To The Members
The Direcors have he pleasure o presen he 53rd Annual Repor of he
Company along wih he audied accouns for the year ended 31 st March,
WORKING RESULTS 2011-12 2010-11
Finished Production of Paper &
Paperboards 50,890 MTs 50,223 MTs
(Rs.In Lacs ) (Rs. In Lacs )
Gross Sales 17,869.00 17,318.35
Net Sales excl Excise Duy 17,022.76 16,657.09
Operating Profit 2,461.24 2,566.88
Less: Finance costs 226.19 205.23
Gross (Cash) Profit 2,235.05 2,361.65
Less: Depreciation 614.36 482.13
Profit before Exceptional
items & Tax 1,620.69 1,879.52
Exceptional Items : Profit on
Sale of shares in Associate Co. 463.67
Electricity Tax relating to earlier
years (75.73) —
Profit before tax 2,008.63 1,879.52
Provision for Taxtincluding
deferred tax 481.38 480.00
Profit after tax for the year 1,527.25 1,399.52
Less: Income tax of earlier years (12.39) 12.25
Net Profit after Tax 1,539.64 1,387.27
Add : Balance Surplus
from the previous year 5,673.27 4775.79
Transfer to General Reserve (154.00) (139.96)
Proposed Dividend @ 22%
(Previous year 20%) (330.00) (300.00)
Provision for Dividend Tax (53.53) (49.83)
Balance Surplus carried forward 6,675.38 5,673.27
Gross sales for he financial year 2011t12 increased to Rs. 178.69
crores as agains Rs. 173.18 crores in he previous year.
Operaing volumes in boh he Paper Plan as well as Prining & Packaging
Division, were marginally higher. Capaciy uilizaion in Paper Plan was
90.88% (las year 89.68%). Alhough he Average Ne Selling Price (NSRP)
could be increased by abou 6%, cos of direc inpus such as wase paper,
fuel, dyes, chemicals and sores & spares consumed increased by about
10% per MT, eroding the direct conribuion margin by abou 410 Rs/M. The
boom line impac of his on he performance of he paper division was abou
210 lacs. Fuel prices were higher on supply consrains winessed in he
economy. Raw maerial prices increased sharply based on inernaional
rends and due a seep depreciaion in he value of he rupee in he las wo
quarers of he financial year. The planned mainenance shudown of Paper
Machine No. 1 for 3 weeks for rebuilding as well as a criical breakdown
of Cotgeneraion plan for 3 weeks in Q3, affeced producion volumes.
Replacemen of old components, in paper plant and box plant led to
increase in repairs & maintenance expenses.
During he year he Company sold shares held in Bhadra Packaids Pv. Ld.,
an Associae Company & realized a gain of Rs. 4.64 crores (repored as
excepional iem). Dividend received from Bhadra Packaids (P) Ld was Rs.
1.74 crores and is repored as Oher income. Aenion of members is drawn o
he fac ha his income is nontrecurring as he shares have been sold as
repored above. Afer making a higher depreciaion provision of Rs. 614.36
lacs (Previous year Rs.482.13 lacs), net profit increased from Rs. 13.87
crores to Rs. 15.39 crores.
During the year, cash flow & liquidity remained comfortable.
Sources of funds Rs. in lacs Deployment of funds Rs.in lacs
Cash flow from operating
activities 2,179 Repayment of Term Loans 288
Dividend received 174 Finance Cost 224
Interest Income 34
Proceeds from Sale of
Associate Concern 518 Income tax 518
Increase in Securiy Deposis 3 Dividend & Dividend Tax 345
Term Loan drawn 200
Decrease in Working Capital 494 Capital Expenditure &
Decrease in cash & cash
equivalents 279 Decrease in Short Term
TOTAL 3,881 TOTAL 3,881
Long Term Debt t o Equity Ratio 0.12 0.15
Current Ratio 1.85 1.84
Capial expendiure and advances includes subsanial amouns owards Prining
& Packaging Division. There are no overdue deposits or unclaimed
matured Fixed Deposits as on 31t3t2012.
During he firs quarer of he curren year, he oupu is similar o he rend
in he previous year and operaing profis are abou he same. The marke
condiions for paper are exremely compeiive wih supply from new
capaciies ousripping demand. Whils here has been a seep increase in raw
maerial and fuel prices due o a seep depreciaion in he rupee, i has
been exremely difficul o push hrough an increase in selling prices due
o demandtsupply siuaion in he paper marke. The brigh spo on he horizon
is he internal demand from the Printing & Packaging Division, which is
seeing an encouraging response from box consuming Brand Owners. The
combinaion of high inflaion, poor growh in demand and a capaciy
overhang will ensure ha capaciy in his segmen remains fla in he near
erm. Your managemen however perceives an opporuniy for growh by
enhancing is box manufacuring capaciy wih a new plant a anoher locaion.
Various sie opions are under evaluaion. An increase in paper making
capaciy hrough browntfield improvemens o suppor he higher conversion
capaciy planned is seen as he way forward.
Overall Turnover and operaing profi is expeced o be beer, mainly due to
higher volume of value addition through conversion.
During he year 2011t12 overall economic growh of India was lower a 6.5%
as agains 8.5% in he las year. Manufacturing sector growth was down at
CAPITAL EXPENDITURE PLANS
The Company is now aking up he upgradaion of he exising paper machines
o increase oupu by abou 25% on PMt4 & 5 for brown grades. Capial
expendiure is planned for he Prining & Packaging Division o increase
overall volumes and produciviy. This will be financed hrough deb &
inernal accruals, o obain opimum reurns. Large capial expendiure, and
subsanial capaciy increase is under consideraion and will be aken up a
he opporune time.
Securiies & Exchange Board of India (SEBI) in order o improve he
sandard of Corporae Governance has inroduced cerain amendmens in he
Lising Agreemens wih he Sock exchanges. Same have been complied wih & a
report on this is attached.
Directors'' Responsibility Statement:
As required by new amendments to Companies Act, 1956, we state that:
While preparing he Annual Accouns, he Company has followed he
applicable Accouning Sandards, referred o in Section 211 (3tC) of the
Companies Act, 1956.
The Direcors have seleced such accouning policies and applied hem
consisenly and has made judgemens and esimaes ha are reasonable and
pruden, so as o give rue and fair view of he sae of affairs of he
Company as at 31t3t2012 & of the profit of the Company for the
financial year 2011t12.
The Direcors have aken proper & sufficien care for he mainenance of
adequae accouning records in accordance wih he provisions of he
Companies Ac, for safeguarding he asses of he Company and for prevening
and deecing fraud and other irregularities.
The Directors have prepared the annual accounts on a going concern
ISO 9001 CERTIFICATION
Company''s Qualiy Managemen Sysems (QMS) have been audied by Bureau
Verias Cerificaion India Pv Ld and ISO 9001: 2008 Cerificaion is
awarded o he Prining & Packaging Division of he Company. This
Cerificaion is valid for a period of 3 years.
RESEARCH & DEVELOPMENT
Several special applicaion grades have been developed & successfully
inroduced during he year o caer o stringent customer specific
ENERGY CONSERVATION MEASURES
The pariculars required under he Companies (Disclosure of pariculars in
he Repor of Board of Direcors) Rules, 1988 with regard to energy
conservation measures are furnished in the Annexure.
Your company has always endeavored o remain in harmony wih is
ecotsphere and ried o equiably balance he ineres of all sakeholders in
i, ofen going beyond he sauory imposiions placed by regulaory
auhoriies. In such effors are included he insallaion of a 0.5 acre hold
ank and a 2 km delivery pipeline for irrigaing oherwise dry lands. The
reaed effluen waer is uilized for irrigaion purposes in the nearby
fields of third party farmers with excellent crop yields.
The Company has insalled & been operaing he Elecro Saic Precipiaor
(ESP) Sysems for is Boilers for conrolling dus emission and dust
extractor system for controlling dust at its fuel handling system.
Cenrifuge and oher machineries have been insalled for effluen reamen.
New fuel shed wih roofing, conrols dust emissions and conserves the
Your Direcors recommend a Dividend of 22% i.e. f 2.20 per equiy share
off 10 each as agains f 2 per equiy share last year(20%). The total
distribution including dividend tax amounts to f 383.53 lacs (f 349.83
PARTICULARS OF EMPLOYEES
Particulars of employees pursuant t o Section 217 (2A) of the Companies
Act, 1956 are annexed.
The industrial relations climate in the Company during the year was
generally cordial and harmonious.
In erms of Secion 255 of he Companies Ac, 1956 Mr Dineshchandra C Pael
& Mr S R Chandrasekara Sey, reire by roaion and hey, being eligible,
offer hemselves for reappoinmen. Your Direcors recommend ha he proposed
resolutions for their reappointment be passed.
There are no adverse comments by the auditors in their report annexed
The Audiors Ms B S Ravikumar & Associaes reire a he conclusion of his
Annual General Meeing and are eligible for reappointment. Your
Directors recommend that t he proposed resolution appointing them be
Your Direcors ake his opporuniy o place on record heir appreciaion for
services rendered by he employees, sales agents, Banks & Financial
for and on behalf of he Board of Direcors
Nanjangud Manish M. Patel
24th May, 2012 Chairman & Managing Director