Dear Sirs

SEBI had constituted a Committee on Corporate Governance under the Chairmanship of Shri Kumar Mangalam Birla, Member, SEBI Board to promote and raise the standard of Corporate Governance inn respect of listed companies. The SEBI Board in its meeting held on January 25, 2000 considered the recommendation of the Committee and decided to make the amendments to the listing agreement in pursuance of the decision of the Board, it is advised that a new clause, namely clause 49, be incorporate in the listing agreement as under:

1. A) The company agrees that the board of directors of the company shall have an optimum combination of executive and non-executive directors with not less than fifty percent of the board of directors comprising of non-executive directors. The number of independent directors would depend whether the Chairman is executive or non-executive. In case of a non-executive chairman, at least one-third of board should comprise of independent directors and in case of an executive chairman, at least half of board should comprise of independent directors.

   Explanation: For the purpose of this clause the expression 'independent directors' means directors who apart from receiving director's remuneration, do not have any other material pecuniary relationship or transactions with the company, its promoters, its management or its subsidiaries, which in judgement of the board may affect independence of judgement of the director.

2. B) The company agrees that all pecuniary relationship or transactions of the non-executive directors viz-a-viz. the company should be disclosed in the Annual Report.

1. A) The company agrees that a qualified and independent audit committee shall be set up and that :

   1. a) The audit committee shall have minimum three members, all being non-executive directors, with the majority of them being independent, and with at least one director having financial and accounting knowledge;

   2. b) The chairman of the committee shall be an independent director;

   3. c) The chairman shall be present at Annual General Meeting to answer shareholder queries;

   4. d) The audit committee should invite such of the executives, as it considers appropriate (and particularly the head of the finance function) to be present at the meetings of the committee, but on occasions it may also meet without the presence of any executives of the company. The finance director, head of internal audit and when required, a representative of the external auditor shall be present as invitees for the meetings of the audit committee;

   5. e) The Company Secretary shall act as the secretary to the committee.

2. B) The audit committee shall meet at least thrice a year. One meeting shall be held before finalisation of annual accounts and one every six months. The quorum shall be either two members or one third of the members of the audit committee, whichever is higher and minimum of two independent directors.

3. C) The audit committee shall have powers which should include the following :

   1. a) to investigate any activity within its terms of reference.

   2. b) to seek information from any employee.

   3. c) to obtain outside legal or other professional advice.

   4. d) to secure attendance of outsiders with relevant expertise, if it considers necessary.

4. D) The company agrees that the role of the audit committee shall include the following.

   1. a) Oversight of the company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

   2. b) Recommending the appointment and removal of external auditor, fixation of audit fee and also approval for payment for any other services.

   3. c) Reviewing with management the annual financial statements before submission to the board, focusing primarily on;

      • Any changes in accounting policies and practices.

      • Major accounting entries based on exercise of judgement by management.

      • Qualifications in draft audit report.

      • Significant adjustments arising out of audit.

      • The going concern assumption.

      • Compliance with accounting standards.

      • Compliance with stock exchange and legal requirements concerning financial statements

      • Any related party transactions i.e. transactions of the company of material nature, with promoters or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests of company at large.

   4. d) Reviewing with the management, external and internal auditors, the adequacy of internal control systems.

   5. e) Reviewing the adequacy of 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

   6. f) Discussion with internal auditors any significant findings and follow up there on.

   7. g) 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.

   8. h) Discussion with external auditors before the audit commences nature and scope of audit as well as have post-audit discussion to ascertain any area of concern.

   9. i) Reviewing the company's financial and risk management policies.

   10. j) To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors.

5. E) If the company has set up an audit committee pursuant to provision of the Companies Act, the company agrees that the said audit committee shall have such additional functions / features as is contained in the Listing Agreement.

1. A) The company agrees that the remuneration of non-executive directors shall be decided by the board of directors.

2. B) The company further agrees that the following disclosures on the remuneration of directors shall be made in the section on the corporate governance of the annual report.

   • All elements of remuneration package of all the directors i.e. salary, benefits, bonuses, stock options, pension etc.

   • Details of fixed component and performance linked incentives, along with the performance criteria.

   • Service contracts, notice period, severance fees.

   • Stock option details, if any - and whether issued at a discount as well as the period over which accrued and over which exercisable.

1. A) The company agrees that the board meeting shall be held at least four times a year, with a maximum time gap of four months between any two meetings. The minimum information to be made available to the board is given in Annexure-I.

2. B) The company further agrees that a director shall not be a member in more than 10 committees or act as Chairman of more than five committees across all companies in which he is a director. Furthermore it should be a mandatory annual requirement for every director to inform the company about the committee positions he occupies in other companies and notify changes as and when they take place.

1. A) The company agrees that as part of the directors' report or as an addition there to, a Management Discussion and Analysis report should form part of the annual report to the shareholders. This Management Discussion & Analysis should include discussion on the following matters within the limits set by the company's competitive position:

   1. a) Industry structure and developments.

   2. b) Opportunities and Threats.

   3. c) Segment-wise or product-wise performance.

   4. d) Outlook

   5. e) Risks and concerns.

   6. f) Internal control systems and their adequacy.

   7. g) Discussion on financial performance with respect to operational performance.

   8. h) Material developments in Human Resources / Industrial Relations front, including number of people employed.

2. B) Disclosures must be made by the management to the board relating to all material financial and commercial transactions, where they have personal interest, that may have a potential conflict with the interest of the company at large (for e.g. dealing in company shares, commercial dealings with bodies, which have shareholding of management and their relatives etc.)

1. A) The company agrees that in case of the appointment of a new director or re-appointment of a director the shareholders must be provided with the following information:

   1. a) A brief resume of the director;

   2. b) Nature of his expertise in specific functional areas ; and

   3. c) Names of companies in which the person also holds the directorship and the membership of Committees of the board.

2. B) The company further agrees that information like quarterly results, presentation made by companies to analysts shall be put on company's web-site, or shall be sent in such a form so as to enable the stock exchange on which the company is listed to put it on its own web-site.

3. C) The company further agrees that a board committee under the chairmanship of a non-executive director shall be formed to specifically look into the redressing of shareholder and investors complaints like transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc. This Committee shall be designated as 'Shareholders/Investors Grievance Committee'.

4. D) The company further agrees that to expedite the process of share transfers the board of the company shall delegate the power of share transfer to an officer or a committee or to the registrar and share transfer agents. The delegated authority shall attend to share transfer formalities at least once in a fortnight.

The company agrees that there shall be a separate section on Corporate Governance in the annual reports of company, with a detailed compliance report on Corporate Governance. Non compliance of any mandatory requirement i.e. which is part of the listing agreement with reasons there of and the extent to which the non-mandatory requirements have been adopted should be specifically highlighted. The suggested list of items to be included in this report is given in Annexure-2 and list of non-mandatory requirements is given in Annexure - 3.

The company agrees that it shall obtain a certificate from the auditors of the company regarding compliance of conditions of corporate governance as stipulated in this clause and annexe the certificate with the directors' report, which is sent annually to all the shareholders of the company. The same certificate shall also be sent to the Stock Exchanges along with the annual returns filed by the company.

The above amendments to the listing agreement have to be implemented as per schedule of implementation given below:

• By all entities seeking listing for the first time, at the time of listing.

• Within financial year 2000-2001,but not later than March 31, 2001 by all entities, which are included either in Group 'A'of the BSE or in S&P CNX Nifty index as on January 1, 2000. However to comply with the recommendations, these companies may have to begin the process of implementation as early as possible.

• Within financial year 2001-2002,but not later than March 31, 2002 by all the entities which are presently listed, with paid up share capital of Rs. 10 cr ore and above, or networth of Rs 25 crore or more any time in the history of the company.

• Within financial year 2002-2003,but not later than March 31, 2003 by all the entities which are presently listed, with paid up share capital of Rs.3 crore and above

• ? As regards the non-mandatory requirement given in Annexure - 3, they shall be implemented as per the discretion of the company. However, the disclosures of the adoption/non-adoption of the non-mandatory requirements shall be made in the section on corporate governance of the Annual Report.

Yours faithfully,
PRATIP KAR
Encl. : Annexures.