Your Directors are pleased to present the 63rd Annual Report of your Company togetherwith the audited financial statements for the year ended 31st March 2018.
FINANCIAL RESULTS :
Financial Results of the Company for the year under review along with the figures forprevious year are as follows:
|Particulars ||31st March 2018 ||31st March 2017 |
| || |
(Rs. in Crores)
|Profit Before Finance Cost and Depreciation (PBIDT) ||381.15 ||340.22 |
|Finance Cost ||42.37 ||51.57 |
|Profit Before Depreciation and Tax ||338.78 ||288.65 |
|Depreciation ||116.22 ||110.77 |
|Tax Expenses (Including Deferred Tax) ||(0.67) ||49.38 |
|Profit after Tax (PAT) ||223.23 ||128.50 |
|Other Comprehensive Income (Net of Tax) ||(0.56) ||(5.92) |
|Total Comprehensive Income ||222.67 ||122.58 |
Your Directors are pleased to recommend dividend of ' 4.00 per equity share (200 %) forthe year ended 31st March 2018 subject to shareholders' approval at the forthcomingAnnual General Meeting.
The performance of the Company during the year under review has been better compared toprevious year. During the year Paper production and Sales got impacted marginally due tomajor job undertaken from 15th September for replacement/ modification of pressure partsof Enmas Recovery Boiler along with ESP & rebuild of PM 3 for quality improvement. PM3 started on 7th November and Enmas Recovery Boiler started on 17th November successfully.This will help Company in uninterrupted operation of Enmas Recovery Boiler. After rebuildof Paper Machine 3 Company could produce good quality surface sized paper which was verywell accepted by market and also could increase speed and productivity of PM3.
The improved performance is mainly due to good demand along with increased product miximproved operating parameters and reduction in finance cost. However there wassignificant increase in rates of chemicals coal and furnace oil.
The Company shall continue to focus on improving operating efficiencies and minimizingcost for better financial performance.
DIVISION WISE PERFORMANCE :
Paper and Paperboard Division Dandeli
The production of Paper Paperboard and Hardwood Pulp was 290844 MT (91% capacityutilization) during the year against 313311 MT in the last year (98% capacity utilization)i.e. lower by 22467 MT. The sale of Paper Paperboard and Hardwood Pulp was 291512 MTduring the year against 317951 MT in the last year i.e. lower by 26439 MT. The turnoverduring the year was ' 1624 Crores as against ' 1692 Crores in the last year (bothexclusive of excise duty) i.e. lower by ' 68 Crores due to lower sales quantity.
Export of Paper Paperboard and Duplex Board during the year was 3388 MT worth ' 18Crores (FOB) as against 4702 MT worth ' 25 Crores (FOB) in last year.
Cable Division Mysore
The production of Optical Fibre Cable was 28405 kms during the year against 29802 kmsin last year thereby lower production by 1397 kms. The sale of Optical Fibre Cable was28665 kms during the year as against 30936 kms in last year. The turnover was ' 74 Croresduring the year as against ' 69 Crores in the last year (both exclusive of excise duty)i.e. higher by ' 5 Crores.
FUTURE PLAN :
Company has made an ambitious plan for growth cum modernization for phase-wiseinvestment in next 4-5 years time period at Company's Paper Division and Cable Division.At Company's Paper Division Dandeli focus areas are increase marginal paper productionfrom existing machines improve paper quality produce new speciality products andreduction
of steam power chemical water and breakdown of machines. In this regard this yearRs. 150 Crores investment has been done and Company has planned around Rs. 180 Croresinvestment in next year.
Apart from above Company is planning for putting up a new line for producing thespeciality products at Dandeli. EIA study is going on. After approval Company will bemaking required investment.
West Coast Opticable Limited Mysore subsidiary of the Company is also makinginvestment of around Rs. 10 Crores in next year for adding new facilities for productionof Optical Fibre Cable.
Company's Cable Division is also working on Green field expansion in Telangana forbackwards integration of raw material required for Optical Fibre Cable. Company hasapplied to the concerned Government authorities and planned to make investment of Rs. 110Crores for this project in next 3 years time.
RAW MATERIALS :
In order to meet out the shortfall of wood availability locally Company is continuingusage of imported woodchips during the year under review. Company consumed 4.66 lakhs MTIndigenous Pulpwood and 3.46 lakhs MT Imported Chips i.e. 57% and 43% respectively.
EXCHANGE RATE VARIATION :
The Company has reinstated foreign currency loans of USD 21.56 Million at the exchangerate prevailing as on 31st March 2018 and the exchange rate difference of Rs. 18.99 Croreshas been added to the cost of Fixed Assets as per Accounting Standard AS-11 issued videNotification No.G.S.R.225(E) dated 31.03.2009 (as last amended vide Notification No. GSR913 (E) dated 29.12.2011) by the Ministry of Corporate Affairs.
RISK MANAGEMENT POLICY :
The Board of Directors had adopted risk policy for forex exposure in the meeting heldon 28.06.2004. The foreign exchange exposure of the Company is reviewed from time to timeby the Board. The Company has taken Mega Risk Insurance Policy to insure its fixed assetsand inventory which cover known and unknown risk including Fire Loss of Profit MachineryBreakdown. The Company has also taken STOP Policy for its input and finished goodsmovement.
RELATED PARTY DISCLOSURE AND TRANSACTIONS :
All related party transactions that were entered into during the financial year were onan arm's length basis and were in the ordinary course of business. There are no materiallysignificant related party transactions made by the Company with Promoters Directors KeyManagerial Personnel or other designated persons.
All related party transactions are placed before the Audit Committee as also the Boardfor approval. The details of related party disclosure and transactions as required by theAccounting Standards (Ind AS 24) has been made in the notes to the Financial Statements.
The Company has developed a related party transaction policy for the purpose ofidentification and monitoring of such transactions. The policy on related partytransactions as approved by the Board is uploaded on the Company's website: www.westcoastpaper.com .
EXTRACT OF THE ANNUAL RETURN :
Extract of the Annual Return in the Form No. MGT 9 is attached and forms a part of thisreport.
CORPORATE SOCIAL RESPONSIBILITY :
The Company has framed a Corporate Social Responsibility (CSR) Policy as required underSection 135 of the Companies Act 2013. CSR Committee has been framed pursuant to Rule 8of the Companies (Corporate Social Responsibility Policy) Rules 2014 to oversee the CSRactivities initiated by the Company during the financial year under review. Annual Reporton CSR in the prescribed format is attached and forms a part of this report & policymay be accessed on the Company's website: www.westcoastpaper.com .
MEETINGS OF THE BOARD :
During the year under review Six Board Meetings held and details thereof are mentionedin the Report on Corporate Governance forms a part of this report. The intervening gapbetween the Meetings was within the period prescribed under the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION :
The Company's policy on Directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a Director and othermatters provided under sub-section (3) of Section 178 is as below :
The appointment policy for Independent Directors Key Managerial Personnel & SeniorExecutives is as under-
(A) Independent Directors:
Independent Directors will be appointed based on the criteria mentioned under section149(6) of the Companies Act 2013 and in accordance with other applicable provisions ofthe Companies Act 2013 Rules made there under & Listing Agreements entered withStock Exchanges.
(B) Key Managerial Personnel (KMP):
KMP will be appointed by the resolution of the Board of Directors of the Company basedon the qualification experience and exposure in the prescribed fields. Removal of the KMPwill also be done by the resolution of the Board of Directors of the Company.Appointment/Removal will be in accordance with provisions of the Companies Act 2013Rules made there under & Listing Agreements entered with Stock Exchanges.
(C) Senior Executives :
Senior Executives will be appointed by the Chairman & Managing Director and/orExecutive Director of the Company based on their qualification experience & exposure.Removal of the Senior Executives will also be by Chairman & Managing Director and/orExecutive Director. Further appointment & removal will be noted by the Board asrequired under clause 8(3) of Companies (Meetings of the Board and its Powers) Rules2014.
PERFORMANCE EVALUATION OF INDEPENDENT DIRECTORS :
Criteria for performance evaluation of Independent Directors as required under SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 also forms a part ofthis report.
MANAGERIAL REMUNERATION :
The requisite details as per Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is annexed herewith forms a part of this report.
CONSERVATION OF ENERGY RESEARCH & DEVELOPMENT TECHNOLOGY ABSORPTION & FOREIGNEXCHANGE EARNING/OUTGO :
The information required under Section 134(3)(m) of the Companies Act 2013 is annexedhereto and forms a part of this report.
MANAGEMENT'S DISCUSSION AND ANALYSIS :
A comprehensive Management's Discussion and Analysis Report as required underRegulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 attached forms a part of this report.
CORPORATE GOVERNANCE :
Pursuant to Schedule V of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a Corporate Governance Report is attached and forms a part of thisreport.
A certificate from the auditors of the Company regarding compliance of the conditionsof Corporate Governance as stipulated in Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 is attached here with forms a part of thisreport.
The Company is complying with Regulations of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 with regard to Corporate Governance and reports to thateffect are being regularly filed with the Stock Exchanges. The Company has obtaineddeclaration from the Directors and Senior Management personnel of the Company forcompliance of Code of Conduct and the Certificate from CEO/CFO was placed before the Boardof Directors at the meeting held on 21.05.2018.
DIRECTORS' RESPONSIBILITY STATEMENT :
The Directors' Responsibility Statement as required under Section 134(5) of theCompanies Act 2013 is attached and forms a part of this report.
During the year under review as per the provisions of the Companies Act 2013 ShriSudarshan Somani (DIN:00137568) was appointed as Independent Director and Smt. ShashiBangur(DIN:00053300) will retire from the office by rotation at the ensuing Annual GeneralMeeting and being eligible offers herself for re-appointment.
Shri M P Taparia (DIN:00112461) Lt.Gen (Retd.) Utpal Bhattacharyya (DIN:02665807) andShri Krishna Kumar Karwa (DIN:00181055) were appointed as Independent Directors to holdoffice for 3(three) consecutive years not liable to retire by rotation with effect fromFebruary 02 2015 the said term was completed on 01.02.2018 and Board of Directors intheir meeting held on 29.01.2018 on the basis of report of performance evaluation havere-appointed as an Independent Directors of the Company not liable to retire by rotationand to continue to hold office for further period of 3(three) consecutive years w.e.f.02.02.2018 subject to approval of members of the Company at the Annual General Meeting.
The notice convening the AGM includes the proposal for reappointment of Directors.
APPOINTMENT OF KMP :
Shri Rajendra Jain has been re-appointed as Executive Director of the Company w.e.f.31.07.2018 for a period of 3 years by the Board of Directors in their meeting held on21.05.2018.
The notice convening the AGM includes the proposal for re-appointment of Shri RajendraJain.
DECLARATION BY DIRECTORS :
The Company has received declaration from all the Independent Directors under Section149(7) of the Companies Act 2013 in respect of meeting the criteria of independenceprovided under Section 149(6) of the said Act.
REPORTING OF FRAUDS :
The Auditors of the Company have not reported any fraud as specified under the 2ndproviso to section 143(12) of the Companies Act 2013.
BOARD EVALUATION :
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout an annual performance evaluation of its own performance the Directors individually aswell as the evaluation of the working of its Board Committees. The manner of evaluationhas been explained in the Corporate Governance Report.
The paid up Equity Share Capital as on 31st March 2018 was Rs. 1320.98 lakhscomprising of 66048908 Equity Shares of Rs. 2/-each. During the year under review theCompany has not issued any further shares to the members or general public.
Credit Rating of the Company done by India Ratings and Research Limited(Fitch Group) asunder:-
a) IND A+: Stable Outlook for Long Term Bank facility.
b) IND A1+' for Short Term Bank facility.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS :
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.
FAMILIARIZATION POLICY :
Pursuant to Regulation 25(7) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Board has framed a policy to familiarize the Independent Directorsabout the Company. The Policy is available on the website of the Company:www.westcoastpaper.com .
VIGIL MECHANISM/WHISTLE BLOWER POLICY :
The vigil mechanism of the Company incorporates a policy under Regulation 22 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and Rule 7 of theCompanies (Meeting of the Board and its Power) Rules 2014 provide the mechanism forEmployees and Directors of the Company to approach the Executive Director and the Chairmanof the Audit Committee of the Board. Protected disclosures can be made by a Whistle Blowerby means of e-mail or telephone or letter to the Executive Director or to the Chairman ofthe Audit Committee. The policy on Vigil Mechanism may be accessed on the Company'swebsite: www.westcoastpaper.com .
BUSINESS RISKS MANAGEMENT :
Pursuant to Regulation 17(9) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has laid down a framework to inform the Board about theparticulars of Risks Assessment and Minimization Procedures (Risks Management) Plan. TheRisks Management Plan is available on the website of the Company.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURT :
There are no significant and material orders passed by the Regulators or Courts whichwould impacts the status of the Company and its future operations.
AUDITORS' REPORT :
The Notes on Accounts and the observations of the Auditors in their Report on theAccounts of the Company are self explanatory and in the opinion of the Directors do notcall for any clarifications.
a. Statutory Auditors and their Report
Messers Singhi & Co. Chartered Accountants Kolkata appointed as Statutory Auditorsof the Company at the 62nd Annual General Meeting of the Company pursuant to the provisionof rotation under section 139 and 141 of the Companies Act 2013 and Rule 7 of Companies(Audit and Auditors) Rules 2014 eligible for re-appointment and ratification ofre-appointment in the ensuing Annual General Meeting for the financial year 2018-19. Theobservations of the Auditors in their report on Accounts and the Financial Statementsread with the relevant notes are self explanatory.
b. Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors appointed Mr. Naman Joshi Bangalore practicing Company Secretary as SecretarialAuditor to carry out Secretarial Audit of the records maintained by the Company for thefinancial year 2017-18. The Report given by him for the said financial year in theprescribed form No: MR 3 is annexed to this report which is self explanatory.
c. Cost Auditor and Cost Audit Report
Pursuant to revised order of the Central Government dated 31.12.2014 Cost Audit of theCost Records of the Company is mandatory from the financial year starting 1st April 2015and Shri S.K.Tikare Cost Accountant Belgaum has been appointed as Cost Auditor of theCompany to conduct Cost Audit of Cost Records maintained by the Company for the financialyear 2018-19. Accordingly matter relating to the appointment will be placed in next AnnualGeneral Meeting. INTERNAL CONTROL SYSTEM :
There are adequate internal control procedures commensurate with the size of theCompany and nature of its business for the purchase of inputs availing of services fixedassets for the sale of goods and providing of services. Full fledged Internal Auditdepartment carries out pre and post audit of all significant transactions throughout theyear. Based on the Annual Internal Audit programme as approved by Audit Committee ofBoard regular internal audits are conducted. Company has also appointed M/s S.S.KothariMehta & Co. Chartered Accountants New Delhi (outsourced) as Internal Auditor.Findings are placed before Audit Committee which reviews and discuss the actions takenwith the Management. INDUSTRIAL RELATIONS :
Industrial Relations remained cordial throughout the year under review. The Company hasentered into a tripartite longterm wage revision settlement with Joint NegotiationCommittee of Unions on 04.05.2016 for the period from 01.01.2015 to 31.12.2018. YourDirectors acknowledge the support and co-operation from employees at all levels.
CONSOLIDATED FINANCIAL STATEMENTS :
The Consolidated Financial Statements have been prepared by the Company in accordancewith the applicable Accounting Standards. The Audited Consolidated Financial Statementstogether with Auditors' Report forms part a of this report.
A Report on the performance and financial position of wholly owned subsidiary company(West Coast Opticable Limited) for the period from 12.12.2017 to 31.03.2018 included inthe Consolidated Financial Statements is presented in the separate Section AOC-1 forms aof part this report.
Pursuant to the provisions under Section 136 of the Companies Act 2013 the financialstatements including consolidated financial statements along with relevant documents andseparate Audited Accounts of the subsidiary company are available at the Company'swebsite: www.westcoastpaper.com .
Your Directors would like to express their sincere appreciation and thanks to theCentral and State Governments Banks Financial Institutions Customers Suppliers andShareholders for their continued support and co-operations.
Your Directors take the opportunity to place on record their deep appreciation of thecommitted services rendered by the employees of the Company who have contributedsignificantly towards Company's performance and growth.
For and on behalf of the Board
S. K. Bangur
Chairman & Managing Director
Place : Kolkata
Date : 21st May 2018