REPORT ON CORPORATE GOVERNANCE
Pursuant to Clause 49 to the Listing Agreement, a report on Corporate Governance, for the year ended 31st March, 2015, is given below:
1. Company's Philosophy on Code of Governance:
Your Company is committed to bring about good corporate governance practices. The Company's policy on Corporate Governance is to make it a way of life by, inter alia, adopting the standard Corporate Governance practices through continual improvement of internal systems and satisfaction of customers and shareholders. It strongly believes in attaining transparency, accountability and equity, in all its operations, and in its interactions with stakeholders including shareholders, customers, vendors, employees, government and lenders.
2. Board of Directors:
(a) Composition of the Board
The Board is headed by Mr. Ness N. Wadia, Non-Executive Chairman and is composed of eminent persons with considerable professional experience in varied fields and comprises a majority of Non-Executive Directors. The composition of the Board of Directors meets the requirement of Clause 49-II(A) of the Listing Agreement, as detailed in the table at item 2(c) below.
The size and composition of the Board conforms to the requirements of Corporate Governance norms as stipulated under the provisions of the Listing Agreement entered into with the Stock Exchange.
(b) Board Meetings and Annual General Meeting:
During the year under review, 5 Board Meetings were held. The dates on which the meetings were held are: 29th May, 2014; 11th August, 2014; 11th November, 2014, 6th February, 2015 and 23rd March, 2015. The AGM was held on 11th August, 2014.
3. Board Committees:
The Board has constituted the following Committees of Directors:
(a) Audit Committee:
The Audit Committee of the Company is constituted in line with the provisions of Section 177 of the Companies Act, 2013 read with revised Clause 49 of the Listing Agreement. The Committee comprises of members who possess financial and accounting expertise/exposure.
The Managing Director, the Chief Financial Officer, the Statutory Auditors, the Internal Auditors and the Cost Auditors attend the Audit Committee Meetings as invitees.
The Company Secretary acts as the Secretary to the Audit Committee.
The Company adopted a revised Audit Committee Charter, containing the terms of reference effective from 1st October, 2014 in accordance with the Companies Act, 2013 and Clause 49 of the Listing Agreement.
The role of the Audit Committee flows directly from the Board of Directors' overview function on corporate governance, which holds the Management accountable to the Board and the Board accountable to the stakeholders. The term of reference of the Audit Committee broadly includes acting as a catalyst, in helping the organization achieve its objectives. The Audit Committee's primary role is to review the Company's financial statements, internal financial reporting process, internal financial controls, the audit process, adequacy, reliability and effectiveness of the internal controls systems and risk management process, vigil mechanism, related party transactions, monitoring process for compliance with laws and regulations and the code of conduct. The Audit Committee also reviews management letters and the responses thereto by the management.
Internal Audit and Control:
M/s. Haribhakti & Co. LLP were the Internal Auditors of the Company for the financial year 2014-15. Their internal audit plan and remuneration are approved by the Audit Committee. The reports and findings of the internal auditor and the internal control system are periodically reviewed by the Audit Committee.
M/s. Mahajan and Aibara, Chartered Accountants, Mumbai, were appointed as Internal Auditors for the financial years 2015-16 & 2016-17.
(b) Nomination and Remuneration Committee:
In view of the mandatory requirement of the Companies Act, 2013, to constitute a Nomination & Remuneration Committee of Directors, the existing Remuneration Committee of the Company has been renamed as 'Nomination and Remuneration Committee'.
The Committee's constitution and terms of reference are in compliance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
Terms of Reference:
The terms of reference of the 'Nomination & Remuneration Committee' inter-alia includes the following:
i. To identify persons who are qualified to become Directors and who may be appointed in the senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and to carry out evaluation of every Director's performance along with the Board.
ii. 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.
iii. Formulation of criteria for evaluation of Independent Directors and the Board.
iv. Devising a policy on Board Diversity.
v. Evaluate the level and composition of remuneration to be reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully.
The remuneration policy of the Company is performance-driven and structured to motivate the employees, recognise their merits and achievements and promote excellence in their performance. The broad terms of reference of the Nomination and Remuneration Committee includes:
>- Setup and composition of the Board, its committees and the leadership team of the Company comprising of Key Managerial Personnel (KMP) and Executive Team.
>- Evaluation of performance of the Board, its Committees and individual Directors.
>- Remuneration for Directors, KMPs, executive team and other employees.
>- Oversight of the familiarization programme of Directors.
>- Oversight of the HR Philosophy, HR and People strategy and Key HR practices. Remuneration Policy:
Payment of remuneration to the Managing Director is governed by the agreement executed between him and the Company. The Board and the shareholders have approved the agreement for re-appointment of the Managing Director for a period of 5 years w.e.f. 1st May, 2013. The criteria adopted by the Committee to determine the remuneration of the Managing Director is the performance of the Company and the industry benchmarks. The remuneration structure comprises salary, incentive allowance, commission linked to profits, perquisites and allowance, contribution to provident fund and superannuation fund.
The Non-Executive Directors do not draw any remuneration from the Company. The Non-Executive Directors are paid sitting fees for their commitment towards attending the meetings of the Board/Committees and commission on the basis of their performance as may be determined by the Board from time to time. The commission payable to them is distributed broadly on the basis of their attendance and contributions at Board/Committee Meetings and Chairmanship of Committees of the Board
(c) Stakeholders' Relationship Committee:
The Board at its meeting held on 29th May, 2014 renamed its existing Committee, viz. Shareholders'/Investors' Grievance Committee as "Stakeholders' Relationship Committee".
The Committee's constitution and terms of reference are in compliance with the provisions of Section 178(5) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
Terms of Reference:
The broad terms of reference of the said Committee are as follows:
i. To look into the redressal of grievances such as transfer/ transmission of security, non-receipt of annual reports, dividends, interest etc. of various stakeholders of the Company viz. shareholders, debenture holders, fixed deposit holders and other security holders.
ii. To monitor transfers, transmission, splitting, consolidation, dematerialisation, rematerialisation of securities issued by the Company and issue of duplicate security certificates. As per Rule 6(2)(a) of the Companies (Share Capital and Debentures) Rules, 2014, a duplicate share certificate is to be issued in lieu of a lost or destroyed certificate, only with the prior consent of the Board or Committee thereof. Accordingly, duplicate share certificates are now issued with the prior approval of the Committee.
iii. To carry out the functions as envisaged under the Code of Conduct to regulate, monitor and report trading by insiders and code of practices and procedures for fair disclosures of unpublished price sensitive information adopted by the Company in terms of Regulations 8(1), 9(1) and 9(2) of SEBI (Prohibition of Insider Trading) Regulations, 2015.
Name and designation of Compliance Officer:
Mr. Hanoz Chinoy, Company Secretary, was designated as Compliance Officer under the provisions of the Listing Agreement. Mr. Chinoy resigned as the Company Secretary of the Company with effect from 20th April, 2015.
Accordingly, Ms. Seema Jagnani was appointed as the Company Secretary of the Company with effect from 21st April, 2015 and also designated as Compliance Officer under the provisions of the Listing Agreement.
No. of shareholders' complaints received during the year : 5
No. of complaints not solved to the satisfaction of shareholders : Nil
No. of pending complaints : Nil
(d) Finance Committee: Terms of Reference:
The terms of reference of the Finance Committee include:
(a) Liability Management — to meet the funding requirements of the Company;
(b) Foreign Exchange Management;
(c) Investment Management — to deploy short-term/long-term surpluses of the Company. The Committee is also authorized to lend/place ICDs with other Companies.
(e) Executive Committee:
The Committee was constituted on 11th April, 2014. Terms of Reference:
The broad terms of reference of the Committee include:
i. Review with the Managing Director and the Business/Operational Heads of the operating divisions, from time to time, business plans and strategies.
ii. Address issues related to capital expenditure.
iii. Review of performance of the business of the Company.
(f) Corporate Social Responsibility (CSR) Committee:
The Committee's constitution and terms of reference are in compliance with the provisions of Section 135 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
Terms of Reference:
The broad terms of reference of the Committee include:
(i) review the existing CSR Policy from time to time and the activities to be undertaken by the Company towards CSR activities;
(ii) recommend the projecl/programme to be undertaken, amount of expenditure to be incurred, roles and responsibilities of various stakeholders, etc. in respect of CSR activities; and
(iii) monitor for ensuring implementation of the projects/programmes undertaken or the end use of the amount spent by the Company towards CSR activities
4. Independent Directors' Meeting:
During the year under review, the Independent Directors met on 23rd March, 2015, inter alia, to discuss:
• Evaluation of the performance of the Board as a whole;
• Evaluation of performance of the Non-Independent, Non-Executive Directors and the Board Chairman.
• To assess the quality, quantity and timelines of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform its duties.
All the Independent Directors were present at the meeting.
Familiarisation programme for Independent Directors:
The Board members are provided with necessary documents/brochures and reports to enable them to familiarise themselves with the Company's procedures and practices. Periodic presentations are made at the Board and Board Committee Meetings, on business and performance updates of the Company, business strategy and risks involved.
Updates on relevant statutory changes encompassing important laws are regularly circulated to the Directors.
The details of familiarisation programmes have been posted on the Company's website at www.naperol.com and can be accessed at web-link <http://www.naperol.com/pdf/boardpolicies/Familiarization_Programme.pdf>.
Pursuant to the provisions of the Companies Act, 2013 ("Act") and the Corporate Governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreement ("Clause 49") (as may be applicable), the Board of Directors ("Board") has carried out an annual evaluation of its own performance, and that of its committees and individual directors.
The performance of the Board and individual directors was evaluated by the Board seeking inputs from all the Directors. The performance of the committees was evaluated by the Board seeking inputs from the committee members. The Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors. A separate meeting of Independent Directors was also held to review the performance of non-independent directors; performance of the Board as a whole and performance of the Chairman of the Company, taking into account the views of executive directors and non-executive directors. This was followed by a Board Meeting that discussed the performance of the Board, its committees and individual directors.
The criteria for performance evaluation of the Board included aspects like Board composition and structure; effectiveness of Board processes, information and functioning etc. The criteria for performance evaluation of committees of the Board included aspects like composition of committees, effectiveness of committee meetings etc. The criteria for performance evaluation of the individual directors included aspects on contribution to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc. In addition the Chairman was also evaluated on the key aspects of his role.
(b) Whether Special Resolutions were passed through postal ballot last year and details of voting pattern : Nil
(c) Person who conducted the postal ballot exercise : Not Applicable
(d) Whether any Special Resolution is proposed to be passed through postal ballot this year (2015-16):
During the current year, if Special Resolutions are proposed to be passed through postal ballot, those will be taken up at the appropriate time.
(e) Procedure for Postal Ballot:
The procedure for conducting the postal ballot exercise would be as per Section 110 of the Companies Act, 2013, read with the Companies (Management and Administration) Rules, 2014, as amended from time to time.
6. Other Disclosures:
(a) Related Party Transactions
All transactions entered into with Related Parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year were in the ordinary course of business and on an arm's length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company. Suitable disclosure as required by the Accounting Standards (AS-18) has been made in the notes to the Financial Statements.
As required under Clause 49(VIII) of the Listing Agreement with the Stock Exchange, the Company has formulated a policy on Related Party Transactions which has been posted on the website of the Company: <http://www.naperol.com/pdf/boardpolicies//RPT_Policy.pdf>.
(b) Disclosure of Accounting Treatment
I n the preparation of financial statements, the Company has followed the Accounting Standards issued by the Institute of Chartered Accountants of India to the extent applicable and notified under the Companies Act, 2013.
(c) Risk Management
A detailed review of business risks and the Company's plan to mitigate them is presented to the Audit Committee and Board. The Company has been taking steps to mitigate foreseeable business risks. Business risk evaluation and management is an ongoing and continuous process within the Company and regularly updated to the Audit Committee and the Board.
The Company has formulated a Risk Assessment & Management Policy, duly reviewed by the Audit Committee, establishing the philosophy of the Company towards risk identification, analysis and prioritization of risks, development of risk mitigation plans and reporting to the Board periodically. The Policy would be applicable to all the functions and departments of the Company. The Risk Assessment & Management Policy would be implemented through the establishment of the Risk Management Committee accountable to the Board of Directors. The Committee shall include the Managing Director (MD), Chief Financial Officer, Internal Auditor of the Company and such other members as included by the Board/MD. The MD will be the Chairman of the Committee.
(d) Code of Conduct
The Board of Directors has adopted the Code of Ethics and Business Principles for the Non-Executive Directors as also for the employees including Managing Director and other Members of Senior Management. The said Code has been communicated to all the Directors and Members of the Senior Management. The Code has also been posted on the Company's website www.naperol.com
(e) Vigil Mechanism/Whistle Blower Policy
The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour. Towards this end, the Company has implemented a Whistle Blower Policy, with a view to provide a mechanism for employees and Directors of the Company to approach the Ethics Counsellor or the Chairman of the Audit Committee of the Company to report instances of violations of laws, rules and regulations, unethical behaviour, actual or suspected, fraud or violation of the Company's Code of Conduct or Ethics Policy. The Whistle Blower Policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination will be meted out to any person for a genuinely raised concern. The vigil mechanism also provides adequate safeguards against victimisation of persons who use such mechanisms and also to ensure direct access to the Ethics Counsellor or the Chairman of the Audit Committee in appropriate or exceptional cases. The Policy is applicable to all the employees, directors, officers, customers, vendors and/or third party intermediaries such as agents and consultants whether appointed on permanent, temporary, full time, part-time, contractual, probation or on retainer basis who are engaged to conduct business on behalf of the Company and its Subsidiary Company.
The Company has posted "Whistle Blower Policy" on the website of the Company at: <http://www.naperol.com/pdf/boardpolicies/Whistle-Blower-Policy.pdf>.
( f) Prevention of Insider Trading Code:
The Company has adopted a Code of Conduct to regulate, monitor and report trading by insiders and code of practices and procedures for fair disclosures of unpublished price sensitive information in terms of Regulations 8(1), 9(1) and 9(2) of SEBI (Prohibition of Insider Trading) Regulations, 2015.
All the Directors, employees at senior management level and other employees who could have access to unpublished price
(g) Details of non-compliance by the Company, penalties, strictures imposed on the Company by Stock Exchange or SEBI or any statutory authority, on any matter related to capital markets, during the last three years: None
(h) Policy for Prevention of Sexual Harassment in the Company:
The Company values the dignity of individuals and strives to provide a safe and respectable work environment to all its employees. The Company is committed to providing an environment, which is free of discrimination, intimidation and abuse. Pursuant to Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013 and rules made there under, the Company has a Policy for prevention of Sexual Harassment in the Company. All employees (permanent, contractual, temporary and trainees) are covered under this policy.
Further, The Company has set up an Internal Complaints Committee for providing a redressal mechanism pertaining to sexual harassment of the employees at workplace.
Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013.
7. CEO / CFO Certification
Mr. S. R. Lohokare, Managing Director and Mr. A. V. Naik, Chief Financial Officer, have certified to the Board in accordance with Clause 49 of the Listing Agreement pertaining to CEO/CFO certification for the financial year ended 31st March, 2015.
8. Means of Communication:
(a) Quarterly Results:
The unaudited quarterly results are announced within 45 days from the end of the quarter and the audited annual results within 60 days from the end of the last quarter, as stipulated under the Listing Agreement with BSE Limited.
(b) Newspapers wherein results normally published:
Business Standard (English) and Mumbai Lakshadeep (Marathi, the regional language).
(c) Any Website, where displayed: www.naperol.com and www.bseindia.com
(d) Whether Website also displays official news releases : No
(e) Whether presentations made to institutional investors or to the analysts : No
(f) Management Discussion & Analysis Report :
The Management Discussion & Analysis Report forms part of the Annual Report.
9. General Shareholder Information:
(a) Annual General Meeting : Tuesday, 11th August, 2015 at 4.00 p.m. at Sunville Banquet & Conference Rooms, 9, Dr. Annie Besant Road, Near Worli Flyover, Worli, Mumbai-400018
(b) Financial Year: The financial year is from 1st April to 31st March.
Results for quarter ending 30th June, 2015 : By August 2015
Results for quarter ending 30th September, 2015 : By November 2015
Results for quarter ending 31st December, 2015 : By February 2016
Results for year ending 31st March, 2016 : By May 2016
AGM for year ending 31st March, 2016 : By August 2016
(c) Date of Book Closure : 29th July, 2015 to 11th August, 2015 (both days inclusive)
(d) Dividend Payment Date : On or after 12th August, 2015
(e) Listing on Stock Exchange : The Company’s shares are listed on BSE Limited. The Company had paid applicable listing fees to BSE Limited for Financial Year 2015-16.
(f) Stock Code:
Demat Code : 500298
Demat ISIN Number for NSDL & CDSL : INE585A01020
Scrip ID* : NATPEROX
*(on the BSE website – www.bseindia.com)
Corporate Identification Number : L24299MH1954PLC009254
Data based on BSE websites: URL "<http://www.bseindia.com/histdata/stockprc2test.asp>" & URL "<http://www.bseindia.com/> histdata/hindices2.asp"
(i) Registrar and Transfer Agents:
Sharex Dynamic (India) Pvt. Ltd.,
Unit No. 1, Luthra Industrial Premises, Andheri Kurla Road, Safed Pool, Andheri (E), Mumbai - 400 072. Tel: 022-2851 5644 / 2851 5606 E-mail Id: firstname.lastname@example.org
(j) Share Transfer System:
Share transfers in physical form are processed within the prescribed period of 15 days from the date of receipt, in case documents are complete in all respects.
(l) Dematerialisation of Shares and Liquidity:
97.54% of the outstanding Equity Shares have been dematerialised upto 31st March, 2015. Trading in Equity Shares of the Company is permitted only in dematerialised form w.e.f. 28th May, 2001, as per notification issued by the Securities and Exchange Board of India (SEBI). The trading / liquidity details are given at item 9(g) above.
(m) Share Capital Audit:
As stipulated by SEBI, a qualified practising Company Secretary carries out the Share Capital Audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and shares held in physical form as per the register of members vis-a-vis the total issued and listed capital. This audit is carried out every quarter and the report is submitted to BSE Ltd. and is also placed before the Board of Directors.
(n) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, conversion date and likely impact on Equity: None
(o) In terms of Section 205C of the Companies Act, 1956 (Section 124 of the Companies Act, 2013), read with the Investor Education and Protection Fund (Awareness and Protection of Investor) Rules 2001, the Company has credited during the year ended 31st March, 2015, a sum of Rs. 2,63,046/- to the Investor Education and Protection Fund (IEPF).
(p) Plant Location
(q) Address for Correspondence:
For Shares held in Physical Form : Sharex Dynamic (India) Pvt. Ltd. at the address given at item 9(i) above.
For Shares held in Demat Form : To the Depository Participant.
For any query on Annual Report/ : The Company Secretary,
Dividend/Investors’ Assistance : National Peroxide Ltd., C-1, Wadia International Centre (Bombay Dyeing), Pandurang Budhkar Marg, Worli, Mumbai-400 025 Ph: 022-66620000; Fax: 022-66193421.
(r) As required in terms of Clause 47(f) of the Listing Agreement, the Company has designated an e-mail ID exclusively for the purpose of registering complaints by investors. The e-mail ID is email@example.com
10. Non-Mandatory Requirements:
(a) Office of the Chairman of the Board:
The Company partly defrays the expenses of the Chairman's Office.
(b) Shareholder Rights:
The Company's half-yearly results are furnished to the Stock Exchange and also published in the newspapers and therefore not sent to the shareholders.
Adoption of other non-mandatory requirements under Clause 49 of the Listing Agreement is being reviewed by the Board from time to time.
Place : Mumbai,
date : 26th May, 2015