n r agarwal industries limited (1)

8/7/2019 N R AGARWAL INDUSTRIES LIMITED (1)

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2. Financial Snapshot

During the current year the company achieved a production of 1,26,059 MT of Duplex Board

and 31,972 MT of Newsprint and Writing Printing Paper as against 1,20,602 tones and

32,997 tones for the previous year. The Duplex Board production & Newsprint and Writing printing paper production have grown by around 6%.

The Turnover for the financial year under review were Rs 38,855 Lacs as against Rs 38,670

lacs for the previous financial year. As compared to the previous year, there has been a

substantial increase in the Net Profit, mainly due to reduction in input costs and improved

Sales realization.

During the year, the Company exported Duplex Board and realized Rs 511 Lacs, as compared

to Rs 1,306 lacs, during the year.

(Rs. in Lakhs)

Particulars Year ended 31.03.2010 Year ended 31.03.2009

Net Sales / Income from Operations and other income 39244.02 39009.96

Interest 861.38 1008.05

Gross Profit after Interest but Before Depreciation andTaxation

2857.17 1741.76

Depreciation 808.53 809.70

Profit before Tax and exceptional items 2048.63 932.06

Exceptional Item 761.80 250.00

Profit before Tax and after exceptional items 2048.64 1182.06

Provisions for Taxation 715.00 246.33

Deferred Tax - 40.16

Fringe Benefit Tax - 5.00

Prior year Adjustments 63.37 (4.20)

Net Profit for the year 2158.81 886.37

Balance in Profit & Loss Account 2858.68 2196.43



4. Board Meetings and Annual General Meeting

The Board meets at least once in each quarter. Five Board Meetings were held during the

year 2009-10. The meetings of the Board were held on April 29, 2009, July 28, 2009, August

20, 2009, October 26, 2009 and January 29, 2010. The Annual General Meeting (AGM) was

held on September 26, 2009.The details of participation of the Directors of the Company

during the financial year ended March 31, 2010 in Board Meetings and AGM of the

Company is as under:

Name of Director No. of Board Meetings

attendedNo. of Board

Meetings attended Attendance at the last AGM

*Shri. N R Agarwal5 0 Not Attended

**Shri. R N Agarwal5 5 Attended

Shri. S N Chaturvedi5 5 Attended

Shri P. Kumar 5 5 Attended

Shri C RRadhakrishnan 5 5 Not Attended

***Shri Raunak Agarwal 5 4 Attended



5. Equity Shares Held By Directors

6. Shareholders Pattern

Name of Director Shares held by the Director

Shri. N R Agarwal &Shri Raunak Agarwal

Jointly owns45,38,893

**Shri. R N Agarwal79,22,030

Shri. S N ChaturvediNil

Shri P. Kumar Nil

Shri C R RadhakrishnanNil

Category No. of shares held Percentage to total share capital

Foreign holding (FIIs, OCBs and NRIs) 28,655 0.169

Financial Institutions/ Banks/ Insurance Companies 2,500 0.014

Mutual Funds and UTI 0 0

Corporate Bodies 10,89,872 6.404

Directors and their relatives 1,24,60,923 73.217

Public 34,37,150 20.196

Total 1,70,19,100 100



7. Directors Remuneration

The Remuneration Committee comprises of three directors all of whom are Non-Executive,Independent Directors.

Shri P Kumar Chairman - Independent, Non ExecutiveShri S. N. Chaturvedi Member - Independent, Non ExecutiveShri C.R. Radha krishnan Member - Independent, Non Executive

The remuneration committee deals with the matters specified in clause 49 of the listing

agreement and also reviews the overall compensation structure and policies of the company.

Presently, the Company does not have any stock option plan or performance linked incentives

for its Directors.

A meeting of the Committee was held on 20.08.2009.

The details of remuneration to all the Directors for the year ended March 31, 2010 are as

under:

* Upto 31.08.2009

** Effective from 01.09.2009

Name of Director Salary (Rs.)

Benefits(Rs.)

Commission (Rs.)Sitting fees

(Rs.)Total

Shri N R Agarwal

(Upto29.01.2010)

25,00,000 50,000 -- -- 25,50,000

Shri R N Agarwal 42,50,000 7,00,000 -- -- 49,50,000

Shri S N Chaturvedi -- -- -- 65,000 65,000

Shri P Kumar -- -- -- 65,000 65,000

Shri C RRadhakrishnan

-- -- -- 53,000 53,000

Shri Raunak Agarwal **3,50,000 -- -- *10,000 3,60,000



8. Governance Report Overview

Corporate Governance is about commitment to values and ethical business conduct. It is also

about how an organisation is managed viz., its corporate and business structures, its culture,

policies and the manner in which it deals with various stakeholders. Timely and accuratedisclosure of information regarding the financial position of the company, its performance

and ownership forms part of the corporate governance.

N R Agarwal Industries Limited (NRAIL) continues to uphold its commitment to high

standards of corporate governance. In all its operations and processes, the Company adheres

to stringent governance norms so that its stakeholders are ensured of superior financial

performance.

Through its corporate governance measures, the Company aims to maintain transparency in

its financial reporting and keep all its stakeholders informed about its policies, performanceand developments. NRAIL will contribute to sustain and strengthen stakeholder¶s confidence

by adopting and continuously improving good corporate practices.

The Company¶s Board has laid down identifiable policies and guidelines related to the key

elements of corporate governance-transparency, disclosure, supervision and internal control,

risk management, internal and external communications, high standard of safety, accounting

fidelity, product and service quality. It has also introduced adequate review processes.

Related Party Transactions:

There were no transactions of Material nature with related parties i.e. with its promoters,

directors or the management, their subsidiaries or relatives etc. that may have potential

conflict with the interest of the company at large. The transactions with related parties as per

Accounting Standard AS-18, are set out in notes to accounts in the Annual Report and were

placed before the Audit Committee periodically.

Risk Management:

The Board of Directors have been informed from time to time the business risks faced by the

Company and the steps taken by the management to face them.

Management

The management discussion and analysis report forms part of this annual report.



The Company has complied with the requirements of regulatory authorities on matters relatedto capital markets and no penalties/strictures have been imposed against the Company during

the last three years.

Whistle Blowing Policy:

The company has not framed whistle blower policy. However, no personnel has been

denied access to the audit committee



9. Calculation of Tobins Q and Interpretation

The combined market value of all the companies on the stock market should be about equal

to their replacement costs. The Q ratio is calculated as the market value of a company divided

by the replacement value of the firm's assets:

Market Capitalisation = Weighted average number of shares outstanding x Market Value of

share

Book value of debt = Secured + Unsecured Loan

Book Value of Equity = Equity capital + Reserves & Surplus

2010 2009 2008

Market

Capitalisati

on

17,019,100 *

30.15=513,125,865

17,019,100 * 18.65=

317,406,215

17,019,100 * 33.51=

570,310,041

Book value

of debt

882,284,068 + 45,778,154

= 928,062,222

733,578,762 + 98,732,173

= 832310935

849,622,13 + 106,652,764

= 191,614,977

Book Value

of Equity

170,191,000 + 510,161,016

= 680,352,016

170,191,000 +

330,120,832 = 500,311,832

170,191,000 +261,395,742

= 431,586,742

Q ratio 2.11 2.29 1.76



Inference:

y A low Q (between 0 and 1) means that the cost to replace a firm's assets is greater

than the value of its stock. This implies that the stock is undervalued.

y Conversely, a high Q (greater than 1) implies that a firm's stock is more expensive

than the replacement cost of its assets, which implies that the stock is overvalued.

y This measure of stock valuation is the driving factor behind investment decisions in

Tobin's model.

y From here where we infer that in 2008 stocks were overvalued as Q ratio comes out to

be 1.76 but in the next fiscal year 2008-09 Q value increased from to 2.29, which

means that stocks were overvalued compared to last year.

y In the latest fiscal 2009-10 company has performed better as Q ratio has come down

to 2.11. As market capitalisation came down because of the share price has declined.

This indicates the company has improved in terms of firm performance.



Regression Data

TOBIN's

Q

Board

Composition

2008 1.76 0.571428571

2009 2.29 0.571428571

2010 2.11 0.5

SUMMARY

OUTPUT

Regression

Statistics

Multiple R 0.7605

R Square 0.57836

Adjusted R

Square 0.15672

Standard Error 0.24749

Observations 3

ANOVA

df SS MS F

Significance

F Regression 1 0.084016667 0.084017 1.3717007 0.44990692

Residual 1 0.06125 0.06125

Total 2 0.145266667

Coefficients St. Error t Stat P-value Lower 95%

Upper

95%

Lower

95%

Upper

95%

Intercept 4.775 2.33 2.05 0.29 -24.81 34.36 -24.81 34.36

-4.97 4.24 -1.17 0.45 -58.89 48.95 -58.89 48.95

Inference:

Regression analysis has been conducted to find out the effect of board composition on firm

performance.Seeing the analysis we found that R square =57% which means that 57% of the

variation in tobin¶s q is being explained by variation in board composition.Further we find

that there is a inverse relationship between board composition and tobin¶s q denoted by beta

coefficient = - 4.97



Correlation Data

BOARD

SIZE

TOBIN's

Q

2008 7 1.76

2009 7 2.29

2010 6 2.11

Correlation output

board

size tobin's q

board

size 1

tobin's q -0.18209 1

Inference:

Correlation between board size and tobin¶s q is -.18 which is almost close to zero that

signifies very weak or no correlation .



Annexure

n r agarwal industries limited (1)

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