Malu Paper Mills Ltd Directors Report.

The Directors have pleasure in presenting the 27th Annual Report for the year ended 31st March 2020 along with the Audited Statement of Accounts with the Report of the Auditors thereon:

FINANCIAL RESULTS

(Rs. In Lakhs)

FY FY
2019-2020 2018-2019
Sales & Other Incomes 22741.60 27553.63
Profit Before Interest & Depreciation 1389.67 2457.00
Less: Financial Charges 792.31 971.33
Profit Before Depreciation 597.37 1485.67
Less: Depreciation 489.71 477.78
Less: Provision For Tax 41.65 265.82
Profit/(Loss) After Tax 66.01 742.43

REVIEW OF OPERATIONS

Your company has posted another year of profitable results considering the challenges faced by it in the current financial year. For the year under review the Company recorded total income of Rs. 22741.60 Lakhs and booked profit before tax of Rs. 107.66 Lakhs.

STATE OF AFFAIRS

The company is in the business of Manufacturing Newsprint, Writing & Printing paper and Kraft Paper. The current year witnessed lot of change in the international paper market and these changes impacted the operations of the Indian paper industry. In the FY 2019-20 the company produced 85,213 Mt of paper as against 85,015 Mt produced in FY 2018-19. In FY 2018-19 the company produced 39,161 Mt (46%) of Kraft paper and 45,854 Mt (54%) of Newsprint & Writing printing paper. In FY 2019-20, the company produced 41,505 Mt (49%) of Kraft paper and 43708 Mt (51%) of Newsprint & Writing printing paper.

There was a change in the product mix in FY 2019-20 to take advantage of the market scenario. The turnover was Rs.22741.60 Lakhs in FY 2019-20 in comparison to turnover of Rs. 27553.63 Lakhs in FY 2018-19. However, the Profit after Tax (PAT) of the current FY was Rs. 66.01 Lakhs in comparison to the Rs. 742.07 lakhs in FY 2018-19. The PAT was reduced by 91%.

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, 2020.

NUMBER OF BOARD MEETINGS HELD

The Board of Directors met Five (05) 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 31 st March, 2020 were on an arms length basis and were in the ordinary course of business. The details of the transactions were tabled before the Audit Committee. 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 27 to the Balance Sheet as on 31st March, 2020.

TRANSFER TO RESERVES

The Company transferred a sum of Rs 6,600,906/- to Retained Earning Reserve during the financial year ended 31st March, 2020.

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

As per the provisions of the Companies Act, 2013, a company meeting the specified criteria shall spend at least 2% of its average net profits for three immediately preceding financial years towards CSR activities. Accordingly, your Company spent Rs. 5,51,000/-towards CSR activities during the financial year 2019-20. The contents of the CSR policy and CSR Report for the year 2019-20 is attached as Annexure D to this report. Contents of the CSR policy are also available on the Companys website and can be accessed through the web linkhttp: / / malupaper.com/pdf/CSR%20POLICY.pdf

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

The Board on recommendation of Nomination and Remuneration Committee reappointed Shri Punamchand Malu (DIN 00301030), as Managing Director and Shri Banwarilal Malu (DIN 00301297) as Joint Managing Director of the Company, subject to approval of shareholders at the ensuing annual general meeting.

Shri Vasudeo Malu (DIN 00301313), the Non Executive Director continues to remain on the Board of the Company and Shri Damodarlal Malu (DIN 00301120), 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 re-appointed as an independent directors for a second term of five years at the Twenty sixth Annual General Meeting (AGM) held on September 27, 2019 continued to remain on the board of the company.

During the year, Shri. Girish Malpani resigned as Chief Financial Officer of the Company with effect from February 4, 2020. The Board placed on record its sincere appreciation of the services rendered by him during his tenure with the Company.

Shri. Prakash Modi has been appointed as Chief Financial Officer of the Company w.e.f. July 31, 2020.

Pursuant to the provisions of Section 203 of the Act, the Key Managerial Personnel of the Company as on March 31, 2020 are: Shri. Punamchand Malu - Managing Director, Shri. Banwarilal Malu - Jt. Managing Director and Mayuri Asawa - Company Secretary.

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

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations from all the Independent Directors under Section 149 (7) of the Companies Act, 2013 and SEBI Listing Regulations that :

a) They meet the criteria of independence laid down in Section 149 (6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

b) They are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence pursuant to Regulation 25 of the Listing Regulations.

c) they have complied with the requirement of inclusion of their name in the data bank maintained by Indian Institute of Corporate Affairs as envisaged under Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, as applicable and they hold valid registration certificate with Data Bank of Independent Directors.

EVALUATION OF INDIVIDUAL DIRECTORS, THE BOARD & ITS COMMITTEES:

Pursuant to the provisions of the Companies Act, 2013and SEBI Listing regulations, a formal evaluation of the performance of the Board, its Committees, the Chairman and the individual Directors was carried out for the financial year 2019-20. The performance evaluation was done using individual questionnaires, covering amongst others, composition of Board, receipt of regular inputs and information, functioning, performance and structure of Board Committees, skill set, knowledge and expertise of directors, preparation and contribution at Board meetings, leadership, etc. The performance evaluation of the respective Committees and that of independent and non-independent directors was done by the Board excluding the Director being evaluated.

The performance evaluation of Non-Independent Directors, the Chairman and the Board was done by the Independent Directors.

PUBLIC DEPOSITS

The Company has not accepted any deposits under Chapter V of Companies Act, 2013 from public during the year under review.

INTERNAL FINANCIAL CONTROL

The Company has put in place adequate internal financial control procedures commensurate with its size, complexity and nature of business. The Company has identified and documented all key financial controls, which impact the financial statements as part of its Standard Operating Procedures (SOP). The financial controls are tested for operating effectiveness through ongoing monitoring and review process by the management and also independently by the Internal Auditor. The Internal Auditor of the Company reports functionally to the Audit Committee of Board, which reviews and approves risk based annual internal audit plan. The Audit Committee periodically reviews the performance of internal audit function.

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 2020. 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. 2019-20.

COMPLIANCE WITH SECRETARIAL STANDARD

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by The Institute of Company Secretaries of India and that such systems are adequate and operating effectively

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 2020 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.

COVID- 19

In the last month of FY 2020, COVID-19, declared by the World Health Organization a global pandemic, developed rapidly into a global crisis, forcing governments to enforce lock-downs of all economic activity. The Ministry of Home Affairs vide order no. 40-3/2020-DM-I(A) dated March 24, 2020 announced a nation-wide lockdown as a measure to contain the spread of Covid-19. For the Company, the focus immediately shifted to ensuring the health and wellbeing of all employees and on minimizing disruption to the operations of the Company. The Company immediately adopted a Work from Home model for all its office-based employees. Owing to the lockdown, the manufacturing operation and supply chain was impacted in the second half of March 2020.

The Company is closely monitoring the impact of the pandemic on all aspects of its business and is taking appropriate measures and ensuring full compliance with the directives issued by the Government in this regard.

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

In terms of the Listing Regulations, a report on Corporate Governance along with Auditors Report on its compliance is annexed, forming part of the Annual Report. Additionally, this contains compliance report signed by the CEO of the Company in connection with compliance with the Code of Conduct, and also CEO/CFO Certification as required by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In line with the requirements of Companies Act, 2013, your Company has constituted the Board Committees and has in place all the statutory Committees required under the law. Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance 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

CS. Yugandhara Kothalkar, Company Secretary has been appointed to conduct the Secretarial Audit of the Company as required under the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI (LODR) Regulations, 2015 and also to provide the Secretarial Compliance Report for the financial year 2019-20. Copy of the Secretarial Audit Report in Form MR-3 is given as an Annexure A to this Directors Report.

ABSTRACT OF THE ANNUAL RETURN

The Abstract of the Annual Return for the year 31st March 2020 being attached with the Directors Report as Annexure B. The same is available on our website http://malupaper.com/investor-relations.aspx

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 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, Chief Financial Officer and Company Secretary in the financial year -

S.No 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 24,00,000 2,55,027 9.41
2 Shri. Banwarilal Malu 24,00,000 2,55,027 9.41
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* 31,08,330 N.A N.A

a) There is no increase in the remuneration of Executive directors and Company Secretary in the financial year.

b) During the Financial year 2019-20, Mr. Girish Malpani ceased to be the Chief Financial Officer of the Company w-e-f February 4, 2020. Hence percentage increase in remuneration is not applicable.

c) The percentage increase in the median remuneration of employees in the financial year: 1.9 6%

d) The number of permanent employees on the rolls of Company: 199

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 : 31/07/2020

By Order of Board of Directors

Place : Nagpur
Punamchand Malu Banwarilal Malu
Managing Director & CEO Jt. Managing Director
(DIN:00301030) (DIN:00301297)