Mar 31, 2015
Dear Members,
The Directors have pleasure in submitting the Tenth Annual Report of
the Company together with the Audited Accounts for the financial year
ended 31st March 2015.
FINANCIAL HIGHLIGHTS
The summarized financial results are as under :
Year ended Year ended
31st March 31st March
2015 2014
Rs.in lacs Rs. in lacs
1. Revenue from operations 17981.73 22224.02
2. Other income 639.37 743.41
3. Total Expenditure before Interest & 18590.93 21120.72
Depreciation
EBITDA 30.17 1846.71
4. Finance Charges 3212.74 3529.15
5. Depreciation 1027.12 1364.10
6. Profit before Tax (4209.69) (3046.54)
7. Provision for Taxation  Â
8 (Net profit ti l / Et di t ^ (4209.69) (3046.54)
(before Exceptional / Extraordinary items)
9. Exceptional/ Extraordinary items  220.07
10. Net Profit (4209.69) (2826.47)
OPERATIONS
The turnover of the Company is Rs.180 Crores compared to Rs.222 Crores
in the previous year. We expect to improve the production and sales in
the forthcoming year 2015-16.
There has been no change in the nature of business of the Company
during the year under review.
TRANSFER TO RESERVES
Due to losses, the Company is unable to transfer any amount to its
Reserves.
DIVIDEND
No dividend has been declared in the financial year under review having
regard to the losses incurred by the company during the year.
SHARE CAPITAL
The paid-up capital of the Company as at 31.03.2015 stood at
Rs.43,11,36,560/- . During the year under review the Company has not
made any fresh issue of shares.
TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION
FUND
The Company has not declared any dividend in the past and hence
transfer of unclaimed Dividend to Investor Education and Protection
fund does not arise.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return pursuant to the provisions of Section 92
of the Companies Act, 2013 read with Rule 12 of the Companies
(Management and Administration) Rules, 2014, in Form MGT-9 is furnished
in Annexure A and is attached to this report.
BOARD / COMMITTEE MEETINGS CONDUCTED DURING THE PERIOD UNDER REVIEW
During the year under review, 4 Meetings of the Board of directors, 4
Meetings of the Audit Committee, 2 Meetings of the Nomination and
Remuneration Committee and 4 Meeting of the Stakeholders Relationship
Committee were held. Further details of the same have been enumerated
in the Corporate Governance Report annexed herewith.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(3)(c) of the Companies Act
2013, with respect to Directors' Responsibility Statement, the
Directors confirm that -
a) In the preparation of the annual accounts, the applicable accounting
standards have been followed and there are no material departure from
those standards;
b) they have 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 end of the financial year and of the loss of the
company for that period;
c) they have taken Proper and sufficient care for maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities;
d) they have prepared the annual accounts on a going concern basis;
e) they have laid down internal financial controls to be followed by
the Company and that such internal financial controls are adequate and
were operating effectively; and
f) they had devised proper system to ensure compliance with the
provisions of all the applicable laws and such systems were adequate
and operating effectively;
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12)
OF THE COMPANIES ACT, 2013 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE
CENTRAL GOVERNMENT
There have been no frauds reported by the Auditors pursuant to Section
143(12) of the Companies Act, 2013.
DECLARATION OF INDEPENDENT DIRECTORS
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet the criteria of
independence as prescribed both under the Companies Act, 2013 and
Clause 49 of the Listing Agreement with the Stock Exchanges.
COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF
REMUNERATION AND OTHER MATTERS PROVIDED UNDER SECTION 178(3) OF THE
COMPANIES ACT, 2013
The Board has, on the recommendation of the Nomination and Remuneration
Committee, framed a policy for fixing and revising remuneration of
Directors, Key Managerial Personnel, Senior Management Personnel and
employees of the Company. The Remuneration policy of the Company is
annexed herewith as Annexure B and can also be accessed on the
Company's website at the link www.servalakshmi.in/Facilities.html.
COMMENTS ON AUDITORS' REPORT:
With regard to the observations of the Statutory Auditors on the
complete erosion of the net worth, your directors are of the view that
this will not have any adverse effect since concerted efforts are being
taken by the management to tide over the situation.
In respect of the qualification(s) made by the Secretarial Auditor in
his Report, your Directors wish to state as under;
Sl
N0 Qualification Reply
1 The Company has not appointed Chief The Company is in the process
Financial Officer and Company Secretary of appointing and complying
after the resignation of Mr. G.V. with the provisions.
Ramana as Chief Financial Officer w.e.f.
22.01.2015, and Ms.Praveena Dhanagopal
as Company Secretary w.e.f 11.02.2015.
2 The financial statements indicate that Considering the accumulated
the Company has accumulated losses and losses and present financial
its net worth has been fully eroded situations, the company has
and accordingly the Company is a "Sick made an application to the
Industrial Company" within the meaning Board for Industrial and
of Sick Industrial Companies (Special Financial Reconstruction
Provisions) Act, 1985. The Company (BIFR) in order to
has made a reference to the BIFR achieve a financial
under Section 15 of Sick Industrial rehabilitation.
Companies (Special Provisions) Act,
1985, in view of the erosion of the
entire net worth of the Company.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186
OF THE COMPANIES ACT, 2013
There were no loans, guarantees or investments made by the Company
under Section 186 of the Companies Act, 2013 during the year under
review and hence the said provision is not applicable.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
The particulars of every contract and arrangement entered into by the
Company with related parties referred to in sub-section (1) of section
188 of the Companies Act, 2013 including certain arm's length
transactions under third proviso thereto are disclosed in Form No. AOC
-2 and forms part of this Report.
The Policy on Related Party Transactions as approved by the Board of
Directors of the Company has been uploaded on the Company's website and
may be accessed through the link at
www.servalakshmi.in/Facilities.html.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF
THE COMPANY:
There have been no material changes and commitments, if any, affecting
the financial position of the Company which have occurred between the
end of the financial year of the Company to which the financial
statements relate and the date of the report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
The information pertaining to conservation of energy, technology
absorption, 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 is furnished in Annexure C and is
attached to this report.
STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT
POLICY OF THE COMPANY
The Company has a structured risk management policy. The Risk
management process is designed to safeguard the organization from
various risks through adequate and timely actions. It is designed to
anticipate, evaluate and mitigate risks in order to minimize its impact
on the business. The potential risks are inventoried and integrated
with the management process such that they receive the necessary
consideration during decision making
DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The Company has not developed and implemented any Corporate Social
Responsibility initiatives as the said provisions are not applicable.
ANNUAL EVALUATION OF THE BOARD ON ITS OWN PERFORMANCE AND OF THE
INDIVIDUAL DIRECTORS AND COMMITTEES
As per the requirements of the Companies Act, 2013 and the clause 49 of
the listing agreement, the formal annual evaluation of the Board as a
whole, its committees and individual directors was conducted based on
the criteria and framework adopted by the Board. The evaluation process
include an assessment of each director's eligibility, skills and
knowledge and the Board is satisfied that all the Directors on the
Board are competent and have the necessary experience to effectively
execute their duties.
The Board also evaluated the working of the Committees and the Board
expressed its satisfaction on the quality, quantity and timeliness of
the flow of the information between the Committees and the Board.
DIRECTORS & KEY MANAGERIAL PERSONNEL
During the year under review, the members have approved the appointment
of Mr.S.Srinivasaraghavan, Mr. V.S.Pattabiraman and Mr.D.Muthusamy as
the Independent Directors of the Company for a period of five years.
Mr. Y.Rambabu resigned as Whole time Director of the company with
effect from 09th August, 2014. The Board places on record its
appreciation for the services rendered by Mr.YRambabu during his tenure
with the company.
Mr.D.V.A.Manoharan ceased to be a director of the company with effect
from 25th April 2014 due to death. The Board places on record the
appreciation for Mr.D.V.A.Manoharan's fruitful association with the
company.
Mr.B.Sriramulu resigned from the directorship of the company with
effect from 01.07.2015. The Board records its appreciation for his
association with the company.
The Board at its Meeting held on 8th November, 2014, appointed Mrs.
Nithya Nirupama as an Additional Director and Independent Director.
Subsequently she resigned from the Directorship of the company with
effect from 13.07.2015. The Board records its appreciation for her
association with the company
Mr. G.V.Ramana resigned as the Chief Financial Officer of the company
with effect from 22nd January, 2015. The Board thanks him for the
services rendered during his tenure as CFO.
Ms. Praveena Dhanagopal resigned as the Company Secretary and
Compliance Officer of the company with effect from 11th February, 2015.
The Board thanks her for providing valuable guidance to the company
during her tenure.
As per the provisions of the Companies Act, 2013, Mr.R.Ramswamy,
Executive Chairman of the company, retires at this Annual General
Meeting and being eligible, offers himself for reappointment. The Board
recommends his re-appointment.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
The Company does not have any Subsidiaries, Joint ventures or Associate
Companies.
FIXED DEPOSITS
Since the Company has not accepted any fixed deposits covered under
Chapter V of the Companies Act, 2013, there are no deposits remaining
unclaimed or unpaid as on 31st March 2015 and accordingly, the question
of default in repayment of deposits or payment of interest thereon,
during the year, does not arise.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR
COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S
OPERATION IN FUTURE
There is no significant and material order passed by the regulators or
courts or tribunals impacting the going concern status and company's
operation in future.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has adequate internal control systems to monitor internal
business process, financial reporting and compliance with applicable
laws. The Company periodically reviews the adequacy and effectiveness
of the control systems.
The Audit committee of the Board reviews internal control systems and
their adequacy, significant risk areas, observations made by the
internal auditors on control mechanism and the operations of the
company, recommendations made for corrective action and the internal
audit reports. The committee reviews with the statutory auditors and
the management, key issues, significant processes and accounting
policies.
AUDITORS
STATUTORY AUDITORS
M/s. S.Krishnamoorthy & Co., Chartered Accountants, Coimbatore were
appointed as the Statutory Auditors of the company for a period of
three years at the Annual General Meeting held on 26th September 2014.
Pursuant to the provisions of Section 139 of the Companies Act, 2013,
the ratification of their appointment is to be done at the ensuing
Annual General Meeting. The Company has obtained written confirmation
from the Auditors to the effect that the ratification of their
appointment if made would be in conformity with the provisions of
Companies Act, 2013. Members are requested to ratify their appointment.
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 Mr.M.D.Selvaraj, MDS
& Associates, Company Secretaries in Practice to undertake the
Secretarial Audit of the Company. The report of the Secretarial report
is annexed herewith as Annexure D to this report.
COST AUDITORS
The Board of Directors on the recommendation of the Audit Committee,
have appointed Mr.S.Thangavelu, Cost Accountant, as the Cost Auditor of
the company for the financial year 2015-16.
Pursuant to Section 148 of the Companies Act 2013 read with the
Companies (Cost Records and Audit) Rules, 2014, the remuneration
payable to the Cost Auditor is subject to the approval of the members
in a general meeting. The Board recommends the ratification of his
remuneration.
Pursuant to Section 209(1 )(d) of the Companies Act, 1956, the Cost
Audit Report for the financial year ended 31st March 2014 was submitted
to the Central Government on 20.02.2015.
PARTICULARS OF EMPLOYEES
The disclosure as required under Section 197(12) of the Companies Act,
2013 read with Rule 5(1) of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014, is annexed herewith as Annexure E
and is attached to this report.
The disclosure referred to the Rule 5(2) of Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 does not apply to the
Company as there were no employees who are in receipt of remuneration
in the aggregate at the rate of not less than Rs.60,00,000/- if
employed throughout the year or Rs.5,00,000/- per month if employed for
part of the year.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has in place a policy on Sexual Harassment of Women at
Workplace in line with the requirements of the Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
All employees (permanent, contractual, temporary, trainees) are covered
under this policy. There were no complaints received from any employee
during the financial year 2014-15.
CORPORATE GOVERNANCE
As required under Clause 49 of the Listing Agreement with the Stock
Exchanges, the report on Management Discussion and Analysis, Corporate
Governance as well as Auditor's Certificate regarding compliance of
conditions of Corporate Governance forms part of this Annual Report.
(VIGIL MECHANISM) WHISTLE BLOWER POLICY
The Company has provided for adequate safeguards to deal with instances
of fraud and mismanagement and to report concerns about unethical
behavior or any violation of the Company's code of conduct. The policy
can be accessed on the Company's website at
www.servalakshmi.in/Facilities.html.
CAUTIONARY NOTE
The statements in this Director's Report & Management Discussions and
Analysis contain forward looking statements regarding Company's
projections & expectations and the actual results could differ
materially from those expressed on account of various factors like raw
material prices, change in demand, government regulation etc., and the
readers are cautioned against placing undue reliance on the same.
ACKNOWLEDGEMENT
Your Directors take this opportunity to place on record their
appreciation for the dedication and commitment of its employees at all
levels. Your directors thank and express their gratitude for the
support and co-operation received from the CDR EG, Central and State
Governments, Bankers, Customers, Distributors, Dealers, Suppliers,
Shareholders, etc., for their continued faith, support and
co-operation.
By order of the Board
For Servalakshmi Paper Limited
(Sd/-)
Coimbatore R. RAMSWAMY
10th August, 2015 Executive Chairman
(DIN : 00010572)
Mar 31, 2014
Dear Shareholders,
The Directors have pleasure in submitting the ninth annual report of
the company together with the audited accounts for the financial year
ended 31st March 2014. The Management Discussion and Analysis (MDA)
report has been included at appropriate places in this report.
FINANCIAL RESULTS
The summarized financial results are as under.
Year ended Year ended
31st March 2014 31st March 2013
Rs. in lacs Rs. in lacs
1. Net Sales/Income from operations 22224.02 18010.44
2. Other Income 743.41 538.10
3. Total Expenditure 21120.72 17315.22
EBITDA 1846.71 1233.32
4. Finance Charges 3529.15 4353.96
5. Depreciation 1364.10 1351.35
6. Profit before Tax (3046.54) (4471.99)
7. Provision for Taxation - -
8. (Netf Proft (3046.54) (4471.99)
(before Exceptional/Extraordinary
items)
9. Exceptional/Extraordinary items 220.07 (105.76)
10. Net Profit (2826.47) (4577.75)
The turnover of the Company rose to Rs. 222 Crores (23%) compared to
Rs. 180 Crores in the previous year.
With the installation of certain critical equipments, the paper machine
is now stabilized with increased runnability and we foresee a
considerable increase in the production and sales for the forthcoming
Year 2014-15 also.
DIVIDEND
Due to loss incurred by the Company, the Board has not recommended any
dividend for the year ended 31st March 2014.
PERFORMANCE OF THE COMPANY
The total paper production during the Financial Year 2013-14 was 54975
tonnes, out of which 37635 tonnes (68 %) was Newsprint (NP) and 17340
tonnes (32%) was Printing and Writing Paper (PWP).
The Company has exported 13155 tonnes (24 % of production) out of which
2159 tonnes was Newsprint (NP) and 10996 tonnes was Printing and
Writing Paper (PWP). Compared with Newsprint, Printing and Writing
Paper yields better margin.
INDUSTRY STRUCTURE AND DEVELOPMENTS
The Contribution of Paper towards Education, dissemination of
information and knowledge and packaging cannot be matched. Despite the
predictions that digital era would render paper obsolete, Paper
industry has been growing year after year.
Annual revenue from the Paper Sector to the world economy is more than
USD 500 Billion. Current paper consumption nears 400 million tonnes per
annum.
Global demand for Paper is expected to grow by 2 - 3 % per annum.
Emerging markets are expected to grow by 5%, whereas India is expected
to have an annual growth of about 6% per annum slightly ahead of China.
Paper Industry in India is high fragmented, with nearly 1000 paper
mills in operation producing nearly 12 Million tonnes of Paper, Paper
Boards and Newsprint. The consumption is nearly 13 million tonnes. It
is expected to touch almost 14 million tonnes by 2015-16 and 20 million
tonnes by 2020, clearing indicating the Scope of the Paper Industry in
India. With growing literacy rates and the economy, this seems to be
Certain.
As per the ICRA reports, the market size and per capita consumption
have grown from 7.3 Kg in 2008-09 to nearly 11 Kg in 2014, clearly
exhibiting the growing demand for Paper in India.
India''s effective literacy rate continues to be around 74%. The
Education sector received an allocation of Rs. 68728 Crores in the
Union Budget 2014.
There is a continuous demand for Newsprint (NP) throughout the year,
where as Printing and Writing Paper (PWP) has seasonality. The peak
demand for PWP is from January to June every year and July to December
is lean period.
OUTLOOK, RISKS, CONCERNS, OPPORTUNITIES AND THREATS
The products News Print and Print and Writing Paper varieties were
manufactured using 100% Recycled fibre and hence the products are not
comparable to the products of virgin pulp based A-grade mills in
quality.
The paper industry is poised for a positive outlook globally. ICRA
expects the paper industry to grow at 6%. India has high potential for
Paper Industry as the per capital consumption of paper is low compared
to other grown up countries.
Non availability of Raw materials is a major concern for the Industry.
Our Company imports waste paper and coal. International Market
conditions and the rupee fluctuation will have a major impact on the
margins of the Company. Also rise in the inflation rates will affect
the profitability margins. The high gap between the demand and supply,
capacity additions and high energy consumption costs are always a
concern.
With better resources, we are concentrating on the higher revenue
segment which will earn more EBIDTA. We are aiming for a market
capitalization of 5% in the Printing and Writing paper segment as the
margins are high compared to other segments. We have a strong domestic
and international customer base and dealer network to market our
increased capacity. There is a huge potential for exports and our
Company is concentrating on increasing the Export turnover.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Internal Control Systems of our Company ensure reliability and
integrity of the financial and operational information and Statutory
Compliance. Our Internal Auditors carry on periodic audits in all the
functional areas and submit their reports to the management. The
management reviews the Internal Audit report and ensures immediate
corrective measures. The Audit Committee of the Company also
periodically reviews the observations of the internal Audit. Annual
corporate business plan with division-wise breakup is laid out every
year. In line with this plan, capital and revenue expenditure budgets
are determined and the actual expenditure is monitored by the Finance
head directly for effective control.
DIRECTORS
The Board of Directors are sad to inform the sudden demise of our
Director Mr.D.V.A. Manoharan on 26.04.2014. The Directors wish to place
on record their special appreciation to the services rendered by him
during his tenure of office as Director.
Mr. Y. Rambabu has tendered his resignation due to his personal
commitments and preoccupation and the Board at its meeting held on 9th
Day of August 2014 has accepted the same. The Directors wish to place
on record their special appreciation to the services rendered by him
during his tenure of office as Director.
The Board of Directors had re-designated Mr.R. Ramswamy as Executive
Chairman and appointed Mr.Y. Shivaram Prasad as Managing Director of
the company for a period of three years with effect from 1st January
2014.
Mr.V.S. Pattabiraman and Mr.D. Muthusamy retire at the ensuing Annual
General Meeting and it has been proposed to appoint them as Independent
Directors for five consecutive years with effect from 26th September
2014. Mr. S. Srinivasaragavan, Director of the Company, is proposed to
be appointed as Independent Director for a period of five consecutive
years with effect from 26th September 2014 as per provisions of Section
149 and other applicable provisions of the Companies Act, 2013.
A brief resume, expertise, shareholding in the Company and details of
other Directorships of these Directors as stipulated under Clause 49 of
the Listing Agreement with the Stock exchange form part of the notice
of the ensuing Annual General Meeting.
Your Directors recommend their appointment/re-appointment.
FINANCE
Your Directors acknowledge with gratitude, the valuable financial
assistance and support extended by the Company''s Consortium bankers
M/s. Indian Overseas Bank, M/s. State Bank of India and M/s. Bank of
India.
The Debt Restructuring Package proposed for the Company was accepted by
the CDR Cell on 31st January 2014 and the package is implemented
successfully and we have received sanction letters from the respective
bankers.
FIXED DEPOSIT
The company has not accepted any Fixed Deposits from public during the
year and hence there are no unclaimed deposits as at 31st March 2014.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS
The Company values and understands the need for continuous growth and
development of its people in order to have greater productivity and
provide job satisfaction and also equip them to meet growing
organizational challenges. We have an excellent harmonious industrial
relation at the plant. The company has genuine concern and top priority
for safety and welfare of its employees. Health and safety remains an
area of very high priority for the company.
CORPORATE SOCIAL RESPONSIBILITY
Our Company is committed to the social and employee welfare and we are
determined to help create a better society. Priority is being given to
the engagement of labour from the villages around Tirunelveli rural
area. The Company is also contributing to the health care activities
taken up by the local authorities in Tirunelveli by providing suitable
drinking water facilities to the local residents.
As a part of Company''s social responsibility towards ''Green Coverage of
Mother Nature'' the Company uses recycled paper and its components to an
extent of 100%.
FOREIGN EXCHANGE INFLOW & OUTGO
During the period ended 31st March 2014, the Company''s foreign exchange
earnings were Rs. 4956.36 lakhs (Rs. 2608.65 lakhs for the year ended
31st March 2013). The revenue expenditure in foreign currency was Rs.
6882.19 lakhs (Rs. 2902.77 lakhs for the year ended 31st March 2013)
and the capital expenditure was Rs. 19.81 lakhs (Nil for the financial
year ended 31st March 2013).
CORPORATE GOVERNANCE
A separate section on Corporate Governance and a Certificate from a
practicing company secretary of the Company regarding compliance of
conditions of Corporate Governance as stipulated under Clause 49 of the
Listing Agreement with the Stock Exchange, forms part of the Annual
Report.
PERSONNEL
No employee was in receipt of remuneration in excess of limit set out
for disclosure in Directors Report under Section 217 (2A) of the
Companies Act, 1956.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
The statement showing the particulars of conservation of energy and
technology absorption pursuant to section 217(1 )(e) of the Companies
Act, 1956, read with Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, is given in the annexure forming
part of this report.
CAUTIONARY STATEMENT
The statement in this Directors'' Report & Management Discussion and
Analysis contain forward looking statements regarding Company''s
projections & expectations and the actual results could differ
materially from those expressed on account of various factors like raw
material prices, change in demand, government regulation etc., and the
readers are cautioned against placing undue reliance on the same.
DIRECTORS'' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 217(2AA) of the Companies
Act, 1956, the Directors, to the best of their knowledge and belief,
hereby confirm that.
a) in the preparation of annual accounts for the financial period ended
31st March 2014, the applicable accounting standards issued by ICAI
have been followed.
b) they had selected such accounting policies and applied them
consistently and made judgements and estimates that were reasonable and
prudent so as to give a true and fair view of the state of affairs of
the company at the end of the period and of the profit of the company
for the period under review.
c) they had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities and
d) they had prepared the annual accounts for the financial period ended
31st March 2014, on a going concern basis.
AUDITORS
The Auditors M/s. S. Krishnamoorthy & Co., Chartered Accountants,
Coimbatore retire at the forthcoming Annual General Meeting and being
eligible offer themselves for re-appointment. The Audit Committee and
the Board recommend the re-appointment of M/s. S. Krishnamoorthy & Co.,
Chartered Accountants, as Statutory Auditors and the Company has
received a certificate from the Statutory Auditors to the effect that
their re- appointment, if made, would be within the limits prescribed
under Section 139 of the Companies Act, 2013. Members are requested to
appoint the Auditors for a period of 3 years commencing from the
conclusion of the ensuing 9th Annual General Meeting up to the
conclusion of the 12th Annual General Meeting of the Company which
ought to be held during the year 2017 subject to the ratification by
the Shareholders annually.
COST AUDITOR
Pursuant to the provisions of the Section 233B of the Companies Act,
1956, the Board of Directors of your company on the recommendation of
Audit Committee had appointed M/s. Vivekanandan Unni & Associates, as
the Cost Auditors for conducting Cost Audit for the financial year
2013-14.
Pursuant to Section 209(1 )(d) of the Companies Act, 1956 and Rule 5 of
the Companies (Cost Audit Records) Rules, 2011, the Cost Audit Report
for the financial year ended 31st March, 2013 was submitted to the
Central Government in the prescribed form on 02.05.2014.
ACKNOWLEDGEMENTS
Your Directors take this opportunity to place on record their
appreciation for the dedication and commitment of its employees at all
levels. Your directors thank and express their gratitude for the
support and co-operation received from the CDR EG, Central and State
Governments,Bankers, Customers, Distributors, Dealers, Suppliers,
Shareholders,etc. for their continued faith, support and
co-operation.
By order of the Board
For Servalakshmi Paper Limited
(Sd/-)
Coimbatore R. RAM SWAMY
9th August, 2014 Executive Chairman
Mar 31, 2012
The Directors have pleasure in submitting the Seventh Annual Report
together with the Audited Accounts for the 9 months period ended 31st
March 2012 in comparison with the 15 months period ended 30th June
2011. The Management Discussion and Analysis (MDA) report has been
included at appropriate places in this report.
FINANCIAL RESULTS:
The summarized financial results are as under:
Rs. in lakhs
Period ended Period ended
31st March 2012 30th June 2011
(9 months) (15 months)
Total Revenue 5,621.17 13,555.59
Total Expenditure 11,591.72 18,920.88
Profit / (Loss) before Tax (5,970.55) (5,365.29)
Exceptional Items, extraordinary
items and tax 172.39 Ã
Profit / (Loss) after Tax (5,798.16) (5,365.29)
PERFORMANCE OF THE COMPANY:
The performance of the company for the 9 months period ended 31st March
2012 is to be viewed in the background of the adverse factors,
affecting its workings.
The total turnover of the company for the 9 months period ended 31st
March 2012 is t 5,409.16 lakhs, including power sales of Rs. 310.11
lakhs. The company had exported paper to the tune of Rs.1,130.01 lakhs.
The accumulated losses of the company is Rs. 11,184 lakhs as against the
net worth of Rs. 11,602 lakhs. As reported already in our last Annual
Report, the unexpected breakdown in the turbine at the company's
Captive power plant has affected the results for the 9 months period
under consideration.
The Company has effected improvement with the installation of Ceramic
drainage element (wire part) and HD Cleaner in its paper plant with a
view to improving the speed and formation of paper. The benefits of
this is likely to accrue to the company in the coming years.
The Company has exported 3246 MT in the 9 months period ended 31st
March 2012, as the export market was looking up. It is encouraging sign
for the company growing its export market in the following year. The
Company is also exploring scope for expanding the demand for its
products domestically.
The increase in average selling price of electricity per unit and the
prevailing shortage of power supply experienced by the industries is
likely to trigger the performance of the power plant during the coming
years.
INDUSTRY STRUCTURE AND DEVELOPMENTS
The paper industry has a vital role to play in socio-economic
development of a country. Indian paper industry has made a steady
growth and it ranks 15th among the paper manufacturing countries in the
world. Total installed capacity is estimated at 10 Million tonnes with
production of 9.2 Million tonnes.
The product segments in the paper industry can be broadly classified as
1) Newsprint, 2) Printing & Writing Paper,3) Industrial Paper and 4)
Specialty paper. Of the total consumption, Printing and Writing paper
accounts for about 35%, Newsprint 20% and Industrial and Specialty
Papers 45%. The per capita consumption of paper in India is about 9 Kgs
against the world average of 58 Kgs and Asian average of 45 Kgs. Your
Company is present in the Newsprint and Printing & Writing Paper
category.
India is considered as one of the fastest growing paper market in the
world due to Government focus on Literacy by introducing "Education is
a Basic Right" under the new Right to Education Act. Shortage of Raw
materials, higher capital outlay and strict CREP environment
regulations are the major entry barriers for the industry.
OUTLOOK, RISKS, CONCERNS, OPPORTUNITIES AND THREATS
Domestic market demand for Newsprint & Printing and Writing Paper is
projected to increase in the forthcoming years. International Newsprint
market is slightly sluggish due to more supply from the developed
countries and the price drop is around 6-7%, which may impact the
domestic market of Newsprint in a long run.
The waste paper prices have also gone up substantially due to higher
demand and also bulk purchases from China. The increase in pulp and
waste paper prices has escalated the cost of production of paper for
many mills across the globe.
Currently, there is no import duty for waste paper. The Company uses
recycled fiber for manufacturing of its products. The parity between
demand and supply of recycled raw materials pose a threat to the
industry with spiraling input costs in short term forecasts affecting
the bottom line of the industry. Cost of coal is escalating and
prospect of availability of quality coal is diminishing. The cost of
importing coal is also a costly proposition.
Paper mills are heavily dependent on imported waste paper which
commands exorbitant price due to inadequate availability. India needs a
well-defined and aggressive system for collection, sorting, grading and
utilization of recyclable waste paper to contain imports.
Although the interest rate cycle has peaked out, RBI has signaled that
interest rates may not go down if inflation remains at elevated levels.
The Government of India has recently withdrawn core sector status
hitherto enjoyed by the paper industry. The paper industry is
considered as one of the high priority industries in the country. India
is considered as one of the largest growing market for paper. With the
increasing literacy rate and improvement in the standard of living, the
paper consumption is likely to grow @ 7% per annum. An increase of 1 Kg
in the per capita consumption would absorb an additional production of
about 1.1 million tonnes.
The average literacy rate has grown from 66% in 2000-01 to nearly 74%
presently. Every 1% increase in literacy will increase the paper demand
by 1 Lakh MTs tonnes per year.
The industry in the last few decades has faced a number of challenges,
particularly
- Obsolescence of technology
- Non availability of good quality fibrous raw materials
- High cost of inputs, especially Waste paper and Coal
- Environmental issues
- Competition in global market
- Lack of skilled manpower to monitor the higher sophistication
- Spurious dumping of imported Waste paper varieties
- Government policies
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has proper and adequate system of internal control to
ensure that all assets are safeguarded and protected against any loss
from unauthorized use or disposition and that transactions are
authorized, recorded and reported correctly. The system further ensures
accurate, reliable and speedy compilation of financial information and
compliance with the laws and regulations. However, efforts are always
continued to further strengthen the Internal Control Procedures.
DIRECTORS
The Directors, Mr. G.P. Muniappan and Mr. S. Srinivasaragavan retire by
rotation at the ensuing Annual General Meeting and are eligible for
reappointment.
Mr. C.K. Lakshminarayanan has resigned from the Board of Directors on
24th January 2012. The Board of Directors wish to appreciate his
services to the Board during his tenure as a Director.
Mr. V.S. Pattabiraman has been appointed as a Director with effect from
9th June 2012 to fill the casual vacancy caused by the resignation of
Mr. C.K. Lakshminarayanan. Mr. V.S. Pattabiraman will hold office of
the Director upto the date upto which Mr. C.K. Lakshminarayanan would
hold the office, if it had not been vacated.
FINANCE
Your Directors acknowledge with gratitude, the valuable assistance and
support extended by the Company's Consortium bankers M/s. Indian
Overseas Bank, M/s. State Bank of India and M/s. Bank of India.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS
The Company values and understands the need for continuous growth and
development of its people in order to have greater productivity and
provide job satisfaction and also equip them to meet growing
organizational challenges. We have an excellent harmonious industrial
relation at the plant. The company has genuine concern and top priority
for safety and welfare of its employees. Health and safety remains an
area of very high priority for the company.
CORPORATE SOCIAL RESPONSIBILITY
Priority is being given to the engagement of labour from the villages
around Tirunelveli town. The Company is also contributing to the health
care activities taken up by the local authorities in Tirunelveli by
providing suitable drinking water facilities to the local residents.
As a part of Company's social responsibility towards 'Green Coverage of
Mother Nature' the Company uses recycled paper and its components to an
extent of 90% with the rest 10% in the form of virgin fibre for
manufacture of its products.
FOREIGN EXCHANGE INFLOW & OUTGO
During the period ended 31st March 2012, the Company's foreign exchange
earnings were Rs. 1,130.01 lakhs. The revenue expenditure in foreign
currency was 18.78 lakhs (Rs. 15.29 lakhs for the 15 months period ended
30th June 2011) and the capital expenditure was Nil (Nil for the 15
months period ended 30th June 2011).
CEO/CFO CERTIFICATION
The Managing Director & Company Secretary of the Company have submitted
a certificate to the Board as required under Clause 49 of the Listing
Agreement for the period ended 31st March 2012.
CORPORATE GOVERNANCE
A separate section on Corporate Governance and a Certificate from a
practicing company secretary of the Company regarding compliance of
conditions of Corporate Governance as stipulated under Clause 49 of the
Listing Agreement with the Stock Exchange, forms part of the Annual
Report.
PERSONNEL
No employee was in receipt of remuneration in excess of limit set out
for disclosure in Directors Report u/s 217 (2A) of the Companies Act,
1956.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
The statement showing the particulars of conservation of energy and
technology absorption pursuant to section 217(1 )(e) of the Companies
Act, 1956, read with Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988, is given in the annexure forming
part of this report.
UTILISATION OF IPO PROCEEDS
The details of utilisation of the IPO proceeds are given in the Notes
to the Financial Statements.
CAUTIONARY STATEMENT
The statement in this Directors' Report & Management Discussion and
Analysis contain forward looking statements regarding Company's
projections & expectations and the actual results could differ
materially from those expressed on account of various factors like raw
material prices, change in demand, government regulation etc., and the
readers are cautioned against placing undue reliance on the same.
DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 217(2AA) of the Companies
Act, 1956, the Directors hereby confirm that:
a) in the preparation of annual accounts for the 9 months period ended
31st March 2012, the applicable accounting standards have been
followed;
b) they had selected such accounting policies and applied them
consistently and made judgements and estimates that were reasonable and
prudent so as to give a true and fair view of the state of affairs of
the company at the end of the period and of the profit of the company
for the period under review;
c) they had taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities and
d) they had prepared the annual accounts for the 9 months period ended
31st March 2012, on a going concern basis.
AUDITORS
The company's auditors M/s. S. Krishnamoorthy & Co., retire at the
ensuing Annual General Meeting and they are eligible for reappointment.
COST AUDITOR
Pursuant to the directives of the Ministry of Corporate Affairs, your
Company had appointed Mr. R.S. Srinivasan, Cost Accountant as Cost
Auditors of the Company under section 233B of the Companies Act, 1956
for the financial period ended 31st March 2012.
ACKNOWLEDGEMENTS
The Board wishes to thank Customers, Distributors, Dealers, Suppliers,
Shareholders, Bankers, etc., for their continued support and
co-operation during the period under review. The Directors wish to
place on record their appreciation to the employees for their continued
co-operation and commitment.
By order of the Board
For Servalakshmi Paper Limited
Coimbatore (Sd) R. RAMSWAMY
9th June, 2012 Chairman & Managing Director
Mar 31, 2010
The Directors have pleasure in submitting the Fifth Annual Report
together with the Audited Accounts for the year ended 31st March 2010.
CONVERSION INTO PUBLIC LIMITED
The company was converted into "Public Limited" as per the resolution
passed by the shareholders at their meeting held on 30th April 2010.
STATUS OF THE NEW PAPER MILL AND CO- GENERATION PLANT
Paper mill project at Kodaganallur in Tirunelveli District has been
completed and trial productions have been carried out and continuous
production has commenced. Co-generation plant, which is mainly intended
for captive consumption has also commenced operations and the surplus
power, if any, will be sold through Power Trading Corporation Limited.
CAPITAL
1. Authorised Capital: At the commencement of the year the Authorised
Capital, was Rs. 12.50 crores consisting of 1,00,00,000 Equity Shares
of Rs.10/- each and 2,50,000 Preference Shares of Rs.100/- each. The
2,50,000 Preference Shares of Rs. 100/- each forming part of the
Authorised Capital were converted into 25,00,000 Equity Shares of
Rs.10/- each on 29.08.2009. Subsequently, the Authorised Capital was
raised to 5,00,00,000 Equity Shares of Rs.10/- each on 29.03.2010. Thus
the present Authorised Capital is Rs.50 Crores.
2. Issued and Paid-up Capital: During the financial year 26,86,000
additional Equity Shares of Rs.10/- each were issued at a premium of
Rs.40/- per equity share. The Company issued 1,06,94,000 Equity Shares
as Bonus Shares in the ratio of 1:1 by way of capitalizing
Rs.10,69,40,000/- from share premium account. The present Paid-up
Capital is Rs. 21,38,80,000/-.
AUDIT COMMITTEE
The company has established an Audit committee as per section 292A of
the Companies Act, 1956. The committee comprises of
Mr.G.RMuniappan(Chairman), Mr.S.N.Inamdar and Mr.B.Sriramulu. The Terms
of Reference of this Committee are wide enough to cover the matters
specified in Section 292A of the Companies Act, 1956 and Clause 49 of
the Listing Agreement.
DIRECTORS
Directors Smt. R Jeevanlatha, Smt. Shobana S. Prasad and Smt. Nirupa
Sriramulu resigned from the Board on 31st March 2010. The Board records
its sincere appreciation for the cooperation and guidance extended by
them to the Company.
Further Sri. S N Inamdar, Sri. G. P Muniappan, and Sri.
Srinivasaragavan were co-opted by the Board as additional Directors.
Their term of office expires on the date of the Annual General Meeting
and they are eligible for appointment as Directors of the Company.
Further Sri. R Ramaswamy has been appointed as Chairman and Managing
Director of the Company without remuneration w.e.f. 01.04.2010 for a
period of 5 years.
Sri. Y. Shivaram Prasad and Sri. B. Sriramulu are the Directors
retiring by rotation and being eligible, offer themselves for
re-appointment.
FIXED DEPOSIT
The company has not accepted any deposits from public during the year
and accordingly there are no unclaimed deposited as at 31/03/2010.
CORPORATE GOVERNANCE
A voluntary Corporate Governance Report together with Management
Discussion and Analysis statement forms part of the Annual Report.
FINANCE
Companys Consortium bankers M/s. Indian Overseas Bank, M/s. State Bank
of India and M/s. Bank of India have extended financial assistance,
both long term and working capital loan.
FOREIGN EXCHANGE INFLOW & OUTGO
There were no exports during the year. However foreign exchange outgo
on account of imports were as follows.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
The particulars as prescribed under section 217(l)(e) of the Companies
Act, 1956, read with the Companies (Disclosure of Particulars in the
Report of the Board of Directors) Rules, 1988, are attached as Annexure
"A" to this report.
PERSONNEL
No employee was in receipt of remuneration in excess of limit set out
for disclosure in Directors Report u/s 217 (2A) of the Companies Act,
1956.
DIRECTORS RESPONSIBILITY STATEMENT
It is hereby reported that:
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation
relating to material departures;
(ii) the directors 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 as on 31st March 2010 and ot the loss oi the company far
the year ended on that date;
(iii) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of this Act for safeguarding the assets of the company and
for preventing and detecting fraud and other irregularities;
(iv) the directors had prepared the annual accounts on a going concern
basis;
AUDITORS
The companys auditors M/s.S.Krishnamoorthy & Co., retire at the
ensuing Annual General Meeting and they are eligible for reappointment.
GENERAL
Your Directors wish to place on record their appreciation of the
contribution of the employees and by the bankers for the timely
financial assistance extended.
By order of the Board
For Servalakshmi Paper Limited
Kodaikanal (Sd) R. Ramaswamy
11.05.2010 Chairman & Managing Director
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