JBF Industries

The Directors have pleasure in presenting the Twenty Sixth Annual
 Report together with the Audited Accounts of the company for the
 financial year ended on 31st March, 2008.
 
 FINANCIAL RESULTS
 
                                                        [Rs.in crores]
 
                                      Year ended on      Year ended on
 Particulars                       31st March, 2008.  31st March, 2007.
                                          [Audited]          [Audited]
 
 Turnover & Other Income                    2161.28           1,491.01
 
 Profit before Depreciation, 
 Impairment & Tax                            213.80             157.12
 
 Less: Depreciation & Impairment              45.73              36,56
 
 Profit before Tax                           168.07             120,56
 
 Less: Provision for Current Taxation         23.84              13.27
 
 Add: MAT Credit Entitlement                    -                 1.05
 
 Less: Provision for Deferred Tax              5.28              27.38
 
 Less: Provision for Fringe Benefit Tax        0.22               0.19
 
 Less: Prior period Adjustments               (0.02)              0,18
 
 Net Profit for the year                     138.75              80.59
 
 Profit/(Loss)brought forward 
 from previous year                          115.98              58.15
 
 Surplus available for appropriations        254.73             138.74
 
 Less: Transfer to General Reserve            14.00               8.10
 
 Less: Proposed Dividend on Equity Shares      9.34              12,23
 
 Less: Tax on Proposed Dividend                1,59               2.08
 
 Less; Dividend paid on 
 Equity Shares Issued on                       1.17               0.31
 
 Conversion of FCCBs
 
 Less: Corporate Dividend Tax                  0.20               0.04
 
 Balance of Profit / [Loss] carried to 
 Balance Sheet                               228.43             115.98
 
 DIVIDEND
 
 The Board of Directors has recommended dividend @15% i.e. Rs.  1.50
 (Rupee One and Paise Fifty only) per share, on the Equity Share Capital
 of the Company. Dividend will be paid to equity shareholders if
 approved by members at the Annual General Meeting.
 
 Based on High Court Order of merger of Microsynth Fabrics (India) Ltd.
 (MFIL), with the Company, 182450 equity shares of the Company will be
 issued to the share holder of MFIL. These shares, issued before the
 date of book closure, will eligible for the dividend.
 
 The equity shares issued on conversion of FCCB before the date of book
 closure will be considered for the payment of dividend.
 
 DIRECTORS
 
 Mr B R Gupta, Mr. P R Srinivasan and Mr. Sunil Diwakar retire by
 rotation and being eligible, offers themselves for re-appointment Mr. N
 Balasubramanian, Additional Independent Director, holds office till the
 date of this Annual General Meeting.
 
 The Company has received notices from the members under Section 257,
 signifying their intention to propose Mr. N Balasubramanian as their
 candidate for the office of the Director. Resolution in this regard has
 been included in the notice for approval of members.
 
 Based on request letter from Life Insurance Corporation of India (LIC),
 Mr. Vinay Sah, was appointed on Board of Directors of the Company as
 Nominee Director (LIC) on 18th November, 2008, in place of Mr. Sadanand
 Pandey. Resolution in this regard has been included in the notice for
 approval of members.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 The Management Discussion and Analysis forms part of the Directors
 Report and is annexed hereto.
 
 ACHIVEMENTS
 
 Performance
 
 The overall production of Polyester Chips during the year has increased
 from 2,43,129 MT in 2007-08 to 3,40,967 MT in 2008-09, reflecting an
 increase of 40%.
 
 Net sale of the Company also increased from Rs. 1479.58 Crores in
 2007-08 to Rs.2149.92 Crores in 2008-09, reflecting an increase of 45%.
 The overall net profit of Company rose from Rs.80.77 Crores 2007-08 to
 Rs.138.74 Crores in 2008-09, reflecting an increase of 72%. The profit
 after tax also shows an improvement from 5.46% of sales in 2007-08 to
 6.45% of sales in 2008-09.
 
 Expansion
 
 The erection of Chips plant at Sarigam, Gujarat, has been completed.
 The plant will have a production capacity of 216,000 MT per annum of
 Polyester Chips and will be able to produce variety of Chips such as
 Bottle Grade, Bright, Film grade etc.
 
 CAPITAL STRUCTURE
 
 During the year the Company has converted 1020 Foreign Currency
 Convertible Bonds (FCCB) worth USD 10.20 million, into 51,84,998 equity
 shares on 16th August, 2007 & 28th August, 2007.
 
 Promoter Group Company M/s. Vaidic Resources Private Limited has
 exercised the option of warrant conversion for 25,00,000 warrants
 allotted to them on 31st July, 2007. On conversion of these warrants
 equal number of equity shares were issued in the name of M/s. Vaidic
 Resources Private Limited, at Rs. 122.50 per share, on 26th March,
 2008.  Both the conversions resulted the increase in issued capital
 upto Rs.62,05,99,980.
 
 SUBSIDIARY COMPANY
 
 During the year the Company has transferred 66254 equity shares of JBF
 RAK FZ LLC to JBF Global Pte Ltd., Singapore. In exchange of these
 shares JBF Global Pte Ltd., has issued 30831003 equity shares in the
 name of the Company, resulting, JBF RAK FZ LLC becoming subsidiary of
 JBF Global Pte Ltd., Singapore Audited Accounts of JBF Global Pte Ltd.
 and JBF RAK FZ LLC and Statements required under Section 212 of
 Companies Act, 1956, regarding the subsidiary company forms part of
 this Annual Report.
 
 RISK MANAGEMENT
 
 Risk Management is the systematic process of understanding, measuring,
 controlling and communicating organisations risk exposures while
 achieving its objectives. The Board of Directors regularly review risks
 and threats and takes suitable steps to safeguard its interest.
 
 INSURANCE
 
 All the properties of the Company including buildings, plant and
 machinery and stocks have been adequately insured.
 
 FIXED DEPOSITS
 
 During the year Company has not accepted any Fixed Deposits and as
 such, no amount of principal or interest is outstanding as on the date
 of Balance Sheet.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 In compliance with Section 217(2AA) of the Companies Act, 1956, the
 Directors report that:
 
 1.  In the preparation of the Annual Accounts, the applicable
 Accounting Standards have been followed along with proper explanation
 relating to Standard Auditing Practices ;
 
 2.  Such Accounting policies have been selected and applied
 consistently and judgements and estimates have been made that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company for the year ended on 31st March, 2008.
 
 3.  Proper and sufficient care has been taken for the maintenance of
 the adequate accounting records in accordance with the provisions of
 the Companies Act, 1956 for safeguarding the assets of the Company and
 for preventing & detecting fraud and other irregularities.
 
 4.  The annual accounts have been prepared on a Going Concern Basis.
 
 MERGER
 
 The certified copy of the order of High Court, Bombay, dated 23rd
 October, 2008, approving Scheme of Amalgamation alongwith Form No.21
 have been filed with Registrar of Companies on 11th November, 2008.
 
 Audited Accounts of the Company for the year ended 31st March, 2008,
 have been restated accordingly.
 
 As per approved Scheme of Amalgamation 182450 equity shares will be
 issued to the shareholders of Microsynth Fabrics (India) Ltd., as a
 part of consideration.
 
 FOREIGN EXCHANGE TRANSACTIONS
 
 In order to hedge the companys exposure to foreign exchange and
 interest rate, the company entered into derivative contracts. The
 marked to market loss in respect of the above derivative contracts as
 on 31st March 2008 was Rs. 93.40 crores, which was not provided in the
 Books of Account, on which Auditor had commented.
 
 The management was of the view that the above loss is notional in
 nature and may be payable only if loss conditions are triggered after
 June 2010. Moreover, in June 2008 the company has unwounded one of the
 above hedge contracts having marked to market loss of Rs. 71.21 crore
 as on 31st March 2008 by incurring a net loss of only Rs. 1.07 crore.
 
 The condition of actual loss can trigger only after June 2010 for the
 balance derivative transaction considering the totality of the
 situation.
 
 The management was strongly in the view that the disclosure be made
 about MTM loss of derivative by way of a note to the Financial Results
 instead of making provision of such notional loss in the accounts.
 
 CORPORATE GOVERNANCE
 
 To comply with conditions of Corporate Governance, pursuant to Clause
 49 of the Listing Agreements with the Stock Exchanges, a Management
 Discussion and Analysis Statement, Corporate Governance Report and
 Auditors Certificate, are included in the Annual Report.
 
 Code of Conduct for Directors and Employees of the Company, has been
 communicated to them and a copy has been pasted on the web site of
 Company.
 
 AUDITORS
 
 M/s Chaturvedi & Shah, Chartered Accountants, Statutory Auditors of the
 Company, hold office until the conclusion of the forthcoming Annual
 General Meeting and are eligible for re-appointment.
 
 The Company has received a certificate from the proposed Auditors to
 the effect that their appointment, if made, would be within the
 prescribed limits under Section 224(1 B) of the Companies Act, 1956 and
 also that they are not otherwise disqualified within the meaning of the
 sub-section 3 of section 226 of the Companies Act, 1956.
 
 COST ACCOUNTING RECORDS
 
 The Company has maintained cost accounting records in respect of
 manufacture of Polyester Chips and Partially Oriented Yarn (POY) as
 required for the year ended 31st March, 2008.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNING AND OUTGO
 
 Company has commissioned power plant of capacity 6 MW, as a result of
 which substantial saving in energy costs have accrued.  Further, this
 has resulted in Company utilising stable power supply leading to higher
 production efficiency.
 
 A Statement containing necessary information as required under Section
 217(e) of the Companies Act, 1956, read with the Companies (Disclosure
 of Particulars in the Report of the Board of Directors) Rules, 1988, is
 annexed to this report as an Annexure A to the Directors Report.
 
 PARTICULARS OF EMPLOYEES
 
 The information required under the provisions of Section 217(2A) of the
 Companies Act, 1956, read with Companies (Particulars of Employees)
 Rules, 1975, and forming part of the Report is annexed hereto as an
 Annexure B to the Directors Report.
 
 FOREIGN EARNINGS/OUT GOINGS
 
 Foreign Exchange earnings by way of exports and interest were Rs.
 275.18 crores and Rs.1.96 crores respectively against outgo of
 Rs.377.00 crores on import of raw materials and others. Rs.7.40 crores
 of foreign exchange was invested in imported capital equipments for the
 growth of the Company.
 
 APPRECIATION
 
 The Board of Directors would like to express their grateful
 appreciation for the assistance, support and co-operation received from
 the Financial Institutions, Banks, Government Authorities and
 Shareholders during the year under review.
 
 The employees of the Company contributed significantly in achieving the
 results. The Directors take this opportunity of thanking them and hope
 that they will maintain their commitment to excellence in the years to
 come.
 
 
                           For and on behalf of the Board of Directors
 
                                                      BHAGIRATH C ARYA
                                                              CHAIRMAN
 
 Place: Mumbai
 Date : 18th November, 2008.