Pioneer Distilleries Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Dec 2018
Auditor and Management Disclosures and Notes for the quarterly results dated 31 Dec 2018
1. Pioneer Distilleries Limited ('the Company') is primarily engaged in the business of Extra Neutral Alcohol, Malt Spirit, Indian Made Foreign Liquor ('IMFL') and allied products. Since the entire business of the Company is evaluated and reviewed by Chief Operating Decision Maker as one reportable segment, the management considers this as a single reportable segment.
2. This statement has been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) prescribed under Section 133 of the Companies Act, 2013 and other recognised accounting practices and policies to the extent possible. Effective April I, 2018, the Company has adopted Indian Accounting Standard 115 (Revenue from contracts with customers). The new standard is based on the principle that revenue is recognised when control of goods or services is transferred to the customer and provides a single, principles based five-step model to be applied to all sales contracts. It replaces the separate models for goods, services and construction contracts under previous standards (Indian Accounting Standard 11 and Indian Accounting Standard 18) which was based on the concept of transfer of risks and rewards. The Company has completed the evaluation of its commercial arrangements with customers. The impact on adoption of the Indian Accounting Standard 115 on the results for the quarter and nine months ended December 31, 2018 is not material.
3. The Company is entitled to certain government subsidy. During the quarter ended September 30, 2018, the Company had received a communication from the concerned government department, amending certain terms of eligibility ('Amended Sanction Letter'). The Company had carried out an internal assessment supported by a legal opinion in respect of the above and had filed a revised claim. Consequently, an expense of Rs. 1,000 lakhs had been recognised in the quarter ended September 30, 2018 and included in 'Other expenses'. During the quarter, the said Amended Sanction Letter has been further revised restoring certain terms that were amended earlier. However, as a matter of prudence, the Company will reverse the expenses of Rs. 1,000 lakhs accounted in previous quarter ended September 30, 2018, upon receipt of revised eligibility certificate from the appropriate authority.
4. The Company's Writ Petition challenging the direction for closure of manufacturing activity ("Closure Direction") was disposed off by the Bombay High Court by directing the Company to approach the National Green Tribunal ("NGT"). The NGT had directed the Company to make its submissions for consideration before MPCB. The MPCB accepted the Company's submissions subject to fulfilment of certain conditions. The Company has complied with the said conditions and has submitted final completion report to MPCB on December 12, 2018. 5. The Company has entered into a tie-up manufacturing agreement with United Spirits Limited ('USL'), the holding company. In terms of this agreement, the Company manufactures, under USL's supervision, brands owned and marketed by USL. Under Ind-AS 115 on 'Revenue from contracts with customers', the Company has assessed its relationship with USL to be that of an agent. Risk and rewards of the activity rests with USL. Further, under the arrangement, the Company is entitled to bottling fees which is determined based on output and volume and has accordingly - a. recorded the income under tie-up manufacturing agreement which is included in Revenue from operations as detailed below:
b. gross sales, excise duty and cost of goods sold (the net impact of which is nil) as indicated below in the respect of these operations are not disclosed by the Company:
6. Previous period's figures have been regrouped/ reclassified to conform to the current period's presentation for the purpose of comparability.
7. This Statement of Unaudited Financial Results has been reviewed by the Audit and Risk Management Committee of the Board of Directors and approved by the Board of Directors at their meetings held on January 30, 2019. The statutory auditors of the Company have carried out a limited review of this Statement of Unaudited Financial Results for the quarter ended December 31, 2018.