shree rajeshwaranand paper mills ltd Directors report

Dear Shareholders,

The Directors present the 29^th ANNUAL REPORT together with the Audited Financial Statement for the Financial Year 2019-20 ended 31^st March, 2020.

1. FINANCIAL RESULTS:

(Rs in lakh)

Particulars	2019-20	2018-19
Profit before Interest and Depreciation	(384.39)	1731.13
Less: Interest	794.39	909.32
Profit before Depreciation	(1178.79)	821.81
Less: Depreciation	725.16	695.85
Profit before Tax	(1903.94)	125.96
Less: Provision for Taxes	-	95.03
Less : Prior period adjustments	-	13.24
Add : Adjustment for Deferred Tax Asset	452.74	90.28
Net Profit	(1451.20)	107.97
Other Comprehensive Income	8.34	(2.35)
Total Comprehensive Income	(1442.86)	105.62
Add: Balance Brought Forward	1825.37	1719.75
Balance carried to Balance Sheet	382.52	1825.37

The material changes and commitment affecting the financial position of the Company which have occurred between 1^st April, 2020 and date of this report is that the Company had to shut down its production facilities since March, 2020 as there was no demand for newsprint paper since the implementation of countrywide lockdown. The management envisages no improvement in near future.

The Company has received notices from bankers of the Company in connection with non- payment of interest and principal since January, 2020.

2. DIVIDEND:

In view of losses suffered during the year, the Board of Directors has not recommended any dividend on the Equity Shares for the year under review ended 31^st March, 2020.

3. PRODUCTION, SALES AND WORKING RESULTS:

The Company achieved production of 21630 MT of Newsprint/ Writing and Printing paper during the year under review compared to 33020 MT during 2018-19. The Company achieved sales of 22385 MT during the year under review compared to 32252 MT. during 2018-19. The Company had to shut down its production facilities during March, 2020 as there was no demand for newsprint paper since the implementation of countrywide lockdown.

The Company has incurred loss before Interest and Depreciation of Rs.384.39 Lakh during the year under review compared to profit of Rs.1731.13 Lakh during 2018-19. After providing for Depreciation, Interest, Prior period adjustments and Taxation, the Net Loss for the year under review stood Rs. 1451.20 Lakh compared to profit of Rs. 107.97 Lakh during 2018-19.

4. NEW PROJECTS:

4.1 NEWS PRINT DIVISION:

The Company has spent substantial amount in the recent past for increasing the installed capacity to 130 M.T. per day as well as for providing facilities for better quality of production. As informed earlier in the report the Company had to shut down its production facilities since March, 2020.

4.2 TOOLS DIVISION:

The products produced by the Company include Abrasive Tools, Core Drill, big size Core Pipe and Ceramic industry Sizing Wheel. As informed earlier in the report the Company had to shut down its production facilities since March, 2020.

5. COVID-19 PANDEMIC:

The World Health Organization (WHO) declared the novel Coronavirus (COVID-19) outbreak a global pandemic on March 11, 2020. Consequent to this, Government of India had declared lockdown on March 23, 2020 and therefore, the Company suspended its business operations. In the wake of the recent global pandemic, some serious aspersions have been cast on the functioning and survival of various businesses globally. Such a scenario is unprecedented and the far-reaching effects of such a global crisis on business, economy and the macro environment cannot be accurately gauged. The downturn will result in a significant increase in both the volume and severity of events and conditions that may in some instances cast doubt on an entities ability to continue as a going concern. However, this does not necessarily mean that a material uncertainty automatically exists.

The company has incurred a net loss after tax of Rs 1,442.86 lakh during the year ending 31^st March 2020. Also current liabilities exceed current assets by Rs 1,084.36 lakh as at that date. During the year, the company has defaulted in repaying term loan and working capital loan installments, including interest due to Indian Banks and financial institutions, which has been partly paid and there are substantial payments overdue to creditors.

These entity specific conditions along with unfavorable business environment conditions on account of COVID-19 as mentioned above indicates the existence of material uncertainty that may cast significant doubt on the companys ability to continue as going concern. However, the increased risk of significant doubt on an entitys ability to continue as a going concern will rather depend on the nature and circumstances of the entity, including the industry in which it operates. As a part of going concern assessment it is critical for management to assess what impact the current events have on the entitys operations and forecasted cash flows with the focus on whether the entity will have sufficient liquidity to continue to meet its obligation as they fall due. Management will need to consider the existing and anticipated effect of the COVID-19 pandemic on the assumptions in its assessment giving particular attention to significance assumption that are sensitive or susceptible to change.

To address this and improve upon its operating and financial performance, various initiatives have been under taken by the Company in relation to saving cost, optimize revenue management opportunities and enhance ancillary revenues. Further, Companys continued thrust to improve operational efficiency and initiatives to raise funds are expected to result in sustainable cash flows addressing any uncertainties

Due to outbreak of COVID-19 globally and in India, the Companys management has made initial assessment of likely adverse impact on business and financial risks on account of COVID-19. There is slow down in the business of the Company due to lockdown which had impact on operations.

However, the management does not see any medium to long term risks in the Companys ability to continue as a going concern and meeting its liabilities and compliance with the debt covenants, applicable, if any.

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 2020-21.

7. SHARE CAPITAL:

The paid up Share Capital of the Company as on 31^st March, 2020 was Rs. 1245.00 Lakh. As on 31^st March, 2020, 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:

Your Company does not propose to transfer any amount to general reserve.

9. DIRECTORS & KMP:

9.1 Mr. Prakash R. Vora retires by rotation in terms of the Articles of Association of the Company.

However, being eligible offers himself for reappointment.

9.2 Mr. Amrish Patel had resigned from the office of Director of the Company w.e.f. 24^th February, 2020.

9.3 Mr. Karunashankar G. Vora resigned from the office of Chief Financial Officer of the Company w.e.f. 29^th February, 2020.

9.4 Ms. Anal Desai had resigned from the office of Director of the Company w.e.f 7^th March, 2020.

9.5 Ms. Kinjal K. Sheth had resigned from the office of Company Secretary & Compliance Officer of the Company w.e.f 17^th March, 2020.

9.6 Mr. Udayan D. Velvan had resigned as Executive Director & Director of the Company w.e.f 3^rd June, 2020.

9.7 Ms. Hemali S. Vora was appointed as an Additional Director w.e.f. 3^rd June, 2020. It is proposed to appoint Ms. Hemali S. Vora as Non-Independent Non-Executive Director, liable to retire by rotation at the forthcoming Annual General Meeting.

9.8 Mr. Ashit L. Modi was appointed as an Additional Director w.e.f. 3^rd June, 2020. It is proposed to appoint Mr. Ashit L. Modi as an Independent Director for a term of five consecutive years at the forthcoming Annual General Meeting.

9.9 Mr. Jayeshkumar T. Surati was appointed as Chief Financial Officer (CFO) of the Company w.e.f 3^rd June, 2020

9.10 Mr. Ashit L. Modi was appointed as an Additional Director w.e.f. 18^th June, 2020. It is proposed to appoint Mr. Balkrushna G. Kahar as an Independent Director for a term of five consecutive years at the forthcoming Annual General Meeting.

9.11 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.

9.12 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.

9.13 The Board of Directors duly met 13 times during the financial year under review.

9.14 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.

9.15 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 31^st March, 2020 being end of the financial year 2019-20 and of the loss 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 Remuneration & Designation for the year	% increase over last year	Parameters	Median of Employees Remuneration	Ratio	Commission received from Holding/ Subsidiary
1.	Mr. Prakash R. Vora - Rs 15,00,000 Managing Director	-	Higher responsibility and time	Rs 1,76,582/-	8.5:1	-
2.	Mr. Udayan D. Velvan - Rs 15,00,000 Executive Director	-	involvement due to current expansion & modernisation	Rs 1,76,582/-	8.5:1	-

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 & 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	(8.33%)*
4.	Kinjal K. Sheth^	CS	^

*Resigned as CFO of the Company w.e.f. 29^th February, 2020. Amounts not directly comparable.

^Resigned as CS & Compliance Officer of the Company w.e.f 17^th March, 2020. Amounts not directly comparable since appointment during 2018-19 was from 1^st October, 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. However, the Companys Newsprint Paper Manufacturing Plant which contributes majority of the revenues had been shut down in March, 2020 since there was no demand for newsprint paper since the implementation of countrywide lockdown. Owing to the uncertainty regarding the resumption of the plant and scale of viable operations, most of the workers and employees have left the Company to seek better opportunities.

The Number of permanent Employees of the Company is 5 since March, 2020. 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 observations of the Auditors,

i) The Company is in the process of identifying and appointing Whole-time Company Secretary post the resignation of the outgoing Company Secretary

ii) The Company has since made new appointments to the Board as required under Reg. 25(6) of SEBI (LODR) Regulations, 2015 and reconstituted the committees. As on date, the Company is in compliance of the composition requirements of the Board and its committees as mandated under relevant regulations of SEBI (LODR) Regulations, 2015

iii) With respect to the observation regarding going concern, the management does not foresee any medium to long term risks in the Companys ability to continue as a going concern and meeting its liabilities and compliance with the debt covenants, applicable, if any.

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. Rakchamps & Co. LLP, Chartered Accountants, Mumbai have resigned as Statutory Auditors of the Company with effect from the financial year 2020-21.

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 MAAK & Associates, Chartered Accountants as Statutory Auditors of the Company for a period of 5 years to hold office from the conclusion of the ensuing 29^th AGM till the conclusion of 34^th AGM on remuneration to be decided by the Board or Committee thereof in consultation with them.

The Company has obtained consent from MAAK & Associates to the effect that their appointment as Auditors of the Company for a period of 5 years commencing from the Financial Year 2020-21 to 2024-25, 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 getting its cost records audited. The audit has been carried out by M/s V. H. Savaliya & Associates, Cost Accountants (Firm Registration No. 100346) for the year 2019-20. As the turn over during the year under review is below the threshold limit for Audit for the year 2020-21, no Cost Auditors has been appointed for the year 2020-21.

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. DISCLOSURE OF MAINTENANCE OF COST RECORDS:

The Company has complied with the requirement of maintenance of cost accounts and records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act 2013.

23. 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.

24. FINANCE:

24.1 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 2016-17.

24.2 The Company is enjoying Working Capital facilities from State Bank of India and Bank of India and Term Loan from Bank of India. During the year, the company has defaulted in repaying term loan and working capital loan installments, including interest due to Indian Banks and financial institutions, which has been partly paid. Please refer note no. 5 of the Directors Report for more details.

25. 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,
	Prakash R. Vora
Place : Jhagadia	Chairman & Managing Director
Date : 31st July, 2020	(DIN: 00612357)