Your Directors have pleasure in presenting the 27th AnnualReport of your Company and the audited financial statements for the year ended March 312020.
The Summary of Financial Performance of the Company for the year2019-20 is as under:
|Particulars ||2019-20 ||2018-19 |
|Gross sales ||15839.59 ||12822.44 |
|Add: Other operating revenue ||1314.24 ||1015.70 |
|Add: Other income ||310.09 ||437.00 |
|Total Income ||17463.92 ||14275.14 |
|Less: Cost of goods sold ||13698.63 ||9356.65 |
|Less: Other costs ||5152.00 ||4143.33 |
|Earnings before government grant depreciation interest and taxes ||-1386.71 ||775.16 |
|Add: Government grant ||523.71 ||-2686.18 |
|Earnings before depreciation interest and taxes ||-863.00 ||-1911.02 |
|Less: Interest costs ||3359.00 ||2935.48 |
|Less: Depreciation ||4690.00 ||4861.00 |
|Earnings before taxes ||-8912.00 ||-9707.50 |
|Income tax expenses ||6007.00 ||-2999.27 |
|Other comprehensive income (Net of tax) ||34.00 ||-13.00 |
|Profit / (loss) available for appropriation ||-14885.00 ||-6721.23 |
In view of the accumulated losses your Directors do not recommend anyDividend on the equity shares of the Company.
During the year under review Five Board Meetings were held. Thedetails of the same are covered in the Corporate Governance Report.
STATE OF COMPANY'S AFFAIRS
Except to the extent as stated under Material changes and Commitmentsthere have been no significant or material orders passed during the year by the regulatorsor Courts or Tribunals impacting the going concern status and the company'soperations in future.
The net worth of the Company has eroded and the current liabilitiesexceed the current assets as at the year-end.
However the Management and the Board of Directors have reviewed thecash flow months and based on the letter of financial support obtained from United SpiritsLimited the holding company have concluded that there is no material uncertainty on theability of the Company to continue as a going concern.
PERFORMANCE OF THE COMPANY
The Company has achieved a gross - sales of INR 15839.59 Lakhs for thefinancial year ended March 31 2020 against the gross sales of INR 12822.44 Lakhs for thefinancial year ended March 31 2019. The Company has reported a loss of INR 8912 Lakhsbefore tax due to intermittent breakdowns in plant machineries external challengesleading to frequent shutdowns and delay in stabilization of operations.
The trading in the equity shares of your Company is under compulsorydematerialization mode. As on March 31 2020 equity shares representing 98.27% of theequity share capital are in dematerialization form. As the depository system offersnumerous advantages members are requested to of the facility of dematerialization of theCompany's shares.
Members may please note that effective from 1st April 2019shares of the listed entity can be traded only in dematerialized mode pursuant to SEBInotification SEBI/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.Sanjeev Kumar Gupta shall retire by rotation and being eligible offered themselves forre-appointment.
Mr. R. Krishnamurthy was appointed as an Independent Director witheffect from July 13 2015 for a period of 5 years. His tenure of directorship will becompleted on July 12 2020. Board of directors at their meeting held on 19thMay 2020 re-appointed him as an independent director for a further period of 3 yearssubject to approval of the members of the Company at the ensuing Annual General Meeting ofthe Company. Accordingly it is proposed before the members of the Company to approve there-appointment of Mr. R. Krishnamurthy for a further period of three years with effectfrom July 12 2020.
Mr Ravi Varma Managing Director had tendered his resignation to theposition of Director and Managing Director with effect from 1st July 2020 due to personalreasons. The resultant vacancy was filled by the Board of Directors at their meeting heldon 11th June 2020 by appointing Mr Alokesh Biswas as a Director and Managing Director witheffect from 1st July 2020 for a period of two years subject to approval of the members ofthe Company.
The Nomination and Remuneration Committee has recommended theappointment/re-appontment as stated above which has been provided in the notice to AGM.
Brief profile of the directors being appointed/re-appointed areprovided in the Notice convening this AGM. As per declarations received no Director ofthe Company is disqualified to be appointed as a Director of any Public Limited Company interms of Section 164(2) of the Companies Act 2013.
Your Company did not appoint any new Independent Director or NomineeDirector financial year 2019-20. Criteria for selection/appointment orreappointment of Independent Directors include skills expertise of the Directorqualifications experience and domain knowledge. The required skills of IndependentDirectors are leadership managerial experience diversity risk management and corporategovernance. All our Independent Directors viz. Mr. R Krishnamurthy and Mrs. Srivathsala KN possess the aforesaid skills.
DECLARATION FROM INDEPENDENT DIRECTORS
In terms of Section 149(7) of the Companies Act 2013 IndependentDirector(s) of the Company have submitted a declaration that they meet the criteria ofIndependence.
FAMILIARISATION PROGRAM UNDERTAKEN FOR INDEPENDENT DIRECTORS
The details of familiarization program of Independent Directors withthe Company their roles rights responsibilities in the Company nature of the industryin which the Company operates business model of the Company and related matters are putup on the website of the Company at the link:http://www.pioneerdistilleries.com/policies.php
There have been meetings of Independent Directors at regular intervalswhich were conducted without the presence of other Directors.
The ratio of the remuneration of each director to the medianemployee's remuneration the names of the top ten employees in terms of remunerationdrawn and other details during the financial year 2019-20 in terms of Section 197(12) ofthe Companies Act 2013 read with Rule 5(1) & (2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in Annexure 1 andalso in the Corporate Governance Report and form MGT 9 which forms part of this report.As stated in the Corporate Governance Report sitting fees were paid to IndependentDirectors for attending Board/Committee meetings. They are also entitled for reimbursementof actual travel expenses boarding and lodging conveyance and incidental expensesincurred in attending such meetings.
Pursuant to the provisions of the Act and Regulation 17 of the SEBIListing Regulations 2015 the Board has been carrying out an annual performanceevaluation of its own performance the performance of its Directors individually as wellas that of the Board Committees. The evaluation process considers the effectiveness of theBoard and the Committees with special emphasis on the performance and functioning of theBoard and the Committees. The evaluation of the Directors is based on the time spent byeach of the Board Members core competencies expertise and contribution to theeffectiveness and functioning of the Board and the Committees.
MATERIAL CHANGES AND COMMITMENTS
The Company had on 26th November 2019 received directions fromMaharashtra Pollution Control Board under section 33A of the Water (Prevention &Control of Pollution) Act 1974 and under section 31 A of the Air (Prevention and Controlof Pollution) Act 1981 alleging pollution caused by the company and complaint receivedthrough Central Pollution Control Board in July 2019 .
The company had submitted reply with bank guarantee of `5 Lakh dated02.01.2020 and other completion report which was completed before November 2018 and wassubmitted through letter dated 12.12.2018.
A suo moto case has been filed by district sessions court Nirmalagainst the company based on the article published in the Local newspaper. After regularhearings in the Nirmal court the company has submitted the affidavit.
The water board has substantially increased the tariff on water andchanged the jurisdiction from Revenue department to Maharashtra Water Resources RegulatoryAuthority thereby giving the control of supply and collection of charges towardsconsumption to Water Resources Department. Looking at the substantial hike and impact thecompany had approached high court to avoid any hostile actions such as stopping the watersupply. After obtaining a stay order in favour of the company we have approached theappellate authority expressing difficulty on account of substantial increase in watertariff the hearings are going Regulation Officer Aurangabad to prove water source as apartly assured water supply and water consumption in the distillery as a process water.
The Management Discussion and Analysis Report read with the report onRisk Management contains impact on the business due to regulatory changes and due torecent COVID-19 Pandemic.
The Companies Act 2013 provides for the formation and duties ofvarious committees of the Board. The
Company has in place the required Committees with specific definedroles duties and responsibilities. Details various committees meetings held andattendance at the various committee meetings are given in the Corporate Governance Reportwhich forms part of the Annual Report.
All the recommendations of the Audit and Risk Management Committee wereaccepted by the Board.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
There are no loans given investments made guarantees givensecurities provided by the Company and acquired by way of subscription purchase orotherwise securities of any other body corporate which are covered under the provisions ofthe Section 186 of the Companies Act 2013.
INTERNAL FINANCIAL CONTROLS
Your Company has established and maintained a framework of InternalFinancial Controls and compliance systems. Based on Board's review of theeffectiveness of the policies and procedures adopted by the Company for ensuring orderlyand efficient conduct of its business including adherence to Company's policysafeguarding its assets prevention and detection of frauds and errors and completeness ofaccounting records and timely preparation of financial statements and the confirmationreceived from the external parties the Board has satisfied itself that the Company haslaid down internal financial controls commensurate with size of the Company and that suchinternal financial controls are broadly adequate and are operating effectively. Thecertification by auditors on internal financial control forms part of the audit report.
M/s. Price Waterhouse & Co. Chartered Accountants LLP (FRN304026E/E-300009) were appointed as Statutory Auditors of your Company in the 24thAGM held on 28 July 2017 for a period of 5 years till the conclusion of the 29thAGM of the Company. Pursuant to provisions of the Companies (Amendment) Act 2017ratification of the appointment made at the earlier Annual General Meeting is not requiredand hence dispensed with ratification the appointment of the auditors.
Pursuant to the provisions of Section 204 of the Companies Act 2013read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 the Company had appointed Mr. Sudhir V. Hulyalkar a Company Secretary in Practice(FCS: 6040 [CP No. 6137]) to undertake the Secretarial Audit of the Company for theFinancial Year 2019-20. The Secretarial Audit Report is given as Annexure 2 formingpart of this Report. In addition the company has also obtained Secretarial ComplianceReport for the year ended March 31 2020 in terms of the SEBI Circular issued onFebruary 08 2019 which is annexed as Annexure 2A. The said report has beensubmitted to the stock exchanges and is also available on the Company's websitewww.pioneerdistilleries.com
The Company has a Risk Management framework. Risk evaluation by themanagement is an ongoing process within the organization and is periodically reviewed bythe Board of Directors. Risk Management has been made part of Audit Committee by renamingthe Audit Committee as Audit and Risk Management Committee. The Risk Management policyadopted by the Company has been explained in the Management Discussion and Analysis Reportwhich forms part of this Annual Report.
WHISTLE BLOWER MECHANISM
The Company has a whistle-blower mechanism known as SpeakUp operatedby a third-party agency. Employees or representative acting on behalf of the Company areencouraged to raise their compliance concerns through this mechanism apart from otherinternal reporting channels viz. Line Manager or HR Business Partner Legal BusinessPartner and Business Integrity member. The Company has a structured Breach ManagementStandard in place which is in line with Global standard for timely and conclusiveresolution of compliance concerns raised through the whistle blower mechanism. Access hasbeen also provided to raise the concerns to the Chairman of the Audit Committee. TheWhistle Blower Mechanism of the Company can be accessed on the website at the followinglink: www.diageospeakup.com
During the year 5 cases have been reported through SpeakUp and otherinternal reporting channels. All five cases were investigated and resolved with 40%substantiation rate. The decision on sanctions on the reported breaches are determined andmonitored by a Compliance Committee in order to ensure that there is a collective and afair decision-making process and consistent action in resolving the breaches. The qualityof investigation reports and remedial actions are reviewed and monitored by the GlobalBusiness Integrity team.
As a part of the governance framework the Board of Directors and theAudit Committee regularly review the strategy and operation of the compliance and ethicsprogramme including the breaches reported through the year. Regular updates are alsoprovided to the senior leadership team on various aspects of the compliance program notonly to set the tone at the top but also as a part of management's commitment tocontinuous improvement in integrating compliance with the business.
RELATED PARTY TRANSACTIONS
The Company has formulated a Policy on dealing with Related PartyTransactions (RPTs) which has been reviewed by the Audit Committee at regular intervals.The Policy is disclosed 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'slength basis. There are no materially significant RPTs entered by the Company withpromoters directors key managerial personnel or other designated persons which may havea potential conflict of interest with the Company.
The details of the RPTs in Form AOC-2 is enclosed and marked as Annexure3. In accordance 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 ofthis report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis Report is annexed separately aspart of this report.
The Company has not accepted any deposits from the public during theyear. There was no fixed deposit amount that remained unpaid/unclaimed as at the end ofthe year.
LISTING OF EQUITY SHARES OF THE COMPANY
The Equity Shares of your Company continue to be listed with BSELimited and National Stock Exchange of India Limited. The Annual Listing fees for the year2019-20 have been paid 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 the Companies Act 1956) read with the Investor Education and ProtectionFund Authority (Accounting Audit Transfer and Refund)
Rules 2016 (IEPF Rules') both of which were applicablewith effect unpaid dividend remaining unclaimed/unpaid for a period of seven years havebeen transferred to the IEPF. There were no amount pending to be transferred to the IEPFaccount for the financial year ended March 2020. Necessary compliance under Rule 3 of theInvestor Education and Protection Fund (Uploading of information regarding unpaid andunclaimed amounts lying with Companies) Rules 2012 have been complied with.
None of the employee draws remuneration in excess of the limitprescribed under rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.
EMPLOYEES STOCK OPTION SCHEME
Your Company has not offeredany stock options to its employees duringthe year 2019-20 within the meaning of SEBI (Share Based Employee Benet) Regulations2014.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
The particulars relating to Energy conservation Technology absorptionForeign exchange earnings and outgo as required to be disclosed under the Act is given inAnnexure 4 to this Report.
EXTRACT OF THE ANNUAL RETURN
Pursuant to the provisions of Section 134(3)(a) of the Companies Act2013 an extract of the Annual Return in Form MGT-9 is given in Annexure 5 to thisReport.
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility (CSR) committee has been setup bythe Company. The composition and other details have been provided in the CorporateGovernance Report.
The Company and its employees have actively participated in engagingwith stakeholders and regulatory authorities so as to create positive impact of ourexistence and operations. This has widely been applauded and reflected with truecommitment of creating a sustainable socio-economicgrowth.Majorefforthas been initiated tominimize the impact on environment caused by burning of agricultural waste in thevicinity. This involves continuous counselling to the local as well as distantagricultural dwellings to stop burning the agri waste and instead collect the same forprocessing as fuel in a controlled manner with relatively negligible emissions andseparation of particulate matter largely benefitted by supplying their agri waste to thecompany as fuel instead of burning.
The company although did not generate profits in the previous financialyear the Company had reported profits in the earlier financial year 2017-18 in thebackdrop of income booked with respect to Government Grant. This
Government Grant has not been fully received by the Company yet.
Operationally the Company continues to report losses and is operatingon working capital borrowed from banks and intercorporate loans and advances from theholding company. However the company has spent 72.66 Lakhs as committed in the beginningof the year towards the unspent CSR amount pertaining to the Financial Year ending March2019.
Furthermore as required by Section 135 of the Companies Act 2013 andthe rules made hereunder additional information on the policy and implementation of CSRactivities by your Company during the year are provided in Annexure 6 to thisreport.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
The Company has implemented a policy on Prevention of Sexual Harassment(POSH) at the Workplace in line with the requirements of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. An Internal Committee (IC)has been setup to redress complaints received regarding sexual harassment. No complaintwas received by the Company during the year ended March 31 2020. To build awareness inthis area the Company has been conducting induction training programmes for employeesconsultants contract employees and permanent workers in the organisation on a continuousbasis. IC has also conducted informal sessions to check the pulse at the grassroot levels.
Pursuant to Section 134 (5) of the Companies Act 2013 in relation tofinancial statements (together with the notes to such financial statements) for the year2019-20 the Board of Directors report that:
(i) in the preparation of the annual accounts the applicableaccounting standards have been followed along with proper explanation relating to materialdepartures;
(ii) the Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give a true and affairs of the view the state Company at the end of thefinancial year and of the profit/loss of the Company for that period;
(iii) the Directors have taken proper and sufficient care for themaintenance of accordance with the provisions of the Companies Act 2013 for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the financial statements on a goingconcern basis;
(v) the Directors have laid down internal financial controls to befollowed by the Company commensurate with the size and nature of its business and thecomplexity of its operations and that such internal financial controls are adequate andare operating effectively.
(vi) the Directors has devised proper systems to ensure compliance withthe provisions of all applicable laws and such systems are adequate and is operatingeffectively.
DISCLOSURE OF COMPLIANCE OF SECRETARIAL STANDARDS:
The relevant Secretarial Standards issued by the Institute of CompanySecretaries of India (ICSI) related to the Board Meetings and General Meeting have beencomplied with by the Company.
Your Directors place on record their sincere appreciation for thesupport from employees shareholders customers suppliers banks auditors government ofMaharashtra Telangana & Karnataka and other business associates.
| ||By Authority of the Board |
|Bengaluru ||R Krishnamurthy |
|June 11 2020 ||Chairman |