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 âFirst time adoption of Indian Accounting Standardsâ.
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 |
â |
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 Companyâs 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 Companyâs 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.
Directorsâ 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 COMPANYâS 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 companyâs 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 Companyâs 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
Companyâs 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 âUtilisation of Paper Mill Effluent for Agricultural Purposeâ. 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 Companyâs 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 DIRECTORâS APPOINTMENT AND REMUNERATION
The Companyâs Policy on directorâs 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 Directorsâ 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 Directorsâ 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 Companyâs 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
Companyâs 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
DIRECTORSâ 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 Companyâs 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.
DIRECTORSâ 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
Companyâs 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 âUtilization of Paper Mill Effluent for Agricultural Purposeâ.
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 Companyâs 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 Workersâ 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 DIRECTORâS APPOINTMENT AND REMUNERATION
The Companyâs Policy on directorâs 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 Directorsâ 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 Directorâs 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
Companyâs 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 à 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