M P Purushothaman Chairman Shaji Purushothaman …Company Secretary cum General Manager(F&A) M P...

Company Secretary cumGeneral Manager(F&A)

M P PurushothamanShaji PurushothamanNisha PurushothamanLt.Gen.R.S.Nagra (Retd.)T.S.RaghavanM.K.Mohan

N.C.AnanthakumarChartered AccountantNo.19, Trustpakkam SouthRaja AnnamalaipuramChennai - 600 028

Andhra BankIndian Overseas BankAllahabad Bank

ChairmanManaging DirectorJoint Managing Director

IMFL:1) Mevaloorkuppam Village, Sriperumpudur Taluk,

Kancheepuram District, Tamil Nadu.

2) Nida, Menonpara Road, Kanjikode PostPalakkad District, Kerala.

Power:Kottadivayal Village, Aranthangi Taluk,Pudukottai District, Tamil Nadu.

693, Mount Road,Chennai - 600 006.

'Empee Towers', 59, Harris Road,Pudupet, Chennai - 600 002.

INDEX Page Nos

Notice of Annual General Meeting 01

Directors' Report 08

Auditor's Report 22

Balance Sheet and Profit & Loss Account 26

Schedules to the Accounts 28

Auditor's Report on Consolidated Accounts 44

Consolidated Balance Sheet and Profit & Loss Account 45

Schedules to the Consolidated Accounts 47

EMPEE DISTILLERIES LIMITEDRegd Office: 693, Mount Road, Chennai - 600 006

NOTICE TO SHARE HOLDERS

NOTICE is hereby given that the 24th Annual General Meeting of Empee Distilleries Limited will be held onMonday, the 8th, December 2008 at 10.00 A.M at The Music Academy, Mini Hall, Old No.306, NewNo.168, T.T.K.Road, Chennai - 600014 to transact the following business:

1. To receive, consider and adopt the audited Profit & Loss Account for 9 months ended 30th June,2008, the Balance Sheet as on that date, the report of the Board of Directors and the report of theAuditors thereon.

2. To declare a dividend.

3. To appoint a Director in place of Mr.T.S.Raghavan, who retires by rotation and being eligible,offers himselffor re-appointment.

4. To appoint a Director in place of Mr.Shaji Purushothaman, who retires by rotation and beingeligible, offers himselffor reappointment.

5. To appoint Auditors of the Company for the period commencing from the conclusion of this AnnualGeneral Meeting till the conclusion of the next Annual General Meeting and to fix their remuneration.

6. To consider and if thought fit to pass with or without modification the following Resolution as a SpecialResolution:

"RESOLVED THAT pursuant to section 269, 198,309, Schedule XIII and other applicable provisionsofthe CompaniesAct, the approval ofthe Company be and is hereby accorded forthe appointment ofMr.Shaji Purushothaman, as Managing Director with effect from 10th March, 2008 for a period of 5years on the following terms of remuneration:

a) Basic Salary - RsA,OO,OOO/-per Month. The quantum of annual increase will be decided by theRemuneration Committee.

b) Commission - Subject to a maximum of 1.5% of the net profits of the Company for the financialyear, the quantum whereofto be determined by the Board of Directors.

c) Perquisites:

i) Free use offurnished accommodation owned or leased by the Company with amenities includingWater, Gas, Electricity and Furnishings.

ii) Medical reimbursement for self and family including premium payable for medical insurance inaccordance with the rules of the Company.

iii) Leave Travel Concession for self and family once in a year in accordance with the rules of theCompany.

iv) Fees of clubs sUbject to a maximum of two c1ubs.This will notinclude admission fee and lifemembership fee.

v) Personal Accident Insurance as perthe rules ofthe Company.

vi) Contribution to PF and Payment of Gratuity as per the rules of the Company, which shall not beincluded for computation ofthe ceiling on the remuneration payable.

vii) Encashment of Leave at the end of the tenure.

viii)Provision of Car with driver and telephone at residence, for Company's business.

RESOLVED FURTHER THAT in the absence or ihadequacy of profits at anytime during the tenure ofthe appointment of the appointee, the minimum remuneration as set out in Schedule XIII of theCompaniesAct, 1956 be payable."

7. To consider and if thought fit to pass with or without modification the followingResolution as a Special Resolution:

"RESOLVED THAT the remuneration of MS.Nisha Purushothaman, who was appointed as JointManaging Director with effect from 1st January 2007 for a period of 5 years be and is here~yrevised with effect from 10th March 2008 till the rest of her tenure as detailed under:

a) Basic Salary - Rs.4,OO,OOO/~per Month. The quantum of annual increase will be decided by theRemuneration Committee.

b) Commission - Subject to a maximum of 1.5% of the net profits of the Company for the financialyear, the quantum whereof to be determined by the Board of Directors.

c) Perquisites:

i) Free use of furnished accommodation owned or leased by the Company with amenities includingWater, Gas, Electricity and Furnishings.

ii) Medical reimbursement for self and family including premium payable for medical insurance inaccordance with the rules ofthe Company.

iii) Leave Travel Concession for self and family Ohce in a year in accordance with the rules of theCompany.

iV) Fees of clubs subject to a maximum of two clubs. This will not include admission fee and lifemembership fee.

v) Personal Accident Insurance as perthe rules ofthe Company.

vi) Contribution to PF and Payment of Gratuity as per the rules of the Company, which shall not beincluded for computation of the ceiling on the remuneration payable.

vii) Encashment of Leave at the end of the tenure.

viii) Provision of Car with driver and telephone at residence, for Company's business.

RESOLVED FURTHER THAT in the absence or inadequacy of profits at any time during the tenure ofthe appointment of the appointee, the minimum remuneration as set out in Schedule XIII of theCompanies Act, 1956 be payable."

By Order of the BoardFor Empee Distilleries Limited

Chennai24/09/2008

M.P.PurushothamanChairman

1. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxyto attend and vote on a poll on his behalf and the proxy need not be a member. The proxy formduly completed and stamped must reach the registered office of the company not less than 48hours before commencement ofthe Meeting.

2. The Register of members and share transfer books of the company will be closed from01.12.2008 to 08.12.2008 (Both days inclusive)

3. Members/proxies should bring the attendance slip duly filled along with copy of Annual report forattending the meeting.

4. Members are requested to intimate changes if any, in their address to the Registrars and sharetransfer Agents of the Company at the following address:

Cameo Corporate Services Limited,"Subramanian Building", V Floor,

1, Club House Road, Chennai-600 002.

J:,',

~

5. The Company's equity shares are listed on the Bombay Stock Exchange Limited and National StockExchange of India Limited.

6. An Explanatory Statement pursuant to section 173(2) of the Companies Act, 1956 relating to theSpecial Business to be transacted at the Meeting is annexed hereto.

7. The information/details pertaining to Mr.T.S.Raghavan and Mr.Shaji Purushothaman to be providedin terms of clause 49 of the Listing Agreement with the Stock Exchanges are furnished in theannexure.

Explanatory statement under Section 173(2) ofthe Companies Act, 1956

Item No6:

Mr.Shaji Purushothaman, Director was appointed as Managing Director by the Board of Directors at theirmeeting held on 10th March 2008 with effect from 10th March 2008 for a period of 5 years at aremuneration approved by the remuneration committee and as set out in the resolution. The appointmentreq uires approval of the shareholders by way of a special resolution.

Mr.Shaji Purushothaman is an Arts graduate and has completed Oxford A level from Oxford University,U.K. He has been actively associated with the Company for the last 12 years and has rich administrativeexperience.

The Company has already given a Notice dated 10th March, 2008 under Section 302 of the CompaniesAct, 1956 for information of Members intimating the same revised terms of remuneration mentioned in theresolution.

Yours Directors commend the resolution for adoption.

None of the Directors except Mr.Shaji Purushothaman, Mr.M.P.Purushothaman and MS.NishaPurushothaman are deemed to be concerned or interested in this resolution.

MS.Nisha Purushothaman, Joint Managing Director was sanctioned revised remuneration as set out inthe resolution by the Board of Directors with effect from 10th March 2008 till the rest of her tenureconsidering the current salary levels in the business segments in which the Company operates and also tocompensate her for the increased responsibilities shouldered by her in the day to day management of theCompany.

The Company has already given a Notice dated 10th March, 2008 under Section 302 of the CompaniesAct, 1956 for information of Members intimating the same revised terms of remuneration mentioned in theresolution.

Her revision of remuneration requires the approval of the Members of the Company by way of SpecialResolution pursuant to Section 269 of the Companies Act, 1956 read with Schedule XIII of the CompaniesAct, 1956.None of the Directors except MS.Nisha Purushothaman, Mr.M.P.Purushothaman and Mr.ShajiPurushothaman are deemed to be concerned or interested in this resolution.

1. INFORMATION AS PER SCHEDULE XIII OF THE COMPANIES ACT, 1956

I. GENERAL INFORMATION:

1. Nature of Industry:The Company is engaged in the business of manufacture of Indian Made Foreign Liquor and Power.

2. Date or expected date of commencement of Commercial production:Not applicable as the Company is an existing Company.

3. In case of new companies, expected date of commencement of activities as per project approved byfinancial institutions appearing in the prospectus:Not applicable as the Company is an existing Company.

4. Financial Performance based on given indicators.

Year ended Year ended Year ended Period endedParticulars 30-9-2005 30-9-2006 30-9-2007 30-6-2008

Sales 33173.74 48298.97 63790.71 56370.83

PBID 1290.54 1706.70 3756.47 2250.79 INet Profit 424.26 1538.18 2010.47 1130.60

5. Export performance: Nil.

6. Foreign investments or collaborations, if any. : Nil

Mr.Shaji Purushothman

Mr.Shaji Purushothaman is the Managing Director of the Company. He is an Arts graduate and hascompleted OxfordALevel from Oxford University, U.K. He has been actively associated with the Companyfor the last 12 years and has rich administrative experience. In the past he has not drawn anyremuneration from the Company. The proposed remuneration as mentioned in the Notice is comparablewith the industry, size of the company and profile of the position. He is related to Mr.M.P.Purushothaman,Chairman and MS.Nisha Purushothaman, Joint Managing Director.

Ms.Nisha PurushothamanMS.Nisha Purushothaman is the Joint Managing Director of the Company. She holds a degree in Mastersin Business Administration from London Business School and was appointed as a Director of theCompany on December 2, 1994 and thereafter appointed as Joint Managing Director on January 1, 1997.She has been looking after administration and human resource management ofthe Company.

Her past remuneration was as follows.

A. Basic Salary Rs. 2,00,000 per month.

B. Perquisites: (The aggregate value whereof shall not exceed the annual salary in a year)

i. Rent-free furnished accommodation with service of personnel for maintenance and protection thereof.ii. Reimbursement of medical expenses for self and family.iii. Leave Travel concession for self and family once in a year in accordance with the rules of the Company.iv. Use of Company's car.v. Use oftelephone at residence.vi. Contribution to Provident Fund.vii. Gratuity payable at a rate not exceeding half a month's salary for each completed year of service.viii. Encashment of earned leave as per Company's rules.

The proposed remuneration as mentioned in the Notice is comparable with the industry, size of thecompany and profile of the position. She is related to Mr.M.P.Purushothaman, Chairman and Mr.ShajiPurushothaman, Managing Director.

! S.NO. DESCRIPTION PARTICULARS

1 Reason of loss or inadequate profits. None. The Company is making adequate profit.

2 Steps taken or proposed to be takenDoes not arisefor improvement.

3Expected increase in productivity and

Depends upon market dynamicsII profits in measurable terms

2. ADDITIONAL INFORMATION ON DIRECTORS RECOMMENDED FOR APPOINTMENT ORSEEKING ELECTION AT THE ANNUAL GENERAL MEETING:

Mr.T.5.Raghavan: (68)

Mr.T.S.Raghavan holds a Degree in Master of Arts from Madras University and is a certificate holder fromCertified Associate from Indian Institute of Bankers (CAIIB). He started his professional career as anOfficer in Indian Overseas Bank in the year 1964 and was an Executive Director of Vijaya Bank fromJanuary, 1996 to April, 1997: Chairman and Managing Director of Bank of Maharashtra during May 1997to November 1998 and Chairman and Managing Director of Indian Bank from December, 1998 to 2000.

He has wide experience in Finance & Banking sectors.

He holds the following Directorship and Membership in Committees of other Companies as follows:

Directorship in other Companies Membership in Committees

Empee Sugars and Chemicals Limited NilVishnu Fabrics Private Limited Nil

He is not holding any shares in the Company.

Mr.5haji Purushothaman: (34)

Mr.Shaji Purushothaman is the Managing Director of the Company. He is an Arts graduate and hascompleted Oxford A level from Oxford University, UK He has been actively associated with the Companyfor the last 12 years and has rich administrative experience.

He holds the following Directorship and Membership in Committees of other Companies as follows:

Directorship in other Companies1. Empee International Hotels & Resorts Limited2. Empee Holdings Limited3. AppolioAlchobev Limited4. Empee Power Company (India) Limited5. Empee Hotels Limited6. Aruna Constructions (India) Limited7. EmpeeAgro farm Products Pvt.Limited8. Empee Marine Products Limited9.Apollo Wind Energy Pvt.Limited1O.Apolio Beers Pvt Limited11. Universal Spirits Limited12. Empee Construction CO.Pvt. Limited

Membership in CommitteesNilNilNilNilNilNilNilNilNilNilNilNil

He holds 3,02,000 Equity Shares in the Company. He is related to Mr.M.P.Purushothaman, Chairman andMS.Nisha Purushothaman, Joint Managing Director.

Chennai24/09/2008

By order of the BoardFor Empee Distilleries Limited

M.P.PurushothamanChairman.

To the Members,

Your Directors take pleasure in presenting their Report together with the audited Accounts for the 9months ended 30th June 2008.

9 month~~rtded Year ended30.0622008 30.09.2007

Total Income 56370.83 63790.71

Operating Profit before Interest and Depreciation 2250.78 3756.47

Less Interest 428.81 547.50Depreciation 206.37 181.33Deferred Revenue Expenses - 41.56

Profit before Tax 1615.60 2986.08

Provision for Taxation 80.00 844.16Provision for Deferred Tax 405.00 131.45

Profit /(Loss) After Tax 1130.60 2010.47

Profit brought forward 35940'55 1584.08

Transfer of Profit to General Reserve 113.06 -

Interim Dividend paid 1.27 -

Dividend tax on interim dividend 9~.92 -Proposed Final Dividend ~~n1R -Dividend tax on proposed final dividend 64.61 -Profit carried forward 3500.11 3594.55

The Company has paid interim dividend of RS.3/- per share for the period ended 30.06.2008. The Board ofDirectors have recommended a final dividend of RS.2/- per share forthe period ended 30.06.2008.

The Company has closed the books of accounts for the 9 months period from 1st October 2007 to 30thJune 2008. Hence the results of 9 months ended 30th June 2008 is not comparable with the results for theyear ended 30th September 2007.

Your company achieved a total income of RS.563.71 crores and net profit after tax of RS.11.31 croresduring the 9 months ended 30th June 2008 as against a total income RS.637.91 crores and net profit aftertax of Rs. 20.10 crores achieved during the previous year ended 30th September 2007.

The two factories at Mevaloorkuppam and Palakkad produced 34,29,834 cases of IMFL during the 9months ended 30.6.2008 as against 40,41,362 cases produced during the previous year ended30.9.2007. The average production during the period ended 30.6.2008 is higher than the averageproduction during the year ended 30.9.2007 on account of higher capacity utilization and increase inproduction capacity during June 2008.

The Company has completed the increase in the capacity of its existing Extra Neutral Alcohol Plant inMarch 2008 situated in Tamil Nadu from 20 KLPD to 70 KLPD and further increased the capacity of theIMFL unit in Tamil Nadu to handle 4.19 Lakh cases per month from the present 3.20 Lakh cases per monthduring June 2008. The. Company commissioned the 10 MW Bio-mass based Power Plant in Pudukottaki,Tamil Nadu during March 2008. The proposal of implementing real estate project by developing 2.00 Lakhsq.ft. of residential space in Mevaloorkuppam, SriperumpudurTaluk, Kancheepuram District, Tamil Naduis in progress. The 60 KLPD grain based distillery project is being implemented and is expected to becommissioned in June 2009.

The increase in capacity of the Extra Neutral Alcohol Plant from 20 KLPD to 70 KLPD will enable theCompany to utilise raw material for IMFL unit at lower cost and thereby stay competitive in the market. Theincreased capacity of the IMFL unit is likely to result in higher production and consequent sales increaseby volume. The 10 MW bio mass based power plant is also expected to result in additional revenues fromthe next year onwards.

The ongoing grain based 60 KLPD distillery project and the property development business which arescheduled to be completed in the next year will ensure the diversification of the business of the Companyand thereby protect the Company from the volatility of anyone business. The proposed diversificationsare also expected to ensure maximization of shareholders wealth.

Mr.T.S.Raghavan and Mr.Shaji Purushothaman, Directors retire by rotation at the ensuing Annual GeneralMeeting and have offered themselves for reappointment.

SUBSIDIARY COMPANY

The consolidated accounts of the Company includes the accounts of subsidiary M/s.Empee Sugars andChemicals Limited and its subsidiary Empee Power Co (India) Limited.

AUDITOR

Mr. N.C.Ananthakumar, the Auditor ofthe Company will retire at the conclusion of the ensuing AnnualGeneral Meeting and being eligible offers himself for reappointment. The company has received acertificate from the Auditor to the effect that their reappointment, if made would be in accordance withSection 224 (1B) ofthe CompaniesAct, 1956. The Board recommends his re-appointment.

FIXED DEPOSITS

Your Company has not accepted any fixed deposits from the public during the year.

REPORT OF EMPLOYEES UNDER SECTION 217(2A)

The particulars of employees falling within the provision of Section 217(2A) of the Companies Act, 1956read with Companies (Particulars of Employees) Rules 1975, is given asAnnexure 1 tothis Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO

Information regarding conservation of Energy, Technology absorption and Foreign Exchange earningsand outgo in accordance with the provisions of Section 217(1 )(e) of the Companies Act, 1956 read withCompanies (Disclosure of particulars in the Report of Directors) Rules 1988 is given as annexure 2 to thisReport.

CORPORATE GOVERNANCE REPORTA Report in line with the requirement of clause 49 of the Listing Agreement on the Corporate Governancepractices followed by the Company and the Certificate from the Statutory Auditors on Compliance ofmandatory requirements along with Management Discussion and Analysis, are given as Annexure 3 tothis report.

INDUSTRIAL RELATIONS

The Industrial Climate in the Company during the year has been conducive and the Company had goodrelations with its workforce located at its factories.

Pursuant to the requirements under Section 217(2AA) of the Companies Act, 1956 your Directors herebystate and confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have beenfollowed;

b) the Directors have selected accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the company as at 30th June 2008 and of the profit of the company for the 91T)0nthsended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956, for safeguarding theassets ofthe Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a 'going concern' basis.

Your Directors place on record their appreciation of the efforts and valuable contributions put in by theemployees at all levels ofthe Company.

YourDirectors also wish to express their gratitude forthe continuous assistance and support extended bythe Banks, Financial Institutions, Customers and Government authorities and also to the shareholdersfor their forbearance and their faith in the management. Further, your Directors also place on record theirdeep sense of appreciation for the contributions made by employees at various levels to the growth andsuccess of the company.

Place: ChennaiDate : 24.09.2008

ANNEXURE (1)

PARTICULARS OF EMPLOYEES UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956

Qualification Date of Last employmentName and Designation Remuneration commencement

and experience of Employment held

Mr.Shaji Purushothaman Rs. 29.94 lacs B.A10/03/2008

Appollo12 years Alchobev Ltd

MS.Nisha Purushothaman Rs. 39.39 lacs MBA 02/12/199413 years -

Information pursuant to the Companies (Disclosure of Particulars in the Report of Board of Director)Rules, 1988 and forming part of the Directors report for the period ended 30th June 2008.

A. Conservation of Energy:

a. Energy conservation measures taken.

The Company has installed the necessary energy conserving machinery as per the standardspecification list prescribed by the Government of India for a factory of its size.

b. Additional Investments and proposals,if any, being implemented for reduction of consumption ofenergy. Nil

c. Impact of measures of (a) and (b) above for reduction of energy, consumption and consequentimpact on the cost of production of goods. Nil

B. Technology absorption:

1. Specific areas in which R&D carried out by the company.

2. Benefits derived as a result ofthe above R&D

4. Expenditure on R&D

a. Capital

b. Recurring

c. Total

d. Total R & D expenditure as a percentage of total turnover

Technology absorption,adaptation and innovation

1. Efforts, in brief made towards technology absorption,adaptation and innovation. Nil

2. Benefits derived as a result of the above efforts, e.g product improvement,cost reduction, product development, import substitution. Nil

(C) Foreign Exchange earnings Nil

ANNEXURE-3

REPORT ON CORPORATE GOVERNANCE

1. Company's Philosophy on Corporate Governance

The company firmly believes that good corporate governance is the foundation of corporate excellence. A.sound governance process consists of a combination of business practices which result in enhancementof shareholder value and enable the company to fulfill its obligations to customers, employees, financiersand to the society in general. The company aims to increase and sustain its corporate value throughgrowth and innovation. Your Company has been observing the key principles of the code and is committedto take adequate measures towards achieving full compliance of the Corporate Governance code. Theareas where the Company is observing the recommendation of SEBI code are given below:

2. Board of Directors

The Board of Directors ofthe company consists ofthe following Directors.Mr.M.P.Purshothaman Promoter- Non executiveMr.Shaji Purushothaman ExecutiveMS.Nisha Prushothaman ExecutiveMr.M.K.Mohan Independent Non-executiveLt.Gen.R.S.Nagra (Retd) Independent Non-executiveMr.T.S.Raghavan Independent Non-executive

The attendance ofthe Directors at the Board Meetings and the last AGM were as follows.

IName No. of Board Whether Number of other Number of

meetings attended Boards in which other Boardattended lastAGM Directorship committees

held in whichmembership

held

Mr.M.P.Purushothaman 9 Yes 14 1

Mr.Shaji Purushothaman 3 Yes 12 -Ms.Nisha Purushothaman 7 Yes 10 1Mr.T.S.Raghavan 6 Yes 2 - iLt.Gen.R.S.Nagra (Retd) 4 Yes 4 2 IMr.M.K.Mohan 6 No 4 1 I

i

9 Board Meetings were held on 13.10.2007,23.10.2007,7.11.2007,16.11.2007, 5.12.2007,10.1.2008,23.1.2008, 10.3.2008 and 29.4.2008.

Mr.T.S.RaghavanLt.Gen.R.S.Nagra (Retd)MS.Nisha Purushothaman

Independent Non-Executive (Chairman)Independent Non-Executive (Member)Executive (Member)

The terms of reference of the audit committee cover the matters specified under Clause 49 of the ListingAgreement and Section 292A of the Companies Act, 1956, besides other terms as may be referred to bythe Board of Directors.

i S.No. Name of Member No. of meetings held No. of meetings attended

i 1 Mr.T.S.Raghavan 3 3I

12 Lt.Gen.R.S.Nagra (Retd.)* 3 -i 3 MS.Nisha Purushothaman 3 3!

4 Mr.M.K.Mohan** 3 3

* appointed with effect from 29.4.2008**ceased to be a member with effectfrom 29.4.2008

The Remuneration committee, comprising of Lt.Gen.R.S.Nagra (Retd.), Mr.MKMohan and MS.NishaPurushothaman, has been constituted under the Chairmanship of Lt.Gen.R.S.Nagra (Retd.), todetermine the quantum and components of the remuneration to be paid to the Wholetime Directors. Onemeeting was held forthe year under review on 10.3.2008 and all the members attended the meeting.

Details of the remuneration of Executive Directors and Non-Executive Directors for the period ended 30thJune 2008 are as follows:

Name Remuneration for theperiod ended 30.6.2008

Mr. Shaji Purushothaman Rs. 29.94 lacs

Ms. Nisha Purushothaman Rs. 39.39 lacs

Name of the Director Sitting Fee Rs.

1. Mr.M.P.Purushothaman 20,000

2. Mr.M.K.Mohan 60,000

3. Lt.Gen.R.S.Nagra (Retd.) 40,000

4. Mr.T.S.Raghavan 60,000

5. Share Transfer Cum Shareholders'/lnvestors' Grievance Committee:

The Share transfer cum shareholders'/Investors' Grievance Committee consists ofthe following:

i) Lt.Gen.R.S.Nagra (Retd.) Chairman of the Committee..

ii) Mr.T.S.Raghavan Member

iii) MS.Nisha Purushothaman Member

The Committee, inter alia, approves share transfers, transmissions and also requests for issue 0

duplicate certificates, spliUconsolidation of shares etc and oversees all matters connected with securitie:transfers and other processes and meetings are heklfrequently. The Committee alsG:>looks into redressaof shareholders' complaints related to share transfers, non receipt of balance sheets, non-receipt 0

dividend etc. The committee oversees the performance of the R&TA and recommends overalimprovement of the quality of investor services. During the period 2007-08, three complaints werereceived and were redressed to the satisfaction of the complaining investors. No investor complaint wa~pending as on 30.6.2008.

The Board has designated Mr C.Shankar, Company Secretary cum General Manager (F & A) as thECompliance Officer, pursuant to Clause 47(a) ofthe Listing Agreement with Stock Exchanges.

6. General Body Meetings:

The last three Annual General Meetings were held as under:

Year Location Date TimeWhether special

I resolutions passed

2006-07 Image Hall, MRC Nagar, Raja 10/3/2008 10A.MAnnamalai Puram, Chennai -600 028 --

2005-06 693, MountRoad,Chennai6000Q6 19/3/2007 11 AM -

2004-05 693, MountRoad,Chennai600006 29/03/2006 11 AM 3

No resolutions were passed last year through postal ballot. As of now no special resolution is proposed tobe conducted through postal ballot.

7. Disclosures:

I. There were no materially significant related party transactions that may have potential conflic1with the interests of company at large.

ii. There are no non-compliance by the Company on any matter related to capital markets, durin~the last three years. There were no penalties, strictures imposed on the Company by Stoc~Exchange or SEBI or any statutory authority, on any matter related to capital markets, during thElast three years.

iii. The Company does not have a Whistle Blower policy. However no personnel has been deniecaccess to the audit committee.

iv. The Company has complied with all the mandatory requirements of this clause. With regard tcadoption of non mandatory requirements, the non-Executive Chairman has been provided with cChairman's office at the Company's expense and a remuneration committee has been formed tcdetermine the remuneration of executive directors.

8. Means of communication:

The Company is publishing quarterly unaudited / annual audited financial results in The Trinity Mirror amthe Hindu-Business Line and Makkal Kural (vernacular language). The Company has posted thEquarterly/ annual results in the Company's website www.empeegroup.co.in. No presentations were madEto institutional investors orto the analysts during the period.

9. General Shareholder Information:

I. AGM Date, time and venue 8th December 2008 at 10 a.mThe Music Academy, Mini Hall,Old No.306,New No.168, T.T.K.Road, Chennai - 600014

ii. Nine months Period 2008-09First quarterly result Before end of October 2008Second quarterly result Before end of January 2009Audited result for the period 2008-09 Before end of June 2009

iii. Date of Book closure 1st December 2008 to 8th December 2008

iv. Dividend Payment Date On or after 8th December 2008

v. Listing on Stock Exchanges National Stock Exchange of India LimitedBombay Stock Exchange Limited

vi. Stock CodeNational Stock Exchange of India Limited EDLBombay Stock Exchange Limited 532920

http://www.empeegroup.co.in.

Month High (Rs.) Low (Rs.)

October 2007 - --November 2007 489.00 290.00

December 2007 365.00 290.10

January 2008 413.00 197.30

February 2008 229.90 163.30

March 2008 178.00 110.00

April 2008 197.00 153.25

May 2008 177.00 148.05

June 2008 160.00 110.15

ix. Registrars and Share TransferAgents

M/s.Cameo Corporate Services Limited, No.1, SubramaniamBuilding, Club House Road, Chennai - 600 002

Share transfers are registered and returned within a period of30 days from the date of receipt, by the Committee whichmeets every week.

No. of equity shares held No. of folios No. of shares held % of share-holding

Upto 500 46987 2346988 98.43

501 to 1000 372 288332 0.781001 to 2000 171 245990 0.362001 to 3000 65 165054 0.143001 to 4000 25 85311 0.054001 to 5000 20 92714 0.045001 to 10000 42 290271 0.0810001 and above 56 15494233 0.12

Total 47738 19008893 100.00

No. of equity shares held No. of folios No. of shares held % of share-holding

Promoters 4 10873200 57.20Directors and their relatives 8 3090444 16.26Mutual funds and UTI 5 167733 0.88Banks, Financial Institutions 3 27346 0.14and Insurance CompaniesPrivate corporate bodies 568 899064 4.73Indian Public 46755 3602087 18.95NRls and OCBs 389 69157 0.36Fils 6 279862 1.48GDRs -- -- --Total 47738 19008893 100.00

xiii. Dematerialisation ofshareholding and liquidity

98.3% of total equity share capital is held in dematerializedform with NSDL and CDSL.

xiv. Outstanding GDR/ADR/Warrants NILor any convertible instruments,conversion date and impact on equity

1. Mevaloorkuppam Unit,Mevaloorkuppam, Sriperumpudur,Kancheepuram, Tamil Nadu.

2. Palakad Unit,Kanjikode, Palakad, Kerala.

'EM PEE TOWERS', 59, Harris Road, Pudupet,Chennai - 600 002.E-mail ID:[email protected]

Chief Executive Officer and Chief Financial Officer Certificate:

The Chief Executive Officer and Chief Financial Officer have submitted to the Board of Directors thcertification as per clause 49(V) of the Listing Agreement.

Declaration under clause 49 ofthe Listing Agreement

I, confirm that the Company has, in respect of the Period ended 30th June 2008, received from thmembers of the Board and Senior Management Personnel of the Company, a declaration of compliancwith the code of conduct as applicable to them.

Chennai24.9.2008

AUDITOR'S CERTIFICATE ON COMPLIANCE WITH CORPORATE GOVERNANCE

I have examined the compliance of conditions of Corporate Governance by Empee Distilleries Limited fcthe period ended 30.06.2008, as stipulated in Clause 49 of the Listing agreement of the said Companwith Stock Exchange(s).

The compliance of conditions of Corporate Governance is the responsibility of the management. Mexamination was limited to procedures and implementation thereof, adopted by the Company for ensurinthe compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression copinion on the financial statements of the Company.

In my opinion and to the best of my information and according to the explanations given to me, I certify thethe Company has complied with the conditions of Corporate Governance as stipulated in the abovmentioned Listing agreement.

1 state that no investor grievances is pending for a period exceeding one month against the Company aper the records maintained by the Shareholders / Investor Grievance Committee.

I further state that such compliance is neither an assurance as to the future viability of the Company nor thefficacy or effectiveness with which the management has conducted the affairs of the Company.

N.C. ANANTHAKUMAIChartered Accountan

Membership No. 2366"Date : 24.9.2008Place: Chennai

mailto:ID:[email protected]

i. Industry structure and developments.

The IMFL industry in India is limited to very few enterprises and it is subject to strict licensing andregulation by the concerned State Governments. The IMFL market was estimated at 190 million casesduring the last fiscal, including 60 million cases sold in the cheap liquor market. IMFL's market share isaround Rs.45,000 crores. The totallMFL market is estimated to have grown at 18.5% in value terms overthe last fiscal, when it was valued at about Rs.38,000 crores. In volume terms, the market has grown 21 %from 158 million cases in fiscal 2007.

ii. Opportunities and Threats.

In the past, the Tamil Nadu Government had not permitted any new entrants other than the existinglicensees to manufacture and market IMFL products. Due to the entry barriers in the State, competition willnot be severe.

Price of liquor products are controlled by the State Governments. The prices are not increasedproportionately inspite of increase in input costs. Further the IMFL industry is politically sensitive and alsoprone to frequent changes in Government policies on taxes, levies and state excise duty. Any materialchange in the duty structure might adversely impact financials.

iii. Segment-wise or product-wise performance.

During the 9 months ended 30.6.2008, the Company produced 3429834 cases of IMFL as against theproduction of 4041362 cases during the 12 month period ended on 30.9.2007. The sales was 3450462cases during the 9 months ended 30.6.2008 as against 4026285 cases sold in the 12 months ended30.9.2007.

The biomass based power project at Aranthangi, Pudukottai was commissioned in March 2008. Therevenue from the sale of Power is likely to significantly increase during the next year when the plant runs tothe full capacity.

iv. Financial performance and Outlook

The financial performance and outlook is mentioned in the Directors' Report.

v. Risks and concerns.

The liquor industry in India is highly Government regulated in terms of constraints on manufacturing,storage as well as distribution. The industry faces threats of prohibition, high excise duties, exorbitantimport duty, restrictions on advertisement, restrictions on inter-state movement, besides there are barrierson control over distribution and monopoly status of the State Government which is the sole purchaser 01the product.

The existing distilleries use molasses based spirit as their basic raw material. Considering the impetugiven to ethanol blending program by the Central Government, a demand-supply mismatch may push ucost ofthe raw material.

vi. Internal control systems and their adequacy.

The Company has adequate internal control systems and procedures installed at all levels. InterneControl Systems are continuously monitored for their adequateness and strengthened through alongoing process. The report of Internal audit is regularly discussed with the management and correctivimeasures, wherever required, are taken and continuously monitored.

VII. Cautionary Statement:

Statements in the Management discussion and analysis report outlining the Company's estimatesperceptions and expectations may be forward looking statements within the meaning of applicable law:and regulations. The actual results may differ materially from those expressed hereinabove due to certailfactors which may be beyond the control of the Company.

The Members,

Empee Distilleries Limited,

I have audited the attached Balance Sheet of M/s.EMPEE DISTillERIES LIMITED as at 30th June2008 and also the Profit and loss Account for the nine months ended on that date and the Cash FlovStatement for the period ended on that date. These financial statements are the responsibility of thEmanagement of the Company. My responsibility is to express an opinion on these financial statementlbased on my audit.

1. I have conducted my audit in accordance with auditing standards generally accepted in India. ThOSEStandards require that I plan and perform the audit to obtain reasonable assurance about whethethe financial statements are free of material misstatement. An audit includes examining, on tesbasis, evidence supporting the amounts and disclosures in the financial statements. An audit alSIincludes assessing the accounting principles used and significant estimates made by managemen1as well as evaluating the overall financial statement presentation. I believe that my audit provides i

reasonable basis for my opinion.

2. As required by the Companies (Auditor's Report) Order, 2003 issued by the Central Government ilterms of section 227(4A) of The Companies Act, 1956, I enclose in the Annexure Statement on thlmatters specified in paragraphs 4 and 5 of the said Order.

3. Furtherto our comments in theAnnexure referred to above, I state that:

(i) I have obtained all the information and explanations which to the best of our knowledge and beliEwere necessary for the pu rposes of my audit;

(ii) In my opinion, proper books of account as required by law have been kept by the Company so far aappears from my examination of those books;

(iii) The Balance Sheet and Profit and loss Account and Cash flow statement dealt with by this report arin agreement with the books of account;

(iv) In my opinion, the Balance Sheet and the Profit and loss Account dealt with by this report complwith the mandatory accounting standards referred to in sub section (3C) of section 211 of thCompanies Act, 1956.

(v) In my opinion and based on information and explanation given to me, none of the Directors ardisqualified as on 30.6.2008 from being appointed as Director in terms of clause (g) of sutsection( 1) of section 274 of the Act;

(vi) In my opinion and to the best of my information and according to the explanations given to me, thsaid accounts read together with the significant accounting policies and other notes thereon giv

the information required by the Companies Act, 1956 in the manner so required and give a true i

fairview in conformity with the accounting principles generally accepted in India;

i) in the case of the Balance Sheet, ofthe state of affairs of the Company as at 30th June, 2008,

ii) in the case of the Profit & LossAccount, of the PROFITforthe period ended on that date, and

iii) in the case of the Cash Flow Statement, ofthe Cash Flow for the period ended on that date.

Place: ChennaiDate: 24.9.2008

ANNEXURE REFERRED TO IN THE AUDITOR'S REPORT TO THE MEMBERS OF EMPEEDISTillERIES LIMITED ON THE ACCOUNTS FOR THE 9 MONTHS ENDED 30.6.2008

On the basis of the information and explanations given to me and the books and records examined byin the normal course of my audit and to the best of knowledge and belief:

1. In respect of Fixed Assets

a) The Company has maintained proper records showing full particulars including quantita1details and situation of its fixed assets.

b) As explained to me, the fixed assets have been physically verified by the Management duringyear in a phased periodical manner, which in my opinion is reasonable having regard to the SiZIthe company and nature of its assets. No material discrepancies were noticed on such physiverification.

c) In my opinion, the Company has not disposed of substantial part of fixed assets during the y'and the going concern status ofthe Company is not affected.

2. In respect of inventories:

a) As explained to me, inventories have been physically verified by the Management at regLintervals during the year.

b) In my opinion and according to the information and explanations given to me, the procedurEphysical verification of inventories followed by the management are reasonable and adequatErelation to the size of the Company and nature of its business.

c) The Company has maintained proper records of inventories. As explained to me, there was

material discrepancies noticed on physical verification of inventory as compared to the books ofaccounts.

3) 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 in the Section 301 of the Companies Act,1956.

The Company has granted loans to the Companies under the same management. In my opinion andaccording to the information and explanation given to me, the terms and conditions are notprejudicial to the interests ofthe Company.

4) In my opinion and according to the information and explanations given to me, there are adequateinternal control system commensurate with the size of the Company and the nature of its business forthe purchase of inventory and fixed assets and for the sale of goods and services. During the courseof my audit, I have not observed any major weakness in internal controls.

5) In respect of transactions covered under section 301 of the Companies Act, 1956.

In my opinion and according to explanations given to me, the particulars of contracts or arrangementreferred to in section 301 of the Companies Act have been entered in the Register required to bemaintained under that section.

6) The Company has not accepted any deposits from the public.

(7) In my opinion, the Company has an adequate internal audit system commensurate with the size andthe nature of its business.

(8) The Central Government has not prescribed maintenance of cost record under section 209 (1) (d) ofthe CompaniesAct, 1956 forthe products ofthe Company.

(9) In respect of statutory dues there are no undisputed statutory dues including provident fund, investoreducation and protection fund, employees state insurance, Income tax, Wealth tax, Sales tax,Customs Duty, Service tax, excise duty, cess and other statutory dues outstanding as at 30.6.2008for a period of more than 6 months from the date of becoming payable.

(10) The Company has no accumulated loss as on 30.6.2008.

(11) Based on audit procedures and according to the information and explanations given to me, I am ofthe opinion that the Company has not defaulted in the repayment of dues to Financial Institutions,Banks, etc.

(12) In my opinion and according to the information and explanation given to me, I am of the opinion thatthe company is not trading in securities, debentures and other investments.

(13) In my opinion the Company is not a Chit Fund, a Nidhi Mutual Benefit Fund / Society. Therefore

clause 4(xiii) of the Companies (Auditor's Report) order, 2003 is not applicable to the Company.

(14) The Company has given guarantee for loans taken by Empee Sugars and Chemicals Limited frcBank and Financial Institutions. I am of the opinion that the terms and conditions thereof are rprima facie prejudicial to the interest of the Company.

(15) The Company has obtained and utilized the term loan for which purpose the term loan was availed.

(16) The company has not ulilised the funds raised for short term purpose for long term investment.

(17) During the year the Company has not made any preferential allotment of shares to parties a'companies covered in the Register maintained under section 301 of the Companies Act, 1956.

(18) The Company has not issued any debentures during the year. Hence the question of creatiisecurities in respect of the same does not arise.

(19) The Company has raised money by way of public issue during the year.

(20) In my opinion and according to the information and explanation given to me, no fraud on or by tlCompany has been noticed or reported during the year that causes the financial statements to 1

materially misstated.


clause 4(xiii) of the Companies (Auditor's Report) order, 2003 is not applicable to the Company.

(14) The Company has given guarantee for loans taken by Empee Sugars and Chemicals Limited frcBank and Financial Institutions. I am of the opinion that the terms and conditions thereof are rprima facie prejudicial to the interest of the Company.

(15) The Company has obtained and utilized the term loan for which purpose the term loan was availed.

(16) The company has not ulilised the funds raised for short term purpose for long term investment.

(17) During the year the Company has not made any preferential allotment of shares to parties a'companies covered in the Register maintained under section 301 of the Companies Act, 1956.

(18) The Company has not issued any debentures during the year. Hence the question of creatiisecurities in respect of the same does not arise.

(19) The Company has raised money by way of public issue during the year.

(20) In my opinion and according to the information and explanation given to me, no fraud on or by tlCompany has been noticed or reported during the year that causes the financial statements to 1

materially misstated.


N.C.ANANTHAKUMAR M.Com., FC

Chartered AccountcMembership No.2361

Particulars Schedules As at As at30.06.2008 30.09.2007(Rs.inlacs) (Rs.in lacs)

SOURCE OF FUNDS

Share Capital 1 1900.89 1420.40Reserves & Surplus 2 23413.01 5979.80Secured Loan 3 3145.26 5955.54Unsecured Loan 4 1550.30 1801.98Deferred Tax Liabilities 939.43 534.41

TOTAL 30948.89 15692.13

APPLICATION OF FUNDS

Fixed Assets 5Gross Block 10068.19 5484.06Less: Accumulated Depreciation 1559.74 1353.37Net Block 8508.45 4130.69Add: Capital Work in Progress 442.28 3623.16

8950.73 7753.85

Investments 6 4512.89 807.19

CURRENT ASSETS, LOANS & ADVANCES

Inventories 7 2001.10 1862.75Sundry Debtors 8 1786.65 1726.79Cash & Bank Balances 9 783.18 207.82Loans & Advances 10 17371.30 6682.15

21942.23 10479.51

Less:

Current Liabilities & Provisions 11 4495.35 3391.02Net Current Assets 17446.88 7088.49Miscellaneous Expenditure 12 38.39 42.60

TOTAL 30948.89 15692.13

Significant accounting policies and noteson financial statements 22

N.C.AnanthakumarChartered AccountantMembership NO.23667Place: ChennaiDate : 24.9.2008


Shaji PurushothamanManaging Director

Nisha PurushothamanJoint Managing Director

C.ShankarCompany Secretary cumGeneral Manager (F&A)

Particulars Schedules 9 months ended Year ended30.06.2008 30.09.2007(Rs.in lacs) (Rs.in lacs)

INCOMESales Income 13 55708.39 62569.59Income from Sale of Power 33.59 41.52

55741.98 62611.11Other Income 14 628.85 1179.60Stock Adjustment 15 158.84) (12.25)Total 56311.99 63778.46EXPENDITURERaw material 16 11263.56 10503.27Manufacturing expenses 628.17 776.63Rent, Rates & Taxes 17 39616.81 46048.12Employee cost 18 603.06 638.38Administrative Expenses 19 903.84 857.81Selling & Distribution Expenses 20 1045.77 1197.78Total 54061.21 60021.99Profit Before Interest, Depreciation,Tax And Extra-ordinary Items 2250.78 3756.47Financial Cost 21 428.81 547.50Depreciation 5 206.37 181.33Deferred Revenue Expenses 0.00 41.56Profit before Tax and Extra-ordinary items 1615.60 2986.08Provision for Taxation

- Current tax 80,00 844.16- Deferred tax 405.00 131.45

Profit after Tax 1130.60 2010.47Profit brought forward 3594.55 1584.08Transfer of profit to General Reserve 113.06 -Interim Dividend paid 570.27 -Dividend Distribution tax paid 96.92 -Proposed Final dividend 380.18 -Dividend Distribution tax on final dividend 64.61 -Profit and Loss Account 3500.11 3594.55EPS before extraordinary items 5.95 14.15EPS after extraordinary items 5.95 14.15Significant accounting policies and notes 22on financial statements

As per my report of even date annexed

N.C.Ananthakumar M.P.PurushothamanChartered Accountant ChairmanMembership NO.23667Place: ChennaiDate : 24.9.2008




As at30.06.2008(Rs.in lacs)


Authorised:

3,00,00,000 Equity Shares of Rs. 101- each

Issued, Subscribed & Paid-up1,90,08,893 Equity Shares of Rs.1 01- each1,42,04,000 Equity Shares of RS.101- each 1420.40

1420.40

Share Premium AccountFixed Assets Revaluation ReserveGeneral ReserveProfit & Loss Account

17414.591685.25813.06

3500.11

23413.01

1685.25700.00

3594.55

5979.80

Term Loan from Banks & Financial InstitutionsWorking Capital LoansSecured loans from NBFCs

2788.56345.9210.78

3145.26 .

3568.702370.13

16.71

5955.54

SCHEDULE 4:UNSECURED LOANSLoan from NBFCs

Gross Block Depreciation Net Block

Opening Additions Deletions Closing Opening For the Deletions Closing Net Block Net BlockBalance Balance Balance year Balance as at as at01.10.07 30.06.08 01.10.07 30;06.08 30.06.08 30.09.07

Land 1666.03 0 0 1666.03 0 0 0 0 1666.03 1666.03

Buildings 1042.11 750.09 0 1792.20 286.68 32.56 0 319.24 1472.96 755.43

Plant & Machinery 2230.43 3738.24 0 5968.67 745.64 124.90 0 ' 870.54 5098.13 1484.79•..

Furniture & Fittings 22.69 1.39 0 24.08 14.96 1.10 0 16.06 8.02 7.73

Office equipments 54.15 1.30 0 55.45 15.15 1.95 0 17.10 38.35 39.00

Vehicles 359.14 7.04 0 366.18 "226.87 25.89 0 252.76 113.42 132.27

Computers 109.51 86.07 0 195.58 64.07 19.97 0 84.04 111.54 45.44

TOTAL 5484.06 4584.13 0 10068.19 )353..37 206.37 0 1559.74 8508.45 4130.69

Previous Year 6105.60 500.06 1121.60 5484.06' 1467.86 236.02 350.51 1353.37 4130.69



Quoted Investments

Andhra Bank

(Cost 1000 Equity shares)Market value (as on 30.6.2008 RS.0.55 lacs)

Empee Sugars and Chemicals Limited

(Subsidiary Company)Cost (28122102 Equity shares)Market value (as on 30.6.2008 RS.2165.40 lacs)

Unquoted Investments

Share application money

25000 Preference shares ofRs.101- each of Ceat Finance Ltd

Empee Hotels LimitedOther investments (mutual funds)

600.00 600.00

2.50 2.50

35.00 35.00

3705.70 0.00

4512.89 807.19

SCHEDULE 7: INVENTORIES

Finished GoodsRaw MaterialsWork in Progress

97.041632.76271.30

2001.10

126.24

1435.57300.94

1862.75

SCHEDULE 8: SUNDRY DEBTORS(Unsecured but considered good)

Debts outstanding fora period not exceeding 6 months

Others

1723.49 1544.45

63.16 182.34

1786.65 1726.79

135.31 96.80

647.87 111.02

783.18 207.82

SCHEDULE 9: CASH AND BANK BALANCE

Cash in handCash at Bank in current accounts

SCHEDULE 10: LOANS & ADVANCES

Advance Recoverable in cash or in kind orfor the value to be received(unsecured but considered good)

Loans and advances

Advance to Suppliers & othersLoans and advances to Subsidiary(Empee Sugars and Chemicals Limited)Prepaid Expenses

Deposits

Deposit with Government departmentsOther deposits

SCHEDULE 11: CURRENT LIABILITIES & PROVISIONS

Sundry Creditors for SuppliesTrade DepositsOther current liabilitiesProvisions

SCHEDULE 12: MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)Share issue expenses

SCHEDULE 13:SALESSales - BasicExcise Duty collectedVAT collected

SCHEDULE 14:OTHER INCOMEDividendMaking chargesProfit on sale of assetsDebit I Credit Balance Written offScrap salesMiscellaneous Income

Period ended30.06.2008(Rs.in lacs)

Year ended30.09.2007(Rs.in lacs)

14210.57 5120.032720.47 1148.14

21.68 43.25

337.52 84.3181.06 286.42

17371.30 6682.15

1224.36 650.169.65 42.88

2748.30 2057.66513.04 640.32

4495.35 3391.02

38.39 42.60

38.39 42.60

16588.35 17335.1319261.77 23076.9519858.27 22157.51

55708.39 62569.59

172.21 0.0449.97 49.250.00 613.1136.64 415.8030.91 67.13339.12 34.27

628.85 1179.60



SCHEDULE 15: STOCK ADJUSTMENT

Closing Stock:Finished Goods 97.04 126.24Work-in-progress 271.30 300.94

368.34 427.18

Opening Stock:Finished Goods 126.24 245.03Work-in-progress 300.94 194.40

427.18 439.43

Increase I (Decrease) in closing stock (58.84) (12.25)

SCHEDULE 16: RAW MATERIAL CONSUMPTION

A. Opening Stock- Raw Materials 1435.57 1134.61

Total 1435.57 1134.61

B.PurchasesRaw Materials, chemicals & packing materials 11460.75 10804.23

C.Closing Stock- Raw Materials 1632.76 1435.57

1632.76 1435.57

RAW MATERIALS CONSUMED (A+B-C) 11263.56 10503.27

SCHEDULE 17: RENT, RATES & TAXES

Excise Duty 19261.77 23077.10Excise Label 267.68 279.42VAT 19858.34 22157.59Label Registration Fee 0.74 0.15Label Renewal Fee 2.40 31.32Rent 21.73 20.71Rates & Taxes 204.15 481.83

39616.81 46048.12

SCHEDULE 18: EMPLOYEE COSTSalary & Allowances 481.22 560.59Contribution to PF & ESI 41.45 30.87Staff Welfare Expenses 38.16 30.02Gratuity 32.79 1.56Bonus and Exgratia 9.44 15.34

603.06 638.38

SCHEDULE 19: ADMINISTRATIVE EXPENSESAudit FeesBank ChargesPostage & TelegramPrinting and StationeryRepairs and MaintenanceDonationsTelephone ExpensesManagerial RemunerationConsulting chargesTravelling ExpensesTravelling Expenses - DirectorsMiscellaneous ExpensesCash DiscountDiscounting charges

SCHEDULE 20: SELLING & DISTRIBUTION EXPENSESAdvertisement & PublicityTravelling Expenses - MarketingFreight & Handling chargesLoading & Unloading chargesSales promotion expensesOther selling expenses

SCHEDULE 21: FINANCIAL CHARGESInterest on Term loansInterest on Working capital loanInterest - Others



1.5035.078.17

13.2436.552.89

16.5369.339.51

33.5913.33

190.83459.9613.34

903.84

1.7526.250.11

12.0189.241.88

25.0124.0027.9147.307.96

126.69445.8421.86

857.81

5.9616.44

296.3255.01

188.26483.78

1045.77

1.9146.11

356.7063.10

264.93465.03

1197.78

161.9554.57

212.29

428.81

221.28226.7899.44

547.50

SCHEDULE - 22

SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON FINANCIAL STATEMENTS

I. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Accounting

The financial statements are prepared and presented in accordance with generally acceptEaccounting principles in India and the provisions of the Companies Act, 1956. The Companyf6110vthe accrual method of accounting under historical cost convention.

2. Recognition of Income & Expenditure

All income and expenditure are accounted for on accrual basis as stated herein except in respectsuch items as are specifically mentioned hereunder and in the notes.

Sales Income are accounted inclusive of excise duty and sales tax wherever applicable but nettrade discounts.

3. Fixed Assets and Depreciation

Fixed assets are stated at their original cost of acquisition (including expenditure for the acquisiticand/or installation) less accumulated depreciation.

Depreciation on Fixed Assets has been provided on straight line method at the applicable rateprescribed under Schedule IV to the Companies Act, 1956. Depreciation on addition to fixed asseduring the year is reckoned on a pro rata basis with reference to the month in which the fixed asseare put to use or commissioned.

Fixed Assets costing less than Rs.5,OOOI-are depreciated fully in the year of acquisition.

4. Impairment of Fixed Assets

Wherever events of changes in circumstances indicate that the carrying value offixed assets may bimpaired, the Company subjects such assets to a test of recoverability, based on discounted casflows expected from use or disposal thereof. If the assets are impaired, the Company recognizes cimpairment loss as the difference between the carrying value and fair value less cost of sale. None (the Company's fixed assets are considered impaired as on the Balance Sheet date.

5. Capital Work in Progress

Capital work in progress is stated at cost.

6. Investments

All long-term investments are stated at cost. Provision for diminution in value, other than tempora~is considered wherever necessary on an individual basis.

Investment cost is arrived at weighted average method for the purpose of valuation of investment.

a) Finished Goods: At cost or market value wherever is lower.

b) Work-in-Progress: At material cost, labour and proportionate direct overheads.

c) Raw materials and Stores & Spares: At landed cost on FIFO basis.

8. Foreign Currency Transaction

Foreign Exchange transactions are recorded at the exchange rates prevailing at the time (transaction.

Assets and Liabilities expressed in Foreign currencies (to the extent not covered against exchangfluctuations) are translated into Indian Rupees at the exchange rate prevailing at the Balance Sheedate and any loss or gain arising there from has been included in Finance charges as per thprovisions of Accounting Standards 16 and 11 issued by The Institute of Chartered Accountants (India.

9. Prior Period and Extra Ordinary Items

Prior Period and Extra Ordinary items having material impact on the financial affairs of the Companare disclosed, wherever applicable.

10. Retirement and Other Benefits

Contribution to Provident Fund is made as per the provisions of Employees Provident Fund anMiscellaneous Provisions Act, 1952 and charged to Profit and Loss Account and discloseseparately.

Gratuity liability is accounted as and when gratuity is paid to the employees.

Leave encashment is accounted as and when leave encashment is paid to the employees.

11. IncomeTax

The income tax liability is provided in accordance with the provisions of the Income Tax Act, 196'Deferred tax is recognized, subject to consideration of prudence, on timing differences, being thdifference between taxable incomes and accounting income that originate in one period and arcapable of reversal in one or more subsequent periods.

A. Business Segments:

Based on the guiding principles given in Accounting Standard - 17 'Segment Reporting', I

Company's business segments include Liquor(IMFL) and Power.

B. SegmentAccounting Policies

In addition to the significant accounting policies applicable to the business segments as givernotes, the accounting policies in relation to segment accounting are as under:

a. Joint revenue and expenses of segments are allocated amongst them on a reasonable ba~All other segment revenue and expenses are directly attributable to the segments.

b. Segment assets include all operating assets used by a segment and consist principallyoperating cash, debtors, inventories and fixed assets, net of allowances and provisions, whare reported as direct offsets in the balance sheet. Segment liabilities include all operatliabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilitdo not include deferred income taxes, share capital, reserves, loans, investments, miscellanecexpenditure and profit and loss appropriation account. While most of the assets / liabilities candirectly attributed to the individual segments, the carrying amount of certain assets / Iiabilitpertaining to both segments are allocated to the segments on a reasonable basis.

c. Inter segment sales between operating segments are accounted at market price. ThEtransactions are eliminated in consolidation.

13. Earnings Per Share

The Company reports basic and diluted earnings per equity share in accordance with AccountiStandard-20. Basic earnings per equity share have been computed dividing net profit after·attributable to equity shareholders by the weighted average number of equity shares outstandiduring the year. Diluted earnings during the year adjusted for effects of all dilutive potential eqLshares per equity share is computed using the weighted average number of equity shares adilutive potential equity shares outstanding during the year. For Basic and diluted earnings bef<extra-ordinary items, the amount of extra-ordinary items and tax thereon are excludedcomputation.

14. Miscellaneous Expenditure

Miscellaneous expenditure includes share issue expenses which is written off over 1period often years.

1. The Company has closed the accounting year on 30.6.2008 for the period from 1.10.2007 to30.6.2008.

2. SECURED LOANS:

a) Working capital facility from Andhra Bank, for RS.800 lacs is secured byhypothecation of raw materials, stores and consumables, work-in-process, finished goods andsales receivables (not older than 90 days) and by second charge on fixed assets of the companyand personal guarantee of two Promoters.

b) Working capital facility from Andhra Bank, for RS.500 lacs is secured byhypothecation of raw materials, stores and consumables, work-in-process, finished goods andsales receivables (not older than 90 days) and by second charge on fixed assets of the Palakkadunit of the company and also personal guarantee oftwo Promoters.

c) Term loan from Andhra Bank, for RsAOO lacs is secured by first charge on fixed assets ofMevaloorkuppam unit of the Company and personal guarantee of twoPromoters.

d) Term loan - Power division, from Andhra Bank, for Rs.2303lacs is secured by way of first chargeon the fixed assets including plant and machineries of Aranthangi division and by personalguarantee oftwo Promoters.

e) Corporate Loan from Indian Overseas Bank, for RS.1000 lacs - collateral security of land andbUilding belonging to associate company, M/s.Empee International Hotels & Resorts Limited.

f) Corporate Loan from Allahabad Bank for RS.700 lacs - collateral security of land situated inKuthambakkam village, SriperumpudurTaluk.

3. Contingent Liabilities

a) Corporate guarantees to the Banks: RS.1681.69Iacs (previous year RS.1681.69 lacs)b) Claims against the company not acknowledged as debts: RS.87 Lacs (Previous year RS.87 lacs )c) Disputed Income tax demand RS.1572 lacs (previous year RS.1572 lacs)d) Disputed sales tax demand RS.1640 lacs (previous year RS.1640 lacs)

4. Estimated amount of capital contracts remaining to be executed is RS.5698.01 lacs (previous yearRs.1215Iacs).

5. During the year, IPO expenses of RS.1324A91acs written off against share premium account.

6. Balances in some of the parties are subject to confirmation.

7. In the absence of receipt of information the small scale industrial status from the parties, the details 01

names of small scale industrial undertaking to which the company owe any sum together winterest outstanding for more than 30 days could not be ascertained.

8. Quantitative information

A. Licensed Capacity(per month)

IMFLproducts- TNIMFL products- Kerala

B. Installed capacity (per month)

IMFLproducts- TNIMFL products - Kerala

C. Production:

IMFLproducts- TNIMFL products - Kerala

D. Sales

IMFL products - TNIMFL products - Kerala

E. Closing stock:

IMFLproducts- TNIMFL products- Kerala

9. CIF Value of Imports

Raw materialsCapital GoodsConsumable spares

10. Earnings in Foreign Exchange

Export of goods calculated on FOB basis

11. Expenditure in Foreign Currency

I) professional and consultation chargesii) interestiii) others

12. Consumption - Raw material, stores & spares and others

- Imported- Indigenous

As at30.06.2008(in cases)

419400180000

419400180000

2914935514899

2920588529874

501915043

As at30.09.2007(in cases)

319400180000

319400180000

3470506570856

3464305561980

932639845

Nil10503.27

Particulars IMFL Power Unallocated Total

Segment RevenueSales 55708.39 33.59 -- 55741.98Other Income 628.85 - - 628.85Total Revenue 56337.24 33.59 -- 56370.83

Segment ResultOperating Profit 2310.85 (60.07) - 2250.78

Interest Expenses 354.72 74.09 -- 428.81Depreciation 166.39 39.98 -- 206.37

Net Profit 1789.74 (174.14) -- 1615.60

Other Information4512.90 35405.85Segment Assets 26439.59 4453.36

Segment Liabilities 3682.52 812.83 -- 4495.35

Depreciation 166.39 39.98 - 206.37Capital expenditure 1151.68 3432.45 - 4584.13

14. Related party transactions

Related Parties

SUbsidiary Company


Fellow Subsidiary Company

Empee Power Company (India) Limited

Key Management Personnel

Mr.M.P.Purushothaman ChairmanMr.Shaji Purushothaman Managing DirectorMS.Nisha Purushothaman Joint Managing Director

Relatives of Key Management Personnel

MS.Sheena Purushothaman

Other related parties

Empee Holdings LimitedEmpee International Hotels & Resorts LimitedSouth (India) Hotels Pvt Ltd

Appollo Wind Energy Pvt LimitedAppollo Bears Pvt LtdEmpee Leasing & Finance Limited

Particulars IMFL Power Unallocated Total

Segment RevenueSales 55708.39 33.59 -- 55741.98Other Income 628.85 - - 628.85Total Revenue 56337.24 33.59 -- 56370.83

Segment ResultOperating Profit 2310.85 (60.07) - 2250.78

Interest Expenses 354.72 74.09 -- 428.81Depreciation 166.39 39.98 -- 206.37

Net Profit 1789.74 (174.14) -- 1615.60

Other InformationSegment Assets 26439.59 4453.36 4512.90 35405.85

Segment Liabilities 3682.52 812.83 -- 4495.35

Depreciation 166.39 39.98 - 206.37Capital expenditure 1151.68 3432.45 - 4584.13


Related Parties

Subsidiary Company


Fellow Subsidiary Company

Empee Power Company (India) Limited


Mr.M.P.Purushothaman ChairmanMr.Shaji Purushothaman Managing DirectorMS.Nisha Purushothaman Joint Managing Director

Relatives of Key Management Personnel

Ms.Sheena Purushothaman


Empee Holdings LimitedEmpee International Hotels & Resorts LimitedSouth (India) Hotels Pvt Ltd

Appollo Wind Energy Pvt LimitedAppollo Bears Pvt LtdEmpee Leasing & Finance Limited

AppolioAlchobev LimitedAruna Exports Pvt LtdEmpee Hotels LimitedAruna Constructions (India) LimitedEmpeeAgro Farm Products Pvt LtdEmpee Marine Products LimitedEmpee Packaging IndustriesN.S.Travels

Empee Heritage Inn Pvt LimitedEmpeeAirways LtdUniversal Spirits LtdEmpee Construction Company Pvt LtdEmpee Power & Infrastructure Pvt LtdEDL Properties Private LtdAruna Constructions

Particulars Subsidiary Key Relatives of Key Other relatedCompanies Management Management parties

Personnel Personnel

Nil 69.33 Nil NilRemuneration (-) (24.00) (-) (-)

Nil Nil Nil NilReceiving of Services (-) (- ) (-) (-)

Finance (Including loans 2665 Nil Nil Niland equity contributions (168.74) (-) (-) (-)in cash or kind)

Interest Paid Nil Nil Nil Nil(-) (-) (-) (-)

Interest Received 65.47 Nil Nil Nil(65.47) (-) (-) (-)

Sale of assets Nil Nil Nil Nil(618.00) (-) (- ) (-)

Sale of investments Nil Nil Nil Nil(-) (- ) (-) (1.50)

Nil Nil Nil 59.17Purchase of goods (- ) (-) (-) (55.46)

Nil Nil 1.35 13.31Rent paid (-) (-) (0.45) (15.84)

Audit FeesTax audit FeeFor other services

16. Details of Subsidiary Companies

2007-08

1.250.25

(Rs.ln Lacs)

2006-07

1.250.250.25

Particulars Empee Sugars and Empee Power CompanyChemicals Limited (India) Ltd

Year (12 months ended 30th june) 2007-08 2006-07 2007-08 2006-07

Share Capital 4197.01 4197.01 784.00 5.00

Reserves & SurplUS (575.81 ) (610.08) -- --Total Liabilities 11447.47 5941.32 1948.40 154.31

Total Assets 11447.47 8028.25 1948.40 154.31

Total Income 6005.34 6115.54 -- --Profit before tax 43.82 54.26 -- --Provisions for tax (85.84 ) (33.31) -- --Profit after tax 129.66 87.57 -- --Proposed Dividend -- -- -- --Details of investments 0.13 0.11 - -

Total earnings available for shareholdersWeighted average no. of sharesNominal value of equity shareBasic/ Diluted Earnings per shares (Rs.)

17. EARN INGS PER SHARE (before and after extraordinary items)

2007-08

Rs.1130.60Iacs1900889310/-5.95

2006-07

Rs.2010.47Iacs1420400010/-14.15


N.C.AnanthakumarChartered AccountantMembership No.23667Place: ChennaiDate : 24.9.2008






A. Cash Flow from Operating Activities:Net Profit before tax & extra ordinary itemsAdjustment for:DepreciationInterest Paid(Profit)/Loss on Sale of Assets(Profit)/Loss on Sale of InvestmentsExpenses written offOperating Profit before Working Capital changes(Increase)/Decrease in stock(Increase)/Decrease in Current AssetsIncrease / (Decrease) in Current LiabilitiesCash generated from operationsTax paidNet cash used in operating activities

B. Cash Flow from Investing activities:

Purchase of Fixed Assets (incl.CWIP)Sale of Fixed AssetsSale / (Purchase) of InvestmentsMiscellaneous ExpenditureNet Cash from Investing activities

C. Cash Flow from Financing activities:

Increase in Working Capital LoanIncrease in Term loanInterest paidIncrease in equity share capitalShare premium amount receivedInterim Dividend paidDividend distribution tax paidNet cash used in Financing activities

Increase in Cash and Cash equivalentsCash and Cash equivalents at the beginning of the yearCash and Cash equivalents at the end of the year

206.37428.810.000.004.21

2254.99(138.35)

(10202.06)579.56

(7505.86)(546.94)(8052.80)

(1403.25)0.00

(3705.71)0.00

(5108.96)

(2275.89)(786.07)(428.81)480.49

17414.59(570.27)(96.92)

13737.12

575.36207.82783.18

181.33547.50

(613.11)14.7541.56

3158.11(288.70)

(2432.23)11.38

448.56(844.16)(395.60)

(3380.79)598.13

16.25(1.05)

(2767.46)

463.373139.67(547.50)

0.000.000.000.00

3055.55

(107.51 )315.33207.82



As per my report of even date annexedN.C.AnanthakumarChartered AccountantMembership NO.23667Place: ChennaiDate : 24.9.2008



Empee Sugars andChemicals Ltd

Empee Power Company(India) Limited

2 Holding Company's interest at the end of thefinancial year of the subsidiary Company

a. No of Equity Sharesb. Extent of Holdingc. Number of Preference Sharesd. Extent of Holding

2,81,22,10267%NilNil

5,00,000'100%

NilNil

3 The net aggregate amount of theSubsidiary's Profit/(Loss) so far as itconcerns the members of the HoldingCompany and is not dealt within the HoldingCompany's books of accounts

a. For the Financial Year ended30.6.2008.(Rs.in lacs)

b. For the previous financial yearssince becoming a subsidiary(Rs.in lacs)

4 The net aggregate amount of the Subsidiary'sProfit/(Loss) so far as it concerns themembers of the Holding Company and isdealt within the Holding Company's books ofaccounts

c. For the Financial Year ended30.6.2008.

d.For the previous financialyears since becoming asubsidiary

• Held by Empee Sugars and Chemicals Ltd.





I. Registration Details

Registration No. 10313 State Code 18Balance Sheet Date 30.06.2008

II. Capital Raised during the year (Rs.in thousands)

Public Issue 48049 Rights Issue NilBonus Issue Nil Private Placement Nil

III. Position of Mobilisation and Utilisation offunds (Rs.in thousands)

Total Liabilities 3094889 Total Assets 3094889Sources offunds:Paid-up capital 190089 Reserves & Surplus 2341301Secured Loans 314526 Unsecured loans 155030Deferred tax liabilities 93943Application offunds:Net Fixed Assets 895073 Investments 451290Net current assets 1744687 Misc. Expenditure 3839

IV. Performance ofthe Company (Rs.in thousands)

Turnover 5637083 Total Expenditure 5475523Profit / (Loss) before tax 161560 Profit after tax 113060Earning per share (Rs.) 5.95 Dividend rate (%) 50%

Item Code No. (ITC Code)Product description

220810IMFL

M .P.PurushothamanChairman




REPORT OF THE AUDITORS TO THE BOARD OF DIRECTORS OF EMPEE DISTILLEREIS LIMITED

I have audited the attached Consolidated Balance Sheet of M/s.Empee Distilleries Limited and itssubsidiary (the Group) as at 30th June 2008, the consolidated Profit and Loss Account and theconsolidated Cash Flow Statement for the period ended on that date, annexed thereto. TheseConsolidated financial statements are the responsibility of Empee Distilleries Limited's Management andhave been prepared by the management on the basis of separate financial statements and other financialinformation regarding components. My responsibility is to express an opinion on these consolidatedfinancial statements based on my audit.

I conducted my audit in accordance with auditing standards generally accepted in India. Those Standardsrequire that I plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessin£accounting principles used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. I believe that the audit provides a reasonable basis for myopinion. I did not audit the financial statements of subsidiaries, whose financial statements reflect thEGroup's share of total assets of Rs.11973.38 lacs as at 30.6.2008 and the Group's share of total revenue~of Rs. 7363.57 lacs for period ended on that date, and net cash inflows amounting to RS.117 .22 lacs forthEyear ended on that date as considered in the consolidated financial statements. These financiastatements and other financial information have been audited by other auditors whose reports have beerfurnished to us, and in my opinion, in so far as it relates to the amounts included in respect of theSEsubsidiaries, is based solely on the reports of the other auditors.

I report that the consolidated financial statements have been prepared by Empee Distillereis Limited'~management in accordance with the requirements of Accounting Standard 21, Consolidated FinanciaStatements, issued by the Institute of Chartered Accountants of India. Based on my audit and orconsideration of the reports of other auditors on separate financial statements and on the other financiainformation of the components, in my opinion and to the best of my information and according to thEexplanations given to us, the attached consolidated Financial Statements give a true and fair view ilconformity with the accounting principles generally accepted in India.

i. In the case of Consolidated Balance Sheet, of the state of affairs of the Company as at 30th Junl2008.

ii. In the case of Consolidated Profit and Loss Account of the profit for the period ended on that dateand

iii. In the case of Consolidated Cash Flow Statement, of the cash flows for the period ended on thedate.


N.C.ANANTHAKUMAR M.Com., FCI

Chartered AccountarMembership NO.2366

Particulars Schedules As at As at30.06.2008 30.09.2007(Rs-in lacs) (Rs.in lacs)

SOURCE OF FUNDS

Share Capital 1 1900.89 1420.40

Minority Interest 638.48 613.18Reserves & Surplus 2 23930.88 6446.41Secured Loan 3 8043.68 10261.00Unsecured Loan 4 1550.30 1951.15Deferred Tax Liabilities 1152.38 788.23

TOTAL 37216.61 21480.37

APPLICATION OF FUNDS

Fixed Assets 5Gross Block 17562.37 10424.22Less: Accumulated Depreciation 4375.33 4005.56Net Block 13187.04 6418.66Add: Capital Work in Progress 2288.19 5539.83

15475.23 11958.49

Investments 6 4344.29 638.59

CURRENT ASSETS, LOANS & ADVANCES

Inventories 7 4177.94 2546.02Sundry Debtors 8 2113.04 2385.08Cash & Bank Balances 9 1129.59 437.01Loans & Advances 10 16287.43 7010.73

23708.00 12378.84Less:

Current Liabilities & Provisions 11 6349.30 3568.95Net Current Assets 17358.70 8809.89Miscellaneous Expenditure 12 38.39 73.40

TOTAL 37216.61 21480.37

Significant accounting policies and noteson financial statements 22

As per my report of even date annexedN.C.Ananthakumar M.P.PurushothamanChartered Accountant ChairmanMembership No.23667Place: ChennaiDate : 24.9.2008




Particulars Schedules Period ended Year ended30.06.2008 30.09.2007(Rs.in lacs) (Rs.in lacs)

INCOMESales Income 13 61527.55 69138.76Income from Sale of Power 33.59 41.52

61561.14 69180.28Other Income 14 668.20 588.69Stock Adjustment 15 1446.22 175.32Total 63675.55 69944.29EXPENDITURERaw material 16 16153.00 16051.16Manufacturing expenses 930.71 413.30Rent, Rates & Taxes 17 40196.92 46408.83Employee cost 18 1081.44 1104.80Administrative Expenses 19 1056.42 1187.69Selling & Distribution Expenses 20 1045.77 1197.78Total 60464.26 66363.56Profit Before Interest, D,preCiatii:)n,Tax And Extra-ordlniiry Items 3211.29 3580.73Financial Cost 21 1004.67 838.11Depreciation 5 369.78 395.97Deferred Revenue Expenses 0.00 41.56Profit before Tax and Extra-ordinary items 1836.84 2305.09Provision for Taxation

- Current tax 192.36 844.16- Deferred tax 437.37 103.67

Profit after Tax 1207.11 1357.26Add I (Less:) Minority Interest (25.25) 16.12Retained earnings 1181.86 1373.38Profit brought forward 3748.24 2374.86Transfer of profit to General Reserve 113.06 0Interim Dividend paid 570.27 0Dividend Distribution tl;iX paid 96.92 0Proposed Final dividend 380.18 0Dividend Distribution tax on final dividend 64.61 0Profit and Loss Account 3705.06 3748.24EPS before extraordinary items 6.22 9.67EPS after extraordinary i~.ems 6.22 9.67Significant accounting polities and notes 22on financial statements

As per my report of even date annexedN.C.AnanthakumarChartered AccountantMembership NO.23667Place: ChennaiDate : 24.9.2008







Authorised:

3,00,00,000 Equity Shares of RS.101- each

Issued, Subscribed & Paid-up1,90,08,893 Equity Shares of RS.101- each1,42,04,000 Equity Shares of RS.101- each

SCHEDULE 2: RESERVES & SURPLUSShare Premium AccountCapital ReserveFixed Assets Revaluation ReserveGeneral ReserveProfit & Loss Account

Term Loan from Banks & Financial InstitutionsWorking Capital LoansSecured Loans from NBFCs

SCHEDULE 4: UNSECURED LOANS

Loan from NBFCs

Gross Block Depreciation Net Block

Opening Additions Deletions Closing Opening For the Deletions tlosinq Net Block Net BlaelBalance Balance Balance year 'alance as at as at01.10.07 30.06.08 01.10.07 30.06.08 30.06.08 30.09.07

Land 1987.25 102.90 0 2090.15 0 0 0 0 ?090.15 1987.25

BUildings 1911.05 890.17 0 2801.22 588.10 49.83 0 637.92 2163.30 1322.95

Plant & Machinery 5828.21 6041.49 0 11869.71 3009.61 266.94 0 3276.55 8593.16 2818.60

Furniture & Fittings 39.03 2.89 0 41.92 26.59 1.60 0 28.19 13.73 12.44

Office equipments 61.93 6.67 0 68.59 18.99 2.44 0 21.43 47.16 42.94

Vehicles 469.93 7.80 0 477.73 278.15 31.58 0 309.13 168.00 191.78

Computers 126.82 86.23 0 213.05 84.12 17.39 0 101.51 111.54 42.70

TOTAL 10424.22 7138.15 0 17562.37 4005.56 369.78 0 4375.33 13187.04 6418.66

Previous Year 10905.78 640.04 1121.60 10424.22 3905.38 450.66 350.48 4005.56 6418.66



Andhra Bank(Cost 1000 Equity shares)Market value (as on 30.6.2008 RS.0.55 lacs)

Unquoted Investments

Share application money

25000 Preference shares ofRs.10/- each of Ceat Finance LtdEmpee Hotels LimitedOther investments (mutual funds)6 Years NSC VIII Issue

2.5035.00

3705.700.13

4344.29

2.5035.00

0.000.13

638.59

Finished GoodsRaw MaterialsWork in Progress

2113.431771.14293.37

4177.94

659.621585.46

300.94

2546.02

(Unsecured but considered good)

Debts outstanding for a period not exceeding 6 monthsOthers

1723.49389.55

2113.04

2202.74182.34

2385.08

Cash in handCash at Bank in current accounts

147.92981.67

1129.59

103.46333.55

437.01

SCHEDULE 10: LOANS & ADVANCES

Advance Recoverable in cash or in kind or for the value tobe received(unsecured but considered good)Loans and advancesAdvance to Suppliers & othersPrepaid ExpensesDepositsDeposit with Government departmentsOther deposits

SCHEDULE 11: CURRENT LIABILITIES & PROVISIONS

Sundry Creditors for SuppliesTrade DepositsOther current liabilitiesProvisions

SCHEDULE 12: MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)Share Issue expensesPreoperative expenses

SCHEDULE 13: SALES

Sales - BasicExcise Duty collectedVAT / Sales tax

SCHEDULE 14: OTHER INCOME

DividendMaking chargesProfit on sale of assetsDebit / Credit Balance Written offScrap salesMiscellaneous Income

Period Ended30.06.2008(Rs.in lacs)

Year Ended30.09.2007(Rs.in lacs)

15658.16 6291.8841.06 57.31

368.77 67.65219.44 593.89

16287.43 7010.73

1959.53 1280.679.65 42.88

3811.02 1578.71569.10 666.69

6349.30 3568.95

38.39 42.600.00 30.80

38.39 73.40

21869.65 23543.5919707.55 23361.2519950.35 22233.92

61527.55 69138.76

172.21 0.0449.97 49.250.00 9.18

36.64 415.8056.40 67.13

352.98 47.29

668.20 588.69



SCHEDULE 15: STOCK ADJUSTMENT

Closing Stock:Finished GoodsWork-in-progress

2113.43 659.64293.36 300.93

2406.79 960.57

659.64 590.84300.93 194.41960.57 785.25

1446.22 175.32

Opening Stock:Finished GoodsWork-in-progress

Increase I (Decrease) in closing stock

SCHEDULE 16: RAW MATERIAL CONSUMPTION

A. Opening Stock- Raw Materials

Total

B.PurchasesRaw Materials, chemicals & packing materials

C.Closing Stock- Raw Materials

1585.46 1389.98

1585.46 1389.98

1&3~8.68 16246.64

1771.14 1585.46

1771.14 1585.46

16153.00 16051.16

19707.55 23361.40267.68 279.42

19950.42 22468.120.74 0.152.40 31.32

39.12 20.71229.01 247.71

40196.92 46408.83

906.29 974.8767.13 63.3849.14 35.5141.49 7.7117.39 23.33

1081.44 1104.80

RAW MATERIALS CONSUMED (A+B-C)

SCHEDULE 17: RENT, RATES & TAXES

Excise DutyExcise LabelVATLabel Registration FeeLabel Renewal FeeRentRates & Taxes

SCHEDULE 18: EMPLOYEE COST

Salary & AllowancesContribution to PF & ESIStaff Welfare ExpensesGratuityBonus and Exgratia

SCHEDULE 19: ADMINISTRATIVE EXPENSES

Audit FeesBank ChargesPostage & TelegramPrinting and StationeryRepairs and MaintenanceDonationsTelephone ExpensesConsulting chargesTravelling ExpensesMiscellaneous ExpensesCash DiscountDiscounting charges

SCHEDULE 20: SELLING & DISTRIBUTION EXPENSES

Advertisement & PublicityTravelling Expenses - MarketingFreight & Handling chargesLoading & Unloading chargesSales promotion expensesOther selling expenses

SCHEDULE 21: FINANCIAL CHARGES

Interest paid



2.1050.0116.7615.2774.312.8916.539.5172.22323.52459.9613.34

1056.42

2.7746.5611.2416.64

158.251.88

25.0186.49

108.69262.46445.8421.86

1187.69

5.9616.44296.3255.01188.26483.78

1045.77

1.9146.11

356.7063.10

264.93465.03

1197.78

1004.67

1004.67838.11

838.11

SCHEDULE - 22:

SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON FINANCIAL STATEMENTS

I. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Accounting

The financial statements are prepared and presented in accordance with generally acceptecaccounting principles in India and the provisions of the Companies Act, 1956. The Compan)follows the accrual method of accounting under historical cost convention.

2. Principles of Consolidation

The consolidated financial statements relate to Empee Distilleries Limited (the Company) and it~subsidiary company. The Consolidated financial statements have been prepared on the followin~basis.

The financial statements of the Company and its subsidiary have been prepared on a line to linEconsolidation by adding together the book values of like items of assets, liabilities, income an(expenses as per the respective financial statements duly certified by the auditors of the respectivicompanies. Intra-group balances and intra-group transactions and the unrealized profits on stock:arising out of intra-group transactions have been eliminated.

The consolidated financial statements have been prepared using uniform accounting policies for Iikltransactions and other events in similar transactions.

% of voting power heldon 30 June, 2008

67.00 (Direct)67.00 (Indirect)

Empee Sugars and Chemicals LimitedEmpee Power Company (India) Limited

3. Minority Interest

Minority interest as at the date of investment in the subsidiariesMinority interest in post acquisition profit

30.6.2008

237.20401.28

638.48

30.9.2007

237.20375.98

613.18

4. Retirement and Other Benefits

Contribution to Provident Fund is made as per the provisions of Employees Provident Fund aniMiscellaneous Provisions Act, 1952 and charged to Profit and Loss Account and discloselseparately.

Gratuity liability is accounted as and when gratuity is paid to the employees.

Leave encashment is accounted as and when leave encashment is paid to the employees.

5. Income Tax

The income tax liability is provided in accordance with the provisions of the Income Tax Act, 1961Deferred tax is recognized, subject to consideration of prudence, on timing differences, being thldifference between taxable incomes and accounting income that originate in one period and ancapable of reversal in one or more subsequent periods.

6. Segment Reporting

A. Business Segments:

Based on the guiding principles given in Accounting Standard - 17 'Segment Reporting', thlCompany's business segments include Liquor(IMFL), Power, Sugar and Industrial AlcoholilPlant(IAP).

B. SegmentAccounting Policies

In addition to the significant accounting policies applicable to the business segments as given irnotes, the accounting policies in relation to segment accounting are as under:

a. Joint revenue and expenses of segments are allocated amongst them on a reasonable basis. AIother segment revenue and expenses are directly attributable to the segments.

b. Segment assets include all operating assets used by a segment and consist principally of operatin~cash, debtors, inventories and fixed assets, net of allowances and provisions, which are reported aldirect offsets in the balance sheet. Segment liabilities include all operating liabilities and consisprincipally of creditors and accrued liabilities. Segment assets and liabilities do not include deferre(income taxes, share capital, reserves, loans investments, miscellaneous expenditure and profit amloss appropriation account. While most of the assets / liabilities can be directly attributed to thEindividual segments, the carrying amount of certain assets / liabilities pertaining to the segmenhare allocated to the segments on a reasonable basis.

c. Inter segment sales between operating segments are accounted at market price. These transactiomare eliminated in consolidation.

7. Earnings Per Share

The Company reports basic and diluted earnings per equity share in accordance with Accountin~Standard-20. Basic earnings per equity share have been computed dividing net profit after ta>attributable to equity shareholders by the weighted average number of equity shares outstandin~during the year. Diluted earnings during the year adjusted for effects of all dilutive potential equit~

shares per equity share is computed using the weighted average number of equity shares andilutive potential equity shares outstanding during the year. For Basic and diluted earnings beforextra-ordinary items, the amount of extra-ordinary items and tax thereon are excluded fccomputation.

8. MiscellaneousExpenditureMiscellaneous expenditure includes share issue expenses which is written off over thperiod often years.

II. NOTESONACCOUNTS1. The holding Company has closed the accounting year on 30.6.2008 for the period from 1.10.20071

30.6.2008.

2. Contingent Liabilities

a) Corporate guarantees to the Banks: Rs.1681.69 lacs (previous year Rs.1681 .69 lacs)b) Claims against the company not acknowledged as debts: RS.3471.57 Lacs (Previous year

Rs.259.63 lacs)c) Disputed Income tax demand Rs.1572 lacs (previous year RS.1572 lacs)d) Purchase tax RS.959.49 lacs (Previous year RS.818.15 lacs)e) Disputed sales tax demand RS.1640 lacs (previous year RS.1640 lacs)

3. Estimated amount of capital contracts remaining to be executed is RS.23500.45Iacs (previous ye,Rs.4763.94 lacs).

4. Segment wise details

Particulars IMFL Power Sugar lAP Unallocated Total

Segment RevenueSales 55708.39 33.59 4161.44 1657.72 -- 61561.1'Other Income 628.85 - 39.36 - - 668.2Total Revenue 56337.24 33.59 4200.80 1657.72 -- 62229.3:

Segment Result 1789.75 (174.14) (137.19) 358.42 - 1836.8·

Segment Assets 23224.07 4453.36 9162.02 2382.17 4344.29 43565.9Segment Liabilities 3682.52 812.83 1383.43 470.51 -- 6349.3'

Depreciation 166.39 39.98 122.03 41.38 - 369.7Capital expenditure 1151.68 3432.45 901.00 1645.02 - 7138.1



Mr.M.P.PurushothamanMr.Shaji PurushothamanMS.Nisha PurushothamanMr.K.Jayachandran

ChairmanManaging DirectorJoint Managing DirectorJoint Managing Director

Relatives of Key management person nel

MS.Sheena Purushothaman


Empee International Hotels & Resorts LimitedSouth (India) Hotels Pvt LtdAppolioAlchobev LimitedAruna Exports Pvt LtdEmpee Hotels LimitedAruna Constructions (India) LimitedEmpeeAgro Farm Products Pvt LtdEmpee Marine Products LimitedAppollo Wind Energy Pvt LimitedAppollo Bears Pvt Ltd

Empee Leasing & Finance LimitedEmpee Heritage Inn Pvt LimitedEmpeeAirways LtdUniversal Spirits LtdEmpee Construction Company Pvt LtdEmpee Power & Infrastructure Pvt LtdEDL Properties Private LtdEmpee Packaging IndustriesAruna ConstructionsN.S.Travels

Particulars Key Management Relatives of Key Other relatedPersonne Management parties

Personnel

Remuneration 125.18 Nil Nil

Receiving of Services Nil Nil 43.05

Finance (Including loans Nil Nil Niland equity contributionsin cash or kind)

Interest Paid Nil Nil Nil

Interest Received Nil Nil Nil

Sale of assets Nil Nil Nil

Sale of investments Nil Nil Nil

Purchase of goods Nil Nil 59.17

Rent paid Nil 13.84 16.01

6. EARNINGS PER SHARE (before and extraordinary items)

2007-08

Total earnings available for shareholdersWeighted average no. of sharesNominal value of equity shareBasic / Diluted Earnings per shares (Rs.)

RS.1181.86 Lacs1900889310/-6.22

2006-07

Rs.2010.47 lac1420400010/-14.15


N.C.AnanthakumarChartered AccountantMembership No.23667Place: ChennaiDate : 24.9.2008





DESCRIPTION As at As at30.06.2008 30.09.2007(Rs.in lacs) (Rs.in lacs)

A. Cash Flow from Operating Activities:Net Profit before tax & extra ordinary items 1836.84 2305.09Adjustment for:Depreciation 369.78 395.97Interest Paid 1004.67 838.11(Profit)/Loss on Sale of Assets 0.00 (9.18)(Profit)/Loss on Sale of Investments 0.00 14.75Expenses written off 35.01 41.56Operating Profit before Working Capital changes 3246.30 3586.30(Increase)/Decrease in stock (1631.92) (370.80)(Increase)/Decrease in Current Assets (8457.66) (2389.98)Increase / (Decrease) in Current Liabilities 2069.98 57.98Cash generated from operations (4773.30) 883.50Tax paid (546.94) (844.16)Net cash used in operating activities (5320.24) 39.34

B. Cash Flow from Investing activities:Purchase of Fixed Assets (incI.CWIP) (3886.52) (4750.85)Sale of Fixed Assets 0.00 48.90Sale / (Purchase) of Investments (3705.71) 1.50Miscellaneous Expenditure 0.00 (71.31 )Net Cash from Investing activities (7592.23) (4771.76)

C. Cash Flow from Financing activities:Increase in Working Capital Loan (1227.35) 2201.62Increase in Term loan (139o.a2) 3481.85Interest paid (1004.67) (838.11)Increase in equity share capital 480.49 0.00Share premium amount received 17414.59 0.00Interim Dividend paid (570.27) 0.00Dividend distribution tax paid (96.92) 0.00Net cash used in Financing activities 13605.05 4845.36

Increase in Cash and Cash equivalents 692.58 112.94Cash and Cash equivalents at the beginning of the year 437.01 324.07Cash and Cash equivalents at the end of the year 1129.59 437.01

N.C.AnanthakumarChartered AccountantMembership NO.23667Place: ChennaiDate : 24.9.2008





Regd Office: 693, Mount Road, Chennai - 600 006

Please complete this attendance slip and hand it over at the entrance of the meeting hall. Only members 0

their proxies are entitled to be present at the meeting.

I hereby record my presence at the 24th Annual General Meeting being held at The MusicAcademy, MirHall, Old No.306, New No.168, TTK.Road, Chennai -600 014 at 10.00AM on Monday, the 8th Decembe2008 and at any adjournment thereof.-1 1i l

iL ,",_. ._"" '.. '.e. • , ~ ~ J

Regd Office: 693, Mount Road, Chennai - 600 006

I/We........... Folio No........... of beirMember / Members of EM PEE DISTillERIES LIMITED hereby appoint .

as my / our Proxy to attend and vote for me / us and on my / our behalf at the 24th Annual General Meetirbeing held atThe MusicAcademy, Mini Hall, Old No.306, New No.168, TTK.Road, Chennai-600 0141O.OOAMon Monday, the 8th December 2008.

Affix andsign on1 RupeeRevenue

Stamp

Date this Day of 2008

Note:

M P Purushothaman Chairman Shaji Purushothaman …Company Secretary cum General Manager(F&A) M P...

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