the Directors Report, accounting policies, compliance with accounting standards, compliance with Stock Exchanges and listing requirements, inter corporate loans and investments and transactions of the company with related parties including approval or any subsequent modification thereof etc.

5) To review with the management, external and internal auditors, the adequacy of internal control systems.

6) To discuss with the Auditors on the scope and nature of Audit and also to have Post Audit discussion to ascertain any area of concern.

7) To review the Company's financial and risk management policies.

8) To review the minutes of the Board meetings of the unlisted subsidiary company along with a statement of significant transactions and arrangements it has entered into, if any.

9) Overseeing Vigil Mechanism for adequate safeguards against victimization of employees and directors.

10) To undertake such other matters as may be delegated by the Board from time to time.

ii) Composition

The composition of the Audit Committee as on 31st March 2015 is as follows:

Mr. Gopal Prasad Dokania - (Independent - Non-Executive)

Mr. Sisir Kumar Mukherjee - (Independent - Non-Executive)

Mr. Murari Sananguly - (Independent - Non-Executive)

Mr. Gopal Prasad Dokania is the Chairman of the Committee.

All the members of the Committee are Independent, Non-Executive Directors. Mr. Gopal Prasad Dokania, an Independent Director is a qualified Chartered Accountant. Mr. Sisir Kumar Mukherjee and Mr. Murari Sananguly are other Directors possessing extensive experience in the respective fields of accounting, taxation, business policies and management. The Company Secretary acts as the Secretary to this Committee.

iii) Meetings and Attendance

The Audit Committee met six times during the year under review on 25 May, 2014, 14 August, 2014, 3 November 2014, 23 November 2014, 8 February, 2015 and 30 March 2015.

Mr. Gopal Prasad Dokania was appointed on 30th June, 2014 and Dr. Mahendra Kumar Loyalka ceased to be committee member on 30 June, 2014.

The Statutory Auditors of the Company are invited to attend audit committee meeting whenever required. Chairman & Managing Director, Chief Financial Officer (CFO), Chief Commercial Officer, Vice President Accounts and Internal Auditor and other senior executives are also invited to attend and deliberate in the Audit Committee meetings.

The Chairman of the Audit Committee was present at the last Annual General Meeting of the Company.

(b) Stakeholders Relationship Committee

The Committee consists of the following members:

Mr. Arun Kumar Jagatramka, Promoter - Executive

Mr. Sisir Kumar Mukherjee, Independent - Non Executive

Mr. Murari Sananguly, Independent - Non Executive

Mr. C Narasimhan, Non Independent Non Executive

The Committee meets at regular intervals to consider and approve transfers, transmission and issue of duplicate share certificates. The Committee looks into the redressal of shareholders' and investors' complaints like transfer of shares, nonreceipt of Annual Reports & Accounts, non receipt of dividends, non receipt of duplicate share certificates etc. The Committee met 4 times during the year under review and the attendance of the committee members in these meetings were as follows:

Mr. Mukund Chandak, Company Secretary has been designated as the Compliance Officer by the Board and assigned with the responsibilities of overseeing shareholders'/investors' grievances under the supervision of the Committee. He also acts as the Secretary to this Committee. There were no complaints which remained pending at the beginning of the year and out of 13 complaints received during the year all complaints were redressed and no complaint was pending as on 31st March, 2015.

(c) Nomination & Remuneration Committee.

The Committee consists of following members:

Mr. Sisir Kumar Mukherjee, Independent - Non-Executive

Mr. Arun Kumar Jagatramka, Non-Independent - Executive

Mr. Gopal Prasad Dokania, Independent - Non-Executive

Mr. Murari Sananguly, Independent - Non-Executive

The terms of reference of this Committee is 1) 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 shall carry out evaluation of every director's performance. 2) 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. 3) While formulating the Policy, the Committee shall ensure that (a) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully; (b)relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and (c) remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the company and its goals. The Company is committed to make full disclosures regarding its payment to all directors. Apart from sitting fees for attending Board and Committee meetings the Company did not pay any other remuneration to the non-executive directors during the year under review. The details of remuneration paid by the Company to its Executive and Non-executive Directors during the year under review are given below. The Company Secretary acts as the Secretary to this Committee.

 (e) Management Committee

Management Committee consists of the following members:

i. Mr. Arun Kumar Jagatramka, CMD - Committee Chairman

ii. Mr. Gopal Prasad Dokania, Director

iii. Mr. Sisir Kumar Mukherjee, Director

iv. Mr. P. R. Kannan, Chief Financial Officer,

v. Mr. Pawan Kumar Agrawal, Chief Commercial Officer

The term of reference of the committee comprises of matters such as allotment of shares on conversion of FCCBs/ Warrants/ESOP etc., to borrow other than by issue of Debenture(s), to give Loan(s)/ Advance(s) as well as to invest funds of the company, to issue securities and/or to provide guarantee(s) on the basis of limits prescribed by the Board, opening and closure of bank accounts, filing of forms and any other matter of routine nature etc. subject to guidelines and supervision of the Board. The Company Secretary acts as the Secretary to this Committee. The committee met 5 (five) times during the year under review.

(e) Corporate Social Responsibility Committee

Corporate Social Responsibility Committee consists of the following members:

Mr. Sisir Kumar Mukherjee, Independent - Non-Executive

Mr. Arun Kumar Jagatramka, Non-Independent - Executive

Mr. Murari Sananguly, Independent - Non-Executive

The term of reference of the committee comprises of 1) To formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the Company as specified in Schedule IV of the Companies Act 2013. 2) Recommend the activities by giving preference to the local area and area around it where the company operates for spending the amount earmarked for Corporate Social Responsibility activities. 3) Recommend the amount of expenditure to be incurred on the activities referred to above. 4) Where the Company fails to spend such amount, to specify the reason for not spending the amount. 5) Monitor Corporate Social Responsibility Policy of the Company from time to time. The Company Secretary has been appointed as the Secretary to this Committee. No meeting of the committee was held during the year under review.

(f) Risk Management Committee

Risk Management Committee consists of the following members:

Mr. Sisir Kumar Mukherjee, Independent - Non Executive

Mr. Arun Kumar Jagatramka, Non-Independent - Executive

Mr. Murari Sananguly, Independent - Non Executive

Mr. C Narasimhan, Non-Independent - Non Executive

The term of reference of the committee comprises of 1) To identify, evaluate and suggest methods for mitigating operational, strategic and environmental risks. 2) To prepare, monitor and approve risk policies and associated practices of the company. 3) To review and approve risk disclosure statements or other statements relating to risk management. The Company Secretary has been appointed as the Secretary to this Committee. No meeting of the committee was held during the year under review.

5. Independent Directors

The Company has complied with the definition of Independence as per Clause 49 of the Listing Agreement and according to the Provisions of section 149(6) Companies Act, 2013. The company has also obtained declarations from all the Independent Directors pursuant to section 149 (7) of the Companies Act, 2013.

a) Separate Meeting of the Independent Directors :

The Independent Directors held a Meeting on 8th February, 2015, without the attendance of Non- Independent Directors and members of Management. All the Independent Directors were present at the meeting. The following issues were discussed in detail:

I) Reviewed the performance of non-independent directors and the Board as a whole;

II) Reviewed the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors;

III) Assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

6. Subsidiaries:

As on 31st March 2015, the Company had two Subsidiaries i.e. Manor Dealcom Pvt. Ltd and Huntervalley Coal Pvt. Ltd. The Company is adequately represented on the Board of Subsidiaries. The financial performance of the Subsidiaries is discussed by the Board at its meeting and the details of investment made by and minutes of the unlisted subsidiaries are also reviewed by the Company's Board.

7. Disclosures:

a) Materially significant Related Party Transactions - The Company has not entered into any transactions of material nature, with its promoters, Directors or the Management, its Subsidiaries or with Director's relatives, etc. that may have potential conflict with its interest at large, other than those in the normal course of business. The transactions undertaken during the year have been disclosed in Note No. 35 of Notes to Financial Statements for the year ended March 31, 2015. The Company's major related party transactions are generally with its Subsidiaries and Group Associates. The related party transactions are entered into based on consideration of various business exigencies, synergy in operations, and optimization of market share, profitability, legal requirements, liquidity and capital resources of Subsidiaries/Associates. All related party transactions are negotiated at arms length basis and in the interest of the Company.

b) Details of Compliance - The Company is regular in complying with the requirements of the regulatory authorities on the matters relating to the Capital market and no penalties/strictures have been imposed on the Company by Stock Exchange or SEBI or any regulatory authority, during last three years.

c) Whistle Blower Policy - The Company has a Whistle Blower Policy and appropriate mechanism in place. Employees can directly report to the top most management (including Chairman & Managing Director and/or the members of the Board/Audit Committee) any concerns about any unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or Ethics Policy. Management on its turn is responsible for establishing a fearless atmosphere where reporting employee doesn't fear being harassed, demoted or retaliated or threatened in any way and simultaneously receiving, investigating and acting upon complaints and concerns regarding actual/ possible violation of Code of Conduct or an event that could affect the business and/or reputation of the Company and/or its Subsidiaries or its Associates. No personnel of the company have been denied access to the audit committee during the year under review.

d) Non-Mandatory Requirements - The Company is duly complying with all the mandatory requirements of Clause 49 of the Listing Agreement with the Stock Exchanges and it has also adopted some of the non-mandatory requirements defined therein such as formation of Remuneration Committee, adoption of best practices to ensure regime of unqualified financial statements,.

8. Means of Communication:

a) The quarterly, half yearly and yearly financial results of the Company as taken on record and approved by the Board of Directors are published in leading newspapers such as Economic Times (English) in its All India editions and Ei-Somoy (Bengali) in its West Bengal edition.

b) The quarterly, half yearly and yearly financial results are also sent immediately upon conclusion of the meeting approving them, to the Stock Exchange(s) on which the Company's shares are listed.

c) Copies of the financial results and Annual Reports of the Company are provided to various Analysts, Government Departments, Investors and others interested in getting the same upon receipt of requests.

d) The Management Discussion and Analysis is annexed to the report and forms a part of this Annual Report.

e) The quarterly, half yearly and yearly results, press releases and relevant presentations of the Company are displayed in the company's website: www.gujaratnre.com.

9. General Shareholders' Information:

a) Annual General Meeting :

Date and Time : Monday, 10th day of August, 2015 at 10.30 a.m.

Venue : Kalamandir, 48, Shakespeare Sarani, Kolkata – 700 017.

b) Financial Year :

12 months from 1st April, 2014 to 31st March, 2015

c) Book Closure Date:

Tuesday, the 4th day of August, 2015 to Monday, the 10th day of August, 2015 (Both days inclusive).

d) Listing of Equity Shares on Stock Exchanges :

(i) BSE Ltd.

P J Towers, Dalal Street, Fort, Mumbai - 400 001

(ii) National Stock Exchange of India Ltd.

Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051

e) Listing Fees:

Annual Listing Fees for the year 2015-2016 have been paid to both the Stock Exchanges. The Company has also paid the Annual Custody Fees to both the Depositories for the year 2015-2016.

f) Depositories:

i) National Securities Depository Ltd.

Trade World, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013.

ii) Central Depository Services (India) Ltd.

P J Towers, 17th Floor, Dalal Street, Fort, Mumbai - 400 001.

g) Stock Codes:

Equity Shares :

Stock Exchange(s) Stock Code

Bombay Stock Exchange, (BSE) :512579

National Stock Exchange (NSE) :GUJNRECOKE

ISIN of equity shares(on both the depositories) : INE110D01013

 “B” Equity Shares (DVR Shares) :

Stock Exchange(s) Stock Code

Bombay Stock Exchange, (BSE): 570003

National “B” Stock Exchange (NSE): GUJNREDVR

ISIN of “B” equity shares(on both the depositories) : IN9110D01011

h) Registrar and Share Transfer Agents:

M/s. Niche Technologies Private Limited,

D-511, Bagri Market, 71, B. R. B. Basu Road, Kolkata-700 001

Phones: +91-33-22357270/7271 Fax: +91-33-22156823

E-Mail: nichetechpl@nichetechpl.com

i) Designated Exclusive email id : The Company has designated the following email id exclusively for investor servicing : investor@gujaratnre.com

j) Share Transfer System:

All matters pertaining to share transfers are being handled by M/s. Niche Technologies Pvt Ltd., the Registrars & Share Transfer Agents (RTA) of the Company. The share transfer requests received by them are processed and a memorandum of transfer is sent to the Company for approval by the Stakeholders Relationship Committee. The company regularly monitors and supervises the functioning of the system so as to ensure that there are no delays and lapses in the system. Shares held in dematerialised form are traded electronically in the Depository. The RTA of the Company periodically receives from the Depository, the beneficial holding so as to enable them to update their records and to send all notices, corporate communications and Dividend Payments etc. to the beneficial owners of shares.

The average time taken for process of share transfer requests including dispatch of share certificates etc. is within 15 days. Physical shares received for dematerialisation are processed and computerised within a period of seven to ten days from the date of receipt, provided they are found in order in every respect. Bad deliveries are immediately returned to the respective Depository Participant under advice to the Shareholders.

k) Dematerialisation of Shares and Liquidity:

Approximately 99.54% of the Company's Equity Shares and approximately 99.39% of Company's “B” Equity Shares have been dematerialised as on March 31, 2015 respectively. The Equity Shares and the “B” Equity Shares of Company are both actively traded in Stock Exchanges and are permitted to be traded only in dematerialised form.

l) Outstanding FCCBs / Warrants / ESOS or any other Convertible instruments, Conversion date and likely impact on equity:

The outstanding convertible bonds, warrants and ESOS as on 31st March, 2015 are as under:

– 2,08,00,000 Warrants of Rs.120 each issued under Qualified Institutional Placement with option to the warrant holder to get allotment of 1 Equity Share in lieu of each warrant. The warrant holders have the right to exercise the option for conversion of warrants on or before 28th April, 2015. If all the aforesaid warrants are converted then the Share Capital of the Company will increase by 2,08,00,000 Equity Shares of Rs. 10 each and by 20,80,000 “B” Equity Shares of Rs. 10 each.

– 6,00,00,000 Warrants of Rs. 10.72 each and 2,50,00,000 warrants of Rs. 12.00 each issued on preferential basis to Promoter/ Promoter Group Companies with option to the warrant holder to get allotment of 1 Equity Share in lieu of every warrant. The warrant holders have the right to exercise the option for conversion of warrants on or before 17th December, 2015 and 13th April, 2016 respectively. If all aforesaid warrants are converted then the Share Capital of the Company will increase by around 8,50,00,000 Equity Shares of Rs. 10/- each.

– 200 Nos. of 5.5% Unsecured FCCB due 2017 with an issue value of USD 1,00,000 each. If all the bonds are converted into equity share at its conversion price, then the Share Capital of the Company will increase by around 4,77,64,444 Equity Shares of Rs.10 each.

– The status on outstanding options under Employee Stock Option Schemes has already been provided in an Annexure to the Directors Report.

m) Plant Location:

Coke Plant(s)

1. Vill. : Dharampur, P.O. Khambhalia Dist. : Devbhoomi Dwarka, Gujarat Pin : 361305

2. Vill. : Lunva, Taluka-Bhachau Dist. : Kutch, Gujarat Pin : 370140

3. Road No. 16, 1st Cross, KIADB, Belur Indusrial Area, Dharwad, Karnataka, Pin : 580011

Steel Plant(s)

Vill. : Lunva, Taluka-Bhachau Dist. : Kutch, Gujarat Pin : 370140

n) Address of Subsidiaries

Manor Dealcom Private Ltd

22, Camac Street, Block C, 5th Floor, Kolkata 700 016

Huntervalley Coal Private Ltd

22, Camac Street, Block C, 5th Floor, Kolkata 700 016

o) Address for Correspondence:

22, Camac Street, Block - C, 5th Floor Kolkata-700 016,

Phone: +91-33-22891471 Fax: +91-33-22891470 E-mail: kolkata@gujaratnre.com

p) Queries:

Any Query on Financial Statements, Company's performance etc. may be sent to investor@gujaratnre.com or addressed to the Company.

9. Auditor's Certificate on Corporate Governance

As per Clause 49 of the Listing Agreement, the Auditor's Certificate on Corporate Governance is annexed to this Report.

For and on behalf of the Board

Arun Kumar Jagatramka

Chairman & Managing Director

Place : Kolkata 55

Dated : 25th May, 2015