REPORT ON CORPORATE GOVERNANCE
COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE:
Your Company has always practiced Corporate Governance of the highest standard and follows a culture that is built on core values and ethics. Your Company is committed to the adoption of best Corporate Governance practices and its adherence in the true spirit, at all times. The Companies Act, 2013 is designed to implement good governance for the Companies.
The Company believes that good governance goes beyond working results and financial propriety and is pre-requisite or attainment of excellent performance.
The Company confirms the compliance of Corporate Governance as contained in Clause 49 of the Listing Agreement, the details of which are given below:
I. BOARD OF DIRECTORS:
During the year under consideration, the Board comprises of 11 Directors drawn from diverse fields/professions. The Board has optimum combination of Executive and Non-executive Directors, which is in conformity with Clause 49 of the Listing Agreement. The Chairman of the Board is Promoter Non-executive Director. All the Directors other than Independent Directors are liable to retire by rotation.
The Company has 8 Non-executive Directors out of which 6 are Independent Directors. There are three directors in whole time employment, being the Managing Directors of the Company.
The necessary disclosure regarding Committee positions have been made by all the Directors. None of the Directors on the Board is a Member of more than 10 committees(2) and Chairman of more than 5 committees(2) across all companies in which they are directors.
The names and categories of the Directors on the Board, their attendance at Board Meetings held during the year and the number of Directorships and Committee Chairmanship / Membership held by them in other Companies are given herein below:
• Board Meetings:
Five Board Meetings were held during the year under review and the gap between two meetings did not exceed 120 days. The dates on which the Board Meetings were held during the Financial Year and attendance on the same are as follows:
II. AUDIT COMMITTEE:
The Audit Committee acts as a link among the Management, the Statutory Auditors, Internal Auditors and the Board of Directors to oversee the financial reporting process of the Company. The Committee's purpose is to oversee the quality and integrity of accounting, auditing and financial reporting process including review of the internal audit reports and action taken report.
The Committee's composition meets with requirements of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Chairman of the audit Committee is a Non-executive and Independent Director. The present composition of the Audit Committee and particulars of meetings attended by them are given below
(ii) Terms of reference:
The terms of reference of the Audit Committee are wide enough to cover the matters specified for Audit Committee under Clause 49 of the Listing Agreements as well as in Section 177 of the Companies Act, 2013. The terms of reference of the Audit Committee are broadly as under:
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. Recommendation for appointment, remuneration and terms of appointment of auditors of the Company;
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 auditor's report thereon before submission to the Board for approval, with particular reference to:
a) Matters required to be included in the Directors' Responsibility Statement to be included in the Board's report in terms of clause (c) of sub-section 3 of Section 134 of the Companies Act, 2013.
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 judgment by the management.
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.
5. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval;
6. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency, monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter;
7. Review and monitor the Auditor's independence and performance, and effectiveness of audit process;
8. Approval or any subsequent modification of transactions of the Company with related parties;
9. Scrutiny of inter-corporate loans and investments;
10. Valuation of undertakings or assets of the Company, wherever it is necessary;
11. Evaluation of internal financial controls and risk management systems;
12. Reviewing, with the management, the performance of statutory and internal auditors, adequacy of the internal control systems;
13. 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;
14. Discussion with internal auditors of any significant findings and follow up there on;
15. 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;
16. 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;
17. To look into the reasons for substantial defaults, if any, in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;
18. To review the functioning of the Whistle Blower mechanism;
19. Approval of appointment of CFO (i.e., the Whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate;
20. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.
21. Reviewing financial statements, in particular the investments made by the Company's unlisted subsidiaries
(iii) Review of Information by Audit Committee:
1. The Management discussion and analysis of financial condition and results of operations.
2. Statement of significant related party transactions submitted by management.
3. Management letters / letters of internal control weaknesses issued by the Statutory Auditors.
4. Internal audit reports relating to internal control weaknesses and
5. The appointment, removal and terms of remuneration of the Chief internal auditor.
III. NOMINATION AND REMUNERATION COMMITTEE:
The Board of Directors of the Company in its meeting held on 8th May, 2014, changed the nomenclature of the "Remuneration Committee" of Board of Directors of the Company to "Nomination and Remuneration Committee" and also modified its terms of reference to comply with the requirements of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
The constitution and terms of reference of Nomination and Remuneration Committee of the Company are in compliance with provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
During the financial year 2014-15, a meeting of the Nomination and Remuneration Committee was held on 8th May, 2014. The composition of the Committee and the details of meeting attended by the members of the Committee are given below
ii) Term of Reference:
The broad terms of reference of Remuneration Committee are as under:
(a) Formulation of the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees;
(b) Formulation of criteria for evaluation of Independent Directors and the Board;
(c) Devising a policy on Board diversity;
(d) Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appointment and removal and shall carry out evaluation of every director's performance.
(e) To carry out any other function as is mandated by the Board from time to time and / or enforced by any statutory notification, amendment or modification, as may be applicable.
(f) To perform such other functions as may be necessary or appropriate for the performance of its duties.
(iii) The Company Secretary acts as the Secretary to the Committee.
• Remuneration to Non-Executive Directors:
The Board of Directors of the Company in its meeting held on 8th May, 2014 decided that in view of the increased responsibility, time devotion, improved corporate governance and cost inflation, the sitting fee payable to all the Non-executive directors of the Company may be enhanced as under.
1. Board Meeting : 785,000/- per meeting
2. Audit Committee Meeting : 740,000/- per meeting
3. Other Board Committees Meetings : 715,000/- per meeting
Executives Directors are not being paid sitting fees for attending meetings of the Board of Directors/Committees. Other than sitting fees, there were no material pecuniary relationships or transactions by the Company with the Non-Executive and Independent Directors of the Company.
The details of sitting fees paid to the Non-Executive and their shareholding details for the financial year 2014-15 are as follows:
• Remuneration to Executive Directors:
The Company pays remuneration to its Executive Directors by way of salary, perquisites and allowances (a fixed component) and commission (a variable component) in accordance with provision of the Schedule V read with other provisions of the Companies Act, 2013, as approved by the Members.
The Board on the recommendation of the Nomination and Remuneration Committee approves the annual increments. The Board fixes a ceiling on perquisites and allowances as a percentage of salary. Within the prescribed ceiling, the perquisite package is recommended by the Nomination and Remuneration Committee. Commission is calculated with reference to the net profits of the Company in a particular financial year and is determined by the Board of Directors at the end of the financial year based on the recommendations of the Nomination and Remuneration Committee, subject to the overall ceiling as stipulated in Section 197 of the Companies Act, 2013.
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, 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 Board Committees.
The performance evaluation of the Chairman and Managing Director and the Non-Independent Directors was carried out by the Independent Directors. The Directors expressed their satisfaction with the evaluation process.
No Stock Options were granted or exercised by any Employee of the Company during the year 2014-15.
Mr. Dinesh Patel, Chairman, Mr. Arun Patel, Vice Chairman and Mr. Rahul A. Patel and Mr. Amit D. Patel, Managing Directors (Group) being the promoters of the Company have not been granted any stock options in terms of the provisions under the SEBI Guidelines/Regulations.
Pursuant to Provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, the said scheme shall be aligned with the said regulations with in prescribed time.
(v) Service contract, severance fees and notice period
The appointment of the Managing Directors are governed by the Articles of Association of the Company and the Resolution passed by the Board of Directors and the Shareholders of the Company.
No separate Service Contract is entered into by the Company with the Managing Directors.
There is no separate provision for payment of severance fee under the resolutions governing the appointment of the Managing Directors.
Perquisites include house rent allowance; leave travel allowance, gas & electricity, medical and premium for personal accident insurance, contribution to provident fund, superannuation fund and gratuity.
The appointment of the Managing Directors are for a period of two-five years.
IV. STAKEHOLDERS' RELATIONSHIP COMMITTEE:
The Board of Directors of the Company in its meeting held on 8th May, 2014 changed the nomenclature of "Shareholders'/ Investors' Grievances Committee" to "Stakeholders' Relationship Committee" and also modified its terms of reference to comply with the requirements of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
The constitution and terms of reference of Stakeholders' Relationship Committee of the Company are in compliance with provisions of Companies Act, 2013 and Clause 49 of the Listing Agreement.
Terms of Reference:
(a) Oversee and review all matters connected with the transfer of the Company's securities.
(b) Monitor redressal of investors' / shareholders' / security holders' grievances.
c) Oversee the performance of the Company's Registrar and Transfer Agents.
(d) Recommend methods to upgrade the standard of services to investors.
(e) Carry out any other function as is referred by the Board from time to time or enforced by any statutory notification / amendment or modification as may be applicable.
During the year 2014-15, four meetings of "Stakeholders' Relationship Committee" were held on 8th May, 2014; 5th
August, 2014; 13th October, 2014 and 28th January, 2015. The
Composition of "Stakeholders' Relationship Committee" and the details of the meetings attended by its members are as follows:
(ii) Investors' Grievance Redressal Cell:
The Company has designated Mr. Hitesh T. Mehta, Company Secretary as the compliance officer of the investors' grievance redressal cell. For the purpose of registering complaints by investors, the Company has designated an e-mail ID - share@ sintex.co.in.
V. SHARE AND DEBENTURE TRANSFER COMMITTEE:
The Board of Directors has delegated the power of approving transfer/transmission of shares/dematerialization / rematerialisation of shares and debentures/issue of duplicate certificates and other related formalities to the Share and Debenture Transfer Committee comprising of Mr. Dinesh B. Patel, Chairman and Mr. Arun P. Patel, as member of the Committee. Mr. Hitesh T. Mehta, Company Secretary acts as the Secretary of the Committee. 36 Meetings of the said Committee were held during the Financial Year 2014-15.
VII. SUBSIDIARY COMPANIES:
The Company has no material non - listed Indian subsidiary Company and therefore, the requirement of inducting an Independent Director of Holding Company on the Board of Directors of the subsidiary Company does not arise.
The financial statements, in particular the investments made by the unlisted subsidiary companies are reviewed quarterly by the Audit Committee of the Company, the minutes of the meetings of subsidiary companies are placed before the Company's Board regularly.
The Board of Directors also reviews statement containing all significant transactions and arrangements entered into by the unlisted subsidiary companies.
The policy for determining Material Subsidiary as approved by the Board may be accessed on the Company's website at the link: <http://sintex.in/investor/material_subsidiary_policy.pdf>.
VIII. OTHER DISCLOSURES:
(i) Disclosure on materially significant related party transactions:
No transactions of material nature has been entered into by your Company with any related parties as per Accounting Standard that may have any potential conflict with the interests of your Company. The related party transactions have been disclosed under Note No. 30.3 forming part of the financial statements.
The Audit Committee reviewed the related party transactions undertaken by the Company in the ordinary course of business.
(ii) Details of non-compliance by the Company:
There were no instances of non-compliance by the Company on any matters relate to various capital markets or penalties imposed on the Company by the Stock Exchange or SEBI or any statutory authority during the last 3 financial years.
(iii) Code of Conduct:
The Company has formulated and implemented a Code of Conduct for Board Members and Senior Management Personnel of the Company which is also posted on the website of the Company.
Requisite annual affirmations of compliance with the respective Codes have been made by the Directors and Senior Management of the Company.
(iv) CEO and CFO Certification:
The Managing Director and the Chief Financial Officer of the Company give annual certification on financial reporting and internal controls to the Board in terms of Clause 49 of the Listing Agreement. The Managing Director and the Chief Financial Officer also give quarterly certification on financial results while placing the financial results before the Board in terms of Clause 41 of the Listing Agreement.
(v) Whistle Blower Policy:
The Company has adopted a Whistle Blower Policy and has established the necessary mechanism in line with the requirements under the Companies Act, 2013 and Listing Agreement:
* For employees to report concerns about unethical behavior;
* To establish a mechanism to report to the management, concerns about unethical behavior, actual or suspected fraud or violation of the Integrity Policy; and
* To ensure that adequate safeguards shall be provided to the whistle blowers against any victimization or vindictive practices like retaliation, threat or any adverse (direct or indirect) action on their employment and direct access to the Chairperson of the Audit Committee in exceptional cases. The Policy also 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.
No personnel/ person has been denied access to the Audit Committee.
The Company has a comprehensive and integrated risk management framework to effectively deal with uncertainty and associated risks and enhances the organisation's capacity to build value. The Risk Management framework of the Company has been designed with an objective to develop a risk culture that encourages identifying risks and responding to them with appropriate actions.
IX. MEANS OF COMMUNICATION:
(i) Financial Results: The annual, half yearly and quarterly results are published in Financial Express (Gujarati) (Ahmedabad Edition), Financial Express (English) (All Editions), Mint - Hindustan Times (All Editions), Business Standard (All Edition) and Business Line (All Edition).
(ii) All quarterly results are also posted on our website -www. sintex.in
(iii) The Company's website www.sintex.in contains a separate dedicated Section Investor Relation where shareholder information is available. The Annual Report of the Company is also available on the website in a user-friendly and downloadable form.
(iv) The management discussion and analysis report is attached with the Directors' Report in this Annual Report.
(v) Press Releases made by the Company from time to time are also displayed on the Company's website.
) Corporate presentations made to institutional investors or to
analysts are posted on the Company's website- www.sintex.in
X. GENERAL SHAREHOLDER INFORMATION:
1. 84th Annual General Meeting
Day, Date and Time : Monday, August 31, 2015 10:30 A.M.
Venue : Sintex Industries Limited
Registered Office: Kalol - 382 721 (N.G.), Dist. Gandhinagar, Gujarat, India
Book closure dates : From August 22, 2015 to August 31, 2015
Dividend payment date : On or after September 4, 2015
2. Financial Calendar
The Company follows the period of 1st April to 31st March, as the Financial Year. For the Financial year 201516, Financial Results will be announced as per the following tentative schedule
1st quarter ending on 30th June, 2015 : 2nd week of July, 2015
2nd quarter ending on 30thSeptember, 2015 : 2nd week of October, 2015
3rd quarter ending on 31st December, 2015: 2nd week of January, 2016
Year ending on 31st March, 2016 : 1st week of May, 2016
Listing on Stock Exchanges:
Stock Exchanges /Type of Instruments/ Stock Code
BSE Limited (BSE) Equity Shares *Equity - 502742
25th Floor, P.J. Towers, Dalal Street, Mumbai - 400 001 Telephone No.: 022 - 22721233/34
Stock Exchanges /Type of Instruments/ Stock Code
National Stock Exchange of India Ltd. (NSE) Equity Shares * Equity - Sintex EQ
Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051Telephone No : 022 - 26598235/36 022 - 26598346
Stock Exchanges /Type of Instruments/ Stock Code
Singapore Exchange Securities Trading Limited Foreign Currency Convertible Bonds ("FCCB") * XS0856331391
2 Shenton Way # 19 - 00 SGX Center 1 Singapore 068804
Telephone No : 00 65-6236 8888
Stock Exchanges /Type of Instruments/ Stock Code
BSE Limited Secured Redeemable Non-Convertible Debentures ("NCD's") *946041- Rs.250 Cr. 946720- Rs.150 Cr. 946743- Rs.200 Cr. 950353- Rs.225 Cr. 951037- Rs.275 Cr.
25th Floor, P.J. Towers, Dalal Street, Mumbai - 400 001 Telephone No : 022 - 22721233/34
International Securities Identification Number (ISIN)
ISIN is an identification number for traded shares. This number needs to be quoted in each transaction relating to the dematerialized equity shares of the Company. Your Company's ISIN number for its equity shares is INE429C01035.
Payment of Listing Fees and Depository Fees
Annual listing fees for the year 2015-16 has been paid by the Company to BSE and NSE. Annual custody / issuer fee for the year 201516 will be paid by the Company to NSDL and CDSL on receipt of the invoices
3. Location of the depositories
National Securities Depository Ltd. (NSDL)
Trade World, 4th Floor, Kamala Mills 022 - 2499 4200 Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013
Central Depository Services (India) Limited (CDSL)
Phiroze Jeejeebhoy Towers, 17th Floor, Dalal Street, Mumbai - 400 001 022 - 2272 3333
7. Dematerialization of Shares:
The Shares of Sintex Industries Ltd are compulsorily traded in dematerialized form. A total number of 40,19,39,510 Equity Shares of the Company constituting about 94.27% of the subscribed and paid-up share capital were in dematerialized form as on March 31, 2015. The Company's Equity Shares are frequently traded on BSE Ltd (BSE) and National Stock Exchange of India Ltd (NSE).
8. Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, conversion date and likely impact on equity:
a) Issue of Foreign Currency Convertible Bonds (FCCBs):
During the financial year 2012-13, the Company has raised USD 140 million step down foreign currency convertible bonds (FCCBs) due 2017. The bondholders are entitled to apply for equity shares at a price of Rs.65.74(reset pursuant to meeting of committee of Board of Directors held on 28th May, 2014) per share with a fixed rate of exchange on conversion of Rs.54.959 to USD 1. Outstanding FCCBs pending for conversion as on 31st March, 2015 is USD 24.15 Million.
After balance conversion of aforesaid FCCBs, paid up capital of the Company will increase by 2,01,89,532 equity shares of Rs.1/- each amounting to Rs.2.02 Crores and the securities Premium Account will increase by Rs.130.71 Crores.
b) Outstanding Warrants:
During the financial year 2012-13, the Company had allotted 3,00,00,000 warrants optionally convertible into Equity Shares to Promoter Group Companies on preferential basis at a price of 769.01 per warrant (25% consideration paid upfront).
During the year under review, the allottees have exercised their right of conversion for the balance of 164,00,000 warrants, aggregating to allotment of 164,00,000 Equity Shares at a price of Rs.69.01 (inclusive premium of Rs.68.01 per share).
At the end of financial year 31st March, 2015, no warrants were outstanding for conversion.
9. Registrar and Share Transfer Agent (RTA):
Share transfers, dividend payment and all other investor related matters are attended to and processed by our Registrar and Share Transfer Agent viz. M/s. Sharepro Services (India) Pvt. Ltd.
Sharepro Services (India) Pvt Ltd. 416-420, 4th Floor, Devnandan Mall, Opp. Sanyas Ashram, Ellisbridge, Ahmedabad - 380 006 Phone: (O) 91-79-26582381 to 84 Fax: 91-79-26582385 Email ID: email@example.com
10. Share Transfer System:
Share transfer requests received in physical form are registered within 15 days from the date of receipt, subject to documents being valid and complete in all respect and Demat requests are normally confirmed within an average of 10 days from the date of receipt.
11. Reconciliation of Share Capital Audit:
A qualified practicing Company Secretary carried out reconciliation of share capital audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and the Central Depository Services (India) Ltd (CDSL) and the total issued and listed capital. The reconciliation of share capital audit report mentions 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 with NSDL & CDSL, as depositories.
12. Plant Locations:
The Company's plastic plants are located at Kalol (N.G.), Kolkata, Daman, Bhachau (Kutch), Nagpur, Nalagarh, Salem and Namakkal and its textile plant is located at Kalol (N.G.).
It is hereby declared that the Company has obtained affirmation from all the Members of the Board and Senior Management personnel that they have complied with the "Code of Conduct and Ethics for Board Members and Senior Management" for the year ended on 31st March, 2015.
Amit D. Patel
Date: July 11, 2015