To the Members
The Directors have pleasure in presenting the 56th Annual Report alongwith AuditedFinancial Statements of the Company for the financial year ended 31st March 2017.
| ||2016-17 ||2015-16 |
|Gross Sales ||2989.37 ||2881.45 |
|Profit Before Finance Costs and ||538.88 ||401.66 |
|Depreciation (PBIDT) || || |
|Profit before Depreciation and Tax (PBDT) ||351.24 ||206.43 |
|Profit After Tax (PAT) ||162.83 ||60.87 |
Your Company has posted improved performance during the year. Continuing with ourcommitment towards shareholders the Directors therefore recommend a Dividend of Re. 1.50per share (Re. 0.50 previous year) on the expanded Equity Share Capital. The Dividendoutgo would amount to Rs. 29.50 crores (inclusive of Dividend Distribution Tax of Rs 4.99crores).
The amount available for appropriation including surplus from the year stood at Rs.600.24 crores. The Directors propose this to be appropriated as under:
|General Reserve ||125.00 |
|Dividend (2015-16) ||7.43 |
|Corporate Dividend Tax ||1.51 |
|Surplus carried to Balance Sheet ||466.30 |
The Company recorded its highest ever Net Sales of Rs 2736.83 crores during the yearan increase of 7.4% over the previous year. The Company achieved its highest ever salesvolumes of 4.82 Lacs
MT. Capacity utilization for the Year stood at 103.4% compared to 98.9% in the previousyear. The Company's efforts in enlarging geographical reach of its products strengtheningthe distribution network and introduction of new products in past few years are showingpositive results. During the year the company focused on further optimizing utilizationand operating parameters of Unit JKPM which led to significant improvement in EBIDTAmargins. As you are aware the Company had stepped up its plantation efforts and it issatisfying to note that the efforts are paying off with greater proportion of therequirement being met out of material sourced from shorter distances which reduces theoverall delivered costs at our mills. Exports accounted for about 42577 MT as against48553 MT in the Previous Year.
With better operating efficiencies softer input prices and better realisations fromthe market the Company posted much improved margin. Consequently EBIDTA at Rs 538.88crores was up by 34.2% over the previous year EBITDA of Rs. 401.66 crores. The Company'sProfit Before Tax was significantly up at Rs 231.71 crores compared to a Rs 89.21 croresduring 2015-16 and Net Profit for the year was Rs 162.83 crores against Rs 60.87 croresduring previous year.
CONVERSION OF FCCBs
During the year under review your Company had issued 7428240 Equity Shares of Rs.10/- each at a conversion price of Rs.56.37 per Equity Share consequent upon theconversion of the Foreign Currency Convertible Bonds (FCCBs) (Series 2) to the holders ofsuch FCCBs. The Company had also converted its FCCBs (Series 3) into 7428240 EquityShares of Rs. 10/- each at a similar conversion price during the financial year 2017-18and consequently the paid-up Equity Share Capital of the Company stands increased to Rs.163.39 Crore on the date of signing of this Report.
AWARDS AND RECOGNITION
Our commitment towards Safety & Environment Quality & Operational Excellenceand HR practices continue to garner appreciation from various industry chambers and socialbodies. Some of the accolades and awards received during the year are as follows:
a. Unit JKPM bagged the Platinum Award for excellent Environment Management fromGreentech Foundation New Delhi.
b. Unit JKPM was adjudged second at the "National Energy Conservation Award -2016" conducted by the Bureau of Energy Efficiency.
c. Unit JKPM was awarded the "Excellent Energy Efficient Unit" and "MostUseful Presentation Award" during 17th National Award for Excellency in CII EnergyManagement summit.
d. Unit JKPM won the "Strong Commitment to HR Excellence Award" in thePrestigious 7th CII National HR Excellence Awards 2016.
e. Unit JKPM bagged the "15th Annual Greentech Safety Award- 2016" in Goldcategory in Paper sector from Greentech Foundation.
f. Frost & Sullivan conferred Unit JKPM with 2nd Runner up Award under ProcessInnovation Leadership category in the manufacturing sector.
g. Unit CPM won the CII National HR Excellence Award - 2016 "SignificantAchievement"category at CII National HR Excellence Award Confluence - 2016-17.
h. Unit CPM bagged the Innovation in CSR Practices Award from World CSR Day & WorldSustainability Organization Mumbai 2015-16.
i. Unit JKPM was among the finalists Mill Manager Award & Environment Managementaward by PPI-2016 Belgium
The industrial relations at our plants continued to remain peaceful and cordialthroughout the year. Our continuous dialogue with the union and workers representatives toimprove the industrial harmony and to create a positive work environment by introducingvarious new work practices along with automation have succeeded in boosting manpowerproductivity. We acknowledge the support and coordination provided by our employees.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2017 in the prescribed form MGT -9 isattached as Annexure-1 to this Report and forms part of it.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The particulars of loans guarantees or securities and investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the financialstatements.
The Company has not made any provision during the financial year 2016-17 for thepurchase of or subscription for shares in the company by trustees of JK Paper Employees'Welfare Trust which was formed by the Company in the year 2004 for the welfare of theemployees of the Company for the shares to be held by or for the benefit of the employeesof the company.
RELATED PARTY TRANSACTIONS
During the financial year ended 31st March 2017 all the contracts or arrangements ortransactions entered into by the Company with the Related Parties were in the ordinarycourse of business and on arm's length basis and were in compliance with the applicableprovisions of the Companies Act 2013 and SEBI (Listing Obligations & DisclosureRequirements) Regulations 2015.
Further the 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 the abovedisclosure in FORM AOC-2 is not applicable.
The Related Party Transaction Policy as approved by the Board is available on thewebsite of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Smt. Vinita Singhania retires by rotation and being eligible offers herself forre-appointment at the ensuing Annual General Meeting (AGM).
Shri Harsh Pati Singhania was reappointed as Vice Chairman & Managing Director ofthe Company for a period of five years w.e.f. 1st January 2017 by the Members at the AGMof the Company held on 14th September 2016.
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 Companies Act2013 and also Regulation 16(1)(b) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.
There was no change in Managing Director Whole-time Director Chief Finance Officerand Company Secretary collectively the Key Managerial Personnel during the year underreview.
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. Further the 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 frauds commensurate 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 environment conservation of natural resources health education ruraldevelopment and 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 of the Company.
Even though the company was not required to spend towards CSR since it incurred a netloss of Rs.14.02 Crore in the preceding three years it has spent Rs. 1.19 Crore towardsCSR activities during the Financial year 2016-17.
Annual Report on the CSR activities undertaken by the Company during the financial yearunder review in the prescribed format is annexed to this Report as Annexure-2.
(a) Statutory Auditors and their Report
The observations of the Auditors in their report on Accounts and the FinancialStatements read with the relevant notes are self explanatory.
M/s S.S. Kothari Mehta & Co. Chartered Accountants were appointed as StatutoryAuditors of the Company for a term of 3 (three) consecutive years to hold the office fromconclusion of the 53rd Annual General Meeting (AGM) held in the year 2014 till theconclusion of 56th AGM of the Company to be held in the year 2017 being the maximumpermissible term since the said firm had been auditors for more than ten consecutiveyears before commencement of the Companies Act 2013. Accordingly the term of M/s S.S.Kothari Mehta & Co. will end at the forthcoming AGM and the said firm will thereforenot be eligible for re-appointment as the Auditors of the Company at the said AGM. TheBoard of Directors wish to place on record its appreciation of the services rendered byM/s S.S. Kothari Mehta & Co.
M/s Lodha & Co. Chartered Accountants are proposed to be appointed as Auditors ofthe Company to hold the office from the conclusion of the 56th AGM to be held in the year2017 until the conclusion of 61st AGM to be held in the year 2022 subject to the approvalof the Members at the AGM to be held in the year 2017 and further subject to ratificationof the appointment by the members at the respective AGMs. M/s Lodha & Co. CharteredAccountants have confirmed that their appointment if made would be in accordance withSection 141 of the Companies Act 2013 & pursuant to the Companies (Audit and Auditors)Rules 2014 there are no pending proceedings against the firm relating to professionalmatters of conduct before the Institute of Chartered Accountants of India or before anycompetent authority or any court & they are holding valid Peer Review Certificateissued by the Peer Review Board of the Institute of Chartered Accountants of India.
(b) Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors appointed Shri Namo Narain Agarwal Company Secretary in Practice as SecretarialAuditor to carry out Secretarial Audit of the Company for the financial year 2016-17. 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 anyqualification reservation or adverse remark.
(c) Cost Auditor and Cost Audit Report
The Cost Audit for the financial year ended 31st March 2016 was conducted by M/s R.J.Goel & Co. Cost Accountants Delhi and as required Cost Audit Report was duly filedwith the Ministry of Corporate Affairs Government of India. The Audit of the cost recordsof the Company for the financial year ended 31st March 2017 is being conducted by thesaid firm and their Report will also 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 review there 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 134(3)(m) read with the Companies (Accounts)Rules 2014 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 median employee'sremuneration and other requisite details pursuant to Section 197(12) of the Companies Act2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended is annexed to this Report as Annexure-5. FurtherParticulars of Employees pursuant to Rule 5(2) & (3) of the above Rules form part ofthis Report. However in terms of provisions of Section 136 of the said Act the Reportand Accounts are being sent to all the members of the Company and others entitled theretoexcluding the said particulars of employees. Any member interested in obtaining suchparticulars may write to the Company Secretary. The said information is available forinspection at the Registered Office of the Company during working hours.
CORPORATE GOVERNANCE: including details
pertaining to board meetings Nomination and Remuneration policy PerformanceEvaluation Risk Management Audit 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) Regulations 2015 Management Discussion and Analysis CorporateGovernance 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 five Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of Directors Key Managerial Personnel andSenior Management including inter alia the 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 &joint ventures included in the Consolidated Financial Statements is presented in aseparate section in this Annual Report. Please refer to AOC-1 annexed to the FinancialStatements in the Annual Report.
Pursuant to the provisions of Section 136 of the Act the financial statements of theCompany Consolidated Financial Statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on the website of the Company.
During the financial year under review your company decided to exit the joint ventureOji JK Packaging Private Limited and use the proceeds for the growth opportunities of theexisting product categories.
JK Paper International (Singapore) Pte. Ltd. (name since changed from HabrasInternational (Singapore) Pte. Ltd.) a subsidiary became a wholly owned subsidiary of thecompany.
Pursuant to the approval of members by means of a Special Resolution at the AGM held on27th September 2014 the Company was accepting deposits from the public in accordancewith the provisions of the Companies Act 2013 and rules thereunder. However the Companyhas not accepted or renewed any fixed deposits w.e.f. 1st November 2016.
The particulars in respect of the deposits covered under Chapter V of the said Act forthe financial year ended 31st March 2017 is annexed to this Report as Annexure-6.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Companies Act 2013
your Directors state that:
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if 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 of the profit of theCompany 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 Government State Governments Shareholders participating Financial Institutionsand Banks Customers Dealers and Suppliers.
The Board wishes to record its highest appreciation of the total commitment dedicationand hard work put in by every member of the Team JK Paper.
| ||On behalf of the Board of Directors |
|New Delhi ||Bharat Hari Singhania |
|Date : 16th May 2017 ||Chairman |