Compliance on Corporate Governance Report for the Quarter ended June 30, 2018.Report for the quarter ended on 30.06.2018
In NTPC, Corporate Governance philosophy stems from our belief that corporate governance is an integral element in improving efficiency and growth as well as enhancing investor confidence. The Corporate Governance philosophy is scripted as:
“As a good corporate citizen, the Company is committed to sound corporate practices based on conscience, openness, fairness, professionalism and accountability in building confidence of its various stakeholders in it thereby paving the way for its long term success.”
The company believes in sustainable corporate growth that emanates from the top leadership down through the organisation to the various stakeholders which is reflected in its sound financial system, enhanced market reputation and improved efficiency.
We believe that our company shall go beyond adherence to regulatory framework. Our corporate structure, business, operations and disclosure practices have been strictly aligned to our Corporate Governance Philosophy. Transparency, accountability, fairness and intensive communication with stakeholders are integral to our functioning. We believe in system driven performance and performance oriented systems. We accord highest priority to these systems and protect the interests of all our shareholders, particularly the minority shareholders.
We have tried to blend growth and efficiency with governance and ethics. Our Board of Directors, guided by the mission statement, formulate strategies and policies having focus on optimising value for various stakeholders like consumers, shareholders and the society at large. Besides adhering to provisions of listing agreement we are also following guidelines on Corporate Governance issued by the Department of Public Enterprises, Government of India
Diversified Expertise based Board drives Our Company
The NTPC Board, at present, comprises of six full time functional directors and the Managing Director who is also the Chairman of the company. Our Company’s functional directors are highly experienced professionals in their respective functional areas; provide directions to the management on operational issues, adoption of systems and best practices in management and oversight of compliance of various legal and other requirements.
The Company has nine independent directors and two directors nominated by the Union Government. The independent directors on the board of the company are appointed by the Government of India through an elaborate procedure of selection which encompasses induction of professionals and experts in relevant field through a “Search Committee” by the Government of India. Our company believes that the Independent Directors bring with them the rich experience, knowledge and practices followed in other companies resulting in imbibing the best practices followed in the industry.
Clear definition of roles and responsibilities of our Board of Directors leading to decentralised decision making
Our company’s framework is designed to enable the board to provide strategic guidelines for the company for the effective over-sight of management. The respective roles and responsibilities of the Board Members and Senior Executives are clearly defined to facilitate accountability to the company as well as its shareholders. This ensures a balance of authority so that no single individual has unfettered powers.
Delegation of decision making to various Committees of the Board
Our company has constituted various committees at the board level to focus attention on crucial issues before placing the same before the board for consideration. Some of these committees have been set up voluntarily even though there is no legal requirement under the listing agreement. These include the ‘Projects Committee’ to consider and decide on investment proposals before approval by the Board, ‘Contracts Committee’ to deal with the award of contracts up to a threshold limit set by the Board, ‘Committee on Management controls’ to review various internal control systems and their compliance and ‘Investment/Contribution Sub-Committee’ for matters related to deployment of surplus funds, approval of contributions/donations for national, public or charitable causes etc. Other Committees of the Board are- ‘Audit Committee’, ‘Shareholders/Investors Grievance Committee’ and ‘Committee of the Board for allotment and post-allotment activities of the company’s Securities’.
The Audit Committee was established in NTPC in 1995, much before it became a statutory necessity under the Companies Act, in 2000. The Audit Committee ensures that truthful and factual financial position of the company is presented to the Board and hence safeguards the integrity of the management.
Established Code of Conduct to promote ethical and responsible decision making
There are two separate codes of conducts in place - one for the board members and another for the senior management personnel. This is in alignment with the company’s vision and values to achieve the mission and objectives and aims at enhancing ethical & transparent process in managing the affairs of the company. The code of conduct also covers issues relating to insider trading in the company’s security.
Established System of Accountability - Evaluation of Performance of the Board of Directors
The performance of the board and the directors are evaluated by the Ministry of Power which is the administrative ministry for the company. For evaluating the performance of the company the Government has instituted a system of target setting which is agreed to between the company and the Government through a Memorandum of Understanding (MOU). The MOU system defines the evaluation criteria in advance on parameters like financials performance, productivity, human resource development activities, project implementation, and operation performance in order to have objective evaluation of a Central Public Sector Enterprise (CPSE).
Performance of functional directors on the board is also evaluated through a performance evaluation system at two levels- first evaluation at the level of Chairman & Managing Director and the second at the level of the Ministry. The performance reports of all directors are reviewed by the Chairman & Managing Director and then forwarded to the ministry for evaluation.
Adopted a policy of making timely and balanced disclosures
We believe in full disclosure of all material matters concerning the company to our investors. The announcements about the company are based on factual details and presented in a transparent and balanced way regularly on its website and also to the regulators.
Going beyond Regulation, we think for our shareholders
NTPC has more than 7.53 lakh shareholders as on 31.3.14. About 99% of these are retail shareholders and the company besides appointing a Share Transfer Agent for servicing these shareholders has set up an in-house Investor Services Department to ensure proper and timely redressal of grievances of these small shareholders.
Continuous efforts are being made to enlarge the number of locations for payment of dividends through the Electronic Clearing System (ECS) etc.
Our directors constantly interact with the Institutional Investors to explain to them the strategies and plans of the company. During such interactions, investors express various view points on the sector and business of the company and the management, in turn, addresses their concerns and explains the measures taken by the company.
We also organise an annual investor and analyst conference where our entire board meets with the analysts and investing community and addresses their queries and concerns about the company.
Risk Management Framework
NTPC has implemented an elaborate Enterprise Risk Management framework for compliance of the listing agreements with BSE/NSE.
A Function Director level “Risk Management Committee (RMC) ” has been entrusted with the responsibility to identify plans and strategies to mitigate risks on short term as well as long term basis.
The RMC meets every quarter to deliberate on strategies. Risks are regularly monitored through reporting of key performance indicators. Outcomes of RMC are submitted for information of the Board of Directors.
Customer Relationship Management
Our approach to customer relationship management is an essential, company-wide business strategy we actively put into practice to systematically create and maintain profitable, long-term customer relationships. As a result NTPC is highly valued among its customers for its professionalism. Under its Customer Relationship Management (CRM) programme, the company has started to offer services to customers in selected areas such as Operation & Maintenance, R&D, Finance, IT etc with the explicit objective of overall power sector growth.
Undivided Commitment towards Society / Society First Commitment
NTPC has been a committed and socially responsible corporate citizen since its inception. The company has formulated and adopted a dynamic Corporate Social Responsibility-Community Development (CSR-CD) policy for taking up CSR activities in areas adjoining the power stations. There is an established “NTPC Foundation” to address the niche domains of social development at national level through strategic interventions.