Annual Report (2011-2012) - Hindustan Newsprint Ltd. (HNL)

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CONTENTS Page

Board of Directors 02

Notice 03

Five Years Digest 04

Employment Cost Summary 05

Directors’ Report 06

Comments of the Comptroller and 22Auditor General of India

Replies to comments of the Statutory Auditors 24

Auditors’ Report 25

Balance Sheet 30

Statement of Profit & Loss 31

Cash Flow Statement 32

Notes forming part of the Financial Statements 34

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BOARD OF DIRECTORS

Chairman and : Shri M.V. Narasimha Rao

Managing Director

Directors : Shri S.N. Bhattacharyya: Shri S.K. Singh: Shri T. Balakrishnan IAS

(upto 31.10.2011)Air Cmde. Prodip Kumar Mukherjee VSM(From 20.02.2012)Shri Prakash P. Mugdiya(from 08.05.2012)

Company Secretary : Shri L.R. EkanathBankers : Central Bank of India

: Corporation Bank: State Bank of Travancore: HDFC Bank Ltd: State Bank of India: Indian Bank: Canara Bank: Federal Bank

Statutory Auditors : M/s. Cheriyan & CheriyanChartered AccountantsP.B No.43, Kallarackal buildingsBaker HillKottayam 686001Kerala

Cost Auditors : M/s. N.P. Gopalakrishnan & CoKochi

Legal Advisors : M/s. Menon & MenonKochi

: M/s. Menon & PaiKochi

Registered Office : Newsprint NagarKottayam DistrictKeralaPin Code - 686 616

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By order of the Board of Hindustan Newsprint Ltd.

(L.R.Ekanath) Company Secretary

Registered OfficeNewsprint NagarDistrict Kottayam

Dated this the 31st

day of October 2012

Enclosures:

Note:

1. A Member entitled to attend and vote, is entitled to appoint a proxy to attend and vote in his stead.A proxy need not be a Member of the Company.

2. Consent for shorter notice from all Members entitled to attend and vote at this meeting hasbeen obtained.

NOTICE

Notice is hereby given that the 29th Annual General Meeting of the Members of Hindustan Newsprint Limited will beheld at its Registered Office at Newsprint Nagar, Kottayam, Kerala, on Tuesday, the 6th November 2012 at 1200hrs, totransact the following business:-

ORDINARY BUSINESS

i) To receive, consider, approve and adopt the Directors’ Report and the Audited Balance Sheet as at 31st March2012 and Profit and Loss Account for the year ended on that date, together with the Report of the StatutoryAuditors thereon and also the Comments and Review of the Comptroller and Auditor General of India, underSection 619(4) of the Companies Act, 1956.

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FIVE-YEAR DIGEST

2011-12 2010-11 2009-10 2008-09 2007-08Production in MT 102450 104911 100546 108005 116111Sales in MT 102450 104911 120986 87476 116111Sales Turnover 31504 30166 28439 29767 29861Other Income 2489 1352 459 694 546Cost of good sold (exclu int & depn) 32066 29739 32902 27015 27358Gross Margin 1927 1779 (4004) 3446 3049Interest 368 62 67 134 59Cash Profit (+)/ deficit(-) 1559 1717 (4070) 3312 2990Depreciation & DRE 1154 1176 1229 1202 1180Profit /(Loss) before Tax 404 541 (5300) 2110 1810Provision for Tax (285) 38 (497) 846 656Profit /(Loss)after Tax 689 504 (4802) 1264 1154Equity 10000 10000 10000 10000 10000Reserves and Surplus 9903 9214 9175 13977 13884Deferred tax liability 2664 3017 3025 3245 3462Loans(excluding interest accrued) 3835 1367 0 3266 788Long-term 0 0 0 935 788Short-term 3835 1367 0 2331 0Gross Block 41916 41960 40632 40353 39596Capital Work in Progress 39 42 1861 1713 1277Net Fixed Assets(excluding 13707 14687 14530 15480 15923work in progress)Deferred revenue expenditure 0 0 0 0 0Current assets, Loans and 15455 15491 14228 21913 16177AdvancesCurrent Liabilities and Provision 7031 8545 8419 8618 5243Working Capital 8424 6946 5809 13295 10934Capital Emloyed 22131 21633 20339 28775 26857Net worth 19903 19214 19175 23977 23884RatiosGross margin to capital employed 0.087 0.082 (0.197) 0.120 0.114Cash Profit to capital employed 0.070 0.079 (0.200) 0.115 0.111P B T as a percentage of sale 1.28% 1.79% -18.63% 7.09% 6.06%Debt equity ratio 0.000 0.000 0.000 0.094 0.079No of employees 809 909 978 1036 1003

( Lakhs)

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EMPLOYMENT COST SUMMARY ( Lakhs)

For the Year ended 31/3/2012 31/3/2011 31/3/2010 31/3/2009 31/3/2008(A) Salaries and Wages, Ex-gratia etc..( Lakh)

a) Basic Pay, PP & NPA 2720.30 2,278.30 1,663.24 1210.41 1158.92b) NPA 3.11 2.79 3.40 0.90 0.90c) VDA & Dearness Pay 1,297.45 1,574.52 1,233.67 1451.19 861.22d) Salaries & Wages -Trainees 110.42 34.39 27.76 33.28 51.70e) HRA 153.81 159.75 116.89 94.14 61.80f) Other allowances like CCA,Shift Allowance,

Sp.Allowance Canteen Allowance,Steering Allowance, Washing Allowance,PTA, Hill Tract Allowance etc… 67.43 80.37 36.48 39.68 38.99

g) Conv.Reimburesement &Fixed Conv.Allowance 101.87 116.94 75.76 77.60 77.32

h) Tution Fee 7.07 3.83 1.89 1.98 2.35i) Overtime 383.27 263.54 174.24 180.12 146.67j) Leave Encashment 0.00 0.00 635.56 301.75 140.62

Sub Total (a-j) 4844.73 4514.43 3968.89 3391.05 2540.49Provision for pay revision 0 378.91 165.03 1246.95 421.32Salaries and wages incl.provision for pay revision 4844.73 4893.34 4133.92 4638.00 2961.81Ex-gratia for VRS Optees 0.00 0.00 0.00 0.00 0.00

Sub total(A) 4844.73 4893.34 4133.92 4638.00 2961.81(B) Employees’ Benefits ( Lakh)

a) Provident Fund and other Fund 476.39 410.34 365.55 330.00 252.25b) Gratuity 0.00 0.00 1,112.60 187.97 388.35c) Productivity Linked Incentive 0.00 63.67 44.51 96.08 192.12d) Township (Net after township income) 185.01 165.49 155.75 152.45 176.95e) Education 20.28 26.57 29.00 36.74 31.44f) Medical 236.97 249.43 223.17 202.52 187.40g) Leave Travel Concession 5.54 6.25 6.51 18.21 8.76h) Canteen subsidy (net) 168.39 103.01 117.67 95.81 90.66I) Others(Grants and Subsidies to Club, 173.16 111.75 65.73 100.02 80.60Uniforms and Liveries,Training exp.etc…)

Sub Total(B) 1265.74 1136.51 2120.49 1219.80 1408.53 Total(A+B) ( .Lakh) 6110.47 6029.85 6254.41 5857.80 4370.84

No.of Employees 809 909 978 1036 1003

Average salaries and wages etc.peremployee per annum ( ) 598854 538321 422691 447683 295295

Average cost of employee benefits peremployee per annum ( ) 156457 125029 216820 117742 140432

Average employment cost peremployee per annum ( )-including provision for pay revision 755311 663350 639511 565425 435727-excluding provision for pay revision 755311 621666 622636 445063 393771

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DIRECTORS’ REPORT TO THE SHAREHOLDERS

To

The MembersHindustan Newsprint Ltd

Gentlemen,

Your Directors present their 29th Annual Report with the Audited Statement of Accounts, Auditors’ Report andComments of the Comptroller and Auditor-General of India for the year ending March 31, 2012.

1 Operational and Financial Performance:

During the year under review, your Company achieved a production of 102450 MT, which is 102.5% of theinstalled capacity. During the year your Company sold 102450 MT with a sales turnover of 315.04 croreas against 104911 MT at a value of 301.66 crore during the previous year. The stock was NIL at the endof 31.03.2012.

The highlights of performance of your Company during Financial Year 2011-2012 together with correspondingfigures for the Previous Year are given below.

1.1 Production Summary:

1.2 Financial Results: Particulars 2011-12 2010-11

Sales Turnover 31504 30166Profit/(loss) before Interest Depreciation and Income Tax 1927 1779Interest 368 62Cash Profit / (Loss) 1559 1717Depreciation and Deferred Revenue Expenditure Write-off 1154 1176Profit/(Loss) before tax 404 541Provision for taxation (285) 38Profit/(Loss) after tax 689 504

2011-2012 2010-2011

ProductInstalledCapacity(MT)

Production(MT)

CapacityUtilisation (%)

Production(MT)

CapacityUtilisation (%)

Saleable Newsprint 100000 102450 102 104911 105Chemi Mech Pulp 60000 45695 76 48947 82Chemical Pulp 27400 15240 56 15070 55De-inked Pulp 33000 28866 87 28346 86

( Lakh)

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2. Contribution to the Exchequer:During the year under review, your Company contributed to the National Exchequer an amount of

650 lakh by way of duties and taxes, the break-up of which, together with the comparable figuresof the previous year, is given below:-

3. Marketing Activities:Newsprint market showed improvements during the fiscal 2011-12. This has helped your Companyto get orders from major publishers and sell entire production of 102450 MT and achieved zerostock by March 31, 2012. The net sales realization had also improved by about 2000 per MT ascompared to FY 2010-11. However, the steep increase in cost of production curtailed theprofit margin.

4. Fibre Development and Procurement Activities (FDP) :The FDP Department of your Company, besides fulfilling the requirement of fibrous raw materialsrequired for achieving the targeted production, is also carrying out the following activities for ensuringlong term fibre security for your company’s operations.

4.1 Captive Plantation:Captive Plantations were raised in an area of 3625 ha in the land allotted by Govt. of Kerala onlease.Out of this 327.291 ha was included in National Parks & Sanctuaries and 190.423 ha is comingunder the core area of Periyar Tiger Reserve. 365.97 ha plantations are under encroachment/threatof encroachment and litigation.The effective area of plantations with HNL at present is2669.6765 ha which are being maintained properly.During 2011-12 materials from an area of 133 hain Munnar and Kottayam Divisions were extracted. In these areas coppice crops will be maintainedor fresh plantations will be raised as per requirement. During 2011-12 an area of 119.60 ha wasreplanted in Thrissur, Munnar and Kottayam Divisions.

4.2 Encroachment in Captive Plantation Area:

Your Company has been facing severe encroachment problems in the Captive Plantation areaslocated in Munnar Division. The programme for extraction of material from Captive Plantationareas was disrupted by threat of encroachment and disputes regarding ownership of land betweenRevenue Department and State Forest Department. Even though the company has taken necessaryaction including moving the Hon’ble High Court of Kerala for obtaining back the possession and alsoinvoked the Magisterial powers of the Estate Officer of the Company for evicting the encroachers,our effort still remains to be materialized in ameliorating the issues in its entirety.

Contribution to the Exchequer:

Particulars 2011-12 2010-11

Customs Duty 128 80Excise Duty 5 8CST/VAT 344 372Rates & Taxes 40 44Corporate Income Tax 68 46Dividend Tax 65 0Total 650 550

( Lakh)

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4.3 Purchase at Gate Scheme (PaG)

Your Company has been procuring materials under the Purchase at Gate Scheme from 1998 onwards.Due to many reasons the availability of pulpwood under PaG Scheme was reduced. Mainly pulpwoodlike Eucalyptus, Acacia, Mangium, etc. have found an alternative market as they are being purchasedby plywood industries paying a very high price. The total quantity of pulpwood, mainly Bamboo,procured under Purchase at Gate Scheme during 2011-12 was 699 MT.

4.4 Research and Development Activities:

With a view to maximize the production of high yielding, disease resistant clonal plantlets suitable tothe climatic conditions of Kerala, your Company has established clonal multiplication units atBhoothathankettu and HNL, Newsprint Nagar with all required facilities like temperature and humiditycontrolled mist chambers, hardening units, open nurseries, etc. These two units together have acapacity to produce 12 lakh clonal plantlets per annum and are being utilised to produce clonalplantlets as per the requirement in the field.

With a view to find out alternatives to the traditional pulpwood species like Eucalyptus, Acacia,Mangium, etc., your company has introduced a new pulpwood species to Kerala. This species iscommonly known as African Mahagony, the scientific name of which is Khaya senegelensis. This iscommonly used as a pulpwood in West African countries but propagation through seeds is difficult.In order to overcome this, your company has developed a method of propagation through rootedcuttings utilising the existing Mist chambers. The cultivation of the species is still under trial and iffound suitable under Kerala conditions, your company will commence large scale production ofrooted cuttings.

4.5 Tissue culture Bamboo:

In view of the dwindling availability of Bamboo in the state resulted from gregarious flowering, yourcompany has introduced a scheme to increase the Bamboo resource in the State. This schemeenvisages promotion of cultivation of high yielding thornless Bamboo propagated through TissueCulture method. Instead of establishing a Tissue Culture lab in your company, which requires hugeinvestment, it was decided to make use of the facilities of Tissue Culture lab at NPM, a Unit of HPC.20,000 Nos. of Semi hardened Tissue Culture plantlets from NPM lab were brought to your Companyand the multiplication and hardening were carried out at HNL utilizing the mist chambers. About39,000 plantlets were sold/distributed among farmers through organizations. A Plantation using TissueCulture Bamboo Plantlets was raised in HNL Compound also. The balance plantlets are beingmultiplied again for next year planting programme and distribution.

5. Expansion cum Diversification Project (EDP)Earlier proposal for Expansion- cum-Diversification Project (EDP) could not be implemented due tosteep increase in project cost and was kept in abeyance. Subsequently, it was planned to move aheadwith EDP in a phased manner. In the first phase, your company had decided to go for a 300 TPD Deinking plant for manufacturing of writing and printing paper in our existing paper machine. To ourGlobal Notice Inviting Bids (GNIB) for the supply of main plant equipments, 3 parties submittedquotation and its evaluation and deviation discussion by HNL team and our consultant, M/s TataConsulting Engineers is in the final stage.

With regard to the power plant of appropriate capacity on BOOT basis, we had awarded workorder to M/s aXYKno capital Services for advisory services to select a Developer. The

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process is on. Various related work viz, Infrastructure valuation, Study by KSEB on the capability ofexisting power line for power evacuation, Environmental Clearance etc, are in progress.

To our GNIB for installation of a 1.7 lakh ton per annum capacity paper machine plant on supplier’scredit basis, there was no response and hence, considering the huge investment required theproposal was kept in abeyance. Instead, it is proposed to go for technological upgradation andmodernization of the existing paper machine for manufacture of writing and printing paper, inaddition to newsprint. Necessary clearances are being obtained for this proposal.

Upgradation of the existing 100TPD deinking plant to 150TPD for capacity enhancement as well asfor manufacturing WPP grade Pulp for use in Paper Machine has also been taken up. Two partieshave been prequalified and further tendering activities are in progress.

6. Quality and Environmental Management System and OHSAS CertificationYour company has been certified in Quality Management System under the standards ISO 9001:2008,Environmental Management System under ISO 14001:2004 and Occupational Health and SafetyAssessment Series (OHSAS 18001:2007). The system continues to be in place with regularmonitoring and surveillance audits conducted as per requirements of the Standards.

Your Company has also met the majority of the action points as per Charter on CorporateResponsibility for Environmental Protection (CREP).

7. Human Resources Development:As a visionary in development, your company has given great prominence to Human ResourcesDevelopment (HRD) by imparting need based training, interceding internal or external resourcepersons. This develops the key competencies of the employees that enable them to perform currentand future jobs through planned learning activities and enable them to manage change.

The growth and advancement needs of the employees for the fulfillment of the organization’sobjectives have been factored into the HRM policies of the Company.

Altogether, HNL has accomplished the task for the year under review by conducting 11 in-housetraining programmes in which 273 persons participated. In addition, the Company also conducted 11External programmes where about 18 persons participated in various training institutions of repute.

Type of Trainings No of Trainings Participants

In House 11 nos 273 persons External Programme 11 nos 18 persons

FACTS AND FIGURES (1st April, 2011 to 31st March, 2012):(a) Training Programmes:

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Topics No of Programmes Participants

Safety, First Aid & Fire, Preparedness etc 6 nos 147 persons

Energy Conservation/OHSAS & Environmental Mgmt System 8 nos 155 persons

(b) Awareness Programmes:

Trade 107 nos

Diploma 30 nos

VHSE 24 nos

Graduates 24 nos

(c) Apprenticeship Training (G.O.I/ Year) – 185 nos

Topics Participants

Vocational Training / Project Work 104 persons

Mill visit –Students / Teachers 101 Persons

(d) Educational Institutions request:

8. Industrial Relations and Employee Welfare Measures:As in earlier years, this year also the Company was very much successful in continuing the harmonious Industrial Relations. The participative work culture of the company through constantinteractions with the Trade Unions and their representatives at political levels together has facilitatedin having a very healthy industrial relations and ensuing zero maydays loss due to strike.

The Welfare measures offered to the employees and their dependents were also continued duringthe year. HNL as a socially responsible organization has been involved in various social activities likeproviding basic amenities like drinking water, school facilities, free medical check-up to nearbyvillages and villages near the plantation areas etc.

9. Employees’ Participation in Management:In order to inculcate a culture of participative management various Committees like WorksCommittee, Safety Committee, Canteen Committee, Grievance Committee and Bi-partiteparticipative fora like Shop Floor Councils and Plant Floor Councils are functioning successfully.The communication meeting between Unions and HoDs is also continued for better understanding.

Also more emphasis is given to Health and Safety aspects of employees with the OHSASCertification, thereby improving the Employees’ awareness in healthy food habits and life style.

10. Particulars of Employees:During the Financial year, the Company did not have any employee for the whole or part of the year,who is receiving an aggregate remuneration of 60 Lakh per Annum or 5 Lakh per month.Therefore, the particulars of the employees under Section 217 (2A) of the Companies (Particulars ofEmployees) Amendment Rules, 2011 may be treated as NIL.

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11. Position of employment of members of SC/ST/OBC, etc:The position of employment of the members of Scheduled Caste(SC)/ Scheduled Tribes(ST)/OBC/ Ex-Servicemen and Persons with Disabilities (PwD) as on March 31, 2012 is as perAnnexure I attached.

12. Position of women employees:The particulars of women employees in the Company as on March 31, 2012 are given inAnnexure-II attached.

13. Promotion of Official Language usage:The Company continued to implement the Presidential Directives on implementation of the OfficialLanguage (OL). As part of this, intensive training programmes, Official Language Month andPeriodical Workshops including High level OL Workshop and Hindi Computer Training Programmesfor the Employees /Officers of all categories were arranged. A number of competitions in Hindi wereconducted and the winners were suitably awarded. Apart from this 'All South India Conference’, OLManagement Programme for Senior Officials of the Company, All Kerala PG level Hindi EssayCompetitions' have already been organized as part of Special OL Programme. Inter Unit HindiCompetitions including OL Seminar has also been conducted in the Company. The Company hasalready been awarded for the Second time with the prestigious Regional Official LanguageShield of Dept. of Official Language, Ministry of Home Affairs, Government of India for excellentand effective implementation of Official Language Rules/Policies of Government of India. Besidesthis, in terms of excellent implementation of OL Rules/Policies of Government of India like previousyears this year also the Company has been awarded with prestigious Official Language Shieldof Town Official Language Implementation Committee (TOLIC), Kottayam. In the Joint OLCompetitions conducted by TOLIC, Kottayam this year two employees and a number ofschool going children of employees have also been awarded with prizes. Employees of the Companyas well as their school going children were awarded with cash prizes under different O.L. IncentiveSchemes. Company's website is already functioning in trilingual form i.e. Malayalam, Hindi &English. Multi user and Multi-lingual software Shreelipi Kairali is being used in different departmentsthrough internal network. Besides this in O.L. Section Unicode based computer is also used.

The Company has taken utmost effort for proper and effective implementation of AnnualProgramme of the Department of Official Language, Ministry of Home Affairs, Governmentof India.

14. Assistance/Recognition from Government of KeralaGovt. of Kerala during 2010-11 had fixed rates of raw materials like Acacia, Mangium and FloweredBamboo at a reasonable level, which were lesser than the rates of the previous year. Considering therequest of your Company, Govt. of Kerala was kind enough to retain the last year’s rates for Acacia,Mangium and Flowered Bamboo for 2011-12 also.

15. Energy Conservation:The particulars as required under Section 217(1) (e) of the Companies Act, 1956, the report onEnergy Conservation, Technology Absorption, etc, are given in Annexure –III of this report. Duringthe year, a number of energy conservation schemes were implemented.

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16 VigilanceYour Company is committed to the highest ethical practices in all its activities. In order to maintainthe values of ethics, probity and public accountability, a multi pronged strategy is adopted whichconsists of preventive, deterrent and punitive measures. To encourage a culture of honesty andtransparency in the company, the guidelines of CVC on leveraging technology are adhered to.Tender documents and contracts finalized are uploaded on the Company website regularly.Payments are made mostly through EFT/RTGS. Various system improvements and preventivevigilance activities are undertaken to sensitize employees about corruption and combat it inorder to ensure probity and integrity in the Organization so that the Company can gainthrough greater transparency and optimal management of resources. Training programmes areconducted to sensitize the officials regarding probity and honesty.

17. Corporate GovernanceIn order to have good corporate governance, your company is following good ethical practices in allof its dealings, covering employees, suppliers, Regulatory Authorities, Banks and FinancialInstitutions. By way of inclusion of Director responsibility statement in the Directors Report, theBoard reaffirms that proper systems are in place to ensure compliance of all laws. The Directorshave duly submitted proper disclosures of interests from time to time.

18. Corporate Social ResponsibilityYour Company, a premier Public Sector Undertaking has always given top priority for its obligation tothe society and the people in need especially those residing in nearby villages with special emphasisfor the surrounding areas of the mill. The Company continues its pursuit in making its presence insocial, economical, infrastructural, educational, cultural activities etc., development for augmentingthe quality of life of people in areas surrounding the mill and the society in general.

19. Directors’ Responsibility StatementPursuant to Section 217 (2AA) of the Companies Act, 1956, your Directors hereby state that:-i) in the preparation of Annual Accounts, the applicable accounting standards had been followed

along with proper explanation relating to material departures;ii) your 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 thestate of affairs of the Company at the end of the financial year and of the profit or loss of theCompany for that period;

iii) your Directors had taken proper and sufficient care for the maintenance of the adequateaccounting records in accordance with the provisions of this Act and for safeguarding the assetsof the Company and for preventing and detecting fraud and other irregularities;

iv) Your Directors had prepared the Annual Accounts on a going-concern basis.20. Auditors:

M/s.Cheriyan & Cheriyan, Chartered Accountants, Kottayam, were appointed as Auditors of yourCompany for the year 2011-12 vide Lr.No.CA.V/COY/CENTRAL GOVERNMENT,HNEWSP(1)/761 dated 13.09.2011 by the Comptroller and Auditor General of India, Govt of India, underSection 619 (2) of the Companies Act, 1956.

21. Comments of the Comptroller and Auditor General of IndiaThe comments of the Comptroller and Auditor General of India under section 619(4) of theCompanies Act 1956 on the Accounts of the Company for the year ended 31st March 2012 are givenin Annexure IV forming part of this report.

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22. Replies to the Comments of the Statutory AuditorsReplies to the comments of the Statutory Auditors are given in Annexure-V of this report.

23. Board meetingsThe Board of Directors of your Company held four meetings on June 30, 2011, September 21,2011, December 22, 2011 and March 30, 2012 during the year under review.

24. Audit CommitteeThere was no Audit Committee Constituted during the year under review.

25. Composition of Board of DirectorsShri. T. Balakrishnan IAS, on expiry of his tenure on 31.10.2011(date of superannuation) ceased tobe Director of the company.Air Cmde. Prodip Kumar Mukherjee VSM joined as Director(Finance) from 20.02.2012 for a periodof five years or till the date of his superannuation or until further orders whichever is the earliestpursuant to DHI Order No.8(28)/2010-PE-VII dated 19th December 2011.Shri. Prakash P. Mugdiya was appointed as Non-official Part-time Director for a period of threeyears vide DHI Order No.8(41)/2004-PE-VII dated 8th May 2012.Shri. M V Narasimha Rao, MD,HNL has been appointed as Chairman-cum-Managing Director ofHindustan Paper Corporation Ltd vide DHI Order No. 8(21)/2011-PE VII dated 23rd December2011 and joined the post on 09.02.2012 and continued to hold the additional charge of the post ofManaging Director of your Company till the new Managing Director is selected and positioned videDHI Order No.8(63)/2008-PE-VII dated 17th February 2012 and 21st June 2012.Your Directors placed on record their appreciation for the valuable guidance and assistancerendered by Shri T. Balakrishnan, IAS during his tenure as Director of the Company.

26. Business OutlookCRISIL Research estimated demand for newprint to grow by 9-10 per cent CAGR from 2.1million tones in 2011-12 to 3.4 million tones in 2016-17.Strong growth rates in Indian newsprint market unlike developed countries is onthe back of strong user industry growth driven by economic growth and the rise in literacy rates.The business outlook appears to be little satisfactory, as the cost of newsprint is rising in the domesticmarket due to increase in prices of fibrous raw materials and power & fuel as compared tointernational market, which remains stable. There is a strong demand fuelled by expansion plans ofnewspaper publishers. This expansion and increase in newspaper circulation gives an indication thatthere is unlikely to be any sharp reduction in newsprint price. Moreover the Indian middle class isfuelling an increase in newspaper readership, which in turn increases advertising revenue forpublishers and demand for newsprint. In the present scenario of growth in the newsprint industry, thedomestic newsprint manufacturing industry perceives a major opportunity for investment insustainable competitiveness. However your Company has taken relentless efforts to create stabilityin the changing market environment, and to provide platform for future growth.

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27. AcknowledgementYour Directors wish to place on record their sincere appreciation of the dedicated and enthusiasticefforts of the employees at all levels for the smooth conduct of business operations of yourCompany. Your Directors acknowledge the guidance and assistance received from the Departmentof Heavy Industry, Ministry of HI&PE, Ministry of Environment & Forests, Govt. of India, the Govt.of Kerala and the Holding Company, Hindustan Paper Corporation Ltd, from time to time. YourDirectors are also thankful to the Comptroller and Auditor General of India , the Statutory Auditorsand the Cost Auditors for their valuable suggestions and guidance. Your Directors are also grateful tothe Customers, Suppliers/Vendors and Bankers for their continued patronage and support.

M V Narasimha RaoChairman

Place : Newsprint NagarDate : 16-10-2012

For and on behalf of the Board of Directors ofHindustan Newsprint Limited

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A 164 2 Orthopaedically disabledB 64 0C&D 581 1 (a) Blind

2 (b) Deaf4 (c) Orthopaedically disabled

ANNEXURE-I TO THE DIRECTORS' REPORT

Position regarding employment of Scheduled Castes(SC)/Scheduled Tribes(ST),Ex-Servicemen/Other Backward Classes(OBC) etc. in the service of the Company as on 31.3.2012.

2. Representation of Ex-Servicemen

Total No. of Disabled % Dependent of % Other Ex- % Group posts filled up Ex-Servicemen Ex-Servicemen Service-

killed in action men

C 548 - - - 8 1.45

D 33 - - - - -

3. Representation of Persons with Disabilities(PwD)

1. Representation of SCs/STs/OBCs

A 164 6 3.65 0 0 21 12.80

B 64 1 1.56 1 1.56 15 23.43

C 548 40 7.29 1 0.18 140 25.54

D 33 6 18.18 0 0 10 30.30

%GroupTotal No. ofEmployees

No. ofSCs %

No. ofSTs

No. ofOBC %

Group Total No.of No.of Physically Category of Physically ChallengedEmployees Challenged

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ANNEXURE-II TO THE DIRECTORS’ REPORT

Representation of Female Employees in the service of the Company as on 31.3.2012

75000-90000 1 0 065000-75000 1 0 043200-66000 1 0 036600-62000 7 0 032900-58000 51 5 9.8029100-54500 15 3 20.0024900-50500 27 2 7.4020600-46500 16 1 6.2516400-40500 45 7 15.55Sub Total 164 18 10.97

B. SUPERVISORS

16400-40500 1 0 012600-32500 39 3 7.6911500-29600 24 0 0Sub Total 64 3 4.68

C. WORKMEN

12600-32500 38 7 18.4211500-29600 126 4 3.1710700-27600 223 26 11.6510000-25200 46 2 4.349500-24000 41 3 7.318900-22000 27 4 14.818500-20500 31 2 6.458200-19800 16 6 37.507900-18100 27 3 11.117700-17200 4 0 07500-16500 2 0 0Sub Total 581 57 9.81

GRAND TOTAL 809 78 9.64

Total No. ofNo. of Female Percentage

Employees Employees Pay Scale

A. EXECUTIVES

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ANNEXURE-III TO THE DIRECTORS’ REPORT

Particulars with respect to Conservation of Energy.

ENERGY CONSERVATION SCHEMES COMPLETED DURING 2011-12

1. Commissioning of Energy Efficient pump for River water intake. Annual savings of about0.12 Million units could be achieved by this.

2. Erection and commissioning of LT Motor and Variable Frequency Drive for 15 MW Turbo GeneratorCooling Water pump that was previously operating with an HT Motor. After converting from HT toLT an annual saving to the tune of 2.38 Million units was obtained on account of optimized pumping.

3. Installation of 10 numbers Flow meters in Compressed air distribution system and their integrationwith DCS for online flow monitoring.

4. Optimal usage of cleaning water at press section by stopping one of the two water pumps(851-265,266) and keeping it as stand-by. Savings achieved was about 0.1 Million Units of Electricityper annum.

5. Installation of Variable Frequency Drive for De-superheating pump in Utility Plant. This has resultedin the saving of about 0.07 Million Units of Electricity.

6. 451.19/20 Black liquor pumps eliminated by making direct flow of Black Liquor from E5 to E6 tank.Savings achieved was 0.044 Million Units of Electricity.

7. Installation of VFD for the Cooling water pump to L&T Evaporator. Annual savings achieved was tothe tune of 0.06 Million Units of Electricity.

ENERGY CONSERVATION SCHEMES TO BE IMPLEMENTED DURING 2012-13

1. Installation of Energy Efficient Pump and motor for Reject Dilution Pump in Paper Machine Plant.

2. Replacement of old and rewound motors with Energy efficient motors in phased manner.

3. Energy Efficient Pump installed to transfer 6% caustic from Causticizing plant to CMP Plant to betaken on line by carrying out necessary modifications in the pipeline.

4. Installation of chiller unit for the sealing water line of Paper machine vacuum pumps to improve theirefficiency and reduce power consumption.

5. Replacement of conventional asbestos sheets in plant areas with transparent sheets to enhancegreen lighting in some more areas.

6. Improvement of steam supply system by arresting leakages and replacing faulty steam traps.

18

A. CONSERVATION OF ENERGYFORM - A

Form for disclosure of particulars with respect to Conservation of EnergyPower & fuel Consumption

Sl.No. Particulars 2011-2012 2010-2011

1 Electricitya) Purchased Power(lakh KWH) 744.78 616.72

Total amount ( Lakhs) 2749.12 2310.34

Cost Per unit (Paise/KWH) 369 375

b) Own GenerationI) Thro' Diesel generator

Units (lakhs KWH) 0.0748 0.0916

Units per Litre of Diesel Oil 2.86 2.54

Duty paid on Power generation ( Lakhs) 0.0011 0.0011

ii) Thro' Steam Turbine/ Generators

Units(lakhs KWH) 993.92 1205.47

MT of input steam per MWH 6.7 6.4

Duty paid on Power generation ( Lakhs) 10.95 14.47

2 Coal (Steam Coal for Boilers)Quantity (MT) 137123 163011

Total Cost ( Lakhs) 5534.39 5585.03

Average rate ( /MT) 4036 3426

3 Furnace OilQuantity(KL) 1740 1943

Total Amount ( Lakhs) 619.74 584.39

Average rate ( /KL) 35617 30056

4 Other fuel/Internal Generationi) Clarifier Sludge (MT) 2806 2013

ii) Coconut shell/Cashew nut shell

Quantity in MT Coconut shell 0 0

Cashew nut shell 0 0

Total Cost ( Lakhs) 0 0

Rate/MT ( ) Coconut shell 0 0

Cashew nut shell 0 0

iii) Wood dust 8629 5674

19

CONSUMPTION PER UNIT OF PRODUCTION

Production details Unit Norm 2011-12 2010-11

Newsprint 52 GSM MT 0 0

Newsprint 49 GSM MT 112000 44551 47583

Newsprint 45 GSM MT 57899 57328

102450 104911

Consumption per Unit

Electricity KWH/MT 1600 1697 1737

Furnace Oil Litre/MT 18.5 16.98 18.43

Coal MT/MT 1.42 1.33 1.55

C.V of Coal (ADB) Kcal/Kg 4200 3990 4034

Others

Coconut shell/cashew shell MT/MT 0 0 0

Wood dust (MT) MT/MT 0 0.084 0.055

Clarifier Sludge MT/MT 0 0.027 0.0192

Water KL/MT 91 100 95.84

20

B. TECHNOLOGY ABSORPTIONFORM –B

Specific area in which R&D R&D works on the following areas were carried out:carried out by the company

Benefits derived as a resultof the above R&D

i) Optimisation of pulp furnishes to control linting of newsprint, interms of wax pick.

ii) Effective Residual Ink Concentration (ERIC) in Deinked pulp ofdifferent waste paper mix.

iii) Effect of mixing coal powder / wood chip dust in lime sludgereburning on quality of product lime.

i) The wax strength number 6A is found to be optimum for newsprintin which the linting of fibres are controlled.To achieve wax strength number 6A in newsprint to control lintingin printing presses, the optimal furnish is a blend of 15% CP + 50%CMP + 35% Deinked pulp, provided the use of retention aids @175 g/T of coagulant and 50 g/T of flocculant and little sizing with2 Kg/T of AKD is assured.

ii) Ink removal is maximum in flotation stage and not predominant inthe other process stages. Effective Residual Ink concentration(ERIC) in final Deinked pulp (DIP) made from 100% OldNewspaper (ONP) is high and brightness is low in comparison toDIP made from ONP mixed with Old Magazine (OMG).It is inferred that a minimum of 10% OMG mixed with ONP helpsto reduce the ERIC below 500 ppm and improve the pulp brightnessabove 51.0% ISO.

iii) High ash coal powder mix @ 2% and 5% with lime sludge yieldsproduct lime with high silica content. The wood chip dust mix atthe same rate with lime sludge doesn’t have any adverse effect onproduct lime quality. The mix of coal (imported) powder of low ashwith lime sludge, the product lime quality is comparable with normal.This indicates low ash coal powder as well as wood chip dust can beused as a partial replacement to reduce costly furnace oil consumption.

a) Development of pilot plant for making Calcium chloride from limesludge.

b) Study on effect of emulsification of furnace oil on reduction of fuelconsumption in limekiln.

c) Chemi-mechanical pulping characteristics of wood under weatherprotected storage in comparison to normal open storage.

a) Capital : Nilb) Recurring : 41.17 lakhsc) Total : 41.17 lakhsd) Total R&D expenditure as % of total turn over : 0.13

The efforts are limited to in-house R&D activities.

Future plan

Expenditure on R&D

Technology absorption,adoption and innovation

1

2

3

4

5

Form for disclosure of particulars with respect toTechnology Absorption and Research and Development

21

1

C. FOREIGN EXCHANGE EARNINGS & OUTGO

Activities relating to exports, initiatives

taken to increase exports, development of

new export markets and products and ser-

vices, and export plans.

As the export market is not remunerative,

at present, the company has no plans.

2 Total Foreign Exchange Outgo 1321.46 lakh

3 Foreign Exchange Earnings Nil

22

ANNEXURE-IV

23

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDERSECTION 619(4) OF THE COMPANES ACT, 1956 ON THE ACCOUNTS OF

HINDUSTAN NEWSPRINT, KOTTAYAM FOR THE YEAR ENDED 31 MARCH 2012

The preparation of financial statements of Hindustan Newsprint Limited, Kottayam for the year ended31 March 2012 in accordance with the financial reporting framework prescribed under the Companies Act,1956 is the responsibility of the management of the company. The statutory auditor appointed by theComptroller and Auditor General of India under Section 619(2) of the Companies Act, 1956 is responsiblefor expressing opinion on these, financial statements under Section 227 of the Companies Act, 1956 basedon independent audit in accordance with the auditing and assurance standards prescribed by their profes-sional body, the Institute of Chartered Accountants of India.

This is stated to have been done by them vide their Audit Report dated. I, on behalf of the Comptroller andAuditor General of India, have conducted a supplementary audit under Section 619(3)(b) of the CompaniesAct, 1956 of the financial statements of Hindustan Newsprint Limited, Kottayam for the year ened31 march 2012. This supplementary audit has been carried out independently without access to the workingpapers of the statutory auditor and is limited primarily to inquiries of the statutory auditor and companypersonnel and a selective examination of some of the accounting records. On the basis of my audit, nothingsignificant has come to my knowledge which would give rise to any comment upon or supplement toStatutory Auditor's report under Section 619(4) of the Companies Act, 1956.

For and on behalf of Comptroller and Auditor General of India.

(S. Rajani)PRINCIPAL DIRECTOR OF COMMERCIAL AUDIT AND

EX-OFFICIO MEMBER AUDIT BOARD

Place: ChennaiDated: October 16, 2012

24

ANNEXURE-V TO THE DIRECTORS’ REPORTREPLIES TO COMMENTS OF THE STATUTORY AUDITORS

Sl.No Comments Replies

1 An amount of 305.15 lakh is recognized underthe head ‘Other Non Operating Income as‘Unclaimed Credit Balance transferred to Income’.This includes an income of 154.15 lakh beingRoyalty payable to Government of Kerala and

151 lakh relating to Earnest Money Deposits,Security Deposits and Penalty of contractors with-held. There is no confirmation from Governmentof Kerala or the contractors waiving the amountand hence in our view this write back is unilateraland hence to that extent the income is overstated.

The liability towards Royalty payable to Govern-ment of Kerala was created during earlier years.On scrutiny during the Current Year these werefound to be not payable. Hence the same waswritten back. The liability towards phased penaltywas recovered as per Contract terms and has beentaken into account.. Regarding EMD/SD etc., itis confirmed that these were written back sincethere was no claim from the parties. Since thereis no liability of the company in this respect, thereis no overstatement of Profit.

2 Other miscellaneous income includesa) 747.50 lakh comprising amounts decreed bythe lower court to be realizable from IMRMetallurgical, Switzerland ( 575.01 lakh ) and Fastand Safe Transports ( 172.49 lakh) both of which,is contingent. In the case of IMRMetallurgical, Switzerland, no proceedings forrealization, as required by law are taken atSwitzerland. In the case of Fast and SafeTransports, an appeal against the lower courtverdict is pending in the High Court and it is notknown whether execution petition stated to be filedis admitted or maintainable. Hence in our viewrecognition of this amount as income would not bein compliance with AS 29. As such the income ofthe Company is overstated to that extent.

There is a clear Judgment of the sub-court in favourof HNL. Though M/s. Fast and Safe TransportersPvt Ltd. has filed an appeal before the Hon’bleHigh Court of Kerala against the said verdict, theHigh court has not stayed the execution of thedecree passed by the Sub-Court. Hence it is feltthat a decision will be forthcoming on our Execu-tion Petition without further delay. Moreover, byvirtue of para 32 of AS 29, when the realization ofincome is virtually certain, then the related asset isnot a contingent asset and its recognition is appro-priate. In this respect opinion from Legal as wellas from Chartered Accountant’s firm were alsoobtained.The case of IMR Metallurgical, Switzerland isalmost similar to the above. But since the vendoris from Switzerland, the execution petition has tobe made in Switzerland. The proposal to file anexecution petition has been cleared by the boardof Directors. Moreover, the Management hasrelied upon the opinion received from the Hon’bleJustice KT Thomas and Chartered Accountantfirm M/S. Krishna Iyer & Co. to recognize thisdecree from the Sub-Court, Kottayam in FY 2011-12.Considering all the aspects above, the Manage-ment decided to recognize the income in FY 2011-12 itself. Hence there is no overstatement of Profit

3 10 lacs being write back of a security depositfrom Mysore Paper Mills against an item ofmachinery spare given on loan basis during2000-01. Though he party has now confirmed thatthe said spare is being retained, regularization ofthe transaction as a sale is pending as such theincome is overstated to that extent.

This was actually a Spare Part given on loan toMysore Paper Mills during the year 2000-01 onsubmission of Security Deposit of 10 lakh.Subsequently, this was converted into a sale basedon the confirmation received from Mysore PaperMills.Sale of the spare has been confirmed by thebuyer. Only the regularization of transaction ispending. Hence there is no overstatement of Income.

25

AUDITORS’ REPORT TO THE MEMBERS OF HINDUSTAN NEWSPRINT LIMITED

1. We have audited the attached Balance Sheet of Hindustan Newsprint Limited Kottayam, as at31st March , 2012 and also the Profit & Loss Account and Cash Flow Statement of the Companyfor the year ended on that date both annexed thereto. These financial statements are theresponsibility of the Company’s Management. Our responsibility is to express an opinion onthese financial statements based on our audit.

2. We have conducted our audit in accordance with auditing standards generally accepted in India.Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.

3. i) An amount of 305.15 lacs is recognised under the head ‘Other Non Operating Income’as ‘Unclaimed Credit Balance transferred to Income’. This includes an amount of 154.15lacs being Royalty payable to Government of Kerala and 151.00 lacs relating to EarnestMoney Deposits, Security Deposits and Penalty of contractors withheld. There is noconfirmation from the Government of Kerala or the contractors waiving the amount andhence in our view this write back is unilateral and hence to that extent the income isoverstated.

ii) ‘Other Miscellaneous Income’ includes

a) 747.50 lacs comprising amounts decreed by the lower court to be realizable fromIMR Metallurgical, Switzerland ( 575.01 lacs) and Fast And Safe Transports( 172.49 lacs) both of which, in our view is contingent. In the case of IMR Metallurgical,Switzerland, no proceedings for realization, as required by law, are taken at Switzerland.In the case of Fast And Safe Transports, an appeal against the lower court verdict ispending in the High Court and it is not known whether execution petition stated to be filedis admitted or maintainable. Hence, in our view, recognition of this amount as income,would not be in compliance with AS 29. As such the income of the company is overstatedto that extent

b) 10.00 lacs being write back of a security deposit from Mysore Paper Mills against anitem of machinery spare given on loan basis during 2000-01. Though the party has nowconfirmed that the said spare is being retained, regularisation of the transaction as a saleis pending as such the income is overstated to that extent.

CHERIYAN & CHERIYANCHARTERED ACCOUNTANTS

P. B. No. 43, Kallarackal BldgsMiss East Road, Kottayam-686 001Tel. 2562527 / 2563449 / 2565571Fax-2563449, (Res) 2562495Branch: E 9, 4th Floor, Metro Plaza, MarketRoad, Near High Court, Kochi.Tel: 0484-6590233.E: mail: [email protected]

Partners:K. I. John. B. A., F. C. A.Iype John, B.com., F. C. A., I. S. A.(ICAI)Anu Iype John, B.com., F. C. A., I. S. A.(ICAI)

26

4. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Governmentof India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose inthe Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order to theextent applicable.

5. Further to our comments in paragraph 3 above and in the Annexure referred to in paragraph 4above, we report that:

i. We have obtained all the information and explanations, which to the best of our knowledgeand belief were necessary for the purpose of our audit;

ii. In our opinion, proper books of accounts as required by law have been kept by the companyso far as appears from our examination of those books;

iii. The Balance Sheet and Profit & Loss Account and Cash Flow Statement dealt with by thereport are in agreement with the books of account;

iv. In our opinion, the Balance Sheet & Profit &Loss Account dealt with by this report complywith the accounting standards referred to in sub-sec.(3C)of sec.211 of the CompaniesAct,1956;

v. Vide Notification No. GSR 829 (E) dated 21st October 2003, the Central Government haddirected that the provisions of section 274 (1) (g) of the Companies Act 1956, shall not applyto a Government Company. Accordingly, a report under section 227(3) (f) is not applicableto the company.

vi. Since the requirements under section 441A of the Companies Act, 1956 are not notified ason 31st March 2012, in our opinion, a report on whether the cess payable under section441A has been paid or not is not relevant for the Company as on the date.

vii. In our opinion, and to the best of our information and according to the explanations given tous, the said accounts give the information required by the Companies Act, 1956, in themanner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India;

(a) In the case of the Balance Sheet, of the state of affairs of the company as at 31st

March 2012, and

(b) In the case of the Profit & Loss Account, of the PROFIT for the year ended onthat date.

(c) In the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.

For CHERIYAN & CHERIYANChartered Accountants

CA. Iyepe John FCA, DISA (ICAI)M.No: 201430 (Partner)

FRN 000624S

Kottayam12th Sept., 2012

27

ANNEXURE TO AUDITORS’REPORT(Referred to in paragraph 4 of our Report of even date)1. a. The Company has maintained proper records showing full particulars, including quantitative

details and situation of fixed assets.

b. As informed to us, the Company has a routine of physically verifying all its Fixed Assets atleastonce during the year, which in our view is reasonable, having regard to the size of the companyand the nature of its assets. It was further explained to us that no material discrepancies werenoticed on such verification.

c. The company has not disposed off a substantial part of its fixed assets during the year.

2. a. As explained to us, the inventory has been physically verified during the year by themanagement. In our opinion, the frequency of verification is reasonable.

b. In our opinion and according to the information and explanations given to us, theprocedures ofphysical verification of inventory followed by the management are reasonable and adequate inrelation to the size of the company and the nature of its business.

c. In our opinion and according to the information and explanations given to us and on the basis ofour examination of the records of inventory maintained in the ERP system, the Company ismaintaining proper records of inventory. The discrepancies noticed on physical verification ofinventory as compared to the book records were not material and have been properly dealt within the books of account. (Limitations on scope of physical verification mentioned in the notes)

3 To the best of our knowledge and according to the information and explanations given to us, thecompany has neither granted nor taken any loans, secured or unsecured, to or from Companies, firmsor other parties covered in the register maintained under section 301 of the Companies Act,1956;

4. In our opinion and according to the information and explanations given to us, there are adequateinternal control procedures commensurate with the size of the company and nature of its businesswith regard to the purchase of inventory and fixed assets and with regard to the sale of goods. Duringthe course of our audit, no major weakness has been noticed in the internal control system.

5. In our opinion and according to the information and explanations given to us, the company has notentered into any contract or arrangement during the year, that need to be entered into a Register inpursuance of section 301 of the Companies Act, 1956 and hence the requirement under para (v) (b)is not applicable.

6. In our opinion and according to the information and explanations given to us, the company has notaccepted deposits from the public within the meaning of Section 58A and 58AA of the CompaniesAct,1956 and the Rules framed there under.

CHERIYAN & CHERIYANCHARTERED ACCOUNTANTS

P. B. No. 43, Kallarackal BldgsMiss East Road, Kottayam-686 001Tel. 2562527 / 2563449 / 2565571Fax-2563449, (Res) 2562495Branch: E 9, 4th Floor, Metro Plaza, MarketRoad, Near High Court, Kochi.Tel: 0484-6590233.E: mail: [email protected]

Partners:K. I. John. B. A., F. C. A.Iype John, B.com., F. C. A., I. S. A.(ICAI)Anu Iype John, B.com., F. C. A., I. S. A.(ICAI)

28

7. In our opinion, the Company has an internal audit system commensurate with the size and nature ofits business.

8. We have broadly reviewed the books of accounts and records maintained by the company pursuantto the rules prescribed by the Central Government for the maintenance of cost records under section209 (1) (d) of the Companies Act 1956 and are prima facie of the opinion that such accounts andrecords have been made and maintained. The contents of these accounts and records have not beenexamined by us.

9. a. According to the records of the Company and the information and explanations given to us, theCompany is regular in depositing the undisputed statutory dues including Provident Fund,Investor Education Protection Fund and other statutory dues with the appropriate authorities.

b. The details furnished by the company regarding disputed dues on account of Sales Tax, IncomeTax, Customs Duty, Wealth Tax, Excise Duty, Service tax, and Cess as applicable on 31st March2012 are given here below:

Name of the Nature of the Amount Period to which The forum where statute dues ( Lakh) the amount relates the dispute is pendingIncome Tax Act Demand under 5.06 Assessment Year 1995-96 Income Tax Appellate1961 Section 143(3) Tribunal

26.05 Assessment Year 1996-97 Income Tax AppellateTribunal

15.18 Assessment Year 2007-08 CIT (Appeals)



Sales Tax LawsKerala General KGST,CST, 138.09 1984-85 to Under various forumsSales Tax Act, Surcharge, etc. 1998-99 Assessment1963

KVAT Act, 2003 KVAT 12.59 2005-06 Assessment Appellate Tribunal

CST Act, 1956 CST 1211.76 2006-07 Assessment Modified Order aftergiving effect to hon.High court awaiting.

KVAT Act, 2003 KVAT 15.09 2006-07 Assessment Commissioner (Appeals)

KVAT Act, 2003 KVAT 15.89 2007-08 Assessment Commissioner (Appeals)

c. According to the information and explanation given to us there are no Disputed Statutoryliabilities not deposited.

10. The Company does not have accumulated losses in excess of fifty percent of its net worth. TheCompany has not incurred cash loss during the financial year covered by our audit and in theimmediately preceding financial year.

11. In our opinion and according to the explanations given to us the Company has not defaulted inrepayment of dues to financial institutions and banks.

29

12. In our opinion and according to the explanations given to us the Company has not granted any loansand advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion the Company is not a Chit Fund or a Nidhi/Mutual Benefit Fund/Society. Thereforethe provisions of clause 4(xiii) of the Companies (Auditor’s Report ) Order 2003 are not applicable tothe Company.

14. In our opinion and according to the information and explanations given to us, the Company is notdealing in or trading in shares, securities, debentures or other investments. Accordingly the provisionsof clause 4(xiv) of the Companies (Auditor’s Report) order 2003 are not applicable to the Company.

15. In our opinion and according to the information and explanations given to us the Company has notgiven any guarantee for loans taken by others from bank or financial institutions.

16. In our opinion and according to the explanations given to us the Company has not availed any termloans from banks during the year. Therefore the requirements under paragraph (xvi) of theCompanies (Auditor’s Report) order 2003 are not applicable to the Company.

17. In our opinion and according to the information and explanations given to us, funds raised on shortterm basis have not been used for long term investment.

18. As explained to us the Company has not made any preferential allotment of shares during the year toparties and Companies covered in the register maintained under section 301 of the CompaniesAct 1956 .

19. As explained the company has not issued any debentures during the period covered by our report.

20. During the period covered by our audit the Company has not raised money by public issues.

21. According to the information given to us, no fraud on or by the company has been noticed or reportedduring the course of our audit.



FRN 000624S

Kottayam12th Sept., 2012

30

BALANCE SHEET AS AT MARCH 31, 2012 ( Lakh)

I. EQUITY AND LIABILITIESI. EQUITY AND LIABILITIESI. EQUITY AND LIABILITIESI. EQUITY AND LIABILITIESI. EQUITY AND LIABILITIESShareholders' Funds

Share Capital 2 9,999.99 9,999.99Reserves & Surplus 3 9,902.92 9,213.84

Non-Current LiabilitiesDeferred Tax Liability (Net) 4 2,663.71 3,016.78Other Long Term Liabilities 5 1,172.46 1,098.89Long Term Provisions 6 54.96 81.18

Current LiabilitiesShort Term Borrowings 7 3,835.15 1,367.46Trade Payables, etc. 8 2,404.39 2,187.28Other Current Liabilities 9 483.28 3,601.69Short Term Provisions 10 308.17 1,389.06 TOTAL 30,825.03 31,956.17

II. ASSETSII. ASSETSII. ASSETSII. ASSETSII. ASSETSNON-CURRENT ASSETS

Fixed AssetsTangible Assets 11 13,706.82 14,683.52Intangible assets 11 - 3.45Capital Works in Progress 12 39.05 42.02Long Term Loans and Advances 13 1,624.44 1,736.04

CURRENT ASSETSInventories 14 7,203.46 6,909.34Trade Receivables 15 2,746.66 2,867.76Cash and Cash equivalents 16 406.39 3,504.28Short term Loans and Advances 17 2,692.14 1,513.70Other Current Assets 18 2,406.07 696.06

TOTAL 30,825.03 31,956.17Significant Accounting Policies 1The accompanying notes 2 to 30 are an integral part of the financial statements

AS AT 31-03- 2011NoteNo.

AS AT 31-03- 2012

L.R. EKANATH AIR CMDE P.K. MUKHERJEE VSM M.V. NARASIMHA RAOCompany Secretary Director (Finance) Chairman cum Managing Director

Ernakulam11-09-2012

As per our report dated 12th Sept., 2012

Kottayam



FRN 000624S

31

STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED MARCH 31, 2012

FOR THE YEAR FOR THE YEARNote ENDED ENDED No. 31-03-2012 31-03-2011

I Revenue from operationsSale of Newsprint (Net of usual trade discounts) 31,508.96 30,173.88Less: Excise Duty 4.64 7.80Net Sales 31,504.32 30,166.08

II Other Income 19 2,488.54 1,352.11III Total Revenue (I + II) 33,992.86 31,518.19IV Expenses :

Cost of Materials consumed 20 10,280.65 9,359.70Changes in inventory 21 (56.51) (17.05)Employee benefits expense 22 5,925.46 5,864.36Finance Costs 23 368.26 61.79Depreciation and amortisation expense 1,154.29 1,175.69Other Expenses 24 15,959.70 14,591.24Total Expenses 33,631.85 31,035.73

V Profit before prior period adjustments, exceptionaland extraordinary items and tax (III - IV) 361.01 482.46

VI Prior Period adjustments (Net) 25 43.36 58.87[(expense) / income]

VII Profit before exceptional and extraordinaryitems and tax (V + VI) 404.37 541.33

VIII Exceptional Items [(expense) / income] - -IX Profit before extraordinary items and tax (VII + VIII) 404.37 541.33X Extraordinary items - -XI Profit before tax (X - XI) 404.37 541.33XII Tax expense : 26

Current tax 68.36 45.74Deferred Tax (353.07) (284.71) (8.09) 37.65

XIII Profit for the period (XI - XII) 689.08 503.68XIV Earnings per equity share

Basic 0.65 0.44Diluted 0.69 0.50

Significant Accounting Policies 1The accompanying notes 2 to 30 are an integral part of the financial statements

( Lakh)


Ernakulam11-09-2012As per our report dated 12th Sept., 2012Kottayam



FRN 000624S

32

1. Cash flows from operating activitiesNet profit / (Loss) before tax 404.37 541.33Current depreciation 1,154.29 1,175.69Prior period Depreciation 3.45 -Interest Paid (Considered separately in Financing activities)Total interest 368.26 61.79Less: interest on income tax - 368.26 0.30 61.49

Increase / Decrease in InventoryOpening balance 6,909.34 6,106.19Closing balance 7,203.46 294.12 6,909.34 803.15

Profit/Loss on sale of Fixed Assets(Considered inInvesting activities) 6.72 3.65Interest received (Considered separately inFinancing activities) 157.85 217.30Less: Interest on income tax - 157.85 49.04 168.26

Income tax paid / refund (net) 66.63 376.61

Increase / decrease in Trade ReceivablesOpening balance 2,867.76 1,698.31Closing balance 2,746.66 121.10 2,867.76 1,169.45

Increase/Decrease in Non-Current and Current Assets(Other than Fixed Assets, Trade Receivables,Inventories and Income Tax paid in Advance)

Opening balance 3,586.33 4,210.84Closing balance 6,361.95 2,775.62 3,586.33 624.51

Lease rent received(Separately considered in Investing Activity) 22.25 22.25

Increase/Decrease in Non-current and Current liabilities(Other than Deferred Tax Liability,Short Term Borrowings, Provision for Income Tax,Proposed dividend and dividend tax)

Opening balance 7,893.21 8,678.00Closing balance 4,423.26 3,469.95 7,893.21 784.79

Prior Period Income without cash transaction 60.26 Total 2,058.19 6,786.42 Total 2,779.63 3,011.81

Net flow 4,728.23 Net flow 232.18

2. Cash flows from investing activitiesSale proceeds of fixed assets 26.35 3.89Net book value of Assets transferred to Assets for disposal 5.83 -Lease rent received 22.25 22.25Interest received 157.85 168.26Addition to fixed assets (net) 216.48 1,332.78

Total 212.28 216.48 Total 194.40 1,332.78 Net flow 4.20 Net flow 1,138.38

3. Cash flows from financing activitiesInterest paid 368.26 61.49Addition to Share Capital

Opening balance 9,999.99 9,999.99Closing balance 9,999.99 - 9,999.99 -

Dividend and Corporate Dividend Tax paid - 464.89Increase/Decrease in borrowings

Opening Balance 1,367.46 -Closing balance 3,835.15 2,467.69 - 1,367.46 1,367.46 -

Total 2,467.69 833.15 Total 1,367.46 61.49 Net flow 1,634.54 Net flow 1,305.97

Particulars 31st March 2012 ( lakh) 31st March 2011 ( lakh) Inflow Outflow Inflow Outflow

CASH FLOW STATEMENT

33

SUMMARYCash Flow from operating activities - 4,728.23 - 232.18Cash Flow from investing activities - 4.20 - 1,138.38Cash Flow from financing activities 1,634.54 - 1,305.97 -Total 1,634.54 4,732.43 1,305.97 1,370.56Net cash inflow / (outflow) (3,097.89) (64.59)Opening balance of cash and cash equivalents 3,504.28 3,568.87

406.39 3,504.28Add: Net Foreign exchange gain

Foreign exchange gain - -Foreign exchange loss - - - -

Closing balance of cash and cash equivalents 406.39 3,504.28

Note: (1) Cash and Bank Balances shown in the Balance Sheet (Note No. 16) are treated as cash and cash equivalents

(2) While preparing this cash flow statement dividend and corporate dividend tax are reckoned only at the time of actual payment

(3) Previous year's figures have been re-grouped wherever necessary to conform with this year's classification


Ernakulam11-09-2012


Kottayam



FRN 000624S

34

Notes forming part of the Financial Statements

NOTE 1 - STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

1. Land

Land is capitalized on the basis of actual cost of acquisition, including establishment charges of landacquisition agency and legal expenses incurred for acquisition. The cost of leasehold land is writtenoff over the period of lease.

2. Capitalization of Assets and Charging of Depreciation

i) Fixed Assets are stated at cost. The cost of acquisition of Fixed Assets is inclusive of freight,duties, taxes, incidental expenses and the cost of installation/erection as applicable.

ii) (a) Depreciation is provided for in the Accounts on Straight Line Method as per the provisionsof Section 205(2)(b) of the Companies Act, 1956 and in accordance with Schedule XIV ofthe Companies Act, 1956 and in accordance with the Guidance Note on Accounting forDepreciation in Companies issued by Institute of Chartered Accountants of India.Continuous Process Plants as defined in Schedule XIV of the Companies Act, 1956 areascertained on technical assessment by the Management.

(b) In the case of assets added /sold/discarded/transferred depreciation is charged onpro-rata basis.

iii) Fixed Assets identified for disposal are stated at Net Block Value or Net Realizable valuewhichever is lower and are shown separately in the financial statements under OtherCurrent Assets.

iv) Cost of Machinery Spares which can be used only in connection with an item of fixed asset andthe use of which is expected to be irregular is allocated to the fixed assets and depreciated tothe extent of 95% within a period not exceeding the useful life of the respective fixed asset.Individual spare parts costing 10 lakh and above only are capitalized and depreciated asmentioned above.

v) Borrowing cost relating to the acquisition/construction of qualifying assets are capitalized untilthe time all substantial activities necessary to prepare the qualifying assets for their intendeduse are complete. The qualifying asset is one that necessarily takes substantial period of time toget ready for its intended use. All other borrowing costs are charged to revenue.

3. Intangible Assets

Intangible Assets including Computer Software grouped under the head Fixed Assets in the Balancesheet are amortised over the useful life of the respective assets.

4. Valuation of investments

All investments are valued at cost.

35

5. Income from LeaseIncome from Assets given on lease is accounted for as the finance income on accrual basis.

6. Valuation of Current Assetsa) Stores, Spares, Materials under Inspection, Materials in Transit, Materials Issued on Loan and

Raw Materials are accounted for at lower of the cost on Weighted Average Method or NetRealisable Value.

b) Finished Goods are accounted for at lower of the cost on Weighted Average Method (excludingInterest and Administration Expenses) or Net Realisable Value.

c) Semi-finished Goods (Work-in-Process) are valued at variable cost on Weighted Average Method.

d) Standing Plantation grown on leasehold lands belonging to the Government of Kerala which areintended for captive use as raw materials included in the inventories are valued at cost representingmaterials, labour, insurance premia and other expenses that are incidental for the developmentand maintenance of the said plantations. Abnormal loss of plantations, if any, is charged to theProfit and Loss Account of the respective year. In the case of eucalyptus, at the time of firstextraction , 60% of the expenditure incurred for raising the plantation during the first two yearsalong with the maintenance expense incurred during the remaining years will be charged toRevenue and the balance 40% of the said expenditure will be charged to Revenue at the timeof extraction of the 2nd and 3rd rotation of shoots in equal proportion

e) Loose Tools are written off over a period of 5 years (20%) and accounted for atdepreciated cost.

7. Prepaid ExpensesExpenses up to 5,000/- in each case paid in advance for the following year(s) are charged off asexpenses of the Current Year.

8. Income and Expenses relating to prior periodAll incomes and expenses relating to prior period up to 5,000/- are being accounted for directly tothe respective heads of account instead of Prior Period Adjustment Account.

9. Retirement/Terminal Benefits/Bonus/Leave encashmenta) Company’s liability towards employee benefits such as gratuity, leave encashment, terminal

benefits etc. is provided for on the basis of actuarial valuation. Company makes gratuitycontribution to the approved gratuity fund under the Group Gratuity cum Life Assurance Schemeand leave encashment to Group Leave Encashment Scheme of the Life Insurance Corporationof India. The liability towards terminal benefits is un-funded.

b) Expenditure incurred on short term employee benefits including bonus, production incentive,medical benefits and other perquisites etc. are charged to the Profit and Loss Account at undiscounted amounts in the year in which services are rendered.

c) Expenditure on employee benefits in the nature of contributions to Provident Fund, FamilyPension Scheme, Employees State Insurance, Labour Welfare Fund etc. are charged to theProfit and Loss Account as and when contributions to the respective funds are due.

d) Liability for bonus is provided for as per the provisions of the Payment of Bonus Act 1965.

36

e) Ex-gratia paid to employees under Voluntary Retirement Scheme is treated as Deferred Revenueexpenditure and charged off to revenue in 5 equal instalments from the year of incurring theexpenditure

f) Actuarial gains or losses, as the case may be, in respect of valuation of employee benefits arecharged to the Profit and Loss Account.

g) Leave Travel Concession is considered as a short term employee benefit; hence the LTCbenefits are not accounted for on accrual basis.

h) The company has introduced Post Retirement Medical Benefit Scheme. As the company iscontributing equal amount of premium as paid by the ex-employee concerned in advance, thereis no additional liability in this regard recognized in the accounts.

10. Miscellaneous Expenditure (to the extent not written off or adjusted)Intangible items like VRS compensation paid, Expenses on Research phase of Internal Projectsincluding Project feasibility studies are written off in the Profit & Loss Account in the year in whichthey are incurred as required by the Accounting Standard 26 issued by the Institute of CharteredAccountants of India and other clarifications and guidance notes issued by the said Institute.

11. Classification of Expenditurea) Stores and Spares consumed

The cost of Stores and Spares used on repairs and maintenance is shown under Repairs &Maintenance Account classifying the same as under:

i) Plant & Machinery,

ii) Building,

iii) Vehicles,

iv) Other Assets,

v) Loose Tools written off.

b) Salaries and Wages

The expenditure on Salaries and Wages incurred for repairs and maintenance of Plant &Machinery, building, etc. is charged directly to “Salaries and Wages Account” and a foot noteindicating the amount thereof is given separately.

12. Claimsa) The claims for capital subsidy are accounted for on cash basis.

b) Claims against Railways/Insurance Companies are stated at the amount for which claims areexpected to be settled.

13. Foreign Currency Transactionsa) Realised gains or losses on foreign exchange transactions are recognised in the Profit &

Loss Account.

b) Foreign Currency liabilities are stated at foreign exchange rates prevailing at the year end.

14. Provisions, Contingent Liabilities and Contingent Assetsa) Provisions (other than trade payables and accruals) as mentioned in the Accounting Standard

37

29 issued by the Institute of Chartered Accountants of India are accounted for and disclosed tothe extent practicable in the manner laid down in the said Accounting Standard.

b) Contingent Liabilities disclosed in the Notes forming part of the Accounts comply with AS 29 tothe extent practicable.

c) Company has not recognized any Contingent Asset.

15. Basis of Accountinga) The Accounts of the Company are prepared under the Historical Cost Convention as a going

concern on accrual basis except for Scrap, Interest on Income Tax and Rent & ElectricityCharges received from Township which are accounted for on cash basis.

b) Income from Sale of Newsprint is accounted net of Excise Duty, Cess, Sales Tax and Discounts.

c) Accounting Policies not referred to otherwise are consistent with generally accepted AccountingPrinciples.

38


NOTE 2NOTE 2NOTE 2NOTE 2NOTE 2SHARE CAPITAL As at 31-03-2012 As at 31-03-2011

Authorised :

10,00,00,000 (10,00,00,000)Equity Shares of 10/- par Value 10,000.00 10,000.00

Issued, Subscribed & Paid Up :9,99,99,900 (9,99,99,900) Equity Shares of 10/-par value fully paid up 9,999.99 9,999.99

Total 9,999.99 9,999.99

Rights, Preferences and Restrictions attached to equity SharesThe Company has only one class of shares referred to as Equity Shares having a par value of 10/-per share. Each holder of Equity Shares is entitled to one vote per share.

The company declares and pays dividend in Indian Rupees. The dividend when proposed by theBoard of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the company the holders of equity shares shall be entitled to receive any ofthe remaining assets of the company after distribution of all preferential amounts. However, no suchpreferential amounts exists currently. The distribution will be in proportion to the number of equityshares held by the shareholders.

During the year there was no change in the number of shares outstanding at the beginning and at the endof the year.

The details of shares held by the holding company Hindustan Paper Corporation Ltd as on March 31,2012 is as under:

9,99,99,900 Equity Shares of par value 10/- each (Previous Year 9,99,99,900 Eq Shares of 10/-)The following shareholders hold more than 5% of the shares

Name Percentage of holding As at 31-03-2012 As at 31-03-2011

Hindustan Paper Corporation Ltd. 100 9999.99 9999.99

NONONONONOTE 3TE 3TE 3TE 3TE 3RESERVES & SURPLUS As at 31-03-2012 As at 31-03-2011

Capital Reserve 11.22 11.22General Reserve 1,187.23 1,187.23Surplus:

Opening balance 8,015.39 7,976.60Add : transfer from Profit & Loss Account 689.08 503.68

8,704.47 8,480.28Less : Proposed Dividend - 400.00Less : Corporate Dividend Tax - 64.89Surplus Closing balance 8,704.47 8,015.39

Total 9,902.92 9,213.84

( Lakh)

( Lakh)

39


( Lakh)NOTE 4NOTE 4NOTE 4NOTE 4NOTE 4DEFERRED TAX LIABLITIES (Net) As at As at

31-03- 2012 31-03- 2011

The major components of Deferred Tax Asset/Liability arising on account of temporary timing differenceis given below:Deferred Tax LiabilitiesDepreciation 2,847.07 3,081.45

2,847.07 3,081.45Deferred Tax AssetProvision for Employee Benefits 117.82 (15.08)Provision for Doubtful Debts/Claims 65.54 79.75

183.36 64.67 Total 2,663.71 3,016.78

( Lakh)NOTE 5NOTE 5NOTE 5NOTE 5NOTE 5OTHER LONG TERM LIABILITIES As at As at

31-03- 2012 31-03- 2011Advance from customers - 3.12Security deposits 1,172.46 1,095.77

Total 1,172.46 1,098.89

( Lakh)NOTE 6NOTE 6NOTE 6NOTE 6NOTE 6LONG TERM PROVISIONS As at As at

31-03- 2012 31-03- 2011Provision for Employee benefits 54.96 81.18

Total 54.96 81.18

( Lakh)NOTE 7NOTE 7NOTE 7NOTE 7NOTE 7SHORT TERM BORROWINGS As at As at

31-03- 2012 31-03- 2011

Secured

From Banks

Cash Credit Accounts 3,835.15 1,367.46

Total 3,835.15 1,367.46

The cash credit from banks is secured by hypothecation of Sundry Debtors, Stock of Raw Materials,Stock in Process, Finished Goods and Stores and Spares.

40


( Lakh)NOTE 8NOTE 8NOTE 8NOTE 8NOTE 8TRADE PAYABLES As at As at

31-03- 2012 31-03- 2011

Payable to Micro Medium & Small Enterprises 20.88 16.34

Other Trade Payables 2,383.51 2,170.94

2,404.39 2,187.28

Disclosure under Micro, Small and Medium Enterprises Development Act:Amount due to Micro, Small and Medium enterprises included under Trade payables is 20.88 lakh(Previous year 16.34 lakh). This amount is identified by the Management and relied upon by theAuditors.No interest had become payable either in the current year or in the previous year under Section 16 of theMicro, Small and Medium Enterprises Development Act, 2006 or under any contractual obligation.

( Lakh)NOTE 9NOTE 9NOTE 9NOTE 9NOTE 9OTHER CURRENT LIABILITIES As at As at

31-03- 2012 31-03- 2011Salaries and Other Benefits 352.81 608.00Statutory Dues Payable 46.51 179.94Other Payables 28.50 42.39Advance from Customers 55.46 1,482.57Related Parties

Holding Company - 1,288.79483.28 3,601.69

( Lakh)NOTE 10NOTE 10NOTE 10NOTE 10NOTE 10SHORT TERM PROVISIONS As at As at

31-03- 2012 31-03- 2011Provision for Employee Benefits

Leave Encashment 266.57 916.74Incentive - 7.43Terminal Benefits 41.60 -

Other ProvisionsDividend - 400.00Corporate Dividend Tax - 64.89

308.17 1,389.06

The Provisions for Gratuity, Leave Encashment and Terminal benefits to employees are made basedon the actuarial valuation on 31.3.2012.Liability for Leave Encashment as on March 31, 2012 as ascertained by the Actuary is 826.14 lakh(Previous year 1122.06 lakh). The funded balance as on 31.03.2012 is 559.58 lakh (Previous year

205.32 lakh). The balance amount of 266.57 lakh (Previous year 916.74 lakh) has been providedfor and shown under Provision for Leave Encashment.

41


NOTE 11- FIXED ASSETS G R O S S B L O C K ( A T C O S T ) D E P R E C I A T I O N N E T B L O C K

SL. PARTICULARS AS AT ADDITIONS SALES / TRSFR. AS AT UP TO FOR THE SALES / TRSFR. UP TO AS AT AS ATN O . 31 / 03 / 2011 DURING YEAR ADJUSTMENTS 31 / 03 / 2012 31 / 03 / 2011 YEAR ADJUSTMENT 31 / 03 / 2012 31 / 03/ 2012 31 / 03 / 2011

A. TANGIBLE ASSETS(i) PLANT & OFFICE1 Land 480.19 1.89 482.08 482.08 480.192 Buildings 4,882.31 2.43 (71.18) 4,813.56 2,337.79 49.12 (67.62) 2,319.29 2,494.27 2,544.523 Roads 111.59 111.59 52.00 1.90 53.90 57.69 59.594 Railway Siding 136.87 136.87 129.66 0.06 129.72 7.15 7.215 Plant & Machinery 31,001.72 201.89 (29.53) 31,174.08 21,197.75 1,001.13 (28.05) 22,170.83 9,003.25 9,802.486 Construction Equipment 152.81 (102.96) 49.85 114.09 0.97 (73.01) 42.05 7.80 38.727 Other Equipment 838.15 (26.91) 811.24 579.33 23.50 (25.57) 577.26 233.98 258.828 Durable Tools 34.03 34.03 21.49 1.45 22.94 11.09 12.549 Fans & Electricals 497.24 497.24 418.96 13.01 431.97 65.27 78.2810 Cooling Apparatus 95.48 95.48 56.84 3.20 60.04 35.44 38.6411 Office Equipment 414.87 9.44 (1.67) 422.64 329.78 12.47 (0.52) 341.73 80.91 85.0912 Vehicles 270.26 (28.29) 241.97 227.95 7.07 (26.88) 208.14 33.83 42.3113 Water Supply 377.96 377.96 345.78 10.03 355.81 22.15 33.6714 Drainage & Sewage System 78.06 78.06 74.15 74.15 3.91 3.9115 Furniture & Fixtures 107.30 107.30 92.18 1.67 93.85 13.45 15.1216 Effluent Treatment 896.04 896.04 606.41 7.39 613.80 282.24 289.63TOTAL 40,374.88 215.65 (260.54) 40,329.99 26,584.16 1,132.97 (221.65) 27,495.48 12,834.51 13,790.72

(ii) TOWNSHIP1 Land 167.28 0.70 167.98 167.98 167.282 Roads 27.50 27.50 12.88 0.46 13.34 14.16 14.623 Buildings 1,098.69 1,098.69 414.25 17.96 432.21 666.48 684.444 Furniture & Fixtures 36.79 36.79 28.98 0.75 29.73 7.06 7.815 Fans & Electricals 93.20 0.13 93.33 84.64 0.85 85.49 7.84 8.566 Air-Conditioners & Coolers 21.02 21.02 19.17 0.32 19.49 1.53 1.857 Water Supply 39.26 39.26 33.20 0.82 34.02 5.24 6.068 Drainage & Sewerage 13.75 13.75 13.07 13.07 0.68 0.689 Hospital Equipment 9.01 9.01 8.06 0.14 8.20 0.81 0.9510 Canteen Equipment 9.45 9.45 8.90 0.02 8.92 0.53 0.55TOTAL 1,515.95 0.83 - 1,516.78 623.15 21.32 - 644.47 872.31 892.80

Total Tangible Assets 41,890.83 216.48 (260.54) 41,846.77 27,207.31 1,154.29 (221.65) 28,139.95 13,706.82 14,683.52

B. INTANGIBLE ASSETS1 Softwares 69.08 69.08 65.63 3.45 69.08 3.45

GRAND TOTAL 41,959.91 216.48 (260.54) 41,915.85 27,272.94 1,154.29 (218.20) 28,209.03 13,706.82 14,686.97

PREVIOUS YEAR 40,631.85 1,332.78 (4.72) 41,959.91 26,101.73 1,175.69 (4.48) 27,272.94 14,686.97 14,530.12

( Lakh)

42

Notes forming part of the Financial StatementsNOTE 11 (Continued)

1. Fixed assets taken over from Hindustan Paper Corporation Ltd. have been accounted for at OriginalCost to Hindustan Paper Corporation Ltd. along with accumulated Depreciation. Depreciation onthese assets has been charged on the Original Cost.

2. Fixed Assets given on Lease:

a) Out of the land and buildings, 20 acres of land has been given to a Private Party on LicenseBasis for setting up of a Cement Plant and 9.51 acres of land including School Building hasbeen given to a Private School on Lease Basis.

b) Right to use a portion of the Railway Siding has been given to a Private Party on Leave andLicense basis.

3. The Fixed Assets do not include 62.19 lakh towards Desilication Plant on which the Company doesnot possess ownership but has right to use and for which a contribution of 58 lakh was receivedfrom CPPRI. However operating cost, if any, is being borne by the company. During the year thecost so incurred is Rs.Nil (Nil)

4. Estimated amount of Capital Commitments remaining to be executed and not provided for is 175.52 lakh (Previous Year 10.65 lakh).

5. On the basis of technical evaluation conducted by qualified, skilled trained and experienced personnelof the Company, the Management is of the view that during the financial year 2011-12 there existedneither any internal indication nor any external indication suggesting that any of the assets belongingto the Company are impaired as mentioned in the Accounting Standard 28 issued by the Institute ofChartered Accountants of India. Based on the above, the Company has not made any provision inits accounts for the year ended 31st March 2012 towards impairment of assets.

6. During the year an amount of 2.59 lakh paid to Ex-landowners has been capitalized.7. Based on Physical verification report, during the year fixed assets having a gross block of 116.56

lakh and net block at 5.83 lakh were removed from Fixed Assets and shown as fixed assets fordisposal under Other Current Assets (Note 18)

43


( Lakh)NOTE 12NOTE 12NOTE 12NOTE 12NOTE 12CAPITAL WORKS IN PROGRESS As at As at

31-03- 2012 31-03- 2011EDP Works

Capital Goods in Stock 14.07 14.23Other Works

Capital Goods in Stock-Others 24.98 27.79Total 39.05 42.02

( Lakh)NONONONONOTE 13TE 13TE 13TE 13TE 13LONG TERM LOANS AND ADVANCES As at As at

31-03- 2012 31-03- 2011Unsecured considered good

EDP WorksAdvance for Capital Expenditure 745.32 642.43Interest During Construction 102.48 102.48Other WorksAdvance for Capital Expenditure 4.05 5.58Security Deposits 570.16 709.18Employee advances and interest due thereon 202.43 276.37Unsecured Considered DoubtfulSecurity Deposits 30.56 30.56

1,655.00 1,766.60Less: Provision for doubtful deposits 30.56 30.56Total 1,624.44 1,736.04

The Provsion for doubtful deposit represent the following:

Deposits with Customs 10.24 10.24Advance to KFDC 20.32 20.32Total 30.56 30.56

( Lakh)NONONONONOTE 14TE 14TE 14TE 14TE 14INVENTORIES As at As at

31-03- 2012 31-03- 2011Raw Material 3,460.14 2,952.57Stores & Spare Parts 3,516.09 3,668.25Stores & Spare Parts - In Transit 26.11 7.11Stores & Spare Parts - Under Inspection 13.64 150.45Works in Progress 187.47 130.96

Total 7,203.46 6,909.34

44

Raw Material Inventory includes Stock of Plantation in Progress 1,315.06 lakh ( 1,310.04lakh)Normal wastage in inventories if any, within the parameter fixed by the management are charged to theconcerned heads of expense as and when it is consumed.

Physical verification in respect of Hardwood, Reeds, Bamboo, Other Forest Raw materials, Waste Paperand Coal was conducted by estimating the quantity of each stack/heap as physical weighment was notpractical.

The value of Plantation in Progress of 1315.06 lakh (Previous year 1310.14 lakh) is after transfer of 3.39 lakh (Previous year 6.42 lakh) to Claims Recoverable (Note 18 – Other Current Assets), which

is the amount of loss due to fire as estimated by the Surveyors of the Insurance Company, subject to finalsettlement of the claims.

Out of total area of 3625.173 hectares under Captive Plantation (land taken on lease from Government ofKerala), there is threat of diminution in the effective area as detailed below:

Location

( Lakh)

Nature of ThreatArea in

HectaresValue

disclosed1 Suryanelly / Munnar Encroachment by Local people and

litigations347.800 74.63

2 Marayoor Sandal Division Proposed site for National Park andSanctuary

327.291 141.21

3 Block-I Pamba Proposed Tiger Reserve 48.881 6.23

However, since then the majority portion of the material from block-I Pamba plantation has been extractedand the company is hopeful of extracting the standing crops either from the plantations or from the alternativesources to be allotted by Govt. of Kerala, no provision is made against Plantation in Progress.

( Lakh)NONONONONOTE 15TE 15TE 15TE 15TE 15TRADE RECEIVABLES As at As at

31-03- 2012 31-03- 2011Exceeding Six Months

Unsecured - Considered Doubtful 50.74 50.74OthersUnsecured - Considered Good 2,746.66 2,867.76

2,797.40 2,918.50Less: Provision for Doubtful Debts 50.74 50.74

Total 2,746.66 2,867.76

45

Name of the Party

Punnyabhoomi 9.96

Janamadhyama Prakasan 14.29

Vijayanand Printers 0.04

Nav Bharat Press 22.74Express-Thrissur 3.71

Total 50.74

The provision of 50.74 lakh relates to the following parties:

( Lakh)

( Lakh)NONONONONOTE 16TE 16TE 16TE 16TE 16CASH AND CASH EQUIVALENTS As at As at

31-03- 2012 31-03- 2011Cash on Hand 1.63 2.15Stamps on Hand 0.07 0.06Balance with Banks

In Current and Deposit Accounts 255.20 3,362.51Earmarked balances 149.49 139.56Total 406.39 3,504.28

The Earmarked balance of 149.49 Lakhs (Fixed Deposit of 139.56 Lakhs and Interest Accrued of 9.93 Lakhs ) relates to the amount invoked against Bank Guarantee from M/S IMR Metallurgical Resources

AG (Supplier of Imported Coal) on account of non- fulfillment of contractual obligation with regard toquality. The deposit has been made based on the direction given by the Hon'ble High Court of Kolkata. Thematter is subjudice.The corresponding liability is accounted for and grouped under Note 5 – 'Other Long Term Liabilities' asSecurity Deposit.

( Lakh)NONONONONOTE 17TE 17TE 17TE 17TE 17SHORT TERM LOANS AND ADVANCES As at As at

31-03- 2012 31-03- 2011Unsecured Considered Good

Advances to employees 347.17 88.92Advances to suppliers 1,251.08 872.48Related Parties 579.20 36.84Other Advances 114.95 113.99Tax Advance (Net of Provisions) 399.74 401.47

Total 2,692.14 1,513.70

46

Particulars As at As at31-03- 2012 31-03- 2011

Holding Company- Hindustan Paper Corporation Ltd. 513.37 -

Nagaland Pulp and Paper Company Ltd 65.83 36.84

Materials issued/received on loan to and from HPC group Companies have been adjusted by routing themthrough Current Accounts. The details of advances with related parties is as under:

Advance due from Employees include due from Directors Nil ( 7,000/-)Advance to employees includes 331.14 lakh paid as salary advance against Productivity Linked GainSharing Scheme and Performance related schemes which are pending finalisation.

( Lakh)NONONONONOTE 18TE 18TE 18TE 18TE 18OTHER CURRENT ASSETS As at As at

31-03- 2012 31-03- 2011

Interest Accrued and Due 21.55 81.26Prepaid expenses 56.86 45.26Fixed Assets for Disposal 8.98 3.15Claims recoverable 1,334.32 598.59Other Advances 1,105.03 127.66

2,526.74 855.92Less : Provision for doubtful claims 120.67 159.86

Total 2,406.07 696.06

Gratuity liability as on March 31, 2012 as ascertained by the Actuary is 2781.57 lakh (Previous year 3918.15 lakh) of which amount funded with the Life Insurance Corporation of India is 3886.60 lakh

(Previous year 4056.03 lakh). The amount paid to the Fund in excess of the obligation amounting to 1105.03 lakh (Previous year 127.66 lakh) is shown under Other Advances under Note 18 – Other

Current Assets. The amount of Other Advances recognized in the balance sheet is after giving effect oflimit as per para 59(b) read with para 61(g) of AS 15 (Revised) is Nil (Previous year 10.22 lakh).

The following items classified under Other Current Assets are considered doubtful of recovery and henceprovision is made:

Particulars( Lakh)Amount

Claim from Railways towards electrification charges 61.25

Customs Duty on Imported Coal 36.53

Others 22.89

TOTAL 120.67

( Lakh)

47


( Lakh)NONONONONOTE 19TE 19TE 19TE 19TE 19OTHER INCOME As at As at

31-03- 2012 31-03- 2011Interest Income 157.85 217.30Profit/(loss) on sale of Fixed Assets (6.72) 3.65Other Sales 124.35 150.57Lease Rent 22.25 22.25Other Non Operating Income 2,136.64 496.94Provision not required written back 54.16 461.40

Total 2,488.54 1,352.11

Other income includes the following:i) Recognised 172.49 lakh being the claim on M/s. Fast and Safe Transporters Pvt. Ltd. on suit

No.OS 462/2003 decreed in favour of the Company.ii) Recognised 575.01 lakh being the claim on M/s. IMR Metallurgical Resources AG on suit

No.OS 284/2008 decreed in favour of the Company.iii) 154.15 lakh being the write back of Royalty payable to Government of Kerala, 44.71 lakh

being the phased penalty retained from extraction contractors and 104.29 lakh being theEMD and Security Deposit

iv) Other Non Operating Income includes 822.36 lakh ( 154.34 lakh), being the excess gratutitypayment reversed.

( Lakh)NONONONONOTE 20TE 20TE 20TE 20TE 20COST OF MATERIALS CONSUMED As at As at

31-03- 2012 31-03- 2011

Wood 3,223.32 3,137.53

Reeds 836.12 717.29

Bamboo 1,144.94 1,469.03

Waste Paper 5,076.26 4,035.85

Total 10,280.65 9,359.70

( Lakh)NONONONONOTE 21TE 21TE 21TE 21TE 21CHANGES IN INVENTORY As at As at

31-03- 2012 31-03- 2011

Stock as on 1st AprilWork in Process 130.96 113.91

Stock as on 31st MarchWork in Process 187.47 130.96

Total (56.51) (17.05)

48

( Lakh)NONONONONOTE 22TE 22TE 22TE 22TE 22EMPLOYEES BENEFIT EXPENSE As at As at

31-03- 2012 31-03- 2011Salaries, Wages & Allowances 5,085.26 5,147.34Contribution to PF & Other Funds 476.39 410.35Productivity Linked Incentive - 63.67Employees Welfare Expenses 363.81 243.00

5,925.46 5,864.36

The Employee benefit expense includes 1912.13 lakh ( 1413.67 lakh)being remuneration and benefitfor repairs and maintenance

( Lakh)NONONONONOTE 23TE 23TE 23TE 23TE 23FINANCE COSTS As at As at

31-03- 2012 31-03- 2011

Interest on Cash Credit Account / Overdraft 354.93 61.49Interest - Others 13.33 0.30

368.26 61.79

( Lakh)NONONONONOTE 24TE 24TE 24TE 24TE 24OTHER EXPENSES As at As at

31-03- 2012 31-03- 2011

Stores and Spares Consumed 4,490.65 3,884.68

Power and fuel 8,953.13 8,528.29

Rent 5.61 6.53

Repairs and maintenanceBuildings 117.89 112.09

Plant & Machinery 1,270.10 810.76

Others 128.95 101.16

Insurance Premium 35.24 32.15

Rates and Taxes 40.33 44.22

Payment to Labour Contractors 332.54 250.41Other Expenses 585.27 820.95

15,959.70 14,591.24

Stores and Spares includes transit loss 12.85 lakh (previous year 39.84 lakh) and relating to coal.

49

( Lakh)NONONONONOTE 25TE 25TE 25TE 25TE 25PRIOR PERIOD EXPENSES As at As at

31-03- 2012 31-03- 2011Expenditure - Debits

Depreciation 3.45 -Others 3.97 1.45

7.42 1.45Income - Credits

Others 60.26- 60.26

Expenditure - CreditsSalary 50.79Others - 0.06

Adjustments -Debit(-)/Credit(+) 43.36 58.87

( Lakh)NONONONONOTE 26TE 26TE 26TE 26TE 26CURRENT TAX As at As at

31-03- 2012 31-03- 2011Income Tax 68.36 45.74Deferred Tax (353.07) (8.09)

(284.71) 37.65

50

NONONONONOTE 27 - Origin and briefTE 27 - Origin and briefTE 27 - Origin and briefTE 27 - Origin and briefTE 27 - Origin and brief histor histor histor histor historyyyyy

ANNEXURE ANNEXURE ANNEXURE ANNEXURE ANNEXURE TTTTTO NOO NOO NOO NOO NOTES ON FINTES ON FINTES ON FINTES ON FINTES ON FINANCIAL STANCIAL STANCIAL STANCIAL STANCIAL STAAAAATEMENTSTEMENTSTEMENTSTEMENTSTEMENTSFOR THE YEAR ENDED MARCH 31, 2012FOR THE YEAR ENDED MARCH 31, 2012FOR THE YEAR ENDED MARCH 31, 2012FOR THE YEAR ENDED MARCH 31, 2012FOR THE YEAR ENDED MARCH 31, 2012

The Company was incorporated as a Private Limited Company on 7th June, 1983, as a wholly ownedsubsidiary of Hindustan Paper Corporation Limited, with the main objective of taking over and acquiring thebusiness of the Kerala Newsprint Project, a unit of Hindustan Paper Corporation Limited, on a goingconcern basis in accordance with the directive of the Government of India.

NONONONONOTE 28TE 28TE 28TE 28TE 28The Revised Schedule VI has become effective from 1st April 2011 for the preparation and presentation offinancial statements. This has significantly impacted the disclosure and presentation made in the consolidatedfinancial statements. Previous year figures have been regrouped/reclassified wherever necessary tocorrespond to the current year’s classification/disclosure.

NONONONONOTE 29 - ContingTE 29 - ContingTE 29 - ContingTE 29 - ContingTE 29 - Contingent Liaent Liaent Liaent Liaent Liabilitiesbilitiesbilitiesbilitiesbilities

a) Particulars Current PreviousYear Year

a) Suits for enhancement of compensation filedby ex-land owners whose lands were acquired 20.00 20.00for Kerala Newsprint Mill.

b) Disputed Liability in respect of Sales Tax 1393.42 1393.42c) Value of Bills Discounted and Letters of 936.03 1028.85

Credit issued by Bankersd) Claim against the Company not acknowledged as debts

1 Claim for Service Tax by Service Providers 484.77 435.202 Claims made by Forest Department, GoK towards Lease rent 44.20 109.283 Others 247.01 390.59

e) Contingent Liability for Income Tax 151.87 80.43f) Disputed liability to KFDC 70.87 18.23g) Contingent Liability in respect of Bank 242.21 263.51

Guarantees issued favouring KSEB, MahanadiCoalfields Limited and East Coast Railways.

b) Service Tax pertaining to different contracts (other than specific claims amounting to 484.77 lakhstated above) are not ascertainable as there is no specific claim against the Company as on 31.3.2012.

c) Contingent Liability on all other pending civil, criminal, arbitration and quasi judicial proceedings arenot disclosed as the same is not quantifiable until final orders are received.

( in Lakhs)

51

NONONONONOTE 30 TE 30 TE 30 TE 30 TE 30 – – – – – AdAdAdAdAdditional Infditional Infditional Infditional Infditional Infororororormamamamamationtiontiontiontion

1. Details of Directors’ remuneration and perquisites

Particulars 2011-12 2010-11

a) Salaries & allowances 15.56 19.26

b) Contribution to Provident Fund 1.87 2.16

c) Other benefits – including medical reimbursementand leave travel concession 0.01* 0.03*

Directors, remuneration includes the remuneration of Director (Finance) from 20.02.2012 to31.03.2012.* Excluding facilities provided in Company hospital, the value of which is not readily ascertainable.The Directors’ has been allowed the use of Company Car for private journey up to a ceiling of 9000KMs per annum on payment as prescribed by Government of India.

2. Information of Goods Manufactured

Newsprint

2011-12 2010-11

Installed Capacity - Metric Tonne 1,00,000 1,00,000

Actual Production - Metric Tonne 1,02,450 1,04,911

( in Lakh)

3. Opening and Closing Stock of Goods produced for sale

Particulars Opening Stock Closing Stock Closing Stockas on 1-4-2010 as on 31-3-2011 as on 31-3-2012

Qty Qty Qty

(MT) Lakh (MT) Lakh (MT) Lakh

Newsprint NIL NIL NIL NIL NIL NIL

4. Sales by class of goods sold

2011-12 2010-11

Value ValueQty (MT) ( in Lakh) Qty (MT) ( in Lakh)

Newsprint 102450 31504.32 104911 30166.08

52

5. Indigenous and Imported Raw Materials, Components and Spare parts consumed.

2011-12 2010-11

Value ValueParticulars ( in % ( in %

Lakh) Lakh)

a) Value of Raw materials consumed

i) Indigenous 9646.96 94 9283.54 99

ii) Imported 633.69 6 76.16 1

10280.65 100 9359.70 100

b) Value of Chemicals, Stores andSpare Parts consumed.

i) Indigenous 11298.64 97 10450.07 97

ii) Imported 354.56 3 286.26 3

11653.20 100 10736.33 100

2011-12 2010-11Particulars in Lakh in Lakh

a) Value of Imports on CIF Basisi) Raw Materials & Consumables 885.84 86.23ii) Components and Spare Parts 359.03 326.70iii) Capital Goods 72.53 12.46

1317.40 425.39

b) Other Expenditure in Foreign Currencies(on cash basis)

i) Expenses on Foreign travel 0.00 0.00ii) Books, Periodicals, & Subscriptions 0.39 0.43iii) Expenses towards Technical Services 3.67 0.00

4.06 0.43c) Value of Exports on FOB Basis 0.00 0.00

6. Information on Imports, Exports & Foreign Currency / Exch. Transactions.

53

7. SOCIAL AMENITIES – EXPENSES & INCOME

2011-12 2010-11 Particulars ( in Lakh) ( in Lakh)

1. Medical facilities including reimbursement ofMedical Expenses and Salaries and Wages. 334.74 330.86

2. Maintenance of School & Educational facilities 20.27 26.57

3. Subsidies for Cultural & Social Activities 3.61 3.77

4. Repairs & Maintenance of Township(including Salaries & Wages) 119.52 80.08

5. Electricity for Township 19.18 lakh KWH(Previous Year 20.47 lakh KWH) 68.82 71.73

6. Water Supply to Township 19.34 lakh Cubic Metre(Previous Year 18.91 lakh Cubic Metre) 73.31 66.91

7. Canteen Expenses 168.39 103.04

8. Depreciation of Fixed Assets used for Social Amenities 21.32 22.08

9. Community Welfare Expenses 4.60 0.90

Total 814.58 705.94

Income - Township 97.96 75.31

Net Expenses 716.62 630.63

8. EXPENDITURE ON RESEARCH & DEVELOPMENT

Sl. 2011-12 2010-11No. Particulars ( in Lakh) ( in Lakh)

1. Employees Remuneration and benefits 33.26 25.34

2. Other items of expenditure 7.91 7.92

Total 41.17 33.26

54

9. DISCLOSURE AS PER AS-15 – EMPLOYEE BENEFITS

Defined Contribution Plan:Contribution to “Defined Contribution Plan”, recognized as expense for the year as under:

lakh lakh2011-12 2010-2011

Employer’s Contribution to Provident Fund 428.88 356.71Employer’s Contribution to Superannuation Fund 47.40 50.52

Defined Benefit Plan:The Employees’ Gratuity Fund Scheme managed by a Trust is a defined benefit plan. The presentvalue of obligation is determined based on actuarial valuation using the Projected Unit Credit Method.In this method the present value of the accrued service benefits is calculated after taking into accountthe usual decrements such as death, withdrawal etc. before normal retirement date and projectingthe qualifying salary upto the expected date of cessation of service as assumed in the probabilitydistribution of decrements stated above using actuarial techniques based on multiple decrement tableand related commutation functions. The obligation for Leave Encashment and Terminal Benefits arealso recognized in the same manner as Gratuity.

Gratuity Leave Encashment Terminal BenefitsReconciliation ofOpening and Closingbalances of DefinedBenefit Obligation:

At the beginning of theyearCurrent Service CostInterest CostActuarial (gain)/lossBenefits Paid

Defined benefit obliga-tion at the year end

2011-12 2010-11 2011-12 2010-11 2011-12 2010-11

lakh lakh lakh lakh lakh lakh

(a)

Fair value of plan assets at the beginning of the yearExpected Return on plan assetsActuarial Gain / (loss) on plan assetsEmployer contributionBenefits paidSettlement costFair value of plan assets at year endActual Return on plan assets

(b) Reconciliation of Opening and Closing balancesof Fair value of plan assets

Funded Funded Funded Funded Unfunded Unfunded

Funded Funded Funded Funded2011-12 2010-11 2011-12 2010-11

lakh lakh lakh lakh

Gratuity Leave Encashment

4056.03 3701.09 205.32 - 357.30 347.92 34.58 9.36

(4.98) 6.69 (12.94) (7.76)100.00 393.53 700.00 248.95

(621.74) (393.20) (367.39) (45.23)- - - -

3886.60 4056.03 559.58 205.32352.31 354.61 21.64 1.60

3918.15 4010.68 1122.06 1455.24 81.18 69.3988.68 104.51 139.14 237.75 - -

289.06 305.43 75.35 (1.78) 5.41 5.41(892.59) (109.27) (143.03) (346.04) 16.45 9.96(621.74) (393.20) (367.39) (223.11) (6.47) (3.58)

2781.57 3918.15 826.14 1122.06 96.56 81.18

55

(e) Investment Details

Investment in Group Gratuity Scheme of LIC ofIndia

Gratuity Leave Encashment Terminal Benefits

2011-12 2010-11 2011-12 2010-11 2011-12 2010-11


(d) Expenses recognised duringthe year

Current Service Cost

Interest Cost

Expected return on Plan assets

Actuarial (gain)/lossEffect of limit as per para 59(b)read with para 69(g) of AS-15 RNet Cost

88.68 104.51 139.14 237.75 - -

289.06 305.42 75.35 (1.78) 5.41 5.41

(357.30) (347.92) (34.58) (9.36) - -

(887.60) (115.96) (130.08) (338.28) 16.45 9.96

- 10.22(867.16) (43.73) 49.83 (111.67) 21.86 15.37


Funded Funded Funded Funded2011-12 2010-11 2011-12 2010-11100% 100% 100% 100%

Gratuity Leave Encashment


Fair value of plan assetsPresent value of obligation

Funded Funded Funded Funded Unfunded Unfunded2011-12 2010-11 2011-12 2010-11 2011-12 2010-11


3886.60 4056.03 559.58 - - -

2781.57 3918.15 826.14 1122.06 96.56 81.18

(1105.03) (137.88) 266.57 1122.06 96.56 81.18

- 10.22

(1105.03) (127.66) 266.57 1122.06 96.56 81.18

(c) Reconciliation of fair valueof assets and obligations

Funded status at the end of theFinancial year

Effect of limit as per para 59(b) readwith para 61(g) of AS-15 R

Amount recognised in Balance sheet

56

10. DISCLOSURE AS PER AS 18 - RELATED PARTY DISCLOSURE:

I 1. Name Hindustan Paper Corporation Limited2. Relationship Holding Company3. Transactions Purchase and Sale of goods, rendering and

receiving of services and finance.4. Volume of transactions NIL (P.Y. NIL)5. Other elements Dividend 400.00 lakh

(P.Y. 0.00 lakh)6. Amount outstanding as on the date of 513.37 lakh (Dr.)

Balance Sheet P.Y. 1288.79 lakh (Cr.)7. Amount written off or written back in

respect of debts due from or to HPC Nil

II Amount paid to Directors1. Salary 15.56 lakh (Previous Year 19.26 lakh)2. Provident Fund Contribution 1.87 lakh (Previous Year 2.16 lakh)3. Other benefits 0.01 lakh (Previous Year 0.03 lakh)


2011-12 2010-11 2011-12 2010-11 2011-12 2010-11

(f) Actuarial Assumptions

8.00% 8.00% 8.00% 8.00% 8.00% 8.00%

8.80% 9.40% 16.80% 9.40% - -

5.00% 5.00% 5.00% 5.00% 5.00% 5.00%

LIC 1994-96 LIC 1994-96 LIC 1994-96Mortality Rates Mortality Rates Mortality Rates

Discount rate (per annum)Expected Rate of Return onplan assets (per annum)

Rate of escalation in salary(per annum)


Mortality Rate

11. Disclosure as per AS 20Basic earnings per share is computed by dividing the net profit after tax by the weighted averagenumber equity shares outstanding during the period. Diluted earnings per share is computed bydividing the profit after tax by the weighted average number of equity shares considered forderiving basic earnings per share and also the weighted average number of equity shares thatcould have been issued upon conversion of all dilutive potential equity shares.

57

Earnings per Share (EPS) 2011-12 2010-11

(a) Net profit/(loss) after tax but before considering Prior Period items andexcess/short provision for tax of earlier years ( lakh) 645.72 444.81

(b) Prior Period adjustments ( lakh) 43.36 58.87

(c) Excess/short provision for tax of earlier years ( lakh) 0.00 0.00

(d) Net profit/(loss) attributable to Equity Shareholder (a)+(b)-(c)( lakh) 689.08 503.68

(e) Weighted average number of Equity Shares 99999900 99999900

(f) Basic & diluted Earnings per Share (a)/(e) ( ) 0.65 0.44

(g) Basic & diluted Earnings (considering taxation for Previous Years andPrior period items) per Share (d)/(e) ( ) 0.69 0.50

(h) Face Value of Equity Share ( ) 10.00 10.00

12. DISCLOSURE FOR AS 22 ( lakh)

(A) Deferred Tax Liabilities: 2011-12 2010-11

Tax Impact of difference between book value 2,847.07 3,081.45of Depreciable Assets as per Books of Accountsand Written Down Value for Tax purposes

(B) Deferred Tax Assets:

Tax impact of expenses/ provisions charged toProfit and Loss Accountbut allowance under Tax laws deferred. 183.36 64.67

(C) Net Deferred Tax Liability (A) – (B) 2,663.71 3,016.78

CALCULATION OF DEFERRED TAX LIABILITYAS ON 31ST MARCH,2012

Closing WDV of Fixed Assets as per Accounts 13,706.82 14,868.97

Less: Closing WDV as per Income Tax Act 4,944.33 5,410.40

Timing Difference of WDV 8,762.49 9,276.57

Add: Permanent Difference in the above difference

a. Loss on sale of Fixed Assets debited to P&L Account 6.72 -

b. WDV of Assets transferred to Assets for disposalbut not required to be reduced from IT Block(Cost 116.56 Lakh-Depn-110.73 lakh) 5.84 -

Timing Difference in assets 8,775.05 9,276.57

Tax effect of Timing Difference @ 32.445% (DTL) 2,847.07 3,081.45

58

13. DISCLOSURE AS PER AS - 29:

Opening Balance 7.43Provision made during the year -Sub Total 7.43Amounts paid during the year 7.43Excess provisions reversed -Closing Balance -

Provision for Production Incentive ( lakh)

CALCULATION OF DEFERRED TAX ASSETS

Balance as on 31st March :

1. Provision for Leave enhcashment 266.57 (127.66)

2. Provision for Terminal benefits 96.56 81.18

3. Provision for Doubtful Claims

(a) Greenworth Consulting - 62.08

(b) Railway Electrification 61.25 61.25

(c) Customs Duty on Coal 36.52 36.52

(d) Provisions created against miscellaneous claims in the current FY 22.89

4. Provision for Doubtful Deposits:(a) Deposit with Customs 10.24 10.24

(b) Advance with KFDC 20.32 20.32

6. Provision for Doubtful Debts 50.74 50.74

Total of expenses/ provisions charged to Profit andLoss Account but allowance under Tax laws deferred. 565.10 194.68

Tax effect of Timing Difference @ 32.445% (DTA) 183.36 64.67

Employee Benefits 117.82 (15.08)

Provision for Doubtful Debts/Claims 65.54 79.75

59

14. Segment ReportingThe Company operates only in one business segment of Paper comprising Newsprint and Writingand Printing Paper and has one Geographical segment ie. in Newsprint Nagar, Kottayam, Kerala.

15. There are no Debts, Advances or Loans due by directors or other officers of the company or any ofthem either severally or jointly with any other person or debts, advances or loans due by firms orprivate companies respectively in which any director is a partner or a director or a member.

16. General16.1 Set off has been made to the extent debit balances could be linked with corresponding

credit balances.

16.2 The amounts in the financial statements are presented in rupees unless otherwise stated.

16.3 Personal balances are subject to confirmation

16.4 No Provision has been made for Share of Expenses of the Holding Company.


Ernakulam11-09-2012


Kottayam



FRN 000624S

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Annual Report (2011-2012) - Hindustan Newsprint Ltd. (HNL)

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