REPORT ON CORPORATE GOVERNANCE:
1. Company's Philosophy on Code of Governance
NHPC has established a framework of Corporate Governance which emphasizes on commitment to quality of governance, transparency, disclosures, maximization of shareholders' wealth and Corporate Social Responsibility. Your Company's management recognizes its role as a trustee on behalf of the stakeholders of the Company. At NHPC, management is taking all possible steps to fulfil its commitment in a judicious, fair and transparent manner. Management believes that this is a way of life rather than a mere legal compulsion.
As a listed entity, your Company has been complying with the requirements of Corporate Governance as stipulated in Listing Agreement and also the Guidelines on Corporate Governance issued by Department of Public Enterprises (DPE), Government of India from time to time.
2. Board of Directors
(i) Size of the Board:
NHPC is a Government Company as defined under Section 617 of the Companies Act, 1956. As per Articles of Association of the Company, the strength of the Board shall not be less than four and not more than fifteen Directors, provided that the number of Independent Directors in any case shall not be less than half of the actual strength of the Board.
(ii) Composition of the Board:
Presently, the Board comprises of the Chairman and Managing Director (CMD), Functional Directors, Government Nominee Directors and Independent Directors. As on 31st March, 2013, there were thirteen directors, of which four were whole-time Directors; two Government Nominee Directors; and seven Independent Directors. Shri G Sai Prasad, a Government Nominee Director, is holding additional charge of Chairman and Managing Director of NHPC Limited since 24th July, 2012 in addition to his duties as Joint Secretary (Hydro), Ministry of Power.
(iii) Age Limit and Tenure of Directors:
The age limit for the whole-time Functional Directors is sixty years. The whole-time Functional Directors are appointed for a period of five years from the date of taking charge till the date of superannuation of the incumbent, or till further instructions from the Government of India, whichever occurs earlier. Government Nominee Directors representing the Ministry of Power, Government of India, retire from the Board at the discretion of the nominating authority or on their ceasing to be officials of the Ministry of Power. Independent Directors are appointed by Government of India usually for a tenure of three years.
(iv) Resume of Directors:
The brief resume of Directors retiring by rotation including their nature of experience in specific functional areas, names of Companies in which they hold directorship and membership/chairmanship of Committees of the Board is appended to the Notice calling the Annual General Meeting. In addition to above, brief profiles of all the Directors are provided elsewhere in this Annual Report.
(v) Non-Executive Directors' compensation and disclosures:
The Company did not pay Sitting Fees to Government Nominee Directors. However, Independent Directors were paid Sitting Fees at the rate of Rupees fifteen thousand per meeting for attending the meetings of the Board of Directors and Committees thereof during the financial year 2012-13.
(vi) Board Meetings, Committee Meetings and Procedures:
(A) Decision-making Process: The Company has laid down a set of guidelines for the meetings of the Board of Directors with a view to professionalize its corporate affairs. These guidelines seek to systematize the decision-making process in Board meetings in an informed and efficient manner.
(B) Scheduling and Selection of Agenda Items for Board/Committee Meetings:
• Meetings are convened by giving appropriate notice after approval of the Chairman of the Board/Committee. Detailed agenda notes, management reports and other explanatory statements are circulated in advance among the members to facilitate meaningful, informed and focused decision making during the meeting. Whenever urgent issues need to be addressed, meetings are called at a shorter notice or resolutions are passed by circulation.
• Whenever it is not possible to attach a document to the agenda notes due to its confidential nature, or in special and exceptional circumstances, or in case of additional or supplemental items, such documents are placed on the table during the meeting.
• Agenda papers are circulated after obtaining approval of the concerned Functional Directors/CMD.
• The meetings are held at the Company Offices in Faridabad or in New Delhi.
• As and when required, presentations are made in the Board/Committee meetings on matters related to Finance, Operations, Human Resources, etc. to enable the members to take informed decisions.
• Members of the Board have complete access to the information pertaining to the Company. Board/Committee members are also free to recommend any issue that they may consider important for inclusion in the agenda. Senior management officials are called during the meeting to provide additional inputs on the matters being discussed by the Board/Committee as and when necessary.
(C) Recording of the Minutes of the Board/Committee Meetings: Minutes of the proceedings of each Board/Committee Meeting are duly recorded in the Minutes Book. The minutes of each Board Meeting are circulated amongst the Members for their confirmation in the next meeting of Board of Directors.
(D) Follow-up Mechanism: Based on the guidelines laid down by the Board/Committee, an Action-Taken Report on the decisions of the Board/Committee is presented in subsequent meetings of respective Board/Committee which helps in effective follow-up, review and reporting on decisions.
(E) Compliance: It is our endeavor to ensure that all applicable provisions of the law, rules and guidelines are adhered to while preparation of the agenda notes. The Company ensures compliance of all applicable provisions of the Companies Act, 1956, SEBI Guidelines, Listing Agreement and other statutory requirements under different laws. The Board of Directors review the Legal Compliance Report placed before it from time to time.
The following information is regularly provided to the Board:
• Annual Operating Plans, Budgetsand related updates.
• Capital Budgetsand related updates.
• Quarterly Financial Results of the Company.
• Minutes of the meetings of the Audit Committee and other Committees of the Board.
• Fatal or serious accidents, dangerous occurrences at different locations/units.
• Major Investment, Formation of Subsidiaries, Joint Ventures and Strategic Alliances.
• Disclosure of interest by the Directors about their Directorships and committee positions held by them in other Companies/Firms, etc.
• Details of Joint Ventures/collaboration agreements, etc.
• Awarding of large contracts.
• Quarterly information with respect to purchases/works/contracts awarded on nomination basis.
• Other items in accordance with the law and Department of Public Enterprises Guidelines.
Twelve meetings of the Board of Directors were held during the year 2012-13. At least one Board meeting was held every three months and the maximum time interval between two meetings did not exceed three months.
(vii) Code of Conduct:
The Company is committed to conduct its business in accordance with the highest standards of business ethics and comply with all applicable laws, rules and regulations. It is hereby confirmed that the Code of Business Conduct and Ethics for Board Members and Senior Management Personnel was circulated amongst all concerned and complied with during the year 2012-13.
(viii) Policies for Preventing Fraud and Risk Management:
The Risk Management System is integrated and aligned with Corporate and Operational objectives. Risk Management is undertaken as part of normal business practice and not as a separate task at set times. The Company has separate policies for Fraud Prevention and Risk Management.
(ix) Training of Board Members:
Whenever new Directors are appointed on the Board, they are given formal induction and orientation with respect to the Company's Vision, Strategic Direction and Core Values, including financial matters and business operations through necessary documents/brochures, reports and internal policies, to familiarize them with Company procedures and practices. A policy on training for Board Members has been formulated by NHPC Limited. The objective of this policy is to provide an opportunity to Board Level functionaries to enhance their skills in the business model of the Company including risk profile, to enable them to discharge their responsibilities more effectively. The policy is also an attempt to enrich their exposure to the best practices on Corporate Governance and Code of Business Conduct and Ethics as applicable to the Board Members.
In addition to the above, site visits are also arranged for the Directors including Independent Director(s). Independent Directors are also considered for nomination to participate in seminars and training programmes organized by reputed institutions.
(x) Code for Prevention of Insider Trading in Securities of NHPC Limited:
In accordance with requirements of the Securities Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, NHPC Limited has implemented a comprehensive Code for Prevention of Insider Trading in its securities. Trading Window remains closed as and when price sensitive information is about to be placed before the Board for designated employees.
3. Committees Constituted by the Board of Directors
The Board has constituted different Committees of Directors to look after various aspects of the business. The following Standing Committees were constituted by the Board:
1. Audit Committee.
2. Shareholders' Grievance Committee.
3. Committee of Directors on Contracts.
4. Remuneration Committee.
5. Committee of Directors for Allotment and Post-allotment Activities of NHPC Securities.
6. Committee of Directors for Investment of IPO Proceeds.
7. Committee of Directors for Self-Insurance Fund.
8. Committee on Corporate Social Responsibility (CSR) and Sustainability
9. Projects and Performance Review Committee
(i) Audit Committee:
The composition, quorum, scope, etc. of the Audit Committee is in line with the Companies Act, 1956, provisions of the Listing Agreement and Guidelines on Corporate Governance issued by Department of Public Enterprises, Govt, of India. The Committee comprised of the following members as on 31st March, 2013:
i) ShriA.K.Mago: Independent Director-Chairman
ii) Shri G. S. Vedi: Independent Director
iii) Shri Atul Kr. Garg: Independent Director
iv) Shri A. Gopalakrishnan: Independent Director
Meetings and Attendance: The Committee met eleven times during the year on 2nd April 2012, 24th May 2012, 5th July 2012, 6th August 2012,17th September 2012,19th October 2012, 30th October 2012, 27th November 2012,4th January 2013, 5th February 2013 and 25th March 2013 respectively.
The Audit Committee meetings were also attended by Director (Finance), head/representatives of Internal Audit and Statutory Auditors as special invitees. The time interval between any two Audit Committee meetings has not exceeded four months during financial year 2012-13. The Company Secretary acted as the Secretary to the Committee.
Terms of Reference of Audit Committee: The terms of reference of the Audit Committee are as per the Companies Act, 1956, Listing Agreement as amended from time to time, and the Guidelines on Corporate Governance issued by Department of Public Enterprises, which inter-alia includes:
1. Oversight of the Company's Financial Reporting Process and the disclosure of its financial information to ensure that the Financial Statement is correct, sufficient and credible.
2. Recommending fixation of Audit Fees to the Board.
3. Approval for payment to Statutory Auditors towards any other services rendered by them.
4. Reviewing, with the management, the Annual Financial Statements before submission to the Board for approval, in particular reference to:
a) Matters required to be included in the Directors' Responsibility Statement to be included in the Board's report in terms of clause (2AA) of Section 217 of the Companies Act, 1956;
b) Changes, if any, in Accounting Policies and Practices and reasons for the same;
c) Major accounting entries involving estimates based on the exercise of judgment by the management;
d) Significant adjustments made in the Financial Statements arising out of audit findings;
e) Compliance with legal requirements related to Financial Statements;
f) Disclosure of any related party transactions; and
g) Qualifications in the Draft Audit Report.
5. Reviewing, Quarterly Financial Statements with the management before submission to the Board for approval.
6. Reviewing, with the management, performance of Internal Auditors and adequacy of the Internal Control Systems.
7. Reviewing the adequacy of the internal audit function, if any, including the structure of the Internal Audit Department, staffing and seniority of the official heading the department, reporting structure coverage, and frequency of the internal audit.
8. Discussion with Internal Auditors and/or Auditors on any significant findings and follow-ups thereon.
9. Reviewing the findings of any internal investigations by Internal Auditors/auditors/agencies where there is suspected fraud or irregularity or failure of Internal Control Systems of a material nature, and reporting the matter to the Board.
10. Discussions with Statutory Auditors before the Audit Commences, about the nature and scope of the audit as well as post-audit discussion to ascertain areas of concern.
11. To look into the reasons for substantial defaults in the payment to the Depositors, Debenture Holders, Shareholders and Creditors.
12. To review functioning of the Whistle Blower Mechanism.
13. Carrying out any other function as mentioned in the terms of reference of the Audit Committee.
14. To review the follow-up action on audit observations of the Comptroller & Auditor General of India (C&AG) audit.
15. To review the follow-up action taken on the recommendations of the Parliament's Committee on Public Undertakings (COPU).
16. Provide an open avenue for communication between the Independent Auditors, Internal Auditor and the Board of Directors.
17. Review and pre-approve all related party transactions in the company. For this purpose, the Audit Committee may designate a member who shall be responsible for pre-approving related party transactions.
18. Review with the Independent Auditor the coordination of audit efforts to assure completeness of coverage, reduction of redundant efforts and the effective use of all audit resources.
19. Consider and review the following with Independent Auditor and management:
- The adequacy of internal controls, including Computerized Information System Controls and Security, and
- Related findings and recommendations of the Independent Auditors and Internal Auditor, together with management responses.
20. Consider and review the following with management, Internal Auditor and Independent Auditors:
- Significant findings during the year, including the status of previous audit recommendations, and
- Any difficulties encountered during audit work, including any restrictions on the scope of activities or access to required information.
(ii) Shareholders' Grievance Committee:
Composition: The Shareholders' Grievance Committee comprised of the following members as on 31st March, 2013:
i) Shri Shantikam Hazarika: Independent Director- Chairman
ii) ShriA.B.L.Srivastava: Director (Finance)
iii) Shri Ashoke Kr. Dutta: Independent Director
Meetings and Attendance: During the year, the committee met thrice on 20th October 2012, 5th February 2013 and 21st March 2013 respectively.
Terms of Reference of the Committee: The Shareholders' Grievance Committee shall have the powers to decide/ oversee the redressal of shareholders' and/or investors' complaints and/or grievances pertaining to share transfers, non-receipt ofAnnual Reports, dividend payments, issue of duplicate certificates, transmission (with or without legal representation) of share and miscellaneous complaints.
Name and Designation of Compliance Officer:
Shri Vijay Gupta, Company Secretary is the Compliance Officer under Clause 47(a) of the Listing Agreement.
Shareholders' Complaints: During the financial year ended 31st March, 2013, the Company has attended to its shareholders' grievances expeditiously except in the cases constrained by disputes or legal impediments.
SEBI Complaints Redress System (SCORES) - Online Portal of SEBI for lodging complaints against Listed Companies
Securities and Exchange Board of India (SEBI) has launched a web based complaints redress system "SCORES", through which a shareholder can lodge his/her complaint against the Company. As and when a complaint is registered, a unique complaint registration number is allotted to it for future reference and tracking. The concerned entity (Intermediary or Listed Company) uploads Action Taken Report on the complaints electronically, which can be viewed by SEBI as well as the Complainant. The concerned entity and the complainant can also seek and/or provide clarifications online to each other. SEBI disposes off the complaints, if it is satisfied that the complaint has been redressed adequately.
An investor, who is not familiar with SCORES or does not have access to SCORES, can lodge his complaint(s) in physical form.
During the year 2012-13, Shareholders' Complaints received through SCORES have been attended to, promptly. Action Taken Reports (ATRs) on these complaints as received from Registrar and Transfer Agent have been submitted to the SEBI through SCORES in compliance with SEBI Circular No. CIR/OIAE/2/2011 dated 3'd June, 2011 and Circular No. CIR/OIAE/1/2012 dated 13th August, 2012 respectively.
Transfer of unpaid/unclaimed amounts to Investor Education and Protection Fund: Pursuant to the provisions of Investor Education and Protection Fund (Uploading of Information regarding unpaid and unclaimed amounts lying with Companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 17th September, 2012 (date of Last Annual General Meeting) on the website of the Company (www.nhpcindia.com), as also on the Ministry of Corporate Affairs website.
Number of Pending Cases for Share Transfers: There was no share transfer request pending as on 31st March, 2013. All share transfers were complied within the time prescribed by the Stock Exchanges and certificates signed by a Practicing Company Secretary have been furnished to Stock Exchanges to this effect.
(iii) Committee of Directors on Contracts:
Composition: The Committee of Directors on Contracts comprised of the following members as on 31st March, 2013:
i) Shri A. B. L. Srivastava: Director (Finance) - Chairman
ii) Shri D. P. Bhargava: Director (Technical)
iii) ShriJ.K.Sharma: Director (Projects)
iv) Shri R. Jeyaseelan: Independent Director
v) Shri Shantikam Hazarika*: Independent Director
* The Board, in its 348th Meeting held on 6th July, 2012 appointed Shri Shantikam Hazarika on the above Committee.
Meetings and Attendance: The committee met once during the year on 17th May 2012. All the members on the date of meeting were present.
Terms of Reference of the Committee: The terms of reference of the Committee of Directors on Contracts are as under:
(a) Award of Letter of Intent/contracts or making commitments referred to at 5 (a) (i), (ii) and (iii) of Annexure-A of Delegation of Powers (Powers Excluded/Excepted from the Delegation of Powers to the CMD, NHPC Limited) for contract amounts exceeding Rupees hundred crore but not exceeding Rupees two hundred crore.
(b) Variations in quantities with respect to quantities indicated in the Bill of Quantity (BOQ) of the Contract Agreement, introduction of new item(s), substitution of one item in the BOQ by another, and deviations from the Terms of the Contract resulting cumulatively in an increase in the contract value approved by the Board by more than 25 per cent or more than Rs.75 crore but within Rs.200 crore, whichever is less excluding increases already built in the contract agreement due to price variation, provision for contingencies, etc. and also due to new statutory requirement or changes in existing statutory requirements.
(c) Payments of idle charges, hire charges and interest to contractor for delay not attributable to contractor and not covered by force majeure ofvalue not exceeding Rupees ten crore.
(d) Acceptance of disputed claims of the value not exceeding Rupees ten crore.
(iv) Remuneration Committee:
NHPC being a Central Public Sector Undertaking, the appointment, tenure and remuneration of its Directors are decided by the President of India. However, as per the provisions of DPE Guidelines on Corporate Governance, a Remuneration Committee was constituted to decide the annual bonus/variable pay pool and policy for its distribution across the Executives and Non-unionized Supervisors, within the prescribed limits. The Remuneration Committee comprised of the following members as on 31st March, 2013:
i) Shri G. S. Vedi: Independent Director-Chairman
ii) Shri Shantikam Hazarika: Independent Director
iii) Shri Ashoke Kr. Dutta: IndependentDirector
Meetings and Attendance: The Committee met five times during the year on 17th May 2012, 22nd June 2012, 6th August 2012, 17th September 2012 and 4th January 2013.
Terms of reference of the Committee:
(i) To recommend distribution of the Annual Bonus/Performance Related Pay (PRP) and policy for its distribution across the Board and below Board level employees.
(ii) To examine and recommend other allowances and perks, etc. to the Board of Directors for approval.
(v) Committee of Directors for Allotment and Post-Allotment activities of NHPC Securities:
Composition: The Committee of Directors for Allotment and Post-Allotment Activities of NHPC Securities comprised of the following membersas on 31st March, 2013:
i) Shri A. B. L. Srivastava: Director (Finance) - Chairman
ii) Shri D. P. Bhargava: Director (Technical)
iii) Shri R. S. Mina: Director (Personnel)
Meetings and Attendance: The Committee met eighteen times during the year, on 27th April 2012, 17th May 2012, 13th June 2012, 26th June 2012, 10th July 2012, 17th July, 2012, 26th July, 2012, 8th August 2012, 28th August 2012, 11th September 2012, 5th October 2012, 22nd October 2012, 9th November 2012, 20th November 2012, 10th December, 2012, 8th January 2013, 1st March 2013 and 15th March 2013.
Terms of Reference of the Committee: The terms of reference of the Committee are as under:
1. Issue of Share Certificates;
2. Transfer and transmission of shares;
3. Re-materialization of Share Certificates;
4. Issue of Duplicate Share Certificates; and
5. Consolidation/splitting of NHPC's shares.
(vi) Committee of Directors for Investment of IPO Proceeds:
Composition: The Committee of Directors for investment of IPO proceeds comprised of the following members as on 31st March, 2013:
i) Shri Atul Kr. Garg: Independent Director - Chairman
ii) Shri A. B. L. Srivastava: Director (Finance)
iii) Shri D. P. Bhargava: Director (Technical)
Meetings and Attendance: The committee met twice during the year on 11th July 2012 and 11th March 2013.
(vii) Committee of Directors for Investment of Self-Insurance Fund:
Composition: The Committee comprised of the following members as on 31st March, 2013:
i) Shri A. B. L. Srivastava: Director (Finance) - Chairman
ii) Shri D. P. Bhargava: Director (Technical)
iii) Shri J. K. Sharma: Director (Projects)
iv) Shri R. S. Mina: Director (Personnel)
Meetings and Attendance: The committee met once during the year on 27th November 2012. The meeting was attended by all the members except Shri J. K. Sharma.
Terms of reference of the committee: The Committee has been authorized to invest the amount available with the Self Insurance Fund in Government Securities, Public Sector Bonds, and time deposits with Nationalized Banks. It is also authorized to sell/realize the proceeds of such investments as deemed fit, considering the requirement of funds to compensate the losses occurred.
(viii) Committee on Corporate Social Responsibility (CSR) and Sustainability
In line with DPE Guidelines on CSR and Sustainability for CPSEs which stipulates for constitution of Board Level Committee headed by Chairman and/or Managing Director or an Independent Director, the Board in its 359th Meeting held on 29th June, 2013 has constituted Committee on Corporate Social Responsibility (CSR) and Sustainability headed by an Independent Director in place of existing Committee of Directors on Sustainable Development.
Composition: The committee was constituted with the following members:
i) ShriA.K.Mago Independent Director-Chairman
ii) Shri D. P. Bhargava Director (Technical)
iii) Shri Atul Kumar Garg: Independent Director
The composition of committee of Directors on sustainable development at the time of its dissolution was as under:
i) Shri A. K. Mago: Independent Director - Chairman
ii) Shri D. P. Bhargava: Director (Technical)
iii) ShriJ.K.Sharma: Director (Projects)
Meetings and Attendance: The committee met thrice till its dissolution on 30th August 2012, 9th November 2012 and 25th March 2013.
Details of the meeting of the Committee of Directors on Sustainable Development attended by members are given in Table 12.
(ix) Projects and Performance Review Committee:
The Board in its 352nd meeting held on 20th October, 2012 discontinued Projects and Performance Review Committee because the progress of Projects is anyway reviewed in the Board Meeting. At the time of dissolution, the Projects and Performance Review Committee comprised of the following members:
i) Shri R. Jeyaseelan: Independent Director- Chairman
ii) Shri G. Sai Prasad: Government Nominee Director & CMD
iii) Shri A. S. Bakshi: Government Nominee Director
iv) Shri A. B. L. Srivastava: Director (Finance)
v) Shri. D. P. Bhargava: Director (Technical)
vi) Shri J. K. Sharma: Director (Projects)
vii) Shri A. K. Mago: Independent Director
Meetings and Attendance: The Projects and Performance Review Committee met once during the financial year 2012-13 till its discontinuation, on 22nd June, 2012. The meeting was attended by all the members except Shri G. Sai Prasad and Shri A. S. Bakshi.
(x) Meeting of Independent Directors: A separate meeting of Independent Directors without the presence of any Functional Directors, Government Nominee Directors and management personnel of NHPC Limited, was held on 22nd March, 2013 under the Chairmanship of Shri A. K. Mago. All the Independent Directors were present in that meeting except Shri A. Gopalakrishnan.
In addition to the above, following issue based Board Level Committees were also constituted by the Board during the Financial Year 2012-13. These Committees were subsequently dissolved on submission of their report / recommendation(s):
(i) Committee of Directors to examine the proposed guidelines for the settlement of claims in respect of Civil Works, Electro-Mechanical Works and Hydro-Mechanical Works:
Composition: This Committee was constituted by the Board in its 346th Meeting held on 4th May, 2012 comprising following members:
(i) Shri R. Jeyaseelan: Independent Director - Chairman
(ii) Shri G. S. Vedi: Independent Director
(iii) Shri D. P. Bhargava: Director (Technical)
(iv) Shri J. K. Sharma: Director (Projects)
In its 348th Meeting held on 6th July, 2012, the Board reconstituted the above Committee by appointing Shri A. K. Mago, Independent Director in place of Shri G. S. Vedi.
Meetings and Attendance: The Committee met five times during the year on 17th May, 2012, 17th July, 2012, 17th August, 2012, 30th August, 2012 and 19th October, 2012 respectively.
(ii) Committee of Directors for review of System and Procedure in working of the Company and suggest measures for improvement:
Composition: This Committee was constituted by the Board in its 347th Meeting held on 25th May, 2012 comprising following members:
(i) Shri G. Sai Prasad: Government Nominee Director & CMD
(ii) Shri A. Gopalakrishnan: Independent Director
(iii) Shri R. Jeyaseelan: Independent Director
(iv) Shri J. K. Sharma: Director (Projects)
(v) Shri D. P. Bhargava: Director (Technical)
Meetings and Attendance: The Committee met thrice during the year on 8th June, 2012, 6th August, 2012 and 31st August, 2012 respectively.
(iii) Committee of Directors on Vigilance Matters:
Composition: The Committee of Directors on Vigilance Matters was constituted by the Board in its 349th meeting held on 7th August, 2012 comprising following members:
(i) Shri R. Jeyaseelan: Independent Director
(ii) Shri Shantikam Hazarika: Independent Director
(iii) Shri A. K. Mago: Independent Director
Further, the Board in its 350th Meeting held on 31st August, 2012 nominated Shri R S Mina, Director (Personnel) as Member Secretary of the Committee.
Meetings and Attendance: The Committee met twice during the year on 12th December, 2012 and 5th February, 2013 respectively.
(iv) Committee of Directors on Capital Restructuring
Composition: This committee was constituted by the Board in its 349th meeting held on 7th August, 2012 comprising following members:
(i) Shri A. Gopalakrishnan: Independent Director
(ii) Shri A. B. L. Srivastava: Director (Finance)
(iii) Shri G. S. Vedi: Independent Director
Meetings and Attendance: The Committee met once during the year on 31st August, 2012 which was attended by all its members.
The Committee submitted its recommendations before 352nd Board Meeting held on 20th October, 2012 and thereafter it was dissolved.
4. Remuneration of Directors
As already stated under the heading Remuneration Committee above, the remuneration of Functional Directors and Sitting Fees payable to Independent Directors is decided by Government of India. The Ministry of Power, Government of India has authorized the Board of Directors of the Company to determine the Sitting Fees payable to Independent Directors within the ceiling prescribed under the Companies Act, 1956. Accordingly, as per decision of the Board of Directors Sitting Fees of Rs. 15,000/- for each meeting of the Board or the Committees of the Board is being paid to Independent Directors.
5. Subsidiary Companies
(i) NHDC LIMITED: NHDC Limited is a Subsidiary Company of NHPC Limited as NHPC holds 51 per cent share of the total Paid-up Equity Share Capital in it. During the year, the Minutes of the Meetings of the Board of Directors of NHDC Limited were placed before the Board of Directors of NHPC Limited. NHPC Board was apprised of the significant transactions and arrangements entered into by the Subsidiary Company at periodical intervals.
NHDC is also covered under the definition of "Material Subsidiary" as stipulated under DPE Guidelines on Corporate Governance. Shri G S Vedi, an Independent Director on the Board of NHPC Limited was appointed on the Board of NHDC Limited with effect from 16th January, 2013. Prior to his appointment, Shri A. Gopalakrishnan had been the Director on the Board of NHDC Limited up to 3rd December, 2012.
Material Progress of NHDC Limited during Financial Year 2012-13:
(a) Diversification: NHDC Limited had signed Memorandum of Understanding on 29th June, 2009 with Government of Madhya Pradesh for establishing Super Critical technology based 1320 MW (2X660 MW) Rewa Thermal Power Project (RTPP), in Khandwa district of Madhya Pradesh. Proposal for Coal Linkage is already under consideration of the Government of India. NHDC has also applied for allotment of Coal Block in its endeavor to arrange coal for Rewa Thermal Power Project. The Company is also exploring the possibility of potential sites for Wind & Solar Energy development in Madhya Pradesh.
(b) Other Activities: Government of Madhya Pradesh (GoMP) has offered NHDC to execute Small & Mini Hydro power schemes in upper Narmada Basin ranging between 10 to 25 MW. The gross capacities of these schemes are anticipated to be 100 to 150 MW. The Ministry of Power, Government of India has already accorded its approval for the draft Memorandum of Understanding between NHDC & GoMP, however the final consent from GoMP is awaited.
(ii) LOKTAK DOWNSTREAM HYDROELECTRIC CORPORATION LIMITED: Loktak Downstream Hydroelectric Corporation Limited (LDHCL) was incorporated on 23rd October, 2009. The Company was promoted as a Joint Venture between NHPC Limited and the Government of Manipur with Equity Shareholding of 74% and 26% respectively. The Company is not a Material Subsidiary as per the Guidelines on Corporate Governance for CPSEs issued by DPE. The minutes of meetings of the Board of LDHCL were placed before the Board of NHPC Limited. Survey and confirmatory investigation work at the project is under progress. Further, the project has received Environment Clearance from Ministry of Environment and Forests (MoEF) in January, 2013.
(iii) CHENAB VALLEY POWER PROJECTS PRIVATE LIMITED: Chenab Valley Power Projects Private Limited (CVPPP) was incorporated on 13th June, 2011 as a Joint Venture of NHPC Limited (49%), Jammu and Kashmir State Power Development Corporation Limited (JKSPDC) (49%) & PTC India Limited (2%) with an Authorized Share Capital of Rs.5 crores for execution of Pakal Dul, Kiru and Kwar H.E. Projects having cumulative installed capacity of 2120 MW in Chenab River Basin. During the year 2012-13, NHPC contributed Rs.77.55 crore towards its proportionate share in CVPPP, whereas other Joint Venture partners are yet to contribute their share which has resulted in increase in holding of NHPC Limited in CVPPP from 49% to 81.60%. As such, CVPPP has been considered as Subsidiary of NHPC Limited instead of Joint Venture as on 31st March, 2013.
(i) Related Party Transactions:
There were no materially significant related party transactions having potential conflict with the interests ofthe Company at large during the Financial Year 2012-13. Related Party Disclosures are included in the notes forming part of the accounts as per Accounting Standard - 18 notified by the Companies (Accounting Standards) Rules, 2006.
(ii) Disclosure Requirements as per Listing Agreement and DPE Guidelines on Corporate Governance:
The Company has adhered to the provisions of law and guidelines of Regulatory Authorities, including those of Securities and Exchange Board of India and Department of Public Enterprises.
The Company has complied with statutory requirements and no penalty was imposed and/or stricture was made on it by the Stock Exchanges or SEBI or any other Statutory Authority, on any matter related to the capital markets or any guidelines issued by Government during the preceding three years.
The periodic results and other communications are regularly published on the Company's official website (www.nhpcindia. com). Information on adoption of the non-mandatory requirements as prescribed under Listing Agreement and DPE Guidelines on Corporate Governance is provided in Annexure-A.
Schedule of Compliances with Presidential Directives issued during Financial Year 2012-13 and preceding three financial years is enclosed as Annexure - B.
(iii) Accounting Treatment:
In the view of Management, all applicable accounting standards are being followed in the preparation of Financial Statements and no treatment different from that prescribed in the Accounting Standard has been followed.
7. CEO/CFO Certification
As required by Clause 49 ofthe Listing Agreement, the certificate duly signed by Shri G. Sai Prasad, Chairman and Managing Director and Shri A B L Srivastava, Director (Finance), was placed before the Board of Directors at the meeting held on 28th May, 2013 and is annexed to the Corporate Governance Report as Annexure - C.
8. Means of Communication
Periodical financial results of the Company are announced within the time specified in Listing Agreement. These results are published in the National and Local Dailies. While the Company did not send periodical results/records to every shareholder, these were hosted on the Company's official website (www.nhpcindia.com).
The Company has also issued official news releases on significant corporate decisions and activities which are also hosted on the Company website.
9. Information for Shareholders
(i) Annual General Meeting:
Date: 16th September, 2013
Time: 12 Noon
Venue: Municipal Corporation Auditorium, NIT, Near B KChowk, Faridabad - 121 001
(ii) Financial Calendar for the Year 2013-14:
Accounting period: 1st April, 2013 to 31st March, 2014
Unaudited Financial Results for the first three quarters: Intimation to Stock Exchanges within fifteen minutes of conclusion ofthe Board meeting. Board Meeting to be held within forty five days from the end of each quarter.
Fourth Quarter Results/Annual Audited Financial Results for the year ending on 31st March, 2014: Intimation to Stock Exchanges within fifteen minutes of conclusion ofthe Board Meeting. Board Meeting to be held on or before 30th May, 2014.
AGM – 2014: September, 2014(Tentative)
(iii) Book Closure/Record Date:
a) For Payment of Dividends
The Register of Members and Share Transfer Books of the Company will remain closed from 03.09.2013 to 16.09.2013 (both days inclusive).
b) For Payment of Interest on Bonds
BOND SERIES: NHPC 7.70% SECURED REDEEMABLE NON-CUMULATIVE TAXABLE 'O' SERIES BONDS (STRPP-E TO STRPP-J)
DUE DATE OF INTEREST PAYMENT: 30.06.2012
RECORD DATE: 14.06.2012
BOND SERIES: NHPC 9% SECURED REDEEMABLE NON-CUMULATIVE TAXABLE T SERIES BONDS
DUE DATE OF INTEREST PAYMENT: 28.02.2013
RECORD DATE: 12.02.2013
BOND SERIES: NHPC 9.25% SECURED REDEEMABLE NON-CUMULATIVE TAXABLE 'Q' SERIES BONDS
DUE DATE OF INTEREST PAYMENT: 12.03.2013
RECORD DATE: 25.02.2013
c) Redemption of Bonds: Details of bonds redeemed during the Financial Year 2012-13 are:
BOND SERIES: NHPC7.70%SECURED REDEEMABLE NON-CUMULATIVE TAXABLE '0' SERIES BONDS (STRPP-E)
SCRIP CODE: NHPC13
DUE DATE OF REDEMPTION: 31.03.2013
RECORD DATE: 15.03.2013
(iv) Listing on Stock Exchanges:
a) Equity Shares:
The Equity Shares of the Company are listed on the following Stock Exchanges:
Bombay Stock Exchange Limited
Scrip Code: 533098
National Stock Exchange of India Limited
Scrip Code: NHPCEQ
Particulars of Bonds issued by NHPC Limited are given as under:
S. No.: Particulars of Bonds
1. NHPC 7.70 per cent Secured Redeemable Non- Cumulative Taxable 'O' Series Bonds
2. NHPC 9 per cent Secured Redeemable Non- Cumulative Taxable 'P' Series bonds
3. NHPC 9.25 per cent Secured Redeemable Non- Cumulative Taxable 'Q' Series bonds
4. NHPC 8.70 per cent Secured Redeemable Non- Cumulative Taxable 'R1' Series Bonds
5. NHPC 8.85 per cent Secured Redeemable Non-Cumulative Taxable 'R2' Series Bonds
6. NHPC 8.78 per cent Secured Redeemable Non-Cumulative Taxable 'R3' Series Bonds
All the Bonds mentioned in the above table are listed on:
The National Stock Exchange India Limited
WDM Segment, Exchange Plaza, Ground Floor, Bandra-Kurla Complex, Bandra (E), Mumbai.
(v) Registrar & Transfer Agents:
a) For Equity Shares:
M/s Karvy Computershare Private Limited
Plot No. 17-24, Vittal Rao Nagar, Madhapur, Hyderabad - 500 081
Tel No: +91 40 4465 5000
Fax No: +91 40 2343 1551
E-mail ID: firstname.lastname@example.org
Toll Free No. : 1-800-3454001
b) For Non-Redeemable Cumulative Bonds:
M/s RCMC Share Registry (P) Ltd.
B-106, Sector-2 Noida-201301 (Uttar Pradesh)
(vi) Share/Bond Transfer System:
It is the responsibility of respective Registrar and Transfer Agents to look into the routine matters related to transfer of shares/bonds, subject to the supervision, control, and approval ofthe Board/Committee of Directors.
(vii) Dematerialization of Share and Liquidity:
The shares of the Company are in the Compulsory Dematerialized Segment and are available for trading with both the depositories, that is, the National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL).
Reconciliation of Share Capital Audit Report for reconciliation of the Total Issued Capital, Listed Capital and Capital held by depositories in a dematerialized form with respect to the Share Capital of the Company with the depositories was obtained from the practicing Company Secretary and was submitted to the Stock Exchanges within the stipulated time.
The Company's Bonds are also in the Compulsory Dematerialized Segment and are available for trading with both the depositories, i.e., the National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL). Reconciliation of Share Capital Audit for Listed Bonds for the purpose of reconciliation of total admitted bonds listed at NSDL/ CDSL and the total issued and listed bonds were obtained from the practicing Company Secretaries.
(viii) Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, Conversion date and likely impact on equity:
NHPC has not issued GDRs/ADRs/warrants or any Convertible Instruments.
(ix) Plant Locations:
NHPC Limited, Surangani, Distt. Chamba, Himachal Pradesh - 176 317
NHPC Limited, P.O. Loktak, Komkeirap, Manipur- 795 124
NHPC Limited, P.O. Jyotipuram, Via Reasi, Distt. Reasi, Jammu & Kashmir - 182 312
NHPC Limited, P.O. TPS. Campus, Banbassa, Distt. Champawat, Uttarakhand -262 310
NHPC Limited, Khairi, Distt. Chamba, Himachal Pradesh - 176325
NHPC Limited, Gingle, P.O. Mohra, Distt. Baramulla, Jammu & Kashmir- 193 122
NHPC Limited, P.O. Rangit Nagar, South Sikkim - 737 111
NHPC Limited, Karian Distt. Chamba, Himachal Pradesh -176310
NHPC Limited, Post Box No. 1, Tapovan, Dharchula, Distt. Pithoragarh, Uttarakhand - 262 545
NHPC Limited, Chenab Nagar, Sector-ll, Kishtwar, Distt. Kishtwar, Jammu & Kashmir - 182 206
NHPC Limited, P.O. Singtam, East Sikkim - 737 134
NHPC Limited, Mashka, Distt. Kathua (J&K)
NHPC Limited, Village Dharwala, PO - 9, Distt. - Chamba, Himachal Pradesh - 176 311
NHPC Limited, P.O. Minji, Distt. Kargil (Ladakh), J&K- 194103
Teesta Low Dam Project - III
NHPC Limited, Rambi Bazar, P.O. Reang, Distt. Darjeeling (W.B.), PIN-734 321
(x) Address for Correspondence:
Shri Vijay Gupta, Compliance Officer
1st Floor, NHPC Office Complex, Sector-33, Faridabad, Haryana - 121 003
The phone numbers and e-mail reference for communication are given below:
Telephone Number: 0129-2278421
Fax No: 0129-2277941
Investor Relation Cell:- 0129-2250437
E-mail ID: email@example.com, firstname.lastname@example.org
Public Spokesperson, Shri Jayant Kumar, Executive Director (Finance):- 0129-2278232
E-mail ID: email@example.com
As per Circular of the Securities & Exchange Board of India dated 22.01.2007, exclusive e-mail address for redressal of Investor Complaints is firstname.lastname@example.org.
Besides the mandatory requirements as mentioned in the preceding pages, the status of compliance with non-mandatory requirements of the Listing Agreement and DPE Guidelines on Corporate Governance is as under:
a) The Board:
The Company is headed by Shri G. Sai Prasad who is holding additional charge of the Chairman and Managing Director in addition to his duties as Joint Secretary (Hydro), Ministry of Power. He is a Government Nominee Director on the Board of NHPC Limited. No Independent Director has been appointed for the period exceeding, in aggregate of 9 years, on the Board of the Company.
b) Remuneration Committee:
Please refer to paragraph 3 (iv) of this Report.
c) Shareholders' Rights:
A half-yearly declaration of financial performance, including a summary of significant events in the last six months is not sent individually to every shareholder. However, this information is made available on the Company's official website. Periodic Financial Results are published in the leading newspapers as mentioned under 'means of communication' in this Report.
d) Audit Qualification:
Joint Statutory Auditors of NHPC Limited have given qualified Audit Report on the Annual Financial Statements of NHPC Limited for the year ended 31st March, 2013. Please refer to paragraph 34 of the Directors' Report.
e) Training of Board Members:
Please refer to paragraph 2 (ix) of this Report.
f) Mechanism for Evaluating Performance of Non-executive Board Members:
Presently, the Board of the Company comprises of nine Non-executive Directors, including two Government Nominees. However, one ofthe Government Nominee Directors, i.e. Shri G Sai Prasad is holding additional charge of Chairman and Managing Director of NHPC Limited. All of them have been appointed by the President of India through the Ministry of Power and therefore, their performance evaluation is not done by the Board of the Company.
g) Whistle Blower Policy:
NHPC has defined and established a Whistle Blower Policy for reporting the instances of unethical/improper conduct and taking suitable steps to investigate and correct the same. No personnel have been denied access to the Audit Committee. In addition to this, a policy to prevent frauds has also been adopted by the company for reporting on frauds or suspected frauds involving employees as well as representatives of vendors, suppliers, contractors, consultants, service providers or any other party doing any type of business with NHPC. All reports on frauds or suspected frauds are investigated with utmost speed. The mechanism for prevention of frauds is also included in the policy.