BECG ASSIGNMENT

CORPORATE
GOVERNANCE POLICY
OF TATA CHEMICALS

Submitted By: Moumita Pain

Enrollment no: 09BS0001323
Section: B
INTRODUCTION
Corporate governance is becoming an increasingly important component of investor
relations. The importance of good corporate governance has been highlighted by the
wave of corporate corruption scandals, especially in recent years. This has renewed
academic interest in corporate governance.
Corporate Governance is the system by which corporations are directed and
controlled. The corporate governance structure specifies the distribution of rights and
responsibilities among different participants in the corporation such as; boards,
managers, shareholders and other stakeholders and spells out the rules and procedures
and also decision making assistance on corporate affairs. By doing this, it also
provides the structure through which the company objectives are set and the means of
obtaining those objectives and examining the value and the performance of the firms.
Corporate Governance essentially is the system by which companies are directed and
controlled by the management in the best interest of the stakeholders and others.
Corporate Governance ensures fairness, transparency and integrity of the
management. Corporate Governance is a way of life, rather than a mere legal
compulsion. It further inspires and strengthens investor’s confidence and commitment
to the Company.

TATA CHEMICALS
The corporate governance philosophy of the Company has been further strengthened
with the adoption of the Tata Code of Conduct, Tata Business Excellence Model, Tata
Code for Prevention of Insider Trading and Code of Corporate Disclosure Policies.
The Company, through its Board and Committees, endeavours to strike and deliver
the highest governing standards for the benefit of its stakeholders. In compliance with
the disclosure requirements of Clause 49 of the Listing Agreement executed with the
stock exchanges, the details are set out below:

Board Of Directors:

The Board has an optimum combination of Executive and Non-Executive Directors,

and is in conformity with Clause 49 of the Listing Agreement entered into with the
stock exchanges in which the Company’s Ordinary Shares are listed.

Proportion of indepdent directors Rating

Upto 49% Disqualified
50-66% A
67-75% AA
76% & Above AAA

Thus this is in compilation with corporate governance policy.

Audit Committee:
The composition of the Committee is in conformity with Clause 49 (II) (A) of the
Listing Agreement.
The terms of reference of the Audit Committee, broadly are as under:
1. Overseeing the Company’s financial reporting process and the disclosure of its
financial information to ensure that the financial statements are true and fair.
2. Recommending to the Board, the appointment, re-appointment of the statutory
auditors, fixation of audit fees and fees for other services.
3. Reviewing, with Management, the quarterly and annual financial statements before
submission to the Board for approval.
4. Reviewing the adequacy of internal control systems and internal audit function,
including the structure of the internal audit department, staffing and seniority of the
official heading the department, reporting structure coverage and frequency of
internal audit.
5. Discussing with internal auditors any significant findings and follow up there on.
6. Reviewing the findings of any internal investigations by the internal auditors into
matters where there is suspected fraud or irregularity or a failure of internal control
systems of a material nature and reporting the matter to the Board.
7. Discussion with the statutory auditors before the audit commences, about the nature
and scope of audit as well as post-audit discussion to ascertain any area of concern.
8. To look into the reasons, if any, for substantial defaults in the payments to the
depositors, debenture holders, shareholders (in case of non payment of declared
dividend) and creditors.
9. Reviewing of the Internal Audit Reports of the foreign subsidiaries.
10. In addition to the above, all items listed in Clause 49 (II) (D) of the Listing
Agreement.
Existence of institutions like audit committee which enable the board to
adequately guide the management.

Remuneration Committee:

The remuneration of the Non-Executive Directors (NEDs) of the Company is decided

by the Board of Directors. The NEDs are paid remuneration by way of Commission
and Sitting Fees. In terms of the approval of the members at the 69th Annual General
Meeting of the Company held on August 04, 2008, commission is paid at a rate not
exceeding one per cent of the net profits of the Company calculated in accordance
with the provisions of Sections 198, 349 and 350 of the Companies Act, 1956. The
distribution of the commission amongst the NEDs is determined by the Board and is
broadly based on attendance, contribution at the Board Meetings and various
Committee Meetings as well as time spent on operational matters.
The Company pays remuneration to its Managing Director and Executive Directors
by way of salary, perquisites and allowances (a fixed component) and commission (a
variable component). Salary is paid within the overall limits approved by the
members of the Company. The Board, on the recommendations of the Remuneration
Committee, approves the annual increments (effective 1st April each year). Within the
prescribed ceiling, the perquisite package is recommended by the Remuneration
Committee to the Board. Commission is calculated with reference to the net profits of
the Company in a particular financial year and is determined by the Board of
Directors at the end of the financial year based on the recommendations of the
Remuneration Committee, subject to the overall ceiling as stipulated in Sections 198
and 309 of the Companies Act, 1956.

Shareholders’/ Investors’ grievance committee:

To look into redressal of investors’ complaints and requests such as transfer of

shares/debentures, non-receipt of dividend, annual report, etc.
Based on the report received from the Company’s Registrars, the number of
Complaints received from shareholders comprises of correspondence identified as
complaints i.e. letter received through statutory/regulatory bodies and letter pertaining
to fraudulent encashment.

Existence of committees Rating

Audit Committee does not exist Disqualified
Any one of the following A
committees ( Remuneration
committee, Nomination committee,
Share transfer committee)
Any two of the following AA
committees (Remuneration
committee, Nomination committee,
Share transfer committee)
All three of the following AAA
committees (Remuneration
committee, Nomination committee,
Share transfer committee)

Thus the company has an Audit Committee, Remuneration Committee, Shareholders’

Committee as in accordance with corporate governance policy.

Statutory Compliance, Penalties and Strictures:

The Company has complied with the requirements of the Stock Exchanges/SEBI and
Statutory Authority on all matters related to capital markets during the last three
years. No penalties or strictures have been imposed on the Company by these
authorities.
Statutory Compliance & Rating
disclosure
Non compliance or partial Disqualified
compliance of statutory
requirements
Statutory compliance but with A
material qualification

Statutory compliance with no AA

material qualification

Statutory compliance ,no material AAA

qualification and quality of
presentation

Means of Communication:
• The quarterly results are published in the following Newspapers:
• Indian Express (English)
• Business Standard (English)
• Loksatta (Marathi)
• Sandesh (Gujarati)
• The financial results are displayed on www.tatachemicals.com.
• Management Discussion and Analysis forms part of the Annual Report.
• The official news releases, presentation made to the Shareholders at the Annual
General Meeting and the presentation made to analysts are posted on the Company’s
website.
Contents on the website of the Rating
company
No website Disqualified
Any two of the following( Annual A
reports, half yearly/quarterly
reports. investors’ services, other
financial & operating data, Share
price, News Update & information
on material development)
Any three of the following AA
Any five or more of the following AAA

Thus the Company has adopted almost all the means of communication as per
corporate governance policy.

Thus from the above analysis we find that the Company has complied with the
conditions of Corporate Governance as stipulated in Clause 49 of the Listing
Agreements.