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Directors Report of Balkrishna Paper Mills Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their Second Annual Report and the Audited Accounts for the financial year ended March 31, 2015.

1. FINANCIAL STATEMENTS & RESULTS:

a. FINANCIAL SUMMARY OR HIGHLIGHTS/ PERFORMANCE OF THE COMPANY (STANDALONE)

financial results: (Rs. in Crores)

Particulars Current Year Previous Year ended ended 31.03.15 31.03.14*

Gross Turnover and Other Income 21.09 -

Less: Excise Duty Recovered on Sales 1.31 -

Net Turnover and Other Income 19.78 -

Gross Profit/(Loss) (2.50) (0.003)

Less: Depreciation and Amortisation 0.54 -

Profit/(loss) before Tax (3.04) (0.003)

Less: Provision for Taxation

Current Tax (MAT) - -

Deferred Tax (Net) 0.06 -

Profit / (Loss) after Tax (3.10) (0.003)

Balance brought forward from last (0.003) - year

PROFIT AVAILABLE FOR APPROPRIATIONS : (3.10) (0.003)

APPROPRIATIONS:

Proposed Dividend (including Tax on Dividend) 0.00 0.00

Balance Carried Forward to Balance Sheet (3.10) (0.003)

* During Financial Year 2013-14 there was no Business activity in the company

b. OPERATIONS:

In terms with the approval of scheme of Arrangement between Balkrishna Paper Mills Limited ("BPML"), Balkrishna Industries Limited ("BIL") and Nirvikara Paper Mills Limited ("NPML") by Bombay High Court on 19.12.2014 and effective from 10.02.2015, business of Paper Board manufacturing transferred to the Company.

c. REPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES:

During the year under review, Balkrishna Synthetics Limited ("BSL") was transferred as wholly own subsidiary by way of scheme of Arrangement to the Company.

The performance and financial position of BSL for the year ended 31st March 2015 is attached and marked as Annexure I and forms part of this Report.

d. DIVIDEND

Considering the loss incurred in the current financial year, your Directors have not recommended any dividend for the financial year under review.

e. TRANSFER TO RESERVES:

In view of loss incurred during the year under review, the Board of Directors has not recommended transfer of any amount to reserves.

f. REVISION OF FINANCIAL STATEMENT:

There was no revision of the financial statements for the year under review.

g. DEPOSITS

The Company has not accepted or renewed any amount falling within the purview of provisions of Section 73 of the Companies Act 2013 ("the Act") read with the Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Act is not applicable.

h. BRIEF DESCRIPTION OF THE COMPANY WORKING DURING THE YEAR/STATE OF COMPANY'S AFFAIR

The Company is engaged in manufacturing of "Coated Duplex Boards". The end uses of the products of the Company, after the same is printed/converted by independent converters, are highly diversified and some typical applications are in Pharmaceuticals, Toiletries, Cosmetics and Health Care products, readymade Garments, Instant Food Products, Match Boxes, FMCG Segments, Agarbatty segments, Cigarette packing, wedding cards, besides many other packaging requirements. The applications of the Coated Boards are well diversified and ever expanding. This segment of the industry has witnessed a healthy growth over the past decade and is expected to continue to grow annually at a rate approximately 9%.

The production for the year under review was 6539 MT and the Sales and Other related income including interest for the year under review was at Rs. 19.78 Crores. The Gross Loss for the year is Rs. 3.04Crores and the Loss after tax is at Rs. 3.10 Crores.

i. TRANSFER OF BUSINESS :

No material changes and commitments which could affect the Company's financial position have occurred between the end of the financial year of the Company and date of this report.

j. INTERNAL CONTROL SYSTEM

Your company has adequate system of internal control to ensure that all the assets are safeguarded and are productive. Necessary checks and controls are in place to ensure that transactions are properly verified, adequately authorised, correctly recorded and properly reported.

During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.

k. DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL

Except order of Bombay High Court on scheme of Arrangement, no orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company's operations in future.

i. PARTICULAR OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

All related party transactions are at arm's length basis.

The details of transactions/contracts/arrangements entered by the Company with related party(ies) as defined under the Companies Act, 2013, during the financial year under review, are furnished in notes to accounts.

m. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES:

During the year under review, there are no loans, guarantees, investments and securities provided by the Company.

n. SHARE WITH DIFFERENTIAL RIGHTS :

The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

o. SWEAT EQUITY SHARES :

The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

p. EMPLOYEES STOCK OPTION SCHEME :

The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no information as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

q. INDUSTRIAL RELATIONS :

Industrial Relations with staff and workmen during the year under review continued to be cordial.

2. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL

a. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Following are change in Directorship and Key Managerial Personnel of the Company during the year under review.

Shri Anurag Poddar (DIN: 00599143) was appointed as Chairman & Managing Director of the Company with effect from February 11, 2015, by Special Resolution.

Shri Ankit Poddar (DIN: 03521731) was appointed as Executive Director of the Company with effect from February 11, 2015, by Special Resolution.

Shri Shrutisheel Jhanwar (DIN: 03582803) was appointed as Whole-time Director of the Company with effect from February 11, 2015, by Special Resolution.

Shri Sachin Nath Chaturvedi (DIN: 00553459) was appointment as an Additional/Independent Director of the Company with effect from February 11, 2015 to hold office till ensuing Annual General Meeting. The term of appointment is for five years and he is not liable to retire by rotation.

Shri Harish N. Motiwalla (DIN: 00029835) was appointment as an Additional/Independent Director the Company with effect from February 11, 2015 to hold office till ensuing Annual General Meeting.The term of appointment is for five years and he is not liable to retire by rotation.

Shri Rakesh Kumar Garodia (DIN: 00143438) was appointment as an Additional/Independent Director of the Company with effect from February 11, 2015 to hold office till ensuing Annual General Meeting. The term of appointment is for five years and he is not liable to retire by rotation.

Smt. Meghna S. Shah (DIN: 07081068) was appointment as an Additional/Independent Director of the Company with effect from February 11, 2015 to hold office till ensuing Annual General Meeting. The term of appointment is for five years and she is not liable to retire by rotation.

Shri Shrutisheel Jhanwar (DIN: 03582803) retired by rotation an offer himself for re-appointment.

Your Directors have pleasure in recommending their appointment.

Shri Arvind Kumar Poddar (DIN: 00089984) resigned as Director of the Company effective February 11, 2015.

Smt. Vijayalaxmi Poddar (DIN: 00160484) resigned as Director of the Company effective February 11, 2015.

Shri Rajiv Arvind Poddar (DIN:00160758) resigned as Director of the Company effective February 11, 2015.

The Board places on record its sincere appreciation for the valuable support rendered by them during their tenure. Following are the change in Key Managerial Personnel of the Company during the year under review.

Shri Rajesh A. Solanki was appointed as Company Secretary & Compliance officer and Key Managerial personnel w.e.f. February 11, 2015

Shri Shrutisheel Jhanwar appointed as Chief Financial Officer and Key Managerial personnel w.e.f. February 11, 2015

b. DECLARATIONS BY INDEPENDENT DIRECTORS:

The Company has received declarations form all the Independent Directors under Section 149(6) of the Companies Act, 2013 confirming their independence vis-a-vis the Company.

3. DISCLOSURES RELATED TO BOARD, COMMITTEES AND POLICIES

a. BOARD MEETINGS:

The Board of Directors met 5 times during the year on the following dates in accordance with the provisions of the Companies Act, 2013 and rules made thereunder viz May 8, 2014, August 2, 2014, November 13, 2014, December 12, 2014 and February 11, 2015.

b. DIRECTOR'S RESPONSIBILITY STATEMENT:

In terms of Section 134(3)(c) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended 31st March, 2015, the Board of Directors hereby confirms that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. such accounting policies have been selected and applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the loss of the Company for that year;

c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d. the annual accounts of the Company have been prepared on a going concern basis;

e. internal financial controls have been laid down by Directors, which are adequate and were operating effectively;

f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;

c. NOMINATION AND REMUNERATION COMMITTEE:

The composition, role, terms of reference as well as powers of the Nomination and Remuneration Committee of the Company meets the requirements of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Composition :

The Committee comprises of 3 Independent Directors.

The composition of the Nomination and Remuneration Committee, category of members, their attendance at the Committee Meetings held during the year under review is given in the table below:

Sr. Name of the Director Category Number of No. Meetings *

Held Attended

1 Shri Sachin Nath Chaturvedi (Chairman) Independent Director 1 0

2 Shri Harish N. Motiwalla Independent Director 1 1

3 Shri Rakesh Kumar Garodia Independent Director 1 1

* During the year 1 meeting held on February 11, 2015. Remuneration Policy:

The Company follows a policy on remuneration of Directors and Senior Management Employees as enumerated below: Remuneration of Non Executive Directors : The Non Executive Directors shall be entitled to receive remuneration by way of sitting fees, reimbursement of expenses for participation in the Board/ Committee meetings and commission, if any, after approval of the members.

Remuneration of Chairman /Managing Director / Whole Time Directors.

1. At the time of appointment or re-appointment of the Managing Director & CEO/ Whole Time Directors, such remuneration shall be paid as may be mutually agreed between the Company (which includes the Nomination and Remuneration Committee and the Board of Directors) and the Chairman / Managing Director / Whole Time Directors within the overall limits prescribed under the Companies Act, 2013.

2. The remuneration shall be subject to the approval of the Members of the Company in General Meeting

3. The remuneration of the Managing Director & CEO/ Whole Time Directors is broadly divided into Salary, Allowances, perquisites, amenities, retirement benefits and commission (subject to availability of profits).

4. In determining the remuneration the Nomination and Remuneration Committee shall ensure / consider the following :-

a. The relationship of remuneration and performance benchmark is clear.

b. Responsibility required to be shouldered by the Chairman/Managing Director/ Whole Time Directors, the industry benchmarks and the current trends.

c.the company's performance vis-a-vis the annual budget achievement and individual performance vis-a-vis the KRAs/KPIs.

Remuneration of Senior Management Employees:

1. In determining the remuneration of the Senior Management employees i.e. KMPs, the Nomination and Remuneration Committee shall ensure/ consider the following :

a. The relationship of remuneration and performance benchmark is clear.

b. The remuneration including annual increment is decided based on the criticality of the roles and responsibilities the Company's performance vis-a-vis the annual budget achievement, individual perfor-mance vis-a-vis KRAs/ KPIs industry benchmark and current compensation trends in the market.

d. AUDIT COMMITTEE:

The composition, role, terms of reference as well as powers of Audit Committee of the Company meet the requirements of Section 177 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Composition:

The Committee comprises 3 Independent Directors and 1 Whole time Director.

The composition of the Audit Committee, category of members, their attendance at the Committee Meetings held during the year under review is given in the table below:

Sr. Name of the Director Category Number of No. Meetings *

Held Attended

1 Shri Sachin Nath Independent Director 0 0 Chaturvedi (Chairman)

2 Shri Harish N. Motiwalla Independent Director 0 0

3 Shri Rakesh Kumar Garodia Independent Director 0 0

4 Shri Shrutisheel Jhanwar Whole-time Director 0 0

* Committee was formed on 11.02.2015. No meeting held during 2014-15.

Shri Rajesh A Solanki, Company Secretary is the Secretary acts as of the Audit Committee.

e. VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES:

The Board of Directors of the Company has, pursuant to the provisions of Section 178(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed "Whistle Blower Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimisation on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any, financial statements and reports, etc. The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee.

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.

The Policy is uploaded on the company's website at www.npml.in

f. RISK MANAGEMENT FRAMEWORK:

The Board of Directors of the Company has Risk Management Framework to avoid events, situations or circumstances which may lead to negative consequences on the Company's businesses, and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions.

g. PARTICULARS OF EMPLOYEES :

The information required pursuant to Section 197 of the Companies Act, 2013 read with rule 5 of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company will be provided upon request in terms of section 136 of the Act, the Report is being sent to all the shareholders of the Company and other entitled thereto, excluding the information particulars of which is available for inspection by the Members at the Corporate office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting. Members interested in obtaining a copy thereof, may write to the Company Secretary in this regard.

h. PAYMENT OF REMUNERATION / COMMISSION TO DIRECTORS FROM HOLDING OR SUBSIDIARY COMPANIES:

None of the managerial personnel i.e. Managing Director and Whole time Directors of the Company are in receipt of remuneration/commission from the Holding or Subsidiary Company of the Company.

4. AUDITORS AND REPORTS

The matters related to Auditors and their Reports are as under:

a. OBSERVATIONS OF STATUTORY AUDITORS ON ACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2015:

The observations made by the Statutory Auditors in their report for the financial year ended 31st March 2015 read with the explanatory notes therein are self-explanatory and therefore, do not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

Further, there were no adverse remarks or qualifications of reservations in the audit report submitted by auditors.

b. COST AUDITORS:

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Notifications/Circulars issued by the Ministry of Corporate Affairs from time to time, the Board of Directors have appointed Shri R Srinivasa Raghavan, Cost Accountants as the Cost Auditors of the Company for the financial year 2015-16. The remuneration to be paid to Cost auditors require ratification by the shareholders and accordingly necessary resolution for ratification for seeking approval of members is included in Notice of ensuing AGM.

5. OTHER DISCLOSURES

Other disclosures as per provisions of Section 134 of the Act read with Companies (Accounts) Rules, 2014 are furnished as under:

a. EXTRACT OF ANNUAL RETURN:

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the financial year ended 31st March 2015 made under the provisions of Section 92(3) of the Act is attached as Annexure II which forms part of this Report.

b. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure - III which forms part of this Report.

6. ACKNOWLEDGEMENT

Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/ associates, financial institutions and Central and State Governments for their consistent support and encouragement to the Company.

For and on behalf of the Board of Directors

Place: Mumbai Anurag Poddar Date: 8th June, 2015 Chairman & Managing Director

 
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