DIRECTORS REPORT Your Directors are pleased to present the 60th Annual Report of the Company, together with the audited accounts for the year ended 31st March 2015. DIVIDEND Your Directors have not recommended any dividend in view of inadequacy of profit. PERFORMANCE For the year under review, the Company has recorded satisfactory outcomes in its working results, even in the midst of adverse circumstances of the reduction in production of the Paper and Paperboards and stagnancy in sale prices. This performance is due to the improved working of the cable division and a decrease in the cost of raw material as a consequence of the higher usage of the imported wood chips in production, thereby reducing the dependency on the local markets and also because of a reduction in other input costs. The Company posted gross profit of Rs. 126.93 Crores (after writing off inter corporate deposit of Rs. 51.60 Crores extended to Shree Rama Newsprint Ltd., and the waiver of interest of Rs. 6.81 Crores both totaling to Rs. 58.41 Crores) as against ~ 141.14 Crores in the previous year-lower by Rs. 14.21 Crores (10%) whereas there was a net profit of Rs. 1.11 Crores as against Rs. 6.63 Crores in the previous year. DIVISION WISE PERFORMANCE A) Paper and Duplex Board Divisions The production of Paper, Paperboard and Hardwood Pulp was 3,00,514 MT (94% capacity utilization) against 3,10,002 MT in the last year (97% capacity utilization) i.e., lower by 9,488 MT. The sale of paper, paperboard and hardwood pulp was 3,02,978 MT against 2,98,682 MT in the last year i.e., higher by 4,296 MT. The turnover during the year was Rs. 1,643.68 Crores as against ~ 1,610.74 Crores in the previous year (both inclusive of excise duty), i.e., higher by Rs. 32.94 Crores, due to higher sales quantity. B) Cable Division - Mysore The production and sales of optical fibre cable in terms of quantity was 30438 kms and 30368 kms during the year as against 20,686 kms and 21,053 kms in the previous year, respectively. Sale of optical fibre cable in terms of value, was higher at Rs. 103.16 Crores as against Rs. 43.76 Crores (both inclusive of excise duty) during the previous year due to execution of more fibre count cable. EXPORTS Export of Paper, Paperboard and Duplex board reduced from 6,539 MT worth ~ 33.68 Crores (FOB) in 2013-14 to 5,348 MT worth ~ 28.12 Crores (FOB) in 2014-15 due to non-remunerative prices. Further, 733 km of Cable worth ~ 0.52 Crores was exported in 2014-15 compared to 1,925 km of Cable worth ~ 1.70 Crores in 2013-14. RAW MATERIALS The Company has started the import of wood chips from Australia, South Africa, Brazil etc., from June 2013, by creating the required infrastructure for efficient handling of the cargoes and during the year under report the company imported 4.20 Lacs MT of wood chips against 3.55 Lacs MT in the previous year. The use of wood chips has been well absorbed in our process and now the Company is getting direct and indirect advantages of its usage. The Company has also focused on Social forestry and cultivated Farms on more than 45,000 acres of land so far within a radius of 250-300 kms so as to enhance the availability of wood. The Company is also distributing seedlings to the farmers at concessional rates so that plantations are taken up by them without any commitment for its supply to the Company. However, this is bound to increase the overall availability of raw material for the industry. EXCHANGE RATE VARIATION The Company has reinstated Foreign Currency Loans/External Commercial Borrowings of USD 43.64 Million at the exchange rate prevailing as on 31st March 2015 and the exchange rate difference of Rs. 78.29 Crores has been added to the cost of Fixed Assets, as per Accounting Standard AS-11 issued vide Notification No.G.S.R. 225(E) dated 31.03.2009 (as last amended vide Notification No GSR 913 (E) dated 29.12.2011) by the Ministry of Corporate Affairs. RISK MANAGEMENT POLICY The Board of Directors had adopted risk policy for Forex exposure in the meeting held on 28.06.2004. The foreign exchange exposure of the Company is reviewed from time to time by the Board. The Company has taken Industrial All Risk Policy to insure its fixed assets and inputs which cover known and unknown risk including Fire, Loss of Profit. RELATED PARTY DISCLOSURE AND TRANSACTIONS The details of related party disclosure and transactions as prescribed in Form AOC-2 are given in the Note No.2.28 of Notes on Financial Statements. All the transactions are done at arms length and pertain to FY 2014-15 period only and as approved in the Board Meeting held on 13.05.2014. EXTRACT OF THE ANNUAL RETURN Extract of the Annual return in the Form No. MGT 9 is attached and forms a part of this report. CORPORATE SOCIAL RESPONSIBILITY The Company has framed a Corporate Social Responsibility (CSR) Policy as required under Section 135 of the Companies Act, 2013. Pursuant to rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, Annual report on CSR in the prescribed format is attached and forms a part of this report & policy may be accessed on the Company's website at the link Rs.<http://westcoastpaper>. com/index.phpRs.q=node/6Rs.. Even though the company is not required to contribute towards CSR as it has incurred net loss of Rs. 8.82 Crores in the preceding 3 years. It has contributed Rs. 15.72 Lacs towards CSR activities in 2014-15. MEETINGS OF THE BOARD The number of meetings of the Board held and details thereof are mentioned in the Report on Corporate Governance forming part of this Annual Report. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION The Company's policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of Section 178 is annexed hereto and forms a part of this report. Criteria for performance evaluation of Independent Directors' as required by the Listing Agreements also forms part of this report. MANAGERIAL REMUNERATION The requisite details as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith forming part of this report. CONSERVATION OF ENERGY, RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNING/ OUTGO The information required under Section 134(3)(m) of the Companies Act, 2013 is annexed hereto and forms a part of this report. PARTICULARS OF EMPLOYEES The particulars of employees, as required under the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in a separate Annexure to this Report. MANAGEMENT'S DISCUSSION AND ANALYSIS A comprehensive Management's Discussion and Analysis Report, forming a part of the Corporate Governance is carried elsewhere in this annual report. CORPORATE GOVERNANCE Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a Corporate Governance Report is made a part of this annual report. A certificate from the auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated by Clause 49 of the Listing Agreements is attached with this report. The Company is complying with Clause 49 of the Listing Agreements with regard to Corporate Governance and reports to that effect are being regularly filed with the Stock Exchanges. The Company has obtained declaration from the Directors and Senior Management members of the Company for compliance of Code of Conduct and the Certificate from CEO/ CFO was placed before the Board of Directors at the meeting held today. DIRECTORS' RESPONSIBILITY STATEMENT The Directors' Responsibility Statement, as required under Section 134(5) of the Companies Act, 2014, is attached and forms a part of this report. DIRECTORS Shri Saurabh Bangur retires from the office by rotation in terms of Article 143 of the Articles of Association of the Company, but being eligible offers himself for re-appointment. Pursuant to Section 152 Shri M. P. Taparia, Lt. Gen. (Retd.) Utpal Bhattacharyya and Shri Krishna Kumar Karwa have been appointed as Independent Directors at the Meeting of the Board of Directors held on 02.02.2015 subject to approval of Members at the ensuing Annual General Meeting. Brief resume of the Directors proposed to be reappointed, nature of their expertise in specific functional areas, names of Companies in which they holds Directorships and Memberships of Board Committees, shareholding, as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges in India, are provided in the Notice to Members, forms a part of this Annual Report. Shri Sanjay Kothari resigned from the Board during the year and the Board of Directors place on record their highest sense of appreciation for the valuable advice and guidance rendered by him during his tenure as Director of the Company. DECLARATION BY 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 provided under Section 149(6) of the said Act. SECRETARIAL AUDIT The Secretarial Audit Report in the Form No. MR 3 issued by Mr. Srikant R. Gudi, is annexed hereto and forms a part of this report. AUDITORS Messers Batliboi & Purohit, Chartered Accountants, will retire at the end of the 60th Annual General Meeting of the Company and offer themselves for re-appointment for the ensuing year. As regards qualifications of the Auditors, we refer to Note no. 2.38, 2.39 & 2.40 which are self explanatory. The Company will account loss on sale of shares of Shree Rama Newsprint Ltd., on completion date as per Share Purchase Agreement dt. 21.05.2015 as detailed in Note no. 2.38 whereas investment in Jayashree Chemicals Ltd., is a long term trade investment hence not provided, whereas amount advanced to Speciality Coatings & Laminations Ltd., will be recovered on disposal of its assets hence no provision is made. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS There are adequate internal control procedures commensurate with the size of the Company and nature of its business for the purchase of inputs and availing of services and fixed assets and for the sale of goods & providing of services. Full fledged Internal Audit department carries out pre and post audit of all significant transactions throughout the year. SHREE RAMA NEWSPRINT LTD (SRNL) The Company has entered into Share Purchase Agreement with Riddhi Siddhi Gluco Biols Ltd.,(Rs.AcquirerRs.) on 21.05.2015 for sale of its Long Term Investments of 2,11,24,791 equity shares of Shree Rama Newsprint Ltd., for Rs. 0.75 Lacs against book value of ~ 4,540.86 Lacs subject to release of Corporate Guarantees of Rs. 24,625.00 Lacs given to various banks by the Company and the Acquirer complying with the requirement of the Open Offer under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 or any other statutory approval. Since the transaction will be completed on fulfillment of the above conditions, loss of Rs. 4,540.11 Lacs will be accounted by the Company in the Accounting Year 2015-16 on the date of completion of transaction. The Company has agreed to accept payment of Rs. 70 Lacs on completion date of Share Purchase Agreement (SPA) dated 21.05.2015 executed between the Company and Riddhi Siddhi Gluco Biols Ltd.,(Rs.AcquirerRs.) against the outstanding inter corporate deposits of Rs. 5,229.50 Lacs given to Shree Rama Newsprint Ltd (SRNL) as per books of accounts and balance amount of Rs. 5,159.50 Lacs has been written off. This has also been confirmed by SRNL & acknowledged by the Acquirer on the letter dated 21.05.2015, written by the Company in pursuance of the said SPA. LOANS, GUARANTEES & INVESTMENTS The Company extended Inter Corporate Deposit of ~ 1.25 Crores to SRNL (total ~ 52.30 Crores) and Rs. 2.90 Crores to Speciality Coating & Laminations Ltd. (total ~ 7.36 Crores) during FY 2014-15. However, no investment was made in any body corporate during FY 2014-15. ACKNOWLEDGEMENT Your Directors would like to thank the Union and State Governments, Banks, Financial Institutions, Customers, Suppliers and Shareholders for their continued support. For and on behalf of the Board S. K. Bangur Chairman & Managing Director Dated : 27th May 2015 Place : Mumbai |