CORPORATE GOVERNANCE REPORT
Philosophy of the Company on Corporate Governance
For SRF Limited (SRF), good corporate governance means adoption of best practices to ensure that the Company operates not only within the regulatory framework, but is also guided by broader business ethics. The adoption of such corporate practices — based on transparency and proper disclosures — ensures accountability of the persons in charge of the Company and brings benefits to investors, customers, creditors, employees and the society at large.
BOARD OF DIRECTORS
Composition of the Board
As on March 31, 2016, SRF's Board consisted of 10 Directors, of which four are executives of the Company (including the Chairman, who is an Executive Chairman), one is non-executive & non-independent and five are independent. Table 1 gives the details of the Board during the year 2015-16.
Our definition of 'Independence' of Directors is derived from Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and Section 149(6) of the Companies Act, 2013. Based on the confirmation/disclosures received from the Directors and on evaluation of the relationships disclosed, all Non-Executive Directors other than Dr Meenakshi Gopinath are Independent in terms of Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013.
None of the Directors is a member of more than ten Board level committees nor are they Chairman of more than five committees in which they are members.
Independent Directors' Meeting
In accordance with the applicable provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 a meeting of the Independent Directors of the Company was held on February 8, 2016, without the attendance of Non-Independent Directors and members of the management.
Your Company has put in place familiarisation programme for all its Directors including the Independent Directors with regard to their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, the business models of the Company etc. and the familiarisation programme for the Independent Directors is available on the website of the Company at the link: http://www.srf.com/investor-relations/investors.html#governance
The Company has not issued any convertible securities to any Director
Information Supplied to the Board
The Board has complete access to all information with the Company. Inter-alia, the following information is regularly provided to the Board as a part of the agenda papers well in advance of the Board meetings or is tabled in the course of the Board meeting:
• Annual operating plans and budgets and any update thereof
• Capital budgets and any updates thereof
• Quarterly results of the Company and operating divisions and business segments
• Minutes of the meetings of the audit committee and other committees of the Board
• Information on recruitment and remuneration of senior officers just below the level of Board, including the appointment or removal of Chief Financial Officer and Company Secretary
• Materially important show cause, demand, prosecution notices and penalty notices
• Fatal or serious accidents, dangerous occurrences, any material effluent or pollution problems
• Any material default in financial obligations to and by the Company, or substantial non-payment for goods sold by the Company
• Any issue, which involves possible public or product liability claims of substantial nature, including any judgement or order, which may have passed strictures on the conduct of the Company or taken an adverse view regarding another enterprise that can have negative implications on the Company
• Details of any joint venture or collaboration agreement
• Transactions that involve substantial payment towards goodwill, brand equity or intellectual property
• Significant labour problems and their proposed solutions. Any significant development in human resources/industrial relations front like signing of wage agreement, implementation of voluntary retirement scheme, etc.
• Sale of material nature of investments, subsidiaries, assets, which is not in the normal course of business
• Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement, if material
• Non-compliance of any regulatory, statutory nature or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer, etc.
The Board periodically reviews compliance reports of all laws applicable to the Company, prepared by the Company as well as steps taken by the Company to rectify instances of non-compliances.
In addition to the above, pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the minutes of the Board meetings of your Company's subsidiary companies and a statement of all significant transactions and arrangements entered into by the unlisted subsidiary companies are also placed before the Board.
Code of Conduct
The Company's Board has laid down a Code of Conduct for all Board members and senior management of the Company. The Code of Conduct is available on the website of the Company (<http://www.srf.com/investor-relations/investors>. html#governance). All Board members and designated senior management personnel have affirmed compliance with the Code of Conduct. A declaration signed by the Managing Director to this effect is enclosed at the end of this report.
The Company has laid down procedures to inform the Board members about the risk assessment and minimisation procedures. These procedures are being periodically reviewed to ensure that management controls risk through means of a properly defined framework.
Statutory Committees of the Board
a) Audit Committee
i) Terms of Reference
The terms of reference of the Audit Committee are wide enough covering the matters as per the guidelines set out in the SEBI (Listing Obligations and Disclosure Requirements
Regulations, 2015 read with Section 177 of the Companies Act, 2013. These broadly includes approval of annual internal audit plan, review of financial reporting systems, ensuring compliance with regulatory guidelines, discussions on quarterly, half yearly and annual financial results, interaction with statutory, internal and cost auditors, recommendation for appointment, remuneration and term of auditors, examination of financial statements and auditors' report thereon, review the functioning of the Whistle Blower Mechanism, review and monitor the auditor's independence and performance and effectiveness of audit process, approval 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, evaluation of internal financial controls and risk management systems and reviewing with the management adequacy of internal control system.
In addition, the Committee also mandatorily reviews:
• 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
• The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the Audit Committee
• Statement of deviations
(a) Quarterly statement of deviation(s) including report of monitoring agency, if applicable, submitted to stock exchange(s) in terms of Regulation 32(1)
(b) Annual statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice in terms of Regulation 32(7)
ii) Composition of Audit Committee and Attendance of members in Audit Committee Meeting held during the year
As on March 31, 2016, the Audit Committee of SRF comprised of three Directors all of whom are independent. The constitution of the Committee meets the requirements of Section 177 of the Companies Act, 2013, as well as Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Table 6 provides details of the Audit Committee meetings held during the year 2015-16 and attendance of its members
b) Nomination and Remuneration Committee
i) Terms of Reference
The terms of reference of the Committee are wide enough covering the matters specified in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013 and Terms of reference of the Committee briefly are as under:
• Formulation of the criteria for determining qualifications, positive attributes and independence of a director
• Formulation of criteria for evaluation of Independent Directors and the Board
• Devising a policy on Board diversity
• Formulation of policies for remuneration to Directors, Key Managerial Personnel, Senior Management Personnel and functional heads
• Identification and recommendation to Board of persons who are qualified to become Directors, Key Managerial Personnel, Senior Management Personnel and functional heads in accordance with the criteria laid down
• Recommend to the Board on appointment and removal of Directors, Key Managerial Personnel, Senior Management Personnel and functional heads
• Evaluation of the performance of Directors (other than independent directors)
• Evaluation of the performance of independent directors and make recommendations to Board
• Evaluation of the performance of Key Management Personnel, Senior management personnel and functional heads as a team
ii) Composition of Nomination and Remuneration Committee and Attendance of members in the meetings of the Nomination and Remuneration Committee held during the year
As on March 31, 2016, this Committee comprised three Directors, Mr Vinayak Chatterjee (Chairman), Mr Tejpreet Singh Chopra and Mr Vellayan Subbiah, all of whom are independent. The constitution of the Committee meets the requirements of Section 178 of the Companies Act, 2013. Table 7 provides details of the Nomination and Remuneration Committee meetings held during the year 2015-16 and attendance of its members
iii) Annual Evaluation of Board, Committees and Individual Directors
Pursuant to the provision of the Companies Act, 2013, Listing Regulations and as per the Nomination, Appointment and Remuneration Policy the Board of Directors/Independent Directors/Nomination & Remuneration Committee ("NRC") (as applicable) has undertaken an evaluation of its own performance, the performance of its Committees and of all the individual Directors including the Chairman of the Board of Directors based on various parameters relating to roles, responsibilities and obligations of the Board, effectiveness of its functioning, contribution of Directors at meetings and the functioning of its Committees.
Performance evaluation of independent directors is done by the Nomination and Remuneration Committee and the Board on criteria like attendance and participation in Board and committee meetings, advises on implementation of good corporate governance practices, diligence and independence in judgement and actions, good faith and interest of the stakeholders, etc.
iv) Nomination, Appointment and Remuneration Policy
The Company's Nomination, Appointment and Remuneration Policy for Directors, Key Managerial Personnel, Senior Management Personnel and Functional Heads is accessible on the Company's website www.srf.com
c) Stakeholders Relationship Committee
As on March 31, 2016, this Committee comprised of five Directors—three executive Directors and two non-executive Directors. The Chairman of the Committee is Mr Tejpreet Singh Chopra, an Independent & Non-Executive Director.
Mr Sanjiv Kumar Sharma, Deputy General Manager is designated as Compliance Officer under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
To expedite the process of transfer, Mr Anoop K Joshi, President, CFO & Company Secretary has been authorised by the Board to consider and approve the registration of transfer and transmission of shares/debentures upto a limit of 1,000 shares/debentures in any one case.
As on March 31, 2016, no investor complaint was pending with the Registrar and Share Transfer Agent. Table 8 gives data on the shareholder/investor complaints received and redressed during the year 2015-16.
d) Corporate Social Responsibility Committee
As on March 31, 2016, this Committee comprised of three Directors — Dr Meenakshi Gopinath (Chairperson), Mr Kartik Bharat Ram and Mr L Lakshman. The constitution of the Committee meets the requirements of Section 135 of the Companies Act, 2013.
The terms of reference of the Committee in line with the requirements of the of Section 135 of the Companies Act, 2013 and the rules framed thereunder.
Table 9 provides details of the CSR Committee meetings held during the year 2015-16 and attendance of its members
Management Discussion and Analysis
This is given as a separate chapter in this Annual Report.
• During the year 2015-16, the Company had no materially significant related party transaction, which is considered to have potential conflict with the interests of the Company at large. Transactions with related parties are disclosed in Note No. 35 to the Financial Statements. The Company has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions. The said policies are available on the website of the Company at the <http://www.srf.com/investor->relations/investors.html#governance. Policy of determining 'material subsidiaries' is available on the website of the Company at the link <http://www.srf.com/investor-relations/> investors.html#governance.
• The equity shares of the Company are listed on BSE Limited and National Stock Exchange of India Limited, Mumbai and the Company has complied with all the applicable requirements of capital markets and no penalties or strictures have been imposed on the Company by Stock Exchange, SEBI or any other statutory authority, on any matter relating to the capital markets, during the last three years.
• Vigil Mechanism Policy: Section 177 (9) of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 requires that a Company shall have a vigil mechanism for directors and employees for reporting concerns about unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The Company is following such a policy and crux of which is disclosed by the Company on its website at the <http://www.srf.com/> investor-relations/investors.html#governance. No personnel has been denied access to the Audit Committee for raising his/her concern under this policy during financial year 2015-16.
• The Company has complied with all the mandatory requirements specified in Regulations 17 to 27 and clauses (b) to (i) of sub - regulation (2) of Regulation 46 of the Listing Regulations.
• This Corporate Governance Report of the Company for the year 2015-16 is in compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as applicable.
The status of adoption of the non-mandatory requirements as specified in sub - regulation 1 of Regulation 27 of the Listing Regulations are as follows:
(a) The Board: The Chairman of the Company is Executive Chairman; (b) Shareholder Rights: Half-yearly and other quarterly financial statements are published in newspapers, uploaded on Company's website www.srf.com (c) Modified opinion(s) in audit report: The Company already has a regime of un-qualified financial statements. Auditors have raised no qualification on the financial statements; (d) Separate posts of Chairperson and CEO: Mr Arun Bharat Ram is the Chairman and Mr Ashish Bharat Ram is the Managing Director of the Company; and (e) Reporting of Internal Auditor: The Internal Auditor of the Company reports to the President, CFO & Company Secretary of the Company and has direct access to the Audit Committee.
The Certificate in compliance with Regulation 17(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 was placed before the Board of Directors.
Reappointment/Appointment of Directors
Dr Meenakshi Gopinath, (Director CSR) is retiring by rotation and being eligible, offer herself for re-appointment.
The present tenure of service of contract of Mr Kartik Bharat Ram, Deputy Managing Director is upto May 31, 2016. Mr Kartik Bharat Ram has been re-appointed as Deputy Managing Director for a period of 5 years w.e.f. June 1, 2016 subject to approval by shareholders at the ensuing Annual General Meeting.
Brief resume of these Directors' is given in the Notice of the 45th Annual General Meeting
Means of Communication with Shareholders
Quarterly and annual results of SRF are published in two major national dailies, generally Business Standard/Financial Express (in English) and Jansatta (in Hindi). In addition, these results are posted on the website of the Company, www.srf.com The website also contains other information regarding SRF available in the public domain.
SRF communicates with its institutional shareholders through analysts briefing and individual discussions between the fund managers and the management team. The presentations made to analysts and fund managers is posted on the Company's website
During the year, no resolution was passed through Postal Ballot.
Additional Shareholder Information 45th Annual General Meeting
Date: August 8, 2016
Time: 3.30 P.M.
Venue: Laxmipat Singhania Auditorium, PHD House, 4/2, Siri Institutional Area, August Kranti Marg, New Delhi-110016
April 1 to March 31
Tentative Financial Calendar for Results, 2016-17
First Quarter : First week of August 2016
Second Quarter : First week of November 2016
Third Quarter : First week of February 2017
Fourth Quarter and Annual : Second week of May 2017
Book Closure Date
The Share Transfer Register of SRF will remain closed from Friday, July 29, 2016 to Monday, August 1, 2016 (both days inclusive) for the purposes of holding the Annual General Meeting.
Interim Dividend Payment Date
Two interim dividends of Rs. 5 per share each (50 per cent) on the paid up capital of the Company absorbing Rs. 69.11 crores approx. (inclusive of tax) were paid on September 4, 2015 and February 23, 2016 respectively.
Listing on Stock Exchanges in India
SRF's shares are listed on the BSE Ltd. and the National Stock Exchange of India Ltd. The Company has paid the listing fee to both BSE and NSE for the year 2016-17. The Stock Codes are:
Stock Exchanges Equity Shares
BSE Limited : 503806
Debentures : -
National Stock Exchange
Equity Shares : SRF
Debentures : INE647A07025
Registrar and Share Transfer Agents
M/s Karvy Computershare Private Limited, Hyderabad are the Registrar and Share Transfer Agent of the Company for handling both electronic and physical shares.
Share Transfer System in Physical Mode
Share certificates sent for transfer are received at the Registered Office/Corporate Office of the Company or the office of Karvy Computershare Private Limited. All valid transfer requests are processed. To expedite the process of share transfer, Mr Anoop K Joshi, Company Secretary has been authorised to consider and approve the registration of transfer and transmission of shares/debentures upto a limit of 1,000 shares/debentures in any one case. For the cases for shares above 1,000, the Stakeholders Relationship Committee meets to approve valid transfer requests. After transfer, the physical shares are sent to the shareholders.
The total number of shares transferred in physical form during the period from April 1, 2015 to March 31, 2016 was 10734.
Shareholders can trade in the Company's shares only in electronic form. The process for getting the shares de-materialised is as follows:
• Shareholder submits the shares certificate along with De-materialisation Request Form (DRF) to Depository Participant (DP)
• DP processes the DRF and generates a unique De-materialisation Request No
• DP forwards the DRF and share certificates to the Registrar and Share Transfer Agent (RTA)
• RTA after processing the DRF confirms or rejects the request to Depositories
• If confirmed by the RTA, depositories give the credit to shareholder in his/her account maintained with DP This process takes approximately 10-15 days from the date of receipt of DRF.
As the trading in the shares of the Company can be done only in the electronic form, it is advisable that the shareholders who have the shares in physical form get their shares dematerialised.
De-materialisation of Shares & Liquidity
As on March 31, 2016 there were 32485 shareholders holding 55716546 shares in electronic form. This constitutes 97.03 per cent of the total paid-up share capital of the Company.
Outstanding GDRs/ADRs/Warrants or Any Convertible Instruments, their Conversion Dates and likely impact on Equity
As on March 31, 2016, there were no outstanding GDRs/ADRs/Warrants or any convertible instruments Commodity Price Risk or Foreign Exchange Risk and Hedging Activities
During the year 2015-16, the Company had managed the foreign exchange risk and hedged to the extent considered necessary. The Company enters into forward contracts for hedging foreign exchange exposures against exports and imports. The details of foreign currency exposure are disclosed in the Note No. 39 to the Financial Statements.
Business : Plant Locations
Technical Textiles Business
• Manali Industrial Area, Manali, Chennai-600 068, Tamil Nadu
• Industrial Area, Malanpur, Distt. Bhind-477 116, Madhya Pradesh
• Plot No. 1, SIPCOT Industrial Area Complex, Gummidipoondi Distt. Thiruvallur-601 201, Tamil Nadu
• Viralimalai, Distt. Pudukottai-621 316, Tamil Nadu
• Plot No. 12, Rampura, Ramnagar Road, Kashipur, Distt. Udham Singh
Nagar-244 713 Uttarakhand
Chemicals and Polymers Business
• Village & P.O. Jhiwana, Tehsil Tijara, Distt. Alwar-301 018, Rajasthan
• Manali Industrial Area, Manali, Chennai-600 068, Tamil Nadu
• Plot No. 14 C, Sector 9, IIE Pantnagar, Distt. Udham Singh Nagar-263 153 Uttarakhand
• DII/I GIDC. PCPIR,GIDC Phase II, Tal Vagra, Vill. Dahej Distt. Bharuch-392 130, Gujarat
Packaging Films Business
• Plot No. 12, Rampura, Ramnagar Road, Kashipur, Distt. Udham Singh
Nagar-244 713 Uttarakhand
• Plot No. C 1-8, C 21-30, Sector 3, Indore Special Economic Zone, Pitam Pur Distt. Dhar-454 775, Indore, Madhya Pradesh
Address for Correspondence
C-8, Commercial Complex Safdarjung Development Area New Delhi 110 016 Tel. No: (+91-11) 26857141 Fax No: (+91-11) 26510428
Block - C, Sector - 45 Gurgaon 122 003 Tel No: (+ 91-124) 4354400 Fax No: (+ 91-124) 4354500 E-mail: firstname.lastname@example.org
Registrar & Share Transfer Agent
Karvy Computershare Private Limited
Karvy Selenium Tower B Plot No 31 & 32 Gachibowli, Financial District Nanakramguda, Serilingampally Hyderabad - 500 008 Tel No: (+91- 40) 67162222 Fax: (+91- 40) 2300 1153 E-mail: email@example.com
IL&FS Trust Company Limited The IL&FS Financial Centre Plot C-22, G Block Bandra Kurla Complex Bandra East Mumbai 400 051 Tel: (011-46577591 E-mail: Neelu.Subramanian@ilfsindia.com Website: <http://www.itclindia.com> Contact Person Neelu Subramanian, Asstt. Vice President