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Directors Report of Tilak Nagar Industries Ltd.

Mar 31, 2015

Dear Members,

The Directors hereby present their 80th Annual Report along with the audited financial statements of the Company for the financial year ended March 31, 2015.

1. FINANCIAL HIGHLIGHTS

The summary of the Company's financial results for the financial year ended March 31, 2015 and appropriation of divisible profits is furnished below:

(Rs. in million)

Particulars Standalone

Year ended Year ended

31.03.2015 31.03.2014

Revenue from operations 5,513.32 6,160.12

Operating expenditure 4,670.31 4,742.53

Earnings before interest, depreciation and 843.01 1,417.59 amortization, tax(EBIDTA)

Other income 19.80 38.86

Finance costs 823.71 530.46

Depreciation and amortization expenses 270.98 234.22

Profit / (Loss) before tax (231.88) 691.77

Tax expenses 113.14 205.82

Profit / (Loss) for the year (345.02) 485.95

Balance brought forward from previous year 1,502.36 1,133.80

Amount available for appropriation 1,157.34 1,619.75

Appropriations

Adjustment relating to fixed assets 38.65 -

Transferred to general reserve - -

Proposed dividend and tax thereon 0.74 117.39

Balance carried to balance sheet 1,117.95 1,502.36

The Company has tie-up arrangements in some States and in respect of such arrangements, the net turnover of Rs. 879.21 million during the financial year ended March 31, 2015 (P.Y. Rs. 3,195.02 million) has not been treated as sales. However, the surplus generated out of these arrangements is included in the revenue from operations.

With effect from the quarter ended September 30, 2014, the Company is recognizing income on account of entitlement of MVAT and CST refund on quarterly basis and has, accordingly, during the financial year 2014-15 recognized a sum of Rs. 1,152.90 million as income on that account (for the year 2013-14 and 2014-15) as against Rs. 123.76 million in the previous year (for the year 2012-13).

During the financial year 2014-15, the finance costs have increased, mainly, due to increased premium paid on forward exchange contracts and hike in the interest rates by the banks.

During the financial year 2014-15, the Company has revised its accounting policy in respect of depreciation method of its fixed assets, which are now being depreciated on straight line method (SLM) over their expected useful life as against written down value method (WDV) for ensuring more appropriate presentation of the financial statements. Consequent upon retrospective calculation of the depreciation on straight line method, reversal of depreciation expense amounting to Rs. 58.75 million pertaining to previous years has been recorded in the current year's Statement of Profit & Loss.

Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets (determined after considering the change in the method of depreciation from WDV to SLM), after retaining the residual value, where the remaining useful life of the asset was determined to be nil as on April 01, 2014 and has adjusted an amount of Rs. 38.65 million net of deferred tax against the opening balance of the Statement of Profit & Loss.

2. OPERATIONAL REVIEW

Operations

The Company is a well established player in the Indian Made Foreign Liquor(IMFL) industry with predominant presence in South India and Canteen Stores Department (CSD). With its diversified brand range and a keen focus on premiumization, the Company has created a distinct identity for itself in the IMFL Segment.

The financial year 2014-15 has turned out to be a tough year for the Company as it faced lots of challenges during the year e.g. supply side limitations in the State of Tamil Nadu driven by bottling constraints, operational disturbances caused due to bifurcation of the State of Andhra Pradesh and restrictions imposed on sales in the Kerala Market. The Company, as a part of its premiumization strategy, focused during the year on selling of high margin semi-premium and premium brands and discontinued various loss making brands in Kerala and CSD. The impact of the same was effected in the sales volume of the Company which has declined during the year by 49% to 8.25 million cases as compared to 16.13 million cases in the previous year.

Due to moderation in revenues, elevated finance costs and increased raw material costs, the profitability during the financial year 2014-15 remained constrained and the Company posted a net loss of Rs. 345.02 million as against a net profit of Rs. 485.95 million in the previous financial year.

While the macro economic situation continues to present challenges, the Company, with the support of its strong, resilient business model, is persistent with its efforts to generate long term growth.

Manufacturing Facilities

The Company has modern manufacturing set up encompassing various manufacturing facilities comprising of 1 owned facility, 4 operating subsidiaries with additional 4 subsidiaries for allied activities, 9 lease arrangements and 13 tie-up units strategically located across India.

The Company is having 100 KLPD molasses based and 100 KLPD grain based distillation plants at Shrirampur (Maharashtra). During the financial year 2014-15, it has increased its own bottling capacity to 0.28 million cases per month with successful completion and commissioning of a new state-of-the-art IMFL bottling facility project based on 'Plant in Plant' concept in Shrirampur.

During the financial year 2014-15, the Company has consciously curtailed the operations of its grain based plant due to increase in the grain prices and has applied to the Government for allowing use of the grain based plant for distillation of molasses along with grain (Dual Feed) to take advantage of the market price of the two feed stocks viz. grain and molasses and is awaiting permission for the same.

The Company stringently monitors all its manufacturing facilities to ensure product consistency and quality.

Sales and Distribution

The Company is an established player in the Brandy space in India and is committed to fortify its presence in the segment with a strong portfolio of brands including Mansion House Brandy and Courier Napoleon Brandy. During the financial year 2014-15, CNB–Green Brandy reported YoY growth and continues to lead the premium plus segment while Mansion House Silk Brandy posted a growth YoY in the super premium Brandy segment.

During the financial year 2014-15, the Company has achieved sales volume of 6.08 million cases in southern region, 1.39 million cases in exports & institutions segment, 0.54 million cases in eastern region and 0.24 million cases in western region. Brandy segment, during the year, has contributed 59%, followed by Whisky, Rum, Vodka & Gin segments, which have contributed 24%, 14% and 3% respectively to the overall sales volume of the Company. Blue Lagoon Gin has become the largest selling premium Gin across the eastern region.

The Company ensures a seamless co-ordination of all its functions not only in production, but also in its supply chain management. The Company markets its products across the country through three main channels viz. corporations, distributors and direct sales. The distribution strength of the Company is built around its dispersed manufacturing facilities that cover large swathes of the Indian market with a strong network of distributors and points of sales covering numerous market segments and geographies with especially pronounced presence in the South, India's largest IMFL consuming geography.

3. DIVIDEND

In view of the loss incurred by the Company during the year, the Directors have not recommended any dividend for the financial year ended March 31, 2015.

4. SHARE CAPITAL

During the financial year 2014-15, the paid up equity share capital of the Company has increased from 123,769,643 equity shares of Rs. 10/- each as on April 01, 2014 to 124,756,115 equity shares of Rs. 10/- each as on March 31, 2015 consequent upon allotment of 986,472 equity shares to option grantees pursuant to exercise by them of vested stock options as per statement given below:

Date Particulars Cumulative No. of Equity Shares

April 01, 2014 Paid up equity shares at the beginning of the year 123,769,643

May 26, 2014 Allotment of 503,195 equity shares 124,272,838

August 14, 2014 Allotment of 284,419 equity shares 124,557,257

November 14, 2014 Allotment of 115,694 equity shares 124,672,951

February 14, 2015 Allotment of 83,164 equity shares 124,756,115

March 31, 2015 Paid up equity shares at the end of the year 124,756,115

5. SUBSIDIARY AND ASSOCIATE COMPANIES

The Company is having 8 subsidiary companies falling under the purview of Section 2(87) of the Companies Act, 2013. In accordance with Rule 8(1) of the Companies (Accounts) Rules, 2014, a report on their performance and financial position is presented herein below:

Sr. Name of Subsidiary Companies (Stake) Performance No.

(A) FOR OPERATING ACTIVITIES

1 Prang Distillery (P) Ltd. (100%) The net sales, during the financial year 2014-15, of Prang stood at Rs. 1,232.11 million as compared to Rs. 1,207.69 million in the previous year. It has incurred net loss of Rs. 15.23 million during the financial year 2014-15 as compared to net profit of Rs. 58.29 million in the previous year.

Out of the total licensed capacity of Prang, 3.5 million PLs is subleased to Period Ricard India Private Limited (PRIPL) along with part of its manufacturing facility for a period of five years for optimum utilization of its production capacities. It is also vigorously pursuing with the Government for enhancement of its bottling capacities from the current 0.05 million cases to 0.3 million cases per month.

2 Vahni Distilleries Private Limited (100%) The net sales, during the financial year 2014-15, of Vahni stood at Rs. 595.92 million as compared to Rs. 671.62 million in the previous year. It has incurred net loss of Rs. 2.03 million during the financial year 2014-15 as compared to net profit of Rs. 37.04 million in the previous year.

The production capacity of Vahni's plant has been fully utilized in the financial year 2014-15. It is contemplating enhancing its finished goods storage capacity in the financial year 2015-16.

3 Kesarval Springs Distillers Pvt. Ltd. (100%) The net sales, during the financial year 2014-15, of Kesarval stood at Rs. 3.54 million as compared to Rs. 2.09 million in the previous year. It has incurred net loss of Rs. 2.27 million during the financial year 2014-15 as compared to net loss of Rs. 4.64 million in the previous year.

There was no significant increase in production of IMFL during the financial year 2014-15. The Company is exploring the option to hive of the entire stake held by it in Kesarval.

4 PunjabExpo Breweries Private Limited (100%) The net sales, during the financial year 2014-15, of PunjabExpo stood at Rs. 181.55 million as compared to Rs. 309.28 million in the previous year. It has incurred net loss of Rs. 36.62 million during the financial year 2014-15 as compared to net profit of Rs. 4.57 million in the previous year.

PunjabExpo is contemplating purchase of adjacent land for its expansion plans in future.

(B) FOR ALLIED ACTIVITIES

5 Mykingdom Ventures Pvt. Ltd. (100%) During the financial year 2014-15, no activities have been carried out by My kingdom and it has incurred net loss of Rs. 0.02 million during the year as compared to net loss of Rs. 0.02 million in the previous year.

6 Studd Projects P. Ltd. (100%) During the financial year 2014-15, no activities have been carried out by Studied and it has incurred net loss of Rs. 0.01 million during the year as compared to net loss of Rs. 0.01 million in the previous year. 7 Srirampur Grains Pvt. Ltd. (100%) During the financial year 2014-15, no activities have been carried out by Srirampur and it has incurred net loss of Rs. 0.02 million during the year as compared to net loss of Rs. 0.03 million in the previous year.

8 Shivprabha Sugars Ltd. (90%) During the financial year 2014-15, no activities have been carried out by Shivprabha and it has incurred net loss of Rs. 0.37 million during the year as compared to net loss of Rs. 0.42 million in the previous year.

Apart from the abovementioned subsidiary companies, the Company is having one associate company falling under the purview of Section 2(6) of the Companies Act, 2013 viz. Mason And Summers Marketing Service Private Limited in which the Company is having 26% stake. During the financial year 2014-15, no significant changes in its financial performance have taken place as compared to previous year.

The consolidated financial statements of the Company and its subsidiaries for the financial year ended March 31, 2015, prepared in accordance with the Companies Act, 2013 and Accounting Standards AS-21 on consolidated financial statements form part of this Annual Report and same shall also be laid in the ensuing Annual General Meeting in accordance with the provisions of Section 129(3) of the Companies Act, 2013. The share of profit/ loss of the associate company being immaterial has not been considered in the abovementioned consolidated financial statements.

In accordance with proviso to Section 129(3) read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of the Company's subsidiaries in Form AOC-1 is attached to the financial statements of the Company and forms part of this Annual Report.

In accordance with the provisions of Section 136 of the Companies Act, 2013, the standalone and consolidated financial statements of the Company along with the documents required to be attached thereto and separate audited financial statements in respect of its subsidiary companies are available on its website i.e. www.tilind.com and are also available for inspection at its Registered Office and Corporate Office.

During the financial year 2014-15, no company has become or ceased to be subsidiary of the Company and no material change in the nature of the business of the existing subsidiary and associate companies has taken place.

6. DIRECTORS

At the 79th Annual General Meeting of the Company held on September 27, 2014, Dr. Vishnu Kanhere, Dr. Ravindra Bapat, Mr. C.V. Bijlani, Mr. Madan Goyal and Mr. Ronil Sujan were appointed as Independent Directors, not liable to retire by rotation for a term expiring on March 31, 2019 in accordance with the provisions of Sections 149,152 read with Schedule IV of the Companies Act, 2013 and Mrs. Shivani Amit Dahanukar, who retired by rotation in the said Annual General Meeting in accordance with the provisions of Section 152(6) of the Companies Act, 2013, was also re-appointed as Director, liable to retire by rotation.

Due to his pre-occupancy with other assignments in Singapore, Mr. Ronil Sujan resigned from the directorship of the Company with effect from April 24, 2015. The Board of Directors places on record its appreciation for the valuable services rendered by him during his tenure as Director of the Company.

All the Independent Directors have furnished declaration stating that they meet the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

In accordance with the provisions of Section 152(6) of the Companies Act, 2013, Mr. Amit Dahanukar, Chairman & Managing Director of the Company is retiring by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment.

In accordance with the provisions of the Clause 49 of the Listing Agreement, his brief profile is furnished in the Notice convening the ensuing Annual General Meeting. The Board of Directors recommends his re-appointment.

7. NOMINATION, REMUNERATION AND EVALUATION POLICY

In accordance with the provisions of Section 178 of the Companies Act, 2013 read with Clause 49(IV)(B) of the Listing Agreement, the Board of Directors in its Meeting held on November 14, 2014 has, on the recommendation of Nomination and Remuneration Committee, adopted the Nomination, Remuneration and Evaluation Policy of the Company which lays down criteria for:

i. determining qualifications, positive attributes required for appointment of Directors, Key Managerial Personnel and Senior Management and also the criteria for determining the independence of a Director;

ii. appointment, tenure, removal/retirement of Directors, Key Managerial Personnel and Senior Management;

iii. determining remuneration (fixed and performance linked) payable to the Directors, Key Managerial Personnel and Senior Management; and

iv. evaluation of the performance of the Board and its constituents.

The contents of the abovementioned Policy are elaborated in the Corporate Governance Report.

8. BOARD EVALUATION

In accordance with the provisions of Section 178(2) and Schedule IV of the Companies Act, 2013 read with Clause 5 of the Nomination, Remuneration and Evaluation Policy of the Company, the annual performance evaluation of the Independent Directors, Executive Directors and Board as a whole (including its Committees) was carried out on February 14, 2015 in the manner given below:

i. The performance evaluation of Independent Directors was done by the entire Board of Directors (excluding the Director being evaluated);

ii. Independent Directors in their separate meeting reviewed the performance of Non-Independent Directors and the Board as a whole; and

iii. Independent Directors in their separate meeting also reviewed the performance of the Chairman after taking into account the views of all the Directors.

After taking into consideration the various aspects of the Board's functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance, a structured questionnaire was prepared and circulated among the Directors for the abovementioned evaluation.

The Nomination and Remuneration Committee reviewed the results of the annual performance evaluation in its Meeting held on May 30, 2015 and expressed overall satisfaction on the performance of the Independent Directors, Executive Directors, Chairman and Board as a whole (including its Committees).

9. NUMBER OF MEETINGS OF THE BOARD

The details of the number of meetings of the Board of Directors held during the financial year 2014-15 are furnished as a part of the Corporate Governance Report.

10. COMPOSITION OF AUDIT COMMITTEE

The Audit Committee comprises of Dr. Vishnu Kanhere, Mr. C.V. Bijlani and Mr. Madan Goyal, Independent Directors of the Company. Dr. Vishnu Kanhere is the Chairman of the Committee and Mr. Gaurav Thakur, Company Secretary is the Secretary to the Committee. There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board of Directors.

11. KEY MANAGERIAL PERSONNEL (KMP)

During the financial year 2014-15, appointment of Mr. Srijit Mullick, Chief Financial Officer as KMP was formalized on November 14, 2014 in accordance with the provisions of Section 179(3) read with Section 203 of the Companies Act, 2013.

12. AUDITORS

Statutory Auditors and Statutory Audit Report

In accordance with the provisions of Section 139 of the Companies Act, 2013 read with Rule 3 of the Companies (Audit and Auditors) Rules, 2014, M/s Batliboi & Purohit, Chartered Accountants were appointed as Statutory Auditors of the Company in the 79th Annual General Meeting held on September 27, 2014 to hold Office from the conclusion of the 79th Annual General Meeting till the conclusion of the 82nd Annual General Meeting of the Company, subject to ratification of their appointment by the Members at every Annual General Meeting held after the 79th Annual General Meeting.

Accordingly, a proposal seeking Members' ratification for the re-appointment of M/s Batliboi & Purohit, Chartered Accountants, as the Statutory Auditors of the Company and for fixing their remuneration for the remaining tenure forms part of the Notice convening the ensuing Annual General Meeting. Pursuant to the provisions of Sections 139 and 141 of the Companies Act, 2013 read with Rule 4 of the Companies (Audit and Auditors) Rules, 2014, the Company has received consent from them to the effect that their re-appointment, if made, will be within the prescribed limits under the Companies Act, 2013 and that they are not disqualified for re- appointment. As required under Clause 41 of the Listing Agreement, they have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The Audit Committee and Board of Directors have reviewed their eligibility criteria as laid down under Section 141 of the Companies Act, 2013 and recommended the ratification of their re-appointment as Statutory Auditors for the remaining tenure.

No frauds have been reported by the Statutory Auditors during the financial year 2014-15 pursuant to the provisions of Section 143(12) of the Companies Act, 2013.

The Board of Directors refer to the Auditors' observations in the Auditors' Report and as required under Section 134(3)(f) of the Companies Act, 2013, provides its explanation as under:

i. Explanation to Point No. (viii) of the Annexure to the Auditors' Report on Consolidated Financial Statements regarding cash losses incurred during the financial year 2014-15:

Prolonged slowdown in the economy, weak consumer sentiments, supply side limitations in the State of Tamil Nadu driven by bottling constraints, operational disturbances caused due to bifurcation of the State of Andhra Pradesh and restrictions imposed on sales in the Kerala Market has resulted in a considerable decline in the revenue of the Company for the financial year 2014-15.

Moderation in revenues, elevated finance costs and increased raw material costs have resulted in incurring of cash losses by the Company during the financial year 2014-15. The Company is making necessary efforts to reduce its cash losses by improving its performance through aggressively pursuing and implementing various strategies

viz. selling of high margin semi-premium and premium brands, discontinuation of various loss making brands in Kerala and Canteen Stores Department(CSD), exploring alternative supply options in the State of Tamil Nadu and cost reductions initiatives etc.

ii. Explanation to Point Nos. (vii)(a) and (vii)(b) of the Annexure to the Auditors' Report on the Standalone and Consolidated Financial Statements respectively regarding unpaid income tax dues of Rs. 99.33 million for the Assessment Year 2014-15:

Income tax dues of Rs. 99.33 million for the Assessment Year 2014-15 are yet to be paid by the Company as liquidity constraints are being faced by it due to the cash losses incurred during the financial year 2014-15. The Company is taking necessary measures to clear the abovementioned dues on priority basis.

iii. Explanation to Point Nos. (vii)(a) and (ix) of the Annexure to the Auditors' Report on the Standalone and Consolidated Financial Statements respectively regarding slight delay in few cases in deposit of undisputed statutory dues and payment of principal and interest to Banks:

During the financial year 2014-15, slight delay had occurred in depositing of undisputed statutory dues in few cases and also, payment of Rs. 42.25 million due on March 26, 2015 to Banks on account of principal and interest was made by the Company on April 10, 2015 due to temporary mismatch in cash flows at that point of time.

Cost Auditors and Cost Audit Report

In accordance with the provisions of Section 148 of the Companies Act, 2013 read with Rule 14(a) of the Companies (Audit and Auditors) Rules, 2014, the Board of Directors, has on the recommendation of the Audit Committee, appointed M/s P. D. Phadke & Associates, Cost Accountants as Cost Auditors of the Company for the financial year 2015-16 at a remuneration of Rs. 1,50,000/- plus service tax as applicable and re-imbursement of out of pocket expenses as may be incurred by them for conducting the Cost Audit subject to ratification of such remuneration by the Members in the ensuing Annual General Meeting. Accordingly, a resolution seeking Members' ratification for the remuneration payable to the Cost Auditors forms part of the Notice convening the ensuing Annual General Meeting.

The Company has fled the Cost Audit Report for the financial year ended March 31, 2014 on September 29, 2014. The Cost Audit Report for the financial year ended March 31, 2015 shall be fled in due course.

Secretarial Auditors and Secretarial Audit Report

In accordance with the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s Ragini Chokshi & Associates, Practicing Company Secretaries as Secretarial Auditors of the Company for the financial year 2015-16.

The Secretarial Audit Report for the financial year ended March 31, 2015 is set out in Annexure 'A' to this Report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Internal Auditors and Internal Audit Report

The Company is having M/s Devdhar Joglekar & Srinivasan, Chartered Accountants as its Internal Auditors in accordance with the provisions of Section 138(1) of the Companies Act, 2013. The Audit Committee reviews the observations made by the Internal Auditors in their Report on quarterly basis and makes necessary recommendations to the management.

13. DETAILS WITH RESPECT TO CONSERVA- TION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Details with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are set out in Annexure 'B' to this Report.

14. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Particulars of employees and related disclosures as required under the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(1) and 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are set out in Annexure 'C' and 'D' to this Report.

15. EXTRACT OF ANNUAL RETURN

An extract of Annual Return in Form MGT-9 as required under the provisions of Section 134(3)(a) read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014 is set out in Annexure 'E' to this Report.

16. EMPLOYEE STOCK OPTION SCHEMES

The Company has implemented ESOP Scheme 2008, ESOP Scheme 2010 and ESOP Scheme 2012 compliant with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 [applicable till October 27, 2014] and SEBI (Share Based Employee Benefits) Regulations, 2014 [applicable from October 28, 2014] to reward and retain the qualified and skilled employees and to give them an opportunity to participate in the growth of the Company. These Schemes are administered by the Compensation Committee of the Company. No changes have taken place in these Schemes during the financial year 2014-15.

The disclosures as required under Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 are set out in Annexure 'F' to this Report. A certificate from the Statutory Auditors of the Company as required under Regulation 13 of SEBI (Share Based Employee Benefits) Regulations, 2014 shall be placed at the ensuing Annual General Meeting for inspection by the Members.

17. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company is committed to ensure a healthy environment and empowered community around it and has, accordingly, adopted a triple bottom line approach of people, planet and profit. The Company has embraced the United Nation's (UN) Millennium Development Goals (MDG) and directs its efforts towards Poverty Reduction, Health, Education and Environment Conservation. Details of the CSR projects, programs or activities undertaken by the Company during the financial year 2014-15 are provided in CSR Report annexed hereto and form an integral part of the Annual Report.

The shortfall in the budgeted CSR expenditure during the financial year 2014-15 relates to certain CSR projects of ongoing nature undertaken by the Company spanning over multiple years and the same is being spent by the Company across the life of these projects

The Annual Report on CSR activities as required under Section 134(3)(o) of the Companies Act, 2013 read with Rule 8 of the Companies (CSR Policy) Rules, 2014 is set out in Annexure 'G' to this Report and is also accessible on Company's website at weblink: http://www.tilind. com/corporateResponsibilities.htm

18. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report containing the details as required under Clause 49 (VIII)(D)(1) of the Listing Agreement is annexed hereto and forms an integral part of this Report.

19. CORPORATE GOVERNANCE REPORT

A separate Report on Corporate Governance along with a certificate from the Statutory Auditors of the Company confirming the compliance of the conditions of corporate governance by the Company as required under Clause 49 of the Listing Agreement is annexed hereto and forms an integral part of this Report.

20. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

In accordance with the provisions of Section 134(3) (g) read with Section 186(4) of the Companies Act, 2013, full particulars of loans given, investments made, guarantees given and securities provided, if any, along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient have been disclosed in the financial statements.

21. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company is committed to provide a healthy environment to all its employees and has zero tolerance for sexual harassment at workplace. In order to prohibit, prevent and redress complaints of sexual harassment at workplace, it has constituted a Complaint Committee in line with the provisions of Section 4(1) of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has not received any complaint of sexual harassment during the financial year 2014-15.

22. FIXED DEPOSITS

As on April 01, 2014, the Company was not having any outstanding deposits falling under the scope of Chapter V of the Companies Act, 2013 and it has not accepted any deposits covered under said Chapter during the financial year 2014-15. As on March 31, 2015, the Company was not having any outstanding deposit falling under the scope of said Chapter.

23. DETAILS OF UNCLAIMED BONUS SHARES IN TERMS OF CLAUSE 5A(II) OF THE LISTING AGREEMENT

Details in respect of unclaimed bonus shares lying in dematerialized form in the 'Tilaknagar Industries Ltd.- Unclaimed Suspense Account' as required under the provisions of Clause 5A(II) of the Listing Agreement are as under:

Particulars Bonus Issue – 2009 Bonus Issue – 2010

No. of No. of No. of No. of

Members Shares Members Shares

Aggregate number of Members and the outstanding shares in 1,112 62,478 1,177 197,866 the suspense account lying at the beginning of the year

Number of Members who approached the Company for transfer 1 100 1 300 of shares from suspense account during the year

Number of Members to whom shares were transferred from 1 100 1 300 suspense account during the year

Aggregate number of Members and the outstanding shares in 1,111 62,378 1,176 197,566 the suspense account lying at the end of the year*

* The voting rights on the shares outstanding in the suspense account as on March 31, 2015 shall remain frozen till the rightful owner of such shares claims the shares.

24. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION & PROTECTION FUND

In accordance with the provisions of Sections 205A(5) read with 205C of the Companies Act, 1956, an amount of Rs. 109,913 being dividend for the financial year 2006- 07 lying unclaimed for a period of 7 years was transferred by the Company on September 20, 2014 to the Investor Education and Protection Fund.

Details of the unclaimed amounts lying with the Company as on September 27, 2014 (date of last Annual General Meeting) as required under the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012 have been uploaded on the website of the Company i.e. www.tilind.com and also on the Ministry of Corporate Affairs' website.

25. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the financial year 2014-15, the Company has not entered into any contracts or arrangements with related parties falling under the purview of Section 188(1) of the Companies Act, 2013. Hence, disclosure in Form AOC-2 as required under Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is not applicable.

26. RISK MANAGEMENT

In accordance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Company has adopted a Risk Management Policy to identify and evaluate elements of business risks. The Policy defnes the risk management approach, establishes various levels of accountability for risk management/mitigation within the Company and reviewing, documentation and reporting mechanism for such risks.

The Risk Management Committee has been entrusted with the responsibilities of developing risk mitigation plans, implementing risk reduction/mitigation strategies and reviewing the effectiveness of the Risk Management Policy.

The key business risks, which in the opinion of the Board of Directors may threaten the existence of the Company, along with mitigation strategies adopted by the Company are enumerated herein below:

i. Regulatory Risk

The IMFL industry is a high-risk industry, primarily on account of high taxes and innumerable regulations governing it. As a result, liquor companies sufer from low pricing flexibility and have underutilized capacities, which, in turn, may lead to low margins. To mitigate this risk, the Company complies with all the applicable rules and regulations in all the States where it is present.

ii. Strategic Risk

The Company's strategy and its execution is dependent on uncertainties and untapped opportunities. To mitigate this risk, the Company has adopted resilient policies which not only allow the Company to maximize opportunities under normal conditions but also ensure that acceptable results are achieved under extra-ordinary adverse conditions.

iii. Concentration Risk

A large percentage of the Company's turnover is derived from South India, where any unfavourable regulatory policy may impact its business. Also, the major portion of revenue of the Company is derived from Brandy sales, exposing the Company to category vulnerability. To mitigate this risk, the Company has extended its focus on other geographies viz. Eastern Region, etc. and product categories viz. Whisky, Vodka, etc.

27. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Board of Directors has laid down standards, processes and procedures for implementing the internal financial controls across the organization. After considering the framework of existing internal financial controls and compliance systems; work performed by the Internal, Statutory and Secretarial Auditors and External Consultants; reviews performed by the Management and relevant Board Committees including the Audit Committee, the Board of Directors is of the opinion that the Company's internal financial controls with reference to the financial statements were adequate and effective during the financial year 2014-15.

28. VIGIL MECHANISM

In accordance with the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Clause 49 of the Listing Agreement, the Company has adopted a Whistle Blower Policy to provide a mechanism to its directors, employees and other stakeholders to raise concerns about any violation of legal or regulatory requirements, misrepresentation of any financial statement and to report actual or suspected fraud or violation of the Code of Conduct of the Company.

The Policy allows the whistleblowers to have direct access to the Chairman of the Audit Committee in exceptional circumstances and also protects them from any kind of discrimination or harassment. The Whistle Blower Policy of the Company can be accessed at the Weblink: http:// www.tilind.com/downloads/pdf/Whistleblower.pdf.

29. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to requirements of Section 134(3)(c) of the Companies Act, 2013, and on the basis of the information furnished to them by the Statutory Auditors and Management, the Directors state that:

a. in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there are no material departures;

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that 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 loss of the Company for the year;

c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and operating effectively; and

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

30. RESIDUARY DISCLOSURES

i. During the financial year 2014-15, the Company has not issued equity shares with differential rights as to dividend, voting or otherwise. Hence, disclosure under Rule 4(3) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable;

ii. During the financial year 2014-15, the Company has not issued sweat equity shares to its employees. Hence, disclosure under Rule 8(13) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable;

iii. During the financial year 2014-15, no significant material orders have been passed by any regulators or courts or tribunals which may impact the going concern status of the Company and its future operations. Hence, disclosure under Rule 8(5)(vii) of the Companies (Accounts) Rules, 2014 is not applicable;

iv. During the financial year 2014-15, there have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this Report. Hence, disclosure under the provisions of Section 134(3)(l) of the Companies Act, 2013 is not applicable; and

v. During the financial year 2014-15, there has been no change in the nature of business of the Company. Hence, disclosure under Rule 8(5)(ii) of the Companies (Accounts) Rules, 2014 is not applicable.

31. ACKNOWLEDGEMENTS

The Directors wish to acknowledge and place on record their sincere appreciation for the assistance and co- operation received from all the members, regulatory authorities, customers, financial institutions, bankers, lenders, vendors and other business associates.

The Directors also recognize and appreciate all the employees for their commitment, commendable efforts, team work, professionalism and continued contribution to the growth of the Company.

For and on behalf of the Board of Directors

Place : Mumbai Amit Dahanukar

Date : August 14, 2015 Chairman & Managing Director


Mar 31, 2014

Dear Members,

The Directors are pleased to present the 79th Annual Report along with the audited financial statements of the Company for the financial year ended March 31,2014.

1. FINANCIAL RESULTS AND OPERATIONAL REVIEW

Financial Results

The financial performance of the Company for the financial year ended March 31,2014 is summarized below:

Rs. in million, except per share data)

Particulars Consolidated

Year ended Year ended 31.03.2014 31.03.2013

Total Revenue 8,284.63 7,545.84

Earnings before interest, depreciation 1,741.46 1,727.68 and tax (EBIDTA)

Profit before tax 845.38 850.37

Profit after tax 582.56 605.96

Surplus brought from last year 1,324.29 832.05

Profit available for appropriations 1,906.85 1,438.01

Transfer to general reserves - -

Proposed dividend and tax thereon 117.39 113.72

Surplus carried to balance sheet 1,789.46 1,324.29

Earnings per share of Rs. 10/- each

(a) Basic 4.75 5.02

(b) Diluted 4.66 4.86

Particulars Standalone

Year ended Year ended 31.03.2014 31.03.2013

Total Revenue 6,198.98 5,713.62

Earnings before interest, depreciation 1,456.45 1,494.93 and tax (EBIDTA)

Profit before tax 691.77 719.72

Profit after tax 485.95 503.43

Surplus brought from last year 1,133.80 744.09

Profit available for appropriations 1,619.75 1,247.52

Transfer to general reserves - -

Proposed dividend and tax thereon 117.39 113.72

Surplus carried to balance sheet 1,502.36 1,133.80

Earnings per share of Rs. 10/- each

(a) Basic 3.96 4.17

(b) Diluted 3.89 4.04

The Company has tie-up arrangements in some States and in respect of such arrangements, turnover of Rs. 6,643.08 million during the financial year 2013-14 (Rs. 5,401.34 million in the last financial year) has not been treated as sales. However, the surplus generated out of these arrangements is included in the total revenue.

The total revenue for the year ended March 31, 2014 includes Rs. 123.76 million on account of entitlement of MVAT and CST refund for the previous year 2012-13 as compared to Rs. 109.84 million included in the year ended March 31,2013 for the year 2011-12 pursuant to the grant of Mega Project Status under Package Scheme of Incentives, 2007 by the Government of Maharashtra vide its eligibility certificate dated April 11,2012.

Operational Review

The Company believes in growing in a balanced manner with a combination of volumes and profitability. As a result, the Company has evolved to become a name to reckon within the Indian alcoholic beverages industry characterized by a robust portfolio of brands including iconic brands such as 'Mansion House' and 'Courrier Napoleon' supported by a loyal and growing customer base.

During the financial year 2013-14, the Company continued its drive towards sustainable growth and witnessed a volume growth of 17% translating to 16.13 million cases as compared to 13.80 million cases in the financial year 2012-13 driven by its concentrated efforts to capitalize the strong portfolio of brands through a well spread distribution network along with focus on brand development.

The Brandy segment of the Company continued to be at forefront contributing 55%, followed by Whisky and Rum segments, which have contributed 22% each to the overall sales volume of the Company. The sales volume in Brandy segment has increased by 24% to 8.80 million cases as compared to 7.08 million cases in the last financial year. The sales volume in Whisky segment has increased by 9% to 3.58 million cases as compared to 3.28 million cases in the last financial year. The sales volume in Rum segment grew by 9% to 3.57 million cases as compared to 3.28 million cases in the last financial year. In other segments, 0.18 million cases were sold as compared to 0.16 million cases sold in the last financial year.

The Company is predominantly present in southern region with sales volume of 12.85 million cases which has grown by 19% as compared to 10.84 million cases in the last financial year. The sales volume in eastern region increased to 0.66 million cases as compared to 0.53 million cases in the last financial year, an impressive increase of 25% Sales volume in western region grew by 20% to 0.34 million cases as compared to 0.28 million cases in the last financial year. Export and Institution segment grew by 6% to 2.28 million cases compared to 2.15 million cases in last financial year.

Despite the lower sales of brands in the State of Tamil Nadu due to lower supply on account of constrains faced by the bottlers, the Company has garnered total revenue of Rs. 8284.63 million during the financial year 2013-14 as compared to Rs. 7545.84 million in the last financial year driven by its premiumization strategy, healthy increase in volumes in other States combined with the efforts to reach a wider consumer base, sustained brand development and marketing effort. The escalated ENA costs coupled with increased sales and distribution costs and hedging cost on forex loans have impacted profitability resulting in a marginal decrease in profit before tax from Rs. 850.37 million to Rs. 845.38 million. Accordingly, the profit after tax for the financial year 2013-14 stood at Rs. 582.56 million as compared to Rs. 605.96 million in the last financial year.

While the macro economic situation continues to present challenges, the Company, with the support of a strong, resilient business model, is persistent with its efforts to grow at a pace which is sustainable and profitable.

2. SIGNIFICANT DEVELOPMENTS

During the financial year 2013-14:

* The Company has acquired the IMFL business of IFB Agro Industries Ltd. ("IFB"), Kolkata including two of its most popular brands in Eastern Indian Markets of West Bengal, Assam and Odisha i.e. "Volga" Vodka and "Blue Lagoon" Gin. The acquisition is a strategic fit to Company's plans to fortify its presence in East and offer a diversified portfolio of liquor, particularly white spirit products;

* White House XXX Matured Rum, which was launched in the month of March 2012 has become the 3rd home-grown Millionaire Brand of the Company;

* The Company has got new aesthetic and visually appealing packaging of Mansion House French Brandy designed from London based internationally reputed brand design agency for introduction in the markets;

* Senate Royale Whisky has become the leading Whisky in the State of Odisha in the semi-premium segment;

* The expansion of the entire bottling line capacity at Shrirampur is expected to be commissioned in its entirety in the financial year 2014-15; and

* In line with its strategy to concentrate on its core business, the Company has exited from the P. P. Caps manufacturing business by divesting the entire stake held by it in P. P. Caps Pvt. Ltd., wholly owned subsidiary and the same has ceased to be subsidiary of the Company w.e.f. January 16, 2014.

3. DIVIDEND

The Board of Directors has recommended a dividend of Rs. 0.80 (Eighty Paisa only) per equity share of Rs. 10/- each (8%) for the financial year ended March 31, 2014 entailing a payout of Rs. 117.39 million(inclusive of tax of Rs. 17.70 million). The payment of the aforesaid dividend is subject to approval of the shareholders at the ensuing Annual General Meeting of the Company and if declared, shall be paid to the shareholders on or before October 04, 2014.

4. SHARE CAPITAL

During the financial year 2013-14, the Company has issued and allotted 1,029,778 equity shares under ESOP Scheme-2008; 574,595 equity shares under ESOP Scheme-2010 and 285,135 equity shares under ESOP Scheme-2012, upon exercise of vested stock options by the option grantees.

The issued, subscribed and paid-up equity share capital of the Company as on March 31,2014 stood at Rs. 1237.70 million, comprising of 123,769,643 equity shares of Rs. 10/- each.

5. MANAGEMENT DISCUSSION AND ANALYSIS

A detailed review of operations, performance, key events of the year, industry scenario, risk and future outlook of the Company and its businesses as stipulated in Clause 49 of the Listing Agreement is given in the Management Discussion and Analysis Report annexed hereto forming part of the Annual Report.

6. SUBSIDIARY COMPANIES

As a part of its strategy to concentrate on its core business of manufacturing branded alcoholic beverages and spending quality management time on the same, the Company has divested the entire stake held by it in P.P. Caps Pvt. Ltd., its wholly owned subsidiary on January 16, 2014. Consequently, P.P. Caps Pvt. Ltd. has ceased to be subsidiary of the Company w.e.f. January 16, 2014.

As on March 31,2014, the Company was having following 8 subsidiaries:

SUBSIDIARIES

For Operating Activities

Name Stake

Prag Distillery(P) Ltd. 100%

Vahni Distilleries Private Limited 100%

Kesarval Springs Distillers Pvt. Ltd. 100%

Punjab Expo Breweries Private Limited 100%

For Allied Activities

Name Stake

Mykingdom Ventures Pvt. Ltd. 100%

Studd Projects P. Ltd. 100%

Shrirampur Grains Pvt. Ltd. 100%

Shivprabha Sugars Ltd. 90%

7. CONSOLIDATED FINANCIAL STATEMENTS

As stipulated under Clause 32 of the Listing Agreement and in accordance with the requirements of Accounting Standard (AS-21) prescribed by the Institute of Chartered Accountants of India, the consolidated financial statements of the Company together with Auditors' Report thereon are annexed to the Annual Report.

In accordance with the general circular no. 2/2011 dated February 08, 2011 issued by the Ministry of Corporate Affairs, the annual accounts of these subsidiary companies are not being attached with the balance sheet of the Company. The Company will make available the annual accounts of the subsidiary companies and the related detailed information to any Member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the registered office of the Company and that of the respective subsidiary companies. The consolidated financial statements presented by the Company include the financial results of its subsidiary companies.

Statement pursuant to Section 212 of the Companies Act, 1956 relating to subsidiary companies is attached to the accounts.

8. DIRECTORS

Dr. Vishnu Kanhere, Dr. Ravindra Bapat, Mr. C.V. Bijlani, Mr. Madan Goyal, Independent Directors of the Company were appointed at various times pursuant to the erstwhile applicable provisions of the Companies Act, 1956. Mr. Ronil Sujan was appointed as an Additional Director (Non-Executive and Independent Director) by the Board of Directors on October 31,2013 and his term is expiring at the ensuing Annual General Meeting.

In terms of Section 149, 150 and other applicable provisions of the Companies Act, 2013 read with Rules made there under, the provisions regarding retirement by rotation shall not apply to Independent Directors. In order to comply with the statutory requirements, the proposals are placed in the ensuing Annual General Meeting for the appointment of Independent Directors under the provisions of Section 149 of the Companies Act, 2013.

The Company has received requisite notices under Section 160 of the Companies Act, 2013 from a Member proposing the candidatures of Dr. Vishnu Kanhere, Dr. Ravindra Bapat, Mr. C.V. Bijlani, Mr. Madan Goyal and Mr. Ronil Sujan for appointment as Independent Directors at the ensuing Annual General Meeting. The Company has also received their consent to act as Director along with declaration regarding their meeting with the criteria of independence.

The Board recommends their appointment as Independent Directors of the Company, not liable to retire by rotation under the provisions of Section 149 of the Companies Act, 2013 for a term expiring on March 31,2019.

In accordance with the provisions of Section 152(6) of the Companies Act, 2013, Mrs. Shivani Amit Dahanukar, Executive Director of the Company is retiring by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. The Board also recommends her re-appointment.

A brief profile of the Directors seeking appointment/ re-appointment is furnished as a part of the Corporate Governance Report pursuant to the provisions of Clause 49 of the Listing Agreement.

Mr. V. B. Haribhakti, Independent Director of the Company has expressed his unwillingness to seek re-appointment as Director of the Company in the ensuing Annual General Meeting on account of his advancing age. The Board places on record its appreciation for the valuable services rendered by him during his tenure of more than three decades as Director of the Company.

9. AUDITORS

Statutory Auditors

The present tenure of M/s Baltiboi & Purohit, Chartered Accountants, the Statutory Auditors of the Company is expiring at the conclusion of the ensuing Annual General Meeting. They are proposed to be re-appointed as Statutory Auditors of the Company from the conclusion of the ensuing 79th Annual General Meeting till the conclusion of the 82nd Annual General Meeting of the Company, subject to ratification of the appointment by the shareholders at every AGM held after the ensuing AGM in accordance with the provisions of Section 139(2) and rules made there under.

As per the provisions of Section 139 of the Companies Act, 2013, the Company has obtained a written consent from M/s Baltiboi & Purohit, to such appointment and also a certificate to the effect that their appointment, if made, would be in accordance with Section 139(1) of the Companies Act, 2013 and the rules made there under and they satisfy the criteria stipulated under the provisions of Section 141 of the Companies Act, 2013.

The Audit Committee and Board have reviewed their eligibility criteria, as laid down under Section 141 of the Companies Act, 2013 and recommended their appointment as Statutory Auditors for the aforesaid period.

Auditors' Report

The Auditors' Report for the financial year ended March 31, 2014 does not contain any qualification. The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

Cost Auditors

The Company has filed the Cost Audit Report for the financial year ended March 31, 2013 with respect to cost records maintained by it relating to manufacturing of Industrial Alcohol on September 27, 2013. The Company has also filed the Compliance Report for the financial year ended March 31, 2013 with respect to cost records maintained under Rule 5 of the Companies Cost Accounting Records (Sugar Industry) Rules, 2011 relating to production, processing or manufacturing of products other than "Industrial Alcohol" on September 27, 2013.

The Cost Audit Report for the Financial Year 2013-14 shall be filed in due course.

Secretarial Auditors

As a good corporate governance practice, the Company has got its secretarial records and documents audited from M/s Ragini Chokshi & Associates, Practicing Company Secretaries voluntarily and their report for the financial year 2013-14 confirms that the Company has complied with the applicable provisions of the Companies Act, 1956, the Companies Act, 2013, Depositories Act, 1996, Listing Agreement with the Stock Exchanges and all other applicable regulations and guidelines issued by Securities and Exchange Board of India.

In accordance with the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s Ragini Chokshi & Associates, Practicing Company Secretaries as Secretarial Auditors of the Company for the financial year 2014-15.

10. CORPORATE GOVERNANCE

The Company has complied with the requirements of corporate governance under Clause 49 of the Listing Agreement with the Stock Exchanges. A separate report on corporate governance together with a certificate from the Statutory Auditors of the Company regarding compliance of conditions of corporate governance as stipulated under Clause 49 of the Listing Agreement is annexed hereto and forms part of this Report.

11. STATUTORY STATEMENTS

Particulars of Employees, Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo

Details with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under 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, are set out in Annexure 'A' to this Report.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, names and other particulars of employees are set out in Annexure 'B' to this Report.

Employee Stock Option Schemes

With an objective of enabling the Company to reward and retain the qualified and skilled professionals and to give an opportunity to employees to participate in the growth of Company, the Company has implemented ESOP Scheme - 2008, ESOP Scheme - 2010 and ESOP Scheme - 2012, in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ('the SEBI Guidelines'). The Compensation Committee, constituted in accordance with the SEBI Guidelines, administers and monitors the said Schemes.

The relevant disclosures in compliance with the Clause 12 of the SEBI Guidelines, as amended, are set out in Annexure 'C' to this report.

The Company has received a certificate from the Statutory Auditors of the Company to the effect that the Schemes have been implemented in accordance with the SEBI Guidelines and the respective resolutions passed by the shareholders.The Certificate will be placed at the Annual General Meeting for inspection by the shareholders.

Fixed Deposits

Pursuant to the provisions of Section 205C(2)(c) of the Companies Act, 1956, a fixed deposit of Rs. 4,000/- (Rupees Four Thousand) lying unclaimed with the Company for seven years was transferred to the Investor Education & Protection Fund (IEPF) of the Central Government on March 15, 2014.

The Company has not accepted any fixed deposits during the year. The Company is not having any outstanding deposit falling within the scope of Section 58A of the Companies Act, 1956 as on March 31,2014.

Details of Unclaimed Bonus Shares in terms of Clause 5A(II) of the Listing Agreement

Pursuant to the provisions of Clause 5A(II) of the Listing Agreement, details in respect of unclaimed bonus shares lying in dematerialized form in the 'Tilaknagar Industries Ltd.-Unclaimed Suspense Account, are as under:

*The voting rights on the shares outstanding as on March 31,2014 in the suspense account shall remain frozen till the rightful owner of such shares claims the shares.

Transfer of Amounts to Investor Education & Protection Fund

Pursuant to the provisions of Sections 205A(5) and 205C of the Companies Act, 1956, relevant amounts which remained unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund.

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unclaimed amounts lying with the Company as on September 11, 2013 (date of last Annual General Meeting) on the website of the Company i.e. www. tilind.com, as also on the Ministry of Corporate Affairs' website.

Directors' Responsibility Statement

Pursuant to requirements of Section 217(2AA) of the Companies Act, 1956, and on the basis of the information furnished to them by the Statutory Auditors and management, the Directors state that:

a. in preparation of the annual accounts, the applicable Accounting Standards have been followed and there are no material departures;

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that 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 accounting year and of the profit of the Company for the year;

c. they have taken proper and sufficient care 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 preventing and detecting fraud and other irregularities; and

d. they have prepared annual accounts on a going concern basis.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility (CSR) is a continuous commitment of the Company for overall economic development and well being of the society. CSR plays an important role in sustainable growth of the Company and ensures that the Company discharges its duties towards development of the society.

The Board of Directors of the Company has constituted a CSR Committee during the year and entrusted it the responsibility of formulating and recommending to it, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, ensuring that the activities as are included in CSR Policy are undertaken by the Company, preparing a transparent monitoring mechanism for ensuring implementation of the CSR activities and recommending to the Board, the amount to be spent on CSR activities every year.

A separate section on initiatives taken by the Company to fulfill its Corporate Social Responsibility (CSR) is annexed hereto and forms part of the Annual Report.

13. ACKNOWLEDGEMENTS

The Directors wish to acknowledge and place on record their appreciation to all stakeholders - customers, bankers, lenders, vendors and all other business associates for the continuous co-operation and excellent support given by them to the Company. The Directors also wish to extend their sincere gratitude to all the regulatory authorities like SEBI, Stock Exchanges, Registrar of Companies, NSDL, CDSL and other government and regulatory agencies for their support.

The Directors recognize and appreciate the commitment, commendable efforts, team work and professionalism of all the employees of the Company and their continued contribution to the growth of the Company.

The Directors also thank the investors for their continued faith in the Company.

For and on behalf of the Board of Directors

Place : Mumbai Amit Dahanukar Date : May 26, 2014 Chairman & Managing Director




Mar 31, 2013

Dear Members

The Directors are pleased to present their 78th Annual Report together with the audited financial statements of the Company for the financial year ended March 31, 2013.

FINANCIAL RESULTS

The financial performance of the Company for the financial year ended March 31, 2013 is summarized below:

in million, except per share data)

Particulars Consolidated Standalone

Year ended Year ended Year ended Year ended 31.03.2013 31.03.2012 31.03.2013 31.03.2012

Total Revenue 7,545.84 5,555.48 5,713.62 4,587.27

Profit before interest, depreciation and tax (EBIDTA) 1,727.68 1,484.82 1,494.93 1,334.36

Profit before tax 850.37 700.01 719.72 580.64

Profit after tax 605.96 471.61 503.43 387.54

Surplus brought from last year 832.05 472.15 744.09 468.26

Profit available for appropriations 1,438.01 943.76 1,247.52 855.80

Transfer to general reserves - - - -

Proposed dividend and tax thereon 113.72 111.71 113.72 111.71

Surplus carried to balance sheet 1324.29 832.05 1133.80 744.09

Earnings per share of Rs. 10/- each

(a) Basic 5.02 4.08 4.17 3.35

(b) Diluted 4.86 4.02 4.04 3.30

The Company has tie-up arrangements in some States and in respect of such arrangements, turnover of Rs. 5,401.34 million during the financial year 2012-13 (Rs. 6,896.02 million in the last financial year) has not been treated as sales. However, the surplus generated out of these arrangements is included in the total revenue.

During the year, the Company has recognized Rs. 109.84 million as income on account of MVAT and CST refunds received with respect to sales made in the State of Maharashtra in the financial year 2011-12 pursuant to Mega Project Status conferred on its manufacturing facilities under Package Scheme of Incentives (PSI), 2007.

DIVIDEND

The Directors are pleased to recommend a final dividend of Rs. 0.80 (eighty paisa only) per equity share of Rs. 10/- each (8%) for the financial year 2012-13. The dividend, if approved by the Members, will entail a payout of Rs. 113.32 million including dividend distribution tax ofRs. 15.82 million and will be paid on or before September 18, 2013.

OPERATIONS

The Company is one of the fastest growing liquor companies in India with a significant presence in South India (largest liquor market) and is a well established name in Canteen Stores Department (CSD). During the year under review, the Company has achieved sales volume of 13.80 million cases as compared to 13.24 million cases in the financial year 2011-12 on consolidated basis, registering an increase of 4% despite the problems faced by the industry in the State of Tamil Nadu, which accounts for sizable part of the Company''s business. The Company''s sustained and systematic drive in premiumizing its products has helped it to carve its niche within the segment.

During the year under review, Brandy segment has contributed 51%, followed by Whisky and Rum segments, which have contributed 24% each to the overall sales volume of the Company. The Mansion House Brandy continues to be the flagship brand of the Company. White House Rum, Company''s newest entrant in the Rum segment has already achieved sales volume of more than 5 lac cases whereas, Madiraa Rum, the millionaire brand of the Company witnessed growth of 10% during the year. Mansion House continues to be a strong driver of the Whisky portfolio in unison with BLACPOWER Grain Whisky, which has increased its pan Indian presence and is now present across 9 States. Savoy Club Orange Gin, launched in the month of August 2012, has garnered a market share of 22% in six months of its launch in West Bengal market.

With respect to geographical expansion, the Company has emerged as the second largest listed Company in South and also in key States of East. South has contributed 75% of the total sales volume followed by CSD which has contributed 16%. East, which has contributed 4% to the Company''s overall sales volume, is the least penetrated and high margin market in the IMFL industry and the Company is focusing on improving its presence in East.

SIGNIFICANT DEVELOPMENTS

During theyear under review, following significant developments took place:

- The Company has signed an agreement with Pernod Ricard India Pvt. Ltd.(PRIPL) to manufacture PRIPL products at its bottling facilities in the States of Maharashtra and Andhra Pradesh.

- The Company has acquired 26% stake in Mason & Summers Marketing Services Pvt. Ltd., which is engaged in the sales, marketing and distribution of the branded products of Mohan Meakin Ltd. and its affiliates including iconic brand "OLD MONK RUM" in North and East India.

- The Company has entered into Trademark assignment agreement with Mohan Breweries and Distilleries Ltd. for assignment of their well established trademarks - "Brigadier''s No. 1 Brandy" and "Vorion No. 1 Indian Brandy".

- Prag Distillery(P) Ltd., the wholly owned subsidiary of the Company has entered into an arrangement with PRIPL for subleasing of part of its total licensed capacity and leasing out part of its manufacturing facility to PRIPL for a period of five years to take advantage of its unutilized production capacities.

- The Company has commenced construction work for the State of Art IMFL bottling facility at Shrirampur, for catering the increased production load.

DIRECTORS

Pursuant to the provisions of Sections 255 and 256 of the Companies Act, 1956 and in terms of the Articles of Association of the Company, Dr. Vishnu Kanhere and Dr. Ravindra Bapat, Directors of the Company are liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

A brief profile of the Directors seeking re-appointment covering nature of their expertise in specific functional areas, the names of the companies in which they hold directorship and committee membership is furnished as a part of the Corporate Governance Report. The Board of Directors recommends their re-appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to requirements of Section 217(2AA) of the Companies Act, 1956, and on the basis of the information furnished to them by the Statutory Auditors and management, the Directors confirm that:

a. in preparation of the annual accounts, the applicable Accounting Standards have been followed and there are no material departures;

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that 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 accounting year and of the profit of the Company for the year;

c. they have taken proper and sufficient care 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 preventing and detecting fraud and other irregularities; and

d. they have prepared annual accounts on a going concern basis.

SHARE CAPITAL

During the year, the Company has issued and allotted 810,151 equity shares under ESOP Scheme - 2008 and 1,068,212 equity shares under ESOP Scheme - 2010, upon exercise of vested stock options.

The issued, subscribed and paid-up equity share capital of the Company as on March 31, 2013 stood at Rs. 1218.80 million, comprising of 121,880,135 equity shares of Rs. 10/- each.

EMPLOYEE STOCK OPTION SCHEMES

With an objective of enabling the Company to reward and retain the qualified and skilled professionals and to give an opportunity to employees to participate in the growth of Company, the Company has implemented ESOP Scheme- 2008, ESOP Scheme - 2010 and ESOP Scheme - 2012, in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (''the SEBI Guidelines''). The Compensation Committee, constituted in accordance with the SEBI Guidelines, administers and monitors the said Schemes.

The relevant disclosures in compliance with the Clause 12 of the SEBI Guidelines, as amended, are set out in Annexure ''C to this report.

The Company has received a certificate from the Statutory Auditors of the Company that the Schemes have been implemented in accordance with the SEBI Guidelines and the respective resolutions passed by the Members. The Certificate will be placed at the Annual General Meeting for inspection by the Members.

SUBSIDIARY COMPANIES

In past few years, the Company has acquired various companies to strengthen its bottling capacities and also to integrate both forward and backward, besides strengthening in house processes. This has, in turn, helped the Company in gaining greater control over the operational aspects.

As on March 31, 2013, the Company was having following 9 subsidiaries:

Statement pursuant to Section 212 of the Companies Act, 1956 relating to subsidiary companies is attached to the accounts.

In accordance with the general circular no. 2/2011 dated February 08, 2011 issued by the Ministry of Corporate Affairs, the annual accounts of these subsidiary companies are not being attached with the balance sheet of the Company. The Company will make available the annual accounts of the subsidiary companies and the related detailed information to any Member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the registered office of the Company and that of the respective subsidiary companies. The consolidated financial statements presented by the Company includes the financial results of its subsidiary companies.

CONSOLIDATED FINANCIAL STATEMENTS

As stipulated under Clause 32 of the Listing Agreement and in accordance with the requirements of Accounting Standard (AS-21) prescribed by the Institute of Chartered Accountants of India, the consolidated financial statements of the Company together with Auditors'' Report thereon are annexed to the Annual Report.

AUDITORS AND AUDITORS'' REPORT

M/s. Batliboi & Purohit, Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment.

The Company has received letter from them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1 B) of the Companies Act, 1956 and that they are not disqualified for re-appointment within the meaning of Section 226 of the said Act. The Board of Directors recommends their re-appointment as Statutory Auditors.

The observations and comments given in the Auditors'' Report read together with notes to accounts are self-explanatory and do not call for any further information and explanation under Section 217(3) of the Companies Act, 1956.

COST AUDITORS

Pursuant to the industry specific cost audit order no. 52/26/CAB- 2010 dated November 06, 2012 of the Central Government, the Company is required to get its cost records for the financial year 2013-14 audited in respect of "Alcoholic Beverages" and "Industrial Alcohol" being manufactured by it.

Pursuant to the provisions of Section 233B(2) of the Companies Act, 1956 and subject to the approval of the Central Government, the Board of Directors on the recommendation of the Audit Committee has appointed M/s. P. D. Phadke & Associates, Cost Accountants as Cost Auditors for conducting the Cost Audit of the cost records maintained by the Company relating to manufacturing of Alcoholic Beverages'' and ''Industrial Alcohol'' for the financial year 2013-14.

The Company has filed the Cost Audit Report for the financial year 2011-12 with respect to cost records maintained by it relating to manufacturing of Industrial Alcohol on January 30, 2013, well before the due date of filing.

The due date for filing the Cost Audit Report for the financial year 2012-13 is September 27, 2013 and the same shall be filed in due course.

SECRETARIAL AUDIT REPORT

M/s. Ragini Chokshi & Associates, Practicing Company Secretaries have conducted Secretarial Audit for the financial year 2012-13 and have submitted the Report confirming compliance with the applicable provisions of the Companies Act, 1956 and other rules and regulations issued by SEBI/other relevant authorities.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI.

The Company is in substantial compliance of the provisions of the voluntary guidelines on corporate governance issued by Ministry of Corporate Affairs in the year 2009, a benchmark for the corporate sector in achieving the highest standard of corporate governance.

The Report on corporate governance alongwith the Statutory Auditors'' Certificate regarding compliance of the conditions of corporate governance pursuant to Clause 49 of the Listing Agreement is annexed hereto and forms part of the Annual Report.

In terms of sub-clause (V) of Clause 49 of the Listing Agreement, a certificate from Chairman & Managing Director and Officiating Head of Finance of the Company, inter-alia, confirming the correctness of the financial statements, adequacy of internal control measures and reporting of matters to the Audit Committee in terms of the said clause, is also enclosed as part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed review of operations, performance, key events of the year, industry scenario, risk and future outlook of the Company and its businesses as stipulated in Clause 49 of the Listing Agreement is given in the Management Discussion and Analysis Report annexed hereto and forms part of the Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The year 2012-13 was a humbling year of achievements for the Company''s CSR team. Not only did, the Company initiate new approaches to address persistent social issues, but also made some partnerships that will go a long way in ensuring the sustainability of its efforts.

A separate section on initiatives taken by the Company to fulfill its Corporate Social Responsibility (CSR) is annexed hereto and forms part of the Annual Report.

PARTICULARS OF EMPLOYEES, CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Details with respect to conservation of energy, technology absorption & foreign exchange earnings and outgo, as required under Section 217(1 )(e), read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are set out in Annexure ''A'' to this Report.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, names and other particulars of employees are set out in Annexure ''B'' to this Report.

FIXED DEPOSITS

The Company has not accepted any fixed deposits within the scope of Section 58A of the Companies Act, 1956 during the year.

As on March 31, 2013, there was one matured deposit aggregating to Rs. 4,000/- (Rupees Four Thousand Only), which has not been claimed by the depositor upto the date of this Report. During the year, the Company has repaid an amount of Rs. 10,000/-(Rupees Ten Thousand Only) lying unclaimed with the Company, on receipt of request from the concerned depositor in this regard.

There are no unclaimed deposits/interest on deposits lying unclaimed with the Company for more than seven years, which may be transferred to Investor Education & Protection Fund pursuant to sub section 2(c) of Section 205C of the Companies Act, 1956.

DETAILS OF UNCLAIMED BONUS SHARES IN TERMS OF CLAUSE 5A(II) OF THE LISTING AGREEMENT

Pursuant to the provisions of Clause 5A(II) of the Listing Agreement, the Company reports the following details in respect of equity shares lying in the Tilaknagar Industries Ltd.- Unclaimed Suspense Account, which were issued in physical form:

Particulars Bonus Issue - 2009 Bonus Issue - 2010

No. of No. of No. of No. of share holders Shares share holders Shares

Aggregate number of shareholders and the 1,116 63,752 1,179 198,088 outstanding shares in the suspense account lying at the beginning of the year

Number of shareholders who approached issuer for 1 1,000 Nil Nil transfer of shares from suspense account during the year

Number of shareholders to whom shares were 1 1,000 Nil Nil transferred from suspense account during the year

Aggregate number of shareholders and the 1,115 62,752 1,179 198,088 outstanding shares in the suspense account lying at the end of the year*

* The voting rights on the shares outstanding in the suspense accounts as on March 31, 2013 shall remain frozen till the rightful owner of such shares claims the shares.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Sections 205A(5) and 205C of the Companies Act, 1956, relevant amounts which remained unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund.

Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unclaimed amounts lying with the Company as on September 21, 2012 (date of last Annual General Meeting) on the website of the Company i.e. www.tilind.com, as also on the Ministry of Corporate Affairs website.

SUSTAINABILITY

The Company''s main focus is to expand the implementation of sustainable exercises for environment protection with each passing year. As part of the environment protection initiative, it is exploring the use of spent wash in brick making and in irrigation and also use of fly ash in cement manufacturing. It is expected that by the next financial year, the Company will have some breakthrough in the above areas and will be successful in commercializing the same.

The Company has also taken sustainable initiatives such as energy generation through solar and gobar gas plants, water harvesting, vermi-composting and soil improvement activities, garbage re-cycling and most important of all tree plantations.

ACKNOWLEDGEMENTS

Your Directors would like to express their sincere appreciation to investors, bankers, customers, suppliers, auditors for their continued support during the year. Your Directors extend their sincere gratitude to all the regulatory authorities like SEBI, Stock Exchanges, Registrar of Companies and other Central and State Government authorities/agencies for their support.

Your Directors place on record their appreciation to employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain at the forefront of the Industry.

For and on behalf of the Board of Directors

Place : Mumbai Amit Dahanukar

Date : May 30, 2013 Chairman & Managing Director


Mar 31, 2012

The Directors are pleased to present the Seventy Seventh Annual Report together with the audited financial statements of the Company for the financial year ended March 31, 2012.

FINANCIAL RESULTS

The financial performance of the Company for the financial year ended March 31, 2012 is summarized below:

(Rs. in millions)

Particulars Consolidated Standalone

year ended year ended year ended year ended 31.03.2012 31.03.2011 31.03.2012 31.03.2011

Total Revenue 5,555.48 4,709.52 4,587.27 3,517.77

Profit before interest, depre ciation and tax (EBIDTA) 1,484.82 1,161.73 1,334.36 1,036.17

Profit before tax 700.01 643.30 580.64 566.80

Profit after tax 471.61 395.74 387.54 349.01

Surplus brought from last year 472.15 538.93 468.26 581.77

Profit available for appropriations 943.76 934.67 855.80 930.78

Transfer to general reserves - 355.00 - 355.00

Proposed dividend and tax thereon 111.71 107.52 111.71 107.52

Balance carried to balance sheet 832.05 472.15 744.09 468.26

The performance of your Company during the financial year is consistent with its planned efforts. It is maintaining its upward trajectory in volume growth ahead of the alcove industry with an equal attention on its financial performance. During the year, the sales volume has increased by 22% and stood at an impressive 13.24 million cases as compared to 10.86 million cases in the financial year 2010-11 on consolidated basis led by an enhanced brand bouquet and penetration in new and existing geographies through mass brands. The Company has franchisee arrangements in some states and in respect of such arrangements, turnover of Rs. 6,896.02 million (Rs. 8,308.30 million in the last financial year) has not been treated as sales. However, the surplus generated out of these arrangements is included in the total revenue. The growth achieved bears witness to the appeal of the TI's brand portfolio catering to wide audience and reaching across various product segments and price points.

While driving volume growth in the IMFL segment has always been the endeavor of the Company, it has simultaneously focused its efforts on margin performance too. Consequently, as a result of the increase in the volumes combined with the premiumisation drive and price increase in the second-half of the financial year, total revenue during the year, on consolidated basis, has increased by impressive 18% and stood at Rs. 5,555.48 million as compared to Rs. 4,709.52 million in the financial year 2010-11.

During the year, your Company has achieved a net profit of Rs. 471.61 million on consolidated basis i.e. 19% increase over net profit of Rs. 395.74 million achieved in the last financial year driven by economies of scale, higher price realizations achieved on account of premium products featured in the diversified product portfolio and price increase taken on the flagship brand 'Mansion House Brandy' and other brands in CSD. Significant investments made in family shape bottles during the last financial year also yielded noteworthy contributions to the earnings whilst providing a hedge against increased glass prices.

The EPS has increased to Rs. 4.08 in the financial year 2011-12 as compared to Rs. 3.85 in the last financial year.

DIVIDEND

Your Directors are pleased to recommend a final dividend of Rs. 0.80 (eighty paisa only) per equity share (8%) for the financial year 2011-12. The dividend, if approved by the Members, will entail a payout of Rs. 111.71 million including dividend distribution tax of Rs. 15.59 million.

The dividend, if approved at the ensuing Annual General Meeting, will be paid on or before September 28, 2012 to:

i) all Members in respect of shares held in physical form whose names appear on the Company's Register of Members as on September 15, 2012 after giving effect to valid transfers in respect of transfer requests lodged with the Company on or before the close of business hours on September 14, 2012;

ii) all Beneficial Owners in respect of shares held in dematerialized form whose names appear in the statement of beneficial ownership furnished by National Securities Depository Limited and Central Depository Services (India) Limited as at the close of business hours on September 14, 2012.

The dividend is tax free in the hands of the Members.

OPERATIONAL REVIEW

Your Company is a well established player in the expanding Indian Made Foreign Liquor (IMFL) industry in India and has created a distinct identity for itself in the IMFL segment, with a diversified brand range and a keen focus on premiumisation. Your Company's brand portfolio comprises of over 40 brands featuring two millionaire brands, 'Mansion House Brandy' and 'Madira Rum'. Your Company also enjoys leading position in the Canteen Stores Department (CSD) with 13 brands registered under it.

Manufacturing Facilities

Your Company has constantly enhanced its core strengths to create a robust business model and presently, it has modern manufacturing set up encompassing various manufacturing facilities spread across India.

Your Company's manufacturing facilities comprise of 1 owned facility, 4 operating subsidiaries with additional 5 subsidiaries for allied activities, 10 lease arrangements and 15 tie-up units. The primary manufacturing facility is located in Shrirampur (Maharashtra) comprising of 100 KLPD molasses based and 100 KLPD grain based distillation plants and 1 lac cases per month (on single shift basis) IMFL bottling plant.

The new 100 KLPD grain based facility has enabled your Company to manufacture more premium quality of brands along with better adaptability to safeguard itself against the variations in the prices of molasses and made your Company self sufficient in alcohol requirement. Your Company is considering conversion of grain based facility into dual mode in order to take advantage of the market price of the two feed stocks, viz. grain and molasses. Presently, both the facilities are in operation and are being used depending upon the feed stock price economies.

Your Company is also considering up gradation of its present IMFL bottling facility to take care of proposed increase in IMFL load for Maharashtra. All the facilities are stringently monitored to ensure product consistency and to produce superior quality alcohol.

Sales and Distribution

Your Company has actualized its growth strategy for the financial year 2011-12 and delivered healthy sales and earnings, which also testifies the vision of the management and the business strategies. Your Company has registered an increase of 22% in sales volume, which is the cumulative result of the investments your Company has made to build its brands along with the benefits of its geographic diversity and distribution network. It also resonates that your Company's high premium brands and differentiated products are

providing the momentum for it to continue penetration in the core markets and simultaneously set footprints in new regions.

Your Company ensures a seamless co-ordination of all functions not just in production, but also in its supply chain management. From tracking market changes and market research to sourcing raw materials, manufacturing and delivering finished goods, it maintains the highest efficiency. The distribution strength of your Company is built around its dispersed manufacturing facilities that covers large swathes of the Indian Market covering all market segments and geographies with a focus on South India. Majority of your Company's retail presence is directly controlled by it, with its ground sales force expanding from 50 to nearly 300 highly motivated sales staff.

Your Company is enjoying market share of between 40% to 97% across the Southern Indian States in the brandy segment. Due to its strong market share in South India and its well-established brands, your Company is in a good position to launch other products in liquor industry, leveraging its distribution network in South India. In terms of sales, Andhra Pradesh and Kerala are the leading markets.

During the year, your Company achieved sales volume of 10.49 million cases in southern region as compared to 8.82 million cases in the last financial year, witnessing an impressive growth of 19%. The sales in eastern region stood at 0.36 million cases, western region at 0.27 million cases and northern region at 0.01 million cases as compared to 0.22 million cases, 0.19 million cases and 0.06 million cases respectively in the last financial year, demonstrating the strength of your Company's strategy to expand in new geographies.

During the year, the sales volume in brandy segment increased by 4% to 7.07 million cases as compared to 6.80 million cases in the last financial year. The sales volume in whisky segment has increased to 3.58 million cases as compared to 2.17 million cases in the last financial year, registering an impressive growth of 65%. The sales volume in rum segment grew by remarkable 37% to 2.50 million cases as compared to 1.83 million cases in the last financial year. In other segments, 0.09 million cases were sold as compared to 0.05 million cases sold in the last financial year.

Madira Rum, the millionaire brand of your Company witnessed growth of 40% during the year as compared to 19% in the last financial year.

During the year, your Company witnessed subdued volume delivery in Tamil Nadu on account of issues related to bottling. Your Company has taken action and realigned the strategy to handle the situation and as a result, has tied up with new units and also launched various variants at higher price points. The Company has initiated operations in the new units recently and expects to see normalized activity in the said region from the second quarter of the financial year 2012-13.

Your Company has built a strong presence in the South and is now excited to extend its foot prints in other markets pan India.

Canteen and Stores Department (CSD)

CSD is an important growth driver for your Company. During the year, 2 million cases were sold in the CSD segment as compared to 1.5 million cases sold in the last financial year, an impressive growth of 37%. The flagship brand, Mansion House Brandy leads the brandy segment amongst Armed Forces with 25% market share in CSD, besides becoming the second-largest selling brandy brand in India. Another well appreciated brand of your Company i.e. Madira XXX Rum has replicated a similar success story amongst the Armed Forces and continues to grow at an accelerated pace.

Your Company is excited about its prospects in CSD, as two of its brands, Mansion House Whisky and Classic Whisky, have received enlistment in CSD during the year. Your Company expects to introduce more brands in CSD in the coming years.

Export

After taking the domestic business to a flourishing note, your Company is now concentrating on expanding its export business. Through investment made in sophisticated microbiology lab and new ENA (Extra Neutral Alcohol) plants combined with implementation of international procedures and high quality standards, your Company ensures meeting global standards of quality required for exports.

During the year, exports stood at 0.11 million cases in the financial year 2011-12 as compared to 0.12 million cases in the financial year 2010-11.

Your Company has responded innovatively to changing customer demands to capture new territories and forayed into uncharted markets. Presently, your Company exports to many overseas countries viz. Angola, Kenya, South Sudan, Nigeria, Uganda, Rwanda, Benin, Ghana, Sierra Leone, Singapore, UAE, Dominican Republic and Haiti.

Brand Launches

Your Company is increasing its orientation towards premiumisation of products in a sustained and systematic manner to drive profitability.

Your Company unveiled the striking new super-premium Seven Islands Vintage Single Malt Scotch Whisky in London, on April 24, 2012. The Seven Islands Vintage has been meticulously designed and created by Ryan50 Scotland Limited, UK, a multi-faceted company in luxury and lifestyle industry, exclusively for your Company, in strategic association with BenRiach Distillery, Scotland, which is a leading distillery in Scotland producing a variety of scotches. Your Company believes that the super-premium scotch market offers very promising growth prospects both in the domestic and international markets. Your Company sees this as an opportunity to leverage its expertise and introduce this brand to the discerning consumers and look forward to capitalize on the opportunities.

Your Company wants to be present in all the segments and does not want to leave out the premium space, as industry in the lower end segments is growing at a much slower rate than the semi-premium and the premium categories. In fact, the premium and semi-premium categories are growing in double-digit growth, whereas, the regular range products are growing in the single digit growth. Therefore, your Company has launched White House Rum and TI's VSOP Brandy in the last quarter of the financial year 2011-12 in Kerala and Tamil Nadu market respectively. White House Rum was positioned in the regular segment and TI's VSOP Brandy was positioned in the semi-premium segment.

In a major development, Bombay High Court by its landmark judgment passed on December 22, 2011, dismissed the notice of motion filed by UTO Nederland B.V. seeking to restrain your Company from using the trademarks 'Mansion House' and 'Savoy Club'. The impact of the said judgment on your Company's growth is of great significance. The judgment has settled the disputes relating to the ownership and use of the concerned trademarks by your Company in India at the interim stage. This clears the path for your Company to aggressively promote the brands pan India and your Company plans to expand markets of 'Mansion House' across India.

Your Company has taken several initiatives to not only expand its presence in the semi-premium and premium category but also to leverage the strength of its existing brand equity to capture market share across geographies and product portfolios. Aligned to this thought process, your Company has successfully launched Mansion House Whisky (MHW) in Maharashtra followed by Andhra Pradesh, Karnataka, Goa, Puducherry, Madhya Pradesh, Odisha and Assam with the aim to benefit from the cult identity and loyal brand following of the flagship brand 'Mansion House Brandy'. The goodwill and dominance of the Mansion House brand in Southern India will be now leveraged to capture market share across geographies and product portfolios.

Your Company is encouraged by the customer response received for Mansion House Whisky (MHW) in the market. It brings great pleasure for your Company to highlight that MHW has earned immediate recognition amongst the whisky enthusiasts and is a strong driver of the whisky portfolio in unison with previously launched BLACPOWER Whisky, which is also doing very well. Your Company is aiming at increasing its visibility by focusing on its consumer engagement programs at point of sales.

Associations

Your Company has recently introduced the cream of Indian Hockey National Team as brand ambassador for Mansion House. The brand 'Mansion House' is based on the theme of 'Have Courage' and this spirit is strongly emphasized by the Indian Hockey and the players your Company has associated with.

Your Company initiated BLACPOWER Batting Challenge to bring out and encourage the batting champions from the nooks and corners of the streets of the city. Such initiative not only helped to promote the hidden talents of the country but also played a vital role in building brand connect with the consumer.

Mansion House, the leading brand of the Company, is continuing as the official 'Cheers' partner of the IPL team Chennai Super Kings (CSK). This engagement has enabled the Company to leverage the brand 'Mansion House' and further consolidate its position as a leading premium brand. The association has helped the Company to strengthen its position in the existing markets and new markets efficiently.

While it has been a year of challenges and opportunities, your Company remained committed to driving growth. Your Company continued to capitalize on the potential in the industry, on the back of a robust model combined with the consumer appeal of its brands.

FUTURE OUTLOOK

Despite low GDP for the year, Indian Made Foreign Liquor (IMFL) industry continued its growth trajectory at a CAGR of 10% to 12% due to improved demography, increased social acceptance and favorable bias towards spirits, a few of the major positive indicators amongst many.

During the year, your Company focused on not only improving the top line but also towards improving cost efficiency to enhance margins. Your Company is confident of expanding its portfolio to attract and cater to a larger audience. In a systematic and efficient manner, your Company wishes to grow its network to many more regions as well as seek opportunities in the international market.

Your Company is planning to consolidate the manufacturing base in Andhra Pradesh through its wholly owned subsidiary i.e. Prag Distillery (P) Ltd. (PDPL) having manufacturing unit at Andhra Pradesh. PDPL has applied for expansion of the bottling capacity from present 50,000 cases to 300,000 cases per month. Also, PDPL has obtained the letter of intent to set up 100 KLPD Greenfield distillery and a project report is being prepared on the benefits of going through this expansion.

Tamil Nadu, which is a key market for your Company, is expected to witness normalized sales in the near future as your Company has taken measures to tie-up with new units along with the launch of new variants.

Your Company, apart from continued focus on the existing markets in South, intends to strengthen its position in East and Northeast markets. Your Company has already launched new brands in some of these markets and is in the process of launching more brands/variants. Initial response from the market for the brands launched by your Company is quite encouraging.

Your Company has a strong traction in the CSD and a major part of supplies are driven by demands from North India. With a view to serve these requirements and ensure lower costs due to savings on transportation and sourcing, your Company has acquired Punjab Expo Breveries Private Limited (Punjab Expo) during the financial year 2011-12 having its bottling unit in Derabassi, Punjab and bottling capacity of 50,000 cases per month. Modernization work at Punjab Expo is nearing its completion stage with installation of a unique PET filling auto line specifically designed to cater to CSD market in North. This will increase the capacity of its plant to 100,000 cases per month on single shift basis.

Mansion House Whisky was your Company's step towards premiumisation. It is now looking at targeting the growing end of the whisky consumers and your Company is collaborating with various agencies, which are helping it to design a high- end product and will take Mansion House Whisky to other regions in the country in a phased manner.

Your Company will take forward its initiatives towards premiumisation to create high-value brands. With further launches of its Seven Islands Vintage Single Malt Scotch Whisky scheduled in Mumbai, Milan and Paris, your Company expects it to be a recognition of its focus on premiumisation in tandem with meticulous efforts to tap opportunities in the overseas and the Indian luxury markets.

While the focus has been to concentrate on brands with better realization, your Company has also made efforts towards cost rationalization. Introduction of the family shape bottles for its flagship brand 'Mansion House' was one such measure which facilitated an easier re-procurement system for these bottles at a lower price.

Your Company is planning to have series of rum, whisky and vodka under the Mansion House and Savoy Club brands, as the verdict given by Bombay High Court in your Company's favour now gives an untrammeled path for executing future plans.

Nevertheless, your Company's new lines will be of entirely different formulation, at different price points and altogether different packaging mix, to cater to an entirely different segment of consumers.

Your Company believes that its diversified brand portfolio, focus on premiumisation and ongoing geographic expansion will enable your Company to fortify its concerted strategy to expand whilst capitalizing new opportunities.

"MEGA PROJECT" STATUS

Your Company has been accorded with the status of "Mega Project" by the Government of Maharashtra for its new facilities, which include the 50 KLPD molasses based ENA distillation plant and 100 KLPD grain based ENA distillation plant along with the captive power plant, under Package Scheme of Incentives (PSI) 2007.

With this status of "Mega Project", your Company is now, eligible for claiming Industrial Promotion Subsidy (IPS) in the form of refund equivalent to 100% of eligible investments made within a period of seven years, by way of set off/credit for tax liability under Maharashtra Value Added Tax Act, 2002 and Central Sales Tax Act, 1956 along with electricity duty exemption and exemption from payment of stamp duty.

Together with the Company's drive to grow its business, the magnitude of benefits associated with this title will have a direct contribution to the Company's earnings. Moreover, this valued accreditation also demonstrates your Company's commitment towards timely execution and adherence to the recommended guidelines and compliance norms as stipulated by the Government of Maharashtra. The "Mega Project" sanction will continue to inspire your Company to broaden its focus in Maharashtra.

AWARDS AND RECOGNITIONS

During the year, your Company was conferred with the following prestigious awards in recognition of its performance, achievements and contribution to the society:

ICAI Award for "Excellence in Financial Reporting"

Your Company is pleased to inform you that the Institute of Chartered Accountants of India (ICAI) has awarded the "Gold Shield for Excellence in Financial Reporting" under the Category VII - Manufacturing Sector to the Annual Report of your Company for the financial year 2010-11.

This award is recognition of your Company's internal controls and stringent efforts to maintain compliance with the prescribed financial framework while maintaining transparency and accountability through communications to its stakeholders. Winning this award is thus, a great testimony to your Company's belief and an endorsement of its commitments towards transparency.

This award motivates your Company to continue engaging with its Members with regards to its business plans through consistent and timely financial communication.

"Top 10 Power Brands" Award

Your Company's flagship brand 'Mansion House Brandy' was awarded one amongst "Top 10 Power Brands" Award by Ambrosia Magazine at Inspirit, 2012 in the presence of various industry players which shall encourage your Company to achieve greater growth and heights in the coming years.

"CSD - Best Business Partner for Excellent Performance for 2011-12" Award

Your Company was awarded with the "CSD - Best Business Partner for Excellent Performance for 2011-12" in liquor category for being the fastest growing Company making supplies to CSD. This award is testament to the Company's success in the CSD segment and a direct reflection of consumers' appreciation for the Company's quality blends.

Your Company takes this accolade as industry recognition and acknowledgement of the wide acceptance of its brands and blends amongst the Armed forces.

"Mother Teresa Excellence" Award

Your Company was awarded "Mother Teresa Excellence Award" by the Integrated Council for Socio-Economic Progress for the outstanding contribution made by your Company in the field of social welfare.

The above awards honor your Company's sincere efforts to consistently increase its presence felt in the industry and designing a strong governance framework and embracing the same to meet its goal of long term sustainable growth.

QUALITY MANAGEMENT

Your Company is having ISO 9001:2008 and 14001:2004 certification signifying commitment to high levels of consistent quality and compliance of specified environmental standards and providing healthy work environment for its employees.

Your Company has set up Centralized Technical Department, which controls supply of high bouquet spirits and food flavors required for the brands of the Company produced across the country. This helps your Company to keep the formulation of its products guarded. This department now dedicatedly works for the development of new brand formulations and participates in packaging development.

Your Company's emphasis on strengthening Standard Operating Procedures continued during the financial year 2011-12 and its implementation is being strengthened.

Post successful trials with sticker label machines for better pack presentation, your Company is now going ahead with sticker label machines for all fast moving and/or high-end brands. This shall help in better image building of the Company through good brand presentation.

SUSTAINABILITY - CONTRIBUTION TO THE 'TRIPLE BOTTOM LINE'

Your Company adopts a triple bottom line (TBL) approach of economic sustainability, healthy environment and empowered community. Your Company has taken sustainable initiatives such as energy generation through solar and gobar gas plants, water harvesting, vermi-composting and soil improvement activities, garbage recycling and most important of all tree plantation.

Your Company has initiated the efforts to establish zero discharge concepts without any environment pollution for its 50 KLPD molasses based ENA Plant at Shrirampur.

Efforts for further improvement in zero discharge continued during the financial year and few trials were conducted for 50 KLPD molasses based ENA plant at Shrirampur. Various options are being evaluated and likely to be finalized in the coming year.

On 100 KLPD grain based ENA Plant, DWGS (Distillers Wet Grain Spent) production continued which is being sold. DWGS is used for cattle feed and is in demand due to its protein value. Trials with dryer to convert DWGS to DDGS (Distillers Dried Grain Spent) continued.

Your Company's main focus is to expand the implementation of sustainable exercises for environmental protection with each passing year.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company understands that growth of the Company must be inclusive and should benefit the communities involved as much as the stakeholders. A separate section on initiatives taken by the Company to fulfill its Corporate Social Responsibility (CSR) is annexed hereto and forms part of the Annual Report.

SUBSIDIARY COMPANIES

Your Company followed a two pronged growth strategy during the year. In addition to growing organically, your Company realized that the estimated demand for products would not be fulfilled by the existing bottling facilities available, therefore the Company is exploring acquisitive ways of growing inorganically. Your Company also acquired companies to integrate both forward and backward, besides strengthening in-house processes.

Existing Subsidiary Companies

- Prag Distillery (P) Ltd. has a bottling unit located in the State of Andhra Pradesh and composite license to manufacture all types of Indian Made Foreign Liquor. It also holds letter of intent for 100 KLPD Greenfield distillery.

- Vahni Distilleries Private Limited owns a bottling unit along with a distillery license. Its plant is located in the State of Karnataka.

- Kesarval Springs Distillers Pvt. Ltd. has its bottling unit located in the State of Goa having capacity of 15,000 cases per month.

Companies acquired during the year

- Punjab Expo Braveries Private Limited has bottling unit located in the State of Punjab having capacity of 50,000 cases per month, augmenting the Company's manufacturing capacity and giving a strategic foothold in North India.

- Srirampur Grains Private Limited, through its specialized staff to deal in procurement of grains, shall help your Company in meeting the requirements of the 100 KLPD grain based ENA Plant of the Company.

- P. P. Caps Private Limited is in the process of establishing cap manufacturing facility and it will be advantageous for the Company to have an in-house facility for manufacturing of caps used for the products of the Company, which will help the Company to become self-reliant in its caps requirement and to optimize its cost of packing material.

- Mykingdom Ventures Pvt. Ltd. and Studd Projects P. Ltd. are into construction and plant erection. With the growing business scale and plans to expand market presence, this acquisition will help the Company to diversify its business segment and to leverage the in-house expertise in infrastructure development. This know-how will aid the Company with rapid implementation solutions which would be of significant advantage in terms of cost effectiveness and timely execution of various expansion and new projects.

- Shivprabha Sugars Ltd. is having land admeasuring 19.77 hectares alongwith necessary permissions for setting up 3000 TCD Sugar Plant, 30 KLPD Distillery and 16.5 MW Co- gen Power Plant at Village Goudgaon, Tal. Barsi, Distt. Sholapur. This acquisition is part of backward integration initiative, which will augment uninterrupted supply of molasses, a key raw material for the Company and will help the Company to become substantially self-reliant.

Statement pursuant to Section 212 of the Companies Act, 1956 relating to subsidiary companies is attached to the accounts.

In accordance with the general circular no. 2/2011 dated February 08, 2011 issued by the Ministry of Corporate Affairs, the annual accounts of these subsidiary companies are not being attached with the balance sheet of the Company. The Company will make available the annual accounts of the subsidiary companies and the related detailed information to any Member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the registered office of the Company and that of the respective subsidiary companies. The consolidated financial statements presented by the Company includes the financial results of its subsidiary companies.

CONSOLIDATED FINANCIAL STATEMENTS

As stipulated under Clause 32 of the Listing Agreement and in accordance with the requirements of Accounting Standard (AS-21) prescribed by the Institute of Chartered Accountants of India, the consolidated financial statements of the Company together with Auditors' Report thereon are annexed to the Annual Report.

SHARE CAPITAL

During the year, your Company has issued and allotted 4,745,068 equity shares, out of which:

- 4,284,236 equity shares were allotted to the promoter of the Company upon conversion of equivalent number of convertible warrants at an exercise price of Rs. 73/- per share; and

- 455,162 equity shares were allotted under ESOP Scheme - 2008 and 5,670 equity shares were allotted under ESOP Scheme - 2010, upon exercise of vested stock options.

The issued, subscribed and paid-up equity share capital of your Company as on March 31, 2012 stood at Rs. 1200.02 million, comprising of 120,001,772 equity shares of Rs. 10/- each.

EMPLOYEE STOCK OPTION SCHEMES

Being committed towards building a high performing growth oriented organization, your Company has been taking steps from time to time to reward and retain the qualified and skilled professionals who are high performing, dedicated and committed towards growth of the Company.

In order to enable the Company to achieve this goal on a sustained basis and to give an opportunity to employees to participate in the growth of Company, the Company had introduced and implemented ESOP Scheme - 2012 on May 28, 2012, after the successful implementation of ESOP Scheme - 2008 and ESOP Scheme - 2010, in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ('the SEBI Guidelines'). The Compensation Committee, constituted in accordance with the SEBI Guidelines, administers and monitors the said Schemes.

The relevant disclosures in compliance with the Clause 12 of the SEBI Guidelines, as amended, are set out in Annexure 'C' to this report.

The Company has received a certificate from the Statutory Auditors of the Company that the Schemes have been implemented in accordance with the SEBI Guidelines and the resolutions passed by the Members. The Certificate would be placed at the Annual General Meeting for inspection by the Members.

DIRECTORS

The tenure of the present term of Mr. Amit Dahanukar, Chairman & Managing Director and Mrs. Shivani Amit Dahanukar, Executive Director of the Company expires on November 06, 2012 and September 30, 2012, respectively. The Board of Directors in its Meeting held on May 28, 2012 has on the recommendation of the Remuneration Committee re- appointed Mr. Amit Dahanukar as Chairman & Managing Director and Mrs. Shivani Amit Dahanukar as Executive Director of the Company for a further period of 5 years with effect from November 07, 2012 and October 01, 2012, respectively, subject to the approval of the Members of the Company at the ensuing Annual General Meeting of the Company.

Pursuant to the provisions of Sections 255 and 256 of the Companies Act, 1956 and in terms of the Articles of Association of the Company, Mr. V. B. Haribhakti and Mr. Madan Goyal, Directors of the Company are liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

A brief profile of the Directors seeking re-appointment covering nature of their expertise in specific functional areas, the names of the companies in which they hold directorship and committee membership is furnished as a part of the Corporate Governance Report. Your Board recommends their re-appointment.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to requirements of Section 217 (2AA) of the Companies Act, 1956, and on the basis of the information furnished to them by the statutory auditors and management, the Directors confirm that:

a. in preparation of the annual accounts, the applicable Accounting Standards have been followed and there are no material departures;

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that 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 accounting year and of the profit of the Company for the year;

c. they have taken proper and sufficient care 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 preventing and detecting fraud and other irregularities; and

d. they have prepared annual accounts on a going concern basis.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best Corporate Governance practices as prevalent globally.

The Report on Corporate Governance along with the Statutory Auditors' Certificate regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the Listing Agreement is annexed hereto and forms part of the Annual Report.

In terms of sub-clause (v) of Clause 49 of the Listing Agreement, a certificate from Chairman & Managing Director and Officiating Head of Finance of the Company, inter-alia, confirming the correctness of the financial statements, adequacy of internal control measures and reporting of matters to the Audit Committee in terms of the said clause, is also enclosed as part of the Annual Report.

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed review of operations, performance, key events of the year, industry scenario, risk and future outlook of your Company and its businesses as stipulated in Clause 49 of the Listing Agreement is given in the Management Discussion and Analysis Report annexed hereto and forms part of the Annual Report.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits within the scope of Section 58A of the Companies Act, 1956 during the year.

As on March 31, 2012, there were 2 matured deposits aggregating to Rs. 14,000/- (Rupees Fourteen Thousand Only), which have not been claimed by the depositors up to the date of this Report. There were no deposits during the year, which were claimed but not paid by the Company.

There are no unclaimed deposits/interest on deposits lying with the Company for more than seven years which are to be transferred to Investor Education & Protection Fund as per sub section 2(c) of Section 205C of the Companies Act, 1956.

PARTICULARS OF EMPLOYEES, CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

Details with respect to conservation of energy, technology absorption & foreign exchange earnings and outgo, as required under Section 217(1)(e), read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are set out in Annexure 'A' to this report.

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, names and other particulars of employees are set out in Annexure 'B' to this report.

AUDITORS AND AUDITORS' REPORT

M/s. Batliboi & Purohit, Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment.

The Company has received letter from them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 224(1B) of the Companies Act, 1956 and that they are not disqualified for re-appointment within the meaning of Section 226 of the said Act. The Board of Directors recommends their re-appointment as Statutory Auditors.

The observations and comments given in the Auditors' Report read together with notes to accounts are self-explanatory and do not call for any further information and explanation under Section 217(3) of the Companies Act, 1956.

COST AUDITORS

Pursuant to the industry specific cost audit order no. 52/26/CAB-2010 dated January 24, 2012 of the Central Government, your Company is required to get its cost accounts audited in respect of 'Industrial Alcohol' being manufactured by it.

Pursuant to the provisions of Section 233B(2) of the Companies Act, 1956 and subject to the approval of the Central Government, the Board of Directors on the recommendation of the Audit Committee has appointed M/s. P. D. Phadke & Associates, Cost Accountants as Cost Auditors for conducting the Cost Audit relating to manufacturing of 'Industrial Alcohol' for the financial year 2012-13.

The due date for filing the Cost Audit Report for the financial year 2011-12 is September 27, 2012 and the same shall be filed in due course.

SECRETARIAL AUDIT REPORT

M/s. Ragini Chokshi & Associates, Practicing Company Secretaries conducted Secretarial Audit for the financial year 2011-12 and has submitted the Report confirming compliance with the applicable provisions of the Companies Act, 1956 and other rules and regulations issued by SEBI/other relevant authorities. The Secretarial Audit Report for the financial year ended March 31, 2012 is annexed hereto and forms part of the Annual Report.

ACKNOWLEDGEMENTS

Your Directors would like to express their sincere appreciation to investors, bankers, customers, suppliers, auditors for their continued support during the year. Your Directors extend their sincere gratitude to all the regulatory authorities like SEBI, Stock Exchanges, Registrar of Companies and other Central and State Government authorities/agencies for their support.

Your Directors place on record their appreciation to employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain at the forefront of the Industry.

For and on behalf of the Board of Directors

Place: Mumbai Amit Dahanukar

Date: May 28, 2012 Chairman & Managing Director


Mar 31, 2011

Dear Members,

The Directors are pleased to present the Seventy Sixth Annual Report along with the Audited Statement of Accounts of your Company for the financial year ended March 31, 2011.

FINANCIAL HIGHLIGHTS

The financial performance of your Company for the financial year ended March 31, 2011 is summarised below:

(Rs.in million)

Consolidated

Particulars Year ended Year ended 31st March, 31st March, 2011 2010

Total Income 4709.52 3889.76

Profit before depreciation and tax 773.96 609.80

Profit before tax 643.30 538.53

Profit after tax 395.74 348.89

Surplus brought from last year 538.93 327.27

Profit available for appropriations 934.67 676.16

Transfer to general reserves 355.00 33.50

Proposed dividend and tax thereon 107.52 103.73

Balance carried to balance sheet 472.15 538.93



(Rs.in million)

Standalone

Particulars Year ended Year ended 31st March, 31st March, 2011 2010

Total Income 3517.77 3544.31

Profit before depreciation and tax 693.09 567.01

Profit before tax 566.80 499.60

Profit after tax 349.01 331.23

Surplus brought from last year 581.77 387.78

Profit available for appropriations 930.78 719.00

Transfer to general reserves 355.00 33.50

Proposed dividend and tax thereon 107.52 103.73

Balance carried to balance sheet 468.26 581.77



OPERATIONAL REVIEW

The core business segment of the Company is manufacturing, sales and distribution of Indian Made Foreign Liquor (IMFL). The financial year 2010-11 was the year of growth and also of challenges. While the sales volume showed a very healthy growth of 36%, there were certain challenges in terms of inflationary pressures.

During the year, your Company has delivered stellar performance by achieving sales of over 10 million cases.

On consolidated basis, your Company achieved the sales of 10.86 million cases in the financial year 2010-11 against 8.00 million cases in the last financial year achieving 36% increase in volume. The Gross Sales of the Company's brands has increased by 32% toRs. 13,154 million in financial year 2010- 11 against Rs. 9,983 million in the last financial year.

The growth in sales is contributed by increasing penetration in existing markets of Southern States, Canteen Stores Department (CSD), Export, Eastern and Western regions as follows:

- CSD sales have grown over three fold

- Sales in the Western region have grown by 65%

- Export Sales have grown by 57%

- Sales in the Eastern region have grown by 35%

- Sales in the existing markets of Southern States have increased by 23%

During the year under review, Rum, Whisky and Brandy sales have grown by 69%, 32% and 30% respectively as compared to the last financial year.

During the year, sales of two of your millionaire brands i.e. Mansion House Brandy and Madira Rum have grown from 4.53 million and 1.05 million cases to 5.44 million and 1.25 million cases respectively resulting in growth of 20% in Mansion House Brandy and 19% in Madira Rum.

Mansion House, the leading brand of the Company, is now the offcial 'Cheers' partner of Chennai Super Kings (CSK). This engagement with CSK is for a period of 3 years. CSK is a franchise cricket team based in Chennai that plays in the Indian Premier League. The team is captained by Mahendra Singh Dhoni and they are the current holders of the IPL trophy, having won the 2011 Indian Premier League. This engagement will entitle the Company to leverage the brand 'Mansion House' and further consolidate its position as a leading premium brand. The Company will also be able to leverage all of CSK's brand communications into its marketing initiatives during this period of association as part of the engagement.

During the year under review, your Company has successfully launched new brands and variants of existing brands in various markets as detailed below:

BLACPOWER Whisky : Andhra Pradesh and Maharashtra

Crown Prince Brandy : Tamil Nadu

MH VSOP Brandy : Puducherry and Kerala

Duchess Brandy : Andhra Pradesh

Madiraa Premium Dark XXX Rum : Goa, Maharashtra and Assam

All these brands have been well received in the market for their blend as well as packaging and your Company expects good growth in these brands in current financial year.

CAPITAL

During the year under review, the authorised share capital of the Company was increased from Rs. 584.6 million to 1,500 million to enable the Company to meet the capital requirements.

- Issue of Bonus Shares:

During the year under review, your Company has issued 64.64 million equity shares of Rs. 10/- each fully paid up, as bonus shares in the ratio of two equity shares for every one equity share by capitalising the free reserves of the Company.

- Qualified Institutional Placement:

During the year under review, your Company has raised an amount of Rs.1,350 million, by issue of 14.21 million equity shares of Rs. 10/- each fully paid up at an issue price of Rs. 95/- per share to the Qualified Institution Buyers by way of Qualified Institutional Placement. The amount raised was primary used for reducing the debt and for meeting commitment for capital expenditures.

- Promoters' Contribution

During the year under review, your Company has allotted 4.02 million equity shares of Rs. 10/- each fully paid up, to the promoters against conversion of equivalent number of convertible warrants at an exercise price of Rs. 73/- per share amounting to ? 293.33 million.

In addition to above, promoters have also infused an amount of Rs. 78.19 million towards application money for subscription of 4.28 million convertible warrants having exercise price of Rs. 73/- each (Rs. 18.25 paid up), convertible into equivalent number of equity shares at an exercise price of Rs. 73/- per equity share.

- Issue of equity shares to employees against options granted

During the year under review, your Company has allotted 0.08 million equity shares to employees pursuant to exercise by them of vested stock options. Thus, the paid up share capital of the Company has increased from 32.31million equity shares of Rs. 10/- each to 115.26 million equity shares of Rs. 10/- each during the year under review as per statement given below

Date Particulars Cumulative No. of Shares (in million) April 01,2010 Paid up equity shares at the beginning of the year 32.31

August 07,2010 Allotment of 8,100 equity shares pursuant to exercise of stock options 32.32

September 30, Allotment of 64,636,200 bonus 2010 shares in the ratio of 2 equity shares for every 96.95 1 share held

November 30, Allotment of 14,210,500 equity 2010 shares at issue price of Rs.95/- per share to 111.16 Qualified Institutional Buyers

December 20, Allotment of 36,000 equity shares 2010 pursuant to exercise of stock options 111.20

March 04, Allotment of 37,640 equity shares 2011 pursuant to exercise of stock options 111.24

March 31, Allotment of 4,018,264 equity 115.26 2011 shares to Promoter of the Company on conversion of equivalent number of convertible warrants at an exercise price of Rs. 73/- per share

As on March 31, 2011, Promoter Group holds 4.28 million warrants convertible into equity shares at an exercise price of Rs. 73/- per share.

DIVIDEND

Your Directors are pleased to propose a final dividend of Rs. 0.80 per equity share (8%), including on equity shares allotted during the year, out of the net available profit after provision for taxation. The dividend, if declared, will involve an outflow of Rs. 107.52 million (inclusive of dividend distribution tax of Rs. 15.32 million).

PROJECT AND ACQUISITION

- Commissioning of 100,000 Litres (100 KLPD) ENA Plant

Your Company is pleased to inform you that it has successfully installed and commissioned a new 100 KLPD grain based Extra Neutral Alcohol (ENA) plant at Shrirampur. This will provide the right base for your Company to launch premium products in both domestic and international markets. The grain facility will also provide a natural hedge against the fluctuations in molasses price. The increase in distillation capacity shall enable your Company to produce ENA in house to meet the growing demand of its IMFL products.

- Power Plant

Along with 100 KLPD grain distillery, your Company has also commissioned 5 MW power plant through back pressure steam technology which will meet the energys requirements of the Company's Shrirampur unit.

- Acquisition

During the year under review, your Company has acquired Kesarval Springs Distillers Pvt. Ltd., which has a bottling unit in Goa, at a cost of Rs. 15 million. This acquisition shall not only enable your Company to cater the markets of Goa and Puducherry but also enable it to diversify into wine business and explore export opportunities.

FUTURE STRATEGY AND GROWTH

Indian Made Foreign Liquor (IMFL) industry is growing steadily over the last decade at a CAGR of more than 10% due to improved demography, increasing social acceptance, favourable bias towards spirits and consistent growth in GDP.

Future growth will be driven by increased penetration of current brands in the existing territories being serviced by your Company and also by introduction of present and new brands at strategic price points in various markets.

While the focus will be to concentrate on brands with better realisation, your Company is also making efforts towards cost rationalisation. Introduction of the family shaped bottles for its flagship brand Mansion House was one such measure which facilitates an easier re-procurement system for these bottles at a lower price. Your Company intends to strengthen its position in its existing markets of Kerala, Andhra Pradesh, Karnataka, Puducherry, Tamil Nadu, Maharashtra, Orissa, Assam, and CSD segment where it enjoys a dominant position in its various brand segments. Your Company has already launched new brands in some of these markets and is in process of launching more brands/variants. Initial response for brands launched is encouraging.

Your Company plans to develop and strengthen its footprint in Northern and Eastern regions by building its manufacturing and distribution infrastructure. Efforts in this regards are already underway.

Your Company is expanding the bottling capacity of its wholly owned subsidiary Prag Distillery (P) Ltd. from 50,000 cases per month to 300,000 cases per month. This will further rationalise its manufacturing infrastructure in the State of Andhra Pradesh which is a main and growing market for your Company.

Further, your Company plans to strategically increase production capacity in its other subsidiary companies viz. Vahni Distilleries Private Limited and Kesarval Springs Distillers Pvt. Ltd.

Acquisition of Kesarval Springs Distillers Pvt. Ltd. gave an opportunity to your Company to add another segment i.e. wine in its portfolio which has a great potential in domestic and international trade.

SUBSIDIARIES

With the acquisition of 100% stake in Kesarval Springs Distillers Pvt. Ltd. on November 21, 2010, the Company has, now, three wholly owned subsidiaries viz. Prag Distillery (P) Ltd. having its Plant in the State of Andhra Pradesh, Vahni Distilleries Private Limited having its Plant in the State of Karnataka and Kesarval Springs Distillers Pvt. Ltd. having its Plant in the State of Goa. None of the above subsidiaries is a Material Non-Listed Subsidiary in terms of the Clause 49 of the Listing Agreement.

In accordance with the general circular no. 2/2011 dated February 08, 2011 issued by the Ministry of Corporate Affairs, the annual accounts of these subsidiary companies are not being attached with the balance sheet of the Company. The Company will make available the annual accounts of the subsidiary companies and related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the registered of ce of the Company and that of the respective subsidiary companies. The consolidated financial statements presented by the Company include the financial results of its subsidiary companies.

CONSOLIDATED FINANCIAL STATEMENTS

As stipulated under Clause 32 of the Listing Agreement and in accordance with the requirements of Accounting Standard AS-21 prescribed by the Institute of Chartered Accountants of India, the consolidated financial statements of the Company together with Auditors' Report thereon are annexed to the Annual Report.

EMPLOYEE STOCK OPTIONS

Being committed towards building a high performing growth oriented organisation, your Company has been taking steps from time to time to reward and retain the employees who are high performing, dedicated and committed towards growth of the Company.

In order to enable the Company to achieve this goal on a sustained basis and to give an opportunity to employees to participate in the growth of Company, the Company had introduced and implemented ESOP Scheme 2010 during the year under review after the successful implementation of ESOP Scheme 2008.

The Compensation Committee granted 52,200 and 286,821 stock options on June 25, 2010 and August 07, 2010 respectively under the ESOP Scheme 2008 and 1,615,500 stock options on January 15, 2011 under ESOP scheme 2010 to the eligible employees. These stock options shall vest with the concerned employees during the next four years from the date of respective grants.

The particulars of the stock options as required by SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 are attached and forms integral part of this report.

DIRECTORS

During the year under review, Mr. S.V. Muzumdar had resigned from the Directorship of the Company w.e.f. February 09, 2011 on health grounds. The Board places on record its high appreciation for the valuable advice and guidance rendered by him during his tenure as the Director of the Company.

Dr. Ravindra Bapat and Mr. C. V. Bijlani, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, of er themselves for re-appointment.

A brief profile of the Directors seeking re-appointment covering the nature of their expertise in specif c functional areas, the names of the companies in which they hold directorship and membership of committees of the board is furnished as a part of the Corporate Governance Report. Your Board has recommended their re-appointment.

QUALITY INITIATIVES, SAFETY AND ENVIRONMENT

Your Company is an ISO 9001:2008 and 14001:2004 Company committed to high levels of consistent quality and compliance of specified environmental standards and providing healthy work environment for its employees.

During the year under review, your Company has issued and implemented an improved version of standard operating procedures (SOPs) and brand manual to be followed by the contract bottling units (CBUs) to ensure uniform quality and standard of the IMFL products produced by such CBUs on behalf the Company.

Your Company plans to have a centralised technical centre at Shrirampur to further strengthen development work for new blends and to help in monitoring the existing blends. It will be in addition to its current R & D centre for chemical analysis. During the year, your Company has developed the blends for its brand BLACPOWER Whisky and Crown Prince Brandy.

In line with the international trade practices and to have better brand presentation, your Company has initiated the process to go for sticker labels instead of glue labels for all its fast moving brands.

ZERO DISCHARGE

Your Company has initiated the efforts to establish zero discharge concept without any environment pollution for its 50 KLPD molasses based and 100 KLPD grain based ENA plant at Shrirampur.

This will make your Company amongst few in the country to establish truly zero discharge concept without any environment pollution for molasses based ENA plant.

Your Company shall be amongst few in the country to completely go for zero discharge for grain based ENA Plant. Currently, we are producing DWGS (Distillers Wet Grain Spent) which is being sold. DWGS is used for cattle feed and is in demand due to its protein value. We will shortly be starting to dry it and will give us added value addition as DDGS (Distillers Dried Grain Spent).

FIXED DEPOSIT

The Company has not accepted any deposit within the scope of Section 58A of the Companies Act, 1956 during the year under review.

At the end of the year under review, there were 3 matured deposits aggregating to Rs. 16,000/- (Rupees Sixteen Thousand only), which have not been claimed by the depositors upto the date of this report. There were no deposits during the year, which were claimed but not paid by the Company.

There are no unclaimed deposits/interest on deposits lying with the Company for more than seven years which are to be transferred to Investor Education and Protection Fund as per sub section 2(c) of Section 205C of the Companies Act, 1956.

AUDITORS AND AUDITORS' REPORT

M/s. Batliboi & Purohit, Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment. The Board of Directors recommends their re-appointment as Statutory Auditors.

The notes on accounts referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

SECRETARIAL AUDIT REPORT

The Board of Directors had entrusted the responsibility of conducting secretarial audit of records and documents of the Company to M/s Ragini Chokshi & Company, Practising Company Secretaries. The secretarial audit report for the financial year ended March 31, 2011 is annexed hereto and forms part of the report.

COST AUDITORS

M/s. P. D. Phadke & Associates, Cost Accountants, Mumbai have been re-appointed as the Cost Auditors to conduct the audit of the cost accounts maintained by the Company for the financial year 2011-12.

CORPORATE GOVERNANCE

The Report on Corporate Governance alongwith the Auditors' Certificate regarding compliance of the conditions of Corporate Governance pursuant to Clause 49 of the Listing Agreement is annexed hereto and form part of the annual report.

In terms of sub-clause (v) of Clause 49 of the Listing Agreement, a certificate from CMD and CFO of the Company, inter- alia, confirming the correctness of the financial statements, adequacy of internal control measures and reporting of matters to the Audit Committee in terms of the said clause, is also enclosed as part of the annual report.

Management Discussion and Analysis Report outlining the key events of the year, industry scenario and risks and outlook is also annexed hereto and forms part of the annual report.

CSR INITIATIVES

A separate section on initiatives taken by the Company to fulfill its corporate social responsibilities is included in the annual report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to requirements of Section 217 (2AA) of the Companies Act, 1956, and on the basis of the information furnished to them by the statutory auditors and management, your Directors state that:

a) in preparation of the annual accounts, the applicable Accounting Standards have been followed and there are no material departures;

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that 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 accounting year and of the profit of the Company for the year;

c) they have taken proper and sufficient care 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 preventing and detecting fraud and other irregularities; and

d) they have prepared annual accounts on a going concern basis.

INFORMATION TECHNOLOGY

Your Company has successfully implemented Multiprotocol Label Switching (MPLS) connectivity between plants of its subsidiary companies and the Company is using packet switch virtual private network technology. It has also implemented Virtual Mail Server through cloud computing which provides reliable and optimised virtualisation solution and also optimised cost and resource utilisation.

PARTICULARS OF EMPLOYEES, CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required to be disclosed with respect to particulars of employees in accordance with Section 217(2A) of the Companies Act, 1956 is annexed.

Details with respect to conservation of energy, technology absorption & foreign exchange earnings and outgo, as required under 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 also annexed and the aforesaid annexures form part of the Directors' report.

ACKNOWLEDGEMENTS

Your Directors would like to express their sincere appreciation to investors, bankers, customers, suppliers, auditors for their continued support during the year. Yours Directors extend their sincere gratitude to all the regulatory authorities like SEBI, Stock Exchanges, Registrar of Companies and other Central and State Government authorities/agencies for their support.

Your Directors also place on record their appreciation and thanks to all employees for dedicated services rendered at various levels, without whose contribution, your Company could not have achieved the year's performance and looking forward to their continued support in the future as well.

For and on behalf of the Board of Directors

Amit Dahanukar Chairman & Managing Director

Place: Mumbai Date : May 26, 2011

 
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