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INTRODUCTION:
Corporate social responsibility (CSR) is about how businesses align their values and
behaviour with the expectations and needs of stakeholders - not just customers and
investors, but also employees, suppliers, communities, regulators, special interest groups
and society as a whole. CSR describes a company's commitment to be accountable to its
stakeholders.
CSR demands that businesses manage the economic, social and environmental impacts of
their operations to maximise the benefits and minimise the downsides.
Different organisations have framed different definitions - although there is considerable
common ground between them. My own definition is that CSR is about how companies
manage the business processes to produce an overall positive impact on society.
Take the following illustration:
Companies need to answer to two aspects of their operations. 1. The quality of their
management - both in terms of people and processes (the inner circle). 2. The nature of,
and quantity of their impact on society in the various areas.
Outside stakeholders are taking an increasing interest in the activity of the company. Most
look to the outer circle - what the company has actually done, good or bad, in terms of its
products and services, in terms of its impact on the environment and on local communities,
or in how it treats and develops its workforce. Out of the various stakeholders, it is financial
analysts who are predominantly focused - as well as past financial performance - on quality
of management as an indicator of likely future performance
DEFINATION OF CSR:
The World Business Council for Sustainable Development in its publication "Making Good
Business Sense" by Lord Holme and Richard Watts, used the following definition. "Corporate
Social Responsibility is the continuing commitment by business to behave ethically and
contribute to economic development while improving the quality of life of the workforce
and their families as well as of the local community and society at large”
the CSR definition used by Business for Social Responsibility is:"Operating a business in a
manner that meets or exceeds the ethical, legal, commercial and public expectations that
society has of business.
On the other hand, the European Commission hedges its bets with two definitions wrapped
into one: "A concept whereby companies decide voluntarily to contribute to a better society
and a cleaner environment. A concept whereby companies integrate social and
environmental concerns in their business operations and in their interaction with their
stakeholders on a voluntary basis".
When you review each of these, they broadly agree that the definition now focuses on the
impact of how you manage your core business. Some go further than others in prescribing
how far companies go beyond managing their own impact into the terrain of acting
specifically outside of that focus to make a contribution to the achievement of broader
societal goals.
ARGUMENTS FOR AND AGAINST
CORPORATE SOCIAL RESPONSIBILITY
The major arguments for and against corporate social responsibility are shown in Exhibit 1.
The "economic" argument against CSR is perhaps most closely associated with the American
economist Milton Friedman, who has argued that the primary responsibility of business is to
make a profit for its owners, albeit while complying with the law. According to this view, the
self-interested actions of millions of participants in free markets will, from a utilitarian
perspective, lead to positive outcomes for society. If the operation of the free market
cannot solve a social problem, it becomes the responsibility of government, not business, to
address the issue.
Arguments For and Against CSR
FOR AGAINST
The rise of the modern corporation created and
continues to create many social problems.
Therefore, the corporate world should assume
responsibility for addressing these problems.
Taking on social and moral issues is not
economically feasible. Corporations
should focus on earning a profit for their
shareholders and leave social issues to
others.
In the long run, it is in corporations' best interest
to assume social responsibilities. It will increase
the chances that they will have a future and
reduce the chances of increased governmental
regulation.
Assuming social responsibilities places
those corporations doing so at a
competitive disadvantage relative to those
who do not.
Large corporations have huge reserves of human
and financial capital. They should devote at least
some of their resources to addressing social
issues.
Those who are most capable should
address social issues. Those in the
corporate world are not equipped to deal
with social problems.
The "competitive" argument recognizes the fact that addressing social issues comes at a
cost to business. To the extent that businesses internalize the costs of socially responsible
actions, they hurt their competitive position relative to other businesses. This argument is
particularly relevant in a globally competitive environment if businesses in one country
expend assets to address social issues, but those in another country do not. According to
Carroll and Buchholtz, since CSR is increasingly becoming a global concern, the differences in
societal expectations around the world can be expected to lessen in the coming years.
Finally, some argue that those in business are ill-equipped to address social problems. This
"capability" argument suggests that business executives and managers are typically well
trained in the ways of finance, marketing, and operations management, but not well versed
in dealing with complex societal problems. Thus, they do not have the knowledge or skills
needed to deal with social issues. This view suggests that corporate involvement in social
issues may actually make the situation worse. Part of the capability argument also suggests
that corporations can best serve societal interests by sticking to what they do best, which is
providing quality goods and services and selling them at an affordable price to people who
desire them.
There are several arguments in favour of corporate social responsibility. One view, held by
critics of the corporate world, is that since large corporations create many social problems,
they should attempt to address and solve them. Those holding this view criticize the
production, marketing, accounting, and environmental practices of corporations. They
suggest that corporations can do a better job of producing quality, safe products, and in
conducting their operations in an open and honest manner.
A very different argument in favor of corporate social responsibility is the "self-interest"
argument. This is a long-term perspective that suggests corporations should conduct
themselves in such a way in the present as to assure themselves of a favorable operating
environment in the future. This view holds that companies must look beyond the short-
term, bottom-line perspective and realize that investments in society today will reap them
benefits in the future. Furthermore, it may be in the corporate world's best interests to
engage in socially responsive activities because, by doing so, the corporate world may
forestall governmental intervention in the form of new legislation and regulation, according
to Carroll and Buchholtz.
Finally, some suggest that businesses should assume social responsibilities because they are
among the few private entities that have the resources to do so. The corporate world has
some of the brightest minds in the world, and it possesses tremendous financial resources.
(Wal-Mart, for example, has annual revenues that exceed the annual GNP of some
countries.) Thus, businesses should utilize some of their human and financial capital in order
to "make the world a better place."
PYRAMID OF CORPORATE SOCIAL RESPONSIBILITIES
For CSR to be accepted by a conscientious business person, it should be framed in such a way that
the entire range of business responsibilities are embraced. It is suggested here that four kinds of
social responsibilities constitute total CSR: economic, legal, ethical. and philanthropic. Furthermore.
these four categories or components of CSR might be depicted as a pyramid. To be sure. all of these
kinds of responsibilities have always existed to some extent. but it has only been in recent years that
ethical and philanthropic functions have taken a significant place. Each of these four categories
deserves closer consideration.
CARROLL PYRAMID
Economic Responsibilities
Historically. business organizations were created as economic entities designed to provide
goods and services to societal members. The profit motive was established as
the primary incentive for entrepreneurship. Before it was anything else, business
organization was the basic economic unit in our society. As such, its principal role wasto
produce goods and services that consumers needed and wanted and to make an acceptable
profit in the process. At some point the idea of the profit motive got
transformed into a notion of maximum profits, and this has been an enduring value ever
since. All other business responsibilities are predicated upon the economic
responsibility of the firm, because without it the others become moot considerations.
summarizes some important statements characterizing economic responsibilities. Legal
responsibilities are also depicted in and we will consider
them next.
Legal Responsibilities
Society has not only sanctioned business to operate according to the profit motive; at the
same time business is expected to comply with the laws and regulations promulgated by
federal, state, and local governments as the ground rules under which
business must operate. As a partial fulfillment of the "social contract" between business and
society firms are expected to pursue their economic missions within the frame workof the
law. Legal responsibilities reflect a view of "codified ethics" in the sense that they
embody basic notions of fair operations as established by our lawmakers. They are depicted
as the next layer on the pyramid to portray their historical development, but
they are appropriately seen as coexisting with economic responsibilities as fundamental
precepts of the free enterprise system.
Ethical Responsibilities
Although economic and legal responsibilities embody ethical norms about fairness and
justice, ethical responsibilities embrace those activities and practices that are expected or
prohibited by societal members even though they are not codified into law. Ethical
responsibilities embody those standards, norms, or expectations that reflect a concern for
what consumers, employees, shareholders, and the community regard as fair, just ,or in
keeping with the respect or protection of stakeholders' moral rights. In one sense, changing
erl1ics or values pre- cede the establishment of law because
they become the driving force behind the very creation of laws or regulations. For example,
the environmental, civil rights, and consumer movements reflected basic
alterations in societal values and thus may be seen as ethical bellwethers foreshadowing
and resulting in the later legislation. In another sense, ethical
responsibilities may be seen as embracing newly emerging values and norms society expects
business to meet, even though such values and norms may reflect a higher standard of
performance than that currently required by law. Ethical responsibilities in
this sense are often ill-defined or continually under public debate as to their legitimacy,and
thus are frequently difficult for business to deal with. Superimposed on these ethical
expectations emanating from societal groups are the implied levels of ethical performance
suggested by a consideration of the great ethical principles of moral philosophy. This would
include such principles as justice, rights, and utilitarianism.The business ethics movement of
the past decade has firmly established an ethical responsibility as a legitimate CSR
component. Though it is depicted as the next layer ofthe CSR pyramid, it must be constantly
recognized that it is in dynamic interplay with the legal responsibility category. That is, it is
constantly pushing the legal responsibility category to broaden or expand while at the same
time placing ever higher expectations on businesspersons to operate at levels above that
required by law.
Philanthropic Responsibilities
Philanthropy encompasses those corporate actions that are in response to
society’sexpectation that businesses be good corporate citizens. This includes actively
engagingIn acts or programs to promote human welfare or goodwill. Examples of
philanthropy
include business contributions to financial resources or executive time, such ascontributions
to the arts, education, or the community. A loaned-executive program thatprovides
leadership for a community’s United Way campaign is one illustration ofphilanthropy.The
distinguishing feature between philanthropy and ethical responsibilities is that theformer
are not expected in an ethical or moral sense. Communities desire firms to
contribute their money, facilities, and employee time to humanitarian programs orpurposes,
but they do not regard the firms as unethical if they do not provide the desired
level. Therefore, philanthropy is more discretionary or voluntary on the part ofbusinesses
even though there is always the societal expectation that businesses
provide it. One notable reason for making the distinction between philanthropic and ethical
responsibilities is that some firms feel they are being socially responsible if they are
justgood citizens in the community. This distinction brings home the vital point that CSR
includes philanthropic contributions but is not limited to them. In fact, it would be argued
here that philanthropy is highly desired and prized but actually less important than the
other three categories of social responsibility, In a sense, philanthropy is icing on the cake—
or on the pyramid, using our metaphor.
CSR IN INDIA ( INITIAL STEPS)
Evolved through the concept of ‘giving’ – an integral part of
Indian culture
1. Philanthropy
2. Religious donations
Modern connotation
Gandhian concept of Trusteeship
Bombay Plan (1944-45) – First initiative by leading business
houses (Tata, Bajaj, Birla group through FICCI)
Individual initiatives by individual corporate
CSR IN INDIA – FOCUS AREAS
Traditional
1. Education
2. Health
Contemporary
Capacity Building – skill development, training
Sustainable Development – environmental protection
Community Development – education, health, poverty alleviation
Social Challenges – women's’ empowerment, girl child.
CSR IN JSW:
CSR activities in JSW group are carried out by a special purpose vehicle called
"JSW Foundation" . An independent Trust, named JSW Foundation, administers the social
development initiatives of the JSW group. Mrs Sangita Jindal chairs the Foundation. Every
year, the Foundation in consultation with plant managements and CSR teams at the plants,
finalises a set of activities that get built into the business plan. The Foundation lays
emphasis on maintaining a continuum of social development thinking into the conduct of
these activities. We are assessing a transition towards a dedicated corpus for activities of
our Foundation.
CSR VISION OF JSW:
“ Empowered Communities with Sustainable Livelihoods.”
CSR MISSION OF JSW :
To contribute towards the social & economic development of communities that we operate
in, especially women and children.
1. To ensure that we care for environment by minimizing pollution by using
environment friendly technologies by planting trees to make earth greener.
2. To nourish the soul of nation by encouraging art & cultural activities.
3. To internalize values by practicing ethical behavior in all business operations
interactions.
CSR POLICY OF JSW:
JSW cherishes people and believes in inclusive growth to facilitate creation of a value based
and empowered society through continuous and purposeful engagement of all partners in
the development process.
JSW would strive to achieve sustainable development in all spheres of life including
education, health and livelihood, promotion of arts and culture, environment protection,
and sports.
CSR INITIATIVES:
The JSW group fulfils its social development responsibility through activities that are
undertaken through four public charitable trusts, viz. Jindal South West Foundation, Hampi
Foundation, a Heal Foundation and Friends of the Sir J J School of Arts Trust. These Trusts
annually consult with the Management and other company's personnel to identify the list of
activities that are subsequently incorporated into the JSW Group's business plans.
The corporate social initiatives undertaken are in the areas of community development,
environment, sports and arts and culture. The CSR initiatives of the group are led by Mrs.
Sangita Jindal. In 2007-2008, the Mumbai Corporate office was strengthened with the
appointment of full time staff. An advisory board has also been created to suggest
programmes and strategies to mainstream for JSW CSR initiatives. Management has
approved an allocation of 1.5% of profit after tax for CSR operational expenses for 2008-
2009.
The sectors of work have been classified into:
1. Education
2. Health
3. Environment
4. Livelihood
5. Sports
6. Arts, Culture & Heritage
EDUCATION:
The Foundation's endevour is to sensitize the need for education among regular and
contract employees' children by establishing schools at the Company's vicinity. At the same
time ensuring that we create an exciting and attractive learning process for the children in
the surrounding village schools.
The Foundation also takes care to build and infuse confidence among school dropouts
encouraging them to join back. The Foundation also plays a pivotal ‘parental role' through
individual monitoring the first generation learners. Besides exploring and nurturing local
rural talents, it regularly demonstrates innovative teaching methods at neighbouring
government-run schools with an aim to improve learning standards.
HEALTH:
The Foundation provides door-to-door medical care by conducting regular general health
check-ups. It also conducts specialized healthcare for the elderly by conducting cataract
screening and performing free surgeries. This apart, it holds routine STI/RTI check-up camps
to identify potential HIV cases to prevent the spread of HIV/AIDS cases at the same time
enhancing rural awareness of the dreaded scourge. Jindal Sanjeevani Hospital (JSH), a non
profit entity is committed to providing excellent and equitable health care to each and every
patient. JSH is a joint effort of JSW Steel Ltd and Jindal Education & Medical trust. Right from
its inception in 2003, JSH has been rendering yeoman’s service to JSW Employees, Associate
Employees and people from the neighbouring areas. The 75 bed hospital is now spread over
27000/- sq ft.
The JSH boasts of state of the art medical facilities.
They are casualty and emergency wards manned
round the clock, Four Operation theatres, ICU &
burns critical care unit, computerized diagnostic,
pathology
laboratory and
radiology department. Services include computerized
ECG, TMT, colour Doppler, physiotherapy, PFT,
audiometry, computerized ophthalmology, well
equipped dental department, C-ARM equipment for
major implant surgery etc.
Facilities like a labour room, blood bank are also present. The hospital has around 20
medical staff and 40 Nursing and 20 Para- Medical/ Technicians apart from administration
staff and associate employees. JSH has a tie-up with Apollo Hospital, Hyderabad for super
specialty surgeries and also has a telemedicine facility
with the hospital.
MID-DAY MEAL PROJECT
Malnourishment is a major concern for the JSW
Foundation. It has associated with the Akshaya Patra
Foundation ISKCON and FORD Relief Foundation in
providing nutritious mid-day meal for school in select areas of Karnataka and Maharashtra.
In Karnataka 5 acres of land has been allocated to the foundation to set up their kitchen.
This proposes to reach out to over a lakh student. Mrs Sangita Jindal was recently invited on
the Advisory Board of the Akshaya Patra Foundation.
Awareness on HIV-AIDS
The Foundation is involved in generating awareness
on HIV-AIDS through collaboration with known
groups/organizations and is committed in spreading
the message around the group employees, families,
truckers and casual laborers / villagers and give a
variety of interactive media tools such as lectures, street plays, films and creative CDs.
Condom vending machines have been installed at Vijayanagar.
Mobile health units
This facility serves the local population in Barmer (Rajasthan), Mednipur (West Bengal),
Ratnagiri (Maharashtra) and Vizag (Andra Pradesh) by organising medical checkup.
ENVIROMENT:
To create an environmental friendly environ, the Foundation builds model villages by
developing rural infrastructure complete with roads and drainage system. To improve living
standards, it creates sanitary facilities for providing effective disposal of solid waste. The
Foundation also sensitizes rural eco-friendliness through enhanced tree planting.
The Foundation builds libraries and has also build an art centre for accelerating rural socio-
cultural development. To create garbage-free villages, the Foundation sets up garbage
management units using proper garbage handling mechanism. It takes utmost care to create
rural awareness on the importance of hygiene and the crucial role people can play to make
that a reality. To minimize waste produced the Foundation has introduced scientific
recycling and reusing technologies.
LIVELIHOOD:
To create livelihoods for rural women by providing revolving fund, skill training and other
linkage services to empower rural women to reduce gender-based discrimination.
SPORTS:
To encourage rural sports the JSW Foundation has formed the Jindal Squash Academy,
Jindal Badminton Academy, Jindal Swimming Academy and Jindal table Tennis Academy.
These academies provide necessary trainings and students have attained national-level
success in many events.
ART,CULTURE& HERITAGE:
To encourage rural sports the JSW Foundation has formed the Jindal Squash Academy,
Jindal Badminton Academy, Jindal Swimming Academy and Jindal table Tennis Academy.
These academies provide necessary trainings and students have attained national-level
success in many events.
RURAL BPO INITIATIVE:
Infrastructure for Rural BPO (Business Process Outsourcing ) in Collaboration with Lason Inc
USA.
Creating Opportunities for Employment to Rural Unemployed Youth in Neighboring Villages
Launched on 15 th August 2005 by Shri MP Prakash,Dy. CM
Present manpower working in BPO
Live Production - 156
On Training - 60
Around 600 to be trained in the coming months
Average Earning per candidate per month Rs. 3500with a potential to go up to Rs. 7000/-
MODERN SCIENTIFIC FARMING:
• As 70% of our population is dependent on agriculture there is an urgent need to improve
the standard of living in rural areas by introducing scientific farming technology.
•MoU with NaanDan Agro-Pro pvt. Ltd Israel for scientific farming
• Pilot project in 100 acres - 200 acres
• Better product yield and world class quality of Vegetables, Fruits &Flowers
• Better marketing network for farmers including export
NURSERY:
SPRINKLING METHOD:
DONATION TO AKSHAYA PATRA:
5 acres of land
Creating Kitchen facility - Rs. 5 Cr
Dis Rs. 2.5 Cr towards construction of Kitchen
Rs. 1 Cr every year for feeding 10,000
children
tribution vehicle cost - Rs. 2 Cr
Seeking employee contribution in terms of adopting the no.of children Approaching mines
and near by industries IT benefit available Managed by Akshaya Patra Trust under ISKCON
Group Presently catering to 12000 children in Bellary district
WHAT IS CORPORATE GOVERNANCE:
Corporate governance is a broad term that has to do with the manner in which the rights
and responsibilities are shared among owners, managers and shareholders of a given
company. In essence, the exact structure of the corporate governance will determine what
rights, responsibilities, and privileges are extended to each of the corporate participants,
and to what degree each participant may enjoy those rights. Generally, the foundation for
any system of corporate governance will be determined by several factors, all of which help
to form the final form of governing the company.
CORPORATE GOVERNANCE OF JSW:
REPORT ON CORPORATE GOVERNANCE FOR THE YEAR 2008-09
(Pursuant to Clause 49 of the Listing Agreements entered into with the Stock Exchanges)
1. COMPANY'S PHILOSOPHY:
Corporate Governance at JSW Steel Limited has been a continuous journey and the business
goals of the Company are aimed at the overall well being and welfare of all the constituents
of the system. The Company has laid a strong foundation for making Corporate Governance
a way of life by constituting a Board with balanced mix of experts of eminence and integrity,
forming a core group of top level executives, inducting competent professionals across the
organization and putting in place best systems, process and technology. The Company
combines leading edge technology and innovation with superior application and customer
service skills.
At the heart of Company's corporate governance policy is the ideology of transparency and
openness in the effective working of the management and Board. It is believed that the
imperative for good corporate governance lies not merely in drafting a code of corporate
governance but in practising it.
Your Company confirms the compliance of Corporate Governance as contained in Clause 49
of the Listing Agreement, the details of which are given below:
2. BOARD OF DIRECTORS:
2.1 Composition, Meetings and attendance record of each Director:
As on 31.03.2009, the Board of Directors comprises of 15 Directors, of which 11 are non-
executive. The Chairperson is non-executive and a Promoter of the Company. The number
of Independent Directors is 8 which is more than the stipulated one half of the total number
of Directors. Except Mrs. Savitri Devi Jindal & Mr. Sajjan Jindal, no other Directors are
related to each other.
None of the Directors on the Board is a Member on more than 10 committees and Chairman
of more than 5 committees (as specified in clause 49) across all the Companies in which
he/she is a Director. The necessary disclosures regarding Committee positions have been
made by the Directors
2.2 Board Meetings, Board Committee Meetings and Procedures:
A. Decision making process
The Board of Directors oversee the overall functioning of the Company. The Board provides
and evaluates the strategic direction of the Company, management policies and their
effectiveness and ensures that the long-term interests of the stake holders are being served.
The Vice Chairman & Managing Director is assisted by the Executive Directors/Senior
Managerial Personnel in overseeing the functional matters of the Company.
The Board has constituted ten Standing Committees, namely Audit Committee, Project
Review Committee, Shareholders/Investors Grievance Committee, Remuneration
Committee, Finance Committee, Nomination Committee, Risk Management Committee,
Share Allotment Committee, Share/Debenture Transfer Committee & JSWSL Code of
Conduct Implementation Committee. The Board constitutes additional functional
committees, from time to time, depending on the business needs.
B. Scheduling and selection of Agenda Items for Board meetings
(i) Minimum four Board Meetings are held every year. Dates for the Board Meetings in the
ensuing quarter are decided well in advance and communicated to the Directors. The
Agenda along with the explanatory notes are sent in advance to the Directors. Additional
meetings of the Board are held when deemed necessary to address the specific needs of the
Company. In case of business exigencies or urgency of matters, resolutions are passed by
circulation.
(ii) The meetings are usually held at the Company's Registered Office at Jindal Mansion, 5A,
Dr. G. Deshmukh Marg, Mumbai - 400 026.
(iii) All divisions/departments of the Company are advised to schedule their work plans well
in advance, particularly with regard to matters requiring discussion/ approval/ decision at
the Board/Committee meetings. All such matters are communicated to the Company
Secretary in advance so that the same could be included in the Agenda for the
Board/Committee Meetings.
(iv) The Board is given presentations covering Global Outlook/Economy, Company's
Financials, Sales, Production, Business Strategy, Subsidiary performance and the Risk
Management practices before taking on record the quarterly/half yearly/annual financial
results of the Company.
C. Distribution of Board Agenda Material
Agenda and Notes on Agenda are circulated to the Directors, in advance, in the defined
Agenda format. All material information is incorporated in the Agenda papers for facilitating
meaningful and focused discussions at the meeting. Where it is not practicable to attach any
document to the Agenda, the same is tabled before the meeting with specific reference to
this effect in the Agenda. In special and exceptional circumstances, additional or
supplementary item(s) on the Agenda are considered.
D. Recording Minutes of proceedings at Board and Committee meetings
The Company Secretary records the minutes of the Proceedings of each Board and
Committee meeting. Draft minutes are circulated to all the members of the
Board/Committee for their comments. The final minutes are entered in the Minutes Book
within 30 days from conclusion of the meeting and are signed by the Chairman of the
meeting/Chairman of the next meeting.
E. Post Meeting Follow-up Mechanism
The Company has an effective post meeting follow up, review and reporting process
mechanism for the decisions taken by the Board/ Committees. Action Taken Report on
decisions of the previous meeting(s) is placed at the immediately succeeding meeting of the
Board/Committee for noting by the Board/Committee members.
F. Compliance
While preparing the Agenda, Notes on Agenda, Minutes etc. of the meeting (s), adequate
care is taken to ensure adherence to all applicable laws and regulations including the
Companies Act, 1956 read with the Rules made there under.
2.3 Meetings of Independent Directors:
The Independent Directors of the Company meet at such intervals as they deem appropriate
without the presence of Executive Directors or management personnel. These meetings are
conducted in an informal and flexible manner to enable the Independent Directors to
discuss matters pertaining to the affairs of the Company and put forth their views to the
Vice Chairman and Managing Director.
2.4 Strategy Meet:
A strategy meet of the Board of Directors is held once in every financial year to formulate,
evaluate & approve the business strategy of the Company. The Functional Heads give a brief
presentation to the Board covering their respective areas of responsibility. The meeting
focuses on strategic goals, financial management policies, management assurances &
control aspects and the growth plan of the Company.
3. AUDIT COMMITTEE:
The Audit Committee comprises of 5 Non-Executive Directors, of which, all are Independent
Directors. Mr. Uday M. Chitale is the Chairman of the Audit Committee. The Members
possess adequate knowledge of Accounts, Audit, Finance, etc.
The Broad terms and reference of Audit Committee are to review the financial statements
before submission to Board, to review reports of the Management Auditors and Internal
Audit department and to review the weaknesses in internal controls reported by Internal
and Statutory Auditors and to review the remuneration of Chief Internal Auditor. In
addition, the powers and role of the Audit Committee are as laid down under Clause 49 II C
and D of the Listing Agreement and Section 292A of the Companies Act, 1956.
Four meetings of the Committee were held during the financial year 2008-09, on
03.05.2008, 30.07.2008, 23.10.2008 and 27.01.2009. The necessary quorum was present at
the meetings.
Audit Committee meetings are also attended by the Jt. Managing Director & CEO, Director
(Finance), Director (Commercial), Operational Heads of each Location, Vice President
(Internal Audit), General Manager (Risk Management), the Company Secretary and the
representative of the Statutory and Management Auditors. The Company Secretary is the
Secretary of the Audit Committee.
The Chairman of the Audit Committee was present at the last Annual General Meeting.
4. REMUNERATION COMMITTEE:
The Remuneration Committee, which is a non-mandatory requirement of Clause 49, was
constituted on 23.03.2002.
The terms of reference of the committee are as follows:
i. To determine on behalf of the Board and on behalf of the Shareholders, the Company's
policy on specific remuneration packages for Executive Directors including pension rights
and any compensation payment.
ii. To approve the payment of remuneration to Managerial Personnel as per the Policy laid
down by the Committee.
No meeting of the Remuneration Committee was held during the financial year 2008-09.
The Chairman of the Remuneration Committee is Dr. S. K. Gupta. The Company has
complied with the non-mandatory requirement of Clause 49 regarding the Remuneration
Committee.
4.1 Remuneration Policy and Details of Remuneration paid to Directors:
The Remuneration Committee recommends the remuneration package for the Executive
Directors of the Board. In framing the remuneration policy, the Committee takes into
consideration the remuneration practices of Companies of similar size and stature and the
Industry Standards. The Directors' compensation is based on the appraisal system wherein
their individual goals are linked to the organisational goals. Executive Directors (ED) are paid
compensation as per the agreements entered into between them and the Company, subject
to the approval of the Board and of the Company in General Meeting and such other
approvals, as may be necessary.
The present remuneration structure of ED comprises of salary, perquisites, allowances,
performance linked incentive and contributions to PF and Gratuity.
The Non-Executive Directors, except for Mr. Biswadip Gupta and Mr. Nagesh Pinge, are paid
remuneration by way of Commission and Sitting fees. The Commission payable to the Non-
Executive Directors is based on the number of meetings of the Board/ Committee attended
by them and their contribution to the Company during the year. The Company pays sitting
fees at the rate of Rs.20,000/- for each meeting of the Board and sub-committees attended
by them.
Shareholding of the Non-Executive Directors in the Company as on 31.03.2009:
None of the Non-Executive Directors other than those named below hold any shares in the
Company.
5. SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE:
The Shareholders /Investors Grievance Committee comprises of 4 Non-Executive Directors
of which all are Independent Directors.
Dr. S. K. Gupta is the Chairman of the Committee.
The terms of reference of the 'said committee' are as follows:
a) Review the reports submitted by the Registrars and Share Transfer Agents of the
Company at half yearly intervals.
b) Periodically interact with the Registrars and Share Transfer Agents to ascertain and look
into the quality of the Company's Shareholders/ Investors grievance redressal system and to
review the report on the functioning of the said Investor grievances redressal system.
c) Follow-up on the implementation of suggestions for improvement.
d) Periodically report to the Board about serious concerns if any.
No. of Shareholders' Complaints received during the year ended 31.03.09 : 2701
Number not solved to the satisfaction of Shareholders : Nil
No. of pending Complaints as on 31.03.2009 : Nil
No. of pending Share Transfers as on 31.03.2009 : 46*
* There were no share transfers pending for registration for more than 15 days as on the
said date.
6. GENERAL BODY MEETINGS:
Special Resolutions passed through Postal Ballot:
Consent of the shareholders was sought through Postal Ballot for the following:
1. Alteration of Clause III C (Other Objects Clause) of the Memorandum of Association of the
Company by incorporating a new sub-clause 100.
2. Commencement of business specified in sub-clause 100 of Clause III C of the
Memorandum of Association of the Company as altered.
The resolutions were sent to the shareholders for their approval through postal ballot which
was returnable by 27.06.2008. The results were declared and approved at the meeting on
01.07.2008 at the Registered Office of the Company at Jindal Mansion, 5A, Dr. G. Deshmukh
Marg, Mumbai - 400 026.
Mr. Prem Rajani of Rajani Associates, Advocates & Solicitors, Mumbai, was appointed as
Scrutiniser to receive and scrutinise the completed postal ballot papers received from the
Members and for conducting the Postal Ballot process in a fair and transparent manner.
At present, the Company does not have any proposal for Postal Ballot this year.
7. DISCLOSURES:
i. There were no materially significant related party transactions i.e. transactions of the
Company of material nature with its Promoters, Directors or the Management, their
relatives or Subsidiaries etc. which could conflict with the interests of the Company.
ii. No penalties or strictures have been imposed on the Company by the Stock Exchanges or
SEBI or any Statutory Authority on any matter related to capital markets during the last
three years.
iii. The Company has laid down procedures to inform Board members about the risk
assessment and minimisation procedures, which are periodically reviewed.
8. WHISTLE BLOWER POLICY:
The Whistle Blower Policy (WBP) adopted by the Company in line with Clause 7 of Annexure
1D to Clause 49 of the Listing Agreement, which is a non mandatory requirement,
encourages all employees, officers and directors to report any suspected violations promptly
and intends to investigate any good faith reports of violations. The Whistle Blower Policy
specifies the procedure and reporting authority for reporting unethical behaviour, actual or
suspected fraud or violation of the Code or any other unethical or improper activity
including misuse or improper use of accounting policies and procedures resulting in
misrepresentation of accounts and financial statements.
WBP also provides safeguards against victimisation or unfair treatment of the employees
who avail of the mechanism and no personnel has been denied access to the Audit
Committee.
Minor modifications were made to the WBP during the period under review and the
amended WBP was adopted by the Board in its meeting held on 24.10.2008.
9. SUBSIDIARY MONITORING FRAMEWORK:
All the subsidiary companies of the Company are Board managed with their Boards having
the right and obligations to manage such companies in the best interest of their stake
holders. As a majority shareholder, the Company nominates its representatives on the
Boards of subsidiary companies and monitors the performance of such companies, inter
alia, by the following means:
a) A copy of the Minutes of the Meetings of the Board of Directors of the Company's
subsidiaries along with Exception Reports and quarterly Compliance Certificates issued by
CEO/ CFO/CS are tabled before the Company's Board quarterly.
b) A summary of the Minutes of the Meetings of the Board of Directors of the Company's
subsidiaries are circulated to the Company's Board quarterly.
c) A statement containing all significant transactions and arrangements entered into by the
unlisted subsidiary companies is placed before the Company's Board.
10. MEANS OF COMMUNICATION:
a) Quarterly/ Half Yearly/ Annual Results: The Quarterly, Half Yearly and Annual Results of
the Company are sent to the Stock Exchanges immediately after they are approved by the
Board.
b) News Releases: The Quarterly, Half Yearly and Annual Results of the Company are
published in the prescribed proforma within 48 hours of the conclusion of the meeting of
the Board in which they are considered, atleast in one English newspaper circulating in the
whole or substantially the whole of India and in one Vernacular newspaper of the State
where the Registered Office of the Company is situated.
c) Website: The Company's website www.jsw.in contains a separate dedicated section
"Investor Relations" where latest shareholders information is available. The Quarterly/ Half
Yearly/ Annual Results are simultaneously posted on the website. The latest official press
releases are also available on the website.
d) Presentations to Analysts: Four presentations were made to analysts during the financial
year 2008-09 on 05.05.2008, 31.07.2008, 24.10.2008 and 28.01.2009 and the same are
available on the Company's web site. The presentations broadly covered operations,
financials and industry outlook.
e) Corporate Filing and Dissemination System (CFDS) Filing: As per the requirements of
Clause 52 of the Listing Agreement, all the data relating to quarterly financial results,
shareholding pattern etc. have been electronically filed on the Corporate Filing and
Dissemination System (CFDS) portal, www.corpfiling.co.in, within the time frame prescribed
in this regard.
f) Annual Report: Annual Report containing, inter alia, Audited Annual Accounts,
Consolidated Financial Statements, Director's Report, Auditors' Report and other important
information is circulated to members and other entitled thereto. The Management
Discussion and Analysis (MD & A) Report forms part of the Annual Report. The Annual
Report is also available on the Company's website.
g) Chairman's Communique: Printed copy of the Chairman's Speech is distributed to all the
shareholders at the Annual General Meetings. The same is also placed on the website of the
Company.
h) Reminder to Investors: Reminders for unpaid dividend/unpaid interest on debentures are
sent to the Shareholders/ Debenture holders as per records at appropriate intervals.
Share Transfers in physical form can be lodged with Karvy Computershare Private Limited at
the above mentioned address. The transfer requests are normally processed within 15 days
of receipt of the documents, if documents are found in order. Shares under objection are
returned within two weeks.
The Board has delegated the authority for approving transfers, transmissions etc. of the
Company's securities to the Share/Debenture Transfer Committee, The decisions of
Share/Debenture Transfer Committee are placed at every Board Meeting. The Company
obtains from a Company Secretary in Practice half yearly certificate of compliance with the
share transfer formalities as required under Clause 47(c) of the Listing Agreement with Stock
Exchange and files a copy of the certificate with the Stock Exchanges.
11.6 Dematerialisation of Shares and Liquidity:
The Company has arrangements with both National Securities Depository Limited (NSDL)
and Central Depository Services (India) Limited (CDSL) for demat facility. 18,10,17,709
Equity Shares aggregating to 96.78 % of the total Equity Capital is held in dematerialised
form as on 31.03 2009 of which 95.24% (17,81,46,808 Equity Shares) of total equity capital
is held in NSDL & 1.54 %(28,70,901 Equity Shares) of total equity capital is held in CDSL as on
31.03. 2009.
11.7 Physical Share Purchase Scheme:
Having regard to the difficulties experienced by the shareholders in disposing off their
shares held in physical form and to mitigate the hardship caused to them, the Company has,
alongwith Karvy Computershare Private Limited (Karvy), formulated a Physical Share
Purchase Scheme in 2005-06.
The equity shares in physical mode tendered by the shareholders under the scheme are sold
by Karvy at the prevailing market price and the net sale proceeds thereof are distributed to
the concerned shareholders. The shareholders who wish to avail benefit of the scheme may
kindly contact Karvy.
11.8 Electronic Clearing Service (ECS) Facility:
The Company, with respect to payment of dividend to shareholders, provides the facility of
ECS at the following cities:
Agra, Ahmedabad, Allahabad, Amritsar, Aurangabad, Bangalore, Bhopal, Bhubaneswar,
Belgum, Bhilwara, Calicut, Chandigarh, Chennai, Cochin, Coimbatore, Dehradun, Dhanbad,
Durgapur, Erode, Gorakhpur, Gwalior, Guwahati, Hyderabad, Haldia, Hubli, Indore, Jabalpur,
Jalandhar, Jammu, Jamnagar, Jamshedpur, Jodhpur, Jaipur, Kanpur, Kolkata, Kakinada,
Kolhapur, Lucknow, Ludhiana, Madurai, Mangalore, Mumbai, Mysore, Nagpur, New Delhi,
Nasik, Nellore, Patna, Pune, Panjim, Puducherry, Raipur, Rajkot, Ranchi, Salem, Shimoga,
Sholapur, Silguri, Simla, Surat, Trichy, Trivandrum, Tirupati, Trichur, Udaipur, Udupi,
Vadodara, Varanasi, Vijayawada and Visakhapatnam.
The Company shall also endeavour to remit the dividend payment through National
Electronic Clearing Service (NECS) to the shareholders having accounts with Branches of
Banks covered under CBS (Core Banking Solution).
Equity Shareholders holding shares in physical form, who wish to avail the ECS facility, may
send their ECS mandate in the format attached to the Company's R & T Agents, in the event
they have not done so earlier. Equity Shareholders holding shares in electronic mode may
send the ECS mandate form to the concerned Depository Participant (DP) directly. The ECS
mandate form can also be availed from the Company's R & T Agents or downloaded from
the Company's website.
11.9 Outstanding GDRs/ADRs or Warrants or any Convertible Instrument, conversion dates
and likely impact on equity:
The Company had issued 3,250 Foreign Currency Convertible Bonds (FCCBs), of US $100,000
each during the financial year 2007-08. As per the option attached to the FCCBs, each Bond
is convertible into Equity Shares of face value of Rs. 10/- each of the Company at a
conversion price of Rs. 953.40 per share, at any time on or after 07.08.2007 until the close
of business on 21.03.2012, unless previously redeemed, converted or purchased and
cancelled and except during a closed period.
In the previous year, one of the Bond Holders i.e. Deutsche Bank AG London, had opted for
the conversion of 8 Bonds into Equity Shares on 31.12.2007 and accordingly the Company
had issued 33,799 Equity Shares of face value of Rs. 10/- each of the Company to Deutsche
Bank AG London.
The Board of Directors at its meeting held on 28.01.2009, resolved to explore opportunities
to buy back a portion of the Company's outstanding Foreign Currency Convertible Bonds
(FCCBs). During the year, 14.74% of the Company's outstanding Zero Coupon Foreign
Currency Convertible Bonds of US $ 1,00,000 each due on 2012 (ISIN XS0302937031),
aggregating to US $ 47.80 million were repurchased in accordance with the A.P. (DIR Series)
Circular No. 39 dated 08.12.2008 issued by the Reserve Bank of India and subsequently
cancelled.
The principal amount of FCCBs outstanding as at 31.03.2009 after this repurchase and
cancellation is US $ 276.40 Million.
The Company adheres to the highest standards of business ethics, compliance with
statutory and legal requirements and commitment to transparency in business dealings. A
Code of Conduct for Board Members and Senior Management and a Code of Conduct for
Prevention of Insider Trading as detailed below has been adopted pursuant to clause 49 (D)
of the Listing Agreement & the Securities & Exchange Board of India (Prohibition of Insider
Trading) Regulations, 1992 (as amended), respectively:
a) Code of Conduct for Board Members and Senior Management
The Board of Directors of the Company adopted the Code of Conduct for its members and
Senior Management at their meeting held on 20.10.2005. The Code highlights Corporate
Governance as the cornerstone for sustained management performance, for serving all the
stake holders and for instilling pride of association.
Minor modifications were made to the Code of Conduct during the period under review.
The amended Code of Conduct was adopted by the Board in its meeting held on 24.10.2008.
The Code is applicable to all Directors and specified Senior Management Executives The
Code impresses upon Directors and Senior Management Executives to uphold the interest of
the Company and its stake holders and to endeavour to fulfil all the fiduciary obligations
towards them. Another important principle on which the code is based is that the Directors
and Senior Management Executives shall act in accordance with the highest standard of
honesty, integrity, fairness and ethical conduct and shall exercise utmost good faith, due
care and integrity in performing their duties. The Code has been posted on the website of
the Company www.jsw.in.
Declaration affirming compliance of Code of Conduct
The Company has received confirmations from the Directors as well as Senior Management
Executives regarding compliance of the Code of Conduct during the year under review.
A declaration by the Jt. Managing Director & Group CFO affirming compliance of Board
Members and Senior Management Personnel to the Code is also annexed herewith.
b) Code of Conduct for Prevention of Insider Trading
The Company has adopted a Code of Conduct for Prevention of Insider Trading for its
Management, Staff and Directors. The Code lays down guidelines and procedures to be
followed and disclosures to be made by directors, top level executives and staff whilst
dealing in shares. The Company Secretary has been appointed as the Compliance Officer
and is responsible for adherence to the Code.
Compliance Certificate by Auditors:
The Company has obtained a certificate from the statutory auditors regarding compliance of
conditions of corporate governance as stipulated in clause 49 which is annexed herewith.