DIRECTORS' REPORT To, The Members, 1.Your Directors have pleasure in presenting their Twenty Seventh Annual Report on the affairs of the Company, together with the Financial Statements for the year ended 31st March, 2015. 2. DIVIDEND Your directors are pleased to recommend dividend of 10% 1/- Per Equity Shares of Rs. 10/- each) for the Financial Year 31st March 2015 (Previous Year Rs. 1.00 per Equity Shares of Rs. 10/- each). The dividend if approved and declared in the forthcoming Annual General Meeting would result a Dividend outflow of Rs. 80.75 Lacs and Dividend Distribution Tax of Rs. 16.44 Lacs aggregating of total outflow of Rs. 97.19 Lacs. 3. MANAGEMENT DISCUSSION AND ANALYSIS (i) Introduction The Company is involved in manufacturing activities comprising printing of capital market stationery, commercial printing such as text books, annual reports etc., security printing like MICR cheques, dividend warrants, shares and debenture certificates, railway tickets and coupons, computer stationery, telephone cards (scratch cards), smart cards, recharge coupons and note books etc. The Company is also engaged in packaging activities which include flexible packaging material of multi-layer film laminates, paper board mono cartons, liner carton, display cartons and outer corrugated boxes etc. There was some reduction in total income and profitability of printing division. However, overall profit margin was better. The performance of the Packaging segments during the year was not up to the mark inspite of increase in total income. This was mainly due to increase in raw material prices and other costs and very high currency movements during the year under Report resulting in vide circulation in raw material prices. The operating profit increased to Rs. 13.87 Crores in the year under report from Rs. 12.43 Crores in previous year. ii) Review of Operations The Turnover of the Company was higher at Rs. 211.31 Crores for the year as against Rs. 189.91 Crores in the previous year, registering an increase of 11.27%. (iii) Segment Wise Performance The Business of Company falls under two Segments viz. (a) Printing (b) Packaging (a) Printing Division The Turnover of Printing Division Increased by 18.73% compared to the previous year. In current year with increased capacity utilization, turnover of this division should improve further. (b) (i) Flexible Packaging: The turnover of Flexible Packaging Division of the Company increased by 9.04% compared to previous year. In current year with increased capacity utilization, turnover of this division should improve further. (ii) Paper Board Carton Division: The turnover of the Paper Board Carton Division increased by 7.55 % compared to previous year. The Company is keenly interested in inducting new technology aimed at upgrading its existing facilities to remain as one of the leading players in the printing and packaging industry. The Company's main thrust now is in paper and paper board related printing and packaging business to safeguard its business interest against any government legislation to curb plastic related packaging on the grounds of environmental pollution. The Company is committed to promote eco-friendly packaging for which it has installed automatic Board to Kraft fluting Lamination Machines. All these machineries and equipment's will help the Company to enhance its business opportunity in value added printing and packaging sector and in export market. (iv) Future Prospects / Outlook The present scenario of the printing industry is fragmented and is dominated by a few big players. The printing and packaging industry has lately improved after receiving initial shock of financial crisis in the year 2008-09. There is strong belief that this business improvement will sustain in the future too. The printing and packaging industry is a service provider and it is co-related with the GDP growth of the country as well as the growth of country's educational sector. Since the GDP growth of the country is pegged at 7%, it provides a lot of encouragement for growth of printing and packaging industry. In the present business scenario and with robust GDP growth, the Company is expecting 10% to 15% growth in its business, at least, for next three years. Besides, India's printing and packaging industry has upgraded to international standard in the last five years and thus provides a lot of export business opportunities for the sector. India is gradually establishing itself as a business sourcing hub for developed countries in printing and packaging materials. Initially, it was China and now India is competing with that country in this sector. Today, the printing and packaging industry export growth is significant compared to last five years. Orient Press has also increased its share of business in exports and will continue to do so in the future. We expect at least 10% growth in this field. Orient Press is constantly upgrading its technology to cater to this market and we expect that in three years our 25% to 30% earnings will be from the export sector which today stands at 20.92%. Exports are growing by 10% and your company is upgrading its technology to cater to this market. Your Company has also received the "Export House" status from the Govt. of India for its consistent export performance. (v) Industry Structure Though the printing and packaging industry is one of the biggest employers in the country, the nature of the industry is not organized and it has not been termed as an "Unorganized Industry" by the Government of India. The number of players in our industry is close to 1,30,000 units ranging widely from the highly organized sector to a very small proprietary units. Due to this diversified structure of the industry, growth and profitability are affected by unhealthy competition. The packaging industry enjoys continuous growth in demand year after year, necessitating large investments for technology up-gradation and automation of manual operations. However fragmented nature of the industry, consequent unhealthy competition put pressures on margins, increasing payback periods for investments. As demand from the larger customers is consistently increasing, it is expected the organized segment will secure larger market share and better margins. (vi) Opportunities and Threats (a) Opportunities Scenario for future opportunities is bright. In the case of printing segment, the enactment of RIGHT TO EDUCATION, by the Parliament, much larger and increasing allocation of budgetary resources by the Central and State Governments, demand for text books and note books is robust. With government change at center, activities in financial sector have increased and in turn this should help to revive IPO market. Government is determined to introduce new legislation to curb food adulteration and enforce higher standards of safe and hygienicpackaging. This will result in greater opportunities for the entire packaging industry. Your Company is geared up to meet this challenge and is planning to expand its production capacity in the packaging field to capitalize on this new business opportunity. (b) Threats Uncertainty regarding new policies or rules to be enforced for use of plastics in packaging and their impact on the pattern of demand for various types of packaging. (vii) Risks and Concern Adverse or sudden changes in policies of environmental protection affecting use of plastics in packaging, international market conditions for petrochemicals affecting raw material prices and unstable demand scenario affecting export volumes and realizations are risk factors which can impact growth and profitability of the industry and your Company. (viii) Internal Control Systems and their Adequacy In our opinion there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to the purchase of stores, raw materials, plant and machinery, equipment and other assets and for the sale of goods as well. However the Company is in the process of introducing more systems to strengthen its internal controls. (ix) Material Developments in Human Resources /Industrial Relations Front Directly/indirectly your Company is providing employment to more than 500 persons at various levels at its factories and the Corporate Office. Its industrial relations continue to remain cordial. 4. FINANCE The Company is availing its Working Capital Limits & Term Loanfrom Axis Bank Ltd. and Allahabad Bank. The company repaid all loan installments on time. During the year CARE awarded "CAREBBB" rating to Bank Loans of the company. This indicates investment grade of the company. 5. CORPORATE GOVERNANCE As required by Clause 49 of the Listing Agreement, a Corporate Governance Report is attached as Annexure F to this Report. Certificate of Auditors regarding compliance of the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement of the Stock Exchanges is also attached and forms part of this Report. 6. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND Pursuant to Section 125 of the Companies Act, 2013 the Company shall transfer unpaid/unclaimed dividends and unclaimed repayment and interest on fixed deposit to Investor Education and Protection Fund of the Government of India when it will become due. The details including last date of claiming of unclaimed/unpaid dividend amount is given on the website ofthe Company viz. www.orientpressltd.com . 7. LISTING The Equity Shares continue to be listed on the BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE). Both these Stock Exchanges have nation-wide terminals and therefore, shareholders/Investors are not facing any difficulty in trading in the shares of the Company from any part of the country. The Company has paid annual listing fee for the Financial Year 2015-16 to BSE & NSE. 8. SHARE CAPITAL The paid up equity capital as on March 31, 2015 was Rs. 8,07,50,000. The Company has not issued Equity Shares with differential voting rights nor granted employee stock options nor sweat equity. The Company has not made provision for purchase of its own shares by employees or by trustees for the benefit of employees. The company received 16 claims for an aggregate of 1100 shares during the year under review. These unclaimed shares are held in a separate Demat account titled "Orient Press Limited - Un-claimed suspense account. 9. FIXED DEPOSITS Your company accepted fixed deposit from Members during the year under review. The details as below:- The Company had accepted deposits u/s 58A and 58AA of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975 as amended. On 1st April 2014 deposit balance was Rs. 632.60 Lacs which was fully paid during the year. Deposit accepted during the year Rs. 353.60 Lacs under Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. Your Company does not have any unpaid or unclaimed public deposits at the end of the year 31st March, 2015. Outstanding public deposits as on March 31, 2015 is Rs. 353.60 Lacs. The Company has been consistent in timely repayments of Fixed Deposits and does not fail to repay the deposit or part thereof or any interest thereon. 10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The Company has not given any loans or guarantees covered under the provisions of section 186 of the Companies Act, 2013. The details of the investments made by Company are given in the notes to the financial statements. 11. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman & Managing Director of the company. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. 12. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES As per the Companies Act, 2013, all companies having net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more or a net profit of Rs. 5 crore or more during any financial year are required to constitute a Corporate Social Responsibility (CSR) committee of the Board of Directors comprising three or more directors, at least one of whom should be an independent director and such Company shall spend at least 2% of the average net profits of the Company's three immediately preceding financial year. Accordingly, we spent Rs. 1,44,120/- towards our CSR activities in fiscal 2015. The Board could partly spend the amount recommend by the Corporate Social Responsibility committee. During the year under report the company could only spent Rs. 144120/- on CSR activities as company faced difficulties in undertaking activities included in CSR policy because as per the applicable Rules the CSR expenditure is required to be incurred on project/program mode and expenses incurred on one-off events would not be qualified as part of CSR expenditure. As the company could not find a suitable project, company contributed Rs. 51000/- to prime minister relief fund and Rs. 51000/- to swach Bharat kosh and spent Rs. 42120/- for medical relief camp at the year end. Our CSR committee comprises Shri Ramvilas Maheshwari (Chairman), Shri Rajaram Maheshwari and Shri Ghanshyamdas Mundra, (Members). The Committee is responsible for formulating and monitoring the CSR policy of the Company. CSR activities, as per the provisions of the Companies Act, 2013, may be undertaken by the Company through a registered trust or a registered society or making contribution to Prime Minister National Relief Fund and Swacch Bharat Kosh. Details about the CSR policy is available on our website, www.orientpressltd.com . The Annual Report on our CSR activities is appended as Annexure A to the Board's report. 13. ENERGY CONSERVATION , TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUT-GO (A) CONSERVATION OF ENERGY a) Company ensures that the manufacturing operations are conducted in the manner whereby optimum utilization and maximum possible savings of energy is achieved. b) No specific investment has been made in reduction in energy consumption. c) As the impact of measures taken for conservation and optimum utilization of energy are not quantitative, its impact on cost cannot be stated accurately. (B) TECHNOLOGY ABSORPTION Company's products are manufactured by using in-house know how and no outside technology is being used for manufacturing activities and does not have technical collaboration. Therefore no technology absorption is required. The Company constantly strives for maintenance and improvement in quality of its products and entire Research & Development activities are directed to achieve the aforesaid goal. 14. INDUSTRIAL RELATIONS During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels. 15. DIRECTORS AND KEY MANAGERIAL PERSONNAL Shri Prakash Maheshwari retire by rotation at the ensuing Annual General Meeting of the Company and, being eligible, offer himself for re-appointment. The Directors recommend for his re-appointment Ms. Vinita Chaparwal was appointed as an additional and Independent Director by the Board of Directors of the Company with effect from 21st March,2015. As per the provisions of Section 161 of the Companies Act, 2013 she holds this office upto the conclusion of forthcoming Annual General Meeting of the Company and therefore the Board recommends the appointment of Ms. Vinita Chhaparwal, as Independent Director under section 149 of the Companies Act, 2013 and clause 49 of the Listing Agreement in the ensuing Annual General Meeting to hold office for a term of five years from 21st March 2015 to 20th March 2020. Ms. Vinita Chhaparwal has given declaration that she meets the criteria of Independence as laid down under section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement. Shri Ravishankar Gopalan, an Independent Director submitted his resignation to the Company on March 31, 2015 due to preoccupation. The same was accepted by the Board in its meeting held on April 20, 2015. The Board hereby placed on records its sincerest thanks and gratitude for the invaluable contribution made by Shri Ravishankar Gopalan towards the growth and development of the Company during his tenure as a Director. The Chairman & Managing Director and Whole-time Directors of the Company were re-appointed by the Board of Directors in their meeting held on 27th September, 2014 for a period of 3 years subject to approval of Members in the General Meeting. Shri Ganeshmal Surana, Chief Financial Officer of the Company resigned w.e. f. 8th October 2014 and Shri Gopal Somani was appointed as Chief Financial Officer of the Company with effect from 1st October 2014. Ms. Meenakshi Anchlia appointed as Whole Time Company Secretary with effect from 23rd March 2015. 16. FORMAL ANNUAL EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit Committee, Nomination & Remuneration Committee, Corporate Social Responsibility Committee, Stakeholder Relationship Committee and Share Transfer Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. 17. NOMINATION AND REMUNERATION POLICY In accordance with section 178 of the Companies Act 2013 and clause 49 of the Listing Agreement, during the year, on the recommendation and approval of the Nomination and Remuneration Committee, the Nomination and Remuneration Policy of the Company was adopted by the company. The Company's Policy is available on the Company's website i.e. www.orientpressltd.com . The details of composition, terms of reference of the Nomination and Remuneration committee, number and dates of meeting held, attendance of the Directors and remuneration paid to them are given separately in the attached Corporate Governance Report forming part of the Boards' Report. 18. MEETINGS During the year, six Board Meetings and six Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. 19. DIRECTOR'S RESPONSIBILITY STATEMENT In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that: i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any. ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 profit of the Company for the year under review. iii) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. iv) The directors have prepared the annual accounts on a going concern basis. v) The directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. vi) The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. 20. NUMBER OF COMPLAINTS RELATING TO SEXUAL HARASSMENT IN THE LAST FINANCIAL YEAR AND PENDING, AS ON THE END OF THE FINANCIAL YEAR As for protection against sexual harassment, Orient Press Limited has formed an internal complaints committee under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, to which employees can write their complaints. Also the Company has sexual harassment norms in which it formalized a free and fair enquiry process with clear timeline. There are no cases of sexual harassment during the year under report. 21. VIGIL MECHANISM POLICY/WHISTLE BLOWER POLICY The Company has a Vigil Mechanism Policy / whistle blower to deal with instance of fraud and mismanagement, if any. In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility. The policy has been placed on the website of the company and available on Web Link: <http://www.orientpressltd.com/Policies.html> 22. AUDITORS & AUDITOR'S REPORT In the previous Annual General Meeting the appointment of Auditors of the Company M/S B.L. Sarda & Associates was made for a term of three years to hold office until the conclusion of the 29th Annual General Meeting of the Company. As per the provisions of Section 139 their appointment is required to be ratified in every General Meeting and therefore the Directors recommend their appointment for ratification. The observation made in the Auditors' Report read together with relevant notes thereon are self-explanatory and hence,do not call for any further comments under Section 134 of the Companies Act, 2013 23. SECRETARIAL AUDITOR Pursuant to provisions of section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company has appointed M/s. V K Mandawaria & Co., a Firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure B". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. 24. COST AUDITORS Under Companies (Cost Records and Audit) Amendment Rules, 2014 dated 31st December 2014 concluded that for the Financial Year 2014-15, the Cost Audit is not applicable on the Company and applicability on 'Plastic and Polymers and Papers' shall enforce with effect from 1st April 2015. 25. INTERNAL AUDITORS Pursuant to provisions of section 138 of the Companies Act 2013 and Companies (Accounts) Rules, 2014 the company has appointed "Sarda & Pareek" a firm of Chartered Accountants in practice to undertake the internal audit of the company. 26. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure C". 27. RELATED PARTY TRANSACTIONS None of the transactions with any of the related parties were in conflict with the company's interest. Suitable discloser as required by the accounting standard (AS-18) has been given in the notes to the financial statements. All related party contracts are negotiated on an arms-length basis and are in ordinary course of business. The related party transactions policy as approved by the Board is uploaded on the company's website www.orientpressltd.com . Particulars of contracts or arrangements entered with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2, is appended as "Annexure D" to the Board's report. 28. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197(12) read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been given in "Annexure E" to the Board's report. The information required pursuant to Section 197(12) read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable because company has not employed any employee drawing salary of Rs. 5, 00,000 per month or Rs. 60,00,000 per annum during the year under review. 29. ACKNOWLEDGEMENTS Your Company and its Directors wish to extend their sincere thanks to the Members of the Company, Bankers, State Government, Local Bodies, Customers, Suppliers, Executives, Staff and workers at all levels for their continuous co-operation and assistance. For and on behalf of the Board of Directors For Orient Press Limited (R. V. Maheshwari) Chairman & Managing Director DIN: 00250378 Place: Mumbai Date: 26th May, 2015 |