Your Directors have pleasure in presenting the 26th Annual Report of yourCompany and the audited financial statements for the year ended March 31 2019.
The Summary of Financial Performance of the Company for the year 2018-19 is as under:
(INR in Lakhs)
|Particulars ||2018-19 ||2017-18 |
|Gross sales ||12822.44 ||12370.03 |
|Add: Other operating revenue ||1015.70 ||1129.95 |
|Add: Other income ||437.00 ||281.33 |
|Total Income ||14275.14 ||13781.31 |
|Less: Cost of goods sold ||9356.65 ||10263.00 |
|Less : Excise duty ||- ||11.85 |
|Less: Other costs ||4143.33 ||4033.86 |
|Earnings before government grant depreciation interest and taxes ||775.16 ||-527.40 |
|Add: Government grant ||-2686.18 ||16685.44 |
|Earnings before depreciation interest and taxes ||-1911.02 ||16158.04 |
|Less: Interest costs ||2935.48 ||2254.48 |
|Less: Depreciation ||4861.00 ||3661.16 |
|Earnings before taxes ||-9707.50 ||10181.40 |
|Income tax expenses ||-2999.27 ||3180.09 |
|Other comprehensive income (Net of tax) ||-13.00 ||42.00 |
|Profit / (loss) available for appropriation ||-6721.23 ||7043.31 |
In view of the accumulated losses your Directors do not recommend any Dividend on theequity shares of the Company.
During the year under review seven Board Meetings were held. The details of the sameare covered in the Corporate Governance Report.
STATE OF COMPANY'S AFFAIRS
Except to the extent as stated under Material changes and Commitments there have beenno significant or material orders passed during the year by the regulators or Courts orTribunals impacting the going concern status and the company's operations in future.
PERFORMANCE OF THE COMPANY
The Companyhasachieved financialyear ended March 31 2019 grosssalesofINR12822.44Lakhsforthe against the gross sales of INR 12370.03 Lakhs for the financial yearended March 31 2018. The Company has reported a loss of INR 9707.50 Lakhs before tax dueto intermittent breakdowns in plant machineries external challenges leading to frequentshutdowns and delay in stabilisation of operations.
The trading in the equity shares of your Company is under compulsory dematerializationmode. As on March 31 2019 equity shares representing 98.18% of the equity share capitalare in dematerialization form. As the depository system offers numerous advantagesmembers are requested to take advantage of the same and avail of the facility ofdematerialization of the Company's shares.
Members may please note that effective from 1st April 2019 shares of thelisted entity can be traded only in dematerialized mode pursuant to SEBI notificationSEBI/LAD-NRO/GN/2018/24 published on 08 June 2018.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Pursuant to the provisions of the Companies Act 2013 (the Act) Mr. Ajay Goel retiresby rotation and being eligible offered himself for re-appointment.
Mr. B.V Krishna Reddy who was re-appointed as Managing Director with effect fromSeptember 21 2018 had resigned due to personal reasons with effect from the close ofbusiness hours on October 2 2018. The Board of directors at their meeting held on 1stOctober 2018 appointed Mr Ravi Varma as Managing Director in place of Mr B V KrishnaReddy with effect from October 3 2018. The appointment of Ravi Varma as Managing Directorwas subject to approval of the members of the Company at the ensuing Annual GeneralMeeting of the Company. Accordingly it is proposed before the members of the Company toapprove the appointment of Mr Ravi Varma as the Managing Director of the Company for aperiod of two years with effect from October 3 2018.
Ms Junia Sebastian resigned due to personal reasons with effect from the close ofbusiness hours on October 1 2018. She has confirmed that there are no material reasonsother than specified reason.
Ms. Srivathsala K N was appointed as an Independent Director with effect from October2 2018. Her appointment is subject to approval of the members of the Company at theensuing Annual General Meeting of the Company. Accordingly it is proposed before themembers of the Company to approve the appointment of
Ms. Srivathsala K N for a period of five years with effect from October 2 2018.
The Nomination and Remuneration Committee has recommended the re-appointment andappointment as stated above which has been provided in the notice to AGM.
A brief profile of Mr. Ajay Goel Mr Ravi this AGM.
As per declarations received no Director of the Company is disqualified to beappointed as a Director of any
Public Limited Company in terms of Section 164(2) of the Companies Act 2013.
DECLARATION FROM INDEPENDENT DIRECTORS
In terms of Section 149(7) of the Companies Act 2013 Independent Director(s) of theCompany have submitted a declaration that they meet the criteria of Independence.
FAMILIARISATION PROGRAM UNDERTAKEN FOR INDEPENDENT DIRECTORS
The details of familiarization program of Independent Directors with the Company theirroles rights responsibilities in the Company nature of the industry in which theCompany operates business model of the Company and related matters are put up on thewebsite of the Company at the link:http://www.pioneerdistilleries. com/policies.php.
There have been meetings of Independent Directors at regular intervals which wereconducted without the presence of other Directors.
The ratio of the remuneration of each director to the median employee's remunerationthe names of the top ten employees in terms of remuneration drawn and other details duringthe financial year 2018-19 in terms of
Section 197(12) of the Companies Act 2013 read with Rule 5(1)&(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided in Annexure1 and also in the Corporate Governance Report and form MGT 9 which forms part of thisreport. As stated in the Corporate Governance
Report sitting fees were paid to Independent Directors for attending Board/Committeemeetings. They are also entitled for reimbursement of actual travel expenses boarding andlodging conveyance and incidental expenses incurred in attending such meetings.
Pursuant to the provisions of the Act and Regulation 17 of the SEBI ListingRegulations 2015 the Board has been carrying out an annual performance evaluation of itsown performance the performance of its Directors individually as well as that of theBoard Committees. The evaluation process considers the effectiveness of the Board and theCommittees with special emphasis on the performance and functioning of the Board and theCommittees. The evaluation of the Directors is based on the time spent by each of theBoard Members core competencies expertise and contribution to the effectiveness andfunctioning of the Board and the Committees.
MATERIAL CHANGES AND COMMITMENTS
The Company had on July 26 2018 received directions ("Closure Direction")from Maharashtra Pollution Control Board ("MPCB") directing closure ofmanufacturing activity of the Company under Section 33A of The Water (Prevention &Control of Pollution) Act 1974 and under Section 31A of The Air (Prevention
& Control of Pollution) Act 1981 alleging pollution caused by the Company. TheCompany had filed a writ petition before the Hon'ble High Court of Judicature of BombayAurangabad Bench and subsequently approached National Green Tribunal ("NGT") atDelhi against the Closure Direction. NGT had vide its order dated August 03 2018directed the Company to put forward its viewpoint for consideration before the MPCB inaccordance with law. The MPCB after hearing the Company vide its direction dated August29 2018 was pleased to accept the Company's submissions subject to fulfilment of certainconditions within specified timelines. The Company has complied with the said conditionsand has submitted final completion report to
MPCB on December 12 2018.
During the year the Company got approval of the members for shifting of RegisteredOffice from the state of
Telangana to state of Karnataka for which order of the authority for formal approvalwas obtained.
The Companies Act 2013 provides for the formation and duties of various committees ofthe Board. The
Company has in place the required Committees with specific defined roles duties andresponsibilities.
Details of various Committees meetings held and attendance at the various Committeemeetings are given in the Corporate Governance Report which forms part of the AnnualReport.
All the recommendations of the Audit and Risk Management Committee were accepted by theBoard.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
There are no loans given investments made guarantees given securities provided bythe Company and acquired by way of subscription purchase or otherwise securities of anyother body corporate which are covered under the provisions of the Section 186 of theCompanies Act 2013.
INTERNAL FINANCIAL CONTROLS
Your Company has established and maintained a framework of Internal Financial Controlsand compliance systems. Based on Board's review of the effectiveness of the policies andprocedures adopted by the
Company for ensuring orderly and efficient conduct of its business including adherenceto Company's policy safeguarding its assets prevention and detection of frauds anderrors and completeness of accounting records and timely preparation of financialstatements and the confirmation received from the external parties the Board hassatisfied itself that the Company has laid down internal financial controls commensuratewith size of the Company and that such internal financial controls are broadly adequateand are operating effectively. The certification by the auditors on internal financialcontrol forms part of the audit report.
M/s.Price Waterhouse & Co. Chartered Accountants LLP (FRN 304026E/E-300009) wereappointed as Statutory Auditors of your Company in the 24th AGM held on 28 July2017 for a period of 5 years till the conclusion of the 29th AGM of thecompany. Pursuant to provisions of the Companies (Amendment) Act 2017 ratification of theappointment made at the earlier Annual General Meeting is not required and hence dispensedwith ratification of the appointment of Auditors.
Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhad appointed Mr. Sudhir V Hulyalkar a Company Secretary in Practice (FCS: 6040 [CP No.6137]) to undertake the Secretarial Audit of the Company for the Financial Year 2018-19.The Secretarial Audit Report is given as Annexure 2 forming part of this Report.
In addition the company has also obtained Secretarial Compliance Report for the yearended March 31 2019 in terms of the SEBI Circular issued on February 08 2019. The saidreport has been submitted to the stock exchanges and is also available on the Company'swebsite www.pioneerdistilleries.com
The Company has a Risk Management framework. Risk evaluation by the management is anongoing process within the organization and is periodically reviewed by the Board ofDirectors. Risk Management has been made part of Audit Committee by renaming the AuditCommittee as Audit and Risk Management Committee. The Risk management policy adopted bythe Company has been explained in the Management Discussion and Analysis Report whichforms part of this Annual report.
WHISTLE BLOWER MECHANISM
The Company promotes ethical behaviour in all its business activities and has put inplace a mechanism for reporting illegal or unethical behaviour. The Company has a Whistleblower mechanism under which the employees and directors are free to report violations ofapplicable laws and regulations and the Code of Conduct and as part of the mechanism allthe employees are provided access to the Chairman of the Audit
Committee. The Whistle Blower Mechanism of the Company can be accessed on the websiteat the following link: www.diageospeakup.com
RELATED PARTY TRANSACTIONS
The Company has formulated a Policy on dealing with Related Party Transactions (RPTs)which has been reviewed by the Audit Committee at regular intervals. The Policy isdisclosed on the website of the Company at the web link:http://www.pioneerdistilleries.com/policies.php. All transactions entered with RelatedParties as defined under the Companies Act 2013 and Regulation 23 of the SEBI ListingRegulations during the year were in the ordinary course of business and at an arm's lengthbasis. There are no materially significant RPTs entered by the Company with promotersdirectors key managerial personnel or other designated persons which may have a potentialconflict of interest with the Company.
The details of the RPTs in Form AOC-2 is enclosed and marked as Annexure 3. Inaccordance with Ind AS 24 the RPTs are disclosed under Note 36 of the FinancialStatements.
CORPORATE GOVERNANCE REPORT
A report on the Corporate Governance is annexed separately as part of this report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report is annexed separately as part of thisreport.
The Company has not accepted any deposits from the public during the year. There was nofixed deposit amount that remained unpaid/unclaimed as at the end of the year.
LISTING OF EQUITY SHARES OF THE COMPANY
The Equity Shares of your Company continue to be listed with BSE Limited and NationalStock Exchange of India Limited. The Annual Listing fees for the year 2019-20 have beenpaid to these Stock Exchanges.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
In terms of Sections 124 and 125 of the Act (erstwhile Section 205A(5) and 205 C of theCompanies Act 1956) read with the Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 (IEPF Rules') both of whichwere applicable with effect from September 07 2016 the unclaimed/unpaid dividendremaining unclaimed / unpaid for a period of seven years have been transferred to theIEPF. There were no amount pending to be transferred to the IEPF account for the financialyear ended
Necessary compliance under Rule 3 of the Investor Education and Protection Fund(Uploading of information regarding unpaid and unclaimed amounts lying with Companies)Rules 2012 have been complied with.
None of the employee draws remuneration in excess of the limit prescribed under rule5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to Energy conservation Technology absorption Foreignexchange earnings and outgo as required to be disclosed under the Act is given in Annexure4 to this Report.
EXTRACT OF THE ANNUAL RETURN
Pursuant to the provisions of Section 134(3)(a) of the Companies Act 2013 an extractof the Annual Return in Form MGT-9 is given in Annexure 5 to this Report.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility (CSR) committee has been setup by the Company. Thecomposition and other details have been provided in the Corporate Governance Report.
We as a genuine contributor to this cause are pleased to inform that this year wehave witnessed increasing participation from the state governments traffic police andenforcement agencies in the Company's CSR activities. In our endeavour to create respectand trust in the society in which the Company is operating your company is presentlycarrying out various activities under Corporate Social Responsibility ("CSR")Program.
The Company will continue to meet its social objectives by spending on the followingCSR activities in the vicinity of the Company's factory:
1. Canal clean-up work near Balapur
2. Safe drinking water for people - "Pani Poi"
3. Hiring of Escavator and Tractor for desilting of nearby ponds.
4. Digging of borewells at Dharmabad.
The Company had reported profits in previous financial year in the backdrop of income
Government Grant. This Government Grant is not received by the Company yet.Operationally the Company continues to report losses and is operating on working capitalborrowed from banks and intercorporate loans and advances from the holding company. TheCompany will spend the unspent CSR amount of INR 51.35 lacs for the financial year endedMarch 31 2019 once the operations are stabilised and the operations starts generatingcash.
Furthermore as required by section 135 of the Companies Act 2013 and the rules madehereunder additional information on the policy and implementation of CSR activities byyour Company during the year are provided in Annexure 6 to this report.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has implemented a policy on Prevention of Sexual Harassment (POSH) at theWorkplace in line with the requirements of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. An Internal Complaints Committee hasbeen setup to redress complaints received regarding sexual harassment. No complaint wasreceived by the Company during the year ended March 31 2019.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to section 134 (5) of the Companies Act 2013 in relation to financialstatements (together with the notes to such financial statements) for the year 2018-19the Board of Directors report that:
(i) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit/ loss of the Company for that period; (iii) the Directors have taken proper andsufficientcare for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; (iv) the Directors have preparedthe financial statements on a going concern basis; (v) the Directors have laid downinternal financial controls to be followed by the Company commensurate with the size andnature of its business and the complexity of its operations and that such internalfinancial controls are adequate and are operating effectively.
(vi) the Directors has devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems are adequate and is operating effectively.
Your Directors place on record their sincere appreciation for the support fromemployees shareholders customers suppliers banks auditors government of Maharashtra& Telangana and other business associates.