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Ballarpur Industries Ltd.

BSE:500102  |  NSE:BALLARPURBE  |  58888:bilt  |  IND:Paper Manufacturer  |  ISIN code:INE294A01037  |  SECT:Paper

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You can view full text of the Director's Report for Ballarpur Industries Ltd.
Director Report
Mar2017   Mar 2018

BOARD''S REPORT

The Directors hereby present the Seventy Third Annual Report together with the Audited Financial Statements for the financial year ended 31 March 2018.

FINANCIAL PERFORMANCE

The financial performance of your Company for the financial year ended 31 March, 2018 is given below.

(in Rs, crore)

Particulars

STANDALONE

CONSOLIDATED

2017-18

2016-17

2017-18

2016-17

Revenue from Operations (Net of Excise duty)

303

216

2519

2059

EBIDTA

16

(248)

352

(247)

Less: Finance Cost

244

153

915

899

Less: Depreciation

60

53

277

264

Profit/(Loss) before Exceptional Items and Taxes

(288)

(454)

(840)

(1410)

Exceptional Items

169

251

190

306

Profit / (Loss) before Tax

(457)

(705)

(1030)

(1716)

Less: Tax

(146)

(25)

(166)

(135)

Profit/(Loss) After Tax

(311)

(680)

(864)

(1581)

Profit/ (loss) from discontinued operation before tax

-

-

(1171)

(317)

Less:Tax expense on discontinued operation

-

-

-

173

Net profit/ (loss) from discontinued operation after tax

-

-

(1171)

(490)

Net profit/ (loss) after tax

(311)

(680)

(2035)

(2071)

OPERATIONS

A detailed review of the operations and performance of the Company and its subsidiaries is provided in the chapter on Management Discussion and Analysis in this Annual Report.

DIVIDEND

In view of losses during the year, your Directors have not recommended any dividend on the Equity Share Capital of the Company for the financial year ended 31 March 2018.

TRANSFER TO RESERVES AND SHARE CAPITAL

The Board has not proposed to transfer any amount to Reserves.

During the year under review, the Company had allotted 63.79 crore Equity Shares of Rs,2/- each at Rs,15.83 per equity share to the Lenders of the Company, in terms of Strategic Debt Restructuring Scheme of the Reserve Bank of India. Consequently, the paid up capital of the Company increased from Rs,131.12 crore to Rs,258.71 crore and Securities Premium increased by Rs,882.26 crore.

fixed deposits

No amount of principal or interest on erstwhile fixed deposits was outstanding as on 31 March 2018. Further, the Company has not invited any fresh deposits.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

To strengthen the leadership at the Board level with independent professionals, in accordance with the provisions of the Companies Act, 2013 (the ''Act''), read with the Articles of Association of the Company, on 8 August 2017 the Board of Directors had appointed Ms. Payal Chawla (DIN 06988235) as an Additional Director (Independent). At the 72nd Annual General Meeting (AGM) of the Company held on 26 September 2017, Members of the Company appointed her as an Independent Director of the Company for a term of five consecutive years i.e. up to 7 August 2022.

As per the provisions of the Act, Mr. Gautam Thapar, Chairman, retires by rotation at the forthcoming AGM and being eligible, offers himself for re-appointment. His profile is provided in this Annual Report in the chapter entitled Corporate Governance. The Directors recommend his re-appointment as a Non-Executive Director of the Company.

Mr. Ashish Guha resigned from directorship of the Company with effect from 8 August 2017, to maintain his independence as a Managing Director of Bilt Paper B.V., the Netherlands, a step down subsidiary of the Company — where he was appointed as a Managing Director with effect from 8 August 2017. The Board places on record its appreciation for Mr. Guha''s contributions as an Independent Director of the Company.

The Life Insurance Corporation of India (LIC), in its letter dated 3 April 2018, had informed that Mr. B. Venugopal, Managing Director of LIC, who had been representing LIC on the Board of Directors of the Company has tendered his resignation from the Board of the Company. Consequently, Mr. Venugopal ceased to be a Nominee Director of LIC with effect from 3 April 2018. The Board places on record its appreciation for Mr. Venugopal''s contributions as a Nominee Director.

The Securities and Exchange Board of India (SEBI) has amended Regulation 17 of Listing Regulations (effective 1 April 2019) which provides that no listed entity shall appoint a person or continue the Directorship of any person as a Non-Executive Director who has attained the age of 75 years, unless a Special Resolution is passed to that effect.

Mr. Amarjit Singh Dulat (DIN 00861917) who was appointed as an Independent Director of the Company to hold office for 5 consecutive years, for a term upto 18 December 2019 is aged 77 years. Accordingly and in view of his valued contributions, the Board of Directors of the Company at its meeting held on 22 May 2018, has approved and recommended for approval of the Members of the Company by way of Special Resolution at the ensuing Annual General Meeting, continuation of Mr. Dulat as an Independent Director till the expiry of his present term.

Further, Mr. Bimal Khandelwal resigned as Chief Financial Officer of the Company with effect from 8 August 2017.

The Nomination and Remuneration Committee of the Company, which has been set up by and reports to the Board of Directors, has formulated the criteria and policy for the identification / appointment of Directors as well as Key Managerial Personnel and Senior Management, including their remuneration and evaluation. This is discussed in the chapter on Corporate Governance.

The Board carried out an annual evaluation of itself, its Committees and its Directors in line with the criteria laid down by the Nomination and Remuneration Committee.

DECLARATIONS BY INDEPENDENT DIRECTORS

All Independent Directors have given declarations confirming that they meet the criteria of independence, as provided in

Section 149(6) of The Companies Act, 2013 (the Act) and Regulation 16(1)(b) of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015 (or the ''Listing Regulations'').

MEETINGS OF THE BOARD

The details of meetings of the Board of Directors of the Company as well as the Committees of the Board are contained in the chapter on Corporate Governance.

PROMOTER GROUP

The Company is a part of the Avantha Group, a global business conglomerate led by the Chairman, Mr. Gautam Thapar. As required by the Listing Regulations, the Company periodically discloses its Promoter, Promoter Group and persons acting in concert in the shareholding pattern and other filings with the Stock Exchanges.

SUBSIDIARY COMPANIES

The Company has three Indian subsidiaries. These are: (i) BILT Graphic Paper Products Limited (BGPPL), (ii) Avantha Agritech Limited (AAL) which was formerly BILT Tree Tech Limited, and (iii) Premier Tissues (India) Limited {PTIL}. AAL and PTIL are direct subsidiaries and BGPPL is a step-down subsidiary of the Company.

The Company also has six foreign subsidiaries. Of these, four are based in The Netherlands: (i) Ballarpur International Holdings B.V. (BIH), (ii) Bilt Paper B.V. (BPBV),

(iii) Ballarpur Paper Holdings B.V. (BPH), and

(iv) Ballarpur Speciality Paper Holdings B.V. (BSPH). One international subsidiary, namely Sabah Forest Industries Sdn. Bhd. (SFI) is based in Malaysia; and another, BILT General Trading (FZE) is based in the UAE.

The chapter on Management Discussion and Analysis in this Annual Report contains a note on the performance of the subsidiaries. The audited accounts of the subsidiaries are available on the website of the Company and are, therefore, not enclosed in this Annual Report. However, these may be provided to any Member of the Company on request.

The Company has no joint ventures or associate companies.

CONSOLIDATION OF ACCOUNTS

The Consolidated Financial Statement of the Company and its nine subsidiaries are annexed to this Annual Report. The performance and financial position of each subsidiary are detailed in the ''Statement containing salient features of the financial statement of subsidiaries'' in Form AOC I, pursuant to Section 129 of the Act.

MATERIAL CHANGES AND COMMITMENT AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of the Company which has occurred between the end of the financial year of the Company, i.e. 31 March 2018, and the date of the Board''s report, i.e. 22 May 2018.

DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with Section 134(5) of the Companies Act, 2013, your Board of Directors confirm that:

- In the preparation of the annual accounts, the applicable accounting standards have been followed and that there is no material departure;

- They selected such accounting policies and applied them consistently and made judgments and estimates 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 the financial year;

- They took proper and sufficient care for maintenance of adequate accounting records as provided in the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

- The annual accounts of the Company have been prepared on a "going concern" basis;

- They laid down internal financial controls to be followed by the Company and that such controls are adequate and operated effectively; and

- They devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Further, the Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Meetings of the Board of Directors and General Meetings.

AUDITORS AND AUDITORS'' REPORTS

Members of the Company at the 72nd Annual General Meeting (AGM) held on 26 September 2017, had appointed M/s Sharp & Tannan, Chartered Accountants, Chennai (Firm Registration No. 003792S), as the Statutory Auditors of the Company for a period of 5 years to hold office from the conclusion of that Annual General Meeting (AGM) till the conclusion of the 77th AGM.

According to the earlier Section 139 of the Companies Act, 2013, the appointment was to be placed for ratification by the Members of the Company at every AGM. However, this requirement has been omitted in an amendment to Section 139, effective from 7 May 2018.

The Auditors have made a qualification and emphasis of matter in their report on the audited accounts of the Company for the financial year ended 31 March 2018.

Board''s explanation to Auditor''s qualification & emphasis of matter

"The qualified opinion regarding liability with respect to the outstanding Put Options and emphasis of matter regarding the existence of a material uncertainty that may cast a significant doubt on the Company''s ability to continue as a going concern are suitably explained in Note Nos. 40 and 41 respectively of the notes to Financial Statements and does not require any additional comment(s)."

During the year under review, no fraud has been reported by the auditors under sub section (12) of Section 143 of the Act.

The Board had appointed M/s PDS & Co., Company Secretaries, to conduct Secretarial Audit of the Company for the financial year 2017-2018. The Secretarial Audit Report is annexed to this report.

On recommendation of its Audit Committee, the Board of Directors appointed M/s. Bahadur Murao & Co., Cost Accountants (Registration No. 000008), as Cost Auditors of the Company, to carry out the cost audit of paper manufactured in relation to the financial year ending 31 March 2019. The Company has received their written consent to act as Cost Auditors of the Company and the appointment is in accordance with the applicable provisions of the Act and rules framed thereunder. Remuneration of the Cost Auditors has been approved by the Board of Directors based on the recommendation of the Audit Committee. The requisite resolution for ratification of this remuneration by the Members has been set out in the Notice of the Seventy Third Annual General Meeting of your Company.

CORPORATE GOVERNANCE

M/s PDS & Co., Company Secretaries, have certified compliance of the Company with the provisions of Corporate Governance, in terms of the Listing Regulations. The report on Corporate Governance together with the said Compliance certificate is attached and forms part of this Annual Report.

RELATED PARTY TRANSACTIONS AND

loans, guarantees or investments

BY THE COMPANY

During the period under review, all transactions with related parties, referred to in sub-section (1) of Section 188 and Regulation 23 of Listing Regulations, were in the ordinary course of business and at arm''s length, duly reviewed/approved by the Audit Committee of the Company. Further, there were no material contracts, arrangements or transactions with related parties which require disclosure in Form AOC-2.

Details of loans / guarantees / investments by the Company under Section 186 of the Companies Act, 2013, are provided in the financial statements of the Company.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has designed and implemented a process-driven framework for internal financial controls within the meaning of explanation to Section 134(5)(e) of the Companies Act, 2013.

For the year ended 31 March 2018, the Board is of the opinion that the Company has sound internal financial controls commensurate with the nature and size of its business operations; that these controls are in place, operating effectively and no material weaknesses exist. The Company has a process to continuously monitor the existing controls and identify gaps, if any, and implement new and / or improved controls, wherever the effect of such gaps could have a material effect on the Company''s operation.

RISK MANAGEMENT

BILT has adopted a group risk management policy. Accordingly, all operational processes are duly covered to assess risk appetites and mitigation processes. Business risks are assessed by operational management and steps are taken for their mitigation.

STATUTORY COMMITTEES

Details of various Committees of the Board, namely Audit, Nomination & Remuneration, Stakeholders Relationship, Corporate Social Responsibility and Risk Management constituted in compliance with the provisions of the Companies Act, 2013 and Listing Regulations — including their constitution, purpose and attendance of Committee members — have been provided in the chapter on Corporate Governance in this Annual Report. The Board has accepted recommendations of the Committees, wherever made.

STATUTORY POLICIES

In compliance of the various provisions of the Companies Act, 2013, and Listing Regulations, the Company has made the following policies which are available on its website: www.bilt.com

- Policy on materiality of and dealing with related party transactions. (http://bilt. com//wp-content/themes/bilt/pdf/ Policy-on-materiality-of-and-dealing-with-related.pdf )

Policy for determining material subsidiaries of the Company. (http:// bilt.com//wp-content/themes/bilt/pdf/ Policy-on-materiality-subsidiary.pdf )

- Corporate Social Responsibility Policy.

- Policy for preservation of documents.

- Policy relating to remuneration of Directors/Key Managerial Personnel.

- Policy on determination of materiality of events.

- Policy on disclosure of unpublished price sensitive information.

- Whistle Blower Policy, covering all employees and Directors, for the vigil mechanism inter alia providing direct access to any whistle blower to the Chairman of the Audit Committee, as per said policy.

- Policy on Prevention of Sexual Harassment of Women at Workplace in line with the requirement of "The Sexual Harassment of Women at Workplace

(Prohibition, Prevention and Redressal) Act, 2013". There was no such incident during the year.

SIGNIFICANT/ MATERIAL ORDERS PASSED BY REGULATORS

There are no significant/ material orders passed by any Regulators/Courts/Tribunals impacting the going concern status of the Company or impacting its operations in future.

conservation of energy, research & DEVELOPMENT, TECHNOLOGY ABSORPTION AND FOREIGN Exchange EARNINGS AND OUTGO

As required by the Companies Act, 2013, read with Companies (Accounts) Rules,

2014, particulars pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are given in the prescribed format, as annexed with this Annual Report as Annexure 1.

PARTICULARS OF EMPLOYEES

Information required under Section 197(12) of the Companies Act, 2013, read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is annexed with this Annual Report as Annexure 2.

extract of the annual return

An extract of the Annual Return as of 31 March 2018, pursuant to sub-section (3) of Section 92 of the Act, and forming part of the report is annexed with this Annual Report as Annexure 3.

CORPORATE SOCIAL RESPONSIBILITY

(csr)

In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of your Company have constituted a CSR Committee. A report on CSR activities undertaken by the Company as per CSR Policy of the Company in terms of said section and the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, forms a part of this Annual Report as Annexure 4.

ACKNOWLEDGEMENT

The Directors wish to convey their gratitude and appreciation to all of the Company''s employees for their professionalism, creativity, integrity and efforts in effective utilisation of available resources for the Company''s performance.

The Directors would also like to thank the employee unions, shareholders, customers, dealers, suppliers, bankers, government and all other business associates for their continued support extended to the Company.

For and on behalf of the Board of Directors,

GAUTAM THAPAR

Chairman DIN 00012289

B. HARIHARAN

Group Director (Finance)

DIN 00012432

Date 22 May, 2018

Place New Delhi

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