Init script does not create a PID file
Solution 1:
Add the --make-pidfile option to your call of start-stop-daemon. --pidfile only tells start-stop-daemon where to look for the pidfile, without --make-pidfile it is assume that this pidfile is created by the program to be launched, and not by start-stop-daemon.
Be sure to read the manpage of start-stop-daemon(8) for more details.