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Directors Report of Sree Sakthi Paper Mills Ltd.

Mar 31, 2015

The Directors have pleasure in presenting their 24th Annual Report and the Audited Financial Statements of the Company for the year ended 31st March 2015

REVIEW OF OPERATIONS 2014-15

In the year under review, the total production was 57571 MT as compared to the previous financial year production of 77454 MT and thus the total production fell short by 19883 MT, of which the shortfall in production of Kraft Paper at Edayar Units is 6552 MT, and Duplex Board at Chalakkudy Unit is 13331 MT.

The main reason for the shortage of production at Edayar Unit was due to frequent stoppage and repairs and the downtime of the boiler and also due to the breakdown of other equipments. Inorder to rectify and carry out repairs, the Company had a long shutdown.

Chalakkudy Duplex Board Unit production for the Financial Year 2014-15 was 6779 MT. The Unit was closed and operations stopped from 1st October, 2014. The Company had to close down the operation due to severe market competative conditions as very many number of Duplex Board Mills were commissioned in Tamil Nadu in and around consuming centers mainly Shivakasi. As Tamil Nadu Mills were servicing the consuming centers at economical prices, the transport charges of our product was an inhibiting factor which practically resulted in losing our competitiveness. Further, the Tamil Nadu News Print Limited (TNPL) is implementing a big Duplex Board Plant Project with a capacity of 1000 tonnes per day, and the same is expected to come into operation soon. The size and capacity of our Duplex Board Unit at Chalakkudy was insufficient and inadequate to enjoy economies of large scale operation and to compete with the Tamil Nadu Mills.

As regards the Kraft Paper, the market conditions were sluggish from the year 2013-14 which continued affecting the profitability. With the completion of the repairs and maintenance work of the boiler and other equipments, the operation of the Kraft Paper Unit have been put into stable operation from the last Quarter of the financial year under review. The Company has now taken all possible steps for effecting cost control and, taking into account the market conditions and sales realization, the Company has drawn up plans for operation of the Kraft Paper Unit at 80% capacity to earn reasonable profits in the current year.

The net loss of the Company for the year ended would have been lesser by Rs. 191.37 lacs if the REC income were recognized on the unsold stock (including opening stock) of REC Certificates (12758) as income at the floor price of Rs. 1500/- fixed by Government.

DIVIDEND

In view of loss, your Directors decided not to recommend payment of dividend on the equity shares and non convertible cumulative Redeemable Preference Shares for the financial year under review.

EXPORT PERFORMANCE

Your Company exported 1518.98 MT of paper and paper boards during the year as compared to 471 MT during the previous year. The export amounted to Rs.389.65 lacs as against Rs 129.74 lacs in the previous year.

PROSPECTS

The Company's performance in the first quarter of the current fiscal is not satisfactory due to the maintenance/ shut of the Power Plant and Market conditions. With the completion of the repairs and maintenance work of the boiler and other equipments, the operation of the Kraft Paper Unit have been put into stable operation from the Second Quarter of the current financial year. As mentioned above the Company has now taken all possible steps for effecting cost control and, taking into account the market conditions and sales realization the Company has drawn up plans for operation of the Kraft Paper Unit at 80% capacity to earn, barring unforeseen circumstances, reasonable profits in the current year.

FINANCIAL PERFORMANCE (Rs./Lacs)

For the For the year ended year ended Particulars 31.03.2015 31.03.2014 Sales (Gross) 16405.45 21554.41

Less: Excise Duty 952.86 1247.60

Sales (Net) 15452.59 20306.81

Operation Profit/Loss 287.73 1320.90

Interest and Finance 590.35 685.57

Depreciation 376.81 489.90

Profit Before Tax (679.43) 145.43

Provision for Tax - 29.35 Profit After Tax (1178.14) 116.08

Balance of Profit

brought forward 513.25 512.55

Amount available

for appropriation (664.89) 628.63

Appropriation

General Reserve - -

Proposed Dividend

& tax on Dividend - 115.38

Retained profit carried

to Balance Sheet (727.31) 513.25

FINANCE

All the repayment and interest commitments were met as per terms of arrangement with the Banks.

SUBSIDIARY COMPANIES

As of 31st March 2015 the Company had 3 subsidiaries viz. Sree Kailas Palchuram Hydro Power Limited, Sree Adisakthi Mukkuttathode Hydro Power Limited and Jalashaayi Alamparathode Hydro Power Limited by virtue of the Company having control on the Board of these Companies. Steps are being initiated to implement the project with the assistance of Government / Private parties.

The Board of Directors of the Company at its meeting held on 30.05.2011 decided to avail the exemption under Section 212 of the Companies Act, 1956 pursuant to GC No.2/2011 dated 08.02.2011 issued by the Central Government. As required in the Circular, the consolidated financial statements audited by the Statutory Auditors of the Company attached along with the Annual Reports of the Company. Annual accounts of the subsidiary companies and the related detailed information would be sent to those shareholders seeking information in this regard at any point of time. Further annual accounts of the subsidiary companies would be available for inspection by any shareholders at the registered office of the Company.

INDUSTRIAL RELATIONS

The industrial relations remained cordial and satisfactory during the year under review.

CHANGES IN NATURE OF BUSINESS

No significant changes had been made in the nature of the Company during the financial year.

MATERIAL CHANGES AND COMMITMENTS OCCURRED BETWEEN THE DATE OF BALANCE SHEET AND THE DATE OF AUDIT REPORT

No significant material changes and commitments have occurred between the date of the balance sheet and the date of the audit report.

FINANCE

A) Deposits

The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.

B) Particulars of Loans, Guarantees or Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial

INTERNAL CONTROL SYSTEM

Your Company has adequate internal control and internal check system commensurate with size of the organization.

The Company has appointed M/s. Pooja A Nayak & Co., Chartered Accountants, Ernakulam as the Internal Auditor of the Company to monitor and evaluate the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company and its subsidiary.

Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

With deep regret we report the sad demise of Mr. A.S. Unny, Chairman of the Company on 17th May 2015. The Board records their deep appreciation for the valuable guidance and leadership rendered by Mr. A.S. Unny, Chairman of the Company.

In terms of Article 83 of the Articles of Association of the Company, Mrs.E. Kamalam, Director retire on rotation, and being eligible offer herself for re- appointment. Mr. T S Anantharaman who was appointed as Independent Director as per SEBI Guidelines is disqualified to act as Independent Director under the provisions of Companies Act, 2013 and his appointment is categorized as Director liable for retirement by rotation. Accordingly he is retiring by rotation and being eligible offers himself for re-appointment.

In the Annual General Meeting held on 30st September 2014 Dr. A.R.K. Rao was appointed as Independent Director for a term of one year and he will be retiring at the ensuing Annual General meeting. The Company has received requisite notices in writing from members proposing Dr. A.R.K. Rao for re-appointment as Independent Director for another consecutive term of one year.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed both under sub section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Bombay Stock Exchange.

During the period under review, Mrs. Usha Venugopal, was appointed as Chief Financial Officer of the Company, as one of the Key Managerial Personnel in compliance with the provisions of Section 203 of the Companies Act, 2013

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Revised Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committee. The manner in which the evaluation has been carried out has been explained in the Governance Report.

REMUNERATION TO DIRECTORS

The Remuneration paid to the Executive Directors and the Sitting Fees paid to the Non Executive and Independent Directors are disclosed in the Extract to the Annual Return i.e Annexure IV to the Board's Report.

AUDIT COMMITTEE

The Audit Committee of the Board was reconstituted on 30-5-2015 and consists of Mr. Deveshwer Kumar Kapila, Independent Director, Mr. U.Gururaja Bhat, Independent Director, Dr. A R K Rao, Independent Director and Mr. S. Giridhar Non Independent Director.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Corporate Social Responsibility Committee of the Company consists of Mr. Deveshwer Kumar Kapila, Independent Director, Dr. S Rajkumar, Managing Director and Mr. A Padmanabhan, Whole Time Director.

The Committee has taken steps for the preparation of CSR policy, projects and programs proposed to be undertaken by the Company for approval of the Board. The Annual Report on CSR Activities for the Financial Year 2014-15 is annexed at Annexure VII to the Directors Report.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee was re- constituted on 30-05-2015 and consists of Mr. Deveshwer Kumar Kapila, Independent Director, Mr. U.Gururaja Bhat, Independent Director, Dr. A R K Rao, Independent Director and Mr. S. Giridhar Non Independent Director.

REMUNERATION POLICY

The Company's Remuneration Policy for Members of the Board and Executive Management is annexed at Annexure IIIA to the Directors' Report. The Company's remuneration policy is directed towards rewarding performance based on review of achievements periodically. The remuneration policy is in consonance with the existing industry practice.

SHAREHOLDERS RELATIONSHIP COMMITTEE

Composition of the Committee as from 30th July 2015:

Dr S. Rajkumar,Managing Director

Mr U.G. Bhat, Independent Director

Dr. A R K Rao, Independent Director

Mr. S.Giridhar, Non Executive/ Non Independent Director

AUDITORS

M/s Balan & Co. Chartered Accountants, the present Auditors of the Company retire and are eligible for reappointment and the proposal has been placed before you. Necessary certificate has been obtained from the Auditors as per Sections 139 and 141 of Companies Act, 2013

FOREIGN EXCHANGE EARNINGS AND OUT-GO

During the year under review, the foreign exchange earned by the Company by way of exports proceeds is Rs. 389.65 lacs. The foreign exchange outgo for the company for import purchases Rs. 5831.15 lacs

PARTICULARS UNDER SECTION 134 Conservation of Energy, Technology Absorption Statement of particulars under Section 134 (3) (m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed as

Annexure - I

Particulars of Employees

None of the employees of the Company are coming under the provisions of Section 197(12) of the Companies Act, 2103, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

CORPORATE GOVERNANCE

The Company's Equity Shares are listed with Bombay Stock Exchange. The Company has implemented all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance. The Report on Management's Discussion and Analysis and Report on Corporate Governance are forming part of Directors' Report and are annexed as Annexure -II and Annexure – III respectively. As required by the Listing Agreement, an Auditors' Certificate on Corporate Governance and a Declaration by the Vice Chairman and Managing Director with regard to Code of Conduct are attached to the said Report. Further, as required by Clause 49 of the Listing Agreement, a Certificate, duly signed by the Vice Chairman and Managing Director and CFO, was submitted to the Board of Directors on the financial statements and cash flow statement of the Company for the year ended March 31, 2015 at the Meeting held on May 30, 2015.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return in Form MGT 9, of the Company is annexed as Annexure IV to this Report.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval. Further prior approval of the Shareholders of the Company at the Annual General Meeting dated 30th September, 2014 has been taken for the business related transactions entered into with the Related Parties during the year.

Particulars of contract or arrangements with related parties is annexed in Form AOC 2 as Annexure V.

SECRETARIAL AUDITOR

The Board has appointed M/s. Lakshmmi Subramonian & Associates, Practising Company Secretary, to conduct Secretarial Audit for the financial year 2014- 15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure VI to this Report.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

In accordance with Section 177 of the Companies Act, 2013 and revised Clause 49 of the Listing Agreement, the Company has constituted a Whistle Blower Policy Vigil Mechanism to establish a vigil mechanism for the Directors and employees to report genuine concerns in such manner as may be prescribed and to report to the management instances of unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct.

The detail of the Whistle Blower Policy has been posted on the website of the Company, www.sree kailas.com

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3) (c) of the Companies Act, 2013 Directors report that:

1. In the preparation of the annual accounts for the financial year ended 31st March 2015 the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. The Directors had selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the close of the Company for the year under review.

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

4. The Directors had prepared the Annual Accounts for the financial year ended 31st March 2015 on a 'going concern' basis.

5. That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

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

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1) Details relating to deposits covered under Chapter V of the Act.

2) Issue of equity shares with differential rights as to dividend, voting or otherwise.

3) Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

4) Neither the Managing Director nor the Whole Time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

5) No significant or material orders were passed by the Regulators or Courts or Tribunal which impact the going concern status and Company's operations in future.

Your Directors further state that 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

ACKNOWLEDGEMENT

The Board places on record, its appreciation for the cooperation and support received from shareholders, customers, suppliers, employees, government authorities and banks.

By and on behalf of the Board of Directors

Sd/-

Cochin -16 Deveshwar Kumar

Kapila

Date :30/7/2015 Chairman


Mar 31, 2014

Dear members,

The Directors have pleasure in presenting their 23rd Annual Report and the Audited Financial Statements of the Company for the year ended 31st March 2014

REVIEW OF OPERATIONS 2013-14

In the year under review, while the Duplex Board unit maintained almost the same production as in last year, the Kraft paper unit at Edayar operated in an uncertain environment affected by machinery breakdown, stoppage by power interruptions and process related problems and thereby total production for the year was 77454Mt a short fall of Rs.2800 Mt compared to last year''s production. Revenue too decreased to Rs 116.08 lakhs from Rs 469.12 lakhs

The market is sluggish which hindered much from increasing sales price in consonance with increase in cost of production due to increase in cost of imported raw material on account of Dollar exchange rate. There was a loss of Rs.62 lakhs towards foreign currency fluctuation

The expected savings /benefits in power cost from Boiler and power plant operations could not be achieved as there were frequent outage due to refractory failure/repair.

As accredited by ANERT,the company is eligible for benefits under REC with effect from the third quarter of fiscal 2013 and around 8000 certificates were accrued in the financial year and 2800 certificates sold.

The net profits of the Company for the year end would have been higher by Rs.106.5 lakhs if REC income were recognized on the unsold stock (including opening stock) of REC certificates ( (7100) as income at the floor price of Rs 1500/- fixed by Government

DIVIDEND

Your directors, despite cash constraint, have recommended a dividend of 6% ie Rs,0.60 per equity share for the financial year ended 31-3-2014.

The dividend payout for the year under review has been formulated in accordance with shareholders aspirations and the Company''s policy to pay uninterrupted dividend

EXPORT PERFORMANCE

Your company exported 471 MT of paper and paper boards during the year as compared to 298 Mt during the previous year. The export amounted Rs.129.74 lacs as against Rs 78.39 lacs in the previous year.

PROSPECTS

The company''s performance in the first quarter of the current fiscal is not satisfactory due to the maintenance/shut of the Power plant . With the completion of Annual maintenance the Company is expecting to improve production at Edayar plant at least by 10% to 15% in the ensuing quarters. This will result in better efficiencies of operation. With the renewable energy certificates (RECs) the Company hopes to save energy cost besides improving the bottom line by encashment of RECs that are accumulated. Thus barring unforeseen circumstances, your Company expects to do better in the current year

FINANCIAL PERFORMANCE (Rs. Lacs)

For the For the year ended year ended Particulars 31.03.2014 31.03.2013

Sales (Gross) 21554.41 21743.16

Less : Excise Duty 1247.6 1261.37

Sales (Net) 20306.81 20481.79

Operating Profit 1320.9 1938.56

Interest and Finance 685.57 715.32

Depreciation 489.9 502.70

Profit before tax 145.43 720.54

Provision for tax 29.35 251.42

Profit after tax 116.08 469.12

Balance of profit brought forward 512.55 431.87

Amount available for appropriation 628.63 900.99

Appropriation

General Reserve 0.00 100.00

Proposed dividend & tax on dividend 115.38 288.44

Retained profit carried to Balance sheet 513.25 512.54

FINANCE

All the repayment and interest commitments were met as per terms of arrangement with the Banks.

During current year the Company has raised share capital by an amount of Rs 10 (Ten)crores by way of allotment of 1 (one) crore 11.25% Non convertible Cumulative Redeemable preference shares of Rs.10/- each to Kerala State Industrial Development Corporation Limited.

SUBSIDIARY COMPANIES

As of 31st March 2014 the company had 3 subsidiaries viz. Sree Kailas Palchuram Hydro Power Limited, Sree Adisakthi Mukkuttathode Hydro Power Limited and Jalashaayi Alamparathode Hydro Power Limited by virtue of the Company having control on the Board of these companies. Steps are being initiated to implement the project with the assistance of Government / Private parties.

The Board of directors of the company at its meeting held on 30.05.2011 decided to avail the exemption under section 212 of the Companies Act, 1956 pursuant to GC No.2/2011 dated 08.02.2011 issued by the Central Government. As required in the Circular, the consolidated financial statements audited by the Statutory Auditors of the company attached along with the Annual Reports of the company. Annual accounts of the subsidiary companies and the related detailed information would be sent to those shareholders seeking information in this regard at any point of time. Further annual accounts of the subsidiary companies would be available for inspection by any shareholders at the registered office of the company.

INDUSTRIAL RELATIONS

The industrial relations remained cordial and satisfactory during the year under review.

INTERNAL CONTROL SYSTEM

Your Company has adequate internal control and internal check system commensurate with size of the organization.

BOARD OF DIRECTORS

With deep regret we report the sad demise of Sri. S. Sivathanu Pillai Founder Director and Chairman of the Company on 25th June 2014. The Board records their deep appreciation for the valuable guidance and leadership rendered by Sri. S. Sivathanu Pillai as Director/Chairman of the Company since inception.

In terms of Article 83 of the Articles of Association of the Company, Mr. S. Subramonian Director and Sri. S. Giridhar Director retire on rotation, and being eligible offer themselves for re-appointment.

Sri.N. Rajagopal Pai, Whole-time Director, Operations resigned from Board with effect from 31-10-2013

Sri. N. Purushothama Prabhu was appointed as Additional Director at the meeting of the Board of Directors held on 31-10-2013. In accordance with the provisions of Companies Act 1956 he would hold office of Director upto the date of ensuing Annual General Meeting. The Board also appointed him as Whole-time Director-Operations of the Company for a period of one year w.e.f. 7-11-2013 to 6-11-2014. The Company has received a notice in writing from a member proposing the candidature of Mr. N. Purushothama Prabhu for the office of the Director along with a deposit as required under the Companies Act 2013

Sri. A.S. Unny, Sri. D.K. Kapila, Sri. U.G. Bhat, and Dr. A.R.K. Rao were appointed as Independent Directors under Clause 49 of Listing Agreement and will retire at the ensuing Annual General meeting. The Company has received requisite notices in writing from members proposing Sri. A.S. Unny, Sri. D.K. Kapila, Sri. U.G. Bhat and Dr. A.R.K. Rao for appointment as Independent Directors.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed both under sub section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Bombay Stock Exchange.

AUDIT COMMITTEE

The Audit Committee of the Board was reconstituted on 30-5-2014 and consists of Non-Executive Independent Directors Viz: Sri. A.S. Unny, Sri. Deveshwer Kumar Kapila, Sri. U.Gururaja Bhat and Sri. S. Giridhar Non Independent Director

SHAREHOLDERS RELATIONSHIP COMMITTEE

Composition of the Committee

Sri A.S. Unny Independent Director

Dr S. Rajkumar Managing Director

Sri U.G. Bhat Independent Director

Sri S.Giridhar Non Executive/Non Independent Director

As required under the provisions of Companies Act, 1956, the '' Shareholders Relationship Committee'' was constituted by the Board on 30-5-2014 after dissolution and merging ''Investors grievance Committee''. The ''Shareholder''s Relationship Committee'' is primarily responsible to consider and review all matters connected with the Company''s transfer of securities and redressal of shareholders/investors/security holders'' complaints and resolve the grievances of security holders of the Company.

AUDITORS

M/s Balan & Co. Chartered Accountants, the present Auditors of the Company retire and are eligible for reappointment and the proposal has been placed before you. Necessary certificate has been obtained from the Auditors as per section 139 and 141 of Companies Act 2013

FOREIGN EXCHANGE EARNINGS AND OUT-GO

During the year under review, the foreign exchange earned by the company by way of exports proceeds is Rs. 129.74 Lacs. The foreign exchange outgo for the company for import purchases - Rs.4967.26 lacs

PARTICULARS UNDER SECTION 217

Conservation of Energy, Technology Absorption

Statement of particulars under section 217(1) (e) of the Companies Act, 1956 are annexed as Annexure -I

Particulars of Employees

None of the employees of the company coming under the provisions of section 217(2A) of the Companies Act,1956. Details of managerial remuneration are disclosed in Notes on Accounts - Schedule 23 (Point No. 2) forming part of the Annual Report.

CORPORATE GOVERNANCE

The Company''s Equity Shares are listed with Bombay Stock Exchange. The Company has implemented all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance. The Report on Management''s Discussion and Analysis and Report on Corporate Governance are forming part of Directors'' Report and are annexed as Annexure -II and Annexure - III. As required by the Listing Agreement, an Auditors'' Certificate on Corporate Governance and a Declaration by the Vice Chairman and Managing Director with regard to Code of Conduct are attached to the said Report. Further, as required by Clause 49 of the Listing Agreement, a Certificate, duly signed by the Vice-Chairman and Managing Director and General Manager-Finance, was submitted to the Board of Directors on the financial statements and cash flow statement of the Company for the year ended March 31, 2014 at the Meeting held on May 30, 2014.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 Directors report that

1. In the preparation of the annual accounts for the financial year ended 31st March 2014 the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. The directors had selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the company for the year under review.

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

4. The directors had prepared the Annual Accounts for the financial year ended 31st March 2014 on a ''going concern'' basis.

ACKNOWLEDGEMENT

The Board places on record, its appreciation for the cooperation and support received from shareholders, customers, suppliers, employees, government authorities and banks.

By and on behalf of the Board of Directors

Sd/- Cochin-16 A.S. Unny Date:14/8/2014 CHAIRMAN


Mar 31, 2013

The Directors have pleasure in presenting their 22nd Annual Report and the Audited Financial Statements of the Company for the year ended 31st March 2013

REVIEW OF OPERATIONS 2012-13

In a year of economic uncertainties, your company posted a modest performance in fiscal 2013. The company''s production and sales were marginally better at 80553 MT ( 2.6%) and 80796 MT ( 3.5%) respectively. Revenue too increased 3.6% to Rs 205 cr. Nonetheless, profit margin came under pressure dragging the operating profit (EBITDA) to Rs 19 cr (-7.7%). Profit at the net level stood at Rs 4.69 cr (-29%). A noteworthy aspect of fiscal 2013 was that the company closed the year with just a day''s stock of finished goods.

The boiler and power plant, commissioned towards the end of previous fiscal, stabilized during the year under review and produced 81.41 lacs units in the year catering to almost 28% of the total power requirement of the company''s Kraft paper units at Edayar. This indeed helped the company to contain the power cost at the time of power restriction/cuts in the state of Kerala. Further, the Krima disperser system installed as part of modernization in last year helped the company to make spec free paper attracting the customers in high-end market.

The installation of krima disperser system at the paper mill and commissioning of the power plant in the previous year helped the company to achieve higher capacity utilization (78%) and better product quality in fiscal 2013. This also enabled the company to get a slightly better realization despite recessionary conditions in the market.

The Renewable Energy Project of the company was accredited by ANERT on 16th November 2012 and registered with Renewable Energy Certificate (REC) Registry on 12th December 2012. The company is eligible for benefits under REC with effect from the third quarter of fiscal 2013 and around 2000 certificates were accrued in the financial year, which has not been sold. The net profit of the company for the year end would have been higher by Rs. 20 lacs if REC Income where recognised as income at the floor price of Rs. 1500 fixed by the government.

DIVIDEND

Under the trying circumstances, your directors have recommended a dividend of 15% which yields an annual return of about 8% on the current market price of the company''s share.

FINANCIAL PERFORMANCE

(Rs./Lacs)

For the For the year ended year ended

Particulars 31.03.2013 31.03.2012

Revenue from operation 20509.29 19800.66

Other Income 56.20 36.65

Total Income 20565.49 19837.31

Operating Profit 1943.58 2105.89

Finance Cost 720.34 574.37

Depreciation & Amortisation 502.70 423.95

Profit before tax 720.54 1107.57

Provision for tax 251.42 447.24

Profit after tax 469.12 660.33

Balance of profit brought forward 431.87 272.69

Amount available for appropriation 900.99 933.02

Appropriation

General Reserve 100.00 100.00

Proposed dividend & tax on dividend 288.44 401.15

Retained profit carried to Balance sheet 512.55 431.87



PROSPECTS

The company''s performance in the first quarter of the current fiscal is satisfactory. With the renewable energy certificates (RECs), the company hopes to save energy cost besides improving the bottom line at the time of encashment of the RECs that have been accumulated since December 2012. Thus, barring unforeseen circumstances, your company expects to do better in the current year.

FINANCE

All the repayment and interest commitments were met as per terms of arrangement with the Banks.

SUBSIDIARY COMPANIES

As of 31st March 2013 the company had 3 subsidiaries viz. Sree Kailas Palchuram Hydro Power Limited, Sree Adisakthi Mukkuttathode Hydro Power Limited and Jalashaayi Alamparathode Hydro Power Limited by virtue of the Company having control on the Board of these companies. Steps are being initiated to implement the project with the assistance of Government / Private parties.

The Board of directors of the company at its meeting held on 30.05.2011 decided to avail the exemption under section 212 of the Companies Act, 1956 pursuant to GC No. 2/2011 dated 08.02.2011 issued by the Central Government. As required in the Circular, the consolidated financial statements audited by the Statutory Auditors of the company attached along with the Annual Reports of the company. Annual accounts of the subsidiary companies and the related detailed information would be sent to those shareholders seeking information in this regard at any point of time. Further annual accounts of the subsidiary companies would be available for inspection by any shareholders at the registered office of the company.

INDUSTRIAL RELATIONS

The industrial relations remained cordial and satisfactory during the year under review.

INTERNAL CONTROL SYSTEM

Your Company has adequate internal control and internal check system commensurate with size of the organization.

BOARD OF DIRECTORS

Mr. S. Sivathanupillai, relinquished his post as Chairman w.e.f 30/5/2013 and continues in the Board as Director of the company. The board records their appreciation for the valuable guidance and leadership rendered by Mr. S. Sivathanupillai as Chairman of the company since inception.

Mr. A.S. Unni, independent director elected as Chairman of the Board w.e.f 30/5/2013.

Mr. N. Ravidranathan ceased to be Director w.e.f 31/1/2013 upon resignation. Board records their appreciation for the valuable guidance and services rendered by Mr. N. Ravidranathan since inception of the company – especially in setting up of the Kraft Paper Unit 1 and 2 at Edayar and Duplex Board Unit at Chalakudy - as Director of the Company

Mr. N. Rajagopal Pai was appointed as an additional Director at the meeting of the board of Directors held on 31/1/2013. In accordance with the provisions of Companies Act, 1956 he would hold office of Director upto the date of ensuing Annual General Meeting. The Board also appointed him as Whole Time Director – operations of the company for a period of 15 months w.e.f 1/2/2013 to 30/4/2014. The Company has received a notice in writing from a member proposing the candidature of Mr. N. Rajagopal Pai for the office of the director along with a deposit as required under the Companies Act, 1956

In accordance with Article 83 of the Articles of Association of the Company, Mr. S. Giridhar, Mr. U.G. Bhat and Mrs. E. Kamalam directors of the Company retire on rotation, and they being eligible offer themselves for re-appointment.

AUDIT COMMITTEE

The Audit Committee of the Board consists following Independent Directors, viz., Mr. A.S. Unni, Mr. Deveshwer Kumar Kapila, Mr. N. Ravidranathan (upto 31/1/2013), Mr. U.G Bhat (w.e.f 30/5/2013) and Mr. S. Sivathanupillai, Non-Independent Director.

AUDITORS

M/s Balan & Co. Chartered Accountants, the present Auditors of the Company retire and are eligible for re-appointment and the proposal has been placed before you. Necessary certificate has been obtained from the Auditors as per section 224(1) of the Companies Act, 1956.

COST AUDIT

Pursuant to the provisions of Section 233 B of the Companies Act 1956, the Central Government issued an order dated 3rd May 2011, by which audit of the Cost Accounts maintained by the Company has been made mandatory for every financial year commencing on or after 1st day of April 2011 through an auditor with the qualification prescribed in Section 233B (1) of the Companies Act, 1956. The Company has with the approval of Central Government appointed M/s. BBS & Associates, Cochin as Cost Auditors of the Company to conduct the audit of cost accounts maintained by the Company. The due date for filing the Cost Audit Reports is 30th September, 2013

FOREIGN EXCHANGE EARNINGS AND OUT-GO

During the year under review, the foreign exchange earned by the company by way of exports proceeds is Rs. 84.71 Lacs. The foreign exchange outgo for import purchases is Rs. 4878.95 lacs.

PARTICULARS UNDER SECTION 217

Conservation of Energy, Technology Absorption

Statement of particulars under section 217(1) (e) of the Companies Act, 1956 are annexed as Annexure - I

Particulars of Employees

None of the employees of the company coming under the provisions of section 217(2A) of the Companies Act, 1956.

CORPORATE GOVERNANCE

The Company''s Equity Shares are listed with Bombay

Stock Exchange. The Company has implemented all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance. The Report on Management''s Discussion and Analysis and Report on Corporate Governance are forming part of Directors'' Report and are annexed as Annexure -II and Annexure – III. As required by the Listing Agreement, an Auditors'' Certificate on Corporate Governance and a Declaration by the Vice Chairman and Managing Director with regard to Code of Conduct are attached to the said Report. Further, as required by Clause 49 of the Listing Agreement, a Certificate, duly signed by the Vice- Chairman and Managing Director and General Manager– Finance , was submitted to the Board of Directors on the financial statements and cash flow statement of the Company for the year ended March 31, 2013 at the Meeting held on May 30, 2013.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 Directors report that

1. In the preparation of the annual accounts for the financial year ended 31st March 2013 the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. The directors had selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the company for the year under review.

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

4. The directors had prepared the Annual Accounts for the financial year ended 31st March 2013 on a ''going concern'' basis.

ACKNOWLEDGMENT

The Board places on record, its appreciation for the co- operation and support received from shareholders, customers, suppliers, employees, government authorities and banks.



By and on behalf of the Board of Directors

Sd/-

Cochin - 16 A.S. Unni

Date : 31.07.2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting their 21st Annual Report and the Audited Financial Statements of the Company for the year ended 31st March 2012

1. REVIEW OF OPERATIONS 2011-12

In a year of economic slowdown, your company posted satisfactory working performance in fiscal 2012. Whereas the company's production and sales were marginally up at 78509 MT and 78034 MT respectively, revenue increased 8.2% to Rs 198 crores. Notwithstanding a forex (fluctuation) loss of about Rs 99 lacs, the company's operating profit grew more than 13 % to Rs 22 crores.

The commissioning of the boiler and Power Plant Project towards the end of the year resulted in higher interest and depreciation which, coupled with a prior-year tax provision of Rs 84 lacs, put pressure on the bottom line. The company netted a marginally lower profit of Rs 6.60 crores for the fiscal. Nevertheless, hoping to reap the benefits of the modernization-cum-expansion from the current year, the directors have proposed to maintain the dividend.

The company completed the modernization-cum- expansion programme during the year by commissioning 22-TPD boiler project, 2 MW Power Plant project, Press and Steam condensate system at Kraft Paper Unit-1 and Krima disperser (fibre treatment plant) at Kraft Paper Unit-2. On completion of the expansion, the company's rated capacity has increased by 18150 MT making the total capacity to more than 1 lac MT per annum. The company's gross fixed assets had an addition of Rs. 26 crores during the year on account of the modernization-cum-expansion.

2. FINANCIAL PERFORMANCE (Rs/Lacs)

For the For the year ended year ended Particulars 31.03.2012 31.03.2011

Revenue from operation 19800.66 18307.19

Other Income 36.65 49.55

Total Income 19837.31 18356.74

Operating Profit 2204.89 1950.13

Finance Cost 574.37 482.94

Depreciation &

Amortisation 423.95 414.44

Profit before tax 1023.57 1052.75

Provision for tax 363.24 351.42

Profit after tax 660.33 701.33 Balance of profit

brought forward 272.69 123.85 Amount available

for appropriation 933.02 825.18 Appropriation

General Reserve 100.00 150.00

Proposed dividend & tax on dividend 401.15 402.49

Retained profit carried to Balance sheet 431.87 272.69

3. FINANCIAL HIGHLIGHTS PARAMETERS FY '12 FY '11

Gross Block (Rs.lacs) 10358 7748

Installed Capacity 103150 85000

Production (MT) 78509 77386

Capacity Utilisation% 76 91

Sales Quantity (Mt) 78034 77381 Average Realisation

Rs per MT 25364 23640

Net Sales (Rs. Lacs) 19792 18293 Profit Before Tax (Rs. Lacs) 1024 1053

Profit After Tax

(Rs. lacs) 660 701

Dividend (%) 21 21

4. OPERATIONAL HIGHLIGHTS

- Modernization boosted the rated capacity more than 21%, from 85000 MT to 103150 MT.

- Net Sales increased 8.2% largely on account of better realization which improved 7.3%, from Rs 23,640 to Rs 25,364 per tonne.

- Efficient working capital management reflected by shorter debtor turnaround time (47 days in FY'12 as compared to 49 days in FY'11).

5. PROSPECTS

The Company's performance so far in the quarter ending 30th June 2012 is satisfactory. The Company expects an increase in the production volume in this year in light of completion of expansion project. Moreover the Boiler and Turbine installed during the end of the year were also stabilized during the first quarter of current fiscal.

Further on generation of power, the company can reduce the drawing of power from KSEB. In addition that company is focusing on more energy saving measures during the year. Your Board is taking all possible cost controlling measures in order to neutralize the loss of profit to the minimum as far as possible. Thus barring unforeseen circumstances, Company expects substantial improvement in sales and performance and to achieve very good results for the current year.

6. FINANCE

During the year the Company has been availed Rs. 1835.49 lacs as Term Loan from banks. All the repayment and interest commitments were met as per terms of arrangement with the Banks.

7. DIVIDEND YIELD

Your directors have recommended a dividend of 21% which yields an attractive return of around 9% on the year-end price of the company's share (Rs 23.45).

8. EXPORT PERFORMANCE

Your company exported 846 MT of paper and paper boards during the year as compared to 1758 Mt during the previous year. The export amounted Rs. 212.82 lacs as against Rs 383.08 lacs in the previous year.

9. SUBSIDIARY COMPANIES

As of 31st March 2012 the company had 3 subsidiaries viz. Sree Kailas Palchuram Hydro Power Limited, Sree Adisakthi Mukkuttathode Hydro Power Limited and Jalashaayi Alamparathode Hydro Power Limited by virtue of the Company having control on the Board of these companies. Steps are being initiated to implement the Hydro Projects with the assistance of Government / Private parties.

The Board of directors of the company at its meeting held on 30.05.2011 decided to avail the exemption under section 212 of the Companies Act, 1956 pursuant to GC No.2/2011 dated 08.02.2011 issued by the Central Government. As required in the Circular, the consolidated financial statements audited by the Statutory Auditors of the company attached along with the Annual Reports of the company. Annual accounts of the subsidiary companies and the related detailed information would be sent to those shareholders seeking information in this regard at any point of time. Further annual accounts of the subsidiary companies would be available for inspection by any shareholders at the registered office of the company.

10. INDUSTRIAL RELATIONS

The industrial relations remained cordial and satisfactory during the year under review.

11. INTERNAL CONTROL SYSTEM

Your Company has adequate internal control and internal check system commensurate with size of the organization.

12. BOARD OF DIRECTORS

In accordance with Article 83 of the Articles of Association of the Company, Mr. S. Subramoniam, Mr. Deveshwer Kumar Kapila and Dr.A.R.K Rao directors of the Company retire on rotation, and they being eligible offer themselves for re-appointment.

13. AUDIT COMMITTEE

The Audit Committee of the Board consists of four members and all of them are Non Executive Directors, viz., Mr.A.S.Unni, Mr.Deveshwer Kumar Kapila, Mr.N.Ravidranathan and Mr.S.Sivathanupillai. Mr.A.S.Unni is the Chairman of the Audit Committee.

14. AUDITORS

M/s Balan & Co. Chartered Accountants, the present Auditors of the Company retire and are eligible for re- appointment and the proposal has been placed before you. Necessary certificate has been obtained from the Auditors as per section 224(1) of the Companies Act, 1956.

15. COST AUDIT

Pursuant to the provisions of Section 233 B of the Companies Act 1956, the Central Government issued an order dated 3rd May 2011, by which audit of the Cost Accounts maintained by the Company has been made mandatory for every financial year commencing on or after 1st day of April 2011 through an auditor with the qualification prescribed in Section 233B (1) of the Companies Act, 1956.The Company has with the approval of Central Government appointed M/S BBS & Associates, Cochin as Cost Auditors of the Company to conduct the audit of cost accounts maintained by the Company . The due date for filing the Cost Audit Reports is 30th September, 2012.

16. FOREIGN EXCHANGE EARNINGS AND OUT-GO

During the year under review, the foreign exchange earned by the company by way of exports proceeds is Rs. 214.07 Lacs. The foreign exchange outgo for the company for were for import purchases (includes Rs. 182.93 lacs paid through buyers credit) - Rs. 5315.03 lacs, travelling expenses - Rs. 0.35 lacs and Export Claim - Rs. 4.22 lacs

17. PARTICULARS UNDER SECTION 217 Conservation of Energy, Technology Absorption

Statement of particulars under section 217(1) (e) of the Companies Act, 1956 are annexed as Annexure -I Particulars of Employees None of the employees of the company coming under the provisions of section 217(2A) of the Companies Act,1956.

18. CORPORATE GOVERNANCE

The Company's Equity Shares are listed with Bombay Stock Exchange. The Company has implemented all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance. The Report on Management's Discussion and Analysis and Report on Corporate Governance are forming part of Directors' Report and are annexed as Annexure - II and Annexure - III. As required by the Listing Agreement, an Auditors' Certificate on Corporate Governance and a Declaration by the Vice Chairman and Managing Director with regard to Code of Conduct are attached to the said Report. Further, as required by Clause 49 of the Listing Agreement, a Certificate, duly signed by the Vice- Chairman and Managing Director and General Manager- Finance , was submitted to the Board of Directors on the financial statements and cash flow statement of the Company for the year ended March 31, 2012 at the Meeting held on May 26, 2012.

19. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 Directors report that

1. In the preparation of the annual accounts for the financial year ended 31st March 2012 the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. The directors had selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the company for the year under review.

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

4. The directors had prepared the Annual Accounts for the financial year ended 31st March 2012 on a 'going concern' basis.

20. ACKNOWLEDGEMENT

The Board places on record ,its appreciation for the co- operation and support received from shareholders, customers, suppliers, employees, government authorities and banks.

By and on behalf of the

Board of Directors

Sd/-

Cochin - 16 S. Sivathanu Pillai

Date : 30.07.2012 CHAIRMAN


Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting their 20th Annual Report and the Audited Financial Statements of the Company for the year ended 31st March 2011

REVIEW OF OPERATIONS 2010-2011

During the year, the company's production increased by about 7.59%, from 71 926 MT to 77385 MT on account of our continuous modernization efforts. Capacity utilization improved from 85 % to 91 %.

The gross turnover was Rs. 1 9082 lakhs for the year under review, as compared to Rs. 14753 lakhs in the previous year. Net Sales surged by 29% on account of better realization which improved 20%, from Rs 19656 to Rs 23640 per tonne.

After absorbing interest/financing charges and depreciation of Rs.485.57 lakhs and Rs.376.17 lakhs respectively, the profit before tax was Rs. 1052.75 lakhs as compared to Rs.706.96 lakhs in the previous year. Pre-Tax profit climbed 49% as interest burden was reduced by 5.7% , from Rs.515.14 lakhs to 485.57 lakhs. Prof it after Tax of the company for the year ended March 2011 rose sharply, by 51 %, to reach Rs.701.33 lakhs as compared to Rs.464.43 lakhs in the previous year, reflecting an improvement of 55 basis points in Net Profit Margin. Return of capital employed improved by 5.03% and Return on Net worth increased by 2.82%.

Fixed assets added to the Company's Gross Block during the year under review was Rs.844.59 lakhs. Productive Assets (Gross Block) increased by about 12% on account of modernization, which is partly financed by availing term loans from banks. Term loans availed from the banks during the year is Rs. 783.64 lakhs.

Efficient working capital management reflected by shorter debtor turnaround time has also contributed in reducing the finance cost.

FINANCIAL PERFORMANCE (Rs Lakhs) For the For the year ended year ended Particulars 31.03.2011 31.03.2010

Sales (Gross) 19081.82 14753.18

Less : Excise Duty 788.99 601.14

Sales ( Net) 18292.83 14152.04

Operating Profit 1914.49 1564.61

Interest and Finance 485.57 515.14

Depreciation 376.17 342.51

Profit before tax 1052.75 706.96

Provision for Tax 351.42 242.31

Income Tax provision w/off/(w/back) O.00 0.22

Profit after tax 701.33 464.43

Balance of profit brought forward 123.85 100.98

Amount available for appropriation 825.18 565.41

Appropriation General Reserve 150.00 100.00

Proposed dividend & tax on dividend 402.49 341.56

Retained profit carried to Balance sheet 272.69 123.85

FINANCIAL HIGHLIGHTS

PARAMETERS 2010-11 2009-10

Gross Block (Rs./Lakhs) 7748.46 6918.93

Average Realization Rs. Per tonne 23640 19656

Production (MT) 77385 71926

Capacity utilization % 91 85

Net Sales (Rs.Lakhs) 18292.83 14152.04

Profit before tax (Rs.Lakhs) 1052.75 706.96

Profit after tax (Rs.Lakhs) 701.33 464.43

Net Profit Margin (%) 3.83 3.28

Return on Net Worth (%) 17.74 12.71

Return on Capital Employed (%) 9.84 7.02

Dividend (%) 21 18

FINANCE

All the repayment and interest commitments were met as per terms of arrangement with the Banks.

SHAREHOLDER RETURN

The company paid an interim dividend of 8% during the year. Including the proposed final dividend of 13%, total dividend for the fiscal 2011 amounted to 21 % (Rs 2.10 per share) as against 18% last year. This yields an impressive return of more than 8% on the average price of the company's share (Rs 25.70) during the financial year.

Whereas Sensex and overall market gained about 10% each in fiscal 2011, Sree Sakthi Paper scrip fetched a capital appreciation of more than 38%.

DEVELOPMENTAL PLANS

The Company has scheduled its expansion-cum- modernization plans in a phased manner. Technology up- gradation projects were already completed and certain other projects are on progressing stages. The details of which are given below;

Twin Wire Technology at Kraft paper Unit I

The Unit upgraded to twin wire technology along with additional dryers in August 2010 and the modernization had enabled the Unit for improvement in production and profit margins partly in the FY 2010-1 I. Full year benefits on account of modernization of this Unit will accrue from FY 201 1-12 onwards. Modernization helped to upgrade and improve the quality of the products to meet the requirements in the medium segment of the Industry.

Triple Wire Technology at Kraft paper Unit 2

The Unit upgraded to triple wire technology from twin wire technology in October 2010. The up-gradation along with adding of dryers embarked improvement in production volume and profitability in the year under review. Full year benefit on account of the up-gradation in the technology will accrue from FY 2011-12 onwards. Modernization enabled the Unit to upgrade and improve the quality of the products to meet the requirements in the high end segment of the industry.

Fiber treatment at Kraft Paper Unit -2

As indicated in the last year, the company imported Krima Disperser Equipment from Sweden. The equipment was imported at 3% Concessional duty under EPCG Scheme. The equipment is meant for dispersing contaminants like wax, bitumen, ink spots, stickers, etc. in the pulp in the stock preparation process. The addition of dryers at the Kraft Paper units , enables the higher production and due to this steam constraint was occurred . Hence the commissioning of krima disperser is rescheduled along with the Boiler Project. Now the installation work is progressing and expected to be completed before the 2nd quarter in FY 2011-12.

Captive power - Co-generation Plant

As decided, the Boiler cum Cogeneration Project at Kraft Paper Units is going as per the schedule. Civil design and excavation works already completed and the part of the boiler and turbine equipments already reached at the factory. The Project expected to complete in the 3rd Quarter of FY 2011-12. The project will be helpful to the company to meet its steam requirement and will also cater to about 30 - 40% power requirement. By Installation of new boiler, there will be improvement in the steam pressure and improve drying capacity by 15%.

Press and Steam and Condensate Systems at Kraft Paper Unit I

As part of modernization program , the installation of Press and Steam & Condensate System in Kraft Paper Unit I are also scheduled in FY 2011-12 and expected to complete the same by 3rd Quarter of FY 2011-12. The improvement of production volume by 10% is expected on account of this.

Carbon credit through Methane Recovery Project

As reported in the last year, the detailed engineering work of the project was entrusted with M/s.KITCO, ieading enginerring consultancy orgainsation at Cochin.Their reports have been received and the same being examined.

Small Hydro Projects

As reported in the previous year's Report, Your company is pursuing with Government of Kerala for assistance in connection with the land acquisition for the hydro-electric projects.

EXPORT PERFORMANCE

Your company exported 1786 MT of paper and paper boards during the year as compared to 744 MT during the previous year. The export amounted Rs.383.08 lakhs as against Rs 147.61 lakhs in the previous year.

SUBSIDIARY COMPANIES

As of 31st March 201 I the company had 3 subsidiaries viz. Sree Kailas Palchuram Hydro Power Limited, Sree Adisakthi Mukkuttathode Hydro Power Limited and Jalashaayi Alamparathode Hydro Power Limited by virtue of the Company having control on the Board of these companies.

The Board of directors of the company at its meeting held on 30.05.2011 decided to avail the exemption under section 212 of the Companies Act, 1956 pursuant to GC No.2/ 2011 dated 08.02.2011 issued by the Central Government. As required in the Circular , the consolidated financial statements audited by the Statutory Auditors of the company attached along with the Annual Reports of the company. Annual accounts of the subsidiary companies and the related detailed information would be sent to those shareholders seeking information in this regard at any point of time. Further annual accounts of the subsidiary companies would be available for inspection by any shareholders at the registered office of the company.

INDUSTRIAL RELATIONS

The industrial relations remained cordial and satisfactory during the year under review.

INTERNAL CONTROL SYSTEM

Your Company has adequate internal control and internal check system commensurate with size of the organization.

BOARD OF DIRECTORS

In accordance with Article 83 of the Articles of Association, of the Company, Mr.S. Sivathanupillai, Mr.A.S. Unni, and Mr. N. Ravindranathan, directors of the Company retire on rotation, and they being eligible offer themselves for re- appointment.

Mr.T.S.Anantharaman was appointed as an additional director at the meeting of the Board of Directors of the companyheid on 30.05.2011. In accordance with the provisions of the Companies Act, 1956 he would hold office of the director up to the date of ensuing Annua! General Meeting. The Company has received a notice in writing from a member proposing the candidature of Mr.T.S.Anantharaman for the office of the director liable to retire by rotation along with a deposit of Rs.500/- as required under the Companies Act, 1956 and accordingly proposal has been placed for your approval.

AUDIT COMMITTEE

The Audit Committee of the Board consists of four members and all of them are Non Executive Directors, viz., Mr.A.S.Unni,Mr.N.Ravidranathan, Mr.Deveshwer Kumar Kapiia, and Mr.S.Sivathanupiilai. Mr.A.S.Unni is the Chairman of the Audit Committee.

AUDITORS

M/s Balan & Co. Chartered Accountants, the present Auditors of the Company retire and are eligible for re-appointment and the proposal has been placed before you. Necessary certificate has been obtained from the Auditors as per section 224( I) of the Companies Act, 1956.

FOREIGN EXCHANGE EARNINGS AND OUT-GO

During the year under review, Foreign Exchange earned by the Company by way of exports proceeds is Rs. 413.02 Lakhs The foriegn Exchange outgo for the company for import purchases - Rs. 4634.73 lakhs, Export Commission- Rs.7.04 lakhs and Export Claim - Rs.5.55 lakhs

PARTICULARS UNDER SECTION 217

Conservation of Energy, Technology Absorption

Statement of particulars under section 217(1) (e) of the Companies Act, 1956 are annexed as Annexure -I

Particulars of Employees

None of the employees of the company coming under the provisions of section 217(2A) of the Companies Act, 1956 . Details of managerial remuneration are disclosed in Notes on Accounts - Schedule 21 B (Point No. i) forming part of the Annual Report.

CORPORATE GOVERNANCE

The Company's Equity Shares are listed with Bombay Stock Exchange. The Company has implemented all the mandatory provisions of Clause 49 of the Listing Agreement relating to the Corporate Governance. The Report on Management's Discussion and Analysis and Report on Corporate Governance are forming part of Directors' Report and are annexed as Annexure -II and Annexure - III. As required by the Listing Agreement, an Auditors' Certificate on Corporate Governance and a Declaration by the Vice Chairman and Managing Director with regard to Code of Conduct are attached to the said Report. Further, as required by Clause 49 of the Listing Agreement, a Certificate, duly signed by the Vice-Chairman and Managing Director and General Manager-Finance, was submitted to the Board of Directors on the financial statements and cash flow statement of the Company for the year ended March 31,2011 at the Meeting held on May 30, 2011.

Initial application for Listing of shares with National Stock Exchange (NSE) has been submitted and approval from NSE is awaited. Further particulars called for to determine the eligibility criteria have been submitted.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 Directors report that

1. In the preparation of the annual accounts for the financial year ended 31st March 2011 the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. The directors had selected such accounting policies and applied them consistently and made judgment and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the company for the year under review.

3. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in ac- cordance with the provisions of the Act, for safeguard- ing the assets of the company and for preventing and detecting fraud and other irregularities.

4. The directors had prepared the Annual Accounts for the financial year ended 31st March 2011 on a 'going concern' basis.

ACKNOWLEDGEMENT

The Board places on record ,its appreciation for the co- operation and support received from shareholders, custom- ers, suppliers, employees, government authorities and banks.

By and on behalf of the Board of Directors

Sd/- S. Sivathanu Pillai CHAIRMAN

Place : Cochin -16 Date : 01.08.2011


Mar 31, 2010

The Directors have pleasure in presenting their 19th Annual Report and the Audited Financial Statements of the Company for the year ended 31st March 2010.

REVIEW OF OPERATIONS 2009-2010

During the year, the companys production increased by about 5%, from 68692 MT to 71926 MT on account of our continuous modernization efforts. Capacity utiliza- tion improved from 81% to 85%.

The gross turnover was Rs. 14753.18 lacs for the year under review, as compared to Rs. 14416.14 lacs in the previous year. The increase of about 2% in turnover is on account of improvement in sales volume. The average sales realization was less due to competitive pressures, especially in the first half of the year. How- ever the prices improved and stabilized by second half and enabled the company to achieve higher turnover.

The Earnings before interest, depreciation and tax was Rs. 1564.61 lacs, as against Rs. 1255.46 lacs in the previous year - a significant improvement of 25% over the previ- ous year. EBITDA Margin strengthened by 190 basis points. Major factors that contributed to higher profit- ability were reduction in the price of imported raw materials and change in the raw materials consumption pattern. The average price of imported raw materials declined about 21% and consumption of imported raw materials during the year increased by 3%. Further, the adverse impact on account of foreign exchange fluctua- tion was less this year as compared to the previous year.

After absorbing interest/financing charges and deprecia- tion of Rs.515.14 lacs and Rs.342.51 lacs respectively, the profit before tax was Rs.706.96 lacs as compared to Rs.483.66 lacs in the previous year. Tax provision for the year under review was Rs.242.31 lacs as against Rs. 153.28 lacs in the previous year. There was no MAT credit entitlement during the year as compared to Rs.60.80 lacs in the previous year. Profit after Tax of the company for the year ended March 2010 rose sharply, by 40%, to reach Rs.464.43 lacs as compared to Rs.33 1.79 lacs in the previous year, reflecting an improvement of 87 basis points in Net Profit Margin. Return of capital employed improved by 44% and Return on Net worth increased by 35%.

Capital expenditure incurred by the Company during the year under review was Rs.406.26 lacs. Productive Assets (Gross Block) increased by about 6% on account of modernization.

The operational efficiency of the company also improved by way of better working capital management, which was reflected by shorter debtor turnaround time, vast improvement in cash flows, significant rise in net cash generation and significant reduction of working capital borrowings despite higher turnover in FY 2009-10.

FINANCIAL PERFORMANCE

(Rs./Lacs) For the For the

year ended year ended

Particulars 31.03.2010 31.03.2009

Sales (Gross) 14753.18 14416.14

Less : Excise Duty 601.14 707.51

Sales (Net) 14152.04 13708.63

Operating Profit 1564.61 1255.46

Interest and Finance 515.14 464.31

Depreciation 342.51 307.49

Profit before tax 706.96 483.66

Provision for tax 242.31 153.28

Income Tax provision

w/off/(w/backx 0.22 (1.41)

Profit after tax 464.43 331.79

Balance of profit

brought forward 100.98 74.63

Amount available

for appropriation 565.41 406.42

Appropriation

General Reserve 100.00 17.00

Proposed dividend

& tax on dividend 341.56 288.44

Retained profit carried

to Balance sheet 123.85 100.98

FINANCIAL HIGHLIGHTS

PARAMETERS 2009-10 2008-09

EBITDA Margin (%) 11.1 9.1

Net Profit Margin (%) 3.3 2.4

Return on Investment (%) 7.0 4.9

Return on Equity (%) 12.7 9.4

Gross Block (Rs./Lacs) 6918.93 6543.26

Debtor Days 49 49

Net cash from operations

(Rs./Lacs) 1528.99 679.76

Dividend (%) 18 15

FINANCE

All the repayment and interest commitments were met as per terms of arrangement with the Banks.

DIVIDEND

For the first time in the companys history an interim dividend of 9% was paid during the year. With the pro- posed final dividend of another 9%, total dividend amounts to Rs 1.80 per share. This yields an impressive return of 10% on the average price of the companys share (Rs 18) during the financial year. In accordance with the provisions of the Income Tax Act, no tax will be de- ducted at source on the dividend but your company will absorb Rs.45.71 lacs towards tax on distributed profits.

DEVELOPMENTAL PLANS

a. Expansion-cum-Modernization: As indicated in the previous years Report, the company has sched- uled its expansion-cum-modernization plans in a phased manner. As a result of modernization com- pleted at the Duplex Board Unit in the previous year, the company was able to manufacture high quality paper to cater to the needs of high-end segment.

Kraft paper Unit I

Kraft Paper Unit I has already been modernized and its capacity has been upgraded to 80 tpd by adding more dryers and installing second wire. Installation of second wire was completed in August 2010. The Unit manufactures kraft paper conforming to 14 -20 bf (bursting factor) and 100 to 150 gsm quality, the modernization program enabled the Unit to upgraded the quality to 18 -28 bf with a gsm range of 120 to 250 gsm and helped the company to retain the cus- tomers in medium segment.

Kraft paper Unit 2

Your company plans to modernize the Kraft Paper Unit 2, by adding dryers and by installing Third Wire. At present Kraft paper Unit-2 has two wires involved in the manufacture of kraft paper conforming 18-30 bf and 80 to 300 gsm quality. With the installation of the third wire, the company would be able to up grade the quality to 22-34 bf and 80-450 gsm. With the third wire, the company would be able to cater to the needs of high-end segment, whose demand is huge.

Fiber treatment at kraft Paper Unit-2

Your company has proposed to install Krima Disperser Unit, which is meant for dispersing con- taminants like wax, bitumen, ink spots, stickies, etc. in the pulp in the stock preparation process. The equipment has already been ordered and it is expected to be commissioned by October 2010.

Captive power - Co-generation Plant

Your company has also decided to install a 25 tone high pressure boiler with 2 MW back pressure turbine. The project will be helpful to the company to meet its entire steam requirement and will also cater to about 30 - 40% power requirement.

The modernization program of Kraft Paper Units involves an outlay of about Rs.20 crore. This is being met partly through debt and partly by internal accruals.

The expansion plans are designed in a scientific way that one Unit can cater the needs of medium seg- ment and the other unit would take care of the high- end customers. Further with the planned expansion, the company could be able to cut down the produc- tion cost, expand product range, retain its strong hold on medium segment customers and offer its products to high-end customers. Moreover, with the planned expansion the company would be able to scale up its production upto 1,00,000 MT per an- num. The expansion-cum-modernization of your com- pany is scheduled to be completed by October 2010.

b. Carbon credit through Methane Recovery Project

Your companys project titled - "Methane recovery from wastewater generated at Paper manufacturing unit of Sree Sakthi Paper Mills Ltd., Kerala" was reg- istered under CDM of UNFCC on October 01, 2009. The estimated emission reduction is 3923 metric tones of C02 equivalent per annum. The detailed engineering of the Project is entrusted with M/s.KITCO, a leading engineering consultancy orga- nization at Cochin and is in progress.

c. Small Hydro Projects

As reported in the previous years Report, Your com- pany is pursuing with Government of Kerala for as- sistance in connection with the land acquisition for the hydro-electric projects. The TEFR approval for the Palchuram Project is yet to be received.

EXPORT PERFORMANCE

Your company exported 744 MT of paper and paper boards during the year as compared to 8862 MT during the previous year. The export amounted Rs. 147.61 lacs as against Rs 1764.87 lacs in the previous year. The Company scaled down its exports due to un-remunera- tive prices prevailing in international markets.

AWARDS - EXPORT HOUSE STATUS

Your company is granted with the Status Certificate of Export House by Government of India, Ministry of Com- merce, Director General of Foreign Trade (DGFT). The certification is valid from April 01, 2009 to March 31, 2014. As such the Company is eligible for all the ben- efits of status holder as per EXIM Policy.

SUBSIDIARY COMPANIES

As of 31st March 2010 the company had 3 subsidiaries viz. Sree Kailas Palchuram Hydro Power Limited, Sree Adisakthi Mukkuttathode Hydro Power Limited and Jalashaayi Alamparathode Hydro Power Limited by vir- tue of the Company having control on the Board of these companies. The reports as required under section 212 of the Companies Act, 1956 and consolidated financial statement as required by the Listing agreement is also attached with the Annual Reports of the Company.

INDUSTRIAL RELATIONS

The industrial relations remained cordial and satisfac- tory during the year under review.

INTERNAL CONTROL SYSTEM

Your Company has adequate internal control and internal check system to ensure that the assets are safeguarded and transactions are authenticated and correctly recorded and reported. During the year the company appointed M/s.Peethambaran & Company, Cochin, as Internal Auditor to review and strengthen the internal controls in the company.

BOARD OF DIRECTORS

In accordance with Article 83 of the Articles of Associa- tion of the Company, Mr.S. Giridhar, Mr..U. Gururaja Bhat, and Smt. E. Kamalam, directors of the Company retire on rotation, and they being eligible offer them- selves for re-appointment.

AUDIT COMMITTEE

The Audit Committee of the Board consists of four mem- bers and all of them are Non Executive Directors, viz.,

Mr.A.S.Unni, Mr.D.K.Kapila, Mr.N.Ravidranathan and Mr.S.Sivathanupillai. Mr.A.S.Unni is the Chairman of the Audit Committee.

AUDITORS

M/s Balan & Co. Chartered Accountants, the present Auditors of the Company retire and are eligible for re- appointment and the proposal has been placed before you. Necessary certificate has been obtained from the Auditors as per section 224( I) of the Companies Act, 1956.

FOREIGN EXCHANGE EARNINGS AND OUT-GO

During the year under review, foreign exchange earned by the Company by way of exports proceeds is Rs. 117.13 Lacs. The foreign exchange outgo for the company were for import purchases - Rs. 3606.40 lacs, Export Commission - Rs. 14.42 lacs and Export Claim - Rs.6.79 lacs.

PARTICULARS UNDER SECTION 217

Conservation of Energy, Technology Absorption

Statement of particulars under section 217( I) (e) of the Companies Act, 1956 are annexed as Annexure -I

Particulars of Employees

Statement of particulars under section 2I7(2A) of the Companies Act, 1956 are annexed as Annexure -II

CORPORATE GOVERNANCE

The Companys Equity Shares are listed with Bombay Stock Exchange. The Company has implemented all the mandatory provisions of Clause 49 of the Listing Agree- ment relating to the Corporate Governance. The Report on Managements Discussion and Analysis and Report on Corporate Governance are forming part of Direc- tors Report and are annexed as Annexure -III and An- nexure - IV. As required by the Listing Agreement, an Auditors Certificate on Corporate Governance and a Declaration by the Vice Chairman and Managing Direc- tor with regard to Code of Conduct are attached to the said Report. Further, as required by Clause 49 of the Listing Agreement, a Certificate, duly signed by the Vice- Chairman and Managing Director and General Manager- Finance , was submitted to the Board of Directors on the financial statements and cash flow statement of the Company for the year ended March 31, 2010 at the Meeting held on May 29, 2010.

Initial application for Listing of shares with National Stock Exchange (NSE) has been submitted and approval from NSE is awaited.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 Directors report that

1. In the preparation of the annual accounts for the financial year ended 31st March 2010 the applicable accounting standards had been followed along with proper explanation relating to material departures.

2. The directors had selected such accounting poli- cies and applied them consistently and made judg- ment and estimates that were reasonable and pru- dent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the company for the year under review.

3. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for

safeguarding the assets of the company and for pre- venting and detecting fraud and other irregularities.

4. The directors had prepared the Annual Accounts for the financial year ended 31st March 2010 on a going concern basis.

ACKNOWLEDGEMENT

Your directors wish to thank the Government authori- ties, Banks, Shareholders customers, dealers, suppliers and employess of the company for their continued co- operation and support.

By and on behalf of the

Board of Directors

Sd/-

Place: Cochin -16 S. Sivathanu Pillai

Date : 31.07.2010 CHAIRMAN

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