BALAJI DISTILLERIES LIMITED · 2010-09-07 · BALAJI DISTILLERIES LIMITED 3 NOTICE is hereby given...

BALAJI DISTILLERIES LIMITED

TWENTY SIXTH ANNUAL REPORT

Board of Directors Shri R Raghuram

Managing Director

Shri S V Sesha Reddy

Shri V Chandrasekhara Reddy

Company Secretary Shri G Sriraman

Auditors M/s P. A. Reddy & Co.

Chartered Accountants

M/s PKF Sridhar & Santhanam


Bankers

Registered Office & Distillery Division Bye-Pass Road

Poonamallee

Chennai - 600 056

Tamilnadu

Brewery Division Mount Tiruvallur High Road

Aranvoyal Village

Tiruvallur District

Pin - 602 025

Tamil Nadu

Corporate Office 9,Bazullah Road

T.Nagar

Chennai – 600 017, Tamilnadu

Registrar and Share Transfer Agent Cameo Corporate Services Limited

“Subramanian Building”

No.1, Club House Road

Chennai 600 002.

Standard Chartered Bank

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CONTENTS

PAGE

NOTICE : 3

DIRECTORS’ REPORT : 4

CORPORATE GOVERNANCE REPORT : 9

AUDITORS’ REPORT : 15

BALANCE SHEET : 20

PROFIT & LOSS ACCOUNT : 21

SCHEDULES TO ACCOUNTS : 22

BALANCE SHEET ABSTRACT &COMPANY'S GENERAL BUSINESS PROFILE : 43

CASH FLOW STATEMENT : 44

STATEMENT RELATING TO SUBSIDIARY COMPANIES : 46

ANNUAL REPORT OF SUBSIDIARY COMPANIES : 47

CONSOLIDATED FINANCIAL STATEMENTS : 70

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3

NOTICE is hereby given that the Twenty Sixth Annual

General Meeting of will be

held at Balamandir German Hall, No.17, Prakasam

Street, T.Nagar, Chennai 600 017, on Thursday, the 30th

September, 2010, at 11.00 a.m. to transact the following

business:

To receive, consider and adopt the audited Profit

and Loss Account for the financial year ended 31st

March, 2010, the Balance Sheet as at that date and

report of the Directors and theAuditors thereon.

2. To appoint a Director in the place of

Shri V Chandrasekhara Reddy, who retires by

rotation and being eligible, offer himself for re-

appointment.

Balaji Distilleries Limited

ORDINARY BUSINESS:

1.

NOTICE

3. To appoint Auditors and to fix their remuneration. In

this connection, to consider and, if thought fit, to

pass with or without modification the following

resolution as an ordinary resolution.

“RESOLVED THAT the retiring Auditors,

M/s P A Reddy & Co., Chartered Accountants and

M/s PKF Sridhar & Santhanam, Chartered

Accountants, be and are hereby appointed as

Auditors of the Company to hold office from the

conclusion of this Annual General Meeting until the

conclusion of the next Annual General Meeting or

until the merger of the Company with United Spirits

Limited which ever is earlier, on a remuneration as

may be decided by the Board of Directors.”

Place: ChennaiDate : August 16, 2010

By Order of the Board

Company SecretaryG. SRIRAMAN

1. A Member entitled to attend and vote at the meeting

is entitled to appoint a proxy to attend and vote on a

poll instead of himself and such proxy need not be a

member of the company.

2. The instrument appointing proxy in order to be

effective should be lodged at the Registered Office

of the Company not less than 48 hours before the

meeting.Ablank proxy form is enclosed.

3. The Register of Members and Share Transfer

Books of the Company will remain closed from

27.09.2010 to 30.09.2010 (both days inclusive).

4. Members/Proxies should bring the Attendance slip

duly filled in for attending the meeting. For shares

held in dematerialised form, the DP ID and Client ID

numbers should be indicated in theAttendance Slip.

5. For shares held in physical form, any change in

address/other details may be intimated to the

Company/Share Transfer Agent by quoting the

NOTES:

Folio Number(s). For shares held in demat form,

change in address/other details may be intimated

directly to the Members' DP.

6. Members are requested to send queries, if any, on

the accounts, at least seven days prior to the date of

the meeting, so that the information can be made

available at the meeting.

7. Reappointment of Director:

Shri V Chandraksehara Reddy, Director of the

Company, retires by rotation at the ensuing Annual

General Meeting and being eligible offers himself

for reappointment.

Shri V Chandrasekhara Reddy, 50 years, is a

Director since 29.06.2001. He is a Chartered

Accountant and has about 19 years of experience in

Finance, Accounts and General Management. He

is also a Director in 1) Polar Breweries Limited

2)Star Investments Private Limited and 3) Ador

Computers Private Limited.


DIRECTORS’ REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS

The Directors of your Company present their Twenty

Sixth Annual Report, together with the audited

statement of accounts for the financial year ended 31st

March, 2010.

Your Company earned a gross revenue of

Rs.2,20,430.16 lakhs during the financial year ended

31st March, 2010 as against the gross revenue of

Rs.2,20,127.16 lakhs in the previous financial year

ended 31st March, 2009.

Rs. in lakhs

During the financial year under review, your

Company's Distillery Division achieved a production of

94,42,429 cases of Indian Made Foreign Liquor (IMFL)

(96,04,027 cases in 2008-09) and sold 94,31,118

cases (95,48,874 cases in 2008-09) of IMFL

generating a net revenue of Rs.47,695.70 lakhs (Rs.

49,467.57 lakhs in 2008-09) and your Company's

Brewery division has achieved a production of

89,46,410 cases of Beer and 2,18,690 litres of

Drought Beer (79,44,267 cases beer and 2,31,080

litres of Drought Beer in 2008-09) and sold 89,68,210

cases of Beer and 2,18,690 litres of Drought Beer

PERFORMANCE HIGHLIGHTS

SUMMARY OF FINANCIAL RESULTS

OPERATING RESULTS

2009-2010(financial

year ending31st March

20010) 2 )

Profit / (Loss) before depreciation 232.22 (1170.24)

Less: Depreciation 964.05 835.22

Profit / (Loss) before tax (731.83) (2005.46)

Provision for Tax Nil Nil

Profit /(Loss) after tax (731.83) (2005.46)

Prior period/exceptional items /provision for tax 196.11 2952.67

Profit / (Loss) for the year (535.72) 947.21

Profit / (Loss) brought forward

Loss carried forward from

Less : Transfer from General Reserve 5088.81 5088.81

Accumulated Loss carried to the

2008-2009(financial


009

from previous years (40053.32) (41000.53)

Profit and LossAccount (40589.04) (40053.32)

Balance sheet (35500.23) (34964.51)

(79,95,624 cases beer and 2,31,080 litres of Drought

Beer in 2008-09) generating a net revenue of

Rs.19,999.12 lakhs (Rs.17,858.35 lakhs in 2008-09).

Your Company has incurred a net loss of Rs.535.72

lakhs for the financial year ended 31st March, 2010 as

against the profit of 947.21 lakhs for the financial year

ended 31st March, 2009, after taking into account

interest, depreciation, prior period adjustments and

exceptional items.

The Company manufactures Indian Made Foreign

Liquor (IMFL) and beer. The IMFL and Beer

manufacturing facility are situated near Chennai. Both

these two products together are some times referred

asAlcoholic Beverages.

Indian Made Foreign Liquor (IMFL) and Beer industries

are “state subject” and as such every State has its own

policies in respect of this industry. Tamilnadu, the state

in which the company operates, has its own policy, both

for manufacture as well as for marketing/distribution.

With the issue of three new licenses by the

Government of Tamilnadu for the production of IMFL

during the last year, there are 9 Distilleries in the State

of Tamilnadu. Out of the new distillery licenses issued,

all the three distilleries have started commercial

production.

There are three breweries in the State of Tamilnadu. In

2008-09, the State Government has also issued one

more license for the manufacture of beer and the unit is

yet to commence commercial operation.

All the products manufactured by these units are sold

to Tamilnadu State Marketing Corporation Ltd

(TASMAC) and TASMAC in turn sell through TASMAC

owned shops. As a preventive measure to curb the

menance of unauthorized movement of liquor from the

neighboring states, TASMAC has started purchasing

the major requirement of IMFL and Beer only from the

units situated within the state. From November 2003,

the State Government has taken over the retail

distribution of IMFL and Beer and accordingly the

entire alcoholic beverages are sold through retail

outlets owned by TASMAC. This move has benefited

the consumers by way of availability of genuine

products at government fixed prices.

MANAGEMENT DISCUSSIONANDANALYSIS

General

INDUSTRY STRUCTUREAND DEVELOPMENT

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Within the IMFL segment, the demand is split between

various products such as Whisky, Brandy, Rum, Gin,

Vodka. Within the product segments, the demand is

further split between the premium brands, medium

brands and lower end brands, which are categorized

according to the price. In terms of volume, it is the

brandy and the lower end brands sells more than the

other products and premium and medium brands.

During 2009-10 TASMAC has sold about 412.26 lakhs

cases of IMFL registering a growth rate of 14.95% over

the last year.

During 2009-10 TASMAC has sold about 239.71 lakhs

cases of Beer registering a growth rate of 6.42% over

the last year.

Alcoholic beverages industry is one of the major

contributors to the exchequer by way of State excise

duty, VAT, Excise Label Fee, etc.

During 2009-10, your company has contributed

Rs.1,53,231.92 lakhs to the exchequer of the State

Government.

Alcoholic beverages industry probably is the only

industry, which posts consistent growth year after year

and is not affected by any cyclical factors. With the state

government's efforts to eradicate the evil of illicit liquor,

the demand for medium and lower end brands are

expected to boom in the years to come. Your company

hasalreadymade in roads into lowersegment.

Even though the entry of foreign players was perceived

as a threat long back, it is not considered as a threat

today due to high price of the foreign brands, which

predominantly target the elitist society.

Prohibition is generally perceived as a major threat to

this industry. However, with the state governments

enjoying high revenue from this industry and with the

lesser opportunity to compensate the loss of huge

revenue, we do not anticipate any threat on account of

prohibition.

Today, with the acceptance of social drinking, the

alcoholic beverages industry is likely to grow with the

compounded annual growth rate of 16%. More and

Contribution to the Exchequer

OPPORTUNITIESAND THREATS

OPPORTUNITY

THREAT

OUT LOOK

more foreign players are expected to come into India,

especially in the beer segment and on such foreign

players entering the beer market, this segment is

expected to grow exponentially.

Your Company continues to enjoy a significant market

share in Tamil Nadu in respect of Indian Made Foreign

Liquor and Beer. Barring unforeseen circumstances,

the Company expects to do well in this line of business,

in the coming years.

For alcoholic beverages industry, the significant risk

factor is the purchasing power of individuals and non

existence of brand loyalty. The company is ensuring

that its products are available on the shelf at any point

of time.

The summarised Profit & Loss account of the company

is given below:

RISK AND CONCERNS THE MANAGEMENT

PERCEIVE

FINANCIAL SUMMARY

Rs. in lakhs

2009-2010(financial


2010)

(A-B) (731.83) (2,005.46)

2008-2009(financial


2009)

exceptional Items

Sales and services 2,19,944.45 2,19,640.57

Other income 485.71 486.59

Excise Duty and TN Vat 1,52,348.21 1,52,761.73

Cost of Materials 41,522.80 41,742.83

Overheads 23,579.97 23,261.38

Interest 2,746.96 3,531.45

Depreciation 964.05 835.23

Profit/(Loss) before prior period/

Add/(Less) prior period adjustments 1.03

Add/(Less): Exceptional items 196.11 3,147.09

Less: Provision for Fringe Benefit Tax -- 181.93

Less: Provision for Fringe Benefitand Income Tax of earlier years -- 13.52

Profit / (Loss) Before Taxation (535.72) 947.21

Provision for taxation -- –

Profit / (Loss) after Taxation (535.72) 947.21

Total income (A) 2,20,430.16 2,20,127.16

Total (B) 2,21,161.99 2,22,132.62

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EXPANSION DETAILS

Brewery Unit:

MERGER OF THE COMPANY WITH UNITED

SPIRITS LIMITED

Swap Ratio

Existing Proposed

SHARE CAPITAL

Expansion of the brewery unit has been completed

during the current year and commercial production

from the new brew house started with effect from

November, 2009.

During the 2008-09, your Board of Directors have

approved the scheme of arrangement interalia

envisaging transfer of brewery division of the company

to Chennai Breweries P Ltd, its wholly owned

subsidiary and merger of residual company consisting

of Distillery division into United Spirits Limited (USL).

The merger shall be effective from 1st April, 2009,

subject to obtaining necessary approvals.

The shareholders of USL have also approved the

Scheme of Arrangement at their meeting held on 21st

April,2010.

However the entire process of merger is delayed due to

delay in obtaining the sanction of BIFR for the Scheme.

The swap ratio in which the shares are proposed to be

allotted by USL is given below:

Equity 2 ( t w o ) e q u i t y s h a r e s o f

share holders Rs.10/- each of USL for every 55(fifty five)equity shares of Rs.10/-each held in BDL

Preference 1 (One) 12.5% Redeemable

share holders (*) Preference Shares of Rs.10/- eachof USL redeemable in March 2014,for every 2 (two) 12.5% CumulativeRedeemable Preference Shares ofRs.10/- each held in BDL

OCCRPS 1 (One) 12.5% Redeemable

holders (*) Preference Shares of Rs.10/- each ofUSL, redeemable in March 2014 forevery 2 (two) 6% OptionallyConvertible Cumulative RedeemablePreference Shares (“OCCRPS”) ofRs.10/- each held in BDL

(*) However your company has redeemed the

preference shares.

On 15.06.2009, your company has allotted 9 crore

Equity Shares to the three investors on receipt of

Rs.111.618 crores being the balance amount payable

on the warrants upon conversion into equity shares.

These shares are yet to be listed in the Stock Exchanges

and due to which are held in the physical form.

On 15.06.2009, your Company has redeemed

4,46,20,900 – 6% Optionally Convertible Cumulative

Redeemable Preference Shares (OCCRPs) of Rs.10/-

each aggregating to Rs.44,62,09,000/- for

Rs.18,02,09,400/- out of the proceeds from the

conversion of warrants in to equity shares.

On 30.06.2009, your Company has also redeemed

15000000 – 12.5% Cumulative Redeemable

Preference Shares of Rs.10/- each aggregating to

Rs.15 crores for Rs.7.50 crores out of the proceeds

from the conversion of warrants into equity shares

The Hon’ble Board for Industrial and Financial

Reconstruction (BIFR) has declared the company as

sick industrial undertaking in terms of section 3(1)(o)

of the Sick Industrial Companies (Special Provisions)

Act, 1985 at its hearing held on 20th December, 2006

and appointed M/s. IDBI Bank Ltd as the operating

Agency (OA). The OA has submitted the revised Draft

Rehabilitation Scheme (DRS) on 5th February, 2009

after taking into account the Scheme of Arrangement

approved by the Board of Directors, which interalia

interalia envisaging transfer of brewery division of the

company to Chennai Breweries P Ltd, its wholly owned

subsidiary and merger of residual company consisting

of Distillery division into United Spirits Limited (USL).

The Hon’ble BIFR has circulated the DRS vide its order

dt 19th February, 2010. Mandatory hearings have

been held on 10th May, 2010, 26th May,2010 and 4th

June,2010 and no creditor has raised any objection for

the DRS. In the meeting held on 4th June, 2010, the

Hon’ble BIFR has reserved its order and directed that

the order will be pronounced on 24th June,2010 in the

Open court. The pronouncement of order was

postponed to 30th June, 2010. On 30th June,2010,

the Hon’ble BIFR has pronounced the order vide which

it has issued certain directions to investors and OA.

The Company preferred an appeal against the order of

BIFR dated 30.06.2010 with the Hon’ble Appellate

Authority for Industrial and Financial Reconstruction

(AAIFR) and obtained stay of the said BIFR order. The

next hearing of the case has been fixed for 16.09.2010.

REFERENCE TO BIFR

INTERNAL CONTROL SYSTEM AND THEIR

ADEQUACY

MATERIAL DEVELOPMENTS IN HUMAN

RESOURCES, INDUSTRIAL RELATIONS FRONT

Your company has established its own internal control

systems and procedures, which ensures maintenance

of proper financial and accounting records. Your

company review the policies and procedures on a

continuous basis for effective internal control.

The company considers the Human Resources as its

6


most important asset and constantly endeavours to

retain, nurture and groom talent to meet the current

and future needs of the business. The company

currently has 593 employees.

The statement in this report is based on the experience

and information available to the company in its

businesses and assumptions with regard to economic

conditions, Government and regulatory policies. The

performance of the company is dependent on these

factors. It may be materially influenced by various

factors including change in economic conditions,

government regulations, tax laws and other incidental

factors, which are beyond the company's control,

affecting the views expressed in or perceived from this

report.

As the operations of the Company in the current year

have resulted in a loss, your directors do not

recommend any dividend for the financial year ended

31st March, 2010.

Shri V Chandrasekhara Reddy retires by rotation at the

conclusion of the ensuingAnnual General Meeting and

being eligible, offers himself for re-appointment.

The consolidated financial statements and the Annual

Report of the subsidiary companies, viz., BDL

Distilleries Private Limited and Chennai Breweries

Private Limited, together with statement under section

212 of the CompaniesAct, 1956 are annexed.

The Company continues to enjoy cordial relations with

employees of all categories. The Board records its

appreciation of the dedicated efforts put in by the

employees at all levels.

In accordance with the provisions of Section

219(1)(b)(iv) of the Companies Act, 1956, the

Directors’Report is being sent to all the shareholders of

the Company excluding the annexure prescribed

under Section 217(2A) of the CompaniesAct. The said

annexure, setting out the names and other particulars

of employees, is available for inspection by the

Members at the Registered Office of the Company

during office hours till the date of the Annual General

Meeting, viz., 30.09.2010.

The Company has fully absorbed the technology used

CAUTIONARY STATEMENT

DIVIDEND

DIRECTORS

SUBSIDIARIES

PERSONNEL

PARTICULARS OF EMPLOYEES

CONSERVATION OF ENERGY, RESEARCH &

DEVELOPMENT, FOREIGN EXCHANGE EARNING

ETC. (SECTION 217 (1) (e) OF THE COMPANIES

ACT, 1956)

in the manufacture of the Company's products under

the supervision of the Company's Principals. Except

for the normal quality control activities no research and

development has been carried out. The Company has

not earned any foreign exchange. The company has

also not spent any foreign exchange (Rs.2316 lakhs in

2008-2009) during the year.

M/s. P.A. Reddy & Co., CharteredAccountants and M/s

PKF Sridhar & Santhanam, Chartered Accountants,

Auditors of the Company hold office until the

conclusion of the ensuing Annual General Meeting.

The Auditors have furnished a certificate regarding

their eligibility for their re-appointment as Company's

Auditors pursuant to Section 224 (1B) of the

Companies Act, 1956. The Board recommends their

re-appointment as referred in the Notice to the Share

Holders.

With respect to the various Observations of the

Auditors in their Report, the Board of Directors wish to

express the following views:

(i) As regards non-disclosure of all the particulars

required to be disclosed under clause 32 of the

listing agreement, your directors are of the opinion

that most of the particulars have already been

disclosed by way of transaction with related party

and necessary provision has been made for the

doubtful loans and advances in the previous years

itself.

(ii) As regards non payment of undisputed sales tax

amount of Rs.4548.91 lakhs relating to the

Financial Year 2003-04, interest thereon of

Rs.6710.13 lakhs upto the Financial Year 2009-10

and interest of Rs.1231.83 lakhs upto the

Financial Year 2009-10 in respect of Sales

Tax/VAT relating to other Financial Years and short

deduction of Tax deducted at source of

Rs.6,76239/-, your Company could not make

these payments mainly on account of incurring of

cash losses.

These amounts and the interest on VAT has

already been included in the Draft Rehabilitation

Scheme (DRS) submitted by the Company to the

BIFR/Operating Agency and sought to be paid

over a period of time as mentioned in the DRS.

However, during the mandatory hearing, the state

government insisted for payment of these dues in

one lumpsum under the TN Sales Tax (Settlement

of Arrears) Act,2010. (Samadhan Scheme). The

company is contemplating to pay these dues

under TN Sales Tax (Settlement of Arrears)

Act,2010.

With regard to short deduction of Tax deducted at

source of Rs.6,76239/-, which has arisen on

AUDITORS

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8

account of bug in software, your company has

taken up the matter with the software supplier for

effecting suitable corrections.

(iii) As regards small delays in TN VAT remittances,

your company is of the opinion that such delays

are mainly on account of mismatch of the cash

flow. However, delayed remittances were made

within the stipulated period and interest has been

paid on such delayed remittances in accordance

with the provisions of the TN VATAct, 2006.

(iv) Your directors wish to state that in the absence of

availability of working capital, your company has

utilised short term funds for acquisition of assets

for capacity expansion and also for payment of

One Time Settlement commitments and interest to

the banks.

The Company’s shares are listed in the following Stock

Exchanges:

The Madras Stock Exchange Limited

A report on Corporate Governance along with Auditors

Certificate is annexed herewith.

Pursuant to the requirement under Section 217 (2AA)

of the Companies Act, 1956 with respect to Directors’

STOCK EXCHANGES

CORPORATE GOVERNANCE

DIRECTORS’RESPONSIBILITY STATEMENT

Bombay Stock Exchange Limited

The Hyderabad Stock Exchange Limited

Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the Annual Accounts for

the financial year ended 31st March, 2010, the

applicable accounting standards had been

followed along with proper explanations relating to

material departures;

(ii) that the accounting policies implemented by the

Company have been applied consistently,

judgments and estimates have been reasonable

and prudent thereby giving a true and fair view of

the state of affairs of the Company at the end of

financial year and of the loss of the Company for

the period under review;

(iii) that the Directors have taken proper and sufficient

care for the maintenance of adequate accounting

records in accordance with the provisions of the

Companies Act, 1956 for safeguarding the assets

of the Company and for preventing and detecting

fraud and other irregularities;

(iv) that the annual accounts were prepared for the

financial year ended 31st March, 2010 on a 'going

concern' basis.

The Directors wish to express their sincere thanks for

valuable assistance extended by the Government of

Tamilnadu, Tamilnadu State Marketing Corporation

Limited and Standard Chartered Bank.

The Directors also wish to place on record their sincere

thanks for valuable assistance extended by United

Spirits Limited and United Breweries Limited.

ACKNOWLEDGEMENT

Place : ChennaiDate : August 16, 2010

On behalf of the Board

V. CHANDRASEKHARA REDDYDirector

R. RAGHURAMManaging Director

REPORT ON CORPORATE GOVERNANCE FOR THE

FINANCIAL YEAR ENDED 31ST MARCH, 2010

The report on Corporate Governance forms part of the Directors Report.

The essential elements of Corporate Governance are fairness, transparency, accountability and responsibility to

which your Company continues to remain committed. The Company will endeavour to improve on these aspects on

an ongoing basis.

Executive Director:Shri R Raghuram, Managing Director

Non Executive Directors:Shri S V Sesha ReddyShri V Chandrasekhara Reddy

The Board met six times during the financial year 2009-2010 - on 29th May 2009, 15th June 2009, 30th June 2009,

31st July 2009, 30th October 2009, and 29th January, 2010.

Necessary steps are being taken to broad base the Board so as to ensure optimum combination of executive, non-

executive and independent Directors.

The remuneration paid to the Managing Director is within the ceiling as per the resolution approved by the

shareholders. Details of remuneration and sitting fees paid to the Managing Director and other Directors during the

year ended 31.03.2010 is given below:

The Company has laid down procedures to be followed by the Members of the Board and Senior Management

Personnel for ethical professional conduct.

Adeclaration signed by the Managing Director to this effect is annexed thereto.

1. COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE

2. BOARD OF DIRECTORS

a) The Composition of the Board during the year is given below:

b) Details of Attendance at Board Meetings and last AGM and details of memberships in other Boards and

Board Committees:

c) Remuneration of Directors:

d) Code of conduct :

Sl No Name of the Director No. of Whether Membership CommitteeBoard attended in other

Meetings lastAGM BoardsAttended

Name Position Sitting Fees Salary Perquisites Commission Contributionto PF and

Superannuation

1 Shri R Raghuram 5 Yes 2 - 1

2 Shri S V Sesha Reddy 4 No 1 - -

3 Shri V Chandrasekhara Reddy 6 Yes 3 - -

Rs. Rs. Rs. Rs. Rs.

Shri R Raghuram Managing Director --- 33,57,000 7,57,950 --- 8,99,700

Shri S V Sesha Reddy Director --- --- --- —

Shri V Chandrasekhara Reddy Director --- --- --- —

20,000

20,000


Chairman Membership

9

e) CEO/CFO Certification:

f) Particulars of retiring Directors:

3.AUDIT COMMITTEE

Committee Members No. of Meetings attended

4. REMUNERATION COMMITTEE

5. SHARE TRANSFER/INVESTORS GRIEVANCE COMMITTEE

Committee Members No. of Meetings attended

Certification by CEO and CFO as required under Clause 49(V) of the listing agreement was placed before the Board at

its meeting held on 31.07.2010.

Shri V Chandrasekhara Reddy, is a Director of the Company since 29.06.2001. He is a CharteredAccountant and has

about 19 years of experience in Finance, Accounts and General Management. He is also a Director in 1) Polar

Breweries Limited 2) Star Investments Private Limited and 3)Ador Computers Private Limited.

The functioning and terms of reference of the Audit Committee are as prescribed under section 292A of the

Companies Act, 1956 and the Listing Agreement with the Stock Exchanges including their role, powers, duties,

quorum and frequency of the meeting.

TheAudit Committee of the Company comprises 3 members viz., Shri R Raghuram, Shri S V Sesha Reddy and Shri V

Chandrasekhara Reddy. Shri V Chandrasekhara Reddy acts as Chairman of the Committee. The Company

Secretary acts as Secretary to theAudit Committee.

During the financial year 2009-2010 five meetings were held on 29th May 2009, 30th June 2009, 31st July 2009, 30th

October 2009 and 29th January 2010.

Shri R Raghuram 4

Shri V Chandrasekhara Reddy 5

The terms of reference of Remuneration Committee pertains to determining the company’s policy on and approving

remuneration package to the managerial personnel.

The Remuneration Committee of the Company comprises 3 members viz., Shri R Raghuram, Shri S V Sesha Reddy

and Shri V Chandrasekhara Reddy. Shri V Chandrasekhara Reddy acts as Chairman of the Committee.

During the financial year 2009-2010, there were no remuneration committee meetings held.

During the year the Company has not received any investors complaints requiring redressel.

The Share Transfer/Investor Grievance Committee comprises 3 members viz., Shri R Raghuram, Shri S V Sesha

Reddy and Shri V Chandrasekhara Reddy.

Shri V Chandrasekhara Reddy acts as Chairman of the Committee and Shri G Sriraman, Company Secretary acts as

the Compliance Officer.

13 meetings of Share Transfer/Investors Grievance Committee were held during the year ended 31st March 2010.

Attendance at meetings during the period::

Shri S V Sesha Reddy 7

Shri V Chandrasekhara Reddy 13

As on 31st March 2010, there were no pending share transfers.

Shri S V Sesha Reddy 3

Shri R Raghuram 13


10

6. GENERAL BODY MEETINGS

Postal Ballot :

7. DISCLOSURES

8. MEANS OF COMMUNICATION

9. GENERAL SHAREHOLDERS INFORMATION

1) Date, time and venue of 26thAGM

2) Financial Year

3) Date of Book Closure

4) Dividend payment date

5) Listing on Stock Exchanges

Location, date and time ofAnnual General Meetings held during the last three years.

Year Location AGM Date Day Time No. of SpecialResolutions passed

No Special Resolutions were passed through Postal Ballot during the last financial year.

Till the date of signing this report, there was no proposal to pass any Special Resolutions to be conducted through

Postal Ballot.

During the year ended 31.03.2010, the Company had no materially significant related party transactions, other than

those mentioned in the Notes on Accounts as is envisaged under the Corporate Governance Code, that may have

potential conflict with the interest of the Company at large.

There has not been any non-compliance, penalties or strictures imposed on the Company by the stock exchanges,

SEBI or any other statutory authority, on any matter related to capital markets, during the last year.

Though there is no separate Whistle Blower Policy, no personnel has been denied to access to theAudit Committee to

air his views.

Management Discussion and Analysis highlighting the business of the company has been mentioned in the Directors

Report.

The Company has adopted all the mandatory requirements and has constituted a Remuneration Committee though

there is no mandatory requirement.

Quarterly results are published in the Trinity Mirror (National Daily) and Makkal Kural (Regional Newspaper).

As per the listing agreement, the Company will provide a soft copy of the Annual Report for the financial year 2009-

2010 to the Stock Exchanges for its dissemination on the Exchange website. The Company has not made any

presentation to institutional investors or to the analysts.

: Thursday, the 30th September 2010, at 11.00 a.m. at Balamandir

German Hall,No.17,PrakasamStreet,T.Nagar,Chennai 600 017

: 1st April to 31st March

: Monday, the 27th September 2010 to Thursday, the 30th

September 2010 (both days inclusive)

: No dividend is being recommended

: (i) Madras Stock Exchange LimitedExchange Building, Post Box No.18311, Second Line Beach, Chennai 600 001Tel:91-44-25224392, 25228951 Fax:91-44-25244897

(ii) The Hyderabad Stock Exchange Ltd6-3-654, SomajigudaHyderabad 500 082.

Fax:91-40-23371696

2006-2007 Balamandir German Hall AGM 12.09.2007 Wednesday 10.00 a.m. 4No.17, Prakasam StreetT.Nagar, Chennai 600 017.

2007-2008 Balamandir German Hall AGM 27.09.2008 Saturday 11.00 a.m. 1No.17, Prakasam StreetT.Nagar, Chennai 600 017.

2008-2009 Balamandir German Hall AGM 30.09.2009 Wednesday 11.00 a.m. NilNo.17, Prakasam StreetT.Nagar, Chennai 600 017.

Tel: 91-40-23371701,


11

(iii) Bombay Stock Exchange LimitedPhiroze Jheejheebhoy Towers, Dalal StreetMumbai 400 001.

: Paid for the year 2010-11 to the above Stock Exchanges as per

the listing agreement

: INE 453A01013

: BSE : 500035

High Low

April 2009 24.00 19.30 11403.25

May 2009 32.40 18.20 14625.25

June 2009 31.75 22.20 14493.84

July 2009 29.80 23.30 15670.31

August 2009 30.70 23.20 15666.64

September 2009 28.40 24.50 17126.84

October 2009 33.25 25.00 15896.28

November 2009 37.45 30.30 16926.22

December 2009 43.25 36.90 17464.81

January 2010 46.85 39.50 16357.96

February 2010 44.25 38.75 16429.55

March 2010 50.90 41.00 17527.77

: Cameo Corporate Services LimitedSubramanian BuildingNo.1, Club House Road, Chennai 600 002Tel:91-44-28460390 ( 5 lines) Fax:91-44-28460129Email : [email protected]

: The Company's shares are traded in the Stock Exchanges ondematerialised mode. The transfers are normally processedwithin 15-20 days from the date of receipt, if the documents arecomplete in all respects.

: As on 31.03.2010, 34.84% of the Company's sharesrepresenting 4,98,26,400 shares were held in thedematerialised form. The Company's shares are available fortrading in the depository systems of both the NationalSecurities Depository Ltd (NSDL) and Central DepositoryServices (India) Ltd (CDSL).

The 9 crores shares allotted on 15.06.2009 consequent uponconversion of warrants into equity shares are yet to be listed inthe Stock Exchanges. Due to which these 9 crores shares areheld on physical form.

: Shri G Sriraman, Company SecretaryBalaji Distilleries LimitedNo.9, Bazullah Road, T.Nagar, Chennai 600 017, Tamil NaduTel: 91-44-2815 8866/4260 6000Fax: 91-44-42606792 / 4260 6797

: Nil

Tel:91-22-22721233 / 22721234Fax:91-22-22721919, 22723121

6) Listing fees

7) ISIN No.

Stock Code

8) Market Price Data: (Rs.)

Month BSE BSE SENSEX

9) Registrar and TransferAgents:(for both physical and electronic transfers)

10) Share Transfer System

11) Dematerialisation of shares and liquidity

12) Compliance Officer

13) Outstanding GDR/ ADR/Warrants orany convertible instruments


12

14) Plant Locations Distillery :

Brewery:

15) Registered Office

16) Address for correspondence

17) Distribution of shareholding as on 31st March 2010:

Nominal value of Share holders ShareAmount

18) Categories of Shareholders as on 31st March 2010:

Sl. No Category No. of Shares % to Total Holdings

:Bye-pass Road, Poonamallee, Chennai 600 056. Tamil NaduTel: 91-44-2627 2436/2627 2169 Fax: 91-44-2627 2116

Mount Tiruvallur High Road,Aranvoyal VillageTiruvallur District - 602 025. Tamil NaduTel: 91-44 2762 1187 / 2762 1188 Fax: 91-44-2762 2083

By-pass Road, Poonamallee, Chennai 600 056. Tamil NaduTel: 91-44-26272436/26272169 Fax: 91-44-26272116

: Balaji Distilleries LimitedCorporate Office:No.9, Bazullah Road, T.Nagar, Chennai 600 017, Tamil NaduTel: 91-44-2815 8866/4260 6000Fax: 91-44-4260 6792/4260 6797Email : [email protected]

Rs. Rs. Number % to Total Rs. % to Total

(1) (2) (3) (4) (5)

10 5,000 9088 78.14 17190440 1.20

5,001 10,000 1208 10.39 10536780 0.74

10,001 20,000 556 4.78 8984090 0.63

20,001 30,000 201 1.73 5321860 0.37

30,001 40,000 88 0.76 3209100 0.23

40,001 50,000 108 0.93 5215950 0.36

50,001 1,00,000 167 1.43 12724300 0.89

1,00,001 and above 214 1.84 1366993080 95.58

Total 11630 100.00 1430175600 100.00

1 Promoters, Directors &Associates 17727501 12.40

2 Financial Institutions & Banks 7604779 5.31

3 FIIs 5715662 4.00

4 NRIs/OCBs 127072 0.09

5 Mutual Funds 1299375 0.91

6 Public including Corporates 110543171 77.29

Total 143017560 100.00

The above report was adopted by the Board of Directors at its meeting held on 16.08.2010


13


AUDITOR’S CERTIFICATE ON CORPORATE GOVERNANCE

TO THE MEMBERS OF BALAJI DISTILLERIES LIMITED

subject to non-appointment of required number of

independent directors in accordance with the Clause 49(1)(A) and 49(II)(A) of the Listing Agreement and as

detailed in para 2a) and para 3 of the Directors Report on Corporate Governance,

We have examined the compliance of the conditions of Corporate Governance by Balaji Distilleries Limited, for the

year ended 31st March, 2010 as stipulated in clause 49 of the Listing Agreement of the said Company with the stock

exchanges.

The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination

has been limited to a review of the procedure and implementations thereof adopted by the Company for ensuring

compliance with the conditions of Corporate Governance. It is neither an audit nor an expression of opinion of the

financial statements of the company.

In our opinion and to the best of our information and according to the explanations given to us, and the representations

made by the directors and the management, we certify that

the company has complied

with the conditions of Corporate Governance as stipulated in clause 49 of the above mentioned ListingAgreement.

As required by the Guidance note issued by the Institute of Chartered Accountants of India, we have to state that

based on report given by the Registrars of the Company to Investor Grievance Committee, as on 31st March, 2010,

there were no investor grievance matters against the company remaining unattended/pending for more than 30 days.

We further state that such compliance is neither an assurance as to the future viability of the company nor the

efficiency or effectiveness with which the management has conducted the affairs of the Company.

DECLARATION

It is declared

a) that the Company has laid down a Code of Conduct for all its Board Members and Senior Management

Personnel in terms of Clause 49(1)(D)(i) of the Listing Agreement entered into with the Stock Exchanges where

equity shares of the Company are listed.

b) that the Board Members and Senior Management Personnel have affirmed compliance with the said code for

the period from 1stApril, 2009 to 31st March, 2010.

ForChartered AccountantsFirm Registration No. 003990S

PartnerMembership No: 25973

Place: ChennaiDate : August

PKF SRIDHAR & SANTHANAM

V. KOTHANDARAMAN

16, 2010

Place : Chennai

Date : 16, 2010AugustR.RAGHURAM

Managing Director

14



P. A. REDDY & CO

P. ASHOK REDDY


AUDITORS’ REPORT TO THE MEMBERS OFBALAJI DISTILLERIES LIMITED

We have audited the attached Balance Sheet of Balaji Distilleries Ltd as at March 31, 2010, the Profit and Loss

Account and the Cash Flow Statement of the Company for the year ended on that date, annexed thereto. These

financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion

on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. These standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles

used and significant estimates made by the management, as well as evaluating the overall financial statements

presentation. We believe that our audit provides a reasonable basis for our opinion.

2) As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of

section 227(4A) of the CompaniesAct, 1956, we enclose in theAnnexure, a statement on the matters specified in

paragraphs 4 and 5 of the said Order.

3) Though the Company has been declared as a Sick Industrial Undertaking, referred to BIFR and has negative

networth, in view of settlement of most of the term liabilities successfully through One Time Settlement (OTS) and

after considering improved operations and Company’s business plans, the company’s accounts are prepared as

a going concern.

4) Without qualifying our opinion, we draw your attention to Para number 13 of Schedule U to the Balance Sheet. In

distillery division, company has changed to weighted average method for valuing raw materials, packing

materials and stores and spares as against FIFO method followed last year. Given the magnitude of the

transactions, Management is unable to quantify the impact due to change in accounting policy.

5) Further to our comments in paragraphs 2 to 4 above, we report that:

we have obtained all the information and explanations, which to the best of our knowledge and belief were

necessary for the purpose of our audit;

b) in our opinion, proper books of account as required by law have been kept by the Company so far as it

appears from our examination of those books;

c) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in

agreement with the books of account;

d) in our opinion, the Balance Sheet, Profit and LossAccount and Cash Flow Statement dealt with by this Report

are in compliance with the accounting standards referred to in Section 211(3C) of the CompaniesAct, 1956.

e) On the basis of written representations received from the Directors of the Company as at 31st March 2010

and taken on record by the Board of Directors, in terms of clause (g) of subsection (1) of section 274 of the

Companies Act, 1956, we report that none of the Directors is disqualified as on 31st March 2010 from being

so appointed as Director of the Company;

f)

1)

a)

The particulars required to be disclosed under clause 32 of the listing agreement have not been

disclosed;

15

6 In our opinion and to the best of our information and according to the explanations given to us, the said accounts

read together with the schedules and notes thereon, give the information required by the CompaniesAct, 1956, in

the manner so required and give a true and fair view in conformity with the accounting principles generally

accepted in India:

i. In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010;

ii. In the case of the Profit and LossAccount, of the loss for the year ended on that date; and

iii. In the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date..

)



Place: ChennaiDate : July


V. KOTHANDARAMAN

31, 2010



P.A. REDDY & CO

P. ASHOK REDDY

16

ANNEXURE TO THE AUDITORS’ REPORT OF BALAJI DISTILLERIES LIMITED[referred to in Paragraph 3 of our report of even date].

Based on the information and explanation furnished to us and the books and records examined by us in the normal

course of our audit, we report that to the best of our knowledge and belief:

The Company has maintained proper records showing full particulars, including quantitative details and

situation of fixed assets.

b) During the year, the Fixed assets have been physically verified by the management. No major

discrepancies were noticed as a result of such verification.

c) The fixed assets disposed off during the year are not substantial and therefore do not affect the going

concern status of the company.

ii. In respect of Inventories of finished goods, work in process, raw materials and stores and spares:

a) The inventories have been physically verified by the management during the year and the frequency of

such verification is reasonable.

b) The procedures of physical verification of inventories followed by the management are reasonable and

adequate in relation to the size of the Company and the nature of its business.

c) The Company is maintaining proper records of inventories. The discrepancies noticed on verification

between the physical stocks and the book records were not material and the same have been properly

dealt with in the books of account.

iii. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies, firms or other

parties covered in the register maintained under section 301 of the CompaniesAct, 1956:

a) During the year, the company has not granted or taken any loans to / from any parties referred above.

iv. In respect of internal control procedures:

a) There are adequate Internal Control Systems commensurate with the size of the Company and the nature

of its business for the purchase of inventories, fixed assets and sale of goods and services. Further, on the

basis of our examination of the books and records of the Company, and according to the information and

explanations given to us, we have neither come across nor have been informed of any continuing failure to

correct major weaknesses in the aforesaid internal control system.

v. In respect of transactions that need to be entered into a register in pursuance of section 301 of the Companies

Act.

a) During the year, there are no contracts and / or arrangements that need to be entered in to the register

maintained under Section 301 of theAct.

vi. In respect of public deposits:

a) The Company has not accepted any deposits from the public within the meaning of section 58A and 58AA

of the Companies Act, 1956 and the Companies (Acceptance of deposits) Rules, 1975 and therefore the

provisions of paragraph 4(vi) of the Order are not applicable to the Company.

vii. In respect of internal audit system:

a) In our opinion, the company has an internal audit system commensurate with its size and nature of its

business.

i) In respect of FixedAssets:

a)

17

viii. In respect of cost records:

a) According to the information and explanations given to us, the Central Government has not prescribed

maintenance of cost records under section 209(1)(d) of the CompaniesAct, 1956, for any of the products of

the Company and therefore the provisions of paragraph 4(viii) of the Order are not applicable to the

company.

ix. In respect of statutory dues,

a) The Company has been generally regular in depositing undisputed dues of provident fund, Investor

Education and protection fund, employees state Insurance, Income Tax, Wealth Tax, Service Tax,

Customs Duty, Excise Duty, Cess and other applicable Statutory dues with the appropriate authorities

during the year

.

b) In respect of Income Tax, Sales Tax, Wealth Tax, Service tax, Customs duty, Excise duty and Cess, there are

no undisputed amounts outstanding as at March 31, 2010 for a period of more than six months from the date

they became payable

.

c) Dues relating to sales tax / excise duty / cess / Income tax / service tax, which have not been deposited on

account of disputes with the related authorities, are stated in the table below:

F.Y. 1985-86 & 1986-87 12.52 High Court, Madras

except undisputed sales tax of Rs. 4548.91 lakhs and interest thereon of Rs. 6710.13

lakhs relating to the financial year 2003-04 and interest on Sales Tax / VAT of Rs 1231.83 lakhs

relating to other financial years. In some cases, Sales Tax and Income Tax remittances of the year

have been made after small delays

except for undisputed sales tax and Value Added Tax of Rs. 4548.91 lakhs and

interest thereonofRs.7941.96 lakhs andshortdeductionofTax deductedatsource ofRs.6,76,239/-

[Rs. In crores] dispute is pending

Sales Tax F.Y. 1996 – 97 4.38 High Court, Madras

Interest on Sales Tax

Income Tax A.Y. 2002-03 & 2004-05 3.02 Commissioner of Income

Tax (Appeals)

State Excise Duty F.Y. 2000-01 to 2008-09 1.63 High Court, Madras

x) In respect of losses:

a) The accumulated losses of the company as at March 31, 2010 are in excess of 50% of the networth. The

company has not incurred cash loss during the year ended on that date and in the immediately preceding

year.

xi) In respect of repayment of dues to financial institutions, banks and / or debenture holders :

a) The Company has no outstanding dues to the financial institutions and has repaid the dues with regard to

debentures in accordance with one time settlement. There is no default as at the balance sheet date as

regards repayment of dues to banks.

xii) In respect of loans on the basis of security by way of pledge of shares, debentures and other securities:

a) The company has not granted any loans and advances on the basis of security by way of pledge of shares,

debentures and other securities. Therefore, the provisions of paragraph 4 (xii) of the Order are not

applicable to the company.

Name of the Statute Period Amount Forum where the

(net of the amount deposited on protest)

18

xiii) In respect of applicability of any special statutes:

a) The company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4

(xiii) of the Order are not applicable to the Company.

xiv) In respect of dealing in shares, securities, debentures and other investments:

a) The Company is not dealing in or trading in shares, securities, debentures and other investments.

Accordingly, the provisions of clause 4 [xiv] of the Order are not applicable to the Company.

xv) In respect of guarantees by the Company for the loan taken by others from banks or financial institutions:

a) The Company has not given any guarantee during the year and there are no guarantees outstanding at the

end of the year.

xvi) In respect of utilization of term loans:

a) The Company has not taken any fresh term loan during the year.

xvii) In respect of utilization of short term funds:

a)

xviii) In respect of preferential allotment of shares:

a) According to the information and explanations given to us, during the period covered by our audit report,

the Company has not made preferential allotment of shares to parties and companies covered in the

register maintained under section 301 of the CompaniesAct, 1956.

xix) In respect of issue of debentures:

a) According to the information and explanations given to us, the Company has not issued any debentures

during the year nor are any debentures outstanding at the end of the accounting year.

xx) In respect of public issues:

a) During the period covered by our audit report, the Company has not raised any money by public issues.

Hence the matters to be reported as per paragraph 4(xx) of the Order are not applicable to the Company.

xxi) In respect of frauds:

a) In our opinion and according to the information and explanations given to us, no material fraud on or by the

Company has been noticed or reported during the course of our audit.

According to the information and explanations given to us and on an overall examination of the

Balance Sheet of the Company, we report that the Company has used funds raised on short term

basis for long term investment.

19





V. KOTHANDARAMAN

31, 2010



P.A. REDDY & CO

P. ASHOK REDDY

SOURCES OF FUNDS

1. SHAREHOLDERS' FUNDS

A

B

2. SHARE WARRANTALLOTMENT MONEY

3. LOAN FUNDS

C

D

Total 2,893,339,217APPLICATION OF FUNDS

1. FIXEDASSETS

E

2. INVESTMENTS F

3. CURRENTASSETS, LOANSANDADVANCES

G

H

I

J

K

4. PROFITAND LOSSACCOUNT (Net) T

Total 2,893,339,217

NOTES ONACCOUNTS U

a) Capital 1,126,384,600

b) Reserves and Surplus 299,824,327

– 124,020,000

a) Secured Loans 1,005,033,007

b) Unsecured Loans -- 338,077,283

a) Gross Block 1,561,224,255

b) Less : Depreciation 429,876,253

c) Net Block 1,131,348,002

d) Capital Work-in-progress 375,670,438

150,899,820

a) Inventories 343,406,529

b) Sundry Debtors 338,389,360

c) Cash and Bank Balances 253,047,365

d) Loans and Advances 119,007,429

1,053,850,683Less: Current Liabilities and Provisions

- Current Liabilities 3,304,171,160

- Provisions 10,709,701

Net CurrentAssets (2,261,030,178)

3,496,451,135

1,430,175,600

981,023,927

680,000,000

2,111,189,855

524,166,473

1,587,023,382

1,427,385

151,900,000

372,244,425

488,170,509

291,299,058

140,016,734

1,291,730,726

3,479,964,874

10,940,306

(2,199,174,454)

3,550,023,214

3,091,199,527

3,091,199,527

BALANCE SHEET AS AT MARCH 31, 2010

Schedule As at 31.03.10(Rs.)

As at 31.03.09(Rs.)

The schedules referred above, form part of the Accounts.This is the Balance Sheet referred to in our report of even date.

20



P.A. REDDY & CO

P. ASHOK REDDY

Place : ChennaiDate : July 31, 2010

G. SRIRAMANCompany Secretary

S. NAGARAJANChief Financial Officer




V. KOTHANDARAMAN

DirectorV. CHANDRASEKHARA REDDY



INCOME

L

M

N

Total 6,845,068,800

EXPENDITURE

O

P

Q

R

E

Total 7,045,615,052

S

T

NOTES ONACCOUNTS U

Income from Operations

Gross Income 21,964,056,943

Less : TN Vat 8,073,909,500 8,062,754,974

Less: Excise Duty 7,151,053,134 7,168,709,580

Net Income 6,732,592,389

Other Income 48,658,924

Variation In Stocks 63,817,487

Materials 4,238,100,511

Personnel 168,738,267

Overheads 2,202,108,706

Finance Charges 353,145,086

Depreciation 83,522,482

Profit / (Loss) for the year before ExceptionalItems and Prior period adjustments (200,546,252)

Exceptional Items 314,709,203

Loss for the year beforePrior period adjustments 114,162,951

Prior PeriodAdjustments – 103,385

Profit/(Loss) before tax 114,266,336

Provision for Income Tax Earlier Years -- 1,352,305

Provision for Fringe benefit tax – 18,193,487

Profit/(Loss) after tax 94,720,544

Deficit brought forwardfrom previous years (4,100,053,149)

Deficit carried forward to Balance Sheet (4,005,332,605)

Basic Earning per Share 0.78

21,994,444,595

6,769,481,961

48,571,136

19,439,259

4,171,719,559

173,086,073

2,194,768,409

274,696,016

96,404,953

(73,182,654)

19,610,575

Profit / ( )(53,572,079)

(53,572,079)

(53,572,079)

(4,005,332,605)

(4,058,904,684)

(0.43)

Diluted Earning per Share (0.43) 0.74

6,837,492,356

6,910,675,010

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010

Schedule For the year ended31.03.10

For the year ended31.03.09

The schedules referred above, form part of the AccountsThis is the Profit and Loss Account referred to in our Report of even date.

21

(Rs.) (Rs.)(Rs.) (Rs.)



P.A. REDDY & CO

P. ASHOK REDDY







V. KOTHANDARAMAN




SCHEDULE A : SHARE CAPITAL

AUTHORISED

ISSUED, SUBSCRIBED AND PAID UP

340,999,600 - -

100,000,000 100,000,000

540,024,327 199,824,327

Total (a + b + c + d) 981,023,927 299,824,327

1 ,00,00,000 ( ,00,00,000) Equity Shares

530,175,600Fully Paid up (Refer Note 2 of Schedule U) (Of the above shares2,05,08,780 were allotted as bonus shares of Rs.10 each by wayof Capitalisation of Securities Premium of Rs.11,50,87,800and General Reserve of Rs.9,00,00,000 and 2,35,08,780Shares were allotted on conversion of debentures issued / loansborrowed)

Nil (4,46,20,900) - 6% Optionally Convertible Cumulative -- 446,209,000

a) Capital Reserves

- Opening Balance - - - -

-Add :Additions (Refer Note 3 of Schedule U) 340,999,600 - -

- Less : Deletions - - - -

b) Capital Redemption Reserve 100,000,000 100,000,000

c) Securities Premium

- Opening Balance 199,824,327 199,824,327

- Add :Additions 340,200,000 - -

- Less : Deletions - - --

d) General Reserve

As Per Last Balance Sheet 508,881,470 508,881,470

508,881,470 508,881,470

5 15of Rs.10/- each 1,500,000,000 1,500,000,000

7,50,00,000 (7,50,00,000) Preference Shares of Rs.10/- each 750,000,000 750,000,000

14,30,17,560 (5,30,17,560) Equity Shares of Rs.10/- each 1,430,175,600

Redeemable Preference Shares of Rs.10/- each (Repayable in36 monthly instalments commencing from April 2015, theentire Optionally Convertible Cumulative RedeemablePreference Shares were alloted on part conversion of loans)(Refer Note 3 of Schedule U)

Nil (1,50,00,000)12.5% Cumulative Redeemable Preference -- 150,000,000Shares of Rs.10/- each (Redeemable at par in three equal annualinstalments commencing from December 2001) (Refer Note 3 ofSchedule U)

2,250,000,000 2,250,000,000

Total 1,430,175,600 1,126,384,600

SCHEDULE B : RESERVESAND SURPLUS

Less: Deducted from Debit balance in Profit and Loss account (Schedule T)

SCHEDULES FORMING PART OF THE BALANCE SHEET AS AT MARCH 31, 2010

As at 31.03.09(Rs.)

22

As at 31.03.10(Rs.)


As at 31.03.10(Rs.)

As at 31.03.09(Rs.)

23

SCHEDULE C : SECURED LOANS

FROM BANKS

RUPEE TERM LOAN

FROM CORPORATES

OTHER LOANS –

Total 1,005,033,007

680,000,000 935,000,000

70,033,007

Pari-passu first mortgage and charge on all the company'simmoveable and moveable properties (excluding current assets)both present and future.

Pari-passu first mortgage and charge on all the company'simmoveable and moveable properties (excluding currentassets) both present and future and first charge on currentassets of brewery division both present and future.

Inter Corporate Deposit - 335,000,000

Interest Accrued And Due - 3,077,283

680,000,000

SCHEDULE D : UNSECURED LOANS

FROM CORPORATES

Total - 338,077,283

24

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SCHEDULE F : INVESTMENTS

LONG TERM INVESTMENTS

TRADE INVESTMENTS

IN SUBSIDIARIES - UN QUOTED

Total 151,900,000 150,899,820

Aggregate Net Asset Value of Mutual Fund Investments

Aggregate value of unquoted Investments

(at cost less provision for other than temporary dimunition in the value)

1,90,000 (89,982) Equity Shares of Rs.10/- each in BDL Distillery P Ltd 1,900,000 899,820

1,50,00,000 (1,50,00,000) Equity Shares of Rs.10/- each in

Chennai Breweries P Ltd 150,000,000 150,000,000

151,900,000 150,899,820

-- --

-- --

151,900,000 150,899,820

Prudential ICICI Liquid Super Institutional Growth Plan FundNil (21,79,53,104) Units -- 2,618,000,000

BDL Distillery P Ltd 100018 (Nil) Equity shares of Rs.10 each 1,000,180 -

Chennai Breweries P Ltd Nil (1,49,89,200) Equity shares of Rs.10 each - 149,892,000

Prudential ICICI Liquid Super Institutional Growth Plan FundNil (23,12,34,957) Units – 2,775,657,086Nil (72) Equity Shares of Rs.10/- each in -- 2,526

Nil (450) Equity Shares of Rs.10/- each in -- 3,000

Nil (10,000) Equity Shares of Rs.10/- each in -- 442,000

Aggregate Market Value of quoted Investments

Purchase during the year

Sales / Redemption during the year

United Spirits Ltd

Balaji Industrial Corporation Ltd

Balaji Hotels and Enterprises Ltd


As at 31.03.10(Rs.)

As at 31.03.09(Rs.)

25

SCHEDULE G : INVENTORIES

Total 372,244,425 343,406,529

488,170,509

SCHEDULE I : CASH AND BANK BALANCES

BALANCES WITH SCHEDULED BANKS

Total 291,299,058 253,047,365

SCHEDULE J : LOANS, ADVANCES AND DEPOSITS

Total 140,016,734 119,007,429

[at lower of cost or net realisable value]

[As certified by management]

Fuel Oil 3,852,147 1,667,665

Raw Materials 104,943,461 87,958,392

Packing Materials 63,195,411 78,468,459

Stores & Spares 57,440,199 51,938,065

Finished Goods 84,911,199 73,068,146

Work-in-Process 59,909,529 52,313,323

374,251,946 345,414,050

Less : Provision for obsolete stock 2,007,521 2,007,521

4,729,419

1,755,400

6,484,819

483,441,090

489,925,909

1,755,400

Cash on Hand 1,386,854 1,104,560

Cheques on Hand 1,664,928 98,007,266

In Current Account 93,527,033 41,065,734

In Deposit Account 194,720,243 112,869,805

Loans (Unsecured and Considered good):

To Subsidiaries -- --

Advances recoverable in cash or kind or for value to be received

(Unsecured)

Considered good : 98,013,560 84847,149

Advance Leave Encashment / Gratuity with LIC 3,191,296 3,524,420

Considered doubtful 2,038,762,660 2,039,462,660

Income Tax (net of provision) 23,303,607 12,981,171

Deposits 15,508,271 17,654,689

2,178,779,394 2,158,470,089

Less : Provision for doubtful advances 2,038,762,660 2,039,462,660

SCHEDULE H : SUNDRY DEBTORS

Total 338,389,360

Unsecured:Debts outstanding for more than six months

Considered good 9,806,520

Considered doubtful 1,755,400

11,561,920

Other Debts

Considered good 328,582,840

340,144,760

Less : Provision for Doubtful debts 1,755,400


As at 31.03.10(Rs.)

As at 31.03.09(Rs.)

26

SCHEDULE K : CURRENT LIABILITIES AND PROVISIONS1. CURRENT LIABILITIES

Total 3,479,964,874 3,304,171,160

2. PROVISIONS

Total 10,940,306 10,709,701

Total [1+2] 3,490,905,180 3,314,880,861

SCHEDULE T : PROFIT AND LOSS ACCOUNT

Total 3,550,023,214 3,496,451,135

Sundry Creditors

- Dues to Small & Micro Enterprises -- --

- Others

- For Materials 236,238,738 302,693,181

- For Capital Goods 8,110,363 27,673,336

- For Others 3,235,615,773 2,973,804,643

Employee Benefits 10,560,231 9,270,194

Provision for Gratuity – 1,003,732

Wealth Tax 380,075 435,775

Deficit in Profit and Loss Account 4,058,904,684 4,005,332,605

Less : General Reserve (As per schedule B) 508,881,470 508,881,470


As at 31.03.10(Rs.)

As at 31.03.09(Rs.)

27

SCHEDULE L : INCOME FROM OPERATIONS

Total 6,732,592,389

Total

Closing Stocks

Less : Opening Stocks

Total 63,817,487

Net Sales

- IMFL 4,946,757,303

- Beer 1,785,835,086

Scrap Sales 10,580,031

Interest on others

Profit on sale of Current Investments – 10,384,639

Profit on sale of assets 209,448

Difference in Exchange 389,860

Trade liabilities written back – 3,499,969

Provisions no longer required --

Sale of Spent Malt 9,152,896

Miscellaneous 2,367,231

Finished Goods 73,068,146

Work-in-Process 52,313,323



4,769,570,273

1,999,911,688

15,571,400

[TDS Rs.7,13,987 (25,77,732)] 8,064,749 12,074,850

88,229

853

770,174

23,160,081

915,650

84,911,199

59,909,529

73,068,146

52,313,323

166,426,851 157,315,617

Add: Purchases 4,173,431,580 4,247,211,745

4,339,858,431 4,404,527,362

168,138,872 166,426,851

Salaries, Wages and Bonus 139,143,010 139,609,032

Contribution to PF and Other Funds 15,287,663 13,904,713

Staff Welfare & Career Development 18,655,400 15,224,522

6,769,481,961

SCHEDULE M : OTHER INCOME

48,571,136 48,658,924

SCHEDULE N : VARIANCE IN STOCKS

19,439,259

SCHEDULE O : MATERIALS

[CONSUMPTION OF GOODS AND MATERIALS]

Opening Stock

Less: Closing Stock

Total 4,171,719,559 4,238,100,511

SCHEDULE P : PERSONNEL

Total 173,086,073 168,738,267

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED MARCH 31, 2010

For the yearended 31.03.10

(Rs.)


(Rs.)

28

SCHEDULES FORMING PART OF THEPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010

SCHEDULE Q : OVERHEADSFACTORY

REPAIRS AND MAINTENANCE

Total [a] 409,684,378 460,018,994

1,722,802,378

2,194,768,409

274,696,016

SCHEDULE S : EXCEPTIONAL ITEMS

19,610,575 314,709,203

Power and Fuel 293,567,186 294,334,471Consumables 34,079,367 23,144,682

- Building 12,356,298 20,814,309- Machinery 48,189,830 64,087,277- Others 4,931,539 5,744,108Provision for Obsolte Stock – 2,007,521Insurance 6,702,247 5,178,012Excise Duty - on opening and closing stock (Net) 9,857,911 36,948,478Extra Excise Duty – 7,760,136

167,726,355427,966,462253,938,693873,170,868

145,506,407

129,189,609

Waiver of Dues by lenders 19,610,575 22,498,473Provision for doubtful advances -- (12,000,000)Provision for doubtful advances no longer required written back -- 79,411,532Relinquishment of rights of assets to RSEB -- 162,702,899Lease income from RSEB (TDS Rs.1,10,73,420/-) -- 16,727,013Interest income from RSEB -- 48,867,695Poompuhar Shipping Corporation - Charter Hire (TDS Rs.4,01,177) -- 17,701,591Share of settlement of Corporate Guarantee -- (21,200,000)

ADMINISTRATION

Total [b] 62,281,653 55,025,542

SELLING

Total [c] 1,687,064,169

Total [a+b+c] 2,202,108,706

SCHEDULE R : FINANCE

Total 353,145,086

Rent 3,845,321 3,896,465Rates and Taxes 6,876,508 5,279,551Printing and Stationery 2,285,914 2,015,793Travelling and Conveyance 2,533,901 2,345,506Communication Expenses 2,341,610 2,036,458Vehicle Maintenance 10,656,757 10,851,227Remuneration to Directors 2,797,500 2,437,500Sitting Fees 40,000 35,000Audit Fees and Expenses 2,183,046 2,236,439Professional Charges 12,452,478 11,235,621Donations 33,005 26,200Excise Establishment 11,123,469 6,938,480Loss on Sale of Assets 578,096 2,490,746General Expenses 4,153,848 2,243,064Bad advances writtenoff - 521,717Wealth Tax 380,200 435,775

Cash Discount 168,337,417Other Selling Expenses 400,616,646Freight and Handling 219,566,916Payment to Brand Owners 898,543,190

Interest - Fixed Loans 169,527,236Interest - Other Loans – 6,494,759Other Finance Charges 177,123,091


(Rs.)


(Rs.)

29

SCHEDULE U : NOTES ON ACCOUNTS

1. ACCOUNTING POLICIES :

i) Basis ofAccounting

(ii) FixedAssets

(iii) Expenditure During Construction period

(iv) Borrowing Costs

(v) Depreciation

(vi) Inventories

Financial statements are prepared as a going concern on accrual basis under the Historical cost convention

and in accordance with the generally accepted accounting principles.

FixedAssets are stated at cost less accumulated depreciation. Cost is inclusive of freight, duties, taxes and

all directly attributable costs of bringing the assets to their working condition for intended use.

At the balance sheet date, an assessment is done to determine whether there is any indication of

impairment in the carrying amount of the company’s fixed assets. If any such indication exists, the asset’s

recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an

asset exceeds its recoverable amount.

After recognition of impairment loss, the depreciation charge for the asset is adjusted in future periods to

allocate the asset’s revised carrying amount, less its residual value (if any), on Straight Line basis over its

remaining useful life.

Expenditure incurred during construction period is included under capital work-in progress and is

capitalised when the asset is ready for commercial use. Expenditure in connection with Project

implementation in so far as such expenditure relates to the period prior to commencement of commercial

production is also included under Capital work in progress.

Borrowing costs that are attributable to construction of qualifying assets are capitalised as part of cost of

such assets till such time the asset is ready for its intended use. A qualifying asset is an asset that

necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs

are recognised as an expense in the period in which they are incurred.

Assets given on lease net of residual value are depreciated over the primary lease period and depreciation

on all other assets is provided on straight line basis at the rates specified in Schedule XIV of the Companies

Act, 1956. Depreciation on additions and deletions during the year is provided on Pro-rata Basis.

Inventories are valued at cost or net realisable value whichever is lower and the cost is determined as

follows:

Raw materials & Packing Materials : Distillery: On Weighted Average basis and cost includes

expenses of procurement, excise and other duties.

Brewery: On FIFO basis and cost includes expenses of

procurement, excise and other duties

Finished Goods : Cost includes appropriate share of related overheads and excise

duty payable on such goods

Work in Progress : Cost includes appropriate share of related Overheads

Stores and Spares : Distillery: On Weighted Average basis and cost includes




SCHEDULES FORMING PART OF ACCOUNTSFOR THE YEAR ENDED MARCH 31, 2010

30

(vii) Investments

(viii) Sales

(ix) Excise Duty

(x) Employee Benefits

(xi) Foreign Currency Transactions

(xii) Current and Deferred Tax

(xiii) Contingent Liabilities

(xiv) Segment Reporting

Long term investments are valued at cost, after providing for any diminution other than temporary in value.

Current investments are valued at cost or market price whichever is lower. Income from investments is

recognised in the year in which it accrues.

Gross Sales includes Excise Duty, TN Vat collected and is net of trade discount.

Excise Duty has been accounted on the basis of payments made in respect of goods cleared and provision

is made for goods lying as closing stock at the year end.

Contributions to defined contribution schemes such as provident fund and family pension fund are accrued

on actual liability basis. In respect of defined benefit plans like Contributions to gratuity, Superannuation

and Leave Encashment, these are accrued in accordance with the terms of the scheme of the Life

Insurance Corporation of India, the liability whereof is determined using projected Unit Credit Method as

provided inAccounting Standard 15 Revised.

All foreign currency transactions are accounted for at the rates prevailing on the dates of the transaction.

Foreign currency liabilities are converted at the year end rates as applicable.

The exchange difference on settlement / conversion are adjusted to a) cost of imported fixed assets, if the

foreign currency liability relates to fixed assets upto March 31, 2007 and b) Profit and Loss account, in all

other cases.

Tax on Income for the current period is determined on the basis of taxable income and tax credits computed

in accordance with the provisions of Income TaxAct 1961.

Deferred Tax is recognised on timing differences between the accounting income and the taxable income

for the year and quantified using the tax rates and laws prevailing as on the Balance Sheet date. Where

there is a carry forward loss or unabsorbed depreciation, deferred tax asset is created only if the set off is

virtually certain.

All possible obligations that arise from past events and existence of which will be confirmed only by the

occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the

company are recognised as contingent liabilities and disclosed by way of notes to the accounts.

a) Revenue and expenses have been identified to the segment on the basis of relationship to operating

activities of the segment. Revenue and expenses which relate to the enterprise as a whole and which

are not allocable to a segment on reasonable basis have been disclosed as unallocable.

b) Segment assets and segment liabilities represent asset and liabilities in respective segments. Other

assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed

as unallocable.

SCHEDULE U : NOTES ON ACCOUNTS (Contd..)

31

2. EQUITY SHARES :

3. PREFERENCE SHARES :

4. ONE TIME SETTLEMENT WITH LENDERS:

5. SECURED LOANS :

During the year, the Company has allotted 90,000,000 equity shares at Rs.13.78 each including Share premium

of Rs.3.78 each consequent upon conversion of 90,000,000 Convertible Warrants. An amount equivalent to the

proceeds of issue of Rs.1,240,200,000/-, interalia has been utilized as under:

Particulars Rs.

Towards Redemption of Preference Shares 75,000,000

Towards Redemption of OCCRPS 180,209,400

Towards Payment to Institutions and Banks for OTS 405,489,625

Towards Payment of VAT 252,800,000

Towards Capital Expenditure 326,700,975

During the year, the outstanding Cumulative Redeemable Preference Shares have been redeemed out of fresh

issue of Equity Shares.

In respect of the 12.5% Cumulative Redeemable Preference Shares with a redemption value of Rs.150,000,000/-

, redemption of entire shares has been made during the year at a discount of Rs.5/- per share which aggregates

to Rs.75,000,000/-.

In respect of 6% Optionally Convertible Cumulative Redeemable Preference Shares with a redemption value of

Rs.446,209,000/- , redemption of entire shares has been made during the year at a discount of Rs.5.96 per share

which aggregates to Rs. 265,999,600/-.

The total discount on redemption aggregating to Rs.340,999,600/- has been credited to capital reserve.

During the year the Interest payable on Debentures issued to an institution have been fully settled under one time

settlement. In view of this an amount of Rs.19,610,575 (Rs.22,498,473) has been written back to Profit and Loss

account as exceptional item.

a) Secured loan with bank is secured by pari-passu first mortgage and charge on all the company’s immovable

and moveable properties (excluding current assets) both present and future.

b) Secured loan has been guaranteed by one of the promoters Mr.M.Sreenivasulu Reddy.

c) Secured loan is also collaterally secured by a real estate property of a company owned by associates,

friends, relatives and well wishers of the promoters.


32

6. A. CONTINGENT LIABILITIES:

B. CAPITAL COMMITMENTS

i Sales Tax:

a) For the Assessment years 1986-87 to 1988-89, the company haswon its case before STAT. However, the department has appealed tothe Sales Tax Special Tribunal. In the absence of details of thegrounds of appeal filed by the department, the amount disputed bythe department could not be quantified.

b) For the Assessment year 1996-97, in the erstwhile Shipping divisionan appeal filed by the Sales tax department before STAT wasallowed. Aggrieved by the order, the company appealed before theHonourable High Court of Madras and got an interim stay order.

c) For the Assessment years 1985-86 & 1986-87, a demand for interesthas been raised through a notice U/Sec 24(3) of the TNGSTAct,1959. When the same was challenged by the company, theHon’ble Madras High Court granted interim injunction and stay afterremittance of Rs.1.00 Crore by the company. Accordingly, thecompany remitted the amount and simultaneously is pursuing thewaiver of interest through industry association before the Tamil NaduState Government. The company is contemplating the option ofsettling the above disputed liabilities under the Samadhan schemeintroduced under Tamil Nadu sales tax (Settlement of Arrears)Act, 2010

d) In respect of the completed Assessment for the year 2000-01, theSales tax department issued a revision notice proposing levy ofSales tax on the sale of ships. On the challenge by the company, theHon’ble Madras High Court granted interim injunction.

e) The company is contemplating the option of settling the abovedisputed liabilities under the Samadhan scheme introduced underTamil Nadu Sales Tax (Settlement ofArrears)Act, 2010.

ii. Income Tax:

a) For the Assessment years 2002-03 & 2004-05 the companyappealed before CIT (A) against the order of assessing officer.

b) In respect of the Assessment years 1986-87 to 1990-91 the Incometax departments appeals against allowance of Commission/Marketing expenses are pending before the Madras High Court.

c) In respect of Assessment years 1994-95 to 2002-03, the Income Taxdepartment’s appeals against sale and lease back transactions, arepending before the Madras High Court.

iii. State Excise Duty:

a) During the year 2007-08 the company has Imported special spirits bypaying Rs.1/- per litre as import permit fee. However based on AG’saudit, the excise department issued notice for Rs.5/- per litre. Thecompany appealed before High court of madras and gotan interim injection order.

The state Government has amended the rule on 18.05.2010imposing import fee at Rs.5/- retrospectively from 2000 onwards.The Excise department has demanded additional payment andcompany has challenged the demand before High court Madras andgot an interim injunction.

337,772,997

498,098,515

204,205,978

498,098,515


Nil

Notquantifiable

Notquantifiable

No DemandQuantified yet

43,783,163 43,783,163

135,171,318135,171,318

Nil

Nil

Nil

103,753,938

30,167,522

3,189,996

13,098,924

2,000,000

2009-10Rs.

2008-09Rs.

33


34

8.

i. StatutoryAudit Fee 1,654,500 1,654,500

ii. TaxAudit Fee 424,656 424,655

iii. Certificate / Other services 55,150 92,197

iv. Out of Pocket Expenses 48,740 65,087

Items relating to prior periods have been (debited) / credited to the Profit and Loss Account under the followingAccount Heads:

Interest Income - (321,398)

Rent - (49,500)

Others - 474.283

This activity is not considered as manufacturing activity under industries(Development and Regulation)Act, 1951.

Licensed Capacity : 11,880,000 Cases 9,967,200 Cases

Installed Capacity : 11,880,000 Cases 9,967,200 Cases



. REMUNERATION TO STATUTORYAUDITORS: 2009-10 2008-09Rs. Rs

9. PRIOR PERIOD EXPENDITURE:

Included under Head ofAccount 2009-10 2008-09Rs. Rs.

Total - 103,385

10. [A] LICENCEDAND INSTALLED CAPACITY :

Indian Made Foreign Liquor (IMFL):

2009-10 2008-09

Beer :

7. DIRECTORS’REMUNERATION: 2009-10 2008-09(Rs.) (Rs.)

Managing Director’s Remuneration

i Salary,Allowance and Bonus 2,797,500 2,437,500

ii Bonus 559,500 538,534

iii Contribution to Provident Fund, SuperAnnuation, and Gratuity 899,700 652,500

iv Leave Encashment – 460,000

v Other Perquisites(Rent, LTA, Medical, Insurance, Club Subscription etc) 937,950 409,363

Other Director’s Sitting Fees 40,000 35,000

Note : 1. Company contributes to LIC towards Gratuity, Super Annuation, and Leave Encashment of employeesincluding Managing Director.

IMFL Cases –

Cases –

Litres –

IMFL Cases

BEER Cases

DRAUGHT BEER Litres

LEASE RENTAL

[B] REVENUE

2009-10 2008-09

Actual Production Unit Quantity Value (Rs.) Quantity Value (Rs.)

[I] Turnover (Net)

9,442,929 – 9,604,027

BEER 8,946,410 – 7,944,267

DRAUGHT BEER 218,690 – 231,080

9,431,118 # 4,769,570,273 9,548,874 4,946,757,303

8,968,210 1,998,460,461 7,995,624 1,784,301,639

218,690 1,451,227 231,080 1,533,447

Raw Material - IMFL

i) Rectified Spirit Bulk Litres 37,801,286 1,362,429,699 38,471,466 1,294,494,447

ii) Malt Spirit Bulk Litres 110,730.120 16,480,085 260,908.039 45,285,481

iii) Grape Spirit Bulk Litres 256,998.630 65,215,922 255,430.541 67,435,292

iv) Others 589,78,565 95,693,800

Raw Material - BEER

i) Malted Barley M.Ton 9,593.451 227,969,878 8,425.768 219,079,435

ii) Broken Rice / (Maize Flakes) KGS 4,661,180 572,41,197 37,48,335 44,161,156

iii) Others 120,118,794 89,958,256

Packing Material

IMFL 1,615,137,888 1,830,086,711

BEER 648,147,531 551,905,933

Imported [In %] 0.023% 959,774

Indigenous [In %] 99.977% 4,170,759,785 100% 4,238,100,511

[II] Stock of finished goods

Opening Stock

IMFL Cases 59,927 22,457,931* 4,774 1,743,023*

BEER Cases 49,863 6,919,813* 101,220 12,215,770*

Closing Stock

IMFL Cases 71,738 27,408,519** 59,927 22,457,931**

BEER Cases 28,063 3,955,558** 49,863 6,919,813**

[III] Consumption

Total 4,171,719,559 4,238,100,511

Percentage of TotalConsumption Materials


BEER:, ,

,* Excluding excise duty of Rs.1 695,841 (Rs.3 442,492)** Excluding excise duty of Rs. 954,423(Rs.1 695,841)

IMFL:, ,, ,

* Excluding excise duty of Rs.41 994,560 (Rs.3 396,103)** Excluding excise duty of Rs.52 592,699 (Rs.41 994,560)# Includes 160 cases of obsolete stock written off.

35

11. EXPENDITURE IN FOREIGN EXCHANGE : 2009-10 2008-09(Rs.) (Rs.)

Total -- 231,600,000

12. CIF VALUE OF IMPORTS : 2009-10 2008-09(Rs.) (Rs.)

Total 17,261,152 21,886,842

Principal to Financial Institutions -- 231,600,000

The repayment of principal and interest of Rs.Nil(23,16,00,000)/- on foreign Currency loans have been paidin Indian currency on the principal translated in to the Indian currency at the rates prevailing on the date ofcrystalisation.

Purchase of spares & Consumables 8,854,423 5,263,835

Purchase of Plant and Machinery 7,446,955 1,204,400

Purchase of Generator -- 15,418,607

Purchase of Empty bottles 959,774 --

13. CHANGE INACCOUNTING POLICY:

During the year, due to the introduction of SAP in Distillery division, the inventories of Raw Material, PackingMaterial and Stores & Spares have been valued at Weighted Average Method as against FIFO basis followed bythe Company. In view of the magnitude of the transactions, the impact of such change in the policy of the inventoryvaluation on the Profit or Loss for the year could not be quantified. In view of the fact that the prices of the RawMaterial, Packing Material and Stores & Spares remained stable throughout the year, the impact of the change inthe valuation method will not be material.

14. SEGMENT REPORTING :

The company has identified three reportable primary business segments viz. Brewery, Distillery and Leasingsegments. Segments have been identified and reported taking into account nature of products and services, thediffering risks and returns and the internal business reporting systems. The company caters to the needs of thedomestic market and as such there are no reportable geographical segments. The accounting policies adoptedfor segment reporting are in line with the accounting policies of the company. During the previous year, theleasing business segment has been wound up.

Sales

Distillery 4,946,757,303

Brewery 1,785,835,086

Leasing – –

Total segment revenue for the period

Distillery 183,444,573

Brewery (25,073,598)

Leasing -- (2,160,651)

Distillery

- Waiver of Principal and Interest 22,498,473

- Provision for doubtful advances (12,000,000)

- Settlement of Corporate Guarantee (21,200,000)

Leasing

-Amount received against written off 79,411,532

- Relinguishment of rights of assets 162,702,899

- Lease income from RSEB 16,727,013

- Interest income from RSEB 48,867,695

Unallocated

- Poompuhar Shipping Corporation 17,701,591

(353,145,085)

12,074,850

103,385

(18,193,487)

Provision for Tax:

Current Tax / Earlier year tax 1,352,305

PARTICULARS 31.03.10 (Rs.) 31.03.09 (Rs.)

[A] Revenue:

6,732,592,389

[B] Result:

Total Segment 156,210,324


Profit / (Loss) afer tax 94,720,544

4769,570,273

1,999,911,688

141,494,387

68,465,580

19,610,575

(16,511,354) (15,686,341)

(274,696,016)

8,064,749

6,769,481,961

209,959,967

(53,572,079)

(53,572,079)

Profit / (Loss) Before Interest , Exceptional Items andprior period adjustments

Exceptional Items

Unallocated Expenditure

Others

Interest

Interest Income / Dividend Income

Prior period adjustments

Provision for fringe benefit tax


36

15. RELATED PARTY DISCLOSURES :

LIST OF RELATED PARTIESAND RELATIONSHIPS

S.No. Party

(A) Associates

(B) Subsidiaries

C) Key Management Personnel

1. Hiwide Enterprises P Ltd.

2. Diadem Enterprises P Ltd.

3. BDLDistilleries P Ltd

4. Chennai Breweries P Ltd

1. R.Raghuram

2. S. Nagarajan


37

Distillery 2,485,196,310 2,539,046,001

Brewery 1,105,708,868 791,425,549

Leasing -- --

Unallocated Liabilities 680,000,000 1,343,110,290

Distillery 38,432,613 101,756,186

Brewery 514,538,233 29,253,566

Leasing -- --

Distillery 19,519,284

Brewery 73,180,507 61,842,547

Leasing 2,160,651

PARTICULARS 31.03.10 (Rs) 31.03.09 (Rs)

[D] Segment Liabilities

Total Liabilities 4,270,905,178 4,673,581,840

[E] Other Information

[C] SegmentAssets:

TotalAssets 4,270,905,178 4,673,581,840

Distillery 1,393,225,172 1,121,060,050

Brewery 1,715,552,712 1,593,318,412

Leasing -- --

Shareholders Funds [ Net of Losses] 1,138,823,687 1,946,222,208

UnallocatedAssets 23,303,607 12,981,170

23,224,446

Capital Expenditure

Depreciation

Non cash expenditure excluding depreciation

2009-10 2008-09Particulars Associates Subsidiaries Key Associates Subsidiaries Key

Management ManagementPersonnel Personnel

Rs. Rs. Rs. Rs. Rs. Rs.

Remuneration - MD 5,194,650 4,497,897

Remuneration - CFO 4,168,200 4,138,115

Purchases 67 651,462

Interest Paid 3 932,055

Amounts Payable:

Diadem Enterprises Pvt Ltd 16,893,790 18,676,550

Hiwide Enterprises Pvt Ltd 335,000,000

Chennai Breweries Pvt Ltd 47,957,907 115,000,000

Investment in Subsidiaries:

BDL Distilleries P Ltd 1,900,000 899,820

Chennai Breweries Pvt Ltd 150,000,000 150,000,000

, 63,296,125

, –

Advance (net) 67,042,093 115,000,000

Investments made 1,000,180 150,683,820

Outstanding as at year end

16. RELATED PARTY TRANSACTIONS :

17. EARNINGS PER SHARE (EPS) :2009-10 2008-09

Rs. Rs.

Total (53,572,079)

18. DEFERRED TAX :

19. SCHEME OFARRANGEMENT :

In respect of equity shares :

Profit (Loss) after Tax attributable to ordinary

Less: Preference Dividend and Dividend Tax

In view of the net deferred tax being an asset, the same has not been recognised in the books, as there is no virtualcertainty of set off

The Board of Directors of the Company in their meeting held on 29th November 2008 had decided to merge theCompany into United Spirits Ltd (USL) and approved the scheme of arrangement subject to the approval of BIFRand other agencies.

The scheme of arrangement interalia provides for transfer of Brewery Division Undertaking of Balaji DistilleriesLimited to Chennai Breweries Private Limited and thereafter merger of Balaji Distilleries Limited (consisting ofDistillery Division Undertaking and investments in subsidiaries) into United Spirits Limited on a going concern basis.The swap has been fixed as under:

Two Equity shares of USL for every 55 equity shares of BDL.

Shareholders (53,572,079) 94,720,544

53,259,096

One.12.5% Redeemable Preference Shares of Rs.10/- each of USLredeemable in March 2014, for every two 12.5% Cumulative RedeemablePreference Shares of Rs.10/- each held in BDL. (These preference shareshave been redeemed during the year).

One 12.5% Redeemable Preference Shares of Rs.10/- each of USL,redeemable in March 2014 for every two 6% Optionally ConvertibleCumulative Redeemable Preference Shares of Rs.10/- each held in BDL(These preference shares have been redeemed during the year).

--

41,461,448

WeightedAverage of Equity Shares of Rs.10 each 124,524,409 53,017,560

Basic EPS (0.43) 0.78

WeightedAverage of Equity Shares (including Dilutive) 124,524,409 56,393,070

Diluted EPS (0.43) 0.74

In respect of Preference shares :

In respect of OCCRPS :


38

20 BOARD FOR INDUSTRIALAND FINANCIAL RECONSTRUCTION (BIFR) :

21. GOING CONCERN :

22. BREAK-UP OF CAPITAL WORK IN PROGRESS :

2009-10 2008-09(Rs. in lacs) (Rs. in lacs)

Description 2009-10 2008-09(Rs.) (Rs.)

The Hon’ble Board for Industrial and Financial Reconstruction (BIFR) has declared the company as sickindustrial undertaking in terms of section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985at its hearing held on 20th December, 2006 and appointed M/s. IDBI Bank Ltd as the operatingAgency (OA). TheOA has submitted the revised Draft Rehabilitation Scheme (DRS) on 5th February, 2009 after taking into accountthe Scheme of Arrangement approved by the Board of Directors, which interalia envisages transfer of brewerydivision of Balaji Distilleries Limited to Chennai Breweries P Ltd, a wholly owned subsidiary of Balaji DistilleriesLimited and thereafter merger of distillery division of Balaji Distilleries Limited with United Spirits Limited (USL).The shareholders of USL have also approved the Scheme of Arrangement at their meeting held on 21stApril,2010.

The Hon’ble BIFR has circulated the DRS vide its order dt 19th February, 2010. Mandatory hearings have beenheld on 10th May, 2010, 26th May,2010 and 4th June,2010 and no creditor has raised any objection for the DRS.In the meeting held on 4th June, 2010, the Hon’ble BIFR has reserved its order and directed that the order will bepronounced on 24th June,2010 in the Open court. The pronouncement of order was postponed to 30th June,2010. On 30th June,2010, the Hon’ble BIFR has pronounced the order and copy of the order is yet to be receivedby the company.After reviewing the order, the Company will take necessary steps for future course of action.

Though the Company has been declared as a Sick Industrial Undertaking, referred to BIFR and has negativenetworth, in view of settlement of most of its term liabilities successfully through One Time Settlement (OTS) andafter considering successful operation and Company’s business plans, the company’s accounts are prepared asa going concern.

5,611.23

Building 427,385 47,794,589

Plant & Machinery 1,000,000 287,069,020

Water Supply Installations 6,490,828

Electrical Installations & Fittings 34,316,001

The company does not have any foreign currency exposure at the end of the year. The company has not enteredinto any derivative transactions during the year nor is any such transaction outstanding at the year end.

a) Interest on Sales Tax for the year 2001-02 356.60 356.60

b) Undisputed sales tax relating to F.Y 2003-04

Sales tax of January, 2004 payable in February, 2004 1,600.00 1,600.00

Sales tax of February, 2004 payable in March, 2004 2,948.91 2,948.91

Interest thereon upto 31.3.2010 6,710.13

c) Interest on VAT March, 2007 upto 31.3.2009 875.23 875.23

d) Current ValueAdded Tax relating to March, 2010 remitted inApril, 2010 7,366.09 6,741.21

Interest on Sales Tax / VAT 124,094,506 148,179,061

Management fee paid to a bank 500,000 --

Particulars 31.03.10 31.03.09(Rs.) (Rs.)

Total 1,427,385 375,670,438

23.

24. SUNDRY CREDITORS OTHERS INCLUDE :

25. OTHER FINANCE CHARGES INCLUDES :


39


40

26. EMPLOYEE BENEFITS :

Particulars 2009-10 2008-09

II Defined Benefit Plans

(A) Gratuity

Particulars 2009-2010 2008-2009

Net Liability / (Asset) (553,488)

Net Liability / (Asset) recognized in the Balance Sheet (553,488) 1,003,732

Particulars

Total 2,485,864 11,085,684

I Defined Contribution Plans

(Rs.) (Rs.)

1,003,732

2009-2010 2008-2009

a. Provident Fund

b. Superannuation Fund

c. State Defined Contribution Plans

i) Employer’s contribution to Employee’s State Insurance

ii) Employer’s Contribution to Employee’s Pension scheme 1995

During the year, the Company has recognised the following amounts in the Profit and loss account:

Employers contribution to provident fund and employees pension scheme 6,496,899 5,799,915

Employers contribution to superannuation fund 3,155,400 2,453,292

Employers contribution to Employee State Insurance 1,848,612 2,286,962

The company has defined benefit plans namely Superannuation, Leave encashment / Compensated absence foremployees and Gratuity for employees. With effect from 2007-08, the liability for these benefit plans isdetermined using Projected Unit Credit Method and accrued as provided in Accounting Standard 15 (R). All theadditional liability has been debited / credited to the profit & loss account of the year.

(a) Description of the Gratuity Plan: The Company provides for gratuity a defined benefit retirement plan coveringeligible employees. Gratuity plan provides for a lump sum payment to employees on retirement, death,incapacitation, termination of employment, of amounts that are based on salaries and tenure of the employees.

The contribution to LIC is made by the Company based on actuarial valuation done by a professional Actuary.

(b) Amount recognized in the Balance Sheet and movements in net liability

Present Value of Funded Obligations 29,773,163 25,552,688

Fair Value of PlanAssets 30,326,651 24,548,956

Present Value of Unfunded Obligations (553,488) 1,003,732

Unrecognized Past service Cost -- -

Liabilities -- 1,115,889

Asset (553,488) (112,157)

Net Liability / (Asset) (553,488) 1,003,732

(c) The fair value of the plan assets does not include the Company’s own financial instruments.

(d) Expenses recognized in the Statement of Profit and LossAccount

Current Service Cost 1,715,298 1,112,768

Interest on Defined Benefit Obligation 2,044,216 1,135,387

Expected Return on PlanAssets (2,335,888) 1,521,733

NetActuarial Losses/ (Gains) Recognized in the year 1,062,238 9,243,373

Past Service Cost -- --

Losses/ (Gains) on “Curtailments & Settlements” -- --

Effect of the limit in Para 59(b) -- --

Net gratuity expenses included in payments to and provision for employees 2,485,864 9,969,795

Add : Unpaid Gratuity provided in Profit and LossAccount -- 1,115,889

Amounts in the Balance Sheet

41


(e) TheActual Return on PlanAssets is Rs.2,335,888 (Rs.1,571,958)

(f) ActuarialAssumptions at the Valuation date

Discount Rate 8% 8%

Expected Rate of Return on PlanAssets* 8% 8%

Salary Escalation Rate

% (Brewery) 6

* This is based on expectation of the average long term rate of return expected on investments of the Fund duringthe estimated term of the obligations.

(g) Descriptions of the PlanAssets

Government of India Securities

Corporate Bonds

Special Deposit Scheme

Insurer Managed Funds 100% 100%

Others

Total 100% 100%

(a) Amount recognized in the Balance Sheet and movements in net liability:



Present Value of Unfunded Obligations (2,622,925) (3,524,420)

Unrecognized Past service Cost -- --

Amount not Recognized asAsset, because of limit in Para 59(b) -- --

Liabilities 14,833 526,473

Assets (2,637,808) (4,050,893)

Net Liability/(Asset) (2,622,925) (3,524,420)

Unpaid Gratuity for transferred employees -- --

(b) The fair value of the plan assets does not include the Company’s own financial instruments; no property of theGratuity Trust is occupied by the Company.

(c) Expenses recognized in the Statement of Profit and LossAccount

Particulars 2009-2010 2008-2009

Particulars 2009-2010 2008 - 2009

Total 1,870,745 5,212,423

5% (Distillery) 5% (Distillery)

6 % (Brewery)

Current Service Cost 3,572,173 531,465

Interest on Defined Benefit Obligation 464,385 50,653

Expected Return on PlanAssets (903,829) 39,830

NetActuarial Losses/ (Gains) Recognized in the year (1,261,984) 4,143,662



Effect of the limit in Para 59(b) – --

Net leave encashment expenses included in payments to andprovision for employees 1,870,745 4,685,950

Add : Unpaid Leave encashment provided in Profit and LossAccount -- 526,473

Category ofAssets As at 31.03.2010 As at 31.03.2009

(B) Leave Encashment

Particulars 2009-2010 2008 - 2009


Net liability/(asset) recognized in the Balance Sheet (2,622,925) (3,524,420)



42

(d) TheActual Return on PlanAssets is Rs. 9,03,829 (Rs.4,87,124)

(e) ActuarialAssumptions at the Valuation date

Discount Rate 8% 8%


Salary Escalation Rate 5% (Distillery) 5% (Distillery)

6% (Brewery) 6% (Brewery)


(f) Descriptions of the PlanAssets


Corporate Bonds



Others

Total 100% 100%

The data with respect to experience adjustment and estimated exhausted gratuity and leave encashment liabilityfor next year has not been provided byActuary

The company has subscribed for 100% of share capital of BDL Distillery Pvt Ltd and Chennai Breweries Pvt Ltd.There is no diminution other than temporary in the value of these investments.

The company has not received any information from the suppliers as regards their status under the Micro, Smalland Medium Enterprises Development Act, 2006 and hence disclosure requirements in this regard as perSchedule –VI of the Companies Act, 1956, could not be provided. However, no interest has been accrued / paidduring the year to any of the suppliers.

Previous Year’s figures have been regrouped / reclassified wherever necessary to conform to the current Year’spresentation.

Particulars 2009-2010 2008-2009


27. INVESTMENT IN SUBSIDIARY COMPANIES :

28. MICRO, SMALLAND MEDIUM ENTERPRISES :

29.



P.A. REDDY & CO

P. ASHOK REDDY







V. KOTHANDARAMAN




1. REGISTRATION DETAILS

II CAPITAL RAISED DURING THE YEAR (Amount Rs. in Thousands)

III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (Amount Rs. in thousands)

IV PERFORMANCE OF THE COMPANY (Amount Rs. in thousands)

V GENERIC NAMES OF THREE PRINCIPAL PRODUCTS / SERVICES OF THE COMPANY(As per monetary terms)

Registration No. : L15520TN1983PLC055365 State Code

Balance Sheet Date

Public Issue Private Placement

Bonus Issue Rights Issue

Total Liabilities Total Assets

Sources of Funds

Paidup Capital Reserves & Surplus

Application of Funds

Net Fixed Assets Investments

Net Current Assets

Accumulated Losses

Turnover Total Expenditure

Profit / (Loss) Before Tax Profit / (Loss) After Tax

Earnings per Share (Rs.) Dividend Rate (%)(Weighted Annualised)

Item Code (ITC Code) Product / Service Description

(Warrants conversion into Equity)

Secured Loans Unsecured Loans

PART IVBALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE

2 2 0 8 2 0 0 1

2 2 0 8 3 0 0 0

2 2 0 3 0 0

N I L

N I L

3 0 9 1 2 0 0 3 0 9 1 2 0 0

9 0 0 0 0 0

9 8 1 0 2 4

N I L

1 5 1 9 0 0

6 9 1 0 6 7 5

(-) 5 3 5 7 2

N I L

1 4 3 0 1 7 6

N I L

1 8

3 1 0 3 2 0 1 0

L I Q U O R B R A N D Y

L I Q U O R W H I S K Y

B E E R

43

6 8 0 0 0 0

1 5 8 8 4 5 1

(-) 2 1 9 9 1 7 4

3 5 5 0 0 2 3

6 8 3 7 4 9 2

(-) 7 3 1 8 3

(-) 0 . 4 3



DirectorV. CHANDRASEKHARA REDDY G. SRIRAMAN

Company SecretaryS. NAGARAJAN

Chief Financial OfficerR. RAGHURAM

Managing Director

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2010


Rs.


Rs.

A. CASH FROM OPERATING ACTIVITIES:

Net Profit Before Tax and Extraordinary Items

Adjusted for:

Operating Profit Before Working Capital Changes 215,544,040

Adjusted for:

Cash Generated From Operations 738,839,949

--

Cash Flow Before Extraordinary Items 177,519,261 773,173,190

Net Cash From (Used) Operating Activities

B. CASH FLOW FROM INVESTING ACTIVITIES:

(281,355,323)

(200,546,252)


Interest and Other Finance Charges 353,145,086

Interest / Dividend Income (12,074,85 )

Foreign Exchange Fluctuation [Net] (389,860)

[Profit] / Loss on sale of Fixed Assets [Net] 2,281,298

[Profit] / Loss on sale of Investments [Net] – (10,384,639)

Wealth Tax Provision 435,775

Provision no longer required (445,000)

Trade Receivables 58,909,123

Trade Payables 549,140,186

Inventories (84,753,400)

Wealth Tax Paid (95,363)

34,428,604

Prior Period Adjustments – 103,385

Purchase of Fixed Assets (411,139,969)

Sale of Fixed Assets 282,994,674

Sale of Investments – --

Interest Received 61,515,788

Dividend Received --

Purchase of Investments (Net) (214,725,818)

(73,182,654)

96,404,953

274,696,016

(8,064,749) 1

(853)

489,867

380,075

(700,000)

(170,986,602)

87,757,004

(28,837,896)

(435,900)

Lease income and Charter Hire

(198,290,827)

400,647

8,260,898

(82,850,618)

290,022,654

177,955,160

Cash Flow Before Exceptional Items 177,519,261 738,744,586

177,519,261

(272,479,900)

773,276,575

44

C. CASH FLOW FROM FINANCING ACTIVITIES:

NET CASH FROM (USED IN) FINANCING ACTIVITIES 51,361,895 (729,566,317)

NET INCREASE/(DECREASE) INCASH AND CASH EQUIVALENTS [A+B+C] (43,598,745) (237,645,066)

CASH AND CASH EQUIVALENTS AS AT 31.03.09

Proceeds From Issue Of Share Capital 1,116,180,000 --

Redemption of Prefence shares (255,209,400) --

Proceeds From Borrowings (Net) (619,811,004) (493,391,733)

Repayment Of Finance Lease Liabilities -- --

Dividend Paid -- --

Non Trade Advances 700,000 –

Interest Paid (190,497,701) (236,174,584)

140,177,560 377,822,626


INCREASE / (DECREASE) IN CASH EQUIVALENTS (43,598,745) (237,645,066)

Particulars

Cash and cash equivalents, end of year 96,578,815 140,177,560

3) Components of cash and cash equivalents:


96,578,815 140,177,560

96,578,815 140,177,560

Notes:

1) The above cash flow statement has been prepared under the "Indirect Method" as set out in the AccountingStandard - 3 on Cash Flow Statements.

2) The reconciliation to the cash and bank balances as given in the Balance Sheet is as follows:

Cash and bank balances, per Schedule I 291,299,058 253,047,365

Less : Fixed deposits with maturity over 90 days 194,720,243 112,869,805

Cash on Hand 1,386,854 1,104,560

Cheques on Hand 1,664,928 98,007,266


Total



Rs.


Rs.



45



P.A. REDDY & CO

P. ASHOK REDDY







V. KOTHANDARAMAN




STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT,1956RELATING TO SUBSIDIARY COMPANIES

1. The Financial Year of the Company ends on:

2. Fully paid up shares held by Balaji Distilleries Ltd

in the Company

a) Number 1,50,00,000

b) Extent of holding

3. Changes in the interest of the company or the

subsidiary company between the end of financial year

of subsidiary company and 31st March, 2010.

4. Net aggregate of profit of the subsidiary company

so far as they concern the members of the company

a) Dealt with in the accounts of the Company for

the year ended 31st March 2010.

b) Not dealt with in the accounts of the Company

for the year ended 31st March 20 0.

5. Net aggregate of profit of the subsidiary company for

the previous financial years, so far as they concern the

members of the company

a) Dealt with in the accounts of the Company for

the year ended 31st March 20 0.

b) Not dealt with in the accounts of the Company

for the year ended 31st March 20 0.

6. Material changes between the end of the Financial Year

of the Subsidiary and the end of holding Company’s

Financial year ended 31st March, 2010 in respect of

a) Fixed Assets

b) Investments

c) Moneys lent by the Subsidiary Company

d) Moneys borrowed by the Subsidiary Companyother than for meeting Current Liabilities

BDL Distilleries Pvt. Ltd. Chennai Breweries Pvt. Ltd.

31st March 2010 31st March 2010

Does not arise Does not arise

Nil Nil

1,90,000

1

1

1

Equity Shares of Equity Shares ofRs.10/- each fully paid up Rs.10/- each fully paid up

100.00% 100.00%

Nil Nil

Nil Nil

Nil Nil

Does not arise Does not arise



DirectorV. CHANDRASEKHARA REDDY G. SRIRAMAN

Company SecretaryS. NAGARAJAN

Chief Financial OfficerR. RAGHURAM

Managing Director

46

SEVENTH ANNUAL REPORT 2009 - 2010

Board of Directors Shri S Nagarajan

Shri G Sriraman

Auditors M/s P.A. Reddy & Co.


Chennai - 600 017



Chennai - 600 004

Bankers ICICI Bank Limited

Registered Office Bye-pass Road

Poonamallee

Chennai 600 056

Tamilnadu

BDL DISTILLERIES PRIVATE LIMITED

47

Your Directors have pleasure in presenting the Seventh Annual Report together with the Audited Accounts of the

Company for the financial year ended 31st March, 2010.

Your Company was incorporated as a Subsidiary of the holding company and incurred an expenditure of

Rs.11,12,944/-. After brought forward loss of Rs.1,68,925/- from previous years, loss carried forward to the Balance

Sheet is Rs.12,81,869/- as on 31st March, 2010.

During the year your company has increased the authorised share capital from Rs.9 lakhs to Rs.20 crores and also

issued 1,00,018 equity shares of Rs.10/- each aggregating to Rs.10,00,180/- to the holding company viz., Balaji

Distilleries Limited.

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors’


(i) that in the preparation of the Annual Accounts for the financial year ended 31st March, 2010, the applicable

accounting standards had been followed along with proper explanations relating to material departures;

(ii) that the accounting policies implemented by the Company have been applied consistently, judgments and

estimates have been reasonable and prudent thereby giving a true and fair view of the state of affairs of the

Company at the end of

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in

accordance with the provisions of the CompaniesAct, 1956 for safeguarding the assets of the Company and for

preventing and detecting fraud and other irregularities;

(iv) that the annual accounts were prepared for the financial year ended 31st March, 2010 on a 'going concern'

basis.

There is no employee falling within the purview of Section 217 (2A) of the CompaniesAct, 1956.

SHARE CAPITAL



financial year and of the loss of the Company for the period under review;

Since the Company is yet to commence its operations, providing the details as required under the Companies

(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, does not arise.

As per the provisions of Section 383Aof the CompaniesAct, 1956 the Secretarial Compliance Certificate is annexed.

M/s P.A. Reddy & Co., Chartered Accountants and M/s RKF Sridhar & Santhanam, Chartered Accountants, Auditors

of the Company hold office until the conclusion of the Seventh Annual General Meeting and are eligible for

reappointment as referred in the Notice to the Share Holders.

The Directors wish to express their sincere thanks to the Bankers/Central Government/Government of Tamilnadu.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND

OUTGO

COMPLIANCE CERTIFICATE

AUDITORS

ACKNOWLEDGEMENT

DIRECTORS’ REPORT TO THE SHAREHOLDERS


By order of the Board

G.SRIRAMANDirector

S. NAGARAJANDirector


48


49

SECRETARIAL COMPLIANCE CERTIFICATE

CIN: U15511TN2003PTC051280Nominal Capital: Rs.20,00,00,000/=Paid up Capital: Rs.19,00,000/=

The MembersM/s. BDL DISTILLERIES PRIVATE LIMITEDBYE PASS ROAD,POONAMALLEE, CHENNAI 600 056.

We have examined the registers, records, books and papers of [theCompany] bearing its as required to be maintained under the CompaniesAct 1956{the Act} and the rules made there under and also the provisions contained in the Memorandum and Articles ofAssociation of the Company for the financial year ended on{financial year}. In our opinion and to the best of our information and according to the examination carried out by usand explanations furnished to us by the Company, its officers and agents, We certify that in respect of the aforesaidfinancial year:

1. The Company has kept and maintained the registers as stated in Annexure ‘A’ to this certificate, as per theprovisions of theAct and the rules made there under and the entries therein have been recorded.

2. The Company has filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar ofCompanies, Chennai (www.mca.gov.in) as prescribed under theAct and the rules made there under.

3. The Company, is a private limited company, has the minimum prescribed paid up share capital and itsmaximum number of members during the said financial year was Three (03) only and during the year underscrutiny has generally complied with the provisions of section 3(1)(iii) of theAct.

4. The Board of Directors met Five (05) times on 30-06-2009, 31-07-2009, 30-10-2009, 10-02-2010 and 26-03-2010 by giving notice to the board members of the Company and the proceedings are recorded and signed, in theMinutes Book maintained for the purpose.

5. The Company has not opted to close its Register of Members, during the period under scrutiny.

6. The Annual General Meeting for the financial year ended 31-03-2009 was held on 30-09-2009 by giving notice tothe members of the Company and the resolution passed thereat were recorded in the minute’s book maintainedfor this purpose.

7. One extra ordinary general meeting was held during the financial year under scrutiny on 15-03-2010 by givingnotice to the members of the Company and the resolutions passed thereat were recorded in the minute’s bookmaintained for this purpose.

8. The company being a private limited company the provisions of section 295 of theAct is not applicable.

9. The company had obtained the approvals of the board of directors for the transactions falling within the provisionsof Section 297 of theAct.

10. The company has made necessary entries in the register maintained under section 301 of theAct.

11. As there were no fresh instances falling within the preview of Section 314 of the Act, the Company had notobtained any from the board of directors/members of the company and Central Government.

12. The company has not issued any duplicate share certificates during the financial year.

13. i] The Company has delivered the certificates on the allotment of equity shares and during the year underreview, there was no transfer or transmission of shares.

[ii] & [iii] The Company has not declared any dividend during the year under report, hence comment on this parasare not required.

[iv] The Company was not required to transfer any amount to Investors Education and Protection Fund.

[v] The company has generally complied with the provisions of Section 217 of theAct.

14. The Board of Directors of the company is duly constituted. During the year under review there was noappointment ofAdditional,Alternative and Directors to fill casual vacancies during the financial year.

15. As the Company being a Private Company provisions of Section 269 of the Act with regard to theappointment/reappointment of the Managing Director/ Whole Time director/Manager are not applicable.

16. The company has not appointed any sole selling agents during the financial year under scrutiny.

M/s. BDL DISTILLERIES PRIVATE LIMITEDCIN U15511TN2003PTC051280

31st March, 2010 (01-04-2009 To 31-03-2010)


50

17. As explained to us, the Company has not had the circumstances to get necessary approvals of the CentralGovernment, Company Law Board, Regional Director, Registrar or such other authorities as prescribed underthe variome provisions of theAct.

18. The directors had disclosed their interest in other firms/companies to the Board of Directors pursuant to theprovisions of theAct and the rules made there under.

19. The company has issued and allotted 1,00,018 equity shares of Rs.10/- each during the financial year underscrutiny and complied with the provisions of theAct.

20. The company has not bought back any shares during the financial year under scrutiny.

21. The Company has no preference shares/debentures and hence the comments on the redemption of preferenceshares or debentures do not arise.

22. As explained to us there were no transactions necessitating the company to keep in abeyance the rights todividend, rights shares and bonus pending registration of transfer of shares.

23. As per the information furnished to us, the company has not invited/accepted any deposits falling within thepurview of section 58A/58AAduring the financial year under scrutiny.

24. The company being a private Company, the provisions of 293(1) (d) of theAct is not applicable.

25. The company being a private limited company the provisions of 372Aof theAct are not applicable.

26. The company has not altered the provisions of the Memorandum with respect to situation of the company'sregistered office from one State to another during the financial year under scrutiny.

27. The company has not altered the provisions of the Memorandum with respect to the objects of the companyduring the year under scrutiny.

28. The company has not altered the provisions of the Memorandum with respect to name of the company during theyear under scrutiny.

29. The company has altered the provisions of the Memorandum with respect to share capital of the company duringthe year under scrutiny and complied with the provisions of theAct.

30. The company has altered itsArticles ofAssociation during the financial year under scrutiny and complied with theprovisions of theAct.

31. As explained to us there was/were no prosecution initiated against or show cause notices received by thecompany and no fines or penalties or any other punishment was imposed on the company during the financialyear, for offences under theAct.

32. The company has not received any money as security deposits from its employees during the financial yearunder scrutiny.

33. As explained to us, the provision of section 418 of theAct is not applicable; being the company has not constitutedany Provident Fund.

ForCompany Secretary – in – Practice

ProprietorFCS 5626 CP 3288

V NAGARAJAN & CO.,

V NagarajanPlace : ChennaiDate: August 16, 2010

ANNEXURE - A TO SECRETARIAL COMPLIANCE CERTIFICATE

CIN: U15511TN2003PTC051280Nominal Capital: Rs.20,00,00,000/=Paid up Capital: Rs.19,00,000/=

S. No. Name of the Register Under Section

1 Register of Members 150

2 Register of Directors, MD and Secretary 303

3 Register of Directors Shareholding 307

4 Copies of theAnnual Returns etc., 159 / 163

5 Minutes of Board of Directors 193

6 Minutes Books of General Body of Shareholders 193

7 Books ofAccounts 209

8 Register of Contracts, Companies and firms in which the Directorsof the Company are interested 301

Forms and Returns as filed by the Company with the Registrar of Companies, Chennai (www.mca.gov.in) duringthe financial year ended 31st March, 2010.

S. No. Forms/Returns Filed under Section Date of filing Remarks

1

2

15.03.2010

4 Form 5 Filed U/s 94, 97 for the increase of the authorised 25.03.2010 Nilshare capital from Rs.9 lacs to Rs.20 crores at theEGM held on 15-03-2010

5 Form 2 Filed U/s 75, for the allotment of 1,00,018 equity 01.04.2010 Nilshares of Rs.10/- each on 26-03-2010

ANNEXURE - B TO SECRETARIAL COMPLIANCE CERTIFICATE

Form 23AC/ACA Filed u/s 220(1) for the year ended 31.03.2009 20.10.2009 Nil(Balance sheet)

Form 20B Filed u/s 159 for theAnnual General Meeting 06.11.2009 Nil(Annual Return) held on 30.09.2009

3. Form No. 23 Filed U/s 192, for the registration of resolutions 25.03.2010 Niland agreements for the resolutions passedat the EGM held on

ForCompany Secretary – in – Practice

ProprietorFCS 5626 CP 3288

V NAGARAJAN & CO.,

V NagarajanPlace : ChennaiDate: August 16, 2010


51

AUDITORS’ REPORT TO THE MEMBERS OFBDL DISTILLERIES PRIVATE LIMITED

1)

a

- In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010,

- In the case of the Profit and LossAccount, of the loss for the year ended on that date.

- In the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.

We have audited the attached Balance Sheet of BDL Distilleries Private Limited as at March 31, 2010, the Profit

and Loss account and the Cash Flow Statement of the Company for the year ended on that date, annexed

thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to

express an opinion on these financial statements based on our audit.

2) We conducted our audit in accordance with auditing standards generally accepted in India. These standards






3) In this context, we report that :

) We have obtained all the information and explanations, which to the best of our knowledge and belief were

necessary for the purpose of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it

appears from our examination of those books.

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in

agreement with the books of account.

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this

Report are in compliance with the accounting standards referred to in Section 211(3C) of the CompaniesAct,

1956.




so appointed as Director of the Company;

f) This report does not include a statement on the matters specified in paragraph 4 of the Companies (Auditor’s

Report) Order 2003, issued by Department of Company Affairs, in terms of Section 227(4A) of the

CompaniesAct, 1956, since in our opinion and according to the information and explanations given to us, the

said order is not applicable to the Company.

g) In our opinion and to the best of our information and according to the explanations given to us, the said

accounts read together with the schedules and notes there on give the information required by the

CompaniesAct,1956, in the manner so required and

give a true and fair view in conformity with the accounting principles generally accepted in India :


52




P.A. REDDY & CO

P. ASHOK REDDY




V. KOTHANDARAMAN

SOURCES OF FUNDS

SHAREHOLDERS' FUNDS

A

Total

APPLICATION OF FUNDS

Current Assets, Loans & Advances

B

C

Net Current Assets

MISCELLANEOUS EXPENDITURE

PROFIT AND LOSS ACCOUNT - Debit Balance

Total 1,900,000

NOTES ON ACCOUNTS : E

Share Capital 1,900,000

Cash and Bank Balances 629,185

Less: Current Liabilities and Provisions

- Current Liabilities 44,124

- Provisions – –

585,061

33,070

1,281,869

899,820

739,879

42,054

697,825

33,070(to the extent not written off or adjusted)

168,925

1,900,000 899,820

899,820


Schedule 31.03.10 31.03.09


(Rs.) (Rs.)(Rs.) (Rs.)




P.A. REDDY & CO

P. ASHOK REDDY




V. KOTHANDARAMAN



Director

Director

S. NAGARAJAN

G. SRIRAMAN

53



As at 31.03.09(Rs.)

The schedules referred above, form part of the Accounts.This is the Profit and Loss Account referred to in our report of even date.

Income

Expenditure

D

- -

Overheads 1,112,944 33,008

Profit (Loss) )

Profit (Loss) brought forward from previous year (168,925) (135,917)

Loss carried forward to balance sheet (1,281,869) (168,925)

Basic Earning Per Share (12.15) (0.37)

Diluted Earning Per Share

1,112,944 33,008

for the year (1,112,944) (33,008

(12.15) (0.37)


54



P.A. REDDY & CO

P. ASHOK REDDY




V. KOTHANDARAMAN



Director

Director

S. NAGARAJAN

G. SRIRAMAN


AUTHORISED

900,000


20,000,000 (90,000) Equity Shares of Rs.10/- each 200,000,000 900,000

190,000 (89,982) Equity Shares of Rs.10/- each Fully paid up 1,900,000 899,820

200,000,000

1,900,000 899,820

SCHEDULE B : CASH AND BANK BALANCES

ON CURRENT ACCOUNT IN SCHEDULED BANKS

629,185 739,879

SCHEDULE C : CURRENT LIABILITIES

44,124 42,054

(All the above shares are held by Balaji Distilleries Limited and its nominees)

ICICI Bank Ltd 629,185 739,879

Outstanding Liabilities 44,124 42,054


As at 31.03.10(Rs.)

As at 31.03.09(Rs.)


SCHEDULE D : OVERHEADS

1,112,944 33,008

Audit Fees 26,472 26,472

Bank Charges 110 112

Certification Charges 2,250 4,224

General Charges -- --

Rates and Taxes 1,084,112 2,200



(Rs.)


(Rs.)

55

SCHEDULE E : NOTES ONACCOUNTS

1. ACCOUNTING POLICIES

i) Basis ofAccounting

(ii) Deferred Revenue Expenditure

2.


a) LIST OF RELATED PARTIESAND RELATIONSHIPS

S.No. Party

(A) Holding Company

(B) Key Management Personnel

b) RELATED PARTY TRANSACTIONS - NIL

4. EARNING PER SHARE (EPS):

2009-10 2008-09Rs. Rs.

5. REMUNERATION TO STATUTORYAUDITORS:

2009-10 2008-09

Rs. Rs.

Financial statements are prepared as a going concern on accrual basis under the historical cost convention


Preliminary expenses will be written off over a period of 10 years in equal installments from the year in

which the company begins commercial operation.

The company was incorporated in 2003 - 04 and there are no manufacturing or trading operations during the year

under review.

1. Balaji Distilleries Ltd.

1. S. Nagarajan

2. G. Sriraman

Profit (Loss) after Tax attributable to ordinary Shareholders (11,12,944) 94,720,544

WeightedAverage of Equity Share of Rs. 10 each 91,626 89,982

Basic EPS (12.15) (0.37)

Diluted EPS (12.15) (0.37)

i. StatutoryAudit Fee 26,472 26,472



56



P.A. REDDY & CO

P. ASHOK REDDY




V. KOTHANDARAMAN



Director

Director

S. NAGARAJAN

G. SRIRAMAN




Sources of Funds




Registration No. : U15511TN2003PTC051280 State Code

Balance Sheet Date

Public Issue

Bonus Issue





Net Current Assets Misc. Expenditure

Accumulated Losses



Earnings per Share (Rs.) Dividend Rate (%)


Private Placement

Rights IssueExisting Share Holders

N A

N I L

1 9 0 0

1 9 0 0

1 2 8 2

5 8 5

N I L

N I L

1 9 0 0

N I L

N I L

N I L

N I L

(-) 1 1 1 3

(-) 1 2 . 1 5

3 3

1 1 1 3

(-) 1 1 1 3

1 0 0 0

N I L

N I L

N I L

1 8

3 1 0 3 2 0 1 0

N A

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE




G. SRIRAMANDirector


57


58



Rs.


Rs.

CASH FROM OPERATING ACTIVITIES:

Operating Profit Before Working Capital Changes

Adjusted for:

Cash Generated From Operations (1,110,874) (220,020)


CASH FLOW FROM INVESTING ACTIVITIES: (B)

(A)

(1,112,944) (33,008)

(1,110,874) (220,020)

CASH FLOW FROM FINANCING ACTIVITIES: (C)

1,000,180 791,820

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (110,694) 571,800

Cash and cash equivalent as on 31.03.10 629,185 739,879

Cash and cash equivalent as on 31.03.09 739,879 168,079

(110,694) 571,800

Net Profit Before Tax and Extraordinary Items (33,008)

Trade Receivables

Trade Payables

Paid

Purchase

(1,112,944)

– --

2,070 (187,012)

Interest – --

/ Sale of Assets – –

– –

Proceeds from Share application money – –

Proceeds from Share Capital 1,000,180 791,820

Notes:





Director

Director

S. NAGARAJAN

G. SRIRAMAN



P.A. REDDY & CO

P. ASHOK REDDY




V. KOTHANDARAMAN

SEVENTH ANNUAL REPORT 2009 - 2010

Board of Directors Shri S Nagarajan

Auditors M/s P.A. Reddy & Co.


Chennai - 600 017



Chennai - 600 004

Bankers ICICI Bank Limited

Bank of Baroda

Standard Chartered Bank

Registered Office

Shri M Satesh Kumaar

Mount Tiruvallur High RoadAranvoyal VillageTiruvallur District 602 025Tamilnadu

CHENNAI BREWERIES PRIVATE LIMITED

59

Your Directors have pleasure in presenting the Seventh Annual Report together with the Audited Accounts of the

Company for the financial year ended 31st March, 2010.

Your Company was incorporated as a Subsidiary of the holding company and incurred an expenditure of

Rs.8,41,105/-. After brought forward loss of Rs.9.95,687/- from previous years, loss carried forward to the Balance

Sheet is Rs.18,36,791/- as on 31st March, 2010.

During the year your company has increased the authorised share capital from Rs.15 crores to Rs.30 crores.

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors’


(i) that in the preparation of the Annual Accounts for the financial year ended 31st March, 2010, the applicable

accounting standards had been followed along with proper explanations relating to material departures;

(ii) that the accounting policies implemented by the Company have been applied consistently, judgments and

estimates have been reasonable and prudent thereby giving a true and fair view of the state of affairs of the

Company at the end of the

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in

accordance with the provisions of the CompaniesAct, 1956 for safeguarding the assets of the Company and for

preventing and detecting fraud and other irregularities;

(iv) that the annual accounts were prepared for financial year ended 31st March, 2010 on a 'going concern' basis.

There is no employee falling within the purview of Section 217 (2A) of the CompaniesAct, 1956.

Since the Company is yet to commence its operations, providing the details as required under the Companies

(Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, does not arise.

The Directors wish to express their sincere thanks to the Bankers/Central Government/Government of Tamilnadu.

SHARE CAPITAL



CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND

OUTGO

AUDITORS

ACKNOWLEDGEMENT

of financial year and of the loss of the Company for the period under review;

M/s P.A. Reddy & Co., Chartered Accountants and M/s PKF Sridhar & Santhanam, Chartered Accountants, Auditors

of the Company hold office until the conclusion of the Seventh Annual General Meeting and are eligible for

reappointment as referred in the Notice to the Share Holders.

With regard to the observation of the Auditors in their report, the Board of Directors wish to state that, since the

Company is yet to commence its commercial operations the establishment of InternalAudit System does not arise.

DIRECTORS’ REPORT TO THE SHAREHOLDERS


By order of the Board

M SATESH KUMAARDirector



60

AUDITORS’ REPORT TO THE MEMBERS OFCHENNAI BREWERIES PRIVATE LIMITED

1)

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it

appears from our examination of those books.

c) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in

agreement with the books of account.

d) In our opinion, the Balance Sheet, Profit and LossAccount and Cash Flow Statement dealt with by this Report

are in compliance with the accounting standards referred to in Section 211(3C) of the CompaniesAct, 1956.




so appointed as Director of the Company.

f) In our opinion and to the best of our information and according to the explanations given to us, the said

accounts read together with the schedules and notes thereon give the information required by the

CompaniesAct,1956, in the manner so required and

give a true and fair view in conformity with the accounting principles generally accepted in India :

-

We have audited the attached Balance Sheet of Chennai Breweries Private Limited as at March 31, 2010, the

Profit and Loss account and Cash Flow Statement of the Company for the year ended on that date, annexed

thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to

express an opinion on these financial statements based on our audit.







3) As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of

section 227(4A) of the CompaniesAct, 1956, we enclose in theAnnexure, a statement on the matters specified in

paragraphs 4 and 5 of the said Order.

4) Further to our comments in the annexure referred to in paragraph 3 above, we report that:

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were

necessary for the purpose of our audit.

In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2010,

- In the case of the Profit and LossAccount, of the loss for the year ended on that date.

- In the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date.


61




P.A. REDDY & CO

P. ASHOK REDDY




V. KOTHANDARAMAN


62

ANNEXURE TO THE AUDITORS’ REPORT OFCHENNAI BREWERIES PRIVATE LIMITED

[Referred to in paragraph 3 of our report of even date]

Based on the information and explanation furnished to us and the books and records examined by us in the normal

course of our audit, we report that to the best of our knowledge and belief:

i. In respect of Fixed Assets, the Company does not own any fixed assets and hence, provisions of clause 4 (i) of

the Order are not applicable to the Company.

ii. In respect of inventory, since the Company has not commenced with commercial operations and there being no

inventory, the provisions of clause 4 (ii) of the Order are not applicable to the Company.

iii. In respect of loans, secured or unsecured, granted or taken by the Company, to / from Companies, firms or other

parties covered in the register maintained under section 301 of the Companies Act, 1956 the Company has not

granted or taken any loan.

iv. In respect of Internal control procedures, there are adequate Internal Control Systems commensurate with the

size of the Company and the nature of its business. Since the Company has not commenced with commercial

operations, company has not purchased any inventory and fixed assets or sold any goods and services. Further,

on the basis of our examination of the books and records of the Company, and according to the information and

explanations given to us, we have neither come across nor have been informed of any continuing failure to

correct major weaknesses in the aforesaid internal control system.

v. In respect of transactions that need to be entered into a register in pursuance of section 301 of the CompaniesAct

a. Particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956, have been

entered in the Register required to be maintained under that section

b. There are no such transactions, which are in excess of Rs 5 lakhs in respect of any party.

vi. In respect of public deposits, the Company has not accepted any deposits from the public within the meaning of

section 58A and 58AA of the Companies Act, 1956 and the Companies (Acceptance of deposits) Rules, 1975

and therefore the provisions of paragraph 4(vi) of the Order are not applicable to the Company.

vii. In respect of internal audit system, in our opinion,

viii. In respect of cost records, according to the information and explanations given to us, the Central Government

has not prescribed maintenance of cost records under section 209(1)(d) of the Companies Act, 1956, for any of

the products of the Company and therefore the provisions of paragraph 4(viii) of the Order are not applicable to

the company.

ix. In respect of statutory dues, since the Company has not commenced its operations, there is no liability with

regard to statutory dues and hence, the provisions of clause 4 (ix) of the Order are not applicable to the Company.

x. In respect of losses, the accumulated losses of the company as at March 31, 2010 are not in excess of 50% of the

networth. The company has incurred cash loss during the year ended on that date and in the immediately

preceding year.

xi. The Company does not have any dues to financial institutions, banks and/or debenture holders, hence, the

provisions of paragraph 4 (xi) of the Order are not applicable to the Company.

xii. In respect of loans on the basis of security by way of pledge of shares, debentures and other securities, the

company has not granted any loans and advances on the basis of security by way of pledge of shares,

debentures and other securities. Hence, the provisions of paragraph 4 (xii) of the Order are not applicable to the

Company.

xiii. In respect of applicability of any special statutes, the company is not a chit fund or nidhi/mutual benefit

fund/society. Hence, the provisions of clause4 (xiii) of the Order are not applicable to the Company.

xiv. In respect of dealing in shares, securities, debentures and other investments, the Company is not dealing in or

trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4 (xiv) of

the Order are not applicable to the Company.

the company does not have internal audit system

commensurate with its size and nature of its business.


63

xv. In respect of guarantees by the Company for the loan taken by others from banks or financial institutions, the

Company has given no such guarantees, hence, the provisions of clause 4 (xv) of the Order are not applicable to

the Company.

xvi. In respect of utilization of term loans, the Company has not availed any term loan and hence, the provisions of

clause 4 (xvi) of the Order are not applicable to the Company.

xvii. The Company has not raised any funds on short term basis and hence, the provision of clause 4 (xvii) of the Order

are not applicable to the Company.

xviii. In respect of preferential allotment of shares, according to the information and explanations given to us, during

the period covered by our audit report, the Company has not made preferential allotment of shares to parties and

companies covered in the register maintained under section 301 of the CompaniesAct, 1956.

xix. In respect of issue of debentures, according to the information and explanations given to us, the Company has

not issued any debentures during the year nor are any debentures outstanding at the end of the accounting year.

xx. In respect of public issues, the Company is a private company, hence the matters to be reported as per

paragraph 4(xx) of the Order are not applicable to the Company.

xxi. In respect of frauds, in our opinion and according to the information and explanations given to us, no material

fraud on or by the Company has been noticed or reported during the course of our audit.




P.A. REDDY & CO

P. ASHOK REDDY




V. KOTHANDARAMAN

SOURCES OF FUNDS

SHAREHOLDERS' FUNDS

A

B

Total 217,042,093

APPLICATION OF FUNDS

Current Assets, Loans & Advances

C

D

E

Net Current Assets

MISCELLANEOUS EXPENDITURE

PROFIT AND LOSS ACCOUNT - Debit Balance

Total

NOTES ON ACCOUNTS G

Share Capital 150,000,000 150,000,000

Unsecured Loan from Holding Company 67,042,093 --

Loans and advances 115,000,000

Cash and Bank Balances 100,198,784 33,997,795

215,198,784 148,997,795

Less: Current Liabilities and Provisions

- Current Liabilities

- Provisions – –

32,990 32,990(To the extent not written off or adjusted)

1,836,791 995,687

150,000,000

217,042,093 150,000,000

115,000,000

26,472 26,472

215,172,312 148,971,323


Schedule 31.03.10 31.03.09


(Rs.) (Rs.)(Rs.) (Rs.)



P.A. REDDY & CO

P. ASHOK REDDY




V. KOTHANDARAMAN



Director

Director

S. NAGARAJAN

M. SATESH KUMAAR


64



P.A. REDDY & CO

P. ASHOK REDDY




V. KOTHANDARAMAN



Director

Director

S. NAGARAJAN

M. SATESH KUMAAR

Income from operations - -

Overheads

Profit (Loss)

Profit (Loss) brought forward from previous year

Loss carried forward to balance sheet

Expenditure

F 841,104 875,133

for the year (841,104) (875,133)

s (995,687) (120,554)

(1,836,791) (995,687)

Basic Earning Per Share (0.06) (0.06)

Diluted Earning Per Share (0.06) (0.06)



As at 31.03.09(Rs.)



65


AUTHORISED


, 0,00,000 ( ) Equity Shares of Rs.10/- each 150,000,0003 0 1,50,00,000 300,000,000

1,50,00,000 (1,50,00,000) Equity Shares of Rs.10/- each Fully paid up 150,000,000 150,000,000

Balaji Distilleries Limited 67,042,093 –

UNSECURED AND CONSIDERED GOOD

Advance purchase consideration for purchase of brewery 115,000,000 115,000,000

Petty Cash 5,773 2,721

ICICI Bank Ltd 41,030 885,131

Bank of Baroda - Current A/c 100,151,981 33,109,943

Outstanding Liabilities 26,472 26,472

300,000,000 150,000,000

150,000,000 150,000,000

SCHEDULE B : UNSECURED LOAN FROM HOLDING COMPANY

67,042,093

SCHEDULE C : LOANS AND ADVANCES

115,000,000 115,000,000

SCHEDULE D : CASH AND BANK BALANCES

ON CURRENT ACCOUNT IN SCHEDULED BANKS

100,198,784 33,997,795

SCHEDULE E : CURRENT LIABILITIES

26,472 26,472

(All the above shares are held by Balaji Distilleries Limited and its nominees)


As at 31.03.10(Rs.)

As at 31.03.09(Rs.)


SCHEDULE F : OVERHEADS

841,104 875,133

Audit fees 26,472 26,472

Rates and Taxes 783,867 843,491

Bank charges 192 2,170

General Charges – --

Certification Fee 12,250 3,000

Printing and Stationery 17,315 --

Donation 1,008 --


66


(Rs.)


(Rs.)

SCHEDULE G : NOTES ONACCOUNTS

1. ACCOUNTING POLICIES

(i) Basis ofAccounting

(ii) Deferred Revenue Expenditure

2.

3. REMUNERATION TO STATUTORYAUDITORS:

2009-10 2008-09

Rs. Rs.



S.No. Party

(A) Holding Company


5. RELATED PARTY TRANSACTIONS:

2009-10 2008-09Rs. Rs.

Particulars Holding Company Holding Company

Financial statements are prepared as a going concern on accrual basis under the historical cost convention


Preliminary expenses will be written off over a period of 10 years in equal installments from the year in which

the company begins commercial operation.

The company was incorporated in 2003-04 and there are no manufacturing or trading operations during the year

under review.

i. StatutoryAudit Fee 26,472 26,472

1. Balaji Distilleries Ltd.

1. S. Nagarajan

2. M. Satesh Kumaar

Advance (Net) 4,79,57,907 11,50,00,000



67



Director

Director

S. NAGARAJAN

M. SATESH KUMAAR



P.A. REDDY & CO

P. ASHOK REDDY




V. KOTHANDARAMAN




Sources of Funds




Registration No. : U15531TN2003PTC051279 State Code

Balance Sheet Date

Public Issue

Bonus Issue




Net Current Assets Misc. Expenditure

Accumulated Losses



Earnings per Share (Rs.) Dividend Rate (%)


Private Placement

Rights Issue


N I L N I L

N I L

N I L N I L

2 1 7 0 4 2

1 5 0 0 0 0

2 1 7 0 4 2

6 7 0 4 2

1 8

3 1 0 3 2 0 1 0

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE




M. SATESH KUMAARDirector


68

N A

N I L

N I L

N I L

2 1 5 1 7 2

(-) 8 4 1

(-) 0 . 0 6

(-) 8 4 1

1 8 3 7

3 3

N I L

N I L

8 4 1

N A


69



Rs.


Rs.

CASH FROM OPERATING ACTIVITIES:

Operating Profit Before Working Capital Changes

Adjusted for:

Cash Generated From Operations (841,104) (116,077,727)


CASH FLOW FROM INVESTING ACTIVITIES: (B)

(A)

(841,104) (875,133)

(841,104) (116,077,727)

CASH FLOW FROM FINANCING ACTIVITIES: (C)

67,042,093 149,892,000

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 66,200,989 33,814,274

Cash and cash equivalent as on 31.03.10 100,198,784 33,997,795

Cash and cash equivalent as on 31.03.09 33,997,795 183,521

66,200,989 33,814,274

Net Profit Before Tax and Extraordinary Items (875,133)

Trade Receivables

Trade Payables

Paid

Purchase Assets

(841,104)

– (115,000,000)

-- (202,594)

Interest – --

/ Sale – –

– –

Proceeds from Borrowings 67,042,093 –

Proceeds from Share Capital -- 149,892,000

Notes:





Director

Director

S. NAGARAJAN

M. SATESH KUMAAR



P.A. REDDY & CO

P. ASHOK REDDY




V. KOTHANDARAMAN

AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTSTO THE BOARD OF DIRECTORS OF BALAJI DISTILLERIES LIMITED AND ITS

SUBSIDIARIES

1) We have audited the attached Consolidated Balance Sheet of Balaji Distilleries Ltd (the company) and its

subsidiaries, BDL Distilleries P Ltd and Chennai Breweries P Ltd (collectively called “The Balaji Group”) as at

March 31, 2010, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the

year ended on that date, annexed thereto. These financial statements are the responsibility of the company’s

management. Our responsibility is to express an opinion on these financial statements based on our audit.







3) We report that the Consolidated Financial Statements have been prepared by the company’s management in

accordance with the requirements of Accounting Standard 21- Consolidated Financial Statements, as mandated

by Companies (Accounting Standards) Rules 2006 and on the basis of separate audited financial statements of

the company and its subsidiaries included in the Consolidated Financial Statements.

4) Though the company has been declared as a Sick Industrial Undertaking, referred to BIFR and has negative

networth, in view of settlement of most of its term liabilities successfully through One Time Settlement (OTS) and

after considering improved operation and the Company’s business plans, the Balaji Group accounts are prepared

as a going concern.

5) Without qualifying our opinion, we draw your attention to Para number 13 of Schedule U to the Consolidated

Balance Sheet. In distillery division, the company has changed to weighted average method for valuing raw

materials, packing materials and stores and spares as against FIFO method followed last year. Given the

magnitude of the transactions, the Management is unable to quantify the impact due to change in accounting

policy.

Based on our audit of the company and its subsidiaries and to the best of our information and according to the

explanations given to us, we are of the opinion that the attached consolidated financial statements, give a true

and fair view in conformity with the accounting principles generally accepted in India :

- In the case of the Consolidated Balance Sheet, of the state of affairs of the Balaji Group as at March 31,

2010,

- In the case of Consolidated Profit and LossAccount, of the loss for the year ended on that date, and

- In the case of the Consolidated Cash Flow Statement, of the Cash Flows for the year ended on that date.

70





V. KOTHANDARAMAN

31, 2010



P.A. REDDY & CO

P. ASHOK REDDY

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2010

71

SOURCES OF FUNDS

1. SHAREHOLDERS' FUNDS

A

B

2. SHARE WARRANTALLOTMENT MONEY

3. LOAN FUNDS

C

D

Total 2,893,339,217APPLICATION OF FUNDS

1. FIXEDASSETS

E

2. INVESTMENTS F

3. CURRENTASSETS, LOANSANDADVANCES

G

H

I

J

K

5. PROFITAND LOSSACCOUNT (Net) T

Total 2,893,339,217NOTES ONACCOUNTS U

a) Capital 1,126,384,600

b) Reserves and Surplus 299,824,327

` – 124,020,000

a) Secured Loans 1,005,033,007

b) Unsecured Loans -- 338,077,283

a) Gross Block 1,561,224,255

b) Less : Depreciation 429,876,253

c) Net Block 1,131,348,002

d) Capital Work-in-progress 375,670,438

-- –

a) Inventories 343,406,529

b) Sundry Debtors 338,389,360

c) Cash and Bank Balances 287,785,039

d) Loans and Advances 119,007,429

1,088,588,357Less: Current Liabilities and Provisions

- Current Liabilities 3,189,239,685

- Provisions 10,709,701

Net CurrentAssets (2,111,361,029)

3,497,615,746

1,430,175,600

981,023,927

680,000,000

2,111,189,855

524,166,473

1,587,023,382

1,427,385

372,244,425

488,170,509

392,127,030

140,016,734

1,392,558,698

3,432,077,566

10,940,306

(2,050,459,174)

66,060 66,060(To the extent not written off or adjusted)

3,553,141,874

3,091,199,527

4. MISCELLANEOUS EXPENDITURE

3,091,199,527


As at 31.03.09(Rs.)




P.A. REDDY & CO

P. ASHOK REDDY







V. KOTHANDARAMAN




CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED MARCH 31, 2010

72

INCOME

L

M

N

Total 6,845,068,800

EXPENDITURE

O

P

Q

R

E

Total 7,046,523,192

S

T

NOTES ONACCOUNTS U

Income from Operations

Gross Income 21,994,444,595 21,964,056,943

Less : TN Vat 8,073,909,500 8,062,754,974

Less: Excise Duty 7,151,053,134 7,168,709,580

Net Income 6,732,592,389

Other Income 48,658,924

Variation In Stocks 63,817,487

Materials 4,238,100,511

Personnel 168,738,267

Overheads 2,203,014,564

Finance Charges 353,147,368


Profit / (Loss) for the year before ExceptionalItems and Prior period adjustments (201,454,392)

Exceptional Items 314,709,203

Loss for the year beforePrior period adjustments 113,254,811

Prior PeriodAdjustments – 103,385


Provision for Income Tax Earlier Years -- 1,352,305

Provision for Fringe benefit tax – 18,193,487

Profit/(Loss) after tax 93,812,404

Deficit brought forwardfrom previous years (4,100,309,620)

Deficit carried forward to Balance Sheet (4,006,497,216)

Basi Earning Per Share 0.76

6,769,481,961

48,571,136

19,439,259

4,171,719,559

173,086,073

2,196,722,155

274,696,319

96,404,953

(75,136,703)

19,610,575

Profit / ( )(55,526,128)

(55,526,128)

(55,526,128)

(4,006,497,216)

(4,062,023,344)

c (0.45)

Diluted Earning Per Share (0.45) 0.72

6,837,492,356

6,912,629,059

Schedule For the year ended31.03.10



(Rs.) (Rs.)(Rs.) (Rs.)



P.A. REDDY & CO

P. ASHOK REDDY







V. KOTHANDARAMAN




SCHEDULES FORMING PART OF THECONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2010

73

As at 31.03.09(Rs.)

As at 31.03.10(Rs.)


AUTHORISED


340,999,600 - -

100,000,000 100,000,000

540,024,327 199,824,327

Total (a + b + c + d) 981,023,927 299,824,327

1 ,00,00,000 ( ,00,00,000) Equity Shares

530,175,600Fully Paid up (Refer Note 2 of Schedule U) (Of the above shares2,05,08,780 were allotted as bonus shares of Rs.10 each by wayof Capitalisation of Securities Premium of Rs.11,50,87,800and General Reserve of Rs.9,00,00,000 and 2,35,08,780Shares were allotted on conversion of debentures issued / loansborrowed)

Nil (4,46,20,900) - 6% Optionally Convertible Cumulative -- 446,209,000

a) Capital Reserves

- Opening Balance - - - -

-Add :Additions (Refer Note 3 of Schedule U) 340,999,600 - -

- Less : Deletions - - - -

b) Capital Redemption Reserve 100,000,000 100,000,000

c) Securities Premium

- Opening Balance 199,824,327 199,824,327

- Add :Additions 340,200,000 - -

- Less : Deletions - - --

d) General Reserve

As Per Last Balance Sheet 508,881,470 508,881,470

508,881,470 508,881,470

5 15of Rs.10/- each 1,500,000,000 1,500,000,000

7,50,00,000 (7,50,00,000) Preference Shares of Rs.10/- each 750,000,000 750,000,000

14,30,17,560 (5,30,17,560) Equity Shares of Rs.10/- each 1,430,175,600

Redeemable Preference Shares of Rs.10/- each (Repayable in36 monthly instalments commencing from April 2015, theentire Optionally Convertible Cumulative RedeemablePreference Shares were alloted on part conversion of loans)(Refer Note 3 of Schedule U)

Nil (1,50,00,000)12.5% Cumulative Redeemable Preference -- 150,000,000Shares of Rs.10/- each (Redeemable at par in three equal annualinstalments commencing from December 2001) (Refer Note 3 ofSchedule U)

2,250,000,000 2,250,000,000

Total 1,430,175,600 1,126,384,600

SCHEDULE B : RESERVESAND SURPLUS

Less: Deducted from Debit balance in Profit and Loss account (Schedule T)

SCHEDULES FORMING PART OF THE CONSOLIDATEDBALANCE SHEET AS AT MARCH 31, 2010

74

As at 31.03.10(Rs.)

As at 31.03.09(Rs.)

SCHEDULE C : SECURED LOANS

FROM BANKS

RUPEE TERM LOAN

FROM CORPORATES

OTHER LOANS –

Total 1,005,033,007

680,000,000 935,000,000

70,033,007

Pari-passu first mortgage and charge on all the company'simmoveable and moveable properties (excluding current assets)both present and future.

Pari-passu first mortgage and charge on all the company'simmoveable and moveable properties (excluding currentassets) both present and future and first charge on currentassets of brewery division both present and future.

Inter Corporate Deposit - 335,000,000

Interest Accrued And Due - 3,077,283

680,000,000

SCHEDULE D : UNSECURED LOANS

FROM CORPORATES

Total - 338,077,283

75

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76

As at 31.03.10(Rs.)

As at 31.03.09(Rs.)

SCHEDULE F : INVESTMENTS

LONG TERM INVESTMENTS – --

Total -- --

Aggregate Net Asset Value of Mutual Fund Investments

Aggregate value of unquoted Investments

(at cost less provision for other than temporary dimunition in the value)

– --

Aggregate Market Value of quoted Investments

Purchase during the year

Sales / Redemption during the year

SCHEDULE G : INVENTORIES

Total 372,244,425 343,406,529

SCHEDULE H : SUNDRY DEBTORS

Total 488,170,509 338,389,360

-- --

-- --

Prudential ICICI Liquid Super Institutional Growth Plan FundNil (21,79,53,104) Units -- 2,618,000,000

Prudential ICICI Liquid Super Institutional Growth Plan FundNil (23,12,34,957) Units – 2,775,657,086



Nil (10,000) Equity Shares of Rs.10/- each in -- 442,000

[at lower of cost and net realisable value]

[As certified by management]

Fuel Oil 3,852,147 1,667,665

Raw Materials 104,943,461 87,958,392

Packing Materials 63,195,411 78,468,459

Stores & Spares 57,440,199 51,938,065

Finished Goods 84,911,199 73,068,146

Work-in-Process 59,909,529 52,313,323

374,251,946 345,414,050

Less : Provision for obsolete stock 2,007,521 2,007,521

Unsecured:Debts outstanding for more than six months

Considered good 4,729,419 9,806,520

Considered doubtful 1,755,400 1,755,400

6,484,819 11,561,920

Other Debts

Considered good 483,441,090 328,582,840

489,925,909 340,144,760

Less : Provision for Doubtful debts 1,755,400 1,755,400

United Spirits Ltd

Balaji Industrial Corporation Ltd

Balaji Hotels and Enterprises Ltd


77

As at 31.03.10(Rs.)

As at 31.03.09(Rs.)

SCHEDULE I : CASH AND BANK BALANCES


Total 392,127,030 287,785,039

SCHEDULE J : LOANS, ADVANCES AND DEPOSITS

Total 140,016,734 119,007,429

Cash on Hand 1,392,627 1,107,281

Cheques on Hand 1,664,928 98,007,266


In Deposit Account 194,720,243 112,869,805

Loans (Unsecured and Considered good):

To Others -- --

Advances recoverable in cash or kind or for value to be received

(Unsecured)

Considered good : 98,013,560 84,847,149

Advance Leave Encashment / Gratuity with LIC 3,191,296 3,524,420

Considered doubtful 2,038,762,660 2,039,462,660

Income Tax (net of provision) 23,303,607 12,981,171

Deposits 15,508,271 17,654,689

2,178,779,394 2,158,470,089

Less : Provision for doubtful advances 2,038,762,660 2,039,462,660

SCHEDULE K : CURRENT LIABILITIES AND PROVISIONS1. CURRENT LIABILITIES

Total 3,432,077,566 3,189,239,685

2. PROVISIONS

Total 10,940,306 10,709,701

Total [1+2] 3,443,017,872 3,199,949,386

SCHEDULE T : PROFIT AND LOSS ACCOUNT

Total 3,553,141,874 3,497,615,746

Sundry Creditors

- Dues to Small & Micro Enterprises – –

- Others

- For Materials 236,238,738 302,693,181

- For Capital Goods 8,110,363 27,673,336

- For Others 3,187,728,465 2,858,873,168

Employee Benefits 10,560,231 9,270,194

Provision for Gratuity – 1,003,732

Wealth Tax 380,075 435,775

Deficit in Profit and Loss Account 4,062,023,344 4,006,497,216

Less : General Reserve (As per schedule B) 508,881,470 508,881,470

SCHEDULES FORMING PART OF THE CONSOLIDATEDPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010

78


(Rs.)


(Rs.)

SCHEDULE L : INCOME FROM OPERATIONS

Total 6,732,592,389

Total

Closing Stocks

Less : Opening Stocks

Total 63,817,487

Net Sales

- IMFL 4,946,757,303

- Beer 1,785,835,086

Scrap Sales 10,580,031

Interest on others

Profit on sale of Current Investments – 10,384,639

Profit on sale of assets 209,448

Difference in Exchange 389,860

Trade liabilities written back – 3,499,969

Provisions no longer required --

Sale of Spent Malt 9,152,896

Miscellaneous 2,367,231



Finished Goods

Work-in-Process

4,769,570,273

1,999,911,688

15,571,400

[TDS Rs.713,987 (2,577,732)] 8,064,749 12,074,850

88,229

853

770,174

23,160,081

915,650

84,911,199

59,909,529

73,068,146 20,797,388

52,313,323 40,766,594

166,426,851 157,315,617

4,173,431,580 4,247,211,745

4,339,858,431 4,404,527,362

168,138,872 166,426,851

Salaries, Wages and Bonus 139,143,010 139,609,032

Contribution to PF and Other Funds 15,287,663 13,904,713

Staff Welfare & Career Development 18,655,400 15,224,522

6,769,481,961

SCHEDULE M : OTHER INCOME

48,571,136 48,658,924

SCHEDULE N : VARIANCE IN STOCKS

19,439,259

SCHEDULE O : MATERIALS

[CONSUMPTION OF GOODS AND MATERIALS]

Opening Stock

Add: Purchases

Less: Closing Stock

Total 4,171,719,559 4,238,100,511

SCHEDULE P : PERSONNEL

Total 173,086,073 168,738,267

SCHEDULES FORMING PART OF THE CONSOLIDATEDPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2010

79


(Rs.)


(Rs.)

SCHEDULE Q : OVERHEADSFACTORY

REPAIRS AND MAINTENANCE

Total [a] 409,684,378 460,018,994

1,722,802,378

SCHEDULE S : EXCEPTIONAL ITEMS

19,610,575 314,709,203

Power and Fuel 293,567,186 294,334,471Consumables 34,079,367 23,144,682

- Building 12,356,298 20,814,309- Machinery 48,189,830 64,087,277- Others 4,931,539 5,744,108Provision for Obsolte Stock – 2,007,521Insurance 6,702,247 5,178,012Excise Duty - on opening and closing stock (Net) 9,857,911 36,948,478Extra Excise Duty – 7,760,136

167,726,355427,966,462253,938,693873,170,868

Waiver of Dues by lenders 19,610,575 22,498,473Provision for doubtful advances -- (12,000,000)Provision for doubtful advances no longer required written back -- 79,411,532Relinquishment of rights of assets to RSEB -- 162,702,899Lease income from RSEB (TDS Rs.11,073,420/-) -- 16,727,013Interest income from RSEB -- 48,867,695Poompuhar Shipping Corporation - Charter Hire (TDS Rs.401,177/-) -- 17,701,591Share of settlement of Corporate Guarantee -- (21,200,000)

ADMINISTRATION

Total [b] 64,235,399 55,931,401

SELLING

Total [c] 1,687,064,169

Total [a+b+c] 2,196,722,155 2,203,014,564

SCHEDULE R : FINANCE

Total 274,696,319 353,147,368

Rent 3,845,321 3,896,465Rates and Taxes 8,744,487 6,125,242Printing and Stationery 2,303,229 2,015,793Travelling and Conveyance 2,533,901 2,345,506Communication Expenses 2,341,610 2,036,458Vehicle Maintenance 10,656,757 10,851,227Remuneration to Directors 2,797,500 2,437,500Sitting Fees 40,000 35,000Audit Fees and Expenses 2,235,990 2,289,383Professional Charges 12,466,978 11,242,845Donations 34,013 26,200Excise Establishment 11,123,469 6,938,480Loss on Sale of Assets 578,096 2,490,746General Expenses 4,153,848 2,243,064Bad advances writtenoff - 521,717Wealth Tax 380,200 435,775

Cash Discount 168,337,417Other Selling Expenses 400,616,646Freight and Handling 219,566,916Payment to Brand Owners 898,543,190

Interest - Fixed Loans 145,506,407 169,527,236Interest - Other Loans – 6,494,759Other Finance Charges 129,189,912 177,125,373

SCHEDULE U : CONSOLIDATED NOTES ON ACCOUNTS

1. ACCOUNTING POLICIES :

(i) Basis of consolidation

a) Basis of preparation

b) Principles of consolidation

Company Relationship Country of Incorporation Proportion of ownership

(ii) Basis ofAccounting

(iii) FixedAssets

(iv) Expenditure During Construction period

(v) Borrowing Costs

(vi) Depreciation

(vii) Inventories

The consolidated financial statements are prepared in accordance with Accounting Standard 21 on

Consolidated Financial Statements issued by the Institute of CharteredAccountants of India.

The consolidated financial statements comprise the financial statements of Balaji Distilleries Limited

and the following companies:

BDLDistilleries Pvt Ltd Subsidiary India 100%Chennai Breweries Pvt Ltd Subsidiary India 100%

Financial statements are prepared as a going concern on accrual basis under the Historical cost convention


FixedAssets are stated at cost less accumulated depreciation. Cost is inclusive of freight, duties, taxes and

all directly attributable costs of bringing the assets to their working condition for intended use.

At the balance sheet date, an assessment is done to determine whether there is any indication of

impairment in the carrying amount of the company’s fixed assets. If any such indication exists, the asset’s

recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an

asset exceeds its recoverable amount.

After recognition of impairment loss, the depreciation charge for the asset is adjusted in future periods to

allocate the asset’s revised carrying amount, less its residual value (if any), on Straight Line basis over its

remaining useful life.

Expenditure incurred during construction period is included under capital work-in progress and is

capitalised when the asset is ready for commercial use. Expenditure in connection with Project

implementation in so far as such expenditure relates to the period prior to commencement of commercial

production is also included under Capital work in progress.

Borrowing costs that are attributable to construction of qualifying assets are capitalised as part of cost of

such assets till such time the asset is ready for its intended use. A qualifying asset is an asset that

necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs

are recognised as an expense in the period in which they are incurred.

Assets given on lease net of residual value are depreciated over the primary lease period and depreciation

on all other assets is provided on straight line basis at the rates specified in Schedule XIV of the Companies

Act, 1956. Depreciation on additions and deletions during the year is provided on Pro-rata Basis.

Inventories are valued at cost or net realisable value whichever is lower and the cost is determined as

follows:


80

Raw materials & Packing Materials : Distillery: On Weighted Average basis and cost includes




Finished Goods : Cost includes appropriate share of related overheads and excise

duty payable on such goods

Work in Progress : Cost includes appropriate share of related Overheads

Stores and Spares : Distillery: On Weighted Average basis and cost includes




Long term investments are valued at cost, after providing for any diminution other than temporary in value.

Current investments are valued at cost or market price whichever is lower. Income from investments is

recognised in the year in which it accrues.

Gross Sales includes Excise Duty, TN Vat collected and is net of trade discount.

Excise Duty has been accounted on the basis of payments made in respect of goods cleared and provision

is made for goods lying as closing stock at the year end.

Contributions to defined contribution schemes such as provident fund and family pension fund are accrued

on actual liability basis. In respect of defined benefit plans like Contributions to gratuity, Superannuation

and Leave Encashment, these are accrued in accordance with the terms of the scheme of the Life

Insurance Corporation of India, the liability whereof is determined using projected Unit Credit Method as

provided inAccounting Standard 15 Revised.

All foreign currency transactions are accounted for at the rates prevailing on the dates of the transaction.

Foreign currency liabilities are converted at the year end rates as applicable.

The exchange difference on settlement / conversion are adjusted to a) cost of imported fixed assets, if the

foreign currency liability relates to fixed assets upto March 31, 2007 and b) Profit and Loss account, in all

other cases.

Tax on Income for the current period is determined on the basis of taxable income and tax credits computed

in accordance with the provisions of Income TaxAct 1961.

Deferred Tax is recognised on timing differences between the accounting income and the taxable income

for the year and quantified using the tax rates and laws prevailing as on the Balance Sheet date. Where

there is a carry forward loss or unabsorbed depreciation, deferred tax asset is created only if the set off is

virtually certain.

All possible obligations that arise from past events and existence of which will be confirmed only by the

occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the

company are recognised as contingent liabilities and disclosed by way of notes to the accounts.

(viii) Investments

(ix) Sales

(x) Excise Duty

(xi) Employee Benefits

(xii) Foreign Currency Transactions

(xiii) Current and Deferred Tax

(xiv) Contingent Liabilities

SCHEDULE U : CONSOLIDATED NOTES ON ACCOUNTS (Contd..)

81

a) Revenue and expenses have been identified to the segment on the basis of relationship to operating

activities of the segment. Revenue and expenses which relate to the enterprise as a whole and which

are not allocable to a segment on reasonable basis have been disclosed as unallocable.

b) Segment assets and segment liabilities represent asset and liabilities in respective segments. Other

assets and liabilities that cannot be allocated to a segment on a reasonable basis have been disclosed

as unallocable.

During the year, the Company has allotted 9,00,00,000 equity shares at Rs.13.78 each including Share premium

of Rs.3.78 each consequent upon conversion of 9,00,00,000 Convertible Warrants. An amount equivalent to the

proceeds of issue of Rs.124,02,00,000/-, interalia has been utilized as under:

Particulars Rs.

Towards Redemption of Preference Shares 75,000,000

Towards Redemption of OCCRPS 180,209,400

Towards Payment to Institutions and Banks for OTS 405,489,625

Towards Payment of VAT 252,800,000

Towards Capital Expenditure 326,700,975

During the year, the outstanding Cumulative Redeemable Preference Shares have been redeemed out of fresh

issue of Equity Shares.

In respect of the 12.5% Cumulative Redeemable Preference Shares with a redemption value of

Rs.150,000,000/-, redemption of entire shares has been made during the year at a discount of Rs.5/- per share

which aggregates to Rs.75,000,000/-.

In respect of 6% Optionally Convertible Cumulative Redeemable Preference Shares with a redemption value of

Rs.446,209,000/-, redemption of entire shares has been made during the year at a discount of Rs.5.96 per share

which aggregates to Rs. 265,999,600/-.

The total discount on redemption aggregating to Rs.340,999,600/- has been credited to capital reserve.

During the year the Interest payable on Debentures issued to an institution have been fully settled under one time

settlement. In view of this an amount of Rs.19,610,575 (Rs.22,498,473) has been written back to Profit and Loss

account as exceptional item.

a) Secured loan with bank is secured by pari-passu first mortgage and charge on all the company’s immovable

and moveable properties (excluding current assets) both present and future.

b) Secured loan has been guaranteed by one of the promoters Mr.M.Sreenivasulu Reddy.

c) Secured loan is also collaterally secured by a real estate property of a company owned by associates,

friends, relatives and well wishers of the promoters.

(xv) Segment Reporting

2. EQUITY SHARES :

3. PREFERENCE SHARES :

4. ONE TIME SETTLEMENT WITH LENDERS:

5. SECURED LOANS :


82


83

6. A. CONTINGENT LIABILITIES:

B. CAPITAL COMMITMENTS

i Sales Tax:

a) For the Assessment years 1986-87 to 1988- 89, the company haswon its case before STAT. However, the department has appealed tothe Sales Tax Special Tribunal. In the absence of details of thegrounds of appeal filed by the department, the amount disputed bythe department could not be quantified.

b) For the Assessment year 1996-97, in the erstwhile Shipping divisionan appeal filed by the Sales tax department before STAT wasallowed. Aggrieved by the order, the company appealed before theHonourable High Court of Madras and got an interim stay order.

c) For the Assessment years 1985-86 & 1986-87, a demand for interesthas been raised through a notice U/Sec 24(3) of the TNGSTAct,1959. When the same was challenged by the company, theHon’ble Madras High Court granted interim injunction and stay afterremittance of Rs.1.00 Crore by the company. Accordingly, thecompany remitted the amount and simultaneously is pursuing thewaiver of interest through industry association before the Tamil NaduState Government. The company is contemplating the option ofsettling the above disputed liabilities under the Samadhan schemeintroduced under Tamil Nadu sales tax (Settlement of Arrears)Act, 2010.

d) In respect of the completed Assessment for the year 2000-01, theSales tax department issued a revision notice proposing levy ofSales tax on the sale of ships. On the challenge by the company, theHon’ble Madras High Court granted interim injunction.

e) The company is contemplating the option of settling the abovedisputed liabilities under the Samadhan scheme introduced underTamil Nadu Sales Tax (Settlement ofArrears)Act, 2010.

ii. Income Tax:

a) For the Assessment years 2002-03 & 2004-05 the companyappealed before CIT (A) against the order of assessing officer.

b) In respect of the Assessment years 1986-87 to 1990-91 the Incometax department appeals against allowance of Commission/Marketing expenses are pending before the Madras High Court.

c) In respect of Assessment years 1994-95 to 2002-03, the Income Taxdepartment’s appeals against sale and lease back transactions, arepending before the Madras High Court.

iii. State Excise Duty:

a) During the year 2007-08 the company has Imported special spirits bypaying Rs.1/- per litre as import permit fee. However based on AG’saudit, the excise department issued notice for Rs.5/- per litre. Thecompany appealed before High court of madras and gotan interim injection order.

The state Government has amended the rule on 18.05.2010imposing import fee at Rs.5/- retrospectively from 2000 onwards.The Excise department has demanded additional payment andcompany has challenged the demand before High court Madras andgot an interim injunction.

337,772,997

498,098,515

204,205,978

498,098,515

Nil

Notquantifiable

Notquantifiable

No DemandQuantified yet

43,783,163 43,783,163

135,171,318135,171,318

Nil

Nil

Nil

103,753,938

30,167,522

3,189,996

13,098,924

2,000,000

2009-10Rs.

2008-09Rs.


84

8. REMUNERATION TO STATUTORYAUDITORS: 2009-10 2008-09Rs. Rs

9. PRIOR PERIOD EXPENDITURE:

Included under Head ofAccount 2009-10 2008-09Rs. Rs.

Total - 1,03,385

10. [A] LICENCEDAND INSTALLED CAPACITY :

Indian Made Foreign Liquor (IMFL):

2009-10 2008-09

Beer :

.

i. StatutoryAudit Fee 1,707,444 1,707,444

ii. TaxAudit Fee 424,656 424,655

iii. Certificate / Other services 55,150 92,197

iv. Out of Pocket Expenses 48,740 65,087

Items relating to prior periods have been (debited) / credited to the Profit and Loss Account under the followingAccount Heads:

Interest Income - (3,21,398)

Rent - (49,500)

Others - 4,74.283

This activity is not considered as manufacturing activity under industries(Development and Regulation)Act, 1951.





7. DIRECTORS’REMUNERATION: 2009-10 2008-09(Rs.) (Rs.)

Managing Director’s Remuneration

i Salary,Allowance and Bonus 2,797,500 2,437,500

ii Bonus 559,500 538,534

iii Contribution to Provident Fund, SuperAnnuation, and Gratuity 899,700 652,500

iv Leave Encashment – 460,000

v Other Perquisites(Rent, LTA, Medical, Insurance, Club Subscription etc) 937,950 409,363

Other Director’s Sitting Fees 40,000 35,000

Note : 1. Company contributes to LIC towards Gratuity, Super Annuation, and Leave Encashment of employeesincluding Managing Director.

IMFL Cases –

Cases –

Litres –

IMFL Cases

BEER Cases

DRAUGHT BEER Litres

LEASE RENTAL

[B] REVENUE

2009-10 2008-09

Actual Production Unit Quantity Value (Rs.) Quantity Value (Rs.)

[I] Turnover (Net)

9,442,929 – 9,604,027

BEER 8,946,410 – 7,944,267

DRAUGHT BEER 218,690 – 231,080

9,431,118 # 4,769,570,273 9,548,874 4,946,757,303

8,968,210 1,998,460,461 7,995,624 1,784,301,639

218,690 1,451,227 231,080 1,533,447


85

Raw Material - IMFL

i) Rectified Spirit Bulk Litres 37,801,286 1,362,429,699 3,8471,466 1,294,494,447

ii) Malt Spirit Bulk Litres 110,730.120 16,480,085 260,908.039 45,285,481

iii) Grape Spirit Bulk Litres 256,998.630 65,215,922 255,430.541 67,435,292

iv) Others 58,978,565 95,693,800

Raw Material - BEER

i) Malted Barley M.Ton 9,593.451 227,969,878 8,425.768 219,079,435

ii) Broken Rice / (Maize Flakes) KGS 4,661,180 57,241,197 3,748,335 44,161,156

iii) Others 120,118,794 89,958,256

Packing Material

IMFL 1,615,137,888 1,830,086,711

BEER 648,147,531 551,905,933

Imported [In %] 0.023% 959,774

Indigenous [In %] 99.977% 4,170,759,785 100% 4,238,100,511

[II] Stock of finished goods

Opening Stock

IMFL Cases 59,927 22,457,931* 4,774 1,743,023*

BEER Cases 49,863 6,919,813* 101,220 12,215,770*

Closing Stock

IMFL Cases 71,738 27,408,519** 59,927 22,457,931**

BEER Cases 28,063 3,955,558** 49,863 6,919,813**

[III] Consumption

Total 4,171,719,559 4,238,100,511

Percentage of TotalConsumption Materials

BEER:, ,

, ,* Excluding excise duty of Rs.1 695,841 (Rs.3 442,492)** Excluding excise duty of Rs. 954 423(Rs.1 695,841)

IMFL:, ,, ,

* Excluding excise duty of Rs.41 994,560 (Rs.3 396,103)** Excluding excise duty of Rs.52 592,699 (Rs.41 994,560)# Includes 160 cases of obsolete stock written off.

11. EXPENDITURE IN FOREIGN EXCHANGE : 2009-10 2008-09(Rs.) (Rs.)

Total -- 231,600,000

12. CIF VALUE OF IMPORTS : 2009-10 2008-09(Rs.) (Rs.)

Total 17,261,152 21,886,842

Principal to Financial Institutions – 231,600,000

The repayment of principal and interest of Rs.Nil(23,16,00,000)/- on foreign Currency loans have been paidin Indian currency on the principal translated in to the Indian currency at the rates prevailing on the date ofcrystalisation.

Purchase of spares & Consumables 8,854,423 5,263,835

Purchase of Plant and Machinery 7,446,955 1,204,400

Purchase of Generator -- 15,418,607

Purchase of Empty bottles 959,774 --


86

13. CHANGE INACCOUNTING POLICY:

During the year, due to the introduction of SAP in Distillery division, the inventories of Raw Material, PackingMaterial and Stores & Spares have been valued at Weighted Average Method as against FIFO basis followed bythe Company. In view of the magnitude of the transactions, the impact of such change in the policy of the inventoryvaluation on the Profit or Loss for the year could not be quantified. In view of the fact that the prices of the RawMaterial, Packing Material and Stores & Spares remained stable throughout the year, the impact of the change inthe valuation method will not be material.

14. SEGMENT REPORTING :

The company has identified three reportable primary business segments viz. Brewery, Distillery and Leasingsegments. Segments have been identified and reported taking into account nature of products and services, thediffering risks and returns and the internal business reporting systems. The company caters to the needs of thedomestic market and as such there are no reportable geographical segments. The accounting policies adoptedfor segment reporting are in line with the accounting policies of the company. During the year, the leasingbusiness segment has been wound up.

Sales

Distillery 4,946,757,303

Brewery 1,785,835,086

Leasing – --

Total segment revenue for the period

Distillery 139,555,142 183,451,798

Brewery (25,073,598)

Leasing -- (2,160,651)

Distillery

- Waiver of Principal and Interest 22,498,473

- Provision for doubtful advances (12,000,000)

- Settlement of Corporate Guarantee (21,200,000)

Leasing

-Amount received against written off 79,411,532

- Relinguishment of rights of assets 162,702,899

- Lease income from RSEB 16,727,013

- Interest income from RSEB 48,867,695

Unallocated

- Poompuhar Shipping Corporation 17,701,591

(16 525,854) (16 601,706)

(353,145,085)

12,074,850

103,385

(18,193,487)

Provision for Tax:

Current Tax / Earlier year tax 1,352,305


[A] Revenue:

6,732,592,389

[B] Result:

Total Segment 208,020,722 156,217,549


Profit / (Loss) afer tax

4,769,570,273

1,999,911,688

68,465,580

19,610,575

(274,696,320)

8,064,749

6,769,481,961

(55,526,128)

(55,526,128) 93,812,404

Profit / (Loss) Before Interest , Exceptional Items andprior period adjustments

Exceptional Items

Unallocated Expenditure

Others , ,

Interest

Interest Income / Dividend Income

Prior period adjustments

Provision for fringe benefit tax


87



S.No. Party

(A) Associates


1. Hiwide Enterprises P Ltd.

2. Diadem Enterprises P Ltd.

1. R.Raghuram

2. S. Nagarajan

Distillery 2,485,266,910 2,539,046,003

Brewery 1,105,708,869 791,425,550

Leasing -- --

Unallocated Liabilities 680,000,000 1,343,178,816

Distillery 38,432,613 101,756,186

Brewery 514,538,233 29,253,566

Leasing -- --

Distillery 23,224,446 19,519,284

Brewery 73,180,507 61,842,547

Leasing – 2,160,651


[D] Segment Liabilities

Total Liabilities 4,270,975,779 4,673,650,369

[E] Other Information

[C] SegmentAssets:

TotalAssets 42,70,975,779 4,673,650,369

Distillery 1,390,111,053 1,085,160,232

Brewery 1,715,552,712 1,593,318,412

Leasing -- --

Shareholders Funds [ Net of Losses] 1,142,008,407 1,947,452,879

UnallocatedAssets 23,303,607 47,718,846

Capital Expenditure

Depreciation

Non cash expenditure excluding depreciation


88

2009-10 2008-09Particulars Associates Key Management Associates Key Management

Personnel PersonnelRs. Rs. Rs. Rs.

Remuneration - M.D. 5,194,650 4,497,897

Remuneration - CFO 4,168,200 4,138,115

Purchases 67 651,462

Interest Paid 3 932,055

Payable:

Diadem Enterprises Pvt Ltd 16,893,790 18,676,550

Hiwide Enterprises Pvt Ltd 335,000,000

, 63,296,125

, – –

Outstanding as at year end

16. RELATED PARTY TRANSACTIONS :

17. EARNINGS PER SHARE (EPS) :

2009-10 2008-09Rs. Rs.

Total (55,526,128)

18. DEFERRED TAX :

19. SCHEME OFARRANGEMENT :

In respect of equity shares :

Profit (Loss) after Tax attributable to ordinary

Less: Preference Dividend and Dividend Tax

In view of the net deferred tax being an asset, the same has not been recognised in the books, as there is no virtualcertainty of set off

The Board of Directors of the Company in their meeting held on 29th November 2008 had decided to merge theCompany into United Spirits Ltd (USL) and approved the scheme of arrangement subject to the approval of BIFRand other agencies.

Two Equity shares of USL for every 55 equity shares of BDL.

Shareholders (55,526,128) 93,812,404

-- 53,259,096

The scheme of arrangement interalia provides for transfer of Brewery Division Undertaking of Balaji DistilleriesLimited to Chennai Breweries Private Limited and thereafter merger of Balaji Distilleries Limited (consisting ofDistillery Division Undertaking and investments in subsidiaries) into United Spirits Limited on a going concernbasis. The swap has been fixed as under:

One.12.5% Redeemable Preference Shares of Rs.10/- each of USLredeemable in March 2014, for every two 12.5% Cumulative RedeemablePreference Shares of Rs.10/- each held in BDL (These preference shareshave been redeemed during the year)

One 12.5% Redeemable Preference Shares of Rs.10/- each of USL,redeemable in March 2014 for every two 6% Optionally ConvertibleCumulative Redeemable Preference Shares of Rs.10/- each held in BDL(These preference shares have been redeemed during the year)

40,516,308

WeightedAverage of Equity Shares of Rs.10 each 124,524,409 53,017,560

Basic EPS (0.45) 0.76

WeightedAverage of Equity Shares (including Dilutive) 124,524,409 56,393,070

Diluted EPS (0.45) 0.72

In respect of Preference shares :

In respect of OCCRPS :

89


20 BOARD FOR INDUSTRIALAND FINANCIAL RECONSTRUCTION (BIFR) :

21. GOING CONCERN :

22. BREAK-UP OF CAPITAL WORK IN PROGRESS :

2009-10 2008-09(Rs. in lacs) (Rs. in lacs)

Description 2009-10 2008-09(Rs.) (Rs.)

The Hon’ble Board for Industrial and Financial Reconstruction (BIFR) has declared the company as sickindustrial undertaking in terms of section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985at its hearing held on 20th December, 2006 and appointed M/s. IDBI Bank Ltd as the operatingAgency (OA). TheOA has submitted the revised Draft Rehabilitation Scheme (DRS) on 5th February, 2009 after taking into accountthe Scheme of Arrangement approved by the Board of Directors, which interalia envisages transfer of brewerydivision of Balaji Distilleries Limited to Chennai Breweries P Ltd, a wholly owned subsidiary of Balaji DistilleriesLimited and thereafter merger of distillery division of Balaji Distilleries Limited with United Spirits Limited (USL).The shareholders of USL have also approved the Scheme of Arrangement at their meeting held on 21st April,2010.

The Hon’ble BIFR has circulated the DRS vide its order dt 19th February, 2010. Mandatory hearings have beenheld on 10th May, 2010, 26th May,2010 and 4th June,2010 and no creditor has raised any objection for the DRS.In the meeting held on 4th June, 2010, the Hon’ble BIFR has reserved its order and directed that the order will bepronounced on 24th June,2010 in the Open court. The pronouncement of order was postponed to 30th June,2010. On 30th June,2010, the Hon’ble BIFR has pronounced the order and copy of the order is yet to be receivedby the company.After reviewing the order, the Company will take necessary steps for future course of action.

Though the Company has been declared as a Sick Industrial Undertaking, referred to BIFR and has negativenetworth, in view of settlement of most of its term liabilities successfully through One Time Settlement (OTS) andafter considering successful operation and Company’s business plans, the company’s accounts are prepared asa going concern.

Building 427,385 47,794,589

Plant & Machinery 1,000,000 287,069,020

Water Supply Installations -- 6,490,828

Electrical Installations & Fittings -- 34,316,001

The company does not have any foreign currency exposure at the end of the year. The company has not enteredinto any derivative transactions during the year nor is any such transaction outstanding at the year end.

a) Interest on Sales Tax for the year 2001-02 356.60 356.60

b) Undisputed sales tax relating to F.Y 2003-04

Sales tax of January, 2004 payable in February, 2004 1,600.00 1,600.00

Sales tax of February, 2004 payable in March, 2004 2,948.91 2,948.91

Interest thereon upto 31.3.2010 6,710.13 5,611.23

c) Interest on VAT March, 2007 upto 31.3.2009 875.23 875.23

d) Current ValueAdded Tax relating to March, 2010 remitted inApril, 2010 7,366.09 6,741.21

Interest on Sales Tax / VAT 124,094,506 148,179,061

Management fee paid to a bank 500,000 --

Particulars 31.03.10 31.03.09(Rs.) (Rs.)

Total 1,427,385 375,670,438

23.

24. SUNDRY CREDITORS OTHERS INCLUDE :

25. OTHER FINANCE CHARGES INCLUDES :

90


26. EMPLOYEE BENEFITS :

Particulars 2009-10 2008-09(Rs.) (Rs.)

II Defined Benefit Plans

(A) Gratuity

Particulars 2009-2010 2008-2009

Net Liability / (Asset) (553,488)

Net Liability / (Asset) recognized in the Balance Sheet (553,488) 1,003,732

Particulars

Total 2,485,864 11,085,684

I Defined Contribution Plans

1,003,732

2009-2010 2008-2009

a. Provident Fund

b. Superannuation Fund

c. State Defined Contribution Plans

i) Employer’s contribution to Employee’s State Insurance

ii) Employer’s Contribution to Employee’s Pension scheme 1995

During the year, the Company has recognised the following amounts in the Profit and loss account:

Employers contribution to provident fund and employees pension scheme 6,496,899 5,799,915

Employers contribution to superannuation fund 3,155,400 2,453,292

Employers contribution to Employee State Insurance 1,848,612 2,286,962

The company has defined benefit plans namely Superannuation, Leave encashment / Compensated absence foremployees and Gratuity for employees. With effect from 2007-08, the liability for these benefit plans isdetermined using Projected Unit Credit Method and accrued as provided in Accounting Standard 15 (R). All theadditional liability has been debited / credited to the profit & loss account of the year.

(a) Description of the Gratuity Plan: The Company provides for gratuity a defined benefit retirement plan coveringeligible employees. Gratuity plan provides for a lump sum payment to employees on retirement, death,incapacitation, termination of employment, of amounts that are based on salaries and tenure of the employees.

The contribution to LIC is made by the Company based on actuarial valuation done by a professional Actuary.

(b) Amount recognized in the Balance Sheet and movements in net liability



Present Value of Unfunded Obligations (553,488) 1,003,732

Unrecognized Past service Cost -- -

Liabilities -- 1,115,889

Asset (553,488) (112,157)

Net Liability / (Asset) (553,488) 1,003,732

(c) The fair value of the plan assets does not include the Company’s own financial instruments.

(d) Expenses recognized in the Statement of Profit and LossAccount

Current Service Cost 1,715,298 1,112,768

Interest on Defined Benefit Obligation 2,044,216 1,135,387

Expected Return on PlanAssets (2,335,888) 1,521,733

NetActuarial Losses/ (Gains) Recognized in the year 1,062,238 9,243,373



Effect of the limit in Para 59(b) -- --

Net gratuity expenses included in payments to and provision for employees 2,485,864 9,969,795

Add : Unpaid Gratuity provided in Profit and LossAccount -- 1,115,889


91

(e) TheActual Return on PlanAssets is Rs.23,35,888 (Rs.1,571,958)

(f) ActuarialAssumptions at the Valuation date

Discount Rate 8% 8%


Salary Escalation Rate

% (Brewery) 6


(g) Descriptions of the PlanAssets


Corporate Bonds



Others

Total 100% 100%

(a) Amount recognized in the Balance Sheet and movements in net liability:



Present Value of Unfunded Obligations (2,622,925) (3,524,420)

Unrecognized Past service Cost -- --

Amount not Recognized asAsset, because of limit in Para 59(b) -- --

Liabilities 14,833 526,473

Assets (2,637,808) (4,050,893)


Unpaid Gratuity for transferred employees -- --

(b) The fair value of the plan assets does not include the Company’s own financial instruments; no property of theGratuity Trust is occupied by the Company.

(c) Expenses recognized in the Statement of Profit and LossAccount

Particulars 2009-2010 2008-2009

Particulars 2009-2010 2008 - 2009

Total 1,870,745 5,212,423

5% (Distillery) 5% (Distillery)

6 % (Brewery)

Current Service Cost 3,572,173 531,465

Interest on Defined Benefit Obligation 464,385 50,653

Expected Return on PlanAssets (903,829) 39,830

NetActuarial Losses/ (Gains) Recognized in the year (1,261,984) 4,143,662



Effect of the limit in Para 59(b) – --

Net leave encashment expenses included in payments to andprovision for employees 1,870,745 4,685,950

Add : Unpaid Leave encashment provided in Profit and LossAccount -- 526,473


(B) Leave Encashment

Particulars 2009-2010 2008 - 2009


Net liability/(asset) recognized in the Balance Sheet (2,622,925) (3,524,420)



92

(d) TheActual Return on PlanAssets is Rs. 9,03,829 (Rs.4,87,124)

(e) ActuarialAssumptions at the Valuation date

Discount Rate 8% 8%


Salary Escalation Rate 5% (Distillery) 5% (Distillery)

6% (Brewery) 6% (Brewery)


(f) Descriptions of the PlanAssets


Corporate Bonds



Others

Total 100% 100%

The data with respect to experience adjustment and estimated exhausted gratuity and leave encashment liabilityfor next year has not been provided byActuary.

The company has subscribed for 100% of share capital of BDL Distillery Pvt Ltd and Chennai Breweries Pvt Ltd.There is no diminution other than temporary in the value of these investments.

The company has not received any information from the suppliers as regards their status under the Micro, Smalland Medium Enterprises Development Act, 2006 and hence disclosure requirements in this regard as perSchedule –VI of the Companies Act, 1956, could not be provided. However, no interest has been accrued / paidduring the year to any of the suppliers.

Previous Year’s figures have been regrouped / reclassified wherever necessary to conform to the current Year’spresentation.

Particulars 2009-2010 2008-2009


27. INVESTMENT IN SUBSIDIARY COMPANIES :

28. MICRO, SMALLAND MEDIUM ENTERPRISES :

29.




P.A. REDDY & CO

P. ASHOK REDDY







V. KOTHANDARAMAN




CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED MARCH 31, 2010

93


Rs.


Rs.

A. CASH FROM OPERATING ACTIVITIES:

Net Profit Before Tax and Extraordinary Items

Adjusted for:

Operating Profit Before Working Capital Changes 214,638,182

Adjusted for:

Cash Generated From Operations 243,045,584 622,544,484

--

Cash Flow Before Extraordinary Items 656,877,725


B. CASH FLOW FROM INVESTING ACTIVITIES:

(130,671,503)


Interest and Other Finance Charges 353,14 ,

Interest / Dividend Income (12,074,850)

Foreign Exchange Fluctuation [Net] (389,860)

[Profit] / Loss on sale of Fixed Assets [Net] 2,281,298

[Profit] / Loss on sale of Investments [Net] – (10,384,639)

Wealth Tax Provision 435,775

Provision no longer required (445,000)

Trade Receivables 58, 09,123

Trade Payables 154,801,172 434,150,579

Inventories (84,753,400)

Wealth Tax Paid (95,363)

34,428,604

Prior Period Adjustments – 103,385

Purchase of Fixed Assets (411,139,969)

Sale of Fixed Assets 282,994,67

Sale of Investments – --

Interest Received 61,515,788

Dividend Received – --

Purchase of Investments (Net) ( )

(75,136,703) (201,454,392)

96,404,953

274,696,319 7 368

(8,064,749)

(853)

489,867

380,075

(700,000)

(170,986,602) 5

(28,837,896)

(435,900)

Lease income and Charter Hire

(198,290,827)

400,647 5

8,260,898

(81,850,438) 64,041,997

288,068,909

Cash Flow Before Exceptional Items 242,609,684 622,449,121

242,609,684

242,609,684

(271,479,720)

656,981,110

C. CASH FLOW FROM FINANCING ACTIVITIES:

NET CASH FROM (USED IN) FINANCING ACTIVITIES 51,361,592 (729,568,600)

NET INCREASE/(DECREASE) INCASH AND CASH EQUIVALENTS [A+B+C] 22,491,555 (203,258,992)


Proceeds From Issue Of Share Capital 1,116,180,000 --

Redemption of Prefence shares (255,209,400) --

Proceeds From Borrowings (Net) (619,811,004) (493,391,733)

Repayment Of Finance Lease Liabilities – –

Dividend Paid – --

Non Trade Advances 700,000 –

Interest Paid (190,498,004) (236,176,866)

174,915,234 378,174,226


INCREASE / (DECREASE) IN CASH EQUIVALENTS 22,491,553 (203,258,992)

Particulars

Cash and cash equivalents, end of year 197,406,787 174,915,234

3) Components of cash and cash equivalents:


197,406,787 174,915,234

197,406,787 174,915,234

Notes:



Cash and bank balances, per Schedule I 392,127,030 287,785,039

Less : Fixed deposits with maturity over 90 days 194,720,243 112,869,805

Cash on Hand 1,392,627 1,107,281

Cheques on Hand 1,664,928 98,007,266


Total

CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED MARCH 31, 2010


Rs.


Rs.



94



P.A. REDDY & CO

P. ASHOK REDDY







V. KOTHANDARAMAN




BALAJI DISTILLERIES LIMITED · 2010-09-07 · BALAJI DISTILLERIES LIMITED 3 NOTICE is hereby given...

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Transcript of BALAJI DISTILLERIES LIMITED · 2010-09-07 · BALAJI DISTILLERIES LIMITED 3 NOTICE is hereby given...