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1. The Directors are pleased to present the Ninety–Sixth Annual Report on the business and operations of your Company and the Statements of Account for the year ended 31st March 2015.
2. Financial Performance and the state of the Company's affairs
On a Standalone basis, the Operating Revenue was maintained at Rs. 8,678 crore as against Rs. 8,675 crore in FY14, despite relative negative variation in fuel charges for regulated business, which is offset by increased revenue from Strategic Engineering Division (SED) business and higher cost of power purchased.
The Profit after Tax in FY15 was higher at Rs. 1,010 crore as compared to Rs. 954 crore last year. This was mainly due to higher dividend and interest income. The Earnings per Share (Basic) in FY15 stood at Rs. 3.30.
On a Consolidated basis, the Operating Revenue stood at Rs. 34,367 crore in FY15, as against Rs. 35,873 crore in FY14. The reduction was mainly due to lower realisation in coal companies and lower revenue from Trombay Unit 8, which was under restoration. Further, Operating Revenue of previous year also included a one–time impact of a favourable order from Appellate Tribunal for Electricity (ATE) that had added Rs. 300 crore.
The Consolidated Profit after Tax in FY15 stood at Rs. 168 crore as compared to a loss of Rs. 260 crore in the previous year mainly on account of improved operational performance at Coastal Gujarat Power Limited (CGPL) and Maithon Power Limited (MPL), lower depreciation based on Companies Act, 2013 (the Act) guidelines and favourable impact of forex due to VAT settlement in coal companies.
Your Company, together with its subsidiaries, achieved generation sales of 44,001 MUs of power from all its power plants during the year, as compared to 42,315 MUs in the previous year. Highlights of operational performance of your Company and its key subsidiaries and joint ventures are available in the Management Discussion and Analysis.
No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company.
The Directors of your Company recommend a dividend of 130% (Rs. 1.30 per share of Rs. 1 each), subject to the approval of the Members.
4. Centenary Year
The Tata Power Company Limited completed 100 years of its operations in February 2015. This journey began in 1915 when the erstwhile 'The Tata Hydro–Electric Power Supply Company Limited' (since amalgamated with your Company) commissioned its first hydroelectric power station at Khopoli and later at Bhivpuri and Bhira (all nearby areas to city of Mumbai, Maharashtra, India). Ever since, the Company has helped the city of Mumbai to grow into a leading financial and commercial centre by delivering reliable power, 24x7. The Company has also been a lead adopter of technologies with several firsts to its name like first SCADA implementation, first 500 MW unit, first islanding implementation and first 800 MW super–critical unit in India. The Company has the distinction of being part of successful Public–Private Partnerships in generation, transmission and distribution. The Company's commitment to sustainability is demonstrated in several programmes encompassing community development, affirmative action initiatives, environment and biodiversity initiatives and focus on clean and green power.
5. Current Size of Operations
The major businesses of the Company are in Generation, Transmission, Distribution–cum–Retail, Power Trading, Power Services, Coal Mines and Logistics, Strategic Engineering for defence applications, Solar Photovoltaic (PV) manufacturing and associated project management services (Engineering, Procurement, Construction).
As of 31st March 2015, the Tata Power Group of companies had an operational generation capacity of 8,726 MW based on various fuel sources– thermal (coal, gas and oil), hydroelectric power, renewable energy (wind and solar PV) and waste heat recovery.
The Company (including its subsidiaries) had 16% of its capacity (in MW terms) in clean and green sources (Hydro, Wind, Solar and Waste Heat Recovery). Your Company stands committed to achieving its target of 20–25% share of its generation mix through clean and green sources.
6. Subsidiaries/ Joint Ventures/ Associates
As on 31st March 2015, the Company had 25 Subsidiaries (16 are wholly–owned Subsidiaries), 35 Joint Ventures (JVs) and 9 Associates. During the year, the following changes occurred in your Company's holding structure:
• Joint Ventures: Koromkheti Netherlands BV and Koromkheti Georgia LLC, created as special purpose vehicles for the Georgia Hydro project
• Indocoal KPC Resources (Cayman) Ltd. created by the demerger of Indocoal Resources (Cayman) Ltd. to facilitate the sale and transfer of Arutmin
• Af–Taab Investment Company Limited (a subsidiary of your Company) sold its stake in Hemisphere Properties India Limited (an Associate)
During FY15, none of the existing subsidiaries or joint ventures ceased to be subsidiaries/joint ventures of the Company. There has been no major change in the nature of business of your Company and its subsidiaries, joint ventures and associates.
Policy for determining material subsidiaries of the Company has been provided in the following link:
<http://www.tatapower.com/aboutus/pdf/dms–policy–15.pdf>. (Scan the adjacent QR code on any mobile device smart phone/ tablet to read the policy on the Company website. QR code scanner app can be downloaded free of cost for Android/iOS/Windows devices from respective app stores).
Report on the performance and financial position of each of the subsidiaries, JVs and associate companies has been provided in Form AOC–1.
7. Disclosures about regulatory and legal matters
The businesses of the Company are governed primarily under the Electricity Act, 2003 (EA, 2003). Following are the critical regulatory orders pertaining to the Company. None of these impact the going concern status of your Company.
7.1. Distribution license in Mumbai
Maharashtra Electricity Regulatory Commission (MERC), through its order dated 14th August 2014, has granted a Distribution License to the Company for 25 years with effect from 16th August 2014 covering the entire South Mumbai area, Mumbai Suburban areas and areas of Mira Bhayandar Municipal Corporation including area covered under Chene and Varsave.
7.2. Transmission license in Mumbai and adjoining areas
MERC, through its order dated 14th August 2014, has granted a Transmission License to the Company for 25 years with effect from 16th August 2014 covering all Transmission Lines and Receiving Substations located in and outside Mumbai area or proposed to be commissioned as per the Intra State Transmission System of Maharashtra.
7.3. Multi year tariff orders of MERC
In August 2013, MERC determined the Multi–Year Tariff (MYT) for all distribution licensees for FY 2013–14, FY 2014–15 and FY 2015–16. The Company has filed Mid Term Review petition with MERC. The petition is still under evaluation.
7.4. Key judgements of MERC and Hon'ble Appellate Tribunal for Electricity (ATE) related to network roll–out and movement of consumers in Mumbai
In November 2014, ATE quashed all restrictions for movement of consumers but has directed the distribution licensees to limit parallel network creation only to areas where network reliability is to be improved or for acquiring new consumers. However, in places where the Company has made considerable investment in laying network or the works are in advanced stage of completion, such network has been allowed to be commissioned and capitalised.
7.5. Compensatory tariff for CGPL
Due to unforeseen changes in Indonesian law, CGPL is not able to recover the full cost of fuel through the existing tariff. In view of this, CGPL had filed a petition before Central Electricity Regulatory Commission (CERC) seeking relief by way of establishment of an appropriate mechanism to offset the adverse impact caused by the steep hike in coal prices. The CERC, in its order dated 15th April 2013, while rejecting the claim of the company under Force Majeure and Change in Law aspects gave directives to constitute a committee to recommend a quantum of compensatory tariff. Subsequent to the committee report, CERC passed an order on 21st February 2014 ruling that the company will be entitled to compensatory tariff to offset additional fuel costs till the hardship continues on account of increase in coal prices.
The said order was challenged by the Procurers before the ATE. On 21st July 2014, ATE passed an interim order directing the procurers to make payment of Compensatory Tariff effective March 2014. Aggrieved by the above, one of the Procurers challenged this interim order before Hon'ble Supreme Court which after hearing the case, rendered inoperative the earlier order passed by CERC dated 15th April 2013 as also the order passed by ATE dated 21st July 2014. It also requested the ATE to hear the matter as already scheduled and to dispose it as expeditiously as possible, without being influenced by the observations made in the orders passed by the CERC and the ATE.
In addition, as all Procurers challenged the CERC Order (passed on 21st February 2014) even after actively participating in the Committee proceedings, the company decided to review its decision not to challenge Force Majeure and Change in Law and filed a cross–appeal before ATE along with an interim application seeking condonation of delay in filing such appeal. However, ATE dismissed the interim application on delay condonation. Being aggrieved by the above Order, the company filed a Civil Appeal before the Hon'ble Supreme Court. The matter is pending before the Hon'ble Supreme Court.
In the meantime, the company has also filed an interim application seeking liberty to make necessary submissions to defend its case on the issues of Force Majeure and Change in Law, which were rejected by CERC in its order dated 15th April 2013.
7.6. CERC tariff order for FY 2011–14 for Maithon Power Limited
CERC passed the Tariff Order of MPL wherein it has approved the Capital Cost of the Project and determined the Tariff from the commercial operation date of Unit 1 and Unit 2 till 31st March 2014. The company has filed an Appeal with ATE challenging a few disallowances.
7.7. De–Allocation of Tubed and Mandakini Coal Blocks
On 25th August 2014, the Supreme Court cancelled the allocation of captive coal blocks both under screening committee route and government dispensation route, which also included the Tubed and Mandakini Coal Blocks.
Tubed: As per the directive of Ministry of Coal (MoC), information regarding assets and liabilities has been submitted to the Nominated Authority. Further investment on the project has been stopped and manpower demobilisation has started. As of the date of this report, Tubed block is expected to be put on auction soon by MoC. After transfer of assets to the new allocatee, Tubed Coal Mines Limited, the JV company, will be closed down as per statutory guidelines.
Mandakini: As per the directive of MoC, information regarding assets and liabilities has been submitted to the Nominated Authority. The block was put on auction by MoC and vesting order to the new allocatee would be issued as per the auction process.
7.8. Writ petition – Mandakini Coal Block
Your Company is aggrieved by the grant of inadequate compensation of Rs. 6.75 crore by MoC as against a claim of Rs. 243.93 crore for Mandakini Coal Company Limited (MCCL), of which Tata Power's share is 33%. Tata Power and MCCL have, therefore, challenged the compensation amount by way of a Writ Petition before the Hon'ble High Court of Delhi. The writ has been admitted and the judgement is expected soon. It may be noted that the Ld. Additional Solicitor General of India appearing on behalf of the Union of India submitted (orally) that he has given an opinion to the Union of India stating that the prior allottees ought to be compensated for the leasehold land which is being transferred to the successful bidder and which accounts for significant amount of disallowance.
7.9. Standby charges
On an appeal filed by the Company, the Hon'ble Supreme Court had stayed the operation of the ATE order in 2007 subject to the condition that the Company deposits an amount of Rs. 227 crore and submits a bank guarantee for an equal amount. Tata Power has complied with both the conditions. Reliance Infrastructure Limited (R–Infra) has also subsequently filed an appeal before the Supreme Court challenging the ATE order. Both the appeals have been admitted in 2007. However, no hearings were held on the matter during the year.
7.10.Energy charges and 'take or pay' obligation
MERC directed R–Infra to pay Rs. 323.87 crore to Tata Power towards the difference between the rate of Rs. 1.77 per kWh paid and Rs. 2.09 per kWh payable for the energy drawn at 220 kV interconnection and towards its 'Take or Pay' obligation for the years 1998 – 1999 and 1999 – 2000. On an appeal filed by R–Infra, the ATE upheld the Company's contention with regard to payment for energy charges but reduced the rate of interest. As per the ATE order, the amount payable works out to Rs. 34.98 crore (excluding interest), as on 31st May2008. As regards the 'Take or Pay' obligation, the ATE has ordered that the issue should be examined afresh by MERC after the decision of the Supreme Court in the appeals relating to the distribution license and rebates given by R–Infra. Tata Power and R–Infra filed appeals in the Supreme Court. Both the appeals have been admitted and are listed for hearing and final disposal. The Supreme Court, vide its order dated 14th December 2009, has granted stay against the ATE order and has directed R–Infra to deposit with the Supreme Court a sum of X 25 crore and furnish a bank guarantee for the balance amount. Pursuant to the liberty granted by the Supreme Court, the Company has withdrawn the above mentioned sum subject to an undertaking to refund the amount with interest, in the event the appeal is decided against the Company. No hearings were held during the year on this matter.
In respect of Entry Tax demand raised on the Company, the management, on the basis of legal opinion, has provided for Entry Tax on inter–state purchase and imports of fuel oil for the period FY06 to FY15, and also accounted for corresponding Value Added Tax set–off.
8. Risks and Concerns
The Company is faced with risks of different types, all of which need different approaches for mitigation. Details of various risks faced by the Company are provided in Management Discussion & Analysis.
9. Risk Management Framework and Internal Financial Controls
Risk Management Framework:
Based on the Risk Management Policy (<http://www.tatapower.com/aboutus/pdf/risk–management–policy.pdf>. Alternately, scan the adjacent QR code using a mobile device to read the policy on the Company website), a standardised Risk Management Process and System has been implemented across Tata Power Group. All risk plans have been uploaded in the system with mitigation action, target dates and responsibility.This has enabled continuous tracking of status of mitigation action and monitoring of Risk Mitigation Completion Index (RMCI). The Risk Register contains the mitigation plans for eleven categories of risk. Eight Risk Management Sub–Committees (RMSCs) closely monitor and review the risk plans. Risk Management Review Committee (RMRC) meets every quarter to review major risks and identify new risks. As per Companies Act, 2013, the newly formed Risk Management Committee (RMC) consists of 2 Independent Directors, one Executive Director, Chief Financial Officer and Chief Risk Officer. The RMC meets every quarter to review top risks of each of the eleven categories and the status of mitigation actions. The Company has refined its risk quantification method which will help identify key risks of the organisation and reduce subjectivity in assessment of residual value. This will further help implement appropriate controls in business process.
British Standards Institution (BSI) has conferred the Statement of Compliance to Tata Power for ISO 31000:2009 – a certification that implies that the Company has strong processes for risk identification, management and mitigation. Tata Power is the first power company in India to get this recognition.
Internal financial controls and systems:
The Company has set up the Internal audit function which endeavours to make meaningful contributions to the organisation's overall governance, risk management, and internal controls. The function reviews and ensures sustained effectiveness of Internal Financial Controls by adopting a systematic approach.
In the year 2014–15, the function reviewed and ensured sustained effectiveness of Internal Financial Controls by adopting a systematic approach to assess design and operating effectiveness. This assessment is carried out at Entity Level & Business Process level. At the Entity level, Internal Audit and Risk Management (IARM) function has carried out a self–assessment by adopting Committee of Sponsoring Organizations (COSO) framework. COSO is a leading framework, which provides guidance on the design and evaluation of internal controls. This has been done for 5 elements and 17 principles, which provides assurance of financial controls in place at the level of functional heads and at top management level. This has helped in assessing the effectiveness and efficiency of operational controls, enhanced governance and consideration of anti–fraud expectations, reliability of financial reporting and statutory compliances. Attributes with internal control deficiency are identified with action plan to be taken and target dates for compliances.
For the Business Process level, controls are evaluated through internal audits and Control Self–Assessment.
The Internal Audit process includes review and evaluation of process robustness, effectiveness of controls and compliances. It also ensures adherence to policies and systems, and mitigation of the operational risks perceived for each area under audit. Internal Audit Policy and Manual has been framed, based on which a flexible risk based audit plan has been formulated that aligns with the organizational strategy and impact on business objectives. Internal audits are classified into Process Audits, Spot Audits, etc. depending on the past performance and also the risk perception. All processes of the Company have been classified under vital, essential and desirable, based on the analysis of process impact on Company's Strategic Objectives. Post the audit, process is rated through the Risk Control Index and Process Robustness Index given by the Internal Auditors. Also, theme based audits are carried out for certain areas getting impacted by changing external environment. Significant observations including recommendations for improvement of the business processes are reviewed by the Management before reporting to the Audit Committee. The Audit Committee then reviews the Internal Audit reports and the status of implementation of the agreed action plan. Post recognition of 'General conformance to international audit standards' from Institute of Internal Auditors (IIA Global) last year, quality review of audit reports is carried out as per IIA global guidelines before the report is issued. Internal audit process has been standardized across the Tata Power Group.
Internal audit plan is executed by in–house audit team with additional support of an expert Internal Audit firm.
Assessment mechanism for measuring the existence and effectiveness of controls are established by the fact that the Value Added Index, which is a measure of effectiveness and contribution of the internal audit to top management and Audit Committee, has improved over the years and so has the RCI Index, thereby giving assurance to management of efficiency and effectiveness of the Internal Financial Controls.
The action taken statistics emerging out of internal audit reports for last three years reflect an increase in implementation percent achieved through rigorous and systematic follow up. Further, the total number of action points has decreased by 7% over the last three years, thereby reflecting an improvement in the system and processes.
On review of the internal audit observations, and action taken on audit observations, we can state that there are no adverse observations having material impact on financials or commercial implications or material non–compliances which have not been acted upon.
Control Self–Assessment: The Company continued Control Self–Assessment process this year, whereby responses of all process owners are used to assess built in internal controls in each process. This helps the Company to identify focus audit areas, design audit plan and support CEO/CFO certification for internal controls. The Control Self–Assessment questionnaire is designed to test effectiveness of deployment of existing controls for processes which are not to be audited as per the audit plan. The responses received from process owners on the questionnaire are analysed and validated through spot audits. This ensures optimum coverage of audit universe to provide assurance on the operating effectiveness based on results of evaluation across all processes.
Process Robustness Index (PRI): The processes are examined to assess their robustness primarily from the perspective of system driven controls (SAP, Customer Connect, etc.), which ensure that deviations from the defined process do not occur due to manual errors. In case controls have not been embedded in the system, other compensating controls such as maker–checker are exercised to assess the robustness of the process. This index is computed on the basis of existence of robust controls and not on the basis of extent of implementation of these controls. Your Company has obtained a copyright for this PRI scoring methodology.
As further support to establish efficiency and effectiveness of Internal Financial Controls, in addition to internal audits, the Company also submits declarations to various regulatory authorities like MERC, SEBI, RBI etc. The statutory auditors carry out an audit at quarterly intervals and these reports have not reported any adverse findings. The Company's secretarial audit carried out in the current year has not indicated any major lapses.
Tata Power firmly believes in integrating its business with the social fabric of the society that it operates in and is a firm supporter of the triple bottom line concept. The Sustainability thought process has been outlined with the governing principle of "Leadership with Care". 'Care' is one of the core values of your Company and has the following elements: Care for Environment, Care for Community, Care for Customers and Care for People i.e. employees, shareholders, suppliers, partners etc.
10.1. Safety – Care for our People
Safety has been a core value and always is the top most priority in Tata Power. Tata Power has a structured Safety organization for monitoring, implementing and taking corrective actions for safety improvements. There are approximately 12,500 employees and contract workers at various locations of Tata Power Group.
The Company, treats any fatality in any of its premises, of any of its employees, contractor/associate's employees or any third party with equal gravitas and is committed to taking the entire working environment and behaviour to the highest safety standards.
Further, the Company is committed to pursuing its policy on Human Rights. The policy document has been provided in the following link: <http://www.tatapower.com/sustainability/pdf/HumanRights–14.pdf>. (Alternately,scan the adjacent QR Code using a mobile device to read the policy on the Company website).
10.2. Care for our Community
Your Company has been actively working on five thrust areas in Corporate Social Responsibility (CSR) – Primary Education with focus on girl child, Health & Drinking Water, Livelihood and Employability, Social Capital and Infrastructure, and Inclusive Growth.
In FY15, the CSR policy for different Tata Power Group companies was aligned to the five thrust areas and programs were rolled out across locations and mapped with Schedule–VII of the Companies Act with timelines and outcome indicators. The same was approved by the respective CSR Board Committees of the respective Tata Power Group companies.
In FY15, Tata Power Group companies reached out to more than 250 villages/urban pockets across 7 states. The year saw Tata Power ramp–up CSR capabilities and operations across all locations by bringing robustness to systems and processes to ensure effective programs which deliver long–term impact and change to the community. This also marked a shift in bringing focus and institutionalisation of 80:20 paradigm of CSR, with 80% allocation of resources on long–term sustainable and thematic programs and 20% resources on location specific programs. Tata Power Community Development Trust (TPCDT) being the vehicle for CSR programs, was assigned to undertake CSR Programs for Tata Power Group companies.
Your Company has set up Tata Power Skill Development Institute (TPSDI) to ensure that unskilled and semi–skilled are adequately upgraded in their capabilities. TPSDI would be involved in imparting modular power skills training, testing, certification and accreditation in a phased manner. To begin with, it would focus on key communities of Tata Power and would over time, cater to other companies in the power sector. TPSDI was formally launched on 9th February 2015 by Tata Power Chairman, Mr. Cyrus P. Mistry, as part of the Company's Centenary Celebrations.
The total CSR spend for the Company in FY15 stood at Rs. 31.1 crore as against the requirement of Rs. 29.8 crore as per the Act. In addition to the above, the CSR spend of subsidiaries and joint ventures of the Company was Rs. 18.2 crore, as against the requirement of Rs. 17.2 crore as per the Act.
Major highlights of programs in FY15 are as follows:
Reached out to half a million beneficiaries through initiatives in Education, Health, Livelihood, Social Capital & Nurturing Sustainability More than 3500 Relief/Hygiene kits were distributed to the impacted families during Jammu & Kashmir (J & K) Flood Relief 2000 Solar lamps were provided to Vishakapatnam district in response to Cyclone Hud–Hud
Reached out to more than 350 schools covering more than 1,00,000 school students through various educational initiatives. 96 villages covered under Vocational Training and Employability programme covering approximately – 1000 youth with an average income between Rs. 5000–8000
More than 110 villages reached through water and energy solutions More than 50 villages installed with Solar Street Lights across locations 45,000 hours contributed through employee volunteering
Annual report of CSR activities is provided in Annexure–I.
10.3. Affirmative Action
Under its Affirmative Action (AA) program, your Company has implemented several initiatives for Employment, Entrepreneurship, Employability, Education and Essential Amenities. These programs touched and influenced over 75,000 beneficiaries in FY15. The major programs carried out in the neighbourhood of the operating plants and projects are Skill Development Programs for youth (Industrial Training Institutes, Business Process Outsourcing training and vocational trainings), entrepreneurial programs like fly ash brick making/supporting Self Help Groups, assistance in obtaining caste certificate through dedicated drives and support for educational initiatives for school children along with assistance in the development of adequate infrastructure.
The Company is also working in areas beyond its areas of operations, such as in Jawhar taluka, Palghar district of Maharashtra, which has a tribal population of over 90% of the total population with a vast majority of them below the poverty line. The Company has continued the engagement with a tribal residential school and a Government ITI in Jawhar through employee volunteering. Also, a village in Jawhar, Kadachimeth, has been identified for long term partnering to develop it into a model village. The Company is working with Non–Government Organisations and employee volunteers to deploy the plans.
10.4. Care for our Environment
The Company addresses various aspects of resource conservation, energy efficiency, carbon footprint, renewable power generation, biodiversity and green buildings. Details of initiatives undertaken are given in MD&A Section 8.1.3.
10.4.1. Club Enerji
Club Enerji, previously known as Tata Power Energy Club, is an initiative that takes energy and resource conservation beyond Tata Power. This initiative helps in sensitizing the community on sustainability through various conservation ideas. Tata Power Club Enerji reaches out to school children through various interactive mediums and sensitizes them on the need to conserve power and resources. Till date, the initiative has reached out to over 480 schools in India and has sensitized over 9.3 million citizens, who in turn have helped save more than 14.2 MUs of electricity. This saving is equivalent to saving 14,200 tonnes of CO2 and is enough to light up over 6,943 houses for a year.
10.4.2. Demand Side Management
Your Company considers it important to manage continuously rising demand by creating an environment for efficient use of power. The Company has developed demand side management programmes for different types of consumers and is pursued by a dedicated team with full time responsibility to drive savings in power consumption.
10.5. Sustainability Reporting
Your Company has adopted the latest Global Reporting Initiative (GRI) G4 guidelines to report on its sustainability performance for FY15. The report, which is being prepared in accordance to the Comprehensive criteria, is specific to the Indian operations of Tata Power viz. generation, transmission and distribution of power and provides highlights on Materiality and Stakeholder Engagement issues. The Company's latest Sustainability Report is hosted on its website: <http://www.tatapower.com/sustainability/sustainability–>communications.aspx.
10.6. Business Responsibility Report (BRR)
The Business Responsibility Reporting is in line with the SEBI requirement based on the 'National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business' notified by Ministry of Corporate Affairs (MCA), Government of India, in July 2011. Your Company has reported its performance as per the BRR framework, describing initiatives taken from an environmental, social and governance perspective. The BRR is hosted on the website.
10.7. United Nations Global Compact
Your Company is dedicated to report on United Nations Global Compact (UNGC) on ten principles in the areas of Human Rights, Labour standards, Environment and Anti–corruption. The Company has been reporting to UNGC principles since 2006. In September 2014, the Company had submitted the 9th Communication on Progress (CoP) to UNGC.
11. Directors and Key Managerial Personnel
In terms of Section 149 of the Act, the Members, at their meeting held on 13th August 2014, appointed the following as Independent Directors of the Company:
• Dr. Homiar S. Vachha
• Mr. Nawshir H. Mirza
• Mr. Deepak M. Satwalekar
• Mr. Ashok K. Basu
• Mr. Piyush G. Mankad
• Ms. Vishakha V. Mulye
In terms of Section 203 of the Act, the following were designated as Key Managerial Personnel of your Company by the Board:
• Mr. Anil Sardana, CEO and Managing Director
• Mr. Ashok S. Sethi, COO and Executive Director (w.e.f. 7th May 2014)
• Mr. S. Padmanabhan, Executive Director (Operations)(till 30th June 2014)
• Mr. Ramesh N. Subramanyam, Chief Financial Officer
• Mr. Hanoz M. Mistry, Company Secretary
Mr. Ashok S. Sethi, Chief–Corporate Operations Management was appointed COO and Executive Director of your Company effective 7th May 2014. Mr. S. Padmanabhan, Executive Director resigned as Director of the Company w.e.f. 30th June 2014. Mr. Thomas Mathew T., LIC nominee on your Company's Board, resigned as a Director of your Company effective 30th April 2015. Mr. Vijay Kumar Sharma, Managing Director of LIC, was appointed as Director representing LIC on the Board effective 19th May 2015.
Eight Board Meetings were held during the year. For further details, please refer Report on Corporate Governance.
The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges.
In accordance with the requirements of the Act and the Articles of Association of the Company, Mr. R. Gopalakrishnan retires by rotation and is eligible for re–appointment.
The Company has adopted Governance Guidelines on Board Effectiveness. The Governance Guidelines cover aspects related to composition and role of the Board, Chairman and Directors, Board diversity, definition of independence, Director's term, retirement age and Committees of the Board. It also covers aspects relating to nomination, appointment, induction and development of Directors, Director remuneration, subsidiary oversight, Code of Conduct, Board Effectiveness Review and mandates of Board Committees.
12. Annual Evaluation of Board performance and performance of its committees and individual directors
Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, performance of the Directors individually as well as the evaluation of the working of its Committees. The following process was adopted for Board Evaluation:
Feedback was sought from each Director about their views on the performance of the Board covering various criteria such as degree of fulfilment of key responsibilities, Board structure and composition, establishment and delineation of responsibilities to various Committees, effectiveness of Board processes, information and functioning, Board culture and dynamics, quality of relationship between the Board and the Management and efficacy of communication with external stakeholders. Feedback was also taken from every director on his assessment of the performance of each of the other Directors.
The Nomination and Remuneration Committee (NRC) then discussed the above feedback received from all the Directors. Based on the inputs received, the Chairman of the NRC also made a presentation to the Independent Directors at their meeting, summarising the inputs received from the Directors as regards Board performance as a whole, and of the Chairman. The performance of the non–independent non–executive directors and Board Chairman was also reviewed by them.
Post the meeting of the Independent Directors, their collective feedback on the performance of the Board (as a whole) was discussed by the Chairman of the NRC with the Chairman of the Board. It was also presented to the Board and a plan for improvements was agreed upon.
Every statutorily mandated committee of the Board conducted a self–assessment of its performance and these assessments were presented to the Board for consideration. Areas on which the Committees of the Board were assessed included degree of fulfillment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.
Feedback was provided to the Directors, as appropriate. Significant highlights, learning and action points arising out of the evaluation were presented to the Board.
13. Remuneration Policy for the Directors, Key Managerial Personnel and other employees
In terms of the provisions of Section 178(3) of the Act and Clause 49(IV)(B)(1) of the Listing Agreement, the NRC is responsible for formulating the criteria for determining qualification, positive attributes and independence of a Director. The NRC is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personnel and other employees. In line with this requirement, the Board has adopted the Policy on Board Diversity and Director Attributes, which is reproduced in Annexure–II and Remuneration Policy for Directors, Key Managerial Personnel and other employees of the Company, which is reproduced in Annexure–III.
14. Committees of the Board
The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority. The following substantive Committees constituted by the Board function according to their respective roles and defined scope:
Audit Committee of Directors
Nomination and Remuneration Committee
Corporate Social Responsibility Committee
Stakeholders Relationship Committee
Executive Committee of the Board
Risk Management Committee
Details of composition, terms of reference and number of meetings held for respective committees are given in the Report on Corporate z Governance.
The details of the familiarisation programmes for Independent Directors are disclosed on the Company's website and the web link for the same