Seshasayee Paper & Boards Ltd Directors Report.

The Directors hereby present their Sixtieth Annual Report and the Audited Accounts for the year ended March 31, 2020.

The Company has adopted the Indian Accounting Standards (IndAS) from Financial Year 2017-18 as mandated. Accordingly, the financial statements for current year, including comparative figures of previous year are based on IndAS and in accordance with the recognition and measurement principles stated therein, as well as other accounting principles generally accepted in India. While this has no major impact for the Statement of Profit and Loss, there is and would be periodical impact for "Other Comprehensive Income" in measuring and restating investments at fair value.


2019-20 2018-19
(in tonnes) (in tonnes)
Production 1 97 547 2 09 015
Sales 1 87 271 2 07 971
(Rs. in crores) (Rs. in crores)
Revenue from
1183.98 1325.24
Other Income 23.87 23.06
Total Revenue 1207.85 1348.30
Profit before interest, depreciation, exceptional item and tax 290.71 318.90
Finance Cost 6.89 13.81
Depreciation 35.00 33.78
Exceptional Item -- --
Profit before tax 248.82 271.31
Profit before tax 248.82 271.31
Provision for current tax 45.17 58.20
Transfer to / (from) Deferred Tax 29.05 23.11
Net Profit 174.60 190.00


The Board of Directors has recommended payment of Dividend of Rs. 3.50 plus a Diamond Jubilee Special Dividend of Rs. 0.50, totalling to a Dividend of Rs. 4.00 per Equity Share of face value of Rs. 2 each, for the financial year 2019-20, absorbing a sum of Rs. 25.23 crores. As per the provisions of the Income tax Act, 1961, as amended by the Finance Act, 2020, Dividend Distribution Tax is not applicable in respect of Dividends declared, distributed or paid by the Company after March 31, 2020. The same will be taxed in the hands of the Shareholders. As per Ind AS 10, Events after the reporting period, Proposed Dividend on Equity Shares being a non-adjusting event at the Balance Sheet date, is not recognised as a liability in the accounts for the year ended March 31, 2020. The same will be recognised in the year of payment, viz., year ending March 31, 2021.


(Rs. in crores)
Net profit for the year 174.60
Surplus brought forward from the previous year 156.38
Carried over 330.98
Brought forward 330.98
Re-measurement of Defined
Benefit Plans 0.80
Dividend paid during the year (For Financial Year 2018-19) 25.23
Tax on Dividend distribution 5.18
Transfer to General Reserve 100.00
Balance carried forward 199.77


During the year, the production at Unit : Erode was 1 25 313 tonnes of paper, as compared to 1 32 379 tonnes, produced in the previous year. Production was lower by 7 066 tonnes, compared to the previous year. Reduction was mainly due to shuts availed in the Paper Machine during the year for upgradation works, poor market conditions and also on account of plant operations being shut down in the last week of March 2020 due to Covid-19 lockdown.

Unit : Erode also produced 35 083 tonnes of Wet Lap Pulp to augment the Pulp requirements of Unit : Tirunelveli.

Unit : Tirunelveli produced 72 234 tonnes of Paper during the year, as compared to 76 636 tonnes, produced in the previous year. The production was lower by 4 402 tonnes, compared to the previous year. The reduction was mainly due to planned shuts, for maintenance activities and also on account of plant operations being shut down in the last week of March 2020 due to Covid-19 lockdown.

Overall Production for the Company was 1 97 547 tonnes of Paper and Boards for the year, as compared to 2 09 015 tonnes produced, in the previous year.


After taking into account 443 tonnes towards in-house consumption, Unit : Erode sold 1 17 576 tonnes, against the production of 1 25 313 tonnes. The Finished Goods Inventory as at March 31, 2020 was 7 294 tonnes (As on March 31, 2019 -Nil).

In addition, Unit : Erode, as part of its trading activity, had sold petroleum products valued at Rs. 25.62 crores and 27 tonnes of Note Books. Closing Stock of Traded Goods was 6 tonnes, as on March 31, 2020.

Unit : Tirunelveli sold 69 695 tonnes after taking into account 2 tonnes towards in-house consumption. The Finished Goods Inventory as at March 31, 2020 was 2 537 tonnes (As on March 31, 2019 -Nil).

In addition, Unit : Tirunelveli as part of its trading activities had sold 338 tonnes of Note Books. Closing stock of traded goods was 452 tonnes as on March 31, 2020.

The overall sale of Paper and Paper Boards effected by the Company during the year, was 1 87 271 tonnes, compared to 2 07 971 tonnes, sold during the previous year.


The Revenue from Operations of the Company for the year was Rs. 1183.98 crores, as against Rs. 1325.24 crores, in the previous year. Profit before interest, depreciation, exceptional item and tax was Rs. 290.71 crores, for the Company as a whole, compared to Rs. 318.90 crores, in the previous year.

After absorbing interest and depreciation of Rs. 6.89 crores and Rs. 35.00 crores respectively, the Profit before tax (PBT) was Rs. 248.82 crores, as compared to Rs. 271.31 crores, in the previous year. The Company registered a lower PBT by 8.3% compared to previous year, mainly due to :

Lower Sales volumes.

Drop in Net Sales Realisations in the current year.

Nationwide lockdown, disrupting plant operations and resulting in higher goods inventory of Paper as on March 31, 2020, with domestic markets and markets outside of India getting closed down, during the last week of March 2020 amidst Covid-19 pandemic.

For the year ended 31st March 2020, current tax liability works out to Rs. 45.17 crores, as against a liability of Rs. 58.20 crores in the previous year. The Deferred Tax liability, net of MAT Credit Entitlement utilisation, amounted to Rs. 29.05 crores for the year ended 31st March 2020, as against a charge of Rs. 23.11 crores in the previous year.

As a result, profitafter tax for the year ended March 31, 2020 was Rs. 174.60 crores, as compared to Rs. 190.00 crores, in the previous year.


Instalments of Term Loans and interest dues on Term Loans and Working Capital borrowings were paid on or before the respective due dates. During the year, the Company had repaid all its Term Loans borrowed from banks and became a Debt free company, with NIL outstanding to Banks / Financial Institutions from December 2019 onwards. The Company reports NIL debt position as on March 31, 2020.


The Company repaid Rs. the lockdown announced3.10 crores during the year and the balance outstanding as on March 31, 2020 was Rs. 11.75 crores.


The year began on a strong note for the Paper Industry, continuing with the strong market sentiments witnessed during the earlier year. Realisations in Domestic and International Markets continued to be favourable in Q1 of 2019-20.

The weakening of demand and the consequent pressure on the selling prices commenced in the latter half of the 2nd Quarter and continued thro to the subsequent 2 quarters, mainly due to following factors : finished

Deceleration in the growth of Indian Economy with falling GDP growth, month after month.

Huge increase in imports of paper by Traders, from ASEAN countries, China, Korea, etc, taking advantage of Import Duty concessions available for such imports.

Reduction in prices of pulp and consequent reduction in prices of paper in the overseas markets, triggering larger imports into India and creating price-war with domestic suppliers.

The paper market reached a trough in the last week of March 2020, amidst the Lockdown of key markets in India and across most parts of the Globe, due to Covid-19 pandemic.

Both the units of the Company (Units in Erode and Tirunelveli) had closed down operations from midnight of March 24, 2020, in response to the nation-wide lockdown to curb the spread of Covid-19 Virus.

Until Financial Year 2018-19, the Company had achieved Zero Stock of Finished Goods at the end of Financial Year, in 21 years out of the last 25 years. Though the Company had put in place plans to reach this feat again as on March 31, 2020, the poor market conditions that prevailed from February 2020 onwards, non-availability of trucks with the drivers fearing the on virus effect and finally March 24, 2020 resulted in the Company holding a Finished Goods inventory of 9831 tonnes at the close of March 31, 2020.


Unit : Erode exported 15 324 tonnes of paper during the year, as compared to 16 993 tonnes, exported during 2018-19. The export proceeds in Foreign Currency for the year 2019-20 amounted to US $ 12 852 220 and AED 1 312 846 (Previous Year Exports -US $ 15 211 167 and Euro 160 056). For Unit : Erode, in Rupee terms, the value of exports amounted to Rs. 88.40 crores (Previous Year Rs. 107.03 crores). For Unit : Erode, by volumes, exports constituted around 12.23% of the Production as against the 12.84% in the previous year. Unit : Erode also sold 63 tonnes during the year, under deemed exports whose proceeds amounted to Rs. 0.41 crores.

Unit : Tirunelveli exported 21 089 tonnes of Paper during the year, as against 17 825 tonnes, exported during 2018-19. The export proceeds in Foreign Currency amounted to US$16673504andEURO1383280(PreviousYear Exports -US $ 15 541 015 and Euro 204 930). For Unit : Tirunelveli, in Rupee terms, the value of exports amounted to Rs. 120.51 crores (Previous Year Rs. 111.01 crores). For Unit: Tirunelveli, Exports, by volumes, constituted around 29.20% of the Production as against 23.26% in the previous year. Unit : Tirunelveli also sold 33 tonnes during the year, under deemed exports whose proceeds amounted to Rs. 0.19 crores.


The Company continues to provide quality Clonal Seedlings of Eucalyptus, as well as bare-rooted Casuarina Seedlings, at subsidised rates, to interested farmers and assist them with technical help to achieve higher yields.

In addition, the Company had provided clones of Melia-Dubia, a high yielding fast growing species, suitable for Pulp production to interested farmers.

Technical Support to the farmers for this initiative is being provided in association with the Department of Tree Breeding of Forest College and Research Institute, attached to Tamil Nadu Agricultural University, Coimbatore, through a Collaborative Research Project.

In accordance with the Companys vision to achieve wood positive status, over fourteen crore Seedlings (Clonal Eucalyptus Seedlings, bare-rooted Casuarina Seedlings and Melia Dubia Clones) were made available during the year, to farmers at subsidised rates for planting in about 16801 acres of land.


The Companys Quality Management Systems and Environment Management Systems continue to be covered under ISO 9001 and ISO 14001 Accreditations. Both ISO 9001 and ISO 14001 Standards have undergone revision to 2015 Standards which lays emphasis on role of top management, adoption of risk management and change management. All these changes are to facilitate sustainability in business performance.


The Company continues to enjoy certification under Occupational Health and Safety Assessment Series 18001 (OHSAS) which is an international standard that facilitates management of Occupational Health and Safety risks associated with the business of the organisation.


The Company has been certified under four Standards of FSC, viz. FSC-STD-40-004, FSC-STD-40-005, FSC-SSTD-40-003 and FSC-STD-50-001. By this, the Company assures its stakeholders that the wood and wood fibre (pulp) purchased by it are traceable to responsibly managed plantations and that adequate document controls are in place to ensure identification and traceability throughout the Chain of Custody. This also means that the Company is capable of manufacturing and selling FSC 100% and FSC Mix Products in the domestic and international markets.


The Company won the following Awards and recognitions during the year :

"CII Excellent Energy Efficiency Unit Award" & "CII Innovative Project Award" at the CIIs 20th National Award for Excellence in Energy Management. Tamil Nadu State Safety Award.

"Star Award" from National Safety Council in Occupational Health, Safety and Environment Awards 2018.


The Company continues to be accredited with "Star Export House" Status by the Government of India, Ministry of Commerce, Directorate General of Foreign Trade, in recognition of its export performance.


As on March 31, 2020, 11 101 Shareholders are holding Shares in Demat form and 4 98 71 055 shares have been dematerialised, representing 79.07% of the total Equity Share Capital.


M/s Esvi International (Engineers & Exporters) stressed Limited (Esvin) is a wholly owned subsidiary of the Company. Currently, Esvin holds properties and derives property income.


After successful completion of the Mill Development Plan -II (Phase -I and II) at Unit : Erode and Mill Expansion Plan in Unit : Tirunelveli in Financial Years 2017-18 and 2018-19, the Company has now embarked on a Mill Development Plan -III (MDP -III) at Unit : Erode at a Cost of Rs. 315 crores.

The MDP -III at Unit : Erode will consist of :

Upgradation and Modernisation of the Paper Machines to increase the Capacity from 1 32 000 tonnes per annum to 1 65 000 tonnes per annum.

Upgradation and Modernisation of the RDH Pulp Mill to increase the Capacity to 1 54 000 tonnes per annum.

Upgradation of the Recovery Island and Augmentation of Waste Water Treatment Plant.

The execution of the Project, MDP-III, has commenced with July 01, 2020 as the Zero Date with an originally planned project execution period of 21 months. However, with some of the major suppliers and service providers, both globally and in India, located in Covid-19 lockdown areas Company expects delay in execution of the project. Also during the Financial Year 2019-20, the Company had submitted a Composite Scheme of Compromise / Arrangement with the Creditors, Shareholders and other Stakeholders of M/s Servalakshmi Papers Limited (SPL) (Under Liquidation) and subsequent amalgamation of SPL with our Company. The matter is pending before NCLAT.

CURRENT YEAR (2020-21)

The month of April 2020, continued to register financially with most key Markets in India and around the world, remaining closed amidst Covid-19 Pandemic.

Both the units of the Company (Units in Erode and Tirunelveli) had closed down operations from midnight of March 24, 2020, in response to the nation-wide lockdown to curb the spread of Covid-19 Virus.

Subsequently, in response to our representation dated April 10, 2020, the Collector of Namakkal District has given permission on same day to the Company to recommence its operations in Unit : Erode, with minimum employees, following all precautions in every shift and after ensuring full hygenic care and protection of the employees. Accordingly, the company recommenced its operations in its Unit : Erode on April 13, 2020. Subsequently, Collector, Tirunelveli District also gave permission to recommence operations in our Unit :Tirunelveli and the operations recommenced on April 27, 2020.

The Company has taken all necessary precautions in both the units and has arranged for required Masks, Hand Sanitisers, etc., to ensure protection for all its employees. The Company, in its Unit : Erode, has a Doctor in attendance, to attend to any health issues of the employees. In Unit : Erode, the Production during April 2020 was 5 715 tonnes, as compared to 10 611 tonnes, produced during April 2019. In Unit : Tirunelveli, the Production was 337 tonnes in April 2020, as against 5 355 tonnes in April 2019. The overall Production for the Company, for the month of April 2020, was 6 052 tonnes. Total Value of Production, during April 2020, amounted to only Rs. 26.15 crores, compared to Rs. 88.67 crores, during April 2019. During April 2020, 113 tonnes of paper, valued at Rs. 0.59 crores were exported.


The Company continues to provide utmost attention to the conservation and improvement of the environment. In Unit : Erode, the Power Boilers and Recovery Boilers are equipped with Electro Static Precipitators, to arrest dust emissions. The Company has installed and operates an Anaerobic Lagoon, for high BOD liquid effluents and a Secondary Treatment System, for total Mill effluent. These facilities are operating enabling the Company to comply with the Pollution Control Authorities, on a sustained basis. The treated effluent water continues to be utilised for irrigating nearby sugar cane fields.

Additional treatment facilities have been proposed for waste water under the Mill Development Plan.

Unit : Tirunelveli is well equipped with efficient Electro Static Precipitator for the Power Boiler and has an extensive green cover. Its treated waste water, after recycling, is used to irrigate the Company owned lands. As part of the Mill Expansion Plan, the Waste Water Treatment Plant has been augmented with a Dissolved Air Floatation Cell and Anaerobic Digester.


The Report on Managements Discussion and Analysis, as required under Clause 49(VIII)(D) of the Listing Agreement with Stock Exchanges covering industry structure and developments, opportunities and threats, outlook, discussion on financial performance, etc., is contained in "Management Discussion and Analysis Report" that forms an integral part of this Report and annexed as Annexure -I.


Pursuant to Regulation 34 and Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Corporate Governance Report, together with the Certificate from the Companys Auditors confirming the compliance of conditions on Corporate Governance, is given in Annexure -II.


Regulation 34(2) of the SEBI (LODR) Regulations requires the listed entities, to include a Business Responsibility Report (BRR) in their Annual Report, describing the initiatives taken by the Company from Environmental, Social and Governance perspective, in the format as efficiently, specified by SEBI from time to time. Originally, this regulation / reporting requirement was applicable only for the top 500 listed Companies, based on Market Capitalisation (calculated as on March 31 of every financial year).

However, SEBI, vide their amendment to LODR, dated December 26, 2019, has extended this to top 1000 Companies. Our Company was in 678th position (Market Capitalisation in BSE) as on March 31, 2019. Hence, this Regulation on BRR will now be applicable to the Company, with effect from Financial Year 2019-20.

The Company has drafted the Business Responsibility Report, in line with the format prescribed by SEBI, which is given in Annexure -III to the Directors Report.


Section 134(3) of the Companies Act, 2013 requires the Boards Report to include several additional contents and disclosures compared to the earlier law. Most of them have accordingly been made in the Corporate Governance Report at appropriate places that forms an integral part of this Report.


The details forming part of the Extract of the Annual Return in Form MGT -9, is given in Annexure -IV.


While preparing the annual accounts, the Company has adhered to the following:

Applicable Accounting Standards, referred to in Section 129(1) of the Companies Act, 2013, have been followed.

The Directors 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 view of the state of affairs of the Company as at March 31, 2020 and of the profit of the Company for the said period.

The Directors 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.

The Directors have prepared the annual accounts on a "going concern" basis.

The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


During the year, SPB Projects and Consultancy Limited repaid the short term Inter Corporate Loan of Rs. 0.60 crores, along with interest, which was extended in the Financial Year 2018-19.

During the year, the Company did not extend any Loan or Guarantee or provided any security or make investment covered under Section 186 of the Companies Act, 2013.


The Corporate Governance Report contains relevant details on the nature of Related Party Transactions (RPTs) and the policy formulated by the Board on Material RPTs. Particulars of Contracts or Arrangements with Related Parties referred to in Section 188(1) of the Companies Act, 2013 is furnished in accordance with Rule 8(2) of the Companies (Accounts) Rules, 2014 in Form AOC -2 as Annexure -V.


There was no change in the nature of business of the Company during the year. With effect from the last week of the financial year ended on March 31, 2020, the Companys operations were materially impacted by lower production, lower sales, higher Inventory and negative cash generation, due to the lockdown consequent to Covid-19 pandemic.

There are no other material changes and commitments in the business operations of the Company since the close of the financial year on 31st March 2020 to the date of this Report.


The information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, as required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 is given in Annexure -VI.


Section 135 of the Companies Act, 2013 mandates every company having minimum threshold limit of net worth, turnover or net profit as prescribed to constitute a Corporate Social Responsibility Committee of the Board, formulation of a Corporate Social Responsibility Policy that shall indicate the activities to be undertaken by the Company as specified in Schedule VII to the Companies Act, 2013 and duly approved by the

Board, fix the amount of expenditure to be incurred on the activities and monitor the CSR Policy from time to time.

Since your Company falls within the minimum threshold limits, the Company has constituted a CSR Committee of the Board and has formulated a CSR Policy. The CSR Report, forming part of this Report, is furnished in Annexure -VII.


The information required pursuant to Section 197, read with Rule 5 of the Companies (Appointment and Remuneration of Management Personnel) Rules, 2014, is furnished in Annexure -VIII.


As required under Regulation 53 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Cash Flow Statement is attached to the Balance Sheet.


Relations between the Management and Employees were cordial throughout the year under review. The five year wage / salary agreement with labour unions / staff association expired on March 31, 2019. Negotiations are underway for a new agreement with effect from April 01, 2019.


During the year, Tamilnadu Government withdrew the nomination of Sri Shambu Kallolikar, IAS and in his place, nominated Sri Deepak Srivatsava, IFS, the Special Secretary to Government, Environment and Forests Department, as its Nominee Director on the Board of our Company. Sri Deepak Srivatsava, IFS, was appointed as an Additional Director on the Board of the Company on July 27, 2019. He was later appointed by the Shareholders of the Company, vide Postal Ballot on September 18, 2020, as Nominee Director liable to retire by rotation. Your Directors place on record the valuable services rendered by Sri Shambu Kallolikar, IAS, during his tenure as Director of the Company. The Board of Directors at their meeting held on July 27, 2019, based on the performance evaluation and based on the recommendations of the Nomination-cum-Remuneration Committee, formed the opinion that Sri A L Somayaji and Dr Nanditha Krishna (whose first term as

Independent Directors expired on September 28, 2019) are persons of integrity and possess relevant expertise and experience and hence could be re-appointed as Independent Directors of the Company. The Board thereupon decided to re-appoint them for a second term as Independent Directors, not liable to retire by rotation, subject to approval by Shareholders of the Company by a Special Resolution.

Approval of the Shareholders, by way of Special Resolution through Postal Ballot, was obtained on September 18, 2019 for the Re-appointment of Independent Directors, Sri A L Somayaji and Dr Nanditha Krishna, for another term of five years from September 29, 2019 to September 28, 2024.

Dr. (Tmt) M Aarthi, holding office as a Nominee Director (nominated to the Board by the Tamil Nadu Industrial Investment Corporation Limited) had vacated office of Nominee Director under Section 167(1)(b) of Companies Act, 2013, with effect from February 1, 2020. She was re-appointed as Additional Director by the Board on March 28, 2020, on receipt of fresh nomination from the Tamil Nadu Industrial Investment Corporation Limited. All the Independent Directors have given the declaration that they meet the criteria on independence, as laid down under Section 149(6) of the Companies Act, 2013. The performance evaluation of Independent Directors has been done by the entire Board of Directors, excluding the Director being evaluated, at the Board Meeting held on 30th May 2020. The Board, on the basis of such performance evaluation determined to continue the term of appointment of all Independent Directors.


M/s Maharaj N R Suresh & Co., and M/s R Subramanian and Company LLP Chartered Accountants continue to be the Statutory Auditors of the Company. Particulars of Statutory Auditors, Cost Auditors, Internal Auditors and the Secretarial Auditors have been given in the Corporate Governance Report that forms an integral part of this report. Secretarial Audit Report, as required by Section 204(1) of the Companies Act, 2013, is attached in Annexure -IX.


The Directors place on record their great appreciation of the tireless efforts of all the Executives and Employees of the Company for their commendable performance in achieving excellent financial results. The Directors also express their sincere thanks to the Government of India, Government of Tamilnadu and Commercial Banks, for their understanding, guidance and assistance and Dealers, Customers, Suppliers and Shareholders, for their excellent support, at all times.