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N R Agarwal Industries Ltd.

BSE: 516082 Sector: Industrials
NSE: NRAIL ISIN Code: INE740D01017
BSE 00:00 | 20 Jul 420.35 6.20






NSE 00:00 | 20 Jul 422.65 10.05






OPEN 412.00
52-Week high 598.60
52-Week low 245.20
P/E 7.93
Mkt Cap.(Rs cr) 715
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 412.00
CLOSE 414.15
52-Week high 598.60
52-Week low 245.20
P/E 7.93
Mkt Cap.(Rs cr) 715
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

N R Agarwal Industries Ltd. (NRAIL) - Director Report

Company director report

Dear Members

Your Directors pleasurably present to you the 24th Annual Report along with theCompany’s Audited Financial Statements for the year ended March 31 2017.


The Company manufactures duplex boards writing and printing paper as well as newsprintproducts. The Indian Paper Industry’s growth during FY17 was sluggish but theCompany performed creditably due to improved operational e-ciency and enhancedrealizations. The summary of financial performance for the year is encapsulated below:

Particulars Year ended March 31 2017 Year ended March 31 2016
Revenue from Operations and Other Income 105022.41 89126.58
Finance Costs 4314.38 4570.43
Gross Profit after Finance Costs but before Depreciation and Taxation 10089.27 2758.23
Depreciation 2450.47 2347.91
Profit before Tax and Exceptional Items 7638.80 410.32
Exceptional Items 388.13 -
Profit before Tax and after Exceptional Items 7250.67 410.32
Provisions for Taxation - 83.50
Deferred Tax 227.50 (1455.75)
Net Profit for the year 7023.17 1782.58
Balance in Statement of Profit and Loss 6756.83 4974.25
Amount available for Appropriation 13780.00 6756.83
Balance in Statement of Profit and Loss 13780.00 6756.83


The global demand for paper and board (W&P paperboard and newsprint) grew at amuted ~0.4% CAGR between the 2011 and 2016 period to reach ~407 million tonnes. Whiledigitization is estimated to have moderated demand by 1.4% and 5.5% in the W&P andnewsprint segments respectively a moderate growth in paperboard segment by ~1.5-1.7% CAGRprovides respite. Although the demand for newsprint has declined tissue papercontainerboards and carton boards have reported growth. Besides declining demand inJapan North America and Western Europe was o-set by buoyant demand in the emergingmarkets of India and China among others. The APAC region was the market leader with a 34%revenue share in 2016 followed by Europe and North America. Developing economies likeIndia and China are likely to drive the paper packaging market with applications acrossindustries like healthcare personal care homecare retail among others. The pulp pricesfluctuation is expected to a-ect industry prospects.

In India the paper demand is estimated at 16 million tonnes; > 2 million tonnes perannum of paper is imported. The industry has ~90% capacity utilization. Increasing rawmaterial fuel logistics and capital costs have staggered capacity creation and increasedIndia’s dependence on imports. Imports have risen at a CAGR of 11.4% in value termsand 7.9% in volume terms. The demand growth rate for paperboard is expected to be healthyrate of 7-8% in the next five years owing to rising customer durable sales FMCG productsreadymade garments and pharmaceuticals. The demand for writing and printing paper isexpected to grow at a CAGR of 4-5% over the next five years due to increasing literacy inIndia.


The financial year 2016-17 was one of the Company’s most critical years. TheCompany countered economic sluggishness and demonetization through decisive initiatives.The Company has exited CDR and is gradually leaving the newsprint business also. In spiteof this the Company reported a 97% growth in its operating revenue during the financialyear under review. Further information on the Company's business overview outlook andstate of a-airs have been discussed in detail in the Management Discussion & Analysis.


There are no material changes and commitments in the Company’s business operationssince the close of the financial year on March 31 2017 to the date of this Report.


There were four meetings of the Company's Board of Directors during the financial year2016-17.


The Directors are pleased to recommend a Rs.2/- per equity share dividend for thefinancial year ended March 31 2017. The proposal is subject to the shareholders’approval at the ensuing Annual General Meeting to be held on September 20 2017.


Shri Ashok Kumar Bansal Whole Time Director retires by rotation at the forthcomingAnnual General Meeting and is eligible for re-appointment in terms of the provisions ofSection 152 of the Companies Act 2013.

During the financial year 2016-17 Shri Ajay Nair was appointed as Additional Directorof the Company with e-ect from August 1 2016 and his further appointment as IndependentDirector was subsequently approved by our shareholders at the Annual General Meeting heldon September 28 2016.

Smt. Reena Agarwal and Shri Raunak Agarwal the Company’s Whole Time Directorshold o-ce upto August 7 2017 and August 31 2017 respectively. The resolutions seekingMembers’ approval for the re-appointment of Smt. Reena Agarwal and Shri RaunakAgarwal as Whole Time Directors have been incorporated in the notice of the forthcomingAnnual General Meeting of the Company along with the requisite details about them.

Apart from the above there has been no change with respect to Key Managerial Personnelduring the year 2016-17.

Independent Directors Declaration

The Company has received declarations from all the Independent Directors such that theymeet the criteria of independence as laid out in sub-section (6) of Section 149 of theCompanies Act 2013 and SEBI (LODR) 2015. In the opinion of the Board the IndependentDirectors fulfill the conditions specified in the Companies Act 2013 and rules madethereunder for their appointments.

Audit Committee

The primary objective of the Audit Committee is to monitor and provide e-ectivesupervision of the Management’s financial reporting process ensuring accurate andtimely disclosures with the highest levels of transparency integrity and quality offinancial reporting. There have been no incidences of non-acceptance with respect to anyrecommendation of the Audit Committee.

The Committee members met four times during the year under review. The details of thismeeting are given in the Corporate Governance Report including the Committee’scomposition.

Vigil Mechanism

The Company has adopted a Whistle Blower Policy dealing with any instance of fraud orany unethical or improper practices. A copy of this policy is available on theCompany’s website. The policy prescribes adequate safeguards against thevictimization of employees who avail of the mechanism and also provide direct access tothe Audit Committee Chairman. It is a-rmed that no Company personnel have been deniedaccess to the Audit Committeeso far.


The Nomination and Remuneration Committee is responsible for developing the competencyrequirements of the Board based on the industry and the Company’s individualstrategy. The Board‘s Composition Analysis reflects an in-depth understanding of theCompany’s strategies environment operations financial condition and compliancerequirements.

The Nomination and Remuneration Committee conducts a gap analysis to refresh the Boardon a periodic basis including a Director’s appointment or re-appointment which isenvisaged every time. The Committee is also responsible for reviewing and vetting the CVsof potential candidates’ vis--vis the required competencies and meeting potentialcandidates prior to making nomination recommendations to the Board. At the time ofappointment specific requirements for the position including expert knowledge expectedis communicated to the appointee.


The Nomination and Remuneration Committee has formulated the criteria for determiningqualifications positive attributes and the Director’s independence in terms ofprovisions of Section 178 (3) of the Act and Regulation 19 read with Part D of Schedule IIof the Listing Regulations.

Independence: In accordance with the above criteria a Director will be considered asan ‘Independent Director’ if he/ she meet the criteria for ‘IndependentDirector’ as laid down in the Act and Regulation 16 (1) (b) of the ListingRegulations.

Qualifications: A transparent Board nomination process is in place that encouragesthought experience knowledge perspective age and gender diversity. It is also ensuredthat the Board has an appropriate blend of functional and industrial expertise. Whilerecommending Director appointments the Nomination and Remuneration Committee considersthe manner in which individual function and domain expertise will contribute to theoverall skill-domain mix of the Board.

Positive Attributes: In addition to the duties prescribed under the Act the Directorson the Board of the Company are also expected to demonstrate high standards of ethicalbehavior strong inter-personal communication skills and sound judgment. IndependentDirectors are also expected to abide by the ‘Code for Independent Directors’ asoutlined in Schedule IV to the Act.


The Company has adopted the Nomination and Remuneration Committee Charter whichincludes the Company's policy on Directors' appointment and remuneration includingcriteria for determining the qualifications positive attributes independence of aDirector and other matters provided under Section 178(3) of the Companies Act 2013.

Pursuant to Section 178(4) of the Companies Act 2013 the Company also adoptedremuneration policy relating to remuneration for the Directors Key Managerial Personneland Senior Executives. The remuneration policy is attached as Annexure 1 and is alsoavailable on Company's website policies.html.


Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of ListingRegulations 2015 the Board has carried out the annual performance evaluation of its ownperformance as well as the evaluation of the working of its Committees.

A separate exercise was carried out to evaluate individual Director performanceincluding that of the Chairman and the Managing Director who were evaluated on parameterssuch as engagement level contribution independence of judgment safeguarding the Companyinterests and its minority shareholders etc.

The Board of Directors expresses its satisfaction with the evaluation process.


The Directors hereby confirm and declare that:-

(i) In the preparation of annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;

(ii) They have selected such accounting policies applied them consistently and madejudgments as well as estimates that are reasonably prudent so as to give a true and fairview of the Company's state of a-airs at the financial year ended March 31 2017 and ofthe Company’s profit for the year;

(iii) They have taken proper and su-cient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013safeguarding the Company assets and for the prevention and detection of fraud and otherirregularities;

(iv) They have prepared the annual accounts on a going concern basis;

(v) They have laid down internal financial controls to be followed by the Company andsuch controls are adequate and operating e-ciently;

(vi) They have devised proper systems to ensure compliance with the applicable lawprovisions and that such systems are adequate and operating e-ciently;


The Company has an internal financial control system commensurate with the size scaleand complexity of the operations. The internal audit function is controlled by thein-house department. The main function of internal audit is to monitor and evaluateadequacy of internal control system in the Company its compliances with the operatingsystems accounting procedures and policies at all Company locations. Based on theinternal audit function report process owners take corrective action in their respectiveareas and thereby strengthen the controls. Significant audit observations and correctiveactions are reported to the Audit Committee.

Statutory Auditors audited the Internal Financial Controls (IFC) over theCompany’s financial reporting as of March 31 2017 in conjunction with audit of theCompany’s financial statements for the year ended on that date. Unmodified opinion onIFC was given by them.


The Company does not have any subsidiary/ joint ventures/ associates.


The extracts of Annual Return as on March 31 2017 as required under sub-section 3 ofSection 92 of the Companies Act 2013 in Form No. MGT 9 is attached as Annexure 2.


a. Statutory Auditors

As per the provisions of Section 139 of the Companies Act 2013 ("the Act")read with rules made thereunder no listed company can appoint or re-appoint an audit firmas auditor for more than two terms of five consecutive years. Section 139 of the Act hasalso provided a period of three years from the date of commencement of the Act to complywith this requirement. In view of the above M/s. Chaturvedi & Partners CharteredAccountants can continue as Auditors of the Company only up to the conclusion of theforthcoming Annual General Meeting.

Following the provisions of the Companies Act 2013 and the Companies (Audit andAuditors) Rules 2014 the Board of Directors has on recommendation of the AuditCommittee proposed the appointment of GMJ & Co. Chartered Accountants (FirmRegistration No. 103429W) as the Statutory Auditors at the Annual General Meeting for aperiod of five years i.e. to hold o-ce from the conclusion of this Annual General Meetingtill the conclusion of the Company’s twenty ninth Annual General Meeting to be heldin the year 2022 subject to ratification of their appointment by the Members at everyAGM if so required under the Act.

The Auditors’ Report for the financial year ended March 31 2017 does not containany qualification reservation or adverse remark.

You are requested to consider and appoint the Company Auditors.

b. Secretarial Auditors

Following the provisions of Section 204(1) of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhad appointed Parikh & Associates Company Secretaries in practice for the financialyear 2016-17 to undertake the Secretarial Audit of the Company. The Secretarial AuditReport is annexed herewith as Annexure 3.

The Secretarial Audit Report for the financial year ended March 31 2017 does notcontain any qualification reservation or adverse remark.

c. Cost Auditors

N. Ritesh & Associates Cost Accountants Mumbai have been appointed to conductCost Audits for all the units of the Company for the year ending March 31 2017 in termsof Section 148 of the Act read with Companies (Audit and Auditors) Rules 2014 and asrequired Cost Audit Report for the financial year 2015-16 which was duly filed withMinistry of Corporate A-airs Government of India on August 30 2016.

The Company’s Cost Audit for the financial year ended March 31 2017 was conductedby the said firm and the Report shall be submitted to the Ministry of Corporate A-airsGovernment of India within the prescribed time


Particulars of energy conservation technology absorption and foreign exchange earningsand outgo as required under Section 134(3)(m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 are given in the Annexure 4 attached and formpart of this Report.


The information required under Section 197(12) of the Act read with Rule 5 of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is attachedas Annexure 5.

The information required under Rule 5(2) and (3) of The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is given in the Annexure forming part ofthe Report. In terms of the first proviso to Section 136 of the Act the Report andAccounts are being sent to the shareholders excluding the aforesaid Annexure. Anyshareholder interested in obtaining the same may write to the Company Secretary at theCompany’s Registered O-ce.


The Company has not accepted any deposits from public during the year under review.


There were no significant material orders passed by the regulators or courts whichwould impact the Company’s growing concern and its future operations.


No loans guarantees and investments covered under the provisions of Section 186 of theCompanies Act 2013 were included during the year under review.


The note for related party transactions – ‘Particulars of transactions withRelated Parties’ pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of theCompanies (Accounts) Rules 2014 are given in Form AOC-2 and the same forms part of thisreport as Annexure 6.

There are no materially significant related party transactions made by the Company withpromoters key managerial personnel or other designated persons which may have potentialconflict with interest of the Company at large.

The Board of Directors approved a policy on related party transactions which isavailable on the Company's website at the web link:


Pursuant to section 134(3)(n) of the Companies Act 2013 and relevant regulations ofListing Regulations 2015 the Company has adopted a Risk Management policy for theidentification and implementation of a Risk Mitigation Plan for the Company. The Companyhas included appropriate procedures to inform the Board about the risk assessment andminimization procedures. The Board periodically revisits and reviews the overall riskmanagement plan for making desired changes in response to the dynamics of the business.


Section 135 of the Companies Act 2013 mandates every Company having a minimum networth threshold limit turnover or net profit as prescribed to constitute a CorporateSocial Responsibility Committee formulating a Corporate Social Responsibility Policythat shall indicate activities to be undertaken by the Company as specified in ScheduleVII to the Companies Act 2013 and duly approved by the Board as well as fix the amount ofexpenditure to be incurred on the activities and monitor the CSR Policy from time to time.

Since the Company falls within the minimum threshold limits it has constituted a CSRCommittee of the Board and formulated a CSR Policy. The focus areas of the CSR Policy areeducation preventive health care sanitation environment and engagement. In view of thepast losses the Company is not required to spend money on CSR Activities as per Section135 of the Companies Act 2013. However as a responsible corporate citizen the Companyhas incurred a sum of Rs.21.53 lakhs various CSR initiatives in these focus areas.

The CSR Report forming part of this Report is furnished in Annexure 7.


The Company has zero tolerance for sexual harassment at the workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at the workplace inline with the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the rules there under for the prevention andredressal of complaints of sexual harassment at the workplace. Internal ComplaintsCommittee (ICC) has been set up to redress sexual harassment complaints received. Allwomen employees (permanent contractual temporary trainees) are covered under thispolicy. No complaint on sexual harassment was received during the Financial Year 2016-17.


The Corporate Governance Report and Management’s Discussion & Analysis Reportand the Auditor’s Certificate regarding compliance with conditions of CorporateGovernance forms part of the Annual Report.


The Directors pleasurably inform you that the Company has been listed on National StockExchange of India Limited w.e.f April 5 2017 in addition to BSE.

The Company has paid the listing fees to BSE and National Stock Exchange of IndiaLimited for the year 2017-2018.


The Board of Directors have adopted the Code of Practices and Procedures for FairDisclosure of Unpublished Price Sensitive Information and Code of Internal Procedures andConduct for Regulating Monitoring and Reporting of Trading by Insiders in accordance withthe requirements of the SEBI (Prohibition of Insider Trading) Regulation 2015 which isavailable on our website (http://www.nrail. com/company-policies.html)


Continuous e-ort is put in to improve the working environment with a focus on employeewell-being and capability building enabling them to perform their best for the Company. Wedevelop global platform leaders at regular intervals as part of our commitment to engageand retain talent. We provide robust leadership development e-orts to hone employee skillsand help keep the Company ahead of the curve.

People are our real strength and therefore while pursuing best-in-class performance;the Company is significantly increasing its investment in its employees with training anddevelopment. NRAIL invests in training and knowledge at all levels in order to alignemployees with the requirements on safety customer support market needs operationalexcellence technology upgradation process improvements innovation and behavioralcompetencies.


The Directors wish to place on record their gratitude to the State and CentralGovernments lending financial institutions and banks for their continued support duringthe year.

The Directors wish to convey their thanks to the valued shareholders customersdealers and suppliers for their continued patronage during the year under review andrecord their appreciation of the contribution made by all the employees during the year.

On behalf of the Board of Directors
Mumbai July 28 2017 Chairman & Managing Director