CORPORATE GOVERNANCE REPORT
COMPANY'S PHILOSOPHY ON CORPORATE GOVERNANCE
Essar Oil Limited believes that adhering to global standards of Corporate Governance is essential to enhance shareholders' value and achieve long term corporate goals. The Company is committed to ethical conduct of business, manages its affairs with fairness to all stakeholders and operates with openness, integrity and accountability. The Board of Directors conducts the business of the Company in due compliance with its Memorandum and Articles of Association and the laws applicable to the jurisdictions of the places where the Company operates and undertakes a periodic review of business plans, performance and compliance with regulatory requirements.
A Relates to Memberships / Chairmanships of Audit Committee and Stakeholders' Relationship Committee. Number of Committees on which a Director is a Member includes the number of Committees on which he/she is a Chairman.
$ Directorships and Committee positions are as on the date of resignations for respective Directors resigned prior to March 31, 2015 and based on the records available with the Company.
1. Appointed as Director with effect from October 10, 2014
2. Appointed as Director with effect from October 10, 2014 and subsequently resigned on May 25, 2015
3. Appointed as Director with effect from March 31, 2015.
4. Appointed as Director with effect from September 10, 2014
5. Appointed as Director with effect from October 10, 2014 and resigned with effect from March 31, 2015.
6. Ceased to be Director with effect from October 14, 2014.
7. Ceased to be Director with effect from September 10, 2014.
8. Ceased to be Director with effect from
July 11, 2014.
9. Ceased to be Director with effect from May 19, 2014.
Dr. Sabyasachi Sen has been appointed as an Independent Directors of the Company with effect from May 25, 2015.
During the year, six Board Meetings were held and the time gap between any two meetings did not exceed one hundred and twenty days. The dates on which the meetings were held are as follows: May 20, 2014; June 22, 2014; August 12, 2014; November 7, 2014; November 21, 2014 and February 10, 2015. The management of the Company is conducted by the Managing Director & CEO, who is assisted by Heads of Divisions/ Departments.
Mr. L. K. Gupta and Mr. C. Manoharan retire by rotation at the ensuing Twenty Fifth Annual General Meeting (AGM) and being eligible seek re-appointment. Section 149 the Companies Act, 2013 provides for appointment of Independent Directors at AGM, Ms. Rugmani Shankar and Dr. Sabyasachi Sen have been appointed as Independent Directors by the Board. The consent of shareholders will be sought at the AGM to approve their appointment for a period of one year each from the date of their appointment. Mr. K N Venkatasubramanian and Mr. V. S. Jain retire by rotation at the ensuing AGM and being eligible are proposed to be appointed as Independent Directors for a term of three years each commencing from the date of the AGM being held on September 30, 2015. In compliance with Clause 49 of the Listing Agreement, brief resume of the directors being re-appointed / appointed along with the nature of their expertise and the details of other directorships and the committee positions held by them and their shareholdings are annexed to the Notice for the ensuing AGM. None of the Directors is related to any other director on the Board.
As on March 31, 2015, Mr. Naresh Nayyar, Mr. D. J. Thakkar, Mr. K. N. Venkatasubramanian, Mr. V. S. Jain and Mr. Sudhir Garg held 8000, 300, 6500, 600 and 200 shares, respectively. None of the other directors held any shares in the Company as on March 31, 2015.
CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT
The Board of Directors has laid down a Code of Conduct ('Code') for Directors and Senior Management personnel one level below the Executive Directors including all Functional Heads. During the year ended March 31, 2015, the Code was suitably modified to include the duties of the Independent Directors as prescribed under the Companies Act, 2013. The Code has been posted on the Company's website.
All the Directors, Senior Management and Functional Heads have affirmed compliance with the Code for the year ended March 31, 2015. The declaration to this effect of the Managing Director & CEO is given below
3. AUDIT & RISK MANAGEMENT COMMITTEE
During the year the nomenclature of Audit & Governance Committee was changed to Audit & Risk Management Committee. The Committee was reconstituted on May 20, 2014 with the induction of Mr. Naresh Nayyar in place of Nominee of Life Insurance Corporation of India. As on March 31, 2015, the Audit & Risk Management Committee comprised of 3 members viz. Mr. Naresh Nayyar, Mr. D. J. Thakkar and Mr. K. N. Venkatasubramanian. Mr. D. J. Thakkar, a Practicing Chartered Accountant, Chairs the meetings of the Committee. The scope of the Committee was enhanced during the year to include the requirements of Section 177 of the Companies Act, 2013, Clause 49 of the listing agreement as amended and monitoring and reviewing risk management plan for the Company. All the members of the Committee are financially literate and the Chairman of the Committee has accounting and related financial management expertise. The Chairman of the Committee was present at the 24th Annual General Meeting to answer the shareholders' queries. The Committee invites Statutory Auditors, Internal Auditors, Managing Director & CEO, Chief Financial Officer and Vice President (Corporate Accounts) to attend the meetings. All department heads are invited to attend the meetings whenever audit issues or transactions with related parties concerning their departments are discussed in the meetings. The representative of the Cost auditor is invited to attend the meetings of the Committee when the cost audit report is placed for discussion. The Company Secretary acts as Secretary to the Committee.
During the year ten meetings of the Audit & Risk Management Committee were held. Mr. K. N. Venkatasubramanian and Mr. D. J. Thakkar attended all meetings. Mr. Naresh Nayyar attended five meetings and Mr. R. Sudarsan, Nominee of LIC of India attended one meeting.
4. NOMINATION & REMUNERATION COMMITTEE
As on March 31, 2015, the Nomination & Remuneration Committee comprised of 3 members viz.: Mr. Naresh Nayyar, Mr. K. N. Venkatasubramanian and Mr. V. S. Jain. Mr. D. J. Thakkar and Mr. Sushil Maroo ceased to be members of the Committee with effect from May 20, 2014 and October 14, 2014 respectively. Mr. K. N. Venkatasubramanian generally chairs the meetings.
During the year the Committee met six times. Mr. K. N. Venkatasubramanian and Mr. V. S. Jain attended all meetings. Mr. Naresh Nayyar attended 4 meetings. Mr. Sushil Maroo attended three meetings. Mr. D. J. Thakkar attended one meeting. The terms of reference of Nomination & Remuneration Committee, which were enhanced during the year, include development of selection criteria for Directors and Senior Management Personnel recommending the Board policies relating to diversity of Board and appointment, removal and remuneration payable to Directors, Key Managerial Personnel and other employees, recommending appointment and remuneration of the Directors and Key Managerial Personnel, review and finalisation of the performance of senior management executives just below the Managing Director, determine the criteria and fix the overall annual variable pay of all executives. The terms of reference of the Nomination & Remuneration Committee are in conformity with Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.
The Company has adopted a policy for Board Diversity, Appointment, Remuneration Training and evaluation of Directors and Employees. The policy inter-alia includes the criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178(3) of the Act. Relevant chapters of the Policy relating to Directors' appointment and remuneration are enclosed as Annexure A to the Directors' Report set out in the Annual Report.
The Non-Executive Directors do not draw any remuneration from the Company except for sitting fees. During the financial year 2014-15 the Non-Executive Directors have been paid sitting fees at the rate of Rs. 20,000/- each for attending meeting of the Board of Directors and Committee. Effective from May 20, 2014 the sitting fees payable to the Independent Directors was enhanced to Rs. 50,000/- for attending each meeting of the Board of Directors and Audit & Risk Management Committee and Rs. 40,000/- for attending each meeting of other Committees of the Board.
The sitting fees paid to the Directors for the year ended March 31, 2015 are as follows: Mr. Prashant S. Ruia: Rs. 1,00,000/-; Mr. Naresh Nayyar: Rs. 20,000/; Mr. D. J. Thakkar: Rs. 10,80,000/; Mr. K. N. Venkatasubramanian: Rs. 14,90,000/-; Mr. V. S. Jain: Rs. 9,80,000/-; Mr. S. V. Venkatesan: Rs. 1,90,000/-; Mr. Deepak K Varma: Rs. 1,90,000/-; Mr. R. Sudarsan: Rs. 1,40,000/- (paid to LIC of India); Mr. Sudhir Garg: Rs. 60,000/- (paid to IFCI Ltd.) and Mr. Rajiv Pal Singh: Rs. 40,000/-. During the year, there were no pecuniary relationships or transactions between the Company and any of its NonExecutive Directors. The Company has not granted any stock options to its Non-Executive Directors.
In terms of the Essar Oil Employee Stock Options Scheme - 2011, the Executive Directors are entitled to be granted stock options. Prior to being appointed as Director (Refinery), Mr. C. Manoharan, in his capacity as Head of Refinery, was granted 191,509 stock options in financial year 2011-12. In Financial Year 2013-14, 319,480 Stock Options were granted to Mr. C Manoharan. There is no separate provision for payment of severance fee to any of the Executive Directors.
5. INVESTORS' RELATIONS
a. Investors' Relations Committee
As on March 31, 2015 the Committee consists of three Directors viz. Mr. D. J. Thakkar; Mr. Naresh Nayyar and Mr. L. K. Gupta. Mr. Sushil Maroo ceased to be member of the Committee from October 14, 2014. Mr. D. K. Varma was inducted as member of the committee on May 25, 2015. Mr. D. J. Thakkar, a Non-Executive Director generally Chairs the meetings.
During the year four meetings were held. Mr. L. K. Gupta and Mr. D. J. Thakkar attended all 4 meetings, Mr. Naresh Nayyar attended 3 meetings and Mr. Sushil Maroo attended 2 meetings.
b. Compliance Officer
The Company Secretary, Mr. Sheikh S.
Shaffi, is the Compliance Officer in terms of Clause 47 of the Listing Agreement.
c. Requests / complaints
There were no complaints from share/ debenture holders pending at the beginning of the financial year. During the financial year, 235 complaints were received and 232 complaints were replied to/resolved. As of March 31, 2015, there were 3 pending complaints.
705 requests involving transfer of 92,475 shares were received during the financial year.
i) The Company does not have any material related party transactions that may have potential conflict with the interest of the Company at large. Transactions with related parties are disclosed in note 44 to the standalone and consolidated financial statements of the Company forming part of the Annual Report.
ii) There were no instances of non-compliance on any matter related to the capital markets and the Stock Exchange(s), SEBI or any other Statutory Authorities have not imposed any strictures, penalties during the last three years. Under the provisions of Clause 49 of the listing agreement, half of the Company's Board should comprise of Independent Directors. The Company has been complying with this requirement. However, the definition of Independent Director was revised by introduction of Clause 49(II)(B) (1) under which Nominee Directors, (Lenders Nominees) were excluded from being regarded as Independent. The Company was required to reconstitute the Board considering the revised criteria of Independence by September 30, 2014. The Company had taken effective steps to reconstitute the Board and complied with this requirement by October 14, 2014.
iii) The financial statements have been prepared in accordance with the accounting policies generally accepted in India. In compliance with clarificatory orders dated August 4, 2006 and August 11, 2006 issued by Hon'ble Gujarat High Court, interest on certain categories of debentures have been accounted on cash basis as detailed in note 7(ii)(a) to financial statements.
Regarding certain funded interest facilities as referred in note 7(ii)(c) to the financial statements, to give accounting effect to reflect substance of the transaction, the Facility Stoppage (FS) loan was, since inception, measured by the Company in accordance with the principles of IAS 39, Financial Instruments, Recognition and Measurement, in absence of specific guidance in Indian GAAP to cover the specific situation. Applying the principle of Accounting Standard 30, Financial Instruments, Recognition and Measurement, the FS loan has been re-measured in continuance of the above principle, considering present value of cash flow inclusive of future interest.
iv) The Company has adopted a Whistle Blower Policy as per the requirements of Listing Agreement and the Companies Act, 2013 which provides a mechanism to any of the employees to report genuine concerns or any violation. During the year no personnel has been denied access to the Audit & Risk Management Committee.
v) Mr. L. K. Gupta, Managing Director & CEO and Mr. Suresh Jain, Chief Financial Officer have certified to the Board of full compliance of Clause 49 (IX) of the Listing Agreement for the financial year ended March 31, 2015.
vi) A certificate issued by Practicing Company Secretaries, M/s. Prakash Pandya & Co. certifying that the Company complies with the conditions of the Corporate Governance as stipulated under Clause 49 of the Listing Agreement, is enclosed as Annexure-H to the Directors' Report.
vii) In respect of compliance with the non-mandatory requirements, the quarterly, half-yearly and annual results are put up on Company's website <http://> essaroil.co.in. The results along with the press release being made to media after release of the results is also being sent to all the shareholders by email whose email IDs are registered with the Company / Depository Participants. The auditors have issued an unqualified report in respect of the audited financial results for the financial year ended on March 31, 2015. The auditors' observations have been adequately explained in the Notes to accounts wherever necessary. The posts of the Chairman and the Managing Director are held by separate persons. The Chief Internal Auditor reports directly to the Audit & Risk Management Committee.
8. MEANS OF COMMUNICATION
1. Quarterly/annual financial results are regularly submitted to Stock Exchanges in accordance with the Listing Agreement and published in all editions of English daily, Business Standard and in a Gujarati daily, Jai Hind. The quarterly/annual results are also made available at the Company's website, <http://> essaroil.co.in. Official news releases, presentations etc. made to media and analysts are displayed on the Company's website. Official press releases are sent to Stock Exchanges.
2. Management Discussion and Analysis Report, in compliance with the requirements of Clause 49 of the Listing Agreement with Stock Exchanges, is annexed to the Directors' Report which forms part of this Annual Report being sent to all the members of the Company.
3. Full text of Annual Reports of the Company are made available on the website of the Company; <http://essaroil.co.in>.
4. The quarterly/annual financial statements along with Corporate Governance report, Shareholding
Pattern, Annual Reports, financial statements of subsidiaries and other documents in compliance with the requirements of Listing Agreement entered into with Stock Exchanges are available on the websites of BSE and NSE by the respective stock exchanges.
5. Printed copy of the Chairman's Speech is distributed to all the shareholders at the Annual General Meeting.
6. Reminders were sent to those investors whose interest/ redemption amount on debentures were unencashed as per records of the Company and was due for transfer to Investor Education and Protection Fund during the financial year 2014-15 advising them to seek demand drafts in lieu of their lapsed warrants.
GENERAL SHAREHOLDER INFORMATION
Corporate Identification Number : L11100GJ1989PLC032116
ii. AGM date, time and venue
September 30, 2015 at 3:00 p.m. at the Registered Office of the Company at Khambhalia Post, Dist. Devbhumi Dwarka-361305
iii. Tentative Financial calendar
Approval of the results for the quarter ending June 30, 2015; September 30, 2015; and December 31, 2015. : Within 45 days of the end of quarter
Audited annual results for the year ending March 31, 2016 : Before May 30, 2016
iv Cutoff date for remote e-voting : September 23, 2015
v. Remote e-voting period :
E-voting commences on : September 25, 2015 at 8:00 a.m.
E-voting ends on : September 29, 2015 at 5:00 p.m.
vi. Date of Book closure: September 29, 2015 to September 30, 2015 (both days inclusive)
vii. Dividend payment date : N.A.
viii. Listing of equity shares on stock exchanges
The equity shares of the Company are listed on BSE Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). The Company has paid the annual listing fees for the financial year 2015-16 to BSE and NSE.
The addresses of the Stock Exchanges are set out below:
BSE Ltd.. 1st Floor, Rotunda Bldg. P.J. Towers, Dalal Street, Mumbai-400 023
National Stock Exchange of India Ltd Exchange Plaza, 5th Floor, Plot No.C/1, G Block Bandra Kurla Complex, Bandra (East), Mumbai-400 051
The Company had on June 20, 2014 received a proposal from Essar Energy Holdings Ltd., Promoter Company offering to purchase all the publicly held equity shares of the Company (delisting offer) and upon successful completion of delisting offer, to voluntarily delist the shares of the Company from the Stock Exchanges. On August 6, 2014, the shareholders have passed a special resolution approving the Delisting Proposal by Postal Ballot mechanism. The Company received in-principle approval for delisting from the National Stock Exchange of India Limited and BSE Limited on July 2, 2015 and July 15, 2015 respectively. The shareholders' resolution was valid for one year i.e. up to August 5, 2015 for completing the delisting process. The Promoters have made an application to Securities and Exchange Board of India under regulation 25A of SEBI (Delisting of Equity Shares Regulations), 2009 seeking extension of time.
ix. Stock Codes Equity shares
BSE Limited : 500134
National Stock Exchange of India Limited : ESSAROIL
ISIN with NSDL and CDSL
Equity shares : INE011A01019
12.50% Secured Non-Convertible Debentures of Rs. 98.70 each redeemable on July 23, 2018 : INE011A07073
xii. Share Transfer Agent
M/s. Datamatics Financial Services Ltd. is the Share Transfer Agent of the Company. The Share Transfer Agent acknowledges and executes transfers of securities and arranges for issue of interest/redemption warrants on debentures. The Share Transfer Agent also accepts, deals with and resolves requests, queries and complaints of share/debenture holders.
xiii. Share Transfer System
The Company's shares are traded on the Stock Exchanges compulsorily in dematerialised mode. Physical shares which are lodged for transfer with the Transfer Agent are processed and returned to the shareholders within a period of 10-15 days.
xvi. Dematerialisation of shares
As on March 31, 2015, 98.78% of the Company's equity shares i.e. 1,43,18,53,063 shares were held in dematerialised foi and 1.22% i.e. 1,76,63,837 shares were held in physical form.
xvii. Outstanding GDRs/ADRs/ Warrants or any Convertible instruments, conversion date and likely impact on equity
62,18,718 Global Depository Shares (GDSs) represented by 95,14,63,854 equity shares were outstanding as on March 31, 2015. Each GDS represents one hundred and fifty three (153) equity shares. There are no convertible instruments outstanding as on March 31, 2015.
xviii. Transfer of unclaimed amount to Investor Education & Protection Fund
For the financial year ended on March 31, 2015, the Company has transferred to Investor Education & Protection Fund (IEPF) in compliance with section 205C of the Companies Act, 1956. Rs. 2,75,64,831 debenture interest and principal amount remaining unpaid or unclaimed for a period of 7 years from the date the amount became due for payment.
xix. Plant Location
The Refinery of the Company is located at Khambhalia Post, Dist. Devbhumi Dwarka - 361305, Gujarat. The Company's oil fields are located at Mehsana, Gujarat and the Coal Bed Methane (CBM) fields are located in Durgapur, West Bengal.
xx. Address for communication
For any assistance, request or instruction regarding transfer or transmission of shares and debentures, dematerialization of shares / debentures, change of address, non-receipt of Annual Report, interest warrant and any other query relating to the shares and debentures of the Company, please write to the following address: M/s. Datamatics Financial Services Ltd., Unit: Essar Oil Limited, Plot No. B - 5, Part B Cross Lane, MIDC, Andheri (East), Mumbai - 400093. Phone: 91-22-66712151 to 66712156, Fax: 91-22-66712209, Email: firstname.lastname@example.org
For any assistance, share / debenture holders may also write to the Company at the following email ID exclusively designated for the purpose: email@example.com