Kuantum Papers Ltd Directors Report.

To the Members,

Your Directors take pleasure in presenting the 23rd Annual Report on the business and operations, together with audited statements of Accounts of the Company, for the financial year ended 31 March 2020.


The summarized financial results of the Company for the financial year 2019-20 are given hereunder.

(Rs. in lacs)

2019-20 2018-19
Sales & other income 75,350.53 80,230.95
Operating Profit 12,732.74 16,439.44
Interest 3,043.39 2,837.97
Gross Profit 9,689.35 13,601.47
Depreciation 3,170.16 2,512.53
Profit before tax 6,519.19 11,088.94
Provision for
- Current Tax 1,206.96 2,476.08
- Deferred Tax (1,868.17) 818.98
Net Profit after tax 7,180.58 7,793.88
Other comprehensive Income (Expense) (12.97) (11.25)
Total comprehensive Income (Expense) for the year (Net of Income Tax) 7,167.61 7,782.63


Your Directors have proposed a dividend of Rs. 2.50 per share (previous year Rs. 5.00 per share of Rs. 10/-* each) on the Equity Shares of Rs. 10/- each, and Re. 1.00 per share (previous year Re. 1.00 per share) on the Non-Cumulative Redeemable Preference Shares of Rs.10/- each, for the financial year ended 31 March 2020 amounting to Rs. 518.16 lacs (previous year Rs. 887.67 lacs).

*As the shareholders have approved the Sub-division of each equity share having nominal value of Rs.10/- (Rupees Ten Only) into 10 (Ten) equity shares having nominal value of Re. 1/- (Rupee One Only) each in EGM held on 10.06.2020. The face value of share will be Re. 1/- (Rupee One Only) each with effect from the record date i.e. 15 July 2020.


During the year under review, your Company has achieved a production of 1,26,633 metric tonnes, as against 1,27,756 metric tonnes in the previous year. The quantitative figure for the sale of paper was 1,25,267 metric tonnes this year, leaving 1,730 metric tonnes as closing stock, as against the sale of 1,27,390 metric tonnes in the previous year.

From the 2nd quarter onwards, there had been a slowdown in the economy, though considered temporary at time but the economy did not recover and the markets were challenged by consumption and demand and fairly high effect of a liquidity crunch. The sales realization has been impacted by about 10% after the first quarter over the previous year. There has also been increase in the material and input costs. Despite this, improved operational efficiencies, better productivity and product quality, higher volumes of premium quality paper products like copier and surface sized paper, and enriched product mix coupled with better operating parameters have contributed to better sales as well as profitability.

Towards the fag end of the year, the performance did get impacted due to COVID-19 pandemic outbreak, resulting in a Nationwide lockdown and curfew imposed in the various parts of the country during March 2020 to prevent novel coronavirus (COVID-19) from spreading in the country. This clearly affected our chance to get past the quantitative figures of the previous year.

The figures given in the Financial statements for the current year under review show the following:

The company recorded a net sales turnover (net of GST) and including other income, at Rs. 75,350.53 lacs; operating profit at Rs. 12,732.74 lacs; Profit before Tax at Rs. 6,519.19 lacs. Net profit after tax and other comprehensive income (expense) is Rs. 7,167.61 lacs. The profit after tax for the year under review is higher due to the lower income tax culminating from the reduced tax rates announced by the Govt. in September 2019 in order to offer tax stimulus to the industry. Further, “Section 115 BAA of the Income Tax Act 1961, introduced by Taxation Laws (Amendment) Ordinance, 2019 gave a one-time irreversible option to Domestic Companies for payment of corporate tax at reduced rates. In view of the MAT Credits, the Company determined that it will continue to recognize tax expense at the existing income tax rate as applicable to the Company. Accordingly, the Company had evaluated the outstanding deferred tax liability (net) as at 31 March 2019, and based on current estimates, re-measured the deferred tax assets/liabilities likely to be reversed at the time the Company would opt for new tax regime which had resulted in write back of deferred tax liability amounting to Rs. 1,956.22 lacs using the revised annual effective income tax rate.”

The initiatives taken by your company in the recent years in improving productivity and operational efficiencies have led to achieving the above operational performance, despite the odds set out in the marketplace. The company has continued to take up projects in focused areas for operational improvement and this has also led to improved operational efficiencies, productivity, reduction in operational costs, and sizeable increase in savings.

The results of cost reduction initiatives and operational efficiencies will continue to be even more visible in the current financial year 2020-21 as your company has continued these initiatives to optimize capacity utilization, cost reduction, new products, optimizing production of better margin products by further undertaking modification and up-gradation of the pulp mill, the chemical recovery plant and a captive 20 MW power plant at a large outlay of Rs 440 crores for improving the cost effectivity, process efficiency, product quality and betterment in operations.

Your company has also launched an extensive array of branded Specialty Papers, which have been well received in the market. Kuantum now has amongst the largest portfolio of paper products available to a company in India. The company sells its products through its wide distribution network by way of dealers located and spread across the country, and maintains a strict policy over collections. The company produces entirely against orders collected in advance which is reflected in the extremely low, sometimes even nil, level of finished stock inventory.

These initiatives have made your company not only one of the most cost competitive paper mills, but is also positioned competitively amongst the large paper player in the writing and printing segment. Furthermore, continuous research & development have enabled the company to manufacture papers of distinctive prime quality and broader product mix, which is competing with the premium quality of other large paper mills.

The detailed performance of Companys operations for the year ended 31 March 2020 has been stated in the Management Discussion & Analysis, which appears as a separate statement in the Annual Report.


In the calendar year 2020, demand for paper and board (writing and printing or W&P, paperboard and newsprint) is expected to be subdued on account of the Covid-19 pandemic-led disruptions across the globe. In China, which had almost one-third of paper demand, it is expected to fall too due to strict shutdown coupled with lower export opportunities. The US and the EU, which together account for almost 40% of global demand, are also expected to witness demand contraction due to the pandemic-driven lockdown. In 2020, CRISIL expects paper and board to de-grow due to moderation of global growth leading to lower demand from end-user industries. However, in 2021, CRISIL expects demand to rebound to 5-6%, driven by strong growth in the paper and paperboard segment.

CRISIL Research expects paper and paperboard capacity to increase to about 22-23 million tonne by fiscal 2025, an increase of 1% CAGR from fiscal 2020. Key players are expected to add an aggregate of 0.5-1.5 million tonne of capacities over the next 5 year period in the paper and paperboard segment. However, on account of a sudden plunge in the demand environment, CRISIL expects players to defer capacity additions until demand improves.

The Indian paper industry accounts for about 4% of the worlds production of paper. The estimated turnover of the industry is INR 70,000 crore (domestic market size of INR 80,000 crores) and its contribution to the exchequer is around INR 5,000 crore. The industry provides direct employment to 5,00,000 persons, and indirectly to around 1.5 million.

Most of the paper mills are in existence for a long time and hence present technologies fall in a wide spectrum ranging from oldest to the most modern. The mills use a variety of raw material viz. wood, bamboo, recycled fibre, bagasse, wheat straw and agro residues. In terms of share in total production, approximately 25% are based on wood, 58% on recycled fibre and 17% on agro-residues. The geographical spread of the industry as well as market is mainly responsible for regional balance of production and consumption.

Consumption of paper is closely linked to the economic development of a country. In India, though the per capita consumption of paper is low, it is gradually improving with economic growth. Industrial production, expenditure incurred on the print media, government spending on education, population growth and literacy levels are the key contributing factors.

The individual segments are expected to grow as follows:

CRISIL Research expects paper and board (including newsprint) demand to de-grow in fiscal 2021, because of the Covid-19 pandemic-led lockdown. The specialty segment is the only one expected to grow 8-11% on-year, driven by increased tissue demand.

CRISIL Research estimates moderation in industrial activity as well as exports to have moderated paper demand to a muted 1-3% in fiscal 2020. Nevertheless, we expect demand to recover and grow at a faster paced 5 year CAGR of 5-6% to ~22 million tonne by fiscal 2025.

• Demand will be led by healthy growth in paperboard volume, which is expected clock 4.5-5.5% CAGR over the next 5 years. This growth would be driven by increased volumes in end-user segments such as household appliances, fast-moving consumer goods (FMCG), ready-made garments, pharmaceuticals, and e-commerce.

• W&P demand is expected to increase at 4-5% CAGR, on the back of increased government (on education sector) and corporate spending.

• Specialty paper (majorly tissue and thermal paper) is expected to continue to log a robust 10-12% CAGR. Players are likely to focus towards such segments where demand is expected to remain robust in the medium term.

• Demand for copier paper (20% of the W & P segment) is expected to increase at 7-8% CAGR through fiscal 2025.

• Demand growth for coated paper is expected to remain moderate at 2-3% CAGR.

Printing and Writing segment demand is expected to grow on account of pick-up from the education sector with improving literacy rates and universalization of education through legislative steps like Right to Education, government measures i.e. Sarva Shiksha Abhiyan, mid-day meal schemes, Girl Education Programme (GEP), growing enrolment as well as increasing number of schools, colleges and institutions, rising enrolment numbers and increased spending on education by all sections of the society is expected to lead to an increased expenditure on textbooks, notebooks.

The industry is classified into four segments, Printing & Writing (P&W), Packaging Paper & Board, Specialty Papers & Others, and Newsprint. The Printing and Writing (P&W) paper segment forms 30% of domestic paper market, Packaging Paper & Board segment accounting for 51% in India and is the largest segment in the industry. Specialty paper & others is the smallest segment, accounting for only 4% of the industry and the Newsprint segment comprises 15% of the Indian Paper Industry.



The members were informed in the last report that the company has taken up implementation of Capex projects for modification, up-gradation of paper machines and other equipment and cost reduction initiatives at a project cost of Rs. 192.00 crores (later on revised to Rs. 200.57 crores) and is funded by Term Loans of Rs. 144.00 crores and internal accruals of Rs. 48.00 crores (revised to Rs. 56.57 crores). These projects have been commissioned during the year under review.

The members were also informed that considering the strong fundamentals of the paper Industry and its growth potential, the company has taken up the implementation for expansion and enhancement of the production capacity to 148500 TPA, expanding its agro pulp and hard wood pulp streets, setting up an additional chemical recovery plant and a captive power plant, thereby sustaining competitiveness in capacity and quality enhancement, cost reduction and improving margins and profitability of the Company. The project cost was envisaged at Rs. 444.04 crores, which was proposed to be financed by debt of Rs. 350.00 crores (now revised to Rs. 333.00 crores) and internal accruals of Rs. 94.04 crores (now revised to Rs. 111.04 crores). The Term Loan of Rs. 333.00 crores were sanctioned by Banks and the disbursement is under way. The capex projects were envisaged to be completed and commissioned in June 2020 but due to Covid-19 pandemic outbreak, nationwide lockdown and curfew in various states including Punjab from March 2020 to May 2020, a delay in the commissioning of the capex projects is anticipated. The work at site has resumed after relaxations in the lockdown. As per the current assessment, with the timely equipment supplies, availability of adequate workforce as also timely payment of vendors and contractors, the capex projects are now scheduled for commissioning by September 2020. Further, the company does not anticipate any cost over run in the projects and time over run is also due to reasons beyond its control. With the commissioning of these capex projects, the operational performance of the company will improve significantly.


Banks have sanctioned the enhanced working capital limits amounting to Rs. 14,949 lacs (fund based Rs. 5,500 lacs, non-fund based Rs. 7,655 lacs and LER/CEL limits of Rs. 1,794 lacs) during the year under review.


As on 31 March 2020, your Company had Fixed Deposits of Rs. 3,969.29 lacs. There were no overdue deposits as on 31 March 2020.

The above deposits have been accepted for a period of 1 year to 3 years as per the Fixed deposit Scheme duly approved by the Board in its meeting held on 29 May 2019 pursuant to the compliance of the provisions of Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules 2014.

Details of Deposits:

(a) Accepted (including renewals) during the year- Rs. 2,414.93 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 thereon during the year. EXTERNAL CREDIT RATING

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

Facilities Amount (Rs./Cr) Rating
Long term Bank Facilities 634.69 CARE A-; Negative (A minus; Outlook: Negative)
Short term Bank Facilities 94.49 CARE A2+ (A Two Plus)
Fixed Deposits 45.00 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 have occurred during the year under consideration, or after closure of the financial year till the date of this report. However, the operations for the current year FY 2020-21 will be impacted due to the closure of operation in April/May 2020 due to Covid-19 pandemic outbreak, nationwide lockdown and curfew in various states including Punjab from March 2020 to May 2020. Your company will not be able to cover the production loss in these months since it has already been operating at optimum capacity utilisation.


Your Company does not have any subsidiary/joint ventures or associate company within the meaning of the Companies Act, 2013. Kapedome Enterprises Limited is the holding company having 66.51% equity capital of the company.


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

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

During the year under review, the company has spent an amount of Rs. 96.42 lacs on the projects covered under CSR activities. The CSR expense required under the relevant provisions up to 31 March 2020 was Rs. 290.00 lacs including Rs. 87.87 lacs from the previous year. The work on several projects is already underway and the balance amount will be spent in the current year. Disclosures as per Rule 9 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in the Annual Report on CSR activities at Annexure- A.


Section 177(9) of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Inter alia, provides for a mandatory requirement for all listed companies to establish a mechanism called the Whistle Blower Policy for Directors and employees to report concerns of unethical behavior, actual or suspected, fraud or violation or the Companys code of conduct or ethics policy. In line with this requirement, the Company has framed a “Whistle Blower Policy”, which is placed on the Companys website.


In line with the new regulatory requirements, the company has framed a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure. A Risk Management Committee has also been constituted to oversee this process.

The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Companys risk management systems and programs comprises of various processes, structures and guidelines which assist the Company to identify, assess, monitor and manages its risks, including any material changes to its risk profile. To achieve this, the Company has clearly defined the responsibility and authority of the Companys Management and the Risk Management Committee to oversee and manage these Programs. The company has taken Industrial All Risk Policy to insure its fixed assets and inputs, that cover known and unknown risk including fire. Details of the various risks, which can affect the Companys business and the managements perception, 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 the major processes to ensure reliability of financial reporting, safeguarding of assets and economical and efficient use of resources as also the compliance of laws, regulations, policies and procedures.

The Companys internal control systems are reviewed by M/s A. Gandhi and Associates, internal auditors, an independent firm of Chartered Accountants. The Internal Auditor independently evaluates the adequacy of internal controls through periodic reviews that cover all the functions and processes through reviewing major transactions. The Internal Auditors reports directly to the Audit Committee to ensure complete independence.


All related party transactions are entered at arms length basis and are as per the applicable provisions of the Companies Act, Indian Accounting Standards and the Listing Regulations. The company has entered into transactions towards material procurement with its holding company amounting to Rs. 4,160.74 lacs (inclusive of GST) and with another company amounting to Rs. 1,655.44 lacs (inclusive of GST) [Refer Note 40 C to the Financial Statements] which are at arms length. No materially significant related party transactions have been entered by the Company with Promoters, Directors or Key Managerial Personnel, which had potential conflict with the interest of the Company at large. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis duly certified by the CEO and CFO. The Related Party Transactions Policy as approved by the Board is placed on the Companys website.

The details of the related party disclosures and transactions as prescribed in Form AOC-2 are given in the Note No. 40 of the notes on Financial Statements. All the related party transactions are done at arms length and pertain to the FY 2019-20.


There are no significant and material orders passed by the Regulators, Courts or Tribunals, which would impact the going concern status of the Company and its operations in future.


Shri Yashovardhan Saboo has resigned from the directorship of the Company during the year w.e.f. 07.08.2019. The Directors place on record their appreciation of the valuable advice and guidance given by him during his tenure.

Further, in accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company Shri Jagesh Kumar Khaitan shall retire by rotation at the forthcoming Annual General Meeting and is eligible for re-appointment.


The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 and the applicable provisions of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 so as to qualify themselves to act as Independent Director under the provisions of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 and the relevant rules.


In terms of Regulation 25(7) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company familiarized the Independent Directors in the following 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 Companys Plant during the year to enable themselves to be conversant with manufacturing operations and processes.

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

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

Details of familiarization programmes imparted to independent directors FY 2019-20 Cumulative till date
Number of programmes attended by independent directors 4 25
Number of hours spent by independent directors in such programmes 6 38


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

(a) Performance of the directors and key attributes of the Directors that justify his/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 management as 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 its Committees and individual Directors including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligation, governance issues, participation and effectiveness.

During the year under review, a meeting of Independent Directors could not be held due to Covid 19 pandemic outbreak, Nationwide lock down and imposition of curfew. The performance of the Non Independent Directors and the Board as a whole vis-a-vis the performance of the Chairman of the Company was reviewed by the Independent Directors.


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

In conformity with the evaluation policy and laid down parameters, the overall contribution of each Director was assessed as satisfactory and appreciable. The suggestions, participation, involvement and constant efforts of each director in the light of improving business operations and overall growth and development of the Company was really significant.

ii. Previous years observations and actions taken:

There was no observation of the Board with regard to the previous year. However, it has been the endeavor of the Board of Directors of the Company to attain the highest level of transparency, accountability and integrity as well as utmost applicable legal and ethical standards in the functioning of the Company with a view to create value that can be sustained continuously for the benefit of its stakeholders.

iii. Proposed actions envisaged:

The Company proposes to hold more trainings, presentations and interactions enabling the Directors to uphold highest standards of integrity & probity and strict adherence of the Companies Act, SEBI (Listing Obligations and Disclosure Requirements) Regulations, and other rules and regulations besides Companys Code of Conduct as also to strive for constructive, effective and value-added deliberations at the meetings as also to consistently strive to implement best corporate governance practices reflecting its strong value system and ethical business conduct.


The Board has, on the recommendation of the Nomination and Remuneration Committee, approved a policy for selection, appointment, remuneration and evaluation of Directors, Senior Management and Key Managerial Personnel. Details of the Nomination and Remuneration Committee are given in the Corporate Governance Report. The Nomination, Remuneration and Evaluation Policy as approved by the Board is placed on the Companys website


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


During the year, 5 (Five) Board meetings were convened and held. Details of number of meetings of Board of Directors and committees thereof and the attendance of the Directors in such meetings are provided under the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.


The Audit Committee constituted by the Board comprised of three Independent Directors and one Executive Directors as at 31 March 2020.

During the year, 4 (four) Audit Committee meetings were convened and held. The details of the Audit Committee meetings, attendance of the members and terms of reference are provided in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.


As per the provisions of section 139 of The Companies Act, 2013, other relevant rules and as per resolution passed by the shareholders, the term of office of M/s BSR & Co. LLP, Chartered Accountants, (ICAI Firm Registration No. 101248W/W-100022) Statutory Auditors of the Company, who were reappointed for a period of five years at the 18th Annual General Meeting of the company, expires with the conclusion of ensuing Annual General meeting.

As M/s BSR & Co. LLP (ICAI Firm Registration No. 101248W/W-100022); can not act as a statutory auditor of the Company after the completion of their second term which is upto the conclusion of 23rd AGM, as per the provisions of Companies Act, 2013, the company has received offer from M/s O P Bagla & Co. LLP, Chartered Accountants, (ICAI Firm Registration No. 000018N/N500091) for appointment of Statutory auditors of the company for a period of five years from the conclusion of 23rd Annual General Meeting till the conclusion of 28th Annual General Meeting. The Company has received a letter from them to the effect that their appointment, if made, would be within the prescribed limits under section 139 of the Companies Act, 2013 and that they are not disqualified for such appointment within the meaning of section 141 of the Companies Act, 2013.


(i) The Auditors Report to the Members on the Audited Financial Statements of the Company for the year ended 31 March 2020 contains the following qualification (s):

We draw attention to the fact that the Company has during the period January - March 2020, given advances amounting to Rs. 1,522.30 lakhs to its holding company which is having two directors of the Company holding more than 25% shares of the holding company apart from also being its directors, for supplies of certain raw materials to the Company as “advance for supply of goods”. The amount outstanding on 31 March 2020 of Rs. 1,840.30 lakhs have been received back subsequent to the year-end. In addition, the Company has also issued a corporate guarantee of Rs. 1,679.00 lakhs in relation to a loan taken by its holding company. We have not been able to obtain sufficient and appropriate audit evidence to verify the nature and business rationale of the aforesaid advance given by the Company and also the end use of the loan by the holding Company in relation to which the aforesaid corporate guarantee was provided. Accordingly, we are unable to comment on whether these transactions with the holding company comply with applicable laws and regulations including section 177(4), 185, 186(7) of Companies Act, 2013 and Regulation 23 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (Listing Regulations) and the consequential impact, if any, on the annual financial results for the year ended and as at 31 March 2020.

In our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the aforesaid financial statements give the information required by the Companies Act, 2013 (“Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2020, its profit and other comprehensive income, changes in equity and its cash flows for the year ended on that date.


(i) According to the information and explanations given to us and based on our audit, the following material weakness has been identified as at 31 March 2020:

a) The Company did not have appropriate internal control for advances and guarantees provided to its holding company, which could potentially result in non-compliance with applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended and in potential material misstatements in the Companys financial statements.

A material weakness is a deficiency, or a combination of deficiencies, in internal financial control over financial reporting, such that there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis.

In our opinion, because of the effects/possible effects of the material weakness described above on the achievement of the objectives of the control criteria, the Company has not maintained adequate internal financial controls with reference to financial statements and such internal financial controls were not operating effectively as at 31 March 2020, based on the internal financial controls with reference to financial statements criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

We have considered the material weakness identified and reported above in determining the nature, timing and extent of audit tests applied in our audit of the 31 March 2020 financial statements of the Company, and the material weakness has affected our opinion on the financial statements of the Company and we have issued a qualified opinion on the financial statements.

Management Response:

The company placed orders for purchasing certain goods and materials required for its manufacturing operations, but due to the overall slowdown in the economic activity in the instant period, Covid-19 pandemic outbreak, curfew in the state of Punjab, followed by nationwide lockdown in March 2020 and subsequent months, the envisaged supplies could not be completed by the Holding company. The holding company has supplied goods and material amounting to Rs. 4,160.74 lakhs during the period under review, leaving an advance against supplies outstanding of Rs. 1,840.30 Lakhs as at 31 March 2020. However, such advance against supplies remaining outstanding has been received back completely.

The company has furnished corporate guarantee after taking the due approval from the Banks in terms of financial loan covenants and shareholders of the company for a loan of Rs. 1,679.00 lakhs taken by the Holding Company from a Bank for acquiring premises for its business purposes in Delhi. The company acquired the assets and the payment was directly released by the Bank to the seller and the asset is appearing in the audited financial statements of the holding company for the year ended 31 March 2019 under the Head “Non-Current Assets- (Fixed Assets-Investment property)”. The end use of the loan is for the purpose for it was sanctioned and disbursed by the Bank. Further, as per the relevant applicable laws, the depreciation has been availed on the asset.

Based on the above, the management clearly believes that the Companys internal financial controls, in its entirety, including in respect of these transactions, were operating effectively and there is no material weakness in such controls and procedures.

The Notes on Accounts referred to in the Annexure to the Auditors Report are self-explanatory and do not call for any comments.


M/s R.J. Goel & Co., Delhi were appointed as Cost Auditors for conducting the cost audit of the Company for the year ended 31 March 2020. The Companys Cost Audit Report for the year ended 31 March 2019 was filed on 22.08.2019 (Due date 30.09.2019). The said firm has been appointed as cost auditors of the Company for the financial year 2020-21 as well.


M/s S.K. Sikka & Associates, Company Secretaries had been appointed as Secretarial Auditors to conduct Secretarial Audit of the Company, and have submitted the Secretarial Audit Report for the year ending 31 March 2020 which is annexed to this Boards Report as Annexure-2.

As per amended SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in addition to the above mentioned Secretarial Audit Report, listed company is also required to obtain an Annual Secretarial Compliance Report from a practicing Company Secretary w.r.t. the compliances of all applicable SEBI Regulations, amendments, circulars or guidelines etc. by the Company. Accordingly, the same has been obtained and filed with the concerned Stock Exchanges.

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

Pursuant to Section 204 of the Companies Act, 2013 M/s S.K. Sikka & Associates, Company Secretaries have been appointed as Secretarial Auditors to conduct Secretarial Audit of the Company for the financial year ending 31 March 2021.


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

The shareholders have approved the Sub-division of each equity share having nominal value of Rs.10/- (Rupees Ten Only) into 10 (Ten) equity shares having nominal value of Re. 1/- (Rupee One Only) each in the extraordinary general meeting held on 10.06.2020, the face value of shares would be Re. 1/- (Rupee One Only) from the record date i.e. 15 July 2020.

Provision of money by Company for purchase of its own shares by employees or by trustees 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 under review.

During the year, the Company has redeemed 300 unlisted Secured Non-Convertible Redeemable Debentures (NCDs) at a face value of Rs. 10,00,000/- (Rupees ten lakhs only) each aggregating to Rs. 30,00,00,000/- (Rupees Thirty crores only) which were issued to UTI Structured Debt Opportunities Fund I on 20 December 2018 and were redeemable on 19 December 2025 but have been redeemed before the due date of redemption on 29 June 2019.

Details pertaining to the shares in Unclaimed suspense account in Compliance with the terms of SEBI (LODR) Regulations, 2015 are given in the Report on Corporate Governance annexed 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 Company Secretary regarding compliance of the conditions of Corporate Governance pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed and forms part of the Annual Report.


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


The information relating to conservation of energy, technology absorption and foreign exchange earnings & 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 given in Annexure-1 which 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 all levels to the operations and in establishing operational efficiencies of the Company during the year under review.


The information required under section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is given in the statement annexed herewith as Annexure-4.

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


The Company has extended corporate guarantee amounting to Rs. 1,679 lacs under Section 185 of the Companies Act, 2013 for a loan taken by the holding company, the disclosure of which is given at Note No. 40 C forming part of the financial statements.


As required under section 134(3) (c) read with Section 134(5) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, your Directors state that:

(i) in the preparation of the annual accounts for the year ended 31 March 2020, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures;

(ii) such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31 March 2020 and of the profit of the company for the year ended on that date;

(iii) proper and sufficient care has been taken 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;

(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 the Company and that such internal financial controls are adequate and are operating effectively; and

(vi) 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.


The Securities and Exchange Board of India (SEBI) as per the (Listing Obligations and Disclosure Requirements) Regulations, 2015 has mandated the inclusion of a “Business Responsibility Report” (BRR) as a part of Companys Annual Report for top 1000 listed entities based on market capitalization (as on March 31 of every financial year) by the stock exchanges. As your company is amongst the top 1000 listed entities based on market capitalization as on March 31,2020, the Business Responsibility Report for the year 2019-20 forms part of the Annual Report.


Your Directors convey sincere thanks to the various agencies of the Central and State Governments, Banks and other concerned agencies for all the assistance and cooperation extended to the Company for their continued support. The Directors also deeply appreciate and acknowledge the trust and confidence the vendors, suppliers, dealers, customers, shareholders and investors reposed in the Company. Your Directors also place on record their appreciation for the dedicated services rendered by the workers, staff and officers of the Company.

For and on behalf of the Board
Place : Chandigarh Jagesh Kumar Khaitan
Dated : 03 July 2020 Chairman