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Notes to Accounts of Jubilant Industries Ltd.

Mar 31, 2014

1. Corporate information

Jubilant Industries Limited (the 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 Bombay Stock Exchange Limited and the National Stock Exchange of India Limited.

2. Contingent liabilities & commitments (to the extent not provided for)

I) Claims against Company not acknowledged as debt:

Claims/Demands in respect of which proceeding or appeals are pending and are not acknowledged as debts, as at 31st March, 2014 is Rs. Nil (Previous Year: Rs. Nil), however, demands in respect of business transferred in earlier years to Jubilant Agri and Consumer Products Limited in terms of the Business Transfer Agreement and Scheme of Arrangement though the demands may be continuing in the name of the Company.

II) Guarantees:

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 31st March, 2014 are as under:

a) To Axis Bank Ltd of Rs. 700.00 million (Previous Year: Rs. 700 million) for working capital facility (including non fund based facility) and effective guarantee is Rs. 354.95 million (Previous Year: Rs. 454.84 million).

b) To Yes Bank Ltd of Rs. 400.00 million (Previous Year: Rs. 400 million) for working capital facility (including non fund basedfacility)andeffectiveguaranteeis Rs. 273.51 million (Previous Year: Rs. 209.41 million).

c) To IDBI Bank Ltd of Rs. 750.00 million (Previous Year: Rs. 750 million) for working capital facility (including non fund based facility) and effective guarantee is Rs. 278.00 million (Previous Year: Rs. 70.18 million).

d) To Corporation Bank of Rs. 1000.00 million (Previous Year: Rs. Nil) for working capital facility (including non fund based facility) and effective guarantee is Rs. 553.20 million (Previous Year: Rs. Nil)

e) To Yes Bank Ltd of Rs. 1200.00 million (Previous Year: Rs. 1200 million) for term loan facility and effective guarantee is Rs. 1200.00 million (Previous Year: Rs. 1200 million).

f) To Ratnakar Bank Ltd of Rs. 850.00 million (Previous Year: Rs. 1200 million) for term loan facility and effective guarantee is Rs. 807.50 million (Previous Year: Rs. 800 million).

III) Commitments

a) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs. Nil (Previous Year: Rs. Nil) [Advances Rs. Nil (Previous Year: Rs. Nil).

b) For lease commitment refer note 34.

3. Excise Duty under manufacturing expenses denotes provision on stock deferential and other claims/payments.

4. Employee Stock Option Scheme

In terms of approval of members accorded and in accordance with SEBI (ESOP &ESPS) Guidelines, 1999, the 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.

5. Disclosures of leasing arrangements

I) Operating lease: The Company''s significant operating lease arrangements are in respect of premises (residential, offices, godowns 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.

6. Current tax includes Rs. 1.07 million (Previous Year: Rs. Nil) related to previous years.

7. Related Party Disclosures

1) Related parties where control exists:

Subsidiaries:

Jubilant Agri And Consumer Products Limited.

2) Other related parties with whom transactions have taken place during the year:

a) Key Management Personnel: Mr. Videh Kumar Jaipuriar* (Managing Director)

* He was appointed as managing director without remuneration w.e.f. March 1, 2013 for a period of three years and he is getting remuneration from Jubilant Agri and Consumer Products Limited, a wholly owned subsidiary of the Company, as its Whole-time Director.

b) Enterprise over which directors and major shareholders of the Company have substantial influence: Jubilant Life Sciences Limited

c) Others: Pace Marketing Specialities Limited Officer''s Superannuation Scheme (Trust), VAM Employees Provident Fund Trust.

8. Value of imports calculated on CIF basis

Value of imports calculated on CIF basis for the year ended 31st March, 2014 is Rs. Nil (Previous Year: Rs. Nil, excluding transaction for Jubilant Agri and Consumer Products Limited (JACPL) during the period where business was run by the Company on behalf of JACPL as Trust as per Business Transfer Agreement).

9. Expenditure in foreign currency

Expenditure in foreign currency for the year ended 31st March, 2014 is Rs. Nil (Previous Year: Rs. Nil, excluding transaction for Jubilant Agri and Consumer Products Limited (JACPL) during the period where business was run by the Company on behalf of JACPL as Trust as per Business Transfer Agreement).

10. Earnings in foreign exchange

Earnings in foreign exchange for the year ended 31st March, 2014 is Rs. Nil (Previous Year: Rs. Nil, excluding transaction for Jubilant Agri and Consumer Products Limited (JACPL) during the period where business was run by the Company on behalf of JACPL as Trust as per Business Transfer Agreement).

11. Amounts remitted in foreign currency during the year on account of dividend Amounts remitted in foreign currency on account of dividend during the year ended 31st March, 2014 is Rs. Nil (Previous Year: Rs. Nil).

12. Previous year''s figures have been regrouped/ reclassified wherever necessary to correspond with the current year''s classification/ presentation.


Mar 31, 2013

1. The Board approved a Business Transfer Agreement (BTA) between the Company and Jubilant Agri and Consumer Products Limited (JACPL), a wholly owned subsidiary of the Company. The BTA became effective on 1st March, 2013 upon receipt of consent of the members of the Company.

Pursuant to the said BTA, the Company has transfered its Vinyl-Pyridine Latex ("VP Latex") and Solid Poly Vinyl Acetate ("Solid PVA") business to JACPL on a going concern basis by way of slump sale, with effect from commencement of business hours of 1st April, 2012. JACPL has discharged the purchase consideration amounting to Rs.974.80 million by issuing 10% Non-cumulative redeemable preference shares.

The results for the year ended 31st March, 2013 are after giving the effect of the BTA and accordingly, not comparable with previous year.

The effect of the transaction on the accounts of the Company as at 1st April, 2012 is set out below:

2. Contingent Liabilities & Commitments (to the extent not provided for) I) 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:

*Excluding demands in respect of business transferred to Jubilant Agri and Consumer Products Limited in terms of the Business Transfer Agreement (Previous Year: Scheme of Arrangement) though the demands may be continuing in the name of the Company.

II) Guarantees:

a) The Company has given corporate guarantee on behalf of its wholly owned subsidiary, Jubilant Agri and Consumer Products Limited to secure fnancial facilities granted by banks, details for guarantees as at 31st March, 2013 are as under:

i) To Axis Bank Limited of Rs.700.00 million for working capital facility and effective guarantee is Rs.47.32 million. ii) To Yes Bank Limited of Rs.400.00 million for working capital facility and effective guarantee is Rs.76.21 million. iii) To IDBI Bank Limited of Rs.750.00 million for working capital facility and effective guarantee is Rs.70.18 million. iv) To Ye s Bank Limited of Rs.1200.00 million for working capital facility and effective guarantee is Rs.1200.00 million. v) To Ratnakar Bank Limited of Rs.1200.00 million for working capital facility and effective guarantee is Rs.800.00 million.

b) Outstanding guarantees furnished by banks on behalf of the Company/by the Company including in respect of Letters of Credit is Rs. Nil (Previous Year: Rs.319.81 million).

c) Others:

Liability in respect of bills discounted with banks is Rs. Nil (Previous Year: Rs.41.79 million).

II) Commitments

a) Capital Commitments

Estimated amount of contracts remaining to be executed on capital account (net of advances) Rs. Nil (Previous Year: Rs.6.54 million) [Advances Rs. Nil (Previous Year: Rs.0.30 million)].

b) For lease commitment refer note 38.

3. Micro and Small Business Entities

There are no micro and small enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2013. The information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) has been determined to the extent such parties have been identifed on the basis of information available with the Company.

Dues to micro and small enterprises have been determined to the extent such parties have been identifed on the basis of information collected by the management. This has been relied upon by the auditors.

4. Excise Duty under manufacturing expenses denotes provision on stock deferential and other claims/payments.

5. Employee Stock Option Scheme

In terms of approval of members accorded and in accordance with SEBI (ESOP &ESPS) Guidelines, 1999, the Company constituted "JIL Employees Stock Option Scheme, 2013 (Scheme 2013) for specifed 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 specifed 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 frst 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.

The Company has not granted any option to its directors or employees upto 31st March, 2013.

Certain employees of the Company, who were previously employed with Jubilant Life Sciences Limited and whose service were transferred to this Company in term of the Scheme of Amalgamation & Demerger (2010) and were granted Stock Options under Jubilant Employee Stock Option Scheme (ESOP) 2005 of Jubilant Life Sciences Limited, are entitled to certain number of shares of the Company which shall be transferred by the "Jubilant Employee Welfare Trust" (the Trust) as per the said Scheme. Such transfer of shares by the Trust has no fnancial implications in the fnancial books of the Company.

6. Disclosures of leasing arrangements

I) Operating lease: The Company''s signifcant operating lease arrangements are in respect of premises (residential, offces, godowns 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) Assets acquired under fnance lease:

The Company has taken vehicles under fnance lease. Future minimum lease payments and their present values under fnance leases as at 31st March, 2013 are as follows:

a) Previous year fgures are given in parenthesis.

b) There is no element of contingent rent or sub lease payments. Company has option to purchase the assets at the end of the lease term. There are no restrictions imposed by these lease arrangements regarding dividend, additional debt and further leasing.

7. The bottling unit of the Company situated at Nira holds a potable liquor license for Indian Made Foreign Liquor (IMFL) and the same is bottling IMFL on the order of another company for bottling fee.

The turnover of IMFL Business, which was accounted for on net economic beneft principle earlier, has now been accounted for on gross basis. However, there is no fnancial impact due to this change.

a) Previous year fgures are given in parenthesis.

b) Provision for excise duty represents the excise duty on closing stock of fnished goods and also in respect of written off/ provision of write down of inventory.

8. Derivatives

a) The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency exposures relating to the underlying transactions and frm commitments. The Company does not enter into any derivative instruments for trading and speculative purposes.

9. Discontinuing operations

The Board of Directors of the Company had decided to discontinue its operation relating to Application Polymer Division (APD) in February, 2011 and to realize the assets and pay off its liabilities in due course.

However consequent to Business Transfer Agreement the opening assets and liabilities of discontinuing operations have been transferred to Jubilant Agri and Consumer Products Limited, a wholly owned subsidiary of the Company.

10. Employee benefts have been calculated as under: (A) Defned contribution plans

a) Provident fund*

b) Superannuation fund

(B) Defned beneft plans

a) Compensated absences and gratuity

In accordance with Accounting Standard 15, an actuarial valuation has been carried out in respect of gratuity and compensated absences. The discount rate assumed is 8% 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 and mortality table is as per IALM (1994-96).

The estimates of future salary increases, considered in actuarial valuation 5% take account of infation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

b) Provident fund

The Guidance on implementation of AS 15, Employee Benefts (Revised 2005) issued by Accounting Standard Board (ASB) states that benefts involving provident funds, which require interest shortfall to be compensated, are to be considered as defned beneft plans. The actuary has worked out a liability of Rs.9.67 million (Previous Year: Rs.8.04 million) likely to arise towards interest guarantee. The Trust is managing common corpus of some of the group companies. The total liability of Rs.9.67 million (Previous Year: Rs.8.04 million) as worked out by the actuary has been allocated to each entity based on the corpus value of each entity as on 31st March 2013. Accordingly,liability of Rs. Nil (Previous Year: Rs.(0.06) million) has been allocated to the Company and Rs. Nil (Previous Year: Rs.(0.06) million) has been charged to Statement of Proft and Loss during the year. The Company has contributed Rs.0.09 million (Previous Year: Rs.3.87 million) to provident fund for the year.

11. Segment reporting

i) The Company operates under one reportable segment viz. IMFL (Indian Made Foreign Liquor).

ii) In respect of secondary segment information, the Company has identifed its geographical segments as:

a. With in India, and

b. Outside India.

45. Related party disclosures

1) Related parties where control exists: Subsidiaries: Jubilant Agri And Consumer Products Limited.

2) Other related parties with whom transactions have taken place during the year:

a) Key management personnel: Mr. Videh Kumar Jaipuriar (Managing Director).

b) Enterprise over which directors and major shareholders of the Company have substantial infuence: Jubilant Life Sciences Limited, Jubilant Life Sciences (Shanghai) Ltd. China, Jubilant Life Sciences (USA) Inc. USA., Jubilant Enpro Private Limited, Enpro Oil (P) Limited

c) Others: Pace Marketing Specialities Limited Offcer''s Superannuation Scheme (Trust), VAM Employees Provident Fund Trust, VAM Offcers Superannuation Trust, Jubilant Bhartia Foundation.

12. Previous year''s fgures have been regrouped/ reclassifed wherever necessary to correspond with the current year''s classifcation/ presentation.

 
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