REPORT ON CORPORATE GOVERNANCE
Company's Philosophy on Code of Governance
Transparency, accountability and integrity are the main ingredients of good Corporate Governance. Your Company as a Corporate Citizen, believes in adhering to the highest standards of Corporate Governance.
Board of Directors Composition
As on 31st March, 2015, the Board of Directors of your Company comprised an Executive Chairman, five Executive Directors and two Non-Executive Directors.
The composition of Board of Directors as on 31st March, 2015 was not in compliance of Clause 49 of the Listing Agreement and DPE Guidelines on Corporate Governance with regard to having not less than 50% of the Board comprising of Non-Executive Directors and Independent Directors.
The Company is a Government Company and as per the Articles of Association of the Company, the power to appoint Directors on the Board of the Company vests with the President of India. The issue relating to the appointment of the required number of Independent Directors on the Board of the Company has been referred to Ministry of Coal, the Administrative Ministry and the appointment is in process.
The Chairman-cum-Managing Director (CMD) has been delegated with certain administrative and financial powers by the Board of Directors. Major decisions involving large capital expenditure, annual plans, award of major contracts, mobilisation of resources, loans and investments (other than short-term investments), borrowings, all policy decisions including policies relating to all human resource matters are decided only at the meetings of the Board. The Board of Directors of the Company has constituted various Sub-committees of the Board as detailed in this report and the said committees exercise the powers as per the delegation granted.
Dates of Board Meetings and Directors' Attendance
During the financial year 2014-15, 9 meetings of the Board of Directors were held on the following dates:
25th April, 2014, 23rd May, 2014, 7th August, 2014, 24th September, 2014, 4th October, 2014, 7th November, 2014, 27th January, 2015, 12th February, 2015 and 23rd March, 2015
Annual General Meeting
Shri. B. Surender Mohan, CMD, Dr. A.K. Dubey, Shri.Rakesh Kumar and Shri. S. Rajagopal, Directors attended the last AGM held on 24th September, 2014.
The following Sub-committees have been constituted by the Board of Directors:
This Committee comprises Chairman-cum-Managing Director, Director (Finance), Director (Planning & Projects) and the Functional Director concerned, in whose operational area, the proposal belongs to, as its Members. This Committee accords approval for certain activities relating to purchase/contracts, as delegated by the Board, prior to award of order/ contract.
Sub-Committee on Purchase/Contracts
The Sub-committee on Purchase/Contracts accords approval for award of order/contract as per the delegation granted by the Board of Directors. Presently, this committee comprises Shri B. Surender Mohan, CMD as its Chairman and Sarvashri Rakesh Kumar, S.Rajagopal, Subir Das and S.Boopathy, Directors as its Members.
The Project Sub-committee has been constituted by the Board of Directors of the Company to examine the proposals including Feasibility Reports for investment in New/Expansion/Joint Venture Projects or any capital expenditure exceeding the value prescribed by the Board and to make appropriate recommendations to the Board. Further, this Committee has also been mandated by the Board to review periodically the status of projects under implementation by the Company. This Committee presently comprises Shri B. Surender Mohan, CMD as its Chairman and Sarvashri Rakesh Kumar, S.Rajagopal, Subir Das and S.Boopathy, Directors as its Members.
The Audit Committee of Board of Directors presently comprising Smt. Sujata Prasad, Director as its Chairperson and Sarvashri S.K. Acharya, S. Rajagopal and S. Boopathy, Directors as its Members. The terms of reference of Audit Committee conform to the requirements of Section 177 of the Companies Act, 2013, Clause-49 of the Listing Agreement with the Stock Exchanges and the DPE guidelines on Corporate Governance.
The composition of Audit Committee, the requirement to have an Independent Director as the Chairman of the Audit Committee and the quorum prescribed were not complied with after 24th September 2014, in the absence of Independent Directors on the Board. The Chairman of the Audit Committee was not present at the last AGM held on 24th September 2014 since the then Chairman relinquished his directorship with effect from the above date.
committee for Contribution/Donation/Sponsorship
This Sub-committee of Board of Directors accords approval for proposals for Contribution/Donation/ Sponsorship by the Company up to the value delegated by the Board. This Committee presently comprises Shri B. Surender Mohan, CMD as its Chairman and Sarvashri Sarat Kumar Acharya, Rakesh Kumar and Subir Das, Directors as its Members.
Sub-committee for Resource Mobilisation
This Committee presently comprising Shri B.Surender Mohan, CMD as its Chairman and Sarvashri Rakesh Kumar, S. Rajagopal and Subir Das, Directors as its Members accords approval for carrying out certain delegated functions in connection with the borrowing/debt raising proposals which have been approved by the Board.
Sub-committee for Short-term Investment
Surplus money, as may be available with the Company from time to time are placed as Short-term deposits as per DPE guidelines and the Board approved investment policy, with the approval of this Sub-committee presently comprising Shri B. Surender Mohan, CMD as its Chairman, Shri Rakesh Kumar, Director and any one of the other Functional Directors as its Members.
Committee of Directors for issue of Share/Bond Certificates
This Sub-committee presently comprising Smt. Sujata Prasad, Director as its Chairperson and Sarvashri Rakesh Kumar and S.Boopathy, Directors as its Members, accords approval for issue of Share Certificates against split/consolidation/duplicate share/bond certificate requests and also for issue of share/bond certificates against rematerialisation requests and in lieu of mutilated certificates.
Stakeholders Relationship Committee
This Committee presently comprising Smt. Sujata Prasad, Director as its Chairperson and Shri. Rakesh Kumar and Shri S. Rajagopal Directors as its Members, look into the redressal of Stakeholders/Investors grievance and review the action taken by the Company. M/s. Integrated Enterprises (India) Ltd., Chennai, is the Share Transfer Agent and the Depository Registrar (STA & DR) of the Company and they attend to transfers/transmission requests lodged with the Company. The STA & DR also co-ordinate with NSDL & CDSL, the Depositories and attend to Investors' complaints.
The complaints received from shareholders are monitored regularly and redressal action is taken immediately. During the year 2014-15, 158 complaints were received from the shareholders/investors, generally pertaining to non-receipt of Dividend and Annual Reports. As per the report received from the Share Transfer Agent, there were 2 complaints pending for redressal as on 31.03.2015 and all have been redressed during the month of April 2015. As reported by the STA & DR, all share transfers received upto 31st March, 2015 have been processed.
As per the Listing Agreement, the Company Secretary is the Compliance Officer and the activities of the STA & DR are under the supervision of the Compliance Officer.
Sub-committee for Pricing of Lignite and Power
This Committee presently comprising Shri B.Surender Mohan, CMD as its Chairman and Sarvashri Rakesh Kumar, S.Rajagopal and Subir Das, Directors as its Members approves the policies and issues relating to transfer price of lignite, lignite price and policy in respect of sales to outsiders and further approval of this Committee is required for fixation of tariff for power sales, if any, made to direct consumers.
Nomination and Remuneration Committee
The appointment of Executive Directors including the Chairman-cum-Managing Director is contractual in nature and the remuneration is paid to them as per the terms of their appointment made by the Government of India. The remuneration of Part-time Official Directors is governed by their respective Government rules. Sitting fees are paid to Independent Directors. However, for finalising the Performance Related Pay for Executive Directors, Executives and Non-unionised Supervisors, as required under the DPE guidelines, the Board had earlier constituted the Remuneration Committee and the said Committee has been renamed as "Nomination and Remuneration Committee", in terms of the provisions of the Companies Act, 2013 and Clause-49 of the Listing Agreement with the terms of reference limited to below Board Level employees only and as per DPE Guidelines for payment of Performance Related Pay. The Committee met once during the year under review and all the then Members excepting Shri C.V. Sankar attended the meeting. The present composition of the Committee is Smt. Sujata Prasad, Director as its Chairperson, Shri S.K. Acharya, Director as its Member Convenor and Shri Rakesh Kumar, Director as its permanent invitee. As stated earlier in the absence of Independent Directors on the Board, the composition of this Committee as on 31st March 2015 was not as per the requirements of Listing Agreement and DPE guidelines on Corporate Governance.
NLC is a Public Sector Undertaking and the appointment of Directors, both Executive and Non-Executive are made by the Government of India. Therefore, the Company has not laid down any criteria for performance evaluation of the Independent Directors and the Board.
Being a Government Company, the remuneration of Board level Directors is fixed by the Government, the appointing authority. In respect of Executives and Supervisors the same is fixed as per the guidelines issued by Department of Public Enterprises and in respect of workmen as per the settlement reached with the recognised unions under the Industrial Disputes Act.
Corporate Social Responsibility Committee
Consequent on the relinquishment of Shri. C. Balakrishnan, this sub-committee presently comprises Shri. Sarat Kumar Acharya, Director as its Chairman and Sarvashri Rakesh Kumar, S. Rajagopal and Subir Das, Directors as its Members. As stated earlier, in the absence of Independent Directors on the Board, the present Composition of the Committee do not comply with provisions of Companies Act, 2013.
Risk Management Committee
The Risk Management Committee has been constituted by the Board of Directors of the Company to review the periodic reports on risk matters and submit appropriate recommendations to Board. Consequent on the relinquishment of Shri. C. Balakrishnan, this Committee presently comprises Shri S. Boopathy and Shri. Rakesh Kumar, Directors as its Members.
The service contract/notice period/ severance fee etc., for the above Directors are as per the terms of appointment made by the Government of India. During the year 2014-15, no bonus/ commission was paid and no Stock Options were issued to them.
No remuneration is being paid to Part-time official Directors nominated by the Government of India and to the Independent Directors on the Board. Independent Directors are being paid Sitting fee @ Rs. 20,000/-for attending the meetings of the Board of Directors and Rs.15,000/- for the meetings of the Sub-Committees thereof.
Code of Conduct
As required under the Listing Agreement, the Board of Directors of the Company have laid down a Code of Conduct applicable for all Board Members and Senior Management Personnel of the Company. In this regard, a declaration by the Chairman-cum-Managing Director is reproduced below:
"I hereby confirm that all the Members of the Board and Senior Management Personnel to whom the Code of Conduct was applicable have affirmed compliance of the above code for the year ended 31st March, 2015".
No special resolution was passed in the previous three Annual General Meetings.
During the year 2014-15, Shareholders' approval by way of special resolution was obtained through Postal Ballot pursuant to the provisions of Section 110 of the Companies Act, 2013 read with the rules prescribed under the Companies (Management and Administration) Rules, 2014, for (1) Creation of mortgage/charge on the assets of the Company for securing the borrowing from time to time and (2) Alteration of Articles of Association of the Company.
The Postal Ballot Notice dated 11th December,2014 together with Explanatory Statement under Section 102 of the Companies Act,2013 was sent to all Members whose names appeared on the Register of Members/List of beneficial owners as on 19th December, 2014, being the cut-off date. Shri. R. Balasubramaniam, Practising Company Secretary was appointed as the scrutiniser to conduct the above Postal Ballot.
The details of the voting are as under:
The Special Resolutions as mentioned in the notice of the postal ballot dt. 11.12.2014 had been passed with the requisite majority on 05.02.2015.
Any decision for matters requiring approval of shareholders to postal ballet system will be obtained as per the procedures laid down under Act.
During the year under review the Company did not enter into any contracts/arrangements/transactions with any Related Party which are not at arm's length basis and no material contracts/arrangements were entered into with them at an arm's length basis. The policy on related party transaction is available at <http://www.nlcindia.com/investor/RPT_new.pdf> The Company has formulated a policy for determining 'Material' subsidiaries and the same is available at <http://www.nlcindia.com/investor/SUBSIDIARY-POLICY.pdf> No materially significant related party transactions were entered in to that may have potential conflict with the interests of the Company at large.
The Company has formulated Whistle Blower Policy and it is affirmed that no personnel have been denied access to the Audit Committee.
None of the Directors/KMPs of the Company are inter-se related as on 31.03.2015.
No penalties/strictures have been imposed on the Company by the Stock Exchanges or SEBI on any matters relating to capital markets during the last 3 years. Details of administrative office and financial expenses for the year under review and for the previous year are available in the annual accounts. No Presidential Directive was received during the year and also in the last 3 years.
Means of Communication
The quarterly and yearly financial results are furnished immediately to the Stock Exchanges where the Company's equity shares are listed. The quarterly financial results are generally published in Business Line and Dinamani (Tamil) while the annual financial results are generally published in The Hindu, Business Line, The Economic Times, The Financial Express, Business Standard, New Indian Express (Tamil Nadu), Deccan Chronicle and Dinamani (Tamil). The financial results are also made available in the Company's website-www.nlcindia.com in addition to furnishing of the same to the Corporate Filing and Dissemination System, NEAPS portal of NSE and Listing Centre portal of BSE. The Company's official news releases are also being made available in the Company's website.
General Shareholder Information
AGM : Date, day, time and venue :
16th September, 2015 - Wednesday - 15.00 Hours "Sathguru Gnanananda Hall", Narada Gana Sabha, No. 314, TTK Road, Alwarpet, Chennai - 600 018.
Financial Calendar for the year 2015-16
Results for the quarter ending 30th June, 30th September, 31st December : Within 45 days from the end of the quarter.
Audited Yearly results : Within 60 days from the end of the financial year
Name of the Stock Exchange Stock Code
Bombay Stock Exchange Ltd. : 513683
National Stock Exchange of India Ltd. : NEYVELILIG
Date of Book Closure
The Register of Members and the Share Transfer Register of the Company would remain closed from 10.09.2015 to 16.09.2015 (both days inclusive) for the purpose of ascertaining the list of shareholders entitled for final dividend, if any, declared at the ensuing Annual General Meeting.
Dividend payment date
The Final Dividend, if declared at the AGM, would be paid to the shareholders within 30 days from the date of AGM
Listing on Stock Exchanges and payment of Listing fees
The equity shares of the Company and the Neyveli Bonds 2009 are presently listed with the Bombay Stock Exchange Limited and National Stock Exchange of India Limited. Listing fees have been paid to both the Stock Exchanges upto the year 2015-16.
Share Transfer System
The share transfer requests lodged with the Company are processed by the Company's Share Transfer Agent and approved by the Sub-committee for Investor Servicing constituted with senior officers of the Company, which meets depending upon the requirement.
Depository Registrar and Share Transfer Agent
M/s.Integrated Enterprises (India) Ltd., is the Depository Registrar and Share Transfer Agent for the Company. The details of their address, contact numbers are as under:
Address: II Floor, 'Kences Towers',No.1, Ramakrishna Street, North Usman Road, T.Nagar, Chennai 600 017. Tel.No.: 044-28140801-03. Fax No.: 044-28142479 E-mail id: email@example.com
Details of Shares held by Non-executive Directors
As per the declarations received, none of the Non-executive Directors are holding any equity shares in the Company.
Outstanding GDRs/ADRs/Warrants or any convertible instruments conversion date and likely impact on equity
No GDRs/ADRs/Warrants or any convertible instruments have been issued by the Company and hence there would not be any impact on the equity.
Dematerialisation of shares and liquidity
The equity shares of the Company are compulsorily traded in dematerialised form as per the notification issued by SEBI. As on 31st March, 2015, equity shares numbering to 167,50,62,550 (99.84%) have been dematerialised by the shareholders. The Company's equity shares are actively traded on the Stock Exchanges.
Mine-I (including Expansion), Mine-IA, Mine-II (including Expansion),TPS-I, TPS-I Expansion, TPS-II and
TPS-II Expansion are located in Neyveli in Cuddalore District in the State of Tamilnadu. Barsingsar Mine and Thermal Power Plant are located in the State of Rajasthan. Neyveli New Thermal Power Station is presently under construction in Neyveli. A Thermal Power Plant of the Subsidiary Company (NTPL) is under construction at Tuticorin, in the State of Tamilnadu. A Thermal Power Plant will be set up in Ghatampur in the State of Uttar Pradesh and a Coal Mine in Pachwara South, in the State of Jharkhand, will be developed by NUPPL, the Subsidiary Company, on obtaining the sanction of GOI.
Address for correspondence
Shareholders/Investors may send their correspondence to the Company Secretary either to the Registered Office at 'Neyveli House', No.135, Periyar EVR High Road, Kilpauk, Chennai - 600 010 (Tel. No.044-28364617) or to the Corporate Office, Block-1, Neyveli-607 801, Cuddalore District, Tamil Nadu (Tel.No.04142-252205). Shareholders may also send their communication electronically to firstname.lastname@example.org the exclusive e-mail-id provided as required under the listing agreement.
The investors may also communicate to M/s. Integrated Enterprises (India) Ltd., the Depository Registrar & Share Transfer Agent for redressal of their grievance, if any.
Non-Mandatory Requirements Chairman of Board
The requirement of maintenance of an office for the Non-executive Chairman and the reimbursement of expenses to him are not applicable to the Company presently as the Company has an Executive Chairman.
The Company's financial results are published in English National newspapers having wide circulation all over India and also in a vernacular newspaper having a wide circulation in the State of Tamil Nadu and hence the financial results are not being sent individually to the shareholders. Further, as required under the Listing Agreement, the results of the Company are also furnished immediately to the Stock Exchanges and also uploaded in the Company's web site www.nlcindia.com in addition to furnishing of the same to Corporate Filing and Dissemination System, NEAPS portal of NSE and Listing Centre portal of BSE.
It is always the Company's endeavour to present unqualified financial statements. The Audit Report for the year 2014-15 does not contain any audit qualifications.
Separate posts of Chairman and CEO
The Composition of Board of Directors of the Company is approved by the Government of India. In case of PSUs, the major owner is the Government of India. The CMD as CEO of the Company implements the decisions of the Board of Directors through a team of Functional Directors and the function of CMD is subject to superintendence and control of the Board of Directors of the Company.
Reporting of Internal Auditor
The internal audit is being done by external firms of Chartered Accountants. Internal Audit reports containing periodical reports includes significant findings, if any, and the same is reviewed by Audit Committee periodically. The Internal Auditors of the Company are being invited to the meetings of Audit Committee.
for and on behalf of the Board of Directors
B. SURENDER MOHAN
Place : Chennai
Date : 07.08.2015