Malu Paper Mills Ltd Directors Report.

The Directors have pleasure in presenting the 26th Annual Report for the year ended 31st March 2019 along with the Audited Statement of Accounts with the Report of the Auditors thereon:

FINANCIAL RESULTS

(Rs. In Lakhs)

FY

2018-2019

FY

2017-2018

Sales & Other Incomes 27553.63 28322.31
Profit Before Interest & Depreciation 2457.00 1896.64
Less: Financial Charges 971.33 1200.50
Profit Before Depreciation 1485.67 696.14
Less: Depreciation 477.78 480.35
Less: Provision For Tax 265.82 69.82
Profit/(Loss) After Tax 742.44 145.97

REVIEW OF OPERATIONS

Your company has posted another year of profitable results considering the challenges faced by it in the last financial year. For the year under review the Company recorded total income of Rs.27553.63 Lakhs and booked profit before tax of Rs. 1007.89 Lakhs.

STATE OF AFFAIRS

The company is in the business of Manufacturing Newsprint, Writing & Printing paper and Kraft Paper. The current year witnessed lots of change in the international paper market and these changes impacted the operations of the Indian paper industry. In the FY 2018-19 the company produced 85,015 Mt of paper as against 91,766 Mt produced in FY 2017-18. In FY 2017-18 the company produced 51,474 Mt (56%) of Kraft paper and 40,292 Mt (44%) of Newsprint paper. In FY 2018-19, the company produced 39,171 Mt (46%) of Kraft paper and 45,844 Mt (54%) of Newsprint & Writing printing paper. There was a change in the product mix in FY 2018-19 to take advantage of the market scenario. The company produced higher quantity of low grammage (GSM), but higher value Newsprint & Writing Printing paper. The turnover was Rs.27553.63 Lakhs in FY 2018-19 in comparison to turnover of Rs. 28322.31 Lakhs. However, the Profit after Tax (PAT) of the current FY was Rs. 742.07 Lakhs in comparison to the Rs. 145.97 lakhs in FY 2017-18. The PAT was higher by 508%.

Malu Paper Mills Ltd has paper mills strategically located in Central India at Nagpur (Maharashtra). The company is the largest Newsprint manufacturer of Central India with 49,500 TPA capacity and produces quality Newsprint with recycle process. The company has swing facility wherein it can change to Newsprint and Writing paper production at short notice. The company is also in the manufacture of the packaging paper of recycle grade with an annual capacity 50,000 TPA. The positive turn of events in the Indian paper industry in the current year due to changes in the International and Domestic market, Environment and

Industrial policy of the government has resulted in favourable changes, which will continue to impact the prospects of the company in years to follow.

There has been no major change in the business of the company during the financial year ended 31st March, 2019.

NUMBER OF BOARD MEETINGS HELD

The Board of Directors met Six (06) times during the year and the details thereof were mentioned in the Report of Corporate Governance forming part of this Annual Report.

AUDITORS REPORT AND SECRETARIAL AUDIT REPORT

The statutory auditors report and the secretarial audit report do not contain any qualifications, reservations, or adverse remarks or disclaimer. Secretarial audit report is attached to this report.

DETAILS OF FRAUD REPORT BY AUDITOR:

As per auditors report, no fraud u/s 143(12) reported by the auditor.

AUDITORS

M/s. R. A Kuvadia & Co., Chartered Accountants, Mumbai, the Auditors of the company, will retire at ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. In terms of provisions of section 139 of the Companies Act, 2013 M/s. R. A Kuvadia & Co., Chartered Accountants have furnished a certificate that their appointment, if made, will be within the limits prescribed under the said section of the Act. As required under Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, they have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEE GIVEN OR SECURITY PROVIDED

The loans given, investments made or guarantee given or security provided by the Company are same as mentioned in notes to the Financial Statements.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

All related party transactions that were entered into during the financial year ended 31st March, 2019 were on an arms length basis and were in the ordinary course of business. Therefore, the provisions of Section 188 of the Companies Act, 2013 were not attracted. Further, there are no materially significant related party transactions during the year under review made by the Company with Promoters, Directors, or other designated persons which may have a potential conflict with the interest of the Company at large. Thus, disclosure in Form AOC-2 is not required.

However, the disclosure of transactions with related party for the year, as per Accounting Standard-18 Related Party Disclosures is given in Note no 28 to the Balance Sheet as on 31st March, 2019.

TRANSFER TO RESERVES

The Company transfered a sum of Rs 74,243,520/- to Retained Earning Reserve during the financial year ended 31st March, 2019.

DIVIDEND

The Board of Directors of your company, after considering holistically the relevant circumstances, has decided that it would be prudent, not to recommend any Dividend for the year under review.

MATERIAL CHANGES AND COMMITMENTS

There have been no material changes and commitments, which affect the financial position of the company which have occurred between the end of the financial year to which the financial statements relate and the date of this Report.

CORPORATE SOCIAL RESPONSIBILITY

During the year the Company was not required to constitute CSR Committee as per the provisions of Section 135 (1) of the Companies Act 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014.

Whereas from FY 2019-20 company is required to constitute CSR committee and your board in the upcoming board meeting will initiate action to constitute the same. Moreover company has always discharged its social responsibility as a part of its corporate governance philosophy. The company has lent helping hand by taking up health check up camps, drinking water supply, tree plantations in the plant premises and in the vicinity of its plant.

DETAILS OF SUBSIDIARY, JOINT VENTURE OR ASSOCIATE COMPANIES

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

DETAILS OF DIRECTOR / KEY MANAGERIAL PERSONNEL APPOINTED/ RETIRED DURING THE YEAR

Shri. Punamchand Malu and Shri. Banwarilal Malu who were reappointed as Managing Director and Jt. Managing Director respectively in the 22nd Annual General Meeting held on September 22, 2015 for the period of 5 years w-e-f 01/04/2015, continued to remain on the Board.

Shri Damodarlal Malu (DIN 00301120), the Non Executive Director continues to remain on the Board of the Company and Shri Vasudeo Malu (DIN 00301313), the Non Executive Director who is liable to retire by rotation retires at the ensuing annual general meeting and being eligible offers himself for re-appointment.

Shri. Chandrakant Thakar, Shri. Shyamsunder Sarda, Shri. Satyanarayan Rathi and FCA. Shrutika Inani were appointed as an independent directors director at the Twenty first Annual General Meeting (AGM) held on September 25, 2014 for a period of five years. Based on the recommendation of the Nomination and Remuneration Committee, their re-appointment for a second term of five years is proposed at the ensuing AGM for the approval of the Members by way of special resolution.

A resolution seeking shareholders approval for their re-appointment forms a part of the Notice.

Pursuant to the provisions of Section 149 of the Act, the independent directors have submitted declarations that each of them meet the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"). There has been no change in the circumstances affecting their status as independent directors of the Company.

Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company as on March 31, 2019 are: Shri. Punamchand Malu - Managing Director, Shri. Banwarilal Malu - Jt. Managing Director, Girish Malpani - Chief Financial Officer and Mayuri Asawa - Company Secretary.

PUBLIC DEPOSITS

The Company has not accepted any deposits from public during the year under review.

INTERNAL FINANCIAL CONTROL

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.

COST RECORD

The provision of Cost audit as per section 148 applicable on the Company and company has maintained proper records and account of the same as required under the act.

Pursuant to the provisions of the Companies Act, 2013, the Board of Directors had appointed M/s. Khanuja Patra & Associates, Cost Accountants, as Cost Auditors of the Company for conducting the audit of Cost records for the financial year ended on 31st March 2019. The audit is in process and report will be filed within prescribed period.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS, COURTS AND TRIBUNALS

No significant and material order has been passed by the regulators, courts, tribunals impacting the going concern status and Companys operations in future.

CONSTITUTION OF COMMITTEE - SEXUAL HARASSMENT AT WORKPLACE

The Company has constituted committee under the sexual harassment of women at workplace (prevention, prohibition and Redressal) Act, 2013 and company has complied with the provisions of the same.

During the year, no complaint of sexual harassment were received to the company.

CONSOLIDATED FINANCIAL STATEMENTS

Company doesnt have any subsidiaries so there is no need to prepare consolidated financial statement for the F. Y. 2018-19.

COMPLIANCE WITH 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

BOARD EVALUATION

Criteria for performance evaluation of its Directors as required by the Listing Agreement and SEBI (Listing Obligations of Disclosure Requirements) Regulations, 2015 are attending Board/committee meetings; going through the agenda papers and providing inputs in the meeting of Board/committees; guidance to the company from time to time on the various issues; discharge of duties as per the Companies Act, 2013 and compliance to the other requirements of the said Act.

DECLARATION BY DIRECTORS

The Company has received declaration from all the Independent Directors under section 149(7) of the Companies Act, 2013 in respect of meeting the criteria of independence provided under section 149(6) of the said Act.

DIRECTORS RESPONSBILITY STATEMENT FORMING PART OF DIRECTORS REPORT

As required under Section 134(5) of the Companies Act, 2013, the Directors confirm that:

1 In the preparation of the annual accounts, the applicable accounting standards have been followed.

2 The Directors had selected such accounting policies and applied them consistently and made judgments and estimate that are reasonable and prudent so as to give a true and fair view of the state of affairs of Company as on 31st March 2019 and of the profit of the company for that period.

3 The Directors have 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 annual accounts have been prepared on a going concern basis.

5 The directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

6 The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and these were adequate and operating effectively.

LISTING OF SHARES

Equity Shares of Company are listed on The Bombay Stock Exchange, Mumbai (BSE) and The National Stock Exchange (NSE). The Company has duly paid listing fees to stock exchanges.

DIRECTORS APPOINTMENT AND REMUNERATION POLICY:

The Companys policy on directors appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which is a part of this report and detailed policy is available on https://www.malupaper.com .

RISK MANAGEMENT

The assets of the Company are adequately insured against the loss of fire, riot, earthquake, terrorism etc. and other risks which considered necessary by the management. The management has taken adequate steps to protect its assets and safeguard the interest of the company.

AUDIT COMMITTEE

As per the provisions of the Listing Agreement and pursuant to Section 177 of the Companies Act, 2013, the Audit committee constituted to review compliances with internal control systems and other various functions of the Company. FCA Shrutika Inani, Independent Director was the Chairman of the Audit Committee.

CORPORATE GOVERNANCE

Pursuant to Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 a report on Corporate Governance is made a part of the Annual Report.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

As per the provisions of Section 177(9) of the Companies Act 2013, a Vigil Mechanism for Directors and employees to report genuine concerns has been established. The practice of the Whistleblower Policy is overseen by the Audit Committee and no employee has been denied access to the Committee. The same has been uploaded on companys website at www.malupaper.com

SECRETARIAL AUDIT

The Secretarial Audit report issued by Practicing Company Secretary is being attached with the Directors report as Annexure A which is self explanatory.

ABSTRACT OF THE ANNUAL RETURN

The Abstract of the Annual Return for the year 31st March 2019 being attached with the Directors Report as Annexure B. The same is available on our website http://malupaper.com/download/mpml19.pdf

DISCLOSURES WITH RESPECT TO DEMAT SUSPENSE ACCOUNT/ UNCLAIMED SUSPENSE ACCOUNT

(a) The outstanding shares in the suspense account held with Sharekhan Limited lying at the beginning of the year is 3,019 shares;

(b) none of shareholders approached listed entity for transfer of shares from suspense account during the year;

(c) no shares were transferred from suspense account during the year;

(d) the outstanding shares in the suspense account held with Sharekhan Limited lying at the end of the year is 3,019 shares;

(e) that the voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required under the Companies Act, 2013, read with the Companies (Accounts) Rules 2014 is given as per Annexure C and forms part of the Directors Report.

As regards disclosure of particulars relating to conservation of energy, great emphasis has been given for reduction of energy consumption to reduce cost per unit of goods. Details are attached herewith as per ‘Annexure C.

The Company imports some portion of its raw material requirement. The foreign exchange earnings and outgo are as mentioned in the reports of the auditor of the Company. Details are attached herewith as per ‘Annexure C.

PARTICULARS OF EMPLOYEES

None of the employee, including Key Managerial Personnel, was drawing in excess of the limits prescribed by Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Companies (Particulars of Employees Rules, 1975, which needs to be disclosed in the directors report.

The information required under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules

The ratio of the remuneration of each director to the median remuneration of the employees of the Company and percentage increase in remuneration of each Director and Chief Financial Officer in the financial year -

Name of the Director Remuneration Per Annum (INR) Median Remuneration Per Annum (INR) Ratio (Remuneration of Director to Median Remuneration) times
Executive Directors
1 Shri. Punamchand Malu 20,00,000 2,50,113 8
2 Shri.Banwarilal Malu 20,00,000 2,50,113 8
Non Executive Directors/Independent Directors
3 Shri.Damodarlal Malu NIL - -
4 Shri.Vasudeo Malu NIL - -
5 Shri.Chandrakant Thakar NIL - -
6 FCA. Shrutika Inani NIL - -
7 Shri. Satyanarayan Rathi NIL - -
8 Shri.Shyamsunder Sarda NIL - -
Chief Financial Officer
9 Mr. Girish Malpani 36,56,330 2,50,113 14.62

a) The percentage increase in the median remuneration of employees in the financial year: 8.82%

b) The number of permanent employees on the rolls of Company: 219

c) Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that the remuneration is as per the remuneration policy of the Company.

ACKNOWLEDGEMENTS

Your Directors wish to place on record their gratitude to Bankers, Customers, Business Associates for the co-operation and support and to the Shareholders, dealers and suppliers, staff and workers for their contribution to the companys growth.

Date : 12/08/2019 By Order of Board of Directors
Place : Nagpur Punamchand Malu Banwarilal Malu
Managing Director Jt. Managing Director
(DIN:00301030) (DIN:00301297)