CORPORATE GOVERNANCE REPORT
(Pursuant to requirements of regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015)
The directors present the Company's report on corporate governance for the year ended on 31 March 2016.
I. COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE
The Company's corporate governance philosophy is founded upon transparency, accountability, values and ethics and is an integral part of the management in its pursuit for growth and value creation. The Company firmly believes and has consistently practiced good corporate governance. The Company constantly strives towards betterment of these aspects and thereby perpetuate it into generating long term economic value for its shareholders, customers, employees, other associated persons and the society as a whole.
II.BOARD OF DIRECTORS
Composition and size of the board
Your board of directors has a primary role of trusteeship to protect and enhance shareholder value through strategic supervision of the Company by providing direction and exercising the appropriate control. Your board includes eminent professionals who have excelled in their respective areas of specialization and comprises professionals drawn from management, financial, legal and other fields.
The board of directors of the Company currently comprises of 6 directors drawn from diverse fields. It has an optimum combination of independent, woman director, executive as well as non- executive directors which is in conformity with the provisions of regulation 27(2) of SEBI (Listing obligations & disclosure requirements) Regulations, 2015 (herein after referred as "Listing Regulations").
More than two third of the board of directors comprises of non-executive directors including one woman director, with half of the board comprising of independent directors. Thus, the board consists of 6 members, 1 of which is executive full-time director, 5 are non-executive directors out of which 3 are independent directors. The board believes that the current size is appropriate, based on the present circumstances.
None of the directors on the board is a member of more than 10 committees or a chairman of more than 5 committees (as stipulated in regulation 26 of the Listing Regulations), across all the Indian public companies, in which he / she is a director. None of the directors hold shares of the Company as on 31 March 2016 The necessary disclosure regarding the committee position has been made by the directors are given herein below:
Board meetings procedure
The annual calendar of meetings is agreed upon at the beginning of each year or in the last board meeting of the previous year. Board meetings are held once in every quarter. In addition to this, board meetings are convened to transact special businesses, as and when necessary. The meetings are governed by a detailed agenda. All major issues included in the agenda are backed up by comprehensive background information to enable the board to take informed decisions.
The agenda papers, containing detailed notes on various agenda items and other information, which would enable the board to discharge its responsibility effectively, are circulated in advance to the directors. The managing director and the CFO briefs the board at every meeting on the overall performance of the Company. The board is briefed on all the relevant matters of the Company at its meeting. The important matters discussed at the meeting of the audit committee are also highlighted to the board.
Number of board meetings and the attendance of directors during the financial year 2015-16
During the financial year 2015-16, five board meetings were held on 18 May 2015, 3 August 2015, 4 November 2015, 4 February 2016 and 16 March 2016. Attendance record of the directors was as under:
Profile of directors seeking appointment / re-appointment
As per the provisions of the Act, two third of the directors should be retiring directors. One third of these retiring directors are required to retire every year and upon being eligible they qualify for reappointment.
- Mr. Stephen Mark Harrington retires at the ensuing AGM and being eligible has offered himself for re-appointment.
- Mr. Sanjiv Vasudeva seeks consent of the shareholders for his appointment as a managing director and Chief executive officer of the Company liable to retire by rotation.
- Mr. Bhupesh P. Porwal, CFO of the Company seeks consent of the shareholder for his appointment as a whole-time director of the Company liable to retire by rotation.
- Ms. Ryna Karani seeks consent of the shareholders for her appointment as an independent director of the Company.
The resolutions for their appointment / re-appointment along with their profile have been appropriately included in the notice of AGM forming part of this annual report.
Training of board members
All new non-executive directors inducted to the board are introduced to our Company culture through appropriate orientation sessions. Presentations are made by managing director and senior management to provide an overview of our operations, and to familiarize the new non-executive directors with our operations. They are also introduced to our organization structure, our services, group structure and subsidiaries, constitution, board procedures, matters reserved for the Board, and our major risks and risk management policy.
Familiarisation program for independent directors
The Company has conducted a familiarization program for independent directors. The details for the same have been disclosed on the website of the Company at <http://www.styrolutionabsindia.com/pdf/Familiarization%20Programme%20for%20Independent%20Di> rectors.pdf
Responsibilities of the chairman, the chief executive officer and managing director:
Our practice is to have a non - executive chairman of the board - Mr. Stephen Mark Harrington and a chief executive officer (CEO) and managing director (MD) - Mr. Sanjiv Vasudeva. The non-executive chairman of the board ('the Chairman') is leader of the board. As chairman, he will be responsible for promoting the integrity of the board while nurturing a culture where the board works harmoniously for the long-term benefit of the Company and all its stakeholders. The chairman is primarily responsible for ensuring that the board provides effective governance for the Company. The chairman will take a lead role in managing the board and facilitating effective communication among directors. The chairman will actively work with the nomination and remuneration committee to plan the board and board committees' composition, induction of directors to the board, plan for director succession, participate in the board effectiveness evaluation process and meet with individual directors to provide constructive feedback and advice.
The CEO and MD is responsible for the overall management of the Company. He is also responsible for achieving the annual business targets. At each board meeting, he periodically makes presentations, gives explanations and appraises the board about the performance of the Company.
III. AUDIT COMMITTEE MEETINGS
The audit committee comprises of independent directors having expertise in accounting / financial management. During the financial year, audit committee met four times. These were on 18 May 2015, 3 August 2015, 4 November 2015 and 4 February 2016.
Terms of reference
The terms of reference of this include matters specified for audit committees under the Listing Regulations, as well as in section 177 of the Act and rules framed thereunder, and are as follows:
1. Oversight of the listed entity's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
2. Recommendation for appointment, remuneration and terms of appointment of auditors of the listed entity;
3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors;
4. 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 Act,
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.Modified opinion(s) in the draft audit report;
5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval;
6. 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;
7. Reviewing and monitoring the auditor's independence and performance, and effectiveness of audit process;
8. Approval or any subsequent modification of transactions of the listed entity with related parties;
9. Scrutiny of inter-corporate loans and investments;
10. Valuation of undertakings or assets of the listed entity, wherever it is necessary;
11. Evaluation of internal financial controls and risk management systems;
12. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems;
13. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit;
14. Discussion with internal auditors of any significant findings and follow up there on;
15. 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;
16. 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;
17. 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;
18. To review the functioning of the whistle blower mechanism;
19. Approval of appointment of chief financial officer after assessing the qualifications, experience and background, etc. of the candidate;
20. Carrying out any other function as is mentioned in the terms of reference of the audit committee.
21. Review the following information:-
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;
e.The appointment, removal and terms of remuneration of the chief internal auditor shall be subject to review by the audit committee
f. Statement of deviations:
- Quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of regulation 32(1).
- Annual statement of funds utilized for purposes other than those stated in the offer document/prospectus/ notice in terms of regulation 32(7).
IV. STAKEHOLDERS RELATIONSHIP AND GRIEVANCE COMMITTEE Composition
The board has constituted stakeholders relationship and grievance committee to attend and redress the stakeholders' grievances and to maintain harmonious relations with all stakeholders of the Company. During the financial year, the committee met four times i.e. on 18 May 2015, 3 August 2015, 4 November 2015 and 4 February 2016
*Resignation of Mr. Chi and appointment of Mr. Vasudeva was considered in the meeting held on 4 February 2016.
CS. Haresh Khilnani, company secretary , head - legal and compliance is the compliance officer pursuant to the requirements of the Listing Regulations
Share transfers are processed weekly. During the financial year under review no complaints were received via SEBI Complaints Redress System (SCORES). Thus there were no investor complaints which remained unresolved at the end of the year.
Link Intime India Private Limited, registrar and share transfer agent of the Company attend to all the grievances of the stakeholders. The details of complaints received, cleared and pending during the financial year 2015-16 are given as under:
V. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Pursuant to provisions of section 135 of the Act, 'Corporate Social Responsibility Committee' of the board was constituted. During the year under review, the committee met four times on 18 May 2015, 3 August 2015, 4 November 2015 and 4 February 2016.
The Committee is primarily responsible for formulating and recommending to the board of directors a corporate social responsibility (CSR) policy and monitoring the same from time to time, amount of expenditure to be incurred on the activities pertaining to CSR and monitoring CSR Projects.
CS. Haresh Khilnani, company secretary ,head- legal and compliance acts as the secretary to the committee.
VI. NOMINATION AND REMUNERATION COMMITTEE
The nomination and remuneration committee has been constituted by the board which meets on specific need basis.
Besides having access to all required information within the company, the committee may investigate any activity within its terms of reference, seek information from any employee, secure attendance of outsiders with relevant expertise, or obtain legal or other professional advice from external sources, whenever required.
The committee acts as a link amongst the management and the board of directors. The committee shall act in accordance with the terms of reference as set out under clause A of part D of schedule ll of the listing regulations read with section 178 of the Act, which shall, inter alia, include;
I. Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the board a policy, relating to the remuneration of the directors, key managerial personnel and other employees;
II. Formulation of criteria for evaluation of performance of independent directors and the board of directors;
III. Devising a policy on diversity of board of directors;
IV. Identifying 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 of directors their appointment and removal.
V. Whether to extend or continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors.
Board membership criteria
The nomination and remuneration committee works with the entire board to determine the appropriate characteristics, skills and experience required for the board as a whole and for individual members. Board members are expected to possess the required qualifications, integrity, expertise and experience for the position. Board members are expected to prepare for, attend and participate in all board and applicable committee meetings. Each member is expected to ensure that their other current and planned future commitments do not materially interfere with their responsibilities with us. The board is responsible for the selection of new directors. The board delegates the screening and selection process involved in selecting new directors to the nomination and remuneration committee, which consists of majority of independent directors. The nomination and remuneration committee in turn makes recommendations to the board on the induction of any new directors.
Mechanism for evaluating board members
The board works with the nomination and remuneration committee to lay down the evaluation criteria for the performance of executive / non-executive / independent directors excluding the director being evaluated. The Questionnaire of the survey is a key part of the process of reviewing the functioning and effectiveness of the board and for identifying possible paths for improvement. Each board member is requested to evaluate the effectiveness of the board dynamics and relationships, information flow, decision-making of the directors, relationship to stakeholders, company performance, company strategy, and the effectiveness of the whole board and its various committees.
Independent directors are evaluated on the following performance indicators:
• Ability to contribute to and monitor our corporate governance practices;
• Ability to contribute by best practices to address top-management issues;
• Commitment to the fulfillment of a director's obligations and fiduciary responsibilities, these include participation in board and committee meetings.
VII. REMUNERATION TO DIRECTORS Remuneration policy:
The nomination and remuneration committee determines and recommends to the board the remuneration payable to directors. All board-level remuneration is approved by the shareholders and disclosed separately in the financial statements. Remuneration for the executive directors consists of a fixed component and a variable component. The annual remuneration of the executive director is approved by the nomination and remuneration committee and placed before the shareholders at the shareholders' meeting.
The chief executive officer and managing director of the company is entitled to an annual variable pay each fiscal year, which is subject to achievement of certain fiscal year milestones by the Company, as determined by the board. The remuneration payable to the independent directors is limited to a fixed amount per year as determined and approved by the board, the sum of which does not exceed 1% of our net profits for the year, calculated as per the provisions of the Act. The performance of the independent directors is reviewed by the board on an annual basis.
Remuneration to executive director:
The board of directors on the recommendations of nomination and remuneration committee of directors is authorised to decide the remuneration of the whole-time directors, subject to the approval of the members and central government, if required. The remuneration structure comprises of salary, perquisites, retirement benefits as per the law / rules, performance linked incentive (PLI) and commission. Annual increments are decided by the nomination and remuneration committee within the salary grade approved by the Members.
Remuneration to non-executive director:
The non-executive directors (independent directors) are paid remuneration by way of sitting fees and commission. None of existing directors hold any shares in the Company. The compensation payable to the independent directors is limited to fixed amount per year as determined and approved by the board, the sum of which does not exceed 1% of our net profits for the year, calculated as per the provisions of the Act. The performance of the independent directors is reviewed by the board on an annual basis. The details of the remuneration policy adopted by the
Company has been disclosed on the website of the Company at
Directors with materially significant related party transactions, pecuniary or business relationship with the Company.
There have been no materially significant related party transactions, pecuniary transactions or relationships between the Company and its directors that may have potential conflict with the interests of the Company at large.
Apart from drawing sitting fees and commission, none of the independent directors have any other material pecuniary relationship or transactions with the Company, its promoters, its management or its subsidiaries, which in the judgment of the board would affect the independence or judgment of directors
VIII. RISK MANAGEMENT COMMITTEE (NON- MANDATORY COMMITTEE) (as on 31 March 2016)
The purpose of the committee is to assist the board in fulfilling its corporate duties by overseeing the responsibilities with regard to the identification, evaluation and mitigation of operational, strategic and environmental risks. The committee has the overall responsibility of monitoring and approving the risk policies and associated practices of the Company. CS. Haresh Khilnani, company secretary , head- legal and compliance , acts as the secretary to the committee.
a. There were no materially significant related party transactions entered into by the Company with its promoters, directors or management, their subsidiaries or relatives etc. that may have potential conflict with the interests of the Company at large. Transactions with related parties are disclosed under notes to accounts and in form AOC-2 forming part of the board's report.
b. During the last three years, there were no strictures or penalties imposed by either the Securities and Exchange Board of India or the stock exchanges or any statutory authority for non-compliance of any matter related to the capital markets.
c. The Company has established vigil mechanism to provide for the safeguards against victimization of directors and employees who follow such mechanism and to report concerns about unethical behavior, actual or suspected fraud, or violation of the Company's code of conduct and ethics. The board has approved whistle blower policy / establishment of vigil mechanism pursuant to Act clause 49 of the Listing Agreement or Listing Regulations, as may be applicable and affirms that no person has been denied access to the chairman of the audit committee and also to the chairman of the board of the Company. The policy adopted has been put up on the website of the Company on following web link : <http://www.styrolutionabsindia.com/pdf/Whistlerblower_Policy.pdf>
d. In accordance with the requirements of the Listing Regulations, the Company has formulated policies material subsidiaries and on related party transactions which the same has been put up on the website of the Company on following web link <http://www.ineosstyrolutionindia.com> under the corporate governance section.
e. The Company has adopted and complied with all the mandatory requirements of corporate governance as mandated under the provisions of Listing Regulations. Some of the non-mandatory requirements have also been complied with.
XI. DISCRETIONARY REQUIREMENTS AS PER REGULATION 27(1) OF SEBI LISTING REGULATIONS (PART E OF SCHEDULE II):
(A) The board: The Company does not maintain a separate office for the non-executive chairperson.
(B) Audit qualification: There has been no audit qualification in the audit report by the auditor for the period April 2015- March 2016.
(C) Separate posts of chairman and CEO: The chairman and managing director are two separate individuals with vast experience and expertise.
(D) Reporting of internal auditor: The internal auditors of the company submits report to the audit committee regularly.
Risk Management Framework
The board takes responsibility for the overall process of risk management in the organization. Your Company has integrated its risk monitoring procedures with the global policies. Through a detailed risk management programme, each functional head addresses opportunities and the attendant risks through a systematic approach aligned to the Company's objectives. This is also facilitated by internal audit. The results of the risk assessment and residual risks are presented to the senior management. The audit committee also reviews reports covering operational, financial and other business risk areas.
Code of Conduct
The Company has in place the subject code framed specifically in compliance with the provisions of regulation 17 of the Listing Regulations. The matters covered in this code are of utmost importance to the Company, our shareholders, clients and business partners. The purpose of this code is to articulate highest standards of honesty, integrity, ethical and law abiding behavior. It also aims to encourage the observance of these standards to protect and promote the interest of shareholders, employees, customers, suppliers and creditors. It sets out the responsibility and accountability and to report and investigate any reported violations of the code or unethical or unlawful behavior.
The code of conduct applicable to board members and key employees of the Company has been posted on the Company's website. For the year under review, all board members and senior management personnel of the Company have confirmed their adherence to the provisions of the said code.
XII. CEO / CFO CERTIFICATE(S)
The managing director and the chief financial officer have submitted to the board of directors annual certification relating to financial reporting and internal controls for the financial year ended 31 March 2016 as required under the provisions of Listing Regulations.
XIII. MEANS OF COMMUNICATION:
Quarterly, half-yearly and annual results of the Company are published in leading english and vernacular newspapers viz. Business Standard and Vadodara Samachar. Additionally, the results, other important information and official news releases including presentations made for investors or analysts are also periodically updated on the Company's website viz. www.ineosstyrolutionindia.com Further, the related information is uploaded/submitted to stock exchanges (BSE Limited and National Stock Exchange of India Limited) on time to time basis.
Extensive Business Reporting Language (XBRL)
XBRL is a language for electronic communication of business and financial data. It offers major benefits to all those who have to create, transmit, use or analyze such information which aids better analysis and decision making.
Ministry of corporate affairs (MCA) had mandated certain companies to file their annual accounts vide this mode. The Company has filed its annual accounts on MCA through XBRL.
Ministry of Corporate Affairs (MCA)
The Company has periodically filed all the necessary documents with the MCA.
SEBI Complaints Redress System (SCORES)
A centralized web based complaints redress system which serves as a centralized database of all complaints received, enables uploading of action taken reports (ATRs) by the concerned companies and online viewing by the investors of actions taken on the complaint and its current status.
The annual report containing inter alia the audited financial statements, consolidated financial statements, directors' report, auditors' report and other important information is sent to the investors. Pursuant to the green initiative launched by the MCA, the Company also sends e-copies of the annual report to members who have registered for the same. The same are also available on the website of the Company.
XIV. GENERAL SHAREHOLDER INFORMATION
43rd AGM :
Date, Time and Venue
12 August, 2016 (Friday) at 11.30 a.m. at Chandarva Hall', WelcomHotel, R. C. Dutt Road, Alkapuri, Vadodara 390007, Gujarat.
Financial year : 1 April to 31 March
The financial results will be adopted as per the following tentative schedule :
First quarter: Second week of August 2016
Second quarter: Second week of November 2016
Third quarter: First week of February 2017
Fourth quarter: First week of May 2017
Dividend for the year 2015-16
The board of directors of the Company has recommended a final dividend of Rs. 4 (@40 %) per equity share for the year ended on 31 March 2016. Dividend when declared at the annual general meeting will be paid to the members, whose names appear on the register of members as on 5 August 2016.
Date of book closure : 6 August 2016
Dividend Payment date : 19 August 2016
Corporate Identity Number (CIN) : L25200GJ1973PLC002436
Listing on Stock Exchanges
BSE Limited (BSE) Scrip Code:506222
National Stock Exchange of India Limited (NSE)
Scrip Symbol : INEOSSTYRO
Listing fees for the year 2016-17 have been paid to both the stock exchanges within stipulated time.
ISIN for NSDL & CDSL INE189B01011
Reconciliation of share capital Pursuant to regulation 40(9) of the Listing Regulations, certificates, on half-audit yearly basis, have been issued by a company secretary-in-practice for due compliance of share transfer formalities by the company. A company secretary-in-practice carried out a reconciliation of share capital audit to reconcile the total admitted capital with NSDL and CDSL and the total issued and listed capital. The audit confirms that the total issued/paid-up capital is in agreement with the aggregate of the total number of shares in physical form and the total number of shares in dematerialized form (held with NSDL and CDSL).
High/low of market price of the Company's shares traded along with the volumes at BSE and NSE during the financial year April 2015 to March 2016 is furnished below:
Registrar and share transfer agent
Link Intime India Private Limited B -102 & 103, Shangrila Complex, First Floor, Opp. HDFC Bank, Near Radhakrishna Char Rasta, Akota, Vadodara - 390 020. Phone : +91 265 2356573, 2356794 Fax : 2356791. E-mail : firstname.lastname@example.org
Share transfer system
All the transfers received are processed by the registrar and share transfer agent and are processed twice in a month or more depending on the volume of transfers. Share transfers are registered and returned within maximum of 15 days from the date of lodgment if documents are complete in all respect.
Exchange of share certificates.
The shareholders holding share certificates of Styrolution ABS (India) Limited , INEOS ABS (India) Limited, LANXESS ABS Limited, Bayer ABS Limited and/or ABS Industries Limited are requested to surrender the same at the Company's registered office at 6th Floor, ABS Towers, Old Padra Road, Vadodara - 390007 to get their share certificates with changed name of the Company i.e. INEOS Styrolution India Limited. However the share certificates with the name Styrolution ABS (India) Limited are also good for delivery in the market.
Dividend declared for the year 2008 has been transferred to the investor education and protection fund (IEPF) administered by the central government and accordingly no claim shall lie in respect thereof.
Bank details for the purpose of dividend
Payment of dividend will be made through National Electronic Clearing Service (NECS) at the RBI Centers by crediting the dividend amount to the bank of the shareholders wherever relevant information is made available to the Company. Members holding shares in physical form and covered under RBI centers, who have not furnished requisite information and who wish to avail of the NECS facility to receive dividend from the Company, may furnish the information to the Company or Link Intime India Private Limited, the registrar and share transfer agent. The members holding shares in electronic form may furnish the information to their depository participants, for receiving dividend through NECS mechanism
Trading window In accordance with the code of conduct for prevention of insider trading adopted by the Company, Company closes trading window for designated employees from time to time. As per policy, trading window is closed from the third day of the close of the quarter for which financial results are prepared and opened after 3 days of conclusion of board meeting in which the financial results are approved. The trading window is also closed during and after occurrence of price sensitive events as per the code for prevention of insider trading.
Outstanding GDRs / ADRs / warrants or any convertible instruments, likely to impact on equity as on March 31, 2016: Not issued.
Report on corporate governance;
The Company regularly submits to the stock exchanges, within the prescribed period, quarterly reports on corporate governance in hard copy and additionally electronically to the BSE & NSE.
Office of the chairperson : The Company has a non-executive chairperson.
Plant locations : The Company's plants are located at Nandesari, Dahej, Katol and Poicha (Moxi) in Gujarat. Please refer page no. 1. of this annual report for the addresses of plant locations.
Address for correspondence
Shareholders' correspondence should be addressed to the Company's registrar and share transfer agent at the address mentioned above.
Shareholders may also contact CS. Haresh Khilnani, company secretary, head - legal and compliance, at the registered office of the Company for any assistance. Email ID : email@example.com Tel. No. +91 265 2303201-02 Fax. +91 265 2303203 Website : www.ineosstyrolutionindia.com
Shareholders holding shares in electronic mode should address all their correspondence to their respective depository participants.