Shree Rajeshwaranand Paper Mills Ltd Directors Report.

Dear Shareholders,

The Directors present the 28TH ANNUAL REPORT together with the Audited Financial Statement for the Financial Year 2018-19 ended 31st March, 2019.

1. FINANCIAL RESULTS:

(र in lakh)
Particulars 2018-19 2017-18
Profit before Interest and Depreciation 1731.13 1646.51
Less: Interest 909.32 892.68
Profit before Depreciation 821.81 753.83
Less: Depreciation 695.85 688.13
Profit before Tax 125.96 65.70
Less: Provision for Taxes 95.03 116.76
Less : Prior period adjustments 13.24 28.32
Add : Adjustment for Deferred Tax Asset 90.28 87.71
Net Profit 107.32 8.33
Other Comprehensive Income (2.35) 4.11
Total Comprehensive Income 105.62 12.44
Add: Balance Brought Forward 1719.75 1707.31
Balance carried to Balance Sheet 1825.37 1719.75

There are no material changes and commitment affecting the financial position of the Company which have occurred between 1st April, 2019 and date of this report.

2. DIVIDEND:

With a view to conserve the resources for the working capital requirement of the Company, the Board of Directors has not recommend any dividend on the Equity Shares for the year under review ended 31st March, 2019.

3. REVIEW OF OPERATIONS:

The Company achieved production of 33020 MT of Newsprint/Writing and Printing paper during the year under review compared to 29333 M.T. during 2017-18. The Company achieved sales of 32252 MT during the year under review compared to 30314 M.T. during 2017-18. The Company had to shut down its production facilities for 20 days for maintenance, boiler inspection etc.

The Company has earned Profit before Interest and Depreciation of Rs.1731.13 Lakh during the year under review compared to Rs. 1646.51 Lakh during 2017-18. After providing for Depreciation, Prior period adjustments and Taxation, the Net Profit for the year under review stood Rs. 107.97 Lakh compared to Rs. 8.33 Lakh during 2017-18.

4. NEW PROJECTS:

4.1 NEWS PRINT DIVISION:

The Company has spent substantial amount during the year under review for increasing the installed capacity to 130 M.T. per day as well as for providing facilities for better quality of production.

During this second phase of expansion, the Company has installed various machineries which will increase the production with improvement in quality of the product. The Company has also installed various other balancing equipments to increase the production.

4.2 TOOLS DIVISION:

The Company commenced production of Abrasive Tools, Core Drill, big size Core Pipe and Ceramic industry Sizing Wheel. The diversification is partly funded from Companys internal accruals and partly from the Financial Assistance from the Bankers of the Company. The necessary arrangements have also been made with the Bankers of the Company for Working Capital Finance.

5. FUTURE PLANS:

As informed earlier, the installed capacity to manufacture Newsprint/Writing & Printing Paper is increased to 130 M.T. per day. The Management is further planning to improve the better quality by further modernise/ modification the plant.

The expansion will be funded out of internal accruals and term loans from Banks and Financial Institution. The Company will be able to undertake good quality of Writing and Printing paper in addition to Newsprint with this substantial expansion production.

6. LISTING :

The Equity Shares of the Company are listed on BSE Limited. The Company is regular in payment of Annual Listing Fees. The Company has paid Listing fees up to the year 2019-20.

7. SHARE CAPITAL:

The paid up Share Capital of the Company as on 31st March, 2019 was Rs. 1245.00 Lakh. As on 31st March, 2019, the Company has not issued shares with differential voting rights nor granted stock options nor do sweat equity and none of the Directors of the Company hold any convertible instruments.

8. RESERVES:

The Company has not transferred any amount to General Reserve.

9. DIRECTORS:

9.1 Mr. Udayan D. Velvan retires by rotation in terms of the Articles of Association of the Company. However, being eligible offers himself for reappointment.

9.2 Mr. Ashok Gosavi had resigned from the office of Director of the Company w.e.f. 26th July, 2018.

9.3 Based on the recommendations of the Nomination and Remuneration Committee, it is proposed to re-appoint Mr. Amrish R. Patel and Mr. Ashok Kumar V. Shah as Independent Directors of the Company for a second consecutive term of 5 years from the conclusion of this 28th AGM up to the conclusion of the 33rd AGM respectively and they will not be liable to retire by rotation.

9.4 The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 (the Act) that they meet with the criteria of their independence laid down in Section 149(6) of the Act.

9.5 Brief profile of the Directors being appointed and re-appointed as required under Regulations 36(3) of Listing Regulations, 2015 and Secretarial Standard on General Meetings and the justification for appointment/reappointment of Independent Directors are provided in the notice for the forthcoming AGM of the Company.

9.6 The Board of Directors duly met 9 times during the financial year under review.

9.7 FORMAL ANNUAL EVALUATION:

The Nomination and Remuneration Committee adopted a formal mechanism for evaluating the performance of the Board of Directors as well as that of its Committees and individual Directors, including Chairman of the Board, Key Managerial Personnel/ Senior Management etc. The exercise was carried out through an evaluation process covering aspects such as composition of the Board, experience, competencies, governance issues etc.

9.8 DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 134 of the Companies Act, 2013, it is hereby confirmed:

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

(ii) that 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 31st March, 2019 being end of the financial year 2018-19 and of the profit of the Company for the year;

(iii) that the Directors had taken proper and sufficient care for 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;

(iv) that the Directors had prepared the annual accounts on a going concern basis.

(v) 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.

(vi) 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.

10 . INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY:

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial disclosures.

11. MANAGERIAL REMUNERATION:

REMUNERATION OF DIRECTORS:

Sr. No. Name of the Director & Designation Remuneration for the year % increase over last year Parameters Median of Employees Remuneration Ratio Commission received from Holding/ Subsidiary
1. Mr. Prakash R. Vora - Managing Director र 15,00,000 - Higher responsibility and time involvement due to current expansion & modernisation र 1,80,468/- 8.3:1 -
2. Mr. Udayan D. Velvan - Executive Director र15,00,000 - र 1,80,468/- 8.3:1 -

The Board of Directors has framed a Remuneration Policy that assures the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors, Key Managerial Personnel and Senior Management to enhance the quality required to run the Company successfully. All the Board Members and Senior Management personnel have affirmed time to time implementation of the said Remuneration policy.

The Nomination and Remuneration Policy is available on the website of the Company -www.rajeshwaranandpaper.com

12. KEY MANAGERIAL PERSONNEL:

% INCREASE IN REMUNERATION OF DIRECTORS AND KMP:

Sr. No. Name of the Director & KMP Designation Percentage Increase (If any)
1. Prakash R. Vora Managing Director Nil
2. Udayan D. Velvan Executive Director Nil
3. Karunashankar G. Vora CFO 17.06%
4. Kinjal K. Sheth* CS N. A.

*Appointed as Company Secretary & Compliance Officer of the Company w.e.f. 01-10-2018.

13. PERSONNEL AND H. R. D.:

13.1 INDUSTRIAL RELATIONS:

The industrial relations continued to remain cordial and peaceful and your Company continued to give ever increasing importance to training at all levels and other aspects of H. R. D.

The Number of permanent Employees of the Company are 97. The relationship between average increase in remuneration and Companys performance is as per the appropriate performance benchmarks and reflects short and long term performance objectives appropriate to the working of the Company and its goals.

13.2 PARTICULARS OF EMPLOYEES:

There is no Employee drawing remuneration requiring disclosure under Rule 5(2) of Companies Appointment & Remuneration of Managerial personnel) Rules, 2014.

14. RELATED PARTY TRANSACTION AND DETAILS OF LOANS, GUARANTEES, INVESTMENT & SECURITIES PROVIDED:

Details of Related Party Transactions and Details of Loans, Guarantees and Investments covered under the provisions of Section 188 and 186 of the Companies Act, 2013 respectively are given in the notes to the Financial Statements attached to the Directors Report.

All transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis. During the year, the Company had not entered into any transactions with related parties which could be considered as material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companys website at www.rajeshwaranandpaper.com

15. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information required under Section 134(3)(m) of the Companies Act, 2013 and rule 8(3) of Companies (Accounts) Rules, 2014, relating to the conservation of Energy and Technology Absorption forms part of this report and is given by way of Annexure- A.

16. CORPORATE GOVERNANCE AND MDA:

As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Report on Corporate Governance, Management Discussion and Analysis (MDA) and a certificate regarding compliance with the conditions of Corporate Governance are appended to the Annual Report as Annexure - B.

17. SECRETARIAL AUDIT REPORT:

Your Company has obtained Secretarial Audit Report as required under Section 204(1) of the Companies Act, 2013 from M/s. Kashyap R. Mehta & Associates, Company Secretaries, Ahmedabad. The said Report is attached with this Report as Annexure – C.

As regards the observation of the Auditors, the Company has yet not taken special efforts to collect copy of PAN, and bank account details of all securities holders holding securities in physical form pursuant to Point 12 of para II of Annexure to the SEBI Circular No. SEBI/ HO/ MIRSD/ DOP1/ CIR/ P/ 2018/ 73 dated 20th April, 2018.

18. EXTRACT OF ANNUAL RETURN:

The extract of Annual return in Form – MGT-9 has been attached herewith as Annexure – D. The same is also available on the Companys website at www.rajeshwaranandpaper.com.

19. AUDIT COMMITTEE/ NOMINATION AND REMUNERATION COMMITTEE/ STAKEHOLDERS RELATIONSHIP COMMITTEE:

The details of various committees and their functions are part of Corporate Governance Report.

20. GENERAL:

20.1. AUDITORS:

STATUTORY AUDITORS:

The remarks of Auditors are self explanatory and have been explained in Notes on Accounts.

The present Auditors of the Company, M/s. Kanak Rathod & Co., Chartered Accountants; Mumbai have resigned as Statutory Auditors of the Company with effect from the financial year 2019-20.

In terms of Section 139 of the Companies Act, 2013 read with Companies (Audit & Auditors) Rules, 2014, the Board of Directors has recommended the appointment of M/s. Rakchamps & Co. LLP, Chartered Accountants, Mumbai as Statutory Auditors of the Company for a period of 5 years to hold office from the conclusion of the ensuing 28th AGM till the conclusion of 33rd AGM on remuneration to be decided by the Board or Committee thereof.

The Company has obtained consent from M/s. Rakchamps & Co. LLP, Chartered Accountants, Mumbai to the effect that their appointment as Auditors of the Company for period of 5 years commencing from the Financial Year 2019-20 to 2023-24, if made, will be in accordance with the provisions of Section 139 and 141 of the Companies Act, 2013.

COST AUDITORS:

As per the requirement of Central Government and pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, the Company has been carrying out audit of cost records every year.

The Board of Directors, on the recommendation of Audit Committee, has appointed M/s V. H. Savaliya & Associates, Cost Accountants, (Firm Registration No. 100346) as Cost Auditor to audit the cost accounts of the Company for the financial year 2018-19. As required under the Companies Act, 2013, a resolution seeking Shareholders approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting for their ratification.

20.2 INSURANCE:

The Companys properties including building, plant and machinery, stocks, stores etc. continue to be adequately insured against risks such as fire, riot, strike, civil commotion, malicious damages, machinery breakdown etc. as per the consistent policy of the Company.

20.3 DEPOSITS:

The Company has not accepted during the year under review any Deposits and there were no overdue deposits.

20.4 RISKS MANAGEMENT POLICY:

The Company has a risk management policy, which from time to time, is reviewed by the Audit Committee of Directors as well as by the Board of Directors. The Policy is reviewed quarterly by assessing the threats and opportunities that will impact the objectives set for the Company as a whole. The Policy is designed to provide the categorization of risk into threat and its cause, impact, treatment and control measures. As part of the Risk Management policy, the relevant parameters for protection of environment, safety of operations and health of people at work and monitored regularly with reference to statutory regulations and guidelines defined by the Company.

20.5 SUBSIDIARIES/ ASSOCIATES/ JVs:

The Company does not have any Subsidiaries/ Associate Companies / JVs.

20.6 CODE OF CONDUCT:

The Board of Directors has laid down a Code of Conduct applicable to the Board of Directors and Senior Management. All the Board Members and Senior Management personnel have affirmed compliance with the code of conduct.

20.7 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

There has been no significant and material order passed by any regulators or courts or tribunals, impacting the going concern status of the Company and its future operations.

20.8 ENVIRONMENT AND SAFETY:

The Company is conscious of the importance of environmentally clean and safe operations. The Companys policy requires conduct of operations in such a manner, so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources.

20.9 DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013:

The Company has in place an Anti Sexual Harassment Policy, in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, the Company did not receive any complaint.

20.10 INSTANCES OF FRAUD, IF ANY REPORTED BY THE AUDITORS:

There have been no instances of fraud reported by the Auditors under Section 143(12) of the Companies Act, 2013.

20.11 SECRETARIAL STANDARDS:

The Company complies with the Secretarial Standards issued by the Institute of Company Secretaries of India which are mandatorily applicable to the Company.

21. DISCLOSURE OF ACCOUNTING TREATMENT:

In the preparation of the financial statements, the Company has followed the Accounting Standards referred to in Section 133 of the Companies Act, 2013. The significant accounting policies which are consistently applied are set out in the Notes to the Financial Statements.

22. DEMATERIALISATION OF EQUITY SHARES:

Shareholders have an option to dematerialise their shares with either of the depositories viz NSDL and CDSL. The ISIN No. allotted is INE617D01017.

23. FINANCE:

23.1 The Companys Income-tax Assessment has been completed up to the Assessment Year 2016-17 and Sales tax Assessment is completed up to the Financial Year 2015-16.

23.2 The Company is enjoying Working Capital facilities from State Bank of India and Bank of India, Term Loan from Bank of India. The Company is regular in payment of interest and principal.

24. ACKNOWLEDGMENT:

Your Directors express their sincere thanks and appreciation to Promoters and Shareholders for their constant support and co operation. Your Directors also place on record their grateful appreciation and co operation received from Bankers, Financial Institutions, Government Agencies and employees of the Company.

For and on behalf of the Board,
Place : Jhagadia Amrish R. Patel
Date : 26th July, 2019 Chairman