Directors Report of Empee Distilleries Ltd.

Mar 31, 2016

Your Directors have pleasure in presenting the Board’s Report together with the audited Accounts for the year ended 31^st March 2016.

FINANCIAL RESULTS (Rs.in lacs)

Particulars	2015-16 (For the Year ended 31.03.2016) (12 months)	2013-15 (For the period ended 31.03.2015) (18 months)
Total Income	61268.14	91510.40
Operating Profit before Interest and Depreciation	4139.95	4921.91
Less : Interest	2504.36	3510.56
Depreciation	1298.42	1178.23
Profit /Loss before Tax	337.17	(233.12)
Provision for Taxation	234.04	121.43
Provision for Deferred Tax	(68.93)	(79.24)
Earlier Tax provision reversed	-	-
Profit / Loss After Tax	172.07	(275.31)
Profit brought forward	8092.50	7249.69
Add : Prior period Income - Depreciation	-	1118.15
Transfer of profit to General Reserve	-	-
Proposed Dividend	-	-
Dividend tax on proposed dividend	-	-
Profit carried forward	8264.57	8092.50

PERFORMANCE REVIEW :

Overall performance

During the year under review, your Company registered a total income of Rs.612.68 crs and a PAT of Rs. 1.72 crs as against the total income of Rs.915.10 crs and a loss of Rs.2.75 crs for a period of 18 months ended on 31.3.2015.

IMFL Division :

IMFL units at Mevalurkuppam, Palghat and Kolar registered a net turnover of Rs 544.04 crs and earned a net profit of Rs.8.60 crs during FY 2015-16 as against a net turnover of Rs.715.13 crs and a loss of Rs. 8.31 crs for a period of 18 months ended on 31.03.2015.

Power Division :

The revenue from the Power Division was Rs.14.85 crs with a net profit of Rs.3.09 crs during the financial year under review as against the revenue of Rs.67.49 crs and net profit of Rs.12.14 crs during the previous financial period 2013-15 (18 months).

Grain Based Alcohol Unit :

During the year 2015-16, the 60 KLPD Grain Based Alcohol unit at Chotkur, Andhra Pradesh earned a revenue of Rs.53.79 crs with a net loss of Rs.9.97 crs as against a revenue of Rs.132.48 crs and a net loss of Rs.6.59 crs in the previous 18 months period ended 31.03.2015.

REVIEW OF OPERATIONS :

Due to effect of price increase for IMFL products by TASMAC and also due to increased contribution from new brands , the performance of the IMFL division during the year under review, as compared to previous 18 months ended on 31.03.2015 was note-worthy. The company’s premium brands namely, Chevalier De Paris Brandy, Carte Royale Brandy, Elcanso Brandy and Blu Crystal Vodka continued to perform well in the home markets of Tamilnadu and Kerala. Contribution from new domestic markets such as Karnataka, Mahe, Pondicherry and foreign markets of Dubai and Singapore also led to increased profitability.

The company’s 10 MW power plant in the Aranthangi, Tamilnadu could not be operated during the year due to imposition of restrictive measures by the Tamilnadu State Electricity Board (TNEB). Due to this the company was forced to discontinue supply of power to third parties.

The overall performance of the company was negatively impacted by the poor performance of the 60 KLPD grain based alcohol plant at Telangana. This unit achieved low capacity utilization due to the non-availability and resultant high price of raw material during the period.

FUTURE OUTLOOK :

The outlook continues to remain positive for the IMFL business. Although the company suffered a minor setback due to market uncertainty caused by elections in the states of Tamilnadu and Kerala, the company’s brands continue to perform well in all markets. Fueled by the success of these brands the company is now in the process of developing high end whisky and wine brands for sale in domestic and foreign markets.

The power unit will be able to commence operations only after lifting of restrictive measures by TNEB. The company is hopeful that the government will remove this restriction in the near future.

The grain based distillery is fully operational due to improved availability of raw material and the grain prices are expected to reduce substantially due to good monsoon in Telengana.

CHANGE IN THE NATURE OF BUSINESS, IF ANY :

There is no change in the nature of the business during the year.

DIVIDEND :

Considering the availability of profits, the Board of Directors regret to recommend any dividend for the financial year ended 31.03.2016.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT :

There are no material changes and commitments affecting the financial position of the company between the end of the financial year and the date of the report.

TRANSFER TO RESERVES :

Your Company does not propose to transfer amounts to the General Reserve considering the availability of profits during the year under review.

FINANCE :

ISSUE OF 14% LISTED, RATED, SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES UNDER PRIVATE PLACEMENT :

The company was facing working capital stress due to non increase of selling price by TASMAC for over seven years. Therefore to improve liquidity, in April 2016 the Company issued of 375 Nos. of 14% listed, rated, secured redeemable non-convertible debentures of Rs.10,00,000 each aggregating Rs.37.50 crs pursuant to EGM approval dated 10^th March 2016 for overall NCD issue of Rs 47.50 Crores under private placement basis. It is proposed to issue NCDs for the remaining amount of Rs. 10.00 Crores during the current financial year. 375 Nos. of debentures were issued to 1) M/s. EW INDIA SPECIAL ASSETS FUND PTE LTD 2) M/s. ARUM INVESTMENTS PRIVATE LTD and listed on Bombay Stock Exchange Limited w.e.f. 9.5.2016. The preferential allotment of 10 lac equity share Warrants aggregating Rs.7.50 crs had been withdrawn by the Company since some regulatory approvals could not be obtained by the Investors.

SHARE CAPITAL :

The paid-up share capital of the company is 19008893 equity shares of Rs.10/- each. There is no change in the Authorized, Issued, Subscribed and Paid-up share capital of the company during the year under review.

DEPOSITS :

Your Company has not invited or accepted any fixed deposits either from the public or from the shareholders of the Company, during the year under review.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 :

The particulars of loans, guarantees and investments u/s 186 of the Companies Act, 2013 is annexed herewith as Annexure-A.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT :

The Management Discussion and Analysis Report is annexed herewith as Annexure-B.

DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR :

During the year under review, Mr.M.P.Mehrotra, Mr.T.S.Raghavan, Mr.M.K.Mohan and Mr. Shaji Purushothaman resigned from the Board of Company w.e.f. 12.11.2015, 11.2.2016, 22.02.2016 and 14.07.2016 respectively. Mr. Shankar Menon and Mr.R.Rangachari were appointed as Additional Directors w.e.f. 14.8.2015 and 09.05.2016 respectively as Independent Directors of the Company by the Board on 14.8.2015 and 09.05.2016. As per the provisions of the Companies Act, 2013, Mr. Shankar Menon and R.Rangachari are proposed to be appointed as Independent Directors for a term of five years from the date of their appointment, as set out in the AGM Notice for the approval of Directors.

The term of employment of Ms. Nisha Purushothaman, as Joint Managing Director of the Company would expire on 31^st December 2016 and hence pursuant to the recommendation of the Nomination and Remuneration Committee Ms. Nisha Purushothaman will be reappointed as Joint Managing Director w.e.f. 1.1.2017 for a term of five years subject to the seeking of the members’ approval.

The Independent Directors of the Company have submitted a declaration u/s.149(7) of the Act that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as Independent Director during their directorship.

NUMBER OF BOARD MEETINGS HELD DURING THE YEAR 2015-16 :

The Company has duly complied with the provisions of the Companies Act, 2013 in holding Board meetings and the details of the meetings are furnished in the Corporate Governance Report.

DETAILS OF POLICIES :

(i) Nomination and Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Company’s Remuneration Policy is available on the Company’s website www.empeegroup.co.in and the same is attached herewith as Annexure - C.

(ii) Corporate Social Responsibility Policy (CSR)

The Board has framed a CSR Policy and the same is available on the Company’s website www.empeegroup.co.in. The said policy is attached herewith as Annexure-D.

Annual Report on CSR as required under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is also attached herewith as Annexure-E.

(iii) Risk Management Policy

Business Risk Evaluation and Management is an ongoing process within the Organization. Pursuant to Section 134(3)(n) of the Companies Act, 2013, the Board has framed a Risk Management Policy for the Company. The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuing basis.

At present the company has not identified any element of risk which may threaten the business of the Company.

(iv) Whistle Blower Policy - Vigil Mechanism

Your Company has formulated a Vigil Mechanism Policy with a view to provide a mechanism for employees and directors of the Company to approach the Chairman of the Audit Committee to ensure adequate safeguards against victimization. This policy would help to create an environment wherein individuals feel free and secure to raise an alarm, whenever any fraudulent activity takes place or is likely to take place. It will also ensure that complainant(s) are protected from retribution, whether within or outside the organization. The Board has elected Mr.R.Rangachari, who is the Chairman of the Audit Committee as the Ethics Counsellor under the vigil mechanism policy. The details of establishment of the Vigil Mechanism Policy as per Annexure - F is displayed on the website of the Company www.empeegroup.co.in.

CORPORATE GOVERNANCE

As required by Regulation 27 of the LODR, 2015 of SEBI with the Stock Exchanges, the Corporate Governance Report and the Auditor’s Certificate regarding compliance of conditions of Corporate Governance, forms part of the Annual Report.

Name of the Committee	Composition	Details of Meetings held during the year 2015-16
AUDIT COMMITTEE	Mr. R.Rangachari Mr. Shankar Menon Ms.Nisha Purushothaman	23.5.2015, 14.8.2015, 12.11.2015 and 11.02.2016
NOMINATION & REMUNERATION COMMITTEE	Mr. Shankar Menon Mr. R.Rangachari Mr. M.P. Purushothaman	23.5.2015, 14.8.2015 and 28.03.2016
CSR COMMITTEE	Mr. Shankar Menon Mr. R.Rangachari Ms. Nisha Purushothaman	11.02.2016
STAKEHOLDERS’ RELATIONSHIP COMMITTEE	Mr. R.Rangachari Mr. Shankar Menon Ms. Nisha Purushothaman	23.5.2015, 14.8.2015, 12.11.2015 and 11.02.2016

DETAILS OF RECOMMENDATIONS OF AUDIT COMMITTEE WHICH WERE NOT ACCEPTED BY THE BOARD ALONG WITH REASONS

The same is not applicable as the Audit Committee’s recommendations were accepted and implemented by the Board.

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR - Not applicable

Subsidiaries

The Consolidated Accounts of the Company includes the audited accounts of subsidiaries namely EDL Properties Ltd and M/s.Appollo Distilleries and Breweries Pvt Ltd. and the associated company M/s.Empee Hotels Ltd. The accounts of the subsidiaries can be made available to the members upon request. Due to the fact that M/s.Empee Sugars and Chemicals Ltd (subsidiary company) has been referred to BIFR under the provisions of Sick Industries Companies Act, 1985 and in pursuance of AS-21 of Accounting Standard the consolidated accounts of Empee Sugars and Chemicals Ltd are not required to be given for the year under review and hence has not been included.

A statement containing salient features of the subsidiaries in Form AOC-1 is annexed herewith marked as Annexure - G and forms part of this report.

AUDITORS

a. Statutory Auditors

M/s. Venkatesh & Co, Chartered Accountants, who was appointed as Statutory Auditors for five years in terms of Sec. 139, 141 of the Companies Act, 2013 shall hold office till the conclusion of the 34^th AGM of the Company to be held in the year 2019, however subject to ratification of their appointment at every AGM.

The Company has received a letter from the Statutory Auditors of the Company, Venkatesh & Co, (ICAI Firm Registration Number: 0046365) Chartered Accountants, to the effect that the ratification of their appointment, if made, will be as per the requirements laid down under Section 139 and 141 of the Companies Act, 2013 read with Rule 4 of the Companies (Audit and Auditors) Rules, 2014. subject to approval of the Members..

Accordingly, a resolution is being placed before the Members for their approval as given in the AGM notice.

AUDITORS’ QUALIFICATIONS

a. Qualification : The Company has made an investment of Rs.1.59 Crores and given share application money of Rs.140.36 Crores to its subsidiary Empee Sugars and Chemicals Limited towards promoters share. The subsidiary company Empee Sugars and Chemicals Limited is incurring losses and has been registered under BIFR as a sick company. This may result in diminution in the value of investments for which no provision is considered.

Reply : Since the subsidiary company namely Empee Sugars and Chemicals Limited has been registered with BIFR by the order dated 24/11/2014 the company is unable to estimate the effect on the above qualification and the resultant is based on the order of the BIFR on rehabilitation scheme to be filed by Empee Sugars and Chemicals Limited.

b. Qualification : Other Loans and advances amounting to Rs.28.80 Crores out of Rs.37.25 Crores under the head Other Current assets, Sundry debtors amounting to Rs.13.49 Crores and Sundry creditors amounting to Rs.35.34 Crores are subject to confirmation and reconciliation. The impact on profitability is not ascertainable.

Reply : Regarding Other Loans and advances amounting to Rs.28.80 Crores out of Rs.37.25 Crores under the head Other Current assets, Sundry debtors amounting to Rs.13.49 Crores and Sundry creditors amounting to Rs.35.34 Crores, the company has taken appropriate steps to reconcile the same with respective debtors/ creditors and once the amount is reconciled necessary adjustments will be made in the accounts.

b. Secretarial Auditors

As per provisions of Sec. 204 of the Companies Act, read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014, your Company appointed M/s. S Dhanapal & Associates, a firm of Practicing Company Secretaries, Chennai as Secretarial Auditors of the Company for the FY ended 31.03.2016. The Secretarial Audit Report in Form No: MR 3 is attached as Annexure-H to this report.

c. Cost Auditors

Pursuant to Sec. 148(3) of the Act, the Board of Directors had appointed Mr.N. Thiagarajan (Reg. No:103955) as Cost Auditors of the Company for conducting the audit

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO

Information regarding conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo is given as Annexure -I and forms part of this Report.

STATUS ON AMALGAMATION

Pursuant to the last year’s Board Report the Scheme of Amalgamation of your company with Empee Sugars and Chemicals Ltd. and Appollo Wind Energy had been withdrawn.

RELATED PARTY TRANSACTIONS

There were no materially significant transactions with Related Parties during the financial year under review, which were in conflict with the interest of the Company. The details of Related Party Transactions during the year ending 31.03.2016, being arm’s length transactions have been reported in the Financial statements and forms part of this report. As per Annexure - J, Ms. Nisha Purushothaman, Joint Managing Director’s salary is reported pursuant to Sec. 188 of the Companies Act, 2013.

MANAGERIAL REMUNERATION/ PARTICULARS OF EMPLOYEES

The details/ particulars of employees/managerial persons remuneration as required to be given u/s 197 of the Companies Act, 2013 read along with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 as applicable is attached herewith as Annexure-K.

DETAILS OF PECUNIARY RELATIONSHIP OR TRANSACTIONS OF THE NON-EXECUTIVE INDEPENDENT DIRECTORS VIS-A-VIS THE COMPANY

There is no pecuniary relationship or transactions of the Non-Executive Independent Directors vis-a-vis the Company for the year ended 31.3.2016.

BOARD’S EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement / LODR, 2015 of SEBI, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and Compliance Committees.

While independent directors in their separate meeting have carried out to assess the performance of Chairman, JMD and other Directors of the Board more particularly about their business acumen and contribution to the Company, the performance evaluation of the Independent Directors was carried out by the entire Board.

The Independent Directors expressed their satisfaction with the evaluation process, functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of duties, obligations, responsibilities and governance.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has a proper and adequate internal control system to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorized, recorded and reported correctly.

The Internal Audit/Control is exercised through an external auditor namely, M/s.Ramesh Subramaniam & Co., Chartered Accountants, Chennai. The audit observations and corrective action taken thereon are periodically reviewed by the audit committee to ensure effectiveness of the internal audit/control system.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

There is no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure - L.

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

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The Company has not received any complaint on sexual harassment during the financial year ended 31.03.2016.

INDUSTRIAL RELATIONS

The Industrial relations continued to remain congenial during the year.

DIRECTORS’ RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:

a. In the preparation of the annual accounts, the applicable accounting standards have been followed.

b. The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review.

c. The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d. The directors have prepared the annual accounts on a going concern basis.

e. The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

f. The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

ACKNOWLEDGEMENT

Your Directors wish to express their gratitude for the continuous assistance and support extended by the Banks, Financial Institutions, Customers and Government authorities and also to the shareholders for their confidence in the management. Further, your Directors also place on record their deep sense of appreciation for the contributions made by employees at all levels to the growth and success of the company.

For and on behalf of the Board of Directors

M.P. Purushothaman

Chairman

Place: Chennai

Date : 11.08.2016

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Mar 31, 2015

Dear Members,

The Directors take pleasure in presenting their Report together with the audited Accounts for the period ended 31st March 2015 (18 months).

FINANCIAL RESULTS (Rs. in lacs)

2013-15 2012-13 Particulars (For the (For the period ended year ended 31.03.2015) 30.09.2013) (18months) (12 months)

Total Income 91510.40 58382.34

Operating Profit before Interest and Depreciation 4921.91 3901.68

Less Interest 3510.56 2360.00

Depredation 1178.23 968.01

Profit /Loss before Tax (233.12) 573.67

Provision for Taxation 121.43 119.81

Provision for Deferred Tax (79.24) 69.79

Earlier Tax provision reversed - -724.57

Profit /Loss After Tax (275.31) 1108.64

Profit brought forward 7249.69 6361.97

Add: Prior period Income - Depreciation 1118.15 -

Transfer of profit to General Reserve - -

Proposed Dividend - 190.09

Dividend tax on proposed dividend - 30.84

Profit carried forward 8092.50 7249.69

PERFORMANCE REVIEW

Overall performance

Your Company achieved a total income of Rs.915.10 crs and Net Loss after tax of Rs.2.75 crs for the period ended 31st March 2015 (18 months) as against the total income of Rs.583.82 crs and Net Profit after tax of Rs.11.09 crs during the previous financial year 2012-13 (12 months).

Power Division

The revenue from the Power Division was Rs.67.49 crs with a net profit of Rs.12.14 crs during the financial period 2013-15 (18 months) as against the revenue of Rs.34,71 crs and net profit of Rs.0.44 crs during the previous financial year 2012-13 (12 months).

Grain Based Alcohol Unit

During the year 2013-15 (18 months) the new 60 KLPD Grain Based Alcohol unit at Chotkur, Andhra Pradesh commissioned its operation and earned a revenue of Rs.132.48 crs with a net loss of Rs.6.58 crs.

REVIEW OF OPERATIONS

The Company''s performance was adversely impacted during the period under review, due to the long delay In price revision of IMFL prices by the Tamil Nadu Government since 2007 and the price-hike for IMFL has been given effect from 1st November 2014. The price revision could not reflect much contribution during the period under review, due to spin off effect of short duration of November 2014 to March 2015.

The two factories at Mevaloorkuppam, Tamilnadu and Palakkad, Kerala produced 57,40,178 cases of IMFL for the period ended 31.3.2015 (18 months) under review as against 46,53,443 cases of IMFL in the previous year ended 31.3.2013(12 months).

The 60KLPD Grain Based Alcohol plant at Choutkur, Madak District, is presently operating at 90% of its installed capacity. During the period under review a drier unit has been installed to improve the viability and performance of this plant in June 2014 and full fledged operation is achieved.

FUTURE OUTLOOK

During the period under review, the Company has introduced a number of brands in the premium category such as Chevalier De Paris-XL Premium Brandy and Carte Royale-XO etc. These brands have been well accepted In the market and we expect significant contribution from these brands. The IMFL plant at Kolar is now at full fledged production level and has made trial consignment of sales to Singapore, Telangana and Andhra Pradesh. The Company is expected to enlarge its horizon by way of Export of IMFL to South Asia, Middle East Countries and to other States in India.

CHANGE IN THE NATURE OF BUSINESS, IF ANY

There Is no change in the nature of the business during the year.

DIVIDEND

Considering the performance of the Company for the year under review, the Board of Directors regret to recommend any dividend for the financial period ended 31.03.2015 (18 months).

TRANSFER TO RESERVES

Due to losses of the Company for the period ended 31.3.2015, your Directors have not proposed any amount to be transferred to the General Reserves of the company.

SHARE CAPITAL

The paid-up share capital of the company is 19008893 equity shares of Rs.10/- each. There is no change in the Authorised, Issued, Subscribed and Paid-up share capital of the company during the period under review.

DEPOSITS

The Company has not invited or accepted any fixed deposits either from the public or from the shareholders of the Company, during the period under review.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The particulars of loans, guarantees and investments u/s 186 of the Companies Act, 2013 is annexed herewith as Annexure-A.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report is annexed as Annexure-B of this report,

DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR

As per the Companies Act, 2013, Mr.M.K.Mohan, Mr.T.S.Raghavan and Mr.M.P.Mehrotra were appointed as Independent Directors of the Company at the Board meeting held on 26/05/2014 for a term of five years. As per the provisions of the Companies Act, 2013 the above independent directors appointments are proposed to appointed for a term of five years from 26/05/2014 and accordingly resolutions are set out in the notice of the AGM for the approval of Directors.

COMPANY SECRETARY

Since Mrs.Sangeetha Sekar, Company Secretary resigned w.e.f 5th November 2014, Mr. K. Murali (FCS No.F4124) has been appointed as the Company Secretary.

DECLARATION BY INDEPENDENT DIRECTORS

The Independent Directors namely, Mr.M.K.Mohan, Mr.T.S.Raghavan and Mr.M.P.Mehrotra have given declarations that they meet the criteria required under section 149(6) of the Companies Act, 2013.

NUMBER OF BOARD MEETINGS HELD DURING THE YEAR 2014-2015

The Company has duly complied with the provisions of the Companies Act, 2013 in holding Board meetings and the details of the meetings are furnished in the Corporate Governance Report.

DETAILS OF POLICIES

(i) Nomination and Remuneration Policy

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Company''s Remuneration Policy is available on the Company''s website www.empeegroup.co.in and the same is attached as Annexure - C of this report.

(ii) Corporate Social Responsibility Policy (CSR)

The Board has, on the recommendation of the CSR Committee, approved the CSR Policy. The Company''s CSR Policy is available on the Company''s website www.empeegroup.co.in and is attached as Annexure-D of this report.

Annual Report on CSR as required under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is also attached herewith as Annexure-E of this report.

(iii) Risk Management Policy

Business Risk Evaluation and Management is an ongoing process within the Organization. Pursuant to Section 134(3)(n) of the Companies Act, 2013, the Board has framed a Risk Management Policy for the Company. The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the business and functions are systematically addressed through mitigating actions on a continuing basis.

At present the company has not identified any element of risk which may threaten the business (or) existence of the company.

(iv) Whistle Blower Policy - Vigil Mechanism

The Company has formulated a Vigil Mechanism Policy with a view to provide a mechanism for employees and directors of the Company to approach the Chairman of the Audit Committee to ensure adequate safeguards against victimisation. This policy would help to create an environment wherein individuals feel free and secure to raise an alarm, whenever any fraudulent activity takes place or is likely to take place, it will also ensure that complainan(s)are protected from retribution, whether within or outside the organization. The Board has elected Mr.T.S.Raghavan, Chairman of the Audit Committee as the Ethics Counsellor under the vigil mechanism policy. The details of establishment of the Vigil Mechanism Policy as per Annexure - F is displayed on the website of the Company www.empeegroup.co.in.

CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement with the Stock Exchanges, the Corporate Governance Report and the Auditor''s Certificate regarding compliance of conditions of Corporate Governance, form part of the Annua! Report.

BOARD COMMITTEES

Name of the Composition Details of Meetings held Committee uring the period 2013-15

Audit Committee Mr.T.S.Raghavan-Chairman 11.11.2013,12.02.2014 Ms.Nisha Purushothaman 14,5.2014,26.5.2014 Mr.M.P.Mehrotra 9.8.2014,25.10.2014 & 11.02,2015 Nomination & Mr.M.K.Mohan Remuneration Mr.T.S.Raghavan 11.2.2015 Committee Ms.Nisha Purushothaman Mr.T.S.Raghavan CSR Committee Ms.Nisha Purushothaman 11.2.2015 Mr.M.P.Mehrotra

Stakeholders'' Mr.M.K.Mohan Relationship Mr.T.S.Raghavan 11.2.2015 Committee Ms.Nisha Purushothaman

DETAILS OF RECOMMENDATIONS OF AUDIT COMMITTEE WHICH WERE NOT ACCEPTED BY THE BOARD ALONG WITH REASONS

The same is not applicable as the Audit Committee''s recommendations were accepted and implemented by the Board.

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR - Not applicable

Subsidiaries

The consolidated accounts of the company includes the audited accounts of subsidiaries namely EDI Properties Ltd and M/s.Appollo Distilleries and Breweries Pvt Ltd. and the associated company M/s.Empee Hotels Ltd. The accounts of the subsidiaries can be made available to the members upon request. Due to the fact that M/s.Empee Sugars and Chemicals Ltd has been referred to BIFR under the provisions of SIck Industries Companies Act, 1985 and in pursuance of AS-21 of Accounting Standard the consolidated accounts of Empee Sugars and Chemicals Ltd are not required to be given for the year under review and hence has not been included.

A statement containing salient features of the subsidiaries in form AOC 1 is annexed herewith marked as Annexure - G and forms part of this report.

AUDITORS

a. Statutory Auditors

Since M/s.D.Sampathkumar & Co., Chartered Accountants, the Auditors of the company have resigned on 14.5.2014 and the Board has appointed M/s. Venkatesh & Co, Chartered Accountants, as Statutory Auditors for five years in terms of Sec. 139,141 of the Companies Act, 2013 to hold office from the conclusion of this AGM till the conclusion of the 34th AGM of the Company to be held in the year 2019, however subject to ratification of their appointment at every AGM.

The Company has received a letter from the Statutory Auditors of the Company, Venkatesh & Co, (ICAI Firm Registration Number: 004636S) Chartered Accountants, to the effect that their appointment, if made, will be as per the requirements laid down under Section 139 and 141 of the Companies Act, 2013 read with Ruie 4 of the Companies (Audit and Auditors) Rules, 2014. The Statutory Auditors have expressed their intention to hold office from the conclusion of the 30th Annual General Meeting of the Company, upto the conclusion of the 34th Annual General Meeting to be held in the year 2019, pursuant to the provisions of the said sections, subject to approval of the Members and ratification of the appointment at every Annual General Meeting.

Accordingly, a resolution is being submitted to the Members for their approval as given in the AGM notice.

b. Secretarial Auditors

M/s, S Dhanapal & Associates, a firm of Practising Company Secretaries, Chennai has been appointed as Secretarial Auditors of the Company for the FY ended 31.03.2015 vide Board resolution dated 11.2.2015.

The Secretarial audit report received from the Secretarial Auditors is annexed to this report marked as Annexure - H and forms part of this report.

c. Cost Auditors

Since Mr. Sundaresan, Cost Auditor of the Company has resigned, the Board has appointed M/s,e2d Professional Services Pvt Ltd., as cost auditors of the Company in terms of Section 148 of the Companies Act, 2013 for the financial year 2015-16 in the Board meeting held on 23.5.2015. A resolution to ratify the payment of remuneration to Mr.G.Sundaresan, Cost Auditor for the financial period 2013-15 (18 months) is set out in the notice convening the AGM.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO

Information regarding conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo is given as Annexure -I and forms part of this Report.

STATUS ON AMALGAMATION

As already intimated to the Stock Exchanges, the Scheme of Amalgamation of your company with Empee Sugars and Chemicals Ltd., has been withdrawn. However the Hon''ble High Court, Andhra Pradesh, has yet to pass orders in this regard.

RELATED PARTY TRANSACTIONS

The details of Related Party Transactions during the period ending 31.03.2015 (18 months), being arm''s length transactions have been reported in the Financial statements and forms part of this report.

MANAGERIAL REMUNERATION

The details of employees/managerial persons remuneration as required to be given u/s 197 of the Companies Act,2013 read along with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial personnel) Rules 2014 as applicable is attached as Annexure-J.

DETAILS OF PECUNIARY RELATIONSHIP OR TRANSACTIONS OF THE NON-EXECUTIVE INDEPENDENT DIRECTORS VIS-A-VIS THE COMPANY

There is no pecuniary relationship or transactions of the Non-Executive Independent Directors vis-a-vis the company for the period ended 31.3.2015.

BOARD''S EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and Compliance Committees.

While independent directors in their separate meeting have carried out to assess the performance of Chairman, JMD and other Directors of the Board more particularly about their business acumen and contribution to the Company, the performance evaluation of the Independent Directors was carried out by the entire Board.

The Independent Directors expressed their satisfaction with the evaluation process, functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of duties, obligations, responsibilities and governance.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has a proper and adequate internal control system to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorised, recorded and reported correctly.

The internal Audit/Control is exercised through an external auditor namely, M/s.Ramesh Subramaniam & Co., Chartered Accountants, Chennai. The audit observations and corrective action taken thereon are periodically reviewed by the audit committee to ensure effectiveness of the internal audit/control system.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

There is no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure - K,

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

The Company has In place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The Company has not received any complaint on sexual harassment during the financial period ended 31.03.2015 (18 months).

INDUSTRIAL RELATIONS

The Industrial relations continued to remain congenial during the year.

DIRECTORS'' RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that:

a. In the preparation of the annual accounts, the applicable accounting standards have been followed.

b. The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review.

c. The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d. The directors have prepared the annual accounts on a going concern basis.

e. The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

f. The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively,

ACKNOWLEDGEMENT

Your Directors wish to express their gratitude for the continuous assistance and support extended by the Banks, Financial Institutions, Customers and Government authorities and also to the shareholders for their forbearance and their confidence In the management. Further, your Directors also place on record their deep sense of appreciation for the contributions made by employees at all levels to the growth and success of the company.

DISCLAIMER

The Ministry of Corporate Affairs vide its Circular No. 08/2014 dated April 4, 2014 clarified that the financial statements and the documents required to be attached thereto, the Auditor''s and Boards'' Report in respect of the financial year under reference shall continue to be governed by the relevant provisions of the Companies Act, 1956 since the financial year has commenced from 01.10.2013. Accordingly, whilst the financial statements and the Auditor''s Report as aforesaid are prepared as per the requirements of the Companies Act, 1956 and 2013, the Company as per its commitment to transparency and good governance, has to the extent possible provided the information in the Board''s Report, Corporate Governance Report and financial statements as per the Companies Act, 2013.

For and on behalf of the Board of Directors

Place: Chennai Date: 23.5.2015 M.P.Purushothaman Chairman

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Sep 30, 2013

To the Members,

The Directors take pleasure in presenting their Report together with the audited Accounts for the year ended 30th September 2013.

Financial Results

(Rs.in lacs)

Particulars 2012-13 2011-12 (For the year ended (For the period ended 30.09.2013) 30.09.2012) (12 months) (18 months)

Total Income 58382.34 100681.25

Operating Profit before Interest and Depreciation 3901.68 7623.43

Less Interest 2360.00 2658.72

Depreciation 968.01 1025.21

Profit before Tax 573.67 3939.50

Provision for Taxation 119.81 1793.65

Provision for Deferred Tax 69.79 -134.26

Earlier Tax provision reversed -724.57 0.00

Profit /(Loss) After Tax 1108.64 2280.11

Profit brought forward 6361.97 4302.79

Transfer of profit to General Reserve

Proposed Dividend 190.09 190.09

Dividend tax on proposed dividend 30.84 30.84

Profit carried forward 7249.69 6361.97

DIVIDEND

The Board of Directors have recommended a dividend of Rs.1/-per share for the year ended 30.09.2013.

FINANCIAL PERFORMANCE

Your Company achieved a total income of Rs.583.82 crores and net profit after tax of Rs.11.08 crores during the financial year 2012-13 as against the total income of Rs.1006.81 crores and net profit after tax of Rs.22.80 crores during the previous financial period 2011-12 (18 months). The revenue from the Power Division was Rs.34.71 crores with a net profit of Rs.0.44 crores during the financial year as against the revenue of Rs.52.12 crores and net profit of Rs.0.27 crores during the previous financial period ended 30th September, 2012 (18 Months). The performance in power division has improved due to higher realization from third party sales. During the current year the new 60 KLPD unit at Chotkur, Andhra Pradesh earned a revenue of Rs.4.20 crores with a net loss of Rs.5.37 crore.

REVIEW OF OPERATIONS

The two factories at Mevaloorkuppam and Palakkad produced 4653443 cases for the year ended 30th September 2013 as against the production of 8332516 cases for the period ended 30th September 2012(18 months). The sales was 4677190 cases for the year ended 30th September 2013 as against 8354524 cases for the period ended 30th September 2012 (18months).

During the year under review your Company has been able to maintain its market share. However the off take of profitable brands by Tasmac were lower which has affected the profitability. The activities on the real estate business of the company are put on hold temporarily due to prevailing unfavorable market conditions.

FUTURE OUTLOOK

The 60 KLPD grain based Distillery at Sanga Reddy, Medak District, Andhra Pradesh was commissioned in March 2013 and reached full production capacity in July, 2013. The company also expects to earn sizable revenues from the new brands to be introduced in the coming year. The Company has entered into manufacturing agreement for manufacture of Indian made foreign liquor which will be initially for a period of three years with United Spirits limited for production at its unit in Kolar District in Karnataka which will improve the top line and bottom line growth of the Company.

DIRECTORS

The term of appointment of Mr. Shaji Purushothaman, Managing Director expired on 9th March 2013. Mr. Shaji Purushothaman has expressed his inability to continue as the Managing Director. The Board places on record its appreciation of the services rendered by Mr.Shaji Purushothaman during his tenure as Managing Director. He however continues as a non executive Director.

Mr M.P.Purushothaman and Mr M.K.Mohan, Directors retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment.

SUBSIDIARIES

The consolidated accounts of the company includes the Un-audited accounts of subsidiaries M/s.Empee Sugars and Chemicals Limited, Empee Power Company (India) Ltd, EDL Properties Ltd, M/s.Appollo Distilleries Pvt Ltd and Appollo Wind Energy Private Limited. The accounts of the subsidiaries can be made available to the members upon request.

AUDITORS

M/s.D.Sampathkumar & Co., Chartered Accountants, the Auditors of the company retire at the ensuing Annual General Meeting and are eligible for re-appointment. The company has received a certificate from them to the effect that their re-appointment if made would be in accordance with Section 224(1B) of the Companies Act, 1956.

FIXED DEPOSITS

The Company has not accepted public deposits.

COMPANY SECRETARY

The Company is taking steps to appoint Company Secretary.

REPORT OF EMPLOYEES UNDER SECTION 217(2A)

There are no employees falling within the provision of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules 1975.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO

Information regarding conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo in accordance with the provisions of Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Directors) Rules 1988 is given as annexure 1 to this Report.

STATUS ON AMALGAMATION

The Scheme of Amalgamation of your company with Empee Sugars and Chemicals Ltd., has been approved by the Honorable High Court of Madras subject to the similar approval being received from the Honorable High Court of Andhra Pradesh.

CORPORATE GOVERNANCE REPORT

A Report in line with the requirement of clause 49 of the Listing Agreement on the Corporate Governance practices followed by the Company and the Certificate from the Statutory Auditors on Compliance of mandatory requirements along with Management Discussion and Analysis, are given as Annexure 2 to this report.

INDUSTRIAL RELATIONS

The Industrial relations continued to remain congenial during the year.

QUALIFICATIONS IN AUDITORS REPORT:

The Explanations to the qualifications made by the Auditors respectively are as under:

a) The investment of Rs.140.36 Crores in Company''s subsidiary Empee Sugars and Chemicals Limited (ESCL) was incurred for the implementation of Integrated Sugar Complex at Ambasamudram. The Composite Scheme of Arrangement for amalgamation with ESCL is in progress. The said Scheme has already been approved by the High Court of Madras subject to similar approval being obtained from the Honorable High Court of Andhra Pradesh. This investment will be squared off in the post amalgamated Balance Sheet of the Company.

b) The qualification is self explanatory.

c) Tax provision has been made under section 115JB of the Income Tax Act, 1961.

DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956 with respect to Directors'' responsibility.

We confirm

1. That in the preparation of the accounts for the year ended 30th September 2013, the applicable accounting standards have been followed.

2. That such Accounting Policies have been selected and applied 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 as at 30th September 2013 and of the profit of the Company for the year ended on that date.

3. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

4. That the annual accounts for the year ended 30th September, 2013 have been prepared on a going concern basis.

ACKNOWLEDGEMENT

Your Directors wish to express their gratitude for the continuous assistance and support extended by the Banks, Financial Institutions, Customers and Government authorities and also to the shareholders for their forbearance and their confidence in the management. Further, your Directors also place on record their deep sense of appreciation for the contributions made by employees at all levels to the growth and success of the company.

For and on behalf of the Board of Directors

Place: Chennai

Date: 11.11.2013 M.P.Purushothaman

Chairman

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Mar 31, 2011

To the Members,

The Directors take pleasure in presenting their Report together with the audited Accounts for the year ended 31st March 2011.

Financial Results

The performance of the company for the year ended 31st March 2011 is as follows:

(Rs. in Lacs)

Particulars 2010-11 2009-10 (For the year ended (For the year ended 31.03.2011) 31.03.2010)

Total Income 87848.52 85473.21

Operating Profit before Interest and Depreciation 4319.78 4243.19

Less: Interest 1477.70 1012.58

Depreciation 626.26 608.50

Add: Extraordinary income 580.70 --

Profit before Tax 2796.52 2622.11

Provision for Taxation 713.51 887.00

Provision for Deferred Tax -37.21 25.93

Profit /(Loss) After Tax 2120.22 1709.18

Profit brought forward 3502.90 3299.05

Transfer of profit to General Reserve 212.02 170.92

Proposed Dividend 950.44 1140.53

Dividend tax on proposed final dividend 157.87 193.89

Profit carried forward 4302.79 3502.89

DIVIDEND

The Board of Directors have recommended a dividend of Rs.5/- per share for the year ended 31.03.2011.

FINANCIAL PERFORMANCE

Your Company achieved a total income of Rs.878.48 crores and net profit after tax of Rs.21.20 crores during the year as against the total income of Rs.854.73 crores and net profit after tax of Rs.17.09 crores during the year ended 31st March 2010. The revenue from the Power Division was Rs.34.30 crores with a net profit of Rs.1.77 crores during the year ended 31st March 2011 as against the revenue of Rs.29.22 crores and net profit of Rs.1.38 crores during the year ended 31st March 2010.

REVIEW OF OPERATIONS

The two factories at Mevaloorkuppam and Palakkad produced 4873075 cases during the year ended 31st March 2011 as against the production of 4598067 cases during the year ended 31st March 2010. The sales was 4859165 cases during the year ended 31st March 2011 as against 4609076 cases during the year ended 31st March 2010.

Inspite of stiff competition from new entrants in the Tamilnadu IMFL market, your Company has been able to maintain its market share.

FUTURE OUTLOOK

Your Company is in the process of carrying out expansion at the Palakkad IMFL Plant in Kerala. The implementation of the 60 KLPD grain based Distillery at Sanga Reddy, Medak District, Andhra Pradesh is in full swing and your company is confident of going into production during the second half of the current financial year 2011-12.

DIRECTORS

Mr.M.P.Purushothaman and Mr. M.K.Mohan, Directors retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment.

SUBSIDIARIES

The consolidated accounts of the Company includes the accounts of subsidiaries M/s. EDL Properties Ltd and M/s.Appollo Distilleries Pvt Ltd. The said accounts of the subsidiaries can be made available to the members upon request.

With reference to the qualification remarks made by the Auditors in their Audit Report on consolidated financial statements, Your Board would like to state that the consolidated accounts of the company does not include the accounts of the other subsidiary M/s.Empee Sugars and Chemicals Limited and its fellow subsidiary M/s.Empee Power Company (India) Limited as those two companies have sought for extension of their financial years, and therefore the audited figures of these two companies as on 31st March 2011 were not available for consolidation.

AUDITORS

M/s.K.S. AIYAR & Co., Chartered Accountants, the Auditors of the company retire at the ensuing Annual General Meeting and are eligible for re-appointment. The company has received a certificate from them to the effect that their re-appointment if made would be in accordance with Section 224(1B) of the Companies Act, 1956.

FIXED DEPOSITS

The Company has no public deposits.

COMPANY SECRETARY

Mr.Harihara Subramanian resigned as the Company Secretary during the year. Mr.R.Anand has been appointed as the Company Secretary with effect from 7.2.2011.

REPORT OF EMPLOYEES UNDER SECTION 217(2A)

There are no employees falling within the provision of Section 217(2A) of the Companies Act, 1956 read with companies (Particulars of Employees) Rules 1975.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO

Information regarding conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo in accordance with the provisions of Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Directors) Rules 1988 is given as annexure 1 to this Report.

CORPORATE GOVERNANCE REPORT

A Report in line with the requirement of clause 49 of the Listing Agreement on the Corporate Governance practices followed by the Company and the Certificate from the Statutory Auditors on Compliance of mandatory requirements along with Management Discussion and Analysis, are given as Annexure 2 to this report.

INDUSTRIAL RELATIONS

The Industrial relations continued to remain congenial during the year.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956 with respect to Directors responsibility.

We confirm

1. That in the preparation of the accounts for the year ended 31st March 2011, the applicable accounting standards have been followed.

2. That such Accounting Policies have been selected and applied consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March 2011 and of the profit of the Company for the year ended on that date.

3. That proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

4. That the annual accounts for the year ended 31st March, 2011 have been prepared on a going concern basis.

ACKNOWLEDGEMENT

Your Directors also wish to express their gratitude for the continuous assistance and support extended by the Banks, Financial Institutions, Customers and Government authorities and also to the shareholders for their forbearance and their confidence in the management. Further, your Directors also place on record their deep sense of appreciation for the contributions made by employees at all levels to the growth and success of the company.

For and on behalf of the Board of Directors

Place : Chennai M.P. Purushothaman

Date : 11.8.2011 Chairman

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Mar 31, 2010

The Directors take pleasure in presenting their Report together with the audited Accounts for the year ended 31sl March 2010.

Financial Results (Rs.in lacs)

2009-10 2008-09 Particulars (For the year ended (9 months period ended 31.03.2010) 31.03.2009)

Total Income 85473.21 67145.14

Operating Profit before Interest and

Depreciation 4243.18 256787

Less Interest 1012.58 647.66

Depreciation 608.50 459.24

Deferred Revenue Expenses _ _

~Profitbefore Tax 2622.10 1460.96

Provision for Taxation 887.00 166.00

Provision for Deferred Tax 25.93 283.38

Profit /(Loss) After Tax 1709.17 1011.58

Profit brought forward 3298.51 3500.11

Transfer of profit to General Reserve 170.92 101.16

Interim Dividend paid - -

Dividend tax on interim dividend - -

Proposed Final Dividend 1140.53 950.44

Diviend tax on interim divindend 193.89 161.58

Profit carried forward 3502.35 3298.51

DIVIDEND

The Board of Directors have recommended a dividend of Rs.6 per share for the year ended 31.03.2010.

FINANCIAL PERFORMANCE

Your company achieved a total income of Rs 854.73 crores and net profit after tax of Rs 17.09 crores during the year ended 31st March 2010 as against a total income Rs 671.45 crores and net profit after tax of Rs 10.12 crores achieved during the previous period (9 months) ended 31sl March 2009. The IMFL Products of the company continue to be well received in the market and the company is constantly focusing its efforts to introduce new brands in medium and premium market segments. The Profit of IMFL division as on 31.03.2010 was Rs. 24.84 crores against previous period at Rs. 23.03 crores The revenue from the Power Division has gone up from previous year Rs.3.48 crores to current year Rs.29.22 crores and the division earned a net profit of Rs. 1.38 crores against a loss of Rs. 8.42 crores during last year.

REVIEW OF OPERATIONS

The two factories at Mevalurkuppam and Palakkad produced 45,98,067 cases during the year ended 31.3.2010 as against 37, 61,337 cases produced during the previous 9 months ended 31.3.2009. The company has toned up manufacturing and other operational efficiencies which has resulted in substantial increase to operational profit (before interest & depreciation) from Rs. 25.68 Crores during previous period to Rs. 42.43 Crores during the current year.

FUTURE OUTLOOK

Considering the present trend of growing demand in the IMFL market the company is confident of keeping up the current pace of growth despite the increase in competition. Power division has consolidated well during the year consequent to the increase in third party sales and efficiency in generation. As per the current estimates there is a huge growing gap between the demand and supply of power and the power division will seize this opportunity and grow further.

DIRECTORS

Mr. T.S.Raghavan and Mr. M.P.Merhotra, Directors retire by rotation at the ensuing Annual General Meeting and have offered themselves for reappointment.

SUBSIDIARIES

The consolidated accounts of the Company includes the accounts of subsidiaries M/s.Empee Sugars and Chemicals Limited, its subsidiary Empee Power Company (India) Limited and EDL Properties Ltd. The company had applied and got the exemption from the Government to attach the Directors Report and annual account statements of the subsidiaries for the year. The said accounts of the subsidiaries can be made available to the members upon request.

AUDITORS

Mr.R.Rajagopalan, the Auditor of the Company has submitted his resignation to act as Auditor of the company from the financial year 2010-11.

A notice has been received from a member proposing M/s.K.S. AIYAR & Co., Chartered Accountants be appointed as Auditors of the Company for the year 2010-11. The company has received a certificate from them to the effect that their appointment, if made would be in accordance with Section 224(1 B) of the Companies Act, 1956. The Board recommends their appointment.

FIXED DEPOSITS

The Company has no public deposits.

REPORT OF EMPLOYEES UNDER SECTION 217(2A)

The particulars of employees falling within the provision of Section 217(2A) of the Companies Act, 1956 read with companies (Particulars of Employees) Rules 1975, is given as Annexure 1 to this Report..

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO

Information regarding conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo in accordance with the provisions of Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of particulars in the Report of Directors) Rules 1988 is given as annexure 2 to this Report.

CORPORATE GOVERNANCE REPORT

A Report in line with the requirement of clause 49 of the Listing Agreement on the Corporate Governance practices followed by the Company and the Certificate from the Statutory Auditors on Compliance of mandatory requirements along with Management Discussion and Analysis, are given as Annexure 3 to this report.

INDUSTRIAL RELATIONS

The Industrial relations continued to remain congenial during the year.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors to the best of their knowledge and belief confirm that:

a) in the preparation of the profit and loss account for the period ended 31.3.2010 and the balance sheet as at that date ("Financial Statements") applicable accounting standards have been followed;

b) appropriate accounting policies have been selected and applied consistently and such judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs of the Company as at the end of the period and of the profit of the company for that period.

c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities, to ensure this, the company has established internal control systems, consistent with its size and nature of operations. In weighing the assurance provided by any such system of internal controls its inherent limitations should be recognized. These systems are reviewed and updated on an ongoing basis. Periodic internal audits are conducted to provide reasonable assurance of compliance with these systems. The audit committee meets at regular intervals to review the internal audit function.

d) the financial statements have been prepared on a going concern basis.

e) the financial statements have been audited by Mr.R.Rajagopalan, statutory auditor and his report is appended thereto.

ACKNOWLEDGEMENT

Your Directors also wish to express their gratitude for the continuous assistance and support extended by the Banks, Financial Institutions, Customers and Government authorities and also to the shareholders for their forbearance and their confidence in the management. Further, your Directors also place on record their deep sense of appreciation for the contributions made by employees at all levels to the growth and success of the company.

For and on behalf of the Board of Directors

sd/- Place: Chennai M.P. Purushothaman

Date: 6-8-2010 Chairman