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Mangalam Timber Products Ltd.

BSE: 516007 Sector: Others
NSE: MANGTIMBER ISIN Code: INE805B01012
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VOLUME 300
52-Week high 20.95
52-Week low 4.61
P/E
Mkt Cap.(Rs cr) 18
Buy Price 10.00
Buy Qty 700.00
Sell Price 10.51
Sell Qty 1000.00

Mangalam Timber Products Ltd. (MANGTIMBER) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the 35th Annual Report of the Company and theAudited Accounts for the financial year ended 31st March 2019.

1. FINANCIAL RESULTS

The Company's financial performance for the year ended 31st March 2019 is summarizedbelow:

(Rs. in lacs)
Particulars For the Year ended 31st March 2019 For the Year ended 31st March 2018
Revenue from operations 1127.51 2278.57
Profit/(Loss) before Interest Finance Charges (935.77) (311.19)
Depreciation and Tax
Less: Finance Charges 984.23 887.11
Profit / (Loss) before Depreciation and Tax (1920.00) (1198.30)
Less: Depreciation 148.80 155.18
Profit / (Loss) before Tax (2068.80) (1353.48)
Less: Tax Expenses (net) (639.26) (419.79)
Net Profit / (Loss) after Tax (1429.54) (933.69)

2. DIVIDEND

In view of losses the Board of Directors has not recommended any dividend for thefinancial year 2018-19.

B. OVERALL PERFORMANCE

The Performance of the Company has been comprehensively covered in the ManagementDiscussion and Analysis which forms a part of Directors' Report.

4. MANAGAEMENT DISCUSSION AND ANALYSIS

A Management Discussion & Analysis is forming part of this Annual Report.

5. FINANCE

Your Company thanks its consortium bankers for their continued support.

6. RAW MATERIAL

All Raw material prices including Firewood Melamine and Urea have increased duringthe year under review thereby affecting the production cost. Also non availability ofFirewood which is a key raw material of the Company's product within a reasonabledistance forming our catchment area added to the transportation cost of firewood andaffected the costs to a large extent.

7. CAPTIVE THERMAL POWER PLANT

The 2.5 MW Captive Thermal Power Plant is in operation which will not only giveconsistent supply of quality power but will also reduce the power cost considerably.

8. PLANTATION

The Company is making continuous effort to develop long term supply of Firewood asavailability in nearby areas has become difficult. The Company is continuing its policy onplantation activity to help supply of quality raw material to factory with least cost oncontinuous and sustainable basis. Some important effort undertaken are mentioned below.

i. Mist Chamber and Nursery: Company is strategically considering to increase the focuson Nursery operations to ensure consistent & quality supply of high yielding clonalplants to the farmers at affordable price and to increase the catchment areas of Companyfor wood.

ii. Farm Forestry Planting: Your Company actively participates in all Farm Forestryschemes introduced on a year to year basis by the Odisha & Chhattisgarh Governmentswhereby Bipartite agreements are entered into between the Company and large farmers whoare supplied quality clones at very low rates and subsequently the Company is givenpreference at the time of harvesting the matured trees.

iii. Private Wood Supply: Presently approx. 10% of our wood requirement comes from farmforestry. In future we can fulfil up to 15%-20% of the Company wood requirement from ourlease land and balance requirement from private suppliers. All efforts are being made toincrease the captive wood supply. However efficient vendor development is essential forlong-term consistent supply of quality wood.

9. EXTRACT FROM ANNUAL RETURN

The Extract of Annual Return as required under Section 134(3) (a) of the Companies Act2013 is set out at Annexure-I forms part of this report.

10. RISK MANGEMENT

In terms of the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company has developed a risk managementpolicy and identified risks and taken appropriate steps for their mitigation for moredetails please refer to the Management Discussion and Analysis set out in this AnnualReport.

11. INSURANCE

Adequate insurance cover has been taken for the properties of the Company includingbuildings plant and machinery and inventories.

12. AMALGAMATION

During recent years the Company has incurred losses due to long maintenance schedulefor age of the machineries and shortage of working capital and especially after the majorfire in the plant in the financial year 2010-11 and the plant remain closed for productionfor six months. This resulted in poor quality production in next financial year andconsequent accumulation of stock of finished goods in 2012 and 2013.Since then we tried toturnaround the Company but due to increase in losses and reduction of bank facility by thebankers there has been acute shortage of funds which resulted in accumulating losses andstoppages of plant for want of raw material and breakage in working capital cycle.

In view of the globalisation and competitive environment and due to the fact that largenew plants are coming up to cater the increasing demand the future looks bright for theMDF product segments.

Since Cement and MDF are both consumer oriented products MCL and MTPL are essentiallyengaged in their respective business segment for manufacture of products whose consumersare large in number and require large distribution network the business of MCL and MTPLcan be combined conveniently and carried out in conjunction more advantageously. Furtherthere is a synergy in the operations and products manufactured by MCL and MTPL as both areprimarily used in housing sectors.

Since MCL has the financial capacity and capability the board of directors felt thatit will be prudent and desirable if MTPL is amalgamated with MCL which will enable theappropriate consolidation and integration of the activity of both MTPL and MCL and willaccelerate the operation of MTPL to create a position of leadership in the productsmanufactured by MTPL.

Your directors are pleased to announce that the proposal of such amalgamation wasaccepted by the members of the board of MTPL and MCL in their meeting dated 11th February2019 and 9th March 2019 respectively and the required process and formalities inconnection with such amalgamation has already been initiated to make the amalgamationeffective from 01.04.2019.

13. BOARD MEETINGS

The Board met five times during the Financial Year 2018-19. Details of Meetings and theattendance of each Director is provided in the Report on Corporate Governance.

14. AUDIT COMMITTEE

The composition and terms of reference of the Audit Committee has been furnished underSN 3A in the Corporate Governance Report forming a part of this Annual Report. There havebeen no instances where the Board has not accepted the recommendations of the AuditCommittee.

15. CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance as animportant step towards building investor confidence improving investors' protection andmaximizing long-term shareholders value. The Report on Corporate Governance as stipulatedunder Chapter IV of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("the Listing Regulations") formspart of the Annual Report. The certificate of the Auditors M/s. Manish Goyal &Associates and confirming compliance of conditions of Corporate Governance as stipulatedunder the Listing Regulations is attached as Annexure-ll and forms a part of this report.

16. CORPORATE SOCIAL RESPONSIBILTY

Driven by the desire to create a meaningful difference in society the Company makesconscious efforts to achieve higher socio-economic goals. It has continued with itswelfare activities for development in the fields of education health culture and otherwelfare measures and to improve the general standard of living.

17. NOMINATION AND REMUNERATION POLICY

The Company has in place a formal Nomination and Remuneration Policy formulated as perprovisions of Section 178(3) of the Act as well as Regulation 19(4) read with Part D ofSchedule II of the Listing Regulations.

The Company's Remuneration Policy is attached as Annexure-lll and forms a part of thisreport.

18. KEY PARAMETER FOR APPOINTMENT OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Nomination and Remuneration Committee has formulated a detailed policy forappointment of directors and key managerial personnel which is designed to attractmotivate and retain best talent. This policy applies to directors senior managementincluding its Key Managerial Personnel (KMP) and other employees of the Company. Thecompensation strategy revolves around getting the "best talent in the market".The remuneration of KMPs of the Company is recommended by the Nomination and RemunerationCommittee based on the Company's remuneration structure taking into account factors suchas level of experience qualification and suitability. The Company generally paysremuneration by way of salary perquisites and allowances (fixed component).

19. DIRECTORS

In accordance with the Articles of Association of the Company and the provisions of theCompanies Act 2013 Smt Vidula Jalan (DIN: 01474162) being non-independent directorretires by rotation and being eligible seeks reappointment. Shri Vishwanath Chandak (DIN:00313035) as a Non-executive Independent Director who has attained the age of 75 yearstherefore his appointment has been approved by way of special resolution in the generalmeeting through Postal Ballot.

The Company has received declaration from all the Independent Directors of the Companyconfirming that they meet the criteria of the independence prescribed under sub section(6) of the section 149 of the Companies Act 2013.

The details of programmes for familiarisation of Independent Directors with theCompany their roles rights responsibility in the Company nature of the industry inwhich the Company operates and other related matters are put on the website of the Companyat the link http://www.mangalamtimber.com/images/Familiarisation-Programme-for-lndependent-Directors.pdf

20. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Act the Directors state that:

a) in the preparation of the annual accounts the applicable accounting standards havebeen followed and proper explanations provided relating to material departures if any;

b) such accounting policies have been selected and applied consistently and judgmentsand estimates made that are reasonable and prudent so as to give a true and fair view ofthe state of affairs of the Company at the end of the financial year and of the loss ofthe Company for that period;

c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 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) internal financial controls were followed by the Company and they are adequate andare operating effectively; and

f) Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems are adequate and operating effectively.

21. KEY MANAGERIAL PERSONNEL

Following employees were the Key Managerial Personnel of the Company during the periodunder review:

i. Shri Siddhartha Roy Manager and Chief Financial Officer of the Company

ii. Ms. Priya Sharma Company Secretary

22. REMUNERATION TO DIRECTORS & KEY MANGERIAL PERSONNEL

i. The Ratio of the remuneration of each Director to the median remuneration ofemployees of the Company for the year ended 31st March 2019 are:-

SI No. Name of Directors and Key Managerial Personnel Designation Ratio of remuneration of Director to median remuneration of the Employee of the Company Percentage increase in the remuneration for the Financial Year 2018-19
1 Shri N. G. Khaitan Independent and Non-Executive Director 0.36 NA*
2 Shri Vishwanath Chandak Independent and Non-Executive Director 0.14 NA*
3 Shri Anand Daga Independent and Non-Executive Director 0.49 NA*
4 Smt. Vidula Jalan Promoter Non-Executive Director 0.44 NA*
SI No. Name of Directors and Key Managerial Personnel Designation Ratio of remuneration of Director to median remuneration of the Employee of the Company Percentage increase in the remuneration for the Financial Year 2018-19
5 Smt Leena Ghosh Independent and Non-Executive Director 0.51 NA*
6 Shri Siddhartha Roy Manager and Chief Financial Officer NA NA
7 Ms Priya Sharma Company Secretary NA NA**

* Being a non-executive director only sitting fees are paid.

** Ms. Priya Sharma has been appointed as Company Secretary of the Company with effectfrom 23rd April 2018 Median remuneration of the Employees of the Company assumed to beRs. 2.00 Lacs (Previous Year: 2.00 Lacs).

ii. In the financial year 2018-19 there was no change in the median remuneration ofemployees.

iii. There were 174 permanent employees on the rolls of Company as on 31st March 2019.

iv. In view of the loss of the Company no increments were given to employees of theCompany.

v. Comparison of the remuneration of the key managerial personnel against theperformance of the Company: The total remuneration of key managerial personnel decreasedby Rs. 5.25 Lacs from Rs. 8.79 Lacs in 2017-18 to Rs 3.54 Lacs in 2018-19.

vi. (a) Variations in the market capitalization of the Company: The marketcapitalization as on 31st March 2019 was Rs 3115.66 Lacs (Rs. 4074 Lacs as on 31st March2018)

(b) Price Earnings Ratio of the Company: Not computed in view of Loss

(c) Percent increase / decrease in the market quotations of the shares of the Companyas compared to the rate at which the Company came out with the last public offer in theyear: The Company has not made any public issue or rights issue of securities in therecent past so comparison have not been made of current share price with public offerprice. The Company's shares are listed on BSE Limited and National Stock Exchange of IndiaLimited

vii. Considering the performance of the Company no increment was made to the salariesof the employees in the financial year i.e. 2018-19.

viii. Key Parameters for any variable component of remuneration availed by theDirectors are based on their contribution at the Board time spent on operational mattersand other responsibilities assigned:

All directors of the Company are non-executive directors hence no remunerations werepaid/ payable to them other than sitting fees.

ix. The ratio of the remuneration of the highest paid Director to that of the employeeswho are not directors but receive remuneration in excess of the highest paid directorduring the year 201819: Nil (All directors of the Company are nonexecutive directors henceno remunerations were paid/ payable to them other than sitting fees).

x. It is hereby affirmed that the remuneration paid is as per the Remuneration Policyof the Company.

23. STATUTORY AUDITORS

M/s Manish Goyal & Associates Chartered Accountants (Firm Registration No.007152C) are the Statutory Auditors of the Company.

24. SECRETARIAL AUDITOR

The Board appointed Shri Arup Kumar Roy ACS Practicing Company Secretary asSecretarial Auditor of the Company for the Year 2018-19. The Report of the SecretarialAuditor is attached in Annexure IV of this Report. There is no qualification in thereport.

25. AUDITORS' REPORT

Auditors' Report to the shareholders does not contain any qualification reservationor adverse remarks and is self-explanatory.

26. CASH FLOW ANALYSIS

In conformity with the provisions of Regulation 34(2)

(c) of the Listing Regulation 2015 Cash Flow Statement for the financial year ended31st March 2019 forms part of the audited financial statement.

27. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The Company has not given any loan guarantees or made any investments as prescribed inSection 186 of the Companies Act 2013.

28. RELATED PARTY TRANSACTIONS

All the related party transactions are entered into at arm's length in ordinary courseof business and are in compliance with the applicable provisions of the Companies Act2013 and the Listing Regulations. There were however no material significant relatedparty transaction made by the Company with the Promoters Directors or Key ManagerialPersonnel etc. which may have potential conflict with the interest of the Company.

The policy on Related Party Transactions as approved by the Board has been uploaded onthe Company's website under web link http://www.mangalamtimber.com/images/Related-Party-Transa ction-Policy.pdf

Your Directors draw attention of the members to Note-n to the financial statement whichsets out related party transactions disclosures.

29. PUBLIC DEPOSIT

The Company has neither invited nor accepted any public deposits within the meaning ofsection 73 of the Companies Act 2013 during the year under report.

30. SUBSIDIARY/ASSOCIATES/JOINT VENTURE COMPANIES

The Company does not have any subsidiary/associate/ joint venture Company for the yearended 31st March 2019.

31. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

No amount is pending for transfer to Investor Education and Protection Fund as on 31stMarch 2019.

32. VIGIL MECHANISM

The Company has a codified whistle blower policy to establish vigil mechanism forDirectors and employees of the Company to report concerns about unethical behaviouractual or suspected fraud or violation of the Company's code of conduct or ethics policy.The mechanism under the policy has been appropriately communicated within theorganisation. The Whistle

Blower Policy is available on the website of the Company.

33. DISCLOSURE UNDER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE

No complaints on the issues covered by "The Sexual Harassment of Women at theWorkplace (Prevention Prohibition & Redressal) Act 2013" were received duringthe year. Consequently the question of disposal of complaints did not arise.

34. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments if any affecting the financialposition of the Company which have occurred between the end of the financial year of theCompany to which the financial statements relate and the date of the report.

35. PERFORMANCE EVALUATION

Pursuant to Regulation 17(10) of the Listing Regulations read with provisions of theCompanies Act 2013 the Board has carried out an evaluation of its own performance andthat of the individual Directors. The evaluation criteria inter-alia covered variousaspects of the Board's functioning including its composition execution and performance ofspecific duties obligations and governance.

The performance of individual directors was evaluated on parameters such as level ofengagement and contribution independence of judgement safeguarding the interest of theCompany and its minority shareholders time devoted etc. The Directors expressed theirsatisfaction with the evaluation process.

36. CARBON CREDIT

Our Clean Development Mechanism (CDM) project activity "Reforestation of degradedland by MTPL in India (5016)" has accumulated credit balance of 1620018 CERs fromUNFCCC on 31.03.2019 after utilisation of 144058 CERs during the current year 2018-19 from1764076 CREs during the financial year 2017-18. These units will be available to theCompany on completion of certain laid formalities.

37. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING ANDOUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013 read withRule 8 of the Companies (Accounts) Rules 2014 is given as Annexure V to this Report.

38. PARTICULARS OF REMUNERATION

The Company has no employee in respect of whom information under Section 197(12) of theCompanies Act 2013 read with Rule 5(2) of Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is required to be annexed.

39. INTERNAL FINANCIAL CONTROL

The Company has in place internal financial control systems commensurate with the sizeand complexity of its operations to ensure proper recording of financial and monitoringof operational effectiveness and compliance of various regulatory and statutoryrequirements. The internal auditor monitors and evaluates the efficacy and adequacy ofinternal control systems in the Company. Based on the report of the internal auditorrespective departments undertake corrective action in their respective areas and therebystrengthen the controls. Significant audit observations and corrective actions thereon arepresented to the Audit Committee of the Board.

40. APPRECIATION

Your Directors place on record their deep appreciation of the assistance and guidanceprovided by the Central Government and the Governments of the States of India itssuppliers technology providers and all other stakeholders. Your Directors thank thefinancial institutions and banks associated with your Company for their support as well.Your Directors also thank the Company's dealers and its customers for their unstintedcommitment and valuable inputs.

Your Directors acknowledge the support received from you as shareholders of theCompany. Yours faithfully.

N G Khaitan
Vidula Jalan
Leena Ghosh Directors
Place: Kolkata Anand Daga
Date : 1st May 2019 Vishwanath Chandak