Sangal Papers Ltd Directors Report.

To,

The Members,

We have pleasure in presenting Thirty Ninth (39th) annual report of business and operation of your Sangal Papers Limited ("The Company"), along with the standalone audited yearly financial statements for the financial year ended 31st March, 2019.

COMPANY OVERVIEW

The Sangal Papers Limited (herein after called "The Company") was incorporated in the year 1980. The company is manufacturing Newsprint, Writing Printing Paper and others various quality papers on customers demand. The company was faced many ups and downs in its life. We pray for better and bright future of the company. Our strategic objectives are to build a sustainable organization that remains relevant to the agenda of our stakeholders and creating growth opportunities for our employee and increase the wealth of the company for our members.

At present the company is facing avoidable and unavoidable challenges and threats. We are facing stiff competition in paper industry and the size of the company is negligible in the papers industry.

FINANCIAL RESULT

The financial statements of the company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 (including any modification if any). The standalone financial highlights of our Company for the financial year ended March 31, 2019 are summarized as follows, details are based on:

Details of financials as per IND AS:

Particulars Current financial year (2019) Previous financial year (2018)
Revenue from Operations 14823.40 12050.03
Other Income 114.96 62.83
Total Income of the company 14938.36 12112.86
Profit before Depreciation, Finance Costs, Exceptional items and Tax Expense 1017.62 618.37
Less: Depreciation/ Amortisation/ Impairment 117.80 100.75
Profit before Finance Costs, Exceptional items and Tax Expense 899.82 517.62
Less: Finance Costs 167.22 154.36
Profit before Exceptional items and Tax Expense 732.6 363.26
Add/Less : Exceptional items 0 0
Profit before Tax Expense 732.6 363.26
Less: Tax Expense (Current & Deferred) 118.96 103.09
Profit for the year (1) 613.64 260.17
Other Comprehensive Income (2) 3.80 1.45
Total Comprehensive Income (1+2) 617.44 261.62
Balance of profit /loss for earlier years 2343.43 2081.82
Add: Revaluation Reserve 48.56 48.56
Balance carried forward 3009.43 2392

SHARE CAPITAL

The issued capital, subscribed capital and paid up equity share capital of the company as on March 31, 2019 was Rs. 1,30,72,600 (Rupees One Crore Thirty Lakhs Seventy Two Thousand Six Hundred Only) divided into 13,07,260 (Thirty Lakhs Seven Thousand Two Hundred Sixty) equity shares of Rs. 10/- each, fully paid up.

During the period under review, there is no change in the share capital of the company.

RESERVE

The Board of Directors of our company has decided not to transfer any to the reserve for the year under review.

DIVIDEND

The Board of Directors of our company, after considering holistically the relevant circumstances and keeping in view the companys dividend distribution policy, has decided that it would be prudent, not to recommend any dividend for future growth of the company for the year under review.

OPERATIONAL REVIEW

Our company is achieving its objectives and goals. Our company wants to be more economical and bring efficiency in the operations of the company. The company is moving fast to maximization the wealth of shareholders and stakeholders of the company.

The company is regularly exploring and critically appraising its domestic and international market, over last few years the company has moved closer to the ultimate consumers and has remained successful in positioning its products in a way that consumers can connect with and aspire with in mind. The company has maintained International standards in its products and always be trying to give sharpness to the companys marketing strategies. The company has diversified its product line, presently coloured verity writing printing paper is key product of the company and has been a main contributory factor in the increase in net profit of the company before was that Newsprint Paper, resulting Profit After Tax (PAT) increased by more than 135.86% (approx) as compared to last year.

The company has recorded a significant growth in all segments. During the year under review the company has achieved a turnover (Net) of Rs. 14,398.36/-(In lakhs) as against previous figure of Rs. 12,112.86/-(In lakhs) increase in sale 23.33% (approx).

During the year under review PBT (Profit Before Tax) was Rs. 732.6/-(In lakhs) as compared to previous year figure of Rs. 363.26/-(In lakhs), posting an increase by 101.67 % (approx) in PBT. Net profit and PAT (Profit After Tax and other comprehensive income) were Rs. 617.44/-(In lakhs) as compared to previous year figure of Rs. 261.62/-(In lakhs) reporting an increase of 136.01% (approx) in net profit as compared to previous year. The operating and fixed expenses are increased during the financial year resulting in lower net profits after tax and therefore, the companys net profit could not post the corresponding increase.

INSTALLED CAPACITY

The companys current installed capacity is 33000 MT per annum. during the year under review no increment installed production capacity of the company.

STATE OF THE COMPANY

The following statement on the affairs of the company under review:

1. The company engaged in single segment i.e., company engaged in manufacturing of paper.

2. There is no changes in status of the company.

3. There is no changes in financial year of the company.

4. There is no such as Capital expenditure programmes which fallen effect on the financial position of the company.

5. There are no acquisition, merger, expansion, modernization and diversification during the year in the company under review.

6. There is no any other material event having an impact on the affairs of the company during the year under review.

CASH AND EQUIVALENTS

Cash and equivalents as on date 31st March, 2019 was Rs. 27.53/-(In lakhs). The company is continuing focus on judicious management of its working capital, receivables, inventories and other working capital parameters are kept under strict check through continuous monitoring.

EARNING PER SHARE (EPS)

The Earning per equity share of the company for the financial year ended on 31/03/2019 was Rs. 46.95/- per share and previous year was Rs. 19.91/- per share. The company has reported an increment of 135.81% in EPS for the said financial year.

CHANGES IN FUNCTIONAL STRUCTURE OF THE COMPANY

The company was working as a single unit, for availing the income tax benefit the company has divided into two units, one was paper manufacturing and second was power plant unit and both were working as under the name and style of Sangal Papers Limited. The Board of Directors of the company apprised that to achieved maximum productivity with minimum wasted effort or expense and to operate businesses efficiently to maximize profits of the company in a well-organized and competent way, for these purpose and availing Income Tax benefit under section 80- IA of the Income Tax Act, 1961, the Board decided that the power plant unit and paper unit will work as a separate unit from the company w.e.f. 1st April, 2018.

INSURANCE

The companys properties including building, plant and machinery, stocks, stores, etc., have been adequately insured against major risks like fire, earthquake, terrorism, burglary etc.

DEPOSITS

The company has not accepted any fixed deposits from public and as such, accordingly no amount, principal or interest amount was outstanding as on the date of the balance sheet.

CREDIT RATING

Our company enjoys credit rating from Brickwork Ratings. The Brickwork Ratings India Pvt. Ltd. has granting credit rating on 19/03/2019 to the company as BWR BBB- (Pronounced as BWR Triple B Minus), Outlook: Stable (Reaffirm) for Fund Based- Cash Credit and Term Loan (o/s) and BWR A3 (Pronounced as BWR, A Three) (Reaffirm) for Non-fund Based: Bank Guarantee and ILC/FLC.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The company has not given or granted any loans or guarantee covered under the provisions of section 186 of the Companies Act, 2013 other details can find on the notes to the financial statements of the company.

MANAGEMENTS DISCUSSION AND ANALYSIS REPORT:

In the term of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements), Regulation 2015, the Management Discussion and Analysis is set out in this Annual Report.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to Chairman of the Audit Committee and Managing Director.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the company, its compliance with operating systems, accounting procedures and policies at all locations of the company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

CORPORATE SOCIAL RESPONSIBILITY

Pursuant to section 135 of the Companies Act, 2013 read with the companies (Corporate Social Responsibility Policy) Rules, 2014 including any amendments if any, your company at the Board Meeting held on 30th day of May, 2019 approved and adopted a policy on Corporate Social Responsibility (CSR) and the Policy was hosted on the website of the company. The net profit of your company during the financial year 2018-19 was more than Rs. 5 crore, on the recommendation of Corporate Social Responsibility Committee (CSR committee) and as part of CSR initiatives, the company will spent CSR amount during the financial year 2019-2020 on specified activities, undertaken projects in areas of promoting education, health care and sanitation, environmental sustainability and others as per deem fit by the CSR committee. These projects will be in accordance with Schedule VII of the Companies Act, 2013. The report on CSR activities is attached as Annexure-I to this.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as required to be disclosed pursuant to Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 are given to the extent applicable here in below:

CONSERVATION OF ENERGY

The Paper manufacturing Industries are one of the growing industries in India. The basic need of paper industries is raw material i.e., waste paper and energy to produce the final product. Our company is seeking to optimize use of energy and installing new equipment for reduce the consumption of energy and pollution at all its manufacturing facilities and registered office at Vill. Bhainsa 22 km, Meerut-Mawana road, Meerut, UP. The company is ensuring about that:

(A) ELECTRICAL ENERGY :

(a) Provision of Energy Efficient Pumps for ETP/STP, Water Supply and Fire Systems.

(b) Use of Energy Efficient LED Lighting for manufacturing and office.

(c) Optimization of processes and operational control.

(d) The manufacturing operations are conducted in the manner whereby optimum utilization and maximum possible savings of energy is achieved.

(e) No specific investment has been made in reduction in energy consumption.

(f) As the impact of measures taken for conservation and optimum utilization of energy are not quantitative, its impact on cost cannot be stated accurately.

(B) WATER :

(a) Rain water harvesting with ground recharge.

(b) Replacement of underground hydrant and water pipeline with above ground level pipeline to arrest water leakages.

(c) Zero discharge of waste water.

TECHNOLOGY ABSORPTION

The Companys products are manufactured by using in-house know how and no outside technology is being used for manufacturing activities. The company is adopting green initiation for reduce the pollution and being more ecofriendly. The company constantly strives for maintenance and improvement in quality of its products and entire in-house Research & Development activities are directed to achieve the aforesaid goal.

IMPORTS/ EXPORTS AND FOREIGN EXCHANGE EARNINGS AND OUTGO

A. IMPORTS

Imported raw materials during the year, detailed as per mentioned in notes of financials statements of the company.

B. EXPORTS

The company exports the paper to Gulf, European, Asian and other Countries all over the world, during the year export increased to Rs. 2078.72 (in lakhs) from Rs. 1477.11 (in lakhs) in the previous year. The company has reported an increment of 40.73% in export for the said financial year. Details are provided under the Point 22 of "Notes to Financial Statements" for the financial year ended as on 31st March 2019.

DEVELOPMENTS IN INDUSTRIAL RELATIONS/ HUMAN RESOURCES INCLUDING NUMBER OF EMPLOYEE EMPLOYED

Employee wealth is main key of success of an origination, it is our obligation provide more facilities to the employee. The company is a paper manufacturing industry, we are committed to maintaining a culture and custom for our employee to attract and retain the best talent. During the year under review, your company enjoyed cordial relationship with workers and employees at all levels.

CORPORATE GOVERNANCE REPORT

The Corporate Governance Report, which form an integral part of this Directors report, is set out as separate Annexure, together with the Certificate from the auditors of the company regarding compliance with the requirements of Corporate Governance as stipulated under various regulations of the SEBI (Listing obligations and disclosure requirements) Regulations, 2015.

DIRECTORS RETIREMENT AND RE-APPOINTMENT

Pursuant to the provisions of section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Vinayak Sangal (DIN : 06833351) Director (Non-Executive) retires by rotation and being eligible, offer himself for re-appointment. The Board of Directors be and is hereby recommended, Mr. Vinayak Sangal (DIN: 06833351) for re-appointment.

[ 20 ] THIRTY NINTH ANNUAL REPORT 2018-19

Pursuant to the provisions of section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mr. Tanmay Sangal (DIN: 01297057) Director (Non-Executive) retires by rotation and, being eligible, offer himself for re-appointment. The Board of Directors recommended, Mr. Tanmay Sangal (DIN: 01297057) for re-appointment.

DIRECTORS AND KEY MANAGERIAL PERSONNEL ("KMP")

The Board of Director of the Company having such executive and non-executive directors.

Key Managerial Personnel

Mr. Himanshu Sangal (Managing Director), Mr. Amit Sangal (Whole Time Director cum CFO), Mr. Shivam Sharma (Company Secretary) of the Company.

Directors

Mr. Tanmay Sangal (President Marketing cum Director), Mr. Vinayak Sangal (President Operation cum Director), Mr. Prem Sethi (Independent Director) and Mrs. Geeta Gupta (Independent Director/ Woman Director) of the Company.

Pursuant to the Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Board of Directors of the Company appointed Mr. Prem Sethi (Non-executive Director) as chairperson of the Board of Directors of the company in the Board Meeting held on 30/05/2019.

BOARD EVALUATION

Pursuant to Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, mandate that the Board shall monitor and review the Board evaluation framework. The framework include the evaluation of the Board of Directors on various parameters, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the Working of its Audit Committee, Nomination and Remuneration Committees and Stakeholder Relationship Committee. The Board specified the manner in which the evaluation has been carried out and explained in the Corporate Governance Report.

DIRECTOR APPOINTMENT AND REMUNERATION POLICY

Thepolicyondirectorsappointmentandremuneration,includingcriteriafordeterminingqualification, positive attribute and independence of a director and other relevant matter, as required as per section 178(3) of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration policy has posted on website of the Company at www.sangalpapers.com, you may find. The Directors appointment and Remuneration Policy also stated in Corporate Governance Report.

DECLARATION BY THE INDEPENDENT DIRECTORS

The Company received necessary declaration from each independent director under section 149(7) of Companies Act, 2013, that Mr. Prem Sethi (Independent Director) and Mrs. Geeta Gupta (Independent Director) meets the criteria of independency laid down in section 149(6) of Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015.

Pursuant to the Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 and based on the confirmation/affirmation received from Mr. Prem Sethi (Independent

Director) and Mrs. Geeta Gupta (Independent Director), that they were not aware of any circumstances that are contrary to the declarations submitted by Independent Directors, the Board acknowledges the veracity of such confirmation and takes on record the same.

FAMILIARIZATION PROGRAM AND INDEPENDENT DIRECTORS MEETING

During the relevant financial year, as per company policy the Independent Directors of the company has conducted a separate meeting of Independent Directors of the company on 30/03/2019. The meeting conducted for the purpose of evaluation of the Board of Directors as whole and individually and also conducted the familiarization program for Independent Directors to introduction to the Board and to attend an orientation program. The details of training and familiarization program are provided in the corporate governance report and also available on companys website www.sangalpapers.com.

BOARD DIVERSITY

We understand the value and importance of balanced and diverse board in the company. We always support a better/best board in the company. The company believes that a truly diverse board will changes in thoughts, perspective, knowledge, skills, industry experience, cultural and geographical background, age, gender that will help us retain our competitive advantage.

MEETINGS OF BOARD OF DIRECTORS AND COMMITTEE

During the financial year 2018-2019, Seven (7) Board of Directors Meetings, Four (4) Audit Committee Meetings, Four (4) Nomination and Remuneration Committee Meetings and Four (4) Stakeholder Relationship Committee Meetings were convened and held. The details of which given in the Corporate Governance Report. The maximum interval between any two meeting of the Board of Directors and the Audit Committee, did not exceed 120 days, as prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

AUDIT COMMITTEE RECOMMENDATIONS

During the year, all the recommendations of Audit Committee were reviews and approved by the Board of Directors, if any.

MATERIAL CHANGES AND COMMITMENT AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

CHANGE IN THE NATURE OF BUSINESS

The company engaged in single segment i.e., manufacturing of paper, the company has not undergone any changes in the nature of the business during the financial year.

THE DETAILS OF SIGNIFICANT AND MATERIAL ORDER PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATION IN FUTURE

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the companys operation in future.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act 2013, your Directors confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed with no material departures;

(b) They have 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 review of the state of affairs of the company at the end of the financial year and of the profit of the company for the same period;

(c) They have 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;

(d) They have prepared the annual accounts on a going concern basis;

(e) They have laid down internal financial controls to be followed by the company and that such internal financial control are adequate and are operating effectively;

(f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively;

RELATED PARTY TRANSACTIONS

Sangal Papers Limited has formulated a policy on Related Party Transaction. The same is available on the company website (www.sangalpapers.com). All the Related Party Transactions are placed before the audit committee for its review on quarterly basic. The related party transactions have already been disclosed in the financial statements. No transaction of material nature has been entered into by the company during the year which may have potential conflict with the interest of the company. All related party transactions that were entered into during the financial year were on arms length basis and were in the ordinary course of the business. 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.

All transactions with related party falls under the scope of Related Party Transactions are complied with the provisions of section 188(1) of the Companies Act, 2013. Information on 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 Annexure II in Form AOC-2 and forms part of this report.

SUBSIDIARY COMPANIES, JOINT VENTURE AND ASSOCIATE COMPANY

The company does not have any subsidiary, joint venture and associate company during the relevant financial year 2018-2019.

CODE OF CONDUCT

The Board of Directors has approved a Code of Conduct and which is applicable to the members of the Board and all employees in the course of day to day business operations of the company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings/behaviours of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as "Code of Business Conduct" which forms and Appendix to the Code and same is available on the company website (www.sangalpapers.com).

The code lays down the standard procedure of business conduct which is expected to be followed by the directors and the designated employees in their business dealings and in particular on matters

relating to integrity in the work place, in business practices and in dealing with stakeholders. The code gives guidance through examples on the expected behaviour from an employee in a given situation and the reporting structure.

All the board members and the Senior Management personnel have confirmed compliances with the code. All Management staff was given appropriate training in this regard.

MECHANISM/WHISTLE BLOWER POLICY

Pursuant to Section 177(9) of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the company has formulated a Whistle Blower Policy to establish a vigil mechanism for directors and employees of the company. The purpose and objective of this Policy is to provide a framework to promote responsible and secure whistle blowing. It protects the employees wishing to raise a concern about serious irregularities within the company. The details of the Whistle Blower Policy are explained in the Corporate Governance Report and also posted on the website of the company (www.sangalpapers.com).

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act, 2013, the rules made there under and that they are not disqualified in terms of Section 141 of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, M/s Raj Sandhya & Co., Chartered Accountants (Registration No.:002011C), Muzaffarnagar has been appointed as Statutory Auditors of the Company for a period Five (5) years at the annual general meeting held on 29th September, 2017 subject to ratification of their appointment by the members at every general meeting. The Auditors have confirmed that, their appointment would be in accordance with the Section 139 of the Companies Act, 2013 and the rules made there under and that they are not disqualified in terms of Section 141 of the Act. The shareholders at the ensuing annual general meeting will consider ratification of the appointment of the Statutory Auditor of the company for the financial year 2019-2020. As required under provisions of Section 139 Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

COST AUDIT

Pursuant to the provision of the Section 148 (3) of Companies Act, 2013 read with rule 6 (2) of Companies (Cost Records and Audit) Amendment Rule, 2014 (include any modification or reenactment thereof, if any) and other applicable law, rules or regulations, if any. Pursuant to Section 148 of the Companies Act, 2013 read with the Rule 6 (2) Companies (Cost Records and Audit) Amendment Rules, 2014 (include any modification or reenactment if any), the company appointed Mr. S. R. Kapur, Cost Accountant (Membership No.:- M-4926), Add.: 278, Pakka Bagh, Holi Chock, Khatauli, Muzaffarnagar, UP-251201 for the financial year ended 2020 with such remuneration and other term and condition as may be agree by the Board of Directors of the Company.

SECRETARIAL AUDIT

Pursuant to provision of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Board of Directors appointed Mr. D.K. Gupta Proprietor of M/s D. K. Gupta & Co., Practicing Company Secretary (Membership Number: 5226, Certificate of Practice Number: 3599), to undertake the Secretarial Audit of the company for the financial year 2019-2020. The Secretarial Audit Report is annexed herewith as part of Boards report.

AUDITORS REPORT/ SECRETARIAL AUDIT REPORT:

The observation made in the Auditors Report read together with relevant notes thereon have been explained in notes on account and hence, do not call for any further comments under Section 134 of the Companies Act, 2013. As required under Section 204 (1) of the Companies Act, 2013, the company has obtained a secretarial audit report. Observations, if any made there are self explanatory and read with Notes on Account of Financial Statement.

PREVENTION OF INSIDER TRADING:

In January 2015, SEBI notified the SEBI (Prohibition of Insider Trading) Regulations, 2015, SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018 and SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2019. Pursuant thereto, the company has formulated and adopted a new Code of practice for fair disclosure of unpublished price sensitive information and Code of Conduct. The code requires pre-clearance for dealing in the Companys shares and prohibits the purchase or sale of company shares by the directors and the designated employees while in possession of unpublished price sensitive information in relation to the company and during the period when the Trading Window is closed. The board is responsible for implementation of the code. All directors and the designated employees have confirmed compliance with the code.

ANNUAL RETURN

Pursuant to the Section 134 (3) of the Companies Act, 2013, Annual Return with necessary annexure of the company for the year 2018-2019, also available on companys website www.sangalpapers.com.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return as provided under Section 92(3) of the Companies Act, 2013 in prescribed form MGT -9 is annexed herewith, also available on companys website www.sangalpapers.com/financials.

PARTICULARS OF EMPLOYEES

The provisions of Rule 5 (2) & (3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 (include any modification or amendment thereof, if any) requiring particulars of the employees in receipt of remuneration in excess of Rupees One Crore and Two Lakh per year and Rupees Eight Lakh Fifty Thousand per month only to be disclosed in the Report of Board of Directors are not applicable to the Company as none of the employees was in receipt of remuneration in excess of Rupees One Crore and Two Lakh per year and Rupees Eight Lakh Fifty Thousand per month during the financial year 2018-2019.

The information required under Section 197 (12) of the Companies Act, 2013 read with Rules 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is given in the Statement annexed herewith as "Annexure -III ".

ACKNOWLEDGEMENTS:

Your Company and its Directors wish to extend their sincerest thanks to the Members of the Company, Bankers, State Government, Local Bodies, Customers, Suppliers, Executives, Staff and workers at all levels for their continuous co-operation and assistance.

For and on behalf of the Board of Directors,

Sd/- Sd/-
Date: 30/05/2019 Amit Sangal Himanshu Sangal
Place: Meerut Whole Time Director/CFO Managing Director
DIN-00091486 DIN -00091324

ANNEXURE "II" TO BOARDS REPORT

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto:

1. Details of contracts or arrangements or transactions not at arms length basis:

The company has not entered into any contract/arrangement/transaction with its Related Parties which is not in ordinary course of business or at arms length during Financial year 2018-19. The company has laid down policies and processes/procedures so as to ensure compliance to the subject section in the Companies Act, 2013 and the corresponding rules. In addition, the process goes through internal and external checking, followed by quarterly reporting to the Audit Committee.

(a) Name(s) of the related party and nature of relationship : Not applicable

(b) Nature of contracts/arrangements/transactions : Not applicable

(c) Duration of the contracts / arrangements/transactions : Not applicable

(d) Salient terms of the contracts or arrangements or transactions including the value, if any : Not applicable

(e) Justification for entering into such contracts or arrangements or transactions : Not applicable

(f) Date(s) of approval by the Board : Not applicable

(g) Amount paid as advances, if any : Not applicable

(h) Date on which the special resolution was passed in general meeting as required under first proviso to Section 188 : Not applicable

2. Details of material contracts or arrangement or transactions at arms length basis:

S. No. Name of related party Nature of relationship Nature of contracts/ transaction Duration of contract/ transactions Salient terms of the contracts or transactions including value (Rs. In Lakhs) Amount paid as advances, if any
1. Mr. Tanmay Sangal* (DIN No.:01297057) Son of MD (Mr. Himanshu Sangal) Salary for holding office or place of profit Regular service 30 NIL
2. Mr. Vinayak Sangal* (DIN No.: 06833351) Son of WTD (Mr. Amit Sangal) Salary for holding office or place of profit Regular service 30 NIL
3. Mrs. Ishita Niyogi Wife of Mr. Tanmay Sangal, Director Salary for holding office or place of profit Regular service 9.60 NIL

 

For and on behalf of the Board of Directors,

Sd/- Sd/-
Date: 30/05/2019 Amit Sangal Himanshu Sangal
Place: Meerut Whole Time Director/CFO Managing Director
DIN-00091486 DIN - 00091324

ANNEXURE "III" TO BOARDS REPORT

Pursuant to Section 197 (3) of the Companies Act, 2013 read with rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel)Rules, 2014

The Sangal Paper Limited is paper manufacturing company. The remuneration and perquisites provided to our employees including management of the company are on par with industries benchmarks. The Board of Directors and Nomination and Remuneration Committee continuously reviewing the compensation of our MD, WTD/CFO and other KMP to align both the short term and long term business objectives of the company and to link with the performance of the directors and KMPs. The details of remuneration to KMP including MD and WTD/CFO in the below table:

a. Remuneration of Managing Director, Whole Time Director/Chief Financial Officer (CFO):

Name of director Directors identification number (DIN) Designation Remuneration in the year 2019 (Rs. In Lakhs) Remuneration in the year 2018 (Rs. In Lakhs) % increase of remuneration in fiscal 2019 as compared to 2018* The ratio of the remuneration of each director to the median of remuneration of employees of the company for the financial year 2018-2019
Himanshu Sangal 00091324 Managing Director 80 60 33.33% 83.37:1
Amit Sangal 00091486 Whole Time Director/CFO 80 60 33.33% 83.37:1

*includes benefits provided by the company to concern MD and WTD during the financial year.

Note :

1. The details in the table are on accrual basis.

2. Remuneration provided to MD and WTD recommended by the Nomination and Remuneration Committee and approved by Board of Directors.

3. Remuneration calculation of MD and WTD/CFO as per Schedule V of Companies Act, 2013 and others applicable rules and regulation. If any.

b. Increase in remuneration of other Key Managerial Personnel (KMP):

Name of KMP Title Remuneration in the year 2019 (Rs. In Lakhs) Remuneration in the year 2018 (Rs. In Lakhs) % increase of remuneration in fiscal 2019 as compared to 2018*
Shivam Sharma Company Secretary cum Compliance officer 3.91 3.38 15.68%

The details in the above table are on accrual basis. For the purpose of comparison for both the financial year 2019 and financial year 2018 are given for the full year.

c. Remuneration of Directors (Non-executive) other than MD,WTD and KMP :

Name of Director Directors Identification Number (DIN) Designation Remuneration in the year 2019 (Rs. In Lakhs) Remuneration in the year 2018 (Rs. In Lakhs) % increase of remuneration in fiscal 2019 as compared to 2018 The ratio of the remuneration of each director to the median of remuneration of employees of the company for the financial year 2018-2019
Tanmay Sangal* 01297057 Director NIL NIL NA NA
Vinayak Sangal* 06833351 Director NIL NIL NA NA
Prem Sethi 07146425 Director NIL NIL NA NA
Geeta Gupta 00095939 Director NIL NIL NA NA

Note:

The details in the above table are on accrual basis, for the purpose of comparison for both the financial year 2019 and financial year 2018 are given for the full year.

*Mr. Tanmay Sangal, President Marketing/Director and Mr. Vinayak Sangal, President Operation/ Director (Non-Executive Director) of the company. They are receiving salary in the capacity of employee not in capacity of director since 2017.

d. Information as per Rule 5(2) of Chapter XIII, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Top 10 employee in terms of remuneration draw during the year :

Employee Name Designation Educational Qualification Experience (in years) Remuneration in 2019 (in Lakhs) Previous employment and designation Date of Commencement of employment Date of Birth/Age as on 01.01.19 No of share held Relationship with Director
Tanmay Sangal President Marketing MBA 10 30 Delliote/ Business Valuation Analysis 01/01/2017 16/10/1985/34 43275 Son of Mr. Himanshu Sangal, MD
Vinayak Sangal President Marketing B.tech., MBA 4.5 30 Godrej boyce Manufacturing co. ltd./ Purchasing Manager 01/04/2017 21/11/1991/28 10489 Son of Mr. Amit Sangal, WTD/ CFO
Praveen Agarwal VP Plant B.E., P.G. 37 12 Ruchi Paper Mill,/GM 03/04/2017 15/05/1960/59 NA NA
Arvind Sharma GM Plant B.O.E. 17 10.20 Shree Lakshmi Cotsyn Ltd./ DGM Power Plant 03/09/2016 01/07/1979/40 NA NA
Ishita Niyogi President Export MBA 10 9.60 Google/ Account Manager 01/11/2017 05/10/1986/33 5034 Wife of Mr. Tanmay Sangal
Sanjay Kumar Agarwal GM Finance M.Com, L.LB., CA 35 6.60 Anand Triplex Board Ltd./GM Finance 01/08/2009 01/07/1966/53 60 NA
Rakesh Paspola Sales Manager B.A. 25 6.64 NA 01/06/2014 20/06/1968/51 NA NA
M.C. Rana Production Manager B.Sc., B.E. 30 6.30 NA 01/01/2017 01/07/1959/60 NA NA
M.L. Gupta Accounts Manager M.A. 41 5.45 NA 20/09/2012 30/03/1955/64 NA NA
Kesho Singh Electric Manager M.Tech. 36 5.90 NA 01/07/2008 12/01/1959/60 NA NA

e. The percentage decrease/increase in the median remuneration of employee in the financial year: (0.81%).

Note : During the year median remuneration of employee decrease due to the number of employee of the financial year 2018-2019 is more than number of employee of the financial year 2017-2018.

f. The number of permanent employees on the rolls of company as on 31st March, 2019: 280 for the year 2018-2019.

The number of permanent employees on the rolls of company as on 31st March, 2018: 204 for the year 2017-2018.

g. Average percentage increase in the salaries of employees other than the managerial personnel in the financial year 2018-2019 was 7% (It is estimate basic) and increase in the managerial remuneration for the same financial year was 33.33%. However, the company is paying fixed remuneration to the individuals based on the responsibility and position, the Company is paying remuneration to the Key Managerial Persons (KMP) as per skills and experience. Increment in Managerial remuneration of the Key Managerial Persons (KMP) and MD and WTD as per Managerial Remuneration Policy.

h. Key parameter for any variable component of remuneration availed by the director-Variance in managerial remuneration as per Managerial Remuneration Policy.

i. We affirm that the remuneration paid to the Directors, Key Managerial Personnel and employees is as per the remuneration policy of the Company.

j. Variations in the market capitalization of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase or decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer:

Closing date of the financial year Issued capital (shares) Closing market price per share EPS PE ratio Market capitalization ( in Lakh)
31.03.2018 1307260 93.35 19.91 4.69 1220.33
31.03.2019 1307260 147.1 46.95 3.13 1922.98
Increase/Decrease - 53.75 27.04 (1.56) 702.65
% of Increase/Decrease - 57.58% 135.81% (33.26) 57.58%

Market quotations of the shares of the Company in comparison to the rate at which the company came out with the last public offer.

The equity shares of the Company were initially listed on BSE Ltd. in the year 1994. The last public offer of the equity shares was made in the year 1994 by way of Public issue to the general public in the ratio of 3:1 at a price of Rs. 10/- per equity share. As on 31st March, 2019 the market quotation of the companys share price (closing price) was Rs. 147.1.

k. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and any exceptional circumstances to increase in the managerial remuneration:

There is only one Managing Director, one Whole Time Director cum Chief Financial Officer (CFO), two non-executive directors and two Independent Directors. Increment in the remuneration of the Executive Director for the respective period as per Managerial Policy and mention in here in below.

l. Comparison of the each remuneration of the KMP against the performance of the company:

Name Remuneration of KMP and directors for the period 2018-2019 (Rs. In Lakhs) Performance of the company PAT as on 31stMarch 2019 ( In Lakh)
Himanshu Sangal Managing Director 80 613.64
Amit Sangal Whole Time Director cum CFO 80 613.64
Tanmay Sangal President Marketing/ Director NIL 613.64
Vinayak Sangal President Operation/Director NIL 613.64
Shivam Sharma Company Secretary 3.91 613.64

Note:

Mr. Tanmay Sangal, President Marketing and Mr. Vinayak Sangal, President Operation is receiving remuneration in the capacity Place of Profit, referred to AOC-2 for disclosure regarding this.

m. The key parameters for any variable component of remuneration availed by the directors: There is no variable component in the remuneration of Executive Directors of the Company.

n. If remuneration is as per the remuneration policy of the Company: Yes

o. The ratio of the remuneration of the highest paid director to that of the employee who are not directors but receive remuneration in excess of the highest paid director during the year : NA

For and on behalf of the Board of Directors,

Sd/- Sd/-
Date: 30/05/2019 Amit Sangal Himanshu Sangal
Place: Meerut Whole Time Director/CFO Managing Director
DIN- 00091486 DIN - 00091324