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Directors Report of Pioneer Distilleries Ltd.

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

 
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