BOARD OF DIRECTOR'S REPORT Dear Shareholders, On behalf of the Board of Directors, it is our pleasure to present the 21st Annual Report together with the Audited Statement of Accounts of Sundaram Multi Pap Limited ("the Company") and its subsidiary for the year ended 31st March, 2015. SUMMARY OF OPERATIONS: The revenue from the operations decreased by 54% to Rs. 8,349.76 Lacs for the year ended 31st March, 2015 as compared to Rs. 15,472.81 Lacs for the year ended 31st March, 2014. Steep decline in the trading sales has resulted in to low turnover. The Company has incurred a loss of Rs. 279.39 lacs before extra-ordinary items & tax for the year as compared to the profit of Rs. 67.44 lacs for the year ended 31st March, 2014. During the year the Company has incurred a loss of Rs. 1,469.43 lacs from the sale of non-moving inventories and other exceptional items. Thus, the Company has incurred a net loss of Rs. 1,674.66 Lacs for the year ended 31st March, 2015 as compared to the profit of Rs. 10.25 Lacs for the year ended 31st March, 2014. TRANSFER TO RESERVE: In view of the losses incurred by the Company, your Directors DIVIDEND: In view of the Loss incurred by your Company, Board of Directors does not recommend any dividend for the Financial Year2014-15. MATERIAL CHANGES AND COMMITMENT: During the year under review the Company had approached the Bankers for the restructuring of loan, which was agreed upon by the bankers. As per the restructuring terms, the Company has pledged 1,49,99,900 Equity Shares of Rs. 10/-each of its Wholly Owned Subsidiary viz. E-class Education System Limited to SBICAP Trustee Company Limited (SBICAPTCL). The pledged shares are held by SBICAPTCL as a trustee for State Bank of India (Ahmedabad Branch) together with IDBI Bank Ltd (Ahmedabad Branch). Your Management is looking forward to clear all the debts and set free the said pledge by the end of Financial Year 2015-16. There have been no such material changes or commitments affecting the financial position from the end of the Financial Year 2014-2015 till date of this report, as may be deemed to be material enough to affect the financial position of the Company, otherwise than in the normal course of business. CHANGES INCLUDING MATERIAL CHANGES DURING THE YEAR: During the year Company has closed down the Nagpur Paper unit due to non-implementation of projects and other technological obsolescence. Further Company's registered office has been shifted from 903, Dev plaza, Opp. Andheri Fire Station, S.V. Road, Andheri West, Mumbai: 400058 to 5/6, Papa Industrial Estate, Suren Road, Andheri East, Mumbai: 400093 w.e.f. 02/12/2014 for better efficiency at work place and to save the administration cost. CAPITAL/ FINANCE: During the year, the Company has not issued and allotted any fresh Share capital. As on 31st March, 2015, the issued, subscribed and paid up share capital of your Company stood at Rs. 21,56,05,773/-(Rupees Twenty One Crores Fifty Six Lakhs Five Thousand Seven Hundred and Seventy Three Only), comprising 21,56,05,773 (Twenty One Crores Fifty Six Lakhs Five Thousand Seven Hundred and Seventy Three )Equity shares of Rs. 1/- (Rupee One Only)each. EXTRACT OFANNUALRETURN: The extract of the Annual return of the Company, pursuant to section 134(3) (a) of the Companies Act, 2013 in annexed herewith as Annexure-1 to this Report. MEETING OF THE BOARD OF DIRECTORS: The Board met Nine (9) times during the Financial Year 2014-15 viz. on 24th May, 2014, 22nd July, 2014, 14th August, 2014, 27th October, 2014, 14th November, 2014, 1st December, 2014, 30th December, 2014, 12th February, 2015 and 30thMarch, 2015. Detailed information on the meetings of the Board of Directors is included in the report on Corporate Governance, which forms part of this Annual Report. COMMITTEES OF BOARD: As per the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, Company has formed Audit Committee, Nomination & Remuneration Committee and Stakeholders Relationship Committee. The details of Composition of the said Committee and their Meeting held during the year along with terms of reference of the said Committees of Board of Directors of the company is given in Corporate Governance Report and is also placed on the Company's website at (<http://www.sundaramgroups.in> /other-information/) DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to the requirement under Section 134 (3) (c) of the Companies Act, 2013, it is hereby confirmed that: (a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) The directors had 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 that period; (c) The directors had taken proper and sufficient care 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 directors have prepared the annual accounts on a going concern basis; (e) The directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and (f) The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DEC LARAT ION GIVEN BY INDEPENDENT DIRECTORS: The Company has received necessary declarations from all the Independent Directors confirming that they meet the criteria of Independence as prescribed under the Section 149 (6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered with the stock exchanges. COMPANY'S POLICY ON DIRECTOR'S APPOINTMENT, REMUNERATION AND EVALUATION The Company has constituted a Nomination and Remuneration Committee with 3 Non-Executive Directors, all the three Directors are Independent Directors. The Chairman of the Committee is an Independent Director. The Company has framed a Nomination, Remuneration and Evaluation Policy. The information under section 134 (3) (e) of the Companies Act, 2013 with respect to the Company's policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of section 178 is attached as Annexure-2 to this report. FORMAL ANNUAL EVALUAT ION MADE BY BOARD OF ITS OWN PERFORMANCE AND OF ITS COMMITTEE AND OF INDIVIDUAL DIRECTORS: Pursuant to the provisions of Section 178 of the 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 as evaluation of working of committees of Board of Directors. Executive Directors were evaluated on the basis of targets / criteria given to them by the board from time to time as well as per their terms of appointment. Independent Directors, being evaluated by entire board except of Director being evaluated, on meeting their obligations connected with their independence criteria as well as adherence with the requirements of professional conduct, roles, functions and duties specifically applicable to Independent Directors as contained in Schedule IV to the Companies Act, 2013. Chairman and other Non-Independent Directors were being evaluated by Independent Directors, who also reviewed the performance of secretarial department. Performance evaluation of the Committees and that of its members in effectively discharging their duties, were also being carried out by board. The overall performance of Chairman, Executive Directors and Non-Executive Directors of the Company is satisfactory. The review of performance was based on criteria of performance, knowledge, analysis, quality of decision making etc. AUDITORS: A. STATUTORY AUDITORS Ratification: M/s. Bhuta Shah & Co., Chartered Accountants, Mumbai, (ICAI Firm Registration No. 101474W), Statutory Auditors of the Company, were appointed as the Statutory Auditors of the Company to hold the office for a period of three years, from the conclusion of last Annual General Meeting of the Company held on 30th September, 2014. The said appointment needs to be ratified by the members of the Company at every Annual General Meeting during the said period and the Statutory Auditors have confirmed their eligibility to the effect that their re-appointment, if made, would be within the prescribed limits under the Act and that they are not disqualified for re-appointment. As required above, the Board has, after considering the recommendations of its Audit Committee, incorporated a suitable resolution for your consideration and approval in the notice calling ensuing Annual General Meeting of the Company. Auditors Observations: The auditor has qualified opinion over the matter of provision for Gratuity and "Discontinuing Operations". They have further emphasized over the matter of certain trade receivables and provisions not made for loans and advances given to wholly owned subsidiary company. For further details refer Independent Auditors Report on Pg no. 55 of the this Annual Report . Management's Response: Response for Gratuity: The Company has made a provision of Rs. 7 Lacs for Gratuity on estimated basis. The Company has already appointed actuary to carry out actuarial valuation of gratuity. On receipt of report appropriate action would be taken. Response for Note No. 42 : Paper Mill at Nagpur The Company is advised that Accounting Standard (AS) 24 relates to "Discontinuing Operations". The Company's matter falls under the sub-clause related to abandonment / termination of operations. Under para 15(b) related to "initial disclosure event", discontinuing operation event takes place on the enterprise's board of directors or similar governing body has both (i) approved a detailed, formal plan for the discontinuance and (ii) made an announcement of the plan. In case of your company the Board has not yet approved a detailed, formal plan for discontinuance. In view of above mentioned facts and provisions of Accounting Standard (AS) 24, the Management is of the view that auditor's qualification in this regard is unwarranted / matter of caution.The Company has informed / made announcement to all its stakeholders. As and when initial disclosure event takes place your company will appropriately take necessary steps and make necessary disclosure. The Auditor has emphasized over the matter of balance of certain trade receivables and advances. The amount are considered realizable. The management is taking necessary steps to recover the trade receivables. The Auditor has emphasized over the matter of provision not made for loan and advances given to its wholly owned subsidiary company viz. E-class education System Limited. In view of the Management of your Company the loans and advances given by the Company to its wholly owned subsidiary viz. E-class Education System Limited amounting to Rs. 22.32 crores are outstanding as on 31st March, 2015. The subsidiary company is expecting a robust growth with good amount of margin in the near future. The management of the Company is of the opinion that if the expectation of the subsidiary materializes in the near future, then a good amount of turn around can be seen in the subsidiary. Further the management of the Company is of the opinion that the diminution in the value of investment and loans and advances does not have any material impact on the financial statement of 31st March, 2015 and hence no provision was made by the Company. B. SECRETARIALAUDITORS Appointment: Pursuant to Section 204 of the Companies Act, 2013, your Company has appointed M/s. Hemanshu Kapadia & Associates, Practicing Company Secretaries, Mumbai as its Secretarial Auditors to conduct the Secretarial Audit for FY 2014-15. The Company provided all assistance and facilities to the Secretarial Auditor for conducting their audit. Auditors Observations: The Company has complied with the provisions of the Section 205 ofthe Companies Act 1956. However there was a reported delay in the payment of Dividend. Management's Response: The Company had made a provision for the Dividend, approved by the members in the AGM held on 30th September, 2014, however due to unanticipated event the amount was utilized by the Company for the said event and hence there was a delay in the payment of dividend. As soon as the funds were available with the company, the dividend was paid to the shareholders. Secretarial Audit Report: The Report of Secretarial Auditor for FY 2014-15 is annexed to this report as Annexure-3. C. INTERNAL AUDITOR The Company continues to engage Prakkash Muni & Associates (ICAI Firm Registration No. 111792W) as its Internal Auditor. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations. D. COST AUDITOR During the year under review Cost Audit was not applicable to the Company's products/ business. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186: There was no loan given or guarantee given or investment made or security provided pursuant to Section 186 of the Companies Act, 2013 during the year under review and hence the said provisions are not applicable. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: During the year, the Board of Directors, on the recommendation of the Audit Committee, in their meeting held on 30th March, 2015 has appointed Mr. Raichand P. Shah, brother of Mr. Amrut P. Shah, Chairman and Managing Director and Mr. Shantilal P. Shah, Whole-time Director, as the Plant Manager of the Company w.e.f 1stApril, 2015. On such terms and conditions including remuneration as set out in the Letter of Appointment dated 30th March 2015. The company has not entered into any other transaction falling under Section 188 (1) of the Companies Act, 2013; therefore disclosure under this section is not applicable to the Company. Also policy on related party transaction has been disclosed on the website of the Company at (<http://> www.sundaramgroups.in/wp-content/uploads/2015/02/05.- Related-party-transaction-policy.pdf). The Company has not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO: The particulars relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earning and outgo, as required to be disclosed under the Act are given below (A) CONSERVATION OF ENERGY (a) Steps taken on conservation of energy: - Transparent roof in the factory premises - Controlling the process parameter - High efficient machinery aids in saving energy - Plant is equipped with energy saving lamps - Self power generation unit (b) The steps taken by the company for utilizing alternate sources of energy: The Company has installed the transparent roof in the working area at the factory premises. This leads to natural light in the factory premises and helps in saving the energy and electricity. The transparent roof drastically enables the company to reduce the artificial lightning. The self-power generator enables the company to overcome the breakdown in the electricity supply and facilitates the continuous working of the production process without any hindrance. (c) The capital investment on energy conservation equipments: Capital Investments were incurred in the earlier years, but no investment was made on energy conservation equipments during the previous year. (B) TECHNOLOGY ABSORPTION (a) The efforts made towards technology absorption: - Fully auto book manufacturing machine - Adoption of partly automation process (b) The benefits derived from the machinery: - Minimized the labour cost and the cycle time of work-in-progress - Increase in the production. - Better quality of products. - Low amount of wastage. (c) In case of imported technology: No technology was imported by the Company during the last three years reckoned from the beginning of the financial year. BUSINESS RISK MANAGEMENT & RISK MANAGEMENT POLICY: 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. Risk Management framework shall primarily focus on the elements such as Risk to Company Assets and Property, Employees Related Risks, Foreign Currency Risks, Risks associated with Non-Compliance of Statutory enactments, Competition Risks, Operational Risks and various other types of risks which may affect the business or organization. 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. Pursuant to Clause 4 of the SEBI Circular CIR/CFD/ POLICY CELL/2/2014 dated 17thApril, 2014; the provisionof Clause 49(VI) (C) of the Listing Agreement with respect to the formation of the Risk Management Committee is not applicable to your Company. Detailed policy framework is disclosed on the website of the Company at (<http://www.sundaramgroups.in/wp->content/uploads/2015/02/02.-Risk-Management-Policy.pdf THE DETAI LS OF DI RECTORS AND KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR RESIGNED DURING THE YEAR: During the year under review Mr. Jagdish J. Kothari (DIN: 00033271), Mr. Manikandam P. Kammenchery (DIN: 03323385) & Mr. Kaushal R. Sheth (DIN: 06949468) were appointed as the Independent Directors by the Shareholders in the AGM held on 30th September, 2014 for a term of five (5) years. Mr. Manik R. Makwana was appointed as the Company Secretary & Compliance Officer and a Key Managerial Personnel of the Company w.e.f from 1st January, 2015. Ms. Minjal V. Kadakia (DIN: 07135977) was appointed as the Additional Independent Women Director on the Board w.e.f 30th March, 2015. The Company has received notice in writing from Member along with the deposit of requisite amount under Section 160 of the Companies Act, 2013 proposing candidature of Ms. Minjal V. Kadakia (DIN: 07135977), who holds the office of Director up to the date of ensuing AGM, as an Independent Director not liable to retire by rotation and to hold the office for the period of 5 years with effect from 30th March, 2015 till 29th March, 2020. Mr. Rajesh B. Jain was appointed as the Chief Financial Officer and a Key Managerial Personnel of the Company w.e.f 1st April, 2015. Mr. Paresh Kumar P. Jain (DIN: 05159799) and Mr. Mahip Agarwal (DIN: 03509204), who were liable to retire by rotation and being eligible, but did not offer themselves for re-appointment at the Annual General Meeting, vacated the position of Director w.e.f 30th September, 2014. Mr. Jagdish J. Kothari (DIN: 00033271) Independent Director and Mr. Hasmukh A. Gada (DIN: 00033151), Whole-time Director & Chief Financial Officer of the Company demitted office as the Director with effect from 1st April, 2015. The term of Mr. Amrut P. Shah (DIN: 00033120) as the Managing Director of the Company and of Mr. Shantilal P. Shah (DIN: 00033182) as the Whole-time Director of the Company expired on 31st March, 2015. Subject to the approval of the Members in the ensuing AGM, the Board has re-appointed Mr. Amrut P. Shah (DIN: 00033120) as Managing Director of the Company and Mr. Shantilal P. Shah (DIN: 00033182) as Whole-time Director of the Company with effect from 1st April, 2015 for a term of three years. Therefore none of the Directors excluding the Independent Directors are liable to retire by rotation at the ensuing AGM. DETAILS OF DEPOSITS: During the year under review, the Company has not accepted any deposits within the meaning of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. Hence there are no details to be disclosed under Rule 8(5) (v) of the Companies (Accounts) Rules, 2014. DISCLOSURE UNDER SEXUAL HARRESMENT AT WORK-PLACE: During the year under review no complaints has been received by Company under The Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE: There are no significant material orders passed by the Regulators / Courts / Tribunal which would impact the going concern status of the Company and its future operations. Hence, disclosure pursuant to Rule 8 (5) (vii) of Companies (Accounts) Rules, 2014 is not required. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: Your Company has in place adequate systems of Internal Control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable Financial and Operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of internal policies. The Company has a well-defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down to ensure adequacy of the control system, adherence to the management instructions and legal compliances. The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES: Disclosures pertaining to remuneration and other details as required under Section 197(12) ofthe Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annexure-5 to this Report. In terms of the provisions of Section 197( 12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess ofthe limits set out in the said rules are not applicable to the Company as no Employees were employed during the year which crosses the limits given under the said rule. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND: During the year Company have transferred unclaimed dividend amount ofRs. 54,699/- pertaining to Financial Year 2006-07, to Investor Education Protection Fund on 29/11/2014. Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last AGM (i.e. 30/09/2014), with the Ministry of Corporate Affairs. STATEMENT CONTAINING SALIENT FEATURES OF FINANCIAL STATEMENTS OF SUBSIDIARIES: As on 31 "March, 2015 your Company has only one Wholly Owned Subsidiary viz. E-class Education System Limited. During the year under review your Company did not have any New Subsidiary neither did it have an Associate Company nor did it enter in to a Joint Venture with any other company. Pursuant to sub-section (3) of section 129 of the Act, the statement containing the salient feature of the financial statement of a company's subsidiary or subsidiaries, associate company or companies and joint venture or ventures is given as Annexure-4. CORPORATE GOVERNANCE: The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The Company has also implemented several best corporate governance practices as prevalent globally. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance. VIGIL MECHANISM: Pursuant to the requirement of the Companies Act 2013 and provisions of Listing Agreement applicable to the Company, your Company has adopted Vigil mechanism (Whistle Blower Policy) for satisfying the Company's Code of Conduct and Ethics, and particularly to assuring that business is conducted with integrity and that the Company's financial information is accurate. The reportable matters may be disclosed by the employees to the Management / Managing Director / Chairman ofthe Audit Committee. No complaint was received during the Financial Year 2014-15. During the year under review, no employee was denied access to the Audit Committee. HUMAN RESOURCES: Your Company treats its "human resources" as one of its most important assets. Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement. UNCLAIMED DIVIDEND: Your Company would like to bring to the notice of the shareholders that some of them have not claimed the dividends as per the under mentioned detail: The Board of Directors sincerely likes to remind the concerned shareholders to claim their dividends. The Board also likes to inform to the shareholders that any dividend remaining unclaimed for seven years gets transferred to Investor Education & Protection Fund as per Section 125 of the Companies Act, 2013. ACKNOWLEDGEMENT: Your Directors place on record their appreciation for employees at all levels, who have contributed to the growth and performance of your Company. Your Directors also thank the clients, vendors, bankers, shareholders and advisers of the Company for their continued support. Your Directors also thank the Central and State Governments, and other statutory authorities for their continued support. For and on behalf of the Board of Directors Sundaram Multi Pap Limited Sd/- AmrutP. Shah (DIN: 00033120) Chairman & Managing Director Date: 12th August, 2015 Place: Mumbai |