JK Paper Ltd

To the Members,

The Directors have pleasure in presenting the 63rd Annual Report along with Audited Financial Statements of the Company for the financial year ended 31st March 2024.

FINANCIAL RESULTS

DIVIDEND

The Board is pleased to recommend final dividend of RS 5.00 per equity share (50%) for the financial year ended 31st March 2024, subject to approval of members at the forthcoming Annual General Meeting and deduction of tax at source, as may be applicable. This is in addition to interim dividend of RS 3.50 per equity share (35%) declared and paid by the Board of Directors during the year. The total dividend outgo will be RS 143.99 crore.

RESERVES AND APPROPRIATIONS

The amount available for appropriation, including surplus from the year, stood at RS 2574.58 crore. The Directors propose this to be appropriated as under:

PERFORMANCE REVIEW

The year gone by marks a new phase for your Company as JK Paper formulated a new Vision which is 'To be a trusted industry leader enriching lives and creating a better future', while continuing to adhere to its Core values of Caring for People; Integrity including Intellectual Honesty, openness, Fairness and Trust; and Commitment to excellence.

The Company achieved highest ever sale of 7.94 lac Metric Tons (Previous Year 7.76 lac Metric Tons) during the year despite it being a challenging one. It further expanded its distribution network. Pricing pressure continued throughout the year across most of the categories due to increase in imports. Packaging Board grew by 12% during the year despite lower growth in FMCG category.

Availability of wood has been a major challenge this year resulting in substantial increase in input costs. This situation is expected to continue in the current year. International pulp prices were low for major part of the year, however, there has been an increasing trend in the last quarter. In order to alleviate this, Company stepped up its plantation activities to procure adequate raw materials by planting a total of around 11.6 crore saplings covering around 81,000 acres in the current financial year.

Corrugated Packaging business witnessed a huge volatility in kraft paper prices during the year resulting in shrinking of margins on account of lag in passing through impact. Commercial production of the new line at Ludhiana started in Q2 of 2023-24 and is in the process of ramping up.

On the financial front, the Company continues to remain healthy with positive cash flow generation because of good operating performance and prudent working capital management.

Your Company maintains it's leadership position in the market. People, brand loyalty, customer centricity, high operating efficiencies and thrust on plantation activities are the key success factors contributed to maintaining its leadership position in the Indian Paper Industry.

NEW PROJECTS AND ACQUISITIONS

Bleach Chemical Thermo-Mechanical Pulp (BCTMP)

To become self-sufficient in hardwood BCTMP for producing Packaging Board and address the issue of price volatility and availability, the Company is setting up a BCTMP Mill at Unit CPM, Songadh, Gujarat, having capacity of 125,000 ADMT per annum. Project is expected to be commissioned in next financial year 2025-26.

Acquisition of Manipal Utility Packaging Solutions Pvt. Ltd. (MUPSPL)

During the year, the Company acquired 100% equity shares of MUPSPL for cash consideration funded through internal accruals. Accordingly, MUPSPL has become a wholly owned subsidiary of the Company. MUPSPL, since renamed as JKPL Utility Packaging Solutions Pvt. Ltd., is engaged in the business of manufacturing of Folding Cartons, Corrugated boxes and Labels. The said acquisition is in synergy with long-term strategic objective of the Company and its subsidiaries in packaging business. This further consolidates the Company's position in packaging and conversion business.

CAPITAL STRUCTURE AND CREDIT RATING

During the year under review, there has been no change in the Authorised and Paid-up share capital of the Company. As on 31st March 2024, the Authorised Share Capital of the Company was RS 500 crore and Paid-up Share Capital was RS 169.40 crore.

The Company continued to have a prudent working capital management and operating efficiencies resulting in cash generation. During the year the Company has repaid Loans to the extent of RS 548 crore, which includes prepayment/ accelerated payments of RS 164 crore.

Your Company kept a close watch on domestic & global economic scenario and moved timely to use various forex and interest rate derivative structure to optimize the overall finance cost in an increasing interest rate scenario. CRISIL Ratings Limited (CRISIL) reaffirmed its rating on the Long term and Short term borrowing facilities. Current Long Term Rating is CRISIL AA/Stable, Short Term Rating is CRISIL A1+ and Fixed Deposit is CRISIL AA/Stable.

India Ratings and Research (Ind-Ra) has reaffirmed its rating for Current Long Term Rating and Short term borrowing facilities. Current Long Term Rating is IND AA/Stable, Short Term Rating is IND A1 + and Fixed Deposit Rating is IND AA/Stable.

The long-term Credit Rating of The Sirpur Paper Mills Ltd., subsidiary of the Company, has upgraded from AA-/Positive to AA/Stable and reaffirmed its Short Term rating IND A1+ .

COMPLIANCE WITH SECRETARIAL STANDARDS

The applicable Secretarial Standards issued under Section 118 of the Companies Act, 2013 ('the Act') have been complied with.

AWARDS AND RECOGNITIONS

Our commitment towards Safety & Environment, Quality & Operational Excellence, Sustainability and Corporate Social Responsibility initiatives continue to garner appreciation from various industry chambers and social bodies. Some of the prominent accolades and awards received during the year are as follows:

Unit JKPM:

- "Atmanirbhar Factory Award" 2022-23, "Gold Medal for Excellence in Manufacturing" 2022-23 and "National Awards for Manufacturing Competitiveness" 2022-23 by International Research Institute for Manufacturing (IRIM), Mumbai.

- Golden Peacock Award for Energy Efficient Unit - 2023.

- "24th National Award for Energy Management" by CII, Hyderabad, Telangana.

- "23rd Annual Greentech Environment Award 2023" by Greentech Foundation.

- "India Green Manufacturing Challenge (IGMC) Winner Award 2023" by International Research Institute for Manufacturing (IRIM), Mumbai.

- Global Sustainability Leadership Award - 2023 for Sustainable development Goals, Knowledge and Leadership by World Sustainability Agency, Mauritius.

- "Platinum Winners Award & Jury Champions Trophy-2023" by Instrumentation Department as Innovative Kaizen Team and Gold Winner Award & Jury Challengers Trophy-2023 for Pulp Mill Operations as Restorative Kaizen Team by CII, Bengaluru, Karnataka.

- "CII National Award for Excellence in Water Management 2023" by CII, Gurgaon, Haryana.

Unit CPM:

- 2 platinum awards and 3 gold awards in the 48th CII National Kaizen Competition.

- CII National Award for Excellence in Water Management 2023.

- Gold award for Power Block Kaizen and Silver Award for Pulp Mill Kaizen in 47th CII National Kaizen Competition in 2023.

- Silver Prize in overall digitalization category (large) from FICCI's 2nd FICCI Industry 4.0 Awards 2023.

- Energy Efficient Award from Confederation of Indian Industry's 24th National Award for Excellence in Energy Management.

INDUSTRIAL RELATIONS

Industrial Relations at units of the Company continued to remain peaceful and cordial throughout the year. We value the long association of our employees including contractors and their workmen to sustain industrial harmony and create a positive work environment. By introducing various new work practices along with automation, we have succeeded in enhancing manpower productivity. We encourage continuous interaction, dialogues and participation of local community and other stakeholders in collaborating various social interventions.

ANNUAL RETURN

Pursuant to the provisions of the Act, the Annual Return of the Company is available on the website of the Company and can be accessed at https://jkpaper.com/wp-content/uploads/2024/06/ Annual_Return_2023-24.pdf

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, guarantees or securities and investments in terms of the provisions of Section 186 of the Act are given in the financial statements.

RELATED PARTY TRANSACTIONS

During the financial year ended 31st March 2024, all the contracts or arrangements or transactions entered into by the Company with the Related Parties were in the ordinary course of business and on arm's length basis and were in compliance with the applicable provisions of the Act and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 ('Listing Regulations').

Form AOC-2 containing details of the material Related Party Transactions entered during the financial year 2023-24 as per Policy, is attached as Annexure-1 to this Report and forms part of it.

Policy on Materiality of Related Party Transactions and on Dealing with Related Party Transactions is available on the website of the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, Shri Bharat Hari Singhania stepped down as Chairman & Director of the Company. Considering his long association, vast experience, knowledge and wisdom in the business of the Company and to continue to have benefit from his rich and valuable experience, the Board has appointed him as Chairman Emeritus for lifetime & Strategic Advisor to the Board for a term of five years w.e.f. 1st April 2024.

Consequent to stepping down of Shri Bharat Hari Singhania, the Board redesignated Shri Harsh Pati Singhania as Chairman & Managing Director of the Company, effective from 1st April 2024.

Shri Bharat Anand (DIN: 02806475) was appointed as NonExecutive Independent Director of the Company w.e.f. 1st July, 2023 for a period of five consecutive years and the requisite resolution in this regard was passed by the Members at the Annual General Meeting (AGM) held on 1st September, 2023. The Board is of the opinion that Shri Bharat Anand has high integrity and relevant experience.

Shri R.V. Kanoria (DIN: 00003792) and Shri Sandip Somany (DIN: 00053597), will complete their second tenure as Independent Directors of the Company, on 22nd August 2024. To continue to have benefit of their knowledge, experience and understanding of the business of the Company, the Board has recommended their appointment as Non-Executive Non-Independent Directors, liable to retire by rotation effective from 4th September 2024 or conclusion of the forthcoming AGM, whichever is later, to the Members for their approval.

Shri S.K. Roongta (DIN: 00309302), currently designated as Non-Executive Non-Independent Director of the Company, meets all the criteria of Independent Director specified under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Accordingly, he is being redesignated as Independent Director of the Company to hold office for a term of upto 5 consecutive years w.e.f. 23rd August 2024, subject to the approval of Members at the forthcoming AGM.

Shri A.S. Mehta (DIN: 00030694) was appointed as President & Director of the Company w.e.f. 1st April 2022, with due approvals of the Board of Directors and Members of the Company for a term upto 31st March 2025. In view of his outstanding performance and experience, the Board has decided to re-appoint him as President & Director of the Company for a further period of three years w.e.f. 1st April 2025, subject to approval of the Members at the forthcoming AGM.

Shri Shailendra Swarup (DIN: 00167799) had ceased to be Director of the Company w.e.f. 23rd August 2023 on completion of his second term as Independent Director of the Company.

Shri Dhirendra Kumar (DIN: 00153773), retires by rotation and has not offered himself for re-appointment at the forthcoming AGM.

The Board wishes to place on record its sincere appreciation of the valuable contributions and guidance received from them during their tenure.

All the Independent Directors of the Company have given requisite declarations that they meet the criteria of independence as provided under the Act and Listing Regulations.

Except as stated above, there was no other change in Directors and Key Managerial Personnel of the Company.

INTERNAL CONTROL SYSTEM

The Company remains committed to have a robust and effective internal control mechanism across all offices, plants and key functions that provides assurance of existence of a structured system for: business planning and review of goals achieved, evaluating & managing risks, policies and procedures adopted for ensuring orderly financial reporting, timely preparation of reliable Financial Information, accuracy and completeness of the accounting records, ensuring legal and regulatory compliance, protecting company's assets, prevention and detection of fraud and error and validation of IT Security Controls. Corporate Internal Audit team consisting of qualified professionals and supported by external independent audit firms and other specialized agencies, regularly conducts internal audits to review the internal control systems and compliance thereof as per the annual audit plan approved by Audit Committee of the Board. The findings of the Audit team are reviewed by the Audit Committee and corrective actions are initiated, where necessary. In addition, the Company also follows a Compliance monitoring software tool to capture status of all applicable statutory compliances online.

The Company has developed a set of documented Risk Control Matrix for all major functions and no material reportable weakness was observed during the year.

The Company has a comprehensive budgetary control system in sync with its Strategic Business Plan. Key performance targets are set for each Plant and product lines. The actual performance against these targets is periodically monitored and corrective actions as needed are initiated.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The core of your Company's CSR activities is centered around the creation of sustainable livelihood opportunities and restoration & preservation of natural resources within the parameters of SDG's and the national developmental priorities- farmers, women, soil, water and youth. The projects have made a significant impact in enhancing the local economy; the beneficiary groups have through savings, bank loans and credit linkages invested over RS 60 crore in small & micro enterprises which have resulted in income generation. The CSR footprint of the Company now extends to 576 villages in states of Odisha, Gujarat, Delhi, Telangana and Uttar Pradesh, touching a population of more than 7.8 lac individuals. The diversity of the interventions range from Farmer Producer Organization, Women Self- Help Groups, Water Harvesting, Solar irrigation, Soil Conservation, Youth Enterprises, Community Health, Disaster relief, Digital Literacy, artisan development resource center, slum education center amongst others. Company's CSR interventions have been coopted by the local authorities and integrated with the overall development programs. These programmes have been widely reported as model programs in the media and have been visited by important dignitaries from the Government and development sector.

The Company has a CSR Policy in accordance with the provisions of the Act. CSR Policy of the Company is displayed on the website of the Company.

Annual Report on the CSR activities undertaken by the Company during the financial year ended 31st March 2024, in the prescribed format, along with summary of Impact Assessment Report is annexed to this Report as Annexure-2 and forms part of it.

AUDITORS & THEIR REPORTS

(a) Statutory Auditors

In accordance with the provisions of the Act and the Rules made thereunder, Lodha & Co. LLP., Chartered Accountants, were re-appointed as Statutory Auditors of the Company for their second term of five consecutive years from the conclusion of the 61st AGM till the conclusion of the 66th AGM to be held in the year 2027.

The observations of the Auditors in their report on Accounts and the Financial Statements, read with the relevant notes are self-explanatory. The Auditor's Report does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Auditors have not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed.

(b) Secretarial Auditor

The Board of Directors had appointed Shri Namo Narain Agarwal, Company Secretary in Practice, as Secretarial Auditor to carry out Secretarial Audit of the Company for the financial year 2023-24. The Report given by him for the said financial year in the prescribed format, pursuant to the provisions of Section 204 of the Act and Regulation 24A of the Listing Regulations, is annexed to this Report as Annexure-3 and forms part of it. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Pursuant to provisions of Regulation 24A of the Listing Regulations, during the year under review, the Company

has two material unlisted subsidiaries incorporated in India-

(i) The Sirpur Paper Mills Limited (SPML) and (ii) Horizon Packs Private Limited (HPPL). Secretarial Audit Reports for FY 2023-24 of (i) Shri Namo Narain Agarwal, Secretarial Auditor of SPML and (ii) M/s Somani & Associates, Secretarial Auditor of HPPL, in the prescribed format are annexed to this Report as Annexure - 3(i) & 3(ii) respectively.

(c) Cost Auditors

In accordance with the provisions of Section 148(1) of the Act, the Company has maintained cost accounts and records. The Cost Audit for the financial year ended 31st March 2023 was conducted by M/s R.J. Goel & Co., Cost Accountants, Delhi and the Cost Audit Report was duly filed with the Ministry of Corporate Affairs, Government of India. The Audit of the Cost Records for the financial year ended 31st March 2024 is being conducted by the said firm and the Report will also be filed with the Ministry of Corporate Affairs, Government of India.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

During the year under review, there were no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. Further, during the year under review, no applications were made or no proceedings were pending as at the end of the year under the Insolvency and Bankruptcy Code, 2016.

MATERIAL CHANGES AND COMMITMENTS

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company and the date of this report.

CHANGE IN THE NATURE OF BUSINESS

During the year under review, there was no material change in the nature of business of the Company.

CONSERVATION OF ENERGY ETC.

The details as required under Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure-4 and forms part of it.

PARTICULARS OF REMUNERATION

Disclosure of the ratio of the remuneration of each Director to the median employee's remuneration and other requisite details pursuant to Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this Report as Annexure-5 and forms part of it. Further, Particulars of Employees pursuant to Rule 5(2) & (3) of the above Rules, also form part of this Board Report. However, in terms of provisions of Section 136 of the Act, the Annual Report for the financial year 2023-24 is being sent to all the members of the Company and others entitled thereto, excluding the said particulars of employees. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is also available for inspection at the Registered Office of the Company on working days during working hours.

CORPORATE GOVERNANCE

Your Company reaffirms its commitment to the highest standards of corporate governance practices. Pursuant to Regulation 34 read with Schedule V of the Listing Regulations, Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate regarding compliance of conditions of Corporate Governance are made part of this Annual Report.

The Corporate Governance Report which forms part of this Annual Report also covers the following:

a) Particulars of Five Board Meetings held during the financial year under review.

b) Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management including, inter alia, the criteria for performance evaluation of Directors.

c) Manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and individual Directors.

d) Details with respect to composition of Audit Committee and establishment of Vigil Mechanism.

e) Details regarding Risk Management.

f) Dividend Distribution Policy.

g) Disclosures under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Pursuant to Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility and Sustainability Report of the Company for the financial year ended 31st March 2024 in the prescribed format, is given in a separate section and forms part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of your Company for the financial year 2023-24 have been prepared in accordance with the Act and applicable Indian Accounting Standards. The Audited Consolidated Financial Statements together with Auditors' Report form part of the Annual Report.

A report on the performance and financial position of each of the subsidiaries and joint ventures included in the Consolidated Financial Statements is presented in a separate section in this Annual Report, refer Form AOC-1 annexed to the Financial Statements forming part of the Annual Report.

Pursuant to the provisions of Section 136 of the Act, Standalone audited financial statements, Consolidated audited financial statements along with relevant documents and separate audited financial statements of each of the subsidiaries are available on the website of the Company.

During the period under review, JKPL Utility Packaging Solutions Pvt. Ltd. (formerly known as Manipal Utility Packaging Solutions Pvt. Ltd.) has become wholly owned subsidiary of the Company. Anant Art & Cultural Foundation formed under Section 8 of the Companies Act, 2013 on 18th April 2024 by the Company as a joint venture with Sparsh Social Foundation, a Section 8 Company, which is engaged as implementing agency for some of the corporate social responsibility activities of the company, for carrying out social activities relating to promotion and education of art, craft, culture and other allied activities. No other company has become or ceased to be subsidiary, joint venture or associate of the Company.

DEPOSITS

Pursuant to the approval of members by means of a Special Resolution at the AGM held on 27th September 2014, the Company is accepting deposits from the public and its members, in accordance with the provisions of the Act and Rules made thereunder.

The particulars in respect of the deposits covered under Chapter V of the said Act, for the financial year ended 31st March 2024 is annexed to this Report as Annexure-6 and forms part of it.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(3)(c) of the Act, your Directors state that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(b) the accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the annual accounts have been prepared on a going concern basis;

(e) the proper internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and were operating effectively; and

(f) the proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

Your Directors acknowledge the unstinted support and cooperation received from the Central Government, State Governments, participating Financial Institutions and Banks and above all the Customers, Dealers, Suppliers and other Stakeholders.

The Board wishes to record its highest appreciation of the total commitment, dedication and hard work, put in by every employee and member of the Team JK Paper.