GOVERNANCE

COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE G4-34 Good corporate governance has been an integral part of our business since its inception. We have been implementing sound management practices in compliance with the laws, adhering to the highest standards of transparency and business ethics. These main drivers, coupled with the Company’s ongoing contribution to the local communities through meaningful ‘corporate social responsibility’ initiatives will reinforce our vision to be the most sustainable and competitive company in our industry and our mission to create value for all our stakeholders. The Company has laid high emphasis on values such as empowerment and integrity of employees, safety of the employees and communities surrounding our plants, transparency in the decision making process, fair and ethical dealings with all, clean environment and accountability to all the stakeholders. These practices, since inception, have contributed to the Company’s sustained growth. The Company also believes that its operations should optimally utilise scarce natural resources to promote sustainable development. Ambuja’s Governance Structure is based on the principles of freedom within a given framework to the Executive Management to ensure that the powers vested in it are exercised with due care and responsibility so as to meet the expectations of all stakeholders. In line with these principles, the Company has created a three-tiered corporate governance structure, viz.: (i) The Board of Directors (BoD): The primary role of the Board is to protect the interest and enhance value for all stakeholders. It conducts overall strategic supervision and control by setting the goals and targets, policies, reporting mechanism and accountability and decision making process to be followed. (ii) Committees of Directors: The Audit Committee, Compliance Committee, Capex Committee, CSR Committee etc. are focused on financial reporting, audit and internal controls, compliance issues, critical assessment and review of large capex and implementation and monitoring of CSR activities. (iii) Executive Management: The entire business including support services is managed with clearly demarcated responsibilities and authorities at different levels. (A) The Executive Committee (ExCo) comprises of the Managing Director (MD), Chief Manufacturing Officer (CMO), Chief Human Resources Officer (CHRO), Chief Finance Officer (CFO), Chief Marketing Officer (CMrktO) and Chief Procurement Officer (CPO). This committee is a brain-storming committee where all important business issues are discussed and decisions are taken. This Committee reviews and monitors monthly performances, addresses challenges faced by the business, draws strategies and policies and keeps the Board informed about important developments having bearing on the operational and financial performance of the Company. (B) Managing Director & CEO reports to the Board and is responsible for the entire operations of all the regions, achieving business strategies, project execution, overall performance and growth, achieving the Company’s vision and mission, mergers and acquisitions, significant policy decisions and all critical issues having significant business and financial implications. He provides strategic direction, policy guidelines and extends support to the Executive Committee members and other functional heads. He also ensures implementation of the decisions of the Board and its various committees. The Company has laid high emphasis on values such as empowerment and integrity of employees, safety of the employees and communities surrounding our plants, transparency in the decision making process, fair and ethical dealings with all, clean environment and accountability to all the stakeholders. The Board of Directors has a very balanced structure, and primarily takes care of the business needs and stakeholders’ interests. The composition of the Board also complies with the provisions of the Companies Act, 1956 and the Listing Agreement. At the end of corporate financial year 2015, the total Board strength was twelve, which includes five independent, six non-independent non-executive members including the Chairman, and one non-independent executive (MD & CEO). The BoD has eleven males and one female. No member is under 30 years of age. For more information on corporate governance, please refer our Annual Report, 2015 (http://www.ambujacement. com/investor-relations/annual-reports/). With the Companies Act, 2013 coming into force, the Board appointed all the existing independent directors as independent directors under section 149 of the Companies Act, 2013 for a term up to 31 March 2019. The independent directors have submitted the Declaration of Independence, as required pursuant to section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in sub-section (6). Directors are appointed or re-appointed with the approval of the shareholders and shall remain in office in accordance with the retirement policy as laid down by the Board from time to time. The Managing Director and all the non-executive directors are liable to retire by rotation unless otherwise specifically approved by the shareholders. The non-executive directors including independent directors on the Board are experienced, competent and highly renowned persons in their respective fields. They take active part at the Board and Committee meetings and play a critical role with regard to strategic issues, which enhances transparency and adds value in the decision making process of the Board of Directors. The Company has a policy on Board Diversity which requires that there will be no discrimination or bias on grounds of age, ethnicity, gender, religion or other socio-cultural factors, but the endeavour would be to have a group of individuals on the Board, with a diverse set of personalities and demographics representing a wide cross-section of industries, professions, backgrounds, occupations and functions, and possessing a blend of skills, domain and functional knowledge, experience, educational qualifications, both individually and collectively. G4-38 to 40 On appointment, the concerned director is issued a letter of appointment setting out in detail, the terms of appointment, duties, responsibilities and expected time commitment. Each newly appointed independent director is taken through a formal induction programme including the presentation from the MD & CEO on the Company’s manufacturing, marketing, finance and other important aspects. The Company Secretary briefs the director about her/his legal and regulatory responsibilities. The induction for independent directors includes interactive sessions with Executive Committee members, business and functional heads, visit to the manufacturing site, etc. The familiarisation programme aims to provide independent directors with the cement industry scenario, the socio-economic environment in which the Company operates, the business model, the operational and financial performance of the Company, and other significant developments so as to enable them to take well-informed decisions in a timely manner. The familiarisation programme also seeks to update the directors on their roles, responsibilities, rights and duties under the Companies Act and other statutes. On matters of specialised nature, the Company engages outside experts/consultants for presentations and discussions with Board members. It is a practice in last so many years to report performance of the Sustainability KPIs and major Sustainability initiatives/ achievements during the quarter to the Board. G4-43 In compliance with the Companies Act, 2013, and Clause 49 of the Listing Agreement, during the year the Board adopted a formal mechanism for evaluating the performance and effectiveness of itself, its committees and individual directors, including the Chairman of the Board. For the Board and its committees, the exercise was carried out through a structured evaluation process covering various aspects of the Board’s functioning such as the composition of the Board and committees, experience and competencies, performance of specific duties and obligations, governance issues etc. In case of evaluation of the individual directors, one-toone meetings of each director with the Chairman of the Board and the Chairman of the Nomination and Remuneration Committee were held. The directors were satisfied with the evaluation results, which reflected the overall engagement and effectiveness of the Board and its committees. G4-44 Board Committees: The following committees have been formed with specific objectives for controlling various operations within the system: Audit Committee: The Audit Committee comprises all non-executive directors; majority of them are independent directors, including the Chairman. The terms of reference of this Committee broadly include (i) approval of annual internal audit plan, (ii) review of financial reporting systems, (iii) review of internal control systems, (iv) discussions on quarterly, half yearly and annual financial results, (v) interaction with statutory, internal and cost auditors, (vi) recommendations for appointment of statutory and cost auditors and their remuneration and (vii) the risk management framework concerning the critical operations of the Company. Compliance Committee: With the rapid growth of the business and its complexities coupled with increasing regulatory compliances, the Board felt it necessary to COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE G4-34 Good corporate governance has been an integral part of our business since its inception. We have been implementing sound management practices in compliance with the laws, adhering to the highest standards of transparency and business ethics. These main drivers, coupled with the Company’s ongoing contribution to the local communities through meaningful ‘corporate social responsibility’ initiatives will reinforce our vision to be the most sustainable and competitive company in our industry and our mission to create value for all our stakeholders. The Company has laid high emphasis on values such as empowerment and integrity of employees, safety of the employees and communities surrounding our plants, transparency in the decision making process, fair and ethical dealings with all, clean environment and accountability to all the stakeholders. These practices, since inception, have contributed to the Company’s sustained growth. The Company also believes that its operations should optimally utilise scarce natural resources to promote sustainable development. Ambuja’s Governance Structure is based on the principles of freedom within a given framework to the Executive Management to ensure that the powers vested in it are exercised with due care and responsibility so as to meet the expectations of all stakeholders. In line with these principles, the Company has created a three-tiered corporate governance structure, viz.: (i) The Board of Directors (BoD): The primary role of the Board is to protect the interest and enhance value for all stakeholders. It conducts overall strategic supervision and control by setting the goals and targets, policies, reporting mechanism and accountability and decision making process to be followed. (ii) Committees of Directors: The Audit Committee, Compliance Committee, Capex Committee, CSR Committee etc. are focused on financial reporting, audit and internal controls, compliance issues, critical assessment and review of large capex and implementation and monitoring of CSR activities. (iii) Executive Management: The entire business including support services is managed with clearly demarcated responsibilities and authorities at different levels. (A) The Executive Committee (ExCo) comprises of the Managing Director (MD), Chief Manufacturing Officer (CMO), Chief Human Resources Officer (CHRO), Chief Finance Officer (CFO), Chief Marketing Officer (CMrktO) and Chief Procurement Officer (CPO). This committee is a brain-storming committee where all important business issues are discussed and decisions are taken. This Committee reviews and monitors monthly performances, addresses challenges faced by the business, draws strategies and policies and keeps the Board informed about important developments having bearing on the operational and financial performance of the Company. (B) Managing Director & CEO reports to the Board and is responsible for the entire operations of all the regions, achieving business strategies, project execution, overall performance and growth, achieving the Company’s vision and mission, mergers and acquisitions, significant policy decisions and all critical issues having significant business and financial implications. He provides strategic direction, policy guidelines and extends support to the Executive Committee members and other functional heads. He also ensures implementation of the decisions of the Board and its various committees. The Company has laid high emphasis on values such as empowerment and integrity of employees, safety of the employees and communities surrounding our plants, transparency in the decision making process, fair and ethical dealings with all, clean environment and accountability to all the stakeholders. The Board of Directors has a very balanced structure, and primarily takes care of the business needs and stakeholders’ interests. The composition of the Board also complies with the provisions of the Companies Act, 1956 and the Listing Agreement. At the end of corporate financial year 2015, the total Board strength was twelve, which includes five independent, six non-independent non-executive members including the Chairman, and one non-independent executive (MD & CEO). The BoD has eleven males and one female. No member is under 30 years of age. For more information on corporate governance, please refer our Annual Report, 2015 (http://www.ambujacement. com/investor-relations/annual-reports/). With the Companies Act, 2013 coming into force, the Board appointed all the existing independent directors as independent directors under section 149 of the Companies Act, 2013 for a term up to 31 March 2019. The independent directors have submitted the Declaration of Independence, as required pursuant to section 149(7) of the Companies Act, 2013, stating that they meet the criteria of independence as provided in sub-section (6). Directors are appointed or re-appointed with the approval of the shareholders and shall remain in office in accordance with the retirement policy as laid down by the Board from time to time. The Managing Director and all the non-executive directors are liable to retire by rotation unless otherwise specifically approved by the shareholders. The non-executive directors including independent directors on the Board are experienced, competent and highly renowned persons in their respective fields. They take active part at the Board and Committee meetings and play a critical role with regard to strategic issues, which enhances transparency and adds value in the decision making process of the Board of Directors. The Company has a policy on Board Diversity which requires that there will be no discrimination or bias on grounds of age, ethnicity, gender, religion or other socio-cultural factors, but the endeavour would be to have a group of individuals on the Board, with a diverse set of personalities and demographics representing a wide cross-section of industries, professions, backgrounds, occupations and functions, and possessing a blend of skills, domain and functional knowledge, experience, educational qualifications, both individually and collectively. G4-38 to 40 On appointment, the concerned director is issued a letter of appointment setting out in detail, the terms of appointment, duties, responsibilities and expected time commitment. Each newly appointed independent director is taken through a formal induction programme including the presentation from the MD & CEO on the Company’s manufacturing, marketing, finance and other important aspects. The Company Secretary briefs the director about her/his legal and regulatory responsibilities. The induction for independent directors includes interactive sessions with Executive Committee members, business and functional heads, visit to the manufacturing site, etc. The familiarisation programme aims to provide independent directors with the cement industry scenario, the socio-economic environment in which the Company operates, the business model, the operational and financial performance of the Company, and other significant developments so as to enable them to take well-informed decisions in a timely manner. The familiarisation programme also seeks to update the directors on their roles, responsibilities, rights and duties under the Companies Act and other statutes. On matters of specialised nature, the Company engages outside experts/consultants for presentations and discussions with Board members. It is a practice in last so many years to report performance of the Sustainability KPIs and major Sustainability initiatives/ achievements during the quarter to the Board. G4-43 In compliance with the Companies Act, 2013, and Clause 49 of the Listing Agreement, during the year the Board adopted a formal mechanism for evaluating the performance and effectiveness of itself, its committees and individual directors, including the Chairman of the Board. For the Board and its committees, the exercise was carried out through a structured evaluation process covering various aspects of the Board’s functioning such as the composition of the Board and committees, experience and competencies, performance of specific duties and obligations, governance issues etc. In case of evaluation of the individual directors, one-toone meetings of each director with the Chairman of the Board and the Chairman of the Nomination and Remuneration Committee were held. The directors were satisfied with the evaluation results, which reflected the overall engagement and effectiveness of the Board and its committees. G4-44 Board Committees: The following committees have been formed with specific objectives for controlling various operations within the system: Audit Committee: The Audit Committee comprises all non-executive directors; majority of them are independent directors, including the Chairman. The terms of reference of this Committee broadly include (i) approval of annual internal audit plan, (ii) review of financial reporting systems, (iii) review of internal control systems, (iv) discussions on quarterly, half yearly and annual financial results, (v) interaction with statutory, internal and cost auditors, (vi) recommendations for appointment of statutory and cost auditors and their remuneration and (vii) the risk management framework concerning the critical operations of the Company. Compliance Committee: With the rapid growth of the business and its complexities coupled with increasing regulatory compliances, the Board felt it necessary to