Corporate Governance

CORPORATE GOVERNANCE
A STUDY ON THE EVALUATION OF CORPORATE

GOVERNANCE STANDARDS & PRACTICES
Done for

Project report submitted in partial fulfillment of the requirement of Jaro Education for the award of
the degree of
MASTER OF BUSINESS ADMINISTRATION
In project management
Submitted By
VIJAY SHAKAR TIWARI
ULSU/MBA/I/APR13/15199


CERTIFICATE

This is to certify that this project entitled A STUDY ON THE EVALUATION OF
CORPORATE GOVERNANCE STANDARDS & PRACTICES. done for ADITYA
BIRLA CHEMICALS (INDIA) LIMITED Rehla, J harkhand is submitted by VIJAY
SHAKAR TIWARI to the ULYANOVSK STATE UNIVERSITY in partial fulfillment of
the degree requirement for the award of degree Master of Business Administration and is
certified to be an original and bonafide work.

NAME: VIJAY SHAKAR TIWARI
Roll No.: ULSU/MBA/I/APR13/15199


DECLARATION

I, VIJAY SHAKAR TIWARI, Student of Ulyanovsk State University, hereby declare that
this project report titled A STUDY ON THE EVALUATION OF CORPORATE
GOVERNANCE STANDARDS & PRACTICES OF ADITYA BIRLA CHEMICALS
(INDIA) LIMITED is an original work done by me and submitted to the ULYANOVSK
STATE UNIVERSITY, for the award of Degree of Master of Business Administration. I
further declare that any part this project itself has not been submitted elsewhere for award of
any degree.



ACKNOWLEDGEMENT

I am indebted to the all powerful Almighty God for all the blessings he showered on me and
for being with me throughout the study. It is not possible to prepare a project report without
the assistance & encouragement of other people. This one is certainly no exception.

I place on record my sincere gratitude and appreciation to internal guide Dr. B.
CHARUMATHI, Associate Guide, Department of Management Studies, for meticulously
reviewing my work, making corrections and offering suggestions without which the project
would have been incomplete.
I express my sincere thanks to Dr. R. P. RAYA, HOD, who provided me an opportunity to
do this project.
I express my deep sense of gratitude to (CA)Brijesh Kumar AGM (ACCOUNTS&
FINANCE), and my Project coordinator Astt. Manager (CA)Rajesh Rathi of ADITYA
BIRLA CHEMICALS (INDIA) LTD for offering me this project and for taking the role as
my external guide and guiding and supporting continuously in shaping my project,
correcting errors, clearing doubts throughout the project. I would also like to thank entire
ADITYA BIRLA CHEMICALS(INDIA) LIMITED,REHLA Team for their constant
guidance and support.
I take this opportunity to dedicate this project to my parents who were a constant source of
motivation and I express my deep gratitude for their never ending support and encouragement
during this project.
Finally I thank each and everyone who helped me to complete this project.



EXECUTIVE SUMMARY

Rules and norms of corporate governance are important components of the framework for
successful market economies. Although corporate governance can be defined in a variety of
ways, generally it involves the mechanisms by which a business enterprise, organised in a
limited liability corporate form, is directed and controlled. It usually concerns mechanisms by
which corporate managers are held accountable for corporate conduct and performance. Poor
corporate governance is widely viewed as one of the structural weaknesses that were
responsible for the outbreak of the 1997 Asian crisis. In companies controlled by family
owners, these owners could pursue their private interests relatively easily and often at the
expense of minority shareholders and firms' profits.Aditya birla chemicals (India) limited one
of the premier company for the chlor-alkali.Study on Corporate Disclosure of Aditya Birla
chemicals(India) Ltd. with reference of mandatory disclosure described by SEBI for Indian
listed companies.

The objective of the project is to analyze corporate governance practice of Aditya Birla
chemicals(India) Ltd. with reference of mandatory disclosure described by SEBI for Indian
companies. The corporate governance report of the company pertaining to 5 years, viz.,
2005-06 to 2009-10 were analysed to know whether the company has followed the
regulations relating to mandatory disclosures of SEBIs clause 49 listing agreement. It is
found that the company has followed the mandatory disclosures but yet to do voluntary
disclosures. This project would help Aditya Birla chemicals(India) Ltd. to reach good
corporate governance prescribed by SEBI.


CONTENT
Chapter Description Page no.
LETTER FROM THE ORGANIZATION
CERTIFICATE
DECLARATION
ACKNOWLEDGEMENT
EXECUTIVE SUMMARY
LIST OF TABLES
1

INTRODUCTION
1.1 INTRODUCTION TO THE TOPIC
1.2 NEED FOR THE STUDY
1.3 STATEMENT OF THE PROBLEM
1.4 OBJ ECTIVES OF THE STUDY
1.5 RESEARCH METHODOLOGY
1.6 LIMITATIONS OF THE STUDY
1.7 CHAPTERIZATION
01-03

2 PROFILE OF THE INDUSTRY
2.1 ORGANIZATIONAL OVERVIEW
2.2 ADITYA BIRLA CHEMICALS (INDIA) LIMITED
04-09
3 CORPORATE GOVERNANCE IN & REGULATORY
FRAMEWORK IN INDIA
11-28
4 ANALYSIS AND INTERPRETATION 29-53
5 SUMMARY OF FINDINGS, SUGGESTIONS AND
CONCLUSION
54-56
BIBILOGRAPHY 57


LIST OF TABLES
TABLE
NO.
TITLE PAGE NO.
4.1
Board of Directors
30
4.2 Board meetings 31
4.3 Audit committee 33
4.4
Shareholders Grievance Committee
34
4.5 Remuneration Committee 34
4.6 Non Executive Directors & fees 35
4.7 salary and perquisites paid 35
4.8 number of requests / complaints 36
4.9
number of requests/complaint for 2005-06 to 2009-
10
37
4.10 General Shareholder Information 38
4.11 Market Price Data 39
4.12 Investors Shareholding patterns 40
4.13 Annual general meeting 41
4.14 Disclosures 42
4.15 Dematerialisation of equity shares 47
4.16 Investors-financials 48
4.17
Evaluation of status of CG during 2005-06 to 2009-
10
50

CHAPTER 1
INTRODUCTION


1.1 INTRODUCTION
Corporate governance is the set of processes, customs, policies, laws, and institutions
affecting the way a corporation (or company) is directed, administered or controlled.
Corporate governance also includes the relationships among the many stakeholders involved
and the goals for which the corporation is governed. In simpler terms it means the extent to
which companies are run in an open & honest manner.
1.2 NEED FOR THE STUDY
The corporate governance practices concentrates on stakeholders protection specially
investors protection.Good corporate governance citizenship evidents through good corporate
governance practices.Good corporate governance enhances the financial position of the
company through ethical means knowing the corporate governance issues in chemical
companies is need of ours.
1.3 STATEMENT OF THE PROBLEM
In view of corporate scandals witnessed during the recent past,the implementation of
corporate governance in listed companies as become significant.Hence the present study has
been taken upto evaluate whether Aditya Birla Chemicals(India) Limited has followed the
corporate governance standards prescribed by SEBIs clause-49 of listing agreement.
1.4 OBJECTIVES OF THE STUDY
1. To analyze corporate governance practice of Aditya Birla chemicals(India) Ltd. with
reference of mandatory disclosure described by SEBI for Indian companies.
2. To offer suggestions based on the findings.
1.5 RESEARCH METHODOLOGY
This is an discriptive research study.It has taken Aditya Birla Chemicals (India) Limited
as a case study. It used only Primary & Secondary Data. The primary data were
collected from secreterial department of Compny by interview. The secondary data

were collected from companys annual report,website.The data are analysed discriptive
by using cross tabulation and percentage analysis.

1.6 PERIOD OF STUDY
It includes 2005-06 to 2009-10
1.6 LIMITATIONS OF THE STUDY
Non availability of certain data with the department, like statutory compliance and
shareholders compliances.
1.7 CHAPTERIZATION
Following is the plan of present study:
Chapter I deals with the meaning introduction to the topic, need for the study,
statement of problem, objective of the study, period of study, research
methodology,limitations of the study.
Chapter II presents the profile of the industry
Chapter III presents the conceptual framework of the topic
Chapter IV analyses and interprets the collected secondary data.
Chapter V concludes the findings derived from the present study and the suggestions
based on the findings were presented.


CHAPTER 2
PROFILE OF THE INDUSTRY


2.1 ORGANIZATIONAL OVERVIEW
Aditya Birla Chemicals (India) Ltd, is a unit of Aditya Birla Group and one of the leading
Chlor Alkali Company in India. The plant has been commissioned in 1984 and located at
Garhwa Road, Distt. PALAMAU, State J HARKHAND, India. Companys detail product
range & Installed Capacity:
Caustic Soda lye 109,500 TPA
Liquid Chlorine 91,250 TPA
Hydrochloric Acid 45,625 TPA
Sodium Hypo Chlorite 1,460 TPA
Aluminium Chloride 11,680 TPA
Stable Bleaching Powder 17,520 TPA
The manufacturing process of the plant is the latest energy efficient and environment friendly
state-of-art Membrane Cell Technology. To meet the requirement of uninterrupted power
supply, company has a state-of-art 30 MW Captive Power Plant. Company has implemented
SAP R/3 and People Soft System.
To meet the heterogeneous business challenges, company has adopted WCM (World Class
Management) work culture. Further organization has adopted 40 villages under community
development to improve the quality of life in nearby vicinity of the factory.
International Applauds
ISO 9001:2000 : For quality management System
ISO 14001:2004 : For environment management System
SA 8000:2001 : For social Accountability
OHSAS 18001:1999 : For Occupational Health & Safety Assessment
Management
National Applauds
IMC Ramkrishna Bajaj National Quality Certificate of merit
Best Responsible care Committed Company Award

RC logo
FICCI award
Planet Award 2005-06
Greentech Environment Excellent Gold Award
Membership of IONAL Associates
Alkali Manufacturers Association Of India (AMAI)
Indian Chemical Council(ICC)
American Chemistry Council
2.2 ADITYA BIRLA CHEMICALS (INDIA) LIMITED
Aditya Birla Chemicals (India) Limited (formerly Bihar Caustic and Chemicals Limited) was
incorporated as a joint venture of the Aditya Birla Group and the Bihar State Industrial
Development Corporation. The unit was set up with the objective of catering to the caustic
soda requirements of Hindalco Industries Limited, and to contribute towards the economic
development of the backward region of Palamau district in J harkhand.
Commissioned in 1984 with an initial caustic soda capacity of 33,000tpa, the company has
since grown to become the leading caustic soda producer in the eastern region of the country.
The company had commissioned a 30mw captive power plant in the year 2000 and
simultaneously, the caustic plant capacity was enhanced to 51,048tpa. In the year 2006, the
capacity was increased to 78,750tpa by converting the mercury cell technology to the more
environment-friendly membrane cell technology supplied by world-renowned technology
supplier UHDENORA, Germany. Presently, the installed capacity stands at 105,000tpa.
For value addition and effective utilization of chlorine, the company has commissioned a
12,000tpa aluminium chloride plant in the year 2007 and a 17,500tpa stable bleaching
powder (SBP) plant in 2008. SBP is marketed under the brand name Shaktiman. Aluminium
chloride is the principal catalyst used in the Friedel Craft reaction and widely used in
pharmaceuticals, chemical intermediates, agrochemicals, dyestuffs and pigments,
hydrocarbon resins, flavours and fragrances. SBP is used in textile mills for bleaching,
sanitation, sewage systems, tanning process, organic synthesis and other applications.
Our Key People

Mr. Kumar Mangalam Birla Chairman, Aditya Birla Group
Mrs. Rajshree Birla Chairperson, Aditya Birla Centre for community
Initiatives and Rural Development
Mr. Ajay Srinivasan Financial Services
Mr. Askaran Agarwal Birla Group Trusts & Special Community
Projects
Dr. Bharat Singh Business Review Council(Services Business)
Mr. D.D. Rathi Business Review Council (Services Business)
Mr. Debu Bhattacharya Metals
Mr. K.K. Maheswari Pulp and fibre
Mr. Pranab Barua Textiles and Apparels
Mr. Rajiv Dube Group Corporate Services
Mr. Rakesh Jain Aditya Birla Nuvo
Mr. Ravi Kastia Trading, Port and power projects
Mr. Himanshu Kapania Telecom
Dr. Santrupt B. Misra Carbon Black Business and Group HR
Mr. Shailendra jain Chairman, Business Review Council
Mr. Thomas Varghese Retail
Mr. Lalit Naik Chemicals
Mr. Tuhin Mukherjee Mining and Mineral Resources Development
Mr. O.P. Puranmalka Cement
Mr. Vikram Rao Acrylic Fibre and Overseas Spinning Business
Some global facts about Aditya Birla Group
It is the worlds largest aluminium rolling company.
It is the world leader in viscose staple fibre.
It is one of the three biggest producers of primary aluminium in Asia.
It is one of the leading cement producers in India and eighth largest globally.
It is the fourth largest producer of carbon black in the world.
It is the fourth largest producer of insulators in the world.

It is the fifth largest producer of acrylic fibre in the world.
Some Indian facts
It is the largest premium branded apparel company.
It is the second largest producer of viscose filament yarn.
It is the second largest in the chlor-alkali sector.
It is among the top five cellular operators.
It is among the top 10 Indian BPO companies by revenue size.
It is among the top 5 asset management and private sector life insurance companies.
2.4 VISION, MISSION & VALUES
Our Vision

To be a premium global conglomerate with a clear focus on each business.
Our Mission

To deliver superior value to our customers, shareholders, employees and society at large.

Our Values

Integrity

Commitment

Passion

Seamlessness

Speed
2.5 Our Valued Customers


2.6 Our Products
1. Caustic Soda
It is also known as lye and Sodium Hydroxide (NaOH), which is a caustic metallic base. It is
used in many industries, mostly as a strong chemical base in the manufacture of pulp and
paper, textile, drinking water, soap, and detergents and as a drain cleaner.
2. Liquid Chlorine
Chlorine is used in the purification of drinking water, as bleaching agent in pulp, paper and
textile industries.
It is also used as raw material / intermediate chemical in the manufacture of PVC plastics,
paraffin waxes, synthetic rubbers, pesticides / insecticides, inorganic / organic chemicals,
pharmaceuticals etc.
3. Hydrochloric Acid
Hydrochloric acid is a solution of hydrogen chloride (HCl) in water that is a
highly corrosive, strong mineral acid with many industrial uses. It is found naturally in gastric
acid.
4. Sodium Hypochlorite
Sodium hypochlorite is a chemical compound with the formula NaClO. Sodium hypochlorite
solution, commonly known as bleach, is frequently used as disinfectant or a bleaching agent

4.Aluminium Chloride
Aluminium chloride (AlCl
3
) is the main compound of aluminium and chlorine. It is white, but
samples are often contaminated with iron trichloride, giving it a yellow color. The solid has a
low melting and boiling point. It is mainly produced and consumed in the production of
aluminium metal, but large amounts are also used in other areas of chemical industry. The
compound is often cited as a Lewis acid. It is an example of an inorganic compound that
"cracks" at mild temperature, reversibly changing from a polymer to a molecule.
5. Stable Bleaching Powder
Calcium hypochlorite is a chemical compound with formula Ca(ClO)
2
. It is widely used
for water treatment and as a bleaching agent (bleaching powder).Calcium hypochlorite is
used for the disinfection of drinking water or swimming pool water. It is used as a sanitizer in
outdoor swimming pools in combination with a cyanuric acid stabilizer, which reduces the
loss of chlorine due to ultraviolet radiation. The calcium content hardens the water and tends
to clog up some filters; hence, some products containing calcium hypochlorite also
contain anti-scaling agents. Calcium hypochlorite is also an ingredient in bleaching powder,
used for bleaching cotton and linen. It is also used in bathroom cleaners, household
disinfectant sprays, moss and algae removers, and weed killers.


CHAPTER 3
CORPORATE GOVERNANCE &
REGULATORY FRMEWORK IN INDIA

3.1 INTRODUCTION
Corporate governance is the set of processes, customs, policies, laws, and institutions
affecting the way a corporation (or company) is directed, administered or controlled.
Corporate governance also includes the relationships among the many stakeholders involved
and the goals for which the corporation is governed. In simpler terms it means the extent to
which companies are run in an open & honest manner.
Corporate governance has three key constituents namely: the Shareholders, the Board
of Directors & the Management. Other stakeholders include employees, customers, creditors,
suppliers, regulators, and the community at large. The concept of corporate governance
identifies their roles & responsibilities as well as their rights in the context of the company. It
emphasises accountability, transparency & fairness in the management of a company by its
Board, so as to achieve sustained prosperity for all the stakeholders.
Corporate governance is a synonym for sound management, transparency &
disclosure. Transparency refers to creation of an environment whereby decisions & actions of
the corporate are made visible, accessible & understandable. Disclosure refers to the process
of providing information as well as its timely dissemination.
In A Board Culture of Corporate Governance, business author Gabrielle O'Donovan
defines corporate governance as An internal system encompassing policies, processes and
people, which serves the needs of shareholders and other stakeholders, by directing and
controlling management activities with good business savvy, objectivity, accountability and
integrity. Sound corporate governance is reliant on external marketplace commitment and
legislation, plus a healthy board culture which safeguards policies and processes.
Issues involving corporate governance principles include:
Internal controls and internal auditors
The independence of the entity's external auditors and the quality of their audits
Oversight of the preparation of the entity's financial statements
Review of the compensation arrangements for the chief executive officer and other
senior executives


3.2 BACKGROUND
As mentioned earlier, the term corporate governance is related to the extent to which the
companies are transparent & accountable about their business. Corporate governance today
has become a major issue of interest in most of the corporate boardrooms, academic circles &
even governments around the globe.
In the 19th century, state corporation laws enhanced the rights of corporate boards to
govern without unanimous consent of shareholders in exchange for statutory benefits like
appraisal rights, to make corporate governance more efficient. Since that time and because
most large publicly traded corporations in the US are incorporated under corporate
administration-friendly Delaware law and because the US's wealth has been increasingly
securitized into various corporate entities and institutions, the rights of individual owners and
shareholders have become increasingly derivative and dissipated. The concerns of
shareholders over administration pay and stock losses periodically has led to more frequent
calls for corporate governance reforms.
In the 20th century, in the immediate aftermath of the Wall Street Crash of 1929, legal
scholars such as Adolf Augustus Berle, Edwin Dodd, and Gardiner C. Means pondered on the
changing role of the modern corporation in society. From the Chicago school of economics,
Ronald Coase's "The Nature of the Firm" (1937) introduced the notion of transaction costs
into the understanding of why firms are founded and how they continue to behave. Fifty years
later, Eugene Fama and Michael J ensen's "The Separation of Ownership and Control" (1983,
J ournal of Law and Economics) firmly established agency theory as a way of understanding
corporate governance: the firm is seen as a series of contracts. Agency theory's dominance
was highlighted in a 1989 article by Kathleen Eisenhardt ("Agency theory: an assessment and
review", Academy of Management Review).
The expansion of US after World War II through the emergence of multinational
corporations saw the establishment of the managerial class. Accordingly, the following
Harvard Business School management professors published influential monographs studying
their prominence: Myles Mace (entrepreneurship), Alfred D. Chandler, J r. (business history),
J ay Lorsch (organizational behavior) and Elizabeth MacIver (organizational behaviour).
According to Lorsch and MacIver "Many large corporations have dominant control over
business affairs without sufficient accountability or monitoring by their board of directors."

Since the late 1970s, corporate governance has been the subject of significant debate
in the U.S. and around the globe. Bold, broad efforts to reform corporate governance have
been driven, in part, by the needs and desires of shareowners to exercise their rights of
corporate ownership and to increase the value of their shares and, therefore, wealth. Over the
past three decades, corporate directors duties have expanded greatly beyond their traditional
legal responsibility of duty of loyalty to the corporation and its shareowners.
In the first half of the 1990s, the issue of corporate governance in the U.S. received
considerable press attention due to the wave of CEO dismissals (e.g.: IBM, Kodak,
Honeywell) by their boards. The California Public Employees' Retirement System (CalPERS)
led a wave of institutional shareholder activism (something only very rarely seen before), as a
way of ensuring that corporate value would not be destroyed by the now traditionally cozy
relationships between the CEO and the board of directors (e.g., by the unrestrained issuance
of stock options, not infrequently back dated).
In 1997, the East Asian Financial Crisis saw the economies of Thailand, Indonesia,
South Korea, Malaysia and The Philippines severely affected by the exit of foreign capital
after property assets collapsed. The lack of corporate governance mechanisms in these
countries highlighted the weaknesses of the institutions in their economies.
In the early 2000s, the massive bankruptcies (and criminal malfeasance) of Enron and
WorldCom, as well as lesser corporate debacles, such as Adelphia Communications, AOL,
Qwest, Arthur Andersen, Global Crossing, Tyco, etc. led to increased shareholder and
governmental interest in corporate governance. Because these triggered some of the largest
insolvencies, the public confidence in the corporate sector was sapped. The popular
perception was that corporate leadership was fraught with greed & excess. Inadequacies &
failure of the existing systems, brought to the fore, the need for norms & codes to remedy
them. This resulted in the passage of the Sarbanes-Oxley Act of 2002, (popularly known as
Sox) by the United States.
In India however, only when the Securities Exchange Board of India (SEBI),
introduced Clause 49 in the Listing Agreement, for the first time in the financial year 2000-
2001, that the listed companies started embracing the concept of corporate governance. This
clause was based on the Kumara Mangalam Birla Committee constituted by SEBI. After
these recommendations were in place for about four years, SEBI, in order to evaluate &

improve the existing practices, set up a committee under the Chairmanship of Mr. N.R.
Narayana Murthy during 2002-2003.At the same time, the Ministry of Corporate Affairs set
up a committee under the Chairmanship of Shri. Naresh Chandra to examine the various
corporate governance issues. The recommendations of the committee however, faced
widespread protests & representations from the industry, forcing SEBI to revise them.
Finally, on the 29
th
October, 2004, SEBI announced the revised Clause 49, which was
implemented by the end of the financial year 2004-2005. Apart from Clause 49 of the Listing
Agreement, corporate governance is also regulated through the provisions of the Companies
Act, 1956. The respective provisions have been introduced in the Companies Act by
Companies Amendment Act, 2000.
3.3 SCOPE & IMPORTANCE OF CORPORATE GOVERNANCE
Corporate governance is all about ethics in business. It is about transparency, openness & fair
play in all aspects of business operations. The key aspects to corporate governance include:

1. Accountability of Board of Directors & their constituent responsibilities to the
ultimate owners- the shareholders.
2. Transparency, i.e. right to information, timeliness & integrity of the information
produced.
3. Clarity in responsibilities to enhance accountability.
4. Quality & competence of Directors and their track record.
5. Checks & balances in the process of governance.
6. Adherence to the rules, laws & spirit of codes.
An active & involved board consisting of professional & truly independent directors
plays an important role in creating trust between a company & its investors and is the
best guarantor of good corporate governance.
Good corporate governance is integral to the very existence of a company. It is
important for the following reasons:
1. Corporate governance ensures that a properly structured Board, capable of taking
independent & objective decisions is at the helm of affairs of the company. This lays
down the framework for creating long-term trust between the company & external
providers of capital.

2. It improves strategic thinking at the top by inducting independent directors who bring
a wealth of experience & a host of new ideas.
3. It rationalizes the management & monitoring of risk that a corporation faces globally.
4. Corporate governance emphasises the adoption of transparent procedures & practices
by the Board, thereby ensuring integrity in financial reports.
5. It limits the liability of top management & directors, by carefully articulating the
decision making process.
6. It inspires & strengthens investors confidence by ensuring that there are adequate
number of non-executive & independent directors on the Board, to look after the
interests & well-being of all the stakeholders.
7. Corporate governance helps provide a degree of confidence that is necessary for the
proper functioning of a market economy, as it contemplates adherence to ethical
business standards.
8. Finally, globalization of the market place has ushered in an era wherein the quality of
corporate governance has become a crucial determinant of survival of corporate.
Compatibility of corporate governance practices with global standards has also
become an important constituent of corporate success. Thus, good corporate
governance is a necessary pre-requisite for the success of Indian corporate.

3.4 CLAUSE 49 MANDATORY REQUIREMENTS

I. BOARD OF DIRECTORS
A. Composition of Board:
1. The Board of directors of the company shall have an optimum combination of
executive and non-executive directors with not less than fifty percent of the
board of directors comprising of non- executive directors .
2. Where the Chairman of the Board is non- executive directors, at least one third
of the Board should comprise of independent directors and in case he is an
executive directors, at least half of the Board should comprise of independent
directors.
3. For the purpose of sub clause (ii) the expression independent director shall
mean a non executive director of the company who:
a. Apart from receiving directors remuneration , does not have any material
pecuniary relationships or transactions with the company, its promoters, its
directors its senior management or its holding company, its subsidiaries
and associated which many affects independence of the director.
b. Is not related to promoters or persons occupying managements positions at
the board level or at one level below the board;

c. It not been executive or was not partner or an executive during the
preceding three years, of any of the following:
d. Is not a partner or an executive or was not partner or an executive during
the preceding three years, of any of the following:
i. The statutory audit firm or the internal audit firm that is associated
with the company, and ;
ii. The legal firm(s) and consulting firm(s) that have a material
association with the company
e. Is not a material supplier, service provider or customer or a lessor or lessee
of the company, which may affect independence of the directors; and
f. is not a substantial shareholder of the company i.e. owning two percent or
more of the block of voting shares.
4. Nominee directors appointed by an institution which has invested in or lent to
the company shall be deemed to be independent directors. However if the Dr.
J .J . irani Committee recommendations on the proposed new company law are
accepted, then directors, nominated by financial institutions and the
government will not be considered independent.
B. Non executive directors compensation and disclosures: all fees/ compensation and
disclosures: all fees/ compensation , if any paid to non executive directors, including
independent directors, shall be fixed by the Board of Directors and shall require
previous approval of shareholders in general meeting. The shareholders resolution
shall specify the limits for the maximum number of stock options that can be granted
to non- executive directors, including independent directors, in any financial year
and aggregate. However as per SEBI amendment made vide circular SEBI/
CFD/DIL/CG dated 12/1/06 sitting fees paid to non-executive directors as authorized
by the Companies Act 1956, would not require the previous approval of
shareholders.
C. Other provisions as to Board and Committees:
1. The board shall meet at least four times a year, with a maximum time gap of
three months between any two meetings. However SEBI has amended the
clause 40 of the listing agreement vide circular SEBI/CFD/DIL/CG dated 12-
1-06 as per which the maximum gap between two board meetings has been
increased again to 4 months.
2. A director shall not be a member in more than 10 Audit and / or Shareholders
grievance Committee or act as chairman of more than five Audit Shareholders
Grievance committee across all companies in which he is a director.
Furthermore it should e mandatory annual requirement for every director to
inform the company about the committee positions he occupies in other
companies and notify changes as and when they take place.

D. Code of conduct:
1. The Board shall lay down a code of conduct for all Board members and senior
management of the company. The code of conduct shall be posted the website
of the company,

2. All Board members and senior management personnel shall affirm compliance
with the code on an annual basis. The Annual report of the company shall
contain declaration to this effect signed by CEO.

II. AUDIT COMMITTEE.
A. Qualified and Independent Audit Committee: A qualified and independent audit
committee shall be set up, giving the terms of reference subject to the following:

1. The audit committee shall have minimum three directors as members.
Two thirds of the members of audit committee shall be independent
directors.
2. All members of audit committee shall be financially literate an at least one
member shall have accounting or related financial management expertise.
3. The chairman of the Audit Committee shall be an independent director.
4. The chairman of the Audit Committee shall be present at annual General
Meeting to answer shareholder queries;
5. The audit committee may invite such of the executives, as it considers
appropriate (and particularly the head of the finance function) to the
present at the meetings of the committee. The finance director, head of
internal audit and representative of the statutory auditor may be present as
invitees for the meeting of the audit committee;
6. The Company Secretary shall act as the secretary to the committee.

B. Meeting of Audit Committee: the audit committee should meet at least four times
in a year and not more than four months shall elapse between two meetings. The
quorum shall be either tow members or one third of the members of the audit
committee whichever is greater, but there should be minimum of two independent
members present.

C. Powers of Audit Committee: the audit committee shall have powers:
1. To investigate any activity within the terms of reference;
2. To seek information from any employee;
3. To obtain outside legal or other professional advice;
4. To secure attendance of outsiders with relevant experts, if any.

D. Role of audit committee: the role for the audit committee shall include the
following:

1. Oversight of the companys financial reporting process and the disclosure of
its financial information to ensure that the financial statement is correct,
sufficient and credible.
2. Recommending to the Board, the appointment reappointment and if required
the replacement or removal of the statutory auditor and the fixation of audit
fees.

3. Approval of payment too statutory auditors for any other services rendered by
the statutory auditors.
4. Reviewing, with the management the quarterly and annual financial statements
before submission to the board for approval with reference to Directors
Responsibility statement under section 217 (2AA)k, significant adjustments
made in financial statements, compliance with listing requirements, disclosure
of any related pending transaction etc.
5. Reviewing with the management performance of statutory and internal auditor
and adequacy of the internal control systems.
6. Discussion with internal auditors regarding any significant findings including
suspected frauds or irregularities and follow up thereon.
7. Reviewing the findings of any internal investigation by the internal auditors
into matters where there is suspected fraud or irregularity or a failure of
internal control system of a material nature and reporting the matter to the
board.
8. Discussion with statutory auditors before the audit commence, about the
nature and scope of audit as well as post- audit discussion to ascertain any area
of concern.
9. To look into the reason of substantial defaults in the payments to the
depositors, debenture holders, shareholders (in case of nonpayment of
declared dividends) and creditors.
10. To review the functioning of the Whistle Blower mechanism, in case the same
is existing.
11. Carrying out any other function as it mentioned in the terms of reference of the
Audit Committee.

III. SUBSIDIARY COMPANIES

1. At least one independent director on the Board of Director of the holding
company shall be a director on the Board of Directors of a material non listed
Indian subsidiary company.
2. The audit committee of the listed holding company shall also review the financial
statements, in particular, the investment made by the unlisted subsidiary company.
3. The minutes of the Board meeting of the unlisted subsidiary company shall be
placed at the Board meeting of the listed holding company, the management
should periodically bring to the attention of the Board of Directors of the listed
holding company, a statement of all significant transaction and arrangements
entered into by the unlisted subsidiary company.

IV. DISCLOSURES

A. Basis of related party transactions:

1. A statement in summary form of transactions with related parties shall be
placed periodically before the audit committee.

2. Details of material individual transactions with related parties which are not in
the normal course of business shall be placed before the audit committee.

B. Disclosure of Accounting Treatment: where in the preparation of financial
statements, a treatment different from that prescribed in an Accounting Standard
has been followed, the fact shall be disclosed in the financial statements, together
with the managements explanation as to why it believes such alternative
treatment is more representative of the true and fair view of the underlying
business transaction in the Corporate Governance Report.

C. Board Disclosure- Risk Management: the company shall lay down procedures to
inform Board members about the risk assessment and minimization procedures.

D. Proceeds from public issues, rights issues , preferential issues etc. : When money
is raised through an issue (public issues rights issues, preferential issues etc.), it
shall disclose to the Audit committee, the uses/ applications of funds by major
category (capital expenditure,, sales and marketing, working capital, etc.), on a
quarterly and annual basis.

E. Remuneration of Directors :

1. All pecuniary relationship or transactions of the non- executive directors vis--
vis the company shall be disclosed in the Annual Report.
2. Further, certain prescribed disclosures on the remuneration of directors shall
be made in the section on the corporation governance of the Annual Report;
3. The company shall disclose the number of shares and convertible instruments
held by non-executive directors in the annual report.
4. Non executive directors shall be required to disclose their shareholding (both
own or held by/ for other persons on a (beneficial basis) in the listed company
in which they proposed to be appointed as directors, prior to their
appointment. These details should be disclosed in the notice to the general
meeting called for appointment of such directors.

F. Management: As part of the directors report or as an addition there to a
Management Discussion and Analysis report, the following should form part of
the Annual Report to the shareholders. This includes discussion on:

1. industry structure and developments.
2. Opportunities and threats.
3. Segment wise or product wise performance
4. Outlook
5. Risks and concerns.
6. Internal control systems and their adequacy
7. Discussion on financial performance with respect to operational performance.

8. Material developments in Human resources/ industrial Relations front
including number of people employed.

G. Shareholders:

1. In case of the appointment of a new directors or reappointment of a director
the shareholders must be provided with the following information:
a. A brief resume of the director
b. Nature of his expertise in specific functional areas;
c. Names of companies in which the persons also holds directorship and the
membership Committees of the Board; and
d. Shareholding of non executive directors.

2. A board committee under the chairmanship of a non- executive director shall
be formed to specifically look into the redressal of shareholder and investor
complaints like transfer of shares, non receipt of declared dividends etc. this
committee shall be designated as Shareholders/Investors Grievance
Committee.
3. To expedite the process of share transfer, Board of the company shall delegate
the power of share transfer to an officer or a committee or to the registrar and
share transfer agents. There delegated authority shall attend to share transfer
formalities and least once in a fortnight.

V. CEO/CFO CERTIFICATION

Through the amendment made by SEBI vide circular SEBI /CFD/DIL CG DATED
12-1-06, in Clause 49 of the Listing Agreement, certification of internal controls and
internal control system
CFO/CEO would be for the purpose of financial reporting. Thus the CEO, i.e. the
Managing Director or Manager appointed in terms of the Companies Act, 1956 and
the CFO i.e. the whole time Finance Director or any other Person heading the
finance function discharging that function shall certify to the Board that:

1. They have reviewed financial statements and the cash flow statement for the year
and that to the best of their knowledge and belief:
i. These statements do not contain any materially untrue statement or omit
any material fact or contain statements that might be misleading;
ii. These statements together present a true and fair view of the companys
affairs and are in compliance within existing accounting standards,
applicable laws and regulations.

2. There are, to the best of their knowledge and belief, no transactions entered into
by the company during the year which fraudulent, illegal or volatile of the
companys code of conduct.


3. They accept responsibility for establishing and maintaining internal controls and
they have evaluated the effectiveness of the internal control system of the
company pertaining to financial reporting and they have disclosed to the auditors
and the Audit Committee, deficiencies in the design or operation of internal
controls, if an, of which they are aware and the steps they have taken or propose to
take to rectify these deficiencies

4. They have indicated to the auditors and the Audit Committee significant changes
in internal control over financial reporting during the year, significant fraud of
which they have become aware and the involvement there in if any, of the
management or an employee having a significant role in the companys internal
control system over financial reporting.

VI. REPORT ON CORPORATE GOVERNANACE

1. There shall be separate section on Corporate Governance in Annual Reports of
Company with a detailed compliance report on Corporate Governance. Non
compliance of any mandatory requirement of this clause with reason there of and
the extent to which the non- mandatory requirements have been adopted should be
specifically highlighted.
2. The companies shall submit a quarterly compliance report to the stock exchange
within 15 days from the close of quarter as per the format given in
3. Annexure IB. the report shall be signed either by the Compliance Officer or the
Chief Executive Officer of the company.

VII. COMPLIANCE

1. The company shall obtain a certificate from either the auditor or practicing
company secretaries regarding compliance of conditions of corporate governance
as stipulated in this clause and annex the certificate with the directors report,
which is sent annually to all the shareholders of the company. The same
certificate shall also be sent to the Stock Exchanges along with the annual report
filed by the company.
The non- mandatory requirements may be implemented as per the discretion of the
company. However, the disclosures of the compliance with mandatory requirements
and adoption / non- adoption of the non mandatory requirements shall be made in the
section on corporate governance of the Annual Report.

3.5 Indian model of governance
Indian corporate is governed by the Companys Act 1956 which follows more or less the UK
model. The pattern of private companies is mostly that of closely held or dominated by a

founder, his family and associates. India has adopted the key tenets of Anglo-American
external and internal control mechanisms after economic liberalization.

Obligation to society at large
A corporation is a creation of law as an association of persons forming part of a society in
which it operates. Its activities are bound to impact the society as the societys value would
have an impact on the corporation. Therefore, they have mutual rights and obligations to
discharge for the benefit of each other.
National interest: A company (and its management) should ne committed in all its
actions to benefit the economic development of the countries in which it operates and
should not engage in any activity that would militate against such an objective.
Political non-alignment: A company should be committed to and support a
functioning democratic constitution and system with a transparent and fair electoral
system and should not support directly or indirectly any specific political party or
candidate for political office.
Legal compliances: The management of a company should comply with all
applicable government laws, rules and regulations. Legal compliance will also mean
that corporations should abide by the tax laws of the nations in which they operate
and these should be paid on time and as per the required amount.
Rule of law: Good governance requires fair, legal frameworks that are enforced
impartially. It also requires full protection of rights, particularly those of minority
shareholders. Impartial enforcement of laws requires an independent judiciary and
regulatory authorities.
Honest and ethical conduct: Every officer of the company including its directors,
executives and non executive directors, managing director, CEO, CFO and CCO
should deal on behalf of the company with professionalism, honesty, commitment and
sincerity as well as high moral and ethical standards.
Corporate citizenship: A corporate should be committed to be a good corporate
citizen not only in compliance with all relevant laws and regulations but also by
actively assisting in the improvement of the quality of life of the people in the

communities in which it operates with the objective of making them self reliant and
enjoy a better quality of life.
Ethical behaviour: Corporations have a responsibility to set exemplary standards of
ethical behaviour, both internally within the organizations, as well as in their external
relationships.
Social concern: The Company should have concerns towards the society. It can help
the needy people & show its concern by not polluting the water, air & land. The waste
disposal should not affect any human or other living creatures.
Healthy and safe working environment: A company should be able to provide a
safe and healthy working environment and comply with the conduct of its business
affairs with all regulations regarding the preservations of environment of the territory
it operates in.
Competition: A company should market its products & services on its own merits &
should not resort to unethical advertisements or include unfair & misleading
pronouncements on competitors products & services.
Timely responsiveness: Good governance requires that institutions & processes try to
serve all stakeholders within a reasonable time frame.
Obligation to investors
The investors as shareholders and providers of capital are of paramount importance to a
corporation. A company has following obligations to investors:
Towards shareholders:
Measures promoting transparency and informed shareholder participation:
Financial reporting and records:
Obligation to employees
In the context of enhanced awareness of better governance practices, managements should
realize that they have their obligations towards their workers too.
Fair employment practices
Equal opportunities
Humane treatment
Participation
Empowermen
Equity and inclusiveness

Participative and collaborative environment
Obligation to customers
A companys existence cannot be justified without its catering to he needs of its customers.
The companies have an obligation to its employees, without whose assistance they cannot
realize their objectives.
1.Quality of products and services:
2. Products at affordable prices:
3. Unwavering commitment to customer satisfaction:
Managerial obligations
Protecting companys assets:
Behaviour toward government agencies:
Control:
Gifts and donations:
3.6 Landmarks in emergence of corporate governance
OECD Principles
The Organization for Economic Co-operation and Development (OECD) was one of the
earliest non-governmental organizations to work on and spell out principles and practices that
should govern corporate in their goal to attain long-term shareholder value. The OECD
Principles were oft-quoted and have won universal acclaim, especially of the authorities on
the subject of corporate governance. Because of the ubiquitous approval, the OECD
Principles are as much trendsetters as the Codes of Best Practices associated to the Cadbury
Report. A useful first step in creating or reforming the corporate governance system is to look
at the principles laid out by the OECD and adopted by its member governments. They include
the following elements:
The rights of shareholders: The rights of shareholders include a set of rights to
secure ownership of their shares, the right to full disclosure of information, voting
rights, participation in decisions on sales or modification of corporate assets, merger
and new share issues. The guidelines go on to specify a host of other issues connected
to the basic concern of protecting the value of the corporation.
Equitable treatment of shareholders: The OECD is concerned with protecting
minority shareholders rights by setting up systems that keep insiders, including

managers and directors, from taking advantage of their roles. Insider trading, for
example, is explicitly prohibited and directors should disclose any material interest
regarding transactions.
The role of stakeholders in corporate governance: the OECD recognizes that there
are other stakeholders in companies ion addition to shareholders. Banks, bondholders
and workers, for example, are important stakeholders in the way in which companies
perform and make decision. The OECD guidelines lay out several general provisions
for protecting stake holders interests.
Disclosure and transparency; The OECD lays down a number of provisions for the
disclosure and communication of key facts about the company ranging from financial
details to governance structures including the board of directors and their
remuneration. The guidelines also specify that independent auditors in accordance
with high quality standards should perform annual audits.
The responsibilities of the board: The OECD guideline provides a great deal of
details about the functions of the board in protecting the company and its
shareholders. These include concerns about corporate strategy, risk, executive
compensation and performance as well as accounting and reporting systems.
3.7 Corporate governance: The Indian scenario
In India the real history of corporate governance dates back to the year 1992, following
efforts made in many countries of the world to put in place a system suggested by the
Cadbury Committee. The Confederation of Indian Industry framed a voluntary code of
corporate governance for listed companies in 1998. This was followed by the
recommendations of the Kumar Mangalam Birla Committee set up in 1999 by SEBI
culminating in the introduction of Clause 49 of the standard Listing Agreement to be
complied with all the listed companies in stipulated phases. The Kumar Mangalam Birla
committee divided its recommendations into mandatory and non-mandatory. Mandatory
recommendations included such issues as the composition of board, appointment and
structure of audit committees, remuneration of directors, board procedures, and additional
information regarding management, discussion and analysis as a part of annual report. Its
non-mandatory recommendations included issues concerning the chairman of the board,
setting up of remuneration committee, half yearly information to shareholders and
appointment of nominee directors.
Efforts to initiate corporate governance in country

The Companies Amendment Act, 2000
Many provisions relating to corporate governance such as additional ground of
disqualification of directors in certain cases, setting up of audit committees, directors
responsibility statement in directors reports, etc. were introduced by the Companies
(Amendment) Act, 2000. Corporate governance was also introspected in 2001 by the
advisory group constituted by the standing committee of International Finance Standards and
Codes of the Reserve Bank of India under chairmanship of Dr. Y.V. Reddy, the then deputy
governor.
Naresh Chandra Committee, 2002
In the year 2002, the committee was asked to examine various corporate governance issues
and to recommend changes in diverse areas such as:
the statutory auditor company relationship so as to further strengthen the professional
nature of the interface
the need for rotation of statutory audit firms or partners
the procedure for appointment of auditors and determination of audit fees
restrictions, if any, on non-audit functions
independence of auditing functions
the need to consider measures such as certification of accounts and financial
statements by managements and directors
the necessity of having transparent system of random scrutiny of audited accounts
Narayan Murthy Committee, 2003
The Company Law Amendment Bill, 2003 envisaged many amendments on the basis of
reports of the Naresh Chandra Committee and the subsequently appointed N R Narayan
Murthy committee. Both the committees have done an excellent job to promote corporate
governance practice in India.
Implementation of the recommendations of Birla Committee Report
Clause 49
Clause 49 of the Listing Agreement to the Indian stock exchange comes into effect from
31 December 2005. It has been formulated for the improvement of corporate governance
in all listed companies.

In corporate hierarchy two types of managements are envisaged: i) companies managed by
[board of directors]; and ii) those by a [managing director], whole-time director or manager
subject to the control and guidance of the board of directors.
As per Clause 49, for a company with an Executive Chairman, at least 50 per cent of the
board should comprise independent directors. In the case of a company with a non-executive
Chairman, at least one-third of the board should be independent directors.
It would be necessary for chief executives and chief financial officers to establish and
maintain internal controls and implement remediation and risk mitigation towards
deficiencies in internal controls, among others.
Clause VI (ii) of Clause 49 requires all companies to submit a quarterly compliance report to
stock exchange in the prescribed form. The clause also requires that there be a separate
section on corporate governance in the annual report with a detailed compliance report.
A company is also required to obtain a certificate either from auditors or practicing company
secretaries regarding compliance of conditions as stipulated, and annex the same to the
director's report.
The clause mandates composition of an audit committee; one of the directors is required to be
"financially literate". It is mandatory for all listed companies to comply with the clause by
December 31, 2005.
Clause 49, when it was first added, was intended to introduce some basic corporate
governance practices in Indian companies and brought in a number of key changes in
governance and disclosures (many of which we take for granted today). It specified the
minimum number of independent directors required on the board of a company. The setting
up of an Audit committee, and a Shareholders Grievance committee, among others, were
made mandatory as were the Managements Discussion and Analysis (MD&A) section and
the Report on Corporate Governance in the Annual Report, and disclosures of fees paid to
non-executive directors. A limit was placed on the number of committees that a director
could serve on.
In late 2002, SEBI constituted the Narayana Murthy Committee to assess the adequacy of
current corporate governance practices and to suggest improvements. Based on the
recommendations of this committee, SEBI issued a modified Clause 49 on October 29, 2004
(the revised Clause 49) which came into operation on J anuary 1, 2006.

The revised Clause 49 has suitably pushed forward the original intent of protecting the
interests of investors through enhanced governance practices and disclosures. Five broad
themes predominate. The independence criteria for directors have been clarified. The roles
and responsibilities of the board have been enhanced. The quality and quantity of disclosures
have improved. The roles and responsibilities of the audit committee in all matters relating to
internal controls and financial reporting have been consolidated, and the accountability of top
managementspecifically the CEO and CFOhas been enhanced. Within each of these
areas, the revised Clause 49 moves further into the realm of global best practices (and
sometimes, even beyond.


CHAPTER 4
ANALYSIS AND INTERPRETATION

4.1 Companys Philosophy on Corporate Governance
The companies believes that sound Corporate Governance is critical to enhance and retain
investors trust. The company seeks to attain its performance with integrity and fairness. Its
philosophy based on Accountability, Ethical conduct, Compliance with status, Interest of all
stakeholders, Transparency & Timely disclosure. The objective is to instutionalize Corporate
Governance practices that go beyond adherence to that extant of regulatory framework.
4.2 Board of Directors
As on 31
st
march 2010,comprises Eight directors out of which Seven are non executives
Directors. Since the company does not have a Chairman, Directors present in the meeting
elect one of them to take the chair and non-executive Director is appointed as chairman of the
meeting.The composition of the board as on 31
st
March 2010,attendance at board meetings
held during the financial year under review and at the last Annual General Meeting And no.
of Directorship and Membership/Chairmanship in public companies held by directors as on
31
st
March 2010(including the company) are given below:
Table:4.1 Board of Directors
Sl.
No
.
Name of Directors Nature of
Directorship
No.
of
Board
meeti
ngs
held
No.
of
Boar
d
meeti
ngs
Atten
ded
No. of
other
Director
ship
Committee
Membership
Attenda
nce at
last
AGM
Mem
ber
Chair
man
1 Shri
A.K.Agarwala
Non-
Executive
promotors
4 4 4 - - No
2 Shri
K.K.Maheshwari
Non-
Executive,
promotors
4 3 3 2 2 Yes
3 Shri K.C.J hanwar Non-
Executive,
promotors
4 4 - - - Yes
4 Shri Biswajit Non-
Executive,In
4 4 10 3 3 Yes

Chaudhari dependent
5

Shri P.P.Sharma Non-
Executive,In
dependent
4 3 - - - No
6 Shri J .C.Chopra Non-
Executive,In
dependent
4 4 3 1 - No
7 Shri S.S.Gupta Managing
Director,Pro
motor
4 4 - 1 - Yes
8 Shri Subrajit
Bhowmick(upto
4
th
April 2010)
Non-
Executive
Nominee
Independent
4 3 - 1 - No
9 Shri
S.C.Mathur(w.e.f.
5th April 2010
Non-
Executive
Nominee
Independent
N.A. N.A. - 1 - N.A.
10 Shri L.S.Naik Non-
Executive,Pr
omoter
N.A. N.A. - - - N.A.
Source:Companys Annual Report
During the year 2009-10, Four (4) Board meetings held,the details of which
are given here in-below:
Table 4.2 Board meetings
Sl. No. Date Board Strength No.Of Directors Present
1 29.04.2009 8 8
2 22.07.2009 8 7
3 26.10.2009 8 8
4 20.01.2010 8 6
During the year under review,Shri Lalitkumar Shantaram Naik has been appointed as
Additional Director in the Board w.e.f. 1
st
April 2010,Shri S.S. Gupta has been re-appointed

as Managing Director of the company w.e.f. 24
th
october 2009 And Shri S.C. Mathur has
been appointed in the Board in place of Shri Subrajit Bhowmick w.e.f.5
th
April 2010.
In accordance with the provisions of Companies Act,1956 and Companys Articles of
Association, Shri A.K. Agarwala and Shri J . C. Chopra,Directors retire by rotation in the
ensuing Annual general meeting of the Company and being eligible.offer themselves for re-
appointement.
As required by Clause 49 of the Listing Agreement, the brief details of Directors seeking
appointment and reappointment is appended to the notice convening the 34th Annual General
Meeting of the Company.
The Code of Conduct, laid down by the Company, binds all the Board Members and Senior
Management of the Company. A declaration by the Managing Director to this effect is
appended to this report.
The Board reviews the Compliance Reports to ensure adherence to all applicable provisions
of Law, Rules and Guidelines on regular basis. Post meeting follow-up, review and reporting
on the actions taken on decisions
of the Board and Committees are being regularly carried out.
4.3 AUDIT COMMITTEE
The Audit Committee of the Board of Directors is constituted in compliance with Corporate
Governance requirements. The three members out of total four members of the Committee
are Independent Directors and all the members are non-Executive Directors and have relevant
finance and audit exposure. The Committee is headed by an Independent Director. The head
of Internal Audit and Statutory Auditors attend and participate in the meeting regularly on
invitation.
The terms of reference and scope of the Committee includes :-
to oversee the Companys financial reporting process and disclosure of its financial
information, to recommend the appointment/removal of Statutory/Internal Auditors, fixation
of audit fees and approval of payments forany other services, to review and discuss with the
Auditors about internal control systems, the scope of audit including the observations of the
Auditors, adequacy of the internal audit system, major accounting policies,practices and

entries, compliances with accounting standards and listing agreement entered into with the
Stock
Exchanges and other legal requirements concerning financial statements and related party
transactions, if any,to review the Risk Management and Legal matters of the Company, to
review the quarterly, half yearly and annual financial statements before submitting to the
Board of Directors.
Minutes of the Audit Committee meetings are circulated to, discussed and noted by the
members of the Board.The Committee held four (4) meetings during the year under review
on 29.04.2009, 22.07.2009, 26.10.2009 and 20.01.2010. The attendance of members at the
meetings was as follows :
Table 4.3 Audit committee
Name of Members Status No.of meeting Attended
Shri Biswajit Choudhuri Chairman 4
Shri K.K.Maheshwari Member 3
Shri J .C. Chopra Member 4
Shri Subrajit bhowmick Member 3
Shri S.S. Gupta Permanent Invitee 4
4.4 SHAREHOLDERS GRIEVANCE COMMITTEE
The Shareholders Grievance Committee of the Board, inter-alia, approves issue of duplicate
share certificates and oversees and reviews all matters connected with the securities transfers.
The Committee also looks into redressal of shareholders complaints like transfer of shares,
non receipt of annual report/dividend warrants etc. and oversees the performance of
Registrars & Transfer Agents and recommends measures for overall improvements in the
quality of investor services.
The Shareholders Grievance Committee comprises two Non-Executive Directors and the
Managing Director and is headed by a Non-Executive Director. The Committee held four (4)
meetings during the year under review on 29.04.2009, 22.07.2009, 26.10.2009 and
20.01.2010. The attendance of members at the meetings was as follows :

Table 4.4: Shareholders Grievance Committee
Shri K.K.Maheshwari Chairman 3
Shri Biswajit Choudhuri Member 4
Shri S.S. Gupta Member 4
Shri Akash Mishra, Company Secretary is the Compliance Officer under the relevant SEBI
directions.
4.5 REMUNERATION COMMITTEE
In continuation of practices of good corporate governance, the Board has constituted the
Remuneration Committee of Directors of the Company on 17.10.2006 to recommend/review
remuneration of the Managing Director and/ or Whole Time Directors, as per requirement.
The Remuneration Committee comprises three non-Executive Directors. The Committee held
one (1) meeting during the year under review on 26.10.2009. The attendance of members at
the meetings was as follows :

Table 4.5: Remuneration Committee
Shri J .C. Chopra Chairman 1
Shri K.K.Maheshwari Member 1
Shri Biswajit Choudhuri Member 1
4.6 Non Executive Directors

The Non Executive Directors are paid only sitting fees for attending Board/Committee
meetings. The amount of sitting fees paid to Non Executive Directors during the year under
review are as follows :
Table 4.6: Non Executive Directors & fees
Name of Director Sitting fee paid (Rs.)
Shri A.K. Agarwala 80,000/-
Shri K. K. Maheshwari 160,000/-
Shri K. C. J hanwar 80,000/-
Shri Biswajit Choudhuri 210,000/-
Shri P. P. Sharma 60,000/-
Shri J . C. Chopra 170,000/-
Shri Subrajit Bhowmick
( upto 4th April 2010 )
120,000/-
Shri L. S. Naik
( w.e.f. 1st April 2010 )
N.A.
Shri S. C. Mathur
( w.e.f. 5th April 2010 )
N.A.
There was no other pecuniary relationship or transaction of the Non Executive Directors with
the Company.The Company has not granted any stock option to any of its Directors. As on
31st March 2010, except Shri A. K. Agarwala and Shri Biswajit Choudhuri, Directors, who
hold 11700 and 100 equity shares of the Company respectively, no other Directors of the
Company hold any shares in the Company, as reported.
The aggregate value of salary and perquisites paid for the year 2009-10 to the Managing
Director are as follows :
( all fig. in Rs.Lacs)
Table 4.7: salary and perquisites paid

Salary Variable Pay All other elements of the
remuneration package*
Total
Shri S. S. Gupta 37.33 8.86 9.75 55.94

*excluding Gratuity and unencashed Earned Leave Salary.
Besides this, the Managing Director is also entitled to other facilities as per the rules of the
Company and Agreement entered with him.
The re-appointment of Shri S. S. Gupta is for a period of two (2) years w.e.f 24.10.2009. In
the event of cessation of employment of Shri Gupta for reasons attributable to him during the
subsistence of service, he shall not be entitled to any
remuneration on and from the date of termination of his employment. Subject to the
provisions of Section 318 of the Companies Act 1956, the Company shall, in the event of the
termination of the appointment of Shri Gupta as its Managing
Director prior to the expiry of the said period, by the Company, pay compensation to Shri
Gupta equivalent to six month's basic salary as prevailing immediately preceding the date he
ceases to hold office of the Managing Director of the Company.
4.7 SHARE TRANSFER
The Registrar and Share Transfer Agent of the Company M/s. C. B. Management Services
(P) Limited, Kolkata looks after physical as well as electronic transfer of Company's shares.
The Board of Directors have delegated the power of approving transfer of securities to the
Registrar subject to notification of the same to the Company Secretary on a monthly basis
and intimation to the Committee about such transfers in its meeting.
The Status of total number of requests / complaints received during the year under review is
as follows :
Table 4.8: number of requests / complaints in 2009-10
Sl.
No.
Descriptin Nos. received Total
Receive
d
Replied/Addressd Pending
QT
1
QT
2
QT3 QT4

A Letters received
from
Statutory bodies
SEBI
0 0 0 0 0 0 0
Stock Exchange 0 0 0 0 0 0 0
B Complaints from
Shareholders
0 0 0 0 0 0 0
C Queries/requests
Issue of duplicate
certificates/
change of address,
Bank
mandates,
Transmission/
transfer of Shares
query, Demat
updation
status/query,
Dividend
related
query/revalidation,
query on fully paid
up etc.
31 60 36 30 157 157 0
Total 31 60 36 30 157 157 0

Table:4.9 number of requests/complaint for 2005-06 to 2009-10
Description 2005-06 2006-07 2007-08 2008-09 2009-10
R A P R A P R A P R A P R A P
Letters received
from
1 1 0 1 1 0 1 1 0 0 0 0 0 0 0

Statutory bodies
SEBI
Stock Exchange 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0
Complaints from
Shareholders
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Queries/requests
Issue of duplicate
certificates/
change of address,
Bank
mandates,
Transmission/
transfer of Shares
query, Demat
updation
status/query,
Dividend
related
query/revalidation,
query on fully
paid up etc.
211 211 0 161 161 0 158 158 0 84 84 0 157 157 0
Total 212 212 0 162 162 0 159 159 0 85 85 0 157 157 0
Where P-Pending A-Addressed R-received
General Shareholder Information
Table:4.10 General Shareholder Information
Registered Office Aditya Birla Chemicals (India) Limited
Garhwa Road, P.O. Rehla - 822 124
Distt. Palamau (J harkhand)
Annual General Meeting Date and Time : 6th August, 2010 at 10:00

A.M.
Venue : Aditya Birla Chemicals (India)
Limited
Dividend payment date : within 10th August,
2010
Date of Book Closure: 28th J uly, 2010 to 6th
August, 2010.
Financial calendar (Tentative) First Quarters Results By mid of August,
2010
Second Quarters Results By mid of
November, 2010
Third Quarters Results By mid of
February, 2011
Annual Results By mid of May, 2011
Listing on Stock Exchanges and Stock Code Bombay Stock Exchange Limited, Mumbai
(Stock Code : 500057)
National Stock Exchange of India Ltd.,
Mumbai
(Symbol - "ABCIL")
Annual Listing Fee (as applicable) paid upto
2010-11
Demat ISIN in NSDL and
CDSL for Equity shares
ISIN INE605B01016
MARKET PRICE DATA : HIGH, LOW DURING EACH MONTH IN
FINANCIAL YEAR 2009-10
Table 4.11: Market Price Data
Bombay Stock Exchange National Stock Exchange

Month High(Rs.) Low(Rs.) High(Rs.) Low(Rs.)
April 2009 50.00 35.50 49.50 35.10
May 2009 68.70 43.25 68.80 42.50
J une 2009 76.00 55.90 76.00 55.60
J uly 2009 71.50 50.00 74.35 50.05
August 2009 74.75 61.40 74.50 61.10
September 2009 81.00 71.00 80.50 71.20
October 2009 95.90 71.25 96.00 71.30
November 2009 83.30 73.15 83.00 72.50
December 2009 89.60 76.50 89.00 75.70
J anuary 2010 102.55 71.00 102.70 70.70
February 2010 79.90 68.05 81.00 64.20
March 2010 79.60 69.60 79.35 69.80
INVESTORS - SHARE HOLDING PATTERNS
Table 4.12: Investors Shareholding patterns
Registrar and
Transfer Agent
M/s. C. B. Management Services (P) Ltd.
P-22, Bondel Road, Kolkata - 700 019
Phone No.(s) : 033 - 4011 6728 / 4011 6717 / 2280 6692-93-94 / 2486
Fax No. 033 - 2287 0263
Email : rta@cbmsl.com
Distribution of
shareholding as on
31
st
march 2010
Category No. of shares % of shareholding
Promoters 13,169,987 56.31
Mutual Funds and UTI 1,500 0.01
Banks/Financial
Institutions/Central
2,034,850 8.70

Govt./
State Govt.(s) / Insurance
Companies / Trust
Corporate Bodies 995,853 4.26
Individuals 6,752,266 28.88
NRI/FII / OCB 253,401 1.08
Clearing Member 178,643 0.76
TOTAL 23,386,500 100.00
Holding of shares as
on 31
st
March 2010
i) NSDL : 8,371,343
ii) CDSL : 13,831,196
iii) Physical : 1,183,961
(5.06% of Company's Equity Shares in physical form)
Plant location Garhwa Road, P.O. Rehla - 822 124
Address for
correspondence
Email : akash.mishra@adityabirla.com
abcil.investors@adityabirla.com
murari.prasad@adityabirla.com
ANNUAL GENERAL MEETINGS
Table 4.13: Annual general meeting
Particulars FY 2006- 2007 FY 2007- 2008 FY 2008- 2009
Date and Time 11.08.2007
at 11:30 A.M.
21.08.2008
at 10:30 A.M.
29.06.2009
at 10:30 A.M.
Venue Garhwa Road,
P.O. Rehla - 822 124
Garhwa Road,
P.O. Rehla - 822 124
Garhwa Road,
P.O. Rehla - 822 124

Dist.-Palamau
(J harkhand)

Dist.-Palamau
(J harkhand
Dist.-Palamau
(J harkhand
No Special Resolution was passed in the previous 3 Annual General Meetings of the
Company.
No Special Resolution was passed through postal ballot at the last Annual General
Meeting.
No Special Resolution is proposed through postal ballot at the forthcoming Annual
General Meeting.
4.8 DISCLOSURES
(i) There have been no materially significant related party transactions, pecuniary transactions
or relationships between the Company and its Directors, management, relatives except for
those disclosed in the Annual Report for the year ended 31st March 2010.
(ii) The Company has complied with the requirements of regulatory authorities on capital
markets and no penalties/strictures have been imposed against it in the last 3 years.
(iii) The Company has complied with mandatory requirements, as reflected in this report and
has adopted the non mandatory requirement of constitution of Remuneration Committee.
(iv) The Directors' Responsibility Statement has been stated in the Directors' Report.
(v) Management Discussion and Analysis Report forms part of Directors' Report.
(vi) The Company does not have any Subsidiary Company.
(vii) The Certification under Clause 49(V) by Managing Director and Finance-in-charge to
the Board is appended to this report.
(viii) Notes on the Statement of Accounts referred to in the Auditors' Report are self
explanatory, and therefore, do not call for any further comments under Section 217(3) of the
Companies Act, 1956.

Table:4.14 Disclosures

Items Availability
2005-06 2006-07 2007-08 2008-09 2009-10
Compliances Certificates Yes Yes Yes Yes Yes
Declaretion for code of
conduct as per clause-49
Yes Yes Yes Yes Yes
certification in terms of clause-
49(V)
Yes Yes Yes Yes Yes
Auditors certificate Yes Yes Yes Yes Yes
4.9 MEANS OF COMMUNICATION
The quarterly/half yearly/yearly financial results were published in Business Standard /
Financial Express(all editions) and Ranchi Express.
The Annual Report containing all of its required and important information is circulated to
Members of the Company and others entitled thereto.
Annual Report, Quarterly Results, Shareholding Pattern etc. of the Company are also posted
on the
website : www.corpfiling.co.in
Website of the Company : www.adityabirlachemicalsindia.com
4.10 COMPLIANCE CERTIFICATE OF THE AUDITORS
The Company has obtained Certificate from the Statutory Auditors regarding compliance of
conditions of Corporate Governance as stipulated in Clause 49 and the same is annexed
herewith.
For and on behalf of the Board of Directors
Camp : Mumbai
Dated : 30th April, 2010 A.K. Agarwala L. S. Naik
Director Director

4.11 DECLARATION FOR CODE OF CONDUCT IN TERMS OF
CLAUSE 49 OF THE LISTING AGREEMENT WITH STOCK
EXCHANGES.

The Board of Directors of Aditya Birla Chemicals ( India ) Limited has laid down a Code of
Conduct for all Board Members and Senior Management of the Company, which is posted on
the website of the Company.The Board Members and Senior Management have affirmed
compliance with the Code of Conduct of the Company.
For ADITYA BIRLA CHEMICALS (INDIA) LIMITED
S. S. GUPTA
[ Managing Director ]
4.12 CERTIFICATION IN TERMS OF CLAUSE 49 (V) OF THE
LISTING AGREEMENT WITH STOCK EXCHANGES
We hereby certify that :
a) we have reviewed financial statements and the cash flow statement for the year ending 31st
March 2010 and that to the best of our knowledge and belief :
i) these statements do not contain any materially untrue statement or omit any material fact or
contain statements that might be misleading;
ii) these statements together present a true and fair view of the Company's affairs and are in
compliance with existing accounting standards, applicable laws and regulations.
b) there are, to the best of our knowledge and belief , no transactions entered into by the
Company during the year which are fraudulent, illegal or violative of the Company's Code of
Conduct.
c) we accept responsibility for establishing and maintaining internal controls for financial
reporting and that we have evaluated the effectiveness of internal control systems of the
Company pertaining to financial reporting and we have disclosed to the Auditors and the
Audit Committee, deficiencies in the design or operation of such internal controls, if any, of
which we are aware and the steps we have taken or propose to take to rectify these
deficiencies.

d) we have indicated to the Auditors and the Audit Committee;
i) significant changes in internal control over financial reporting during the year;
ii) significant changes in accounting policies during the year and that the same have been
disclosed in the notes to the financial statements; and
iii) instances of significant fraud of which we have become aware and the involvement
therein, if any, of the Management or an Employee having a significant role in the Company's
internal control system over financial reporting.

Brijesh Kumar S. S. Gupta
[Finance In-charge] [Managing Director]

4.13 AUDITORS CERTIFICATE
AUDITORS' CERTIFICATE ON COMPLIANCE OF CONDITIONS OF
CORPORATE
GOVERNANCE AS STIPULATED IN CLAUSE - 49 OF THE LISTING
AGREEMENT

AUDITOR'S CERTIFICATE
To
The Members of Aditya Birla Chemicals (India) Limited

1. We have examined the compliance of conditions of Corporate Governance by Aditya Birla
Chemical (India) Limited ('the Company') for the year ended March 31, 2010 , as stipulated
in clause 49 of the Listing Agreement of the Company with Stock Exchanges.
2. The compliance of conditions of Corporate Governance is the responsibility of the
management. Our examination was limited to procedures and implementation thereof,
adopted by the Company for ensuring the compliance of the conditions of the Corporate
Governance. It is neither an audit nor an expression of opinion on the financial statements of
the Company.

3. In our opinion and to the best of our information and according to the explanations given to
us, we certify that the Company has complied with the conditions of Corporate Governance
as stipulated in the above mentioned Listing Agreement.
4. We further state that such compliance is neither an assurance as to the future viability of
the Company nor the efficiency or effectiveness with which the management has conducted
the affairs of the Company.
For and on behalf of
Khimji Kunverji & Co.
Chartered Accountants
Firm Registration No. 105146W
Dated : 30th April 2010 Hasmukh B Dedhia
Place : Mumbai Partner (F-033494)
4.14 DEMAT / TRANSFER INFORMATION
Depository System (DS)
Trading in shares of the company is permitted only in dematerialised form. As such, we wish
to advise members to arrange to dematerialise their shareholding in the company as DS
weeds out several problems which are otherwise associated with the scrip-based system such
as bad deliveries, fraudulent transfers, fake certificates, thefts in postal transit, delay in
transfers, long settlement cycles, mutilation of share certificates, etc. At the same time, DS
offers several advantages like exemption from stamp duty, elimination of the concept of
market lot, elimination of bad deliveries, reduction in transaction costs, improved liquidity,
etc.
Share transfers
Share transfers in physical form are registered normally within two to three days from the
date of receipt, provided that the documents are clear in all respects.
The Investor Relations and Finance Committee of the Board considers and approves transfers
above 5,000 shares and debentures under one transfer deed. Further, certain officers of the
company have been authorised to approve transfers up to 5,000 shares and debentures under
one transfer deed.

ECS facility
Shareholders holding shares in physical form and desirous of availing the facility of
electronic credit of dividend or recording change in their existing mandate registered with the
Company.
In respect of electronic share accounts, members are requested to notify / update their ECS
details to / with their respective depository participants.
Demat
Dematerialisation of shares and liquidity
The Equity Shares of the Company are required to by compulsorily traded in the
dematerialised form. The Equity Shares of the Company are admitted for trading under both
the Depository System in India NSDL and CDSL. The International Securities
Identification Number (ISIN) allotted to the Companys Equity Shares under the Depository
System is INE605B01016.
Statement of Physical transfer of shares & electronic transfer of 5000 & above shares during
the period Oct.2010 to Dec.2010:-
The statement dealing number of shares transferred in physical form during the period from
1
st
oct. to 31
st
Dec. 2010 were presented before the committee for its notification.The
committee noted that during the aforesaid period,650 physical shares bearing transfer no.
from 1227 to 1230 were transferred and timely action was taken in transferring the shares
lodged for transfer.The statements detailing no. of shares (more than 5000 shares) purchased
& sold in electronic form during the period Oct.2010 to dec 2010 were also presented before
the committee for its notification.The committee noted the same.
Taking Note of Dematerialisation of equity shares as on 31
st
March 2011.
Table 4.15: Dematerialisation of equity shares
Sl.no.

Description

As on 31.12.2010
Total no. of shares
As on 31.03.2011
Total no. of shares

1.

In Demat form
1.NSDL
2.CDSL

90,94,972
1,31,24,347

91,83,892
1,30,43,213
2.

In physical form 11,67,181 11,59,395
Total

2,33,86,500

2,33,86,500

Source:Companys Database
The committee noted that 95.01% shares had been dematerialized upto 31
st
dec.2010 and out
of total physical holding of 11,67,181 shares,promoters were holding 7,75,000 shares in
physical form,thus out of total physical holding of 4.99%,promoters holding in physical form
stood at 3.31%.
INVESTORS - FINANCIALS
Table 4.16: Investors-financials
PERFORMANCE UNIT
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
Gross Turnover
Rs. In
Crores
107.84 124.83 129.05 166.31 202.51 230.91 241.08
PBDIT
Rs. In
Crores
37.96 50.88 55.31 71.30 85.1 79.90 94.83
PBDT
Rs. In
Crores
25.78 41.95 47.52 60.58 75.81 74.32 91.26
PAT
Rs. In
Crores
8.63 26.45 26.15 33.76 49.27 46.08 60.74

EPS
Rs. In
Crores
4.84 11.31 11.18 14.43 21.07 19.70 25.97
ROCE % 21.07 27.39 32.00 21.25 23.04 19.62 23.15

EVA
Rs. In
Crores
2.98 11.91 10.23 6.20 12.50 8.51 8.27
Source:Website(www.moneycontrol.com)
4.15 COMMUNITY SERVICES
Beyond the business, the company committed for upliftment of the society and social
environment where it operates and transacts businesses. The Company is sincerely working
for the various noble causes in the form of promotion to rural education, women
empowerment, self reliance and many more as outlined hereunder-
- Medical Camps in every week at Medical Centers of 40 villages adopted by the Company,
where 17624 patients were given free treatment.
- Eye Camp, Eye Check up & Operation for 12 days in which 1038 Cataract operations
conducted
- Artificial Limb camp conducted, where 59 handicapped persons benefited with Artificial
Limbs.
- Family Planning camp, Mother-child health camp, immunization camp, Dental Check up
camp, Homeopathic camp, AIDS awareness camp and other camps conducted, where the
beneficiaries were more than 6403.
- NID Pulse Polio Programme organized in 29 booths, where the beneficiaries were more
than 23473.
- 2059 blanket & woolen cloths distributed among poor and needy
- Old Age Monthly pension distribution for 31 poor and needy persons
- Scholarships were given to 110 poor girls, bicycle were distributed to 11 poor girls and
Tailoring training was given to 40 needy girls.
- 26000 tree saplings distributed among farmers

- Wheat seeds distributed among 585 farmers
- 17809 catties were provided vaccination for the benefit of 5300 villagers.
- 158 hand pumps repaired/ installed in our adopted villages.
- Construction of 2 Hydel Towers and repair of Check Dam to provide water to nearby
society.
4.16 INDUSTRIAL RELATIONS
The industrial relations with the employees and workmen of the company continued to be
cordial. The Company continues to improve the manpower productivity.
4.17 SAFETY, HEALTH, ENVIRONMENT PROTECTION AND
POLLUTION CONTROL
The Company is conscious about safety of the employees vis-a vis all the stakeholders
involved directly or indirectly in their activities. The company is pleased to share that year
2009-10 has been a ZERO accident year.
Company has taken various steps for safety, health and pollution control, such as -
commissioning of Auto liquid Chlorine filling stations, installation of Auto Control valves
(on-off) in liquid Chlorine storage tanks, installation of Chlorine sensors, Pressure gauge and
temperature sensors, Continuous monitoring of Mercury bearing hazardous waste earlier
disposed in defined lagoon, Centralized control
on emission of ancillaries through Calcium Hypo unit, Safe storage of solid waste of
ancillary units in lined lagoon, Change in logic of cell load reduction from the rectifier
cubicle directly instead of DCS which takes lesser time as compared to load reduction from
DCS, Provision of explosion vent in boiler flue gas path to prevent over pressurization,
automated vent in APH of boiler for safety against any entrapped combustible gasses inside;
and mistake proofing against operational errors, Fail safe TG trip interlocking for turbine etc.

Table:4.16 Evaluation of status of CG during 2005-06 to 2009-10
Items Availability
2005-06 2006-07 2007-08 2008-09 2009-10

Compnys philosophy on
corporate governance
Yes Yes Yes Yes Yes
Board of Directors Yes Yes Yes Yes Yes
Details of Board meetings held Yes Yes Yes Yes Yes
Audit committee prescribed by
SEBIs clause-49
Yes Yes Yes Yes Yes
Meeting held for Audit
committee
Yes Yes Yes Yes Yes
Shareholders Grievance
committee prescribed by
SEBIs clause-49
Yes Yes Yes Yes Yes
Meeting held for Shareholders
Grievance committee
Yes Yes Yes Yes Yes
Remuneration committee
prescribed by SEBIs clause-49
Yes Yes Yes Yes Yes
Meeting held for Remuneration
committee
Yes Yes Yes Yes Yes
Non-executive directors and
fees
Yes Yes Yes Yes Yes
Salary and perquisities to MD Yes Yes Yes Yes Yes
Share transfer Yes Yes Yes Yes Yes
No.of requests/complains Yes Yes Yes Yes Yes
General shareholders
Information
Yes Yes Yes Yes Yes
Market price data Yes Yes Yes Yes Yes
Investors shareholding patterns Yes Yes Yes Yes Yes
Annual general meetings Yes Yes Yes Yes Yes
Disclosures
1.Registrar And Transfer agent
2.Plant location
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes

3.Address for correspondence
4.Annual general meetings
Date & time
5.Venue for Annual general
meeting
6.Listing of stock exchange
7.Stock code
8.Registered Office
9.Directors responsibility
statement
10.Directors report
11.Auditors report
12.Basis of related party
transctions
13.Disclosure of accounting
treatment
14.Board disclosures-Risk
management
15.Proceeds from public
issues,right issues etc.
16.CEO/CFO certification
17.report on Corporate
governance
18.Shareholders
19.Compliance
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Compliances Certificates Yes Yes Yes Yes Yes
Declaretion for code of conduct
as per clause-49
Yes Yes Yes Yes Yes
certification in terms of clause-
49(V)
Yes Yes Yes Yes Yes

Auditors certificate Yes Yes Yes Yes Yes
Demat transfer information Yes Yes Yes Yes Yes
Statement of physical transfer
of shares & electronic transfer
Yes Yes Yes Yes Yes
Investors-financials Yes Yes Yes Yes Yes
Policies regarding
1.Human resource depatment
2.Industrial relations
3.Corporate social responsibilty
4.Safety and health
5.Others like IT,Quality,Public
Recognition etc
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Yes Yes Yes Yes Yes
Code of conduct Yes Yes Yes Yes Yes
Other provisions as to Board
nad Meetings
Yes Yes Yes Yes Yes


CHAPTER 5
SUMMARY OF FINDINGS,
SUGGESTIONS AND CONCLUSION


5.1 General Finding

1. Clause 49 of the Listing Agreement to the Indian stock exchange comes into effect from
31 December 2005. It has been formulated for the improvement of corporate governance
in all listed companies.
2. As per Clause 49, for a company with an Executive Chairman, at least 50 per cent of the
board should comprise independent directors.
3. In the case of a company with a non-executive Chairman, at least one-third of the board
should be independent directors.
4. It would be necessary for chief executives and chief financial officers to establish and
maintain internal controls and implement remediation and risk mitigation towards
deficiencies in internal controls, among others.
5. Clause VI (ii) of Clause 49 requires all companies to submit a quarterly compliance
report to stock exchange in the prescribed form. The clause also requires that there be a
separate section on corporate governance in the annual report with a detailed compliance
report.
6. A company is also required to obtain a certificate either from auditors or practicing
company secretaries regarding compliance of conditions as stipulated, and annex the
same to the director's report.
7. The clause mandates composition of an audit committee; one of the directors is required
to be "financially literate".
8. Clause 49, when it was first added, was intended to introduce some basic corporate
governance practices in Indian companies and brought in a number of key changes in
governance and disclosures (many of which we take for granted today).
9. It specified the minimum number of independent directors required on the board of a
company.
10. The setting up of an Audit committee, and a Shareholders Grievance committee, among
others, were made mandatory as were the Managements Discussion and Analysis
(MD&A) section and the Report on Corporate Governance in the Annual Report, and
disclosures of fees paid to non-executive directors.
11. A limit was placed on the number of committees that a director could serve on.
12. In late 2002, SEBI constituted the Narayana Murthy Committee to assess the adequacy
of current corporate governance practices and to suggest improvements. Based on the

recommendations of this committee, SEBI issued a modified Clause 49 on October 29,
2004 (the revised Clause 49) which came into operation on J anuary 1, 2006.
13. The revised Clause 49 has suitably pushed forward the original intent of protecting the
interests of investors through enhanced governance practices and disclosures.
14. Five broad themes predominate. The independence criteria for directors have been
clarified. The roles and responsibilities of the board have been enhanced. The quality and
quantity of disclosures have improved. The roles and responsibilities of the audit
committee in all matters relating to internal controls and financial reporting have been
consolidated, and the accountability of top managementspecifically the CEO and
CFOhas been enhanced. Within each of these areas, the revised Clause 49 moves
further into the realm of global best practices (and sometimes, even beyond.
5.2 Specific Findings
1.The company has optimum combination of executives and non-executive directors with not
less than fifty percentage of the Board of directors comprising of non-executive directors.
2.The Audit committee of the board of directors is constituted in compliance with corporate
governance.
3.In continuation of practices of good corporate governance,the board has constituted the
remuneration committee of Directorsof the company.
4.The Shareholders Grievance committee of the board,inter-alia,approves issue of duplicate
share certificates and oversees.
5. The Board of directors have delegated the power of approving transfer of securities to the
Registrar subject to notification of the same to the company secretary.
6.Company has disclosed the status of total no. of requests/complaints and general
shareholders information.
7. The financial results were published in business standards/Financila express and also
posted on website.
8. Company has disclosed Directors responsibility statement.
9. Company has received proceeds from public issues,right issues,preferential issues etc.
10. Details of fixed component and performance linked incentives,along with the
performance criteria are disclosed.
11.Comapny has separate policy for human resource department,community services,health
and safety.


5.3 Suggestions to improve overall structure of corporate governance
1.Current norms of corporate governance are efficient but at Initial level. There must be
improvement in terms of code of conduct of corporate governance.
2.More and more development programmes should be conduct to improve the awareness
level of Investors.
3.Implementation of current norms should be made efficient.
4.Company should appoint more internal auditor for audit committee.
5.Cross check step should be implemented for betterment of investors.
6.Stakeholders value enhancement steps should be considered at large.
7.More and More programmes should be arranged to educate shareholder about corporate
governance.

5.4 CONCLUSION
Corporate governance is a way of life and not a set of rules, a way of life that necessitates
taking into account the stakeholders interest in every business decision.


BIBLIOGRAPHY

Websites

http://www.sebi.org
http://www.bseindia.com
http://www.adityabirlachemicals.com
http://www.adityabirlachemicalsindia.com
http://www.corpfiling.co.in
http://www.google.com
http://www.moneycontrol.com

Books

Corporate governance
Arya P. P. Tandon B. B. Vashint A. K.

Corporate Governance-New paradigm
Gopalsamy N

Corporate Governance Putting Investors first
Scott C. Newquist, Max B. Russell

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