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Jocil Ltd.

BSE: 500561 Sector: Industrials
NSE: JOCIL ISIN Code: INE839G01010
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Jocil Ltd. (JOCIL) - Director Report

Company director report

Your Directors have pleasure in presenting the Forty third Annual Report of the Companytogether with the Audited Statement of Accounts for the Financial Year ended 31 March2021.

(Rs.in Lakhs)

1. FINANCIAL RESULTS 2020-21 2019-20
Sales 56235.41 44232.12
Processing charges 301.62 392.86
Other income 131.53 560.56
Total income 56668.56 45185.54
Profit for the year before interest and depreciation 2169.77 2439.05
Interest (66.11) (82.18)
Depreciation (560.79) (592.05)
Profit before tax 1542.87 1764.82
Less:
Provision for current tax 470.00 500.00
Deferred tax - (credit)/charge (288.13) 8.99
Short provision of income tax in earlier years 0.04 6.64
Profit after tax 1360.96 1249.19

The turnover of the company for the year at Rs. 562.35 crores increased by 27.14% fromRs. 442.32 crores of the previous year. During the year the sales volume of toilet soapand soap products have increased by 20.34% due to favourable market conditions. The salesvolume of fatty aciods decreased marginally by 2.75%. Profit Before Interest and Tax(PBIT) has decreased slightly from Rs. 2439.05 lakhs to Rs. 2169.78 lakhs due to decreasein other income. The Profit Before Tax (PBT) has decreased to Rs. 15.43 crores as comparedto Rs. 17.65 crores in the previous year for the reason as state above.

The appropriations from the profit are as detailed below.

(Rs. in Lakhs)

2020-21 2019-20
Profit after tax (including other comprehensive income) 1825.29 789.67
Balance brought forward from previous year 3640.60 2958.00
Profit for appropriations 5465.89 3747.67
APPROPRIATIONS
Dividend (accounted in the year of payment)* 266.43 88.81

* In accordance with the requirements of Ind AS dividend is to be accounted in theyear of payment. Hence dividend paid during the year is given instead of dividenddeclared during the year.

Provision for tax on distributed profits @ 20.55529% on dividend (accounted in the year of payment) 18.26
Balance carried forward 5199.46 3640.60
TOTAL 5465.89 3747.67
Authorized capital 1000.00 1000.00
Paid-up capital 888.16 888.16
Reserves & surplus 18722.87 1 71 64.02

2. DIVIDEND & RESERVES

The Board of Directors have recommend for the approval of the shareholders of theCompany for payment of dividend for the year ended 31 -03-2021 at Rs.3.00 per equityshare of Rs.10 each which aggregates to Rs.26643450 on 8881150 equity shares of theCompany. In the previous year also the Company paid dividend at Rs.3.00 per equity shareof Rs.10 each on 8881150 shares amounting to Rs.26643450. Your Directors do notpropose to transfer any amount to reserves for the Financial Year ended on March 312021.

3. OPERATIONS 2020-21 2019-20
MT MT
Production
(including processed on jobwork)
a) Fatty acids 69120 67810
b) Toilet soap & soap products 50644 44983
c) Biomass power-kwh 29357562 31961284
d) Wind power-kwh 11870213 12428464
By-products:
Glycerine 2771 2402
Fatty acid pitch 2387 2603
Sales
a) Fatty acids 43817 45160
b) Toilet soap & soap products 42389 35224
c) Biomass power-kwh 10697100 12229800
d) Wind power-kwh 11777565 12302213
By-products:
Glycerine 1610 1502
Fatty acid pitch 2682 2402

4. OUTLOOK

Fatty Acids and Soap

There is an improvement in sales volume of soap products glycerine and fatty acidpitch. However sales volume of fatty acids are slightly lower than that of previous year.Even though there is an overall improvement of production and sale volumes theprofitability is lower due to decrease in other income when compared to previous year. GSTrefund/benefit is continuing for North-eastern states and Jammu & Kashmir and will beavailable upto June 30 2027. Hitherto manufacturers in non-exempt areas doing job workfor customers were finding it difficult to market their capacities. However afterintroduction of GST the value of benefits of exemption has comedown considerably. As aresult the opportunities have improved for manufacturers in non-exempt areas especiallyfor those catering to the Southern markets as these benefits may not be attractive enoughfor the value addition and to overcome logistical costs. Accordingly Company is able tosustain orders for soap products from major customers. The present market conditions areexpected to continue for some more time.

Cost of raw materials is a major component in total cost of production and thefluctuation in raw material prices is a serious cause of concern to the companyparticularly when the customers demand long term forward contracts while the same is notpossible with the raw material suppliers. There is stiff competition from manufacturersparticularly from those having backward integration which gives them a cost advantage.

The Company enters into contracts for doing job-work for Fatty Acids Soap Noodles andToilet Soap for major customers wherein the customers themselves supply/cover rawmaterials required for the total process and the Company receives processing charges forthe manufacture of final products. This helps to safeguard against fluctuations in rawmaterial prices. Barring unforeseen circumstances the market is expected to continue thesame trend in the coming months.

Biomass Power Plant

During the year under review the performance of the Biomass Power Plant has declinedmarginally when compared to the previous year. The generation from the plant during theyear has decreased by 26.04 lakh units an 8.15% decrease when compared to the previousyear. Existing Distributed Control System (DCS) is upgraded due to its redundancy.Commissioning activities of new DCS were completed on 28.1.2021 and is functioningsmoothly. Export of power to APSPDCL was stopped from 07 July 2019 to 27 July 2019 andfrom 15 January 2020 to 26 January 2020 for replacement of DCS and scheduled maintenance.

Power Purchase Agreement entered with APSPDCL by the Company for export of Power for aperiod of 20 years expired on 25 March 2021 .Company approached APSPDCL and AP TRANSCO forextension of PPA. However APSPDCL is not willing to extend the agreement even at reducedtariff. Hence Company is in the process of finalising a third party for sale of power.

Wind Energy Generators (WEG)

Power generation during the year from the four Wind Energy Generators (WEGs) of 6.3 MWcapacity has marginally declined as compared to the previous year. During the year thepower generation from all the four WEGs is 118.70 lakh units as compared to 124.28 lakhunits in the previous year due to lower wind velocity. The backdown of WEGs for want ofevacuation facilities amounts to 8.95% of available time during the year 2020-21 ascompared to 5.38% in the previous year.

Impact of COVID-19

As stated in the previous annual report in view of permission granted to our Companyby the District Collector due to inclusion of our products under essential commoditieslist for containment of COVID-19 there is no direct material impact of lockdown to ourCompany. Restrictions imposed by the State Government in view of second wave of COVID-19has also not impacted our Company as it is a continuous production generation unit.

5. FINANCE AND STATUTORY COMPLIANCES

The Company availed working capital facilities under consortium arrangement with UnionBank of India and State Bank of India and the accounts are in order. The company compliedwith all the legal requirements and there are no outstanding statutory dues as on 31 March2021.

During the year there have been no significant and material orders passed by theregulators or courts or tribunals impacting the going concern status and company'soperations in future.

6. CREDIT RATING

During the year the Credit Rating Agency CARE revised the credit rating for variousfacilities as detailed hereunder.

Nature of Facilities

Rating Assigned

2020-21 2019-20
1. Working capital facilities i) Long term facilities CARE A-; Positive (adequate degree of safety regarding timely servicing of financial obligations) CARE A - Stable (adequate degree of safety regarding timely servicing of financial obligations)
[Positive outlook indicates an expected upgrade in the credit ratings in the medium term on [Stable outlook indicates expected stability (or retention) of the credit ratings in the

 

Rating Assigned
2020-21 2019-20
account of expected positive impact on the credit risk profile of the entity in the medium term] medium term on account of stable credit risk profile of the entity in the medium term]
ii) Short term facilities CARE A2 + CARE A2
(Strong degree of safety regarding timely payment of financial obligations) (Strong degree of safety regarding timely payment of financial obligations)
2. Fixed deposits CARE A2 + (FD) (Strong degree of safety regarding timely payment of financial obligations) CARE A2 (FD) (Strong degree of safety regarding timely payment of financial obligations)

7 DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013.

The Company has in place an Anti-Sexual Harassment Policy inline with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. The Company has complied with provisions relating to the constitutionof Internal Complaints Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. During the year the Company has notreceived any complaints on sexual harassment of women at the workplace.

8. VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has established Vigil Mechanism as required under Sec. 177 of the CompaniesAct 2013 for directors and employees to report genuine concerns as prescribed in thepolicy. The policy provides adequate safeguards against victimization of persons who usesuch mechanism and makes provision for direct access to the Chairperson of the AuditCommittee in appropriate or exceptional cases.

9. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

a) In accordance with the provisions of the Companies Act 2013 and Articles ofAssociation of the Company Sri P Narendranath Chowdary Chairman retires by rotation atthe ensuing Annual General Meeting and being eligible offers himself for re-appointment.

b) The Company held Four Board Meetings during the year. Board Meeting dates andattendance particulars are available in the report on Corporate Governance.

c) The Company has received declarations from all the five Independent Directorsconfirming that he/she meets the criteria of independence as provided under sub-section 6of Sec. 149 of the

Companies Act 201 3 at the first meeting of the Board in which he/she participated asa Director and thereafter at the first meeting of the Board in every financial year orwhenever there is any change in the circumstances which may affect his/her status as anIndependent Director.

d) The Audit Committee consists of 3 Non-Executive Directors of which 2 are IndependentDirectors.

Sri VS. Raju Independent Director is the Chairman of the Audit Committee. Theremaining 2 members are Sri Mullapudi Thimmaraja Non-Executive Director and Sri SubbaraoV Tipirneni Independent Director. The Board accepted all the recommendations of the AuditCommittee during the year.

e) During the year under review the Company is having the following persons as KeyManagerial Personnel under Sec. 203 of the Companies Act 2013.

Name of the Official DIN/Membership No. Designation
Sri J. Murali Mohan 00114341 Managing Director
Sri K. Raghuram FCS - 6712 Secretary & Dy. General
Manager (Fin.) (CFO)

10. MEETING OF INDEPENDENT DIRECTORS

A separate meeting of Independent Directors as required under Schedule IV of theCompanies Act 201 3 was held on 25 January 2021 without the presence of Non-IndependentDirectors. This meeting was conducted to review and evaluate (a) the performance ofNon-Independent Directors and the Board as a whole (b) the performance of the Chairpersonof the company taking in to account the views of Executive Directors and Non-ExecutiveDirectors and (c) assess the quality quantity and timeliness of flow of informationbetween the Company Management and the Board that is necessary for the Board toeffectively and reasonably perform their duties. The Independent Directors expressed theirsatisfaction with the performance of Non-Independent Directors and the Board as a wholeand Lead Independent Director briefed the outcome of the meeting to the Board.

11. AUDITORS

M/s. Chevuturi Associates Chartered Accountants Vijayawada were appointed as Auditorsfor a period of 5 years at the 39th Annual General Meeting held on 28 September2017 till the year 2021 - 22. There are no qualifications reservations or adverse remarksin the audit report issued by them for the financial year ended 31 March 2021.

12. COST RECORDS AND COST AUDITORS

Company is maintaining cost records as specified by the Central Government under subsection (1) of Section 148 of the Companies Act 2013. M/s. Narasimha Murthy & Co.Cost Accountants Hyderabad are conducting the cost audit for applicable products duringthe year. They are eligible for reappointment as Cost Auditors for the year 2020-21. Thereare no qualifications reservations or adverse remarks in the audit report issued by themfor the financial year ended 31 March 2021.

13. SECRETARIAL AUDIT

M/s. Nekkanti S.R.VVS. Narayana & Co. Company Secretaries Hyderabad wereappointed as Auditors for secretarial audit for the year 2020-21 under Sec. 204 of theCompanies Act 2013 and they have submitted their report. There are no qualificationsreservations or adverse remarks in the audit report issued by them for the financial yearended 31 March 2021.

14. In accordance with the notification dated 28th August 2020 issued by theMinistry of Corporate Affairs with regard to commencement of provisions of clause (ii) ofSection 23 of the Companies (Amendment) Act 2017 with effect from 28th August2020 and pursuant to Section 92(3) of the Companies Act 2013 Annual Return has beenplaced in the website of the Company and weblink for the same iswww.//jocil.in/AnnualReturn2021 .pdf

15. The information required to be included in the Board of Directors Report under theCompanies Act 2013 and Rules made there under is annexed and forms part of this reportdetails of which are as follows.

Sl. No. Particulars Section Rule Annexure No.
1 Company policy on Directors appointment and remuneration etc. provided under sub-sections (3) and (4) of Section 178 134 (3) (e) 1
2 Particulars of loans guarantees or investments under Section 186 134 (3) (g) 2
3 Particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 in Form AOC -2. Companies (Accounts) Rules 2014 134 (3) (h) 8(2) 3
4 Conservation of energy technology absorption and Foreign Exchange earnings and outgo. Companies (Accounts) Rules 2014 1 34 (3) (m) 8 (3) (A) (B) & (C) 4
5 Risk management policy for the company including identification therein of elements of risk if any. 134 (3) (n) 5
6 Corporate Social Responsibility policy and initiatives taken during the year. Companies (Corporate Social Responsibility policy) Rules 2014 134 (3) (o) 8 (1) 6
7 Statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and Individual Directors. Companies (Accounts) Rules 2014 134 (3) (p) 8 (4) 7
8 Financial summary or highlights. Companies (Accounts) Rules 2014 134 (3) (q) 8 (5) (i) 8
9 Details relating to deposits covered under Chapter V of the Act. Companies (Accounts) Rules 2014 134 (3) (q) 8 (5) (v) & (vi) 9
10 Ratio of the remuneration of each Director to the median employee's remuneration and such other details. Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 197 (12) 5 (1) 10
11 Particulars of employees in receipt of remuneration not less than Rs. 850000 per month or Rs. 10200000 per year etc. Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 197 (12) 5 (2) 11
12 Secretarial Audit Report in Form MR-3. Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 204 (1) 9 (1) 12

16. INFORMTION UNDER LISTING REGULATIONS

The Company is committed to maintain the standards of Corporate Governance prescribedunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations).

The information required to be included in the Annual Report under Schedule V of theListing Regulations are as follows.

Sl.No. Particulars Para Exhibit No.
1 Related Party Disclosures A 13
2 Management Discussion and Analysis Report B 14
3 Report on Corporate Governance C 15
4 Declaration by the Managing Director that all Board Members and Senior Management Personnel affirmed their compliance to the Code of Conduct. D 16
5 Compliance Certificate from Auditors on Corporate Governance E 17
6 Disclosures with respect to Demat Suspense Account/Unclaimed Suspense Account F 18
7 Details of shares transferred to IEPF G 19

The Company is having a policy to deal with Related Party Transactions and the same maybe viewed in the Company's website www.jocil.in. Accounts for disclosures in compliancewith the Accounting Standards on "Related Party Disclosures" are given in noteno. 34.

17. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that -

a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the company for that period ;

c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively;

Explanation: For the purpose of this clause the term "internal financialcontrols" means the policies and procedures adopted by the company for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information.

f) and the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.

18. PERSONNEL

The Directors wish to place on record their appreciation to all the employees of theCompany for their sustained efforts and valuable contribution to the performance of theCompany during the year.

19. ACKNOWLEDGEMENTS

The Directors wish to place on record their appreciation for the wholehearted andsincere cooperation the Company received from various departments of Central and StateGovernments Bankers Auditors Dealers and Suppliers of the Company. The Directors alsowould like to express their grateful appreciation for the guidance and cooperationreceived from the Holding Company M/s. The Andhra Sugars Limited Tanuku.

For and on behalf of the Board of Directors
Tanuku FINARENDRANATH CHOWDARY
10 June 2021 Chairman

.