To
The Members
Your Directors hereby present the 64th Annual Report of the Company along
with the audited accounts for the year ended 31st March, 2023.
The Company has adopted Indian Accounting Standards (Ind AS), from die financial year
2017-18 as mandated by the Ministry of Corporate Affairs (MCA), in place of Indian GAAP,
followed earlier. Financial statements for the current year, including figures of the
previous year are based on IndAS and this adoption has no major impact for the Statement
of Profit and Loss.
WORKING RESULTS |
FY 2022-23 |
FY 2021-22 |
FY 2020-21 |
Finished Production of Paper & Paperboards |
50,867 MTs |
54,991 MTs |
53,372 MTs |
Conversion Quantity at the Box Plant (PPD) |
28,068 MTs |
29,225 MTs |
29,166 MTs |
|
(Rs In Lacs ) |
(Rs In Lacs) |
(Rs In Lacs ) |
Revenue from Operations |
28,785.11 |
30,535.57 |
22,678.27 |
FINANCIAL RESULTS: |
|
|
|
Profit/(Loss) before interest, depreciation & tax |
(502.35) |
3,822.44 |
3,817.18 |
Less : Finance costs |
1,624.38 |
587.75 |
445.82 |
Gross/Cash Profit/(Loss) |
(2,126.73) |
3,234.69 |
3,371.36 |
Less : Depreciation |
1,603.39 |
943.92 |
1014.38 |
Profit/(Loss) before Exceptional items & Tax |
(3,130.12) |
2,290.77 |
2,356.98 |
Add : Exceptional income |
1,327.50 |
273.05 |
305.79 |
Profit/(Loss) after Exceptional items, before tax |
(2,402.62) |
2,563.82 |
2,662.77 |
Less : Provision for Current tax |
— |
(559.17) |
(483.20) |
Less/(Add): MAT credit (utilized)/ entitlement |
— |
— |
(375.16) |
Less/(Add): Deferred Tax (charge)/ credit |
752.38 |
160.26 |
100.54 |
Profit/(Loss) after tax for the year |
(1,650.24) |
2,164.91 |
1,904.95 |
(Less) / Add :(Tax Provision for earlier years)/ Reversal |
(16.95) |
1.14 |
— |
Net Profit/(Loss) after Tax |
(1,667.19) |
2,166.05 |
1,904.95 |
OPERATIONS
Revenue from operations for the financial year 2022-23 at Rs287.85 crores, decreased by
5.73% from Rs305.35 crores in the previous year.
Expansion project to increase paper manufacturing capacity by addition of a new paper
plant has been completed and Hie processes are being optimised for improving efficiency.
Current year results are negatively impacted by raw material price volatility, steep
increase in energy costs and production losses due to optimisation and stabilisation
activity of the new machinery. Production in the last quarter was low due to these
activities and holidays in February and March 2023. Raw material prices went up during
first half of the year started to decline in Q3, Q4, consequently
bringing down the selling price, resulting in reduction in turnover and margins. Fuel
prices are decreasing gradually and operating volumes are gradually being increased. Paper
from the new Paper Machine has been received well in the market.
During the second half of the FY 2022-23, realization was lower, as the market was
depressed owing to global downturn and recessive conditions and could not get satisfactory
unit variable margin, despite lower rawmaterial cost, as fuel prices did not correct as
much.
Operation at the Paper Mill was lower. It reduced from @ 83% on old capacity to 44% of
the new capacity, for the reasons stated above.
At Printing & Packaging Division Conversion tonnage was about 78% as against 81%,
in the preceding year.
Profit before interest, depreciation, tax (PBDIT) in FY 2022-23 showed a loss ofRs 502
lacs, as against Rs 3,822 lacs profit in the preceding year. Finance costs were higher at
Rs 1624 lacs from Rs 588 lakhs as the Project Term loan interest is getting charged as
revenue expenditure, also with increased utilization of working capital facility, from
banks. After making a depreciation provision of Rs 1,603 lacs (Previous year 944 lacs),
loss before Exceptional income & tax was Rs 3,130 lacs(Previous year Profit Rs 2,291
lacs). Exceptional income ofRs 1,327 lakhs (previous year Rs 273 lakhs) on sale of part of
an immovable property (held for sale), led the loss before tax to Rs 2,403 lakhs (previous
year Profit before tax Rs 2,564 lakhs).
Company has opted for new regime of Income tax, wherein effective tax rate is 25.17%
sans certain exemptions and allowances like additional depreciation, from FY 2021-22.
Provision for current tax Rs Nil (Rs 559 lacs) & deferred tax assets credit of Rs
753 lakhs is considered in view of loss (considering net effect of deferred tax ofRs 160
lakhs reduction due to opting of lower tax rate in the previous year),net loss for the
year stood at Rs 1,650 lacs. (Previous Year profit Rs 2,165 lacs)
Considering the prevailing economic environment and the internal and external factors,
the Company has assessed the carrying amount of property, plant & equipment,
receivables, inventories, investments and other assets as at the Balance Sheet date, the
current liquidity position including its cash flows, the business outlook and has
concluded that no material adjustments are required in these financial results and the
Balance Sheet as at 31-3-2023.
FINANCES
During the year, cash flow & liquidity remained comfortable for most of the time.
Sources of funds |
Rs in lacs |
Deployment of funds |
Rs in lacs |
Sale of Land |
1,343 |
Repayment of Term Loans |
1,114 |
|
|
Repayment of Vendor Financing, STL |
478 |
Interest receipts |
41 |
Capital Expenditure & Advances |
2,716 |
Term Loan drawn from Banks |
1,746 |
Finance Cost incl capitalized interest |
1,879 |
Proceeds from issue of shares |
4,537 |
Income tax Paid for earlier years |
278 |
Vendor Financing, Short term Loan drawn |
840 |
Dividend payment |
155 |
Decrease in Working Capital |
409 |
Security Deposits paid |
78 |
|
|
Decrease in Bank Borrowing for Working capital |
1,693 |
Increase Trade Deposit, others |
18 |
Loss from operations |
543 |
Total |
8,934 |
Total |
8,934 |
Installments of Term Loans and Interest on Term Loans and Working capital borrowings
were paid within due dates.
RAISING OF FUNDS BY ISSUANCE OF EQUITY SHARES ON PREFERENTIAL BASIS AND CORRESPONDING
CHANGE IN PAID UP SHARE CAPITAL
Pursuant to the shareholders approval received at the Extra-ordinary General Meeting
held on 23rd March, 2023, your Company has issued 37,50,000 equity shares of
the face value ofRs 10 each, at a price ofRs 121 per equity share (including a premium
ofRs Ill per equity share), aggregating to Rs 45,37,50,000 to Mr Harshad Natvarlal Modi
and Mrs Rajul Harshad Modi, for cash consideration, by way of a preferential issue on a
private placement basis in terms of provisions of Section 42, 62 and such other applicable
provisions of the Act read with the rules made there under and Chapter V of the Securities
Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.
Post completion of the issuance, the equity paid up share capital of the Company has
increased from 1,50,00,000 Equity Shares of Rs 10/- each to 1,87,50,000 Equity Shares ofRs
10/- each. There is no change in the Authorized Share Capital of the Company.
The utilization of proceeds of the Preferential Issue is as under
SI Description No. |
Funds raised through Preferential Allotment on 28th March
2023 |
Funds utilized till 31st March 2023 |
Funds utilized from 1st April 2023 till the date of Directors report
i.e 25th May 2023 |
1 Augmenting of working capital needs of the Company, and
partly to reduce the term debt from Banks with a view to conserve cash hows by reduction
of interest and repayment of instalments |
Rs 45,37,50,000 |
Rs 31,25,25,000 |
Rs 14,12,25,000 |
As on Hie date of the Directors Report i.e as on 25th May 2023, the entire
amount raised through Preferential Allotment been fully utilized.
DEPOSITS
The Company has neither accepted nor renewed any deposits within the meaning of Section
73 of the Companies Act, 2013 and rules framed there under, during the financial year.
CREDIT RATING
ICRA has downgraded the Companys Long term Credit rating (for Fund based limits i.e.
Term Loans and CC limits) from [ICRA)BBB+ stable to [ICRA)BBB with negative outlook and a
short term rating (for Non Fund based limits
i.e LC & BG facilities) of [ICRAJA2. to [ICRAJA3+ in view of the losses incurred.
|
31.03.2023 |
31.03.2022 |
Long Term Gross Debt to Equity Ratio |
0.68 |
0.74 |
Current Ratio |
1.12 |
1.15 |
CURRENT PROSPECTS
Current year, the operating levels improved in April 2023. May is below normal, owing
to holidays and stoppages. Globally, Inflation has peaked out as per Central Banks due to
strict measures, which now threatens to give rise to recessive conditions impacting the
demand in the near term. Company is trying hard to cut losses and reach to cash profits by
first half of the current Financial Year. Situation may improve further in the second half
of FY 23 with optimum scale of operation, leading to positive earnings.
The market conditions for paper, though generally competitive, as the industry capacity
has increased substantially over the years, is favorable for quality products in the
segment in which the Company can operate with the new plant. The market for corrugated
boxes has become extremely competitive, as more players shift towards the new technology
paradigm in corrugation even as demand growth remains lackluster. The Company is exploring
opportunities in new areas where the ban in single use plastic affords new opportunities
CAPITAL EXPENDITURE PLANS
Expansion project to increase paper manufacturing capacity by addition of a new paper
plant has been completed and the processes are being optimised for improving efficiency.
New Production Capacity of 350 MTPD (Metric Tonnes Per Day) is operative, in place of
200 MTPD earlier. CORPORATE GOVERNANCE
As per SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015
separate Report on Corporate Governance, along with Auditors Certificate confirming the
compliance is attached.
Directors Responsibility Statement:
As required by Section 134(5) of the Companies Act 2013, we state that:
While preparing the Annual Accounts, the Company has followed the applicable Accounting
Standards;
The Directors have selected such accounting policies and applied them consistently and
has made judgements and estimates that are reasonable and prudent, so as to give true and
fair view of the state of affairs of the Company as at 31-3-2023 & of the loss of the
Company for the financial year 2022-23.
The Directors have taken proper & sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 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 the controls are adequate and operating effectively.
The Directors have devised proper systems to ensure compliance with the provisions of
all the applicable laws and these systems are adequate and operating effectively.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
During the year, the Company did not give any Loan / Guarantee or has provided any
security or make investment covered under Section 186 of the Companies Act, 2013
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTY
None of the transactions with any of the related parties was in conflict with the
interests of the Company. Details of transactions with related parties are furnished as an
annexure in Form AOC-2.
CHANGES IN NATURE OF BUSINESS OF THE COMPANY
There was no change in the nature of business of the Company during the year.
MATERIAL CHANGES & COMMITMENTS
There was no change in the nature of business of the Company during the year.
There was no material changes and commitments in the business operations of the Company
since the close of the financial year on 31st March 2023 to the date of this
report.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT,
2013
In terms of provisions of the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 tlie Company has formulated a Policy to prevent
Sexual Harassment of Women at workplace. During the year under review, there were no cases
filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS
As per Rule 8(5)(vii) of the Companies (Accounts), Rules 2014, there were no
significant and material orders passed by the regulators or courts or tribunals impacting
the going concern status and companys operations.
INTERNAL FINANCIAL CONTROL WITH REFERENCE TO FINANCIAL STATEMENTS
The Board has adopted policies and procedures for ensuring the orderly and efficient
conduct of its business, including adherence to the Companys policies, the safeguarding
of its assets, the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation of reliable financial
disclosures.
During the year, such controls were tested and no reportable material weakness in the
design or operation were observed.
ISO 9001 CERTIFICATION
Companys Quality Management Systems (QMS) have been audited by Bureau Veritas
Certification India Pvt Ltd and ISO 9001: 2015 Certification was awarded to the Printing
& Packaging Division of the Company. This Certification issued is valid up to
17-5-2024.
FOREST STEWARDSHIP COUNCIL (FSC) CERTIFICATION
The Company continues to be certified under standards of FSC, namely FSC-STD-40-003,
FSC-STD-40-004 and FSC-STD-40-007 for its product group. This is an assurance of
environmental protection by providing sufficient documentary controls and tractability
throughout the Chain of Custody.This certification means Company is capable of
manufacturing FSC Recycled and FSC Mixed products.
RESEARCH & DEVELOPMENT
Several special application grades have been developed & successfully introduced
during the year to cater to stringent customer specific requirements.
ENERGY CONSERVATION MEASURES
The particulars required under Section 134 (3) (m) of the Companies Act, 2013 with
regard to energy conservation measures are furnished in the Annexure.
ENVIRONMENTAL PROTECTION
Your company has always endeavored to remain in harmony with its eco-sphere and tried
to equitably balance the interest of all stakeholders in it, often going beyond the
statutory impositions placed by regulatory authorities. In such efforts are included the
installation of a 0.5 acre hold tank and a 2 km delivery pipeline for irrigating otherwise
dry lands. ETP facility installed in the preceding year for conserving water and meeting
the pollution control norms even on the expanded capacity of the paper mill is functioning
satisfactorily. The treated effluent water is utilized for irrigation purposes in the
nearby fields of third party farmers with excellent crop yields.
The Company has installed & been operating the Electro Static Precipitator (ESP)
Systems for its Boilers for controlling dust emission and dust extractor system for
controlling dust at its fuel handling system. Centrifuge and other machineries have been
installed for effluent treatment.Fuel shed with roofing, controls dust emissions and
conserves the resources.
In order to ensure environmentally safe disposal of solid wastes, the Company has
started disposing Ash and plastic waste to recyclers authorized by KSPCB. Ash is used in
brick manufacturing and plastic is being used in cement kilns.
The Company had engaged the expert services of University of Agricultural Sciences,
Gandhi Krishi Vigyana Kendra, Bangalore for a study of ‘Utilisation of Paper Mill
Effluent for Agricultural Purpose. After 4 years study, a final report has been issued
concluding that the effluent generated by the paper mill contains small amount of
nutrients, higher amount of salts and are within limits of Central Pollution Control Board
norms. The finding further says that mill effluent along with additional dose of nitrogen
has significant effect in increasing the crop yields.
DIVIDENDS
In view of the loss, no Dividend is recommended for FY 2022-23 (Previous year Dividend
of 10% i.e. Re 1.00 per equity share of Rs 10 each was recommended). The total
distribution amounts to Rs.Nil (Last year 150 lacs)
As per Ind AS 10, Events after the reporting period, Proposed Dividends on Equity
shares being a non-adjusting event at the Balance Sheet date, was not recognised as as a
liability in the accounts for the previous year ended 31st March, 2022. This
Dividend was recognised in the accounts in the year of payment i.e. FY 2022-23.
PARTICULARS OF EMPLOYEES
Particulars of employees as prescribed under the Companies Act, 2013 are annexed.
Annual Return
Copy of the Annual Return for the financial year ended 31-3-2023 is available on our
website www.sipaper.com.
Managerial Remuneration
Requisite details as per Rule 5 of the Companies (Appointment and Remuneration of
Managerial Personnel)Rules 2014 is annexed herewith and forms a part of this Annual report
Meetings of the Board
The number of meetings of die Board held and details diereof are mentioned in the
Report on Corporate Governance forming a part of this Annual Report.
Whistle Blower Policy
In deference to Section 177 (9) of the Act,read with relevant Rule 7 of the Companies
(Meetings of Board and its Powers) Rules, 2014 and Listing Regulations the Company has
established a vigil mechanism overseen by the Audit Committee. The Company has formed
Whistle Blower policy as required under the Companies Act 2013 and Listing Regulations and
no personnel has been denied access to the Audit Committee.
Risk Management
The Company has a risk management framework to identify and evaluate business risks and
opportunities. It seeks to create transparency, minimise adverse impact on the business
objective and enhance the Companys competitive advantage. It aims at ensuring that the
executive management controls the risk through means of a properly defined framework.
The Company has laid down appropriate procedures to inform the Board about the risk
assessment and minimization procedures. The Board periodically revisits and reviews the
overall risk management plan for making desired changes in response to the dynamics of the
business.
The Board of Directors have constituted a Risk Management Committee as required under
the Listing Regulations, vide Board Meeting held on 27.01.2015, to frame, implement and
monitor the risk management plan of the Company. The Committee comprises of the following
Directors.
Mr Manish M Patel - Chairman
Mr M G Mohan Kumar - Member
Mr S R Chandrasekara Setty - Member
The terms of reference of risk management committee include review of Risk management
policy and its development within the Company, to monitor the effectiveness of risk
management policy, review major risks of the Company and to advice on mitigation to the
Board.
LABOUR RELATIONS
The industrial relations climate in the Company during the year was cordial and
harmonius. A 6 year Wage settlement agreement signed with workers union at the Paper Mill
was in force upto 31-3-2022. Negotiation for agreement for the subsequent period is in
progress. In case of the Box unit, a 4 year Wage settlement agreement signed with workers
union is in force upto 31-3-2024.
DIRECTORS
In terms of Section 152 of the Companies Act 2013, Mr Ajay D Patel (DIN 00466905)
retires by rotation and he, being eligible offers himself for re appointment.
Your Directors recommend his reappointment.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declaration from all the Independent Directors under Section
149(7) of the Companies Act 2013, in respect of meeting the criteria of independence as
provided under Section 149(6) of the Act.
BOARD EVALUATION
The Board of Directors have carried out an annual evaluation of its performance, Board
Committees and Individual Directors pursuant to the provisions of the Companies Act and
SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015.
The Board has recorded overall satisfaction.
In a separate meeting of Independent Directors held on 28-03-2023, the performance of
Non Independent Directors, Board as a whole and the performance of the Chairman was
evaluated.They have expressed overall satisfaction on such evaluation
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The Companys Policy on directors appointment and remuneration including criteria for
determining qualifications, positive attributes, independence of a Director and other
matters as provided under Section 178(3) is annexed hereto and forms part of this Annual
Report.
Criteria for performance evaluation of Independent Directors as required by the
Listing Regulations also forms part of this report.
CORPORATE SOCIAL RESPONSIBILITY
The Board has constituted a Corporate Social Responsibility Committee as mandated by
Section 135 of the Companies Act 2013 vide Board Meeting held on 27.01.2015.
The broad terms of reference of the CSR Committee are as under:
• Formulating and recommending to the Board, the C SR Policy which shall indicate
the activities to be undertaken by the Company.
• Recommending the amount of expenditure to be incurred on the aforesaid
activities
and;
• Reviewing and Monitoring the CSR Policy of the company from time to time.
The Company has spent towards CSR activities during the year Rs 45.11 lakhs in full.
There is no unspent amount. A report on CSR Activities is annexed herewith and forms a
part of the Directors Report.
APPOINTMENT OF KEY MANAGERIAL PERSONNEL There are no changes in Key Managerial
Positions during the year.
OTHER DISCLOSURES
The Company has not made any application, nor any proceeding is pending against the
Company under the Insolvency and Bankruptcy Code, 2016 during the year under review.
The Company has not made any one time settlement with any Banks or financial
institution during the year under review. Hence Rule 8(5)(xii) of Companies (Accounts)
Rules 2014 is not applicable.
AUDITORS
There are no adverse comments by the Auditors in their report annexed herewith.
SECRETARIAL AUDIT
Pursuant to Section 204(1) of the Companies Act, 2013, read with the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has
appointed Mr S N Hitaish Kumar, Practicing Company Secretary (C PNo. 6553), to conduct the
Secretarial Audit of the Company for Financial Year 2022-23. The Secretarial Audit Report
in Fonn MR 3 is annexed.
Explanation for observation / comments made by the Company Secretary in Practice.:
Version 3 of Ministry of Corporate Affairs website through which Report on Corporate
Social Responsibility in Form CSR-2 was due for filing on or before March 31,2023 is
popping up error message upon uploading and grievance in this regard has already been
raised by the Company which is pending resolution.
INTERNAL AUDITOR
Pursuant to Section 138(1) of the Companies Act, 2013, the Company has appointed M/s
Rau and Nathan Chartered Accountants (Firm Regn. No.003178S), Mysore, to conduct Internal
Audit of die functions and activities of die Company for Financial Year 2022-23.
COST AUDIT
Companys products are not notified for Cost Audit in FY 2022-23.
APPRECIATION
Your Directors take diis opportunity to place on record dieir appreciation for services
rendered by the employees, sales agents, Banks & Financial Institutions.
for and on behalf of the Board of Directors
Nanjangud |
Manish M. Patel |
25th May, 2023 |
Chairman & Managing Director |
+91-9892691696
