Orient Paper & Industries Ltd Directors Report.

Dear Shareholders,

We are pleased to present the annual report along with the audited accounts of your Company for the year ended 31st March, 2019.

Financial results

The financial performance of the Company for the year ended 31st March, 2019 is summarised below:

(Rs. in crores)
Particulars 2018-19 2017-18
Revenue from Operations 710.04 671.80
Other Income 33.71 11.23
Total Income 743.75 683.03
Earnings before Interest, Depreciation, Amortisation & Taxation 171.64 123.11
Interest/Finance costs 9.97 14.69
Profit before Depreciation and Taxation 161.67 108.42
Depreciation 31.61 28.31
Profit before Taxation 130.06 80.11
Taxation 28.41 30.82
Profit for the year 101.65 49.29
Other Comprehensive Income (6.07) 94.35
Total Comprehensive Income 95.58 143.64
STATEMENT OF RETAINED EARNINGS
At the beginning of the year 839.84 796.20
Add: Profit for the year 101.65 49.29
Add: Transfer from FVOCI - sale of equity investments (net of taxes) 0.29 30.68
Less: Other Comprehensive Loss (net of taxes) 3.43 0.57
Dividend on Equity shares 23.34 29.71
Corporate dividend tax 4.80 6.05
At the end of the year 910.21 839.84
EPS (Rs.) 4.79 2.32

Operational and Financial Performance

The performance of your Company showed a marked improvement in the year under review. Orient Paper registered a revenue of Rs. 710.04 crores for the financial year ended March 31, 2019, an increase of 5.69% over the previous year. EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) stood at Rs. 171.64 crores, up by 39.42% compared to the previous year, on the back of rising demand for your Companys products and control over costs. The Finance Cost was reduced by 32.13%. Profit before Tax (Before Exceptional Items) stood at Rs. 130.06 crores, up by 62.35% compared to the previous year. Net Profit for financial year ended March 31, 2019 stood at Rs. 101.65 crores as compared to Rs. 49.29 crores in the previous year.

Share Capital

There was no change in the share capital of the Company during the financial year 2018-19.

Dividend

Subject to the shareholders and other requisite approvals, your Directors recommend payment of final dividend of Rs. 0.60 (60%) per equity share of Rs. 1/- each. This is in addition to the Interim Dividend of Re. 0.50 (50%) per equity share of Rs. 1/- each declared on 23rd January, 2019 by the Board of Directors of the Company, bringing the total dividend for the year Rs. 1.10/- (110%).

Economic climate and our performance

Indias economy is acknowledged as the worlds fastest growing major economy and is expected to record a growth of ~7% for the year under review.

There continues to be a strong push on development of infrastructure and education by the Government. Private sector investments have also started picking up gradually. RBIs recent reduction in rates should provide further impetus to investments and economic growth.

We therefore feel that our countrys economy is in a reasonably stable state and should grow even faster going forward.

The Indian Paper industry also performed well based on healthy growth in demand and a balanced supply/ demand equation. Higher International prices of Pulp & Paper also contributed to higher exports.

This is also reflected in our performance for the year during which we have achieved the best ever results in our history despite the 21 days maintenance shut during the 1st quarter. This has been possible due to our relentless push towards cost reduction and efficiency improvements.

We are now in the process of upgrading our pulp mill to become ECF compliant and also increase its capacity to reduce our dependence on imported pulp for meeting the increased pulp requirement for our expanded paper capacity after installation of the 3rd Tissue paper machine last year. As a part of this project we are going to set up an energy efficient recovery boiler and a "7-effect falling film evaporator", which will significantly contribute to reduction in our costs further.

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 provide assistance to the farmers around our plants by aggressively promoting farm forestry and achieved plantation of one crore trees covering 4500 during the year under review.

Our efforts towards conservation of water and energy have been widely recognized by several institutions including the Ministry of water resources, Government of India, CII and others as detailed 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 2019 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

The extract of Annual Return in form MGT 9 is annexed herewith as Annexure II. The Annual Return of the Company for the year ended 31st March, 2018 is available on the website of the Company www.orientpaperindia.com.

Directors and Key Managerial Personnel Directors

(i) Resignation

During the year, Shri Amitabha Ghosh (DIN:00055962), an Independent Director of the Company, resigned from the Board of the Company with effect from 31st January, 2019. 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 25th March, 2019, has appointed Mr. Srinivasan Vishvanathan (DIN:02255828) as an Additional Director and an Independent Director for a period of five years effective from 25th March, 2019, subject to the approval of the shareholders of the Company at the ensuing Annual General Meeting.

Re-appointment

The term of appointment of Mr. Narendra Singh Sisodia (DIN:06363951) as an Independent Director for a period of five years will be completed on 21st July 2019. The Nomination & Remuneration Committee and the Board of Directors of the Company at their respective meetings held on 2nd May, 2019 approved the re-appointment of Mr. Narendra Singh Sisodia as an Independent Director for a period from 22.07.2019 to 13.01.2020, upon his attaining the age of 75 years, subject to the approval of the shareholders of the Company.

The term of appointment of Mr. Manohar Lal Pachisia (DIN:00065431) as the Managing Director of the Company ended on 31st March, 2019. The Nomination & Remuneration Committee and the Board of Directors of the Company at their respective meetings held on 23rd January, 2019 approved the re-appointment of Mr. Manohar Lal Pachisia as Managing Director (a Key Managerial Personnel) from 1st April 2019 to 31st March, 2020, subject to the approval of shareholders of the Company.

(iii) Retirement 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.

(iv) 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.

(v) 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(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Auditors & Audit Reports

(i) Statutory 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 2018-19 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 selfexplanatory.

(ii) Cost 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 2019 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 201920. 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 2018-19. 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 2019-20.

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 and conditions of the transactions. Particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 have been given in the prescribed form AOC -2 as Annexure VII. Web link for the policy in 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 adopted 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 adopted 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 in the website is https://orientpaperindia.com/codes- policies.

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 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 2019 and the date of this 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, cooperation and support in the Companys endeavours to achieve continuous growth and progress.

By Order of the Board of Directors

C. K. Birla
Chairman
New Delhi, 2nd May, 2019 (DIN: 00118473)