jocil ltd Directors report

Your Directors have pleasure in presenting the Forty fifth Annual Report of the Company together with the Audited Statement of Accounts for the Financial Year ended 31st March 2023.

(Rs in Lakhs)

FINANCIAL RESULTS	2022-23	2021-22
Sales	91601.49	75114.07
Processing charges	326.44	244.91
Other income	238.86	113.20
Total income	92166.79	75472.18
Profit for the year before interest and depreciation	1965.22	1644.99
Interest	(69.93)	(4.94)
Depreciation	(621.01)	(682.20)
Profit before tax	1274.28	957.85
Less:
Provision for current tax	355.00	327.00
Deferred tax-(credit)/charge	(64.77)	(81.83)
(Excess)/Short provision of income tax in earlier years	(15.49)	0.01
Profit after tax	999.54	712.67

The turnover of the company for the year at Rs 916.01 crores increased by 21.95% from Rs 751.14 crores of the previous year. This is largely due to increase in the prices of finished goods in line with the increase in the prices of raw materials and also due to increase in the sales volume of Fatty Acids and Soap Noodles. During the year, the sales volume of Fatty acids and Toilet Soap & Soap products increased by 17.36% and 8.53% respectively due to favourable market conditions. The Profit Before Tax (PBT) increased to Rs 12.74 crores as compared to Rs 9.58 crores in the previous year. The main reasons for increase in profitability are increase in sales volume of Fatty Acids and Soap Noodles due to increase in demand and also due to commencement of sale of surplus power to Indian Energy Exchange (IEX) through PTC India Limited.

The appropriations from the profit are as detailed below.

(Rs in Lakhs)

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

	2022-23	2021-22
Profit after tax (including other comprehensive income)	452.71	1020.05
Balance brought forward from previous year	5953.08	5199.46
Profit for appropriations	6405.79	6219.51
APPROPRIATIONS
Dividend (accounted in the year of payment)*	177.62	266.43
Balance carried forward	6228.17	5953.08
TOTAL	6405.79	6219.51
Authorized capital	1000.00	1000.00
Paid-up capital	888.16	888.16
Reserves & surplus	19751.58	19476.49

2. DIVIDEND & RESERVES

The Board of Directors have recommend for the approval of the shareholders of the Company for payment of dividend for the year ended 31-03-2023, at 2.50 per equity share of 10 each, which aggregates to 2,22,02,875/- on 88,81,150 equity shares of the Company. In the previous year, the Company paid dividend at 2.00 per equity share of 10 each on 88,81,150 shares amounting to 1,77,62,300. Your Directors do not propose to transfer any amount to reserves for the Financial Year ended on March 31, 2023.

3. OPERATIONS	2022-23	2021-22
	MT	MT
Production
(including processed on jobwork)
a. Fatty acids	72514	63048
b. Toilet soap & Soap products	44892	41886
c. Biomass power-kwh	24502397	18176102
d. Wind power-kwh	11073930	12441968
By-products:
Glycerine	1386	1019
Fatty acid pitch	2239	2369
Sales
a. Fatty acids	49741	42382
b. Toilet soap & Soap products	38242	35236
c. Biomass power-kwh	5107757	-
d. Wind power-kwh	11053081	12375271
By-products:
Glycerine	709	758
Fatty acid pitch	2168	2330

4. BUSINESS REVIEW AND OUTLOOK

Your Company has not changed its business during the period under review.

Division wise performance and outlook is described as given below.

Fatty Acids and Soap

There is an improvement in sales volume of Fatty Acids and Soap Noodles. Due to increase in volume of the said products and also due to commencement of sale of surplus power, the profitability in the current year is higher when compared to previous year. GST refund/benefit is continuing for Northeastern states and Jammu & Kashmir and will be available upto June 30, 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. The Company is able to maintain reasonable volume of orders for Fatty Acids and Soap Noodles from major customers.

Cost of raw materials is a major component in total cost of production and the fluctuation in their prices is a serious cause of concern to the company particularly when the customers demand long term forward contracts while the same is not possible with the raw material suppliers. There is stiff competition from manufacturers particularly from those having backward integration which gives them a cost advantage. The Company is able to source the raw materials largely from local suppliers. During the year under review the prices of raw materials have stabilized due to declining of COVID-19 impact and lifting of export ban by major vegetable oil producing countries like Indonesia & Malaysia. As a result, the interest burden on working capital decreased as predicted in the previous year. However, Company may have to import PFAD and RBD Palm Stearine at increased costs in case of shortage in local market.

The Company enters into contracts for supply of Fatty Acids, Soap Noodles and Toilet Soap for major customers wherein the price of raw materials is factored into the selling price of the products. The customers themselves supply/cover raw materials required for the total process and the Company receives processing charges for the manufacture of final products. This helps to safeguard against fluctuations in raw material prices. The market for stearic acid is expected to improve and for Toilet Soap, Soap Noodles and Glycerine it may slightly decrease in the forthcoming period due to decline in demand.

Biomass Power Plant

The Company commenced sale of surplus Power with effect from 24 June 2022 to Indian Energy Exchange (IEX) through PTC India Ltd by way of Open Access arrangement. As a result of commencement of sale of power, the generation from the plant during the year improved to 245 lakh units, a 35% increase when compared to the previous year. The revenue from Biomass Power Plant is expected to improve further due to demand for Power. However running of Plant at higher capacity may not be viable if the raw material prices are increasing as prices prevailing in IEX are very competitive.

Wind Energy Generators (WEG)

Power generation during the year from the four Wind Energy Generators (WEGs) of 6.3 MW capacity has declined as compared to the previous year. During the year, the power generation from all the four WEGs was 110.74 lakh units as compared to 124.42 lakh units in the previous year 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 to 09 May 2023. The backdown of WEGs for want of evacuation facilities amounts to 7.77% of available time during the year 2022-23 as compared to 8.22% in the previous year.

5. SUBSIDIARY / ASSOCIATE COMPANIES

Your Company has no subsidiary/associate / joint venture companies. During the year under review, your company has not added/removed any subsidiaries, joint ventures or associate companies.

6. FINANCE AND STATUTORY COMPLIANCES

The Company availed working capital facilities under consortium arrangement with Union Bank of India and State Bank of India and the accounts are in order. The company complied with all the legal requirements and there are no outstanding statutory dues as on 31st March 2023.

During the year there have been no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and companys operations in future.

7. CREDIT RATING

During the year the Credit Rating Agency CARE re-affirmed the credit rating for working capital facilities as detailed hereunder.

Nature of Facilities	Rating Assigned
	2022-23	2021-22
i. Long term facilities	CARE A-; Stable (adequate degree of safety regarding timely servicing of financial obligations)	CARE A -, Stable (adequate degree of safety regarding timely servicing of financial obligations)
ii. Short term facilities	CARE A2+ (Strong degree of safety regarding timely payment of financial obligations)	CARE A2+ (Strong degree of safety regarding timely payment of financial obligations)

8. DEPOSITS

Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 i.e. within the meaning of Section 2(31)of the Companies Act, 2013 read with Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014 and as such there are no such overdue deposits outstanding as on 31 March 2023.

9. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT.

There are no material changes and commitments affecting financial position of the Company, which occurred after the end of the financial year i.e. 31 March 2023.

10. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act 2013. The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year the Company has not received any complaints on sexual harassment of women at the workplace.

11. VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has established Vigil Mechanism as required under Section 177 of the Companies Act, 2013 for directors and employees to report genuine concerns as prescribed in the policy. The policy provides adequate safeguards against victimization of persons who use such mechanism and makes provision for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases.

12. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

a. In accordance with the provisions of the Companies Act 2013 and Articles of Association of the Company, Sri Mullapudi Mrutyumjaya Prasad, Director retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

b. Shareholders at their meeting held on 24 September 2022 appointed Sri. P Kesavulu Reddy as Independent Director of the Company for a term of 5 consecutive years commencing from 24 September 2022 to 23 September 2027 not liable to retire by rotation.

c. Sri Subbarao V Tipirneni, retired from the position of Independent Director consequent upon completion of his present term of appointment on 30 September 2022.

d. In the opinion of the Board, Independent Directors appointed during the year possess the requisite integrity, expertise and experience (including proficiency),

e. During the year under review, none of the Directors resigned from the Board.

f. The Company held Four Board Meetings during the year. Board Meeting dates and attendance particulars are available in the report on Corporate Governance.

g. The Company has received declarations from all Independent Directors confirming that he/she meets the criteria of independence as provided under sub-section 6 of Sec. 149 of the Companies Act, 2013 at the first meeting of the Board in which he/she participated as a Director and thereafter at the first meeting of the Board in every financial year or whenever there is any change in the circumstances that may affect his/her status as an Independent Director.

h. The Audit Committee consists of 4 Non-Executive Directors of which 3 are Independent Directors. Sri VS. Raju, Independent Director is the Chairman of the Audit Committee. The remaining 3 members are Sri Mullapudi Thimmaraja, Non-Executive Director, Sri PA. Chowdary, Independent Director and Sri P Kesavulu Reddy, Independent Director. The Board accepted all the recommendations of the Audit Committee during the year.

i. During the year under review, the Company is having the following persons as Key Managerial 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)

13. MEETING OF INDEPENDENT DIRECTORS

A separate meeting of Independent Directors as required under Schedule IV of the Companies Act, 2013 was held on 8 February 2023, without the presence of Non-Independent Directors. This meeting was conducted to review and evaluate (a) the performance of Non-Independent Directors and the Board as a whole, (b) the performance of the Chairperson of the company, taking into account the views of Executive Directors and Non-Executive Directors and (c) assess the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The Independent Directors expressed their satisfaction with the performance of Non-Independent Directors and the Board as a whole and Lead Independent Director briefed the outcome of the meeting to the Board.

14. AUDITORS

M/s. Chevuturi Associates, Chartered Accountants, Vijayawada were re-appointed as Auditors for a period of 5 years at the 44th Annual General Meeting held on 24 September 2022 till the year 2026-27. There are no qualifications, reservations or adverse remarks in the audit report issued by them for the financial year ended 31st March 2023.

15. COST RECORDS AND COST AUDITORS

Company is maintaining cost records as specified by the Central Government under sub section (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 during the year. They are eligible for re-appointment as Cost Auditors for the year 2023-24. There are no qualifications, reservations or adverse remarks in the audit report issued by them for the financial year ended 31st March 2023.

16. SECRETARIAL AUDIT

M/s. Nekkanti S.R.VVS. Narayana & Co., Company Secretaries, Hyderabad were appointed as Auditors for secretarial audit for the year 2022-23 under Section 204 of the Companies Act, 2013 and they have submitted their report. There are no qualifications, reservations or adverse remarks in the audit report issued by them for the financial year ended 31st March 2023.

17. ANNUAL RETURN

Pursuant to Section 92(3) of the Companies Act, 2013, Annual Return has been placed in the website of the Company and web link for the same is www.//jocil.in/AnnualReturn2023.pdf

18. DECLARATION AS PER SECTION 134(3)(ca) OF COMPANIES ACT, 2013

During the year, the auditors have not reported any instance of frauds committed by or against the Company by its Directors/Officers/Employees to the Audit Committee or Board under Section 143(12) of the Companies Act, 2013 and rules made thereunder. Therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.

19. SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS

There were no significant material orders passed by any Regulators/Courts/Tribunals that would impact the going concern statutes of the Company and its future operations.

Your company has complied with all the Acts, Rules, Regulations and Guidelines issued/prescribed by the Securities Exchange Board of India, Reserve Bank of India, Ministry of Corporate Affairs and other statutory authorities.

20. No application has been made under the Insolvency and Bankruptcy Code. The requirement to disclose the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year is not applicable.

21. The requirement to disclose the details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof, is not applicable.

22. INTERNAL FINANCIAL CONTROLS AND ITS ADEQUACY

Your Company has adequate Internal Financial Controls as per Section 134(5)(e) of the Companies Act, 2013 that commensurate with the size of the business and nature of its operations, designed to provide

reasonable assurance with regard to the accuracy and completeness of the accounting records and timely preparation and provision of reliable financial statements.

The Board has inter alia reviewed the adequacy and effectiveness of the Companys internal financial controls relating to its financial statements, the major financial risk exposures if any and steps taken by the management to monitor and control such exposures, overseen and reviewed the functioning of the Whistle Blower Mechanism.

Your Company has adopted necessary policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of financial information.

During the year no fraud by the Company or with the Company by its officers or employees has been noticed/reported.

23. The information required to be included in the Board of Directors Report under the Companies Act, 2013 and Rules made there under is annexed and forms part of this report, details of which are as follows.

Sl Particulars No.	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	134 (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 of the performance of the Board, its committees and Individual Directors have been made. Companies (Accounts) Rules, 2014	134 (3) (p)	8 (4)	7

 

Sl. Particulars No.	Section	Rule	Annexure No.
8 Financial summary or highlights. Companies (Accounts) Rules, 2014	134 (3) (q)	8 (5) (i)	8
9 Ratio of the remuneration of each Director to the median employees remuneration and such other details. Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014	197 (12)	5 (1)	9
10 Particulars of employees in receipt of remuneration not less than Rs. 8,50,000 per month or Rs. 1,02,00,000 per year etc. Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014	197 (12)	5 (2)	10
11 Secretarial Audit Report in Form MR-3. Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014	204 (1)	9 (1)	11

24. INFORMATION UNDER LISTING REGULATIONS

The Company is committed to maintain the standards of Corporate Governance prescribed under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (Listing Regulations). The information required to be included in the Annual Report under Schedule V of the Listing Regulations are as follows.

Sl.No. Particulars	Para	Exhibit No.
1 Management Discussion and Analysis Report	A	12
2 Report on Corporate Governance	B	13
3. Related Party Disclosures	C	14
4. Disclosures with respect to Demat Suspense Account / Unclaimed Suspense Account	D	15
5 Declaration by the Managing Director that all Board Members and Senior Management Personnel affirmed their compliance with the Code of Conduct.	E	16
6 Compliance Certificate from Auditors on Corporate Governance	F	17

The Company is having a policy to deal with Related Party Transactions and the same may be viewed in the Companys website www.jocil.in. Accounts for disclosures in compliance with the Accounting Standards on "Related Party Disclosures" are given in note no. 34.

25. DIRECTORS RESPONSIBILITY STATEMENT

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

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. 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 at the end of the financial year and of the profit and loss of the company for that period;

c. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets 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 the company and that such internal financial controls are adequate and were operating effectively;

Explanation : For the purpose of this clause, the term "internal financial controls" means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

f. and, the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

26. PERSONNEL

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

27. ACKNOWLEDGEMENTS

The Directors wish to place on record their appreciation for the wholehearted and sincere cooperation the Company received from various departments of Central and State Governments, Bankers, Auditors, Dealers and Suppliers of the Company. The Directors also would like to express their grateful appreciation for the guidance and cooperation received from the Holding Company, M/s. The Andhra Sugars Limited, Tanuku.

	For and on behalf of the Board of Directors
Kovvur	P NARENDRANATH CHOWDARY
25 May 2023	Chairman

COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

(Sec. 134(3)(e) and Sec. 178 (3 & 4) of Companies Act, 2013)

The Board of Directors constituted Nomination and Remuneration Committee which at present consists of six directors of which four are independent directors. The Nomination and Remuneration Committee formulated a criteria for determining qualifications, positive attributes and independence of a Director and a policy on remuneration for the Directors, Key Managerial Personnel (KMP) and other employees as detailed below and recommended to the Board and the Board approved the same.

Criteria for appointment :

a) The appointee should possess adequate qualification, expertise and experience for the position they consider for appointment. The Committee has discretion to decide whether qualification, expertise and experience possessed by a person is appropriate for the concerned position.

b) Managing Director or Executive Director can be appointed for a term not exceeding five years at a time. No re-appointment shall be made earlier than one year before the expiry of the term.

c) An Independent Director shall hold office for a term up to five consecutive years on the Board of the Company and will be eligible for re-appointment on passing of a special resolution by the Company and disclosure of such appointment in the Boards report.

d) No Independent Director shall hold office for more than two consecutive terms, but such Independent Director shall be eligible for appointment after expiry of three years of ceasing to become an Independent Director, provided that an Independent Director shall not, during the said period of three years, be appointed in or be associated with the Company in any other capacity, either directly or indirectly.

e) At the time of appointment of Independent Director it should be ensured that number of Boards on which such Independent Director serves is restricted to seven listed companies as an Independent Director and in case such person is serving as a Whole-time Director of a listed company, three listed companies as an Independent Director.

f) The Committee shall specify the manner for effective evaluation of performance of the Board, its Committees and individual Directors to be carried out by the Board and review its implementation and compliance.

g) The Committee may recommend to the Board with reasons recorded in writing, removal of a Director, KMP or Senior Management Personnel subject to the provisions and compliance of the rules and regulations.

h) The Director, KMP and Senior Management Personnel shall retire as per the applicable provisions of the Companies Act, 2013 and the prevailing policy of the Company. The Board will have the discretion to utilize the services of KMP Senior Management Personnel even after attaining the retirement age, for the benefit of the Company.

Policy on remuneration :

a) The remuneration/compensation/commission etc., to the Managing Director / Whole-time Director, KMP and Senior Management Personnel will be determined by the Committee and recommended to the Board for approval. The remuneration/compensation/commission etc., shall be subject to the prior / post approval of the Shareholders of the Company and Central Government, as may be required by any Statute.

b) The remuneration and commission to be paid to the Managing Director/ Whole-time Director shall be in accordance with the percentage/conditions laid down in the Articles of Association of the Company and as per the provisions of the Companies Act, 2013, and the Rules made thereunder.

c) The Managing Director/Whole-time Director/KMP and Senior Management Personnel shall be eligible for a monthly remuneration as may be approved by the Board on the recommendation of the Committee.

d) If, in any financial year, the Company has no profits or its profits are inadequate and if it is not able to comply, the Company shall pay remuneration to its Managing Director/ Whole-time Director in accordance with the provisions of Schedule V of the Companies Act, 2013 with such provisions.

e) The Non-Executive/Independent Director may receive remuneration by way of sitting fees for attending meetings of Board or Committee thereof, provided that the amount of such fees shall not exceed the amount prescribed under Articles of Association of the Company. In addition to the remuneration payable as sitting fees they shall be paid traveling / hotel and other expenses as determined by the Board from time to time for attending and returning from, meetings of the Board of Directors or any committee thereof or in connection with the business of the Company.

f) An Independent Director shall not be entitled to any stock option of the Company.

Annexure - 2

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS DURING THE YEAR

Section 134(3)(g) and Section 186(4) of the Companies Act, 2013 Para A(2) of Schedule V to Listing Regulations

Sl.No. Name of the Company	Amount	Remarks
Particulars of loans given - NIL	-	-

During the year the Company has not made any investments, not given any guarantees and not provided any security to any person or other body corporate.