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Directors Report of Pioneer Distilleries Ltd.

Mar 31, 2016

The Directors have pleasure in presenting the Annual Report of your Company and the audited accounts for the year ended March 31, 2016.

FINANCIAL RESULTS

The Summary of Financial Performance of the Company for the year 2015-16 is as under:

(Rs. in Lakhs)

Particulars

2015-16

2014-15

Net Sales

14,288.02

15,043.37

Add: Other income

8,355.13

3,201.33

Add: Increase / (Decrease ) in stocks

(54.73)

1,664.74

Total Income

22,588.42

19,909.44

Less: Expenditure

14,380.57

16,966.74

Profit / (Loss) before depreciation, interest and tax

8,207.85

2,942.70

Less: Interest

2,231.25

3,923.84

Less: Depreciation

2,552.76

2,386.73

Profit / (Loss) before Tax

3,423.84

(3,367.88)

Provision for Taxation :

- Tax relating to earlier years

0

(1,203.36)

Profit / (Loss) after Tax

3,423.84

(2,164.52)

Add: Balance brought forward from previous year

(12,015.69)

(8,667.67)

Balance carried to Balance Sheet

(8,591.85)

(12,015.69)

DIVIDEND

In view of the Accumulated Losses, your Directors do not recommend any Dividend on the equity shares of the Company.

TRANSFER TO RESERVE

No amount is proposed to be transferred to reserves during the year under review.

BOARD MEETINGS

During the year under review, six Board Meetings were held. The details of the same are covered in the Corporate Governance Report.

STATE OF COMPANY’S AFFAIRS

There have been no significant or material orders passed by the regulators or Courts or Tribunals impacting the going concern status and the company’s operations in future.

Performance of the Company

The Company has achieved a Turnover of Rs.14,288.02 Lakhs for the financial year ended March 31, 2016 against the Turnover of Rs.15,043.37 Lakhs as on March 31, 2015. The Profit before tax of your Company during the financial year amounted to Rs.3,423.84 Lakhs. The Company has shown improved profit performance during the year as can be seen from the above results. The turnover of the Company was impacted due to shortage of water during the year. The Company is taking steps to minimize the impact on the Company due to any ongoing or future shortage of water.

DEPOSITORY SYSTEM

The trading in the equity shares of your Company is under compulsory dematerialization mode. As on March 31, 2016, equity shares representing 92.44 % of the equity share capital are in dematerialization form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail of the facility of dematerialization of the Company’s shares.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors has appointed Mr. B.V. Krishna Reddy as Managing Director of the Company with effect from October 01, 2015 for a period of two years.

Ms. Junia Sebastian was appointed as an Additional Director of the Company in terms of Section 161 of the Companies Act, 2013, in the capacity of Independent Director, with effect from April 20, 2016. The Company has received notice under Section 160 of the Companies Act, 2013 in writing from a member signifying it’s intention to propose the candidature of Ms. Junia Sebastian as an Independent Director of your Company for a period of five years. Ms. Junia Sebastian will hold office till the date of the forthcoming AGM.

Mr. Vinod Rao appointed as a Director and Chairman of the Company on May 20, 2015, tendered his resignation as Director and Chairman of the Company with effect from October 14, 2015 and the Directors place on record their appreciation for the valuable services rendered by Mr. Vinod Rao during his tenure as Director and Chairman of your Company.

As per declarations received, no Director of the Company is disqualified to be appointed as a Director of any Public Limited Company in terms of Section 164(2) of the Companies Act, 2013.

Mr. Gopal Kothari was appointed as Chief Financial Officer (CFO) of the Company w.e.f. October 01, 2015 in place of Mr. Debasis Chaudhuri who resigned as CFO of the Company on September 30, 2015.

DECLARATION FROM INDEPENDENT DIRECTORS

In terms of Section 149(7) of the Companies Act, 2013, Independent Director(s) of the Company has/have submitted a declaration that they meet the criteria of Independence.

FAMILIARIZATION PROGRAMME UNDERTAKEN FOR INDEPENDENT DIRECTORS

The details of programmes for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the link: http:// www.pioneerdistilleries.com/policies.php.

REMUNERATION POLICY

The ratio of the remuneration of each director to the median employee’s remuneration and other details during the financial year 2015-16, in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Corporate Governance Report and in form MGT 9, that is attached herewith and marked as Annexure

A. As stated in the Corporate Governance Report, sitting fees are paid to Independent Directors for attending Board/Committee meetings. They are also entitled to reimbursement of actual travel expenses, boarding and lodging, conveyance and incidental expenses incurred in attending such meetings.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Act, and Regulation 17 of the SEBI Listing Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the performance of its Directors individually, as well as that of Board Committees. The evaluation process considered the effectiveness of the Board and the Committees with special emphasis on the performance and functioning of the Board and the Committees. The evaluation of the Directors was based on the time spent by each of the Board Members, core competencies, expertise and contribution to the effectiveness and functioning of the Board and the Committees.

MATERIALCHANGESAND COMMITMENTS

As discussed earlier shortage of water at the factory premises resulted in the production and sales at the factory being materially affected during the year. Other than this event, there are no material changes and commitments affecting the financial position of your Company between the end of the financial year of the Company to which the financial statements relate and on the date of this report.

COMMITTEES

The Companies Act, 2013 provides for the formation and duties of various committees of the Board. The Company has in place the required Committees with specific defined roles, duties and responsibilities.

Details of various Committees, meetings held and attendance at the various Committee meetings are given in the Corporate Governance Report.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

There are no loans given, investments made, guarantees given and securities provided by the Company which are covered under the provisions of the Section 186 of the Companies Act, 2013.

INTERNAL FINANCIAL CONTROLS

The Board considered material placed before it and after reviewing the confirmation from external parties and reviewing the effectiveness of the policies and procedures adopted by the Company for ensuring orderly and efficient conduct of its business, including adherence to Company’s policy, safeguarding its assets, prevention and detection of frauds and errors and completeness of accounting records and timely preparation of financial statements, the Board has satisfied itself that the Company has laid down internal financial controls, commensurate with size of the Company and that such internal financial controls are broadly adequate and are operating effectively. The certification by the auditors on internal financial control forms part of the audit report.

AUDITORS

M/s. Lodha & Co, Chartered Accountants, the Auditors of your Company, hold office till the conclusion of the forthcoming Annual General Meeting (“AGM”) of the Company and have given their consent for re-appointment. Pursuant to provisions of Section 139(2) of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules 2014, M/s. Lodha & Co are eligible for appointment as Auditors for a further period of five consecutive years. Your Company has received a written confirmation from M/s. Lodha & Co, Chartered Accountants to the effect that their appointment, if made, would satisfy the criteria provided in Section 141 of the Companies Act, 2013 for their appointment. The Board recommends the re-appointment of M/s. Lodha & Co, Chartered Accountants as the Auditors of the Company from the conclusion of the ensuing AGM till the conclusion of the 28th AGM subject to the remuneration as may be recommended by the Audit Committee in consultation with the Auditors.

SECRETARIALAUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Mr. Sudhir Hulyalkar, Company Secretary in Practice to undertake the Secretarial Audit of the Company for the Financial Year 2015-16. The Secretarial Audit Report is given as Annexure B forming part of this Report.

BOARD OF DIRECTORS’ RESPONSES TO OBSERVATIONS, QUALIFICATIONS AND ADVERSE REMARKS IN SECRETARIAL AUDIT REPORT

The Secretarial Auditor has made the following observations in his report:

1. The Company did not have minimum number of independent directors as required under Section 149(4) of the Act read with Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and also as required under Clause 49 of the erstwhile Listing Agreement and Regulation 17 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

As a result, the Audit Committee, the Nomination and Remuneration Committee were not constituted with the composition of its members as required under Section 177and Section 178 of the Act and Rules made there under and also Clause 49 of the erstwhile Listing Agreement and Regulation 18 and Regulation 19 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Since there was only one Independent Director on the Board, there was also no meeting of Independent Directors held during the year as required under Clause VII (1) of Schedule IV of Companies Act, 2013 read with Secretarial Standard -1 and also as required under Clause 49 of erstwhile Listing Agreement, Regulation 25 (3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Due to this, the Company was not having optimum combination of Executive and Non-executive directors till the appointment of the Managing Director and an independent director made on September 30, 2015 and April 20, 2016 respectively, as required under Clause 49 of erstwhile Listing Agreement, Regulation 17 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Directors’ Response: The Company has appointed Ms. Junia Sebastian, as Independent Director on April 20, 2016 and as member of the Audit Committee and Nomination and Remuneration Committee on April 27, 2016. With this appointment the requirement of minimum number of Independent Directors and composition of Audit Committee and Nomination and Remuneration Committee as per the provisions of the Companies Act, 2013 and the SEBI Listing Regulations have been met.

In view of the absence of required Independent Directors, meeting of Independent Directors was not held. The Company will comply with the same during the year 2016-17.

2. In one instance, there was a gap of more than 4 months between two consecutive meetings of Audit Committee as against the requirement of frequency of such meetings during a year under Clause 49 of erstwhile Listing Agreement.

Directors’ Response: No Audit Committee meeting was held between November 11, 2014 and July 22, 2015, since the then Independent Directors on the Board resigned, resulting in the need to reconstitute the Audit Committee as per the provisions of the Companies Act, 2013 and the Listing Agreement. Since appointment of Independent Directors and replacement of nominee Directors of United Spirits Limited (holding company of the Company) took time, we held the Audit Committee meeting on July 22, 2015 as soon as the Board / Audit Committee were reconstituted.

RISKMANAGEMENT

The Company has a Risk Management framework. Risk evaluation by the management is an ongoing process within the organization and is periodically reviewed by the Board of Directors.

WHISTLE BLOWER MECHANISM

The Company promotes ethical behaviour in all its business activities and has put in place a mechanism for reporting illegal or unethical behaviour. The Company has a Whistle blower mechanism under which the employees and Directors are free to report violations of applicable laws and regulations and the Code of Conduct. During the year under review, no employee was denied access to the Audit Committee. The Whistle Blower Mechanism of the Company can be accessed on the website at the following link: http://pioneerdistilleries.com/ispeak.php.

RELATED PARTY TRANSACTIONS

The Company has formulated a Policy on dealing with Related Party Transactions (RPTs). The Policy is disclosed on the website of the Company at the web link: http://www.pioneerdistilleries.com/policies.php. All transactions entered into with Related Parties as defined under the Companies Act, 2013 and Regulation 23 of the SEBI Listing Regulations during the year were in the ordinary course of business and at an arm’s length basis. There are no materially significant RPTs made by the Company with promoters, directors, key managerial personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The details of the RPTs in Form AOC-2 is enclosed and marked as Annexure C. In accordance with Accounting Standard 18, the RPTs are disclosed under Note No.22 of the Notes to the Accounts.

CORPORATE GOVERNANCE REPORT

A report on the Corporate Governance is annexed separately as part of this report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report is annexed separately as a part of this report.

FIXED DEPOSITS

The Company has not accepted any deposits from public during the year.

LISTING OF EQUITY SHARES OF THE COMPANY

The Equity Shares of your Company continue to be listed with BSE Limited and National Stock Exchange of India Limited. The Annual Listing fees for the year 2016-17 have been paid to these Stock Exchanges.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A(5) and 205 C of the Companies Act, 1956, the Unclaimed Dividend, remaining unclaimed and unpaid for a period of more than 7 years, have been transferred to the Investor Education and Protection Fund.

Necessary compliance under Rule 3 of the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with Companies) Rules, 2012 have been followed.

Financial Year

Date of declaration

Amount Unclaimed/Unpaid

Due date for

as on 31.03.2016 (Rupees)

transfer

2008-09

30/09/2009

83,028

29/10/2016

2009-10

25/09/2010

295,809

24/10/2017

EXPLANATION TO THE QUALIFICATIONS IN AUDITOR’S REPORT

There are no qualifications or adverse remarks in the Auditor’s Report.

HUMAN RESOURCES

The Company has no employee in respect of whom Statement under Section 197(12) of the Companies Act, 2013, is required to be annexed.

CONSERVATION OF ENERGY, TECHNOLOGYAND FOREIGN EXCHANGE

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act is given in Annexure D to this Report.

EXTRACT OF THE ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013 an extract of the Annual Return in Form MGT-9 is given in Annexure E to this Report.

CORPORATE SOCIAL RESPONSIBILITY

Your Company is presently not required to spend any amount under Corporate Social Responsibility (CSR) due to the average net profit of the last three years being negative. However, the Company has still met its social objectives by spending on the following CSR activities, in the vicinity of the Company’s factory:

1) Support for starting Digital class room at Zilla Parishad School, Balapur (V) and at Bellur / Chincholi.

2) Support to Allur village for starting RO Plant. This has resulted in 1500 Families getting advantage of clean drinking water.

3) Cleaning of ponds at Chikana Village, which has allowed the pond to be filled up with rain water. The SDM / Deputy Collector Nanded has appreciated the efforts taken by your Company.

4) Completed road work from Allur Village to the Godavari River bank.

5) Arranged PAN-POI near Bus Stand for providing drinking water to travelers in summer for 3 months.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a policy on Prevention of Sexual Harassment at the Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been setup to redress complaints received regarding sexual harassment. No complaint was received by the Company during the year ended March 31, 2016.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies, Act, 2013, the Board of Directors state that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) appropriate accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year ended March 31, 2016;

(iii) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis;

(v) proper internal financial controls which are commensurate with the nature, size and complexity of its business have been followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(vi) the Company has a system of getting reports of compliances periodically from the unit and is also in the process of putting proper systems in place to ensure compliance with the provisions of all applicable laws so that such systems are adequate and operate effectively.

ACKNOWLEDGEMENT

Your Directors place on record their sincere appreciation for the continued support from employees, shareholders, customers, suppliers, Banks, Government of Maharashtra & Telangana and other business associates.

By Authority of the Board

Bangalore B.V. Krishna Reddy Mamta Sundara

August 25, 2016 Managing Director Director


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the Annual Report of your Company and the audited accounts I for the year ended March 31, 2014.

FINANCIAL RESULTS

The Summary of Financial Performance of the Company for the year 2013-14 is as under:

(Rs. in Lakhs) Particulars 2013-14 2012-13

Net Sales 12890.39 10362.99

Add: Other income 1688.80 2.35

Add: Increase /(Decrease ) in stocks (453.38) 722.78

Total Income 14125.81 11088.12

Less: Expenditure 13277.10 11861.67

Profit/(Loss) before depreciation, interest and tax 848.71 (773.55)

Less: Interest 1910.33 1030.44

Less: Depreciation 1067.91 927.34

Profit / (Loss) before Tax (2129.53) (2731.33) Provision for Taxation :

- Tax relating to earlier years 0 54.43

Profit / (Loss) after Tax (2129.53) (2785.76)

Add: Balance brought forward from previous year (6538.14) (3752.37)

Balance carried to Balance Sheet (8667.67) (6538.13)



DIVIDEND

In view of Loss, your Directors do not recommend any Dividend on the equity shares of the Company.

PERFORMANCE OF THE COMPANY

The Company has achieved a Turnover of Rs.12,890.39 Lakhs for the financial year ended March 31, 2014 I against the Turnover of Rs.10,362.99 Lakhs an increase of 24% over the previous year. The Loss before I tax of your Company during the financial year amounted to Rs.2,129.53 Lakhs.

This loss is mainly due to higher Input Cost, increase in interest cost on borrowings and non-availability I of good quality Molasses.

PROSPECTS

Keeping in view the emerging demand for Grain Based Alcohol, the Company has installed Grain Based facility. Plans are afoot to install a Dried Distillers Grains and Soluble (DDGS) facility for the Grain Spirit plant and to retrofit the 100 Kilo Litres Per Day (KLPD) primary distillery plant from atmospheric pressure to multi pressure to improve quality and recoveries.

The expansion would not only enable the Company to substantially increase the revenue, but also to meet the increased demand of Extra Neutral Alcohol (ENA) by United Spirits Limited, holding company of the Company.

While the Company continues to be a significant player in the ENA market, it continuously endeavors to make special efforts to tap new markets, apart from traditional markets. The Company sees a very good potential for growth in all the products in the coming years.

In view of further expansion plans / programme and diversification into value added products, your Company expects to report growth in the turnover and profitability in future.

EROSION OF ENTIRE NET WORTH

As reported last year, consequent upon the erosion of your Company''s entire net worth, a reference has been made to the Board for Industrial and Financial Reconstruction (BIFR) pursuant to Section 15 of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and the same has been registered with the BIFR. The BIFR, by order pronounced on February 8, 2014, has appointed the IDBI Bank Limited to conduct a Special Investigative Audit (SIA) as per the provisions of section 16(2) of SICA. The IDBI Bank Limited has appointed M/s.Dagliya& Company on April 25, 2014 to conduct the SIA ordered by BIFR and the SIA is in process.

OPEN OFFER TO THE PUBLIC SHAREHOLDERS OF THE COMPANY

During the year under review, Relay B.V. (as Acquirer) along with Diageo plc and United Spirits Limited (as persons acting in concert) has made an Open Offer, pursuant to Regulations 3(1), 4 and 5 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 to the public shareholders of the Company to acquire up to 2,466,168 equity shares, representing 18.42% of the current paid up capital of the Company at a cash price of Rs.64.02 per equity share. The total equity shares validly tendered by the public shareholders were 639,185 equity shares constituting 4.77% of the equity shares, which were acquired by United Spirits Limited. Consequently, the share holding of United Spirits Limited in the Company increased from 81.58% to 86.35%

MINIMUM PUBLIC SHAREHOLDING

Your Company is listed on BSE Limited, National Stock Exchange of India Limited and Pune Stock Exchange Limited. As per the listing requirements, your Company should have a minimum public shareholding of 25%. Your promoters are exploring the various possibilities of bringing down their shareholding from 86.35% to 75% before September 25, 2014.

DEPOSITORY SYSTEM

The trading in the equity shares of your Company is under compulsory dematerialization mode. As on August 01, 2014, equity shares representing 92.32% of the equity share capital are in dematerialization form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail of the facility of dematerialization of the Company''s shares.

DIRECTORS

As per the provisions of the Companies Act, 2013, Mr. PA. Murali, Director retires by rotation and being eligible, offers himself for re-appointment.

Mr. M.R. Doraiswamy Iyengar and Mr. CL. Jain, who were appointed as Directors of the Company liable for retirement by rotation under the Companies Act, 1956, in respect of whom the Company has received notices in writing from members proposing their candidature for the office of Director, are proposed to be appointed as Independent Directors not liable to retire by rotation, for 2 years from September 26, 2014 to September 25, 2016 pursuant to the provisions of Section 149 read with Schedule IV and other applicable provisions, if any, of the Companies Act, 2013.

As per declarations received, none of the Directors of the Company is disqualified to be appointed as a Director of any Public Limited Company in terms of Section 274(1)(g) of the Companies Act, 1956/ Section 164(2) of the Companies Act, 2013.

AUDITORS

M/s. Lodha & Co, Chartered Accountants, the Auditors of your Company, hold office till the conclusion of the forthcoming Annual General Meeting ("AGM") of the Company and have given their consent for re-appointment. Pursuant to provisions of Section 139(2) of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules 2014, M/s. Lodha & Co are eligible for appointment as Auditors for a further period of two consecutive years. Your Company has received a written confirmation from M/s. Lodha & Co, Chartered Accountants to the effect that their appointment, if made, would satisfy the criteria provided in Section 141 of the Companies Act, 2013 for their appointment. The Board recommends the re-appointment of M/s. Lodha & Co, Chartered Accountants as the Auditors of the Company from the conclusion of the ensuing AGM till the conclusion of the 23 rd AGM subject to the remuneration as may be recommended by the Audit Committee in consultation with the Auditors.

CORPORATE GOVERNANCE REPORT

A report on the Corporate Governance is annexed separately as part of this report along with a certificate of compliance from Auditors. Necessary requirements of obtaining certifications/declarations in terms of Clause 49 of the listing agreement with the stock exchanges have been complied with.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis Report is annexed and forms an integral part of the Annual Report.

FIXED DEPOSITS

The Company has not accepted any deposits from public during the year.

LISTING OF EQUITY SHARES OF THE COMPANY

The Equity Shares of your Company continue to be listed with BSE Limited, National Stock Exchange of India Limited and Pune Stock Exchange Limited. The Annual Listing fees for the year 2014-15 have been paid to these Stock Exchanges.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

As on date, no amount of dividend has remained unclaimed and unpaid for more than 7 years, which are required to be transferred to the Investor Education and Protection Fund, pursuant to the provisions of Section 205A (5) and 205C of the Companies Act, 1956.

Necessary compliance under Rule 3 of the Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012 have been followed.

HUMAN RESOURCES

The Company has no employee in respect of whom Statement under 217 (2A) of the Companies Act, 1956, is required to be annexed.

CONSERVATION OF ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

In accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, the required information relating to Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo is annexed.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the Section 217(2AA) of the Companies, Act, 1956, in relation to financial statements for year 2013-14, the Board of Directors reports that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) accounting policies have been selected and applied consistently and that the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of I affairs of the Company as at the end of the financial year and of the loss of the Company for the year ended March 31, 2014;

(iii) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of I the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT

Your Directors place on record their sincere appreciation for the continued support from employees, shareholders, customers, suppliers, Banks, Government of Maharashtra and other business associates.

By Authority of the Board

Bangalore PA. MURALI August 08, 2014 Chairman


Mar 31, 2013

The Directors have pleasure in presenting the Annual Report of your Company and the audited accounts for the year ended March 31, 2013.

FINANCIAL RESULTS

The Summary of Financial Performance of the Company for the year 2012-13 is as under:

(Rs. in Lakhs)

Particulars 2012-13 2011-12

Net Sales 10362.99 10445.25

Add: Other income 2.35 1.25

Add: Increase / (Decrease ) in stocks 722.78 (233.44)

Total Income 11088.12 10213.06

Less: Expenditure 11861.67 10520.13

Profit / (Loss) before depreciation, interest and tax (773.55) (307.07)

Less: Interest 1030.44 1292.36

Less: Depreciation 927.34 930.93

Profit / (Loss) before Tax (2731.33) (2530.36)

Provision for Taxation :

- Tax relating to earlier years 54.43

Profit / (Loss) after Tax (2785.76) (2530.36)

Add: Balance brought forward from previous year (3752.37) (1401.06)

Balance carried to Balance Sheet (6538.13) (3931.42)



DIVIDEND

In view of Loss, your Directors do not recommend any Dividend on the equity shares of the Company.

PERFORMANCE OF THE COMPANY

The Company has registered a Turnover of Rs.10362.99 Lakhs for the financial year ended March 31, 2013. The Loss before Tax of your Company during the financial year amounted to Rs.2731.33 Lakhs.

The Company has incurred losses mainly due to higher Input Cost and non availability of good quality Molasses.

PROSPECTS

Keeping in view the emerging demand for Grain Based Alcohol, the Company has installed Grain Based facility. Plans are afoot to install a Dried Distillers Grains and Solubles (DDGS) facility for the Grain Spirit plant and to retrofit the 100 KLPD primary distillery plant from atmospheric pressure to multi pressure to improve quality and recoveries.

The expansion would enable the Company to substantially increase the revenue.

In view of further expansion plans / programmes and diversification into value added products, your Company expects to report growth in the turnover and profitability in future.

EROSION OF ENTIRE NET WORTH

As reported last year, consequent upon the erosion of your Company''s entire net worth, a reference has been made to the Board for Industrial and Financial Reconstruction (BIFR) pursuant to Section 15 of Sick Industrial Companies (Special Provisions) Act, 1985 and the same has been registered with the BIFR.

DISINVESTMENT

United Spirits Limited (USL), holding company / promoters of the Company has divested 55,100 equity shares (0.41%) of the Company on October 23, 2012 through ‘Offer for Sale'' through Stock Exchange mechanism and with this promoters holding has come down from 81.99 % to 81.58 %. Your promoters are exploring the various possibilities of bringing down their holding to 75%.

DEPOSITORY SYSTEM

The trading in the equity shares of your Company is under compulsory dematerialization mode. As on May 03, 2013 equity shares representing 91.91 % of the equity share capital are in dematerialization form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail of the facility of dematerialization of the Company''s shares.

MEGA PROJECT STATUS

Your Company has been granted Mega Project status under Package Scheme of Incentives (PSI), 2007 by the State Government of Maharashtra vide their letter dated February 11, 2013 for the proposed expansion of Malt Spirit plant capacity from 12 Kilo Litres Per Day (KLPD) / 36.0 Lac Bulk Litres (BLS) per annum to 24 KLPD / 72.0 BLS per annum, bottling plant capacity of Indian Made Foreign Liquor (IMFL) from 0.6 Lac cases per month / 7.2 Lac cases per annum to 4.0 Lac cases per month / 48.0 Lac cases per annum and Extra Neutral Alcohol 160 KLPD / 480.0 Lac BLS per annum at the existing factory site at Balapur (V), Dharmabad, Nanded, Maharashtra. Your Company, therefore, is eligible for various incentives under PSI, 2007, inter alia, i). electricity duty exemption for a period of 15 years from the date of commencement of commercial production. ii). Industrial Promotion Subsidy (IPS) equivalent to 100% of eligible investments under PSI, 2007 made with in a period of 5 years from October 19, 2012.

DIRECTORS

Mr. S.G Ruparel ceased to be a Director with effect from February 11, 2013 on his demise. The Board of Directors express their profound grief and sorrow on the demise of Mr. S.G. Ruparel and place on record their deep appreciation of his valuable contribution during his tenure as a Director of your Company.

Mr. CL. Jain was appointed as an Additional Director on March 21, 2013 and will hold office in terms of Section 260 of the Companies Act, 1956 up to the date of the ensuing Annual General Meeting.

A Notice in writing has been received by your Company from a member signifying his intention to propose the appointment of Mr. C.L Jain as a Director at the ensuing Annual General Meeting.

Mr. Ashok Capoor, retire by rotation and being eligible, offers himself for re-appointment.

As per declarations received, none of the Directors of the Company is disqualified to be appointed as a Director of any Public Limited Company in terms of Section 274 (1) (g) of the Companies Act, 1956.

AUDITORS

M/s. Lodha & Co., Chartered Accountants, the retiring Auditors, are eligible for re-appointment at the ensuing Annual General Meeting and it is necessary to fix their remuneration.

CORPORATE GOVERNANCE REPORT

A report on the Corporate Governance is annexed separately as part of this report along with a certificate of compliance from Auditors. Necessary requirements of obtaining certifications / declarations in terms of Clause 49 of the listing agreement with the stock exchanges have been complied with.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis Report is annexed and forms an integral part of the Annual Report.

FIXED DEPOSITS

The Company has not accepted any deposits from public during the year.

LISTING OF EQUITY SHARES OF THE COMPANY

The Equity Shares of your Company continue to be listed with BSE Limited, National Stock Exchange of India Limited and Pune Stock Exchange Limited. The Annual Listing fees for the year 2013-14 have been paid to these Stock Exchanges.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

As on date, no amount of dividend has remained unclaimed and unpaid for more than 7 years, which are required to be transferred to the Investor Education and Protection Fund, pursuant to the provisions of Section 205A (5) and 205C of the Companies Act, 1956.

HUMAN RESOURCES

The Company has no employee in respect of whom Statement under 217 (2A) of the Companies Act, 1956, is required to be annexed.

CONSERVATION OF ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

In accordance with the provisions of Section 217 (1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, the required information relating to Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo is annexed.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the Section 217 (2AA) of the Companies, Act, 1956, in relation to financial statements for year 2012-13, the Board of Directors reports that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) accounting policies have been selected and applied consistently and that the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the loss of the Company for the year ended March 31, 2013;

(iii) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT

Your Directors place on record their sincere appreciation for the continued support from employees, shareholders, customers, suppliers, banks, Government of Maharashtra and other business associates. By Authority of Board

Bangalore P.A. MURALI

May 09, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting the Annual Report of your Company and the audited accounts for the year ended March 31, 2012.

FINANCIAL RESULTS

The Summary of Financial Performance of the Company for the year 2011-12 is as under:

(Rs. in Lakhs)

Particulars 2011-12 2010-11

Net Sales 10445.25 5355.13

Add: Other income 1.25 213.79

Add: Increase / (Decrease ) in stocks (233.44) (1174.14)

Total Income 10213.06 4394.78

Less: Expenditure 10520.13 6116.01 Profit / (Loss) before depreciation, interest and tax (307.07) (1721.23)

Less: Interest 1292.36 479.60

Less: Depreciation 930.93 485.88

Profit / (Loss) before Tax (2530.36) (2686.71) Provision for Taxation :

- Current Tax - 9.36

- Deferred Tax - 224.12

Profit / (Loss) after Tax (2530.36) (2920.19)

Add: Balance brought forward from previous year (1401.06) 1587.38

APPROPRIATIONS:

- Preference Shares Redemption Premium - 68.25

Balance carried to Balance Sheet (3931.42) (1401.06)

DIVIDEND

In view of Loss, your Directors do not recommend any Dividend on the equity shares of the Company.

PERFORMANCE OF THE COMPANY

The Company has registered a Turnover of Rs. 10446.50 Lakhs for the financial year ended March 31, 2012. The Loss before Tax of your Company during the financial year amounted to Rs. 2530.36 Lakhs.

The Company has incurred losses mainly due to higher Input Costs and Interest Cost.

PROSPECTS

Keeping in view the emerging demand for Grain Based Alcohol, the Company has already installed Grain Based facility. Plans are afoot to install a fresh production facility for Malt Spirit shortly. The Company also proposes to set up an Indian Made Foreign Liquor (IMFL) Bottling plant. Both these facilities will come on stream during the fiscal 2012-13.

The expansion would enable the Company to substantially increase the revenue.

In view of further expansion plans / programmes and diversification into value added products, your Company expects to report growth in the turnover and profitability in future.

EROSION OF ENTIRE NET WORTH

The accumulated losses as on March 31, 2012, as per the audited accounts, have resulted in erosion of your Company's entire net worth. However, the Directors are pleased to inform you that with the acquisition of controlling interest in your Company by United Spirits Limited (U SL), the market leader in the liquor industry, your Company has already started expansion plans and diversification into bottling of IMFL, which is expected to generate sufficient profits in the near future, making your Company's net worth positive.

Applicable provisions of Sick Industrial Companies (Special Provisions) Act, 1985 shall be complied with, as appropriate, after the annual accounts have been approved by the Shareholders and stand finalized.

DEPOSITORY SYSTEM

The trading in the equity shares of your Company is under compulsory dematerialization mode. As on May 18, 2012 equity shares representing 91.83 % of the equity share capital are in dematerialization form. As the depository system offers numerous advantages, members are requested to take advantage of the same and avail of the facility of dematerialization of the Company's shares.

DIRECTORS

Mr. P.A. Murali, retires by rotation and being eligible, offers himself for re-appointment.

As per declarations received, none of the Directors of the Company is disqualified to be appointed as a Director of any Public Limited Company in terms of Section 274 (1) (g) of the Companies Act, 1956.

AUDITORS

M/s. Lodha & Co., Chartered Accountants, the retiring Auditors, are eligible for re-appointment at the ensuing Annual General Meeting and it is necessary to fix their remuneration.

CORPORATE GOVERNANCE REPORT

A report on the Corporate Governance is annexed separately as part of this report along with a certificate of compliance from Auditors. Necessary requirements of obtaining certifications / declarations in terms of Clause 49 of the listing agreement with the stock exchanges have been complied with.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management Discussion and Analysis Report is annexed and forms an integral part of the Annual Report.

FIXED DEPOSITS

The Company has not accepted any deposits from public during the year.

LISTING OF EQUITY SHARES OF THE COMPANY

The Equity Shares of your Company continue to be listed with Bombay Stock Exchange Limited, National Stock Exchange of India Limited and Pune Stock Exchange Limited. The Annual Listing fees for the year 2012-13 have been paid to these Stock Exchanges.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

As on date, no amount of dividend has remained unclaimed and unpaid for more than 7 years, which are required to be transferred to the Investor Education and Protection Fund, pursuant to the provisions of Section 205A (5) and 205C of the Companies Act, 1956.

HUMAN RESOURCES

The Company has no employee in respect of whom Statement under 217 (2A) of the Companies Act, 1956, is required to be annexed.

CONSERVATION OF ENERGY, TECHNOLOGYAND FOREIGN EXCHANGE

In accordance with the provisions of Section 217 (1) (e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, the required information relating to Conservation of Energy, Technology Absorption and Foreign Exchange earnings and outgo is annexed.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the Section 217 (2AA) of the Companies, Act, 1956, in relation to financial statements for year 2011-12, the Board of Directors reports that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) accounting policies have been selected and applied consistently and that the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the loss of the Company for the year ended March 31, 2012;

(iii) proper and sufficient care have been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENT

Your Directors place on record their sincere appreciation for the continued support from employees, shareholders, customers, suppliers, banks, Government of Maharashtra and other business associates.

By Authority of Board

Bangalore P.A. MURALI

May 24, 2012 Chairman


Mar 31, 2010

The Directors are pleased to present your Companys Seventeenth Annual Report together with the Audited Statement of Accounts for the year ended March 31st, 2010.

Financial Results

The Summary of Financial Results of your Company for the year 2009-10 is as under:

(Rs. in lakhs)

Particulars 2009-10 2008-09

Gross Sales 4845.30 8031.67

Net Sales 4658.45 7595.92

Add: Other income 93.99 70.15

Add: Increase in stocks 1115.81 276.77

Total Income 5868.25 7942.84

Less: Expenditure 4387.91 6304.55

Profit before depreciation, interest and tax 1480.34 1638.29

Less: Interest 293.54 212.56

Less: Depreciation 386.72 355.40

Less: Preliminary Expenses Written Off 4.80 4.80

Profit/Loss before Tax 795.28 1065.53

Add: Exceptional Items (MAT credit adjustment) 33.96 162.05

Provision for Taxation :

Current Tax 126.40 283.44

Fringe Benefit Tax 0 4.53

Deferred Tax 133.33 152.86

Income Tax 2005-06 0 0.92

Profit After Tax 569.51 785.82

Less: Extraordinary Item 250.98 0

Profit After Extraordinary Item 318.53 785.82

Add: Balance brought forward from previous year 1607.84 1181.29

APPROPRIATIONS:

1. Equity Dividend 126.48 235.16

2. Preference Dividend 10.69 11.75

3. Dividend Distribution Tax 23.31 41.96

4. Transfer to General Reserve 0 70.40

5. Transfer to Capital Redemption Reserve 170.00 0

6. Preference Shares Redemption Premium 8.50 0

Balance carried to Balance Sheet 1587.39 1607.84

Operations

Your Company has registered a Turnover (Gross Sales) of Rs. 4845.30 Lakhs (Net Sales of Rs. 4658.45 Lakhs) for the financial year ended March 31st, 2010. The Profit Before Tax of your Company during the financial year amounted to Rs. 795.28 Lakhs.

Dividend

Your Directors have recommended a dividend of Rs. 1.00 per Equity Share (10 percent) aggregating to Rs. 126.48 Lakhs to the Equity Shareholders of the Company for the financial year ended the 31st March 2010, subject to the approval of the Shareholders at the ensuing Annual General Meeting.

The Directors have recommended a dividend @ 5% on 23,50,000 5% Cumulative Redeemable Preference Shares of Rs.10/- each for the year ended the 31st March, 2010 amounting to Rs.10.69 Lakhs to the Preference Shareholders of the Company.

The total Dividend distribution tax is Rs.23.31 Lakhs.

Changes in Share Capital Structure

i) During the financial year 2009-10, 16,00,000 equity convertible warrants of Rs.10/- each were issued at a premium of Rs.26.10/- per warrant on 30th July 2009 on preferential basis to the promoters & non promoters of the Company, which will be converted into equity shares within 18 months from the date of allotment.

ii) Out of the 16,00,000 equity convertible warrants of Rs.10/- each issued at a premium of Rs.26.10/- per warrant on 30th July 2009, 8,00,000 equity convertible warrants were converted into 8,00,000 Equity Shares of Rs.10/- each on 10th December 2009 resulting in increase in the paid-up capital of the Company from Rs. 11,78,82,000/- to Rs.12,58,82,000/-.

iii) On 24th July 2010, remaining 8,00,000 convertible warrants of Rs.10/- each issued at a premium of Rs.26.10/- per warrant were converted into 8,00,000 Equity Shares of Rs. 10/- each, resulting in increase in the paid-up capital of the Company from Rs. 12,58,82,000/ - to Rs. 13,38,82,000/-.

Redemption of 5% Redeemable Preference Shares

The Company had issued 5% Redeemable Preference Shares to Financial Institutions viz, Industrial Development Bank of India (IDBI) (17,00,000 shares) and Life Insurance Corporation of India Limited (LIC) (6,50,000 shares). During the financial year 2009-10, the Company had redeemed 5% Redeemable Preference Shares issued to IDBI. On 23-07-2010, the Company had redeemed 5% Redeemable Preference Shares issued to LIC.

Expansion Activity

The 60KLPD Grain Based Alcohol Facility will commence its production of Alcohol in the month of October 2010, which utilizes grains such as maize, jowar and broken rice as raw material. This expansion would not only enable the company to substantially increase its revenue, but also enhance its share in the niche markets for grain based alcohol. Due to the economies of scale, the Company would acquire a better bargaining power resulting in the improved profit margins. Steps have also been initiated to procure Licenses for Barley Malt Spirit facility and Bottling Plant.

Board of Directors

In accordance with the provisions of the Companies Act, 1956 and the Companys Articles of Association, Sri L Venkateswara Rao and Sri C V Kamalaker retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves for re-appointment.

Statutory Auditors

M/s Alapati Vadde & Co, Chartered Accountants, the Statutory Auditors of the Company has expressed their inability for reappointment as Statutory Auditors of the Company, since they have not received the Peer Review Certificate as required by SEBI requirements. The Company has received a letter from M/s N G Rao & Associates, Chartered Accountants that their appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956. Accordingly, the proposal for their appointment has been placed for the approval of Members at the ensuing Annual General Meeting as they have submitted Peer Review Certificate.

Fixed Deposits:

The Company has not accepted nor invited any Deposits from the public during the year and hence no deposit is due for repayment as on 31st March, 2010.

Compliance with Corporate Governance Voluntary Guidelines 2009

During the year, the Ministry of Corporate Affairs, Government of India, published the Corporate Governance Voluntary Guidelines 2009. These Guidelines have been published keeping in view the objective of encouraging the use of better practices through voluntary adoption, which not only serves as a benchmark for the corporate sector but also helps them in achieving the highest standard of corporate governance. These guidelines provide corporate India a framework to govern themselves voluntarily as per the highest standards of ethical and responsible conduct of business. The Ministry hopes that adoption of these guidelines will also translate into a much higher level of stakeholders confidence, which is crucial to ensure the long-term sustainability and value generation by business. The guidelines broadly focuses on areas such as Board of Directors, responsibilities of the Board, audit committee functions, roles and responsibilities, appointment of auditors, Compliance with Secretarial Standards and a mechanism for whistle blower policy.

Directors Responsibility Statement

Pursuant to the Section 217(2AA) of the Companies, Act, 1956, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

(ii) the accounting policies are in line with those generally accepted and have consistently been followed and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit for the year under review.

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Annual Accounts of the Company have been prepared on a going concern basis.

Disclosure as per the Listing Agreement

The Equity Shares of the Company got listed on the National Stock Exchange Limited, Mumbai on June 15, 2010. Accordingly, the Companys Equity Shares as on date are listed on:

The Bombay Stock Exchange Limited,

Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai – 400001

The National Stock Exchange of India Limited,

Exchange Plaza, C-1,

G Block, Bandra-Kurla Complex,

Bandra (East), Mumbai – 400 051

The Pune Stock Exchange Limited,

Shivleela Chambers, 752, Sadashivpeth, R.B. Kumthekar Marg, Pune - 4110360

The annual listing fees for the above mentioned stock exchanges have been paid.

Particulars of Employees

Information in accordance with sub-section (2A) of Section 217 of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, is set out in Annexure –1 to this Report.

Conservation of Energy, Technology and Foreign Exchange Energy conservation is a focus area for the Company from the angles of both cost control and social responsibility. A report in respect of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required under the provisions of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is set out as Annexure - 2 to this Report.

Corporate Governance Report

A detailed Report on Corporate Governance is set out in Annexure – 3 to this Report. A certificate from the Statutory Auditors of the Company confirming compliance of the Corporate Governance is appended to the Report on Corporate Governance.

Management Discussion and Analysis Report

The Management Discussion and Analysis report is annexed to this report as Annexure-4.

Acknowledgements

Your Directors take this opportunity to acknowledge with deep appreciation the co- operation and support received from the Financial Institutions and Bankers and look forward for their continuous assistance and support to the Company. We also convey our sincere thanks and gratitude to all our customers, suppliers, auditors, shareholders and the concerned government departments for their continued support to your Company. Your Directors wish to place on record their appreciation for the dedication of all the executives, staff and workers of the Company.

For and on behalf of the Board of Directors

K. SUDHIR RAO K. SUHAN RAO

Vice Chairman Managing Director

Place: Hyderabad

Date: 28th August 2010

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