Your Directors have pleasure in presenting the Board s Report together with the audited
Accounts for the year ended 31st March 2017.
FINANCIAL RESULTS |
|
(Rs.in lacs) |
Particulars |
2016-17 |
2015-16 |
|
(For the Year ended 31.03.2017) |
(For the period ended 31.03.2016) |
Total Income |
50160.47 |
61268.14 |
Operating Profit before Interest and Depreciation |
(1148.13) |
4139.95 |
Less : Interest |
3035.63 |
2504.36 |
Depreciation |
1257.39 |
1298.42 |
Profit before exceptional item and tax |
(3378.88) |
- |
Extra-ordinary items (loss on sale of Investments) |
(2062.27) |
- |
Profit / Loss before Tax |
(5441.15) |
337.17 |
Provision for Taxation |
(2906.40) |
234.04 |
Provision for Deferred Tax |
|
(68.93) |
Earlier Tax provision reversed |
- |
- |
Exceptional Item |
- |
- |
Profit /Loss After Tax |
(2534.75) |
172.07 |
Profit brought forward |
(2534.75) |
- |
Add : Prior period income Depreciation |
- |
- |
Transfer of profit to General Reserve |
- |
- |
Proposed Dividend |
- |
- |
Dividend tax on proposed dividend |
- |
- |
Profit carried forward |
(2534.75) |
172.07 |
PERFORMANCE REVIEW :
Overall performance
During the year under review, your Company registered a total income of Rs.501.60 Crs
and incurred a loss of Rs 54.41 Crs , after extra-ordinary item i.e. loss on sale of
investments amounting to Rs 20.62 Crs and thus overall net operating loss stood at Rs.
33.79 Crs, as against the total income of Rs.612.68 crs and a profit of Rs.1.72 crs for
the year ended 31st March 2016. The performance during the year under review
was impacted due to (a) Demonetization of high value currencies in Dec. 2016, (b)
Uncertain political environment in the wake of demise of Tamil Nadu s Chief Minister (c)
Increase in price of basic raw materials like ENA, Maize etc, (d)Effect of desolate
Cyclone Vardah , (e) Cash flow constraint for GBAP due to non sanction of working capital
facilities by UBI, (f) Closure of more than 3000 Retail Vending shops in TN & Kerala
due to Govt policies, (g) Non production of Power from Aranthangi unit due to restrictive
measures taken by Tamil Nadu Govt.
IMFL Division :
IMFL units at Mevalurkuppam, Palghat and Kolar registered a net turnover of Rs. 476.12
crs and resulted in a net operating loss of Rs. 7.22 crs during FY 2016-17 as compared to
a turnover of Rs. 544.04 crs and Rs. 8.60 crs. of profits in the last financial year
(2015-16)
Power Division :
The revenue from the Power Division was Rs 376.30.lacs with a profit of Rs. 74.36 lacs
during the financial year under review as against the revenue of Rs 14.85 crs and net
profit of Rs 3.09 crs during the previous financial period 2015-16
Grain Based Alcohol Unit :
During the year 2016-17 the 60 KLPD Grain Based Alcohol unit at Chotkur, Andhra Pradesh
earned a revenue of Rs 21.72. crs with a net operating loss of Rs 27.31 crs as against a
revenue of Rs 53.79 crs and a net loss of Rs 9.97 crs in the previous financial year.
REVIEW OF OPERATIONS :
The Economy/regular brands of the Company maintained a reasonable turnover while thin
margins resulted in overall loss during the year under review. The focus on the Premium
brands such as Chevalier De Paris Brandy, Carte Royale Brandy, Elcanso Brandy and Blue
Crystal Vodka added substantial value in terms of market penetration and the market share
in Tamilnadu, Kerala, Karnataka is moving forward. The export market for premium brands
are encouraging with exports Chevalier De Paris Brandy, Carte Royale Brandy, Elcanso
Brandy and Blue Crystal Vodka to Singapore and Dubai.
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).
The Grain based Distillery unit at Chotkur could not perform during the year due to
non-availability of grains and the prices of grains.
The overall performance of the company was greatly affected due to many problems the
Company encountered during the year under review as stated above, and hence the turnover
was considerably low in 2016-17 resulting in a net operating loss of Rs.33.79 crs.
FUTURE OUTLOOK :
The outlook for 2017-18 is promising as the Company explored more avenues to export
IMFL products to Singapore, Malaysia, Dubai, and other states in India from its
manufacturing unit at Kolar and Palakkad. The power unit will be able to commence
operations only after lifting of restrictive measures by TNEB and the Company is confident
in this regard. The Company is devising plans to gear up production of GBA at Chotkur in
the current Financial year (2017-18).
CHANGE IN THE NATURE OF BUSINESS, IF ANY :
There is no change in the nature of the business during the year.
DIVIDEND :
Due to losses for the FY 2016-17, the Board of Directors regret to recommend any
dividend for the financial year ended 31.03.2017.
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 due to losses
incurred during the year under review.
FINANCE :
ISSUE OF 1166860 SHARE WARRANTS UNDER PRIVATE PLACEMENT :
The Company in order to improve the working capital liquidity issued 9,39,727 Equity
Warrants to EW India Special Assets Fund Pte Ltd and 2,27,133 Equity Warrants of Rs 10/-
each to Edelcap Securities Limited , at a premium of Rs 54.54 per share aggregating
Rs.7.53 crs pursuant to EGM approval dated 28th November 2016, 19th
January 2017 and 15TH March 2017. These warrants were converted into 1166860
equity shares of Rs.10 each on 21st March 2017 and the same were listed on BSE
and NSE w.e.f 21st April , 2017 and 11th May, 2017 respectively.
SHARE CAPITAL :
Due to conversion of 1166860 share warrants into same number of equity shares, the
paid-up share capital of the company as on the date of this report increased to 20175753
equity shares of Rs.10/- each. There is no change in the Authorised, 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 :
Due to sudden death of Mr.Shankar Menon on 22.01.2017 he ceased to be the Director
w.e.f. 22 01 2017.
Mr. M.P. Purushothaman who retires by rotation at this AGM offers himself for
re-appointment at this AGM.
Mr. Suresh Raj Madhok was appointed as Additional Director w.e.f. 26.12.2016 by the
Board. As per the provisions of the Companies Act, 2013, Mr. Suresh Raj Madhok is proposed
to be appointed as Independent Director for a term of five years from the date of his
appointment, as set out in the AGM Notice for the approval of Director.
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 2016-17 :
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.
Due to loss of Rs.25.35 crs for the year under review and lack of profits in the three
immediate preceding financial years, the Company could not allocate funds for CSR
activities.
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 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
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 SEBI s (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.
BOARD COMMITTEES
Name of the Committee |
Composition |
Details of Meetings held during the year 2016-17 |
AUDIT COMMITTEE |
Mr. R.Rangachari |
|
|
Mr. Shankar Menon upto 22.01.2017 |
30.5.2016, 11.8.2016, 12.11.2016, 13.2.2017 |
|
Mr. Suresh Raj Madhok |
|
|
Ms.Nisha Purushothaman |
|
|
Mr. Shankar Menon upto |
|
NOMINATION & REMUNERATION COMMITTEE |
22.01.2017 |
30.5.2016, 11.8.2016, |
|
Mr Suresh Raj Madhok |
12.11.2016, 13.2.2017 |
|
Mr. R.Rangachari |
|
|
Mr. M.P. Purushothaman |
|
|
Mr Suresh Raj Madhok |
|
CSR COMMITTEE |
Mr. R.Rangachari |
13.02.2017 |
|
Ms. Nisha Purushothaman |
|
STAKEHOLDERS |
Mr. R.Rangachari |
30.5.2016, 11.8.2016, |
RELATIONSHIP |
Mr. Shankar Menon upto 22.01.2017 |
12.11.2016, 13.2.2017 |
COMMITTEE |
Mr Suresh Raj Madhok |
|
|
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
Pursuant to EGM resolution dated 15th March, 2017, the company has sold
9889285 Equity shares of Rs.10 each held in Empee Hotels Ltd (Associate Company -unlisted
entity) in favour of Appollo Alchobev Ltd and hence the percentage of shareholding has
decreased from 39.05 % to 19.26%. Consequent to this, the consolidation of accounts of
Empee Hotels Ltd with the Company does not arise.
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. The accounts
of the subsidiaries can be made available to the members upon request. M/s.Empee Sugars
and Chemicals Ltd (subsidiary company) has been referred to BIFR under the provisions of
Sick Industrial Companies Act, 1985 in November 2014. Since BIFR was abolished in December
2016, Insolvency and Bankruptcy Code (IBC) has been introduced. As informed by the said
subsidiary Company it has filed a petition as a Corporate Debtor with NCLT, Hyderabad
under IBC. As such 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 the same has been dispensed with.
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 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: 0046365) Chartered Accountants, to the effect
that their 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 ratification/approval of the
Members..
Accordingly, a resolution is being placed before the Members for their
ratification/approval as given in the AGM notice.
AUDITORS QUALIFICATIONS
a. Qualification : The company has made an investment of Rs.1.59 Crores as Equity
Shares and further investment by way of share application money of Rs.140.36 Crores to its
subsidiary Empee Sugars and Chemicals Limited and Rs.20.68 Crores as investment in Equity
Shares of Empee Hotels Limited. The Companies Empee Sugars and Chemicals Limited &
Empee Hotels Limited have been incurring losses. No Provision for diminution in the value
of investment in respect of these companies have been considered in the accounts.
Reply : Since the subsidiary company namely Empee Sugars and Chemicals Limited has been
registered with BIFR (now under IBC) 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 NCLT, Hyderabad, on revival scheme to be filed by Empee Sugars and Chemicals
Limited.
Regarding share application money in Empee Sugars and Chemicals Ltd (ESCL) of Rs.140.36
Crs pending for allotment in favour of EDL, the holding Company, it is stated that due to
non-receipt of certain statutory approvals the same is kept pending. However since these
monies have been received prior to the Companies Act, 2013, the Company is said to be
attracted to the provisions of the Companies Acceptance of Deposit Rules 2014 and
Investors Education and Protections Fund. But the Company has reiterated that since the
Company has been registered under BIFR much ahead of the said Deposit Rules, the same
shall not apply. In this connection it is pertinent to report that BIFR has been abolished
w.e.f. 1.12.2016 and in its place Insolvency and Bankruptcy Code (IBC) has been replaced.
ESCL is in the process of making out an application as Corporate debtor to NCLT,
Hyderabad. Further the Investors protection and Education Fund Rules do not apply in so
far as EDL has claimed the refund of share application money. ESCL could not refund the
share application money due to absence of the normal functioning of the Company and
negative cash flows which are the matters to be considered by NCLT under IBC.
As regards diminution in the value of investments of shares in Empee Hotels Ltd, since
another company in the group namely Appollo Alcobev Ltd is likely to merge with Empee
Hotels Ltd, the functioning of Empee Hotels Ltd may improve in near future and as such the
diminution in the value of shares are deferred to next financial year 2017-18.
b. Qualification Other Loans & Advances amounting to Rs. 40.35 Crores out of
Rs.40.98 Crores under the head other Current Assets, Sundry Debtors to Rs. 65.08 Crores
and Loan and advances to related parties Rs. 41.88 Crores, Other Long Term Liabilities Rs.
38.92 Crores and Trade Payable of Rs. 79.34 Crores are subject to confirmation and
reconciliation. The impact on profitability is not ascertainable.
Reply :
The same has been since reconciled.
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 Practising Company Secretaries, Chennai as
Secretarial Auditors of the Company for the Financial year ended 31.03.2017. 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 for
the Financial year ended 31.03.2017
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.
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 31.03.2017, being arm s
length transactions have been reported in the Financial statements and forms part of this
report as per Annexure - J.
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--VIS THE COMPANY
There is no pecuniary relationship or transactions of the Non-Executive Independent
Directors vis--vis the Company for the year ended 31.3.2017.
BOARD S EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and Clause 27 of the SEBI s
(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 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 - 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 31.03.2017.
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 |
Place : Chennai |
M.P. Purushothaman |
Date : 21.08.2017 |
Chairman |
|