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Tilaknagar Industries Ltd.

BSE: 507205 | NSE: TI |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE133E01013 | SECTOR: Breweries & Distilleries

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Director’s Report

Dear Members,

The Directors hereby present their 83rd Annual Report along with the audited financial statements of the Company for the financial year ended March 31, 2018.

1. FINANCIAL HIGHLIGHTS

The summary of the Company’s financial results for the financial year ended March 31, 2018 is furnished below:

(Rs. in Lacs)

Standalone

Sr. No.

Particulars

Year ended 31.03.2018

Year ended 31.03.2017

I

Revenue from operations

39,674.77

62,578.01

II

Other Income

3,142.14

393.09

III

Total Income (I III)

42,816.91

62,971.10

IV

Expenses

(a) Cost of materials consumed

12,717.81

21,618.31

(b) (Increase)/Decrease in Stock

635.38

2,083.60

(c) Excise Duty

8,792.42

24,443.94

(d) Employee benefits expense

1,770.42

2,599.08

(e) Finance costs

13,369.52

15,318.07

(f) Depreciation and amortization

3,560.33

3,624.71

(g) Other expenses

22,035.06

20,824.08

Total expenses

62,880.94

90,511.79

V

Profit/(Loss) before exceptional items and tax (III-IV)

(20,064.03)

(27,540.69)

VI

Exceptional items

-

-

VII

Profit/(Loss) before tax (V-VI)

(20,064.03)

(27,540.69)

VIII

Tax Expense

(a) Current tax

-

-

(b) Taxes for earlier years

(265.30)

(729.84)

(c) Deferred tax

-

-

Total Tax Expense

(265.30)

(729.84)

IX

Profit/(Loss) for the period (VII-VIII)

(19,798.73)

(26,810.85)

X

Other Comprehensive Income/(Loss)

(a) Items that will not be reclassified to Profit & Loss

(i) Re-measurement gain/(loss) in respect of the defined benefit plans

(22.86)

(56.04)

(ii) Deferred tax on re-measurement gain/(loss) in respect of defined benefit plans

-

-

(b) Items that will be reclassified to Profit & Loss

-

-

Total Other Comprehensive Income/(Loss) for the period [(a) (b)]

(22.86)

(56.04)

XI

Total Comprehensive Income/(Loss) for the period (IX X)

(19,821.59)

(26,866.89)

Finance cost has decreased from Rs. 15,318.07 lacs during the financial year ended March 31, 2017 to Rs. 13,369.52 lacs during the financial year ended March 31, 2018 on account of repayment of high cost debts and one time settlement with Axis Bank.

Due to price increase received in few major southern States and reduction in finance costs coupled with austerity measures and cost reduction initiatives and premiumization strategy adopted by the Company, the total comprehensive loss had decreased to Rs. 19,821.59 lacs during the financial year March 31, 2018 as compared to total comprehensive loss of Rs. 26,866.89 lacs during the financial year March 31, 2017.

The Company is actively exploring the possibilities of restructuring the existing debts, selling of nonperforming assets and considering the feasibility of raising additional capital from affiliates or other investors. While the macro economic situation continues to present challenges, the Company, with the support of its strong, resilient business model and the effective implementation of the above plans, is persistent with its efforts to generate long term growth.

In view of loss incurred by the Company during the financial year 2017-18, no amount is proposed to be transferred to reserves.

2. OPERATIONAL REVIEW

Operations

The Company is among India’s leading alco-bev business companies with a wide range of brands across the IMFL spectrum comprising Whisky, Brandy, Rum, Gin and Vodka, with a predominant presence in South India and CSD stores. It has established its unique identity in the IMFL industry with its core competencies across manufacturing facilities, wide distribution network and efficient marketing strategies.

During the financial year 2017-18, the Company faced liquidity constraints coupled with an inability to achieve breakeven sales volume due to constraints in the supply of Company’s brands in key profitable States owing to shortage of working capital. The Company is making efforts to address these issues and improve its liquidity position to meet the requirement of funds.

Manufacturing Facilities

The Company has ultra-modern set up with robust manufacturing facilities, comprising of 1 owned facility, 3 operating liquor subsidiaries, 3 leased and 10 tie-up units strategically located across India. It has 100 KLPD molasses based and 100 KLPD grain based distillation plants and IMFL Bottling Plant at Shrirampur (Maharashtra).

During the financial year 2017-18, the grain based plant of the Company was not operational. The Company had applied to the State government authorities for dual feed permission for manufacture of ENA through molasses as well as grain for the said plant. Permission has been received for operating the fermentation section for one year and permission for operating the distillation section is awaited.

Sales and Distribution

The Company is an established player in the Brandy space in India and is committed to fortify its presence in the segment with a strong portfolio of brands including Mansion House Brandy and Courrier Napoleon Brandy.

During the financial year 2017-18, the sales volume increased by 15.40% to 59.2 lacs cases as compared to 51.3 lacs cases in the financial year 2016-17. Region-wise, the Company has registered sales volume of 49.1 lacs cases in southern region, 1.9 lacs cases in eastern region, 0.7 lacs cases in western region and 7.5 lacs cases in exports & institutions segment. Segment-wise, Brandy contributed 84%, followed by Rum, Whisky, Vodka & Gin segments, which have contributed 10%, 4%, and 2%, respectively to the overall sales volume of the Company.

The Company ensures a seamless co-ordination of all its functions not only in production, but also in its supply chain management. The Company markets its products across the country through three main channels viz. corporations, distributors and direct sales. The distribution strength of the Company is built around its dispersed manufacturing facilities that cover large swathes of the Indian market with a strong network of distributors and points of sales covering numerous market segments and geographies with especially pronounced presence in the South, India’s largest IMFL consuming geography.

The Company is presently exporting its products to Singapore in South-East Asia and Guinea, Ghana, Nigeria, Angola, Congo, South Sudan, Uganda, Rwanda & Kenya in Africa. It is also exploring to export its products to UAE in Middle-East and Malawi in Africa.

Both Mansion House Brandy and Courrier Napoleon Brandy continue to be consumer’s most preferred brands across southern region. Dipstick studies conducted by internal teams of the Company indicated that both brands were on top of consumers’ mind when it came to premium Brandies.

Material Developments

While talks are on with the working capital lenders and other lenders for settlement/restructuring of existing debts, settlement arrangements of the principal dues have been entered into with Axis Bank and Bank of India during the financial year 2017-18.

The Company has re-commenced the bottling operations in the State of Tamil Nadu during the financial year 2017-18 after entering into settlement terms for the pending dispute with the existing bottler.

During the financial year 2017-18, the Trademark License Agreement entered into by the Company with Vahni Distilleries Private Limited, wholly owned subsidiary of the Company (“Vahni”) on October 27, 2016 whereby exclusive license was granted to Vahni for use of certain trademarks of the Company in the territories of Karnataka on royalty basis for a period of 15 years w.e.f. April 01, 2017 was cancelled.

During the financial year 2017-18, the Trademark License Agreement entered into by the Company with PunjabExpo Breweries Private Limited, wholly owned subsidiary of the Company (“PunjabExpo”) on

April 10, 2017 was modified to enable the Company also to manufacture its brands/products in the States of Andhra Pradesh, Telangana, Puducherry, Mahe & Karikal, where PunjabExpo was granted the right to sell, manufacture and distribute the licensed trademark of TI with effect from April 01, 2017.

With respect to the Corporate Insolvency Resolution Process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 (“the Code”) in respect of Prag Distillery(P) Ltd., wholly owned subsidiary of the Company(‘Prag’), National Company Law Tribunal vide its order delivered on August 09, 2018 has, inter-alia, directed for Prag’s liquidation as a going concern.

3. DIVIDEND

In view of the loss incurred by the Company during the year, the Directors have not recommended any dividend for the financial year ended March 31, 2018.

4. SHARE CAPITAL

During the financial year 2017-18, there was no change in the authorized, issued, subscribed and paid-up share capital of the Company. As on March 31, 2018, the Company was having authorized share capital of Rs. 15,000 lacs comprising of 1,500 lacs equity shares of Rs. 10/- each out of which issued, subscribed and paid-up share capital was Rs. 12,475.61 lacs comprising of 1,247.56 lacs equity shares of Rs. 10/- each.

The Board of Directors, in its adjourned Meeting held on June 14, 2018, approved the allotment of 1,75,100 equity shares of Rs. 10/- each to the option grantees at an issue price of Rs. 13/- each under ESOP Scheme 2010 and ESOP Scheme 2012 of the Company. Post allotment, the post-issue paid-up equity share capital of the Company has become Rs. 12,493.12 lacs divided into 1,249.31 lacs equity shares of Rs. 10/- each.

5. SUBSIDIARY AND ASSOCIATE COMPANIES

The Company is having 8 subsidiary companies falling under the purview of Section 2(87) of the Companies Act, 2013. In accordance with Rule 8(1) of the Companies (Accounts) Rules, 2014, a report on their performance and financial position is presented herein below:

Sr. No.

Name of Subsidiary (Stake)

Performance

(A)

OPERATING SUBSIDIARIES

1

Prag Distillery (P) Ltd. (100%)

The revenue from operations, during the financial year 2017-18, of Prag stood at Rs. 1,728.23 lacs as compared to Rs. 28,113.43 lacs in the previous year. It has incurred total comprehensive loss of Rs. 608.79 lacs during the financial year 2017-18 as compared to total comprehensive loss of Rs. 334.60 lacs in the previous year.

With respect to the Corporate Insolvency Resolution Process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 (“the Code”) in respect of Prag, National Company Law Tribunal vide its order delivered on August 09, 2018 has, inter-alia, directed for its liquidation as a going concern.

2

Vahni Distilleries Private Limited (100%)

The production capacity of Vahni’s plant has been fully utilized in the financial year 2017-18.

The revenue from operations, during the financial year 2017-18, of Vahni stood at Rs. 41,470.97 lacs as compared to Rs. 31,386.04 lacs in the previous year. It has incurred total comprehensive loss of Rs. 1,119.66 lacs during the financial year 2017 18 as compared to total comprehensive loss of Rs. 758.62 lacs in the previous year.

The Trademark License Agreement entered into by the Company with Vahni on October 27, 2016 whereby exclusive license was granted to Vahni for use of certain trademarks of the Company in the territories of Karnataka on royalty basis for a period of 15 years w.e.f. April 01, 2017 was cancelled.

3

PunjabExpo Breweries Private Limited (100%)

The revenue from operations, during the financial year 2017-18, of PunjabExpo stood at Rs. 52,099.98 lacs as compared to Rs. 1,838.87 lacs in the previous year. It has incurred total comprehensive income of Rs. 356.73 lacs during the financial year 2017-18 as compared to total comprehensive loss of Rs. 57.12 lacs in the previous year.

The Company has subscribed to 53,03,998 (Fifty Three Lacs Three Thousand Nine Hundred and Ninety Eight) Equity Shares of PunjabExpo having face value of Rs. 10/- (Rupees Ten Only) each at an issue price of Rs. 10/- (Rupees Ten Only) each amounting to Rs. 5,30,39,980/- (Rupees Five Crores Thirty Lacs Thirty Nine Thousand Nine Hundred and Eighty Only) on preferential basis through private placement.

The Trademark License Agreement entered into by the Company with PunjabExpo on April 10, 2017 was modified to enable the Company also to manufacture its brands/products in the States of Andhra Pradesh, Telangana, Puducherry, Mahe & Karikal, where PunjabExpo was granted the right to sell, manufacture and distribute the licensed trademark of TI with effect from April 01, 2017.

(B)

OTHER SUBSIDIARIES

4

Kesarval Springs Distillers Pvt. Ltd. (100%)

During the financial year 2017-18, no activities have been carried out by Kesarval and it has incurred total comprehensive loss of Rs. 5.99 lacs during the year as compared to total comprehensive loss of Rs. 8.35 lacs in the previous year.

5

Mykingdom Ventures Pvt. Ltd. (100%)

During the financial year 2017-18, no activities have been carried out by Mykingdom and it has incurred total comprehensive loss of Rs. 22.91 lacs during the year as compared to total comprehensive loss of Rs. 0.34 lac in the previous year.

6

Studd Projects P. Ltd. (100%)

During the financial year 2017-18, no activities have been carried out by Studd and it has incurred total comprehensive loss of Rs. 8.77 lacs during the year as compared to total comprehensive loss of Rs. 0.28 lac in the previous year.

7

Srirampur Grains Pvt. Ltd. (100%)

During the financial year 2017-18, no activities have been carried out by Srirampur and it has incurred total comprehensive loss of Rs. 2.18 lacs during the year as compared to total comprehensive loss of Rs. 0.39 lac in the previous year.

8

Shivprabha Sugars Ltd. (90%)

During the financial year 2017-18, no activities have been carried out by Shivprabha and it has incurred total comprehensive loss of Rs. 0.82 lac during the year as compared to total comprehensive loss of Rs. 0.99 lac in the previous year.

Apart from the above mentioned subsidiary companies, the Company is having one associate company falling under the purview of Section 2(6) of the Companies Act, 2013 viz. Mason and Summers Marketing Service Private Limited in which the Company is having 26% stake. During the financial year 2017-18, no significant changes in its financial performance have taken place as compared to previous year.

The consolidated financial statements of the Company and its subsidiaries for the financial year ended March 31, 2018, prepared in accordance with the Companies Act, 2013 and Indian Accounting Standards (Ind AS) forms part of this Annual Report and same shall also be laid in the ensuing Annual General Meeting in accordance with the provisions of Section 129(3) of the Companies Act, 2013. Since, the Company doesn’t have any obligation to fund the losses of the associate beyond the investments made, the share of loss of the associate company has not been considered in the consolidated financial statements.

In accordance with proviso to Section 129(3) read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of the Company’s subsidiaries in Form AOC-1 is attached to the financial statements of the Company and forms part of this Annual Report.

In accordance with the provisions of Section 136 of the Companies Act, 2013, the standalone and consolidated financial statements of the Company along with the documents required to be attached/ annexed thereto and separate audited financial statements in respect of its subsidiary companies are available on its website i.e. www.tilind.com and are also available for inspection at its Registered Office and Corporate Office.

During the financial year 2017-18, no company has become or ceased to be subsidiary of the Company and no material change in the nature of the business of the existing subsidiary and associate companies has taken place except with respect to the Corporate Insolvency Resolution Process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 (“the Code”) in respect of Prag, National Company Law Tribunal vide its order delivered on August 09, 2018 has, inter-alia, directed for its liquidation as a going concern.

6. DIRECTORS

At the 82nd Annual General Meeting of the Company held on September 25, 2017, Mr. Amit Dahanukar, who retired by rotation in the said Annual General Meeting in accordance with the provisions of Section 152(6) of the Companies Act, 2013, was re-appointed as Director, liable to retire by rotation.

In accordance with the provisions of Section 152(6) of the Companies Act, 2013, Mrs. Shivani Amit Dahanukar, Director of the Company is retiring by rotation at the ensuing Annual General Meeting and being eligible, has offered herself for re-appointment. The Board recommends her appointment.

Dr. Ravindra Bapat and Mr. C.V Bijlani were appointed as Independent Directors of the Company to hold office for a term of 5(Five) consecutive years commencing from April 01, 2014 and expiring on March 31, 2019, vide resolutions passed by the Members of the Company at the 79th Annual General Meeting held on September 27, 2014.

Pursuant to the provisions of Section 149 and other applicable provisions of the Companies Act, 2013, an Independent Director shall hold office for a term up to five consecutive years on the Board of Directors and shall be eligible for re-appointment on passing of a Special Resolution by the Company.

In order to comply with the above statutory requirement, the proposals are placed in the ensuing Annual General Meeting for the re-appointment of Dr. Ravindra Bapat and Mr. C.V. Bijlani, who have given their consent pursuant to Section 160 of the Companies Act, 2013, as Independent Directors of the Company, not liable to retire by rotation for a second term of 5(Five) consecutive years commencing from April 01, 2019 and expiring on March 31, 2024.

The Board recommends their re-appointment as Independent Directors of the Company, not liable to retire by rotation under the provisions of Section 149 of the Companies Act, 2013 for a second term expiring on March 31, 2024. Information pursuant to Regulation 36(3) of the Listing Regulations with respect to Directors seeking re-appointment is appended to the Notice convening the ensuing Annual General Meeting.

All the Independent Directors have furnished respective declaration stating that they meet the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 read with Regulation 16(1)(b) of the Listing Regulations.

7. NOMINATION, REMUNERATION AND EVALUATION POLICY

The Nomination, Remuneration and Evaluation Policy of the Company, adopted by the Board in accordance with the provisions of Section 178(3) of the Companies Act, 2013 based on the recommendations made by the Nomination and Remuneration Committee, lays down criteria for:

i. determining qualifications, positive attributes required for appointment of Directors, Key Managerial Personnel and Senior Management and also the criteria for determining the independence of a Director;

ii. appointment, tenure, removal/retirement of Directors, Key Managerial Personnel and Senior Management;

iii. determining remuneration (fixed and performance linked) payable to the Directors, Key Managerial Personnel and Senior Management; and

iv. evaluation of the performance of the Board and its constituents.

The contents of the abovementioned Policy have been elaborated in the Corporate Governance Report in accordance with the provisions of Section 134(3)(e) of the Companies Act, 2013. The Company has uploaded the Nomination, Remuneration and Evaluation Policy on its website, accessible at the weblink: http:// www.tilind.com/wp-content/uploads/2017/09/ NominationRemunerationandEvaluationPolicy.pdf.

8. BOARD EVALUATION

In accordance with the provisions of Section 178(2) read with Schedule IV of the Companies Act, 2013, Listing Regulations and Clause 5 of the Nomination, Remuneration and Evaluation Policy of the Company, the annual performance evaluation of the Independent Directors, Non-Independent Directors, Chairman and the Board as a whole (including its Committees) was carried out on February 27, 2018, in the manner given below:

i. Performance evaluation of the Independent Directors was done by the entire Board (excluding the Director being evaluated);

ii. Independent Directors, in their separate meeting, reviewed the performance of the NonIndependent Directors and the Board as a whole (including its Committees); and

iii. Independent Directors, in their separate meeting, also reviewed the performance of the Chairman after taking into account the views of all the Directors.

After taking into consideration the various aspects of the Board’s functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance and the criteria specified in the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 05, 2017, a structured questionnaire was prepared and circulated among the Directors for the abovementioned evaluation.

The Nomination and Remuneration Committee reviewed the results of the annual performance evaluation carried out in the financial year 2017-18 in its Meeting held on June 12, 2018 and expressed overall satisfaction on the performance of the Independent Directors, Non-Independent Directors, Chairman and the Board as a whole (including its Committees). Accordingly, no corrective action was proposed to be taken pursuant to such evaluation results.

As results of the performance evaluation of the Independent Directors, Non-Independent Directors, Chairman and the Board as a whole (including its Committees) carried out in the financial year 2016-17 were also satisfactory therefore, no corrective action was required to be taken pursuant to such evaluation results.

9. NUMBER OF MEETINGS OF THE BOARD

The Board met 5 times during the financial year 2017-18, details thereof have been furnished as a part of the Corporate Governance Report.

10. COMPOSITION OF AUDIT COMMITTEE

In accordance with the provisions of Section 177(8) of the Companies Act, 2013, details of the composition of the Audit Committee have been furnished as a part of the Corporate Governance Report. There have not been any instances during the year when the recommendations of the Committee were not accepted by the Board.

11. KEY MANAGERIAL PERSONNEL

As on March 31, 2018, Mr. Amit Dahanukar, Chairman & Managing Director, Mr. Srijit Mullick, Chief Financial Officer and Mr. Gaurav Thakur, Company Secretary were the Key Managerial Personnel of the Company under the provisions of Sections 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Qualifications of Managerial Personnel) Rules, 2014. There was no change in the Key Managerial Personnel during the financial year 2017-18.

12. AUDITORS

Statutory Auditors and Statutory Audit Report

At the 82nd Annual General Meeting (“AGM”) held on September 25, 2017, M/s. M. M. Parikh & Co., Chartered Accountants (Firm Registration No. 107557W) were appointed as Statutory Auditors of the Company from the conclusion of the 82ndAGM till the conclusion of the 87th AGM, subject to ratification of their appointment by the Members at every AGM held after the 82nd AGM.

Section 139 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014 as amended by the Companies (Amendment) Act, 2017 and the Companies (Audit and Auditors) Amendment Rules, 2018 respectively, does not contain the provisions relating to annual ratification of the appointment of the Statutory Auditors with effect from May 07, 2018. Therefore, the appointment of Statutory Auditors is not required to be ratified each year at the AGM and accordingly, M/s. M. M. Parikh & Co., Chartered Accountants (Firm Registration No. 107557W) hold office until the conclusion of the 87th Annual General Meeting without following the requirement of ratification of their appointment by the Members at the AGM every year.

No frauds have been reported by the Statutory Auditors during the financial year 2017-18 pursuant to the provisions of Section 143(12) of the Companies Act, 2013.

With reference to the Statutory Auditors’ qualified opinion, matter of emphasis and observations in the Auditors’ Report, the explanation/comments of the Board in accordance with the provisions of Section 134(3)(f) of the Companies Act, 2013 are set out in Annexure ‘G’ to this Report.

Cost Records, Cost Auditor and Cost Audit Report

The Company is required to maintain cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013 and accordingly, has made and maintained such accounts and records for the financial year 2017-18.

In accordance with the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the Board has, on the recommendation of the Audit Committee, appointed CMA Dr. Netra Shashikant Apte having Membership No. 11865 and Firm Registration No. 102229 as Cost Auditor for conducting the audit of cost accounting records maintained by the Company relating to manufacturing of the products covered under the Companies (Cost Records and Audit) Rules, 2014 at a remuneration of Rs. 1,50,000/- (Rupees One Lac Fifty Thousand Only) plus tax as applicable and reimbursement of out of pocket expenses as may be incurred by her for conducting the Cost Audit for the financial year 2018-19.

In view of the requirements of Section 148 of the Companies Act, 2013, the Company has obtained from the Cost Auditor written consent along with certificates with respect to compliance with the conditions specified under Rule 6(1A) of the Companies (Cost Records and Audit) Rules, 2014 and certifying her independence and arm’s length relationship with the Company.

In terms of the provisions of Section 148(3) of the Companies Act, 2013 read with Rule 14(a)(ii) of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditor is required to be ratified by the Members of the Company. Accordingly, a resolution seeking Members’ ratification for the remuneration payable to the Cost Auditor forms part of the Notice convening the ensuing Annual General Meeting.

The Company has filed the Cost Audit Report for the financial year ended March 31, 2017 submitted by CMA Dr. Netra Shashikant Apte, Cost Auditor on October 13, 2017. The Cost Audit Report for the financial year ended March 31, 2018 shall be filed in due course.

Secretarial Auditors and Secretarial Audit Report

In accordance with the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s. Ragini Chokshi & Co., Practicing Company Secretaries as Secretarial Auditors of the Company for the financial year 2018-19.

The Secretarial Audit Report for the financial year ended March 31, 2018 is set out in Annexure ‘A’ to this Report.

The Board’s responses with respect to the Secretarial Auditors’ observations in their Secretarial Audit Report for the financial year ended March 31, 2018 are as under:

1) Secretarial Auditors’ observations under Point (i) :

The un-audited financial results (consolidated and standalone) for the quarter and half year ended September 30, 2017 pursuant to the Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 were filed by the Company on February 27, 2018 as against the due date of December 14, 2017 and the Company had paid the penalties of Rs. 18,37,921/- and Rs. 18,37,922/- to BSE and NSE respectively in this regard.

Board’s Response: The abovementioned results could not be prepared within the stipulated timelines due to delay in configuration of the ERP system for implementation of the Goods and Service Tax provisions across Company’s various units pan India.

2) Secretarial Auditors’ observations under Point (ii) :

The un-audited financial results (consolidated and standalone) for the quarter and nine months ended December 31, 2017 pursuant to the Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 were filed by the Company on February

27, 2018 as against the due date of February 14, 2018 and the Company had paid the penalties of Rs. 1,53,400/- and Rs. 1,53,400/- to BSE and NSE respectively in this regard.

Board’s Response: The abovementioned results could not be prepared within the stipulated timelines due to delay in configuration of the ERP system for implementation of the Goods and Service Tax provisions across Company’s various units pan India.

Internal Auditors and Internal Audit Report

The Company is having M/s. Devdhar Joglekar & Srinivasan, Chartered Accountants as its Internal Auditors in accordance with the provisions of Section 138(1) of the Companies Act, 2013. The Audit Committee reviews the observations made by the Internal Auditors in their Report on quarterly basis and makes necessary recommendations to the management.

13. DETAILS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Details with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are set out in Annexure ‘B’ to this Report.

14. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Particulars of employees and related disclosures as required under the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(1) and 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are set out in Annexures ‘C’ and ‘D’ to this Report.

15. ANNUAL RETURN

In accordance with the provisions of Section 134(3)(a) of the Companies Act, 2013, the Company has uploaded the Annual Return for the financial year ended March 31, 2018 on its website, accessible at the weblink : https://www.tilind.com/ investors/#disclosure.

16. EMPLOYEE STOCK OPTION SCHEMES

The Company has implemented ESOP Scheme 2008, ESOP Scheme 2010 and ESOP Scheme 2012 compliant with the SEBI (Share Based Employee Benefits) Regulations, 2014 to reward and retain the qualified and skilled employees and to give them an opportunity to participate in the growth of the Company. These Schemes are administered by the Compensation Committee of the Company. No changes have taken place in these Schemes during the financial year 2017-18.

A certificate from the Statutory Auditors of the Company as required under Regulation 13 of the SEBI (Share Based Employee Benefits) Regulations, 2014 shall be placed at the ensuing Annual General Meeting for inspection by the Members. The disclosures as required pursuant to Rule 12(9) of the Companies (Share Capital and Debentures) Rules, 2014 read with Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 are set out in Annexure ‘E’ to this Report and are also uploaded on Company’s website, accessible at the weblink : http:// www.tilind.com/wp-content/uploads/2017/09/ ESOP-disclosure.pdf.

17. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Company is committed to ensure a healthy environment and empowered community around it and has, accordingly, adopted a triple bottom line approach of people, planet and profit. The Company has embraced the United Nation’s (UN) Sustainable Development Goals (SDG) and is mainly directing its efforts towards health & nutrition, education & environment conservation. The details of the CSR programs or activities undertaken by the Company during the financial year 2017-18 are as follows:

i. Health & Nutrition Program

With a vision of having 100% healthy and intelligent children in the villages surrounding the plant of the Company, efforts are now focused on promoting the first 1000 days program through Maternal Infant and Young Child Nutrition (MIYCN) empowerment of the community by implementing the following activities:

a) Mother and Child Nutrition Centres

Mother and Child nutrition centres (free of cost) are setup in Shrirampur, Loni hospital and outreach centres among different villages around Shrirampur. At these centres, our doctors, nutritionists along with local community workers support women in the community in practising the essential nutrition actions needed for the first 1000 days. Anthropometric assessments are conducted for the children to determine their nutritional status and mothers are counselled on correct feeding techniques. In 2017-18, 11 villages and hamlets benefited from these outreach centres. In total, 920 pregnant women and young children were benefited from this activity.

Taking this experience and expanding it further, a mother and child nutrition centre has been launched on 25th February 2018 in the urban slums of Ganesh Nagar, Dhobi Ghat, Mumbai.

b) Community nutrition raising activities

In addition to the Mother and Child nutrition centres, outreach activities viz. nutritional cooking demonstrations, health videos screening, talks, celebration of national nutrition week and world breastfeeding week etc. Have been conducted during the financial year 201718 to raise awareness regarding maternal and child health among different villages and areas in and around the plant of the Company in Shrirampur.

c) Hospital-based Infant Young Child Feeding (IYCF) Counselling Centre

The Company continues to support an IYCF counselling centre (a weekly outpatient clinic) at Pravara Medical Trust (PMT), Loni. Breastfeeding and complementary feeding counselling on OPD basis is conducted by the health and nutrition team. The team also visits the delivery and paediatric wards to provide lactation counselling to the admitted mothers. Some other activities that were conducted to make the project sustainable were celebration of world breastfeeding week and national nutrition week along with PMT staff and training on IYCF for the nurses working with delivery & paediatrics.

d) Training on “First 1000 days - Maternal & Child Nutrition”

The health and nutrition team successfully completed 5 training programs for 357 government frontline workers and NGO staff at various locations.

ii. Community kitchen

Nutritious, healthy and wholesome complete meal comprising of rice, dal and vegetable is cooked daily at the annakshetra (community kitchen) and is served to the children.

iii. Education

The Company continues to support the Dahanukar Vidyalay, Tilaknagar (DVT) school and the Balvarg. During the financial year 2017-18, Sarv Anandshala, a Multi grade Multi level (MGML) and Activity Base learning (ABL) teaching method was initiated for standard 1 under which students of different learning abilities, physical abilities and social classes learns together.

iv. Supply of R.O water

The Company supplies safe drinking (R.O) water to more than 10 wadis.

v. Sports outreach

Training of the sports faculty of schools, distribution of sports equipments, maintenance of playgrounds at ZP schools and conducting various inter village matches in order to develop sports talent that lies hidden in the villages are some of the activities carried out under sports outreach program by the Company. 3,675 students were benefited from this program that covered 32 ZP schools in the area. The Company has also organized inter school sports event which saw overwhelming response from students as well as parents with 20 schools participating with 832 students entering the various sporting competition.

The second activity that is carried out under the sports outreach program is “Kridamandal” aimed at engaging youth and unemployed in sports to keep them away from addiction towards tobacco, alcohol etc. Currently there are 10 Kridamandal groups, benefitting 190 youths.

vi. Environment Conservation

The Company believes in organic and sustainable farming and grows soybean, sugarcane, fruits, vegetables, maize, ginny grass, jowar grass in its land grounds besides maintaining a flower nursery. Additionally, with support of the in-house school students and the Company’s employees, various tree plantation drives were undertaken and more than 2,000 trees were planted during the financial year 2017-18.

vii. Arunodaya Sanskruti Pratishthan

With an aim of reviving the Indian culture and study of Vedas, the Arunodaya Sanskruti Pratishthan Institute has been launched.

viii. Animal Welfare Centre

The Company continues to take care of abandoned and rescued animals in its animal shelter as well as maintains a Goshala.

During the financial year 2017-18, the Company was not required to spend any amount on CSR activities as per the provisions of Section 135(5) of the Companies Act, 2013. However, a budget of Rs. 45 lacs was earmarked for spending on ongoing CSR Activities during the financial year 2017-18.

As against the budgeted amount of Rs. 45 lacs, the Company has spent Rs. 55.90 lacs on CSR activities during the financial year 2017-18.

The Annual Report on CSR activities as required under Section 134(3)(o) of the Companies Act, 2013 read with Rule 8 of the Companies (CSR Policy) Rules, 2014 is set out in Annexure ‘F’ to this Report. The Company has uploaded the CSR Policy and the Annual Report on CSR Activities for the financial year 2017-18 on its website, accessible at the weblinks: http://www.tilind.com/wp-content/ uploads/2017/09/CSRpolicy120115.pdf and https:// www.tilind.com/wp-content/uploads/2018/08/ AnnualReportCSR-Activities-17-18.pdf respectively.

18. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Regulation 34(2)(e) of the Listing Regulations, Management Discussion and Analysis Report containing the details as required under Schedule(V)(B) of the said Regulations is annexed hereto and forms an integral part of this Report.

19. CORPORATE GOVERNANCE REPORT

Pursuant to Regulation 34(3) of the Listing Regulations, Corporate Governance Report containing the details as required under Schedule(V) (C) of the said Regulations along with a certificate from the Statutory Auditors of the Company confirming the compliance of the conditions of corporate governance by the Company as required under Schedule(V)(E) of the said Regulations is annexed hereto and forms an integral part of this Report.

20. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

In accordance with the provisions of Sections 134(3)(g) and 186(4) of the Companies Act, 2013, full particulars of loans given, investments made, guarantees given and securities provided, if any, along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient have been disclosed in the financial statements.

21. DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company is committed to provide a healthy environment to all its employees and has zero tolerance for sexual harassment at workplace. In order to prohibit, prevent and redress complaints of sexual harassment at workplace, it has complied with the provisions relating to the constitution of the Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 [14 of 2013].

The Company has not received any complaint of sexual harassment during the financial year 2017-18.

22. FIXED DEPOSITS

As on April 01, 2017, the Company was not having any outstanding deposits falling under the scope of Chapter V of the Companies Act, 2013 and it has not accepted any deposits covered under said Chapter during the financial year 2017-18. As on March 31, 2018, the Company was not having any outstanding deposit falling under the scope of the said Chapter.

23. DETAILS OF UNCLAIMED BONUS SHARES IN THE SUSPENSE ACCOUNT

Pursuant to Regulation 34(3) of the Listing Regulations, details in respect of unclaimed bonus shares lying in dematerialized form in the ‘Tilaknagar Industries Ltd. - Unclaimed Suspense Account’ as required under Schedule(V) (F) of the said Regulations are as follows:

Particulars

Bonus Issue - 2009

Bonus Issue - 2010

No. of Members

No. of Shares

No. of Members

No. of Shares

Aggregate number of Members and the outstanding shares in the suspense account lying at the beginning of the year

1,109

61,636

1,173

1,95,856

Number of Members who approached the Company for transfer of shares from suspense account during the year

-

-

-

-

Number of Members to whom shares were transferred from suspense account during the year

-

-

-

-

Transferred to IEPF Authority

331

27,612

1#

3

Aggregate number of Members and the outstanding shares in the suspense account lying at the end of the year*

778

34,024

1,173

1,95,853

* The voting rights on the shares outstanding in the suspense account as on March 31, 2018 are frozen till the rightful owner claims such shares.

# Partial shareholding of the Member was transferred to IEPF.

24. TRANSFER OF DIVIDEND/SHARES TO INVESTOR EDUCATION & PROTECTION FUND

In accordance with the provisions of Section 124(5) of the Companies Act, 2013, dividend lying unclaimed in the unpaid dividend account for a period of 7 (seven) years is required to be transferred by the Company to the IEPF. Accordingly, an amount of Rs. 5,14,473 being dividend for the financial year 2009-10 lying unclaimed for a period of 7 years was transferred by the Company during the financial year 2017-18 to the Investor Education & Protection Fund (“IEPF”).

Pursuant to Section 124(6) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (“the IEPF Rules”), the Company is, also, required to transfer all shares in respect of which dividend has not been claimed for 7 (seven) consecutive years or more to the IEPF Authority. Accordingly, 1,00,687(One Lac Six Hundred and Eighty Seven) shares relating to financial year 200910 have been transferred by the Company during the financial year 2017-18 to the IEPF Authority.

Details of the abovementioned unclaimed dividend/shares transferred to IEPF have been uploaded on the website of the Company, accessible at the weblink: http://www.tilind.com/ investors/#unclaimedmaturedrefundbonus and also on the website of the IEPF Authority i.e. www.iefp.gov. in.

Details of the unclaimed dividend lying with the Company as on September 25, 2017 (date of last Annual General Meeting) and shares/unclaimed dividend (for the financial year 2010-11) proposed to be transferred to IEPF as required under the provisions of the IEPF Rules have also been uploaded on the website of the Company i.e. www.tilind.com. The Company has sent individual notices to the Members through registered post and also published public notice in the newspapers to enable them to claim the dividend lying unclaimed.

25. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

During the financial year 2017-18, the Company has not entered into contracts or arrangements with related parties falling under the purview of Section 188(1) of the Companies Act, 2013. Hence, disclosure in Form AOC-2 as required under Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is not applicable. Further, no transactions have been entered into by the Company with related parties during the financial year 2017-18, qualifying as material transactions under the provisions of the Listing Regulations.

26. RISK MANAGEMENT

In accordance with the provisions of the Companies Act, 2013, the Company has adopted a Risk Management Policy to identify and evaluate elements of business risks. The Policy defines the risk management approach, establishes various levels of accountability for risk management/mitigation within the Company and reviewing, documentation and reporting mechanism for such risks.

The Risk Management Committee has been voluntarily constituted by the Company and is entrusted with the responsibilities of developing risk mitigation plans, implementing risk reduction/ mitigation strategies and reviewing the effectiveness of the Risk Management Policy.

The key business risks, which in the opinion of the Board may threaten the existence of the Company, along with mitigation strategies adopted by the Company are enumerated herein below:

i. Regulatory Risk

The IMFL industry is a high-risk industry, primarily on account of high taxes and innumerable regulations governing it. As a result, liquor companies suffer from low pricing flexibility and have underutilized capacities, which, in turn, may lead to low margins. To mitigate this risk, the Company complies with all the applicable rules and regulations in all the States where it is present.

ii. Strategic Risk

The Company’s strategy and its execution is dependent on uncertainties and untapped opportunities. To mitigate this risk, the Company has adopted resilient policies which not only allow the Company to maximize opportunities under normal conditions but also ensure that acceptable results are achieved under extraordinary adverse conditions.

iii. Concentration Risk

A large percentage of the Company’s turnover is derived from South India, where any unfavourable regulatory policy may impact its business. Also, the major portion of revenue of the Company is derived from Brandy sales, exposing the Company to category vulnerability. To mitigate this risk, the Company has extended its focus on other geographies viz. Eastern Region, etc. and product categories viz. Whisky, Vodka, etc.

27. INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Board has laid down standards, processes and procedures for implementing the internal financial controls across the organization. After considering the framework of existing internal financial controls and compliance systems;work performed by the Internal, Statutory and Secretarial Auditors and external consultants; reviews performed by the Management and relevant Board Committees including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls with reference to the financial statements were adequate and effective during the financial year 2017-18.

28. VIGIL MECHANISM

The Whistle Blower Policy of the Company, adopted by the Board, provides mechanism to its directors, employees and other stakeholders to raise concerns about any violation of legal or regulatory requirements, misrepresentation of any financial statement and to report actual or suspected fraud or violation of the Code of Conduct of the Company.

The Policy allows the whistleblowers to have direct access to the Chairman of the Audit Committee in exceptional circumstances and also protects them from any kind of discrimination or harassment. During the financial year 2017-18, no employee was denied access to the Audit Committee. The Whistle Blower Policy of the Company can be accessed at the Weblink: http://www.tilind.com/wp-content/ uploads/2017/09/Whistleblower.pdf.

29. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to requirements of Section 134(3)(c) of the Companies Act, 2013 and on the basis of the information furnished to them by the Statutory Auditors and Management, the Directors state that:

a. in the preparation of the annual accounts, the applicable Accounting Standards have been followed and there are no material departures;

b. they have 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 loss of the Company for the year;

c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and operating effectively; and

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

30. RESIDUARY DISCLOSURES

i. During the financial year 2017-18, the Company has not issued equity shares with differential rights as to dividend, voting or otherwise. Hence, disclosure under Rule 4(4) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable;

ii. During the financial year 2017-18, the Company has not issued sweat equity shares to its employees. Hence, disclosure under Rule 8(13) of the Companies (Share Capital and Debentures) Rules, 2014 is not applicable;

iii. During the financial year 2017-18, no significant material orders have been passed by any regulators or courts or tribunals which may impact the going concern status of the Company and its future operations. Hence, disclosure under Rule 8(5)(vii) of the Companies (Accounts) Rules, 2014 is not applicable;

iv. There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this Report; and

v. During the financial year 2017-18, there has been no change in the nature of business of the Company. Hence, disclosure under Rule 8(5)(ii) of the Companies (Accounts) Rules, 2014 is not applicable.

31. ACKNOWLEDGEMENTS

The Directors wish to acknowledge and place on record their sincere appreciation for the assistance and co-operation received from all the members, regulatory authorities, customers, financial institutions, bankers, lenders, vendors and other business associates.

The Directors also recognize and appreciate all the employees for their commitment, commendable efforts, team work, professionalism and continued contribution to the growth of the Company.

For and on behalf of the Board of Directors

Place : Mumbai Amit Dahanukar

Date : August 13, 2018 Chairman & Managing Director

Director’s Report