The Board of Directors of your company is pleased to present the Directors' Reporttogether with Audited Financial Results of the company for the year ended 31st March2019.
1. FINANCIAL HIGHLIGHTS
Audited financial results for the year ended 31st March 2019 are summarised below:
AUDITED FINANCIAL RESULTS
| || ||(Rs. in Cr.) |
| ||Year ended 31st March 2019 ||Year ended 31st March 2018 |
|Particulars || || |
|Profit before interest and depreciation ||56.57 ||77.32 |
|Interest and finance charges ||0.65 ||1.05 |
|Depreciation ||4.39 ||4.07 |
|Profit before Exceptional Items ||51.53 ||72.20 |
|Exceptional & non-recurring items ||- ||- |
|Profit before tax ||51.53 ||72.20 |
|Provision for Income Tax ||(1.66) ||17.94 |
|Profit after tax (PAT) ||53.19 ||54.26 |
|Earning per share (EPS)- in Rupees ||34.08 ||34.76 |
2. DIVIDEND & TRANSFER TO RESERVES
Considering performance of the company for the year 2018-19 your Directors are pleasedto recommend a dividend of Rs. 2.50/- per equity share (25%) subject to approval of theShareholders at the ensuing Annual General Meeting of the company. No amount of profitsfor the year is carried to General Reserve.
3. STATE OF THE COMPANY AFFAIRS
Review of operations 2018-19
Production Sales-volume and Sales-realization for the year further improved due tofavourable market conditions product-mix optimization and Export-demand. This was howeveroffsetby unabated escalation in wood prices and increase in energy cost following ban onindustrial use of pet-coke and furnace oil which emerged as factors which impactedbottom-line of the company for the year.
Considering the cost escalation Your company reported satisfacory financialperformance for the year 2018-19. Profit after tax for the year stood at Rs. 53.19 Croresvis-a-vis Rs. 54.26 Crores for FY 2017-18.
There is no change in the nature of the business of the company during the year.Further no material changes and commitments have occurred after the close of the yeartill the date of this Report which may affect the financial position of the Company.
Expectations for the year 2019-20:
Constant increase in raw material and fuel prices would impact the company in the nearterm. Challenges such as increased imports from ASEAN under FTAs intense competitionGovernment policies higher input costs etc may affect the business.
4. ANNUAL-RETURN EXTRACTS
Extracts of the Annual Return as provided in Section 92(3) of the Companies Act 2013in MGT-9 is attached as Annexure-I.
5. BOARD MEETINGS/AUDIT COMMITTEE
a) During the financial year 2018-19 four (4) meetings of the Board of Directors wereheld on 21st May 2018 13th Aug. 2018 14th Nov. 2018 and 8th Feb. 2019.
b) Audit & Risk Management Committee-
The Company has constituted the Audit & Risk Management Committee of the Boardpursuant to Section 177 of the Companies Act 2013 and its terms of reference are inconformity with SEBI (Listing Obligations & Disclosure Requirements) Regulations2015. The composition of Committee is mentioned in the Corporate Governance Report.
6. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review is presented in aseparate section forming part of the Annual Report for 2018-19.
7. VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES
Pursuant to Section 177 of the Companies Act 2013 the company has established aVigil Mechanism' for directors and employees to report their genuine concerns to thecompany. The company oversees this Vigil Mechanism' through the Audit & RiskManagement Committee of the Board.
8. ENVIRONMENT POLLUTION CONTROL AND SAFETY
Your company is committed to provide safe working conditions and healthy environment toall its stakeholders. Your company is accredited with ISO 9001 : 2015 ISO 14001: 2015and ISO 18001 :2007 which signifies adoption of integrated quality environment and safetymanagement systems to harmonize Industrial activities with environmental preservation withletter and spirit. The company has requisite environmental consents from the Governmentauthorities. Your company has been awarded the following awards during the year 2018-19:
I) Gold Award in paper sector for outstanding achievement in Environment management byGreen tech Foundation in its18th Annual Environmental Award-2018.
II) Platinum Award in paper sector for outstanding achievement in Environmentmanagement by Apex India in its Environment Excellence Award-2018
9. SOCIAL FARM FORESTRY
Your company has been promoting and encouraging tree plantation program under SocialFarm Forestry. The program helps in enhancing rural incomes and facilitates sustainavailability of raw material to the company. The scheme involves supply of high qualityclones/seedlings apart from providing technical assistance to the farmers. The companyfurther stepped-up propagation and distribution of clonal plants and the area coverageduring the year.
10. FIXED DEPOSITS
The company has not invited any fixed deposits during the year and as such there hasbeen no default in repayment of deposit or payment of interest thereon during the year.There were no outstanding fixed deposits as on 31st March 2019. (Rs. Nil as on 31stMarch 2018).
The company is in compliance with provisions of the Companies Act 2013 and rules madethereunder in respect of deposits.
11. INTERNAL CONTROLS
The company has adequate internal control systems in place on the basis of whichfinancial accounting is done and periodically financial statements are prepared. SuchInternal control systems are adequate and operating effectively.
12. REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your company adopted a policy on Corporate Social Responsibility (CSR) to fulfill itsobligation towards the society. The CSR Policy may be accessed on the company's website athttp://www.starpapers.com. The key philosophy of the Company's CSR initiative is topromote development through social and economic transformation. The composition ofCommittee is mentioned in the Corporate Governance Report.
The Report on CSR activities undertaken during the year 2018-19 is annexed herewithmarked as Annexure II.
13. DIRECTORS/KEY MANAGERIAL PERSONNEL
i) Pursuant to Section 152 of the Companies Act 2013 Mr. Shrivardhan Goenka(DIN-00030375) shall retire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-appointment. The Board recommends his appointment.
ii Mr. Sunil Srivastav (DIN-00237561) was appointed as Additional director(Independent) of the company w.e.f. 14th Nov. 2018.
iii Pursuant to newly inserted Regulation 17(1A) of the Securities and Exchange Boardof India (Listing Obligations & Disclosure Requirements) Amendment Regulations 2018the shareholders have approved by passing of three special resolutions through postalballot on 11th April. 2019 to continue directorship of Mr. Shiromani Sharma (DIN00014619)Mr. Chander Mohan Vasudev (DIN 00143885) and Mr. Michael Philip Pinto (DIN 00021565) whohad attained the age 75 years upto 27th Sept. 2019 being the date of expiry of theircurrent term of office. Further the Board has recommended to the shareholders tore-appoint them as Independent Directors for another term of five consecutive years.
iv) Mr. G.P. Goenka (DIN:00030302) and Ms. Savita Laxmipathy Acharya (DIN: 07038198)have resigned from the position of Executive Chairman' and Independent directorrespectively w.e.f 29th May 2019.The Board placed on record its appreciation for thevaluable contributions made by Mr. Goenka & Ms. Acharya during their respectivetenures.
v) The Board of Directors has re-appointed Mr. Madhukar Mishra (DIN-00096112) asManaging Director of the company w.e.f. 1st July 2019 for a period of three (3) yearssubject to approval of the shareholders at the ensuing AGM. vi) Mr. P.K. Agrawal ChiefFinancial Officer (CFO) retired from the services of the company on attaining the age ofsuperannuation and continued as CFO on retainership basis upto 31.05.2019. The Board ofDirectors has designated Mr. Sandeep Kumar Rastogi as new Chief Financial Officer (CFO) ofthe company w.e.f 1st June 2019
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as laid down under Section 149(6)of the Companies Act 2013 and SEBI Listing Regulations 2015. The company'sfamiliarization program for Independent Directors is posted on the website of the companyand can be accessed at http://www.starpapers.com/familarisation_prog.pdf.
14. NOMINATION AND REMUNERATION COMMITTEE/POLICY
The Board of Directors has constituted a Nomination & Remuneration Committee'which follows the company's policy on directors' appointment and remuneration includingcriteria for determining qualification positive attitudes independence of a director andother matters provided under section 178 (3) of the Companies Act 2013.
The gist of company's policy on nomination and remuneration is as under:
The Committee shall consider ethical standards of integrity qualification expertiseand experience for appointment of Directors/KMP etc. and recommend to the Board ofDirectors. Directors/ KMP etc shall be appointed as per the procedure laid down inapplicable laws.
The Committee will recommend the remuneration to be paid to Directors/KMP etc requiringCommittee approval as per statutory provisions. The level and composition of remunerationso determined by the Committee shall be reasonable and sufficient to attract retain andmotivate the appointee(s). Nomination and Remuneration Policy of the company can beaccessed from the company website -www.starpapers.com.
15. LOAN GUARANTEE INVESTMENTS ETC.
The company has not given any loan or guarantee or provided security in connectionwith any loan to any other body corporate during the year.
16. SUBSIDIARY/JOINT VENTUE/ASSOCIATE COMPANIES
No company has become or ceased to be your company's subsidiary/jointventure/associate company during the year.
17. PARTICULARS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
PParticulars regarding energy conservation technology absorption and foreign exchangeearnings/outgo pursuant to Section 134(3)(m) of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 are furnished as Annexure-III to this Report.
18. PARTICULARS OF EMPLOYEES AND REMUNERATION
Information in accordance with the provisions of Section 134(3)(q) and Section 197(12)of the Companies Act 2013 read with the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 regarding employees' remuneration are given hereunder:
i) Name of the employees who are in receipt of remuneration of Rs. 102 lacs or moreduring the FY 2018-19:
|Sr. ||Name & Designation ||Remuneration* recd.-(in lacs) ||Nature of employment ||Qualification & experience ||Date of commencement of employment ||Age ||Last employment held ||% of equity shares held ||Whether relative to director |
|1 ||Mr. G.P Goenka Executive Chairman ||269.19 ||Contractual ||B. Sc. 57 years ||20/05/2015 ||78 Y ||Executive Director- Duncan Industries Ltd. ||Nil ||Yes Father of Mr. Shrivardhan Goenka |
|2 ||Mr. Madhukar Mishra Managing Director ||216.10 ||-do- ||B. Sc. DMS (Mgt.) 40 years ||01/07/2001 ||62 Y ||Sr. VP(Corporate Planning) -Dail Consultants Ltd. ||Nil ||No |
*including employer's provident fund contribution.
a) Ratio of remuneration of each director to the median remuneration of employees
|Director ||Director remuneration (DR) - ||Median remuneration (MR) of employee - ||Ratio (DR/MR) |
| ||Rs. ||Rs. || |
|Mr. G.P. Goenka ||26919185 ||280577 ||95.94 |
|Mr. Shrivardhan Goenka ||80000 ||280577 ||0.29 |
|Mr. Shiromani Sharma ||280000 ||280577 ||0.99 |
|Mr. C.M. Vasudev ||160000 ||280577 ||0.57 |
|Mr. M.P. Pinto ||120000 ||280577 ||0.43 |
|Ms. Savita L. Acharya ||180000 ||280577 ||0.64 |
|Mr. Sunil Srivastav ||60000 ||280577 ||0.21 |
|Mr. Madhukar Mishra ||21610274 ||280577 ||77.02 |
b) % increase in remuneration of each director CEO CFO CS in the financial year2018-19
|Official Name ||Year 2018-19 Remuneration- Rs. In lacs ||% increase in remuneration |
|Directors ||Directors are receiving only sitting fees for attending meetings. |
|Executive Chairman ||269.09 ||14% |
|Managing Director ||216.10 ||3% |
|Chief Financial Officer* ||28.06 ||Nil |
|Company Secretary ||10.85 ||1% |
*Retired on 29-01-19 and continued as CFO upto 31st May 2019 on retainership basis.
c) % increase in median remuneration of employees in the financial year 2018-19 was:Nil.
d) Number of permanent employees on the rolls of the company as on 31.03.19 was 512.
e) Average increase in remuneration inter-alia depends upon the inflation individual'sperformance company policy human resource demand-supply position negotiations withtrade unions company performance etc.
f) Average percentage increase in salaries of employees vis-a-vis managerial personnel- Average percentage increase in salaries of employees was 3% vis-a-vis 6% increase insalary of managerial personnel for FY 2018-19
g) No director is getting any variable component of remuneration except commission toExecutive Chairman and performance pay to the Managing Director are decided by the Boardof Directors every year based on performance of the company terms of appointment andapplicable statutory provision. Remuneration is paid as per remuneration policy of thecompany.
19. PERFORMANCE EVALUATION
The company has a Policy on Nomination & Remuneration and Evaluation of directorsetc. The Board of Directors evaluates its own performance that of Committee(s) andindividual director(s) on annual basis in the manner envisaged by the Nomination &Remuneration Committee (NRC) of the Board. Nomination & Remuneration Committee (NRC)also ensures that evaluation process is carried out by the Board every year as per theprescribed method.
20. HUMAN RESOURCES AND WELFARE
Your company has a structured approach to manage its human resources in line withchanging needs of the organisation. Industrial relations remained harmonious during theyear.
Your Directors further state that during the year under review there was no casereported under the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013.
21. DIRECTORS' RESPONSIBILITY STATEMENT
As required under the provisions of Section 134(3)(c) Directors ResponsibilityStatement on preparation and presentation of these accounts is as per Annexure-IV tothis Report.
22. CORPORATE GOVERNANCE
A separate report on corporate governance along with a certificate from the statutoryauditors confirming the compliance with corporate governance requirements has been annexedas Annexure-V to Directors' Report.
The members at its 78th Annual General Meeting held on 14th Sept. 2017 appointed M/sJain Pramod Jain & Co. Chartered Accountants New Delhi as statutory auditors of thecompany to hold office from till the conclusion of 83rd AGM of the company.
24. COST AUDITORS
Pursuant to Section 148(3) of the Companies Act 2013 read with the Rules madethereunder the Board of Directors on the recommendation of Audit & Risk ManagementCommittee has appointed M/s K.B. Saxena & Associates Cost Accountants as the CostAuditors of the Company for the financial year 2018-19.
25. AUDITORS' REPORT
i) Statutory Audit:
The observations of the auditors read with relevent notes on the financial statementsare self-explanatory.
ii) Secretarial Audit:
M/s D. Dutt & Co. company secretary in practice secretarial auditor of thecompany has done secretarial audit for FY 2018-19. Secretarial audit report is attached asAnnexure-VI. The observations of the secretarial auditor in the report areself-explanatory.
26. TRANSACTIONS WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the company during the financialyear with related parties were in the ordinary course of business and on arm's lengthbasis. During the year the company had not entered into any contract / arrangement /transaction with related parties which could be considered material. Information pursuantto Section 134(3)(h) of the Act read with rule 8(2) of the Companies(Accounts) Rules 2014are given in Annexure-VII in Form AOC-2 and the same forms part of this report.
27. RISK MANAGEMENT
The Company is having Risk Management framework covering identification evaluation andcontrol measures to mitigate the identified business risks.
28. LISTING ON STOCK EXCHANGES
Your company's equity shares are listed on National Stock Exchange of India Ltd. (NSE)and The Stock Exchange Mumbai (BSE). The company has paid the listing fees to the stockexchanges for the financial year 2018-19.
The Directors place on record their gratitude for the excellent support and efforts putin by all the Stakeholders viz. employees bankers investors dealers suppliers andGovernment authorities.
| ||For and on behalf of the Board |
|Place : New Delhi ||Shiromani Sharma |
|Date : 29th May 2019 ||Chairman |