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Notes to Accounts of Seshasayee Paper & Boards Ltd.

Mar 31, 2023

14 (i) Interest free loan under Sales Tax Deferment Scheme of Government of Tamil Nadu:

Interest free loan under Sales tax Deferment Scheme of Government of Tamil Nadu has a deferment period of 10 years from 01.06.2013. Out of total loan of '' 47.64 crores, the Company had fully repaid the entire '' 47.64 crores as at March 31,2023.

The Company had adopted previous GAAP for the carrying amount of the loan at the date of transition and had applied Ind AS 109 after the date of Transition.

Loan outstanding as at April 01, 2016 was valued at fair value and the difference between gross outstanding and fair value of loan was the benefit derived from interest free loan and was recognised as deferred income. Interest on the loan was recognised in the Statement of Profit and Loss applying effective interest rate of 10%. (Refer Note No. 1.11 )

35. (E) ADDITIONAL REGULATORY INFORMATION:

a. Borrowings secured against current assets

The Quarterly returns or statements of current assets filed by the Company with Banks or financial statements are in agreement with the books of accounts.

b. Utilisation of borrowed funds and share Premium throâ intermediaries or for benefit of third party beneficiaries.

i) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other persons or entities, including foreign entities (âIntermediariesâ), with the understanding, whether recorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or invest in other persons or entities Identified in any manner whatsoever by or on behalf of the company (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

ii) No funds have been received by the company from any persons or entities, including foreign entities (âfunding Partiesâ), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.


	Year ended 31-03-2023	Year ended 31-03-2022
	'' crores	'' crores
36 CONTINGENT LIABILITIES AND COMMITMENTS
a. Contingent Liabilities
Claims against the company not acknowledged as debts:
(i) Demands for various years relating to Central excise, Customs duty, Service tax, VAT and GST contested in appeal (Refer Note -1 given below)	7.44	7.35
(ii) Differential duty on Coal imported and consequent penalty contested before CESTAT, Chennai	21.64	21.64
(iii) Demand by Public Works department based on Sanctioned quantity of water as against actual water drawn contested in writ petition before Hon''ble High Court of Madras.	27.29	25.09
(iv) Demand towards energy charges(Start-up Power) as per TNERC order contested in writ petition before Hon''ble High Court of Madras.	4.63	4.63
(v) Partial Disallowance of the claim w.r. to Armâs Length Price and consequent disallowance under Section 80IA of the Income Tax Act, 1961 - contested / estimated	15.01	15.01
(vi) Other - Demand contested.	0.18	0.18
b. Commitments
(i) Estimated amount of contracts remaining to be executed on capital account and not provided for	3.19	5.06
Note - 1 - Includes the following : a) Alleged Irregular Availment of CENVAT Credit of CVD on Import Coal; matter pending before CESTAT, Chennai	5.11	5.11
b) Disputed Service Tax Credit b/fd into GST Tran -1 Credit; Fresh demand raised by GST Authorities post settlement under Sabkha Viswas Scheme; matter pending before Hon''ble High Court of Madras.	1.29	1.29
c) DEPB licences purchased and utilised were disallowed; matter pending before CESTAT, Chennai	0.37	0.37
d) Others	0.67	0.58

1. The fair value of quoted investment in quoted equity shares measured at quoted price.

2. In case of trade receivables, cash and cash equivalents, trade payables, short term borrowings and other financial assets and liabilities it is assessed that the fair values approximate their carrying amounts largely due to the short-term maturities of these instruments.

3. The fair values of the financial assets and financial liabilities included above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparties.

37 (C) FINANCIAL RISK MANAGEMENT - OBJECTIVES AND POLICIES

The Companyâs operational activities expose to various financial risks i.e. market risk, credit risk and risk of liquidity. The Company realises that risks are inherent and integral aspect of any business. The primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

The Companyâs financial liabilities comprise mainly of trade payables and other payables. The Company has NIL Term Loan Borrowings from Banks / any Financial Institutions as on March 31, 2023 and hence doesnât have any financial liability and allied risk on this account. The Companyâs financial assets comprise mainly of cash and cash equivalents, other balances with banks, trade receivables, other receivables and investments.

The Company has financial risk exposure in the form of market risk, credit risk and liquidity risk. The risk management policies of the Company are monitored by the Risk Management Committee of the Board of Directors. The present disclosure made by the Company summarizes the exposure to the financial risks.

1) Market Risk:

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market price comprises three types of risk: currency risk, interest rate risk and other price risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments, and derivative financial instruments. Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Regular interaction with bankers, intermediaries and the market participants help us to mitigate such risk.

a) Interest Rate Risk exposure

The risk is that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company did not have any Term Loan (both working Capital or Project Term Loans) outstanding during the FY 2022-23. The Company, throughout the FY 2022-23, has not availed the Fund Based Working Capital Limits, sanctioned by the Bankers. The Company has not entered into any of the interest rate swaps. Hence, the Company is not exposed to any interest rate risk, as on March 31,2023.

The Company is however exposed to the risk of interest rate fluctuations on the rate of return on fixed deposits of '' 519.90 crores as on 31.03.2023 (excluding accrued interest), maintained by the company with State Bank of India (SBI) and HDFc Bank Limited (Fixed Deposit balance as at 31.03.2022 - '' 300.46 crores).

The Companyâs investment in fixed deposit with banks is only on Fixed Interest Rate Terms and hence, there is no exposure to future interest rate movement.

b) Foreign currency risk exposure

The Company imports coal, pulp, waste paper and other stores & spares for which payables are denominated in foreign currency. The Company is exposed to foreign currency risk on these transactions. The Company, in general, follows a conservative and sound policy by entering into simple Forward Exchange Contracts to hedge the foreign currency risk whose maturity is coterminous with the maturity period of the foreign currency liabilities (underlying). The Company had Foreign Exchange liability for US $ 11.87 Mn as on 31st March 2023 of which US $ 1.85 Mn is hedged with forward contracts, leaving US $ 10.02 Mn as unhedged.

The Company is also exposed to foreign currency risk on its Exports. As on March 31,2023, the Company had Export Receivables in Foreign Currency amounting to US $ 2.91 Mn. (Previous Year -US $ 1.90 Mn), of which US $ 1.95 Mn is hedged with forward contracts on cash flow basis.

c) Commodity price risk

The Company is exposed to the movement in price of key input materials in domestic and international markets. The Company has in place policies to manage exposure to fluctuations in the prices of the key raw materials used in operations. The Company manages fluctuations in raw material price through hedging in the form of advance procurement when the prices are perceived to be low and also enters into advance buying contracts as strategic sourcing initiative in order to keep raw material prices under check, to the extent possible.

d) Other price risk

Other price risk is the risk that the fair value of a financial instruments will fluctuate due to changes in market traded prices. The Companyâs equity investment in its subsidiary and associate is for strategic purposes and not held for trading. They are carried at cost and are hence not subjected to price related risk. Other investments in equity instruments are held with a view to hold them for a long-term basis and not held for trading. The investments are in fundamentally strong companies and temporary fluctuations in price do not attribute any investment risk.

e) Competition and Price risk

The Company faces competition from local and foreign competitors. Nevertheless, it believes that it has competitive advantage in terms of the wide spread of product offerings, good quality products and continuous upgrading its expertise to meet the needs of its customers.

2) Credit Risk

The credit risk refers to risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk arises primarily from financial assets such as trade receivables, other balances with banks and other receivables.

The credit risk arising from the exposure of investing in other balances with banks and bank balances is limited and there is no collateral held against these because the counterparties are public sector banks / AAA rated private sector banks.

The Company sells its products through appointed indentors. The Company has established a credit policy under which every indentor is analysed individually for creditworthiness. Each indentor places security deposit in the Company, based on the quota allocated to him. Though the invoices are raised on the individual customer, the indentor is responsible for the collection and in case of default by the customer, the dues from the customer are withheld / adjusted against the payables to indentor. Over 32% of the receivables as on 31.03.2023 is covered by the credits available with the Company, against indentors account. The balance receivables are insured with Trade Credit Insurance programs offered by a premier Indian Insurance Company. Thus, the credit risk is mitigated in full.

Exports are, in general, made against advances received or terms with payment against documents. The Company has also covered the residual risk with a credit insurance from ECGC. Hence, the credit risk in respect of its exports is fully covered.

For trade receivables, as a practical expedient, the Company computes the credit loss allowance if there is life-time expected credit losses.

3) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly to meet obligations when due. The Companyâs exposure to liquidity risk arises primarily from mismatches of maturities of financial assets and liabilities.

The Company manages the liquidity risk by (i) maintaining adequate and sufficient cash and cash equivalents including investments in fixed deposits with banks (ii) making available the funds from realizing timely maturities of financial assets to meet the obligations when due. The management monitors rolling forecast of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows. Also, the Company manages the liquidity risk by projecting cash flows considering the level of liquid assets necessary to meet the obligations by matching the maturity profiles of financial assets and financial liabilities and monitoring balance sheet liquidity ratios. Further, the liquidity risk management involves matching the maturity profiles of financial assets and financial liabilities.

The Company makes an annual / long term financial plan so as to ensure there are no maturity mismatches in settlement of liabilities.

Undrawn Working Capital borrowing facilities ('' 25 crores and '' 36 crores of Fund Based Limits sanctioned by HDFC and State Bank of India respectively; '' 25 crores and '' 31 crores of Non-fund Based limits sanctioned by HDFC and State Bank of India respectively ) secured by :

- Hypothecation of stocks of Raw Materials, Stores, Spares, Chemicals and others, including Goods-in-Transit, Stock-in-Trade, Stock-in-Process, Finished Goods and Book Debts of the Company

- Second charge, by way of hypothecation of movable fixed assets of the Company, consisting of plant and machinery, fixtures and fittings.

Period and amount of continuing default in respect of above said borrowing facilities: NIL 37 (D) Capital Management

The Company adheres to a cautious capital management that seeks to trigger growth creation and maximization of shareholdersâ value. For the purpose of the Companyâs capital management, capital includes issued capital and all other equity reserves attributable to the shareholders of the Company. The Company has been funding its growth and acquisition plans and working capital requirements through a balanced approach of internal accruals and external debt from banks. The Company monitors the capital structure on the basis of net debt to equity ratio and maturity profile of the overall debt component of the Company.

41 EMPLOYEE BENEFITS (i) Defined Contribution Plans:

contributions and '' 0.22 crores (Year ended March 31,2022 '' 0.32 crores) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plans:

Gratuity (Funded) and Retirement Benefit Scheme (Unfunded)

In respect of Gratuity, the most recent actuarial valuation of the plan assets and in respect of Gratuity and Retirement benefit Scheme the present value of the defined benefit obligation were carried out by actuarial valuation . The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the projected unit cost method. The following table sets forth the status of the Gratuity Plan and the Retirement benefit Scheme of the Company and the amount recognised in the Balance Sheet and Statement of Profit and Loss. The Company provides the gratuity benefit and through annual contributions to the funds managed by the Life Insurance Corporation of India.

The Company is exposed to various risks in providing the above gratuity benefit and Leave Encashment which are as follows:

Interest Rate Risk:

The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

Investment Risk:

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Escalation Risk:

The present value of the defined benefit plan is calculated with the assumption of salary increase rate of plan participants in future, based on past experience. Deviation in the rate of increase of salary in future for plan participants from the rate of increase in salary used to determine the present value of obligation will have a bearing on the planâs liability.

The Company pays contributions to the insurer as determined by them. The insurance company has invested the plan assets in Government Securities, Debt Funds, Equity shares, Mutual Funds and Money Market Instruments. The expected rate of return on plan assets based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation. Significant actuarial assumptions for the determination of the defined benefit obligation are as discussed above.

Sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity outgoes happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset)

The Companyâs best estimate of the contribution expected to be paid to the plan during the next year is '' 7.00 crores ( Previous year Actual '' 6.01 crores).

42 APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved for issue by the Board of Directors at their meeting held on 29th April 2023.

Mar 31, 2022

14 (i) Interest free loan under Sales Tax Deferment Scheme of Government of Tamil Nadu:

Interest free loan under Sales tax Deferment Scheme of Government of Tamil Nadu has a deferment period of 10 years from 01.06.2013. Out of total loan of '' 47.64 crores, the Company has already repaid '' 43.27 crores up to March 31, 2022.

The Company has adopted previous GAAP for the carrying amount of the loan at the date of transition and has applied Ind AS 109 after the date of Transition.

Loan outstanding as at April 01, 2016 was valued at fair value and the difference between gross outstanding and fair value of loan was the benefit derived from interest free loan and is recognised as deferred income. Interest on the loan is recognised in the Statement of Profit and Loss applying effective interest rate of 10%. (Refer Note No. 1.11 )

37. (E) ADDITIONAL REGULATORY INFORMATION:

a. Borrowings secured against current assets

The Quarterly returns or statements of current assets filed by the Company with Banks or financial statements are in agreement with the books of accounts.

b. Utilisation of borrowed funds and share Premium throâ intermediaries or for benefit of third party beneficiaries.

(âUltimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries..


	Year ended 31-03-2022	Year ended 31-03-2021
	'' crores	'' crores
38 CONTINGENT LIABILITIES AND COMMITMENTS
a. Contingent Liabilities
Claims against the company not acknowledged as debts:
(i) Demands for various years relating to Central excise, Customs duty, Service tax, VAT and GST contested in appeal	7.35	4.31
(ii) Differential duty on Coal imported and consequent penalty contested before CESTAT, Chennai	21.64	21.64
(iii) Demand by Public Works department based on Sanctioned quantity of water as against actual water drawn contested in writ petition before Hon''ble High Court of Madras.	25.09	22.80
(iv) Demand towards energy charges as per TNERC order contested in writ petition before Hon''ble High Court of Madras.	4.63	4.63
(v) Partial Disallowance of the claim under Section 80IA of the Income Tax Act, 1961 - contested / estimated	15.01	_â
(vi) Other - Demand contested.	0.18	0.18
b. Commitments
(i) Estimated amount of contracts remaining to be executed on capital account and not provided for	5.06	42.42

1. The fair value of quoted investment in quoted equity shares measured at quoted price.

39 (C) FINANCIAL RISK MANAGEMENT - OBJECTIVES AND POLICIES

The Company''s operational activities expose to various financial risks i.e. market risk, credit risk and risk of liquidity. The Company realises that risks are inherent and integral aspect of any business. The primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

The Company''s financial liabilities comprise mainly of trade payables and other payables. The Company has NIL Term Loan Borrowings from Banks / any Financial Institutions as on March 31, 2022 and hence doesn''t have any financial liability and allied risk on this account. The Company''s financial assets comprise mainly of cash and cash equivalents, other balances with banks, trade receivables, other receivables and investments.

The Company has financial risk exposure in the form of market risk, credit risk and liquidity risk. The risk management policies of the Company are monitored by the Board of Directors. The present disclosure made by the Company summarizes the exposure to the financial risks.

1) Market Risk:

a) Interest Rate Risk exposure

The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has repaid / prepaid all the Term Loans (sanctioned and availed for Projects) during the FY 2021-22. The Company, throughout the FY 2021-22, has not availed the Fund Based Working Capital Limits, sanctioned by the Consortium of Bankers. The Company doesn''t have any Term Loan outstanding as of March 31, 2022. The Company has not entered into any of the interest rate swaps. Hence, the Company is not exposed to any interest rate risk, as on March 31, 2022.

b) Foreign currency risk exposure

The Company imports coal, pulp, waste paper and other stores & spares for which payables are denominated in foreign currency. The Company is exposed to foreign currency risk on these transactions. The Company, in general, follows a conservative and sound policy by entering into simple Forward Exchange Contracts to hedge the foreign currency risk whose maturity is coterminous with the maturity period of the foreign currency liabilities (underlying). The Company had unhedged Foreign Exchange liability for US $3.37 Mn as on 31st March 2022. The Company had EEFC Balance to mitigate the risk arising out of this open exposure.

The Company is also exposed to foreign currency risk on its Exports. As on March 31, 2022, the Company had Export Receivables in Foreign Currency amounting to US $ 1,896,866. (Previous Year -US $ 1,617,073), which is hedged with forward contracts on cash flow basis.

c) Commodity price risk

The Company is exposed to the movement in price of key raw materials in domestic and international markets. The Company has in place policies to manage exposure to fluctuations in the prices of the key raw materials used in operations. The Company manages fluctuations in raw material price through hedging in the form of advance procurement when the prices are perceived to be low and also enters into advance buying contracts as strategic sourcing initiative in order to keep raw material prices under check, to the extent possible.

d) Other price risk

Other price risk is the risk that the fair value of a financial instruments will fluctuate due to changes in market traded prices. The Company''s investment in fixed deposit with banks is on Fixed Interest Rate Terms and hence, there is no risk price movement arising to the Company. The Company''s equity investment in its subsidiary and associate is for strategic purposes and not held for trading. They are carried at cost and are hence not subjected to price related risk. Other investments in equity instruments are held with a view to hold them for a long-term basis and not held for trading. The investments are in fundamentally strong companies and temporary fluctuations in price do not attribute any investment risk.

e) Competition and Price risk

The Company faces competition from local and foreign competitors. Nevertheless, it believes that it has competitive advantage in terms of high quality products and by continuously upgrading its expertise and wide range of products to meet the needs of its customers.

2) Credit Risk

The Company sells its products through appointed indentors. The Company has established a credit policy under which every indentor is analysed individually for creditworthiness. Each indentor places security deposit in the Company, based on the quota allocated to him. Though the invoices are raised on the individual customer, the indentor is responsible for the collection and in case of default by the customer, the dues from the customer are withheld / adjusted against the payables to indentor. Thus, the credit risk is mitigated with a substantial portion of due covered by deposit and payables.

Exports are, in general, made against advances received or terms with payment against documents or against confirmed LCs. The Company has also covered the residual risk with a credit insurance from ECGC. Hence, the credit risk in respect of its exports is fully covered.

For trade receivables, as a practical expedient, the Company computes the credit loss allowance if there is life-time expected credit losses.

3) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk may result from an inability to sell a financial asset quickly to meet obligations when due. The Company''s exposure to liquidity risk arises primarily from mismatches of maturities of financial assets and liabilities.

The Company manages the liquidity risk by (i) maintaining adequate and sufficient cash and cash equivalents including investments in fixed deposits with banks (ii) making available the funds from realizing timely maturities of financial assets to meet the obligations when due. The management monitors rolling forecast of the Company''s liquidity position and cash and cash equivalents on the basis of expected cash flows. Also, the Company manages the liquidity risk by projecting cash flows considering the level of liquid assets necessary to meet the obligations by matching the maturity profiles of financial assets and financial liabilities and monitoring balance sheet liquidity ratios. Further, the liquidity risk management involves matching the maturity profiles of financial assets and financial liabilities.

Undrawn Working Capital borrowing facilities ('' 61 crores of Fund Based Limits and '' 56 crores of Non-Fund Based Limits, sanctioned by State Bank of India & HDFC Bank) secured by :

- Hypothecation of stocks of Raw Materials, Stores, Spares, Chemicals and others, including Goods-in-Transit, Stock-in-Trade, Stock-in-Process, Finished Goods and Book Debts of the Company

- Second charge, by way of mortgage of immovable properties of the Company, consisting of land, buildings, fixed plant and machinery, fixtures and fittings [excluding (i) the assets created out of MDP III Project (ii) 57.93 acres of land together with structures thereon and (iii) Captive Power Plant Assets to the extent of '' 85.00 crores, of Unit : Erode.]

Period and amount of continuing default in respect of above said borrowing facilities: NIL 39 (D) CAPITAL MANAGEMENT

The Company adheres to a cautious capital management that seeks to trigger growth creation and maximization of shareholders'' value. For the purpose of the Company''s capital management, capital includes issued capital and all other equity reserves attributable to the shareholders of the Company. The Company has been funding its growth and acquisition plans and working capital requirements through a balanced approach of internal accruals and external debt from banks. The Company monitors the capital structure on the basis of net debt to equity ratio and maturity profile of the overall debt component of the Company.

43 EMPLOYEE BENEFITS

(i) Defined Contribution Plans:

The Company makes Provident Fund and Superannuation Fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company in the FY 2021-22, recognised '' 4.66 crores (Year ended March 31,2021 '' 4.26 crores) for Provident Fund contributions and '' 0.32 crores (Year ended March 31, 2021 '' 0.32 crores) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(ii) Defined Benefit Plans:

Gratuity (Funded) and Retirement Benefit Scheme (Unfunded)

The Company is exposed to various risks in providing the above gratuity benefit and Leave encashment which are as follows:

Interest Rate Risk:

Investment Risk:

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Escalation Risk:

Demographic Risk:

The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out adverse compared to the assumptions

outgoes happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in a increase in liability without corresponding increase in the asset)

The Company''s best estimate of the contribution expected to be paid to the plan during the next year is '' 4.00 crores ( Previous year Actual '' 2.42 crores).

44 APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved for issue by the Board of Directors at their meeting held on 7th May 2022

Mar 31, 2019

41 EARNINGS PER SHARE

	Year ended 31-03-2019	Year ended 31-03-2018
Profit after Tax (Rs crores)	190.00	122.89
Weighted average no of Shares	12613628	12613628
Basic earnings per share (Rs)	150.63	97.43
Diluted earnings per Share (Rs)	150.63	97.43

42 EMPLOYEE BENEFITS

(i) Defined Contribution Plans:

The Company makes Provident Fund and Superannuation Fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs 4.29 crores (Year ended March 31, 2018 Rs 4.39 crores) for Provident Fund contributions and Rs 0.32 crores (Year ended March 31, 2018 Rs 0.32 crores) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes."

(ii) Defined Benefit Plans:

Gratuity (Funded) and Retirement Benefit Scheme (Unfunded) In respect of Gratuity, the most recent actuarial valuation of the plan assets and in respect of Gratuity and Retirement benefit Scheme the present value of the defined benefit obligation were carried out by actuarial valuation . The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the projected unit cost method. The following table sets forth the status of the Gratuity Plan and the Retirement benefit Scheme of the Company and the amount recognised in the Balance Sheet and Statement of Profit and Loss. The Company provides the gratuity benefit and through annual contributions to the funds managed by the Life Insurance Corporation of India. The Company is exposed to various risks in providing the above gratuity benefit and Leave encashment which are as follows:"

Interest Rate risk:

Investment Risk:

The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Salary Escalation Risk:

Demographic Risk:

The Company has used certain mortality and attrition assumptions in valuation of the liability. The Company is exposed to the risk of actual experience turning out adverse compared to the assumptions Post employment benefit

General description	Gratuity - Funded plan		Retirement benefit Scheme -Non Funded plan
	31-03-2019	31-03-2018	31-03-2019	31-03-2018
	Rs crores	Rs crores	Rs crores	Rs crores
(i) Changes in Defined Benefit Obligations Present Value of - opening balance	30.06	26.50	1.20	1.48
Current Service Cost	1.85	1.52	0.06	0.08
Interest Cost	2.14	1.95	0.08	0.09
Actuarial (Gain) / Loss	-0.61	4.29	0.01	-0.04
Benefits paid	-2.48	-4.20	-0.18	-0.41
Present value - closing balance	30.96	30.06	1.17	1.20
(ii) Changes in the Fair Value of Plan Assets
Opening Balance	28.08	26.50	-	-
Expected Return	2.14	2.10	-	-
Actuarial (Gain) / loss	-0.64	-	-	-
Contributions by employer	3.86	3.68	0.18	0.41
Benefits paid	-2.48	-4.20	-0.18	-0.41
Closing Balance	30.96	28.08	-	-
Actual return	1.50	2.11	-	-
(Mi) Amounts recognised in the Balance Sheet (as at year end)
Present Value of Obligations	30.96	30.06	1.17	1.20
Fair Value of Plan Assets	30.96	28.08	-	-
Net Asset/ (Liability) recognised	-	-1.98	-1.17	-1.20
(iv) Expenses recognised in the Profit and Loss account statement.
Current Service Cost	1.85	1.52	0.06	0.08
Interest on obligation	-	-0.15	0.08	0.09
Total included in "Employee benefit expense"	1.85	1.37	0.14	0.17

Post employment benefit

General description	Gratuity - Funded plan		Retirement benefit Scheme -Non Funded plan
	31-03-2019	31-03-2018	31-03-2019	31-03-2018
	Rs crores	Rs crores	Rs crores	Rs crores
(V) Expenses recognized in Other Comprehensive Income
Remeasurement on the net defined benefit liability
- Actuarial Gain and Losses arising from changes in financial Assumption	0.82	-3.23	-0.01	0.08
- Actuarial Gain and Losses arising from changes in experience adjustment	-0.21	-1.06	-	-0.04
Return on plan assets	-0.64	-	-	-
Net cost in Other Comprehensive Income	-0.03	-4.29	-0.01	0.04
Asset information
- Insurer managed	100%	100%	NA	NA
Principal actuarial assumptions
Mortality	Indian assured Lives Mortality (2012-14)
Discount rate(%)	7.37	7.44	7.44	6.80
Future Salary increase (%)	8.00	8.00	NA	NA
Expected Rate of return of plan assets (%)	7.37	7.44	NA	NA
Expected average remaining working lives of employees (years)	7.8	6.4	NA	NA
Expected contribution (Rs in crores)	4.00	3.86

The sensitivity analysis below have been determined based on reasonably possible changes of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The results of sensitivity analysis is given below:"

Post employment benefit

Particulars	Gratuity - Funded plan		Retirement benefit Scheme -Non Funded plan
	Rs crores	Rs crores	Rs crores	Rs crores
	31-03-2019	31-03-2018	31-03-2019	31-03-2018
Discount Rate
- 0.5% Increase	30.12	29.39	1.11	1.14
- 0.5% decrease	31.84	30.75	1.23	1.25
Salary Growth Rate
- 0.5% Increase	31.88	30.80
- 0.5% decrease	30.08	29.35
Attrition Rate
- 0.5% Increase	30.93	30.04
- 0.5% decrease	30.98	30.07

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity outgoes happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in an increase in liability without corresponding increase in the asset).

The Company''s best estimate of the contribution expected to be paid to the plan during the next year is Rs 4.00 crores ( Previous year 2018 Actual Rs 3.86 crores).

43 APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved for issue by the Board of Directors at their meeting held on 25th May 2019.

Vide our report of date attached
MAHARAJ N R SURESH AND CO.,	R SUBRAMANIAN AND COMPANY LLP	N GOPALARATNAM	MOHAN VERGHESE CHUNKATH
Firm Regn. No. 001931S	Firm Regn. No. S200041	Chairman	DR. NANDITHA KRISHNA
			A.L. SOMAYAJI
			V. SRIDAR
N R Suresh	N Krishnamurthy		Directors.
Membership No. 021661	Membership No. 019339	V PICHAI
Partner	Partner	Deputy Managing	K S KASI VISWANATHAN
Chartered Accountants	Chartered Accountants	Director & Secretary	Managing Director
Chennai
May 25, 2019

Mar 31, 2018

(b) Effective Interest Method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as FVTPL. Interest income is recognized in the Statement of Profit and Loss.

(c) Investments in Equity Instruments at FVTOCI

(i) Investments in Equity Instruments in Subsidiary and Associates :

The Company has elected to carry investment in equity instruments in subsidiary and associates at cost in accordance with Paragraphs 10 of âInd AS 27 - Separate Financial Statementsâ.

(ii) Investments in other Equity Instruments:

The Company has irrevocably designated to carry investment in Equity Instruments as Fair value through Other Comprehensive Income. On initial recognition, the Company can make an irrevocable election (on an instrument-by-instrument basis) to present the subsequent changes in fair value in Other Comprehensive Income pertaining to investments in Equity Instruments. This election is not permitted if the equity investment is held for trading. These elected investments are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognized in Other Comprehensive Income and accumulated in the âReserve for Equity Instruments through Other Comprehensive Incomeâ. On derecognition of such Financial Assets, cumulative gain or loss previously reported in OCI is not reclassified from Equity to Statement of Profit and Loss. However, the company may transfer such cumulative gain or loss into retained earnings within equity.

The Company has equity investments which are not held for trading. The Company has elected the FVTOCI irrevocable option for these investments (see Note 3). Fair value is determined in the manner described in Note 1.2.

Dividends on these investments in equity instruments are recognized in the Statement of Profit and Loss when the Companyâs right to receive same is established, it is probable that the economic benefits associated with the dividend will flow to the company, the dividend does not represent a recovery of part of cost of the investment and the amount of dividend can be measured reliably.

(d) Impairment of Financial Assets

In accordance with Ind AS 109, the Company uses âExpected Credit Lossâ (ECL) model, for evaluating impairment of financial assets other than those measured at fair value through Profit and Loss (FVTPL).

Expected credit losses are measured through a loss allowance at an amount equal to:

- The 12 months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or

- Full lifetime expected credit losses (expected credit losses that result from all possible defaults events over the life of the financial instrument).

For trade receivable, Company applies âsimplified approachâ which requires expected life time losses to be recognized from initial recognition of the receivables.

For other assets, the Company uses 12 months ECL to provide for impairment loss where there is no significant increase in credit risk, if there is significant increase in credit risk full lifetime ECL is used.

(e) Derecognition of Financial Assets:

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for de-recognition under Ind AS 109, a financial liability (or a part of a financial liability) is derecognized when the obligation specified in the contract is discharged or cancelled or expires

Concomitantly, if the asset is one that is measured at:

(a) Amortized cost, the gain or loss is recognized in the Statement of Profit and Loss.

(b) Fair value through Other Comprehensive Income, the cumulative fair value adjustments previously taken to Reserves are reclassified to the Statement of Profit and Loss unless the asset represents an equity investment in which case the cumulative fair value adjustments previously taken to reserves is reclassified within equity.

1.17 Financial Liabilities and Equity Instruments

(a) Classification as Debt or Equity

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

(b) Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a company are recognized at the proceeds received, net of direct issue costs.

(c) Financial Liabilities

All financial liabilities are initially recognized at the value of respective contractual obligations. Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortised cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the âFinance costsâ line item. _y

(d) Derecognition of Financial Liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability modified, such an exchange or modification is treated as the Derecognition of the original liability and the recognition of a new liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid is recognized in the Statement of Profit and Loss.

1.18 Derivative Financial Instruments and Hedge Accounting

The Company enters into derivative financial instruments to manage its exposure to foreign exchange rate risks, by means of foreign exchange forward contracts.

Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in the Statement of Profit and Loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedging relationship and the nature of the hedged item.

The Company designates hedging instruments in respect of foreign currency risk as either fair value hedges or cash flow hedges.

At the inception of the hedge relationship, the company documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Company documents whether hedging instrument is highly effective in offsetting changes in fair values or cash flows of the hedged item attributable to the hedged risk.

Cash Flow Hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recorded in Other Comprehensive Income and are accumulated as âcash flow hedge reserveâ. The gain or loss relating to the ineffective portion is recognized immediately in the Statement of Profit and Loss.

The cumulative gain or loss previously recognized in Other Comprehensive Income remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognized in Other Comprehensive Income is transferred to the carrying amount of the asset when it is recognized . In other cases the amount recognized in Other Comprehensive Income is transferred to the Statement of Profit and Loss in the same period when the hedged item affects Profit and Loss.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. Any gain or loss recognized in Other Comprehensive Income and accumulated in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the Statement of Profit and Loss. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in the Other Comprehensive Income is transferred to the Statement of Profit and Loss.

Fair Value Hedges

The Company designates derivative contracts as hedging instruments to mitigate the risk of change in fair value of hedged item in foreign exchange rates.

Changes in the fair value of hedging instruments and hedged items that are designated and qualify as fair value hedges are recorded in the Statement of Profit and Loss. If the hedging relationship no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortized to Statement of Profit and Loss over the period of maturity.

Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or when it no longer qualifies for hedge accounting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortized to Profit and Loss from that date.

1.19 Foreign Currency Transactions

(a) Initial Recognition

On initial recognition, transactions in foreign currencies are recorded in the functional currency (i.e. Indian Rupees), by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.

(b) Measurement of foreign currency items at reporting date

Foreign currency monetary items are translated at the closing exchange rates. Non-monetary items that are measured at historical cost in a foreign currency, are translated using the exchange rate at the date of the transaction. Non-monetary items that are measured fair value in a foreign currency, are translated using the exchange rates at the date when the fair value is measured.

(c) Recognition of exchange difference

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements is recognized in Profit or Loss in the period in which they arise.

1.20 Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

1.21 First-time adoption - Mandatory Exceptions, Optional Exemptions

(a) Overall principle

The Company has prepared the opening balance sheet as per Ind AS as of April 1, 2016 (the transition date) by recognizing all assets and liabilities whose recognition is required by Ind AS, not recognizing items of assets or liabilities which are not permitted by Ind AS, by reclassifying items from previous GAAP to Ind AS as required under Ind AS, and applying V_/

Ind AS in measurement of recognized assets and liabilities. However, this principle is subject to the certain exceptions and certain optional exemptions availed by the Company as detailed below.

(b) Materiality

The company has applied the Standards only to items / transactions which are material.

(c) Classification of Debt Instruments

The Company has determined the classification of debt instruments in terms of whether they meet the amortized cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.

(d) Impairment of Financial Assets

The Company has applied the impairment requirements of Ind AS 109 retrospectively; however, as permitted by Ind AS 101, it has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments were initially recognized in order to compare it with the credit risk at the transition date. Further, the Company has not undertaken an exhaustive search for information when determining, at the date of transition to Ind AS, whether there have been significant increases in credit risk since initial recognition, as permitted by Ind AS 101. The Company has determined the classification of debt instruments in terms of whether they meet the amortized cost criteria or the FVTOCI criteria based on the facts and circumstances that existed as of the transition date.

(e) Deemed Cost for Property, Plant and Equipment

The Company has elected to continue with the carrying value of all of its Property, Plant and Equipment recognized as of April 1, 2016 (transition date) measured as per the previous IGAAP and use that carrying value as its deemed cost as of the transition date.

(f) Government Grants

The Company has applied the requirement of Ind AS 109 - Financial Instruments and Ind AS 20 - Accounting for Government Grants and Disclosure of Government Assistanceâ prospectively to the interest-free sales tax loan existing at the date of transition and has used the previous GAAP carrying amount of the loan at the date of transition and has applied Ind AS 109 to the measurement of such loan after the date of transition to Ind AS.

(g) Business Combinations

The Company elected not to apply âInd AS 103 - Business Combinationsâ retrospectively for past business combinations.

1.22 Taxes on Income

Taxes on income comprise of Current Tax and Deferred Tax.

(a) Current Tax

Current tax is the amount of income taxes payable in respect of taxable profit for a period. Taxable profit differs from âprofit before taxâ as reported in the statement of Profit and Loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible under the Income Tax Act, 1961.

Current tax is measured using tax rates and tax laws enacted during the reporting period together with any adjustment to tax payable in respect of previous years.

(b) Deferred Tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit under Income Tax Act, 1961.

Deferred tax liabilities are recognized for all taxable temporary differences. However, in case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the accounting profit nor the taxable profit, deferred tax liabilities are not recognized .

Deferred tax assets are recognized for all deductible temporary differences to the extent it is probable that future taxable profits will be available against which those deductible temporary difference can be utilized. In case of temporary differences that arise from initial recognition of assets or liabilities in a transaction that affect neither the taxable profit nor the accounting profit, deferred tax assets are not recognized .

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefits of part of all of such deferred tax assets to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that have been enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

MAT Credit Entitlement are in the form of unused tax credits and are accordingly grouped under Deferred Tax Assets.

(c) Current and Deferred Tax for the year

Current and deferred tax are recognized in the Statement of Profit and Loss, except when they relate to items that are recognized in Other Comprehensive Income or directly in equity, in which case, the current and deferred tax are also recognized in Other Comprehensive Income or directly in equity respectively.

1.23 Events after reporting period

Where events occurring after the Balance Sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the Balance Sheet date of material size of nature are only disclosed.

1.24 Financial and Management Information System

The Companyâs Accounting System is designed to unify the Financial and Cost Records and also to comply with the relevant provisions of the Companies Act, 2013, to provide financial and cost information appropriate to the businesses and facilitate Internal Control. _y

1.25 Segment Reporting

The Company is engaged in the business of manufacture and sale of writing and printing paper and there are no other reportable segment of operation of the Company.

1.26 Earnings Per Share (EPS)

Basic EPS is calculated by dividing the profit or loss attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential equity shares.

B. Key Accounting Estimates and Judgments

1.1 Use of Estimates

The preparation of financial statements in conformity with Ind AS requires Management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates.

1.2 Key sources of estimation uncertainty

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Key assumption concerning the future, and other key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as given below.

(a) Fair value measurement and valuation processes

Some of the Companyâs assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or a liability, the Company uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Company engages third party qualified valuers to perform the valuation. The Management works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.

(b) Useful life of Property, Plant and Equipments

The Company reviews the estimated useful lives of Property, Plant and Equipment at the end of each reporting period. During the current year, there has been no change in useful life considered for the assets.

(c) Cash discounts

I n accordance with Ind AS 18, the Company deducts cash discounts from the revenue for sale of products. Cash discounts on the sale of products in the last month of the year is estimated based on the past experience.

(d) Actuarial valuation

The determination of Companyâs liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognized in the State of Profit and Loss and in Other Comprehensive Income. Such valuation depend upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market. Information about such valuation is provided in notes to the financial statements.

(e) Claims, Provisions and Contingent Liabilities

The Company has ongoing litigations with various regulatory authorities and third parties. Where an outflow of funds is believed to be probable and a reliable estimate of the outcome of the dispute can be made based on managementâs assessment of specific circumstances of each dispute and relevant external advice, Management provides for its best estimate of the liability. Such accruals are by nature complex and can take number of years to resolve and can involve estimation uncertainty. Information about such litigations is provided in notes to the financial statements.

(f) Tax Expense

Significant judgments and estimates are involved in estimating the budgeted profits for the purposes of advance tax, determining the provision for income tax, Minimum Alternate Tax and MAT Credit which may get revised pursuant to the determination by the Income Tax authorities.

2 (i) The Company has taken borrowings from banks which carry charge over all the assets of the Company (Refer Note No 16 towards security.)

2 (ii) Refer Note no 38(b) for disclosure of contractual commitments for the acquisition of Property, Plant and Equipment.

2 (iii) The amount of Borrowing Costs Capitalized during the year ended 31^st March 2018 was Rs, 4.98 crores. The Company has applied Capitalisation rate of 10.11% which is the effective rate of interest rate (EIR) of the Specific borrowings.

UNIT - ERODE:

16 (i) Term loan from Banks including its current maturities (Refer Note No. 23) is secured by :

(a) Hypothecation of Mill Development Plan II - Phase I and Phase II assets at Unit : Erode

(b) Further to be secured by mortgage of immovable properties consisting of land, buildings, fixed plant and machinery, fixtures and fittings (exclusive of 57.93 acres of land together with structures thereon and Captive Power Plant Assets) to the extent of Rs, 85.00 crores.

16 (ii) Terms of Repayment :

Mill Development Plan II - Phase I

(a) The Term loan of Rs, 40.00 crores from Syndicate Bank which carries interest rate of 10.5% is repayable in 66 equal monthly instalments of Rs,0.61 crores Commencing from July 2016.

(b) The Term loan of Rs, 20.00 crores from Canara Bank which carries interest rate of 9.30% is repayable in 28 quarterly Instalments of Rs, 0.71 crores commencing from October 2016.

Mill Development Plan II - Phase II

(c) The Term loan of Rs, 40.00 crores from Syndicate Bank which carries interest rate of 9.75% is repayable in 24 quarterly instalments of Rs, 1.67 crores commencing from April 2019

16 (iii) Interest free loan under Sales Tax Deferment Scheme of Government of Tamil Nadu :

I nterest free loan under Sales Tax Deferment Scheme of Government of Tamil Nadu has a deferment period of 10 years from 01.06.2013. Out of total loan of Rs, 47.64 crores the Company has already paid Rs, 28.91 crores up to 31.03.2018.

The Company has adopted previous GAAP carrying amount of the loan at the date of transition and has applied Ind AS 109 after the date of transition.

Loan outstanding as at 1^st April 2016 is valued at fair value and the difference between gross outstanding and fair value of loan is the benefit derived from interest free loan and is recognized as deferred income. Interest on the loan is recognized in the Statement of Profit and Loss applying effective interest rate of 10%. (Refer Note No.1.12).

UNIT - TIRUNELVELI :

16 (iv) Term loan from bank including its current maturities is secured by :

(a) a charge by way of mortgage of immovable properties of the Company, consisting of land, building, fixed plant and machinery, fixtures and fittings of Unit - Tirunelveli and

(b) hypothecation of movables, including movable plant and machinery and book debts of Unit - Tirunelveli.

16 (v) Mill expansion Plan term loan including its current maturities is secured by :

(a) a charge, by way of mortgage of immovable properties of the Company, consisting of land, building, fixed plant and machinery, fixtures and fittings of Unit - Tirunelveli and

(b) hypothecation of movables, including movable plant and machinery and book debts of Unit - Tirunelveli.

16 (vi) Terms of repayment :

(a) the term loan which carries interest rate of 9.40% is repayable in 24 quarterly instalments of Rs, 5.41 crores from January 2014 to October 2015, Rs, 7.57 crores from January 2016 to October 2017, Rs, 8.65 crores from January 2018 to April 2019 and the balance Rs, 8.10 crores will be paid in July 2019.

(b) Mill Expansion Plan loan of Rs, 60.00 crores (Rs, 48.00 crores drawn and balance Rs, 12.00 crores surrendered) which carries interest rate of 9.40% is repayable in quartley instalments of Rs, 2.20 crores from December 2016 to December 2021 and the balance Rs, 1.80 crores will be paid in March 2022.

Unit - Erode

Secured by:

- hypothecation of stocks of Raw Materials, Stores, Spares, Chemicals and others including Goods-in-Transit, Stock-in-Trade, Stock-in-Process, Finished Goods and Book Debts of Unit

- Erode

- second charge, by way of mortgage of immovable properties of Unit-Erode, consisting of land, buildings, fixed plant and machinery, fixtures and fittings excluding the assets created out of MDP II Phase I Project and exclusive of 57.93 acres of land together with structures thereon and Captive Power Plant Assets to the extent of Rs, 85.00 crores.

Period and amount of continuing default : Nil v y

1. The fair value of quoted investment in quoted equity shares measured at quoted price.

2. I n case of trade receivables, cash and cash equivalents, trade payables, short term borrowings and other financial assets and liabilities, it is assessed that the fair values approximate their carrying amounts largely due to the short-term maturities of these instruments.

39(C) OBJECTIVES AND POLICIES - FINANCIAL RISK MANAGEMENT

The Companyâs financial liabilities comprises mainly of term loan borrowings, trade payables and other payables. The Companyâs financial assets comprises mainly of cash and cash equivalents, other balances with banks, trade receivables, other receivables and investments.

39(C) OBJECTIVES AND POLICIES - FINANCIAL RISK MANAGEMENT (Contd.)

1) Market Risk:

(a) Interest Rate Risk exposure

The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company has availed significant Rupee term loans at floating (reset every year) interest rates. The interest rate is at 1 to 1.3% (spread) plus MCLR rate of respective Bank and the interest rate is reset once in every year, as per the loan facility agreement. The Company has not entered into any of the interest rate swaps and hence, the Company is exposed to interest rate risk.

Interest Rate Sensitivity analysis

The Company considering the economic environment in which it operates has determined the interest rate sensitivity analysis (interest exposure) at the end of the reporting period. The interest rate for the Company are floating rates and hence, the analysis is prepared assuming the amount of the borrowings outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point /- fluctuation in the interest rate is used for disclosing the sensitivity analysis.

The interest rate sensitivity analysis is done holding on the assumption that all other variables remaining constant.

The increase / decrease in interest expense is mainly attributable to the Companyâs exposure to interest rates on its variable rate of borrowings.

(b) Foreign currency risk exposure

The Company imports pulp, waste paper and other stores & spares for which payables are denominated in foreign currency. The Company is exposed to foreign currency risk on these transactions. The Company follows a conservative and sound policy by entering into simple Forward Exchange Contracts to hedge the foreign currency risk whose maturity is coterminous with the maturity period of the foreign currency liabilities. (underlying)

In respect of exports of paper, exports are made against advances received or against confirmed LCs of usance period not exceeding 30 days. Hence, the Company is not exposed to any significant foreign currency risk in respect of its exports.

(c) Other price risk

Other price risk is the risk that the fair value of a financial instruments will fluctuate due to changes in market traded prices. The Companyâs investment in fixed deposit with banks is fixed and hence, there is no risk price movement arising to the Company. The Companyâs equity investment in its Subsidiary and Associate is for strategic purposes and not held for trading. They are carried at cost and are hence not subjected to price related risk. Other investments in equity instruments are held with a view to hold them for a long-term basis and not held for trading. The investments are in fundamentally strong companies and temporary fluctuations in price do not attribute any investment risk.

2) Credit Risk

The Company sells its products through appointed Indentors. The Company has established a credit policy under which every Indentor is analysed individually for creditworthiness. Each indentor places security deposit based on the quotes allocated to him. Though the invoices are raised on the individual customer, the Indentor is responsible for the collection and in case of default by the customer, the dues from the customer are withheld / adjusted against the payables to Indentor. Thus, the credit risk is mitigated.

For trade receivables, as a practical expedient, the Company computes the credit loss allowance if there is life-time expected credit losses.

3) Liquidity risk

The Company manages the liquidity risk by (i) maintaining adequate and sufficient cash and cash equivalents including investments in mutual funds (ii) making available the funds from realizing timely maturities of financial assets to meet the obligations when due. The Management monitors rolling forecast of the Companyâs liquidity position and cash and cash equivalents on the basis of expected cash flows. Also, the Company manages the liquidity risk by projecting cash flows considering the level of liquid assets necessary to meet the obligations by matching the maturity profiles of financial assets and financial liabilities and monitoring Balance Sheet liquidity ratios. Further, the liquidity risk management involves matching the maturity profiles of financial assets and financial liabilities.

The Company makes an annual / long term financial plan so as to ensure there are no maturity mismatches in settlement of liabilities.

39(D) CAPITAL MANAGEMENT

Proposed Dividend

The Board of Directors at its meeting held on 26^th May 2018 have recommended a payment of dividend of Rs, 15 per equity share of face value of Rs,10 each for the financial year ended 31^st March 2018. The same amounts to Rs, 22.81 crores including Dividend distribution tax of Rs, 3.89 crores.

40(5) FIRST TIME ADOPTION OF IND AS

For all periods up to and including the year ended 31^st March 2017, the Company had prepared its financial statements in accordance with the Accounting Standards notified under Section 133 of the Companies Act, 2013, read together with Rule 7 of the Companies (Accounts) Rules, 2014 (âPrevious GAAPâ). This note explains the principal adjustments made by the Company in restating its financial statements prepared under previous GAAP for the following:

a) Balance Sheet as at 1^st April 2016 (Transition date);

b) Balance Sheet as at 31^st March 2017 ;

c) Statement of Profit and Loss for the year ended 31^st March 2017; and

d) Statement of Cash flows for the year ended 31^st March 2017.

(a) Exemptions availed:

Ind As 101 First -time adoption of Indian Accounting Standards, allows first-time adopters, exemptions from the retrospective application and exemption from application of certain requirements of other Ind AS. The Company has availed the following exemption as per Ind AS 101:

1) The Company has elected to consider the carrying value of all its items of Property, Plant and Equipment and intangible assets recognized in the financial statements prepared under previous GAAP and use the same as deemed cost in the opening Ind AS Balance Sheet.

2) The carrying amounts of the Companyâs investments in its Subsidiary and Associate companies as per the financial statements of the Company prepared under previous GAAP, are considered as deemed cost for measuring such investments in the opening Ind AS Balance Sheet.

3) The Company has applied the requirement of Ind AS 109 - Financial Instruments and Ind AS 20 - Accounting for Government Grants and disclosure of Government assistance prospectively to the Interest Free Sales Tax Loan existing at the date of transition and has used the previous GAAP carrying amount of the loan at the date of transition and has applied Ind AS - 109 to the measurement of such loan after the date of transition to Ind AS.

4) Business Combinations:

The Company elected not to apply âInd AS 103 - Business Combinationsâ retrospectively for past business combinations.

(b) Non-Current Investments:

I n the financial statements prepared under previous GAAP, Non-current Investments of the Company were measured at cost less provision for diminution. Under Ind AS, the Company has recognized such investments as follows :

- Equity shares - At FVTOCI through an irrevocable option

I nd AS requires the investments to be recognized at fair value except investments in equity shares of Subsidiary and Associate companies, for which option is available as per Ind AS - 27 to account for cost or in accordance with Ind AS - 109. (Fair Value)

On the date of transition to Ind AS, the difference between the fair value of Non-Current Investments as per Ind AS and their corresponding carrying amount as per financial statements prepared under previous GAAP, has resulted in an increase in the carrying amount of these ^ y

investments by Rs, 30.66 crores which has been recognized as Effect of Measuring Investments at fair value under Other Comprehensive Income (OCI).

As at 31^st March 2017, the difference between the fair value of Non-Current Investments as per Ind AS and their corresponding carrying amounts as per financial statements prepared under previous GAAP, has resulted in an increase in the carrying amount of these investments by Rs, 44.34 crores which has been recognized in OCI.

The above transition has resulted increase in equity by Rs, 30.66 crores as at the date of transition to Ind AS and by Rs, 13.68 crores as at 31st March 2017.

(c) Proposed Dividend

In the financial statements prepared under previous GAAP, dividend on equity shares recommended by the Board of Directors after the end of reporting period but before the financial statements were approved for issue, was recognized as a liability in the financial statements in the reporting period relating to which dividend was proposed. Under Ind AS, such dividend is recognized in the reporting period in which the same is approved by the members in a general meeting.

On the date of transition, the above change in accounting treatment of proposed dividend has resulted in increase in Equity with a corresponding decrease in provisions by Rs, 7.59 crores.

(d) Fair Valuation for Financial Assets:

The Company has valued financial assets - Trade Receivables / Loans, at fair value as mandated by Ind AS 109 - Financial Instruments. Impact of fair value changes as on the date of transition amounting to Rs, 0.87 crore is recognized in opening reserves and changes thereafter is recognized in Statement of Profit and Loss amounting to Rs, 2.62 crores.

(e) Borrowings - EIR working

In the financial statements prepared under previous GAAP processing charges paid for borrowings is debited to CWIP / Finance Cost. However under Ind AS, processing charges are debited to loan account and Effective Rate of Interest is applied. Net Impact on processing charges as on the date of transition is Rs, 0.39 crores. The same is recognized in opening reserves and changes thereafter amounting to Rs, 0.04 crores are recognized in Statement of Profit and Loss, Fixed Assets / CWIP, as the case may be.

(f) Interest free Sales Tax loan:

I n the financial statements prepared under previous GAAP, the carrying value of Interest Free Sales Tax Loan was recognized at the principal amounts payable by the borrower. Under Ind AS, Government Grant borrowing being a financial liability is required to be recognized initially at fair value and subsequently measured at amortised cost using the effective interest method. The difference between the carrying value of Rs, 28.64 crores and the fair value of Rs, 20.95 crores amounting to Rs, 7.68 crores is recognized as deferred income and disclosed under Other Liabilities.

The Company has applied Ind AS 109 to Interest Free Sales Tax Loan after the date of transition to Ind AS 101.

As a consequence Other Income has increased by Rs, 1.10 crores due to reversal of deferred income for the year ended 31^st March 2017, and Interest and Finance charges increased by Rs, 1.88 crores charging interest on borrowing using the effective interest method.

The above changes resulted in decrease in profit by Rs, 0.78 crores and increase in Deferred Tax Asset as at 31^st March 2017 by Rs, 0.27 crores.

(g) Revenue from sale of products:

In the financial statements prepared under previous GAAP, revenue from sale of products was presented net of Excise Duty. However, under Ind AS, revenue from sale of products includes Excise Duty. Excise Duty expense amounting to Rs, 59.08 crores is presented separately on the face of the Statement of Profit and Loss for the year ended 31^st March 2017.

I n the financial statements prepared under previous GAAP, cash discount, trade discount and export commission were shown as a part of Other Expenses. However, under Ind AS, such expenses amounting to Rs, 26.45 crores for the year ended 31^st March 2017, have been reduced from revenue from sale of Products.

I n the financial statements prepared under previous GAAP, cash discount for the month of March sales is accounted based on actual realisation date. However, in Ind AS, cash discount of Rs, 0.75 crores is reduced from sales based on past estimates.

(h) Actuarial gains and losses:

Under previous GAAP, actuarial gains and loss were recognized in profit or loss. Under Ind AS, the actuarial gains and losses form part of re-measurement of the net defined benefit liability / asset and is recognized in Other Comprehensive Income. Consequently, the tax effect of the same has also been recognized in the Other Comprehensive Income under Ins AS instead of profit and loss. The actuarial gain for the year ended March 31, 2017 was Rs, 1.96 crores and the tax effect thereon was Rs, 0.68 crores. This change does not affect total equity, but there is an increase in profit before tax of Rs, 1.96 crores, and in total profit of Rs, 1.28 crores for the year ended March 31, 2017.

(i) Deferred Tax:

In the financial statements prepared under previous GAAP, Deferred Tax was accounted as per the Income approach, which required creation of deferred tax asset / liability on timing differences between taxable profit and accounting profits. Under Ind AS, Deferred Tax is accounted as per Balance Sheet approach, which requires creation of deferred tax asset / liability on temporary differences between the carrying amount of an asset / liability in the Balance Sheet and its corresponding tax base.

The application of Ind AS has resulted in recognition of Deferred Tax on new temporary differences which were not required to be recognized under previous GAAP. In addition, the above mentioned transitional adjustments have also led to temporary differences and creation of Deferred Tax thereon.

The above changes have resulted in creation of Deferred tax liabilities amounting to Rs, 9.77 crores as at date of transition to Ind AS.

(j) Fair value of Forward Exchange Contract :

I n previous GAAP, the exchange difference on forward contracts not intended for speculation were recognized on the reporting period in which the exchange rate changes. Under Ind AS such forward contract are treated as hedging instruments and the fair value gain of Rs, 0.65 crores is recognized in the statement of profit and Loss.

(k) Effect of Ind AS adoption on Statement of Cash Flow for the year ended 31st March 2017.

I n the financial statements prepared under previous GAAP, interest received was grouped under financing activity. However, the same is now grouped under Investment activity in line with Ind AS.

V_J

44 EMPLOYEE BENEFITS

(i) Defined Contribution Plans:

The Company makes Provident Fund and Superannuation Fund contributions which are defined contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs, 4.39 crores (Year ended March 31, 2017 Rs, 5.10 crores) for Provident Fund contributions and Rs, 0.32 crores (Year ended March 31, 2017 Rs, 0.17 crores) for Superannuation Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.â

(ii) Defined Benefit Plans:

Gratuity (Funded) and Retirement Benefit Scheme (Unfunded) In respect of Gratuity, the most recent actuarial valuation of the plan assets and in respect of Gratuity and Retirement benefit Scheme the present value of the defined benefit obligation were carried out by actuarial valuation. The present value of the defined benefit obligation and the related current service cost and past service cost, were measured using the projected unit cost method. The following table sets forth the status of the Gratuity Plan and the Retirement Benefit Scheme of the Company and the amount recognized in the Balance Sheet and Statement of Profit and Loss. The Company provides the gratuity benefit through annual contributions to the funds managed by the Life Insurance Corporation of India.The Company is exposed to various risks in providing the above gratuity benefit and Retirement Benefit Scheme which are as follows:â

Interest Rate Risk : The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).

Investment Risk :

The probability or likelihood of occurrence of losses relating to the expected return on any particular investment.

Salary Escalation Risk :

Demographic Risk :

The Company pays contributions to the insurer as determined by them. The insurance company has invested the plan assets in Government Securities, Debt Funds, Equity Shares, Mutual Funds and Money Market Instruments. The expected rate of return on plan assets is based on expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligation. Significant actuarial assumptions for the determination of the defined benefit obligation are as discussed above.

The Company has purchased insurance policy, which is basically a year-on-year cash accumulation plan in which the interest rate is declared on yearly basis and is guaranteed for a period of one year. The insurance Company, as part of the policy rules, makes payment of all gratuity outgoes happening during the year (subject to sufficiency of funds under the policy). The policy, thus, mitigates the liquidity risk. However, being a cash accumulation plan, the duration of assets is shorter compared to the duration of liabilities. Thus, the Company is exposed to movement in interest rate (in particular, the significant fall in interest rates, which should result in an increase in liability without corresponding increase in the asset).

The CompanyRs,s best estimate of the contribution expected to be paid to the plan during the next year is Rs, 5.00 crores ( previous year 2017 Rs, 4.00 crores).

9 EXCEPTIONAL ITEMS

Exceptional item represents compensation received pursuant to interim award passed by Tamil Nadu State Government for acquisition of Land belonging to the Company including structures for construction of Railway over bridge.

10 APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved for issue by the Board of Directors at their meeting held on 26^th May 2018.

Mar 31, 2017

1 SEGMENT

Paper is the only reportable segment of operation of the Company.

2 REGROUPING OF FIGURES

Figures for the previous year have been re-grouped, wherever necessary, to conform to current yearâs classification.

3 In respect of assets taken on lease no substantial risk and reward incidental to ownership of an asset has been obtained. All Lease agreements are cancellable at the option of the Company

4 Disclosure of Related Party transactions, as required under Accounting Standard (AS) 18

(i) Name of the Related Parties and description of relationship between the parties :

a) Control

- Esvi International (Engineers & Exporters ) Limited (ESVIN)

- SPB Equity Shares Trust

b) Presumption of significant influence

- Ponni Sugars(Erode) Limited (PEL)

- SPB Projects and Consultancy Limited (SPB-PC)

- Time Square Investments Private Limited (TSI)

- Dhanashree Investments Private Limited (DSI)

- Ultra Investments and Leasing Co. Private Limited (UIL)

c) Key Management Personnel

- Sri N Gopalaratnam, Chairman

- Sri K S Kasi Viswanathan, Managing Director

- Sri V Pichai, Deputy Managing Director & Secretary

Mar 31, 2016

1. SEGMENT

Paper is the only reportable segment of operation of the Company.

2. REGROUPING OF FIGURES

Figures for the previous year have been re-grouped, wherever necessary, to conform to current year''s classification.

(iii) During the period of five years immediately preceding 31.03.2016, 13 63 628 equity shares of Rs, 10 each, fully paid up pursuant to a Scheme of Amalgamation of SPB Papers Limited with the Company were issued for consideration other than cash.

Group Gratuity Scheme became applicable for unit : Tirunelveli from 2013-14 which was Non Funded for that year. From 2014-15 onwards the Scheme is funded and is for both Unit: Erode and Unit: Tirunelveli.

Notes :

1 Cash and cash equivalents represent cash in hand and cash with Scheduled Banks.

2 Cash from operating activities has been prepared following the indirect method.

3 Closing Cash and cash equivalents are after adjusting changes in foreign currency exchange rates amounting to Rs, NIL. (Previous year - Rs, 1.41 lakhs Debit).

4 Figures for the previous year have been re-grouped wherever necessary.

Mar 31, 2015

1 SEGMENT

Paper is the only reportable segment of operation of the Company.

2 REGROUPING OF FIGURES

Figures for the previous year have been re-grouped, wherever necessary, to conform to current year's classification.

As at As at 31-3-2015 31-3-2014 Rs. lakhs Rs. lakhs

3 Contingent Liabilities and Commitments not provided for

(i) Contingent Liabilities :

(a) Claims against the Company not acknowledged as debts

(1) Demands relating to Central Excise, Customs duty, Service Tax and VAT contested and appeals pending before High Court, CESTAT and other Appellate Authorities 2636.91 2599.41

(2) Income Tax demand contested and appeals pending before High Court and CIT (A) 763.52 763.52

(3) Others- Demands contested and pending before High Court and other Appellate Authorities 2518.54 2015.46

(b) Guarantees 19.50 9.00

(ii) Commitments :

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 1640.47 351.37

(b) Export obligation in respect of imports cleared under Export Promotion Capital Goods Scheme 0.00 37.75

4 The Depreciation for the year ended March 31, 2015 has been charged as per the revised requirement under the Companies Act, 2013 with effect from April 01,2014. The amount of depreciation is lower by Rs. 1968.03 lakhs, consequent to such change.

5 Plant and Machinery on Lease to Others under Note No. 8 - Fixed Assets, represent assets acquired and given on lease prior to 2001 whose primary lease period was also over during 2001.

In respect of assets taken on lease no substantial risk and reward incidental to ownership of an asset has been obtained.

All lease agreements are cancellable at the option of the Company.

6 Disclosure of Related Party transactions, as required under Accounting Standard (AS) 18

(i) Name of the Related Parties and description of relationship between the parties :

a) Control

* Esvi International (Engineers & Exporters) Limited (ESVIN)

* SPB Equity Shares Trust

b) Presumption of significant influence

* Ponni Sugars(Erode) Limited (PEL)

* SPB Projects and Consultancy Limited (SPB-PC)

* Time Square Investments Private Limited (TSI)

* Dhanashree Investments Private Limited (DSI)

* Ultra Investments and Leasing Co. Private Limited (UIL)

c) Key Management Personnel

* Sri N Gopalaratnam, Chairman

* Sri K S Kasi Viswanathan, Managing Director

* Sri V Pichai, Deputy Managing Director & Secretary

Mar 31, 2014

1 SEGMENT

Paper is the only reportable segment of operation of the Company.

2 REGROUPING OF FIGURES

Figures for the previous year have been re-grouped, wherever necessary, to conform to current year''s classification.

3 Contingent Liabilities and Commitments not provided for

(i) Contingent Liabilities :

(a) Claims against the Company not acknowledged as debts 3279.31 1538.86

(b) Guarantees 9.00 9.50

(ii) Commitments :

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for 351.37 179.18

(b) Export obligation in respect of imports cleared under Export Promotion Capital Goods Scheme 37.75 3434.42

4 Disclosure of Related Party transactions, as required under Accounting Standard (AS) 18 of The Companies (Accounting Standards) Rules, 2006

(i) Name of the Related Parties :

- Sri N Gopalaratnam, Chairman and Managing Director

- Sri K S Kasi Viswanathan, Deputy Managing Director

- Sri V Pichai, Director (Finance) & Secretary

- Esvi International (Engineers & Exporters ) Limited (ESVIN)

- SPB Equity Shares Trust

(ii) Description of relationship between the parties :

Control.

Mar 31, 2013

1 SEGMENT

Paper is the only reportable segment of operation of the Company.

2 SCHEME OF AMALGAMATION

A) Disclosure in respect of Amalgamation in accordance with Accounting Standard (AS) 14 - Accounting for Amalgamations

a) Names and general nature of Business of the Amalgamating Companies:

Names:

Transferor Company - SPB Papers Limited

Transferee Company - Seshasayee Paper and Boards Limited

General nature of Business:

Transferor Company - Manufacture of Printing & Writing paper

Transferee Company - Manufacture of Printing & Writing Paper and Paper Boards

b) Effective date of Amalgamation for accounting purposes : 01-04-2012

c) Method of Accounting used to reflect Amalgamation : Purchase Method

d) Particulars of the Scheme sanctioned :

i) The Authorised Share Capital of the Transferee Company is increased by transfer of the Authorised Share Capital of the Transferor Company aggregating Rs.1 500 lakhs, comprising of 1 50 00 000 Equity Shares of ` 10/-each.

ii) The Equity shareholders of Transferor Company will be allotted 1 Equity Share of Rs.10/-each, of the Transferee Company as fully paid up for every 11 Equity Shares of Rs.10/-each held by them in the Transferror Company.

iii) 13 63 238 Equity Shares of Rs.10/-each are to be issued as fully paid up to the Equity Shareholders of Transferor Company.

iv) The Value of all assets and liabilities (other than Shareholders'' Funds) of the Transferor Company, as on the appointed date, at their respective fair values vest with the Transferee Company.

v) The Inter-Corporate deposits/loans and advances, receivables/payables outstanding as on the Appointed date between the Transferee Company and Transferor Company shall stand cancelled.

vi) Consideration for the Amlagamation and a description of the Consideration paid:

a) 13 63 628 Equity Shares of Rs.10/-each fully paid-up (pending allotment) : Rs.136 lakhs Less:

Value of Net Assets of Transferor Company transferred-at fair value : ` 3801 lakhs Surplus credited to Capital Reserve : Rs.3665 lakhs

b) Contingently Payable : NIL

vii) In terms of the Scheme the Transferor Company continued the Operations as Trustee of Transferee Company. The results of such operations have been duly incorporated in the accounts of the Transferee Company.

B) The Scheme of Amlgamation between Transferror Company with Transferee Company was sanctioned by the Hon''ble High Court of Madras, vide its Order dated 26.04.2013, a certfied copy of which has been filed with the Registrar of Companies,Chennai on 24.05.2013 and accordingly these accounts have been prepared giving effect to the Scheme of Amalgamation.

C) Consequent to the Amalgamation, the carried forward losses and unabsorbed depreciation of Transferror Company are eligible to be adjusted against the income of the Transferee Company in accordance with Section 72A of the Income Tax Act, 1961. Such carried forward benefits adjusted in the current year to the extent of income amount to Rs.28.39 crores.

D) Shares of the Transferor Company that are held by the Transferee Company have been transferred to SPB Equity Trust exclusively for the benefit of the Transferee company and its Successors.The value of such assets is recognised under Long Term Loans and Advances in Note No 9(d).

3 REGROUPING OF FIGURES

Current Year''s figures are not comparable with previous year''s figures due to amalgamation of the Transferor Company with the Transferee Company with effect from 1st April 2012.

4 Disclosure of Related Party transactions, as required under Accounting Standard (AS) 18 of The Companies (Accounting Standards) Rules, 2006

(i) Name of the Related Parties :

- Sri N Gopalaratnam, Chairman and Managing Director

- Ponni Sugars (Erode) Limited (PEL)

- High Energy Batteries (India) Limited (HEB)

- SPB Projects and Consultancy Limited (SPB-PC)

- Time Square Investments Private Limited (TSI)

- Esvi International (Engineers & Exporters ) Limited (ESVIN)

- Sri K S Kasi Viswanathan, Deputy Managing Director

- Sri V Pichai, Director (Finance) & Secretary

(ii) Description of relationship between the parties :

Presumption of significant influence.

Mar 31, 2012

1 SEGMENT

Paper is the only reportable segment of operation of the Company.

2 Contingent Liabilities and Commitments not provided for

(i) Contingent Liabilities :

(a) Claims against the Company not

acknowledged as debts 1457.52 1780.48 (b) Guarantees 11.25 12.43 (ii) Commitments : (a) Estimated amount of contracts remaining to be executed on capital account and not provided for 249.04 182.82

3 Disclosure of Related Party transactions, as required under Accounting Standard (AS) 18 of The Companies (Accounting Standards) Rules, 2006

(i) Name of the Related Parties :

- Sri N Gopalaratnam, Chairman and Managing Director

- Ponni Sugars (Erode) Limited (PEL)

- High Energy Batteries (India) Limited (HEB)

- SPB Projects and Consultancy Limited (SPB-PC)

- Time Square Investments Private Limited (TSI)

- SPB Papers Limited (SPBPL)

- Sri K S Kasi Viswanathan, Deputy Managing Director 0 Sri V Pichai,Director (Finance) & Secretary

(ii) Description of relationship between the parties :

Presumption of significant influence.

Mar 31, 2011

1 Paper is the only reportable segment of operation of the Company.

2 Figures for the previous year have been re-grouped, wherever necessary, to conform to current years classification.

31-3-2011 31-3-2010 Rs. lakhs Rs. lakhs

3 Contingent liabilities on account of Guarantees given by Banks on behalf of the Company. 12.43 37.36

4 The Company calls for information from all suppliers with regard to their registration with the specified authority under the Micro, Small and Medium Enterprises Development Act, 2006. The Company has a policy of paying the dues within the generally prescribed credit terms.

5 (a) During the year, the Company, acquired 62 50 000 Equity Shares of Rs. 10 each, constituting 41.67% of the total Equity Capital of Subburaj Papers Limited (SPL), a 90 000 tonnes per annum secondary pulp based paper mill located near Tirunelveli in Tamilnadu.

(b) The Company has availed unsecured Short Term Loan of Rs. 210 crores from Canara Bank and advanced to SPL a sum of Rs. 180 crores to enable them to make One Time Settlement (OTS) with their consortium Banks.

(c) Loans to Other Corporates in Schedule I includes Rs. 180 crores advanced to SPL.

6 Employee Cost for the year under review includes a sum of Rs. 629.34 lakhs, being the arrears of salary paid to the employees, consequent to the long term wage settlement entered into with Trade Unions effective April 01, 2009.

7 Plant and Machinery on Lease to Others under Schedule D- Fixed Assets, represent assets acquired and given on lease prior to 2001 whose primary lease period was also over during 2001.

In respect of assets taken on lease no substantial risk and reward incidental to ownership of an asset has been obtained.

All lease agreements are cancellable at the option of the Company.

8 Disclosure of Related Party transactions, as required under Accounting Standard (AS) 18 of The Companies (Accounting Standards) Rules, 2006 :

(i) Name of the transacting Related Parties :

- Sri N Gopalaratnam, Chairman and Managing Director of the Company

- Ponni Sugars (Erode) Limited (PEL)

- High Energy Batteries (India) Limited (HEB)

- SPB Projects and Consultancy Limited (SPB-PC)

- Time Square Investments Private Limited (TSI)

- Subburaj Papers Limited (SPL)

- Sri K S Kasi Viswanathan, Deputy Managing Director

- Sri V Pichai, Director (Finance) & Secretary

(ii) A description of the relationship between the parties :

Presumption of significant influence.

Mar 31, 2010

1 Paper is the only reportable segment of operation of the Company.

2 Figures for the previous year have been re-grouped, wherever necessary, to conform to current yearÃs classification.

3 Disclosure of Related Party transactions, as required under Accounting Standard (AS) 18 of The Companies (Accounting Standards) Rules, 2006 :

(i) Name of the transacting Related Parties :

- Sri N Gopalaratnam, Chairman and Managing Director of the Company

- Ponni Sugars (Erode) Limited (PEL)

- High Energy Batteries (India) Limited (HEB)

- SPB Projects and Consultancy Limited (SPB-PC)

- Time Square Investments Private Limited (TSI)

- Sri K S Kasi Viswanathan, Deputy Managing Director

- Sri V Pichai, Director (Finance) & Secretary

(ii) A description of the relationship between the parties :

Presumption of significant influence.

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