Orient Paper & Industries Ltd Directors Report.

We are pleased to present the annual report along with the audited accounts of your company for the year ended 31st March, 2020.

Financial results

The financial performance of the Company for the year ended 31st March, 2020 is summarised below:

(C in crores)

Particulars 2019-20 2018-19
Revenue from Operations 606.56 710.04
Other Income 11.78 33.71
Total Income 618.34 743.75
Earnings before Interest, Depreciation, Amortisation & Taxation 59.33 171.64
Interest/Finance costs 5.23 9.97
Profit before Depreciation and Taxation 54.10 161.67
Depreciation 33.16 31.61
Profit before Taxation 20.94 130.06
Taxation 1.01 28.41
Profit for the year 19.93 101.65
Other Comprehensive Income (127.10) (6.07)
Total Comprehensive Income (107.08) 95.58
Statement of retained earnings
At the beginning of the year 910.21 839.84
Add: Profit for the year 19.93 101.65
Add: Transfer from FVOCI – sale of equity investments (net of taxes) - 0.29
Less: Other Comprehensive Loss (net of taxes) 2.15 3.43
Dividend on Equity shares 12.73 23.34
Corporate dividend tax 2.62 4.80
At the end of the year 912.64 910.21
EPS (H) 0.94 4.79

Operational and Financial Performance

Our performance for the year was impacted adversely by a combination of following factors:

1. G eneral slow-down in the economy

2. L oss of production due to maintenance requirements of recovery boiler which has now been attended to ensure uninterrupted operations during the coming year.

3. R eduction in price realisation due to lower demand heightened competition from imports

4. I mpact of COVID-19 and consequent lock downs both in and abroad.

Despite these challenges, your company has continued to take steps to cut down on costs and improve efficiencies. Details of these actions are covered in the Management discussion & analysis chapter of this report. Many more actions in this direction are currently under implementation which should help the Company to come out stronger once normalcy returns.

Share Capital

There was no change in the share capital of the Company during the financial year 2019-20.

Dividend

Subject to the shareholders and other requisite approvals, your Directors recommend payment of a dividend of Rs 0.50 (50%) per equity share of Rs 1/- each.

As per Finance Bill 2020, the dividend declared / paid from 1st April, 2020 will be taxable in the hands of the shareholders and hence payment of dividend distribution tax on the dividend, if approved, will not arise.

Economic climate and Companys performance

Indias economy which was growing at close to 7%, slowed down considerably during the year and was further impacted by the COVID-19 pandemic in the 4th quarter resulting in likely growth of only around 4.5%. This will be the lowest level in the last few years. The Indian paper industry also experienced challenges of slowdown in demand which was further compounded by heightened imports following steep drop in International price of Pulp and Paper.

The caustic industry also faced similar pressures due to slowdown in consuming industries and imports.

Most of the World economies also registered slower growth and disruptions, particularly in the 4th quarter of the year caused by the COVID-19 pandemic.

In addition to these factors our performance was also impacted adversely due to production loss resulting from break downs and repair of our recovery boiler during the 4th quarter. The boiler has since been attended to.

While we expect the COVID-19 pandemic to impact the Companys performance in the short term but are convinced that based on actions already taken and in hand, the Company will continue to achieve a healthy growth in the long run.

Sustainable Development and Environment

We have always considered environment protection and sustainable development as integral part of our business philosophy. We are happy to report that we meet or exceed all the latest environmental standards including Zero liquid discharge.

We have also been contributing to greening of our environment and assistance to the farmers around our plants by aggressively promoting farm forestry.

Our efforts towards conservation of water and energy have been widely recognized by several institutions as reflected by a number of awards and recognitions shown elsewhere in this report.

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 2020 is included in the annual accounts.

Corporate Governance

Your 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.

Management Discussion and Analysis

The Management Discussion and Analysis Report for the year under review as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached.

Deposits

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

Particulars of Loans, Guarantee and Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Corporate Social Responsibility

Pursuant to the requirement 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 are given in the CSR Report as Annexure I.

Extract of Annual Return

Pursuant to the provisions of Section 92 of the Companies Act, 2013 and rules framed thereunder, the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure II and forms part of this report. The extract of Annual Return has also been placed at the Companys website www.orientpaperindia.com.

Directors and Key Managerial Personnel Directors

(i) Cessation

During the year Shri Michael Bastian (DIN: 00458062), an Independent director of the company ceased to be a director with effect from 5th August, 2019 upon attaining the age of 75 years. The Board of Directors place on record their deep appreciation for his immense and valuable contribution to the growth and development of the Company during his long tenure as a Director of the Company.

During the year, Shri Narendra Singh Sisodia (DIN:06363951), an Independent Director of the Company ceased to be a director with effect from 14th January, 2020 upon attaining the age of 75 years. The Board of Directors place on record their deep appreciation for his immense and valuable contribution to the growth and development of the Company during his long tenure as a Director of the Company.

(ii) Appointment

The Board of Directors of the Company at its meeting held on 1st August 2019 appointed Mr. Ashwin Bishnoi (DIN:06862466) as an Additional Director and an Independent Director for a period of five years effective from 1st August, 2019, subject to the approval of the shareholders of the Company at the ensuing Annual General Meeting.

The Board of Directors of the Company at its meeting held on 27th January 2020 appointed Mr. Raj Kumar Agrawal (DIN:00177578) as an Additional Director and an Independent Director for a period of five years effective from 27th January, 2020, subject to the approval of the shareholders of the Company at the ensuing Annual General Meeting.

(iii) R e-appointment

The term of appointment of Mr. Manohar Lal Pachisia (DIN:00065431) as the Managing Director of the Company ended on 31st March, 2020. The Nomination & Remuneration Committee and the Board of Directors of the Company at their respective meetings held on 27th January, 2020 approved the re-appointment of Mr. Manohar Lal Pachisia as Managing Director (a Key Managerial Personnel) from 1st April 2020 to 31st March, 2021, subject to the approval of shareholders of the Company.

(iv) 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.

(v) B oard 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.

(vi) B oard 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) S tatutory Auditors

The Shareholders of the Company at the Annual General Meeting held on 9th August, 2017 appointed M/s. Price Waterhouse & Co. Chartered Accountants LLP (FRN 304026E/E-300009) as the Auditors of the Company for a period of 5 years. The Auditors Report for the financial year 2019-20 does not contain any qualification, reservation or adverse remark. Further, in terms of section 143 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, as amended, 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. 51 (c) appearing in the Notes to Financial Statements referred to in the Auditors Report is self-explanatory.

(ii) C ost Auditor

Pursuant to Section 148 of the Companies Act, 2013 and rules made there under, Mr. Somnath Mukherjee, Cost Accountant (Membership no. M/5343) was appointed for the financial year ending 31st March 2020 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 Shri Somnath Mukherjee, Cost Accountant as Cost Auditor for auditing the cost accounts of the Company for the financial year 2020-21. 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) S ecretarial 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 2019-20. The Report of the Secretarial Auditor is annexed to this report as Annexure III. 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 2020-21.

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 IV.

Directors responsibility statement

Directors responsibility statement pursuant to section 134(3)(c) of the Companies Act, 2013 is attached herewith as Annexure V.

Information of employees

The prescribed information of Employees as required under Section 134(3)(q) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached herewith as Annexure VI.

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 VII. Web link for the policy on the website is https://orientpaperindia.com/codes-policies.

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. Web link for the policy in the website is https://orientpaperindia.com/codes-policies.

Risk Management

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 https:// orientpaperindia.com/codes-policies.

Prevention of Sexual Harassment of Women at Workplace

It has been an endeavour 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 complaint under the said policy during the year. Web link for the policy in the website is https:// orientpaperindia.com/codes-policies.

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 (SOP). 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.

Material Changes and Commitment Affecting Financial Position of the Company

There are no material changes and commitment affecting financial position of the Company which has occurred between the end of the financial year of the Company i.e. 31st March 2020 and the date of this Report.

Business Responsibility Report

In compliance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility 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.

Acknowledgements

Your 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 endeavours to achieve continuous growth and progress.

By Order of the Board of Directors