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Binny Mills Ltd.

BSE: 535620 Sector: Others
NSE: N.A. ISIN Code: INE160L01011
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NSE 05:30 | 01 Jan Binny Mills Ltd
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VOLUME 355
52-Week high 404.00
52-Week low 198.50
P/E 60.48
Mkt Cap.(Rs cr) 76
Buy Price 226.20
Buy Qty 3.00
Sell Price 236.95
Sell Qty 4.00
OPEN 220.00
CLOSE 215.55
VOLUME 355
52-Week high 404.00
52-Week low 198.50
P/E 60.48
Mkt Cap.(Rs cr) 76
Buy Price 226.20
Buy Qty 3.00
Sell Price 236.95
Sell Qty 4.00

Binny Mills Ltd. (BINNYMILLS) - Director Report

Company director report

To the Members

Your Directors have pleasure in presenting the Tenth Annual Report and the AuditedAccounts of your company for the year ended 31st March 2017.

FINANCIAL RESULTS

31st March 2017 31st March 2016
Rs. Rs.
Revenue from operations & other income 91939708 79869541
Profit before Depreciation and extraordinary item 11827404 10148167
Depreciation 315184 316500
Profit before Tax and extraordinary item 11512220 9831667
Extraordinary item* 3952697 -
Profit after extraordinary item before Tax 7559523 9831667
Provision for Tax (including Deferred tax) 3806212 3685873
Profit after Tax 3753311 6145794

* Extraordinary item of expense pertains to prior period electricity charges paidduring the first quarter of the financial year.

OPERATIONS

As the members may be aware pursuant to the Demerger Scheme of Binny Ltd the Agenciesand Services Undertaking of Binny Ltd was transferred to and vested in the Company witheffect from 1st Jan 2010 the Appointed Date as per the Demerger Scheme.

The company operates in 4 divisions' viz. Warehousing Showrooms Agencies and Bintex.The Warehousing division has rented its warehouses and is deriving rental income from it.The Showrooms are engaged in retail selling of textile materials. The Agencies division isengaged in the business of selling Tarpaulin rain coats and bags. The Bintex division isengaged in selling textile materials particularly uniform materials bed spreads andother textile varieties.

For the year 2016-17 the Rental income from Warehousing division was Rs.199.58 lakhsas against Rs. 208.36 lakhs in the previous year a marginal decrease by about 4%. Thesales made by the Showrooms division was Rs.165.94 lakhs as against Rs. 107.45 lakhs inthe previous year the Agencies division did not make any sale during the year as also inthe previous year and the Bintex division Rs.543.58 lakhs as against Rs. 470.89 lakhs inthe previous year.

The aggregate amount of revenue from Rent Sales and operating income were Rs.919.40lakhs as against Rs. 798.70 lakhs in the previous year. The Company has earned a NetProfit (before tax) of Rs.75.59 lakhs as against Rs. 98.31 lakhs in the previous aftersetting off an extraordinary item of expense of Rs.39.53 lakhs pertaining to prior periodelectricity charges paid during the first quarter of the financial year and a Net Profit(after tax) of Rs.37.53 lakhs as against a Net Profit of Rs. 61.45 lakhs in the previousyear.

PREFERENCE SHARES

The 281418142 (9%) CRPS of Rs.5/- each aggregating to Rs.1407090710/- areredeemable on or before 12th May 2020.

Preference share dividend is payable on the CRPS from the date of original allotment ofshares by Binny Ltd. The holders of the CRPS have preferential right to dividend over theequity share holders as and when dividend is declared by the company. The Preferenceshare dividend in arrears for 9% CRPS as at 31st March 2017 isRs.1277736038/-.

Since the Company is in the process of consolidating its operations the company couldnot find enough resources to pay dividend this year. Hence the company is notrecommending preference dividend this year.

DIVIDEND ON EQUITY SHARES

As stated for Preference Dividend since the Company is in the process of consolidatingits operations the company could not find enough resources to pay dividend this year.Hence the company is not recommending dividend on the equity shares this year.

COMPANY'S PERFORMANCE

Considering the difficult macro-economic conditions and challenging businessenvironment the Company's performance during the year under review was satisfactory.

FUTURE PLANS

The Company has plans to improve its sales performance in the Textile Division byfocusing on whole sale customers while retaining the existing retail customers. TheCompany has plans to procure bulk orders for its Textile division in order to improve thesales and profit. The Company has plans to modernize its showrooms at Bangalore andKolkata to attract new customers for its retail textile sale.

ECONOMIC AND BUSINESS ENVIRONMENT

Ahead of the G-20 (Group of Twenty Nations) meeting held recently in Germany to takestock of the Global economy the International Monetary Fund (IMF) has said that theIndia's growth outlook has improved as the impact of the last year's demonetizationexercise seems to be fading with the key structural reforms paying off. In April 2017IMF had predicted India to grow at 7.2% in Financial Year 2017-18 and at 7.7% in theFinancial Year 2019-20. Earlier in the January to March 2017 quarter India's growth ratehas gone down to 6.18% due to demonetization declared in November 2016.

The Government's emphasis on skill building with the Make in India Start-up India andDigital India initiatives are expected to show results in the days to come. As a result wecan safely expect to have a bank of 500 million trained manpower by 2020. They will befueled by quality education and the spirit of entrepreneurship. The Goods and Services Tax(GST) being dubbed as the single biggest tax reform in the country was rolled out from 1stJuly 2017. While GST is ‘theoretically' good from the consumer point of viewparticularly in eliminating multiple taxation and providing seamless input tax creditdoubts persist on its proper implementation.

The Demonetisation of the Specified Bank Notes (SBN's) during November – December2016 is said to be a landmark economic reform. It needs to be seen what effect it has onthe medium and small industries. The informal sector of the economy undeniably has beenhit by it.

OUTLOOK AND OPPORTUNITIES

Your directors expect that with stable government in the Centre estimates of betterGDP growth rate the Company's strong business model innovative fund management andmarketing techniques continued confidence and support of the lending institutions to theCompany's fund mobilization activities on account of good track record of debt servicingcontinued confidence and support of the customers and suppliers your Company shouldachieve better performance in the year 2017-18.

BOARD OF DIRECTORS

Director retiring by rotation:

Shri V. R. Venkataachalam Director (DIN 00037524) retires by rotation at thisAnnual General Meeting and being eligible offers himself for reappointment.

Director appointment made during the year:

Ms. V. Samyuktha [DIN 02691981] who was appointed as an Additional Director of theCompany with effect from 25th May 2017 by the Board of Directors pursuant toArticle 87 of the Articles of Association of the Company and Section 161 of the CompaniesAct 2013 ("the Act") holds office up to the date of the ensuing 10thAnnual General Meeting and being eligible for appointment as Director of the Companypursuant to Section 152 of the Act read with the Companies (Appointment and Qualificationsof Directors) Rules 2014 offers herself for appointment as director of the Company. TheCompany has received a notice in writing from a member under Section 160 of the Actproposing the candidature of Ms. V. Samyuktha for the office of Director of the Company.The appointment if made will be in the category of Non Independent Director and WomanDirector liable to retirement by rotation.

A brief resume of the directors including therein the nature of their expertise infunctional areas inter-se relationship with other directors names of other listedentities in which they also hold directorship and membership of Committees of the Boardand their shareholding in the Company as required under regulation 36 (3) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is given in theReport on Corporate Governance which forms part of the Annual Report.

Present term of office of Managing Director:

The present term of appointment of Shri V. Rajasekaran as Managing Director of theCompany is up to 12th May 2020.

DISCLOSURES AS PER SECTION 134 OF THE COMPANIES ACT 2013 READ WITH RULE 8(5) OF THECOMPANIES (ACCOUNTS) RULES 2014

Extract of Annual Return:

The extract of the Annual Return in the Form MGT 9 is annexed to the Directors' Reportas Annexure I.

Number of meetings of the Board:

There were four Board meetings held during the year. The details of the Board meetingsand the Committee meetings are given in the Report on Corporate Governance which formspart of the Annual Report.

Directors' Responsibility Statement:

To the best of their knowledge and belief and according to the confirmation andexplanations obtained by them your Directors make the following statement in terms ofSection 134(5) of the Companies Act 2013. i) That in the preparation of the AnnualAccounts for the year ended 31st March 2017 the applicable AccountingStandards had been followed along with proper explanation for material departures if any;ii) That the selected accounting policies were applied consistently and judgements andestimates that are reasonable and prudent were made so as to give a true and fair view ofthe state of affairs of the Company as at the end of the financial year ended 31stMarch 2017 and of the profit of the Company for that period; iii) That proper andsufficient care has been taken for the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safe guarding the assets ofthe Company and for preventing and detecting frauds and other irregularities; iv) That theannual accounts for the year ended 31st March 2017 had been prepared on a going concernbasis. v) Internal financial controls had been laid down to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and;vi) Proper systems to ensure compliance with the provisions of all applicable laws hadbeen devised and that such systems were adequate and operating effectively.

Declaration by Independent Directors:

The Board has received the declaration from all the Independent Directors as per therequirement of section 149(7) of the Companies Act 2013 and the Board is satisfied thatall the Independent Directors meet the criterion of independence as mentioned in section149(6) of the Companies Act 2013.

Company's policy on Directors appointment and remuneration:

In accordance with section 178(4) of the Companies Act 2013 and pursuant to Part D ofSchedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (henceforth referred to as ‘the Listing regulations') the Nomination andRemuneration Committee has put in place the policy on diversity of Board of directors forappointment of directors taking into consideration the qualification and wide experienceof the directors in the fields of textiles trading banking finance administration andlegal apart from compliance of legal requirements of the Company. The policy on diversityof Board of directors is annexed to the Directors' Report as Annexure II.

The Nomination and Remuneration Committee has laid down remuneration criteria for thedirectors key managerial personnel and other employees in the Nomination and RemunerationPolicy. It has also laid down in the Nomination and Remuneration Policy the evaluationcriteria for performance evaluation of the directors including independent directors. TheNomination and Remuneration Policy is annexed to the Directors' Report as Annexure IIIpursuant to section 178(4) of the Companies Act 2013.

Explanations or comments by the Board on every qualification reservation or adverseremark or disclaimer made in the Auditors' Report and in the Secretarial Audit Report:

The Auditors' Report to the Shareholders for the year under review does not contain anyqualification reservation or adverse remark or disclaimer. The Secretarial Audit Reportgiven by a Company Secretary in practice states that the Company has to appoint KeyManagerial Personnel as prescribed under section 203 of the Companies Act 2013 and theRules made thereunder. The Company is advised to appoint one more independent Director andfill up the vacancy caused by the resignation of Women Director. The Company has appointeda Woman Director on 25th May 2017.The Company is taking all effective steps toappoint the Key Managerial Personnel and an Independent Director.

Particulars of loans guarantees or investments under section 186 of the Companies Act2013:

There are no loans made guarantees given or security provided or securities of anyother body corporate acquired during the year under section 186 of the Companies Act2013.

Particulars of contracts or arrangements with related parties:

The Related Party Transactions (RPT's) entered into by the Company are given in NoteNo.36 of the Notes on Accounts attached to the Financial Statements forming part of thisAnnual Report. These transactions were entered into in the ordinary course of business andon an arm's length basis and were in compliance with the provisions of the Companies Act2013 and Regulation 23 of the Listing Regulations. There are no contracts or arrangementswith Related Parties referred to in section 188 (1) of the Companies Act 2013. There areno materially significant related party transactions made by the Company with thePromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large. None of the directors haveany pecuniary relationships or transactions with the Company except for the payment ofsitting fees. There are no particulars of RPT's to be disclosed in Form AOC-2.

The statement of RPT's is placed before the Audit Committee and the Board on aquarterly basis. Omnibus approval was obtained for the transactions of repetitive nature.

The Policy on Materiality of Related Party Transactions and dealing with Related PartyTransactions as approved by the Board is uploaded on the Company's websitewww.bmlindia.com

The state of the Company's affairs:

The state of the Company's affairs is explained in the paragraph ‘operations' inthe Directors' Report.

The amount if any carried to reserves:

The Company has not transferred any amount to reserves.

The amount if any which it recommends should be paid by way of dividend:

The Board is not recommending payment of any dividend on the Preference shares and theequity shares issued by the Company.

Material changes and commitments if any affecting the financial position of theCompany which have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of report:

There are no material changes and commitments affecting the financial position of theCompany that have occurred between the end of the financial year of the Company to whichthe financial statements relate and the date of report viz. for the period from 31stMarch 2017 to 11th August 2017.

Conservation of energy technology absorption foreign exchange earnings and outgo:

The information pursuant to section 134(3) (m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is as follows: a. The Company has noactivity involving conservation of energy or technology absorption. b. The Company doesnot have any foreign exchange earnings and outgo.

Risk Management Policy:

The Company has framed a Risk Management Policy to identify communicate and managematerial risks across the organisation. The policy also ensures that responsibilities havebeen appropriately delegated for risk management. Key Risk and mitigation measures areprovided in the Management Discussion and Analysis Report attached to the Directors'Report.

The details about the policy developed and implemented by the Company on CorporateSocial Responsibility initiatives taken during the year:

The provisions of section 135 of the Companies Act 2013 are not applicable to theCompany. Hence the Company has no Corporate Social Responsibility Policy. Howeverpursuant to good corporate governance practice your company demands adherence of socialresponsibility coupled with creation of value in the larger interest of the society. Yourcompany and its dedicated employees continue to contribute towards several worthwhilecauses. Your company aims to enhance the quality of life of the community in general andhas a strong sense of social responsibility. Your Company and its employees haveparticipated in welfare activities of the community.

Statement indicating the manner in which formal annual evaluation has been made by theBoard of its own performance and that of its committees and individual directors:

Pursuant to the provisions of the Companies Act 2013 and regulation 17(10) of theListing Regulations the Board has carried out an annual performance evaluation of its ownperformance the directors individually as well as the evaluation of the working of itsvarious Committees. The manner in which the evaluation has been carried out has beenexplained in the Report on Corporate Governance.

The financial summary or highlights:

The financial summary is given in the Paragraph ‘Financial Results' in theDirectors' Report.

The change in the nature of business if any: There is no change in the nature ofbusiness.

The details of directors or key managerial personnel who were appointed or haveresigned during the year:

There were no directors or key managerial personnel who were appointed or have resignedduring the year.

The names of companies which have become or ceased to be Subsidiaries joint venturesor associate companies during the year:

There are no companies which have become or ceased to be Subsidiaries joint venturesor associate companies during the year.

The details relating to deposits covered under Chapter V of the Companies Act 2013and details of deposits which are not in compliance with the requirements of Chapter V ofthe Companies Act 2013:

The company has not accepted any deposits covered under Chapter V of the Companies Act2013.

The details of significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future: Thereare no significant and material orders passed by the regulators or courts or tribunalsimpacting the going concern status and Company's operations in future.

The details in respect of adequacy of internal financial controls with reference to theFinancial Statements: The Company's well defined organizational structure documentedpolicy guidelines defined authority matrix and internal financial controls ensureefficiency of operations protection of resources and compliance with the applicable lawsand regulations. Moreover the Company continuously upgrades its systems and undertakesreview of policies. The internal financial control is supplemented by regular reviews bymanagement and standard policies and guidelines to ensure reliability of financial and allother records to prepare the financial statements and other data. The Audit Committeereviews the internal financial controls and also monitors the implemented suggestions.

Disclosure under section 22 of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.

During the year under review there were no cases filed under the Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013.

DISCLOSURES BY A LISTED COMPANY UNDER RULE 5(1) OF THE COMPANIES (APPOINTMENT ANDREMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014 The ratio of the remuneration of eachdirector to the median remuneration of the employees of the company for the financial year:Since no director of the Company is in receipt of remuneration from the Company there areno particulars to be furnished.

The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year:

There is no increase in the remuneration to the aforesaid personnel in the financialyear 2016-17.

The percentage increase in the median remuneration of employees in the financial year:

There is no increase in the median remuneration of employees in the financial year2016-17.

The number of permanent employees on the rolls of the Company:

There are 12 permanent employees on the rolls of the Company as at 31stMarch 2017.

Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year viz. 2016-17 and its comparison with thepercentile increase in the managerial remuneration:

There is no managerial remuneration paid during the financial year 2016-17. There wasno increase in the salaries of employees during the financial year 2016-17.

The key parameters for any variable component of remuneration availed by the directors:

The directors were not paid any remuneration during the financial year 2016-17.

STATEMENT OF EMPLOYEES' PARTICULARS

The particulars required to be furnished under Rule 5(2) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 is as follows: During the year thereare no employees drawing remuneration of Rs.60 lakhs or more per annum or Rs.5 lakhs ormore per month or was in receipt of remuneration which neither in the aggregate nor at arate which in the aggregate is in excess of that drawn by the Managing Director orholding either by himself or along with his spouse and dependent children not less than2% of the equity shares of the Company.

AUDITORS

M/s T. Selvaraj & Co. Chartered Accountants Chennai (Firm Registration No.003703S) the auditors of the company retire at the conclusion of the ensuing AnnualGeneral Meeting. The existing auditors M/s T. Selvaraj & Co. Chartered AccountantsChennai are not eligible for re-appointment as the auditors for the year 2017-2018pursuant to the provisions of rotation of auditors as specified in section 139 (2) of theCompanies Act 2013 as they have completed two terms of five consecutive years each asprovided therein.

It is proposed to appoint M/s N S R & Co. Chartered Accountants Chennai (FirmRegistration No. 010522S) as the auditors of the Company (in the place of M/s. T. Selvaraj& Co. Chartered Accountants Chennai (Firm Registration No. 003703S) the retiringauditor whose tenure expires at the conclusion of the ensuing Annual General Meeting).The appointment of new auditor is made pursuant to the provisions of Sections 139 142 andother applicable provisions if any of the Companies Act 2013 and the Companies (Auditand Auditors) Rules 2014 (including any statutory modification(s) or re-enactmentthereof for the time being in force) and pursuant to the recommendation of the AuditCommittee and the Board of Directors. The Company has received written consent from M/s NS R & Co. Chartered Accountants Chennai (Firm Registration No. 010522S) for beingappointed as the auditor of the Company subject to the shareholders' approval of theappointment at the ensuing 10th Annual General Meeting as provided in section139(1) of the Companies Act 2013.

The Company has also received a Certificate from M/s N S R & Co. CharteredAccountants Chennai (Firm Registration No. 010522S) pursuant to section 139 of theCompanies Act 2013 read with Rule 4 of the Companies (Audit and Auditors) Rules 2014 inrespect of the matters specified in those Rules.

Certificate has also been received from them to the effect that their appointment asauditors of the Company if made would be within the limits prescribed under Sections 139& 141 of the Companies Act 2013. They have also confirmed that they hold a valid peerreview certificate as prescribed under regulation 33(1) (d) of the Listing Regulations.

The Directors recommend their appointment. Members are requested to consider theirappointment. If appointed they shall hold office from the conclusion of this 10thAnnual General Meeting till the conclusion of 15th Annual General Meeting ofthe Company (subject to ratification of their appointment by Members at every AnnualGeneral Meeting till the 14th Annual General Meeting) for conducting the auditof the Company for a term of five consecutive years commencing from 1st April2017.

The Auditors' Report to the Shareholders for the year under review does not contain anyqualification.

SECRETARIAL AUDIT

The Board had appointed Shri K. Elangovan M/s Elangovan Associates CompanySecretaries in Practice Chennai (Certificate of Practice No.3552) Membership No. (FCS1808) to carry out Secretarial Audit under the provisions of section 204 of the CompaniesAct 2013 for the financial year 2016-17. The Secretarial Audit Report is annexed to thisreport as Annexure IV.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

Pursuant to section 177 (9) and (10) of the Companies Act 2013 and regulation 22 ofthe Listing regulations the Company has formulated and established a Whistle BlowerPolicy / Vigil Mechanism providing a mechanism under which an employee and director of theCompany may report violation of personnel policies of the Company unethical behaviorsuspected or actual fraud violation of Company's code of conduct or ethics policy.

The Vigil Mechanism provides for adequate safeguards against victimization of directors/ employees who avail of the mechanism and also provide for direct access to the Chairmanof the Audit Committee in exceptional cases. It also ensures standards of professionalismhonesty integrity and ethical behavior. The Whistle Blower Policy / Vigil Mechanism isuploaded on the Company's website www.bmlindia.com

ANNEXURES TO THE DIRECTORS' REPORT

1. The Extract of Annual Return in Form MGT-9 – Annexure I

2. The Policy of Board Diversity – Annexure II

3. The Nomination and Remuneration Policy – Annexure III

4. Secretarial Audit Report – Annexure IV; and

5. Auditors' Certificate on Corporate Governance Compliance – Annexure V

ATTACHMENTS TO THE DIRECTORS' REPORT The Management Discussion and Analysis Report

The Management Discussion and Analysis Report pursuant to regulation 34 (2) (e) andSchedule V of the listing regulations is given as a separate Report and this report ispart of the Directors' Report.

The Report on Corporate Governance

The Report on Corporate Governance pursuant to regulation 34 (3) and Schedule V of thelisting regulations together with Auditors' Certificate on Corporate Governance thecertificate duly signed by the Managing Director on the Financial Statements of theCompany for the year ended 31st March 2017 as submitted to the Board ofDirectors at their meeting held on 25th May 2017 and the declaration by theManaging Director regarding compliance by the Board members and senior managementpersonnel with the Company's Code of Conduct is included as a separate section in theAnnual Report.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation for the continued co-operation andsupport extended by all concerned persons and authorities for the smooth and efficientfunctioning of the Company.

For and on behalf of the Board
V.R. Venkataachalam
Chairman
Registered Office:
No.4 (Old No.10) Karpagambal Nagar
Mylapore
Chennai 600 004.
Date: 11th August 2017

POLICY ON BOARD DIVERSITY

1. Purpose

Pursuant to Part D of Schedule II of the Listing regulations (in Para A (3)) theCompany has framed a formal policy on Board Diversity which sets out a framework topromote diversity on Company's Board of Directors (the ‘Board').

2. Vision

The Company recognizes the importance and benefits of having a diverse Board to enhancequality of its performance.

3. Policy Statement

The Company believes that a diverse Board will enhance the quality of the decisionsmade by the Board by utilizing the different skills qualification professionalexperience gender knowledge etc. of the members of the Board necessary for achievingsustainable and balanced development. For appointments of persons to office of directorsand deciding composition of the Board the Nomination and Remuneration Committee and theBoard shall also have due regard to this policy on Board Diversity. In this process theNomination and Remuneration Committee and the Board will take into considerationqualification and wide experience of the directors in the fields of textilesmanufacturing finance regulatory administration and legal segment apart from complianceof legal and contractual requirements of the Company.

The total number of directors constituting the Board shall be in accordance with theArticles of Association of the Company. The Board of Directors of the Company shall haveoptimum combination of executive and non-executive directors with at least one womandirector and the composition of the Board shall be in accordance with requirements of theArticles of Association of the Company the Companies Act 2013 the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 the statutory regulatory andcontractual obligations of the Company.

4. Review of Policy

The Nomination and Remuneration Committee will review the policy from time to time andmake recommendations on any required changes to the Board for consideration and approval.

ANNEXURE III

BINNY MILLS LIMITED

CIN: L 17120TN2007PLC065807

REGISTERED OFFICE: No.4 Karpagambal Nagar Mylapore Chennai 600004

BINNY MILLS LIMTED – NOMINATION AND REMUNERATION POLICY RELATING TO THEREMUNERATION FOR THE DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES (Pursuant tosection 178 (4) of the Companies Act 2013) Constitution of Nomination and RemunerationCommittee

Section 178 of the Companies Act 2013 read with Rule 6 of Companies (Meetings of Boardand its Powers) Rules 2014 and the provisions of Regulation 19 and Part D of Schedule IIof the Listing Regulations requires the Board of Directors of every listed company toconstitute the Nomination and Remuneration Committee. The Nomination and RemunerationCommittee shall consist of three or more non-executive directors out of which not lessthan one-half shall be independent directors. The Chairperson of the Nomination andRemuneration Committee shall be an independent director.

Principle and Rationale:

The Role of the Nomination and Remuneration Committee shall be as follows:

- Formulate the criteria for determining qualifications positive attributes andindependence of a director and recommend to the Board a policy relating to theremuneration for the directors key managerial personnel and other employees.

- Identify persons who are qualified to become directors and who may be appointed insenior management in accordance with the criteria laid down recommend to the Board theirappointment and removal.

- Carry out evaluation of every director's performance.

- Formulate the criteria for evaluation of performance of Independent Directors and theBoard.

- Whether to extend or continue the term of appointment of the independent director onthe basis of the report of performance evaluation of Independent Directors.

Accordingly in adherence to the above said requirements and in line with the Company'sphilosophy towards nurturing its human resources the Nomination and RemunerationCommittee of the Board of Directors of Binny Mills Limited herein below recommends to theBoard of Directors for its adoption the Nomination and Remuneration Policy for thedirectors key managerial personnel and other employees of the Company as set out below:

Company Philosophy:

Binny Mills Ltd is an organisation committed to paying fair remuneration to itsemployees matching the responsibilities and performance. The organisation does notdiscriminate on grounds of age gender colour race ethnicity language caste creedeconomic or social status or disability. The Company's committed workforce spread acrossits corporate office and factory locations which has over the years transformed BinnyMills Ltd into a consistent growing organisation forms the backbone of the Company.

Pay revisions and other benefits are designed in such a way to compensate goodperformance of the employees of the Company and motivate them to do better in future.

Employee recognition schemes in the form of Production incentive and Service award havealso been introduced as successful tools in acknowledging their contribution.

The endeavour of the company is to acknowledge the contributions of its directors keymanagerial personnel and other employees with best compensation and benefits thatappropriately rewards performance in line with the regulatory and industry best practices.

Guiding Principles:

In the formulation of this Policy the Nomination and Remuneration Committee has alsoendeavoured to ensure the guiding principles as prescribed u/s 178(4) of the CompaniesAct 2013and Part D of Schedule II of the Listing Regulations are summarized hereunder:a) the level and composition of remuneration is reasonable and sufficient to attractretain and motivate human resource including directors of the quality required to run thecompany successfully; b) Relationship of remuneration to performance is clear and meetsappropriate performance benchmarks; c) Remuneration to directors key managerial personneland senior management involves a balance between fixed and incentive pay reflecting shortand long-term performance objectives appropriate to the working of the company and itsgoals; d) Facilitating effective shareholder participation in key Corporate Governancedecisions such as the nomination and election of board members; e) Aligning key executiveand board remuneration with the longer term interests of the company and its shareholders;f) Ensuring a transparent board nomination process with the diversity of thoughtexperience knowledge perspective and gender in the Board.

Nomination of the Directors:

The Nomination and Remuneration Committee of the Board of Directors is dedicated toensuring the continuance of a dynamic and forward-thinking Board and recommend to theBoard qualified candidates for directorship.

Before recommending a nominee's candidature to the Board for being appointed as aDirector the following criteria set out may be applied as guidelines in consideringpotential nominees to the Board of Directors. General Criteria a) The background andqualifications of the Directors considered as a group should provide a significantcombination of experience knowledge and abilities to assist the Board in fulfilling itsresponsibilities. b) Directors should be so selected such that the Board of Directorsshould remain as a diverse body with diversity reflecting gender ethnic background andprofessional experience. Because a mix of viewpoints and ideas enhances the Board'sability to function effectively the Committee shall consider the diversity of theexisting Board when considering potential nominees so that the Board maintains a body ofdirectors from diverse professional and personal backgrounds. c) Potential nominees shallnot be discriminated against on the basis of race religion national origin sexdisability or any other basis prohibited by law. d) Any nominee should be free of anyconflict of interest which would violate any applicable law or regulation or interferewith the performance of the responsibilities of a director. e) Commitment of the nomineeto understanding the Company and its industry embracing the Company's values to helpshape its vision mission and strategic direction including oversight of risk managementand internal control. f) Commitment of the nominee to spending the time necessary tofunction effectively as a Director including attending and participating in Boardmeetings and its Committee meetings.

Specific Criteria a) Demonstrated business acumen experience and ability to use soundjudgment and to contribute to the effective oversight of the business and financialaffairs of a large or medium sized multifaceted Indian Company. b) The nominee reflectsthe right corporate tone and culture and excels at board-management relationships. c)Experience in strategic planning and managing multidisciplinary responsibilities theability to navigate among diverse professional groups and points of view a track recordof communicating effectively in a global environment and high standards of integrity andprofessional conduct. d) Nominees understand and endeavour to balance the interests ofshareholders and / or other stakeholders and put the interests of the company aboveself-interest. He/she has demonstrated a commitment to transparency and disclosure. e) He/she is committed to superior corporate performance consistently striving to go beyond thelegal and/or regulatory governance requirements to enhance not just protect shareholdervalue. f) Nominee contributes to effective governance through superior constructiverelationships with the Executive Directorate and management.

Remuneration of the Directors:

The Company strives to provide fair compensation to directors taking intoconsideration industry benchmarks Company's performance vis--vis the industryresponsibilities shouldered performance/ track record macroeconomic review onremuneration packages of heads of other similar sized companies. The remuneration payableto the directors of the company shall at all times be determined in accordance with theprovisions of Companies Act 2013.

Appointment and Remuneration of Managing Director and Whole time- Director:

The terms and conditions of appointment and remuneration payable to the ManagingDirector and the Whole-time Director(s) shall be recommended by the Nomination andRemuneration Committee to the Board for its approval which shall be subject to approval byshareholders at the next general meeting of the Company and by the Central Government incase such appointment is at variance to the conditions specified in Schedule V to theCompanies Act 2013. Approval of the Central Government is not necessary if theappointment is made in accordance with the conditions specified in Schedule V to the Act.

In terms of the provisions of Companies Act 2013 the Company may appoint a person asits Managing Director or Whole-time Director for a term not exceeding 5 (years) at a time.The executive directors may be paid remuneration either by way of a monthly payment or ata specified percentage of the net profits of the Company or partly by one way and partlyby the other.

The break-up of the pay scale performance bonus and quantum of perquisites includingemployer's contribution to P.F pension scheme medical expenses club fees etc. shall bedecided and approved by the Board on the recommendation of the Committee and shall bewithin the overall remuneration approved by the shareholders and Central Governmentwherever required.

While recommending the remuneration payable to a Managing/ Whole-time Director theNomination and Remuneration Committee shall inter alia have regard to the followingmatters:

* Financial and operating performance of the Company

* Relationship between remuneration and performance

* Industry/ sector trends for the remuneration paid to similar executives.

Annual Increments to the Managing/ Whole Time Director(s) shall be within the slabsapproved by the Shareholders. Increments shall be decided by the Nomination andRemuneration Committee at times it desires to do so but preferably on an annual basis.

Insurance Premium as Part of Remuneration:

Where any insurance is taken by a company on behalf of its managing directorwhole-time director manager Chief Executive Officer Chief Financial Officer or CompanySecretary for indemnifying any of them against any liability in respect of any negligencedefault misfeasance breach of duty or breach of trust for which they may be guilty inrelation to the company the premium paid on such insurance shall not be treated as partof the remuneration payable to any such personnel.

However if such person is proved to be guilty the premium paid on such insuranceshall be treated as part of the remuneration.

Remuneration of Independent Directors:

Independent Directors may receive remuneration by way of

* Sitting fees for participation in the Board and other meetings

* Reimbursement of expenses for participation in the Board and other meetings

* Commission as approved by the Shareholders of the Company

Independent Directors shall not be entitled to any stock options

Based on the recommendation of the Nomination and Remuneration Committee the Board maydecide the sitting fee payable to independent directors. Provided that the amount of suchfees shall not exceed the maximum permissible under the Companies Act 2013.

Remuneration to Directors in other capacity:

The remuneration payable to the directors including managing or whole-time director ormanager shall be inclusive of the remuneration payable for the services rendered by him inany other capacity except the following: (a) The services rendered are of a professionalnature; and (b) In the opinion of the Nomination and Remuneration Committee the directorpossesses the requisite qualification for the practice of the profession.

Evaluation of the Directors:

As members of the Board the performance of the individual Directors as well as theperformance of the entire Board and its Committees is required to be formally evaluatedannually.

Section 178 (2) of the Companies Act 2013 also mandates the Nomination andRemuneration Committee to carry out evaluation of every director's performance.

In developing the methodology to be used for evaluation on the basis of best standardsand methods meeting international parameters the Board / Committee may take the advice ofan independent professional consultant.

Nomination and Remuneration of the Key Managerial Personnel (other than Managing /whole time directors) key executives and senior management:

The executive management of a company is responsible for the day to day management of acompany. The Companies Act 2013 has used the term "key managerial personnel"(KMP) to define the executive management. The KMPs are the point of first contact betweenthe company and its stakeholders. While the Board of Directors are responsible forproviding the oversight it is the key managerial personnel and the senior management whoare responsible for not just laying down the strategies but for its implementation aswell. The Companies Act 2013 has for the first time recognized the concept of KeyManagerial Personnel. As per section 2(51) "key managerial personnel" inrelation to a company means—(i) The Chief Executive Officer or the managing directoror the manager; (ii) The whole-time director; (iii) The Chief Financial Officer; (iv) Thecompany secretary; and (v) Such other officer as may be prescribed.

Among the KMPs the remuneration of the CEO or the Managing Director and the Whole timeDirector(s) shall be governed by the Section on Remuneration of the Directors ofthis Policy dealing with "Remuneration of Managing Director and Whole time-Director".

Apart from the directors the remuneration of

* All the Other KMPs such as the company secretary or any other officer that may beprescribed under the statute from time to time; and

* "Senior Management" of the Company defined in the clause 49 of the ListingAgreement with the Stock Exchanges i.e. personnel who are members of its core managementteam excluding the Board of Directors. Senior executives one level below the Board i.e.President cadre Shall be determined by the Human Resources Department of the Company inconsultation with the Managing Director and/ or the Whole time Director.

The remuneration determined for all the above said senior personnel shall be in linewith the Company's philosophy to provide fair compensation to key - executive officersbased on their performance and contribution to the Company and to provide incentives thatattract and retain key executives instill a long-term commitment to the Company anddevelop a pride and sense of Company ownership all in a manner consistent withshareholder interests.

The break-up of the pay scale and quantum of perquisites including employer'scontribution to P.F pension scheme medical expenses club fees etc. shall be decided bythe Company's HR department.

Decisions on Annual Increments of the Senior Personnel shall be decided by the HumanResources Department in consultation with the Managing Director and/ or the Whole timeDirector of the Company.

Remuneration of other employees:

Apart from the Directors KMPs and Senior Management the remuneration for rest of theemployees is determined on the basis of the role and position of the individual employeeincluding professional experience responsibility job complexity and local marketconditions.

The Company considers it essential to provide incentives to the workforce to ensureadequate and reasonable compensation to the staff. The Human Resources Department shallensure that the level of remuneration motivates and rewards high performers who performaccording to set expectations for the employee.

The various remuneration components basic salary allowances perquisites etc. may becombined to ensure an appropriate and balanced remuneration package. The annual incrementsto the remuneration paid to the employees shall be determined based on the annualappraisal carried out by the Head of Departments of various departments.

Decisions on Annual Increments shall be made on the basis of this annual appraisal.

General:

This Policy shall apply to all future employment of Company's Senior Managementincluding Key Managerial Personnel and Board of Directors.

Any or all the provisions of this Policy would be subject to the revision/ amendment inthe Companies Act 2013 related rules and regulations guidelines and the ListingAgreement on the subject as may be notified from time to time.

Any such amendment shall automatically have the effect of amending this Policy withoutthe need of any approval by the Nomination and Remuneration Committee and/ or the Board ofDirectors.