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Agio Paper & Industries Ltd.

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Annual Report

For Year :
2015 2014 2013 2012 2011 2010 2009 2008 2007

Director’s Report

Dear Shareholders, The Directors have pleasure in presenting the 30th Annual Report together with the Audited Statement of Accounts of Agio Paper & Industries Limited for the year ended 31st March, 2015. 1. SUMMARISED FINANCIAL HIGHLIGHTS (Rs. in Lacs) Current Year Previous Year Gross Turnover and other receipts 474.75 70.42 Profit / (Loss) before Interest and Depreciation 372.48 (53.47) Less: Interest - 495.66 Profit/(Loss) Before Depreciation 372.48 (549.08) Less: Depreciation 28.86 27.57 Profit /(Loss) Before Tax 343.62 (576.65) Less: Provision for taxation - - Profit /(Loss) After Tax 343.62 (576.65) Balance brought forward from previous year (2699.81) (2123.16) Balance carried to Balance Sheet (2356.18) (2699.81) 2. BUSINESS PERFORMANCE The resumption of productivity depends upon a host of factors and the main problem still revolves around the restrictions imposed by the Central Pollution Control Board. However, we remain optimistic about overcoming these hurdles in the near future. 3. DIVIDEND In accordance with compromise settlement arrived with the lender bank during the year the company has written back interest accrued in earlier years in the books of accounts. However, in absence of any production activities no operational profit was generated for recommendation of dividend for the financial year ended 31st March, 2015. 4. SHARE CAPITAL The paid up Equity Share Capital as on March 31, 2015 was Rs.16.12 crores. During the year under review the company has not issued any shares or any convertible instruments. 5. CREDIT FACILITIES Before closure of our factory at Bilaspur the Allahabad Bank had granted us certain credit facilities in connection with our projects at factory site. Even after closure of factory the company was regular in its commitments to the bank but due to adversities after a period of time such adherence was not complied with which led the bank to exercising its rights. But the company had always been in contact with the bank to amicably arrive at a mutual settlement. The efforts finally came to fruition since an amicable settlement was reached which was formally communicated to the company by the bank vide its letter dated 27th March, 2015 and which certainly is a giant step towards in right direction. 6. ECONOMIC SCENARIO AND OUTLOOK India is set to become the world''s fastest-growing major economy by 2016 ahead of China, the International Monetary Fund (IMF) said in its recent latest forecast. India is expected to grow at 6.3 per cent in 2015, and 6.5 per cent in 2016 by when it is likely to cross China''s projected growth rate, the IMF said in the latest update of its World Economic Outlook. The government, engineering an economic rebound with a slew of reforms, has unveiled a new statistical method to calculate the national income with a broader framework that turned up a pleasant surprise: GDP in the past year 2013-14 grew 6.9 per cent instead of the earlier 4.7 per cent. The International Monetary Fund (IMF) and the World Bank in a joint report have forecasted that India will register a growth of 6.4 per cent in 2015, due to renewed confidence in the market brought about by a series of economic reforms pursued by the government. 7. PAPER INDUSTRY OUTLOOK AND OPPORTUNITIES There are about 700 - 800 paper mills (organized & unorganized sector) in the country out of which 12 large units accounts for production share of about 30% and balance units mostly comprising of medium (Agro-based) and Small (waste paper based) paper mills with production share of 70%. Wood based industry accounts for 35% of production while waste paper and agri residue accounts for 44% & 21% respectively. The paper industry in India has become more promising as the domestic demand is on the rise. Increasing population and literacy rate, growth in GDP, improvement in manufacturing sector and lifestyle of individuals are expected to account for the growth in the paper industry of India. According to India Paper Industry Forecast & Opportunities, 2017 the paper industry in India is expected to grow at the CAGR of around 9.6% during 2012-2017, which will make the revenues of paper industry of India to reach up to USD 11.83 Billion by 2017. 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 The well disciplined workforce which has served the company for three decades lies at the very foundation of the company''s major achievements and shall well continue for the years to come. The management has always carried out systematic appraisal of performance and imparted training at periodic intervals. The company has always recognized talent and has judiciously followed the principle of rewarding performance. 10. BUSINESS RISK MANAGEMENT Although the company has long been following the principle of risk minimization as is the norm in every industry, it has now become a compulsion. Therefore, in accordance with 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 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 Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal auditor of the company checks and verifies the internal control and monitors them in accordance with policy adopted by the company. 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. 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 clause 49 of listing agreement. At a board meeting held on 26.09.2014 the board had appointed Smt. Sudha Dhanuka (DIN 06417787) as an Additional Director in the category of Independent Director. At the same Board meeting the board also noted and condoled the passing away of Executive Director Shri Davinder Kumar (DIN 00289363) on 7th September, 2014. 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. 13.1 BOARD EVALUATION Pursuant to the provisions of companies Act,2013 and clause 49 of the Listing Agreement, 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. 13.2 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. 13.3 MEETINGS During the year Seven 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 were adhered to while considering the time gap between two meetings. 13.4 AUDIT COMMITTEE The company is having an audit committee comprising of the following directors: Name Status Category Shri Kamal Kumar Khetawat Chairman Non Executive & Independent Director Shri Ankit Jalan Member Executive Director Shri Sheo Shankar Joshi Member Non Executive & Independent Director 13.5 NOMINATION AND REMUNERATION COMMITTEE The company is having a Nomination and Remuneration Committee comprising of the following directors: Name Status Category Shri Kamal Kumar Khetawat Chairman Non Executive & Independent Director Shri Sheo Shankar Joshi Member Non Executive & Independent Director Smt Sudha Dhanuka Member Additional Director - Independent Category 14. 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, 2015, 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, 2015 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. 15. RELATED PARTY TRANSACTIONS There were no contracts or arrangements entered into by the company in accordance with provisions of section 188 of the Companies Act, 2013. However, there were material related party transactions in terms of clause 49 of the listing agreement. All material related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are 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-a-vis the Company. 16. 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. 17. AUDITORS 17.1 STATUTORY AUDITORS M/s Singhi & Co (Firm Registration No.302049E) ,Chartered Accountants have been appointed as statutory auditors of the company at the last 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. 17.2 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''. 17.3 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. 18. CORPORATE GOVERNANCE As per Clause 49 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. 19. 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. 20. 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. 21. 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. 22. 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. 23. FINANCIAL VIABILITY OF COMPANY As it has been pointed out in the statutory auditor''s report that there has been complete erosion of net worth due to closure of our mill. The company is exploring various avenues to infuse funds into the company for repaying debts as well as revival of the company 24. CPCB RESTRICTIONS As it has been pointed out in the secretarial auditor''s report the factory still remains non operational due to restrictions imposed by the Central Pollution Control Board. The management is pursuing active steps to comply with norms in order to resume production activities. 25. 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. 26. CAUTIONARY STATEMENT The statements contained in the Board''s Report and Management Discussion and Analysis contain certain statements relating to the future and therefore are forward looking within the meaning of applicable securities, laws and regulations. Various factors such as economic conditions, changes in government regulations, tax regime, other statues, market forces and other associated and incidental factors may however lead to variation in actual results. For and on behalf of the Board of Director Kolkata ANKIT JALAN K K KHETAWAT 11th April, 2015 (Executive Director) (Director)

Director’s Report