JK Paper Ltd.
|BSE: 532162||Sector: Industrials|
|NSE: JKPAPER||ISIN Code: INE789E01012|
|BSE LIVE 09:35 | 26 Sep||109.10||
|NSE 09:19 | 26 Sep||108.75||
|Mkt Cap.(Rs cr)||1,842|
|Mkt Cap.(Rs cr)||1842.37|
JK Paper Ltd. (JKPAPER) - Director Report
Company director report
To the Members
The Directors have pleasure in presenting the 55th Annual Report alongwithAudited Financial Statements of the Company for the financial year ended 31stMarch 2016.
Your Company has posted significantly improved performance during theyear.Howeverthere is a need to conserve cash for reduction in debts and for futureprojectsThe Directors therefore recommend a Dividend of Re.0.50 per share on the expandedEquity Share Capital.The Dividend outgo would amount to Rs.8.94 crores (inclusive ofDividend Distribution Tax of Rs 1.51 crores).
The amount available for appropriationincluding surplus from the previous yearincluding debenture redemption reserve written backstood at Rs.291.53 crores.TheDirectors propose this to be appropriated as under:
The Company recorded its highest ever Sales of Rs 2881.45 crores during the year anincrease of 14.6% over the previous year.The Company achieved its highest ever salesvolumes of 4.60 Lacs MT.Both our Units operated at near-full capacities compared to 91% inthe previous year.The Companys efforts in enlarging the geographical reach of itsproductsstrengthening the distribution network and introduction of new products in thelast 2 years are showing positive results.Howeverrealizations continued to be a matter ofconcern due to cheaper nil duty imports from ASEAN countries and consequent inability ofIndian manufacturers to pass on cost increases to the market.During the year the companyfocused on further optimizing the utilization and operating parameters of the new projectat Unit JKPM which led to significant improvement in EBIDTA margins.As you are aware theCompany had stepped up its plantation efforts and it is satisfying to note that theefforts has paid offwith greater proportion of the requirement being met out of materialsourced from shorter distances which reduces the overall delivered costs at ourmills.Exports accounted for about 48553 MT as against 40332 MT in the Previous Year.
With better operating efficiencies and softer input pricesthe Company posted muchimproved margin consequently EBIDTA at Rs 420.83 crores was up 57.9% over the previousyear.The Companys Profit Before Tax was significantly up at Rs 115.12 crorescompared to a loss of Rs 51.03 crores during 2014-15 and Net Profit for the year was Rs79.56 crores against loss of Rs 12.74 crores during previous year.
During the year under reviewyour Company had issued 11910000 Equity Shares ofRs.10/- each at a price of
Rs.42/- (including premium of Rs.32/-) aggregating to Rs.50 Crore on Preferential basisto the Promoter and constituents of the Promoter Group.Consequentlythe paid-up EquityShare Capital of the Company increased to Rs.148.53 Crore from Rs.136.62 Crore.Theproceeds of the said issue have been used towards augmenting the Net Worth of the Company.
The newly commissioned mill at UnitJKPM is one of the most modern in the Indianindustry.The technological edge and economies of scale provided by the new machine haveenabled the Company to lower its cost of production and to scale up market share in officepapers quite steeply.Average capacity utilization of the new mill stood at 104% for theyear under consideration.
The Companys joint venture with Oji Holdings Corporation and Marubeni of Japancommenced its operations in July 2014.The high end corrugated box making unit is howeverfaced with slow pick up due to sluggish sales in end user segments.It might take 2-3 yearsmore to reach full capacity utilization.The emergence of online retail and consequentdemand for corrugated packaging offers exciting opportunities.
AWARDS AND RECOGNITION
Our commitment towards Safety & EnvironmentQuality & Operational Excellenceand HR practices continue to garner appreciation from various industry and socialbodies.Some of the accolades and awards received during the year are as follows:
a.UnitJKPM bagged 1st Prize among Pulp and Paper Industries in Indiain the prestigious"National Energy Conservation Award 2015" organised by Ministry of Power andBureau of Energy Efficiency (BEE)Govtof India.
b.UnitJKPM was adjudged Winner at the prestigious "7th -SRISTI- G- CUBE (GoodGreen Governance) Award -2015" organised by SRISTI publication
c.Unit JKPM bagged the "Energy Efficient Unit" in "16th National Awardfor Excellence in Energy Management-2015" organized by Cll held on 2nd and 3rdSeptember 20l5at Hyderabad
d.Unit CPM received Greentech Environment Gold Award 2015 from Greentech Foundation(NGO- Registered under Indian Societies Act) New Delhi.
e.Unit CPM received the "Best Social Innovative Project Award" by 5th WorldCSR Congress on 18th February 2016
The industrial relations at our plants continued to remain peaceful and cordialthroughout the year.Our continuous dialogue with the union and workers representatives hasimproved the industrial harmony and work culture.Our engagement with the workforce hasimproved the work environmentquality of lifeproductivity and skill.By introducingvarious new work practices along with automationwe have succeeded in increasingproductivity.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2016 in the prescribed form MGT -9 isattached as Annexure-I to this Report and forms part of it.
PARTICULARS OF LOANSGUARANTEES OR INVESTMENTS
The particulars of loansguarantees or securities and investments covered under theprovisions of Section 186 of the Companies Act2013 are given in the financial statements.
The Company has not made any provision during the financial year 2015-16 for thepurchase ofor subscription forshares in the company by trustees of JK PaperEmployees Welfare Trustwhich was formed by the Company in the year 2004 for thewelfare of the employees of the Companyfor the shares to be held by or for the benefit ofthe employees of the company.
RELATED PARTY TRANSACTIONS
During the financial year ended 31st March 2016all the contracts orarrangements or transactions entered into by the Company with the Related Parties were inthe ordinary course of business and on arms length basis and were in compliance withthe applicable provisions of the Companies Act2013 and SEBI (Listing Obligations &Disclosure Requirements) Regulations2015.
Furtherthe Company has not entered into any contract or arrangement or transactionwith the Related Parties which could be considered material in accordance with the Policyof the Company on materiality of Related Party Transactions.In view of theabovedisclosure in FORM AOC-2 is not applicable.
The Related Party Transaction Policy as approved by the Board is available on thewebsite ofthe Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Shri Wilhelmus Johannes Maria Wienk retires by rotation and being eligible offershimself for reappointment at the ensuing Annual General Meeting (AGM).
Shri.O.P.Goyal was reappointed as Whole-time Director of the Company from 7thSeptember 2015 till 30th September 2018 by the Members at the AGM of theCompany held on 24th September 2015.
The Board of Directors of the Company re-appointed Sh.Harsh Pati Singhania as ViceChairman & Managing Director of the Company for a period of five years w.e.f.IstJanuary 2017subject to the approval of the Members at the forthcoming AGM ofthe Company.
All the Independent Directors of the Company have given requisite declarations thatthey meet the criteria of independence as provided in Section 149(6) of the CompaniesAct2013 and also Regulation I6(l)(b) of SEBI (Listing Obligations and DisclosureRequirements) Regulations2015.
There was no change in Managing DirectorWholetime DirectorChief Finance Officer andCompany Secretarycollectively the Key Managerial Personnelduring the year under review.
INTERNAL FINANCIAL CONTROLS
The Company has in place an adequate budgetary control system and internal financialcontrols with reference to financial statements.No reportable material weaknesses wereobserved in the system during the year.Furtherthe Company has laid down internalfinancial control policies and procedures which ensure accuracy and completeness of theaccounting records and the same are adequate for safeguarding of its assets and forprevention and detection of errors and fraudscommensurate with the size and nature ofoperations of the Company.The policies and procedures are also adequate for orderly andefficient conduct of business of the Company.The Company also has a robust managementinformation system for the timely preparation of correct and accurate financialinformation.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has been one of the foremost proponents of inclusive growth and hascontinued to undertake projects for overall development and welfare of the society in thefields of environmentconservation of natural resourceshealtheducationrural developmentand livelihood interventions etc.
The Company has requisite Corporate Social Responsibility (CSR) Policy in accordancewith the provisions of the Companies Act 2013 and rules made there under.The contents ofthe CSR Policy are disclosed on the website ofthe Company.
Even thoughthe company was not required to spend towards CSR since it incurred a netloss of Rs.120.86 crore in the preceding three yearsit has spent Rs.105.36 lac towardsCSR activities during the Financial year 2015-16.
A detailed report on Companys CSR activities alongwith the Annual Report on theCSR activities undertaken by the Company during the financial year under reviewin theprescribed format is annexed to this Report as Annexure-2.
(a) Statutory Auditors and their Report
M/s S S Kothari Mehta & Co.Chartered Accountantshave been appointed as Auditorsof the Company to hold the office from the conclusion ofthe 53rd AGM held on 27thSeptember
2014 until the conclusion of the 56th AGM to be held in the year2017subject to ratification of the appointment by the members at the respectiveAGMs.Accordinglymatter relating to the appointment of the Auditors will be placed forratification by members at the forthcoming AGM.The observations of the Auditors in theirreport on Accounts and the Financial Statementsread with the relevant notes are selfexplanatory.
(b) Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act2013the Board ofDirectors appointed Shri Namo Narain AgarwalCompany Secretary in Practice as SecretarialAuditor to carry out Secretarial Audit of the Company for the financial year 2015-16 .TheReport given by him for the said financial year in the prescribed format is annexed tothis Report as Annexure-3.The Secretarial Audit Report does not contain anyqualificationreservation or adverse remark.
(c) Cost Auditor and Cost Audit Report
The Audit of the cost records of the Company for the financial year ended 31stMarch 2016is being conducted by M/s R.J.Goel & Co.Cost AccountantsDelhi and theirReport will be filed with the Ministry of Corporate AffairsGovernment of India.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the financial year under reviewthere were no significant and material orderspassed by the Regulators or Courts or Tribunals which would impact the going concernstatus of the Company and its future operations.
CONSERVATION OF ENERGY ETC.
The details as required under Section I34(3)(m) read with the Companies (Accounts)Rules2014 is annexed to this Report as Annexure-4 and forms part of it.
PARTICULARS OF REMUNERATION
Disclosure of the ratio of the remuneration of each director to the medianemployees remuneration and other requisite details pursuant to Section 197(12) ofthe Companies Act2013 read with Rule 5 (I) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules2014as amendedis annexed to this Report asAnnexure-5.FurtherParticulars of Employees pursuant to Rule 5(2) & (3) ofthe aboveRulesform part of this Report.Howeverin terms of provisions of Section 136 of the saidActthe Report and Accounts are being sent to all the members ofthe Company and othersentitled theretoexcluding the said particulars of employees.Any member interested inobtaining such particulars may write to the Company Secretary.The said information isavailable for inspection at the Registered Office of the Company during working hours.
Including details pertaining to Board MeetingsNomination and RemunerationPolicyPerformance EvaluationRisk ManagementAudit Committee and Vigil Mechanism:
Your Company reaffirms its commitment to the highest standards of corporate governancepractices.Pursuant to Regulation 34 read with Schedule V of SEBI (Listing Obligations andDisclosure Requirements) Regulations2015the Management Discussion and AnalysisCorporateGovernance Report and Auditors Certificate regarding compliance of conditions of CorporateGovernance are made part of this Annual Report.
The Corporate Governance Report which forms part of this Annual Report also covers thefollowing:
a) Particulars of the four Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of DirectorsKey Managerial Personnel andSenior Management includinginter aliathe criteria for performance evaluation ofDirectors.
c) The manner in which formal annual evaluation has been made by the Board of its ownperformance and that of its Committees and individual Directors.
d) The details with respect to composition of Audit Committee and establishment ofVigil Mechanism.
e) Details regarding Risk Management.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordancewith the applicable Accounting Standards.The Audited consolidated financial statementstogether with Auditors Report form part of the Annual Report.
A report on the performance and financial position of each of the subsidiaries andassociates included in the Consolidated Financial Statements is presented in a separatesection in this Annual Report.Please refer to AOC-I annexed to the Financial Statements inthe Annual Report.
Pursuant to the provisions of Section 136 of the Actthe financial statements oftheCompanyConsolidated Financial Statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on the website ofthe Company.
During the financial year under reviewHabras International (Singapore) Pte.Ltd.becameyour Companys subsidiary.
Pursuant to the approval of members by means of a Special Resolution at the AGM held on27th September 2014the Company has continued to accept deposits from the publicinaccordance with the provisions of the Companies Act2013 and rules thereunder.
The particulars in respect of the deposits covered under Chapter V of the said Actforthe financial year ended 31st March 2016 are:
(a) Accepted during the year Rs.12.66 crores;
(b) Remained unclaimed as at the end of the year - Rs.0.87 crores;
(c) Default in repayment of deposits or payment of interest thereon at the beginning ofthe year and at the end of the year - Nil; and
(d) Details of deposits which are not in compliance with the requirements of Chapter Vofthe said Act
DIRECTORS REPONSIBILITY STATEMENT
As required under Section I34(3)(c) ofthe Companies Act2013your Directors state that:
(a) in the preparation of the annual accountsthe applicable accounting standards havebeen followed along with proper explanation relating to material departuresif any;
(b) the accounting policies have been selected and applied consistently and judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and ofthe profit oftheCompany for that period;
(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the said Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) the proper internal financial controls to be followed by the Company have been laiddown and that such internal financial controls are adequate and were operatingeffectively; and
(f) the proper systems have been devised to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
Your Directors acknowledge the continued support and cooperation received from theCentral GovernmentState GovernmentsShareholdersparticipating Financial Institutions andBanksCustomersDealers and Suppliers.
The Board also wishes to record its sincere appreciation of the totalcommitmentdedication and hard workput in by every member of the Team JK Paper.
CORPORATE SOCIAL RESPONSIBILITY REPORT
1.Companys CSR Philosophy and Belief
CSR at JK Paper is driven by the belief that communities prosper when they areeconomically viable and socially harmonious.And inclusive development - Sab Ka Saath SabKa Vikas; is about building self reinforcing networks that can access resources embeddedin collective social assets.
Our CSR is therefore focused on a) creating social assets through interventions inhealtheducation & skilling; b) building & strengthening networks of SHGsfor the capitalization of social assets and c) mobilizing the networks for social changethrough capacity buildingtraining and advocacy with key influencers.
2.Environment & Sustainability
Sustainability is at the core of our operations; our carbon foot print is amongst thelowest in industry.UnitJKPM generated 59% energy from renewable sources therebysignificantly reducing emissions and consumption of fossil fuels.Our intervention in farmforestry project has resulted in enhancing green cover in OdishaGujaratAndhra Pradeshand Maharashtraat the end of FY 2015-16 our cumulative acreage stands at over 1.44 LacHa.
3.Human Resource Practices
We encourage an ownership culture and commitment amongst our employees.Thecompanys HR policy is aimed at ensuring equality of opportunity and access totraining and skill upgradation for all its employees be it ManagersSupervisors or theWorkers.We do not allow or encourage child or forced labour directly orindirectly.Employees at CorporateBranch Offices and Factories are provided withsafehygienicand humane workplace environment.
4.Educational Initiatives 4.I.School Education
The Company through its schools has been imparting quality education from the primaryto the tertiary level.The three schools at Raygada(Odisha) and Songadh(Gujarat) make allout efforts to reach out to the weaker sections by enrolling students from its vicinity.
Both units JKPM & CPM regularly organize special programs from time to time fortribal children so that they can compete with other students.Unit CPM has been runningComputer Certificate Courses through a Computer training Centre from June 2010.More than500 studentslargely from tribal communityhave successfully completed these subsidizedcourses.
The program started more than a decade back has not only enabled 13403 individuals tobecome literate but also productive assets of the society.
At Unit JKPM 9111 Tribal Women were enabled to become literate.The Program started with2 centers in 2005 and has expanded to 25 Community Based Centers in
2015.In a recent initiative on digital learning Computer Based Functional Literacymodules were introduced in six centers which simplified learning &comprehension.Similarly Unit CPM operates 20 centers and till date 4292 tribals becameliterates from areas where prevailing illiteracy rates are as high as 42%.The program hasenhanced self belief of the participants and many of them now participate in SHGs orgroup enterprise development.
The project addresses a vital need amongst slow learners.The objective ofthe project isto extend supplementary tutorial support to the 4th & 5th class students who are foundweak in EnglishScience & Mathematics.Envisaged as a participatory model to createjoint ownershipthe success of this model has paved the way for its replication in morevillages.
Nutan Gyanvardhinia special school for the Educational Rehabilitation ofthe ChildrenWith Special Needs (CWSN).The schoolstarted in collaboration with the districtadministrationRayagada has 30 students of Rayagada and Kolnora blocks on its rolls.
Vocational rehabilitation is a key focus areatraining in tailoring gardening &paper envelope making have been included for vocational rehabilitation of thesechildren.Regular parent meeting is organized to create an interface for assessing thedevelopmental trend ofthe CWSNs and General Health check up camp is organized twice amonth with support from unitJKPM.
The school runs from 10 AM to 4 PM & the children are served with breakfast andlunch daily.Children are brought into the school and taken back to their home by theschool bus regularly with escort services.
JKPL operates tribal areas and has made special efforts to enhance the employability oftribal youth by organizing different need based Skill Development Programs.
Unit CPM adopted Industrial Training Institute (ITI)UkaiGujarat under PPP model inthe year 2008.It now offers 10 different job oriented courses in demand from industry inthe vicinity.Declared as Centre of Excellenceits enrollment in 2015 -16 stood at 620students.
ITI Ukai organized Kaushalya Vardhan Kendra (KVK) where 100 Employment Kits weredistributed byTribal Development Department to unemployed boys & girls residing atborder villages of Fort Songadh Taluka.An MOU has been signed between ITI Ukai and UnitCPM for training non-qualified workmen for short term KVK courses where ITI Ukai willprovide study material and other assistance to the workmen of CPM identified for thetraining courses.
UnitJKPM similarly has been taking up activities towards Skill development foremployability of tribal youth.A tailoring cum embroidery centre has been createdexclusively for SC/ ST adolescent girls.Employability among the tribal youth & girlsis also enhanced through other vocational trainings like Mobile RepairElectricianDriving& Beautician courses.After the trainingthe tribal youth have started earning theirlivelihood.Some of the tribal girls have been providing their service to Tribal GirlsHostels & Beauty Parlours and earn in the process.
Entrepreneurship development is key to unlocking social capital and Promotion of MicroEnterprises is a proven intervention in fulfilling this important national goal.JKPL incollaboration with Central Board of Workers Education mobilized 406 SC/ST boys andgirlsshortlisted candidates were counseled and provided with business development planplus handholding support for setting up own enterprise in their village at the lowestworking capital.The effort has resulted in the setting up of micro enterprises like tiffinstallsgrocery shopstailoringmobile repairingDTH repairing & mobile vending units.
The enterprises are linked with MUDRA (Micro Units Development & RefinanceAgencies) Yojana recently launched by Govtof India for further scaling up.
The transformation of women from illiteracy to literacy through JKPLs adulteducation program has empowered them and encouraged them to form Self Help Groups enablingthem to become productive assets ofthe society and in turn enhance economic & socialstatus.
The groups have taken up Income Generation Programmes (IGP) like PhenylMakingDetergent MakingPaper Plate makingTurmericHill broom making etc.Producer Groupsconsisting ofthe members of different members ofthe Self Help Groups were also formed incollaboration with Odisha Livelihood Mission.These were supported by encouraging them totake up Poultry farming as a backyard initiative.This has brought them dual income bothfrom selling of meat & eggs.Over 1000 tribal women have been involved in Micro Creditactivities through formation of 72 Self Help Groups(SHG) in JKPM and 9 inCPM.MoreoverSelf Help Group Corpus of Rs.31.48 lakh generated through Micro Saving bymembers has substantially increased their economic independence.The SHGs have mobilized Rs79.44 lakh as working capital from different financial institutions.Odisha LivelihoodMission (OLM) based on their performance has sanctioned revolving fund to the bestperforming SHGs.The impact is visible in enhanced family incomes of between Rs 1000 to Rs3000 per montha major part of which is spent on health nutrition & education ofthechildren.
The empowerment of women members of SHGs are manifested in active participation of
SHG leaders in Gram Sabha deliberations.12 women from them have been elected to 3 TierPanchayat RajGovernance System.554 SHG members have opened individual bank accounts underPradhan Mantrijan Dhan Yojana.
4.8.Disseminate scientific agricultural practices
UnitJKPM also helped create additional income for farmers by introducing scientificpractices in agriculture.Farmers Clubs have been formed and Crop Specific Training (CST)programmes were organized on both Kharif & Rabi with the support of NABARD.Farmerswere also trained on commercial vegetable farming during the seasons its earning potentialand fertilizer application.
Recently some leading farmers were selected and imparted training on modernagricultural practices.They were also taken for an exposure visit to successfulagriculture models for Hybrid MaizeBasmati RiceVegetableSun Flower & Fruitscultivation in Uttarakhand and Himachal Pradesh.These visits were organized incollaboration with Directorate of AgricultureGovtof Odisha.
Introduction of New Cash Crop Pattern i.e.Pointed GourdLemon Grass & Watermelonhas fetched additional income of up to Rs 60000/-Rs 45000 &Rs3l000/- per acre.
Line Transplantation of paddy as a technology supplement has increased 35% paddy yieldin 250 ha.benefiting 271 farmers.
Basic health services including free medicines to the ST & SC through health campsand mobile dispensaries are held in nearby villages at regular intervalsover 81066patients have been benefitted through 525 health camps.Mobile Medical Dispensary coveringvillages within 20km radius around unit CPM has been rendering this service since1998.Committed health intervention through health camps & mobile dispensaries besidesmaternal & child health services at the doorstep has successfully reduced theincidence of health hazards in the villages.
SimultaneouslyCommunity Health Facilitators make house visits to sensitize thepregnant & lactating mothers on safe health practices to encourage health seekingbehavior.
5.2.JK Center for Tribal Eye Health
JK center for Tribal Eye Health in partnership with reknown L V Prasad Eye Institutewas inaugurated on 31st August by the Honble Chief MinisterOdisha Shri NaveenPatnaik in the presence of VC & MDJKPL Shri
H.P.Singhania.Tribal Eye Care is a first ever outreach program of its kind and includesmobilization of the population for eye healthcreating awareness about eyehealthscreening for possible disorders and surgeries.JK Centre for Tribal Eye Health isequipped with state of the art equipment and trained staff to deliver equitablecomprehensive eye care.A population of 75000 in a span of five years shall be servedunderthis intervention.
5.3.Community Health Interventions
Life Skill Education has proven beneficial to the tribal adolescent girlsimpartedthrough Balika Mandals in different villagesthe participants learnt 10 Life Skills.
Adolescent Reproductive & Sexual Health (ARSH) is one of the priority areas of ourproject villages.This initiative has brought significant change in the lives of theadolescent girls who have learnt the use of sanitary napkins and tips to care duringmenstrual cycle.
Special initiative has been taken up for sensitizing the youngsters on the origin ofdeadly diseasevarious common sources of acquiring HIVits symptoms & also motivatedwith various real life examples of death owing to AIDS.
Basic infrastructure like crematoriumvillage approach roadoverhead tanks for safedrinking waterrepair oftemples were taken up in the need based villages during the year.
JK Paper is proud of its achievements but recognizes it still has a long way to go.Itwill like to build on what has been achieved so far and by learning from its past to servethe society to the best of its abilities.On 5th January2010SPARSHa NGO wasformed under Society Registration Act I860 in CuttackOdisha to take up developmentalactivities in the nearby villages of unitJKPM to carry out JKs CSR activitiessystematically.
ANNUAL REPORT ON THE CSR ACTIVITIES UNDERTAKEN BY THE COMPANY DURING THE FINANCIAL YEARENDED 3IST MARCH 2016
1.A brief outline of the Companys CSR Policyincluding overview of projects orprograms proposed to be undertaken and a reference to the web-link to the CSR policy andprojects or programs-
The Company has been one ofthe foremost proponents of inclusive growth and has beenundertaking projects for overall development and welfare of the society through its CSRinitiatives in areas pertaining to promoting preventive healthcareeducationruraldevelopmentenvironmental sustainability and conservation of natural resourcesetc.
The Company has framed a CSR Policy as required under Section 135 ofthe Companies Act2013.The details ofthe CSR Policy has been posted on the website ofthe Company and theweb-link for the same is http://www.jkpaper.com/images/pdf/Corporate-Social-Responsibility-Policy.pdf
2.The Composition of the CSR Committee:
The CSR Committee comprises of the following Directors:
Shri Harsh Pati Singhania (Chairman ofthe Committee)Non-independent
Shri Shailendra SwarupIndependent
3.Average Net Profit/(loss) of the Company for last three financial years: (Rs.120.86)crore.
4.Prescribed CSR Expenditure (two percent ofthe amount as in item 3 above): NotApplicable
c.manner in which the amount spent during the financial year .
The Company has undertaken various CSR activities during the Financial year 2015-16asstated in the CSR Report forming part of the Annual Report and has spent Rs.105.36 lactowards such activities even thoughthe company was not required to spend towards CSRsince it incurred an average net loss during the three immediately preceding financialyears.
6.The CSR Committee confirms that the implementation and monitoring of CSR Policyis incompliance with CSR objectives and Policy of the Company.
SECRETARIAL AUDIT REPORT
FOR THE FINANCIAL YEAR ENDED 31ST MARCH2016
[Pursuant to Section 204(1) of the Companies Act2013 and Rule No.9 of the Companies(Appointment and
Remuneration of Managerial Personnel) Rules2014]
JK Paper Limited
P.O.Central Pulp Mills- 394660
Fort SongadhDist.Tapi Gujarat
I have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by JK Paper Limited (hereinaftercalled the Company).Secretarial Audit was conducted in a manner that providedme a reasonable basis for evaluating the corporate conducts/statutory compliances andexpressing my opinion thereon.
Based on my verification of the Companys bookspapersminute booksforms andreturns filed and other records maintained by the Company and also the informationprovided by the Companyits officersagents and authorized representatives during theconduct of secretarial auditI hereby report that in my opinionthe Company hasduring theaudit period covering the financial year ended on 31st March2016 (AuditPeriod)complied with the statutory provisions listed hereunder and also that the Companyhas proper Board-processes and compliance-mechanism in place to the extentin the mannerand subject to the reporting made hereinafter:
I have examined the bookspapersminute booksforms and returns filed and other recordsmaintained by the Company for the financial year ended on 31st March2016 according to theprovisions of:
(i) The Companies Act2013 (the Act) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act1956
(SCRA) and the rules made thereunder;
(iii) The Depositories Act1996 and the Regulations and Bye-laws framed thereunder;
(iv) Foreign Exchange Management Act1999 and the rules and regulations made thereunderto the extent of Foreign Direct InvestmentOverseas Direct Investment and ExternalCommercial Borrowings;
(v) The following Regulations and Guidelines prescribed underthe SecuritiesandExchangeBoardoflndia Act1992 (SEBI Act):-
(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations2011;
(b) The Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations2015;
(c) The Securities and Exchange Board of India (Issue of Capital and DisclosureRequirements) Regulations2009;
(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployees Stock Purchase Scheme) Guidelines1999- (Not applicable to the Company duringthe Audit Period);
(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations2008- (Not applicable to the Company during the Audit Period);
(f) The Securities and Exchange Board of India (Registrarstoanlssue and Share TransferAgents) Regulations1993 regarding the Companies Act and dealing with client;
(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations2009- (Not applicable to the Company during the Audit Period)
(h) The Securities and Exchange Board of India (Buyback of Securities)Regulations1998- (Not applicable to the Company during the Audit Period); and
(i) The Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations2015.
(vi) Management has identified and confirmed the following laws as being specificallyapplicable to the Companywhich have been complied with:-
(a) Paper and Paper Board Cess Rules1981.
(b) The Indian ForestAct1927
I have also examined compliance with the applicable clauses of the following:
(i) Mandatory Secretarial Standard I and Secretarial Standard 2 issued by the Instituteof Company Secretaries of India.
(ii) The Listing Agreements entered into by the Company with the Stock Exchanges.
During the period under reviewthe Company has complied with the provisions of theActsRulesRegulationsGuidelinesStandardsetc.as mentioned above.
I further report that:
The Board of Directors of the Company is duly constituted with proper balance ofExecutive DirectorsNon-Executive Directors and Independent Directors.The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with provisions of the Act.
Adequate Notice is given to all directors at least seven days in advance to schedulethe Board Meetings.Agenda and detailed notes on agenda are also sent in advance and asystem exists for seeking and obtaining further information and clarifications on theagenda items before the meeting and for meaningful participation at the Meeting.
All decisions at Board Meetings and Committee Meetings are carried out unanimously asrecorded in the Minutes ofthe Meetings ofthe Board of Directors or Committee oftheBoardas the case may be.
I further report thatbased on review of compliance mechanism established by theCompany and on the basis of compliance certificates issued by the Company Executives andtaken on record by the Board of Directors and Audit Committee at their meetingsthere areadequate systems and processes in the Company commensurate with the size and operations ofthe Company to monitor and ensure compliance with applicable lawsrulesregulations andguidelines.
I further report that during the audit period the Company has -
(i) Obtained Members approvalpursuant to sections 196197 and 198 of theCompanies Act2013 by means of a Special Resolution passed on 24 September2015 forre-appointment of and payment of remuneration to Shri OP Goyal as Whole-time Director ofthe company for a period from 7th September 2015 till 30th September2018
(ii) Obtained Members approvalpursuant to section 62 (I) (c) ofthe CompaniesAct2013 by means of a Special Resolution passed on 2 September2015 for issue of11910000 equity shares of Rs.10 eachat a price of Rs.42 eachon preferential basis tothe Promoter and constituents of the Promoter Group of the companyand
(iii) Sold 3402171(1.15%) shares in Udaipur Cement Works Limitedthrough offer forsalepursuant to Clause 40A of the (then) Listing Agreementto achieve Minimum PublicShareholding of 25% in that company.
JK Paper Limited
P.O.Central Pulp Mills- 394660
Fort SongadhDist.Tapi Gujarat
My report of even date on Secretarial audit for the financial year ended 31stMarch2016 is to be read along with this letter stating that -
1.Maintenance of secretarial record is the responsibility of the management of thecompany.My responsibility is to express an opinion on these secretarial records based onmy audit.
2.1 have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records.Theverification was done on test basis to ensure that correct facts are reflected insecretarial records.I believe that the processes and practicesI followed provide areasonable basis for my opinion.
3.1 have not verified the correctness and appropriateness of financial records andBooks of Accounts ofthe company.
4.Where ever requiredI have obtained the Management representation about thecompliance of lawsrules and regulations and happening of events etc.
5.The compliance ofthe provisions of Corporate and other applicablelawsrulesregulationsstandards is the responsibility of management.My examination waslimited to the verification of procedures on test basis.
6.The Secretarial Audit report is neither an assurance as to the future viability ofthe company nor of the efficacy or effectiveness with which the management has conductedthe affairs ofthe company.
Particulars of Conservation of EnergyTechnology Absorption and Foreign ExchangeEarnings & Outgo in terms of section 134 (3) (m) of the Companies Act2013read withCompanies (Accounts) Rules2014 and forming part of Directors Report to the membersfor the year ended 31st March 20I6.
A) CONSERVATION OF ENERGY
1.The steps taken for conservation of energy:
(I) EOPfeed MC pump & Bleached HD MC Pump ran with 100% valve kept open and thespeed regulated with VFD.(2) Energy saved in use of Compressed air in CFB-6 Ash handlingsystem by changing the operation from timer mode to Probe mode (need basis avoiding idleoperation) and decreasing the Conveying air pressure in the ash handling system from 4.0kg/cm2 to 2.0 kg/cm2 and also air consumption reduced by reducingair line orifice in the conveying air from 8 to 4 nos & decreased the orifice holesdiameter from 8 mm to 6 mm.(3) Savings in Power due to decrease in Drag chain feeders sealair pressure by reducing the SA fan RPM.(4) Reduction in cooling tower fans (4 nos) powerconsumption by decrease in blade angle.Savings in power Rs.13.9 Lacs I Annum.(5)Replacement of energy inefficient vacuum pump (PM I- InoPM 3 - 2nosPM 5- I no & PDplant - 2 nos)with new energy efficient vacuum pumps.(6) Duplex strainer installed in thereturn line of evaporator condensate to create standby strainer to avoid drainage lossduring cleaning.(7) WBL Flash vapor
2 valves provided & position adjusted at 7th body inlet.Steam economy improved.(8)Steam lines and traps were audited for steam leakagesfunctionality of steamtrapsradiation losses etc.identified & rectified the faulty trapsinsulated the barelines and valvesplugged the leakages & isolated the identified idle steam lines andheaders.(9) Power factor improvement from 0.82 to 0.88.(10) Utilisation of all Coal FiredBoilers and Liquor Fired Boiler CBD and IBD hot water in Caustisizing and Pulp Mill.(II)Replacement of normal bulbs by LEDwherever possible.(12) Replacement of Broke Refiner byDeflaker.
ii.The capital investment on energy conservation equipments:
The Company has invested Rs.128.76 Lacs for energy conservation equipments during theyear
B) RENEWABLE ENERGY
The steps taken by the company for utilizing alternate sources of energy:
Concentrated black liquor contains carbohydrates( Lignin) extracted from wood andsodium salts bonded with carbohydrates from the cooking chemicals added at thedigester.Combustion ofthe organic portion of Black liquor solids produces heat in therecovery boilerheat is used to produce high pressure steamwhich is used to generateelectricity in a turbine.Turbine extraction Medium & low pressure steam is used forprocess heating.Black liquor solids as a fuel has been confirmed as renewable biomass fuelby Ministry of New & Renewable EnergyGovernment of India.About 20% of the energyrequirement at Unit CPM and 55% at UnitJKPM is being met by this renewable source.
C) TECHNOLOGY ABSORPTIONADAPTATION AND INNOVATION
i.The efforts made towards technology absorption:
1.Reduction in paper breaks caused by replacement & optimization of Defoamer inPM-I.
2.High pressure showers installed & Felt Conditioning Program (Chemicals) stopped.
3.A 3000 M3 capacity Sewage Treatment Plant is commissioned which covers the effluentgenerated from entire townshipESI Hospital and some of surrounding villages ofthe JKPaper Mills.The green water so generated is being used in the process.
4.Continuous on line sprinklers for dust suppression at coal yard and chips conveyorfor better environment.
5.Pet coke plant installed & commissioned to reduce Furnace oil consumption in Limekiln.
6.Introduction of Leaf Filter to overcome limitation ofX-Filter and centrifuge inCaustisizing plant.
ii.The benefits derived as a result of above efforts:
The initiatives have enabled the company in terms of product & qualityimprovementcost reductionproduct development and enhance customer satisfaction.
iii.Research & Development:
During the yearthe Company has spent Rs.409 Lacs on Research & Development.Varioustrials were conducted on the shop floor for new product developmentto upgrade the qualityof products and for cost savings.
1.New Products developed and introduced during the current year:
Envelope paper 80-180 gsmStiffener 140-170 gsmBraille paper 140 gsmParchment 170gsmCup base 160 gsmJK Cote AP 120 gsmCopier 65 gsm and HI FPPP 60 - 90 gsm.
2.R&D activities in Plantation:
a.Produced Eucalyptus clones by 100% mini-cutting method to avoid topophysis effect inclonal plantation resulting in higher yield per unit area.
b.Developed clone of E Ruophylla selected from Godhra whose productivity is higherunder irrigated condition in Gujarat.
c.Developed breeding orchard for Lueceana CollensiiCPM II (Subabul Clone)CPM 16(Subabul Cone) and K 636 at Plantation R&D Centre.
D) FOREIGN EXCHANGE EARNINGS AND OUTGO
Disclosure pursuant to Section I97(I2) of the Companies Act20I3 read with Rule 5(I) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules20I4 as amendedvide MCA Notification dated 30th June 2016for the FY2015-16 ended 31st March 2016:
A.The ratio of the remuneration of each director to the median remuneration of theemployees of the Company-
(a) Non-Executive Directors: Shri Bharat Hari SinghaniaChairman7.66; Shri Arun BharatRam2.32 ; Shri Dhirendra Kumar2.21; Shri M.H.Dalmia1.97; Shri R.V.Kanoria2.51; ShriSandip Somany2.07; Shri Shailendra Swarup2.20; Shri Udayan Bose2.37; Smt.VinitaSinghania2.07; and Shri Wim Wienk2.02 (b) Executive Directors: Shri Harsh PatiSinghaniaVC & MD189.3 I and Shri O.P.GoyalWTD84.23.
B.The percentage increase in remuneration of each directorchief financeofficercompany secretary - Shri Bharat Hari SinghaniaChairman1306 %; Shri Harsh PatiSinghaniaVC & MD78 %; Shri O.P.GoyalWTD39%; Shri Arun Bharat Ram843%; ShriDhirendra Kumar530%; Shri M.H.Dalmia1144%Shri R.V.Kanoria550%Shri SandipSomany1867%Shri Shailendra Swarup942%Shri Udayan Bose487%Smt.VinitaSinghania883%Shri Wim Wienk1178%Shri V.KumaraswamyCFO30%and Shri Suresh ChanderGuptaCS21%.
The said increase in the remuneration to (i) VC & MD and WTD was due to payment ofcommission linked with net profits and performance linked incentive as per scheme of theCompanyduring the financial year 2015-16and (ii) Non Executive Directorswas due topayment of commission linked with net profits.No such commission/performance linkedincentive was paid in last financial year 2014-15due to absence of profits.
C.The percentage increase in the median remuneration of employees - 5.74%.The number ofpermanent employees on the rolls of Company - 2602.
D.Average percentage increase made in the salaries of employees other than themanagerial personnel in the financial year 2015-16 was 13.76% whereas the increase in themanagerial remuneration for the same financial yearwas 63.88%.Such increase in managerialremuneration is as perjustification given in point B above.
E.We affirm that the remuneration paid during the year 2015-16 is as per theRemuneration Policy for DirectorsKey Managerial Personnel and Senior Management oftheCompany.