SDF Industries Ltd. के निदेशक की रिपोर्ट

Mar 31, 2014

Dear members,

The Directors present their 24th Annual Report and the Audited Statement of Accounts for the year ended 31 st March 2014.

Particulars As on As on 31.03.2014 31.03.2013 (Rs. Lakhs) (Rs. Lakhs)

Total Income 578.49 408.28

Total Expenditure 494.64 323.12

Profit before interest & depreciation 83.85 85.16

Less :

Interest __ __

Depreciation 19.39 20.53

Net Profit 64.46 64.63

I. PERFORMANCE:

The year 2013-14 has been very eventful one with negative growth for the manufacturing sector. While the economy being on a slow growth, the cost pull inflation affected the manufacturing sector especially the distillery industry which had few avenues to pass the cost increase to the consumers due to strict government restriction on price increase. Thus, liquor industry particularly in Kerala suffered unprecedented losses.

Our Company though no exception to the said circumstances, however continued to make profits albeit in small way due to our policy of primarily concentrating on providing bottling services rather than investing in unprofitable brand marketing. Even though overall productivity and revenue increased by 42 % over the last financial year, the net profits were more or less same as of last year at Rs.83.85 lakhs before depreciation and Rs, 64.46 lakhs net after depreciation. The profit margins would have been higher but for the extra cost especially incurred on implementing the Minimum Wages Act which was made effective from June 2013. Though the Company has willingly abided to this increased cost as being welfare measure to our workers, the government refused to increase the selling prices of IMFL products. Hence, this increased expense without price increase reduced the margins, as we were unable to demand corresponding increase in bottling fees from ourclients.

II. OVERALL VIEW

Being in alcoholic industry in Kerala where the governmental control is significant, our flexibility to react to market dynamics is rather limited if not curtailed. Hence, the Company continued to operate as contract bottlers for the time being which has given somewhat better results even under the adverse circumstances. Under the emerging scenario, diversification into other areas by our company is becoming imperative and the directors are actively considering this matter as the long term business strategy while continuing present operations to the near future i.e as service provider to other liquor marketing companies to full fill the obligations as part of rehabilitation process.

The company is still under the process of Rehabilitation stage and is under the purview of Hon. BIFR. The Operating Agencies (OA) have submitted a DRS (Draft Rehabilitation Scheme) and presently is in final stages with few more clarifications to be addressed satisfactorily.

III. CORPORATE GOVERNANCE

The requirement of compliance with code of Corporate Governance as per clause 49 of the listing Agreement has been duly complied with. The Company has an "Audit Committee" of independent Directors with Mr.M.P.Gopalakrishnan (Chairman), Mr. N. Muralidhar Nair, Mr. K.V. Viswamohan Menon and Mr. K. Rajkumar as members and a report showing the details of Corporate Governance is enclosed.

IV. PERSONNEL

None of the employees of the Company was in receipt of remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended. Directors are not paid any remuneration nor sitting fees for the board meetings.

V. CONSERVATION OF ENERGY

Since the main distillery division is not functioning, only IMFL bottling division is presently operated, the consumption of energy / power therefore is insignificant.

VI. LISTING PARTICULARS

The Company''s shares are suspended from trading in the Bombay Stock Exchange Ltd., until the company comes out of its sickness. After this the company can recommence the trading of its shares.

VII. DIRECTORS

The Board of Directors, at their meeting held on 12th February, 2014, have appointed Mr.Nottiyath Muralidhar Nair as an Additional Director of the Company and he holds office upto the date of the ensuing Annual General Meeting. The Board recommends the appointment of Mr.Nottiyath Muralidhar Nair as an Independent Director of the Company for a period of 5 consecutive years and accordingly, necessary Resolution has been included in the Agenda of the Notice convening the Annual General Meeting.

Further, the Board of Directors, at their meeting held on 13th August, 2014, have recommended the appointment of Mr. Muthiyil Pathayapura Gopalakrishnan, as an Independent Director of the Company for a period of 5 consecutive years and accordingly, necessary'' Resolution proposing his appointment has been included in the Agenda of the Notice convening the Annua! General Meeting.

Mr. Krishnan Nair Rajkumar, Director of the Company, retires by rotation and being eligible, offers himself for re-appointment.

VIII. AUDIT

Messers. Varma & Varma, (having Firm Registration NO.004532S), Chartered Accountants, Kozhikode, Statutory Auditors of the Company retires at the ensuing Annual General Meeting. Being eligible for re-appointment, in accordance with the provisions of Section 139, 142 and other applicable provisions, if any, of the Companies Act, 2013 the Board of Directors have recommended the appointment of Messers. Varma & Varma, (having Firm Registration No.004532S), Chartered Accountants, Kozhikode as the Statutory Auditors of the Company for a period of 3 consecutive years from the conclusion of the ensuing Annual General Meeting till the conclusion of 27th Annual General Meeting which ought to be held during the year 2017, subject to ratification by the members annually.

IX. COST COMPLIANCE

The Cost Compliance Report for the financial year ended 31 st March 2013 was submitted to the Central Government in the prescribed form on 25th September, 2013 vide SRN:S22522338.

Further, in accordance with Section 209(1 )(d) of the Companies Act, 1956 read with Rule 5 of the Companies (Cost Accounting Records) Rules, 2011, the Cost Compliance Report for the financial year ended 31st March 2014 will be submitted to the Central Government within the prescribed time.

X. DIRECTOR''S RESPONSIBILITY STATEMENT

The Directors hereby state:

i) That in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures.

ii) That they have selected such accounting policies, consulted the Statutory Auditors and have applied them consistently and made judgments and estimates that are reasonable arid 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 on 31.03.2014 and of the profit of the Company for the period.

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

iv) That they have prepared the annual accounts on a going concern basis.

XI. ACKNOWLEDGMENT

The Directors thank all the bottling business partners for their continued faith in the Company as they contributed substantially to the gainful operations of our company. Our directors would also like to thank the fellow directors, executives and employees without whose untiring work the Company would not have achieved the good results inspite of the adverse business environment. Your directors would also like to thank all the shareholders for their continued confidence in the Company.

On behalf of the Board of Directors

K. V. Viswamohan Menon Chairman & Wholetime Director

Palakkad

13.08.2014

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Mar 31, 2013

TO THE MEMBERS OF SDF INDUSTRIES LIMITED

The Directors present their 23rd Annual Report and the Audited Statement of Accounts for the year ended 31st March 2013.

I. PERFORMANCE:

Financial Year

2012-13 2011-12 (Rs. Lakhs) (Rs. Lakhs)

(i) Total Income 408.28 389.60

(ii) Total Expenditure 323.12 353.58

(iii) Profit before interest & depreciation 85.16 36.02

(iv) Interest --- ---

(v) Depreciation 20.53 23.93

(vi) Net Profit 64.63 12.09



The Financial year 2012-13 was marked by prolonged difficulties faced by liquor manufacturing companies in Kerala. At one end there was deep escalation of input costs while the government''s refusal to increase the sale prices pressurized the workability of distilleries in the State. Coupled with this non-profitability, the Government with its policy to reduce supply of liquor, made various physical curtailments to the trade. In short the year was yet another bad year for the liquor industry.

Within this scenario your Company did somewhat better by earning Rs. 64.63 lakhs as net profit compared to Rs. 12.09 lakhs last year. The policy of the Company operating as service provider helped from worse results. As the Government policies are unlikely to change in the near future, the Company will continue to play safe by doing only contract Bottling for others. Here also there is a huge escalation of costs and wages and the Company is unable to recover higher fees due to market circumstances

The Company is still under the purview of Hon. BIFR being sick unit registered under SICA. The operating Agency has submitted a Draft Rehabilitation Scheme (DRS) which is under scrutiny by Hon. BIFR. As per the said DRS, once these rehabilitation measures are carried, the company has good prospects to be financially healthy and come out of sickness status within 4 to 5 years from the date of sanction.

As the members are aware, though the Company is in existence for more than 15 years, it has been sick for most of its life. However, with the advent of the present management team, the Company has recovered to healthy position and paid off bank liability which at one time exceeded Rs. 40 Crores. From a chronic loss making enterprises, the Company has turned around to a profit making company for the past 4 years. Considering the circumstances under which liquor companies in Kerala have to operate, the results are considered to be satisfactory. However, it is hoped that once the DRS is approved, Company may attract better bottling parties to avail your Company''s facilities at a better Bottling Fee and better capacity utilization so that the profit margins could improve.

II. OVERALL VIEW

As mentioned in previous years, the fortunes of distilleries in Kerala do very much depend upon the short and long term government policies. Hence, the Company can only perform best within these strict parameters.

Within these adverse scenario, the management and employees performed in an exceptional manner to record Rs. 85.16 Lakhs PBIDT and Rs.64.63 Lakhs as net profit for the year. On your behalf I take this opportunity to thank all our Managers, Staffs and Workers for their contribution. I also thank my fellow Directors for their guidance and support that too without any remuneration in the service of the Company.

III. CORPORATE GOVERNANCE

The requirement of compliance with Code of Corporate Governance as per clause 49 of the Listing Agreement has been duly complied with.The Company has an "Audit Committee" of Directors with Mr.M.P.Gopalakrishnan(Chairman), Dr.G.S.Keshavamurthy and Mr. K.V.Mohan Menon as members and a report showing the details of Corporate Governance is enclosed.

IV. PERSONNEL

There are no employees drawing more than Rs.5,00,000 per month. Directors are not paid any remuneration nor sitting fees for the board meetings. However now that the company is making profits we will be remunerating the directors for their valuable service to the company as it is difficult to attract talents to work for the company unless we remunerate at the market rates for their skilled service.

V. CONSERVATION OF ENERGY

Since the main distillery division is not functioning, only IMFL bottling division is presently operated, the consumption of energy/power therefore is insignificant.

VI. LISTING PARTICULARS

The company''s shares are suspended from trading in the Bombay Stock Exchange Ltd., until the company comes out of its sickness. After this the company can recommence the trading of its shares in the premier bourses.

VII. REPLY TO AUDITORS OBSERVATIONS

With regard to the observations made by the Statutory Auditors in their Report, suitable explanations have been included in the Notes forming part of Accounts.

VIII. DIRECTORS

Mr. M.P. Gopalakrishnan retire by rotation and is eligible for reappointment.

Mr.Krishnan Nair Rajkumar was co-opted as Additional Director on the Board of the Company with effect from 12th November 2012 and who holds office till the conclusion of the ensuing Annual General Meeting of the Company. Notice pursuant to Section 257 of the Companies Act, 1956, has been received from a shareholder proposing Mr.Krishnan Nair Rajkumar for appointment as Director of your Company.

The Board performs its functions by regular meetings and monitors all the activities purely on honorary basis and in the best interests of the Company. Directors are not paid any remuneration nor sitting fees for the board meetings. But as mentioned earlier the Board will consider remuneration if found necessary and as per Government regulations.

IX. AUDIT

The Statutory Auditors Messrs. Varma & Varma, Chartered Accountants, retires at the ensuing Annual General Meeting and are eligible for reappointment.

X. COST COMPLIANCE

Pursuant to Section 209 (1)(d) of the Companies Act, 1956 and Rule 5 of The Companies (Cost Accounting Records) Rules, 2011, the Cost Compliance Report for the financial year ended 31 st March 2012 was submitted to the Central Government.

XI. DIRECTORS'' RESPONSIBILITY STATEMENT

The Directors hereby state:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures.

ii. that they have selected such accounting policies, consulted the Statutory Auditors and have 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 on 31.03.2013 and of the profit of the Company forthat period.

iii. that they 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.

iv. that they have prepared the annual accounts on a going concern basis.

XII.APPRECIATION

The Board thanks fellow stakeholders, Management Staff and Employees for their encouragement and hard work to keep the company make profits albeit small in spite of very adverse circumstances.



On behalf of the Board of Directors Palakkad K. V. Mohan Menon

14.08.2013 Chairman & Wholetime Director

---

Mar 31, 2011

TO THE MEMBERS OF SDF INDUSTRIES LIMITED

The Directors present their Twenty First Annual Report and the Audited Statement of Accounts for the year ended March 31,2011.

I. PERFORMANCE:

Financial Year

2010-2011 2009-2010 (Rs. Lakhs) (Rs. Lakhs)

(i) Total Income 430 455

(ii) Total Expenditure 344 442

(iii) Profit 86 13

(iv) Bank Interest waiver 3633

(v) Net Profit 3719 13

In the last years Directors' Report we mentioned about the ongoing Rehabilitation Scheme (DRS) under Hon'ble BIFR. One of the stipulation was to complete a One Time Settlement (OTS) with banks. We are very happy to announce that the company paid off all liabilities to banks and as a consequence we were allowed to write off the huge liability this company has been carrying. You will see that Rs.36.33 crores as Extra Ordinary Profit for this financial year which is due to writing off of the past accumulated interest. We wish to thank our management team for an excellent and dedicated work in paving way to reduce a substantial portion of our carried forward losses. We still have some carried forward losses which we are sure that our team will be able to overcome in the years to come. Our case with BIFR is still pending and it is hoped a favorable Draft Rehabilitation Scheme would be sanctioned soon.

II. OVERALL VIEW:

This financial year has been one of the most difficult years for distilleries of Kerala. High inflation, huge cost escalation was experienced while the selling prices were constant for the last five years - due to the government policy. This pushed the industry in general in to loss making venture. It is hoped that the prices of raw material to come down or the government deregulates the selling prices for the industry to survive. Within this scenario your company did better than last year by

clocking Rs.86 lakhs as net profit and Rs.37 crores including the extra ordinary items in Profit & Loss account. Few years back we took a decision to become primarily a service provider of bottling for others rather than selling and investing in our own products. This policy is helping us now as we could avoid losses due to cost escalation as mentioned earlier. However we must mention here that due to cost escalation connected with bottling like wage increase, electricity / water charges etc., the company could only make marginal profit. The 2011 -12 will also be not a very encouraging year due to continuation of the government policy. The industry has represented to the government on price revision for the year 2012-13 and we hope that will be granted. As mentioned in last year's report this industry's fortune depend largely to the government policy as the liquor industry in Kerala is highly regulated and we can only perform within these parameters. For your information the taxes and government margins on a Rs.100/- per bottle sale is almost Rs.88/. Hence the supplier gets only approximately Rs.12/- while the government sells the same at Rs. 100/- per bottle.

III. IMFL& DISTILLERY OPERATIONS

Presently the Company is only doing IMFL manufacturing activities under job work basis and joint venture manufacturing. During the year 2010-11 the company has manufactured 15.96 lakhs cases. Presently company is producing an average of 1.27 lakhs cases per month. It is unlikely to restart the distillery operations in the near future due to the prevailing commercial scenario. Our policy is to concentrate on bottling as core business model at least to the near future and Endeavour to enhance productivity with in the adverse external factors.

IV. CORPORATE GOVERNANCE

The requirement of compliance with Code of Corporate Governance as per clause 49 of the Listing Agreement has been duly complied with. The Company has an "Audit Committee" of Directors with Mr M.P. Gopalakrishnan(Chairman), Mr. Ranjiit Taunk and Dr.G.S.Keshavamurthy as members and a report showing the details of Corporate Governance is enclosed.

V. PERSONNEL There are no employees drawing more than Rs.2,00,000 per month. Directors are not paid any remuneration nor sitting fees for the board meetings. However now that the company is making profits we will be remunerating the directors for their valuable service to the company as it is difficult to attract talents to work for the company unless we remunerate at the market rates for the skilled service.

VI. CONSERVATION OF ENERGY

Since the main distillery division is not functioning, only IMFL bottling division is presently operated, the consumption of energy/power therefore is insignificant.

VII. LISTING PARTICULARS

The company's shares are suspended from trading in the Bombay Stock Exchange Ltd., until the company comes out of its sickness. After this the company can recommence the trading of its shares in the premier bourses.

VIII. REPLY TO AUDITORS OBSERVATIONS

With regard to the observations made by the Statutory Auditors in their Report, suitable explanations have been included in the Notes forming part of Accounts in Schedule 16.

IX. DIRECTORS

Mr. M.P.Gopalakrishnan retire by rotation and is eligible for reappointment. Mr.S.Vasudevan, Nominee director of SBT withdrew from the Board since the bank dues are completely cleared. The Board records its appreciation for the valuable service rendered by Mr. S.Vasudevan and the members of the lending consortium for their timely advice and assistance whenever the company required. The Board performs its functions by regular meetings and monitors all the activities purely on honorary basis and in the best interests of the Company. Directors are not paid any remuneration nor sitting fees for the board meetings. But as mentioned earlier the Board will consider remuneration if found necessary and as per government regulations.

X. AUDIT

The Statutory Auditors Messrs. Varma & Varma, Chartered Accountants, retires at the ensuing Annual General Meeting and are eligible for reappointment.

XI. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors hereby state:

i. that in the preparation of the annual accounts, the

applicable accounting standards have been follower and that there are no material departures.

ii. that they have selected such accounting policies, consulted the Statutory Auditors and have applies them consistently and made judgments anc estimates that are reasonable and prudent so as to give a true and fair view of tie state of affairs of the Company at ihe end of the financial year or 31.03.2011 and of the profit of the Company for that period.

iii. that they have taken proper and sufficient car o for the maintenance of adequate accounting records ire accordance with the provisions of this Act foil safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. that they have prepared the annual accounts on z going concern basis.

XII. APPRECIATION

The Board takes this opportunity to thank all our fellow shareholders for their continued co-operation. The Board of Directors, wish to thank the Bankers who stood with the company in difficult times and for appreciating the company's genuine and transparent efforts in coming out from deep economic stress. The Board takes this opportunity to thank Mr.K.V.Pradeep Menon for having provided comfort deposit to the banks during the repayment period due to which the banks extended repayment period extensively. This gesture old Mr.Pradeep Menon helped the company to write off large amount of interest arrears to the banks. Board also thanks Directors Mr.Ranjiit Taunk and Mr.Mohan Menon for providing personal guarantees, to the banks during the currency of the pending loans. The Board old Directors also thank every member of its staff and employees for their sincere and hard work which enabled the company to come out of its very adverse past. Without all these support from so many well wishers the company would not have come to profit making stage from almost point of liquidation. Finally I must record my thanks to my fellow Directors for doing their skilled and sincere duty without any remuneration so far.

On behalf of the Board of Directors

(Sd./-) Chairman & Whole time Director

Palakkad 15.11.2011

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Mar 31, 2010

The Directors present their Twentieth Annual Report and the Audited Statement of Accounts for the year ended March 31,2010

I. PERFORMANCE:

Financial Year

2009-2010 2008-2009

(Rs. Lakhs) (Rs. Lakhs)

(i) Total Income 455 339

(ii) Total Expenditure 442 326

(iii) Net Profit 13 13

As stated in the last years Directors Report the Company is in the process of Rehabilitation (DRS) under Honble BIFR. The Operating Agency (OA) - State Bank of Travancore (SBT) had submitted a One Time Settlement scheme (OTS). The company is awaiting Hon. BIFR sanction to the said DRS for further action in this regard. However, notwithstanding the sanction of BIFR, the company has paid fully the Principal balance of OTS amount of Rs.4 crores and will complete the interest part in the month of August 2010. With this the company would have completed all its bank loans.

II. OVERALL VIEW:

In spite of very turbulent economic scene the company increased its productivity by attracting better and larger bottling parties. The company successfully achieved second time also a net profit of Rs.12.63 lakhs during the year. It is hoped that the company will continue to perform better once its obligations to banks are over. Hence the management is giving priority now to come out of the present corporate sickness by making full repayment of OTS to banks . Of course, the board hastens to add that any prospect of this industry vastly depend upon government policies.

III. IMFL& DISTILLERY OPERATIONS

Presently the Company is only doing IMFL manufacturing activities under job work basis and joint venture manufacturing. During the year 2009-10 the company has manufactured 12.92 lakhs cases. Presently company is producing an average of 1.50 lakhs cases per month. But it is increasingly difficult to attract new customers while the company is sick. Once bank settlement is over, the company will get few more blue chip bottling customers. It is unlikely to restart the distillery operations in the near future due to prevailing Government policies and commercial scenario. Our policy is to concentrate on bottling as core business model at least for the next few years.

IV. CORPORATE GOVERNANCE

The requirement of compliance with Code of Corporate Governance as per clause 49 of the Listing Agreement has been duly complied with. The Company has an Audit Committee of Directors with Mr.M.P.Gopalakrishnan (Chairman), Mr. Ranjiit Taunk and Dr.G.S. Keshavamurthy as members and a report showing the details of Corporate Governance is enclosed.

V. PERSONNEL

There are no employees drawing more than Rs.2,00,000 per month. Directors are not paid any remuneration nor sitting fees for the board meetings.

VI. CONSERVATION OF ENERGY

Since the main distillery division is not functioning, only IMFL bottling division is presently operated, the consumption of energy / power therefore is insignificant.

VII. LISTING PARTICULARS

The companys shares are suspended from trading in the Bombay Stock Exchange Ltd., until the company comes out of its sickness. After this the company can recommence the trading of its shares in the premier bourses.

VIII. REPLY TO AUDITORS OBSERVATIONS

With regard to the observations made by the Statutory Auditors in their Report, suitable explanations have been included in the Notes forming part of Accounts in Schedule 17.

IX. DIRECTORS

Dr.G.S. Keshavamurthy and Mr. Ranjiit Taunk retire by rotation and are eligible for reappointment. The Board performs its functions by regular meetings and monitors all the activities purely on honorary basis and in the best interests of the Company. Directors are not paid any remuneration nor sitting fees for the board meetings.

X. AUDIT

The Statutory Auditors Messrs. Varma & Varma, Chartered Accountants, retires at the ensuing Annua! General Meeting and are eligible for reappointment.

XI. DIRECTORS RESPONSIBILITY STATEMENT

The Directors hereby state:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures.

ii. that they have selected such accounting policies, consulted the Statutory Auditors and have 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 on 31.03.2010 and of the profit of the Company for that peried.

iii. that they 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.

iv. that they have prepared the annual accounts on a going concern basis.

XII. APPRECIATION

The board takes this opportunity to thank all our fellow shareholders for their continued co- operation. The Board of Directors, wish to thank the Government Officials and the Bankers who stood with the company in difficult times and for appreciating its genuine and transparent efforts in coming out of deep sickness. The Board of Directors also thank every member of its staff and employees for their sincere and hard work which enabled the company to come out of its very adverse past. Without all these support from so many the company would not have come to profit making level from almost point of closer.

On behalf of the Board of Directors

(Sd./-)

K. V. Mohan Menon

Chairman & Whole time Director

Palakkad

27.08.2010