National Plywood Industries Ltd

Your Directors are pleased to present the 44th Annual Report and audited accounts for the financial year ending on 31st March 2019.

Company's state of affairs

The revenue from operations recorded for the financial year ended 31st March, 2019 was RS.3,982.50 lakhs as compared to RS.4,216.39 lakhs in the previous financial year ended 31st March, 2018 marking a decrease in the turnover by 5.55%. Several new products have been added to the portfolio to improve profitability, especially in the economy range of plywood as well as in value added items. These products are in their nascent stage of introduction and require a longer period of time to see higher off-take that will then increase turnover. Expenditure on advertising and marketing was also negligible but is expected to increase significantly, especially for the promotion of the new products, which should also result in higher off-take.

The Company is striving towards obtaining a working capital infusion and shortening the cycle of cash flow with the introduction of advance payment discounts and other trade incentives so as to manage operations more smoothly. Additionally, capital investment in machinery at the Margherita unit has already been initiated and is further envisaged for FY 2019-2020. A change in product mix resulted in an increase in profits despite stabilization of revenue and is set to ensure better productivity that will lead to better yields.

Industrial relations

HR policies of the Company are aimed at attracting, motivating and retaining employees at all levels. Relations with employees continue to be cordial and harmonious in the Margherita Unit. However, employees at the Hosur Unit have raised exorbitant and unreasonable demands, and the Company is currently negotiating with them for a mutually accepted settlement. Normal functioning of the factory is presently suspended until the situation is resolved. Until then, the alternative arrangements for job work of its laminate products that the Company has made in both Gujarat and West Bengal are meeting the existing demands of the Company.

Change in the nature of business

There has been no change in the nature of the business of the Company.

Share capital

The paid-up equity share capital as on 31st March 2019 has increased from RS.5.85 Crores to RS.24.64 Crores by issue of preferential shares to promoters and outsiders. The Company has issued 41,00,000 share warrants of Rs.17/- each, on which RS.4.25 has been paid-up. The said share warrants will be converted to equity shares on receipt of balance payment after expiry of 18 months from the date of allotment i.e. 14.09.2018. Thereafter the warrants will stand cancelled after issuing of equity shares which will be listed subsequently.

Dividend

Due to nominal profit available for appropriation, the Directors are unable to recommend any dividend for the year under review.

Fixed deposits

During the year under review, the Company has not accepted deposits falling within the ambit of Section 73 of the Companies Act, 2013.

Particulars of loans, guarantees or investments

During the year under review, your Company has not given any loan/guarantee or provided any security and/or made any investments. Thus, compliance to Section 186 of the Companies Act, 2013 is not applicable.

Subsidiaries, joint ventures & associate companies

The Company has no subsidiaries, joint ventures or associate companies.

Depository system

The Company's shares are available for dematerialization with the National Securities Depository Ltd. (NSDL) and Central Depository Services (I) Ltd. (CDSL). 95.55% of the total shareholding of the Company was held in dematerialized form as on 31st March, 2019.

Directors

Malvika Periwal, DIN: 02927105, retires by rotation at the ensuing Annual General Meeting and, being eligible, offers herself for reappointment.

During the year under review, the office of Vijay Kumar Periwal, DIN 00705848, has been vacated under Section 1 67(1)(b) of the Companies Act, 2013 as on 30.05.2019 since he has not attended any board meeting of the Company held during a period of twelve months.

Corporate Governance

As required under Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter called "the Listing Regulations"), a separate report on Corporate Governance is also enclosed as a part of this Annual Report, duly certified by L.N. Malik & Co., Chartered Accountants, the Statutory Auditors of the Company, confirming compliance of the conditions of Corporate Governance .

Board meetings

During the year under review, five (5) board meetings were convened and held, the details of which are given in the Corporate Governance Report. The provisions of the Companies Act, 2013 and the Listing Regulations were adhered to while considering the time duration between two meetings.

Declarations by Independent Directors

The Company has received declarations from all the Independent Directors confirming that they meet with the criteria of independence as prescribed under Sub-Section (6) of Section 149 of the Companies Act, 2013 and under the provisions of the Listing Regulations.

Independent Directors are familiarized with their roles, rights and responsibilities as well as with the nature of the industry and business model through an induction programme at the time of their appointment as Directors as well as through presentations on the economy & industry overview, key regulatory developments, strategy and performance which are made to the them from time to time. The terms & conditions of the appointment of Independent Directors can be accessed in the Investor Relations tab on the Company website, www.nationalplywood.net.

Directors' Responsibility Statement

On the basis of compliance certificates received from the executives of the Company, subject to the disclosures in the annual accounts and also on the basis of discussions with the Statutory Auditors of the Company from time to time, the Directors make the following Directors' Responsibility Statement pursuant to Section 134(3)(c) of the Companies Act, 2013:

a) That in the preparation of the annual accounts for the year ended 31st March, 2019, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any

b) That such accounting policies have been selected and applied consistently and that judgment and estimates have been made that are both reasonable and prudent so as to give a true and fair view of the state of affairs and of the profit of the Company for the year ended on 31st March, 2019

c) That proper and sufficient care has been taken to maintain adequate accounting records in accordance with the provisions of the Companies Act, 2013, both for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities

d) That the annual financial statements have been prepared on a going concern basis

e) That proper internal financial controls have been in place and that the financial controls have been adequate and operating effectively

f) That proper systems to ensure compliance with provisions of all applicable laws have been in place, and have been adequate and operating effectively

Board evaluation

In compliance with the Companies Act, 2013 and Regulation 17 of the Listing Regulations, the Board adopted a formal mechanism for evaluating its performance as well as that of its committees and individual Directors, including the Chairman of the Board. This exercise was carried out through a structured evaluation process covering various aspects of the functioning of the Board, such as the composition of the Board and its committees, the experience & competency of the members of the Board, their performance of specific duties & obligations, contribution in meetings and otherwise, their independent judgment, governance issues, etc.

The evaluation criteria of the Company can be accessed in the Investor Relations tab of the website, www.nationalplywood.net.

Listing

The entire equity share capital amounting to RS.24,64,27,500 was listed with the Bombay Stock Exchange (BSE)

The Company has applied on 27th March, 2018 to the Calcutta Stock Exchange (CSE) for the voluntary delisting of the equity shares of the Company. The application for delisting from the CSE is in process.

Nomination and Remuneration Policy

The Board, on the recommendation of the Nomination & Remuneration Committee, has framed a policy for selection and appointment of Directors, senior management along with terms of their remuneration. The remuneration paid to the Directors and the senior management is as per the Remuneration Policy of the Company. Brief details of the Remuneration Policy are provided in the Corporate Governance Report.

The Nomination & Remuneration Policy of the Company can be accessed in the Investor Relations tab of the website, www. nationalplywood.net.

Internal financial control systems and their adequacy

The Company has adequate internal control systems and procedures designed to effectively control the operation of its various functions. The internal control systems are designed to ensure that financial and other records are reliable for the preparation of financial statements and for maintaining assets.

Based on deliberations with the Statutory Auditors to ascertain their views on the financial statements, including the financial reporting system and compliance with accounting policies and procedures, the Audit Committee was satisfied with the adequacy and effectiveness of the internal control systems followed by the Company.

Indian Accounting Standards (IND AS), 2015

The annexed financial statements comply, in all material aspects, with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Act [Companies (Indian Accounting Standards) Rules, 2015] and under other relevant provisions of the Act.

Risk management

The laying down of a Risk Management Policy and setting up of a Risk Management Committee, as prescribed under Regulation 21 of the Listing Regulations, 2015, is not applicable to the Company.

Corporate Social Responsibility (CSR)

As per the terms of Section 135 and Schedule - VII of the Companies Act, 2013, Corporate Social Responsibility (CSR) is not applicable to the Company.

Management Discussion and Analysis report

The Management Discussion and Analysis report, as required under the Listing Regulations, forms part of this report and annexed thereto under Annexure - 1.

Obligation of the Company to set up a complaints committee against the sexual harassment of women in the workplace

As per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, every company is required to set up an Internal Complaints Committee to look into complaints relating to sexual harassment at work place of any woman employee.

The Company has adopted a policy for the prevention of sexual harassment of women in the workplace.

During the financial year ended 31st March, 2019, the Company had not received any complaint of sexual harassment of any kind.

The Prevention of Sexual Harassment Policy of the Company can be accessed under the Codes and Policies section in the Investor Relations tab of www.nationalplywood.net.

Extract of annual return

The details forming part of the extract of the Annual Returns in Form MGT-9 are provided in Annexure - 3 of this Annual Report.

Related party transactions

As required by the Listing Regulations, 2015, related party transactions are placed before the Audit Committee for approval. Wherever required, prior approval of the Audit Committee is obtained on an omnibus basis for continuous transactions and the corresponding actual transactions become a subject of review at subsequent Audit Committee Meetings.

All related party transactions/arrangements entered into by the Company during the year were at an arm's length basis and in the ordinary course of business.

There were no materially significant related party transactions entered into by the Company with the Promoters, Directors, Key Managerial Personnel or other designated persons which conflicted with the interests of the Company as a whole. Hence, disclosure in Form AOC-2 pursuant to Rule 8(2) of the Companies (Accounts) Rules, 2014 has not been made. The details of related party transactions have been explained in the Notes on Accounts section of this report.

Vigil Mechanism/Whistleblower Policy

The Company has adopted a Vigil Mechanism/ Whistleblower Policy and has established the necessary steps for employees and Directors to report concerns about unethical behavior in the Company. No person has been denied access to the Chairman of the Audit Committee.

During the financial year under review, there were no cases pertaining to the Vigil Mechanism/ Whistleblower Policy.

The said policy of the Company can be accessed under the Codes and Policies section in the Investor Relations tab of www.nationalplywood. net.

Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Company

There are no significant and material orders passed by regulators or courts or tribunals which would impact the going concern status and the Company's future operations.

Statutory Auditors and Auditors' report

In terms of the provision of Section 139 of the Companies Act, 2013, M/s. L.N. Malik & Co., Chartered Accountants, New Delhi, were appointed as Statutory Auditors of the Company to hold office from the conclusion of the 43rd Annual General Meeting (AGM) on 27th September, 2018, for a further period of three years subject to ratification by the members at every Annual General Meeting. They 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.

The notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain qualifications, reservations, or adverse remarks.

Secretarial Audit report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules made thereunder, the Company has appointed M/S. Maheshwari R & Associates, (Membership No. 5126) Company Secretaries in Practice, to undertake the Secretarial Audit of the Company. The Secretarial Audit report for the financial year ended 31st March, 2019 is provided as Annexure - 2. There were no qualifications, reservations or adverse remarks given by the Secretarial Auditor of the Company.

Particulars of employees

None of the employees of the Company have drawn a remuneration during the year under review in excess of the prescribed limit under Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Hence, disclosure required under the said rule is not applicable to the Company.

Information required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in Annexure - 4 of this report.

Material changes and commitments affecting the financial position of the Company

No material change or commitment has occurred between the end of the financial year and the date of this report which affects the financial statement of the Company with respect to the reporting year.

Conservation of energy, technology absorption and foreign exchange earning and outgoing

A statement giving details of conservation of energy, technology absorption and foreign exchange earnings and outgoings in accordance with Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is provided in Annexure - 5 of this report.

Acknowledgement

The Directors place on record their sincere thanks and appreciation for the support and co-operation received from the financial institutions, banks, dealers, suppliers, customers, shareholders, various Government authorities and other business associates of the Company. The Directors also place on record their appreciation of the dedication and commitment of all employees in achieving and sustaining excellence in all areas of the business and look forward to their continued support.