Your Directors have pleasure in presenting the Twenty Ninth Annual Report together with the Financial Statements of the Company for the Financial Year ended March 31, 2022.
A brief overview on Stand-Alone and Consolidated Financial Performance for the Financial Year ended March 31, 2022 is as follows:
A. STANDALONE FINANCIAL PERFORMANCE
|Revenue from operations||25053.25||22669.80|
|Employee Benefit Expense||1145.55||913.81|
|Depreciation and amortization expenses||898.30||572.44|
|Profit before finance cost and tax||(179.41)||(907.69)|
|Profit before tax||(1100.60)||(2079.02)|
|Share of profit/(loss) in associates||-||-|
|Profit before comprehensive income||(1097.24)||(1803.61)|
|Other comprehensive incomes||14.08||(2.96)|
|Total Comprehensive Income for the year||(1083.16)||(1806.57)|
B. CONSOLIDATED FINANCIAL PERFORMANCE
|Revenue from operations||65380.61||50708.33|
|Employee Benefit Expense||2169.85||1678.80|
|Depreciation and amortization expenses||1677.77||1336.86|
|Profit before finance cost and tax||281.18||(2036.87)|
|Profit before tax||(1254.27)||(3902.77)|
|Share of profit/(loss) in associates||-||-|
|Profit before comprehensive income||(984.01)||(3807.29)|
|Other comprehensive incomes||11.02||(3.77)|
|Total Comprehensive Income for the|
TRANSFER TO RESERVES
The Board of the Company has decided to carry entire amount of its losses to reserves and surplus.
DIVIDEND EQUITY SHARES
For this FY 2021-22 your Board has not recommend any dividend on equity share on account of the losses in the Company.
During the year under review, on consolidated basis, your Company registered Gross Revenue of Rs 65650.34 lacs, whereas the Profit/(Loss) before Tax and total comprehensive income for the year stood at Rs. (1254.27) lacs and Rs. (972.99) lacs respectively. On a standalone basis, the Company registered Gross Revenue of Rs. 25948.73 lacs, whereas the Profit/(Loss) before Tax and total comprehensive income for the year stood at Rs. (1100.60) lacs and Rs. (1083.16) lacs, respectively.
The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this Annual Report.
During the year under review, statutory auditors M/s R.N. Gupta & Associates, Chartered Accountants, (FRN:001419C) tendered their resignation due to unavoidable circumstances and health concerns, resulting into a casual vacancy in the office of Statutory Auditors of the company as envisaged by section 139(8) of the Companies Act, 2013 ("Act"). Accordingly, the Board of Directors of the Company, at its meeting held on October 30, 2021 approved the appointment of M/s AKB Jain & Co., Chartered Accountants, (FRN:003904C), as the Statutory Auditors of the Company to fill the casual vacancy caused by the resignation of M/s. RN Gupta & Associates, Chartered Accountants. The Members of the Company at the Extra-Ordinary General Meeting held on 16th December, 2021 approved the appointment of M/s AKB Jain & Co., Chartered Accountants, (Firm Registration No:003904C), Bhopal as the Statutory Auditor of the Company till the conclusion of this 29th Annual General Meeting and to conduct the Statutory Audit for the financial year ended 31st March, 2022.
Accordingly, M/s AKB Jain & Co., Chartered Accountants will complete their term on conclusion of this Annual General Meeting in terms of the said approval and as per Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014. The present remuneration of M/s AKB Jain & Co., Chartered Accountants for conducting the statutory audit for the financial year 2021-22 is Rs. 1.92 lakhs (excluding out of pocket expenses).
M/s AKB Jain & Co., Chartered Accountants have expressed their intention to seek re-appointment as Statutory Auditor of the Company on conclusion of the present term vide their letter dated 14.07.2022 addressed to the Audit Committee and to the Board of Directors of the Company. The Audit Committee and the Board of Directors at their meeting held on July 20, 2022 took note of the above and accepted their request to re-appoint on conclusion of the forthcoming AGM of the Company.
M/s AKB Jain & Co., Chartered Accountants, have given their consent and eligibility to act as the Statutory Auditors of the Company and have confirmed that the said appointment, if made, will be in accordance with the conditions prescribed under Sections 139 and 141 of the Act. Further, the Company has also received a copy of Peer Review Certificate as prescribed by the Institute of Chartered Accountant of India to the firm.
The Board of Directors of the Company at its meeting held on July 20, 2022, on the basis of the recommendations of the Audit Committee, recommended for the approval of the Members, the re-appointment of M/s AKB Jain & Co., Chartered Accountants, (Firm Registration No:003904C), Bhopal as the Statutory Auditor of the Company for a period of two consecutive financial years from the conclusion of the twenty nineth AGM till the conclusion of the thirty first Annual General Meeting on remuneration, terms and conditions as may approved by the Board.
The Notes on accounts and observations of the Auditors in their Report on the Accounts of the Company are self- explanatory.
There are no observations (including any qualification, reservation, adverse remark or disclaimer) of the Auditors in their Audit Reports that may call for any explanation from the Directors.
SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Neelesh Jain & Associates, Company Secretaries to undertake the Secretarial Audit of the Company for the FY 2022-23. The remarks of Secretarial Auditors were self-explanatory and the same was mentioned in the Board?s Report.
The comments of Board on observations of Secretarial Auditor of the Company in their Report for the FY 2021-22 are indicated below and the Report of the Secretarial Audit in Form MR-3 is annexed as Annexure I. In terms of Regulation 24A of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company carried out Secretarial Audit of its material unlisted subsidiaries i.e. (a) Woodpecker Distilleries & Breweries Private Limited and (b) Som Distilleries & Breweries Odisha Private Limited, through M/s MM Chawla & Associates, Company Secretaries in Practice. The reports of the secretarial audit are annexed herewith as Annexure I (A) & Annexure I (B) respectively.
Comments by Board on observations of Secretarial Auditor:
As per Section 124(6) of the Act read with the IEPF Rules as amended, all the Shares in respect of which dividend has remained unpaid/ unclaimed for seven consecutive years or more are required to be transferred to IEPF Account. The Company is in process to send notice / reminders to the concerned members and to publish notice regarding the same in newspaper(s).
The Board of Directors had appointed Mr. Sourabh Tandon as the Internal Auditors of the Company for the F.Y. 2022-23. Internal Financial Control & Systems of the Company has been devised through its extensive experience that ensures control over various functions of its business. The Company practices Quality Management System for Design, Planning, Construction and Marketing. Periodic audits conducted by Internal Auditors and Statutory Auditors provide means whereby any weakness, whether financial or otherwise, is identified and recti_ed in time.
SUBSIDIARY, JOINT VENTURE & ASSOCIATE COMPANIES
The Company has 2 Wholly Owned Subsidiary as on March 31, 2022. List of companies which have been consolidated at the year-end is given in the Notes to Accounts.
There has been no material change in the nature of the business of the Subsidiaries. A separate statement containing the report on the performance and financial position of each of subsidiaries is included in the consolidated financial statements of the Company forming part of this Annual Report.
ACCOUNTS OF SUBSIDIARY COMPANIES
Pursuant to applicable Accounting Standards on Consolidated Financial Statements and Financial Reporting issued by the ICAI and as prescribed by Securities and Exchange Board of India (SEBI), Consolidated Financial Statements, which includes the financial information of the subsidiaries, are enclosed and forms part of this Annual Report.
As per the provision of first proviso of Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the balance sheets of the Subsidiary Companies have not been attached to the Annual Report. However, Company is required to attach along with its financial statements a separate statement containing the salient features of financial statements of its subsidiaries in Form AOC-1.
Further, the Annual Accounts of the Subsidiary Companies and the related detailed information will be made available to the shareholders of the Holding and Subsidiary Companies seeking such information at any point of time and the Annual Accounts of the subsidiary companies will also be kept for inspection by any member in the head office of the holding Company and of the subsidiary companies concerned. Further, the annual accounts for the FY 2021-22 of all the subsidiary companies are available on the website of the Company i.e., www.somindia.com.
BUSINESS RESPONSIBILITY REPORT
As per Regulation 34 of the SEBI Listing Regulations, a Business Responsibility Report is annexed as Annexure II and forms part of this Annual Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Board, upon the recommendation of the CSR Committee, has adopted CSR Policy and initiated its implementation. The CSR Policy is available on the Company?s website www.somindia.com. During the period under consideration, the Company had to spend an overall amount of Rs.23.35 lacs towards CSR activity. Further the company has voluntarily adopted the ESG policy.
The details pertaining to composition of CSR Committee are included in the Corporate Governance Report, which forms part of this Annual Report. The Annual Report on CSR activities is annexed as Annexure III.
POLICY ON SEXUAL HARASSMENT
The Company has Internal Complaints Committee (ICC) with Ms. Anamma Vasco as (Presiding Officer), Mr. Nakul Sethi (Member), Mr. Rajesh Dubey (Member), Ms. Madhuri Goel a member from an NGO, in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All female employees are covered under the Policy. There was no complaint received from any employee during the FY 2021-22 and hence no complaint is outstanding as on March 31, 2022 for redressal.
DIRECTORATE & KMP
During the period under review, the term of appointment of Mr. Jagdish Kumar Arora, as Chairman and Managing Director (DIN:00224633) was expiring. Accordingly, the Board of Directors on the recommendation of the Nomination and Remuneration Committee ("NRC") of the
Company at their Meeting held on November 18, 2021, considering the performance evaluation, approved the re-appointment of Mr. Arora as Chairman & Managing Director of the Company for a period of 3 years with effect from February 4, 2022. The shareholders have approved the same at their meeting held on December 16, 2021
The Board of Directors of the Company (‘the Board?) at the meeting held on July 20, 2022, on the recommendation of the Nomination & Remuneration Committee (‘NRC?), recommended for the approval of the Members, to continue appointment of Mr. Samal as Independent Director of the Company on attaining the age of seventy-five years for the remaining term of his appointment i.e. upto April 19, 2025.
Brief resume of the Director(s) recommended for approval of appointment/re-appointment at the 29th AGM of the Company and nature of expertise in specific functional areas and names of the Companies in which he/she holds Directorship and Membership/ Chairmanship of Committees of the Board, as stipulated under SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 are provided in the Corporate Governance Report which forms part of the Annual Report.
BOARD AND ITS COMMITTEES
The Board, as on March 31, 2022 comprises 6 Members - 2 Executive Directors and 4 Non-executive Directors, of which 4 are Independent Directors. During the period under review, your Directors met eight times. The maximum time-gap between any two consecutive meetings was within the period prescribed under the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Details of number of meetings of Board and various Committees attended during the year by each Director/ Member is disclosed in the Corporate Governance Report forming part of this Annual Report.
The Board, as on March 31, 2022 has six Committees namely, Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholder Relationship Committee, Risk Management Committee and Executive Legal and Borrowing Committee.
A detailed note on the composition of the Board, Committees including meetings, attendance thereat is provided in the Corporate Governance Report which forms part of this Annual Report.
Mr. J.K. Arora, is the Chairman and Managing Director, Mr. Nakul Kam Sethi is the Wholetime Director, Mr. Rajesh Kumar Dubey is the Chief Financial Officer and Mr. Om Prakash is the Company Secretary & Compliance Officer of the Company.
INDEPENDENT DIRECTORS? MEETING
The Independent Directors met on 10th February, 2022, without the attendance of Non-Independent Directors and members of the Management. The Independent Directors reviewed the performance of non-independent directors and the Board as a whole; the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.
COMPLIANCE OF THE SECREATARIAL STANDARDS ISSUED BY ICSI
The Board confirms that, during the period under review, the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) as amended from time to time.
DECLARATION BY INDEPENDENT DIRECTORS
As per the requirement of section 134(3)(d) of the Companies Act, 2013, the Company is required to attach the statement on declaration given by the Independent Directors under Section 149(6) with the
Report. Your Company has received the said declaration from all the Independent Directors.
DIRECTORS? RESPONSIBILITY STATEMENT
Pursuant to the requirement under section 134(5) of the Companies Act, 2013, with respect to Directors? Responsibility Statement, it is hereby confirmed that:
a. In the preparation of the annual accounts for the Financial Year ended March 31, 2022, the applicable Accounting Standards have been followed and there are no material departures;
b. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2022 and of the profit of the Company for the year ended on that date;
c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
d. The Directors had prepared the financial statements of the Company for the Financial Year ended March 31, 2022 on a ‘going concern? basis.
e. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.
f. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
PARTICULARS OF EMPLOYEES
As required by the provisions of Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, details of the Employees are set out in Annexure IV.
DISCLOSURE RELATING TO SOM EMPLOYEES STOCK OPTION PLAN SCHEME 2020
The Company has "SOM Employees Stock Option Plan Scheme 2020" ("ESOP-2020"). The Board on the recommendation of NRC modified the ESOP-2020 scheme and the shareholders approved the same at their Meeting (EGM) held on April 8, 2021 to extend the benefits of the ESOP-2020 scheme for the benefit of permanent Employees and/ or Directors of the Company and/or subsidiary company(ies), as may be permissible under the SEBI Regulations.
The Company did not issue/grant any options under "ESOP-2020 scheme" during the year under review.
Hence there are no outstanding options under ESOP-2020 as on March 31, 2022. Accordingly, no disclosures in terms of Companies (Share Capital and Debenture) Rules, 2014 and SEBI (Employee Share Based Employee Benefits) Regulations, 2014 is required.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT/ TECHNOLOGY/ ABSORPTION/ FOREIGN EXCHANGE EARNING AND OUTGO
The information required pursuant to Section 134(3)(m) of the Companies Act, 2013, read with Companies (Accounts) Rules, 2014 pertaining to Conservation of Energy, Research & Development, Technology Absorption are not applicable to the Company.
The earning in foreign currency is Rs. 778 lacs during the current FY as against Rs. 897.77 lacs in previous year and expenditure in foreign currency is Rs. 0.45 lacs during the current year as compared to Rs. 1.59 lacs in the previous year.
As per the Circular No. CIR/OIAE/2/2011 dated June 3, 2011 issued by the Securities and Exchange Board of India, Company is timely redressing the Investor Complaints through the SEBI complaints Redress System (SCORES). As a part of compliance, the Company has a Stakeholder Relationship Committee to redress the issues relating to investors. It consists of three Members namely Mr. Deena Nath Singh Chairperson, Ms. Nishi Arora and Mr. Nakul Kam Sethi Members. The details of this Committee are provided in the Corporate Governance Report forming part of the Annual Report.
The equity shares continue to be listed on the BSE Ltd (Bombay Stock Exchange) and the National Stock Exchange of India Ltd. (NSE). Both these Stock Exchanges have nationwide terminals and therefore, shareholders/investors are not facing any difficulty in trading the shares of the Company from any part of the Country. The Company has paid annual listing fees for previous year FY 2021-22 and FY 2022-23 to BSE and NSE and annual custody fees to National Securities Depository Limited and Central Depository Services (India) Limited.
CORPORATE GOVERNANCE REPORT
The Directors adhere to the requirements set out by the Securities and Exchange Board of India?s Corporate Governance practices and have implemented all the stipulations prescribed. Secretarial compliances, reporting, intimations etc. Under the Companies Act, 2013, listing agreement(s) and other applicable laws, rules and regulations are noted in the Board/ Committee Meetings from time to time. The Company has implemented several best corporate governance practices as prevalent globally.
The Corporate Governance Report as stipulated under Regulation 34(3) and other applicable Regulations read with Part C of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Report.
CERTIFICATE ON CORPORATE GOVERNANCE FROM PRACTICING COMPANY SECRETARIES
The requisite Certificate from the Company secretary in practice, M/s N.K. Jain & Associates, Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under Regulation 34(3) and 53(f) read with Part E of Schedule V of the aforesaid Regulations, forms part of this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report as required under Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Report.
The Annual Return of the Company as on 31st March, 2022 is available on the Company?s website and can be accessed at the Company?s website under the weblink https://www.somindia. com.
PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES
All contracts/ arrangements/ transaction entered into by the Company during the financial year with related parties were in the ordinary course of business and on arm?s length basis.
During the year, the Company had not entered into any contract/ arrangement/ transaction with the related parties which could be considered material in accordance with the Policy of the Company on materiality of related party transactions. The RPT Policy is available on the Company?s website under the weblink https://www.somindia. com. Your Directors draw attention of the Members to Note no. 35 of the financial statements which set out related party disclosure.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT
The company has complied with the provisions of Section 186 of the Companies Act, 2013 in relation to loans, investments and guarantees given by the Company during the year.
APPROVAL FROM SEBI AND RIGHTS ISSUE
During the period under review, the company made application to Securities and Exchange Board of India ("SEBI") for providing exemption under Regulation 11 of SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 ("SEBI SAST Regulations"). Upon scrutiny, the Whole time Member of SEBI vide order no. WTM/ SM/CFD/39 /2021-22 dated July 15, 2021 passed under Section 11(1) and Section 11(2)(h) of Securities and Exchange Board of India Act, 1992 read with Regulation 11(5) of SEBI SAST Regulations provide exemption to the company to make public announcement on the terms as mentioned in the order.
In compliance of the aforesaid Order the company came up with a rights issue of equity shares of upto Rs.17.50 crore. The promoters acquired the unsubscribed portion in addition to their entitlement in compliance of the SEBI Order and the issue was fully subscribed. The promoters holding crossed the threshold of 25% and in terms of the aforesaid Order, it was not required to make a public announcement.
MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY
No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate till the date of this report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
The details of the same are provided in Corporate Governance Report forming part of the Annual Report.
SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015, mandates that the Board shall monitor and review the Board evaluation framework. The framework includes the evaluation of Directors on various parameters.
Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board on its own performance and that of its Committees, Chairman of the Board and Individual Directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent Directors shall be done by the entire Board of Directors, excluding the Directors being evaluated.
The Company has adopted adequate Policy for the evaluation of its Director including independent Director and for the evaluation of the performance of Board and its Committee; the above referred evaluation has been made in accordance with the stated Policy which is available on the website of the Company under the weblink https://www.somindia.com.
DIRECTOR?S APPOINTMENT AND REMUNERATION POLICY
Pursuant to the provision of Section 178 of the Companies Act 2013 and Regulation 19 of SEBI (Listing Obligation & Disclosure Requirements) Regulations, 2015 the Board of Directors on the recommendation of Nomination and Remuneration Committee has framed a Policy for the appointment of Directors and Senior Management and their remuneration which is available on the website of the Company under the weblink https://www.somindia.com.
The details pertaining to composition of Nomination and Remuneration Committee are included in the Corporate Governance Report, which forms part of this Annual Report.
RISK MANAGEMENT POLICY
The Company has adopted the Risk Management Policy which is aimed at creating and protecting shareholders value by minimizing threats and losses and identifying and maximizing opportunities. Your Directors periodically review the risks associated with the business or threaten the prospect of the Company. The Risk Management Policy is available on the website of the Company under the weblink https://www.somindia.com.
WHISTLE BLOWER POLICY
The Company has a vigil mechanism named as Whistle Blower Policy of the Company, an avenue to raise concern and access in good faith the Chairman of the Audit Committee which provide for adequate safeguard against victimization of person. The Policy on Whistle Blower Policy is available on the website of the Company under the weblink https://www.somindia.com.
COVID-19 PANDEMIC IMPACT ON BUSINESS OPERATIONS OF THE COMPANY
During the first quarter of the current financial year there was a surge in the spread of COVID-19 in India and various state governments imposed restrictions ranging from curfew / lockdown to contain the spread of COVID19. The impact of COVID 19 has now affected the operations of the company for two consecutive seasons.
The business operations of the Company and its two subsidiaries have been significantly impacted by way of interruption of production, supply chain, since the start of the pandemic.
The impact of COVID-19 pandemic on the overall economic environment continues to be uncertain though there has been a revival in the volumes in the last quarter.
The Company will continue to closely monitor the situation and any material changes to future economic conditions.
The outlook for the industry is positive yet remains volatile depending amongst others on the future trajectory of the pandemic as well as the state of the economy. The company continues to actively review costs and focus on working capital management. We remain optimistic about the long-term growth drivers of the industry.
ICRA Limited on February 23, 2021 has placed long term rating on watch with negative implications due to COVID lockdown and reafirmed short term rating. Further on April 7, 2022, ICRA has restored long term rating to same level before COVID i.e. assigned a stable outlook to the long term rating from watch with negative implications.
As on March 31, 2022, the Company has the following rating assigned by ICRA on banking facilities.
|Long Term Rating||[ICRA]BBB- (pronounced ICRA triple B minus) with a Stable outlook|
|Short Term Rating||[ICRA]BBB- (pronounced ICRA triple B minus)|
Your Directors would like to express their sincere appreciation for assistance and co-operation received from the vendors and stakeholders including financial institutions, banks, Central & State Government Authorities, other business associates, who have extended their valuable sustained support and encouragement during the year under review.
The relationship with the employees remained cordial during the year. Your Directors are thankful to the shareholders and customers for their continued patronage. Your Directors wish to place on record their appreciation for solidarity, cooperation and support of employees and all stakeholders.
Statement made in the Annual Report, including those stated under the caption "Management Discussion and Analysis" describing the Company?s plans, executions, achievements, projections and expectations may include approximations and may constitute "forward looking statement" within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.
|Place: Bhopal||For and on behalf of the Board|
|Date: July 20, 2022||FOR SOM DISTILLERIES AND BREWERIES LIMITED|
|CHAIRMAN AND MANAGING DIRECTOR|