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Star Paper Mills

BSE: 516022|NSE: STARPAPER|ISIN: INE733A01018|SECTOR: Paper
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Directors Report Year End : Mar '16    Mar 15

Dear Shareholders,

The Directors are pleased to present the Directors’ Report along with audited financial results of the company for the year ended 31st March, 2016.

1. FINANCIAL HIGHLIGHTS

Audited financial results of your company for the year ended 31st March, 2016 are summarized as under:

AUDITED FINANCIAL RESULTS

(Rs. in Cr.)

Particulars

Year ended 31st March, 2016

Year ended 31st March, 2015

Profit before interest and depreciation

27.54

15.73

Interest and finance charges

2.55

3.36

Depreciation

4.25

4.86

Profit before Exceptional Items

20.74

7.51

Exceptional & non-recurring items - -

Profit before taxation

20.74

7.51

Provision for Income Tax

4.24

(8.03)

Profit after taxation

16.50

15.54

Balance brought forward

(26.49)

(42.03)

Available for appropriation:

(9.99)

(26.49)

- Transfer to General Reserve - -

- Proposed dividend - -

- Tax on proposed dividend - -

Balance carried to the Balance Sheet

(9.99)

(26.49)

2. DIVIDEND

Though the company has achieved better financial performance vis-a-vis previous year, your Directors do not recommend a dividend in view of carried forward losses.

3. STATE OF COMPANY’S AFFAIRS

Review of operations 2015-16:

Volumes improved marginally during the year. However, your company undertook a number of measures to reduce costs. These coupled with softness in wood and furnace oil prices led to better financial performance.

The company posted a pre-tax Profit of Rs. 20.74 Crores vis-a-vis a Rs. 7.51 Crores for FY 2014-15.

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 year till the date of this Report, which may affect the financial position of the Company.

Expectations for FY 2016-17

Energy prices have started increasing again since January, 2016. While domestic demand for paper is increasing, albeit at a slower pace than historical, even this meagre growth is absorbed by imports under FTAs. Industry has represented to the Government a number of times to initiate mitigating measures. Similarly, due to decline in wood prices, pace of fresh plantations have decelerated.

Your company will continue to strive for effective measures to face these challenges and improve performance

4. ANNUAL- RETURN EXTRACTS

Extracts of the Annual Return as provided in Section 92(3) of the Companies Act, 2013 in MGT-9 is attached as Annexure-I

5. BOARD MEETINGS/AUDIT COMMITTEE

a) During the financial year 2015-16, five (5) meetings of the Board of Directors were held on 20.05.2015, 14.08.2015, 24.09.2015, 06.11.2015, 12.02.2016.

b) Audit & Risk Management Committee-

The Company has constituted the Audit & Risk Management Committee of the Board pursuant to Section 177 of the Companies Act, 2013 and its terms of reference are in conformity with SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The composition of Committee is mentioned in the Corporate Governance Report.

6. MANAGEMENT’S DISCUSSION AND ANALYSIS REPORT

Management’s Discussion and Analysis Report for the year under review is presented in a separate section forming part of the Annual Report for 2015-16.

7. VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES

Pursuant to Section 177 of the Companies Act, 2013, the company has established a ‘Vigil Mechanism’ for directors and employees to report their genuine concerns to the company. The company oversees this ‘Vigil Mechanism’ through the Audit & Risk Management Committee of the Board.

8. ENVIRONMENT, POLLUTION CONTROL AND SAFETY

STAR is committed to provide healthy environment and safe working conditions to all the stakeholders. Your company is accredited with ISO 14001: 2004, ISO 9001 : 2008 & ISO 18001 :2007. We have integrated quality and environment management systems which harmonize operations with environmental preservation. We have the required environmental clearances from the Government authorities.

This year, your company has won Platinum Award for environmental excellence in Paper Industry presented by Green tech Foundation, New Delhi reflecting commitment of the company to preserve environment and providing safe work conditions.

9. SOCIAL FARM FORESTRY

Your company has been promoting and encouraging social farm forestry to increase green cover, enhance raw material base and supplement rural income generation. The program maintained its momentum during the year too. The company distributed 333 lacs seedlings to farmers during the year covering an area of 13320 hectare.

10. FIXED DEPOSITS

The company has not invited any fixed deposits during the year and as such there has been no default in repayment of deposit or payment of interest thereon during the year. There were no outstanding fixed deposits as on 31st March, 2016. (Rs. Nil as on 31st March, 2015).

The company is in compliance with provisions of the Companies Act, 2013 and rules made there under in respect of deposits.

11. INTERNAL CONTROLS

The company has adequate internal control systems in place on the basis of which financial accounting are done and periodically financial statements are prepared. Such Internal control systems are adequate and operating effectively.

12. REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules 2014, the Company has constituted Corporate Social Responsibility (CSR) Committee. Your company is committed to discharge its social responsibility by undertaking various initiatives from time to time which would benefit the society at large.

As the average net profits of immediately preceding three financial years are negative, there was no requirement of spending on CSR activities during FY 2015-16. Even then, your company has spent Rs. 15.15 lacs on various CSR initiatives.

13. DIRECTORS

In terms of Section 152 of the Companies Act, 2013, Sh. S.V Goenka (DIN-00030375) shall retire by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment.

The members in their last AGM held on 27th Sept., 2015 have appointed Sh. G.P. Goenka (DIN-00030302) as Executive Director of the company w.e.f. 20th May, 2015 for a period of 3 years. He is designated as ‘Executive Chairman’.

Members have approved the appointment of Ms. Savita L. Acharya (DIN 07038198) as Independent Director under the Companies Act, 2013 for a period of five (5) years, not liable to retire by rotation. The Company has received declarations from all the Independent Directors of the Company confirming 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’s familiarization program for Independent Directors is posted on the website of the company and 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 including criteria for determining qualification, positive attitudes, independence of a director and other 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, expertise and experience for appointment of Directors/KMP etc. and recommend to the Board of Directors. Directors/ KMP etc shall be appointed as per the procedure laid down in applicable laws.

The Committee will recommend the remuneration to be paid to Directors/KMP etc requiring Committee approval as per statutory provisions. The level and composition of remuneration so determined by the Committee shall be reasonable and sufficient to attract, retain and motivate the appointee(s).

15. LOAN, GUARANTEE, INVESTMENTS ETC.

The company has not given any loan or guarantee or provided security in connection with any loan to any other body corporate during the year.

16. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars regarding energy conservation, technology absorption and foreign exchange earnings/outgo pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 are furnished as Annexure-II to this Report.

17. 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 of Managerial Personnel) Rules, 2014 regarding employees’ remuneration are given hereunder:

i) Name of the employee who is in receipt of remuneration of Rs. 60 lacs or more for FY 2015-16:

Name & Designation

Remuneration*

recd.-(lacs)

Nature of employment

Qualification & experience

Date of commencement of employment

Age

Last employment held

% of equity shares held

Whether relative to director

Mr. G.P Goenka, Executive Chairman

90.65

Contractual

B. Sc.

55 years

20/05/2015

75 Y

Executive Director-Duncan Industries Ltd.

Nil

Yes

Mr. Madhukar Mishra, Managing Director

151.73

Contractual

B. Sc., DMS (Mgt.)

38 years

01/07/2001

59 Y

Sr. VP(Corporate Planning) -Dail Consultants Ltd.

Nil

No

*including employer’s provident fund contribution.

ii) Disclosure in respect of Remuneration etc.-

a) Ratio of remuneration of each director to the median remuneration of employees

Director

Director remuneration (DR)-Rs.

Median remuneration (MR) of employee

Ratio (DR/MR)

MR. G.P. GOENKA

90,65,646

2,24,447

42.39

MR. S.V. GOENKA

30,000

2,24,447

0.13

MR. SHIROMANI SHARMA

1,90,000

2,24,447

0.84

MR. C.M. VASUDEV

1,30,000

2,24,447

0.58

MR. M.P PINTO

80,000

2,24,447

0.35

MS. SAVITA L. ACHARYA

1,30,000

2,24,447

0.58

MR. MADHUKAR MISHRA

1,51,73,298

2,24,447

67.60

b) % increased in remuneration of each director, CEO, CFO, CS in the financial year 2015-16

Official name

Year 2015-16 Remuneration-Rs.

% increased in remuneration

Directors

Directors are receiving only sitting fees for attending meetings. The sitting fee was increased from Rs. 10,000/- per meeting to Rs. 20,000/- per meeting w.e.f. 12th Feb., 2016.

Managing Director

151.73 lacs

4%

Chief Financial Officer

23.52 lacs

3%

Company Secretary

8.85 lacs

3%

c) % increase in median remuneration of employees in the financial year 2015-16 was: Nil.

d) Number of permanent employees on the rolls of the company as on 31.03.16 was 661.

e) Average increase in remuneration inter-alia depends upon the inflation, individual’s performance, company policy, human resource demand-supply position, negotiations with trade unions, company performance etc.

f) Considering performance of the company, remuneration of KMPs i.e Managing Director, CFO and CS was at par.

g) A number of parameters of the company as on 31.03.2016 and 31.03.2015 as under:

Parameters

As on 31.03.2016

As on 31.03.2015

Market capitalization-Rs.

54,39,50,997

30,35,82,407

Closing price/share-Rs.

34.85

19.45

Price/ earnings ratio

3.30

1.95

% decrease in market quotation of the share in comparison to rate at which last public offer was made (Rs. 60/per share)

42% decrease in price

67% decrease in price

h) Average percentage increase in salaries of employees vis-a-vis managerial personnel - Average percentage increase in salaries of employees was 9% vis-a-vis 5 % increase in salary of managerial personnel for FY 2015-16.

i) No director is getting any variable component of remuneration except performance pay of the Managing Director is decided by the Board of Directors every year based on performance terms of appointment and applicable statutory provision.

j) Ratio of remuneration of highest paid director to that of employees receiving remuneration in excess of that of highest paid director-N.A

18. PERFORMANCE EVALUATION

The company has in place a Policy on performance evaluation of Independent Directors, Board, Committees and individual Directors. The Board of Directors evaluates its own performance in terms of operations of the company, financial results etc. The performance of Committee(s) is evaluated by the Board based on effectiveness of committee, its functioning and decisions etc. The Board also reviews the performance of individual director(s) based on the contribution of the individual director to the Board/ committee meetings, participation in discussion, inputs given in the meeting.

19. HUMAN RESOURCES AND WELFARE

STAR continue to lay emphasis on regular employee-skill development programs to address the changed working conditions and environment and also needs of the organization. Your company continues to have a cordial and harmonious relations with its work-force at all levels.

Your Directors further state that during the year under review, there was no case reported under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

20. DIRECTORS’ RESPONSIBILITY STATEMENT

As required under the provisions of Section 134(3)(c) Directors Responsibility Statement on preparation and presentation of these accounts is as per Annexure-III to this Report.

21. CORPORATE GOVERNANCE

A separate report on corporate governance, along with a certificate from the statutory auditors confirming the compliance with corporate governance requirements has been annexed as Annexure-IV to Directors’ Report.

22. AUDITORS

M/s Lodha & Co. Chartered Accountants, retire at the ensuing Annual General Meeting. They have expressed their willingness to continue in office, if appointed and have furnished the requisite certificate of their eligibility pursuant to the provisions of the Companies Act, 2013.

23. COST AUDITORS

Pursuant to Section 148(3) of the Companies Act, 2013 read with the Rules made there under, the Board of Directors on the recommendation of Audit & Risk Management Committee has appointed M/s R.J. Goel & Co., Cost Accountants, as the Cost Auditors of the Company for the financial year 2015-16.

24. AUDITORS’ REPORT

i) Statutory Audit:

The observation of the Auditors in their report read with relevant note on the financial statements is self-explanatory.

ii) Secretarial Audit:

M/s D. Dutt & Co., company secretary in practice, secretarial auditor of the company for FY 2015-16 has competed secretarial audit for FY 2015-16. Secretarial audit report is attached as Annexure-V.

25. TRANSACTIONS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the company during the financial year with related parties were in the ordinary course of business and on arm’s length basis. During the year, the company had not entered into any contract / arrangement / transaction with related parties which could be considered material. Information pursuant to Section 134(3)(h) of the Act read with rule 8(2) of the Companies(Accounts) Rules, 2014 are given in Annexure-VI in Form AOC-2 and the same forms part of this report.

26. RISK MANAGEMENT

The Company is having Risk Management framework covering identification, evaluation and control measures to mitigate the identified business risks.

27. 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 stock exchanges for the financial year 2015-16.

28. ACKNOWLEDGEMENTS

Your Directors are pleased to place on record their gratitude for the excellent support and efforts put in by the employees, bankers, investors, dealers, suppliers and Government Departments.

For and on behalf of the Board

Place : New Delhi

Date : 25th May, 2016 G. P. Goenka

Executive Chairman

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