Corporate Govern Hardcopy_comparison

8/2/2019 Corporate Govern Hardcopy_comparison

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CorporateGovernance

ComparisonCII, KMBR, Clause 49

This project includes comparison of corporate governance followed in

Sterlite Industries Ltd; and Hindalco Ltd. Vis--vis Kumar Mangalam

Birla committee report, The CII report & the Clause 49.

2012

Mulund College of Commerce

TYBCFM

2/25/2012


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Corporate Governance Comparison

February 25, 2012

Page 1

FOREWORD

For over the years, the Confederation of Indian Industry (CII), KMB, and the Clause 49 reports has

been at the forefront of the corporate governance movement in India. In April 1998, it released a Task

Force report entitled Desirable Corporate Governance: A Code, which outlined a series of voluntary

recommendations regarding best-in class practices of corporate governance for listed companies. It is

worth noting that most of the CII Code was subsequently incorporated in SEBIs Kumar Mangalam Birla

Committee Report and thereafter in Clause 49 of the Listing Agreement. Moreover, the CII Code was the

first and probably a unique instance where an industry association took the lead in prescribing corporate

governance standards for listed companies.

Corporate governance guidelines - both mandated and voluntary - have evolved Since 1998,

thanks to the efforts of several committees appointed by the Ministry of Corporate Affairs (MCA) and the

SEBI. Indeed, it is fair to say that in terms of norms, guidelines and standards set for the board of

directors, financial and non-financial disclosures and information to be shared by the management to

stakeholders and the wider public, Indian corporate governance standards rank among the best in the

world. And CII is privileged to be a part of this movement.

Unfortunately, history tells us that even the best standards cannot prevent instances of major

corporate misconduct. This has been true in the US - Enron, WorldCom, Tyco and, more recently gross

miss-selling of collateralized debt obligations; in the UK; in France; in Germany; in Italy; in Japan; in South

Korea; and many other OECD nations. The Satyam Maytas Infra-Maytas Properties scandal that has

rocked India since 16th December 2008 is another example of a massive fraud. The overwhelming

majority of corporate India is well run, well regulated and does business in a sound and legal manner.

However, the Satyam episode has prompted a relook at our corporate governance norms and how

industry can go a step further through some voluntary measures.


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February 25, 2012

Page 2

INTRODUCTION

Good corporate governance involves a commitment of a company to run its businesses in a legal,

ethical and transparent manner - a dedication that must come from the very top and permeate

throughout the organization. That being so, much of what constitutes good corporate governance has to

be voluntary. Law and regulations can, at best, define the basic framework boundary conditions that

cannot be crossed.

All such reports, that has been included in this project has always held the view that while law

may need to be strengthened when occasions so demand, there are fundamental limits to using

legislative and regulatory instruments to enforce better corporate governance.

The thrust of these reports, therefore, is to suggest certain voluntary recommendations for

industry to adopt.


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February 25, 2012

Page 3

Task Force on Corporate Governance

Focus and

ObjectivesCII, Clause 49, KMB reportThis head includes the objectives and the focus (exactly which part of

the corporate governance framework) of the reports.


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February 25, 2012

Page 4

Growth

Industrialsector

Identify &

strengthen

Industry's rolein economicdevelopment

Provide up-

to-date info.

To industriesand govt.

Identify &

address

special need ofsmall scale

sector

Createawareness &

support

industries'effort on

quality, envt.,etc.

to work

towards

Globalisation

The BoardOf Directors

Non-executiveAnd

IndependentDirectors

CommitteesOf The Board

SignificantRelated PartyTransactions

Auditors

IndependenceOf Auditors

Rotation OfAudit Partners

RegulatoryAgencies

Legal AndRegulatoryStandards

Effective AndCredible

Enforcement

ExternalInstitutions

InstitutionalInvestors

The Press


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February 25, 2012

Page 5

Independent Directors,Board of Directors

Compensations

Disclosures

Responsibility

Laying the code of conduct

Audit committee

Increase Responsibility,Qualification

Legal Compliance Of AuditReports

Other Professional StakeHolders

CFO, CEO

Company Secretaries

Stock Exchanges


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February 25, 2012

Page 6

Board

Composition

Decision making

Limit of directorships

Meetings

Remuneration Comm.

Audit Comm.

ShareholdersShare transfer agents

Issues

Disclosure

Level of compliance

Director's interest

Significant events

Information andcommunication.

Reports

Director's income.

Retain theinterests of thestake holders

Enhancement ofshareholder

value

A companyshud not merelydraft a CG codebut also follow

it

Implementingthe structures,

rules anddicipline

Treat therecommendatio

ns not like acode / structurebut a way of life

Have dicipline,transparency,

fairness &achieve

confidence ofshareholders


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February 25, 2012

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SynopsisCII, Clause 49 & KMB report

This head includes the details whether the companies (Sterlite industries

and Hind Alco ltd) follow the recommendations and how do they differ from

each other.


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February 25, 2012

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RECOMMENDATION 1

The board:

Composition

(a) At least 50%

should be n-e

(b) 1/3 rd. of the

board must be

n-e, if chairman

is n-e(c) must be n-e

if chairman is

executive

director.

BIRLA

REPORT

For, Sterlite Industries (India) limited.

The Companys Board comprises of six Directors. Mr. Anil

Agarwal, Chairman (n-e) and Mr. Navin Agarwal,

Executive, Vice-Chairman are the two promoter Directorsand Mr. Din Dayal Jalan is the Whole-time Director. In

addition to the promoter directors, there are three n-e

Independent Directors, viz., Mr. Gautam Doshi, Mr. Berjis

Desai and Mr. Sandeep Junnarkar. All the Independent

Directors meet the independence criteria as required

under Clause 49 of the Listing Agreement.

For Hindalco Industries (India) Ltd.,

Companys Board comprises of 9 N-e Directors as on 31st

March, 2011 with considerable experience in their

respective fields. Of these, 6 Directors are independent

Directors. The chairman is a n-e director, and only 1 i.e.

the MD is the executive director.

Recommendation 1 of Birla report is fulfilled. 50% of the

board being n-e, when the chairman is n-e

Recommendation 1 of Birla report is fulfilled. 50% of theboard being n-e, when the chairman is n-e


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February 25, 2012

Page 9

RECOMMENDATION 2

The Board : Auditcommittee

This will help

increase the

importance of

(a) financial

disclosures

(b) promote

transparency

BIRLA

REPORT


As on 31 March 2011, Sterlites Audit Committee consisted

of Mr. Gautam Doshi (Chairman), Independent Director, Mr.

Sandeep Junnarkar, Independent Director, and Mr. Berjis

Desai, Independent Director. Mr. Gautam Doshi is the

financial expert in the Audit Committee and all members of

the Audit Committee have accounting and financial

management knowledge and expertise. The Committee met

six (6) times during the course of the year.


Company has an Audit Committee at the Board level which

acts as a link between the management, the statutory and

internal auditors and the Board of Directors and oversees

the financial reporting process. The Committee presently

comprises four n-e Directors, all of whom are Independent

Directors. During the year, the Audit Committee met 6

times to deliberate on various matters.

Recommendation 2 of Birla report is fulfilled. Audit

committee appointed, with 3 independent directors.

Recommendation 2 of Birla report is fulfilled. Audit

committee appointed, with 4 independent directors.


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February 25, 2012

Page 10

RECOMMENDATION 3

The Board:

Remuneration

Committee

A remuneration

Comm. Must be set

up On behalf of

the shareholders.

It must decide the

remuneration

packages of

executive

directors.

BIRLA

REPORT


The Companys Remuneration Committee is responsible for

recommending the fixation and periodic revision of

remunerations (including commissions and/or incentives,

etc.) of Whole-time Directors / Executive Directors. This is

done after reviewing their performance based on pre-

determined evaluation parameters and the Company policy

of rewarding achievements and performance.

The remuneration structure comprises of salary,

commission linked to profits, perquisites and allowances

and retirement benefits (pension, superannuation and

gratuity).

For Hindalco Industries (India) Ltd.,,

Since the Company has one Executive Director, the

Company does not have a Remuneration Committee. The

Board of Directors decides the remuneration of the

Managing Director. The Company has a system where all

the directors or senior management of the Company are

required to disclose all pecuniary relationship or

transactions with the Company. No significant material

transactions have been made with the Non- Executive

Directors Vis- a Vis the Company during the year.ExecutiveDirector is paid remuneration within the limits envisaged

under Schedule XIII of the Companies Act, 1956. The said

remuneration is approved by the Board as well as the

Shareholders of the Company.

Recommendation 3 of Birla report is fulfilled. Remuneration

committee set up with 2 n-e directors and 1 independentdirector

Recommendation 3 of Birla report is partially fulfilled.

Remuneration committee is not set up but since there is only

one executive director, the board decides his remuneration.


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February 25, 2012

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RECOMMENDATION 4

Shareholders: Issues

Set up a comm.

which will

specifically look

into:

(a) Shareholder

issues

(b) Share transfer

(c) Shareholder

complaints

BIRLA

REPORT


The Shareholders Grievance Redressal Committee of the

Company reviews matters related Grievances of

shareholders and investors. The Committee primarily

focuses on review of Investor complaints and its Redressal,

queries received from investors i.e. transfer of shares,

issue of share certificates, non-receipt of Annual Report,

non-receipt of declared dividends etc. and reviews the

Report presented by the Share Transfer Agent of the

Company.


The Company has an Investor Grievance Committee at

the Board level to deal with various matters relating to

Redressal of shareholders and investor grievances, such as

transfer and transmission of shares, issue of duplicate

shares, non-receipt of dividend / notices/ Annual Reports,

etc. In addition, the Committee looks into other issues

including status of dematerialization / rematerialisation of

shares and debentures, systems and procedures followed

to track investor complaints and suggest measures for

improvement from time to time.


committee set up with 2 n-e directors and 1 executive

director


committee set up with 2 n-e directors.


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RECOMMENDATION 5

Shareholders: Share

transfers

An officer,

committee or a

share transfer

agent should be

appointed.

BIRLA

REPORT

For, Sterlite Industries (India) ltd.

The Company has appointed, M/s. Karvy Computershare

Private Limited, as its Registrar and Share Transfer Agent,

who are fully equipped to carry out share transfer activities

and redress investor complaints. Company Secretary is the

Compliance Officer for Redressal of all shareholders

grievances.


The Company has In-House Investors Service Department

registered with SEBI as category II Share Transfer Agent videRegistration no INR 000003910 Investors Service

Department Hindalco Industries Limited Andheri (East),

Mumbai- 400 093.

E-mail: [email protected]

Recommendation 5 of Birla report is fulfilled. Share transfer

agents are M/s Karvy Computershare ltd

Recommendation 5 of Birla report is fulfilled. The company

has in-house share transfer agent clearing systems.


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February 25, 2012

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RECOMMENDATION

6

Disclosures:

Directors income

Disclosures

regarding:

(a) Remuneratio

n

(b) Directors

salary

(c) Bonuses

(d) Stock

options

(e) pensions


Recommendation 6 of

Birla report is fulfilled.

Remunerations

disclosed.

For further reference,

page 81 of the annual

report might prove

beneficial.


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Page 14


Recommendation 6 of Birla report is fulfilled.Remunerations disclosed. For further reference, page

28 of the annual report might prove beneficial.


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RECOMMENDATION 7

Board: Meetings

Meetings:

(a) Held at least 4

times a

year.(max. gap

of 4 months

b/w any two

meetings)

(b) All information

recommended

by SEBI should

be placed

before the

board.

BIRLAREPORT


In 2010-11, the Board of the Company met Fourteen (14)

times.

The gap between 2 board meetings was less than 4 months.


In 2010-11, the board of the company met six (6) times. The

gap between two meetings was less than 4 months.

Recommendation 7 of Birla report is fulfilled. The board

met twice in April, July, October, and March; once in May,

September, November, December and January & February.

Recommendation 7 of Birla report is fulfilled. The board metonce in May, June, August, September, November,


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Page 16

RECOMMENDATION 8

Disclosures: Reports

(a) Directors

report

(b) Management

discussion and

Analysis report

BIRLA

REPORT


The Management Discussion and Analysis begins with an

overview; then analyses each of the businesses; moves on

to details on financial performance, risks and internal

control measures and concludes with sustainable

development initiatives.(pg:18, annual report)

Pg:65 of annual report, provides the directors report. It

includes financial & operational performance. Other items

such as transfer to reserves, bonus, split, capital,

acquisitions credit rating etc.


The Management Discussion and Analysis Report begins

with a business overview; then it moves on to giving

business highlights- revenues, cash flows, other business

performances. The report then moves on to discussing the

operational details, internal controls, raw materials

demand etc. then it gives an overview of the business

outlook, and expansions, projects etc. finally, it ends withrisk management and financial performance analysis.

Pg. no: 4 of the annual report provides the Management

Discussion and Analysis Report and pg. no: 48 forms the

directors report in the annual report.

Recommendation 8 of Birla report is fulfilled. Annual report

includes directors report, management discussion and

analysis report.

Recommendation 8 of Birla report is fulfilled. Annual report

includes directors report, management discussion and

analysis report.


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RECOMMENDATION 9

Disclosures:Information &

communication

(a) Company

related

information

(b) Results

(c) Presentationsmade by the

companies

All the above must be

put on companys

website so that the

stock exchanges on

which the company is

listed can put it in the

stock exchanges

website

BIRLA

REPORT


Information related to the company, results, presentations are

posted on the company website:www.sterlite-industries.com

The information can also be found at NSE and BSEs websites.


Information related to the company, results, presentations are

posted on the company website: www.hindalco.com and

www.adityabirla.com

The information can also be found at BSE and NSEs website.

Recommendation 9 of Birla report is fulfilled. Website

includes the asked information.

Recommendation 9 of Birla report is fulfilled. Website

includes the asked information.
http://www.sterlite-industries.com/http://www.sterlite-industries.com/http://www.sterlite-industries.com/http://www.hindalco.com/http://www.adityabirla.com/http://www.adityabirla.com/http://www.adityabirla.com/http://www.hindalco.com/http://www.sterlite-industries.com/


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February 25, 2012

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RECOMMENDATION

10

Disclosures:Compliance

(a) Details

regarding level

of compliance

made by the

company.

(b) If any

mandatory

recommendati

ons are not

followed then

reasons must

be specified.

BIRLAREPORT


There is a separate section on corporate governance and can

be found in page no. 75 on the annual report. This also

includes a compliance certificate mentioned in page no: 91


There is a separate section on corporate governance and can

be found in page no. 24 of the annual report. This also

includes a compliance certificate mentioned in page no: 30 of

the annual report.

Recommendation 10 of Birla report is fulfilled. All

mandatory recommendations are followed

Recommendation 10 of Birla report is fulfilled. All

mandatory recommendations are followed.


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February 25, 2012

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RECOMMENDATION

11

Board:Directorships of

sirectors

No director

should:

(a) Be a

member in

more than

10

committee

s or a

chairman

in 5

committee

s. (across

all the

companies

where he is

a director.)

(b) Inform the

company

about the

positions in

the

committee

s he

occupies

BIRLA

REPORT



Other

directorships

Committe

es

Chairmans

hipsRecommendation 11 of

Birla report is fulfilled.

Recommendation 11 of

Birla report is partially

fulfilled. 2 directors have

directorships in morethan 10 companies.


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RECOMMENDATION

13

Disclosures: Directors

interest

Disclosures

regarding:

(a) Material

(b) Financial

(c) Commercial

transactions

All the above with

regard to the

directors financial

interest

BIRLA

REPORT


The Independent Directors on Sterlites

Board(disclosures):

a) Apart from receiving Directors remuneration, donot have any material pecuniary relationships or

transactions with the Company, its promoters, its

Directors, its senior management its holding

Company or its subsidiaries and associates which

may affect the independence of the Director.

b) Are not related to promoters or persons occupyingmanagement positions at the Board level or at one

level below the Board.

c) Have not been an executive of the Company in theimmediately preceding three financial years.

d) Are not partners or executives or were notpartners or Executives during the preceding three

years of the:

e) Are not material suppliers, service providers orcustomers or Lessors or lessees of the Company,

which may affect independence of the Director.

f) Are not substantial shareholders of the Companyi.e. do not own two percent or more of the block

of voting shares.

Transactions with related parties are disclosed in Note 34

of Schedule 21 Notes forming part of the Accounts

annexed to the financial statements of the year. There

has been no materially relevant pecuniary transaction or

relationship between the Company and its nonexecutive

and / or independent Directors during the year 2010-11.


There has been no direct disclosure of the material and

financial interest; it is also mentioned in notes to

accounts, in note 19. No material transaction has been

entered into by the Company with the Promoters,

Directors or the Management, their subsidiaries.

Recommendation 13 of Birla report is fulfilled. The

directors financial and material interest is disclosed.


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RECOMMENDATION

14

Disclosures: Significant

events

(a) Half yearly

Financial

performance

(b) Significant

events

All the above during

the last 6 months;

should be sent to the

shareholders.

BIRLA

REPORT


The above disclosures are made in the directors report,

which forms the part of the annual report included in page

no: 67 onwards. During the year, the quarterly/half yearlyresults of the Companys performance have been published

in leading newspapers such as The Economic Times in

English and in one of the local Tamil dailies, i.e. in the

vernacular. Hence, they are separately sent to individual

shareholders. Sterlite, however, furnishes the quarterly and

half-yearly results on receipt of a request from any

shareholder.


The above disclosures are made in the directors report,

which forms the part of the annual report included in page

no: 48 onwards. The half yearly and quarterly results are

uploaded in the companys website; they are published in

the leading newspapers (financial express-English, navshakti-marathi), the results are also separately sent to the

shareholders. The significant events and financial

performance are discussed in the directors report.

Recommendation 14 of Birla report is fulfilled. Significant

events are disclosed. They are even e-mailed to the

shareholders.

Recommendation 14 of Birla report is fulfilled.

Significant events are disclosed. They are even e-

mailed to the shareholders.


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RECOMMENDATION

15

Board: Decision

making

Financial

institutions should

not have direct

role in the decision

making process

BIRLA

REPORT


The decision making is in the hands of the directors only. The

directors are paid remuneration on a performance based rating.

Hence the directors have to perform. Some decisions lie with the

hands of the shareholders like appointing, re-appointing orremoving a director.


The decision making is in the hands of the directors only. The

directors are paid remuneration on a performance based

rating. Some decisions lie with the hands of the shareholders

like appointing, re-appointing or removing a director.

However there have been no decisions made through ballot

this year.

Recommendation 15 of Birla report is fulfilled. Major

decisions vest in the hands of the directors only.

Recommendation 15 of Birla report is fulfilled. Financial

institutions do not have a direct role to play in the decision

making.


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RECOMMENDATION

16

Disclosures: Clause 49

compliance

(a) A separate

section

covering clause

49

requirementsshould form a

part of the

annual report.

(b) Mandatory and

non-

mandatory

recommendations complied

and not

complied with

should be

disclosed.

BIRLA

REPORT


Mandatory Requirements

The Company is fully compliant with the applicable

mandatory requirements of Clause 49.

Non-Mandatory Requirements

The details of compliance of the non-mandatory

requirements are listed below.

Remuneration Committee: Details of the composition and

function of the Remuneration Committee are given in the

section Committees of the Board.

Shareholder Rights furnishing of half-yearly results:

Details of the shareholders rights in this regard are given in

the section Communication to Shareholders.

Audit Qualifications: During the current financial year,

there are no audit qualifications in the financial statements.

The Company continues to adopt appropriatebest practices

in order to ensure unqualified financial statements.

Auditors Certificate on Corporate Governance: The

Company has obtained a Certificate from the Statutory

Auditors regarding compliance of conditions of corporate

governance, as mandated in Clause 49. The certificate isannexed to the annual report.

Recommendation 16 of Birla report is fulfilled. The mandatory

and non-mandatory requirements have been disclosed in the

annual report


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BIRLAREPORT



The Company is fully compliant with the applicable mandatory requirements of Clause 49.

Non-mandatory requirements

1. The Company maintains a separate office for the Non-Executive Chairman. All necessaryinfrastructure and assistance are available to enable him discharge his responsibilities effectively.

2. Company does not have a Remuneration Committee. The Board of Directors fixes theremuneration of the Managing Director.

3. Performance Update consisting of financial and operational performance for the first six monthsof financial year has been sent to the shareholders since 2000-01. However this practice has been

discontinued from 2008-09. Analyst Report is uploaded in the Companys website which is more

elaborative and informative.

4. During the period under review, there is no audit qualification in the financial statement. TheCompany continues to adopt best practices to ensure unqualified financial statements.

5. During the duration of the Audit and Board Meetings, the management and the executive Directogive extensive briefings to the Board members on the business model of the Company. The

Company has also formed a Risk Management Board comprising of Directors and Executives of the

Company which meets periodically to review Commodity and Foreign Exchange exposures of the

Company.

6. All the Aditya Birla Group Companies have common Corporate Principles & Code of Conduct,applicable to all the employees. Interalia, it provides mechanism to enforce and report violations

of the principles and the code.

7.

Voluntary Guidelines 2009: The Ministry of Corporate Affairs has issued a set of VoluntaryGuidelines, on Corporate Social Responsibility in December 2009. These guidelines are expected to

serve as a bench mark for the Corporate Sector and also help them in achieving the highest

standard of Corporate Governance. Your Company has in place most of the provision of these

guidelines.

8. The company has a Whistle Blower Policy and the Audit Committee reviews the same.Recommendation 16 of Birla report is fulfilled. The mandatory and non-mandatory requirements

have been disclosed in the annual report


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RECOMMENDATION

17

Disclosures: Proof of

Compliance

(a) Certificates

from the

auditors

should form a

part of theCorporate

Governance

report and

annual report.

(b) A copy of the

same has to be

sent to the

stock

exchangeswhere the

security is

listed.

BIRLA

REPORT

For Sterlite Industries (India) Ltd.

Auditors Certificate on Corporate Governance

The Company has obtained a Certificate from the Statutory


governance, as mandated in Clause 49. The certificate is

annexed to the annual report. It has also been sent to the

stock exchanges. (Page 91)


Auditors certificate

The company has obtained an auditors certificate from M/S

Sanghi and Co (Kolkata). The report forms a part of the

directors report but not corporate governance report. The

report is duly signed by the auditors.


certificate has been provided in the annual report & has

been sent to the stock exchanges.


certificate has been provided in the annual report & hasbeen sent to the stock exchange


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February 25, 2012

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RECOMMENDATION 1

Board: Meetings

Meetings should be

conducted for a min. 6

times a year.

(Interval of 2 months)

Same as,

Recommendation 7

(Birla report)

C I IREPORT

For Sterlite Industries (India) Ltd.,

In 2010-11, the Board of the Company met Fourteen (14) times

The gaps between 2 board meetings were within the period of

2 months.


In 2010-11, the board of the company met six (6) times. The

gap between two meetings was less than 4 months.

Recommendation 1 of CII report is fulfilled. The board met

twice in April, July, October, and March; once in May,

September, November, December and January &

Recommendation 1 of CII report is fulfilled. The board met

once in May, June, August, September, November, and

February.


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February 25, 2012

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RECOMMENDATION 2

Board: Composition

If the turnover is above

100 crores, the

company must have

professionally

competent

independent directors:

(a) At least 30% (if

chairman is n-e)

(b) At least 50% (if

chairman and

MD is the same

person)

Same as,

Recommendation 1

(Birla report)

C I I

REPORT


The chairman of the company i.e. Mr.Anil Agarwal is an n-e

chairman and a managing director; the company has a turnover

of more than 100 crores. The board comprises of 6 directors of

which 4 are n-e including the chairman.


The chairman and the MD are different people. Chairman is a n-

e director. Companys Board comprises of 9 N-e Directors as on31st March, 2011 with considerable experience in their


Directors. The chairman is a n-e director, and only 1 i.e. the MD

is the executive director.

Recommendation 2 of CII report is fulfilled. Only 2

directors are executives, rest does not have a financial

interest in the company.

Recommendation 2 of CII report is fulfilled. Only 1 director

is an executive director, rests do not have a financial

interest in the company.


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February 25, 2012

Page 29

RECOMMENDATION 3

Board: directorships

No director should

have directorships in

more than 10

companies.

Same as,

Recommendation 11

(Birla report)



Other

directorshi

ps

Committ

ees

Chairma

nships

Recommendation 3 of

CII report is fulfilled.

Recommendation 3 of CII report is partially fulfilled. Only

2 directors have directorships in more than 10

companies. Rests comply with the recomm.


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February 25, 2012

Page 30

RECOMMENDATION 4

Performance: n-e

directors

For better performance,

decision making, and

long term shareholder

value:

(a) N-e directors

must have active

participation

(b) Clearly defined

responsibilities.

(c) Must know to

read a BALANCE

SHEET, CASH

FLOW

STATEMENT,P/L.

(d) Knowledge

about Company

Law.

C I I

REPORT


(a) The attendance record of the n-e directors shows theperformance of the directors.

(b)Moreover Sterlite industries pays commission, sittingfees on a performance based principle.

(c) The attendance record of the directors is also a sign ofactive participation in the management.


The board comprises only of n-e directors, with only 1

executive director. This shows that the directors have active

participation in the company management. They have clearly

defined responsibilities. They are paid remuneration and

commission based on the profits of the company. Hence the

commission is performance based.

Recommendation 4 ofCII report is fulfilled. The directors

profile as shown in the Birla report synopsis (pg.21)

proves that the company follows the recommendation 4.

Recommendation 4 of CII report is fulfilled. The directors

have active participation in the management.


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Page 31

RECOMMENDATION 5

Performance: n-e directors

To secure better effort

from the n-e directors,

the company should:

(a) Pay acommission over

and above the

sitting fees

(b) Offer ESOPs C I IREPORT


(d)Sitting fees are paid for Board level Committees likeAudit Committee, Investors Grievance Committee and

Remuneration Committee.

(e)Commission to Non-Executive Independent Directorsis payable for the financial year ended 31 March 2011. With

respect of Executive Directors (Mr. Navin Agarwal and Mr. D

D. Jalan), a performance based payment was made. The

payment is based on both operational and financia

performance of the Company.

(f) The Companys parent / ultimate holding Company,Vedanta Resources Plc. has granted its stock options to

Companys Executive Directors.

(g) The attendance record of the directors is also a sign ofactive participation in the management.


The Company has a system where all the directors or senior

management of the Company are required to disclose al

pecuniary relationship or transactions with the Company. No

significant material transactions have been made with the

Non- Executive Directors vis- a vis the Company during the

year. Besides sitting fees @ Rs. 5000/- per meeting of the

Board or Committee thereof, the Company also pays

Commission to the Non- Executive Directors.

For FY- 2010-11, the Board has approved payment of Rs.14

Crores (Previous Year Rs.14 Crores) as Commission to the

Non- Executive Directors of the Company pursuant to the

authority given by the shareholders at the Annual Genera

Meeting held on 28th July, 2006 to pay Commission notexceeding 1% of the net profits of the Company to the n-e

directors of the Company. The Amount of Commission

payable is determined after assigning weightage to

attendance and the type of meeting and other

responsibilities. The company offers ESOPs.

Recommendation 5 of CII report is fulfilled. The

company pays a commission on a performance based

principle and the company also provides ESOPs.

Recommendation 5 of CII report is fulfilled.


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Page 32

RECOMMENDATION 6

Board: Re-appointment

While Re-appointing

directors, the

attendance record

must be checked.

If a director is not

present for more than

50% or more meetings,

then it should be

stated in the Annual

report.

Re-appointment of the

defaulter must be donewith the consent of the

shareholders.

C I I

REPORT


Out of the 14 board meetings in the year, only one director

(executive) has attended all the meetings. Out of the other 5

2 have attended 13 meetings, one has attended 12, the

chairman hasnt attended any of the meetings, while Mr

Berjis desai, has attended only 2 out of 14 meetings. This calls

for his re-appointment, but the shareholders have decided

not to re-appoint him.


Out of the 6 board meetings in the accounting year, 4

directors (independent) have attended all the meetings. 3

have attended 5 meetings (2-independent, 1- non-executive)

2 directors have attended 4 (1-independent, 1-non-

executive). 1 director is a defaulter. He has not attended any

of the meetings. Hence this calls for his re-appointment. But

the shareholders have decided not to remove him.


attendance is the main aim, where Sterlite industries do

a good job

Recommendation 6 of CII report is fulfilled. The recomm.

Focuses on attendance of board meetings and Hindalco

comply with the recomm.


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Page 33

RECOMMENDATION 7

Disclosures: key

information

Info that is to be

presented to the board:

(a) Annual operating

plans.

(b) Budgets: Capital,overheads,

manpower.

(c) Quarterly results

(d) Internal audit

reports

(e) Show cause,

demand,

prosecution

notice

(f) Fatal accidents,

pollution

problems etc.

(g) Defaults by the

company

(h) Details of joint

ventures,

collaboration

agreements

(i) Payments against:

goodwill, brand

etc.

(j) Such other

disclosures

C I I

REPORT


The key information has been disclosed and discussed with the

board. The key information disclosed can be found in pg. no

77. There are a total of 21 points which Sterlite feels as keyinformation.


The key information that is need to be disclosed to the board, is not

provided in the annual report. But this information is been

highlighted in the directors report. The company just mentions that

the key information is discussed in the annual meetings.

Recommendation 7 of CII report is fulfilled. The key

information as specified is disclosed.

Recommendation 7 of CII report is partially fulfilled. The

key information discussed is not disclosed in the

corporate governance report


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Page 34

RECOMMENDATION 8

Appointment of Audit

committee

Any company having

more than 100 crores

of turn-over must

appoint an audit

committee.

The audit comm. must:

(a) 3 n-e directors

(b) Assist Board in

preparing

accounts,

reporting and

have effective

supervision.

(c) Periodically

interact with

the auditors

and fulfill their

responsibilities

Same as,

Recommendation 2

(Birla report)

C I I

REPORT


Sterlite has a turnover of over 100 crores, and has hence

appointed an audit committee.As on 31 March 2011, SterlitesAudit Committee consisted of Mr. Gautam Doshi (Chairman),

Independent Director, Mr. Sandeep Junnarkar, Independent

Director, and Mr. Berjis Desai, Independent Director. Mr

Gautam Doshi is the financial expert in the Audit Committee

and all members of the Audit Committee have accounting and

financial management knowledge and expertise.

The responsibilities are briefed about in page no: 79 of the

annual report


Hindalco has a turnover of more than 100 crores. Hence the

company has appointed an audit committee. Your Company

has an Audit Committee at the Board level which acts as a link

between the management, the statutory and internal auditors

and the Board of Directors and oversees the financial reporting

process. The Committee presently comprises four Non-

Executive Directors, all of whom are Independent Directors

During the year, the Audit Committee met 6 times to deliberate

on various matters. Due to the demise of Mr. E.B. Desai, Mr.

K.N.Bhandari an independent director was inducted in the

Audit Committee in place of Mr. E.B. Desai.

Recommendation 8 of CII report is fulfilled. Audit

committee has been appointed and other requirements

have been fulfilled.

Recommendation 8 of CII report is fulfilled. Audit

committee has been appointed and other requirements

have been fulfilled.


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Page 35


Disclosures regarding the stock prices have been made in the

corporate governance section. Below are further details:RECOMMENDATIO

N 9

Disclosures: Share

prices

The company

must give:

(a) The highs

and lows,

monthlyaverages

of share

prices

(b) Analysis

of

markets

and

review of

operations.

(c) Future

prospects

Recommendation 9 of CII report is fulfilled. The history of

the stock prices have been disclosed, moreover the analysis

and stock returns compared to Nifty and Sensex have also

been disclosed.


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Page 36


Recommendation 9 of CII report is fulfilled. The history of

the stock prices have been disclosed, moreover the analysis

and stock returns compared to Nifty and Sensex have also

been disclosed.


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Page 37

C I I

REPORT


The accounts have been consolidated, the balance sheet, cash

flow statement, the profit and loss statement have been

disclosed from page no: 98 onwards of the annual report. The

accounts of the subsidiaries have also been annexed.


The accounts have been consolidated, the balance sheet, cash

flow statement, the profit and loss statement have been

disclosed from page no: 2,3 and pg. no 80 onwards of the

annual report. The accounts of the subsidiaries have also been

annexed.

RECOMMENDATION 10

Disclosures: Accounting

Consolidation of

accounts is optional.

If the company

voluntarily choses toconsolidate the

accounts then it Is

necessary to annex the

accounts of the

subsidiaries.

If there is a

consolidation, then the

company must include

the parent companies

where the voting rights

are more than 50%.

Recommendation 10 of CII report is fulfilled. The accounts

consolidated, have been disclosed the way it is to be

disclosed.

Recommendation 10 of CII report is fulfilled. The accounts

consolidated, have been disclosed the way it is to be

disclosed.


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February 25, 2012

Page 38

C I I

REPORT


There is a separate section on the proof of compliance in the

corporate governance section. The certificate can be found in

the page no: 90 & 91 of the annual report.


There is a separate section on the proof of compliance

certificate signed by the CEO and the CFO. This certificate can

be found in the page no. 30 of the annual report in thecorporate governance section.


additional points of the report i.e. (a), (b), (c) are also

followed.

The stock exchanges have

mandated a compliance

certificate signed by the

CEO and the CFO. It must

state that:

(a) The mgt. is

responsible for

preparation of

financial accounts.

(b) Accounting policies

and principles are

followed.

(c) The board has

checked the

internal controls

through a director.

RECOMMENDATION 11

Disclosures: Proof of

compliance


additional points of the report i.e. (a), (b), (c) are also

followed.


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Page 39

C I I

REPORT


Sterlite industries make a profit of more than 20 crores, but it

has not issued any GDR issues. The stock is listed in the

London stock exchange, and has issued ADRs.


Hindalco makes a profit of more than 20 crores; it has also

issued GDR issues. The stock is listed on Luxembourg

exchange. The overseas disclosures are being followed. Thedepository agents of overseas GDRs are JP Morgan Chase

bank.

RECOMMENDATION 12

Disclosures: GDR issue

Companies with more

than 20 crores as turn-

over, the quality and

quantity of the GDR

issues should be the

norm of any domestic

issue.

Recommendation 12 of CII report is not a mandatory

recommendation, and Sterlite Ind. Has not issued any

GDR issues.


recommendation, but Hindalco follows it, all disclosures

have been made in the annual report and submitted to

the stock exchange.


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Page 40

RECOMMENDATION 13

Government

Government must allow

for greater funding to

the corporate sector

against the security ofshares and other papers

C I I

REPORT


Sterlite industries have their credit rating obtained from

CRISIL. Their rating is one of the best. So we think Sterlites

security as co-lateral is allowed for greater funding.


Hindalco have not obtained a credit rating from any agency.

There is a reason why Sterlite forms a part of A group

companies and Hindalco a b group company. The annuareport does not disclose anything about the creditworthiness

of the stock of Hindalco.

So we personally dont feel that government will allow

funding against stocks of Hindalco. The financia

intermediaries will do it at their own risk.


recommendation, but Sterlite being a group company,

this recommendation is followed.


recommendation, and Hindalco does not comply with

it.


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Page 41

C I I

REPORT


There has been no default whatsoever in disclosures or any

other matter. The company has disclosed their half yearly

quarterly results on their website and emailed the necessary

information to the shareholders.


Hindalco had been demoted from A group to B group in the

Sensex. Maybe there was a default in the past. But the annua

report of 2010-11 does not provide with any details of defaults. To

our knowledge all the complaints that Hindalco had faced in 2010-

11 (82 complaints) has all been resolved in the same year itself.

RECOMMENDATION 14

Financial institutions

FIs can eliminate having

nominee directors

except where there is a

serious default and

company is not

providing six-monthly or

quarterly data


recommendation, and Sterlite complies with it.


recommendation, and Hindalco partially complies

with it.


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February 25, 2012

Page 42

C I IREPORT


CRISIL has upgraded its ratings of your Companys cash credit

facility and non-convertible debentures to AA+/Stable from

AA/Stable.

The upgrade reflects CRISILs expectation of significant

improvement in the Companys capital structure than

previously envisaged, and also reflects the groups continued

strong business performance and the good progress in the

groups ongoing projects. The rating on Sterlites short-term

facilities has been reaffirmed at P1+. The treasury portfolio

of fixed income investments has been evaluated as Very

Good (highest safety from credit default on CRISILs 4 point

scale). Strong credit ratings by Credit Rating agencies reflect

the Companys financial discipline and prudence.


The company has not obtained any credit rating from any

credit rating agency. So this recommendation does not apply

to Hindalco.

RECOMMENDATION 15

Credit rating agency

If the company has

obtained credit rating

from more than one

credit rating agency,

then it should bementioned in the

prospectus.

Credit rating comparison

should also be shown.

Foreign debt issues must

have same set of

disclosure norms

Recommendation 15 of CII report is fulfilled. Since the

company has not obtained a rating from any other

rating agency, the further points of the

recommendation need not be fulfilled.

Recommendation 15 of CII report is not fulfilled, since

this recomm. does not apply to this company.


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February 25, 2012

Page 43

C I IREPORT


There has been no default on loans and deposits whatsoever in

the history of Sterlite industries.


Maybe there must have been a default in deposits, the reason

that explains why Hindalco was demoted from a group. But the

company has outstanding loans. The company also pays

dividends every year so we think this recomm. Is followed i.e.does not apply to Hindalco.

RECOMMENDATION 16

Deposits

Companies defaulting

on loans and deposits

should not be allowed

to:

(a) Accept further

deposits

(b) Make loans

(c) Declare

dividends

(Until the

default is made

good)

Recommendation 16 of CII report is not applicable to

Sterlite industries ltd.

Recommendation 16 of CII report is not applicable to

Hindalco industries ltd.


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Page 44


RECOMMENDATION 17

Directorships of nominee

directors

Reduction in the no. of

companies where they

are nominee directors.

FIs should withdrawdecision-making from

the boards of the

companies where:

(a) Individual

shareholding is

less than 5%

(b) Where total FI

shareholding is

under 10%


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February 25, 2012

Page 45


Recommendation 17 of CII report is followed both by Hindalco and Sterlite industries.


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Page 46

CLAUSE

49


There are 6 directors in Sterlites board, with 2 executive

directors and the rest independent and n-e directors. The

chairman is n-e, so the board comprises 1/3rd

of its members as

n-e directors.


The chairman and the MD are different people. Chairman is a

n-e director. Companys Board comprises of 9 N-e Directors as

on 31st March, 2011 with considerable experience in their


Directors. The chairman is a n-e director, and only 1 i.e. the MD

is the executive director

Recommendation 1

Board of directors

(a) Not less than 50% of theboard must be n-e.

(b) If the chairman is n-e, 1/3rdof the board must beindependent.

(c) If the chairman isexecutive, half of theboard must be n-e

Same as,Recomm. 2 of CII and 1 of Birlareport

Therefore the 1strecommendation of

the clause 49agreement is

appropriatelyfollowed by Sterlite

Industries Ltd &Hindalco industries

Ltd.


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Page 47

CLAUSE

49


Directors with Material Pecuniary or Business Relationships

with the Company

As mandated by Clause 49, the Independent Directors on

Sterlites Board:

(a)Apart from receiving Directors remuneration, do nothave any material pecuniary relationships or transactions

with the Company, its promoters, its Directors, its senior

management its holding Company or its subsidiaries and

associates which may affect the independence of the

Director.

(b) Are not related to promoters or persons occupying

management positions at the Board level or at one leve

below the Board.

(c) Have not been an executive of the Company in the immediately preceding three financial years.(d) Are not partners or executives or were not partners or executives during the preceding three years of

the:

(e) Are not material suppliers, service providers or customers or lessors or lessees of the Company, which

may affect independence of the Director.

(f) Are not substantial shareholders of the Company i.e. do not own two percent or more of the block of

voting shares.

(g) Are not less than 21 years of age.

Transactions with related parties are disclosed in Note 34 of Schedule 21 Notes forming part of the

Accounts annexed to the financial statements of the year. There has been no materially relevant

pecuniary transaction or relationship between the Company and its nonexecutive and / or independentDirectors during the year 2010-11. All the related party transactions are strictly done on arms length

basis. The Company presents a detailed statement of

all related party transactions before the Audit

Committee on a quarterly basis, specifying the

nature, value and terms and conditions of the

transaction. Transactions with related parties are

conducted in a transparent manner with the interest

of the Company as utmost priority.


There has been no direct disclosure regarding

director relationship with the company be it

material, financial or other relationships. But the

annual report mentions that there is no financial

interest of the directors in the company.

Recommendation 2

Board: disclosures regarding

director relationships with the

company.

All pecuniary relationships /transactions of the n-e with thecompany should be disclosed.

Same as,Recommendation 13 of Birla report.

Recommendation 2 is aptlybeing followed by Sterlite

industries ltd; but Hindalco

has not disclosed whateverwas needed but rather justmentioned that they have

followed.


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CLAUSE

49


Nominations Governance and Remuneration Committee

The Companys Remuneration Committee is responsible for

recommending the fixation and periodic revision of

remunerations (including commissions and/or incentives, etc.

of Whole-time Directors / Executive Directors. This is done after

reviewing their performance based on pre-determined

evaluation parameters and the Company policy of rewarding

achievements and performance.

Payment of remuneration to the Executive Vice-Chairman

Managing Director and Whole-time Director is governed by the

respective agreements executed between them and the

Company and are governed by Board and shareholders

resolutions. The remuneration structure comprises of salary,

commission linked to profits, perquisites and allowances and retirement benefits (pensionsuperannuation and gratuity).


The recomm. 6 of the Birla report covered in this hard copy can be referred for the same. Since the

Company has one Executive Director, the Company does not have a Remuneration Committee. The Board

of Directors decides the remuneration of the Managing Director. The Company has a system where all the

directors or senior management

of the Company are required to

disclose all pecuniary relationship

or transactions with the Company.

No significant materialtransactions have been made with

the Non- Executive Directors Vis- a

Vis the Company during the year.

The said remuneration is

approved by the Board as well as

the Shareholders of the Company.

Recommendation 3

Remuneration

(a) Paid by directors.(b) Other disclosures as

specified by therecommendation.

Same as,Recomm. 6 & 3 of Birla committeereport.

Recommendation 3 is aptly being followed by Sterliteindustries ltd and Hindalco Ind. Sterlite has appointeda remuneration comm. whereas, since the Hindalcos

board comprises only of 1 exec. Director the othermembers fix the remuneration for him.


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CLAUSE

49


The board met 14 times in 2010-11. The board met twice in

April, July, October, and March; once in May, September

November, December and January & February.

Directorships: the details regarding directorships in other

companies has been covered in page no: 29

(recommendation 3 of CII report) and page no: 19

(recommendation 11 of the Birla report) of this hard copy

submitted.

Auditors have reviewed the board minutes and directors

have also reported their directorships and chairmanships.


The board met 6 times in 2010-11. The first meeting was in

June, and then followed by meetings in May, June, Aug,

Sept, Nov, and Feb.

Directorships: The details of directorships can be referred in

pg. no: 29 or 19.

Auditors have reviewed the board minutes and this has been

mentioned in the auditors report.

Recommendation 4

Board Procedure

(a) Meetings held at least 4

times a year. (min. gap of 4months between 2meetings.)

(b) Director must not be amember in more than 10committees or chairman inmore than 5 committees.

(c) The auditor must examinethe minutes of BOD, and theannual reporting ofdirectors regarding theircommittee chairmanshipsand other details asspecified by therecommendation.

Same as,Recomm. 3 of CII & 7, 11 of BirlaReport

Recommendation 4 which concentrateson board meetings, directorships,

reporting to auditors; both the

companies do their best to follow thisrecomm. There is excellence with Sterlite

as they have met 14 times in 2010-11,whereas Hindalco have done it for the

sake o it!!!


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CLAUSE

49


Yes, this recommendation is followed. The details of this are

included in recommendation 8 of this hard copy i.e. page no

16.

All disclosures relating to financial and commercia

transactions where directors may have a potential interest

are provided to the Board, and the interested directors do

not participate in the discussion nor do they vote on such

matters. (pg. no: 82 of the annual report)


Yes, this recomm. Of clause 49 is being followed. The detailsare included in the Birla committee report (pg. no 16) of this

hard copy.

The disclosures regarding directors financial and material interest is not disclosed but it is mentioned in

the directors and the auditors report that they

follow this recommendation.

Recommendation 5

Management

(a) Management Discussion and

Analysis Report shud form apart of the annual report. Itmust include the details asspecified by therecommendation.

(b) Disclosures regarding thedirectors financial interest.

Same as,Recomm. 8 of Birla committeeReport.

Recommendation 5 whichconcentrates on disclosures:management discussion andanalysis report and directors

financial interest. Sterlitecomplies with the recomm.

Whereas, Hindalco on the other

hand complies with (a) but notwith (b); it has just mentioned inthe annual report that they satisfy

the condition.


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CLAUSE

49


Yes, the disclosures regarding the appointment and re-

appointment have been disclosed in the annual report.

The results, presentations, are put on the companys website

www.sterlite-industries.com.

The Shareholders Grievance Redressal Committee of the

Company reviews mattersrelated Grievances of shareholdersand investors. The Committee primarily focuses on review of

investor complaints and its Redressal, queries received from

investors i.e. transfer of shares, issue of share certificates

non-receipt of Annual Report, non-receipt of declared

dividends etc. and reviews the Report presented by the Share

Transfer Agent of the Company.

The share transfer agents of the company are M/S Karvy

Computershare ltd.


Yes, the disclosures regarding appointment regarding

appointment and re-appointment have been disclosed in the annual report.

The presentations made by the company, quarterly results have been uploaded in the company websitewww.hindalco.com

The Company has an Investor Grievance Committee at the Board level to deal with various matters

relating to Redressal of shareholders and investor grievances,

such as transfer and transmission of shares, issue of duplicate

shares, non-receipt of dividend / notices/ Annual Reports, etc.

In addition, the Committee looks into other issues including

status of dematerialization / rematerialisation of shares and

debentures, systems and procedures followed to track

investor complaints and suggest measures for improvement

from time to time.

The Company has In-House Investors Service Department

registered with SEBI as category II Share Transfer Agent vide

Registration no INR 000003910 Investors Service Department

Hindalco Industries Limited Andheri (East), Mumbai- 400 093.

E-mail: [email protected]

Recommendation 6

Shareholders

(a) Disclosures: In case of

appointment and re-appointment.

(b) Disclosures: results,presentations, shall be puton the companys website.

(c) Committees: shareholder grievance comm. Shud beappointed.

(d) A share transfer agent shudbe appointed.

Same as,Recomm. 4, 5, 9, and 14 of the Birlacommittee report.

Yes, both thecompanies follow the

recommendation.
http://www.sterlite-industries.com/http://www.sterlite-industries.com/http://www.hindalco.com/http://www.hindalco.com/http://www.hindalco.com/http://www.sterlite-industries.com/


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CLAUSE

49


Yes, there is a separate section on corporate governance in the

annual report.


The Company is fully compliant with the applicable

mandatory requirements of Clause 49.

Non-Mandatory Requirements

The details of compliance of the non-mandatory

requirements are listed below.

Remuneration Committee: Details of the composition and

function of the Remuneration Committee are given in the section Committees of the Board.

Shareholder Rights furnishing of half-yearly results: Details of the shareholders rights in this regard are

given in the section Communication to Shareholders.

Audit Qualifications: During the current financial year,

there are no audit qualifications in the financial

statements. The Company continues to adopt appropriate

best practices in order to ensure unqualified financial

statements.

Auditors Certificate on Corporate Governance: The

Company has obtained a Certificate from the Statutory


governance, as mandated in Clause 49. The certificate is

annexed to the annual report.

Recommendation 7

Corporate governance report.

(a) Separate section on

corporate governance in theannual report.

(b) Disclosures: mandatory andnon-mandatoryrecommendations followed /not-followed along withreasons (if not followed)

Same as,

Sterlite complies with allthe mandatory

recommendations and allthose which it doesnt

follow has been disclosedwith reasons being

specific or not applicableto the company.


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CLAUSE

49



The Company is fully compliant with the applicable mandatory requirements of Clause 49.

Non-mandatory requirements

1. The Company maintains a separate office for the Non-Executive Chairman. All necessaryinfrastructure and assistance are available to enable him discharge his responsibilities effectively.

2. Company does not have a Remuneration Committee. The Board of Directors fixes theremuneration of the Managing Director.

3. Performance Update consisting of financial and operational performance for the first six monthsof financial year has been sent to the shareholders since 2000-01. However this practice has been

discontinued from 2008-09. Analyst Report is uploaded in the Companys website which is more

elaborative and informative.

4. During the period under review, there is no audit qualification in the financial statement. TheCompany continues to adopt best practices to ensure unqualified financial statements.

5. During the duration of the Audit and Board Meetings, the management and the executive Directorgive extensive briefings to the Board members on the business model of the Company. The

Company has also formed a Risk Management Board comprising of Directors and Executives of the

Company which meets periodically to review Commodity and Foreign Exchange exposures of the

Company.

6. All the Aditya Birla Group Companies havecommon Corporate Principles & Code of

Conduct, applicable to all the employees.

Interalia, it provides mechanism to enforce andreport violations of the principles and the code.

7. Voluntary Guidelines 2009: The Ministry ofCorporate Affairs has issued a set of Voluntary

Guidelines, on Corporate Social Responsibility in

December 2009. These guidelines are expected

to serve as a bench mark for the Corporate

Sector and also help them in achieving the

highest standard of Corporate Governance.

Your Company has in place most of the

provision of these guidelines.

8. The company has a Whistle Blower Policy andthe Audit Committee reviews the same.

Hindalco complies with allthe mandatoryrecommendations and all

those which it doesnt

follow has been disclosedwith reasons being

specific or not applicableto the company.


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49


Audit Committee

Composition:

Sterlite: As on 31 March 2011, Sterlites Audit Committee

consisted of Mr. Gautam Doshi (Chairman), Independent

Director, Mr. Sandeep Junnarkar, Independent Director, and Mr

Berjis Desai, Independent Director. Mr. Gautam Doshi is the

financial expert in the Audit Committee and all members of the

Audit Committee have accounting and financial management

knowledge and expertise.

Hindalco: Company has an Audit Committee at the Board leve

which acts as a link between the management, the statutory and

internal auditors and the Board of Directors and oversees thefinancial reporting process. The Committee presently comprises

four Non-Executive Directors, all of whom are Independent

Directors.

Meetings:

Sterlite: The Committee met six (6) times during the course of

the year on 26 April 2010, 26 July 2010, 29 September 2010, 26

October 2010, 25 January 2011 and 31 March 2011.

Hindalco: The committee met 6 times a year.

Powers and role: Both Sterlite and Hindalco

The Audit Committee is empowered, pursuant to its terms of

reference to:

a) Investigate any activity within its terms of reference and to

seek any information it requires from any employee.

b) Obtain legal or other independent professional advice and to

secure the attendance of outsiders with relevant experience and

expertise, when considered necessary.

Recommendation 8

Audit committee

1. Composition:(a) min. 3 members: n-e &

independent directors.

(b) Chairman is independent.(c) Chairman has to be present at the

AGMs.(d) The co secretary shud act as the

secretary to the comm.(e) Finance director, head of internal

controls and audit must bepresent at the meeting.

2. Meetings:(a) At least thrice a year.(b) One meeting before finalization of

annual accounts.(c) Examine the minute books of themeetings.

3. Powers:(a) Investigation(b) Seek information from an

employee.(c) Obtain legal and professional

advice.(d) Attendance of outsiders.

4. Role:

(a) Look into companys financialreporting process

(b) Recommend appointment,removal, fees of external auditors.

(c) Reviewing annual statements,with special focus of change inaccounting policies.

(d) Reviewing external and internalcontrol systems.

(e) Internal audit systems.

5. Legal:

(a) If the audit comm. Is set up as percompanies Act, additionalfunctions should be followed.


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Page 55

CLAUSE49

The Company has systems and procedures in place to ensure that the Audit Committee mandatorily

reviews:

1. Management discussion and analysis of financial condition and results of operations.2. Statement of significant related party transactions (as defined by the Audit Committee), submitted

by management.

3. Management letters / letters of internal control weaknesses issued by the statutory auditors.4. Internal audit reports relating to internal control weaknesses.5. The appointment, removal and terms of remuneration of the chief internal auditor.

The Audit Committee of the Company reviews the financial statements of the subsidiary companies,

during the year, the Audit Committee also reviewed the investments made by the subsidiary companies,

minutes of the Board meeting of the subsidiary companies and statement of all significant transactions

and arrangements entered into by the subsidiary companies. No Indian subsidiary of the Company falls

under the term material non-listed Indian subsidiary as defined under Clause 49 of the Listing

Agreement.

The Audit Committee is also appraised on information with regard to related party transactions by

being presented with:

1. A statement in summary form of transactions with related parties in the ordinary course ofbusiness.

2. Details of material individual transactions with related parties which are not in the normal courseof business.

3. Details of material individual transactions with related parties or others, which are not on an armslength basis along with managements justification

for the same.

This completes the synopsis of Sterlite industries ltd and Hindalco ltd. Vis--vis Kumar Mangalam Birla

committee report, confederation of Indian Industry report & the clause 49.

The end

Both the companiescomply exactly with thegiven recommendation.


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