Jasch Industries Ltd Management Discussions.


Statement in this Report, which describe the companys plans, projections, estimates, expectations or predictions, are based on certain assumptions and expectations of future events which may or may not happen. Therefore actual results could differ materially from those expressed / implied and the company cannot guarantee that these will be realized. Important factor that could make a difference to the companys operations include raw material availability and prices, cyclical demand and pricing in the companys principal markets, change in the government regulations, tax regime, economic developments within India and the countries in which the company conducts business and other incidental factors.


Jasch industries Ltd manufactures PU/PVC Coated Fabrics (also known as synthetic Leather or Artificial Leather) and Allied products in Coated Fabrics Division & Nucleonic & X- RAY Source based thickness Gauging systems in Electronic Gauge Division. The major business segment & their product applications are as follows:-

Business segment 01- PU/PVC Coated Fabric & Allied product

PU/PVC Coated is mostly used in footwear industry as raw material for shoe upper , lining, insole, chappal , sandal straps, in garment as lining material and in automobiles as seat cover. It is also used in furniture upholstery material, ladies and gents purses, bags, luggage and in the manufacture of sports goods & accessories.

Business segment 02 Electronic Gauges

Electronic Gauges are used for online measurement of thickness, grammage, moisture & ash contents in paper making industry, on line measurement of thickness & coating weight in plastics, steel, sheet rolling, galvanizing, aluminum foil & non ferrous metal rolling industry. Business distribution of these segments is as under :

(Figures other than percentages are in lakh Rupees)



Business Distribution Value % Value %
PU / PVC Coated Fabric 9452.37 72.91 10758.86 70.29
Electronic Gauges 3511.89 27.09 4548.51 29.71
Total 12964.26 100.00 15307.37 100.00


Synthetic Leather Industry in India is mostly in small and medium scale sector and somewhat concentrated in Northern India & Western India. It has not been able to achieve its full potential due to tough competition from imported material from china, Taiwan, Hong Kong & Korea, where there are very large units enjoying benefits of economies of scale and availability of local raw material at very competitive price.

Your company has been able to withstand competition, both domestic and from abroad, as it is also an integrated player with in house manufacturing facility for PU Resin, which is the main raw material for PU coated Fabrics. Further, the company is continuously upgrading its technology and modernizing plant & machinery to maintain competitive edge in the market. It also manufactures PU Resin using surplus capacity available for selling to outside parties for adhesive & coating applications.


Development of new types of high quality PU resins and coated fabric, particularly breathable ones, presents fresh opportunities, because there is less competition in these fields. Obsolescence of technology of coated fabrics poses a threat but through foreign technical experts, the company is continuously upgrading its technology. Most of artificial leather units in India manufacture only PVC Leather and Jasch Industries Limited is the only significant manufacturer of PU Synthetic Leather. The fortune of Electric Gauge Division are linked with the revival of domestic and international economies. The performance of Electronic Gauges Division depends upon investment in user-industries and may get adversely affected whenever there is slowdown in domestic and international economies.

As intimated in paragraph 2 of Directors Report, the fear associated with the Covid-19 pandemic, associated lock-downs, travel restrictions, general economic gloom and reduced purchasing power of the consumer (due to lay-offs, pay cuts and job losses), which appear to have significantly changed consumer behavior, pose a major and immediate threat. Your directors hope that this phase is temporary, and, like good times, this too shall pass.

Financial ratios

As required under Regulation 34(3) of Listing Regulations read with para B.1 of Schedule V thereof, it is stated that:

(1) there were no significant changes (change of 25% or more) in the key financial ratios as compared with those of the immediately previous financial year.

(2) The position of return on net worth of the Company, as compared with that of the previous year, was as under and the same was not significant:

Particulars 31-03-2020 31-03-2019
Net Profit (2018-19) 7,85,17,092.00 Net Profit (2018-19) 5,36,39,801.00
Equity (2019-20) 57,89,56,914.00 Equity (2019-20) 53,35,85,000.00
Ratio (Increase) 0.136 0.101


During the year under Report, the segment wise performance of the company had been as follows:

SEGMENT WISE PERFORMANCE (Unless specifically stated otherwise, the figures are in Rs. lakh)


2019-2020 2018-2019
Production (lakh meter) 58.88 62.65
Segment Revenue 9452.37 10758.86
Segment profits/(loss) before interest and other common un-allocable expenditure 480.97 442.28
Segment assets 6578.56 6722.11
2019-2020 2018-2019
Production in Nos (Gauge + Parts) 105 + 820 156 + 625
Segment Revenue 3511.89 4548.51
Segment profits/(loss) before interest and other common un-allocable expenditure 377.50 799.70
Segment assets 2367.11 3886.09


The Company is continuously upgrading its technology and modernizing plant & machinery to maintain competitive edge in the market. Despite tough competition in the market, its sales are growing every year. For some time now, the company has been concentrating on PU resin and PU Synthetic Leather, where competition in somewhat less. The company has recently modified its production lines, which has resulted in development of some new products with significant saving in power and fuel. These measures are expected to give some measurable boost to Companys profit margins.

As far as outlook for the financial year 2020-21 is concerned, due to the fear associated with the Covid-19 pandemic, associated lock-downs, travel restrictions, general economic gloom and reduced purchasing power of the consumer (due to lay-offs, pay cuts and job losses), have significantly changed consumer behavior. This poses a major and immediate threat. Your directors hope that this phase is temporary, and, like good times, this too shall pass.


Risk is an integral part of any business and Jasch Industries Ltd is no exception. A brief evaluation of business risk of the Company, as perceived by the management, is as under:

1 . Business Risk

A . User Industry concentration

PVC /PU Synthetic Leather is used across a wide spectrum of industries. The companys products are mostly used in footwear industry. Therefore, the fortunes of the company are invariably inter linked with that of footwear Industry. Any downward trend in footwear Industry results significant impact on the company. With vigorous efforts, the Company has now been able to diversify usage of its products in other industries such as automobile & general purpose upholstery, Sports Goods and Garment Industries to the extent of 40%.

Electronic gauges are classified as capital goods. These are generally bought by paper, plastic, steel and galvanizing industry. Revenues and consequent profits from industrial gauges, depend on growth of these industries. In case of a downward trend in the economy, investment in capital goods is the last priority of an enterprise.

B. Commodity Risk

About 65% raw materials (comprising of Dioctyl Phthalate, Dimethylformamide, PVC resin, man-made fabrics, pigments, etc) used by PVC /PU Synthetic Leather Division are petroleum-based products. Any increase in the international crude-oil price may adversely affect the prices of petroleum-based raw materials, thereby increasing the cost of production. Therefore when, say after three months, the effect of increase in crude oil price is visible on the petroleum-based raw materials, all the sellers of synthetic leather/PU resin in the market, increase prices to pass on this burden to the customers and the Company also follows suit. The Company does not enter into any long term contracts either with suppliers of raw materials or with the buyer of finished goods. Therefore, the only commodity risk the Company assumes in this segment, relates to less than 15 days orders in hand, which is not material. In Electronics Gauges segment, any increase in price of electronics items and steel has very little effect on the cost of production of gauges. The gauges being technology-based capital goods, the Company is able to pass on the entire burden to the buyers and there is no commodity risk whatever, in this segment. There are no long-term contracts in this segment also.

C. Customer & Geographical concentration

Excessive exposure to a few large clients has the potential to adversely affect the sales and profitability in view of failure/shift of clients to other manufactures. Fortunately, the companys customers are fairly spread out across the country both in respect of Coated Fabrics & Electronics Gauges and further efforts are underway to enlarge presence in eastern and southern market.

D . Technological Obsolescence

Right from the beginning, the company has been engaged in its own Research & Development activity with a view to improve upon/ modify the process and product to suit Indian tropical conditions and usage practices. Over the years, the company has been able to develop many new product/ applications. The company had entered into technical collaboration agreement with DUKSUNG COMPANY LTD., Korea. This collaboration had been quite successful in updating technology and development of new products and saving in cost of inputs.

The Company has developed the technology in house for the design and manufacture of Nucleonic and X- ray Thickness Gauging System which is being further upgraded continuously. Hence, in this segment there is no threat of obsolescence in near future.


(a) Currency Fluctuation Risk

The currency risk emerges from the potential or downward fluctuation in foreign currency. The Companys foreign exchange spending including custom duty by way of import of raw materials and consumables currently constitutes about 33% of landed cost of raw material and consumables. The Thickness Gauging System has large export potential, which provides some cushion by way of natural hedge on foreign exchange transactions. The company has incurred foreign currency expenditure of Rs. 2877.17 lakh during the year (including capital goods of Rs. 33.66 lakh and foreign travel of Rs. 17.58 lakh, exhibition expenses of Rs. 2.07 lakh and sales commission of Rs. 7.16 lakh) and no technical knowhow fee against exports in foreign currency were of Rs. 492.99 lakh, which provides some hedge against adverse fluctuation in foreign currency. The companys foreign currency transactions are on current account basis and there are no deferred liabilities in terms of foreign exchange except amount due in respect of raw material imported on deferred payment basis after 31st March 2020 and to be paid later.

(b) Interest and Leverage Risk

Increase in bank interest rate impacts the profitability of the company because this increase cannot always be passed on to customer. The management tries to contain interest cost by efficient management of inventory and working capital resources.

(c) Force Majeure & Act of God

Unforeseen natural or man-made calamities may have a significant financial bearing on the operation of the Company.


Internal Control Systems

In order to safeguard the assets and their usage, maintenance of proper accounting record and provision of reliable data for taking business decisions, the management has put in place various internal control system. Broadly, these systems are entity level controls, financial controls and operational controls. The internal controls provided by this system are authority and organization matrix, standard operating procedures, risk management practices, compliance framework within the organization, ethics and fraud risk management, management information system, self assessment of control point, business continuity and disaster recovery planning, budgeting system, etc.

Adequacy and Key elements of the Internal Control Systems

The Audit Committee of the company, all of whose members are Independent Directors, has reviewed the aforesaid internal control systems and found the same to be adequate and commensurate with the nature, size, complexity and the business processes followed by the Company.

The Company has appointed an internal Auditor to ensure compliance and effectiveness of the internal control systems prevalent in the company. The Audit Committee reviews the Internal Audit Reports. Additionally, the Audit Committee approves all the audit plans and reports for any issues raised by the Internal and External Auditors. Regular reports on the business development, future plans and projections are given to the Board of Directors. Internal Audit Reports are regularly circulated for the perusal of the senior management for appropriate action as required. Normal foreseeable risks of the Companys assets are adequately covered by comprehensive insurance and are supplement by periodic risk assessments, inspections and safety conducted by the Company.

DISCUSSION ON FINANCIAL AND OPERATIONAL PERFORMANCE: Please refer to paragraph 1 of Directors Report.


The Company treats its human resources as one of its most important assets. The Company continuously invests in attraction, retention and development of talent on an ongoing basis. The welfare activities of the Company specifically dedicated to its employees, include free emergency medical care, subsidized group health insurance, subsidized canteen facilities and need-based soft loans. To enrich the skills of employees, the Company conducts focused training programs. The Company did not have any labor problem during the year under report. Relations with worker and staff were cordial. There were no material developments in human resources/industrial relations front. The number of persons on rolls of the Company as on 31-03-2020 were 218.

Place : Sonipat Date : 13-06-2020

For & on behalf of the Board