ballarpur industries ltd Directors report

Your Directors hereby present the Seventy Fourth Annual Report together with the Audited Financial Statements for the financial year ended 31 March 2019.

FINANCIAL PERFORMANCE

The financial performance of your Company for the financial year ended 31 March, 2019 is given below.

(in Crore)

Particulars	STANDALONE		CONSOLIDATED
	2018-19	2017-18	2018-19	2017-18
Revenue from Operations (Net of Excise duty)	455	303	3643	2519
EBIDTA	47	16	676	352
Less: Finance Cost	242	244	843	915
Less: Depreciation	63	60	266	277
Profit/(Loss) before Exceptional Items and Taxes	(258)	(288)	(433)	(840)
Share of Profit/(Loss) in Associate and Joint Venture	-	-	0.69	-
Exceptional Items	377	169	369	190
Profit / (Loss) before Tax	(635)	(457)	(801)	(1030)
Less: Tax	-	(146)	34	(166)
Profit/(Loss) After Tax	(635)	(311)	(835)	(864)
Profit/ (loss) from discontinued operations before tax	-	-	(236)	(1171)
Less: Tax expense on discontinued operations	-	-	-	-
Net profit/ (loss) from discontinued operations after tax	-	-	(236)	(1171)
Net profit/ (loss) after tax	(635)	(311)	(1071)	(2035)

OPERATIONS

A detailed review of the operations and performance of the Company and its subsidiaries is provided in the chapter on Management Discussion and Analysis in this Annual Report.

DIVIDEND

In view of losses during the year, your Directors have not recommended any dividend on the Equity Share Capital of the Company for the financial year ended 31 March 2019.

TRANSFER TO RESERVES AND SHARE CAPITAL

The Board has not proposed to transfer any amount to Reserves.

FIXED DEPOSITS

No amount of principal or interest on erstwhile fixed deposits was outstanding as on 31 March 2019. Further, the Company has not invited any fresh deposits.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors at its meeting held on 28 March 2019 reappointed Mr. B. Hariharan (DIN 00012432) as Wholetime Director designated as Executive Director for a further period of 3 years i.e. from 1 April, 2019 upto 31 March, 2022, liable to retirement by rotation. His reappointment as Executive Director is recommended for approval by the Members of the Company at the forthcoming Annual General Meeting (AGM) of the Company for the aforesaid term. His profile is provided in the Corporate Governance Report.

Mr. Gautam Thapar (DIN 00012289) at the aforesaid Board Meeting informed the Board that he desired to step down as Chairman of the Company and continue as a Non-Executive Director. The Board of Directors at its aforesaid meeting appointed Mr. Hariharan as the Chairman w.e.f. 1 April, 2019.

To strengthen the leadership at the Board level with independent professionals, the Board of Directors at its meeting held on 28 March 2019 appointed Mr. Rajeev Ranjan Vederah (DIN 00012252) as an Additional Director (Independent) in accordance with the provisions of the Companies Act, 2013 (the Act) read with the Articles of Association of the Company. Mr. Vederah was a Non-Executive Director of the Company upto 28 March 2019. His appointment as an Independent Director is recommended for approval by the Members of the Company at the AGM of the Company

for a term of 5 years. His profile is provided in the Corporate Governance Report. Mr. Vederah is also Vice Chairman.

As per the provisions of the Act, Mr. Hariharan, Chairman & Executive Director, retires by rotation at the forthcoming AGM and being eligible, offers himself for reappointment. His profile is provided in the Corporate Governance Report. The Directors recommend his re-appointment.

To strengthen the leadership at the Board level with independent professionals, in accordance with the provisions of the Companies Act, 2013 ("the Act") read with the Articles of Association of the Company, Mr. Krishan Varma (DIN 06428524) has been appointed as an Additional Director (Independent) by the Board of Directors on 16 May, 2019. His appointment as an Independent Director is recommended for approval by the Members of the Company at the forthcoming Annual General Meeting (AGM) of the Company for a term of 5 years. His profile is provided in the Corporate Governance Report and AGM Notice.

Mr. Sanjay Labroo vide his letter dated 13 May, 2019 resigned as Independent Director of the Company on account of his inability to devote required time as Independent Director due to personal and unavoidable reasons. Mr. Sudhir Mathur vide his letter dated 16 May, 2019 resigned as Independent Director of the Company due to personal and other preoccupations. Mr. A.S. Dulat vide his letter dated 16 May, 2019 has resigned as Independent Director of the Company on account of health issues.

Mr. Labroo, Mr. Mathur and Mr. Dulat vide their respective letters have confirmed that there is no other material reason for their resignation other than that provided above. The Board places on record its appreciation for their valuable contributions during their tenure as Directors of the Company.

The Nomination and Remuneration

Committee of the Company, which has been set up by and reports to the Board of Directors, has formulated the criteria and policy for the identification / appointment of Directors as well as Key Managerial Personnel and Senior Management,

including their remuneration and evaluation. This is discussed in the chapter on Corporate Governance.

The Board carried out an annual evaluation of itself, its Committees, Independent Directors and its Directors in accordance with the criteria specified by the Nomination and Remuneration Committee. Overall, the Board was satisfied with the performance of the Board as a whole, its Committees and its Directors.

DECLARATION By INDEpENDENT DIRECTORS

All Independent Directors have given declaration that they meet the criteria of independence, as provided in Section 149(6) of The Companies Act, 2013 (the Act) and Regulation 16(1)(b) of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015.

meetings OF THE BOARD

The details of meetings of the Board of Directors of the Company as well as the Committees of the Board are contained in the chapter on Corporate Governance.

promoter group

The Company is a part of the Avantha Group, a global business conglomerate led by Mr. Gautam Thapar. As required by the Listing Regulations, the Company periodically discloses its Promoter, Promoter Group and persons acting in concert in the shareholding pattern and other filings with the Stock Exchanges.

SUBSIDIARY COMpANIES

The Company has 2 Indian subsidiaries. These are: (i) Bilt Graphic Paper Products Limited (BGPPL) and (ii) Avantha Agritech Limited (AAL) which was formerly BILT Tree Tech Limited. AAL is a direct subsidiary and BGPPL is a step-down subsidiary of the Company.

The Company also has six foreign subsidiaries. Of these, four are based in The Netherlands: (i) Ballarpur International Holdings B.V. (BIH), (ii) Bilt Paper B.V. (BPBV),

(iii) Ballarpur Paper Holdings B.V. (BPH), and

(iv) Ballarpur Speciality Paper Holdings B.V. (BSPH). One international subsidiary, namely Sabah Forest Industries Sdn. Bhd. (SFI) is based in Malaysia; and another, Bilt General Trading (FZE) is based in the UAE.

The chapter on Management Discussion and Analysis in this Annual Report contains a note on the performance of the subsidiaries. The audited accounts of the subsidiaries are available on the website of the Company and are, therefore, not enclosed in this Annual Report. However, these may be provided to any Member of the Company on request.

The Company has one joint venture. During the year under review, M/s Rubfila International Ltd. subscribed to 56,20,427 equity shares of 10/- each of M/s. Premier Tissues (India) Ltd. (PTIL) (an erstwhile wholly owned subsidiary of the Company) at a price of 28.47/- (aggregating to 50% Equity Share Capital of PTIL). Accordingly, PTIL became a joint venture w.e.f. 8 November, 2018.

CONSOLIDATION OF ACCOUNTS

The Consolidated Financial Statements of the Company, its Eight subsidiaries and one joint venture Company are annexed to this Annual Report. The performance and financial position of each subsidiary and joint venture are detailed in the Statement containing salient features of the financial statement of subsidiaries, associate companies/joint ventures in Form AOC I, pursuant to Section 129 of the Act.

MATERIAL CHANGES AND COMMITMENT AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year of the Company, i.e. 31 March 2019, and the date of the Boards report, i.e. 16 May 2019.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with Section 134(5) of the Companies Act, 2013, your Board of Directors confirm that:

• In the preparation of the annual accounts, the applicable accounting standards have been followed and that there is no material departure;

• They selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for the financial year;

• They took proper and sufficient care for maintenance of adequate accounting records as provided in the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

• The annual accounts of the Company have been prepared on a "going concern" basis;

• They laid down internal financial controls to be followed by the Company and that such controls are adequate and operated effectively; and

• They devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Further, the Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and General Meetings.

AUDITORS AND AUDITORS REPORTS

Members of the Company at the 72^nd Annual General Meeting (AGM) held on 26 September 2017, had appointed M/s Sharp & Tannan, Chartered Accountants, Chennai (Firm Registration No. 003792S), as the Statutory Auditors of the Company for a period of 5 years to hold office from the conclusion of the said AGM till the conclusion of the 77^th AGM.

According to the earlier Section 139 of the Companies Act, 2013, the appointment was to be placed for ratification by the Members of the Company at every AGM. However, this requirement has been omitted effective 7 May 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at the ensuing AGM.

The Auditors have made qualifications in their report on the financial statements of the Company for the financial year ended 31 March 2019.

Boards explanation to Auditors qualifications:

In respect of non-accrual of put option liability, note 45 to the accompanying standalone financial statements is self explanatory.

Further, with respect to audit qualification on differences in accrual of interest expense as compared to bank confirmations / loan agreement with the lenders and non receipt of direct confirmation from certain lenders for balance outstanding, it may be noted that negotiations for assignment/ settlement of loans is in progress and in view of the liquidity position of the Company and discussions with lenders, no provision is being made in the financial statements towards the penal interest. The Company does not expect a material variance upon settlement with lenders.

Reservation or disclaimer, if any, of the Statutory Auditor in its reports on financial statements has also been adequately addressed in the relevant notes accompanying said financial statements.

During the year under review, no fraud has been reported by the auditors under sub section (12) of Section 143 of the Act.

The Board had appointed M/s PDS & Co., Company Secretaries, to conduct Secretarial Audit of the Company for the financial year 2018-2019. The Secretarial Audit Report is annexed to this report. Regarding observation in the said report on appointment of Chief Financial Officer (CFO), the Company is searching for a suitable candidate to be appointed as CFO.

On recommendation of its Audit Committee, the Board of Directors appointed M/s. Bahadur Murao & Co., Cost Accountants (Registration No. 000008), as Cost Auditors of the Company, to carry out the cost audit of paper manufactured and pulp, if any, in relation to the financial year ending 31 March 2020. The Company has received their written consent to act as Cost Auditors of the Company and the appointment is in accordance with the applicable provisions of the Act and rules framed thereunder. Remuneration of the Cost Auditors has been approved by the Board of Directors based on the recommendation of the Audit Committee. The requisite resolution for ratification of this remuneration by the Members has been set out in the Notice of the Seventy Fourth Annual General Meeting of your Company.

Further, the Company is required to maintain cost records as required under Section 148(1) of the Companies Act, 2013 and accordingly such accounts and records are made and maintained.

CORPORATE GOVERNANCE

M/s PDS & Co., Company Secretaries, have certified compliance of the Company with the provisions of Corporate Governance, in terms of the Listing Regulations. The report on Corporate Governance together with the said Compliance certificate is attached and forms part of this Annual Report.

RELATED PARTY TRANSACTIONS AND LOANS, GUARANTEES OR INVESTMENTS

by the company

During the period under review, all transactions with related parties, referred to in sub-section (1) of Section 188 and Regulation 23 of Listing Regulations, were in the ordinary course of business and at arms length, duly reviewed/approved by the Audit Committee of the Company. Further, there were no material contracts, arrangements or transactions with related parties which require disclosure in Form AOC-2.

Details of loans / guarantees / investments by the Company under Section 186 of the Companies Act, 2013, are provided in the financial statements of the Company.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has designed and implemented a process-driven framework for internal financial controls within the meaning of explanation to Section 134(5)(e) of the Companies Act, 2013.

For the year ended 31 March 2019, the Board is of the opinion that the Company has sound internal financial controls commensurate with the nature and size of

its business operations; that these controls are in place, operating effectively and no material weaknesses exist. The Company has a process to continuously monitor the existing controls and identify gaps, if any, and implement new and / or improved controls, wherever the effect of such gaps could have a material effect on the Companys operations.

RISK MANAGEMENT

BILT has adopted a group risk management policy. Accordingly, all operational processes are duly covered to assess risk appetites and mitigation processes. Business risks are assessed by operational management and steps are taken for their mitigation.

STATUTORY COMMITTEES

Details of various Committees of the Board, namely Audit, Nomination & Remuneration, Stakeholders Relationship, Corporate Social Responsibility and Risk Management constituted in compliance with the provisions of the Companies Act, 2013 and Listing Regulations — including their constitution, purpose and attendance of Committee members — have been provided in the chapter on Corporate Governance in this Annual Report. The Board has accepted recommendations of the Committees, wherever made.

STATUTORY POLICIES

In compliance of the various provisions of the Companies Act, 2013, and Listing Regulations, the Company has made the following policies which are available on its website: www.bilt.com ^•

• Policy on materiality of and dealing with related party transactions. (http:// bilt.com//wp-content/themes/bilt/ pdf/Policy-on-materiality-of-and- dealine-with-related.pdf) Policy for determining material subsidiaries of the Company. (http://bilt.com//wp-content/ themes/bilt/pdf/Policy-on-materiality- subsidiary.pdf)

• Corporate Social Responsibility Policy.

• Policy for preservation of documents.

• Policy relating to remuneration of Directors/Key Managerial Personnel.

• Policy on determination of materiality of events.

• Policy on disclosure of unpublished price sensitive information.

• Whistle Blower Policy, covering all employees and Directors, for the vigil mechanism inter alia providing direct access to any whistle blower to the Chairman of the Audit Committee, as per said policy.

• Policy on Prevention of Sexual Harassment of Women at Workplace in line with the requirement of "The Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013". There was no such incident during the year.

Further, the Company has complied with the provisions relating to constitution of Internal Complaints Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,

2013.

SIGNIFICANT/ MATERIAL ORDERS PASSED BY REGULATORS

There are no significant/ material orders passed by any Regulators/Courts/Tribunals impacting the going concern status of the Company or impacting its operations in future.

CONSERVATION OF ENERGY, RESEARCH

& development, technology absorption and foreign exchange

EARNINGS AND OUTGO

As required by the Companies Act, 2013, read with Companies (Accounts) Rules,

2014, particulars pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are given in the prescribed format, as annexed with this Annual Report as Annexure 1.

particulars of employees

Information required under Section 197(12) of the Companies Act, 2013, read with

Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is annexed with this Annual Report as Annexure 2.

extract of the annual return

An extract of the Annual Return as of 31 March 2019, pursuant to sub-section (3) of Section 92 of the Act, and forming part of the report is annexed with this Annual Report as Annexure 3.

corporate social responsibility

(CSR)

In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of your Company has constituted a CSR Committee. A report on CSR activities undertaken by the Company as per CSR Policy of the Company in terms of said section and the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, forms a part of this Annual Report as Annexure 4.

ACKNOWLEDGEMENT

The Directors wish to convey their gratitude and appreciation to all of the Companys employees for their professionalism, creativity, integrity and efforts in effective utilisation of available resources for the Companys performance.

The Directors would also like to thank the employee unions, shareholders, customers, dealers, suppliers, bankers, government and all other business associates for their continued support extended to the Company.

For and on behalf of the Board of Directors,

B. HARIHARAN

Chairman & Executive Director

DIN 00012432

GAUTAM THApAR

Director

DIN 00012289

Date 16 May, 2019

Place Gurugram