Your directors have pleasure in presenting the 31st Annual Report together with theAudited Statement of Accounts of Agio Paper & Industries Limited for the year endedMarch 31 2016.
1. SUMMARISED FINANCIAL HIGHLIGHTS
| || ||(Rs. in Lacs) |
| ||Current Year ||Previous Year |
|Gross Turnover and other receipts ||7.10 ||474.75 |
|Profit / (Loss) before Interest and Depreciation ||(117.57) ||372.48 |
|Less: Interest ||- ||- |
|Profit/(Loss) Before Depreciation ||(117.57) ||372.48 |
|Less: Depreciation ||23.66 ||28.86 |
|Profit /(Loss) Before Tax ||(141.23) ||343.62 |
|Less: Provision for taxation ||5.50 ||- |
|Profit /(Loss) After Tax ||(146.73) ||343.62 |
|Balance brought forward from previous year ||(2356.18) ||(2699.81) |
|Balance carried to Balance Sheet ||(2502.91) ||(2356.18) |
2. BUSINESS PERFORMANCE
We are trying to find ways to overcome the strictures imposed upon us by the CentralPollution Control Board. Soon upon finding a feasible solution we shall be able to resumeproduction facilities.
In absence of any production activities no operational profit was generated forrecommendation of dividend for the financial year ended 31st March 2016.
4. SHARE CAPITAL
The paid up Equity Share Capital as on March 31 2016 was Rs.16.12 crores and paid uppreference share capital as on that date was Rs.14.48 crores. During the year under reviewthe company has issued 1448855 10% Non-cumulative Redeemable Preference Shares ofRs.100/- each. The said preference shares were issued under private placement basis toBengal Orion Financial Hub Ltd throughout the year.
5. CREDIT FACILITIES
Vide Allahabad banks sanction letter dated 27.03.2015 the company has reached anamicable settlement with the Allahabad bank regarding repayment of its dues whichhas been adhered to in a timely manner.
6. ECONOMIC SCENARIO AND OUTLOOK
The world economy stumbled in 2015 amid weak aggregate demand falling commodityprices and increasing financial market volatility in major economies. The world economy isprojected to grow by 2.9 percent in 2016 and 3.2 percent in 2017 supported by generallyless restrictive fiscal and still accommodative monetary stances worldwide.
With a much anticipated slowdown in China and persistently weak economic performancesin other large developing and transition economiesnotably Brazil and the RussianFederationthe developed economies are expected to contribute more to global growthin the near term provided they manage to mitigate deflationary risks and stimulateinvestment and aggregate demand.
The Reserve Bank of India in its first monetary policy statement of 2016-17 has statedthat growth rate for 2016-17 shall be 7.6%. The reduction in small savings rates announcedin March 2016 the substantial refinements in the liquidity management framework and theintroduction of the marginal cost of funds based lending rate (MCLR) should improvetransmission and magnify the effects of the current policy rate cut. The stance ofmonetary policy will remain accommodative.
7. PAPER INDUSTRY OUTLOOK AND OPPORTUNITIES
The paper industry in India has become more promising as the domestic demand is on therise. Increasing population and literacy rate improvement in manufacturing sector andlifestyle of individuals are expected to account for the growth in the paper industry ofIndia. The paper industry in India is growing in a rapid speed with demand increment andopportunity creation and attraction to the international players. The forecasted demand ofIndian paper is 10 million tons and 33 percent of this demand is for P&W papers. Eventhough India has covered 15% of population in world the paper consumption levels standsat very low which is 3 to 5 percent. The leading global paper manufacturers are gainingnearly 5% on average and it stands at 8% approximately among Asia. However for Indianmarket it is 12% or above which sounds very lucrative for Indian paper industry. Thereshould be impact on the printing paper industry in India which is significant butunfortunately in India it is less.
The key challenges to be met is market conditions which are poor and technologyobsolete lacking ability in achieving economy scale and lack of skilled labor . Enablinga overall management and the holistic change which can incorporate a better standards forthe organizational efficiency.
8. CORPORATE SOCIAL RESPONSIBILITY
Even though the provisions of Companies Act 2013 regarding Corporate SocialResponsibility are not attracted to the company yet the Company has been over the yearspursuing as part of its corporate philosophy an unwritten CSR policy voluntarily whichgoes much beyond mere philanthropic gestures and integrates interest welfare andaspirations of the community with those of the Company itself in an environment ofpartnership for inclusive development.
9. HUMAN RESOURCES
Inspite of enduring perhaps the toughest phase in the companys history it must bementioned that the trusted loyal work force has always stood firmly in the hour of need.The company also looks after its human resources well and has always judiciously rewardedperformance.
10. BUSINESS RISK MANAGEMENT
Although the company had long been following the principle of risk minimization as isthe norm in every industry it became a compulsion during more recent times.
Therefore in accordance with erstwhile clause 49 of the listing agreement the Boardmembers were informed about risk assessment and minimization procedures after which theBoard formally adopted steps for framing implementing and monitoring the risk managementplan for the company.
The main objective of this policy is to ensure sustainable business growth withstability and to promote a pro-active approach in reporting evaluating and resolvingrisks associated with the business. In order to achieve the key objective the policyestablishes a structured and disciplined approach to Risk Management in order to guidedecisions on risk related issues.
In accordance with newly introduced Regulation 17(9) of the SEBI (Listing Obligationsand Disclosure Requirements) Regulation 2015 the Board ensures adherence and continuationof such risk management policy.
In todays challenging and competitive environment strategies for mitigatinginherent risks in accomplishing the growth plans of the Company are imperative. The commonrisks inter alia are: Regulations competition Business risk Technology obsolescenceInvestments retention of talent and expansion of facilities.
Business risk inter-alia further includes financial risk political risk fidelityrisk legal risk.
As a matter of policy these risks are assessed and steps as appropriate are taken tomitigate the same.
11. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The system of internal control maintained by the company is adequate and also uptodate.Only after ensuring authenticity and genuineness of various transactions they arerecorded and reported to management.The company always follows relevant and applicableAccounting Standards for properly maintaining the books of accounts and reportingfinancial statements.The internal auditor follows the internal control system on aconsistent basis. Even through this non-production period the Company continues to ensureproper and adequate systems and procedures commensurate with its size and nature of itsbusiness.
12. VIGIL MECHANISM / WHISTLE BLOWER POLICY
In order to ensure that the activities of the Company and its employees are conductedin a fair and transparent manner by adoption of highest standards of professionalismhonesty integrity and ethical behaviour the company has adopted a vigil mechanismpolicy.This policy is explained in corporate governance report and also posted on thewebsite of company.
13. DIRECTORS & COMMITTEES
At the 29th Annual General Meeting of the company held on 24th September2014 thecompany had appointed the existing independent directors Shri Kamal Kumar Khetawat (DIN00438830) and Shri Sheo Shankar Joshi ( DIN 01180895) as independent directors under thecompanies Act 2013 for 5 consecutive years for a term upto the conclusion of the 34thAnnual General Meeting.
At the 30th Annual General Meeting of the company held on 30.05.2015 the company hadconfirmed the appointment of Mrs.Sudha Dhanuka(DIN 06417787) as Director in the categoryof Independent/woman Director under the companies Act 2013. She shall hold office for 5consecutive years for a term upto the conclusion of the 35th Annual General Meeting.
All independent directors have given declaration that they meet the criteria ofindependence as laid down under section 149(6) of the Companies Act 2013 and regulation16(b) of SEBI (Listing Obligations & Disclosure Requirements) Regulation 2015.
In accordance with the provisions of Companies Act2013 Shri Ankit Jalan (DIN:02577501) Executive Director retires by rotation and being eligible offers himself forre-appointment.
14.1 BOARD EVALUATION
Pursuant to the provisions of companies Act2013 and SEBI (Listing Obligations &Disclosure Requirements) Regulation 2015 the Board has carried out annual performanceevaluation of its own performance the directors individually as well the evaluation ofthe working of its Audit Nomination & Remuneration and Stakeholder committee. Themanner in which the evaluation has been carried out has been explained in CorporateGovernance Report.
14.2 REMUNERATION POLICY
The Board has on the recommendation of the Nomination & Remuneration committeeframed a policy for selection and appointment of DirectorsSenior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.
During the year Twelve Board Meetings and one independent directors meeting washeld.The Details of which are given in Corporate Governance Report.The provisions ofCompanies Act2013 and listing agreement and SEBI (Listing Obligations and DisclosureRequirements) Regulation 2015 were adhered to while considering the time gap between twomeetings.
14.4 AUDIT COMMITTEE
The company is having an audit committee comprising of the following directors:
|Name ||Status ||Category |
|Mr Kamal Kumar Khetawat ||Chairman ||Non Executive & Independent Director |
|Mr Ankit Jalan ||Member ||Executive Director |
|Mr Sheo Shankar Joshi ||Member ||Non Executive & Independent Director |
14.5 NOMINATION AND REMUNERATION COMMITTEE
The company is having a Nomination and Remuneration Committee comprising of thefollowing directors:
|Name ||Status ||Category |
|Mr Kamal Kumar Khetawat ||Chairman ||Non Executive & Independent Director |
|Mr Sheo Shankar Joshi ||Member ||Non Executive & Independent Director |
|Mrs Sudha Dhanuka ||Member ||Non Executive & Independent Director |
15. DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013: a) that in the preparation of the annualfinancial statements for the year ended March 31 2016 the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures if any; b) that such accounting policies as mentioned in Notes to theFinancial Statements have been selected and applied consistently and judgement andestimates have been made that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at March 31 2016 and of the profit of theCompany for the year ended on that date; c) that proper and sufficient care has been takenfor the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d) that the annual financial statements havebeen prepared on a going concern basis; e) that proper internal financial controls were inplace and that the financial controls were adequate and were operating effectively. f)that systems to ensure compliance with the provisions of all applicable laws were in placeand were adequate and operating effectively.
16. RELATED PARTY TRANSACTIONS
There were no material contracts or arrangements entered into by the company inaccordance with provisions of section 188 of the Companies Act 2013.
All Related Party Transactions in usual course were placed before the Audit Committeeas also the Board for approval. The policy on Related Party Transactions as approved bythe Board is uploaded on the Companys website.
None of the Directors has any pecuniary relationships or transactions vis--vis theCompany.
17. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
18.1 STATUTORY AUDITORS
M/s Singhi & Co (Firm Registration No.302049E) Chartered Accountants have beenappointed as statutory auditors of the company at the Annual General Meeting held on24.09.2014 for a period of three years subject to ratification by members at everyconsequent Annual General Meeting. Therefore ratification of appointment of StatutoryAuditors is being sought from the members of the Company at the ensuing AGM.
18.2 SECRETARIAL AUDITORS
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Subhasish Bosu & Co. (CP No.:11469 FCS: 7277)Company Secretaries toundertake the secretarial audit of the company.The Secretarial Audit Report is annexedherewith as Annexure 1.
18.3 INTERNAL AUDITORS
M/S Ashish K Gupta & Associates Chartered Accountants performs the duties ofinternal auditors of the company and their report is reviewed by the audit committee fromtime to time.
19. CORPORATE GOVERNANCE
As per SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 of theListing Agreement with the Stock Exchanges a separate section on corporate governancepractices followed by the Company together with a certificate from the CompanysSecretarial Auditor confirming compliance forms an integral part of this Report.
20. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of The Companies (Accounts) Rules 2014 is annexed herewith as "Annexure2".
21. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT 9 is annexedherewith as "Annexure 3".
22. 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 employeesof the Company is as follows: The company has one Executive Director and due to financialconstraints being faced by the company he has forgone remuneration. Further no sittingfees has been paid to any director during the year.
The particulars of the employees who are covered by the provisions contained in Rule5(2) and rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are:
|a) Employed throughout the year ||Nil |
|b) Employed for part of the year ||Nil |
The remuneration paid to all Key management Personnel was in accordance withremuneration policy adopted by the company.
23. IMPAIRMENT OF ASSETS & CAPITAL WORK-IN-PROGRESS
The paper plant was closed on 6th October 2010 to ensure due compliance of orders ofthe Central Pollution Control Board during which the expansion unit was still under theinstallation stage. As a result of the closure the installation of the paper machine andthe integration of the power plant with the old and new machines could not be carried out.In order to be effective as well as feasible both needs to operate in unison but sincecircumstances has led to non commissioning of the power plant and the new paper machineboth of them have been shown as work in progress in auditors report.
In compliance with Accounting Standard AS-28 relating to "Impairment ofAssets" the company has reviewed the carrying amount of its fixed assets as at theend of the year. During the previous financial years the valuation of the various assetsof the company situated at our mill site including the factory building and premises wascarried out by a registered valuer in connection with various financial facilities grantedby our banker. Although the report was submitted by the valuer to the bank directly inaccordance with his norms of appointment it is significant to note that neither the bankhas communicated any adverse remarks on such assets nor have they expressed any concernregarding the current state of such assets till date. Based on the strategic plans andsuch valuation of the fixed assets of the company no impairment of assets is envisaged atthe balance sheet date.
24. FINANCIAL VIABILITY OF COMPANY
As it has been pointed out in the statutory auditors report that there has been50% erosion of net worth due to closure of our mill. During 2011-16 the company startedinfusing funds into the company by way of private placement of redeemable preferenceshares for repaying debts as well as revival of the company.
25. CPCB RESTRICTIONS
As it has been pointed out in the secretarial auditors report the company hadreceived a show cause notice from CPCB directing closure of factory for non compliance of"Installation and commissioning of online effluent monitoring system".Howeverthe company has replied to the CPCB stating that its manufacturing unit remainsclosed since 06.10.2010 in order to comply with CPCB order. It has also been stated thatas and when the company resumes production it shall install the necessary machines andshall ensure compliance of CPCB directions.
26. SEPARATE POSTS FOR KMPS
In order to ensure compliance of section 203 of the Companies Act 2013 and SEBI(LODR) Regulation 2015the company has created separate posts for CFO and CEO andappointed separate key managerial personnel in those posts and this has also been pointedout in secretarial audit report.
The company has been very well supported from all quarters and therefore your directorswish to place on record their sincere appreciation for the support and co-operationreceived from Employees Dealers Suppliers Central and State Governments Bankers andothers associated with the Company.
Your Directors wish to thank the banks financial institutions shareholders andbusiness associates for their continued support and cooperation.
We look forward to receiving the continued patronage from all quarters to become abetter and stronger company.
28. CAUTIONARY STATEMENT
The statements contained in the Boards Report and Management Discussion andAnalysis contain certain statements relating to the future and therefore are forwardlooking within the meaning of applicable securities laws and regulations.
Various factors such as economic conditions changes in government regulations taxregime other statues market forces and other associated and incidental factors mayhowever lead to variation in actual results.
| ||For and on behalf of the Board of Directos || |
|Kolkata ||ANKIT JALAN ||K K KHETAWAT |
|4th May 2016 ||(Executive Director) ||(Director) |