DIRECTORS' REPORT TO THE MEMBERS: Your Directors have pleasure in presenting their Twentieth Annual Report and the Audited Financial Statement for the year ended on 31st March 2015, together with the Auditors' Report thereon. Dividend: Your Directors have pleasure in recommending a modest dividend of 5%, i.e. Rs. 0.50 per Equity Share on 5356700 Equity Shares of Rs. 10/- each for the year 2014-2015. Management Discussion and Analysis: Attached report on Management Discussion and Analysis, which is forming part of this report, adequately deals with the operations as also current and future outlook of the Company. Corporate Governance: Pursuant to clause 49 of the Listing Agreement with the Stock Exchanges, a separate report titled Corporate Governance is attached to this Annual Report. Finance: The Company has successfully negotiated during the month of March, 2015 a term loan of Rs. 10.20 crores with Company's banker for part financing of modernization and up-gradation of plant and machinery of the existing plant and various factory civil construction work and Rs. 2.25 crores for part financing machinery and equipments of co-generation plant due to cost escalation. The documents have since been executed and drawing of amount commenced in April, 2015. The repayment of due loan installments and interest payment is being regularly done. Subsidiary Company, Joint Venture and Consolidated Financial Statements: The Company's subsidiary Shree Samrudhi Industrial Papers Pvt Ltd. has not yet commenced any business. The Board of Directors of Shree Samarpan Pulp and Paper Pvt Ltd, a joint venture company vide their Board Resolution dated 26th July, 2014, have decided to dissolve the said joint venture entity. Consequently, the Company has written off its investment of Rs. 1.00 lac in the said Company. As required by section 129 (3) of the Companies Act, 2013 and the listing agreements with Stock Exchanges, the Consolidated Financial Statements for the year ended on 31 st March, 2015 have been prepared in accordance with the relevant accounting standards as prescribed under section 133 of the Companies Act, 2013 and the Auditors report there on are attached. As required by first proviso of section 129 (3) of the Companies Act, 2013 and Rule 5 of the Companies (Accounts) Rules 2014, the statement containing the salient features of the financial statements of the Company's subsidiary (Shree Samrudhi Industrial Papers Pvt Ltd.) and joint venture (Shree Samrat Pulp and Paper Pvt Ltd), in form AOC1 is also attached. Shareholders interested in obtaining a copy of the audited annual financial statements of the subsidiary company may write to the Company. Directors: Mr. Dhansukhlal G Shah (DIN: 00377970) retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Mr. GhanshyamkumarG. Dobariya (PAN: AQHPD5222E) was appointed as Company Secretary with effect from 2nd June, 2014. Mr. Piyush R. Shah ceased as Marketing Director of the Company with effect from 22nd January, 2015 due to death. The Board places on record its appreciation of the valuable services rendered by him during his long tenure as Marketing Director of the Company. Mr. Darshak B. Shah (DIN:00098897) was appointed as Independent Director of the Company at the 19th Annual General Meeting held on 29th September, 2014 to hold office for 5 years till 31 st March, 2019. Your Directors have appointed Mrs. Bela Gautam Shah (DIN: 01044910) as Additional Director and Woman Director as required by second proviso of section 149 (1) (b) of the Companies Act, 2013 with effect from 7th February, 2015. Mrs. Bela G. Shah was also appointed as Executive Director with effect from the said date for the period of 5 (five) years. The necessary resolution for approval of her appointment and payment of remuneration to her is being placed at the ensuing Annual General Meeting for your consideration. Your Directors have reappointed Mr. Gautam D. Shah (DIN: 00397319) as Managing Director for a further period of 5 (five) years with effect from 1st July, 2015 and necessary resolution for approval of re-appointment and payment of remuneration to him is being placed before the Annual General Meeting for your consideration. Extract of the Annual Return: An extract of the Annual Return in Form MGT-9 for the year ended on 31st March, 2015 pursuant to sub-section (3) of Section 92 of the Companies Act, 2013 is annexed with this report. Directors' Responsibility/Statement: In accordance with section 134(5) of the Companies Act, 2013 your Board of Directors confirms 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 Companies Act, 2013 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; (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; and (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. Statement on declaration given by Independent Directors u/s. 149(6): Every Independent Director has given declaration that he meets the criteria of independence as provided in section 149 (6) of the Companies Act, 2013 and Schedule IV of the Companies Act, 2013 and clause 49 of the Listing Agreement. Company's policy on directors' appointment and remuneration including criteria for determining qualification: The Nomination and Remuneration Committee identifies potential candidates for appointments of Directors/ Independent Directors/ Key Managerial Personnel based on expertise and experience. The Committee also ensures that the remuneration is sufficient to attract, retain and motivate best managerial talents. Particulars of Contract or arrangement regarding related party u/s. 188: During the Financial Year 2014-15 the Company has not entered into any contract or arrangement with related party under section 188 of the Companies Act, 2013. The policy on materiality of related party transaction is placed on website of the Company. Material Changes and Commitment affecting Financial Position of the Company: There are no material changes and commitments affecting the financial position of the Company which has occurred between end of the financial year of the Company and the date of directors' report. Conservation of energy, technology absorption and foreign exchange earning and outgoes: The relevant data is given as an annexure to this report. CSR Committee and Implementation of CSR Projects: Pursuant to the provisions of section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility) Rules 2014 and Schedule VII, a Corporate Social Responsibility (CSR) Committee of the Board has been constituted comprising of the Managing Director and two independent Directors. The said Committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of the CSR Policy and recommending the amount to be spent on CSR activities. The Annual Report for the year 2014-15 on CSR activities is annexed with this report. The detailed CSR policy is placed on the website of the Company. Establishment of Vigil Mechanism: The Company has established a vigil mechanism for employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the code of conduct and ethics of the Company. It provides for adequate safeguard against the victimization of employees who avail the mechanism and are allowed direct access to the Chairman of the Audit Committee and Ethics Councilor of the Company. The whistle blower policy is placed on the website of the Company. Formal annual evaluation of the Board of Directors: Evaluation of Non-Independent Director: The body of independent directors of the Company reviews the roles, responsibilities and performance of the non independent directors. The body of independent directors evaluate that all the non independent directors have played their roles well and spent sufficient time in the Company to perform their duties. Evaluation of Independent Directors: The Board follows the criteria of independent directors contained in the Companies Act, 2013 and Schedule IV and clause 49 of Listing Agreement to ensure that all Independent Directors are independent and are persons of integrity and possess relevant expertise and experience and have no relationship of any kind with the Company, its Group or its Management. Risk Management: The Company is addressing various risks impacting the paper industry. Some of the risks to which the Company is exposed are as under. Financial Risks : The Company’s policy is to actively manage its foreign exchange risks. Commodity price risks : The Company proactively manages risks of price fluctuation of raw materials through forward booking and inventory management. The Company’s reputation for quality product mitigates the impact of price risk on finished goods. Regulatory risks : The Company is exposed to risks attached to various statutes and regulations. The Company is mitigating these risks through regular review of legal compliance carried out from time to time. Human resources risks: Retaining the existing talents and attracting new talents are major risks. These risks are mitigated by regular interaction with concerned employees and providing congenial working conditions Disclosure under Sexual Harassment of Women at work place (Prevention, Prohibition and Redressal) Act, 2013 : There was no complaint received from any woman employee during the financial year 2014-15 and hence no complaint is outstanding as on 31st March, 2015 for redressal. Public Deposit: The company has not accepted any deposit from the public within the meaning of chapter V of the Companies Act 2013, and rules there under. Auditors: The notes on financial statements referred to in the Auditors Report are self-explanatory and do not require further explanation. M/s. Deloitte Haskins& Sells LLP, Chartered Accountants, Mumbai (Firm Registration Number- 117366W/W-100018), the Auditors of the Company retire at the ensuing Annual General Meeting and being eligible, have offered themselves for reappointment for the year 2015-2016. You are requested to appoint them as Auditors of the Company for the year 2015-2016 and to fix their remuneration. Secretarial Audit Report: Pursuant to Section 204 of Companies Act 2013, your Company had appointed Mr. V. C. Khambhata, Practicing Company Secretary (CP No. 6177) as Secretarial Auditor to conduct the secretarial audit of the Company for the Financial Year 2014-15. The report of Secretarial Auditor is annexed with this report. Acknowledgment: The Board wishes to express its appreciation to the Bankers, Shareholders, Customers, Suppliers and Employees of the Company for their support during the year. FOR AND ON BEHALF OF THE BOARD OF DIRECTORS Gautam D. Shah Chairman and Managing Director Bela G. Shah Executive Director Place : Vapi Date : 28th May 2015 |