Your Directors have pleasure in presenting the Thirty-fourth Annual Report of B&APackaging India Ltd (hereinafter referred to as "the Company") together with theaudited financial statements of the company for the year ended 31st March 2020.
The financial results of the company are summarized below:
(in Rs. Lac)
|Particulars ||Year ended March 312020 ||Year ended March 312019 |
|Revenue from Operations ||7569.91 ||7168.02 |
|Other Income ||62.53 ||69.53 |
|Total Income ||7632.44 ||7237.55 |
|Total Expenditure after adjustment of increase/decrease of stocks ||6395.81 ||6182.63 |
|Profit from operations before Depreciation Finance Cost and Tax ||123663 ||1054.92 |
|Depreciation ||129.55 ||144.16 |
|Finance Cost ||133.80 ||190.88 |
|Profit before Tax ||973.28 ||719.88 |
|Provision for Tax || || |
|Current Tax ||271.00 ||206.00 |
|Deferred Tax ||(50.61) ||33.84 |
|Profit for the year ||752.89 ||480.04 |
Net sales for the year under review is higher by Rs. 397.84 lac over previous year.Profit after tax was Rs. 752.89 lac which is higher than previous year's level. TheEarnings per Share (EPS) for the year stood at Rs. 15.18 which is also higher thanprevious year's level.
PERFORMANCE AND OPERATIONS
Your Company manufactures quality paper sacks and flexible laminates in its twomanufacturing divisions located at Balasore Odisha. While the sacks division has beensuccessfully serving the packaging needs of sectors like tea food agricultural productspesticides industrial products etc. the flexible laminates division has made its niche inthe sectors like fresh and frozen foods beverages pharmaceuticals snacks andconfectioneries dairy products to name a few. Over the years the company has establisheditself as a premium manufacturer of
quality sacks and flexible laminates and its products have found wide acceptability inthe Indian market due to continuous research work and use of modern technology helping toimprove the quality of the products to meet consumer's requirements. The company hassustained its growth in the highly competitive market by offering end-to-end solutionsacross paper and flexible packaging spectrum. It has rejigged its product portfolio tocater the needs across various industries. The company has taken a series of modernizationprogramme in its plants which has led to superior product offerings by value added productdifferentiation. It has also strengthened
its distribution channels to execute higher quanta of orders ensuring lead timedeliveries across India. The Company has been accredited with British Retail Consortium(BRC: lop) which is acknowledged as a global benchmark for food safety for its facilitiesat Balasore factory besides ISO accreditations. The Company is enlisted as a 'mediumsector enterprise' in terms of memorandum issued by Ministry of Micro Small and MediumEnterprises Government of India.
During the year under review your Company was able to maintain overall growth in termsof sales and profitability despite entry of foreign multinationals in the Indian marketfierce competition from the domestic manufacturers price fluctuations in imported papersand multiple increases in wages and other input costs.
The paper sacks division recorded gross sales of Rs. 5102.49.lac (previous year Rs.5079.79 lac) and a profit of Rs. 830.36 lac (previous year Rs. 816.04 lac) during thefinancial year ended 31st March 2020 as both are marginally higher than the previousfinancial year. The turnover of the company in this segment was adversely affected due tolack of demand in the tea and carbon black sector which are going through recessionaryphase since last year.
The flexible laminates division recorded gross sales of Rs. 2467.42 lac (previous yearRs. 2088.23 lac) and a profit of Rs. 276.72 lac (previous year Rs. 94.72 lac) during thefinancial year ended 31st March 2020. The significant increase in the turnover andprofitability is due to surge in the demand from food sector particularly in the milkconfectionary and some other consumer durable products.
INDUSTRY STRUCTURE AND DEVELOPMENTS
Industry reports suggest that Indian Packaging sector will be registering a CAGR of22-25% per annum during the period of 2020-2025. Owing to the rising populationincreasing income levels changing lifestyles increased media penetration and growingeconomy the demand for packaging materials is growing. Moreover it is one of thestrongest growing sectors in the country. According to available data
more than 49% of the paper produced in the country is used for packaging purposes.
The rapid growth of the market is primarily driven by the pharmaceuticals and food andbeverage industries. Huge investments in the food processing personal care andpharmaceuticals end-user industries are creating scope for expansion of the packagingmarket.
The rise of the Indian middle class rapid expansion of organized retail growth ofexports and India's rising e-commerce sector are further facilitating growth. Accordingto the Indian Institute of Packaging (IIP) the packaging consumption in India hasincreased by 200% in the past decade rising from 4.3 kg per person per annum to 8.6 kg.
India is expected to see an increase in Flexible Packaging due to its cost efficiencyand rise in the demand for packaged beverages food pharmaceuticals and personal careproducts. Increase in the number of supermarket chains rise in the packed food demand ande-commerce sales are driving the growth of the market in India.
COMPANY OUTLOOK AND PROSPECTS
Your Company has progressed through technical ability and innovative skills to engineerpackaging solutions which has resulted increase in its market share over the years. TheCompany houses fully automated machines and boasts of a team of highly technical andself-motivated professionals. The Company also houses well-equipped laboratories withmodern and computerized equipment which are continuously engaged in upgrading theproducts to cater to the needs of the market. The Company directs all its efforts tobenchmark itself against global standards and to be in alignment with international needsworld-class standards of quality service and cost. The Company is continuously makingendeavors on achieving its goals by eavesdropping to the changing demands of the customersand to satisfy their expectations in a timely cost-effective and value-added manner. TheCompany has undertaken several modernization programs in its plant in the last few years.However its long-term plan to upgrade the factory to meet the international standards ispoised for availability of funds at competitive rates.
OPPORTUNITIES RISKS AND CONCERNS Opportunities
Indian packaging sector is among the high growth industries in India and developing tobecome a preferred global manufacturing hub. The Industry has reported steady growth overpast several years and shows high potential for much expansion particularly in the exportmarket. Costs of processing and packaging in India could be much lower than other parts ofAsia and Europe which combined with India's resources of skilled labor make it anattractive venue for investment. A high degree of potential exists for almost all usersegments which are expanding appreciably processed foods hard and soft drinks fruit andmarine products etc. to name a few.
The Indian packaging industry has made a mark with its exports that comprise plasticfilm laminates craft paper paper board and packaging machinery.
In India the fastest growing packaging segments are laminates and flexible packagingespecially PET and woven sacks. Over the last few years packaging industry is an importantsector driving technology and innovation growth in the country and adding value to thevarious manufacturing sectors including agriculture and FMCG segments.
The global packaging industry is developing and expanding day by day and Indianpackaging industry is also growing at a rapid pace. The growth is primarily augmented byfactors like growing pharmaceutical food processing manufacturing industry FMCGhealthcare sector and ancillary in the emerging economies like China India BrazilRussia and few other East European countries.
However at this stage the success of the industry will depend on the government andregulatory sustenance. As the Government's aim to make India a global manufacturing hub istaking shape packaging industry is poised for exponential growth with conducive policiesthat will help them to compete on the international arena.
Challenges Risks and Concerns
Though the packaging industry is poised with growth and opportunity the IndianCompanies engaged in this sector faces the following key challenges;
Rising Raw material cost: Paper plastic resins films paperboard and adhesives aresome of the common raw materials used by packaging companies. In recent times thesecommodities have witnessed a steep rise in their prices both in indigenous market as wellas import front.
Rapid Technological changes: CPG companies constantly lookout for ways to improve andaddress consumers' demands. This increases the pressure especially on flexible packagingcompanies to keep pace with fast-changing demands. Also this compels them to makeconstant technology upgrades which require huge capital investments.
Sustainability challenges: Many governmental organizations consumers andenvironmental groups keep a close watch on flexible packaging companies due to wastagescreated by them. Companies therefore need to develop designs that can addressenvironmental issues such as end-of-life disposal and reduction of greenhouse gas andwater footprints to sustain themselves. This at times proves to be a costly process.
Impact of COVID 19: With the recent outbreak of COVID-19 the packaging manufacturersare facing supply chain disruption along with decreasing manufacturing at site in manyparts of India. Fortunately the company could register higher turnover and profitabilityin spite of negative impact of the COVID-19. The Company could maintain operationincluding factory and office after the lifting of the lockdown restrictions afterestablishing thorough and well-rehearsed safety protocols. The Company adopted the workfrom home policy during the lockdown period.
The Company is in a comfortable liquidity position due to adequate banking limits inplace. The strong Balance Sheet of the Company is expected to be a key differentiator inthe market place. Even before COVID-19 the company embarked upon initiatives to bring downcosts and conserve cash and the company is expected to get benefits as a consequence ofthese initiatives in future. Although the operating Cash Flow was affected during thelockdown period with lifting of the lockdown normalcy is returning slowly. The Companydoesn't see incremental risk of recoverability of Assets (inventory receivable etc.)taking into account the measures
being taken to mitigate the risk. There is also no impact on internal financialcontrols due to the COVID-19 situation. The Company is well positioned to fulfill itsobligation and also does not foresee any significant impact on the business due tonon-fulfillment of the obligations by any party in the future.
Your Directors have formulated Risk Management Policy and appointed a Risk cellcomprising of executives from senior management team. All potential and material risksfaced by the company with regards to its packaging business are identified and assessed oncontinuous basis by the Risk Cell. For each area of the risks identified necessarycontrols are exercised and procedures are put in place for monitoring mitigating all suchrisks and reporting the same to Audit Committee on periodic basis. The Risk ManagementPolicy and the constitution of risk cell are available in the company's website athttps://www.bampl.com/policy/html.
Recent outbreak of COVID 19 has put immense challenge before the risk structure of thecompanies across the globe in the key compliance areas like corporate governancestatutory compliances and disclosures workplace health and safety employment andcontinuity data privacy supply chain and working capital. The pandemic is causing hugeloss of business due to trade restrictions additional cost of operations due tounproductive employment maintaining workplace health and safety and additional dataprivacy and security. Your Directors feel that there would be no single key word toaddress a solution but detailed analysis of the critical areas impacted due to thepandemic and plan for remedial measures specially preparing for organizationalinfrastructure and people to respond would be ideal risk management during pandemic.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
Details of significant changes in key financial ratios as on 31st March 2020 comparedto previous financial year are enclosed as Annexure-A.
In order to conserve resources the Directors do not recommend any dividend for thefinancial year 2019-20.
The Company had no outstanding deposit as on 31st March 2020.
TRANSFER TO RESERVES
The Board does not propose any amount to be transferred to any reserve.
As on 31st March 2020 the Directorate of the Company consists of five directors threeof them are independent. Mrs. Anuradha Farley has been appointed Chairman of the Board.The composition of the directorate is in conformity with the provisions of the CompaniesAct' 2013 (hereinafter the Act') allied rules and regulations and Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015[hereinafter SEBI (LODR)]. The particulars of the directorate and the key managerialpersonnel are given under Part I of the Corporate Governance Report which forms part ofthis Annual Report.
Mr. Anjan Ghosh whose office fall vacant on 31st March 2020 was re-appointed asIndependent Director on the Board in the last annual general meeting held on 6th September2019 for a period of five consecutive years with effect from 1st April 2020. Mr. BasantKumar Goswami was appointed an Independent Director on the Board in the last annualgeneral meeting with effect from 6th September 2019 to hold office upto 31st March 2024.During the year under review none of the existing directors had resigned from the Board.However by virtue of section 167(1) (b) of the Act' office of directorship of Mrs. GargiBarooah fall vacant on 31st March 2020.
By virtue of section 152 of the Act' Mr. Somnath Chatterjee retires by rotation at theforthcoming Annual General Meeting (AGM) and being eligible offers himself forre-appointment.
The Board of Directors of the Company in its meeting held on 13th February 2020 hasre-appointed Mr. Somnath Chatterjee as Whole Time Director of the Company with effect from27th March 2020 for a period of 3 (three) years. The terms and conditions of appointmentof Mr. Chatterjee including remuneration payable to him are subject to the
approval of the Members in the ensuing General Meeting.
A brief resume expertise and shareholding in your company together with details ofother directorships of Mr. Somnath Chatterjee is given in the Corporate Governance Sectionof the Annual Report.
None of the Directors on the Board as on 31st March 2020 has been debarred ordisqualified from being appointed or continuing as Directors by Ministry of CorporateAffairs Government of India or Securities and Exchange Board of India or any suchStatutory Authority. A certificate in this regard from a Practicing Company Secretary isenclosed as Annexure - B and forms part of this report.
KEY MANAGERIAL PERSONNEL
Mr. Somnath Chatterjee Whole time Director Mr. D. Chowdhury Company Secretary andMr. G. Mukhopadhyay Chief Financial Officer hold the position of key managerialpersonnel in terms of section 203 of the Act'.
DECLARATION BY INDEPENDENT DIRECTORS
All Independent Directors have given declaration to the company certifying theirindependency in terms of section 149(6) of the Act and the same were placed and noted bythe Directors present in the meeting of the Board held on 25th May 2020.
PERFORMANCE EVALUATION OF THE BOARD OF DIRECTORS
In terms of section 134 (3) of the Act' read with SEBI (LODR) the company had laiddown the criteria for reviewing the performance of its Board of Directors Committees ofthe Board and individual Directors. The evaluation process of Directors inter aliaconsiders attendance of the Directors at Board and Committee meetings acquaintance withbusiness communicating inter se board members effective participation in meetingsdomain knowledge compliance with code of conduct vision and strategy.
The evaluation process and criteria for evaluating the performance of the Directors areavailable in detail in the website of the company at the following web-linkhttps://www.bampl.com/policy/nomination- remuneration-policy.pdf.
The Board evaluated its own annual performance including that of its Committees in themeeting of the Board of Directors held on 26th June 2020. The Board in the same meetingevaluated performance of the individual directors on the basis of recommendations made bythe respective Committees.
OPINION OF THE BOARD ON INDEPENDENT DIRECTORS
The Members of the Company re-appointed Mr. Anjan Ghosh as an Independent Director ofthe Company in the Annual General Meeting held on 6th September 2019 as perrecommendations made by the Board of Directors in this regard. Mr. Basant Kumar Goswamiwas appointed in the same meeting as an Independent Director as per recommendations madeby the Board.
The Board of Directors is of the opinion that Mr. Ghosh and Mr. Goswami have got therequired integrity expertise and experience to serve the Board as Independent Directors.
MEETINGS OF THE BOARD OF DIRECTORS
The particulars of the meetings of the Board of Directors held during the financialyear ended 31st March 2020 have been furnished under para (ii) of section I of theCorporate Governance Report forming part of the Annual Report.
MEETING OF THE INDEPENDENT DIRECTORS
In terms of section 149 of the Act' read with schedule IV of the Act' a separatemeeting of the Independent Directors of the Company was held on 13th February 2020.
COMMITTEES OF BOARD
The Board had constituted 'Audit Committee' 'Nomination and Remuneration Committee''Corporate Social Responsibility Committee' Share Transfer Committee and 'StakeholdersRelationship Committee' of Directors in terms of respective provisions of the Act' andSEBI (LODR). The constitution terms of references and policies of these committees havebeen discussed in detail in the Corporate Governance section of the Annual Report. Therewere no instances where the Board did not accept the recommendations of the AuditCommittee.
NOMINATION AND REMUNERATION POLICY
The Board of Directors in compliance with the provisions of section 178 (3) of the Acton recommendation made by the Nomination and Remuneration Committee of Directorsformulated the Nomination and Remuneration Policy of the company. The said policy isavailable at the website of the company at the following web-linkhttps://bampl.com/policies/remuneration-policy.pdf.
Disclosure in terms of section 197 of the Act' read with rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 regarding remunerationpaid to Directors and Key Managerial Personnel for the financial year ended 31st March2020 is given para 2(f) of Section II in the Corporate Governance Section of the AnnualReport.
Particulars of top ten employees in terms of remuneration drawn during the financialyear ended 31st March 2020 is produced in the Corporate Governance section of the AnnualReport.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under section 134(5) of the Act' your Directors state that:
a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
b) They had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company as at 31st March 2020 and of the profit of thecompany for the financial year ended 31st March 2020;
c) They had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
d) They had prepared the annual accounts on a going concern basis;
e) They had laid down internal financial controls to be followed by the Company andthat such
internal financial controls were adequate and were operating effectively.
f) They had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The internal financial controls are adequate and areoperating effectively so as to ensure orderly and efficient conduct of the businessoperations. The Statutory Auditors have also given an unmodified opinion on the internalfinancial controls on the financial reporting process in their report.
MAINTENANCE OF COST RECORDS
During the year under review the Company was not required to maintain any cost accountsor records as specified under Section 148(1) of the Act' with respect to its packagingbusiness.
M/s. Ghosal Basu & Ray Chartered Accountants Kolkata (FRN 315080E) wereappointed as Statutory Auditors of the Company for term of five years in the AnnualGeneral Meeting held on 7th September 2017.
The report given by the Statutory Auditors on the Financial Statements of the companyfor the financial year ended 31st March 2020 forms part of the Annual Report. There was noqualification reservation adverse remark or disclaimer in the report.
Pursuant to section 204 of the Act' and Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 read with Regulation 24A of SEBI (LODR) the SecretarialAudit of the Company for the financial year 2019-20 was conducted by M/s. T. Chatterjee& Associates Company Secretaries (FRN P2007WB067100). The Secretarial Audit Reportand Secretarial Compliance Report are attached with the Board' Report as Annexure-C.
In reply to the observations made by the Secretarial Auditors in their report withregards to non-listing of 2750500 equity shares in the company and consequentnon-dematerialization of the same the Directors confirm that necessary steps will betaken within warranted time frame.
None of the Auditors of the Company has reported any fraud as specified under thesecond proviso of Section 143 (12) of the Act.
COMPLIANCE WITH CORPORATE GOVERNANCE NORMS
In terms of SEBI (LODR) a certificate from a Practicing Company Secretary on complianceof Corporate Governance Norms is attached with the Directors report as Annexure-D andforms part of Annual Report.
PARTICULARS OF CONTRACT OR ARRANGEMENT WITH RELATED PARTY
A Policy on related party has been devised by the Board of Directors which is inconformity with regulation 23 of SEBI (LODR) for determining the materiality oftransactions with related parties and strategy for dealing with the same. The said policyis available at the website of the company at the following web-linkhttps://www.bampl.com/ policy/policy-on-related-panty-transdions.pdf
In terms of section 134 of the Act' read with rule 8(2) of the Companies (Accounts)Rules 2014 particulars of contracts/ arrangements entered into by the company during theyear under review in Form AOC- 2 is attached as Annexure-E and forms part of theDirector's Report.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility (CSR) Policy formulated by the Company is availableat the website of the company at https://www.bampl.com/policy/html. The policy encompassesthe philosophy of the Company for delineating its responsibility as a corporate citizenand lays down the guideline and mechanism for undertaking socially useful programs forwelfare of the community at large and for under privileged community in the area of itsoperation in particular. The constitution of the CSR Committee
and particulars of meetings of the Committee held during the year are disclosed in theCorporate Governance section of the Annual Report.
The Annual Report on CSR activities as prescribed under rule 9 of the Companies(Accounts) Rules 2014 read with rule 8 of the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 is attached as Annexure - F and forms part of the Director's Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information relating to conservation of energy technology absorption and foreignexchange earnings and outgo as envisaged in section 134 (3) of the Act' read withCompanies (Accounts) Rules 2014 is attached as Annexure - G and forms part of thisreport.
EXTRACT OF ANNUAL RETURN
Pursuant to section 92(3) of Act' read with rule 12(1) of the Companies (Management andAdministration) Rules 2014 extract of Annual Return of the company for the financial yearended 31st March 2020 is attached with Board's Report as Annexure - H.
Annual Return of the Company for the financial year ended 31st March 2019 is availableat the website of the company at the following web-linkhttps://www.bampl.com/annual-return/forms-MGT- 7-for-the-financial-year-2019-20.pdf.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
In terms of section 177 (10) of the Act' read and regulation 22 of the SEBI (LODR) yourDirectors have adopted a Vigil Mechanism/Whistle Blower Policy to report and deal withgenuine concern raised by a whistle blower. The said policy has been posted on the websiteof the company and is available at https://www.bampl.com/ policies/vigil-mechanism.pdf.During the year under review no complaint has been reported under the policy.
MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments affecting the financial position of thecompany
between the end of the financial year i.e. 31st March 2020 and the date of this report.
The Company employed around 133 individuals across its factory and offices who share apassion for excellence. The key attributes that excelled their performance are knowledgebase expertise and experience. The Employee Relations remained harmonious throughout theyear and your Directors wishes to convey their gratitude and place on record theirappreciation for all executives staff and workers at all levels for their hard worksolidarity cooperation and dedication during the year.
Your Directors state that during the year under review:
a. The Company complied with Secretarial Standards issued by the Institute of CompanySecretaries of India on Board and General Meetings.
b. The Company made no scheme or provision of money for the purchase of its own sharesby employees/ Directors or by trustees for the benefit of employees/Directors.
c. The Company did not give any loan or provided any guarantee or made any investmentswhich were covered under section 186 of the Act'.
d. The Company did not issue any equity shares with differential rights as to dividendvoting or otherwise; and
e. There was no change in the share capital or nature of business of the Company.
f. There were no significant or material orders passed by the Regulators or Courts orTribunals which would have impacted the going concern status of the Company's business.
For and on behalf of the Board of Directors
| || ||Somnath Chatterjee ||Anjan Ghosh |
|Place ||: Kolkata ||Whole Time Director ||Director |
|Date : ||26th June 2020 ||DIN :00172364 ||DIN :00655014 |