N R Agarwal Industries Ltd Directors Report.

To the Members,

Your Directors are pleased to present the 26th Annual Report alongwith the Audited Financial Statements of the Company for the year ended March 31, 2019.

FINANCIAL RESULTS

(Rs in lakh)

Particulars Year ended Year ended
March 31, 2019 March 31, 2018
Revenue from Operations and Other Income 132659.98 120962.49
Finance Costs 3454.54 4016.84
Gross Profit after Finance Costs but before Depreciation and Taxation 15814.36 12333.26
Depreciation 2745.28 2625.93
Profit before Tax and Exceptional Items 13069.08 9707.33
Exceptional Items - -
Profit before Tax and after Exceptional Items 13069.08 9707.33
Provisions for Taxation 2814.58 62.48
Tax expense of previous year (net) 5.58 12.60
Deferred Tax 784.57 607.86
Net Profit for the year 9464.34 9024.40
Other Comprehensive Income (Net of Tax) (2.89) 7.10
Total Comprehensive Income 9461.45 9031.49

Industry Overview

The pulp and paper industry is one of the largest industries in the world. It is dominated by North American, Northern European and East Asian companies. Latin America and Australia also have significant pulp and paper industries.

Over the next few years, it is expected that both India and China will become key players in the industry. World production of paper and paperboard is around 390 million tonnes per annum and is expected to reach 490 million tonnes per annum by 2020. The pulp and paper industry is a large and growing portion of the worlds economy.

Under the impact of a booming Internet and new media, the product structure of the paper industry will confront the pressure of profound adjustment. The widespread adoption of new media and paperless reading has led to a shrinking demand for printing & writing paper as well as newsprint.

Whilst demand for printing and writing paper and newsprint is decreasing globally, the internet and e-commerce business model has driven the rapid expansion of the express delivery business, and the demand for packaging paper is expected to increase steadily. In the context of the internet economy age, with the rapid transformation of the traditional media industry into new media and the rapid growth of online consumption, the product structure of the paper industry will also face tremendous pressure for adjustment. The successful paper companies will adjust their product focus in light of the changing demands of the e-commerce world.

State of Companys Affairs

Your Company delivered another round of commendable performance this year. The net revenue of the Company in 2018-19 increased from 1209.62 crore to 1326.59 crore registering a growth of 9.67% over the last year. The profit after tax for the current year also increased to 94.64 crore as against the 90.24 crore in the previous year.

Material Changes and Commitments affecting financial position of the Company occurred between March 31, 2019 and date of this report

There are no material changes and commitments which affected the financial position of the Company between March 31, 2019 and date of this report i.e. July 31, 2019.

Number of Meetings of the Board of Directors

There were four meetings of the Companys Board of Directors during the financial year 2018-19.

Transfer to reserves

There was no transfer made to the General Reserve.

Dividend

The Directors are pleased to recommend a dividend of 4/- per equity share of face value 10/- each on 17019100 equity shares for financial year 2018-19 subject to the approval of members at the ensuing Annual General Meeting of the

Company, resulting in an appropriation of 8,20,69,658/- (including Corporate Dividend Tax of 1,39,93,258/-)

Directors and Key Managerial Personnel

Smt. Reena Agarwal, Whole Time Director, retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers herself for re-appointment in terms of the provisions of Section 152 of the Companies Act, 2013. The Board, at its meeting held on October 31, 2018, has recommended the re-appointment of Shri Ashok Kumar Bansal as Whole Time Director for a further period of three years with effect from November 1, 2018 to October 31, 2021, subject to the approval of the shareholders. The necessary Resolution seeking approval of the members for the re-appointment of Shri Ashok Kumar Bansal as the Whole Time Director has been incorporated in the notice of the forthcoming Annual General Meeting of the Company.

The Board of Directors of the Company has, pursuant to the provisions of Section 149 and other applicable provisions of the Act and based on Shri P Kumars and Shri C R Radhakrishnans skills, expertise and performance evaluation, proposed the re-appointment of Shri P Kumar and Shri C R Radhakrishnan, as Independent Directors of the Company for the second term of five years. The proposal for their reappointments for second term of five years are being placed before the shareholders for their approval at the ensuing Annual General Meeting.

The necessary Special Resolutions for reappointments of Shri P Kumar and Shri C R Radhakrishnan as Independent Directors of the Company for a second term of five years have been incorporated in the notice of the forthcoming Annual General Meeting of the Company along with brief details about them.

Apart from the above, there has been no change with respect to the Directors and Key Managerial Personnel during the year 2018-19.

Independent Directors Declaration

The Company has received declarations from all Independent Directors that they meet the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). In the opinion of the Board, the Independent Directors fulfill the conditions specified in the Companies Act, 2013 and rules made thereunder for their appointment as Independent Directors of the Company.

Audit Committee

The primary objective of the Committee is to monitor and provide effective supervision of the Managements financial reporting process, to ensure accurate and timely disclosures with the highest levels of transparency, integrity and quality of financial reporting. There have been no instances of non-acceptance of any recommendation of the Audit Committee.

The Committee members met four times during the year under review. Details of the meetings are given in the Corporate Governance Report including the Committees composition.

Vigil Mechanism

The Company has adopted a Whistle Blower Policy dealing with any instance of fraud or any unethical or improper practices. A copy of this policy is available on the Companys website. The policy prescribes adequate safeguards against the victimization of employees who avail of the mechanism and also provide direct access to the Audit Committee Chairman. It is affirmed that no Company personnel has been denied access to the Audit Committee. The Whistle Blower Policy (Vigil Mechanism) is uploaded on the Companys website at http://www.nrail. com/company_policies.html.

Procedure for Nomination and Appointment of Directors

The Nomination and Remuneration Committee is responsible for developing the competency requirements of the Board, based on the industry and the Companys individual strategy. The Board‘s Composition Analysis reflects an in-depth understanding of the Companys strategies, environment, operations, financial condition and compliance requirements.

The Nomination and Remuneration Committee conducts a gap analysis to refresh the Board on a periodic basis, including a Directors appointment or re-appointment, which is envisaged every time. The Committee is also responsible for reviewing and vetting the CVs of potential candidates vis--vis the required competencies and meeting potential candidates prior to making nomination recommendations to the Board. At the time of appointment, specific requirements for the position, including expert knowledge expected, is communicated to the appointee.

Criteria for Determining Qualifications, Positive

Attributes & Independence of a Director

The Nomination and Remuneration Committee has, besides the requisite qualifications and experience, formulated the criteria for determining positive attributes and independence of Directors in terms of provisions of Section 178 (3) of the Act and Regulation 19 read with Part D of Schedule II of the Listing Regulations.

Independence: A Director will be considered as an ‘Independent Director if he/ she meets with the criteria for ‘Independent Director as laid down in the Act and Regulation 16 (1) (b) of the Listing Regulations.

Other factors: A transparent Board nomination process is in place that encourages thought, experience, knowledge, perspective, age and gender diversity. It is also ensured that the Board has an appropriate blend of functional and industrial expertise. While recommending Director appointments, the Nomination and Remuneration Committee considers the manner in which the individual function and domain expertise will contribute to the overall skill-domain mix of the Board.

Positive attributes: In addition to the duties as prescribed under the Act, the Directors on the Board of the Company are also expected to demonstrate high standards of ethical behavior, strong inter-personal relations and communication skills besides soundness of judgment. Independent Directors are also expected to abide by the ‘Code for Independent Directors as outlined in Schedule IV to the Act.

Remuneration Policy

The Company has adopted the Nomination and Remuneration Committee Charter which includes the Companys policy on Directors appointment and remuneration besides the criteria for determining the qualifications, positive attributes, independence of a Director and other matters provided under Section 178(3) of the Companies Act, 2013.

Pursuant to Section 178(4) of the Companies Act, 2013, the Company also adopted remuneration policy relating to remuneration for the Directors, Key Managerial Personnel and Senior Executives. The remuneration policy is attached as Annexure 1 and is also available on Companys website http://www.nrail.com/company_policies.html.

Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of Listing Regulations, 2015, the Board has carried out the annual performance evaluation of its own performance as well as the evaluation of the working of its Committees. The criteria for performance evaluation of the Board and committees included aspects such as composition, structure, effectiveness of board and committee processes, etc.

A separate exercise was carried out to evaluate individual Directors performance including that of the Chairman & Managing Director and also the Whole Time Director, who were evaluated on parameters such as engagement level, contribution, independence of judgment, safeguarding the Company interests and its minority shareholders etc. The Board of Directors expresses its satisfaction with the evaluation process.

Directors Responsibility Statement

The Directors hereby confirm and declare that:-

(i) in the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanations relating to material departures;

(ii) they 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 affairs of the Company at the financial year ended March 31, 2019 and of the profit of the Company for the year;

(iii) they 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;

(iv) they had prepared the annual accounts on a going concern basis;

(v) they had laid down internal financial controls to be followed by the Company and such controls are adequate and operating

(vi) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such efficiently; systems are adequate and operating

Internal Control over Financial Reporting

The Company has, in place, adequate internal financial controls commensurate with the size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The report on the Internal Financial Control issued by the Statutory Auditors of the Company under the provisions of Companies Act, 2013 is given elsewhere in the report.

Details of Subsidiaries/ Joint ventures/ Associates

The Company does not have any subsidiary/ joint ventures/ associates.

Extract of Annual Return

The extracts of Annual Return as on March 31, 2019, as required under sub-section 3 of Section 92 of the Companies Act, 2013 in Form No. MGT 9, is attached as Annexure 2.

Auditors and Auditors Report

a. Statutory Auditors

M/s. GMJ & Co., Chartered Accountants, have been appointed as the Statutory Auditors of the Company for a period of five years at the Annual General Meeting (“AGM”) of the Company held on September 20, 2017, to hold office till the conclusion of the 29th AGM of the Company to be held in the year 2022.

The Auditors Report for the financial year ended March 31, 2019 does not contain any qualification, reservation or adverse remark.

b. Secretarial Auditors

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 had appointed Parikh & Associates, Company Secretaries 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 3.

The Secretarial Audit Report for the financial year ended March 31, 2019 does not contain any qualification, reservation or adverse remark.

c. Cost Auditors

N. Ritesh & Associates, Cost Accountants, have been appointed to conduct Cost Audits for all the units of the Company for the year ending March 31, 2019 in terms of Section 148 of the Act read with Companies (Audit and Auditors) Rules, 2014 and, as required, Cost Audit Report for the financial year 2017-18 was duly filed with Ministry of Corporate Affairs, Government of India on August 23, 2018.

The Cost Audit of the Company for the financial year ended March 31, 2019 was conducted by the said firm and the Report shall be submitted to the Ministry of Corporate Affairs, Government of India within the prescribed time.

Technology Absorption, Energy Conservation & Foreign Exchange Earning & Outgo

Particulars of 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 are given in Annexure 4 attached and forms part of this Report.

Particulars of Employees & Related Disclosures

The information required under Section 197(12) of the Act read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is furnished in Annexure 5.

The information required under Rule 5(2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report. In terms of the first proviso to Section 136 of the Act, the Report and Accounts are being sent to the Shareholders excluding the aforesaid Annexure. Any Shareholder interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company.

Public Deposits

The Company has not accepted any deposits from public in terms of Section(s) 73 and/or 74 of the Act.

During the year under review, no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations.

Particulars of Loans, Guarantees or Investments under Section 186 of the Companies Act, 2013.

Details of loans, guarantees, investments covered under provisions of Section 186 of the Act are provided in the notes to the Financial Statements.

Related Party Transactions

Particulars of transactions with Related Parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Form AOC-2 and the same forms part of this report as Annexure 6.

There are no materially significant related party transactions made by the Company with promoters, key managerial personnel or other designated persons which may have potential conflict with interest of the Company at large. The Board of Directors have approved a policy on related party transactions which is placed on the Companys website at the web link: http://www.nrail.com/ companypolicies.html.

Risk Management

Pursuant to Section 134(3)(n) of the Companies Act, 2013 and relevant provisions of Listing Regulations, the Company has adopted Risk Management Policy for identification and implementation of Risk Mitigation Plan for the Company. The Company has laid down appropriate procedures to inform the Board about the risk assessment and minimization procedures. The Board periodically revisits and reviews the overall risk management plan for making desired changes in response to the dynamics of the business.

Corporate Social Responsibility (CSR) Initiatives

Section 135 of the Companies Act, 2013 mandates every Company having a minimum net worth threshold limit, turnover or net profit, as prescribed, to constitute a Corporate Social Responsibility Committee, formulating a Corporate Social Responsibility Policy that shall indicate activities to be undertaken by the Company as specified in Schedule VII to the Companies Act, 2013 and duly approved by the Board as well as fix the amount of expenditure to be incurred on the activities and monitor the CSR Policy from time to time.

Since your Company falls within the minimum threshold limit, it has constituted a CSR Committee of the Board and formulated a CSR Policy. The focus areas of CSR Policy are education, preventive health care, sanitation, environment and engagement. During the financial year 2018-19, the Company has spent a total amount of 1,19,47,039/- towards CSR initiatives.

The CSR Report, forming part of this Report, is furnished in Annexure 7.

Prevention, Prohibition and Redressal of Sexual Harassment at Workplace

The Company has zero tolerance policy for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment of women at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules there under for prevention and redressal of complaints of sexual harassment at workplace. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All women employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaint on sexual harassment was received during the financial year 2018-19.

Corporate Governance & Management Discussion & Analysis

The Corporate Governance Report and Managements Discussion & Analysis Report and the Auditors Certificate regarding compliance with conditions of Corporate Governance, forms part of the Annual Report.

Listing Fees

The Company has paid the listing fees to BSE and NSE for the year 2019-2020.

Insider Trading Regulations and Code of Disclosure

The Board of Directors have adopted the Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information and Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulation, 2015 which is available on our website (http://www.nrail.com/ company_policies.html)

Secretarial Standards

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.

Human Resources

There is a continuous effort to improve the working environment with focus on employee well-being and capability building to enable them to perform at their best for the Company. The Company develops leaders at global platforms at regular intervals as a part of it commitment to engage and retain talent. The Company offers robust leadership development efforts to hone employee skills and help keep the Company ahead of the curve.

People are the real strength of the Company while pursuing best-in-class performance. The Company is significantly increasing its investment in its employees with training and development. NRAIL invests in training and knowledge at all levels in order to align employees with requirements on safety, customer support, market needs, operational excellence, technology upgradation, process improvements, innovation and behavioral competencies.

Acknowledgements

Your Directors place on record their deep appreciation of the employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain an industry leader. Your Directors also take this opportunity to thank all the Shareholders, Clients, Dealers, Vendors, Banks, Government and Regulatory Authorities for their continued support and confidence in the Companys Management.

On behalf of the Board of Directors
R N AGARWAL
Mumbai, July 31, 2019 Chairman & Managing Director