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Pudumjee Paper Products Ltd.
 
March 2015

DIRECTORS' REPORT

To the Members,

The Directors have pleasure in presenting before you the 50th Annual Report of the Company together with the Audited Financial Statements for the year ended 31st March, 2015.

CONSOLIDATED FINANCIAL STATEMENTS :

Pursuant to Section 129, 134 of the Companies Act, 2013 (the Act), the Consolidated Financial Statement of the Company, and its subsidiaries prepared, in accordance with schedule III of the Act and Accounting Standards AS 21 and AS 23 forms part of this Annual Report.

DIVIDEND :

The Board of Directors recommends the payment of Dividend for the year ended 31st March, 2015 at the rate of Rs. 0.30 per share. If approved, the equity Dividend shall be paid, subject to the provisions of section 126 of the Companies Act, 2013 to those shareholders whose names stand on the Register of Members on 19th September, 2015.

The Dividend in respect of shares held in electronic form will be paid to the beneficial owners of the shares at the close of business hours on 7th September,2015, as per the details furnished by depositories for the purpose.

OPERATIONS :

The Directors are happy to inform that the Company has registered significant improvement both in terms of revenue and profits over the last year’s improved performance. This has been possible by combination of various efforts in the direction of cost reduction, product development and change in marketing strategy to address, the challenges posed by unfair competition in respect of overseas suppliers. The currently prolonged prevalent recessionary trend did put some impediments in these improvements but were substantially tackled through judicious marketing strategy. Consequently the Company achieved a much better capacity utilization of its resources. The efforts in the aforesaid area will be further intensified so as to move towards full utilization of the capacity and improvement in the Company’s performance.

The Management is actively considering reviving expansion project at Mahad, earlier put on hold since 2012- 13. The expansion when finalized, would also include progressive shifting of the existing production facilities at Pune to Mahad duly upgraded for more efficient operations. With this objective the Board of Directors of the Company has undertaken restructuring initiative for demerger of the Paper manufacturing business of the Company and the Board at its meeting held on 17th January, 2015 based on the Audit committee recommendation, has considered and approved a draft Scheme of Arrangement (Demerger) between the Company, Pudumjee Industries Limited, Pudumjee Hygiene Products Limited and Pudumjee Paper Products Limited and their respective shareholders and creditors.

The Scheme envisages transfer of paper manufacturing business of the Company, with all its assets and liabilities, into Pudumjee Paper Products Limited (PPPL), newly incorporated subsidiary company as Special Purpose Vehicle for the purpose. As part of the Scheme, Pudumjee Paper Products Limited shall also seek listing approval from stock exchanges in due course. The appointed date in respect of the Scheme is 1st April, 2014.

After receipt of all requisite approvals and satisfaction of the related conditions the Scheme will be effective and the record date will be determined for considering the shareholders entitlement to the equity shares of PPPL as per the ratio mentioned in the Scheme i.e. 37 (Thirty Seven) fully paid-up Equity Share of Rs. 1 each of PPPL for every 20 (Twenty) Equity Shares of Rs. 2 each held by the shareholders in the Company.

The Stock Exchanges (NSE, BSE & PSE) have conveyed their No- objection to the scheme of Arrangement. The Scheme shall further be subject to approval of the shareholders, Creditors and the Hon’ble Bombay High Court.

The demerger process when complete will enable the Company to focus on Real Estate business.

The Real Estate Business of the firm in which the Company is a Partner is satisfactorily progressing. One more building of 94 flats has been completed and the accounts include Company’s share of profit of Rs. 13.53 crores in this respect. One more residential building for construction has been taken up during the year and despite recessionary pressure elsewhere the firm has been able to book all but few flats.

The construction of residential cum commercial complex taken up by the Company on its own, is awaiting certain statutory clearances. The labour relations continued to remain peaceful.

SUBSIDIARIES :

As at 31st March, 2015, the Company has two subsidiaries namely Pudumjee Investment & Finance Co. Ltd., and Pudumjee Paper Products Limited (PPPL). During the Year the Company has invested in 2,55,000 Equity Shares of Rs. 1/- at premium of Rs. 19/- per equity share of PPPL. Accordingly, PPPL has become ‘Subsidiary’ of the Company with its 51% stake in PPPL. The PPPL is incorporated on 14th January, 2015 as a special purpose vehicle with a view to de-merge paper manufacturing business of the Company through De-merger process.

PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES :

Pursuant to Rule 8 of the Companies (Accounts) Rules, 2014, the information on the performance and financial position of each of the subsidiaries, associates, joint venture Companies, etc. as included in consolidated financial statement is provided in Annexure 1 to this report.

FIXED DEPOSITS :

Fixed deposits accepted from the public, shareholders and employees as on 31st March, 2015 stood at Rs. 2676.28 Lacs as against Rs. 3317.09 Lacs at the end of the previous year. During the year, the Company has not accepted/renewed such deposits, and all the deposits falling due for repayment during the year were fully repaid on maturity except unclaimed deposits numbering 87 with amount Rs. 36.16 Lacs as at the end of the year. There were no over dues on account of principal or interest on public deposits other than the unclaimed deposits as at the year end and there have been no default in repayment of deposits or payment of interest thereon. There are no deposits which are not in compliance with the requirements of Chapter V of the Act read with Companies (Acceptance of Deposits) Rules 2014.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND :

Pursuant to the provisions of Section 124 and 125 of the Companies Act, 2013 (corresponding to section 205A of Companies Act 1956), relevant amounts like unclaimed dividend interest on Fixed Deposits, etc. which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from to time to time on due dates, to the Investor Education and Protection Fund.

AUDITORS :

M/s. Khare and Co., Chartered Accountants, has been appointed as Statutory Auditors of the Company at the 49th Annual General Meeting for a period upto the conclusion of 51st Annual General Meeting and their appointment is subject to ratification of shareholders at every Annual general meeting. M/s. Khare and Co., have given their consent to act as the Auditors of the Company. The Shareholders will be required to ratify their appointment and fix their remuneration.

The Company has received a Certificate from M/s. Khare and Co., to the effect that their appointment, would be within the prescribed limits under section 141 and other applicable provisions of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules 2014 and that they are not disqualified for re-appointment.

There is no Qualification in the Statutory Auditor’s Report as annexed elsewhere in this Annual Report.

The Auditors have reported that there is no fraud on or by the Company noticed or reported during the year.

DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP) :

The Company has Board of Directors with total 10 directors out of which 6 are Non-Executive Independent Directors and the remaining are 4 Executive Directors. By virtue of Section 149 of the Companies Act, 2013 and rules made there under, the Independent Directors are not liable to retirement by rotation. Mr. Ved Prakash Leekha, Director, retires by rotation at the ensuing Annual General Meeting, and being eligible, offer himself for re-appointment.

During the year, Mr. S. K. Bansal was appointed as Chief Financial Officer of the Company with effect from 1st April, 2014 and Mr. R. M. Kulkarni as Company Secretary of the Company with effect from 1st June, 2014, in the Board Meeting held on 17th May, 2015.

The Board of Directors appointed Ms. Preeti Mehta and Dr. Ashok Kumar as additional directors at meetings held on 1st November, 2014 and 14th February, 2015 respectively. Ms. Preeti Mehta and Dr. Ashok Kumar hold their respective office of directorship upto the date of the forthcoming Annual General Meeting. Notice together with security deposit has been received from members proposing their candidature for the office of Director of the Company at the forthcoming Annual General Meeting. The Brief profile of appointees is provided under Corporate Governance Report.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under the applicable provisions of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

SECRETARIAL AUDITOR :

Pursuant to the provisions of Section 204 read with Section 134(3) of the Companies Act, 2013 mandates Secretarial Audit of the Company to be done from the financial year commencing on or after 1st April 2014 by a Company Secretary in Practice. The Board in its meeting held on 13th September, 2014 has appointed M/s Parikh & Associates, Practicing Company Secretary (Certificate of Practice No. 1228) as the Secretarial Auditor for the financial year ending 31st March 2015. The Secretarial Auditors’ Report for the financial year 2014-15 is annexed hereto and marked as Annexure No. 2.

There is no Qualification in the Secretarial Audit Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR) :

During the year, the Board of Directors has constituted the Corporate Social Responsibility Committee. The major role of this Committee is to formulate, recommend, implement and monitor the CSR policy and activities to be undertaken by the Company to meet/contribute towards its corporate social responsibility recommended objectives. The Board of Directors at its meeting held on 1st November, 2014 has constituted its CSR Committee and has also adopted its CSR policy recommended by the committee. Some of the activities which will be undertaken by the Company through an eligible trust are as under;

a) Education in Rural Area

b) Environment in rural area

c) Vocational Development

The CSR committee comprises of the following members :

The said Policy is also uploaded on the website of the Company viz; www.pudumjee.com. During the year, the Company has allocated total Rs. 40 Lacs, out of which Rs. 10.20 Lacs has been spent through M. P. Jatia Charitable trust on Education in Rural Area. The other relevant disclosures as stipulated under Companies (Corporate Social Responsibility Policy) Rules, 2014 are given in Annexure No. 3.

The CSR committee has adopted CSR policy in the month of November 2014, the Company is in the process of spending on CSR Activities. For the year under consideration the Company has allocated an amount of Rs. 40 Lacs for the said purpose and it has contributed Rs.10.20 Lacs during the year on CSR activities. The report obtained from the trust has been taken into consideration in the disclosures given. The entire allocated amount could not be spent due to paucity of sufficient time. The remaining allocation (which is in excess of the amount statutorily required) of CSR expenditure of Rs. 29.80 Lacs has been appropriated from retained earnings as shown in note to the Financial Statements.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS :

The loans, guarantees or investments made by the Company are within the limits of Section 186 of the Companies Act, 2013 and rules made there under as approved by shareholders vide special resolution passed, held at 49th Annual General Meeting of the Company.

The brief summary of such transactions are provided in Annexure 4 to this Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

A policy on Related Party Transactions has been adopted by the Board of Directors at its meeting held on 1st November, 2014 for determining the materiality of transactions with related parties and dealings with them.

The said policy is available at the Company’s website at the web link www.pudumjee.com.The Audit Committee reviews all related party transactions quarterly.

Pursuant to Section 134(3), 188(1) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 the particulars of contracts/arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 in Form AOC -2 are provided as Annexure No. 5.

ANNUAL EVALUATION OF BOARD’S PERFORMANCE :

As required under Companies Act 2013, a meeting of the Independent Directors was held on 14th February, 2015 to evaluate the performance of the Non-Independent Directors, wherein the evaluation of performance of the non independent directors, including the Chairman and also of the Board as a whole was made, against pre-defined and identified criteria.

The criteria for evaluation of the performance of the Independent Directors, chairman and the Board, was finalized by the Nomination and Remuneration Committee in its meeting held on 14th February, 2015, the said committee has carried out evaluation of the performance of every director. The said criteria is available at the Company’s website i.e. www.pudumjee.com. The Board of Directors at their meeting held on 14th February, 2015 is evaluated the performance of Independent Directors.

RISK MANAGEMENT POLICY :

During the year the Board of Directors at its meeting held on 17th May, 2014 adopted Risk Management Policy identifying risks to the Company, procedures to inform Board members about the risk assessment & minimization procedures, monitoring the risk management plan, etc.

WHISTLE BLOWER MECHANISM :

The Company has a Whistle Blower Policy / vigil mechanism. The said policy has been made keeping in view of the amendments in the Companies Act, 2013 and Clause 49 of the Listing Agreement. The said policy may be referred to, at the Company’s official website i.e. www.pudumjee.com.

PARTICULARS OF EMPLOYEES :

Pursuant to Section 197 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the statement giving required details is given in the Annexure No. 6A and 6B to this report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 :

There were no complaints reported under the Prevention of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO :

As required under Section 134(3)(m) of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, the information relating to Conservation of Energy, Technology Absorption and Foreign Exchange earnings & outgo is annexed as Annexure No. 7 and forms a part of this Report.

REPORT ON CORPORATE GOVERNANCE :

The report on Corporate Governance in accordance with the guidelines of the Securities & Exchange Board of India and amended Clause 49 of the Listing Agreements with the Stock Exchanges is attached and marked as Annexure 8.

EXTRACT OF ANNUAL RETURN :

The extract of the Annual Return of the Company in Form MGT-9 is annexed herewith as Annexure No. 9 to this report.

REMUNERATION POLICY :

Pursuant to the provisions of Section 178 and other applicable provisions of the Companies Act, 2013 and Listing Agreement the Nomination and Remuneration Committee has determined, recommended and approved remuneration policy at its meeting held on 1st November, 2014, and recommended to the Board of Directors.

The said policy may be referred to, at the Company’s website i.e. www.pudumjee.com and is annexed hereto and marked as Annexure No. 10.

SIGNIFICANT AND MATERIAL ORDERS :

There is no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

DIRECTORS’ RESPONSIBILITY STATEMENT :

The Directors confirm that;

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the directors have 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 of the Company for that period;

c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) the directors have prepared the annual accounts on a going concern basis; and

e) the directors, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENTS :

Your Directors wish to express their appreciation of the continued support and co-operation received from the all the stakeholders, employees of the Company.

On behalf of the Board of Directors,

A.K. Jatia

Executive Chairman

Place : Mumbai

Dated : 30th May, 2015

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