JVL Agro Industries Ltd

Dear members

Your Directors have pleasure in presenting the 22nd Annual Report together with theAudited Statement of Accounts of the Company for the financial year ended on March 31,2011.

(Rs. in crores)

Dividend

Your Directors are pleased to recommend a dividend of 20% (previous year dividend 15%),subject to the approval of the shareholders at the Annual General Meeting, for fullypaid-up equity shares of Rs.1.00 each, amounting to Rs.2.57 crore (previous year dividendRs.1.53 crore). The tax on distributed profits payable on this dividend is Rs.0.43 crore(previous year Rs.0.26 crore) making the aggregate distribution to Rs.3.00 crore (previousyear Rs.1.79 crore).The proposed dividend will be tax-free in the hands of theshareholders.

Transfer to Reserves

The Board recommended a transfer of Rs.4.00 crore to the General Reserve (previous yearRs.2.50 crore).

Performance in the year 2010-11

In the financial year 2010-11, the Company performed unexpectedly. The Company crossedits topline target of 1,800.00 crore. The total revenue of the financial year 2010-11 isRs.2,180.79 crore which was Rs.1,234.14 crore in the financial year 2009-10. There is agrowth of 77%. The revenue of all the four quarters of 2010-11 surpassed the correspondingperiod of the last financial year 2009-10. As far as the half-yearly trend is concerned,the turnover of the Company for the first half year period ended as on September 30, 2010almost touched the total turnover of the financial year 2009-10. We can clearly see thatthe Company performed tremendously in the financial year 2010-11. Profit after tax hasalso gone up from Rs.29.22 Crore to Rs.50.02 Crore from the year 2009-10 to 2010-11.EBIDTA for the year 2009-10 was Rs.63.12 Crore and increased to Rs.86.14 Crore in year2010-11 i.e. by 36%.

Current Performance

During the three-month period ended June 30, 2011, the Company achieved a turnover ofRs.612.25 crore as compared with Rs.469.12 crore during the corresponding period in theprevious financial year, in percentage there is a growth of 31%. The PAT increased by 47%while the EBIDTA increased by 33%. This has been its historical performance. The Companyis moving aggressively on its sales and marketing efforts and reaching out to biggerpopulation in line with its plan to become a pan-India company by 2015. It continues tofollow the policy of perpetual technological upgradation. The Company is ISO9001:2008-certified in recognition of the organisation’s quality system.

Annual General Meeting

The Annual General Meeting of the Company will be held on September 30, 2011 at 3.00P.M. at ‘Hotel Ramada Plaza’, JHV, The Mall, Cantonment, Varanasi (U.P) totransact the businesses as specified in the Notice of the meeting.

Expansion Plans

The Company is focusing on its 1,200 MT Haldia unit to get it started by the end ofthis year. This project is expected to contribute and strengthen the position of theCompany in the national edible oil sector and enhance the presence of the Company in theeastern, North-Eastern and central markets of India.

This will be the biggest and technologically most advanced project of the company. Thecompany already has an existing network of sales and distribution in Eastern andNortheastern market and will be able to leverage that in selling the output of the Haldiaunit under its brand.

The Company is expanding its seed crushing capacity at Alwar, Rajasthan to meet growingdemand of its mustard oil and for lesser dependence on outside parties for solventextraction plant. This will also help in improvising on cost and bringing technologyupgradation, plant and machinery order are being placed and the company plans to start thenew plant before the next season of mustard crop in March, 2012.

The Company acquired 500 acres of land in Bihar for further agro-related upgradationactivities, as part of its plan to enter into other commodities in which the Company canleverage its existing sales and distribution network.

Central India being the most thickly populated part of the country, the Company wantsto be a formidable force in the agro and related sectors along with its plan to grow inthe edible oil space.

Secretarial Audit

As directed by Securities and Exchange Board of India (SEBI) secretarial audit is beingcarried out at the specified periodity by a practising Company secretary. The findings ofthe secretarial audit were satisfactory.

Human Resources

The Company’s comprehensive HR policy interalia provides manpower training anddevelopment, keeping in mind the growing requirement for custom trained manpower at itsnew initiatives. The Company’s factory at Naupur is used as a training ground fortechnical manpower. The employees are also sent to the Company’s other units fortraining which helps in reducing manpower costs, avoids poaching of the Company’smanpower, and develops a sense of belonging among the Company employees, resulting inemployee satisfaction and a high employee retention rate.

The Company’s office is fully computerized. The new recruits are trained with anERP system when they join, bringing out their true potential. The Company hires engineers,ITIs, MBAs, among others, for internal training and then positions them at theCompany’s other locations. The management interacts regularly with staff members tounderstand their needs and problems and to create a suitable working environment.

The Company promotes employees working in the lower order on a regular basis, and alsotransfers them to other branches to enable them to undertake more challenging roles,resulting in employee growth and development. The Company provides accommodation toemployees whom needed and takes appropriate efforts to make them feel at home.

The Company conducts various sporting activities and celebrates Independence day andRepublic day. These initiatives help boost employee morale and create a cordialenvironment. The senior management participates in various training programmes and attendsconferences to update their knowledge base, in turn providing better value to the Company.These proactive measures resulted in an improved performance and a reduction in employeeturnover.

The Company is planning on developing a recreation centre for employees and theirfamilies in Varanasi, along with a state-of-the-art guest house for employees travellingto the head office from the various offices/units.

Capital and Borrowings

During the year, there was a change in the equity share capital of the Company due tosub- division of the shares of the Company. Earlier, the face value of the Company wasRs.10 per share, but after subdivision the face value of the shares is Rs.1 per share,accordingly the new share capital comprises 12,84,40,000 equity shares of Rs.1 each.

During the year 2010-11, the Company availed of credit facilitiesfrom Bank of Barodaand Punjab National Bank for its Varanasi and Alwar (Rajasthan) unit, under the consortiumarrangement. The Company also availed credit facilities from consortium led by State Bankof India for the units in Bihar. The total outstanding long-term loans frombanks/financial institution/others as on March 31, 2011 is Rs.53.89 crore (previous yearRs.51.50 crore). The gross fixed assets increased by Rs.38.80 crore representing capitalexpenditure on setting up new projects (Dehri-On-Sone, Bihar and at Haldia, West Bengal),expansion of existing manufacturing facility, research and development facility, othermaintenance capital expenditure and for technological upgradation. The Company had cashand cash equivalents aggregating to Rs.332.77 crore as on March 31, 2011, as againstRs.297.88 crore as on March 31, 2010. This increase is largely on account of increase incash generated from operating activities. The Company has sufficient financialflexibility, in terms of available cash and cash equivalents and committed facilities frombanks/financial institution to finance the future growth plans and capitalise on emergingopportunities.

Cash Flow Statement

In accordance with the requirement of Clause 32 of Listing Agreement of the stockexchange cash flow statement duly verified by the Auditors together with their certificateis annexed hereto.

Statutory Auditors

The Company received the letters from M/s Garg & Company, Chartered Accountants,Kolkata, West Bengal and M/s Singh Dikshit & Company, Chartered Accountants, Varanasi,U.P. to the effect that there reappointment as the Company’s Joint Statutory Auditorsfor the financial year 2011-12, if made, would be within the prescribed limits of Section224(1B) of the Companies Act, 1956 and that they are not disqualified for suchreappointment within the meaning of Section 226 of the Companies Act, 1956.

Auditors Reports

The notes to the accounts referred to in the Auditors’ Report have been explainedin note schedule of the Audited accounts. Your directors however like to briefly clarifythe auditors’ qualification as follows:

A. The Company has a large network of suppliers dealing with raw material, packingmaterials, among others, catering to the Company and buyers of its finished products.Hence it is not possible to get confirmation from each and every party therefore theAuditors has qualified the same.

B. The Company has not made provision for diminution in the value of long-terminvestments and it is of the opinion that the fall in the value of such investments is notof permanent nature.

C. The salary and wages include payment of remuneration of Rs.16.80 lacs to Mr. D. N.Jhunjhunwala, Chairman, Rs.15.60 lacs to Mr. S. N. Jhunjhunwala, Managing Director andRs.13.50 lacs to Mr. Adarsh Jhunjhunwala, Wholetime Director of the Company.

D. Advances given to Mr. D. N. Jhunjhunwala and Mr. S. N. Jhunjhunwala are pertainingto the Company.

E. Other observations made in the Auditors’ Report are self- explanatory thereforedo not call for further comments under Section 217 of the Companies Act, 1956.

F. The contingent liability mentioned in Schedule 16 are payable only on the basis oflegal pronouncement made by the different authorities previously.

G. The Company maintained cost records under Section 209(1) (d) of the Companies Act,1956.

Particulars of the Employees

Company’s (Particulars of Employees) Rules, 1975 as amended read with section217(2A) of the Companies Act, 1956 are not applicable to the Company as there are noemployees drawing the minimum salary envisaged in the rules.

Audit Committee

Pursuant to the requirement under section 292(A) of the Companies Act, 1956, an AuditCommittee was constituted. The Committee comprises Mr. D. N. Jhunjhunwala, Dr. S. K.Dikshit and Mr. Mahesh Kedia, Directors of the Company.

Directors Responsibility Statement

The Board of Directors of the Company confirms:

A. That in preparation of the annual accounts, the applicable accounting standards hasbeen followed and there has been no material departure.

B. That the selected accounting policies were applied consistently and the Directorsmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of the affairs of the Company as on March 31, 2011 and profit of theCompany for the year ended on that date.

C. That the proper and sufficient care has been taken for the maintenance of adequateaccounting records and are in accordance with the provision of the Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and others.

D. That the assumption of going concern is followed.

Directors' Re-Appointment

a) Mr. D. N. Jhunjhunwala, Director of the Company retire by rotation and beingeligible to offers himself for reappointment, in view of valuable contribution made by Mr.D. N. Jhunjhunwala to the Company, the Board of Directors recommend to the shareholders toreappoint Mr. D. N. Jhunjhunwala as a Director of the Company, he is having 50 years ofexperience in various facets of management, out of which 30 years have been dedicated inoil industries.

b) Mr. H. L. Agarwal, Director of the Company retire by rotation and being eligibleoffers himself for reappointment, in view of valuable contribution made by Mr. H. L.Agarwal to the Company, the Board of Directors recommend to the shareholders to reappointMr. H. L. Agarwal as a Director of the Company, by profession he is a retired Judge ofHon’ble Patna High Court, he has rich experience in the law.

Listing of Shares

The equity shares of the Company continue to be listed during the year under review atthe Bombay Stock Exchange, Mumbai and Uttar Pradesh Stock Exchange Association Ltd.,Kanpur, Delhi Stock Exchange Limited, New Delhi. The Company is listed with National StockExchange on 17.06.2011 and the trading in NSE has been started. The annual listing fees ofeach of these stock exchanges were paid on due date.

Corporate Governance

As required by Clause 49 of the Listing Agreement, a separate report on CorporateGovernance is included Annexure II to the Director’s Report in the annual report andyour Directors affirm that the Company has, during the year under review, complied withthe conditions of Clause 49 of the Listing Agreement.

Management discussion and analysis

As required by Clause 49 of the Listing Agreement, the detailed analysis of theoperating performance of the Company for the year, the state of affairs and the keychanges in the operating environment has been included in the management discussion andanalysis section which forms a part of the annual report.

Conservation Of Energy, Technology Absorption and Foreign Exchange Earnings

As required U/S 217(1) (e) of the Companies Act, 1956, read with Companies (Disclosureof Particulars in the Report of Board of Directors) Rules, 1988, the information onconservation of energy, technology absorption and foreign exchange earnings and out go aregiven in Annexure I forming part of this report.

Corporate Social Responsibility

The Company is constructing a building to promote Sanskrit teaching in Varanasi. Thisis a contribution of the Company towards the promotion of Indian cultural heritage.

The Company has undertaken a plantation drive on the occasion of Independence Day(August 15, 2011) and planted 2,000 trees close to all its units in India. The Company isalso adopting parks in Varanasi for its maintenance as its contribution to the society forgreener tomorrow.

The Company bought more buses to pick the children from remote places and bring them tostudy at the two charitable schools run by it in Varanasi, so that it can spread themessage of education and help the needy who cannot afford to travel to its school everyday.

The Company is planning to adopt a hospital in local village for the medical needs ofthe people residing in villages around the plant. For this, the initiative was started andthe management is engaged in the finalishing the formalities for adopting the same. TheCompany is trying to provide all the possible medical facilities there. After starting ofthe hospital the people need not to go to towns for the medical facilities. The Company isproviding safe drinking water facility for the local people and labourers of all its unitsand is maintaining proper hygiene conditions.

The Company is making good policies and implementing them for the interest of itsemployees, stakeholders and for everybody having interest in the Company by producingquality product, instant credit mechanism, good working capital cycle, among others.

Appreciation and acknowledgements

Your Directors are grateful and pleased to place on record the appreciation for theirsupport, trust, guidance and cooperation extended and reposed by all its stakeholders,employees, customers, consumers, media, financial institutions and banks, all agencies ofGovernment of India and other central and state government bodies, statutory andregulatory bodies and local authorities in the Company and look forward to their continuedpatronage. The Board also expresses its appreciation of the understanding and supportextended by the shareholders and employees of the Company.

ANNEXURE TO DIRECTORS’ REPORT

Particulars as required U/S 217 (1) (e) of the Companies Act, 1956 for the year endedMarch 31, 2011

(Rs. in crore)