CORPORATE GOVERNANCE REPORT
The Directors present the Company's Report on Corporate Governance for the year ended March 31.2015.
The Company's Governance philosophy is based on trusteeship, transparency and accountability. As a corporate citizen, our business fosters a culture of ethical behaviour and disclosures aimed at building trust of our stakeholders. The Company's Code of Business Conduct and Ethics, and the Code of Conduct for Prevention of Insider Trading are an extension of our values and reflect our commitment to ethical business practices, Integrity and regulatorv compliances.
The Corporate Governance structure is as fol lows:
1. Board of Directors: The Board is entrusted with the ultimate responsibility of the management, directions and performance of the C'ompany .As its primary role is fiduciary in nature, the Board provides leadership, strategic guidance, objective and independent view to the Company's management while discharging its responsibilities, thus ensuring that the management adheres to ethics, transparency and disclosure.
2. Committees of the Board: The Board has constituted the fol lowing Committees viz. Audit Committee, Remuneration and Nomination Committee and Stakeholders Relationship Committee
THE BOARD OF DIRECTORS
The Board is broad based and consists of eminent individuals from industry, management, legal, financial, technical and marketing. The Company is managed by the Board of Directors in coordination with the Senior Management team. The Board periodically evaluates the need for change in its composition and size. As on March 31, 2015, the Board of the Company had six Directors out of which one is the Managing Director, three are Independent Directors and two are Non-Executive Directors. The Chairman of the Board is the Managing Director.
The Non-Executive Independent Directors fulfd the conditions of Independence specified in Section 149(6) of the Companies Act, 2013 and Rules made there under and meet with the requirements of Clause 49 of the Listing Agreement entered into with the Bombay Stock Exchange. A formal letter of appointment to Independent Director as provided in Companies Act, 2013 and the Listing agreement has been issued and disclosed on the website of the Company viz. www.southerngasindia.com
The Board meets at regular intervals to discuss and decide on business strategies/policies and review the financial performance of the Company. The Board Meetings are pre-scheduled and a tentative annual calendar of the Board is circulated to the Directors well in advance to facilitate the Directors to plan their schedules. In ease of business exigencies the Board's approval is taken through circular resolutions. The circular resolutions are noted at die subsequent Board Meeting.
The notice of each Board Meeting is given in writing to each Director. The Agenda along with the relevant notes and other material information are sent in advance separately to each Director and in exceptional cases tabled at the meeting. This ensures timely and informed decisions by the Board. The Board reviews the performance of the Company vis-a-vis the budgets/targets.
In the financial year 2014-15, the Board met on four occasions. The meetings were held on May 29, 2014, August 8,2014. November 7,2014 and February 13,2015.
The interval between two meetings was well within the maximum period mentioned under Section 173 of the Companies Act, 2013 and the Listing agreement
Information given to the Board
The Company provides the information as set out in Clause 49 of the Listing Agreement to the Board and the Board Committees to the extent it is applicable and relevant. Such information is submitted cither as part of the agenda papers in advance of the respective meetings or by way of presentations and discussions during the meeting.
Post Meeting Mechanism
The important decisions taken at the Board/Board Committee meetings are communicated to the concerned departments/divisions.
FAMILIARISATION PROGRAMME FOR DIRECTORS
At the time of appointing a Director, a formal letter of appointment is given to him, which inter alia explains the role, function, duties and responsibilities expected of him as a Director of the Company. The Director is also explained in detail the Compliance required from him under the Companies act, 2013, Clause 49 of the Listing Agreement and other relevant regulations and affirmation taken with respect to the same. The Chairman and Managing Director also has one to one discussion with the newly appointed Director to familiarise him with the Company's operations. Further the Company has put in place a system to familiarise the Independent Directors about the Company, its products, business and the on-going events relating to the Company.
Code of Business Conduct and Ethics
The Company has adopted Code of Business Conduct & Ethics ("the Code") which is applicable to the Board of Directors and Senior Management Team (one level below the Board) of the Company. The Board of Directors and the members of Senior Management Team are required to affirm semi-annual Compliance of this Code. The Code requires Directors and Employees to act honestly, fairly, ethically and with integrity, conduct themselves in professional, courteous and respectful manner, The Code is displayed on the website of the Company viz. www.southenigasindia.com
Conflict of Interests
Each Director informs the Company on an annual basis about the Board and the Committee positions he occupies in other companies including Chairmanships and notifies changes during the year. Members of the Board while discharging their duties, avoid conflict of interest in the decision making process. The members of the Board restrict themselves from any discussion and voting in transactions that they have concern or interest
Insider Trading Code
The Company has adopted a Code of Conduct for Prevention of Insider Trading ("the Code") in accordance with the requirements of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations. 1992 . The Code is amended from time to time reflecting the changes brought in by SEBI in the Insider Trading Regulations. The Code is applicable to Promoters . all Directors and such designated Employees who are expected to have access to unpublished price sensitive information relating to the Company.
COMMITTEES OF THE BOARD
The Board of Directors have constituted Board Committees to deal with specific areas and activities which concern the Company and need a closer review. The Board C'ommittes are formed with approval of the Board and function under their respective Charters. These Board Committees play an important role in overall management of day-to-day affairs and governance of the Company. The Board Committees meet at regular interval, takes necessary steps to perfonn its duties entrusted by the Board. To ensure good governance, the Minutes of the Committee Meetings are placed before the Board for their noting. The board has currently the following Committees:
(A) AUDIT COMMITTEE
Audit Committee of the Board of Directors ('the Audit Committee") is entrusted with the responsibility to supervise the Company's internal controls and financial reporting process. The composition, quorum, powers, role and scope are in accordance with Section 177 of the Companies Act, 2013 and the provisions of Clause 49 of the Listing Agreement. Ail members of the Audit Committee are financially literate and bring in expertise in the fields of Finance, Taxation, Economics, Risk and International Finance. Mr. Ranganath N. Prabhu, Non-Executive Independent Director is the Chairman of the Audit Committee. The other members of the Audit Committee include Mr Motilal S. Keny, and Mr Gautam V. Pai Cacode.
Meetings and Attendance
The Audit Committee met four times during the Financial Year 2014-15. The Company is in full compliance with Clause 49 of the Listing Agreement on gaps between any two meetings. The committee met on May 29,2014, August 8,2014, November 7,2014 and February 13,2015. The necessary quorum was present for all Meetings. The Chairman of the Audit Committee was not present at the last Annual General Meeting of the Company. The table below provides the attendance of the Audit Committee members:
Terms of Reference
The Audit Committee inter alia performs the functions of approving Annual Internal Audit Plan, review of financial reporting system, internal control systems, discussion on quarterly, half-yearly, and annual financial results, interaction with Statutory and Internal Auditors, one-on-one meeting with Statutory and Internal Auditors, recommendation for the appointment of Statutory and cost Auditors and their remuneration, recommendation for the appointment and remuneration of Internal Auditors, review of Business Risk Management Plan, review of Forex Policy, Management Discussion & Analysis, review of Internal Audit Reports, significant related party transactions. The Board has framed the Audit Committee Charter for the purpose of effective compliance of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. In fulfilling the above role, the Audit Committee has powers to investigate any activity within its terms of reference, to seek information from employees and to obtain outside legal and professional advice.
Functions of Audit Committee
The Audit Committee, while reviewing the Annual Financial Statements also review the applicability of various Accounting Standards referred to in Section 133 of the Companies Act, 2013. Compliance of the Accounting Standards as applicable to the Company has been ensured in the preparation of the Financial Statements for the year ended March 31,2015.
The Audit Committee bridges the gap between the Internal Auditors and the Statutory Auditors. The Statutory Auditors are responsible for performing independent audit of the Company's financial statements in accordance with the generally accepted auditing practices and issuing reports based on such audits, while the Internal Auditors are responsible for the internal risk controls. Besides, the above, Chairman and Managing Director, Business Heads of the Company's Divisions, the representatives of the Statutory Auditors and the Internal Auditors are permanent Invitees to the Audit Committee Meetings. The representatives of the Cost Auditor attend such meetings of the Audit Committee where matters relating to the Cost Audit Report are discussed at length.
The Company follows best practices in financial reporting. The Company has been reporting on quarterly basis the Un-audited Standalone Financial Results as required by Clause 41 of the Listing Agreement entered with the Bombay Stock Exchange. The company's quarterly un-audited Standalone Financial Results are made available on the website www.southerngasindia.com and are also sent to the Bombay Stock Exchange where the Company's equity shares are listed for display at their respective websites.
The Audit Committee also overseas and reviews the functioning of a vigil mechanism (implemented in the Company as a Fraud Risk Management Policy and Whistle Blower Policy) and reviews the finding of investigation into cases of material nature and the actions taken in respect thereof
Internal Control and Governance Processes
The Company has appointed an Internal Auditor to review and report on the internal controls system. The report of the Internal Auditor is reviewed by the Audit Committee. The audit Committee formulates a detailed plan to the Internal Auditors for the year and the same is reviewed at the Audit committee meetings. The internal Auditor submits his recommendations to the Audit Committee and provides a road map for future action.
(B) REMUNERATION AND NOMINATION COMMITTEE
The remuneration and Nomination Committee comprises of 3 Directors. Mr Ranganath N. Prabhu. Independent Director is the Chairman of the Committee. The other members of the Remuneration Committee include Mr. Shripad P. Patnekar and Mr Jayendra V. Gaitonde. The Composition of Remuneration and
Nomination Committee is pursuant to the provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
Meeting and Attendance
The Remuneration and Nomination Committee met once during the year on 29* May,2014. The necessary quorum was present for the Meeting. The Chairman of the Remuneration and Nomination Committee was not present at the last Annual General Meeting of the Company and he had sought leave for the same. The table below provides the attendance of the Remuneration and Nomination Committee members.
Terms of Reference
The Board has framed the Remuneration and Nomination Committee Charter which ensures effective compliance of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Board has clearly defined terms of reference for the Remuneration and Nomination Committee, which are as follows:
« Reviewing the overall compensation policy, sen-ice agreements and other employment conditions
of Managing/Wliole-time Director (s) and Senior Management (one level below the Board)
• To help in determining the appropriate size, diversity and composition of the Board;
• To recommend to the Board appointment/reappointment and removal of Directors:
• To frame criteria for dctennining qualifications, positive attributes and independence of Directors;
« To recommend to the Board remuneration payable to the Directors while fixing the remuneration to Executive Director (s) the restrictions contained in the Companies Act, 2013 is to be considered.
• To create an evaluation framework for Independent Directors and the Board;
• To provide necessary reports to the Chairman after the evaluation process is completed by the Directors;
« To assist in developing a succession plan for the Board;
• To assist the Board in fulfilling responsibilities entrusted from time-to-time;
• Delegation of any of its powers to any Member of the Committee or the Compliance Officer
A Remuneration to Non-Executive Directors
The Non-Executive Directors are paid remuneration by way of Sitting Fees. The Non-Executive Directors are paid sitting fees for each meeting of the Board or Committee of Directors attended by them. The total amount of sitting fees paid during the Financial Year 2014-15 was Rs 49,000/-. The Non-Executive Independent Directors do not have any material pecuniary relationship or transactions with the Company.
B Remuneration to Executive Directors
The appointment and remuneration of Executive Directors including Chairman and Managing Director and Whole-time Director is governed by the recommendation of the Remuneration and Nomination Committee, resolutions passed by the Board of Directors and shareholders of the Company. Payment of Remuneration to Executive Directors is governed by the respective
Agreements executed between them and the Company. The remuneration package of the Chairman and Managing Director and Whole-time Directors comprises of salary, perquisites, allowances and contributions to Provident and other Retirement Benefit Funds as approved by the Shareholders at the General Meetings.
Annual increments are linked to performance and are decided by the Remuneration and Nomination Committee and recommended to the Board for approval thereof.
The remuneration policy is directed towards rewarding performance, based on review of achievements. It is aimed at attracting and retaining high calibre talent. Presently, the Company docs not have a scheme for grant of stock options or performance linked incentives for its Directors
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. A structured questionnaire was prepared after circulating the draft forms, covering various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.
The performance evaluation of the Chairman and Managing Director and the Non-independent Directors was carried out by the Independent Directors. The Directors express their satisfaction with the evaluation process
(C) STAKEHOLDERS RELATIONSHIP COMMITTEE
Composition and Attendance
Terms of Reference
The Board has clearly defined the terms of reference for this Committee, which generally meets once a month. The Committee looks into the matters of Shareholders/Investors grievances along with other matter listed below:
• Approval of transfer of share/debentures and issue of duplicate/split/consolidation/sub-division of share/debenture certificates.
• Opening/modification of operation and closing of bank accounts
• Grant of special/general Power of Attorney in favour of employees of the Company from time to time in connection with the conduct of business of the Company particularly with Government and Quasi-
• To fix record date/book closure of share/debenture transfer book of the Company from time to time:
• To appoint representatives to attend General Meetings of other companies in which the Company is holding shares;
• To change the signatories for availment of various facility from Banks/Financial Institutions;
• To grant authority to execute and sign foreign exchange contracts and derivative transactions;
• To carry out any other duties that may be delegated to the Committee by the Board of Directors from time-to-time.
The Secretarial Department of the Company attend to all grievances of the shareholders received directly or through SEBI, Stock Exchange, Ministry of Corporate Affairs, Registrar of Companies, etc. The Minutes of the Stakeholders Relationship Committee Meetings are circulated to the Board and noted by the Board of Directors at the Board Meetings. Continuous efforts are made to ensure that grievances are more expeditiously redressed to the complete satisfaction of the investors. Shareholders are requested to furnish their telephone numbers and e-mail addresses to facilitate prompt action.
Details of Shareholders' Complaints Received, Solved and Pending Share Transfers
The total number of complaints received and replied to the shareholders during the year ended 3 ls! March, 2015 were nil as per details given below. There were no complaints outstanding as on March 31, 2015. The number of pending share transfers and pending requests for dematerialisation as on March 31, 2015 were NIL. Shareholders'/Investors' complaints and other correspondence are normally attended to within seven working days except where constrained by disputes or legal impediments. No investor grievances remained unattended/pending for more than thirty days as on March31,2015
The above table includes Complaints received from SEBI SCORES by the Company.
(A) INDEPENDENT DIRECTORS' MEETING
During the year under review, the Independent Directors met on March 9, 2015, inter alia, to discuss:
• Evaluation of performance of Non-independent Directors and the Board of Directors as a whole Evaluation of performance of the Chairman and Managing Director, taking into account the views of the Executive and Non-Executive Directors:
• Evaluation of the quality, content and timeliness of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform its duties. All the Independent Directors were present for this Meeting.
The Company does not have any material subsidiary as defined under Clause 49 of the Listing Agreement.
AFFIRMATIONS AND DISCLOSURES
a Compliances with Governance Framework
The Company is in compliance with all mandatory requirements of Clause 49 of the Listing Agreement,
b Related party transactions
All transactions entered into with the Related Parties as defined under the Companies Act, 2013 and Clause 49 of the Listing Agreement during the financial year 2014-15 were in the ordinary course of business and on arm's length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no materially significant transactions with related parties during die financial year. Related party transactions have been disclosed under the note 2.32 of significant accounting policies and notes forming part of the financial statements in accordance with "Accounting Standard 18". A statement in in summary form of transactions with related parties in the ordinary course of business and arm's length basis is periodically placed before the Audit Committee for review and recommendation to the Board for their approval.
As required under Clause 49 of the Listing Agreement, the Company has formulated a policy dealing with Related Party Transactions. The Policy is available on the website of the Company viz. www.southerngasindia.com.
None of the transactions with related parties were in conflict with die interest of the Company. All the transactions arc in the normal course of business and have no potential conflict with the interest of the Company at large and are carried out on an arm's length basis or fair value,
c Details of non-compliance by the Company, penalties, and strictures imposed on the Company by Stock exchanges or SEBI or any other statutory authority, on any matter related to capital markets, during the last three years.
The Company has complied with all requirements of the Listing Agreement entered into with the Bombay Stock Exchange as well as regulators and guidelines of SEBI. Consequently, there were no strictures or penalties imposed by either SEBI or the Stock Exchange or any statutory authority for non compliance of any matter related to the capital markets during the last three years,
d Whistle Blower Policy
Pursuant to Section 177(9) and (10) of the Companies Act. 2013 and Clause 49 of the Listing Agreement, the Company has formulated Whistle Blower Policy for vigil mechanism for Directors and employees to report to the management about the unethical behaviour, fraud or violation of Company's code of conduct. The mechanism provides for adequate safeguards against victimisation of employees and Directors who use such mechanism and makes provision for direct access to the Chairperson of the Audit Committee in exceptional cases. None of the personnel of the Company has been denied access to the Audit Committee
Disclosure of Accounting Treatment
In the preparation of financial statements, the Company has followed the Accounting Standards referred to in Section 133 of die Companies Act, 2013. The significant accounting policies which are consistently applied are set out in the Notes to the Financial Statements.
Business risk evaluation and management is an ongoing process within the Company. The assessment is periodically examined by the Board.
Adoption of non-mandatory requirements of Clause 49 of the Listing agreement is being reviewed by the Board from time-to-time.
ANNUAL GENERAL MEETING FOR THE FINANCIAL YEAR 2014-15
DAY AND DATE Thursday September 24, 2015.
TIME 10.30 a.m.
VENUE Administrative Office, Meera Classic, Phase II, Gogol Borda. Margao, Goa 403602
BOOK CLOSURE DATES Wednesday September^, 2015 to
FOR DIVIDEND Thursday September 24, 2015 (both days inclusive)
LAST DATE OF RECEIPT OF Tuesday September 22, 2015
Tentative Calendar for Financial Year ending March 31, 2016 The Tentative dates for Board Meetings for consideration of quarterly financial results are as follows:
1 First Quarter Results In or before the Second week of August, 2015
2 Second Quarter & Half Yearly Results In or before the Second week of November, 2015
3 Third Quarter & Nine Months Results In or before the Second week of February, 2016
4 Fourth Quarter & Annual Results In or before the Fourth week of May, 2016
The Board of Directors at their meeting held on May 21, 2015. recommended dividend payout, subject to approval of the shareholders at the ensuing Annual General Meeting of Rs 30/- per share, on the equity shares of the Company for the Financial Year 2014-15. The Dividend shall be paid to the members whose names appear on Company's Register of Members as on September 24,2015 in respect of physical shareholders
Unclaimed Dividend/Share Certificates
The unclaimed dividend for a period of seven years is compulsorily deposited in Investor Education and Protection Fund (IEPF) Account in accordance with Section 205C of the Companies Act. 1956 administered by the Central Government which cannot be claimed by the Shareholders/Investors. The details of unclaimed dividend is posted on the website of the Company.
MEANS OF COMMUNICATION TO SHAREHOLDERS
(i) The Unaudited quarterly / half yearly results are announced within forty five days of the close of the quarter. The audited annual results are announced within sixty days from die closure of the financial year as per the requirement of the Listing Agreement with the Bombay Stock Exchange.
(ii) The approved financial results are forthwith sent to the Bombay Stock Exchange and are published in a leading English newspaper. In addition, the same are published in local language newspaper, within forty-eight hours of approval thereof. Presently the same are not sent to the shareholders separately.
(iii) The Company's financial results and official press releases are displayed on the Company's website - www.southerngasindia.com
(iv) Management Discussion and Analysis fonns part of this Annual Report which is sent to the shareholders of the Company.
(v) The quarterly results, shareholding pattern, quarterly compliances and all other corporate communication to the Bombay Stock Exchange are filed electronically. The Company has complied with filing submissions through BSE's BSE Listing Centre.
(vi) A separate dedicated section, under "Investor Relations" on the Company's website gives the information on unclaimed dividends, quarterly compliance with the Bombay Stock Exchange and other relevant information of interest to the investors/public.
Share Transfer System
The transfer of shares is processed and completed within a period of seven days from the date of receipt thereof provided all the documents are in order.
Individual shareholders holding shares singly or jointly can nominate a person in whose name the shares shall be transferable in case of death of the registered shareholders(s).
Address for Correspondence
Compliance Officer Correspondence with the Company
Mr. S. R. Bhatikar
Sr. Manager Personel & Administration (Designation)
Compliance Officer Phone: 0832-2724863 e-mail: firstname.lastname@example.org
THE SOUTHERN GAS LIMITED
Share Department Meera Classic, Phase II. Gogol. Borda. Maraao, Goa 403602 Phone: 0832-2724863,64 Fax: 0832-2724865 e-mail: email@example.com
The Company has the following units at: