To the Members
Your Directors are pleased to present the 25th Annual Report along withAudited Financial Statements of the Company for the year ended March 31 2018.
| || ||(Rs in lakhs) |
|Particulars ||Year ended March 31 2018 ||Year ended March 31 2017 |
|Revenue from Operations and Other Income ||123229.02 ||110133.81 |
|Finance Costs ||3794.82 ||4280.26 |
|Gross Profit after Finance Costs but before Depreciation and Taxation ||12333.26 ||10144.86 |
|Depreciation ||2625.93 ||2450.47 |
|Profit before Tax and Exceptional Items ||9707.33 ||7694.39 |
|Exceptional Items ||- ||(120.88) |
|Profit before Tax and after Exceptional Items ||9707.33 ||7815.27 |
|Provisions for Taxation ||62.48 ||- |
|Tax expense of previous year (net) ||12.60 ||- |
|Deferred Tax ||607.86 ||2842.08 |
|Net Profit for the year ||9024.40 ||4973.19 |
|Other Comprehensive Income (Net of Tax) ||7.10 ||(13.96) |
|Total Comprehensive Income ||9031.49 ||4959.22 |
Globally over 400 million tons of paper and paper products are consumed. The world'sthree largest paper producing countries are China the US and Japan (these threecountries account for approximately half of the world's total paper production) whileIndia accounts for a small but growing share of the global market. The global paper andpulp mills industry has contracted slightly over the past five years primarily due to theshift to digital media and paperless communication across most developed economies.However demand in emerging markets has partially offset the decline by driving increaseddemand for paper used in packaging materials.
In spite of the continual focus on digitization India's requirement for paper isanticipated to rise 53 percent in the next six years principally due to a sustained boostin the number of school-going children in rustic areas. Growing consumerism modernretailing rising literacy and the growing use of documentation will continue demand forwriting and printing paper buoyant. The exponential enlargement of e-commerce in thenation has opened up the latest horizon and could donate significantly to the demand wherethe paper is being lengthily used for packaging.
State of Company's Affairs
Your Company delivered another round of commendable performance this year. The Revenueof the Company in 2017-18 increased from Rs 1101.34 Cr to Rs 1232.29 Cr registering agrowth of 11.89% over last year. The Profit after Tax for the current year also increasedby 81.46% to 90.24 Cr as against the 49.73 Cr in the previous year. During the currentyear Excise Duty till June 30 2017 is included in Revenue whereas in previous year theExcise duty for full year is included in the Revenue. Further after implementation of GSTthe Revenue excludes GST.
First-time adoption of Indian Accounting Standards
The Company has adopted Indian Accounting Standards (Ind AS) as notified by theMinistry of Corporate Affairs with effect from April 1 2017 with a transition date ofApril 1 2016. These financial statements for the year ended March 31 2018 are the firstfinancial statements the Company has prepared under Ind AS. For all periods up to andincluding the year ended March 31 2017 the Company prepared its financial statements inaccordance with the accounting standards notified under Section 133 of the Companies Act2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014(Previous GAAP'). The adoption of Ind AS has been carried out in accordance with IndAS 101 First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that allInd AS standards and interpretations that are issued and effective for the first Ind ASfinancial statements be applied retrospectively and consistently for all financial yearspresented. Accordingly the Company has prepared financial statements which comply withInd AS for year ended March 31 2018 together with the comparative information as at andfor the year ended March 31 2017 and the opening Ind AS Balance Sheet as at April 12016 the date of transition to Ind AS.
Material Changes and Commitments affecting financial position of the Company occurredbetween March 31 2018 and date of this report
There are no material changes and commitments which affected the financial position ofthe Company between March 31 2018 and date of this report i.e. July 24 2018.
Number of Meetings of the Board of Directors
There were four meetings of the Company's Board of Directors during the FY 2018.
Transfer to reserves
There was no transfer made to the General Reserve.
The Directors are pleased to recommend a final dividend of Rs 3/- per equityshare of face value Rs 10/- each on 4558177 equity shares for FY 2018 subject to theapproval of members at the ensuing Annual General Meeting of the Company resulting in anappropriation of Rs 16485362/- (including Corporate Dividend Tax of Rs 2810831/-) Nodividend was recommended on 12460923 equity shares held by the promoters who haveirrevocably waived their entitlement to dividend for the FY 2018.
Directors and Key Mangerial Personnel
Shri Raunak Agarwal Whole Time Director retires by rotation at the forthcoming AnnualGeneral Meeting and being eligible o_ers himself for re-appointment in terms of theprovisions of Section 152 of the Companies Act 2013.
The re-appointment of Smt. Reena Agarwal & Shri Raunak Agarwal as the Whole TimeDirectors of the Company was approved by the shareholders at the Annual General Meetingheld on September 20 2017.
The term of Office of Shri R N Agarwal as the Managing Director of the Company expireson July 31 2018. The Board at its meeting held on July 24 2018 has recommended hisreappointment for a further period of three years. The resolution seeking approval of themembers for the re-appointment of Shri Rajendra Agarwal as Managing Director has beenincorporated in the notice of the forthcoming Annual General Meeting of the Company.
Shri S N Chaturvedi has vacated his Office of Independent Director with effect fromNovember 10 2017 owing to disqualification u/s Section 164 of the Companies Act 2013.
With a view to strengthen the Board and also to meet the regulatory requirements theBoard of Directors of the Company on the recommendation of Nomination and RemunerationCommittee appointed Shri R K Bakshi as an Additional Independent Director of the Companywith effect from February 7 2018 to hold Office upto January 31 2023. The saidappointment is subject to the approval of the members of the Company in General Meeting.
Apart from the above there has been no change with respect to the Directors and KeyManagerial Personnel during the year 2017-18.
Independent Directors Declaration
The Company has received declarations from all Independent Directors that they meet thecriteria of independence as laid out in sub-section (6) of Section 149 of the CompaniesAct 2013 and SEBI (LODR) 2015. In the opinion of the Board the Independent Directorsfulfill the conditions specified in the Companies Act 2013 and rules made thereunder fortheir appointment as an Independent Directors of the Company.
The primary objective of the Committee is to monitor and provide effective supervisionof the Management's financial reporting process to ensure accurate and timely disclosureswith the highest levels of transparency integrity and quality of financial reporting.There have been no incidences of non-acceptance of any recommendation of the AuditCommittee.
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.
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 the Company'swebsite. The policy prescribes adequate safeguards against the victimization of employeeswho avail of the mechanism and also provide direct access to the Audit Committee Chairman.It is afirmed that no Company personnel have been denied access to the Audit Committee sofar. The Whistle Blower Policy (Vigil Mechanism) is uploaded on the Company's website athttp://www.nrail.com/company_policies.html.
Procedure for Nomination and Appointment of Directors
The Nomination and Remuneration Committee is responsible for developing the competencyrequirements of the Board based on the industry and the Company's individual strategy. TheBoards Composition Analysis reflects an in-depth understanding of the Company'sstrategies environment operations financial condition and compliance requirements.
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.
Criteria for Determining Qualifications Positive Attributes & Independence of aDirector
The Nomination and Remuneration Committee has formulated the criteria for determiningqualifications positive attributes and independence of Directors in terms of provisionsof Section 178 (3) of the Act and Regulation 19 read with Part D of Schedule II of theListing Regulations.
Independence: In accordance with the above criteria a Director will be consideredas an Independent Director' if he/ she meets with the criteria for IndependentDirector' as laid down in the Act and Regulation 16 (1) (b) of the Listing Regulations.
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 as prescribed under the Act theDirectors on the Board of the Company are also expected to demonstrate high standards ofethical behavior strong inter-personal and communication skills and soundness ofjudgment. Independent Directors are also expected to abide by the Code forIndependent Directors' as outlined 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 http:// www.nrail.com/company_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's 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.
Directors' Responsibility Statement
The Directors hereby confirm and declare that:-
(i) in the preparation of annual accounts the applicable accounting standards had beenfollowed along with proper explanation relating to material departures;
(ii) 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 at the financial year ended March 31 2018 and ofthe profit of the Company for the year;
(iii) they had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
(iv) they had prepared the annual accounts on a going concern basis;
(v) they had laid down internal financial controls to be followed by the Company andsuch controls are adequate and operating e_ciently;
(vi) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating e_ciently;
Internal Control over Financial Reporting
The Company has in place adequate internal financial controls commensurate with thesize scale and complexity of its operations. During the year such controls were testedand no reportable material weakness in the design or operations were observed. The reporton the Internal Financial Control issued by the Statutory Auditors of the Company in viewof the provisions under Companies Act 2013 is given elsewhere in the report.
Details of Subsidiaries/ Joint ventures/Associates
The Company does not have any subsidiary/ joint ventures/ associates.
Extract of Annual Return
The extracts of Annual Return as on March 31 2018 as required under sub-section 3 ofSection 92 of the Companies Act 2013 in Form No. MGT 9 is attached as Annexure 2.
Auditors' and Auditors' Report
a. Statutory Auditors
M/s. GMJ & Co. Chartered Accountants have been appointed as the StatutoryAuditors of the Company for a period of five years at the Annual General Meeting("AGM") of the Company held on September 20 2017 to hold Office till theconclusion of the 29th AGM of the Company to be held in the year 2022.
The Auditors' Report for the financial year ended March 31 2018 does not contain anyqualification reservation or adverse remark.
b. Secretarial Auditors
Pursuant to 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 FY2018 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report isannexed herewith as Annexure 3.
The Secretarial Audit Report for the financial year ended March 31 2018 does notcontain any qualification reservation or adverse remark.
c. Cost Auditors
N. Ritesh & Associates Cost Accountants have been appointed to conduct Cost Auditsfor all the units of the Company for the year ending March 31 2018 in terms of Section148 of the Act read with Companies (Audit and Auditors) Rules 2014 and as required CostAudit Report for the FY 2017 was duly filed with Ministry of Corporate Affairs Governmentof India on August 4 2017.
The Cost Audit of the Company for the financial year ended March 31 2018 was conductedby the said firm and the Report shall be submitted to the Ministry of Corporate AffairsGovernment of India within the prescribed time.
Technology Absorption Energy Conservation & Foreign Exchange Earning & Outgo
Particulars of conservation of energy technology absorption and foreign exchangeearnings and outgo as required under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8(3) of the Companies (Accounts) Rules 2014 are given in the Annexure 4attached and forms part of this Report.
Particulars of Employees & Related Disclosures
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 provided in the Annexure forming partof the 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 theRegistered Office of the Company.
The Company has not accepted any deposits from public in terms of Section 73 and/or 74of the Act.
Significant and Material Orders passed by the Regulators
During the year under review no significant and material orders were passed by theregulators or courts or tribunals impacting the going concern status and the Company'soperations.
Particulars of Loans Guarantees or Investments under Section 186 of the Companies Act2013.
Details of loans guarantees investments covered under provisions of Section 186 ofthe Act are provided in the notes to the Financial Statements.
Related Party Transactions
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 is placedon the Company's website at the web link: http://www.nrail.com/companypolicies.html.
Pursuant to Section 134(3)(n) of the Companies Act 2013 and relevant regulations ofListing Regulations the Company has adopted Risk Management policy for identification andimplementation of Risk Mitigation Plan for the Company. The Company has laid downappropriate procedures to inform the Board about the risk assessment and minimizationprocedures. The Board periodically revisits and reviews the overall risk management planfor making desired changes in response to the dynamics of the business.
Corporate Social Responsibility (CSR) Initiatives
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 Policy thatshall indicate activities to be undertaken by the Company as specified in Schedule VII tothe 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 your Company falls within the minimum threshold limits it constituted a CSRCommittee of the Board and formulated a CSR Policy. The focus areas of CSR Policy areeducation preventive health care sanitation environment and engagement. During the FY2018 the Company has spent a total amount of Rs 3850000/- towards CSR initiatives.
The CSR Report forming part of this Report is furnished in Annexure 7.
Prevention Prohibition and Redressal of Sexual Harassment at Workplace
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the rules there under for prevention andredressal of complaints of sexual harassment at workplace. Internal Complaints Committee(ICC) has been set up to redress complaints received regarding sexual harassment. Allwomen employees (permanent contractual temporary trainees) are covered under thispolicy. No complaint on sexual harassment was received during the FY 2018.
Corporate Governance & Management Discussion & Analysis
The Corporate Governance Report and Management's Discussion & Analysis Report andthe Auditor's Certificate regarding compliance with conditions of Corporate Governanceforms part of the Annual Report.
The Company has paid the listing fees to BSE and NSE for the year 2017-2018.
Insider Trading Regulations and Code of Disclosure
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)
The Directors have devised proper systems to ensure compliance with the provisions ofall applicable Secretarial Standards and that such systems are adequate and operatingeffectively.
There is a continuous effort to improve the working environment with focus on employeewell-being and capability building to enable them to perform at their best for theCompany. We develop leaders at global platforms at regular intervals as a part of ourcommitment to engage and retain talent. We o_er robust leadership development efforts tohone employee skills and help keep the Company ahead of the curve.
People are our real strength & while pursuing best-in-class performance theCompany 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 requirements on safety customer support market needs operationalexcellence technology upgradation process improvements innovation and behavioralcompetencies.
Your Directors place on record their deep appreciation to employees at all levels fortheir hard work dedication and commitment. The enthusiasm and unstinting efforts of theemployees have enabled the Company to remain an industry leader. Your Directors also takethis opportunity to thank all the Shareholders Clients Dealers Vendors BanksGovernment and Regulatory Authorities for their continued support.
| ||On behalf of the Board of Directors |
|Mumbai ||R N AGARWAL |
|July 24 2018 ||CHAIRMAN & MANAGING DIRECTOR |