Growing sustainably. And profitably. · 2013-04-05 · the Company, Mr. Rohit Kumar Dhoot and Mr....

Growing sustainably.And profitably.

The Oudh Sugar Mills LimitedAnnual Report 2008-09

The Oudh Sugar Mills Limitedwww.birla-sugar.com

Late Dr K.K. Birla

(1918-2008)

Our Source of Inspiration

print anderson 9831778971

CONTENTS

Corporate Information ......................................................................................... 2

Notice ........................................................................................................................ 3

Key Figures ............................................................................................................... 4

Chairman’s Message ............................................................................................. 6

Directors’ Report ................................................................................................... 8

Management Discussion & Analysis Report ................................................ 12

Report on Corporate Governance ................................................................. 24

Financial Statements (Standalone) ................................................................ 35

Financial Statements (Consolidated) ............................................................ 69

Financial Statements (Subsidiaries) .............................................................. 99

BOARD OF DIRECTORS REGISTRAR & SHARE TRANSFER AGENTMr. Chandra Shekhar Nopany, Chairman-cum-Mg. Director Link Intime India Private LimitedMr. S.V. Muzumdar (Unit : The Oudh Sugar Mills Limited)Mr. Ashvin C. Dalal C-13, Pannalal Silk Mills CompoundMr. C.B. Patodia L.B.S. Marg, Bhandup (West)Mr. Rohit Kumar Dhoot Mumbai 400 078Mrs. Madhu Vadera Jayakumar Tel. No. : 91- 022–2596 3838Mr. Haigreve Khaitan Fax No. : 91- 022–2594 6969Mr. J.N. Godbole e-mail : [email protected]

COMMITTEES OF DIRECTORS REGISTERED OFFICEFinance & Corporate Affairs Committee P. O. Hargaon District – Sitapur, (U. P.)Mr. Chandra Shekhar Nopany Pin Code – 261 121Mr. S.V. MuzumdarMr. Ashvin C. Dalal CORPORATE OFFICEMrs. Madhu Vadera Jayakumar Unit No. 210/212, Solaris - 1, ‘A’ Wing, 2nd Floor

Saki Vihar Road, Opp : L&T Gate No. 6, Audit Committee Andheri (East), Mumbai – 400 072.Mr. Ashvin C. Dalal Tel. No. : 91-022-2847 0249Mr. C.B. Patodia Fax No. : 91-022-2847 0275Mr. S.V. Muzumdar e-mail : [email protected]

Mr. Rohit Kumar Dhoot

HEAD OFFICEInvestors’ Grievance Committee 9/1, R.N. Mukherjee Road,Mr. S.V. Muzumdar Kolkata - 700 001Mr. Rohit Kumar Dhoot Tel. No. : 91-033-2243 0497/8 Mrs. Madhu Vadera Jayakumar Fax No. : 91-033-2248 6369

e-mail : [email protected] Committee Website : www.birla-sugar.com/osugar Mr. S.V. MuzumdarMr. Ashvin C. DalalMr. Rohit Kumar Dhoot SUGAR MILLS

1. Hargaon, Dist. Sitapur, (U. P.)EXECUTIVES 2. Rosa, Dist. Shahjahanpur, (U. P.)Mr. G.N. Pareek, Company Secretary 3. Narkatiaganj, Dist. West Champaran, (Bihar)Mr. Naresh Chandra Paliwal, Executive President, Hargaon 4. Hata, Dist. Kushinagar, (U.P.)Mr. Chandra Mohan Singh, Executive President, NarkatiaganjMr. B.K. Malpani, Executive President, Rosa DISTILLERYMr. S. K. Premi, Executive President, Allahabad 1. Hargaon, Dist. Sitapur, (U. P.)Mr. P.K. Saini, Executive President, Hata 2. Narkatiaganj, Dist. West Champaran, (Bihar)

AUDITORS CANNING FACTORYS.R. Batliboi & Co. P.O. Bamrauli, Allahabad, (U. P.)Chartered Accountants

CO-GENERATION POWER PLANTADVOCATES & SOLICITORS 1. Hargaon, Dist. Sitapur, (U. P.)Khaitan & Co. 2. Narkatiaganj, Dist. West Champaran, (Bihar)

3. Hata, Dist. Kushinagar, (U.P.)BANKERSState Bank of IndiaIDBI Bank Ltd.Axis Bank Ltd.State Bank of HyderabadUnion Bank of IndiaBank of Rajasthan

CORPORATE INFORMATION

The Oudh Sugar Mills Limited2

The Oudh Sugar Mills Limited Regd. Office : P.O. Hargaon, Dist. Sitapur (U.P.), Pin - 261 121

Notice is hereby given that the Seventy-seventh Annual General Meeting of the members of The Oudh Sugar Mills Limited will be held at the Registered Office of the Company at Meeting Hall, Oudh Sugar Mills Complex, Hargaon, District Sitapur, Uttar Pradesh, Pin – 261121, on Thursday, the 26th November, 2009 at 2.00 P.M. to transact the following businesses :

Ordinary Business :1. To consider and adopt the audited Balance Sheet as at 30th

June, 2009, the Profit and Loss Account for the year ended on that date and the Reports of the Directors and Auditors thereon.

2. To declare dividend on Equity Shares.

3. To appoint a Director in place of Mr. Rohit Kumar Dhoot who retires by rotation and being eligible offers himself for re-appointment.

4. To appoint a Director in place of Mr. Haigreve Khaitan who retires by rotation and being eligible offers himself for re-appointment.

5. To appoint Auditors and to fix their remuneration

By Order of the Board

Place : Mumbai G. N. Pareek

Dated : 25th August, 2009 Company Secretary

NOTES :

1. A member entitled to attend and vote at the meting is entitled to appoint a proxy to attend and vote instead of himself and a proxy need not be member. The instrument appointing proxy should, however, be deposited at the Registered Office of the Company not less than forty-eight hours before commencement of the meeting.

2. The Register of the Members of the Company will remain closed from 23rd October, 2009 to 24th October,2009 both days inclusive for the purpose of payment of dividend for the year ended 30th June, 2009 and from 24th November, 2009 to 25th November, 2009, both days inclusive, for the purpose of holding the Annual General Meeting of the Company on 26th November, 2009 in terms of this notice.

3. In terms of Article 82 of the Articles of Association of the Company, Mr. Rohit Kumar Dhoot and Mr. Haigreve Khaitan Directors, retire by rotation at the ensuing Annual General Meeting and are eligible for re-appointment. A brief resume of these Directors, nature of their expertise in specific functional areas, names of companies in which they hold Directorship and Membership/Chairmanship of Board Committees and Shareholding, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, are provided in the report on Corporate Governance forming part of the Annual Report. The Board of Directors of the

NOTICE

Company recommends their respective re-appointments.

4. Members are requested to notify the change in their addresses, if any to the Company/Registrar & Share Transfer Agent. Members holding shares in dematerialised form should send the above information to their Depository Participants.

5. In all correspondences with the Company/Registrar & Share Transfer Agent, the members are requested to quote their account/folio numbers and in case their shares are held in the dematerialised form, they must quote their Client ID Number and their DP ID Number.

6. Pursuant to the provisions of Section 205A of the Companies Act, 1956, as amended, dividend remaining unclaimed/ unpaid for a period of seven years is required to be transferred to the Investor Education and Protection Fund of the Central Government (Fund). Accordingly, all unclaimed / unpaid dividends till the financial year up to and including 31.03.1999 have since been transferred to the said fund. There had been no payment of dividend after 31.03.1999 till the financial year 2003-04. Therefore, Members who have not encashed the dividend warrants so far for the financial years 2003-04 and for subsequent financial years may make their claim to the Company / Registrar and Share Transfer Agent. Once the unclaimed/unpaid dividend is transferred to the Fund no claim in this regard, shall lie against the Fund or the Company.

7. In terms of provisions of Section 109A of the Companies Act, 1956, nomination facility is available to individual shareholders in respect of shares held by them in physical form. The Nomination Form 2B prescribed by the Government can be obtained for the purpose from the Company/Registrar & Share Transfer Agent. The said Form 2B can also be downloaded from the Company’s website.

8. The Equity Shares of the Company are listed at The Bombay Stock Exchange Ltd., Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001 and The National Stock Exchange of India Limited, Exchange Plaza, Plot No. C-1, G-Block, Bandra Kurla Complex, Bandra (East), Mumbai-400 051. The listing fee for the year 2009-2010 has been paid to both the above Stock Exchanges.

9. Shares of the Company are compulsorily tradable on the Bombay Stock Exchange Limited and The National Stock Exchange of India Limited only in the dematerialised form. Therefore, shareholders holding their shares in physical form are advised to have their holding of shares in physical form converted into dematerialised form to have a better liquidity of their shareholding.

By Order of the Board

Place : Mumbai G. N. Pareek

Dated : 25th August, 2009 Company Secretary

Annual Report 2008-09 NOTICE 3

(Rs. in lakhs)

FINANCIAL HIGHLIGHTS

2004-05 2005-06 2006-07 2007-08 2008-09

Gross Turnover 37,628.42 52,864.92 46,812.06 35,393.59 58,309.13

EBDIT 8,096.94 10,297.66 129.80 5,280.58 10,578.35

Net Profit/(Loss) 1,116.04 4,536.51 -2,689.55 -451.27 1,917.38

Segment Revenue

(a) Sugar 32,078.00 44,890.74 37,817.54 25,839.51 47,532.93

(b) Distillery 2,335.20 3,792.89 3,919.33 4,677.10 5,017.13

(c) Co-generation 0.00 0.00 766.43 725.57 587.06

(d) Canning 1,191.37 1,433.10 1,741.15 1,913.72 2,507.44

KEY FIGURES

(Rs.)

PER SHARE DATA

2004-05 2005-06 2006-07 2007-08 2008-09

Earnings per share 7.05 24.96 -14.80 -2.48 9.34

Dividend per share 2.50 4.50 0.00 0.00 1.50

Payout Ratio (%) 35.46 18.03 0.00 0.00 16.06

Book value per share 53.69 73.35 58.34 55.48 62.82

Total Income (Rs. in lakhs)

55,933.882008-09

2007-08

2006-07

34,181.84

44,356.97

EBDIT (Rs. in lakhs)

10,578.352008-09

2007-08

2006-07

5,280.58

129.80


PAT (Rs. in lakhs)

1,917.382008-09

2007-08

2006-07

-451.27

-2,689.55

EPS (Rs.)

9.342008-09

2007-08

2006-07

-2.48

-14.80

RONW (%)

13.922008-09

2007-08

2006-07

-4.48

-25.37

Net Worth (Rs. in lakhs)

13,770.062008-09

2007-08

2006-07

10,083.42

10,603.02

Debt-Equity Ratio

5.782008-09

2007-08

2006-07

8.58

5.32

Net Cash from Operating Activities (Rs. in lakhs)

21,338.032008-09

2007-08

2006-07

-10,929.49

3,770.23

Annual Report 2008-09 KEY FIGURES 5

CHAIRMAN’S MESSAGE

Dear Shareholders,

The year gone by has been unforgettable for the incredible impact

of the global recession on economies around the world.

However, we chose to prepare ourselves for the global rebound by

consolidating energies, optimising opportunities and augmenting

capacities. Adorning our portfolio, the New India Sugar Mills

at Hata, Uttar Pradesh, commenced operations this year with a

crushing capacity of 7,000 tonnes of sugarcane per day.

Our efforts paid off and reflected in a quantifiable increase in

total income from Rs. 34,181.84 lakhs in 2007-08 to Rs. 55,933.88

lakhs in 2008-09.

I am proud to iterate the challenges faced and overcome, the

market situation and the strategies we implemented to grow,

sustainably and profitably.

THE CHALLENGE TO GROW

The Sugar industry at present is under that phase of the peculiar

sugar cycle, where sugarcane production plummets sharply. The

sugar production in turn was also impacted. This can be attributed

to poor or delayed rainfall hampering sucrose formation, lesser

acreage and loss in farmer interest. This in turn resulted in a

declining stock/consumption ratio, finally resulting in soaring

sugar prices.

We took this in our stride and leveraged on the high prices and

enhanced realisations to augment capacities and de-risk our sugar

and allied products business.

The year also saw increasing attention paid to additional revenue

streams. Ethanol, a by product of sugar is one of the most effective

renewable biomass fuels available. Ethanol, when mixed with

gasoline, acts as an oxygenate, containing an enhanced oxygen

content which besides absorbing Carbon di-oxide can be used

as an alternative fuel. This not only reduces vehicular pollution,

but also plays a pivotal role in decreasing our dependence on non

renewable sources of energy.

We, at The Oudh Sugar Mills, have focused on what we do best,

that is producing high grade sugar and allied products. However,

attention was paid to minimise risks and grow responsibly. We

took efforts at generation of power using bagasse and alcohol

manufacture through molasses.

Thus, we have continued in the path of wholesome growth in a

Mr. Chandra Shekhar Nopany

Chairman-cum-Managing Director

The Board is headed by Mr. Chandra Shekhar

Nopany, aged 43 years, who is the Chairman-

cum-Managing Director. He is a Chartered

Accountant and Master in Science of

Industrial Administration from Carnegie

Mellon University, Pittsburgh, USA. He is an

eminent industrialist having vast industrial

experience in diverse fields like sugar, tea,

shipping, textiles, fertilisers and chemicals, etc.

He is the past President of Indian Chamber of

Commerce.


year where we did not let the all pervading gloom take the upper

hand.

OUTLOOK

The Sugar production is further expected to fall in the coming

sugar season. Prices shall thus surge again. Sugar stocks are going

to fall further as Government looks to import more and more raw

sugar to tide over the shortage.

To face the vicissitudes of the economy, it is important to pay

increased attention to the extreme link in our system, the farmers.

We have never compromised on the timely payments for the

very upholders of our business. In fact, significant attempts are

being made through awareness oriented training and education

to familiarise the farmers with advanced methods in cane

farming so as to escape the fickleness of natural and crop cyclical

conditions.

Also, the Hata plant has commenced production and lending support

towards augmenting capacities. This unit also has co-generation

facilities. Thereby, we have always remained independent in terms

of power, as also using ethanol to reduce vehicular pollution and

bagasse as a ‘green’ source of power for our projects.

Therefore, we are looking forward to an era of global economic

rebound wherein we will continue to benefit from our values,

act on the opportunity, serve our people and grow further

responsibly.

I hereby take the opportunity to extend my regards to our

shareholders who have kept their faith in us and I hope they will

continue participating in all our future successes.

Warm regards,

Chandra Shekhar Nopany

We chose to prepare ourselves for the global rebound by consolidating energies, optimising opportunities and augmenting capacities. Adorning our portfolio, the New India Sugar Mills at Hata, Uttar Pradesh, commenced operations this year with a crushing capacity of 7,000 tonnes of sugarcane per day.

Annual Report 2008-09 CHAIRMAN MASSAGE 7

DIRECTORS’ REPORT

(Rs. In lakhs)

2008 – 09 2007 – 08

2. Gross Sales 58,309.13 35,393.59

Profit before Depreciation and Tax 5,636.82 1,602.76

To which is added/(deducted) :

Balance brought forward from the previous year 78.69 29.96

Deferred Tax Credit/(Charge) (1,062.33) 212.12

Income Tax Provision no longer required written back 1.67 0.60

Transfer from General Reserve -- (981.97) 500.00 742.68

Leaving a balance of 4,654.85 2,345.44

Out of this provisions have been made for :

Depreciation 2,632.03 2,229.68

Taxation [including Wealth tax Rs. 3.00 lakhs (Rs. 3.00 lakhs) ] 122.02 3.00

Minimum Alternative Tax (MAT) credit (entitlement) / Reversal (119.02) 3.93

Fringe Benefit Tax 23.75 2,658.78 30.14 2,266.75

Surplus available for Appropriation 1,996.07 78.69

From out of which following Appropriations were made :

i) Dividend 328.80 --

ii) Dividend Tax 55.88 --

iii) Transfer to General Reserve 100.00 484.68 -- --

Balance carried forward to Balance Sheet 1,511.39 78.69

To

The Shareholders,

Your Directors take pleasure in presenting their 77th Annual Report together with the audited Statements of Account of the Company

for the year ended 30th June, 2009.

FINANCIAL RESULTS & APPROPRIATIONS

FINANCIAL PERFORMANCE & DIVIDEND

3. There is marked improvement in the financial performance of

the Company for the year under review when the Company

has earned a profit (before Depreciation and Tax) of

Rs. 5,636.82 Lakhs as against a similar figure of Rs.1,602.76

Lakhs during the immediately preceding financial year. A

sharp fall in the sugar production in the country has resulted

in a revival of sugar prices and has improved profitability.

4. A detailed analysis of the Company’s operations, future

expectations and business environment has been given in

the Management Discussions & Analysis Report, which is

attached and is an integral part of this Report.

5. In view of improved profit performance of the Company, the

Board recommends a dividend of Re. 1.50 per equity share of

Rs. 10 each (previous year-NIL). The total outgo on this account

shall be a sum of Rs. 384.68 Lakhs including dividend tax.


FORFEITURE OF EQUITY SHARES ALLOTTED ON RIGHTS BASIS

6. 2,53,125 Equity Shares held by 570 shareholders have been

forfeited by the Board due to non payment of call money of

Rs. 30 per share allotted in course of the Rights Issue during

2008-09. The Board had also waived off the entitlement

of interest on payment of call money received after 15th

January, 2009 and also refunded the said money received

from shareholders prior to such waiver.

CAPITAL PROJECTS

7. The Construction of Company’s Greenfield Integrated Sugar

Project of 7,000 TCD with a sugar refinery and Co-generation

Plant at Hata, Kushinagar, Uttar Pradesh has started crushing

operations during the year. Further, the supply of power

from the Co-generation Plant of 35 MW capacity at the said

unit shall commence during the ensuing season.

CORPORATE GOVERNANCE

8. Pursuant to Clause 49 of the Listing Agreement, the

Management Discussion & Analysis Report, the report on

Corporate Governance, Declaration of Managing Director

on Code of Conduct and Auditors’ Certificate on compliance

of conditions of Corporate Governance are all attached and

marked as Annexures “A”, “E”, “F” and “G”, respectively and

forms integral parts of this Report.

DIRECTORS

9. The Company has seven Non Executive directors having

experience in varied fields and a Managing Director. Two

directors Mr. Rohit Kumar Dhoot and Mr. Haigreve Khaitan

retire from the Board by rotation and being eligible offers

themselves for re-appointment.

10. Other information on the directors including required

particulars of directors retiring by rotation is provided in the

Report of Corporate Governance.

DIRECTORS’ RESPONSIBILITY STATEMENT

11. Your Directors confirm that -

i) in the preparation of the annual accounts, the

applicable accounting standards have been followed

and there is no material departures;

ii) such accounting policies have been selected and

applied consistently and judgments and estimates

made are reasonable and prudent, so as to give a true

and fair view of the state of affairs of the Company at

the end of the financial year and of the profit of the

Company for that year;

iii) proper and sufficient care has been taken for the

adequate accounting records in accordance with the

provisions of the Companies Act, 1956 for safeguarding

the assets of the Company and for preventing and

detecting fraud and other irregularities;

iv) the annual accounts have been prepared on a ‘going

concern’ basis.

AUDITORS, AUDIT QUALIFICATIONS AND BOARD’S

EXPLANATIONS

12. The Auditors Report is self-explanatory. However, the Auditors

have made the observation regarding non-adjustment of

levy sugar price matters which is presently under litigation.

The Company’s view is that as the matter is under litigation,

provision will be made at the appropriate time. The Auditors

have also expressed their inability whether the Company

will be entitled to claim MAT credit of Rs. 836.59 lakhs. The

Company’s projections are that this would be claimed within

the stipulated time.

13. The Auditors, Messrs S.R. Batliboi & Co, Chartered

Accountants, retire and are eligible for re-appointment. The

said re-appointment, if made, will be in accordance with the

provisions of Section 224(1B) of the Companies Act, 1956.

9 Annual Report 2008-09 DIRECTORS’ REPORT

14. In accordance with the directives of the Central Government

under Section 233B of the Companies Act, 1956, Messrs D.

Radhakrishnan & Co., Cost Accountants, have been appointed

as Cost Auditors to audit the cost accounting records relating

to Sugar and Industrial Alcohol for the current year.

SUBSIDIARY COMPANIES

15. The audited accounts of Champaran Marketing Company

Limited, OSM Investment & Trading Company Limited,

Hargaon Investment & Trading Company Limited, subsidiaries

of the Company and Hargaon Properties Limited, a subsidiary

of Hargaon Investment & Trading Company Limited, for the

year ended 31st March, 2009 are attached. In this regard, the

Statement pursuant to Section 212 of the Companies Act,

1956 is attached and is marked as Annexure “D”.

CONSOLIDATED FINANCIAL STATEMENTS

16. As required under the Listing Agreement with Stock

Exchanges, Consolidated Financial Statements conforming

to the Accounting Standard 21 are attached.

PARTICULARS OF EMPLOYEES

17. Particulars of employees as required under Section 217(2A)

of the Companies Act, 1956 is attached as a separate

Annexure ”C” and forms an integral part of this Report.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND

FOREIGN EXCHANGE EARNINGS & OUTGO

18. Particulars in respect of conservation of energy, technology

absorption and foreign exchange earnings and outgo as

required under Section 217(1)(e) of the Companies Act, 1956

is marked as Annexure “B” and forms part of this Report.

FIXED DEPOSITS

19. As on 30th June, 2009, your Company had 635 depositors

with fixed deposits of Rs. 306.29 Lakhs. 30 depositors had

not claimed their Fixed Deposits amount of Rs. 7.30 Lakhs

as on that date. The depositors are being advised at regular

intervals to claim their deposits.

ACKNOWLEDGEMENTS

20. Your Directors take this opportunity of recording their

appreciation of the shareholders, financial institutions and

bankers for extending their support to the Company. Your

Directors are also grateful to the various ministries in the

Central and State Governments of Uttar Pradesh and Bihar,

the Sugar Directorate and the Sugar Development Fund

for their continued support to the Company. The Directors

also place on record their appreciation of the valuable

contribution made by the employees at all levels.

For and on behalf of the Board

Chandra Shekhar Nopany

Chairman-cum-Managing Director

Place : Mumbai

Dated : 25th August, 2009


MANAGEMENT DISCUSSION & ANALYSIS REPORT

SUGAR INDUSTRY OVERVIEW

Global Sugar Scenario

Sugar, both through beet or sugarcane, is produced in 125 countries. Currently, 69% of the world’s sugar is consumed in the countries

of its origin, whilst the balance is traded on world markets.

World Sugar Balance

2009-10 2008-09 Change

(million tonnes, raw value) in million tonnes in %

Production 159.042 154.225 4.817 3.12

Consumption 167.446 164.593 2.853 1.73

Surplus/Deficit -8.404 -10.368

Import demand 51.930 50.962 0.968 1.90

Export availability 51.964 50.903 1.061 2.08

End Stocks 53.234 61.672 -8.438 -13.68

Stocks/Consumption ratio in% 31.79 37.47

Source: ISO quarterly market outlook, September, 2009

The five largest exporters of Sugar in 2009-10, i.e. Brazil, Thailand, Australia, India and SADC are expected to supply approximately 79%

of all world free market exports. South Africa is currently ranked as the ninth largest exporter to the world market.

The price of raw sugar has increased to its highest level since March, 1981, as supply concerns grow. Reuter reports that a growing global

sugar deficit should help sustain world market prices despite the global economic downturn, which is seen as having little impact on

global demand for sugar. Global sugar prices are likely to stay high in the months ahead, making the sweetener import costlier than it is

now. World raw sugar prices rose steeply from only 11.4 cents/lb in January 2009 to 18 cents/lb in July, 2009. In August, 2009 raw sugar

hit a 28-year high and now is being traded at over 22 cents/lb. World market values demonstrated moderate increases during May, June

and July, but prices rocketed in August to a level, which has not been seen since the last large-scale sugar price boom at the beginning

of the 1980s. On 31st August, 2009 the ISA daily price was as high as 25.18 cents/lb.

Non remunerative sugar prices led to a significant decrease in sugarcane acreage especially in India leading to a sharp fall in production

during 2008-09. It was against this background of weak underlying fundamental factors that sugar prices rallied to new highs in the

latter part of the season 2008-09 as a direct result of the reduced sugar inventories and continued focus on ethanol coupled with

adverse climatic conditions in Brazil. These fundamental changes have attracted commodity investors to the future markets. The scale

and significant impact of this investment activity created a sense of dislocation between market fundamentals and futures prices. As a

consequence, futures prices have been increasing since December, 2008 and are prevailing around US 23.43 cents/lb for March, 2010.

ANNEXURE - A


However, the industry is expected to remain in deficit in Sugar Year

2008-09 as well as 2009-10 after 2 continuous years of surplus

position. The world sugar economy faces a second consecutive

year of a large deficit projected at 8.4 million tonnes. The world

raw sugar output is expected to stand at 158.78 million tonnes

against previous estimates of 161.7 million tonnes. However, on

the demand side, the global consumption is expected to move up

by 3.2 % to 162.11 million tonnes with an additional consumption

of 3.3 million tonnes that could raise sugar prices further. (Source:

Financial Chronicle)

Indian Sugar Industry

India has been known as the original home of sugar and sugarcane.

Indian mythology supports the above fact as it contains legends

showing the origin of sugarcane. The advent of modern sugar

processing industry in India began in 1930 with grant of tariff

protection to the Indian sugar industry. The number of sugar mills

increased from 30 in the year 1930-31 to over 650 at present

and the production during the same period increased from 0.120

million tonnes to 26.3 million tonnes under the dynamic leadership

of the private sector. India is the second largest producer of cane

in the world next only to Brazil. Presently, about 4 million hectares

of land in India is under cane cultivation with an average yield of

70 tonnes per hectare.

The Indian sugar industry at present is highly fragmented in terms

of its location as a direct result of strict government controls on

licensing and distribution of sugar mills, and on the pricing of

cane and sugar.

Revival of Sugar Prices

Sugar prices have been slowly reviving since June, 2008 till the

first quarter of Financial Year 09 due to lower production and

increasing cane cost. Lack of vision and an unfocussed sugar

policy by the Governments at the Central and State levels with

multiple levels of controls have been continuously hampering the

growth of this sector. A short sighted policy to curb sugar prices

led to lower cane payments leading to lower acreage which has

been the major cause of this shortfall in production. An irrational

sugarcane pricing policy led to huge cane arrears that have also

compounded the problem. Sugar prices have increased despite

Government’s efforts to control the prices of sugar due to critical

inventory position in the country. This rise in prices have led to

better profitability and recovery for the sugar manufacturing

companies during the Financial Year 2008-09.

55.00

World Sugar Prices (c/kg)

50.00

45.00

40.00

35.00

30.00

25.00

20.00

Sep-

06

Oct-06

Nov-0

6

Dec-0

6

Jan-0

7

Feb-

07

Mar-07

Apr-0

7

May-0

7

Jun-

07Ju

l-07

Aug-0

7

Sep-

07

Oct-07

Nov-0

7

Dec-0

7

Jan-0

8

Feb-

08

Mar-08

Apr-0

8

May-0

8

Jun-

08Ju

l-08

Aug-0

8

Sep-

08

Oct-08

Nov-0

8

Dec-0

8

Jan-0

9

Feb-

09

Mar-09

Apr-0

9

May-0

9

Jun-

09Ju

l-09

Aug-0

9

Source : mongabay.com using World Bank Commodity Price data

Karnataka

AndhraPradesh

Tamil Nadu

Punjab

Assam Nagaland

Orissa

Gujrat Madhya Pradesh

Maharashtra

Uttaranchal

RajasthanUtter

Pradesh

Haryana

Goa

Kerala

Chhattisgarh

WestBengal

Bihar

INDIATotal Numbers of Sugar Mills - 650

Total Sugar Production - 14.7 million tonnes


Source: CMIE, KSBL Research.

In order to augment the supply and availability of sugar, the

Government has announced several measures like duty-free import

of raw sugar, permission to some state enterprises to import duty-

free white sugar to the extent of 1 million tonnes and imposition

of stock limits for dealers to check the hoarding and ban of sugar

futures, in the recent past.

Such measures and higher sugar release under the release

mechanism by the Government have kept sugar prices under

control for a short span. However, considering the strong

fundamentals of the up move in the current sugar cycle (backed

by a steep deficit), the uptrend in sugar prices is likely to continue

for some time now. The higher global prices will ensure that the

domestic price of sugar remains on a strong footing.

Cane Pricing

Sugar mills in India pay cane price either based on the Statutory

Minimum Price (SMP) announced by the Central Government or

the State Advised Price (SAP) announced by the State Government

where a SAP regime is in place with the SAP usually being higher

than SMP. Mills in India’s largest cane producing state [Uttar

Pradesh (UP)] pay cane price to farmers according to SAP.

Historically, SAP has been significantly higher (20%-50%) than

SMP and northern Indian mills had paid cane price of Rs. 140

per quintal. The Mills in Maharashtra, Karnataka and Tamil Nadu

consider SMP or an agreed price as in the case of Bihar.

UP Cane Pricing Predicament

The UP sugar industry as a whole has been exposed to increases

in cane prices. Historically, the State Government has been fixing

cane price irrespective of the price of sugar. The industry is

contesting in the court of law, the arbitrary fixing of the cane

price and demanding a methodology of cane pricing based on the

price of sugar. The outcome of this case is still awaited.

Sugar, for historical reasons, carries a very strong weightage in the

Wholesale Price Index. Hence, the Government keenly monitors its

price movement. In India, sugar is a strong political commodity

since cane farming is the means of livelihood for a big mass of population in states such as Maharashtra and UP. In both these states sugar farmers operate through co-operative societies and wield significant influence over local politics. Thus, while, on the one hand, the Government tries its best to check rise in sugar prices, on the other hand, the SAP is normally increased irrespective of the sugar mills’ capacity to pay for cane.

Declining Stock/Consumption Ratio Of Sugar

The Stock/Consumption Ratio refers to the percentage of stock of sugar held at the end of a given year in respect to the amount of sugar consumed during the year. A declining Stock/Consumption Ratio strengthens the sugar prices considerably. This fact can be observed from the following table -

Declining Production And Stocks Of Sugar

With the production declining and the consumption rising steadily, the stock of sugar at year end has been declining notwithstanding the fact that the Government has been importing raw sugarcane for inducing higher production. This has been steadily transforming into declining Stock/Consumption Ratio and thus steadily rising prices. As such prices are likely to remain on the higher side in the coming sugar year.

Correlation between sugar price and stock/consumption

8065.4 66.7 70.9

45.8

24.919.5

2,0001,9001,8001,7001,6001,5001,4001,3001,2001,1001,000

7060

50403020100

SY00

-01

SY01

-02

Source : Sharekhan Research

SY02

-03

SY03

-04

SY04

-05

SY05

-06

SY06

-07

SY07

-08

stock/consumption % (LHS) sugar price (Rs per quintal) (RHS)

46.340.6

Apr-03

2400

2200

2000

1800

1600

1400

1200

1000Jan-04 Oct-04 Jul-05 Apr-06 Jan-07 Oct-07 Jul-08 Apr-09

Domestic sugar prices


Source: Sharekhan

The Levy Sugar

The obligation placed by the Government on the sugar industry

to supply 10% of its output as levy sugar at prices far below

the actual cost of production and the open market prices. The

levy sugar is distributed through the Public Distribution System

channel to the B.P.L. population. Thus, while the sugar industry is

forced to supply levy sugar, there is hardly any realization among

the public that the subsidy on levy sugar is funded by the industry

and not by the Government. Unfortunately, the public distribution

system is highly inefficient where substantial leakages occur and

the sugar supplied by the industry ends up in the free maket where

prices are normallly higher. The Government is looking to revamp

this entire system.

Anticipating Tight Sugar Supply

India plays a crucial role in the world’s sugar output. According

to a US Governmental report, world sugar output may probably

dip by 6.37 % in the Sugar season 2008-09 on the back of lower

production in major sugarcane producing countries including

India and spurt in the demand.

Indian Sugar output in the current sugar year 2008-09 has

plummeted substantially as compared with the output in the

previous few years. Current year’s estimate is now placed at around

14.75 million tonnes, 44% lower than the output achieved in the

previous year 2007-08 at 26.3 million tonnes. Such a sharp decline

in sugar production by 11.55 million tonnes in one single year

is unprecedented. This has happened mainly because the farmers

seem to have lost interest in sugarcane planting in recent past

due to lack of orderly disposal thereof in addition to the fact that

there has been ambiguity regarding cane pricing and large dues by

the industry to the farmers.

The season 2009-10 plantation has been poor due to the non-

availability of sugarcane seed due to the sharp surge in sugarcane

prices at the fag end of the season 2008-09. The yields are also

likely to be affected due to less than normal rainfall in most of the

sugarcane growing belt. Some of the districts producing cane have

been declared drought hit. Indian sugar industry suffers from too

many interventions by the authorities. Such interventions, lead

to wide variations in sugar production. Domestic demand on the

other hand is pegged at an increased level of 22.0 million tonnes.

The country has contracted to import around 4 million tonnes of

raw sugar.

The Indian sugar industry expects the Government to extend its

duty-free raw sugar import policy by one more year to encourage

overseas purchases and curb domestic prices in the year of tight

supplies. The Government, earlier this year, removed the export

obligation that was linked to the import of raw sugar, as tight

supplies threatened to push up prices, stoking inflation.

The Fuel Ethanol

Ethanol fuel is available as a by-product of sugar mills producing

sugar. It can be used as a fuel, mainly as a bio-fuel alternative to

gasoline, and is widely used in cars in Brazil and as an oxygenate to

gasoline in the United States. It is steadily becoming a promising

alternative to gasoline throughout the world and thus instead of

sugar may be produced as a primary product out of sugarcane

processing.

Brazil is the world’s second largest producer of ethanol fuel and

the world’s largest exporter. Together, Brazil and the United

States lead the industrial production of ethanol fuel, accounting

together for 89% of the world’s production in 2008. In 2008 Brazil

Sugar Year (Oct - Sep) 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09E 2009-10E 2010-11EOpening stock 9.3 10.6 11.2 12.4 8.2 4.6 3.7 9.5 8.9 2.5 2.0Production 18.5 18.5 20.1 13.5 12.7 19.3 28.0 26.3 14.5 19.0 25.0% chg 0.0 8.6 -32.8 -5.9 52.0 45.1 -6.1 -44.9 31.0 31.6Imports 0 0 0 0.4 2.1 0 0 0 2 4 0Total availability 27.8 29.1 31.3 26.3 23 23.9 31.7 35.8 25.4 25.5 27

Domestic consumption 16.2 16.8 17.5 17.9 18.5 19.0 20.5 21.9 22.8 23.5 24.3% chg 3.7 4.2 2.3 3.4 2.7 7.9 6.8 4.1 3.1 3.4Exports 1.0 1.1 1.5 0.2 0 1.1 1.7 5.0 0.1 0 0Total offtake 17.2 17.9 19 18.1 18.5 20.1 22.2 26.9 22.9 23.5 24.3Closing stock 10.6 11.2 12.4 8.2 4.6 3.7 9.5 8.9 2.5 2 2.7Stock/Domesticconsumption (%)

65.4 66.7 70.9 45.8 24.9 19.5 46.3 40.6 11.0 8.5 11.1

Stock as no. of months of consumption

7.9 8.0 8.5 5.5 3.0 2.3 5.6 4.9 1.3 1.0 1.3

India’s Sugar Scenario (million tonne)


produced 24.5 billion litres (6.47 billion U.S. liquid gallons), which represents 37.3% of the world’s total ethanol used as fuel.

India has initiated the use of ethanol as an automotive fuel. In fact, 5% blending is already underway with oil companies inviting tenders

from the sugar industry for supply of ethanol. 5% blending has been a grand success. The Government of India had approved a 10 %

ethanol blend with gasoline for mandatory use in vehicles from October, 2008.

However, the ethanol blending programme has suffered a setback due to the sharp fall in sugarcane production in the country. Fall in

sugarcane production has also resulted in a sharp fall in the production of molasses a by-product of sugarcane and the raw material

for ethanol. Consequently, a tight supply of molasses has sent its prices soaring resulting in the non-viability of ethanol and industrial

alcohols production. Global prices have not risen resulting in large scale imports of industrial alcohol into India.

The quantitative figures of production and recovery of the Company’s Distilleries are as under:

Year 2008-09 (Full year ended 30th June, 2009) Year 2007-08 (Full year ended 30th June, 2008)

Hargaon Narkatiaganj Total Hargaon Narkatiaganj Total

Alcohol Produced

(Lakh quintals)

131.33 102.15 233.48 165.47 80.02 245.49

Average Recovery (%) 21.03 23.02 22.37 23.48

The Green Power/Co-Gen Capability Of Sugar

The sugar industry can make a significant contribution in meeting the national power requirements. Sugar mills in India produce 2,000

megawatt of biomass-based energy every year, as much as windmills produce, and at half the cost, a new study has found. Sugar mills,

which produce both electricity and heat through co-generation, are already selling power to the grid and can produce up to 5,100 MW

- 69 % of the country’s total co-generation capacity [according to the study carried out by the New Delhi-based NGO Centre for Science

and Environment (CSE)]. If the resources and technology are improved, co-generation can produce almost 10,000 MW or 40 % of the

country’s 2008 power deficit. Such alternatives to fossil fuel energy are critical for India’s energy and climate security.

Sugar mills generate biomass-based ‘green’ energy from bagasse, a by-product that comes from cane crushing. Mills in five major cane

growing states of Andhra Pradesh, Karnataka, Maharashtra, Tamil Nadu and UP are generating enough bagasse to meet the energy needs

of a business centre of the size of Gurgaon.

However, India has no policy framework in place to strengthen this green energy source. Today, out of the 650 odd sugar mills in India,

107 have co-generation plants. This revenue stream has managed to provide a much needed cash flow support at times of low sugar

prices.

Bagasse-based co-generation plants also earn carbon credits as the carbon dioxide absorbed by sugarcane plants while growing up is

more than the carbon dioxide produced in burning bagasse. India launched its biomass power (bagasse-based co-generation) policy in

1990. As the shortage of power grew in many sugarcane states, the policy was revised in 2006 to provide capital subsidy and tax rebates.

The 2003 Amendment to the Electricity Act also provided the necessary framework for promoting renewable energy sources-asking states

to fix a minimum limit for energy utilities to buy green energy.

Like molasses the production of bagasse has also been seriously curtailed due to shortage of sugarcane. Soaring bagasse prices and lack

of availability has also reduced the production of energy during the season 2008-09. This trend is likely to continue during 2009-10.

The Company has co-generation power plants at Hargaon and Narkatiaganj. The sale of power to State Grid by the company is as follows:

Year 2008-09 (Full year ended 30th June, 2009) Year ended 2007-08 (Full year ended 30th June, 2008)

Hargaon Narkatiaganj Total Hargaon Narkatiaganj Total

Power Sale (Lakh units) 155.65 36.33 191.98 201.63 44.30 245.92


COMPANY OVERVIEW

Operating Performance Review

Oudh Sugar Mills performed well during 2008-09 backed by strong demand, better recovery, better cost management and operational

efficiencies. Higher sales price coupled with higher liquidation of stocks in hand have led to the topline growth inspite of lower production

during the year.

The Comparative Operational Figures of the Sugar Factories for the Last Two Seasons:

Season 2008-09 (Actual) Season 2007-08 (Actual)

Hargaon Rosa Narka-

tiaganj

Hata Total Hargaon Rosa Narka-

tiaganj

Hata Total

Sugarcane Crushed

(Lakh quintals)

71.67 29.55 45.16 1.45 147.83 122.05 45.61 69.39 -- 237.05

Recovery (%) 9.34 8.59 9.02 8.00 10.59 9.85 8.83 --

Sugar Produced

(Lakh quintals)

6.69 2.54 4.07 0.12 13.42 12.93 4.49 6.12 -- 23.54

Crushing days 102 86 73 11 272 136 115 116 -- 367

Financial Performance Review

The Company’s total turnover increased by 64.74% to Rs. 58,309.13 lakhs during the year 2008-09 as compared to Rs. 35,393.59 lakhs

during the year 2007-08. The Company was able to earn profit during the year 2008-09 after 2 years of losses suffered during the years

2006-07 and 2007-08. The net profits for the year stood at Rs. 1,917.38 lakhs as against a net loss of Rs. 451.27 lakhs in 2007-08. The

Net Worth of the Company rose by 36.56% to be placed at Rs. 13,770.06 lakhs as on 30th June , 2009 as against Rs. 10,083.42 lakhs as

on 30th June, 2008.

Segmental break-up of Revenue

14%

2%

6%

78%

9%1%

5%

85%

2008-09Sugar 47,537.70Spirits 5,017.13Co-generation 587.06Food processing 2,507.44

2007-08Sugar 25,839.51Spirits 4,677.10Co-generation 725.57Food processing 1,913.72

Sugar Co-generation

Spirits Food processing

Sugar Co-generation

Spirits Food processing


Internal Control System

The Company has a sound and robust system of internal control for financial reporting of various transactions, efficiency of operations

and compliance with relevant laws and regulations. The controls span over all the functions and departments of the organisation. The

internal control system is adequate and commensurate with the size of the Company and the nature of its business.

Human Resources And Industrial Relations

Employee strength as on 30th June, 2009 was 1916 employees as against1926 as on 30th June, 2008.

Except a change in the office of the Company Secretary there has been no material change in the senior management team of the

Company. The Company’s HR Policy continues to be based on inspiring and unleashing creative potential in human assets of the Company.

This is possible in an environment where we respect the rights of all those around us. In this direction, we endeavor:

1) To treat individuals in all aspects of employment solely on the basis of their ability irrespective of race, caste, creed, religion, age,

disability, gender, sexual orientation or marital status.

2) Not to tolerate racial, sexual or any other kind of harassment.

The Company had cordial industrial relations in all the Mills and offices during the year under review.

Risks and Concerns Review

Michael Porter Analysis

PotentialEntrants

Suppliers

Substitutes

Buyers

IndustryCompetitorsBargaining Power

of Suppliers

Threat ofNew Entrants

Threat ofSubstitute Products or Service

Bargaining Power

of BuyersRivalry amongexisting Firms


Threat Of New Entrants

The sugar industry in India already has a number of players with a strong foothold. Presently there is shortage of sugarcane production in India. As such there is high competition for procurement of the same. This acts as a deterrent for new entrants into the industry.Low to Medium

Rivalry Among Existing Firms

There are some 650 mills located all across India. Oudh Sugar Mills is not yet among the large players in the industry. Large scale businesses have operational advantages as against the smaller players. However, the Company has taken a number of steps that put its operational efficiencies at par with the larger players.Medium to High

Bargaining Power Of Buyers

The demand for sugar has been increasing regularly and is also expected to rise further in the future. The release of sugar into the market is regulated directly by the Government. As such the bargaining power of buyers is limited to a very certain extent.Low to Medium

Threat Of Substitute Products

Increase in demand for substitute products could negatively affect the Company’s business. However, the primary substitutes for sugar-gur and khandsari do not have a large and strong market and as such do not act as a big threat to sugar companies.Low

Bargaining Power Of Suppliers

The sugar industry has typical cyclicality in operations. At a time when there is shortage of sugarcane production due to cyclical factors, the bargaining power of buyers rise considerably and vice-versa.Medium

Other Risks And Concerns

Industry Risk

Global economic downturn might negatively affect the sugar industry.

Risk Mitigation

Demand for sugar not impacted by a great deal due to economic slowdowns. Even during a year in which the global economy was largely affected, the demand for sugar was robust and is expected to continue to be so.

Raw Material Risk

Cane is the main raw material for a sugar mill. The area under cane cultivation is expected to have come down during sugar year 2008-09 as compared to sugar year 2007-08. As a result production of sugarcane has fallen. In addition to this, unfavorable climatic

conditions also negatively impact productivity.

Risk Mitigation

The Government is importing large amount of raw sugar from

abroad to meet the industry requirement. The Company has

taken measures to ensure harmonious relationships with cane

growers to ensure that the Company’s mills do not fall short of

its requirements.

Regulatory Risk

Sugar industry is regulated by both Central as well as State

Governments. The input prices are regulated by both Central

and State Governments. The release mechanism used by Central

Government to regulate outputs has an impact on sugar prices.

In addition to these, levy sugar, i.e. 10% of the total output is

required to be sold at prices far below the market prices.

Risk Mitigation

The Government is considering deregulating the sector as much

as possible. Over the years, the levy sugar has been brought down

to 10% of output. Government has also taken steps to provide

export incentives and other measures to reduce problems faced

by sugar mills.

Business Concentration Risk

Sugar being a cyclical commodity, may pose a threat to the

Company’s financial and operational performance if it is largely

dependent on sugar business.

Risk Mitigation

To reduce this concentration risk, the Company is diversifying its

business to various other segments like ethanol, co-generation

and canning segments.

FORWARD LOOKING STATEMENTSThis report contains forward-looking statements, which may

be identified by their use of words like ‘plans’, ‘expects’, ‘will’,

‘anticipates’, ‘believes’, ‘intends’, ‘projects’, ‘estimates’ or other

words of similar meaning. All statements that address expectations

or projections about the future, including but not limited to

statements about the Company’s strategy for growth, product

development, market position, expenditures, and financial results,

are forward-looking statements. Forward-looking statements are

based on certain assumptions and expectations of future events.

The Company cannot guarantee that these assumptions and

expectations are accurate or will be realised.

The Company’s actual results, performance or achievements could

thus differ materially from those projected in any such forward-

looking statements. The Company assumes no responsibility to

publicly amend, modify or revise any forward looking statements,

on the basis of any subsequent developments, information or

events.


Statement showing particulars pursuant to the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 and forming part of the Directors’ Report for the year ended 30th June, 2009.

I. CONSERVATION OF ENERGYa. Energy conservation measures taken

Following initiatives have been taken by the Company to conserve Energy during the year 2008-2009.

To save the energy which is in the form of steam and electricity, energy saving systems have been installed at Company’s various units. For this, new technology has been adopted and following major equipments have been installed :i) Condensates Flash Recovery Equipment named Cigar;ii) Direct Contact Juice Heater;iii) Direct Contact Molasses Conditioner;iv) Sugar Melter of new design working at a very low temperature vapour;

v) Conversion of Evaporator System from Quad to Quintuple;vi) Continuous Pan at B & C Boiler;vii) Latest High Capacity Batch Type Flat Bottom Machines;viii) Replacement of old low efficiency boiler with high efficiency boiler with 120 ton capacity per hour;ix) Installation of high efficiency 15 MW Power Turbine;

b. Additional investments and proposals, if any, being implemented for reduction of consumption of energy

There has been no additional investment during the year under review nor is there any capital expenditure plan for purchase of capital equipments aimed at reduction of consumption of energy.

c. Impact of the measures at I and II above on the reduction of energy consumption and consequent impact on the cost of production of goods

In spite of the energy conservation measures enumerated in I and II above there has been a spurt in power and fuel expenses in absolute terms for the following, amongst other reasons :-

i) A new boiler of 30 MT had to run additionally at Hargaon unit to feed constant power to its distillery.ii) Lower crushing of cane in all the units due to scarcity of sugarcane has resulted in lesser availability of bagasse which in turn

lead to comparatively more consumption of high speed diesel and purchase of power from the concerned State Electricity Boards.

d. Total energy consumption and energy consumption per unit of production

(A) Power & Fuel Consumption :

Current Year Previous Year

Sugar FoodProcessing


1. Electricity :a) Purchased : Units (in lakhs) 14.43 1.75 4.60 1.38 Total amount (Rs. in lakhs) 93.17 10.33 21.74 7.73 Rate/Unit(Rs.) 6.46 5.91 4.73 5.61b) Own Generation :i) Through Diesel Generator : Units (in lakhs) 23.62 0.87 18.89 0.98 Units/litre of diesel-oil 3.31 12.10 4.39 10.23 Cost/Unit (Rs.) 10.25 3.07 7.19 3.57ii) Through Steam Turbine/ Generator :

Units (in lakhs) (Excluding units sold to and used in other

segment

471.29 -- 680.55 --

Units/litre of fuel oil/gas Not ascertainable as the bagasse which is a

by-product is being used as fuelCost/Unit (Rs.)

ANNEXURE - B


Current Year Previous Year



2. Coal :

Quantity (Tonnes) -- 1,183.00 -- 861.10

Total Cost (Rs. in lakhs) -- 62.82 -- 45.89

Average Rate (Rs.) -- 5,309.94 -- 5,329.36

(B) Consumption per unit of production :

Products Sugar - (in lakhs Qtls)/Food Processing (in Qtls) 14.12 0.40 23.54 0.42

Electricity (unit) 36.07 6.60 29.71 5.61

Coal (in kg) -- 0.30 -- 0.20

II. RESEARCH & DEVELOPMENT AND TECHNOLOGY ADOPTION

AND INNOVATION

a. Research & Development

Though the Company being an agro based manufacturing

organisation is not engaged in any substantial research and

development activities, it continues its efforts to improve

the quality and efficiency of its operations and for that

purpose has taken following initiatives towards research and

development :

i) The existing boilers are endeavored to run with coal

after suitable design modifications so as to overcome

the deficiency of baggase fuel availability;

ii) The soil testing laboratory is planned to be in full

stream during the current financial year to educate the

farmers as regards different varieties of manures to be

used to increase the productivity of the soil, increase

the farm output and sucrose contents of the crop.

iii) In order to maintain the genetic purity of different

varieties of sugarcane, improve the quality and yield of

sugar, seeds are treated with moist heat air.

iv) Ways and means are being adopted to control

onslaught of insects and other damaging creatures,

different varieties of insecticides and pesticides are

being developed.

v) The growth of parasites and borers is controlled

through various biological controls of new and

improved nature.

vi) Ratoon management is done on scientific basis only to

increase the yield of sugarcane crop.

vii) The expenditure so far incurred in research and

development is Rs. 331.01 lakhs.

b. Technology Adoption and Innovation

1. The Company has not imported any technology during

the year under review. Nonetheless the following

efforts have been made towards absorption of

indigenous technology, its adoption and innovation of

newer and improved means of crop management and

plant efficiency:-

• installation of additional converter and boilers in the

mills;

• installation of heat and moist absorption mechanism in

the mills ;

• technological changes and advancement at various

stages of plant management and to educate the

farmers to increase their yield and sucrose contents of

sugarcane.

2. Benefits derived as a result of above efforts :

• energy efficiency mechanism;

• reduction in green house gas emission effect;

• marginal increase in production capacity and

productivity;

• increase in the crop yield

• improvement in genetic purity of the sugarcane.


III. FOREIGN EXCHANGE EARNINGS AND OUTGO:

a) Activities relating to exports, initiatives taken to increase exports

During the year under review the Company has not made any direct export of sugar. As and when there is an export obligation the same is discharged through chanalised agencies. As regards export of canned fruits, jam and jelly through Allahabad Canning Co., a Division of the Company, the same is managed through correspondence and personnel contacts with overseas buyers. The total export of Rs. 305 lakhs during the year 2007-08 has been increased to Rs. 680 lakhs (CIF value) during the year 2008-09. The size of the order book position as on the date of this report is Rs. 630 lakhs supported by established L/Cs in favour of the Company and to be executed during the current year 2009-10.

b) Development of new export markets for products and services and export plan

c) Earnings in Foreign Exchange - Rs. 633.34 lakhs (FOB value)

d) Expenditure in Foreign Currency - Rs. 17.71 lakhs

Name DesignationRemuneration

(Rs.)Nature of

Duties Qualification

Experience (years)

Age (years)Year of

commencement of employment

Last employment

held

Employed throughout the year :

Mr. Chadra Shekhar Nopany

Managing Director

1,02,88,640

Overall management of

the affairs of the Company

B. Com., A.C.A., M.S.I.A.

19 43 1995 None

Mr. Chandra Mohan Executive President,

Narkatiaganj28,56,000

Overall management

of the affairs of the

Company’s unit, Narkatiaganj

Diploma in Mechanical Engineering

28 49 May, 2007Bajaj Hindustan Ltd., Sharanpur

Mr. V.P. SinghTechnical

Advisor27,22,260

Overall incharge of

Technical Affairs of the

Company

Diploma in Mechanical Engineering

39 59 June, 2004

The Dhampur Sugar Mills

Ltd., Executive President

PARTICULARS OF EMPLOYEES AS REQUIRED UNDER SECTION 217(2A) OF THE COMPANIES ACT, 1956

AND FORMING PART OF THE DIRECTORS’ REPORT FOR THE YEAR ENDED 30TH JUNE, 2009

Notes : 1. The remuneration includes salary, Company’s contribution to provident fund and perquisite value of rent paid.

2. The appointment is contractual.

3. Other terms and conditions are as per rules of the Company. For and on behalf of the Board

Place : Mumbai Chandra Shekhar Nopany

Dated, 25th August, 2009 Chairman-cum-Managing Director

ANNEXURE - C


STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956

The entire subscribed equity capital of Champaran Marketing Company Limited, Hargaon Investment & Trading Company Limited and

OSM Investment & Trading Company Limited as on 31st March, 2009 was held by the Company. As on 31st March, 2009, 55.56% and

44.44% of the subscribed equity capital of Hargaon Properties Limited was held by Hargaon Investment & Trading Company Limited and

Champaran Marketing Company Limited respectively, wholly owned subsidiaries of the Company and accordingly the said company is the

stepped down subsidiary of the Company.

(Rs. In lakhs)

Name of the Subsidiary Company

Net aggregate of subsidiaries’ profit/(loss)

not dealt with in Holding Company’s Accounts

Net aggregate of subsidiaries’ profit/(loss)

dealt with in Holding Company’s Accounts

Current year

Upto Previous year since became

subsidiary

Current year

Upto Previous year since became

subsidiary

Champaran Marketing Company Limited 10.10 301.45 -- 43.41

OSM Investment & Trading Company Limited 10.65 248.45 -- 26.06

Hargaon Investment & Trading Company Limited 22.51 763.39 -- 57.22

Hargaon Properties Limited (0.23) 2.60 -- --

Since the close of the accounts of Champaran Marketing Company Limited, Hargaon Investment & Trading Company Limited, OSM

Investment & Trading Company Limited and Hargaon Properties Limited on 31st March, 2009, no change has taken place in the holding

Company’s interest in the said subsidiary Companies nor has any material change taken place in subsidiary Companies in regard to any

of the matters specified in Section 212(5)(b) of the Companies Act, 1956 except that the monies lent by Champaran Marketing Company

Limited increased by Rs. 50,000 and monies lent by OSM Investment & Trading company Limited decreased by Rs.25,000.

Chandra Shekhar Nopany Chairman-cum-Managing Director

A.C. Dalal Director

G.N. Pareek Company Secretary

ANNEXURE - D

Annual Report 2008-09 DIRECTORS’ REPORT 23

REPORT ON CORPORATE GOVERNANCE

1. COMPANY’S PHILOSOPHY

The Company continues to believe that Corporate governance

is not a destination, it is a journey and the business situation

is very dynamic. The corporate governance in this way shall

usher in an era of enhancement of intrinsic strength of

the organization as also its stake holders. Accordingly, the

Company is vigilant and applies supervisory mechanism

to ensure that the senior management of the Company

complies with the standards of disclosure, transparency

and accountability. The overall philosophy of the Company

towards corporate governance is one of shared responsibility.

Each one in the Company is expected to ensure professional

and ethical management of the Company.

2. BOARD OF DIRECTORS

i) The Board is headed by Mr. Chandra Shekhar Nopany,

Chairman-cum-Managing Director and is composed

of eminent persons with considerable professional

experience in various corporate fields. The present

strength of the Board of Directors is eight, of which

seven are Non-executive Directors and one Managing

Director. Except Mr. S. V. Muzumdar who is holding

1050 (0.01%) Equity Shares, no other Non-executive

Director is holding any Equity Share of the Company.

ii) None of the Directors on the Board is a Member of

more than 10 Committees or Chairman of more than

5 Committees across all the companies in which he or

she is a Director.

iii) With a view to institutionalize all corporate affairs and

set up values, systems, standards and procedures for

advance planning for matters requiring discussions/

decisions by the Board, the Company has defined

guidelines for the meetings of the Board of Directors

and Committees thereof. These guidelines seek to

systematize the decision making process at the

meetings of the Board/Committees in an informed and

most efficient manner.

iv) The Company holds minimum of four Board Meetings

in each year.

v) All divisions/departments in the Company are

encouraged to plan their functions well in advance,

particularly with regard to matters requiring

discussions/approval/ decision in the Board/Committee

Meetings. All such matters are communicated to the

Company Secretary in advance so that the same could

be included in the Agenda for the Board Meetings.

vi) The Chairman-cum-Managing Director and the

Company Secretary in consultation with other

concerned persons in the senior management, finalise

the agenda papers for the Board Meetings.

vii) Agenda papers are circulated to the Directors

sufficiently in advance. All material information is

incorporated in the Agenda papers for facilitating

meaningful and focused discussions at the meeting.

Where it is not practicable to attach any document to

the Agenda, the same are placed on the table at the

meeting with specific reference to this effect in the

Agenda.

viii) In special and exceptional circumstances, additional or

supplementary item(s) on the agenda are permitted.

Sensitive subject matters may be discussed at the

meeting without written material being circulated in

advance or at the meeting.

Nine Board Meetings were held during the year under

review .Board Meetings were held on17th July, 2008,

26th August, 2008, 23rd October, 2008, 25th November,

2008, 29th December, 2008, 23rd January, 2009, 30th

March, 2009, 20th April, 2009 and 23rd June, 2009

to deliberate on various matters. The composition of

the Board of Directors and their attendance at the

Board Meetings during the year and at the last Annual

General Meeting as also the number of directorships in

Indian public limited companies are as follows:

ANNEXURE - E


Name of Director Attendance at

last AGM

No. of Board

meetings

attended

Category of

Director

Directorships No. of Chairmanship/ Membership

of Board Committees

Chairman Member

Mr. Chandra Shekhar

Nopany

Yes 5 MD 12 2 2

Mr. S. V. Muzumdar No 7 I/NED 5 2 5

Mr. Ashvin C. Dalal No 9 I/NED 1 1 -

Mr. C. B. Patodia Yes 2 I/NED 1 - 1

Mr. Rohit Kumar Dhoot No 6 I/NED 7 - 2

Mrs. Madhu Vadera

Jayakumar

No 7 I/NED 1 - 1

Mr. Haigreve Khaitan No 2 NED 15 - 8

Mr. J. N. Godbole No 8 I/NED 12 2 7

MD - Managing Director I - Independent

NED - Non-executive Director

3. AUDIT COMMITTEE

The Audit Committee of the Company is constituted in line

with the provisions of Clause 49 of the Listing Agreement

with the Stock Exchanges read with Section 292A of the

Companies Act, 1956.

a) Terms of Reference

The terms of reference of the Audit Committee are

broadly as under:

• Overview of the Company’s financial reporting process

and the disclosure of its financial information to ensure

that the financial statements reflect a true and fair

position and that sufficient and credible information

is disclosed.

• Recommending the appointment and removal of

statutory auditors, fixation of audit fee and also

approval for payment for any other services.

• Discussion with statutory auditors before the audit

commences of the nature and scope of audit as well

as post-audit discussion to ascertain any area of

concern.

• Reviewing the financial statements and draft audit

report, including quarterly/half yearly financial

information.

• Reviewing with management the annual financial

statements before submission to the Board, focusing

primarily on :

i. any changes in accounting policies and practices;

ii. major accounting entries based on exercise of judgment

by management;

In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges, membership/chairmanship of only the Audit Committee

and Shareholders’/Investors’ Grievance Committee of all the public limited companies has been considered in the aforesaid chart.

Annual Report 2008-09 REPORT ON CORPORATE GOVERNANCE 25

iii. qualifications in draft audit report;

iv. significant adjustments arising out of audit;

v. the going concern assumption;

vi. compliance with accounting standards;

vii. compliance with stock exchange and legal requirements

concerning financial statements;

viii. any related party transactions as per Accounting

Standard 18.

• Reviewing the Company’s financial and risk management

policies.

• Reviewing with the management, external and internal

auditors, the adequacy of internal control systems.

• Reviewing the adequacy of internal audit function, including

structure of the internal audit department, approval of

the audit plan and its execution, staffing and seniority of

the official heading the department, reporting structure,

coverage and frequency of internal audit.

• Discussion with internal auditors of any significant findings

and follow-up thereon.

• Reviewing the findings of any internal investigations by the

internal auditors into matters where there is suspected fraud

or irregularity or a failure of internal control systems of a

material nature and reporting the matter to the Board.

• Looking into the reasons for substantial defaults in payments

to the depositors, debenture holders, shareholders (in case of

non-payment of declared dividends) and creditors.

b) Composition

The Audit Committee comprises of four Independent Non-

executive Directors viz. Mr. Ashvin C. Dalal, Mr. C. B. Patodia,

Mr. S. V. Muzumdar and Mr. Rohit Kumar Dhoot. The

Committee met four times during the year on 26th August,

2008, 23rd October, 2008, 23rd January, 2009, and 20th

April, 2009. Attendance of the members at the meetings was

as under :

Name of the Member Status No. of meetings

attended

Mr. Ashvin C. Dalal Chairman 4

Mr. C. B. Patodia Member 2

Mr. S. V. Muzumdar Member 2

Mr. Rohit Kumar Dhoot Member 2

The Secretary of the Company who is also acting as

Secretary of the Audit Committee attends the meetings.

At the invitation of the Committee, the Internal Auditors,

Statutory Auditors and Cost Auditors also attend the Audit

Committee Meetings to answer and clarify the queries raised

at the Meetings.

4. REMUNERATION COMMITTEE

i) Though the constitution of the Remuneration

Committee is not mandatory, the Company has

constituted the Remuneration Committee during the

year 2002-2003.

ii) The broad terms of reference of the Remuneration

Committee are as under:

a. To approve the remuneration and commission payable

to the Directors.

b. Such other matters as the Board may from time to time

request the Remuneration Committee to examine and

recommend / approve.

iii) The Committee, presently, comprises of three

Independent Non-executive Directors, viz. Mr. S.V.

Muzumdar, Mr. Ashvin C. Dalal and Mr. Rohit Kumar

Dhoot. The Secretary of the Company is also acting as

Secretary of the Remuneration Committee. A meeting

of the Remuneration Committee was held on 25th

August, 2008. Attendance of the members at the

meeting was as under:

Name of the Member Status No. of

meetings

attended

Mr. S. V. Muzumdar Chairman 1

Mr. Ashvin C. Dalal Member 1

Mr. Rohit Kumar Dhoot Member --

iv) Remuneration Policy

Remuneration of employees broadly consists of

base remuneration, perquisites, bonus, exgratia, etc.

The components of the total remuneration vary for

different cadres and are governed by industry pattern,

qualifications and experience of the employee,

responsibilities entrusted to and handled by him,

individual performance, etc.

The objectives of the remuneration policy are to

motivate employees to excel in their performance,


recognise their contribution, retain talent in the

organisation and reward merits.

v) Remuneration of Directors

Details of remuneration paid to Directors for the year

2008-09.

a) Executive Director

Managing

Director

Salary

Rs.

Perquisites

Rs.

Retirement

benefits Rs.

Mr. C.S.

Nopany

39,00,000 59,20,640 4,68,000

Mr. C.S. Nopany’s remuneration package includes

salary, free furnished accommodation with all expenses

for upkeep and maintenance thereof, contribution to

Provident Fund, reimbursement of medical expenses,

leave travel concession, car with driver and telephone.

b) Non-executive Directors

The Company pays remuneration to its Non-executive

Directors by way of commission upto 1% of the net

profits for all directors put together with the maximum

ceiling of Rs. 1,00,000 per director. The Company pays a

fee Rs. 5,000 and Rs. 2,500 per meeting to each Director

for attending meetings of the Board of Directors

and Committees thereof respectively. The details

of sitting fee paid during the year 2008-09 are

as follows:

Sl. No. Name of the Director Gross Amount

(Rs.)

1 Mr. S. V. Muzumdar 47,500

2 Mr. Ashvin C. Dalal 65,000

3 Mr. C. B. Patodia 15,000

4 Mr. Rohit Kumar Dhoot 35,000

5 Mrs. Madhu Vadera

Jayakumar

40,000

6 Mr. Haigreve Khaitan 10,000

7 Mr. J. N. Godbole 40,000

5. INVESTORS’ GRIEVANCE COMMITTEE

The Committee, presently, comprises of three Non-executive

Directors viz. Mr. S. V. Muzumdar as Chairman and Mr.

Rohit Kumar Dhoot and Mrs. Madhu Vadera Jayakumar as

members. Mr. Govind Narayan Pareek, Company Secretary, is

the Compliance Officer of the Company for complying with

the requirements of the Listing Agreement with the Stock

Exchanges. No meeting of Investor Grievance Committee was held

during the period under review.

The Board of Directors have authorised the Company Secretary to

approve transfers/transmissions of upto 1000 shares. The transfers/

transmissions approved by the Company Secretary are periodically

placed before the Committee. The Committee deals with the

applications for transfer/ transmission of shares, subdivision and

consolidation of share certificates and issue of duplicate share

certificates, etc. The Committee also keeps a close watch on all

complaints/grievances of shareholders. During the year under

review the Company received 56 complaints/grievances from the

shareholders which were duly attended.

The average period of redressal of grievances is 7 days from the date

of receipt of letters/complaints. There was no unresolved complaint

as on 30th June, 2009. There was no share transfer application

pending for registration as on 30th June, 2009.

6. GENERAL BODY MEETINGS

The last three Annual General Meetings of the Company were held

as under :

Financial

Year

Date Time Location

2007-2008 18.12.2008 11.00 a.m. Registered Office:

Hargaon,

Dist. Sitapur, U. P.,

Pin-261 121.


Hargaon,


Pin-261 121.


Hargaon,


Pin-261 121.

Special resolution was passed at the Annual General Meeting

held on 18th December, 2008 for re-appointment of Mr. Chandra

Shekhar Nopany as the Managing Director for a further period of

three years with effect from 1st July, 2008. No special resolution

was passed at the Annual General Meeting held on 17th December,

2007 and a special resolution was passed at the Annual General

Meeting held on the 6th November, 2006 for issue of securities

through Public Issue, Rights Issue, Preferential Issue and/or Private

Placement, with or without an over-allotment option, equity shares

and/or equity shares through Global Depository Receipts (“GDRs”)

and/or American Depository Receipts (“ADRs”) and/or Foreign

27 Annual Report 2008-09 REPORT ON CORPORATE GOVERNANCE

Currency Convertible Bonds (“FCCBs”) and/or equity shares under

the Qualified Institutional Placement Guidelines (“QIPs”) and/or

any securities convertible into equity shares at the option of the

Company and/or holder(s) of the securities and/or securities linked

to equity shares and/or securities with warrants for an amount not

exceeding Rs.100 crores inclusive of such premium as may from

time to time be decided.

There was no occasion to pass special resolution through postal

ballot. Further, no such proposal is proposed to be placed for

the shareholders’ approval at the forthcoming Annual General

Meeting.

The last Annual General Meeting held on 18th December, 2008

was not attended by Mr. Ashvin C. Dalal, Chairman of the Audit

Committee due to sickness.

7. DISCLOSURES

i) There are no materially significant related party transactions

of the Company which have potential conflict with the

interest of the Company at large.

ii) No penalties or strictures have been imposed on the Company

by Stock Exchanges or SEBI or any statutory authority on any

matter related to capital markets for non-compliance by the

Company during the last three years.

8. MEANS OF COMMUNICATION

a) Since the quarterly and annual audited financial results of the

Company are sent to the Stock Exchanges immediately after

they are approved by the Board/Committee and posted on

Company’s website and also published in Business Standard,

Mumbai, The Pioneer, Kanpur, and Rashtriya Sahara, Lucknow

the same were not separately sent to each household of

shareholders.

b) The results are simultaneously uploaded on the website

at http://www.birla-sugar.com/osugar. Distribution of

shareholdings is also displayed on the website.

c) The quarterly results, annual financial results, annual report

& accounts and shareholding pattern are simultaneously

filed on the Electronic Data Information Filing and Retrieval

(EDIFAR) Website maintained by National Informatics Centre

in association with SEBI. The site can be accessed at http://

www.sebiedifar.nic.in.

d) No presentation was made to any Institutional Investor or to

any Analysts during the year.

9. GENERAL SHAREHOLDERS’ INFORMATION

a) 77th Annual General Meeting

Date : 26th November,2009

Time : 2.00 P.M

Venue : Registered Office:

Sugar Mills Complex, Hargaon, District – Sitapur

Uttar Pradesh – 261 121.

b) Tentative Financial Calendar

Audited Annual Results (2008-09) 25th August, 2009

Publication of Audited Results 26 th/27th August, 2009

Mailing of Annual Report October, 2009

First Quarter Results 28th October, 2009

Second Quarter Results End January, 2010

Third Quarter Results End April, 2010

Audited Annual Results (2009-10) August/September, 2010

c) Book Closure

The Register of the Members of the Company will remain

closed from 23rd October, 2009 to 24th October, 2009

both days inclusive for the purpose of payment of

dividend for the year ended 30th June, 2009 and from

24th November, 2009 to 25th November, 2009 both days

inclusive for the purpose of holding the Annual General

Meeting of the Company on 26th November, 2009.

d) Listing on Stock Exchanges and Stock codes

The names of the stock exchanges at which the Equity

Shares of the Company are listed and the respective

stock codes are as under:

Sl. No. Name of the Stock Exchange Stock code

1. Bombay Stock Exchange

Limited

507260

2. The National Stock Exchange

of India Limited

OUDHSUG

Under the depository system, International Securities

Identification Number (ISIN) allotted to the Equity

Shares of the Company is INE594A01014 and that for

Warrants is INE594A13019.


e) Market Price Data

Monthly high/low of market price of the Company’s Equity Shares traded on Bombay Stock Exchange Limited and The National

Stock Exchange of India Limited during the last financial year was as under:

Month Bombay Stock Exchange Limited The National Stock Exchange of India LimitedHigh (Rs.) Low (Rs.) High (Rs.) Low (Rs.)

July, 2008 61.15 47.00 64.20 48.00August, 2008 72.90 54.90 72.00 53.15September, 2008 60.75 41.60 60.85 42.00October, 2008 47.00 25.85 47.10 25.35November, 2008 35.50 21.75 34.85 21.10December, 2008 33.60 22.10 34.15 20.30January, 2009 37.40 29.05 37.50 29.70February, 2009 38.00 31.25 38.00 31.10March, 2009 36.40 29.00 36.75 28.10April, 2009 52.45 34.55 52.70 32.10May, 2009 63.65 46.65 63.40 46.90June, 2009 67.95 54.40 68.95 54.25

f) Performance of Company’s Equity Shares in comparison to BSE Sensex and BSE 200

A graphical presentation of Indices vis-a-vis our share prices during July, 2008-June, 2009 is as follows:

July 0840.00

50.00

60.00

70.00

80.00

90.00

100.00

110.00

120.00

Aug 08 Sep 08 Oct 08

Months

Valu

es in

%

Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 May 09 June 09

OSML BSE Sen BSE 200

g) Registrar & Share Transfer Agent

The Company has appointed Link Intime India Pvt. Ltd. as its Registrar & Share Transfer Agents (RTA) for handling work related

to share registry in terms of both physical and electronic modes. Accordingly, all correspondence, shares for transfer, demat/

remat requests and other communication in relation thereto should be mailed/hand delivered to the said RTA directly at the

following addresses:

Link Intime India Private Limited

(Formerly Intime Spectrum Registry Limited)

(Unit: The Oudh Sugar Mills Limited)

C-13, Pannalal Silk Mills Compound

L.B.S. Marg, Bhandup (West)

Mumbai - 400 078

Tel. No. : 91 - 022 – 2596 3838

Fax No. : 91 - 022 – 2594 6969

e-mail : [email protected]


(Formerly Intime Spectrum Registry Limited )

(Unit: The Oudh Sugar Mills Limited)

203, Daver House

197/199 D.N. Road

Mumbai - 400 001

Tel. No.: 91 - 022 – 2269 4127


j) Dematerialisation of Shares and Liquidity

The Equity Shares of the Company are compulsorily traded in dematerialised form at all the stock exchanges viz. Bombay

Stock Exchange Limited and National Stock Exchange of India Ltd. under depository systems at both the Depositories viz.

National Securities Depository Limited and Central Depository Services (India) Limited. Over 98.31 % of the share capital of

the Company has already been dematerialised.

k) Outstanding GDRs /ADRs /Warrants or Convertible Instrument

As on 30th June, 2009, the Company did not have any outstanding GDRs/ ADRs.

In terms of the Letter of Offer dated 17th July, 2008 the Company issued 39,98,240, Equity Shares on Rights basis along

with 39,98,240 Detachable Warrants on 12th September, 2008. These Warrants are to be converted into Equity Shares of the

Company after 6 months but within 48 months from the date of allotment at a price and on the terms of payment as described

in the Offer document. All these warrants are pending conversion as on the date of this Report.

h) Share Transfer System

After the request for transfer/transmission of shares is approved by the Company Secretary/Investors’ Grievance Committee,

the same is sent to the Registrar & Share Transfer Agent for completing the necessary procedural formalities and despatch

to the shareholder. Shares when received for transfer etc. if found to be in order in all respect are normally effected within a

period of 15 days from the date of receipt. A total of 3955 shares were transferred/ transmitted during the year 2008-09. The

dematerialised shares are directly credited to the respective Demat Account of beneficiaries by the Depositories.

i) Distribution of Shareholding

a) The distribution of shareholding as on 30th June, 2009 was as follows:

Number of Equity Shares

held in the range of

Number of

Shareholders

Percentage of total

Shareholders

Number of

Shares held

Percentage of

total Shares1 - 500 12,806 86.09 18,05,547 8.24

501 - 1,000 1,058 7.11 8,22,910 3.751,001 - 2,000 526 3.54 7,83,414 3.572,001 - 3,000 162 1.09 4,12,985 1.883,001 - 4,000 71 0.48 2,51,081 1.154,001 - 5,000 64 0.43 2,98,008 1.365,001 - 10,000 88 0.59 6,28,470 2.87

10,001 & Above 100 0.67 1,69,16,520 77.18Total 14,875 100.00 2,19,18,935 100.00

b) Details of Shareholding as on 30th June, 2009 was as follows:

Sl. No. CategoryNumber of shares

held

Percentage of

Shareholding1. Promoter and Promoter Group 1,17,97,163 53.822. Mutual Funds / UTI 3,350 0.023. Financial Institutions/ Banks 4,01,514 1.834. Insurance Companies 16,36,961 7.475. Bodies Corporate 19,02,946 8.686. Public 562,1,590 25.647. Foreign Nationals 72,027 0.338. Clearing Members 4,83,384 2.21

Total 2,19,18,935 100.00


l) Location of the Plants

Sugar Mills:

a. Hargaon, District-Sitapur, Uttar Pradesh, Pin-261 121.

b. Rosa, District-Shahjahanpur, Uttar Pradesh, Pin-242 406.

c. Narkatiaganj, District-West Champaran, Bihar, Pin-845 455.

d. Hata, District-Kushinagar, Uttar Pradesh, Pin-274207

Distilleries:


b. Narkatiaganj, District-West Champaran, Bihar, Pin-845 455.

Food Processing Factory:

P.O. Bamrauli, Allahabad, Uttar Pradesh, Pin-211 012.

Co-generation Power Plant:


b. Narkatiaganj, District-West Champaran, Bihar, Pin-845 455.

c. Hata, District-Kushinagar, Uttar Pradesh, Pin-274207

m) Address for Correspondence

The Company Secretary

The Oudh Sugar Mills Ltd.

9/1, R.N. Mukherjee Road,

5th Floor

Kolkata - 700 001

Tel. No. : 91-033-2243 0497/8

Fax No. : 91-033-2248 6369



(Unit: The Oudh Sugar Mills Ltd.)

C-13,Pannalal Silk Mills Compound

L.B.S. Marg, Bhandup (West)

Mumbai - 400 078

Tel. No.: 91- 022 – 2596 3838

Fax No.: 91- 022 – 2594 6969



(Unit: The Oudh Sugar Mills Ltd.)

203, Daver House

197/199, D.N. Road

Mumbai - 400 001

Tel. No.: 91-022-2269 4127

10. BRIEF RESUME OF DIRECTORS SEEKING APPOINTMENT / RE-APPOINTMENT

i) Mr. Rohit Kumar Dhoot, aged 40 years, is a Chartered Accountant. He is a businessman of wide experience occupying the

position of Managing Director of Dhoot Industrial Finance Limited and Directorship in several companies.

Names of Indian Public Limited Companies in which Mr. Rohit Kumar Dhoot is a Director or Chairman/Member of Board

Committees.

Sl. No. Name of the Company Name of Board Committee Chairman/ Member

1 Dhoot Industrial Finance Limited -- --

2. Anukool Traders & Finance Limited -- --

3. Aakarshak Synthetics Limited -- --

4. Avilok Trade & Finance Limited -- --

5. Young Buzz India Limited -- --

6. The Oudh Sugar Mills Limited

Audit Committee Member

Investors’ Grievance

CommitteeMember

7. Ashish Trading and Finance Limited -- --

ii) Mr. Haigreve Khaitan aged 38 years, is a practicing Advocate since 1995 and a Partner in Khaitan & Co. His area of expertise

include commercial & corporate laws, tax laws, mergers and acquisitions, restructuring, foreign collaboration, licensing etc.


11. INTERNAL CONTROL SYSTEM

The Internal Control System of the Company is aimed at proper utilisation and safeguarding of the Company’s resources and also at promoting operational efficiency. The Internal Audit of the Company is conducted by various firms of Chartered Accountants. The findings of the Internal Audit and consequent corrective actions initiated and implemented from time to time are placed before the Audit Committee. The Audit Committee reviews such audit findings and the adequacy of Internal Control System.

12. HUMAN RESOURCE DEVELOPMENT/INDUSTRIAL RELATIONS

Continuous learning is the cornerstone of the Company’s human resource policy. The Company’s human resource policy is structured to meet the aspirations of the employees as well as of the organisation. The Company has adopted a progressive policy of continuous development of its human resources by training and motivating its employees to attain greater efficiency and competency.

The current strength of management staff is 85 and non-management staff is 1831.

Industrial relations in all the units were cordial throughout the year under review.

13. RISK MANAGEMENT

The Company has in place a Risk Management Policy, which lays down a robust and dynamic process for identification and

mitigation of risks. This Policy has been adopted by the Audit Committee as well as the Board of Directors of the Company. The Audit Committee reviews the risk management and mitigation plan from time to time, the last such review being on 25th August, 2009. The Company has also constituted a committee to assess the risk profile of the Company and to suggest mitigation plan.

14. INSIDER TRADING

The Company has adopted the Code of Internal Procedures and Conduct framed under the SEBI (Prohibition of Insider Trading) Regulations, 1992, as amended, to, inter alia, prevent insider trading in the shares of the Company.

15. CODE OF CONDUCT & ETHICS

The Company has adopted a Code of Conduct and Ethics (Code) for the members of Board of Directors and Senior Management Personnel of the Company. The essence of the Code is to conduct the business of the Company in an honest and ethical manner, in compliance with applicable laws and in a way that excludes considerations of personal advantage. All Directors and Senior Management Personnel have affirmed compliance with the Code, and a declaration to this effect, signed by the Managing Director, is attached to this report.

Names of Indian public limited companies in which Mr. Haigreve Khaitan is a Director or Chairman/Member of Board

Committees.

Sl No Name of the Company Name of Board Committee Chairman/ Member1 The Oudh Sugar Mills Ltd. -- --2 Ceat Limited -- --3 Dhunseri Tea & Industries Limited -- --4 Harrisons Malayalam Limited Audit Committee Member5 Inox Leisure Limited Audit Committee Member

6 National Engineering Industries LimitedAudit Committee Member

Investors’ Grievance

CommitteeMember

7 Jindal Steel & Power Limited -- --

8 Rama Newsprint & Papers LimitedInvestors’ Grievance

CommitteeMember

9 Sterlite Technologies Limited Audit Committee Member10 TCPL Packaging Limited -- --11 The Madras Aluminium Company Limited -- --12 Xpro India Limited -- --13 AVTEC Limited Audit Committee Member14 Bennett Coleman & Co Ltd Audit Committee Member15 Great Eastern Energy Corporation Ltd. -- --


To

The Members

The Oudh Sugar Mills Limited

P.O. Hargaon, Dist. Sitapur

U.P. - 261 121

Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges, I, Chandra Shekhar Nopany, Chairman-cum-Managing Director of

The Oudh Sugar Mills Limited, declare that all the Board Members and Senior Executives of the Company have affirmed their compliance

with the Code of Conduct and Ethics during the year 2008-09.

Place : Mumbai Chandra Shekhar Nopany

Dated, 25th August, 2009 Chairman-cum-Managing Director

For S.R. Batliboi & Co.

Chartered Accountants

Per R.K. AGRAWAL

Place : Kolkata Partner

Dated, 25th August, 2009 Membership No. 16667

To

The Members


We have examined the compliance of conditions of Corporate Governance by THE OUDH SUGAR MILLS LIMITED, for the year ended 30th

June, 2009, as stipulated in clause 49 of the Listing Agreement of the said Company with Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures

and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of the Corporate Governance. It is

neither an audit nor an expression of opinion on the financial statements of the Company.

The Chairman of the Audit Committee has not attended the Annual General Meeting held on 18th December, 2008. Subject to above, in

our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied

with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness

with which the management has conducted the affairs of the Company.

DECLARATION BY THE MANAGING DIRECTOR ON CODE OF CONDUCT

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

ANNEXURE - F

ANNEXURE - G


FINANCIAL STATEMENTS

CONTENTS

Financial Statements (Standalone)

Auditors’ report ...............................................................................................................................35

Balance Sheet ...................................................................................................................................38

Profit & Loss Account ....................................................................................................................39

Cash Flow Statement .....................................................................................................................40

Schedules ...........................................................................................................................................41

Financial Statements (Consolidated)

Auditors’ report ...............................................................................................................................69

Balance Sheet ...................................................................................................................................70

Profit & Loss Account ....................................................................................................................71

Cash Flow Statement .....................................................................................................................72

Schedules ...........................................................................................................................................73

Financial Statements (Subsidiaries)

Financial Statements (Champaran Marketing Company Limited) ...................................99

Financial Statements (OSM Investment & Trading Company Limited) ....................... 110

Financial Statements (Hargaon Investment & Trading Company Limited) ............... 121

Financial Statements (Hargaon Properties Limited) ......................................................... 132


AUDITORS’ REPORTTo

The Members of


We have audited the attached Balance Sheet of THE OUDH SUGAR MILLS LIMITED as at 30th June, 2009 and also the Profit and Loss Account and the Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor’s Report) Order, 2003 (as amended) issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that :–

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief, were necessary for the purpose of our audit;

(ii) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;

(iii) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account as submitted to us;

(iv) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, subject to our comments in para (vii) (b) below.

(v) On the basis of written representations received from the directors as on 30th June, 2009 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 30th June, 2009 from being appointed as a director in terms of Clause (g) of sub section (1) of Section 274 of the Companies Act, 1956;

(vi) Without qualifying our opinion, we draw attention to Note No. 7 on Schedule 23, regarding accounting of Sugarcane

purchases at Hargaon & Rosa Sugar units in Uttar Pradesh @ Rs. 110 per quintal for sugar season 2007-2008 as against the State Advised Price (SAP) of Rs. 125 per quintal in view of the interim order dated 8th September, 2008 of the Hon’ble Supreme Court. Since the matter is subjudice, the liability for differential price of Rs. 2,422.74 Lakhs is presently undeterminable and hence, no provision thereof has been made in the accounts.

(vii) Attention is drawn to the following notes on Schedule – 23 :

(a) Note Nos. 5 and 6 regarding non-adjustment of certain realisations in earlier years aggregating to Rs. 131.46 Lakhs (Previous Year Rs. 131.46 Lakhs) and non-provision of interest payable thereon, if any, in case of refund of such realisations. As the matters are under adjudication / not yet settled, the impact of above non-adjustment on the Company’s profit is not presently ascertainable;

(b) Note No. 8(b) regarding recognition of MAT Credit Entitlement of Rs. 836.59 Lakhs upto the Balance Sheet date based on the future profitability projections made by the management. However, we are unable to express any opinion on the above projections and their consequent impact, if any, on such recognition of MAT Credit Entitlement. Had the impact of above been considered, there would be a profit of Rs. 1,080.79 Lakhs as against the reported profit of Rs. 1,917.38 Lakhs for the year and the figures of Reserves & Surplus would be Rs. 10,728.81 Lakhs as against the reported figures of Rs. 11,565.40 Lakhs.

In respect of the above items, the previous year’s audit report was similarly modified.

In our opinion and to the best of our information and according to the explanations given to us, the said Statements of Account, Subject to the matters stated in para (vii) above, give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

(a) in the case of Balance Sheet, of the state of affairs of the Company as at 30th June, 2009;

(b) in the case of Profit and Loss Account, of the profit of the Company for the year ended on that date; and

(c) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

For S. R. BATLIBOI & CO. Chartered Accountants

Per R. K. AGRAWALPlace: Kolkata PartnerDated: August 25, 2009 Membership No. 16667

Annual Report 2008-09 FINANCIAL STATEMENTS 35

ANNEXURE TO THE AUDITORS’ REPORT(referred to in our report of even date to the members of The Oudh Sugar Mills Limitedas at and for the year ended 30th June, 2009)

(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situations of fixed assets.

(b) Fixed Assets have been physically verified by the management during the year based on a phased programme of verifying all the assets over a period of two years, which in our opinion, is reasonable having regard to the size of the Company and the nature and value of its assets. As informed, no material discrepancies were noticed on such verification.

(c) There was no substantial disposal of fixed assets during the year.

(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during the year.

(b) The procedures of physical verification of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of inventory and no material discrepancies were noticed on such physical verification.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence the requirements of clauses (iii) (b) to (d) of the order are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956 and hence the requirements of clauses (iii) (f) and (g) of the order are not applicable.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls in respect of these areas.

(v) (a) According to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956 that need to be entered into the register maintained under the above section, have been so entered.

(b) In our opinion and according to the information and explanations given to us, the transactions made in

pursuance of such contracts or arrangements exceeding

the value of Rupees five Lakhs entered into during

the financial year, are at prices which are reasonable

having regard to the prevailing market prices at the

relevant time.

(vi) In respect of deposits accepted, in our opinion and

according to the information and explanations given to

us, the directives issued by the Reserve Bank of India and

the provisions of Sections 58A, 58AA or other relevant

provisions of the Companies Act, 1956 and the rules framed

thereunder, to the extent applicable, have been complied

with by the Company. We are informed by the management

that no order has been passed by the Company law Board,

National Company Law Tribunal or Reserve Bank of India or

any other Tribunal.

(vii) In our opinion, the Company has an internal audit system

commensurate with the size and nature of its business.

(viii) We have broadly reviewed the books of account maintained

by the Company pursuant to the rules made by the Central

Government for the maintenance of cost records under

Section 209(1) (d) of the Companies Act, 1956 in respect

of its products and are of the opinion that prima facie,

the prescribed accounts and records have been made and

maintained.

(ix) (a) The Company has generally been regular in depositing

undisputed statutory dues including provident fund,

investor education and protection fund, employees’

state insurance, income-tax, sales-tax, wealth-tax,

service tax, custom duty, excise duty, cess and other

material statutory dues with appropriate authorities

except for Cane Purchase Tax of Rs. 79.16 Lakhs

relating to the sugar unit in Bihar which remains

unpaid as on the Balance sheet date, pending disposal

by the State Government of the representation made

by the Bihar Sugar Mills Association for its remission.

(b) According to the information and explanations given

to us, no undisputed amounts payable in respect of

provident fund, investor education and protection

fund, employees’ state insurance, income-tax, sales-tax,

wealth-tax, service tax, custom duty, excise duty, cess

and other material statutory dues were outstanding, at

the year end for a period of more than six months from

the date they became payable.

(c) According to the records of the Company, the dues

outstanding in respect of income tax, sales tax, wealth

tax, service tax, custom duty, excise duty and cess on

account of any dispute are as follows :


ANNEXURE TO THE AUDITORS’ REPORT (Contd.)

Name of the statute Nature of dues Amount (Rs. in Lakhs)Period to which the

amount relatesForum where dispute

is pending

Bihar Finance Act, 1981Tax on sale of Alcohol to country vendors & non submission of declaration forms

25.101984-85 to 1989-90, 1995-96, 1997-98 to 2000-01 & 2003-04

Joint Commissioner (Appeals) / Appellate Tribunal/ High Court,

Patna

UP Trade Tax ActVarious Sales Tax / Entry tax demands on assessment

4.151977-78 to 1981-82 &

2000-01

Appellate Tribunal, Lucknow / High Court,

Allahabad

The Uttar Pradesh Tax on entry of Goods Act, 2000

On Sales of sugar 72.082000-01, 2001-02 &

2007-08

Asst. Commissioner / Deputy Commissioner / High Court, Allahabad

Central Sales Tax Act, 1956

Central Sales Tax demand on interstate sale

9.29 1993-94 to 2004-05 Joint Commissioner (Appeals)

Demand for Sales Tax / non – submission of Declaration Forms

5.07 2003-04Joint Commissioner

(Appeals) / High Court, Allahabad

Central Excise Act, 1944Disallowance of Cenvat Credit on certain inputs / capital items

112.261998-99, 2001-02, 2002-03, 2004-05 to 2007-08

Commissioner (Appeals) / CESTAT /

High Court, AllahabadExcise Duty on burnt / waste and loss on storage of molasses etc.

44.76 2002-03 to 2006-07Commissioner

(Appeals) / CESTAT / High Court, Allahabad

Utilisation of Cenvat Credit on Rectified Spirit

101.00 2000-01 CESTAT, Kolkata

Excise duty on loss on reprocessing of brown sugar

19.71 1988-89 CESTAT, Delhi

(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses in the current year and in the immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and explanations given by the management, we are of the opinion that the Company has not defaulted in repayment of dues to any bank, except that the Company had applied for deferment of loans of Rs. 206.50 Lakhs and Rs. 449.45 Lakhs but the said deferment is stated to have been accepted by the banks from a later date. Accordingly there was a delay of 81 days and 27 days in repayment of the above amounts which have, however, been paid as per the revised schedule advised by the banks.

(xii) According to the information and explanations given to us and based on the documents and records produced to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society and therefore, the provisions of clause 4(xiii) of the order are not applicable.

(xiv) In our opinion, the Company is not dealing or trading in shares, securities, debentures and other investments and therefore, the provisions of clause 4(xiv) of the order are not applicable.

(xv) According to the information and explanations given to us, the Company has given guarantees for loans taken by others from a bank, the terms and conditions whereof are stated to be not prima-facie prejudicial to the interest of the Company.

(xvi) Based on the information and explanations given to us by the management, term loans were applied for the purpose for which these were obtained.

(xvii) According to the information and explanations given to us and on an overall examination of the balance sheet of the Company, we report that Rs. 12886 Lakhs approx. raised on short-term basis have been used for long-term investment (without considering permanent working capital).

(xviii) The Company has not made any preferential allotment of shares during the year to parties or companies covered in the register maintained under Section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during the year.

(xx) The Company has not raised any money through a public issue during the year.

(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.


Per R. K. AGRAWALPlace: Kolkata PartnerDated: August 25, 2009 Membership No. 16667


(Rs. in Lakhs)

Schedule 30th June, 2009 30th June, 2008

SOURCES OF FUNDS

A. Shareholders’ Funds

(a) Share Capital 1 2,204.66 1,817.49

(b) Reserves & Surplus 2 11,565.40 8,265.93

13,770.06 10,083.42

B. Loan Funds 3

(a) Secured 53,212.61 54,868.78

(b) Unsecured 16,091.80 20,706.75

69,304.41 75,575.53

C. Deferred Tax Liability (net) 630.09 -

83,704.56 85,658.95

APPLICATION OF FUNDS

A. Fixed Assets 4

(a) Gross Block 71,732.45 48,601.07

(b) Less: Accumulated Depreciation 17,493.15 15,174.12

(c) Net Block 54,239.30 33,426.95

(d) Capital Work- in- Progress 209.90 340.80

(e) Capital Expenditure on New / Expansion Projects 5 14,319.69 25,677.31

68,768.89 59,445.06

B. Investments 6 1,079.23 1,079.46

C. Deferred Tax Asset (net) - 432.24

D. Current Assets, Loans & Advances

(a) Inventories 7 17,380.17 29,039.82

(b) Sundry Debtors 8 775.32 648.39

(c) Cash & Bank Balances 9 520.04 422.29

(d) Other Current Assets 10 9.02 4.55

(e) Loans & Advances 11 6,052.14 5,699.99

24,736.69 35,815.04

E. Less: Current Liabilities & Provisions 12

(a) Current Liabilities 10,334.83 10,953.79

(b) Provisions 545.42 159.06

10,880.25 11,112.85

Net Current Assets 13,856.44 24,702.19

83,704.56 85,658.95

Accounting Policies and Notes to Accounts 23

Schedules referred to above form an integral part of the Balance Sheet.

BALANCE SHEETas at 30th June, 2009

As per our report of even date. For S. R. BATLIBOI & CO.Chartered Accountants

Per R. K. AGRAWALPartnerMembership No. 16667 Place: Kolkata G. N. Pareek Chandra Shekhar Nopany Chairman - cum - Mg. Director Dated: 25th August, 2009 Company Secretary A. C. Dalal Director


(Rs. in Lakhs)Schedule 2008-2009 2007-2008

INCOMEGross Sales 13 58,309.13 35,393.59 Less : Excise Duty 2,085.46 1,926.61 : Cess 574.30 2,659.76 311.08 2,237.69 Net Sales 55,649.37 33,155.90 Other Income 14 284.51 1,025.94

55,933.88 34,181.84 EXPENDITURE

Decrease / (Increase) in Stocks 15 12,606.43 (9,630.41)Excise Duty & Cess on Stocks (1,242.30) 574.12 (Refer note no. 4 on Schedule 23)Agricultural Loss 16 21.48 25.99 Purchase of Finished Goods 260.67 145.74 Raw Materials Consumed 17 24,430.58 28,301.83 Stores, Spares & Packing Materials Consumed 18 2,406.05 2,970.39 Fuel & Electricity 700.89 536.86 Payments to and Provisions for Employees 19 2,928.36 2,887.82 Manufacturing, Selling and Other Expenses 20 3,196.48 3,040.49 Directors’ Remuneration 21 46.89 48.43

45,355.53 28,901.26 Profit before Interest, Depreciation & Taxation 10,578.35 5,280.58 Less : Interest & Finance Charges (net) 22 4,941.53 3,677.82 Depreciation 2,632.03 2,229.68

7,573.56 5,907.50 Profit / (Loss) before Taxation 3,004.79 (626.92)Provision for Taxation:Current Tax [including wealth tax Rs. 3.00 Lakhs(Rs. 3.00 Lakhs)] 122.02 3.00 Deferred Tax charge / (credit) 1,062.33 (212.12)Minimum Alternative Tax Credit (Entitlement) / Reversal (119.02) 3.93 Provision for Income Tax no longer required written back 1.67 0.60 Provision for Fringe Benefit Tax 23.75 30.14 Profit / (Loss) after Taxation 1,917.38 (451.27)Surplus brought forward from previous year 78.69 29.96 Transfer from General Reserve - 500.00 Profit available for Appropriation 1,996.07 78.69 Appropriations :-

Transfer to General Reserve 100.00 - Proposed dividend on Equity Shares 328.79 - Tax on Dividend 55.88 - Surplus carried to Balance Sheet 1,511.40 78.69

1,996.07 78.69 Earning per Share of Rs. 10 each (Basic and Diluted) (Rs.) 9.34 (2.48)(Refer note no. 15 on Schedule 23)


Schedules referred to above form an integral part of the Profit & Loss Account.

PROFIT & LOSS ACCOUNTfor the year ended 30th June, 2009




(Rs. in Lakhs)2008-2009 2007-2008

A. CASH FLOW FROM OPERATING ACTIVITIES :Profit / (Loss) before Tax 3,004.79 (626.92)Adjustments for :

Depreciation 2,634.91 2,232.02 Interest & Finance Charges (net of capitalisation & Subsidy) 5,120.35 3,717.39 Molasses Storage and Maintenance Reserve 4.02 6.55 Profit on Fixed Assets sold / discarded (21.38) (66.42)Profit on sale of Long Term Investments - (15.31)Interest & Dividend Income (178.86) (39.86)Bad Debts, irrecoverable claims & advances written off 29.03 11.97 Provision for Warranties & Claims 5.78 6.86 Provision for diminution in the value of investments Written Back - (0.25)Provision for bad and doubtful debts/advances (net) 101.31 52.50

Operating Profit before Working Capital Changes : 10,699.95 5,278.53 Adjustments for :

Decrease in Trade Payables (748.91) (4,290.68)Increase in Trade & Other Receivables (324.06) (2,310.36)Decrease / (Increase) in Inventories 11,659.65 (9,565.96)

10,586.68 (16,167.00)Cash Generated from Operations : 21,286.63 (10,888.47)

Direct Taxes Refund / (Paid) 51.40 (41.02)Net Cash from Operating Activities 21,338.03 (10,929.49)

B. CASH FLOW FROM INVESTING ACTIVITIES :Sale of Fixed Assets 194.84 201.77 Capital Subsidy 142.18 200.83 Sale of Investments 0.23 16.62 Loans Received back 20.42 1.44 Interest Received 174.35 38.57 Dividend Received 0.04 0.28 Purchase of Investments - (1.00)Fixed deposits (173.16) (1.30)Purchase of Fixed Assets (8,600.88) (17,747.44)

Net Cash used in Investing Activities (8,241.98) (17,290.23)C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from Borrowings 10,243.17 45,791.39 Repayment of Loans (16,972.99) (11,304.12)Rights issue of Shares 387.17 - Share Premium on rights issue of shares 1,935.84 - Rights Shares Issue Expenses (173.10) - Interest & Finance Charges Paid (net of Subsidy) (8,591.45) (6,358.51)Dividend Paid (including dividend tax) (0.10) (0.32)

Net Cash from Financing Activities (13,171.46) 28,128.44 NET CHANGES IN CASH & CASH EQUIVALENTS (A+B+C) (75.41) (91.28)* Cash & Cash equivalents - Opening Balance 365.79 457.07 * Cash & Cash equivalents - Closing Balance 290.38 365.79

*Represents Cash and Bank balances as indicated in Schedule - 9 , and excludes Rs. 229.66 Lakhs (Rs. 56.50 Lakhs) being bank balances with restricted use or with maturity of more than three months.

CASH FLOW STATEMENTfor the year ended 30th June, 2009




SCHEDULES to the Balance Sheet

(Rs. in Lakhs)

30th June, 2009 30th June, 2008

SCHEDULE - 1 : SHARE CAPITAL

Authorised :

4,00,00,000 Equity Shares of Rs. 10 each 4,000.00 4,000.00

Issued :

2,21,72,060 (1,81,73,820) Equity Shares of Rs. 10 each 2,217.21 1,817.38

1,883 1/2 Equity Shares of Rs. 100 each 1.89 1.89

2,219.10 1,819.27

Subscribed & Paid-up :

2,19,18,935 (1,81,73,820) Equity Shares of Rs. 10 each fully paid 2,191.89 1,817.38

44 Quarter Equity Shares of Rs. 25 each fully paid 0.01 0.01

Bearer Equity Share Coupons of Rs. 25 and Rs. 12.50 each fully paid 0.06 0.06

2,191.96 1,817.45

Add: Forfeited Shares (amount originally paid-up) 12.70 0.04

2,204.66 1,817.49

Note :

Out of the above 6,11,550 Equity Shares have been issued for consideration other than cash and 11,55,575 Equity Shares have been

allotted as Bonus Shares by capitalisation of Securities Premium and General Reserve.

SCHEDULE - 2 : RESERVES & SURPLUS

Capital Reserve :

As per last account 195.88 195.88

Capital Redemption Reserve :


Securities Premium :

As per last account 6,247.67 6,247.67

Add : Received on Rights Shares issued 1,935.84 -

8,183.51 6,247.67

Less : Adjustment of Rights Shares issue expenses 173.10 -

8,010.41 6,247.67

General Reserve :

As per last account 1,625.12 2,200.00

Add : Transfer from Profit & Loss Account 100.00 -

Less : Impact of Revised AS-15 as on 1st July,2007 (Net of Tax) - 74.88

: Transfer to Profit & Loss Account - 500.00

1,725.12 1,625.12

Molasses & Alcohol Storage and Maintenance Reserve :


Add : Provided during the year 4.02 6.55

82.06 78.04

Effluent Disposal Reserve :


Surplus as per Profit & Loss Account 1,511.40 78.69

11,565.40 8,265.93


SCHEDULES to the Balance Sheet (Contd.)

(Rs. in Lakhs)

30th June, 2009 30th June, 2008

SCHEDULE - 3 : LOAN FUNDSA. Secured Loans :

Term Loans

Long TermFrom Scheduled Bank(s):

Under Project Finance Loan Scheme 30,497.23 24,572.42

Under Financial Assistance Scheme (Excise Duty Loan) 3,985.00 3,985.00

Interest accrued & due 799.05 254.50

From Sugar Development Fund 5,334.05 5,207.86

From a Body Corporate 1,200.00 2,400.00

Short TermFrom a Scheduled Bank 2,100.00 1,000.00

From a Body Corporate - 1,000.00

Other Loans From a Scheduled Bank on Cash Credit Account 9,297.28 16,449.00

53,212.61 54,868.78 B. Unsecured Loans :

Short Term Loan from a Scheduled Bank - 1,000.00

From State Bank of India against Crop Loan to Canegrowers 2,560.34 2,215.21

From Subsidiary Companies (not bearing interest) 123.25 165.00

Inter Corporate Loans 13,010.00 16,919.00

Fixed Deposits from Staff and Others 306.29 308.39

Trade and other Deposits (partly not bearing interest) 91.92 99.15

16,091.80 20,706.75 69,304.41 75,575.53

NOTES :

1 Term loans from Scheduled Bank(s) (except Excise Duty Loan) and from a Body Corporate are secured by first mortgage / charge on all the immovable and movable assets (save and except book debts), present and future, of the Company’s Sugar Units at Hargaon, Rosa, Narkatiaganj and Dhadha Bujurg (Hata) and Distillery Unit at Hargaon, ranking pari-passu amongst the various lenders, subject to prior charges created on movables for working capital borrowings from the Company’s bankers.

Term loans under Financial Assistance Scheme (Excise Duty Loan) are to be secured by a residual charge on the entire Fixed Assets (movable and immovable) of the Company’s Sugar Units at Hargaon, Rosa and Narkatiaganj.

2 Term loans from the Sugar Development Fund are secured by a second charge on all the immovable / movable assets (save and except book debts) present and future of the Company’s Sugar Units at Hargaon and Narkatiaganj and include Rs. 738.66 Lakhs(Rs. 824.51 Lakhs) towards interest which, as per stipulated terms, is payable on a long term basis.

3 a. Short term loan of Rs. 900 Lakhs (Rs. 1,000 Lakhs) from a Scheduled Bank / a Body Corporate is secured by the pledge of certain shares held as Investments by the Company’s Subsidiaries.

b. Short term loan of Rs. 1,200 Lakhs (Rs. Nil) from a Scheduled Bank is secured by first mortgage / charge on all the immovable and movable assets, present and future, of the Company’s Sugar Unit at Rosa, ranking pari-passu amongst the various lenders.

4 Cash Credit borrowings are secured by hypothecation of entire current assets of the Company and also by a charge on the immovable assets as follows :-

a. Canning factory at Allahabad - First Charge

b. Sugar Unit at Rosa - Second Charge

c. Sugar Units at Hargaon and Narkatiaganj - Third Charge

5 Unsecured loans, as stated above, include Rs. 15,777.17 Lakhs (Rs. 20,280.68 Lakhs) falling due for payment within one year.



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30th June,

2009

30th June,

2008

SCHEDULE - 5 : CAPITAL EXPENDITURE ON NEW / EXPANSION PROJECTS

A. Freehold Land 997.99 1,089.65

B. Fixed Assets

(1) Buildings 40.16 37.10

(2) Plant & Machinery 128.52 14.08

(3) Motor Cars, Lorries & Other Conveyance 1.17 1.17

(4) Furniture & Fixtures 71.67 49.39

241.52 101.74

Less: Depreciation (charged to Pre-operative expenses as below) 76.57 164.95 59.05 42.69

C. Machinery and Building under erection 27,171.02 24,194.44

D. Materials at site including goods in transit

[net of sales Rs. 175.36 Lakhs (Rs. 161.46 Lakhs)] 224.81 1,277.06

E. Advances against purchase of fixed assets 1,234.97 2,336.15

29,793.74 28,939.99

Less: Transfer to Fixed Assets during the year 18,242.29 6,629.21

11,551.45 22,310.78

F. Incidental Expenditure (including during trial run period)

pending allocation to Fixed Assets :

Amount brought forward from previous year 3,366.53 837.57

Add for the year :

Salaries, Wages, Bonus, etc. 295.50 195.54

Contribution to Provident & Other Funds 12.32 6.22

Gratuity 1.43 0.53

Fuel & Electricity 246.51 156.00

Raw Materials Consumed 256.27 -

Stores, Spares & Packing Materials consumed 40.18 -

Project Consultancy / Supervision Charges 7.33 133.28

Insurance Charges 21.72 35.06

Miscellaneous Expenses [including Rs. 1.20 Lakhs (Rs. 1.50

Lakhs) paid for various certificates to the Statutory

Auditors] 184.94 242.94

Interest & Finance Charges [including Rs. 2105.55 Lakhs

(Rs. 1005.61 Lakhs) on fixed loans] 3,442.48 2,362.35

Depreciation 17.52 45.68

7,892.73 4,015.17

Less: Closing Stocks :

Finished Goods 176.20 -

By-Products 24.03 -

Goods under Process 72.97 273.20 - -

7,619.53 4,015.17

Less: Capitalised / Allocated to Fixed Assets during the year 4,851.29 648.64

2,768.24 3,366.53

14,319.69 25,677.31



(Rs. in Lakhs)

No. of SharesFace Value per

share (Rs.)30th June, 2009 30th June, 2008

SCHEDULE - 6 : INVESTMENTS

Long Term

Government Securities :

Quoted :

5 1/2 % U.P. State Development Loan,1977 - (c) -

5 1/2 % U.P. State Development Loan,1981 0.60 (d) 0.60

11 % Bihar State Development Loan, 2001 0.53 0.53

1.13 1.13

Unquoted :

12 Years National Savings Certificates 0.08 (d) 0.08


6 Years National Savings Certificates 1.12 1.35

12 Years National Defence Certificates 0.04 (d) 0.04

12 Years National Plan Savings Certificates - (c) -


7 Years National Defence Certificates - (c) -

1.27 1.50

Equity Shares (Fully Paid)

Quoted :

Upper Ganges Sugar & Industries Ltd. 18,562 10 13.23 13.23

13.23 13.23

Unquoted :

In Subsidiary Companies

Champaran Marketing Company Ltd. 43,49,000 2.50 192.96 192.96

Hargaon Investment & Trading Co. Ltd. 30,45,727 10 609.14 609.14

OSM Investment & Trading Co. Ltd. 17,40,418 10 261.06 261.06

1,063.16 1,063.16

In Other Companies

Bihar State Financial Corporation Ltd. 70 100 0.07 0.07

Moon Corporation Ltd. (‘A’ Class) 745 100 0.77 0.77

Moon Corporation Ltd. (‘B’ Class) 2,502 5 0.13 0.13

Birla Buildings Ltd. 1,920 10 0.19 0.19

The Oudh Trading Co. Pvt.Ltd. 25 100 0.03 0.03

A.P.V.Texmaco Ltd. (in liquidation) 28,750 10 0.86 (d) 0.86

Jai Hind Publishing Co.Ltd. (in liquidation) 80 25 - -

Akhil Bharat Printers Ltd. (in liquidation) 150 100 - -

Indo International Distillers Association Pvt. Ltd. 54,000* 10 5.40 (d) 5.40

7.45 7.45

1,086.24 1,086.47

Share Application Money :

Indo International Distillers Association Pvt. Ltd. 46,000* 10 4.60 (d) 4.60

1,090.84 1,091.07

Less : Provision for diminution in the value of

Investments 11.61 11.61

1,079.23 (b) 1,079.46



(Rs. in Lakhs)

30th June, 2009 30th June, 2008

SCHEDULE - 6 : INVESTMENTS (Contd.)

Book Value Market Value Book Value Market Value

Aggregate Value Of Investments :

Book Value

Quoted 13.76 13.51 13.76 13.17

Unquoted 1,065.47 1,065.70

1,079.23 1,079.46

NOTES :

(a) All the above investments are Non-Trade, except those marked with an asterisk.

(b) Includes Government Securities of the face value of Rs. 1.76 Lakh (Rs. 1.99 Lakh) and Rs. 0.60 Lakh (Rs. 0.60 Lakh) deposited /

pledged with various Government authorities and Hon’ble Allahabad High Court respectively (including Rs. 0.73 Lakh (Rs. 0.71

Lakh) matured, but pending encashment).

(c) The figures, being less than Rs. 500, have not been shown above.

(d) Indicates securities where provision for diminution in the value of Investments has been made.

(Rs. in Lakhs)

30th June, 2009 30th June, 2008

SCHEDULE - 7 : INVENTORIES

At lower of cost and net realisable value

Raw Materials 886.36 235.44

Stores, Chemicals, Spare Parts, etc. 1,219.42 1,204.74

[including in transit Rs. 7.46 Lakhs (Rs. 12.19 Lakhs)]

Finished Goods 13,859.51 25,744.12

Power - Banked 29.38 30.75

Goods under Process 478.88 262.20

Standing Crop 38.83 30.60

16,512.38 27,507.85

At estimated net realisable value

By Products 852.85 1,509.43

Scrap 13.54 20.89

Country Crop 1.40 1.65

867.79 1,531.97

17,380.17 29,039.82



(Rs. in Lakhs)

30th June, 2009 30th June, 2008

SCHEDULE - 8 : SUNDRY DEBTORS

(Unsecured , unless otherwise specified)

(a) Debts due for a period exceeding six months :

Considered Good 21.89 31.81

Considered Doubtful 44.62 118.87

66.51 150.68

Less: Provision 44.62 118.87

21.89 31.81

(b) Other Debts

Considered Good

[includes secured Rs. 2.79 Lakhs (Rs. 6.06 Lakhs)] 753.43 616.58

775.32 648.39

SCHEDULE - 9 : CASH & BANK BALANCES

Cash in hand 42.41 19.66

Cheques / Drafts in hand 36.59 130.39

79.00 150.05

With Scheduled Banks on :

Current Account 178.09 176.51

Unpaid Dividend Account 10.73 10.83

Fixed Deposit Account [Receipts for Rs. 216.45 Lakhs (Rs. 30.70 Lakhs)

pledged with various Govt.authoritities as security / Bank as margin money] 229.66 56.50

418.48 243.84

With Non-Scheduled Banks on Current Account :

Name of the BankMaximum amount

outstanding during the year

Lucknow Kshetriya Gramin Bank 878.17 (1,554.31) 10.37 15.67

Zila Sahkari Bank Ltd., Sitapur 172.24 (169.56) 3.75 4.74

District Co-operative Bank Ltd., Lakhimpur Kheri 391.58 (547.04) 4.42 4.71

Urban Co-operative Bank Ltd., Lakhimpur Kheri 27.11 (26.09) 1.13 0.62

Avadh Gramin Bank, Hardoi 0.40 (0.69) 0.35 0.34

Baroda Uttar Pradesh Grameen Bank 242.60 (376.99) 2.10 1.74

22.12 27.82

With Post office on :

Savings Account (Pass Book lodged with various Govt.

Authorities) 0.44 0.58

520.04 422.29



(Rs. in Lakhs)30th June, 2009 30th June, 2008

SCHEDULE -- 10 : OTHER CURRENT ASSETSInterest accrued on Investments 2.67 3.68 Accrued interest on loans, deposits etc. Considered Good 6.35 0.87 Considered Doubtful - 0.58

6.35 1.45 Less : Provision - 0.58

6.35 0.87 9.02 * 4.55

* including Rs. 0.43 Lakh (Rs. 0.91 Lakh) due for more than six months

SCHEDULE - 11 : LOANS AND ADVANCESUNSECUREDConsidered goodLoans :Not bearing interest :

To a Subsidiary Company 22.50 32.50 Bearing interest :

To Employees 30.57 29.61 To Others 3.69 15.07

56.76 77.18 AdvancesAdvances recoverable in cash or in kind or for value to be received or pending adjustments 771.16 1,052.35Sales tax, Excise duty etc. paid under appeal and / or under dispute 107.03 105.79Balance with Excise & other Govt.Authorities 3,445.38 2,775.34 Claims and Refunds receivable 783.20 768.98 Advance payment of Tax, Refunds receivable and Tax deducted at source (after adjusting provisions) - 151.03 Advance for Fringe Benefit tax (net of provision) 6.01 3.71 Minimum Alternative Tax Credit Entitlement 836.59 717.57 Sundry Deposits 46.01 48.04

5,995.38 5,622.81 6,052.14 5,699.99

Considered doubtful :Advances & Claims 343.20 280.74 Less : Provisions 343.20 280.74

- - 6,052.14 5,699.99

NOTES:Amount due from Officers of the Company

Loans - - Advances - 0.41

- 0.41 Maximum amount due at any time during the year

Loans - 6.00 Advances 9.77 7.27

9.77 13.27 Amount due from the Managing Director of the Company - - Maximum amount due at any time during the year - 6.09 Loan to a Subsidiary Company :

Champaran Marketing Company Limited 22.50 32.50 Maximum amount due at any time during the yearChamparan Marketing Company Limited 32.50 39.50



SCHEDULES to the Profit & Loss Account


SCHEDULE - 12 : CURRENT LIABILITIES & PROVISIONS A. Current Liabilities :

Acceptances 1,648.13 - Sundry Creditors for goods, services, expenses etc. Due to Micro and Small Enterprises 342.91 415.97 (Refer note no. 11 on Schedule 23) Due to Others 6,178.19 7,959.37 For Other Finance 385.78 682.31 Excess price of sugar including excise duty 79.41 79.41 Advance against sale of goods 1,639.64 1,748.71 Interest accrued but not due on loans, deposits etc. 42.62 36.67 Preference Shares Redemption Account 0.05 0.05 Unclaimed Scrip Dividend 0.04 0.04 Less: Shares held for distribution 0.04 - 0.04 - Fractional entitlements for Bonus Shares andBearer Coupons 0.07 0.07 Investor Education & Protection Fund : (not yet due) Unpaid & Unclaimed Dividends 10.73 10.83 Unclaimed matured Fixed Deposits 7.30 20.40

10,334.83 10,953.79 B. Provisions :

Leave 106.87 80.13 Gratuity - 70.81 Warranties 7.11 8.12 Taxation (net of advance tax) 46.77 - Proposed Dividend on Equity Shares 328.79 - Tax on proposed dividend 55.88 -

545.42 159.06 10,880.25 11,112.85

(Rs. in Lakhs)

2008-2009 2007-2008

SCHEDULE - 13 : GROSS SALES

Finished Goods 56,724.39 32,971.58

Power 587.06 725.56

By-Products 998.11 1,529.74

Sugar Hedging Transactions (net) - 135.24

Others 14.32 39.03

58,323.88 35,401.15

Less : Claims, Rebates etc. 14.75 7.56

58,309.13 35,393.59


(Rs. in Lakhs)2008-2009 2007-2008

SCHEDULE - 14 : OTHER INCOMEIncome from Long Term Investments (Non-Trade)Dividend 0.04 0.28 Interest - 0.01 Insurance & Other Claims 18.54 23.81 Rent & Hire Charges 17.38 18.94 Profit on sale of Long Term Investments (Non-Trade) - 15.31 Exchange rate fluctuations (net) 3.28 - Export Incentives 49.81 22.42 Unspent liabilities,excess provisions and unclaimed balances written back (net) 172.93 212.69 Provision for diminution in the value of investments no longer required written back - 0.25 Cane Price Subsidy for earlier years - 573.58 Buffer Stock subsidy towards Insurance & storage charges 4.58 83.50 Profit on Fixed assets sold / discarded (net) 11.20 66.42 Items Pertaining to previous years (net) 0.10 0.12 Miscellaneous Receipts 6.65 8.61

284.51 1,025.94

SCHEDULE - 15 : DECREASE / (INCREASE) IN STOCKS :Opening Stocks :

Finished Goods 25,744.12 16,732.27 Power - Banked 30.75 24.72 By-Products 1,509.43 840.80 Goods under Process 262.20 317.73 Scrap 20.89 21.46

27,567.39 17,936.98 Add: Stocks (Refer schedule- 5) :

Finished Goods 176.20 - By-Products 24.03 - Goods under Process 72.97 273.20 - -

27,840.59 17,936.98 Less : Closing Stocks :

Finished Goods 13,859.51 25,744.12 Power - Banked 29.38 30.75 By-Products 852.85 1,509.43 Goods under Process 478.88 262.20 Scrap 13.54 20.89

15,234.16 27,567.39 12,606.43 (9,630.41)

SCHEDULES to the Profit & Loss Account (Contd.)



(Rs. in Lakhs)

2008-2009 2007-2008

SCHEDULE - 16 : AGRICULTURAL LOSS

INCOME

Sales including inter- transfers Rs. 21.31 Lakhs (Rs. 24.78 Lakhs) 51.66 34.89 Other Income :Rent & Hire Charges 17.73 25.23 Profit on sale / discard of fixed assets 10.18 - Miscellaneous Receipts 0.40 28.31 3.24 28.47 Increase in Stocks :Closing Stock 40.23 32.25 Less : Opening Stock 32.25 7.98 29.21 3.04

87.95 66.40 EXPENDITURESeeds, Manures and Fodder Consumed 34.14 22.15 Stores & Spares Consumed 1.50 0.27 Tractor Expenses 29.92 32.29 Repairs to : Machinery 0.62 0.72 Building 0.20 0.06 Others 1.25 0.30 Lease Land Rent 1.58 - Rates & Taxes 0.19 0.15 Payments to and Provisions for Employees : Salaries, Wages & Bonus 31.24 26.79 Contribution to Provident and Other Funds 1.53 1.54 Gratuity 0.23 33.00 0.10 28.43 Insurance 0.12 0.15 Cartage & Transportation charges 0.23 1.09 Irrigation Expenses 0.97 0.82 Harvesting Expenses 0.44 1.06 Miscellaneous Expenses 2.39 2.56 Depreciation 2.88 2.34

109.43 92.39 Loss transferred to Profit & Loss Account 21.48 25.99

SCHEDULE - 17 : RAW MATERIALS CONSUMEDOpening Stock 235.44 337.35 Add : Purchase & Procurement Expenses [including transfer ofsugarcane from own farms Rs. 21.31 Lakhs (Rs. 24.78 Lakhs)] 24,799.72 27,864.24 Purchase Tax & Cess (net) 281.78 335.73

25,316.94 28,537.32 Less : Sales - 0.05 Closing Stock 886.36 235.44

24,430.58 28,301.83

SCHEDULE - 18 : STORES, SPARES & PACKING MATERIALS CONSUMEDStores, Spare Parts, Chemicals etc.[after adjusting Sales & Claims Rs. 200.71 Lakhs (Rs. 122.20 Lakhs)] 1,183.01 1,495.77 Packing Materials 1,223.04 1,474.62

2,406.05 2,970.39



(Rs. in Lakhs)2008-2009 2007-2008

SCHEDULE - 19 : PAYMENTS TO AND PROVISIONS FOR EMPLOYEESSalaries, Wages, Bonus, etc 2,607.74 2,527.77 Contribution to Provident & Other Funds 218.59 208.16 Gratuity [Refer note no. 12(b) on Schedule 23] 7.49 68.15 Workmen Compensation - 1.62 Employees’ Welfare Expenses 94.54 82.12

2,928.36 2,887.82

SCHEDULE - 20 : MANUFACTURING, SELLING AND OTHER EXPENSES

Repairs to and Maintenance of :Buildings 161.86 105.23 Machinery 1,030.09 1,276.57 Others 25.21 21.00

Rent 79.24 76.04 Rates & Taxes (net) 37.41 38.27 Insurance 84.60 78.01 Auditors’ Remuneration :

As AuditorsAudit Fees 12.25 12.25 Tax Audit Fees 7.35 7.35 Limited Review Fees 7.35 4.50 In other capacity for Certificates & other services 4.71 2.02 For Expenses 2.06 1.96

Cost Auditors’ Remuneration :For Audit Fees 0.60 0.60 For Expenses 0.09 0.15

Selling Commission & Expenses :Commission on sales 268.56 159.60 Other Selling Expenses 448.07 400.28

Charity & Donations 15.80 4.97 Provision for bad and doubtful debts / advances 101.31 52.50 Provision for Warranties & Claims 5.78 6.86 Bad Debts, irrecoverable claims & advances written off 142.71 14.32 Less : Adjusted against provisions 113.68 29.03 2.35 11.97 Loss on sale of long term Investments - 24.75 Less : Adjusted against provisions - - 24.75 - Exchange rate fluctuations (net) - 2.13 Molasses Storage & Maintenance Reserve 4.02 6.55 Sales Tax for earlier years 5.12 - Sugar Hedging Transactions (net) 4.81 - Miscellaneous Expenses [including Directors’ travelling Rs. 14.92 Lakhs (Rs. 12.46 Lakhs)] 861.16 771.68

3,196.48 3,040.49



(Rs. in Lakhs) 2008-2009 2007-2008

SCHEDULE - 21: DIRECTORS’ REMUNERATIONProfit / (Loss) before Taxation as per Profit & Loss Account 3,004.79 (626.92)Add :

Depreciation (as per Accounts) 2,634.91 2,232.02 Provision for bad & doubtful debts/advances 101.31 52.50 Net Loss / (Profit) on fixed assets sold and / ordiscarded (as per Accounts) (21.38) (66.42)Directors’ Fees & Remuneration 105.41 97.57

2,820.25 2,315.67 5,825.04 1,688.75

Less :Depreciation(under Section 350 of the Companies Act, 1956) 2,634.91 2,232.02 Bad debts/advances adjusted against provision 113.68 2.35 Provision for Diminution in the value of Investmentsno longer required written back - 0.25 Net Loss / (Profit) on fixed assets sold / discarded(as per Section 349 of the Companies Act,1956) (27.14) 32.30 Directors’ Fees 2.52 3.47

2,723.97 2,270.39 Profit / (Loss) for the year 3,101.07 (581.64)Less / (Add) : Loss brought forward from the previous year 4,312.70 (3,731.06)Net Profit / (Loss) under Section 349 of the Companies Act, 1956 (1,211.63) (4,312.70)(A) Managing Director’s Remuneration :

Salary 39.00 39.00 Contribution to Provident Fund 4.68 4.68 Gratuity - 0.39 Provision for Leave 0.69 44.37 0.89 44.96

(B) Directors’ Fees 2.52 3.47 46.89 * 48.43

* Excludes Rs. 36.00 Lakhs (Rs. 30.00 Lakhs) and Rs. 22.52 Lakhs (Rs.19.14 Lakhs) paid towards rent and maintenance respectively of

the accommodation provided to the Managing Director and the same has been included under the head “Rent” and “Miscellaneous

Expenses” in Schedule 20.

Note: In view of the loss under Section 349, as stated above, no provision for Directors’ Commission has been made.

SCHEDULE - 22 : INTEREST & FINANCE CHARGES (NET)On Fixed Loans 4,258.03 3,368.46 On Other Loans 4,347.60 3,473.73 To Income Tax Department 8.03 -

8,613.66 * 6,842.19 Less : At Credit :

Amount Capitalised 3,458.08 2,513.86Buffer Stock Subsidy towards interest 35.23 610.94From Income Tax Department 14.54 -On Unsecured Loans, Deposits etc. (Gross) :[Tax deducted at source Rs. 35.42 Lakhs (Rs. 1.04 Lakhs)] 164.28 39.57

3,672.13 3,164.374,941.53 3,677.82

* excludes Rs. 477.67 Lakhs (Rs. 165.57 Lakhs) being interest on excise duty loan from a Bank which is recoverable as subsidy from the

Government.


SCHEDULE to the Balance Sheet and Profit & Loss Account

SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

1. Statement Of Significant Accounting Policies :

(i) Basis of Preparation :

The financial statements have been prepared to comply

in all material respects with the Accounting Standards

Notified by the Companies Accounting Standards Rules,

2006 (as amended) and the relevant provisions of the

Companies Act, 1956. The financial statements have been

prepared under the historical cost convention on an accrual

basis. The accounting policies applied by the Company are

consistent with those used in the previous year.

(ii) Use of Estimates :

The preparation of financial statements in conformity

with generally accepted accounting principles requires

management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and

disclosure of contingent liabilities at the date of financial

statements and the results of operations during the

reporting year end. Although these estimates are based

upon the management’s best knowledge of current

events and actions, actual results could differ from these

estimates.

(iii) Revenue Recognition :

(a) Revenue from sale of goods is recognised upon

passage of title to the customers which generally

coincides with delivery thereof.

(b) Dividend Income is recognised when the

shareholders’ right to receive the payment is

established by the balance sheet date. Dividend

from subsidiaries is recognised even if the same is

declared after the balance sheet date but pertains to

period on or before the date of balance sheet as per

the requirement of Schedule VI of the Companies

Act, 1956.

(c) Due to uncertainty in realisation, following incomes

are accounted for on acceptance / actual receipt

basis :-

(i) Insurance and other claims.

(ii) Interest on doubtful loans and advances to

cane growers.

(iii) Compensation receivable in respect of

land surrendered to / acquired by the

Government.

(iv) Fixed Assets :

Fixed assets are stated at cost less accumulated depreciation

and impairment, if any. Cost comprises the purchase price

inclusive of duties (net of cenvat credit), taxes, incidental

expenses and erection / commissioning expenses etc. upto

the date the asset is ready for its intended use.

Machinery spares which can be used only in connection

with an item of fixed assets and whose use as per technical

assessment is expected to be irregular, are capitalised and

depreciated over the residual life of the respective assets.

Assets awaiting disposal are valued at the lower of written

down value and net realisable value.

(v) Impairment of Assets :

The carrying amounts of assets are reviewed at each

balance sheet date to determine whether there is any

indication of impairment based on external / internal

factors. An impairment loss is recognised wherever the

carrying amount of an asset exceeds its recoverable

amount which represents the greater of the net selling

price and ‘Value in use’ of the assets. The estimated future

cash flows considered for determining the value in use, are

discounted to their present value at the weighted average

cost of capital.

(vi) Depreciation :

(a) The classification of plant and machinery into

continuous and non continuous process is done as

per technical certification and depreciation thereon

is provided accordingly.

(b) Depreciation on fixed assets is provided as per

straight line method, at the rates prescribed in

schedule XIV of the Companies Act, 1956, except on

gross assets valuing Rs. 43.28 Lakhs (Rs. 43.28 Lakhs),

where written-down value method is followed.

(c) Depreciation on fixed assets added / disposed of

during the year is provided on pro-rata basis, with

reference to the date of addition / disposal.

(d) In case of impairment, if any, depreciation is

provided on the revised carrying amount of the

assets over its remaining useful life.

(vii) Government Grants and subsidies :

Government Grants and subsidies are recognised when

there is reasonable assurance that the same will be received.

Revenue grants / subsidies are recognised in the Profit &

Loss Account. Capital grants relating to specific fixed assets

are reduced from the gross value of the respective fixed

assets. Other capital grants are credited to capital reserve.


SCHEDULE to the Balance Sheet and Profit & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO THE ACCOUNTS (Contd.)

(viii) Borrowing Costs :

Borrowing costs relating to acquisition / construction

of qualifying assets are capitalised until the time all

substantial activities necessary to prepare the qualifying

assets for their intended use are complete. A qualifying

asset is one that necessarily takes substantial period of

time to get ready for its intended use. All other borrowing

costs are charged to revenue.

(ix) Investments :

Investments that are readily realisable and intended to

be held for not more than a year are classified as Current

Investments. All other Investments are classified as Long

term Investments. Current Investments are stated at

lower of cost and market rate on individual investment

basis. Long term investments are considered “at cost” on

individual investment basis, unless there is a decline other

than temporary in the value, in which case adequate

provision is made against such diminution in the value of

investments.

(x) Inventories :

(a) Raw Materials, stores and spares are valued at

lower of cost and net realisable value. However,

these items are considered to be realisable at cost

if the finished products, in which they will be used,

are expected to be sold at or above cost. Cost is

determined on a weighted average basis.

Goods under process and finished goods (including

Power Banked) are valued at lower of cost and net

realisable value. Finished goods and Goods under

process include cost of conversion and other costs

incurred in bringing the inventories to their present

location and condition.

By products, Country crop and Saleable scraps,

whose cost is not identifiable, are valued at

estimated net realisable value.

Net realisable value is the estimated selling price

in the ordinary course of business, less estimated

costs of completion and estimated costs necessary

to make the sale.

(b) In case of inter-transferred materials, the transfer

price is considered as cost for the purpose of

valuation of closing stock.

(xi) Foreign Currency Transactions :

(a) Initial Recognition

Foreign currency transactions are recorded in the

reporting currency, by applying to the foreign

currency amount the exchange rate between the

reporting currency and the foreign currency at the

date of the transaction.

(b) Conversion

Foreign currency monetary items are reported using

the closing rate. Non-monetary items which are

carried in terms of historical cost denominated in

a foreign currency are reported using the exchange

rate at the date of the transaction and non-

monetary items which are carried at fair value or

other similar valuation denominated in a foreign

currency are reported using the exchange rates that

existed when the values were determined.

(c) Exchange Differences

Exchange differences arising on the settlement/

conversion of monetary items are recognised as

income or expenses in the year in which they arise.

(d) Forward Exchange Contracts not entered for trading

or speculation purpose

The premium or discount arising at the inception

of forward exchange contracts is amortised as

expenses or income over the life of the respective

contracts. Exchange differences on such contracts

are recognised in the statement of profit and loss in

the period in which the exchange rates change. Any

profit or loss arising on cancellation or renewal of

forward exchange contracts is recognised as income

or expense for the year.

(xii) Retirement Benefits :

(a) Retirement benefits in the form of Provident and

Pension Funds are defined contribution schemes and

are charged to the Profit and Loss Account of the year

when the contributions to the respective funds are

due. The Company has no obligations other than the

contribution payable to the respective trusts / funds.

(b) Gratuity liability being a defined benefit obligation

is provided for on the basis of actuarial valuation

on projected unit credit method made at the end of

each year.

(c) Long term compensated absences are provided

for based on actuarial valuation on projected unit

credit method made at the end of each year.


(d) Actuarial gains / losses are immediately taken to

profit and loss account and are not deferred.

(xiii) Taxation :

Tax expense comprises of current, deferred and fringe

benefit tax. Current income tax and fringe benefit tax

are measured at the amount expected to be paid to tax

authorities in accordance with Income Tax Act, 1961.

Deferred income tax reflects the impact of current year

timing differences between taxable income and accounting

income for the year and reversal of timing differences of

earlier years.

The deferred tax for timing differences between the book

and tax profit for the year is accounted for using the tax

rates and laws that have been substantively enacted as of

the Balance Sheet date. Deferred tax asset is recognised

only to the extent that there is reasonable certainty

that sufficient future taxable income will be available

against which such deferred tax asset can be realised. If

the company has carry forward unabsorbed depreciation

and tax losses, deferred tax asset is recognised only to

the extent that there is virtual certainty supported by

convincing evidence that sufficient taxable income will be

available in future against which such deferred tax asset

can be realised.

The carrying amounts of deferred tax assets are reviewed

at each balance sheet date. The company writes-down the

carrying amount of a deferred tax asset to the extent that

it is no longer reasonably certain or virtually certain, as the

case may be, that sufficient future taxable income will be

available against which deferred tax asset can be realised.

Any such write-down is reversed to the extent that it

becomes reasonably certain or virtually certain, as the case

may be, that sufficient taxable income will be available in

future.

At each balance sheet date the Company re-assesses

unrecognised deferred tax assets. It recognises unrecognised

deferred tax assets to the extent that it has become

reasonably certain or virtually certain, as the case may

be that sufficient future taxable income will be available

against which such deferred tax assets can be realised.

Minimum Alternative Tax (MAT) credit is recognised as

an asset only when and to the extent there is convincing

evidence that the company will pay normal income tax

during the specified period. In the year in which the

MAT credit becomes eligible to be recognised as an asset

in accordance with the recommendations contained in

the guidance Note issued by the Institute of Chartered

Accountants of India, the said asset is created by way of

a credit to the profit and loss account and shown as MAT

Credit Entitlement. The Company reviews the same at each

balance sheet date and writes down the carrying amount

of MAT Credit Entitlement to the extent there is no longer

convincing evidence to the effect that the Company will

pay normal Income Tax during the specified period.

(xiv) Segment Reporting :

(a) Identification of Segments :

The Company has identified that its operating

segments are the primary segments. The Company’s

operating businesses are organised and managed

separately according to the nature of products, with

each segment representing a strategic business unit

that offers different products and serves different

markets. The analysis of geographical segments is

based on the areas in which the customers of the

Company are located.

(b) Inter Segment Transfers :

The Company accounts for inter segment transfers

at mutually agreed transfer prices.

(c) Allocation of Common Costs :

Common allocable costs are allocated to each

segment on case to case basis applying the ratio,

appropriate to each relevant case. Revenue and

expenses which relate to the enterprise as a whole

and are not allocable to segments on a reasonable

basis, are included under the head “Unallocated –

Common”.

The accounting policies adopted for segment

reporting are in line with those of the Company.

(xv) Fixed Assets Acquired under Lease :

(a) Finance Lease

Assets acquired under lease agreements which

effectively transfer to the company substantially all

the risk and benefits incidental to ownership of the

leased items, are capitalised at the lower of the fair

value and present value of minimum lease payment

at the inception of the lease term and disclosed

as leased assets. Lease payments are apportioned

between the finance charges and the reduction of

the lease liability so as to achieve a constant rate of

interest on the remaining balance of their liability.



Finance charges are charged directly to the expenses

account.

(b) Operating Lease

Leases where the lessor effectively retains

substantially all the risks and benefits of the

ownership of the leased assets are classified as

operating leases. Operating lease payments are

recognised as an expense in the profit and loss

account.

(xvi) Share Issue Expenses :

Share issue expenses are adjusted against Securities

Premium Account.

(xvii) Earning per Share :

Basic Earning per Share is calculated by dividing the net

profit or loss for the year attributable to equity shareholders

by the weighted number of equity shares outstanding

during the year.

For the purpose of calculating diluted earning per share,

net profit or loss for the year attributable to equity share

holders and the weighted average number of shares

outstanding during the year are adjusted for the effect of

all dilutive potential equity shares.

(xviii) Excise Duty :

Excise Duty is accounted for at the point of manufacture

of goods and accordingly, is considered for valuation of

stocks as on the Balance Sheet date.

(xix) Hedging :

The company has adopted a policy to minimize risks

associated with foreign exchange fluctuations with respect

to its borrowings.

The premium or discount arising at the inception of forward

exchange contracts is amortised as expense or income over

the life of the contract.

(xx) Research Costs :

Research costs of revenue nature are expensed as and

when they are incurred, while capital expenditure is added

to the cost of the respective fixed assets.

(xxi) Cash and Cash equivalents :

Cash and cash equivalents in the cash flow statement comprise

of cash at bank and in hand and short-term investments with

an original maturity of three months or less.

(xxii) Provisions :

A provision is recognised when an enterprise has a present

obligation as a result of past event and it is probable that

an outflow of resources will be required to settle the

obligation, in respect of which a reliable estimate can be

made. Provisions made in terms of Accounting Standard 29

are not discounted to its present value and are determined

based on management estimate required to settle the

obligation, at the Balance Sheet date. These are reviewed

at each Balance Sheet date and adjusted to reflect the

current management estimates.

(xxiii) Derivative Instruments :

As per the announcement made by the Institute of

Chartered Accountants of India, Derivative contracts, other

than those covered under AS-11, are marked to market on

a portfolio basis, and the net loss after considering the

offsetting effect of the underlying hedged item is charged

to the income statement. Net gains are ignored as a matter

of prudence.

(xxiv) Contingencies :

Liabilities which are material and whose future outcome

cannot be ascertained with reasonable certainty are

treated as contingent and disclosed by way of notes to the

accounts.



(Rs. in Lakhs)

As at 30th

June, 2009

As at 30th

June, 2008

2. Estimated amount of contracts remaining to be executed on Capital Account

(net of advances) and not provided for

1,371.16 8,186.52

3. Contingent Liabilities not provided for in respect of :–

(a) Demands / Claims by various Government Authorities and others

not acknowledged as debts:

(i) Excise Duty & Service Tax 705.71 773.85

(ii) Sales & Entry Tax 156.41 241.52

(iii) Duty under State Acts 230.18 155.05

(iv) Others 28.16 36.12

Total 1,120.46 1,206.54

(b) (i) Guarantees given to a bank against loans to cane growers 4,000.00 3,000.00

(ii) Against the above, the loan facilities actually availed as on the Balance Sheet date 3,047.93 2,350.22

(c) Unredeemed bank guarantees 0.96 0.96

(d) Bills discounted with banks [since realised Rs. 81.00 Lakhs (Rs. 49.26 Lakhs)] 176.00 66.54

4. Excise Duty & Cess on stocks represents differential excise

duty and cess on opening and closing stock of finished goods

/ by products.

5. Pending disposal of writs / appeals by the court with regard

to levy sugar prices for some years, Rs. 79.41 Lakhs (Rs. 79.41

Lakhs) (net) received as excess levy sugar price, against which

bank guarantees furnished by the Company for Rs. 84.88

Lakhs, are in force in terms of the Court Orders, is included

under the head ‘Current Liabilities’. Necessary adjustment

for the above amount together with interest, if any, in this

regard will be made in the accounts as and when the matter

will be finally settled.

6. Pending decisions of various courts on writ petitions filed

by / against the Company, no credit has been taken in the

Profit and Loss Account in respect of certain realisations

aggregating to Rs. 52.05 Lakhs in earlier years, which

continue to be shown under the head “Liabilities for other

Finance” in Schedule – 12. Against the above, fixed deposit

receipts / bank guarantees for similar amount have been

furnished by the Company.

7. In view of the interim order dated 8th September, 2008 of

the Hon’ble Supreme Court, the Company for its Hargaon

and Rosa Sugar units in Uttar Pradesh has continued the

provision towards Sugarcane purchases made during the year

2007-08 @ Rs. 110 per quintal as against the State Advised

Price (SAP) of Rs. 125 per quintal. Pending final decision by

the Hon’ble Supreme Court in this matter, the differential

price of Rs. 2,422.74 Lakhs between SAP and the amount

already provided, as stated above, has not been accounted

for.

(Rs. in Lakhs)

As at 30th

June, 2009

As at 30th

June, 2008(A) Deferred Tax Liability

(i) Timing difference in depreciable assets 6,557.38 5,344.786,557.38 5,344.78

(B) Deferred Tax Asset(i) Carry forward unabsorbed depreciation 5,188.26 4,659.60(ii) Expenses allowable against taxable income in future years 739.03 1,117.42

5,927.29 5,777.02Net Deferred Tax Liability / (Asset) ( A – B ) 630.09 (432.24)


8. a) The break-up of net Deferred Tax Liability as on 30th June, 2009 is as under:


b) Minimum Alternate Tax (MAT) credit entitlement of Rs.

836.59 Lakhs (Rs. 717.57 Lakhs), being available as tax

credit for set off in future years as per the Income Tax

Act, 1961, is carried forward for future adjustments

based on future profitability projections.

9. a) Pending execution of the conveyance deed, no

adjustment has been made in respect of 0.75 acre

of land sold by the Company in earlier years.

b) An application filed by the Company for exemption of

3785.19 sq. mtrs. of land at Bamrauli under the Urban

Land (Ceiling and Regulation) Act, 1976, is pending

with the concerned authority.

10. A civil suit is pending against the Company’s sugar unit at

Dhadha Bujurg (Hata), which is already in operation. The

Company has been legally advised that the said civil suit is

not tenable as per law.

(Rs. in Lakhs)

2008-2009 2007-2008

(i) Principal amount remaining unpaid to any supplier at the end of accounting

year (including retention money against performance). 317.74 408.06

(ii) Interest due on above. 9.82 2.99

Total of (i) & (ii) 327.56 411.05

(iii) Amount of interest paid by the Company to the suppliers in terms of section 16

of the Act. - -

(iv) Amount paid to the suppliers beyond the respective due date. 106.93 105.52

(v) Amount of interest due and payable for the period of delay in payments (which

have been paid but beyond the due date during the year) but without adding

the interest specified under the Act. 5.31 4.92

(vi) Amount of interest accrued and remaining unpaid at the end of accounting year. 15.13 7.91

(vii) Amount of further interest remaining due and payable even in the succeeding

years, until such date when the interest dues as above are actually paid to the

small enterprise, for the purpose of disallowance as a deductible expenditure

under section 23 of this Act. 10.04 -


11. Based on the information / documents available with the Company, information as per the requirement of Section 22 of The Micro,

Small and Medium Enterprises Development Act, 2006 are as under:

12. (a) The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled

to Gratuity on terms as per provisions of The Payment of Gratuity Act, 1972. The Company has got an approved gratuity fund

which has taken an insurance policy with Life Insurance Corporation of India (LIC) to cover the gratuity liabilities.


(Rs. in Lakhs)

2008-09 2007-08

(i) Net Employee Expense /(benefit)

Current service cost 49.45 47.16

Interest cost on benefit obligation 54.19 51.17

Expected return on plan assets (53.23) (45.70)

Net Actuarial Loss (Gain) recognised in the year (41.26) 16.54

Total employer expense 9.15* 69.17

* including Rs. 1.43 Lakhs (Rs. 0.53 Lakh) capitalised as pre-operative expenses

in Schedule-5

(ii) Actual return on plan assets 155.39 47.45

(iii) Benefit Asset / (Liability)

Fair Value of Plan Assets 840.81 628.78

Defined benefit obligation 802.93 699.59

Benefit Asset / (Liability) 37.88 (70.81)

(iv) Movement in benefit liability

Opening defined benefit obligation 699.59 665.13

Interest cost 54.19 51.17

Current service cost 49.45 47.16

Benefits paid (61.20) (82.16)

Actuarial (gains) / losses on obligation 60.90 18.29

Closing benefit obligation 802.93 699.59

(v) Movement in fair value of plan assets

Opening fair value of plan assets 628.78 533.36

Expected Return on plan assets 53.23 45.70

Contribution by employer 117.84 130.13

Benefits paid (61.20) (82.16)

Actuarial gains / (losses) on obligation 102.16 1.75

Closing fair value of plan assets 840.81 628.78

(vi) The major categories of plan assets as a percentage of the fair value of

total plan assets

Funded with insurer 100% 100%

(vii) The Principal actuarial assumptions are as follows:

Discount rate 7.6% 8.1%

Expected Return on plan assets 8.1% 8.5%

Salary Increase 5% 5%

Withdrawal rates Varying between 1% to 7% per annum

depending upon the duration and age of the

employees

The overall expected rate of return on assets is assumed to be 8.10% per annum as at 1st July, 2008 i.e. the same as discount

rate as at 30th June, 2008 because the assets are primarily invested in Government Bonds.


The following tables summarize the components of net benefit expenses recognised in the Profit & Loss Account and the funded

status and amounts recognised in the balance sheet for gratuity.


(viii) Amount incurred as expense for defined contribution to

Provident / Pension fund plan Rs. 222.04 Lakhs (Rs. 214.62

Lakhs) [including Rs. 12.11 Lakhs (Rs. 6.19 Lakhs) capitalised

as pre-operative expenses in Schedule-5].

(Rs. in Lakhs)

2008-09 2007-08

(xi) The details for the current and previous year are as follows :

Defined Benefit Obligation 802.93 699.59

Plan Assets 840.81 628.78

Surplus / (Deficit) 37.88 (70.81)

Experience adjustments on plan liabilities Not Available*

Experience adjustments on plan assets Not Available*

* The management has relied on the overall actuarial valuation conducted by the actuary. However, experience adjustments on

plan liabilities and assets are not readily available and hence not disclosed.

(Rs. in Lakhs)

2008-2009 2007-2008

Salaries & Wages 490.38 580.49

Stores and Spares, etc. 1,083.96 1,171.85

Insurance 0.20 0.42

15. Earning per Share (EPS) :

In terms of Accounting Standard - 20, the calculation of EPS is given below:

Profit / (Loss) as per Profit & Loss Account (Rs. in Lakhs) 1,917.38 (451.27)

Weighted average number of Equity Shares outstanding during the year (Rs. 10 each) 2,05,29,746 1,81,73,820

Basic and Diluted earnings per share (Rs.) 9.34 (2.48)

The impact of diluted shares, if any, arising out of the exercise of detachable warrants as indicated in Note no. 13 above, has not

been considered for the computation of EPS, since the quantum of such dilutive option is not presently ascertainable.


(ix) The estimates of future salary increases considered in

actuarial valuation, take account of inflation, seniority,

promotion and other relevant factors, such as supply and

demand in the employment market.

(x) The Company expects to contribute Rs. 120 Lakhs to

Gratuity fund in 2009-2010.

Rs. 10 each for each warrant held on the date to be declared by the Company during the warrant exercise period between 12th March, 2009 to 11th September, 2012 at a price to be determined in the manner as indicated in the Letter of Offer.

(c) Rights Shares Issue expenses include Rs. 22.00 Lakhs paid to the Statutory Auditors.

14. (a) Salaries and Wages relating to various repairs have not been charged separately to the repairs, as the amount thereof has not been demarcated.

(b) Consumption of raw materials, stores, spare parts and packing materials includes profit/loss on sale thereof.

(c) The following items are included under other heads

of expenses in the Profit & Loss Account :

(b) Gratuity amount appearing in schedule 19 is after

adjustment of surplus of Rs. 37.88 Lakhs as indicated

above, being the excess of plan assets over the actuarial

liability as on the balance sheet date.

13. (a) The company has raised Rs. 2,323.01 Lakhs (including securities premium Rs. 1,935.84 Lakhs) by issue of equity shares of Rs. 10 each at a premium of Rs. 50 per equity share on Rights basis during the year and has utilised the proceeds of the issue for repayment of a part of the working capital borrowings as well as expenses incurred on such rights issue.

(b) In addition to equity shares allotted on rights basis, as stated above 39,98,240 detachable warrants were also allotted to the shareholders in terms of the said rightsissue entitling them to apply for one equity share of


16. Operating lease :

Certain office premises, godowns, etc. are obtained on operating lease. The lease term is for 1-3 years and renewable for further

period either mutually or at the option of the Company. There is no escalation clause in the lease agreement. There are no restrictions

imposed by lease agreements. There are no subleases. The leases are cancellable.(Rs. in Lakhs)

Particulars 2008-2009 2007-2008

Lease payments made for the year 79.24 76.04

Contingent rent recognised in the profit and loss account Nil Nil

17. The movements in provision for warranties during the year are as follows: -

(Rs. in Lakhs)

Balance as at

01.07.2008

Additions during

the year

Amount used during

the year

Balance as at

30.06.2009

Warranties 8.12 5.78 6.79 7.11


18. The Company’s segment information as at and for the year ended 30th June, 2009 are as below:

(Rs. in Lakhs)

Sugar SpiritsCo-

generation

Food

processingOthers Total

(a) Revenue (net of excise duty and cess)External Sales 47,537.74 5,017.13 587.06 2,507.44 - 55,649.37

(25,839.51) (4,677.10) (725.57) (1,913.72) (-) (33,155.90)Inter-segment Sales 4,082.09 13.40 1,490.57 - - 5,586.06

(3,388.80) (18.10) (1661.37) (-) (-) (5,068.27)Total Revenue 51,619.83 5,030.53 2,077.63 2,507.44 - 61,235.43

(29,228.31) (4,695.20) (2,386.94) (1,913.72) (-) (38,224.17)(b) Results

Segment Results 7,907.55 -64.42 379.01 195.06 -0.02 8,417.18(1,761.34) (1,025.79) (553.10) (79.64) (-0.56) (3,419.31)

Unallocated expenses net of unallocated Income 470.86(368.41)

Operating Profit 7,946.32(3,050.90)

Interest & Finance Charges (net) 4,941.53(3,677.82)

Income, Wealth & Fringe Benefit Tax (net) 144.10(32.54)

MAT Credit Entitlement/(-) Reversal 119.02(-3.93)

Deferred Tax Charge/(Credit) 1,062.33(-212.12)

Net Profit/(-) Loss 1,917.38(-451.27)

(c) Total AssetsSegment Assets 70,788.27 13,664.38 6,051.99 1,176.18 1.41 91,682.23

(73,144.09) (12,827.55) (6,488.18) (1,070.87) (1.45) (93,532.14)Unallocated Assets 2,902.58

(3,239.66)

94,584.81(96,771.80)



Notes:

(i) Business Segment : The business segments have been identified on the basis of the products of the Company. Accordingly, the Company has identified “Sugar”, “Spirits”, “Co-generation” and “Food processing” as the operating segments :

Sugar - Consists of manufacture and sale of Sugar, Molasses & Bagasse.

Spirits - Consists of manufacture and sale of Industrial Spirits (including Denaturants), Fusel Oil & Bio Compost.

Co-generation - Consists of generation and transmission of Power.

Food Processing Products - Consists of Canned Fruits & Vegetables, Jams, Jellies, Squashes & Juices.

Others – Consist of Miscellaneous business comprising of less than 10% revenues.

(ii) Geographical Segment : The Company primarily operates in India and therefore the analysis of geographical segment is demarcated into its Indian and Overseas Operations.

(iii) The Company has common fixed assets located in India for producing goods for domestic and overseas markets. Hence, separate figures for fixed assets / additions thereof cannot be furnished.

(e) Other Information

(i) Non cash expenses 4.02 - - - - 4.02

(6.55) (-) (-) (-) (-) (6.55)

(ii) Capital Expenditure 11,360.20 696.02 71.76 4.22 - 12,132.20

(11,898.40) (8,013.00) (310.51) (19.55) (-) (20,241.46)

(iii) Depreciation for the year 1,741.85 521.60 366.20 5.23 0.03 2,634.91

(1,731.03) (181.52) (314.39) (5.05) (0.03) (2,232.02)

(f) Geographical Segments

Revenue

Domestic 54,969.87

(32,851.00)

Overseas (Including through third party) 679.50

(304.90)

55,649.37

(33,155.90)

(d) Total Liabilities

Segment Liabilities 8,919.02 649.20 28.73 790.96 0.12 10,388.03

(9,386.30) (862.24) (41.03) (735.26) (0.15) (11,024.98)

Unallocated Liabilities 70,426.72

(75,663.40)

80,814.75

(86,688.38)

(Rs. in Lakhs)

Sugar SpiritsCo-

generation

Food


18. The Company’s segment information as at and for the year ended 30th June, 2009 are as below: (Contd.)


19. Related Party Disclosure :

(a) Names of the related parties :

Subsidiary Companies : Champaran Marketing Company Ltd.

OSM Investment & Trading Co. Ltd.

Hargaon Investment & Trading Co. Ltd.

Hargaon Properties Ltd.

Key Management Personnel : Mr. Chandra Shekhar Nopany – Chairman-cum-Managing Director

Mr. V. P. Singh – Executive President, Hargaon Unit

Mr. Chandra Mohan – Executive President, Narkatiaganj Unit

Mr. B. K. Malpani – Executive President, Rosa Unit

(From 12th September, 2008)

Mr. P. K. Saini – Executive President, Hata Unit

Mr. S. K. Premi – Executive President, Allahabad Unit

Mr. Sanjay Mukherjee – Company Secretary (Upto 28th February, 2009)

Mr. G. N. Pareek – Company Secretary (From 1st March, 2009)

Relatives of Key Management Personnel : Mrs. Nandini Nopany – Mother of Shri Chandra Shekhar Nopany

Enterprises owned or Upper Ganges Sugar & Industries Ltd.

significantly influenced by Sutlej Textiles & Industries Ltd.

Key Management Personnel SIL Investments Ltd.

and their relatives : SCM Investment & Trading Co. Ltd.

RTM Investment & Trading Co. Ltd.

Uttar Pradesh Trading Co. Ltd.



(b) Aggregated Related Party Disclosures as at and for the year ended 30th June, 2009 (Rs. in Lakhs.)

Subsidiaries

Key

Management

Personnel

Relatives of

Key Management

Personnel

Enterprises owned by

Key Management

Personnel or their relatives TotalTransaction

Value

Balance

Outstanding

as on 30.06.

2009

Transaction

Value

Balance

Outstanding

as on 30.06.

2009

Transaction

Value

Balance

Outstanding

as on 30.06.

2009

Transaction

Value

Balance

Outstanding

as on 30.06.

2009

Transaction

Value

Balance

Outstanding

as on 30.06.

2009 Sale of Goods & Services Upper Ganges Sugar & Industries Ltd. - - - - - - 35.38 - 35.38 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (206.66) ( - ) (206.66) ( - ) Purchase of Goods & Services

Upper Ganges Sugar & Industries Ltd. - - - - - - 109.98 - 109.98 - ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (37.17) ( - ) (37.17) ( - )

Sale of Fixed Assets Upper Ganges Sugar & Industries Ltd. - - - - - - 21.76 - 21.76 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (130.66) ( - ) (130.66) ( - )

Purchase of Fixed Assets Upper Ganges Sugar & Industries Ltd. - - - - - - 11.61 - 11.61 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (96.11) ( - ) (96.11) ( - ) Interest Paid Sutlej Textiles & Industries Limited - - - - - - 149.24 - 149.24 -

( - ) ( - ) ( - ) (340.24) ( - ) (340.24) ( - ) SIL Investments Ltd. - - - - - - 73.28 - 73.28 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (184.91) ( - ) (184.91) ( - ) SCM Investment & Trading Co. Ltd. - - - - - - 432.32 - 432.32 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (172.05) ( - ) (172.05) ( - ) RTM Investment & Trading Co. Ltd. - - - - - - 620.88 - 620.88 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (186.85) ( - ) (186.85) ( - ) Loans/Intercorporate deposits repaid Champaran Marketing Company Ltd. 1.00 22.50 - - - - - - 1.00 22.50

(10.50) (32.50) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (10.50) (32.50)OSM Investment & Trading Company Ltd. 25.75 - - - - - - - 25.75 -

(12.00) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (12.00) ( - ) Hargaon Investment & Trading Company Ltd. 50.75 - - - - - - - 50.75 -

(63.50) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (63.50) ( - ) Sutlej Textiles & Industries Limited - - - - - - 3,500.00 - 3,500.00 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (3,000.00) ( - ) (3,000.00) ( - ) SIL Investments Limited - - - - - - 1,675.00 - 1,675.00 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (250.00) ( - ) (250.00) ( - ) SCM Investment & Trading Co. Ltd. - - - - - - 855.00 - 855.00 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (300.00) ( - ) (300.00) ( - ) RTM Investment & Trading Co. Ltd. - - - - - - 4,060.00 - 4,060.00 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (2,150.00) ( - ) (2,150.00) ( - ) Loans/Intercorporate deposits Taken Champaran Marketing Company Ltd. 11.00 - - - - - - - 11.00 -

(17.50) ( - ) ( - ) ( - ) (-) (-) (-) (-) (17.50) ( - ) OSM Investment & Trading Company Ltd. 11.50 10.25 - - - - - - 11.50 10.25

(26.00) (24.50) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (26.00) (24.50)Hargaon Investment & Trading Company Ltd. 23.25 113.00 - - - - - - 23.25 113.00

(115.00) (140.50) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (115.00) (140.50)Sutlej Textiles & Industries Limited - - - - - - 500.00 - 500.00 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (4,000.00) (3,000.00) (4,000.00) (3,000.00)SIL Investments Limited - - - - - - 100.00 - 100.00 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (1,300.00) (1,575.00) (1,300.00) (1,575.00)SCM Investment & Trading Co. Ltd. - - - - - - 525.00 2,570.00 525.00 2,570.00

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (3,200.00) (2,900.00) (3,200.00) (2,900.00)RTM Investment & Trading Co. Ltd. - - - - - - 3,030.00 3,420.00 3,030.00 3,420.00

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (6,600.00) (4,450.00) (6,600.00) (4,450.00)Balance Outstanding (net) Debit/(-) Credit :Upper Ganges Sugar & Industries Ltd. - - - - - - - 52.59 - 52.59 ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) (-48.47) ( - ) (-48.47) RemunerationMr. V.P. Singh - - 27.22 0.79 - - - - 27.22 0.79

( - ) ( - ) (19.06) (1.18) ( - ) ( - ) ( - ) ( - ) (19.06) (1.18)Mr. Chandra Mohan - - 28.56 0.90 - - - - 28.56 0.90

( - ) ( - ) (17.41) (0.90) ( - ) ( - ) ( - ) ( - ) (17.41) (0.90)Mr. P.K. Saini - - 11.97 0.90 - - - - 11.97 0.90

( - ) ( - ) (9.61) (0.08) ( - ) ( - ) ( - ) ( - ) (9.61) (0.08)Mr. S.K.Premi - - 15.29 0.93 - - - - 15.29 0.93

( - ) ( - ) (12.43) (0.11) ( - ) ( - ) ( - ) ( - ) (12.43) (0.11)Mr. B.K. Malpani - - 9.77 1.00 - - - - 9.77 1.00

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) Mr. Sanjay Mukherjee - - 8.33 - - - - - 8.33 -

( - ) ( - ) (5.58) (0.18) ( - ) ( - ) ( - ) ( - ) (5.58) (0.18)Mr. G.N. Pareek - - 3.14 - - - - - 3.14 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - )

NOTE : Remuneration paid to Mr. C. S. Nopany, Chairman-cum-Managing Director, is disclosed in Schedule 21 to the Accounts.



20. Additional information pursuant to the provisions of Clause 3, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956 (to the extent applicable) :

(i) Licensed and Installed capacity, production, stock & sales of goods produced/traded during the year :

(Rs. in Lakhs.)

Opening Stock Closing Stock (b) Sales (b) Purchase of

Finished Goods

Class of

Goods

Licensed

Capacity

Installed

Capacity

Unit Production Quantity Amount Quantity Amount Quantity Amount Quantity Amount

Sugar (Bagged) Not Applicable 28700 Qtls 1405576 1723521 (c) 24,586.64 622614 12,034.24 2504324 (d) 48,973.09 - -

(21700) (2350576) (1150827) (15,815.90) (1723521) (24,586.64) (1775979) (25,819.58) (–) (–)

Tonnes Crushing per day

Power (-do-) 25 Units 36824300 1569000 30.75 1379423 29.38 19197988 (e) 587.06 - -

(25) (52686105) (1525879) (24.72) (1569000) (30.75) (24592277) (725.56) (–) (–)

M.W.

Molasses (sent out) – – Qtls 720504 499652 (g) 1,380.39 267313 (g) 788.49 974581 (d) 377.22 - -

(—) (—) (1155055) (480684) (787.81) (499652) (1,380.39) (1142792) (584.84) (–) (–)

Spirit 48.00 48.00 Ltrs. 23339973 3621292 506.60 5246980 1,180.37 21692440 5,144.49 - -

(45.00) (45.00) (24548914) (3113781) (489.45) (3621292) (506.60) (23953502) (5,184.66) (–) (–)

Million Ltrs. Million Ltrs.

Bio Compost Not Applicable 335000 Qtls. 233378 82636 41.72 67789 31.19 248225 (d) 84.62 - -

(-do-) (335000) (180745) (62923) (26.38) (82636) (41.72) (140531) (46.45) (–) (–)

Fusel Oil — — Ltrs. 8,000 3,600 - 3,600 - 8,000 1.12 - -

(—) (—) (–) (3600) (–) (3600) (–) (–) (–) (–) (–)

Canned Fruits

&

Not Specified 10 Tonnes

per day

Tonnes 2793 1428 562.39 1259 565.39 3529 1,969.00 567 260.67

Vegetables (-do-) (-do-) (3134) (861) (339.58) (1428) (562.39) (2929) (1,452.15) (362) (145.74)

Jams, Jellies,

Squashes &

Not Specified 10 Tonnes

per day

Tonnes 1168 128 46.77 126 48.32 1170 537.32 - -

Juices (-do-) (-do-) (1,077) (176) (60.96) (128) (46.77) (1125) (461.18) (–) (–)

Baggasse — — Qtls. 2627434 (f) 195622 129.04 66563 64.36 2756493 (d) 620.89 - -

(—) (—) (3926557) (119215) (52.99) (195622) (129.04) (3850150) (944.90) (–) (–)

Sugar Hedging Rs. - - - - -

Transactions (net) (–) (–) (135.24) (–) (–)

Others Rs. 20.89 13.54 14.32

(21.46) (20.89) (39.03)

27,305.19 14,755.28 58,309.13 260.67

(17,619.25) (27,305.19) (35,393.59) (145.74)

Farm Produce Qtls. 28,376 - - - - 28,376 36.60

Sugarcane (27422) (—) (—) (—) (—) (27422) (27.92)

Cereals etc. Qtls. 933 120 1.65 113 1.40 940 9.23

(208) (114) (0.97) (120) (1.65) (202) (1.88)

Gardens & Dairy

Products

Qtls. 5.83

(5.09)* excludes standing crop 1.65 1.40 51.66

(0.97) (1.65) (34.89)


NOTES :(a) Licensed and installed capacities are as certified by the management and accepted as correct by the Auditors.(b) Quantitative figures of closing stock are shown after adjusting shortage / excess, evaporation loss, samples etc. Sales figures

are inclusive of excise duty.(c) Includes 2155 (1901) quintals lost due to reprocessing during the year.(d) Includes 10453 (21196) quintals of Sugar, 881608 (955181) quintals of Molasses, 2297726 (2737557) quintals of Bagasse and

53613 (90510) quintals of Bio-compost transferred / consumed departmentally.(e) After adjusting inter-transfers 14237297 (22540653) units, transmission loss 314788 (1136366) units and captive consumption

3263804 (4373688) units. (f) Includes Bagasse used in Co-generation but excludes the quantum used for other own consumption in sugar units.(g) Includes 76355 quintals of Sub-standard materials pending destruction, for which permission from excise authorities is

awaited.



Class of Goods Quantity (in quintals) Rs. in LakhsSugarcane (crushed) 14783295 21,586.80

(23705967) (27,023.95)Raw Sugar 79755 1,325.53 (-) (-)Molasses 1066645 3,366.13

(1090459) (1,741.07)Bagasse 1722180 1,159.65

(2261070) (1,285.01)Fresh Fruits & Vegetables 39212 492.82

(39757) (484.26)Sugar 9746 198.57

(10310) (154.07)Press Mud 640410 50.80

(933367) (74.27)Total 28,180.30

(30,762.63)

Less : Inter unit transfer of own produced materials 3,749.72(2,460.80)

Net Consumption of raw materials 24,430.58(28,301.83)

(ii) Raw Materials Consumed (after adjusting sales and claims) :

Class of Goods Quantity (in quintals) Rs. in LakhsSugarcane (crushed) 145476 256.27

(-) (-)

NOTES :

(a) The above figures are after adjusting transit losses / shortages and include the quantity of materials produced during the process of manufacturing and consumed departmentally.

(b) The above figures are exclusive of following raw materials consumed as indicated in schedule 5 :

(Rs. in Lakhs)2008-2009 2007-2008

(iii) C.I.F. Value of Imports (including through canalizing agencies on invoice value) :Raw Sugar 1,648.13 -Stores, Chemicals and Spares etc. 534.08 461.77

(iv) Expenditure in Foreign Currency (On Cash Basis) :(a) Traveling 1.34 0.20(b) Selling Commission 16.37 36.60

(v) Earning in Foreign Exchange (On Cash Basis) :F O B value of Exports (including through third party) 633.34 287.19

(vi)

Break-up of consumption of Raw Materials and Stores, Spare – parts and Packing Material etc. (including debits to other heads of account and after adjusting sales and claims) :

Raw Materials* Stores, Chemicals, Spare Parts etc.*Rs. in Lakhs % Rs. in Lakhs %

Imported 1,205.73 4.94 346.64 9.93(as certified by the management) (—) (—) (438.04) (10.57)Indigenous 23,224.85 95.06 3,144.87 90.07

(28,301.83) (100) (3,704.47) (89.43)24,430.58 100.00 3,491.51 100.00

(28,301.83) (100.00) (4,142.51) (100.00)

* Includes shortages and excludes materials consumed as indicated in schedule 5.

21. Figures given in brackets are for the previous year and the same have been regrouped and / or rearranged, wherever necessary.

Signatories to Schedules - 1 to 23As per our report of even date. For S. R. BATLIBOI & CO.Chartered Accountants



I. Registration Details

CIN L15432UP1932PLC025186 State Code 20

Balance Sheet Date 30.06.2009

II. Capital Raised during the year(Amount in Rs. thousands)

Public Issue Nil Rights Issue 38717

Bonus Issue Nil Private Placement Nil

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. thousands)

Total Liabilities 8370456 Total Assets 8370456

Sources of Funds

Paid-up Capital 220466 Secured Loans 5321261

Reserves & Surplus 1156540 Unsecured Loans 1609180

Deferred Tax Liability (net) 63009

Application of Funds

Net Fixed Assets 5444920 Net Current Assets 1385644

Capital Expenditure on New/ Expansion Projects 1431969 Miscellaneous Expenditure Nil

Investments 107923

IV. Performance of Company (Amount in Rs. thousands)

Turnover (including other income) 5593388 Total Expenditure 5292909

Profit before Tax 300479 Profit after Tax 191738

Earning Per Share (in Rs.) 9.34 Dividend Rate (Re.) 1.50

V. Generic Names of three Principal Products/Services of the Company : (as per monetary terms)

Item Code. No. 17011000 Item Code. No. 220710

Description Sugar Description Industrial Alcohol

Item Code. No. 200600

Description Canning Products

BALANCE SHEET ABSTRACT and company’s general business profile

G. N. Pareek A. C. Dalal Chandra Shekhar NopanyCompany Secretary Director Chairman - cum - Mg. Director


AUDITORS’ REPORTon Consolidated Financial StatementsTo The Board of Directors ofThe Oudh Sugar Mills Limited

1. We have examined the attached Consolidated Balance Sheet of THE OUDH SUGAR MILLS LIMITED and its subsidiaries as at 30th June, 2009 and also the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We have not audited the financial statements of the subsidiary companies, whose financial statements reflect total assets of Rs. 2,491.04 Lakhs as at 31st March, 2009 and total revenues of Rs. 46.21 Lakhs and net cash flow of Rs. (-) 0.78 Lakhs for the year then ended. These financial statements have been audited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included in respect of these subsidiaries, is based solely on the reports of other auditors as well as management certificate in respect of certain adjustments for the reasons as mentioned in Note No. 1(c) of Schedule - 23.

4. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS) 21,”Consolidated Financial Statements” notified under the Companies Accounting Standards Rules, 2006.

5. Without qualifying our opinion, we draw attention to Note No. 8 on Schedule 23, regarding accounting of Sugarcane purchases at Hargaon & Rosa Sugar units in Uttar Pradesh @ Rs. 110 per quintal for sugar season 2007-2008 as against the State Advised Price (SAP) of Rs. 125 per quintal in view of the interim order dated 8th September, 2008 of the Hon’ble Supreme Court. Since the matter is subjudice, the liability for differential price of Rs. 2,422.74 Lakhs is presently undeterminable and hence, no provision thereof has been made in the accounts.

6. Attention is drawn to the following notes on Schedule – 23 :

(a) Note Nos. 6 and 7 regarding non-adjustment of certain realisations in earlier years aggregating to Rs. 131.46 Lakhs (Previous Year Rs. 131.46 Lakhs) and non-provision of interest payable thereon, if any, in case of refund of such realisations. As the matters are under adjudication / not yet settled, the impact of above non-adjustment on the Company’s profit is not presently ascertainable;

(b) Note No. 10(b) regarding recognition of Minimum Alternative Tax (MAT) credit entitlement of Rs. 836.59 Lakhs upto the Balance Sheet date based on the future profitability projections made by the management. However, we are unable to express any opinion on the above projections and their consequent impact, if any, on such recognition of MAT Credit Entitlement. Had the impact of above been considered, there would be a profit of Rs. 1,123.82 Lakhs as against the reported profit of Rs. 1,960.41 Lakhs for the year and the figures of Reserves & Surplus would be Rs. 12,089.43 Lakhs as against the reported figures of Rs. 12,926.02 Lakhs. In respect of the above items, the previous year’s audit report was similarly modified.

7. Based on our audit and on consideration of reports of other auditors on separate financial statements and on the other financial information of the components, and to the best of our information and according to the explanations given to us, we are of the opinion that the attached consolidated financial statements, subject to the matters stated in para 6 above, give a true and fair view in conformity with the accounting principles generally accepted in India :

(a) in the case of Consolidated Balance Sheet, of the consolidated state of affairs of The Oudh Sugar Mills Limited and its subsidiaries as at 30th June, 2009;

(b) in the case of Consolidated Profit & Loss Account, of the consolidated profit of The Oudh Sugar Mills Limited and its subsidiaries for the year then ended and

(c) in the case of Consolidated Cash Flow Statement, of the consolidated cash flows of The Oudh Sugar Mills Limited and its subsidiaries for the year then ended.


Per R. K. AGRAWALPlace: Kolkata PartnerDated: 25th August, 2009 Membership No. 16667


(Rs. in Lakhs)

Schedule 30th June, 2009 30th June, 2008

SOURCES OF FUNDS

A. Shareholders’ Funds

(a) Share Capital 1 2,204.66 1,817.49

(b) Reserves & Surplus 2 12,926.02 9,583.52

15,130.68 11,401.01

B. Loan Funds 3

(a) Secured 53,212.61 54,868.78

(b) Unsecured 15,968.55 20,541.75

69,181.16 75,410.53

C. Deferred Tax Liability (net) 630.09 -

84,941.93 86,811.54


A. Fixed Assets 4

(a) Gross Block 71,840.50 48,709.12

(b) Less: Accumulated Depreciation 17,493.15 15,174.12

(c) Net Block 54,347.35 33,535.00

(d) Capital Work- in- Progress 209.90 340.80

(e) Capital Expenditure on New / Expansion Projects 5 14,319.69 25,677.31

68,876.94 59,553.11

B. Investments 6 2,229.21 2,154.44

C. Deferred Tax Asset (net) - 432.24

D. Current Assets, Loans & Advances

(a) Inventories 7 17,380.17 29,039.82

(b) Sundry Debtors 8 775.32 648.39

(c) Cash & Bank Balances 9 521.63 423.92

(d) Other Current Assets 10 9.02 4.55

(e) Loans & Advances 11 6,030.14 5,667.99

24,716.28 35,784.67

E. Less: Current Liabilities & Provisions 12

(a) Current Liabilities 10,335.08 10,953.99

(b) Provisions 545.42 159.06

10,880.50 11,113.05

Net Current Assets 13,835.78 24,671.62

F. Miscellaneous Expenditure

(to the extent not written off or adjusted) - 0.13

84,941.93 86,811.54


Schedules referred to above form an integral part of the Consolidated Balance Sheet.

CONSOLIDATED BALANCE SHEETof The Oudh Sugar Mills Limited and its Subsidiary Companies as at 30th June, 2009


Per R. K. AGRAWALPartnerMembership No. 16667 Place: Kolkata G. N. Pareek Chandra Shekhar Nopany Chairman - cum - Mg. DirectorDated: 25th August, 2009 Company Secretary A. C. Dalal Director

The Oudh Sugar Mills Limited (Consolidated)70

(Rs. in Lakhs)Schedule 2008-2009 2007-2008

INCOMEGross Sales 13 58,309.13 35,393.59 Less : Excise Duty 2,085.46 1,926.61 : Cess 574.30 2,659.76 311.08 2,237.69 Net Sales 55,649.37 33,155.90 Other Income 14 330.73 1,134.08

55,980.10 34,289.98 EXPENDITURE

Decrease / (Increase) in Stocks 15 12,606.43 (9,630.41)Excise Duty & Cess on Stocks (1,242.30) 574.12 (Refer note no. 5 on Schedule 23)Agricultural Loss 16 21.48 25.99 Purchase of Finished Goods 260.67 145.74 Raw Materials Consumed 17 24,430.58 28,301.83 Stores, Spares & Packing Materials Consumed 18 2,406.05 2,970.39 Fuel & Electricity 700.89 536.86 Payments to and Provisions for Employees 19 2,928.36 2,887.82 Manufacturing, Selling and Other Expenses 20 3,199.56 3,043.27 Directors’ Remuneration 21 47.02 48.57

45,358.74 28,904.18 Profit before Interest, Depreciation & Taxation 10,621.36 5,385.80 Less : Interest & Finance Charges (net) 22 4,941.53 3,677.81 Depreciation 2,632.03 2,229.68

7,573.56 5,907.49 Profit / (Loss) before Taxation 3,047.80 (521.69)Provision for Taxation:Current Tax [including wealth tax Rs. 3.00 Lakhs (Rs. 3.00 Lakhs)] 122.02 3.12 Deferred Tax charge / (credit) 1,062.33 (212.12)Minimum Alternative Tax Credit (Entitlement) / Reversal (119.02) 3.93 Provision for Income Tax no longer required written back 1.69 0.60 Provision for Fringe Benefit Tax 23.75 30.14 Profit / (Loss) after Taxation 1,960.41 (346.16)Surplus brought forward from previous year 743.38 610.69 Transfer from General Reserve - 500.00 Balance Available for Appropriation 2,703.79 764.53 Appropriations :-Transfer to Reserve fund 8.89 21.15 Transfer to General Reserve 100.00 - Proposed dividend on Equity Shares 328.79 - Tax on Dividend 55.88 - Balance carried to Balance Sheet 2,210.23 743.38

2,703.79 764.53 Earning per Share of Rs. 10 each (Basic and Diluted) (Rs.) 9.55 (1.90)(Refer note no. 18 on Schedule 23)


Schedules referred to above form an integral part of the Consolidated Profit & Loss Account.

CONSOLIDATED PROFIT & LOSS ACCOUNTof The Oudh Sugar Mills Limited and its Subsidiary Companies for the year ended 30th June, 2009




CONSOLIDATED CASH FLOW STATEMENTof The Oudh Sugar Mills Limited and its Subsidiary Companies for the year ended 30th June, 2009

(Rs. in Lakhs)2008-2009 2007-2008

A. CASH FLOW FROM OPERATING ACTIVITIES :Profit / (Loss) before Tax 3,047.80 (521.69)

Adjustments for :Depreciation 2,634.91 2,232.02 Interest & Finance Charges (net of capitalisation & Subsidy) 5,120.35 3,717.39 Molasses Storage and Maintenance Reserve 4.02 6.55 (Profit) / Loss on Fixed Assets sold / discarded (21.38) (66.42)(Profit) on sale of Long Term Investments - (15.31)Interest & Dividend Income (225.08) (148.01)Preliminary Expenses written off 0.13 0.13 Bad Debts, irrecoverable claims & advances written off 29.03 11.97 Provision for Warranties & Claims 5.78 6.86 Provision for diminution in the value of investments written back - (0.25)Provision for bad and doubtful debts / advances (net) 101.31 52.50

Operating Profit before Working Capital Changes : 10,696.87 5,275.74 Adjustments for :

Decrease in Trade Payables (748.85) (4,290.74)Increase in Trade & Other Receivables (324.07) (2,310.34)Decrease / (Increase) in Inventories 11,659.65 (9,565.96)

10,586.73 (16,167.04)Cash Generated from Operations : 21,283.60 (10,891.30)

Direct Taxes Refund / (Paid) 51.42 (41.01)Net Cash from Operating Activities 21,335.02 (10,932.31)

B. CASH FLOW FROM INVESTING ACTIVITIES :Sale of Fixed Assets 194.84 201.77 Capital Subsidy 142.18 200.83 Sale of Investments 0.23 16.62 Loans Given 10.42 (5.56)Interest Received 174.35 38.58 Dividend Received 46.26 108.42 Purchase of Investments (75.00) (31.90)Fixed deposits (173.16) (1.30)Purchase of Fixed Assets (8,600.88) (17,747.44)

Net Cash used in Investing Activities (8,280.76) (17,219.98)C. CASH FLOW FROM FINANCING ACTIVITIES :

Proceeds from Borrowings 10,243.17 45,725.89 Repayment of Loans (16,931.24) (11,304.12)Rights issue of Shares 387.17 - Share Premium on rights issue of shares 1,935.84 - Rights Shares Issue Expenses (173.10) - Interest & Finance charges Paid (net of subsidy) (8,591.45) (6,358.51)Dividend Paid (including dividend tax) (0.10) (1.96)

Net Cash from Financing Activities (13,129.71) 28,061.30 NET CHANGES IN CASH & CASH EQUIVALENTS (A+B+C) (75.45) (90.99)*Cash & Cash equivalents - Opening Balance 367.42 458.41 *Cash & Cash equivalents - Closing Balance 291.97 367.42

*Represents Cash and Bank balances as indicated in Schedule - 9 , and excludes Rs. 229.66 Lakhs (Rs. 56.50 Lakhs) being bank balances

with restricted use or with maturity of more than three months.


Per R. K. AGRAWALPartnerMembership No. 16667 Place: Kolkata G. N. Pareek Chandra Shekhar Nopany Chairman - cum - Mg. DirectorDated: 25th August, 2009 Company Secretary A. C. Dalal Director


SCHEDULES forming part of the Consolidated Balance Sheet

(Rs. in Lakhs)

30th June, 2009 30th June, 2008


Authorised :

4,00,00,000 Equity Shares of Rs. 10 each 4,000.00 4,000.00

Issued :

2,21,72,060 (1,81,73,820) Equity Shares of Rs. 10 each 2,217.21 1,817.38

1,883 1/2 Equity Shares of Rs. 100 each 1.89 1.89

2,219.10 1,819.27

Subscribed & Paid-up :

2,19,18,935 (1,81,73,820) Equity Shares of Rs. 10 each fully paid 2,191.89 1,817.38

44 Quarter Equity Shares of Rs. 25 each fully paid 0.01 0.01

Bearer Equity Share Coupons of Rs. 25 and Rs. 12.50 each fully paid 0.06 0.06

2,191.96 1,817.45

Add : Forfeited Shares (amount originally paid-up) 12.70 0.04

2,204.66 1,817.49

Note :

Out of the above 6,11,550 Equity Shares have been issued for consideration other than cash and 11,55,575 Equity Shares have been

allotted as Bonus Shares by capitalisation of Securities Premium and General Reserve.

SCHEDULE - 2 : RESERVES & SURPLUS Capital Reserve :

As per last Account 198.59* 198.59* * Includes Rs. 2.71 Lakhs arisen on consolidation

Capital Redemption Reserve :As per last Account 82.69 82.69

Securities Premium :As per last Account 6,247.67 6,247.67 Add : Received on Rights Shares issued 1,935.84 -

8,183.51 6,247.67 Less : Adjustment of Rights Shares issue expenses 173.10 -

8,010.41 6,247.67 Reserve Fund:

As per last Account 280.69 259.54 Add : Transfer from Profit & Loss Account 8.89 21.15

289.58 280.69 General Reserve :

As per last Account 1,949.62 2,524.50 Add : Transfer from Profit & Loss Account 100.00 - Less : Impact of Revised AS-15 as on 1st July, 2007 (Net of Tax) - 74.88 : Transfer to Profit & Loss Account - 500.00

2,049.62 1,949.62 Molasses & Alcohol Storage and Maintenance Reserve :

As per last Account 78.04 71.49 Add : Provided during the year 4.02 6.55

82.06 78.04 Effluent Disposal Reserve :

As per last Account 2.84 2.84 Surplus as per Profit & Loss Account 2,210.23 743.38

12,926.02 9,583.52


SCHEDULES forming part of the Consolidated Balance Sheet (Contd.)

(Rs. in Lakhs)

30th June, 2009 30th June, 2008

SCHEDULE - 3 : LOAN FUNDS

A. Secured Loans :

Term Loans

Long Term

From Scheduled Bank(s) :

Under Project Finance Loan Scheme 30,497.23 24,572.42

Under Financial Assistance Scheme (Excise Duty Loan) 3,985.00 3,985.00

Interest accrued & due 799.05 254.50

From Sugar Development Fund 5,334.05 5,207.86

From a Body Corporate 1,200.00 2,400.00

Short Term

From a Scheduled Bank 2,100.00 1,000.00

From a Body Corporate - 1,000.00

Other Loans

From a Scheduled Bank on Cash Credit Account 9,297.28 16,449.00

53,212.61 54,868.78

B. Unsecured Loans :

Short Term Loan from a Scheduled Bank - 1,000.00

From State Bank of India against Crop Loan to Canegrowers 2,560.34 2,215.21

Inter Corporate Loans 13,010.00 16,919.00

Fixed Deposits from Staff and Others 306.29 308.39

Trade and other Deposits (partly not bearing interest) 91.92 99.15

15,968.55 20,541.75

69,181.16 75,410.53

Notes :

1 Term loans from Scheduled Bank(s) (except Excise Duty Loan) and from a Body Corporate are secured by first mortgage / charge on all the immovable and movable assets (save and except book debts), present and future, of the Company’s Sugar Units at Hargaon, Rosa, Narkatiaganj and Dhadha Bujurg (Hata) and Distillery Unit at Hargaon , ranking pari-passu amongst the various lenders, subject to prior charges created on movables for working capital borrowings from the Company’s bankers.

Term loans under Financial Assistance Scheme (Excise Duty Loan) are to be secured by a residual charge on the entire Fixed Assets (movable and immovable) of the Company’s Sugar Units at Hargaon, Rosa and Narkatiaganj.

2 Term loans from the Sugar Development Fund are secured by a second charge on all the immovable / movable assets (save and except book debts) present and future of the Company’s Sugar Units at Hargaon and Narkatiaganj and include Rs. 738.66 Lakhs(Rs. 824.51 Lakhs) towards interest which, as per stipulated terms, is payable on a long term basis.

3 a. Short term loan of Rs. 900 Lakhs (Rs. 1,000 Lakhs) from a Scheduled Bank / a Body Corporate is secured by the pledge of certain shares held as Investments.

b. Short term loan of Rs. 1200 Lakhs (Rs. Nil) from a Scheduled Bank is secured by first mortgage / charge on all the immovable and movable assets, present and future, of the Company’s Sugar Unit at Rosa, ranking pari-passu amongst the various lenders.

4 Cash Credit borrowings are secured by hypothecation of entire current assets of the Company and also by a charge on the immovable assets as follows :-

a. Canning factory at Allahabad - First Charge

b. Sugar Unit at Rosa - Second Charge

c. Sugar Units at Hargaon and Narkatiaganj - Third Charge

5 Unsecured loans, as stated above, include Rs. 15,653.92 Lakhs (Rs. 20,115.68 Lakhs) falling due for payment within one year.



(Rs.

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(Rs. in Lakhs)30th June,

2009

30th June,

2008SCHEDULE - 5 : CAPITAL EXPENDITURE ON NEW / EXPANSION PROJECTSA. Freehold Land 997.99 1,089.65 B. Fixed Assets

(1) Buildings 40.16 37.10 (2) Plant & Machinery 128.52 14.08 (3) Motor Cars, Lorries & Other Conveyance 1.17 1.17 (4) Furniture & Fixtures 71.67 49.39

241.52 101.74 Less : Depreciation (charged to Pre-operative expenses as below) 76.57 164.95 59.05 42.69

C. Machinery and Building under erection 27,171.02 24,194.44 D. Materials at site including goods in transit 224.81 1,277.06

[net of sales Rs. 175.36 Lakhs (Rs. 161.46 Lakhs)]E. Advances against purchase of fixed assets 1,234.97 2,336.15

29,793.74 28,939.99 Less : Transfer to Fixed Assets during the year 18,242.29 6,629.21

11,551.45 22,310.78 F. Incidental Expenditure (including during trial run period) pending

allocation to Fixed Assets :Amount brought forward from previous year 3,366.53 837.57 Add for the year :

Salaries,Wages,Bonus,etc 295.50 195.54 Contribution to Provident & Other Funds 12.32 6.22 Gratuity 1.43 0.53 Fuel & Electricity 246.51 156.00 Raw Materials Consumed 256.27 - Stores, Spares & Packing Materials consumed 40.18 - Project Consultancy / Supervision Charges 7.33 133.28 Insurance Charges 21.72 35.06 Miscellaneous Expenses [including Rs. 1.20 Lakhs (Rs. 1.50 Lakhs) paid 184.94 242.94 for various certificates to the Statutory Auditors]Interest & Other Financial Charges [including Rs. 2,105.55 Lakhs

(Rs. 1,005.61 Lakhs) on fixed loans] 3,442.48 2,362.35 Depreciation 17.52 45.68



7,619.53 4,015.17 Less : Capitalised / Allocated to Fixed Assets during the year 4,851.29 648.64

2,768.24 3,366.53 14,319.69 25,677.31



(Rs. in Lakhs)

No. of Shares Face Value per

share (Rs.)

30th June,

200930th June, 2008

SCHEDULE - 6 : INVESTMENTSLong TermGovernment Securities :Quoted :

5 1/2 % U.P.State Development Loan,1977 - (c) -

5 1/2 % U.P.State Development Loan,1981 0.60 (d) 0.60

11 % Bihar State Development Loan, 2001 0.53 0.53

1.13 1.13 Unquoted :



6 Years National Savings Certificates 1.12 1.35

12 Years National Defence Certificates 0.04 (d) 0.04

12 Years National Plan Savings Certificates - (c) -


7 Years National Defence Certificates - (c) -

1.27 1.50 Equity Shares (Fully Paid)Quoted :

SIL Investments Ltd. 1,758,125 10.00 396.04 396.04

Sutlej Textiles & Industries Ltd. 1,773,351 10.00 514.72 514.72

Upper Ganges Sugar & Industries Ltd. 1,172,260 10.00 867.44 867.44

New India Retailing & Investment Ltd. 266,874 10.00 212.63 212.63

Chambal Fertilizers & Chemicals Ltd. 302,500 10.00 55.00 55.00

Manavta Holdings Ltd. 72,000 10.00 3.53 3.53

Manbhawani Investment Ltd. 67,500 10.00 2.07 2.07

2,051.43 2,051.43 Unquoted :

Bihar State Financial Corporation Ltd. 70 100.00 0.07 0.07

Modern DiaGen Services Ltd. 23,752 10.00 2.38 2.38

Taparia Ltd. 3,500 10.00 0.40 0.40

Shree Vihar Properties Ltd. 747,692 10.00 65.77 65.77

India Educational & Research Inst. Pvt. Ltd. 4,900 10.00 0.49 0.49

Moon Corporation Ltd. (‘A’ Class) 745 100.00 0.77 0.77

Moon Corporation Ltd. (‘B’ Class) 2,502 5.00 0.13 0.13

Birla Buildings Ltd. 1,920 10.00 0.19 0.19

The Oudh Trading Co. Pvt. Ltd. 25 100.00 0.03 0.03

A.P.V. Texmaco Ltd. (in liquidation) 28,750 10.00 0.86 (d) 0.86

Leas Communication Ltd. 21,000 10.00 - -

Chandausi Rice Mills Ltd. 1,000 10.00 - -

Swadeshi Jute Machinery Corporation Ltd. 15,000 10.00 - -

Maruti Ltd. (In liquidation) 10,000 10.00 - -

Jai Hind Publishing Co.Ltd. (in liquidation) 80 25.00 - -

Akhil Bharat Printers Ltd. (in liquidation) 150 100.00 - -

Indo International Distillers Association Pvt. Ltd. 54,000 * 10.00 5.40 (d) 5.40

76.49 76.49



(Rs. in Lakhs)

30th June, 2009 30th June, 2008

Book Value Market Value Book Value Market Value

Aggregate Value Of Investments :

Book Value

Quoted 2,051.96 3,461.39 2,051.96 3,754.53

Unquoted 177.25 102.48

2,229.21 2,154.44


(Rs. in Lakhs)

No. of

Shares

Face Value per

share (Rs.)30th June, 2009 30th June, 2008

SCHEDULE - 6 : INVESTMENTS (Contd.)Equity Shares (Partly Paid)Unquoted :

Modern DiaGen Services Ltd. (Rs. 2 paid up) 1,545,044 10.00 30.90 30.90

Preference Shares (Fully Paid) 8% Non - Convertible Cumulative Redeemable Preference

Shares of New India Retailing & Investments Ltd. 75,000 100 75.00 -

(-) Other Investments

Share Application Money :

Indo International Distillers Association Pvt. Ltd. 46,000 * 10.00 4.60 (d) 4.60

2,240.82 2,166.05 Less : Provision for diminution in the value of Investments 11.61 11.61

2,229.21 (b) 2,154.44

Notes :

(a) All the above investments are Non-Trade, except those marked with an asterisk.

(b) Includes Government Securities of the face value of Rs. 1.76 Lakh (Rs. 1.99 Lakh) and Rs. 0.60 Lakh (Rs. 0.60 Lakh)

deposited / pledged with various Government authorities and Hon’ble Allahabad High Court respectively (including Rs. 0.73 Lakh

(Rs. 0.71 Lakh) matured, but pending encashment).

(c) The figures, being less than Rs. 500, have not been shown above.

(d) Indicates securities where provision for diminution in the value of Investments has been made.



(Rs. in Lakhs)

30th June, 2009 30th June, 2008

SCHEDULE - 7 : INVENTORIES

At lower of cost and net realisable value

Raw Materials 886.36 235.44

Stores, Chemicals, Spare Parts, etc.

[including in transit Rs. 7.46 Lakhs (Rs. 12.19 Lakhs)] 1,219.42 1,204.74

Finished Goods 13,859.51 25,744.12

Power - Banked 29.38 30.75

Goods under Process 478.88 262.20

Standing Crop 38.83 30.60

16,512.38 27,507.85

At estimated net realisable value

By Products 852.85 1,509.43

Scrap 13.54 20.89

Country Crop 1.40 1.65

867.79 1,531.97

17,380.17 29,039.82

SCHEDULE - 8 : SUNDRY DEBTORS

(Unsecured , unless otherwise specified)

(a) Debts due for a period exceeding six months :


Considered Doubtful 44.62 118.87

66.51 150.68

Less: Provision 44.62 118.87

21.89 31.81

(b) Other Debts

Considered Good

[includes secured Rs. 2.79 Lakhs (Rs. 6.06 Lakhs)] 753.43 616.58

775.32 648.39


Cash in hand 42.43 19.70

Cheques / Drafts in hand 36.59 130.39

79.02 150.09

With Scheduled Banks on :

Current Account 179.66 178.10

Unpaid Dividend Account 10.73 10.83

Fixed Deposit Account [Receipts for Rs. 216.45 Lakhs (Rs. 30.70 Lakhs)

pledged with various Govt.authoritities as security / Bank as margin money] 229.66 56.50

420.05 245.43


With Non-Scheduled Banks on Current Account:

Name of the BankMaximum amount

outstanding during the year

Lucknow Kshetriya Gramin Bank 878.17 (1,554.31) 10.37 15.67

Zila Sahkari Bank Ltd., Sitapur 172.24 (169.56) 3.75 4.74

District Co-operative Bank Ltd., Lakhimpur Kheri 391.58 (547.04) 4.42 4.71

Urban Co-operative Bank Ltd.,Lakhimpur Kheri 27.11 (26.09) 1.13 0.62

Avadh Gramin Bank, Hardoi 0.40 (0.69) 0.35 0.34

Baroda Uttar Pradesh Grameen Bank 242.60 (376.99) 2.10 1.74

22.12 27.82

With Post office on :

Savings Account (Pass Book lodged with various Govt.

Authorities) 0.44 0.58

521.63 423.92

SCHEDULE - 10 : OTHER CURRENT ASSETS

Interest accrued on Investments 2.67 3.68

Accrued interest on loans, deposits etc.


Considered Doubtful - 0.58

6.35 1.45

Less : Provision - 0.58

6.35 0.87

9.02 * 4.55

* including Rs. 0.43 Lakh (Rs. 0.91 Lakh) due for more than six months

SCHEDULE - 11: LOANS AND ADVANCES

UNSECURED

Considered good

Loans :

Bearing interest

To Employees 30.57 29.61 To Others 3.69 15.07

34.26 44.68 Advances :

Advances recoverable in cash or in kind or for value to be received or pending

adjustments 771.66 1,052.85

Sales tax, Excise duty etc. paid under appeal and/or under dispute 107.03 105.79

Balance with Excise & other Govt.Authorities 3,445.38 2,775.34

Claims and Refunds receivable 783.20 768.98

Advance payment of Tax, Refunds receivable and Tax

deducted at source (after adjusting provisions) - 151.03

Advance for Fringe Benefit tax (net of provision) 6.01 3.71

Minimum Alternative Tax (MAT) Credit Entitlement 836.59 717.57

Sundry Deposits 46.01 48.04

5,995.88 5,623.31

6,030.14 5,667.99


(Rs. in Lakhs)

30th June, 2009 30th June, 2008

SCHEDULE - 9 : CASH & BANK BALANCES (Contd.)



(Rs. in Lakhs)

30th June, 2009 30th June, 2008

Considered doubtful:

Advances & Claims 343.20 280.74

Less : Provisions 343.20 280.74

- -

6,030.14 5,667.99

NOTES :

Amount due from Officers of the Company

Loans - -

Advances - 0.41

- 0.41

Maximum amount due at any time during the year

Loans - 6.00

Advances 9.77 7.27

9.77 13.27

Amount due from the Managing Director of the Company - -

Maximum amount due at any time during the year - 6.09

SCHEDULE - 11: LOANS AND ADVANCES (Contd.)


SCHEDULE - 12 : CURRENT LIABILITIES & PROVISIONS A. Current Liabilities :

Acceptances 1,648.13 - Sundry Creditors for goods, services, expenses etc. Due to Micro and Small Enterprises 342.91 415.97 (Refer note no. 13 on Schedule 23) Due to Others 6,178.44 7,959.57 For Other Finance 385.78 682.31 Excess price of sugar including excise duty 79.41 79.41 Advance against sale of goods 1,639.64 1,748.71 Interest accrued but not due on loans, deposits etc. 42.62 36.67 Preference Shares Redemption Account 0.05 0.05 Unclaimed Scrip Dividend 0.04 0.04 Less: Shares held for distribution 0.04 - 0.04 - Fractional entitlements for Bonus Shares andBearer Coupons 0.07 0.07 Investor Education & Protection Fund : (not yet due) Unpaid & Unclaimed Dividends 10.73 10.83 Unclaimed matured Fixed Deposits 7.30 20.40

10,335.08 10,953.99 B. Provisions :

Leave 106.87 80.13 Gratuity - 70.81 Warranties 7.11 8.12 Taxation (net of advance tax) 46.77 - Proposed Dividend on Equity Shares 328.79 - Tax on proposed dividend 55.88 -

545.42 159.06 10,880.50 11,113.05


(Rs. in Lakhs)2008-2009 2007-2008

SCHEDULE - 13 : GROSS SALES Finished Goods 56,724.39 32,971.58 Power 587.06 725.56 By-Products 998.11 1,529.74 Sugar Hedging Transactions (net) - 135.24 Others 14.32 39.03

58,323.88 35,401.15 Less : Claims, Rebates etc. 14.75 7.56

58,309.13 35,393.59

SCHEDULE - 14 : OTHER INCOMEIncome from Long Term Investments (Non-Trade)Dividend 46.26 108.42 Interest - 0.01 Insurance & Other claims 18.54 23.81 Rent & Hire charges 17.38 18.94 Profit on sale of Long Term Investments (Non-Trade) - 15.31 Exchange rate fluctuations (net) 3.28 - Export Incentives 49.81 22.42 Unspent liabilities, excess provisions and unclaimed balances written back (net) 172.93 212.69 Provision for diminution in value of investments no longer required written back - 0.25 Cane Price Subsidy for earlier years - 573.58 Buffer Stock subsidy towards Insurance & storage charges 4.58 83.50 Profit on Fixed Assets sold/ discarded (net) 11.20 66.42 Items pertaining to previous years (net) 0.10 0.12 Miscellaneous Receipts 6.65 8.61

330.73 1,134.08

(Rs. in Lakhs)2008-2009 2007-2008

SCHEDULE - 15 : DECREASE / (INCREASE) IN STOCKS :Opening Stocks :

Finished Goods 25,744.12 16,732.27 Power - Banked 30.75 24.72 By-Products 1,509.43 840.80 Goods under Process 262.20 317.73 Scrap 20.89 21.46

27,567.39 17,936.98 Add : Stocks (Refer schedule - 5) :



Finished Goods 13,859.51 25,744.12 Power - Banked 29.38 30.75 By-Products 852.85 1,509.43 Goods under Process 478.88 262.20 Scrap 13.54 20.89

15,234.16 27,567.39 12,606.43 (9,630.41)

SCHEDULES forming part of the Consolidated Profit & Loss Account


(Rs. in Lakhs)

2008-2009 2007-2008

SCHEDULE - 16 : AGRICULTURAL LOSS

INCOMESales including inter- transfers Rs. 21.31 Lakhs (Rs. 24.78 Lakhs) 51.66 34.89 Other Income :Rent & Hire Charges 17.73 25.23 Profit on sale / discard of fixed assets 10.18 - Miscellaneous Receipts 0.40 28.31 3.24 28.47 Increase in Stocks :Closing Stock 40.23 32.25 Less: Opening Stock 32.25 7.98 29.21 3.04

87.95 66.40 EXPENDITURESeeds, Manures and Fodder Consumed 34.14 22.15 Stores & Spares Consumed 1.50 0.27 Tractor Expenses 29.92 32.29 Repairs to : Machinery 0.62 0.72 Building 0.20 0.06 Others 1.25 0.30 Lease Land Rent 1.58 - Rates & Taxes 0.19 0.15 Payments to and Provisions for Employees : Salaries, Wages & Bonus 31.24 26.79 Contribution to Provident and Other Funds 1.53 1.54 Gratuity 0.23 33.00 0.10 28.43 Insurance 0.12 0.15 Cartage & Transportation charges 0.23 1.09 Irrigation Expenses 0.97 0.82 Harvesting Expenses 0.44 1.06 Miscellaneous Expenses 2.39 2.56 Depreciation 2.88 2.34

109.43 92.39 Loss transferred to Profit & Loss Account 21.48 25.99

SCHEDULE - 17: RAW MATERIALS CONSUMED

Opening Stock 235.44 337.35

Add : Purchase & Procurement Expenses [including transfer of

sugarcane from own farms Rs. 21.31 Lakhs (Rs. 24.78 Lakhs)] 24,799.72 27,864.24

Purchase Tax & Cess (net) 281.78 335.73

25,316.94 28,537.32

Less : Sales - 0.05

Closing Stock 886.36 235.44

24,430.58 28,301.83

SCHEDULES forming part of the Consolidated Profit & Loss Account (Contd.)


(Rs. in Lakhs)2008-2009 2007-2008

SCHEDULE - 18 : STORES,SPARES & PACKING MATERIALS CONSUMEDStores, Spare Parts, Chemicals etc.[after adjusting Sales & Claims Rs. 200.71 Lakhs (Rs. 122.20 Lakhs) ] 1,183.01 1,495.77 Packing Materials 1,223.04 1,474.62

2,406.05 2,970.39

SCHEDULE - 19 : PAYMENTS TO AND PROVISIONS FOR EMPLOYEESSalaries, Wages, Bonus, etc. 2,607.74 2,527.77 Contribution to Provident & other Funds 218.59 208.16 Gratuity [Refer note no. 14 (b) on Schedule 23] 7.49 68.15 Workmen Compensation - 1.62 Employees’ Welfare Expenses 94.54 82.12

2,928.36 2,887.82

SCHEDULE - 20 : MANUFACTURING, SELLING AND OTHER EXPENSESRepairs to and Maintenance of :

Buildings 161.86 105.23 Machinery 1,030.09 1,276.57 Others 25.21 21.00

Rent 79.24 76.05 Rates & Taxes (net) 37.69 38.54 Insurance 84.60 78.01 Auditors' Remuneration :

As AuditorsAudit Fees 12.50 12.50 Tax Audit Fees 7.35 7.35 Limited Review Fees 7.35 4.50 In other capacity for Certificates & other services 5.00 2.08 For Expenses 2.06 1.96

Cost Auditors’ Remuneration : For Audit Fees 0.60 0.60 For Expenses 0.09 0.15

Selling Commission & Expenses :Commission on sales 268.56 159.60 Other selling expenses 448.07 400.28

Charity & Donations 15.80 4.97 Provision for bad and doubtful debts / advances 101.31 52.50 Provision for Warranties & Claims 5.78 6.86 Bad Debts, irrecoverable claims & advances written off 142.71 14.32 Less : Adjusted against provisions 113.68 29.03 2.35 11.97 Loss on sale of long term Investments - 24.75 Less : Adjusted against provisions - - 24.75 - Exchange rate fluctuations (net) - 2.13 Molasses Storage & Maintenance Reserve 4.02 6.55 Sales Tax for earlier years 5.12 - Preliminary Expenses written off 0.13 0.13 Sugar Hedging Transactions (net) 4.81 - Miscellaneous Expenses [including Directors' travelling Rs. 14.92 Lakhs (Rs.12.46 Lakhs)] 863.29 773.74

3,199.56 3,043.27



(Rs. in Lakhs)2008-2009 2007-2008

SCHEDULE - 21 : DIRECTORS’ REMUNERATION

Directors’ Remuneration(a) Managing Director’s Remuneration :

Salary 39.00 39.00 Contribution to Provident Fund 4.68 4.68 Gratuity - 0.39 Provision for Leave 0.69 0.89

44.37 44.96 (b) Directors’ Fees 2.65 3.61

47.02 * 48.57

* Excludes Rs. 36.00 Lakhs (Rs. 30.00 Lakhs) and Rs. 22.52 Lakhs (Rs. 19.14 Lakhs) paid towards rent and maintenance respectively of the

accommodation provided to the Managing Director and the same has been included under the head “Rent” and “Miscellaneous

Expenses” in Schedule 20.

SCHEDULE - 22 : INTEREST & FINANCE CHARGE (NET)On Fixed Loans 4,258.03 3,368.46 On Other Loans 4,347.60 3,473.73 To Income Tax Department 8.03 -

8,613.66 * 6,842.19 Less : At Credit :

Amount Capitalised 3,458.08 2,513.86 Buffer Stock Subsidy towards interest 35.23 610.94 From Income Tax Department 14.54 0.01 On Unsecured Loans,Deposits etc. (Gross) :[Tax deducted at source Rs. 35.42 Lakhs (Rs. 1.04 Lakhs)] 164.28 39.57

3,672.13 3,164.38 4,941.53 3,677.81

* excludes Rs. 477.67 Lakhs (Rs. 165.57 Lakhs) being interest on excise duty loan from a Bank which is recoverable as subsidy from the

Government.



SCHEDULE to the Consolidated Balance Sheet and Profit & Loss Account

SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO ACCOUNTS

Notes annexed to and forming part of the Company’s Consolidated

Balance Sheet and Profit & Loss Account as at and for the year

ended 30th June, 2009.

1. Principles Of Consolidated Financial Statements :

The consolidated financial statements which relate to The

Oudh Sugar Mills Ltd. and its subsidiary companies have

been prepared on the following basis :

a) The financial statements of the Company and its subsidiaries

are combined on a line-by-line basis by adding together the

book values of like items of assets, liabilities, income and

expenditure, after fully eliminating intra group balances,

intra group transactions and any unrealised profit/loss

included therein.

b) The consolidated financial statements have been prepared

using uniform accounting policies, except stated otherwise,

for like transactions and are prepared, to the extent possible,

in the same manner as the Company’s separate financial

statements.

(c) As the financial year of the subsidiaries closes on 31st

March, their audited accounts as at and for the year ended

31st March, 2009 have been incorporated in these accounts.

However, in order to eliminate the intra group balances,

certain adjustments pertaining to the period from 1st April,

2009 to 30th June, 2009 have been made in the accounts.

d) The difference between the cost of the Company’s

investments in the subsidiaries and their respective equity

as on the date of investment is treated as Goodwill / Capital

Reserve, as the case may be, in the financial statements.

e) The Subsidiary Companies considered in the financial

statements are as follows :

Name Country of Incorporation % of voting power /

ownership as on 30th

June, 2009

Hargaon Investment & Trading Company Ltd. India 100

OSM Investment & Trading Company Ltd. India 100

Champaran Marketing Company Ltd. India 100

Hargaon Properties Ltd. India 100

2. Statement Of Significant Accounting Policies :

(i) Basis of Preparation :

The financial statements have been prepared to comply in

all material respects with the Accounting Standards Notified

by the Companies Accounting Standards Rules, 2006 (as

amended) and the relevant provisions of the Companies

Act, 1956. The financial statements have been prepared

under the historical cost convention on an accrual basis. The

accounting policies applied by the Company are consistent

with those used in the previous year.

(ii) Use of Estimates :

The preparation of financial statements in conformity

with generally accepted accounting principles requires

management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and disclosure

of contingent liabilities at the date of financial statements

and the results of operations during the reporting year end.

Although these estimates are based upon the management’s best knowledge of current events and actions, actual results could differ from these estimates.

(iii) Revenue Recognition :

(a) Revenue from sale of goods is recognised upon passage of title to the customers which generally coincides with delivery thereof.

(b) Dividend Income is recognised when the shareholders’ right to receive the payment is established by the balance sheet date.

(c) Due to uncertainty in realisation, following incomes are accounted for on acceptance / actual receipt basis :-

(i) Insurance and other claims.

(ii) Interest on doubtful loans and advances to cane growers.

(iii) Compensation receivable in respect of land

surrendered to / acquired by the Government.


(iv) Fixed Assets :

Fixed assets are stated at cost less accumulated depreciation

and impairment, if any. Cost comprises the purchase price

inclusive of duties (net of cenvat credit), taxes, incidental

expenses and erection / commissioning expenses etc. upto

the date the asset is ready for its intended use.

Machinery spares which can be used only in connection

with an item of fixed assets and whose use as per technical

assessment is expected to be irregular, are capitalised and

depreciated over the residual life of the respective assets.

Assets awaiting disposal are valued at the lower of written

down value and net realisable value.

(v) Impairment of Assets :

The carrying amounts of assets are reviewed at each balance

sheet date to determine whether there is any indication

of impairment based on external / internal factors. An

impairment loss is recognised wherever the carrying amount

of an asset exceeds its recoverable amount which represents

the greater of the net selling price and ‘Value in use’ of

the assets. The estimated future cash flows considered for

determining the value in use, are discounted to their present

value at the weighted average cost of capital.

(vi) Depreciation :

(a) The classification of plant and machinery into

continuous and non continuous process is done as

per technical certification and depreciation thereon is

provided accordingly.

(b) Depreciation on fixed assets is provided as per straight

line method, at the rates prescribed in schedule XIV of

the Companies Act, 1956, except on gross assets valuing

Rs. 43.28 Lakhs (Rs. 43.28 Lakhs), where written-down

value method is followed.

(c) Depreciation on fixed assets added / disposed of during

the year is provided on pro-rata basis, with reference

to the date of addition / disposal.

(d) In case of impairment, if any, depreciation is provided

on the revised carrying amount of the assets over its

remaining useful life.

(vii) Government Grants and subsidies :

Government Grants and subsidies are recognised when

there is reasonable assurance that the same will be received.

Revenue grants / subsidies are recognised in the Profit & Loss

Account. Capital grants relating to specific fixed assets are

reduced from the gross value of the respective fixed assets.

Other capital grants are credited to capital reserve.

(viii) Borrowing Costs :

Borrowing costs relating to acquisition / construction of

qualifying assets are capitalized until the time all substantial

activities necessary to prepare the qualifying assets for their

intended use are complete. A qualifying asset is one that

necessarily takes substantial period of time to get ready for

its intended use. All other borrowing costs are charged to

revenue.

(ix) Investments :

Investments that are readily realisable and intended to

be held for not more than a year are classified as Current

Investments. All other Investments are classified as Long

term Investments. Current Investments are stated at lower

of cost and market rate on individual investment basis. Long

term investments are considered “at cost” on individual

investment basis, unless there is a decline other than

temporary in the value, in which case adequate provision is

made against such diminution in the value of investments.

(x) Inventories :

(a) Raw Materials, stores and spares are valued at lower

of cost and net realisable value. However, these items

are considered to be realisable at cost if the finished

products, in which they will be used, are expected to be

sold at or above cost. Cost is determined on a weighted

average basis.

Goods under process and finished goods (including

Power Banked) are valued at lower of cost and net

realisable value. Finished goods and Goods under

process include cost of conversion and other costs

incurred in bringing the inventories to their present

location and condition.

By products, Country crop and Saleable scraps, whose

cost is not identifiable, are valued at estimated net

realisable value.

Net realisable value is the estimated selling price in

the ordinary course of business, less estimated costs of

completion and estimated costs necessary to make the

sale.

(b) In case of inter-transferred materials, the transfer price

is considered as cost for the purpose of valuation of

closing stock.

SCHEDULE to the Consolidated Balance Sheet and Profit & Loss Account (Contd.)

SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd.)


(xi) Foreign Currency Transactions :

(a) Initial Recognition

Foreign currency transactions are recorded in the

reporting currency, by applying to the foreign currency

amount the exchange rate between the reporting

currency and the foreign currency at the date of the

transaction.

(b) Conversion

Foreign currency monetary items are reported using

the closing rate. Non-monetary items which are carried

in terms of historical cost denominated in a foreign

currency are reported using the exchange rate at the

date of the transaction, and non-monetary items which

are carried at fair value or other similar valuation

denominated in a foreign currency are reported using

the exchange rates that existed when the values were

determined.

(c) Exchange Differences

Exchange differences arising on the settlement /

conversion of monetary items are recognised as income

or expenses in the year in which they arise.

(d) Forward Exchange Contracts not entered for trading or

speculation purpose.

The premium or discount arising at the inception of

forward exchange contracts is amortised as expenses

or income over the life of the respective contracts.

Exchange differences on such contracts are recognised

in the statement of profit and loss in the period in which

the exchange rates change. Any profit or loss arising on

cancellation or renewal of forward exchange contracts

is recognised as income or expense for the year.

(xii) Retirement Benefits :

(a) Retirement benefits in the form of Provident and

Pension Funds are defined contribution schemes and

are charged to the Profit and Loss Account of the year

when the contributions to the respective funds are

due. The Company has no obligations other than the

contribution payable to the respective trusts / funds.

(b) Gratuity liability being a defined benefit obligation

is provided for on the basis of actuarial valuation on

projected unit credit method made at the end of each

year.

(c) Long term compensated absences are provided for

based on actuarial valuation on projected unit credit

method made at the end of each year.

(d) Actuarial gains / losses are immediately taken to profit

and loss account and are not deferred.

(xiii) Taxation :

Tax expense comprises of current, deferred and fringe benefit

tax. Current income tax and fringe benefit tax are measured

at the amount expected to be paid to tax authorities in

accordance with Income Tax Act, 1961. Deferred income

tax reflects the impact of current year timing differences

between taxable income and accounting income for the year

and reversal of timing differences of earlier years.

The deferred tax for timing differences between the book

and tax profit for the year is accounted for using the tax

rates and laws that have been substantively enacted as of the

Balance Sheet date. Deferred tax asset is recognised only to

the extent that there is reasonable certainty that sufficient

future taxable income will be available against which such

deferred tax asset can be realised. If the company has carry

forward unabsorbed depreciation and tax losses, deferred

tax asset is recognised only to the extent that there is virtual

certainty supported by convincing evidence that sufficient

taxable income will be available in future against which such

deferred tax asset can be realised.

The carrying amounts of deferred tax assets are reviewed

at each balance sheet date. The company writes-down the

carrying amount of a deferred tax asset to the extent that

it is no longer reasonably certain or virtually certain, as the

case may be, that sufficient future taxable income will be

available against which deferred tax asset can be realised.

Any such write-down is reversed to the extent that it

becomes reasonably certain or virtually certain, as the case

may be, that sufficient taxable income will be available in

future.

At each balance sheet date the Company re-assesses

unrecognised deferred tax assets. It recognizes unrecognised

deferred tax assets to the extent that it has become reasonably

certain or virtually certain, as the case may be that sufficient

future taxable income will be available against which such

deferred tax assets can be realised.

Minimum Alternative Tax (MAT) credit is recognised as

an asset only when and to the extent there is convincing

evidence that the company will pay normal income tax during

SCHEDULE to the Consolidated Balance Sheet and Profit & Loss Account (Contd.)SCHEDULE – 23 : ACCOUNTING POLICIES AND NOTES TO ACCOUNTS (Contd.)


the specified period. In the year in which the MAT credit

becomes eligible to be recognised as an asset in accordance

with the recommendations contained in the guidance Note

issued by the Institute of Chartered Accountants of India,

the said asset is created by way of a credit to the profit

and loss account and shown as MAT Credit Entitlement. The

Company reviews the same at each balance sheet date and

writes down the carrying amount of MAT Credit Entitlement

to the extent there is no longer convincing evidence to the

effect that the Company will pay normal Income Tax during

the specified period.

(xiv) Segment Reporting :

(a) Identification of Segments :

The Company has identified that its operating segments

are the primary segments. The Company’s operating

businesses are organised and managed separately

according to the nature of products, with each

segment representing a strategic business unit that

offers different products and serves different markets.

The analysis of geographical segments is based on

the areas in which the customers of the Company are

located.

(b) Inter Segment Transfers :

The Company accounts for inter segment transfers at

mutually agreed transfer prices.

(c) Allocation of Common Costs :

Common allocable costs are allocated to each segment

on case to case basis applying the ratio, appropriate to

each relevant case. Revenue and expenses which relate

to the enterprise as a whole and are not allocable to

segments on a reasonable basis, are included under the

head “Unallocated – Common”.

The accounting policies adopted for segment reporting

are in line with those of the Company.

(xv) Fixed Assets Acquired under Lease :

(a) Finance Lease :

Assets acquired under lease agreements which

effectively transfer to the company substantially all

the risk and benefits incidental to ownership of the

leased items, are capitalized at the lower of the fair

value and present value of minimum lease payment at

the inception of the lease term and disclosed as leased

assets. Lease payments are apportioned between the

finance charges and the reduction of the lease liability

so as to achieve a constant rate of interest on the

remaining balance of their liability. Finance charges

are charged directly to the expenses account.

b) Operating Lease :

Leases where the lessor effectively retains substantially

all the risks and benefits of the ownership of the leased

assets are classified as operating leases. Operating lease

payments are recognised as an expense in the profit

and loss account.

(xvi) Share Issue Expenses :

Share issue expenses are adjusted against Securities Premium

Account.

(xvii) Earning per Share :

Basic Earning per Share is calculated by dividing the net

profit or loss for the year attributable to equity shareholders

by the weighted number of equity shares outstanding during

the year.

For the purpose of calculating diluted earning per share, net

profit or loss for the year attributable to equity share holders

and the weighted average number of shares outstanding

during the year are adjusted for the effect of all dilutive

potential equity shares.

(xviii) Excise Duty :

Excise Duty is accounted for at the point of manufacture of

goods and accordingly, is considered for valuation of stocks

as on the Balance Sheet date.

(xix) Hedging :

The company has adopted a policy to minimize risks

associated with foreign exchange fluctuations with respect

to its borrowings.

The premium or discount arising at the inception of forward

exchange contracts is amortised as expense or income over

the life of the contract.

(xx) Research Costs :

Research costs of revenue nature are expensed as and when

they are incurred, while capital expenditure is added to the

cost of the respective fixed assets.

(xxi) Cash and Cash equivalents :

Cash and cash equivalents in the cash flow statement comprise

of cash at bank and in hand and short-term investments with an

original maturity of three months or less.



(xxii) Provisions :

A provision is recognised when an enterprise has a present

obligation as a result of past event and it is probable that an

outflow of resources will be required to settle the obligation,

in respect of which a reliable estimate can be made.

Provisions made in terms of Accounting Standard 29 are not

discounted to its present value and are determined based on

management estimate required to settle the obligation, at

the Balance Sheet date. These are reviewed at each Balance

Sheet date and adjusted to reflect the current management

estimates.

(xxiii) Derivative Instruments :

As per the announcement made by the Institute of Chartered

Accountants of India, Derivative contracts, other than those

covered under AS-11, are marked to market on a portfolio

basis, and the net loss after considering the offsetting effect

of the underlying hedged item is charged to the income

statement. Net gains are ignored as a matter of prudence.

(xxiv) Contingencies :

Liabilities which are material and whose future outcome

cannot be ascertained with reasonable certainty are

treated as contingent and disclosed by way of notes to the

accounts.

3. Estimated amount of contracts remaining to be executed on Capital Account (net of advances)

and not provided for

1,371.16 8,186.52

4. Contingent Liabilities not provided for in respect of :–

(a) Demands / Claims by various Government Authorities and others not acknowledged as

debts:

(i) Excise Duty & Service Tax 705.71 773.85

(ii) Sales & Entry Tax 156.41 241.52

(iii) Duty under State Acts 230.18 155.05

(iv) Others 28.16 36.12

Total 1,120.46 1,206.54

(b) (i) Guarantees given to a bank against loans to cane growers 4,000.00 3,000.00

(ii) Against the above, the loan facilities actually availed as on the

Balance Sheet date 3,047.93 2,350.22

(c) Unredeemed bank guarantees 0.96 0.96

(d) Uncalled capital on partly paid shares held as Investments 123.60 123.60

(e) Bills discounted with banks [since realised Rs. 81.00 Lakhs (Rs. 49.26 Lakhs)] 176.00 66.54

5. Excise Duty & Cess on stocks represents differential excise

duty and cess on opening and closing stock of finished goods

/ by products.

6. Pending disposal of writs / appeals by the court with regard

to levy sugar prices for some years, Rs. 79.41 Lakhs (Rs. 79.41

Lakhs) (net) received as excess levy sugar price, against which

bank guarantees furnished by the Company for Rs. 84.88

Lakhs, are in force in terms of the Court Orders, is included

under the head ‘Current Liabilities’. Necessary adjustment

for the above amount together with interest, if any, in this


(Rs. in Lakhs)

As at 30th

June, 2009

As at 30th

June, 2008

regard will be made in the accounts as and when the matter

will be finally settled.

7. Pending decisions of various courts on writ petitions filed

by / against the Company, no credit has been taken in the

Profit and Loss Account in respect of certain realisations

aggregating to Rs. 52.05 Lakhs in earlier years, which

continue to be shown under the head “Liabilities for other

Finance” in Schedule – 12. Against the above, fixed deposit

receipts / bank guarantees for similar amount have been

furnished by the Company.



8. In view of the interim order dated 8th September, 2008 of the Hon’ble Supreme Court, the Company for its Hargaon and Rosa Sugar units in Uttar Pradesh has continued the provision towards Sugarcane purchases made during the year 2007-08 @ Rs. 110 per quintal as against the State Advised Price (SAP) of Rs. 125 per quintal. Pending final decision by the Hon’ble Supreme Court in this matter, the differential price of Rs. 2,422.74 Lakhs between SAP and the amount already provided, as stated above, has not been accounted for.

(Rs. in Lakhs)

As at 30th

June, 2009

As at 30th

June, 2008(A) Deferred Tax Liability

(i) Timing difference in depreciable assets 6,557.38 5,344.786,557.38 5,344.78

(B) Deferred Tax Asset(i) Carry forward unabsorbed depreciation 5,188.26 4,659.60(ii) Expenses allowable against taxable income in future years 739.03 1,117.42

5,927.29 5,777.02Net Deferred Tax Liability / (Asset) ( A – B ) 630.09 (432.24)

(Rs. in Lakhs)2008-2009 2007-2008

(i) Principal amount remaining unpaid to any supplier at the end of accounting year

(including retention money against performance). 317.74 408.06(ii) Interest due on above. 9.82 2.99

Total of (i) & (ii) 327.56 411.05(iii) Amount of interest paid by the Company to the suppliers in terms of section 16 of

the Act. - -(iv) Amount paid to the suppliers beyond the respective due date. 106.93 105.52(v) Amount of interest due and payable for the period of delay in payments (which have

been paid but beyond the due date during the year) but without adding the interest

specified under the Act. 5.31 4.92(vi) Amount of interest accrued and remaining unpaid at the end of accounting year. 15.13 7.91(vii) Amount of further interest remaining due and payable even in the succeeding

years, until such date when the interest dues as above are actually paid to the small

enterprise, for the purpose of disallowance as a deductible expenditure under section

23 of this Act. 10.04 -


9. Diminution of Rs. 180.86 Lakhs (Rs. 203.13 Lakhs) in the value of certain quoted investments based on the last quoted price has not been provided, as the breakup value of the said company supplemented by the market value as on 30th June, 2009, of the quoted investments held by the investee company is much higher than the corresponding book value.

10. a) The break-up of net Deferred Tax Liability as on 30th June, 2009 is as under:

b) Minimum Alternate Tax (MAT) credit entitlement of Rs.

836.59 Lakhs (Rs. 717.57 Lakhs), being available as tax

credit for set off in future years as per the Income Tax

Act, 1961, is carried forward for future adjustments

based on future profitability projections.

11. a) Pending execution of the conveyance deed, no

adjustment has been made in respect of 0.75 acre of

land sold by the Company in earlier years.

13. Based on the information / documents available with the Company, information as per the requirement of Section 22 of The Micro,

Small and Medium Enterprises Development Act, 2006 are as under:

b) An application filed by the Company for exemption of

3785.19 sq. mtrs. of land at Bamrauli under the Urban

Land (Ceiling and Regulation) Act, 1976, is pending

with the concerned authority.

12. A civil suit is pending against the Company’s sugar unit at

Dhadha Bujurg (Hata), which is already in operation. The

Company has been legally advised that the said civil suit is

not tenable as per law.



14 (a) The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service is entitled

to Gratuity on terms as per provisions of The Payment of Gratuity Act, 1972. The Company has got an approved gratuity fund

which has taken an insurance policy with Life Insurance Corporation of India (LIC) to cover the gratuity liabilities.

(b) The following tables summarize the components of net benefit expenses recognised in the Profit & Loss Account and the

funded status and amounts recognised in the balance sheet for gratuity.

(Rs. in Lakhs)2008-09 2007-08

(i) Net Employee Expense /(benefit)Current service cost 49.45 47.16Interest cost on benefit obligation 54.19 51.17Expected return on plan assets (53.23) (45.70)Net Actuarial Loss (Gain) recognised in the year (41.26) 16.54Total employer expense 9.15* 69.17* including Rs. 1.43 Lakhs (Rs. 0.53 Lakh) capitalised as pre-operative expenses

in Schedule-5(ii) Actual return on plan assets 155.39 47.45(iii) Benefit Asset / (Liability)

Fair Value of Plan Assets 840.81 628.78Defined benefit obligation 802.93 699.59Benefit Asset / (Liability) 37.88 (70.81)

(iv) Movement in benefit liabilityOpening defined benefit obligation 699.59 665.13Interest cost 54.19 51.17Current service cost 49.45 47.16Benefits paid (61.20) (82.16)Actuarial (gains) / losses on obligation 60.90 18.29Closing benefit obligation 802.93 699.59

(v) Movement in fair value of plan assetsOpening fair value of plan assets 628.78 533.36Expected Return on plan assets 53.23 45.70Contribution by employer 117.84 130.13Benefits paid (61.20) (82.16)Actuarial gains / (losses) on obligation 102.16 1.75Closing fair value of plan assets 840.81 628.78

(vi) The major categories of plan assets as a percentage of the fair value of total plan assetsFunded with insurer 100% 100%

(vii) The Principal actuarial assumptions are as follows: Discount rate 7.6% 8.1%Expected Return on plan assets 8.1% 8.5%Salary Increase 5% 5%

Withdrawal rates Varying between 1% to 7% per annum

depending upon the duration and age of the

employeesThe overall expected rate of return on assets is assumed to be 8.10% per annum as at 1st July, 2008 i.e. the same as discount

rate as at 30th June, 2008 because the assets are primarily invested in Government Bonds.



(viiii) Amount incurred as expense for defined contribution to

Provident / Pension fund plan Rs. 224.04 Lakhs (Rs. 214.62

Lakhs) [including Rs. 12.11 Lakhs (Rs. 6.19 Lakhs)] capitalised

as pre-operative expenses in Schedule-5).

(ix) The estimates of future salary increases considered in

(Rs. in Lakhs)

2008-09 2007-08

(xi) The details for the current and previous year are as follows :

Defined Benefit Obligation 802.93 699.59

Plan Assets 840.81 628.78

Surplus / (Deficit) 37.88 (70.81)

Experience Adjustments on Plan Liabilities Not Available *

Experience Adjustments on Plan Assets Not Available *

* The management has relied on the overall actuarial valuation conducted by the actuary. However, experience adjustments on plan

liabilities and assets are not readily available and hence not disclosed.

(c) The following items are included under other heads of expenses in the Profit & Loss Account :

(Rs. in Lakhs)

2008 2009 2007 2008

Salaries & Wages 490.38 580.49

Stores and Spares, etc. 1,083.96 1,171.85

Insurance 0.20 0.42


actuarial valuation, take account of inflation, seniority,

promotion and other relevant factors, such as supply and

demand in the employment market.

(x) The Company expects to contribute Rs. 120 Lakhs to Gratuity

fund in 2009-2010.

(b) Gratuity amount appearing in schedule 19 is after

adjustment of surplus of Rs. 37.88 Lakhs as indicated above,

being the excess of plan assets over the actuarial liability as

on the balance sheet date.

15. The subsidiary companies have given undertakings to a

bank / financial institution not to transfer, assign, pledge,

hypothecate or otherwise dispose of their shareholding in

Sutlej Textiles & Industries Ltd. and Modern DiaGen Services

Ltd. without their prior approval in writing till the loans

granted by them to these Companies remain outstanding.

16. (a) The company has raised Rs. 2,323.01 Lakhs (including

securities premium Rs. 1,935.84 Lakhs) by issue of

equity shares of Rs. 10 each at a premium of Rs. 50

per equity share on Rights basis during the year and

has utilised the proceeds of the issue for repayment

of a part of the working capital borrowings as well as

expenses incurred on such rights issue.

(b) In addition to equity shares allotted on rights basis, as

stated above 39,98,240 detachable warrants were also

allotted to the shareholders in terms of the said rights

issue entitling them to apply for one equity share of

Rs. 10 each for each warrant held on the date to be

declared by the Company during the warrant exercise

period between 12th March, 2009 to 11th September,

2012 at a price to be determined in the manner as

indicated in the Letter of Offer.

(c) Rights Shares Issue expenses include Rs. 22.00 Lakhs

paid to the Statutory Auditors.

17. (a) Salaries and Wages relating to various repairs have not

been charged separately to the repairs, as the amount

thereof has not been demarcated.

(b) Consumption of raw materials, stores, spare parts and

packing materials includes profit/loss on sale thereof.



18. Earning per Share (EPS) :

In terms of Accounting Standard - 20, the calculation of EPS is given below :

(Rs. in Lakhs)

2008-09 2007-08

Profit / (Loss) as per Profit & Loss Account (Rs. in Lakhs) 1,960.41 (346.16)

Weighted average number of Equity Shares outstanding during the year (Rs. 10 each) 2,05,29,746 1,81,73,820

Basic and Diluted earnings per share (Rs.) 9.55 (1.90)

The impact of diluted shares, if any, arising out of the exercise of detachable warrants as indicated in Note no. 16 above, has not

been considered for the computation of EPS, since the quantum of such dilutive option is not presently ascertainable.

19. Operating lease :

Certain office premises, godowns, etc. are obtained on operating lease. The lease term is for 1-3 years and renewable for further

period either mutually or at the option of the Company. There is no escalation clause in the lease agreement. There are no

restrictions imposed by lease agreements. There are no subleases. The leases are cancellable.

(Rs. in Lakhs)

Particulars 2008-2009 2007-2008

Lease payments made for the year 79.24 76.05

Contingent rent recognised in the profit and loss account Nil Nil

20. The movements in provision for warranties during the year are as follows :

(Rs. in Lakhs)

Balance as at

01.07.2008

Additions during the

year

Amount used during

the year

Balance as at

30.06.2009

Warranties 8.12 5.78 6.79 7.11



21. The Consolidated segment information as at and for the year ended 30th June, 2009 are as below:

(Rs. in Lakhs)

Sugar SpiritsCo-

generation

Food


(a) Revenue (net of excise duty and cess)

External Sales 47,537.74 5,017.13 587.06 2,507.44 - 55,649.37

(25,839.51) (4,677.10) (725.57) (1,913.72) (-) (33,155.90)

Inter-segment Sales 4,082.09 13.40 1,490.57 - - 5,586.06

(3,388.80) (18.10) (1,661.37) (-) (-) (5,068.27)

Total Revenue 51,619.83 5,030.53 2,077.63 2,507.44 - 61,235.43

(29,228.31) (4,695.20) (2,386.94) (1,913.72) (-) (38,224.17)

(b) Results

Segment Results 7,907.55 -64.42 379.01 195.06 -0.02 8,417.18

(1,761.34) (1,025.79) (553.10) (79.64) (-0.56) (3,419.31)

Unallocated expenses net of unallocated Income 427.85

(263.19)

Operating Profit 7,989.33

(3,156.12)

Interest & Finance Charges (net) 4,941.53

(3,677.81)

Income, Wealth & Fringe Benefit Tax (net) 144.08

(32.66)

MAT Credit Entitlement/(-) Reversal 119.02

(-3.93)

Deferred Tax Charge/(Credit) 1,062.33

(-212.12)

Net Profit/(-) Loss 1,960.41

(-346.16)

(c) Total Assets

Segment Assets 70,788.27 13,664.38 6,051.99 1,176.18 3.00 91,683.82

(73,144.09) (12,827.55) (6,488.18) (1,070.87) (3.08) (93,533.77)

Unallocated Assets 4,138.61

(4,390.69)

95,822.43

(97,924.46)

(d) Total Liabilities

Segment Liabilities 8,919.02 649.20 28.73 790.96 0.12 10,388.03

(9,386.30) (862.24) (41.03) (735.26) (0.15) (11,024.98)

Unallocated Liabilities 70,303.72

(75,498.60)

80,691.75

(86,523.58)



(e) Other Information (i) Non cash expenses 4.02 - - - - 4.02

(6.55) (-) (-) (-) (-) (6.55)(ii) Capital Expenditure 11,360.20 696.02 71.76 4.22 - 12,132.20

(11,898.40) (8,013.00) (310.51) (19.55) (-) (20,241.46)(iii) Depreciation for the year 1,741.85 521.60 366.20 5.23 0.03 2,634.91

(1,731.03) (181.52) (314.39) (5.05) (0.03) (2,232.02)(f) Geographical Segments

RevenueDomestic 54,969.87

(32,851.00)Overseas (Including through third party) 679.50

(304.90)55,649.37

(33,155.90)

Notes :

(i) Business Segment: The business segments have been identified on the basis of the products of the Company. Accordingly,

the Company has identified “Sugar”, “Spirits”, “Co-generation” and “Food processing” as the operating segments:

Sugar - Consists of manufacture and sale of Sugar, Molasses & Bagasse

Spirits - Consists of manufacture and sale of Industrial Spirits (including Denaturants), Fusel Oil & Bio-Compost

Co-generation - Consists of generation and transmission of Power

Food Processing Products - Consists of Canned Fruits & Vegetables, Jams, Jellies, Squashes & Juices

Others – Consist of Miscellaneous business comprising of less than 10% revenues.

(ii) Geographical Segment: The Company primarily operates in India and therefore the analysis of geographical segment is

demarcated into its Indian and Overseas Operations.

(iii) The Company has common fixed assets located in India for producing goods for domestic and overseas markets. Hence,

separate figures for fixed assets/additions thereof cannot be furnished.

21. The Consolidated segment information as at and for the year ended 30th June, 2009 are as below: (Contd.)

(Rs. in Lakhs)

Sugar Spirits Co-

generation

Food

processing

Others Total

22. Related Party Disclosure :

a. Names of the related parties :

Key Management Personnel Mr. Chandra Shekhar Nopany – Chairman-cum-Managing Director Mr. V.P. Singh – Executive President, Hargaon Unit Mr. Chandra Mohan – Executive President, Narkatiaganj UnitMr. B.K. Malpani – Executive President, Rosa Unit

(From 12th September,2008)Mr. P.K. Saini – Executive President, Hata Unit Mr. S.K. Premi – Executive President, Allahabad Unit Mr. Sanjay Mukherjee – Company Secretary (Upto 28th February,2009) Mr. G.N. Pareek – Company Secretary Secretary (From 1st March,2009)

Relatives of Key Management Personnel Mrs. Nandini Nopany – Mother of Shri Chandra Shekhar Nopany

Enterprises owned or significantly influenced

by Key Management Personnel and their

relatives

Upper Ganges Sugar & Industries Ltd.

Sutlej Textiles & Industries Ltd.

SIL Investments Ltd.

SCM Investment & Trading Co. Ltd.RTM

Investment & Trading Co. Ltd.

Uttar Pradesh Trading Co. Ltd.



(b) Aggregated Consolidated Related Party Disclosures as at and for the year ended 30th June, 2009 (Rs. in Lakhs)

Key Management

Personnel

Relatives of

Key Management

Personnel


Key Management

Personnel or their relatives TotalTransaction

Value

Balance

Outstanding

as on 30.06.

2009

Transaction

Value

Balance

Outstanding

as on 30.06.

2009

Transaction

Value

Balance

Outstanding

as on 30.06.

2009

Transaction

Value

Balance

Outstanding

as on 30.06.

2009

Sale of Goods & Services

Upper Ganges Sugar & Industries Ltd. - - - - 35.38 - 35.38 -

( - ) ( - ) ( - ) ( - ) (206.66) ( - ) (206.66) ( - )

Purchase of Goods & Services


( - ) ( - ) ( - ) ( - ) (37.17) ( - ) (37.17) ( - )

Sale of Fixed Assets


( - ) ( - ) ( - ) ( - ) (130.66) ( - ) (130.66) ( - )

Purchase of Fixed Assets


( - ) ( - ) ( - ) ( - ) (96.11) ( - ) (96.11) ( - )

Interest Paid

Sutlej Textiles & Industries Limited - - - - 199.27 - 199.27 -

( - ) ( - ) (340.24) ( - ) (340.24) ( - )

SIL Investments Ltd. - - - - 73.28 - 73.28 -

( - ) ( - ) ( - ) ( - ) (184.91) ( - ) (184.91) ( - )

SCM Investment & Trading Co. Ltd. - - - - 432.32 - 432.32 -

( - ) ( - ) ( - ) ( - ) (172.05) ( - ) (172.05) ( - )

RTM Investment & Trading Co. Ltd. - - - - 620.88 - 620.88 -

( - ) ( - ) (186.85) ( - ) (186.85) ( - )

Loans/Intercorporate deposits repaid

Sutlej Textiles & Industries Limited - - - - 3,500.00 - 3,500.00 -

( - ) ( - ) ( - ) ( - ) (3,000.00) ( - ) (3,000.00) ( - )

SIL Investments Limited - - - - 1,675.00 - 1,675.00 -

( - ) ( - ) ( - ) ( - ) (250.00) ( - ) (250.00) ( - )

SCM Investment & Trading Co. Ltd. - - - - 855.00 - 855.00 -

( - ) ( - ) ( - ) ( - ) (300.00) ( - ) (300.00) ( - )

RTM Investment & Trading Co. Ltd. - - - - 4,060.00 - 4,060.00 -

( - ) ( - ) ( - ) ( - ) (2,150.00) ( - ) (2,150.00) ( - )

Loans/Intercorporate deposits Taken


( - ) ( - ) ( - ) ( - ) (4,000.00) (3,000.00) (4,000.00) (3,000.00)

SIL Investments Limited - - - - 100.00 - 100.00 -

( - ) ( - ) ( - ) ( - ) (1,300.00) (1,575.00) (1,300.00) (1,575.00)

SCM Investment & Trading Co. Ltd. - - - - 525.00 2,570.00 525.00 2,570.00

( - ) ( - ) ( - ) ( - ) (3,200.00) (2,900.00) (3,200.00) (2,900.00)

RTM Investment & Trading Co. Ltd. - - - - 3,030.00 3,420.00 3,030.00 3,420.00

( - ) ( - ) ( - ) ( - ) (6,600.00) (4,450.00) (6,600.00) (4,450.00)



Balance Outstanding (net)

Debit / (-) Credit :

Upper Ganges Sugar & Industries Ltd. - - - - - 52.59 - 52.59

( - ) ( - ) ( - ) ( - ) ( - ) (-48.47) ( - ) (-48.47)

Dividend Received


( - ) ( - ) ( - ) ( - ) (79.80) ( - ) (79.80) ( - )

SIL Investments Limited - - - - 17.58 - 17.58 -

( - ) ( - ) ( - ) ( - ) (17.58) ( - ) (17.58) ( - )

Remuneration

Mr. V.P.Singh 27.22 0.79 - - - - 27.22 0.79

(19.06) (1.18) ( - ) ( - ) ( - ) ( - ) (19.06) (1.18)

Mr. Chandra Mohan 28.56 0.90 - - - - 28.56 0.90

(17.41) (0.90) ( - ) ( - ) ( - ) ( - ) (17.41) (0.90)

Mr. P.K. Saini 11.97 0.90 - - - - 11.97 0.90

(9.61) (0.08) ( - ) ( - ) ( - ) ( - ) (9.61) (0.08)

Mr. S.K. Premi 15.29 0.93 - - - - 15.29 0.93

(12.43) (0.11) ( - ) ( - ) ( - ) ( - ) (12.43) (0.11)

Mr. B.K. Malpani 9.77 1.00 - - - - 9.77 1.00

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - )

Mr. Sanjay Mukherjee 8.33 - - - - - 8.33 -

(5.58) (0.18) ( - ) ( - ) ( - ) ( - ) (5.58) (0.18)

Mr. G.N. Pareek 3.14 - - - - - 3.14 -

( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - ) ( - )

NOTE : Remuneration paid to Mr. C. S. Nopany, Chairman-cum-Managing Director, is disclosed in Schedule 21 to the Accounts.

(b) Aggregated Consolidated Related Party Disclosures as at and for the year ended 30th June, 2009 (Contd.) (Rs. in Lakhs)

Key Management Personnel

Relatives of Key Management

Personnel


Key Management

Personnel or their relatives Total

Transaction Value

Balance Outstandingas on 30.06.

2009

Transaction Value


2009

Transaction Value


2009

Transaction Value


2009

23. Figures given in brackets are for the previous year and the same have been regrouped and / or rearranged, wherever necessary.


Signatories to Schedules - 1 to 23




DIRECTORS’ REPORTTo

The Shareholders,

Champaran Marketing Co. Ltd.

Your Directors have pleasure in presenting their Report and the

audited Accounts of the Company for the year ended 31st March,

2009.

2. Financial Results : Rs. Rs.

The Profit & Loss Account

shows a profit of10,10,047

To which is added the balance

brought forward from the

previous year

70,95,092

Making a total of 81,05,139

Out of this provisions has been

made for Reserve Fund2,25,000

Balance to be carried forward 78,80,139

3. Dividend :

Your Directors have not recommended any dividend.

4. Directors :

Shri Sanjay Mukherjee resigned from the Directorship of the

Company with effect from 16th April, 2009.

Shri Sunil Lohia retires from the Board by rotation and being

eligible offers himself for re-appointment.

5. Auditors :

The Auditors, Messrs K.P. Gutgutia & Co., Chartered

Accountants, retire and are eligible for re-appointment.

6. Conservation of Energy, Technology Absorption, Foreign

Exchange Earnings and Outgo :

As the Company has no manufacturing activity, it is

not required to furnish any information with regard to

conservation of energy. There is no information to furnish

with regard to technology absorption. During the year, no

foreign exchange was earned or used by the Company.

7. Particulars of Employees :

The provisions of Section 217 (2A) of the Companies Act,

1956 are not applicable to the Company as there is no

employee.

8. Directors’ Responsibility Statement :

Your Directors confirm that -

i) in preparation of the annual accounts, the applicable

accounting standards have been followed along with

proper explanation relating to material departures;

ii) they have selected such accounting policies and applied

them consistently and made judgements and estimates

that are reasonable and prudent so as to give a true




iii) they have taken proper and sufficient care for the

maintenance of adequate accounting records in

accordance with the provisions of the Companies

Act, 1956 for safeguarding the assets of the Company

and for preventing and detecting fraud and other

irregularities;

iv) they have prepared the annual accounts on a going

concern basis.

9. Compliance Certificate :

A copy of the Compliance Certificate from Messrs A.M.

Bubna & Associates, Company Secretaries, as required under

Section 383A of the Companies Act, 1956 is attached and

forms a part of this Report.


Kolkata - 700 001 R. N. JHUNJHUNWALA

Dated : 16th April, 2009 T. R. CHACHAN Directors


COMPLIANCE CERTIFICATETo

The Members

We have examined the registers, records, books and papers of

Champaran Marketing Company Limited (the Company) as required

to be maintained under the Companies Act, 1956, (the Act) and

the rules made thereunder and also the provisions contained in

the Memorandum and Articles of Association of the Company for

the financial year ended on 31st March, 2009 (Financial year). In

our opinion and to the best of our information and according to

the examinations carried out by us and explanations furnished

to us by the Company, its officers and agents, we certify that in

respect of the aforesaid financial year:

1. The Company has kept and maintained all registers as stated

in Annexure ‘A’ to this certificate, as per the provisions of

the Act and the rules made thereunder and all entries therein

have been duly recorded.

2. The Company has duly filed the forms and returns as stated

in Annexure ‘B’ to this certificate, with the Registrar of

Companies within the time prescribed under the Act and the

rules made thereunder.

3. The Company, being a public limited company, clause 3 is

not applicable.

4. The Board of Directors duly met 6 (Six) times respectively

on 16th April, 2008, 2nd June, 2008, 23rd June, 2008, 24th

September, 2008, 3rd October, 2008 & 27th January, 2009

in respect of which meetings proper notices were given and

the proceedings were properly recorded and signed in the

Minutes Book maintained for the purpose.

5. The Company was not required to close its Register of

Members during the financial year since it is not listed with

any stock exchange.

6. The Annual General Meeting for the financial year ended

on 31st March, 2008 was held on 16th June, 2008 after

giving due notice to the members of the Company and the

resolutions passed thereat were duly recorded in Minutes

Book maintained for the purpose.

7. No Extra Ordinary General Meeting was held during the

financial year.

8. The Company has not advanced any loans to its directors or

persons or firms or companies referred to under Section 295

of the Act.

9. The Company has not entered into any contracts falling

within the purview of Section 297 of the Act.

10. The Company has made necessary entries in the register

maintained under Section 301 of the Act.

11. As there were no instances falling within the purview of

Section 314 of the Act the Company was not required to

obtain any approvals from the Board of Directors, members

or Central Government.

12. The Company has not issued any duplicate share certificates

during the financial year.

13. The company has :

a. not allotted/ transferred/ transmitted securities during

the financial year.

b. not deposited any amount in a separate Bank Account

as no dividend was declared during the financial year.

c. not posted warrants to any member of the Company as

no dividend was declared during the financial year.

d. no amount in unpaid dividend account, application

money due for refund, matured deposits, matured

debentures and the interest accrued thereon and as

such it was not required to transfer any amount to

Investor Education and Protection Fund.

e. duly complied with the requirements of section 217 of

the Act.

14. The Board of Directors of the Company is duly constituted

and the appointment of a director was duly made.

15. The Company has not appointed any Managing Director/

Whole-time Director / Manager during the financial year as

there was no need to do so.

16. The Company has not appointed any sole-selling agents


17. The Company was not required to obtain any approvals of

the Central Government, Company Law Board, Regional

Director, Registrar of Companies or such other authorities

as may be prescribed under the various provisions of the Act


18. The Directors have disclosed their interest in other firms/

companies to the Board of Directors pursuant to the

provisions of the Act and the rules made thereunder.

19. The Company has not issued any shares, debentures or other

securities during the financial year.

20. The Company has not bought back any shares during the

financial year.

Champaran Marketing Company Limited 100

COMPLIANCE CERTIFICATE (Contd.)

21. The Company has not redeemed any Preference shares during

the financial year.

22. There were no transactions necessitating the Company to

keep in abeyance the rights to dividend, rights shares and

bonus shares pending registration of transfer of shares.

23. The Company has not invited / accepted any deposits under

Section 58A of the Act during the financial year.

24. The Company has not made any borrowings during the

financial year ended 31st March, 2009.

25. The provisions of Section 372 A are not applicable to the

Company as its principal business is acquisition of shares,

stocks, debentures or other securities.

26. The Company has not altered the provisions of the

Memorandum with respect to the situation of the Company’s

registered office from one state to another during the year

under scrutiny.


Memorandum with respect to the objects of the Company

during the year under scrutiny.


Memorandum with respect to name of the Company during

the year under scrutiny.


Memorandum with respect to share capital of the Company


30. The Company has not altered its Articles of Association


31. There was no prosecution initiated against or show cause

notices received by the Company and no fines or penalties or

any other punishment was imposed on the Company during

the financial year for offences under the Act.

32. Since the Company has no employees, it didn’t receive any

money as security from its employees during the financial

year.

33. Since the Company has no employees, the provisions of EPF

& Miscellaneous Provisions Act, 1952 are not applicable,

consequently it was not required to deduct any contribution

towards Provident Fund during the financial year.

Annexure A

Registers / Records as maintained by the Company

1. Register of Transfers u/s 108/111.

2. Register of Members u/s 150.

3. Minutes Book of Board Meetings u/s 193.

4. Minutes Book of General Meetings u/s 193.

5. Books of Accounts u/s 209.

6. Register of Contracts, Companies and firms in which

directors are interested u/s 301.

7. Register of Directors, Managing Director, Manager and

Secretary u/s 303.

8. Register of Directors’ Shareholding u/s 307.

9. Register of Loans & Investments.

10. Application for and allotment of shares.

11. Copies of Annual Return u/s 163

Annexure B

Forms and Returns as filed by the Company with Registrar of

Companies (ROC), Regional Director, Central Government or other

authorities during the financial year ended 31st March, 2009.

1. Balance Sheet in Form No. 23AC along with Profit and Loss

Account in Form 23ACA Filed u/s 220 on 09.07.2008 for the

financial year ended on 31.03.2008 with R.O.C.

2. Compliance Certificate in Form No. 66 filed u/s 383A on

08.07.2008 for the financial year ended on 31.03.2008 with

R.O.C.

3. Annual Return in Form No.20B Filed u/s 159 on 1.08.2008

made upto 16.06.2008 with R.O.C.

For A.M. BUBNA & ASSOCIATES (Company Secretaries)105, Cotton Street Name of the Co. Secretary : Ashish BubnaKolkata - 700 007 (Partner)Dated : 16th April, 2009 C.P. No. 3569


AUDITORS’ REPORT

To

The Members,

1. We have audited the attached Balance Sheet of Champaran

Marketing Company Limited as at 31st March, 2009 and

the Profit & Loss Account for the year ended on that

date annexed thereto. These financial statements are

the responsibility of the Company’s management. Our

responsibility is to express an opinion on these financial

statements based on our audit.

2. We conducted our audit in accordance with the auditing

standards generally accepted in India. Those standards require

that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free

of material misstatement. An audit includes examining, on a

test basis, evidence supporting the amounts and disclosures

in the financial statements. An audit also includes assessing

the accounting principles used and significant estimates

made by the management, as well as evaluating the overall

financial statement presentation. We believe that our audit

provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003

(as amended), issued by the Central Government of India in

terms of sub-section (4A) of Section 227 of the Companies

Act, 1956, we enclose in the annexure, a statement on the

matters specified in paragraphs 4 & 5 of the said Order.

4. Further to our comments in the Annexure referred to above,

we report that :-

i) We have obtained all the information and

explanations, which to the best of our knowledge and

belief, were necessary for the purposes of our audit.

ii) In our opinion, proper books of account as required

by law have been kept by the Company, so far as

appears from our examination of those books.

iii) The Balance Sheet and the Profit & Loss Account,

dealt with by this report, are in agreement with the

books of account as submitted to us.

iv) In our opinion, the Balance Sheet and Profit & Loss

Account dealt with by this report comply with the

Accounting Standards referred to in sub-section (3C)

of Section 211 of the Companies Act, 1956.

v) On the basis of written representations received from

the Directors as on 31st March, 2009 and taken on

record by the Board of Directors, we report that none

of the directors is disqualified as on 31st March, 2009

from being appointed as director in terms of clause

(g) of sub-section (1) of Section 274 of the Companies

Act, 1956.

vi) In our opinion and to the best of our information and

according to the explanations given to us, the said

accounts read together with the notes thereon, give

the information required by the Companies Act, 1956

in the manner so required and give a true and fair

view in conformity with the accounting principles

generally accepted in India :-

a) in the case of the Balance Sheet, of the state

of affairs of the Company, as at 31st March,

2009; and

b) in the case of the Profit & Loss Account, of the

Profit of the Company for the year ended on

that date.

For K.P. GUTGUTIA & CO.


2, Princep Street (K.P. GUTGUTIA)

Kolkata - 700 072 Proprietor

Dated : 16th April, 2009 Membership No. 7250


1. The Company has no fixed assets, as such the question of maintenance of fixed assets records and physical verification thereof does not arise.

2. The Company has no manufacturing and / or trading activities and as such the question of having any stock and maintenance of records in respect thereof and physical verification of inventory does not arise.

3. The Company has not taken / granted any loans, secured or unsecured, from/to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956.

4. The Company has not purchased any goods and fixed assets and also there is no sale of goods and services during the year and as such the question of having any internal control system with regard to purchase of inventory, fixed assets and sale of goods does not arise.

5. There was no transaction which required to be entered in the register in pursuance of Section 301 of the Companies Act, 1956.

6. The Company has not accepted any deposits from the public.

7. The internal audit was conducted by a service company and in our opinion the internal audit system is commensurate with the size of the Company and the nature of its business.

8. The Company is not required to maintain any cost records under Section 209(1)(d) of the Companies Act, 1956.

9. The Company has been regular in depositing undisputed

statutory dues with the appropriate authorities as applicable.

As the Company has no employee and no manufacturing

and/or trading activities are carried on by the Company the

question of payment of provident fund, employees’ state

insurance, sales-tax, customs duty, excise duty, service tax,

cess, etc., does not arise. According to the information and

explanations given to us no undisputed amounts payable in

respect of statutory dues were outstanding as at 31st March,

2009 for a period of more than six months from the date

they became payable. There are no dues outstanding in

respect of statutory dues on account of any dispute.

10. The Company has no accumulated losses at the end of the financial year and it has not incurred any cash losses in the current and immediate preceding financial year.

11. In our opinion and according to the information and explanations given to us, the Company has not taken any

loan from financial institutions, bank or debenture holders, as such, the question of any default in repayment does not arise.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. In our opinion and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi / mutual benefit fund / societies.

14. In respect of dealing in shares, securities, debentures and other investments, in our opinion and according to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares, securities, debentures and other investments have been held by the Company in its own name.

15. The Company has not given any guarantee for loans taken by others from banks and financial institutions.

16. The Company has not taken any term loan from any financial institutions or bank. The Company does not have any borrowing by way of debentures.

17. We have been informed by the management that no funds were raised either on short term basis or on long term basis.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Companies Act, 1956.

19. The Company has not issued any debentures during the year.

20. The Company has not raised any money through a public issue during the year.

21. Based upon the audit procedures performed and as per the information and explanations given by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



2, Princep Street (K. P.GUTGUTIA)

Kolkata - 700 072 Proprietor

Dated : 16th April, 2009 Membership No. 7250

ANNEXURE REFERRED to in Paragraph 3 of our Report of Even Date


BALANCE SHEETas at 31st March, 2009

SCHEDULE 31st March, 2009

Rs.

31st March, 2008

Rs.

SOURCES OF FUNDS

Shareholders’ Fund

Share Capital 1 1,08,72,500 1,08,72,500

Reserves & Surplus 2 3,98,50,139 3,88,40,092

5,07,22,639 4,97,12,592

Loan

Unsecured Loan

The Oudh Sugar Mills Ltd.,

The holding company (not bearing interest) 22,00,000 32,50,000

22,00,000 32,50,000

5,29,22,639 5,29,62,592


Investments 3 5,29,15,352 5,29,15,352

Current Assets, Loans & Advances

Current Assets 4 15,287 53,240

15,287 53,240

Less : Current Liabilities & Provisions 5

Current Liabilities 8,000 6,000

Provisions - -

8,000 6,000

Net Current Assets 7,287 47,240

5,29,22,639 5,29,62,592

Accounting Policies and Notes on Accounts 7

In terms of our attached Report of even date.




Kolkata - 700 072 Proprietor R. N. JHUNJHUNWALADated : 16th April, 2009 Membership No. 7250 T. R. CHACHAN Directors


PROFIT & LOSS ACCOUNTfor the year ended 31st March, 2009

SCHEDULE 2008-2009

Rs.

2007-2008

Rs.

INCOME

Dividend 11,05,852 18,14,342

11,05,852 18,14,342

EXPENDITURE

Directors’ Fees 4,600 4,000

Other Expenses 6 91,205 78,167

95,805 82,167

Profit before Taxation 10,10,047 17,32,175

Less : Provision for Taxation - 8,399

Profit after Taxation 10,10,047 17,23,776

Add : Balance brought forward from last year 70,95,092 57,21,316

Profit available for Appropriation 81,05,139 74,45,092

APPROPRIATIONS

Transfer to Reserve Fund 2,25,000 3,50,000

Balance carried to Balance Sheet 78,80,139 70,95,092

81,05,139 74,45,092

In terms of our attached Report of even date.


31st March, 2009

Rs.

31st March, 2008

Rs.

SCHEDULE - 1 : SHARE CAPITALAuthorised

6,406 Ordinary Shares of Rs. 10 each 64,060 64,060

59,74,376 Ordinary Shares of Rs. 2.50 each 1,49,35,940 1,49,35,940

2,50,000 Peference Shares of Rs. 10 each 25,00,000 25,00,000

1,75,00,000 1,75,00,000 Issued

43,50,000 Ordinary Shares of Rs. 2.50 each 1,08,75,000 1,08,75,000

1,08,75,000 1,08,75,000 Subscribed & Paid-up

43,49,000 Ordinary Shares of Rs. 2.50 each fully

paid up 1,08,72,500 1,08,72,500

1,08,72,500 1,08,72,500

Notes : 1) Out of 43,49,000 Ordinary Shares 1,08,750 Shares have been allotted as fully paid Bonus Shares by capitalisation of General Reserve.2) The entire Subscribed Ordinary Share Capital is held by The Oudh Sugar Mills Ltd., the holding company.




Kolkata - 700 072 Proprietor R. N. JHUNJHUNWALADated : 16th April, 2009 Membership No. 7250 T. R. CHACHAN Directors



31st March, 2009

Rs.

31st March, 2008

Rs.

SCHEDULE - 2 : RESERVES & SURPLUSShare Premium Account

As per last Account 86,95,000 86,95,000 Reserve Fund

As per last Account 60,50,000 57,00,000 Add : Transfer from Profit & Loss Account 2,25,000 3,50,000

62,75,000 60,50,000 General Reserve

As per last Account 1,50,00,000 1,50,00,000 Capital Redemption Reserve

As per last Account 20,00,000 20,00,000 Surplus as per Profit & Loss Account 78,80,139 70,95,092

3,98,50,139 3,88,40,092

No. of SharesFace Value

Rs.31st March, 2009

Rs.31st March, 2008

Rs.

SCHEDULE - 3 : INVESTMENTS (At Cost)LONG TERM

Quoted

Equity Shares (Fully Paid)

Chambal Fertilisers & Chemicals Ltd. 3,02,500 10 55,00,000 55,00,000

New India Retailing & Investment Ltd. 94,077 10 75,23,560 75,23,560

Upper Ganges Sugar & Industries Ltd. 2,60,841 10 1,95,59,479 1,95,59,479

SIL Investments Ltd. 1,99,773 10 38,14,988 38,14,988

Sutlej Textiles & Industries Ltd. 2,06,540 10 64,41,985 64,41,985

Manavta Holdings Ltd. 72,000 10 3,52,755 3,52,755

4,31,92,767 4,31,92,767 UnquotedEquity Shares (Fully Paid)

Taparia Ltd. 3,500 10 40,105 40,105

Shree Vihar Properties Ltd. 7,47,692 10 65,76,920 65,76,920

Modern Diagen Services Ltd. 10,556 10 1,05,560 1,05,560

Hargaon Properties Ltd. 2,00,000 10 20,00,000 20,00,000

Leas Communications Ltd. (Value written off) 21,000 10 - -

Chandausi Rice Mills Ltd. (Value written off) 1,000 10 - -

Swadeshi Jute Machinery Corporation

Ltd.(In liquidation) (Value written off) 15,000 10 - -

Maruti Ltd. (In liquidation) (value written off) 10,000 10 - -

87,22,585 87,22,585 Equity Shares (Partly Paid)

Modern Diagen Services Ltd. 5,00,000 2 10,00,000 10,00,000

97,22,585 97,22,585 5,29,15,352 5,29,15,352

Aggregate Book Value of Quoted Investments 4,31,92,767 4,31,92,767 Aggregate Book Value of Unquoted Investments 97,22,585 97,22,585

5,29,15,352 5,29,15,352 Market Value of Quoted Investments 4,10,28,318 7,21,74,630



SCHEDULES to the Profit & Loss Account

31st March, 2009

Rs

31st March, 2008

Rs.SCHEDULE - 4 : CURRENT ASSETSCash & Bank Balances

With Scheduled Banks on Current Accounts 15,287 53,240 15,287 53,240

SCHEDULE - 5 : CURRENT LIABILITIES & PROVISIONSCurrent Liabilities

Sundry Creditors for Expenses 8,000 6,000 8,000 6,000

Provisions For Taxation - - For Proposed Dividend - - For Dividend Tax - -

- - 8,000 6,000

2008 - 2009

Rs.

2007 - 2008

Rs.

SCHEDULE - 6 : OTHER EXPENSES Rates & Taxes 7,300 7,300 Service Charges 49,439 44,944 General Charges 12,521 19,423 Auditors’ Remuneration :

As Audit Fees 8,000 6,000 For Certificate etc. 13,945 500

91,205 78,167

1. Accounting Policies

a) Recognition of Income & Expenditure :

Income & Expenditure are recognised on accrual basis.

b) Investments :

Long-term Investments are considered at cost on individual basis, unless there is permanent decline in value thereof, in which case adequate provision is made against the diminution in the value of Investments.

2. Diminution of Rs. 93.08 lakhs in the value of certain quoted investments based on the last quoted price, has not been provided as the break up value of the said shares supplemented by the market value as on 30th June, 2008, of the quoted investments held by the investee company, is much higher than the corresponding Book Value.

3. The Company has given undertaking to financial institution/bank not to transfer, assign, pledge, charge or create any lien or otherwise dispose of its shareholdings present or future in Damanganga Processors Ltd., without their prior approval in writing till the financial assistance provided by them to the said companies remain outstanding.

4. The Company has pledged 1,99,773 equity shares of Sutlej Textiles & Industries Ltd., 2,59,923 equity shares of Upper Ganges Sugar & Industries Ltd. and 3,02,500 equity shares of Chambal Fertilisers & Chemicals Ltd. during the year in favour of The Bank of Rajasthan Ltd., as a security against loan of Rs. 900 lakhs, granted to The Oudh Sugar Mills Ltd., the holding Company. The said loan is repayable in two equal instalments of Rs. 450 Lakhs each in August & September, 2009.


SCHEDULE - 7 : ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

For K.P. GUTGUTIA & CO.Chartered Accountants

2, Princep Street (K. P.GUTGUTIA)Kolkata - 700 072 Proprietor R. N. JHUNJHUNWALADated : 16th April, 2009 Membership No. 7250 T. R. CHACHAN Directors


BALANCE SHEET ABSTRACTand Company’s General Business Profile


Registration No. U15424WB1951PLC019451 State Code 21


II. Capital raised during the year (Amount in Rs. Thousands)

Public Issue Nil Rights Issue Nil


III. Position of Mobilisation and Deployment of Funds : (Amount in Rs. Thousands)

Total Liabilities 52,923 Total Assets 52,923

Sources of Funds Application of Funds

Paid-up Capital 10,873 Net Fixed Assets Nil

Reserves & Surplus 39,850 Investments 52,916

Secured Loans Nil Net Current Assets 7

Unsecured Loans 2,200 Miscellaneous Expenditure Nil

Accumulated Losses Nil

IV. Performance of Company (Amount in Rs. Thousands)

Turnover 1,106 Total Expenditure 96

Profit before tax 1,010 Profit after Tax 1,010

Earning per share (Rs.) 0.23 Dividend Rate Nil

V. Generic Names of Principal Products / Services of the Company

(As per monetary terms)

Item Code No. (ITC Code) Not Applicable

Product Description

R.N. JHUNJHUNWALADirectors

T.R. CHACHAN


SCHEDULE

to the Balance Sheet of a Non-Banking Financial Company(As required in terms of paragraph 9BB of Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998)

Rs. in LakhsPARTICULARS Amount

outstanding(As on

31.03.2009)

Amountoverdue

(As on 31.03.2009)

Liabilities Side : 1) Loans and Advances availed by

the NBFC’S inclusive of interestaccrued thereon but not paid :

(a) Debentures :Secured Nil NilUnsecured Nil Nil(Other than falling withinthe meaning of PublicDeposits)

(b) Deferred Credits Nil Nil(c) Term Loans Nil Nil(d) Inter-Corporate Loans and

BorrowingsNil Nil

(e) Commercial Paper Nil Nil(f) Other Loans (specify nature) 22.00 22.00

4) Break-up of Investments : Current Investments : 1. Quoted :

(i) Shares :(a) Equity Nil (b) Preference Nil

(ii) Debentures and Bonds Nil(iii) Units of Mutual Funds Nil(iv) Government Securities Nil(v) Others (please specify) Nil

2. Unquoted :(i) Shares :

(a) Equity Nil(b) Preference Nil


Long Term Investments : 1. Quoted :

(i) Shares :(a) Equity 431.93(b) Preference Nil



(a) Equity 97.23(b) Preference Nil


5) Borrower group-wise classification of Assets financed as in (2) and (3) above : Category Amount net of provisions

Secured Unsecured Total1. Related Parties

(a) Subsidiaries Nil Nil Nil(b) Companies

in the same groupNil Nil Nil

(c) Other related parties Nil Nil Nil2. Other than related parties Nil Nil Nil

Total Nil Nil Nil

Amount outstanding

Assets Side : 2) Break-up of Loans and Advances

including Bills receivables (otherthan those included in (4) below)

(a) Secrued Nil(b) Unsecured Nil

3) Break-up of Leased Assets andStock on Hire and other assetscounting towards AFC activitiesi) Lease Assets including lease

rentals under sundry debtors : (a) Financial Lease Nil(b) Operating Lease Nil

ii) Stock on hire including hirecharges under sundry debtors :(a) Assets on Hire Nil(b) Repossessed Assets Nil

iii) Other Loans counting towards AFCactivities : (a) Loans where assets have been

repossessed Nil

(b) Loans other than (a) above Nil

6) Investor group-wise classification of all Investments (current and long term) in shares and securities (both quoted and unquoted) : Category Market Value/

Break-up orFair value or

NAV

Book Value(Net of

Provisions)

1. Related Parties (a) Subsidiaries Nil Nil(b) Companies in the same

group Nil Nil

(c) Other related parties Nil Nil2. Other than related parties 526.60 529.15

Total 526.60 529.15

7) Other InformationParticulars Amounti) Gross Non-Performing Assets

(a) Related parties Nil(b) Other than related parties Nil

ii) Net Non-Performing Assets (a) Related parties Nil(b) Other than related parties Nil

iii) Assets acquired in satisfaction of debt Nil

Rs. in Lakhs

R.N. JHUNJHUNWALADirectors

T.R. CHACHAN


To

The Shareholders,

OSM Investment & Trading Co. Ltd.

Your Directors have pleasure in presenting their Report

and the audited Accounts of the Company for the year ended

31st March, 2009.

Rs. Rs.2. Financial Results :

The Profit & Loss Account shows a profit of

10,63,539

To which is added :

Balance brought forward

from the previous year 1,15,87,129

Income tax refund received

in respect of an earlier year 1,160 1,15,88,289

Making a total of 1,26,51,828

Out of this provisions has been

made for Reserve Fund2,13,000

Balance to be carried forward 1,24,38,828

3. Dividend :


4. Directors :

Shri C. S. Nopany resigned from the Chairmanship

& Directorship of the Company with effect from

22nd September, 2008. The Board placed on record its highest

appreciation for the invaluable advices and services rendered

by Shri Nopany during his tenure as a Director and Chairman

of the Company.

Shri T. R. Chachan retires from the Board by rotation and is

eligible for re-appointment.

5. Auditors :

The Auditors, Messrs R. L. Agarwalla & Co., Chartered












employee.

















irregularities;


concern basis.

9. Auditors Report :

As regards Auditors observations in their Report the notes to

the Accounts should be referred to.

10. Compliance Certificate:

A copy of the Compliance Certificate from Messrs S.M. Gupta

& Co., Company Secretaries, as required under Section 383A

of the Companies Act, 1956 is attached and forms a part of

this Report.


Kolkata - 700 001 T.R. CHACHANDirectors

Dated : 1st June, 2009 A.L. TULSIAN

DIRECTORS’ REPORT

OSM Investment & Trading Company Limited 110

COMPLIANCE CERTIFICATETo,

The Members

We have examined the registers, records, books and papers of

OSM Investment & Trading Company Limited (the Company) as

required to be maintained under the Companies Act, 1956 (the

Act) and the Rules made thereunder including the Report of

the Statutory Auditors under the Companies (Auditor’s Report)

Order, 2003 as amended and also the provisions contained in the

Memorandum and Articles of Association of the Company for the

financial year ended on 31st March, 2009. In our opinion and to

the best of our knowledge, belief and information and according

to the examinations carried out by us and explanations furnished

to us by the Company, its officers and agents, we certify that in

respect of the aforesaid financial year :

1. The Company has kept and maintained registers as stated in Annexure A to this certificate, as per the provisions of the Act and the Rules made thereunder and all entries therein have been recorded.

2. The Company has filed the forms and returns as stated in Annexure B to this certificate, with the Registrar of Companies as required under the Act and the Rules made thereunder.

3. The Company being a Public Limited Company, Clause No. 3 is not applicable.

4. The Board of Directors met 6 times on 16.04.2008, 02.06.2008, 24.09.2008, 03.10.2008, 17.12.2008 and 23.03.2009 in respect of which meetings proceedings were recorded and signed in the Minutes Book maintained for the purpose. As informed to us, no circular resolution was passed during the financial year.

5. The Company was not required to close its Register of Members during the financial year since it is not listed with any Stock Exchange.

6. The Annual General Meeting for the financial year ended on 31.03.2008 was held on 28.07.2008 after giving notice to the members of the Company and the resolutions passed thereat were recorded in Minutes Book maintained for the purpose.

7. No Extra Ordinary General Meeting was held during the financial year.

8. The Company during the financial year has not advanced any loan to its Directors and / or persons or Firms or Companies referred to in Section 295 of the Act.

9. The Company has not entered into any contract falling within the purview of Section 297 of the Act, as informed to us by the Management.

10. The Company is making necessary entries in the register maintained under Section 301 of the Act as and when required.

11. As there were no instances falling within the purview of Section 314 of the Act, the Company was not required to

obtain any approvals under the said Section.

12. No duplicate share certificates were issued during the

financial year, as per the records of the Company.

13. The Company :

(i) has been delivering the certificates on lodgment

thereof for transfer / transmission or any other purpose

as and when it receives the same;

(ii) has not declared dividend for the financial year ended

31.3.2008;

(iv) has no amount lying in unpaid/unclaimed dividend

account; and

(v) has generally complied with the requirements of

Section 217 of the Act.

14. The Board of Directors of the Company is duly constituted.

15. The Company is not required to appoint a Managing Director,

Whole-time Director or Manager under Section 269 of the

Act as its paid up Capital is less than Rs. 5 crores.

16. The Company did not appoint any sole selling agent during

the financial year.

17. We have been informed by the Management that the

Company, during the financial year, was not required to

obtain the approval of any authority under the provisions of

the Act.

18. The Directors have disclosed their interest in other

Firms / companies to the Board of Directors pursuant to the

provisions of the Act and the Rules made thereunder.

19. The Company has not issued any security during the financial

year.

20. The Company has not bought back any shares during the

financial year.

21. Since the Company has not issued Preference

Shares / Debentures, there was no redemption during the

year under review.

22. As informed to us, the Company during the financial year,

was not required to keep in abeyance rights to any benefits

on shares pending completion of formalities under the

provisions of the Act.

23. The Company has not accepted any deposits from the public.

(Refer Auditors’ Report)

24. The Company did not borrow any money during the

financial year.

25. The Company being a Non – Banking Financial Company

registered under Section 45 IA of the Reserve Bank of India

Act, 1934 is exempt from the provisions of Section 372A of

the Act.

26 The Company, during the financial year, has not altered the

to provisions of the Memorandum with respect to :

29 (a) situation of registered office of the Company

&(iii)


COMPLIANCE CERTIFICATE (Contd.) (b) the objects of the Company

(c) name of the Company

(d) share capital of the Company

30. The Company has not altered its Articles of Association during the financial year.

31. As informed to us, during the financial year, no prosecution was initiated against or show cause notice received by the

Company for any alleged offence under the provisions of the Act.

32. Since the Company has no employee, it has not received any money as security during the financial year.

33. The provisions of Provident Fund Act are not applicable to the Company, as it has no employee. (Refer Auditors’ Report)

Annexure A

Sl.

No.

Registers/Records as maintained by the Company

Statutory Registers/Records

Under Section

1. Register of Investments 49(7)

2. Register of Charges 143

3. Register of Members 150

4. Copies of Annual Returns etc. 163

5. Minutes of Board Meetings 193

6. Minutes of General Meetings 193

7. Books of Accounts 209

8. Register of Contracts 301

9. Particulars of Directors etc. 303

10. Register of Directors’ shareholding 307

11. Register of Loans and Investments etc. 372A

Other Registers

12. Register of Share Transfers 108/111

13. Register of Notices received from Directors 299

14. Register of Fixed Assets

Annexure B

Forms and Returns as filed by the Company with the Registrar of Companies, West Bengal during the financial year ended 31st March,

2009:

Sl. No. FormNo Under Section For Date of filing

1. Form 23AC & 23ACA 220 Form for filing Balance Sheet and Profit & Loss Account for

Financial year ended on 31.03.2008

12.08.2008

2. Form 66 383A Form for filing of Compliance Certificate for Financial year ended

31.03.2008

12.08.2008

3. Form 20B 159 Form for filing of Annual Return made upto 28.07.2008 19.09.2008

4. Form 32 303(2) Resignation of Mr. C. S. Nopany from the Chairmanship &

Directorship of the Company w.e.f. 22.09.2008

01.10.2008

Place : P-15, Bentinck Satreet,

Kolkata - 700 001 Signature : S. M. Gupta

Dated : 1st June, 2009 Name of Company Secretary : S. M. GUPTA

C. P. No. : 2053


AUDITORS’ REPORT

To The MembersOMS Invesment & Trading Co. Ltd.1. We have audited the attached Balance Sheet of OSM Investment

& Trading Company Limited as at 31st March, 2009 and also the Profit & Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosure in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order 2003 (as amended), issued by the Central Government of India in terms of sub-section(4A) of section 227 of the Companies Act,1956, we enclose in the annexure, a statement on the matters specified in paragraphs 4 & 5 of the said order.

4. Further we reported that:- i) We have obtained all the information and

explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

ii) In our opinion, proper books of account as required by the Laws have been kept by the Company, so far as appears from our examination of those books;

iii) The Balance Sheet and the Profit & Loss Account dealt with by this report, are in agreement with the

books of account as submitted to us; iv) In our opinion, the Balance Sheet and profit & Loss

account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211of the Companies Act, 1956;

v) On the basis of written representations received from the directors, as on 31st March, 2009 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2009 from being appointed as a director in term of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to Note No. 3 on Schedule- 6, regarding non-provision for diminution of market value of quoted investments amounting to Rs. 113.77 lakhs, as in the opinion of the management the break-up value of those investments are higher than the corresponding book value , whose impact on the Company’s profit/reserves is not presently ascertainable and read together with Notes thereon and attached thereto give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principals generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009; and

b) in the case of the Profit & Loss Account, of the profit for the year ended on that date.

For R.L. AGARWALLA & CO.

7, Rabindra Sarani Chartered Accountants

Kolkata – 700 001 R. L. AGARWALLA

Dated : 1st June, 2009 Proprietor

Membership No. 50516

(i) The Company has maintained proper records of fixed assets showing full particulars, including quantitative details and situation thereof. Fixed Assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. There was no substantial disposal of fixed assets during the year.

(ii) The Company has no manufacturing and or trading activities and as such the question of having any stock and maintenance of records in respect thereof and physical verification of inventory does not arise.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured, to Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and hence the requirement of sub clauses (b) to (d) of

ANNEXURE REFERRED to in paragraph 3 of our report of even date

clause (iii)of the Companies (Auditor’s Report) Order, 2003 ( as amended) are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured, from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act,1956 and hence the requirement of sub clauses (f) & (g) of Clause (iii) of the Companies (Auditor’s Report) Order, 2003 ( as amended) are not applicable.

(iv) The Company has not purchased any goods and fixed assets and also there is no sale of goods and services during the year and as such the question of having any internal control system with regard to purchase of inventory, fixed assets and sale of goods does not arise.

(v) There was no transaction which was required to be entered in the register maintained under section 301of the Companies Act. 1956.


ANNEXURE REFERRED to in paragraph 3 of our report of even date (Contd.)

Company does not attract any special statute applicable to chit fund and nidhi / mutual benefit fund/ societies.

(xiv) In respect of dealing in shares, securities, debentures and other investments, in our opinion and according to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares, securities, debentures and other investments have been held by the Company in its own name.

(xv) As informed, the Company has not given any guarantee for loans taken by others from bank and financial institutions.

(xvi) The Company has not taken any term loan from any financial institutions or bank. The Company does not have any borrowing by way of debentures.

(xvii) We have been informed by the management that fundsraised on short term basis were not utilized for long term purpose.

(xviii) The Company has not made any preferential allotment ofshares to parties and Companies Covered in the register maintained under section 301 of the Companies Act.1956.

(xix) The Company has not issued any debentures during the year.


(xxi) Based upon the audit procedures performed and information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.

For R. L. AGARWALLA & CO.

7, Rabindra Sarani Chartered Accountants

Kolkata – 700 001 R. L. AGARWALLA

Dated : 1st June, 2009 Proprietor

Membership No. 50516

(vi) The Company has not accepted any deposits from the public.

(vii) The internal audit was conducted by a service company and in our opinion the internal audit system was commensurate with the size of the Company and the nature of its business.

(viii) The Company is not required to maintain any cost records under section 209(1)(d)of the Companies Act, 1956.

(ix) The Company is regular in depositing undisputed statutory dues with the appropriate authorities, as applicable. As the Company has no employee and no manufacturing and or trading activities are carried on by the Company, the questions of payment of Provident Fund, Employees’ State Insurance, Sales Tax, Custom Duty, Excise Duty, Service tax, Cess etc, does not arise. According to the information and explanations given to us no undisputed amounts payable in respect of statutory dues were outstanding as on 31st March, 2009 for the period of more than six months from the date they become payable. There are no dues outstanding in respect of statutory dues on account of any dispute.

(x) The company has no accumulated loss at the end of financial year and it has not incurred any cash loss in the current and immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not taken any loan from financial institutions, bank or debenture holders, as such, the question of any default does not arise.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities hence maintenance of records in respect thereof does not arise.

(xiii) In our opinion, and according to the information and explanations given to us, the nature of activities of the



SCHEDULE 31st March, 2009Rs.

31st March, 2008Rs.

SOURCES OF FUNDS


Share Capital 1 1,74,04,180 1,74,04,180


5,19,15,068 5,08,50,369


Fixed Assets

Land

As per last account 31,45,415 31,45,415

Investments 3 4,77,07,627 4,52,07,627


Current Assets

Cash & Bank Balances 4 20,026 53,327

Loans & Advances

Loan to The Oudh Sugar Mills Ltd., the

holding company (not bearing Interest) 10,50,000 24,50,000

10,70,026 25,03,327



8,000 6,000

Net Current Assets 10,62,026 24,97,327

5,19,15,068 5,08,50,369

Accounting Policies & Notes on Accounts 6

Schedules referred to above form an integral part of the Balance Sheet

In terms of our attached report of even date.

For R. L. AGARWALLA & CO.Chartered Accountants

7, Rabindra Sarani R. L. AGARWALLAKolkata – 700 001 Proprietor T.R. CHACHANDated : 1st June, 2009 Membership No. 50516 A.L. TULSIAN Directors



SCHEDULE 2008-2009Rs.

2007-2008Rs.

INCOME : Dividend from Long Term Investments 11,66,225 26,56,805

11,66,225 26,56,805 EXPENDITURE :

Rates & Taxes 8,800 8,950 Auditors' Remuneration

Audit Fees 8,000 10,000 For Certificates & Others 7,250 2,000 Directors' Fees 3,600 4,600 Miscellaneous Expenses 75,036 63,675 (including Service Charges Rs. 49,439;previous year Rs. 44,944)

1,02,686 89,225 Profit before Taxation 10,63,539 25,67,580 Less : Provision for Taxation - 286 Add : Excess Provision for Taxation in respect of an 10,63,539 25,67,294 earlier year written back - 1,240Add : Income-Tax refund received in respect of an 10,63,539 25,68,534 earlier year 1,160 - Profit after Taxation 10,64,699 25,68,534 Add : Balance brought forward from last year 1,15,87,129 95,33,595 Profit available for Appropriation 1,26,51,828 1,21,02,129 APPROPRIATIONS :

Transfer to Reserve Fund 2,13,000 5,15,000 Balance carried to Balance Sheet 1,24,38,828 1,15,87,129

1,26,51,828 1,21,02,129 Accounting Policies & Notes on Accounts 6In terms of our attached report of even date.

31st March, 2009

Rs.

31st March, 2008

Rs.

SCHEDULE - 1 : SHARE CAPITALAuthorised :

24,90,000 Equity Shares of Rs. 10 each 2,49,00,000 2,49,00,000 2,60,000 Preference Shares of Rs. 10 each 26,00,000 26,00,000

2,75,00,000 2,75,00,000 Issued :

17,40,420 Equity Shares of Rs. 10 each 1,74,04,200 1,74,04,200 1,74,04,200 1,74,04,180

Subscribed & Paid-up :17,40,418 Equity Shares of Rs. 10 each fully paid up in cash 1,74,04,180 1,74,04,180

1,74,04,180 1,74,04,180

Notes :

The entire Subscribed Equity Share Capital is held by The Oudh Sugar Mills Ltd., the holding company.





31st March, 2009Rs.

31st March, 2008Rs.

SCHEDULE - 2 : RESERVES & SURPLUS :

Share Premium Account :

As per last Account 87,02,060 87,02,060

General Reserve :


Reserve Fund :


Transfer from Profit & Loss Account 2,13,000 5,15,000

58,70,000 56,57,000

Capital Redemption Reserve :


Surplus as per Profit & Loss Account 1,24,38,828 1,15,87,129

3,45,10,888 3,34,46,189

No. of SharesFace Value

Rs.31st March, 2009

Rs.31st March, 2008

Rs.

SCHEDULE - 3 : INVESTMENTS (At Cost)

Long Term Investments (Non-Trade) :

Quoted : (Fully Paid)

Equity Shares :

Upper Ganges Sugar & Industries Ltd 2,34,891 10 1,70,29,956 1,70,29,956

SIL Investments Ltd. 4,17,421 10 97,63,978 97,63,978

(Formerly Sutlej Industries Ltd.)

Sutlej Textiles & Industries Ltd. 4,25,880 10 1,40,06,908 1,40,06,908

Manbhawani Investment Ltd. 67,500 10 2,06,905 2,06,905

New India Retailing & Investment Ltd. 38,349 10 30,67,920 30,67,920

(Formerly New India Sugar Mills Ltd.)

4,40,75,667 4,40,75,667

Unquoted : (Fully Paid)

Equity Shares :

Modern DiaGen Services Ltd. 13,196 10 1,31,960 1,31,960

(Formerly Damanganga Processors Ltd.)

Preference Shares :

8% Non-Convertible Cumulative Redeemable

Preference Shares of New India Retailing &

Investment Ltd. 25,000 100 25,00,000 -

Unquoted : (Partly Paid)

Equity Shares :

Modern DiaGen Services Ltd. (Rs. 2/- Paid Up) 5,00,000 10 10,00,000 10,00,000

4,77,07,627 4,52,07,627

Aggregate Book Value of Investments :

Quoted 4,40,75,667 4,40,75,667

Unquoted 36,31,960 11,31,960

4,77,07,627 4,52,07,627

Market Value of Quoted Investments 4,19,27,362 9,27,94,733



31st March, 2009Rs.

31st March, 2008Rs.

SCHEDULE - 4 : CASH & BANK BALANCES:

Cash in hand 1,106 1,162

With a Scheduled Bank on Current Account 18,920 52,165

20,026 53,327

SCHEDULE - 5 : CURRENT LIABILITIES & PROVISIONS :

Current Liabilities :

Sundry Creditors :

For Expenses 8,000 6,000

8,000 6,000


1. Accounting Policies :

i) Fixed Assets are stated at cost.

ii) Long Term Investments are considered at cost on individual basis, unless there is permanent decline in value thereof, in which

case adequate provision is made against the diminution in the value of investments.

iii) Items of Income and Expenditure are recognised on accrual basis.

2. Contingent Liability not provided for in respect of uncalled capital on partly paid shares held as investments of Rs 40,00,000

(Previous year- Rs 40,00,000)

3. Diminution of Rs. 113.77 Lakhs in the value of certain quoted investments based on the last quoted price, has not been

provided, as the break-up value of the said shares supplemented by the market value as on 31st March, 2008 / 30th June, 2008, of

the quoted investments held by the investee Company, is much higher than the corresponding Book Value.

4 The Company has pledged 2,34,891 Equity Shares of Upper Ganges Sugar & Industries Ltd.,and 4,17,421 Equity Shares of Sutlej

Textiles & Industries Ltd. against outstanding loan of Rs.900 Lakhs granted by The Bank of Rajasthan Ltd. to The Oudh Sugar Mills

Ltd.., the Holding Company.


SCHEDULE - 6 : ACCOUNTING POLICIES & NOTES ON ACCOUNTS :




BALANCE SHEET ABSTRACTand company’s General Business Profile




II. Capital Raised during the year (Amount in Rs. thousands)



III. Position of Mobilisation and Deployment of Funds (Amount in Rs. thousands)

Total Liabilities 51915 Total Assets 51915

Sources of Funds Application of Funds :

Paid-up Capital 17404 Net Fixed Assets 3145

Reserves & Surplus 34511 Investments 47708


Unsecured Loans Nil Miscellaneous Expenditure Nil



Turnover 1166 Total Expenditure 103

Profit before Tax 1063 Profit after Tax 1065

Earning per Share (Rs.) 0.61 Dividend Rate Nil


(as per monetary terms)

Item Code No. (ITC Code)

Product DescriptionNot Applicable

T. R. CHACHAN Directors

A. L. TULSIAN


SCHEDULE to the Balance Sheet of a Non-Banking Financial Company(As required in terms of paragraph 9BB of Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998)

Rs. in Lakhs

PARTICULARS Amount

outstanding(As on

31.03.2009)

AmountOverdue

(As on 31.03.2009)


the NBFC’S inclusive of interestaccrued thereon but not paid:(a) Debentures :

Secured Nil NilUnsecured Nil Nil(Other than falling withinthe meaning of PublicDeposits)


BorrowingsNil Nil

(e) Commercial Paper Nil Nil(f) Other Loans (specify nature) Nil Nil







Long Term Investments : 1. Quoted : Rs. in Lakhs




(a) Equity(b) Preference 11.32

(ii) Debentures and Bonds 25.00(iii) Units of Mutual Funds Nil(iv) Government Securities Nil(v) Others (please specify) Nil

5) Borrower group-wise classification of Assets financed as

in (2) and (3) above : Category Amount net of provisions



in the same groupNil 10.50 10.50

(c) Other related parties Nil Nil Nil2. Other than related parties Nil Nil Nil

Total Nil 10.50 10.50

Amount outstanding

Assets Side :

2) Break-up of Loans and Advancesincluding Bills receivables (other than those included in (3) below)

(a) Secrued Nil(b) Unsecured 10.50

3) Break-up of Leased Assets andStock on Hire and other assetscounting towards AFC activitiesi) Lease Assets including lease


ii) Stock on hire including hirecharges under sundry debtors : (a)

(b)

Assets on hire

Repossessed AssctsNil

Niliii) Other Loans counting towards

AFC activities :

(a) Loans where assets have been repossessed Nil


6) Investor group-wise classification of all Investments (current and long term) in shares and securities (both quoted and unquoted) : Category Market Value/


NAV

Book Value(Net of

Provisions)

1. Related Parties (a) Subsidiaries Nil Nil(b) Companies in the same

group Nil Nil

(c) Other related parties Nil Nil2. Other than related parties 422.33 477.08

Total 422.33 477.08

7) Other InformationParticulars Amounti) Gross Non-Performing Assets




T. R. CHACHAN Directors

A. L. TULSIAN


To

The Shareholders,

Hargaon Investment & Trading Co. Ltd.

Your Directors have pleasure in presenting their Report and

the audited Accounts of the Company for the year ended

31st March, 2009.

2. Financial Results : Rs.

The Profit & Loss Account shows a profit of 22,51,416

To which is added balance brought forward

from the previous year4,75,27,190

Making a total of 4,97,78,606

Out of this provision has been made for

Reserve Fund4,51,000

Balance to be carried forward 4,93,27,606

3. Dividend :


4. Directors :

Mr. Sanjay Mukherjee resigned from the Directorship of the

Company with effect from 23rd March, 2009.

Mr. C.S. Nopany retires from the Board by rotation and is

eligible for re-appointment.

5. Auditors :

The Auditors, Messrs R. L. Agarwalla & Co., Chartered












employee.

















irregularities;


concern basis.

9. Auditors Report :

The notes to the Accounts referred to in the Auditors Report

are self –explanatory.


A copy of the Compliance Certificate from Shri S.K. Jain,

Practicing Company Secretaries, as required under Section

383A of the Companies Act, 1956 is attached and forms a

part of this Report.

11. Subsidiary Company :

The audited accounts of Hargaon Properties Ltd., a subsidiary

of the Company, for the year ended 31st March, 2009 are

attached as required under Section 212 of the Companies

Act, 1956.


Kolkata - 700 001 S.K. JHUNJHUNWALADirectors

Dated : 1st June, 2009 K.C. GUPTA

Statement Pursuant to Section 212 of the Companies Act, 1956

As on 31st March, 2009 55.56% of the subscribed share capital of

Hargaon Properties Ltd. was held by the Company.

The net amount of the Profit / (Loss) of the subsidiary company

for the last as well as the previous year, which concerns the

members of the Company but have not been dealt with in or

for the purposes of the accounts of the Company amounts to

(Rs. 12,863) and Rs. 1,44,050.


Kolkata - 700 001 S.K. JHUNJHUNWALADirectors

Dated : 1st June, 2009 K.C. GUPTA

DIRECTORS’ REPORT


To,The ShareholdersHargaon Investment & Trading Co. Ltd.

I have examined the registers, records, books and papers of Hargaon Investment & Trading Company Limited, CIN U67120WB1986PLC041679 (the Company), as required to be maintained under the Companies Act, 1956 and the rules made thereunder and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on 31.3.2009. In my opinion and to the best of my information and according to the examinations carried out by me and explanations furnished to me by the Company, its officers and agents, I certify that in respect of the aforesaid financial year :

1) The Company has kept and maintained all registers, as stated in Annexure `A’ to the Certificate, as per the provisions of the Act and the rules made thereunder, and all entries therein have been duly recorded.

2) The Company has duly filed the forms and returns, as stated in Annexure `B’ to this certificate, with the Registrar of Companies, Regional Director, Central Government, Company Law Board and other authorities.

3) The Company being a Public Limited Company, comments on clause 3 is not required.

4) The Board of Directors duly met 6 (Six) times on 16.04.2008, 02.06.2008, 24.09.2008, 03.10.2008, 17.12.2008 and 23.03.2009 in respect of which meetings, proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose.There were no circular resolutions passed during the year.

5) The Company has not closed its Register of Members or Debenture holders during the financial year.

6) The Annual General Meeting for the financial year ended 31st March, 2008 was held on 28.07.2008 after giving due notice to the Members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose.

7) No Extra-ordinary general meeting was held during the financial year.

8) The Company has not advanced during the year any loans to its directors or persons or firms or companies referred to under Section 295 of the Act.

9) The Company has not entered into any contract falling within the purview of Section 297 of the Act during the year under review.

10) The Company was not required to make any entry in the register maintained under Section 301 of the Act during the year.

11) As there was no instances falling within the purview of provisions of Section 314 of the Act, the company was not required to obtain any approvals from directors, members or the Central Government.

12) The Company has not issued any duplicate share certificates during the financial year.

13) The Company has:

i) made no allotment/transfer/transmission of securities during the financial year;

ii) not deposited any amount in a separate Bank Account as no dividend was declared during the Financial year;

iii) not posted warrants to any member of the Company as no dividend was declared during the Financial year;

iv) no case requiring the Company to transfer in unpaid dividend account, Application money due for refund, matured deposits, matured debentures and the interest accrued thereon which has remained unclaimed or unpaid for a period of seven years to Investor Education & Protection Fund;

v) Generally complied with the requirements of section 217 of the Act.

14) The Board of Directors of the Company is duly constituted. There was no appointment of additional director, alternate directors and directors to fill casual vacancy during the financial year.

15) The Company has not appointed any Managing Director/Whole Time Director / Manager during the financial year.

16) The Company has not appointed any sole-selling agents during the financial year.

17) The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar and/or such authorities as prescribed under the various provisions of the Act during the financial year.

18) The Directors have disclosed their interest in other firms / companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder.

19) The Company has not issued any shares, debentures or other securities during the financial year.

20) The Company has not bought back any shares during the financial year.

21) There was no redemption of preference shares or debentures during the financial year.

COMPLIANCE CERTIFICATE

Hargaon Investment & Trading Company Limited 122

22) There were no transactions necessitating the Company to

keep in abeyance the rights to dividend, rights shares and

bonus shares pending registration of transfer of shares.

23) The Company has not invited / accepted any deposits

including any unsecured loans falling within the purview of

Section 58A during the financial year.

24) The Company has not made any borrowings during the

Financial year ended on 31-03-2009.

25) The Company being a Licenced Non-Banking Finance

company the provisions of Section 372A are not

applicable.

26) The Company has not altered the provisions of the

Memorandum with respect to situation of the Company’s

registered office from one State to another during the year

under scrutiny.

27) The Company has not altered the provisions of the

Memorandum with respect to the objects of the Company


28) The Company has not altered the provisions of the Memorandum with respect to name of the company during the year under scrutiny.

29) The Company has not altered the provisions of the Memorandum with respect to share capital of the Company during the year under scrutiny.

30) The Company has not altered its Articles of Association during the financial year under scrutiny.

31) There was / were no prosecution initiated against or show cause notice received by the Company and no fines or penalties or any other punishment imposed on the Company during the financial year, for offences under the Act.

32) The Company has not received any money as security from its employees during the financial year.

33) The Company has not established any fund as required under Section 418 of the Act and hence deduction and payment of Provident Fund during the financial year does not arise.


Annexure `A’

Statutory Registers as maintained by the Company

1. Register of Members & Share Ledger U/S 150 & 1512. Register of Directors, Managing Directors etc. U/S 3033. Register of Director’s Shareholding U/S 3074. Register of Share Transfers U/S 1085. Register of Charges & Records U/S 143 & 1286. Register of Investments U/S 49(7)7. Copies of Returns filed with the Registrar of Companies U/S 1638. Register of Contracts & Directors interest U/S 299 & 3019. Register of Contracts in which Directors are interested U/S 301(3)10. Minute books for proceedings of Board Meetings U/S 19311. Minute books for proceedings of General meetings U/S 19312. Register of Directors attendance at the meeting of the Board Under Regulation 71 of Table A to Schedule I of the Act.13. Register of Fixed Assets As required under the Manufacturing and other Companies

(Auditor’s Report) Order, 1988.14. Register of Loans & Investments made U/S 372 (A)15. Books of Accounts Under Section 209

Sl. No. Form No. Filed Service Request Number

1. Form No. 20B U/S 159 P 21718085

2. Form No. 23AC & 23ACA U/S 220 P 20328100

3. Form No. 32 U/S 303(2) A 58939711

Annexure `B’

Forms and Returns as filed by the Company with Registrar of Companies, Regional Director, Central Government or other authorities

during the Financial year ended 31.3.2009.

Signature : For S. K. JAIN

FE-257, Sector III, Company Secretaries

Salt Lake City, Kolkata-700 106 Name of the Company Secretary : S. K. JAIN

Dated : 1st June, 2009 C. P. No. : 4077


AUDITORS’ REPORT To The MembersHargaon Investment & Trading Co. Ltd.

1. We have audited the attached Balance Sheet of Hargaon Investment & Trading Company Limited as at 31st March, 2009 and also the Profit & Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Orders, 2003 (as amended), issued by the Central Government of India in terms of sub-section(4A) of section 227 of the Companies Act,1956, we enclose in the annexure, a statement on the matters specified in paragraphs 4 & 5 of the said order.

4. Further we reported that:-

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

ii) In our opinion, proper books of account as required by the Laws have been kept by the Company, so far as appears from our examination of those books;

iii) The Balance Sheet and the Profit & Loss Account dealt with by this report, are in agreement with the books of account as submitted to us;

iv) In our opinion, the Balance Sheet and Profit & Loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211of the Companies Act, 1956;

v) On the basis of written representations received from the directors, as on 31st March, 2009 and taken on record by the Board of Directors, we report that none of the Directors is disqualified as on 31st March, 2009 from being appointed as a director in term of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.

vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts subject to Note No. 3 on Schedule 6, regarding non-provision for diminution in the market value of quoted investments amounting to Rs. 296.13 lakhs, as in the opinion of the management, the break-up value of those investments are higher than the corresponding book value, whose impact on the Company’s profit/reserves is not presently ascertainable and read together with other notes thereon and attached thereto give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009; and

b) in the case of the Profit & Loss Account, of the profit for the year ended on that date.



7, Rabindra Sarani (R.L.AGARWALLA)

Kolkata – 700 001 Proprietor

Dated : 1st June, 2009 Membership No. 50516

(i) The Company has maintained proper records of fixed assets showing full particulars, including quantitative details and situation thereof. Fixed Assets have been physically verified by the management during the year and no material discrepancies were noticed on such verification. There was no substantial disposal of fixed assets during the year.

(ii) The Company has no manufacturing and or trading activities and as such the question of having any stock and maintenance of records in respect thereof and physical verification of inventory does not arise.

(iii) (a) As informed, the Company has not granted any loans, secured or unsecured, to Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and hence the requirement of sub clauses (b) to (d) of

ANNEXURE REFERRED to in paragraph 3 of our report of even date

clause (iii) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable.

(b) As informed, the Company has not taken any loans, secured or unsecured, from Companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 and hence the requirement of sub clauses (f) & (g) of Clause (iii) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable.

(iv) The Company has not purchased any goods and fixed assets and also there is no sale of goods and services during the year and as such the question of having any internal control system with regard to purchase of inventory, fixed assets and sale of goods does not arise.

(v) There was no transaction which was required to be entered in the register maintained under section 301 of the Companies Act, 1956.


(vi) The Company has not accepted any deposits from the public.

(vii) The internal audit was conducted by a service company and in our opinion the internal audit system was commensurate with the size of the Company and the nature of its business.

(viii) The Company is not required to maintain any cost records under section 209(1)(d)of the Companies Act, 1956.

(ix) The Company is regular in depositing undisputed statutory dues with the appropriate authorities, as applicable. As the Company has no employee and no manufacturing and or trading activities are carried on by the Company, the question of payment of Provident Fund, Employees’ State Insurance, Sales Tax, Custom Duty, Excise Duty, Service tax, Cess etc, does not arise. According to the information and explanations given to us no undisputed amounts payable in respect of statutory dues were outstanding as on 31st March, 2009 for the period of more than six months from the date they become payable. There are no dues outstanding in respect of statutory dues on account of any dispute.

(x) The company has no accumulated loss at the end of financial year and it has not incurred any cash loss in the current and immediately preceding financial year.

(xi) In our opinion and according to the information and explanations given to us, the Company has not taken any loan from financial institutions, bank or debenture holders, as such, the question of any default does not arise.

(xii) The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities hence maintenance of records in respect thereof does not arise.

(xiii) In our opinion, and according to the information and explanations given to us, the nature of activities of the Company does not attract any special statute applicable to chit fund and nidhi / mutual benefit fund/ societies.

(xiv) In respect of dealing of shares, securities, debentures and other investments, in our opinion and according to the information and explanations given to us, proper records have been maintained of the transactions and contracts and timely entries have been made therein. The shares, securities, debentures and other investments have been held by the Company in its own name.

(xv) As informed, the Company has not given any guarantee for loans taken by others from bank and financial institutions.

(xvi) The Company has not taken any term loan from any financial institutions or bank. The Company does not have any borrowing by way of debentures.

(xvii) We have been informed by the management that funds raised on short term basis were not utilized for long term purpose.

(xviii) The Company has not made any preferential allotment of shares to parties and Companies covered in the register maintained under section 301 of the Companies Act.1956.

(xix) The Company has not issued any debentures during the year.


(xxi) Based upon the audit procedures performed and information and explanations given to us by the management, we report that no fraud on or by the Company has been noticed or reported during the course of our audit.



7, Rabindra Sarani (R.L.AGARWALLA)

Kolkata – 700 001 Proprietor

Dated : 1st June, 2009 Membership No. 50516



SCHEDULE 31st March, 2009

Rs.

31st March, 2008

Rs.

SOURCES OF FUNDS


Share Capital 1 3,04,57,270 3,04,57,270


13,95,05,086 13,72,53,670


Fixed Assets

Land

As per last account 29,35,653 29,35,653

Investments 3 12,51,91,208 12,01,91,208


Current Assets

Cash & Bank Balances 4 36,225 32,809

Loans & Advances

Loans

To The Oudh Sugar Mills Ltd.,

the holding Company (not bearing interest) 1,13,00,000 1,40,50,000

Advances recoverable in cash or in kind or for value to be

received or pending adjustments 50,000 50,000

1,13,86,225 1,41,32,809



Net Current Assets 1,13,78,225 1,41,26,809

13,95,05,086 13,72,53,670


Schedules referred to above form an integral part of the Balance Sheet




7, Rabindra Sarani (R. L. AGARWALLA)

Kolkata – 700 001 Proprietor S.K. JHUNJHUNWALADirectors

Dated : 1st June, 2009 Membership No. 50516 K.C. GUPTA



SCHEDULE 2008-2009Rs.

2007-2008Rs.

INCOME

Dividend from Long Term Investments 23,49,086 63,42,344

23,49,086 63,42,344

EXPENDITURE

Rates & Taxes 7,300 7,300

Auditors' Remuneration

Audit Fees 8,000 10,000

For Certificates 7,250 2,000

Directors' Fees 3,800 4,400

Miscellaneous Expenses

(including Service Charges Rs. 49,439 previous year Rs. 44,944) 71,320 72,540

97,670 96,240

Profit before Taxation 22,51,416 62,46,104

Less : Provision for Taxation - 5,125

Profit after Taxation 22,51,416 62,40,979

Add : Balance brought forward from last year 4,75,27,190 4,25,36,211

Profit available for Appropriation 4,97,78,606 4,87,77,190

APPROPRIATIONS :

Transfer to Reserve Fund 4,51,000 12,50,000

Balance carried to Balance Sheet 4,93,27,606 4,75,27,190

4,97,78,606 4,87,77,190


Schedules referred to above form an integral part of the Profit and Loss Account.









31st March, 2009Rs.

31st March, 2008Rs.


Authorised

49,90,000 Equity Shares of Rs. 10 each 4,99,00,000 4,99,00,000

10,000 Preference Shares of Rs. 10 each 1,00,000 1,00,000

5,00,00,000 5,00,00,000

Issued

30,45,733 Equity Shares of Rs. 10 each 3,04,57,330 3,04,57,330

Subscribed & Paid-up

30,45,727 Equity Shares of Rs. 10 each fully paid up in cash 3,04,57,270 3,04,57,270

(The entire Subscribed Capital is held by The Oudh Sugar Mills Ltd., the holding company)

SCHEDULE - 2 : RESERVES & SURPLUS

Share Premium Account

As per last Account 3,04,57,210 3,04,57,210

Reserve Fund


Transfer from Profit & Loss Account 4,51,000 12,50,000

1,68,13,000 1,63,62,000

General Reserve


Surplus as per Profit & Loss Account 4,93,27,606 4,75,27,190

10,90,47,816 10,67,96,400

No. of Shares Face ValueRs.

31st March, 2009Rs.

31st March, 2008Rs

SCHEDULE - 3 : INVESTMENTS (At Cost)

Long Term Investments (Non-Trade)

Quoted (Fully Paid)

Equity Shares

Upper Ganges Sugar & Industries Ltd 6,57,966 10 4,88,31,540 4,88,31,540

New India Retailing & Investment Ltd 1,34,448 10 1,06,72,988 1,06,72,988

(Formerly New India Sugar Mills Ltd.)

SIL Investments Ltd. 11,40,931 10 2,60,25,111 2,60,25,111

(Formerly Sutlej Industries Ltd.)

Sutlej Textiles & Industries Ltd 11,40,931 10 3,10,22,481 3,10,22,481

11,65,52,120 11,65,52,120

Unquoted (Fully Paid)

Equity Shares

India Educational and Research Institutions Pvt. Ltd. 4,900 10 49,000 49,000

Preference Shares 8% Non-Convertible Cumulative Redeemable

PreferenceShares of New India Retailing & Investment Ltd. 50,000 100 50,00,000 -

Unquoted (Partly Paid)

Equity Shares

Modern DiaGen Services Ltd. (Rs. 2 Paid Up) 545,044 10 10,90,088 10,90,088



Cash in hand 1,134 746

With a Scheduled Bank on Current Account 35,091 32,063

36,225 32,809

SCHEDULE - 5 : CURRENT LIABILITIES & PROVISIONS

Current Liabilities

Sundry Creditors

For Expenses 8,000 6,000

8,000 6,000

SCHEDULE - 6 : ACCOUNTING POLICIES & NOTES ON ACCOUNTS

Aggregate Book Value of Investments

Quoted 11,65,52,120 11,65,52,120

Unquoted 86,39,088 36,39,088

12,51,91,208 12,01,91,208

Market Value of Quoted Investments 11,48,90,864 25,31,61,038

No. of Shares Face ValueRs.

31st March, 2009Rs.

31st March, 2008Rs.

SCHEDULE - 3 : INVESTMENTS (At Cost) (Contd.)

Shares in Subsidiary Company

Unquoted (Fully Paid)

Equity Shares

Hargaon Properties Ltd. 2,50,000 10 25,00,000 25,00,000

12,51,91,208 12,01,91,208


1. Accounting Policies

i) Fixed Assets are stated at cost.

ii) Long Term Investments are considered at cost on individual basis, unless there is permanent decline in value thereof, in which case adequate provision is made against the diminution in the value of investments.

iii) Items of Income and Expenditure are recognised on accrual basis.

2. Contingent Liability not provided for in respect of uncalled capital on partly paid shares held as investments of Rs. 43,60,352 (Previous Year - Rs. 43,60,352)

3. Diminution of Rs. 296.13 Lakhs in the Value of certain quoted investments based on the last quoted price, has not been provided, as the break-up value of the said shares supplemented by the market value as on 31st March, 2008 / 30th June, 2008, of the quoted investments held by the investee Company, is much higher than the corresponding Book Value.

4. The Company has given an undertaking to Punjab National Bank not to transfer, assign, dispose of, pledge, charge or create any lien or in any way encumber its shareholding, present or future in Sutlej Textiles & Industries Ltd without their approval in writing till the financial assistance provided by them to the said company remains unpaid.

5. The Company has pledged 6,57,966 Equity Shares of Upper Ganges Sugar & Industries Ltd. and 11,40,931 Equity Shares of Sutlej Textiles & Industries Ltd. against outstanding loan of Rs. 900 lakhs granted by ‘The Bank of Rajasthan Ltd. to The Oudh Sugar Mills Ltd., the holding Company.











II. Capital Raised during the year (Amount in Rs. Thousands)



III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities 1,39,505 Total Assets 1,39,505


Paid-up Capital 30,457 Net Fixed Assets 2,936

Reserves & Surplus 1,09,048 Investments 1,25,191

Secured Loans Nil Net Current Assets 11,378

Unsecured Loans Nil Miscellaneous Expenditure Nil



Turnover 2,349 Total Expenditure 98

Profit before Tax 2,251 Profit after Tax 2,251

Earning per Share (Rs.) 0.74 Dividend Rate Nil


(as per monetary terms)

Item Code No. (ITC Code)


S.K. JHUNJHUNWALADirectors

K.C. GUPTA

BALANCE SHEET ABSTRACTand Company’s General Business Profile


SCHEDULES to the Balance Sheet of a Non-Banking Financial Company (As required in terms of paragraph 9BB of Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998)

Rs. in LakhsPARTICULARS Amount

outstanding(As on

31.03.2009)

Amountoverdue

(As on 31.03.2009)


the NBFC’S inclusive of interestaccrued thereon but not paid:(a) Debentures :

Secured Nil NilUnsecured Nil Nil(Other than falling within themeaning of Public Deposits)


BorrowingsNil Nil

(e) Commercial Paper Nil Nil(f) Other Loans (specify nature) Nil Nil







Long Term Investments : 1. Quoted :




(a) Equity 36.39(b) Preference 50.00


5) Borrower group-wise classification of Assets financed as

in (2) and (3) above :

Rs. in LakhsCategory Amount net of provisions



in the same groupNil 113.00 113.00

(c) Other related parties Nil Nil Nil2. Other than related parties Nil 0.50 0.50

Total Nil 113.50 113.50

Amount

outstandingAssets Side : 2) Break-up of Loans and Advances

including Bills receivables (other than those included in (3) below)

(a) Secrued Nil(b) Unsecured 113.50

3) Break-up of Leased Assets and Stock on Hire and other assets counting towards AFC activities i) Lease Assets including lease


ii) Stock on hire including hire charges under sundry debtors : (a) Assets on Hire Nil(b) Repossessed Assets Nil

iii) Other Loans counting towards AFC activities : (a) Loans where assets have been

repossessed Nil


6) Investor group-wise classification of all Investments (current and long term) in shares and securities (both quoted and unquoted) :Category Market Value/


NAV

Book Value(Net of

Provisions)

1. Related Parties (a) Subsidiaries 26.37 25.00(b) Companies in the same

group Nil Nil

(c) Other related parties Nil Nil2. Other than related parties 1,201.85 1,226.91

Total 1,228.22 1,251.91

7) Other Information :Particulars Amounti) Gross Non-Performing Assets




S.K. JHUNJHUNWALADirectors

K.C. GUPTA


DIRECTORS’ REPORTTo

The Shareholders,

Hargaon Properties Ltd.

Your Directors have pleasure in presenting their Report and

the audited Accounts of the Company for the year ended

31st March, 2009.

2. Financial Results :

The Profit & Loss Account for the year under review after

writing off preliminary expenses of Rs. 13,115 shows a loss

of Rs. 23,152 which has been deducted from the credit

balance of Rs. 2,59,269 brought forward from the previous

year leaving a credit balance of Rs. 2,36,117 which is to be

carried forward.

3. Dividend :


4. Directors :

Shri Sanjay Mukherjee resigned from the Directorship of

the Company with effect from 1st April, 2009.

Shri U.S. Beria retires from the Board by rotation and being

eligible offers himself for re-appointment.

Shri Sunil Lohia, who was appointed as an additional

Director on 1st April , 2009 will hold office upto the date of

the ensuing Annual General Meeting.

The Company received a notice under Section 257 of the

Companies Act, 1956 proposing Shri Lohia ’s appointment as

a Director of the Company. The resolution for appointment

of Shri Sunil Lohia as a Director of the Company shall be

placed at the ensuing Annual General Meeting for the

approval of the members.

5. Auditors :

The Auditors, Messrs S.N. Roy & Co., Chartered Accountants,

retire and are eligible for re-appointment.











employee.






ii) they have selected such accounting policies and

applied them consistently and made judgements and

estimates that are reasonable and prudent so as to

give a true and fair view of the state of affairs of the

Company at the end of the financial year and of the

loss of the Company for that year ;






irregularities;


concern basis.


A copy of the Compliance Certificate from Messrs D. Raut &

Associates, Company Secretaries, as required under Section

383A of the Companies Act, 1956 is attached and forms a

part of this Report.


Kolkata - 700 001 U.S. BERIA

Dated: 20th May, 2009 K. C. GUPTADirectors

Hargaon Properties Limited 132

COMPLIANCE CERTIFICATETo,The Members,Hargaon Properties Ltd.

We have examined the registers, records, books and papers of Hargaon Properties Limited (the Company) as required to be maintained under the Companies Act, 1956, (the Act) and the rules made thereunder and also the provisions contained in the Memorandum and Articles of Association of the Company for the financial year ended on 31st March, 2009. In our opinion and to the best of our information and according to the examinations carried out by us and explanations furnished to us by the Company, its officers and agents, we certify that in respect of the period under scrutiny :

1. The Company has kept and maintained all registers as stated in Annexure ‘A’ to this certificate, as per the provisions of the Act and the rules made thereunder and all entries therein have been duly recorded.

2. The Company has duly filed the forms and returns as stated in Annexure ‘B’ to this certificate, with the Registrar of Companies within the time prescribed under the Act and the rules made thereunder.

3. The Company, being a Public Limited Company, clause 3 is not applicable.

4. The Board of Directors duly met Four (4) times respectively on 28th May, 2008, 27th August, 2008, 26th November, 2008 and 18th February, 2009 in respect of which meetings proper notices were given and the proceedings were properly recorded and signed in the Minutes Book maintained for the purpose.

5. The Company was not required to close its Register of Members during the financial year, since it is not listed with any stock exchange.

6. The Annual General Meeting for the financial year ended on 31st March, 2008 was held on 11th July, 2008 after giving due notices to the members of the Company and the resolutions passed thereat were duly recorded in Minutes Book maintained for the purpose.

7. No Extra Ordinary General Meeting was held duringthe year.

8. The Company has not advanced any loans to its Directors or persons or firms or Companies referred to under Section 295 of the Act.

9. The Company has not entered into any contracts falling within the purview of Section 297 of the Act.

10. The Company has made necessary entries in the register maintained under Section 301 of the Act.

11. As there was no instance falling within the purview of Section 314 of the Act, the Company was not required to obtain any approvals from the Board of Directors, members, or Central Government.

12. The Company has not issued any duplicate Share certificates during the financial year.

13. The Company has :

a. not made any transfer / transmission or allotment of shares during the financial year.

b. not deposited any amount in a separate Bank Account as no dividend was declared during thefinancial year.

c. was not required to post warrants to members of the Company as no dividend was declared during the financial year.

d. no amount in unpaid dividend account, application money due for refund, matured deposits, matured debentures and the interest accrued thereon and as such it was not required to transfer any amount to Investor Education And Protection Fund.

e. has duly complied with the requirements of Section 217 of the Act.

14. The Board of Directors of the Company is duly constituted. There is no appointment of any Director / Additional Director or Director to fill casual vacancy during the financial year.

15. The Company has not appointed any Managing Director / Whole time Director / Manager during the financial year, as there was no need to do so.

16. The Company has not appointed any sole-selling agents during the financial year.

17. The Company was not required to obtain any approvals of the Central Government, Company Law Board, Regional Director, Registrar of Companies or such other authorities as may be prescribed under the various provisions of the Act during the financial year.

18. The Directors have disclosed their interest in otherfirms / Companies to the Board of Directors pursuant to the provisions of the Act and the rules made thereunder.

19. The Company has not issued any shares, debentures or other securities during the financial year.

20. The Company has not bought back any Shares during the financial year.

21. There was no redemption of preference Shares or debentures during the financial year, as the Company has not issued any preference Shares or debentures.

22. There was no transaction necessitating the Company to keep in abeyance the rights to dividend, rights shares and bonus shares pending registration of transfer of shares.

23. The Company has not invited / accepted any deposits including any unsecured loans falling within the purview of Section 58A during the financial year.

24. The Company has not borrowed any amount during the financial year.

25. The Company has not made any loans / advances or made investments or provided guarantee to other body corporate during the Financial Year and hence no entries are required to be made in the registers kept for the purpose.



26. The Company has not altered the provisions of the Memorandum with respect to the situation of the Company’s registered office from one state to another during the year under scrutiny.

27. The Company has not altered the provisions of the Memorandum with respect to the objects of the Company during the year under scrutiny.

28. The Company has not altered the provisions of Memorandum with respect to name of the Company during the year under scrutiny.

29. The company has not altered the provisions of Memorandum with respect to Share Capital of the Company during the year under scrutiny.

30. The Company has not altered its Articles of Association during the financial year.

31. There was no prosecution initiated against or show cause notices received by the Company and no fines or penalties or any other punishment was imposed on the Company during the financial year, for offences under the Act.

32. Since the Company has no employees, it has not received any money as security from its employees during the financial year.

33. Since the Company has no employees, the provisions of EPF & Miscellaneous Provisions Act, 1952 are not applicable; consequently it was not required to deduct any contribution towards Provident Fund during the financial year.

ANNEXURE – A

SI. No. Registers/Records as maintained by the Company

1. Register of Transfer u/s 108/111.

2. Register of Members u/s 150.

3. Minutes Book of Board Meetings u/s 193.

4. Minutes Book of General Meetings u/s 193.

5. Books of Accounts u/s 209.

6. Register of Notice of Interest given by the Directors u/s 299.

7. Register of Contracts, Companies and firms in which Directors are interested u/s 301.

8. Registers of Directors, Managing Director, Manager and Secretary u/s 303.

9. Register of Directors’ Shareholding u/s 307.

10. Register of Loans & Investments u/s 372A.

11. Application for and allotment of Shares.

12. Copies of Annual Return u/s 163.

ANNEXURE – B

Forms as filed by the Company with Registrar of Companies (ROC), Regional Director, Central Government or other authorities during

the financial year ended on 31st March, 2009

Sl. No. Form No./ Return Filed u/s For the period Date of filing Whether Filed within

the Prescribed time

Yes / No

If delay in filing

whether additional

fees have been paid

1. Form 23AC & Form 23ACA relate to Balance Sheet & Profit & Loss Account

220(1) Financial year ended 31.03.2008

25.07.2008 Yes NA

2. Form 66 relate to Compliance Certificate

383A Financial year ended 31.03.2008

25.07.2008 Yes NA

3. Form 20B relate to Annual Returns

159(1) For AGM held on 11.07.2008

25.07.2008 Yes NA

For D. RAUT & ASSOCIATES

2A, Ganesh Chandra Avenue (Company Secretaries)

Commerce House, 8th Floor Name of the Comapany Secretary : DEBENDRA RAUT

Room No. 8C, Kolkata 700 013 (Proprietor)

Dated : 20th May, 2009 C.P. No.: 5232


AUDITORS’ REPORT

We have audited the attached Balance Sheet of Hargaon Properties

Limited, Kolkata as at 31st March, 2009 and also the Profit &

Loss Account for the year ended on that date annexed thereto.

These financial statements are the responsibility of the Company’s

management. Our responsibility is to express an opinion on these

financial statements based on our audit.

We conducted our audit in accordance with the auditing standards

generally accepted in India. Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement. An

audit includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit also

includes assessing the accounting principles used and significant

estimates made by the management, as well as evaluating the

overall financial statement presentation. We believe that our

audit provides a reasonable basis for our opinion.

As required by the Companies (Auditor’s Report) Order, 2003, as

amended, issued by the Central Government of India in terms of

Sub-section (4A) of Section 227 of the Companies Act, 1956, we

enclose in the Annexure, a statement on the matters specified in

Paragraphs 4 & 5 of the said Order.

Further we report that :-

i) We have obtained all the information and explanations,

which to the best of our knowledge and belief, were

necessary for the purposes of our audit;

ii) In our opinion, proper books of account as required by law

have been kept by the Company, so far as appears from our

examination of those books;

iii) The Balance Sheet and the Profit & Loss Account dealt with

by this report, are in agreement with the books of account

as submitted to us;

iv) In our opinion, the Balance Sheet and Profit & Loss Account

dealt with by this report comply with the Accounting

Standards referred to in Sub-section (3C) of Section 211 of

the Companies Act, 1956;

v) On the basis of written representations received from the

Directors as on 31st March, 2009 and taken on record by

the Board of Directors, we report that none of the Directors

is disqualified as on 31st March, 2009 from being appointed

as a director in terms of clause (g) of Sub-section (1) of

Section 274 of the Companies Act, 1956.

vi) In our opinion and to the best of our information and

according to the explanations given to us, the said accounts

give the information required by the Companies Act, 1956

in the manner so required and give a true and fair view

in conformity with the accounting principles generally

accepted in India :

a. In the case of the Balance Sheet, of the state of

affairs of the Company, as at 31st March, 2009, and

b. In the case of the Profit & Loss Account, of the Loss

of the Company for the year ended on that date.

For S. N. ROY & CO.


29A, Madan Mohan Tala Street, S.N. ROY

Kolkata – 700 005. Proprietor

Dated : 20th May, 2009 Membership No. 51056


ANNEXURE referred to in paragraph 3 of our report of even date1. (a) The Company has maintained proper records to show full

particulars, including quantitative details and situation of fixed assets.

(b) The fixed assets of the Company have been physically verified during the year by the management, which has revealed no discrepancies between the book records and the physical inventory.

(c) During the year, none of the fixed assets have been disposed of by the Company.

2. The Company has no manufacturing and/or trading activities and as such the question of having any stock and maintenance of record in respect thereof and physical verification of inventory does not arise. Hence clauses ii(a), ii(b) & ii(c) of paragraph 4 of the aforesaid order are not applicable.

3. The Company has neither granted nor taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under Section 301 of the Act and hence clauses iii(a), iii(b), iii(c), iii(d), iii(e), iii(f) & iii(g) of paragraph 4 of the aforesaid order are not applicable.

4. There is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of fixed assets made during the year. There is no continuing failure to correct major weaknesses in internal control system.

5. There was no transaction needed to be entered in the register in pursuance of Section 301 of Companies Act, 1956 and hence clauses v(a) & v(b) of paragraph 4 of the aforesaid order are not applicable.

6. The Company has not accepted deposits from the public during the year.

7. The Company is not a listed Company and paid up capital and reserves are less than Rs. 50 lakhs at the commencement of the financial year and also the average annual turnover is less than Rs, 5 Crores for a period of three financial years immediately preceding the financial year concern, hence clause vii of paragraph 4 is not applicable.

8. The Company is not required to maintain any cost records.

9. (a) The Company is regular in depositing undisputed statutory dues with the appropriate authorities as applicable. As the Company has no employee and no manufacturing and/or trading activities are carried on by the Company the question of payment of the Provident Fund, Employees’ State Insurance, Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess etc., does not arise. According to the information and explanations

given to us no undisputed amounts payable in respect of statutory dues were outstanding as on 31st March, 2009 for a period of more than six months from the date they became payable.

(b) As at 31st March, 2009 there are no disputed dues in respect of Income Tax, Sales Tax, Wealth Tax, Custom Duty, Excise Duty, Cess, etc.

10. The Company has been registered for a period less than five years and hence clause x of paragraph 4 is not applicable.

11. The Company has not taken any term loan from any financial institution or bank. The Company does not have any borrowings by way of debentures.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

13. (a) The Company is not a chit fund, nidhi or mutual benefit fund/society.

(b) In view of our comment in paragraph xiii(a) above clauses xiii(b), xiii(c) & xiii(d) of paragraph 4 of the aforesaid order are not applicable.

14. The Company is not dealing or trading in shares, securities, debentures, etc.

15. The Company has not given any guarantee for the loans taken by other parties from any bank or financial institution.

16. The Company has not raised any funds on short term basis or on long term basis. Hence clauses xvi & xvii of the aforesaid order are not applicable.

17. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintained under Section 301 of the Act. The Company has not raised any money through a public issue during the year.

18. The Company has not issued any debentures. Hence clauses xix & xx of the aforesaid order are not applicable.

19. During the course of our examination of the books of account carried out in accordance with the generally accepted auditing practices in India, we have neither come across any instance of fraud on or by the Company nor we have been informed of such case by the management.

For S. N. ROY & CO.


29A, Madan Mohan Tala Street, S. N. ROY

Kolkata – 700 005. Propreitor

Dated : 20th May, 2009 Membership No. 51056




SCHEDULE 31st March, 2009 31st March, 2008Rs. Rs.

SOURCES OF FUNDSShareholders’ Fund

Share Capital 1 45,00,000 45,00,000 Reserves & Surplus 2 2,36,117 2,59,269

47,36,117 47,59,269 APPLICATION OF FUNDSFixed Assets

Land 47,23,634 47,23,634 Current Assets, Loans & Advances

Current Assets 3 13,483 23,520 Less : Current Liabilities & Provisions 4

Current Liabilities 1,000 1,000 1,000 1,000

Net Current Assets 12,483 22,520 Miscellaneous Expenditure (to the extent not written off or adjusted)

Preliminary Expenses - 13,115 47,36,117 47,59,269

Accounting Policies & Notes on Accounts 5Schedules referred to above form an integral part of the Balance Sheet.In terms of our attached report of even date.

2008-2009 2007-2008Rs. Rs.

INCOMEInterest from Income Tax Department - 1,192

- 1,192 EXPENDITURE

Rates & Taxes 4,400 3,400 Land Rent 33 288 Auditors' Remuneration :

Audit Fees 1,000 1,000 Miscellaneous Expenses 4,604 6,228 Preliminary Expenses Written Off 13,115 13,115

23,152 24,031 Profit/(Loss) before Taxation (23,152) (22,839)Less : Provision for Taxation - 492Profit / (Loss) after Taxation (23,152) (23,331)Add : Profit brought forward from last year 2,59,269 2,82,600 Credit balance carried to Balance Sheet 2,36,117 2,59,269


For S. N. ROY & CO.Chartered Accountants

29A, Madan Mohan Tala Street S. N. ROYKolkata - 700 005 Proprietor U. S. BERIADated :20th May, 2009 Membership No. 51056 K. C. GUPTA

Directors



Directors



SCHEDULE - 4 : CURRENT LIABILITIES & PROVISIONS :Current Liabilities :

Sundry Creditors for Expenses 1,000 1,000

SCHEDULE - 2 : RESERVES & SURPLUSSurplus as per Profit & Loss Account 2,36,117 2,59,269

SCHEDULE - 3 : CURRENT ASSETS Cash & Bank Balances

Cash-in-hand 356 1,856 Balance with a Scheduled Bank on Current Account 13,127 21,664

13,483 23,520

31st March, 2009 31st March, 2008Rs. Rs.

SCHEDULE - 1 : SHARE CAPITALAuthorised

5,00,000 Equity Shares of Rs. 10 each 50,00,000 50,00,000 Issued, Subscribed & Paid-up

4,50,000 Equity Shares of Rs. 10 each fully paid up in cash (Out of the above, 2,50,000 Equity Shares are held by Hargaon Investment & Trading Co. Ltd., theholding company)

45,00,000 45,00,000

Accounting Policies :Basis of Accounting The Company prepares its accounts on accrual basis in acordance with normallyaccepted accounting principles. Fixed AssetsFixed Assets are stated at cost. Preliminary Expenses Preliminary Expenses are being written off over a period of five years in equal instalments.


SCHEDULE - 5 : ACCOUNTING POLICIES & NOTES ON ACCOUNTS



Directors


U. S. BERIADirectors

K. C. GUPTA

BALANCE SHEET ABSTRACTAND COMPANY’S GENERAL BUSINESS PROFILEI. Registration Details

Registration No. U70101WB2003PLCO97280 State Code 21


II. Capital raised during the year (Amount in Rs. Thousands)



III. Position of Mobilisation and Deployment of Funds : (Amount in Rs. Thousands)

Total Liabilities 4,736 Total Assets 4,736


Paid-up Capital 4,500 Net Fixed Assets 4,724

Reserves & Surplus 236 Investments -


Unsecured Loans Nil Miscellaneous Expenditure -


IV. Performance of Company (Amount in Rs.Thousands)

Turnover - Total Expenditure 23

Profit / (Loss) before tax (23) Profit / (Loss) after Tax (23)

Earning per share(Rs.) (0.05) Dividend Rate Nil


(As per monetary terms)

Item Code No.(ITC Code)



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140

Late Dr K.K. Birla

(1918-2008)

Our Source of Inspiration

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