Subam Papers Ltd

To

The Members

Your directors have pleasure in presenting their Nineteenth Annual Report on the affairs of the company together with the Audited Statement of Accounts for the year ended 31st March, 2023.

1. Financial Highlights

During the year under review, performance of your company as under:

(Rupees in Lakhs)

2. State of Company's Affairs and Future Outlook:

Your directors are happy to report 42.13% increase in the turnover of the company as compared to the previous year. Due to war in Ukraine, movement of containers for imports/exports was severely affected leading to congestion in the ports. This had escalated cost of both imported and domestic waste paper. As a result the profitability for the year under review was down by nearly 84% from the previous year level.

In order to harness the green energy and also to mitigate the steep hike in power cost, 4 MWH Offsite Solar Plant has been planned during the current fiscal. Your directors further add that already 1.70 MWH of Windmills are with the company and with the addition of the proposed Solar Power Plant, total Renewable Energy Resources Capacity will go up to 15.70 MWH.

Movement and demand for Paper board has improved and the profitability is better than that of the corresponding previous year. In this backdrop your directors are hopeful of better performance in the fiscal year 2023-2024.

3. Amounts Transferred to Reserves:

The company has not transferred any amount to General Reserves during the year.

4. Dividend:

The Company has not declared any dividend during the year under audit.

5. Change in nature of business, if any:

There is no change in the nature of business during the year.

6. Changes in Share Capital, if any:

There is no change in the share capital of the company during the year.

7. Material Changes between the date of Board report and end of financial year.

There have been no material changes and commitments 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.

8. Subsidiary Company:

The Company has one Wholly owned Subsidiary Company namely M/s Subam Agro Ventures Private Limited and one Partly Owned Subsidiary Company namely M/s.Subam Paper and Boards Private Limited and two Associate Companies namely M/s B.M.M. Paper Board Private Limited and M/s Saradhambika Paper and Board Mills Private Limited as on 31st March 2023 and the details are given in Annexure I - "AOC -1" and the Consolidated Financial Statements are annexed.

9. Statutory Auditor & Audit Report:

M/s Narayanasamy & Associates, Chartered Accountants, FRN 002401S, Statutory Auditors of the Company, hold Office till the conclusion of the Twenty Third Annual General Meeting. The Company has received a certificate from M/s Narayanasamy & Associates, Chartered Accountants, to the effect that their appointment made is within the limits prescribed.

10. Explanation to Auditor's Remarks:

1) The Auditor of the Company has pointed out in Note No.53 that confirmation of balances due to/due from the company has not been received which is being obtained.

2) The Auditor of the Company has pointed out in their report that gratuity payable to employees is not provided on actuarial basis as provided under the Accounting Standard No:15- Employee Benefits. In this connection it is stated that gratuity liability is computed as per the Payment of Gratuity Act 1972 and provision is made accordingly which is sufficient to cover the liability.

3) The Auditors of the Company have pointed out in their report that the unspent CSR fund of Rs.111.26 lakhs is not deposited in a special account in Bank as per the provision of Sub-Section (6) of Section 135 of the Companies Act, 2013. In this connection it is stated that the monies will be deposited or will be spent in the current Financial Year 2023-24.

4) The Auditors of the Company have pointed out in their report that short term funds of Rs.1030.21 lakhs have been utilised for long term applications. In this connection it is stated that due to increase in the cost of inputs, the profits of the company fell by nearly 84% from the previous year level which had resulted in such gap. The current year's position will be much better and the gap will be bridged with the retention of profits.

5) The Auditors of the Company have pointed out in their report that the guarantee provided to M/s. Subam Paper and Boards Private Limited (SPBPL) and advances given to M/s Subam Agro Ventures Private Limited (SAVPL) are primafacie prejudicial to the interests of the company in view of the fact that no guarantee commission/interest is charged for such guarantee/advance. In this connection it is stated that;

i) The company holds 99.88% shareholding of SPBPL and it has been planned to purchase balance 0.12% of the shares in the current fiscal in order to make it a fully owned subsidiary. In view of this no commission/ interest is charged on the guarantee/advance respectively.

ii) SAVPL is a Wholly Owned Subsidiary of our company and in view of this, no interest is charged on the advance to SAVPL.

11. Details of directors or key managerial personnel:

All the directors of the company, who retire at this annual general meeting and being eligible, offer themselves for reappointment.

12. Deposits;

The Company has not invited/ accepted any deposits from the public during the year ended March 31, 2023. There were no unclaimed or unpaid deposits as on March 31, 2023.

13. Conservation of energy, technology absorption, foreign exchange earnings and outgo:

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3}(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure II".

14. Corporate Social Responsibility:

In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of the Company have formed a Corporate Social Responsibility (CSR) Committee. The CSR Committee of the Board have formulated necessary CSR policy which is available with the Company. The CSR Committee have identified Rural Development, Education and Sports, Health Care, Water & Sanitation, Swatch Bharath Scheme etc. which are in accordance with Schedule VII of the Companies Act 2013. The Company has spent Rs.121.36 lakhs during FY 2022-23 towards the CSR obligation. The company couldn't spent the entire CSR obligation amounts within 2022-2023 as proper CSR projects could not be identified before 31st March 2023. The company has been pursuing the CSR projects and the entire backlog in CSR obligation will be cleared on or before the end of this current fiscal. The report on Corporate Social Responsibility (CSR) activities as prescribed under Companies (Corporate Social Responsibility Policy) 2014 is given in Annexure No.lll

15. Number of meeting of the Board:

The Board of Directors of the company met twenty three times on 6.4.22, 27.4.22, 11.5.22, 19.5.22, 30.5.22, 8.6.22, 6.7.22, 6.8.22, 17.8.22, 5.9.22, 19.9.22, 6.10.22, 17.10.22, 28.10.22, 4.11.22, 18.11.22, 30.11.22,11.1.23,12.1.23, 30.1.23, 21.2.23,17.3.23 and 29.3.23 during the year.

16. Directors' Responsibility Statement:

Pursuant to the requirement under section 134(3)(C) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of the annual accounts for the financial year ended 31st March, 2023, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) 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 as at March 31, 2023 and of the Profit of the company for that period;

(iii) 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;

(iv) the directors had prepared the annual accounts on a going concern basis; and

v) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

17. Particulars of loans, guarantees or investments under section 186:

Complete details of Loans, Guarantees and Investments covered under Sec 186 of Companies Act, 2013 is given in Annexure IV.

18. Particulars of Employee:

None of the employee has received remuneration exceeding the limit as stated in rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

19. Related Party Transactions:

The particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act 2013 for the Financial Year 2022-23 in the prescribed format - AOC 2 has been enclosed with the report as Annexure V.

20. Risk Management Policy:

The Directors of the Company continuously assess the risk the company is exposed to which in their opinion threaten the existence of the company and take suitable preventive steps to mitigate the risk. In the opinion of the directors there are no perceivable risks threatening the existence of the company.

21. Internal Financial Controls

In accordance with Section 134(5)(e) of the Companies Act, 2013, the company has Internal Financial Controls Policy by means of Policies and Procedures commensurate with the size and nature of its operations and pertaining to financial reporting. In accordance with Rule 8(5)(viii) of Companies (Accounts) Rules 2014, it is hereby confirmed that the Internal Financial Controls are adequate with reference to the financial statements.

22. Cost Records

The Company is required to maintain records as specified by the Central Government under subsection (1) of section 148 of the Companies Act, 2013 and accordingly such accounts and records are made and maintained.

23.lnternal Complaints Committee

Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 [14 of 2013] has been formed under the Chairmanship of Mr. P.Balagurunathan, Director of the Company and is active.

24.IBC 2016 Proceedings

The company has not filed any application under the Insolvency and Bankruptcy Code, 2016 during the year. One of the operational creditors of the company namely Exim Routes Pte Limited had filed a petition against the company under Section 9 of the Insolvency and Bankruptcy Code, 2016 vide petition No: 172/2022. The issue was amicably settled and the said operational creditor withdrew the petition on 6th October 2022.

25.Details of One-Time settlement(OTS)

The company has not made any application for OTS before any Bank, Financial Institution or any other lender during the year.

26.Secretarial Audit

Secretarial Audit as required under section 204(1) of the Companies Act 2013 is done by Mr. J.John Ohilvi, Practicing Company Secretary and his report is annexed as part of this report.

27. Acknowledgement

Your Directors take this opportunity to place on record their sincere thanks to M/s HDFC Bank Limited and M/s.lCICI Bank Ltd. for their continued assistance and co-operation and look forward to do the same also in the years to come.

Your Directors acknowledge the support and co-operation received from the employees and all those who have helped in the day to day management.