1. Corporate Information

Jubilant industries Limited (“the Company” or the “Parent Company”) is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Presently, the Company is engaged in the business of manufacturing of Indian-made foreign liquor. Its shares are listed on the BSE Limited and the National Stock Exchange of India Limited. The registered office of the Company is situated at Bharttiagram, Gajraula District Amroha-244 223.

These financial statements were authorised for issuance by the Board of Directors of the Company in their meeting held on May 10, 2018.

2.1 The Company has only one class of shares referred to as equity shares having par value of Rs. 10 each. Holder of each equity share is entitled to vote one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

2.2 Details of shareholders holding more than 5% of the aggregate shares in the Company:

2.3 Aggregate number of shares issued for consideration other than cash:

Issued, subscribed and paid-up share capital includes 3,835,348 (31 March 2017: 3,835,348; 1 April 2016: 3,835,348) equity shares of Rs. 10 each allotted and issued pursuant to Scheme of arrangement with Jubilant Agri and Consumer Products Limited and Enpro Oil Private Limited during the FY 2011-12.

2.4 16,031 (31 March 201 7 : 28,470; 1 April, 2016: 37,196) equity shares, of Rs. 10 each allotted on exercise of the vested stock options in accordance with the terms of exercise under the “Employee Stock Option Scheme, 2013” (Refer note 38).

3.1 Expenditure related to corporate social responsibility as per Section 135 of the Companies Act, 2013, read with Schedule VII thereof: Rs. Nil (31 March 2017: Rs. Nil). There is no requirement of CSR specific for the year as there is no profits calculated under Section 198 of the Companies Act, 2013.

4. Income tax

The major components of income tax expense for the year ended 31 March 2018 and 31 March 2017 are:

5. Micro, small and medium enterprises

There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at the end of the year. The information as required to be disclosed in relation to Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company.

6. Employee benefits in respect of the Company have been calculated as under:

A. Defined Contribution Plans

The Company has certain defined contribution plan such as provident fund (1), employee state insurance, employee pension scheme, employee superannuation fund wherein specified percentage is contributed to them. During the year, the Company has contributed following amounts to:

(1) For certain employees where provident fund is deposited with government authority e.g. Regional Provident Fund Commissioner.

B. Defined Benefits Plans

i. Gratuity

In accordance with Ind AS 19 “Employee Benefits”, an actuarial valuation has been carried out in respect of gratuity. The discount rate assumed is 7.70% p.a. (31 March 201 7 : 7.37% p.a.; 1 April 2016: 7.90% p.a.) which is determined by reference to market yield at the Balance Sheet date on government bonds. The retirement age has been considered at 58 years (31 March 2017: 58 years; 1 April 2016: 58 years) and mortality table is as per IALM (2006-08) [31 March 2017: IALM (2006-08); 1 April 2016: IALM (2006-08)].

The estimates of future salary increases, considered in actuarial valuation is 9% p.a. for first three years and 5% p.a. thereafter (31 March 2017: 9% p.a. for first three years and 5% p.a. thereafter; 1 April 2016: 10% p.a. for first three years and 5% p.a. thereafter), taking into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The sensitivity analysis above have been determined based on reasonable possible changes of the respective assumptions occurring at the end of the year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant.

ii. Provident Fund:

The Company makes monthly contributions to provident fund managed by trust for qualifying employees. Under the scheme, the Company is required to contribute a specific percentage of the payroll costs to fund the benefits. As per Ind AS 19 on “Employee Benefits”, employer established provident fund trusts are treated as defined benefit plans, since the Company is obliged to meet interest shortfall, if any, with respect to covered employees. The total liability of Rs. Nil (31 March 2017: Rs. Nil; 1 April 2016: Rs. Nil) has been allocated to Company and Rs. Nil (31 March 2017: Rs. Nil) has been charged to Statement of Profit and Loss during the year.

Note:

(a) Fair valuation of financial assets and liabilities with short term maturities is considered as approximate to respective carrying amount due to the short term maturities of these instruments.

(b) The fair value is determined by using the valuation model/technique with observable/non-observable inputs and assumptions.

There are no transfers between Level 1, Level 2 and Level 3 during the years ended 31 March 2018 and 31 March 2017.

Reconciliation of Level 3 fair value measurement:

7. Financial risk management Risk management framework

The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework.

The Company, through three layers of defence namely policies and procedures, review mechanism and assurance aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The Audit committee of the Board with top management oversee the formulation and implementation of the risk management policies. The risk are identified at business unit level and mitigation plan are identified, deliberated and reviewed at appropriate forums.

The Company has exposure to the following risks arising from financial instruments:

- credit risk [see (i)];

- liquidity risk [see (ii)]; and

- market risk [see (iii)].

i. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers, loans and investments.

The carrying amount of financial assets represents the maximum credit exposure.

Trade receivables and other financial assets

The Company has established a credit policy under which new customer is analysed individually for creditworthiness before the payment and delivery terms and conditions are offered. The Company’s review includes external ratings, if they are available, financial statements, credit agency information, industry information and business intelligence. Sale limits are established for each customer and reviewed annually. Any sales exceeding those limits require approval from the appropriate authority as per policy.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are institutional, dealers or end-user customer, their geographic location, industry, trade history with the Company and existence of previous financial difficulties.

Expected credit loss for trade receivables:

Based on internal assessment which is driven by the historical experience/ current facts available in relation to default and delays in collection thereof, the credit risk for trade receivables is considered low. The Company estimates its allowance for trade receivable using lifetime expected credit loss. The balance past due for more than 6 months is Rs. 4.19 million (31 March 2017: Rs. 8.69 million; 1 April 2016: Rs. Nil).

Expected credit loss on financial assets other than trade receivables:

With regard to all financial assets with contractual cash flows, other than trade receivables, management believes these to be high quality assets with negligible credit risk. The management believes that the parties from which these financial assets are recoverable, have strong capacity to meet the obligations and where the risk of default is negligible and accordingly no provision for excepted loss has been provided on these financial assets. Break up of financial assets other than trade receivables have been disclosed on Balance Sheet.

ii. Liquidity risk

Liquidity risk is the risk that the will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company’s treasury department is responsible for managing the short-term and long-term liquidity requirements. Short term liquidity situation is reviewed daily by the Treasury. Longer term liquidity position is reviewed on a regular basis by the Company’s Board of Directors and appropriate decisions are taken according to the situation.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and un-discounted, and include contractual interest payments and exclude the impact of netting agreements.

iii. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Company’s income or the value of its holding of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

Currency risk

Foreign currency is the risk that the fair value of future cash flows of an exposure will flucate because of changes in foreign exchange rates. The Company has not foreign currency borrowing, foreign currency trade payable and trade receivable, therefore, no exposed to foreign currency risk.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to interest rate risk because funds are not borrowed.

8. Capital management Risk management

The Company’s objectives when managing capital are to:

- safeguarding their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio:

‘Net Debt’ (total borrowings net of cash and cash equivalents and other bank balances) divided by ‘Total EquityR’ (as shown in the Balance sheet).

9. Segment information

The Company’s operation comprises of IMFL business only. As such, there are no separate reportable business segments in terms of Ind AS-108 “Operating Segments”.

10. Related party disclosures

1. Subsidiaries:

Jubilant Agri And Consumer Products Limited, Jubilant Industries Inc., USA.

2. Key management personnel (KMP) and other related entities

Mr. Manu Ahuja* (CEO and Managing Director)(w.e.f. 10 May 2018), Mr. Videh Kumar Jaipuriar** (Managing Director) (up to 11 December 2017), Mr. Sandeep Kumar Shaw (Chief Financial Officer) (up to 28 April 2017), Mr. Umesh Sharma***, Mr. Dinesh Kumar Gupta (Company Secretary) (up to 18 December 2018), Mr. Abhishek Mishra (Company Secretary) (w.e.f. 16 March 2018), Mr. Priyavrat Bhartia (Chairman), Mr. Shamit Bhartia (Director), Mr. Ghanshyam Dass (Director) (up to 26 February 2018), Mr. R. Bupathy (Director), Mr. S.K. Roongta (Director), Ms Shivpriya Nanda (Director).

* He was appointed as CEO and Managing Director without remuneration w.e.f. May 10, 2018 for a period of three years and also serve and draw remuneration as CEO and Whole-time Director from Jubilant Agri and Consumer Products Limited, a wholly owned subsidiary of the Company.

** He was appointed as Managing Director without remuneration w.e.f. March 1, 2016 for a period of three years and also serving and drawing remuneration as Whole-time Director from Jubilant Agri and Consumer Products Limited, a wholly owned subsidiary of the Company.

*** Chief Financial Officer: Appointed w.e.f. 24 May 2017; Whole-time Director: Appointed w.e.f. 16 March 2018 and subsequently resigned w.e.f. 10 May 2018.

Jubilant Life Sciences Limited, HSSS Investment Holding Private Limited.

3. Others:

VAM Employees Provident Fund Trust, Jubilant Bhartia Foundation.

11. Contingent Liabilities & Commitments (to the extent not provided for)

A) Guarantees:

I The Company has given corporate guarantee on behalf of its wholly owned subsidiary, Jubilant Agri and Consumer Products Limited to secure financial facilities granted by banks, details for guarantees as at 31 March 2018 are as under:

a) To Axis Bank Ltd of Rs. 520 million (31 March 2017: Rs. 528.00 million; 01 April 2016: Rs. 528.00 million) for working capital facility (including non fund based facility) and effective guarantee is Rs. 250.10 million (31 March 2017: Rs. 225.24 million; 01 April 2016: Rs. 115.05 million).

b) To Yes Bank Ltd of Rs. 680.00 million (31 March 2017: Rs. 302.50 million; 01 April 2016: Rs. 302.50 million) for working capital facility (including non fund based facility) and effective guarantee is Rs. 79.24 million (31 March 2017: Rs. 167.48 million; 01 April 2016: Rs. 204.32 million).

c) To IDBI Bank Ltd of Rs. Nil (31 March 2017: Rs. 566.00 million; 01 April 2016: Rs. 566.00 million) for working capital facility (including non fund based facility) and effective guarantee is Rs. Nil (31 March 2017: Rs. 180.45 million; 01 April 2016: Rs. 291.07 million).

d) To Corporation Bank of Rs. 200.00 million (31 March 2017: Rs. 753.50.00 million; 01 April 2016: Rs. 753.50 million) for working capital facility (including non fund based facility) and effective guarantee is Rs. 90.09 million (31 March 2017: Rs. 294.55 million; 01 April 2016: Rs. 388.60 million).

e) To RBL Limited of Rs. 750.00 million (31 March 2017: Rs. Nil; 01 April 2016: Rs. Nil) for working capital facility (including non fund based facility) and effective guarantee is Rs. 372.83 million (31 March 2017: Rs. Nil; 01 April 2016: Rs. Nil).

f) To Axis Bank Limited of Rs. Nil (31 March 2017: Rs. 1500.00 million; 01 April 2016: Rs. 1500.00 million) for term loan facility and effective guarantee is Rs. Nil including interest (31 March 2017: Rs. 1476.91 million; 01 April 2016: Rs. 1515.48 million).

g) To RBL Limited of Rs. 1812.50 million (31 March 2017: Rs. Nil; 01 April 2016: Rs. Nil) for term loan facility and effective guarantee is Rs. 1782.50 million including interest (31 March 2017: Rs. Nil; 01 April 2016: Rs. Nil).

II Outstanding guarantees furnished by banks on behalf of the Company is Rs. Nil (31 March 2017: Rs. Nil; 01 April 2016: Rs. 0.50 million).

B) Claims against Company not acknowledged as debt*:

Claims/Demands in respect of which proceeding or appeals are pending and are not acknowledged as debts on account of:

12. Commitments as at year end

a) Capital Commitments:

Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs. Nil (31 March 2017: Rs. Nil; 1 April 2016: Rs. Nil) [Advances Rs. Nil (31 March 2017: Rs. Nil; 1 April 2016: Rs. Nil)].

b) Leases

i) The Company’s significant operating lease arrangements are in respect of premises (residential, offices, godowns, vehicles etc.). These leasing arrangements, which are cancellable, range between 11 months and 3 years generally and are usually renewable by mutual agreeable terms. The aggregate lease rentals have been charged as expenses.

ii) The Company has operating lease arrangements in respect of vehicles which are cancellable, range between 2 years and 5 years. The aggregate lease rentals payable are charged as expenses. Rental expenses recognized under such leases amounting to Rs. 0.14 million (31 March 2017: Rs. 0.18 million) has been included under vehicle running and maintenance expense in note 27.

13. Employee Stock Option Scheme

In terms of approval of members accorded and in accordance with SEBI (ESOP & ESPS) Guidelines, 1999, the Parent Company constituted “JIL Employees Stock Option Scheme, 2013 (Scheme 2013)” for specified categories of employees and directors of the Company, its subsidiaries and holding companies. Under the Scheme 2013, up to 590000 stock options can be issued to eligible directors (other than promoter directors, independent directors and nominee directors of the Company/subsidiaries/holding companies) and other specified categories of employees of the Company/subsidiaries/holding companies. The options are to be granted at market price. As per SEBI Guidelines, the market price is taken as the closing price on the day preceding the date of grant of options, on the stock exchange where the trading volume is the highest.

Each option, upon vesting, shall entitle the holder to subscribe 1 (one) fully paid equity share of Rs. 10 of the Company. 20% of the options shall vest on first anniversary of the grant date, subsequent 30% shall vest on second anniversary and balance 50% of the options shall vest on the third anniversary of the grant date.

The Company has constituted a Compensation Committee, comprising of a majority of independent directors. This Committee is fully empowered to administer the Scheme 2013.

Expenses arising from share-based payment transaction

The expenses arising from share-based payment transaction recognised in Standalone Financial Statements as part of Investments as at 31 March 2018 Rs. 2.37 million (31 March 2017: Rs. 2.09 million; 01 April 2016: Rs. 2.66 million).

14. First-time adoption of Ind AS Transition to Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The significant accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standard) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

14(A). Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

Ind AS optional exemptions

1. Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. This exemption can also been used for intangible assets covered by Ind AS 38 Intangible assets.

Accordingly, the Company had elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying date.

2. De-recognition of financial assets and liabilities

Ind AS 101 permits a first-time adopter to apply the de-recognition provisions of Ind AS 109 “Financial Instruments” prospectively for transactions occuring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity’s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

Ind AS mandatory exceptions

1. Estimates

An entity’s estimate in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless here is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for investments in preference shares (debt instruments) carried at FVPL in accordance with Ind AS at the date of transition as this was not required under previous GAAP.

2. Classification and measurement of financial assets

Ind AS 101 requires an equity to assess classification of financial assets on the basis of the facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition it retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Management of the financial assets accounted at amortised cost has been done retrospective except where the same is impracticable.

14(E). Statement of Cash Flows

Other than effect of certain reclassifications due to difference in presentation, there was no other material effect of cash flows from operating, financing, investing activities for all period presented.

Note 1: Fair valuation of investments

Under the previous GAAP, investments in equity instruments and debt instruments were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the vale of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, investments in subsidiaries are carried at cost except investments in preference shares (debt instruments) are measured at fair value. The resulting fair value changes with respect to investments in preference shares (debt instruments) designated as at FVPL. Accordingly, an amount of Rs. (9.96) million has been recognised as fair value gain/(loss) in to the value of investments as at 31 March 2017 (01 April 2016: Rs. (401.56) million) with corresponding increase/decrease in other equity and profit for the year ended 31 March 2017 by Rs. 391.60 million.

Note 2: Re-measurements of post-employment benefit obligations

Under Ind AS, re-measurements i.e. actuarial gains and losses and the return on plan assets on the net defined benefit obligation are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit before tax for the year ended 31 March 2017 increased by Rs. 0.01 million. There is no impact on the total equity as at 1 April 2016 and 31 March 2017.

Note 3: Employee share-based payment expense

Under the previous GAAP, the cost of equity-settled employee share based plan were recognised using the intrinsic value method. Under Ind AS, the cost of equity settled share based plan is recognised based on the fair value of options as at the grant date. Consequently, the investments in subsidiaries for the year ended 31 March 2017 increased by Rs. 2.09 million in relation to equity settled share based payment transaction with the employee of the subsidiary company, with the corresponding increase in share based payment reserve by Rs. 2.09 million as at 31 March 2017 (01 April 2016: Rs. 2.66 million).

Note 4: Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expenses that are not recognised in profit or loss but are shown in the statement of profit and loss as ‘Other comprehensive income’ includes re-measurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP.

Note 5: Exceptional items

Exceptional items have been reclassified to the respective heads to conform to Ind AS classification.