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Mangalam Timber Products

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Directors Report Year End : Mar '16    Mar 15

DIRECTORS'' REPORT FOR THE YEAR ENDED 31ST MARCH 2016

Dear Members,

The Directors are pleased to present the 32nd Annual Report of the Company and the Audited Accounts for the financial year ended 31st March, 2016.

1. FINANCIAL RESULTS

The Company''s financial performance for the year ended 31st March, 2016 is summarized below:

(Rs. in lacs)

Particulars

For the Year ended 31st March, 2016

For the Year ended 31st March, 2015

Net Sales / Income from operations

3853.42

3958.30

Profit/(Loss) before Interest, Finance Charges,

Depreciation and Tax

Less: Interest and Finance Charges

(1550.11)

347.84

(1057.18)

358.36

Profit / (Loss) before Depreciation and Tax

Less: Depreciation

(1897.95)

137.57

(1415.54)

161.27

Profit / (Loss) before Tax

Less: Tax Expenses (net)

(2035.52)

(770.76)

(1576.81)

(569.28)

Net Profit / (Loss) after Tax

Profit / (Loss) brought forward from previous year

(1264.76)

(2635.53)

(1007.53)

(1596.43)

Balance carried forward to next year

(3900.29)

(2603.96)

2. DIVIDEND

In view of losses, the Board of Directors has not recommended any dividend for the financial year 2015-16.

3. TRANSFER TO RESERVES

In view of the losses incurred by the Company this year, no amount has been transferred to the General Reserve.

4. MANAGAEMENT DISCUSSION AND ANALYSIS

A Management Discussion & Analysis is forming part of this Annual Report.

5. FINANCE

Your Company thanks its consortium bankers for their continued support.

6. REPORTING TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR)

As per the audited accounts of the Company for the financial year ended 31st March, 2016, the accumulated losses as at the end of the staid period stood at Rs. 3900.29 Lacs which exceeds fifty percent of its peak net worth of Rs. 5279.74 Lacs during immediate preceding four financial years.

In terms of Section 23(a)(i) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), the Company falls under the category of potentially Sick Industrial Company and therefore the fact is required to be reported to Board of Industrial and Financial Reconstruction (BIFR) within 60 days from the date of finalization of the audited accounts, which is the date of Annual General Meeting in which accounts will be approved by the shareholders. A report on causes of erosion of net worth and steps taken by the Company is forming part of the Notice to Annual General Meeting.

7. RAW MATERIAL

Raw material costs especially firewood, Melamine and Urea have increased substantially and have affected performance during the year. Further, unavailability of firewood, which is a key raw material of the Company''s product, also affected the Company''s performance to a large extent. Other raw materials also have shown an upward trend in prices. As in the past years the focus on the Plantation under the Farm Forestry Scheme was maintained. This, together with plantation activities undertaken in our owned leased land, will make the Company self-sufficient in availability of its principal raw material in future.

8. CAPTIVE THERMAL POWER PLANT

The Company has commissioned trial run of its 3MW captive thermal power plant and will commission commercial production on successful completion of said trail run. This power plant will provide uninterrupted power for the production which will not only improve the plant efficiency but also reduce its cost of production. With this power plant, the Company will be 100% self-sufficient through its own power generation.

9. PLANTATION

Availability of firewood in nearby areas has become difficult but necessary efforts are being made continuously to develop long term supply. Your company is continuing its policy on plantation activities to help supply quality raw material to factory with least cost on a continuous & sustainable basis. Some important efforts undertaken during the year are mentioned below:

i. Mist Chamber and Nursery: Company is strategically increasing the focus on Nursery operations to ensure consistent & quality supply of high yielding clonal plants to the farmers at affordable price and to increase the catchment areas of Company for wood. Production capacity of the nursery is 3.00 million clonal plants.

ii. Farm Forestry Planting: Odisha forest department has invited the wood based industry to participate in a farm forestry scheme wherein industry will supply good quality clonal planting material to small and marginal farmers with wood buyback arrangement. The scheme provides scope for the farmer to achieve higher returns from his/her land. During the year also, we have entered into new BIPARTARE AGREEMENT between Company and big farmers on buy back basis. The scheme provides scope for industry to procure good quality raw material and increase the availability of wood near Nabarangpur catchment areas of the Company. By this scheme we have supplied 0.13 million clonal plants to farmers.

iii. Lease area Replanting: We are gradually increasing the area under plantation and by 2017-18 entire lease area will have high yielding clonal plants, which would supply approx. 15% to 20% annual requirement of our plant from 2017 onwards.

iv. Private Wood supply: Presently approx. 10% of our wood requirement comes from farm forestry and lease plantations. In future we can fulfill up to 15%-20% of the Company wood requirement from our leased land and balance requirement from private suppliers. All efforts are being made to increase the captive wood supply. However, efficient vendor development is essential for long-term consistent supply of quality wood.

10. EXTRACT FROM ANNUAL RETURN

The Extract of Annual Return as required under Section 134(3)(a) of the Companies Act, 2013 is set out at Annexure-I forms part of this report.

11. BOARD MEETINGS

The Board met four times during the Financial Year 2015

16. Details of Meetings and the attendance of each Director is provided in the Report on Corporate Governance

12. AUDIT COMMITTEE

The composition and terms of reference of the Audit Committee has been furnished under SN 3A in the Corporate Governance Report forming a part of this Annual Report. There have been no instances where the Board has not accepted the recommendations of the Audit Committee.

13. CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance as an important step towards building investor confidence, improving investors'' protection and maximizing long-term shareholders value. The Report on Corporate Governance as stipulated under Chapter IV of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations) forms part of the Annual Report. The certificate of the Auditors, M/s. S. M. Daga & Co., confirming compliance of conditions of Corporate Governance as stipulated under the Listing Regulations is attached as Annexure-II and forms a part of this report.

14. CORPORATE SOCIAL RESPONSIBILTY

Driven by the desire to create a meaningful difference in society, the Company makes conscious efforts to achieve higher socio-economic goals. It has continued with its welfare activities for development in the fields of education, health, culture and other welfare measures and to improve the general standard of living.

15. NOMINATION AND REMUNERATION POLICY

The Company has in place a formal Nomination and Remuneration Policy formulated as per provisions of Section 178(3) of the Act as well as Regulation 19(4) read with Part D of Schedule II of the Listing Regulations. The Company''s Remuneration Policy is attached as Annexure-III and forms a part of this report.

16. KEY PARAMETER FOR APPOINTMENT OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Nomination and Remuneration Committee has formulated a detailed policy for appointment of Directors and Key Managerial Personnel which is designed to attract, motivate and retain best talent. This policy applies to Directors, Senior Management including its Key Managerial Personnel (KMP) and other employees of the Company. The compensation strategy revolves around getting the best talent in the market. The remuneration of KMPs of the Company is recommended by the Nomination and Remuneration Committee based on the Company''s remuneration structure taking into account factors such as level of experience, qualification and suitability. The Company generally pays remuneration by way of salary, perquisites and allowances (fixed component).

17. DIRECTORS

Shri N G Khaitan, Shri Prabir Chakravarti, Shri Anand Daga, Smt. Vidula Jalan and Smt. Leena Ghosh are members of the Board.

In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 2013, Smt Vidula Jalan, being non-independent director, retires by rotation and being eligible, seeks re-appointment.

The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of the independence prescribed under sub section (6) of the section 149 of the Companies Act, 2013.

The details of programmes for familiarization of Independent Directors with the Company, their roles, rights, responsibility in the Company, nature of the industry in which the Company operates and other related matters are put on the website of the Company at the link http://www.mangalamtimber.com/images/ Familiarisation-Programme-for-Independent-Directors.pdf

18. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Act, the Directors state that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed and proper explanations provided relating to material departures, if any;

b) such accounting policies have been selected and applied consistently and judgments and estimates made that 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 loss 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 Companies Act, 2013 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) internal financial controls were followed by the Company and they are adequate and are operating effectively; and

f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

19. KEY MANAGERIAL PERSONNEL

Following employees were the Key Managerial Personnel of the Company during the period under review:

i. Shri Soumitra Kumar De, Manager of the Company (with effect from 13th August, 2015)

ii. Shri Tara Chand Sharma, Manager of the Company (upto 31st July, 2015)

iii. Shri Amit Kumar Agarwal, Chief Financial Officer

iv. Miss. Namrata Priya, Company Secretary

20. REMUNERATION TO DIRECTOR''S & KEY MANGERIAL PERSONNEL

i. The Ratio of the remuneration of each Director to the median remuneration of employees of the Company for the year ended 31st March, 2016 are :-

Sl

No.

Name of Directors and Key Managerial Personnel

Designation

Ratio of remuneration of Director to median remuneration of the Employee of the Company

Percentage increase in the remuneration for the Financial Year 2015-16

1

Shri N. G. Khaitan

Independent and Non Executive Director

27%

Nil

2

Shri Prabir Chakravarti

Independent and Non Executive Director

32%

Nil

3

Shri Anand Daga

Independent and Non Executive Director

28%

Nil

4

Smt Vidula Jalan

Promoter Non Executive Director

30%

Nil

5

Smt Leena Ghosh

Independent and Non Executive Director

22%

NA

6

Shri Tara Chand Sharma

Manager of the Company 1

NA

Nil

7

Shri Soumitra Kumar De

Manager of the Company #

NA

NA

8

Shri Amit Kumar Agarwal

Chief Financial Officer

NA

Nil

9

Miss Namrata Priya

Company Secretary

NA

Nil

ii. In the financial year 2015-16, there was decrease of 8.41% in the median remuneration of employees.

iii. There were 248 permanent employees on the rolls of Company as on 31st March, 2016.

iv. In view of the loss of the Company no increments were given to employees of the Company.

v. Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company: The total remuneration of Key Managerial Personnel increased by Rs 0.76 Lacs from Rs 10.76 Lacs in 201415 to Rs 11.52 Lacs in 2015-16.

vi. (a) Variations in the market capitalization of the

Company: The market capitalization as on 31st March, 2016 was Rs 3069.84 Lacs (Rs. 1649.47 Lacs as on 31st March, 2015)

(b) Price Earnings Ratio of the Company: Not computed in view of Loss

(c) Percent increase over / decrease in the market quotations of the shares of the company as compared to the rate at which the company came out with the last public offer in the year: The company has not made any public issue or rights issue of securities in the recent past, so comparison have not been made of current share price with public offer price. The Company''s shares are listed on BSE Limited and National Stock Exchange of India Limited.

vii. Considering the performance of the Company no increment was made to the salaries of the employees in the last financial year i.e. 2015-16.

viii. Key Parameters for any variable component of remuneration availed by the Directors are based on their contribution at the Board, time spent on operational matters and other responsibilities assigned: All directors of the Company are non-executive directors hence no remuneration was paid/ payable to them other than sitting fees.

ix. The ratio of the remuneration of the highest paid Director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year 2015-16: Nil (All directors of the Company are non-executive directors hence no remuneration was paid/ payable to them other than sitting fees).

x. It is hereby affirmed that the remuneration paid is as per the Remuneration Policy of the Company.

21. STATUTORY AUDITORS

The Statutory Auditors, M/s S. M. Daga & Co, Chartered Accountants, hold office up to the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. The Board recommends their reappointment for the ensuing year. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment.

22. SECRETARIAL AUDITOR

The Board appointed Shri Arup Kumar Roy, ACS, Practicing Company Secretary as Secretarial Auditor of the Company for the Year 2015-16. The Report of the Secretarial Auditor is attached in Annexure IV of this Report. There is no qualification in the report.

23. AUDITORS'' REPORT

Auditors'' Report to the shareholders does not contain any qualification, reservation, or adverse remarks and is self-explanatory.

24. CASH FLOW ANALYSIS

In conformity with the provisions of Regulation 34(2)(c) of the Listing Regulations, 2015, Cash Flow Statement for the financial year ended 31st March, 2016 forms part of the audited financial statement.

25. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The Company has not given any loan, guarantees or made any investments as prescribed in Section 186 of the Companies Act, 2013.

26. RELATED PARTY TRANASACTIONS

All the related party transactions are entered into at arm''s length in ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Regulations. There were, however, no material significant related party transaction made by the Company with the Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the Company.

The policy on Related Party Transactions as approved by the Board has been uploaded on the Company''s website under web link http://www.mangalamtimber.com /images/Related-Party-Transaction-Policy.pdf Your Directors draw attention of the members to Note 2.25 (6) to the financial statement which sets out related party transactions disclosures.

27. PUBLIC DEPOSIT

The Company has neither invited nor accepted any public deposits, within the meaning of section 73 of the Companies Act, 2013, during the year under report.

28. SUBSIDIARY/ASSOCIATES/JOINT VENTURE COMPANIES The Company does not have any subsidiary/associate/joint venture company for the year ended 31st March, 2016.

29. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

The Company has transferred a sum of Rs 7,29,010/- during the financial year 2015-16 to the Investor Education and Protection Fund, established by the Central Government for the unclaimed dividends, for the financial year 2007-08, in compliance with section 125 of the Companies Act, 2013. The said unclaimed dividends were lying with the Company for a period of 7 years from their respective due dates of payment.

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on September

11, 2015 (date of last Annual General Meeting) on the Company''s website under we blink http:// www.mangalamtimber.com/index.php/investor-desk/unclaimed-dividend

30. VIGIL MECHANISM

The Company has a codified whistle blower policy to establish vigil mechanism for Directors and employees of the Company to report concerns about unethical behavior, actual or suspected fraud or violation of the Company''s code of conduct or ethics policy. The mechanism under the policy has been appropriately communicated within the organization. The Whistle Blower Policy is available on the website of the Company.

31. DISCLOSURE UNDER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE

No complaints on the issues covered by The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013, were received during the year. Consequently, the question of disposal of complaints did not arise.

32. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

33. PERFORMANCE EVALUATION

Pursuant to Regulation 17(10) of the Listing Regulations read with provisions of the Companies Act, 2013, the Board has carried out an evaluation of its own performance and that of the individual Directors. The evaluation criteria, inter-alia, covered various aspects of the Board''s functioning including its composition, execution and performance of specific duties, obligations and governance. The performance of individual directors was evaluated on parameters such as level of engagement and contribution, independence of judgement, safeguarding the interest of the Company and its minority shareholders, time devoted, etc. The Directors expressed their satisfaction with the evaluation process.

34. CARBON CREDIT

Our Clean Development Mechanism (CDM) project activity Reforestation of degraded land by MTPL in India (5016) has accumulated credit of 1764076 tCERs from UNFCCC. These units will be available to the Company on completion of certain laid formalities.

35. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING 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 given as Annexure V to this Report

36. PARTICULARS OF REMUNERATION

The Company has no employee in respect of whom information under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is required to be annexed.

37. INTERNAL FINANCE CONTROL

The Company has in place internal financial control systems, commensurate with the size and complexity of its operations, to ensure proper recording of financial and monitoring of operational effectiveness and compliance of various regulatory and statutory requirements. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control systems in the Company. Based on the report of the Internal Auditor, respective departments undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board

38. LISITNG AGREEMENT

The Securities and Exchange Board of India (SEBI), on September 2, 2015, issued SEBI (Listing Obligation and Disclosure Requirements), Regulation, 2015, with the aim to consolidate and streamline the provision of the Listing Agreement for different segment of capital markets to ensure better enforceability. The said regulations were effective December 1, 2015. Accordingly, all listed entities were required to enter into Listing Agreement within six months from the effective date. The Company entered into Listing Agreement with BSE Limited and the National Stock Exchange of India Limited within stipulated time frame.

39. APPRECIATION

Your Directors place on record their deep appreciation of the assistance and guidance provided by the Central Government and the Governments of the States of India, its suppliers, technology providers and all other stakeholders. Your Directors thank the financial institutions and banks associated with your Company for their support as well. Your Directors also thank the Company''s dealers and its customers for their unstinted commitment and valuable inputs.

Your Directors acknowledge the support received from you as shareholders of the Company.

N G Khaitan

Prabir Chakravarti Directors

Dated : 25th May, 2016 Leena Ghosh

Place : Kolkata Vidula Jalan

Source : Dion Global Solutions Limited
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