To the Members,
The Directors have pleasure in presenting the 56th Annual Report alongwith Audited Financial Statements of the Company for the financial year ended 31st March, 2017.
Rs in Crore (10 million)
Profit Before Finance Costs and Depreciation (PBIDT)
Profit before Depreciation and Tax (PBDT)
Profit After Tax (PAT)
Your Company has posted improved performance during the year. Continuing with our commitment towards shareholders, the Directors therefore recommend a Dividend of Re. 1.50 per share (Re. 0.50 previous year) on the expanded Equity Share Capital. The Dividend outgo would amount to Rs. 29.50 crores (inclusive of Dividend Distribution Tax of Rs 4.99 crores).
The amount available for appropriation, including surplus from the year stood at Rs. 600.24 crores. The Directors propose this to be appropriated as under:
Corporate Dividend Tax
Surplus carried to Balance Sheet
The Company recorded its highest ever Net Sales of Rs 2,736.83 crores during the year an increase of 7.4% over the previous year. The Company achieved its highest ever sales volumes of 4.82 Lacs
MT. Capacity utilization for the Year stood at 103.4% compared to 98.9% in the previous year. The Company''''s efforts in enlarging geographical reach of its products, strengthening the distribution network and introduction of new products in past few years are showing positive results. During the year the company focused on further optimizing utilization and operating parameters of Unit JKPM which led to significant improvement in EBIDTA margins. As you are aware the Company had stepped up its plantation efforts and it is satisfying to note that the efforts are paying off, with greater proportion of the requirement being met out of material sourced from shorter distances which reduces the overall delivered costs at our mills. Exports accounted for about 42577 MT as against 48553 MT in the Previous Year.
With better operating efficiencies, softer input prices and better realisations from the market, the Company posted much improved margin. Consequently EBIDTA at Rs 538.88 crores was up by 34.2% over the previous year EBITDA of Rs. 401.66 crores. The Company''''s Profit Before Tax was significantly up at Rs 231.71 crores compared to a Rs 89.21 crores during 2015-16 and Net Profit for the year was Rs 162.83 crores against Rs 60.87 crores during previous year.
CONVERSION OF FCCBs
During the year under review, your Company had issued 74,28,240 Equity Shares of Rs. 10/- each at a conversion price of Rs.56.37 per Equity Share consequent upon the conversion of the Foreign Currency Convertible Bonds (FCCBs) (Series 2) to the holders of such FCCBs. The Company had also converted its FCCBs (Series 3) into 74,28,240 Equity Shares of Rs. 10/- each at a similar conversion price during the financial year 2017-18 and consequently the paid-up Equity Share Capital of the Company stands increased to Rs. 163.39 Crore on the date of signing of this Report.
AWARDS AND RECOGNITION
Our commitment towards Safety & Environment, Quality & Operational Excellence and HR practices continue to garner appreciation from various industry chambers and social bodies. Some of the accolades and awards received during the year are as follows:
a. Unit JKPM bagged the Platinum Award for excellent Environment Management from Greentech Foundation, New Delhi.
b. Unit JKPM was adjudged second at the "National Energy Conservation Award - 2016", conducted by the Bureau of Energy Efficiency.
c. Unit JKPM was awarded the "Excellent Energy Efficient Unit" and "Most Useful Presentation Award" during 17th National Award for Excellency in CII Energy Management summit.
d. Unit JKPM won the "Strong Commitment to HR Excellence Award" in the Prestigious 7th CII National HR Excellence Awards
e. Unit JKPM bagged the "15th Annual Greentech Safety Award-2016" in Gold category in Paper sector from Greentech Foundation.
f. Frost & Sullivan conferred Unit JKPM with 2nd Runner up Award under Process Innovation Leadership category in the manufacturing sector.
g. Unit CPM won the CII National HR Excellence Award - 2016, "Significant Achievement"category at CII National HR Excellence Award Confluence - 2016-17.
h. Unit CPM bagged the Innovation in CSR Practices Award from World CSR Day & World Sustainability Organization, Mumbai
i. Unit JKPM was among the finalists Mill Manager Award & Environment Management award by PPI-2016, Belgium
The industrial relations at our plants continued to remain peaceful and cordial throughout the year. Our continuous dialogue with the union and workers representatives to improve the industrial harmony and to create a positive work environment, by introducing various new work practices along with automation have succeeded in boosting manpower productivity. We acknowledge the support and coordination provided by our employees.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2017 in the prescribed form MGT -9 is attached as Annexure-1 to this Report and forms part of it.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The particulars of loans, guarantees or securities and investments covered under the provisions of Section 186 of the Companies Act,
2013 are given in the financial statements.
The Company has not made any provision during the financial year 2016-17 for the purchase of, or subscription for, shares in the company by trustees of JK Paper Employees'''' Welfare Trust, which was formed by the Company in the year 2004 for the welfare of the employees of the Company, for the shares to be held by or for the benefit of the employees of the company.
RELATED PARTY TRANSACTIONS
During the financial year ended 31st March 2017, all the contracts or arrangements or transactions entered into by the Company with the Related Parties were in the ordinary course of business and on arm''''s length basis and were in compliance with the applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
Further, the Company has not entered into any contract or arrangement or transaction with the Related Parties which could be considered material in accordance with the Policy of the Company on materiality of Related Party Transactions. In view of the above, disclosure in FORM AOC-2 is not applicable.
The Related Party Transaction Policy as approved by the Board is available on the website of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Smt. Vinita Singhania retires by rotation and being eligible offers herself for re-appointment at the ensuing Annual General Meeting (AGM).
Shri Harsh Pati Singhania was reappointed as Vice Chairman & Managing Director of the Company for a period of five years w.e.f. 1st January 2017 by the Members at the AGM of the Company held on 14th September 2016.
All the Independent Directors of the Company have given requisite declarations that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and also Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements)
There was no change in Managing Director, Whole-time Director, Chief Finance Officer and Company Secretary, collectively the Key Managerial Personnel, during the year under review.
INTERNAL FINANCIAL CONTROLS
The Company has in place an adequate budgetary control system and internal financial controls with reference to financial statements. No reportable material weaknesses were observed in the system during the year. Further, the Company has laid down internal financial control policies and procedures which ensure accuracy and completeness of the accounting records and the same are adequate for safeguarding of its assets and for prevention and detection of errors and frauds, commensurate with the size and nature of operations of the Company. The policies and procedures are also adequate for orderly and efficient conduct of business of the Company. The Company also has a robust management information system for the timely preparation of correct and accurate financial information.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has been one of the foremost proponents of inclusive growth and has continued to undertake projects for overall development and welfare of the society in the fields of environment, conservation of natural resources, health, education, rural development and livelihood interventions etc.
The Company has requisite Corporate Social Responsibility (CSR) Policy in accordance with the provisions of the Companies Act 2013 and rules made there under. The contents of the CSR Policy are disclosed on the website of the Company.
Even though, the company was not required to spend towards CSR since it incurred a net loss of Rs.14.02 Crore in the preceding three years, it has spent Rs. 1.19 Crore towards CSR activities during the Financial year 2016-17.
Annual Report on the CSR activities undertaken by the Company during the financial year under review, in the prescribed format is annexed to this Report as Annexure-2.
(a) Statutory Auditors and their Report
The observations of the Auditors in their report on Accounts and the Financial Statements, read with the relevant notes are self explanatory.
M/s S.S. Kothari Mehta & Co., Chartered Accountants, were appointed as Statutory Auditors of the Company for a term of 3 (three) consecutive years to hold the office from conclusion of the 53rd Annual General Meeting (AGM) held in the year 2014 till the conclusion of 56th AGM of the Company to be held in the year
2017, being the maximum permissible term, since the said firm had been auditors for more than ten consecutive years before commencement of the Companies Act, 2013. Accordingly, the term of M/s S.S. Kothari Mehta & Co. will end at the forthcoming AGM and the said firm, will therefore, not be eligible for re-appointment as the Auditors of the Company at the said AGM. The Board of Directors wish to place on record its appreciation of the services rendered by M/s S.S. Kothari Mehta & Co.
M/s Lodha & Co., Chartered Accountants, are proposed to be appointed as Auditors of the Company to hold the office from the conclusion of the 56th AGM to be held in the year 2017 until the conclusion of 61st AGM to be held in the year 2022, subject to the approval of the Members at the AGM to be held in the year 2017 and further subject to ratification of the appointment by the members at the respective AGMs. M/s Lodha & Co., Chartered Accountants, have confirmed that their appointment, if made, would be in accordance with Section 141 of the Companies Act 2013 & pursuant to the Companies (Audit and Auditors) Rules 2014 there are no pending proceedings against the firm relating to professional matters of conduct before the Institute of Chartered Accountants of India or before any competent authority or any court & they are holding valid Peer Review Certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
(b) Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act,
2013, the Board of Directors appointed Shri Namo Narain Agarwal, Company Secretary in Practice as Secretarial Auditor to carry out Secretarial Audit of the Company for the financial year 2016-17. The Report given by him for the said financial year in the prescribed format is annexed to this Report as Annexure-3. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
(c) Cost Auditor and Cost Audit Report
The Cost Audit for the financial year ended 31st March 2016 was conducted by M/s R.J. Goel & Co., Cost Accountants, Delhi and as required Cost Audit Report was duly filed with the Ministry of Corporate Affairs, Government of India. The Audit of the cost records of the Company for the financial year ended 31st March 2017, is being conducted by the said firm and their Report will also be filed with the Ministry of Corporate Affairs, Government of India.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
During the financial year under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.
CONSERVATION OF ENERGY ETC.
The details as required under Section 134(3)(m) read with the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure-4 and forms part of it.
PARTICULARS OF REMUNERATION
Disclosure of the ratio of the remuneration of each director to the median employee''''s remuneration and other requisite details pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is annexed to this Report as Annexure-5. Further, Particulars of Employees pursuant to Rule 5(2) & (3) of the above Rules, form part of this Report. However, in terms of provisions of Section 136 of the said Act, the Report and Accounts are being sent to all the members of the Company and others entitled thereto, excluding the said particulars of employees. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is available for inspection at the Registered Office of the Company during working hours.
CORPORATE GOVERNANCE: including details
pertaining to board meetings, Nomination and Remuneration policy, Performance Evaluation, Risk Management, Audit Committee and Vigil Mechanism.
Your Company reaffirms its commitment to the highest standards of corporate governance practices. Pursuant to Regulation 34 read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis, Corporate Governance Report and Auditors Certificate regarding compliance of conditions of Corporate Governance are made part of this Annual Report.
The Corporate Governance Report which forms part of this Annual Report also covers the following:
a) Particulars of the five Board Meetings held during the financial year under review.
b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management including, inter alia, the criteria for performance evaluation of Directors.
c) The manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual Directors.
d) The details with respect to composition of Audit Committee and establishment of Vigil Mechanism.
e) Details regarding Risk Management.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordance with the applicable Accounting Standards. The Audited consolidated financial statements together with Auditors'''' Report form part of the Annual Report.
A report on the performance and financial position of each of the subsidiaries & joint ventures included in the Consolidated Financial Statements is presented in a separate section in this Annual Report. Please refer to AOC-1 annexed to the Financial Statements in the Annual Report.
Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, Consolidated Financial Statements along with relevant documents and separate audited accounts in respect of subsidiaries are available on the website of the Company.
During the financial year under review your company decided to exit the joint venture Oji JK Packaging Private Limited and use the proceeds for the growth opportunities of the existing product categories.
JK Paper International (Singapore) Pte. Ltd. (name since changed from Habras International (Singapore) Pte. Ltd.) a subsidiary became a wholly owned subsidiary of the company.
Pursuant to the approval of members by means of a Special Resolution at the AGM held on 27th September 2014, the Company was accepting deposits from the public, in accordance with the provisions of the Companies Act, 2013 and rules thereunder. However, the Company has not accepted or renewed any fixed deposits w.e.f. 1st November, 2016.
The particulars in respect of the deposits covered under Chapter V of the said Act, for the financial year ended 31st March 2017 is annexed to this Report as Annexure-6.
DIRECTORS'''' RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Companies Act, 2013,
your Directors state that:
(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) the accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;
(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) the proper internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and
(f) the proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Your Directors acknowledge the continued support and cooperation received from the Central Government, State Governments, Shareholders, participating Financial Institutions and Banks, Customers, Dealers and Suppliers.
The Board wishes to record its highest appreciation of the total commitment, dedication and hard work, put in by every member of the Team JK Paper.
On behalf of the Board of Directors
New Delhi Bharat Hari Singhania
Date : 16th May, 2017 Chairman