CORPORATE GOVERNANCE REPORT
[Pursuant to Clause 49 of the Listing Agreement]
COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE
The Directors present the Company's Report on Corporate Governance for the financial year ended on March 31, 2014 (hereinafter referred as 'the year').
The Company has an in-built system of corporate governance practices which involve checks and balances at all levels within the organization. It is a continuous process, which involves creating and implementing a structure to ensure complete transparency in the business dealings internally as well as with outside parties. The interests of all the stakeholders are taken care of with adequate disclosure standards. Adherence to corporate governance norms and guidelines makes the Company more responsible in all the spheres of its activities.
With the changing times, the Company is preparing itself for the next level of corporate governance standards and in process of implementing business and financial restructuring. It is redesigning its strategies for sustainable business environment with internal and external expertise. As a business philosophy, corporate governance practices are being pursued in all the spheres of operations, to protect the interests of all the stakeholders of the Company and the society.
BOARD OF DIRECTORS
Composition and category
As on March 31, 2014, the Board of directors of the Company ('Board') consists of 10 directors; out of which 5 are executive and remaining 5 are non-executive directors. Executive directors consist of an executive Chairman and two Managing Directors, Chief Financial Officer and Group Technical Advisor. 3 out of 10 directors belong to the promoters' group and are executive directors. The ratio between executive and non-executive directors is 1:1. All the non-executive directors are independent. The composition of the Board and the number of other directorship(s) and committee membership/ chairmanship(s) held by the directors are as follows:
Broad responsibilities of executive directors
The Company has 5 executive directors, and their responsibilities and authorities are as follows:
• Mr. Gurmit Singh Mann, Chairman is responsible for laying down broad strategic management policies, approving the growth plans, approving the business and financial restructuring, implementing corporate governance policies, allocation of the work amongst the managing directors and set out their reporting / review structures, and apprising the Board on various business matters and development plans thereof.
• Mr. Gurpal Singh, Managing Director is responsible for carrying out the management affairs in the Company, as directed by the Board of directors and the Chairman, in the areas related to the boundary management, management of the operating plants of the manufacturing units of the Company, policies implementation, looking after affairs of subsidiary companies, setting out, implementation and review of the governance standards and internal control functions.
• Ms. Gursimran Kaur Mann, Managing Director is responsible for carrying out the management affairs in the Company, as directed by the Board of directors and the Chairman, in the areas related to supervision, review and regulation of the commercial, financial and legal functions of the Company, restructuring and growth strategies, planning, joint venture management, implementation and review of policies along with budgetary controls and forecasting functions.
• Mr. Sanjay Tapriya, Chief Financial Officer is responsible for the work assigned by the Managing Directors including supervision of areas related to finance, accounts, taxation, and affairs related to joint ventures. He is also the Chief Executive officer and whole time director in a joint venture associate company.
• Mr. Sachchida Nand Misra, Group Technical Advisor is responsible for the work assigned by the Managing Directors including operations of the business units, technical supervision, sugarcane management, implementation and achieving business plan and operational policies, meeting statutory compliances at all the manufacturing units of the Company.
Pecuniary relationship and transactions with nonexecutive directors
All the non-executive directors are independent and do not have any material pecuniary relationship.
Information to Board
The Chairman and the Managing Directors are responsible to make full disclosure to the Board. The major decisions related to the operations of the Company, its business plans, financial affairs and results, indebtness issues, legal and corporate governance issues, growth strategies, restructuring plans, senior appointments etc are placed before the Board. This also include quarterly/half yearly/periodical financial and operational results, business or financial restructuring, capital expenditure, sale and acquisition of assets, capital budget, business plans, mortgages, guarantees and loans, analysis of operations, major litigations, feedback reports, minutes of committee meetings, minutes/transactions of subsidiary companies, staff matters, senior level appointments, labour relationship, accidents/ mishaps, information technology strategies, insider trading compliances, and general notices of interest etc.
Board has constituted six committees viz Audit Committee, Finance Committee, Remuneration & Compensation Committee, Allotment Committee, Investors' Grievance Committee and Restructuring Committee. The Company Secretary acts as the Secretary to all the committees.
I. Audit Committee
The Audit Committee comprises of four non-executive independent directors. Mr. B K Goswami acts as the Chairman of the Committee. The whole time directors and the statutory and internal auditors of the Company are the regular invitees.
All members of the Committee have sound knowledge in the fields of finance and accounts. The role and terms of reference of audit committee covers all the areas mentioned under Clause 49 of the listing agreement and Section 177 of the Companies Act, 2013 (hereinafter referred as the 'Act'). Further, the Committee oversees and monitors the financial reporting system within the Company, considers its quarterly, half-yearly and All members of the Committee have sound knowledge in the fields of finance and accounts. The role and terms of reference of audit committee covers all the areas mentioned under Clause 49 of the listing agreement and Section 177 of the Companies Act, 2013 (hereinafter referred as the 'Act'). Further, the Committee oversees and monitors the financial reporting system within the Company, considers its quarterly, half-yearly and annual financial results, utilization of proceeds from the capital issues, status of indebtness, financial restructuring plans, reviews the annual internal audit plans, the report of internal auditors, legal compliance, internal control system, audit methodology, accounting policies and practices, compliance with applicable accounting standards, risk management, risk disclosure and submit its observations to the Board. The audit committee also advises the management on areas where greater internal control and internal audit focus are required to be strengthening, and review areas for audit and control purposes cost control measures and statutory compliances in various functional areas.
II. Finance Committee
The Finance Committee comprises of four executive directors for taking decisions in respect of consideration of financial conditions of the Company, opening and closing bank accounts, change of signatories in existing accounts, acceptance of terms of loans/facilities within the policies set out and borrowing limits laid down by the Shareholders/Board and to do such other things, which are required for carrying out the day to day financial activities of the Company. The Committee works under the guidance of Board and its decisions are ratified in the subsequent Board meeting. Mr. Gurmit Singh Mann is the Chairman of this Committee. During the year, no meeting of this Committee was held.
III. Remuneration & Compensation Committee
The Remuneration & Compensation Committee of the Board comprises of four directors; out of which one is executive and three are non-executive independent directors. Mr. B K Goswami acts as the Chairman of the Committee. The Committee recommends the terms of appointment including remuneration and other compensation to be paid to the whole time directors. During the year, two meetings of this Committee were convened.
IV. Allotment Committee
The Securities Allotment Committee comprises of one executive director and one non-executive independent director. Mr. S K Ganguli acts as the Chairman of the Committee. The Committee is constituted to issue and allot securities in the Company on receipt of the application in this respect. It also consider request for conversion of bonds, debentures, preference shares, warrants and options into equity shares/ other securities in the Company. The Committee works under the guidance of the Board and its decisions are ratified in the subsequent Board meeting. During the year, no meeting of this Committee was held.
V. Investors' Grievance Committee
The Investors' Grievance Committee comprises of one executive director and two non-executive independent directors. Mr. S K Ganguli acts as the Chairman of the Committee. The Committee deals with redressal of the shareholders grievances relating but not limiting to transfer of shares, non-receipt of annual reports, change of addresses, non-receipt of dividend etc. The meetings of this committee are held on quarterly basis. During the year, four meetings of this Committee were held. The details are as follows:
During the year, three investors' complaints were received and all complaints were redressed. There was no pending complaint as on March 31, 2014.
VI. Restructuring Committee
The Restructuring Committee of the Company was set up during the year. It comprises of one non-executive independent director and three executive directors. Mr. S K Ganguli acts as the Chairman of the Committee. The Committee is formed for the purpose of implementation of the Scheme of Amalgamation and deals with finalizing and giving effect to the acts and deeds as may be required including the filing of the Scheme with the Stock Exchanges and the High Court etc. During the year, no meeting of this Committee was held.
Remuneration policy as applicable to executive/nonexecutive directors
The remuneration policy as adopted by the Company and applicable to executive/non-executive directors provides for the following:
a. The executive directors are paid remuneration as per their respective terms of employment in accordance with the applicable provisions of the Companies Act, 1956. No sitting fee is payable to executive directors. Details of remuneration paid to them for the year are as follows:
During the year, the services of Dr G S C Rao, the then Whole Time Director and Group Chief Executive Officer were terminated as whole time director and considering his resignation, he ceased to be a director on the Board of the Company with effect from September 11, 2013. He was paid Rs. 22.65 lacs and balance amount has not been paid, since matter becomes subjudice.
b. Sitting fee of Rs. 11,500 effective from September 18, 2012 per meeting is being paid to non-executive directors for attending meetings of Board and Committee thereof.
During the year, no equity shares and/or convertible securities were issued to the executive/non-executive directors.
Disclosure of payment of remuneration to whole time directors under Para IV of clause 1(B) of section II of Part II of Schedule XIII to the Companies Act, 1956.
Mr. Gurmit Singh Mann, Chairman; Mr. Gurpal Singh, Managing Director; Ms. Gursimran Kaur Mann, Managing Director, Mr. Sanjay Tapriya, Chief Financial Officer and Mr. Sachchida Nand Misra, Group Technical Advisor have been appointed as whole-time directors for a period of 5 years.
Mr. Gurmit Singh Mann, Mr. Gurpal Singh and Ms. Gursimran Kaur Mann are the promoter directors and holding beneficial interest in the share capital of the Company.
Mr. Sanjay Tapriya, and Mr. Sachchida Nand Misra are the professional directors and not holding any beneficial interest in the share capital of the Company. Mr Sanjay Tapriya, is also holding the position of chief executive officer and whole time director in Uniworld Sugars Private Limited, an associate company.
During the year, the aggregate remuneration paid to these directors is within the limits of Schedule XIII to the Companies Act, 1956.
The appointment of the aforesaid directors is liable to be terminated on a notice of three/two months or payment of salary in lieu thereof. All the remunerations comprise of fixed components and there is no performance linked incentives criterion. No severance fee is payable to them. During the year, no stock option has been granted by the Company to the aforesaid directors.
Mr. Kamal Samtani, Company Secretary is the Compliance Officer.
MANAGEMENT DISCUSSION AND ANALYSIS
Management discussion and analysis report, is made a part of report of directors, forming part of the corporate governance report.
CERTIFICATE ON CORPORATE GOVERNANCE
The Certificate issued by M/s Amit Gupta & Associates, Practicing Company Secretaries regarding compliance with the provisions relating to corporate governance laid down in Clause 49 of the listing agreement with the stock exchanges and the certificate on the financial statements issued by Chairman, Managing Directors and Chief Financial Officer form part of this report.
Related party transactions and their basis
In terms of Accounting Standards (AS) 18 "Related Party Disclosure" issued by 'The Institute of Chartered Accountants of India', the Company has identified the related parties covered therein and details of transactions with such related parties have been disclosed at para no. 12 to the notes forming part of accounts for the year ended on March 31, 2014. The minutes/ transactions of the subsidiary companies have been taken on record in the Board Meetings of the Company. There were no transactions of material nature with the directors or the management or their relatives or subsidiary companies etc. during the year that had potential conflict with the interest of the Company at large.
Disclosure of accounting treatment
The financial statements are prepared under the historical cost convention in accordance with the mandatory accounting standards prescribed under the relevant presentational requirements of the Act.
Details of non-compliance
There were no instances of non-compliance of any matter related to the capital markets during the last three years. No penalties or strictures have been imposed on the Company by stock exchanges or SEBI or any statutory authority on any matter related to capital markets. The Company has issued codes of conduct for its Board and senior management in compliance with SEBI regulations and listing agreement with the stock exchanges, advising and cautioning management staff and other business associates on the procedure to be followed while dealing in equity shares of the Company and have complied with the disclosure requirements. The policies framed in this regard are available on the Company's website.
The quarterly financial results of the Company are published in reputed national and regional newspapers mainly in Business Standard. The quarterly results are sent to the stock exchanges, immediately after their approval from the Board. The Company provides comprehensive details of the operations of the Company, the financial results and other information on its website www.simbhaolisugars.com .
Internal Control Compliances
With the changing environment and growth in the business, the Company is in process of review and strengthening its internal control procedures and compliance standards. During the year, certain irregularities have been observed in the business affairs of the Company and its subsidiary. Following its policies, it has taken requisite legal and administrative steps against identified senior executives. This has been detailed elsewhere in the Directors' Report.
April to March. The Company shall publish the quarterly/yearly results in accordance with the listing agreement.
Listing of Equity Shares
Bombay Stock Exchange Limited,
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai.
Tel: 91-22-22721233/34, Fax: 91-22-22721919 Website: www.bseindia.com
Scrip Code: 507446
National Stock Exchange of India Limited, Exchange Plaza, Bandra Kurla Complex, Mumbai
Tel : 91-22-26598100 Fax : 91-22-265988120 Website: www.nseindia.com
Scrip Code: 507446
Scrip code :SIMBHSUGAR
Listing fee for the financial year 2014-15 has been paid to both the stock exchanges.
National Securities Depository Limited,
Trade World, 4th Floor, Kamla Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013 Tel: 91-22-24994200 Fax: 91-22-24972993/2497 Email: firstname.lastname@example.org Website : www.nsdl.co.in
Central Depository Services (India) Limited, Phiroze Jeejeebhoy Towers, 17th Floor, Dalal Street, Mumbai-400 023
Tel: 91-22-2272333 Fax: 91-22-22723199
Email: email@example.com Website: www.cdslindia.com
During the year, the Company has not issued any share warrants/ESOP/Convertible securities.
LOCATION OF THE PLANTS AND OPERATING DIVISIONS:
Simbhaoli, District Hapur, Uttar Pradesh - 245 207
Tel.No. +91 5731-23117/8/9
Chilwaria, Distt. Bahraich, Uttar Pradesh - 271 801 Tel.No. +91 5252-244251/2
Brijnathpur, District Hapur, Uttar Pradesh - 245 101 Tel. No. +91 9927049979
Village Versamedi, Tehsil Anjar, Gandhidham, District Bhuj -Kachchh, Gujarat -370 110
Tel. No. + 91 9624019862
*1000 TPD Raw Sugar refining plant of Uniworld Sugars Private Limited. Any correspondence with units can be sent to firstname.lastname@example.org
Share Transfer System
Share transfer request under physical and demat categories are normally affected/confirmed within a period of 15 days from the date of receipt. Shares are transferred and depository services are provided through M/s Mas Service Limited, the Registrar and share transfer agent. Investor's correspondence can be made at any of the following address:
i) Mas Services Limited: T-34, 2nd Floor, Okhla Industrial Area, Phase - II, New Delhi - 110 020
Phone No.: +91-11-26387281/82/83 E-mail : email@example.com
ii) Registered Office: Simbhaoli - 245 207, District Hapur, Uttar Pradesh
Phone No. +91-5731-226411/223118 E-mail: firstname.lastname@example.org
Non-mandatory requirements have been adopted by the Company to the extent they are in line with the nature of business activities of the Company. However, steps have been taken to implement the other requirements in a phased manner.
The prescribed form for nomination can be obtained from the Company/Transfer agent. Nomination facility in respect of shares held in electronic form is also available with depository participant as per the bye-laws and business rules applicable to NSDL and CDSL.
Unclaimed dividend and interest
There is no unclaimed dividend and interest outstanding and the amount of dividend/debenture installment or interest thereon remaining un-claimed for a period of 7 years have been transferred to the credit of investors' education and protection fund.
For and on behalf of Board of Directors of Simbhaoli Sugars Limited
Gurmit Singh Mann
May 27, 2014