Mar 31, 2022
The Board of Directors has the pleasure in presenting its 58th Report along with the Audited Financial Statements for the year ended March 31,2022.
The performance of the Company for the financial year under consideration has witnessed significant improvement throughout the financial year. These results were driven by higher sales volume and higher sales price realization. Improved productivity from our mills helped to generate more volumes. The Company continued to focus on important initiatives for improving safety and environmental compliance as well as improving the customer experience and operational efficiencies.
(H in crores) |
||
Particulars |
For the year ended March 31, 2022 |
For the year ended March 31, 2021 |
Revenue from Operations |
1,380.23 |
886.75 |
Earnings before interest, depreciation and taxation (EBITDA) |
265.81 |
76.11 |
Finance costs |
5.45 |
4.51 |
Depreciation |
72.01 |
73.38 |
Profit / (Loss) before exceptional items |
188.35 |
(1.79) |
Exceptional items |
- |
(4.41) |
Profit / (Loss) before tax |
188.35 |
(6.20) |
Tax expense |
48.62 |
(1.60) |
Profit / (Loss) for the year |
139.73 |
(4.60) |
There was no change in the nature of business during the year.
The Board of Directors at their Meeting held on May 5, 2022 recommended a dividend of Rs. 7.50 per equity share of Rs.10/-each, for approval of the Shareholders at the forthcoming Annual General Meeting, and is incompliance with the Dividend Distribution Policy of the Company. The said Policy is disclosed on the Company''s website: www.andhrapaper.com.
Markets, Customers and Commercial Excellence
The Company continues to believe in âCustomer Firstâ and its endeavour to create more value for Customers.
The Company''s products are predominantly used for printing, publishing and converting for the W&P segment. However, with changing environment due to COVID 19 first wave the Company went in the direction to produce Value Added Products like Cupstock, Pharma Print and Kraft. This capability helped in the second wave resulting in increased sales of Cupstock (YoY 38%), High BF Virgin Kraft (YoY 1893%) and Pharma Print (YoY 110%).
Apart from developing new products, keeping industry dynamics in mind, continuous endeavour is being made to improve the existing products based on feedback from customers & channel partners to make our products suit their requirements.
The Company overcame the challenging situation in Q1 & Q2 by leveraging the existing Export Network and existing Product Portfolio to balance the supply position into Exports resulting in increased sales of 177% YOY.
With focus on meeting the changing work environment from WFH to Offices in the later part of the year, the copier products were given thrust resulting in YoY growth of 37%.
It is therefore gratifying that even during these trying times the Company''s performance ranked amongst the best in the paper industry. Despite the volatility in Q1 & Q2 during the partial lockdowns, online classes and WFH, the Company achieved the highest sales in a year at 2,40,479 Tons (YoY 39%) with Zero Stock at the close of the year.
Though FY 2021-22 was another challenging year which was mainly affected by partial lockdowns, WFH, closure of Educational Institutions and restrictions on logistics due to Covid-19, the Company had put in its best efforts to achieve OTIF delivery rate (On- Time-In-Full) at 95%, forecast accuracy to 92.5% and improved complaint closure to ~84% which is top tier in the Indian paper industry.
The Company''s concept of âThink Customerâ continues to yield desired results to enhance customer value by way of offering âright products for right applicationsâ at an increased speed to address customer needs & grievances.
FY 2022 Highlights:
⢠Highest Sales of 2,40,479 Tons
⢠Increased Export Sales by 177%, one of the best in the Paper Industry
⢠Significant growth in VAP segment like Cup Stock (38%), Pharma Print (110%) & HBF Kraft (1893%)
⢠OTIF Score - 95%, one of the best in the Paper Industry
The Company believes that the long-term sustainability for supply of virgin fibre depends on farm-forestry program and ensuring farmer''s willingness to continue plantation of virgin fibre by improving yield of crops per unit area. The Company believes that improving yield, besides ensuring right price of the produce, is the only way by which farmer''s income can be increased. Therefore, the Company remains focused on continuous Research & Development (R&D) program for production of high yielding quality clones for increasing productivity of land. The Company remains committed in collaborating with likeminded premium institutes e.g. Institute of Forest Genetics & Tree Breeding, Coimbatore (IFGTB) to ensure right approach for capacity building of stakeholders, sharing of best practices and execution of R&D program for enhancing productivity of farmer''s land.
The Company remains committed in capacity building of local community in the journey envisaged for long-term sustainability for supply of virgin fibre through farm-forestry program. With this vision, the Company has embarked on a journey of developing partner nurseries in respective areas within a radius of 150 KM from the Mills to cater to the requirement of clones of farming community to increase plantation in the catchment area for sustainable supply of virgin fibre. The Company had partnered with 19 Clonal Production Centres (CPC) during the year for production and distribution of high yielding Casuarina clones. The Company continues to reach out to farmers, create awareness on the price offered and ensuring that farmers get maximum benefit in the supply chain of Virgin Fibre.
The Company has facilitated distribution of 563 lakhs of Casuarina clones and seedlings combined, covering 6,327 hectares of land and generated 31.6 lakhs man-days of employment to the farmers under the farm-forestry program within the catchment area.
Employee Development and Engagement
The Company''s agenda for engaging and developing its employees includes initiatives to attract, develop and retain talent. The key focus areas include diversity and inclusion, succession planning, developing a talent pool for critical positions, quality of life programs and leadership development.
The Company has taken a professional approach to industrial relations. The Company continued to treat people with dignity and respect as well as upheld important principles of labour relations.
Leveraging the power of Information Technology
During the year under review, the Company achieved lot of IT effectiveness in business areas and enhanced the technological use in organisation.
Over the year 2021-22 there has been significant improvement in the IT Division''s innovation, improvements of applications, delivery of user''s service, project management and the overall contribution to the organisation''s mission and goals.
Enhancement of the performance of SAP S/4 HANA as it relates to complex and time driven business activities such as real-time planning, execution, reporting and analytics based on live data, as well as prompt period closing and improved forecasting including SAP Analytics on Cloud (SAC) for insights and decision making and proliferation of visualisation tools like Power BI across the function.
The following projects were implemented during the year and successfully rolled out:
⢠SAP Treasury and Risk Management applications;
⢠SAP GRC (Governance Risk Compliance) application in identifying and managing risks in a proper manner.
⢠SAC (SAP Analytic Cloud)
⢠Developed in-house REEL WRAPING integration system with SAP
⢠Alternate printing solution against HP Managed printing service
⢠Implemented in- house grievance system for cost optimisation of Cloud GRIVANCE SYSTEM and successfully rolled out.
Outsourced Share Point portal service
⢠CYBERSECURITY implemented by CISCO umbrella, AMP, endpoint security with dual factor e-mail security system
⢠SharePoint
⢠Kronos - Contractor Management System (CMS) to provide a single window experience for HR
⢠Zoom video collaboration system with added benefit of reducing the costs, time and network bandwidth
Community Service and Engagement
The Company is committed to the cause of communities where it operates, by supporting Education, Health & Wellness and other genuine requirements of the people therein.
The Company considers the community as its key stakeholder and is one of the foremost proponents of inclusive growth and has continued to undertake projects for overall development and welfare of the society in the fields of health, education, rural development and livelihood interventions etc., and is sensitive to its needs. The Company also extended co-operation and assisted the local administration in taking various preventive and safety measures.
The Company had adopted a CSR Policy which is placed on the Company''s website: www.andhrapaper.com. The Members of Corporate Social Responsibility Committee as on March 31, 2022 comprised of:
Mr. Virendraa Bangur |
- Chairman |
Mr. Saurabh Bangur |
- Member |
Mr. Sudarshan V. Somani |
- Member |
Mr. Rajendra Jain |
- Member |
The Annual Report on CSR activities is attached as Annexure - 1 to this report.
During the year, the Company was awarded âBest Safety Performer for the year 2021â by Confederation of Indian Industry for Unit: Kadiyam.
All related party transactions that were entered into during the financial year under review were at arm''s-length basis and also in the ordinary course of business. There were no material significant related party transactions entered into by the Company with the Promoters, Directors, Key Managerial Personnel which may have a potential conflict with the interests of the Company at large.
The Board of Directors approved a Policy on Related Party Transactions which is placed on the Company''s website www. andhrapaper.com. The disclosures on related party transactions are given in Notes to the financial statements.
The Company has adopted the Nomination and Remuneration Committee Charter which contains, inter alia, framework for Directors'' appointment and remuneration, criteria for determining
the qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) of the Companies Act, 2013 (âThe Actâ).
Pursuant to Section 178(4) of the Act, the Company also adopted Remuneration Policy relating to remuneration for the Directors, Key Managerial Personnel and Senior Executives in the rank of Vice President and above. The Remuneration Policy is placed on Company''s website www.andhrapaper.com.
Energy Conservation, Technology Absorption & Foreign Exchange earnings and outgo
Particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given in Annexure - 2 attached to this Report.
The Company has a robust business risk management framework to identify and evaluate business risks and opportunities. This framework aims to create transparency, minimize adverse impact of risks on the business objectives and enhance the Company''s competitive advantage. Some of the critical risks that have been identified are Fibre Procurement, Competition risk, Occupational Health & Safety, etc.
a. During the year under review, Mr. Mukesh Jain has been appointed as a Whole-time Director designated as Director -Commercial & Key Managerial Personnel effective November 10, 2021 in place of Mr. Anish T. Mathew who resigned as a Director of the Company effective November 09, 2021.
b. Independent Directors
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 (6) of the Act and Regulations 16(1 )(b) and 25(8) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âthe SEBI Listing Regulationsâ) and that they are independent from the Management of the Company and they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact his ability to discharge his duties with an objective independent judgment and without any external influence. Further, all the Independent Directors have given declarations that they complied with the provisions of Companies (Appointment and Qualifications of Directors) Rules, 2014. Further they have given declarations that they have complied with the Code for Independent Directors prescribed in Schedule IV to the Act and the Code of Business Conduct and Ethics of the Company.
A separate Meeting of Independent Directors was held on January 19, 2022. All the Independent Directors of the Company attended the said Meeting.
Mr. Praveen P. Kadle and Mr. Adhiraj Sarin, Independent Directors, completed their second term on March 31,2022 and the Company filled the vacancies by appointing Mr. Virendra Sinha and Mr. Sitaram Sharma as Independent Directors of the Company for a period of 3 years effective April 1, 2022.
c. Non-Executive Directors
Mr. Virendraa Bangur, Director, is liable to retire by rotation at the ensuing Annual General Meeting, as per the provisions of the Companies Act, 2013 and being eligible, offered himself for reappointment.
d. Details of Key Managerial Personnel
As on March 31, 2022, Mr. Shree Kumar Bangur, Chairman & Managing Director, Mr. Saurabh Bangur, Joint Managing Director, Mr. Mukesh Jain, Director - Commercial and Mr. Aravind Matta, Company Secretary & Vice President (Corporate Affairs) are the Key Managerial Personnel of the Company.
The Board at the Meeting held on May 5, 2022 has appointed Mr. Mukesh Jain as Chief Financial Officer effective May 5, 2022 and re-designated him as Director - Commercial & Chief Financial Officer.
e. Meetings of the Board
During the year under review, four Board meetings and four Audit Committee meetings were held. The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Companies Act, 2013. The details of the meetings held are given in the Corporate Governance Report forming part of this Report.
f. Performance Evaluation
Pursuant to the provisions of the Act and SEBI Listing Regulations, the Annual performance evaluation of Board, its Committees, Chairman & Managing Director, Joint Managing Director and Director - Commercial has been carried out based on various parameters.
A separate exercise for the financial year 2021-22 was carried out to evaluate the performance of all individual directors including Independent Directors who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interests of the Company and its minority shareholders etc.
g. Board Training and Induction
At the time of appointing a Director, a formal letter of appointment is given to him/her, which inter alia explains the role, function, duties and responsibilities expected of him/her as a Director
of the Company. The Director is also explained in detail the compliances required from him/her under the Act, the SEBI Listing Regulations and other relevant Laws and Regulations. Details of Familiarization of Directors are disclosed on the Company''s website www.andhrapaper.com.
h. Audit Committee
During the year, the Audit Committee has been reconstituted by replacing Mr. Shree Kumar Bangur with Mr. Saurabh Bangur as a Member of the Committee.
The Audit Committee as on March 31, 2022 comprised of Mr. Praveen P. Kadle as Chairman and Messrs Adhiraj Sarin, Arun Kumar Sureka and Saurabh Bangur as other Members. All the recommendations made by the Audit Committee were accepted by the Board.
The information required pursuant to Section 197 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, is provided in Annexure-3. Having regard to the provisions of the second proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. If any Member is interested in obtaining information on Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, such Member may, write to the Company Secretary at the Registered Office in this regard or can inspect the related documents/information at the Registered Office of the Company.
The Company has adopted Whistle Blower Policy to deal with instance of fraud or any unethical or improper practices. A copy of this Policy is placed on the Company''s website www.andhrapaper.com.
The Company established internal financial control(s) commensurate with the size, scale and complexity of the operations. Internal audit function is being handled by a professional firm of chartered accountants. The main function of Internal Audit is to monitor and evaluate adequacy of internal control system in the Company, its compliance with the operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners take corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions are reported to the Audit Committee.
Statutory Auditors audited the Internal Financial Controls (IFC) over financial reporting of the Company as of March 31,2022 in conjunction with audit of the financial statements of the Company for the year ended on that date. Unmodified opinion on IFC was given by them.
The Report of Auditors for the fiscal year 2022 does not have any qualifications, reservations or adverse remarks. The Report is enclosed with the financial statements in this Annual Report.
The Members of the Company at the 55th Annual General Meeting held on August 1, 2019 re-appointed Messrs Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors of the Company for a second term of three years to hold office from the conclusion of 55th Annual General Meeting till the conclusion of the ensuing 58th Annual General Meeting.
Messrs Deloitte Haskins & Sells, Chartered Accountants, Statutory Auditors of the Company are completing their second term at the ensuing AGM and are not eligible for re-appointment. The Board at its Meeting held on May 5, 2022 considered the recommendation of Audit Committee and recommended to the Members, the appointment of Messrs MSKA & Associates, Chartered Accountants, as Statutory Auditors of the Company in place of retiring auditors, for a term of five years, to hold office from the conclusion of 58th Annual General Meeting till the conclusion of 63rd Annual General Meeting corresponding to the financial years from 2022-23 to 2026-27.
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Messrs D. Hanumanta Raju & Co., a firm of Company Secretaries to undertake the secretarial audit of the Company for the financial year 2021-22. Secretarial Audit Report under Section 204(1) of the Act issued by Messrs D. Hanumanta Raju & Co., Practicing Company Secretaries, in respect of financial year 2021-22 is attached as Annexure - 4 to this Report.
The Report of Secretarial Auditors does not have any qualifications, reservations or adverse remarks.
In terms of Section 148 of the Act read with the Companies (Audit & Auditors) Rules, 2014, the Board at their Meeting held on May 5, 2022, on the recommendation of Audit Committee, appointed M/s. Narasimha Murthy & Co., Cost Accountants as Cost Auditors of the Company for the financial year 2022-23, at a remuneration of Rs.4.00 lakhs (excluding applicable taxes) plus reimbursement of out-of-pocket expenses and their remuneration is being submitted for ratification by the Members at the forthcoming Annual General Meeting.
Cost Accounting Records and Cost Audit
Cost accounting records for the financial year under review were maintained as per the Companies (Cost Records and Audit) Rules, 2014. M/s. Narasimha Murthy & Co., Cost Accountants were
appointed as Cost Auditors of the Company to audit the Cost Records for the year ended March 31,2021. The Cost Audit Report for the financial year ended March 31,2021 was filed with the Ministry of Corporate Affairs in August, 2021.
The Cost Audit Report for the year ended March 31,2022 will be filed within the due date.
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
Particulars of loans, guarantees, security or investments
The particulars of loans, guarantees, securities and investments covered under the provisions of Section 186 of the Act have been disclosed in the financial statements.
The Company made an investment of Rs.5.00 lakhs by way of share capital in Andhra Paper Foundation (âFoundationâ), incorporated under Section 25 of the Companies Act, 1956, wherein the excess of income over expenditure will be applied for promoting its objectives. Accordingly, the accounts of Andhra Paper Foundation were not consolidated, since the holding Company will not derive any economic benefit from its investment in Foundation.
The Company undertakes that annual accounts of Foundation and the related information will be made available to the members of holding company seeking such information at any point of time. The annual accounts of Foundation are placed on the Company''s website www.andhrapaper.com and are also available for inspection by any member at the Registered Office of the Company during business hours on all working days of the Company. A statement containing salient features of the financial statement of Foundation for the financial year ended March 31,2022 is attached as Annexure - 5 to this Report.
In terms of Section 92(3) of the Act, the Annual Return for the financial year ended March 31,2022 is displayed on the website of the Company https://www.andhrapaper.com/index.html.
Business Responsibility Report (âBRRâ)
Pursuant to Regulation 34 of the SEBI Listing Regulations, âBusiness Responsibility Report'' forms part of this Report as Annexure - 6, which describes the initiatives taken by the Company from an environmental, social and governance perspective.
Material changes and commitments affecting the financial position of the Company which occurred between end of financial year and date of the Report
There were no material changes and commitments affecting the financial position of the Company which occurred between end of financial year and date of the Report.
Directorsâ Responsibility Statement
The Board of Directors hereby confirms and declares that:
⢠in the preparation of final accounts for the year ended March 31, 2022 the applicable accounting standards had been followed;
⢠they had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the financial year end March 31,2022 and of the profit and loss of the Company for the year;
⢠they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
⢠they had prepared the accounts for the year ended March 31, 2022 on a âgoing concern'' basis;
⢠they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
⢠they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
⢠During the year under review, the Chairman & Managing Director of the Company has not received any remuneration or commission from the subsidiary company.
⢠There were no significant material orders passed by the regulators or courts or tribunals which would impact the going
concern status of the Company and its future operations
⢠During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143 (12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees.
⢠The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All women employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year, no complaints were received by the Company under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
⢠The Company has complied with all the applicable laws, rules, regulations and Secretarial Standards.
⢠All Policies as required under the Act or the SEBI Listing Regulations are available on the website of the Company www.andhrapaper. com.
The Board of Directors wish to place on record their gratitude to the Central Government, Government of Andhra Pradesh, Government of Telangana and Banks for their continued support during the year.
The Board of Directors wish to convey their thanks to the valued customers and dealers for their continued patronage and place on record their appreciation of the contribution made by all the employees during the year under review.
For and on behalf of the Board
Place: Rajahmundry Shree Kumar Bangur
Date: June 22, 2022 Chairman & Managing Director
Mar 31, 2019
BOARD''S REPORT
Dear Members,
The Board of Directors has the pleasure in presenting its 55th Report along with the Audited Accounts for the year ended March 31, 2019.
Performance Review
During the financial year 2018-19, the Company recorded an impressive performance by recording its highest EBITDA and Profit After Tax (PAT). While EBITDA registered an increase by 73%, PAT improved by 140%. These results were driven by higher sales volume, higher sales price realization and lower input cost. Improved productivity from our mills helped to generate more volume for sales revenue and lower manufacturing cost from more efficient operations. The Company continued to focus on important initiatives for improving safety and environmental compliance as well as improving the customer experience and operational efficiencies.
Summary of Financial Results (In Rs, Crores)
Particulars |
March 31, 2019 |
March 31, 2018 |
Sales and other operating income |
1427.33 |
1279.80 |
Earnings before interest, depreciation and taxation (EBITDA) |
393.16 |
226.72 |
Finance costs |
8.54 |
26.09 |
Depreciation |
67.87 |
65.81 |
Profit before exceptional items |
316.75 |
134.82 |
Exceptional items |
(5.42) |
(8.37) |
Profit before tax |
311.33 |
126.45 |
Tax expense |
111.26 |
43.39 |
Profit for the year |
200.07 |
83.06 |
Dividend
In order to conserve the resources for meeting future capital needs related to maintenance, regulatory, cost reduction and potential strategic projects, the Board of Directors have decided not to recommend dividend on the equity shares of the Company.
Markets, Customers and Commercial Excellence
Demand for Writing & Printing papers in India continues to grow. From education to publishing, to office use, the consumption of paper is moving with the many market segments that are fueling the economic growth of India. The supply and demand for paper during 2018-19 was balanced with domestic and foreign producers competing for customers and supply position. Foreign producers importing into India are aggressively positioning their products and establishing capable supply lines for selling quality products into India. As a relatively small producer, IP APPM must have high quality products, but must also distinguish itself among the competition. Over time, customers expect more from us so the commercial team is focused on improving the overall customer experience. The product itself is just one piece of the equation and we must deliver value to the customer including product choice, dependable and consistent service and capable technical support.
Our Forecast Accuracy of 81 % and On-Time-in-Full delivery rate of 92% are among the best in the Industry. This high service level has helped our channel partners to better plan their resources and commitments thus increasing the value that we can provide for both the distributer and customer.
Our concept of " Think Customer" is yielding better results to enhance customer satisfaction by way of increased speed, better On-Time-in-Full delivery and reduced Turn-Around-Time to address quality improvements. The focus on high service and delivering more value to our customers has ultimately resulted in our ability to grow sales volume by ~3% over last year.
Manufacturing, Operations and Safety
The manufacturing teams use a systematic approach and programs for managing safety and manufacturing excellence. Each year, we build improvement targets into the operating plans. The results of these programs have helped to improve safety performance by reducing incidents to the lowest level recorded among employees. The mill manufacturing teams have improved pulp and paper productivity to record levels during FY 2018-19. The productivity improvements drove lower costs for fiber, energy and chemicals and delivered record paper production and sales.
Raw Material Security
Long term access to cost effective fiber is important to our strategy. The IP APPM forestry team is building lasting partnerships with farmers, research institutions and vendors. These partnerships are important to ensure that each participant gets a benefit from their investment.
The Company continued to focus on a long term fiber security strategy by providing high quality Casuarina clones and seedlings to farmers, with an eye to develop sustained fiber supply within a catchment of 150 km radius. The Company also partnered with private nurseries to build capacity for production and distribution of clones. The Company also continued to partner with the Institute of Forest Genetic & Tree Breeding, Coimbatore (IFGTB) to ensure the broadest approach to sharing best practices, gaining knowledge and performing R&D for enhancing productivity.
All these activities shall ensure sustainable supply and long term security of virgin fiber to our mill. Our farm forestry program has led to the plantation of 2.5 million high yielding Casuarina clones, along with 32 million Casuarina seedlings within a radius of 150 Km of the mill. This covered 3,834 hectares of plantation and generated 1.92 million man-days of employment for farmers. The Company''s policy to bring down the procurement area near to the mill has further helped in rationalizing the cost of virgin fiber during 2018-19.
Employee Development and Engagement
The Company''s agenda for engaging and developing its employees includes initiatives to attract, develop and retain talent. The key focus areas included diversity and inclusion, succession planning, developing a talent pool for critical positions, quality of life programs and leadership development.
We have taken a professional approach to industrial relations. While upholding the IP philosophy of treating people with dignity and respect as well as important principles of labor relations, we engaged with the union leaders, management and government.
The Company successfully signed a long-term collective bargaining agreement, for the period January 2017 to June 2020, with Rajahmundry unit workmen on January 7, 2019. In line with the philosophy of treating people with respect and equity, the Company introduced medical insurance policy for mill workers and their spouses that will cover their hospitalization expenses.
The annual leadership conference was attended by Company''s top 70 leaders. The Company used this opportunity to recognize its leaders'' accomplishments as well as review the success, failures and learningâs from 2018. Finally, with all of the top leaders in one room, the Company reviewed the goals for next year and made sure that all are aligned on the 2019 priorities.
In May / June, 2019 the Company conducted MyView Employee Engagement Survey which is aimed at building an exceptional engagement culture that takes everyone''s view into consideration - a culture that allows for greater understanding and empowers each employee to make a positive impact. The participation rate was around 98%. The survey results are expected in August, 2019 after which necessary action plan on the feedback will be initiated.
Leveraging the power of Information Technology
In an effort to enable better decision making, provide improved management of information and ultimately provide better control of manufacturing processes, the Company has initiated a program that utilizes technology for automation and data analytics. In the long term, the benefits of automation and data analytics should create value by saving time, lowering cost and improving productivity.
Community Service and Engagement
The Company is committed to support of the communities where it operates by supporting Education, Health & Wellness and Community Engagement.
The Company had adopted a CSR Policy which is placed on the Company''s website: www.ipappm.com. The Members of Corporate Social Responsibility Committee as on March 31, 2019 comprised of:
Mr. M. S. Ramachandran (Independent Director) -Chairman
Ms Ranjana Kumar (Independent Director) - Member
Mr. Donald P. Devlin (Chairman & Managing Director) -Member
As per Section 135 of the Companies Act, 2013, the Company is required to spend a sum of '' 111.32 lakhs during the financial year 2018-19 whereas the Company spent a sum of '' 113.79 lakhs (Including donation of '' 13.83 lakhs given to IP India Foundation, a Section 8 Company) for supporting various CSR initiatives in these focus areas.
The Annual Report on CSR activities is at Annexure- 1to the report.
Awards
During the year under review, the Company received the following Awards:
a. Certificate of Appreciation for good practices in safety systems was presented in September 2018 to International Paper APPM Ltd. - Unit Kadiyam by Federation of Indian Chambers of Commerce and Industry; and
b. CSR award 2018 was presented by Janmabhoomi Committee to International Paper APPM Limited for impactful CSR projects undertaken by it in the areas of health and wellness, education and community engagement.
Related Party Transactions
All related party transactions that were entered into during the financial year under review were at arm''s-length basis and also in the ordinary course of business. There are no materially significant related party transactions entered into by the Company with the promoters, directors, key managerial personnel which may have a potential conflict with the interests of the Company at large.
The Board of Directors approved a policy on related party transactions which is placed on the Company''s website. The related party disclosures are given in Note No.35 to the financial statements.
Remuneration Policy
The Company has adopted the Nomination and Remuneration Committee Charter which includes the Company''s Policy on directors'' appointment and remuneration including criteria for determining the qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) of the Companies Act, 2013.
Pursuant to Section 178(4) of the Companies Act, 2013, the Company also adopted Remuneration Policy relating to remuneration for the directors, key managerial personnel and senior executives in the rank of vice president and above. The Remuneration Policy is placed on Company''s website.
Technology Absorption & Energy Conservation
Particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given in Annexure - 2 attached to this Report.
Risk Management
The Company has a robust business risk management framework to identify and evaluate business risks and opportunities. This framework aims to create transparency, minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. The key business risks identified by the Company and its mitigation plans are as under:
a. Fiber Procurement
The Company spends approximately 40% of its total cost on procurement of fiber viz. casuarina, subabul, mixed hard wood, eucalyptus etc. Keeping in view the criticality of this factor, the Company has been expanding farm forestry program to secure fiber supply.
b. Competition Risk
The paper industry is becoming intensely competitive with the expansion of capacities by the existing players and lower import duties. To mitigate this risk, the Company is leveraging on its expertise and experience by enhancing its brand equity/visibility and product portfolio.
c. Occupational Health & Safety (OH&S)
Safety of employees is of paramount importance to the Company. In order to inculcate safety culture in the Company, it has identified Occupational Health & Safety as one of its focus areas. Various training programs have been conducted at the plants and other locations. Accountability has been strengthened by integrating OH&S objectives into job descriptions with the introduction of management personnel and safety professionals.
Directors
a. Meetings of the Board
The Company prepares Calendar of Meetings for each calendar year and circulates the same in advance to all the Directors. During the year under review, four Board meetings and four Audit Committee meetings were held. The details of the meetings held are given in the Corporate Governance Report forming part of this Report.
b. Non-Executive Directors:
As per the provisions of Companies Act, 2013, Mr. Russell V. Harris will retire by rotation at the forthcoming Annual General Meeting and being eligible offered himself for reappointment.
c. Independent Directors
Pursuant to the Companies Act, 2013 and erstwhile Listing Agreement the Members, at the 50th Annual General Meeting held on August 27, 2014, appointed Mr. Praveen P. Kadle, Mr. Adhiraj Sarin, Ms Ranjana Kumar, Mr. Milind Sarwate and Mr. M.S. Ramachandran as Independent Directors of the Company, each for a term of five years up to March 31, 2019. The tenure of Independent Directors expired on March 31, 2019.
The Company received communication from Ms Ranjana Kumar, expressing her unwillingness for reappointment due to personal commitments. Accordingly, Ms Ranjana Kumar''s office as an Independent Director of the Company ceased with effect from closure of business hours on March 31, 2019. The Board placed on record its appreciation for her valuable guidance as Independent Director of the Company.
The Board of Directors at their meeting held on January
30, 2019, based on the recommendation of Nomination and Remuneration Committee and subject to approval of members by special resolution, reappointed Mr. M.S. Ramachandran, Mr. Praveen P. Kadle, Mr. Adhiraj Sarin and Mr. Milind Sarwate as Independent Directors of the Company, for a second term of three years effective April 1, 2019. Further, Mr. M.S. Ramachandran shall be attaining the age of seventy five years during this second term and hence approval of members by special resolution is also being sought for the same, at the forthcoming Annual General Meeting.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and that they are independent from the Management of the Company.
Separate Meetings of Independent Directors were held on May 2, 2018 and October 24, 2018.
d. Key Managerial Personnel
Mr. Donald P. Devlin, Chairman & Managing Director, Mr. C. Prabhakar, Company Secretary and Mr. Anish T. Mathew, Chief Financial Officer are the Key Managerial Personnel of the Company.
e. Performance Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of performance of Board, as well as the evaluation of the working of its Committees.
A separate exercise was carried out to evaluate the performance of individual directors including the Chairman & Managing Director who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interests of the Company and its minority shareholders etc. The outcome of Board evaluation for the financial year 201819 was discussed by the Board at the Meeting held on May 2, 2019.
f. Board Training and Induction
At the time of appointing a Director, a formal letter of appointment is given to him/her, which inter alia explains the role, function, duties and responsibilities expected of him/her as a Director of the Company. The Director is also explained in detail the compliances required from him/her under the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other relevant Laws and Regulations. Details of Familiarization of Directors are disclosed on the Company''s website.
g. Audit Committee
The Audit Committee as on March 31, 2019 comprised of Mr. Praveen P. Kadle as Chairman and Messrs. Milind Sarwate, Adhiraj Sarin and W. Michael Amick Jr. as other Members. All the recommendations made by the Audit Committee were accepted by the Board.
Annual Return
In terms of Section 134 of Companies Act, 2013, the Annual Return for the financial year ended March 31, 2019 is placed on the website of the Company.
Particulars of Employees
The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. The Directors'' Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on all working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary at the Registered Office in this regard.
Vigil Mechanism
The Company has adopted Whistle Blower Policy to deal with instance of fraud or any unethical or improper practices. A copy of this Policy is placed on the Company''s website.
Internal Financial Controls
The Company established internal financial control(s) commensurate with the size, scale and complexity of the operations. Internal audit function is being handled by a professional firm of chartered accountants. The main function of Internal Audit is to monitor and evaluate adequacy of internal control system in the Company, its compliance with the operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners take corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions are reported to the Audit Committee.
Statutory Auditors audited the Internal Financial Controls (IFC) over financial reporting of the Company as of March 31, 2019 in conjunction with audit of the financial statements of the Company for the year ended on that date. Unmodified opinion on IFC was given by them.
Statutory Auditors
The Members at the Annual General Meeting held on August 27, 2014 appointed Messrs Deloitte Haskins & Sells, Chartered Accountants, Hyderabad, as Auditors of the Company for a period of five years to hold office from the conclusion of 50th Annual General Meeting to the conclusion of the fifth consecutive annual general meeting. The term of appointment of Messrs Deloitte Haskins & Sells, Chartered Accountants concludes at this Annual General Meeting. Pursuant to the provisions of Companies Act, 2013, Messrs Deloitte Haskins & Sells, Chartered Accountants are eligible for re-appointment as Statutory Auditors of the Company for a second term of three years. Messrs Deloitte Haskins & Sells, Chartered Accountants have provided their consent and also confirmed their eligibility, for the reappointment. Re-appointment of M/s. Deloitte Haskins & Sells is being submitted for approval of the Members at the forthcoming Annual General Meeting.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Messrs D. Hanumanta Raju & Co., a firm of Company Secretaries in Practice to undertake the secretarial audit of the Company. Secretarial Audit Report under Section 204(1) of the Companies Act, 2013 issued by Messrs D. Hanumanta Raju & Co., Practicing Company Secretaries in respect of financial year 2018-19 is attached as Annexure-3 to this Report.
Cost Auditors
In terms of Section 148 of the Companies Act, 2013 read with the Companies (Audit & Auditors) Rules, 2014, the Board at their meeting held on May 2, 2019 appointed Messrs Narasimha Murthy & Co., Cost Accountants as Cost Auditors of the Company at a remuneration of '' 7.75 lakhs (excluding applicable taxes) plus reimbursement of travelling and out-of-pocket expenses on the recommendation of Audit Committee for the financial year ending March 31, 2020 and their remuneration is submitted for ratification by the Members at the forthcoming Annual General Meeting.
Cost Accounting Records and Cost Audit
Cost accounting records for the financial year under review were maintained as per the Companies (Cost Records and Audit) Rules, 2014. M/s. Narasimha Murthy & Co., Cost Accountants were appointed as Cost Auditors of the Company to audit the Cost Records for the financial year ended March 31, 2019. The Cost Audit Report for the financial year ended March 31, 2018 was filed with the Ministry of Corporate Affairs in August, 2018.
The Cost Audit Report for the year ended March 31, 2019 will be filed before September 30, 2019.
Public Deposits
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
Particulars of loans, guarantees or investments
No loans, guarantees, security and investments covered under the provisions of Section 186 of the Companies Act, 2013 were given during the year under review.
Subsidiary Company
The Company made an investment of Rs, 5 lakhs by way of share capital in IP India Foundation, incorporated under Section 25 of the Companies Act, 1956, wherein the excess of income over expenditure will be applied for promoting its objectives. Accordingly, the accounts of IP India Foundation were not consolidated, since the holding Company will not derive any economic benefit from its investment in IP India Foundation. During the financial year ended March 31, 2019, the Foundation recorded a surplus of Rs, 20.75 lakhs.
The Company undertakes that annual accounts of IP India Foundation and the related information will be made available to the members of holding company seeking such information at any point of time. The annual accounts of IP India Foundation are placed on the Company''s website and are also available for inspection by any Member at the Registered Office of the Company during business hours on working days of the Company. Statement containing salient features of the financial statement of IP India Foundation for the financial year ended March 31, 2019 is attached as Annexure-4 to this Report. Material changes and commitments affecting the financial position of the Company which occurred between end of financial year and date of the Report On May 29, 2019, the promoters of the Company namely International Paper Investments (Luxembourg) S.A.R.L and IP International Holdings Inc. holding 21,856,033 equity shares of Rs, 10 each and 79,71,496 equity shares of Rs, 10 each respectively, comprising 75% of the issued and paid up capital of the Company on a fully diluted basis, have executed a Share Purchase Agreements ("SPA") with West Coast Paper Mills Limited (Purchaser) to sell such number of equity shares of the Company aggregating to a minimum of 51% and up to a maximum of 60% of the issued and paid up capital of the Company as per the terms and conditions stated in the SPA.
The aforesaid transaction is subject to receipt of requisite regulatory approval(s), as applicable.
The Company was a party to Share Purchase Agreement for the limited purpose of undertaking certain obligations viz., carrying business in ordinary course, not to sell business or assets otherwise than in ordinary case, not to alter the constitutional documents etc.,
Directors'' Responsibility Statement
The Board of Directors hereby confirms and declares that:
- in the preparation of final accounts for the year ended March 31, 2019 the applicable accounting standards had been followed;
- they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the financial year ended March 31, 2019 and of the profit of the Company for the year;
- they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- they had prepared the accounts for the year ended March 31, 2019 on a ''going concern'' basis;
- they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
- they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
General
- During the year under review, the Chairman & Managing Director of the Company has not received any remuneration or commission from the subsidiary company.
- There were no significant material orders passed by the regulators or courts which would impact the going concern status of the Company and its future operations.
- The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under for prevention and redressal of complaints of sexual harassment at workplace. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All women employees (permanent, contractual, temporary, trainees) are covered under this policy.
- During the year, one complaint was filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the respondent against whom the complaint has been filed has subsequently resigned from the services of the Company.
Acknowledgements
The Board of Directors wish to place on record their gratitude to the Central Government, Government of Andhra Pradesh, Government of Telangana, State Bank of India, Axis Bank Limited, Citibank N.A., BNP Paribas, JPMorgan Chase Bank N.A. and Bank of America N.A. for their continued support during the year.
The Board of Directors wish to convey their thanks to the valued customers and dealers for their continued patronage and place on record their appreciation of the contribution made by all the employees during the year under review.
For and on behalf of the Board
Place: Hyderabad Donald P. Devlin
Date: June 30, 2019 Chairman & Managing Director
Mar 31, 2018
BOARD''S REPORT
Dear Members,
The Board of Directors has pleasure in presenting the 54th Annual Report of the Company and the Audited Accounts for the year ended March 31, 2018.
Performance Review
During the financial year 2017-18, the Company financial performance improved by earning its highest recorded EBITDA and PAT. These results were driven by higher sales volume, higher selling prices as well as record production levels and improved efficiency and manufacturing cost. While EBITDA registered an increase of 28%, Profit after Tax improved by 156% supported by decrease in finance costs, depreciation and exceptional items. The Company continued to focus on important initiatives for improving employee safety and environmental compliance as well as improving the customer experience and operational efficiencies.
(In Rs, Crores)
summary of Financial Results |
March 31, 2018 |
March 31, 2017 |
Sales and other operating income |
1279.80 |
1230.94 |
Earnings before interest, depreciation and taxation (EBITDA) |
226.72 |
176.03 |
Finance costs |
26.09 |
33.59 |
Depreciation |
65.81 |
70.03 |
Profit before exceptional items |
134.82 |
72.41 |
Exceptional items |
(8.37) |
(28.18) |
Profit before tax |
126.45 |
44.23 |
Tax expense |
43.39 |
11.83 |
Profit for the year |
83.06 |
32.40 |
dividend
In order to conserve the resources for meeting future capital needs, the Directors have decided not to recommend dividend on the equity shares of the Company.
Markets, Customers and Commercial excellence
The Paper Industry in India is growing steadily with increasing demand from various customer segments like education, business & corporate and commercial printing. The demand and growth drivers have come from a combination of factors such as rising income levels, growing per capita expenditure, rapid urbanization, industrial production, government spending on education and increased school enrollments.
To cater to the customer needs, the Company offers the best products and services using innovation, sustainability and manufacturing excellence programs. The Company has been able to grow in most regions through distribution expansion and customer engagement programs.
To build trust with the customers, the Company needs to be consistent with its quality and service. Our customers expect the Company to deliver orders on-time and in-full. We must do this to earn their trust. To improve the customer experience, we revised our order management and scheduling process for a Rs,10% improvement in OTIF rate to 90% for 2017 (On-Time & In-Full).
With an objective to increase customer satisfaction, loyalty and awareness, the Company conducted various customer engagement programs like roadshows, technical meetings, loyalty programs and conferences. These programs served as a platform to show case the Company''s products and demonstrate their performance, which helped in understanding the customer needs better. Based on this, the Company developed new products to suit their specific needs. One of the success stories last year was Reflection - White in Cutsize. The Company also aligned its product development strategy to address the growing trends in business and education segments, which added to the value proposition.
The continuous focus in improving customer experience through engagement and new product introduction resulted in increased customer value creation, which led to increase in sales volume by 4% over last financial year.
Raw Material Security
Fiber is the key raw material ingredient within our products, so long term access to low cost sustainable fiber is important to our strategy. We actively engage with farmers and other key stakeholders to collaborate on efforts to improve the strength of the seedlings and clones as well as enhanced farming techniques to improve yield. These efforts help to ensure the long term access to sustainable fiber.
The strategy has also enabled the sourcing of 100% of the Company''s fiber requirement within a 300 km radius of the mill, while stabilizing the fiber cost in 2017-18. Our partnerships with farmers has enabled the planting of Rs, 4.3 million high yielding Casuarina clones and Rs, 70 million Casuarina seedlings. The plantations have covered Rs, 10,250 hectares of farm land and generated Rs,5.1 million man-days of employment for farmers.
Developing and maintaining strong species of Casuarina, Eucalyptus and Subabul requires a commitment to ongoing research and development. We are working with the Indian Paper Manufacturers Association (IPMA) and the Institute of Forest Genetic & Tree Breeding Coimbatore (IFGTB) to ensure the broadest approach to sharing best practices, gaining knowledge and performing R&D for developing clonal species.
Human Resource Management
The Company''s agenda for engaging and developing our employees is broad and deep including many initiatives to attract, develop and retain talent. The key focus areas during the year included diversity and inclusion, succession planning, developing a talent pool for critical positions, quality of life programs and leadership development. Beginning with the senior leadership team, the Company appointed a new Vice President & CFO and new Vice President for Procurement and Forestry. Both of these leaders were promoted from within the Company and are a testament to the organization strength of succession planning and development of future leaders. The succession plans and leadership development programs also work deep in the organization as evidenced by the promotion of several young and talented employees to new leadership positions.
We have taken a more professional, proactive and engaging approach to industrial relations. While upholding the IP philosophy of treating people with dignity and respect as well as important principles of labor relations, we engaged with the union leaders, management and government. Following a fair, transparent and engaging process, the Company successfully signed a long-term bargaining agreement with Kadiam Workers Union.
We believe that highly engaged employees drive better results in every measurement. The global employee engagement survey received tremendous response at the Company with 92% respondents voicing high satisfaction at work. This high level of satisfaction rated in the top quartile of IP globally. In addition to employee participation, for the first time, we included contract workers in the survey to measure their engagement.
In line with the philosophy of treating people with respect and equity, the Company introduced medical insurance policy for mill workers and their spouses that will cover their hospitalization expenses.
The annual leadership conference was attended by Company''s top 100 leaders. The Company used this opportunity to recognize its leaders'' accomplishments as well as review the success, failures and learnings from 2017. Finally, with all of the top leaders in one room, the Company reviewed the goals for next year and made sure that all are aligned on the 2018 priorities.
Leveraging the power of Information technology
Applying IT solutions to business operations can be a powerful technique to improve efficiency, cost and focus time. The IT department has begun using data analytics and digital automation tools to enhance productivity, reduce manual work and increase accuracy. The focus areas include Sales, Marketing, Forestry and Manufacturing. New process automation in our Farm Forestry operation has enhanced our capability to track saplings from production to delivery. Further process automation within our Environmental management operation has reduced manual work and improved our data management and our ability to ensure that we operate in compliance to the regulations. We have provided new analysis and report tools for our commercial team to better understand key market and customer trends, thus leading to better decisions.
CsR and inclusive growth
The Company is committed to inclusive growth of the communities around the manufacturing facilities in which it operates and for this purpose, it identified three focus areas namely Education, Health and Wellness and Engagement. It has been striving hard for sustainable inclusive growth by taking up various initiatives under these focus areas.
The Company had adopted a CSR Policy which is placed on the Company''s website: www.ipappm.com. The Members of Corporate Social Responsibility Committee as on March 31, 2018 comprised of:
a. Mr. M.S. Ramachandran (Independent Director) -Chairman
b. Ms Ranjana Kumar (Independent Director) - Member
c. Mr. Donald P. Devlin (Chairman & Managing Director) -Member
As per Section 135 of the Companies Act, 2013, the Company is required to spend a sum of '' 60.70 lakhs during the financial year 2017-18 whereas the Company spent a sum of '' 61.04 lakhs (Including donation of '' 9.10 lakhs given to IP India Foundation, a Section 8 Company) for supporting various CSR initiatives in these focus areas.
The Annual Report on CSR activities is at Annexure-1. awards
During the year under review, the Company received the following Awards:
a. Certificate of Silver Prize in the manufacturing sector, medium scale hazardous category under 6th FICCI Safety Systems Excellence Awards for Industry 2017 in respect of Unit: Kadiyam from Federation of Indian Chambers of Commerce and Industry.
b. Janmabhoomi Award in recognition of special CSR work done in Kadiam
c. Janmabhoomi Award for CSR work done in the areas of education and safe drinking water plants in Rajahmundry
d. Award for innovation in the field of mental health for employees from National Institute of Mental Health and Neurosciences
Related party transactions
All related party transactions that were entered into during the financial year under review were on arms-length basis and also in the ordinary course of business. There are no materially significant related party transactions entered into by the Company with the promoters, directors, key managerial personnel which may have a potential conflict with the interests of the Company at large.
The Board of Directors approved a policy on related party transactions which is placed on the Company''s website. The related party disclosures are given in Note No.35 to the financial statements.
Remuneration Policy
The Company has adopted the Nomination and Remuneration Committee Charter which includes the Company''s policy on directors'' appointment and remuneration including criteria for determining the qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) of the Companies Act, 2013.
Pursuant to Section 178(4) of the Companies Act, 2013, the Company also adopted remuneration policy relating to remuneration for the directors, key managerial personnel and senior executives in the rank of vice president and above. The remuneration policy is placed on Company''s website.
technology absorption & energy Conservation
Particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given in Annexure-2 attached which forms part of this Report.
Risk Management
The Company has a robust business risk management framework to identify and evaluate business risks and opportunities. This framework aims to create transparency, minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. The key business risks identified by the Company and its mitigation plans are as under:
a. Fiber Procurement
The Company spends more than 25% of its total cost on procurement of fiber viz. casuarina, subabul, mixed hard wood, eucalyptus etc. Keeping in view the criticality of this factor, the Company has been expanding farm forestry program to secure fiber supply.
b. Competition Risk
The paper industry is becoming intensely competitive with the expansion of capacities by the existing players and lower import duties. To mitigate this risk, the Company is leveraging on its expertise and experience by enhancing its brand equity/visibility and product portfolio.
c. occupational Health & safety (oH&s)
Safety of employees is of paramount importance to the Company. In order to inculcate safety culture in the Company, it has identified Occupational Health & Safety as one of its focus areas. Various training programs have been conducted at the plants and other locations. Accountability has been strengthened by integrating OH&S objectives into job descriptions with the introduction of management personnel and safety professionals.
directors
a. Meetings of the Board
The Company prepares Calendar of Meetings for each calendar year and circulates the same in advance to all
the Directors. During the year under review, four Board meetings and five Audit Committee meetings were held. The details of the meetings held are given in the Corporate Governance Report forming part of Annual Report.
during the year under review:
a. Mr. Rampraveen Swaminathan resigned as Chairman & Managing Director with effect from the close of office hours of April 27, 2017 and the Board placed on record its appreciation for his outstanding contribution in building a strong leadership team, and culture of meritocracy, integrity and fairness and turning around into a profitable company.
b. Mr. Thomas G. Kadien, Non-Executive Director resigned from the Board effective June 30, 2017 and the Board placed on record its appreciation for the valuable advice and guidance received from Mr. Thomas G. Kadien.
c. Ms Shiela P. Vinczeller, Non-Executive Director resigned from the Board effective February 2, 2018 and the Board placed on record its appreciation for the valuable advice and guidance received from Ms Shiela P. Vinczeller.
Mr. Donald P. Devlin assumed charge as Chairman & Managing Director of the Company with effect from April 28, 2017.
As per the provisions of Companies Act, 2013 Mr. W. Michael Amick Jr. will retire by rotation at the forthcoming Annual General Meeting and being eligible offered himself for reappointment.
Mr. Russell V. Harris and Ms Megan A.F. Bula will hold office up to the date of forthcoming Annual General Meeting and the Board recommends their reappointment by the Members at the forthcoming Annual General Meeting.
b. Independent directors
The Members at the 50th Annual General Meeting held on August 27, 2014 appointed the existing Independent Directors viz. Mr. Praveen P. Kadle, Mr. Adhiraj Sarin, Ms Ranjana Kumar, Mr. Milind Sarwate and Mr. M.S. Ramachandran under the Companies Act, 2013 each for a term of five years up to March 31, 2019.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
A Meeting of Independent Directors was held on January 31, 2018.
c. Key Managerial Personnel
Mr. Badrinath Chellappa resigned as Chief Financial Officer with effect from the close of business hours of July 25, 2017. Mr. Anish T. Mathew has been appointed as Chief Financial Officer and he assumed charge from October 24, 2017.
d. performance evaluation
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of performance of Board, as well as the evaluation of the working of its Committees.
A separate exercise was carried out to evaluate the performance of individual directors including the Chairman & Managing Director who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interests of the Company and its minority shareholders etc. The outcome of Board evaluation for the financial year 2017-18 was discussed by the Board at the Meeting held on May 2, 2018.
e. Board training and Induction
At the time of appointing a Director, a formal letter of appointment is given to him/her, which inter alia explains the role, function, duties and responsibilities expected of him/her as a Director of the Company. The Director is also explained in detail the compliances required from him/her under the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 and other relevant Laws and Regulations. Details of Familiarization of Directors are disclosed on the Company''s website.
f. audit Committee
The Audit Committee as on March 31, 2018 comprised of Mr. Praveen P. Kadle as Chairman and Messrs Milind Sarwate, Adhiraj Sarin, W. Michael Amick Jr. and Donald P. Devlin as other Members. All the recommendations made by the Audit Committee were accepted by the Board.
extract of annual Return
The extract of Annual Return as on financial year ended March 31, 2018 as required under sub-section 3 of Section 92 of the Companies Act, 2013 in Form No. MGT 9 is attached as Annexure-3.
particulars of employees
The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary at the Registered Office in this regard.
Vigil Mechanism
The Company has adopted Whistle Blower Policy to deal with instance of fraud or any unethical or improper practices. A copy of this policy is placed on the Company''s website.
Internal Financial Controls
The Company established an internal financial control(s) commensurate with the size, scale and complexity of the operations. Internal audit function is being handled by a professional firm of chartered accountants. The main function of Internal Audit is to monitor and evaluate adequacy of internal control system in the Company, its compliance with the operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners take corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions are reported to the Audit Committee.
Statutory Auditors audited the Internal Financial Controls (IFC) over financial reporting of the Company as of March 31, 2018 in conjunction with audit of the financial statements of the Company for the year ended on that date. Unmodified opinion on IFC was given by them.
statutory auditors
The Members at the Annual General Meeting held on August 27, 2014 appointed Messrs Deloitte Haskins & Sells, Chartered Accountants, Hyderabad, as Auditors of the Company for a period of five years to hold office from the conclusion of 50th Annual General Meeting to the conclusion of the fifth consecutive annual general meeting. Messrs Deloitte Haskins & Sells, Chartered Accountants have confirmed their eligibility and compliance with conditions relating to their reappointment for the financial year 2018-19.
secretarial auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Messrs D. Hanumanta Raju & Co., a firm of Company Secretaries in Practice to undertake the secretarial audit of the Company. Secretarial Audit Report under Section 204(1) of the Companies Act, 2013 issued by Messrs D. Hanumanta Raju & Co., Practicing Company Secretaries in respect of financial year 2017-18 is attached as Annexure-4.
Cost auditors
In terms of Section 148 of the Companies Act, 2013 read with the Companies (Audit & Auditors) Rules, 2014, the Board at their meeting held on May 2, 2018 appointed Messrs Narasimha Murthy & Co., Cost Accountants as Cost Auditors of the Company at a remuneration of Rs, 7.75 lakhs (excluding applicable taxes) plus reimbursement of travelling and out of pocket expenses on the recommendation of Audit Committee for the financial year ending March 31, 2019 and their remuneration shall be ratified by the Members at the forthcoming Annual General Meeting.
Cost accounting Records
Cost accounting records for the financial year under review were maintained as per the Companies (Cost Records and Audit) Rules, 2014. M/s. Narasimha Murthy & Co., Cost Accountants were appointed as Cost Auditors of the Company to audit the cost Records for the financial year ended March 31, 2018. The Cost Audit Report for the financial year ended March 31, 2017 was filed with the Ministry of Corporate Affairs in August, 2017.
The Cost Audit Report for the year ended March 31, 2018 will be filed before end of September, 2018.
public deposits
The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.
particulars of loans, guarantees or investments
No loans, gurantees, security and investments covered under the provisions of Section 186 of the Companies Act, 2013 were given during the year under review.
subsidiary Company
The Company made an investment of Rs, 5 lakhs by way of share capital in IP India Foundation, a Section 25 company under the Companies Act, 1956 wherein the excess of income over expenditure will be applied for promoting its objectives. Accordingly, the accounts of IP India Foundation are not consolidated since the holding Company will not derive any economic benefit from its investment in IP India Foundation. During the financial year ended March 31, 2018, the Foundation recorded deficit of Rs, 0.61 lakhs.
The Company undertakes that annual accounts of IP India Foundation and the related information will be made available to the members of holding company seeking such information at any point of time. The annual accounts of IP India Foundation are placed on the Company''s website and are also available for inspection by any Member at the Registered Office of the Company during business hours on working days of the Company. Statement containing salient features of the financial statement of IP India Foundation for the financial year ended March 31, 2018 is attached as Annexure-5. directors'' Responsibility statement
The Board of Directors hereby confirms and declares that:
- in the preparation of final accounts for the year ended March 31, 2018 the applicable accounting standards had been followed along with proper explanation relating to material departures;
- they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the financial year ended March 31, 2018 and of the profit of the Company for the year;
- they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- they had prepared the accounts for the year ended March 31, 2018 on a ''going concern'' basis;
- they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating efficiently;
- they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating efficiently.
General
- During the year under review, the Chairman & Managing Director of the Company has not received any remuneration or commission from the subsidiary company.
- There were no significant material orders passed by the regulators or courts which would impact the going concern status of the Company and its future operations.
- The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under for prevention and redressal of complaints of sexual harassment at workplace. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All women employees (permanent, contractual, temporary, trainees) are covered under this policy.
acknowledgements
The Board of Directors wish to place on record their gratitude to the Central Government, Government of Andhra Pradesh, Government of Telangana, State Bank of India, Axis Bank Limited, Citibank N.A., BNP Paribas, JPMorgan Chase Bank N.A. and Bank of America N.A. for their continued support during the year.
The Board of Directors wish to convey their thanks to the valued customers and dealers for their continued patronage and place on record their appreciation of the contribution made by all the employees, during the year under review.
For and on behalf of the Board
Hyderabad Donald P. Devlin
June 30, 2018 Chairman & Managing Director
Mar 31, 2017
Dear Members,
The Board of Directors has pleasure in presenting the 53rd Annual Report of the Company and the Audited Accounts for the year ended March 31, 2017.
Performance of the Company
During the financial year 2016-17, the Company performed well with strong sales volume and price improvement as well as more consistent mill operations and lower costs for key raw materials. The Company continues to focus on important initiatives for improving employee safety and environmental compliance as well as improving the customer experience and operation efficiencies. These efforts helped the Company to make significant improvements in EBITDA and profit before exceptional items. The summary of financial performance for the year is encapsulated below:
In Rs, crore
Financial Results |
March 31, 2017 |
March 31, 2016 |
Sales and other income (Net of excise duty) |
1214.20 |
1166.27 |
Earnings before interest, depreciation and taxation (EBITDA) |
171.58 |
137.13 |
Finance costs |
32.60 |
40.30 |
Depreciation |
68.23 |
73.17 |
Profit before exceptional items |
70.75 |
23.66 |
Exceptional items |
28.19 |
32.70 |
Profit before tax |
42.56 |
56.36 |
Tax expense |
11.26 |
19.47 |
Profit for the year |
31.30 |
36.89 |
Sales and Marketing
The key demand drivers contributing to GDP growth in India are also driving consumption of paper products. The demand for printing and writing UFS (Uncoated Free Sheet) is driven by growth in consumption within many service sector businesses, education, manufacturing and government. The Company''s commercial performance was strengthened with enhanced product offerings, expanded domestic distribution and a growing export supply position.
- Volume - 1.5% year-on-year growth;
- Domestic Market - expanded distribution in North, East and West regions;
- Launched new market-specific products to expand range of products offered;
- Export Market - grew HP brand cut-size by 9%, in Middle East and Africa.
The market for UFS was more balanced during 2016-17 as demand continued to grow and the industry experienced supply constraints. Imports from ASEAN Countries increased substantially during 2016 and this added supply has put pressure on the cut-size market.
In order to strengthen relationships with customers, the Company utilized the Paper Baron Program and Dealer Engagement Program to demonstrate the Company''s commitment to quality, service and reliability as a supplier.
The Company continues to focus on delivering increased value to customers through improved products and services including the introduction of several new products to offer to customers a better range of options and to drive increased revenue for the Company.
For supply chain efficiency, the Company undertook various Manufacturing Excellence projects involving cross functional teams. The projects include Grams per Square Meter (GSM) Rationalization, Block Scheduling and On-line Order Status visibility. The success of the block scheduling project was reflected in Company''s On-Time-in-Full (OTIF) metrics, which improved from 81% to 88% by year end. GSM rationalization helped the Company to improve the paper machine efficiencies.
Raw Material
The Company continued to execute its farm forestry fiber strategy and has further strengthened the sustainable supply of fiber to its mills. By leading a collaborative approach with farmers and key stakeholders, the Company has continued on the path of long term sustainability. The farm forestry and procurement strategy has enabled the Company to effectively source 100% of its fiber requirement within a 300 kms radius of the mill. With better execution and increased availability, the Company has stabilized fiber cost in 2016-17. In addition, the Company continued to execute a focused fiber procurement strategy within 100 kms of the mill by empowering and partnering with farmers for long term association. During the planting year 2016, more than 5 million high yielding Casuarina clones, along with 49 million Casuarina seedlings were planted. This covered ~7500 hectares of plantation with 50% within 100 km radius of the mill. The Company''s sustainability drive resulted in around 3.75 million man-days employment generation. Research and Development taken up through collaborative project with Indian Paper Manufacturers Association (IPMA) and Institute of Forest Genetic & Tree Breeding (IFGTB), Coimbatore, is continuing and expected to be completed by 2018. Research and development on Eucalyptus started by partnering with IP Brazil in 2016 and for Casuarina with IFGTB is on ground with four multi-location provenance trial established till now at different parts of Andhra Pradesh.
Human Resource & People Development
The people strategy for the year had focus on creating a strong leadership talent pool for future growth, well-being of ageing workforce, industrial relations on IP principles and philosophy of being fair and transparent, and creating a collaborative and engaging culture in the organization.
The Company developed a strong leadership pool of mid and senior leadership as part of Company''s succession plan who are available for cross functional and within function to take up responsibilities as it presents itself. In line with the employee well being, the Company organized annual health check for all its senior staff and introduced medical insurance policy that is common for all, irrespective of levels in the Company.
As part of transforming the culture and behavior in the industrial relations space, the Company had taken up several steps in educating and engaging with the workmen in a fair and transparent manner, at the same time not allowing the external forces to influence and disrupt the relations of workmen with the management. The Company ensures that all the employees are treated with same respect.
The development initiatives like diversity and Inclusion, employee engagement, learning and development had significant impact on the Company during the year under review. The Company had taken various initiatives like hiring 40% women at the entry level in engineering and management segments, First Line Leader program entailing more than 8 months intense training to make them ready for future leadership assignments. The Manufacturing Excellence projects provided an opportunity for junior and midlevel employees to improve their skills in operational excellence, problem solving and process improvements.
IT Initiatives
IT Department continued its focus on enabling business processes and systems through strategic adoption of IT. These covered all the operating areas including manufacturing, sales and marketing, human resources and forestry. During the year under review, the Company implemented several IT systems and processes including redesigning the website, infrastructure upgrades, regional office migrations, enhancing mobile apps and existing applications to enable customers to view the Company''s products. SAP application is being stabilized and it improved operational efficiency, cost reduction, improved controls in the areas of finance, costing, purchasing, manufacturing and project systems. The benefits derived from this project are simplified, standardized and streamlined business processes with greater integration across the enterprise. The Company is also focusing on innovation within IT to reduce the costs and introduce new tools.
CSR Initiatives
The Company had adopted CSR Policy which is placed on the Company''s website: www.ipappm.com. The Members of Corporate Social Responsibility Committee as on March 31, 2017 comprised of:
a. Mr. M.S. Ramachandran (Independent Director) -Chairman
b. Ms. Ranjana Kumar (Independent Director) - Member
c. Mr. Rampraveen Swaminathan (Chairman & Managing Director) - Member
The focus areas of CSR Policy are education, environment and engagement. In view of past losses, the Company is not required to spend money on CSR activities as per Section 135 of the Companies Act, 2013. However, as a responsible corporate citizen, the Company incurred a sum of ''62.08 lakhs (Including grant of ''15 lakhs given to IP India Foundation, a Section 8 Company) for supporting various CSR initiatives in these focus areas. During the year, the Company''s CSR initiatives included:
a. Facilitated spoken English classes for the students of Government Schools in Rajahmundry and APPM Model School;
b. Construction of compound Wall in Girijan Vikas Kendram, toilets for girl students in municipal school in Veeravaram Village, teachers'' training to Government School Teachers and painting of two government schools in Kadiyam and Veeravaram and infrastructure support to Sangamitra Rehabilitation Centre engaged in teaching mentally challenged children;
c. Merit scholarship to the children of government schools, sponsoring of Bala kalakaar, an art camp for the under privileged children;
d. Providing gym equipment to fitness centre and sewing machines to women''s tailoring centre in Kadiyam;
e. Installation of three RO plants for providing safe drinking water in Mulagapudi, Theeda, Ammulapalem villages and two UV plants in two government schools in Rajahmundry;
f. Continuing to provide water through tankers to the people in Katheru.
Awards
During the year under review, the Company received the following Awards:
- ''National Awards for Excellence in CSR & Sustainability'' for Community Project of the Year wherein safe drinking water initiatives were undertaken in 5 different Mandals of East Godavari and Visakhapatnam districts;
- ''Aqua Excellence Award 2016'' awarded by Aqua Foundation at the World Aqua Congress for ''Outstanding Contribution towards the cause of Sustainability - Private Sector '';
- ''Janmabhoomi Award'' for work done in the adopted village of Kadiam under Government of Andhra Pradesh - Smart Village Smart ward program;
- ''Social Innovation Award'' presented by the World CSR Congress for Innovation Product or Services for implementing a successful model of cost effective spoken English course in government schools named Project New Horizons;
- ''World Water Leadership - Sustainable Initiatives'' award for building a self-sustaining model of Safe Drinking Water plants as part of CSR initiatives;
- ''Best Energy From Waste'' award for usage of bark, sludge and biomass gasification, substituting coal consumption in boiler;
- Europe Business Assembly''s Prestigious International award in the management and business sphere;
- Special Export Award in recognition of export achievement for the year 2014-15 from CAPEXIL (sponsored by Ministry of Commerce & Industry, Government of India).
Related Party Transactions
All related party transactions that were entered into during the financial year under review were on arms-length basis and were also in the ordinary course of business. There are no materially significant related party transactions entered into by the Company with the promoters, directors, key managerial personnel which may have a potential conflict with the interests of the Company at large.
The Board of Directors approved a policy on related party transactions which is placed on the Company''s website. The related party disclosures are given in Note No.27 to the financial statements.
Remuneration Policy
The Company has adopted the Nomination and Remuneration Committee Charter which includes the Company''s policy on directors'' appointment and remuneration including criteria for determining the qualifications, positive attributes, independence of a director and other matters provided under Section 178(3) of the Companies Act, 2013.
Pursuant to Section 178(4) of the Companies Act, 2013, the Company also adopted remuneration policy relating to remuneration for the directors, key managerial personnel and senior executives in the rank of vice president and above. The remuneration policy is placed on Company''s website.
Technology Absorption & Energy Conservation
Particulars of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given in Annexure-1 attached which forms part of this Report.
Risk Management
The Company has a robust business risk management framework to identify and evaluate business risks and opportunities. This framework aims to create transparency, minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. The key business risks identified by the Company and its mitigation plans are as under:
a. Fiber Procurement
The Company spends more than 25% of its total cost on procurement of fiber viz. casuarina, subabul, mixed hard wood, eucalyptus etc. Keeping in view the criticality of this factor, the Company has been expanding farm forestry program to secure fiber supply.
b. Competition Risk
The paper industry is becoming intensely competitive with the expansion of capacities by the existing players and lower import duties. To mitigate this risk, the Company is leveraging on its expertise and experience by enhancing its brand equity/visibility and product portfolio.
c. Occupational Health & Safety (OH&S)
Safety of employees is of paramount importance to the Company. In order to inculcate safety culture in the Company, it has identified Occupational Health& Safety as one of its focus areas. Various training programs have been conducted at the plants and other locations. Accountability has been strengthened by integrating OH&S objectives into job descriptions with the introduction of management personnel and safety professionals.
Directors a. Meetings of the Board
The Company prepares Calendar of Meetings for each calendar year and circulates the same in advance to all the Directors. During the year under review, five Board meetings and four Audit Committee meetings were held. The details of the meetings held are given in the Corporate Governance Report forming part of Annual Report.
During the year under review:
a. Ms. Ann Wrobleski, non-executive director resigned from the Board effective December 31,
2016 and the Board placed on record its appreciation for the valuable advice and guidance received from Ms. Ann Wrobleski.
b. Mr. Rampraveen Swaminathan resigned as Chairman & Managing Director with effect from the close of office hours of April 27, 2017 and the Board placed on record its appreciation for his outstanding contribution in building a strong leadership team, and culture of meritocracy, integrity and fairness and turning around into a profitable company.
The Board of Directors at the Meeting held on January 18, 2017 appointed Mr. W. Michael Amick Jr. as Additional Director with effect from January 18, 2017. He will hold office up to the date of ensuing annual general meeting.
The Board of Directors at the Meeting held on February 22, 2017 appointed Mr. Donald P. Devlin as Additional Director effective February 22, 2017 and as Chairman & Managing Director with effect from April 28, 2017. The Company had received requisite notices under Section 160 of the Companies Act, 2013 proposing the candidature of Mr. W. Michael Amick Jr. and Mr. Donald P. Devlin.
In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Ms. Shiela P. Vinczeller retires by rotation at the forthcoming Annual General Meeting and being eligible offers herself for re-appointment.
b. Independent Directors
The Members at the 50th Annual General Meeting held on August 27, 2014 appointed the existing Independent Directors viz. Mr. Praveen P Kadle, Mr. Adhiraj Sarin, Ms. Ranjana Kumar, Mr. Milind Sarwate and Mr. M.S. Ramachandran under the Companies Act, 2013 each for a term of five years up to March 31, 2019.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
c. Key Managerial Personnel
There is no change in the key managerial personnel during the year under review.
d. Performance Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of its own performance, as well as the evaluation of the working of its Committees.
A separate exercise was carried out to evaluate the performance of individual directors including the Chairman & Managing Director who were evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interests of the Company and its minority shareholders etc. The outcome of Board evaluation for the financial year 2016-17 was discussed by the Board at the Meeting held on April 25, 2017.
e. Board Training and Induction
At the time of appointing a Director, a formal letter of appointment is given to him/her, which inter alia explains the role, function, duties and responsibilities expected of him/her as a Director of the Company. The Director is also explained in detail the compliances required from him/her under the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other relevant laws and regulations. Details of familiarization of directors are disclosed on the Company''s website.
f. Audit Committee
The Audit Committee as on March 31, 2017 comprised of Mr. Praveen P. Kadle as Chairman and Messrs Milind Sarwate, Adhiraj Sarin, Thomas G. Kadien and Rampraveen Swaminathan as other Members. All the recommendations made by the Audit Committee were accepted by the Board.
Extract of Annual Return
The extract of Annual Return as on financial year ended March 31, 2017 as required under sub-section 3 of Section 92 of the Companies Act, 2013 in Form No. MGT 9 is attached as Annexure-2.
Particulars of Employees
The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary at the Registered Office in this regard.
Vigil Mechanism
The Company has adopted Whistle Blower Policy to deal with instance of fraud or any unethical or improper practices. A copy of this policy is placed on the Company''s website.
Internal Financial Controls
The Company established an internal financial control system commensurate with the size, scale and complexity of the operations. Internal audit function was jointly controlled by in-house department and by a professional firm of chartered accountants. The main function of Internal Audit is to monitor and evaluate adequacy of internal control system in the Company, its compliance with the operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners take corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions are reported to the Audit Committee.
Statutory Auditors audited the internal financial controls (IFC) over financial reporting of the Company as of March 31, 2017 in conjunction with audit of the financial statements of the Company for the year ended on that date. Unmodified opinion on IFC was given by them.
Statutory Auditors
The Members at the Annual General Meeting held on August 27, 2014 appointed Messrs Deloitte Haskins & Sells, Chartered Accountants, Hyderabad, as Auditors of the Company for a period of five years to hold office from the conclusion of 50th Annual General Meeting to the conclusion of the fifth consecutive annual general meeting subject to ratification of the appointment by the Members at every subsequent annual general meetings. Messrs Deloitte Haskins & Sells, Chartered Accountants have confirmed their eligibility and willingness to accept office, if re-appointed by the Members at the 53rd Annual General Meeting of the Company.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Messrs D. Hanumanta Raju & Co., a firm of Company Secretaries in Practice to undertake the secretarial audit of the Company. Secretarial Audit Report under Section 204(1) of the Companies Act, 2013 issued by Messrs D. Hanumanta Raju & Co., Practicing Company Secretaries in respect of financial year
2016-17 is attached as Annexure-3.
Cost Auditors
In terms of Section 148 of the Companies Act, 2013 read with the Companies (Audit & Auditors) Rules, 2014, the Board at their meeting held on April 25, 2017 appointed Messrs Narasimha Murthy & Co., Cost Accountants as Cost Auditors of the Company at a remuneration of Rs,7.50 lakhs (excluding applicable taxes) plus reimbursement of travelling and out of pocket expenses on the recommendation of Audit Committee for the financial year ending March 31, 2018 and their remuneration shall be ratified by the Members at the forthcoming Annual General Meeting.
Cost Accounting Records
Cost accounting records for the financial year under review were maintained as per the Companies (Cost Accounting Records) Rules. M/s. Narasimha Murthy & Co., Cost Accountants were appointed as Cost Auditors of the Company to audit the cost accounts for the financial year ended March 31, 2017. The Cost Audit Report for the financial year ended March 31, 2016 was filed with the Ministry of Corporate Affairs in August, 2016.
The Cost Audit Report for the year ended March 31, 2017 will be filed before end of September, 2017.
Public Deposits
The Company had discontinued its public deposit scheme in the financial year 2012-13. Despite efforts to identify and repay unclaimed deposit, the amount of public deposit matured and remaining unclaimed with the Company as on March 31, 2017 was Rs,0.65 lakhs. The Company has not accepted or renewed any deposit during the year from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. During the year under review, there was no unclaimed deposit amount which is required to be transferred to Investor Education and Protection Fund.
Particulars of loans, guarantees or investments
No loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 were given during the year under review.
Dividend
In view of accumulated losses, the Board of Directors decided not to recommend payment of dividend on the equity shares for the financial year under review.
Subsidiary Company
The Company made an investment of Rs,5 lakhs by way of share capital in IP India Foundation, a Section 25 company under the Companies Act, 1956 wherein the excess of income over expenditure will be applied for promoting its objectives. Accordingly, the accounts of IP India Foundation are not consolidated since the holding Company will not derive any economic benefit from its investment in IP India Foundation. During the financial year ended March 31, 2017, the Foundation recorded surplus of Rs,23.85 lakhs.
The Company undertakes that annual accounts of IP India Foundation and the related information will be made available to the members of holding company seeking such information at any point of time. The annual accounts of IP India Foundation are placed on the Company''s website and are also available for inspection by any Member at the Registered Office of the Company during business hours on working days of the Company. Statement containing salient features of the financial statement of IP India Foundation for the financial year ended March 31, 2017 is attached as Annexure-4.
Directorsâ Responsibility Statement
The Board of Directors hereby confirms and declares that:
- in the preparation of final accounts for the year ended March 31, 2017 the applicable accounting standards had been followed along with proper explanation relating to material departures;
- they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the financial year ended March 31, 2017 and of the profit of the Company for the year;
- they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
- they had prepared the accounts for the year ended March 31, 2017 on a ''going concern'' basis;
- they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating efficiently;
- they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating efficiently.
General
- During the year under review, the Chairman & Managing Director of the Company has not received any remuneration or commission from the subsidiary company.
- There were no significant material orders passed by the regulators or courts which would impact the going concern status of the Company and its future operations.
- The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules there under for prevention and redressal of complaints of sexual harassment at workplace. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All women employees (permanent, contractual, temporary, trainees) are covered under this policy.
Acknowledgements
The Board of Directors wish to place on record their gratitude to the Central Government, Government of Andhra Pradesh, Government of Telangana, State Bank of India, Axis Bank Limited, Citibank N.A., BNP Paribas, JPMorgan Chase Bank N.A. and Bank of America N.A. for their continued support during the year.
The Board of Directors wish to convey their thanks to the valued customers and dealers for their continued patronage and place on record their appreciation of the contribution made by all the employees, during the year under review.
For and on behalf of the Board
Hyderabad Donald P. Devlin
June 5, 2017 Chairman & Managing Director
Mar 31, 2016
Dear Members,
The Directors have pleasure in presenting the 52nd Annual Report of
the Company and the Audited Accounts for the year ended March 31, 2016.
Performance of the Company
During the financial year 2015-16, your Company recorded a significant
improvement in business performance through strong operational
performance, better revenue management and generating better cash flow.
During the financial year ended March 31, 2016, the Company continued
to execute initiatives for reducing the cost of production, improve the
customer satisfaction, continued focus on safety environment and
productivity. These efforts have helped the Company improve
profitability substantially, registering an increase of 148 times over
the last financial year. These initiatives will also create long-term
value for the stakeholders and help position the Company as a leading
supplier of premium grade products in the domestic market. The summary
of financial performance for the year is encapsulated below:
In Rs. crore
Financial Results March 31,2016 March 31, 2015
Sales and other income 1166.27 1173.94
Earnings before interest,
depreciation & taxation
(EBIDTA) 137.13 106.16
Finance costs 40.30 44.60
Depreciation 73.17 69.00
Profit/(Loss) before
exceptional items 23.66 (7.44)
Exceptional items 32.70 1.13
Profit/(Loss) before tax 56.36 (6.31)
Tax expense/(benefit) 19.47 (6.56)
Profit for the year 36.89 0.25
Sales & Marketing
Market demand for uncoated free sheet (UFS) paper remained soft during
most part of the year with signs of improvement towards the year-end.
Our estimate is that overall demand for paper grew by around 2-3%
during the year. Demand was adversely impacted as government buying was
deferred/reduced. Uncertain government policy of restraining private
publishers in CBSE school books took a toll in the creamwove segment.
Imports and substitution in some segments also continues to be a
threat. Pricing was under pressure during the year due to sluggish
demand and is now showing signs of firming up gradually. In this market
environment, the Company was able to make marginal progress in sales
growth in domestic and export markets and could maintain our prices
through- out the year.
Highlights of sales & marketing performance:
a. Sales of 217,706 MT in the financial year 2015-16 as against
215,846 MT in the financial year 2014-15, a growth of 1%;
b. We grew in West and Andhra Pradesh/Telangana which were our focus
markets which aligns well with our future strategy of domestic growth;
c. Cutsize grew by 38% and we expanded our distribution in new markets
and new geographies;
d. We also expanded our export sales in Middle East & Africa and
achieved a substantial growth of around 46%. Established consistent
sales of cut-size products (under the HP brand). The Company has
successfully met all its EPCG obligations;
e. Your Company continues to be focused on delivering increased value
to customers through improved products and customer service;
f. The Company continued to increase penetration of new products
launched with the International Paper brand last year. Sales of
TruPrint, TruPrint Ultra, WriteChoice in the printing/notebook segment
& Hammermill and HP in the cut-size segment registered strong growth
during the year with significant improvement in brand building;
g. The Company continued to be responsive to customer needs and
developed new products to cater to niche segments. Developed watermark
paper to maintain Creamwove sales in lean months;
h. Launched WD engagement program - Paper Barons
- to differentiate ourselves and improve customer connect;
i. Introduced mobile app to provide real time information to
customers;
j. Launched door to door delivery model in Cutsize varieties in Andhra
Pradesh;
k. Special focus on OTIF which improved the score from 77 to 85 in 3
years time;
l. Have undertaken deliberate improvement projects involving
cross-functional teams to enhance customer service through OTIF
Raw Material Procurement
The Company''s sustainable farm forestry program represents a strong
competitive advantage. During 2015-16, your Company continued to expand
the program and its partnership with local farmer communities with an
endeavor to ensure long term fiber sustainability. The Company was able
to source 100% requirement of pulpwood from Andhra and Telangana,
primarily within a radius of 350 sq.kms. After three years of
significant increase in fiber costs, 2015-16 experienced an increase in
wood availability and correction in wood prices.
The Company continues to focus on empowerment of farmers by expanding
the clonal distribution program under its robust farm forestry program
with education, research & development and community support.
During 2015 planting year, approximately 225 million saplings were
distributed covering an area of 31,300 hectares under plantation. The
Company expanded the clonal propagation center infrastructure and
introduced new business practices to improve safety and productivity.
To have even more better meaningful relationship with the farmers, your
Company has started a unique initiative through digital system by
launching www.rythukosam.com and ''Krishak honored smart card''. IP APPM
farmers will have direct access with your Company and the Company will
have direct relationship with them.
Research and Development has been taken at a wider perspective through
a collaborative project with Indian Paper Manufacturers Association
(IPMA) and Institute of Forest Genetic & Tree Breeding (IFGTB),
Coimbatore. We are introducing more farmer-friendly demonstration plots
and other cost reduction measures in qualitative and quantitative
production processes. In addition, the initiatives with high yielding,
short rotation planting stock will enhance raw material availability.
These have created a pool of over 123 million man-days so far.
In India, long awaited research and development on Eucalyptus has been
started with partnering with IP Brazil being Brazil as most advanced
and progressive country in the world.
Information Technology
Our vision is to enable business processes and systems through
strategic adoption of IT. These cover all the operating areas including
manufacturing, sales and marketing, human resources and forestry.
During 2015-16, the Company implemented several IT systems and
processes including redesign to the internet, new farmer portal, a new
payroll system, mobile app to enable customers to view our products and
most importantly SAP upgrade. SAP upgrade provides operational
efficiency, cost reduction, improved controls in the areas of finance,
costing, purchasing, manufacturing and project systems
During the year under view, the Company implemented SAP FICSM project
(Finance, Capital, Source, Maintenance, Order Management and
Manufacturing) with a view to be a part of IP''s standard application
portfolio with global processes. The benefits derived from this project
are simplified, standardized and streamlined business processes with
greater integration across the enterprise.
HR initiatives
During the year under review, the Company made significant investments
in digitizing all the HR systems and creating culture of leadership
whereby every leader demonstrates the 3 Cs - Character, Capability and
Catalyst. The Company has successfully completed implementing all the
modules of SAP HR that provides system as one place for all employee
data. It also created the Performance Management System in one platform
that is available online for an employee and the manager to effectively
plan their objectives, measure performance, update their
accomplishments etc. Talent Reviews were conducted function-wise to
recognize the competencies, growth and development of the employees.
IP Leadership Institute conducted various programs that provide
development opportunity for talent at all levels.
A multi-skilled, multi-trade study was conducted with a view to
understand the current skills and map them to the jobs currently
performed by the workmen in order to position them in the right grade
and jobs.
Industrial relations at both manufacturing units are cordial and
focused on long-term development.
During 2014-15, the Company conducted the Global Engagement Survey to
assess employee engagement and satisfaction. The participation rate was
98.37%, the highest among all IP entities. Overall employee engagement
registered a strong improvement compared to prior surveys, with a
specific improvement in communication and recognition.
CSR Initiatives
The Company has adopted CSR Policy which is placed on the Company''s
website. The Board of Directors during the year has re-constituted
Corporate Social Responsibility Committee comprising of:
a. Mr. M.S. Ramachandran (Independent Director) - Chairman
b. Ms. Ranjana Kumar (Independent Director) - Member
c. Mr. Rampraveen Swaminathan (Chairman & Managing Director) - Member
d. Ms. Ann Barbara Wrobleski (Non-Executive Director)
- Member
The focus areas of CSR Policy are education, environment and
engagement. In view of past losses, the Company is not required to
spend money on CSR activities as per Section 135 of the Companies Act,
2013. However, as a responsible corporate citizen, the Company incurred
a sum of Rs.47.35 lakhs supporting various CSR initiatives in these
focus areas. During the year, the Company''s CSR initiatives included:
- As part of Swatch Bharath programme, installation of RO plants in
Madhavarayudu Village and Chaitanya Nagaram Village, Kadiyam Mandalam;
- Construction of bus shelter in Kadiyam Village;
- Supporting the sports events viz., AP State Volley Ball Association
and AP State Kabaddi Championships;
- Construction of community sanitary complex for the women in Setty
Balijapeta, Kadiyam Mandalam;
- Construction of compound wall for Government Primary School at
Bhaskara Ram Nagar, Kadiyam Mandalam and construction of Diamond Mesh
Fence for Government Primary School, Chaitanya Nagaram Village, Kadiyam
Mandalam;
- Construction of girls toilet and installation of RO plant in Girijana
Vikas Kendra School which supports the tribal students;
- Under project New Horizons, students of 5 municipal schools in
Rajahmundry were given training in spoken English;
- Sponsored the Balakalakar Art Camp for underprivileged children.
In addition to the above financial commitments, your Company actively
engaged employees to volunteer in the local community. Our employees
have logged over 2,300 hours with impressive results.
Awards
During the year under review, the Company received the following
Awards:
- Special Export Award for its export performance for the year 2012-13
from CAPEXIL.
- Parivarthan Sustainability Leadership Award for its sustainability
initiatives under the category of leadership in branding for
sustainability.
- Community Development Award from World CSR Congress for the Community
development work done by the Company around Unit: Kadiyam.
- Award for social innovation from World CSR Congress for the project
New Horizons whereby the students in municipal schools in Rajahmundry
were trained in spoken English.
- A Certificate of Appreciation from FICCI for good practice in safety
systems by the Company''s Unit: Kadiyam in recognition of its commitment
to safety at workplace and putting in place safety systems.
- Uttama Smart Partner Award from Mandal Praja Parishad, Kadiyam,
Government of Andhra Pradesh in recognition of the various development
works done by the Company in Kadiyam Mandal.
- ''Best Management Award'' from the Government of Andhra Pradesh for the
good practices followed to keep industrial harmony and good employee
relations in the organization.
Related Party Transactions
All related party transactions that were entered into during the
financial year under review were on arms length basis and were also in
the ordinary course of business. There are no materially significant
related party transactions entered into by the Company with the
promoters, directors, key managerial personnel which may have a
potential conflict with the interests of the Company at large.
The Board of Directors approved a policy on related party transactions
which is placed on the Company''s website. The related party
disclosures are given in note no.27 to the financial statements.
Remuneration Policy
The Company has adopted the Nomination and Remuneration Committee
Charter which includes the Company''s policy on directors'' appointment
and remuneration including criteria for determining the qualifications,
positive attributes, independence of a director and other matters
provided under Section 178(3) of the Companies Act, 2013.
Pursuant to Section 178(4) of the Companies Act, 2013, the Company also
adopted remuneration policy relating to remuneration for the directors,
key managerial personnel and senior executives in the rank of vice
president and above. The remuneration policy is placed on Company''s
website.
Technology Absorption & Energy Conservation
Particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo as required under Section 134(3)(m)
of the Companies Act, 2013 read with Rule 8(3) of the Companies
(Accounts) Rules, 2014 are given in the Annexure-1 attached and forms
part of this Report.
Risk Management
The Company has a robust business risk management framework to identify
and evaluate business risks and opportunities. This framework aims to
create transparency, minimize adverse impact on the business objectives
and enhance the Company''s competitive advantage. The key business risks
identified by the Company and its mitigation plans are as under:
a. Fiber Procurement
The Company spends more than 25% of its income on procurement of fiber
viz. casuarina, subabul, mixed hard wood, eucalyptus etc. Keeping in
view the criticality of this factor, the Company has been expanding
farm forestry program to secure fiber supply.
b. Competition Risk
The paper industry is becoming intensely competitive with the expansion
of capacities by the existing players and lower import duties. To
mitigate this risk, the Company is leveraging on its expertise and
experience by enhancing its brand equity/visibility and energy product
portfolio.
c. Occupational Health & Safety (OH&S)
Safety of employees is of paramount importance to the Company. In order
to inculcate safety culture in the Company, it has identified
Occupational Health & Safety as one of its focus areas. Various
training programs have been conducted at the plants and other
locations. Accountability has been strengthened by integrating OH&S
objectives into job descriptions with the introduction of management
personnel and safety professionals.
Directors
a. Meetings of the Board
The Company prepares Calendar of Meetings for each calendar year and
circulates the same in advance to all the Directors.
During the year under review, four Board meetings and four Audit
Committee meetings were held. The details of the meetings held are
given in the Corporate Governance Report forming part of Annual Report.
During the year under review, Ms. Jayashree Satagopan resigned as
Non-Executive Director with effect from the close of office hours of
April 24, 2015.
The Board placed on record its appreciation for the valuable advice and
guidance received from Ms. Jayashree Satagopan.
In accordance with the provisions of the Companies Act, 2013 and
Articles of Association of the Company, Mr. Thomas G. Kadien retires by
rotation at the forthcoming Annual General Meeting and being eligible
offers himself for re-appointment.
b. Independent Directors
The Members at the 50th Annual General Meeting held on August 27, 2014
appointed the existing
Independent Directors viz. Mr. Praveen P. Kadle, Mr. Adhiraj Sarin, Ms.
Ranjana Kumar, Mr. Milind Sarwate and Mr. M.S. Ramachandran under the
Companies Act, 2013 each for a term of five years up to March 31, 2019.
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013 and Clause 16(1)(b) of Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
c. Key Managerial Personnel
There is no change in the key managerial personnel during the year.
d. Performance Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Regulation 17
of SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015, the Board has carried out the annual performance evaluation of
its own performance, as well as the evaluation of the working of its
Committees.
A separate exercise was carried out to evaluate the performance of
individual directors including the Chairman & Managing Director who
were evaluated on parameters such as level of engagement and
contribution, independence of judgment, safeguarding the interests of
the Company and its minority shareholders etc.
e. Board Training and Induction
At the time of appointing a Director, a formal letter of appointment is
given to him/her, which inter alia explains the role, function, duties
and responsibilities expected of him/her as a Director of the Company.
The Director is also explained in detail the compliances required from
him/her under the Companies Act, 2013, SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 and other relevant laws and
regulations. Details of familiarization of directors are disclosed on
the website of the Company.
f. Audit Committee
The Audit Committee comprises of Mr. Milind Sarwate as Chairman and
Messrs Praveen P. Kadle, Adhiraj Sarin, Thomas G. Kadien and
Rampraveen Swaminathan as other Members. All the recommendations made
by the Audit Committee were accepted by the Board.
Extract of Annual Return
The extract of Annual Return as on financial year ended March 31, 2016
as required under sub-section 3 of Section 92 of the Companies Act,
2013 in Form No. MGT 9 is attached as Annexure-2.
Particulars of Employees
The information required pursuant to Section 197 read with Rule 5 of
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 in respect of employees of the Company, will be provided
upon request. In terms of Section 136 of the Act, the Report and
Accounts are being sent to the Members and others entitled thereto,
excluding the information on employees'' particulars which is available
for inspection by the Members at the Registered Office of the Company
during business hours on working days of the Company up to the date of
the ensuing Annual General Meeting. If any Member is interested in
obtaining a copy thereof, such Member may write to the Company
Secretary at the registered office in this regard.
Vigil Mechanism
The Company has adopted Whistle Blower Policy to deal with instance of
fraud or any unethical or improper practices. A copy of this policy is
placed on the Company''s website.
Internal Financial Controls
The Company has an internal financial control system commensurate with
the size, scale and complexity of the operations. Internal audit
function was jointly controlled by in-house department and by a
professional firm of chartered accountants. The main function of
Internal Audit is to monitor and evaluate adequacy of internal control
system in the Company, its compliances with the operating systems,
accounting procedures and policies at all locations in the Company.
Based on the report of internal audit function, process owners take
corrective action in their respective areas and thereby strengthen the
controls. Significant audit observations and corrective actions are
reported to the Audit Committee.
Statutory Auditors audited the internal financial controls (IFC) over
financial reporting of the Company as of March 31, 2016 in conjunction
with audit of the financial statements of the Company for the year
ended on that date. Unmodified opinion on IFC was given by them.
Statutory Auditors
The Members at the Annual General Meeting held on August 27, 2014
appointed Messrs Deloitte Haskins & Sells, Chartered Accountants,
Hyderabad, as Auditors of the Company for a period of five years to
hold office from the conclusion of 50th Annual General Meeting to the
conclusion of the fifth consecutive annual general meeting subject to
ratification of the appointment by the Members at every subsequent
annual general meetings. Messrs Deloitte Haskins & Sells, Chartered
Accountants have confirmed their eligibility and willingness to accept
office, if re-appointed by the Members at the 52nd Annual General
Meeting of the Company.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed Messrs D. Hanumanta
Raju & Co., a firm of Company Secretaries in Practice to undertake the
secretarial audit of the Company. Secretarial Audit Report under
Section 204(1) of the Companies Act, 2013 issued by Messrs D. Hanumanta
Raju & Co., Practising Company Secretaries is attached as Annexure-3.
Cost Auditors
In terms of Section 148 of the Companies Act, 2013 read with the
Companies (Audit & Auditors) Rules, 2014, the Board at their meeting
held on April 22, 2016 appointed Messrs Narasimha Murthy & Co., Cost
Accountants as Cost Auditors of the Company at a remuneration of ''6.50
lakhs (excluding service tax) plus reimbursement of travelling and out
of pocket expenses on the recommendation of Audit Committee at their
meeting held on April 22, 2016 for the financial year ending March 31,
2017 and their remuneration shall be ratified by the Members at the
forthcoming Annual General Meeting.
Cost Accounting Records
Cost accounting records for the financial year under review were
maintained as per the Companies (Cost Accounting Records) Rules. M/s.
Narasimha Murthy & Co., Cost Accountants were appointed as Cost
Auditors of the Company with the approval of Central Government to
audit the cost accounts for the financial year ended March 31, 2016.
The Cost Audit Report in XBRL form due for filing on September 27, 2015
for the financial year ended March 31, 2015 was filed with the Ministry
of Corporate Affairs on September 30, 2015.
The report for the year ended March 31, 2016 will be filed on or before
end of September, 2016.
Public Deposits
The Company had discontinued its public deposit scheme in the financial
year 2012-13. Despite efforts to identify and repay unclaimed deposit,
the amount of public deposit matured and remaining unclaimed with the
Company as on March 31, 2016 was Rs.0.65 lakhs. The Company has not
accepted or renewed any deposit during the year from the public falling
within the ambit of Section 73 of the Companies Act, 2013 and the
Companies (Acceptance of Deposits) Rules, 2014. During the year under
review, there was no unclaimed deposit amount which is required to be
transferred to Investor Education and Protection Fund.
Particulars of loans, guarantees or investments
No loans, guarantees and investments covered under the provisions of
Section 186 of the Companies Act, 2013 were given during the year under
review.
Dividend
In view of accumulated losses, your Directors decided not to recommend
payment of dividend on the equity shares for the financial year under
review.
Subsidiary Company
The Company made an investment of Rs.5 lakhs by way of share capital in
IP India Foundation, a Section 25 company under the Companies Act, 1956
wherein the excess of income over expenditure will be applied for
promoting its objectives. Accordingly, the accounts of IP India
Foundation are not consolidated since the holding Company will not
derive any economic benefit from its investment in IP India Foundation.
During the financial year ended March 31, 2016, the Foundation recorded
a deficit amounting to Rs.0.62 lakhs.
The Company undertakes that annual accounts of IP India Foundation and
the related information will be made available to the members of
holding company seeking such information at any point of time. The
annual accounts of IP India Foundation is placed on the Company''s
website www.ipappm.com and is also available for inspection by any
Member at the Registered Office of the Company during business hours on
working days of the Company.
Statement containing salient features of the financial statement of IP
India Foundation for the financial year ended March 31, 2016 is
attached as Annexure-4.
Directors'' Responsibility Statement
Your Directors hereby confirm and declare that:
- in the preparation of final accounts for the year ended March 31,
2016 the applicable accounting standards had been followed along with
proper explanation relating to material departures;
- they had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the financial year ended March 31, 2016 and of the
profit of the Company for the year;
- they had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
- they had prepared the accounts for the year ended March 31, 2016 on a
''going concern'' basis;
- they had laid down internal financial controls to be followed by the
Company and that such internal financial controls are adequate and were
operating efficiently;
- they had devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating efficiently.
General
- During the year under review, the Chairman & Managing Director of the
Company has not received any remuneration or commission from the
subsidiary company.
- There were no significant material orders passed by the regulators or
courts which would impact the going concern status of the Company and
its future operations.
- The Company has zero tolerance for sexual harassment at workplace and
has adopted a policy on prevention, prohibition and redressal of sexual
harassment at workplace in line with the provisions of the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 and the rules there under for prevention and
redressal of complaints of sexual harassment at workplace. Internal
Complaints Committee (ICC) has been set up to redress complaints
received regarding sexual harassment. All women employees (permanent,
contractual, temporary, trainees) are covered under this policy.
Acknowledgements
Your Directors wish to place on record their gratitude to the Central
Government, the Government of Andhra Pradesh, the Government of
Telangana, State Bank of India, Axis Bank Limited, Citibank N.A., BNP
Paribas, JPMorgan Chase Bank, Royal Bank of Scotland and Bank of
America N.A. for their continued support during the year.
Your Directors wish to convey their thanks to the valued customers and
dealers for their continued patronage during the year and place on
record their appreciation of the contribution made by all the
employees, during the year.
For and on behalf of the Board
Hyderabd Rampraveen Swaminathan
April 22, 2016 Chairman & Managing Director
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the 51st Annual Report of
the Company and the Audited Accounts for the year ended March 31, 2015.
Performance of the Company
During the financial year 2014-15, your Company recorded a significant
improvement in business performance through strong operational
performance, better revenue management and generating better cash flow.
During the financial year ended March 31, 2015, the Company continued
to execute initiatives for reducing the cost of production, improve the
customer satisfaction, continued focus on safety environment and
productivity. These efforts have helped the Company improve
profitability, resulting in a nominal net profit of Rs. 24.78 lakhs as
against a net loss of Rs. 4161.21 lakhs in the previous year. These
initiatives will also create long-term value for the stakeholders and
help position the Company as a leading supplier of premium grade
products in the domestic market. The summary financial performance for
the year is encapsulated below:
In Rs. crore
March 31, March 31,
Financial Results 2015 2014
Sales and other income 1152.50 1104.16
Earnings before interest,
depreciation & taxation (EBIDTA) 106.16 73.98
Less: Interest (including bank &
finance charges) 44.60 43.39
Depreciation 69.00 87.01
Profit/(Loss) before
exceptional items (7.44) (56.42)
Exceptional items 1.13 -
Profit/(Loss) before tax (6.31) (56.42)
Tax expense/(benefit) (6.56) (14.81)
Profit/(Loss) for the year 0.25 (41.61)
Sales & Marketing
Market demand for uncoated free sheet (UFS) paper remained sluggish
during the year. We estimate that overall demand for paper grew by
around 3% during the year. Demand was impacted by the weak economic
environment, lower demand from government organization and substitution
in some segments. Pricing was under pressure during the year due to
sluggish demand and increased supply of paper. In this market
environment, the Company was able to make progress in sales growth in
domestic and export markets.
Highlights of sales & marketing performance:
a. Sales of 215,846 MT in the financial year 2014-15 as against
208,089 MT in the financial year 2013-14, a growth of 4%;
b. Marked improvement in exports through entering new markets with
annualized growth of over 70%. During the year, your Company expanded
its geographical coverage and added new distribution partners in Africa
and Latin America, and also introduced new cut-size products (under the
HP brand) in the Middle East. The Company is well positioned to meet
all its EPCG obligations;
c. Your Company continues to be focused on delivering increased value
to customers through improved products and customer service;
d. The Company continued to increase penetration of new products
launched with the International Paper brand last year. Sales of
TruPrint, TruPrint Ultra, WriteChoice in the printing/notebook segment
& Hammermill and HP in the cut-size segment registered strong growth
during the year;
e. On Time in Full (OTIF) delivery was improved during the year by 8%.
Raw Material Procurement
The Company''s sustainable farm forestry program represents a strong
competitive advantage. During 2014-15, your Company continued to expand
the program and its partnership with local farmer communities. The
Company was able to source 100% requirement of pulpwood from Andhra and
Telangana, primarily within a radius of 350 sq.kms. After three years
of significant increase in fiber costs, 2014-15 saw increased
availability and price stability.
The Company continues to focus on empowerment of farmers by expanding
the sapling program, education, research & development and community
support.
During 2014 planting year, approximately 220 million saplings were
distributed covering an area of 30,656 hectares under plantation. The
Company expanded the clonal propagation center infrastructure and
introduced new business practices to improve safety and productivity.
Research and Development has been taken at a wider perspective through
a collaborative project with Indian Paper Manufacturers Association
(IPMA) and Institute of Forest Genetic & Tree Breeding (IFGTB),
Coimbatore. The Company is introducing more farmer-friendly
demonstration plots and other cost reduction measures in qualitative
and quantitative production processes. In addition, the initiatives
with high yielding, short rotation planting stock will enhance raw
material availability. These have created a pool of over 107 million
man-days so far.
Information Technology
The Company''s approach towards Information Technology (IT) is to enable
business processes and systems through strategic adoption of IT. These
cover all the operating areas including manufacturing, sales and
marketing, human resources and forestry. During 2014-15, the Company
implemented several IT systems and processes including an upgrade to
the intranet, a new time & attendance system, automation of weighbridge
operations, automation of accounts payable and label printing systems
at Units: Rajahmundry and SN Palem. The Company is also in process of
implementing an upgrade to the current SAP based ERP system. The
project will automate and integrate our finance, control, purchasing
and project management functions providing operational efficiency, cost
reduction, improved controls and management information systems.
During the year, the Company also completed development of a Business
Continuing Plan (BCP) to provide a framework and response plan in case
of disasters. Implementation and monitoring of the BCP is an ongoing
activity.
HR initiatives
Employee engagement and development are critical to the Company''s long
term success. During 2014-15, the Company implemented several
initiatives to create a performance management culture and enable
talent development. As part of the same, the Company has invested in
providing managers training at the IP Leadership Institute. The First
Line Leadership (FLL) Program targeted at first time leaders and
supervisory staff was launched in August 2014. The Company is in the
process of launching manufacturing training programs as part of the
Global Manufacturing System (GMS) initiative.
Long term collective bargaining wage settlement has been completed for
Rajahmundry Mills and Section 12(3) agreement signed on January 7, 2015
as per the provisions of the Industrial Disputes Act. Industrial
relations at both units are collaborative and focused on long-term
development.
During 2014-15, the Company conducted the Global Engagement Survey to
assess employee engagement and satisfaction. The participation rate was
98.37%, the highest among all IP entities. Overall employee engagement
registered a strong improvement compared to prior surveys, with a
specific improvement in communication and recognition.
CSR Initiatives
The Company has adopted CSR Policy which is placed on the Company''s
website. The Board of Directors has also constituted Corporate Social
Responsibility Committee comprising of:
a. Mr. M.S. Ramachandran (Independent Director) - Chairman
b. Ms. Ranjana Kumar (Independent Director) - Member
c. Mr. Rampraveen Swaminathan - Member
The focus areas of CSR Policy are education, environment and
engagement. In view of past losses, the Company is not required to
spend money on CSR activities as per Section 135 of the Companies Act,
2013. However, as a responsible corporate citizen, the Company incurred
a sum of Rs. 55.14 lakhs supporting various CSR initiatives in our
focus areas. During the year, the Company''s CSR initiatives included:
* Donation to Andhra Pradesh Chief Minister''s Relief Fund for Hudhud
Disaster Relief;
* Construction of a check dam for water management in Tantikonda;
* Provision of drinking water to villages around the mill operations;
* Financial support to 62 students under IP Scholarship Program &
Project Saathi;
* Continued distribution of solar lamps to the students in villages
which enabled students to study during power cut time;
* Supporting rain water harvesting activities in five government
schools;
* Construction of drains in Venkatanagaram Village;
* Planting of trees in Visakhapatnam, affected by cyclone ''Hudhud''.
In addition to the financial commitments, your Company has actively
encouraged employees to volunteer in the local community. Our employees
have logged over 3,500 hours, with some impressive results.
Awards/Recognitions
During 2014-15, the Company received the following recognitions:
* IPMA Environment Award 2013-14 from Indian Paper Manufacturers
Association in recognition of maintenance of high standard of
environment management at Rajahmundry Mill;
* Excellence Award and Udyog Rattan Award from Institute of Economic
Studies (IES), New Delhi;
* Finalist in Parivartan Sustainability Leadership Award 2014 from
Sustainability Outlook in recognition of the resource management
leadership demonstrated by the organization;
* Three-star rating from CII Southern Region, in recognition of its
commitment to environment, health and safety practices and policies for
the year 2014 at Rajahmundry mill.
Related Party Transactions
All related party transactions that were entered into during the
financial year under review were on arms length basis and were also in
the ordinary course of business. There are no materially significant
related party transactions by the Company with the promoters,
directors, key managerial personnel which may have a potential conflict
with the interests of the Company at large.
The Board of Directors approved a policy on related party transactions
which was uploaded on the Company''s website. The related party
disclosures are given in note no.26 to the financial statements.
Remuneration Policy
The Company has adopted the Nomination and Remuneration Committee
Charter which includes the Company''s policy on directors'' appointment
and remuneration including criteria for determining the qualifications,
positive attributes, independence of a director and other matters
provided under Section 178(3) of the Companies Act, 2013.
Pursuant to Section 178(4) of the Companies Act, 2013, the Company also
adopted remuneration policy relating to remuneration for the directors,
key managerial personnel and senior executives in the rank of vice
president and above. The remuneration policy is placed on Company''s
website.
Technology Absorption & Energy Conservation
Particulars of conservation of energy, technology absorption are given
in the prescribed format under the Companies (Accounts) Rules, 2014.
Particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo as required under Section 134(3)(m)
of the Companies Act, 2013 read with Rule 8(3) of the Companies
(Accounts) Rules, 2014 are given in the Annexure-1 attached and forms
part of this Report.
Risk Management
The Company has a robust business risk management framework to identify
and evaluate business risks and opportunities. This framework aims to
create transparency, minimize adverse impact on the business objectives
and enhance the Company''s competitive advantage. The key business risks
identified by the Company and its mitigation plans are as under:
a. Fiber Procurement
The Company spends more than 25% of its income on procurement of fiber
viz. casuarina, subabul, mixed hard wood, eucalyptus etc. Keeping in
view the criticality of this factor, the Company has been expanding
farm forestry programme to secure fibre supply.
b. Competition Risk
The paper industry is becoming intensely competitive with the expansion
of capacities by the existing players and lower import duties. To
mitigate this risk, the Company is leveraging on its expertise and
experience by enhancing its brand equity/visibility and energy product
portfolio.
c. Occupational Health & Safety (OH&S)
Safety of employees is of paramount importance to the Company. In order
to inculcate safety culture in the Company, it has identified
Occupational Health & Safety as one of its focus areas. Various
training programs have been conducted at the plants and other
locations. The accountability has been strengthened by integrating OH&S
objectives into job descriptions with the introduction of management
personnel and safety professionals.
Directors
a. Meetings of the Board
The Company prepares Calendar of Meetings with venue and circulates the
same in advance to all the Directors.
During the year under review, four Board meetings and four Audit
Committee meetings were held. The details of the meetings held are
given in the Corporate Governance Report forming part of Annual Report.
During the year under review, (a) Mr. Kenneth P. Huelskamp resigned as
Non-Executive Director with effect from July 14, 2014; (b) Mr. Michael
Baymiller resigned as Non-Executive Director with effect from December
1,2014 and (c) Mr. W. Michael Amick Jr. resigned as Whole-time
Director designated as Executive Chairman from the close of office
hours of October 31, 2014. However, he continued as Non- Executive
Director effective November 1, 2014.
Mr. Rampraveen Swaminathan was appointed as Chairman & Managing
Director with effect from November 1, 2014. Subsequently, Mr. W.
Michael Amick Jr. resigned as Non-Executive Director with effect from
January 19, 2015, and Mr. M. K. Sharma resigned as Independent Director
with effect from January 22, 2015. Ms. Jayashree Satagopan resigned as
Non-Executive Director with effect from April 24, 2015.
The Board placed on record its appreciation for the valuable advice and
guidance received from Mr. Kenneth P Huelskamp, Mr. Michael Baymiller,
Mr. W. Michael Amick Jr., Mr. M.K. Sharma and Ms. Jayashree Satagopan.
Ms. Ann Barbara Wrobleski was appointed as Additional Director under
the category of Non-Executive Director effective April 23, 2015 and she
will hold office upto the date of ensuing Annual General Meeting. The
Company had received requisite notice in writing under Section 160 of
the Companies Act, 2013 proposing her candidature.
In accordance with the provisions of the Companies Act, 2013 and
Articles of Association of the Company, Ms. Shiela P Vinczeller will
hold office up to the forthcoming Annual General Meeting and being
eligible offer herself for re-appointment.
b. Independent Directors
The Members at the 50th Annual General Meeting held on August 27, 2014
appointed the existing Independent Directors viz. Mr. Praveen P Kadle,
Mr. Adhiraj Sarin, Ms. Ranjana Kumar, Mr. Milind Sarwate and Mr. M.S.
Ramachandran under the Companies Act, 2013 each for a term of five
years with effect from August 27, 2014.
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149(6) of the
Companies Act, 2013 and Clause 49 of the Listing Agreement with the
stock exchanges.
c. Key Managerial Personnel
Mr. C. Badrinath was appointed as Chief Financial Officer with effect
from May 1, 2014 in the place of Ms. Jayashree Satagopan.
d. Performance Evaluation
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, the Board has carried out the annual performance
evaluation of its own performance, the Directors individually as well
as the evaluation of the working of its Audit, Nomination and
Remuneration, Corporate Social Responsibility Committees and
Stakeholders Relationship Committee.
A separate exercise was carried out to evaluate the performance of
individual directors including the Chairman& Managing Director who were
evaluated on parameters such as level of engagement and contribution,
independence of judgment, safeguarding the interests of the Company and
its minority shareholders etc.The performance evaluation of independent
directors was carried out by entire Board with the help of an outside
agency viz. Egon Zehnder. The performance evaluation of Chairman &
Managing Director and non-independent directors was carried out by
Independent Directors.
e. Board Training and Induction
At the time of appointing a Director, a formal letter of appointment is
given to him/her, which inter alia explains the role, function, duties
and responsibilities expected of him/her as a Director of the Company.
The Director is also explained in detail the compliances required from
him/her under the Companies Act, 2013, Clause 49 of the Listing
Agreement and other relevant regulations and his/ her affirmation taken
with respect to the same. Details of familiarization of directors are
disclosed on the website of the Company.
f. Audit Committee
The Audit Committee comprises of Mr. Milind Sarwate as Chairman and
Messrs Praveen P. Kadle, Adhiraj Sarin, Thomas G. Kadien and Rampraveen
Swaminathan as other Members. All the recommendations made by Audit
Committee were accepted by the Board.
Extract of Annual Return
The extract of Annual Return as on financial year ended March 31,2015
as required under sub-section 3 of Section 92 of the Companies Act,
2013 in Form No. MGT 9 is attached as Annexure-2.
Particulars of Employees
The information required pursuant to Section 197 read with Rule 5 of
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 in respect of employees of the Company, will be provided
upon request. In terms of Section 136 of the Act, the Report and
Accounts are being sent to the Members and others entitled thereto,
excluding the information on employees'' particulars which is available
for inspection by the Members at the Registered Office of the Company
during business hours on working days of the Company up to the date of
the ensuing Annual General Meeting. If any Member is interested in
obtaining a copy thereof, such Member may write to the Company
Secretary at the registered office in this regard.
Vigil Mechanism
The Company has adopted Whistle Blower Policy to deal with instance of
fraud or any unethical or improper practices. A copy of this policy is
also posted on the website of the Company.
Internal Financial Controls
The Company has an internal financial control system commensurate with
the size, scale and complexity of its operations. Internal audit
function is jointly controlled by in-house department and E&Y LLP. The
main function of Internal Audit is to monitor and evaluate adequacy of
internal control system in the Company, its compliances with the
operating systems, accounting procedures and policies at all locations
in the Company. Based on the report of internal audit function, process
owners take corrective action in their respective areas and thereby
strengthen the controls. Significant audit observations and corrective
actions are reported to the Audit Committee.
Statutory Auditors
The Members at the Annual General Meeting held on August 27, 2014
appointed Messrs Deloitte Haskins & Sells, Chartered Accountants,
Hyderabad, as Auditors of the Company for a period of five years to
hold office from the conclusion of 50th Annual General Meeting to the
conclusion of the fifth consecutive annual general meeting subject to
ratification of the appointment by the Members at every subsequent
annual general meetings. Messrs Deloitte Haskins & Sells, Chartered
Accountants have confirmed their eligibility and willingness to accept
office, if re-appointed.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Company has appointed Messrs D. Hanumanta
Raju & Co., a firm of Company Secretaries in Practice to undertake the
secretarial audit of the Company. Secretarial Audit Report under
Section 204(1) of the Companies Act, 2013 issued by Messrs
D. Hanumanta Raju & Co., Practising Company Secretaries is attached
as Annexure-3.
Cost Auditors
In terms of Section 148 of the Companies Act, 2013 read with the
Companies (Audit & Auditors) Rules, 2014, the Board at their meeting
held on April 23, 2015 appointed Messrs Narasimha Murthy & Co., Cost
Accountants as Cost Auditors of the Company at a remuneration of Rs.
6.15 lakhs (excluding service tax) plus reimbursement of travelling and
out of pocket expenses on the recommendation of Audit Committee at
their meeting held on April 22, 2015 for the financial year ending
March 31, 2016 and their remuneration shall be ratified by the Members
at the forthcoming Annual General Meeting.
Cost Accounting Records
Cost accounting records for the financial year under review were
maintained as per the Companies (Cost Accounting Records) Rules. M/s.
Narasimha Murthy & Co., Cost Accountants were appointed as Cost
Auditors of the Company with the approval of Central Government to
audit the cost accounts for the financial year ended March 31, 2015.
The Cost Audit Report in XBRL form due for filing on September 27, 2014
for the financial year ended March 31, 2014 was filed with the Ministry
of Corporate Affairs on August 15, 2014.
The report for the year ended March 31,2015 will be filed on or before
September 27, 2015.
Public Deposits
The Company had discontinued its public deposit scheme in the financial
year 2012-13. Despite efforts to identify and repay unclaimed deposit,
the amount of public deposit matured and remaining unclaimed with the
Company as on March 31, 2015 was Rs. 0.65 lakhs. The Company has not
accepted or renewed any deposit during the year from the public falling
within the ambit of Section 73 of the Companies Act, 2013 and the
Companies (Acceptance of Deposits) Rules, 2014. During the year under
review, there was no unclaimed deposit amount which is required to be
transferred to Investor Education and Protection Fund.
Particulars of loans, guarantees or investments
No loans, guarantees and investments covered under the provisions of
Section 186 of the Companies Act, 2013 were given during the year
under review.
Dividend
In view of accumulated losses, your Directors decided not to recommend
payment of dividend on the equity shares for the financial year under
review.
Subsidiary Company
The Company made an investment of Rs. 5 lakhs by way of share capital
in IP India Foundation, a Section 25 company under the Companies Act,
1956 wherein the excess of income over expenditure will be applied for
promoting its objectives. Accordingly, the accounts of IP India
Foundation are not consolidated since the holding Company will not
derive any economic benefit from its investment in IP India Foundation.
During the financial year ended March 31,2015, the Foundation recorded
an excess of income over expenditure amounting to Rs. 3.95 lakhs.
The Company undertakes that annual accounts of IP India Foundation and
the related information will be made available to the members of
holding company seeking such information at any point of time. The
annual accounts of IP India Foundation will be available on the
Company''s website www.ipappm.com and will also be available for
inspection by any Member at the Registered Office of the Company during
business hours on working days of the Company.
Statement containing salient features of the financial statement of IP
India Foundation for the financial year ended March 31, 2015 is
attached as Annexure-4.
Directors'' Responsibility Statement
Your Directors hereby confirm and declare that:
* in the preparation of final accounts for the year ended March 31,
2015, the applicable accounting standards have been followed along with
proper explanation relating to material departures;
* they had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the year ended March 31, 2015 and of the profit of the
Company for the year;
* they had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of
Companies Act, 2013 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
* they had prepared the accounts for the year ended March 31, 2015 on a
''going concern'' basis;
* they had laid down internal financial controls to be followed by the
Company and that such internal financial controls are adequate and were
operating efficiently;
* they had devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating efficiently.
General
* During the year under review, the Executive Directors of the Company
have not received any remuneration or commission from the subsidiary
company.
* There were no significant material orders passed by the regulators or
courts which would impact the going concern status of the Company and
its future operations.
* During the year under review, no complaints/cases were filed pursuant
to Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013.
Acknowledgements
Your Directors wish to place on record their gratitude to the Central
Government and Government of Andhra Pradesh, State Bank of India, Axis
Bank Limited, Citibank N.A., BNP Paribas, JPMorgan Chase Bank, Royal
Bank of Scotland and Bank of America N.A. for their continued support
during the year.
Your Directors wish to convey their thanks to the valued customers and
dealers for their continued patronage during the year and place on
record their appreciation of the contribution made by all the
employees, during the year.
For and on behalf of the Board
Hyderabad Rampraveen Swaminathan
June 15, 2015 Chairman & Managing Director
Mar 31, 2013
The Directors have pleasure in presenting the 49th Annual Report of the
Company and the Audited Accounts for the 15 month period ended March
31, 2013.
The financial performance of the Company for the period under review is
summarized in the table given below:
Financial Results Rs. Crore
15 Month 9 Month
ended ended
March 31, December 31,
2013 2011 @
Sales and other income 1253.62 601.60
Earnings before interest, depreciation
& taxation (EBIDTA) 138.77 73.56
Less: Interest (including bank & finance
charges) 55.36 36.10
Depreciation 87.94 50.62
Profit/(Loss) before tax (4.53) (13.16)
Less: Exceptional items 16.19 -
Provision for tax 2.98 84.65
Profit/(Loss) for the period (23.70) (97.81)
@ Figures have been regrouped/reclassified, wherever necessary.
Change in the Financial Year
In order to have uniform financial year under various legislations,
your Company has decided to change the financial year from
January-December to April-March. Accordingly, current annual accounts
and this Report of the Company are for a period of 15 months from
January 1, 2012 to March 31, 2013. Therefore, the figures for the
current period are not comparable with those of the 9 month period
ended December 31, 2011.
Performance of the Company
Your Company adopted 5 strategic principles viz.
a. Become the low cost producer
b. Customer support excellence
c. World class operations and focus on safety, environment and
productivity
d. Expand in printing and writing segments and
e. Create a performance culture.
During the 15 month period ended March 31, 2013 your Company recorded:
a. paper production of 258,201 MT as against 160,565 MT for the
previous 9 month period ended December 31, 2011;
b. revenue of Rs.1230.50 crore from net sale of paper as against
Rs.595.23 crore for the previous 9 month period ended December 31,
2011;
c. sales of 279,093 MT as compared to 1,39,786 MT. The Company
managed to get a better Net Sales Realization per MT over the previous
year due to upward price revisions across all grades and a change in
the product mix;
d. export volume of 37,819 MT as against 15,283 MT. Volume growth of
147% in exports accompanied by a sharp increase in prices improved net
realization per MT;
e. EBIDTA of Rs.138.77 crore as against Rs.73.56 crore;
f. a loss of Rs.23.70 crore in view of outage, abnormal increase in
fibre cost, certain exceptional items and increase in legal and
professional charges. The outage incurred at a cost of Rs.35 crore, had
an unfavourable impact on shipment of 13,000 MT. However, the outage
completed without any LIFE incident resulted in increase in bleached
pulp production and stabilization of power and paper machine
performance.
Dividend
In view of loss, your Directors decided not to recommend payment of
dividend on the equity shares for the financial year under review.
Raw Material Procurement
Your Company concentrated its efforts to procure pulpwood from South
India with focus on State of Andhra Pradesh for meeting its entire
requirement despite unprecedented competition from other paper
manufacturers in this area.
During the year under review, 161.30 million quality saplings were
distributed covering an area of 26,134 hectares under plantation
against development and distribution of 120.70 million seedlings
covering an extent of 16,823 hectares during the previous 2011 planting
year. Research on clonal development has resulted in introduction of
high yielding, disease resistant clones and versatile to a wide variety
of agro-climatic conditions in inland and coastal areas.
Research and Development initiatives with low cost planting techniques,
quality seed material and high yielding, short rotation planting stock
have enhanced raw material availability spread over more than 158,891
hectares.
These benefits are extended to around 48,718 families creating
employment resource pool of 79 million man-days especially in rural
areas so far.
Specific projects for infrastructure development and to provide better
facilities in wood procurement areas were undertaken.
Future Plan of Action
Major thrust shall be given for increasing the Casuarina clonal
plantation with low cost clone development technique, intensifying
specific projects for fibre security, introducing more site-specific
clones by means of macro propagation, clonal trials for Subabul and
spacing trials along with encouraging specific projects for CSR and
environment improvement.
New Projects
During the financial year under review, the Company had commissioned
various maintenance and upgradation projects for sustaining production
levels with quality as well as regulatory projects for meeting
regulatory norms and strategic projects as part of business strategy in
Units: Rajahmundry and Kadiyam.
Awards/Certifications
The Company received second prize in appreciation of the achievements
in Energy Conservation in Large Scale Industry Sector for the year
2011-12 from the Government of Andhra Pradesh.
The Company was also awarded the ''2013 Award for Outstanding Rural
Development'' at the World CSR Congress in Mumbai. This award is in
global recognition of Company''s efforts in the areas of Social
Development.
The 2013 award recognizes the integrated CSR efforts undertaken by the
Company in rural areas, combining our farm forestry programs and social
enrichment programs such as the Mamidilova Check Dam.
The award was titled ''Corporate Social Responsibility - Rural
Development'' for improving the livelihood of farmers in the Mamidilova
village.
Your Company also received Forest Stewardship Council Certification
(FSC), in respect of Unit:Kadiyam covering the production of paper
using transfer and credit systems and sourcing of reclaimed material.
Sustainability
Your Company believes that sustainability makes good business sense and
it extends from plantations to the employees, suppliers and the society
at large. During the year, your Company made significant progress in
the following key focus areas:
- Improving water consumption and waste water treatment performance;
- Reducing fiber losses in process and pulp mill operations;
- Continuing to focus on energy efficiency and renewable energy
sources.
Your Directors are very happy to report that the Company had achieved a
land mark of reaching 1 billion saplings under the social agro forestry
program during the year under review.
Corporate Social Responsibility
As a responsible corporate citizen, the Company has been focusing on
different Corporate Social Responsibility activities like education,
empowerment, environment and employee engagement to help the
communities in and around Rajahmundry.
The following CSR activities were undertaken during the year under
review:
a. Launched distribution of solar lamps to the students of Zilla
Parishad High Schools in the forest areas to enable them to study where
there are power cuts benefitting around 1,500 students;
b. Launched Green Wave campaign at Rajahmundry which motivated several
children to pledge towards plantation of trees and understand its use
towards improving the environment;
c. Constructed a Check Dam in Mamidilova village with storage capacity
of 0.00012 TMC which enables increase in irrigated area from 800 acres
to 5,000 acres;
d. Provided support to the farmers of Eastern Ghatts of Yetikoppaka
village by purchasing the toys from them and participated in the
exhibition;
e. Supported along with employees the farmers during the recent Neelam
Cyclone in the Coastal Andhra region and fire accident at
Chaitanyapuram in Rajahmundry;
f. Organized blood donation camps, health and motivation awareness
event and awareness on HIV/ AIDS.
Particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo
Particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo as required under Section 217 (1)
(e) of the Companies Act, 1956, read with the Companies (Disclosure of
Particulars in Report of the Board of Directors) Rules, 1988 are given
in the Annexure-I attached and forms part of this Report.
Particulars of employees
The information required under Section 217 (2A) of the Companies Act,
1956 and the Rules made thereunder is provided in the Annexure-II
forming part of the Report.
Public Deposits
3 deposits totaling Rs.1.45 lakhs due for repayment on or before March
31, 2013 were not claimed by the depositors as on that date. A deposit
for Rs.0.75 lakhs was refunded during April, 2013. During the year
under review, there was no unclaimed deposit amount which is required
to be transferred to Investor Education and Protection Fund.
The provisions of Section 58A of the Companies Act, 1956 have been
complied with.
Auditors
Messrs Deloitte Haskins & Sells, Chartered Accountants, Hyderabad,
Auditors of the Company will retire at the conclusion of the ensuing
Annual General Meeting and being eligible, offered themselves for
re-appointment.
Directors
During the year under review, Mr. Paul Brown, Executive Chairman
resigned from the Board with effect from July 13, 2012. Mr. Shreeyash
Bangur and Mr. P.K.Suri, Director (Operations) also resigned from the
Board with effect from July 12, 2012 and July 13, 2012 respectively.
The Board placed on record its appreciation for the valuable advice and
guidance received from Mr. Paul Brown, Mr. Shreeyash Bangur and Mr.
P.K.Suri during their tenure as Directors of the Company.
The Board of Directors at the Meeting held on July 13, 2012 appointed
Mr. W. Michael Amick Jr. as Director and also as Executive Chairman for
a period of 5 years from the date of assuming charge i.e. August 23,
2012.
Mr. Michael Baymiller and Mr. Kenneth P. Huelskamp were appointed as
additional directors with effect from July 13, 2012.
Mr. M.K. Sharma, Mr. Adhiraj Sarin and Mr. Milind Sarwate who were
appointed as independent directors in the casual vacancies, will hold
office up to the ensuing Annual General Meeting and being eligible,
offered themselves for re- appointment.
Mr. W. Michael Amick Jr., Mr. Michael Baymiller and Kenneth P.
Huelskamp will hold office up to the ensuing Annual General Meeting.
The Company has received requisite notices in writing under Section 257
of the Companies Act, 1956 from Members proposing their candidature.
HR Initiatives and Industrial Relations
During the period under review, the Company had taken the following HR
initiatives:
- Introduced performance based pay by assessing the performance of
the employees through contribution summary assessment forms;
- Encouraged the employees to participate in Global Employee
Engagement Survey;
- Completed Compensation Mark-to-Market Survey for aligning the
compensation structure with that of the market;
- Introduced medical insurance, personal accident insurance and group
term life insurance as part of social security benefits;
- Introduced certain policies like gift policy, new forestry
allowances policy and office infrastructure and workplace policy and is
in the process of finalizing the other HR related policies;
- Conducted technical, safety and SAP training in co- ordination with
the mills'' HR;
- Nominated certain leaders and young and aspiring leaders for week
long training at the Leadership Institute, US.
The overall industrial relations at both the Units: Rajahmundry and
Kadiyam are harmonious and cordial. The employees and the unions have
been cooperating in improving productivity.
All the employees have been motivated to improve safety and environment
at workplace and facilitate the management to take pro-active
steps/measures in this regard.
Cost Accounting Records
Costing accounting records for the financial year under review were
maintained as per Cost Accounting Records Rules. M/s. Narasimha Murthy
& Co., Cost Accountants, were appointed as Cost Auditors of the Company
with the approval of Central Government to audit the cost accounts for
the financial year ended March 31, 2013.
The Cost Audit Report in XBRL form due for filing on February 28, 2013
for the financial year ended December 31, 2011 was filed with the
Ministry of Corporate Affairs on January 31, 2013.
The report for the year ended March 31, 2013 will be filed on or before
September 27, 2013.
Directors'' Responsibility Statement
Your Directors hereby confirm and declare that:
i. in the preparation of annual accounts for the 15 month period ended
March 31, 2013, the applicable accounting standards have been followed
along with proper explanation relating to material departures;
ii. they had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the 15 month period ended March 31, 2013 and of the loss
of the Company for that period;
iii. they had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv. they had prepared the accounts for the 15 month period ended March
31, 2013 on a ''going concern'' basis.
Acknowledgements
Your Directors wish to place on record their gratitude to the Central
Government and Government of Andhra Pradesh, State Bank of India,
Canara Bank, Axis Bank Limited, Citibank N.A., IFC, DEG, BNP Paribas,
JPMorgan Chase Bank, and Bank of America N.A., for their continued
support during the year.
Your Directors wish to convey their thanks to the valued customers and
dealers for their continued patronage during the year. Your Directors
also place on record their appreciation of the contribution made by all
the employees during the year.
For and on behalf of the Board
Hyderabad W. Michael Amick Jr.
April 23, 2013 Executive Chairman
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting the 47th Annual Report and
the Audited Accounts for the year ended 31st March, 2011.
Rs. Crore
Financial Results 2010-11 2009-10
Sales and other income 798.62 658.02
Earnings before Interest,
Depreciation and Taxation (EBIDTA) 163.94 153.03
Less: Interest 39.88 32.16
Depreciation 66.97 55.82
Profit before Tax 57.09 65.05
Less: Provision for Tax 12.14 10.86
Profit for the year 44.95 54.19
Add: Profit brought forward
from previous year 69.99 119.61
Profit available for appropriation 114.94 173.80
Appropriations
Transfer to General Reserve 50.00 100.00
Proposed Equity Dividend 3.98 3.27
Corporate Tax on Dividend 0.65 0.54
Balance carried to Balance Sheet 60.31 69.99
114.94 173.80
During the year under review, your Company recorded production of
1,87,233 MT during the year under review as against 1,76,452 MT in the
previous year and sales of 1,93,302 MT as compared to 1,77,351 MT in
the previous year. The increase in volumes and net sales realization
contributed to higher sales value. EBIDTA was Rs.163.94 crore as against
Rs.153.03 crore in the corresponding year. However, profitability was
affected due to higher input cost, retrospective settlement of wage
revision following an agreement with the union of Unit:APPM, higher
depreciation cost and interest and finance charges.
Change in the share capital
On 2nd December, 2010, your Company allotted 70,18,242 equity shares of
Rs.10 each for cash at a premium of Rs.40 per share aggregating to Rs.3509.12
lakhs by converting equivalent number of Detachable Warrants.
Consequently, the equity share capital has gone up from Rs.32,75,17,970
divided into 3,27,51,797 equity shares of Rs.10 each to Rs.39,77,00,390
divided into 3,97,70,039 equity shares of Rs.10 each. The newly issued
equity shares have since been listed on Bombay Stock Exchange Limited
and National Stock Exchange of India Limited.
Sale of Promoter Shareholding
On 1st April, 2011, a public announcement was issued by Lazard India
Private Limited on behalf of IP Holding Asia Singapore PTE. Limited
(Acquirer) along with International Paper Company ('Person Acting in
Concert' or PAC) to the equity shareholders of the Company pursuant to
Regulations 10, 12 and other applicable provisions of Securities and
Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 1997 offering to acquire 85,67,521 equity
shares of Rs.10 each representing 21.54% of the paid-up capital of your
Company at Rs.544.20 per share payable in cash. The public announcement
was made consequent upon share purchase agreement dated 29th March,
2011 entered into with the promoter group of APPM whereby the acquirer
would purchase the entire shareholding of the promoter group in APPM.
The acquirer is a private unlisted company incorporated on 15th
September, 2010 under the laws of Singapore and is a subsidiary of IP
International Holdings Inc., a subsidiary of International Paper
Company. The PAC is a global paper and packaging company with
manufacturing operations in North America, Europe, Latin America,
Russia, Asia and North Africa. Its businesses include uncoated papers
and industrial and consumer packaging, complemented by xpedx, the
company's North American distribution company. Net sales for the
financial year ended 31st December, 2010 were more than USD 25 billion.
After acquisition of shares from the promoter group and the equity
shareholders from the public category, the acquirer would be holding
75% of the equity share capital of the Company. Consequently, the
Company would become a subsidiary of IP Holding Asia Singapore PTE.
Limited.
Dividend
Your Directors are pleased to recommend a dividend of Rupee One per
share on 3,97,70,039 Equity Shares of Rs.10 each including 70,18,242
equity shares of Rs.10 each allotted in December, 2010 on conversion of
detachable warrants involving an outgo of Rs.462.22 lakhs including
Dividend Distribution Tax.
Marketing and exports
Sales for the year were 1,93,302 MT as compared to 1,77,351 MT in the
previous year. In 2010-11, paper sales comprised 1,88,569 MT and sale
of surplus pulp was 4,733 MT in comparison, paper sales in 2009-10 was
1,52,646 MT and that of pulp was 24,705 MT. Additional quantity
resulted from the commissioning of PM 6. However, the complete benefit
of the expanded capacity will be derived in the financial year 2011-12.
The Company managed to get a better Net Sales Realization per MT over
the previous year partly due to better market conditions and revisions
in the price list across all grades and partly due to change in product
mix at Unit:CP.
Export volumes were 21,669 MT as against 13,646 MT in the previous
year. The Company was not only able to significantly increase quantity,
but also able to substantially increase the sales realization per MT
over the previous year as well.
Raw material procurement
In the field of social/farm forestry, efforts were made to increase the
area under plantation activities in order to meet the demand of
pulpwood in tune with the mill development plan. Concerted efforts by
APPM have enabled to meet and over come the stiff competition in the
catchment for pulpwood procurement.
Raw material resource development
103.70 million quality saplings were developed and distributed during
the year 2010-11 covering an area of 15,000 Ha under plantation against
development and distribution of 97 million saplings covering an extent
of 14,000 Ha during previous 2009- 10 planting year. Research on clonal
development has resulted into introduction of high yielding, disease
resistant clones and versatile to a wide variety of agro-climatic
conditions in inland and coastal areas.
Research and Development initiatives with low cost planting techniques,
quality seed material and high yielding, short rotation planting stock
have enhanced raw material availability spread over more than 1,15,000
Ha. These benefits are extended to around 41,000 families creating
employment resource pool of 57 million man-days especially in rural
areas so far.
Forestry targeting marginal and wastelands
The ongoing farm forestry activities focused on agrarian community of
small and marginal land holdings which could be better utilised for
plantations with minimal investment by adopting low cost planting
technology. Wasteland development also geared up by introducing site
specific superior clones. Introduction of casuarina hybrid has come
out with higher yield ensuring quality raw material to mills and higher
returns to farmers.
The mills farm forestry activities have helped in generating the
pulpwood requirement to mills and also in sustaining the local needs of
farmers by means of generating employment and upliftment of
socio-economic conditions of the villagers and tribal communities.
The industries presence in greening waste lands for raw material
resources have created a strong network comprising tribal
beneficiaries, self help groups, village organizations etc. to fight
against poverty and natural disasters.
Projects
Unit:APPM
Paper Machine # 6
Erection of the second hand paper machine of capacity of 67,000 TPA,
imported from Germany was completed and commissioned in May 2010. The
machine has stabilized.
Two numbers of sheet cutters were received along with the paper machine
and installed in conversion unit near mill and were commissioned in
August 2010.
In addition, one number synchro duplex sheeter and A4 cutting line were
commissioned at SN Palem facility in March 2011.
Export of power
Retrofit of electro static precipitators (ESP) for reduction of
emissions and environment in improvement is completed for coal fired
boilers No.1 to 5. Electrical front arrangements are also completed to
export power up to 8 MW per day.
Construction of D1 tower for DnD sequence
Tower construction and equipment erection was completed. Tower
testing, equipment pre-commissioning trials were completed and
commissioned in July 2011.
Installation of a new ESP and retrofit of Recovery Boiler # 4
All equipments for ESP are received at site. Erection completed and
commissioned in April 2011. Boiler retrofit shall be carried out during
November 2011.
Modifications in Paper Machine # 5
New closed hood and PV system, new state of art design steam &
condensate system equipment, new ceramic top de-watering elements and
new micro travel variable speed high pressure oscillating showers are
ordered on reputed suppliers and partly received at site. The
modifications of new closed hood & ventilation will be completed during
November 2011. All other modifications were completed during April
2011.
Re-winders for PM # 3 and PM # 6
New re-winders are being installed in PM # 6 and PM # 3 to meet the
production requirements. The existing Jagenberg re- winder of PM # 6 is
being retrofitted and operates at its rated speed. The existing
re-winder of PM # 3 will be retrofitted and installed for PM # 2 to
meet converting capacity of the machine.
On-line monitoring systems for stacks, ambient air quality and waste
water
New on-line monitoring systems are installed for stacks for CF Boiler #
1 to CF Boiler # 6 (for SPM) in July 2011. Installation of on-line
monitoring system is in progress for both the lime kilns (for SPM & HS)
and Recovery Boiler # 4 (for SPM & HS). Ambient air quality monitoring
systems (RSPM, SO2, NOx, and Methyl Mercaptans) are being installed.
On-line monitoring systems for waste water (for total organic carbon,
dissolved oxygen, temperature and pH) are also being installed.
Unit:CP
Retrofit of De-Inking Plant
All the imported and indigenous equipment were received at site.
Erection is completed and commissioned in July 2011.
On-line monitoring systems for stack
New on-line monitoring systems are being installed for stack of CF
Boiler # 4 (for SPM). On-line monitoring systems for waste water (for
total organic carbon) are being installed.
Awards
The Company received the following awards during the year under review:
i. The Financial Express - Emergent Venture India (FE-EVI) Green
Business Leadership Award in pulp and paper Sector for the year 2009-10
for its commitments and continuous improvements towards environment
protection, minimizing greenhouse gas emissions through selection of
state-of-the-art technologies and bringing awareness about climate
change.
ii. IPMA Environment Award 2009-10.
iii. The CII Environmental Best Practices Award 2011 for its commitment
and continuous improvements towards environment protection by
installing high efficiency and low odour chemical recovery boiler.
Corporate Social Responsibility
Under CSR initiatives, during July 2010, an ambulance was donated to
Government Hospital, Rajahmundry. A check dam was constructed
(initiated during 2009-10) at Mamidilova Village, near Pendurthi of
Visakhapatnam District. This has helped the villages to increase their
land productivity, wood yield and their earnings considerably. A sum of
?18.07 lakhs was spent till now towards this initiative. At
Venkatanagram village, your Company started operating and maintaining
the reverse osmosis plant which was installed in the previous year.
Your Company also initiated road development works at quarry market
area of Rajahmundry City.
Summer training facility was extended to engineering/MBA/
ITI/polytechnic students for nearby college students. Over 300 students
underwent such training. At Ongole Division, covering five villages,
about 800 school bags were distributed to the poor and needy school
going children.
A number of eye camps and cataract operations, free supply of
spectacles were organized in and around Rajahmundry. Free tailoring and
embroidery training facilities were provided to women and youth of
weaker section of society through APPM developed training centers. 300
ladies underwent a six months training program, which has helped them
to provide financial support to their respective families.
Your Company also continued its support to local social-cultural-
religious functions and sports and games events in and around
Rajahmundry.
Particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo Particulars of conservation of
energy, technology absorption and foreign exchange earnings and outgo
as required under Section 217 (1) (e) of the Companies Act, 1956, read
with the Companies (Disclosure of Particulars in Report of the Board of
Directors) Rules, 1988, are given in the Annexure - I attached and
forms a part of this Report.
Particulars of employees
The information required under Section 217 (2A) of the Companies Act,
1956 and the rules made there under is provided in the Annexure - II
forming part of the Report.
Public deposits
37 deposits totaling Rs.23.60 lakhs due for repayment on or before 31st
March, 2011 were not claimed by the depositors as on that date.
Deposits aggregating to Rs.22.90 lakhs were refunded upto 31st July,
2011. During the year under review, there was no unclaimed deposit
amount which is required to be transferred to Investor Education and
Protection Fund.
The provisions of Section 58A of the Companies Act, 1956 have been
complied with.
Auditors
M/s. B S R & Co., Chartered Accountants, Hyderabad, Auditors of the
Company will retire at the conclusion of the ensuing Annual General
Meeting and, being eligible, have offered themselves for
re-appointment.
Directors
Pursuant to Article 142 of the Articles of Association of the Company,
Mr. L.N. Bangur and Mr. Rajiv Kapasi will retire by rotation at the
ensuing Annual General Meeting and are eligible for re-appointment.
Mr. P.R. Ramakrishnan, who was appointed as Director in the casual
vacancy caused by the resignation of Mr. R.V. Raghavan, will hold
office upto the date of ensuing Annual General Meeting and, being
eligible, has offered himself for re-appointment.
Mrs. Alka Bangur resigned as a Director from the Board of Directors of
the Company with effect from 17th May, 2011. The Board placed on
record its appreciation of the valuable services rendered by Mrs. Alka
Bangur during her tenure as a Director of your Company.
Mr. R. C. Sarin resigned from the Board with effect from 8th August,
2011. Your Directors placed on record their appreciation of the
excellent services rendered by him during his association with the
Company.
The Board appointed Mr. Paul Brown, nominee of IP Holding Asia
Singapore PTE Limited as Additional Director through Circular
Resolution with effect from 18th May, 2011. Pursuant to Article 129 of
the Articles of Association, Mr. Paul Brown will hold office upto the
ensuing Annual General Meeting and being eligible, has offered himself
for re-appointment.
Industrial relations/initiatives
The industrial relations at both the units of the Company have been
harmonious and cordial. The employees and unions have been proactive in
maintenance of discipline and cooperative in improving productivity.
The wage settlement was successfully concluded for Unit:APPM and for
Unit:CP.
Employee training and development
Thrust is being continued by providing necessary training in their
respective functional areas as well as on safety, management systems,
leadership development skills to enhance individual competency to meet
the current challenges and improve organizational performance. During
the year 2010-11, total training man-hours were 35,977 which worked out
to 15 hours per participant.
Cost Accounting Records
Cost accounting records for the year ended 31st March, 2011 were
maintained as per Cost Accounting Records Rules. M/s. Narasimha Murthy
& Co., Cost Accountants were appointed as Cost Auditors of the Company
with the approval of Central Government to audit the cost accounts for
the year ended 31st March, 2011.
The cost audit report due for filing on 30th September each year, was
filed with the Ministry of Corporate Affairs on 24th August, 2010 for
the financial year 2009-10.
The report for 2010-11 will be filed on or before 30th September, 2011.
Directors' Responsibility Statement
Your Directors hereby confirm and declare that:
a. in the preparation of annual accounts for the year ended 31st
March, 2011, the applicable Accounting Standards has been followed
along with proper explanation relating to material departures as
mentioned in Note No. 3 of Schedule No. 20 of the said annual accounts;
b. they had selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the financial year i.e. 31st March, 2011 and
of the profit of the Company for that period;
c. they had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
d. they had prepared the accounts for the year ended 31st March, 2011
on a going concern basis.
Response to the Auditors' observation
As regards Auditors' observation vide Item No.3 of the Auditors' Report
dated 4th May, 2011 regarding Accounting Standard 22 on Accounting for
Taxes on Income, an explanation has been given in Note No. 3 of
Schedule No. 20 of the annual accounts for the year ended 31st March,
2011.
Acknowledgements
Your Directors wish to place on record their gratitude to Central
Government and the Government of Andhra Pradesh, IFC, DEG, Finnish Fund
for Industrial Cooperation Limited, State Bank of India, Canara Bank,
IDBI Bank, ICICI Bank and Axis Bank for their continued support during
the year. Your Directors also wish to convey their thanks to the valued
customers and dealers for their continued patronage during the year.
Your Directors also place on record their appreciation of the
contribution made by all the employees during the year.
For and on behalf of the Board
Secunderabad L.N. Bangur
8th August, 2011 Executive Chairman
Mar 31, 2010
The Directors have pleasure in presenting the 46th Annual Report and
the Audited Accounts for the year ended 31st March, 2010.
Rs. Crore
Financial Results 2009-10 2008-09
Sales and other income (after accounting
for increase/(decrease) in stocks) 638.92 669.05
Earnings before Interest, Depreciation and
Taxation (EBIDTA) 153.03 125.37
Less: Interest 32.16 49.37
Depreciation 55.82 54.11
Profit before Tax 65.05 21.89
Less: Provision for Tax 10.86 2.93
Profit for the year 54.19 18.96
Add: Profit brought forward from previous year 119.61 104.06
Profit available for appropriation 173.80 123.02
Appropriations:
Transfer to General Reserve 100.00 1.90
Proposed Equity Dividend 3.27 1.29
Corporate Tax on Dividend 0.54 0.22
Balance carried to Balance Sheet 69.99 119.61
173.80 123.02
During the year under review, your Company achieved the highest ever
performance in terms of,
a. Earnings before interest, depreciation and tax (EBIDTA) Rs.153.03
crore
b. Profit before tax (PBT) Rs.65.05 crore and
c. Profit after tax (PAT) Rs.54.19 crore
reflecting operational efficiency and incremental contribution. The
increase in performance compared to previous year in terms of EBIDTA
was 22%, PBT 197% and PAT 186%.
Change in the share capital
On 30th March, 2010, the Company allotted 70,18,242 Equity Shares of
Rs.10 each for cash at a premium of Rs.40 per share aggregating to
Rs.3509.12 lakhs on rights basis in the ratio of 3:11 to the equity
shareholders and also 70,18,242 detachable warrants simultaneously.
These detachable warrants would be converted into Equity Shares at any
time before the expiry of eighteen months from the date of allotment
i.e. 30th September, 2011 on payment of warrant exercise price of
Rs.50 per warrant.
Consequently, the equity share capital had gone up from Rs.25,73,35,550
divided into 2,57,33,555 Equity Shares of
Rs.10 each to Rs.32,75,17,970 divided into 3,27,51,797 Equity Shares of
Rs.10 each. The newly issued Equity Shares and Detachable Warrants have
since been listed on Bombay Stock Exchange Limited and National Stock
Exchange of India Limited.
Dividend
Your Directors are pleased to recommend a dividend of Rupee One per
Share on 3,27,51,797 Equity Shares of Rs.10 each including the Equity
Shares allotted in March, 2010 involving an outgo of Rs.381.92 lakhs
including Dividend Distribution Tax.
Marketing and Exports
Sales for the year were 1,77,351 MT as compared to 1,70,239 MT in the
previous year. In 2009-10, paper sales comprised 1,52,646 MT and sale
of surplus pulp was 24,705 MT. In comparison, paper sales in 2008-09
was 1,38,630 MT and that of pulp was 31,609 MT. While the slowdown in
the economy had limited impact on the volumes, it did have an impact on
the price realizations both in the pulp and paper segments.
New Products
In the second half of the year, the Company introduced a new 90+
brightness range of papers in a bid to re-establish and grow our
volumes in both copier and graphic papers including Indias first
copier with Colour Freeze technology - Copyrite. Apart from this, the
other introductions are Reflection a premium grade 70 GSM copier, a
high bright paper Andhra Starwhite, high-end writing and printing paper
Andhra Primavera, a premium grade Maplitho paper Andhra Royal Silk and
a superior special grade paper Andhra Hi Brite SG Maplitho in the
surface size segment. Andhra Skytone and Andhra Starliner in the
premium non-surface sized category were introduced to primarily cater
to the notebook conversion segment. All these products are positioned
and benchmarked to the best in competition and have not only been very
well received but are also being increasingly demanded by the end
customer.
Power Generation
During the year under review, your Company started exporting surplus
generated power of 5 MW to Transmission Corporation of Andhra Pradesh
Limited resulting in additional revenue of Rs.15 crore.
Raw Material Procurement
In the field of social/farm forestry, efforts were made to increase the
area under plantation activities in order to meet the demand of
pulpwood in tune with the mill development plan. Concerted efforts by
APPM have enabled to meet and overcome the stiff competition in the
catchment for pulpwood procurement.
Raw Material Resource Development
97.74 million quality seedlings were developed during the year 2009-10
covering an area of 14,500 hectares under plantation against 95.2
million seedlings covering an extent of 14,000 hectares during the 2008
planting year. Research on clonal development has resulted into
introduction of high yielding, disease resistant clones and versatile
to a wide variety of agro-climatic conditions in inland and coastal
areas.
Research and Development initiatives with low cost planting techniques,
quality seed material and high yielding, short rotation planting stock
have enhanced raw material availability spread over more than 1 Lakh
hectares. These benefits are extended to around 39,000 families
creating employment resource pool of 50 million man-days especially in
rural areas so far.
Forestry Targeting Marginal and Wastelands
The ongoing farm forestry activities focused on agrarian community of
small and marginal land holdings which could be better utilised for
plantations with minimal investment by adopting low cost planting
technology. Wasteland development also geared up by introducing site
specific superior clones. Introduction of Casuarina hybrid has come
out with higher yield ensuring quality raw material to mills and higher
returns to farmers.
The mills farm forestry activities have helped in generating the
pulpwood requirement to mills and also in sustaining the local needs of
farmers by means of generating employment and upliftment of
socio-economic conditions of the villagers, tribal communities and
self-help groups.
Projects implemented
Umt:APPM
Your Company successfully started commercial production from Paper
Machine No.6 on 19th May, 2010 at its Unit:APPM at Rajahmundry.
Currently, the Voith made machine imported from Salach, Germany has a
paper production capacity of 67,000 MTPA of UFS (Uncoated Free Sheet)
and Copier Grades. However, with some modifications, the machine can be
scaled up to manufacture an additional 20,000 MTPA. With the startup of
this machine, your Company now has approximately 250,000 MTPA of Pulp
and Paper manufacturing capacity.
The start up of Paper Machine No.6 marks the end of the final phase of
the Mill Development Plan worth almost USD 205 million at Unit:APPM.
Earlier, your Company had commissioned a 500 Bone Dry Metric Tonnes
(BDMT)/day Elementary Chlorine Free (ECF) pulp mill of Andritz make, a
105 TPH coal fired boiler and a 34 MW turbine at the same location.
With its new ECF pulp mill, de-inking plant and rice straw pulp mill,
your Company is among a handful of fully integrated paper manufacturers
in India who are not dependent on market pulp.
Unit:CP
Projects implemented
Sludge de-watering machine
Sludge de-watering press of 35 BD MTPD sludge handling capacity was
commissioned on 25th August, 2009 for disposal of sludge. The
performance has been satisfactory.
Awards
The Company received the following awards during the year under review:
i. A special award by CAPEXIL (sponsored by Ministry of Commerce &
Industry, Government of India) in recognition of outstanding export
performance in respect of paper and paperboards for the year 2008-09.
ii. Forest Stewardship Councils (FSC) Chain-of-Custody (C0C)
Certificate for responsible sourcing of pulpwood fibre for manufacture
of pulp and paper.
iii. First Prize under National category for design and concept of the
stall at the International Exhibition and Conference in New Delhi by
PAPEREX.
iv. Gold Medal from the Governor of Andhra Pradesh & President - Red
Cross Society, AP State Branch for assisting Red Cross Society in
mobilising resources for its various humanitarian activities in East
Godavari District for the year 2008-09.
Corporate Social Responsibility
The Company installed a Reverse Osmosis plant with a capacity to
process 3,000 litres/hr along with a dedicated borewell and water
storage tank to hold 20,000 litres to supply safe drinking water to
Venkatanagaram Village. Another initiative in the farm-forestry area
was the construction of a check dam at Mamidilova near Pendurthi in
Visakhapatnam District for enhancing the land productivity through
optimum utilization of site resources. With the involvement of the
local people and a goal of environment amelioration, the Company has
succeeded in the upliftment of socio-economic status of the farmers
living in the areas near the dam.
Free tailoring and embroidery training has been provided to women and
youth of weaker sections of society through Company developed tailoring
centers. 220 ladies underwent a six months training programme, which
has helped them to provide financial support to their individual
families.
Our Company has also continued its support to local socio-
cultural-religious functions and sports & games events in and around
Rajahmundry. Activities such as conducting eye camps (Drushtee),
assistance for construction of dressing rooms at the newly developed
skating ring etc. were initiatives taken in this area.
Particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo
Particulars of conservation of energy, technology absorption and
foreign exchange earnings and outgo as required under Section 217 (1)
(e) of the Companies Act, 1956, read with the Companies (Disclosure of
Particulars in Report of the Board of Directors) Rules, 1988, are given
in the Annexure attached hereto and forms a part of this report.
Particulars of Employees
The information required under Section 217 (2A) of the Companies Act,
1956 and the Rules made thereunder is provided in the Annexure forming
part of the Report. However,
in terms of Section 219 (1) (b) (iv) of the Companies Act, this Annual
Report is being sent to the shareholders excluding the aforesaid
Annexure. Any shareholder interested in obtaining a copy of the same
may write to the Company Secretary at the Registered Office of the
Company.
Public Deposits
Three deposits totalling Rs.1.05 lakhs due for repayment on or before
31st March, 2010 were not claimed by the depositors as on that date.
During the year under review, there was no unclaimed deposit amount
which is required to be transferred to Investor Education and
Protection Fund.
Auditors
In view of rotational policy of the Company, Messrs Brahmayya & Co.,
Chartered Accountants, Visakhapatnam, Auditors of the Company informed
that they would not seek re-appointment at the conclusion of the
ensuing Annual General Meeting. On the recommendation of the Audit
Committee, your Board of Directors decided to propose the appointment
of Messrs B S R & Co., Chartered Accountants, Hyderabad as statutory
auditors to hold office from 15th July, 2010 being the date of 46th
Annual General Meeting till the conclusion of next Annual General
Meeting.
The Board placed on record its appreciation of the long association
with the outgoing firm of auditors viz. Messrs Brahmayya & Co. and the
valuable assistance rendered by them during their tenure as auditors.
Directors
Pursuant to Article 142 of the Articles of Association of the Company,
Shri P.J.V. Sarma and Shri P.K. Paul will retire by rotation at the
ensuing Annual General Meeting and are eligible for re-appointment.
The Board at the meeting held on 30th January, 2010 decided to
re-appoint Ms. Sheetal Bangur as Whole-time Director designated as
Director (Commercial) for a further period of five years from 1st
April, 2010 subject to approval of shareholders.
Shri R. V. Raghavan, resigned on 14th May, 2010 from the Directorship
of the Company. The Board placed on record its appreciation of the
valuable services rendered by Shri Raghavan during his tenure as
Director of the Company.
The Board at the meeting held on 20th May, 2010 appointed Shri L. N.
Bangur, Chairman as Executive Chairman for a period of five years from
27th May, 2010 subject to approval of Members.
Directors Responsibility Statement
Your Directors hereby confirm and declare that:
a. in the preparation of Annual Accounts for the year ended 31st March,
2010, the applicable Accounting Standards had been followed along with
proper explanation relating to material departures as mentioned in Note
No.10 of Schedule No.19 of the said Annual Accounts;
b. they had selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state-of-affairs of
the Company at the end of the financial year i.e. 31st March, 2010 and
of the profit of the Company for that period;
c. they had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting the fraud and other irregularities;
d. they had prepared the accounts for the year ended 31st March, 2010
on a going concern basis.
Industrial Relations
Industrial relations during the year under review were cordial.
Employee Training and Development
Thrust has been continued by providing training in their respective
functional areas, safety, management systems and behavioral skills to
enhance individual competence to meet the current challenges and
thereby improve organizational performance. During the year 2009-10,
total training manhours were 39,736 which worked out to 6.5 hours per
participant.
Cost Accounting Records
Cost accounting records for the year ended 31st March, 2010 were
maintained as per Cost Accounting Records Rules. M/s. Narasimha Murthy
& Co., Cost Accountants were appointed as Cost Auditors of the Company
with the approval of Central Government to audit the cost accounts for
the year ended 31st March, 2010.
Response to the Auditors observation
As regards Auditors observation vide Item Nos. 4 (d) and (e) of
Auditors Report dated 4th May, 2010 regarding Accounting Standard 22
on Accounting for Taxes on Income, an explanation has been given in
Note No.10 of Schedule No.19 of the Annual Accounts for the year ended
31st March, 2010.
Acknowledgements
Your Directors wish to place on record their gratitude to Central
Government and the Government of Andhra Pradesh, IFC, DEG, Finnish Fund
for Industrial Cooperation Limited, State Bank of India, Canara Bank,
IDBI Bank and Axis Bank for their continued support during the year.
Your Directors also wish to convey their thanks to the valued customers
and dealers for their continued patronage during the year. Your
Directors also place on record their appreciation of the contribution
made by all the employees during the year.
For and on behalf of the Board
Secunderabad L.N. Bangur
27th May, 2010 Executive Chairman