jvl agro industries ltd Management discussions

INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian GDP has grown to 6.8% in Financial Year 2019. The decline in GDP growth is on account of multiple factors like, fallout of NBFCs, low credit growth, tight liquidity conditions, dismal growth in wages and flat exports owing to a global slowdown. Indian Manufacturing continued its downtrend growing at 3.1%. However, GDP growth rate is expected to bottom out in the coming quarters. With Government continuing to roll out policies focusing on rural population, there could be some relief to the ongoing distress and signs of recovery should be visible in the second half of the financial year.

Each year, India imports a substantial amount of edible oils to meet the growing demand for its domestic consumption. With a population of 1.3 Billion people, it accounts for 4% of global vegetable oil production, 12% of global consumption and 21% of globally traded volumes.

OPPORTUNITIES AND THREATS

With the positive attitude of the Government, it appears that new opportunities may open up for sustained growth of Manufacturing Companies. However, the Management is not satisfied about the future growth of the Company and constantly reviews the ups and downs of the market particularly bearing in mind that the Company is under Corporate Insolvency Resolution Process (CIRP) and there are plenty of obstacles which are hindering its growth.

The Company has to ensure that the people working for it, who constitute its major competitive advantage, continue to contribute productivity to its business. The Company has to be on the lookout for tracking the competition and maintaining its competitive edge in terms of quality and value proportion. Following also contribute to the favourable opportunities of the Company:

a) Favourable business environment, increase in demand for the products; b) Ease in liquidity; c) Expansion in the Product Base as a result of recent plant modification for Ethanol; d) Favourable foreign currency movements; e) Ease in domestic and international prices of raw materials; f) Fast pace progress towards the commencement of production of subsidiary; g) Stable government in India.

Our company is exposed to the risk of price fluctuation on raw material as well as on finished goods, business risk, commodity risk, etc. in its entire product range and economic risk. The risk identified are reviewed and evaluated on continuous basis and suitable steps are taken on timely basis to mitigate the same. The Risk Management Process is reviewed periodically.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The performance of the Company for the year 2018-19 is described in the Financial Statement of the Company.

OUTLOOK

The recent passage of the IBC (Insolvency & Bankruptcy Code) has been a major change in the environment for the company. As mentioned earlier, the Committee of Creditors has not approved any Resolution Plan submitted for the Company and hence, the Resolution Professional has filed an application before the Honble National Company Law Tribunal, Allahabad Bench demanding liquidation of the Company.

RISK AND CONCERN

Needless to mention, with huge money, there comes the involvement of big risks. The Company faces the following risks:

? Business Risk

? Market Risk

? Financial Risk

? Legal Risk

? Commodity Risk

? Political Risk

? Exchange Rate Risk

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has not laid down internal financial controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that transaction are authorized, recorded and reported correctly.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company is under CIRP and due to non-approval of any resolution plan by Committee of Creditors, the Resolution Professional made an application before the Honble National Company Law Tribunal, Allahabad Bench for liquidation of Company.

HUMAN RESOURCE DEVELOPMENT

Prior to commencement of CIRP, it has been the tradition of the Company to maintain excellent industrial relations at all levels.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS ALONG WITH DETAILED EXPLANATION

As reflected from the Financial Statements of the Company, there are major changes in the financial ratios of the Company. The Company is currently undergoing CIRP and no resolution plan is approved by the Committee of Creditors.

Under such circumstances, the Resolution Professional has made an application before the Honble National Company Law Tribunal, Allahabad Bench for liquidation of Company.

For JVL Agro Industries Limited

(Company under Corporate Insolvency Resolution Process)

Ramesh Chandra Garg

Chief Financial Officer