Emami Paper Mills Ltd Directors Report.

Your Directors take pleasure in presenting their Thirty Seventh Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2019.

FINANCIAL SUMMARY
Particulars 2018-19 2017-18
र. in Crores र. in Crores
Operational Income 1528.48 1366.37
Pro!t before Finance Cost, Depreciation& Taxation (PBIDT) 242.32 171.87
Less: Finance Cost 106.68 83.63
Pro!t Before Depreciation & Tax (PBDT) 135.64 88.24
Depreciation & amortisation 69.40 64.31
Pro!t Before Taxation 66.24 23.93
Less : Provision for Current taxation (MAT) 13.38 2.37
MAT Credit entitlement (13.38) (2.37)
- -
Current Income Tax for the previous year (0.87) -
Provision for deferred tax 23.12 7.55
Pro!t after Tax 43.99 16.38
Add : Surplus brought forward 18.08 10.44
Balance available for appropriation 62.07 26.82
Appropriations
Dividend on Equity Shares 7.26 7.26
Corporate Dividend Tax 1.48 1.48
Balance carried forward 53.33 18.08

PERFORMANCE HIGHLIGHT

Your Company registered another commendable performance with impressive top line growth despite a challenging economy. Your Company recorded its highest turnover of Rs.1528.48 crores as compared to Rs.1366.37 crores in 2017-18 registering a growth of 11.9%. Earnings before Interest, Depreciation and Tax (EBIDTA) increased by 41% to Rs.242.32 crores as against Rs.171.87 crores in 2017-18. During the year under review, the combined production from Packaging Board, Newsprint and Writing & Printing paper stood at 3,22,359 MT and the capacity utilization stood at 100%. The Company also recorded its highest sales volumes of 3,04,089 MT. Exports accounted for 16754 MT as against 13209 MT in the Previous Year.

The Company is continuously focusing on improving operating e#ciencies and reducing manufacturing cost with increased production for better financial performance.

Your Company has maintained its leadership position in the high-end packaging board segment and continues to consolidate its preferred supplier status amongst leading end-use customers & brands. The Company has also enjoyed dominant position in India being world class quality manufacturer of Newsprint.

OPERATIONS AND OUTLOOK

Your Company has achieved remarkable performance with all-round growth of Multi-layer Coated Board plant and recorded 1,78,534 MT of Board production. This was clocked through focus on product quality, process innovation, improved manufacturing e#ciencies and enhanced service level with better logistic arrangements. The packaging board plant capacity further increased from 1,80,000 TPA to 2,00,000 TPA during the year by adding balancing equipment.

Over the next !ve years, the domestic paper industry is projected to grow at 6% to 7% CAGR to reach 20 million tons by 2022. The packaging paper and paperboard having 48% of the market share is estimated to grow at around 7.5% CAGR. However, premium grade packaging board is projected to grow at a healthy rate of around 10.5% CAGR driven by growth in demand from FMCG, Pharma, publishing, food & beverages and garments industries.

Newsprint industry scenario has improved in the !rst half of 2018-19 with increase in prices of newsprint by about 30% and increase in demand of quality newsprint from domestic manufacturers. However, newsprint industry witnessed a depressed market scenario in second half of the year due to higher volume of imports at cheap rates (dumping).Considering the changed and challenging scenario, your company has decided to go for change in the product mix by converting 60,000 MT newsprint capacity to any other value added and premium quality products.

The year 2018-19 was therefore marked with volatility and disruptions. Your Company however continued to perform consistently well in these challenging times and delivered better results. With 1,50,000 TPA newsprint capacity and focus on operational excellence and quality, your Company is well placed.

NEW PROJECT

Your Company has acquired 400387.05 square meters of land in Sayakha Industrial Estate, District: Bharuch, Gujrat from Gujrat Industrial development Corporation (GIDC), for Green!eld Expansion Project.

Overall, the performance has been satisfactory despite economic and industry challenges. With the implementation of GST and regularization of formal economy coupled with initiatives taken by the government to improve infrastructure and industry across all segments, signi!cant industrial growth is expected in times to come. Your company is attractively positioned to take bene!t of this growing opportunity and therefore looks to the future with optimism and con!dence.

DIVIDEND

Your Directors are pleased to recommend dividend of 60% (1.20 per share) on Equity shares of र.2.00 each and 8% p.a. dividend on Preference shares of र.100.00 each for the financial year ended 31st March, 2019. The Dividend, if approved by the shareholders, will absorb 14.64 Crores (including the dividend Tax of र.2.48 crores)

ENVIRONMENT MANAGEMENT

Your companys approach towards environmental protection is guided by Environmental Policy, commitment towards a sustainable planet and a clean environment as well as a healthy workplace for employees. The Company focuses on environmental management not only to comply with the applicable regulatory regime but also strives to contribute positively to the communities around its operations through varied community initiatives, encouraging biodiversity and natural resource conservation

To meet its environmental objectives, the Company adopts:

• Compliance with all relevant legislative requirements.

• Minimum Pollution Load in terms of Liquid Discharge and Air Emission.

• Stimulate rational use of resources through behavioral and technological improvements.

• Minimizing waste and maximizing recycling/ reuse.

• Creating Human Awareness in Environment, Safety, and Health.

• Promoting comprehensive programs for continual improvement of Environmental performance.

• Reduce speci!c energy consumption and associated greenhouse gas emission.

Your Company has adopted one of the best Integrated Management Systems (IMS) certi!ed by DNV (Det Norske Veritas AS, the Netherlands) through their rigorous surveillance and recerti!cation audits, encompassing the following:

• ISO 9001:2015 - Quality Management System

• ISO 14001:2015 - Environment Management System

• OHSAS 18001:2007 - Occupational Health & Safety Management System.

• Practicing TPM with an objective to achieve zero defect, zero breakdowns, zero pollution, and zero loss.

At Emami Paper, there has been a substantial development in energy conservation by installing energy e#cient equipment. Key environmental control equipment, mechanism and monitoring instruments maintained by the company are as below:

• Online Ambient air quality monitoring system (3 Nos)

• Online stack emission monitoring system (3 nos) with auto calibration facility

• Online monitoring system for !nal discharge water at ETP

• State-of-the-art e*uent treatment plant (ETP)-Augmented further to meet the stringent standards being proposed by CPCB. Additional features include: Equalisation tank, Flash tank, and Flocculation tank before primary clari!er, Up+ow Anaerobic Sludge Blanket Reactor(UASBR) before the aerobic system, Online DO monitoring device in the aeration basin, Bio-gas scrubber with +aring unit and Multi-Grade Filter(MGF) with chlorination

• Use of ETP !nal water for agricultural and plantation purpose and minimum discharge to river Sono

• 100% sludge used as co-fuel in the power boiler in

Balasore Plant

• Decanter for secondary sludge dewatering

• Rainwater harvesting through 20 Nos of recharge well

• Air pollution control through ESP, Ash conveying system pneumatically through the close pipeline, Dust Suppression System, Ash conditioner before unloading, Water Sprinkling System

• 100% of +y ash is used for +y ash bricks manufacturing.

• Massive green belt development

• New Sewage Treatment Plant (STP)

These systems and assets have enabled the Company to safeguard the environment by meeting all statutory norms. As a measure of sustainable growth policy of the company, it continuously gears up its resources to provide better protection to the environment and natural resource conservation.

SHARE CAPITAL

The company has neither issued shares with differential voting rights nor granted stock options or sweat equity.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of section 125 of the Companies Act, 2013, the unclaimed or unpaid Dividend is due for remittance to the Investor Education and Protection Fund established by the Central Government in accordance with the schedule given below:-

Financial year Dividend ID No. Last date of Payment of dividend Total Amount of Dividend Unclaimed Dividend as on 31.03.2019 Last date for transfer to I.E.P.F. on
2011-12 30th 11/09/2012 3,63,00,000 66,013.20 16/09/2019
2012-13 31st 11/09/2013 3,63,00,000 99,385.80 16/09/2020
2013-14 32nd 09/09/2014 3,63,00,000 97,523.40 14/09/2021
2014-15 33rd 09/09/2015 3,63,00,000 94,495.80 14/09/2022
2015-16 34th 08/09/2016 3,63,00,000 99,232.80 13/09/2023
2016-17 35th 31/08/2017 7,25,98,860 2,05,544.40 05/09/2024
2017-18 36th 04/09/2018 7,25,98,860 1,42,267.20 09/09/2025
Total : 32,66,97,720 8,04,462.60

Note: There is no unclaimed dividend on 8% Cumulative Redeemable Non-convertible Preference Shares issued by the Company.

Details of unclaimed dividend is available on the Companys website www.emamipaper.in

DETAILS OF SUBSIDIARY/ JOINT VENTURES/ ASSOCIATE COMPANIES

The Company does not have any Subsidiary or Joint Venture/ Associate Companies.

DETAILS OF DEPOSITS

The Company has neither accepted nor renewed any deposits under section 73 of the Companies Act, 2013 during the year under review.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure I and is attached to this Report.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return in form MGT-9 is given in Annexure II to the Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES

The company has formulated the policy for development and implementation of Corporate Social Responsibility as also required under Section 135 of the Companies Act, 2013.

Further, the information pursuant to Section 134(3)(o) of the Companies Act, 2013 and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 is given in Annexure III outlining the main initiatives during the year under review.

GROWTH WITH SOCIAL RESPONSIBILITY:

Emami Paper Mills Limited through its CSR activities takes up programs that bene!t the communities in & around its place of work and ensure over a period of time, enhancement in the quality of life & economic well<being of the local people and thereby establishing its presence as a good corporate citizen.

EPML is committed to helping the inhabitants of the surrounding villages by taking part in drinking water supply schemes, laying and improving roads, culverts, providing lighting facilities, development of parks, supply of equipment and instruments to Fair Price Shops, improving infrastructure facilities in Government Schools, conducting medical camps, providing financial assistance to needy people, contributing for cultural programs, sports activities, construction/renovation works in the place of worship, etc. This has paved the way for establishing a harmonious relationship with the surrounding neighborhood.

EPML undertakes Community Development activities by categorizing the needs of the community under various heads, viz., Infrastructure and basic amenities, providing drinking water supply, education, medical camps and environment, promotion of Oriya literature, Art & Culture, assistance for the differently – abled, training of unemployed youth, Organizing sports and talent competitions etc.

The company takes pride for its sense of responsibility towards the community and environment and the way it is duty bound for the enrichment of the life of less privileged people and protection of the environment around its area of operation. The company has taken its social responsibility as a part of its operating policy and gearing its social activities to promote inclusive and sustained growth.

AWARDS & RECOGNITION:

Our commitment towards Safety & Environment, Quality

& Operational Excellence and HR practices continue to garner appreciation from various industry chambers and social bodies. Some of the accolades and awards received during the year are as follows:

1. 18th Greentech Environment Award-Gold Category.

2. Go-Green Certi!cation 2018.

3. Corporate Excellence, Best Paper Industry 2017 by Odisha Cultural Foundation for excellent performance with outstanding contribution and dedication to the society.

4. CII, Eastern Region conferred with 2nd Runner up Award in the large scale category of Energy Conservation.

5. State Safety Award for Best performance in Safety, Health & Environment and Best Environment Management.

6. Accolade of Appreciation by Ishani, Balasore in Baisakhi Mahotsav for infrastructure development and employment generation.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

Your Company has laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and e#cient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The Audit Committee evaluates the internal financial control system periodically.

AUDITORS AND AUDITORS REPORT

1. STATUTORY AUDITORS

As per section 139 and other applicable provisions of the Companies Act, 2013 the Company has appointed M/s. Agrawal Subodh & Co. Chartered Accountants (Registration No. 319260E) as the Statutory Auditors of the Company, for a period of !ve years till the conclusion of 40th Annual General Meeting (AGM) of the Company, subject to rati!cation by the shareholders in every AGM of the company on the remuneration and other terms and conditions as may be !xed by the Board of Directors. The Board recommends the rati!cation by the shareholders regarding the appointment of M/s Agrawal Subodh & Co, Chartered Accountants as Statutory Auditors of the Company.

The present Statutory Auditors, M/s Agrawal Subodh & Co., Chartered Accountants for both the units will continue their o#ce till the conclusion of ensuing 40th Annual General Meeting of the Company.

2. COST AUDIT

Your Company has appointed M/s. V. K. Jain & Co. Cost Accountant as Cost Auditors of the Company for the Financial Year 2018-19 for both the units at Balasore and Kolkata under section 148 of the Companies Act, 2013, at the Board Meeting held on 02ndMay, 2018 to audit cost accounting records as may be applicable to the Company for the financial year 2018-19 and their remuneration was approved at the last Annual General Meeting.

In terms of Section 148 of the Companies Act, 2013 read with the Companies (Audit & Auditors) Rules, 2014, M/s V. K. Jain & Co. Cost Accountant, has been reappointed as Cost Auditor for the year 2019-20 as required under the Companies Act, 2013, the remuneration payable to Cost Auditor is required to be placed before the members in General Meeting for their rati!cation. As such, a resolution seeking members rati!cation for the remuneration payable to them is included in the Notice convening the Annual General Meeting.

3. SECRETARIAL AUDIT

Pursuant to the provisions of section 204(1) of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company has appointed M/s MKB & Associates, Company Secretary in practice for the financial year 2018-19 to undertake the Secretarial Audit of the company. The Secretarial Audit Report is annexed herewith as Annexure IV.

AUDITORS REPORT AND SECRETARIAL AUDIT REPORT

The observations made in the Auditors Report read together with Key Audit matters and relevant notes thereon are self-explanatory and hence do not call for any further explanations or comments by the Board under Section 134 of the Companies Act, 2013.

DISCLOSURE ON COMPLIANCES OF APPLICABLE SECRETARIAL STANDARD

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.

The above statement is intended to align the disclosure requirement with the provisions of section 134(5)(f) of the Act, which requires the directors to state in the Directors Responsibility statement that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

1) The company has given Inter Corporate loan to some of the Body corporates covered under the provisions of section 186 of the Companies Act, 2013. The amount of loan given is Rs.170 crores and the whole amount have been received back during the year. The purpose was to utilize the loan amount for their general business purposes.

2) The loan and advances given to employees are covered under the remuneration policy of the company. Hence section 186 of the Companies Act, 2013 is not applicable.

3) The company has not provided any guarantee.

4) The details of the investments made by the company are given in the notes to the financial statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the financial year were on arms length basis and were in the ordinary course of the business. There are no materially signi!cant related party transactions made by the company with promoters, Key managerial personnel or other designated persons which may have potential con+ict with the interest of the company at large.

Necessary disclosure regarding transactions with related parties has been made in the Notes to the Audited Accounts.

The related party transactions policy has been given on the website of the company under the head Investors-Corporate Governance.

Web link: http://www.emamipaper.in/compliances.php

COMPOSITION OF AUDIT COMMITTEE

The composition of the Audit Committee of the company is mentioned in the Corporate Governance Report attached to this report.

DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM AND WHISTLE BLOWER POLICY

Details of establishment of Vigil Mechanism and Whistle Blower policy is mentioned in Corporate Governance Report attached to this Report and also available at the website of the Company i.e.www.emamipaper.in.

STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY

Pursuant to section 134(3)(n) of the Companies Act, 2013 and relevant regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the company has adopted Risk Management policy for identi!cation and implementation of Risk Mitigation Plan which is reviewed by the Management, Audit Committee and the Board on half yearly basis. In the opinion of the Board, there is no such risk which may threaten the existence of the company.

DIRECTORS & KEY MANAGERIAL PERSONNEL

A) Directors retirement by rotation

Smt. Richa Agarwal, Director would retire by rotation and, being eligible, o"ers herself for re-appointment.

B) Declaration by an Independent director(s) and reappointment, if any

All Independent directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and relevant regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended from time to time).

C) Key Managerial Personnel

During the year following changes were made in the Key Managerial Personnel of your Company.

1. Shri U. G. Bhat, Independent Director resigned w.e.f.11th October, 2018

2. Shri Ashish De, Whole Time Director was appointed on 13th April, 2018 and resigned w.e.f. 01st March, 2019.

3. Shri Shyamalendu Chatterjee was appointed as an Independent Director of the Company w.e.f. 07th January, 2019.

4. Shri Manish Goenka, Whole-Time Director, redesignated to Promoter, Non-Executive Director w.e.f.14th May 2018.

5. Shri M.B.S.Nair resigned w.e.f.13th April, 2018 from the post of Director (Operations).

6. Shri S. K. Khetan, Senior President was reappointed as Chief Financial Officer (C.F.O.) of the Company being Whole Time Key Managerial Personnel (KMP) under Section 203 of the Companies Act, 2013 with e"ect from 01st April, 2019.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

Pursuant to section 178 of the Companies Act, 2013, the Board of the directors of the company has approved the revised Nomination and Remuneration policy as recommended by the Nomination and Remuneration Committee in their meeting held on 27thJanuary2015.

The policy is disclosed in the Corporate Governance Report.

ANNUAL EVALUATION OF BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Pursuant to the provisions of section 134(3)(p) of the Companies Act, 2013 and relevant regulations of SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015 (as amended from time to time), the Board has carried out the annual performance evaluation of its own performance, its committees and individual directors on 08th May, 2019, on the basis of agreed norms for evaluation.

Further, the independent directors have evaluated the performance of non-independent directors at a separate meeting held on 05th February 2019.

The manner in which the evaluation carried out has been explained in the Corporate Governance Report.

Meetings of the Board and Committee thereof

The details have been covered in the Corporate Governance Report.

MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of managerial personnel and employees of the company is attached herewith in Annexure V.

RECEIPT OF COMMISSION BY THE DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY UNDER SECTION 197(14)

Not Applicable

CORPORATE GOVERNANCE

The Corporate Governance Report and Managements Discussion & Analysis Report are set out as Annexure VI in this Report.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of section 134(5) of the Companies Act, 2013 the Directors would like to state that:-

1. In the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2. The Directors had 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 a"airs of the company at the end of the financial year and of the pro!t and loss of the company for that period;

3. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. The Directors had prepared the annual accounts on a going concern basis;

5. The Directors had laid down internal financial controls to be followed by the company and such controls are adequate and operating effectively; and

6. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively;

MISCELLANEOUS

1. Industrial Relations: During the year under review, the Company enjoyed a cordial relations with the workers and employees at all levels.

2. Signi!cant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in the future:

No such orders passed during the year under review.

ACKNOWLEDGEMENT

The Board acknowledges the understanding and support shown by its lending financial institutions, banks, distributors, customers, suppliers, employees and other business associates. Your Company operated e#ciently due to a culture of professionalism, integrity and continuous improvement leading to sustainable and pro!table growth.

For and on behalf of the Board of Directors
A. V. Agarwal
Place: Kolkata Executive Chairman
Date: 08th May, 2019 DIN : 00149717