N R Agarwal Industries Ltd Directors Report.

To the Members,

Your Directors are pleased to present the 27th Annual Report together with the Audited Financial Statements of the Company for the year ended March 31, 2020.

FINANCIAL RESULTS

(Rs in lakh)

Particulars Year ended March 31, 2020 Year ended March 31, 2019
Revenue from Operations and Other Income 141710.64 132659.98
Finance Costs 3588.47 3454.45
Gross Profit after Finance Costs but before Depreciation and Taxation 19245.63 15814.36
Depreciation 3151.06 2745.28
Profit before Tax and Exceptional Items 16094.57 13069.08
Exceptional Items - -
Profit before Tax and after Exceptional Items 16094.57 13069.08
Provisions for Taxation 2810.37 2814.58
Tax expense of previous year (net) - 5.58
Deferred Tax 1609.32 784.57
Net Profit for the year 11674.88 9464.35
Other Comprehensive Income (Net of Tax) (88.24) (2.89)
TOTAL COMPREHENSIVE INCOME 11586.64 9461.46

STATE OF COMPANYS AFFAIRS

N R Agarwal Industries Limited is pleased to present record revenues and profit after tax in 2019-20, which surpassed the best it had achieved in the previous financial year. During the year under review, the company reported profitable growth as revenues increased 6.58 per cent while EBIDTA increased 18.50 per cent and profit after tax strengthened 23.36 per cent. The improvement in performance was also accompanied by an improvement in business health. The company reported an increase in EBIDTA margin from 14.62% in 2018-19 to 16.25% in 2019-20.

During the year under review, the combined production from Packaging Board, Writing & Printing paper and Copier stood at 338988 MT and the capacity utilization stood at an average of 93%. The Company is continuously focusing on improving operating and reducing costs with for better financial performance. The Company continues to enjoy the dominant position of being a world class quality manufacturer of Duplex Board in India.

PANDEMIC IMPACT

The performance of the company was affected from the second half of March 2020 when the first signs of the Covid-19 pandemic began to become evident across India.

The packaging board, which is almost 50% of our total production, has good potential as it is used to package the essentials like pharmaceutical, food, cereals etc. However, the other grades like writing and printing and copier may witness downward or no growth in demand with work from home practices, online education systems and other digital platforms taking a lead due to the pandemic. However, we are confident about our ability to manage this crisis through our financial stability, our dealers and consumers, our committed employees and our quality of leadership.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments which affected the financial position of the Company between March 31, 2020 and date of this report i.e. September 3, 2020.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

There were four meetings of the Companys Board of Directors during the financial year 2019-20.

TRANSFER TO RESERVES

There was no transfer made to the General Reserve.

DIVIDEND

In view of the ongoing covid crises and future expansion plans of the Company, the Board has not recommended any dividend for the financial year 2019-20.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Shri R N Agarwal, Whole Time Director, retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-appointment in terms of the provisions of Section 152 of the Companies Act, 2013. The Board at its meeting held on October 22, 2019, has recommended the appointment of Shri Rohan Agarwal as the Whole Time Director for a period of three years from November 1, 2019 to October 31, 2022, subject to the approval of the shareholders. The necessary resolution seeking approval of the members for the appointment of Shri Rohan Agarwal as Whole Time Director has been incorporated in the notice of the forthcoming Annual General Meeting of the Company. Shri Ajay Nair, Independent Director of the Company has resigned with effect from February 12, 2020 due to other pre-occupations.

With a view to strengthen the Board and also to meet the regulatory requirements, the Board of Directors of the Company on the recommendation of Nomination and Remuneration Committee appointed Shri S N Chaturvedi and Smt. Sunita Nair as Additional Independent Directors of the Company with effect from October 22, 2019 and April 1, 2020 to hold office for a period of five years. The said appointment is subject to the approval of the members of the Company in General Meeting.

Apart from the above, there has been no change with respect to the Directors and Key Managerial Personnel during the year 2019-20.

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") as amended from time to time and there has been no change in the circumstances which may affect their status as independent director during the year. In the opinion of the Board, the independent directors possess appropriate balance of skills, experience and knowledge, as required.

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. A copy of this 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, inter-alia on 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 requisite 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 & 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 Directors, 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, 2020 and of the office 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 extract of Annual Return as on March 31, 2020, as required under sub-section 3 of Section 92 of the Companies Act, 2013 in Form No. MGT 9, is attached as Annexure 2. The extract of Annual Return in Form MGT- 9 as per provisions of the Act and Rules thereto is also available on the Companys website at www.nrail.com.

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 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, 2020 does not contain any reservation or adverse remark.

During the year under review, there were no instances of fraud reported by the auditors, under Section 143(12) of the Companies Act, 2013 to the Audit Committee or the Board of Directors. 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 2019-20, 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, 2020 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, 2020 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 2018-19 was duly filed with Ministry of Corporate Affairs, Government of India on August 19, 2019.

The Cost Audit of the Company for the financial year ended March 31, 2020 was conducted by the said firm and the Report has been 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.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS

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 2019-20, the Company has spent a total amount of H 2.04 Crores 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 2019-20.

SUSTAINABILITY AND BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Sustainability and Business Responsibility Report of the Company for the financial year ended March 31, 2020 is given in a separate section and forms part of this report.

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 2020-2021.

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 develop leaders at global platforms at regular intervals as a part of its 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 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
Place: Mumbai R N AGARWAL
Date: September 3, 2020

Chairman & Managing Director