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Kuantum Papers Ltd.

BSE: 532937 Sector: Industrials
BSE 00:00 | 24 Apr Kuantum Papers Ltd
NSE 05:30 | 01 Jan Kuantum Papers Ltd
OPEN 425.90
52-Week high 585.00
52-Week low 250.10
P/E 4.16
Mkt Cap.(Rs cr) 339
Buy Price 388.20
Buy Qty 5.00
Sell Price 424.00
Sell Qty 3.00
OPEN 425.90
CLOSE 401.00
52-Week high 585.00
52-Week low 250.10
P/E 4.16
Mkt Cap.(Rs cr) 339
Buy Price 388.20
Buy Qty 5.00
Sell Price 424.00
Sell Qty 3.00

Kuantum Papers Ltd. (KUANTUM) - Director Report

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Company director report

To the Members

Your Directors take pleasure in presenting the 22nd Annual Report on thebusiness and operations together with audited statements of Accounts of the Company forthe financial year ended 31 March 2019.


The summarized financial results of the Company for the financial year 2018-19 aregiven hereunder.

(Rs. in lacs)

2018-19 2017-18
Sales & other income 80230.95 71795.72
Operating Profit 16439.44 15111.50
Interest 2837.97 2458.40
Gross Profit 13601.47 12653.10
Depreciation 2512.53 1942.00
Profit before tax 11088.94 10711.10
Provision for
- Current Tax 2476.08 2410.83
- Deferred Tax charge 818.98 1011.52
Net Profit after tax 7793.88 7288.75
Other comprehensive Income (Expense) (11.25) (14.63)
Total comprehensive Income (Expense) for the year (Net of Income Tax) 7782.63 7274.12


Your Directors have proposed a dividend of Rs. 5.00 per share (previous year Rs. 2.50per share) on the Equity Shares of Rs. 10/- each and Re. 1.00 per share (previous yearRs. 1.00 per share) on the Non-Cumulative Redeemable Preference Shares of Rs.10/- eachfor the financial year ended 31 March 2019 amounting to Rs. 887.67 lacs (previous year Rs.624.67 lacs) including a dividend distribution tax of Rs. 151.35 lacs (previous year Rs.106.51 lacs).


During the year your Company has achieved its highest ever production of paper tilldate which was 127756 metric tonnes as against 125617 metric tonnes in the previousyear. The quantitative figure for the sale of paper was 127390 metric tonnes this yearleaving 360 metric tonnes closing stock as against the sale of 126087 metric tonnes inthe previous year.

The company has continued to record a phenomenal performance in its working results.Higher sales realization improved operational efficiencies better productivity andproduct quality higher volumes of premium quality paper products like specialty andsurface sized paper an enriched product mix coupled with better operating parameters havecontributed to the increased revenues as well as profitability.

The figures given in the Financial Highlights for the current year under review showthe following trends over the previous year:

The company recorded a Sales Turnover (net of GST) including other income at Rs.80230.95 lacs up by 13.4%; Operating Profit at Rs. 16439.44 lacs up by 8.8%; Profitbefore Tax at Rs. 11088.94 lacs up by 3.5% compared to the previous year. Net Profitafter Tax is up by 7.0% and stands at Rs. 7782.63 lacs.

The initiatives taken by your company in the recent years in improving productivity andoperational efficiencies have led to achieving the above operational performance. Thecompany has continued to take up projects in focused areas for operational improvement andthis has also led to improved operational efficiencies productivity reduction inoperational costs and sizeable increase in savings thereby improving the bottom-line.Your company has also launched an extensive array of branded Specialty Papers which havebeen well received in the market. Kuantum now has amongst the largest portfolio of paperproducts available to a company in India. We sell our products through our widedistribution network by way of dealers located and spread across the country and maintaina strict policy over collections. We produce entirely against orders collected in advancewhich is reflected in the extremely low sometimes even nil level of finished stockinventory.

The results of cost reduction initiatives and operational efficiencies will continue tobe more visible in the current financial year 2019-20 as your company has continued theseinitiatives to optimize capacity utilization cost reduction new product launchesoptimizing production of better margin products by further undertaking modification andup-gradation of the paper machines and other equipments for improving the product qualityand operations.

These initiatives have made your company not only one of the most cost competitivepaper mills but is also placed amongst the large paper player in the writing and printingsegment. Furthermore continuous research & development has enabled the company tomanufacture papers of distinctive prime quality and a broader product mix which iscompeting successfully with the premium quality of other large paper mills.


Consumption of paper is closely linked to the economic development of a country. InIndia though the per capita consumption of paper is low it is gradually improving witheconomic growth. Industrial production expenditure incurred on the print mediagovernment spending on education population growth and literacy levels are the keycontributing factors.

Writing & printing paper segment has witnessed optimum capacity utilizations levelsover the past few years due to steady demand growth. Your company has been able to operateat higher optimum levels of production and sale. Despite increasing digitization CAREexpects the overall paper demand growing at a CAGR of 6.7% to touch 20.8 million tonnes in2020-21. The demand growth is expected to be benefitted and driven by a combination offactors i.e. rising income levels growing per capita expenditure rapid urbanizationimproved industrial activity and rise in advertisements. The demand will continue to bedriven and supported by greater Government thrust and spending on education sectorcorporate spending on stationary and healthy growth in services sector.

The industry is classified into four segments Printing & Writing Packaging Paper& Board Specialty Papers & Others and Newsprint. The Printing and Writing papersegment forms 30% of domestic paper market Packaging Paper & Board segment accountingfor 51% in India and is the largest segment in the industry Specialty Paper & othersis the smallest segment accounting for only 4% of the industry and the Newsprint segmentcomprises 15% of the Indian Paper and Paper Products Industry.

The individual segments are expected to grow as follows:

• Printing and Writing segment demand is expected to grow at a CAGR of 4.5% andreach 5.8 million tonnes in FY21. The demand is expected to grow on account of pick-upfrom the education sector with improving literacy rates and universalization of educationthrough legislative steps like Right to Education Government measures like Sarva ShikshaAbhiyan Mid-day Meal Schemes Girl Education Programme growing enrolment as well asincreasing number of schools colleges and institutions rising enrolment numbers andincreased spending on education by all sections of the society which is expected to leadto an increased expenditure on textbooks and notebooks.

• Packaging Paper & Board segment caters to industries such as FMCG food& beverage pharmaceutical textiles etc. Demand in this segment is expected to growat a CAGR of 8.5% and reach 11.1 million tonnes in FY21. The growth is expected fromfactors such as increased urbanization requirement of better quality packaging of FMCGproducts marketed through organized retail E-Commerce and increasing preference forpackaged food.

• Newsprint segment - Improving literacy rates rising circulation and anincreasing number of newspapers and magazines is expected to support growth in newsprintdemand which is expected to grow at a CAGR of 2.0% and reach 2.7 million tonnes in FY21.

• Specialty Paper and others is expected to grow at a CAGR of 15% and reach 1.2million tonnes in FY21. The main varieties of specialty paper and other papers are tissuepaper decor paper thermal paper cigarette paper and business card paper. Their usagehas been growing in line with growth in the economy rise in organised retail penetrationand increase in urbanisation.

With the domestic industry growing steadily and at a significantly higher rate comparedto the global growth rate the majority of domestic paper mills despite high raw materialprices are currently operating at approximately 85% to 90% capacity utilisation levelwhile the larger companies are operating close to or more than 100% capacity utilisation.Consequently domestic paper mills have announced capacity expansion plans. Major part ofthe expansion plans is in the paperboard segment reflecting the increased demand witnessedas well as the higher growth rate anticipated in the segment.

The detailed performance of Company's operations for the year ended 31 March 2019 hasbeen stated in the Management Discussion & Analysis which appears as a separatestatement in the Annual Report.



The members were informed in the last report that the company has taken upimplementation of Capex projects for modification up-gradation of paper machines andother equipment and cost reduction initiatives at a project cost of Rs. 192.00 cr and isfunded by Term Loans of Rs. 144.00 cr and internal accruals of Rs. 48.00 cr. The TermLoans of Rs. 144.00 cr have been sanctioned by the Banks and disbursement is underway andthe projects are expected to be completed and commissioned by December 2018.

Based on further introspection and assessment scope of few projects was scaled downand a new project for modernisation of existing Chemical Recovery was taken up.Resultantly the capex project cost was revised to Rs. 200.57 cr. The Term Loans of Rs.144.00 cr remained unchanged and internal accruals were increased to Rs. 56.57 cr. Thecapex projects were completed and commissioned as envisaged except modernisation ofexisting Chemical Recovery which is scheduled to be completed by December 2019.

Further considering the strong fundamentals of the paper Industry and its growthpotential the company has taken up the implementation for expansion and enhancement ofthe production capacity to 148500 TPA expanding its agro pulp and hard wood pulp streetssetting up an additional chemical recovery plant and a captive power plant therebysustaining competitiveness in capacity and quality enhancement cost reduction andimproving margins and profitability of the Company. The Capex project cost is envisaged atRs. 444.04 cr which is proposed to be financed by debt of Rs. 350.00 cr and internalaccruals of Rs. 94.04 cr. The sanction and tie up of debt with the banks/financialinstitutions is under way and is expected to be completed by the end of August 2019. Thecapex projects are envisaged to be completed and commissioned by June 2020. With thecommissioning of these capex projects the margins of the company will improvesignificantly.


Banks have sanctioned the enhanced working capital limits amounting to Rs. 13155 lacs(fund based Rs. 5500 lacs non-fund based Rs. 7655 lacs) during the year under review.


As on 31 March 2019 your Company had Fixed Deposits of Rs. 4291.20 lacs. There wereno overdue deposits as on 31 March 2019.

The above deposits have been accepted for a period of 1 year to 3 years as per theFixed deposit Scheme duly approved by the Board in its meeting held on 25 May 2018pursuant to the compliance of the provisions of Companies Act 2013 read with theCompanies (Acceptance of Deposit) Rules 2014.

Details of Deposits:

(a) Accepted (including renewals) during the year- Rs. 2305.31 lacs

(b) Remained unpaid or unclaimed as at the end of the year- Nil

There has been no default in repayment of deposits or payment of interest thereonduring the year.


During the year under review CARE Ratings Limited (CARE) has reviewed the externalcredit rating for the Long term Short term Bank facilities and Fixed Deposits of thecompany. The facility wise rating is as under:

Facilities Amount (Rs./Cr) Rating
Long term Bank Facilities 329.04 CARE A-; Negative (A minus; Outlook: Negative)
Short term Bank Facilities 71.55 CARE A2+ (A Two Plus)
Fixed Deposits 45.0 0 CARE A-(FD); Negative (A minus (Fixed deposit); Outlook Negative)


There is no change in the nature of business.


No material changes or commitments affecting the financial position of the Company haveoccurred during the year under consideration or after closure of the financial year tillthe date of this report.


Your Company does not have any subsidiary/joint ventures or associate company withinthe meaning of the Companies Act 2013. Kapedome Enterprises Limited is the holdingcompany of Kuantum Papers Limited having 66.50% equity shares of the company.


Pursuant to Section 135 of the Companies Act 2013 and the relevant rules the Boardof Directors of your Company has an existent constituted CSR Committee. The CSR Policy hasbeen framed by the Company which is placed on its website.

In pursuance of the Companies Act 2013 and in alignment with its vision the Companythrough its CSR initiatives will continue to enhance value creation in the society and inthe community in which it operates through its services conduct and initiatives so asto promote sustained growth for the society and community.

During the year under review the company has spent an amount of Rs. 62.27 lacs on theprojects covered under CSR activities. Disclosures as per Rule 9 of the Companies(Corporate Social Responsibility Policy) Rules 2014 are given in the Annual Report on CSRactivities at 'Annexure- A'.


Section 177(9) of the Companies Act 2013 and Regulation 22 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 Inter alia provides for amandatory requirement for all listed companies to establish a mechanism called the'Whistle Blower Policy' for Directors and employees to report concerns of unethicalbehavior actual or suspected fraud or violation or the Company's code of conduct orethics policy. In line with this requirement the Company has framed a "WhistleBlower Policy" which is placed on the Company's website.


In line with the new regulatory requirements the company has framed a 'Risk ManagementPolicy' to identify and assess the key risk areas monitor and report compliance andeffectiveness of the policy and procedure. A Risk Management Committee has also beenconstituted to oversee this process.

The Company manages monitors and reports on the principal risks and uncertainties thatcan impact its ability to achieve its strategic objectives. The Company's risk managementsystems and programs comprises of various processes structures and guidelines whichassist the Company to identify assess monitor and manages its risks including anymaterial changes to its risk profile. To achieve this the Company has clearly defined theresponsibility and authority of the Company's Management and the Risk Management Committeeto oversee and manage these Programs. The company has taken Industrial All Risk Policy toinsure its fixed assets and inputs that cover known and unknown risk including fire.Details of the various risks which can affect the Company's business and the management'sperception are more elaborately given in the 'Management Discussion & Analysis'attached to this Report.


Effective and strong internal control systems are developed in the Company for all themajor processes to ensure reliability of financial reporting safeguarding of assets andeconomical and efficient use of resources as also the compliance of laws regulationspolicies and procedures.

The Company's internal control systems are reviewed by M/s A. Gandhi and Associatesinternal auditors an independent firm of Chartered Accountants. The Internal Auditorindependently evaluates the adequacy of internal controls through periodic reviews thatcover all the functions and processes and through reviewing major transactions. TheInternal Auditors reports directly to the Audit Committee to ensure complete independence.


All related party transactions are entered at arm's length basis and are as per theapplicable provisions of the Companies Act Indian Accounting Standards and the ListingRegulations. No materially significant related party transactions have been entered by theCompany with Promoters Directors or Key Managerial Personnel which had potentialconflict with the interest of the Company at large. A statement of all related partytransactions is presented before the Audit Committee on a quarterly basis duly certifiedby the CEO and CFO. The Related Party Transactions Policy as approved by the Board isplaced on the Company's website.

The details of the related party disclosures and transactions as prescribed in FormAOC-2 are given in the Note No. 40 of the notes on Financial Statements. All the relatedparty transactions are done at arms length and pertain to the FY 2018-19.


There are no significant and material orders passed by the Regulators Courts orTribunals which would impact the going concern status of the Company and its operationsin future.


Pursuant to Regulation 17 (1A) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Shri Darshan Chand Mehandru (DIN: 00308524) IndependentDirector and Chairman of Audit Committee of the Company ceased to be the director of theCompany on 31st March 2019.

Shri Umesh Kumar Khaitan has resigned from the directorship of the Company during theyear w.e.f. 09.08.2018.

The Directors place on record their appreciation of the valuable advice and guidancegiven by them during their tenure.

Shri Bhavdeep Sardana was appointed as Independent Director of the Company w.e.f.20.12.2018 for a period of five years.

Further in accordance with the provisions of the Companies Act 2013 and Articles ofAssociation of the Company Shri D.S. Sandhawalia shall retire by rotation at theforthcoming Annual General Meeting and is eligible for re-appointment.


The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013 soas to qualify themselves to act as Independent Director under the provisions of theCompanies Act 2013 and the relevant rules.


In terms of Regulation 25(7) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company familiarized the Independent Directors in thefollowing areas:

(a) Nature of the industry in which the entity operates;

(b) Business model of the entity;

(c) Roles rights responsibilities of independent directors.

The Independent Directors have visited the Company's Plant during the year to enablethemselves to be conversant with manufacturing operations and processes.

Presentations are made to the Board/Committees of the Board on regular intervals whichinter alia cover business strategies & reviews operations Industry developmentsmanagement structure quarterly and year to date financial results budgets/businessplans review of Internal Audit and risk management framework.

Further as per Regulation 46(2) (i) of SEBI (Listing Obligations & DisclosureRequirements) 2015 the required details are as follows:

Details of familiarization programmes imparted to independent directors FY 2018-19 Cumulative till date
Number of programmes attended by independent directors 4 21
Number of hours spent by independent directors in such programmes 6 34


Nomination Remuneration and Evaluation policy has been framed by the Nomination andRemuneration Committee. This Committee has laid down the criteria for performanceevaluation of the individual Directors as well as the Board. The framework of performanceevaluation of the Directors captures the following points:

(a) Performance of the directors and key attributes of the Directors that justifyhis/her extension/continuation on the Board of the Company.

(b) Participation of the Directors in the Board proceedings and their effectiveness.

(c) Fulfillment of the independence criteria and their independence from the managementas specified in SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(including any statutory modification(s) or enactment thereof for the time being in force)in case of Independent Directors.

The Board adopted a formal mechanism for evaluating its performance as well as of itsCommittees and individual Directors including the Chairman of the Board. The exercise wascarried out through a structured evaluation process covering various aspects of theBoard's functioning such as composition of the Board and Committees experience andcompetencies performance of specific duties and obligation governance issuesparticipation and effectiveness.

During the year under review a meeting of Independent Directors was held on 29 March2019 wherein the performance of the Non Independent Directors and the Board as a wholevis-d-vis the performance of the Chairman of the Company was reviewed.


i. Observations of Board Evaluation carried out for the year:

In conformity with the evaluation policy and laid down parameters the overallcontribution of each Director was assessed as satisfactory and appreciable. Thesuggestions participation involvement and constant efforts of each director in the lightof improving business operations and overall growth and development of the Company wasreally significant.

ii. Previous year's observations and actions taken:

There was no observation of the Board with regard to the previous year. However it hasbeen the endeavor of the Board of Directors of the Company to attain the highest level oftransparency accountability and integrity as well as utmost applicable legal and ethicalstandards in the functioning of the Company with a view to create value that can besustained continuously for the benefit of its stakeholders.

iii. Proposed actions envisaged:

The Company proposes to hold more trainings presentations and interactions enablingthe Directors to uphold highest standards of integrity & probity and strict adherenceof the Companies Act SEBI (Listing Obligations and Disclosure Requirements) Regulationsand other rules and regulations besides Company's Code of Conduct as also to strive forconstructive effective and value-added deliberations at the meetings as also toconsistently strive to implement best corporate governance practices reflecting its strongvalue system and ethical business conduct.


The Board has on the recommendation of the Nomination and Remuneration Committeeapproved a policy for selection appointment remuneration and evaluation of DirectorsSenior Management and Key Managerial Personnel. Details of the Nomination and RemunerationCommittee are given in the Corporate Governance Report. The Nomination Remuneration andEvaluation Policy as approved by the Board is placed on the Company's website


The Company has in place a 'Prevention of Sexual Harassment Policy' pursuant to theSexual Harassment of Women at workplace (Prevention Prohibition and Redressal) Act 2013.Internal Complaints Committee has been set up to redress complaints received regardingsexual harassment. All employees (Permanent contractual temporary trainees) are coveredunder this policy. No complaint has been received during the year under review.


During the year 6 (Six) Board meetings were convened and held. Details of number ofmeetings of Board of Directors and committees thereof and the attendance of the Directorsin such meetings are provided under the Corporate Governance Report. The intervening gapbetween the meetings was within the period prescribed under the Companies Act 2013.


The Audit Committee constituted by the Board comprised of four Independent Directorsand two Executive Directors till 31 March 2019. Pursuant to Regulation 17 (1A) insertedvide SEBI notification dated May 09 2018 in the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 Shri Darshan Chand Mehandru (DIN: 00308524) IndependentDirector of the Company who was also the Chairman of Audit Committee ceased to be thedirector of the Company on 31st March 2019.

During the year 4 (four) Audit Committee meetings were convened and held. The detailsof the Audit Committee meetings attendance of the members and terms of reference areprovided in the Corporate Governance Report. The intervening gap between the meetings waswithin the period prescribed under the Companies Act 2013.


M/s BSR & Co. LLP Chartered Accountants (ICAI Firm Registration No.101248W/W-100022) Statutory Auditors of the company were appointed for a period of 5years by the shareholders in the Annual General Meeting held on 18 September 2015 till theconclusion of 23rd Annual General Meeting to be held in the year 2020.

As per the existing appointment of M/s BSR & Co. LLP Chartered Accountants theirremaining audit period covers the last year of their appointment up to the conclusion ofthe next Annual General Meeting to be held in the financial year 2020-21.

As required under Section 139 of the Companies Act 2013 the Company has obtained awritten consent from the Auditors to their continued appointment and also a certificatefrom them to the effect that their existing appointment is in accordance with theconditions prescribed under the Companies Act 2013 and rules made thereunder.


The Auditor's Report to the Members on the Audited Financial Statements of the Companyfor the year ended 31 March 2019 contains the following qualification (s):

Attention is invited to Note 6 and Note 43 to the financial statements which explainsthat the Company has given certain unsecured inter-corporate deposits (ICDs) during theyear. The outstanding balance of ICDs as at 31 March 2019 amounted to Rs. 1842.80 lakhs(balance as at 29 May 2019: Rs. 1479.87 lakhs). In relation to these ICDs we have notbeen provided with appropriate basis of selection of the Companies including anassessment of their credit worthiness. In view of this we are unable to comment onrecoverability of these ICDs and impact if any on these financial statements includingcompliance with provisions of Companies Act 2013 to the extent applicable.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion section of our report the aforesaid financial statements give the informationrequired by the Companies Act 2013 ("Act") in the manner so required and give atrue and fair view in conformity with the accounting principles generally accepted inIndia of the state of affairs of the Company as at 31 March 2019 its profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.


According to the information and explanations given to us and based on our audit thefollowing material weakness has been identified as at 31 March 2019:

The Company did not have an appropriate internal control system of evaluation forgiving inter-corporate deposits which could potentially result in material misstatementsin the Company's loan balances and consequently the financial statements.

A 'material weakness' is a deficiency or a combination of deficiencies in internalfinancial control over financial reporting such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements willnot be prevented or detected on a timely basis.

In our opinion because of the effects/possible effects of the material weaknessdescribed above on the achievement of the objectives of the control criteria the Companyhas not maintained adequate internal financial controls with reference to financialstatements and such internal financial controls were not operating effectively as at 31March 2019 based on the internal financial controls with reference to financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India (the"Guidance Note").

We have considered the material weakness identified and reported above in determiningthe nature timing and extent of audit tests applied in our audit of the 31 March 2019financial statements of the Company and the material weakness has affected our opinion onthe financial statements of the Company and we have issued a qualified opinion on thefinancial statements.


The company had surplus cash flows in the previous financial years and the funds havebeen kept with the Banks in the shape of fixed deposits. With a view to deploy the fundseffectively at higher interest rate than being paid on loans the company extended InterCorporate Deposits (ICDs) to six entities amounting to Rs. 2447.00 lacs after conductingadequate diligence and interaction with the entities particularly with regard to paymentof interest and repayment of ICD deposits. ICDs extended to two entities amounting to Rs.645.00 lacs were received back in full alongwith due interest during the year itself asper the terms. The ICDs of Rs. 1842.80 lacs extended to four entities outstanding as on31 March 2019 comprises of principal Rs. 1802.00 lacs and interest Rs. 40.80 lacs. Thecompany has entered into loan agreements with detailed terms and conditions with therespective entities and has taken security cheques for the full amount towards therepayments of ICDs. The present tenure of these loans after roll over was agreed uptoDecember 312019. The company has received interest on quarterly basis as provided in theloan agreements. These entities have adequate assets to repay the ICDs. Furthermore anaccelerated repayment schedule has also been worked out with these entities to expeditethe repayment before the due date to mitigate the concerns with regard to itsrecoverability so as to complete the same by August end 2019. Pursuant to such efforts ason date the company has received an amount of Rs. 1205.80 lacs and is confident toreceive the remaining outstanding amount of Rs. 637.00 lacs by August end 2019. As suchthe amount of Rs. 1842.80 lacs outstanding as on 31 March 2019 is fully recoverable.

The management clearly believes that as appropriate system with respect to the internalcontrols on these ICDs has been followed before placing the same and that the Company'sinternal financial controls in respect of assessment of the inter corporate deposits andits recoverability were operating effectively and there is no material weakness in suchcontrols and procedures.


M/s R.J. Goel & Co. Delhi were appointed as Cost Auditors for conducting the costaudit of the Company for the year ended 31 March 2019. The Company's Cost Audit Report forthe year ended 31 March 2018 was filed on 22.08.2018 (Due date 30.09.2018). The said firmhas been appointed as cost auditors of the Company for the financial year 2019-20 as well.


M/s S.K.Sikka & Associates Company Secretaries had been appointed as SecretarialAuditors to conduct Secretarial Audit of the Company and have submitted the SecretarialAudit Report for the year ending 31 March 2019 which is annexed to this Board's Report asAnnexure-2.

As per amended SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015in addition to the above mentioned Secretarial Audit Report listed company is alsorequired to obtain an Annual Secretarial Compliance Report from a practicing CompanySecretary w.r.t. the compliances of all applicable SEBI Regulations amendments circularsor guidelines etc. by the Company. Accordingly the same has been obtained and filed withthe Bombay Stock Exchange.

Further pursuant to SEBI (Listing Obligations and Disclosures Requirements)Regulations 2015 read with Securities and Exchange Board of India (Listing Obligationsand Disclosures Requirements) (Amendment) Regulations 2018 the Company is required toobtain a certificate from Practicing Company Secretary that none of the directors on theboard of the company have been debarred or disqualified from being appointed or continuingas directors of companies by the Board/Ministry of Corporate Affairs or any such statutoryauthority. The declaration in this regard has been obtained from all the Directors andaccordingly the said Certificate has been obtained from the M/s S.K.Sikka &Associates Company Secretaries which is annexed to this Board's Report as Annexure-3.

Pursuant to Section 204 of the Companies Act 2013 M/s S.K.Sikka & AssociatesCompany Secretaries have been appointed as Secretarial Auditors to conduct SecretarialAudit of the Company for the financial year ending 31 March 2020.


During the year under review the Company has not issued any equity shares withdifferential rights sweat equity shares or employee stock option.

Provision of money by Company for purchase of its own shares by employees or bytrustees for the benefit of employees is not applicable to the Company.

There is no change in the Equity and Preference share capital during the year underreview.

During the year the Company has issued 300 unlisted Secured Non-Convertible RedeemableDebentures (NCDs) at a face value of Rs. 1000000/- (Rupees ten lakhs only) eachaggregating to Rs. 300000000/- (Rupees Thirty crores only) to UTI Structured DebtOpportunities Fund I on 20th December 2018 after obtaining the necessary approval ofshareholders in their meeting held on 03.11.2018. The said NCDs have since already beenredeemed before the due date of redemption in the current financial year.

Details pertaining to the shares in 'Unclaimed suspense account' in Compliance with theterms of SEBI (LODR) Regulations 2015 are given in the Report on Corporate Governanceannexed with this report.


The Company has not conducted any Postal Ballot during the year under review.


A Report on Corporate Governance along with a Certificate from the Practicing CompanySecretary regarding compliance of the conditions of Corporate Governance pursuant to SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 is annexed and formspart of the Annual Report.


The extract of annual return in form no. MGT-9 would be available at the website oftheCompany at http://


The information relating to conservation of energy technology absorption and foreignexchange earnings & outgo as required under Section 134(3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is given in Annexure-1which forms part of this Report. No foreign technology has been availed by the Company.


Relationship with the employees remained cordial throughout the year in the Company.The Directors express their appreciation for the contribution made by the employees at alllevels to the operations and in establishing operational efficiencies of the Companyduring the year under review.


The information required under section 197(12) of the Companies Act 2013 read withRule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules2014 is given in the statement annexed herewith as Annexure-4.

The information required pursuant to the provisions of Rule 5(2) & (3) of theCompanies (Appointment & Remuneration of Managerial Personnel) Rules 2014 requiringparticulars of the employees in receipt of remuneration in excess of Rs. 102 lacs perannum if employed throughout the year and Rs. 8.50 lacs if employed for part of the yearis given in the statement annexed herewith as Annexure-4.


The Company has extended loan/guarantee under Section 186 of the Companies Act 2013the disclosure of which is given at Note No. 6 and 43 forming part of the financialstatements.


As required under section 134(3) (c) read with Section 134(5) of the Companies Act2013 and SEBI (LODR) Regulations 2015 your Directors state that:

(i) in the preparation of the annual accounts for the year ended 31 March 2019 theapplicable accounting standards read with requirements set out under Schedule MI to theAct have been followed and there are no material departures;

(ii) such accounting policies have been selected and applied consistently and judgmentsand estimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the company as at 31 March 2019 and of the profit of thecompany for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(iv) the annual accounts have been prepared on a going concern basis;

(v) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

(vi) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.


Your Directors convey sincere thanks to the various agencies of the Central and StateGovernments Banks and other concerned agencies for all the assistance and cooperationextended to the Company for their continued support. The Directors also deeply appreciateand acknowledge the trust and confidence the vendors suppliers dealers customersshareholders and investors reposed in the Company. Your Directors also place on recordtheir appreciation for the dedicated services rendered by the workers staff and officersof the Company.

For and on behalf of the Board
Place : Chandigarh Jagesh Kumar Khaitan
Dated : 09 July 2019 Chairman