1 Corporate Information
Jayant Agro-Organics Limited was incorporated on May 7, 1992 under Companies Act, 1956 having CIN L24100MH1992PLC066691. The Company is mainly engaged in manufacturing and trading of castor oil and its derivatives such as oleo chemicals.
Notes:
2. Plant and machinery includes general plant and machinery, electrical installations, laboratory equipments and windmill.
*The Company has elected to consider the carrying value of all its items of property plant and equipment and intanqible assets recoqnised in the financial statements prepared under Previous GAAP and use the same as deemed cost in the openinq Ind AS Balance Sheet. Accordinqly, the accumulated depreciation in the openinq Ind AS Balance Sheet is Nil.
(d) Rights, preferences and restrictions attached to equity shares: The company has one class of equity shares having a face value of Rs.5/- each per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.
Note 3: Capital Reserve was partially created in FY 2009-10 for for forfeiture of Share warrants and partially in FY 2011-12 on account of a amalgamation of a Company.
Note 4: Capital Redemption Reserve is created out of profits on redemption of preference share capital in year 2006-07.
Note 5: Amount received on issue of shares in excess of the par value has been classified as security premium account.
Note 6: General Reserve is created from time to time by way of transfer of profits from retained earnings for appropriation purpose. General Reserve is created by transfer of one component of equity to another and hence not an item of Other Comprehensive Income.
(i) Fair value hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.
The fair value of financial instruments as referred to in note above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active market for identical assets or liabilities (level 1 measurements) and lowest priority to unobservable inputs (level 3 measurements). The categories used are as follows :
Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. Considering that all significant inputs required to fair value such instruments are observable, these are included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
(ii) Valuation technique used to determine fair value
The fair value of financial instrument is determined using discounted cash flow analysis.
For Assets and liabilities not discounted:
The carrying amounts of trade receivables, loans, cash and bank balances,trade payable and other financial liabilities are considered to be the same as their fair values, due to their short-term nature.
For assets and liabilities discounted:
The fair values for Unbilled revenue were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.
The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.
Note 7: Financial risk management
The Company's business activities expose it to a variety of financial risks, namely liquidity risk, market risks and credit risk. The Company has the overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities.
The Risk Management policy of the Company provides assurance that the Company's financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives. The Finance department activities are designed to:
- protect the Company's financial results and position from financial risks;
- maintain market risks within acceptable parameters, while optimising returns; and
- protect the Company's financial investments, while maximising returns.
A) Management of market risk A1-Interest Risk
Company's borrowing is in the form of working capital loans which are linked to MCLR of the lending banks. Any change in the MCLR can have a positive or negative impact on the companies profit to the extent the benefit or cost is not absorbed in the selling price of the products.
A2-Commodity Risk
The prices of agricultural commodities are subject to vide fluctuations due to unpredictable factors such as weather, government policies, change in global demand and farmers sowing pattern.
The castor seed crop is shallow in nature and much smaller crop in size, therefore there is an inherent risk associated with the vide fluctuation in castor seed prices, the main raw material of the company.
The company has in place Risk Management Policy which is reviewed from time to time to cap the potential losses arising from such risks.
B) Management of credit risk
Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligations.
The group is exposed to credit risk from Loans and Inter corporate deposits, deposits with banks and financial institutions, as well as credit exposure to customers with deferred payment terms.
Trade receivable
Credit risks related to receivables resulting from the sale of inventory property is managed by screening the customer profile and also by sales to high credit rating counterparties therefore, substantially eliminating the Company's credit risk in this respect.
Other financial assets
Credit risk from balances with banks and financial institutions is managed in accordance with the Company's policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparties. Counterparty credit limits are reviewed on periodic basis, and updated the same as and when required as per the credit profile of the customer. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through potential counterparty failure
C) Foreign Currency Risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.
Foreign Currency Sensitivity Analysis
The Company is mainly exposed to the currency : USD, EUR, JPY
The following table details the Company's sensitivity to a 5% increase and decrease in the INR against the relevant foreign currencies. 5% is the sensitivity rate used when reporting foreign currency risk internally to key managerial personnel and represents management's assessment of the reasonably possible change in foreign exchange rates. This is mainly attributable to the exposure outstanding on receivables and payables in the Company at the end of the reporting period. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5% charge in foreign currency rate. A positive number below indicates an increase in the profit or equity where the INR strengthens 5% against the relevant currency. For a 5% weakening of the INR against the relevant currency, there would be a comparable impact on the profit or equity, and the balances below would be negative.
The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts to manage its exposure in foreign exchange rate variations. The counter party is generally a bank. These contracts are for a period between one day and four years. The above sensitivity does not include the impact of foreign currency forward contracts which largely mitigate the risk.
Derivative Instruments:
The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to accounts receivable, accounts payable and future sales order. The use of foreign currency forward contracts is governed by the Company's strategy approved by the Board of Dire ctors, which provide principles on the use of such forward contracts consistent with the Company's Risk Management Policy. The Company does not use forward contracts for speculative purposes.
Note 8 (a): Capital Management
The Company considers that capital includes net debt and equity attributable to the equity holders.
The primary objective of the Company's capital management is to ensure that it maintains a strong credit rating and healthy credit ratios in order to support its business and maximise shareholders value.
The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.
No changes were made in the objectives, policies or processes for managing capital during the years ended March 31, 2018 and March 31, 2017.
The Company monitors capital using a gearing ratio which is total capital divided by Net debt. The Company includes within Net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents excluding discontinued operations.
*Liability for service tax shown above is net of Rs.1,123,595/- reversed under protest.
**The borrowings of the subsidiary company are primarily secured against the fixed assets of the subsidiary in case of term loan and current assets in case of working capital loans. The company being the holding company has provided corporate guarantee over and above the security provided by the subsidiary.
Proposed Dividend
The Board of Directors at its meeting held on 5th May. 2018 have recommended a payment of final dividend of Rs.1.35 (Rupees one and paisa thirty five only) per equity share of face value of Rs.5 each for the financial year ended 31st March, 2018. The same amounts to Rs.4.88 crores including dividend distribution tax of Rs.0.83 crores.
The above is subject to approval at the ensuing Annual General Meeting of the Company and hence is not recognised as a liability.
Note 9: Capital Commitment
Estimated amount of contracts remaining to be executed on Capital accounts amounted to Rs.13,075,000/- (PY Rs.7,411,294/-).
Note 10: Disclosure under the Micro, Small and Medium Enterprises Development Act (MSMED), 2006
The Company has no dues towards principal and interest amount to micro, small and medium enterprise at the year end March 31, 2018.
Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.
* During the year Company has issued Bonus Shares in 1:1 ratio (refer Note No. 16 (b)) to eligible equity shareholder. The Earning Per Share figures for the year ended March 31, 2017 has been restated to give effect to the allotment of the bonus shares.
Note 11: Employee Benefit Obligation
The Company has recognised, in the Statement of Profit and Loss the following amount as contribution made under defined contribution plans.
Gratuity:
The Company operates a gratuity plan covering qualifying employees. The benefit payable is the greater of the amount calculated as per the Payment of Gratuity Act or the Company scheme applicable to the employee. The benefit vests upon completion of the five years of continuous service and once vested is payable to employee on retirement or on termination of employment. The Company makes annual contribution to the gratuity scheme administered by the Life Insurance Corporation of India through its Gratuity Trust Fund.
The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.
The Expected Rate of Return on Plan Assets is determined considering several applicable factors, mainly the composition of Plan Assets held, assessed risks, historical results of return on Plan Assets and the Company's policy for Plan Assets Management.
The expected contributions for Defined Benefit Plan for the next financial year will be in line with FY 2017-18.
Sensitivity Analysis
Significant Actuarial Assumptions for the determination ofthe defined benefit obligation are discount trade ,expected salary increase and employee turnover. The sensitivity analysis below, have been determined based on reasonably possible changes of the assumptions occurring at end of the reporting period , while holding all other assumptions constant. The result of Sensitivity analysis is given below:
Terms and conditions of transactions with related parties
a) The sale and purchase from related parties are made on terms equivalent to those that prevail in arm's length transactions. Outstanding balances at the year end are unsecured and interest free and settlement occurs in cash and cash equivalents. For the year ended March 31, 2018 the company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
b) The company has entered into job work agreement with the subsidiary company for crushing of castor seed on the terms equivalent at the arms length price.
Note 12: Disclosure as per Regulation 53(F) of SEBI (Listing Obligation and Disclosure Requirements) Regulations
There was no loans and advances in the nature of loans given to subsidiaries, associates and firms or companies in which directors are interested.
Note 13: Disclosure as per Section 186 of the Companies Act, 2013
(i) There was no loans and advances in the nature of loans given to subsidiaries, associates and firms or companies in which directors are interested.
(ii) The guarantees issued by the Company in accordance with Section 186 of the Companies Act, 2013 read with rules issued thereunder is given in the below table:
Note 14: Subscription to Share Warrant
During the year 2014-15, pursuant to Joint Venture Agreement, the company has subscribed to 36,000,000 share warrants of Rs.5 each issued by Vithal Castor Polyols Pvt. Ltd. a joint venture of the company. These warrants entitles company to subscribe 36,000,000 equity shares of Rs.5 each fully paid upon payment at any time after the period of 7 years but on or before 20 years from the date of issue of warrants made by the said associated enterprise.
Note 15: Long Term Derivative Contracts
The Company does not have any long term contracts or derivatives contract, which require provision of any foreseeable losses. Note 50: Investor Education and Protection Fund
The Company has transferred the amount, required to be transferred, of Rs.133,464 (PY Rs.308,390) to Investor Education and Protection Fund.
Note 16: Interest Income
Interest income include an amount of Rs.31,251,526/- (PY Rs.Nil) received from Department of Commercial Tax in Gujarat as interest on VAT refunds.
Note 17: Segment Reporting
The company has identified Castor Oil based derivative business as its only primary reportable segment in accordance with the requirement of Ind AS 108, 'Operating Segments'. Accordingly, no separate segment information has been provided.
Note 18: Approval of Financial Statements
The financial statements are approved for issue by the Audit Committee at its meeting held on 5th May. 2018 and by the Board of Directors on May 5, 2018.
Note 19: Previous Year Figures
Previous year figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification.
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