ANNUAL REPORT

2005-2006
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Mill view

PM2
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Farm forestry

Captive plantation at Bharathidasan University

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TEWLIS irrigated land - sugarcane

TEWLIS irrigated land - coconut trees

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Medical camp

Support to flood relief measures

 NOTICE
NOTICE is hereby given that the Twentysixth Annual General
Meeting of the Members of Tamil Nadu Newsprint and Papers
Limited will be held on Friday the 25th August 2006 at 10.25 AM
at the Music Academy Main Hall, 168 T T K Road, Alwarpet,
Chennai 600 014 to transact the following business :
ORDINARY BUSINESS
1. To receive, consider and adopt the Profit and Loss Account
for the year ended 31st March 2006, Balance Sheet as at
31 st March 2006 and the Directors’ Report and Auditors’
Report thereon.
2. To declare dividend.
3. To appoint a Director in the place of Thiru V. Narayanan,
who retires by rotation and being eligible offers himself for
reappointment.
4. To appoint a Director in the place of Thiru V. R. Mehta, who
retires by rotation and being eligible offers himself for
reappointment.
5. To consider and if thought fit, to pass with or without
modifications, the following resolution as an ORDINARY
resolution:
RESOLVED THAT consent of the Company be and is hereby
accorded for the payment of remuneration of Rs.2,25,000/-
to M/s.Maharaj N. R. Suresh & Co., Statutory Auditors,
besides reimbursement of travelling and out of pocket
expenses at actuals subject to other terms and conditions
laid down by the Office of the Comptroller and Auditor
General of India in their letter No. CA V/COY/Tamil
Nadu,TNEWSP(1)/46 dt.17.8.2005.
SPECIAL BUSINESS
6. To consider and if thought fit, to pass with or without
modifications, the following resolution as an ORDINARY
Resolution :
RESOLVED THAT pursuant to the provisions of Sec.269 and
other applicable provisions, if any, of the Companies Act,
1956 and Article 140 of the Articles of Association of the
Company and subject to such other approvals, as may be
necessary, consent of the members of the Company be and
is hereby accorded to the appointment of Thiru S
Ramasundaram, IAS as Chairman and Managing Director of
the company w.e.f. 8.8.05 on such terms and conditions and
such remuneration as may be prescribed by the Government
of Tamil Nadu from time to time.
7. To consider and if thought fit, to pass with or without
modifications, the following resolution as an ORDINARY
Resolution :
RESOLVED THAT pursuant to the provisions of Sec.269 and
other applicable provisions, if any, of the Companies Act,
1956 and Article 140 of the Articles of Association of the
Company and subject to such other approvals, as may be
necessary, consent of the members of the Company be and
is hereby accorded to the appointment of Thiru V. Murthy,
IAS as Managing Director of the company w.e.f. 17.5.06 AN
on such terms and conditions and such remuneration as
may be prescribed by the Government of Tamil Nadu from
time to time.
8. To consider and if thought fit, to pass with or without
modifications, the following resolution as an ORDINARY
Resolution :
RESOLVED THAT Thiru Shaktikanta Das, IAS be and is
hereby appointed as Director of the Company.
9. To consider and if thought fit, to pass with or without
modifications, the following resolution as an ORDINARY
Resolution :
RESOLVED THAT Thiru Sandeep Saxena, IAS be and is
hereby appointed as Director of the Company.
BY ORDER OF THE BOARD
Place : Chennai A. VELLIANGIRI
Date : 20.6.06 DIRECTOR (FINANCE)
NOTES
1) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE
MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND
AND VOTE ON A POLL INSTEAD OF HIMSELF AND SUCH
PROXY NEED NOT BE A MEMBER OF THE COMPANY.
2) Proxies in order to be effective, must be lodged with the
Company not later than 48 hours before the meeting.
3) The relative Explanatory Statement pursuant to Section
173(2) of the Companies Act, 1956 in respect of the
Special Business set out under Items 6 to 9 is annexed
hereto.
4) The Register of Members and Share Transfer Books of the
Company will be closed from 18.8.06 to 25.8.06 (both
days inclusive).
5) The dividend for the year ended 31 st March 2006 as
recommended by the Board, if sanctioned at the meeting,
will be paid to those members whose names appear in the
Company’s Register of Members on 25th August 2006. In
respect of shares held in electronic form, the dividend will
be paid on the basis of beneficial ownership as per details
furnished by National Securities Depository Limited and
Central Depository Services (India) Limited for this
purpose.
6) In accordance with the amended provisions of
Sec.205A(5) of the Companies Act, 1956, the unclaimed
dividend pertaining to the years 1999-2000, 2000-01,
11
2001-02, 2002-03, 2003-04 and 2004-05 would remain
with the company for a period of 7 years, upon expiry of
which they will be transferred to ‘The Investor Education
and Protection Fund’.
7) Members who have not encashed their dividend warrant(s)
so far for the financial year ended 31st March 1999 or any
subsequent financial year(s) are requested to make their
claim to the company or to the Company’s Registrar and
Share Transfer Agents.
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

8) Members are requested to quote their Registered Folio No.
or Depository Participant Id. No. and Client Id. No. in all
their correspondences and notify promptly change, if any,
in their Address/bank mandate to the Company’s Share
Transfer Agent viz.Cameo Corporate Services Limited Unit:
Tamil Nadu Newsprint and Papers Limited, ‘Subramanian
Building’, 1 Club House Road, Chennai 600 002.
9) Members/Proxies are requested to bring the attendance
slip sent with Annual Report duly filled in for attending the
meeting.
10) Members are requested to bring their copies of Annual
Report for the meeting. Copies of the Annual Report will
not be distributed at the Annual General Meeting.
11) Equity shares of the Company have been placed under
Compulsory Demat Trading w.e.f. 8.5.2000. Members who
have not dematerialised their physical holding in the
Company are advised to avail the facility of
dematerialisation of equity shares of the Company.
12) Members holding shares under different folios in the same
names are requested to apply for consolidation of folios
and send relevant share certificates to the Company’s
Registrar and Transfer Agents.

ANNEXURE TO THE NOTICE ITEM NO. 4

Name : Thiru V. R. Mehta
Notes on directors seeking appointment/re-appointment Age : 72 years
as required under Clause 49 of the Listing Agreement Qualification : An Honours degree in Engineering from BITS,
entered into with Stock Exchanges: Pilani
Experience :
PROFILE OF DIRECTORS BEING Thiru Mehta worked as a Senior Expert in the Asian Development
APPOINTED/ REAPPOINTED Bank, Manila for over 14 years. Since his return from the Asian
Development Bank in 1994, Thiru Mehta continues to undertake
ITEM NO. 3
short-term assignments as a Senior Consultant for the World
Name : Thiru V. Narayanan
Bank in Washington D.C. and the African Development Bank,
Age : 68 years
Tunis.
Qualification : M.Sc. (Chemistry)
Experience : Thiru V. Narayanan has more than 45 years of Prior to joining the ADB, Thiru Mehta served in the Government
experience in Management. He has held several of India in the Ministry of Shipping & Transport for almost 6 years
positions in Hindustan Lever Ltd., both in India as Director and Joint Secretary, with the charge of all the major
and in the U.K. Subsequently he had joined ports in the country. He is the founder Managing Director of the
Pond’s (India) Ltd. and was its Chairman and Dredging Corporation of India. Thiru Mehta had earlier served for
Managing Director for over 15 years. He is about 17 years in various senior positions in the Railway Board
currently on the Board of several reputed and the zonal railways.
companies. Presently, he is the Honorary
Thiru Mehta has been closely associated with the charitable work
Chairman of Academy for Management
of Jaipur Foot (artificial limbs) and Mother Teresa and has also
Excellence.
co-authored a book on Mother Teresa.
His Directorships and Committee Memberships of other
Companies are as follows: His Directorships and Committee Memberships of other
Companies are as follows:
Company Position Committee Membership
Ponds Exports Limited Chairman
Company Position Committee
M M Forgings Limited Chairman Audit Committee-Chairman Membership
UCAL Fuel Systems Limited Director Audit Committee-Chairman
Bata India Limited Director Audit Committee-Chairman Sical Logistics Limited, Chennai Director –
Samtel Color Limited -do- Southern Petrochemical
Glaxo Smithkline -do- Audit Committee-Member Industries Corpn.Ltd., Chennai Director –
Pharmaceuticals Ltd. Remuneration Committee-
Tata Motors Ltd., Mumbai Director Audit Committee-
Member
Chairman
12 Samcor Glass Limited -do-
Remuneration
Hindustan Lever Limited -do- Remuneration Committee-
Committee-Member
Chairman
Telco Construction Equipment Director Audit Committee-
Rane (Madras) Limited -do- Audit Committee-Member
Company Ltd., Bangalore Chairman
Lafarge India Pvt. Ltd. -do-
Remuneration
Sundaram Fasteners Limited -do- Audit Committee-Member
Committee-Member
FAL Industries Limited -do- Audit Committee-Member
Foster’s India Limited -do- T T Ltd., New Delhi Director Audit Committee-
Rane Holdings Limited -do- Member
ITEM NO. 6 His Directorships and Committee Memberships of other
Name : Thiru S. Ramasundaram, IAS Companies are as follows:

Age : 52 years Company Position Committee

Membership
Qualification : M.Sc. (Chem.), MS (Applied Demography), USC
Los Angeles, USA
Titan Industries Chairman
Experience : Thiru S. Ramasundaram, IAS belongs to 1979 Tamil Nadu Petro Products Limited Chairman
batch of Indian Administrative Service. He has Tamil Nadu Industrial Guidance &
27 years of experience in various Departments Export Promotion Bureau Chairman

of Govt. of Tamil Nadu and Govt. of India. TASCO Chairman

Tidel Park Limited Director
His Directorships and Committee Memberships of other Tamil Nadu Industrial Development Director
Companies are as follows: Corporation Limited
Chennai Petroleum Corporation Limited Director
Company Position Committee Southern Petrochemical Industries
Membership Corpn. Ltd. Director
Tamil Nadu Sugar Director – Neyveli Lignite Corporation Limited Director
Corporation Ltd. Small Industries Promotion Corporation
of Tamil Nadu Ltd. Director
P.S.G.STEP Governing Body Member
ITEM NO. 7

Name : Thiru V. Murthy, IAS

ITEM NO. 9
Age : 58 years
Name : Thiru Sandeep Saxena, IAS
Qualification : M.A.B.L., H.D.C. Age : 40 years
Experience : Thiru V. Murthy, IAS belongs to 1991 batch of
Qualification : B.E. (Civil), M.Tech, (Water Resources
Indian Administrative Service. He has 36 years
Engg.IITD),
of experience in various Departments of Govt. of
MBA(International Fin.)
Tamil Nadu.
M.A.(Eco.)
His Directorships and Committee Memberships of other
Experience : Thiru Sandeep Saxena, IAS belongs to 1989
Companies are Nil.
batch of Indian Administrative Service. He has
17 years of service in various departments of
Government of Tamil Nadu.
ITEM NO. 8
Name : Thiru Shaktikanta Das, IAS
Age : 49 years His Directorships and Committee Memberships of other
Qualification : M.A. Companies are as follows:
Experience : Thiru Shaktikanta Das, IAS belongs to 1980
batch of Indian Administrative Service. He has Company Position Committee
26 years of experience in various departments of Membership
Government of Tamil Nadu. Thiru Shaktikanta Tamil Nadu Sugar Managing Audit Committee –
Das, IAS was the Managing Director of TNPL for Corporation Ltd. Director Chairman
three years from 1993 to 1996. Currently, he is
holding the office of the Secretary to Perambalur Sugar Mills Chairman and Audit Committee-
Limited Managing Chairman
Government, Industries Department, Govt. of 13
Director
Tamil Nadu.
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D
EXPLANATORY STATEMENT
PURSUANT TO SECTION 173(2) OF
THE COMPANIES ACT, 1956
ITEM NO. 6
Pursuant to G.O.Rt.No.3264 Public (Special A) Department
dt.8.8.2005 issued by the Govt. of Tamil Nadu and in terms of
Article 139 of the Articles of Association of the Company, the
Board of Directors have passed a resolution appointing Thiru S.
Ramasundaram, IAS as Chairman and Managing Director of the
Company with effect from 8.8.05.
Under Sec.269 read with Schedule XIII of the Companies Act,
appointment of Managing Director has to be approved by the
Members of the Company in general meeting. The terms and
conditions of his appointment including remuneration payable to
him are governed by the orders of the Govt. of Tamil Nadu.
Your Directors recommend this resolution for approval of the
members of the Company.
None of the Directors of the Company other than Thiru S
Ramasundaram, IAS is interested or concerned in the resolution.
ITEM NO. 7
Pursuant to G.O.Rt.No.1900 Public (Special A) Department
dt.16.5.2006 issued by the Govt. of Tamil Nadu and in terms of
Article 139 of the Articles of Association of the Company, the
Board of Directors have passed a resolution appointing Thiru V.
Murthy, IAS as Managing Director of the Company with effect
from 17.5.06 AN.
Under Sec.269 read with Schedule XIII of the Companies Act,
appointment of Managing Director has to be approved by the
Members of the Company in general meeting. The terms and
conditions of his appointment including remuneration payable to
him are governed by the orders of the Govt. of Tamil Nadu vide
G.O.Ms.No.167 Public (Special A) Department dt.21.2.94 read
with G.O.Ms.No.495 Finance(BPE) Department dt.18.7.88. Copies
of the abovesaid orders are available for inspection by any of the
shareholders at the Registered Office of the Company.
Your Directors recommend this resolution for approval of the
members of the Company.
14
None of the Directors of the Company other than Thiru V. Murthy,
IAS is interested or concerned in the resolution.
ITEM NO. 8
The Board of Directors of your Company have appointed Thiru
Shaktikanta Das, IAS as an additional Director with effect from
24.5.06. As an additional Director Thiru Shaktikanta Das, IAS
will hold the office of Director upto the date of AGM.
Notice has been received under Section 257 of the Companies
Act, 1956 from a member of his intention to propose the
candidature for directorship of Thiru Shaktikanta Das, IAS. This
may also be treated as individual notice under Sec.257(1A) of the
Companies Act, 1956.
Your Directors recommend this resolution for approval of the
members of the Company.
None of the Directors of the Company other than Thiru
Shaktikanta Das, IAS is interested or concerned in the resolution.
ITEM NO. 9
The Board of Directors of your Company have appointed Thiru
Sandeep Saxena, IAS as an additional Director with effect from
20.6.06. As an additional Director Thiru Sandeep Saxena, IAS
will hold the office of Director upto the date of AGM.
Notice has been received under Section 257 of the Companies
Act, 1956 from a member of his intention to propose the
candidature for directorship of Thiru Sandeep Saxena, IAS. This
may also be treated as individual notice under Sec.257(1A) of the
Companies Act, 1956.
Your Directors recommend this resolution for approval of the
members of the Company.
None of the Directors of the Company other than Thiru Sandeep
Saxena, IAS is interested or concerned in the resolution.
BY ORDER OF THE BOARD
Registered Office :
67 Mount Road,
Guindy, A. VELLIANGIRI
Chennai 600 032. DIRECTOR (FINANCE)
 DIRECTORS’ REPORT
TO THE MEMBERS 3. OVERALL PERFORMANCE
The production and capacity utilization are given
The Directors have pleasure in presenting the Twentysixth hereunder:
Annual Report and the Audited Accounts of your Company for (Figures in MTs)
the financial year ended 31.3.2006. Particulars 2005-06 2004-05
PM I PM II Total PM I PM II Total
1. FINANCIAL RESULTS
Newsprint – 5468 5468 — 7708 7708
(Rs. in crores)
PWP 1 0 8 9 2 3 1 1 5 6 8 8 2 2 4 6 1 1 94920 93613 188533
Particulars 2005-06 2004-05
Total 1 0 8 9 2 3 1 2 1 1 5 6 2 3 0 0 7 9 94920 101321 196241
Sales 775.67 641.06 Capacity
Other income 25.73 27.17 Utilisation 100% 85.47%
Operating Profit (PBIDT) 189.33 117.27 (%)

Interest and Finance charges 20.29 16.22 Your company has achieved an overall capacity utilization of
Gross Profit (PBDT) 169.04 101.05 100% against 85.47% in the previous year. The production
was higher by 33,838 MT over the previous year.
Depreciation 62.50 61.88
Profit before Prior Period/ The production mix of newsprint and printing & writing
Exceptional items 106.54 39.17 paper was 2:98 against 4:96 in the previous year. Your
company’s strategy of keeping the production mix flexible
Prior Period/Exceptional items 5.07 –
between newsprint and printing & writing paper has
Profit before tax 101.47 39.17
improved the sales revenue and the profit.
Provision for taxation
During the year, your company has exported 38,645 MT of
– Current tax 36.51 8.68
printing & writing paper against 41,264 MT in the previous
– Deferred Tax (13.81) (7.46)
year. Your company has sold the entire production and
– Fringe Benefit Tax 0.95 – achieved zero stock of finished goods as on 31.3.2006. This
– Excess provision of is the 15th year in which your company has achieved ‘zero
Income Tax written back (2.73) – stock’ of finished goods at the end of the financial year.
Profit after tax 80.55 37.95 This is a unique record in the Paper Industry.

Balance brought forward 20.20 20.06 In-house hardwood pulp production reached a new peak of
41,907 MT registering an improvement of 3644 MT over the
Profit Available for previous year. This is the sixth year in which your company
appropriation 100.75 58.01 has increased the hardwood pulp production in a row. Your
company has produced 4280.18 lakh units of power during
APPROPRIATIONS
the year against 3810.56 lakh units in the previous year. Of
Transfer to General Reserve 57.00 16.00 this, 831.38 lakh units were exported to the State grid.
Dividend Adjustments – 0.01 During the year, your company has drawn only 14.76 lakh
Interim dividend 10.41 – units of power from the State grid, equivalent to 0.43% of
Proposed Dividend 10.38 19.08 the total consumption. This has enabled your company to
control the cost on the energy front.
Tax on Dividend 2.91 2.72
Balance carried forward 20.05 20.20 Consequent on the good monsoon and increased sugar
100.75 58.01 cane production, bagasse supplies have increased and the
bagasse stock as on 31.03.2006 swelled to 315000 MT.
With the abundant availability of bagasse, your company
has stopped procuring bagasse from distant sources to
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2. DIVIDEND keep the cost low. There was no water shortage during the
year. Your company has maintained water conservation
Your company has paid Interim Dividend of 15% during
measures and kept the water consumption at 104 KL per MT
November 2005. Your Directors are pleased to recommend
of finished production.
final dividend of 15% for the financial year ended
31.3.2006. The final dividend, if approved by the Your company set up a novel bio-methanation plant for
shareholders, will be paid to all the equity shareholders generating methane gas (bio-gas) around 15000M3 per day
whose names appear in the Register of Members as on from bagasse wash water. The bio-gas is used as fuel in the
25.08.06. Total dividend of 30% for the year 2005-06 lime-kiln replacing usage of furnace oil around 10 KL per
would absorb Rs. 2078.60 lakhs. day. Your company has registered the project under Clean
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D
Development Mechanism (CDM) with UNFCCC and has
obtained 82955 CERs (Certified Emission Reduction) for the
period from 1.8.2003 to 31.12.2005. In addition, your
company will be generating about 37000 CERs per annum
upto 31st July 2013. Your company’s bio-methanation plant
is the country’s first ever CDM Project in the waste
management sector, to be registered with the UNFCCC and
the first CDM Project from the Indian Paper Industry.
4. MARKET TRENDS
Newsprint is in an uptrend right from March 2003. The
imported newsprint price has increased from USD 590 per
MT during January - March 2005 to USD 670 per MT during
January-March 2006 and to USD 700 per MT for supplies
during April-June 2006. Correspondingly, the newsprint
price in the domestic market has also increased from
Rs. 26,250 per MT during January-March 2005 to
Rs. 30,250 per MT during January-March 2006 and to
Rs. 31,500 per MT for supplies during April-June 2006.
Printing & Writing Paper market was stable throughout the
year. To neutralise partly the cumulative adverse impact of
the cost increase, printing & writing paper prices were
increased in the domestic as well as export sales.
Pulp price in the International market was stable during the
year, price ranging from USD 486 to USD 540 per MT in the
case of soft wood pulp and USD 482 to USD 513 in the
case of hardwood pulp. However, imported softwood pulp
price has increased to USD 650 per MT and hardwood pulp
USD 570 per MT since April 2006.
To overcome the competition from “B” Grade Mills, and to
improve the sales realization, your company has increased
the production of value added products viz. TNPL Copier,
Ultrawhite Maplitho, Hi-tech Maplitho, Offset Printing and
TNPL Elegant Printing from 78368 Mts. in 2004-05 to
105259 Mts. in 2005-06.
During the year, the Government of India has reduced the
export incentive for printing & writing paper from 9% to
7% for Sheets & Cut size papers with effect from
26.05.2005 and from 4% to 3% for Reels with effect from
14.9.2004. During the year, your company has exported
38,645 MT of PWP to 22 countries.
5. OUTLOOK
The domestic consumption of Newsprint is expected to
16
grow by 5% per annum and printing & writing paper by 6%
per annum. The pulp price in the international market has
firmed up from April 2006. However, paper price in the
international market has increased only marginally. With
the steep increase in the pulp prices, the paper prices in
the international market may rise in the near term.
The market for surface sized paper is expected to grow by
8% and Copier paper by 15% per annum. With the
installation of the state of the art Size Press in PM-I, Copier
production has been increased from 19311 MT in 2003-04
to 28,141 MT in 2004-05 and 37,645 MT in 2005-06
registering a growth of 46% in 2004-05 and 34% in
2005-06. The company has set a target of 42,000 MT of
Copier production for the year 2006-07.
The newsprint market is also showing a positive trend. The
newsprint price in the international market has increased to
USD 700 per MT during April – June 2006. The price is
expected to remain firm during the current year.
In the Union Budget 2006-07, the Government has reduced
the excise duty on printing & writing paper from 16% to
12% effective from 1.3.2006. Import duty on printing &
writing paper has been reduced from 15% to 12.5% with
effect from 1.3.2006. Import duty on newsprint is retained
at 5%. Cenvatable countervailing duty of 4% introduced in
the Union Budget 2006-07 is applicable for printing & writing
paper. Newsprint is exempted from the levy of
countervailing duty.
6. HIGHLIGHTS OF THE YEAR
• Achieved highest production of 2,30,079 MT and
highest sales of 230079 MT. Production during the year
was higher by 33,838 MT over the previous year. Sales
during the year was higher by 28792 MT compared to
the previous year.
• Achieved highest production of 37,645 MT of TNPL
Copier Paper against 28,141 MT in the previous year
registering a growth of 34%.
• Achieved highest Hardwood Pulp production of 41,907
MT against 38,263 MT in the previous year. This is the
sixth consecutive year in which the company has
increased the Hardwood Pulp production.
• Exported 38,645 MT of Printing & Writing Paper during
the year valuing Rs. 117.55 crores on FOB basis. This is
the highest export of wood free uncoated printing &
writing paper from India during 2005-06.
• Introduced a new product, namely, “TNPL Copy Crown”
for Inkjet and laser printers.
• Implemented Farm Forestry Scheme in 6054 acres
benefiting 1466 farmers in nine districts and Captive
Plantation in 188 acres. Total area covered under Farm
Forestry Scheme and Captive Plantation during the year
is 6242 acres against 3076 acres in the previous year. It
is proposed to implement the Farm Forestry Scheme and
Captive Plantation in about 10000 acres during 2006-07.
• Achieved Zero Stock of finished goods (NP & PWP) at
the end of the financial year. This is the 15th year in
which your company has achieved Zero Stock (NP &
PWP) at the end of the financial year.
• Received the Special Export Award from CAPEXIL for
the seventh consecutive year in recognition of the
outstanding export performance.
 • The Mill Development Plan has been taken up for
implementation at a capital outlay of Rs.565 Crores.
The project will be implemented before 31.3.2007.
• Processed 16,70,636 M 3 of Black liquor in energy
efficient falling film evaporator, against 14,62,850 M3 in
the previous year.
• Registered the Bio-Methanation project with United
Nations Framework Convention Climate Change
(UNFCCC) as the country’s first CDM Project in the
waste management sector. The project generates about
37,000 CERs per annum. 82955 CERs have been
received from UNFCCC for the period from 1.8.2003 to
31.12.2005.
7. WIND FARM
Your company has increased the wind farm capacity from
21.75 MW to 28 MW by installing 5 Nos. of 1250 KW wind
energy generators at Devarkulam during February 2006.
During the year under review, your company has
generated 309.31 lakh units of wind power against 348.86
lakh units in the previous year. The wind farm, has earned
a profit of Rs.17.71 lakhs during the year.
8. EXPORTS
Your company has exported 38,645 MT of woodfree
uncoated printing & writing paper valuing Rs. 128.44
Crores (C & F) during the year 2005-06. Your company has
set a target of 42000 MT for exports during 2006-07.
9. FORFEITURE OF SHARES
A sum of Rs. 18.76 lakhs has been received during the year
towards allotment and call money arrears. During the year,
TNPL has forfeited 427400 shares for which Rs. 293.68
lakhs were overdue. The above shares were forfeited after
ten years of IPO and after giving several notices and
reminders to the defaulting shareholders.
10. FIXED DEPOSITS
Your company has stopped accepting fresh deposits from
1.6.2002 and renewals from 1.8.2005. The outstanding
deposits as on 31.3.2006 was Rs. 10.72 Crores against
Rs. 17.40 Crores in the previous year. Number of
depositors as on 31.3.2006 was 3929 against 6627
depositors in the previous year.
11. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION
AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars required under Sec. 217(1)(e) of the
Companies Act, 1956, read with the Companies (Disclosure
of Particulars in the Report of Board of Directors) Rules,
1988 are furnished in the Annexures to this Report
(Annexure I and II).
12. STATEMENT OF EMPLOYEES’ PARTICULARS
None of the employees drew remuneration of
Rs. 24,00,000 or more per annum/ Rs. 2,00,000 or more
per month during the year. This information is furnished as
required under Section 217(2A) of the Companies Act, 1956
read with the Companies (Particulars of Employees) Rules,
1975.
13. DIRECTORS
Pursuant to the orders of Government of Tamil Nadu, Thiru
D. Rajendran, IAS has been co-opted as an Additional
Director in place of Thiru Rameshram Mishra, IAS w.e.f.
17.10.05. Thiru D. Rajendran, IAS will hold office upto the
date of forthcoming Annual General Meeting and is eligible
for appointment as Director in the Annual General Meeting.
Tvl. R. S. Kanna, IAS, V. R. Mehta and V. Narayanan,
Directors retire by rotation in the forthcoming Annual
General Meeting. They are eligible for re-appointment as
Directors in the Annual General Meeting.
14. COST AUDITORS
Pursuant to orders of the Department of Company Affairs,
M/s S T R & Associates, Cost Accountants, Chennai have
been appointed as Cost Auditors of your Company for the
year 2005-2006.
15. AUDITORS
In terms of Section 619(2) of the Companies Act, 1956 the
Department of Company Affairs has appointed
M/s. Maharaj N. R. Suresh & Co., Chartered Accountants,
Chennai as the Auditors of your Company for the year
2005-2006.
16. INDUSTRIAL RELATIONS
Overall industrial relations during the year were cordial. The
Directors place on record their appreciation of the valuable
contribution made by the employees of your Company
towards the performance and growth of your Company.
17. SOCIAL DEVELOPMENT
Your company is now well perceived as an environment
caring company. It has taken up the all round development
of the Kagithapuram area. Besides building up community
assets, your company has promoted health camps and
poverty alleviation efforts in the area.
17
18. DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the
Companies Act, 1956, with respect to Directors’
Responsibility Statement, it is hereby confirmed:
a) That the applicable accounting standards have been
followed along with proper explanation relating to
material departures, if any;
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D
b) That the selected accounting policies were applied
consistently and judgements and estimates that are
reasonable and prudent were made 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) That the Directors have taken proper and sufficient
care for the maintenance of adequate accounting
records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud
and other irregularities;
d) That the annual accounts were prepared for the
financial year ended 31 st March 2006 on a going
concern basis.
19. CORPORATE GOVERNANCE
Pursuant to Clause 49 of the Listing Agreement with the
Stock Exchanges, Management Discussion and Analysis
Report and Corporate Governance Report are made a part
of this Annual Report.
A Certificate from the auditors of the company regarding
compliance of the conditions of Corporate Governance as
18
stipulated by Clause 49 of the Listing Agreement is
attached to this report.
20. CEO/CFO CERTIFICATION
Thiru S. Ramasundaram, IAS, Chairman and Managing
Director and Thiru A. Velliangiri, Director (Finance) &
Secretary have furnished the certificate as per the
requirement of Clause 49(V) of the Listing Agreement.
21. ACKNOWLEDGEMENT
The Directors have pleasure in recording their appreciation
of the assistance, co-operation and support extended to
your company by the shareholders, Govt. of Tamil Nadu,
the participating Indian Financial Institutions, Commercial
banks, Depositors, Managements of Sugar Mills, the
indentors and customers.
For and on behalf of the Board
S. RAMASUNDARAM, IAS
CHAIRMAN AND MANAGING DIRECTOR
Place : Chennai – 600 032
Date : 9.5.2006
 ANNEXURE – I
PARTICULARS UNDER COMPANIES (DISCLOSURE OF
PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS)
RULES, 1988
I. (A) REPORT ON ENERGY CONSERVATION
1. 1 No. 132 KW clarified water pump was provided with Variable
Frequency Drives with an investment of Rs. 6 lakhs. This has
resulted in annual savings of 1.6 lakh units of electricity.
2. 10 Nos. of running motors were downsized with a total installed
KW reduction of 125 KW. There is no investment in the above
project. The annual savings works out to 1 lakh units.
3. Process modification in Pulp Mill towards energy conservation
through motors removed from service with a combined load of
59 KW. The annual savings works out to 4.8 lakh units.
4. Flash steam vented out to the atmosphere in Paper Machine
I was recovered and utilised in Power Boilers 1 to 4 deaerator.
This has resulted in reduction in LP steam consumption to the
extent of 10,000 MTs per annum, with no investment.
5. The total energy savings works out to Rs. 63 lakhs per annum.
The investment towards Energy Conservation is Rs. 6 lakhs.
6. During the year, energy audit was carried out through
Confederation of Indian Industry, Hyderabad. The
recommended Energy Conservation measures will be
implemented during 2006-07.
I. (B) RESEARCH & DEVELOPMENT AND TECHNOLOGY
ABSORPTION
(AS PER “FORM B” SEE RULE 2)
I. SPECIFIC AREAS IN WHICH R&D CARRIED OUT BY THE
COMPANY
ALTERNATIVE RAW MATERIALS FOR PULPING
Pulping of wood varieties such as Acacia, Pinewood, Wattle and
Blue gum as an alternative to Eucalyptus Hybrid, was carried out
on laboratory scale to assess their suitability and chemicals
requirement and pulp yield.
Suitability of other wood varieties such as Dlabergia Sisoo, Samania
Saman, Hilanthus Execise, Casto Siamea Wood, Gmelina Arborea,
Grenia Tillitolia, Melia Dubia – forest wood species were evaluated
for their pulping performance. In addition, imported mixed hardwood
chips from Australia were also evaluated for their suitability as
alternative.
As an alternative to bagasse fiber source, the suitability of Sabai
Grass, Sorghum Vulgaris were studied for pulping properties.
Suitability of 14 clones of Eucalyptus species was carried out in
comparison to Euca hybrid.
PULPING
Pulping of bagasse received from different offsites was carried out
to comparatively evaluate the differences. Also the effect of
different fiber fractions on pulping of bagasse was studied.
BLEACHING
Bleaching of Acacia, Blue gum, Pinewood and Wattle pulps were
carried out with conventional CE (P) HH bleaching to a brightness
of 85% ISO and compared with Euca hybrid pulp. Comparison was
made with regard to bleach chemical consumption, viscosity and
strength properties.
Elemental chlorine free OO-DHT-E(OP)-D bleaching involving
Oxygen delignification and Chlorine di-oxide was carried out for
Hardwood pulp and compared with conventional CE(P)HH bleaching
with regard to brightness development, yield, pulp properties and
pollutant generation.
ENZYME PREBLEACHING
Use of Xylanase prebleaching stage as step towards Chlorine
reduction and AOX reduction in bleaching was studied in laboratory.
For same ultimate brightness target of 85% ISO, 20% Chlorine
reduction could be achieved with enzyme pretreatment in addition
to proportionate reduction in AOX. Plant scale trials are being
planned.
WILD SUGARCANE
Studies on wild sugarcane developed on trial plantation was carried
out to assess the yield per hectare, pulping and bleaching properties
in comparison to conventional sugarcane. Potential for using High
Fibre Cane varieties with relatively less sugar will be tried as a
fibrous raw material as well as to generate renewable energy.
NEW PRODUCT DEVELOPMENT
COPY CROWN – a multipurpose office stationery with improved
properties over regular copier paper which include brightness, ink
jet printability, reduced two sidedness, whiteness and stiffness
was developed and has been marketed on trial basis. The field
trials on the product performance have been satisfactory. The
new A4 80 gsm premium product is meant to cater the hitech
segment of A4 cut size market.
PRODUCT IMPROVEMENT
Use of alternative Oxidised starch products from different sources
was tried on plant scale and new products could be identified for
surface sizing of paper at lower cost. Two indigenous products and
two imported products were tried. 19
With a view to reduce dusting and linting during printing, use of
additives such as antilinting agents, starch products etc., were
tried on lab scale and on plant scale. The role of additives in improving
surface strength in terms of IGT Viscosity Velocity Product (VVP)
was studied. Recommendations for plant scale continuous addition
have been made.
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D
The role of different wood varieties on pulp properties such as
stiffness, curl needed for Copier was studied.
Improving existing Copier grade to meet International Paper
Products standard was carried out by trial scale in plant with
modifications in pulp combination and additives. Improvement in
Copier quality meeting International Paper Products
recommendations could be achieved.
Use of alternative fillers such as calcined clays, high bright clays,
and Synthetic silicates for high bright products were analysed for
their suitability in laboratory. Some have been recommended for
plant trials.
Improving bulk of products by using BCTMP and through additives
was studied in laboratory. Use of BCTMP to about 10% was tried in
plant scale and bulk improvement could be observed. Further trials
have been planned.
Improving shade stability of products through usage of Direct dyes
and Pigment dyes in place of basic dyes were studied.
Pigmenting of paper for improved printability and surface
characteristics was carried out on trial basis.
PROCESS IMPROVEMENTS
Pulping of Wattle, Blue gum and Hybrid separately instead of mixed
cooking was implemented so as to have better control over pulping
and bleaching.
Usage of Polyelectrolyte for dewatering of lime sludge was studied.
Chloride removal from ESP ash through fractional crystallisation of
sulfate has been implemented in the plant to remove Chloride and
Potassium from system.
Liquid OBA addition without dilution so as to prevent unwanted
quenching of OBA activity by poor water quality has been
implemented.
Addition of Synthetic fillers at the fan pump after centricleaning
system to prevent loss of costly filler and better brightness
realisation with reduced specific consumption in hightech grades.
Installation and stabilisation of conical refiner with specific energy
control for hardwood pulp refining in PM2.
ENVIRONMENT RELATED R&D
Use of Ferric Chloride for colour removal in anaerobic stream was
implemented in plant in place of alum, based on laboratory scale
studies.
Biomethanation process improvements and augmentation of the
20 system with additional reactor to take care of excess bagasse
washing effluent load.
Constant monitoring of environmental parameters, both water and
air and maintaining them within stipulated levels set by Pollution
Control Board.
Installation of Centrifugal Decanter, to take care of excess
secondary sludge generated, in combination with polyelectrolyte
addition.
Trials on sludge dewatering of mixed waste sludge in effluent
treatment plant using belt filters and polyelectrolyte.
Installation of online dust monitoring in limekiln and in one of the
power boilers.
CDM AND CARBON TRADING
The Kyoto Protocol under the United Nations Framework Convention
on Climate Change introduced a market-based approach to combat
climate change through emissions trading and generation of
tradeable green house gas emission reduction credits through
projects. TNPL participated in the CDM process and developed two
projects viz,, GHG reduction from biomethanation plant and GHG
reduction through generation of renewable energy using windmills.
The Biomethanation project got registered with UNFCCC with a
potential CER (Certified Emission Reduction) generation of around
37000 CERs for a period of 10 years.
II. BENEFITS DERIVED AS A RESULT OF ABOVE R&D
• Usage of Bluegum and Wattle has resulted in better pulp yield in
comparison to Euca hybrid.
• Separate pulping of wood species instead of mixed pulping has
paved way for active alkali reduction.
• Wild cane gives improved pulp yield and better tear factor in
comparison to conventional bagasse.
• New product developed meets modern hitech copier segment
requirements.
• Alternatives for additives and process improvements have
reduced chemical requirements.
• Studies on improving surface strength through additives have
improved the paper quality.
• Use of OBA without dilution and continuous monitoring has
reduced OBA overall requirement.
• Pigmenting of paper has paved way for improving bagasse
based paper.
• Use of Ferric Chloride in place of Alum has resulted in cost
savings with reduced sludge and TDS.
• Maximising Biogas production has resulted in furnace oil savings
in Limekiln.
• Installation of centrifugal decanter for secondary sludge has
resulted in reduction in MLSS in the system within controllable
limits.
III. FUTURE PLAN OF ACTION
• Alkaline sizing of bagasse based papers.
• Use of Direct/Pigment dyes for shading and improved colour
stability.
• Studies on ECF bleaching of different wood species and bagasse.
• Enzyme prebleaching and its effectiveness in ECF.
• Biorefining of pulps for energy reduction and better strength
development.
• Pigmenting of bagasse based papers.
• Studies on high fibre cane varieties with low sugar content as efforts are taken to increase exports by exploring new markets.
fibre source and for renewable energy generation.
b. Foreign Exchange Earnings Rs. in lakhs
• Development of seedlings for captive wood plantation.
• Alternative raw material evaluation. Export of PWP (CIF value) 12843.84
• Product and process improvement studies.
I. (D) FOREIGN EXCHANGE OUTGO
IV. EXPENDITURE ON R&D a . Imports (on CIF basis)
Rs. in lakhs Raw materials 7451.17
a) Capital : 23.69 Components, spare parts & chemicals 1931.35
Imported coal 9709.29
b) Recurring : 65.34
Capital goods 1119.53
c) Total : 89.03
Total 20211.34
d) Total R&D expenditure as a : 0.11%
percentage of total turnover b. Other than imports
Engineering & Supervision charges 6.22
I. (C) FOREIGN EXCHANGE EARNINGS Interest & Commitment charges 993.10
a . Activities relating to Exports Repayment of foreign currency loan 3369.81
During the year , the company exported 38645 Mts. of Printing Others 40.51
and Writing Paper valued at Rs. 128.44 crores. Continuous Total 4409.64

21
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

Form A ANNEXURE – II
(See Rule 2)

A. POWER AND FUEL CONSUMPTION

1. Power
S.No. PARTICULARS UOM 2005-2006 2004-2005
Current year Previous year
a) Purchased
Unit Lakh KWH 14.76 14.52
Energy Charges Rs. in lakhs 54.23 53.35
MD & Other Charges ” 362.07 346.57
Total Charges ” 416.30 399.91
Rate/Unit (Excluding MD & Other Charges) Rupees 3.68 3.68
b) Own Generation
(i) Through Steam Turbine/ Generator
Units generated Lakh KWH 4280.18 3810.56
Cost / Unit (Variable Cost) Rupees 1.64 1.58
Units Consumed Lakh KWH 3448.80 3047.04
Cost / Unit (Variable Cost) Rupees 1.57 1.50
Units Exported to TNEB Lakh KWH 831.38 763.52
Cost / Unit (Variable Cost) Rupees 1.93 1.89
(ii) Through Wind Turbine/ Generator * Lakh KWH 309.31 348.86
Cost / Unit (Total Cost) Rupees 2.64 2.14
* Power sold to TNEB (Generation net of imports)
2. Fuel Consumed #
S. No. PARTICULARS 2005-2006 2004-2005
Qty. Total Cost Avg. Rate Qty. Total Cost Avg. Rate
(MT) Rs. lakhs Rs. (MT) Rs. lakhs Rs.
Fuel Purchased
A Indigenous Coal 4136 98.81 2389 44528 903.36 2029
B Imported Coal 360803 8666.28 2402 272746 6565.30 2407
C Raw Lignite – – – 6006 78.62 1309
D Furnace Oil (Kilo Litre) 8092 1179.52 14576 7723 949.60 12295
E Agro Fuel 2037 25.21 1238 7167 82.34 1149
Fuel – Internal Generation
F Pith 88950 104643
G MLSS Pith 13211 16545
H Black Liquor Solids 228991 199071
J Bio Methane Gas - 000 M3 4831 3257
# Includes Fuel consumed for the Inhouse Power exported to TNEB
B. CONSUMPTION PER UNIT OF PRODUCTION OF PAPER
S.No. PARTICULARS UOM Current Year Previous Year
(1) (2)
NP P&WP NP P&WP
a) Electricity KWH 1571 1474 1485 1527
b) Ind.Coal Kg 15 18 187 228
22
c) Imp.Coal Kg 1130 1323 887 1083
d) Raw Lignite Kg 0 0 25 31
e) Furnace Oil Ltr 19 36 23 40
f) Agro Fuel Kg 8 9 30 37
g) Pith Kg 333 390 439 536
h) MLSS Pith Kg 49 58 69 85
i) Black Liquor Solids Kg 802 1005 797 1021
j) Bio-Methane Gas 000 M3 10 21 9 17
 ADDENDUM TO DIRECTORS’ REPORT

Pursuant to the orders of Government of Tamil Nadu, Thiru V. Murthy, IAS was appointed as Managing
Director. Thiru V Murthy, IAS assumed charge on 17.5.06 AN.

Pursuant to the orders of Government of Tamil Nadu, Thiru Shaktikanta Das, IAS and Thiru Sandeep
Saxena, IAS have been appointed as Additional Directors in place of Thiru D. Rajendran, IAS and Thiru
R. S. Kanna, IAS, respectively. The above directors will hold office upto the date of forthcoming Annual
General Meeting and are eligible for appointment as Directors in the General Meeting.

Government of Tamil Nadu have also directed that the Secretary to Government, Industries Department
shall function as Chairman of the Company. Accordingly, Thiru Shaktikanta Das, IAS, has become the
Chairman of the Company.

For and on behalf of the Board

Place: Chennai V. MURTHY, IAS

Date : 20.6.2006 MANAGING DIRECTOR

23
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D
AUDITORS’ REPORT TO THE MEMBERS OF
TAMIL NADU NEWSPRINT AND PAPERS LIMITED
1. We have audited the attached Balance Sheet of TAMIL
NADU NEWSPRINT AND PAPERS LIMITED as at
31st March 2006, the Profit and Loss Account and also the
Cash Flow Statement for the year ended on that date
annexed thereto. These financial statements are the
responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
2. We 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 assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used
and significant estimates 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. As required by the Companies (Auditor’s Report) Order,
2003, issued by the Central Government of India in terms
of sub-section (4A) of Section 227 of the Companies Act
1956, we enclose in the Annexure, a statement on the
matters specified in paragraphs 4 and 5 of the said order.
4. Further to our comments in this Annexure referred to
above, we report that:
i) We have obtained all the information and
explanations, which to the best of our knowledge and
belief were necessary for the purpose of the audit.
ii) In our opinion, proper books of accounts as required
by law have been kept by the company so far as
appears from our examination of those books.
24
iii) The Balance Sheet, Profit and Loss Account and Cash
Flow Statement dealt with by this report are in
agreement with the books of account.
iv) In our opinion, the Balance Sheet, Profit and Loss
Account and Cash Flow Statement dealt with by this
report comply with the accounting standards referred
to in subsection (3C) of Section 211 of the
Companies Act, 1956.
v) On the basis of written representations received from
the directors as on 31st March, 2006 and taken on
record by the Board of Directors, we report that none
of the directors is disqualified as on 31st March 2006
from being appointed as a director in terms of Clause
(g) of sub-section (1) of Section 274 of the
Companies Act, 1956.
vi) In our opinion, and to the best of our information
and according to the explanations given to us, the
said accounts give the information required by the
Companies Act, 1956 in the manner so required and
give a true and fair view in conformity with the
accounting principles generally accepted in India:
a. in the case of the Balance Sheet, of the state of
affairs of the Company as at 31st March 2006;
b. in the case of the Profit & Loss Account of the
PROFIT for the year ended on that date; and
c. in the case of the Cash Flow Statement, of the
cash flows for the year ended on that date.
For MAHARAJ N. R. SURESH & CO.
Chartered Accountants
N. R. SURESH
Place: Chennai Partner
Date : 09th May 2006 Membership No.200/21661
 ANNEXURE REFERRED TO IN PARA 3 OF OUR
REPORT OF EVEN DATE
i) a) The Company has maintained proper records showing
full particulars including quantitative details and
situation of fixed assets.
b) All the assets have not been physically verified by the
management during the year but there is a regular
programme of verification which, in our opinion, is
reasonable having regard to the size of the company
and the nature of its business and assets. No material
discrepancies were noticed on verification.
c) No Substantial part of the fixed assets has been
disposed of during the year.
ii) a) Inventories have been physically verified during the
year by the management. In our opinion, the
frequency of verification is reasonable.
b) The procedures of physical verification of inventory
followed by the management are reasonable and
adequate in relation to the size of the Company and
the nature of its business.
c) The Company is maintaining proper records of
inventory. The discrepancies noticed on physical
verification of stocks as compared to book records
have been properly dealt with in the books of accounts
and were not material.
iii) a) The company has neither granted nor taken any loans,
secured or unsecured to/from companies, firms or
other parties covered in the register maintained under
Section 301 of the Companies Act, 1956.
iv) In our opinion and according to the information and
explanations given to us, there exists an adequate internal
control system commensurate with the size of the
company and the nature of its business with regard to
purchases of inventory and fixed assets and with regard to
the sale of goods and services. During the course of our
audit, we have not observed any continuing failure to
correct major weaknesses in internal controls.
v) In our opinion and according to the information and
explanations given to us, there are no contracts or
arrangements referred to in Section 301 of the Companies
Act, 1956 that need to be entered into the register
maintained under that section.
vi) The company has complied with the provisions of Sections
58A, 58AA or other relevant provisions of the Companies
Act, 1956 and the Companies (Acceptance of Deposits)
Rules, 1975 with regard to the deposits accepted from the
public. No order has been passed by the Company Law
Board or National Company Law Tribunal or Reserve Bank
of India or any Court or any other Tribunal.
vii) In our opinion, the company has an internal audit system
commensurate with its size and nature of its business.
viii) On the basis of records produced to us, we have broadly
reviewed the cost records maintained by the company
pursuant to the rules made by the Central Government for
the maintenance of cost records under Section 209 (1) (d)
of the Companies Act, 1956 and we are of the opinion
that, prima facie, the cost records prescribed have been
made and maintained.
ix) a) The Company is regular in depositing with appropriate
authorities undisputed statutory dues including
Provident Fund, Investor Education and Protection
Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax,
Custom Duty, Excise Duty, Cess and other material
statutory dues applicable to it. According to the
information and explanations given to us, no
undisputed amounts payable were in arrears, as at 31st
March 2006 for a period of more than six months from
the date they became payable. The provisions of
Employees State Insurance Act are not applicable to
the company.
b) According to the information and explanation given to
us, there are no dues of Income Tax, Sales Tax,
Wealth Tax, Service Tax, Customs Duty, Excise Duty
and cess, which have not been deposited on account
of any dispute other than the following:
Sl. Nature of Amount Forum where Dispute
No. Dues Rs. Lacs is pending
1. Income Tax 231.57 Income Tax
Appellate Authorities
2. Wealth Tax 10.22 Wealth Tax
Assessing Authorities
3. Customs Duty 8.68 Madras High Court
4. Customs Duty 217.21 Customs Assessment
Authorities
Total 467.68
x) The Company has no accumulated losses, as at 31st March
2006. The company has not incurred cash losses in the
financial year under report and in the immediately
preceding financial year. 25
xi) The company has not defaulted in repayment of dues to a
financial institution, bank or debenture holders.
xii) The Company has not granted loans and advances on the
basis of security by way of pledge of shares, debentures
and other securities.
xiii) The company is not a chit fund or a nidhi/mutual benefit
fund/society.
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D
xiv) The company was dealing in Mutual Fund investments
during the year. Proper records have been maintained of
the transactions and contracts and timely entries have
been made. The said investments have been held by the
company in its own name. However no such investments
are held as at 31st March 2006.
xv) The company has not given any guarantee for loans taken
by others from bank or financial institutions.
xvi) The term loans have been applied for the purpose for
which they were raised.
xvii) According to the information and explanations given to us
and on an overall examination of the balance sheet of the
Company as at 31.03.2006, we report that no funds
raised on short term basis have been used for long term
investment.
xviii) The company has not made any preferential allotment of
shares to parties and companies covered in the register
maintained under Section 301 of the Act during the year.
26
xix) The company has not issued any debentures during the
year.
xx) The Company has not raised money by public issue
during the year. However the company has received calls
in arrears in respect of Public Issue made in November
1995 for which Project has already been completed.
xxi) According to the information and explanations given to
us, no fraud on or by the company has been noticed or
reported during the course of our audit.
For MAHARAJ N. R. SURESH & CO.
Chartered Accountants
N. R. SURESH
Place : Chennai Partner
Date : 09th May 2006 Membership No.200/21661
COMMENTS OF THE COMPTROLLER AND AUDITOR
GENERAL OF INDIA UNDER SECTION 619 (4) OF THE
COMPANIES ACT, 1956 ON THE ACCOUNTS OF
TAMIL NADU NEWSPRINT AND PAPERS LIMITED FOR
THE YEAR ENDED 31st MARCH 2006

I have to state that the Comptroller and Auditor General of India has no
comments upon or supplement to the Auditors’ Report under Section 619(4)
of the Companies Act, 1956 on the accounts of Tamilnadu Newsprint and
Papers Limited, Chennai for the year ended 31st March 2006.

S. MURUGIAH, I.A. & A.S.

ACCOUNTANT GENERAL
Place : Chennai – 18
Date : 13-07-2006

27
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

REVIEW OF ACCOUNTS OF TAMIL NADU NEWSPRINT AND PAPERS LTD,

CHENNAI FOR THE YEAR ENDED 31ST MARCH 2006 BY THE
COMPTROLLER AND AUDITOR GENERAL OF INDIA
1. FINANCIAL POSITION
The table below summarises the financial position of the Company under broad headings for three years upto 2005-06
(Rs. in lakhs)

2003-04 2004-05 2005-06

LIABILITIES
a) Paid-up Capital (including advances for shares) 6935.86 6935.99 6937.78
b) Reserves and Surplus 37987.69 39607.34 45314.03
c) Borrowings:
i) Short Term & Long Term 25317.43 24677.80 30508.60
ii) Cash Credit 81.77 325.45 304.78
d) Deferred Tax Liability 17603.00 16857.00 15476.00
e) Trade dues and other liabilities (including provisions) 19547.82 23349.85 22972.39
Total 107473.57 111753.43 121513.58

ASSETS
a) Gross Block 136463.58 138344.40 143235.13
b) Less : Depreciation 61368.67 66563.96 72995.94
c) Net Fixed Assets 75094.91 71780.44 70239.19
d) Capital Works-in-progress 968.71 1104.72 11513.28
e) Other Assets / Investments 814.76 114.05 114.05
f) Current Assets, Loans and Advances 30568.81 38734.43 39633.87
g) Intangible Assets:
i) Miscellaneous Expenditure 26.38 19.79 13.19
ii) Accumulated Losses — — —
Total 107473.57 111753.43 121513.58
CAPITAL EMPLOYED 87084.61 88239.21 98413.95
NET WORTH 44897.17 46523.54 52238.62

Note:
1. Capital Employed represents “Net Fixed Assets” PLUS “Working Capital”.
2. Net Worth represents “Paid-up Capital” PLUS “Reserves” LESS “Intangible Assets”.

2. CAPITAL STRUCTURE
a) Debt-Equity Ratio

28 The Debt-Equity Ratio for the Company was 0.35:1 in 2003-04, 0.23:1 in 2004-05 and 0.35:1 in 2005-06.
b) The amount of loans taken from Government of Tamil Nadu outstanding as on 31st March 2006 was Rs. NIL lakhs.

3. RESERVES AND SURPLUS

Reserves and Surplus accumulated upto 31.3.2006 amounted to Rs.45314.03 lakhs as against Rs.39,607.34 lakhs as on 31.3.2005
and Rs.37,987.69 lakhs as on 31.3.2004.

The Reserves and Surplus (Rs.45,314.03 lakhs), amounted to 37.29 percent of the total liabilities in 2005-06 as against 35.51
percent in 2004-05 and 35.35 percent in 2003-04, and 653.14 percent of the equity capital (Rs. 6,937.78 lakhs) in 2005-06 as
against 571.04 percent in 2004-05 and 547.70 percent in 2003-04.
4. LIQUIDITY AND SOLVENCY
a) The percentage of current assets to total net assets varied from 28.44 in 2003-04 to 34.55 in 2004-05 and to 32.62 in
2005-06.
b) The percentage of current assets to current liabilities (including provisions) varied from 156.38 in 2003-04 to 172.53 in
2004-05 and to 172.52 in 2005-06.
c) The percentage of quick assets (Sundry debtors, advances, Cash and Bank balances) to current liabilities varied from 112.08 in
2003-04 to 123.72 in 2004-05 and to 153.01 in 2005-06.

5. WORKING CAPITAL
The working capital (Current assets, Loans and advances LESS trade dues and current liabilities) of the Company at the close of
three years ending with 31.3.2006 amounted to Rs.11,020.99 lakhs, Rs.15,377.51 lakhs and Rs.16,661.48 lakhs respectively and
represented 2.59 months’ value of production in 2005-06; 2.94 months’ value of production in 2004-05; and 2.17 months’ value of
production in 2003-04.

6. SOURCES AND USE OF FUNDS

Funds amounting to Rs. 14,252.96 lakhs from internal sources (Reserves, Depreciation, Provision & Surplus) and Rs. 5811.92 lakhs
from external sources were utilised during 2005-06 as follows:
(Rupees in lakhs)
a) Gross fixed assets including capital works in progress 15299.29
b) Increase in net current assets 3384.59
c) Decrease in Deferred Tax Liability 1381.00
20064.88

7. WORKING RESULTS
The Working Results of the Company for the three years upto 31st March 2006 are tabulated below:
(Rs. in lakhs)

Sl.No. Particulars 2003-04 2004-05 2005-06

a) Profit (+)/Loss (-) as per accounts 5280.08 3794.60 8054.57

Add/Deduct: Investment Allowance Reserve – – –

Add/Deduct: Adjustment for prior period 331.13 – 507.49
b) Profit(+)/Loss(-) for the year 5611.21 3794.60 8562.06

c) Profit(+)/Loss(-) before Tax and Investment Allowance 6857.58 3916.95 10147.36

Tax provision 1577.50 122.35 2092.79

d) Profit(+)/Loss(-) after Tax and before Investment Allowance 5280.08 3794.60 8054.57

e) Percentage of Profit before Tax and Investment Allowance to:

i) Sales 11.75 6.11 13.08
ii) Gross Fixed Assets 5.03 2.83 7.08
iii) Capital Employed 7.87 4.44 10.31
f) Percentage of Profit after Tax and before Investment Allowance to:
29
i) Net Worth 19.76 8.16 15.42
ii) Equity Capital 76.13 54.71 116.09
iii) Capital Employed 6.06 4.30 8.18

The reasons for increase in profit during the year is directly attributed to increase in Sales and Carbon credit sales.
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

8. COST TRENDS
The table below indicates the percentage of cost of sales to sales during three years upto 2005-06
(Rs. in lakhs)

2003-04 2004-05 2005-06

Sales 58359.62 67128.52 77567.10

Less: Profit for the year 6857.58 3916.95 10147.36
Add: Loss for the year – – –
Cost of Sales 51502.04 63211.57 67419.74
Percentage of Cost of Sales to Sales 88.25 94.17 86.92

9. PRODUCTION PERFORMANCE
The value of production during the three years upto 2005-06 worked out below:

(Rs. in lakhs)

2003-04 2004-05 2005-06

1. Sales 58359.62 67128.52 77567.10

2. Closing stock of finished goods and works-in-progress (at cost) 2522.96 1112.58 706.60

3. Opening stock of finished goods and works-in-progress (at cost) 161.12 2522.96 1112.58
4. Value of production (1+2-3) 60721.46 65718.14 77161.12

The percentage of value of production to net worth increased / decreased from 135.24 in 2003-04 to 141.26 in 2004-05 and to
147.71 in 2005-06.

The percentage of value of production to total net assets of the Company fluctuated from 56.49 in 2003-04 to 58.81 in 2004-05
and to 63.5 in 2005-06.

10. INVENTORY AND PRODUCTION

The following table indicates the comparative position of the inventory and its distribution at the close of three years upto 2005-06.
(Rs. in lakhs)

2003-04 2004-05 2005-06

i) Raw materials and components 5104.78 5889.00 6045.60

ii) Stores and Spare parts 1846.36 2452.13 1812.94
iii) Opening Stock of finished goods and works-in-progress (at cost) 1018.31 1099.71 706.60
iv) Finished goods 1504.65 12.87 –
v) Loose tools – – 4.01
30
vi) Other items 901.11 3015.20 3585.71

The stock of raw materials and components, stores, spares was equivalent to 3.61 months’ consumption in 2003-04 compared with
3.29 months’ in 2004-05 and 3.8 months’ in 2005-06.

The works-in-progress at the end of 2003-04 represented about 0.20 months’ value of production at cost as against 0.21 months’
during the year 2004-05 and 0.10 months’ during the year 2005-06.
11. SUNDRY DEBTORS AND TURNOVER
The following table indicates the value of book-debts and sales for three years upto 2005-06.

(Rs. in lakhs)

As on 31st March Book-debts considered Sales during Percentage of

Good Doubtful Total the year debtors to sales

2004 8930.72 1091.97 10022.69 58359.62 17.17

2005 11838.26 648.95 12487.21 67128.52 18.60

2006 12776.68 356.99 13133.67 77567.10 16.93

12. The following table indicates details of debts outstanding for more than one year as on 31.03.2006.

(Rs. in lakhs)

Government Government Private Total

Departments Companies Parties

Debts Outstanding
For 1 - 2 years 38.70 – – 38.70
For 2 - 3 years – – 8.85 8.85
For over 3 years 55.68 – 319.99 375.67
Total 94.38 – 328.84 423.22

ACCOUNTANT GENERAL

31
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

REPORT ON CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement with the Stock Exchanges, a report on Corporate Governance in accordance with the
SEBI prescribed format is given below:

A. MANDATORY REQUIREMENTS

1. Company’s Philosophy
TNPL’s philosophy on Corporate Governance endeavours to achieve highest levels of transparency, integrity and equity, in all its
operations and in its dealings with all its stakeholders, including shareholders, employees, the Government and lenders.

2. Board of Directors

a . Composition and Category of Directors

The composition of Board of Directors is in conformity with the Corporate Governance code.

The Board comprises of a Chairman (Executive Director, nominated by Government of Tamil Nadu), one Executive Director,
three non-executive Directors nominated by the Government of Tamil Nadu, one independent non-executive Director
nominated by Industrial Development Bank of India Limited (equity investor) and five independent non-executive Directors as
on 31.03.2006.

The Independent Directors on the Board are experienced, competent and highly respected persons from their respective fields.
They take active part in the Board and Committee meetings. None of the Directors on the Board is a Member on more than 10
Committees. Necessary disclosures have been made by the Directors in this regard.

Board’s functioning and Procedure

The Board plays a pivotal role in ensuring good governance. The Board’s role, functions, responsibility and accountability are
clearly defined. In addition to its primary role of setting corporate goals and monitoring corporate performance, it directs and
guides the activities of the Management towards the set goals and sets accountability with a view to ensure that the corporate
philosophy and mission viz. to create long term sustainable growth that translates itself into progress, prosperity and the
fulfilment of stakeholders’ aspirations is accomplished. It also sets standards of corporate behaviour and ensures ethical
behaviour at all times and strict compliance with laws and regulations.

b. Attendance of each Director at the Board of Directors’ Meetings held during 2005-2006 and the last AGM is
as follows:

Board of Directors’ Meetings Last AGM

Director
No. of Meetings Held Attended (held on 22.8.05) Attended

EXECUTIVE DIRECTORS
Tvl.
Rameshram Mishra, IAS 3 3 Attended
Chairman and Managing Director
I/c(ceased w.e.f. 8.8.05)

S. Ramasundaram, IAS 5 5 Attended

Chairman and Managing Director
32 (w.e.f. 8.8.05 )

A. Velliangiri 8 8 Attended
Director (Finance)
 Board of Directors’ Meetings Last AGM
Director
No. of Meetings Held Attended (held on 22.8.05) Attended

NON-EXECUTIVE
DIRECTORS FROM GOTN
Rameshram Mishra, IAS – – –
(As non-executive director from
9.8.05 till 17.10.05)
N. Narayanan, IAS 1 1 –
(Ceased w.e.f. 26.5.05)
R. S. Kanna, IAS 8 – Not Attended
D. Rajendran, IAS 4 4 –
(Appointed w.e.f. 17.10.05)
K. Gnanadesikan, IAS 7 3 Not Attended
(Appointed w.e.f. 26.5.05)

INDEPENDENT NON-EXECUTIVE
NOMINEE DIRECTORS FROM
IDBI(EQUITY INVESTOR)
R. S. Agarwal 8 8 Attended

INDEPENDENT NON-
EXECUTIVE DIRECTORS
V. R. Mehta 8 7 Attended
V. Narayanan 8 8 Attended
Dr. S. Janakarajan 2 1 –
(ceased w.e.f. 27.6.05)
R. R. Bhandari 8 8 Attended
G. Prabhakara 7 5 Attended
(appointed w.e.f. 21.4.05)
N. Kumaravelu
(appointed w.e.f. 27.6.05) 6 6 Attended

c. Number of other Company Boards or Board Committees in which each of the Directors of the Company is a
Member or Chairperson:

Directorships held in other Committee Memberships

Name of Director Category Companies Held in other Companies
As Director As Chairman As Member As Chairman

Tvl.
S. Ramasundaram, IAS Executive 1 – – –
D. Rajendran, IAS Non-Executive 6 9 – –
K. Gnanadesikan, IAS Non-Executive 5 – – –
R. S. Kanna, IAS Non-Executive 1 1 – 2 33
R. S. Agarwal Non-Executive 6 – 7 –
V. R. Mehta Non-Executive 5 – 3 2
V. Narayanan Non-Executive 10 2 4 4
G. Prabhakara Non-Executive – – – –
R. R. Bhandari Non-Executive – – – –
N. Kumaravelu Non-Executive 2 – – –
A. Velliangiri Executive – – – –
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

d. Number of Board Meetings held and the dates on which held:

Eight Board Meetings were held during the year 2005-2006 as against the minimum requirement of four meetings. The dates on
which the meetings were held are given below:

21.4.05, 26.5.05, 22.7.05, 22.8.05, 17.10.05, 5.12.05, 20.1.06, 21.3.06

Information placed before the Board of Directors

In addition to matters statutorily requiring approval of the Board, all major items relating to mobilisation of resources, capital
expenditure, investments, acquisitions, technology and risk management are discussed in the Board. All the information laid
down in the Corporate Governance code are placed before the Board of Directors.

All the items on the Agenda are accompanied by notes giving comprehensive information on the related subject and in certain
matters such as financial/business plans, financial results, detailed presentations are made. The agenda and the relevant notes
are sent in advance separately to each Director to enable the Board to take informed decisions.

The minutes of the meetings of the Board are individually given to all Directors and confirmed at the subsequent Board Meeting.
The minutes of the various Committees of the Board are given to the Members of the Committees and thereafter tabled before
the Board for discussion at the subsequent Meeting.

Particulars of Directors being appointed at the Annual General Meeting and Directors retiring by rotation and seeking
reappointment have been given in the Notice convening the 26th Annual General Meeting along with the Explanatory
Statement.

3. Audit Committee
a . Terms of reference
The terms of reference of this Committee are wide enough to cover the matters specified for Audit Committee under Clause 49
of the Listing Agreements as well as in Sec.292(A) of Companies Act and are as follows:
1. Oversight of the company’s financial reporting process and the disclosure of its financial information to ensure that the
financial statement is correct, sufficient and credible.
2. Recommending to the Board the appointment, reappointment and if required, the replacement or removal of the statutory
auditors and fixation of audit fees.
3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

4. Reviewing with the management, the annual financial statements before submission to the Board for approval, with
particular reference to :
a . Matters required to be included in the Directors’ Responsibility Statement to be included in the Board’s report in terms
of Clause (2AA) of Section 217 of the Companies Act, 1956.
b. Changes, if any, in accounting policies and practices and reasons for the same.
c. Major accounting entries involving estimates based on the exercise of judgment by management.
d. Significant adjustments made in the financial statements arising out of audit findings.
e . Companies with listing and other legal requirements relating to financial statements.
f. Disclosure of any related party transactions.
g. Qualifications in the draft audit report.
5. Reviewing, with the management, the quarterly financial statements before submission to the Board for approval.

6. Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control
34 systems.

7. Reviewing the adequacy of internal audit functions, including the structure of the internal audit department, staffing and
seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

8. Discussions with internal auditors any significant finding and follow-up thereon.

9. Reviewing the findings of any internal investigations by the internal auditors into matter where there is suspected fraud or
irregularity or a failure of internal control systems of a material nature and reporting the matter to the Board.

10. Discussions with statutory auditors before the audit commences, nature and scope of audit as well as have post-audit
discussion to ascertain any area of concern.
 11. To look into the reasons for substantial default in the payment to depositors, debentureholders, shareholders (in case of
non-payment of declared dividend) and creditors.
12. Reviewing the company’s financial and risk management policies.
13. The audit committee should have discussions with the auditors periodically about the internal control systems, the scope of
audit including the observations of the auditors and review the half yearly and annual financial statements before
submission to the Board and also ensure compliance of internal control systems.
14. The Audit Committee shall have authority to investigate into any matter in relation to the items specified in this section or
referred to it by the Board and for this purpose, shall have full access to information contained in the records of the
company and external professional advice, if necessary.
15. To review internal audit programme, to ensure coordination between the internal and statutory auditors, to ensure the
internal audit function is adequately resourced and has appropriate standing within the company and to request internal
audit to undertake specific audit projects, having informed management of their intentions.
16. Review of Cost Audit Report.
17. Reviewing any other areas which may be specified as role of the audit committee under amendments, if any, from time to
time, to the Listing Agreement, Companies Act and other statutes.
18. Considering such other matters as may be required by the Board.
The Audit Committee mandatorily reviews the following information :
1. Management discussion and analysis of financial condition and results of operations;
2. Statement of significant related party transactions (as defined by the audit committee), submitted by management;
3. Management letters / letters of internal control weaknesses issued by the statutory auditors;
4. Internal audit reports relating to internal control weaknesses; and
5. The appointment, removal and terms of remuneration of the Chief internal auditor shall be subject to review by the
Audit Committee.
The recommendations of the Audit Committee on any matter relating to financial management, including the audit report,
shall be binding on the Board.

b. Composition, name of members and Chairperson

In TNPL, the Audit Committee was established even before the introduction of the Corporate Governance code. Currently, the
following five non-executive Directors are the members in the Audit Committee:
Thiru V. Narayanan, Chairman of the Committee
Thiru V. R. Mehta, Member
Thiru R. S. Agarwal, Member
Thiru R. R. Bhandari, Member
Thiru N. Kumaravelu, Member

Thiru V. R. Mehta was the Chairman of the Audit Committee till 21st April 2005. Thiru V. Narayanan became the Chairman of the
Audit Committee from 26th May 2005.

The CMD, Director (Finance), Senior Management Executives, Statutory Auditors, External Internal Auditors and Cost Auditors
are invited to the Audit Committee meetings.

c. Meetings and attendance during the year

No. of Meetings
Director Attended
Held
Tvl.
35
V. Narayanan 6 6
V. R. Mehta 7 6
R. S. Agarwal 7 7
R. R. Bhandari 7 7
S. Janakarajan 1 1
(ceased w.e.f. 8.6.05)
N. Kumaravelu 4 4

The Audit Committee met 7 times during 2005-06 as against the minimum requirement of 3 meetings.
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

4. Remuneration Committee

a . Remuneration Policy
Thiru Rameshram Mishra, IAS was holding additional charge as Chairman and Managing Director till 8.8.05 and was being paid
remuneration by the Govt. in accordance with the Govt. Rules as applicable to his cadre.

Thiru S. Ramasundaram, IAS is holding additional charge as Chairman and Managing Director with effect from 8.8.05 and is
being paid remuneration by the Govt. in accordance with the Govt. Rules as applicable to his cadre.

Thiru A. Velliangiri, Director (Finance) is drawing remuneration as per TNPL Rules applicable to officers of his category. No
remuneration except sitting fees for attending the Board/Committee Meetings is paid to other Directors. As such, there has
been no need to constitute a Remuneration Committee.

b. Details of remuneration for the year ended 31.3.2006

Executive Directors
(Rs. in lakhs)

Pay & Reimbursement of

Name & Position Perquisites Total Retirement Benefits
Allowances medical expenses

Tvl.
A. Velliangiri 7.89 0.49 1.97 10.35 Gratuity and
Director (Finance) Superannuation as
per rules of the company
Rameshram Mishra, IAS 0.37 – – 0.37 As per Govt. rules
applicable to his cadre
S. Ramasundaram, IAS – 0.17 – 0.17 As per Govt. rules
applicable to his cadre

Non-Executive Directors
Remuneration by way of sitting fees for attending Board/ Board Committee Meetings are paid only to non-executive Directors.
Sitting fees paid to non-executive Directors during the financial year are given below:

Sitting Fees Paid

Name of the Director
(Rs.)
Tvl.
Rameshram Mishra, IAS 18000 *
N. Narayanan, IAS 6000 *
S. Ramasundaram, IAS 24000 *
D. Rajendran, IAS 28000 *
K. Gnanadesikan, IAS 22000 *
R. S. Agarwal 93500
V. R. Mehta 69000
V. Narayanan 84500
Dr. S. Janakarajan 15000
R. R. Bhandari 89000
G. Prabhakara 34000 **
36
N. Kumaravelu 63500
Total 546500

* remitted to Govt. of Tamil Nadu

** remitted to LIC

Independent Directors were paid sitting fees of Rs. 6,000/- per meeting of the Board and Rs. 4,500/- per meeting of the Committee
of the Board. This has been increased to Rs.10,000/- per meeting uniformly for Board meetings and Committee meetings with
effect from 1.2.2006.
5. Shareholders’ Committee
a . Shareholders’/Investors’ Grievances Committee
Shareholders’ complaints/grievances are redressed by the Registrar and Transfer Agent, namely M/s.Cameo Corporate
Services Limited. The Board also constituted the Shareholders’/Investors’ Grievances Committee in August 2001. The following
two non-executive directors are the members in the Shareholders’/ Investors’ Grievances Committee as on 31.3.2006.
1. Thiru R. S. Agarwal Chairman of the Committee
2. ’’ R. R. Bhandari Member
3. ’’ N. Kumaravelu Member

Thiru R. S. Agarwal became the Chairman of the Investors’ Grievances Committee from 26.5.05.

The Investors’ Grievances Committee review and redress the grievances/complaints received from Shareholders/Investors. The
Shareholders’/Investors’ Grievances Committee met on 26th May 2005 and reviewed the grievances/complaints received and the
action taken on the grievances / complaints.

Complaints Status: 1.4.2005 to 31.3.2006

¾ Number of shareholders’ complaints received so far : 159
¾ Number not solved to the satisfaction of shareholders : Nil
¾ Number of pending complaints : Nil

b. Share Transfer Committee

To expedite the process of share transfers, the Board has delegated the powers of share transfers to a Committee comprising
of CMD, Director (Finance) and Chief General Manager (Finance). The Share Transfer Committee attends to the share transfer
formalities thrice a month. The business transacted at the Share Transfer Committee meetings is placed before the Board
regularly.

All valid share transfers during the year ended 31.3.06 have been acted upon. No share transfer was pending as on 31.3.06.

6. General Body Meetings

a . Last three Annual General Meetings were held as below:

Year Location Date Time

2002-03 Music Academy 13.8.2003 10.00 AM

Chennai 14
2003-04 -do- 20.8.2004 10.00 AM
2004-05 -do- 22.8.2005 10.25 AM

b. No special resolution was put through postal ballet last year nor is any proposed for this year.

7. Disclosures

a . Disclosures on materially significant related party transactions i.e. transactions of the company of material nature, with its
promoters, the directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the
interests of the company at large.

There were no such transactions during the year except the remuneration paid to Wholetime Directors of the company.
37
b. Details of non-compliance by the company, penalties, strictures imposed on the company by stock exchanges or SEBI or any
statutory authority on any matter related to capital markets during the last three years.

None

Code of Conduct
The Board of Directors has framed the Code of Conduct for Board Members and Senior Management. The code of conduct has
been communicated to the Directors and the Members of the Senior Management. The code of conduct has also been posted
on the Company’s website www.tnpl.co.in
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

8. Means of Communication
a . Half-yearly report sent to each household of shareholders : No
b. Quarterly results :
Newspapers published in : Financial Express
Economic Times
Daily Thanthi
Namadhu M G R
Website where displayed www.tnpl.co.in
c. Whether the website also displays official : Yes
news releases and presentations to the
media, analysts, institutional investor’s
etc.?
d. Audited financial results : Economic Times
(Newspapers published in) Financial Express
Daily Thanthi
e . Whether MD&A (Management : Yes
Discussion & Analysis) is a part of
Annual Report ?

The company also informs by way of intimation to the Stock Exchanges all price sensitive matters and such other matters which in
its opinion are material and of relevance to the shareholders and subsequently issues a Press Release on the said matters.

All data required to be filed electronically as EDIFAR document pursuant to Clause 51 of the Listing Agreement with the Stock
Exchanges such as quarterly financial results, shareholding pattern, are being regularly filed on the EDIFAR website, in addition to
the filing of the same with the Stock Exchanges.

9. SHAREHOLDERS’ INFORMATION
i) Annual General Meeting
- Date and Time : August 25, 2006 at 10.25 a.m.
- Venue : The Music Academy, 168, T.T.K.Road, Chennai – 600 014.
ii) Financial Year Calendar : Results for quarter ending June 30, 2006 Fourth week of July 2006.
(2006-2007) (Tentative) Results for quarter ending September 30, 2006 Fourth week of October 2006.
Results for quarter ending December 31, 2006 Fourth week of January 2007.
Results for quarter ending March 31, 2007 Second week of May 2007.
iii) Book closure date : 18.08.2006 to 25.08.2006 (both days inclusive) on account of AGM and Dividend.
iv) Dividend payment date : 26.08.2006 onwards.
v) Listing of Equity Shares on
a) Stock Exchanges at : 1) National Stock Exchange of 2) Mumbai Stock Exchange,
India Limited Listing Department
Plot No.C/1, G Block Phiroze Jeejeebhoy Towers
Bandra-Kurla Complex 25th Floor
Bandra (E) Dalal Street
Mumbai – 400 051 Mumbai – 400 001

b) Depositories : 1) National Securities Depository Ltd.

Trade World, 4th Floor
Kamala Mills Compound
Senapati Bapat Marg
38 Lower Parel
Mumbai – 400 013.
2) Central Depository Services (India) Limited
28th Floor, Phiroze Jeejeebhoy Towers
Dalal Street
Fort, Mumbai – 400 023.
Listing fee for the year 2006-2007 has been paid to the above Stock
Exchanges.
vi) Stock Code : Trading Symbol Bombay Stock Exchange : “TNPL 31426”
Trading Symbol National Stock Exchange : “TNPL EQ”
Trading Symbol National Stock Exchange : “TNPL AE’’/
(Demat Segment) “TNPL BE’’
vii) Market Price Data (In Rs.)

Bombay Stock Exchange (BSE) National Stock Exchange (NSE)

High Price Low Price Volume High Price Low Price Volume

April 2005 65.00 57.50 827771 63.50 57.30 3178625

May 2005 80.95 60.50 2872112 81.20 60.00 7365041
June 2005 88.45 74.50 3666837 88.80 74.50 7855880
July 2005 90.90 78.75 1715844 99.40 78.50 5090572
August 2005 97.00 80.00 5909917 96.10 80.30 10515083
September 2005 103.80 81.60 5077848 103.75 78.60 11078347
October 2005 100.00 79.25 2033416 97.40 79.00 4548883
November 2005 91.95 80.05 1007024 91.80 79.00 2789009
December 2005 92.25 76.25 2109502 91.90 82.50 5341459
January 2006 102.70 85.00 3828745 102.40 88.00 8638114
February 2006 109.00 91.00 4685538 108.80 90.55 8612391
March 2006 120.40 104.50 6036440 120.65 104.20 9833390

viii) Share price performance in comparison to broad based indices – BSE Sensex and NSE Nifty :

Year BSE Sensex NSE Nifty

1-4-2005 % change in % change in TNPL % change in % change in TNPL

to TNPL Share Sensex reactive TNPL Share Nifty reactive
31-3-2006 Price to Sensex Price to Nifty

Financial
Year 98.72% 73.73% (+)24.99% 98.72% 67.15% (+)31.57%
2005-2006

39

SENSEX and TNPL share prices are based on month end closing rates.
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D
NIFTY and TNPL share prices are based on month end closing rates.
ix) Registrar and Transfer Agent
x) Share Transfer System
i) Share Transfers
ii) Nomination facility for
shareholding
40 iii) Payment of dividend through
Electronic Clearing Services
iv) Unclaimed dividends
: Securities Exchange Board of India (SEBI) has mandated, vide Circular No. D&CC/
FITTC/CIR-15/2002 dated December 27, 2002 that all Share Registry work relating to
both physical shares and shares held in electronic mode must be maintained at a
single point, either in-house or by a SEBI registered Registrar and Transfer Agent.
The Company has already enlisted the services of M/s Cameo Corporate Services
Ltd., Chennai to act as Registrar and Transfer Agents to handle all investor services
relating to shares held in physical form as well as in electronic mode. Their address is
given below :
M/s Cameo Corporate Services Ltd.
V Floor, “Subramanian Building”
No.1 Club House Road
Chennai – 600 002
Tel.No.044-28460390 - 28460394
Fax No.044-28460129
E-mail ID : cameo@cameoindia.com
:
: The shares of the Company, being in the compulsory demat list, are transferable
through the depository system. Shares in physical form are processed and the share
certificates are generally returned within a period of 7 days from the date of
receipt.
As per the Guidelines of SEBI/Stock Exchanges, a Demat Option Letter is sent to
the transferees, seeking their option, as to whether the shares transferred in their
name, would be demated by them or they would like to hold the shares, in physical
form. After 30 days time, if the Demat Request Form is not received alongwith the
Demat Option Letter, duly accepted, physical share certificates are despatched to
the transferees.
All transfers received are processed and approved by the Share Transfer
Committee which normally meets thrice in a month. Shares under objection are
returned within two weeks.
: As per the provisions of the amended Companies Act 1956, facility for making
nomination is available for shareholders in respect of shares held by them.
Nomination forms can be obtained from the share transfer agent.
: The Securities and Exchange Board of India (SEBI) has made it mandatory for all
companies to use the bank account details furnished by the depositories for
depositing dividends through Electronic Clearing Service (ECS) to the Investors
wherever ECS and Bank details are available. In the absence of ECS facility the
Company is required to print the Bank account details if available on payment
instruments for distribution of dividend etc. to the shareholders.
: The company is required to transfer dividends which have remained unpaid/
unclaimed for a period of seven years to the Investor Education & Protection Fund
established by the Government. The Company will accordingly be required to

v) Correspondence regarding
Change of Address etc.
vi) Pending Investors’ Grievances
xi) Distribution of Shareholding as on 31st March, 2006.
transfer in the year 2006, the dividend for the year ended March 31, 1999 which
have remained unclaimed/unpaid.
: Shareholders are requested to ensure that any correspondence for change of
address, change in Bank Mandates etc. should be signed by the first named
shareholder. Shareholders who hold shares in dematerialised form should correspond
with the Depository participant with whom they have opened Demat Account/s.
: Any Shareholder whose grievance has not been resolved to his/her satisfaction may
kindly write to the Asst. Company Secretary at the Registered Office with a copy of
the earlier correspondence.

DISTRIBUTION SCHEDULE AS ON 31ST MARCH 2006

Shareholding of
Shareholders Shares
Nominal value of

Rs. Number % to Total In Rupees % to

Total
(1) (2) (3) (4) (5)
Upto - 5000 20315 87.57 30297290 4.38
5001 - 10000 1345 5.80 11602190 1.68
10001 - 20000 635 2.74 10170400 1.47
20001 - 30000 259 1.12 6752370 0.98
30001 - 40000 110 0.47 4075070 0.59
40001 - 50000 139 0.60 6734280 0.97
50001 - 100000 185 0.80 13755380 1.98
100001 And Above 209 0.90 608719020 87.95
TOTAL 23197 100.00 692106000 100.00

Distribution of Shareholding as on 31.03.2006

NO. OF % OF SHARE
CATEGORY
SHARES HOLDING
A PROMOTERS’ HOLDING
1. Promoters
– Indian Promoters 24444900 35.32
– Foreign Promoters Nil Nil
2. Persons acting in Concert # – –
SUB-TOTAL 24444900 35.32
B. NON-PROMOTERS’ HOLDING
3. Institutional Investors – –
a. Mutual Funds 13335596 19.27
b. Banks, Financial Institutions, Insurance 14205562 20.53
Companies, Central/State Govt.
Institutions/Non-Government
Institutions)
c. Foreign Institutional Investors 2884533 4.16
41
SUB-TOTAL 30425691 43.96
4 OTHERS
a. Private Corporate Bodies 3574254 5.16
b. Indian Public 9979031 14.42
c. NRIs/OCBs 558291 0.81
d. Others 228433 0.33
SUB-TOTAL 14340009 20.72
GRAND TOTAL 69210600 100.00
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

Share Holding Pattern

As on 31.03.2006 As on 31.03.2005
No. of Shares % to shares No. of Shares % to shares

Governor of Tamil Nadu 2,44,44,900 35.32% 2,44,44,900 35.10%

Foreign Institutional Investors 28,84,533 4.17% 29,57,828 4.25%
Indian Mutual Funds 1,33,35,596 19.27% 51,89,236 7.45%
Banks 7,55,108 1.09% 90,52,054 13.00%
Indian Financial Institutions 2,94,726 0.43% 3,04,826 0.44%
Insurance Companies 1,01,94,368 14.73% 1,12,08,877 16.09%
Non-Resident Companies 35,000 0.05% 54,600 0.08%
Employees 45,100 0.07% 55,800 0.08%
Limited Companies 65,35,614 9.44% 67,64,467 9.71%
NRIs 5,23,291 0.75% 2,28,995 0.33%
Public & Trust 99,37,832 14.36% 91,13,190 13.09%
Shares Dematerialised/Shares in transit 2,24,532 0.32% 2,63,227 0.38%
Total 6,92,10,600 100.00% 6,96,38,000 100.00%

xii) Dematerialisation of Shares and liquidity : For Dematerialisation of Equity shares, the Company has entered into a
tripartite agreement with National Securities Depository Limited (NSDL)
and Central Depository Services (India) Limited (CDSL). The Company’s
Equity shares have been included in the list in which trading is compulsory
for all investors in dematerialised form, along with other scrips, from
8.5.2000.
42
Details of Demat shares as at 31st March 2006 :
No. of Shareholders No. of Shares % to Capital
NSDL 15599 37961106 54.85
CDSL 2366 27964838 40.40
Physical Form 5230 3284656 4.75
Total 23195 69210600 100.00
 As on March 31, 2006, 17965 shareholders are holding
shares in demat form and 6,59,25,944 shares have
been dematerialized, representing 95.25% of the total
Equity Share capital.

xiii) Outstanding GDRs/ADRs/Warrants or any

Convertible Instruments, conversion date and
likely impact on equity : Nil

xiv) Plant locations : Kagithapuram

Karur District
Tamil Nadu
Pin : 639 136
Tel.No.04324-277001 to 277017
Fax : 04324-277025/277026/277027

xv) Address for correspondence :

a) Investor correspondence for transfer/
dematerialisation of shares, payment of
dividend on shares, and any other query
relating to the shares of the Company
: M/s Cameo Corporate Services Ltd.
V Floor, “Subramanian Building”
No.1 Club House Road
Chennai – 600 002
Tel.No.044-28460390 - 28460394
Fax No.044-28460129
E-mail ID : cameo@cameoindia.com
Contact Person : Thiru D. Narasimhan
Executive

b) Any query on Annual Report : Shares Department

Tamil Nadu Newsprint and Papers Ltd.
67, Mount Road, Guindy,
Chennai – 600 032.
Tel.No.22354417 Fax No. 22350834 & 22354614
e-mail address : response@tnpl.co.in, sivakumar.v@tnpl.co.in
Contact Person : Thiru V. Sivakumar
Asst. Company Secretary

43
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

B. NON-MANDATORY REQUIREMENTS

1. The Board

a . Whether Chairman of the Board is entitled to maintain a Chairman’s Office at the Company’s expenses and also allowed
reimbursement of expenses incurred in performance of his duties.
Chairman is an executive Director in the company.

b. Independent directors may have a time not exceeding in the aggregate a period of nine years on the Board of the Company.
Presently the company has not adopted the above non-mandatory requirement.

2. Remuneration Committee
The Company has not formed Remuneration Committee.

3. Shareholders’ Rights
The half-yearly results of the company are published in more than one English newspaper having a wide circulation and in one Tamil
Newspaper. (vide para 8(d) of this Report). The results are not sent to the shareholders individually.

4. Audit Qualification
There is no qualification of Accounts during the year.

5. Training of Board Members

Presently the company does not have training programme for Board Members.

6. Mechanism for evaluating non-executive Board Members

Presently the company does not have any mechanism for evaluating the performance of Non-executive Board Members.

7. Whistle Blower Policy

Presently the company does not have a Whistle Blower Policy.

This is the report on Corporate Governance referred to in our Certificate of even date.

For MAHARAJ N. R. SURESH & CO.

CHARTERED ACCOUNTANTS

Place : Chennai (N. R. SURESH)

Date : 9.5.2006 Partner

CERTIFICATE OF COMPLIANCE WITH THE CODE OF CONDUCT POLICY

As provided under Clause 49 of the Listing Agreement with the Stock Exchanges, the Board Members and the Senior Management
Personnel have confirmed compliance with the Code of Conduct for the period ended 31st March 2006.

44
For TAMIL NADU NEWSPRINT AND PAPERS LIMITED

Place : Chennai S. RAMASUNDARAM, IAS

Date : 9.5.2006 Chairman and Managing Director
 REPORT ON CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement with the Stock Exchanges, a report on Corporate Governance in accordance with the
SEBI prescribed format is given below:

A. MANDATORY REQUIREMENTS

1. Company’s Philosophy
TNPL’s philosophy on Corporate Governance endeavours to achieve highest levels of transparency, integrity and equity, in all its
operations and in its dealings with all its stakeholders, including shareholders, employees, the Government and lenders.

2. Board of Directors

a . Composition and Category of Directors

The composition of Board of Directors is in conformity with the Corporate Governance code.

The Board comprises of a Chairman (Executive Director, nominated by Government of Tamil Nadu), one Executive Director,
three non-executive Directors nominated by the Government of Tamil Nadu, one independent non-executive Director
nominated by Industrial Development Bank of India Limited (equity investor) and five independent non-executive Directors as
on 31.03.2006.

The Independent Directors on the Board are experienced, competent and highly respected persons from their respective fields.
They take active part in the Board and Committee meetings. None of the Directors on the Board is a Member on more than 10
Committees. Necessary disclosures have been made by the Directors in this regard.

Board’s functioning and Procedure

The Board plays a pivotal role in ensuring good governance. The Board’s role, functions, responsibility and accountability are
clearly defined. In addition to its primary role of setting corporate goals and monitoring corporate performance, it directs and
guides the activities of the Management towards the set goals and sets accountability with a view to ensure that the corporate
philosophy and mission viz. to create long term sustainable growth that translates itself into progress, prosperity and the
fulfilment of stakeholders’ aspirations is accomplished. It also sets standards of corporate behaviour and ensures ethical
behaviour at all times and strict compliance with laws and regulations.

b. Attendance of each Director at the Board of Directors’ Meetings held during 2005-2006 and the last AGM is
as follows:

Board of Directors’ Meetings Last AGM

Director
No. of Meetings Held Attended (held on 22.8.05) Attended

EXECUTIVE DIRECTORS
Tvl.
Rameshram Mishra, IAS 3 3 Attended
Chairman and Managing Director
I/c(ceased w.e.f. 8.8.05)

S. Ramasundaram, IAS 5 5 Attended

Chairman and Managing Director
(w.e.f. 8.8.05 ) 45

A. Velliangiri 8 8 Attended
Director (Finance)
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D
MANAGEMENT DISCUSSION AND ANALYSIS
I. INDUSTRY SCENARIO
The Indian Paper Industry ranks 15 among the global
th
producers. The industry is fragmented with over 600
units. Capacity is ranging from 3 tpd to 700 tpd. Total
production capacity is 7.82 million tonnes. Actual
production is 5.94 million tonnes. Consumption 6.378
million tonnes. 12 top players with a capacity of over
1 lakh tonnes per annum account for a production of
2 million tonnes equivalent to 1/3rd of the total production.
Indian average per capita paper consumption is 6 kg.
against the Asian average of 45 kg. and world average of
54 kg. The economic growth and the increase in the
literacy rate are expected to increase the per capita
consumption to 8-9 kg. by 2010 and 11-12 kg. by 2015.
The compounded average growth rate in the last three
years is 5.47%. The current growth rate is estimated at
5% for NP and 6% for PWP. Within PWP, non-surface
sized papers are expected to grow at 3-4%, Surface
sized paper at 6-8% and copier at 15%. Raw material
shortage, high capital outlay, strict environmental
regulations are the major entry barriers for the industry.
Because of the entry barriers, only very few greenfield
projects are at sight. Many ‘A’ grade mills are upgrading
their facilities with cleaner technology for improving their
competitiveness. Some ‘B’ grade mills are also expanding
their capacity. Small mills not complying with environmental
regulations may be forced to close down their operation in
course of time. The demand for quality products is on the
rise.
The industry is open to competition from the global
players. Imports are freely allowed. In the Union Budget
2006-07, the import duty on paper has been reduced
from 15% to 12.5% with effect from 1.3.2006.
Countervailing duty of 4% introduced with effect from
1.3.2006 is levied on PWP. Import duty on newsprint is
retained at 5%. Countervailing duty is not levied on
newsprint imports. IPMA member mills have exported
around 2 lakh mts. during 2005-06. Imports during
2005-06 was 9 lakh mts. This includes newsprint imports
of 7 lakh mts.
II. STRATEGY
With the increasing competition the manufacturing units
46
are compelled to upgrade the technology and the scale of
operation to supply quality products at competitive rates.
TNPL’s strategy in this regard has been to restructure the
company thoroughly to impart to it the ability to meet the
adverse conditions and evolve as a globally competitive
low cost producer. The strategy adopted in this regard
are discussed hereunder:
• Technology upgradation
• Work continuously on cost reduction
• Redesign the financial structure to bring down the
interest costs
• Get customer centric
• Be an innovative company
• Development of Human Resources
The strategy has worked well and facilitated the company
to post a healthy profit during 2005-06.
Technology Upgradation
TNPL expanded the capacity from 90000 tpa to 180000
tpa during 1993-96 by installing a new Paper Machine.
Then enhanced the capacity to 230000 tpa during
2002-03 through upgradation of Paper Machines. Under
the Mill Development Plan being implemented, the existing
hardwood line of 120 tpd will be replaced with a new
300 tpd hardwood line with ECF bleaching. The existing
two Chemical bagasse bleach lines with a total capacity
of 400 tpd will be replaced with a single line of 500 tpd
with ECF bleaching. The paper capacity will be increased
from 230000 tpa to 245000 tpa. The cut pack line
capacity will be expanded from 150 tpd to 350 tpd by
December 2006 through adding a new Cut Pack line of
200 tpd.
The emphasis on the economies of scale and technology
upgradation has transformed the company into an
efficient producer in the global arena.
Work Continuously on Cost Reduction
Companies capable of keeping the cost of production low
alone can survive the increasing competition. Having this
in view, TNPL has been working continuously on cost
reduction measures. The focus has been on pulp and
energy cost. Hardwood pulp production was increased
from 38263 mts. in 2004-05 to 41907 mts. in 2005-06.
This is the sixth year in a row in which the hardwood pulp
production has been increased with the existing facilities.
Pulp furnish is optimised through usage of purchased pulp
of different varieties.
Captive power capacity was increased from 36.5 MW to
61.12 MW during 2001-02. The capacity will be increased
to 81.12 MW during 2006-07 by adding a new 20 MW TG
under Mill Development Plan. TNPL will be self-sufficient in
power even after enhancing the pulp & paper capacity
under MDP. Surplus power will continue to be exported to
the State grid.
Redesign the Financial Structure to bring down training is imparted to improve the knowledge and skill of
Interest Costs the employees. The employees are encouraged to handle
greater responsibilities. M/s Price Waterhouse Coopers
TNPL has pre-paid high cost loans and swapped the high
(P) Ltd (PWC) have developed the Key Performance
cost multi-currency world bank loan of USD 45 million with
Indicators (KPI) and Competency Mapping for all the
USD denominated FCNR(B) loan. The swap has benefited
executives upto the level of Managers. TNPL employees
TNPL a sum of Rs. 34 crores between December 2002 and
have carried out a number of projects under TQM for
March 2006 in the form of reduction in loan liability: USD
improving the operation, performance and reducing the
3.74 million (Rs 16.68 crores) and reduction in financial
cost of production.
charges: USD 3.88 million (Rs.17.32 crores). The average
cost of loans outstanding as on 31.3.06 is 6.30 %.
III. THE SUCCESS DRIVERS
Bagasse Management
Getting Customer Centric
TNPL requires around one million tonnes of wet whole
TNPL adopts the production mix in line with the market
bagasse per annum for a production of 2,30,000 MT per
requirement. The Newsprint and Printing & Writing Paper
annum. As of date, TNPL has firm tie-up arrangements
production ratio was 33:67 in 2000-01. Newsprint
with seven sugar mills in Tamil Nadu for procuring bagasse
production has been gradually reduced from 33% in
on steam substitution basis. TNPL can procure more than
2000-01 to 4% during 2004-05 and to 2% during
one million tonnes of bagasse from the above tied-up
2005-06. The manufacturing flexibility has helped the
sources. TNPL is not likely to face bagasse shortage in
company to earn profits even during hard times.
the years to come. As on 31.3.2006, TNPL has stocked
315000 MT of depithed bagasse. Equivalent wet whole
TNPL has increased the Copier production from 19,311 MT
bagasse is: 420000 Mts.
in 2003-04 to 28,141 MT in 2004-05 and to 37645 MT in
2005-06, registering a growth of 46% and 34% Pulpwood Management
respectively. The target production for 2006-07 is 42,000
Hardwood pulp production capacity is 120 tpd. Under the
MT. During the year, TNPL has launched a new product,
Mill Development Plan, the hardwood line will be replaced
namely “TNPL Copy Crown”, for Inkjet and Laser printers.
with a new state-of-art 300 tpd hardwood line with ECF
Two new products, namely, TNPL Offset Printing and
bleaching, recovery boiler and other facilities. Pulpwood
Elegant Printing introduced during 2004-05 to meet the
requirement thereafter will be increased from 1.50 lakh MT
requirements of ever increasing publishing segment have
to 3.50 lakh MT per annum. To meet the additional
been received well in the market. TNPL has exported
requirement, TNPL has entered into a long term agreement
38645 MT uncoated wood free printing & writing paper
with Tamil Nadu Forest Plantation Corporation Ltd.
during 2005-06. An optimum mix of market sales, direct
sales and exports has enabled the company to obtain the In addition, TNPL has started implementing Farm Forestry
best value for its products. and Captive Plantation schemes from 2004-05. So far,
TNPL has raised pulpwood plantation in 7945 acres under
Be an Innovative Company farm forestry scheme and in 1373 acres under captive
plantation scheme. It is proposed to raise pulpwood
TNPL has installed shoe press in both the paper machines
plantation in 7000 acres under Farm Forestry Scheme and
and a state of art pre-metered size press in paper
machine-I. TNPL has installed a bio-methanation plant 3000 acres under Captive Plantation Scheme during
2006-07. The farm forestry and captive plantation will be
generating about 15,000 M3 of methane gas per day.
continued in the ensuing years also as a regular feature
The methane gas is used in limekiln replacing 10-12 KL of
furnace oil per day and part quantity of coal in the boilers. for sourcing additional quantity of pulp wood.
TNPL is the first paper mill in the country which has Fuel Management
registered a project with UNFCCC for availing carbon
TNPL uses solid fuel in the main factory for generation of
credit. Thus there has always been a comprehensive
steam and power. TNPL procures bagasse from the sugar
focus on products and processes to bring them into the
mills in substitution of steam generated through solid fuel.
best practices.
Both in the main factory and sugar mills, TNPL uses all 47
available agro fuels such as saw dust, paddy husk, coir
Development of Human Resources
pith and coconut shells. TNPL uses a judicious mix of
Human Resources Policies and Practices play a major role imported coal, indigenous coal, lignite and agro fuel
in every organization. TNPL has evolved a periodical depending on the availability and economics. Adequate
Performance Appraisal System, through which the stock of imported coal is kept in the factory to ensure
performance of the individual employees is measured with that the solid fuel is available all the time and the overall
reference to the targets and wherever necessary, cost is low.
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D
Water Management
TNPL sources water from river Cauvery. Due to failure of
monsoon during 2002-03, 2003-04 and 2004-05, there
was no supply of water into the river during 2003-04 and
2004-05 summer months. Consequently, due to water
shortage, TNPL lost production on 37 machine days during
2003-04 and 58 machine days during 2004-05. TNPL has
taken steps to optimize the water consumption. Water
consumption during 2005-06 was 104 KL per tonne of
paper which is one of the lowest in Indian Paper Industry.
TNPL has gone in for a series of rain water harvesting
structures in the factory and colony areas. Wherever
possible, the used water is recycled to reduce the fresh
water consumption. TNPL has also developed storage
facilities to take care of contingencies during summer
months. The Mill Development Plan being implemented, will
reduce fresh water consumption in the Pulp Mill.
Consequently, despite expanding the pulping capacity
from 520 tpd to 800 tpd and increasing the paper
production from 2,30,000 tonnes to 2,45,000 tonnes per
annum, the post-expansion water consumption will remain
only at the current level.
Energy Management
The power generation capacity is 61.12 MW. TNPL is
self-sufficient in its energy requirement. Surplus power is
exported to the State Grid. During 2005-06, TNPL has
exported 831.38 lakh units of power to the State Grid.
TNPL has been continuously expanding the wind farm
capacity. During the year, the wind farm capacity was
increased from 21.75 MW to 28 MW by adding 5 Nos. of
1250 KVA each wind energy generators. During the year,
TNPL has exported 309.31 lakh units of wind farm power
to the State Grid.
Under the Mill Development Plan, a turbo generator of
20 MW capacity will be installed. The turbo generator will
be operated with the steam generated in the new
recovery boiler by firing black liquor. This will increase the
power generation and reduce the cost.
The Bio-Methanation plant installed during June 2003 has
been functioning well. The methane gas generated from
bagasse wash water through the bio-methanation plant is
used as fuel in limekiln replacing 10-12 KL furnace oil per
day and power boilers replacing part quantity of coal.
During 2005-06, 45.77 lakh M3 of methane gas were used
48 in limekiln valuing Rs. 400.33 lakhs. TNPL is taking steps to
expand the bio-methanation capacity by 50%. The
expansion will be completed during the current year.
Marketing Management
IV. REVIEW OF OPERATIONS
The market for newsprint and printing & writing paper is
highly competitive. Newsprint price is less economical
compared to printing & writing paper. TNPL has therefore
reduced newsprint production to 2% of the total
production. The production mix can be changed any time
depending on the market requirements and economics.
TNPL has been introducing one or two new products
every year to cope up with market requirements. During
the year, TNPL has introduced a high bright high opacity
Copier paper, namely, “TNPL Copy Crown” for Inkjet and
Laser printers. TNPL has also increased the production of
other value added products, namely, Elegant Printing,
Ultra Maplitho, Hi-Tech Maplitho. TNPL is a consistent
exporter receiving special export award for seven
consecutive years. During 2005-06, TNPL has exported
38645 MT of printing & writing paper representing 16.8%
of the total production. Customers Service Cell has been
formed for each region. The Customers Service Cell visits
the customers regularly and gets the feedback for making
improvements in the products. With the above measures,
TNPL is keeping its market risks low.
Research and Development & Quality
Management
Product development and product improvement are the
priority areas under the R&D activities. R&D efforts are
also made to reduce the cost of production through usage
of alternative pulps and chemicals. The feedback from the
customers on performance of various products is taken as
an important input in the R&D activities. TNPL enjoys the
second position in the market in copier sales. The
increased production of Copier paper and Surface sized
papers and exports bear testimony to the R&D efforts on
product development. The State-of-art facilities enables
the company to maintain the consistency in quality.
Being an ISO 9001 and ISO 14001 certified organisation,
systematic procedures have been laid down for
maintaining uniform quality of end products. Continuous
thrust is given for developing alternative raw material for
paper making. The commercial, economic and technical
suitability of wild sugarcane as an alternative to bagasse
is being studied as a CESS funded project.
Excellence in Corporate Governance
The Institute of Company Secretaries of India (ICSI), New
Delhi, has conferred on TNPL, the “ICSI National Award
for Excellence in Corporate Governance” for the year
2004 in the category of public sector recognising the
company’s application of best management practices,
compliance of law in true letter and spirit and adherence
to ethical standards for effective management and
distribution of wealth and discharge of social responsibility
for sustainable development of all stakeholders.
During the year the company has produced 2,30,079 Mts
of paper, equivalent to 100% capacity utilization. The
newsprint production was restricted to 5468 Mts against
 7708 Mts in the previous year. The printing and writing
paper production was increased to 2,24,611 Mts against
1,88,533 Mts in the previous year. The change in the
product mix of NP & PWP from 4:96 in 2004-05 to 2:98 in
2005-06, was based on the market dynamics. The
manufacturing flexibility has helped the company to
improve the profitability.
The wind farm capacity was enhanced from 21.75 MW to
28 MW in February 2006 by installing 5 Nos. of 1250 KW
capacity each wind energy generators. During the year the
wind farm generated 309.31 lakh units of power against
348.86 lakh units in the previous year. The generation was
less compared to the previous year due to low wind velocity.
The entire wind power was exported to the State Grid.
In-house captive power plant of 61.12 MW capacity has
generated , 4280.18 lakh units of power during the year
against 3810.56 lakh units in the previous year. TG power
exports to the State grid was at 831.38 lakh units against
763.52 lakh units in the previous year (higher by 67.86 lakh
units). Total power export during the year was 1140.69 lakh
units against 1112.38 lakh units in the previous year.
V. FINANCIAL REVIEW
During the year the company has recorded an all time high
turnover of Rs. 801.41 crores against Rs. 668.23 crores
in the previous year, registering a growth of 19%. The
sales include Rs. 31.05 crores relating to the sale of
power.
TNPL has posted an all time high net profit during the
year. The Gross profit before interest and depreciation is
Rs. 189.33 crores against Rs. 117.27 crores in the
previous year. Rs. 20.29 crores has been provided for
interest and financial charges and Rs. 62.50 crores has
been provided for depreciation. Net Profit before tax is
Rs. 101.47 crores against Rs. 39.17 crores in the
previous year. Net profit after tax is Rs. 80.55 crores,
against Rs. 37.95 crores in the previous year. Rs. 36.51
Crores has been provided for current tax, Rs. (13.81)
crores for deferred tax and Rs. 0.95 crores for fringe
benefit tax.
Debtors outstanding as on 31.03.2006 is Rs. 127.77 crores
against Rs. 118.14 crores as on 31.3.2005. The
outstanding has increased mainly due to the increase in
sales. The inventory as on 31.3.2006 is Rs. 121.55 crores
against Rs. 123.00 crores in the previous year. The loans
(secured and un-secured) outstanding as on 31.3.2006 is
Rs. 308.13 crores against Rs. 249.73 crores in the previous
year. During the year the company has drawn new loan of
Rs. 75.48 crores for Mill Development Plan and Rs. 26.50
Crores for wind farm expansion. The term loan instalments
were paid on due dates. Addition to the Fixed Assets is
Rs. 49.75 crores. There is no change in the investments. A
sum of Rs. 18.76 lakhs has been received during the year
towards allotment and call money arrears. During the year,
TNPL has forfeited 427400 shares for which Rs. 293.68
Lakhs were overdue. The above shares were forfeited
after ten years of IPO and after giving several notices and
reminders to the defaulted shareholders.
The financial statement has been prepared in accordance
with the requirement of the Companies Act, 1956 and the
prescribed Accounting Standards. The estimates and
judgement to the financial statements has been made on
a reasonable basis, in order that the financial statements
reflect in a true and fair manner. The forms and
substances of transactions are reasonably representing
the company’s state of affair and the profit for the year.
VI. RESOURCES & LIQUIDITY
TNPL believes in prudent financial management for
continuous success. The expansion project for doubling
the capacity from 90,000 tpa to 1,80,000 tpa
implemented during 1993-96 was funded through an
optimum mix of internal generation, issue of equity shares
and term loans. The second capacity expansion from
1,80,000 tpa to 2,30,000 tpa, implemented during
2002-03, was funded entirely through internal
generation. The Mill Development Plan being implemented
at a capital outlay of Rs. 565 Crores will be funded
through internal generation of Rs. 150 Crores and term
loan of Rs. 415 Crores.
TNPL has pre-paid the high cost loans. TNPL also
swapped the high cost World Bank loan into Dollar
denominated FCNRB loan and reduced the interest
charges considerably. Even after borrowing the entire
amount of Rs. 415 Crores for the Mill Development Plan,
the Debt Equity ratio at the peak level during 2006-07 will
be around 0.93:1. The weighted average cost of loan
outstanding as on 31.03.2006 is 6.30%.
CRISIL has rated TNPL’s Fixed Deposits at FAA+ which
indicates the degree of safety regarding timely repayment
of principal and interest is strong.
VII. OUTLOOK, OPPORTUNITIES AND CHALLENGES
Newsprint
The newsprint segment was restricted to the public sector
till 1991. Thereafter, the Government has allowed the
private players to set up small units to manufacture
newsprint. In 1992 the Government decanalised the
import of newsprint and imposed a quantity restriction for
imports. As per the quantity restriction, the end-users
49
should purchase 2 tonnes of NP from domestic sources for
every tonne of newsprint imported.
In 1995, when the newsprint prices in the global market
reached the peak, the newsprint was placed under OGL
and the quantity restriction for import was withdrawn. In
1996, the newsprint prices in the global market declined.
There was large scale import of newsprint in the domestic
market. The domestic manufacturers rolled back the prices
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D
by around 30%. The levy of 10% import duty did not
deter large scale dumping of newsprint into India. In
January 1997, the Govt. of India brought back the end-
user criteria for newsprint imports. During 1997, the
import duty of newsprint was reduced to 5% and the
same rate is continued till date, though the WTO bound
rate for newsprint import is 25%. The domestic newsprint
industry is completely open to the competition and has to
move in tandem with international trends.
Due to consolidation taken place during 1999-2000 and
closing down of excess capacity, the newsprint prices in
the international market stabilised during September 1999
– December 2000. During this period (2000-01), the
newsprint prices in the domestic market also showed
uptrend. Thereafter, due to global economic slow down,
the newsprint consumption reduced considerably.
Consequently, the newsprint prices started declining fast
from January 2001 in the international market and from
April 2001 in the domestic market. The newsprint prices
ruling at USD 720 pmt during January-March 2001
dropped to USD 400 pmt during January-March 2002.
Consequently, the newsprint prices in the domestic market
also went down by 30% during 2001-02 compared to the
previous year. Except a short spell during July-September
2002, the imported newsprint prices were ranging
between USD 400-420 per MT till January-March 2003.
Since then, the imported newsprint price is in an uptrend
and reached a level of USD 670 per MT during January-
March 2006 and USD 700 per MT for supplies during April-
June 2006. The newsprint price in the domestic market
has increased from Rs. 26,250 per MT during January -
March 2005 to Rs. 30,250 per MT during January-March
2006 and Rs. 31,500 per MT for supplies during April -
June 2006. Outlook for newsprint is good.
Printing & Writing Paper
The Indian Paper industry is fragmented. The per capita
consumption is 6 Kg. The paper industry was under
protection with high level of import duty. The duty was
reduced to 35% in 2001-02. Thereafter, the import duty
was reduced by 5% every year till it reached 15% in
2005-06. In the Union Budget 2006-07, the import duty
was reduced to 12.5%. With effect from 1.3.2003, excise
duty is levied at 8% on the first 3500 Mts. of PWP made
primarily out of non-conventional raw material. For the
balance, excise duty is levied at 12%.
Till 1994-95, Indian Paper Industry was not active in the
50 export market. Over the years, the Indian paper
manufacturers have increased the export sales. During
VIII. FUTURE PLANS
2005-06, the IPMA mills have exported a total quantity of
around 2 lakh tonnes against 2.30 lakh tonnes in the
previous year. During 2005-06, TNPL has exported
38645 mts. of PWP.
The overall demand for cut size paper has been increasing
at an average of 15% per annum. TNPL’s copier sales
during 2005-06 was 35977 mts. against 28141 mts. in the
previous year. TNPL enjoys the second place in the
domestic market for branded copier with the market
share of around 17%.
Pulp prices of all varieties have increased by around USD
70-100 per MT from April 2006. The pulp prices are likely
to remain firm during the current year. The outlook for
PWP in the domestic market and export is good.
Opportunities and Challenges
The Indian economy is growing @ 6-8% per annum on a
consistent basis. The demand growth in paper and the
demand growth in GDP are positively correlated and move
together. The consistent growth in the GDP and the
increasing literacy rates are likely to increase the per
capita consumption. India, with 16% of the world
population, consumes only 1.2% of global paper and
board production. The per capita consumption of 6 Kg. is
far below the global average of 54 Kg. The growth in GDP
and the increasing literacy rates are likely to move up the
per capita consumption to 8-9 Kg. by 2010 and to 11-12
Kg. by 2015. Increase in per capita consumption by 1 Kg.
would mean an increase in demand by 1 million tonnes.
The capacity additions during 2006-07 is estimated to be
less than 1.5 lakh tonnes. With the increase in exports
and increase in consumption in the domestic market, the
additional production can be absorbed. The outlook for
PWP is good. The NP consumption is also growing @ 5%
per annum. The imported NP price is likely to remain in the
range of USD 700 – 725 per MT during the year.
The Indian Paper Industry faces challenges like
in-adequate availability of raw material, low economies of
scale, environmental concerns, intensive competition and
so on. The Indian paper industry, in the last few years,
has learnt to manage the above constraints through
upgrading the technology, increasing the capacity through
brown field expansion and new capacity additions,
implementing farm forestry and captive plantation
schemes, focussing on cost control measures and so on.
Now, the Indian paper industry is able to market its
products in the international market in competition with
other global manufacturers.
TNPL will be able to meet the above challenges and make
use of the opportunities for achieving growth in terms of
capacity additions, turnover and profit. TNPL will continue
its focus on PWP.
TNPL is currently implementing the Mill Development Plan
at a capital outlay of Rs. 565 Crores with the following
goals:
• To become environmentally benign by implementing
Elemental Chlorine Free (ECF) bleaching sequence in
the in-house pulping lines.
 • To increase in-house pulp production capacity from 520
tpd to 800 tpd and thereby reduce the dependence on
purchased pulp and market the surplus pulp around 120
tpd.
Orders have been placed for all the major equipments.
The project will be completed by March 2007. With the
implementation of the Mill Development Plan, the entire
pulp requirement will be met internally. Surplus pulp
around 120 tpd will be sold in the market generating
revenue. The mill operations will be fully environmental
compliant. The water consumption will be minimized.
The paper production capacity will be increased from
230000 tpa to 245000 tpa effective from April 2007.
A new 200 tpd Cut Pack line will be installed by December
2006 and thereby the total conversion capacity will be
increased from 150 tpd to 350 tpd. This will enable the
company to increase Copier production and improve the
market share in the Copier segment.
TNPL has installed 5 Nos. of 1250 KVA wind energy
generators during February 2006. The wind farm capacity
will be further augmented during 2006-07.
TNPL is also examining the possibility of increasing the
production capacity from 2,45,000 tpa to 3,50,000 tpa
through adding a new paper machine in the existing site
to make use of the surplus pulp and other infrastructure
facilities. Decision on expansion of capacity will be taken
soon.
TNPL has implemented Farm Forestry and Captive
Plantation schemes in 7945 acres and 1373 acres
respectively upto 31.3.2006. The scheme will be
implemented in additional 10,000 acres during the current
year to augment the pulpwood supplies.
IX. INTERNAL CONTROLS
TNPL has instituted adequate internal control procedures
commensurate with the nature of business and size of its
operations. TNPL has also prepared an ‘Internal Control
Procedure Manual’ for all the departments to ensure that
the control procedures are followed by all departments.
Internal controls are supported by internal audit and
management reviews. The Board of Directors has an Audit
Committee chaired by an Independent Director. The Audit
Committee meets periodically the management, external-
internal auditors, internal-internal auditors, statutory
auditors and reviews the audit plans, internal controls,
audit reports and the management response to the
observations and recommendations emanated from the
audit. All significant observations and follow-up actions
are reported to the Audit Committee. The Audit
Committee has met seven times during the financial year.
X. ENVIRONMENT
TNPL is totally committed to save the Environment, uphold
Human Safety and Health. With this view, the corporate
Management of TNPL has declared policies of
Environment, Safety, Quality and Energy. The main
excerpts of the above policies are:
• Compliance with all relevant legislative requirements.
• Reducing Pollution Load in terms of Liquid Discharge, Air
Emission, and Land conservation.
• Saving Energy & Preserving natural resources like
Water, Raw material, Fuels.
• Generating Human Awareness in Environment, Safety
and Health.
• Minimizing the Unsafe Acts & Unsafe working
conditions.
• Promoting comprehensive programs to propagate
Health and Environmental Safety.
Around 1600 acres of land is irrigated with TNPL’s treated
effluent water under TNPL’s Treated Effluent Water Lift
Irrigation Scheme (TEWLIS).
XI. HUMAN RESOURCES DEVELOPMENT
Training
TNPL’s HR strategies focus on providing need
based training to its employees to develop their
knowledge, skills and attitude in compliance with ISO
9001/2000 Standards. During the year, 49 in-house
trainings were organized covering operation,
maintenance, instrumentation, electrical, finance,
Information Technology, human resources and other
areas. On-the-job training was provided to 180
employees in key areas of operation. 106 Executives
were nominated for 60 external training programmes on
various topics. Awareness programme on Internal Quality
Auditor Training on ISO 9001 (Quality Management
System), ISO 14001 (Environmental Management System)
and OHSAS 18001 (Occupational Health and Safety
Management System) were conducted to train 38
Executives in the above standards.
M/s Pricewater House Coopers (P) Ltd. have prepared the
balance scorecard for the organisation, departments and
individuals upto the level of Managers. The Consultants
have also prepared Key Performance Indicators and
Competency Mapping for 47 Key personnel in the
Organisation. This will be put into practice to improve
51
further the managerial efficiency.
Total Quality Management (TQM)
Creativity and lateral thinking improve productivity.
Considering this, TQM was introduced in TNPL in the year
2000. TQM projects implemented has resulted in cost
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D
savings, quality improvement and simplification of work
methods. Optimisation of bio-methanation operation
carried out through TQM has increased the methane gas
production. Similarly, reduction of chlorides from the
Electro Static Precipitator ash has been achieved through
a TQM project. Projects, namely, “Wealth from Waste” for
converting organic garbage in TNPL factory and
residential colony into manure and maintaining an eco-
friendly environment and cultivation of Jatropha in the
vacant land in the windfarms have been undertaken
during the year.
Harmonious Industrial Relations
The company has created a participative and congenial
atmosphere for redressing the grievances of the
employees which has yielded a propitious working
environment. There are three recognized trade unions
representing Workmen and one Association representing
the Staff. The matters concerning the Workmen and Staff
are discussed with the recognized trade unions and
Association and resolved amicably.
An amicable bipartite settlement was entered into with the
trade unions for payment of bonus and ex-gratia for the
financial year 2004-05. The Settlement entered into with
the Trade Unions under Section 12(3)/18 of the Industrial
Disputes Act, is valid upto 15.5.2006. A new Wage
Settlement effective from 16.5.2006 will be entered into
with the recognized Trade Unions during the course of
the year.
Health
TNPL takes care of its employees and their dependents in
the health front. Various schemes, which are in vogue,
stands as testimony of the care and concern shown by
the Company on its employees and their dependents.
A well equipped First Aid Medical Centre is maintained at
factory with three Doctors. Employees are sent for
Master Medical Check-up in the renowned hospitals in
Chennai and Madurai after completion of 40 years and
again, after completion of 50 years.
Awareness Programmes and Medical Camps are conducted
in the factory with the help of specialists invited from
reputed hospitals. Immediate action is taken on accidents
and serious ailments cases by referring to the renowned
hospitals in Chennai, Madurai and Coimbatore.
52
Safety
TNPL has a clearly defined Occupational Health and
Safety Policy. The Safety Policy specifies in detail the
responsibility for implementation of safety measures,
prevention of personal injury, accident reporting system
and statutory reporting system. Personal protective
equipment as required are provided to all employees to
avoid personal injury. Periodical medical checkups are
organized to identify occupational health hazards.
TNPL’s Safety Committee is represented by the
Management Members and Workmen Members nominated
by the Unions. Periodical Committee meetings are
conducted and suggestions of the Members are
implemented. Accidents and incidents within the factory
are documented and preventive/corrective actions are
taken to minimize accidents/incidents.
An Onsite Emergency Management Plan has been
developed. Periodic Mock Drills on major chemical hazards
like Chlorine gas leakage and incidents of fire are
conducted. Periodic training programmes on safety
measures and safety method of chlorine handling and fire
are organized. Periodic testing of all unfired pressure
vessels are carried out in collaboration with Deputy Chief
Inspector of Factories to ensure safety under operating
conditions. As part of statutory requirement under
Factories Act, Internal Safety Audit, building stability
testing, testing of lifting, tackles etc., are carried out and
the report submitted to the Chief Inspector of Factories,
Tamil Nadu.
Two mobile fire-tenders are available. The entire Mill is
covered with fire hydrant points with pressurized water
mains. All safety reporting systems, testing procedures,
inspection procedures have been brought under ISO
9001-2000 documentation as well as ISO 14001. Periodic
audits are conducted. Safety slogans are displayed in
different areas. Safety suggestion boxes are placed in
different departments inviting suggestions from
employees. Area-wise Safety Committee has been formed
for involvement of more employees in ensuring safety in
their respective areas. Personal protective equipment are
kept at various sections of the Mill for ready use of the
employees when required.
Community Development
TNPL, committed to social responsibilities, has been taking
steps on a continuous basis for promoting the overall
betterment of the villages in the neighbourhood. TNPL has
extended financial assistance in the neighbourhood for
laying and improving roads, providing drinking water
supply, providing lighting facilities, providing laboratory
facilities to schools, construction of sports complex, etc.
TNPL extended help to the District Administration by
providing food, drinking water and lighting arrangements
during flood in river Cauvery during October – November
2005. TNPL and its employees contributed a sum of
Rs.63,78,910 for Tsunami relief activities during
December 2004 and Rs.One crore for flood relief measures
during 2005. TNPL has conducted free medical camps in
the neighbouring villages. Through implementation of
various social and community development activities, TNPL
has received appreciation and recognition from the
society and among the local residents.
Awards, Accolades and Achievements
• Achieved highest production of 2,30,079 MT and
highest sales of 230079 MT. Production during the
year was higher by 33,838 MT over the previous
year. Sales during the year was higher by 28839 MT
compared to the previous year.
• Achieved highest production of 37,645 MT of TNPL
Copier Paper against 28,141 MT in the previous year
registering a growth of 34%.
• Achieved highest Hardwood Pulp production of
41,907 MT against 38,263 MT in the previous year.
This is the sixth consecutive year in which the
company has increased the Hardwood Pulp
production.
• Exported 38,645 MT of Printing & Writing Paper
during the year valuing Rs. 117.55 crores on FOB
basis. This is the highest export of wood free
uncoated printing & writing paper from India during
2005-06.
• Introduced a new product, namely, “TNPL Copy
Crown” for Inkjet and Laser Printers.
• Implemented Farm Forestry Scheme in 6054 acres
benefiting 1466 farmers in nine districts and Captive
Plantation in 188 acres. Total area covered under
Farm Forestry Scheme and Captive Plantation during
the year is 6242 acres against 3076 acres in the
previous year. It is proposed to implement the Farm
Forestry Scheme and Captive Plantation in about
10,000 acres during 2006-07.
• Achieved Zero Stock of finished goods (NP & PWP) at
the end of the financial year. This is the 15th year in
which your company has achieved Zero Stock (NP &
PWP) at the end of the financial year.
• Received the Special Export Award from CAPEXIL for
the seventh consecutive year in recognition of the
outstanding export performance.
• The Mill Development Plan has been taken up for
implementation at a capital outlay of Rs. 565 Crores.
The project will be implemented before 31.3.2007.
• Processed 16,70,636 M 3 of Black liquor in energy
efficient falling film evaporator, against 14,62,850 M3
in the previous year.
• Registered the Bio-Methanation project with United
Nations Framework Convention Climate Change
(UNFCCC) as the country’s first CDM Project in the
waste management sector. The project generates
about 37,000 CERs per annum. 82955 CERs have
been received from UNFCCC for the period from
1.8.2003 to 31.12.2005.
XII. CAUTIONARY STATEMENT
The Management Discussion and Analysis Report contains
forward looking statements based upon the data available
with the Company, assumptions with regard to global
economic conditions, the government polices etc. The
Company cannot guarantee the accuracy of assumptions
and perceived performance of the Company in future.
Therefore, it is cautioned that the actual results may
materially differ from those expressed or implied in the
report.
53
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

TAMIL NADU NEWSPRINT AND PAPERS LIMITED

BALANCE SHEET AS AT 31ST MARCH 2006
(Rs. in Lakhs)

As at As at
Schedule 31/03/06 31/03/05
I. SOURCES OF FUNDS
SHARE HOLDERS’ FUNDS
Share Capital 1 6937.78 6935.99
Reserves and Surplus 2 45314.03 39607.34
52251.81 46543.33
LOAN FUNDS
Secured Loans 3 22428.92 15794.97
Unsecured Loans 4 8384.46 9177.75
30813.38 24972.72
DEFERRED TAX 5 15476.00 16857.00
98541.19 88373.05
II. APPLICATION OF FUNDS
FIXED ASSETS
Gross block 143235.13 138344.40
Less: Depreciation 72995.94 66563.96
Net Block 6 70239.19 71780.44
Capital work-in-progress 11513.28 1081.26
81752.47 72861.70

INVESTMENTS 7 114.05 114.05

CURRENT ASSETS, LOANS AND ADVANCES
Inventories 8 12154.86 12299.50
Sundry Debtors 9 12776.68 11814.20
Cash and Bank balances 10 2021.49 1360.38
Loans and Advances 11 12680.84 13066.88
A 39633.87 38540.96
Less:
CURRENT LIABILITIES AND PROVISIONS
Current Liabilities 12 16513.62 18812.37
Provisions 13 6458.77 4351.08
B 22972.39 23163.45
NET CURRENT ASSETS A–B 16661.48 15377.51
MISCELLANEOUS EXPENDITURE
(to the extent not written off or adjusted)
Voluntary Retirement Scheme 13.19 19.79
98541.19 88373.05

54 Schedules 1 to 13, 21 and 22 form an integral part of this Balance Sheet.

S. RAMASUNDARAM, IAS D. RAJENDRAN, IAS vide our report of even date

CHAIRMAN & MANAGING DIRECTOR DIRECTOR MAHARAJ N. R. SURESH & CO.
CHARTERED ACCOUNTANTS

(A. VELLIANGIRI) (N. R. SURESH)

Place : Chennai – 32 DIRECTOR (FINANCE) PARTNER
Date : 09th May 2006 & SECRETARY Membership No. 200/21661
 TAMIL NADU NEWSPRINT AND PAPERS LIMITED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2006
(Rs. in Lakhs)
For the For the
Schedule Year ended Year ended
31/03/06 31/03/05
I. INCOME
Sales 14 77567.10 64106.02
Other Income 15 2573.61 2716.52
A 80140.71 66822.54
II. EXPENDITURE
Manufacturing expenses 16 49517.42 44448.05
Personnel expenses 17 5166.68 5358.00
Administration, selling & other expenses 18 6523.27 5289.76
Interest and finance charges 19 2028.85 1621.48
Depreciation/amortisation 6 6249.64 6188.30
B 69485.86 62905.59
III. PROFIT BEFORE PRIOR PERIOD/EXCEPTIONAL ITEMS A–B 10654.85 3916.95
Prior Period / Exceptional Items 20 507.49 0.00

IV. PROFIT BEFORE TAX 10147.36 3916.95

PROVISION FOR TAXATION
– Current Tax 3650.96 868.35
– Excess provision of Income Tax written back (272.52) 0.00
– Deferred Tax (1381.00) (746.00)
– Fringe Benefit Tax 95.35 0.00
2092.79 122.35
V. PROFIT AFTER TAX 8054.57 3794.60
Balance brought forward 2020.15 2006.78
VI. PROFIT AVAILABLE FOR APPROPRIATIONS 10074.72 5801.38
VII. APPROPRIATIONS
Transfer to General Reserve 5700.00 1600.00
Dividend Adjustments 0.00 1.41
Interim Dividend 1040.44 0.00
Proposed Dividend 1038.16 1907.42
Tax on Dividend 291.53 272.40
VIII. BALANCE CARRIED FORWARD 2004.59 2020.15
10074.72 5801.38
IX. BASIC & DILUTED EARNINGS PER SHARE
(Refer Para No.III-D of Sch., 22)
Basic Earnings Per Share before Prior Period / Exceptional Items Rs. 12.39 5.47
Diluted Earnings Per Share before Prior Period / Exceptional Items Rs. 12.37 5.45
Basic Earnings Per Share after Prior Period / Exceptional Items Rs. 11.66 5.47
Diluted Earnings Per Share after Prior Period / Exceptional Items Rs. 11.64 5.45

Schedules 14 to 22 form an integral part of this profit and loss account. 55

S. RAMASUNDARAM, IAS Vide our report of even date

CHAIRMAN & MANAGING DIRECTOR D. RAJENDRAN, IAS MAHARAJ N.R.SURESH & CO.
DIRECTOR CHARTERED ACCOUNTANTS

(A.VELLIANGIRI) (N. R. SURESH)

Place : Chennai – 32 DIRECTOR (FINANCE) PARTNER
Date : 09th May 2006 & SECRETARY Membership No.200/21661
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

SCHEDULES TO BALANCE SHEET

(Rs.in Lakhs)

As at As at
31/03/06 31/03/05

1. SHARE CAPITAL
Authorized:
13,50,00,000 Equity Shares of Rs.10/- each 13500.00 13500.00

Issued:
7,00,00,000 Equity Shares of Rs.10/- each 7000.00 7000.00

Subscribed and Paid up:

6,92,10,600 Equity Shares of Rs.10/- each fully paid up 6921.06 6963.80
Less: Calls in arrears (from persons other than directors) 0.00 27.81

Add: Shares Forfeited 16.72 0.00

Equity Shares Paid up Amount
Nos. Rs. Rs.
27600 7 193200
93000 6 558000
306800 3 920400
427400 1671600
6937.78 6935.99

2. RESERVES AND SURPLUS

(a) Capital Reserve :

Project Investment subsidy 125.00 125.00

(b) Share Premium:

Opening Balance 17950.86 17944.58
Add: Calls-in-arrears received/adjusted 22.25 6.28
17973.11 17950.86

(c) General Reserve:

Opening Balance 19511.33 17911.33
Add : Transferred from Profit & Loss Appropriation A/c 5700.00 1600.00
25211.33 19511.33

(d) Balance in Profit and Loss Account 2004.59 2020.15

TOTAL (a)+(b)+(c)+(d) 45314.03 39607.34

56
 SCHEDULES TO BALANCE SHEET
(Rs. in Lakhs)
As at As at
31/03/06 31/03/05
3. SECURED LOANS
(a) Term Loans:
From Banks
– FCNR(B) 7747.40 8750.00
– Rupee Term Loans 5877.22 0.00
(Secured by pari passu first charge on fixed assets (land, buildings, Plant and Machinery and
other immovable properties-except movable fixed assets given as first charge for ECB Loan)
of the company including an equitable mortgage by deposit of title deeds in respect of 566.26
acres of land situated at Kagithapuram, Karur district, Tamil Nadu as primary security on a
pari passu basis with other lenders and a pari passu second charge on the current assets of
the company viz., stock of raw materials, finished goods, stores and other movables.)
- ECB LOAN 1784.40 1750.00
(External Commercial Borrowing (ECB) Loan is secured by the first charge on the company’s
movable fixed assets pertaining to the 18.75 MW Wind Farm facilities.)
- Rupee Term Loans 2650.00 0.00
(Secured by first charge on Wind Mills created out of the respective loans)
18059.02 10500.00
(b) Working Capital from Banks
Cash Credit 304.78 325.45
Buyer’s Credit 1063.91 2006.67
Short Term Loan 1000.00 0.00
Post Shipment Credit 239.86 1024.72
Pre-Shipment Credit - Foreign Currency 1561.35 1938.13
Pre-Shipment Credit 200.00 0.00
(Working Capital facilities obtained from banks are secured by hypothecation of stock of raw
materials, semi-finished and finished goods, consumables, stores and book debts and a
second charge by way of extension of equitable Mortgage on immovable properties of the
company in Kagithapuram, Karur District, Tamil Nadu.)
4369.90 5294.97
Total of (a)+(b) 22428.92 15794.97

4. UNSECURED LOANS
Fixed Deposits # 1051.49 1709.62
Short Term Loans from Banks
FCNR(B) 3301.14 4112.50
Pre-Shipment Credit - Foreign Currency 0.00 2187.50
Pre-Shipment Credit 2000.00 0.00
Buyer’s Credit 1131.83 1168.13
Rupee Loan 900.00 0.00
8384.46 9177.75
# Due for repayment within one year 552.70 788.61

5. DEFERRED TAX
A . DEFERRED TAX LIABILITY 57
Depreciation 16113.00 17496.00
16113.00 17496.00
B. DEFERRED TAX ASSETS
Provision for Doubtful Debts 130.00 229.00
Provisions for Gratuity and Leave Encashment 507.00 410.00
637.00 639.00
DEFERRED TAX (NET) (A) – (B) 15476.00 16857.00
 58
SCHEDULES TO BALANCE SHEET
6. FIXED ASSETS (Rs. in Lakhs)

GROSS BLOCK DEPRECIATION /AMORTISATION NET BLOCK

As at Additions/ Adj. As at Upto for the period Adj. Upto As at As at
DESCRIPTION 01/04/05 (Deletions) 31/03/06 31/03/05 (Deletions) 31/03/06 31/03/06 31/03/05

A. TANGIBLE ASSETS

LAND 765.55 11.71 777.26 0.00 0.00 0.00 777.26 765.55

BUILDINGS
ON FREE HOLD LAND 9632.16 312.27 (958.79) 8942.19 2932.02 242.77 (360.27) 2789.30 6152.89 6700.14
(43.45) (25.22)

ON LEASE HOLD LAND 1078.33 15.77 1094.10 218.84 37.72 256.56 837.54 859.49
0.00 0.00

RAILWAY SIDINGS 201.32 0.00 201.32 201.32 0.00 201.32 0.00 0.00
PLANT & MACHINERY
ON FREE HOLD LAND 116477.94 4575.53 958.79 121980.43 59344.13 5724.32 360.27 65399.46 56580.97 57133.81
(31.83) (29.26)

ON LEASE HOLD LAND 9160.78 15.86 9176.64 3269.34 420.24 3689.58 5487.06 5891.44
0.00 0.00
FURNITURE, FIXTURES & 630.58 31.27 661.57 317.01 35.40 352.35 309.22 313.57
T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

OTHER EQUIPMENTS (0.28) (0.06)

VEHICLES 161.04 11.75 172.79 93.79 11.21 105.00 67.79 67.25
0.00 0.00

B. INTANGIBLE ASSETS
COMPUTER SOFTWARE 236.70 0.69 228.83 187.51 23.42 202.37 26.46 49.19
(8.56) (8.56)

TOTAL 138344.40 4974.85 0.00 143235.13 66563.96 6495.08 0.00 72995.94 70239.19 71780.44
(84.12) (63.10)

PREVIOUS YEAR 136463.58 3011.81 138344.40 61368.67 6188.30 66563.96

(1130.99) (993.01)

CAPITAL WORK-IN-PROGRESS (Refer Para I (A) (d) of Sch., 22) 11513.28 1081.26
81752.47 72861.70
 SCHEDULES TO BALANCE SHEET

(Rs. in Lakhs)

As at As at
31/03/06 31/03/05

7. INVESTMENTS

LONG TERM
Non-Trade: Quoted Investment stated at cost :
Industrial Development Bank of India Ltd.
142720 fully paid equity shares of Rs.10 each 114.05 114.05
[(Market value Rs.111.75 lakhs (Previous Year Rs.130.09 lakhs)]
114.05 114.05

8. INVENTORIES
Stores and Spare parts 1812.94 1672.75
Loose Tools 4.01 4.93
Consumables 3158.46 3688.15
Raw materials 5547.92 5528.84
Materials in Transit 727.09 145.04
Work in process 706.60 1099.71
Finished Goods 0.00 12.87
Standing crops 197.84 147.21

12154.86 12299.50

9. SUNDRY DEBTORS - UNSECURED

Debts outstanding for a period exceeding six months:
– Considered good 363.32 758.59
– Considered doubtful 356.99 673.01
720.31 1431.60
Other debts
– Considered good 12413.36 11055.61
13133.67 12487.21
Less: Provision for doubtful debts 356.99 673.01

12776.68 11814.20

10. CASH AND BANK BALANCES

Cash balance on hand 4.42 4.37
Bank balances with Scheduled Banks:
a) in current accounts 1893.44 1186.19
59
b) in savings account (Employees’ Security Deposit) 0.87 0.84
c) in unpaid Dividend accounts 43.76 31.98
d) in deposit accounts 79.00 137.00

2021.49 1360.38
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

SCHEDULES TO BALANCE SHEET

(Rs. in Lakhs)
As at As at
31/03/06 31/03/05

11. LOANS AND ADVANCES

Unsecured - considered good:
Prepaid Expenses # 160.17 70.13
Advances recoverable in cash or in kind or for
value to be received 7227.05 10495.31
Advances & Deposits with Government and
public bodies 4772.08 2069.00
Balance with:
– Port Trust/Airport Authority 0.59 0.22
– Central Excise 520.95 432.22

12680.84 13066.88
Unsecured - considered doubtful 28.26 30.66
Less: Provision for doubtful advances (28.26) (30.66)

12680.84 13066.88
# Includes Rs.11.47 lakhs Deferred Premium on Forward Contracts

12. CURRENT LIABILITIES

Acceptances 1344.22 4984.87
Sundry Creditors
a) Small Scale Industrial Undertakings 217.93
(Previous Year Rs.217.62 lakhs)
b) Others (Previous Year Rs.587.78 lakhs) 818.40 1036.33 805.40
Security Deposits from customers/contractors 1552.50 1365.06
Investor Education and Protection Fund
a) Unclaimed Dividend 43.76 31.98
b) Unclaimed Matured Deposits 20.72 30.53
(Amount payable during the year Rs.Nil (Previous Year Rs.Nil))
Other Liabilities 12269.84 11354.23
Interest accrued but not due 246.25 240.30

16513.62 18812.37

13. PROVISIONS
For Income-Tax 3698.85 888.54
Proposed Dividend 1038.11 1907.42
60 Tax on Dividend 145.60 267.52
For Leave Encashment 157.14 127.31
For Gratuity 1419.07 1160.29

6458.77 4351.08
 SCHEDULES TO PROFIT AND LOSS ACCOUNT
(Rs. in Lakhs)

For the For the

Year ended Year ended
31/03/06 31/03/05
14. SALES (Net of Sales Tax & Sales Returns)
Printing & Writing Paper:
– Domestic Sales 69805.52 54798.95
Less: Excise Duty & Cess 7355.36 5443.49
62450.16 49355.46
– Export Sales 12843.84 12768.32
75294.00 62123.78
Newsprint – Domestic Sales 1500.17 1960.83
76794.17 64084.61
Less: Discounts 2614.41 3022.50
74179.76 61062.11
Note Books 144.45 86.11
Chemical Bagasse Pulp 138.07 30.69
Sale of Energy 3104.82 2927.11
77567.10 64106.02

15. OTHER INCOME

Interest - Deposits/Advances/OD bills 367.27 188.55
[TDS Rs. 27.05 lakhs (Previous Year Rs. 26.06 lakhs)]
Sale of scrap, wastes etc. 556.10 598.94
Rental – Building 97.47 99.36
[TDS Rs. 19.92 lakhs (Previous Year Rs. 20.78 lakhs)]
Income from Investments 8.01 42.26
Interest – Short Term Deposits 190.84 184.35
[TDS Rs. 7.78 lakhs (Previous Year Rs. 39.32 lakhs)]
Incentive under CDM 495.53 0.00
Export Incentive 604.50 917.42
Profit on Sale of Assets 0.00 247.45
Other receipts 253.89 438.19
2573.61 2716.52

16. MANUFACTURING EXPENSES

Raw materials consumed * 15697.53 14712.78
Purchase of Note Books 132.12 99.06
Chemicals consumed 8146.91 6587.91
Stores consumed 995.13 831.11
(Increase)/Decrease in Stock of Bagasse (723.53) (1166.28)
(Increase)/Decrease in Stock-WIP 393.11 (81.40)
(Increase)/Decrease in Stock-Finished Goods 12.87 1491.78
Freight & Handling charges 1645.81 1937.94
61
Packing Expenses 1991.55 1535.62
Power, Fuel & Water charges 16792.13 14331.05
Repairs and maintenance:
– Building 300.35 107.66
– Plant and machinery 4133.44 4060.82
49517.42 44448.05
* Excluding cost of Bagasse procured in lieu of steam/fuel supplied
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

SCHEDULES TO PROFIT AND LOSS ACCOUNT

(Rs. in Lakhs)

For the For the

Year ended Year ended
31/03/06 31/03/05

17. PERSONNEL EXPENSES

Salaries,Wages and Bonus 3384.54 3640.38
Contribution to Provident and Other funds 462.57 486.23
Employees’ Gratuity and Leave Encashment 443.61 350.57
Staff Welfare Expenses * 875.96 880.82
5166.68 5358.00

18. ADMINISTRATION, SELLING & OTHER EXPENSES

Rent 55.34 40.55
Rates and Taxes 1058.55 586.49
Insurance 204.17 217.99
Transportation Charges 1464.65 1391.58
Commission & Discount on Sales 2088.61 1672.83
Repairs and Maintenance – Other than
Building and Plant & Machinery 112.47 72.11
Travelling Expenses 194.97 157.90
Auditors’ Remuneration # 3.66 3.35
Printing and Stationery 61.18 46.95
Communication Expenses 95.13 80.58
Loss on write off/Sale of Fixed Assets 20.07 0.00
Advertisement 127.39 119.09
Provision for Doubtful Debts and Advances 322.27 323.03
Miscellaneous Expenses 714.81 577.31
6523.27 5289.76
# Details of Auditors’ Remuneration
Statutory Audit 2.48 2.25
Tax Audit 0.35 0.35
Limited Review 0.80 0.75
Certification Fee 0.03 0.00

19. INTEREST AND FINANCE CHARGES

Interest on Term Loans 447.77 415.33
Interest on Short Term Loans 247.57 142.10
Interest on Working Capital 459.51 266.25
Interest on Fixed Deposits 115.30 195.40
Lease Rental Charges 240.16 240.16
Other Interest & Finance Charges 518.54 362.24
2028.85 1621.48

20. PRIOR PERIOD/EXCEPTIONAL ITEMS

62 Depreciation on reclassification of assets 252.25 0.00
Depreciation pertaining to earlier years (6.81) 0.00
Compensation for Bagasse supply relating to earlier periods 695.98 0.00
Interest Receipts (408.93) 0.00
Other receipts (25.00) 0.00
507.49 0.00

* Includes amortisation of Voluntary Retirement compensation of Rs. 6.59 lakhs (Previous Year Rs. 6.59 lakhs)
 SCHEDULES TO BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

21. SIGNIFICANT ACCOUNTING POLICIES

AS – 1 Disclosure of Accounting Policies

The accounts have been prepared using historical cost convention and on the basis of going concern, with revenues
recognised and expenses accounted on accrual basis, unless otherwise stated.

AS – 2 Valuation of Inventories
Inventories are valued at cost or net realisable value, whichever is lower. Cost for the purpose of valuation of stocks
purchased is determined by using the moving weighted average cost, net of MODVAT/CENVAT credit (wherever
applicable) except in the following cases:-
a) Raw Materials
Bagasse is valued at the average cost of production of steam/average cost of fuel (excluding interest) supplied to the
sugar mills inclusive of freight, handling and other charges. In accordance with AS-2, from this year depreciation has
been included for ascertaining the cost of bagasse procured which has resulted in increase in the value of closing stock
of bagasse to the extent of Rs.195.70 lakhs.
b) Work-in-Process
Work-in-process is valued at cost, which includes the cost of raw materials and overheads on FIFO basis upto the
stage of the completion.
c) Finished Goods
Finished Goods are valued at the lower of the cost or net realisable value and are inclusive of excise duty.
d) Captive Plantation / Standing Crops
The Crops are valued at the total amount of expenditure incurred (including land development expenditure) less any
incidental revenue realised.

AS – 3 Cash Flow Statements

Cash Flow Statement has been prepared under Indirect Method. Cash and Cash Equivalents comprise Cash in Hand,
Current and Other Accounts (including Fixed Deposits) held with Banks.

AS – 4 Events occurring after the Balance Sheet Date

a) Assets and Liabilities are adjusted for events occurring after the balance sheet date that provide additional evidence
to assist the estimation of amounts relating to conditions existing at the balance sheet date.
b) Dividends, which are proposed/declared by the Company after the Balance Sheet date but before the approval of the
Financial Statements, are adjusted.

AS – 5 Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies
Significant items of Extra-ordinary Items, and Prior Period Income and Expenditure, are accounted in accordance with
Accounting Standard 5.

AS – 6 Depreciation Accounting
a) Depreciation on fixed assets is provided on straight-line basis at the rates and in the manner prescribed in Schedule
XIV to the Companies Act, 1956.
b) Depreciation on addition to assets (which are to supplement the usage of the parent asset) is provided as detailed
below:
i) In respect of additions to existing Buildings, Depreciation has been provided from the beginning of the year in
which such addition is made.
ii) In respect of additions to existing Plant and Machinery, Depreciation has been provided prospectively over the
residual useful life of the parent asset from the beginning of the year in which such addition is made. 63
iii) However, in respect of rebuild / upgrade of machinery leading to substantial capacity expansion, depreciation is
provided on straight line basis at the rates and in the manner provided in Schedule XIV of the Companies Act, 1956.
iv) Depreciation on account of change in the value of fixed assets acquired out of foreign currency loans is provided
prospectively over the residual useful life of the respective assets from the beginning of the year in which the
change has occurred.
c) Pending renewal of agreements with sugar mills, depreciation on fixed assets at such Offsites is provided on straight-
line basis at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956 considering the
continued arrangement for procurement of bagasse from sugar mills.
 T A M I L N A D U N E W S P R I N T A N D P A P E R S LT D

AS – 9 Revenue Recognition
a) Sales are accounted net of excise duty, sales tax and sales returns.
b) Other items of revenue are recognised in accordance with the Accounting Standard (AS-9) issued by the Institute of
Chartered Accountants of India. Accordingly, where there are uncertainties in the ascertainment /realisation of
income such as interest from customers (upon factors such as financial condition of the person from whom the same is
to be realised)/Liquidated damages recovered from suppliers/contractors, the same is not accounted for.

AS – 10 Accounting for Fixed Assets

Fixed Assets
a) Fixed Assets are stated at cost of construction or acquisition less depreciation. All costs attributable to bring the fixed
assets to a working condition are capitalised. MODVAT / CENVAT Credit availed due to purchase of fixed assets is
deducted from the cost.
b) Exchange differences due to changes in foreign exchange liabilities in relation to the acquisition of Fixed Assets are
adjusted in the carrying cost of the respective Fixed Assets.
c) Additional compensation for lands acquired from farmers under Land Acquisition Act, 1894 is capitalised with the cost
of the land in the year of payment based on final award of compensation by appropriate authority.

Capital Work-in-Progress
Advances paid for acquisition of fixed assets and cost of assets not put to use before the year-end are disclosed under
Capital Work-in-Progress.

AS – 11 Accounting for Effects in Foreign Exchange Rates

Fixed Assets
a) Fixed Assets acquired out of foreign currency loans are recorded at the actual transaction rate.
b) The gains or losses due to exchange fluctuations on repayment of such loans during the year are recorded at the
actual repayment rates and consequent adjustments are made in the cost of Fixed Assets.
c) The gains or losses on translation of such loan liabilities at the year-end (at the closing rate) are adjusted against the
cost of Fixed Assets.

Current Assets and Current Liabilities

a) Foreign Currency Current Assets and Current Liabilities are recorded at the actual transaction rate.
b) The gain or loss arising out of settlement are recognised as income / expenditure in the profit and loss account.
c) The gain or loss arising out of translation of the assets and liabilities at the closing rates at the year-end are
recognised as income / expenditure in the profit and loss account.

Forward Contracts:
Forward Contracts are entered into to hedge foreign currency risk of the underlying assets/liabilities as at the Balance
Sheet date and also to hedge foreign currency risk of firm commitments or highly probable forecast transaction. The
premium or discount on all such contracts arising at the inception of each contract is amortised as income or expense over
the life of the contract. Any profit or loss arising on cancellation of forward contracts is recognised as income or expense
for the period.

AS – 12 Accounting for Government Grants

Capital Grants relating to specific fixed assets are reduced from the gross value of the respective fixed assets and other
Capital Grants are treated as Capital Reserve.

AS – 13 Accounting for Investments

a) Long-term investments are valued at cost. Provision, if any, is made to recognise a decline other than a temporary
64 decline, in the value of long-term investments. Permanent decline in the value of long-term investments is determined
initially ten years from the date of its purchase and thereafter once in a period of five years.
b) Current investments are valued at lower of cost and fair market value.

AS – 15 Accounting for Retirement Benefits

Provident Fund / Employees Pension Scheme
Contribution to Provident Fund/Employee Pension Scheme is made monthly, at a pre-determined rate to the Provident
Fund Trust and debited to the Profit and Loss Account on accrual basis.
 Superannuation Fund
The Company has arrangements with the Life Insurance Corporation of India to administer the Superannuation Schemes.
The premium paid/payable is debited to the Profit and Loss Account on accrual basis.

Gratuity & Leave Encashment

Liabilities in respect of Gratuity and Leave Encashment are provided for on the basis of Actuarial Valuations as at the year-
end.
VRS Compensation
Payment of compensation to employees who have retired under Voluntary Retirement Scheme (VRS) is amortised over a
period of 5 years. The balance amount is carried forward as “Miscellaneous Expenditure” (to the extent not written off or
adjusted).

AS – 16 Borrowing cost
Borrowing costs, attributable to qualifying assets, are capitalised up to the date the asset is ready to put to use. All other
borrowing costs are charged to revenue.

AS – 17 Segment Reporting
The company’s products namely Newsprint and Printing & Writing Paper are classified under one segment. Revenue/value
of fixed assets/net profit of energy division being less than 10% of the total revenue/value of fixed assets/net profit of
the company, segment reporting for energy division is considered as not applicable.

AS – 18 Related Party Transactions

a) In pursuance of the opinion of the Institute of Chartered Accountants of India, the transactions with IDBI are not
regarded as ‘Related Party Transactions’.
b) Remuneration to Key Managerial Personnel, other than Independent Non-executive Directors, is disclosed as ‘Related
Party Transactions’ in the Notes to Accounts, as per the Standard and its interpretations.

AS – 19 Leases
Rentals are expensed with reference to lease terms and other considerations.

AS – 20 Earnings per Share

a) Basic Earnings per Share has been computed with reference to the Weighted Average number of Shares, based on
monthly rests.
b) Diluted Earnings per Share has been computed based on the fully paid-up value of the Shares issued, as if Calls-in-
Arrears has been received.

AS – 22 Accounting for Taxes on Income

Income-tax expense is accounted in accordance with AS 22 - “Accounting for taxes on Income” which includes current
taxes and deferred taxes. Deferred taxes reflect the impact of current year timing differences between taxable income
and accounting income for the year and reversal of timing differences of earlier years. Deferred tax assets are
recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available.

AS – 26 Intangible Assets
General:
a) Intangible assets are stated at cost less accumulated amortisation.
b) Computer software being intangible asset is amortised over a period of four years.

Research and Development:

a) Expenditure relating to capital items are treated as fixed assets and depreciated at applicable rates.
b) Expenditure on Research is recognised as an expense under respective natural heads, as and when incurred.
65
AS – 28 Impairment of Assets
The Company determines the Impairment of Assets based on Cash Generating Units. For this purpose, the Cash
Generating Units have been based on segments of operations, viz., ‘Paper & Pulp’ and ‘Energy’.

AS – 29 Provisions, Contingent Liabilities and Contingent Assets

a) A present obligation, which could be reliably estimated, is provided for in the accounts, if it is probable that an outflow
of resources embodying economic benefits will be required for its settlement.
b) Contingent Liabilities are disclosed by way of notes in the Balance Sheet.
c) Contingent Assets are neither recognised nor disclosed.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

TAMIL NADU NEWSPRINT AND PAPERS LIMITED

Registered Office: 67, Mount Road, Guindy, Chennai – 600 032
ATTENDANCE SLIP

D.P. Id* Master Folio No.

Client Id* No. of Share(s)

NAME AND ADDRESS OF THE SHAREHOLDER

I hereby record my presence at the 26th Annual General Meeting of the Company held on Friday, the 25th August 2006 at
10.25 a.m. at The Music Academy, 168, T.T.K. Road, Chennai – 600 014.

Signature of the shareholder or proxy

* Applicable for investors holding shares in electronic form.
Note: Please fill attendance slip and hand it over at the Entrance of the Meeting Hall.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -T
- -E- A
- -R- - -H- E
- -R- E
---------------------------------------------------

TAMIL NADU NEWSPRINT AND PAPERS LIMITED

Registered Office: 67, Mount Road, Guindy, Chennai – 600 032


PROXY FORM
D.P. Id* Master Folio No.

Client Id*

I / We ................................................................................................................................................................................. of

.......................................................................... being a member / members of Tamil Nadu Newsprint and Papers Limited hereby

appoint ................................................................................................................................................................................. of

............................................................................................................................................................................ or failing him

vote for me / us and on my / our behalf at the 26th Annual General Meeting to be held on Friday, the 25th August 2006 at
10.25 a.m. or at any adjournment thereof.
Affix
Signed this ........................................ day of ................................ 2006. One Re.

* Applicable for investors holding shares in electronic form.

Revenue 75
Stamp

Note : The Proxy in order to be effective should be duly stamped, completed and signed and must be deposited at the Registered
Office of the Company not less than 48 hours before the time for holding the aforesaid meeting. The Proxy need not be a
member of the Company.