Pioneer Distilleries Ltd Directors Report.

To the Members of Pioneer Distilleries Limited

Report on the audit of the nancial statements

Opinion

1. We have audited the accompanying nancial statements of Pioneer Distilleries Limited ("the Company"), which comprise the balance sheet as at March 31, 2021, and the statement of pro t and loss (including other comprehensive income), the statement of changes in equity and the statement of cash ows for the year then ended, and notes to the nancial statements, including a summary of signi cant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid nancial statements give the information required by the Companies Act, 2013 ("the Act") in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of a airs of the Company as at March 31, 2021, and the total comprehensive income (comprising of loss and other comprehensive income), changes in equity and its cash ows for the year then ended.

Basis for opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) speci ed under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the "Auditors responsibilities for the audit of the nancial statements" section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the nancial statements under the provisions of the Act and the Rules thereunder, and we have ful lled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is su cient and appropriate to provide a basis for our opinion.

Key audit matters

4. Key audit matters are those matters that, in our professional judgment, were of most signi cance in our audit of the nancial statements of the current period. These matters were addressed in the context of our audit of the nancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matters How our audit addressed the key audit matters
Assessment of Going Concern as a basis of accounting: Our audit procedures included the following:
(Refer Note 39 to the nancial statements) ? Understood and evaluated the Companys processes and controls in relation to identifying the risk of going concern and the actions taken by Management to address the risk including the design and operating e ectiveness of controls in relation to going concern.
The Company has incurred a loss of Rs.8657 lacs for the year and its accumulated losses as at the year-end exceeds the share capital. Apart from the erosion of net worth, the Companys current liabilities as at the year- end exceeds the value of current assets. ? Veri ed the letter of nancial support received by the Company from the holding company.
These indicators cast doubt on the ability of the Company to generate adequate cash from operations to meet its nancial obligations over the next twelve months. ? Assessed the nancial condition of the holding company to examine whether it would be able to enable the Company to meet its obligations as they fall due for a period of at least one year from the date of the balance sheet.
However, the Company has received a letter of nancial support from the holding company to support the operations of the Company in the foreseeable future. ? Evaluated the inputs and assumptions used in the cash ow forecast prepared by Management by evaluating the assumptions and comparing them to external data as well as estimates used in the preparation of nancial statements.
Management and the Board of Directors have reviewed and approved the cash ow forecast for the next twelve months. ? Veri ed that the cash ow forecast has been prepared considering the attributes of the prior year approved budget and the current year actual performance and that the assumptions considered in the cash ow forecast are consistent and comparable with those in the prior year approved budget; and that the estimates and assumptions have been updated where applicable.
Considering the cash ow forecast and the letter of nancial support received from the holding company, Management and the Board of Directors have concluded that there is no material uncertainty, which impacts the ability of the Company to continue as a going concern. Based on the above work performed, Managements assessment of the going concern assumption in the preparation of nancial statements appears reasonable.
The availability of su cient funding and testing whether the Company will be able to continue meeting its obligations are important for the going concern assumption and, as such, are signi cant aspects of our audit. The cash ow forecast contains assumptions like revenue growth and improvement in plant operations (increase in capacity utilization) where Management has applied judgements that, in the current external environment, are signi cant. Hence, this area has been considered as a key audit matter.
Assessment of contingent liabilities and provisions for signi cant litigations: Our audit procedures included the following:
(Refer Notes 14 and 26 to the nancial statements) ? Understood and evaluated the Companys processes and controls in relation to identifying the risk of not identifying or not disclosing signi cant litigations and the actions taken by Management to address the risk including the design and operating e ectiveness of controls in relation to litigations.
The Company has litigations related to legal and regulatory matters, of which the most signi cant ones are related to water charges levied on purchase of water for the Companys processing plant. ? Inquired with the Companys internal legal counsel on the status of litigations and examined underlying notices from Government authorities.
The amount involved in litigations are signi cant and Management applies judgment in estimating the likelihood of the outcome and the amount of liability, if any. ? Veri ed the underlying calculations supporting the appropriateness of related provision recognised and contingent liability disclosed.
We have considered this as a key audit matter as the amounts are signi cant to the nancial statements and the eventual outcome of these matters is uncertain and the position taken by Management is based on the exercise of signi cant judgement, supported by external legal advice, where applicable. ? Sought and obtained direct con rmation from external lawyers assisting the Company in dealing with the litigations.
Based on the above work performed, Managements assessment in respect of litigations and related disclosures relating to contingent liabilities, where applicable, appears reasonable.

Other information

5. The Companys Board of Directors is responsible for the other information. The other information comprises the information included in report of the directors, but does not include the nancial statements and our auditors report thereon. Our opinion on the nancial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the nancial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the nancial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the nancial statements

6. The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these nancial statements that give a true and fair view of the nancial position, nancial performance, changes in equity and cash ows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards speci ed under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal nancial controls, that were operating e ectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

7. In preparing the nancial statements, management is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Companys nancial reporting process.

Auditors responsibilities for the audit of the nancial statements

8. Our objectives are to obtain reasonable assurance about whether the nancial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to in uence the economic decisions of users taken on the basis of these nancial statements.

9. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the nancial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is su cient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal nancial controls with reference to nancial statements in place and the operating e ectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast signi cant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the nancial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the nancial statements, including the disclosures, and whether the nancial statements represent the underlying transactions and events in a manner that achieves fair presentation.

10. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and signi cant audit ndings, including any signi cant de ciencies in internal control that we identify during our audit.

11. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

12. From the matters communicated with those charged with governance, we determine those matters that were of most signi cance in the audit of the nancial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest bene ts of such communication.

Report on other legal and regulatory requirements

13. As required by the Companies (Auditors Report) Order, 2016 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure B a statement on the matters speci ed in paragraphs 3 and 4 of the Order, to the extent applicable.

14. As required by Section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes 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, the statement of pro t and loss (including other comprehensive income), the statement of changes in equity and the statement of cash ows dealt with by this Report are in agreement with the books of account.

(d) In our opinion, the aforesaid nancial statements comply with the Accounting Standards speci ed under Section 133 of the Act.

(e) On the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disquali ed as on March 31, 2021 from being appointed as a director in terms of Section 164(2) of the Act.

(f) With respect to the adequacy of the internal nancial controls with reference to nancial statements of the Company and the operating e ectiveness of such controls, refer to our separate Report in "Annexure A".

(g) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its nancial position in its nancial statements Refer Notes 14 and 26 to the nancial statements.

ii. The Company has long term contracts as at March 31, 2021 for which there were no material foreseeable losses. The Company did not have any derivative contracts.

iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company during the year ended March 31, 2021.

iv. The reporting on disclosures relating to Speci ed Bank Notes is not applicable to the Company for the year ended March 31, 2021.

15. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

Referred to in paragraph 14(f) of the independent auditors report of even date to the members of Pioneer

Distilleries Limited on the nancial statements as of and for the year ended March 31, 2021

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Report on the internal nancial controls with reference to nancial statements under Clause (i) of Sub-

section 3 of Section 143 of the Act

1. We have audited the internal nancial controls with reference to nancial statements of Pioneer Distilleries Limited ("the Company") as of March 31, 2021 in conjunction with our audit of the nancial statements of the Company for the year ended on that date.

Managements responsibility for internal nancial controls

2. The Companys management is responsible for establishing and maintaining internal nancial controls based on the internal control over nancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") issued by the Institute of Chartered Accountants of India ("ICAI"). These responsibilities include the design, implementation and maintenance of adequate internal nancial controls that were operating e ectively for ensuring the orderly and e cient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable nancial information, as required under the Act.

Auditors responsibility

3. Our responsibility is to express an opinion on the Companys internal nancial controls with reference to nancial statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing deemed to be prescribed under Section 143(10) of the Act to the extent applicable to an audit of internal nancial controls, both applicable to an audit of internal nancial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal nancial controls with reference to nancial statements was established and maintained and if such controls operated e ectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal nancial controls system with reference to nancial statements and their operating e ectiveness. Our audit of internal nancial controls with reference to nancial statements included obtaining an understanding of internal nancial controls with reference to nancial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating e ectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error.

5. We believe that the audit evidence we have obtained is su cient and appropriate to provide a basis for our audit opinion on the Companys internal nancial controls system with reference to nancial statements.

Meaning of internal nancial controls with reference to nancial statements

6. A companys internal nancial controls with reference to nancial statements is a process designed to provide reasonable assurance regarding the reliability of nancial reporting and the preparation of nancial statements for external purposes in accordance with generally accepted accounting principles. A companys internal nancial controls with reference to nancial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly re ect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of nancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the companys assets that could have a material e ect on the nancial statements.

Inherent limitations of internal nancial controls with reference to nancial statements

7. Because of the inherent limitations of internal nancial controls with reference to nancial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal nancial controls with reference to nancial statements to future periods are subject to the risk that the internal nancial control controls with reference to nancial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion, the Company has, in all material respects, an adequate internal nancial controls system with reference to nancial statements and such internal nancial controls with reference to nancial statements were operating e ectively as at March 31, 2021, based on the internal control over nancial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note issued by ICAI.

Referred to in paragraph 13 of the Independent Auditors Report of even date to the members of Pioneer Distilleries Limited on the nancial statements as of and for the year ended March 31, 2021

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i. (a). The Company is maintaining proper records showing full particulars, including quantitative details and situation, of xed assets.

(b) The xed assets are physically veri ed by the Management according to a phased programme designed to cover all the items over a period of two years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the xed assets has been physically veri ed by the Management during the year and no material discrepancies have been noticed on such veri cation.

(c). The title deeds of immovable properties, as disclosed in Note 2 on Property, plant and equipment to the nancial statements, are held in the name of the Company.

ii. The physical veri cation of inventory (excluding stocks with third parties) have been conducted at reasonable intervals by the Management during the year. In respect of inventory lying with third parties, these have substantially been con rmed by them. The discrepancies noticed on physical veri cation of inventory as compared to book records were not material and have been appropriately dealt with in the books of accounts.

iii. The Company has not granted any loans, secured or unsecured, to companies, rms, Limited Liability Partnerships or other parties covered in the register maintained under Section 189 of the Act. Therefore, the provisions of Clause 3(iii), (iii)(a), (iii)(b) and (iii)(c) of the Order are not applicable to the Company.

iv. The Company has not granted any loans or made any investments or provided any guarantees or security to the parties covered under Sections 185 and 186. Therefore, the provisions of Clause 3(iv) of the Order are not applicable to the Company.

v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed thereunder to the extent noti ed.

vi. The Central Government of India has not speci ed the maintenance of cost records under sub-section (1) of Section 148 of the Act for any of the products of the Company.

vii. (a). According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues in respect of provident fund, though there has been a slight delay, and is regular in depositing undisputed statutory dues, including employees state insurance, income tax, duty of excise, profession tax, goods and services tax and other material statutory dues, as applicable, with the appropriate authorities. Also, refer Note 40 to the nancial statements regarding managements assessment on certain matters relating to provident fund.

(b). According to the information and explanations given to us and the records of the Company examined by us, the particulars of dues of income tax, sales tax, service tax, duty of customs and duty of excise duty, value added tax or goods and service tax as at March 31, 2021, which have not been deposited on account of a dispute, are as follows:

Name of the statute Nature of dues Amount (in Rs.) Period to which the amount relates Forum where the dispute is pending
The Central Sales Tax Act, 1958 and Sales tax/ Value added tax 84,062,547 (*1) 2012-13 The Joint Commissioner Appeals, Amravati, Maharashtra
The Maharashtra Value Added Tax 337,170,316 (*2) 2014-15
Act, 2002 235,833,423 (*3) 2015-16
122,119,107 2016-17 The Commissioner of Commercial
Sales Tax, Nanded, Maharashtra
The Income Tax Income tax 15,186,680 (*4) 2009-10 The Commissioner of Income Tax
Act, 1961 (Appeals), Bengaluru

(*1) Rs.14,887,357 has been paid "under protest" by the Company. (*2) Rs.18,138,196 has been paid "under protest" by the Company. (*3) Rs.12,032,318 has been paid "under protest" by the Company. (*4) Rs.12,107,052 has been paid "under protest" by the Company.

viii. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any nancial institution or bank or Government or dues to debenture holders, as may be applicable, as at the balance sheet date.

ix. The Company has not raised any moneys by way of initial public o er and further public o er (including debt instruments). In our opinion, and according to the information and explanations given to us, the term loans have been applied for the purposes for which they were obtained.

x. During the course of our examination of the books and records of the Company carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its o cers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

xi. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act. Also, refer paragraph 15 of our audit report on the nancial statements.

xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the nancial statements as required under Indian Accounting Standard 24 "Related Party Disclosures" speci ed under Section 133 of the Act.

xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non-cash transactions with its directors or persons connected with him.

Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.

xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

For Price Waterhouse & Co Chartered Accountants LLP
Firm Registration Number: 304026E/E-300009
Shivakumar Hegde
Partner
Place : Bengaluru Membership Number: 204627
Date : 7 May 2021 UDIN: 21204627AAAABZ9135