Orient Paper Director Discussions


Dear Shareholders,

The Board of Directors are pleased to present the annual report along with the audited accounts of your Company for the year ended 31st March 2023.

FINANCIAL RESULTS

The financial performance of the Company for the year ended 31st March, 2023 is summarized below:

(Rs in crores)

Particulars

2022-23 2021-22
Revenue from Operations 942.96 585.65
Other Income 29.14 9.17
Total Income 972.10 594.82

Earnings before Interest, Depreciation, Amortization & Taxation

191.10 (7.74)
Interest/Finance costs 10.39 4.98

Profit before Depreciation and Taxation

180.71 (12.72)
Depreciation 33.05 31.20

Profit before Taxation

147.66 (43.92)
Taxation 48.41 (15.04)

Profit for the year

99.25 (28.88)
Other Comprehensive Income (131.32) 119.04

Total Comprehensive Income

(32.07) 90.16

STATEMENT OF RETAINED EARNINGS

At the beginning of the year 834.90 863.54
Add: Profit for the year 99.25 (28.88)
Add: Transfer from FVOCI – sale of equity investments (net of taxes) - 3.46
Less: Other Comprehensive Loss (net of taxes) 0.23 (2.08)
Dividend on Equity shares 5.30 5.30
At the end of the year 929.08 834.90

EPS (Rs)

4.68 (1.36)

GLOBAL ECONOMIC CLIMATE

Following more than two years of pandemic, spillovers from the Russias invasion on Ukraine sharply hastened the deceleration of global economic activity in CY22 – growing at 3.2% vs. ~6% in CY21. The global geopolitical landscape has undergone tremendous changes, leading to the emergence of a new world order not seen since WWII – high commodity prices, supply side disruptions, increased food insecurity and poverty, stagflationary headwinds and heightened policy uncertainty in CY22.

However, India had a strong FY23, with its economy growing at ~7.2% driven by lesser dependence on global demand, increase in private consumption and private investment, on the back of government policies to improve transport infrastructure, logistics, and the business ecosystem. Govt. policy on near-universal vaccination coverage also enabled people to spend on contact-based services and helped the economic rebound post Covid-19 uncertainties.

The baseline forecast for global growth may fall from 3.2% in 2022 to 2.8% in 2023, before settling at 3.0% in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7% in 2022 to 1.3% in 2023. Global headline inflation in the baseline may fall from 8.7% in 2022 to 7.0% in 2023 on the back of lower commodity prices but underlying inflation is likely to decline more slowly. Indias economy is expected to face a moderate slowdown to ~5.9% in FY24.

Sources: IMF, World Bank, ADB, CRISIL Research and NSO

COMPANYS PERFORMANCE

The year under review saw ~1.6x revenue growth effected by strengthening the core, developing robust supply chain to scale the business, identifying opportunities for unlocking its full potential, engaging with customers and the value chain to discover new opportunities for Value Added Products. Additionally, the company has started the foundational work to emerge as a Sustainability leader by having a 360-degree approach, starting from developing an innovative & exhaustive outreach program to embarking on its sustainable energy transition to laying the foundation for Orient to become a digital company over next 36 months to leverage the power of AI&ML.

As our Company has an ambitious plan for its transformation to become the industry leader in specialty paper, we have launched a program called NIPUN, which as the name suggests will help us build excellence in all aspects of business (People-Process-Technology).

Realizing the importance of attracting and retaining top talent, our company has embarked on the journey towards becoming a Great Place to Work by doing a base line assessment and now in the process of developing a comprehensive HR intervention across the business.

Our Company has achieved a significant milestone by commissioning our New Recovery boiler in FY23, commercialized several new Value-Added Products, established robust supply chain partnerships, transitioned ~40% of power needs to grid, achieved highest ever direct plantations in local catchment area (6395 acres) and integrated ESG as a core element to fuel the next phase of our business strategy.

Our company has also committed capex of Rs475 cr. in Mar23 towards enhancing efficiency, improving reliability of operations, and de-bottlenecking capacity.

SHARE CAPITAL

There was no change in the share capital of the Company during the financial year 2022-23.

DIVIDEND

The Directors recommend payment of a dividend of Re.1/- (100%) per equity share of Re.1/- each for the Financial Year ended 31st March, 2023, subject to the approval of the shareholders at the ensuing Annual General Meeting ("AGM"). This dividend payout ratio works out to 21% of the net profit for the financial year ended 31st March, 2023.

In view of the changes made under the Income-Tax Act, 1961, by the Finance Act, 2020, as amended, dividend paid or distributed by the companies shall be taxable in the hands of the shareholders. The Company shall, accordingly, make the payment of the final dividend after deduction of tax at source, at the rates prescribed therein.

The dividend recommended by the Board is in accordance with the Dividend Distribution Policy of the Company. The Dividend Distribution Policy, in terms of Regulation 43A of the Listing Regulations is available on the Companys website: http://www. orientpaperindia.com/resources/fck_upload/codeandpolicies/ Dividend-Distribution-Policy.pdf

SUSTAINABLE DEVELOPMENT AND ENVIRONMENT

In the 87 years since its formation, Orient Paper has consistently strived to become the most responsible paper manufacturing company. The core values of Integrity, Excellence, Respect, Responsibility and Accountability have been deeply ingrained in the way we conduct business. Some of these values directly contribute to environmental and social development. For example, the Company has devoted itself to environmental responsibility in the past, receiving widespread recognition from independent agencies. It also prioritized respect by empowering its employees and valuing everyones contribution. Ensuring employee welfare and safety is a top priority and it has actively engaged with and uplifted the local community through its various initiatives.

As part of its efforts, the Company has initiated an outreach program aimed at transforming the lives of over 450,000 individuals in 1,089 villages located in the hinterlands of Madhya Pradesh. This transformation encompasses social, economic, spiritual and environmental aspects for the entire ecosystem. Combined with its existing sustainability plans, Orient Paper shall contribute to 16 out of the 17 United Nations Sustainable Development Goals (SDGs) with significant focus on reducing the eco-system carbon footprint, soil and water conservation.

In FY23, the Company conducted its ESG (Environmental, Social and Governance) profiling. This served as the foundation for developing a comprehensive framework for its ESG strategy and is already working towards its implementation.

CASH FLOW ANALYSIS

In conformity with the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and section 2(40) of the Companies Act, 2013, the cash flow statement for the year ended 31st March, 2023 is included in the annual accounts.

CORPORATE GOVERNANCE

The Company believes that good Corporate Governance is essential for achieving long-term corporate goals and enhancing stakeholders value. The Companys business objective and that of its management and employees is to manufacture and market the Companys products in such a way so as to create value that can be sustained on a long-term basis for all its stakeholders including shareholders, employees, customers, government and the lenders. In addition to compliance with the regulatory requirements, the Company endeavours to ensure the highest standards of ethical conduct throughout the organization.

The Company is in full compliance with the Corporate Governance requirements in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on Corporate Governance and a certificate from the auditors confirming compliance with the Corporate Governance requirements are attached and forms part of this annual report.

MANAGEMENT DISCUSSION AND ANALYSIS

In terms of Regulation 34 of the Listing Regulations, the Management Discussion and Analysis Report for the year under review is presented in a separate section, forming an integral part of this annual report.

DEPOSITS

The Company has not accepted any deposit from public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

PARTICULARS OF LOANS, GUARANTEE AND INVESTMENTS

The company has not given any loans, provided any guarantees / securities or made investments that are covered under the provisions of Section 186 of the Companies Act, 2013 (the "Act"), during the financial year ended 31st March, 2023.

CORPORATE SOCIAL RESPONSIBILITY

Pursuant to the requirements of Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (CSR) Committee was constituted. Details of the CSR activities as required under Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, are given in the Annual Report on CSR Activities annexed as Annexure I. The Companys Policy on Corporate Social Responsibility is available on the website of the Company at http://www.orientpaperindia.com/resources/fck_upload/ codeandpolicies/CSR-Policy.pdf

ANNUAL RETURN

Pursuant to the provisions of Section 92 of the Companies Act, 2013 and rules framed thereunder a copy of the Annual Return has been placed on the Companys website http://www. orientpaperindia.com/investors/annual-general-meeting

DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors

(i) R etirement by rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mr. Chandra Kant Birla (DIN: 00118473), Director of the Company, retires by rotation and being eligible offers himself for re-appointment.

(ii) Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015, the Board has carried out an annual performance evaluation of its own performance, of the directors individually as well as the evaluation of its various Committees. The process of evaluation has been explained in the Corporate Governance Report.

(iii) Board Meetings

The details of meetings of the Board and its various committees are given in the Corporate Governance Report.

None of the Directors are disqualified under Section 164(2) of the Companies Act, 2013.

All the Independent Directors have given their declaration confirming that they meet the criteria of independence in terms of Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Auditors & Audit Reports

(i) St atutory Auditors

The Shareholders of the Company at the Annual General Meeting held on 10th August, 2022, appointed M/s. B S R & Co. LLP Chartered Accountants (Firm Registration no. 101248W/W-100022) as the Auditors of the Company for a period of 5 years.

The Auditors Report for the financial year 2022-23 does not contain any qualification, reservation or adverse remark. Further, in terms of section 143 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, notifications/circulars issued by the Ministry of Corporate Affairs, from time to time, no fraud has been reported by the Auditors of the Company where they have reason to believe that an offence involving fraud is being or has been committed against the Company by officers or employees of the Company.

Note No. 48 (c) appearing in the Notes to Financial Statements referred to in the Auditors Report is self-explanatory.

(ii) Cost Auditor

Pursuant to the provisions of Section 148 of the Companies Act, 2013 and rules made there under, Mr. Somnath Mukherjee, Cost Accountant (Membership no. 5343) was appointed for the financial year ending 31st March, 2023 to conduct cost audit for the products covered under the said rule. The Board of Directors of the Company, on the recommendation of the Audit Committee has further appointed Mr. Somnath Mukherjee, Cost Accountant as Cost Auditor for auditing the cost accounts of the Company for the financial year 2023-24. The Auditor has confirmed his eligibility under Section 141 of the Companies Act, 2013 and the rules framed there under for appointment as Cost Auditor of the Company.

(iii) Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed Mr. A. K. Labh, Company

Secretary in Practice (CP Regn. No. 3238) to undertake the Secretarial Audit of the Company for the financial year 2022-23. The Report of the Secretarial Auditor is annexed to this report as Annexure II. The comments mentioned in the Secretarial Audit Report are self-explanatory.

The Board of Directors of the Company have further appointed Mr. A. K. Labh, Company Secretary in Practice to undertake the Secretarial Audit of the Company for the financial year 2023-24.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is attached herewith as Annexure III and forms part of this annual report

DIRECTORS RESPONSIBILITY STATEMENT

Directors Responsibility Statement pursuant to section 134(3) (c) of the Companies Act, 2013 is attached herewith as Annexure IV and forms part of this annual report.

INFORMATION OF EMPLOYEES

The prescribed information of Employees as required under Section 197(12) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached herewith as Annexure V and forms part of this annual report

RELATED PARTY TRANSACTIONS

All transactions entered into with Related Parties as defined under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, during the financial year were in the ordinary course of business and on arms length basis.

All the Related Party Transactions are presented to the Audit Committee and the Board. Prior omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of all related party transactions is presented before the Audit Committee and Board of Directors on a quarterly basis specifying the nature, value and terms & conditions of the transactions. Particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 are given in the prescribed form AOC -2 as Annexure VI. Web link for the policy on the website is http://www.orientpaperindia. com/resources/fck_upload/codeandpolicies/Related-Party-Transaction-Policy.pdf

REMUNERATION POLICY

The Board has, on the recommendation of its Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report and forms part of this annual report. Web link for the policy on the website is http://www.orientpaperindia.com/resources/fck_ upload/codeandpolicies/Nomination-Remuneration-Policy.pdf

RISK MANAGEMENT

The Board of Directors of the Company has formed a Risk Management Committee, inter alia, to frame, implement and monitor the risk management plan for the Company.

Pursuant to Section 134 of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has a risk management policy. The policy comprises of a robust business risk management framework to identify, evaluate and mitigate potential business risks. The business risk framework defines the risk level including documentation and reporting.

WHISTLE BLOWER POLICY

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. In line with these objectives, the Company has a Vigil Mechanism named Whistle Blower Policy to deal with instances of fraud and mismanagement.

Details of the Whistle Blower Policy are stated in the Corporate Governance Report. Web link for the policy on the website is http://www.orientpaperindia.com/resources/fck_upload/ codeandpolicies/Whistle-Blower-Policy.pdf

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

It has been an endeavor of your Company to support women professionals through a safe, healthy and conducive working environment by creating and implementing proper policies to tackle issues relating to safe and proper working conditions for them.

The Company as required under the provisions of the "the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013" has framed a Policy on Prohibition, Prevention and Redressal of Sexual Harassment of Women at Workplace and matters connected therewith or incidental thereto.

The Company has not received any complaints under the said policy during the year. Web link for the policy on the website is http://www.orientpaperindia.com/investors/codes-and-policies/POSH.pdf

INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

The Company has adequate internal financial control procedures commensurate with its size and nature of business. The Company has identified and documented all key internal financial controls, which impact the financial statements, as part of its Standard Operating Procedures (SOPs). The SOPs are designed for all critical processes across all its plants and offices wherein financial transactions are undertaken. The Financial controls are tested for operating effectiveness through ongoing monitoring and review process by the management and independently by the Internal Auditors. In our view the Internal Financial Controls, affecting the financial statements are adequate and are operating effectively.

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

In compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility & Sustainability Report is presented in a separate section forming part of the Annual Report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

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

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of the Company which has occurred between the end of the financial year of the Company i.e., 31st March, 2023 and the date of this Report.

ACKNOWLEDGEMENTS

The Board of Directors place on record their sincere gratitude to the shareholders, customers, bankers, financial institutions, government agencies, supply chain partners and the employees for their valuable contribution, co-operation and support in the Companys endeavors to achieve continuous growth and progress.

By Order of the Board of Directors

C. K. Birla

Chairman
New Delhi, 18th May, 2023 (DIN: 00118473)