Your Directors have pleasure in presenting the Board s Report together with the auditedAccounts for the year ended 31st March 2016.
FINANCIAL RESULTS (Rs.in lacs)
|Particulars ||2015-16 ||2013-15 |
| ||(For the Year ended ||(For the period ended |
| ||31.03.2016) ||31.03.2015) |
| ||(12 months) ||(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 :
During the year under review your Company registered a total income of Rs.612.68 crsand a PAT of Rs.1.72 crs as against the total income of Rs.915.10 crs and a loss ofRs.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 544.04crs and earned a net profit of Rs.8.60 crs during FY 2015-16 as against a net turnover ofRs.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 crsduring the financial year under review as against the revenue of Rs.67.49 crs and netprofit 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 AndhraPradesh earned a revenue of Rs.53.79 crs with a net loss of Rs.9.97 crs as against arevenue of Rs.132.48 crs and a net loss of Rs.6.59 crs in the previous 18 months periodended 31.03.2015.
REVIEW OF OPERATIONS :
Due to effect of price increase for IMFL products by TASMAC and also due to increasedcontribution from new brands the performance of the IMFL division during the year underreview as compared to previous 18 months ended on 31.03.2015 was note worthy.The companys premium brands namely Chevalier De Paris Brandy Carte Royale Brandy Elcanso Brandyand Blu Crystal Vodka continued to perform well in the home markets of Tamilnadu andKerala. Contribution from new domestic markets such as Karnataka Mahe Pondicherry andforeign markets of Dubai and Singapore also led to increased profitability.
The company s 10 MW power plant in the Aranthangi Tamilnadu could not be operatedduring the year due to imposition of restrictive measures by the Tamilnadu StateElectricity Board (TNEB). Due to this the company was forced to discontinue supply ofpower to third parties.
The overall performance of the company was negatively impacted by the poor performanceof the 60 KLPD grain based alcohol plant at Telangana. This unit achieved low capacityutilisation due to the non-availability and resultant high price of raw material duringthe period.
FUTURE OUTLOOK :
The outlook continues to remain positive for the IMFL business. Although the companysuffered a minor setback due to market uncertainty caused by elections in the states ofTamilnadu and Kerala the company s brands continue to perform well in all markets. Fueledby the success of these brands the company is now in the process of developing high endwhisky and wine brands for sale in domestic and foreign markets.
The power unit will be able to commence operations only after lifting of restrictivemeasures by TNEB. The company is hopeful that the government will remove this restrictionin the near future.
The grain based distillery is fully operational due to improved availability of rawmaterial and the grain prices are expected to reduce substantially due to good monsoon inTelengana.
CHANGE IN THE NATURE OF BUSINESS IF ANY :
There is no change in the nature of the business during the year.
Considering the availability of profits the Board of Directors regret to recommend anydividend for the financial year ended 31.03.2016.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANYBETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THE REPORT :
There are no material changes and commitments affecting the financial position of thecompany 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 consideringthe availability of profits during the year under review.
ISSUE OF 14% LISTED RATED SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURES UNDER PRIVATEPLACEMENT :
The company was facing working capital stress due to non increase of selling price byTASMAC for over seven years. Therefore to improve liquidity in April 2016 the Companyissued of 375 Nos. of 14% listed rated secured redeemable non-convertible debentures ofRs.1000000 each aggregating Rs.37.50 crs pursuant to EGM approval dated 10thMarch 2016 for overall NCD issue of Rs 47.50 Crores under private placement basis. It isproposed to issue NCDs for the remaining amount of Rs. 10.00 Crores during the currentfinancial 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.7.50crs had been withdrawn by the Company since some regulatory approvals could not beobtained 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 Authorised Issued Subscribed and Paid-up share capital of thecompany during the year under review.
Your Company has not invited or accepted any fixed deposits either from the public orfrom 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 2013is 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 RESIGNEDDURING 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 11.2.201622.02.2016 and 14.07.2016 respectively. Mr. Shankar Menon and Mr.R.Rangachari wereappointed as Additional Directors w.e.f. 14.8.2015 and 09.05.2016 respectively asIndependent Directors of the Company by the Board on 14.8.2015 and 09.05.2016. As per theprovisions of the Companies Act 2013 Mr. Shankar Menon and R.Rangachari are proposed tobe appointed as Independent Directors for a term of five years from the date of theirappointment 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 theCompany would expire on 31st December 2016 and hence pursuant to therecommendation of the Nomination and Remuneration Committee Ms. Nisha Purushothaman willbe reappointed as Joint Managing Director w.e.f. 1.1.2017 for a term of five years subjectto the seeking of the members approval.
The Independent Directors of the Company have submitted a declaration u/s.149(7) of theAct that each of them meets the criteria of independence as provided in Section 149(6) ofthe Act and there has been no change in the circumstances which may affect their status asIndependent 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 holdingBoard meetings and the details of the meetings are furnished in the Corporate GovernanceReport.
DETAILS OF POLICIES :
(i) Nomination and Remuneration Policy
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Company s Remuneration Policy is available on the Company s websitewww.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 websitewww.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 SocialResponsibility 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 RiskManagement Policy for the Company. The Company has in place a mechanism to identifyassess monitor and mitigate various risks to key business objectives. Major risksidentified by the business and functions are systematically addressed through mitigatingactions on a continuing basis.
At present the company has not identified any element of risk which may threaten thebusiness of the Company.
(iv) Whistle Blower Policy Vigil Mechanism
Your Company has formulated a Vigil Mechanism Policy with a view to provide a mechanismfor employees and directors of the Company to approach the Chairman of the Audit Committeeto ensure adequate safeguards against victimisation. This policy would help to create anenvironment wherein individuals feel free and secure to raise an alarm whenever anyfraudulent activity takes place or is likely to take place. It will also ensure thatcomplainant(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 theEthics Counsellor under the vigil mechanism policy. The details of establishment of theVigil Mechanism Policy as per Annexure F is displayed on the website of the Companywww.empeegroup.co.in.
As required by Regulation 27 of the LODR 2015 of SEBI with the Stock Exchanges theCorporate Governance Report and the Auditor s Certificate regarding compliance ofconditions 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 ||23.5.2015 14.8.2015 12.11.2015 and 11.02.2016 |
| ||Mr. Shankar Menon || |
| ||Ms.Nisha Purushothaman || |
|NOMINATION & ||Mr. Shankar Menon || |
|REMUNERATION ||Mr. R.Rangachari ||23.5.2015 14.8.2015 and 28.03.2016 |
|COMMITTEE ||Mr. M.P. Purushothaman || |
|CSR COMMITTEE ||Mr. Shankar Menon || |
| ||Mr. R.Rangachari ||11.02.2016 |
| ||Ms. Nisha Purushothaman || |
|STAKEHOLDERS ||Mr. R.Rangachari ||23.5.2015 14.8.2015 12.11.2015 and 11.02.2016 |
|RELATIONSHIP ||Mr. Shankar Menon || |
|COMMITTEE ||Ms. Nisha Purushothaman || |
DETAILS OF RECOMMENDATIONS OF AUDIT COMMITTEE WHICH WERE NOT ACCEPTED BY THE BOARDALONG WITH REASONS
The same is not applicable as the Audit Committee s recommendations were accepted andimplemented by the Board.
NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES JOINT VENTURESOR ASSOCIATE COMPANIES DURING THE YEAR
Not applicable Subsidiaries
The Consolidated Accounts of the Company includes the audited accounts of subsidiariesnamely EDL Properties Ltd and M/s.Appollo Distilleries and Breweries Pvt Ltd. and theassociated company M/s.Empee Hotels Ltd. The accounts of the subsidiaries can be madeavailable to the members upon request. Due to the fact that M/s.Empee Sugars and ChemicalsLtd (subsidiary company) has been referred to BIFR under the provisions of Sick IndustriesCompanies Act 1985 and in pursuance of AS-21 of Accounting Standard the consolidatedaccounts of Empee Sugars and Chemicals Ltd are not required to be given for the year underreview and hence has not been included.
A statement containing salient features of the subsidiaries in Form AOC-1 is annexedherewith marked as Annexure - G and forms part of this report.
a. Statutory Auditors
M/s. Venkatesh & Co Chartered Accountants who was appointed as Statutory Auditorsfor five years in terms of Sec. 139 141 of the Companies Act 2013 shall hold office tillthe conclusion of the 34th AGM of the Company to be held in the year 2019however 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 effectthat the ratification of their appointment if made will be as per the requirements laiddown under Section 139 and 141 of the Companies Act 2013 read with Rule 4 of theCompanies (Audit and Auditors) Rules 2014. subject to approval of the Members..
Accordingly a resolution is being placed before the Members for their approval asgiven in the AGM notice.
AUDITORS QUALIFICATIONS a. Qualification : The Company has made an investment ofRs.1.59 Crores and given share application money of Rs.140.36 Crores to its subsidiaryEmpee Sugars and Chemicals Limited towards promoters share. The subsidiary company EmpeeSugars and Chemicals Limited is incurring losses and has been registered under BIFR as asick company. This may result in diminution in the value of investments for which noprovision is considered.
Reply : Since the subsidiary company namely Empee Sugars and Chemicals Limited has beenregistered with BIFR by the order dated 24/11/2014 the company is unable to estimate theeffect on the above qualification and the resultant is based on the order of the BIFR onrehabilitation 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 thehead Other Current assets Sundry debtors amounting to Rs.13.49 Crores and Sundrycreditors amounting to Rs.35.34 Crores are subject to confirmation and reconciliation. Theimpact on profitability is not ascertainable.
Reply : Regarding Other Loans and advances amounting to Rs.28.80 Crores out of Rs.37.25Crores under the head Other Current assets Sundry debtors amounting to Rs.13.49 Croresand Sundry creditors amounting to Rs.35.34 Crores the company has taken appropriate stepsto reconcile the same with respective debtors/ creditors and once the amount is reconcilednecessary 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 appointedM/s. S Dhanapal & Associates a firm of Practising Company Secretaries Chennai asSecretarial Auditors of the Company for the FY ended 31.03.2016. The Secretarial AuditReport 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 ForeignExchange 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 companywith 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 thefinancial year under review which were in conflict with the interest of the Company. Thedetails of Related Party Transactions during the year ending 31.03.2016 being arm slength transactions have been reported in the Financial statements and forms part of thisreport. As per Annexure - J Ms. Nisha Purushothaman Joint Managing Director s salary isreported 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 begiven 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 isattached herewith as Annexure-K.
DETAILS OF PECUNIARY RELATIONSHIP OR TRANSACTIONS OF THE NON-EXECUTIVE INDEPENDENTDIRECTORS VIS--VIS THE COMPANY
There is no pecuniary relationship or transactions of the Non-Executive IndependentDirectors vis--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 ListingAgreement / LODR 2015 of SEBI the Board has carried out the annual performanceevaluation of its own performance the Directors individually as well as the evaluation ofthe working of its Audit Nomination and Remuneration and Compliance Committees.
While independent directors in their separate meeting have carried out to assess theperformance of Chairman JMD and other Directors of the Board more particularly abouttheir business acumen and contribution to the Company the performance evaluation of theIndependent Directors was carried out by the entire Board.
The Independent Directors expressed their satisfaction with the evaluation processfunctioning such as adequacy of the composition of the Board and its Committees Boardculture execution and performance of duties obligations responsibilities andgovernance.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Company has a proper and adequate internal control system to ensure that all assetsare safeguarded and protected against loss from unauthorized use or disposition and thosetransactions are authorised recorded and reported correctly.
The Internal Audit/Control is exercised through an external auditor namely M/s.RameshSubramaniam & Co. Chartered Accountants Chennai. The audit observations andcorrective action taken thereon are periodically reviewed by the audit committee to ensureeffectiveness of the internal audit/control system.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANY S OPERATIONS IN FUTURE
There is no significant and material orders passed by the regulators or courts ortribunals 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 annexedherewith as Annexure - L.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.
The Company has not received any complaint on sexual harassment during the financialyear ended 31.03.2016.
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 tostate that:
a. In the preparation of the annual accounts the applicable accounting standards havebeen followed.
b. The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were 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 or loss of the Company for the year under review.
c. The directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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 thecompany and that such internal financial controls are adequate and were operatingeffectively.
f. The directors had devised proper system to ensure compliance with the provisions ofall applicable laws and that such system were adequate and operating effectively.
Your Directors wish to express their gratitude for the continuous assistance andsupport extended by the Banks Financial Institutions Customers and Governmentauthorities and also to the shareholders for their confidence in the management. Furtheryour Directors also place on record their deep sense of appreciation for the contributionsmade 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 || |