Dear Shareholders Welcome to a changing Jagatjit Industries limited!
I am delighted to share with you the Annual Report for the Financial Year 2017-18encapsulating our strategy and plans for the future growth and expansion. As the titletheme of this Annual Report says We are changing' I am excited to sharewith you an outline of this change disruption and transformation to make thisorganisation sustainable in the long run.
Before I take you through how we are changing it will be important to understand whywe are changing. During the past few years we have faced significant challenges both dueto external factors and internal issues.
While factors like demonetisation and various bans on the sale of alco-beverageimpacted demand low surplus funds after servicing high fixed costs prevented us fromreinvesting in business to scale production and invest in better technologies andbranding. This also led to opportunity loss as stagnant production volumes wereinsufficient to meet the high latent demand for our products. Keeping the industry outsidethe purview of Goods and Services
Tax (GST) a bold and disruptive indirect reform aimed at creating open market furtheraggravated the scenario as there was no provision for manufacturers to be able to claiminput credit set-off.
In addition to the industry challenges we have also been facing some internalchallenges. Rising costs particularly fixed costs have stressed our working capital.OTHER issues like upgrading our plant and equipment with latest technology can beextremely gruelling on resources. While there is a strong latent demand for many of ourproducts our resource limitations have constrained our ability to manufacture and meetthis demand. Our branding spends have also been under pressure.
And thus it became necessary to deploy right strategies to overcome these challengesand turnaround operations.
The first step towards this will be to free-up working capital requirement by curbingfixed cost. And for this we have started moving towards the franchisee model and areevolving from a manufacturing to a marketing Company with a strong focus on brandbuilding. It will allow us to scale-up production to meet demand without any proportionalincrease in costs. The released working capital shall be channelised towards marketingand branding. Our model is such that we will be able to garner long term partnershipswith associates who have efficiencies and expertise at the local level. We of coursebring the acumen of being a national player with erstwhile brands on our side.
Technology will be anOTHER focus area. We believe modernising our plants (for ourMalted Milk Food operations) with latest equipment and technology will unlock newpotential in terms of efficiency productivity and cost optimisation. This will dovetailinto higher revenues as well as improved margins. Technology will also unleash higherproductivity at an organisational level. We have already implemented ERP and oursubsidiary Yoofy Computech Private Limited has prototyped a channel partner engagementplatform in Rajasthan. As we go forward we will increasingly deploy new-age technologieslike Big Data and Artificial Intelligence to gain better insights and sharpen ourstrategy.
AnOTHER aspect that we are focussing on is our financial efficiency. This year weraised Rs. 265 Crores from IndiaBulls to retire the existing high-cost debt to the tune ofRs. 110 Crores. The additional funds are being utilised for business developmentrequirements. We are also considering sale of our real-estate assets to raise additionalfunds. Our aim is to eventually become debt-free in the next three years.
As far as our products are concerned we continue with our guiding policy - Heritage ofQuality and our promise to offer Superior Brands at Affordable Prices to the mass segmentwhich is our key customer base. In line with this we are set to launch two new brandies -one each in premium and mass category in South India. We revamped our semi-premium whisky- AC Black and are set to revamp the Deluxe whisky - Aristocrat Premium. The IICE
Vodka was relaunched in frosted bottles during the year. We have also started theprocess to make our packaging a key element towards being future-ready. We have tweakedour blends delivering complete satisfaction and a delight to our existing and prospectiveconsumers.
Our exports business too holds immense potential. We have a substantial footprint inmultiple countries and are focussing on African countries like Nigeria and Kenya. We arealso looking at expanding to Nepal and re-entering the UAE.
We continue to see strong momentum in our Malted Milk Food business as well. While apart of our production is captively consumed the rest is sold to leading companies. Ourlong-term supply contract with GlaxoSmithKline Consumer Healthcare to manufacture Boostprovides significant revenue visibility and steady cash flows. This business continues toshow a strong potential for future growth.
Amidst these changes along with a tough operating environment during the year I wouldsay our performance has been reasonably steady. Our total revenues for the year declinedby 33.09% to Rs.56710 Lacs compared to Rs.84758 Lacs in the previous year. However ourconcerted efforts towards reducing costs have contributed towards better bottomlineperformance. As a result we reported a lower net loss of Rs.7433 Lacs in the currentyear compared to Rs.11695 Lacs recorded in the previous year.
As I look ahead into the near and mid-term I am quite positive and optimistic. Thechanges that are underway at JIL are all steps in the right direction. We are focussing onthe right kind of manpower at certain levels within the organisation. We are looking athiring more women employees in line with our belief that Diversity Promotes Growth. I havealready laid out our strong focus on being asset-light with a powerful marketingorientation to widen our reach and propel production and enhance shares.
All in all I believe these changes will enable us to regain our position as one of theleaders in the alco-beverage and malt food businesses in India.
I thank you all for your sustained cooperation and continued support to theCompany's management and assure you that we shall continue in our endeavour tocreate long-term value for all our stakeholders.
|Yours sincerely |
|Roshini Sanah Jaiswal |
|Chief Restructuring Officer |