REPORT ON CORPORATE GOVERNANCE FOR THE FINANCIAL YEAR 2015-16
1. COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE
At Tata Sponge Iron Limited (TSIL), Corporate Governance framework and regulations are very critical since they are the basis for business conduct and business relations.
The essence of good corporate governance is ensuring trustworthy relations between the Company and its stakeholders and therefore, the Company follows the principles of consistency, responsibility, accountability, fairness, transparency, and effectiveness with a view to enhance the stakeholders value.
The Company believes in healthy competition, provision of equal opportunity in employment, political non-alignment, promotion of health, safety and welfare, production of quality products and services, compliance with all relevant laws, rules and regulations, improvement in quality of life and meeting social responsibility.
It is expected that good corporate governance by TSIL would protect and enhance the trust of shareholders, customers, suppliers, financiers, employees, government agencies and the society, in TSIL.
2. BOARD OF DIRECTORS
Size and composition of the Board
The Board of Directors of the Company comprises of ten (10) members, of which eight (8) are Non-executive directors and five are Independent directors. The Chairman of the Board is a non-executive director.
None of the Directors on the Board holds directorships in more than ten public companies. Further, none of them is a Member of more than ten committees or Chairman of more than five Committees across all public companies in which he/she is a director. The necessary disclosures regarding Committee positions have been made by the Directors.
None of the Directors are related to each other.
The information as required under Regulation 17(7) of I SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is being made available periodically to the Board. The Board periodically reviews the compliance status of the Company.
Details of Directors seeking appointment/re-appointment in Thirty-third Annual General Meeting are given with the Notice to the Annual General Meeting.
The company has adopted the Tata Code of Conduct for Executive Directors, Senior Management Personnel and other executives of the company. The company has received confirmation from Executive Directors (i.e. the Managing Director and the Executive Director) as well as the senior management personnel regarding compliance of the Code during the year under review. The company has also adopted the Code of Conduct for the Non-Executive Directors of the company. The company has received confirmations from the Non-Executive Directors regarding compliance of the Code for the period ended 31st March, 2016. Both the Codes are posted on the website of the Company i.e. www.tatasponge.com.
Familiarisation programme for Independent Directors
The Company has laid down a detailed policy/programme for familiarisation of Independent Directors after their appointment which is displayed on the website of the Company, viz, www.tatasponge.com.
The Program aims to provide insights into the Company to enable the Independent Directors to understand its business in depth and contribute significantly to the Company. The Company shall through its MD/EDs/KMPs conduct programs/presentations periodically to familiarize the Independent Directors with the strategy, operations and functions of the Company.
Such programs / presentations provide an opportunity to the Independent Directors to interact with the Senior Management of the Company and help them to understand the Company's strategy, business model, operations, service and product offerings, markets, organization structure, finance, human resources, technology, quality, facilities and risk management and such other areas as may arise from time to time;
3. BOARD COMMITTEES
As on March 31, 2016, the Company had the following committees:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
4. Corporate Social Responsibility Committee
5. Ethics and Compliance Committee
6. Risk Management Committee
7. Committee of Board
Minutes of proceedings of Committee meetings are circulated to the Directors and placed before the Board Meeting for noting thereat.
3.1. AUDIT COMMITTEE
The Company had constituted an Audit Committee in line with the provisions of Section 177 of the Companies Act, 2013 read with Regulation 18 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The broad terms of reference of the Audit Committee were :
(i) the recommendation for appointment, remuneration and terms of appointment of auditors of the company;
(ii) review and monitor the auditor's independence and performance, and effectiveness of audit process;
(iii) examination of the financial statement and the auditors' report thereon;
(iv) approval or any subsequent modification of transactions of the company with related parties;
(v) scrutiny of inter-corporate loans and investments;
(vi) valuation of undertakings or assets of the company, wherever it is necessary;
(vii) evaluation of internal financial controls and risk management systems;
(viii) monitoring the end use of funds raised through public offers and related matters.
The scope of the Audit Committee has been in compliance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The chairman of the Audit Committee, Mr. P.C. Parakh, was present at the Thirty-second Annual General Meeting held on 21st August, 2015.
Audit Committee meetings are attended by the Chief Financial Officer and the Head (Internal Audit). The Statutory Auditors are invited to each meeting and the Managing Director/other persons are invited to the meetings as and when required. The Company Secretary acts as the Secretary of the Audit Committee.
The necessary quorum was present at the meetings.
3.2. NOMINATION AND REMUNERATION COMMITTEE
The Board at its meeting held on 28th April, 2014, reconstituted the Remuneration Committee as 'Nomination and Remuneration Committee' with the scope as prescribed under the provisions of Section 178 of the Companies Act, 2013.
The broad terms of reference of the Remuneration Committee are inter-alia to periodically reviewing the size and composition of the Board, formulating the criteria determining qualifications, positive attributes and independence of a Director and recommending candidates to the Board, establishing and reviewing Board and senior executive succession plans, evaluation of Board Performance, reviewing and making recommendations to the Board on the remuneration of the Managing Director, Executive Director and KMPs, the total level of remuneration of Non-Executive Directors and for individual remuneration of the Non-Executive Directors and the Chairman. The Committee also undertakes the functions as specified in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Remuneration to Directors
The details of remuneration paid to all the directors and the other disclosures required to be made under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 have been disclosed in annexure to "Directors' Report".
Pursuant to the provisions of the Companies Act, 2013 and in compliance with the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 Committees. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, 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.
A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Key Managerial Personnel. The Directors expressed their satisfaction with the evaluation process.
Appointment and remuneration policy for Directors, Key Managerial Personnel and Senior Management Personnel
The Nomination and Remuneration Committee ("NRC") has adopted a policy which, inter alia, deals with the manner of selection of Board of Directors, Managing Director/Executive Director, other Key Managerial Personnel and their remuneration.
1. Criteria of selection of Non-Executive Directors
a) The Non-Executive Directors shall be of high integrity with relevant expertise and experience so as to have a diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, law, governance and general management
b) In case of appointment of Independent Directors, the NRC shall satisfy itself with regard to the independent nature of the Directors vis-a-vis the Company so as to enable the Board to discharge its functions and duties effectively.
c) The NRC shall ensure that the candidate identified for appointment as a Director is not disqualified for appointment under Section 164 of the Companies Act, 2013.
d) The NRC shall consider the following attributes / criteria, whilst recommending to the Board the candidature for appointment as Director.
(i) Qualification, expertise and experience of the Directors in their respective fields;
(ii) Personal, Professional or business standing;
(iii) Diversity of the Board.
e) In case of re-appointment of Non-Executive Directors, the Board shall take into consideration the performance evaluation of the Director and his engagement level.
Remuneration to Non-Executive Directors
The Non-Executive Directors shall be entitled to receive remuneration by way of sitting fees, reimbursement of expenses for participation in the Board / Committee meetings and commission as detailed hereunder :
i) A Non-Executive Director shall be entitled to receive sitting fees for each meeting of the Board or Committee of the Board attended by him, of such sum as may be approved by the Board of Directors within the overall limits prescribed under the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014;
ii) A Non-Executive Director will also be entitled to receive commission on an annual basis, of such sum as may be approved by the Board on the recommendation of the NRC Committee;
iii) The NRC may recommend a higher commission for the Chairman of the Board of Directors, taking into consideration their overall responsibility;
iv) In determining the quantum of commission payable to the Directors, the NRC shall make its recommendation after taking into consideration the overall performance of the Company and the onerous responsibilities required to be shouldered by the Director.
v) The NRC may recommend to the Board, for the payment of additional commission to those Directors who are Chairman of the Audit Committee and the NRC of the Board subject to a ceiling on the total commission payable as may be decided;
vi) The total commission payable to the Directors shall not exceed 1% of the net profit of the Company;
vii) The commission shall be payable on pro-rata basis to those Directors who occupy office for part of the year.
viii) The Independent Directors of the Company shall not be entitled to participate in the Stock Option Scheme of the Company, if any, introduced by the Company.
2. Criteria for selection and appointment of the Managing Director (MD) / the Executive Director (ED)
For the purpose of selection of the MD/ED, the NRC shall identify persons of integrity who possess relevant expertise, experience and leadership qualities required for the position and shall take into consideration recommendation, if any, received from any member of the Board. The Committee will also ensure that the incumbent fulfils such other criteria with regard to age and other qualifications as laid down under the Companies Act, 2013 or other applicable laws.
Remuneration policy for the Managing Director/Executive Director
i) At the time of appointment or re-appointment, the MD/ED shall be paid such remuneration as may be mutually agreed between the Company (which includes the NRC and the Board of Directors) and the MD/ED within the overall limits prescribed under the Companies Act, 2013.
ii) The remuneration shall be subject to the approval of the Members of the Company in the Annual General Meeting.
iii) The remuneration of the MD/ED is broadly divided into fixed and variable components. The fixed component comprises salary, allowances, perquisites, amenities and retiral benefits. The variable component comprises commission.
Iv) In determining the remuneration (including the annual increment and performance bonus) the NRC shall ensure / consider the following:
(a) the relationship of remuneration and performance benchmarks is clear;
(b) balance between fixed and incentive pay reflecting short and long term performance objectives, appropriate to the working of the Company and its goals;
(c) responsibility required to be shouldered by the MD/ED, the industry benchmarks and the current trends;
(d) the Company's performance vis-a-vis the annual budget achievement and individual performance vis-a-vis the KRAs / KPIs.
Remuneration Policy for the Key Managerial Personnel / Senior Management Employees
I. In determining the remuneration of the Senior Management Employees (i.e. KMPs and Executive Committee Members) the NRC shall ensure / consider the following:
i. the relationship of remuneration and performance benchmark is clear;
ii. the balance between fixed and incentive pay reflecting short and long term performance objectives, appropriate to the working of the Company and its goals;
iii. the remuneration is divided into two components viz. fixed component comprising salaries, perquisites and retirement benefits and a variable component comprising performance bonus;
iv. the remuneration including annual increment and performance bonus is decided based on the criticality of the roles and responsibilities, the Company's performance vis-a-vis the annual budget achievement, individuals performance vis-a-vis KRAs / KPIs, industry benchmark and current compensation trends in the market.
II. The Managing Director will carry out the individual performance review based on the standard appraisal matrix and shall take into account the appraisal score card and other factors mentioned herein-above, whilst recommending the annual increment and performance incentive to the N R C Committee for its review and approval.
3.4 CORPORATE SOCIAL RESPONSIBILITY ("CSR") COMMITTEE
The Board at its meeting held on 9th March, 2014, had constituted a Corporate Social Responsibility Committee in line with Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014,. The terms of reference of the CSR Committee are in accordance with the provisions of Companies Act, 2013.
3.5. ETHICSAND COMPLIANCE COMMITTEE
In accordance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, as amended (the Regulations), the Board of Directors of the company adopted the Code of Conduct for Prevention of Insider Trading and the Code of Corporate Disclosure Practices (the Code) to be followed by Directors, Officers and other Employees. The Code is based on the principle that Directors and Employees of the company owe a fiduciary duty to, among others, the shareholders of the company to place the interest of the shareholders above their own and conduct their personal securities transactions in a manner that does not create any conflict of interest situation. The Code also seeks to ensure timely and adequate disclosure of Price Sensitive Information to the investor community by the company to enable them to take informed investment decisions with regard to the company's securities. The Company Secretary is the Compliance Officer under the above-mentioned Code.
3.6. COMMITTEE OF BOARD
The Board of Directors of the Company at its meeting held on 3rd November, 2010, has constituted a Committee of Board for advising/recommending to the Board on strategic and other important business issues.
3.7. RISK MANAGEMENT COMMITTEE
In compliance with the requirement of the amended Clause 49 of the Listing Agreement, the Board at its meeting held on 15th October, 2014, has constituted a Risk Management Committee (i) to inform the Board members at least once a year about the risk assessment and minimization procedures; (ii) to monitor and review the risk management plan; and (iii) to perform other relevant functions in this connection. The Committee also functions as required under the relevant provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
4. SUBSIDIARY COMPANY
A wholly owned subsidiary namely, "TSIL Energy Limited", was incorporated on 20th November, 2012, with an authorised share capital of Rs.10 crore. The subscribed/paid up capital of this subsidiary was Rs.1,06,00,600 as on 31st March, 2016. Four Board meetings of this company were held during the year ended 31st March, 2016.
TSIL Energy Limited is not a "Material Subsidiary" as defined under Company Act, 2013. However, the Company has laid down a policy for determining material subsidiaries. This policy is displayed on the website of the Company, viz. www.tatasponge.com.
5. MEANS OF COMMUNICATION
(i) Quarterly Results -
The quarterly and annual financial results are normally published in Business Standard (all editions) and the 'Sambad' (Oriya daily) and also posted on the website of the Company (www.tatasponge.com). The website also displays official news releases.
(ii) Presentation to Institutional Investors or to Analysts -
The presentations made to the analysts/ investors during the financial year 2015-16, are available on the website (www.tatasponge.com) of the Company.
(iii) Company's Corporate Website -
The Company's website (www.tatasponge.com) is a comprehensive reference on the company's management, vision, mission, policies, corporate governance, corporate social responsibility, investor relations, operations, financials, news, etc .
7. GENERAL SHAREHOLDER INFORMATION
7.1 33rd Annual General Meeting
Day/Date : Tuesday, the 26th July, 2016
Time : 10.00 a.m
Venue : Lake View - Officers' Recreation Centre, TSIL Township, Joda, Dist - Keonjhar Odisha, Pin code - 758 034.
7.2 Financial year 2015-16 (April to March)
7.3 Financial calendar
Approval of quarterly results: April, July, October and January. Annual General Meeting in July/August.
7.4 Date of book closure
From 6th July, 2016 to 8th July, 2016, both days inclusive.
Record date of payment of dividend 5th July, 2016
7.5 Dividend payment date
The dividend warrants will be posted on or after 31st July, 2016.
7.6 Listing on Stock Exchanges
1] BSE Ltd.
Phiroze Jeejeebhoy Towers Dalal Street Mumbai - 400 001.
2] National Stock Exchange of India Ltd.
Exchange Plaza (5th Floor) Plot No. C/1, G. Block Bandra-Kurla Complex, Bandra (E) Mumbai - 400 051.
7.7 Stock Code-
ISIN CODE INE 674A01014 (Electronic form)
BSE CODE 13010 (Physical form)
513010 (Demat form)
NSE SCRIP CODE TATASPONGE
7.8 Correspondence Address
P.O. Joda - 758 034 Dist - Keonjhar, Odisha
Phone : 06767 284236 Fax : 06767 278159/278129 E-mail : email@example.com
7.9 Exclusive e-mail address for redressal of investor complaints
This is to confirm that the Company has made the payment of Listing Fee till the year 2016-2017 to both the Stock Exchanges namely, BSE Limited and National Stock Exchange of India Limited.
7.12 Registrars & Share TransferAgents :
REGISTERED OFFICE :
M/s. TSR Darashaw Limited
(formerly Tata Share Registry Limited)
6-10, Haji Moosa Patrawala Industrial House 20, Dr. E. Moses Road, Near Famous Studio Mahalaxmi, Mumbai - 400 011
Phone 022 - 66568484 Fax 022 - 66568494 / 66568496
Website www.tsrdarashaw.com e-mail firstname.lastname@example.org
BRANCH OFFICES :
For the convenience of shareholders based in the following cities, transfer documents and letters will also be accepted at the following branches/agencies of TSR Darashaw Limited :
M/s. TSR Darashaw Limited
(formerly Tata Share Registry Limited)
503, Barton Centre (5th Floor) 84, Mahatma Gandhi Road Bangalore - 560 001.
Phone 080 - 25320321
Fax 080 - 25580019
M/s. TSR Darashaw Limited
(formerly Tata Share Registry Limited)
Bungalow No.1, 'E' Road Northern Town, Bistupur Jamshedpur - 831 001.
Phone 0657 - 2426616
Fax 0657 - 2426937
M/s. TSR Darashaw Limited
(formerly Tata Share Registry Limited)
Tata Centre, 1st Floor 43, Jawaharlal Nehru Road Kolkata - 700 071.
Phone: 033 - 22883087
Fax :033 - 22883062
4) New Delhi
M/s. TSR Darashaw Limited
(formerly Tata Share Registry Limited)
Plot No. 2/42, Sant Vihar Ansari Road, Daryaganj New Delhi - 110 002.
Phone :011 - 23271805
Fax: 011 - 23271802
M/s.Shah Consultancy Services . Ltd.
Agents : TSR Darashaw Pvt. Limited
Sumatinath Complex Pritamnagar,Akhada Road, Ellisbridge Ahmedabad -380 006.
Phone: 079 - 26576038
Fax :079 - 26576038
Note : Name of the Registrars & Share Transfer Agents has been changed from Tata Share Registry Limited to TSR Darashaw Limited w.e.f. 12-01-2006, from TSR Darashaw Limited to TSR Darashaw Private Limited w.e.f. 6-11-2012. and subsequently from TSR Darashaw Private Limited to TSR Darashaw Limited w.e.f. 10th November, 2014.
7.13 Share Transfer System:
The Company has retained M/s. TSR Darashaw Limited (formerly Tata Share Registry Ltd.) of Mumbai to carry out the transfer related activities. Authorised personnel are approving the transfer on periodical basis. All valid transfers are affected within stipulated days. Share certificates received at Registered Office are also sent to Registrars and Share TransferAgents for doing the needful. In case of electronic transfers, the bye laws of Depositories are complied with.
7.17 Dematerialisation of Shares
As per SEBI's direction the Company had signed tripartite agreements with both the Depositories (NSDL & CDSL) and Registrars and Transfer Agents in March, 2000. Accordingly, dematerialisation facility for the shares of the Company is available and it is in the interest of all the shareholders to convert their physical holdings into electronic holdings by dematerialisation.
As on 31st March, 2016, 14502243 shares were held in dematerialised form which constitute approx. 94.17% of total number of subscribed shares.
Since Company's shares are listed (as on 31-3-2016) on BSE Limited and National Stock Exchange of India Limited and are compulsorily traded in dematerialised form, these shares enjoy enough liquidity in the market.
7.19 Outstanding GDRs/ADRs/Warrants or any convertible instruments, conversion date and likely impact on equity
: Not applicable
7.20 Plant and Registered Office
P.O. Joda, Dist - Keonjhar, Odisha - 758 034.
Phone - 06767-284236, Fax - 06767-278159/278129
E-Mail : email@example.com , Website: www.tatasponge.com
8. OTHER DISCLOSURES
(a) Details of establishment of vigil mechanism, whistle blower policy, and affirmation that no personnel has been denied access to the Audit Committee.
The Company has adequate vigil mechanism in place.
The Company has a Whistle Blower Policy that provides a formal mechanism for all employees of the Company to approach the Ethics Counsellor/Chairman of the Audit Committee of the Company and make protective disclosures about the unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct. The Whistle Blower Policy is an extension of the Tata Code of Conduct, which requires every employee of the company to promptly report to the Management any actual or possible violation of the Code or an event he becomes aware of that could affect the business or reputation of the company. The disclosures reported are addressed in the manner and within the time frames prescribed in the policy. Under the policy, each employee has an assured access to the Ethics Counsellor/Chairman of the Audit Committee. The Whistle Blower Policy is displayed on the website of the Company, viz, www.tatasponge.com
(b) Details of compliance with mandatory requirements and adoption of the non-mandatory requirements
The Company has complied with all applicable mandatory requirements as specified in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 .
(c) Web link where policy for determining 'material' subsidiaries is disclosed
The web link is provided under "Corporate Governance" in "Investors" Section of the Company's website "www.tatasponge.com"
(d) Web link where policy on dealing with Related Party transactions
The web link is provided under "Corporate Governance" in "Investors" Section of the Company's website "www.tatasponge.com
(e) Disclosure on commodity price risks and commodity hedging activities - Not applicable
9. Non-compliance of any requirement of corporate governance report of sub-paras mentioned above with reasons thereof shall be disclosed
There was no non-compliance of any of the provisions applicable to the Company.
10. The Corporate Governance report shall also disclose the extent to which the discretionary requirements as specified in Part E of Schedule II have been adopted
Following discretionary requirements as specified in Part E of Schedule II has been adopted by the Company:
• The Company has moved towards a regime of financial statements with unmodified audit opinion.
• The Company has separate posts of chairperson and Managing Director
• The internal auditor is free to report directly to the audit committee.
11. The disclosures of the compliance with corporate governance requirements specified in regulations 17 to 27 and clause (b) to clause (i) of sub-regulation (2) of regulation 46 shall be made in the section of corporate governance of the annual report
Complied wherever applicable.
12. Materially significant related party transactions that may have potential conflict with the interests of the company at large:
13. Disclosure by key managerial personnel about related party transactions
The Board has received disclosures from key managerial personnel relating to financial and commercial transactions where they and/or their relatives have personal interest. There were no materially significant related party transactions, which have potential conflict with the interest of the company at large. The related party transactions have been disclosed in the notes on Balance Sheet and Statement of Profit and Loss for the year ended 31st March, 2016.
The Company has laid down a policy for dealing with Related Party Transactions. This policy is displayed on the website of the Company, viz, www.tatasponge.com
14. Disclosure of Accounting Treatment
The applicable Accounting Standards as issued by the Institute of Chartered Accountants of India and notified by the Central Government under Companies (Accounting Standards) Rules, 2006 as amended from time to time, have been followed in preparation of the financial statements of the company.
15. Board Disclosures - Risk Management
The procedures for risk assessment and minimisation have been disclosed elsewhere in the annexure to the Directors' Report.
16. Proceeds from public issues, rights issues, preferential issues etc.
The company has not made any capital issues during the financial year.
17. Matters related to Capital Markets
The company has complied with the requirements of the Stock Exchanges, SEBI and other statutory authorities on all matters relating to capital markets during the last three years. No penalties or strictures have been imposed on the company by any Stock Exchange or SEBI or any statutory authority, on any matter relating to capital markets, during the last three years except as follows:
There was a delay in filing the Corporate Governance Report for the quarter ended 30th September, 2015 with BSE Limited, for which the BSE Limited imposed a fine of Rs.65,265/- and the same was paid on 30th March, 2016 by the Company.
18. Management Discussion & Analysis Report
The Management Discussion & Analysis Report is a part of this Annual Report.
19. CEO/CFO Certification
The Managing Director and the Chief Financial Officer of the Company have given a certificate to the Board of Directors as prescribed under SEBI (Listing Obligations and Disclosure Requirements) Regulation, for the year ended 31st March, 2016.
20. Share Capital Reconciliation Audit
A qualified practicing Company Secretary carried out Share Capital Reconciliation audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued/paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialised shares held in electronic mode with NSDL and CDSL.
For and on behalf of the Board of Directors
Place : Kolkata
Dated : 25th April, 2016