The Directors of your company are pleased to present the Directors' Report togetherwith Audited Financial Results of the company for the year ended 31st March 2017.
1. FINANCIAL HIGHLIGHTS
Audited financial results for the year ended 31st March 2017 are summarised below:
AUDITED FINANCIAL RESULTS (Rs. in Cr.)
|Particulars ||Year ended 31st March 2017 ||Year ended 31st March 2016 |
|Profit before interest and depreciation ||72.48 ||27.54 |
|Interest and finance charges ||1.27 ||2.55 |
|Depreciation ||4.12 ||4.25 |
|Profit before Exceptional Items ||67.09 ||20.74 |
|Exceptional & non-recurring items ||- ||- |
|Profit before taxation ||67.09 ||20.74 |
|Provision for Income Tax ||7.15 ||4.24 |
|Profit after Tax (PAT) ||59.94 ||16.50 |
|Earning per shair (EPS)-in Rupees ||38.40 ||10.57 |
2. DIVIDEND & TRANSFER TO RESERVES
In view of improved performance of the company for the financial year 2016-17 yourDirectors are pleased to recommend a dividend of Rs. 2/- per equity share subject toapproval of the Shareholders at the ensuing Annual General Meeting of the company. Noamount of profit for the year is required to be carried to General Reserve.
3. STATE OF THE COMPANY AFFAIRS Review of operations 2016-17:
The year has been a testimony to our commitment to progress amidst challenges.Favourable demand-supply balance led to improvement in volumes for the year. Softness inwood prices during first half of the year coupled with Product-mix optimization andongoing cost-reduction measures resulted in vastly improved financial performance. Yourcompany reported a Profit after tax of Rs 59.94 Crores vis-a-vis Rs. 16.50 Crores for FY2015-16.
There is no change in the nature of the business of the company during the year.Further no material changes and commitments have occurred after the close of the yeartill the date of this Report which may affect the financial posit ion of the Company.
Expectations For FY 2017-18 :
Wood and Energy prices exhibit a rising trend. These have been partially offset byincrease in prices of some grades of paper. Challenges such as imports under FTAspersistence of upward trend in input costs GST and other regulatory changes will impactthe business.
Your company will continue to strive for effective measures to meet these developments.
4. ANNUAL- RETURN EXTRACTS
Extracts of the Annual Return as provided in Section 92(3) of the Companies Act 2013in MGT-9 is attached as Annexure-I
5. BOARD MEETINGS/AUDIT COMMITTEE
a) During the financial year 2016-17 five (5) meetings of the Board of Directors wereheld on 25.05.2016 10.08.2016 14.09.2016 11.11.2016 10.02.2017.
b) Audit & Risk Management Committee-
The Company has the Audit & Risk Management Committee of the Board pursuant toSection 177 of the Companies Act 2013 and its terms of reference are in conformity withSEBI (Listing Obligations & Disclosure Requirements) Regulations 2015. Thecomposition of Committee is given in the Corporate Governance Report.
6. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under review is presented in aseparate section forming part of the Annual Report for 2016-17.
7. VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES
Pursuant to Section 177 of the Companies Act 2013 the company has established aVigil Mechanism' for directors and employees to report their genuine concerns to thecompany. The company oversees this Vigil Mechanism' through the Audit & RiskManagement Committee of the Board.
8. ENVIRONMENT POLLUTION CONTROL AND SAFETY
Your company is committed to provide safe working conditions and healthy environment toall the stakeholders. Accredited with ISO 14001: 2004 ISO 9001 : 2008 and ISO 18001:2007 your company has in place the integrated quality environment & safetymanagement systems to harmonize Industrial activities with environmental preservation.STAR has all necessary environmental clearances from the Government authorities.
Your company has been awarded Gold Award by Greentech Foundation New Delhi forenvironmental excellence in Paper Industry during the year.
9. SOCIAL FARM FORESTRY
As in the past your company continues to foster pulpwood plantations with activeco-operation of the farmers. During the year a total of 318 lacs (last year 311 lacs)seedlings were distributed covering an area of 12712 hectare. Social Farm forestry leadsto enhanced rural income beside easing pressure on raw material availability to thecompany.
10. FIXED DEPOSITS
The company has not invited any fixed deposits during the year and as such there hasbeen no default in repayment of deposit or payment of interest thereon during the year.There were no outstanding fixed deposits as on 31st March 2017. (Rs. Nil as on 31stMarch 2016).
The company is in compliance with provisions of the Companies Act 2013 and rules madethereunder in respect of deposits.
11. INTERNAL CONTROLS
The company has adequate internal control system in place on the basis of whichfinancial accounting is done and periodically financial statements are prepared. Such
Internal control systems are adequate and operating effectively.
12. REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your company has formulated and approved a Corporate Social Responsibility Policy (CSRPolicy) indicating the CSR activities to be undertaken. The CSR Policy may be accessed onthe Company's website at http://www.starpapers.com. The key philosophy of the Company'sCSR initiative is to promote development through social and economic transformation. Thecomposition of Committee is mentioned in the Corporate Governance Report.
The Report on CSR activities undertook during the year is annexed herewith marked as AnnexureII.
13. DIRECTORS/KEY MANAGERIAL PERSONNEL
Pursuant to Section 152 of the Companies Act 2013 Mr. Shrivardhan Goenka(DIN-00030375) shall retire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment.
The members in their last AGM held on 14th Sept. 2016 have re-appointed Mr. MadhukarMishra (DIN-00096112) as Managing Director of the company w.e.f. 1st July 2016 for aperiod of three years.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as laid down under Section 149(6)of the Companies Act 2013 and SEBI Listing Regulations 2015. The company'sfamiliarization program for Independent Directors are posted on the website of the companyand can be accessed at http://www.starpapers.com/familarisation_prog.pdf. During the yearthere was no change in the Key Managerial Personnel (KMP) of your company.
14. NOMINATION AND REMUNERATION COMMITTEE/POLICY
The Board of Directors has constituted a Nomination & Remuneration Committee'which follows the company's policy on directors' appointment and remuneration includingcriteria for determining qualification positive attitudes independence of a director andother matters provided under section 178 (3) of the Companies Act 2013.
The gist of company's policy on nomination and remuneration is as under:
The Committee shall consider ethical standards of integrity qualification expertiseand experience for appointment of Directors/KMP etc. and recommend to the Board ofDirectors. Directors/ KMP etc shall be appointed as per the procedure laid down inapplicable laws. The Committee will recommend the remuneration to be paid to Directors/KMPetc requiring Committee approval as per statutory provisions. The level and composition ofremuneration so determined by the Committee shall be reasonable and sufficient to attractretain and motivate the appointee(s).
15. LOAN GUARANTEE INVESTMENTS ETC.
The company has not given any loan or guarantee or provided security in connection withany loan to any other body corporate during the year.
16. SUBSIDIARY/JOINT VENTUE/ASSOCIATE COMPANIES
No company has become or ceased to be your company's subsidiary/joint venture/associatecompany during the year.
17. PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
Particulars regarding energy conservation technology absorption and foreign exchangeearnings/outgo pursuant to Section 134(3)(m) of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 are furnished as Annexure-III to this Report.
18. PARTICULARS OF EMPLOYEES AND REMUNERATION
Information in accordance with the provisions of Section 134(3)(q) and Section 197(12)of the Companies Act 2013 read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 regarding employees' remuneration are given hereunder:
i) Name of the employee who is in receipt of remuneration of Rs. 60 lacs or more for FY2016-17:
|Name & Designation ||Remuneration* recd.-(lacs) ||Nature of employ- ment ||Qualifica - tion & ex- perience ||Date of com- mencement of employ- ment ||Age ||Last employment held ||% of equity shares held ||Whether rela- tive to director |
| || || || || || || || || |
|Mr. G.P Goenka Exec- utive Chairman ||228.19 ||Contractual ||B. Sc. ||20/05/2015 ||76 Y ||Executive Director-Duncan Industries Ltd. ||Nil ||Yes father of Mr. Shrivardhan go- enka |
| || || || || || || || || |
| || || ||56 years || || || || || |
|Mr. Madhukar Mishra Managing Director ||201.62 ||Contractual ||B. Sc. DMS (Mgt.) ||01/07/2001 ||60 Y ||Sr. VP(Corporate Planning) -Dail Consultants Ltd. ||Nil ||No |
| || || || || || || || || |
| || || ||39 years || || || || || |
*including employer's provident fund contribution.
ii) Disclosure in respect of Remuneration etc.
a) Ratio of remuneration of each director to the median remuneration of employees
|Director ||Director remuneration ||Median remuneration ||Ratio (DR/MR) |
| ||(DR)- Rs. ||(MR) of employee || |
|MR. G.P. GOENKA ||22819456 ||308050 ||74.80 |
|MR. SHRIVARDHAN GOENKA ||20000 ||308050 ||0.06 |
|MR. SHIROMANI SHARMA ||300000 ||308050 ||0.97 |
|MR. C.M. VASUDEV ||220000 ||308050 ||0.71 |
|MR. M.P. PINTO ||120000 ||308050 ||0.39 |
|MS. SAVITA L. ACHARYA ||200000 ||308050 ||0.65 |
|MR. MADHUKAR MISHRA ||20161907 ||308050 ||65.45 |
b) % increase in remuneration of each director CEO CFO CS in the financial year2016-17
| ||Year 2016-17 |
|Official name ||Remuneration-Rs. in lacs ||% increase in remuneration |
|Directors ||Directors are receiving only sitting fees for attending meetings. |
|Executive Chairman ||228.19 ||117% |
|Managing Director ||201.62 ||32% |
|Chief Financial Officer ||25.19 ||7% |
|Company Secretary ||8.95 ||1% |
c) % increase in median remuneration of employees in the financial year 2016-17 was:37% d) Number of permanent employees on the rolls of the company as on 31.03.17 was 623.e) Average increase in remuneration inter-alia depends upon the inflation individual'sperformance company policy human resource demand-supply position negotiations withtrade unions company performance etc. f) Considering performance of the companyremuneration of KMPs i.e Executive Chairman and Managing Director was reasonable andjustified. g) A number of parameters of the company as on 31.03.2017 and 31.03.2016as under:
|Parameters ||As on 31.03.2017 ||As on 31.03.2016 |
|Market capitalization-Rs. ||276.50 Crores ||54.40 Crores |
|Closing price/share-Rs. ||177.15 Crores ||34.85 Crores |
|Price/ earnings ratio ||4.61Crores ||3.30 Crores |
|% change in market quotation of the share in comparison to rate at which last public offer was made (Rs. 60/per share) ||195% increase in price ||42% decrease in price |
h) Average percentage increase in salaries of employees vis-a-vis managerial personnel- Average percentage increase in salaries of employees was 5% vis-a-vis 39 % increase insalary of managerial personnel for FY 2016-17.
i) No director is getting any variable component of remuneration except commission toExecutive Chairman and performance pay to the Managing Director which are decided by theBoard of Directors every year based on performance of the company terms of appointmentand applicable statutory provision. Remuneration is paid as per remuneration policy of thecompany.
j) Ratio of remuneration of highest paid director to that of employees receivingremuneration in excess of that of highest paid director-N.A
19. PERFORMANCE EVALUATION
The company has in place a Policy on performance evaluation of Independent DirectorsBoard Committees and individual Directors. The Board of Directors evaluates its ownperformance in terms of operations of the company financial results etc. The performanceof Committee(s) is evaluated by the Board based on effectiveness of committee itsfunctioning and decisions etc. The Board also reviews the performance of individualdirector(s) based on the contribution of the individual director to the Board/ committeemeetings participation in discussion inputs given in the meeting.
20. HUMAN RESOURCES AND WELFARE
Your company continues to lay emphasis on regular employee-skill development programsto address the changed working conditions and environment and also needs of theorganisation. Your company enjoys cordial and harmonious relations with its employees atall levels.
Your Directors further state that during the year under review there was no casereported under the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
21. DIRECTORS' RESPONSIBILITY STATEMENT
As required under the provisions of Section 134(3)(c) Directors ResponsibilityStatement on preparation and presentation of these accounts is as per Annexure-IV tothis Report.
22. CORPORATE GOVERNANCE
A separate report on corporate governance along with a certificate from the statutoryauditors confirming the been annexed as Annexure-V to Directors' Report.
Pursuant to Section 139(2) of the Companies Act 2013 M/s Lodha & Co. CharteredAccountants shall retires at the ensuing Annual General Meeting. M/s Jain Pramod Jain& Co. Chartered Accountants New Delhi have expressed their willingness to beappointed as statutory auditors of the company and have furnished the requisitedeclaration of their eligibility pursuant to the provisions of the Companies Act 2013.The Directors' recommend the appointment of M/s Jain Pramod Jain & Co. CharteredAccountants New Delhi at the ensuing AGM.
24. COST AUDITORS
Pursuant to Section 148(3) of the Companies Act 2013 read with the Rules madethereunder the Board of Directors on the recommendation of Audit & Risk Management
Committee has appointed M/s R.J. Goel & Co. Cost Accountants as the Cost Auditorsof the Company for the financial year 2016-17.
25. AUDITORS' REPORT i) Statutory Audit:
The observation of the Auditors in their report read with relevant note on thefinancial statements is self-explanatory.
ii) Secretarial Audit:
M/s D. Dutt & Co. company secretary in practice secretarial auditor of thecompany has competed secretarial audit for FY 2016-17. Secretarial audit report isattached as Annexure-VI.
26. TRANSACTIONS WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the company during the financialyear with related parties were in the ordinary course of business and on arm's lengthbasis. During the year the company had not entered into any contract / arrangement /transaction with related parties which could be considered material. Information pursuantto Section 134(3)(h) of the Act read with rule 8(2) of the Companies(Accounts) Rules 2014are given in Annexure-VII in Form AOC-2 and the same forms part of this report.
27. RISK MANAGEMENT
The Company is having Risk Management framework covering identification evaluation andcontrol measures to mitigate the identified business risks.
28. LISTING ON STOCK EXCHANGES
Your company's equity shares are listed on National Stock Exchange of India Ltd. (NSE)and The Stock Exchange Mumbai (BSE). The company has paid the listing fees to the stockexchanges for the financial year 2016-17.
The Board of Directors place on record their gratitude for the excellent support andefforts put in by all the Stakeholders viz. employees bankers investors dealerssuppliers and Government authorities.
| ||For and on behalf of the Board |
|Place : New Delhi ||G. P. Goenka |
|Date : 25th May 2017 ||Executive Chairman |