MANAGEMENT DISCUSSION AND ANALYSIS REPORT (within the limits set by the Company's competitive position) Industry structure and developments, segment wise or product-wise performance, outlook, risks and opportunities of the Company and discussion on financial performance with respect to the operational performance, has been covered in the Board's Report - more specifically under the sections on Financial Results and State of Company's Affairs and Management Analysis, Exports, Business Development of the Company. The Company has an adequate system of internal controls to ensure that transactions are properly authorised, recorded, and reported, apart from safeguarding its assets. The internal control system is supplemented by well-documented policies, guidelines and procedures and reviews carried out by the Company's internal audit function, which submits reports periodically to the Management and the Audit Committee of the Board. In order to foster an improved internal control culture in the Company, wherein every employee is fully aware of all the major risk/controls faced in his / her work sphere and assumes responsibility for the controls performed therein, the Company has inter alia implemented a tool called "Controls Manager" which works on the basic concept of Control Self-Assessment. The Self-Assessments by process / control owner are also used as the basis of CEO/CFO certification as required under Regulation 17(8) of the Listing Regulations. During the year, there has been no material development in Human Resources / Industrial relations. Strong commitment and teamwork was exhibited by the employees of the Company during the complex and critical process of withdrawal, rebuild and relaunch of MAGGI Noodles portfolio. Your Company has a favourable work environment that motivates performance, customer focus and innovation while adhering to the highest degree of quality and integrity. As part of manpower development and training and with an aim to enhance operational efficiency, employees of the Company have been sent on postings and assignments to the other Nestle Group companies. Manpower figure of the Company as on 31st December, 2015 was 7,495. DISCLOSURES During the year 2015, the Company had no materially significant related party transaction, which is considered to have potential conflict with the interests of the Company at large. Transactions with related parties are disclosed in Note No. 40 to the Annual Accounts. The Company has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions. The said policy is also available on the website of the Company (web link <http://www.nestle.in/investors/policies>). The equity shares of the Company are listed on BSE Limited, Mumbai and the Company has complied with all the applicable requirements of capital markets and no penalties or strictures have been imposed on the Company by Stock Exchange, SEBI or any other statutory authority, on any matter relating to the capital markets, during the last three years. The standard of behaviour of Nestle India is governed by significant documents "Nestle Corporate Business Principles", "The Nestle Management and Leadership Principles" and "Nestle Code of Business Conduct". Employees can report to the Company Secretary, on a confidential basis, any practices or actions believed to be inappropriate or illegal under the Nestle India Code of Business Conduct ("the Code"). The Code provides for adequate safeguards against victimisation of director(s)/employee(s) who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases. It is affirmed that no person has been denied access to the Audit Committee. As an additional facility to all the Directors and Employees of the Company, the Company under the Code provides Integrity Reporting System, an independent third party operated free phone and web based facility for the directors and employees of the Company across all locations. Further, the Company has appointed Ombudsman for Infant Code, under which employees can report Infant Code violations directly to the Ombudsman, with adequate safeguard to protect the employee reporting. The Company has complied with all the mandatory requirements specified in Regulations 17 to 27 and clauses (b) to (i) of sub - regulation (2) of Regulation 46 of the Listing Regulations. This Corporate Governance Report of the Company for the year 2015 or as on 31st December, 2015 are in compliance with the requirements of Corporate Governance under Clause 49 of the Listing Agreement with BSE Limited or SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as applicable. The status of adoption of the non-mandatory requirements as specified in sub - regulation 1 of Regulation 27 of the Listing Regulations are as follows: (a) The Board : The Chairman of the Company is Executive Chairman; (b) Shareholder Rights: Half-yearly and other quarterly financial statements are published in newspapers, uploaded on Company's website www.nestle.in and sent in soft copy to members who have registered their email address with the Company; (c) Modified opinion(s) in audit report: The Company already has a regime of un-qualified financial statements. Auditors have raised no qualification on the financial statements; (d) Separate posts of Chairperson and CEO: Mr. Suresh Narayanan is the Chairman and Managing Director of the Company; and (e) Reporting of Internal Auditor: The Chief Internal Auditor of the Company reports to the Director - Finance and Control & CFO and has direct access to the Audit Committee. Suresh Narayanan Chairman and Managing Director REMUNERATION POLICY This Remuneration Policy relating to remuneration for the directors, key managerial personnel and other employees, has been formulated by the Nomination and Remuneration Committee (hereinafter "Committee") and approved by the Board of Directors. OBJECTIVES: The objectives of this policy is to stipulate criteria for: • Appointment, re-appointment, removal of Directors, KMPs and Senior Management. • Determining qualifications, positive attributes and independence of a director and recommend to the Board. • Retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage to run the operations of the Company successfully. • Consider and determine the remuneration, based on the fundamental principles of payment for performance, for potential, and for growth. CRITERIA FOR APPOINTMENT The appointment shall be based on the followings criteria: • Ethical standards of integrity and probity, qualification, expertise and experience of the person for appointment. • Age, number of years of service, specialized expertise and period of employment or association with the Company. • Special achievements and Operational Efficiency which contributed to growth in business in the relevant functional area. • Constructive and active participation in the affairs of the Company. • Exercising the responsibilities in a bona fide manner in the interest of the Company. • Sufficient devotion of time to the assigned tasks. • Diversity of the Board. • Demonstrable leadership qualities and interpersonal communication skills, devote to the role, compliant with the rules, policies and values of the Company and does not have any conflicts of interest. • Transparent, unbiased and impartial and in accordance with appropriate levels of confidentiality. • Appointment of Directors and KMPs in compliance with the procedure laid down under the provisions of the Companies Act, 2013, rules made thereunder or any other enactment for the time being in force. CRITERIA FOR REMUNERATION The Remuneration Policy reflects on certain guiding principles of the Company such as aligning remuneration with the longer term interests of the Company and its shareholders, promoting a culture of meritocracy and creating a linkage to corporate and individual performance, and emphasizing on line expertise and market competitiveness so as to attract the best talent. It also ensures the effective recognition of performance and encourages a focus on achieving superior operational results. The level and composition of remuneration shall be reasonable and sufficient to attract, retain and motivate the directors, key managerial personnel and other employees of the quality required to run the Company successfully. The relationship of remuneration to performance should be clear and meet appropriate performance benchmarks. The remuneration to directors, key managerial personnel and senior management personnel should also involve a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the Company and its goals. The remuneration of the Non-Executive Directors shall be based on their contributions and current trends, subject to regulatory limits. Sitting fees is paid for attending each meeting(s) of the Board and Committees thereof. Additionally, equal amount of commission is paid to Nonexecutive directors on a pro-rata basis, within limits approved by the shareholders. On behalf of the Board of Directors Suresh Narayanan Chairman and Managing Director Place : Gurgaon Date :12th February, 2016 |