BOARD’S REPORT Dear Shareholders, Your directors have pleasure in presenting the 31st Annual Report together with the Audited Statement of Accounts of Agio Paper & Industries Limited for the year ended March 31, 2016. 2. BUSINESS PERFORMANCE We are trying to find ways to overcome the strictures imposed upon us by the Central Pollution Control Board. Soon upon finding a feasible solution we shall be able to resume production facilities. 3. DIVIDEND In absence of any production activities no operational profit was generated for recommendation of dividend for the financial year ended 31st March, 2016. 4. SHARE CAPITAL The paid up Equity Share Capital as on March 31, 2016 was Rs.16.12 crores and paid up preference share capital as on that date was Rs.14.48 crores. During the year under review the company has issued 14,48,855 10% Non-cumulative Redeemable Preference Shares of Rs.100/- each. The said preference shares were issued under private placement basis to Bengal Orion Financial Hub Ltd throughout the year. 5. CREDIT FACILITIES Vide Allahabad bank’s sanction letter dated 27.03.2015 the company has reached an amicable settlement with the Allahabad bank regarding repayment of it’s dues which has been adhered to in a timely manner. 6. ECONOMIC SCENARIO AND OUTLOOK The world economy stumbled in 2015, amid weak aggregate demand, falling commodity prices and increasing financial market volatility in major economies. The world economy is projected to grow by 2.9 percent in 2016 and 3.2 percent in 2017, supported by generally less restrictive fiscal and still accommodative monetary stances worldwide. With a much anticipated slowdown in China and persistently weak eco¬nomic performances in other large developing and transition economies—notably Brazil and the Russian Federation—the developed economies are expected to contribute more to global growth in the near term, provided they manage to mitigate deflationary risks and stimulate investment and aggregate demand. The Reserve Bank of India in its first monetary policy statement of 2016-17 has stated that growth rate for 2016-17 shall be 7.6%. The reduction in small savings rates announced in March 2016, the substantial refinements in the liquidity management framework and the introduction of the marginal cost of funds based lending rate (MCLR) should improve transmission and magnify the effects of the current policy rate cut. The stance of monetary policy will remain accommodative 7. PAPER INDUSTRY OUTLOOK AND OPPORTUNITIES The paper industry in India has become more promising as the domestic demand is on the rise. Increasing population and literacy rate, improvement in manufacturing sector and lifestyle of individuals are expected to account for the growth in the paper industry of India. The paper industry in India is growing in a rapid speed with demand increment and opportunity creation and attraction to the international players. The forecasted demand of Indian paper is 10 million tons and 33 percent of this demand is for P&W papers. Even though India has covered 15% of population in world, the paper consumption levels stands at very low which is 3 to 5 percent. The leading global paper manufacturers are gaining nearly 5% on average and it stands at 8% approximately among Asia. However, for Indian market it is 12% or above which sounds very lucrative for Indian paper industry. There should be impact on the printing paper industry in India which is significant but unfortunately in India it is less. The key challenges to be met is market conditions which are poor and technology obsolete, lacking ability in achieving economy scale and lack of skilled labor . Enabling a overall management and the holistic change which can incorporate a better standards for the organizational efficiency. 8. CORPORATE SOCIAL RESPONSIBILITY Even though the provisions of Companies Act, 2013 regarding Corporate Social Responsibility are not attracted to the company yet the Company has been, over the years, pursuing as part of its corporate philosophy, an unwritten CSR policy voluntarily which goes much beyond mere philanthropic gestures and integrates interest, welfare and aspirations of the community with those of the Company itself in an environment of partnership for inclusive development. 9. HUMAN RESOURCES Inspite of enduring perhaps the toughest phase in the company’s history it must be mentioned that the trusted loyal work force has always stood firmly in the hour of need. The company also looks after its human resources well and has always judiciously rewarded performance. 10. BUSINESS RISK MANAGEMENT Although the company had long been following the principle of risk minimization as is the norm in every industry, it became a compulsion during more recent times. Therefore, in accordance with erstwhile clause 49 of the listing agreement the Board members were informed about risk assessment and minimization procedures after which the Board formally adopted steps for framing, implementing and monitoring the risk management plan for the company. The main objective of this policy is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues. In accordance with newly introduced Regulation 17(9) of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 the Board ensures adherence and continuation of such risk management policy. In today’s challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks inter alia are: Regulations, competition, Business risk, Technology obsolescence, Investments, retention of talent and expansion of facilities. Business risk, inter-alia, further includes financial risk, political risk, fidelity risk, legal risk. As a matter of policy, these risks are assessed and steps as appropriate are taken to mitigate the same. 11. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The system of internal control maintained by the company is adequate and also up to date. Only after ensuring authenticity and genuineness of various transactions they are recorded and reported to management. The company always follows relevant and applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditor follows the internal control system on a consistent basis. Even through this non-production period the Company continues to ensure proper and adequate systems and procedures commensurate with its size and nature of its business. 12. VIGIL MECHANISM / WHISTLE BLOWER POLICY In order to ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour the company has adopted a vigil mechanism policy. This policy is explained in corporate governance report and also posted on the website of company. 13. DIRECTORS & COMMITTEES At the 29th Annual General Meeting of the company held on 24th September,2014 the company had appointed the existing independent directors Shri Kamal Kumar Khetawat (DIN 00438830) and Shri Sheo Shankar Joshi ( DIN 01180895) as independent directors under the companies Act, 2013 for 5 consecutive years for a term upto the conclusion of the 34th Annual General Meeting. At the 30th Annual General Meeting of the company held on 30.05.2015 the company had confirmed the appointment of Mrs. Sudha Dhanuka(DIN 06417787) as Director in the category of Independent/woman Director under the companies Act, 2013. She shall hold office for 5 consecutive years for a term upto the conclusion of the 35th Annual General Meeting. All independent directors have given declaration that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and regulation 16(b) of SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015. In accordance with the provisions of Companies Act,2013 Shri Ankit Jalan (DIN: 02577501), Executive Director retires by rotation and being eligible offers himself for re-appointment. 14.1 BOARD EVALUATION Pursuant to the provisions of companies Act,2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015, the Board has carried out annual performance evaluation of its own performance, the directors individually as well the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholder committee. The manner in which the evaluation has been carried out has been explained in Corporate Governance Report. 14.2 REMUNERATION POLICY The Board has, on the recommendation of the Nomination & Remuneration committee framed a policy for selection and appointment of Directors ,Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. 14.3 MEETINGS During the year Twelve Board Meetings and one independent directors’ meeting was held. The Details of which are given in Corporate Governance Report. The provisions of Companies Act,2013 and listing agreement and SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 were adhered to while considering the time gap between two meetings 15. DIRECTORS’ RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013: a) that in the preparation of the annual financial statements for the year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b) that such accounting policies as mentioned in Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date; c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) that the annual financial statements have been prepared on a going concern basis; e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively. f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. 16. RELATED PARTY TRANSACTIONS There were no material contracts or arrangements entered into by the company in accordance with provisions of section 188 of the Companies Act, 2013. All Related Party Transactions in usual course were placed before the Audit Committee as also the Board for approval. The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website. None of the Directors has any pecuniary relationships or transactions vis-à-vis the Company. 17. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. 18. AUDITORS 18.1 STATUTORY AUDITORS M/s Singhi & Co (Firm Registration No.302049E) ,Chartered Accountants have been appointed as statutory auditors of the company at the Annual General Meeting held on 24.09.2014 for a period of three years subject to ratification by members at every consequent Annual General Meeting. Therefore, ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing AGM. 18.2 SECRETARIAL AUDITORS Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Subhasish Bosu & Co. (CP No.:11469, FCS: 7277),Company Secretaries to undertake the secretarial audit of the company.The Secretarial Audit Report is annexed herewith as ‘Annexure 1’. 18.3 INTERNAL AUDITORS M/S Ashish K Gupta & Associates, Chartered Accountants performs the duties of internal auditors of the company and their report is reviewed by the audit committee from time to time. 19. CORPORATE GOVERNANCE As per SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 of the Listing Agreement with the Stock Exchanges, a separate section on corporate governance practices followed by the Company, together with a certificate from the Company’s Secretarial Auditor confirming compliance forms an integral part of this Report. 20. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as “Annexure 2”. 21. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as “Annexure 3”. 22. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is as follows: The company has one Executive Director and due to financial constraints being faced by the company he has forgone remuneration. Further, no sitting fees has been paid to any director during the year. The particulars of the employees who are covered by the provisions contained in Rule 5(2) and rule 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are: a) Employed throughout the year Nil b) Employed for part of the year Nil The remuneration paid to all Key management Personnel was in accordance with remuneration policy adopted by the company 23. IMPAIRMENT OF ASSETS & CAPITAL WORK-IN-PROGRESS The paper plant was closed on 6th October, 2010 to ensure due compliance of orders of the Central Pollution Control Board during which the expansion unit was still under the installation stage. As a result of the closure, the installation of the paper machine and the integration of the power plant with the old and new machines could not be carried out. In order to be effective as well as feasible both needs to operate in unison but since circumstances has led to non commissioning of the power plant and the new paper machine both of them have been shown as work in progress in auditor’s report. In compliance with Accounting Standard AS-28 relating to “Impairment of Assets”, the company has reviewed the carrying amount of its fixed assets as at the end of the year. During the previous financial years the valuation of the various assets of the company situated at our mill site including the factory building and premises was carried out by a registered valuer in connection with various financial facilities granted by our banker. Although the report was submitted by the valuer to the bank directly in accordance with his norms of appointment it is significant to note that neither the bank has communicated any adverse remarks on such assets nor have they expressed any concern regarding the current state of such assets till date. Based on the strategic plans and such valuation of the fixed assets of the company, no impairment of assets is envisaged at the balance sheet date. 24. FINANCIAL VIABILITY OF COMPANY As it has been pointed out in the statutory auditor’s report that there has been 50% erosion of net worth due to closure of our mill. During 2011-16 the company started infusing funds into the company by way of private placement of redeemable preference shares for repaying debts as well as revival of the company. 25. CPCB RESTRICTIONS As it has been pointed out in the secretarial auditor’s report the company had received a show cause notice from CPCB directing closure of factory for non compliance of “Installation and commissioning of online effluent monitoring system ”.However, the company has replied to the CPCB stating that it’s manufacturing unit remains closed since 06.10.2010 in order to comply with CPCB order. It has also been stated that as and when the company resumes production it shall install the necessary machines and shall ensure compliance of CPCB directions. 26. SEPARATE POSTS FOR KMPS In order to ensure compliance of section 203 of the Companies Act, 2013 and SEBI (LODR), Regulation 2015,the company has created separate posts for CFO and CEO and appointed separate key managerial personnel in those posts and this has also been pointed out in secretarial audit report. 27. ACKNOWLEDGEMENTS The company has been very well supported from all quarters and therefore your directors wish to place on record their sincere appreciation for the support and co-operation received from Employees, Dealers, Suppliers, Central and State Governments, Bankers and others associated with the Company. Your Directors wish to thank the banks, financial institutions, shareholders and business associates for their continued support and cooperation. We look forward to receiving the continued patronage from all quarters to become a better and stronger company. For and on behalf of the Board of Directors ANKIT JALAN (Executive Director) K K KHETAWAT (Director DATE : 4th May, 2016 PLACE : Kolkata |