24 Apr 2017 | Livemint.com

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Orissa Sponge Iron & Steel Ltd.

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Orissa Sponge Iron & Steel Ltd. Accounting Policy

REPORT ON CORPORATE GOVERNANCE

1. Company's philosophy on Code of Corporate Governance:

The Company's philosophy on Corporate Governance is to conduct its business with responsibility, honesty, integrity and fairness and in a transparent manner to meet its obligations to shareholders' and all other stakeholdes' value with best practices of Corporate Governance. This code is also a tool in carrying the corporate social responsibility in an ethical and effective manner.

2. Board of Directors:

The Company has a Whole Time Executive Vice Chairman &t Managing Director and a Whole Time Executive Director both representing the promoters' viz Torsteel Research Foundation in India (TRFI). Industrial Promotion and Investment Corporation of Odisha Limited (IPICOL) has nominated a Non Executive Director on the Board. The promoters i.e. TRFI and IPICOL have nominated three directors and one director respectively. The number of Non-Executive Directors is more than half of the total number of Directors on the Board.

None of the Directors on the Board is a member of more than 10 Committees and Chairman of more than 5 Committees (as specified in Clause 49 of the Listing Agreement) across all the Companies in which he is a Director. The necessary disclosures regarding Committee positions have been made by the Directors.

 (C) Change in Directorship during the financial year 2014-15 and thereafter:

(1) IPICOL withdrew the nomination of Mr. G. Mothivathanan os Chairman & Director w.e.f. 26.12.2014 and Mr. P. C. Mohanty as Director w.e.f. 06.04.2015.

(2) Mr. S. K. Kar. nominated by IPICOL as Director and Ms. Sonia Jabbar, nominated by TRFI as Women Director were appointed as Additional Directors at the Board Meeting held on 29.08.2015

(3) TRFI has withdrawn the nomination of Mr. S. H. Gupta w.e.f. 01.04.201 S

3. Audit Committee:

The Board of Directors has reconstituted the Audit Committee of Directors to exercise powers and discharge functions as stipulated in Section 177 of the Companies Act, 2013, Clause 49 of the Listing Agreement with Stock Exchanges and other relevant statutory/regulatory provisions besides other terms as referred by the Board of Directors which includes review of Financial Results, Audit Reports, internal Control System & Procedures, reviewing of company matters with Internal Auditor and Statutory Auditors etc.

Committee Meeting were held on 29.05.2014, 14.08.2014,14.11.2014 and 09.02.2015. In all Four Meetings of the Committee were held during the year.

Mr. B.K.Sarkar, an Independent Director is the Chairman of the Audit Committee.

4. Nomination and Remuneration Committee:

The Remuneration Committee was reconstituted during the year as the Nomination and Remuneration Committee at the Board Meeting held on 14th November, 2014, to exercise powers and discharge functions as stipulated in Section 178(1) of the Companies Act. 2013, Clause 49 of the Listing Agreement with Stock Exchanges and other relevant statutory/regulatory provisions besides other terms as referred by the Board of Directors. The broad terms of reference of the Nomination and Remuneration Committee are to recommend to the Board appointment/reappointment of Managing/Whole—time Directors, other Directors and Key Managerial Personnel and decide on the salary, perquisites and commission to be paid to them etc. along with evaluation of the remuneration policy of the Company.

One Committee Meeting was held during the year on 09.02.2015.

Mr. B. K. Sarkar. an Independent Director is the Chairman of the Nomination and Remuneration Committee.

5. Ethics Committee:

In accordance with the Securities and Exchange Board of India (Prohibition of insider Trading Regulations, 1992), as amended, the Board of Directors of the Company adopted the Code of Conduct for Prevention of Insider Trading and the Code of Corporate Disclosure Practices to be followed by Directors. Officers and other Employees. No meeting of the Committee was held during the year 2014-15.

6. Stakeholders Relationship Committee:

The Board at its meeting held on 14th November. 2014 reconstituted the earlier Shareholders'/ Investors' Grievance Committee into Stakeholders Relationship Committee to exercise powers and discharge functions as stipulated in Section 178(5) of the Companies Act. 2013, Clause 49 of the Listing Agreement with Stock Exchanges and other relevant statutory/regulatory provisions besides other terms as referred by the Board of Directors. This Committee primarily looks after the redressal of investors' complaints as well as share transfers.

Mr. B. K. Sarkar. an Independent Director is the Chairman of the Stakeholders Relationship Committee.

The composition of the Shareholders'/Investors' Grievance Committee and the reconstituted Stakeholders Relationship Committee as on 31.03.2015 and attendance of each committee member during the year is as given hereunder:

7. Risk Management Committee:

In compliance with the requirement of the amended Clause 49 of the Listing Agreement, the Board at its meeting held on 9th February, 2015 constituted a Risk Management Committee to exercise powers and discharge functions as stipulated in Clause 49{VI) of the Listing Agreement The function of the Committee is to inform the Board members about the risk assessment and minimization procedures, monitor and review the risk management plan and to perform other relevant functions in this connection. No meeting of the Committee was held during the year 2014-15.

Dr. P. K. Mohanty. Managing Director is the Chairman of the Risk Management Committee. No formal meeting was held during the year. 8. Board Evluation:

(1) Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, and the criteria laid down by the Nomination and Remuneration Committee the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committee, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees. Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interest of the Company and Its minority shareholders etc. The performance evaluation of the Independent Directors wos carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Key Managerial Personnel. The Directors expressed their satisfaction with the evaluation process.

(2) Appointment and remuneration policy for Directors, Key Managerial Personnel and Senior Management Personnel

The Nomination and Remuneration (N&R) Committee has adopted a policy which, inter alia, deals with the manner of selection of Board of Directors, Managing Director/Executive Directors, other Key Managerial Personnel and their remuneration.

1. a) Criteria of selection of Non Executive Directors

a. The Non Executive Directors shall be of high integrity with relevant expertise and experience so as to have a diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, law. governance and general management.

b. In case of appointment of Independent Directors, the N&R Committee shall satisfy itself with regard to the Independent nature of the Directors vis-d-vis the Company so as to enable the Board to discharge its functions and duties effectively.

c. The N&R Committee shall ensure that the candidate identified for appointment as a Director is not disqualified for appointment under Section 164 of the Companies Act. 2013.

d. The N&R Committee shall consider qualification, expertise ond experience of the Directors In their respective fields; personal. Professional or business standing; diversity of the Board etc, whilst recommending to the Board the candidature for appointment as Director.

e. In case of re-appointment of Non Executive Directors, the Board shall take into consideration the performance evaluation of the Director and his engagement level.

f. At the first meeting attended by the newly appointed Director, a brief training session in the form of familiarization with the business activities of the Company is imparted. The Company Secretary also briefs the Directors about the prevailing provisions of the Companies Act, 2013; the Rules made there under; provisions of the listing agreement in respect of corporate governance. SEBI Guidelines etc. concerning the Directors.

(Ii) Remuneration to Non Executive Directors

The Non Executive Directors shall be entitled to receive remuneration by way of sitting fees and reimbursement of expenses for participation in the Board/Committee Meetings.

2. Criteria for selection and appointment of the Managing Director (MD)/the Executive Director (ED)

For the purpose of selection of the MD/ED. the N&R Committee shall identify persons of integrity, who possess relevant expertise, experience and leadership qualities required for the position and shall take into consideration recommendation. If any, received from any member of the Board. The Committee will also ensure that the incumbent fulfils such other criteria with regard to age and other qualifications as laid down under the Companies Act, 2013 or other applicable laws.

Remuneration Policy for the Managing Director/Executive Director

i. At the time of appointment or re-appointment, the MD/ED shall be paid such remuneration as may be permitted under the Companies Act. 2013 and mutually agreed between the Company (which includes the N&R Committee and the Board of Directors) and the MD/ED within the overall limits prescribed under the Companies Act, 2013.

Corporate Governance

ii. The remuneration shall be subject to the approval of the Members of the Company in General Meeting.

iii.The remuneration of the MD/ED is broadly divided into fixed and variable components. The fixed component comprises salary,allowances, perquisites, amenities and retiral benefits. The variable component comprises commission.

IV. In determining the remuneration (including the fixed increment and performance bonus) the N&R Committee shall ensure/considerthe following:

a. the relationship of remuneration and performance benchmarks is clear;

b. balance between fixed and incentive pay reflecting short and long term performance objectives, appropriate to the working of the Company and its goals;

c. responsibility required to be shouldered by the MD/ED. the industry benchmarks and the current trends:

d. the Company's performance vis-a-vis the annual budget achievement and Individual performance vis-a-vis the KRAs/KPls. 3. Remuneration Policy for the Key Managerial Personnel/Senior Management Employees

I. In determining the remuneration of the Senior Management Employees (i.e KMPs and Executive Committee Members) the N&R Committee shall ensure/consider the following:

i. the relationship of remuneration and performance benchmark is clear;

ii. balance between fixed and incentive pay reflecting short and long term performance objectives, appropriate to the working of the Company and its goals;

iii. the remuneration is divided into two components viz. fixed component comprising salaries, perquisites and retirement benefits and a variable component comprising performance bonus:

iv. the remuneration including annual increment and performance bonus is decided based on the criticality of the roles and responsibilities, the Company's performance vis-d-vis the annual budget achievement, individuals performance vis-d-vis KRAs/KPIs. industry benchmark and current compensation trends in the market.

II. The Managing Director will carry out the Individual performance review based on the standard appraisal matrix and shall take into account the appraisal score card and other factors mentioned herein-above, whilst recommending the annual increment and performance incentive to the N&R Committee for its review and approval.

10A. Compliance Officer

Name Address Phone No. Fax No. E-mail

Company Website

Not yet appointed. However correspondence may be addressed to the Corporate Office at the address given below CIC Building, 11 th Floor. 33A Jawaharlal Nehru Road, Kolkata - 700 071 : 033-22883910-16 : 033-22272511

corporate@orissasponge.com  www.orissasponge.com

10B. Shareholder's Complaints

The number of complaints received and resolved to the satisfaction of investors during the year under review and their break-up are as under:

Type of Complaints Number of Complaints

Non-Receipt of Dividend Warrant -

Non-Receipt of Bonus Share Certificates -1

Non-Receipt of Annual Report-3

Disclosures:

(a) Related party disclosure:

The particulars of transactions between the Company and related parties as per the Accounting Standards are mentioned separately in Note No. 36 of the Notes to the Financial Statement. However these transactions are not likely to have any conflict with the Company's business interest-

(b) Matters relating to Stock Exchange. SEBI. Capital Market

(1) Listing fee to the Stock Exchanges due for the financial year 2015-16 could not be paid.

(2)BSE has Imposed penalty of t 1.124 for non submission of the Annual Report for Financial Yar 2013-14 and f 27.360 for FinancialYear 2014-15 within the period prescribed under Clause 31; Rs. 85.500 and Rs. 171.000 and 7 1.14.500 for non submission of financial results within the prescribed period under Clause 41 and Rs. 57,000 under SEBI Circular dated 17.04.2014.

(3) Out of 105 Lakhs Share Warrants issued by the Company in earlier years 70 lakhs warrants have been converted in to equity shares.

Out of the shares so converted rights attached to 30 lakh shares cannot be exercised as the matter is subjudice. Conversion of the remaining 35 lakhs warrants into equity is also subjudice.

(4) The Company issued 200,00.00010% Cumulative Non Convertible Redeemable Preference Shares of Rs. 10 each amounting to Rs.20crores on private placement during the year. These Shares are redeemable on the expiry of 12 years from the date of allotment These shares are not listed.

(c) Disclosure of Accounting Treatment:

The applicable Accounting Standards as issued by the Institute of Chartered Accountants of India hove been followed in preparation of the financial statements of the Company as far as practicable.

(d) The Company has formed a Whistle Blower Policy/Vigil Mechanism as required under Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The said Policy may be referred to at the Company's Website.

(e) Compliance of mandatory requirements and adoption of non mandatory requirements:

The Company has complied with all the mandatory and non mandatory requirements of the Cause 49 of the Lisiting Agreement.

(f) Proceeds from public issues, right issues, preferential issues etc.:

A sum of Rs.20 crores has been received by the Company against issue of 200.00,000 (Two Crores) 10 % Non Convertible Cumulative Redeemable Preference Shares of Rs.10 each amounting to Rs. 20 crores.

Means of Communication:

The quarterly financial results are published in Mint (Kolkota & Mumbai Edition) in English and in Utkal Mall in Orlya. The financial results are also uploaded in the Company's website www.orissasponge.com  for the information of shareholders and public at large. The website is updated from time to time to incorporate therein the details as required by Clause 54 of the Listing Agreement with the Stock Exchange.

General Shareholder information:

 (a) 35th Annual General Meeting:

Day Friday

Date : 19.02.2016

Time : 11.00 a.m.

Venue Hotel Grand Central. Old Station Road, Bhubaneswar - 751006

(b) Financial Calendar for 2015-16 (Partly Tentative)

Board Meeting for unaudited financial results for the quarter ended 30th June, 2015 2nd January 2016

Board Meeting for unaudited financial results for the quarter ended 30th September, 2015 2nd January 2016

Board Meeting for unaudited financial results for the quarter ended 31st December. 2015 2nd Week of February. 2016

Board Meeting for audited financial results for the quarter and year ending 31st March, 2016 Last Week of May. 2016

 (c) Annual Accounts 2015-2016

May. 2016

(d) Date of Book Closure

12.02.2016 to 19.02.2016 (both days inclusive)

(e) Listing on Stock Exchange

 (i) Bombay Stock Exchange

(ii) Calcutta Stock Exchange (applied for delisting)

(ill) National Stock Exchange (applied for listing)

 (f) Stock Code

 (i) Stock Market Data:

Bombay Stock Exchange-504 8 64 Calcutta Stock Exchange-10025083

(g) Demat 1SIN Number in NSDL & CDSL for Equity Shares

 INE228D01013

(h) Website

The Company has a website www.orissasponge.com  which is updated from time to time to incorporate therein the details as required by Clause 54 of the Listing Agreement with the Stock Exchange.

(i) Registrar and Transfer Agents:

The share management work, both physical and demat, Is being handled by the Registrar and Share Transfer Agent of the Company whose name and address is given below:

Link Intime India Private Limited. 59C, Chowringhee Road. 3rd Floor. Kolkata - 700020. Phone No: 033-2289-0S40. Fax No: 033-2289-0539 E-mail: kolkata@linkintime.co.in .

All communication regarding share transactions, change of address, bank mandate, nominations etc. should be addressed to the Registrar and Share Transfer Agents at the above address.

(j) Share Transfer System:

Share Transfer requests valid and complete in all respects are normally processed within fifteen days. All efforts are made by the Company and the Registrar and Share Transfer Agents for expediting share transfers. Valid requests for demat of shares are completed within 15 days. The Company received 11 cases of Share Transfer comprising of 1.360 shares. Number of Transmission cases received during the year was 2 comprising of 432 shares and 6 cases of subdivision/duplicate/consolidation/replacement of shares comprising of 810 shares were received during the year.

(k) Shores held by Non-Executive Directors:

Non-Executive Directors do not hold any shares in the Company,

(l) Subsidiary Company:

Bamra Iron & Steel Company (India) Ltd. has been struck off from the Register of Companies as per the Order issued by the Registrar of Companies Odisha. Consequently, the Company has no subsidiary on the Reporting date.

(m) Dematerialization of Shares:

As per SEBI's direction, the Company has signed tripartite agreements with both NSDL & CDSL and Registrar & Transfer Agent. Accordingly, dematerialization facility for the shores of the Company is available and it Is in the interest of all the shareholders to convert their physical holdings into the electronic holdings by dematerialization.

During the year the Company received 57 cases for dematerialization comprising of 11.494 shores. As on 31 st March. 2015.2,35.78.274 shares were held in dematerialized form which constitute 87.33 % of total number of subscribed shares,

(n) Outstanding GDRs/ADRs/warrants or any convertible instruments, conversion date and likely impact on equity: NIL

15. Key Locations of the Company with the activities carried on:

Registered Office and Project & Engineering Office:

OSIL House. Gangadhar Meher Marg. Bhubaneswar 751024.

Phone: 0674-3016500 to 503 Fax: 0674-3016505/535.

E-mail: orisponge@gmail.com . Company Website: www.orissasponge.com  

In addition to being the Registered Office, this office also provides project & engineering services to the Company and other customers.

Plant:

P.O.: Palaspanga. District - Keonjhar 758031. Odisha.

Phone: 06766-235223/225/227/229, Fax: 06766-235205, E-mail: osilsite.2009@rediffmail.com  

The manufacturing facility is situated here. Delhi Office:

H-1 A. 2nd Floor. Hauz Khas, New Delhi -110016, Telefax: 011 -26968924 / 26864548, E-mail: osildelhi@gmail.com

This office carries out liasion work.

Corporate Office:

CIC Building, 11th Floor. 33A, Jawaharlal Nehru Road. Kolkata - 700071,

Phone: 22883910 to 3916. Fax : 033-22272511. E-mail: corporate@orissasponge.com

This office is center of corporate activities having the offices of Vice Chairman and Managing Director; a Whole time Director; and CFO & Company Secretary.

16. Additional Information (Non Mandatory)

i) Code of Conduct:

Company has always encouraged and supported compliance to ethical business practices in personal and corporate behavior by its employees. Company in order to further strengthen corporate practices has framed a specific code of conduct for the members of the Board of Directors and senior Management personnel of the Company, who have affirmed compliance thereof. A declaration to this effect signed by Vice-Chairman & Managing Director of the Company is annexed to this report.

II) Risk Management:

The Company has laid down procedures to inform Board Members about the risk assessment and minimization procedures, which are periodically reviewed,

iii) Reconciliation of Share Capital Audit:

Reconciliation of Share Capital to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital is carried out by a practicing Company Secretory and his report is placed to the Board periodically. The audit confirms that the total issued/paid-up capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held in electronic mode with NSDL and CDSL.

iv) Management Discussion and Analysis:

Management Discussion and Analysis forms part of the Annual Report which is posted to the shareholders of the Company.

v) Certificate on Corporate Governance:

Compliance of Corporate Governance by the Company as stipulated in Clause 49 of the Listing Agreement is examined and reviewed by M/s. A. K. Labh & Co., Company Secretaries, 40. Weston Street, 3rd Floor, Kolkata • 700013 and his report is annexed.

vi) CEO/CFO Certificate:

A Certificate duly signed by the Vice-Chairman & Managing Director and CFO relating to financial statements and Internal Control Systems for financial reporting, accounting policy etc. for the year ended 31.03.2015 as per Clause 49 of the Listing Agreement was placed before the Board and the same was taken on record.

vii) Compliance by Company Secretary:

The Company Secretary while preparing the Agenda. Notes on Agenda, Minutes etc. of the Meeting(s). is responsible for and is required to ensure adherence to all the applicable laws and regulations including the Companies Act. 2013 read with the Rules and Regulations issued there under and to the extent feasible and the Secretarial Standards recommended by the Institute of Company Secretaries of India.

viii) Cautionary Statement:

Details given relating to various activities and future plans may be 'forward looking statement' within the meaning of applicable laws and regulations. The actual performance may differ from those expressed or implied.

ix) Certificate:

All material requirements with respect to Corporate Governance as stipulated in the Listing Agreement have been complied with.

x) Contact Person for any query on Annual Report / Investor Communication:

Mr. N. C. Sinha. Senior Officer. Secretarial, Orissa Sponge Iron & Steel Limited. CIC Building, 11th Floor. 33A Jawaharlal Nehru Road, Kolkata - 700071,

Phone : 033-22883910-16. Fax: 033-22272511, E-mail: corporate@orissasponge.com