REPORT OF THE DIRECTORS ear Sharehofders Your Directors take pleasure in presenting their Thirty Fourth Annual Report together with the Audited Statement of Accounts for the year ended March 31, 2016. OPERATIONS AND OUTLOOK Your Directors are pleased to inform you that the commissioning of Multi-Layer Coated Board plant at Balasore, Odisha has been successfully completed and resulted in an increase in production capacity from 1,45,000 TPA to 2,77,000 TPA. Your Company continued its dominance as the lowest cost and quality Newsprint manufacturer achieving plant capacity utilization over 100% and extended its market presence for the Multi-Layer Coated Board segment. During the year your Company registered a growth in the turnover from Rs. 521.02 crores in 2014-15 to Rs. 538.80 crores in 2015-16 and profit after tax (PAT) has shown growth from Rs. 12.17 crores in 2014-15 to Rs. 27.92 crores in 2015-16. Many initiatives of efficiency enhancement and cost reduction have been undertaken and implemented. The Company is in the process of installing balancing equipment during current year for marginal enhancement in overall capacity from 2,77,0 0 0 TPA to 3,00,000 TPA. The fully automated Multi-Layer Coated Board facility will help your Company to scale up the operations and also propel to be amongst the leading paperboard businesses in the country. Overall, the performance has been satisfactory despite economic and industrial challenges. With the expansion project is now fully functional, the Company's performance is expected to improve substantially in the coming years. MULTI LAYER COATED BOARD PROJECT The company has set up a state-of-the-art Multi-Layer Coated Board plant with an annual capacity of 1,32,000 TPA and 10.5 MW Captive Power Plant at Balgopalpur, Balasore, Odisha. The Company is producing high-end packaging board product for usage in pharmaceuticals, healthcare, FMCG goods, consumer durable goods and food product industries, in various gsm ranging from 170 to 450. The project has created direct and indirect employment for about 2000 persons. The company focuses only on high-end segment of virgin fibre board with its brands "Emami Maxo Fold" & "Emami Glamkot" and also developed "Emami Eco Strong' brand for recycled board and established as quality manufacturer in the country. Market growth for the virgin grade segment continued to be robust due to increasing thrust on good quality packaging for consumer products. In spite of competition from established manufacturers, the company has achieved 100% capacity utilization in March 2016 and sold its product to leading printers for high-end use. The Coated Board Plant has started commercial operation on 25th March, 2016 and is now operating consistently and delivering superior quality paperboard. The adoption of advanced technology in this plant has helped in reducing consumption of wood pulp, Chemical, water and energy while improving margins for the Company. The company intends to leverage the scale of operations and technology advantage, to reduce input cost further while delivering enhanced performance of its paperboards. Domestic paper and paperboard industry is currently estimated at 13.4 million tonnes per annum, out of which paperboards is 2.6 million tonnes per annum and is expected to grow at around 8% CAGR aided by Value Added Paperboards (VAP) at 12% CAGR. The growth potential of the VAP grade is expected to be driven by the higher GDP growth, increasing demand from rural markets, branded packaged products, shift from low end packaging and growth in organized retail. The need for differentiated packaging, coupled with change in lifestyles will continue to drive demand for paperboards and the company will maintain its position in this attractive market. DIVIDEND Your Directors are pleased to recommend dividend of 30% (Rs. 0.60 per share) on Equity Shares of Rs. 2/- each and 8% p.a. dividend on Preference shares of Rs. 100/- each for the financial year ended March 31, 2016. The Dividend, if approved by the shareholders, will absorb Rs. 1026.65 lacs (including the dividend tax of Rs. 173.65 lacs). ENVIRONMENT MANAGEMENT Your company's approach towards environmental protection is guided by Environmental Policy, commitment towards a sustainable planet and a clean environment as well as a healthy workplace for employees. The Company focuses on environmental management not only to comply with the applicable regulatory regime but also strives to contribute positively to the communities around its operations through varied community initiatives, encouraging biodiversity and nature conservation. To meet its environmental objectives, the Company adopts: -Cleaner production technology & best available technology -Resource conservation -Value addition to waste management -Minimum pollution load and emission to the environment -Educate human resource to be environmentally responsible Your Company is among the few in the industry to have adopted one of the best Integrated Management Systems (IMS) certified by DNV (Det Norske Veritas AS, the Netherlands) through their rigorous surveillance and recertification audits, encompassing the following: *- ISO 9001:2008 - Quality Management System *- ISO 14001:2004 - Environment Management System *- OHSAS 18001:2007 - Occupational Health & Safety Management System -Practicing TPM with an objective to achieve zero defect, zero breakdown, zero pollution, and zero loss. At Emami Paper, there has been substantial development in energy conservation by installing energy efficient equipment. Key environmental control equipments, mechanism and monitoring instruments maintained by the company are as below: -Online Ambient air quality monitoring system (3 nos) -Online stack emission monitoring system (3 nos) -State-of-the-art effluent treatment plant (ETP) -Use of ETP final water for agricultural and plantation purpose -100% primary sludge used as co-fuel in the power boiler -Decanter for secondary sludge dewatering -Rainwater harvesting through 17 nos of recharge well -Air pollution control through ESP, Ash conveying system pneumatically through close pipe line, Dust Suppression System, Water Sprinkling System *- 100% Solid Waste Management -Green belt development These systems and assets have enabled the Company to safeguard the environment by meeting all statuary norms. As a measure of sustainable growth policy of the company, it continuously gears up its resources to provide better protection to environment and natural resource conservation. To optimize chemical and water consumption even further, the Company undertook the following measures: -Tertiary treatment plant is installed to reduce fresh water consumption -Integrated the water management with process needs by adopting the 'Reduce, Re-use and Recycle' concept to optimize discharge quantities. -Explored opportunities for reducing energy and chemical consumption in water and wastewater treatment -Propagated water saving equipment and devices besides organizing training programs on water management SHARE CAPITAL The company has neither issued shares with differential voting rights nor granted stock options or sweat equity. DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES The Company does not have any Subsidiary or Joint Venture/ Associate Companies. DETAILS OF DEPOSITS The Company has neither accepted nor renewed any deposits under section 73 of the Companies Act, 2013 during the year under review. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information pertaining to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure I and is attached to this Report. EXTRACT OF ANNUAL RETURN The extract of Annual Return in form MGT -9is given in Annexure II to the Report. CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES The company has formulated the policy for development and implementation of Corporate Social Responsibility as also required under Section 135 of the Companies Act, 2013. Further, the information pursuant to Section 134(3)(o) of the Companies Act, 2013 and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 are given in Annexure III outlining the main initiatives during the year under review. ANNUAL CSR REPORT (2015-16) Emami Paper Mills Limited through its CSR activities takes up programs that benefit the communities in & around its place of work and ensure over a period of time, enhancement in the quality of life & economic well being of the local people and thereby establishing its presence as a good corporate citizen. Eradication of Hunger, Poverty and Mal Nutrition : The company, as a part of its CSR activities promotes eradication of hunger and Malnutrition from the local community. Nearly 400 mouths are fed every day on this account. The Company monitors the Body Mass Index (BMI) of children of the locality and detects cases of mal-nutrition. Such children are supplemented with protein enriched food supplement three times a week. Nearly 250 children are benefited on this account. Clothes are also provided to poverty sicken orphan children of the locality. Promotion of Preventive Health Care : A dedicated team of doctors and para-medical staff provide door to door preventive health service to the local community. Along with this mobile health service is available at 12 locations twice a week. During the year under reference 7269 patients have been provided elementary healthcare through the mobile health unit. Regular medical advice along with medicines under traditional system of medicine is also provided at ten locations. During 2015-16, 23,270 patients were benefited under this scheme. In addition to the regular clinics, 18 special combined homeopathic and ayurvedic camps were conducted during the year. During the year, the company supported the local govt. PHCs (Public Health Centre) in upgrading their labor room, indoor patient wards and sitting arrangements for the out-patient department. Regular medicines are being provided to Mitrapur Swasthya Seva Kendra for free distribution. On the recommendation of doctors, company also supports poor and needy patients for seeking expert medical advice. 35 patients were benefited under this scheme during the year. Sanitation and Provision for Safe Drinking Water : Realizing the fact that safe drinking water is the key for preventive healthcare, the company provides running water supply to 120 households of Rasulpur village and has commissioned 22 new tube wells to the already 185 community water points in the area over the last five years. Promoting Education and Vocational Skills : Initiatives under promotion of education encompass five broad activities namely, Infrastructural support to local educational institutions, scholarship support to the poor and meritorious, free distribution of exercise notebooks, community teacher program and capacity building of the tribal children through 'Bal Vikas' program. Based on the survey of local schools, the company supports educational institutions in developing their infrastructure by making provisions for classroom furniture, fans, lights and toilet. During the year 530 pairs of desk cum bench has been provided to 16 institutions to accommodate the growing student enrollment. To develop proper sanitation and hygiene in the educational institutions, the company has constructed toilets with running water supply in ten local institutions. Scholarship program was initiated by the company in the year 2013-14, which is growing wider by the year. During 2015-16, 330 top scorers from 71 institutions have been provided with a scholarship ranging between Rs.500 to Rs.5000. Along with this, 95 number of workers' children were also supported for pursuing higher studies. Free distribution of exercise notebooks to students took a quantum jump in comparison to the previous year. In 2015-16, 71,433 exercise books were distributed to 89 institutions. The 'Bal Vikas' program aims at increasing school enrollment and reducing dropout particularly among the tribal communities of the area. This is done by capacity building of the children through a locally appointed teacher (Bal Vikas Guru) who provides the much needed educational support to the first generation learners. During 2015-16 the company operated ten 'BalVikas' centers with an enrolled strength of 239 children. Such initiative has resulted in substantial increase in school enrollment and improvement in quality of primary education. Ensuring Environmental Sustainability and Animal welfare : The company has undertaken bulk plantation on 2.5 acres of land at Baniagaon where 2500 seedlings were planted. Along with this, 5,690 peripheral plantations were undertaken around the factory site on 6.3 acres of land. The Company had also distributed 1,745 horticultural plants to 348 households for their own backyard plantation. The plantation team had also undertaken plantation activities in 9 educational institutions where 1,817 plantations were conducted with the help of students. As a concern for the animals, the company provides shelter, food and required medical care to 132 abandoned cattle in an exclusively made animal shelter. Protection of Art and Culture and restoration of sites of Historical Importance : The Company during the year had taken initiative to restore place of cultural importance at Nuapadhi village under Remuna block. The company also supported in the construction of Sri Ranga Charan Kala Ashram, Remuna and a Yoga centre at Udumber under Mandarpur panchayat. As a mark of respect to the people's President who had spent a significant period of his life in Balasore, the company supported local administration in erecting a statute in his honour at Chandipur. Rural Infrastructure : During the year under reference, the company has invested its resources in creation of lasting rural infrastructure. Community centers were erected at Rasalpur. The company took initiative in installing 17 street lights in Rasalpur and Patripal gram Panchayats. A creche by the company was constructed at Balasore during the year. Summing up The company takes pride for its sense of responsibility towards the community and environment and the way it is duty bound for enrichment of the life of less privileged people and protection of the environment around its area of operation. The company has taken its social responsibility as a part of its operating policy and gearing its social activities to promote inclusive and sustained growth. AWARDS AND RECOGNITION It is a matter of great pride that Company's endeavor and commitment to achieve higher level of operational performance and environmental excellence has been recognized at various forums. Company has earned number of awards and honors as mentioned below: -*- 5th Annual Greentech CSR Award, 2015 (Gold Award) in Paper Sector for outstanding achievement in Corporate Social Responsibility by Greentech Foundation for effort by Company to serve the community as a good corporate citizen. -"Odisha State Energy Conservation Award - 2015" - 'Award of Appreciation' from the Ministry of Power - Department of Energy, Government of Odisha. -Utkal Chamber of Commerce & Industry, Bhubaneswar, Odisha recognized the company for outstanding contribution in the field of Large Scale Industry sector of Odisha. -Greentech Environment Award 2014 (Gold Category) in the paper sector for the efforts made in environmental protection. -Kalinga Safety Award by Odisha State Safety Conclave 2014 for the strides made in the areas of safety management. INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY Your Company has laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timey preparation of reliable financial information. The Audit Committee evaluates the internal financial control system periodically. AUDITORS AND AUDITORS REPORT 1. STATUTORY AUDITORS As per section 139 and other applicable provisions of the Companies Act, 2013 the Company has appointed M/s. S. K. Agrawal & Co. Chartered Accountants (Registration No. 302111E) as the Auditors and M/s. Salarpuria Jajodia & Co. Chartered Accountants (Registration No. 306033E) as Unit Auditors (Kolkata Unit) as per the approval of the shareholders in Annual General Meeting(AGM) held on 11th August, 2014, for a further period of three years till the conclusion of 35th Annual General Meeting of the Company, subject to ratification by the shareholders in every AGM of the company on the remuneration and other terms and conditions as may be fixed by the Board of Directors. The Board recommends the ratification by the shareholders regarding their reappointment. 2. COST AUDIT The Company has appointed M/s. V. K. Jain & Co. Cost Accountant as Cost Auditors of the Company for the Financial Year 2016-17 for both the units at Balasore and Kolkata under section 148 of the Companies Act, 2013, in their meeting held on 24th May, 2016. In terms of Section 148 of the Companies Act, 2013 read with the Companies (Audit & Auditors) Rules, 2014, the Board at their meeting held on 24th May, 2016 appointed M/s V.K.Jain & Co. Cost Accountant as Cost Auditors of the Company at a remuneration of Rs. 1.00 lac (excluding service tax) plus reimbursement of travelling and out of pocket expenses on the recommendation of Audit Committee at their meeting held on 24th May, 2016 for the financial year ending March 31, 2017 and their remuneration shall be ratified by the Members at the forthcoming Annual General Meeting. 3. SECRETARIAL AUDIT Pursuant to the provisions of section 204(1) of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company has appointed M/s MKB & Associates, Company Secretary in practice for the financial year 2015-16 to undertake the Secretarial Audit of the company. The Secretarial Audit Report is annexed herewith as Annexure IV. AUDITORS' REPORT/ SECRETARIAL AUDIT REPORT The observations made in the Auditors' Report read together with relevant notes thereon are self-explanatory and hence do not call for any further explanations or comments by the Board under Section 134 of the Companies Act, 2013. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013 1) The company has given Inter Corporate loan to some of the Body corporates covered under the provisions of section 186 of the Companies Act, 2013. The amount of loan given is Rs. 91 crores and the whole amount have been received back during the year. The purpose was to utilize the loan amount for their general business purposes. 2) The loan and advances given to employees are covered under the remuneration policy of the company. Hence section 186 of the Companies Act, 2013 is not applicable. 3) The company has not provided any guarantee. 4) The details of the investments made by the company are given in the notes to the financial statements PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES All related party transactions that were entered into during the financial year were at arm's length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the company with promoters, Key managerial personnel or other designated persons which may have potential conflict with interest of the company at large. Necessary disclosure regarding transactions with related parties has been made in the Notes to the Audited Accounts. Further, the particulars of every contract or arrangements entered into by the company during the year with related parties as per in section 188(1) of the Companies Act, 2013 is disclosed in form AOC 2 in Annexure V. The related party transactions policy has been given on the website of the company under the head Investors-Corporate Governance. Web link: <http://www.emamipaper.in/downloads/related->party-policy-tr.pdf COMPOSITION OF AUDIT COMMITTEE The composition of Audit Committee of the company is mentioned in the Corporate Governance Report attached to this report. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM As per requirement of section 177 (9) of the Companies Act, 2013, the company has established a Vigil mechanism for the directors and employees to report genuine concerns, as recommended by the Audit Committee and approved by the Board of Directors in their meeting held on 21st January, 2014. The Company's Whistleblower Policy encourages Directors and employees to bring to the Company's attention, instances of unethical behavior, actual or suspected incidents of fraud or violation of the Code of Conduct that could adversely impact the Company's operations, business performance and / or reputation. The Policy provides that the Company investigates such incidents, when reported, in an impartial manner and takes appropriate action to ensure that the requisite standards of professional and ethical conduct are always upheld. It is the Company's Policy to ensure that no employee is victimized or harassed for bringing such incidents to the attention of the Company. The practice of the Whistleblower Policy is overseen by the Audit Committee of the Board and no employee has been denied access to the Committee. The Whistleblower Policy is available on the Company's corporate website www.emamipaper.in STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY Pursuant to section 134(3)(n) of the Companies Act, 2013 and relevant regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the company has adopted Risk Management policy for identification and implementation of Risk Mitigation Plan for the company. In the opinion of the Board there is no such risk which may threaten the existence of the company. DIRECTORS & KEY MANAGERIAL PERSONNEL A) Directors retirement by rotation Mr. P. S. Patwari, Executive Director and Mr. A. V. Agarwal, Executive Chairman would retire by rotation and, being eligible, offer themselves for re-appointment. B) Declaration by an Independent director(s) and re-appointment, if any All Independent directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and relevant regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended from time to time). C) Key Managerial Personnel During the year there was no change in the Key Managerial Personnel of your Company. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION Pursuant to section 178 of the Companies Act, 2013, the Board of the directors of the company has approved the revised Nomination and Remuneration policy as recommended by the Nomination and Remuneration Committee in their meeting held on 27th January, 2015. The policy is disclosed in the Corporate Governance Report. ANNUAL EVALUATION OF BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS Pursuant to the provisions of section 134(3)(p) of the Companies Act, 2013 and relevant regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended from time to time), the Board has carried out the annual performance evaluation of its own performance, its committees and individual directors on 24th May, 2016, on the basis of agreed norms for evaluation. Further, the independent directors have evaluated the performance of non-independent directors at a separate meeting held on 27th January, 2016. The manner in which the evaluation carried out has been explained in the Corporate Governance Report. Meetings of the Board and Committee thereof The details have been covered in the Corporate Governance Report. MANAGERIAL REMUNERATION AND PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of managerial personnel and employees of the company is attached herewith in Annexure VI. RECEIPT OF COMMISSION BY THE DIRECTOR FROM HOLDING OR SUBSIDIARY COMPANY UNDER SECTION 197(14) Not Applicable CORPORATE GOVERNANCE The Corporate Governance Report and Managements Discussion & Analysis Report are set out as Annexure VII in this Report. DIRECTORS' RESPONSIBILITY STATEMENT In terms of section 134(5) of the Companies Act, 2013 the Directors would like to state that:- 1. In the preparation of annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; 2. 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; 3. The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4. The directors had prepared the annual accounts on a going concern basis; 5. The directors had laid down internal financial controls to be followed by the company and such controls are adequate and operating effectively; and 6. The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively; MISCELLANEOUS 1. Industrial Relations : During the year under review, the Company enjoyed cordial relationship with the workers and employees at all levels. 2. Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future: No such orders passed during the year under review. ACKNOWLEDGEMENT The Board acknowledges the understanding and support shown by its lending financial institutions, banks, distributors, customers, suppliers, employees and other business associates. Your Company operated efficiently due to a culture of professionalism, integrity and continuous improvement leading to sustainable and profitable growth. For and on behalf of the Board of Directors A.V. AGARWAL Executive Chairman Place : Kolkata Date : 24th May, 2016 |