Corporate Governance Report
Phillips Carbon Black Limited
I. COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE
The Company continues to focus on good Corporate Governance, which aims to improve the Company's efficiency, effectiveness and social responsibility. The basic philosophy of Corporate Governance in the Company emphasizes on highest levels of transparency, accountability and equity, in all respects of its operations. The Company believes that the governance process should ensure economic prosperity and long term value creation for the enterprise and its shareholders keeping in view the needs and interests of all its stakeholders. The Company has a strong legacy of fair, transparent and ethical governance practices. The Company ensures that timely disclosures are being made regarding its performance and financials as well as its leadership team. The Company also respects the rights of its shareholders and other stakeholders to information on the performance of the Company based on highest professional, ethical and financial reporting standards.
Pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "SEBI Listing Regulations"), the Company has executed fresh Listing Agreements with the Stock Exchanges.
The Company is in compliance with the requirements specified in the Regulation 17 to 27 and Clauses (b) to (i) of sub-regulation (2) of Regulation 46 of the SEBI Listing Regulations, with regard to Corporate Governance.
II. COMPOSITION OF THE BOARD OF DIRECTORS AS ON 31ST MARCH, 2016.
(a) The Board of Directors of the Company comprises:
• 3 Non-Executive Directors
• 5 Non-Executive Independent Directors
• 1 Executive Director who is the Managing Director.
The composition of the Board satisfies the requirements of Section 149 of the Companies Act, 2013 ("the Act") and Regulation 17 of the SEBI Listing Regulations.
III. AUDIT COMMITTEE
1. Terms of Reference
The Company has an Audit Committee and the terms of reference are in conformity with the powers as stipulated in Regulation 18 of the SEBI Listing Regulations read with Section 177 of the Act.
The role of the Audit Committee of the Company include the following:
1. Oversight of the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
2. Recommending to the Board, the appointment, re-appointment and if required, the replacement or removal of the statutory auditor and fixation of audit fees.
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 Auditors report 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 judgement by maganement.
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) Qualifications in the draft audit report, if any.
5. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.
6. Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal control systems.
7. 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.
8. Discussion with internal auditors any significant findings and follow up thereon.
9. Investigating into any matter in relation to the items specified in the terms of reference and 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.
10. 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.
11. Reviewing the Company's risk management policies.
12. Looking 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.
13. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
The Auditors and the Key Managerial Personnel have a right to be heard in the meetings of the Audit Committee when it considers the Auditor's Report.
The Audit Committee is also empowered, pursuant to its terms of reference, to :
a) Investigate any activity within its terms of reference and to seek any information it requires from any employee.
b) Obtain professional advice from external sources to carry on any investigation and have full access to information contained in the records of the Company.
c) Discuss any related issues with the internal and statutory auditors and the management of the Company.
d) Review and monitor the auditor's independence and performance, and effectiveness of audit process.
e) Approve subsequent modification of transactions of the Company with related parties.
f) Discussion with the 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.
g) Look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders and creditors.
h) Scrutinize the inter-corporate loans and investments and evaluate internal financial controls and risk management systems.
i) Oversee the vigil mechanism/whistle blower policy of the Company.
The Company has systems and procedures in place to ensure that the Audit Committee mandatorily reviews:
• Management discussion and analysis of financial condition and results of operations.
• Statement of significant realted party transactions (as defined by the Audit Committee), submitted by Management.
• Management letters/letters of internal control weaknesses issued by the statutory auditors.
• Internal Audit Reports relating to internal control weaknesses.
• The appointment, removal and terms of remuneration of the chief internal auditor.
Whenever applicable, monitoring end use of funds raised through public issues, right issues, preferential issues by major category (capital expenditure, sales and marketing, working capital etc.), shall form a part of the quarterly declaration of financial results.
In addition, the Audit Committee of the Board is also empowered to review the financial statements, in particular, the investments made by the unlisted subsidiary companies, in view of the requirements under Regulation 24 of the SEBI Listing Regulations. No person has been denied access to the Committee. The minutes of the meetings of the Board of Directors of the unlisted subsidiary companies are periodically placed before the meeting of the Audit Committee of the Board of Directors of the Company.
The Audit Committee comprises 4 Directors out of which 3 are Non - Executive Independent Directors and 1 is a Non-Executive Director.
• Audit Committee Meetings were held on 6th May, 2015, 31st July, 2015, 2nd November, 2015 and 29th January, 2016. The necessary quorum was present for all the meetings. The Annual Accounts for the year ended 31st March, 2015 was reviewed by the Audit Committee at its meeting held on 6th May, 2015. The Audit Committee also reviewed the Audited Financial Results for the year ended 31st March, 2015 and Unaudited Financial Results for the quarters ended 30th June, 2015, 30th September, 2015 and 31st December, 2015 before recommending their adoption to the Board.
• Audit Committee Meetings were also attended by the Managing Director, Chief Financial Officer, Internal Auditor, Statutory Auditors and Cost Auditors of the Company.
• The Company Secretary acts as Secretary to the Audit Committee.
• Members of the Audit Committee are eminent persons in their fields having expertise in Finance and Accounting.
• The Chairman of the Audit Committee Mr. K S B Sanyal attended the last Annual General Meeting of the Company held on 31st July, 2015.
IV. NOMINATION AND REMUNERATION COMMITTEE
1. Terms of Reference
The Company has a Nomination and Remuneration Committee and the terms of reference are in conformity with the provisions of Regulation 19 of the SEBI Listing Regulations, read with Section 178 of the Act.
The role of the Committee inter alia includes the following:
• Identify persons qualified to become directors or hold senior management positions and advise the Board for such appointments/removals where necessary.
• Formulate criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy relating to the remuneration of directors, key managerial personnel and other employees.
• Evaluate the performance of independent directors and the board of directors and to decide whether to continue the term of appointment of the independent director, on the basis of the report of performance evaluation of independent directors.
• Devise a policy on Board diversity.
In accordance with the recommendation of the Committee, the Company has since formulated a Remuneration Policy for directors, key managerial personnel and other employees of the Company. The Committee is responsible for recommending the fixation and periodic revision of remuneration of the Managing Director. The Committee also decides on payment of commission to non-executive Directors and other senior managerial personnel. The performance evaluation criteria for non-executive including independent directors laid down by Committee and taken on record by the Board includes-
a. Attendance and participation in the Meetings.
b. Preparedness for the Meetings.
c Understanding of the Company and the external environment in which it operates and contributes to strategic direction.
d. Raising of valid concerns to the Board and constructive contribution to issues and active participation at meetings.
e. Engaging with and challenging the management team without being confrontational or obstructionist.
The performance evaluation of Independent Directors was done by the entire Board of Directors and in the evaluation, the Directors who are subject to evaluation had not participated.
The Nomination and Remuneration Committee comprises 3 Directors, all of whom are Non - Executive Independent Directors. The composition of the Nomination and Remuneration Committee, meetings held and attendance thereof are as below:
During the year ended 31st March, 2016, the Nomination ant Remuneration Committee met thrice on 6th May, 2015, 31st July 2015 and 29th January, 2016.
4. Remuneration Policy -
Payment of remuneration to the Managing Director is governed by the agreement executed between him and the Company and are also governed by Board and Shareholders' resolutions. The remuneration structure comprises salary, variable pay, perquisites and allowances and retirement benefits in the forms of superannuation and gratuity. The Company does not have any Employee Stock Option Scheme.
The details of the remuneration paid or payable to the NonExecutive Directors and the Executive Director have been given below.
I. Details of Sitting Fees/ Remuneration
A. Sitting Fees / Commission paid to the Non - Executive Directors
The Non-Executive Directors are paid remuneration based on their contribution and current trends. The sitting fees for the Board and the Committee Meetings and Commission paid to the Non-Executive Directors during the year ended 31st March, 2016 are as follows:-
Mr. Sanjiv Goenka - Sitting Fee Rs. 1,40,000/-, Mr. Shashwat Goenka - Sitting Fee Rs. 1,45,000/-, Mr. C R Paul - Sitting Fee Rs. 2,65,000/- , Mr. K S B Sanyal - Sitting Fee Rs. 2,70,000/, Mr. O P Malhotra - Sitting Fee Rs. 2,55,000/-, Dr. Ram S Tarneja - Sitting Fee Rs. 40,000/-, Mr. Paras K Chowdhary -Sitting Fee Rs. 2,20,000/-, Mr. Pradip Roy - Sitting Fee Rs.1,60,000/- and Ms. Kusum Dadoo-Sitting Fee Rs.1,60,000/-.
No commission was paid to the Non- Executive Directors during the year ended 31st March, 2016. The Company also reimburses the out of pocket expenses incurred by the Directors for attending the meetings.
V. STAKEHOLDERS RELATIONSHIP COMMITTEE
1. Terms of Reference
The Company has a Stakeholders' Relationship Committee and the terms of reference of the Stakeholders' Relationship Committee are in conformity with the provisions of Regulation 20 of the SEBI Listing Regulations, read with Section 178 of the Act. The Stakeholders' Relationship Committee specifically looks into the redressal of grievances of shareholders and other security holders such as transfer/transmission of shares, issue of duplicate share certificates, recording dematerialization /rematerialisation of shares, non-receipt of Annual Report, non-receipt of declared dividends and other related matters.
The Stakeholders' Relationship Committee of the Board of Directors under the Chairmanship of a Non-Executive Independent Director, Mr. C. R. Paul, meets at regular intervals and specifically looks into redressal of grievances of shareholders and other security holders. The composition of the Stakeholders' Relationship Committee, meetings held and attendance thereof are as below:
* The Company has received confirmations from National Stock Exchange of India Limited, Bombay Stock Exchange Limited and The Calcutta Stock Exchange Ltd. that no investor complaints are pending against the Company as on 31st March, 2016.
4. Share Transfer
Mr. Kaushik Roy, Managing Director, Mr. Raj Kumar Gupta, Chief Financial Officer, and Mr. Kaushik Mukherjee, Company Secretary & General Manager (Legal) are severally authorized to approve share transfers in physical mode.
During the year ended 31st March, 2016, the Stakeholders' Relationship Committee met twice on 31st July, 2015 and 29th January, 2016, which was attended by all the members.
VI . Corporate Social Responsibility (CSR) Committee
1. Terms of Reference
The Board of Directors of the Company has constituted a Corporate Social Responsibility Committee in compliance with the provisions of Section 135 of the Act.
The role of Committee inter alia includes the following :-
• Formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII of the Act.
• Recommend the amount of expenditure to be incurred on the activities referred to in the above point.
• Monitor the Corporate Social Responsibility Policy of the Company from time to time.
The Corporate Social Responsibility Committee comprises 3 Directors out of which 1 is a Non - Executive Independent Director, 1 is a Non-Executive Director and 1 is an Executive
• Corporate Social Responsibility Committee Meeting was held on 29th January, 2016.
• The Company Secretary acts as a Secretary to the Corporate Social Responsibility Committee.
VII. Independent Directors Meeting
During the year under review the Independent Directors met on 29th January, 2016, interalia to review the performance of non-independent directors including that of the Chairman taking into account the views of the executive and non - executive directors; assess the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties and other related matters. All the five Independent Directors attended the said meeting.
The details of the familiarisation programme for Independent Directors is posted on the website of the Company and may be accessed at the link <http://pcblltd.com/investorrelations/> investorrelations.php.
Neither any resolution was put through postal ballot last year nor any resolution is proposed to be conducted through postal ballot in the ensuing Annual General Meeting.
2. Disclosures regarding appointment or re-appointment of Directors in accordance with Regulation 36(3) of the SEBI Listing Regulations has been provided in the Notice convening the Annual General Meeting of the Company.
1. Disclosures on materially significant related party transactions that may have potential conflict with the interests of the Company at large :
No such transactions took place during the year ended 31st March, 2016.The Board has approved a policy for related party transactions which has been posted on the Company's website at the following link: <http://pcblltd.com/investorrelations> /investorrelations.php.
2. Disclosure by Senior Management in accordance with Regulation 26(5) of the SEBI Listing Regulations:
The Senior Management of the Company has confirmed to the Board of Directors that they do not have any personal interest relating to material, financial and commercial transactions entered into with the Company that may have a potential conflict with the interests of the Company at large.
3. Disclosures on Compliance of Law :
The Company has complied with the mandatory requirements of the Stock Exchanges, SEBI and other statutory authorities on all matters related to capital markets during the last three years. No penalties or strictures were imposed by SEBI, Stock Exchanges, or any statutory authorities on any matter related to capital markets during the last three years.
4. Vigil Mechanism / Whistle Blower Policy
The Company has a Whistle Blower Policy / Vigil Mechanism which is posted on the website of the Company for its directors, employees and stakeholders for reporting genuine concerns about any instance of any irregularity, unethical practice and/or misconduct. No personnel has been denied any access to the Audit Committee.
5. Code for Prevention of Insider Trading Practices
In compliance with the SEBI Regulation on Prevention of Insider Trading, the Company has in place a comprehensive code of conduct for its Directors and Senior Management Officers. The code lays down guidelines, which advises them on procedures to be followed and disclosures to be made, while dealing with the shares of the Company. The code clearly specifies, among other matters, that Directors and specified employees of the Company can trade in the shares of the Company only during 'Trading Window Open Period'.
The trading window is closed during the time of declaration of results, dividend and material events, as per the Code.
The policy relating to Code of Conduct on Insider Trading has been posted on the Company's website at the following link: <http://pcblltd.com/investorrelations/investorrelations.php>. Mr. Kaushik Mukherjee, Company Secretary & General Manager (Legal), is the Compliance Officer who also acts as the Chief Investor Relations Officer.
6. Details of compliance with mandatory requirements and adoption of non mandatory requirements
All mandatory requirements have been complied with and the non-mandatory requirements are dealt with at the end of the Report.
7. Policy for determining 'material subsidiaries'
The Company has also adopted a Policy for determining 'material subsidiaries' and the same is posted on the Company's website at the following link: <http://pcblltd.com/investorrelations/investorrelations.php>.
8. Commodity price risk or foreign exchange risk and hedging activities
The foreign exchange exposure during FY 2015-2016 was fully hedged in accordance with the policy.
The Company is, in an industry where the price movement of its Raw Materials and Finished Product move to a great extent in line with crude oil prices for which no hedging is done at present.
9. Certificate from the Managing Director and the Chief Financial Officer
Certificate from Mr. Kaushik Roy, Managing Director and Mr. Raj Kumar Gupta, Chief Financial Officer, in terms of Regulation 17(8) of the SEBI Listing Regulations for the financial year ended 31st March, 2016 was placed before the Board of Directors of the Company in its meeting held on 13th May, 2016.
10. Code of Conduct
A new code of Business Conduct and Ethics for Members of the Board and Senior Management Personnel which suitably incorporates the duties of Independent Directors as laid down in the Act, has been adopted by the Board, in supersession of the earlier one, to bring it in line with the SEBI Listing Regulations. The Code of Conduct for Board Members and Senior Management Personnel of the Company has been posted on the Company's website at the following link: <http://pcblltd.com/investorrelations/investorrelations.php>. All Board Members and Senior Management Personnel have affirmed compliance with the Code on an annual basis. A declaration to this effect signed by the Managing Director in terms of SEBI Listing Regulations forms a part of this Annual Report.
11. Sexual Harassment Policy
The Company has in place an Anti Sexual Harassment Policy in line with the requirements of ''The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013'' covering all employees of the Company. Internal Complaints Committee set up for the purpose did not receive any complaints for redressal during the year.
X. MEANS OF COMMUNICATION
1. The Company sends the Quarterly/Half yearly/Annual Audited Results to the Stock Exchanges. Results are also published in the newspapers such as Business Standard (All Editions) and Aajkal (Kolkata).
2. The results are also posted on the Company's website at www.pcblltd.com <http://www.pcblltd.com>.
3. Whenever the Company issues any press release, it is sent to the Stock Exchanges as well as posted on the Company's website. Presentations made to the Investors as well as the Investor Updates are also posted on the Company's website after the declaration of the Quarterly/Half yearly/ Annual Results.
4. Management Discussion and Analysis forms a part of the Boards' Report.
XI. GENERAL SHAREHOLDER INFORMATION
• Annual General Meeting
Date, Time and Venue:
Date: 22nd July, 2016 at 10.30 A.M. to be held at "Uttam Mancha", 10/1/1, Monoharpukur Road, Kolkata - 700026.
• Financial Year:
1st April, 2016 to 31st March, 2016.
• Book Closure:
15th July, 2016 to 22nd July, 2016 (both days inclusive).
• Dividend payment date:
Dividend , if declared, at the ensuing Annual General Meeting will be paid on and from 26th July, 2016.
• Listing on Stock Exchanges and Stock Codes:
a) The Calcutta Stock Exchange Ltd. - 10026125
7, Lyons Range, Kolkata - 700 001
b) Bombay Stock Exchange Limited - 506590 (B2)
Phiroze Jeejeebhoy Towers,
Dalal Street, Mumbai - 400 001
c) National Stock Exchange of India Ltd. - PHILIPCARB
Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051
Listing Fees for all the above Stock Exchanges for the Financial Year 2016 - 2017 have been paid.
• Registrar and Share Transfer Agent:
Link Intime India Pvt. Ltd. 59-C Chowringhee Road 3rd Floor Kolkata 700 020
Telephone No: (033) 2289 0539/40 Fax - 033- 2289 0539 E - Mail: email@example.com
• Share Transfer Process
The shares in physical form for transfer should be lodged at the office of the Company's Registrar and Share Transfer Agent, Link Intime India Pvt. Ltd., Kolkata or at the Registered Office of the Company. The transfers are processed within 10 days from the date of receipt of such request for transfer, if technically found to be in order and complete in all respects. As perdirectives issued by SEBI it is compulsory to trade in securities of any Company's equity shares in dematerialized form.
The process of conversion of shares from physical form to electronic form is known as dematerialisation. For dematerializing the shares, the shareholders should open a demat account with a Depository Participant (DP). He/She is required to submit a Demat Request Form duly filled up along with the share certificates to his/her DP. The DP will allocate a demat request number and shall forward the request physically as well as electronically, through NSDL/CDSL, to the Registrar and Share Transfer Agent. On receipt of the demat request both physically and electronically and after verification, the shares are dematerialised and an electronic credit of shares is given in the account of the shareholder.
• ISIN NO. INE 602A01015
• Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion date and likely impact on equity
• Plant Locations
The Company's plants are located at Durgapur, Kochi, Mundra and Palej. The detailed addresses of the Company's plants have also been given separately in the Annual Report.
Address for correspondence :
1) Registrar and Share Transfer Agent :
(For share and dividend related queries)
Link Intime India Pvt. Ltd.
59-C, Chowringhee Road, 3rd Floor Kolkata - 700 020
Telephone : (033) 2289-0539/40 Fax : (033) 2289-0539 E-mail : firstname.lastname@example.org
(For any other matter and unresolved complaints)
Mr. Kaushik Mukherjee Company Secretary Phillips Carbon Black Limited
31, Netaji Subhas Road, Kolkata - 700 001
Phones : (033) 6625 1500, 2242 0839 Fax : (033) 2248 0140 E-mail : email@example.com
This Corporate Governance Report of the Company is in compliance with the requirements of the SEBI Listing Regulations.
XII. STATUS OF ADOPTION OF THE NON MANDATORY REQUIREMENTS
The Company has duly fulfilled the following discretionary requirements as prescribed in sub - regulation (1) of Regulation 27 of the SEBI Listing Regulations as follows:
a. Modified opinion(s) in Audit Report:
The Company already has a regime of un-qualified financial statements.
b. Separate posts of chairperson and chief executive officer:
Mr. Sanjiv Goenka is the Chairman of the Company and Mr. Kaushik Roy is the Managing Director of the Company.
c. Reporting of Internal Auditor:
Internal Auditors of the Company make presentations to the Audit Committee on their reports and has direct access to the Audit Committee.
• The rest of the Non Mandatory Requirements will be implemented by the Company as and when required and/or deemed necessary by the Board.
For and on behalf of the Board
Sanjiv Goenka Chairman
(DIN : 00074796)
13th May, 2016