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 2020.

1. FINANCIAL HIGHLIGHTS

Audited financial results for the year ended 31st March, 2020 are summarised below:

AUDITED FINANCIAL RESULTS

(Rs. in Crores)

Particulars Year ended 31st March, 2020 Year ended 31st March, 2019
Profit before interest and depreciation 54.96 56.57
Interest and finance charges 0.65 0.95
Depreciation 5.16 4.39
Profit before Exceptional Items 49.15 51.53
Exceptional & non-recurring items - -
Profit before tax 49.15 51.53
Provision for Income Tax 11.88 (1.66)
Profit after tax (PAT) 37.27 53.19
Earning per share (EPS)- in Rupees 23.88 34.08

2. DIVIDEND & TRANSFER TO RESERVES

Considering performance of the company for the year 2019-20, 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. The company has transferred Rs. 3.00 Crores out of profits for the year to General Reserve.

3. STATE OF THE COMPANY AFFAIRS REVIEW OF PERFORMANCE FOR THE YEAR 2019-20

The Coronavirus outbreak known as Covid-19 has severely impacted businesses around the world during last quarter of FY 2019-20. In many countries including India, there has been severe disruption to regular business operations due to lockdowns.

Production and sales volume for the year remained in line with the subdued market conditions and the unprecedented Covid-19 pandemic. Further, higher raw material prices impacted profitablity of the company for the year. However, we could reduce Energy costs which substantially offset the Raw Material price escalation.This and other cost containement measures led to somewhat better margins.

Your companys reported satisfactory financial performance was commensurate with the business activity for the year 2019-20. Profit after tax for the year stood at Rs. 37.27 Crores vis-a-vis Rs. 53.19 Crores for FY 2018-19.

There is no change in the nature of the business of the company during the year. Due to COVID-19 Pandemic and resultant lockdown from 24th March, 2020, the operations of the company and supply-chain got affected. The company does not have any major pending contract/agreement, nonfulfilment of which may have significant impact on companys business.

EXPECTATIONS FOR THE YEAR 2020-21

The economic jolt from the continuing Covid-19 spread will weigh significantly on the operations in the near term. However, stimulus packages announced by the Government should mitigate the potential damage and also enable an early revival. It is however difficult to forsee impact on different segments along of the supply chain.

Your company is making all efforts to alleviate impact of the pandemic on its business to the extent possible

4. ANNUAL- RETURN EXTRACTS

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

5. BOARD MEETINGS/AUDIT COMMITTEE

a) During the financial year 2019-20 five (5) meetings of the Board of Directors were held on 29th May, 2019, 7th Aug., 2019, 19th Sept., 2019, 14th Nov., 2019 and 12th Feb., 2020.

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 2019-20.

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. The 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 financial year 2019-20 :

- Two (2) awards in paper sector for outstanding achievement in Safety Management and Environment management by Greentech Foundation, New Delhi in its Annual Environmental Award-2019.

- Platinum Award in paper sector for outstanding achievement in Environment management by Apex India in its Environment Excellence Award- 2019.

- Excellence award in National Conventional on Quality Concepts, Varanasi-2019 organised by Quality Circle Forum of India.

9. SOCIAL FARM FORESTRY

As in the past, your company continues to foster plantations with active co-operation of the farmers. This scheme involves supply of high quality clones/seedlings apart from providing technical assistance, modern farming methods and education to the farmers through various programs. 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, 2020. (Rs. Nil as on 31st March, 2019).

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 2019-20 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) The shareholders at their 80th AGM held on 19th Sept., 2019 appointed Mr. Sunil Srivastav (DIN-00237561) and Ms. Savita L. Acharya (07038198) as Independent director w.e.f 19th Sept., 2019 for a period of 5 years.

iii) The shareholders at their 80th AGM held on 19th Sept., 2019 approved the appointment of Mr. G.P. Goenka (DIN-00030302) as Executive Director w.e.f 7th Aug., 2019 for a period of 3 years.

(iv) The shareholders at their 80th AGM held on 19th Sept., 2019 approved the re-appointment of Mr. Madhukar Mishra (DIN-00096811) as Managing Director of the company w.e.f. 1st July, 2019 for a period of three (3) years.

(v) Mr. G.P. Goenka and Ms. Savita L. Acharya have resigned from Directorship of the company on 30th July, 2020 due to personal reasons and other pre-occupations respectively.

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 particulars of loans, guarantees or investments have been given in the financial statements.

16. SUBSIDIARY/JOINT VENTUE/ASSOCIATE COMPANIES

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

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

Particulars 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

i) Name of the employee who is in receipt of remuneration of Rs. 102 lacs or more during the financial year 2019-20 :

Sr. Name & Designation Remuneration* recd.- (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 208.86 Contractual B. Sc. 58 years 20/05/2018 79Y Executive Director- Duncan Industries Ltd. Nil Yes, Father of Mr. Shrivardhan Goenka
2. Mr. Madhukar Mishra, Managing Director 285.15 -do- B. Sc., DMS (Mgt.) 41 years 01/07/2001 63Y Sr. VP(Corporate Planning) -Dail Consultants Ltd. Nil No

including employers provident fund contribution, if any.

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 :

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

Director Director remuneration (DR)- Rs. Median remuneration (MR) of employee -Rs. Ratio (DR/MR)
MR. G.P. GOENKA 2,08,85,813 2,96,947 70.33
MR. SHRIVARDHAN GOENKA 80,000 2,96,947 0.27
MR. SHIROMANI SHARMA 3,90,000 2,96,947 1.31
MR. C.M. VASUDEV 2,80,000 2,96,947 0.94
MR. M.P. PINTO 2,10,000 2,96,947 0.71
MS. SAVITA L. ACHARYA 1,00,000 2,96,947 0.34
MR. SUNIL SRIVASTAV 1,40,000 2,96,947 0.47
MR. MADHUKARMISHRA 2,85,15,593 2,96,947 96.02

b) % increase in remuneration of each director, CEO, CFO, CS in the financial year 2019-20

Official name Year 2019-20 Remuneration-Rs. In lacs % increase in remuneration
Directors Directors are receiving only sitting fees for attending meetings.
Sitting fee has been revised from Rs. 20,000/- per Board/Committee meeting to Rs. 30,000/- per Board/Committee w.e.f 12th Feb., 2020
Executive Chairman 208.86 Nil
Managing Director 285.16 31.9%
Chief Financial Officer* 29.87 N.A
Company Secretary 13.11 19.6%

*appointed during the financial year.

c) % increase in median remuneration of employees in the financial year 2019-20 vis-a-vis previous year was 6%.

d) There were 457 permanent employees on the rolls of the company as on 31.03.2020.

e) Average increase in remuneration inter-alia depends upon rate of 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 11% vis-a-vis 17.16% in salary of managerial personnel for FY 2019-20.

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. COSTAUDITORS

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 2019-20.

25. AUDITORS REPORT

I) Statutory Audit :

The observations of the auditor read with relevant 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 2019-20. 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 2019-20.

29. ACKNOWLEDGEMENT

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

For and on behalf of the Board
Place : New Delhi Shiromani Sharma
Date : 31st July , 2020 Chairman