(a) SIRT Ae IS CATT FACTS fers HAKKANI PULP & PAPER MILLS LTD.TRA 1a IG tia east (eis HAKKANI PULP & PAPER MILLS LTD. Annual Report 2018-2019 Contents Transminal Leter Notice ofthe 23nd Annual General Meeting Company Profile Directors Profile Corporate Management Report ofthe Board of Directors Report ofthe CEO and CFO Corporate Governance Certificate on Compliance on the Corporate Governance Code 10. Repon on Compliance of Corporate Governance Code 11. Key Operating and Financial Data of Preceding Five Years 12. The Patter of Shareholding 13, Centficate of Membership with BAPLC 14, Certificate of Membership with BPMA 15. Reportof the Audit Committee 16. NRC Committee Report 17. Independent Auditors’ Report 18. Audited Financial Statements 18, Glimpse of 22nd AGM 2018 20, Proxy Form & Shareholders Attendance Slip, Annual RepsRRA a eS COTA erst Fes HAKICANI PULP & PAPER MILLS LTD. TRANSMITTAL LETTER Date: November 02, 2019 Valued Shareholders Bangladesh Securities and Exchange Commission Registrar of Joint Stock Companies and Firms Dhaka Stock Exchange Limited Chittagong Stock Exchange Limited Subject: Annual Report for the year ended June 30, 2019 Dear Si.) We are pleased to enclose a copy of the Annual Report of Hakkani Pulp & Paper Mills Limited together with the Aucited Financial Statements, Report of the Board of Directors land Auditors Report thereon for the year ended June 30, 2019 for your information and records. Yours sincerely Company SecretaryNOTICE OF THE 23rd ANNUAL GENERAL MEETING ‘This is hereby Noticed that the 23% ANNUAL GENERAL MEETING of the shareholders of Hakkani Pulp & Paper Mills Limited will be held on Thursday, the 26" December 2079 at 11.00.a.m at the “Green City Convention Hall, Noya Bazar Moor, Bishawo Road, Halishar, Chattogram to transact the following business: Agenda-1 : To receive, consider and adopt the Audited Financial Statements of the company for the year ended 30th June 2019 together with the Reports of the Auditors’ and the Directors’ thereon. ‘Agenda-2 : To declare and approve Dividend forthe year ended 30th June 2019 as recommended by the Board of Directors. Agenda-3.: To elect Directors in terms of the relevant provision of Articles of Association of the company. Agenda-4_: To approve the appeiniment of independent Director. Agenda-S.: To ap; Auditors for the year 2019-2020 and fix their remuneration, Agenda-6 : To appoint professional for the Certification on Corporate Governance forthe year 2019-2020 and fix ‘thelr remuneration, Agenda-7 ; To transact any other business of the company with the permission of the Chair. By order of the Board Dated : Chattogram Mohammad Musa November 02, 2019 Company Secretary Notes: (1). The Record Date willbe 24th November 2018, (2) The Sharchoiders whose names would appear inthe Register of Members of the Company on the Record Date will be clgible to attend the meeting 2) Amemiser eligible to attend and vote at the Annual General Meeting may appoint proxy to attend and vote on his/her bochalf. The Proxy Form must be affixed with requisite revenue stamp and submit atthe registered office of the Company not later than 48 hours before the time Fixed for the Annual General Meeting (4). Election of Directors will be hed in terms of Articles of Association of the Company and relevant Rules / Circulars in force. (5). Shareholders are advised to update the change of addres, if necessary, through their respective Depository Participant. (©) Admission tothe meeting room wil be strictly on production ofthe attendance slip sent with the Notice.SIRE Are aS ATS eA IB HAKKANI PULP & PAPER MILLS LTD. owe ae Atetat eI Ca SE are UT ot aw cote Fiery fig oz raf cAmacensteeTE SAE FT KTR, CHI SeeR TE areas er soot Suz FECHA 03m CETERA MeN 39,00 NIB AM “he FAS SACOM we, ETAT ang, fe are, efar, BIST" afer | SE eT ey Fe iets sermror feewos # Grete oot BR oe Ie sane TEMA Mfrs aris aedl, Geter fete oe ofeverenretta efirar ste, apa STAT | “Srey FerH-o8 £ GoM GR gob THAN AA METTEE Bea ofPbles Me MET TofS Hse RAT SR SEM “ares ec 2 cent enter vs TA oI A | sieroy fert-os 2 rem afore frm ST | SremoT fau-o@ # Rode LOND ARNE ROTH we PR rm oe HR oe Fea | sy Feer-oy s aose-Roxo SE xen meshed on DBE way creas ca at ore orf ‘freer “sremoy feeio9 & meter sf acs cotta say core Pore TTA | aftorereata Ea, ‘artes Baa (Gre TM) ATEYE 02, 20d corr af fem (9) GRRE CRD / commis qaree aE AHR IS 28TH ATES 2090 | (a) afte aretes err Does eTaT a COB ARete Scare CoM CeACETET ary eer arse Te ofS TH ROTTER Ae See eT Sk By HT oS a AEH hice mileceT (0) feoere Sato core committe veulaties grate Af wepiae war et (8) Urs oorarersrcrd wiora em, aH Re eH, Ce ae SRT ALT TT | (@) OTT eee a HET CAM OOM TATE EKCompan oneBINT rer es Cera eT HAKKANI PULP & PAPER MILLS ETD, Company Profile Hakkani Pulp & Paper Mills Ltd. is one of the ploneer, leading paper manufactures in Bangladesh, located at patiya, Chittagong, Bangladesh a sister concetn of Hakkani Group has been established and incorporated in Registrar of Joint Stock Companies and firms in 1996 as public limited company ang has already been issued public share in 2001 and listed with two largest Stock Exchange of the country Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited. Authorized Capital of the company is 500 milion and pald up capital is 190 million. The project commenced commercial production at the end of 2003. Under the guidance of nine members of Board of Directors ofthe company isrun by a management team headed by the managing director wth a iew to run the company efficiently. The company involved in producing the best ‘quality of news print paper writing printing paper and medium paper. ‘The vision and mission of the company is to conduct transparent business operation based on market mechanism within the legal and ethical frame work and to produce best quality paper to meet the required country’s demand and also to ensuring benefit to the shareholders, stack holders and the society at large. Company involved in the area production of papers and marketing, throughout the country with established agents and outlet in adequate supply chain to ensure effective smooth supply in time on terms. n the view of production of best quality paper and customer strength the company recognized for edge outstanding performance of product, quality manufacturing environment along with professional services. ‘The company places total emphasis on maintaining and improving of quality ofits products at every levels of production and handling of the company. The customer considered as prime focus as such implemented satisfactory customer's service as deemed suitable and has been acquainted space in paper market with ation portion of share in quality papers. Finished products are produced by composition of wastage paper both local and imported which is fully favorable for environment and it does not harmful for environment which save the ‘lobal environment. Considering the local as well as foreign demand, the Company has almost completed the installation of Tissue project. After completion the installation of tissue project. the capacity of project will be inereated to 25 ton per ay, Various kinds of quality tissue will be produced from the project. (On the other hand the company wants to increase its production capacity by Balancing Modemization Replacement and Expansion (BMRE) by adding of madern and powerful machineries and technology to meet the increasing market demand, The main cbjectives of up-coming project are to produce quality writing printing paper, both side quoted paper, off set paper & glassy paper. Since commercial production, the company has been achieving profitability by utilization of maximum capacity and improvement in all phases, resulting gradually increases net asset value of shareholders simultaneously. ‘The company using most dependable machineries equipment’s and technology to produce compatible best quality paper and also keeping continuous effort to upgrade and adopt new technology in production, quality control, distribution and administration ofits products. Since commencement of commercial operation company has been contributing a decent amount to the national exchequer in the form of import related taxes, duties, VAT and Income TaxMD. ABDULLAH Chairman a v MD. GOLAM MOSTOFA Managing Director & MD. GOLAM KIBRIA Deputy Managing Director Mr. Mohammad Abdullah was born in a famous Muslim family of Chattogram, Bangladesh in 1947. He is one of the founders of Hakkani Group of Companies. He carns a treasure of experiences through doing business, setting different industrial units and leading the whole activities ‘rom the front for the last 37 years in Hakkani Group of Companies, He has been the key person ofthis group. He was appointed as Vice Chairman of the Company since its incorporation. After that, he was appointed as, Chairman of Hakkani Pulp & Paper Mills Limited on 30th April, 2015.He has shown his immeasurable capacity as a successful entrepreneur in different sectors of economy for more than three decades. He has exploited his considerable talents and expertise to operate paper Industries, transport business and other business most successfully. He has already affilated hhim with many foremost businesses. He always intends to add new dimension to his business portfolio. He is man of commitment prudent personality. He is involved in many social organizations and performing ‘various social activities forthe welfare of the societies, Mr, Mohammad Golam Mostofa was born in a famous Muslim family of CChattogram, Bangladesh in 1977. He isthe 1st son of Mr. Md, Abdullah. He was appointed as Managing Director of the company since the incorporation of Hakkeni Pulp & Paper Mills imited. He completed his Masters in Management from the Government College of Commerce Chittagong. He s the dynamic Managing Director of Hakkani Pulp & Paper Mills Ute. He has gathered huge knowledge and experience in the management of both industrial and trading organization. He started his business career after completion of his post graduation. Mr. Mostofa looks after the overall production of industrial concems of Hakkani Group from the very beginning, He has been leading Business in different arena with his pregmaticand dynamic efforts. Thisis how, he has gathered immense experienced in paper manufacturing business, Trading business, packing industry international trade, logistic management, fuel station etc. He has been playing major ole in planning, executing and controling operating financing and investing activities of Hakkani pulp & paper mil limited most productively Mr, Mohammad Golam Kibria was born in a famous Muslim family of CChattogram, Bangladesh in 1980. He is the 2nd san of Mr. Md. Abdullah. He Joined the family business after completion of his graduation. He was appointed as Deputy Managing Director of Hakkani Pulp & Paper Mills, Limited from its incorporation. He has gathered huge knowledge in Industrial management and production technology through working at different level of responsibilities with the inheritance of the group. He acquired computer based education from NCC, UK and involved related business since long with goodwill and success. He can individually manage the whole operational technological side of the industry. He has been also playing an important role on various aspects of management and corporate planning. He is a member of Audit committee of Hakkani Pulp & Paper Mills Limited. Ensuring quality of the product and focusing on customer's satisfactions are his priority.TONER one aS HAT HAKKANI PULP & PAPER MILLS LTD. 6 HOSNE ARA BEGUM Directo: ps MD. GOLAM HAIDER Director is. Hosne Ara Begum was born in Chattogram, Bangladesh in 1952. She is the wife of Mr, Md. Abdullah, She is the Sponsor Director of Hakicani Pulp & Paper Mills td, and one of the important fellows in planning policy maker and executer. She is actively involving with this group business since 32, years. She is regular in Board of Directors meeting to play vital role and to ‘make decision and ensure transparency in all assignment related to this Business group. She provided necessaty back up to strength this group of npany. She involved with different corporate social responsibilty activities, Mr. Mohammad Golam Haider was born in a famous Muslim family of Chattogram, Bangladesh in 1984, He isthe 3rd son of Mr. Md. Abdullah. He was appoint ctor of Hakkani Pulp & Paper Mills Ltd. from its incorporation. He has been started his business career after completion his ‘graduation. As a Director, Operation he has proved himself as a dynam cone in the relevant field, He is a young, energetic and devotee to his du assigned for. His analytical knowledge and experience helped to implement and run 2 number of industries and enterprise and holds the external ability to manage itn a up-to-date view, Mr. Mohammad Golam Morshed was born in a famous Muslim family of Chattogram, Bangladesh in 1985, He isthe 4th son of Mi. Md. Abdullah. He is an MBA, He was appointed as Director of Hakkani Pulp & Paper Mills Limited on 30th April, 2015. He engaged with the family business after completion of his post graduation. He is active in the day to day operation of the company as the Director. He is introducing modern management practices in the company and installing a team spirit to excel in the industry. He's also a member of the Audit Committee. Direcigrsrs. TO:1 a aay, MD. GOLAM RASUL MUKTADIR Director =e A MD. AMIRUL ISLAM FCA, FCS Independent Director DR. MOHAMMAD SALEH JAHUR independent Director ‘Mr. Mohammad Golam Rasul Muktadir was born in famous Muslim family ‘of Chattogram, Bangladesh in 1991. He is the Sth son of Mr. Ma. Abdullah. He was appointed as Director of Hakkani Pulp & Paper Wills Limited on 30th Apri, 2015. He completed his graduation in Business Administration. He is one of the youngest Director of Hakkani Pulp & Paper Mills Limited. He started his business career after completion of his graduation, He has ‘gathered his immense experience in paper manufacturing industries and ‘transport business. Mr, Mohammad Amirul Islam FCA, FCS was bor in 1954. He is a Fellow Member of Institute of Chartered Accountants of Bangladesh {ICAB) and. Institute of Chartered Secretary of Bangladesh (ICSB). He dic his Honors’ and Masters in Management from University of Dhaka. Mir. [slam retired as, General Manager from Bangladesh Development Bank Limited. Currently heisa Senior Partner of K M Hassan & Co,, Chartered Accountants, He was appointed as independent Director of the Company in 2013. He is the Chairman of the Audit Committee of the company. He is adding a Unique dimension to the Board with his long experiences in working for the BSRS and BDBL. Now he is working as Independent Director of NCC Bank Limited and Dhaka Dying & Manufacturing Company Limited. He is, also the Chairman of Audit Committee of the Board of Directors of NCC Bank Limited. He isa senior faculty member of the Institute of Chartered ‘Accountants of Bangladesh (ICAB) since 1994. Dr. Mohammad Saleh Jahur was born on January 21, 1966 in Chattogram. He completed &.Com Hons) in Accounting in 1986 and Masters in ‘Accounting in 1987 from University of Chittagong, Bangladesh. He did his Ph. D. in Finance and got awarded with Ph.D. on January 18, 2003 from University Business School, Panjab University, Chandigarh, India. Dr. Saleh Jahur has also completed Certificate Course in International Financial Reporting Standards (IFRSs) from Institute of Chartered Accountants in England and Weles (ICAEW), United Kingdom in 2008; and Course on Green Productivity for Bangladesh (BDGP), Conducted by HIDAThe ‘Overseas Human Resources and industry Development Association and ‘AOTS, Japan in January-February 2014, Mr. Saleh Jahur started his teaching career as a Lecturer in Finance, Department of Finance ané Banking, University of Chittagong from September 30, 1993. Currently, He is Professor of Accounting and Finance of the seme university. Bangladesh. He was also acted as @ Chairman ofORME Ta as eg (Bes es HAKKANI PULP & PAPER MILLS LTD. Department of Finance and Banking and Director of Bureau of Business Research, Faculty of Business Administration, University of Chittagong, Gangladesh. Before starting career as teacher, he joined BPC as executive officer in 1992 and worked therefor almost 30 months, and completed 1th BCS Cadre successfully He also works os adjunct faculty of reputed private universities and professional bodies in Chattogram. Or Saleh Jahur being academic and researcher got pubished a good numberof research based articles at home and abroad in different areas like management accounting, corporate finance, investment in money and stock market, risk management, etc Dr Saleh Jahur has been working in the corporate sectorsfor many yearsin the capacities of advisor, consultant, and independent directors in diferent reputed corporate firms in Bangladesh. He has also exposure to the capital market as stock market analyst and editor of stock market issue Board of Directors has appointed him as an independent director of the Company in 2017, He is also the member of Audit Committee of the Company. His excellent academic background, profesional knowledge and analytical ability are expected to contribute to the growth and evelopment of Hakkani Puip & Paper Mills Limited. Dr. Saleh Jahur is associated with many social organization and activities. He isa member of CChistagong Club Limited, Chattogram; Director of Khulshi Club Limited, Life Member of Ma O Shishu Hospital Limited, Chattogram, and Life Member of Chittagong Diabetics Association, Khulshi, Chattogram. Professor SM. Nasrul Quadir was bor on 26th November, 1964 in Chattogram. He completed Bachelor of Commerce with Honours Finance in 1985 and Masters in Finance and Banking in 1986 from University of Dhaka, Bangladesh. He did his PGDPM from Bangladesh | Institute of Management (formerly Gangladesh Management Development Centre - BMDC) in 1992. Professor Quadir has aso obtained | his MBA in International Business from Birmingham, United Kingdom in 2008, | Professor Quadir started his teaching career as a Lecturer in Finance, Department of Finance and Banking, Univesity of Chittagong from May, 1996. He has been serving 2s a Professor of Department of Finance ofthe sre unversty Bangacesn ance 20126 wos the syncicate member of University of Chittagong, and also the General Secretary, Joint Secretary PROFESSORS.M.NASRULQUADIR Treasurer of Chittagong Universty Teachers’ Association, Before Starting career as teacher, Professor Quadir worked as Regional Sales Manager with ICI Bangladesh Limited, Ohaka, a subsidiary of Il ple UK from September, 1989 to February.1994 and with Linkers (Far East) Pte Limited, Singapore 25 Manager , Bangladesh Liaison office, Chittagong from March,1994 to Apri1996, He also serves as adjunct faculty of reputed private universities and professional bodies in Chattogram, Professor Quadit has 2 good number of research articles published in recognized national and international journals and books indifferent areas 0 Dine Independent Di rectorlike Micro Finance, Lease Finance, e-banking, Corporate Finance, Capital Market, Human Resource Management, Risk Management, etc. Professor Quadir has been involved with the corporate sectors for many years in the capacities of advisor and consultant in diferent reputed corporate firms in Bangladesh, Professor Quadir is associated with many social organizations and activities. He is a member of Chittagong Club Limited, Chattogram; Director of Independent School and College, Chittagong, Member of Academy of International Business (AIB), USA, Member Of Islamabad Town Co-operative Bank, Chattogram, Life Member of Maa O Shishu Hospital Limited, Chattogram and Bangladesh Red Crescent Society member of Governing Body of Maa 0 Shishu Nursing Institute, Chattogram and Majidia Islamia Alim Madrasha, Chandgaon, Chattogram — and. President of Baitullah Jam-e-Mosque, Sakalia, CChattogram. He has attended many seminars, symposiums and workshops athome and abroad. Board of Directors of Hakkani Pulp and Paper Mills Ltd has appointed him as an Independent Dsirector of the Company in 2019. His befitting academic background, professional knowledge, polished communication skill and analytical ablity are expected to contribute to the further growth and development of the company. Directory tle tsTERN Ae 9s CPT Bers is HAKKANI PULP & PAPER MILLS LTD. CORPORATE MANAGEMENT Board of Directors: SI.No. Name of the Directors 01. Mr. Md. Abdullah 02. Mr. Md, Golam Mostofa 03. Mr.Md. Golam Kibria 04. Mr. Amirul Islam FCA, FCS 05. Dr. Mohammad Saleh Jahur 05, —-Mr.S.MNasrul Quadir 07. MrMd. Golam Haider 08. Mr, Md. Golam Morshed 09. Mr. Md. Golam Rasul Muktadir 10. Mis. Hosne Ara Begum Audit Committee: Sl.No, Name of the Member o1 02, 03. 04. Dr. Mohammad Saleh Jahur Me, Md. Golam Kibria Mr. Md. Golam Marshed Mr. Mohammad Musa Position Chairman Managing Director Deputy Managing Director Independent Director (Retired on 27.04.2019) Independent Director Independent Director Director Director Director Director Status in the Company Independent Director Deputy Managing Director Director Company Secretary Nomination and Remuneration Committee (NRC): S.LNo. Name of the Member 01. Dr. Mohammad Seleh Jahur 02, tt.S. 4 Nasrul Quadit 03. Mr Md. Golam Kibria 04, Mr.Md.Golam Haider 05. -Mr.Md.Golam Morshed 06, Mr. Mohammad Musa Company Secretary: Mr. Mohammad Musa Status in the Company Independent Director Independent Director Deputy Managing Director Director Director ‘Company Secretary Statusin the ‘Committee Chairman, ‘Member Member Secretary of the Committee Status in the Committee Chairperson Member Member Member Member Secretary of the CommitteeOTHER PARTICULARS Bank and other financial institutior SLNo. Name of the Bank 01. Social Islami Bank Ltd 02, ABBankLtd. 03. First Security Islami Bank Ltd, 04, National Bank Ltd. 05. Prime Bank Ltd 06. Premier Bank Lte. 07. Southeast Bank Ltd 08, TheCCity Bank Ltd. 09, Bangladesh Krishi Bank Ltd, 10, National Credit and Commerce Bank Ltd. 11. Mercantile Bank Ltd. 12, Standard Bank Ltd 13. Union Bank Ltd, 14, Dhaka Bank Lid, 15, Islami Bank Bangladesh Ltd. 16. United Commercial Bank Ltd. Auditors: khan Wahab Shafique Rahman & Co. Chartered Accountants upali Bima Bhaban (Sth & 6th Floor) 7, Rajuk Avenue, Motijheel, Dhaka, Bangladesh Phone: 9565136, 9551663, 9551821 Fax: 880-02-9551821 E-mail: kwsredhaka.net Registered Office: 2/10, Dhaka Trunk Road North Pahartal, Chattogram, Bangladesh Phone: +88-02-43151463-64, 02-43150864-65 (PABX) Fax: =88-02-43152348 E-mail : infoghakkanigroup.com, hppmiwhakkanigroup.com Web : www.hakkanigroup.com Dhaka Offic Factory: ms Flat # 8-03, 3rd Floor, 30 Topkhana Road Halim kharchar, PS: Patiya g Paltan, Dhaka-1000, Bangladesh Chattogram, Bangladesh Mobile: +88-01714:087508 13SIMI Aes eS PTT PATA I HAKKANI PULP & PAPER MILLS LTD. afaorrat wort afore 20 GH, Robe AAS TH FAT feofemrtir arena afer aS OTTO, SPP rere arent oni os comma fi fs 0 gec8N Rls reer mm cove aoe oN Tc CT DHT ATE TNE etre aH eeRTER eT CeIeE RDN, CorMIAE ATAE CORIIRNCH eae ACE Meme STINT ore TEMS, 5B cee SATA Bay SE wTelae afer | cenit wre sane, SPRSRET we aatcos ofr FETT shi, SAMMI flora wr (aia) cae ore mite etree Be (SIR STRAT) SAT STTTE COMMAS cose GH Rose eee TTS eI ae ee ile aah, frthecen affrcarn cm often afecaen rear Fe FeCaGAT «NACKTE wey Gein wae | > Lareahfoe wetafee cere; FORETETET Global Economic Prospects Ms fer samt omnis zone wade erefer em MPR fare eT aE See ace Fars er singe otc ge at TTT erga ee re eaace | «ene Seow ae maT Pe ga aifoam ererora Bea TEs ae Sainte ormacerrs HR ie of Kear wae TUTE BET Sa val cacy CE! ose ame Tree arTH sTENhfes aon erase FegDT Rens oes ex 1 wits 2059 § Rody ATT ae A AE aes Far aoe Feet emer aan Sreswrs cofomrve ea TOOT TENTH FAB a ew aT EAE Eon ARTS STAM ATT OTE Soir TR etal oa TUcifcw wees ante tere eu, (ecm TEE or Titan wee! xem WHY S05 MOT TUM Ee ee ky Fone THT BAT RT, BT oTTTTTS eight Ue 3 semen ec a aR FAT be Tene BR RTT aH 3c HTN Mise Sat aT | Sea A wy Bera FeySI RTT IAT CONTR BA eT CTA I MAAS aT AACE | Rod HEM TEATS We 9.6 MENT MEAT A ET as ce crea rc Bc mr eet oT em le ot ea |r ee afer ees Hoe ATT RT| soye-o30 7TH ans Saami contre seRfe a ¢.2 weit ete CHT EOE | Soko TM TALE aoe se Be eA Hl RR gono AT OMe EHR eH 4.3 ele Re Me TAT TO 2 cater were corer ame 2030-gonh HE Tees ater ean en TP 4 weit sar wafer (arma) fet aren stam, eames aera ews aver qe BEAT) aerraore BE wonces area wen maa aie cht FREE TeeK AAS He MTT STE EEL oa TTI BET ,s60,904 | 230,¢03.n03 fitewm comm faa | oxseres | ve,nasoe | 3,20,03,08¢ : 3,083,802 cacnfere areca FUE) 3,2¢,08,239 | ¥,22,0b,0e3 88,44.809 eats REafes corm] 8.02,02,895 - - - - fafea caces fo 8.6 4,007.98 - - * . cs fewer [Baav,s20r0 | B.8¢.rbsee | 0833,0%990 | SARRSe IAD | 000,980,834 SOT Hp feNrs So3d 2020 aE eter Fae Siro mR oat aioe STERTG MIAN x | Taw aCe TE eg ATT TRLOnE THT fe oa ce Ferre ae oT | ween corms ee EE Sf ee See Eom Me ee wo di) «iy Ww onfie stofer sts + orate aitefere mers comtta wor were aeepr eae aa ear a ig « fem eles eT aoe wkarren Sora fe ae we Parga Bere, are feo ant offers ua fen ¢ ahve adinfes mS arr oe a ‘aie Fears s metaiee were, oh, or STAT sett aes wa oot aie were eS aT ass fafa era fea 2 we om acs core Seon iors Bere neeAh Free, Cacafoe sae Fao ene ofrecer covert aa sre wren wate es artes are a vos Oo eran Sf, SMH RT YH, ato aM YS cee Ha eae eas {ft sere oT afore Yate we wEKCe Sete ALE TT ‘fora feenita or oy.o0 6 a8 ares Feerfre TET EA STATE | |. 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Background of tek dest In SCONCES OF CONNIE busnes orimwar roy T Uneraty Teacher wo i eccationl background Wy Eeanomies ot Commer Binns Stusies rarer sb) ‘rafesioral whe e win an a6vee rciang af tt in te igh GOVT ‘ion of Banca Spr Cour of Catan Acar o° Cost a arapement crane Crores Prac Arpt or Chrteed Cores Accountant oy Conted Fable Accountant ot “Chane. Managers ‘courte o ures Sect reenn uaheaton‘Compliance status Tat vine Condition ations Remarks No. ™ = = x lifany) ct complied | conted z z Ses 4 — Tore) Teinctoercensdreer saliva et oteiyewsotespetences | y . . ‘ny foudmertoned in cus Tana) | RiBxca cave th above qanifenions or expatencer may Beton | ouch devon ‘bec or approval afte Commision Cezured 116) | Duatty of charperson a the oar of Olrecrors and Managing Decor or Chie Execatve Ofer. The peony of the Chiigaon of the Rawd wn te. Managing sve; | Brector tuo srelr cet teens Ofc CFO ofthe comeany mal | - be ied by iene a ‘he Managing Oreo (9D) aeorGhet Eee ie CF) of» ‘4; tieg conpury sail not mothe sare poston ancter hoes | 2 : seroany veoa | The Catpenon ofthe Bard shal be Aled fom among the ron-| - - ‘ein Ares othe compay Tang) | The Beare sal day dene epecive les and responsive afte | y i sk) | Charpesonsratne Mangrgonectorshtorchel ecu Ofer tnt bean fi Cepesor oh Baa he ein meres ay sua) | secene ot rvs ter next rear an Chuapenon tat | parka ows mcg, een of aes he ep herpes tPate iy conan minaee | | The Directoy Report to Shareholders us| TreBoerdattneconpory sal cise tefoloing scctorastarertt rSaloues inti Dstt reared under seven 1th Companies ee 195 et XN 1904 TG | Anindanty oick wl posse ne devoprenisinahe aay | _¥ : 3 ‘isu The segrent ante or product wae perermane, v - "isn | RE an corcens recog Ienal and ener kaos test | y 7 ‘tna ndnepatre exon ene fay | vison | Adie on Cot of Gooch ok Gris Plt Magn and ner rot | - Margin were appa sy | A escusion on contnaty of any extaararyecies and th 130 No weh vee ane 9) | tmpications gain riot a] ] Asien oat A detaled sicason 00 tuted pay tansatons aloog th a ‘te ty sHe} | statement showing amount, nature of related party, nature of v ee transactions and basis of transactions ofa! related party transactions; aati aha mee tothe Financial somromes_| isi stement of uttaton of pow rite trough publ ive, eee 154 gs uae ancora ernment: = oe ‘Ae exalanation # the financial results deteriorate aftr the company goes for | ruswvay_| it rt rn 2, Repent PLC Ofer POL Age Shae Oe, |= 3 wa rears | Asatenentat septearevatance sone | Aeon on ny sontont vince tat oct betwen Quetty | . | eee Financ etrmanceren Aarau ne Steet der Notes toteRRM AE Ie CAP ets es HAKKANI PULP & PAPER MILLS LTD. apie marae contin tama we ‘a sence | Ag ‘Complied | complied 7 z 3 * ne 5 ao vos | ain pt He en wn) So - independent directors; “under notes te the Financia | a ae meses |v ; omen Sa ag igre aoe SO (Sel | ecm aimee: bs Fae aocag ER on |e taeesee | o 2 eu ee ee a a aaa canoe Se Of ee eer ier ar aoe Ea eo TiS) has been effectively malemented and monttored: * 7 Feet i ny rl fa a vena |ineMrtoetinee one aare| Pee ere vwna [Sgeamwnrspeme orcs spy) spn nt winners a Siete rT Ta ee) town | Sarge ce menn sateen sae | enone =e vom ea emattsaaainaee| ene. = a rr a eae eee reat ao aoe saa] — | O) | as been or shall be declared as inteion divider cre ees | [panes Se SE [one [Soma Tera | teeta oto nec oe aenimie] ys o ones a ean ea Say BES DA Sg eee pte Aisha [ ecm 7lance status | Rav inthe ee nite appropriate col) ne ls ‘Not ied complied et 2 z = 5 ‘Shareholders holding tn parent (105) or wave wong interest in the ompany name wiedetass risjpnica, | 2 an2von For the purpose o these dause the moresion Feecutve® | 7 means top $ ive) laid employees ofthe company, oer tan the Saco, Chit Eaxcute Ofer, Commeany Satetay, Chit Thnancal fcr nc ead of Itemel ual ond Compliance | signa) | Incase of the aopanament reappoiniment ofa crestor a diclonsrc an the alloving information tothe eharholders = Sania) able esume ofthe decor v : {1Sioa) | pure ot ser her expertise spec uretional re ond z] ‘isioatg) | fa companies in whic the pas ako holds the drectorhp and 7 | 15040 | temembenhipo commitees ofthe Sod, ¥ spam [A Mansaements Docusion end Awana signed by CEO cv MO presenting deal anaps of he companys poston and ‘pera dn wha bre acisvon fehange inthe ran slatements among other foes or senna) SEQUG pokes an maton fr estonia | anges in sceourtng policies and estimation, Hany. cetlydesrbng skort | tne elect on Marc performance or resus and tana postion as | 7 ‘eo as cap own abet gue for such hangs: comparative analysing flees of Inti) of franca sisioaone) | Perform or rauts and francial pontion as wall as cash fows for | y ‘ment franc year with nmediate rec Fve years expaning reona there ‘iskanna) | empare such franca peormance ct wesuts and faandal poston 2s | y . - i ‘all a cash Hos with he par nda Sens 1iavie) | bry explain the Francal and economic scenario ofthe county and the globe ¥ Sona | WAS Ad cancer ues esta ta the finan tatemonts eopsinng (ene | Such skane concerns iigaon plan ofthe compar nd 2 future plan er projecion or forecast for companys operation Seong) | perlomance and franca posite, with justfeation thereat, ses acai | 3 postion sabe expect the shareholdors nthe ret AGH [ecration oF cematon Uy Une GED and the CFO to the Bord as since) | roquted uncer eondon Na 33) shal be diclesed ws por Annexure: | The repor as wel as crate egaring comatlance of condtons of {yiak) this Code required under condion No shall be ioe ar per | Annexure Bans Annexure ‘Meetingsof the board of Directors ‘The company sll conduct Re Board mestings sd record the mints wo _ | o{themectngs as wel as eso requied boos and recrdsin ne wth | y | tas prowons af the rlevane Suresh Secretar Stands SS) at opted bythe let of Chaeres Sera of Banging UCSB Jefe srtarestanardaroeincorsserenthary condor tht Code | 1 Code of Conduct for the Chairperson, ather Board members and Chief Executive Offer The Gourd atoll ly down a code of conduc bated on the turnay | seornmendation of the Nomination ane Remauncaton Commie | y (NAC) at condition Ma. forthe Chaperone the Wana ther Boss member and Chil Exxshe Ofer ofthe comaSRN tia es PTT Bets ee HAKKANI PULP & PAPER MILLS LTD. Compliance Status hat nthe aperoprate column) |_teenerneeSy Not complied omar ifany) 2 The cade of conduct as determines by the NRC shal be puted or the | bite of econ v “Governance of Board of Directors of Subsidiary Company. Provstns relating to the compostion of the oad of the hed ‘company shall be rade applica te the corpostion ofthe Boat a thesubselary company, WOTML doesnot have anysubsiny company. 2 [Attest | fone) dependent dretoron the Homo theholing company | thal bea diectoron te Boer oF te easy company WA 2 The minutes ofthe Bord mesting ofthe subiiy company shal be ced for teviw at the allowing Rod meting of the holding company | wa 20 The minutes ofthe espectve Board meting of he haaig company shal sate that sey have evewed te afi othe subsidy company 20 The Audit Commetee ofthe hoiing company shall ko review the Sasori saterenss in parcular the nvestmeets made by the subslan company. a 3 Compliance HIAC) nd Company Secretary ()-- ‘Managing Director (MD) or Chief Executive Officer (CEO), Chie Financial Officer (CFO), Head (of internal Aud a 30 xy ‘Appolntment ‘he Beard shall anno « Managing Director OD) or Chiet Secatve | Officer CEO} a Corny Secretary (C5) Che Fnancil Ofc (CFO) anda Hen onteral hut and Comp ree WAC) 510) “The postions af the Managing Dvector (MD ar Che Executive Ofc (EO) Company Secretary (9), Chet nancial Offer (CFO) on Head of Intemal Aust and Compliance (AAC) stall be Bled by olferert Indu nite The Moor CEO, C5, CFO and WAC ofa mes comoary sal na hold any snectiw position nay ate company othe are rm, sana “The Bond shot Geary cei espectve oles. responses nd cus ofthe ce0, toa ana thes ane ‘The HD or CHO, C5 CFO and HAC shall ot be removed om th Potton withoct approval of he one actos memecate ‘trina othe Corson ane ack exenange®) a2 to attend Board of Directory Meetings The MD or CEO, 5, CFO and HIAC ofthe comp sal attend the rmeetngsof the Bost Provided thst the CS, CFO andlor the HAC shal nates wh rt 2 recting of the Beard whch wolves corige'avon ofan agers Ket Felting othe pevsonal acters. Duties of Managing Director MD) or Chief Executive Ofer (CEO) and Chiet Financ] Officer CFO) ss) The MD or CEO ain CFO shall cetfy to the Bou tha they have reviewed fran statements forthe you arc! Unt to the Bet of Se (EOand PO canted | totheboae during ‘stint of fra ‘tere sia These statements do not conan any meray untrue statement oF | fom ny mat ot or contan stems ha might be milangeCondition Compliance status Paty inthe appropriate column) complied Wot complied Remarks (fang) 2 avai ‘These staterrers together presenta te and far view af the companys fas and are in compliance with edsing acounting standards and applies 2010) “The MO of CEO ard CFO shall also crt that Ware ae tthe Bet of sowie and babe no transactions entered into by the company ‘dort ine year whch re mausuert, egal ovn Walston fhe code conduc fr he comauny’s outdo is memba. save “The catfcation of the MD o CEO and CFO sal be eacoted inthe nv Report Soard of Directors Cormmites.- Fer ensining good goverance inthe company the Board shall haw at east folowing sub D uit Commies ane v 7 Nomination and Remuneration Comite, v s ‘Audit Committee. — sa ‘Responsibility tthe Beard af Directors re “The com sanyshallhavean Aud Conmitaeai a subcarrier 50 “The Aust Commitee sallassst the Bardia ensuring thal the nana stacemerts reflect ve and fa ie ofthe sate of aks of he copay ara n ensues a go0d mont ons eye thin the Busnes sve ‘The AuatConwntie shall be responsible sth Dow the ees fhe Aue Cerentee nal echt ing 52) Constitution of the Aude Committee = The Audit Commitee salle compote ofa ast vee members save) ‘The Hoa shall appoint member fhe Audit Comm tee who sal Be | norwexecutivedtectcis of te company oxcestine Chatperson ofthe Saar halide atleast one independent dector “The Aus Commiee 'scomprsed of 3 tees} merbers ‘Al members of the audit committee shoul be “Wrancly iterate” ond 3 least 1 (one) memoer shal have accountng oF relates Maar ‘managerentbackzroune and 10 tel yt of ucenoanenc, Explanation: The tr Franc afy Hort’ mesne the ability to reac and | understand the fart states the tatement of ence! pos, Satewer of comsrehensive income statement of changes eaUly nd cash Flows statement and a pean wil be coneiered to Rave Bccourting oF related Franal managornl exprine # he oF he possessor pofessonal qualifeaton or Accounting 9" Finance soca wit at least 10 Ten) years of corporate management or r'esinal eepenaness see sai! When the tr a eice ofan Commitee member expres or tere any creumstance causing any Committe mais o be unable to hold fee efor expation of the ter of servis thus mane the rer ttthe Commitee members to be lower than he presribed number of 3 Toes persons, the aor sl apni the na Convmiese member to fils te vacancy imme or rot than 1 (0) mrt mye date of vacingy In the Corie t0 soe carvan of she Delormance af werk of he Aud Commitee ‘Te boars hos sopointed membersin rdoctene and no acon occured ‘The company secretary shalact as the secretary ofthe Commute sin ‘The quonim of the Ast Commitee meeting sall not constitute stout aan 1ane eepercent decShana net aes coe HTT HAKKANI PULP & PAPER MILLS LTD. condition Wo. Tle ‘Compliance status Pat inthe eppropiate column) ‘complied Not Complied (ifany) 2 4“ ‘Chairperson ofthe Aust Committee ‘he Heard shal select 1 (one) ember of the Audit Commitee to be CChatperon of the Rude Cormmetea, vino shall be an independent Sector sean) In the absence of ke Chavpenon of the Aude Commitee, te remaining members may elect ane of tenelves as Charpersan for thst Dartculor messing tat cave hve sulle ns prlam of onsttung quorum 3: requir! uncer condkion No, Sib) and the reson af Sbeence 0 the raglan Chavperton hall be uly recorded im the aK “Chapeson of fe Ava Commitee shall remain preset in the Ant General Meeting (ASM Provided tat i absence of Chatgerson of the Aust Commitee. ay ‘other member fromthe hus Commie shale sete obs prsent Inthe annual genes! meeting (GM) ae reson for boars othe CCharpon of the Aut Commits shal be recorded Inthe minutes of the Acme 38) ‘Meeting ofthe Audit Committee “Tm ait Commitee shall conduct ot least Rs four meetingt im © sci year Provided that any emergency messing a adtion to regular meeting may be convene a the request of any one of the members of the Commitee vant ‘The quorum ofthe reoting af the Au Comite shal be cantituted In pveance of eh wo members tv thd ofthe members of re ‘Aust Commitee, whichever Is higher, where retonce of an ‘nsepensen directors a rust 8) Tole of Audit Commie ‘The Commit shal « 5a ‘Gverge the nance veportng process 3516) ‘Monitor choice of outing pce ar prnepes: v0 “Monfor Inter Ait ond Cometance process to ensure tha Adamuely resourced. Incusing approval oF the intemal Aa and Conia Plan and review of te Intemal AUSE are Complince Report 5518) Grete hing and pevfomunce of extol ven sista old masting with tha enema or satiny auditor for ovr of the fnnual franca statement afore sion to te Ror fr srl Sr adoption ssi Review slong wih the munagement, te annual franc stamens ‘bore sutiaion tne Sond fo aero! 55) fevow along with the management the quaredy and hat yeaty “anancllttement befere lor snes ote Bow! appa 5590) Review the ace quicy of nemuloud function i | 0 Tacviow the Managements Dicusio an Anahi before asoaing the ‘real Report ‘eview statement of al lated party tansacons submated by the management,Put” inthe Condition soporte oun Remarks ‘No. Tite | eee (ifany) Not Complied | complied z 2 3 2 5 Tip) | Peden Meragerent ates or Lar of ral Conve weno | | sued by sat eudtors ‘Oversee the determination ef aude fees based on scope ane mageitude, sisi) | level of expen deloyes and trv outed ‘er aecve sust ond | (Sane the perfomance at exes ouSiosand Overee hater the paced raed trough Isl Publ Oferng [ane sispmy | 1P0! "Repeat Pic Oeing (PO o is Share Ofer Rave Bee prrelereey ‘flied on pet the. purposed near fr acumen Of eran | ‘prospectus approved by the Commission: - To__| Reporting ofthe Andi Commitee 51518) | Repoting tothe Bardot Director {i6%ax0 _ | The Ava Conroe shal epor er Rraciveto ths Ward v_ I : i) _| The Audlt Comite shall menedily report to the Bouron the flowing ings any ree wasn Si@.aKiN\a) Report on conflicts of interests: v Lee 18 Sespeced or came faut regulary marl lect ent ed 546i(eMiNNb) | im the internal audit and compliance process of in the Anencial ¥ - oe aed sateen “kapeted ingenent of ons eguony complance cing stove AO | ecules ibted las, rales and regulation sand ’ had sang | 20 thermaerwbch the Ai Caries Ses cea shall be ; SIOHAIONG | caecosed to the Board munediatety, % = Aeportng tothe Author: 1 he Aust Committe has reported the Boar about ayhing wnch | ha material npc on te fnsncal condition and ests of operator ate hos c.sed with the Board andthe nage aay rfkacwrmaauenesas 516K) | reetincation is necessary and if the Audit Committee finds that such - mae = rectthcation has been unreasonably ignored, the Audit Comrmitter shall oe Teper sch ding to he Comms upon repcting of ach ters tate toad for estes comstion os peed f(s moths frome datos puri othe Soe cheer ee 57) | Reporting tothe Shareholders and General investors [ Report an activities certied out by the Audi Committee, including any “The Audit Committ ‘epant ade othe Der unr condtion Mo. aN above Gung | everson ‘he ye sal be sped by the Chapin othe Aust Cmte ae Pitas izlses inthe onal ego ofthe sue cones chara of BC. % | Nomination and Remuneration Commitee NRC) 21) | Responsibility tothe Board of Directors vatvay |The Sompary sna nave @ Nomrauon and Aemuneaton comme | y Xe) | (ache sarcomrtn of the Bom “The RE sal ast he Goad in Formulation aU oration citria pokey fr seeming quleaios pose sts, expres cxryiy | Sod independence of thecore snd toptewl eecitie tv wel asa | poly tor fomol paso one restart 2 Sectors, to BetocsveITH tra es PTE ETT I HAKKCANI PULP & PAPER MILLS LTD. T Complianes Status ‘Put? inthe Condition Remarks le appropriate column) No. ime a litany lot Complied | complied 7 Z 3 * 5 The Ter of Reference (108) f the NAC shall Be clariy se eth 0 210 _| ting cover the areas stated atthe condition No. iS) v Under rocess E2__| Constitution of the WAC “Te Commitee shall carpe ofa last tee members incirg an 62h) dependent rector < “SaKb) _| Al merersef the Commitee shall he non xceutve eto ¥ ‘Meribas oF tne Commies shal be nominned ond appointed by the sara | ee v v@_| (ht Bona anal have authomy to rerane and apaoint any member of $28) | unecommite: i ‘cae of dent resignation cagualfcatioy or removal any member ayes | oie Combes onary ster caves ofwacances the Beare sx fly the vacancy with TAO fone hundred eh bys of securing suet speaney the com te “The Charpaon of the Commitee may appoint or corapt any exer ‘ape andor members of taf tthe Crrrce a a0 ho sal ayy | be nomvoring memaer the Chaizenon feel that advce or | Suggestion for such external expert andor meres of ta shal be equ or vlble forthe Commnte, ‘Kq)_| Tre company secretary shal at ashe seciotry the Commitee: ¥ The quorum ofthe WRC mesurg shal not consttutewihout atandonce 1200 | afatteastan indepen crestor, 4 To meroer of the MAC sul rece. ether eiecty oF indie ny 46219 | remunertion for ay advsery or casutane fle er ctherwea, other | than Deer fes or honeatur fam the comps, l 3) Chairperson ofthe NRC gaya) TH Bod sal selec 1 Jone) member oF the NRC wo be Chakperson of [| y Ns) | the Commnrcn who sallbe an independent rector: Inthe aosonce ofthe Chatp'son ofthe NAC, the remaining neers | nayetet one of themselves as Chasen fr het marl maatng oot | ple eed aanee | “The Charpsrsn of the WRC shall aera the anauel genera! meeting (AGM to orser the queries fhe sarenoer: Provided that in absence of hap ofthe NA any ater mernber ‘Ge! | from the NAC shall be selected to be present in the annual genesal a ” ‘rewting ACH) foraameing the trehoidr ques ars ran fot sence of he Ciseron ofthe NRC shal be eco nthe rates ore AGM. Ga) Mocking ofthe NRE i418) | The NRC shal conduct lat ove mete afore yen 7 : sein) | TeCIDEBIN of he NRE may crwene ary eesincy meting LEN No Such reporasie 121) gaqust by any meres of he WC; 7 . Incidence aoe “The quorum ofthe mowing the NRC shal be consuted in peesence iare. | Beather to member oF two thie ofthe mambers ofthe Commitee, | . ‘wnchever is tigher where presence ofan independent rectors must “tequted under condtion No 621ie) Condition Tee ‘Compliance status ‘Put? nthe eppreprate column) Wot complied | complied Remarks (ifany) 3 = wane) “The precedings ofeach meeting ofthe NEC sal duly be recorded in the unutes ard such minutes sll 6 confirmed tthe next rsetng ot te NRC v “ ole of the NAC [NAC shalbe independent and responible or acountable othe Baud andi the sareolders 69) NRC shal oversee among others the felowlg mates and meve report with acommenaien athe Bae sito, formating the cites for dctminng questions, postive atubutet and indegendence of 2 drecr ad recommend 3 psey tothe Sa, Felting fo the remuneraaon of the eects, top level execute, onsen the lion x00) ‘he lve and comanion of renuneraton fe maconable anc aufflent 1 atract relah aré motivate Suitable cietors trun Une company success, raee acess «15x01010) the rlatonshp of remureraten te performance i clear and meets "pops performance bern aks ane nde proces iswoniie Temunerton (a decor, top level executive involves 9 bale betveen fred and incentive poy seeing shor and longterm performance obectves appropiate tothe working ofthe compury are gay nde proces exon “evaing w poly on How's deity taking ito consideration age gender experience, trict, edacovona backgrountand analy nde proces sit \centfving persons whe ae qualifed to become decor and ne may ‘be appointed in 10> level executive poston in aeondance ith the ‘ter aid down, and recommend ter appointment ar removal 0 thea Lunde process s5iei60 Foxmting the cite or eulution of perormance of ingaaendent actor athe Bor Under oacess as) Iceraiying the company’s neds for employes at eiflerert ives and Getermine ther selection, tansfer er seplcerent and. pomotion tiered Under races ovwinning recommending and reviewing anrully the company thman renee eed by patos S50 The company shal diciowe te nommaton ard remuneration poly 4nd the elation cian actes of NRC dung the yer a 8 ‘lence mits anne! ep. Under process 7 External or Statutory Auditors 7 ‘The ssuercorpany shall notengage hs externa or statutory aud to perform the folowing senics ofthe compery nemey= ant aperisl or alatonseviesor fumes opions v “The Satutory Auditor Fasdec wed tee fomplonce| 7K feancal efomationsynemedlgn and mperntation ra nxt ‘bok Keuping or ater ewiesveaed to te accounting records or financial statenens Lovee dealer services 0 acuaralserdcesSHGRINIET TH RS CTT TST fer HAKKANI PULP & PAPER MILLS LTD, Complionce status Tatvinne Condition Remarks le {appropiate corn No. si ee (ifany) Not Complied | complied i z 3 z z “i _| eternal auc sericea pei uci ences y zanyvin | snysersie thatthe Aut Comrise deters ¥ sirwan | Bor caret saves on compliance corporate govemanceas ‘eed under orton No 9 a 7a) | anyothersenie retreats conf of interes. v No pater ot employees ofthe ete! wut Firs shall possess any thar fhe comzary they adit Te hr he tn Fh a yo) spore of at company so Tomy members IEMA | ol ny shares ne coma Provided that spe son, daughter moter, nother, ste $0 Into daughter in hal Be correc sem meres. Teprnetatie of eternal or tatsor audios shall erin oresentin 70) the Shareholders Meeting (onus! General Mecing or Footy | [Generating to anser he quero esr 2 __| Maintaining a website by the Company - ao [Rte Rao et to en eee Ty 7 . 122) _ | tecomporyshal hep the website functnal fom the cae cistng a The compenyshalimake avelablethe dete icsures on ts website tia; | ar requred uncer the Istg regustions of the concemes sock | ‘ Sete | Reporting ane Compllance of Corporate Governance “Te company shel obtan » cxrifeate fom « practicing Profesional Twa Aecoumanto Sereary (Curated Accountant and ‘Seen sta nes ome xy | Marogement Accountant ot Chrted searioy) other than ts | is Sha freak Co Stat ets "a fry cr gear bass tegen com parce of Ghaneres Acouncats “ontons of Corperate Gotenance Code of tre Commision are sal forthe mange [cheer shal be coud inthe Anu Repo 20182018 oar ecommersed Ie profesional uh wil provide the carteate on compliance of his the pcleona for sta | Cerpoate Goverance cote iat be appointed byte harcekies =| le SSpsineene by tearm genoa meet, ‘pe saree Ia The decors of the comgany sal stat, In accordance with the Statusof Compan sa | Annevurec avached nthe decors report whedhethe company has | sais pee iee Cempledvh ese conditions ornct ‘he DrecersRapet as eauAnnexure) Key operating and financial data of preceding 5 (Five) years: r Para 20142015] Particulars |perey, 2018-2019 | 2017-2018 2016-2017 20152016 | Tpastnedh ‘Operation and Market: Production Capacity | MT 11350 7500 6090 ‘000 000 ‘Actual Production MT “72 41920 358631 sine 435959 Sales Quantity MT 477889 4965.19 3743.28 456688 Financial Results: Tumover Tk | aeaooare9 | 282580254 | 341138173 | 27.2075,109 | 300223218 TK | 66262778 | 33210851 | 25414055 | 17987201 | 164654983 Gross rot — - % 13.69% 1195% 745% 659% 555% TK @rso76n —cise19.72) | 18690630 | (1437650 | ceso2si5) Operating Profit % “1.60% 563%) 549%) (527%) (2.86%) Te | wso7as7) | (14823999 | csaesz7y | tusszase) | c.as3.749 Net Profit before Tax % 1.14% 52599 (4.685) (4.25%) (262%) 235213) | (18219722) | «ag101520 | «3746851 | (10785,406) Net Profit ater Tox % “437% (6.456) 531%) 6.04%) 3.59% Earnings Per Share EPS) | 1 an (096) 35) on (05) 3 1 5 Dividend (Cash) te | omawinde | cnsngease | NoDividend | cpaaneon | canuwgedar ornate mm, eothensions | oases Financial Postion: Paid-up Capital Tx | 190000000 | 180000000 | r9a000000 | 180000000 | 190000000 Curent Ratio 0974 ost 0954 orm 1 Mercer eae 1 | 882494770 | szerrsase 614265905 63,1651,793 | 65,2982,392 [Current assets Te | aznsassre | 393917319 | 325652086 | 264456451 | 20,11,90054 Current Labity Te | agore9.c09 | 455596815 | 341296483 | 3ai9azgrs | 17.87.93847 NetCunent Assets TK | e3so05) | 1779480 | (5648367 | 27487424 | 22396807 Astassets value with tk | 4953070342 | 521245690 | 5366214 | 55,1434936 | 57,431,842 | | NelAseevale | 3x gogeei92s7 | 221096045 aaa30aora | 226024300 | 225070413 hegre. | Te 2607 2743 2325 2902 3023 at Ase Value Pr Share] 1088 1164 1st 1190 1237 re 435 120 643) 265) 130/ | 39SION Orr eS COT PTT RS HAKKANI PULP & PAPER MILLS LTD. Annexure) HAKKANI PULP AND PAPER MILLS LIMITED THE PATTERN OF SHAREHOLDING AS ON 30 JUNE 2019 1), ParenuSubsiiaryzAssodated Companies and other elated pats “numberof | Percentage ] | = — Share Holding _of Share Remess Parent Company NA wi = | eee Subsidiary Company | wa ni | eerie Other Related Parties WA wi Ni ; 2) directors: company |.Mumberat | Percentage of aa are Positioninthe company |gHumber of | Percent amar i a Aba Caiman saiees | za9% [> Me Gol Meta Wonaging rer Ts.ig666 | 79055 : MMe. Gola Kia Deputy Hanaging Onector | 1505000 | _7825 : Mi Gola Haier rector 1686.66 |__—077% Mic Golam Morined ——[ Dretor 1688556 | 87% = Ti Golam asl Putas Dretor 168666 87% : Tis ose Ars Begum Director 50000 299% - 3) CEO/CFO/Head of Internal Audit & Compliance and their spouses and minor children: - r | Postoninthe | Number of | Perentage of | oa ‘company Share Holding, ‘Share — Get oa Chet eeutveOfcar— 5.15665 "| 790% |. managing Dear ic Mokamea un Company ery Niniger wi : Ri Notammad MoinaTAGedn | Chet Finan fier | wi [We Ma Saleh med Plush | Head of ternal Aud iF 2 4)_ Shareholding Poston of top salaried employee other han CEO, CS, CHOM MIA T [ Numberof | Perentageat | ] Name | Postoninthecompsny |etr ang Spa femarkt ie Tonoharimadaye | Heedot Sate markeing_| WI | : Tir. Md. Nazrulislam Khan | Sr. Manager, Sales ni__| Ni = m ‘Te Bipul Poder | Manager (Corporate Sales) Ni Nil S i (Mr. Mohammad Younus Mie Assistant General Manager Nil Nil = We Ma ean Mecha Engines wi ‘i : i ~ 5). Shareholders Holding 10% or more voting interest in the company: ‘Shareholders Holding 10% or — ] - more wating interest in the , wt “a B company =kJesauay-A1ey23995 oy “6toz Jaguiaracy , J ¢ Jun juasnd surpuian ayvorfinsad siyy, ‘ojasay Buruvpaddr saBapiaud puv sqyBu aya yp 01 paynyua st pup} sajuedwio) paisiy Ajaijqng 40 uovelossy Yysape|sueg fo saquayy CpuipiQw sr CALIWII STIW wadVd 8 dd INVYAVH aya firsa9 07 1 siyT, a}LOYIa) pomaudy EE, PREM Z| 291/omeeky :0N fo io aeSHR tl is CTE ets Ie HAKKANI PULP & PAPER MILLS LTD. PAPER MILLS ASSOCIATION [BPMA] Ref: BPMA/Certificate/2019 (21) November 17,2019 MEMBERSHIP CERTIFICATE This is to certify that Hakkani Pulp & Paper Mills Ltd. 2/10, Dhaka Trunk Road, North Pahartali, Chittagong, Bangladesh is a Member Organization of this Association. Their membership ID is 21 and the membershio shall remain valid up to December 31, 2019. BPMA Management wishes continued success of Hakkani Pulp & Paper Mills Ltd. On behalf of BPMA bee a+ Bs 7 +l AKM. Newsherul Alar Secretary fI Report of the Audit Committee For the year ended 30th June, 2019 Constitution of the Audit Committee: The audit committee of Hakkani Pulp & Paper Mills Limited was reconstituted by the Board of Directors in its ‘meeting held on 28th October, 2017 with the following Directors: Name of the Member Status in the Company Status in the Committee | Mr. Md AmirulIsiam ECA, FCS Independent Director Chairman Dr, Mohammad Saleh Jahur Independent Director Member ‘Mr. Md, Golam Kibria Director Member |__Mr-hid. Golam Morshed Director [-Wember (On expiry of the tenure of Mr. Amirul islam FCA the audit committee was further reconstituted by the Board of Directors in its meeting held on 27th Apri, 2019 with the following Directors: [ ame ofthe Member Sinaia he tompany Statusin the Commitee Dr Mohammad Saleh Johar Teependent Gaapson Mr. Md. Golam Kibria Director Member | Mr Ma. Golam Morshed Drecor Member Meeting of the Committe: ‘The audit committee held 4 (four) meetings during the year 2017-2018 an the following dates: Tnaierdt mena Date of Mestings : [tse Meeting 26th September, 2018 _] nd Meeting "stNoverber, 2018 3re Meeting 34st danuory, 2019 ath Meeting 27th Api 2018 ‘The Committee discharged its role as follows: Internal Control: + The Committee reviewed the procedure and task of the internal audit and financial report preparation, + The Committee reviewed and considered the report of internal auditors and statutory auditors’ ‘observations on internal control. + The Committee reviewed the internal control system prevailing in the company to introduce the appropriate compliance culture and also to ensure that all employees have clear understanding of their respective roles and responsibilities. + The Committee reviewed the arrangements made by the management for developing a suitable Management Information System (MIS) + The Committee reviewed statement of related party transactions submitted by the management,DIORA sre aes Crea Riera Re HAKKANI PULP & PAPER MILLS LTD. External Audit: + The Committee recommended the appointment of statutory aucitors. The Committee reviewed the findings of external auditors and finalized the audit report and annual financial statements Financial Statements Reporting: ‘The Committee reviewed quarterly and half yearly financial statements before submission to the Board for approval. ‘The Committee reviewed the annual financial statements before submission to the Board for approval. or. fon mi leh Jahur Chalfperson Audit Committee of the Board Dated: November 02, 2019NOMINATION & REMUNERATION COMMITTEE (NRC) REPORT FOR THE YEAR ENDED 30 JUNE 2019 The Nomination and Remuneration Committee (NRC) of HAKKANI PULP AND PAPER MILLS LIMITED was constituted by the Board of Directors in its meeting held on 26" July 2018 with the following Directors: Name of Members | aamenconeny Status in the Committee (Dr. Mohammad Saleh jahur | Independent Director Chairperson [i Amiral lam FCA, FCS Independent Director Member Mr. Md. Golam Kibria Director Member | | Mr. Md. Golam Haider Director Member | [le Ma Golam Morshed Director Member | ‘On expiry of the tenure of Mr. Aminul sam FCA the committee was further reconstituted by the Board of Directors Inits meeting held on 27” April, 2019 with the following Directors: Name of the Member Statusin the Company Status in the Committee Dr. Mohammad Saleh jahur Independent Director Chairperson ‘Mr. Mad. Golam Kibria Director Member Mr. Md. Golam Haider Director Member | Mir. Md. Golam Morshed Director _ Member Company Secretary acts as the member of secretary to the Committee. The Nomination and Remuneration Committee (NRC) had its first meeting on 4* April 2019 Role of the Nomination and Remuneration Committee (NRC 1) The Committee shall be independent and responsible or accountable to the Board and to the Shareholders; b) The Committee shall oversee, among others, the following matters and make report with recommendation to the Board 1. To formulate the criteria for determining qualifications, positive attributes and dependence of a director and recommend a policy to the Board, relating to the remuneration of the directors, top level executive, considering the fellowing: 4) the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate suitable directors to run the company successfully; b) the ‘relationship of remuneration to performance is clear and mects appropriate performance benchmarks; and remuneration to directors, top level executive involves a balance between fixed and incentive pay reflecting short and long term performance objectives appropriate to the working of the company and its goals; 2. Tedevise policy on Boar's diversity taking into consideration age, gender, experience, ethnicity, educational background and nationality: 3. Todentify persons who are qualified to became directors and who may be appointed in top evel executive 45. samTG rer ees CHT BRT eI HAKKANI PULP & PAPER MILLS LTD. position in accordance with the criteria laid down, and recommend their appointment and removal to the Board; 4. To formulate the critetia for evaluation of performance of independent directors and the Board; 5. To indentify the company’s needs for employees at different levels and determine thelr selection, transfer or replacement and promotion criteria; and 6. To develop, recommend and review annually the company’s human resource and training policies; Activities of the Nomination and Remuneration Committee (NRC) for the period under Report: In the FIRST Meeting of the committee focused on the review to the specific areas of existing status, policies and processes and addressed the following: + The committee reviewed and recommended on organizational structure with Roles and Responsi ‘employees of the company; ies of ‘+ The Committee reviewed, developed and recommended a Service Rules for the employees of the Company. Dr. flohammad Saleh Jahur Chaiperson NRC of the Board Dated: November 02, 2019— KHAN WAHAB SHAFIQUE RAHMAN & CO. mgiworldwide, « CHARTERED ACCOUNTANTS Diala Ofie Chatogam tanh ote: pt Res aban 8 1 ft Saree, 2 Raju e. Noed ahh Ste Rad brat eta Se a hen Sanaa aR asic ssi Eigse targa Epectir: saat a snes Ea? hosrechatanet Fora? ogee Wel a ined Wo mst com Opinion We have audited the Financial Statements of “Hakkanl Pulp & Paper Mills Limited” which comprise the Statement of Financial Position as at 30 June 2019, and Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and explanatory information's, Inouropinion, the accompanying financial statements present fairly, n all materia respects, the financial position of “Hakkani Pulp and Paper Mills Limited” as at 30 June 2019, and its financial performance and its cash flows for the year then ended in accordance with Intemational Financial Reporting Standards (IFRSs). the Companies ‘Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors! Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Intemational Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and Bangladesh Securities and Exchange Commission (SEC), and we have fulfilled our ethical responsibilities in accordance with the IESBA Code and the institute of Chartered Accountants of Bangladesh (ICAB) Bye Laws. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion, Matter of Emphasise: # Anamount of loss of Tk 19,558,746 had been incurred in Tissue Unit and Tk.1,496,132 in Paper Unit. Total loss of Tk. 21,054,878 and the percentage of loss comparing with last year increased by 16% due to new Tissue Unit has been gone into commercial production from January 2019. The reason for decrease in EPS from (0.96) in the previous year to this year (1.11) is mainly due to increase in operating losses. Our opinion is not modified in respect of this matters. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period, These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters tobe communicated in our report. [ined EaSITE Aral ks PPT FETS IIS HAKKANI PULP & PAPER MILLS LTD. Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole. Our opinion on the financial statements is not modified with respect to any of the key audit ‘matters described below, and we do not express an opinion on these individual matters. We have determined the following key audit matters to communicate in our report Revenue Recognition: The key Audit Matter The company recognizes revenue from the sales of paper and tissue products when control over goods is transferred to a customer/dealers. The actual point in time when revenue is recognized varies depending on the specific terms and conditions of the sales contracts entered into with customers/dealers, The company has a ‘number of customers operating in various geographies and sales contracts with customers/dealers have a Gifferent terms relating to the recognition of revenue, the right of return and price adjustments. Sales arrangements in certain jurisdictions lead to material deductions to gross sales in arriving at revenue, We Identified the recognition of revenue from sale of products as a key audit matter because; + Revenue is a key performance indicator of the company and there is risk of revenue being overstated due to fraud resulting from pressure to achieve targets. How the scope of our audit responded to the key audit matter ‘* Assessing the appropriateness of the policies in respect of revenue recagnition by comparing with applicable accounting standards; ‘+ Evaluating the design, testing the implementation and operating effectiveness of the company's internal controls over recognition of revenue and measurement of rebates, discounts, returns and chargebacks; * Assessing manual journals posted to revenue to identify unusual items not already covered by our audit, testing: + Evaluating the adequacy of the financial statement disclosures, including disclosures of key assumptions, judgments and sensitivities. Property, Plant & Machinery: The key Audit matter The company has Tk 882,494,770 as Written Down Value at Property Plant & Equipment which stands 66.94% of total assets with new acquisition of Tk 290,637,715 made during the year. Please refer to Note 4.00 “Property, Plant & Machinery’ of the notes to the Financial Statements for relevant details. How the scope of our audit responded to the key audit matter: ‘Our procedures in relation to property, plant and equipment included: * Obtained an understanding of the management process for acquisition of fixed assets, = Evaluate the appropriateness of acquisition process of non-current assets ‘+ Testing the key controls over the management's judgment in relation to the accounting estimates of property, plant and equipment.Taxation The key Audie Matter Given the company’s exposure to complex tax issues, the high level of management judgment in estimating the amounts of reserve and provision for tax and involvement with regulatory authorities, taxation was considered to bea key audit matter. Please refer to Note 17.00 “Deferred Tax Liability” and Nate 22.00 “Current Tax Liability” to the financial statements for relevant disclosures regarding calculation and disclosure of taxation. How the scope of our audit responded to the key audit matter We particularly focused on the impact of whether the tax provision was appropriately recognized; we conducted interviews with the company’s tax personnel in order to assess the taxable income of the company, We re-performed the calculations made by the management regarding tax liabilities to ensure compliance with the provisions of income Tax Ordinance, 1984 and checked the arithmetical accuracy of the calculations. We also carefully reviewed for any contingent liabilities to be included in the financial statements in this regard. We also obtained an understanding, evaluated the design and tested the operational effectiveness of the Company's key controls aver the recognition and measurement of deferred tax liabilities and the assumptions sed thereon, We assessed key assumptions, controls, recognition and measurement of deferred tax assets. We also assessed the appropriateness of presentation of disclosures against “Income Tax”. Other Information Management is responsible for the other information, The other information comprises all of the information other than the financial statements and our auditor's report thereon, ‘Our opinion on the financial statements does not cover the ether information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated, When we read the annual report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the board of directors of the Company. Responsibilities of Management and Those Charged with Governance for the Financial Statements ‘Management is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the company's ability to continue asa going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management elther intends to liquidate or to cease operations, or has no realistic alternative but to doso. ‘Those charged with governance are responsible for overseeing the Companys financial reporting process.RTA Ta as CAI ler Fee HAKKANI PULP & PAPER MILLS LTD. ‘Auditor's Responsibilities for the Audit of the Financial Statements (Our objectives are to obtain reasonable assurance about whether the financial statements asa whole are free from material misstatement, whether due to fraud or error, and to Issue an auditor's report that includes our opinion. Reasonable assurance Is @ high level of assurance, but is not 3 guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists, Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements, As part of an audit In accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: ‘© Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud Is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissians, misrepresentations, or the override of internal control. + Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate inthe circumstances. + Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management but net for the purpose expressing an opinion con the effectiveness of the company’s internal control. + Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether @ material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going coneern. we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or if such disclosures are inadequate, to madify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the company to cease to continue asa going concern, + Evaluate the overall presentation, structure and content of the company's financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events ina manner that achieves fair presentation. = Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the company audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we Identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that ‘may reasonably be thought te bear en our independence, and where applicable, related safeguardsFrom the matters communicated with those charged with governance, we determine those matters that were of ‘most significance in the audit of the financial statements of the current period and are therefore the key audit matters, We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should net be communicated in cur report because the adverse consequences of doing so would reasonably be expected to ‘outweigh the public interest benefits of such communication. Report on other Legal and Regulatory Requirements Inaccordance with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations, we also report the following: 3) we have obtained all the information and explanations (except the matter discussed in qualified opinion para) which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof, ) In our opinion, proper books of accounts(except the matter discussed in qualified opinion para) as required by law have been kept by the company so far as it appeared from our examination of these books; the statements of Financial Position and Statements of Profit or Loss and Other Comprehensive income dealt with by the report are in agreement with the books of accounts and retums; and d)_ the expenditure incurred and payments made were for the purposes of the company’s business. ‘Shafique Rahman & Co. Date: November 06, 2019 Accountants Chattogram