Shreyans Industries Ltd Directors Report.

Dear Members,

Your Directors are pleased to present the 39th Annual Report on the business and operations of the Company along with Audited Financial Statements for the year ended 31st March 2019.

Financial Performance

(Rs in lakhs)

PARTICULARS 2018-19 2017-18
Revenue from operations [net of excise duty]* 57,390.91 46,357.47*
Other Income 598.23 459.18
Total 57,989.14 46,816.65
Profit before Interest & Financial 8,624.02 6,041.19
Charges, Depreciation, Exceptional
Items and Tax
Less: Interest & Financial Expenses 636.99 559.90
Less: depreciation 938.64 878.46
Profit before Tax 7,048.39 4,602.83
Less: Provision for taxation 2,353.36 1,484.57
Profit after taxation 4,695.03 3,118.26
Add: Other comprehensive income arising from remeasurement of Defined Benefit Plan (net of tax) (29.28) 66.71
Total Comprehensive Income 4,665.75 3,184.97

Previous years figures have been regrouped for comparison purposes with current years presentation wherever necessary.

CORPORATE REVIEW

Paper industry maintained a healthy trend during the year under review and products of the Company could get better realization in the market. However, prices of inputs, especially wood pulp, chemicals, power and fuel showed significant uptrend during the year. Total revenue of the Company increased to F579.89 crores against F468.17 crores of last year, showing about 24% increase. Profit before interest & financial charges and depreciation was significantly higher by 43% at F86.24 crores against F60.41 crores of last year. Net profit after tax was also higher by 51% at F46.95 crores against F31.18 crores of last year. It is expected that paper industry will continue to do well in the current financial year also because of healthy demand growth in various segments of paper industry included writing and printing paper.

Increase in cheap imports of paper from ASEAN countries continues to be a threat for domestic paper industry. The cost of raw material and manufacturing cost is much higher in India which adversely impacts competitiveness of the domestic paper industry especially writing and printing paper segment.

PERFORMANCE REVIEW

Our focus for the last few years has been on enhancement of our product quality and at the same time reduction in costs and increase in efficiencies. These initiatives were pursued with even vigour during the year under review with significant positive results. The performance of both units of the Company is as follows:

SHREYANS PAPERS

Total production of paper in this unit was 49,858 MTs, which was almost at the same level of 49,169 MTs of last year. Capital expenditure for an additional Boiler along with normal capital expenditure was incurred in the unit to maintain its operations. Wire section of paper machine was also renovated during the year. In the current year further capital expenditure is planned to strengthen the bleach plant to further improve the quality of end product and optimize other operating parameters. Total capital expenditure planned is in the range of F25 crores to 30 crores. This will help the unit to further improve its operations in terms of quality and better environmental performance.

SHREE RISHABH PAPERS

Total paper production in this unit was 39,704 MTs which was significantly higher as compared to last years production of 31,881 MTs. The impact of modernization undertaken in the past year constituting of installation of new Head Box, continuous digester, approach flow system, and additional dryers is reflected in the operations of the unit.

In the current year further capital expenditure to install improvised Bleach Stage Washers, additional Fluidized Bed Reactor soda recovery plant, Turbo calenders and Steam condensate system at paper machine are planned to strengthen the operations of the unit. Total capital expenditure planned is in the range of F27 crores to 32 crores.

FINANCIAL REVIEW

EQUITY SHARE CAPITAL

The paid up Equity Share Capital as on March 31, 2019 was F13.82 crores. During the year under review, the Company has neither issued any shares nor granted stock options and nor sweat equity.

FINANCE

An amount of F11.61 crores, out of existing term loan of F25.01 crores were repaid during the year. Overall financial cost relating to borrowings has declined during the year despite increase in operations of the Company. However, an amount of F1.68 crores has been paid to PSPCL as interest on arrears of voltage surcharge, which is being contested by the Company.

EXTERNAL CREDIT RATING

During the year under review, CARE Ratings Limited has upgraded the external credit rating for the Long term and Short term Bank facilities of the Company from BBB+ to A-. The facility wise upgraded rating is as under:

Facilities Amount (F/Cr) Upgraded Rating
Long Term Bank Facilities 35.97 CARE A-; Stable [A minus: Outlook: Stable]
Short Term Bank Facilities 40.00 CARE A2+ [A two Plus]

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

OTHER EQUITY

The Company does not propose to carry any amount to any reserves.

DIVIDEND

Your Directors proposed a dividend of F5 per share [i.e. 50% including a one-time Special Dividend of 30%] for the financial year ended 31st March 2019 [previous year 18%]. The dividend, if approved by the shareholders, will be paid to all the equity shareholders whose names appear in the Register of Members as on 8th July 2019. The proposed dividend would result in cash outflow of F833.31 lakhs including corporate dividend tax.

DEPOSITS

(Rs in Crores)

PARTICULARS From Members From Directors
(a) accepted during the year; 3.21
(b) remained unpaid or unclaimed as at the end of the year;
(c) whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved-
(i) at the beginning of the year;
(ii) maximum during the year;
(iii) at the end of the year;
(d) The details of deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013.

At the end of the year, fixed deposits from the public and directors were outstanding to the tune of F5.56 crores and FNil respectively. There were no overdue deposits as on 31st March 2019. The Company has accepted deposits from the members and public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

FUTURE PLANS/PROSPECTS

Continuous technical and operational upgradation of the production facilities is a hallmark of the Companys policy and keeping the same trend a major capex is planned in Shree Rishabh Papers unit of the Company during the year as stated above. Besides this, normal capital expenditure is being done continuously to make operations of the Company more competitive.

NUMBER OF MEETINGS HELD

The details of Board and Committee Meetings held during financial year 2018-19, are given in the Corporate Governance Report.

DIRECTORS/ KEY MANAGERIAL PERSONNEL

Mr. Rajneesh Oswal, Director of the Company, is liable to retire by rotation at the forthcoming Annual General Meeting under Article 86(1) of Article of Association of the Company and being eligible, offer himself for re-appointment.

Mr. M.L. Gupta (DIN 00272672), Independent Director, on account of health issues had resigned w.e.f 13th May 2019 which was taken note by the Nomination and Remuneration Committee and Board in their meeting held on 13th May 2019.

All other Independent Directors submitted their declarations that, they meet the criteria of Independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015). Based on recommendation of Nomination and Remuneration Committee and in terms of the provisions of Sections 149, 150, 152 read with Schedule IV and any other applicable provisions of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Dr. Pratibha Goyal, Mr. A.K. Chakraborty and Dr. N.J. Rao, being eligible for re-appointment as an Independent Director and offering themselves for re-appointment, the Board has proposed for re-appointment of Independent Directors for second term as detailed in Notice of 39th Annual General Meeting.

Based on the recommendations of the Nomination and Remuneration Committee of directors, the Board in its meeting held on 13th May, 2019, has considered and recommended the appointment of Dr. Prem Kumar as an Additional Director (Non-Executive Independent) on the Board of the Company. Further, the Board is seeking approval of the shareholders of the Company to appoint Dr. Prem Kumar as Director (Non-Executive Independent) for a term of 5 (five) years effective from 13th May 2019 to 12th May 2024.

There were no changes in Key Managerial Personnel during the year under review.

BOARD EVALUATION

Pursuant to provisions of the Companies Act, 2013 and SEBI Listing Regulations, the Board has carried out an annual performance evaluation of its own performance and the performance of the individual directors as well as the evaluation of the working of its committees. The manner in which the evaluation was carried out has been explained in the Corporate Governance.

REMUNERATION POLICY

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their Remuneration. The said policy has been uploaded on the website of the Company. The key provisions of Nomination and Remuneration policy are appended as an Annexure I to the Boards report.

AUDIT COMMITTEE

The Company has duly constituted Audit Committee, the scope of which is quite comprehensive and is in conformity with the provisions of the Companies Act, 2013 and Listing Regulations.

The composition of the Audit Committee is given in Corporate Governance Report.

All the recommendations of the Audit Committee were accepted by the Board.

DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has adopted the Whistle Blower Policy/Vigil mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud, or violation of the Companys Code of Conduct and Ethics. Such mechanism/policy is also uploaded on the website of the Company.

STATUTORY AUDITORS

At 37th Annual General Meeting held on 7th September 2017 M/s. K.C. Khanna & Company, were appointed as Statutory Auditors of the Company to hold office from 37th Annual General Meeting till the conclusion of the 42nd Annual General Meeting.

The Auditors Report on the accounts of the Company for the year under review requires no comments. Further, there were no frauds reported by the Statutory Auditors of the Company during the period under review neither under Section 143(12) of the Act nor which are reportable to the Central Government.

COST AUDIT

Maintenance of Cost Records as specified by the Central Government under Section 148(1) of the Companies Act, 2013, is applicable on the Company and accordingly, such accounts and records related to cost audit, are made and maintained by the Company.

M/s. Rajan Sabharwal & Associates were appointed as Cost Auditors of your Company for auditing the cost accounts records for Financial Year 2018-19 under provisions of Section 148(1) of the Companies Act, 2013. They are likely to submit Cost Audit Report within the prescribed time limit.

Furthermore, the Board has re-appointed M/s Rajan Sabharwal and Associates, (Firm Registration No. 101961) as Cost Auditors of the Company for Financial Year 2019-20.

SECRETARIAL AUDIT

M/s P. S. Bathla & Associates, Practising Company Secretaries, at Ludhiana, were appointed to conduct the secretarial audit of the Company for Financial Year 2018-19, as required under Section 204 of the Companies Act, 2013 and Rules made there under. The Secretarial Audit Report for Financial Year 2018-19 is appended as an Annexure II to the Boards Report.

The Secretarial Auditors Report for the year under review requires no comments.

The Board has re-appointed M/s P. S. Bathla & Associates, Practising Company Secretaries, Ludhiana as Secretarial Auditor of the Company for Financial Year 2019-20.

RELATED PARTY TRANSACTIONS

All Related Party transactions entered during the financial year were on arms length basis and in the ordinary course of business. There were no materially significant related party transactions with the Companys Promoters, Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. Transactions with related parties entered by the Company in the normal course of business are periodically placed before the Audit Committee for its omnibus approval.

There was no material contract or arrangement or transactions with Related Party during the year. Thus, disclosure in form AOC-2 is not required.

The Board of Directors of the Company has, on the recommendation of the Audit Committee, adopted a policy to regulate transactions between the Company and its Related Parties, in compliance with the applicable provisions of the Companies Act, 2013, the rules there under and Listing Regulations.

This Policy as considered and approved by the Board has been uploaded on the website of the Company at http://www.shreyansgroup.com/upload/c1449201532SIL_Rel ated_Party_Transaction_Policy_07_11_2015.pdf

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is appended as an Annexure III and forms an integral part of this report.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return as of March 31, 2019 pursuant to the sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 12 (1) of the Companies (Management and Administration)Rules, 2014 and forming part of the report is placed on the website of the Company as per provisions of Section 134(3)(a) and is available at http://shreyansgroup.com/ upload/a1559544481SIL_EXTRACT_OF_ANNUAL_RETURN _31_03_2019_MGT9.pdf

INDUSTRIAL RELATIONS

The Company maintained healthy, cordial and harmonious industrial relations at all levels.

DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY

The Company has been addressing various risks through well defined risk management policy/procedures, which in the opinion of the Board may threaten the existence of the Company.

INTERNAL FINANCIAL CONTROL SYSTEMS

The Company has laid down adequate internal financial controls with reference to financial statements. During the year such controls were tested and no material weakness in their operating effectiveness was observed.

ASSOCIATES AND SUBSIDIARIES

The Company has no Associates & Subsidiaries as on 31 March, 2019.

CORPORATE GOVERNANCE

As per the provisions of Listing Regulations, a separate Report on Corporate Governance practices followed by the Company together with a Certificate from the Practising Company Secretary, confirming compliance forms part of this report.

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 Companies (Accounts) Rules, 2014 the particulars relating to conservation of energy, technology, absorption and foreign exchange earnings and outgo is appended as an Annexure IV to the Boards Report.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

Your Company, in collaboration with a local NGO in Ahmedgarh, has set up an Eye Hospital. Besides contributing in setting up of this hospital, financial assistance is extended on monthly basis. Eye care is provided to needy persons on subsidized rates/free of cost.

Your Company is also involved with various educational in st itu tio n s fo r p roviding scholarship/financial assistance to deserving students on recommendations of the managements of such institutions. Your Company actively participates with number of NGOs for holding medical check-up camps, sports events and other social activities.

Your Company provides firefighting services, as and when need arises, in nearby areas through its own fire tender and firefighting staff.

Annual Report on Corporate Social Responsibility [CSR] activities is appended as an Annexure V.

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

There were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(5) of the Companies Act, 2013, your directors confirm 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 this Act 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; and (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.

(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.

GENERAL DISCLOSURES

Your directors state that, no disclosure or reporting is required in respect of the following matters as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. No unclaimed/unpaid Dividend to be transferred to Investor Education and Protection Fund.

3. The Company has already complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at

Workplace (Prevention, Prohibition and Redressal) Act,

2013. There were no complaints/cases reported with internal complaints committee formed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENT

Your directors place on record their sincere appreciation for the contributions made by the employees through their dedication, hard work and commitment in achieving your Companys performance. In an increasingly competitive environment collective dedication of employees is delivering superior and sustainable shareholder value.

The Board has pleasure in recording its appreciation of the assistance, co-operation and support extended to the Company by the Government Authorities, Commercial Banks, Financial Institutions and Depositors.

The Board also places on record its sincere appreciation

towards the Companys valued customers, vendors,

shareholders and investors for their continued support to the Company.

For and on Behalf of the Board
Sd/-
Rajneesh Oswal
Chairman & Managing Director
Place : Ludhiana (DIN : 00002668)
Date : May 13, 2019