Corporate Governance Report for the year 2013-14

3. Audit Committee

The Company had constituted an Audit Committee in the year 1986. The scope of the activities of the Audit Committee is as set out in Clause 49 of the Listing Agreements with the Stock Exchanges read with Section 292A of the Companies Act, 1956. The terms of reference of the Audit Committee are broadly as follows:

  1. To review compliance with internal control systems;
  2. To review the findings of the Internal Auditor relating to various functions of the Company;
  3. To hold periodic discussions with the Statutory Auditors and Internal Auditors of the Company concerning the accounts of the Company, internal control systems, scope of audit and observations of the Auditors/Internal Auditors;
  4. To review the quarterly, half-yearly and annual financial results of the Company before submission to the Board;
  5. To make recommendations to the Board on any matter relating to the financial management of the Company, including Statutory & Internal Audit Reports;
  6. Recommending the appointment of cost auditors and statutory auditors and fixation of their remuneration.
  7. Review of Cost Audit Report.
  8. Reviewing the Company's financial and risk management policies.

Mr. Subodh Bhargava, Chairman of the Audit Committee was present at the Annual General Meeting held on 14th August, 2013.

Six meetings of the Audit Committee were held during the Financial Year 2013-14.

The composition of the Audit Committee and the details of meetings attended by the Directors are given below:

Date of Meeting Mr. Subodh Bhargava
Chairman,
Independent,
Non-Executive		 Mr. S. M. Palia*
Member,
Independent,
Non-Executive		 Mr. Ishaat Hussain
Member,
Not Independent,
Non-Executive		 Mr. Andrew Robb
Member,
Independent,
Non-Executive		 Mr. D K Mehrotra**
Member,
Independent,
Non-Executive		 Mr. O P Bhatt**
Member,
Independent,
Non-Executive
10th April, 2013 Yes Yes Yes No NA NA
22nd May, 2013 Yes NA Yes Yes NA NA
12th August, 2013 Yes NA Yes Yes NA NA
18th September, 2013 Yes NA Yes Yes Yes No
12th November, 2013 Yes NA Yes Yes Yes Yes
10th February, 2014 Yes NA Yes Yes Yes Yes
* Stepped down as member w.e.f 25th April, 2013
** Appointed as member w.e.f 13th August, 2013

Audit Committee meetings are attended by the Group Executive Director (Finance & Corporate), Chief (Corporate Audit & Assurance) India & South East Asia and Representatives of Statutory Auditors. The Company Secretary acts as the Secretary of the Audit Committee.

The necessary quorum was present at the meetings.

Whistle Blower Policy

The Audit Committee at its meeting held on 25th October, 2005, approved framing of a Whistle Blower Policy that provides a formal mechanism for all employees of the Company to approach the Ethics Counsellor/Chairman of the Audit Committee of the Company and make protective disclosures about the unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct. The Whistle Blower Policy is an extension of the Tata Code of Conduct, which requires every employee to promptly report to the Management any actual or possible violation of the Code or an event he becomes aware of that could affect the business or reputation of the Company. The disclosures reported are addressed in the manner and within the time frames prescribed in the Policy. Under the Policy, each employee of the Company has an assured access to the Ethics Counsellor/Chairman of the Audit Committee.

Cost Auditor's details

The Central Government has approved the appointment of M/s Shome & Banerjee, Cost Accountants as Cost Auditors for conducting Cost Audit of the Company for the Financial Year 2013-14.

The due date for filing the Cost Audit Reports for the Financial Year ended 31st March, 2014 is 30th September, 2014.

The due date for filing the Cost Audit Report of the Company for the Financial Year ended 31st March, 2013 was 30th September, 2013 and the Cost Audit Report was filed by the Cost Auditor M/s Shome & Banerjee, Cost Accountants, on 27th August, 2013 in XBRL Mode as mandated by the Ministry of Corporate Affairs vide their circular no. 8/2012 dated 10th May, 2012.

4. Remuneration Committee

The Company had constituted a Remuneration Committee in the year 1993. The broad terms of reference of the Remuneration Committee are as follows:

  1. Review the performance of the Managing Director and the Whole-time Directors, after considering the Company's performance.
  2. Recommend to the Board remuneration including salary, perquisites and commission to be paid to the Company's Managing Director and Whole-time Directors.
  3. Finalise the perquisites package of the Managing Director and Whole-time Directors within the overall ceiling fixed by the Board.
  4. Recommend to the Board, retirement benefits to be paid to the Managing Director and Whole-time Directors under the Retirement Benefit Guidelines adopted by the Board.

The Remuneration Committee also functions as the Compensation Committee as per SEBI guidelines on the Employees' Stock Option Scheme. The Company, however, has not yet introduced the Employees' Stock Option Scheme.

Four meetings of the Remuneration Committee were held during the Financial Year 2013-14.

The composition of the Remuneration Committee and the details of meetings attended by the Directors are given below:

Date of Meeting Mr. S. M. Palia*
Chairman,
Independent,
Non-Executive		 Mr. Nusli N. Wadia**
Chairman,
Independent,
Non-Executive		 Mr. Cyrus P. Mistry
Member,
Not Independent,
Non-Executive		 Mr. O P Bhatt #
Member,
Independent
Non- Executive
23rd May, 2013 NA Yes Yes NA
29th May, 2013 NA Yes Yes NA
19th September, 2013 NA Yes Yes No
13th November, 2013 NA Yes Yes Yes
* Stepped down as Member w.e.f. 25th April, 2013.
** Appointed as Chairman w.e.f. 13th August, 2013.
# Appointed as Member w.e.f. 13th August, 2013.

The Chairman of the Remuneration Committee, Mr. Nusli N. Wadia was not present at the Annual General Meeting held on 14th August, 2013.

The Company has complied with the non-mandatory requirement of Clause 49 regarding the Remuneration Committee.

Remuneration Policy

The Company while deciding the remuneration package of the senior management members takes into consideration the following items:

  1. employment scenario
  2. remuneration package of the industry and
  3. remuneration package of the managerial talent of other industries.

The annual variable pay of senior managers is linked to the performance of the Company in general and their individual performance for the relevant year measured against specific Key Result Areas, which are aligned to the Company's objectives.

The Non-Executive Directors (NEDs) are paid remuneration by way of Commission and Sitting Fees. In terms of the shareholders' approval obtained at the AGM held on 3rd August, 2011, the Commission is paid at a rate not exceeding 1% per annum of the profits of the Company (computed in accordance with Section 309(5) of the Companies Act, 1956). The distribution of Commission amongst the NEDs is placed before the Board. The Commission is distributed on the basis of their attendance and contribution at the Board and certain Committee Meetings as well as time spent on operational matters other than at the meetings.

The Company pays sitting fees of Rs.20,000 per meeting to the NEDs for attending the meetings of the Board, Executive Committee of the Board, Remuneration Committee, Audit Committee, Safety, Health and Environment Committee, Nomination Committee, Committee of Investment & Projects and Committees constituted by the Board from time to time.

For other meetings, viz. Investors' Grievance Committee and Ethics and Compliance Committee, the Company pays to the NEDs sitting fees of Rs.5,000 per meeting.

The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and commission (variable component) to Managing and Whole-time Directors. Salary is paid within the range approved by the Shareholders. Annual increments effective 1st April each year, as recommended by the Remuneration Committee, are approved by the Board. The ceiling on perquisites and allowances as a percentage of salary, is fixed by the Board. Within the prescribed ceiling, the perquisites package is approved by the Remuneration Committee. Commission is calculated with reference to net profits of the Company in a particular financial year and is determined by the Board of Directors at the end of the financial year based on the recommendations of the Remuneration Committee, subject to overall ceilings stipulated in Sections 198 and 309 of the Companies Act, 1956. Specific amount payable to such directors is based on the performance criteria laid down by the Board which broadly takes into account the profits earned by the Company for the year.