To the Members
Your Directors are pleased to present the 26th Annual Report alongwith the AuditedFinancial Statements of the Company for the year ended March 31 2019.
(Rs in lakh)
|Particulars ||Year ended ||Year ended |
| ||March 31 2019 ||March 31 2018 |
|Revenue from Operations and Other Income ||132659.98 ||120962.49 |
|Finance Costs ||3454.54 ||4016.84 |
|Gross Profit after Finance Costs but before Depreciation and Taxation ||15814.36 ||12333.26 |
|Depreciation ||2745.28 ||2625.93 |
|Profit before Tax and Exceptional Items ||13069.08 ||9707.33 |
|Exceptional Items ||- ||- |
|Profit before Tax and after Exceptional Items ||13069.08 ||9707.33 |
|Provisions for Taxation ||2814.58 ||62.48 |
|Tax expense of previous year (net) ||5.58 ||12.60 |
|Deferred Tax ||784.57 ||607.86 |
|Net Profit for the year ||9464.34 ||9024.40 |
|Other Comprehensive Income (Net of Tax) ||(2.89) ||7.10 |
|Total Comprehensive Income ||9461.45 ||9031.49 |
The pulp and paper industry is one of the largest industries in the world. It isdominated by North American Northern European and East Asian companies. Latin America andAustralia also have significant pulp and paper industries.
Over the next few years it is expected that both India and China will become keyplayers in the industry. World production of paper and paperboard is around 390 milliontonnes per annum and is expected to reach 490 million tonnes per annum by 2020. The pulpand paper industry is a large and growing portion of the world's economy.
Under the impact of a booming Internet and new media the product structure of thepaper industry will confront the pressure of profound adjustment. The widespread adoptionof new media and paperless reading has led to a shrinking demand for printing &writing paper as well as newsprint.
Whilst demand for printing and writing paper and newsprint is decreasing globally theinternet and e-commerce business model has driven the rapid expansion of the expressdelivery business and the demand for packaging paper is expected to increase steadily. Inthe context of the internet economy age with the rapid transformation of the traditionalmedia industry into new media and the rapid growth of online consumption the productstructure of the paper industry will also face tremendous pressure for adjustment. Thesuccessful paper companies will adjust their product focus in light of the changingdemands of the e-commerce world.
State of Company's Affairs
Your Company delivered another round of commendable performance this year. The netrevenue of the Company in 2018-19 increased from 1209.62 crore to 1326.59 croreregistering a growth of 9.67% over the last year. The profit after tax for the currentyear also increased to 94.64 crore as against the 90.24 crore in the previous year.
Material Changes and Commitments affecting financial position of the Company occurredbetween March 31 2019 and date of this report
There are no material changes and commitments which affected the financial position ofthe Company between March 31 2019 and date of this report i.e. July 31 2019.
Number of Meetings of the Board of Directors
There were four meetings of the Company's Board of Directors during the financial year2018-19.
Transfer to reserves
There was no transfer made to the General Reserve.
The Directors are pleased to recommend a dividend of 4/- per equity share of face value10/- each on 17019100 equity shares for financial year 2018-19 subject to the approval ofmembers at the ensuing Annual General Meeting of the
Company resulting in an appropriation of 82069658/- (including Corporate DividendTax of 13993258/-)
Directors and Key Managerial Personnel
Smt. Reena Agarwal Whole Time Director retires by rotation at the forthcoming AnnualGeneral Meeting and being eligible offers herself for re-appointment in terms of theprovisions of Section 152 of the Companies Act 2013. The Board at its meeting held onOctober 31 2018 has recommended the re-appointment of Shri Ashok Kumar Bansal as WholeTime Director for a further period of three years with effect from November 1 2018 toOctober 31 2021 subject to the approval of the shareholders. The necessary Resolutionseeking approval of the members for the re-appointment of Shri Ashok Kumar Bansal as theWhole Time Director has been incorporated in the notice of the forthcoming Annual GeneralMeeting of the Company.
The Board of Directors of the Company has pursuant to the provisions of Section 149and other applicable provisions of the Act and based on Shri P Kumar's and Shri C RRadhakrishnan's skills expertise and performance evaluation proposed the re-appointmentof Shri P Kumar and Shri C R Radhakrishnan as Independent Directors of the Company forthe second term of five years. The proposal for their reappointments for second term offive years are being placed before the shareholders for their approval at the ensuingAnnual General Meeting.
The necessary Special Resolutions for reappointments of Shri P Kumar and Shri C RRadhakrishnan as Independent Directors of the Company for a second term of five years havebeen incorporated in the notice of the forthcoming Annual General Meeting of the Companyalong with brief details about them.
Apart from the above there has been no change with respect to the Directors and KeyManagerial Personnel during the year 2018-19.
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 (Listing Obligations and Disclosure Requirements) Regulations 2015("Listing Regulations"). In the opinion of the Board the Independent Directorsfulfill the conditions specified in the Companies Act 2013 and rules made thereunder fortheir appointment as 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 instances of non-acceptance of any recommendation of the AuditCommittee.
The Committee members met four times during the year under review. Details of themeetings 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 affirmed that no Company personnel has been denied access to the Audit Committee.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.The Boards 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 a Director
The Nomination and Remuneration Committee has besides the requisite qualifications andexperience formulated the criteria for determining positive attributes and independenceof Directors in terms of provisions of Section 178 (3) of the Act and Regulation 19 readwith Part D of Schedule II of the Listing Regulations.
Independence: A Director will be considered as an Independent Director' if he/she meets with the criteria for Independent Director' as laid down in the Act andRegulation 16 (1) (b) of the Listing Regulations.
Other factors: 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 the 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 relations and communication skills besidessoundness of judgment. Independent Directors are also expected to abide by the Codefor Independent 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 besides thecriteria 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. The criteria forperformance evaluation of the Board and committees included aspects such as compositionstructure effectiveness of board and committee processes etc.
A separate exercise was carried out to evaluate individual Director's performanceincluding that of the Chairman & Managing Director and also the Whole Time Directorwho were evaluated on parameters such as engagement level contribution independence ofjudgment safeguarding the Company interests and its minority shareholders etc. The Boardof 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 explanations 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 2019 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
(vi) they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such efficiently; systems are adequate and operating
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 underthe provisions of 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 2019 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 2019 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 financialyear 2018-19 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 2019 does notcontain any qualification reservation or adverse remark.
c. Cost Auditors
N. Ritesh & Associates Cost Accountants have been appointed to conduct CostAudits for all the units of the Company for the year ending March 31 2019 in terms ofSection 148 of the Act read with Companies (Audit and Auditors) Rules 2014 and asrequired Cost Audit Report for the financial year 2017-18 was duly filed with Ministry ofCorporate Affairs Government of India on August 23 2018.
The Cost Audit of the Company for the financial year ended March 31 2019 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 Annexure 4 attachedand 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 furnishedin 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(s) 73 and/or74 of the Act.
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
'Particulars of transactions with Related Parties' pursuant to Section 134(3)(h) of theAct read with Rule 8(2) of the Companies (Accounts) Rules 2014 are given in Form AOC-2and the same forms part of this report 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 have approved apolicy on related party transactions which is placed on the Company's website at the weblink: http://www.nrail.com/ companypolicies.html.
Pursuant to Section 134(3)(n) of the Companies Act 2013 and relevant provisions 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 limit it has 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 thefinancial year 2018-19 the Company has spent a total amount of 11947039/- towards CSRinitiatives.
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 policy for sexual harassment at workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment of women atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the rules there under for preventionand redressal of complaints of sexual harassment at workplace. Internal ComplaintsCommittee (ICC) has been set up to redress complaints received regarding sexualharassment. All women employees (permanent contractual temporary trainees) are coveredunder this policy. No complaint on sexual harassment was received during the financialyear 2018-19.
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 2019-2020.
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. The Company develops leaders at global platforms at regular intervals as a partof it commitment to engage and retain talent. The Company offers robust leadershipdevelopment efforts to hone employee skills and help keep the Company ahead of the curve.
People are the real strength of the Company 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 requirements on safety customer support market needs operationalexcellence technology upgradation process improvements innovation and behavioralcompetencies.
Your Directors place on record their deep appreciation of the employees at all levelsfor their hard work dedication and commitment. The enthusiasm and unstinting efforts ofthe employees have enabled the Company to remain an industry leader. Your Directors alsotake this opportunity to thank all the Shareholders Clients Dealers Vendors BanksGovernment and Regulatory Authorities for their continued support and confidence in theCompany's Management.
| ||On behalf of the Board of Directors |
| ||R N AGARWAL |
|Mumbai July 31 2019 ||Chairman & Managing Director |