DIRECTORS' REPORT To The Members Ravi Kumar Distilleries Limited. Your Directors have pleasure in presenting the 22nd Annual Report together with the Audited Accounts of the Company for the year ended 31st March 2015. Performance of the Company during the year under review Your Company is engaged in the business of manufacture and trade of Indian Made Foreign Liquor (IMFL) under own brand Capricorn, 2 Barrels, Green Magic, Chevalier as well as under tie-up arrangements with other Companies. The IMFL comprises of Whisky, Brandy, Rum, Gin and Vodka. Your Company currently operates through own manufacturing unit located at R.S 89/4A, Katterikuppam Village, Mannadipet Commune, Pondicherry. The Unit is equipped with infrastructure facilities and technology, which encompasses all modern facilities for blending and bottling, can undertake manufacture of IMFL. The core competency of your Company is in house technical and formulation knowledge, skilled workforce and well equipped manufacturing facilities, which enable us to manufacture a wide range of IMFL products to diverse client requirements. During the year, the total Income from operations was Rs. 4576 lakhs compared to Rs.3819 lakhs in the previous year recording a loss of (Rs. 590 lakhs). The net loss was (Rs. 590 lakhs) as against the loss (Rs. 580) lakhs in the previous year. Earning per share is (Rs. 2.46) against (Rs. 2.42) in the previous year on a weighted average basis as per Accounting Standard 20 issued by the Institute of Chartered Accountants of India. However, the Company is taking possible steps to revive the business. Future Outlook: During current year, your Company will try to achieve maximum capacity utilization in our existing plant at Pondicherry. Insurance: All the properties of the Company including buildings, plant and machinery and stocks have been adequately insured. Reasons for Loss during the year: The Board of Directors discussed on the Loss of the company to the tune of Rs. 590.00 lacs and attribute following main reasons for non growth of the company: 1. Change In Excise Law The increase of Excise Duty implemented two years back has severely affected the sales this year also. However the company is working on other avenues and areas for increasing the sales and the turnover has increased from Rs.3819.00 lacs to Rs. 4576.00 lacs. 2. Legal Cases Pertaining To The Company The company's performance was also severely affected due to various issues and fraudulence committed by Mr. Anil Agrawal, Managing Director of M/s. Comfort Securities Limited, M/s. Comfort Intech Limited and his associates against the Company. Your Company has filed complaints against Mr. Anil Agrawal, M/s. Comfort Securities Ltd., Merchant Bankers, M/s. Comfort Intech Ltd. and its other group companies with the following authorities. 1. A Civil Suit OS No. 103/2013 and I.A. No. 405/2013 before 2nd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad with prayers: a. To rescind the agreements as being void and restore the parties back to the position prior to the MOU dated 05.09.2012. b. To declare the notice for EGM dated 05.02.2013 as null and void and illegal. The court has passed an order restraining Mr. Anil Agrawal from holding the EGM till further orders in the case of M/s.Liquors India Ltd., c. I.A. No. 1453 of 2013 filed with Ilnd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad praying not to alienate, encumber assets of M/s.Liquors India Ltd. d. I.A. No. 1452 of 2013 filed with Ilnd Additional District Judge, Ranga Reddy District, L.B. Nagar, Hyderabad praying not to alter the Board. i. The Court has passed interim order in IA No.1452 & 1453, not to alienate, encumber assets of LIL and not to alter the Board. ii. Mr. Anil Agrawal filed appeal in High Court, Hyderabad and HC permitted to sub-lease with third parties. iii. Aggrieved by this order, your company filed SLP with the Supreme Court of India against the above order. The Supreme Court has stayed the High Court Order till further hearings. e. I.A. No. 654 of 2015 in OS no. 103/2013 filed with Ilnd Additional District Judge, Ranga Reddy District, L.B.Nagar, Hyderabad praying to appoint Official Receiver conferring powers on the receiver for the management, protection, collection of profits and improvement of M/s.Liquors India Limited. The case is in argument stage. 2. Writ Petition No. 12713 of 2014 with the Hon'ble High Court, Andhra Pradesh praying License of Liquors India Limited issued by the Excise Department should be cancelled and sub-lease agreement also be cancelled. The order has been passed that all transactions including financial transactions between Mr. Anil Agrawal and Tilaknagar Industries Limited shall be booked and recorded faithfully pending further consideration of this W.P.M.P. No. 15944 of 2014 in W.P. No. 12713 of 2014. Mr. Anil Agrawal and Tilaknagar Industries Limited shall not create any charge or third party interest relating to the assets of Liquors India Limited. 3. You company has filed a Complaint with the Commissioner of Police, Hyderabad against the fraud and cheating committed by Mr. Anil Agrawal. The Police has registered the FIR No.248/2013 dated 23.08.2013 against Mr. Anil Agrawal and others under Section 406-IPC, 420-IPC, 447-IPC, 385-IPC, 386-IPC, 467-IPC, 468-IPC, 469-IPC, 471-IPC, 120B-IPC, 34-IPC. a) Mr. Anil Agrawal has filed CP. No. 11292 of 2013 in the High Court of Hyderabad against FIR No. 248/2013 dated 23.08.2013 and High Court passed order to complete the investigation without arresting Mr. Anil Agrawal and others. 4. Your company has filed a Complaint with EOW, Mumbai for cheating and money laundering to recover company's money of Rs. 33.73 crores. EOW has registered FIR No.34/14 dated 21.01.2014 under section 409,420,465,467, 468,471,474,120(B). a. Mr. Anil Agrawal filed W.P. No. 2059 of 2014 in High Court of Mumbai and the Court has declared that the FIR registered by EOW is not maintainable since Nacharam Police Station has registered the FIR first. i. Aggrieved by delay in investigation by the Hyderabad Police and order by the High Court, Mumbai, Your company has filed. a. Two SLPs with the Supreme Court of India against High Court of Mumbai order and delay in investigation by Hyderabad Police. These SLPs have been taken by the Supreme Court and the next hearing is on 14.09.2015. 5. Your company has filed a Complaint with SEBI, Mumbai against BRLM M/s. Comfort Securities Ltd., (DP) promoted by Mr. Anil Agrawal for violations of SEBI Regulations and others. 6. Your company has filed a Recovery suits No. SL/1135, 1136, 1137, 1138 and 1139 of 2013 filed against M/s. Ranisati Dealer Pvt.Ltd., M/s. Vibhuti Multi Trade PvtLtd., M/s. Gulistan Vnijya Pvt.Ltd., M/s. Sukusama Trading and Investments Pvt.Ltd. and M/s. BLC Trading and Agencies Pvt.Ltd. in the High Court of Bombay. Matter pending before the court. 7. Your company has filed a Complaint with Enforcement Directorate, Mumbai to investigate the frauds committed by Mr. Anil Agrawal and his companies. Enforcement Directorate has initiated enquiries against Mr. Anil Agrawal, his companies and others under the provisions of prevention of Money Laundering Act 2002 on the basis oftheFIRNo.34/14dated21.01.2014. 8. Your company has filed a Complaint with RBI and Ministry of Finance to appoint officer to investigate the affair of CIL and cancel the License to act as NBFC for violating the guidelines. RBI has cancelled the NBFC Licence of Comfort Intech Limited based on forgery and mis-representation by CIL in some other different matter for forging and fabricating RBI documents. 9. Your company has filed a Complaint with The Police Commissioner of Chennai against the fraud and cheating committed by Mr. Anil Agrawal. Mr. Anil Agrawal filed Writ Petition No. 32829 of 2013 with High Court of Chennai to direct the Police, Chennai not to proceed further with the investigation. The matter is pending before the Court. 10. Your company has filed a Petition Under section 111A r/w 111(4) of the Companies Act filed before the Company Law Board, Chennai in the matter of Liquor India Limited, Mr. Anil Agrawal and others. Matter is pending before the CLB. 3. Mr. Anil Agrawal has filed complaints against the company with the following authorities: 1. The Company Law Board, Chennai under section 397,398, 235(2) and 237(b) of the Companies Act, 1956. The Company has filed counter and the matter is pending before the CLB. 2. Mr. Anil Agrawal filed a Counter Complaint with Hyderabad Police against Mr. R.V. Ravikumar. The Hyderabad Police have not considered the complaint since there was no substance. Aggrieved, Mr. Anil Agrawal filed W.P. No. 7956 of 2014 filed with Hon'ble High Court, Andhra Pradesh to register the complaint filed by him against Mr. R.V. Ravikumar with Hyderabad Police. The Police have submitted their report to the High Court, Hyderabad stating that there is no substance in the Complaint. The matter is pending before the court without further date. 3. Mr. Anil Agrawal has filed a Counter Complaint with Malad Police Station, Mumbai against the company and its Directors. Preliminary enquiry was conducted by the Malad Police and since there was no substance in the Complaint, Malad Police did not pursue further. 4. M/s. First Financial Services Limited, Chennai has filed O.S. No. 6602 of 2013 alleging mis-management of the company. The court has rejected the suit. 5. M/s. Tilaknagar Industries Limited - accused A7, A8 and A9 in the Hyderabad Police FIR, filed W.P. No. 4945 of 2014 with the Hon'ble High Court, Andhra Pradesh to stay all further proceedings of the FIR. The W.P. is pending for admission. Dividend: The Board of Directors does not recommend any Dividend for the year 2014-15 considering the finance situation of the company. Fixed deposits: During the year under review, the Company has not accepted any fixed deposits and there are no fixed deposits, which are pending repayment. Subsidiary Companies: Your Company does not have any subsidiary company during the year under review. Directors: "The term of office of Mr. Ashok R Shetty , Independent Director of the Company ceased during the year and Mr. Ashok R Shetty had consented to continue as Independent Director if appointed in this Annual General Meeting. Pursuant to the provisions of the Companies Act, 2013 and the Company's Articles of Association, Mr. Ashok R Shetty if appointed as Independent Director shall hold the office for 5 years till 27th Annual General Meeting. Mr. Badrinath S Gandhi, Executive Director retire by rotation at this AGM being eligible, offer themselves for re-appointment. Pursuant to clause 49 of the Listing Agreement with the Stock Exchanges, brief resume of Mr. Ashok R Shetty as well as Mr. Badrinath S Gandhi have been provided in the notice convening the Annual General Meeting." Board Meeting Five meetings of the Board of Directors were held during the year. For further details, please refer report on Corporate Governance of this Annual Report. Declaration by Independent Director The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Act and Clause 49 of the Listing Agreement with the Stock Exchanges. The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the non-executive directors and executive directors and a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors. The details of programs for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company. Directors' Responsibility statement: The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) shall state that— (a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) The directors had selected such accounting policies and applied them 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 at the end of the financial year and of the profit and loss of the company for that period; (c) The directors had 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 had prepared the annual accounts on a going concern basis; and (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. Nomination & remuneration Committee The Board constituted a Nomination and Remuneration Committee comprising of Mr. Ashok R Shetty, Mr. Popatlal M Kathariya and Mr. K.SM. Rao refer Corporate Governance report for details. Corporate Governance: The Company has complied with the requirements of the Code of Corporate Governance as stipulated in clause 49 of the listing agreement with the stock exchanges. A Report on Corporate Governance along with Certification by the Managing Director is attached to this Directors' Report. A Certificate from the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated by clause 49 of the listing agreement is attached to this Directors' Report. Auditors: The statutory auditors of the Company M/s. Ramanand & Associates, Mumbai retire at the conclusion of the ensuing Annual General Meeting. The retiring auditors have furnished a certificate under Sec. 141 of the Companies Act, 2013 confirming their eligibility for reappointment. The Auditor Report for the financial year ended March 31, 2015 is annexed herewith and is part of the Annual Report. Extract of Annual Return An Extract of Annual Return of the Company Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014 is given below; 1. Foreign Exchange Inflow & Outgo: a) Activities relating to Exports, Initiatives taken to increase Exports, Developments of new Export Market for products and Services and Export Plans: The Company has not undertaken any export activities. The company is looking out for Export Opportunities. b) Total Foreign Exchange used and earned: Used : Nil Earned : Nil Risk Management During the year, your Directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company's risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, market, liquidity, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. A Risk Management Policy was reviewed and approved by the Committee. The Company manages, monitors and reports on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company's management systems, organizational structures, processes, standards, code of conduct and behaviors together form the Risk Management System (RMS) that governs how the company conducts the business of the Company and manages associated risks. The Company has introduced several improvements to Risk Management, Internal Controls Management and Assurance Frameworks and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities. Particulars of loans, guarantees or investments under section 186: Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement. Related Party Transaction under sub-section (1) of section 188: Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board is provided in the company's web site. Your Directors draw attention of the members to Note to the financial statement which sets out related party disclosures. Acknowledgments: The Management is grateful to the Regulatory Authorities, Share holders, Company's Bankers, Financial Institutions, Insurance Companies, Investors, Clients, Business Associates for their continued support and co-operation. The Directors also wish to place on record their appreciation for the co-operation, active involvement and dedication of the employees. For and on behalf of the Board of Directors R.V. Ravikumar Managing Director Registered Office: SI & S2, Second Floor, 'B' Block, "Ameen Manors" No.138, Nungambakkam High Road, Nungambakkam, Chennai - 600 034. Place: Chennai Date : 12.08.2015 |