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Shree Rajeshwaranand Paper Mills Ltd.

BSE: 516086 Sector: Industrials
NSE: N.A. ISIN Code: INE617D01017
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NSE 05:30 | 01 Jan Shree Rajeshwaranand Paper Mills Ltd
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OPEN 2.05
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VOLUME 500
52-Week high 4.07
52-Week low 1.33
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Mkt Cap.(Rs cr) 3
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Shree Rajeshwaranand Paper Mills Ltd. (SHRAJESHWPAP) - Director Report

Company director report

Dear Shareholders

The Directors present the 29th ANNUAL REPORT together with the AuditedFinancial Statement for the Financial Year 2019-20 ended 31st March 2020.

1. FINANCIAL RESULTS:

(Rs in lakh)

Particulars 2019-20 2018-19
Profit before Interest and Depreciation (384.39) 1731.13
Less: Interest 794.39 909.32
Profit before Depreciation (1178.79) 821.81
Less: Depreciation 725.16 695.85
Profit before Tax (1903.94) 125.96
Less: Provision for Taxes - 95.03
Less : Prior period adjustments - 13.24
Add : Adjustment for Deferred Tax Asset 452.74 90.28
Net Profit (1451.20) 107.97
Other Comprehensive Income 8.34 (2.35)
Total Comprehensive Income (1442.86) 105.62
Add: Balance Brought Forward 1825.37 1719.75
Balance carried to Balance Sheet 382.52 1825.37

The material changes and commitment affecting the financial position of the Companywhich have occurred between 1st April 2020 and date of this report is that theCompany had to shut down its production facilities since March 2020 as there was nodemand for newsprint paper since the implementation of countrywide lockdown. Themanagement envisages no improvement in near future.

The Company has received notices from bankers of the Company in connection with non-payment of interest and principal since January 2020.

2. DIVIDEND:

In view of losses suffered during the year the Board of Directors has not recommendedany dividend on the Equity Shares for the year under review ended 31st March2020.

3. PRODUCTION SALES AND WORKING RESULTS:

The Company achieved production of 21630 MT of Newsprint/ Writing and Printing paperduring the year under review compared to 33020 MT during 2018-19. The Company achievedsales of 22385 MT during the year under review compared to 32252 MT. during 2018-19. TheCompany had to shut down its production facilities during March 2020 as there was nodemand for newsprint paper since the implementation of countrywide lockdown.

The Company has incurred loss before Interest and Depreciation of Rs.384.39 Lakh duringthe year under review compared to profit of Rs.1731.13 Lakh during 2018-19. Afterproviding for Depreciation Interest Prior period adjustments and Taxation the Net Lossfor the year under review stood Rs. 1451.20 Lakh compared to profit of Rs. 107.97 Lakhduring 2018-19.

4. NEW PROJECTS:

4.1 NEWS PRINT DIVISION:

The Company has spent substantial amount in the recent past for increasing theinstalled capacity to 130 M.T. per day as well as for providing facilities for betterquality of production. As informed earlier in the report the Company had to shut down itsproduction facilities since March 2020.

4.2 TOOLS DIVISION:

The products produced by the Company include Abrasive Tools Core Drill big size CorePipe and Ceramic industry Sizing Wheel. As informed earlier in the report the Company hadto shut down its production facilities since March 2020.

5. COVID-19 PANDEMIC:

The World Health Organization (WHO) declared the novel Coronavirus (COVID-19) outbreaka global pandemic on March 11 2020. Consequent to this Government of India had declaredlockdown on March 23 2020 and therefore the Company suspended its business operations.In the wake of the recent global pandemic some serious aspersions have been cast on thefunctioning and survival of various businesses globally. Such a scenario is unprecedentedand the far-reaching effects of such a global crisis on business economy and the macroenvironment cannot be accurately gauged. The downturn will result in a significantincrease in both the volume and severity of events and conditions that may in someinstances cast doubt on an entities ability to continue as a going concern. However thisdoes not necessarily mean that a material uncertainty automatically exists.

The company has incurred a net loss after tax of Rs 1442.86 lakh during the yearending 31st March 2020. Also current liabilities exceed current assets by Rs1084.36 lakh as at that date. During the year the company has defaulted in repaying termloan and working capital loan installments including interest due to Indian Banks andfinancial institutions which has been partly paid and there are substantial paymentsoverdue to creditors.

These entity specific conditions along with unfavorable business environment conditionson account of COVID-19 as mentioned above indicates the existence of material uncertaintythat may cast significant doubt on the company's ability to continue as going concern.However the increased risk of significant doubt on an entity's ability to continue as agoing concern will rather depend on the nature and circumstances of the entity includingthe industry in which it operates. As a part of going concern assessment it is criticalfor management to assess what impact the current events have on the entity's operationsand forecasted cash flows with the focus on whether the entity will have sufficientliquidity to continue to meet its obligation as they fall due. Management will need toconsider the existing and anticipated effect of the COVID-19 pandemic on the assumptionsin its assessment giving particular attention to significance assumption that aresensitive or susceptible to change.

To address this and improve upon its operating and financial performance variousinitiatives have been under taken by the Company in relation to saving cost optimizerevenue management opportunities and enhance ancillary revenues. Further Company'scontinued thrust to improve operational efficiency and initiatives to raise funds areexpected to result in sustainable cash flows addressing any uncertainties

Due to outbreak of COVID-19 globally and in India the Company's management has madeinitial assessment of likely adverse impact on business and financial risks on account ofCOVID-19. There is slow down in the business of the Company due to lockdown which hadimpact on operations.

However the management does not see any medium to long term risks in the Company'sability to continue as a going concern and meeting its liabilities and compliance with thedebt covenants applicable if any.

6. LISTING :

The Equity Shares of the Company are listed on BSE Limited. The Company is regular inpayment of Annual Listing Fees. The Company has paid Listing fees up to the year 2020-21.

7. SHARE CAPITAL:

The paid up Share Capital of the Company as on 31st March 2020 was Rs.1245.00 Lakh. As on 31st March 2020 the Company has not issued shares withdifferential voting rights nor granted stock options nor do sweat equity and none of theDirectors of the Company hold any convertible instruments.

8. RESERVES:

Your Company does not propose to transfer any amount to general reserve.

9. DIRECTORS & KMP:

9.1 Mr. Prakash R. Vora retires by rotation in terms of the Articles of Association ofthe Company.

However being eligible offers himself for reappointment.

9.2 Mr. Amrish Patel had resigned from the office of Director of the Company w.e.f. 24thFebruary 2020.

9.3 Mr. Karunashankar G. Vora resigned from the office of Chief Financial Officer ofthe Company w.e.f. 29th February 2020.

9.4 Ms. Anal Desai had resigned from the office of Director of the Company w.e.f 7thMarch 2020.

9.5 Ms. Kinjal K. Sheth had resigned from the office of Company Secretary &Compliance Officer of the Company w.e.f 17th March 2020.

9.6 Mr. Udayan D. Velvan had resigned as Executive Director & Director of theCompany w.e.f 3rd June 2020.

9.7 Ms. Hemali S. Vora was appointed as an Additional Director w.e.f. 3rd June2020. It is proposed to appoint Ms. Hemali S. Vora as Non-Independent Non-ExecutiveDirector liable to retire by rotation at the forthcoming Annual General Meeting.

9.8 Mr. Ashit L. Modi was appointed as an Additional Director w.e.f. 3rd June2020. It is proposed to appoint Mr. Ashit L. Modi as an Independent Director for a term offive consecutive years at the forthcoming Annual General Meeting.

9.9 Mr. Jayeshkumar T. Surati was appointed as Chief Financial Officer (CFO) of theCompany w.e.f 3rd June 2020

9.10 Mr. Ashit L. Modi was appointed as an Additional Director w.e.f. 18th June2020. It is proposed to appoint Mr. Balkrushna G. Kahar as an Independent Director for aterm of five consecutive years at the forthcoming Annual General Meeting.

9.11 The Company has received necessary declaration from each Independent Director ofthe Company under Section 149(7) of the Companies Act 2013 (the Act) that they meet withthe criteria of their independence laid down in Section 149(6) of the Act.

9.12 Brief profile of the Directors being appointed and re-appointed as required underRegulations 36(3) of Listing Regulations 2015 and Secretarial Standard on GeneralMeetings and the justification for appointment/ reappointment of Independent Directors areprovided in the notice for the forthcoming AGM of the Company.

9.13 The Board of Directors duly met 13 times during the financial year under review.

9.14 FORMAL ANNUAL EVALUATION:

The Nomination and Remuneration Committee adopted a formal mechanism for evaluating theperformance of the Board of Directors as well as that of its Committees and individualDirectors including Chairman of the Board Key Managerial Personnel/ Senior Managementetc. The exercise was carried out through an evaluation process covering aspects such ascomposition of the Board experience competencies governance issues etc.

9.15 DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 134 of the Companies Act 2013 it is herebyconfirmed:

(i) that in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;

(ii) that the Directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at 31st March2020 being end of the financial year 2019-20 and of the loss of the Company for the year;

(iii) that the Directors had taken proper and sufficient care for maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

(iv) that the Directors had prepared the annual accounts on a going concern basis.

(v) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.

(vi) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

10 . INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY:

The Board has adopted policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to the Company's policies safeguarding ofassets prevention and detection of frauds and errors accuracy and completeness of theaccounting records and the timely preparation of reliable financial disclosures.

11. MANAGERIAL REMUNERATION:

REMUNERATION OF DIRECTORS:

Sr. No. Name of the Director Remuneration & Designation for the year % increase over last year Parameters Median of Employees Remuneration Ratio Commission received from Holding/ Subsidiary
1. Mr. Prakash R. Vora - Rs 1500000 Managing Director - Higher responsibility and time Rs 176582/- 8.5:1 -
2. Mr. Udayan D. Velvan - Rs 1500000 Executive Director - involvement due to current expansion & modernisation Rs 176582/- 8.5:1 -

The Board of Directors has framed a Remuneration Policy that assures the level andcomposition of remuneration is reasonable and sufficient to attract retain and motivateDirectors Key Managerial Personnel and Senior Management to enhance the quality requiredto run the Company successfully. All the Board Members and Senior Management personnelhave affirmed time to time implementation of the said Remuneration policy.

The Nomination and Remuneration Policy is available on the website of the Company-www.rajeshwaranandpaper.com

12. KEY MANAGERIAL PERSONNEL:

% increase in remuneration of Directors & KMP:

Sr. No. Name of the Director & KMP Designation Percentage Increase (If any)
1. Prakash R. Vora Managing Director Nil
2. Udayan D. Velvan Executive Director Nil
3. Karunashankar G. Vora* CFO (8.33%)*
4. Kinjal K. Sheth^ CS ^

*Resigned as CFO of the Company w.e.f. 29th February 2020. Amounts notdirectly comparable.

^Resigned as CS & Compliance Officer of the Company w.e.f 17th March2020. Amounts not directly comparable since appointment during 2018-19 was from 1st October2018.

13. PERSONNEL AND H. R. D.:

13.1 INDUSTRIAL RELATIONS:

The industrial relations continued to remain cordial and peaceful and your Companycontinued to give ever increasing importance to training at all levels and other aspectsof H. R. D. However the Company's Newsprint Paper Manufacturing Plant which contributesmajority of the revenues had been shut down in March 2020 since there was no demand fornewsprint paper since the implementation of countrywide lockdown. Owing to the uncertaintyregarding the resumption of the plant and scale of viable operations most of the workersand employees have left the Company to seek better opportunities.

The Number of permanent Employees of the Company is 5 since March 2020. Therelationship between average increase in remuneration and Company's performance is as perthe appropriate performance benchmarks and reflects short and long term performanceobjectives appropriate to the working of the Company and its goals.

13.2 PARTICULARS OF EMPLOYEES:

There is no Employee drawing remuneration requiring disclosure under Rule 5(2) ofCompanies Appointment & Remuneration of Managerial personnel) Rules 2014.

14. RELATED PARTY TRANSACTION AND DETAILS OF LOANS GUARANTEES INVESTMENT &SECURITIES PROVIDED:

Details of Related Party Transactions and Details of Loans Guarantees and Investmentscovered under the provisions of Section 188 and 186 of the Companies Act 2013respectively are given in the notes to the Financial Statements attached to the Directors'Report.

All transactions entered by the Company during the financial year with related partieswere in the ordinary course of business and on an arm's length basis. During the year theCompany had not entered into any transactions with related parties which could beconsidered as material in accordance with the policy of the Company on materiality ofrelated party transactions.

The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board may be accessed on the Company's website atwww.rajeshwaranandpaper.com

15. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

EARNINGS AND OUTGO:

The information required under Section 134(3)(m) of the Companies Act 2013 and rule8(3) of Companies (Accounts) Rules 2014 relating to the conservation of Energy andTechnology Absorption forms part of this report and is given by way of Annexure- A.

16. CORPORATE GOVERNANCE AND MDA:

As per Regulation 34 (3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 Report on Corporate Governance ManagementDiscussion and Analysis (MDA) and a certificate regarding compliance with the conditionsof Corporate Governance are appended to the Annual Report as Annexure - B.

17. SECRETARIAL AUDIT REPORT:

Your Company has obtained Secretarial Audit Report as required under Section 204(1) ofthe Companies Act 2013 from M/s. Kashyap R. Mehta & Associates Company SecretariesAhmedabad. The said Report is attached with this Report as Annexure – C.

As regards the observations of the Auditors

i) The Company is in the process of identifying and appointing Whole-time CompanySecretary post the resignation of the outgoing Company Secretary

ii) The Company has since made new appointments to the Board as required under Reg.25(6) of SEBI (LODR) Regulations 2015 and reconstituted the committees. As on date theCompany is in compliance of the composition requirements of the Board and its committeesas mandated under relevant regulations of SEBI (LODR) Regulations 2015

iii) With respect to the observation regarding going concern the management does notforesee any medium to long term risks in the Company's ability to continue as a goingconcern and meeting its liabilities and compliance with the debt covenants applicable ifany.

18. EXTRACT OF ANNUAL RETURN:

The extract of Annual return in Form – MGT-9 has been attached herewith as Annexure– D. The same is also available on the Company's website atwww.rajeshwaranandpaper.com.

19. AUDIT COMMITTEE/ NOMINATION AND REMUNERATION COMMITTEE/ STAKEHOLDERS' RELATIONSHIPCOMMITTEE:

The details of various committees and their functions are part of Corporate GovernanceReport.

20. GENERAL:

20.1. AUDITORS:

STATUTORY AUDITORS:

The remarks of Auditors are self explanatory and have been explained in Notes onAccounts.

The present Auditors of the Company M/s. Rakchamps & Co. LLP CharteredAccountants Mumbai have resigned as Statutory Auditors of the Company with effect fromthe financial year 2020-21.

In terms of Section 139 of the Companies Act 2013 read with Companies (Audit &Auditors) Rules 2014 the Board of Directors has recommended the appointment of MAAK& Associates Chartered Accountants as Statutory Auditors of the Company for a periodof 5 years to hold office from the conclusion of the ensuing 29th AGM till theconclusion of 34th AGM on remuneration to be decided by the Board or Committeethereof in consultation with them.

The Company has obtained consent from MAAK & Associates to the effect that theirappointment as Auditors of the Company for a period of 5 years commencing from theFinancial Year 2020-21 to 2024-25 if made will be in accordance with the provisions ofSection 139 and 141 of the Companies Act 2013.

COST AUDITORS:

As per the requirement of Central Government and pursuant to Section 148 of theCompanies Act 2013 read with the Companies (Cost Records and Audit) Rules 2014 asamended from time to time the Company has been getting its cost records audited. Theaudit has been carried out by M/s V. H. Savaliya & Associates Cost Accountants (FirmRegistration No. 100346) for the year 2019-20. As the turn over during the year underreview is below the threshold limit for Audit for the year 2020-21 no Cost Auditors hasbeen appointed for the year 2020-21.

20.2 INSURANCE:

The Company's properties including building plant and machinery stocks stores etc.continue to be adequately insured against risks such as fire riot strike civilcommotion malicious damages machinery breakdown etc. as per the consistent policy of theCompany.

20.3 DEPOSITS:

The Company has not accepted during the year under review any Deposits and there wereno overdue deposits.

20.4 RISKS MANAGEMENT POLICY:

The Company has a risk management policy which from time to time is reviewed by theAudit Committee of Directors as well as by the Board of Directors. The Policy is reviewedquarterly by assessing the threats and opportunities that will impact the objectives setfor the Company as a whole. The Policy is designed to provide the categorization of riskinto threat and its cause impact treatment and control measures. As part of the RiskManagement policy the relevant parameters for protection of environment safety ofoperations and health of people at work and monitored regularly with reference tostatutory regulations and guidelines defined by the Company.

20.5 SUBSIDIARIES/ ASSOCIATES/ JVs:

The Company does not have any Subsidiaries/ Associate Companies / JVs.

20.6 CODE OF CONDUCT:

The Board of Directors has laid down a Code of Conduct applicable to the Board ofDirectors and Senior Management. All the Board Members and Senior Management personnelhave affirmed compliance with the code of conduct.

20.7 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR

TRIBUNALS:

There has been no significant and material order passed by any regulators or courts ortribunals impacting the going concern status of the Company and its future operations.

20.8 ENVIRONMENT AND SAFETY:

The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliances of environmental regulations and preservationof natural resources.

20.9 DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION& REDRESSAL) ACT 2013:

The Company has in place an Anti Sexual Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. During the year under review the Company did not receive anycomplaint.

20.10 INSTANCES OF FRAUD IF ANY REPORTED BY THE AUDITORS:

There have been no instances of fraud reported by the Auditors under Section 143(12) ofthe Companies Act 2013.

20.11 SECRETARIAL STANDARDS:

The Company complies with the Secretarial Standards issued by the Institute of CompanySecretaries of India which are mandatorily applicable to the Company.

21. DISCLOSURE OF ACCOUNTING TREATMENT:

In the preparation of the financial statements the Company has followed the AccountingStandards referred to in Section 133 of the Companies Act 2013. The significantaccounting policies which are consistently applied are set out in the Notes to theFinancial Statements.

22. DISCLOSURE OF MAINTENANCE OF COST RECORDS:

The Company has complied with the requirement of maintenance of cost accounts andrecords as specified by the Central Government under sub-section (1) of section 148 of theCompanies Act 2013.

23. DEMATERIALISATION OF EQUITY SHARES:

Shareholders have an option to dematerialise their shares with either of thedepositories viz NSDL and CDSL. The ISIN No. allotted is INE617D01017.

24. FINANCE:

24.1 The Company's Income-tax Assessment has been completed up to the Assessment Year2016-17 and Sales tax Assessment is completed up to the Financial Year 2016-17.

24.2 The Company is enjoying Working Capital facilities from State Bank of India andBank of India and Term Loan from Bank of India. During the year the company has defaultedin repaying term loan and working capital loan installments including interest due toIndian Banks and financial institutions which has been partly paid. Please refer note no.5 of the Directors' Report for more details.

25. ACKNOWLEDGMENT:

Your Directors express their sincere thanks and appreciation to Promoters andShareholders for their constant support and co operation. Your Directors also place onrecord their grateful appreciation and co operation received from Bankers FinancialInstitutions Government Agencies and employees of the Company.

For and on behalf of the Board
Prakash R. Vora
Place : Jhagadia Chairman & Managing Director
Date : 31st July 2020 (DIN: 00612357)

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