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Directors Report of Emami Paper Mills Ltd.

Mar 31, 2014

Dear Shareholders

The Directors take pleasure in presenting their Thirty Second Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2014.

FINANCIAL RESULTS

(Rs in Lacs) 2013-14 2012-13

Operational Income 54,656.51 51,001.61 Profit before interest and depreciation 7,383.71 7,348.31

Less : Interest 1,902.80 3,022.16

Profit Before Depreciation & Tax 5,480.91 4,326.15

Depreciation 3,208.53

Less : Transfer from Revaluation Reserve 42.62 3,165.91 3,032.90

Profit Before Taxation 2,315.00 1,293.25

Less : Provision for Current Taxation (MAT) 477.15

MAT Credit entitlement (235.93)

Provision for deferred tax 212.48 453.70 137.77

Profit after Tax 1,861.30 1,155.48

Add : Surplus brought forward 1,170.32 941.58

Balance available for Appropriation 3,031.62 2,097.06

Appropriations :

Proposed Dividend on Equity Shares 363.00 363.00 Proposed Dividend on Preference Shares 243.55 1.75 Tax on Dividend 103.08 61.99 Transfer to General Reserve 500.00 500.00 Balance carried forward 1,821.99 1,170.32

3,031.62 2,097.06

FINANCIAL PERFORMANCE

Your Company continued to maintain its leadership position in the Indian Newsprint industry as a preferred supplier to the leading newspaper publishers. Emami Paper''s firm Commitment of delivering superior quality products at competitive price has been a major factor for its prestigious position in the industry.

During the year, your Company registered a growth in the turnover from Rs 499.89 crores in 2012-13 to Rs 545.38 crores in 2013-14. By achieving continued operational efficiency enhancements at all levels of operations, your Company''s profit after tax (PAT) has shown growth from Rs 11.55 crores in 2012-13 to Rs 18.61 crores in 2013-14.

Despite poor performance of the paper industry particularly newsprint, the performance of your Company should be considered satisfactory.

DIVIDEND

Your Directors are pleased to recommend dividend of 30% (Rs 0.60 per share) on Equity Shares of Rs 2/- each and 8% pro-rata dividend on Preference shares of Rs 100/- each for the financial year ended March 31, 2014. The Dividend, if approved by the shareholders, will absorb Rs 709.62 Lacs (including the dividend tax of Rs 103.08 Lacs).

MILL EXPANSION AND DEVELOPMENT PLAN

The Company''s diversification project for setting up 1,32,000 TPA paper machine for manufacturing Multi Layer Coated Board at its existing location at Balasore is progressing satisfactorily and will be completed by March, 2015.

Your Company will emerge as the largest manufacturer of Multi Layer Coated Board in eastern India and one of the largest in the country.

Multi-layer coated board (comprising grey back, white back, folding box board, solid bleached board and liquid packaging board) is one of the fastest growing segments of the paper industry, growing at an annual rate of between 14-20 percent per year, even faster than the overall rate of growth of the domestic paper industry at about 10 percent.

Multi-layer coated board is used in several industries such as FMCG, pharmaceuticals and several other packaging-centric industries and with the upcoming boom in retail, especially enabled by the 49% FDI being permitted into the industry, the demand for duplex/ coated boards is expected to increase to 3.2 Million Tonne by 2016-17, up from 2.2 Million Tonne in 2012-13.

ISSUE OF PREFERENCE SHARES

During the year the Company has issued 22,50,000, 8% Cumulative Redeemable, Non-Convertible Preference Shares on preferential basis to the promoters of the face value of Rs 100/- each at a premium of Rs 300/- each aggregating to Rs 90.00 Crores as promoters contribution for Mill Expansion and Development Plan.

ENVIRONMENT MANAGEMENT

Your Company''s approach towards environmental protection is guided by Environmental Policy, commitment towards a sustainable planet and a clean environment as well as a healthy workplace for employees. The Company focuses on environmental management not only to comply with the applicable regulatory regime but also strives to contribute positively to the communities around its operations through varied community initiatives, encouraging biodiversity and nature conservation.

Towards achieving its environmental objectives, the Company is focused on:

. Cleaner production.

. Resource conservation.

. Responsible waste management.

. Minimum pollution load.

Your Company is among the few in the industry to have adopted one of the best Integrated Management Systems (IMS) certified by DNV (Det Norske Veritas AS, the Netherlands) through their rigorous surveillance and recertification audits, encompassing the following :

. ISO 9001:2008 - Quality Management System.

. ISO 14001:2004 - Environment Management System.

. OHSAS 18001:2007 - Occupational Health & Safety Management System.

At Emami Paper, there has been substantial development in energy conservation by installing energy efficient equipment and during the year a continuous (real time) ambient air quality monitoring system was installed. Some of the environmental assets possessed by the Company include :

. Ambient air quality monitoring system.

. State-of-the-art effluent treatment plant (ETP).

. Sludge dewatering system.

. Solid waste recycling.

. Feeding of ETP sludge to boiler for power generation.

. Rainwater harvesting.

These assets have enabled the Company to achieve declining water consumption per tonne of paper produced to benchmarks even lower than the standards. To optimise chemical and water consumption even further, the Company undertook the following measures :

. Conducted detailed study of water and wastewater management practices in different processes and domestic level assessing the opportunities for water and cost savings by performance enhancement of existing and future facilities.

. Integrated the water management with process needs by adopting the ''Reduce, Re-use and Recycle'' concept to optimize discharge quantities.

. Explored opportunities for reducing energy and chemical consumption in water and wastewater treatment systems.

. Adopted the latest water and wastewater treatment technologies.

. Propagated water saving equipment and devices besides organising training programmes on water management.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR projects focus on promoting Economic, Social, Environmental and Cultural growth of the community at large in an equitable and sustainable manner in the peripheral areas around the factories. Over the years, we have worked with dedication towards enriching lives across the community. The company is consistently taking up various community welfare initiatives for the benefit of the people. A sense of responsibility towards society is inherent to Emami''s concept of entrepreneurship. Under CSR, the major thrust areas include education, health care, drinking water and community service schemes to neighbouring villages and supporting them during natural calamities.

Education :

. Funded the building and Science Section of Remuna College, Balasore.

. Provided scholarships to deserving students (including tribals).

. Emphasized and funded girl education.

. Commissioned Bal Vikas Kendras, providing free education to the poor.

. Provided free meals and Exercise Note Books to school children.

. Donated desks, tables and water coolers to schools.

. Infrastructural support to 30 schools in the neighbouring villages covering 2500 students.

. Contribution to Friends of Tribals Society (FTS).

Health :

. Conducted free health camps (diagnosis and medicines).

. Started rural mobile health camps.

. Started free Ayurveidc, Homeopathic and Allopathic health camps.

. Built toilets for tribals.

Community Service :

. Built roads in the area, constructed temples.

. Installing and maintaining tube wells, street lights.

. Sponsoring sports activities.

. Extending helping hand to orphanage homes.

Natural Calamities and Disaster Relief :

. Contribution to Chief Minister''s Relief Fund for natural calamities ''Pheline''.

. Organized flood relief camps and distribution of dry foods, essential household and waterproof shelters.

General :

. Trained women with tailor competence.

. Provided firewood to tribals.

. Started free veterinary services for animals.

The Company''s CSR activities and its continuing policy of social and community services have made a visible impact in the upliftment of local villages in the vicinity of its plant at Balgopalpur and surrounding areas.

AWARDS & RECOGNITION

It is a matter of great pride that Company''s endeavor and commitment to achieve higher level of operational performance and environmental excellence has been recognized at various forums. Company has earned number of awards and honors as mentioned below :

. Environmental Best Practices Award-2013 by Karnataka State Pollution Control Board in November, 2013 for the process modifications made to the ''Effluent Treatment Plant (ETP)'' and endorsed by the Confederation of Indian Industries (CII) as an ''Innovative Environmental Project''.

. Greentech Safety Award-2013 under Silver category in the paper sector for the strides made in the areas of safety management.

. Greentech Environment Award-2013 under Silver category in the paper sector for the efforts made in environmental protection.

. Gold Award 2013-14 for CSR by Greentech Foundation for effort by Company to serve the community as a good corporate citizen.

CORPORATE GOVERNANCE

The sections of Corporate Governance and Management''s Discussion & Analysis are set out as Annexure-III in this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors have :

1. Followed the applicable accounting standards in the preparation of the Annual Accounts;

2. Selected prudent accounting policies;

3. Taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company as well as preventing fraud and other irregularities; and

4. Prepared the annual accounts on a going concern basis.

DIRECTORS

Dr. Y. S. P. Thorat was appointed as an Additional Director in the category of Non-Executive Independent Director with effect from 8th November, 2013 under section 260 of the Companies Act, 1956 and he resigned w.e.f. 23rd February, 2014. Your Directors place on record their gratitude for his guidance and advice during his tenure of Director.

Shri M. B. S. Nair was appointed as an Additional Director (Whole-Time Director) designated as Director (Operations) of the Company with effect from 25th April, 2014 under section 161 of the Companies Act, 2013 to hold office till the date of ensuing Annual General Meeting. Notice under section 160 of the Companies Act, 2013 was received by the Company from members signifying their intention to propose Shri M.B.S.Nair as candidate for the Office of Directors.

Out of present five independent directors Shri U.G.Bhat, Shri H.M.Marda and Shri J.K.Khetawat would retire by rotation at the ensuing Annual General Meeting under the provision of the erstwhile Companies Act, 1956, and they are eligible, offer themselves for re- appointment. In terms of Section 149 and any other applicable provisions of Companies Act, 2013, they will be appointed for a term of 5 years and not liable to retire by rotation.

In order to comply with the provisions of section 149 of the Companies Act, 2013, the Board recommends for appointment of all the present five Independent Directors including the retiring directors for a consecutive period of 5 years and seek approval by the shareholders of the company at the next General Meeting.

1) Shri U. G. Bhat

2) Shri H. M. Marda

3) Shri J. K. Khetawat

4) Shri J. Godbole

5) Shri S. Balasubramanian

AUDITORS'' REPORT

The observations made in the Auditors'' Report are self-explanatory and therefore do not call for any further comments.

AUDITORS

M/s S. K. Agrawal & Company, Chartered Accountants, retire at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. M/s Salarpuria Jajodia & Co. have expressed their willingness to continue as Unit Auditors for the Gulmohar unit, if appointed.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Information pursuant to Section 217(1)(e) of the Companies Act, 1956 are given in Annexure-I to the Report.

DELISTING OF EQUITY SHARES

As no trading of the Company''s shares has been reported in U. P. Stock Exchange and trading volume in Calcutta Stock Exchange is very insignificant, Equity Shares of the Company have been voluntarily delisted from U.P.Stock Exchange and Calcutta Stock Exchange, under clause 6(a) of SEBI (Delisting of Equity Shares Regulation, 2009).

PERSONNEL

Information pursuant to Section 217(2A) of the Companies Act, 1956 is given in Annexure-II attached to this Report. ACKNOWLEDGEMENT

The Board acknowledges the understanding and support shown by its lending financial institutions, banks, distributors, customers, suppliers, employees and other business associates. Your Company operated efficiently due to a culture of professionalism, integrity and continuous improvement leading to sustainable and profitable growth.

For and on behalf of the Board A. V. Agarwal Executive Chairman

Place : Kolkata Date : 25th April, 2014


Mar 31, 2013

The Directors take pleasure in presenting their Thirty First Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2013.

FINANCIAL RESULTS Rs./iacs

2012-13 2011-12

Operational Income 51001.61 49507.76

Profit before interest and depreciation 7348.31 6514.37

Less: Interest 3022.16 2637.15

Profit Before Depreciation & Tax 4326.15 3877.22

Depreciation 3082.14

Less :Transfer from revaluation reserve 49.24 3032.90 2716.22

Profit Before Taxation 1293.25 1161.00

Less : Provision for current taxation (MAT) 253.83 - 230.11

MAT Credit entitlement (253.83) - (230.11)

Provision for deferred tax 137.77 137.77 330.30

Profit after Tax 1155.48 830.70

Add : Surplus brought forward 941.58 1032.76

Balance available for appropriation 2097.06 1863.46

Appropriations

Proposed Dividend on Equity Shares 363.00 363.00

Proposed Dividend on Preference Shares 1.75

Tax on Dividend 61.99 58.88

Transfer to General Reserve 500.00 500.00

Balance carried forward 1170.32 941.58

2097.06 1863.46

Financial Performance

Your Company continued to reinforce its leadership position in the Indian newsprint industry and remained one of the lowest cost manufacturers of Newsprint. Emami Paper''s commitment of delivering superior quality products to a wide segment of pride-enhancing customers has been a major reason for the Company in maintaining an impressive position in the industry.

Despite several obstacles of challenging economic environment, high interest rates, stubborn inflation levels and an overall suppressed consumer demand, your Company registered a growth in the turnover from Rs. 493.50 crores in 2011-12 to Rs.499.89 crores in 2012-13. By achieving continued operational efficiency enhancements and tight cost structures, your Company''s operating profit (PBDIT) increased 12.77% from Rs.65.14 crores in 2011-12 to Rs.73.46 crores in 2012-13. The company has achieved record production of 145816 tonne for the year 2012-13 which is more than 100% of installed capacity.

This performance is testimony to the Company''s inherently robust business and operating model, enabling it to continue to outperform the industry average. With the increased focus on literacy by the Government of India through such grassroots programmes as Sarva Siksha Abhiyan and allocation of large funds for the education and the print media sector, demand for newsprint in the country is expected to continue to report substantial growth of between 8-10 percent over the next decade.

Dividend

Your Directors are pleased to recommend dividend of 30% (Re.0.60 per share) on Equity Shares of Rs.2/- each and 8% pro-rata dividend (Re.0.09 per share) on Preference shares of Rs.100/- each for the financial year ended March 31, 2013. The Dividend, if approved by the shareholders, will absorb Rs.426.74 lacs (including the dividend tax of Rs.61.99 lacs).

Mill Expansion And Development Plan

Leveraging a rich experience of over 30 years in the business of manufacturing and marketing various grades of paper, readymade and well-laid infrastructure in terms of land, energy (captive power and grid transmission and distribution), water availability, MOEF clearance and skilled resources, your Company is undertaking a landmark expansion by setting-up a 100,000 TPA paper machine for manufacturing multi-layer coated board (packaging paper grades) at its existing location in Balasore. With a view to reinforce its competitiveness in the market and secure energy availability, the new mill complex will also have a 10 MW captive power plant, providing 100 percent self-reliance.

When completed by March 2015, your Company will emerge as the largest manufacturer of Multi-Layer Coated Board in Eastern India and one of the largest in the country.

Multi-layer coated board (comprising grey back, white back, folding box board, solid bleached board and liquid packaging board) is one of the fastest growing segments of the paper industry, growing at an annual rate of between 14-20 percent per year, even faster than the overall rate of growth of the domestic paper industry at about 10 percent.

Multi-layer coated board is used in several industries such as FMCG, pharmaceuticals and several other packaging-centric industries and with the upcoming boom in retail, especially enabled by the 49 percent FDI being permitted into the industry, the demand for duplex/ coated boards is expected to increase to 3.2 million tonne by 2016-17, up from 2.2 million tonne in 2012-13.

The project capital cost is optimally funded through a mix of promoter funds and foreign currency debt (ECB/ FCNR).

Issue Of Preference Shares

During the year the Company has issued 20,00,000, 8% Cumulative Redeemable, Non-Convertible Preference Shares of the face value of Rs.100/- each at a premium of Rs.300/- each aggregating to Rs.80.00 Crores.

Environment Management

Emami Paper Mills has embraced several proactive environmental measures to mitigate the risks of its operations on the environment. The Company promoters are of the firm belief that they are as much environmentalists as industrialists and as such, have contributed to the development of several state-of-the-art environmental assets across its manufacturing facilities. your Company believes in achieving growth but not at the expenses of the environment. The Company has undertaken necessary steps and actions for ensuring high levels of environmental management by ensuring health, hygiene and safety for surrounding communities in all the locations where it operates.

Towards achieving its environmental objectives, the Company is focused on:

- Cleaner production

- Resource conservation

- Responsible waste management

- Minimum pollution load

your Company is among the few in the industry to have adopted one of the best Integrated Management Systems (IMS) certified by DNV (Det Norske Veritas AS, the Netherlands) through their surveillance and recertification audits, encompassing the following:

- ISO 9001:2008 - Quality Management System

- ISO 14001:2004 - Environment Management System

- OHSAS 18001:2007 - Occupational Health & Safety Management System.

At Emami Paper, there has been substantial development in energy conservation by installing energy efficient equipment. Hundred percent of the energy requirement of the Balasore plant is sourced from the mill''s 20 MW captive power plant. Some of the other environmental assets possessed by the Company include:

- State-of-the-art effluent treatment plant (ETP)

- Sludge dewatering system

- Solid waste recycling

- Feeding of ETP sludge to boiler for power generation

- Rainwater harvesting

These assets have enabled the Company to achieve declining water and energy consumption per tonne of paper produced to benchmarks even lower than the standards. To optimise chemical and water consumption even further, the Company undertook the following measures:

- Conducted detailed study of water and wastewater management practices in different processes and domestic level assessing the opportunities for water and cost savings by performance enhancement of existing and future facilities

- Integrated the water management with process needs by adopting the ''Reduce, Re-use and Recycle'' concept to optimise discharge quantities

- Explored opportunities for reducing energy and chemical consumption in water and wastewater treatment systems

- Adopted the latest water and wastewater treatment technologies

- Propagated water saving equipment and devices besides organising training programmes on water management

Corporate Social Responsibility (CSR)

At Emami Paper Mills, we are not just another business organization driven by the sole objective of our bottomline. We are a positive change initiator, touching people''s lives, enhancing incomes and creating a happier society. The company''s conviction is in line with a maturing governance culture that no company can hope to succeed as a profitable island in an underprivileged environment.

It is with this conviction that Emami Paper engaged in corporate social responsibility when it went into business in 1983. The company directed its CSR for the benefit of those living in the vicinity of its Balasore plant, benefiting the tribal community. The Company''s CSR initiatives were conducted with the singular objective to extend the benefits of its corporate growth to its societal stakeholders.

Over the years, the company made relevant interventions in the areas of education, health and general welfare. The result is that Emami Paper has emerged as a responsible corporate citizen in the locations of its presence.

At Emami, our corporate social responsibility is not an adhoc response; this institutionalized initiative is driven by a CSR committee comprising eight executives. The result is that the company''s footprint and portfolio have progressively increased, benefiting around 30,000 people.

Youth

Over the years, Emami Paper has increasingly invested in youth-building through a larger investment in schools and youth-centric activities. During the year under review, the company allocated 24% of its CSR budget on youth.

Miscellaneous

Emami Paper also intends to invest in schemes related to animal welfare, grass and food cultivation, biogas generation, power and electricity and solar energy in Balasore. The company intends to engage in research related to water management, waste management and superior land utilization.

CSR initiatives, 2012-13

Education

- The company funded the building of Remuna College, Balasore.

- Provided scholarships to deserving students (including tribals).

- Funded the entire science section of Remuna College.

- Emphasised and funded girl education.

- Commissioned Bal Vikas Kendras, providing free education to the poor.

- Provided free meals and exercise books to school children.

- Donated desks, tables and water coolers to schools.

Health

- Conducted free health camps (diagnosis and medicines).

- Adopted 57 families of Fulkiari village; provided health insurance, benefiting tribals.

- Started rural mobile health camps.

- Started free ayurvedic, homeopathic and allopathic health camps.

- Built toilets for tribals; provided tube wells for drinking water.

Infrastructure

Built roads in the area; constructed temples.

General

- Trained women with tailor competence.

- Provided firewood to tribals.

- Started free veterinary services for animals.

- Supported victims of burnt houses, failed marriages and orphans; distributed free clothes to villagers.

Corporate Governance

The sections of Corporate Governance and Management''s Discussion & Analysis are set out as Annexure-III in this Report.

Directors'' Responsibility Statement

Your Directors have:-

1. Followed the applicable accounting standards in the preparation of the Annual Accounts;

2. Selected prudent accounting policies;

3. Taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company as well as preventing fraud and other irregularities; and

4. Prepared the annual accounts on a going concern basis.

Directors

Shri R. S. Goenka resigned from the Board as Executive Chairman with effect from 13th August, 2012. Your Directors wish to place on record their gratitude for his excellent and valuable service to the Company by his commendable leadership during his tenure as Executive Chairman of the Company.

Shri R. S. Agarwal was appointed as Director with effect from 26/03/1994 and he resigned with effect from 13th August, 2012. your Directors wish to place on record their gratitude for his excellent and valuable service to the Company by his commendable leadership during his tenure as Director of the Company.

Shri P. S. Patwari, Shri Aditya Vardhan Agarwal and Shri S. Balasubramanian retire by rotation and being eligible, offer themselves for reappointment.

Auditors'' Report

The observations made in the Auditors'' Report are self- explanatory and therefore do not call for any further comments.

Auditors

M/s S. K. Agrawal & Company, Chartered Accountants, retire at the forthcoming Annual General Meeting and being eligible offer themselves for reappointment. M/s Salarpuria Jajodia & Co. have expressed their willingness to continue as Unit Auditors for the Gulmohar unit, if appointed.

Energy, Technology And Foreign Exchange

Information pursuant to Section 217(1) (e) of the Companies Act, 1956 are given in Annexure-I to the Report.

Delisting Of Equity Shares

The Company''s Equity Shares are listed with Bombay Stock Exchange, Calcutta Stock Exchange and U.P.Stock Exchange.

Bombay Stock Exchange Limited (BSE) provides a nationwide trading terminals and unrestricted, unhindered access to the investors to trade in the Shares of the Company. As no trading of the Company''s shares has been reported in U. P. Stock Exchange and trading volume in Calcutta Stock Exchange is very insignificant, the Board has approved delisting of the Equity Shares of the Company from U.P.Stock Exchange and Calcutta Stock Exchange.

Personnel

Information pursuant to Section 217(2A) of the Companies Act, 1956 is given in Annexure-II attached to this Report.

Acknowledgement

The Board acknowledges the understanding and support shown by its lending financial institutions, banks, distributors, customers, suppliers, employees and other business associates. your Company operated efficiently due to a culture of professionalism, integrity and continuous improvement leading to sustainable and profitable growth.

For and on behalf of the Board

Kolkata A.V. AGARWAL

April, 30, 2013 Executive Chairman


Mar 31, 2012

The Directors take pleasure in presenting their Thirtieth Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2012.

FINANCIAL RESULTS Rs./Lacs 2011-12 2010-11

Operational Income 48,969.00 42,984.01

Profit before interest and depreciation 6,943.07 7,207.68

Less: Interest 3,065.85 2,740.35

Profit Before Depreciation & Tax 3,877.22 4,467.33

Depreciation 2,773.19

Less: Transfer from Revaluation Reserve 56.97 2,716.22 2,657.59

Profit Before Taxation 1,161.00 1,809.74

Less : Provision for Current Taxation -

Income tax for earlier years 98.51

Provision for deferred tax 231.79 330.30 423.22

Profit after Tax 830.70 1,386.52

Add : Surplus brought forward 1,032.76 568.13

Balance available for appropriation 1,863.46 1,954.65

Appropriations

Proposed Dividend 363.00 363.00

Tax on Dividend 58.88 58.89

Transfer to General Reserve 500.00 500.00

Balance carried forward 941.58 1,032.76

1,863.46 1,954.65

Financial Performance

Your Company strengthened its leadership in the newsprint segment and continued to be the lowest cost manufacturer in the country. The Company's commitment in delivering high quality products to customers has been a major reason for maintaining prestigious position in the industry and allowed the Company to achieve better sales realization against the stiff competition with imported newsprint.

Your Company registered a considerable growth of 13.92% in the turnover from Rs.429.84 crores in 2010-11 to Rs.489.69 crores during the year under review. The Company achieved another landmark by registering a record production of 144920 MT for the year. Operating profit (PBDIT) was marginally lower at Rs.69.43 crores as against Rs.72.08 crores last year despite sharp increase in the cost of raw material, coal and financing charges. Directors are pleased to inform that in spite of turbulent business environment, your company, based on its intrinsic strength, has maintained its performance and outperformed the industry.

With the increased focus on the literacy by the Government and allocation of large funds for education and print media sector, demand of the company's products is expected to be very promising. Therefore, overall performance of your Company is expected to be improved substantially in the coming years.

Dividend

Your Directors are pleased to recommend a dividend of 30% for the financial year ended March 31, 2012. The Dividend, if approved by the shareholders, will absorb Rs.421.88 lacs (including the dividend tax of Rs.58.88 lacs).

Environment Management

Your Company continued with its commitment towards ensuring a safe and healthy workplace for all employees, guests and visitors, by maintaining the highest levels of safety and occupational health standards. Manufacturing units of your Company have best-in-class infrastructure, competent resources and state-of-art protection measures. The Environment, Occupational Health and Safety Management Systems conform to the best international standards.

Emami Paper Mills Limited (EPM) has adopted one of the best Integrated Management Systems (IMS), duly certified by M/s DNV, through their Surveillance and Recertification Audits, covering the following:

- ISO 9001:2008 - Quality Management System

- ISO 14001:2004 - Environment Management System

- OHSAS 18001:2007 - Occupational Health & Safety Management System.

EPM committed to its responsible manufacturing practices and has implemented several environment-friendly processes under its well-defined Environment Policy. The occupational health and safety process is implemented through periodic safety audit, safety observation and environment audit. EPM always makes constant efforts to better the stipulated standards, ensuring sufficient energy conservation with higher waste recycling. EPM has implemented its policies as under:

- Complying with all relevant legislative requirements

- Reducing pollution load in terms of liquid discharge, air emission and land conservation

- Saving energy and preserving natural resources like water, raw material, fuels

- Generating awareness on environment, safety and health

- Minimizing unsafe acts and working conditions

- Promoting comprehensive programmes to propagate health and environmental safety

- Adoption of superior technology and equipment with respect to resource conservation, energy and eco-friendliness.

The Company is well-renowned for its environmental management practices. It possesses:

- State-of-art effluent treatment plant

- Sludge dewatering system

- Feeding of ETP sludge to FBC boiler for power generation

- Recharging cum Rainwater harvesting system

- Development of green belt.

The aforesaid steps have resulted in declining water and energy consumption, reflected in the data submit- ted for energy conservation in this report.

Corporate Social Responsibility (CSR)

The CSR projects focus on promoting Economic, Social, Environmental and Cultural growth of the com- munity at large in an equitable and sustainable manner in the peripheral areas around the factories. Over the years, we have worked with dedication towards enriching lives across the community. The company is consistently taking up various community welfare initiatives for the benefit of the people. A sense of responsibility towards society is inherent to Emami's concept of entrepreneurship. Under CSR, the major thrust areas include education, health care, drinking water and community service schemes to neighbouring villages and supporting them during natural calamities.

Health Care: Our healthcare activities range from operating local first aid centers, free health care services and health camps through which we also provide ayurvedic, homeopathic and allopathic medicines.

Education: Infrastructural support has been provided to 30 schools in the neighbouring villages covering 2500 students and distributed notebooks, given scholarship to meritorious students, supplied accessories like desks, benches, fans, water filter etc. Besides, regular contribution made to the Friends of Tribals Society (FTS) for education to tribals in rural areas and also to various schools and Colleges. The company also sponsored tribal students for their better education.

Villages Adoption: The company adopted Fulkiari village, comprising 200 villagers living below the poverty level, having single-room temporary houses with no toilets, for onward development with a significant expenditure covering the following activities: Toilets, insurance cover, safe drinking water with water filters, bore wells, education for children, medical and health camps and women's self-employment.

Community Service: In the community service schemes, Emami is always ahead in installing and maintaining tube wells, street lights, road repairs, road construction, sponsoring sports activities, mass marriages, distributing blankets in winter, extending helping hand to orphanage homes to meet their requirements, religious and social activities through local groups. The Company undertook the construction and renovation of Temples in the nearby villages.

The Company's CSR activities and its continuing policy of social and community services have made a visible impact in the upliftment of local villages in the vicinity of its plant at Balgopalpur and surrounding areas.

Awards

The Company received the following awards during the year under review:

Energy Award:

2011- 'National Award for Excellence in Energy Management- 2011' by CII - GBC Hyderabad. This prestigious award was received from Dr. Ajay Mathur, Director General, and Bureau of Energy Efficiency in 10th Energy Efficiency Summit 2011.

For Energy Management, Emami has also received the First Prize for "NATIONAL ENERGY CONSERVATION AWARD" for the Pulp & Pa- per Sector from the Ministry of Power, Government of India for the year 2009-10

Excellence Award:

2011- Silver Certificate of Merit of The Economic Times India Manufacturing Excellence Award 2011 for the efforts taken by the Plant and its personnel in enhancing manufacturing and supply chain excellence. This award is jointly hosted by The Economic Times in collaboration with Frost & Sullivan.

Group for Interse Transfer of Shares

As required under Clause 3(1)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997 persons constituting "Group" (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of the aforesaid Regulations, are given in the Annexure IV attached herewith and forms part of this Annual Report.

Corporate Governance

The sections of Corporate Governance and Management's Discussion & Analysis are set out as Annexure-III in this Report.

Directors' Responsibility Statement

Your Directors have:-

1. Followed the applicable accounting standards in the preparation of the Annual Accounts;

2. Selected prudent accounting policies;

3. Taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1 956 for safe- guarding the assets of your Company as well as pre- venting fraud and other irregularities; and

4. Prepared the annual accounts on a going concern basis.

Directors

Shri R.C. Mall was appointed as Director in the category of Executive with effect from 11th August 2011 under section 260 of the companies Act, 1956 and he resigned with effect from 23rd April, 2012. Your Directors wish to place on record their gratitude for his guidance and advice during his tenure as Director in the category of Executive.

Shri J.K. Khetawat was appointed as Additional Di- rectors of the Company with effect from 11th August 2011 under section 260 of the companies Act, 1956 to hold office till the date of ensuing Annual General Meeting. Notice under section 257 of the Companies Act, 1956 was received by the Company from members signifying their intention to propose Shri J.K. Khetawat as candidate for the Office of Directors.

Shri Manish Goenka and Shri J. Godbole retire by rotation and being eligible, offer themselves for re-appointment. Shri S. K. Todi and Shri N. Mishra would also retire by rotation at the ensuing Annual General Meeting but they do not seek / offer for reappointment in the ensuing Annual General Meeting.

Auditors' Report

The observations made in the Auditors' Report are self- explanatory and therefore do not call for any further comments.

Auditors

M/s S. K. Agrawal & Company, Chartered Account- ants, retire at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. M/s Salarpuria Jajodia & Co. have expressed their willingness to continue as Unit Auditors for the Gulmohar unit, if appointed.

Energy, Technology and Foreign Exchange

Information pursuant to Section 217(1)(e) of the Companies Act, 1956 are given in Annexure-I to the Re- port.

Personnel

Information pursuant to Section 217(2A) of the Companies Act, 1956 is given in Annexure-II attached to this Report.

Acknowledgement

The Board acknowledges the understanding and sup- port shown by its lending financial institutions, banks, distributors, customers, suppliers, employees and other business associates. Your Company operated efficiently due to a culture of professionalism, integrity and continuous improvement leading to sustainable and profitable growth.



For and on behalf of the Board

Kolkata R. S. Goenka

May, 17, 2012 Executive Chairman


Mar 31, 2011

The Directors take pleasure in presenting their Twenty-Ninth Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2011.

Financial Results (Rs. in Lacs)

2010-11 2009-10

Operational Income 43,218.24 39,789.42

Profit before interest and depreciation 6,626.09 6,512.20

Less: Interest (net) 2,157.87 2,393.45

Profit Before Depreciation & Tax 4,468.22 4,118.75

Depreciation 2,723.61

Less:Transfer from Revaluation Reserve 66.02 2,657.59 2,940.90

Profit Before Taxation 1,810.63 1,177.85

Less : Provision for Current taxation 359.90

Income tax for earlier years 2.49

Provision for deferred tax 420.73

MAT Credit entitlement (359.01) 424.11 478.91

Profit after Tax 1,386.52 698.94

Add : Surplus brought forward 568.13 793.88

Balance available for appropriation 1,954.65 1,492.82

Appropriations

Proposed Dividend 363.00 363.00

Tax on Dividend 58.89 61.69

Transfer to General Reserve 500.00 500.00

Balance carried forward 1,032.76 568.13

1,954.65 1,492.82

Financial performance

Your Company reported another strong performance this year as it extended its leadership in newsprint segment. Your Company continued its dominance in being the lowest cost newsprint manufacturer and extended its market presence. This allowed the company to deliver superior value to the stakeholders.

Net Sales grew 11.42% from Rs. 385.78 crores in 2009-10 to Rs. 429.84 crores in 2010-11 due to significant increase in existing business volumes. The Company also achieved a record production of 144712 MT during the year achieving plant capacity utilization of almost 100%.

Your company registered a 54% growth in profit before tax to Rs. 18.11 crores in 2010-11 against Rs. 11.78 crores in 2009-10. Profit after taxation also jumped over 98% from Rs. 6.99 crores in 2009-10 to Rs. 13.87 crores.

In view of the paper market condition looking much favorable, the working results of the company are expected to be significantly better in the coming years.

Dividend

Your Directors are pleased to recommend a dividend of 30% for the financial year ended March 31, 2011. The Dividend, if approved by the shareholders, will absorb Rs. 423.29 lacs (including the dividend tax of Rs. 60.29 lacs).

Operations and outlook

Your Company is the largest manufacturer of Newsprint in ndia and registered an overall improved performance in 2010-11, where all business verticals and sub-segments grew at a robust pace. The average realization in newsprint and writing and printing paper increased by 17 per cent over 2009-10.

Emami Papers philosophy is to actively engage with the customers not only in providing them with the right quality of products but also to provide solutions to their need through its dedicated technical service team. This has helped in attaining quick market penetration in high end newsprint sector.

The Company continued its excellence in operations with modernized technology, backed by efficient intellectual capital - resulting in zero breakdowns or rejections.

Paper industry is poised for growth and has a linear relationship with GDP of our economy. With the GDP expected to be at around 9 percent during 2011-12, the paper industry will grow simultaneously at 8 per cent over the next 10 years. This will translate into positive results for the Company and higher returns for our stakeholders.

Environment management

Emami Paper Mills Limited (EPML) continues to be committed to its responsible manufacturing practices and has implemented several environment-friendly processes under its well-defined Environment Policy. Some of its environmental policies are:

- Clean production

- Resource conservation

- Responsible waste management

- Minimum pollution load

EPML always makes constant efforts to better the standards set by the Pollution Control Board, ensuring sufficient energy conservation with higher waste recycling.

EPML has adopted one of the best Integrated Management Systems (IMS), duly certified by M/s DNV (M/s Det Norske Veritas AS, Netherlands) through their Surveillance and Recertification Audits, covering the following:

1. ISO 9001:2008 - Quality Management System

2. ISO 14001:2004 - Environment Management System

3. OHSAS 18001:2007 - Occupational Health & Safety Management System.

The management is committed to saving the environment and upholding human safety and health. EPML has implemented its policies and focuses on environment, health and safety, quality and energy as under:

- Complying with all relevant legislative requirements

- Reducing pollution load in terms of liquid discharge, air emission and land conservation

- Saving energy and preserving natural resources like water, raw material, fuels

- Generating awareness on environment, safety and health

- Minimising unsafe acts and working conditions

- Promoting comprehensive programmes to propagate health and environmental safety.

The Company is well-renowned for its environmental management practices. It possesses:

- State-of-art effluent treatment plant

- Sludge dewatering system

- Managing solid wastes through recycling

- Feeding of ETP sludge to boiler for power generation

- Rainwater harvesting

The aforesaid steps have resulted in declining water and energy consumption, reflected in the data submitted for energy conservation in this report.

Mill expansion plans

In line with the planned expansion projects, the Company has firmed up plans for installing Printing & Writing Paper Machine of 175,000 tpa and Elemental Chlorine Free (ECF) Bamboo/Wood Pulp Mill of 150,000 tpa, Captive Power Plant of 32 MW along with required Water Intake and Treatment facilities at a project cost of Rs. 1,225 crores in the 1st Phase. Approvals are in process for land acquisition, environment clearance, water clearance and financial tie-up among others.

As a part of above, the Company has acquired state of the art used Paper Machine from Sweden. It has also floated global tender for the main process equipment. Location of the these facilities adjacent to the existing mill at Balasore provides advantage in terms of utilization of available resources, well established infrastructure and proximity to the coalfield, port, railway siding and highway facilities.

New vista -agro-forestry

In line with Companys plans to install an Integrated Pulp & Paper Plant to produce high end Printing & Writing graphic papers from virgin pulp out of bamboo/wood as pulpable raw materials, the Company has set up a full fledged department known as Agro-Forestry Division at Balasore to develop a sound raw material base within its catchment area.

Nurseries in various districts of Orissa and West Bengal have been established to provide saplings of Eucalyptus, Acacia & Casuarina to farmers for pulp wood tree plantations under farm forestry schemes. Apart from the seed root origin based saplings, the Company has planned to use higher technology aided clonal saplings to increase productivity. A Research and Development Centre for multiplication of clones of Eucalyptus and Casuarinas has started functioning at Balasore with an initial capacity of 10 lacs clonal saplings per year which will be increased to 50 lacs clonal saplings.

The above programme will mean the following direct and indirect advantages to the region.

1. It will provide productive use of the farmers land particularly in the non-irrigated areas.

2. It will provide 200 man days per Ha per annum of employment to the rural population.

3. Apart from bringing in the dramatic change in the earning capacity of farmers, it will improve soil condition of the arid land which can help arrest of degradation and erosion.

4. It will also work as huge carbon sink to reduce the GHG problem.

The Agro-Forestry Division has also taken up activities to motivate the farmers/villagers to practice inter-cropping of vegetables, pulses, etc. along with tree plantation to get more interim revenue out of these fast growing crops.

Community responsibility

We at Emami Paper, extend our responsibility, not only to our employees and shareholders but also to the community. Over the years, we have worked with dedication towards enriching lives across the community. A sense of responsibility towards society is inherent to Emamis concept of entrepreneurship. Under CSR, the major thrust areas include health care, drinking water, education and community service schemes to neighbouring villages and supporting them during natural calamities.

Our healthcare activities range from operating local first aid centres, free health services and health camps through which we provide ayurvedic, homeopathic and allopathic medicines. In the community service schemes, Emami is always ahead in installing and maintaining tube wells, street lights, road repairs, sponsoring sports activities, mass marriages, religious and social activities through local groups. With regards to education, the Company makes regular contribution to the Friends of Tribals Society (FTS)

for education to tribals in rural areas and also to various schools and colleges. During the year, the Company adopted Fulkiari, a village with a population of 200 and provided them with basic amenities to raise living standards.

The Companys CSR activities and its continuing policy of social and community services have made a visible impact in the upliftment of local villages in the vicinity of its plant at Balgopalpur and surrounding areas.

Awards

The Company received the following awards during the year under review :

- First Prize for "NATIONAL ENERGY CONSERVATION AWARD" for the Pulp & Paper Sector from the Ministry of Power, Government of India for the year 2009-10.

- First Prize for "ENERGY CONSERVATION AWARD" from the Indian Paper Manufacturers Association for the year 2009-10.

- The years of excellence by our CEO & Executive Director Mr. P.S. Patwari resulted in him recognized as "CA Business Achiever Award" in the SME category for excellent management for the year 2010 by the Institute of Chartered Accountants of India.

- Excellence Award for excelling in the field of "Corporate Social Responsibility" by All India Small & Medium Newspapers Federation, New Delhi, Orissa Unit.

Group for interse transfer of shares

As required under Clause 3(1)(e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997 persons constituting "Group" (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of the aforesaid Regulations, are given in the Annexure IV attached herewith and forms part of this Annual Report.

Corporate governance

The sections of Corporate Governance and Managements Discussion & Analysis are set out as Annexure-III in this Report.

Directors responsibility statement

Your Directors have:-

1. Followed the applicable accounting standards in the preparation of the Annual Accounts;

2. Selected prudent accounting policies;

3. Taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company as well as preventing fraud and other irregularities; and

4. Prepared the annual accounts on a going concern basis.

Directors

Shri U.G. Bhat, Shri A.V.Agarwal, Shri R.S.Goenka and Shri H.M. Marda retire by rotation and being eligible, offer themselves for re-appointment.

Auditors report

The observations made in the Auditors Report are self- explanatory and therefore do not call for any further comments.

Auditors

M/s S. K. Agrawal & Company, Chartered Accountants, retire at the forthcoming Annual General Meeting and being eligible offer themselves for re-appointment. M/s Salarpuria Jajodia & Co. have expressed their willingness to continue as Unit Auditors for the Gulmohar unit, if appointed.

Energy, technology and foreign exchange

Information pursuant to Section 217(1)(e) of the Companies Act, 1956 are given in Annexure-I to the Report.

Personnel

Information pursuant to Section 217(2A) of the Companies Act, 1956 is given in Annexure-II attached to this Report.

Acknowledgement

The Board acknowledges the understanding and support shown by its lending financial institutions, banks, distributors, customers, suppliers, employees and other business associates. Your Company operated efficiently due to a culture of professionalism, integrity and continuous improvement leading to sustainable and profitable growth.

For and on behalf of the Board

Kolkata

May, 30, 2011 R.S. Goenka

Executive Chairman

 
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