REPORT ON CORPORATE GOVERNANCE
The Directors present the Company's report on Corporate Governance.
1. The Company's Corporate Governance Philosophy
Corporate Governance is the application of management practices, compliance of law and adherence to ethical standards to achieve the company's objective to enhance shareholder value. Corporate governance is the structure by which responsibilities are assigned and authority entrusted among the Board of directors, senior management and employees etc.
At, Sirpur Paper, the core principles of Corporate Governance are based on transparency, integrity, accountability and commitment to values. Empowerment to employees is given with freedom to decide, execute and deliver, accompanied however with responsibility. This governance structure and the core principles ensure performance discipline, meet shareholders' aspirations and lead to public confidence.
2. Composition of the Board
I. The Board of directors of the Company consists of eminent persons with professional expertise. The Board comprises one managing director, one whole time director and five non-executive directors, of whom three are independent directors as on March 31, 2014. The composition of the Board is in conformity with the requirements of the listing agreement with the stock exchanges.
3. Audit Committee
I. Presently, the Audit Committee comprises of one executive director and four non-executive directors, one of whom is the IDBI nominee. One director is a chartered accountant having accounting and financial background. Shri P. Vaman Rao is the Chairman of the Committee. The Committee met four times during the year on May 13, 2013; August 14, 2013; November 13, 2013 and February 13, 2014 and the attendance of the Members at the meetings was as follows:
Ms. Poonam Bodra was appointed as Member of the Committee with effect from February 13, 2014. Shri Rakesh Bhartia resigned as Member with effect from February 10, 2014.
The Chief financial officer, Internal auditor and Statutory Auditors are the permanent invitees. The Company Secretary is the secretary of the Committee.
The Chairman of the Audit Committee was present at the Annual General Meeting of the Company held on September 30, 2013.
The objective of the Audit Committee is to monitor and effectively supervise the Company's financial reporting process with a view to provide accurate, timely and proper disclosure. The Audit Committee has power to investigate any activity, seek information from any employee and obtain legal and other professional advice.
II. TERMS OF REFERENCE
The terms of reference of the Audit Committee include the following:
Powers of the Audit Committee
• Investigate any activity within its terms of reference;
• Seek information from any employee;
• Obtain outside legal or other professional advice;
• Secure attendance of external resources with relevant expertise, if considered necessary;
Role of the Audit Committee inter alia, includes the following:
• Overseeing the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible;
• Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of statutory auditors, including cost auditors, and fixation of audit fees and other terms of appointment;
• Approving payment to statutory auditors, including cost auditors for any other services rendered by them;
• Reviewing with the management, annual financial statements and auditors' report thereon before submission to the Board for approval, with particular reference to:
? Matters required to be included in the Directors' Responsibility Statement in the Directors' Report in terms of the Companies Act;
? Changes, if any, in accounting policies and practices and reasons for the same;
? Major accounting entries involving estimates based on the exercise of judgment by the management;
? Significant adjustments made in financial statements arising out of audit findings;
? Compliance with listing and other legal requirements relating to financial statements;
? Disclosure of related party transactions;
? Qualifications in draft audit report;
• Reviewing with the management the quarterly financial statements before submission to the Board for approval;
• 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 utilised 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;
• Reviewing and monitoring the auditors' independence and performance and effectiveness of audit process;
• Approving or any subsequent modification of transactions of the Company with related parties;
• Scrutiny of inter-corporate loans and investments;
• Valuation of undertakings or assets of the Company, wherever it is necessary;
• Evaluating of internal financial controls and risk management systems;
• Reviewing with the management, the performance of statutory auditors, including cost auditors and internal auditors, adequacy of internal control systems;
• 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;
• Discussing with internal auditors, any significant findings and follow-up thereon;
• 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;
• Discussing 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;
• Examining the reasons for substantial defaults, if any, in the payment to depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;
• Reviewing the functioning of the Whistle Blower mechanism;
• Approving the appointment of the 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 of the candidate;
• Carrying out such other functions as may be specifically referred to the Committee by the Company's Board of Directors and/or other Committees of Directors;
• Reviewing financial statements, in particular the investments made by the Company's unlisted subsidiaries;
• Reviewing the following information:
? Management Discussion and Analysis of financial condition and results of operations;
? Statement of significant related 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; and
? Appointment, removal and terms of remuneration of internal auditors/chief internal auditor;
• Seeking comments of the auditors about internal control systems, the scope of audit, including the observations of the auditors and review of financial statement before their submission to the Board and to discuss any related issue with the internal and statutory auditors and the management of the Company.
1 As revised by the Board in its meeting held on May 29, 2014 in conformity with the revised Clause 49 of the Listing Agreement. Executives of the accounts department, finance department, corporate secretarial department and internal audit cell and representatives of statutory and internal auditors attend the Audit Committee Meetings. The cost auditors attend the Audit Committee Meeting when cost audit reports are discussed.
During the year, the Committee has reviewed the internal controls put in place to ensure that accounts of the Company are properly maintained and that the accounting transactions are in accordance with prevailing laws and regulations. In conducting such reviews, the committee found no discrepancy or weakness in the internal control system of the Company.
4. Nomination and Remuneration Committee1
II. TERMS OF REFERENCE
• Identify persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and to recommend to the Board their appointment and/or removal;
• Carry out evaluation of every Director's performance;
• Formulate the criteria for determining qualifications, positive attributes and independence of a Director, and recommend to the Board a policy, relating to the remuneration for the Directors, key managerial personnel and other employees;
• Formulate the criteria for evaluation of Independent Directors and the Board;
• Devise a policy on Board diversity;
• Recommend/review remuneration of the Managing Director(s) and Whole-time Director(s) based on their performance and defined assessment criteria;
• 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;
• Perform such other functions as may be necessary or appropriate for the performance of its duties.
1 The Board in its meeting held on May 29, 2014 re-named the Committee and revised the terms of reference in conformity with the revised Clause 49 of the Listing Agreement.
III. REMUNERATION POLICY
Remuneration of employees largely consists of base remuneration, perquisites and performance incentive, which vary for cadres and are governed by industry pattern, qualification and experience of the employee, responsibilities handled and individual performance etc. The committee while approving the remuneration of managerial personnel takes into account the financial position of the company and trend in the industry.
5. Stakeholders Relationship Committee1
The Committee comprises of two executive directors and two non-executive directors as on March 31, 2014. Shareholders' complaints/grievances are redressed by the Registrar and Transfer Agent, viz. Venture Capital and Corporate Investments Private Limited. During the year, the Company has not received any investors' complaints. Hence, no meeting of the Stakeholders Relationship Committee was held.
1 TERMS OF REFERENCE
The functioning and broad terms of reference of the Stakeholders Relationship Committee as adopted by the Board are as under:
• Monitor redressal of investors'/shareholders'/security holders' grievances;
• Oversee the performance of the Company's Registrar and Transfer Agent;
• Recommend methods to upgrade the standard of services to investors;
• Monitor implementation of the Company's Code of Conduct for prohibition of insider trading;
• 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.
a. Examine redressal of shareholders' and investors' complaints such as transfer of shares, non-receipt of balance sheet, non-receipt of declared dividend etc.
b. Do all other acts or deeds as may be necessary or incidental thereto. The main objective of the Committee is to strengthen the investor relations.
1 The Board in its meeting held on May 29, 2014 re-named the Committee and revised the terms of reference in conformity with the revised Clause 49 of the Listing Agreement.
The Company Secretary and the Compliance Officer are entrusted with the responsibility to specifically look into the redressal of the shareholders' complaints and report the same to the Committee.
During the year, no complaints were received from the shareholders. As on August 11, 2014 no requests involving transfer of shares are pending for processing.
In order to expedite the process of share transfers, the Board has delegated the powers of approving transfer of shares to the Company Secretary and Senior Manager (Legal). The delegated authority is attending to share transfer formalities within the stipulated time. All valid share transfers during the year ended March 31, 2014 have been acted upon. The Company had no complaints pending at the close of the financial year.
7. a. Code of Conduct
The Board of Directors has adopted the Code of Business Conduct and Ethics for Directors and senior management.
A copy of the Code has been put on the Company's website www.sirpurpaper.com. The code has been circulated to all the Directors and senior management personnel and the compliance of the same is affirmed by them annually.
A declaration signed by the Executive Director of the Company is annexed.
b. Whistle Blower Policy
The Company has established a vigil mechanism for the Directors and employees in compliance with revised Clause 49 of the Listing Agreement and Section 177 (9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014. As required, the Whistle Blower Policy has been posted on the Company's website.
a. During the year, there were no transactions with the promoters, directors or the management or their relatives that had potential conflict with the interest of the Company. The Company has no subsidiaries.
Transactions with related parties as per requirements of Accounting Standard (AS-18) - 'Related Party Disclosures' are disclosed in Note No.28(l) of the financial statements in the Annual Report.
b. In the preparation of the financial statements, the Company has followed the Accounting Standards as prescribed by Companies (Accounting Standards) Rules, 2006. The significant accounting policies, which are consistently applied, are disclosed in Note No.1.2 of the financial statements in the Annual Report.
c. The Company has laid down procedures to inform the Board about the risk assessment and minimization. The Board periodically discusses the significant business risks identified by the management and the mitigation measures to address such risks.
d. There were no instances of non-compliance by the Company on any matter related to the capital markets, during the last three years and no strictures or penalties have been imposed on the Company by the stock exchange or by any statutory authority.
e. The Executive Director and the Chief Financial Officer of the Company have issued necessary certificate pursuant to Clause 49 of the Listing Agreement and the same is attached and forms part of the annual report.
9. Means of Communication
a. Quarterly results and statutory notices are published in prominent daily newspapers viz. Financial Express and Andhra Prabha.
b. Share holding pattern, quarterly results and annual report are sent to the stock exchanges, where securities of the Company are listed, within the stipulated time. These are provided on the Company's website www.sirpurpaper.com and furnished to the website www.corpfiling.co.in
c. Separate Email ID for registering investors grievances is email@example.com
d. Management discussion and analysis report forms part of the annual report, which is mailed individually to the Members of the Company.
10. General Shareholders' information
a. Annual General Meeting will be held on Monday, September 29, 2014 at 12:30 p.m. at 'Bhaskara Auditorium', B. M. Birla Science Center, Adarshnagar, Hyderabad - 500 063.
b. E-voting services:
In compliance with the provisions of Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014 read with Clause 35B of the Listing Agreement, the Company is pleased to provide to the Members the facility to exercise their right to vote on all resolutions set forth in the Notice to the Members, convening the 75th Annual General Meeting by electronic means and the business will be transacted through E-voting service provided by National Securities Depository Limited. The detailed instructions for E-voting are given as a separate attachment to the said Notice.
c. Financial calendar:
Financial year: April 1 to March 31
Financial reporting for the quarterly results: (Tentative)
First quarter ending June 30 : on or before August 14
Second quarter ending September 30 : on or before November 14
Third quarter ending December 31 : on or before February 14
Quarter/year ending March 31 : on or before May 30
Annual General Meeting : on or before September 30
d. Dates of book closure: September 25, 2014 to September 29, 2014 (both days inclusive)
e. Listing on stock exchanges: BSE Limited, Mumbai (BSE) National Stock Exchange of India Limited (NSE) Annual listing fees for the year 2014-15 has been paid to the above stock exchanges.
f. Stock codes, demat ISIN & CIN
BSE Limited ; 502455
National Stock Exchange of India Limited : SIRPAPER EQ
ISIN No. on NSDL & CDSL ; INE202C01010
CIN : L21010TG1938PLC000591
g. In terms of the CDR scheme and the Master Restructuring Agreement entered with the lenders, the Company has made a preferential issue of 11,05,100 Ordinary shares of Rs.10 each at a price of Rs.43 per share (including premium of Rs.33 per share) aggregating Rs.4.75 crore, to be offered and allotted in two tranches. Accordingly, the Company has offered and allotted 5,55,100 Ordinary shares in first tranche to M/s. Amba Investment Private Limited, a promoter on January 31, 2013. The balance 5,50,000 ordinary shares have also been allotted to the said promoter in second tranche in pursuance of CDR scheme on August 14, 2013. The said Ordinary shares are listed on BSE and NSE. The 5,50,000 Ordinary shares (equity) issued shall bear a lock-in of one year, from the date of allotment (i.e. August 14, 2013) till August 14, 2014
i. Share Transfer System
The Company's shares are traded in the stock exchanges compulsorily in demat mode. The Company has appointed a Registrar and Transfer Agent as a common agency to look after both physical and demat share work. The shares, which are lodged for transfer with the Registrars and Transfer Agent, are processed and returned to Members within stipulated time. The address of the Registrar and Transfer Agent for correspondence is as follows:
Venture Capital and Corporate Investments Private Limited Unit: The Sirpur Paper Mills Limited 12-10-167, Bharat Nagar Hyderabad 500 018 Tel.: +91 40 2381 8475/2381 8476 Fax: +91 40 2386 8024Email: firstname.lastname@example.org
11. Dematerialisation of shares and liquidity
Trading in Company's shares is permitted only in dematerialized form and 1,60,81,014 Ordinary shares (representing 94.68% of the Company's share capital) have been dematerialised upto March 31, 2014.
12. Books of Account: The Books of Account of the Company with respect of items mentioned in Clause (a) to (d) of sub-section (1) of Section 209 of the Companies Act, 1956 are kept at the Mills Office at factory.
13. The addresses for correspondence are as mentioned below:
Sirpur - Kaghaznagar - 504 296Adilabad District Telangana
The Sirpur Paper Mills Limited 6 5-9-22/1/1, 1st Floor Adilabad District Ashoka Chambers, Opp: New MLA Quarters Telangana Adarshnagar, Hyderabad - 500 063 Tel.: +91 40 2323 6301/2329 8705 Fax: +91 40 2329 8705 Email: email@example.com
14. Non-mandatory requirements
a. At present, the Chairman does not have any separate office with the Company. The Corporate Office of the Company supports the Chairman for discharging the responsibilities.
b. As the financial performance of the Company is well publicised, individual communication of half-yearly results is not sent to the Members.