We are pleased to present the annual report along with the audited accounts of yourCompany for the year ended 31st March 2019.
The financial performance of the Company for the year ended 31st March 2019 issummarised below:
| || ||(Rs. in crores) |
|Particulars ||2018-19 ||2017-18 |
|Revenue from Operations ||710.04 ||671.80 |
|Other Income ||33.71 ||11.23 |
|Total Income ||743.75 ||683.03 |
|Earnings before Interest Depreciation Amortisation & Taxation ||171.64 ||123.11 |
|Interest/Finance costs ||9.97 ||14.69 |
|Profit before Depreciation and Taxation ||161.67 ||108.42 |
|Depreciation ||31.61 ||28.31 |
|Profit before Taxation ||130.06 ||80.11 |
|Taxation ||28.41 ||30.82 |
|Profit for the year ||101.65 ||49.29 |
|Other Comprehensive Income ||(6.07) ||94.35 |
|Total Comprehensive Income ||95.58 ||143.64 |
|STATEMENT OF RETAINED EARNINGS || || |
|At the beginning of the year ||839.84 ||796.20 |
|Add: Profit for the year ||101.65 ||49.29 |
|Add: Transfer from FVOCI - sale of equity investments (net of taxes) ||0.29 ||30.68 |
|Less: Other Comprehensive Loss (net of taxes) ||3.43 ||0.57 |
|Dividend on Equity shares ||23.34 ||29.71 |
|Corporate dividend tax ||4.80 ||6.05 |
|At the end of the year ||910.21 ||839.84 |
|EPS (Rs.) ||4.79 ||2.32 |
Operational and Financial Performance
The performance of your Company showed a marked improvement in the year under review.Orient Paper registered a revenue of Rs. 710.04 crores for the financial year ended March31 2019 an increase of 5.69% over the previous year. EBITDA (Earnings before InterestTax Depreciation and Amortisation) stood at Rs. 171.64 crores up by 39.42% compared tothe previous year on the back of rising demand for your Company's products and controlover costs. The Finance Cost was reduced by 32.13%. Profit before Tax (Before ExceptionalItems) stood at Rs. 130.06 crores up by 62.35% compared to the previous year. Net Profitfor financial year ended March 31 2019 stood at Rs. 101.65 crores as compared to Rs.49.29 crores in the previous year.
There was no change in the share capital of the Company during the financial year2018-19.
Subject to the shareholders' and other requisite approvals your Directors recommendpayment of final dividend of Rs. 0.60 (60%) per equity share of Rs. 1/- each. This is inaddition to the Interim Dividend of Re. 0.50 (50%) per equity share of Rs. 1/- eachdeclared on 23rd January 2019 by the Board of Directors of the Company bringing thetotal dividend for the year Rs. 1.10/- (110%).
Economic climate and our performance
India's economy is acknowledged as the world's fastest growing major economy and isexpected to record a growth of ~7% for the year under review.
There continues to be a strong push on development of infrastructure and education bythe Government. Private sector investments have also started picking up gradually. RBI'srecent reduction in rates should provide further impetus to investments and economicgrowth.
We therefore feel that our country's economy is in a reasonably stable state and shouldgrow even faster going forward.
The Indian Paper industry also performed well based on healthy growth in demand and abalanced supply/ demand equation. Higher International prices of Pulp & Paper alsocontributed to higher exports.
This is also reflected in our performance for the year during which we have achievedthe best ever results in our history despite the 21 days maintenance shut during the 1stquarter. This has been possible due to our relentless push towards cost reduction andefficiency improvements.
We are now in the process of upgrading our pulp mill to become ECF compliant and alsoincrease its capacity to reduce our dependence on imported pulp for meeting the increasedpulp requirement for our expanded paper capacity after installation of the 3rd Tissuepaper machine last year. As a part of this project we are going to set up an energyefficient recovery boiler and a "7-effect falling film evaporator" which willsignificantly contribute to reduction in our costs further.
Sustainable Development and Environment
We have always considered environment protection and sustainable development asintegral part of our business philosophy. We are happy to report that we meet or exceedall the latest environmental standards including Zero liquid discharge.
We have also been contributing to greening of our environment and provide assistance tothe farmers around our plants by aggressively promoting farm forestry and achievedplantation of one crore trees covering 4500 during the year under review.
Our efforts towards conservation of water and energy have been widely recognized byseveral institutions including the Ministry of water resources Government of India CIIand others as detailed elsewhere in this report.
Cash Flow Analysis
In conformity with the provisions of Regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and section 2(40) of the Companies Act 2013the cash flow statement for the year ended 31st March 2019 is included in the annualaccounts.
Your Company is in full compliance with the Corporate Governance requirements in termsof SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A report onCorporate Governance and a certificate from the auditors confirming compliance with theCorporate Governance requirements are attached.
Management Discussion and Analysis
The Management Discussion and Analysis Report for the year under review as stipulatedunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isattached.
The Company has not accepted any deposit from public falling within the ambit ofSection 73 of the Companies Act 2013 and the Company's (Acceptance of Deposits) Rules2014.
Particulars of Loans Guarantee and Investments
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
Corporate Social Responsibility
Pursuant to the requirement of Section 135 of the Companies Act 2013 a CorporateSocial Responsibility (CSR) Committee was constituted. Details of the CSR activities asrequired under Section 135 of the Companies Act 2013 are given in the CSR Report asAnnexure I.
Extract of Annual Return
The extract of Annual Return in form MGT 9 is annexed herewith as Annexure II. TheAnnual Return of the Company for the year ended 31st March 2018 is available on thewebsite of the Company www.orientpaperindia.com.
Directors and Key Managerial Personnel Directors
During the year Shri Amitabha Ghosh (DIN:00055962) an Independent Director of theCompany resigned from the Board of the Company with effect from 31st January 2019. TheBoard of Directors place on record their deep appreciation for his immense and valuablecontribution to the growth and development of the Company during his long tenure as adirector of the Company.
The Board of Directors of the Company at its meeting held on 25th March 2019 hasappointed Mr. Srinivasan Vishvanathan (DIN:02255828) as an Additional Director and anIndependent Director for a period of five years effective from 25th March 2019 subjectto the approval of the shareholders of the Company at the ensuing Annual General Meeting.
The term of appointment of Mr. Narendra Singh Sisodia (DIN:06363951) as an IndependentDirector for a period of five years will be completed on 21st July 2019. The Nomination& Remuneration Committee and the Board of Directors of the Company at their respectivemeetings held on 2nd May 2019 approved the re-appointment of Mr. Narendra Singh Sisodiaas an Independent Director for a period from 22.07.2019 to 13.01.2020 upon his attainingthe age of 75 years subject to the approval of the shareholders of the Company.
The term of appointment of Mr. Manohar Lal Pachisia (DIN:00065431) as the ManagingDirector of the Company ended on 31st March 2019. The Nomination & RemunerationCommittee and the Board of Directors of the Company at their respective meetings held on23rd January 2019 approved the re-appointment of Mr. Manohar Lal Pachisia as ManagingDirector (a Key Managerial Personnel) from 1st April 2019 to 31st March 2020 subject tothe approval of shareholders of the Company.
(iii) Retirement by rotation
In accordance with the provisions of Section 152 of the Companies Act 2013 Mr.Chandra Kant Birla (DIN: 00118473) Director of the Company retires by rotation and beingeligible offers himself for re-appointment.
(iv) Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligations& Disclosure Requirements) Regulation 2015 the Board has carried out an annualperformance evaluation of its own performance of the directors individually as well asthe evaluation of its various Committees. The process of evaluation has been explained inthe Corporate Governance Report.
(v) Board Meetings
The details of meetings of the Board and its various committees are given in theCorporate Governance Report.
None of the Directors are disqualified under Section 164(2) of the Companies Act 2013.
All the Independent Directors have given their declaration confirming that they meetthe criteria of independence in terms of Section 149(6) of the Companies Act 2013 andregulation 16(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015.
Auditors & Audit Reports
(i) Statutory Auditors
The Shareholders of the Company at the Annual General Meeting held on 9th August 2017appointed M/s. Price Waterhouse & Co. Chartered Accountants LLP (FRN 304026E/E-300009)as the Auditors of the Company for a period of 5 years.
The Auditors' Report for the financial year 2018-19 does not contain any qualificationreservation or adverse remark. Further in terms of section 143 of the Companies Act 2013read with Companies (Audit and Auditors) Rules 2014 as amended notifications/ circularsissued by the Ministry of Corporate Affairs from time to time no fraud has been reportedby the Auditors of the Company where they have reason to believe that an offence involvingfraud is being or has been committed against the Company by officers or employees of theCompany.
Note No. 51(c) appearing in the Notes to Financial Statements referred to in theAuditors' Report is selfexplanatory.
(ii) Cost Auditor
Pursuant to Section 148 of the Companies Act 2013 and rules made there under Mr.Somnath Mukherjee Cost Accountant (Membership no. M/5343) was appointed for the financialyear ending 31st March 2019 to conduct cost audit for the products covered under the saidrule. The Board of Directors of the Company on the recommendation of the Audit Committeehas further appointed Shri Somnath Mukherjee Cost Accountant as Cost Auditor for auditingthe cost accounts of the Company for the financial year 201920. The Auditor has confirmedhis eligibility under Section 141 of the Companies Act 2013 and the rules framed thereunder for appointment as Cost Auditor of the Company.
(iii) Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company appointedMr. A. K. Labh Company Secretary in Practice (CP Regn. No. 3238) to undertake theSecretarial Audit of the Company for the financial year 2018-19. The Report of theSecretarial Auditor is annexed to this report as Annexure III. The comments mentioned inthe Secretarial Audit Report are self-explanatory.
The Board of Directors of the Company have further appointed Mr. A. K. Labh CompanySecretary in Practice to undertake the Secretarial Audit of the Company for the financialyear 2019-20.
Conservation of energy technology absorption foreign exchange earnings and outgo
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is attached herewith as Annexure IV.
Directors' responsibility statement
Directors' responsibility statement pursuant to section 134(3)(c) of the Companies Act2013 is attached herewith as Annexure V.
Information of employees
The prescribed information of Employees as required under Section 134(3)(q) read withRule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is attached herewith as Annexure VI.
Related Party Transactions
All transactions entered into with Related Parties as defined under the Companies Act2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015during the financial year were in the ordinary course of business and on arm's lengthbasis.
All the Related Party Transactions are presented to the Audit Committee and the Board.Prior omnibus approval is obtained for the transactions which are foreseen and repetitivein nature. A statement of all related party transactions is presented before the AuditCommittee and Board of Directors on a quarterly basis specifying the nature value andterms and conditions of the transactions. Particulars of contracts or arrangements withrelated parties referred to in sub-section (1) of Section 188 have been given in theprescribed form AOC -2 as Annexure VII. Web link for the policy in the website ishttps://orientpaperindia.com/codes-policies.
The Board has on the recommendation of its Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Key Managerial Personnel andSenior Management and their remuneration.
The Remuneration Policy is stated in the Corporate Governance Report. Web link for thepolicy in the website is https://orientpaperindia.com/codes-policies.
Pursuant to Section 134 of the Companies Act 2013 and Regulation 17 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Company hasadopted a risk management policy.
The policy comprises of a robust business risk management framework to identifyevaluate and mitigate potential business risks. The business risk framework defines therisk level including documentation and reporting.
Whistle Blower Policy
The Company is committed to adhere to the highest standards of ethical moral and legalconduct of business operations. In line with these objectives the Company has adopted aVigil Mechanism named Whistle Blower Policy to deal with instances of fraud andmismanagement.
Details of the Whistle Blower Policy are stated in the Corporate Governance Report. Weblink for the policy in the website is https://orientpaperindia.com/codes- policies.
Prevention of Sexual Harassment of Women at Workplace
It has been an endeavor of your Company to support women professionals through a safehealthy and conducive working environment by creating and implementing proper policies totackle issues relating to safe and proper working conditions for them.
The Company as required under the provisions of the "The Sexual Harassment ofWomen at Workplace (Prohibition Prevention and Redressal) Act 2013" has framed aPolicy on Prohibition Prevention and Redressal of Sexual Harassment of Women at Workplaceand matters connected therewith or incidental thereto.
The Company has not received any complaint under the said policy during the year. Weblink for the policy in the website is https://orientpaperindia.com/codes-policies.
Internal Financial Controls with reference to Financial Statements
The Company has adequate internal financial control procedures commensurate with itssize and nature of business. The Company has identified and documented all key internalfinancial controls which impact the financial statements as part of its StandardOperating Procedures (SOP). The SOPs are designed for all critical processes across allits plants and offices wherein financial transactions are undertaken. The Financialcontrols are tested for operating effectiveness through ongoing monitoring and reviewprocess by the management and independently by the Internal AuditoRs. In our view theInternal Financial Controls affecting the financial statements are adequate and areoperating effectively.
Material Changes and Commitment Affecting Financial Position of the Company
There are no material changes and commitment affecting financial position of theCompany which has occurred between the end of the financial year of the Company i.e. 31stMarch 2019 and the date of this Report.
Significant and Material Orders Passed by the Regulators or Courts
There are no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the Company and its future operations.
Your Directors place on record their sincere gratitude to the shareholders customersbankers financial institutions government agencies supply chain partners and theemployees for their valuable contribution cooperation and support in the Company'sendeavours to achieve continuous growth and progress.
By Order of the Board of Directors
| ||C. K. Birla |
| ||Chairman |
|New Delhi 2nd May 2019 ||(DIN: 00118473) |