The Company is engaged in the manufacture of Stearic Acid, Fatty Acids, Refined
Glycerine, Soap Noodles, Toilet Soap, Industrial Oxygen and in the generation of Power
from biomass and wind. Non edible vegetable oils and Fat distillates, both indigenous and
imported, are used as raw materials for the manufacture of the finished products. The
products manufactured are marketed directly from the factory as well as through Depots and
C&F Agents located in major cities across the country. The Company also undertakes to
manufacture Soap Noodles and Toilet Soap on contract basis for reputed customers.
The Company is having 6 Mw Biomass Cogeneration Captive Power Plant located within the
factory premises. It is also having four Wind Energy Generators (WEGs) of total 6.30 MW
setup in Tamil Nadu and the power generated from these plants is sold to Tamil Nadu
Generation and Distribution Corporation Limited (TANGEDCO).
Majority of the Fatty Acids produced in the industry are consumed as raw material in
Toilet Soap industry for making Soap Noodles and Toilet Soap. Hence performance of that
industry will also have its impact on the demand for fatty acids. Stearic Acid is used in
rubber, plastic, metal polish, cosmetics, paints and number of other industries and any
changes in demand by the major user industries may lead to fluctuations in demand.
Glycerine and Industrial Oxygen are the by-products.
The country is short of both edible and non-edible vegetable oils. However, in India,
refineries with huge capacities have been setup for processing Crude Vegetable Oils like
Palm Oil mainly imported from Malaysia and Indonesia and some that is available
domestically. By-products generated from these refineries viz., RBD Palm Stearine (RBDPS)
and Palm Fatty Acid Distillate (PFAD) are the raw materials to the Company. As a result,
the Company indirectly depends on imports of crude vegetable oils for refining.
Consequently the supply and demand position in the international market for vegetable oils
influence the domestic market.
The Malaysian and Indonesian Governments vary export duty from time to time on crude
oil to encourage value addition within their country prior to exports. This turns out as
additional cost to consumers in India. Further, fluctuation in crude oil (fossil) prices
also have impact on edible and no edible oils due to their usage in production of
bio-fuels.
The fuels intended for running the biomass power plant are Rice Husk, fire wood like
Cotton Stalk, Chili Stalk, English Thumma etc., available in the surrounding areas. Their
availability is seasonal and also depends on availability of labour and farm works during
the season. Transportation and storage of biomass fuels are the other problems due to
their low bulk density. They are also fire hazardous.
Scheduled maintenance activities are being carried out regularly for optimum capacity
utilization of the power plant. Steam and power requirements of Process Plants are met
from the Biomass Power Plant and surplus power after internal consumption is sold to
Indian Energy Exchange through PTC India Ltd.
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Jocil Limited
Continuous development efforts are being made to absorb the latest technologies and
practices. Quality Management Systems (QMS) Standard ISO 9001:2015 obtained from a
renowned certification agency, TUV SUD South Asia Pvt. Ltd., Mumbai is being followed by
the Company, Det Norske Veritas (DNV) also confirmed ISO 22716:2007 on the Company for
following GMP Guidelines of Standard in the manufacture of Stearic Acid and Glycerine.
Raw materials and semi-finished soap products are tested in Companys laboratory having
Microorganism Testing Equipment for reliable and consistent results. It also saves time
involved in sending samples to outside laboratories situated far away from the Company.
b. Opportunities and Threats:
Raw material cost is a major component in the cost of production of fatty acids and
soap products. International market prices of edible and non-edible oils highly influence
the raw material prices in the domestic market. During the year under review prices of raw
materials have increased enormously but now the prices have been stabilized. Competitors
having backward integration have an edge over the Company because of cheaper and secured
source of raw materials. Volatility of raw material prices and demand by bulk consumers of
fatty acids and soap products for contracts of large quantities for future delivery is a
big challenge to the Company when similar facility for advance coverage of raw materials
is not available to hedge the risks. Retention of high volume customers is considered very
important and hence very competitive rates are having to be quoted with hidden risks.
GST refund/benefit is continuing for North-eastern states and Jammu & Kashmir and
will be available upto 30 June 2027. However, these benefits may not be attractive enough
to overcome the increased logistical costs for marketing in the south. As a result, the
opportunities have improved for manufacturers in non-exempt areas especially for those
catering to the Southern markets. Company is able to sustain reasonable volume of orders
for soap products from major customers and accordingly, capacity utilization of Soap Plant
has not been impacted much during the year.
Company commenced sale of surplus Power w.e.f 24 June 2022 to Indian Energy Exchange
(IEX) through PTC India Limited by way of Open Access arrangement.
The generation of power from Wind Energy Generators (WEGs) has declined to 110.74 lakh
units as against 124.28 lakh units in the previous year. As a result, revenue from sale of
power from Wind Energy Generators decreased to 320.96 lakhs from 358.60 lakhs. It is
mainly due to increase of low wind from 39.86% to 42.35% and also due to failure of
transformer in sub-station from 27 May 2022 and breakdown of one machine from 19 February
2023. Payments from TANGEDCO are being received as per Late Payment Surcharge (LPSC)
Scheme opted by TANGEDCO.
c. Segment-wise or Product-wise performance:
Segment-wise performance of the Company is at Note No. 31 to the Accounts.
d. Outlook:
The demand for Stearic Acid is expected to improve due to improvement of additional
geographical segment. However the demand for Toilet Soap, Soap Noodles and Glycerine may
slightly decline in the forthcoming period due to anticipated lower customer base.
e. Risks and Concerns:
Inverted duty structure for imports (higher duty for raw materials and lower duty for
finished products) is a major problem for manufacturers of Soap Noodles. There is no
customs duty on Soap Noodles imported from Asian countries under Indian Free Trade
Agreement. Whereas, Lauric Acid and PFAD, the major raw materials in the manufacture of
Soap Noodles attracts basic customs duty at 7.5% and 5% respectively. As a result
indigenous manufacturers are placed at a disadvantage in competing with import of Soap
Noodles. The Company expects the Government to recognize the inverted duty structure for
Soap Noodles and correct the anomaly to enable the industry to face the competition from
import of soap noodles effectively.
The wide fluctuations in raw material prices in the international market affect the
prices of final products which may result in conditions sometimes favourable or at other
times unfavourable to the Company, in spite of taking precautions to avoid risks in price
fluctuations.
At present availability of Palm Fatty Acid (PFAD) and RBD Palm Stearine, the major raw
materials for fatty acids production is a bit of concern as processing of Crude Palm Oil
(from which PFAD & RBD Palm Stearine are derived as by products) has come down
substantially at refineries and refineries are interested to import Palm Olein, pack and
sell in the local market due to lower duties. As a result, Company may have to import PFAD
& RBD Palm Stearine at increased costs in case of shortage.
Generation of power by Biomass Power Plant depends on availability of biomass and its
cost. Generation of power by windmills depends on wind velocity and the policy of TANGEDCO
to prioritize evacuation over the other sources of energy available to it. The
profitability of Wind Energy Generators largely depends upon the purchase price fixed by
the Government for purchase of energy from renewable sources of energy as a promotional
measure.
f. Internal Control System and their adequacy:
The Company has proper and adequate internal control procedures commensurate with its
size and nature of business. These internal control procedures ensure protection to the
resources of the Company and compliance with the policies, procedures and statutes.
The internal controls are supplemented by internal audit by M/s. Mastanaiah & Co.,
Chartered Accountants, Guntur. The internal controls and internal audit ensure that
appropriate financial records are available for preparing financial statements and other
data for maintaining accountability of assets. The Report of the Auditors on Internal
Financial Controls under Sec.143(3)(i) of the Act is provided as Annexure-B to the
Independent Auditors Report.
g. Discussion on Financial Performance with respect to Operational Performance:
The operations of Toilet Soap & Soap products and Fatty Acids increased by around
17.36% and 8.53% respectively. The operation of Biomass Power Plant vastly improved by
around 35% due to commencement of sale of power to Indian Energy Exchange (IEX) through
PTC India Ltd. However, the operations of Wind Power decreased by around 11%. The profit
before interest & depreciation increased by around 19% due to increase in sales volume
of Fatty Acids and Soap Noodles.
h. Material developments in Human Resources / Industrial Relations front, including
number of people employed:
The Company employed 794 persons as on 31st March 2023 both in the factory and office.
The Management of the Company maintains good relations with the employees. There have been
no labour problems since the inception of the Company in 1980.
i. Details of significant changes in Key Financial Ratios.
Ratio |
Formula |
2022-23 |
2021-22 |
Change % increase/ (decrease) |
Explanation for change |
Debtors Turnover |
Net credit sales /Avg. Accounts receivable |
12.47 |
9.43 |
32.29 |
Increase in Turnover |
Inventory Turnover |
Net sales / Average Inventory |
9.60 |
8.11 |
18.39 |
- |
Interest Coverage Ratio |
EBIT / Interest |
19.22 |
194.90 |
(90.14) |
Increase in Interest expense |
Current Ratio |
Current Assets / Current Liabilities |
4.64 |
3.93 |
18.20 |
- |
Debt Equity Ratio |
Debt / Equity |
0.01 |
0.02 |
(63.64) |
Decrease in short term borrowings |
Operating Profit Margin(%) |
Operating Profit / Sales |
1.47 |
1.28 |
14.49 |
- |
Net Profit Margin (%) |
Net Profit / Sales |
1.09 |
0.95 |
15.01 |
- |
j. Details of change in Return On Net Worth
Ratio |
Formula |
2022-23 |
2021-22 |
Change % increase/ (decrease) |
Explanation for change |
Return on Net Worth |
Profit after tax/ Net worth |
4.88 |
3.57 |
36.74 |
Increase in PAT due to increase in sales volume of Fatty Acids and
Soap Noodles and also due to commencement of sale of surplus Power to IEX through PTC
India Ltd. |
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