MANAGEMENT DISCUSSION AND ANALYSIS

The company is engaged in the business of manufacturing and trade of Indian Made Foreign Liquor (IMFL) under our own brand portfolio as well as under tie up arrangements with other companies. The IMFL comprises of whisky, Brandy, Rum, Gin & Vodka. We started our initial capacity of 7,20,000 cases per annum and a bond capacity 6300 cases of Excise Bonded warehouse. Presently our plant is having an installed capacity of 14,25,000 cases per annum and 26000 cases of Excise Bonded wharehouse.

During the year, the total Income from operations was Rs. 4576 lakhs compared to Rs 3819 lakhs in the brvious year recording a loss of Rs. 590 lakhs. The net loss was Rs. 590 lakhs as against the Loss of Rs. 580 lakhs in the brvious year.

Business Outlook

Indian alcohol market has been flourishing since 2001 and registered growth between 7-12% till 2011 when the growth finally declined due to heavy import taxes, state government taxes, excise duty and political instability in election season. The year 2013 was a great fall in Indian alcohol market when the spirits volume actually declined by 2-3% in India. Alcohol industry is a part of huge US$ 12 billion beverage industry of India excluding milk and milk products.

Indian alcohol market is dominated by whiskey which falls under spirit category. However, the wine market is expected to show highest growth in the forecast period. The Indian alcohol market is broadly segmented as spirits, beer and wine. Spirits are further sub-segmented into whiskey, rum/brandy, vodka, gin and others.

Consumers are largely inclined towards quality alcohol due to increasing disposable income and better standard of living. Other drivers include greater inclination towards social drinking as well as women indulging into alcohol consumption. As India has huge youth population, the demand of alcohol would remain high in the coming years. The market saw a boom in Vodka sales in past decade as Vodka was positioned as the alcohol for women. Youth largely brfer beer and the salaried youth are inclined toward whiskey and rum. In beer segment, more than 85% of the market is dominated by strong beer rather than mild.

There exists quite a few restraints in the market such as high taxes, stringent government regulations on manufacturing and selling liquor, and ban on advertisements among others. Alcohol consumption is also subjected to the overall economy's growth in terms of gross net income per capita and household expenditure. Thus, development in the economy would give a thrustto the alcohol market further but in a less pronounced manner.

One of the most notable trend is the demand of brmium liquor among the consumers. The growth of brmium segment would surpass the overall growth of alcohol market due to greater exposure towards foreign brands. India has seen a burst of high net worth individuals in past two decades and the list is ever increasing, which would fuel the growth of market in brmium segment. In addition to travel retail theatres and duty free retailing would further boost the growth of brmium alcohol in the market

Risk Factors:

Government regulations affects the Indian Liquor industry introducing structural rigidities. Apart from the high level taxes and levies regulations pertaining to licensing creation or expanding of brewing / distillery and bottling capacities, manufacturing process (grain based and molasses based), distribution and advertising impinge on the industry. Further liquor being a state subject, every state has different regulations (including those on distribution) and tax rate for the industry apart from restrictions as well as levies on the inter- state movement of liquor.

Future Outlook:

During current year, your Company will try to achieve maximum capacity utilization in our existing plant at Pondicherry.

Internal control systems and their adequacy

The Managing Director / Whole Time Director certification provided in the report discusses the adequacy of our internal control systems and procedures.

Human Resource Development

The most important asset of the company is its Human Resources.

Cautionary statements

Statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectation may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those exbrssed or implied.