Directors Report of JK Paper Ltd.
Mar 31, 2023
The Directors have pleasure in presenting the 62nd Annual Report along with Audited Financial Statements of the Company for the financial year ended 31st March 2023.
|
FINANCIAL RESULTS |
Rs. in crore (10 Million) |
|||
|
Particulars |
Standalone |
Consolidated |
||
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
|
|
Revenue from Operations |
6543.68 |
4165.76 |
6745.02 |
4153.47 |
|
Profit before Finance Costs and Depreciation & Tax (EBITDA) |
1759.38 |
1023.09 |
2184.45 |
1121.63 |
|
Profit before Depreciation and Tax (PBDT) |
1548.37 |
930.44 |
1928.33 |
989.75 |
|
Profit After Tax (PAT) |
885.33 |
511.09 |
1208.22 |
543.82 |
The Board is pleased to recommend final dividend of Rs. 4/- per equity share (40%) for the financial year ended 31st March 2023, subject to approval of members at the forthcoming Annual General Meeting and deduction of tax at source, as may be applicable. This is in addition to interim dividend of Rs. 4/- (40%) per equity share declared and paid by the Board of Directors during the year. The total dividend outgo will be Rs. 135.52 crore. Dividend payout is in accordance with the Dividend Distribution Policy of the Company.
The amount available for appropriation, including surplus from the year, stood at Rs 2133.08 crore. The Directors propose this to be appropriated as under:
Rs. in crore (10 Million)
Item__2022-23 2021-22
General Reserve 300.00 200.00
Dividend for 2021-22/2022-23 160.93 67.76
Surplus carried to Balance Sheet 1672.15 1247.75
The Company achieved its highest ever Sales, EBIDTA and PAT during the financial year 2022-23 despite higher input costs. Ramp up of volumes from the new Packaging Board plant at Unit CPM coupled with overall better realization have contributed in increasing overall revenues of the Company. The Gross Revenue, EBIDTA and PAT increased by 57%, 72% and 73%, respectively, compared to FY 2021-22.
The Company''s inherent strengths of its people, brand loyalty, customer centricity, high operating efficiencies and the continued focus on plantation activities in nearby areas have combined to make this performance possible. Your Company continues to maintain it''s leadership position.
Healthy demand of writing & printing paper and packaging board resulted in higher price realizations and higher volume growth. However, coated paper and packaging board segment witnessed price pressure in the second half of the year. Outbreak of Ukraine-Russia war has led to sharp increase in prices of key inputs like coal, imported pulp and other commodities, during the year, although there has been some softening towards end of the financial year. The coming year has to be viewed with some caution given volatility in input and output prices arising from global economic and political situation.
(i) Investments in JKPL Packaging Products Ltd. (JKPPPL)
As reported last year, the Company had embarked upon a greenfield Corrugated Packaging Plant at Ludhiana to take advantage of the growing industrialization and e-commerce markets which is expected to grow at a healthy rate. Your Company had formed a subsidiary - JKPL Packaging Products Limited (JKPPPL) for this project which has acquired a green field site in Ludhiana. Board had approved an investment of upto Rs. 150 crore for this project which is funded by equity from the Company and Loans from Domestic banks. There were some delays due to the late delivery of some equipments from suppliers. Trial run of the plant is underway and commercial production is expected to commence this year.
(ii) Acquisition of Horizon Packs Pvt. Ltd. (HPPL) and Securipax Packaging Pvt. Ltd.(SPPL)
During the year, the Company had acquired 85% equity shares of each of HPPL and SPPL, for cash consideration funded through internal accruals. Accordingly, HPPL and SPPL have become subsidiaries of the Company. HPPL and SPPL are engaged in Corrugated Packaging business and are
collectively number one in the Country. The said acquisitions are in synergy with the growing packaging sector and corrugated packaging business of the Company''s subsidiary. This will enable substantial expansion of Company''s foot print in corrugated packaging business in terms of volume and market, making it the largest organized player.
CAPITAL STRUCTURE AND CREDIT RATING
During the year under review, there has been no change in the Authorised and Paid-up share capital of the Company. As on 31st March 2023, the Authorised Share Capital of the Company was Rs. 500 crore and Paid-up Share Capital was Rs. 169.40 crore.
The Company improved the working capital management by use of its surplus funds instead of using short-term borrowings from banks in an increasing interest rate scenario.
The Company has prepaid Rs. 72.69 crore of its loan outstanding while meeting its financial obligations.
Your Company closely monitors domestic & global economic scenario and moved timely and swiftly to use various forex and interest rate derivative structure to optimize the overall finance cost in an increasing interest rate scenario.
Long-term credit rating of JK Paper has been upgraded from AA-/ Stable to AA/Stable by CRISIL and India Ratings and it continues to enjoy the highest A1 credit rating for its short-term debt.
The long-term Credit Rating of The Sirpur Paper Mills Ltd., subsidiary of the Company, has also upgraded two notches from A/Positive to AA-/Positive.
COMPLIANCE WITH SECRETARIAL STANDARDS
The applicable Secretarial Standards issued under Section 118 of the Companies Act, 2013 (''the Act'') have been complied with.
Our commitment towards Safety & Environment, Quality & Operational Excellence, Sustainability and Corporate Social Responsibility initiatives continue to garner appreciation from various industry chambers and social bodies. Some of the prominent accolades and awards received during the year are as follows:
⢠Unit JKPM is ranked no. 1 in first green rating of Pulp & Paper Sector by Centre for Science and Environment.
⢠Unit CPM has won Energy Efficient Award by CII - 23rd National Award for Excellence in Energy Management.
⢠Unit JKPM bagged the "23rd National Award for Excellence in Energy Management 2022" by CII and "CII National Award for excellence in Water Management -2022"
⢠Unit CPM was awarded with "Excellent position" under Paper Industry category -SCALE (Supply Chain and Logistics Excellence Awards) 2022, organized by CII.
⢠Unit JKPM was awarded "IPMA Paper Mill of the Year Award" 2021-22 by Indian Paper Manufacturers Association (IPMA).
⢠Unit JKPM has received "Odisha CSR Excellence Award"-2022 from Odisha CSR Forum.
⢠Unit JKPM has received "Odisha State Energy Conservation Award"-2022 from Principal Chief Electrical Inspector & State Designated Agency.
⢠Unit JKPM has won "National Energy leader Award" by CII.
⢠Unit JKPM has received "FICCI''S Sustainable Agriculture Award-2022"
Industrial Relations at units of the Company continued to remain peaceful and cordial throughout the year. We value the long association of our employees including contractors and their workmen to sustain industrial harmony and create a positive work environment. By introducing various new work practices along with automation, we have succeeded in enhancing manpower productivity. We encourage continuous interaction, dialogues and participation of local villagers and other stakeholders in collaborating various social interventions.
Pursuant to the provisions of the Act, the Annual Return of the Company is available on the website of the Company and can be accessed at https://jkpaper.com/wp-content/uploads/2023/07/ Annual_Return_2022-23.pdf
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of loans, guarantees or securities and investments in terms of the provisions of Section 186 of the Act are given in the financial statements.
During the financial year ended 31st March 2023, all the contracts or arrangements or transactions entered into by the Company with the Related Parties were in the ordinary course of business and on arm''s length basis and were in compliance with the applicable provisions of the Act and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (''the Listing Regulations'').
Form AOC-2 containing details of the material Related Party Transactions entered during the financial year 2022-23 as per
Policy, is attached as Annexure-1 to this Report and forms part of it.
Policy on Materiality of Related Party Transactions and on Dealing with Related Party Transactions is available on the website of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review, Shri Harshavardhan Neotia (DIN: 00047466) was appointed as Non-Executive Independent Director of the Company w.e.f. 29th July, 2022 for a period of five consecutive years and the requisite resolution in this regard was passed by the Shareholders at the Annual General Meeting (AGM) held on 6th September, 2022.
Shri Anoop Seth (DIN:00239653) was appointed as Non-Executive Independent Director of the Company w.e.f. 27th September, 2022 for a period of three consecutive years and the requisite resolution in this regard was passed by the Shareholders on 17th November, 2022 through Postal Ballot (through remote e-voting only).
The Board is of the opinion that Shri Harshavardhan Neotia and Shri Anoop Seth have high integrity and relevant experience.
During the year under review, Shri Arun Bharat Ram (DlN: 00694766) and Shri M.H. Dalmia (DlN: 00009529) had ceased to be Directors of the Company w.e.f. 23rd August 2022 on completion of their second term as Independent Directors of the Company. The Board wishes to place on record its sincere appreciation of the valuable contributions and guidance received from them during their tenure.
Smt. Vinita Singhania (DIN: 00042983), retires by rotation and being eligible offers herself for re-appointment at the forthcoming AGM of the Company.
Shri Bharat Anand (DIN: 02806475) was appointed as Additional Director on the Board of the Company in the category of Independent Director w.e.f. 1st July 2023 for a period of five consecutive years, subject to approval of Shareholders at the forthcoming AGM of the Company.
All the Independent Directors of the Company have given requisite declarations that they meet the criteria of independence as provided under the Act and Listing Regulations.
Except as stated above, there was no other change in Directors and Key Managerial Personnel of the Company.
The Company remains committed to have a robust and effective internal control mechanism across all offices, plants and key functions that provides assurance of existence of a structured system for: business planning and review of goals achieved ,
evaluating & managing risks, policies and procedures adopted for ensuring orderly financial reporting, timely preparation of reliable Financial Information, accuracy and completeness of the accounting records, ensuring legal and regulatory compliance, protecting company''s assets, prevention and detection of fraud and error and validation of IT Security Controls. Corporate Internal Audit team consisting of qualified professionals and supported by external independent audit firms and other specialized agencies, regularly conducts internal audits to review the internal control systems and compliance thereof as per the annual audit plan approved by Audit Committee of the Board. The findings of the Audit team are reviewed by the Audit Committee and corrective actions are initiated, where necessary. In addition, the Company also follows a Compliance monitoring software tool to capture status of all applicable statutory compliances online.
The Company has also developed a set of documented Risk Control Matrix for all major functions and no material reportable weakness was observed during the year.
The Company also has a comprehensive budgetary control system in sync with its Strategic Business Plan. Key performance targets are set for each Plant and product lines. The actual performance against these targets is periodically monitored and corrective actions as needed are initiated.
CORPORATE SOCIAL RESPONSIBILITY
The core of your Company''s CSR activities is centered around the creation of sustainable livelihood opportunities and restoration & preservation of natural resources within the parameters of SDG''s and the national developmental priorities- farmers, women, soil, water and youth. The projects have made a significant impact in enhancing the local economy, the beneficiary groups have through savings, bank loans and credit linkages invested over Rs.60 crores in small & micro enterprises which have resulted in income generation. The CSR footprint of the Company has extended to 846 villages in states of Odisha, Gujarat, Telangana and Uttar Pradesh, touching a population of more than 690 thousand individuals. The diversity of the interventions ranges from Farmer Producer Organization, Women Self- Help Groups, Water Harvesting, Solar irrigation, Soil Conservation, Youth Enterprises, Community Health, Disaster relief, Digital Literacy, artisan development resource center amongst others. Company''s CSR interventions have been co-opted by the local authorities and integrated with the overall development programs. The programs have been widely reported as model programs in the media and have been visited by important dignitaries from the government and development sector.
The Company has a Corporate Social Responsibility (CSR) Policy in accordance with the provisions of the Act. CSR Policy of the Company is displayed on the website of the Company. During the year, pursuant to amendment in the Companies (Corporate
Social Responsibility Policy) Rules, 2014, inter alia, pertaining to criteria of Implementing Agencies, CSR Policy of the Company was amended.
Annual Report on the CSR activities undertaken by the Company during the financial year ended 31st March 2023, in the prescribed format, along with summary of Impact Assessment Report is annexed to this Report as Annexure-2 and forms part of it.
AUDITORS & THEIR REPORTS(a) Statutory Auditors
In accordance with the provisions of the Act and the Rules made thereunder, M/s Lodha & Co., Chartered Accountants, were reappointed as Statutory Auditors of the Company for their second term of five consecutive years from the conclusion of the 61st AGM till the conclusion of the 66th AGM to be held in the year 2027.
The observations of the Auditors in their report on Accounts and the Financial Statements, read with the relevant notes are self-explanatory. The Auditor''s Report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Auditors have not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed.
The Board of Directors had appointed Shri Namo Narain Agarwal, Company Secretary in Practice, as Secretarial Auditor to carry out Secretarial Audit of the Company for the financial year 2022-23. The Report given by him for the said financial year in the prescribed format, pursuant to the provisions of Section 204 of the Act and Regulation 24A of the Listing Regulations, is annexed to this Report as Annexure-3 and forms part of it. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.
Pursuant to provisions of Regulation 24A of the Listing Regulations, during the year under review, the Company has two material unlisted subsidiaries incorporated in India-(i) The Sirpur Paper Mills Limited (SPML) and (ii) Horizon Packs Private Limited (HPPL). Secretarial Audit Reports for FY 202223 of (i) Shri Namo Narain Agarwal, Secretarial Auditor of SPML and (ii) M/s Somani & Associates, Secretarial Auditor of HPPL, in the prescribed format are annexed to this Report as Annexure - 3(i) & 3(ii) respectively.
In accordance with the provisions of Section 148(1) of the Act, the Company has maintained cost accounts and records. The
conducted by M/s R.J. Goel & Co., Cost Accountants, Delhi and the Cost Audit Report was duly filed with the Ministry of Corporate Affairs, Government of India. The Audit of the Cost Records for the financial year ended 31st March 2023 is being conducted by the said firm and the Report will also be filed with the Ministry of Corporate Affairs, Government of India.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the year under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. Further, during the year under review, no applications were made or no proceedings were pending as at the end of the year under the Insolvency and Bankruptcy Code, 2016.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company and the date of this report.
CHANGE IN THE NATURE OF BUSINESS
During the year under review, there was no material change in the nature of business of the Company.
The details as required under Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure-4 and forms part of it.
Disclosure of the ratio of the remuneration of each Director to the median employee''s remuneration and other requisite details pursuant to Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this Report as Annexure-5 and forms part of it. Further, Particulars of Employees pursuant to Rule 5(2) & (3) of the above Rules, also form part of this Board Report. However, in terms of provisions of Section 136 of the Act, the Annual Report for the financial year 2022-23 is being sent to all the members of the Company and others entitled thereto, excluding the said particulars of employees. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is also available for inspection at the Registered Office of the Company on working days during working hours.
Your Company reaffirms its commitment to the highest standards of corporate governance practices. Pursuant to Regulation 34 read with Schedule V of the Listing Regulations, Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance are made part of this Annual Report.
The Corporate Governance Report which forms part of this Annual Report also covers the following:
a) Particulars of Five Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management including, inter alia, the criteria for performance evaluation of Directors.
c) Manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual Directors.
d) Details with respect to composition of Audit Committee and establishment of Vigil Mechanism.
e) Details regarding Risk Management.
f) Dividend Distribution Policy.
g) Disclosures under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Business Responsibility and Sustainability Report
Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility and Sustainability Report of the Company for the financial year ended 31st March 2023 in the prescribed format, is given in a separate section and forms part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of your Company for the financial year 2022-23 have been prepared in accordance with the Act and applicable Indian Accounting Standards. The Audited Consolidated Financial Statements together with Auditors'' Report form part of the Annual Report.
A report on the performance and financial position of each of the subsidiaries and joint ventures included in the Consolidated Financial Statements is presented in a separate section in this Annual Report, refer Form AOC-1 annexed to the Financial Statements forming part of the Annual Report.
Pursuant to the provisions of Section 136 of the Act, Standalone audited financial statements, Consolidated audited financial statements along with relevant documents and separate audited financial statements of each of the subsidiaries are available on the website of the Company.
During the financial year under review, Horizon Packs Private Limited and Securipax Packaging Private Limited have become subsidiaries of the Company and no other company has become or ceased to be subsidiary, joint venture or associate of the Company.
Pursuant to the approval of members by means of a Special Resolution at the AGM held on 27th September 2014, the Company is accepting deposits from the public and its members, in accordance with the provisions of the Act and Rules made thereunder.
The particulars in respect of the deposits covered under Chapter V of the said Act, for the financial year ended 31st March 2023 is annexed to this Report as Annexure-6 and forms part of it.
DIRECTORS'' RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Act, your Directors state that:
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) the accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) the proper internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and
(f) the proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Your Directors acknowledge the unstinted support and cooperation received from the Central Government, State Governments, participating Financial Institutions and Banks and above all the Customers, Dealers, Suppliers and other Stakeholders.
The Board wishes to record its highest appreciation of the total commitment, dedication and hard work, put in by every employee and member of the Team JK Paper.
On behalf of the Board of Directors
Place: New Delhi Bharat Hari Singhania
Date: 16th May, 2023 Chairman
Mar 31, 2022
The Directors have pleasure in presenting the 61st Annual Report along with Audited Financial Statements of the Company for the financial year ended 31st March 2022.
|
FINANCIAL RESULTS |
H in crore (10 Million) |
|
|
Particulars |
2021-22 |
2020-21 |
|
Revenue from Operations |
4165.76 |
2,969.15 |
|
Profit before Finance Costs and Depreciation & Tax (EBITDA) |
1023.09 |
701.41 |
|
Profit before Depreciation and Tax (PBDT) |
930.44 |
607.04 |
|
Profit After Tax (PAT) |
511.09 |
322.19 |
DIVIDEND
Your Directors are pleased to recommend a Dividend of H5.50 per share (55%) on the Equity Share Capital of H169.40 crore for the financial year ended 31st March 2022. The dividend outgo will be H93.17 crore. The dividend payout is in accordance with the Dividend Distribution Policy of the Company, subject to deduction of tax at source, as may be applicable.
RESERVES AND APPROPRIATIONS
The amount available for appropriation, including surplus from the year, stood at H1515.51 crore. The Directors propose this to be appropriated as under:
|
H in crore (10 Million) |
||
|
Item |
2021-22 |
2020-21 |
|
General Reserve |
200.00 |
200.00 |
|
Dividend for 2020-21 |
67.76 |
- |
|
Surplus carried to Balance Sheet |
1247.75 |
1004.42 |
The operating results of your Company for the financial year 202122 has been one of great satisfaction. Despite challenges from 2nd wave of Covid 19 during the early part of the year, supply disruptions and steep input price increases during the year, the Company declared its highest ever Sales, EBIDTA and PAT. The Gross Sales, EBIDTA and PAT were increased by 40%, 46% and 59% respectively compared to 2020-21.
The Company''s inherent strengths of its people, brand loyalty, customer centricity, high operating efficiencies and the continued
expansion of its plantation efforts in nearby areas have combined to make this performance possible. Your Company continues to outperform its peers and maintains its leadership position in several of its segments.
The impact of the Pandemic on the operations of the Company was largely confined to the beginning of the year. With the educational institutions and offices gradually opening up towards the end of the year, the demand for the Company''s writing and printing papers improved, resulting in higher realizations. The prices of key inputs like Coal, Wood, imported Pulp and certain Chemicals increased sharply during the year. These were largely passed in the market and partially made up by improved operating efficiencies.
The Company operated its SOPs during the entire Pandemic period and worked with the local communities and Government to vaccinate its staff and their families. The Company also lent its services to the local administration in tackling the pandemic and minimize its impact in the neighborhood.
While the Industry scenario both domestic and overseas, the market and demand supply balance and other operating conditions are elaborated in the Management Discussion and Analysis section, the situation regarding supply of Coal and Wood and key inputs like imported pulp and chemicals continue to remain a matter of concern.
(i) Packaging Board Project at Unit CPM
As reported last year, the Company had embarked upon an expansion of its Virgin Fibre Board (VFB) capacity by 170,000 TPA
at Unit CPM to take advantage of its strong market standing, good growth arising from changes in organised retail and need for more eco-friendly, aesthetic and consumer-friendly packaging. This comprises of a new Board Machine with an integrated pulp mill and related utilities having a capacity of 150,000 TPA. The Board is happy to report that the project commenced its commercial production on 14th January 2022. Inspite of frequent disruptions due to covid during the last two years, the total project was completed at a cost of around H1950 crore, net of GST.
With this the Company''s total capacity for Packaging Boards is 270,000 TPA which gives it an approximate market share of 20%. The board machine has ramped up well and average capacity utilisation in April 2022 was 90%. The products have been accepted well not only in India but in overseas markets as well. The team is focused on optimizing all the operating parameters so as to get the desired quality with optimum yields and full output.
(ii) Progress at The Sirpur Paper Mills Ltd. (SPML)
Since takeover in August 2018, the Company has been investing in upgrading various sections and has replaced the Power systems for better efficiency. The Board is happy to note that the unit has seen steady increase in capacity utilization during the last year. The average capacity utilization for the year 2021-22 was 72%. This is despite Covid related disruptions from time to time.
The quality of products has been upgraded significantly and is well accepted in the market, as observed with the prices of end-products reaching parity with similar products of other leading players.
(iii) Investments in JKPL Packaging Products Ltd. (JKPPPL)
With growing industrialization and e-commerce markets, the corrugated packaging segment is expected to grow at a healthy rate. Your Company has formed a subsidiary - JKPL Packaging Products Limited (JKPPPL) - to diversify into this area. JKPPPL has acquired a green field site at the Hi-Tech Cycle Valley, Ludhiana. Your Board approved an investment of H150 crore for this project which is being funded by equity from JKPL and Loans from Domestic banks. As on date all the key contracts for execution of the project have been awarded. The project is planned to go on stream in March 2023.
(iv) Acquisition of Embedded systems and Electro Optics Business
During the year, your Company acquired the Embedded systems and Electro Optics Business of Deepti Electronics and Electro Optics Pvt. Ltd. through a Business Transfer Agreement.
CAPITAL STRUCTURE AND CREDIT RATING
During the year under review, there has been no change in the Authorised and Paid-up share capital of the Company. As on 31st March 2022, the Authorised Share Capital of the Company was H500 crore and Paid-up Share Capital was H169.40 crore. The Company has issued and allotted 12,500 rated, unlisted, secured, redeemable, non-convertible debentures aggregating to Rs.125 crore on private placement basis.
As reported last year, the Company achieved financial closure for its Packaging Board Project from Indian and foreign banks with a mix of domestic loans, foreign currency loans from both overseas financial institutions and overseas arms of domestic banks, besides internal accruals. This was to optimize the interest costs. The financial risks arising out of these are being managed with a mixture of option and forward contracts, which are reviewed periodically.
In order to optimize cost of working capital funds, the Company continued to raise Commercial Papers (CPs) at competitive rates during the year. Over time with a mixture of CPs, Buyers'' and Suppliers'' Credit in foreign exchange, Rupee Export Credit and Working Capital Demand Loan, the Company hopes to maintain its cost of working capital borrowing. The Company has met all its financial repayment obligations during the year and also prepaid Rs. 96 crore of loan additionally ahead of its scheduled repayments.
JK Paper maintained its long-term credit ratings with CRISIL and India Ratings of AA - (minus)/Stable inspite of impact of COVID on its operations, delay of Packaging Board Project at Unit CPM and additional debt taken for the project. The Company continues to enjoy the highest A1 credit rating for its short-term debt.
COMPLIANCE WITH SECRETARIAL STANDARDS
The applicable Secretarial Standards issued under Section 118 of the Companies Act, 2013 (''the Act'') have been complied with.
Our commitment towards Safety & Environment, Quality & Operational Excellence and HR practices continue to garner appreciation from various industry chambers and social bodies. Some of the accolades and awards received during the year are as follows:
a) CPM received The Best Employer Brand Award from Gujarat Best Employer Brands Awards in Sep 2021.
b) JKPM received 22nd National Award for Excellence in Energy Management from CII in Sept 2021.
c) 7 Teams of JKPM Unit received excellence and Par Excellence Award in 35th National Convention on Quality Concepts organised by Quality Council forum of India in December 2021.
d) CSR Team Award 2020-21 in the Category CSR & Community Development Initiatives - awarded by Odissa CSR forum in October 2021.
e) JKPM bagged 2 winner awards for Best Safety Awards from Ministry of Labour & Employment - Govt of India under the National Safety award 2018 in November 2021.
f) JK Paper won the CSR Gold Award from a leading Odiya daily newspaper group Sambad under Corporate Excellence Award - 2022.
g) Unit JKPM won the Platinum Award at the first Industry4.0 Awards & Conference organized by FICCI under the Overall Digital Transformation category.
Industrial Relations at both units of the Company continued to remain peaceful and cordial throughout the year. We value the long association of our employees including contractors and their workmen to sustain industrial harmony and create a positive work environment. By introducing various new work practices along with automation, we have succeeded in enhancing manpower productivity. We encourage continuous interaction, dialogues and participation of local villagers and other stakeholders in collaborating various social interventions.
Pursuant to the provisions of the Act, the Annual Return of the Company is available on the website of the Company and can be accessed at https://jkpaper.com/wp-content/uploads/2022/05/ Annual-Return-2020-21.pdf
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of loans, guarantees or securities and investments in terms of the provisions of Section 186 of the Act are given in the financial statements.
During the financial year ended 31st March 2022, all the contracts or arrangements or transactions entered into by the Company with the Related Parties were in the ordinary course of business and on arm''s length basis and were in compliance with the applicable provisions of the Act and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (''the Listing Regulations'').
Form AOC-2 containing details of the material Related Party Transactions entered during the Financial Year 2021-22 as per Policy, is attached as Annexure-1 to this Report and forms part of it.
SEBI vide its Notification dt. 9th November 2021 has amended the provisions relating to Related Party and Related Party Transactions,
effective from 1st April 2022. Accordingly, amended Policy on Materiality of Related Party Transactions and on Dealing with Related Party Transactions is available on the website of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Shri Harsh Pati Singhania (DIN: 00086742) was re-appointed as Vice Chairman & Managing Director of the Company for a period of five years w.e.f. 1st January 2022 by the Members at the Annual General Meeting (AGM) of the Company held on 31st August 2021 and accordingly will continue to be a Key Managerial Personnel of the Company.
Smt. Deepa Gopalan Wadhwa (DIN: 07862942) was re-appointed as an Independent Director of the Company for second term of five consecutive years w.e.f. 27th June 2022 by the Members at the AGM of the Company held on 31st August 2021. The Board is of the opinion that Smt. Deepa Gopalan Wadhwa has high integrity and relevant experience.
Shri A.S. Mehta (DIN: 00030694) was re-appointed as President & Director of the Company for a period of three years w.e.f. 1st April 2022 by the Members at the AGM of the Company held on 31st August 2021 and accordingly will continue to be a Key Managerial Personnel of the Company.
Shri Sushil Kumar Roongta (DIN: 00309302), retires by rotation and being eligible offers himself for re-appointment at the forthcoming AGM of the Company.
All the Independent Directors of the Company have given requisite declarations that they meet the criteria of independence as provided under the Act and Listing Regulations.
Shri KR. Veerappan has been appointed as the Chief Finance Officer and Whole time Key Managerial Personnel of the Company w.e.f. 14th May 2022 and Shri V. Kumaraswamy had ceased to be the Chief Finance Officer and Whole time Key Managerial Personnel of the Company w.e.f. close of business hours of 13th May 2022.
Except as stated above, there was no other change in Directors and Key Managerial Personnel of the Company of the Company, during the year under review.
The Company has a robust internal control mechanism across all offices, plants and key functions. There is a Corporate Internal Audit team consisting of qualified professionals and system experts. In addition, services of external Audit firms and other specialized agencies are also availed to further strengthen its effectiveness. Regular internal audits are conducted to review the internal control systems and compliance thereof as per the annual audit plan approved by Audit Committee of the Board. The findings of the Audit team are reviewed by the Audit Committee and corrective
actions are initiated, where necessary. In addition, the Company also follows a Compliance monitoring software tool to capture status of all applicable statutory compliances online.
The Company has also developed a set of documented Risk Control Matrices for all major functions and no material reportable weakness was observed during the year.
The Company also has a comprehensive budgetary control system in sync with its Strategic Business Plan. Key performance targets are set for each Plant and product lines. The actual performance against these targets is periodically monitored and corrective actions as needed are initiated.
CORPORATE SOCIAL RESPONSIBILITY
The core of your Company''s CSR activity is centered around creation of sustainable livelihood opportunities within the parameters of SDG''s and the national developmental priorities- farmers, women, and youth. The CSR footprint of the Company has exceeded 800 villages in states of Odisha, Gujarat, Rajasthan and Uttar Pradesh touching more than 4,00,000 individuals and 60,000 households. The diversity of the interventions ranges from Farmer Producer Organization, Women Self- Help Groups, Water Harvesting, Soil Conservation, Youth Enterprises, Community Health, Disaster relief, Digital Literacy amongst others. Company''s CSR interventions have been co-opted by the local authorities and integrated with the overall development programmes. The programmes have been widely reported as model programs in the media and have been visited by important dignitaries from the government and development sector.
The Company has a Corporate Social Responsibility (CSR) Policy in accordance with the provisions of the Act. CSR Policy of the Company is displayed on the website of the Company.
Annual Report on the CSR activities undertaken by the Company during the financial year ended 31st March 2022, in the prescribed format, is annexed to this Report as Annexure-2 and forms part of it.
(a) Statutory Auditors
In accordance with the provisions of the Act and Rules made thereunder, M/s Lodha & Co., Chartered Accountants, were appointed as Auditors of the Company to hold office from the conclusion of the 56th AGM held in the year 2017 till the conclusion of 61st AGM of the Company to be held in the year 2022. Accordingly, the term of office of said Auditors shall expire at the conclusion of the forthcoming AGM.
In terms of the provisions of Section 139 of the Act and the Rules made thereunder, your Directors have recommended re-appointment of M/s Lodha & Co., Chartered Accountants, as Statutory Auditors of the Company for another term of five
consecutive years from conclusion of the ensuing AGM of the Company till the conclusion of the 66th AGM of the Company to be held in the year 2027, for approval of Members of the Company. M/s Lodha & Co. have given their consent to act as Statutory Auditors of the Company and have further confirmed that their appointment, if made, at the forthcoming AGM shall be in accordance with conditions specified in the Act.
The observations of the Auditors in their report on Accounts and the Financial Statements, read with the relevant notes are self-explanatory. The Auditor''s Report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Auditors have not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed.
(b) Secretarial Auditor
The Board of Directors had appointed Shri Namo Narain Agarwal, Company Secretary in Practice, as Secretarial Auditor to carry out Secretarial Audit of the Company for the financial year 2021-22. The Report given by him for the said financial year in the prescribed format, pursuant to the provisions of Section 204 of the Act and Regulation 24A of the Listing Regulations, is annexed to this Report as Annexure-3 and forms part of it. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.
Pursuant to provisions of Regulation 24A of the Listing Regulations, during the year under review, the Company has one material unlisted subsidiary incorporated in India- The Sirpur Paper Mills Limited (SPML). Secretarial Audit Report of Shri Namo Narain Agarwal, Secretarial Auditor, for FY 2021-22 of SPML in the prescribed format is annexed to this Report as Annexure - 3(i).
(c) Cost Auditors
In accordance with the provisions of Section 148(1) of the Act, the Company has maintained cost accounts and records. The Cost Audit for the financial year ended 31st March 2021 was conducted by M/s R.J. Goel & Co., Cost Accountants, Delhi and the Cost Audit Report was duly filed with the Ministry of Corporate Affairs, Government of India. The Audit of the Cost Records for the financial year ended 31st March 2022, is being conducted by the said firm and the Report will also be filed with the Ministry of Corporate Affairs, Government of India.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the year under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. Further, during the year under review, no applications
were made or no proceedings were pending as at the end of the year under the Insolvency and Bankruptcy Code, 2016.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company and the date of this report.
CHANGE IN THE NATURE OF BUSINESS
During the year under review, there was no material change in the nature of business of the Company.
The details as required under Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure-4 and forms part of it.
Disclosure of the ratio of the remuneration of each Director to the median employee''s remuneration and other requisite details pursuant to Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this Report as Annexure-5 and forms part of it. Further, Particulars of Employees pursuant to Rule 5(2) & (3) of the above Rules, also form part of this Board Report. However, in terms of provisions of Section 136 of the Act, the Annual Report for the financial year 2021-22 is being sent to all the members of the Company and others entitled thereto, excluding the said particulars of employees. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is also available for inspection at the Registered Office of the Company on working days during working hours.
Your Company reaffirms its commitment to the highest standards of corporate governance practices. Pursuant to Regulation 34 read with Schedule V of the Listing Regulations, Management Discussion and Analysis, Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance are made part of this Annual Report.
The Corporate Governance Report which forms part of this Annual Report also covers the following:
a) Particulars of four Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management including, inter alia, the criteria for performance evaluation of Directors.
c) Manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual Directors.
d) Details with respect to composition of Audit Committee and establishment of Vigil Mechanism.
e) Details regarding Risk Management.
f) Dividend Distribution Policy.
g) Disclosures under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
SUSTAINABILITY AND BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Sustainability and Business Responsibility Report of the Company for the financial year ended 31st March 2022 is given in a separate section and forms part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of your Company for the financial year 2021-22 have been prepared in accordance with the Act and applicable Indian Accounting Standards. The Audited Consolidated Financial Statements together with Auditors'' Report form part of the Annual Report.
A report on the performance and financial position of each of the subsidiaries and joint ventures included in the Consolidated Financial Statements is presented in a separate section in this Annual Report. Please refer to Form AOC-1 annexed to the Financial Statements forming part of the Annual Report.
Pursuant to the provisions of Section 136 of the Act, Standalone audited financial statements, Consolidated audited financial statements along with relevant documents and separate audited financial statements of each of the subsidiaries are available on the website of the Company.
During the financial year under review, JKPL Packaging Products Limited became wholly owned subsidiary of the Company and no other company has become or ceased to be subsidiary, joint venture or associate of the Company.
Pursuant to the approval of members by means of a Special Resolution at the AGM held on 27th September 2014, the Company
is accepting deposits from the public and its members, in accordance with the provisions of the Act and Rules made thereunder.
The particulars in respect of the deposits covered under Chapter V of the said Act, for the financial year ended 31st March 2022 is annexed to this Report as Annexure-6 and forms part of it.
DIRECTORS'' RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Act, your Directors state that:
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) the accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) the proper internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and
(f) the proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Your Directors acknowledge the unstinted support and cooperation received from the Central Government, State Governments, Stakeholders, participating Financial Institutions and Banks, Customers, Dealers and Suppliers.
The Board wishes to record its highest appreciation of the total commitment, dedication and hard work, put in by every employee and member of the Team JK Paper.
On behalf of the Board of Directors
Place: New Delhi Bharat Hari Singhania
Date: 13th May, 2022 Chairman
Mar 31, 2018
To the Members,
The Directors have pleasure in presenting the 57th Annual Report alongwith Audited Financial Statements of the Company for the financial year ended 31st March, 2018.
FINANCIAL RESULTS
Rs in Crore (10 million)
|
2017-18 |
2016-17 |
|
|
Gross Sales |
3,069.68 |
2,989.37 |
|
Profit Before Finance Costs and Depreciation (PBIDT) |
639.10 |
538.88 |
|
Profit before Depreciation and Tax (PBDT) |
496.08 |
351.24 |
|
Profit After Tax (PAT) |
260.14 |
162.83 |
DIVIDEND
In view of better financial results, the Directors are pleased to recommend an enhanced Dividend of Rs. 2.50 per share (Rs. 1.50 previous year) on the expanded Equity Share Capital. The Dividend outgo would amount to Rs. 53.72 crore (inclusive of Dividend Distribution Tax of Rs 9.16 crore).
APPROPRIATIONS
The amount available for appropriation, including surplus from the year stood at Rs. 726.44 crore. The Directors propose this to be appropriated as under:
(Rs crore)
|
General Reserve |
125.00 |
|
Dividend (2016-17) |
24.51 |
|
Corporate Dividend Tax |
4.99 |
|
Surplus carried to Balance Sheet |
571.94 |
PERFORMANCE REVIEW
The Company recorded its highest ever Turnover of Rs 3069.68 crore during the year with highest ever sales volumes of 5.02 Lacs MT. Capacity utilization for the Year stood at 105.1% compared to 103.4% in the previous year. The Companyâs continued thrust on expanding geographical reach of its products, strengthening the distribution network and responding to the market needs by introduction of new products have continued to reap benefits. During the year the company focused on further optimizing utilization and operating parameters at Unit JKPM which led to notable improvement in EBIDTA margins. The Companyâs continued thrust on plantation activity in the vicinity of its Plants continues to bear fruit, with a greater proportion of the requirement being met out of material sourced from shorter distances reducing the overall delivered costs at the mills. Exports accounted for 48,313 MT as against 42,577 MT in the Previous Year.
With better operating efficiencies, softer input prices and better realisations from the market, the Company improved its margins. Accordingly, EBIDTA was at Rs 639.10 crore against the previous year at Rs. 538.88 crore. Further, finance cost has also come down due to rating upgrade of the Company, lower net debts and improvement in working capital efficiency. The Companyâs Profit Before Tax was considerably up at Rs. 375.19 crore compared to a Rs 231.71 crore and Net Profit for the year was Rs 260.14 crore against Rs 162.83 crore during previous year. Operations, performance and industry scenario are discussed in more detail in the Management discussion and analysis section.
CONVERSION OF FCCBs
During the year under review, Euro 17.1 million FCCBs were converted resulting in increase in paid up Equity Capital of the Company from Rs 155.96 crore to Rs 175.50 crore. Since then, all the remaining FCCBs (Euro 2.4 million) have been converted enhancing the Equity Share Capital to Rs.178.24 crore.
AWARDS AND RECOGNITION
Our commitment towards Safety & Environment, Quality & Operational Excellence and HR practices continue to garner appreciation from various industry chambers and social bodies. Some of the accolades and awards received during the year are as follows:
a. EVP (Works) at Unit JKPM bagged Mill Manager Award by Pulp and Paper International (PPI), Belgium 2017.
b. At the 18th National Award for Excellence in Energy Management- 2017 Unit JKPM was awarded as âExcellent Energy Efficient Unitâ
c. The CII TPM Club of India awarded a TPM Recognition Certificate to Unit JKPM for Strong TPM Commitment.
d. Both Unit JKPM & Unit CPM bagged The âSignificant Achievement in HR Excellenceâ CII HR Excellence Award 2017.
e. Unit JKPM was awarded a certificate of appreciation along with a Plaque at FICCI CSR Award 2017.
f. Unit JKPM bagged First Prize in Technical Paper & Case Study contest at National Conference of âSociety of Power & Energy Professionals (SOPEP)- 2017â
g. Unit JKPM also bagged over 5 recognitions at the State Safety Award organised by Directorate of Factories and Boilers Odisha; including ones in Best performance in Safety, Health and Environment and Lowest Weighted Frequency Rate of Accidents.
h. Unit CPM was conferred CII National HR Excellence Award -2017 under âSignificant Achievement Category.
INDUSTRIAL RELATIONS
Industrial relations at our plants continued to remain peaceful and cordial throughout the year. Our continuous dialogue with the union and workers representatives to improve the industrial harmony and to create a positive work environment helped us to sign the Long Term Settlement for our contract labour and Bonus agreement for the year peacefully. By introducing various new work practices along with automation, we have succeeded in boosting manpower productivity. We acknowledge the continued support and cooperation of our employees.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2018 in the prescribed form MGT -9 is attached as Annexure-1 to this Report and forms part of it.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of loans, guarantees or securities and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the financial statements.
The Company has not made any provision during the financial year 2017-18 for the purchase of, or subscription for, shares in the Company by trustees of JK Paper Employeesâ Welfare Trust, which was formed by the Company in the year 2004 for the welfare of the employees of the Company, for the shares to be held by or for the benefit of the employees of the company.
RELATED PARTY TRANSACTIONS
During the financial year ended 31st March 2018, all the contracts or arrangements or transactions entered into by the Company with the Related Parties were in the ordinary course of business and on armâs length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
Further, the Company has not entered into any contract or arrangement or transaction with the Related Parties which could be considered material in accordance with the Policy of the Company on materiality of Related Party Transactions. In view of the above, disclosure in FORM AOC-2 is not applicable.
The Related Party Transaction Policy as approved by the Board is available on the website of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Shri Dhirendra Kumar retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting (AGM).
All the Independent Directors of the Company have given requisite declarations that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and also Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
There was no change in Managing Director, Whole-time Director, Chief Finance Officer and Company Secretary, collectively the Key Managerial Personnel, during the year under review.
INTERNAL CONTROL SYSTEM
The Company has a robust internal control mechanism in place with a Corporate Internal Audit team consisting of qualified professionals and system experts. In addition, services of external Audit firms and other specialized agencies are availed as part of the process to further strengthen the effectiveness. Regular internal audits are conducted covering all offices, factories and key areas of the business to review the internal control systems and compliance thereof, based on the annual audit plan approved by Audit Committee of the Board. The Audit committee periodically reviews the findings of the Audit team and discusses the actions taken with the management. In addition, a Compliance monitoring software tool is also in place to capture all applicable statutory compliances on line. The Company also has a set of documented Risk Control Matrices for all major functions and no material reportable weakness was observed in the system during the year. The Company follows a comprehensive Budgetary control system. Key performance goals are set for each of the Plants and Business lines. The performance against these goals is monitored and reviewed on a periodic basis and corrective actions as needed are initiated.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has been one of the foremost proponents of inclusive growth and has continued to undertake projects for overall development and welfare of the society in the fields of environment, conservation of natural resources, health, education, rural development and livelihood interventions etc.
The Company has a Corporate Social Responsibility (CSR) Policy in accordance with the provisions of the Companies Act 2013 and rules made there under. The contents of the CSR Policy are disclosed on the website of the Company.
Annual Report on the CSR activities undertaken by the Company during the financial year under review, in the prescribed format is annexed to this Report as Annexure-2.
AUDITORS
(a) Statutory Auditors and their Report
M/s Lodha & Co., Chartered Accountants, have been appointed as Auditors of the Company to hold office from the conclusion of the 56th Annual General Meeting (AGM) held in the year 2017 till the conclusion of 61st AGM of the Company to be held in the 2022, subject to ratification of the appointment by the members at the respective AGMs. However, the provision relating to ratification of such appointment by Members at every Annual General Meeting stands deleted w.e.f. 7th May 2018 by the Companies (Amendment) Act 2017 and accordingly the said ratification is henceforth not required. The observations of the Auditors in their report on Accounts and the Financial Statements, read with the relevant notes are self explanatory.
(b) Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors appointed Shri Namo Narain Agarwal, Company Secretary in Practice as Secretarial Auditor to carry out Secretarial Audit of the Company for the financial year 2017-18. The Report given by him for the said financial year in the prescribed format is annexed to this Report as Annexure-3. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
(c) Cost Auditor and Cost Audit Report
The Cost Audit for the financial year ended 31st March 2017 was conducted by M/s R.J. Goel & Co., Cost Accountants, Delhi and as required Cost Audit Report was duly filed with the Ministry of Corporate Affairs, Government of India. The Audit of the Cost Records for the financial year ended 31st March 2018, is being conducted by the said firm and the Report will also be filed with the Ministry of Corporate Affairs, Government of India.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the financial year under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.
CONSERVATION OF ENERGY ETC.
The details as required under Section 134(3)(m) read with the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure-4 and forms part of it.
PARTICULARS OF REMUNERATION
Disclosure of the ratio of the remuneration of each Director to the median employeeâs remuneration and other requisite details pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this Report as Annexure-5. Further, Particulars of Employees pursuant to Rule 5(2) & (3) of the above Rules, form part of this Report. However, in terms of provisions of Section 136 of the said Act, the Report and Accounts are being sent to all the members of the Company and others entitled thereto, excluding the said particulars of employees. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is available for inspection at the Registered Office of the Company during working hours.
CORPORATE GOVERNANCE
Your Company reaffirms its commitment to the highest standards of corporate governance practices. Pursuant to Regulation 34 read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis, Corporate Governance Report and Auditors Certificate regarding compliance of conditions of Corporate Governance are made part of this Annual Report. The Corporate Governance Report which forms part of this Annual Report also covers the following:
a) Particulars of the four Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management including, inter alia, the criteria for performance evaluation of Directors.
c) The manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual Directors.
d) The details with respect to composition of Audit Committee and establishment of Vigil Mechanism.
e) Details regarding Risk Management.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordance with the applicable Accounting Standards. The Audited consolidated financial statements together with Auditorsâ Report form part of the Annual Report.
A report on the performance and financial position of each of the subsidiaries & joint ventures included in the Consolidated Financial Statements is presented in a separate section in this Annual Report. Please refer to AOC-1 annexed to the Financial Statements in the Annual Report.
Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, Consolidated Financial Statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company.
DEPOSITS
Pursuant to the approval of members by means of a Special Resolution at the AGM held on 27th September 2014, the Company is accepting deposits from the public, in accordance with the provisions of the Companies Act, 2013 and rules thereunder.
The particulars in respect of the deposits covered under Chapter V of the said Act, for the financial year ended 31st March 2018 is annexed to this Report as Annexure-6.
DIRECTORSâ RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Companies Act, 2013, your Directors state that:
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) the accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) the proper internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and
(f) the proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
ACKNOWLEDGEMENT
Your Directors acknowledge the continued support and cooperation received from the Central Government, State Governments, Shareholders, participating Financial Institutions and Banks, Customers, Dealers and Suppliers.
The Board wishes to record its highest appreciation of the total commitment, dedication and hard work, put in by every employee and member of the Team JK Paper.
On behalf of the Board of Directors
New Delhi OP Goyal Harsh Pati Singhania
Date : 14th May, 2018 Whole-time Director Vice Chairman & Managing Director
Mar 31, 2017
To the Members,
The Directors have pleasure in presenting the 56th Annual Report alongwith Audited Financial Statements of the Company for the financial year ended 31st March, 2017.
FINANCIAL RESULTS
Rs in Crore (10 million)
|
2016-17 |
2015-16 |
|
|
Gross Sales |
2,989.37 |
2881.45 |
|
Profit Before Finance Costs and Depreciation (PBIDT) |
538.88 |
401.66 |
|
Profit before Depreciation and Tax (PBDT) |
351.24 |
206.43 |
|
Profit After Tax (PAT) |
162.83 |
60.87 |
DIVIDEND
Your Company has posted improved performance during the year. Continuing with our commitment towards shareholders, the Directors therefore recommend a Dividend of Re. 1.50 per share (Re. 0.50 previous year) on the expanded Equity Share Capital. The Dividend outgo would amount to Rs. 29.50 crores (inclusive of Dividend Distribution Tax of Rs 4.99 crores).
APPROPRIATIONS
The amount available for appropriation, including surplus from the year stood at Rs. 600.24 crores. The Directors propose this to be appropriated as under:
(Rs crore)
|
General Reserve |
125.00 |
|
Dividend (2015-16) |
7.43 |
|
Corporate Dividend Tax |
1.51 |
|
Surplus carried to Balance Sheet |
466.30 |
PERFORMANCE REVIEW
The Company recorded its highest ever Net Sales of Rs 2,736.83 crores during the year an increase of 7.4% over the previous year. The Company achieved its highest ever sales volumes of 4.82 Lacs
MT. Capacity utilization for the Year stood at 103.4% compared to 98.9% in the previous year. The Company''s efforts in enlarging geographical reach of its products, strengthening the distribution network and introduction of new products in past few years are showing positive results. During the year the company focused on further optimizing utilization and operating parameters of Unit JKPM which led to significant improvement in EBIDTA margins. As you are aware the Company had stepped up its plantation efforts and it is satisfying to note that the efforts are paying off, with greater proportion of the requirement being met out of material sourced from shorter distances which reduces the overall delivered costs at our mills. Exports accounted for about 42577 MT as against 48553 MT in the Previous Year.
With better operating efficiencies, softer input prices and better realisations from the market, the Company posted much improved margin. Consequently EBIDTA at Rs 538.88 crores was up by 34.2% over the previous year EBITDA of Rs. 401.66 crores. The Company''s Profit Before Tax was significantly up at Rs 231.71 crores compared to a Rs 89.21 crores during 2015-16 and Net Profit for the year was Rs 162.83 crores against Rs 60.87 crores during previous year.
CONVERSION OF FCCBs
During the year under review, your Company had issued 74,28,240 Equity Shares of Rs. 10/- each at a conversion price of Rs.56.37 per Equity Share consequent upon the conversion of the Foreign Currency Convertible Bonds (FCCBs) (Series 2) to the holders of such FCCBs. The Company had also converted its FCCBs (Series 3) into 74,28,240 Equity Shares of Rs. 10/- each at a similar conversion price during the financial year 2017-18 and consequently the paid-up Equity Share Capital of the Company stands increased to Rs. 163.39 Crore on the date of signing of this Report.
AWARDS AND RECOGNITION
Our commitment towards Safety & Environment, Quality & Operational Excellence and HR practices continue to garner appreciation from various industry chambers and social bodies. Some of the accolades and awards received during the year are as follows:
a. Unit JKPM bagged the Platinum Award for excellent Environment Management from Greentech Foundation, New Delhi.
b. Unit JKPM was adjudged second at the "National Energy Conservation Award - 2016", conducted by the Bureau of Energy Efficiency.
c. Unit JKPM was awarded the "Excellent Energy Efficient Unit" and "Most Useful Presentation Award" during 17th National Award for Excellency in CII Energy Management summit.
d. Unit JKPM won the "Strong Commitment to HR Excellence Award" in the Prestigious 7th CII National HR Excellence Awards
2016.
e. Unit JKPM bagged the "15th Annual Greentech Safety Award-2016" in Gold category in Paper sector from Greentech Foundation.
f. Frost & Sullivan conferred Unit JKPM with 2nd Runner up Award under Process Innovation Leadership category in the manufacturing sector.
g. Unit CPM won the CII National HR Excellence Award - 2016, "Significant Achievement"category at CII National HR Excellence Award Confluence - 2016-17.
h. Unit CPM bagged the Innovation in CSR Practices Award from World CSR Day & World Sustainability Organization, Mumbai
2015-16.
i. Unit JKPM was among the finalists Mill Manager Award & Environment Management award by PPI-2016, Belgium
INDUSTRIAL RELATIONS
The industrial relations at our plants continued to remain peaceful and cordial throughout the year. Our continuous dialogue with the union and workers representatives to improve the industrial harmony and to create a positive work environment, by introducing various new work practices along with automation have succeeded in boosting manpower productivity. We acknowledge the support and coordination provided by our employees.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2017 in the prescribed form MGT -9 is attached as Annexure-1 to this Report and forms part of it.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of loans, guarantees or securities and investments covered under the provisions of Section 186 of the Companies Act,
2013 are given in the financial statements.
The Company has not made any provision during the financial year 2016-17 for the purchase of, or subscription for, shares in the company by trustees of JK Paper Employees'' Welfare Trust, which was formed by the Company in the year 2004 for the welfare of the employees of the Company, for the shares to be held by or for the benefit of the employees of the company.
RELATED PARTY TRANSACTIONS
During the financial year ended 31st March 2017, all the contracts or arrangements or transactions entered into by the Company with the Related Parties were in the ordinary course of business and on arm''s length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
Further, the Company has not entered into any contract or arrangement or transaction with the Related Parties which could be considered material in accordance with the Policy of the Company on materiality of Related Party Transactions. In view of the above, disclosure in FORM AOC-2 is not applicable.
The Related Party Transaction Policy as approved by the Board is available on the website of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Smt. Vinita Singhania retires by rotation and being eligible offers herself for re-appointment at the ensuing Annual General Meeting (AGM).
Shri Harsh Pati Singhania was reappointed as Vice Chairman & Managing Director of the Company for a period of five years w.e.f. 1st January 2017 by the Members at the AGM of the Company held on 14th September 2016.
All the Independent Directors of the Company have given requisite declarations that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and also Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
There was no change in Managing Director, Whole-time Director, Chief Finance Officer and Company Secretary, collectively the Key Managerial Personnel, during the year under review.
INTERNAL FINANCIAL CONTROLS
The Company has in place an adequate budgetary control system and internal financial controls with reference to financial statements. No reportable material weaknesses were observed in the system during the year. Further, the Company has laid down internal financial control policies and procedures which ensure accuracy and completeness of the accounting records and the same are adequate for safeguarding of its assets and for prevention and detection of errors and frauds, commensurate with the size and nature of operations of the Company. The policies and procedures are also adequate for orderly and efficient conduct of business of the Company. The Company also has a robust management information system for the timely preparation of correct and accurate financial information.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has been one of the foremost proponents of inclusive growth and has continued to undertake projects for overall development and welfare of the society in the fields of environment, conservation of natural resources, health, education, rural development and livelihood interventions etc.
The Company has requisite Corporate Social Responsibility (CSR) Policy in accordance with the provisions of the Companies Act 2013 and rules made there under. The contents of the CSR Policy are disclosed on the website of the Company.
Even though, the company was not required to spend towards CSR since it incurred a net loss of Rs.14.02 Crore in the preceding three years, it has spent Rs. 1.19 Crore towards CSR activities during the Financial year 2016-17.
Annual Report on the CSR activities undertaken by the Company during the financial year under review, in the prescribed format is annexed to this Report as Annexure-2.
AUDITORS
(a) Statutory Auditors and their Report
The observations of the Auditors in their report on Accounts and the Financial Statements, read with the relevant notes are self explanatory.
M/s S.S. Kothari Mehta & Co., Chartered Accountants, were appointed as Statutory Auditors of the Company for a term of 3 (three) consecutive years to hold the office from conclusion of the 53rd Annual General Meeting (AGM) held in the year 2014 till the conclusion of 56th AGM of the Company to be held in the year
2017, being the maximum permissible term, since the said firm had been auditors for more than ten consecutive years before commencement of the Companies Act, 2013. Accordingly, the term of M/s S.S. Kothari Mehta & Co. will end at the forthcoming AGM and the said firm, will therefore, not be eligible for re-appointment as the Auditors of the Company at the said AGM. The Board of Directors wish to place on record its appreciation of the services rendered by M/s S.S. Kothari Mehta & Co.
M/s Lodha & Co., Chartered Accountants, are proposed to be appointed as Auditors of the Company to hold the office from the conclusion of the 56th AGM to be held in the year 2017 until the conclusion of 61st AGM to be held in the year 2022, subject to the approval of the Members at the AGM to be held in the year 2017 and further subject to ratification of the appointment by the members at the respective AGMs. M/s Lodha & Co., Chartered Accountants, have confirmed that their appointment, if made, would be in accordance with Section 141 of the Companies Act 2013 & pursuant to the Companies (Audit and Auditors) Rules 2014 there are no pending proceedings against the firm relating to professional matters of conduct before the Institute of Chartered Accountants of India or before any competent authority or any court & they are holding valid Peer Review Certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
(b) Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act,
2013, the Board of Directors appointed Shri Namo Narain Agarwal, Company Secretary in Practice as Secretarial Auditor to carry out Secretarial Audit of the Company for the financial year 2016-17. The Report given by him for the said financial year in the prescribed format is annexed to this Report as Annexure-3. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
(c) Cost Auditor and Cost Audit Report
The Cost Audit for the financial year ended 31st March 2016 was conducted by M/s R.J. Goel & Co., Cost Accountants, Delhi and as required Cost Audit Report was duly filed with the Ministry of Corporate Affairs, Government of India. The Audit of the cost records of the Company for the financial year ended 31st March 2017, is being conducted by the said firm and their Report will also be filed with the Ministry of Corporate Affairs, Government of India.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the financial year under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.
CONSERVATION OF ENERGY ETC.
The details as required under Section 134(3)(m) read with the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure-4 and forms part of it.
PARTICULARS OF REMUNERATION
Disclosure of the ratio of the remuneration of each director to the median employee''s remuneration and other requisite details pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is annexed to this Report as Annexure-5. Further, Particulars of Employees pursuant to Rule 5(2) & (3) of the above Rules, form part of this Report. However, in terms of provisions of Section 136 of the said Act, the Report and Accounts are being sent to all the members of the Company and others entitled thereto, excluding the said particulars of employees. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is available for inspection at the Registered Office of the Company during working hours.
CORPORATE GOVERNANCE: including details
pertaining to board meetings, Nomination and Remuneration policy, Performance Evaluation, Risk Management, Audit Committee and Vigil Mechanism.
Your Company reaffirms its commitment to the highest standards of corporate governance practices. Pursuant to Regulation 34 read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis, Corporate Governance Report and Auditors Certificate regarding compliance of conditions of Corporate Governance are made part of this Annual Report.
The Corporate Governance Report which forms part of this Annual Report also covers the following:
a) Particulars of the five Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management including, inter alia, the criteria for performance evaluation of Directors.
c) The manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual Directors.
d) The details with respect to composition of Audit Committee and establishment of Vigil Mechanism.
e) Details regarding Risk Management.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordance with the applicable Accounting Standards. The Audited consolidated financial statements together with Auditors'' Report form part of the Annual Report.
A report on the performance and financial position of each of the subsidiaries & joint ventures included in the Consolidated Financial Statements is presented in a separate section in this Annual Report. Please refer to AOC-1 annexed to the Financial Statements in the Annual Report.
Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, Consolidated Financial Statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company.
During the financial year under review your company decided to exit the joint venture Oji JK Packaging Private Limited and use the proceeds for the growth opportunities of the existing product categories.
JK Paper International (Singapore) Pte. Ltd. (name since changed from Habras International (Singapore) Pte. Ltd.) a subsidiary became a wholly owned subsidiary of the company.
DEPOSITS
Pursuant to the approval of members by means of a Special Resolution at the AGM held on 27th September 2014, the Company was accepting deposits from the public, in accordance with the provisions of the Companies Act, 2013 and rules thereunder. However, the Company has not accepted or renewed any fixed deposits w.e.f. 1st November, 2016.
The particulars in respect of the deposits covered under Chapter V of the said Act, for the financial year ended 31st March 2017 is annexed to this Report as Annexure-6.
DIRECTORS'' RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Companies Act, 2013,
your Directors state that:
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) the accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) the proper internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and
(f) the proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
ACKNOWLEDGEMENT
Your Directors acknowledge the continued support and cooperation received from the Central Government, State Governments, Shareholders, participating Financial Institutions and Banks, Customers, Dealers and Suppliers.
The Board wishes to record its highest appreciation of the total commitment, dedication and hard work, put in by every member of the Team JK Paper.
On behalf of the Board of Directors
New Delhi Bharat Hari Singhania
Date : 16th May, 2017 Chairman
Mar 31, 2016
The Directors have pleasure in presenting the 55th Annual Report along with Audited Financial
Statements of the Company for the financial year ended 31st March, 2016.
FINANCIAL RESULTS
Rs in Crore (10 million)
2015-16 2014-15
Gross Sales 2881.45 2514.97
Profit Before Finance Costs and 420.83 266 49
Depreciation (PBIDT)
Profit before
Depreciation and Tax (PBDT) 222.43 62.56
Profit/(Loss) After Tax (PAT) 79.56 (12.74)
DIVIDEND
Your Company has posted significantly improved performance during the year. However,
there is a need to conserve cash for reduction in debts and for future projects, The
Directors therefore recommend a Dividend of Re. 0.50 per share on the expanded Equity
Share Capital. The Dividend outgo would amount to Rs. 8.94 crores (inclusive of Dividend
Distribution Tax of Rs 1.51 crores).
APPROPRIATIONS
The amount available for appropriation, including surplus from the previous year
including debenture redemption reserve written back, stood at Rs. 291.53 crores. The
Directors propose this to be appropriated as under:
(Rs crore)
- General Reserve 57.00
- Dividend 7.43
- Corporate Dividend Tax 1.51
- Surplus carried to Balance Sheet 225.59
PERFORMANCE REVIEW
The Company recorded its highest ever Sales of Rs 2881.45 crores during the year an
increase of 14.6% over the previous year. The Company achieved its highest ever sales
volumes of 4.60 Lacs MT. Both our Units operated at near-full capacities compared to 91 %
in the previous year. The Company''s efforts in enlarging the geographical reach of its
products, strengthening the distribution network and introduction of new products in the
last 2 years are showing positive results. However, realizations continued to be a matter
of concern due to cheaper nil duty imports from ASEAN countries and consequent inability
of Indian manufacturers to pass on cost increases to the market. During the year the
company focused on further optimizing the utilization and operating parameters of the new
project at Unit JKPM which led to significant improvement in EBIDTA margins. As you are
aware the Company had stepped up its plantation efforts and it is satisfying to note that
the efforts has paid off, with greater proportion of the requirement being met out of
material sourced from shorter distances which reduces the overall delivered costs at our
mills. Exports accounted for about 48553 MT as against 40332 MT in the Previous Year.
With better operating efficiencies and softer input prices, the Company posted much
improved margin consequently EBIDTA at Rs 420.83 crores was up 57.9% over the previous
year. The Company''s Profit Before Tax was significantly up at Rs I 15.12 crores compared
to a loss of Rs 51.03 crores during 2014-15 and Net Profit for the year was Rs 79.56
crores against loss of Rs 12.74 crores during previous year.
During the year under review, your Company had issued 1, 19,10,000 Equity Shares of Rs.
10/- each at a price of Rs. 42/- (including premium of Rs. 32/-) aggregating to Rs. 50
Crore on Preferential basis to the Promoter and constituents of the Promoter Group.
Consequently, the paid-up Equity Share Capital of the Company increased to Rs. 148.53
Crore from Rs. 136.62 Crore. The proceeds of the said issue have been used towards
augmenting the Net Worth of the Company.
NEW PROJECTS
The newly commissioned mill at UnitJKPM is one of the most modern in the Indian industry.
The technological edge and economies of scale provided by the new machine have enabled
the Company to lower its cost of production and to scale up market share in office papers
quite steeply. Average capacity utilization of the new mill stood at 104% for the year
under consideration.
The Company''s joint venture with Oji Holdings Corporation and Marubeni of Japan commenced
its operations in July 2014. The high end corrugated box making unit is however faced
with slow pick up due to sluggish sales in end user segments. It might take 2-3 years
more to reach full capacity utilization. The emergence of online retail and consequent
demand for corrugated packaging offers exciting opportunities.
AWARDS AND RECOGNITION
Our commitment towards Safety & Environment, Quality & Operational Excellence and HR
practices continue to garner appreciation from various industry and social bodies. Some
of the accolades and awards received during the year are as follows:
a. UnitJKPM bagged 1st Prize among Pulp and Paper Industries in India, in the prestigious
"National Energy Conservation Award 2015" organized by Ministry of Power and Bureau of
Energy Efficiency (BEE), Govt, of India.
b. Unit JKPM was adjudged Winner at the prestigious "7th -SRISTI- G- CUBE (Good Green
Governance) Award -2015" organized by SRISTI publication
c. Unit JKPM bagged the "Energy Efficient Unit" in "16th National Award for Excellence
in Energy Management-2015" organized by CM held on 2nd and 3rd September 2015 at
Hyderabad
d. Unit CPM received Genentech Environment Gold Award 2015 from Greentech Foundation
(NGO- Registered under Indian Societies Act) New Delhi.
e. Unit CPM received the "Best Social Innovative Project Award" by 5th World CSR
Congress on 18th February 2016
INDUSTRIAL RELATIONS
The industrial relations at our plants continued to remain peaceful and cordial
throughout the year. Our continuous dialogue with the union and workers representatives
has improved the industrial harmony and work culture. Our engagement with the workforce
has improved the work environment, quality of life, productivity and skill. By
introducing various new work practices along with automation, we have succeeded in
increasing productivity.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31 st March 2016 in the prescribed form MGT -9 is
attached as Annexure-1 to this Report and forms part of it.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of loans, guarantees or securities and investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the financial
statements.
The Company has not made any provision during the financial year 2015-16 for the purchase
of, or subscription for, shares in the company by trustees of JK Paper Employees'' Welfare
Trust, which was formed by the Company in the year 2004 for the welfare of the employees
of the Company, for the shares to be held by or for the benefit of the employees of the
company.
RELATED PARTY TRANSACTIONS
During the financial year ended 3 Ist March 2016, all the contracts or arrangements or
transactions entered into by the Company with the Related Parties were in the ordinary
course of business and on arm''s length basis and were in compliance with the applicable
provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure
Requirements) Regulations, 2015.
Further, the Company has not entered into any contract or arrangement or transaction with
the Related Parties which could be considered material in accordance with the Policy of
the Company on materiality of Related Party Transactions. In view of the above,
disclosure in FORM AOC-2 is not applicable.
The Related Party Transaction Policy as approved by the Board is available on the website
of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Shri Wilhelmus Johannes Maria Wienk retires by rotation and being eligible offers himself
for re- appointment at the ensuing Annual General Meeting (AGM).
Shri. O.P. Goyal was reappointed as Whole-time Director of the Company from 7th September
2015 till 30th September 2018 by the Members at the AGM of the Company held on 24th
September 2015.
The Board of Directors of the Company re-appointed Sh. Harsh Pati Singhania as Vice
Chairman & Managing Director of the Company for a period of five years w.e.f. 31st
January 2017, subject to the approval of the Members at the forthcoming AGM of the
Company.
All the Independent Directors of the Company have given requisite declarations that they
meet the criteria of independence as provided in Section 149(6) of the Companies Act,
2013 and also Regulation I6(l)(b) of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
There was no change in Managing Director, Whole- time Director, Chief Finance Officer and
Company Secretary, collectively the Key Managerial Personnel, during the year under
review.
INTERNAL FINANCIAL CONTROLS
The Company has in place an adequate budgetary control system and internal financial
controls with reference to financial statements. No reportable material weaknesses were
observed in the system during the year. Further, the Company has laid down internal
financial control policies and procedures which ensure accuracy and completeness of the
accounting records and the same are adequate for safeguarding of its assets and for
prevention and detection of errors and frauds, commensurate with the size and nature of
operations of the Company. The policies and procedures are also adequate for orderly and
efficient conduct of business of the Company. The Company also has a robust management
information system for the timely preparation of correct and accurate financial
information.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has been one of the foremost proponents of inclusive growth and has
continued to undertake projects for overall development and welfare of the society in the
fields of environment, conservation of natural resources, health, education, rural
development and livelihood interventions etc.
The Company has requisite Corporate Social Responsibility (CSR) Policy in accordance with
the provisions of the Companies Act 2013 and rules made there under. The contents of the
CSR Policy are disclosed on the website of the Company.
Even though, the company was not required to spend towards CSR since it incurred a net
loss of Rs. 120.86 crore in the preceding three years, it has spent Rs. 105.36 lac
towards CSR activities during the Financial year 2015-16.
A detailed report on Company''s CSR activities along with the Annual Report on the CSR activities
undertaken by the Company during the financial year under review, in the prescribed format is
annexed to this Report as Annexure-2.
AUDITORS
(a) Statutory Auditors and their Report
M/s S S Kothari Mehta & Co., Chartered Accountants, have been appointed as Auditors of the Company
to hold the office from the conclusion of the 53rd AGM held on 27th September 2014 until the
conclusion of the 56th AGM to be held in the year 2017, subject to ratification of the appointment
by the members at the respective AGMs. Accordingly, matter relating to the appointment of the
Auditors will be placed for ratification by members at the forthcoming AGM. The observations of
the Auditors in their report on Accounts and the Financial Statements, read with the relevant notes
are self explanatory.
(b) Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Board of Directors
appointed Shri Namo Narain Agarwal, Company Secretary in Practice as Secretarial Auditor to carry
out Secretarial Audit of the Company for the financial year 2015-16 . The Report given by him for
the said financial year in the prescribed format is annexed to this Report as Annexure-3. The
Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
(c) Cost Auditor and Cost Audit Report
The Audit of the cost records of the Company for the financial year ended 31st March 2016, is being
conducted by M/s R.J. Goel & Co., Cost Accountants, Delhi and their Report will be filed with the
Ministry of Corporate Affairs, Government of India.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the financial year under review, there were no significant and material orders passed by the
Regulators or Courts or Tribunals which would impact the going concern status of the Company and
its future operations.
CONSERVATION OF ENERGY ETC.
The details as required under Section I34(3)(m) read with the Companies (Accounts) Rules, 2014 is
annexed to this Report as Annexure-4 and forms part of it.
PARTICULARS OF REMUNERATION
Disclosure of the ratio of the remuneration of each director to the median employee''s remuneration
and other requisite details pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5
(I) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as
amended, is annexed to this Report as Annexure-5. Further, Particulars of Employees pursuant to
Rule 5(2) & (3) of the above Rules, form part of this Report. However, in terms of provisions of
Section 136 of the said Act, the Report and Accounts are being sent to all the members of the
Company and others entitled thereto, excluding the said particulars of employees. Any member
interested in obtaining such particulars may write to the Company Secretary. The said information
is available for inspection at the Registered Office of the Company during working hours.
CORPORATE GOVERNANCE: including details pertaining to Board Meetings, Nomination and Remuneration
Policy, Performance Evaluation, Risk Management, Audit Committee and Vigil Mechanism:
Your Company reaffirms its commitment to the highest standards of corporate governance practices.
Pursuant to Regulation 34 read with Schedule V of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, the Management Discussion and Analysis, Corporate Governance
Report and Auditors Certificate regarding compliance of conditions of Corporate Governance are made
part of this Annual Report.
The Corporate Governance Report which forms part of this Annual Report also covers the following:
a) Particulars of the four Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior
Management including, inter alia, the criteria for performance evaluation of Directors.
c) The manner in which formal annual evaluation has been made by the Board of its own performance
and that of its Committees and individual Directors.
d) The details with respect to composition of Audit Committee and establishment of Vigil Mechanism.
e) Details regarding Risk Management.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordance with the
applicable Accounting Standards. The Audited consolidated financial statements together with
Auditors'' Report form part of the Annual Report.
A report on the performance and financial position of each of the subsidiaries and associates
included in the Consolidated Financial Statements is presented in a separate section in this Annual
Report. Please refer to AOC-I annexed to the Financial Statements in the Annual Report.
Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company,
Consolidated Financial Statements along with relevant documents and separate audited accounts in
respect of subsidiaries are available on the website of the Company.
During the financial year under review, Habras International (Singapore) Pte. Ltd., became your
Company''s subsidiary.
DEPOSITS
Pursuant to the approval of members by means of a Special Resolution at the AGM held on 27th
September 2014, the Company has continued to accept deposits from the public, in accordance with
the provisions of the Companies Act, 2013 and rules there under.
The particulars in respect of the deposits covered under Chapter V of the said Act, for the
financial year ended 31st March 2016 are:
(a) Accepted during the year Rs. 12.66 crores;
(b) Remained unclaimed as at the end of the year - Rs.0.87 crores;
(c) Default in repayment of deposits or payment of interest thereon at the beginning of the year
and at the end of the year - Nil; and
(d) Details of deposits which are not in compliance with the requirements of Chapter V of the said
Act - Nil.
DIRECTORS'' REPONSIBILITY STATEMENT
As required under Section I34(3)(c) of the Companies Act, 2013, your Directors state that:
(a) in the preparation of the annual accounts, the applicable accounting standards have been
followed along with proper explanation relating to material departures, if any;
(b) the accounting policies have been selected and applied consistently and judgments and estimates
made are reasonable and prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit of the Company for that period;
(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in
accordance with the provisions of the said Act for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) the proper internal financial controls to be followed by the Company have been laid down and
that such internal financial controls are adequate and were operating effectively; and
(f) the proper systems have been devised to ensure compliance with the provisions of all applicable
laws and that such systems were adequate and operating effectively.
ACKNOWLEDGEMENT
Your Directors acknowledge the continued support and cooperation received from the Central
Government, State Governments, Shareholders, participating Financial Institutions and Banks,
Customers, Dealers and Suppliers.
The Board also wishes to record its sincere appreciation of the total commitment, dedication and
hard work, put in by every member of the Team JK Paper.
On behalf of the Board of Directors
New Delhi Bharat Hari Singhania
Date : 25th July, 2016 Chairman
Mar 31, 2015
The Directors have pleasure in presenting the 54th Annual Report and
Audited Accounts of the Company for the year ended 31st March, 2015.
FINANCIAL RESULTS
Rs in Crore (10 million)
2014-15
Sales 2514.97
Profit Before Finance Costs and
Depreciation (PBIDT) 266.49
Profit before Depreciation
and Tax (PBDT) 62.56
Profit/(Loss) after Tax (PAT) (12.74)
Surplus brought forward 223.23
Total amount carried to Balance Sheet 210.49
DIVIDEND
In view of the losses, the directors regret their inability to
recommend dividend.
PERFORMANCE REVIEW
The Company recorded the highest ever sales at Rs 2514.97 Crore (up
24%) during the year as compared to Rs 2025.47 Crore in the previous
year. The Operating Profit (PBIDT) increased to Rs 266.49 Crore (up
92%) from Rs 138.51 Crore in the previous year. Higher interest and
depreciation on account of the Company's new project at Jaykaypur,
Odisha which was commissioned in the previous year impacted net profit
(PAT). The Company has stabilized operations of the project during the
year and supplemented it by appropriate marketing efforts. As a result
loss for the year was significantly reduced to Rs 12.74. Crore as
compared to Rs 77.19 Crore in the previous year. The Company recorded
the highest ever production of 4.14 Lac tonnes (up 26%) and sales of
3.98 Lac tonnes (up 24%) as compared to 3.28 Lac tonnes and 3.21 Lac
tonnes respectively in the previous year. Overall capacity utilization
(including new plant) was over 90%.
Wood prices which had increased substantially (by 33%) in the previous
year continued its upward trend though at a slower pace of 13%. There
is an evidence of increased wood availability due to social farm
forestry done by the paper industry. As the availability increases
further, we expect a favorable impact on raw material prices in
future. Hardwood pulp prices which were ruling lower during much of the
year exhibited upward trend towards last quarter of the financial year.
This trend is continuing till this time but does not seem sustainable
due to surplus global capacities and prices are likely to remain stable
going forward. Increase in rail freight resulted in higher landed cost
of linkage Coal, though international Coal prices continued to be low.
The Company had increased sales realization by 8% during 2013-14;
however the economic slowdown and domestic surplus resulted in
improvement of only [% in the current year. The Company is continuously
focusing on improving operating efficiencies and minimizing cost for
better financial performance. The Company has also engaged external
consultants to provide outside-in perspective in its endeavour to
optimize cost and unlock value.
The Company has been aggressively pursuing farm forestry efforts to
develop sufficient raw material resources within 200 Km of its mills.
The Company continued its focus on this programme and has covered
16,934 hectares during the year thus achieving a cumulative acreage of
1,32,934 hectares from the inception of its farm forestry programme.
The Company had to import lesser quantities of wood logs and wood chips
as a result of improved availability during the year.
The developed markets are experiencing decline in Paper consumption due
to widespread use of electronic media, however growth in packaging
paper & board continues due to demand from its end use segments.
Contrary to this, the Indian Paper and Board Industry has been growing
at 7%, which is one of the highest in the world. At 14.5 Mn tonnes, the
India ranks amongst the top 15 Paper and Board markets globally. The
lower per capita consumption of 12 Kg as compared to world average of
57 Kg indicates that the growth is likely to continue. Some of the
value added segments in Paper and Board are likely to grow at higher
rate thus offering new product opportunities for the Company. With this
growth the market is projected to reach 20 Mn tonnes by 2020.
The Company has been following a policy of focusing on value added
products like Copier Paper, Coated Paper, Virgin Fibre Packaging Boards
and High end Maplitho Paper which has paid rich dividends. The
Company's wide distribution network along with emphasis on meeting
customer expectations has helped it to establish a leadership position
in the market, despite strong competitive challenges. The recent
expansion has increased its ability to provide high quality paper
in-line with changing end user requirements at competitive costs.
OFFICE PAPER PROJECT
As you are aware that the Company has set up a 2,15,000 TPA Pulp Mill,
a 1,65,000 TPA Paper Machine and a 55 MW captive power plant at Unit
JKPM in Odisha.
You will be happy to note that after the teething issues, the new
facilities have stabilized in short time. The plant performance in its
first full year of operations has been up to expectations with the
company realizing cost advantages on account of reduced wood, water and
energy consumption.
The technology and scale provided by the new project will help the
Company to produce high quality printing paper at reasonable costs and
further strengthen its position in Office Papers. The Average capacity
utilization for the new paper machine for the year 2014- 15 was 94% and
full capacity utilization in February 2015.
CORRUGATED PACKAGING PROJECT
The Company's JV with Oji Holdings Corporation and Marubeni Corporation
of Japan to produce High- end Corrugated Packaging commissioned its
plant at Neemrana, Rajasthan in July 2014. The production is being
steadily ramped up and 100% utilization is likely to be achieved in
next 2/3 years. The high quality corrugated packaging from this
facility is gaining acceptance among Consumer Durables, Electronics,
Auto Components, FMCG and Food Processing Industries. The emergence of
online retail and consequent demand for corrugated packaging is also
creating exciting market opportunities for the venture.
CUSTOMER SATISFACTION AND QUALITY
The Company has always been at the forefront in providing value added
products and services to its customers. JK Paper's obsession with
Quality and Customer Satisfaction has been a major strength in its
attaining and retaining a leadership position in the Indian Paper
Industry. The Company's wide distribution network has also extended a
similar belief in fulfillment of expectations of the customers, big or
small. JK Paper became the first Indian Company to produce and sell
high quality Colorlok papers in India. This tie up with HP, helped in
producing world class printing paper for the increasingly demanding
Indian customers.
The Company continues to conduct regular audit for its quality
standards and customer satisfaction through research conducted both
in-house and by an independent agency. Customer feedback is taken
seriously with prompt actions for resolution and prevention of future
occurrence. The product and quality standards are also benchmarked with
the best in class to bring about continuous improvement and exceed
customer expectations. This process helps to understand changing
customer preferences and develop products that meet their requirements.
Continuous interaction between the customers and factory is promoted
through mill visits to generate valuable ideas that could be used for
quality improvement, new product development and service enrichment.
These customer visits help in showcasing the Company's state of the art
manufacturing facilities and building a strong long term relationship
with them.
AWARDS AND RECOGNITION
The Company has been committed towards ensuring high standards of
Safety and Environment, Quality & Operational Excellence and HR
practices. It is a matter of great satisfaction that these initiatives
taken by the Company have been appreciated at various industry forums.
The Company received following accolades during the year;
- Unit - JKPM was awarded the certificate for Well- Managed Group
Plantation by Forest Stewardship Council in 2014.
- Unit CPM was presented the Certificate of Honour - 2013 from Gujarat
Safety Council.
- Unit CPM received Greentech Environment Management Award 2014 from
Greentech Foundation, New Delhi.
- Unit CPM received First Position in Importer Category by single
industry at 1CD Ankleshwar from Container Corporation of India Ltd
(CONCOR).
- Unit JKPM received the state safety award for the year 2011 and 2012.
ENVIRONMENT
The company is committed to health and safety of its employees and its
neighboring communities and believes in pursuing its business growth
objectives in a socially responsible and ecologically sustainable way.
It has been a pioneer in adopting latest environment friendly processes
and technologies in its manufacturing processes with an aim to have
minimum impact on the environment. The recent new project at Unit JKPM
has corroborated the Company's' endeavour in that direction. It has
helped to minimize consumption of natural resources like wood, water
and coal while minimizing waste and emissions to the environment The
use of Elemental Chlorine Free (ECF) technology has eliminated the
direct use of Chlorine thus minimizing environmental impact and safety
hazard,
Both its production units are certified for ISO 9001:2008, ISO
14001:2004 and OHSAS 18001:2007. The Occupational Health and Safety
process is implemented through periodic safety audits, safety
observations, TPM Internal Audits and Environment Audits focusing on
Safety Health and Environment (SHE) related issues.
At Unit CPM, the use of Treated Effluent for Irrigation under the Zero
Discharge Scheme Phase-I (Part A & B) has increased from 56 % in
previous year to 62 % in the current year. In Phase II about 80 - 90 Ha
of additional land has been covered for irrigation with our Treated
Effluent. It is a matter of great satisfaction that treated effluent
from the plant is being effectively utilized for Agriculture, Subabul,
and Eucalyptus plantations. Combined Recharging cum Rain water
harvesting system (RWH) has been installed in the company's colony
premises as a part of water conservation efforts, Solar heaters have
also been installed for utilization of clean energy.
INDUSTRIAL RELATIONS
Industrial Relations remained cordial throughout the year under review.
We acknowledge the wholehearted support and cooperation provided by
employees at all levels of the organization during commissioning and
stabilization of the new project and the valuable contribution made by
them towards the growth of your company. A number of employee welfare
initiatives have been implemented by the company which have
significantly helped in improving the work environment, productivity,
discipline and enriching employees quality of life. Our continuous
dialogue with the union and workers representatives have ensured
transparency and improved the industrial harmony to create a positive
work environment
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2015 in the
prescribed form MGT-9 is attached as Annexure- I to this Report and
forms part of it
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of loans, guarantees or securities and investments
covered under the provisions of Section 186 of the Companies Act, 2013
are given in the financial statements.
The Company has not made a provision of money during the financial year
2014-15 for the purchase of, or subscription for, shares in the company
by trustees of JK Paper Employees' Welfare Trust which was formed by
the Company in the year 2004 for the welfare of the employees of the
Company, for the shares to be held by or for the benefit of the
employees of the company.
RELATED PARTY TRANSACTIONS
During the financial year ended 31st March 2015, all the contracts or
arrangements or transactions entered into by the Company with the
Related Parties were in the ordinary course of business and on arm's
length basis and were in compliance with the applicable provisions of
the Companies Act, 2013 and the Listing Agreement.
Further, the Company has not entered into any contract or arrangement
or transaction with the Related Parties which could be considered
material in accordance with the Policy of the Company on materiality of
Related Party Transactions. In view of the above, disclosure in FORM
AOC-2 is not applicable.
The Related Party Transaction Policy as approved by the Board is
available on the website of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
With enactment of the Companies Act, 2013, all the six Independent
Directors of the Company, namely - Shri Arun Bharat Ram, Shri M.H.
Dalmia, Shri R.V. Kanoria, Shri Shailendra Swarup, Shri Udayan Bose
and Shri Sandip Somany, were appointed by the members at the Annual
General Meeting (AGM) held on 27th September 2014 under Section 149 of
the Act for a term of five consecutive years commencing from the date
of the AGM. All Independent Directors of the Company have given
declarations that they meet the criteria of independence as provided in
Section 149(6) of the Companies Art, 2013 and also Clause 49 of the
Listing Agreements with the Stock Exchanges.
Shri Shailesh Haribhakti who was liable to retire by rotation at the
last Annual General Meeting of the Company held on 27Lh September 2014
had not offered his candidature for reappointment as a Director due to
SEBI's impending limits on the number of Boards that he could serve on
and consequently he ceased to be a director of the Company w.e.f.
27.09.2014.
Shri O.P. Goyal retires by rotation and being eligible offers himself
for re-appointment at the ensuing AGM.
Further, in terms of Section 203 of the Companies Act, 2013, Shri Harsh
Pati Singhania, Vice Chairman and Managing Director, Shri O.P. Goyal,
Whole Time Director, Shri V. Kumaraswamy, Chief Finance Officer and
Shri Suresh Chander Gupta, Company Secretary were appointed as "Key
Managerial Personnel" (KMP) of the Company on their existing terms and
conditions.
INTERNAL CONTROL SYSTEM
The corporate internal audit team consisting of Chartered Accountants
and system experts review the internal control system on a regular
basis to improve its effectiveness besides verifying statutory
compliances, Based on Annual Internal Audit programme as approved by
Audit Committee of Board, regular internal audits are conducted
covering all offices, factories and key areas of the business. Findings
are placed before Audit Committee, which reviews and discusses the
actions taken with management. The Audit Committee also reviews the
effectiveness of Company's internal controls and regularly monitors
implementation of audit recommendations.
The Company has also put in place a comprehensive budgetary control
system. Key performance goals are set for each of the units and product
lines. The performance against these goals are monitored and reviewed
on a periodic basis and corrective actions as needed are initiated.
The Company has in place adequate internal financial controls with
reference to financial statements and no material reportable weakness
was observed in the system. Further, the Company has in place adequate
internal controls commensurate with the size and nature of its
operations.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has been one of the foremost proponents of inclusive
growth and since inception, has been continuing to undertake projects
for overall development and welfare of the society in the fields of
environment, conservation of natural resources, health, education,
rural development, etc.
The Company has framed Corporate Social
Responsibility (CSR) Policy in accordance with the provisions of the
Companies Act 2013 and rules made there under. The contents of the CSR
Policy are disclosed on the website of the Company.
Even though, the company was not required to spend towards CSR since it
incurred a net loss of Rs.8.09 Crore in the preceding three years, it
has spent Rs.77.83 lac towards CSR activities during the Financial year
2014-15,
A detailed report on Company's CSR activities along with the annual
report on the CSR activities undertaken by the Company during the
financial year under review, in the prescribed format is annexed to
this Report as Annexure-2.
AUDITORS
(a) Statutory Auditors and their Report
M/s S S Kothari Mehta & Co., Chartered Accountants, have been appointed
as Auditors of the Company to hold the office from the conclusion of
the 53rd Annual General Meeting held on 27th September 2014 until the
conclusion of the 56th Annual General Meeting to be held in year 2017,
subject to ratification of the appointment by the members at the
respective AGMs to be held in the years 2015 and 2016. Accordingly,
matter relating to the appointment of the Auditors will be placed for
ratification by members at the forthcoming Annual General Meeting. The
observations of the Auditors in their report on Accounts and the
Financial Statements, read with the relevant notes are self
explanatory.
(b) Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013,
the Board of Directors appointed Shri Namo Naratn Agarwal, Company
Secretary in Practice as Secretarial Auditor to carry out Secretarial
Audit of the Company for the financial year 2014-15 . The Report given
by him for die said financial year in die prescribed format is annexed
to this Report as Annexure-3. The Secretarial Audit Report does not
contain any qualification, reservation or adverse remark.
(c) Cost Auditor and Cost Audit Report
Pursuant to order of the Central Government dated 30th June 2014, your
Company did not fall within the ambit of Cost Audit for the year 2014-
15. However, pursuant to the revised order of the Central Government
dated 31st December 2014, Cost Audit of the Cost Records of the Company
is mandatory from the financial year starting I" April 2015 and M/s
R.J. Goel & Co., Cost Accountants have been appointed as Cost Auditors
of the Company to conduct cost audit of cost records for the financial
year 2015-16 subject to ratification of their appointment and
remuneration at the forthcoming Annual General Meeting of the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS
During the financial year under review, there were no significant and
material orders passed by the Regulators or Courts or Tribunals which
would impact die going concern status of the Company and its future
operations.
CONSERVATION OF ENERGY ETC.
The details as required under Section 134(3)(m) read with the Companies
(Accounts) Rules, 2014 is annexed to this Report as Annexure-4 and
forms part of it.
PARTICULARS OF REMUNERATION
Information in accordance with die provisions of Section 197 of the
Companies Act, 2013 read with the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 regarding
remuneration and other details is annexed to this Report. However, as
per the provisions of Section 136 of die said Act, the Report and
Accounts are being sent to all the members of die Company and others
entitled diereto, excluding die aforesaid information, Any member
interested in obtaining such particulars may write to the Company
Secretary at the registered office of the Company. The said information
is available for inspection at the Registered Office of the Company
during working hours.
CORPORATE GOVERNANCE
Corporate Governance - including details pertaining to Board Meetings,
Nomination and Remuneration Policy, Performance Evaluation, Risk
Management, Audit Committee and Vigil Mechanism:
Your Company reaffirms its commitment to the highest standards of
corporate governance practices. Pursuant to Clause 49 of the Listing
Agreement with the Stock Exchanges, a Management Discussion and
Analysis, Corporate Governance Report and Auditors Certificate
regarding compliance of conditions of Corporate Governance are made a
part of this Report.
The Corporate Governance Report which forms part of this Report, also
covers the following:
a) Particulars of the four Board Meetings held during the financial
year under review.
b) Policy on Nomination and Remuneration of Directors, Key Managerial
Personnel and Senior Management including, inter alia, the criteria for
performance evaluation of Directors.
c) The manner in which formal annual evaluation has been made by the
Board of its own performance and that of its Committees and individual
Directors.
d) The details with respect to composition of Audit Committee and
establishment of Vigil Mechanism.
e) Details regarding Risk Management.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company
in accordance with the applicable Accounting Standards. The Audited
consolidated financial statements together with Auditors' Report form
part of the Annual Report
A report on the performance and financial position of each of the
subsidiaries and associates included in the
Consolidated Financial Statements is presented in a separate section in
this Annual Report. Please refer to AOC-1 annexed to the Financial
Statements in the Annual Report.
Pursuant to the provisions of Section 136 of the Act, the financial
statements of the Company, Consolidated Financial Statements along with
relevant documents and separate audited accounts in respect of
subsidiaries are available on the website of the Company.
During the financial year under review, no company has become or ceased
to be your Company's subsidiary and joint venture. In terms of Section
2(6) of Companies Act 2013, your Company has become an associate of
Bengal & Assam Company Ltd.
DEPOSITS
Pursuant to the approval of members by means of a Special Resolution
dated 27th September 2014, the Company has continued to accept deposits
from the public, in accordance with the provisions of the Companies
Act, 2013 and rules there under.
The particulars in respect of the deposits covered under Chapter V of
the said Act, for the financial year ended 31st March 2015 are - (a)
Accepted during the year Rs. 2.23 Crore; (b) Remained unclaimed as at
the end of the year - Rs. 0.63 crore; (c) Default in repayment of
deposits or payment of interest thereon at the beginning of the year
and at the end of the year - Nil and (d) Details of deposits which are
not in compliance with the requirements of Chapter V of the said Act -
Nil.
DIRECTORS' REPONSIB1LITY STATEMENT
As required under Section 134(3)(c) of the Companies Art, 2013, your
Directors state 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) the accounting policies have been selected and applied consistently
and judgments and estimates made are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company at the
end of the financial year and of the profit of the Company for that
period;
(c) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
said Act for safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) the proper internal financial controls to be followed by the
Company have been laid down and that such internal financial controls
are adequate and were operating effectively; and
(f) the proper systems have been devised to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
ACKNOWLEDGEMENT
The Directors acknowledge the continued support and cooperation
received from the Central Government, State Governments, Shareholders,
participating Financial Institutions and Banks, Customers, Dealers and
Suppliers.
The Board also wishes to record its sincere appreciation of the total
commitment, dedication and hard work, put in by every member of the
Team JK Paper.
On behalf of the Board of Directors
New Delhi BHARAT HAR1 S1NGHANIA
Date : 3rd August, 2015 Chairman
Mar 31, 2014
To the Members,
The Directors have pleasure in presenting the 53rd Annual Report and
Audited Accounts of the Company for the year ended 31st March, 2014.
FINANCIAL RESULTS
Rs in Crore (10 million)
2013-14
Sales 2025.47
Profit Before Finance Costs and
Depreciation (PBIDT) 138.51
Profit before Depreciation and Tax (PBDT) 16.65
Profit/(Loss) after Tax (PAT) (77.19)
Surplus brought forward 300.42
Total amount carried to
Balance Sheet 223.23
DIVIDENDS
In view of the losses, the directors regret their inability to
recommend dividend.
PERFORMANCE REVIEW
The Company''s sales during the year increased to Rs 2025.47 Crore (up
18%) from Rs 1721.38 Crore in the previous year. The Operating Profit
(PBIDT) stood at Rs 138.51 Crore, however the Company recorded a loss
amounting to Rs 77.19 Crore as a result of higher interest and
depreciation burden arising from commissioning of Company''s new
project (Rs 1775 Crore excluding notional losses on forex loans) at
Jaykaypur, Odisha, slower ramp up of production and severe cost
increase. Total production at 3,28,321 tonnes and Sales at 3,21,094
tonnes represented an increase of 12% and 11% respectively over the
previous year and are highest ever achieved by the Company. Overall
capacity utilization (including new plant) was 85%.
During the year, there was a severe increase in wood prices (37%) and
coal (15%). Though, the Company was able to increase sales realization
(12%), it was inadequate to cover the steep cost increase thereby
impacting the profit margins. Cost compression measures adopted by the
company helped to moderate the impact of higher input costs. Hardwood
pulp prices which were ruling higher during start of the year declined
during second half of the year but weakening of Rupee negated the
impact on landed cost. With the expected commissioning of new large
scale pulp capacities in Latin America, prices are likely to remain
stable going forward.
The growth of Indian Paper and Board industry at 6.5% is one of the
fastest in the world. At 13 million tonnes per annum, the Indian Paper
and Board market ranks amongst the top 15 globally. Furthermore the
large population base and low penetration (per capita consumption at 11
Kg as compared to world average of 56 Kg) indicates the future
potential for growth. JK Paper has always focused on providing value to
its customers through differentiated products/ services and led the
transition of paper from being a commodity to a Branded product. The
Company introduced high quality "ColorLok" papers in India to
address the changing needs of customers, which have occupied a unique
position in the minds of its end customers. The Virgin Fibre Board and
Coated Papers produced by the Company are similarly recognized for
their quality and functional properties. All this has resulted in the
Company achieving a leadership position in Office Papers segment and
being ranked one of the top 2 players in Coated Paper and Virgin Fibre
Board market.
Wood is the primary raw material for the paper industry, however in the
recent years the domestic supply has failed to catch-up with demand
from various consuming industries. This has led to sharp increase in
wood prices and consequently higher input costs for the paper industry.
To tide over this situation the Company imported some quantities of
wood logs and wood chips during the year. The industry will have to
resort to such imports till the demand supply gap is addressed in the
next couple of years. The Company had foreseen this situation and had
intensified its farm forestry activities to develop raw material bank
within 200 Km radius of the mills. During the year the Company covered
14,877 hectares, thus achieving a cumulative acreage of 1,16,000
hectares from the inception of its farm forestry programme.
INDUSTRY SCENARIO
The industry growth was muted due to economic slowdown and decrease in
spending across the board. With gradual improvement in the economy and
growth drivers in place such as changing lifestyles, increasing
organized retail and government spending on education, the paper and
board consumption is bound to increase. However, increased supply in
domestic market due to new capacities and Cheaper imports from ASEAN
countries at zero duty are likely to pose some challenges in the short
term.
Office Papers: The market scenario for uncoated paper improved during
the year and some price increases could be effected and sustained in
the market. These are early indicators that the capacity overhang
created in the last couple of years is partly getting absorbed. This
augurs well for the Company as it will achieve full capacity during FY
2014-15 from its new facility at Unit JKPM. The Company''s market
share has already increased to 26% from 19% in 2013-14.
The Company introduced JK MAX in 67 gsm and JK CMAX in 72gsm to cater
to some unaddressed segments of the market. The products have been
received favourably and are gaining popularity. The existing brands
"JK Copier","JK Easy Copier", "JK Copier Plus",
"Sparkle" and "Cedar" continued to cement their position
further in the market. The Company''s products "JK Excel Bond",
"JK Ledger" and "MICR Cheque Papers" cater to niche segments
and enjoy patronage from corporate customers.
Coated Papers: The market for Coated Papers continued to grow, however
reduced corporate spending due to economic slowdown resulted in slower
demand growth. Imports from China and Indonesia continued unabated
preventing any significant price increases. Weakening of Rupee against
the Dollar created a temporary slowdown in imports but lack of
additional domestic supply assisted in recovery for imports. The
Company''s Brands "JK Cote" and "JK Supercote" continue to
attract a wide variety of customers..
Packaging Board: The Company focuses only on high end segment of Virgin
Fibre Board with its brands "JK
Tuffcote" and "JK Ultima". Market growth for the targeted segment
continues to be robust due to increasing thrust on good quality
packaging for consumer products. Inspite of competition from new
entrants the Company has maintained its position as the 2nd largest
player in the market. With shift from low end packaging and increasing
organized retail, the market is expected to continue its growth
momentum. The Company will continue to maintain its position in this
attractive market.
Maplitho Paper: With the new capacity at Unit JKPM now operational, the
Company plans to re-enter this segment, which was created by your
company, with a superior product offering. The market for Maplitho
paper is large and growing at stable rate thus providing a good
opportunity for the Company to leverage its Brand recall with this
category.
NEW PROJECTS
The Company has been a market leader in Office Papers segment which has
been witnessing strong growth in recent years. The domestic capacities
were not sufficient to meet demand. Sensing this opportunity the
Company embarked upon an ambitious project at Unit JKPM to increase the
Company''s annual capacity from 2,90,000 tonnes to 4,55,000 tonnes per
annum. This involved setting up a 2,15,000 TPA pulp mill, a 1,65,000
TPA paper machine and a 55 MW captive power plant along with other
necessary utilities. The Project utilizing state of the art technology
from reputed global equipment suppliers involved a capital investment
of Rs 1775 Crore excluding notional losses on forex loans.
The plant was commissioned on 30th August 2013 and is now operating
consistently and delivering superior quality paper. The Average
capacity utilization for the last quarter of 2013-14 was 89%, with a
maximum of 93% achieved in the month of February 2014. Adoption of
contemporary technology in this plant has helped in reducing
consumption of wood, water, and energy while improving margins for the
Company. The Company intends to leverage the scale and technology
advantage provided by the new plant to optimize input costs further
while delivering enhanced performance of its office papers.
Last year, the Company forayed into High-end Corrugated Packaging
segment through a joint venture with Oji Holdings Corporation and
Marubeni Corporation of Japan. The JV will manufacture high quality
packaging products required by Consumer Durables, Electronics, Auto
Components, FMCG and Food Processing Industries at its manufacturing
facility in Neemrana, Rajasthan. Trial production from the plant is
expected to commence in Q2 of 2014-15.
CUSTOMER SATISFACTION AND QUALITY
The Company''s leadership position in the market is due to its
customer focused approach in the pursuit of offering value added
products. Through its various touch points the Company is able to
understand customer needs and develop new products that meet them. The
product and quality standards are also benchmarked with competition to
bring about continuous improvement and exceed customer expectations.
Use of pigment dyes was adopted in all products to improve quality and
satisfy the changing needs of customers.
Customers are invited to the mills at regular intervals to have a
firsthand feel of the manufacturing processes and also have close
interaction with factory personnel. Such interactions have generated
many opportunities for close collaboration in areas of new product
development and service.
ENVIRONMENT
The environmental management practices at JK Paper have been centered
on using sustainable practices for its operations. Both its production
units are certified for ISO 9001 : 2008, ISO 14001 : 2004 and OHSAS
18001 : 2007. The Occupational Health and Safety process is implemented
through rigorous Safety Audits, TPM Internal Audits & Environment
Audits. The Company not only tries to comply with stipulated
regulations but also to exceed them through conscious efforts at all
levels. The operational teams focus particularly on conservation of
natural resources used during manufacturing and productive recycling of
waste.
The new plant at Unit JKPM uses Elemental Chlorine Free (ECF)
technology that obviates direct use of Chlorine thus minimizing
environmental impact and safety hazard. The new production line has
thus improved our compliance with environmental standards and has also
resulted in major savings through reduction in usage of water, fuel and
raw materials.
At Unit CPM, treated effluent from the mill is used for irrigation of
nearby farm lands. Currently more than half of the treated effluent is
being used for this purpose which is likely to increase substantially
at the end of next phase currently in progress. It is a matter of great
satisfaction to us that the Company has been able to create livelihood
opportunities for nearby farmers by providing access to nutrient rich
quality water for Agriculture, Subabul and Eucalyptus plantations.
Combined Recharging cum Rain water harvesting system (RWH) is
implemented in the company''s housing colony to ease the burden on
natural sources. The Company has also installed solar heaters for
utilisation of solar energy.
AWARDS AND RECOGNITION
Awards and recognition received by the Company reinforce its belief
that the Company is moving in the right direction to achieve higher
levels of operational performance and social commitments. It is a
matter of great satisfaction that various initiatives taken by the
Company have received recognitions at esteemed forums.
Unit - JKPM has been awarded the following;
- Green Manufacturing Excellence Award-2013 from Frost & Sullivan.
- National Safety Award-2011 for outstanding performance in industrial
safety.
- Golden Peacock Environment Management-2013.
- Greentech Award-2013 for outstanding achievement in Safety.
- Appreciation for Good practices in Quality Systems by FICCI.
Unit - CPM has been awarded the following;
- Greentech Safety Gold Award-2013.
- Greentech HR Silver Award-2013 for outstanding achievement in paper
sector.
- World CSR Congress Best Sustainability Award-2013.
- IPMA Award-2013 for Energy Conservation.
- Greentech Environment Gold Award- 2013. DIRECTORS
Shri Shailesh Haribhakti, who is liable to retire by rotation at the
forthcoming Annual General Meeting (AGM) has not offered his
candidature for reappointment as a Director, due to SEBI''s impending
limits on the number of Boards that he can serve on. He will hold
office as Director till the date of ensuing AGM.
Shri Udayan Bose and Shri M.H.Dalmia retire by rotation at the ensuing
AGM and being eligible are proposed to be appointed as Independent
Directors of the Company to hold office for a term of five consecutive
years from the ensuing AGM. Shri R.V.Kanoria, Shri Shailendra Swarup,
and Shri Arun Bharat Ram whose period of office is liable to
determination by retirement of Directors by rotation are also proposed
to be appointed as Independent Directors of the Company to hold office
for a term of five consecutive years from the ensuing AGM. The Company
has also received declarations from the said Directors about their
independence pursuant to Section 149 of the Companies Act, 2013.
The Board recommends these appointments as aforesaid.
CORPORATE SOCIAL RESPONSIBILITY
A detailed report on the Company''s CSR activities is given separately
in the Annual Report.
AUDITORS
M/s. S S Kothari Mehta & Co, Chartered Accountants, Auditors of the
Company, retire and are eligible for re-appointment. The observations
of the Auditors in their Report on Accounts read with the relevant
notes are self-explanatory.
COST AUDIT
M/s R.J.Goel & Co., Cost Accountants, Delhi conducted the Cost Audit
for the financial year ended 31st March 2013 and as required, Cost
Audit Report was duly filed with Ministry of Corporate Affairs,
Government of India on 19.09.2013.
The Audit of the Cost Accounts of the Company for the financial year
ended 31st March 2014 will be conducted by the said firm and the Report
will be submitted to the Ministry of Corporate Affairs, Government of
India.
ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
Details of energy conservation, technology absorption, foreign exchange
earnings and outgo, required to be disclosed under Section 2l7(l)(e) of
the Companies Act, 1956 read, with the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988 is annexed
to this Report and forms part of it.
PARTICULARS OF EMPLOYEES
Information in accordance with the provisions of Section 2l7(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended regarding employees is given in Annexure to the
Directors'' Report. However, as per the provisions of Section 219
(l)(b)(iv) of the Companies Act, l956, the Annual Report is being sent
to the shareholders of the Company excluding the aforesaid information.
Any shareholder interested in obtaining such particulars may write to
the Secretary at the Company''s New Delhi address.
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion & Analysis, Corporate Governance
Report and Auditor''s Certificate regarding compliance of conditions
of Corporate Governance are made a part of this Annual Report.
SUBSIDIARY COMPANIES
The accounts of the wholly-owned subsidiaries i.e. Jaykaypur
Infrastructure & Housing Limited (JIHL)and Songadh Infrastructure &
Housing Limited (SIHL) and of the subsidiary i.e., JK Enviro-tech
Limited (JKETL) have been consolidated as required by applicable
Accounting Standards. With reference to the General Circular No. 2/2011
dated 8th Feb. 2011, issued by the Ministry of Corporate Affairs,
Government of India, copies of the Balance Sheet, Statement of Profit &
Loss, Reports of the Board and the Auditors of the aforesaid Subsidiary
Companies have not been attached to the Balance Sheet of the Company.
However, annual accounts of the Subsidiary Companies and the related
detailed information of the Holding and Subsidiary Companies, shall be
made available to the shareholders seeking such information at any
point of the time. The annual accounts of the Subsidiary Companies are
also available for inspection by any shareholder at the Registered and
Head Offices of the Company and that of the Subsidiary Companies
concerned.
DIRECTORS'' REPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, your
Directors state that:
i. in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. the accounting policies selected and applied are consistent and
judgments and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of
the Financial Year and of the Profit & Loss of the Company for that
period;
iii. proper and sufficient care has been taken for maintenance of
adequate accounting records in accordance with the provisions of the
said Act for safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities;
iv. The annual accounts have been prepared on a going concern basis.
INDUSTRIAL RELATIONS
Industrial Relations continued to be cordial and healthy. The Company
could overcome challenges faced during commissioning of the new project
with continued support of all the workmen, staff and unions. During the
year, the Company amicably concluded its long term wage agreement with
the trade unions at both the plants. The credibility of the company
among its stakeholders is growing continuously because of its
commitment to continuously address people issues with openness and
transparency. Several initiatives implemented by the Company have
significantly helped in improving the work culture, enhancing
productivity and enriching the quality of life of the workforce
ACKNOWLEDGEMENT
The Directors acknowledge the continued support and cooperation
received from the Central Government, State Governments, Shareholders,
participating Financial Institutions and Banks, Customers, Dealers and
Suppliers.
The Board also wishes to record its sincere appreciation of the total
commitment, dedication and hard work, put in by every member of Team JK
Paper.
On behalf of the Board of Directors
BHARAT HARI SINGHANIA
Chairman
New Delhi
Date : 21st May, 2014
Mar 31, 2013
To the Members,
The Directors have pleasure in presenting the 52nd Annual Report and
Audited Accounts of the Company for the year ended 31st March, 2013.
FINANCIAL RESULTS
Rs in Crore (10 million)
2012-13
Sales 1,721.38
Profit Before Finance Costs and 144.41
Depreciation (PBIDT)
Profit before Depreciation and Tax 110.25
(incl. Exceptional Items)
Profit after Tax 37.70
Surplus brought forward 271.56
Total amount available for 309.26
appropriation
APPROPRIATIONS:
Capital Redemption Reserve 0.03
Debenture Redemption Reserve 0.82
Dividend (incl. Tax on Dividend) 7.99
Surplus carried to Balance Sheet 300.42
TOTAL 309.26
DIVIDENDS
With a view to conserve cash and reduced profitability for the year,
the Directors recommend a dividend of 5% on the Equity Share Capital
(Rs. 0.50 Per share). The total outgo including tax on account of
dividend would be Rs. 7.99 Crore.
DIRECTORS
Your Directors express their profound grief and sorrow on the sad
demise of Shri Hari Shankar Singhania, Chairman of the Board of
Directors, JK Paper Limited and President JK Organisation, on 22nd
February 2013. He was associated with the Group''s Paper business for
over 50 years. Under his leadership, an integrated pulp and paper mill
of 18,000 TPA was established at Unit JKPM, Odisha in 1962. Since then,
the capacity of JK Paper''s business has grown to 2,90,000 TPA. The
ongoing expansion project was also started by him, which will further
enhance the Company''s capacity to 4,55,000 TPA. He not only provided
vision to the paper industry in India but also worked hard for its
development and growth.
Shri Singhania, who learnt the ropes of business under his illustrious
father late Lala Lakshmipatji, was actively involved with J.K.
Organisation since 1951, from the young age of 18 years, and held
various positions before he assumed the Chairmanship of various
Companies. Shri Singhania contributed immensely not only in the
progress of your Company but also in the growth of industrialization
and economic development of India for which he received numerous
prestigious Indian & International awards and recognitions. Your
Directors pay their respectful homage and tribute to this extraordinary
human being, a great leader, an iconic industrialist and a leading
statesman.
Shri S.K. Pathak, a Member of the Board passed away on 4th January
2013. Shri Pathak joined the Board of the Company on 24th April 2004,
and had a very rich business experience. The Board places on record its
sincere appreciation of the valuable services and guidance rendered by
him to the Company during his tenure.
Shri Bharat Hari Singhania and Shri Shailendra Swarup were appointed as
Additional Directors of the Company pursuant to Section 260 of the
Companies Act, 1956 with effect from 21st May 2013. In terms of Section
260 of the said Act, they will hold office as Directors upto the date
of the ensuing Annual General Meeting. The Company has received notices
in writing from members proposing candidature of Shri Bharat Hari
Singhania and Shri Shailendra Swarup for being appointed as Directors,
liable to retire by rotation and the Board recommends their
appointment.
The Board of Directors at its meeting held on 21st May 2013 appointed
Shri Bharat Hari Singhania as Chairman and Shri Harsh Pati Singhania as
Vice-Chairman of the Board of Directors of the Company. They shall now
be Chairman and Vice-Chairman & Managing Director respectively, of the
Company.
Shri R.V. Kanoria, Shri Arun Bharat Ram and Shri Dhirendra Kumar retire
by rotation and being eligible offer themselves for re-appointment at
the Annual General Meeting.
PERFORMANCE REVIEW
The Company''s Sales during the year was Rs. 1,721.38 Crore, Operating
Profit (PBIDT) Rs. 144.41 Crore and PAT amounted to Rs. 37.70 Crore. In
volume terms, Production of 2,92,582 tonnes and Sales at 2,90,420
tonnes were the highest ever recorded. Overall capacity utilization
increased to 101% and savings were achieved in power and fuel
consumption. Continuous review of outstandings and inventory helped in
optimizing the working capital cycle and fund utilization. Despite
these favourable factors, profit was adversely affected due to
unprecedented increase in raw material prices without commensurate
increase in selling prices.
During the year, global hardwood pulp prices were stable but weakening
of rupee adversely impacted the landed cost of pulp for the Company.
With increase in global supplies, pulp prices are likely to remain
stable in the near future.
JK Paper has always believed in offering differentiated products to its
target markets. The high quality "ColorLok" papers have occupied a
distinct position in the minds of consumers. Similarly JK''s Brands are
recognised by their customers in Virgin Fibre Board and Coated Paper
segment for their superior quality and high standards of service. The
Company''s strong brand equity is evident from the fact that it is a
market leader in Office papers and ranks among the top 2 players in
Coated Paper and Virgin Fibre Board market. Over the years, the
Company has established a strong distribution network that provides a
distinct competitive advantage in the geographically dispersed Indian
market.
Increased demand for wood from consuming industries coupled with
shortage of supply due to tree disease and uprooting of plantations in
earlier years led to unprecedented increase in raw material prices. The
Company intensified its efforts in promoting farm forestry to maximize
availability of wood in its catchment areas. During the year, the
Company covered 11,300 hectares with plantation taking the cumulative
acreage under this programme to 1,01,500 hectares. The Company has
drawn up ambitious plans for next 3/4 years keeping in view increased
raw material requirements from the expansion Project. It is also
exploring opportunities in South East Asia to secure raw material
supplies for its operations in India.
INDUSTRY SCENARIO
The industry witnessed a significant decline in profitability on
account of raw material price rise and its inability to pass on the
input cost increases fully. Growth was impacted by slowdown in
economic activity and lower spends. Despite this, India continues to be
one of the fastest growing paper markets in the world. The lower per
capita consumption compared to the world average indicates the future
potential for growth. Greater thrust on literacy and education,
changing lifestyle, growth in organised retail and higher disposable
income in rural areas will fuel paper and board consumption in the
country.
Office Papers: While there was some impact of slowdown on the Office
Papers market due to its linkage with corporate and economic activity,
the new production capacities that came on stream during the previous
year have now been absorbed. The scenario improved towards the end of
the year and the company could pass on input cost increases partially
through price revisions. The situation should ease further as the
economic activity picks up.
The Company''s brands "JK Copier", "JK Easy Copier", "JK Copier Plus",
"Sparkle" and "Cedar" continue to enjoy a strong market position. The
company also enjoys a strong brand equity in niche segments through
products like "JK Excel Bond", " JK Ledger" and "MICR Cheque Papers".
Coated Papers: Growth in Coated Paper segment was muted due to
decreased marketing spends by businesses. Coated Paper prices
continued to be under stress due to increased imports from Asian
countries. Weaker Rupee provided some relief as landed prices of these
imports rose. "JK Cote" and " JK Supercote" continue to attract a wide
variety of customers due their superior quality and recorded higher
sales volume during the year.
Packaging Board: The Packaging Board segment maintained its growth
momentum during the year due to increasing demand for value added
packaging. The demand is being driven by growth in organized retail and
continuous shift from low quality Packaging Boards to superior
varieties. The company''s brands "JK Tuffcote" and "JK Ultima" are well
established in this highly demanding segment. Despite augmentation of
capacity in 2010-11, the capacity utilization stood at 108% due to
growing demand for the Company''s products.
EXPANSION & NEW VENTURES
In order to address the opportunity in the Office Papers and enhance
the Company''s leadership position in this segment, an ambitious
expansion Project is nearing completion at Unit JKPM with an outlay of
Rs. 1653 Crore. This would enhance the Company''s annual capacity from
the current 2,90,000 tonnes to 4,55,000 tonnes per annum. This consists
of a 2,15,000 tpa pulp mill, 1,65,000 tpa paper machine , 55 MW Power
plant and requisite utilities.
The machines used for the expansion have been sourced from leading
global and domestic suppliers and incorporate state of the art
technology. With this, the Company will be able to minimize
environmental impact by conserving water and energy besides reducing
emissions. It will also render scale economies and lead to more
efficient use of fibre. All this will result in improvement of margins
for the Company. Quality of paper produced will be of international
standards and will cater to evolving customer needs. Production is
expected by 2nd quarter of the current financial year.
Your Company has identified High-end Corrugated Packaging as a market
with high growth potential and has decided to venture into this
segment. JK Paper has entered into a Joint Venture agreement with Oji
Holdings Corporation and Marubeni Corporation of Japan for setting up a
modern manufacturing facility for Corrugated Packaging. The Capital
outlay is estimated at Rs. 150 Crore. The plant will manufacture high
quality packaging products required by Consumer Durables, Electronics,
Auto Components, FMCG and Food Processing Industries.
CUSTOMER SATISFACTION AND QUALITY
JK Paper has been constantly endeavouring to upgrade product quality so
that its offerings meet customers'' expectations. It has also been
developing new tailor made products to meet consumer''s specific end-use
requirements.
In line with the Company''s regular practice, customers were invited at
regular intervals to mills, personnel from our manufacturing units also
visited the customers at their respective facilities to interact on
various quality related parameters. The feedback received from
customers was used for understanding their changing needs and undertake
product upgradation initiatives. This also helped to create a greater
feeling of bonding between the consumers, production and marketing
team.
Based on customer insights the Company undertook development of new
products like ''Finesse'' - a substantially improved version of printing
grade paper, higher GSM C1S paper for digital printing segment, Blade
Wrapper for specific end uses etc.
CORPORATE SOCIAL RESPONSIBILITY
''If we want to have a successful business, then we must have a
successful society around us'', is the abiding motto that drives JK
Paper Ltd''s Corporate Social Responsibility initiatives. The targeted
interventions are in sectors like Community Asset Building, Livelihood
Promotion, Health Care, Awareness & Capacity Building, Promotion of
Education Services, Infrastructure Development, Adult Literacy, Skill
Development, Women & Child Development and Promotion of Sports.
The Company has been imparting education through its schools at both
the manufacturing units at Odisha and Gujarat with a combined strength
of over 3,200 students. Of this about 55% of the children come from
under-privileged sections of society. The successful Adult Literacy
Programme (ALP) that focuses on tribal women has now covered over 7,300
people since its inception with over 2,000 benefitting in 2012 alone.
Under Government''s PPP model, the Company adopted ITI, Ukai near its
Unit CPM in Gujarat in the year 2008. After being declared as ''Centre
of Excellence'' last year, this year its student intake rose to 391. It
has helped ITI pass outs to improve their understanding of trades and
become better skilled to get employment in the industry.
Company continues to provide basic health services through Mobile
Dispensary, Health Camps and Awareness programmes, Community Health
Interventions like Maternal & Child Health care. During the year about
7800 people have benefitted from the health camps at both the mills. A
detailed report on the Company''s CSR activities is given separately in
the Annual Report.
ENVIRONMENT
JK Paper Limited continues to focus on adoption of best environmental
practices in order to perform better than the stipulated standards. The
ISO 14001:2004 & OHSAS 18001:2007 systems help us in our commitment
towards safety and environment.
Conscious efforts are made to develop and implement schemes for energy
and water conservation, minimizing emissions and waste. Through a
continuous process of Reduce, Recycle and Reuse, the manufacturing
units have been continuously optimizing their water consumption. Thrust
is given on activities for reduction of solid waste generation, finding
ways for effective reutilisation of the solid waste, reduction of
effluent colour, sustainable forestry practices, effective use of
by-products as alternative fuel .etc
A 5.4 MW TG at Unit JKPM has been dedicated to energy generation
through bio-fuels. This is first such power project in Odisha State and
has been registered at NLDC for REC. Green power generated from this TG
is 20% of the factory''s total consumption saving fossil fuel.
The new production line at Unit JKPM will improve our compliance with
environmental standards and there will be major savings in water, fuel
and raw materials.
AWARDS AND RECOGNITION
It is a matter of great pride that the Company''s endeavour and
commitment to achieve higher level of operational performance and
environmental excellence has been recognized at various forums. Both
Units of the Company received the CII National HR Excellence Award 2012
for strong commitment to HR Excellence. The Company also received
Talent Management Award at Asia''s Best Employer Brand 2012 hosted by
Employer Branding Institute, World HRD Congress and Stars of Industry
Group Unit - JKPM has been awarded the following;
a) Greentech award for outstanding achievement in Safety Management
b) National safety award for outstanding performance in Industrial
Safety during performance year 2010 from ministry of Labour &
Employment, Government of India
c) Gold award in paper sector by Greentech Foundation for Environment
Management.
d) Silver award in paper sector for CSR by Greentech Foundation
e) Business World FICCI CSR Award 2011-2012
Unit - CPM has been awarded the following;
a) Greentech Environment Gold Award 2012 in paper sector for
outstanding achievement
b) Winner of Golden Peacock environment management Award 2012
c) Best sustainability performance award by World CSR congress
d) IPMA Award 2011-12 for Energy conservation
e) Golden Jubilee Trust award by South Gujarat Chamber of Commerce of &
Industry (SGCCI) for "Excellence in Improving Productivity"
AUDITORS
M/s. S S Kothari Mehta & Co, Chartered Accountants, the Statutory
Auditors of the Company are eligible for re-appointment at the ensuing
Annual General Meeting. The observations of the Auditors in their
Report on Accounts read with the relevant notes are self- explanatory.
The Auditors have confirmed that they have undergone the peer review
process of the Institute of Chartered Accountants of India and hold a
valid certificate issued by the ''Peer Review Board'' of ICAI.
COST AUDIT
The Cost Audit Report for the financial year ended 31st March, 2012 was
filed by the Cost Auditor with the Ministry of Corporate Affairs,
Government of India, on 01-01-2013.
The Cost audit for the year ended 31st March 2013 will be conducted by
M/s. R.J. Goel & Co., Cost Accountants and the reports will be
submitted to the Ministry of Corporate Affairs, Government of India.
ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
Details of energy conservation, technology absorption, foreign exchange
earnings and outgo, required to be disclosed under Section 2l7(l)(e) of
the Companies Act, 1956 read, with the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, l988 is annexed
to this Report and forms part of it.
PARTICULARS OF EMPLOYEES
Information in accordance with the provisions of Section 2l7(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended regarding employees is given in Annexure to the
Directors'' Report. However, as per the provisions of Section 219
(1)(b)(iv) of the Companies Act, 1956, the Annual Report is being sent
to the shareholders of the Company excluding the aforesaid information.
Any shareholder interested in obtaining such particulars may write to
the Secretary at the Company''s New Delhi address.
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion & Analysis, Corporate Governance
Report and Auditor''s Certificate regarding compliance of conditions of
Corporate Governance are made a part of this Annual Report.
SUBSIDIARY COMPANIES
The accounts of the wholly-owned subsidiaries i.e. Jaykaypur
Infrastructure & Housing Limited (JIHL) and Songadh Infrastructure &
Housing Limited (SIHL), have been consolidated as required by
applicable Accounting Standards. With reference to the General Circular
No. 2/2011 dated 8th Feb. 2011, issued by the Ministry of Corporate
Affairs, Government of India, copies of the Balance Sheet, Statement of
Profit & Loss, Reports of the Board and the Auditors of the aforesaid
Subsidiary Companies have not been attached to the Balance Sheet of the
Company. However, annual accounts of the Subsidiary Companies and the
related detailed information of the Holding and Subsidiary Companies,
shall be made available to the shareholders seeking such information at
any point of time. The annual accounts of the Subsidiary Companies are
also available for inspection by any shareholder at the Registered and
Head Offices of the Company and that of the Subsidiary Companies
concerned.
DIRECTORS'' REPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, your
Directors state that:
i. in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
ii. the accounting policies selected and applied are consistent and
judgments and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of
the Financial Year and of the Profit & Loss of the Company for that
period;
iii. proper and sufficient care has been taken for maintenance of
adequate accounting records in accordance with the provisions of the
said Act for safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities;
iv. The annual accounts have been prepared on a going concern basis.
INDUSTRIAL RELATIONS
Industrial Relations remained cordial throughout the year under review.
Several initiatives implemented by the Company have significantly
helped in improving the work culture, enhancing productivity and
enriching the quality of life of the workforce. Our openness and
transparency in dealing with people issues and several IR initiatives
implemented by the Company have been gaining all round faith of
different stake-holders.
ACKNOWLEDGEMENT
The Directors acknowledge the continued support and cooperation
received from the Central Government, State Governments, Shareholders,
participating Financial Institutions and Banks, Customers, Suppliers
and Dealers.
The Board also wishes to record its sincere appreciation of the total
commitment, dedication and hard work, put in by every member of Team JK
Paper.
On behalf of the Board of Directors
BHARAT HARI SINGHANIA
Chairman
New Delhi
Date : 21st May, 2013
Mar 31, 2012
The Directors have pleasure in presenting the 51st Annual Report and
Audited Accounts of the Company for the year ended 31st March, 2012.
FINANCIAL RESULTS
Rs in Crore (10 million)
2011-12
Sales and Other Income 1,557.10
Profit Before Finance Costs and 176.31
Depreciation (PBIDT)
Profit Before Depreciation and Tax 125.06
Profit After Tax 49.32
Surplus brought forward 249.29
Total amount available for appropriation 298.61
APPROPRIATIONS:
Debenture Redemption Reserve 0.66
Capital Redemption Reserve 0.06
General Reserve 2.50
Dividend:
- On Preference Shares 0.01
(incl. Ta x on Dividend)
- On Equity Shares 23.82
(incl. Ta x on Dividend)
Surplus carried to Balance Sheet 271.56
TOTAL 298.61
DIVIDENDS
Your Directors are pleased to recommend a dividend of 15% on the
expanded Equity Share Capital (Rs. 1.50 per share). The dividend
payable on Preference Share Capital (including interim dividend) at the
specified rate is Rs. 0.01 Crore. The total outgo including tax on
account of dividend would be Rs. 23.83 Crore.
PERFORMANCE REVIEW
The Company's Sales and Other Income during the year was Rs. 1,557.10
Crore, Operating Profit (PBIDT) Rs. 176.31 Crore and PAT stood at Rs.
49.32 Crore. The Company's production was 2,83,038 tonnes and sales
increased to 2,77,599 tonnes as against 2,67,081 tonnes.
Operating Profit (PBIDT) was considerably impacted due to increase in
raw material price, lower receipt of linkage coal resulting in purchase
of open market coal at much higher price and increase in other input
costs. The Company was able to offset some of these cost increases by
higher productivity and efficiencies. However, market conditions did
not favour increase in product prices to fully compensate the cost
increases during the year.
International hardwood pulp prices declined from a level of US $ 770/MT
in April 2011 to as low as USD 550/MT during December 2011. Since then
it has increased again by USD 150/MT. However, much of the benefits
due to the drop in pulp prices were neutralized by the depreciation in
rupee vis-ÃÂ -vis the US Dollar.
JK Paper has been constantly creating value with its Brand driven
strategy and the brands of the Company are synonymous with premium
quality paper. It is the ability to understand customers' aspirations
and develop products for those needs and fulfil them which have given
us the "first mover advantage" in many products.
Our long standing relations with channel partners also helped us to
withstand competition. The Company is the market leader in office
papers and among the top 2 players in coated paper and high end
packaging board segment.
The Company was able to increase acreage under farm forestry
significantly in 2011-12 by aggressive efforts. This will augment
supplies of wood from our nearby catchment area and help us reduce
transportation of wood from long distances.
The Company carried out some upgradation and de-bottlenecking in its
Packaging Board plant at Unit CPM which enhanced its capacity from
60,000 tpa to 84,000 tpa. The Company's factories have been
consistently operating at more than 100% of its stated capacities. This
is due to continuous improvements and modernisation of plant and
machinery. In order to better reflect the current production
capabilities, the management considers it appropriate to re-state the
installed capacity at 2,90,000 tpa.
INDUSTRY SCENARIO
India's per capita consumption of paper and board has shown consistent
rising trend in recent years and it is expected that the market size
will rise to 20 million tonnes by 2020 from around 10.5 million tonnes
in 2010-11. Despite the slower growth last year due to economic
slowdown, medium to long term growth potential of the industry remains
bright.
Low per capita consumption of paper and board, at around 9.5 kg,
vis-ÃÂ -vis the average World consumption of 58 kg., along with
increasing literacy levels, higher spending on education sector,
changing urban lifestyles as well as better economic growth augur well
for sustained growth of the Indian Paper industry.
Office Papers: The market for office papers was adversely affected
last year due to general economic slowdown and the consequent lesser
spends by corporate and other sectors. Bunching of capacity additions
in recent years added to the market pressure. However, there are signs
of improvement and sales have picked up to some extent in the last
quarter of the year. This trend is likely to continue in the coming
quarters.
Coated Papers: The two-side coated segment where your Company operates
exhibited a growth of about 12% during the year and continues to grow
robustly due to high growth in corporate retailing and shift in
marketing and branding methodology. However, the prices were adversely
impacted during much of the year due to higher imports from China and
South Korea at low prices. In the recent months, steep depreciation of
the Rupee coupled with reduced pressure from these sources have enabled
the industry in improving realisations.
Packaging Board: The overall segment has grown at around 9-10% during
the last year. The main reasons for this increase in demand are rising
disposable incomes and retail boom both of which call for superior
grade packaging. This is resulting in shifting of lower quality
packaging board to premium quality packaging board. The Company opines
that these trends are likely to sustain in the medium to long term thus
making this sector poised for growth. JK Paper has been focussing on
the upper end of Packging Board which is benefitting from the shifts.
EXPANSION
JK Paper's expansion cum modernization project is on track. It
envisages enlarging the annual capacity from the current 2,90,000
tonnes to 4,55,000 tonnes per annum by early 2013. The Rs. 1,653 crore
expansion project achieved financial closure with financing done
through a mix of funding viz: Rights Issue, FCCBs, Internal Accruals,
Rupee-debt from Indian Banks and Forex-debt from multilateral
development funding institutions.
This expansion plan will enable us to retain our leadership position in
the Office Paper segment. New production line will manufacture
multi-purpose cut size Office Papers. The machines from Germany and
Finland incorporate the latest technology and are being sourced from
the world leaders in the respective fields.
By introducing contemporary technology, the Company will be able to
conserve water and energy besides reducing emissions and waste
discharge. It will also give us scale economies, help reduce
consumption of coal and lead to more efficient use of fibre which
will help the Company in being more cost competitive.
Physical progress of the project is as per schedule, and project is
expected to be complete by end of this calendar year. Commercial
production is expected during beginning of next calendar year.
To part finance the above expansion at Unit JKPM, at district
Rayagada, Odisha and to fund expenditure for general corporate
purposes, your Company had during the year under review issued
5,84,70,686 Equity Shares of Rs. 10 each at a price of Rs. 42
(including premium of Rs. 32) aggregating to Rs. 245.58 Crore on Rights
basis in the ratio of three Equity Shares for every four Equity Shares
held on the Record Date i.e. 27th July 2011.
Consequent to the Rights Issue, the paid-up Equity Share Capital of the
Company increased w.e.f. 3rd September 2011 to Rs. 136.62 Crore from
Rs. 78.15 Crore. The proceeds of the Rights Issue are being utilised as
per objects of the issue and pending full utilisation, the balance
amount are invested in mutual funds and fixed deposits with banks.
Your Company had also issued unsecured & unlisted Foreign Currency
Convertible Bonds (FCCBs) aggregating to Euro 35 Million (equivalent to
Rs. 226.14 Crore) to European Development Financial Institutions in
May, 2011. Various loans have also been negotiated from domestic and
international banks/ institutions and the project finance stands fully
tied-up.
CUSTOMER-IN CULTURE AND QUALITY
JK Paper has been committed to meeting customers needs by offering them
a range of products that confirm to their varied requirements. We have
been doing this through regular and continual up gradation in product
quality, modernization and adoption of latest technology & processes,
and strict adherence to quality standards and pro active customer
interaction.
Customers are periodically invited to the Mills for interaction with
our workmen and staff. This makes the Company staff more quality
conscious and customer focussed. The Company has been taking up regular
audits to identify the areas for improvement and take appropriate
corrective and preventive measures. This has helped to understand
customer preference and prepare ourselves to stay ahead of competition.
Last year, we developed new products for specific segments like C1S
coated boards (Natural shade), Playing Card Boards, and Up gradation of
JK Easy copier shade etc.
CORPORATE SOCIAL RESPONSIBILITY
The Company has been focusing on four major areas in CSR activities:
Education, Health care, Skill development, Livelihood interventions and
Community development. A detailed report on the Company's CSR
activities is given in the Annual Report.
Adult Education Model has successfully enabled many illiterate women,
especially tribal and SCs/ STs, to become literates through our
community based Adult Education Centres. Till now we have created
around 5,300 literates under this scheme. Recent years have seen
up-scaling of activities in this area.
Unit CPM has adopted an ITI to help to reduce the gap between training
of students and industry's requirements. The Company's initiative has
been recognised by Government by making this ITI a Model Centre in
Gujarat for other business units to emulate.
Self Help Groups (SHG): Our efforts have motivated many tribal women to
organize into SHG. They have initiated different income generating
activities like hill broom binding, phenyl making, tamarind processing
and a host of other activities that fi nd ready market in nearby urban
areas.
Basic health services including free medicines to ST & SC people
through health camps were organised in nearby villages at regular
intervals. Over 6,300 patients have availed the services last year.
Community development initiatives through "SPARSH": To carry out our
CSR activities in a focused and systematic manner we have formed an NGO
"SPARSH". Through this we have been organising structured activities in
two broad areas viz. Livelihood Interventions and Health Care
Interventions.
ENVIRONMENT
JK Paper believes in the betterment of the Environment and its Safety.
It has been introducing cleaner and environment-friendly technologies.
Both the units of the Company are ISO 9001-2000, ISO 14001 certified
for their Quality and Eco-friendly operations and OHSAS-18001
Certified for Health, Safety and Security.
The Company has been pursuing continuous improvement activities which
have helped it conserve resources. Better technology combined with
process innovation and efforts by all concerned have helped it achieve
savings in water consumption through recycling, reuse and minimising
waste water discharge. We have also been able to conserve energy
through this approach and reduce its gas/air emissions as well.
AWARDS AND RECOGNITION
It is a matter of great satisfaction that your Company has continued to
be conferred several awards in recognition of its commitments to
excellence, efficiency & environment friendliness.
Unit JKPM has been awarded the following;
(a) Greentech Environment Excellence Award for Outstanding achievement
in Safety Management.
(b) Silver Award in Paper Sector from Greentech Foundation.
(c) National Award for Excellence in Energy Management 2011 as an
"Energy Efficient Unit" from Confederation of Indian Industries (CII),
and
(d) Second Prize for "Best Practices in Industrial Relations" from
Confederation of Indian Industries (CII), Bhubaneswar.
Unit CPM has been awarded the following;
(a) CII National HR Excellence Award à Strong Commitment to HR
Excellence, 2011,
(b) Greentech Foundation CSR Gold Award à 2011,
(c) Greentech Safety Gold Award à 2011, and
(d) South Gujarat Chamber of Commerce & Industry Productivity Award Ã
2011.
DIRECTORS
During the year Mr. Wim Wienk has joined the Board of the Company as a
nominee of the FCCB investors. He is an Additional Director and would
be appointed as a Director liable to retire by rotation at the
forthcoming Annual General Meeting of the Company. Smt. Vinita
Singhania, Shri Udayan Bose and Shri M.H. Dalmia retire by rotation at
the ensuing Annual General Meeting and being eligible to offer
themselves for re-appointment.
AUDITORS
The observations of the Auditors in their Report on Accounts read with
the relevant notes are self- explanatory.
M/s. Lodha & Co., Chartered Accountants, the Auditors of the Company
have not offered themselves for re- appointment at the ensuing Annual
General Meeting. The Board of Directors wish to place on record its
sincere appreciation of the services rendered by M/s Lodha & Co.
M/s. S. S. Kothari Mehta & Co., Chartered Accountants, have given their
consent to be appointed as Auditors of the Company. The Auditors have
confirmed that they have undergone the peer review process of the
Institute of Chartered Accountants of India and hold a valid certificate
issued by the 'Peer Review Board' of ICAI.
COST AUDIT
The Cost Audit Report for the financial year ended 31st March, 2011
was filed by the Cost Auditor with the Ministry of Corporate Affairs,
Government of India, on 28th Sept. 2011 (due date 30th Sept. 2011).
The Cost audit for the year ended 31st March, 2012 will be conducted by
M/s. R.J. Goel & Co., Cost Accountants, and the reports will be
submitted to the Ministry of Corporate Affairs, Government of India in
due course.
ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
Details of energy conservation, technology absorption, foreign exchange
earnings and outgo, required to be disclosed under Section 217(1) (e)
of the Companies Act, 1956 read, with the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988 is annexed
to this Report and forms part of it.
PARTICULARS OF EMPLOYEES
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended regarding employees is given in Annexure to the
Directors' Report. However, as per the provisions of Section 219
(1)(b)(iv) of the Companies Act, 1956, the Annual Report is being sent
to all shareholders of the Company excluding the aforesaid information.
Any shareholder interested in obtaining such particulars may write to
the Secretary at the Company's New Delhi address.
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion & Analysis, Corporate Governance
Report and Auditor's Certificate regarding compliance of conditions of
Corporate Governance are made part of this Annual Report.
SUBSIDIARY COMPANIES
The accounts of the Wholly-Owned Subsidiaries i.e. Songadh
Infrastructure & Housing Limited (SIHL) and Jaykaypur Infrastructure &
Housing Limited (JIHL), have been consolidated as required by
applicable Accounting Standards. With reference to the General Circular
No. 2/2011 dated 8th Feb. 2011, issued by the Ministry of Corporate
Affairs, Government of India, copies of the Balance Sheet, Statement of
Profit & Loss, Reports of the Board and the Auditors of the aforesaid
Subsidiary Companies have not been attached to the Balance Sheet of the
Company.
However, annual accounts of the Subsidiary Companies and the related
detailed information of the Holding and Subsidiary Companies, shall be
made available to the shareholders seeking such information at any
point of the time. The annual accounts of the Subsidiary Companies are
also available for inspection by any shareholder at the Registered and
Head Offices of the Company and that of the Subsidiary Companies
concerned.
DIRECTORS' REPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, your
Directors state that:
i. in the preparation of the annual accounts, the applicable Accounting
Standards have been followed along with proper explanation relating to
material departures;
ii. the accounting policies selected and applied are consistent and
judgments and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of
the Financial Year and of the Profit & Loss of the Company for that
period;
iii. proper and sufficient care has been taken for maintenance of
adequate accounting records in accordance with the provisions of the
said Act for safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities;
iv. The annual accounts have been prepared on a going concern basis.
INDUSTRIAL RELATIONS
Industrial Relations remained cordial throughout the year under review.
Our openness and transparency in dealing with people issues and several
path-breaking IR initiatives implemented by the Company have
significantly helped not only in signing of Long Term Wage Agreement
but also improving the overall atmosphere at our plants.
ACKNOWLEDGEMENT
The Directors acknowledge the continued support and cooperation
received from the Central Government, State Governments, Shareholders,
participating Financial Institutions, Banks and other Lenders,
Customers, Suppliers and Dealers.
The Board also wishes to record its sincere appreciation of the total
commitment, dedication and hard work, put in by every member of Team
JK.
On behalf of the Board of Directors
HARI SHANKAR SINGHANIA
Chairman
New Delhi
Date : 14th May, 2012
Mar 31, 2011
The Directors have pleasure in presenting the 50th Annual Report and
Audited Accounts of the Company for the year ended 31st March, 2011.
FINANCIAL RESULTS
Rs in Crore (10 million)
2010-11 2009-10
Gross Sales 1,432.97 1,299.57
Profit before Interest and 265.77 245.46
Depreciation
Interest & Financial Charges 45.70 48.49
Profit before Depreciation 220.07 196.97
Profit before Tax 148.45 126.93
Provision for Tax 42.03 35.90
Profit after Tax 106.42 91.03
Surplus brought forward 174.51 111.95
Total amount available for 280.93 202.98
appropriation
APPROPRIATIONS:
Capital Redemption Reserve 0.11 0.21
General Reserve 11.00 10.00
Debenture Redemption 22.94 Nil
Reserve
Debenture Redemption (22.94) Nil
Reserve Written Back
Dividend:
- On Preference Shares 0.01 0.03
(incl. Ta x on Dividend)
- On Equity Shares (incl. Tax 20.51 18.23
on Dividend)
Surplus carried to Balance Sheet 249.30 174.51
TOTAL 280.93 202.98
DIVIDENDS
Considering the better performance during the year, your Directors had
declared an interim dividend of 22.50% on the Equity Capital (Rs. 2.25
per share) on 28th January, 2011. The dividend paid on Preference Share
Capital (including interim dividend) at the specifi ed rate is Rs. 0.01
Crore. The total outgo including tax on account of dividend was Rs.
20.52 Crore. In order to conserve funds for the on-going Expansion at
Unit JKPM, the Board proposes that the Interim Dividend be treated as
Final Dividend for the year ended 31st March, 2011.
PERFORMANCE REVIEW
The CompanyÃs Gross Sales during the year was Rs 1,432.97 Crore, the
Operating Profit (PBIDT) was Rs. 265.77 Crore and PAT stood at Rs
106.42 Crore as against Rs. 91.03 Crore during the previous year, an
increase of 17%. These represent the highest Gross Sales, PBIDT and PAT
achieved by the Company.
The CompanyÃs production increased to 286,019 tonnes (previous year
273,755 tonnes, up 4.5%) and sales stood at 267,081 tonnes as against
265,045 tonnes. Overall, plant capacity utilization was 119% and it is
heartening to note that the Packaging Board plant operated at 125 % of
its installed capacity. The Company, however, cut back its outsourced
volumes due to volatility in the international markets and limited
domestic supplies.
Operating Profit (PBIDT) was higher despite increase in raw material
cost and price of purchased pulp. Continued spikes in crude oil prices,
made several petroleum based chemicals costlier. Lower availability of
linkage coal and increase in the price of coal also contributed to
higher cost of production. Though the Company was able to contain some
of these cost increases due to higher productivity and effi ciencies,
it was constrained to raise paper prices during the year. PAT was
higher by 17%, despite a higher provision for taxes of Rs 42.03 Crore
(previous period Rs 35.90 Crore).
The Indian Paper and Paper Board industry is among the 15 largest in
the world by volume. Per capita consumption in the country has
increased from 8 Kg to 9.6 Kg over the last 3 years. This, however, is
far below the Asian per capita consumption of 35 Kg.
The Company has been following a policy of focussing on value added
products, which has paid rich dividends. As a
result, it has strong presence in the segments of Copier Paper, Coated
Paper and Virgin Fibre based Packaging Boards.These have all shown
rapid growth in demand. The Companys wide distribution network along
with emphasis on meeting customer expectations has helped it establish
a leadership position in the market, despite strong competitive
challenges. JK Paper continues to be the highest producer of Copier and
Office Paper in the Country with well established Brands like "JK
CopierYJK Easy Copier"."JK Copier Plus","Sparkle", and "Cedar". During
the year it tied up with HP to introduce high performance "ColorLok"
papers which gives better printability and saves consumption of ink.
The Company has also been targeting niche segments through speciality
products like "JK Excel Bond", "JK LedgerVMICR Cheque papers" etc.
The market for coated paper continues to grow well. Domestic coated
paper prices hardened during the year due to rising costs of inputs.
"JK Cote", the Companys coated paper continues to attract a wide
variety of customers.
The Packaging Boards business achieved highest production volumes with
increased sales of Virgin Fiber based Boards. Demand continues to be
strong and JK Paper has established itself as a leading player in this
highly demanding segment with Brands like "JK Ultima", "JKTuffcote","JK
Neo Purefil" etc.The Board machine was rebuilt in March 2011, which
added 24,000 TPA of capacity.
Global pulp and paper industry recovered sharply during the year to
reach pre-crisis levels. Prices of pulp rose significantly though they
are expected to decline over the next 6-9 months. International paper
prices also went up during the year.
In 2010-11 the Company took steps to overcome the setback in
plantation activities due to outbreak of "gall disease" last year. It
increased plantation to cover 6700 Ha. during the year. As a result of
plantation activities taken up by the Company, its share of wood
sourced from farm forestry in total raw material use has been on the
rise.
EXPANSION
During the year your Company placed orders for major plant and
machinery for its expansion program at Unit JKPM. The Rs. 1650 Crore
Project envisages
setting up a 215,000 TPA Pulp Mill, 165,000 TPA Paper machine, 55 MW
Power block with all requisite auxiliaries.
The equipment is being sourced from leading international and domestic
suppliers and incorporates efficient & contemporary technologies. The
plant will
deliver not only high- quality end product but will also result in
lower cost of operation and have a beneficial impact on the
environment.
A dedicated team has been put in place for
implementing the Project, aided by external technical consultants.
Photocopier and Office papers from the new facility will be available
for sale towards the later part of FY 2012-13.
The Company is at an advanced stage of achieving financial closure
through an appropriate mix of internal accruals, debt & equity.
CUSTOMER SATISFACTION AND QUALITY
The Companys commitment and success in delivering
high quality products and services to customers has been a major reason
for its attaining and retaining a leadership position in the Indian
Paper Industry. JK Papers obsession towards Quality and Customer
Satisfaction is reflected in understanding and fulfillment of
expectations of the customers, big or small. This in turn has been a
key factor in its growth and the advantage that the Company has been
able to build over the years in terms of a wide and loyal distribution
network.
JK Paper became the first Indian Company to produce and sell ColorLok
copier paper in India.This exclusive tie up with HP, helps us in
bringing in world class printing paper for the increasingly demanding
Indian
customers.
The Company continues to conduct regular audit for its quality
standards and customer satisfaction
through research conducted in-house and also by an independent agency.
This helps it to be in constant touch with changing customer
preferences and develop its products to stay well ahead of the curve.
CORPORATE SOCIAL RESPONSIBILITY
The Company is committed to the health and safety
of its employees and its neighbourhood and believes
in pursuing its business growth objectives in a socially responsible
and ecologically sustainable way.
We strive to actively contribute to the social and economic development
of the communities in which we operate. Our CSR efforts are focused on
helping the citizens of our vicinity lead a healthier, happier & more
meaningful life.
Towards this end a new School building was opened with spacious
premises and all modern infrastructure for housing the English medium
Singhania Public School at Unit CPM, Gujarat. This CBSE School is open
to children of employees as well as those from surrounding communities.
It has received enthusiastic response in the whole of Tapi district.
The Company has been pursuing an adult education model to help adults
become literate through community based Adult Education Centers.
Teachers from villages have been nominated to spread literacy in the
peripheral villages.
Basic health services through distribution of free medicines and
organizing of health camps is done at regular intervals to serve
underprivileged communities. More than 5500 persons have benefi ted
from such programs and 1760 children have been immunized during the
year.
The Company continued with its efforts towards empowerment of women
through Self Help Groups (SHGs) that have already been established.
During the year more activities for income generation of these
predominantly tribal women were undertaken. Several young girls were
also trained in embroidery and tailoring and were educated on health
and hygiene through activities like Balika Mandals.
ENVIRONMENT
JK Paper has always laid emphasis on adoption of best environmental
management practices in order to go beyond stipulated standards. Both
the production units strive continuously to benchmark best practices
and inculcate them in their systems. The ISO 14001: 2004 and OHSAS
18001 : 2007 certifi cation of both the units bears a testimony of our
commitment towards Safety and Environment. The occupational Health and
Safety process is implemented through periodic Safety Audits, Safety
observations, TPM
Audits and Environment Audits focusing on SHE issues.
It is really matter of great pride that JK Paper Ltd. was nominated as
one of the 6 fi nalists worldwide for the "Environmental Strategy of
the Year Award 2010Ã sponsored by Pulp and Paper International, UK.
These global awards recognize the achievements of Companies, mills and
individuals in the sector based on their contribution to the
Environment, Adoption of superior technology and equipment with respect
to resource conservation, energy and eco-friendliness.
A number of schemes for energy and water saving were identifi ed during
the audit under Cleaner Production Programme of IFC Washington. Many of
these schemes have been implemented along with internally generated
ideas which have resulted in reducing the Water requirement by 11% and
Electricity requirement by 6% per Tonne of production over the last two
years.
At Unit CPM, a project is underway for usage of treated effl uent water
for irrigation in nearby areas. Combined recharging cum Rain Water
Harvesting (RWH) system has been implemented at our plant and its
housing colony. In its pursuit of excellence in Environmental
management practices, the Company also operates lime sludge recycling
plant at both its factories.
AWARDS AND RECOGNITION
It is a matter of great satisfaction that JK Paper has been conferred
"Dun & Bradstreet à Rolta Corporate Award 2010à as the top Indian
Company in the Paper Industry.
Unit CPM was awarded "Greentech Environment Gold Award à 2010à and
"Greentech Safety Gold Award à 2010à in the Paper Sector from Greentech
Foundation, New Delhi. Unit JKPM also received the "Greentech
Environment Excellence Award à 2010à in the Silver category. These
awards are a recognition of exemplary environmental and safe operation
systems being practiced at the Mills, and refl ect our commitment
towards Environment Protection and Safety.
Quality circles at Unit JKPM bagged 6 awards in the Gold category and
also a Best Case study presentation Award at the 19th Koraput Chapter
Convention. Tw o quality circles also received recognition in the
"Excellentà category at the National Convention on
Quality Circles held at Visakhapatnam between 27th and 29th December
2010.
The Industrial Health & Safety Department, Government of Gujarat, also
gave "Shram Veer Award" to one of our employees for innovative idea and
productivity improvements.
DIRECTORS
ShriArun Bharat Ram, Shri Dhirendra Kumar and Shri Shailesh Haribhakti
retire by rotation at the ensuing Annual General Meeting and being
eligible offer
themselves for re-appointment.
Shri Shailendra Swarup ceased to be a Director on the Companys Board
from 28th January, 2011 The Board places on record its sincere
appreciation of the valuable services rendered by him during his
tenure.
AUDITORS
M/s. Lodha and Co., Chartered Accountants, the Auditors of the Company
are eligible for re- appointment at the ensuing Annual General Meeting.
The Auditors have confirmed that they have undergone the peer review
process of the Institute of Chartered Accountants of India (ICAI) and
hold a valid certificate issued by the Peer Review Board of ICAI. The
observations of the Auditors in their Report on Accounts read with the
relevant notes are self-explanatory.
COST AUDIT
The Cost Audit Report for the financial year ended 31st March 2010 was
filed by the Cost Auditor with the ministry of Corporate Affairs,
Government of India, on 07.09.2010 (Due date 30.09.2010).
The Cost audit for the year ended 31st March 2011 will be conducted
by M/s. R.J. Goel & Co., Cost Accountants and the reports will be
submitted to the Ministry of Corporate Affairs, Government of India.
ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
Details of energy conservation, technology absorption, foreign exchange
earnings and outgo, required to be disclosed under Section 2l7(l)(e) of
the Companies Act, 1956 read, with the Companies (Disclosure of
Particulars in the Report of Board of
Directors) Rules, 1988 is annexed to this Report and forms part of it.
PARTICULARS OF EMPLOYEES
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended regarding employees is given in Annexure to the
Directors Report. However, as per the provisions of Section
2l9(l)(b)(iv) of the Companies Act, 1956, the Annual Report is being
sent to all shareholders of the Company excluding the aforesaid
information. Any shareholder interested in obtaining such particulars
may write to the Company Secretary at the Companys New Delhi address.
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion & Analysis, Corporate Governance
Report and Auditors Certificate
regarding compliance of conditions of Corporate Governance are made a
part of this Annual Report.
SUBSIDIARY COMPANIES AND SCHEME OF ARRANGEMENT
The accounts of the wholly-owned subsidiaries i.e. Songadh
Infrastructure & Housing Limited (SIHL) and Jaykaypur Infrastructure &
Housing Limited (JIHL), have been consolidated as required by
applicable Accounting Standards. With reference to the General Circular
No. 2/2011 dated 8th Feb. 2011, issued by the Ministry of Corporate
Affairs, Government of India, copies of the Balance Sheet,Profit& Loss
Account, Reports of the Board and the Auditors of the aforesaid
Subsidiary Companies have not been attached to the Balance Sheet of the
Company. However, annual accounts of the Subsidiary Companies and the
related detailed information of the holding and subsidiary
Companies.shall be made available to the shareholders seeking such
information at any point of time.The annual accounts of the subsidiary
companies are also available for inspection by any shareholder at the
Registered and Head Offices of the Company and that of the Subsidiary
Companies concerned.
The Scheme of Arrangement, between the Company and the wholly owned
subsidiaries of the Company (SIHL and JIHL) and their respective
Shareholders (the
Scheme) was sanctioned by the HonÃble High Court of Orissa on 1st
October 2010 and by the HonÃble High Court of Gujarat on 24th December
2010. Upon fi ling the certifi ed copies of the Orders of the HonÃble
High Courts of Orissa and Gujarat with the respective Registrar of
Companies, the said Scheme became effective on 20th January 2011
("Effective DateÃ) and become operative w.e.f "The Appointed Dateà i.e.
1st April 2009 as per the Scheme.
Consequently the CPM Staff Housing Undertaking and JKPM Staff Housing
Undertaking of the Company stood transferred and vested in SIHL and
JIHL respectively, w.e.f. 1st April, 2009 as going concerns. The
consideration as per the Scheme has been settled by the Subsidiary
companies and further necessary steps as required by the scheme are
being taken.
DIRECTORSÃ RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, your
Directors state that:
i. in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. the accounting policies selected and applied are consistent and
judgments and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of
the Financial Year and of the Profit & Loss of the Company for that
period;
iii. proper and suffi cient care has been taken for maintenance of
adequate accounting records in accordance with the provisions of the
said Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
iv. The annual accounts have been prepared on a going concern basis.
INDUSTRIAL RELATIONS
Industrial Relations remained cordial throughout the year under review.
We acknowledge the wholehearted support and cooperation provided by
employees at all levels of the organization and appreciate the valuable
contribution made by them towards the growth of your company. Several
Industrial Relations initiatives implemented by the Company have
signifi cantly helped in improving the work culture, enhancing
productivity and enriching the quality of life of the workforce.
ACKNOWLEDGEMENT
The Directors acknowledge the continued support and cooperation
received from the Central Government, State Governments, Shareholders,
participating Financial Institutions and Banks, Customers, Suppliers
and Dealers.
The Board also wishes to record its sincere appreciation of the total
commitment, dedication and hard work, put in by every member of Team
JK.
On behalf of the Board of Directors
HARI SHANKAR SINGHANIA
Chairman
New Delhi
Date : 29th April, 2011
Mar 31, 2010
The Directors have pleasure in presenting the 49th Annual Report and
Audited Accounts of the Company for the year ended 31st March, 2010.
The Company is paying tribute to Lala Lakshmipat Singhania (1910-1976),
on his Birth Centenary Year. Late Lala Lakshmipat Singhania was a key
architect of JK Organization, a true visionary, who believed in the
philosophy of inclusive growth for all sections of the society. The
best ever performance by the Company is a benefi ting tribute to the
great founder.
FINANCIAL RESULTS
Rs in Crore (10 million)
2009-10 2008-09
Gross Sales 1,299.57 1,268.34
Profi t before Interest and 245.46 182.24
Depreciation
Interest & Financial Charges 48.49 58.47
Profi t before Depreciation 196.97 123.77
Profi t before Tax 126.93 54.08
Provision for Tax 35.90 16.07
Profi t after Tax 91.03 38.01
Surplus brought forward 111.95 93.90
Total amount available for 202.98 131.91
appropriation
APPROPRIATIONS:
Capital Redemption Reserve 0.21 0.40
General Reserve 10.00 3.50
Dividend:
- On Preference Shares 0.03 0.06
(incl. Tax on Dividend)
- On Equity Shares (incl. Tax 18.23 16.00
on Dividend)
Surplus carried to Balance Sheet 174.51 111.95
TOTAL 202.98 131.91
DIVIDENDS
Your Directors are pleased to recommend a dividend of 20% on the Equity
Capital. The dividend payable on Preference Share Capital (including
interim dividend of Rs. 0.01 Crore) at the specifi ed rate is Rs. 0.03
Crore. The total outgo including tax on account of dividend would be
Rs. 18.26 Crore.
PERFORMANCE REVIEW
The CompanyÃs Gross Sales during the year was Rs. 1,299.57 Crore, the
Operating Profi t (PBIDT) was Rs. 245.46 Crore (an increase of 35% over
previous year) and PAT stood at Rs 91.03 Crore as against Rs. 38.01
Crore during the previous year, an increase of 140%. These represent
the highest ever Gross Sales, PBIDT and PAT achieved by the Company.
The CompanyÃs production increased to 273,755 tonnes (previous year
254,816 tonnes, an increase of 7.4% over previous year) and sales stood
at 265,044 tonnes as against 256,918 tonnes in previous year. Overall,
plant capacity utilization was 114% and it is heartening to note that
the recently started Packaging Board plant operated at 118% in its
second full year of operations. The Company, however, cut back its
outsourced volumes due to volatility in the international markets and
diffi culty in getting supplies domestically.
The growth in Operating Profi t (PBIDT) was possible due to increased
capacity utilization in all the production lines, sales of more value
added products in Packaging Board, strategic purchase of imported pulp
at lower prices, and soft crude oil prices which made several petroleum
based chemicals rule easy. GovernmentÃs stimulus package also helped
the industry in containing the effect of the slow down in demand in the
early part of year. Interest expense came down signifi cantly to Rs
48.49 Crore from Rs 58.47 Crore during the previous year, a decrease of
17%. This was possible due to large re-payment of loans out of cash
generation, tighter credit and stocking policies leading to a reduction
in working capital funds. The PAT consequently was higher by 140%,
despite a higher provision for taxes at Rs 35.90 Crore (previous period
Rs 16.07 Crore).
After the turmoil in the fi nancial markets during the previous year,
the year saw the beginnings of a recovery in the world economy, even if
unevenly across geographies. India was one of the earliest to recover
from the crisis and its monetary and fi scal management before and
during the crisis has been acclaimed widely. Despite a year of
drought, industrial activity exhibited growth. This was refl ected in
Paper industry as well. Although, there was some sluggishness in
output prices during the early part of the year due to cost cutting
measures by several Government Departments and the corporate sector and
new paper capacities coming on stream, prices recovered in the last
quarter due to smart demand pick up.
Low per-capita consumption, increasing GDP growth rates, increased
emphasis on education and literacy, growth in organized retail and
demand for better quality papers and boards augur well for the
sustained growth of the industry.
The Company is well positioned to take advantage of this growth due to
its presence in all high value added segments. All the three major
segments à Copier, Coated and Virgin Fibre based Packaging Boards Ã
have grown for the last 4-5 years at double digit rates. Positive
growth continued even during the turmoil seen in the last 18 months.
The CompanyÃs extensive distribution reach and depth helps it in
tackling competitive and price pressures.
The demand for the CompanyÃs fl agship copier papers is linked to the
performance and growth of the industrial sector, levels of activity in
the service sector, besides use in the household and education sector.
Although it had a modest start, the overall annual growth rate for the
segment clocked double digits. During the last quarter most of the
pipeline inventories got cleared, leading to hardening of prices. The
Company continues to be the market leader in the segment with offerings
across the entire spectrum with its well known brands such as JK
Copier, JK Easy Copier, JK Copier Plus, Sparkle, and Cedar. Besides
this, the Company also focuses on niche segments through specialty
products like JK Excel Bond, MICR Cheque papers etc.
Coated paper prices were volatile during the fi rst half of the fi
nancial year, tracking international prices and increased imports of
coated paper. However, JK Paper was able to improve its performance
through improved effi ciency and lower chemical cost, even though
realization fell marginally. The outlook for JK Cote, the CompanyÃs
coated paper remains favourable especially as prices in the
international market have moved up due to surge in paper price.
The Packaging Board business achieved substantial growth and turned in
a strong performance. Production reached 118% of installed capacity
with the entire production being high value added virgin fi bre based
boards by the middle of the year. Yo u would be happy to note that all
major brands à JK TuffCote, JK Ultima, and JK PureFil are now widely
recognized and well received by the end consumers. Most of the end user
industries using value added Packaging Boards such as the grades
marketed by JK Paper are growing at a fast clip which should translate
into better growth and profi t performance for the segment.
During the year, the prices of imported pulp fell sharply. The Company
increased its stock levels and resorted to strategic buying of pulp
when the international prices touched their lowest levels in several
years. This contributed signifi cantly to profi tability in the
packaging board business. However, towards the end of the year, the
pulp prices have once again risen sharply due to demand pick-up in
China, restrictions in global wood supply and temporary capacity shuts
in Chile due to the earthquake in February 2010. As a result, the
Company has had to pass on part of these increases to its end
customers.
While input costs remained under control, the availability of adequate
quantity of linkage coal continues to pose problems.
Availability of raw material (wood) of appropriate quality at
affordable prices will govern the growth and profi tability of the
paper industry. To ensure continued availability the Company continued
to pursue farm forestry during the year with renewed focus on
plantation within a 100 km radius of factory locations. However,
plantation activity for the entire industry suffered due to emergence
of gall disease leading to destruction of saplings and trees and
resultant reduction in new plantation acreage. The industry hopes to
recover from this in the coming year. The share of wood sourced from JK
Paper farm forestry is steadily increasing and has touched 76% during
the year.
EXPANSION
As mentioned previously, the Copier segment is growing steadily every
year. In order to maintain the CompanyÃs leadership in this segment, JK
Paper has embarked upon a major expansion programme. The programme
envisages installation of a new paper machine of 150,000 tpa and pulp
mill of 200,000 tpa along with utilities. This will help the Company in
taking advantage of newer and more effi cient pulping technology,
besides upgrading the quality of its copier paper. A dedicated team of
qualifi ed professionals have been put in place to work out the details
of implementation. The Company will fi nance the project through an
appropriate mix of debt, internal accruals and equity.
CUSTOMER SATISFACTION AND QUALITY
Any product is built on quality and the key is consistency in features
and its performance. This in turn works as the key differentiator in
developing a ÃBrandà USP delivering a positive consumer experience. The
CompanyÃs Quality Policy is to actively engage with the customer and
provide them with desired quality products. For this it has dedicated
technical service teams which work on providing end-to-end solutions.
This intrinsic strength of JK Paper has enabled it to produce winning
brands and stay ahead in the quality race in the Indian paper industry.
Keeping this philosophy in mind, the Company introduced high bright
copier paper with brightness in the range of 97 degree ISO. The
packaging board brands likes Endura, JK Club Card etc. introduced this
year are testimony to the CompanyÃs policy of tailoring its offerings
to meet the constantly evolving needs of its consumers.
This is supplemented through constant market feedback and in-house
research. The Company conducts periodic customer satisfaction surveys
through in- house as well as independent agencies, which provides it
with directions for product development, and service levels.
JK PaperÃs constant obsession towards excellence resulted in its
winning the TPM Consistent Commitment Award this year, taking it a
level up from winning the TPM Excellence Award- First Category
previously.
CORPORATE SOCIAL RESPONSIBILITY
The Company has always believed in pursuing its business growth
objectives in a socially responsible and ecologically sustainable way.
It is committed to the health and safety of its employees and those in
the neighbourhood and believes in inclusive growth.
JK Paper believes in committed to go beyond the stipulated environment
standards and ensuring energy conservation and productive recycling of
waste. Both its production units are certifi ed for ISO 9001, ISO 14001
and OHSAS 18001. During the year our ISO 9001:2000 certifi cation was
upgraded to ISO 9001:2008 and OHSAS 18001:1999 certifi cation was
upgraded to 18001:2007.
The Company relentlessly pursues cleaner production processes that
inherently reduce pollution levels and require lesser resources per
unit of output. During the previous year the International Finance
Corporation conducted a Cleaner Production assessment which helped in
identifying several specifi c initiatives for cost savings, low-cost
upgrades and reducing the energy and water consumption. It provided a
loan of USD 3 million to implement these initiatives. This is estimated
to result in 17% reduction in water consumption and 10% savings in
energy consumption. The savings envisaged equal the average annual
water consumption of 75,000 Indian households and energy use of 9,100
families.
The Company has installed lime sludge recycling plants at both its
factories. State-of-the-art industrial Effl uent Treatment Plant (ETP)
ensures that the CompanyÃs effl uents are well within the norms
prescribed. The quality of effl uents, water and air emissions are
tested and monitored on an ongoing basis.
Treated effl uents are re-cycled and used in factory processes or
towards horticulture. In view of the acute drought and severe water
shortage in the country, we have installed rainwater harvesting systems
in our premises.
Our focus is on all-round development of the communities around our
plants located in distant rural area and tribal belt. This includes
education, health and family welfare, infrastructure development,
social causes, sustainable development and livelihood generation.
During the year another 21 Adult Literacy Centers were opened in the
nearby villages, 26 Mobile medical camps in nearby villages to provide
health care facilities to unprivileged people were organized. 25 Women
Self-Help Groups have been formed in 12 adopted villages with a
membership of 294 rural Women, mostly belonging to Tribal Community. As
a part of Health Education, 29 Balika Mandals with 466 adolescent girls
were formed for sensitizing the target audience on basics of health
care.
The CompanyÃs social farm forestry programme, provides better
livelihood opportunities to farmers as an endevaour to build a better,
sustainable way of life for the weaker sections of society.
To further intensify our efforts on the Community Development front and
thereby to create a better quality of life to the people of the society
in the vicinity, we have formed a new NGO named SPARSH.
AWARDS AND RECOGNITION
Unit JKPM was awarded ÃNational Energy Management Award à 2009à by
Confederation of Indian Industry (CII), and ÃBest Practices in
Industrial Relations à 2009à award by Hooghly Chamber of Commerce and
Industry, Collate. For promoting water conservation through recycling &
reuse, this unit has also been awarded the prestigious ÃGround Water
Augmentationà award (Bhumijal Samvardhan Puraskar), from the Ministry
of Water Resources, Government of India. The Directorate of Factories
& Boilers, Government of Orissa, Bhubaneswar, has given ÃState Safety
Awardà to one of our employees for saving human life.
Unit CPM was awarded the ÃNational Energy Conservation Award - 2009Ã by
Bureau of Energy, Government of India, in appreciation of the efforts
in Resource Conservation in Pulp & Paper Sector. The unit has also won,
ÃGreentech Environment Excellence Gold Award à 2009à as well as
ÃGreentech Safety Silver Award à 2009à from Greentech Foundation.
During the year, both the units were also awarded ÃExcellence in
Consistent TPM Commitment Award à 2009à by Japan Institute of Plant
Maintenance.
DIRECTORS
Shri R.V. Kanoria, Shri S.K. Pathak and Shri Shailendra Swarup retire
by rotation at the ensuing Annual General Meeting and being eligible
offer themselves for re-appointment.
AUDITORS
M/s Lodha and Co., Chartered Accountants, the auditors of the Company
are eligible for re-appointment at the ensuing Annual General Meeting.
The Auditors have confi rmed that they have undergone the peer review
process of the Institute of Chartered Accountants of India (ICAI) and
hold a valid certifi cate issued by the ÃPeer Review Boardà of ICAI.
The observations of the Auditors in their Report on Accounts read with
the relevant notes are self-explanatory.
COST AUDIT
The Cost audit for the year ended 31st March 2010 will be conducted by
M/s R.J. Goel & Co., Cost Accountants and the reports will be submitted
to the Ministry of Corporate Affairs, Government of India.
ENERGY, TECHNOLOGY & FOREIGN EXCHANGE
Details of energy conservation, technology absorption, foreign exchange
earnings and outgo, required to be disclosed under Section 217(1)(e) of
the Companies Act, 1956 read, with the Companies (Disclosure of
Particulars in the Report of Board of Directors) Rules, 1988 is annexed
to this Report and forms part of it.
PARTICULARS OF EMPLOYEES
Information in accordance with the provisions of Section 217(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended regarding employees is given in Annexure to the
Directorsà Report. However, as per the provisions of Section
219(1)(b)(iv) of the Companies Act, 1956, the Annual Report is being
sent to all shareholders of the Company excluding the aforesaid
information. Any shareholder interested in obtaining such particulars
may write to the Secretary at the CompanyÃs New Delhi address.
CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion & Analysis, Corporate Governance
Report and AuditorÃs Certifi cate regarding compliance of conditions of
Corporate Governance are made a part of this Annual Report.
SUBSIDIARY COMPANIES AND SCHEME OF ARRANGEMENT
Both Songadh Infrastructure & Housing Limited and Jaykaypur
Infrastructure & Housing Limited became wholly-owned subsidiaries of
the Company during the year. Accordingly, the Accounts of the Companies
have been consolidated as required by applicable Accounting Standards.
In terms of the approval granted by the Central Government under
Section 212(8) of the Companies Act, 1956, copies of the Balance Sheet,
Profi t & Loss Account, Reports of the Board and the auditors of the
aforesaid Subsidiary Companies have not been attached to the Balance
Sheet of the Company. However, the related detailed information of the
annual accounts of the Subsidiary Companies will be made available to
the investors seeking this information at any point of the time. The
annual accounts of the Subsidiary Companies are also available for
inspection by the investors at the Registered and Head Offi ces of the
Company and that of the Subsidiary Companies concerned.
A Scheme of Arrangement, which provides for the transfer and vesting of
the CPM Staff Housing Undertaking to Songadh Infrastructure & Housing
Limited and JKPM Staff Housing Undertaking to Jaykaypur Infrastructure
& Housing Limited, has been fi led with the High Courts of Gujarat and
Orissa for their approval, pursuant to Sections 391 to 394 of the
Companies Act.
DIRECTORSÃ RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, your
Directors state that:
i. in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. the accounting policies selected and applied are consistent and
judgments and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of
the Financial Year and of the Profi t & Loss of the Company for that
period;
iii. proper and suffi cient care has been taken for maintenance of
adequate accounting records in accordance with the provisions of the
said Act for safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities;
iv. The annual accounts have been prepared on a going concern basis.
INDUSTRIAL RELATIONS
Industrial Relations remained cordial throughout the year under review.
Several Industrial Relation initiatives implemented by the Company have
signifi cantly helped in improving the work culture, enhancing
productivity and enriching the quality of life of the workforce.
ACKNOWLEDGEMENT
The Directors acknowledge the continued support and cooperation
received from the Central Government, State Governments, Shareholders,
participating Financial Institutions and Banks, Customers, Suppliers
and Dealers.
The Board also wishes to record its sincere appreciation of the total
commitment, dedication and hard work, put in by every member of Team
JK.
On behalf of the Board of Directors
HARI SHANKAR SINGHANIA
Chairman
New Delhi
Date : 17th May, 2010
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