The Board of Directors presents the Annual Report of the Company together with the Audited Statements of Account for the financial year ended March 31, 2015
There have been several positive developments in 2015; record annual mined metal production at Zinc-India, record aluminium production as the new Jharsuguda-II and Korba-II smelters are ramping up well, and record alumina production at the Lanjigarh refinery. We have also commenced iron ore production in Karnataka and mining activities in Goa are expected to resume in the latter half of 2015. We have taken actions to maintain financial strength and flexibility during this period of weak commodity prices through capital re-phasing and cost management initiatives. We remain confident of our diversified business model and low cost asset base and will continue to generate attractive returns to our shareholders.
• Strong underlying results, on the back of a diversified portfolio, in a weak commodity price environment
• Revenue at Rs. 73,364 Crore
• EBITDA at Rs. 22,226 Crore; EBITDA margin of 41%
• Attributable pre-exceptional PAT at Rs. 5,060 Crore
• Gross debt reduced by Rs. 2,814 Crore during the year, Cash & Cash equivalents of over Rs. 46,200 Crore
• Free Cash Flow post capex of Rs. 3,425 Crore
• Contribution of Rs. 27,900 Crore to the Indian Exchequer during the year, in the form of taxes, duties, royalties and profit petroleum
• Exceptional items includes a one-time non cash impairment charge of Rs. 19,956 Crore largely relating to Cairn India acquisition goodwill and the Sri Lanka Block on account of a steep fall in crude oil prices • Final dividend of Rs. 2.35 per share; FY 2014-15 total dividend 26% higher at Rs. 4.1 per Share
• Record full year production of mined metal at Zinc India; better positioned for underground transition
• Record full year production of mined metal at Zinc India; underground conversion better positioned
• Record full year Aluminium and Alumina production; started new Jharsuguda-II and Korba-II smelters
• Commenced Iron ore production at Karnataka, final approval awaited at Goa; record annual production of Pig Iron
• Oil & Gas production normalised post shutdown in Q2 FY 2014-15
Name change of the Company
A Scheme of Amalgamation and Arrangement amongst Sterlite Industries (India) Limited (Sterlite), Madras Aluminium Company Limited (MALCO), Sterlite Energy Limited (SEL), Vedanta Aluminium Limited (VAL) and Sesa Goa Limited (Sesa Goa) and their respective shareholders and creditors (Composite Scheme) became effective from August 17, 2013. Post the implementation of the Scheme of Arrangement and Amalgamation, the name of the Company was changed to ‘Sesa Sterlite Limited’. This name change was effective from September 18, 2013.
The Company is one of the world’s largest diversified natural resources companies. Our business primarily involves exploring, extracting and processing minerals and oil & gas. We produce and process oil and gas, zinc, lead, silver, copper, iron ore, aluminium and commercial power and have a presence across India, South Africa, Namibia, Ireland, Australia, Liberia and Sri Lanka.
The Company is a subsidiary of Vedanta Resources Plc, UK which is listed on London Stock Exchange. In order to have alignment with the brand “Vedanta”and its diversified natural resources business, the name of the Company has been changed from ‘Sesa Sterlite Limited’ to ‘Vedanta Limited’ effective April 21, 2015. The same was also approved by the Shareholders by way of Postal Ballot on March 30, 2015.
Management Discussion and Analysis
A detailed report on the Management Discussion and Analysis is provided as a separate section in the Annual Report which forms part of the Directors Report.
Update on the Scheme of Amalgamation & Arrangement
The Hon’ble High Court of Bombay at Goa had approved the Scheme of Amalgamation of the wholly owned subsidiary of the Company, Goa Energy Limited with the Company on March 12, 2015. The appointed date of the Scheme was April 1, 2014 and subsequent to filling the necessary forms, the Scheme has become effective from March 24, 2015.
The Hon’ble High Court of Madras, had on March 25, 2015 approved the Scheme of Amalgamation of the Company’s wholly owned subsidiary, Sterlite Infra Limited with the Company. The appointed date for the Scheme was April 1, 2014 and subsequent to filling the necessary forms, the Scheme has become effective from April 8, 2015.
The Board of Directors has recommended a final dividend @ 235%, i.e., Rs. 2.35 per equity share of Rs. 1/- each for FY 2014-15. This is in addition to interim dividend of Rs. 1.75 per share declared and paid during the year. The dividend payout is subject to approval of members at the ensuing Annual General Meeting.
Transfer to General Reserve
Out of the total profit of Rs. 1,927.20 Crore for the financial year, NIL amount is proposed to be transferred to the General Reserve.
CRISIL Research certifies its ratings of your Company for the financial year. The treasury portfolio of fixed income investments has been consistently evaluated as ‘Very Good’ (highest safety from credit default on CRISIL’s 4 point scale).
As we continue to create value for all our stakeholders, to connect better and communicate Vedanta’s social responsibility to all our stakeholders, we have a fourth pillar - strategic communications in our sustainability model, which also comprises of – Responsible Stewardship, Building Strong Relationship and Adding & Sharing Values. The Fourth pillar reflects our commitment to complete transparency and emphasises our principles of community dialogue and mutual respect, including free prior informed consent to access natural resources.
During the year, we have continued to strengthen our Sustainability Framework with the release of guidance notes on safety, environment and community relations. We are using the Vedanta Sustainability Assurance Programme (VSAP) to ensure Framework compliance, including a programme of audits. We now have a platform that measures and reports on the performance of Sustainable Development processes of the Vedanta group. The implementation is based on SAP- Environment Health Safety (EHS) and Sustainability Performance Management (SUPM) modules, a one of a kind initiative by any corporate.
The businesses have performed well on Sustainability aspects like Incident reduction, Energy, Water and Non Hazardous waste and are working towards embedding a zero tolerance culture with a focus on safety, health, and environment. Further as per the community need based assessment, all our operations are making a valuable contribution to the social and economic development of the communities in which we operate.
Pursuant to Clause 49 of the Listing Agreement and the Companies Act, 2013, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board’s Report.
Our businesses are exposed to variety of risks which are inherent to an international mining and resources organisation. Our risk management framework is designed to be simple, consistent and clear for managing and reporting risks from the Group’s businesses to the Board. Our management systems, organisational structures, processes, standards, code of conduct together form the system of internal controls that govern how we conduct the Group’s business and manage the associated risks. We have a multi-layered risk management framework aimed at effectively mitigating the various risks which our businesses are exposed to in the course of their operations. Board Level Risk Management Committee supports the Audit Committee and the Board in nurturing the risk management framework in the group. Risks are identified through a consistently applied methodology, the Turnbull Matrix. The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions. Risk officers have been formally nominated at operating businesses as well as Group level whose role is also to develop the risk management culture within the businesses.
Corporate Social Responsibility
Community well-being and social development is an integral part of the Sustainable Development and ‘License to Operate’ philosophy of your Company.
This year, in line with your Company’s CSR policy, the Company and its subsidiary Companies have initiated community need assessment and impact assessment studies covering its ‘Core’ and ‘Peripheral’ area of operation with an objective to understand the impact of ongoing projects mapped to community needs and better align its site specific community development program. We are pleased to inform you that the broad outcome of the studies revealed the need for education, health and livelihood opportunities for the community around the operations. This is in line with current CSR thrust and CSR programs designed by your Company.
The first CSR Committee meeting was held in July 2014. The Committee reviewed and approved the CSR policy which has been circulated within the organisation and is available on the Company’s website. The CSR programmes undertaken by the business units and the budgets were presented to the CSR Committee and duly approved.
The community programs are designed to be self – sustainable, interdependent and self-sufficient. Your Company has partnered with the Government of India in creating platforms of childcare and education for children aged 2 to 6 years through the Angawadi program in the areas of our operations. Over 900 children were enrolled for pre-nursery (Anganwadi) education, while 18,000 children were provided midday meals, and 200 students of secondary and higher secondary standards were given scholarships in this year.
The healthcare programmes include Mobile Health Vans (MHV) which benefited about 40,000 patients in the year while medical health camps benefited about 52,000 people around your operation.
In the livelihood programs, the emphasis have been given to vocational skill training for woman and unemployed youth. Your Company supports about 1,750 Self – Help – Groups with over 22,000 women members, earning their livelihood though production of household requirements and food staples such as Agarbatti, Papad, Achar, disinfectant amongst others. In this year, vocational training was given to about 750 youth, while over 1,600 farmers benefited through awareness programmes and provision of modern agricultural technology.
During the year, the divisions of the Company spent Rs. 25.50 Crore, on CSR activities, which is in line with our sustainability policy, while, your Company, on consolidated basis, has spent about Rs. 171 Crore on CSR. The Annual Report on CSR activities forms part of the Directors Report and is annexed herewith as “Annexure A”.
Directors/Key Managerial Personnel (KMP) Details
During the year under review, Mr. Thomas Albanese (DIN: 06853915) was appointed Whole-time Director designated Chief Executive Officer for a term of three (3) years effective April 1, 2014 to March 31, 2017. Mr. Tarun Jain (DIN: 00006843) was appointed as Wholetime Director for a term of four (4) years effective April 1, 2014 to March 31, 2018. Mr. Dindayal Jalan (DIN: 00006882) was appointed as Whole-time Director designated as Chief Financial Officer effective April 1, 2014 to September 30, 2014. The aforesaid appointments along with the terms and conditions of their appointment were approved by the Shareholders of the Company in its Annual General Meeting held on July 11, 2014. Mr. Dindayal Jalan was further re-appointed as Whole-time Director designated as Chief Financial Officer effective October 1, 2014 to September 30, 2016 which was approved by the Shareholders through Postal Ballot on October 11, 2014.
The Shareholders of the Company by way of Postal Ballot on March 30, 2015 approved the appointment of the existing Non-Executive Independent Director namely, Mr. Naresh Chandra, (DIN: 00015833) Ms. Lalita Dileep Gupte (DIN: 00043559) and Mr. Ravi Kant (DIN: 00016184) as Non-Executive Independent Directors of the Company as per the provisions of the Companies Act, 2013, for a fixed term of a period of three years from the date of appointment by the Board of Directors of the Company, i.e., from January 29, 2015 to January 28, 2018.
The Board of Directors on April 27, 2015 approved appointment of Ms. Anuradha Dutt (DIN: 00145124), a prominent member of legal fraternity with substantial contributions to the field of law as an Additional Independent Director to hold a fixed term of three (3) years effective April 27, 2015 to April 26, 2018, subject to approval of the Shareholders of the Company in the ensuing Annual General Meeting of the Company.
All the Independent Directors have provided declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and the Listing Agreement.
The Board of Directors of the Company are deeply saddened by the sudden demise of Mr. Gurudas Kamat (DIN:0015932), Non-Executive Independent Director of the Company on January 27, 2015. Mr. Kamat retired as Chief Justice of Gujarat High Court in January 1997 and had over 45 years of experience in the field of legal practice and judiciary. A highly learned, legal luminary and a humble person, Mr. Kamat’s contribution and guidance to the Company, during his tenure as an Independent Director will always be valued.
In terms of the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Thomas Albanese, Whole Time Director and Chief Executive Officer is retiring by rotation and being eligible has offered himself for re-appointment. Mr. Rajiv Choubey was appointed Whole Time Key Managerial Personnel in terms of Section 203 of the Companies Act, 2013 and as Compliance Officer in terms of the Listing Agreement with stock exchanges effective July 29, 2014 in place of Mr. C. D. Chitnis who ceased as Company Secretary effective May 13, 2014.
Company’s policy on Directors’ appointment and remuneration
The Company has a Nomination and Remuneration Committee (NRC) and the details of Committee and the terms of reference of the NRC Charter are set out in the Corporate Governance Report forming part of the Board’s Report.
The Company’s Policy for selection and appointment of Directors and their remuneration is derived from its NRC policy which, inter alia, deals with the manner of selection of Board of Directors and such other matters as provided under section 178(3) of the Companies Act, 2013 and such other laws as may be applicable. This Policy is accordingly derived from the said Charter and the scope of the Committee is set out in the Corporate Governance Report.
The Shareholders of the Company may visit the Company’s website for the detailed Nomination & Remuneration Policy of the Company on Directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178.
Evaluation of performance of the Board, its Committees and individual Directors
As part of good governance practice, Boards evaluate its performance. The Companies Act, 2013 and Clause 49 of the Listing Agreement has mandated the need to ensure effectiveness of the Board governance and requires a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors.
Structured questionnaires/performance evaluations forms were prepared taking into consideration inputs received from the Directors for evaluation of the Board and its Committees, their effectiveness was broadly based on parameters like Strategic and Operational Oversight, the Dynamics, Composition, Level of Expertise, Terms of Reference, Board support and processes, Governance etc.
The Directors evaluation was broadly based on parameters such as understanding of the Company’s vision and objective, skills, knowledge and experience, participation and attendance in Board/ Committee meetings; governance and contribution to strategy; interpersonal skills etc. The performance evaluation of Chairman of the Company was undertaken by the Independent Directors taking into account the views of Executive Directors and Non-executive Directors. The Independent Directors also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board. The Directors expressed overall satisfaction on the evaluation process.
Human Resources (HR)
In line with the Company’s philosophy of nurturing talents from within, the Company has a robust process towards generating a reservoir of talent and leaders over the decades. Few of the noteworthy HR initiatives and focus areas are:
• Continuous improvement through strong performance management system and strong linkage between performance and rewards have resulted in improving people accountability, achievement orientation and have created healthy internal competition for superior performance.
• Your Company has been promoting leadership development through a structured talent management framework; ensuring robust leadership pipeline for all key and critical positions. A systemic and systematic talent review by the senior team has ensured trust and confidence amongst talented employees regarding addressing their growth needs and aspirations.
• Manpower optimisation for better productivity through redeployment, restructuring and rationalisation of jobs has been a major focus area for your Company. This has not only enabled meeting resource requirements but has also helped many managers in their career advancement and assuming challenging opportunities.
• Your Company has always laid emphasis on hiring young and emerging professionals. Robust plans are in place to draw leadership talent from the pool of young talent available in the Company.
• Building and maintaining proactive relations have been the Company’s forte, which has resulted in cordial industrial relationships throughout the year without any major shutdowns. Continuous efforts have been made to remove restrictive practices at the shop floor and provide direction and growth to all strata of employees.
• Company has always encouraged innovation, risk taking and experimentation by promoting small group activities at the shop floor. These have resulted into significant savings and continuous improvement of processes.
Going ahead, your Company has to proactively address further strengthening of performance management systems, best practices benchmarking in the areas of talent development, compensation management and career management. This will enable and prepare us to address future challenges for effective sustainable competitive advantage, growth and harnessing people potential.
Particulars of employees and related disclosures
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Companies Act, 2013, the same is open for inspection at the Registered Office of your Company. Copies of this statement may be obtained by the members by writing to the Company Secretary of your Company. The full Annual Report including the aforesaid information is being sent electronically to all those members who have registered their email addresses and is available on the Company’s website.
The ratio of the remuneration of each director to the median employee’s remuneration and other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as “Annexure B”.
Corporate Governance Report
Corporate Governance Report detailing inter-alia, the following is attached and forms part of the Directors Report:
(i) all elements of remuneration package such as salary, benefits, bonuses, stock options, pension, etc., of all the directors;
(ii) details of fixed component and performance linked incentives along with the performance criteria;
(iii) service contracts, notice period, severance fees;
(iv) stock option details, if any, and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable
(v) number of meetings of the Board and its Committees
As reported last year, the Company has discontinued renewal of its fixed deposits on maturity. As on March 31, 2015 all fixed deposits had matured while deposits amounting to Rs. 54,000 remained unclaimed. Since the matter is sub judice, the Company is maintaining status quo.
Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as “Annexure C”.
Subsidiaries/Joint Ventures/Associate Companies
A separate section on the performance and financial position of each of the subsidiaries, associates and joint venture companies in Form AOC- I is part of the report and is annexed on page no. 260 of the Annual Report.
As per the Listing Agreement, a policy on material subsidiaries as approved by the Board of Directors, may be accessed on the Company’s website: www.vedantalimited.com.
Internal Financial Controls
As per the provisions of section 134(5)(e) of the Companies Act, 2013, the Directors have an overall responsibility for ensuring that the Company has implemented robust systems/ framework of internal financial controls to provide them with reasonable assurance regarding the adequacy and operating effectiveness of controls with regards to reporting, operational and compliance risks. To enable the Directors to meet these responsibilities, the Board has devised systems/ frameworks which are operating within the Company. In line with best practice, the Board regularly reviews the internal control system to ensure that it remains effective and fit for purpose. Where weaknesses are identified as a result of the reviews, new procedures are put in place to strengthen controls and these are in turn reviewed at regular intervals.
The systems/ frameworks include proper delegation of authority, operating philosophies, policies and procedures, effective IT systems aligned to business requirements, internal audit framework, ethics framework, risk management framework and adequate segregation of duties to ensure an acceptable level of risk. Your Company has also adopted SAP GRC (Governance, Risk and Compliance) framework to further strengthen the internal control and segregation of duties/ access. Your Company also follows a half yearly process of management certification through the Control Self-Assessment framework including on financial controls/ exposures.
Your Company has a documented Standard Operating Procedures (SOPs) for procurement, project / expansion management capex, human resources, sales and marketing, finance, treasury, compliance, safety, health and environment (SHE) and manufacturing.
The Group’s internal audit activity is managed through the Management Assurance Services (‘MAS’) function and is an important element of the overall process by which the Board obtains the assurance on the effectiveness of relevant internal controls.
The scope of work, authority and resources of MAS are regularly reviewed by the Audit Committee and its work is supported by the services of leading international accountancy firms (but specifically not including the Group’s external auditors).
The Company’s system of internal audit includes, covering monthly physical verification of inventory, monthly review of accounts and a quarterly review of critical business processes. To enhance internal controls, the internal audit follows stringent grading mechanism, focusing on the implementation of recommendations of internal auditors. The internal auditors make periodic presentations on audit observations, including follow-up status to the Audit Committee.
The Company is also required to comply with the Sarbanes Oxley Act Sec 404 which pertains to Internal Controls over Financial Reporting (ICOFR). Through the SOX 404 compliance program, which is aligned to the COSO framework, the Board also gains assurance from the management on the adequacy and effectiveness of the ICOFR.
In addition, as part of their role, the Board and its Committees routinely monitor the Group’s material business risks. Due to the limitations inherent in any risk management system, the process for identifying, evaluating and managing the material business risks is designed to manage, rather than eliminate, risk and to provide reasonable, but not absolute assurance, against material misstatement or loss.
Since we have strong internal control systems which get further accentuated by review of Clause 49 & SOX compliance by the Statutory Auditors, the CEO & CFO give their recommendation for strong internal financial control to the Board. Based on information provided, nothing has come to the attention of Directors to indicate that any material breakdown in the function of these controls, procedures or systems occurred during the year under review. There have been no significant changes in our internal financial controls during the year that have materially affected, or are reasonably likely to materially affect, our internal financial controls.
There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Further, in the design and evaluation of our disclosure controls and procedures, our management was necessarily required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Details of Loans/Guarantees/Investment made by the Company
The full particulars of the loans given, investment made or guarantee given or security provided and the purpose for which the loan or guarantee or security is proposed to be utilised as per the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements (Refer note no. 49).
Related Party Transactions
All the related party transactions including in relation to its international direct/ indirect subsidiaries, are strictly done on an arm’s length basis and in ordinary course of business. The Company presents a detailed landscape of all related party transactions before the Audit Committee, specifying the nature, value, and terms and conditions of the transaction. Transactions with related parties are conducted in a transparent manner with the interest of the Company and Stakeholders as utmost priority. The Company has developed aRelated Party Transactions Manual-Standard Operating Procedures for purpose of identification and monitoring of such transactions.
The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website. Since all Related Party Transactions entered into by the Company were in ordinary course of business and were on arms’ length basis, Form AOC-2 is not applicable to the Company.
Material changes affecting the Company
There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report and there has been no change in the nature of business.
The details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future are:
1. a) Iron ore Division - Goa Operations
The Supreme Court on October 5, 2012 suspended mining operations and transportation of material of all miners in Goa (including your Company) following allegations of illegal mining and based on the M. B. Shah Commission Report. Separately, Government of Goa similarly banned all mining and transportation of iron ore in Goa and the Ministry of Environment and Forest (MOEF) suspended Environmental Clearances of all mining leases within State of Goa.
The Supreme Court on April 21, 2014 has lifted the above mentioned ban subject to certain conditions inter alia limiting the maximum annual excavation to 20 million tonnes subject to determination of final capacity by the Expert Committee appointed by it and 10% of the sale proceeds of the iron ore to be appropriated towards a sustainability fund. The Supreme Court has held that all mining leases in the State of Goa, including those of the Company, had expired in 2007 and consequently, no mining operations can be carried out until renewal/execution of mining lease deeds by the Goa government.
On August 13, 2014, the High Court of Goa passed a common order directing the State of Goa to renew the mining leases for which stamp duty was collected in accordance with the Goa Mineral Policy (2013) and to decide the other applications for which no stamp duty was collected within three months thereof. As on date, in relation to the Company, lease deeds have been executed for all the 9 working mining leases and are pending registration. The Govt. of Goa in January 2015 revoked the order suspending mining operations in Goa as well as issued a subsequent order in March 2015 revoking suspension of Environment Clearances. The Company is working towards registering the mining lease deeds and securing the necessary permissions for commencement of operations at the earliest.
b) Iron ore Division - Karnataka Operations
Mining operations in Karnataka were banned in July 2011following allegations of illegal mining. The Supreme Court allowed resumption of Company’s Karnataka mine in April2013 with the cap of 2.29 million tones. The Company restarted operations on December 28, 2013 which resulted in production of 1.5 million tones in FY 2014. The mining was stopped in August 2014; however, following mining lease renewal and receipt of statutory clearances in March2015, the mining has resumed.
2. Aluminium Division
Niyamgiri Bauxite mine was to be one of the sources of supply of bauxite to the Alumina refinery at Lanjigarh under he Joint VentureAgreement with Orissa Mining Corporation (OMC) dated October05, 2004 and MOU dated June 7, 2003 with the Government ofOdisha (GOO), under which 150 million tonnes of bauxite was tobe made available to the Company. The Ministry of Environment& Forest (‘MoEF’) on August 24, 2010 declined to grant the forest clearance for the Niyamgiri Mines to OMC. This was challenged by OMC in March 2011 before Supreme Court. The Supreme Court vide order dated April 18, 2013 directed GOO to place any unresolved issues and claims of the local communities under the Forest Rights Act and applicable rules before the Gram Sabha, the council representing the local community. GOO completed the process of conducting Gram Sabha meetings and submitted its report to the MoEF in January 2014, reiterating the rejection of grant of Stage I forest clearance for the Niyamgiri project of OMC.
The Company is presently sourcing bauxite and late rite from alternate sources to support refinery operations from varioussources including imports. Further, in view of recent amendment in the MMDR Act promoting auction of bauxite mines in the state and approval of policy for long term linkage of raw material to the MOU based industries by State of Odisha, we are hopeful that these auctions will enable the Company to provide raw-material security for the Alumina Refinery, Lanjigarh.
The public hearing regarding alumina expansion from 1 MTPA to 6 MTPA [Phase-I - 2 MTPA, Phase-II - 4 MTPA and Phase-II – 6 MTPA] was held in July 2014. The Expert Appraisal Committee (EAC) of MOEF in January 2015 has recommended Environment Clearance (EC) subject to fulfilment of certain conditions. The Company is in the process of complying with the conditions and the expansion of the Lanjigarh refinery will commence once we receive the EC.
3. Copper Division
In March 2013, Tamil Nadu Pollution Control Board (TNPCB) ordered the closure of the copper smelter at Tuticorin due to complaints regarding alleged gas leak by local residents. The Company had immediately moved the National Green Tribunal (NGT) challenging the order of the TNPCB on the basis that the plant’s emissions were within permissible limits. The NGT passed an interim order in May 2013 allowing the smelter to recommence operations subject to certain conditions. The Company recommenced operations on June 16, 2013. The Expert Committee constituted by the NGT submitted a report on the operation of the plant on July 10, 2013 stating that the plant’s emissions were within the prescribed standards and based on this report, the NGT, on July 15, 2013, ordered that the smelter could re-commence its operations. On August 8, 2013, the NGT confirmed its May 2013 order and held that there was no health impact owing to the operations, with directions to comply with the recommendations made by the committee to further improve the working of the plant within a time bound schedule.
TNPCB has filed civil appeal against the orders of the NGT which is pending before the Supreme Court. We don’t believe there to be any significant impact since we have implemented all the recommendations during FY 2013-14 and the copper smelter continues to operate at rated capacity.
Directors Responsibility Statement
Pursuant to section 134 of the Companies Act, 2013, with respect to Directors’ Responsibility Statement it is hereby confirmed that:
(a) in the preparation of the annual accounts, the applicable accounting standards had been followed and there is no material departures from the same;
(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year, i.e., March 31, 2015 and of the profit and loss of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Employees Stock Option Plan
The Shareholders of the Company by way of Postal Ballot on March 30, 2015 approved the Vedanta Employees Stock Option Scheme (ESOS) and issue of Securities to the Employees of Vedanta Limited, India (VEDL, India) and that of the Holding/Subsidiary Company(ies) of VEDL, India and it also authorised the ESOS trust for Secondary Acquisition. No options have been granted to any Employees under the Scheme till date.
Vedanta Resources Plc, UK (VRPlc), the Holding Company has already in place its Stock Option Scheme under which certain employees of VEDL have received Stock Options. The Shareholders may kindly note that on the VEDL’s ESOS Scheme becoming effective, the employees of VEDL, India will be entitled to stock options of VEDL, India only. Except for such employees as the Nomination & Remuneration Committee of VRPlc may find eligible, be entitled to the Stock Options under VRPlc Scheme. The Employees will be eligible for stock options either under VEDL India or VRPlc Scheme and not both. The Shareholders may also note that wherever the subsidiaries of VEDL, India have their own stock option schemes, such employees will be eligible and governed by the stock option schemes of the respective companies.
Your Company has established a robust vigil mechanism for reporting of genuine concerns through the Whistle Blower Policy of the Company. As per the whistleblower policy adopted by various businesses in the group, all complaints are reported to Director – Management Assurance who is independent of operating management and businesses. In line with global practices, dedicated email IDs and centralised database have been created to facilitate receipt of complaints. A 24X7 whistle blower hotline cum web based portal was also launched during the year. All employees and stakeholders can register their integrity related concerns either by calling on a toll free number or by writing on the web based portal that is managed by a third party. The hotline provides multiple local language options. After the investigation, established cases are brought to Group Ethics Committee for decision making. All cases reported as part of whistle blower mechanism are taken to their logical conclusion within a reasonable timeframe. The details of the same are also provided in the Corporate Governance Report and the Whistle Blower Policy is also posted on the website of the Company.
Prevention, Prohibition and Redressal of Sexual Harassment at Workplace
The Company as part of Vedanta Group is an equal opportunity employer and believes in providing opportunity and key positions to women professionals. It has been the endeavour of the Group to encourage women professionals by creating proper policies to tackle issues relating to safe and proper working conditions for them and create and maintain a healthy and conducive work environment, free of discrimination. This includes discrimination on any basis, including gender and any form of sexual harassment.
• Statutory Auditors
Statutory auditors of the Company, M/s. Deloitte Haskins & Sells, LLP Chartered Accountants, (FRN 117366W/W-100018) hold office until the conclusion of the ensuing Annual General Meeting.
They have confirmed their eligibility and willingness to accept office of Auditors. The Audit Committee and the Board of Directors therefore recommend M/s. Deloitte Haskins & Sells, LLP Chartered Accountants as Statutory Auditors of the Company for FY 2015-16 for the approval of shareholders.
The Audit Committee/ Board of Directors are cognizant of the need for rotation of the Statutory Auditors in line with the requirement of the Companies Act, 2013 and the high Governance Standards that the Company is committed to. The Company will approach the shareholders in this regard at the appropriate time.
The Notes on Financial Statements referred to in the Auditors Reports are self-explanatory and do not call for any comments and explanation.
• Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Chandratre, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report in the Form MR-3 is annexed herewith as “Annexure D”.
Depository System and Listing of shares
Details of the depository system and listing of shares are given in the section “Additional Shareholder Information”, which forms a part of the Corporate Governance Report and is attached with the Annual Accounts. The Company has paid the listing fee for FY 2015-16 to BSE and NSE.
Registrar and Share Transfer Agent
M/s. Karvy Computershare Private Limited, Hyderabad, is the Registrar and Share Transfer Agent of the Company. Details of the depository system and listing of shares are given in the section “Additional Shareholder Information”, which forms a part of the Corporate Governance Report and is attached with the Annual Accounts
Energy Conservation, Technology Absorption, Foreign Exchange Earnings And Outgo
The information on conservation of energy, technology absorption stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as “Annexure E”.
Your Company maintained healthy, cordial and harmonious industrial relations at all levels. The enthusiasm and unstinting efforts of the employees have enabled your Company to remain at the forefront of the industry. The Directors place on record, their sincere appreciation for the significant contributions made by the employees through their dedication, hard work and commitment towards the success and growth of the Company.
The Directors also acknowledge the support and assistance extended to us by the Government of India, various state governments, and government departments, financial institutions, bankers, community, shareholders and investors at large, and look forward to having the same support in our endeavours.
For and on behalf of the Board of Directors
Place : Mumbai
Date : April 29, 2015