Shree Ajit Pulp and Paper Ltd Directors Report.

TO THE MEMBERS:

Your Directors have pleasure in presenting their Twenty-Fourth Annual Report and the Audited Financial Statements for the year ended on 31st March 2019, together with the Independent Auditors Report thereon.

Financial Results:

(Rs. In Lakh)

Particulars Current Year Ended 31-03-2019 Previous Year Ended 31-03-2018
Revenue from operations 26,970.23 25,269.76
Other income 30.35 24.69
Total income 27,000.58 25,294.45
Expenses
Operating expenditure 22,523.03 22,835.74
Depreciation and amortization expenses 700.47 646.25
Total expenses 23,223.50 23,481.99
Profit before finance cost and tax 3,777.08 1,812.46
Finance costs 515.13 565.07
Profit before tax (PBT) 3,261.95 1,247.39
Current tax expenses 849.45 257.44
Deferred tax expenses 99.64 105.99
Exceptional item - 58.55
Profit for the year 2,312.86 825.41
Total comprehensive income for the year 2,314.00 827.65
Balance brought forward from previous year 9,559.33 8,780.05
Amount Available for Appropriation 11,873.33 9,607.69
Appropriations:
Proposed Dividend (Including Tax) 48.36 48.36
Balance carried to Balance Sheet 11,824.97 9,559.33

Dividend:

Your Directors have pleasure in recommending a modest dividend of 7.50%, i.e. Rs. 0.75 per Equity Share (previous year 7.50% i.e. Rs. 0.75) on 5356700 Equity Shares of Rs. 10/- each for the year 2018-2019.

Management Discussion and Analysis:

Attached report on Management Discussion and Analysis, which is forming part of this report, adequately deals with the operations as also current and future outlook of the Company.

Corporate Governance:

Pursuant to Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate report titled Corporate Governance is attached to this Annual Report.

Finance:

The repayment of due loan installments and interest payment is being regularly done.

Subsidiary Company, Joint Venture and Consolidated Financial Statements:

The Companys subsidiary Shree Samrudhi Industrial Papers Pvt. Ltd. has not yet commenced any business.

As required by Section 129 (3) of the Companies Act, 2013 and Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Consolidated Financial Statements for the year ended on 31st March, 2019, prepared in accordance with the relevant accounting standards as prescribed under Section 133 of the Companies Act, 2013 and the Auditors report there on are attached.

As required by first proviso of Section 129 (3) of the Companies Act, 2013 and Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing the salient features of the financial statements of the Companys subsidiary (Shree Samrudhi Industrial Papers Pvt. Ltd.) and joint venture (Shree Samrat Pulp and Paper Pvt. Ltd.), in form AOC-1 is also attached. The statement also provides the details of performance and financial position of the said subsidiary and joint venture Companies.

Shareholders interested in obtaining a copy of the annual audited financial statements of the subsidiary Company may write to the Company.

Directors and Key Managerial Personnel:

Mrs. Bela G. Shah, Executive Director (DIN: 01044910) retires by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment.

Your Board of Directors re-appointed Mr. Laxminarayan J. Garg (DIN: 00786976) as Independent Director of the Company for second term of 5 (five) consecutive years with effect from 1st April, 2019. The necessary resolution for approval of his re-appointment under Sections 149, 152 and Schedule IV of the Companies Act, 2013 is being placed before the Annual General Meeting for your consideration.

Your Board of Directors re-appointed Mr. Darshak B. Shah (DIN-00098897) as Independent Director of the Company for second term of 5 (five) consecutive years with effect from 1st April, 2019. The necessary resolution for approval of his re-appointment under Sections 149, 152 and Schedule IV of the Companies Act, 2013 is being placed before the Annual General Meeting for your consideration.

Mr. Dhansukhlal G. Shah (DIN: 00377970) resigned and ceased as Non-executive Director of the Company with effect from 25th March, 2019. The Board places on record its appreciation of the valuable services rendered by him during his long tenure as a Director of the Company.

Extract of the Annual Return:

An extract of the Annual Return in Form MGT-9 for the year ended on 31st March, 2019 pursuant to sub-section (3) of Section 92 of the Companies Act, 2013 is annexed with this report.

Directors Responsibility Statement:

In accordance with Section 134(5) of the Companies Act, 2013 your Board of Directors confirms that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) The Directors had 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 at the end of the financial year and of the profit and loss of the Company for that period;

(c) The Directors had 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) The Directors had prepared the annual accounts on a going concern basis;

(e) The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

Internal Financial Controls:

Your Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operation. Review of the internal financial controls environment of the Company was undertaken during the year which covered verification of entity level control, process level control, identification, assessment and definition of key business processes and analysis of risk control matrices etc. During the period under review, effectiveness of internal financial controls was evaluated. Reasonable Financial Controls are operative for the business activities of the Company and no material weakness in the design or operation of any control was observed. The internal financial controls with references to the Financial Statements are commensurate with the size and nature of the business of the Company.

Statement on Declaration Given by Independent Directors u/s. 149(6):

Every Independent Director has given declaration that he meets the criteria of independence as provided in Section 149 (6) and Schedule IV of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Companys Policy on Directors Appointment and Remuneration:

Pursuant to provisions of Section 134 (3) read with Section 178 of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Board of Directors, on recommendation of the Nomination and Remuneration Committee, has adopted a policy for appointment and payment of remuneration of Directors / KMP(s) and other senior executives of the Company. The policy is placed on website of the Company at www.shreeajit.com.

The Nomination and Remuneration Committee also recommends appointment and remuneration of Directors / KMP(s) and other senior executives of the Company, based on expertise and experience. The Committee also ensures that the remuneration is sufficient to attract, retain and motivate best managerial talents.

Particulars of Loans, Guarantees or Investment u/s. 186:

During the year the Company has not given any loans or guarantees or made any investments exceeding limit under Section 186 of Companies Act, 2013.

Particulars of Contract or Arrangement Regarding Related Party u/s. 188:

During the Financial Year 2018-19 the Company has entered into contract / arrangement / transaction with related parties under Section 188 of the Companies Act, 2013, details of which, as required to be provided under Section 134(3)(h) of the Companies Act, 2013 read with Rule (8)(2) of the Companies (Accounts) Rule, 2014 are disclosed in Form No. AOC-2 as annexure which forms part of this report. The policy on materiality of related party transaction is placed on website of the Company.

Material Changes and Commitments Affecting Financial Position of the Company:

There are no material changes and commitments affecting the financial position of the Company which have occurred between end of the financial year of the Company and the date of Directors Report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo:

The relevant information is given as an annexure to this report.

Change in Nature in Business:

There has been no change in the nature of Business of the Company during the year.

Transfer of Amounts to any Reserve:

The Company was not required to transfer any amount to any reserve during the year.

CSR Committee and Implementation of CSR Projects:

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility) Rules, 2014 and Schedule VII as amended from time to time, a Corporate Social Responsibility (CSR) Committee of the Board is in place comprising of the Managing Director and two Independent Directors of the Company. The said Committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy (CSR Policy), from time to time indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of the CSR Policy and recommending the amount to be spent on CSR activities. The Annual Report for the year 2018-19 on CSR activities is annexed with this report. The detailed CSR policy is placed on the website of the Company.

Establishment of Vigil Mechanism:

The Company has established a vigil mechanism for employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the code of conduct and ethics of the Company. It provides for adequate safeguard against the victimization of employees who avail the mechanism and are allowed direct access to the Chairman of the Audit Committee and Ethics Counselor of the Company. The whistle blower policy is placed on the website of the Company.

Performance Evaluation:

Pursuant to the provisions of Section 134 (3) (p), 149(8) and Schedule IV of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended from time to time, annual performance evaluation of the Directors as well as of the Audit Committee, Nominations and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility (CSR) Committee of the Board has been carried out.

The performance evaluation of the Independent Directors was carried out by the entire Board and the Performance Evaluation of the Chairman and Non-Independent Directors was carried out by the Independent Directors.

Particulars of Remuneration:

The information required under Section 197 of the Companies Act, 2013 and Rules made there under, in respect of employees of the Company is as follows:

1. (i) The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year:

Directors Name Ratio to median remuneration
Mr. Gautam D. Shah 94.62
Mrs. Bela G. Shah 94.78

Note: Non Executive/Independent Directors are not paid any remuneration except the sitting fees for attending meetings of the Board and Committees thereof.

(ii) The percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer, Company Secretary or Manager, if any, in the financial year:

Directors/CFO/CEO/CS/Manager name

% Increase in remuneration

Mr. Gautam D. Shah, CMD 79.36
Mrs. Bela G. Shah, Executive Director 151.54
Mr. Rakesh Kumar Kumawat, Company Secretary 5.02

Note: Non Executive/Independent Directors are not paid any remuneration except the sitting fees for attending meetings of the Board and Committees thereof.

(iii) Percentage increase in the median remuneration of employees in the financial year: 11.91%

(iv) The number of permanent employees on the rolls of the Company: 263

(v) Average percentile increase already made in the salaries of employees other than managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

The average increase in salaries of employees other than managerial personnel in 2018-19 was 6.95%. Percentage increase in the managerial remuneration for the year was 106.16% KMP salary increase is decided based on the individuals and Companys performance.

(vi) Affirmation that the remuneration is as per the remuneration policy of the Company: YES

2. Statement pursuant to Section 197 (12) of the Companies Act, 2013 read with Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the year ended 31st March, 2019:

Name, and Age Mr. Gautam D. Shah, 54 years Mrs. Bela G. Shah, 54 years,
Designation Chairman and Managing Director Executive Director
Nature of Employment Contractual Contractual
Gross Remuneration Rs. 1,80,32,692/- (Includes Salary, Commission and Provision for leave encashment and gratuity) Rs. 1,80,63,463/- (Includes Salary, Commission and Provision for leave encashment and gratuity)
Qualification and Experience BE Civil / 31 years Bachelor in Science / 18 years
Date of Joining 01-07-2005 07-02-2015
Previous Employment N.A. N.A.
Percentage of equity shares held 19.88% 7.23%
Relation with Other Directors Mrs. Bela G. Shah - Wife Mr. Gautam D. Shah - Husband

Risk Management:

The Company is addressing various risks impacting the paper industry. Some of the risks to which the Company is exposed are as under.

Financial Risks:

The Companys policy is to actively ma nage its foreign exchange risks.

Commodity price risks:

The Company proactively manages risks of price fluctuation of raw materials through forward booking and inventory management. The Companys reputation for quality product mitigates the impact of price risk on finished goods.

Regulatory risks:

The Company is exposed to risks attached to various statutes and regulations. The Company is mitigating these risks by engaging competent person in each functional area and through regular review of legal compliances carried out from time to time.

Human resources risks:

Retaining the existing talents and attracting new talents are major risks. These risks are mitigated by regular interaction with concerned employees and providing congenial working conditions.

Disclosure under Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013:

There was no complaint received from any woman employee during the financial year 2018-19 and hence no complaint is outstanding as on 31st March, 2019 for redressal. The Company has complied with the provisions of the constitution of Internal Compliant Committee under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Public Deposit:

The company has not accepted any deposit from the public within the meaning of Chapter V of the Companies Act, 2013, and rules there under.

Significant and Material Orders Passed by the Regulators:

During the financial year under review, no significant and material orders were passed by the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations.

Auditors:

The notes on financial statements referred to in the Auditors Report are self-explanatory and do not require further explanation.

Your Company has, at the 21st Annual General Meeting of the Company held on 30h August, 2016, appointed M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Mumbai (Firm Registration Number-117366W/W-100018) as Statutory Auditors of the Company to hold office up to the conclusion of the 26th Annual General Meeting at a remuneration as may be fixed by the Managing Director in consultation with the said Auditors.

Particulars of Frauds, if any Reported under Sub-Section (12) of Section 143 other than those which are Reportable to the Central Government :

No frauds have been reported by the Auditors under sub-section (12) of Section 143 of the Companies Act, 2013.

Secretarial Audit Report:

Pursuant to Section 204 of Companies Act, 2013, your Company had appointed Mr. V. C. Khambhata, Practicing Company Secretary (CP No. 6177) as Secretarial Auditor to conduct the Secretarial Audit of the Company for the Financial Year 2018-19. The report of Secretarial Auditor is annexed with this report. The report does not contain any qualification, reservation or adverse remark.

Secretarial Standards:

The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India in respect of Meetings of Board and Shareholders.

Maintenance of Cost Records:

The Maintenance of cost records has not been specified by the Central Government under Section 148(1) of the Companies Act, 2013.

Acknowledgement:

The Board wishes to express its appreciation to the Bankers, Shareholders, Customers, Suppliers and Employees of the Company for their support during the year.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
Place: Vapi Gautam D. Shah Bela G. Shah
Date: 28 May, 2019 Chairman and Managing Director Executive Director and CFO
DIN:00397319 DIN:01044910