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Directors Report of South India Paper Mills Ltd.

Mar 31, 2018

To

The Members

The Directors hereby present the 59th Annual Report of the Company along with the audited accounts for the year ended 31st March, 2018.

The Company has adopted Indian Accounting Standards (Ind AS), from the financial year 2017-18 as mandated by the Ministry of Corporate Affairs (MCA), in place of Indian GAAP, followed hitherto and the financial statements for FY 2016-17 have been recast for comparison. Accordingly, the transition was carried out, from the Indian GAAP as specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (previous GAAP) to Ind AS 101 “First time adoption of Indian Accounting Standards”.

The impact of transition has been recorded in opening reserves as at April 1, 2016 and the periods presented have been restated / reclassified. The reconciliation and descriptions of the effect of the transition from Indian GAAP to Ind AS have been provided in the notes to accounts in the standalone financial statements.

WORKING RESULTS

2017-18

2016-17

Finished Production of Paper & Paperboards

32,687 MTs

52,752 MTs

Conversion Quantity at the Box Plant (PPD)

15,522 MTs

26,196 MTs

( Rs. In Lacs )

( Rs. In Lacs )

Gross Sales

13,448.91

20,673.18

Net Sales excl Excise Duty

13,448.30

19,512.41

FINANCIAL RESULTS:

Profit before interest, depreciation & tax

1,437.11

3,159.18

Less : Finance costs

477.70

388.43

Gross (Cash) Profit

959.41

2,770.75

Less : Depreciation

878.81

951.17

Profit before Tax

80.60

1,819.58

Less : Provision for Current tax

16.00

410.00

Less : Deferred tax incl MAT credit entitlement

(30.68)

220.10

Profit after tax for the year

95.28

1,189.48

Add :Excess Tax Provision reversed

—

5.99

Net Profit after Tax

95.28

1,195.47

OPERATIONS

Gross sales for the financial year 2017-18 stood at Rs. 134.49 crores as against Rs. 206.73 crores in the previous year. Sales and operating volumes were lower, owing to labour strike at the Paper Mills upto 26th July 2017 and at Printing & Packaging Division upto mid August 2017. Operation at the Paper Mill was lower by about 38% during the year.

Printing & Packaging Division too operated with lower volumes & the Conversion tonnage was down by 41%.

Profit before interest, depreciation, tax (PBDIT) reduced to Rs. 1,437 lacs from Rs. 3,159 lacs, owing to above factors. Finance costs increased from Rs. 388 lacs to Rs. 478 lakhs in line with higher term funds utilization. After making a depreciation provision of Rs. 879 lacs (Previous year Rs. 951 lacs), profit before tax was Rs. 81 lacs (Previous year Rs. 1,819 lacs). After making a provision for tax of Rs. 16 lacs & considering deferred tax & MAT credit of 31 lacs (net tax of Rs. 624 lacs in the previous year), net profit stood at Rs. 95 lacs. (PY 1,195 lacs)

FINANCES

During the year, cash flow & liquidity remained comfortable.

Sources of funds

Rs. in lacs

Deployment of funds

Rs. in lacs

Cash flow from operating activities

1,243

Repayment of Term Loans

199

Interest receipts

43

Deferred Payt Credit-Installments paid

296

Sale of used Machinery, Vehicle

242

Finance Cost

479

Term Loan drawn from Banks

1,150

Income tax Paid

5

Dividend & Dividend Tax

276

Capital Expenditure & Advances

268

Decrease in short term Bank Borrowings

200

Increase in working capital

955

Total

2,678

Total

2,678

Instalments of Term Loans and Interest on Term Loans and Working capital borrowings were paid within due dates.

DEPOSITS

The Company has neither accepted nor renewed any deposits within the meaning of Section 73 of the Companies Act. 2013 and Rules framed thereunder, during the financial year.

CREDIT RATING

ICRA has reaffirmed our long term rating of [ICRA]A- with a stable outlook and a short term rating of [ICRA]A2 to the Company’s line of credit.

CURRENT PROSPECTS

The Company has operated for 2 quarters, after resumption of operations, subsequent to labour strike in the year under review. Business affected by labour strike in the first half of the year, is restored in the second half.

The market conditions for paper appears to be better, with improved opportunity for exports. Market for corrugated boxes continue to be extremely competitive, with supplies from new capacities and rising input prices.

An increase in paper making capacity through brown-field investment being planned is seen as the way forward.

Overall Turnover and operating profit is expected to be normal in the current year as against lower profits last year.

CAPITAL EXPENDITURE PLANS

Plans for conserving water resources & ETP facility & a new 66KV transmission line for Power evacuation are nearing completion & will be completed by second quarter. The Company’s plan for capacity expansion to double the production capacity of paper mill at an estimated cost of about Rs. 125 crores is under consideration. This will be financed through debt & internal accruals, to obtain optimum returns.

CORPORATE GOVERNANCE

As per SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 separate Report on Corporate Governance, along with Auditors Certificate confirming the compliance is attached.

Directors’ Responsibility Statement :

As required by Section 134(5) of the Companies Act 2013, we state that :

(i) While preparing the Annual Accounts, the Company has followed the applicable Accounting Standards;

(ii) The Directors have selected such accounting policies and applied them consistently and has made judgements and estimates that are reasonable and prudent, so as to give true and fair view of the state of affairs of the Company as at 31-3-2018 & of the profit of the Company for the financial year 2017-18.

(iii) The Directors have taken proper & sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) The Directors have prepared the annual accounts on a going concern basis.

(v) The Directors have laid down internal financial controls to be followed by the Company and the controls are adequate and operating effectively.

(vi) The Directors have devised proper systems to ensure compliance with the provisions of all the applicable laws and these systems are adequate and operating effectively.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year, the Company did not give any Loan / Guarantee or has provided any security or make investment covered under Section 186 of the Companies Act, 2013

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY

None of the transactions with any of the related parties was in conflict with the interests of the Company. Details of transactions with related parties are furnished as an annexure in Form AOC-2.

CHANGES IN NATURE OF BUSINESS OF THE COMPANY

There was no change in the nature of business of the Company during the year.

MATERIAL CHANGES & COMMITMENTS

There was no material changes and commitments in the business operations of the Company since the close of the financial year on 31st March 2018 to the date of this report.

SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

In terms of provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated a Policy to prevent Sexual Harassment of Women at Workplace. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention. Prohibition and Redressal) Act, 2013.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS

As per Rule 8(5)(vii) of The Companies (Accounts) Rules, 2014, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations.

INTERNAL FINANCIAL CONTROL WITH REFERENCE TO FINANCIAL STATEMENTS

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

ISO 9001 CERTIFICATION

Company’s Quality Management Systems (QMS) have been audited by Bureau Veritas Certification India Pvt Ltd and ISO 9001: 2008 Certification was awarded to the Printing & Packaging Division of the Company. This Certification issued was valid for 3 years up to 17-5-2018. Recertification and upgradation to ISO 9001: 2015 is awarded and is valid upto 17-5-2021.

FOREST STEWARDSHIP COUNCIL (FSC) CERTIFICATION

The Company received FSC certificate under standards of FSC-STD-40 003 V2-1, FSC-STD-40 004 V2-1 and FSC-STD-40 007 V 2-0 for its product group. This is an assurance of environmental protection by providing sufficient documentary controls and traceability throughout the Chain of Custody.This certification means Company is capable of manufacturing FSC Recycled and FSC Mixed products.

RESEARCH & DEVELOPMENT

Several special application grades have been developed & successfully introduced during the year to cater to stringent customer specific requirements.

ENERGY CONSERVATION MEASURES

The particulars required under Section 134 (3) (m) of the Companies Act, 2013 with regard to energy conservation measures are furnished in the Annexure.

ENVIRONMENTAL PROTECTION

Your company has always endeavoured to remain in harmony with its eco-sphere and tried to equitably balance the interest of all stakeholders in it, often going beyond the statutory impositions placed by regulatory authorities. In such efforts are included the installation of a 0.5 acre hold tank and a 2 km delivery pipeline for irrigating otherwise dry lands. The treated effluent water is utilized for irrigation purposes in the nearby fields of third party farmers with excellent crop yields.

The Company has installed & been operating the Electro Static Precipitator (ESP) Systems for its Boilers for controlling dust emission and dust extractor system for controlling dust at its fuel handling system. Centrifuge and other machineries have been installed for effluent treatment.Fuel shed with roofing, controls dust emissions and conserves the resources.

In order to ensure environmentally safe disposal of solid wastes, the Company has started disposing ash and plastic waste to recyclers authorized by KSPCB. Ash is used in brick manufacturing and plastic is being used in cement kilns.

The Company has engaged the expert services of University of Agricultural Sciences, Gandhi Krishi Vigyana Kendra, Bangalore for a study of ‘Utilisation of Paper Mill Effluent for Agricultural Purpose’. After 4 years study, a final report has been issued concluding that the effluent generated by the paper mill contains small amount of nutrients, higher amount of salts and are within limits of Central Pollution Control Board norms. The finding further says that mill effluent along with additional dose of nitrogen has significant effect in increasing the crop yields.

DIVIDENDS

Your Directors recommend a Dividend of 10% i.e.Re 1.00 per equity share of Rs. 10 each (last year 15% i.e. Rs. 1.50 per share). The total distribution including dividend tax amounts to Rs. 180.83 lacs (Rs. 270.81 lacs).

Pursuant to the Indian Accounting Standards issued by Ministry of Corporate Affairs Notification, proposed dividend on Equity Shares and Corporate Tax in Dividend being a non adjusting event at the Balance Sheet date, are not recognised as liabilities in the accounts for the year ended March 31, 2018. The same will be recognised in the year of payment, viz., year ending March 31, 2019.

PARTICULARS OF EMPLOYEES

Particulars of employees as prescribed under the Companies Act, 2013 are annexed.

Extract of Annual Return

The Extract of Annual Return in Form MGT 9 is attached and forms a part of this Annual Report.

Managerial Remuneration

Requisite details as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed herewith and forms a part of this Annual report.

Meetings of the Board

The number of meetings of the Board held and details thereof are mentioned in the Report on Corporate Governance forming a part of this Annual Report.

Whistle Blower Policy / Vigil Mechanism

In deference to Section 177 (9) of the Act,read with relevant Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Listing Regulations the Company has established a vigil mechanism overseen by the Audit Committee. The Company has formed Whistle Blower policy as required under the Companies Act 2013 and Listing Regulations and no personnel has been denied access to the Audit Committee.

Risk Management

The Company has a risk management framework to identify and evaluate business risks and opportunities. It seeks to create transparency, minimise adverse impact on the business objective and enhance the Company’s competitive advantage. It aims at ensuring that the executive management controls the risk through means of a properly defined framework.

The Company has laid down appropriate procedures to inform the Board about the risk assessment and minimization procedures. The Board periodically revisits and reviews the overall risk management plan for making desired changes in response to the dynamics of the business.

The Board of Directors have constituted a Risk Management Committee as required under Cl 49 of the Listing Agreement vide Board Meeting held on 27.01.2015, to frame, implement and monitor the risk management plan of the Company. The Committee comprises of the following Directors.

Mr Manish M Patel - Chairman

Mr M G Mohan Kumar - Member

Mr S R Chandrasekara Setty - Member

The terms of reference of risk management committee include review of Risk management policy and its development within the Company, to monitor the effectiveness of risk management policy, review major risks of the Company and to advice on mitigation to the Board.

LABOUR RELATIONS

The industrial relations climate in the Company during the year was affected by labour strike during first 4 months at the paper mill and 4.5 months at the box unit. Strike ended with signing of a 6 year agreement in place of 4 years at the paper mill, which will be in force upto 31-3-2022. At the box unit, the agreement is covering 4 years upto 31-3-2020. Post resumption from strike, industrial relations remained generally cordial and harmonious.

DIRECTORS

In terms of Section 152 of the Companies Act, 2013 Mr Dineshchandra C Patel (DIN 00167581) retires by rotation and he, being eligible, offers himself for reappointment. Your Directors recommend his reappointment.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declaration from all the Independent Directors under Section 149(7) of the Companies Act 2013, in respect of meeting the criteria of independence as provided under Section 149(6) of the Act.

BOARD EVALUATION

The Board of Directors have carried out an annual evaluation of its performance, Board Committees and Individual Directors pursuant to the provisions ofthe CompaniesAct and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Board has recorded overall satisfaction.

In a separate meeting of Independent Directors held on 22-03-2018, the performance of Non Independent Directors. Board as a whole and the performance of the Chairman was evaluated.They have expressed overall satisfaction on such evaluation

POLICY ON DIRECTOR’S APPOINTMENT AND REMUNERATION

The Company’s Policy on director’s appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters as provided under Section 178(3) is annexed hereto and forms part of this Annual Report.

Criteria for performance evaluation of Independent Directors’ as required by the Listing Regulations also forms part of this report.

CORPORATE SOCIAL RESPONSIBILITY

The Board has constituted a Corporate Social Responsibility Committee as mandated by Section 135 ofthe Companies Act 2013 vide Board Meeting held on 27.01.2015.

The broad terms of reference of the CSR Committee are as under:

- Formulating and recommending to the Board, the CSR Policy which shall indicate the activities to be undertaken by the Company.

- Recommending the amount of expenditure to be incurred on the aforesaid activities and;

- Reviewing and Monitoring the CSR Policy of the company from time to time.

Company has planned for CSR projects for the benefit of villagers in the villages around the factory. As the required land for the project was not made available to the Company, by the Gram Panchayath so far, planned CSR project could not be done. Amount will be spent once the Gram Panchayath clears the site for the Project.

A report on CSR Activities is annexed herewith and forms a part of the Directors’ Report.

APPOINTMENT OF KEY MANAGERIAL PERSONNEL

There are no changes in Key Managerial Positions during the year.

AUDITORS

There are no adverse comments by the auditors in their report annexed herewith.

The Company’s Auditors, Murthy Swamy & Associates, Chartered Accountants, Mysore, appointed at the 58th Annual General Meeting held on 26-9-2017, for a period of 5 years, subject to ratification at each of the subsequent Annual General Meetings (AGM). As per Companies (Amendment) Act 2017 notified with effect from 7-5-2018, ratification by members at each of the subsequent AGM is dispensed with.

SECRETARIAL AUDIT

Pursuant to Section 204(1) of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr S N Hitaish Kumar, Practicing Company Secretary (C P No. 6553), to conduct the Secretarial Audit ofthe Company for Financial Year 2017-18. The Secretarial Audit Report in Form MR 3 is annexed.

INTERNAL AUDITOR

Pursuant to Section 138(1) of the Companies Act, 2013, the Company has appointed M/s Rau and Nathan Chartered Accountants (Firm Regn. No.003178S), Mysore, to conduct Internal Audit of the functions and activities of the Company for Financial Year 2017-18.

COST AUDIT

Company’s products are not notified for Cost Audit in FY 2017-18.

APPRECIATION

Your Directors take this opportunity to place on record their appreciation for services rendered by the employees, sales agents, Banks & Financial Institutions.

for and on behalf of the Board of Directors

Bengaluru Manish M. Patel

24th May, 2018 Chairman & Managing Director


Mar 31, 2016

DIRECTORS’ REPORT

To

The Members

The Directors have the pleasure to present the 57th Annual Report of the Company along with the audited accounts for the year ended 31st March, 2016.

WORKING RESULTS

2015-16

2014-15

Finished Production of Paper & Paperboards

56,268 MTs

49,058 MTs

(Rs,In Lacs )

(Rs,In Lacs )

Gross Sales

21,899.17

19,674.95

Net Sales excl Excise Duty

20,661.87

18,537.92

FINANCIAL RESULTS:

Operating Profit

3,626.01

3,002.71

Less : Finance costs

165.04

181.55

Gross (Cash) Profit

3,460.97

2,821.16

Less : Depreciation

797.43

750.98

Profit before exceptional items and Tax

2,663.54

2,070.18

Exceptional items

821.57

-

Profit before tax

3,485.11

2,070.18

Less : Provision for Tax:

Current Tax Expense

752.96

664.50

Deferred Tax Expense

333.02

49.95

MAT Credit Entitlement

(12.54)

-

Profit after tax for the year

2,411.67

1,355.73

Less : Income tax of earlier years

2.68

2.67

Net Profit after Tax

2,408.99

1,353.06

Add : Balance Surplus brought forward from the previous year

8,506.50

7,604.78

10,915.49

8,957.84

APPROPRIATIONS:

Proposed Dividend @ 30% (Previous year 25%)

(450.00)

(375.00)

Provision for Dividend Tax

(91.61)

(76.34)

Balance Surplus carried forward

10,373.88

8,506.50

OPERATIONS

Gross sales for the financial year 2015-16 increased toRs,218.99 crores as against Rs,196.75 crores in the previous year. Operation at the Paper Mill was higher by about 14.7% during the year.

With the increase in volumes, combined with better operating efficiency, profitability improved.

Printing & Packaging Division operated with increased volumes & the Conversion tonnage was up by 7.3%. Operating profit improved toRs,3,626 lacs from Rs,3,003 lacs, owing to above factors. After making a depreciation provision ofRs,797 lacs(Previous yearRs,751 lacs), profit before exceptional items & tax wasRs,2,663 lacs (Previous yearRs,2,070 lacs).Exceptional items (net) being non recurring nature contributedRs,822 lakhs. PBT after exceptional items increased toRs,3,485 lacs (Rs, 2,070 lacs). After making a provision for tax ofRs,1,076 lacs (Rs,717 lacs in the previous year),net profit increased fromRs,1,353 lacs toRs,2,409 lacs.

FINANCES

During the year, cash flow & liquidity remained comfortable.

Sources of funds

Rs, in lacs

Deployment of funds

Rs, in lacs

Cash flow from operating activities

3,582

Repayment of Term Loans

125

Interest Income

44

Deferred Payt Credit-Installments paid

232

Term Loan drawn from Bank

1,057

Finance Cost

165

Increase in Bank Borrowings

506

Income tax Paid

822

Exceptional items (net)

822

Dividend & Dividend Tax

446

Decrease in working capital

202

Capital Expenditure & Advances

5,275

Deferred Payment credit

852

Total

7,065

Total

7,065

31.03.16

31.03.15

Long Term Debt to Equity Ratio

0.15

0.05

Current Ratio

1.44

2.04

Installments of Term Loans and Interest on Term Loans and Working capital borrowings were paid within due dates. CREDIT RATING

ICRA has assigned a long term rating of [ICRA]BBB with a stable outlook and a short term rating of [ICRA]A2 to the Company’s line of credit.

CURRENT PROSPECTS

With the implementation of Co-gen facility consisting of 50tph CFBC Boiler, Steam Turbine of 11 MW capacity, Electro Static Precipitator (ESP) in FY 2015-16, new Transmission line of 66KV is under implementation to bring down the overall energy cost. The market conditions for paper continue to be extremely competitive with additional supply from new capacities. Demand is expected to grow in line with growth projected for Indian economy. The bright spot in the horizon is the internal demand from the Printing & Packaging Division, which is seeing an encouraging response from box consuming Brand owners. Your management perceives an opportunity for growth by enhancing its box manufacturing capacity with a new plant at another location. Various site options are under evaluation. An increase in paper making capacity through brown-field improvements to support the higher conversion capacity planned is seen as the way forward. Priority is given for increase in Co-generation facility, with improved efficiency, to bring down the unit cost of energy substantially.

Overall Turnover and operating profit is expected to be better in the current year, with improvement over the last year.

CAPITAL EXPENDITURE PLANS

The Company is planning the up gradation / modernizing /balancing of the existing paper machines with focus on quality & higher grades to sustain in the competitive situation. Capital expenditure is planned for enhancing the box manufacturing capacity, conserving water resources & ETP facility & a new 66KV transmission line for Power evacuation. Adding box manufacturing capacity with a new plant at another location is under active consideration of your management.

This will be financed through debt & internal accruals, to obtain optimum returns. Large capital expenditure, and substantial capacity increase is under consideration and will be taken up after completing above capex, at the opportune time.

CORPORATE GOVERNANCE |

Securities & Exchange Board of India (SEBI) ! in order to improve the standard of Corporate . Governance has introduced certain amendments j in the Listing Agreements/ Regulations with the Stock exchanges. Some have been complied with & a report on this is attached.

DIRECTORS’ RESPONSIBILITY STATEMENT :

As required by Section 134(5) of the Companies Act 2013, we state that :

While preparing the Annual Accounts, the Company has followed the applicable Accounting Standards;

The Directors have selected such accounting policies and applied them consistently and has made judgments and estimates that are reasonable and prudent, so as to give true and fair view of the state of affairs of the Company as at 31-3-2016 & of the profit of the Company for the financial year 2015-16.

The Directors have taken proper & sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

The Directors have prepared the annual accounts on a going concern basis.

The Directors have laid down internal financial controls to be followed by the Company and the controls are adequate and operating effectively.

The Directors have devised proper systems to ensure compliance with the provisions of all the applicable laws and these systems are adequate and operating effectively.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year, the Company did not give any Loan / Guarantee or has provided any security or make investment covered under Section 186 of the Companies Act, 2013

PARTICULARS OF CONTRACTS OR arrangements WITH RELATED PARTY

The Company has no transactions with related parties other than remuneration to related parties. The details are furnished as an annexure in Form AOC-2.

MATERIAL CHANGES & COMMITMENTS

There was no change in the nature of business of the Company during the year.

There was no material changes and commitments in the business operations of the Company since the close of the financial year as on 31st March 2016 to the date of this report.

ISO 9001 CERTIFICATION

Company’s Quality Management Systems (QMS) have been audited by Bureau Veritas Certification India Pvt Ltd and ISO 9001: 2008 Certification is awarded to the Printing & Packaging Division of the Company. This Certification issued from May 2012 was valid for a period of 3 years, up to 17-05-2015. Re-certification audit is done & certificate valid for 3 years up to 17-5-2018 is issued.

FOREST STEWARDSHIP COUNCIL (FSC) CERTIFICATION

The Company received FSC Certificate under standards of FSC - STD-40 003 V2-1, FSC-STD-40 004 V2-1 & FSC - STD - 40 007 V2-0 for its product group. This is an assurance of environmental protection by providing sufficient documentary controls and traceability throughout the chain of custody. This certification means company is capable of manufacturing FSC recycled and FSC mixed products.

RESEARCH & DEVELOPMENT

Several special application grades have been developed & successfully introduced during the year to cater to stringent customer specific requirements.

ENERGY CONSERVATION MEASURES

The particulars required under Section 134 (3) (m) of the Companies Act, 2013 with regard to energy conservation measures are furnished in the Annexure.

ENVIRONMENTAL PROTECTION

Your company has always endeavored to remain in harmony with its eco-sphere and tried to equitably balance the interest of all stakeholders in it, often going beyond the statutory impositions placed by regulatory authorities. In such efforts are included the installation of a 0.5 acre hold tank and a 2 km delivery pipeline for irrigating otherwise dry lands. The treated effluent water is utilized for irrigation purposes in the nearby fields of third party farmers with excellent crop yields.

The Company has installed & been operating the Electro Static Precipitator (ESP) Systems for its Boilers for controlling dust emission and dust extractor system for controlling dust at its fuel handling system. Centrifuge and other machineries have been installed for effluent treatment. Fuel shed with roofing, controls dust emissions and conserves the resources.

In order to ensure environmentally safe disposal of solid wastes, the Company has started disposing Ash and plastic waste to recyclers authorized by KSPCB. Ash is used in brick manufacturing and plastic is being used in cement kilns.

The Company has engaged the expert services of University of Agricultural Sciences, Gandhi Krishi Vigyana Kendra, Bangalore for a study of ‘Utilization of Paper Mill Effluent for Agricultural Purpose’.

DIVIDENDS

Your Directors recommend a Dividend of 30% i.e.Rs,3.00 per equity share ofRs,10 each (last year 25% i.e.Rs,2.50 per share). The total distribution including dividend tax amounts toRs,541.61 lacs ('' 451.34 lacs).

PARTICULARS OF EMPLOYEES

Particulars of employees as prescribed under the Companies Act, 2013 are annexed.

EXTRACT OF ANNUAL RETURN

The Extract of Annual Return in Form MGT 9 is attached and forms a part of this Annual Report.

MANAGERIAL REMUNERATION

Requisite details as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed herewith and forms a part of this Annual report

MEETINGS OF THE BOARD

The number of meetings of the Board held and details thereof are mentioned in the Report on Corporate Governance forming a part of this Annual Report.

WHISTLE BLOWER POLICY

In deference to Section 177 (9) of the Act, read with relevant Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Listing Regulations, the Company has established a vigil mechanism overseen by the Audit Committee. The Company has formed Whistle Blower policy as required under the Companies Act 2013 and Listing Regulations and no personnel has been denied access to the Audit Committee.

RISK MANAGEMENT

The Company has a risk management framework to identify and evaluate business risks and opportunities. It seeks to create transparency, minimize adverse impact on the business objective and enhance the Company’s competitive advantage. It aims at ensuring that the executive management controls the risk through means of a properly defined framework.

The Company has laid down appropriate procedures to inform the Board about the risk assessment and minimization procedures. The Board periodically revisits and reviews the overall risk management plan for making desired changes in response to the dynamics of the business.

The Board of Directors have constituted a Risk Management Committee as required under Lasing Regulation vide Board Meeting held on 27.01.2015, to frame, implement and monitor the risk management plan of the Company. The Committee comprises of the following Directors.

Mr Manish M Patel - Chairman

Mr M G Mohan Kumar - Member

Mr S R Chandrasekara Setty - Member

The terms of reference of risk management committee include review of Risk management policy and its development within the Company, to monitor the effectiveness of risk management policy, review major risks of the Company and to advice on mitigation to the Board.

LABOUR RELATIONS

The industrial relations climate in the Company during the year was generally cordial and harmonious. Long term settlement for a period of 4 years, signed with the Workers’ Union was in force up to 31-3-2016. Negotiation for a 4 year agreement has commenced.

DIRECTORS

In terms of Section 152 of the Companies Act, 2013 Mr Jitendra A Patel (DIN 00248302)retires by rotation and he, being eligible, offers himself for reappointment. Your Directors recommend his reappointment.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declaration from all the Independent Directors under Section 149(7) of the Companies Act 2013, in respect of meeting the criteria of independence as provided under Section 149(6) of the Act.

BOARD EVALUATION

The Board of Directors have carried out an annual evaluation of its performance, Board Committees and Individual Directors pursuant to the provisions of the Companies Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Board has recorded overall satisfaction.

In a separate meeting of Independent Directors held on 28-03-2016, the performance of Non Independent Directors, Board as a whole and the performance of the Chairman was evaluated. They have expressed overall satisfaction on such evaluation

policy ON DIRECTOR’S APPOINTMENT AND REMUNERATION

The Company’s Policy on director’s appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters as provided under Section 178(3) is annexed hereto and forms part of this Annual Report.

Criteria for performance evaluation of Independent Directors’ as required by the Listing Regulations also forms part of this report.

CORPORATE SOCIAL RESPONSIBILITY

The Board has constituted a Corporate Social Responsibility Committee as mandated by Section 135 of the Companies Act 2013 vide Board Meeting held on 27.01.2015.

The broad terms of reference of the CSR Committee are as under:

- Formulating and recommending to the Board, the CSR Policy which shall indicate the activities to be undertaken by the Company.

- Recommending the amount of expenditure to be incurred on the aforesaid activities and;

- Reviewing and Monitoring the CSR Policy of the company from time to time.

Company has planned for following CSR projects for the benefit of villagers in the villages around the factory:

i) Chlorination plant for drinking water for Chikkayana chatra & Banchalli hundi villages.

ii) Sewage Treatment Plant for the 3 villages Chikkayana chatra, Thandavapura & Banchalli hundi.

Reasons for not spending on CSR activities during the financial year.

Land finalization for the project is awaited from Gram Panchayath. Amount could not be spent pending finalization of land by Gram Panchayath. On finalizing the above, Company will be spending on the project. If the Gram Panchayath finalization is not received within reasonable time, company will be spending on other CSR Activities.

A report on CSR Activities is annexed herewith and forms a part of the Director’s Report.

APPOINTMENT OF KEY MANAGERIAL PERSONNEL

Mr N S Hegde, Company Secretary of the Company resigned from the post of Company Secretary w.e.f 29-10-2015. The Board of Directors have taken this on record. The Board of Directors at their meeting held on 29-10-2015 appointed Ms Vidya Bhat as the Company Secretary of the Company w.e.f 29-10-2015.

AUDITORS

There are no adverse comments by the auditors in their report annexed herewith.

The Auditors M/s B S Ravikumar & Associates have been appointed as statutory auditors of the Company till the conclusion of 58th Annual General Meeting of the Company, subject to ratification by members at every AGM. Accordingly requisite resolution for ratifying their appointment is proposed in the notice.

SECRETARIAL AUDIT

Pursuant to Section 204(1) of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr S N Hitaish Kumar, Practicing Company Secretary (C P No. 6553), to conduct the Secretarial Audit of the Company for Financial Year 2015-16. The Secretarial Audit Report in Form MR 3 is annexed.

There are no qualifications in the Secretarial Audit Report.

INTERNAL AUDITOR

Pursuant to Section 138(1) of the Companies Act, 2013, the Company has appointed M/s Rau and Nathan, Chartered Accountants (Firm Regn. No.003178S), Mysore, to conduct Internal Audit of the functions and activities of the Company for Financial Year 2015-16.

COST AUDIT

Company’s products are not notified for Cost Audit in FY 2015-16.

APPRECIATION

Your Directors take this opportunity to place on record their appreciation for services rendered by the employees, sales agents, Banks & Financial Institutions.

for and on behalf of the Board of Directors

Bengaluru Manish M. Patel

26th May, 2016 Chairman & Managing Director


Mar 31, 2015

The Members

The Directors have the pleasure to present the 56th Annual Report of the Company along with the audited accounts for the year ended 31st March, 2015.

WORKING RESULTS 2014-15 2013-14

Finished Production of Paper & Paperboards 49,058 MTs 36,891 MTs (Rs. In Lacs) (Rs. In Lacs)

Gross Sales 19,674.95 15,212.83

Net Sales excl Excise Duty 18,537.92 14,342.82

FINANCIAL RESULTS

Operating Profit 3,002.71 1,512.96

Less : Finance costs 181.55 193.08

Gross (Cash) Profit 2,821.16 1,319.88

Less : Depreciation 750.98 745.81

Profit before Tax 2,070.18 574.07

Provision for Tax-including deferred tax 714.45 185.12

Profit after tax for the year 1,355.73 388.95

Less : Income tax of earlier years 2.67 -

Net Profit after Tax 1,353.06 388.95

Add : Balance Surplus brought forward from the previous year 7,604.78 7,517.97

8,957.84 7,906.92

APPROPRIATIONS

Transfer to General Reserve - (38.90)

Proposed Dividend @ 25% (Previous year 15%) (375.00) (225.00)

Provision for Dividend Tax (76.34) (38.24)

Balance Surplus carried forward 8,506.50 7,604.78

OPERATIONS

Gross sales for the financial year 2014-15 stood at Rs. 196.75 crores as against Rs. 152.13 crores in the previous year. Operation at the Paper Mill was normal during the year as against loss of production on account of labour strike during the first quarter of the previous financial year.

With the increase in volumes, combined with better operating efficiency, profitability improved.

Printing & Packaging Division operated with increased volumes & the Conversion tonnage was up by 5%.

Operating profit improved to Rs. 3,003 lacs from Rs. 1,513 lacs, owing to above factors. After making a depreciation provision of Rs. 751 lacs (Previous year 746 lacs), profit before tax was Rs. 2,070 lacs (Previous year Rs. 574 lacs). After making a provision for tax of Rs. 717 lacs ( Rs. 185 lacs in the previous year), net profit increased from Rs. 389 lacs to Rs. 1,353 lacs.

FINANCES

During the year, cash flow & liquidity remained comfortable.

Sources of funds Rs. in lacs

Cash flow from operating activities 2,933

Interest Income 24

Term Loan drawn from Bank 600

Increase in Trade/ Security Deposits 7

Total 3,564

Deployment of funds Rs. in lacs

Repayment of Term Loans 312

Deferred Payt Credit-Installments paid 175

Finance Cost 182

Income tax Paid 536

Dividend & Dividend Tax 263

Capital Expenditure & Advances 769

Increase in Working Capital 1,239

Decrease in Bank Borrowings 88

Total 3,564

31.03.15 31.03.14

Long Term Debt to Equity Ratio 0.05 0.03

Current Ratio 2.04 1.67

There are no overdue deposits or unclaimed matured Fixed Deposits as on 31-3-2015.

CREDIT RATING

ICRA has assigned a long term rating of [ICRA]BBB with a stable outlook and a short term rating of [ICRA]A2 to the Company's line of credit. Rating Review is in progress.

CURRENT PROSPECTS

The market conditions for paper continue to be extremely competitive with additional supply from new capacities. Demand is expected to grow in line with growth projected for Indian economy. The bright spot in the horizon is the internal demand from the Printing & Packaging Division, which is seeing an encouraging response from box consuming Brand owners. Your management perceives an opportunity for growth by enhancing its box manufacturing capacity with a new plant at another location. Various site options are under evaluation. An increase in paper making capacity through brown-field improvements to support the higher conversion capacity planned is seen as the way forward. Priority is given for increase in Co-generation facility, with improved efficiency, to bring down the unit cost of energy substantially.

Overall Turnover and operating profit is expected to be better in the current year, with improvement over the last year. CAPITAL EXPENDITURE PLANS

The Company is planning the upgradation /modernising /balancing of the existing paper machines with focus on quality & higher grades to sustain in the competitive situation. Capital expenditure is planned for process improvement, increased efficiency to reduce the operating costs. Installation of a new Boiler of 50 TPH capacity & Steam Turbine of 11 MW are planned for the current year at an estimated cost of Rs. 47 crores.

This will be financed through debt & internal accruals, to obtain optimum returns. Large capital expenditure, and substantial capacity increase is under consideration and will be taken up at the opportune time.

CORPORATE GOVERNANCE

Securities & Exchange Board of India (SEBI) in order to improve the standard of Corporate Governance has introduced certain amendments in the Listing Agreements with the Stock exchanges. Same have been complied with & a report on this is attached.

DIRECTORS' RESPONSIBILITY STATEMENT

As required by Section 134(5) of the Companies Act 2013,we state that :

While preparing the Annual Accounts, the Company has followed the applicable Accounting Standards;

The Directors have selected such accounting policies and applied them consistently and has made judgements and estimates that are reasonable and prudent, so as to give true and fair view of the state of affairs of the Company as at 31-3-2015 & of the profit of the Company for the financial year 2014-15.

The Directors have taken proper & sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

The Directors have prepared the annual accounts on a going concern basis.

The Directors have laid down internal financial controls to be followed by the Company and the controls are adequate and operating effectively.

The Directors have devised proper systems to ensure compliance with the provisions of all the applicable laws and these systems are adequate and operating effectively.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year, the Company did not give any Loan / Guarantee or has provided any security or make investment covered under Section 186 of the Companies Act, 2013

PARTICULARS OF CONTRACTS OR Arrangements WITH RELATED Party

The Company has no transactions with related parties other than remuneration to related parties. The details are furnished as an annexure in Form AOC-2.

MATERIAL CHANGES & COMMITMENTS

There was no change in the nature of business of the Company during the year.

There was no material changes and commitments in the business operations of the Company since the close of the financial year on 31st March 2015 to the date of this report.

ISO 9001 CERTIFICATION

Company's Quality Management Systems (QMS) have been audited by Bureau Veritas Certification India Pvt Ltd and ISO 9001: 2008 Certification is awarded to the Printing & Packaging Division of the Company. This Certification

issued from May 2012 was valid for a period of 3 years, upto 17-05-2015. Re-certification audit is done & certificate valid for 3 years upto 17-5-2018 is issued.

RESEARCH & DEVELOPMENT

Several special application grades have been developed & successfully introduced during the year to cater to stringent customer specific requirements.

ENERGY CONSERVATION MEASURES

The particulars required under Section 134 (3) (m) of the Companies Act, 2013 with regard to energy conservation measures are furnished in the Annexure.

ENVIRONMENTAL PROTECTION

Your company has always endeavoured to remain in harmony with its eco-sphere and tried to equitably balance the interest of all stakeholders in it, often going beyond the statutory impositions placed by regulatory authorities. In such efforts are included the installation of a 0.5 acre hold tank and a 2 km delivery pipeline for irrigating otherwise dry lands. The treated effluent water is utilized for irrigation purposes in the nearby fields of third party farmers with excellent crop yields.

The Company has installed & been operating the Electro Static Precipitator (ESP) Systems for its Boilers for controlling dust emission and dust extractor system for controlling dust at its fuel handling system. Centrifuge and other machineries have been installed for effluent treatment. Fuel shed with roofing, controls dust emissions and conserves the resources.

In order to ensure environmentally safe disposal of solid wastes, the Company has started disposing Ash and plastic waste to recyclers authorized by KSPCB. Ash is used in brick manufacturing and plastic is being used in cement kilns.

The Company has engaged the expert services of University of Agricultural Sciences, Gandhi Krishi Vigyana Kendra, Bangalore for a study of ' Utilisation of Paper Mill Effluent for Agricultural Purpose'.

DIVIDENDS

Your Directors recommend a Dividend of 25% i.e. Rs. 2.50 per equity share of Rs. 10 each (last year 15% i.e. Rs. 1.50 per share). The total distribution including dividend tax amounts to Rs. 451.34 lacs (Rs. 263.24 lacs)

PARTICULARS OF EMPLOYEES

Particulars of employees as prescribed under the Companies Act, 2013 are annexed.

EXTRACT OF ANNUAL RETURN

The Extract of Annual Return in Form MGT 9 is attached and forms a part of this Annual Report.

MANAGERIAL REMUNERATION

Requisite details as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed herewith and forms a part of this Annual report

MEETINGS OF THE BOARD

The number of meetings of the Board held and details thereof are mentioned in the Report on Corporate Governance forming a part of this Annual Report.

WHISTLE BLOWER POLICY

In deference to Section 177 (9) of the Act,read with relevant Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Company has established a vigil mechanism overseen by the Audit Committee. The Company has framed Whistle Blower policy as required under the Companies Act 2013 and Listing Agreement and no personnel has been denied access to the Audit Committee

RISK MANAGEMENT

The Company has a risk management framework to identify and evaluate business risks and opportunities. It seeks to create transparency, minimise adverse impact on the business objective and enhance the Company's competitive advantage. It aims at ensuring that the executive management controls the risk through means of a properly defined framework.

The Company has laid down appropriate procedures to inform the Board about the risk assessment and minimization procedures. The Board periodically revisits and reviews the overall risk management plan for making desired changes in response to the dynamics of the business.

The Board of Directors have constituted a Risk Management Committee as required under Clause 49 of the Listing Agreement vide Board Meeting held on 27.01.2015, to frame, implement and monitor the risk management plan of the Company. The Committee comprises of the following Directors.

Mr Manish M Patel - Chairman Mr M G Mohan Kumar - Member Mr S R Chandrasekara Setty - Member

The terms of reference of risk management committee include review of Risk management policy and its development within the Company, to monitor the effectiveness of risk management policy, review major risks of the Company and to advice on mitigation to the Board.

LABOUR RELATIONS

The industrial relations climate in the Company during the year was generally cordial and harmonious. Long term settlement for a period of 4 years, signed with the Workers' Union last year is valid upto 31-3-2016.

DIRECTORS

In terms of Section 152 of the Companies Act, 2013 Mr D C Patel (DIN 00167581) retires by rotation and he, being eligible, offers himself for reappointment. Your Directors recommend his reappointment.

Mrs Girija Shankar (DIN 07148094 ) was appointed by the Board at its meeting held on 31-03-2015, as an Additional Director. As per Section 161 of the Companies Act 2013 and Articles of Association of the Company, she holds office upto the date of the ensuing Annual General Meeting. It is proposed to appoint Mrs Girija Shankar (DIN 07148094) as an Independent Director for a period of 5 consecutive years w.e.f 31st March, 2015 not liable to rotation.

Your Director's recommend her appointment as an Independent Director.

The Company had, pursuant to the provisions of clause 49 of the Listing Agreement entered into with Stock Exchange, appointed Mr M G Mohan Kumar, Mr S R Chandrasekara Setty, Mr N S Kishore Kumar and Mr Jagdish M Patel as Independent Directors of the Company. As per section 149(4) of the Companies Act, 2013 (Act), which came into effect from April 1, 2014, every listed public company is required to have at least one-third of the total number of directors as Independent Directors. In accordance with the provisions of section 149 of the Act, the Board at their meeting held on 31st March 2015, based on the recommendation of the Nomination & Remuneration Committee, continued the appointments of these Directors as Independent Directors w.e.f 31st March 2015 for a consecutive period of 5 years, not liable to retire by rotation. The resolution for continuation of appointment of these directors as Independent Directors is now being placed before the Members for their approval.

Your directors recommend the resolution set out in Item Nos. 5 to 8 of the notice for the approval by the members of the Company.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declaration from all the Independent Directors under Section 149 (7) of the Companies Act 2013, in respect of meetimg the criteria of Independence has provided under Section 149(6) of the Act.

BOARD EVALUATION

The Board of Directors have carried out an annual evaluation of its performance, Board Committees and Individual Directors pursuant to the provisions of the Companies Act and Clause 49 of the Listing Agreement.

The Board has recorded overall satisfaction.

In a separate meeting of Independent Directors held on 30-03-2015, the performance of Non Independent Directors, Board as a whole and the performance of the Chairman was evaluated.They have expressed overall satisfaction on such evaluation.

POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION

The Company's Policy on director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matter as provided under Section 178(3) is annexed hereto and forms part of this Annual Report.

Criteria for performance evaluation of Independent Directors' as required by the Listing Agreements also forms part of this report.

CORPORATE SOCIAL RESPONSIBILITY

The Board has constituted a Corporate Social Responsibility Committee as mandated by Section 135 ofthe Companies Act 2013 vide Board Meeting held on 27.01.2015.

The broad terms of reference of the CSR Committee are as under:

- Formulating and recommending to the Board, the CSR Policy which shall indicate the activities to be undertaken by the Company.

- Recommending the amount of expenditure to be incurred on the aforesaid activities and;

- Reviewing and Monitoring the CSR Policy of the company from time to time.

Reasons for not spending on CSR activities during the financial year

Company has planned for following CSR projects for the benefit of villagers in the villages around the factory:

i) Chlorination plant for drinking water for Chikkayana Chatra & Banchalli Hundi villages.

ii) Sewage Treatment Plant for the 3 villages Chikkayana Chatra, Thandavapura & Banchalli hundi.

Land finalization for the project is awaited from Gram Panchayath. On finalizing the above, Company will be spending on the project.

A report on CSR Activities is annexed herewith and forms a part of the Director's Report.

APPOINTMENT OF KEY MANAGERIAL PERSONNEL

The Board of Directors at their meeting held on 22-05-2014 appointed Mr B Ravi Holla as the Chief Financial Officer (CFO) of the Company as per the requirements of the Companies Act, 2013.

AUDITORS

There are no adverse comments by the auditors in their report annexed herewith.

The Auditors M/s B S Ravikumar & Associates retire at the conclusion of this Annual General Meeting and are eligible for reappointment. Your Directors recommend their reappointment.

SECRETARIAL AUDIT

Pursuant to Section 204(1) of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr S N Hitaish Kumar, Practicing Company Secretary (C P No. 6553), to conduct the Secretarial Audit of the Company for Financial Year 2014-15. The Secretarial Audit Report in Form MR 3 is annexed.

Explanation for observations made by the Company Secretary in Practice :

i) Woman Director appointed on 31-3-2015, in compliance with the requirement of the Companies Act, 2013. Filing has been approved by MCA.

ii) No separate filing is done, as the matter was combined with filing done for final accounts.

iii) Forms were filed with additional fees, as the MCA website did not allow the in time filing of MGT 10 due to technical reasons.

iv) Website is updated periodically.

INTERNAL AUDITOR

Pursuant to Section 138(1) of the Companies Act, 2013, the Company has appointed M/s Rau and Nathan Chartered Accountants (Firm Regn. No.003178S), Mysore, to conduct Internal Audit of the functions and activities of the Company for Financial Year 2014-15.

COST AUDIT

Cost Audit was applicable for Paper manufacture up to FY 2013-14.

Mr. Madhukar P Nayak, Cost Accountant, was appointed as Cost Auditor for the year 2013-14. The Cost Audit Report for the year 2013-14 was filed within due date. Paper Industry is not notified for Cost Audit in FY 2014-15.

APPRECIATION

Your Directors take this opportunity to place on record their appreciation for services rendered by the employees, sales agents, Banks & Financial Institutions.

for and on behalf of the Board of Directors

Bengaluru Manish M. Patel 28th May, 2015 Chairman & Managing Director


Mar 31, 2014

The Members

The Directors have the pleasure to present the 55th Annual Report of the Company along with the audited accounts for the year ended 31st March, 2014.

WORKING RESULTS 2013-14 2012-13

Finished Production of Paper & Paperboards 36,891 MTs 49,678 MTs ( Rs.In Lacs ) ( Rs. In Lacs )

Gross Sales 15,212.83 17,804.50

Net Sales excl Excise Duty 14,342.82 16,830.18

FINANCIAL RESULTS:

Operating Profit 1,512.96 2,760.75

Less : Finance costs 193.08 184.75

Gross (Cash) Profit 1,319.88 2,576.00

Less : Depreciation 745.81 731.70

Profit before Exceptional items & Tax 574.07 1,844.30

Less : Exceptional items - -

Profit before tax 574.07 1,844.30

Provision for Tax-including deferred tax 185.12 448.70

Profit after tax for the year 388.95 1,395.60

Less : Income tax of earlier years - 30.40

Net Profit after Tax 388.95 1,365.20

Add : Balance Surplus brought forward from the previous year 7,517.97 6,675.38

7,906.92 8,040.58

APPROPRIATIONS :

Transfer to General Reserve (38.90) (136.52)

Proposed Dividend @ 15% (Previous year 22%) (225.00) (330.00)

Provision for Dividend Tax (38.24) (56.09)

Balance Surplus carried forward 7,604.78 7,517.97

OPERATIONS

Gross sales for the financial year 2013-14 stood at Rs. 152.13 crores as against Rs. 178.04 crores in the previous year. Operation at the Paper Mill was affected due to labour strike, which resulted in loss of production during the first quarter of the financial year. Printing & Packaging Division was operative during the quarter with material purchased from outside.

Operating volumes for the paper plant was at 65.88% (last year 88.71%). Volumes could have been higher, but for the labour strike at the Paper plant, which affected the production during the first quarter, for 89 days. Increase in Raw material, Fuel cost, affected the earnings as it was possible to recover the costs partially owing to tight market conditions.

Printing & Packaging Division operated with reduced volumes, owing to market conditions during the year & supply constraints of required raw materials during first quarter. Conversion tonnage was lower by 13.5%.

Operating profit declined to Rs. 1,513 lacs from Rs. 2,761 lacs, owing to above factors. After making a depreciation provision ofRs. 746 lacs (Previous year Rs. 732 lacs), profit before tax was Rs. 574 lacs (Previous year Rs. 1,844 lacs). After making a provision for tax of Rs. 185 lacs (Rs. 449 lacs in the previous year), net profit decreased from Rs. 1,365 lacs to Rs. 389 lacs.

FINANCES

During the year, cash flow & liquidity remained comfortable.

Sources of funds Rs. in lacs

Cash flow from operating activities 1,467

Interest Income 46

Proceeds from Sale of Fixed Assets 5

Increase in short term borrowings 526

Decrease in cash/cash equivalents 140

Increase in Deferred credit from- Machinery vendors 318

Total 2,502

Deployment of funds Rs. in lacs

Repayment of Term Loans 295

Finance Cost 196

Decrease in Security Deposits 5

Increase in Working Capital 66

Income tax incl earlier years 261

Dividend & Dividend Tax 382

Capital Expenditure & Advances 1,297

Total 2,502

31.03.14 31.03.13

Long Term Debt to Equity Ratio 0.05 0.08

Current Ratio 1.67 2.00

There are no overdue deposits or unclaimed matured Fixed Deposits as on 31-3-2014.

CREDIT RATING

ICRA has assigned a long term rating of [ICRA]BBB with a stable outlook and a short term rating of [ICRA]A2 to the Company''s line of credit.

CURRENT PROSPECTS

The market conditions for paper are extremely competitive with supply from new capacities outstripping demand. Whilst there had been a steep increase in raw material and fuel prices due to a steep depreciation in the rupee, it is extremely difficult to push through an increase in selling prices due to demand-supply situation in the paper market. The bright spot in the horizon is the internal demand from the Printing & Packaging Division, which is seeing an encouraging response from box consuming Brand owners. The combination of high inflation, poor growth in demand and a capacity overhang will ensure that capacity in this segment remains flat in the near term. Your management however perceives an opportunity for growth by enhancing its box manufacturing capacity with a new plant at another location. Various site options are under evaluation. An increase in paper making capacity through brown-field improvements to support the higher conversion capacity planned is seen as the way forward.

Overall Turnover and operating profit is expected to be higher in the current year, as against loss of production at the paper plant due to labour strike in Q1 of last year.

CAPITAL EXPENDITURE PLANS

The Company is planning the upgradation /modernising /balancing of the existing paper machines with focus on quality & higher grades to sustain in the competitive situation. Capital expenditure is planned for process improvement, increased efficiency to reduce the operating costs. This will be financed through debt & internal accruals, to obtain optimum returns. Large capital expenditure, and substantial capacity increase is under consideration and will be taken up at the opportune time.

CORPORATE GOVERNANCE

Securities & Exchange Board of India (SEBI) in order to improve the standard of Corporate Governance has introduced certain amendments in the Listing Agreements with the Stock exchanges. Same have been complied with & a report on this is attached.

Directors'' Responsibility Statement :

As required by new amendments to Companies Act, 1956, we state that :

While preparing the Annual Accounts, the Company has followed the applicable Accounting Standards, referred to in Section 211 (3-C) of the Companies Act, 1956.

The Directors have selected such accounting policies and applied them consistently and has made judgements and estimates that are reasonable and prudent, so as to give true and fair view of the state of affairs of the Company as at 31-3-2014 & of the profit of the Company for the financial year 2013-14.

The Directors have taken proper & sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

The Directors have prepared the annual accounts on a going concern basis.

ISO 9001 CERTIFICATION

Company''s Quality Management Systems (QMS) have been audited by Bureau Veritas Certification India Pvt Ltd and ISO 9001: 2008 Certification is awarded to the Printing & Packaging Division of the Company. This Certification issued from May 2012 is valid for a period of 3 years, upto 17-05-2015.

RESEARCH & DEVELOPMENT

Several special application grades have been developed & successfully introduced during the year to cater to stringent customer specific requirements.

ENERGY CONSERVATION MEASURES

The particulars required under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 with regard to energy conservation measures are furnished in the Annexure.

ENVIRONMENTAL PROTECTION

Your company has always endeavoured to remain in harmony with its eco-sphere and tried to equitably balance the interest of all stakeholders in it, often going beyond the statutory impositions placed by regulatory authorities. In such efforts are included the installation of a 0.5 acre hold tank and a 2 km delivery pipeline for irrigating otherwise dry lands. The treated effluent water is utilized for irrigation purposes in the nearby fields of third party farmers with excellent crop yields.

The Company has installed & been operating the Electro Static Precipitator (ESP) Systems for its Boilers for controlling dust emission and dust extractor system for controlling dust at its fuel handling system. Centrifuge and other machineries have been installed for effluent treatment. New fuel shed with roofing, controls dust emissions and conserves the resources.

In order to ensure environmentally safe disposal of solid wastes, the Company has started disposing Ash and plastic waste to recyclers authorized by KSPCB. Ash is used in brick manufacturing and plastic is being used in cement kilns.

The Company has engaged the expert services of University of Agricultural Sciences, Gandhi Krishi Vigyana Kendra, Bangalore for a study of '' Utilisation of Paper Mill Effluent for Agricultural Purpose''.

DIVIDENDS

Your Directors recommend a Dividend of 15% i.e. Rs. 1.50 per equity share of Rs. 10 each (last year 22% i.e. Rs. 2.20 per share). The total distribution including dividend tax amounts to Rs. 263.24 lacs (Rs. 386.08 lacs)

PARTICULARS OF EMPLOYEES

Particulars of employees pursuant to Section 217 (2A) of the Companies Act, 1956 are annexed.

LABOUR RELATIONS

The industrial relations climate in the Company during the year was generally cordial and harmonious except during the first quarter of the FY 2013-14 which witnessed labour strike at the paper plant pressing for higher wages. Long term settlement for a period of 4 years, was signed with the Workers'' Union. This will be valid upto 31-3-2016.

DIRECTORS

In terms of Section 152 of the Companies Act, 2013 Mr Ajay D Patel (DIN 00466905) & Mr M G Mohan Kumar (DIN 00020029) retire by rotation and they, being eligible, offer themselves for reappointment. Your Directors recommend their reappointment.

AUDITORS

There are no adverse comments by the auditors in their report annexed herewith.

The Auditors M/s B S Ravikumar & Associates retire at the conclusion of this Annual General Meeting and are eligible for reappointment. Your Directors recommend their reappointment.

COST AUDIT

Pursuant to Section 233-B of the Companies Act, 1956, the Central Government has ordered that the Company''s cost accounts relating to paper be audited every year. Mr. Madhukar P Nayak, Cost Accountant, was appointed as Cost Auditor for the year 2013-14. The Cost Audit Report for the year 2012-13 was filed within due date and the Report for 2013-14 will be submitted to the Central Government before the due date.

APPRECIATION

Your Directors take this opportunity to place on record their appreciation for services rendered by the employees, sales agents, Banks & Financial Institutions.

for and on behalf of the Board of Directors

Nanjangud Manish M. Patel

22nd May, 2014 Chairman & Managing Director


Mar 31, 2013

To The Members

The Directors have the pleasure to present the 54th Annual Report of the Company along with the audited accounts for the year ended 31 st March, 2013.

WORKING RESULTS 2012-13 2011-12

Finished Production of Paper & Paperboards 49,678 MTs 50,890 MTs

(Rs.In Lacs ) (Rs.In Lacs)

Gross Sales 17,804.50 17,869.00

Net Sales excl Excise Duty 16,830.18 17,022.76

FINANCIAL RESULTS:

Operating Profit 2,760.75 2,461.24

Less : Finance costs 184.75 226.19

Gross (Cash) Profit 2,576.00 2,235.05

Less : Depreciation 731.70 614.36

Profit before Exceptional items & Tax 1,844.30 1,620.69

Exceptional Items: Profit on Sale of shares in Associate Co. - 463.67

Electricity Tax relating to earlier years - (75.73)

Profit before tax 1,844.30 2,008.63

Provision for Tax-including deferred tax 448.70 481.38

Profit after tax for the year 1,395.60 1,527.25

Less : Income tax of earlier years 30.40 (12.39)

Net Profit after Tax 1,365.20 1,539.64

Add : Balance Surplus brought forward from the previous year 6,675.38 5,673.27

8,040.58 7,212.91

APPROPRIATIONS :

Transfer to General Reserve (136.52) (154.00)

Proposed Dividend @ 22% (Previous year 22%) (330.00) (330.00)

Provision for Dividend Tax (56.09) (53.53)

Balance Surplus carried forward 7,517.97 6,675.38



OPERATIONS

Gross sales for the financial year 2012-13 stood at Rs. 178.04 crores as against Rs. 178.69 crores in the previous year.

Operating volumes for the paper plant was at 88.71% (last year 90.88%). Volumes could have been higher, but for the labour strike at the Paper plant from 11th March, 2013, which affected the production for 21 days in the financial year. Realisation was slightly better & overall costs remained at the last year s level. Increase in Fuel cost & sizing materials was offset by reduction in raw material cost and repairs & maintenance.

Printing & Packaging Division operated with higher volumes and conversion tonnage was higher by 8%. Operating profit improved from X 2,461 lacs to X 2,761 lacs. After making a higher depreciation provision of X 731.70 lacs (Previous year - 614.36 lacs), profit before tax increased from X 1,621 lacs to Rs.1,844 lacs. Net profit decreased from X 1,539 lacs (last year included exceptional items amounting to Rs 388 lacs, which are non recurring) to X 1,365 lacs. Excluding the effect of exceptional items, net profit for the reporting year is higher.

FINANCES

During the year, cash flow & liquidity remained comfortable.

Sources of funds X in lacs Deployment of funds X in lacs

Cash flow from operating activities 2,704 Repayment of Term Loans 295

Interest Income 55 Finance Cost 188

Proceeds from Sale of Fixed Assets 5 Decrease in Security Deposits 12

Increase in short term borrowings 160 Increase in Working Capital 624

Income Tax 429

Capital Expenditure and advances 813

Dividend & Dividend Tax 379

Increase in cash & cash equivalents 184

Total 2,924 Total 2924



31.03.13 31.03.12

Long Term Debt to Equity Ratio 0.08 0.12

Current Ratio 2.00 1.81

There are no overdue deposits or unclaimed matured Fixed Deposits as on 31-3-2013.

CREDIT RATING

ICRA has assigned a long term rating of [ICRA] BBB with a stable outlook and a short term rating of [ICRA] A2 to the Company s Line of Credit.

CURRENT PROSPECTS

Labour strike which commenced in March 2013 at the paper plant, continued in the first quarter of FY 2013-14 and is bound to affect the working results of Ql.

The market conditions for paper are extremely competitive with supply from new capacities outstripping demand. Whilst there had been a steep increase in raw material and fuel prices due to a steep depreciation in the rupee, it is extremely difficult to push through an increase in selling prices due to demand-supply situation in the paper market. The bright spot in the horizon is the internal demand from the Printing & Packaging Division, which is seeing an encouraging response from box consuming Brand owners. The combination of high inflation, poor growth in demand and a capacity overhang will ensure that capacity in this segment remains flat in the near term. Your management however perceives an opportunity for growth by enhancing its box manufacturing capacity with a new plant at another location. Various site options are under evaluation. An increase in paper making capacity through brown-field improvements to support the higher conversion capacity planned is seen as the way forward.

Overall Turnover and operating profit is expected to be lower, mainly due to loss of production at the paper plant due to labour strike. It is hoped that operating levels will be higher in the other quarters with higher output at both the plants.

During the year 2012-13 overall economic growth of India was lowerat about 5% as against 6.5% in the last year. Manufacturing sector growth was down at 1% (2.9%).

CAPITAL EXPENDITURE PLANS

The Company is planning the upgradation /modernising /balancing of the existing paper machines with focus on quality & higher grades to sustain in the competitive situation. Capital expenditure is planned for the Printing & Packaging Division to increase overall volumes and productivity. This will be financed through debt & internal accruals, to obtain optimum returns. Large capital expenditure, and substantial capacity increase is under consideration and will be taken up at the opportune time.

CORPORATE GOVERNANCE

Securities & Exchange Board of India (SEBI) in order to improve the standard of Corporate Governance has introduced certain amendments in the Listing Agreements with the Stock exchanges. Same have been complied with & a report on this is attached.

Directors Responsibility Statement:

As required by new amendments to Companies Act, 1956, we state that:

While preparing the Annual Accounts, the Company has followed the applicable Accounting Standards, referred to in Section 211 (3-C) of the Companies Act, 1956.

The Directors have selected such accounting policies and applied them consistently and has made judgements and estimates that are reasonable and prudent, so as to give true and fair view of the state of affairs of the Company as at 31-3-2013 & of the profit of the Company for the financial year 2012-13.

The Directors have taken proper & sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

The Directors have prepared the annual accounts on a going concern basis.

ISO 9001 CERTIFICATION

Company''s Quality Management Systems (QMS) have been audited by Bureau Veritas Certfication India Pvt Ltd and ISO 9001: 2008 Certification is awarded to the Printing & Packaging Division of the Company. This Certification issued from May 2012 is valid for a period of 3 years, upto 17-05-2015.

RESEARCH & DEVELOPMENT

Several special application grades have been developed & successfully introduced during the year to cater to stringent customer specific requirements.

ENERGY CONSERVATION MEASURES

The particulars required under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 with regard to energy conservation measures are furnished in the Annexure.

ENVIRONMENTAL PROTECTION

Your company has always endeavored to remain in harmony with its eco-sphere and tried to equitably balance the interest of all stakeholders in it, often going beyond the statutory impositions placed by regulatory authorities. In such efforts are included the installation of a 0.5 acre hold tank and a 2 km delivery pipeline for irrigating otherwise dry lands. The treated effluent water is utilized for irrigation purposes in the nearby fields of third party farmers with excellent crop yields.

The Company has installed & been operating the Electro Static Precipitator (ESP) Systems for its Boilers for controlling dust emission and dust extractor system for controlling dust at its fuel handling system. Centrifuge and other machineries have been installed for effuent treatment. New fuel shed with roofng, controls dust emissions and conserves the resources.

In order to ensure environmentally safe disposal of solid wastes, the Company has started disposing Ash and Plastic waste to recyclers authorised by KSPCB. Ash is used in brick manufacturing and plastic is being used in Cement Kilns.

The Company has engaged the expert services of University of Agricultural Sciences, Gandhi Krishi Vigyana Kendra, Bangalore for a Study of "Utilisation of Paper Mill Effuent for Agricultural Purpose".

DIVIDENDS

Your Directors recommend a Dividend of 22% i.e. Rs. 2.20 per equity share of Rs. 10 each (same as in last year). The total distribution including dividend tax amounts to Rs. 386.08 lacs (Rs. 383.53 lacs)

PARTICULARS OF EMPLOYEES

Particulars of employees pursuant to Section 217 (2A) of the Companies Act, 1956 are annexed.

LABOUR RELATIONS

The industrial relations climate in the Company during the year was generally cordial and harmonious except towards the end of FY 2012-13, which witnessed labour strike at the paper plant pressing for higher wages. Management is analysing the causes and is aiming for prevention of work disruption.

DIRECTORS

In terms of Section 255 of the Companies Act, 1956 Mr Jagdish M Patel & Mr N S Kishore Kumar, retire by rotation and they, being eligible, offer themselves for reappointment. Your Directors recommend their reappointment.

Mr Jitendra A Patel was appointed by the Board at its meeting held on 27-09-2012 as an Additional Director. As per Section 260 of the Companies Act, 1956 and the Articles of Association of the Company, he holds offce upto the date of the ensuing Annual General Meeting. Your Directors recommend his appointment as Director, liable to retire by rotation.

AUDITORS

There are no adverse comments by the auditors in their report annexed herewith.

The Auditors M/s B S Ravikumar & Associates retire at the conclusion of this Annual General Meeting and are eligible for reappointment. Your Directors recommend their reappointment.

COST AUDIT

Pursuant to Section 233-B of the Companies Act, 1956, the Central Government has ordered that the Company''s cost accounts relating to paper be audited every year. Mr. Madhukar P Nayak, Cost Accountant, was appointed as Cost Auditor for the year 2012-13. The Cost Audit Report for the year 2012-13 will be submitted to the Central Government before the due date.

APPRECIATION

Your Directors take this opportunity to place on record their appreciation for services rendered by the employees, sales agents, Banks & Financial Institutions.



for and on behalf of the Board of Directors

Nanjangud Manish M. Patel

30th May, 2013 Chairman & Managing Director


Mar 31, 2011

The Members

The Directors have the pleasure to present the 52nd Annual Report of the Company along with the audited accounts for the year ended 31st March, 2011.

Working Results 2010-11 2009-10

Finished Production of Paper & Paperboards 50,223 MTs 49,452 MTs

Sales Volume of Paper, corrugated cartons & sheets 53,358 MTs 47,567 MTs (Rs.in Lacs) (Rs.in Lacs)

Gross Sales 17,318.35 13,419.83

Net Sales excl Excise Duty 16,657.09 12,809.66

FINANCIAL RESULTS

Operating Profit 2,509.53 2,476.78

Less : Finance charges (net) 147.44 186.18

Gross (Cash) Profit 2,362.09 2,290.60

Less : Depreciation 482.13 457.07

Profit before tax 1,879.96 1,833.53

Provision for Tax-including deferred tax 480.44 456.54

Profit after tax for the year 1,399.52 1,376.99

Less : Income tax of 12.25 - earlier years

Net Profit after Tax 1,387.27 1,376.99

Add : Balance in Profit & Loss Account brought forward 4,775.79 3,798.87 from the previous year 6,163.06 5,175.86

APPROPRIATIONS :

Transfer to General Reserve (139.96) (137.70)

Proposed Dividend @ 20% (300.00) (225.00) on post bonus capital (prev.yr.30%)

Provision for Dividend Tax (49.83) (37.37)

Balance carried forward in Profit & Loss Account 5,673.27 4,775.79

Operations

Gross sales for the financial year 2010-11 increased to Rs. 173.18 crores as against Rs.134.20 crores in the previous year.

Operating volumes in both the Paper Plant as well as Printing & Packaging Division, were higher. Capacity utilization in Paper Plant was 89.68% (last year 88.31%). Raw material, fuel prices were higher due to inflationary pressures, which also led to higher cost of funds. With the planned maintenance shut down in Q4, replacement of old components, repairs & maintenance expenses increased. Despite above factors, Company could achieve higher output & better recovery of costs in the second half of the year, helped in reporting marginally better results.

Cash generated after finance charges and taxes was (Rs. 1,869 lacs during the year as against (Rs. 1,834 lakhs in the preceding year. Net finance charges were (Rs. 147 lacs ( (Rs. 186 lacs). Net profit increased marginally to Rs. 1,387 lacs (1,377 lacs).

Finances

During the year, cash flow & liquidity remained comfortable.

Sources of funds Rs. in Deployment of funds Rs. in lacs lacs

Net operating 2,479 Repayment of Term Loans 330 profit Interest & Finance 147 charges

Dividend received 13 Income tax & Wealth tax 526

Increase in Security 25 Dividend & Dividend Tax 262 Deposits

Increase in short 297 Capital Expenditure & 1,032 term Bank borrowing Advances for working capital Increase in working 595 capital

Term Loans drawn 300 Increase in cash & 222 cash equivalents

TOTAL 3,114 TOTAL 3,114

Capital expenditure & advance includes substantial amounts towards Printing & Packaging Division. The long term Debt to Equity ratio as on 31-03-2011 stands comfortably at 0.15 as against 0.17 as on 31-03-2010. The current ratio as on 31-3-11 is 1.95 (1.98 as on 31-3-10).

There are no overdue deposits or unclaimed matured Fixed Deposits as on 31-3-2011.

CURRENT PROSPECTS

The operating level is steady & overall paper production/ sales volumes are picking up on the back of internal demand from the Printing & Packaging Division, which is seeing an encouraging response from the market. Prevailing inflationary effect in the economy contributing to higher input prices and higher interest costs is a matter of concern deterring large capex and capacity expansion. With this scenario, a gradual increase in paper manufacturing capacity through brown-field improvements is the way forward.

Overall Turnover and operating profit is expected to be better, mainly due to higher volume of value addition through conversion.

During the year 2010-11 overall economic growth was 8.5% as against 8% in last year. Manufacturing sector growth was maintained at 8.8%.

CAPITAL EXPENDITURE PLANS

The Company is now taking up the upgradation of the existing machines to increase output by about 25% on PM-4 & 5 for brown grades. Capital expenditure is planned for the Printing & Packaging Division to increase overall volumes and productivity. This will be financed through debt & internal accruals, to obtain optimum returns. Large capital expenditure, and substantial capacity increase is under consideration to be taken up next.

CORPORATE GOVERNANCE

Securities & Exchange Board of India (SEBI) in order to improve the standard of Corporate Governance has introduced certain amendments in the Listing Agreements with the Stock exchanges. Same have been complied with & a report on this is attached.

Directors' Responsibility Statement :

As required by new amendments to Companies Act, 1956, we state that :

While preparing the Annual Accounts, the Company has followed the applicable Accounting Standards, referred to in Section 211 (3-C) of the Companies Act, 1956.

The Directors have selected such accounting policies and applied them consistently and has made judgements and estimates that are reasonable and prudent, so as to give true and fair view of the state of affairs of the Company as at 31-3-2011 & of the profit of the Company for the financial year 2010-11.

The Directors have taken proper & sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

The Directors have prepared the annual accounts on a going concern basis.

QMS Initiative:

Company has taken up Quality Management System (QMS) initiative and is working towards ISO 9001 certification for its Printing & Packaging Division.

RESEARCH & DEVELOPMENT

Several special application grades have been developed & successfully introduced during the year to cater to stringent customer specific requirements.

ENERGY CONSERVATION MEASURES

The particulars required under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 with regard to energy conservation measures are furnished in the Annexure.

ENVIRONMENTAL PROTECTION

Your company has always endeavored to remain in harmony with its eco-sphere and tried to equitably balance the interest of all stakeholders in it, often going beyond the statutory impositions placed by regulatory authorities. In such efforts are included the installation of a 0.5 acre hold tank and a 2 km delivery pipeline for irrigating otherwise dry lands. The treated effluent water is utilized for irrigation purposes in the nearby fields of third party farmers with excellent crop yields.

The Company has installed & been operating the Electro Static Precipitator (ESP) Systems for its Boilers for controlling dust emission and dust extractor system for controlling dust at its fuel handling system. Centrifuge and other machineries have been installed for effluent treatment. New fuel shed with roofing, controls dust emissions and conserves the resources.

DIVIDENDS

Your Directors recommend a Dividend of (Rs. 2 per share on the post bonus capital comprising of 1.50 crore equity shares as against (Rs. 3 per share on 75 lakh shares last year. Bonus shares issued in September 2010 are also eligible for full dividend. Dividend distribution in absolute terms is higher by 33% over last year. The total distribution including dividend tax amounts to (Rs. 350 lakhs ( (Rs. 262 lakhs)

PARTICULARS OF EMPLOYEES

Particulars of employees pursuant to Section 217 (2A) of the Companies Act, 1956 are annexed.

LABOUR RELATIONS

The industrial relations climate in the Company during the year was generally cordial and harmonious.

DIRECTORS

In terms of Section 255 of the Companies Act, 1956 Mr M G Mohan Kumar & Mr Ajay D Patel , retire by rotation and they, being eligible, offer themselves for reappointment. Your Directors recommend that the proposed resolutions for their reappointment be passed.

Mr N S Kishore Kumar was appointed by the Board at its meeting held on 31-1-2011 as an Additional Director. As per Section 260 of the Companies Act, 1956 & the Articles of Association of the Company, he holds office upto the date of the ensuing Annual General Meeting. Your Directors recommend that the proposed resolution appointing him as Director, liable to retire by rotation, be passed.

AUDITORS

There are no adverse comments by the auditors in their report annexed herewith.

The Auditors M/s B S Ravikumar & Associates retire at the conclusion of this Annual General Meeting and are eligible for reappointment. Your Directors recommend that the proposed resolution appointing them be passed.

APPRECIATION

Your Directors take this opportunity to place on record their appreciation for services rendered by the employees, sales agents, Banks & Financial Institutions.

for and on behalf of the Board of Directors

Manish M. Patel Chairman & Managing Director

Nanjangud 26th May, 2011


Mar 31, 2010

The Directors have the pleasure to present the 51 st Annual Report of the Company along with the audited accounts for the year ended 31 st March, 2010.

Working Results 2009-10 2008-09

Finished Production of Paper & Paperboards 49,452 MTs 50,617 MTs

Sales Volume of Paper, corrugated cartons & sheets 47,567 MTs 49,014 MTs

(Rs. In Lacs)(Rs. In Lacs)

Gross Sales 13,419.83 13,398.31

Net Sales excl Excise Duty 12,809.66 12,598.06

FINANCIAL RESULTS

Operating Profit 2,476.78 1,604.98

Less: Finance charges (net) 186.18 152.21

Gross (Cash) Profit 2,290.60 1,452.77

Less: Depreciation 457.07 385.44

Profit before tax 1,833.53 1,067.33

Provision for Tax-including deferred tax 456.54 233.83

Profit after tax for the year 1,376.99 833.50

Less: Income tax of earlier years — 6.23

Net Profit after Tax 1,376.99 827.27

Balance in Profit & Loss Account brought forward

from the previous year 3,798.87 3,317.57

5,175.86 4,144.84

APPROPRIATIONS :

Transfer to General Reserve (137.70) (82.73)

Proposed Dividend @ 30% (225.00) (225.00)

Provision for Dividend Tax (37.37) (38.24)

Balance carried forward in Profit & Loss Account 4,775.79 3,798.87

Operations

Gross sales for the financial year 2009-10 stood at Rs 134.20 crores as against 133.98 in the previous year.

Printing & Packaging Division, which commenced production in September 2008, operated at substantially higher volumes. Operating volumes in the paper plant were lower, particularly in the second half mainly on account of maintenance/ upgradation shutdowns. This resulted in lower capacity utilization at 88.31% (last year 90.39%). Though the selling prices were lower during 2009-10 as compared to prices prevailing during first half of 2008-09, operating results were better because of comparatively lower raw material prices,

higher realization from conversion operations in the Printing & Packaging Division.

Cash generated after finance charges and taxes was Rs 1,834 lacs during the year as against Rs 1,213 lakhs in the preceding year. Finance charges were marginally higher at Rs 186 lacs (Rs 152 lacs). Net profit increased by 66%.

Finances

During the year, cash flow & liquidity remained comfortable.

Sources of funds Rs in lacs Deployment of funds Rs in lacs

Net operating profit 2,466 Repayment of Term Loans 296

Interest & Finance charges 186

Dividend received 11 Income tax, Wealth tax & FBT 330

Dividend & Dividend Tax 258

Sale of Fixed Assets 12 Capital Expenditure & Advances 754

Increase in working capital 118

Decrease in short term Bank

borrowing for working capital 436

Repayment of Fixed Deposits 47

Increase in cash & cash equivalents 64

TOTAL 2,489 TOTAL 2,489



Capital expenditure & advance includes substantial amounts towards Printing & Packaging Division. The long term Debt to Equity ratio as on 31-03-2010 stands comfortably at 0.17 as against 0.27 as on 31-03-2009. The current ratio as on 31-3-10 is 1.98 compared to 1.68 as on 31-3-09.

There are no overdue deposits or unclaimed matured Fixed Deposits as on 31-3-2010.

Current Prospects

The operating level is steady & overall paper production/ sales volumes are picking up on the back of internal demand from the Printing & Packaging Division, which is seeing an encouraging response from the market. Given this trend, the prospects of increasing Mill capacity by balancing and marginal investment in the near future with the higher operating margins is good.

Overall Turnover and operating profit is better, mainly due to higher value addition through conversion. A matter of concern however is the likely inflationary effect on

cost arising from the strong liquidity impetus from the government stimulus package. Input prices are likely to increase as a result of increased demand as the global economy recovers. Real Inflation and a possible hike in interest rates is likely.

During the year 2009-10 overall economic growth was 7.4% as against 6.7% in last year. Manufacturing sector growth registered a steep growth to 10.4% in 2009-10 from 2.8% in the preceding year.

Capital Expenditure Plans

After the successful implementation of the Forward Integration plan, the Company is now taking up the upgradation of the existing machines to increase output by about 25% on PM-4 & 5 for brown grades. Capital expenditure is planned for the Printing & Packaging Division to increase overall volumes and productivity. This will be financed through debt & internal accruals, to obtain optimum returns. Large capital expenditure, and substantial capacity increase is under consideration to be taken up next.

Corporate Governance

Securities & Exchange Board of India (SEBI) in order to improve the standard of Corporate Governance has introduced certain amendments in the Listing Agreements with the Stock exchanges. Same have been complied with & a report on this is attached.

Directors Responsibility Statement :

As required by new amendments to Companies Act, 1956, we state that:

While preparing the Annual Accounts, the Company has followed the applicable Accounting Standards, referred to in Section 211 (3-C) of the Companies Act, 1956.

The Directors have selected such accounting policies and applied them consistently and has made judgments and estimates that are reasonable and prudent, so as to give true and fair view of the state of affairs of the Company as at 31-3-2010 & of the profit of the Company for the financial year 2009-10.

The Directors have taken proper & sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

The Directors have prepared the annual accounts on a going concern basis.

Research & Development

Several special application grades have been developed & successfully introduced during the year to cater to stringent customer specific requirements.

Energy Conservation Measures

The particulars required under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 with regard to energy conservation measures are furnished in the Annexure.

Environmental Protection

Your company has always endeavoured to remain in harmony with its eco-sphere and tried to equitably balance the interest of all stakeholders in it, often going beyond the statutory impositions placed by regulatory authorities. In such efforts are included the installation of a 0.5 acre hold tank and a 2 km delivery pipeline for irrigating otherwise dry lands. The treated effluent water is utilized for irrigation purposes in the nearby fields of third party farmers with excellent crop yields.

The Company has installed & been operating the Electro Static Precipitator (ESP) Systems for its Boilers for controlling dust emission and dust extractor system for controlling dust at its fuel handling system. During the year Centrifuge Machinery has been installed for effluent treatment.

Dividends

Your Directors recommend a Dividend of Rs 3 per share i.e. @ 30% ( same as in last year). The total distribution including dividend tax amounts to Rs. 262 lakhs (Rs. 263 lakhs)

Particulars of Employees

Particulars of employees pursuant to Section 217 (2A) of the Companies Act, 1956 are annexed.

Labour Relations

The industrial relations climate in the Company during the year was generally cordial and harmonious.

Directors

In terms of Section 255 of the Companies Act, 1956 Mr Dineshchandra C.Patel & Mr Jagdish M Patel, retire by

rotation and they, being eligible, offer themselves for reappointment. Your Directors recommend that the proposed

resolutions be passed.

Auditors

There are no adverse comments by the auditors in their report annexed herewith.

The Auditors M/s B S Ravikumar & Associates retire at the conclusion of this Annual General Meeting and are eligible for reappointment. Your Directors recommend that the proposed resolution appointing them be passed.

Appreciation

Your Directors take this opportunity to place on record their appreciation for services rendered by the employees, sales agents, Banks & Financial Institutions.

for and on behalf of the Board of Directors

Nanjangud Manish M. Patel

27th May, 2010 Chairman & Managing Director

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