Star Paper Mills Ltd Directors Report.

Dear Shareholders,

The Board of Directors of your company is pleased to present the Directors Report together with Audited Financial Results of the company for the year ended 31st March, 2019.

1. FINANCIAL HIGHLIGHTS

Audited financial results for the year ended 31st March, 2019 are summarised below:

AUDITED FINANCIAL RESULTS

(Rs. in Cr.)
Year ended 31st March, 2019 Year ended 31st March, 2018
Particulars
Profit before interest and depreciation 56.57 77.32
Interest and finance charges 0.65 1.05
Depreciation 4.39 4.07
Profit before Exceptional Items 51.53 72.20
Exceptional & non-recurring items - -
Profit before tax 51.53 72.20
Provision for Income Tax (1.66) 17.94
Profit after tax (PAT) 53.19 54.26
Earning per share (EPS)- in Rupees 34.08 34.76

2. DIVIDEND & TRANSFER TO RESERVES

Considering performance of the company for the year 2018-19, your Directors are pleased to recommend a dividend of Rs. 2.50/- per equity share (25%) subject to approval of the Shareholders at the ensuing Annual General Meeting of the company. No amount of profits for the year is carried to General Reserve.

3. STATE OF THE COMPANY AFFAIRS

Review of operations 2018-19

Production, Sales-volume and Sales-realization for the year further improved due to favourable market conditions, product-mix optimization and Export-demand. This was however offsetby unabated escalation in wood prices and increase in energy cost following ban on industrial use of pet-coke and furnace oil which emerged as factors which impacted bottom-line of the company for the year.

Considering the cost escalation, Your company reported satisfacory financial performance for the year 2018-19. Profit after tax for the year stood at Rs. 53.19 Crores vis-a-vis Rs. 54.26 Crores for FY 2017-18.

There is no change in the nature of the business of the company during the year. Further, no material changes and commitments have occurred after the close of the year till the date of this Report, which may affect the financial position of the Company.

Expectations for the year 2019-20:

Constant increase in raw material and fuel prices would impact the company in the near term. Challenges such as increased imports from ASEAN under FTAs, intense competition, Government policies, higher input costs etc may affect the business.

4. ANNUAL-RETURN EXTRACTS

Extracts of the Annual Return as provided in Section 92(3) of the Companies Act, 2013 in MGT-9 is attached as Annexure-I.

5. BOARD MEETINGS/AUDIT COMMITTEE

a) During the financial year 2018-19 four (4) meetings of the Board of Directors were held on 21st May, 2018, 13th Aug., 2018, 14th Nov., 2018 and 8th Feb., 2019.

b) Audit & Risk Management Committee-

The Company has constituted the Audit & Risk Management Committee of the Board pursuant to Section 177 of the Companies Act, 2013 and its terms of reference are in conformity with SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The composition of Committee is mentioned in the Corporate Governance Report.

6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report for the year under review is presented in a separate section forming part of the Annual Report for 2018-19.

7. VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

Pursuant to Section 177 of the Companies Act, 2013, the company has established a ‘Vigil Mechanism for directors and employees to report their genuine concerns to the company. The company oversees this ‘Vigil Mechanism through the Audit & Risk Management Committee of the Board.

8. ENVIRONMENT, POLLUTION CONTROL AND SAFETY

Your company is committed to provide safe working conditions and healthy environment to all its stakeholders. Your company is accredited with ISO 9001 : 2015, ISO 14001: 2015, and ISO 18001 :2007 which signifies adoption of integrated quality, environment and safety management systems to harmonize Industrial activities with environmental preservation with letter and spirit. The company has requisite environmental consents from the Government authorities. Your company has been awarded the following awards during the year 2018-19:

I) Gold Award in paper sector for outstanding achievement in Environment management by Green tech Foundation in its18th Annual Environmental Award-2018.

II) Platinum Award in paper sector for outstanding achievement in Environment management by Apex India in its Environment Excellence Award-2018

9. SOCIAL FARM FORESTRY

Your company has been promoting and encouraging tree plantation program under Social Farm Forestry. The program helps in enhancing rural incomes and facilitates sustain availability of raw material to the company. The scheme involves supply of high quality clones/seedlings apart from providing technical assistance to the farmers. The company further stepped-up propagation and distribution of clonal plants and the area coverage during the year.

10. FIXED DEPOSITS

The company has not invited any fixed deposits during the year and as such there has been no default in repayment of deposit or payment of interest thereon during the year. There were no outstanding fixed deposits as on 31st March, 2019. (Rs. Nil as on 31st March, 2018).

The company is in compliance with provisions of the Companies Act, 2013 and rules made thereunder in respect of deposits.

11. INTERNAL CONTROLS

The company has adequate internal control systems in place on the basis of which financial accounting is done and periodically financial statements are prepared. Such Internal control systems are adequate and operating effectively.

12. REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your company adopted a policy on Corporate Social Responsibility (CSR) to fulfill its obligation towards the society. The CSR Policy may be accessed on the companys website at http://www.starpapers.com. The key philosophy of the Companys CSR initiative is to promote development through social and economic transformation. The composition of Committee is mentioned in the Corporate Governance Report.

The Report on CSR activities undertaken during the year 2018-19 is annexed herewith marked as Annexure II.

13. DIRECTORS/KEY MANAGERIAL PERSONNEL

i) Pursuant to Section 152 of the Companies Act, 2013, Mr. Shrivardhan Goenka (DIN-00030375) shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his appointment.

ii Mr. Sunil Srivastav (DIN-00237561) was appointed as Additional director (Independent) of the company w.e.f. 14th Nov., 2018.

iii Pursuant to newly inserted Regulation 17(1A) of the Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Amendment Regulations, 2018, the shareholders have approved by passing of three special resolutions through postal ballot on 11th April. 2019 to continue directorship of Mr. Shiromani Sharma (DIN00014619), Mr. Chander Mohan Vasudev (DIN 00143885) and Mr. Michael Philip Pinto (DIN 00021565) who had attained the age 75 years, upto 27th Sept., 2019, being the date of expiry of their current term of office. Further, the Board has recommended to the shareholders to re-appoint them as Independent Directors for another term of five consecutive years.

iv) Mr. G.P. Goenka (DIN:00030302) and Ms. Savita Laxmipathy Acharya (DIN: 07038198) have resigned from the position of ‘Executive Chairman and Independent director respectively w.e.f 29th May, 2019.The Board placed on record its appreciation for the valuable contributions made by Mr. Goenka & Ms. Acharya during their respective tenures.

v) The Board of Directors has re-appointed Mr. Madhukar Mishra (DIN-00096112) as Managing Director of the company w.e.f. 1st July, 2019 for a period of three (3) years subject to approval of the shareholders at the ensuing AGM. vi) Mr. P.K. Agrawal, Chief Financial Officer (CFO) retired from the services of the company on attaining the age of superannuation and continued as CFO on retainership basis upto 31.05.2019. The Board of Directors has designated Mr. Sandeep Kumar Rastogi as new Chief Financial Officer (CFO) of the company w.e.f 1st June, 2019

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI Listing Regulations, 2015. The companys familiarization program for Independent Directors is posted on the website of the company and can be accessed at http://www.starpapers.com/familarisation_prog.pdf.

14. NOMINATION AND REMUNERATION COMMITTEE/POLICY

The Board of Directors has constituted a ‘Nomination & Remuneration Committee which follows the companys policy on directors appointment and remuneration including criteria for determining qualification, positive attitudes, independence of a director and other matters provided under section 178 (3) of the Companies Act, 2013.

The gist of companys policy on nomination and remuneration is as under:

The Committee shall consider ethical standards of integrity, qualification, expertise and experience for appointment of Directors/KMP etc. and recommend to the Board of Directors. Directors/ KMP etc shall be appointed as per the procedure laid down in applicable laws.

The Committee will recommend the remuneration to be paid to Directors/KMP etc requiring Committee approval as per statutory provisions. The level and composition of remuneration so determined by the Committee shall be reasonable and sufficient to attract, retain and motivate the appointee(s). Nomination and Remuneration Policy of the company can be accessed from the company website -www.starpapers.com.

15. LOAN, GUARANTEE, INVESTMENTS ETC.

The company has not given any loan or guarantee or provided security in connection with any loan to any other body corporate during the year.

16. SUBSIDIARY/JOINT VENTUE/ASSOCIATE COMPANIES

No company has become or ceased to be your companys subsidiary/joint venture/associate company during the year.

17. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

PParticulars regarding energy conservation, technology absorption and foreign exchange earnings/outgo pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are furnished as Annexure-III to this Report.

18. PARTICULARS OF EMPLOYEES AND REMUNERATION

Information in accordance with the provisions of Section 134(3)(q) and Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 regarding employees remuneration are given hereunder:

i) Name of the employees who are in receipt of remuneration of Rs. 102 lacs or more during the FY 2018-19:

Sr. Name & Designation Remuneration* recd.-(in lacs) Nature of employment Qualification & experience Date of commencement of employment Age Last employment held % of equity shares held Whether relative to director
1 Mr. G.P Goenka, Executive Chairman 269.19 Contractual B. Sc., 57 years 20/05/2015 78 Y Executive Director- Duncan Industries Ltd. Nil Yes, Father of Mr. Shrivardhan Goenka
2 Mr. Madhukar Mishra, Managing Director 216.10 -do- B. Sc., DMS (Mgt.) 40 years 01/07/2001 62 Y Sr. VP(Corporate Planning) -Dail Consultants Ltd. Nil No

*including employers provident fund contribution.

a) Ratio of remuneration of each director to the median remuneration of employees

Director Director remuneration (DR) - Median remuneration (MR) of employee - Ratio (DR/MR)
Rs. Rs.
Mr. G.P. Goenka 2,69,19,185 2,80,577 95.94
Mr. Shrivardhan Goenka 80,000 2,80,577 0.29
Mr. Shiromani Sharma 2,80,000 2,80,577 0.99
Mr. C.M. Vasudev 1,60,000 2,80,577 0.57
Mr. M.P. Pinto 1,20,000 2,80,577 0.43
Ms. Savita L. Acharya 1,80,000 2,80,577 0.64
Mr. Sunil Srivastav 60,000 2,80,577 0.21
Mr. Madhukar Mishra 2,16,10,274 2,80,577 77.02

b) % increase in remuneration of each director, CEO, CFO, CS in the financial year 2018-19

Official Name Year 2018-19 Remuneration- Rs. In lacs % increase in remuneration
Directors Directors are receiving only sitting fees for attending meetings.
Executive Chairman 269.09 14%
Managing Director 216.10 3%
Chief Financial Officer* 28.06 Nil
Company Secretary 10.85 1%

*Retired on 29-01-19 and continued as CFO upto 31st May, 2019 on retainership basis.

c) % increase in median remuneration of employees in the financial year 2018-19 was: Nil.

d) Number of permanent employees on the rolls of the company as on 31.03.19 was 512.

e) Average increase in remuneration inter-alia depends upon the inflation, individuals performance, company policy, human resource demand-supply position, negotiations with trade unions, company performance etc.

f) Average percentage increase in salaries of employees vis-a-vis managerial personnel - Average percentage increase in salaries of employees was 3% vis-a-vis 6% increase in salary of managerial personnel for FY 2018-19

g) No director is getting any variable component of remuneration except commission to Executive Chairman and performance pay to the Managing Director are decided by the Board of Directors every year based on performance of the company, terms of appointment and applicable statutory provision. Remuneration is paid as per remuneration policy of the company.

19. PERFORMANCE EVALUATION

The company has a Policy on Nomination & Remuneration and Evaluation of directors etc. The Board of Directors evaluates its own performance, that of Committee(s) and individual director(s) on annual basis in the manner envisaged by the Nomination & Remuneration Committee (NRC) of the Board. Nomination & Remuneration Committee (NRC) also ensures that evaluation process is carried out by the Board every year as per the prescribed method.

20. HUMAN RESOURCES AND WELFARE

Your company has a structured approach to manage its human resources in line with changing needs of the organisation. Industrial relations remained harmonious during the year.

Your Directors further state that during the year under review, there was no case reported under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

21. DIRECTORS RESPONSIBILITY STATEMENT

As required under the provisions of Section 134(3)(c) Directors Responsibility Statement on preparation and presentation of these accounts is as per Annexure-IV to this Report.

22. CORPORATE GOVERNANCE

A separate report on corporate governance, along with a certificate from the statutory auditors confirming the compliance with corporate governance requirements has been annexed as Annexure-V to Directors Report.

23. AUDITORS

The members at its 78th Annual General Meeting held on 14th Sept., 2017 appointed M/s Jain Pramod Jain & Co., Chartered Accountants, New Delhi as statutory auditors of the company to hold office from till the conclusion of 83rd AGM of the company.

24. COST AUDITORS

Pursuant to Section 148(3) of the Companies Act, 2013 read with the Rules made thereunder, the Board of Directors on the recommendation of Audit & Risk Management Committee has appointed M/s K.B. Saxena & Associates, Cost Accountants, as the Cost Auditors of the Company for the financial year 2018-19.

25. AUDITORS REPORT

i) Statutory Audit:

The observations of the auditors read with relevent notes on the financial statements are self-explanatory.

ii) Secretarial Audit:

M/s D. Dutt & Co., company secretary in practice, secretarial auditor of the company has done secretarial audit for FY 2018-19. Secretarial audit report is attached as Annexure-VI. The observations of the secretarial auditor in the report are self-explanatory.

26. TRANSACTIONS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the company during the financial year with related parties were in the ordinary course of business and on arms length basis. During the year, the company had not entered into any contract / arrangement / transaction with related parties which could be considered material. Information pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies(Accounts) Rules, 2014 are given in Annexure-VII in Form AOC-2 and the same forms part of this report.

27. RISK MANAGEMENT

The Company is having Risk Management framework covering identification, evaluation and control measures to mitigate the identified business risks.

28. LISTING ON STOCK EXCHANGES

Your companys equity shares are listed on National Stock Exchange of India Ltd. (NSE) and The Stock Exchange, Mumbai (BSE). The company has paid the listing fees to the stock exchanges for the financial year 2018-19.

29. ACKNOWLEDGEMENT

The Directors place on record their gratitude for the excellent support and efforts put in by all the Stakeholders viz., employees, bankers, investors, dealers, suppliers and Government authorities.

For and on behalf of the Board
Place : New Delhi Shiromani Sharma
Date : 29th May, 2019 Chairman