JBF Industries Ltd Directors Report.

DEAR SHAREHOLDERS,

Your Directors have pleasure to present the Thirty-Eighth Annual Report and the Companys Audited Financial Statement for the year ended 31st March, 2020.

The Companys financial performance, for the year ended on 31st March, 2020 is summarized below:

FINANCIAL RESULTS

Particulars Year ended on 31st March, 2020 Year ended on 31st March, 2019
Revenue from Operations 2,812.90 2,958,27
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 globe including 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 been shut down following nationwide lock down by the Government of India in the last week of March 2020. This to some extent impacted financial statement for the year ended 31st March 2020. Production and supply started in a phased and gradual manner during April to June, 2020 in a staggered manner after obtaining the necessary permissions from the appropriate government authorities. As per the prescribed guidelines of Government, our corporate office has also re-opened by allowing minimum staff to work from office premises and rests are still continuing to work from home. In assessing the recoverability of Companys assets such as Trade receivable and Inventories etc., the Company has considered internal and external information upto the date of approval of these financial statement and expects to recover the carrying amount of the above. However, the management will continue to closely monitor the evolving situation and assess its impact on the operations of the Company. The actual effects of COVID-19 could be different from what is presently assessed and would be known only in due course of time.

DIVIDEND

The Company is facing liquidity crunch and also going through the process of restructuring with the lenders for the reduction of debt exposure of the Company. Hence, your Directors have not recommended dividend one quity shares of the Company for the year 2019-20.

However, the dividend on the preference shares will be carried forward for payment in the next financial year.

SHARE CAPITAL

The paid up Equity Share Capital as on 31st March, 2020 was Rs 81.87 Crore and Preference Share Capital as on 31st March, 2020 was Rs 14.91 Crore.

PERFORMANCE OF THE COMPANY

The Companys revenue for F.Y. 2019-20 was Rs 2,812.90 Crore as against Rs 2,958.57 Crore for the previous year, due to adverse market conditions, Covid 19 and reduction in margins.

During the year, the Production of Polyster Chips increased to 348,943 MT, and Production of POY & yarn was 248,437 MT.

Directors

Mr. Bhagirath Arya who retires by rotation and being eligible offers himselffor 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 General Meeting.

Mrs. Ujjwala Apte has been appointed Additional Executive Director on18th November, 2019 to hold office till the date of this Annual General Meeting.

All Independent Directors have given declarations that they meet the criteria of Independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(b) of SEBI (Listing Obligationsand Disclosure Requirements) Regulations, 2015.

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 Polyester industry, particularly in the field of synthetic yarn.

• Handles all management and operating affairs of JBF Industries Ltd.

Ms. Ujjwala apte (Din-00403378)

• Qualified with a Bachelor of Commerce and also ACS, egistered with 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 Additional Director w.e.f 18th November, 2019.

Ml s N shetty (din :07962778)

• Qualified with a Bachelor of Commerce as well as Law and Administrative Management.

• Equipped with varied experience in Human Resources, General Administration 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.

BOARD EVALUATION

Pursuant to the provision of the Companies Act, 2013 and Regulation 4(2) (f) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, a structured questionnaire was prepared after taking into consideration of various aspects of the Boards functioning, composition of Board and its Committees, culture, execution and 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 carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the evaluation process.

BOARD COMMITTEES

As per the requirement of the Companies Act, 2013 and of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, the Board of Directors of the Company has Seven Committees namely Audit Committee, Stakeholders Relationship Committee, Risk Management Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Prevention of Sexual Harassment Committee and Finance Committee.

The details of the constitution of the Committees and the meetings held during the financial year 2019-20 are included in the Corporate Governance Report forming part 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 & AUDIT COMMITTEE

During the year Five Board Meetings and Six Audit Committee Meetings were 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 the Companies Act, 2013 and relevant provisions of LODR 2015 of SEBI.

Subsidiaries

Company has overseas subsidiary under the name and style JBF Global Pte Ltd at Singapore, which has subsidiaries, namely JBF Petrochemicals Ltd at Mangalore, India, JBF Trade Invest Pte Ltd at Singapore, and JBF RAK LLC, at U.A.E with its own subsidiaries, JBF Bahrain S.PC at Bahrain and JBF Global Europe BVBA at Belgium.

At Indian & Foreign subsidiaries of the Company financial restructuring/ negotiation with lenders/ investors are under process and Company do not have the audited financial statements of its subsidiaries hence the Company could not prepare the consolidated financial statements. The same has been referred by the auditors in their report.

Explanation/comments on audit qualifications

1. The companys Business as a going concern :

The Company has been in constant touch with couple of interested investor to find an amicable debt resolution plan. The company is hopeful that the resolution plan, as and when proposed, will be accepted by the consortium of Lenders.

Under this circumstances, the accounts are prepared on the basis of going concern and assuming that the resolution plan proposed with desired modification will be implemented.

2. Interest @ 9% on Borrowings

Company has provided interest @ 9% p.a. On borrowings aggregating to Rs 2,618.65 crore for the period from 1st April, 2019 to 31st March, 2020 as against the documented rate resulting into lower provision of finance cost for the year 31st March, 2020 by Rs 139.86 crores.

Management is of the view that ultimate liability will not be more than 9%.Therefore the Company is continues to recognise the same on 9%.

3. Subsidaries Exposure

Company has exposure in subsidiaries by way of investments, loans and other receivables aggregating to Rs 1,515.69 crores. No exercise isundertaken to determine impairment, if any.

The company has proposed a resolution to enable the Board of Directors to 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 advance against supply of goods, which are unsettled for the extended period of time.

Efforts are being made to settle the above advance and the Management believes that above advance either will be settled against supply of goods or amount will be refunded and hence no provision is required.

5. Claim filed by an Operational creditor of JBF RAK llc, (stepdown subsidiary of the company)

An application filed with National Company Law Tribunal (NCLT), by the one of the operational creditors of JBF RAK LLC (JBF RAK), situated at UAE, a subsidiary of the Company, against the Company, for supply of raw materials to JBF RAK and claim of Rs 128.48 Crore (US$ 19,899,091.53). No provision has been considered for the above claim.

Management is of the view that in view of negotiation with the above creditor by JBF RAK and based on past settlement by the Company with above creditors in respect of raw material purchased by the Company, there will be no liability on account of it 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 the Company, as required under SEBI (Listing obligations and Disclosure Requirements) Regulations, 2015 is provided in a separate section and forms an integral part of this Report.

CORPORATE GOVERNANCE

As per Regulations 34 (3) read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, a separate section on corporate governance practices followed by the Company (including disclosures prescribed under Section II of Part II of Schedule V of the Companies Act, 2013), together with a certificate from the Companys Auditors on compliance forms an integral part of this report.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report as per Regulation 34(2) of SEBI (Listing Obligations and Disclosure requirement) Regulations, 2015, is annexed and forms an integral part of the Report.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT-9, as required under Section 92 of the Companies Act, 2013, is annexed and forms an integral part of this Report.

CORPORATE SOCIAL RESPONSIBILITY

As a part of its initiative under the "Corporate Social Responsibility"(CSR) drive, the Company has undertaken projects in the area of rural development.

The disclosures required under section 135 of the Companies Act, 2013, read with the rule 8(1) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 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) of the Companies (Appointment and Remuneration) Rules, 2014 in respect of employees of the Company and Directors is enclosed in the Annual Report. The statement containing particulars of remuneration of employees as required under Section 197(12) of the Act, read with Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in an annexure to the Annual Report. In terms of Section 136(1) of the Act, the Annual Report is being sent to the Member shaving the aforesaid annexure. The information is also available for inspection by the Members at the Registered Office of the Company during business hours on all working days except Saturdays and Sundays. Any Member desirous of obtaining a copy of the said annexure may write to the Company Secretary and the same will be furnished on request.

COMPANY POLICIES:

The company has formulated various policies which are available on our website : www.jbfindia.com

NOMINATION AND REMUNERATION POLICY

The Company has formed Nomination and Remuneration Committee and framed the Remuneration Policy. The Committee has been given responsibility of appointment and re-appointment of Whole-time Director, Directors, Key Managerial Persons and the specified employees / executives of the Company and approving their remuneration based on their qualification experience and responsibility in the Company.

The salient features of Remuneration policy are included in Corporate Governance Report forming part of this annual report.

Risk Management Policy

As a good governance practice, the Company has constituted Risk Management Committee. The Company has a Risk Management Policy and team evaluate business risks.

The Board of Directors regularly reviews risk and threats in the business and takes suitable steps to safeguard Companys interest.

Related Party Transactions Policy

As per statutory requirement the Company has framed related party transcation policy. As a policy all Related Party Transactions including saleand purchase entered into with Subsidiary Companies, if any, are placed before the Audit Committee and also before the Board for approval. Omnibus approval was obtained on a quarterly / annual basis for such transactions which are of repetitive nature.

There are no material related party transactions during the year under review with the Promoters, Directors or Key Managerial Personnel. The Company has also formulated policy on materiality of Related Party Transactions.

Whistle Blower policy

A whistle blower policy in terms of the Listing Regulations includes Ethics & Compliance for senior executives of the Company. It also includes vigil mechanism. Confidential disclosures can be made by whistle blower through an e-mail, or a letter to the Committee member or to the Chairman of the Audit Committee.

The efforts is taken to accept the observations of the whistle blower and the action are taken accordingly.

Prevention of Sexual Harassment at Workplace policy and preservation of documents policy

The company has also constituted prevention of sexual harassment at workplace policy and preservation of documents policy. Separate Management Teams are appointed to review periodically at different locations of the Company. These policies are also available on website of the Company.

Foreign exchange earning and outgo

Foreign exchange earning by way of export and Freight were Rs 632.98 crore against outgo of Rs 7.42 crore on import of raw materails, stores, spares & consumables.

Fixed deposits

During the year Company has not accepted any Fixed Deposits and as such, no amount of principal or interest on account of Fixed Deposits is outstanding as on the date of Balance Sheet.

PARTICULARS OF LOAN, GUARANTEES OR INVESTMENTS BY COMPANY

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to Financial Statements (refer Note no.41)

INSURANCE

All the properties of the Company including buildings, plant and machinery and stock have been adequately insured.

DIRECTORS RESPONSIBILITY STATEMENT

To the best of knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134(3) (c) of the Companies Act, 2013:

I. That in the preparation of the Annual Accounts for the year ended 31st March, 2020, the applicable Indian Accounting Standards (IND-AS) have been followed along with proper explanation relating to material departures, if any;

Ii. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2020 and 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 the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting 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 be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

Vi. That the Directors had devised proper systems were adequate and operating effectively.

Compliance with secretarial standards

The Board has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made hereunder, the Company has appointed M/s. Jagdish Patel & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as and forms an integral part of this Report.

STATUTORY AUDITOR

Pursuant to the provisions of Section 139 of the Companies Act, 2013, and rules made there under the term of office of M/s. Pathak H D & Associates, Chartered Accountants, (Firm Registration No. 107783W) as the Statutory Auditors of the Company will conclude from the close of ensuing Annual General Meeting of the Company.

The Board of Directors places on record its appreciation to the services rendered by M/s. Pathak H D & Associates, Chartered Accountants, (Firm Registration No. 107783W) as the Statutory Auditors of the Company. Subject to the approval of the Members, the Board of Directors of the Company has recommended the appointment 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. Pathak H D & Associates, Chartered Accountants, pursuant to Section 139 of the Companies Act, 2013.

Accordingly, the Board seeks approval of Shareholders of the company for the appointment

COST AUDITOR

The Board of Directors has approved appointment of Mr. Vijay Bavchandbhai Patel, Cost Accountant as the Cost Auditor of the Company to conduct cost audit and give report for the year 2020-21. The notice of Annual General Meeting includes the resolution to obtain consent of the shareholders.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS 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 NCLT application under Section 7 of IBC Code with Ahmedabad Branch. The matter is still pending for hearing and admission.

One of the operational creditor of the company i.e M/s SABIC Asia Pacific 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-mitigation system, which are assessed and strengthened with new/revised standard operating procedures. The Companys internal control system is commensurate with its size, scale and complexities of its operations. The internal audit is entrusted to M/s. Bhuwania & Agrawal Associates. Every quarter internal audit report is placed before the Audit Committee and the Audit Committee of the Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same.

ENVIRONMENT AND SAFETY

The Company has constituted Committee for prevention of sexual harassment at work place with a mechanism of lodging complaints. During the year under review no complaints were reported to the Board.

ACKNOWLEDGEMENT

The Board of Directors would like to express their grateful appreciation for the assistance, support and co-operation received from the Financial Institutions, Banks, Government Authorities and Shareholders during the year under review.

The employees of the Company contributed significantly in achieving the results. The Directors take this opportunity of thanking them and hope that they will maintain 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