Your Directors have pleasure to present the Thirty-Eighth Annual Reportand the Company's Audited Financial Statement for the year ended 31st March 2020.
The Company's financial performance for the year ended on 31st March2020 is summarized below:
|Particulars ||Year ended on 31st March 2020 ||Year ended on 31st March 2019 |
|Revenue from Operations ||2812.90 ||295827 |
|Other Income ||26.61 ||19.13 |
|Profit/(Loss)from the year before Finance cost Depreciation and exceptional items ||76.74 ||99.04 |
|Less : Finance Cost ||248.51 ||251.61 |
|Less : Depreciation and Amortization Expenses ||94.48 ||99.46 |
|Less: Exceptional Item ||67.41 ||697.92 |
|Profit / (Loss) Before Tax ||(333.66) ||(949.95) |
|Current Tax ||-- ||-- |
|MAT Credit Entitlement ||-- ||-- |
|Deferred Tax ||(0.16) ||(191.86) |
|Profit / (Loss) for the year ||(333.50) ||(758.09) |
|Other Comprehensive Income ||(1.18) ||(0.15) |
|Total Comprehensive Income for the year ||(334.68) ||(758.24) |
IMPACT OF COVID 19
The outbreak of COVID-19 virus continues to spread across the globeincluding India and has caused significant disruption of businesses including our Company.Initially the Company had to shut down its manufacturing facilities located at Silvassa(Athola & Saily) & Gujarat (Sarigam). The Corporate Office in Mumbai has also beenshut down following nationwide lock down by the Government of India in the last week ofMarch 2020. This to some extent impacted financial statement for the year ended 31st March2020. Production and supply started in a phased and gradual manner during April to June2020 in a staggered manner after obtaining the necessary permissions from the appropriategovernment authorities. As per the prescribed guidelines of Government our corporateoffice has also re-opened by allowing minimum staff to work from office premises and restsare still continuing to work from home. In assessing the recoverability of Company'sassets such as Trade receivable and Inventories etc. the Company has considered internaland external information upto the date of approval of these financial statement andexpects to recover the carrying amount of the above. However the management will continueto closely monitor the evolving situation and assess its impact on the operations of theCompany. The actual effects of COVID-19 could be different from what is presently assessedand would be known only in due course of time.
The Company is facing liquidity crunch and also going through theprocess of restructuring with the lenders for the reduction of debt exposure of theCompany. Hence your Directors have not recommended dividend one quity shares of theCompany for the year 2019-20.
However the dividend on the preference shares will be carried forwardfor payment in the next financial year.
The paid up Equity Share Capital as on 31st March 2020 was Rs 81.87Crore and Preference Share Capital as on 31st March 2020 was Rs 14.91 Crore.
PERFORMANCE OF THE COMPANY
The Company's revenue for F.Y. 2019-20 was Rs 2812.90 Crore as againstRs 2958.57 Crore for the previous year due to adverse market conditions Covid 19 andreduction in margins.
During the year the Production of Polyster Chips increased to 348943MT and Production of POY & yarn was 248437 MT.
Mr. Bhagirath Arya who retires by rotation and being eligible offershimselffor re-appointment.
Mr. S. N. Shetty has been appointed as Additional Director - Legal& Admin on 18th November 2019 to hold office till the date of this Annual GeneralMeeting.
Mrs. Ujjwala Apte has been appointed Additional Executive Directoron18th November 2019 to hold office till the date of this Annual General Meeting.
All Independent Directors have given declarations that they meet thecriteria of Independence as laid down under Section 149(6) of the Companies Act 2013 andRegulation 16(b) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations2015.
BRIEF Profile OF DIRECTOR
Mr. Bhagirath C. Arya (DIN-00228665)
Qualified with a Bachelor of Electrical Engineering.
Equipped with over 35 years of experience in the Polyesterindustry particularly in the field of synthetic yarn.
Handles all management and operating affairs of JBF IndustriesLtd.
Ms. Ujjwala apte (Din-00403378)
Qualified with a Bachelor of Commerce and also ACS egisteredwith Institute of Company Secretaries of India New Delhi.
Having experience of Thirty Seven (37) years of in her filed.
Has been inducted on the Board of the Company as AdditionalDirector w.e.f 18th November 2019.
Ml s N shetty (din :07962778)
Qualified with a Bachelor of Commerce as well as Law andAdministrative Management.
Equipped with varied experience in Human Resources GeneralAdministration and Legal departments.
Presently appointed as the Group - Senior Vice President -Legal Administrative & HR. He had joined the Company as the General Manager - Legal& Administration in 1992.
Pursuant to the provision of the Companies Act 2013 and Regulation4(2) (f) of SEBI (Listing Obligations and Disclosure Requirements) Regulation 2015 astructured questionnaire was prepared after taking into consideration of various aspectsof the Board's functioning composition of Board and its Committees culture executionand performance of specific duties obligations and governance.
The performance evaluation of the Independent Directors was completed.The performance evaluation of the Chairman and the Non-Independent Directors was carriedout by the Independent Directors. The Board of Directors expressed their satisfaction withthe evaluation process.
As per the requirement of the Companies Act 2013 and of SEBI (ListingObligations and Disclosure Requirements) Regulation 2015 the Board of Directors of theCompany has Seven Committees namely Audit Committee Stakeholders Relationship CommitteeRisk Management Committee Nomination and Remuneration Committee Corporate SocialResponsibility Committee Prevention of Sexual Harassment Committee and Finance Committee.
The details of the constitution of the Committees and the meetings heldduring the financial year 2019-20 are included in the Corporate Governance Report formingpart of Annual Report.
KEY MANAGERIAL PERSONNEL
Following are the Key Managerial Personnel of the Company:
|Name of the person ||Designation |
|1 Mr. Bhagirath C. Arya ||Executive Chairman |
|2 Mr. S. N. Shetty ||Additional Director |
|3 Mrs. Ujjwala Apte ||Addl Director & Company Secretary |
NUMBER OF MEETINGS OF THE BOARD & AUDITCOMMITTEE
During the year Five Board Meetings and Six Audit Committee Meetingswere convened and held. The details of which are given in the Corporate Governance Report.The intervening gap between the Meetings was within the period prescribed under theCompanies Act 2013 and relevant provisions of LODR 2015 of SEBI.
Company has overseas subsidiary under the name and style JBF Global PteLtd at Singapore which has subsidiaries namely JBF Petrochemicals Ltd at MangaloreIndia JBF Trade Invest Pte Ltd at Singapore and JBF RAK LLC at U.A.E with its ownsubsidiaries JBF Bahrain S.PC at Bahrain and JBF Global Europe BVBA at Belgium.
At Indian & Foreign subsidiaries of the Company financialrestructuring/ negotiation with lenders/ investors are under process and Company do nothave the audited financial statements of its subsidiaries hence the Company could notprepare the consolidated financial statements. The same has been referred by the auditorsin their report.
Explanation/comments on audit qualifications
1. The company's Business as a going concern :
The Company has been in constant touch with couple of interestedinvestor to find an amicable debt resolution plan. The company is hopeful that theresolution plan as and when proposed will be accepted by the consortium of Lenders.
Under this circumstances the accounts are prepared on the basis ofgoing concern and assuming that the resolution plan proposed with desired modificationwill be implemented.
2. Interest @ 9% on Borrowings
Company has provided interest @ 9% p.a. On borrowings aggregating to Rs2618.65 crore for the period from 1st April 2019 to 31st March 2020 as against thedocumented rate resulting into lower provision of finance cost for the year 31st March2020 by Rs 139.86 crores.
Management is of the view that ultimate liability will not be more than9%.Therefore the Company is continues to recognise the same on 9%.
3. Subsidaries Exposure
Company has exposure in subsidiaries by way of investments loans andother receivables aggregating to Rs 1515.69 crores. No exercise isundertaken to determineimpairment if any.
The company has proposed a resolution to enable the Board of Directorsto borrow such sums as may be necessary for its business.
4. Advance given to Supplier
Rs 6.90 Crore given to one of the suppliers of the Company as advanceagainst supply of goods which are unsettled for the extended period of time.
Efforts are being made to settle the above advance and the Managementbelieves that above advance either will be settled against supply of goods or amount willbe refunded and hence no provision is required.
5. Claim filed by an Operational creditor of JBFRAK llc (stepdown subsidiary of the company)
An application filed with National Company Law Tribunal (NCLT) by theone of the operational creditors of JBF RAK LLC (JBF RAK) situated at UAE a subsidiaryof the Company against the Company for supply of raw materials to JBF RAK and claim ofRs 128.48 Crore (US$ 19899091.53). No provision has been considered for the above claim.
Management is of the view that in view of negotiation with the abovecreditor by JBF RAK and based on past settlement by the Company with above creditors inrespect of raw material purchased by the Company there will be no liability on account ofit to the Company and hence no provision is required towards above claim
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report on the operations of theCompany as required under SEBI (Listing obligations and Disclosure Requirements)Regulations 2015 is provided in a separate section and forms an integral part of thisReport.
As per Regulations 34 (3) read with Schedule V of SEBI (ListingObligations and Disclosure Requirements) Regulation 2015 a separate section on corporategovernance practices followed by the Company (including disclosures prescribed underSection II of Part II of Schedule V of the Companies Act 2013) together with acertificate from the Company's Auditors on compliance forms an integral part of thisreport.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report as per Regulation 34(2) of SEBI(Listing Obligations and Disclosure requirement) Regulations 2015 is annexed and formsan integral part of the Report.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in FormMGT-9 as required under Section 92 of the Companies Act 2013 is annexed and forms anintegral part of this Report.
CORPORATE SOCIAL RESPONSIBILITY
As a part of its initiative under the "Corporate SocialResponsibility"(CSR) drive the Company has undertaken projects in the area of ruraldevelopment.
The disclosures required under section 135 of the Companies Act 2013read with the rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules2014 are annexed to Directors' Report.
DISCLOSURE UNDER RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION)RULES 2014
The information required pursuant to Section 197 read with rule 5(1) ofthe Companies (Appointment and Remuneration) Rules 2014 in respect of employees of theCompany and Directors is enclosed in the Annual Report. The statement containingparticulars of remuneration of employees as required under Section 197(12) of the Actread with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is given in an annexure to the Annual Report. In termsof Section 136(1) of the Act the Annual Report is being sent to the Member shaving theaforesaid annexure. The information is also available for inspection by the Members at theRegistered Office of the Company during business hours on all working days exceptSaturdays and Sundays. Any Member desirous of obtaining a copy of the said annexure maywrite to the Company Secretary and the same will be furnished on request.
The company has formulated various policies which are available on ourwebsite : www.jbfindia.com
NOMINATION AND REMUNERATION POLICY
The Company has formed Nomination and Remuneration Committee and framedthe Remuneration Policy. The Committee has been given responsibility of appointment andre-appointment of Whole-time Director Directors Key Managerial Persons and the specifiedemployees / executives of the Company and approving their remuneration based on theirqualification experience and responsibility in the Company.
The salient features of Remuneration policy are included in CorporateGovernance Report forming part of this annual report.
Risk Management Policy
As a good governance practice the Company has constituted RiskManagement Committee. The Company has a Risk Management Policy and team evaluate businessrisks.
The Board of Directors regularly reviews risk and threats in thebusiness and takes suitable steps to safeguard Company's interest.
Related Party Transactions Policy
As per statutory requirement the Company has framed related partytranscation policy. As a policy all Related Party Transactions including saleand purchaseentered into with Subsidiary Companies if any are placed before the Audit Committee andalso before the Board for approval. Omnibus approval was obtained on a quarterly / annualbasis for such transactions which are of repetitive nature.
There are no material related party transactions during the year underreview with the Promoters Directors or Key Managerial Personnel. The Company has alsoformulated policy on materiality of Related Party Transactions.
Whistle Blower policy
A whistle blower policy in terms of the Listing Regulations includesEthics & Compliance for senior executives of the Company. It also includes vigilmechanism. Confidential disclosures can be made by whistle blower through an e-mail or aletter to the Committee member or to the Chairman of the Audit Committee.
The efforts is taken to accept the observations of the whistle blowerand the action are taken accordingly.
Prevention of Sexual Harassment at Workplacepolicy and preservation of documents policy
The company has also constituted prevention of sexual harassment atworkplace policy and preservation of documents policy. Separate Management Teams areappointed to review periodically at different locations of the Company. These policies arealso available on website of the Company.
Foreign exchange earning and outgo
Foreign exchange earning by way of export and Freight were Rs 632.98crore against outgo of Rs 7.42 crore on import of raw materails stores spares &consumables.
During the year Company has not accepted any Fixed Deposits and assuch no amount of principal or interest on account of Fixed Deposits is outstanding as onthe date of Balance Sheet.
PARTICULARS OF LOAN GUARANTEES OR INVESTMENTS BY COMPANY
Details of Loans Guarantees and Investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the notes to FinancialStatements (refer Note no.41)
All the properties of the Company including buildings plant andmachinery and stock have been adequately insured.
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of knowledge and belief and according to the informationand explanations obtained by them your Directors make the following statement in terms ofSection 134(3) (c) of the Companies Act 2013:
I. That in the preparation of the Annual Accounts for the year ended31st March 2020 the applicable Indian Accounting Standards (IND-AS) have been followedalong with proper explanation relating to material departures if any;
Ii. The Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and fair view of the state of affairs of the Company as at 31st March 2020and of the profit/ loss of the Company for the year ended on that date;
Iii. That the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
Iv. The annual accounts have been prepared on a going concern basis;
V. That the Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and
Vi. That the Directors had devised proper systems were adequate andoperating effectively.
Compliance with secretarial standards
The Board has devised proper systems to ensure compliance with theprovisions of all applicable Secretarial Standards issued by the Institute of CompanySecretaries of India and that such systems are adequate and operating effectively.
Pursuant to the provisions of Section 204 of the Companies Act 2013and rules made hereunder the Company has appointed M/s. Jagdish Patel & Co. a firmof Company Secretaries in Practice to undertake the Secretarial Audit of the Company. TheSecretarial Audit Report is included as and forms an integral part of this Report.
Pursuant to the provisions of Section 139 of the Companies Act 2013and rules made there under the term of office of M/s. Pathak H D & AssociatesChartered Accountants (Firm Registration No. 107783W) as the Statutory Auditors of theCompany will conclude from the close of ensuing Annual General Meeting of the Company.
The Board of Directors places on record its appreciation to theservices rendered by M/s. Pathak H D & Associates Chartered Accountants (FirmRegistration No. 107783W) as the Statutory Auditors of the Company. Subject to theapproval of the Members the Board of Directors of the Company has recommended theappointment of M/s. S C Ajmera & Co Chartered Accountants Mumbai (Registration No.002908C) as the Statutory Auditors of the Company for three years in place of M/s. PathakH D & Associates Chartered Accountants pursuant to Section 139 of the Companies Act2013.
Accordingly the Board seeks approval of Shareholders of the companyfor the appointment
The Board of Directors has approved appointment of Mr. VijayBavchandbhai Patel Cost Accountant as the Cost Auditor of the Company to conduct costaudit and give report for the year 2020-21. The notice of Annual General Meeting includesthe resolution to obtain consent of the shareholders.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THEREGULATORS OR COURTS
There are no significant and material orders passed by the Regulators/Courts that would impact the going concern status of the Company andits future operations.
However Bank of Baroda lead Bankers of the Company has filed NCLTapplication under Section 7 of IBC Code with Ahmedabad Branch. The matter is still pendingfor hearing and admission.
One of the operational creditor of the company i.e M/s SABIC AsiaPacific Pte.Ltd has referred the Company to NCLT for their dues. However the Company& creditors have mutually agreed and settled.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has an effective internal control and risk-mitigationsystem which are assessed and strengthened with new/revised standard operatingprocedures. The Company's internal control system is commensurate with its size scale andcomplexities of its operations. The internal audit is entrusted to M/s. Bhuwania &Agrawal Associates. Every quarter internal audit report is placed before the AuditCommittee and the Audit Committee of the Directors actively reviews the adequacy andeffectiveness of the internal control systems and suggests improvements to strengthen thesame.
ENVIRONMENT AND SAFETY
The Company has constituted Committee for prevention of sexualharassment at work place with a mechanism of lodging complaints. During the year underreview no complaints were reported to the Board.
The Board of Directors would like to express their gratefulappreciation for the assistance support and co-operation received from the FinancialInstitutions Banks Government Authorities and Shareholders during the year under review.
The employees of the Company contributed significantly in achieving theresults. The Directors take this opportunity of thanking them and hope that they willmaintain their commitment to excellence in the years to come.
| ||For and on behalf of the Board of Directors |
| ||S. N. SHETTY |
| ||Director |
| ||DIN-07962778 |
| ||Ujjwala apte |
|Place : Mumbai ||Director |
|Date : 10th September 2020 ||DIN-00403378 |