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Directors Report of Balrampur Chini Mills Ltd.

Mar 31, 2013

Dear shareholders,

THE DIRECTORS HAVE PLEASURE IN PRESENTING THEIR REPORT AS A PART OF THE 37TH ANNUAL REPORT, ALONG WITH THE AUDITED ACCOUNTS OF THE COMPANY FOR THE YEAR ENDED 31ST MARCH 2013.

Operating and financial review (Rs. in lacs)

Financial Results 2012-13 2011-12

Gross turnover 338403.03 239031.15

Operating profit before finance costs, depreciation 46268.04 26597.21 and tax

Finance cost 14386.70 14741.11

Depreciation and amortisation expense 10825.74 11078.09

Tax expense 4852.72 30065.16 115.52 25934.72

Net profit 16202.88 662.49

Add : Dividend on equity shares (including tax on - 22.89 dividend) for previous period written back

Add : Balance brought forward from the previous 7904.63 7219.25 year

Profit available for appropriation 24107.51 7904.63

Appropriations:

Proposed dividend on equity shares 4886.28 -

Tax on proposed dividend 830.42 -

General Reserve 10000.00 -

Leaving a balance to be carried forward to next 8390.81 7904.63 year''s account

24107.51 7904.63

Dividend

Your Directors are pleased to recommend payment of Dividend for consideration of the shareholders @ Rs. 2.00 per share.

Operations

The operational data of the Company for the last two sugar seasons/ financial years are provided as under:

Parameters Season Season Financial year Financial year 2012-13 2011-12 ended 31.3.13 ended 31.3.12

Sugar cane crushed (in lac qtls) 862.63 860.18 810.52 846.28

Sugar produced (in lac qtls) 82.33 82.17 77.18 80.71

Recovery (%) 9.54 9.55 9.52 9.54

Performance 2012-13

The Company reported a gross turnover of Rs.3384.03 crores for the year ended 31st March, 2013 as against Rs.2390.31 crores in the previous financial year, a growth of 41.57%. The Net Profit also increased to Rs. 162.03 crores from Rs. 6.62 crores (after providing cane dues of Rs.92.35 crores pursuant to the Hon''ble Supreme Court Order) in the previous year.

The average price of free sale sugar realised during the year was Rs. 33.00 per kg. The cost of production for the year 2012-13 stands at Rs.33.16 per kg. The entire closing stock out of the production of 2012-13 has been valued at Rs.31.55 per kg which is the current market price. The above sales during the year comprised of opening stock valued at Rs. 28.67 per kg and sugar produced during 2012-13.

The Cabinet Committee of Economic Affairs in its landmark decision has decided to do away with the release mechanism and obligation on the millers to supply 10% of their sugar produced as ''Levy Sugar'' with effect from season 2012-13 onwards. Had the levy obligation continued, the Company would have valued 10% of the ''Levy Sugar'' i.e., 7.7 lakh quintals at an average price of Rs.19.70 per kg.

During the year under review, your Company decided not to account for the benefits which are to be reimbursed by the Government, available under the "New Sugar Industry

Promotion Policy, 2004" from the current year onwards which shall be accounted for in accordance with the final Order of the High Court. However, benefits in the form of remission has been accounted for.

The net loss in the sugar segment stands at Rs. 2126.00 lacs after providing for interest and the corporate overheads. However net profit was derived after optimum utilisation of byproducts i.e. molasses and bagasse.

Sugar: Your Company is glad to report that the aggregate crushing marginally increased from 860.18 lakh qntls in the sugar season 2011-12 to 862.63 lakh qntls in the sugar season 2012-13 when there was an overall decline in India''s cane output. The average recovery was marginally lower at 9.54% as against 9.55%. Further when viewed against the perspective of the financial year ended 31st March, 2013 crushing was lower at 810.52 lakh qntls compared to 846.28 lakh qntls during the previous financial year 2011-12, due to a delay in starting crushing operations by the sugar units of the Company.

The Uttar Pradesh Government announced a cane price of Rs.280 per quintal for the season 2012-13 compared to Rs. 240 for the season 2011-12. At Rs.280 per quintal and with an average recovery of around 9% in U.P., the cost of production of sugar in U.P. has become the highest in the country. This escalation in cane price announced by the State Government has rendered the U. P. sugar industry cash-starved and uncompetitive. The result was that cane price arrears mounted to an all time record of Rs. 6000 crores.

Power: The power business of the Company performed better during the year under review. The total power generated by our cogeneration plant was higher at 7488.69 lac units, as against 7390.47 lac units in the previous year. Power export to UPPCL was also higher at 5386.27 lac units as against 5267.96 lac units in the previous year; the total value of power exported to the grid was Rs. 21843.61 lacs as against Rs. 21810.68 lacs in the previous year.

Distillery: The distillery performance was satisfactory. The Company produced 317.62 lac BL industrial alcohol, 185.43 lac BL ethanol and 173.61 lac BL ENA as against 280.47 lac BL, 165.31 lac BL and 112.07 lac BL respectively during the previous year. The average realisation (net of excise duty) per BL of industrial alcohol, ethanol and ENA was Rs.28.06 as againstRs. 26.70 during the previous year.

Organic manure: The performance of organic manure division was satisfactory during the year.

Subsidiary companies

Indo Gulf Industries Ltd (IGIL): IGIL reported a net loss of Rs.56.74 lacs for the year ended 31st March, 2013.

Balrampur Overseas Private Limited (BOPL) a wholly owned subsidiary of the Company incorporated in Hong Kong has been deregistered voluntarily during the year by the Company Registry in Hong Kong as there was no activity during last few years.

The statement under Section 212(3) of the Companies Act, 1956 in respect of subsidiary company is separately annexed.

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss Account and other documents of the subsidiary company is not attached with the Balance Sheet of the Company. The annual accounts of the subsidiary company and the related detailed information shall be made available to members of the Company and subsidiary company seeking such information at any point of time. The annual accounts of the subsidiary company shall be kept for inspection for members at the Company''s Registered Office and at the Registered Office of the subsidiary company concerned.

Cane and sugar policy

Season 2012-13: The salient features of the sugar policy were as under:

* The ratio of levy and free-sale sugar at 10:90 has been changed to 100% free. The levy and the release requirements were abolished from season 2012-13 onwards.

* The Fair & Remunerative Price (F&RP) was fixed at Rs.170 per quintal linked to a basic recovery of 9.5% subject to a premium ofRs. 1.70 per quintal for every 0.1% increase in recovery above that level. The said F&RP was increased to Rs.210 per quintal for the season 2013-14.

* The U.P. Government increased the state advised price from Rs.240 per quintal to Rs.280 for normal variety.

New project

During the year under review, the Company embarked upon installation of 12.70 MW of cogeneration of power plant at Kumbhi Unit at an estimated cost of Rs. 52 crores. The project is expected to be ready by March 2014. Any capital investment under this project would be entitled to receive interest subvention under the ''New Sugar Policy'' of the U.P. Government. Once completed, this will add value to the bagasse trade.

Consolidated financial statements

In compliance with the Accounting Standards 21 and 23 of the Companies (Accounting Standards) Rules, 2006 and pursuant to the Listing Agreement with the Stock Exchanges, the consolidated financial statements form a part of this Annual Report.

Outlook

The sugar production in the country for the season 2012-13 is expected to be about 248 lakh tonnes as against 264 lakh tonnes during the season 2011-12. However, the sugar production in the country during the coming season 2013-14 is expected to decline on a possible lower availability of cane, especially in the drought-prone regions in Maharashtra and other Southern states. Indian sugar production would enter its third year of surplus during 2012-13. At 248 lac tonnes of production which surpasses consumption at approximately 235 lac tonnes and even in the current year there will be addition to inventory.

In Brazil there is large surplus of sugar production which has resulted in a lowering of international prices, despite announcements of duty cuts on ethanol in Brazil.

With higher level of inventory, large scale cane arrears and domestic prices pegged at lower than the cost of production, there is a dire need to increase import duties from 10% to check unwanted import of sugar.

The Cabinet Committee on Economic Affairs (CCEA) on 4th April, 2013 had decided to partially decontrol the sugar sector.

i) As per the CCEA decision, regulated release mechanism under which the sugar quantity for open market sale is fixed by the government, is abolished with immediate effect.

ii) Besides, mills will be freed from mandatory supply of 10% of their production to the government at the cheaper rate to meet PDS.

However, the Central Government has left to the State Governments the option to choose the cane price formula as recommended by the Rangarajan Committee. Karnataka has already moved ahead and taken steps for cane price linkage with sugar price by passing an ordinance.

For sustainable long-term growth of the sugar industry, all State Governments, including U.P. should take rational steps to adopt cane price linkage with sugar price which is being practiced globally with great success.

Abolition of regulated release mechanism will provide freedom to sell sugar without quantitative restriction and ensure better cash flows for timely payment of cane price to the farmers. With the above measure, the Central Government has completely freed the sales and marketing of sugar. This historic decision has opened up the sugar sector which will improve the financial viability of the industry and enable better liquidation of cane arrears and encourage new investments and consolidation. However, for complete deregulation, an effective cane price policy, beneficial for all the stakeholders i.e. cane growers, sugar producers and consumers is the need of the hour.

The CCEA on 22nd November, 2012 made it mandatory for Oil Marketing Companies (OMC) to blend 5% ethanol with petrol for the country as a whole. The OMC has invited bids for 110 crore litres of ethanol from domestic and global suppliers for blending with petrol during the year 2013-14 and have been allowed to follow a flexible policy of blending upto 10% in some parts of the country. Indian sugar mills offered 55 crore litres. Your Company participated in the tenders for 2.68 crores litres of ethanol at an average price of Rs. 35 per litre.

Merger of Khalilabad Sugar Mills Pvt. Ltd.

Your Company during the year under review proposed the merger of - Khalilabad Sugar Mills Pvt. Ltd. (KSMPL) a sick company under BIFR with itself in all share deal through Draft Modified Rehabilitation Scheme. The proposed exchange ratio is one share of the Company for every 20 shares of KSMPL. Proposed merger scheme is expected to be sanctioned by Hon''ble BIFR during the 2013-14 financial year. KSMPL is engaged in manufacturing of sugar and having is factory at Khalilabad (U.P.) with a crushing capacity of 2500 TCD.

Listing of equity shares

Your Company''s equity shares are listed on the Bombay, Calcutta and National Stock Exchanges. Your Company paid the annual listing fees to each stock exchange.

Corporate governance

As per Clause 49 of the Listing Agreement with the Stock Exchanges, the Management Discussion and Analysis, the Corporate Governance report and the Auditors'' Certificate on the compliance of conditions of Corporate Governance, form a part of the Annual Report. However, the voluntary guidelines on Corporate Governance issued by the Ministry of Corporate Affairs, Government of India, will be considered after the enactment of the New Companies Bill, 2012 by the Government.

Credit rating

ICRA has assigned a credit rating of A & A1 respectively for Company''s long-term and short-term debt.

Employee Stock Option Scheme

Pursuant to the Provision of Guidelines 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended, the details of Stock Options as on 31st March, 2013 under the Employee Stock Option Scheme, 2005 are set out in the Annexure to the Directors'' Report.

Directors

Shri R.K. Choudhury and Dr. A.K. Saxena, Directors of your Company, retire from the Board by rotation and are eligible for re-election.

Directors'' responsibility statement

As required under Section 217 (2AA) of the Companies Act, 1956 your Directors confirm that:

i. In preparation of the annual accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year, and of the profit of your Company for that year.

iii. The Directors have taken proper and sufficient care to maintain adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities, and

iv. The Directors have prepared the annual accounts on a ''going concern'' basis.

Particulars of employees

The particulars of employees, as required under Section 217(2A) of the Companies Act, 1956, are given in a separate annexure attached hereto and form part of this report.

Conservation of energy technology absorption and foreign exchange earnings and outgo

The particulars related to the conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1) (e) of the Companies Act, 1956, are given in a separate annexure attached hereto and form a part of this report.

Fixed deposits

The Company did not accept any deposit under Section 58A of the Companies Act, 1956 during the year under review.

Auditors & Auditors'' Report

M/s. G.P. Agrawal & Co., Chartered Accountants, Auditors of your Company retire, and being eligible, offers themselves for reappointment. The Notes on Accounts referred to in the Auditors'' Report are self-explanatory and therefore do not call for any further explanations/comments.

Cost auditors

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956, M/s. N. Radhakrishnan & Co, Cost Accountants, were appointed to conduct cost audits relating to sugar, electricity and industrial alcohol for the year ended 31st March, 2012.

The Cost Audit Report for the financial year ended 31st March, 2012 was filed by the Cost Auditors with respect to the Sugar, Electricity & Industrial Alcohol units of the Company on 23rd January, 2013, which is well within the due date of filing i.e. 28th February, 2013.

Appreciation

Your Board of Directors are thankful to the various stakeholders - shareholders, customers, dealers, financial institutions, the Central Government, the Government of U.P, State Bank of India, HDFC Bank, Punjab National Bank, other Bankers and other business associates for the excellent support received from them during the year under review. Your directors wish to place on record their sincere appreciation to all employees of the Company for their commitment and continued contribution to the Company.

For and on behalf of the Board of Directors

Kishor Shah Vivek Saraogi

Director cum Chief Financial Officer Managing Director

Place: Kolkata

Date: 10th May, 2013.


Mar 31, 2012

The Directors have pleasure in presenting their report as a part of the 36th Annual Report, along with the audited accounts of the Company for the year ended 31st March, 2012.

Operating and financial review [Rs. in Lacs]

Financial Results 2011-12 2009-11 (For 12 months) (For 18 months)

Gross turnover 239031.15 306739.86

Operating profit before finance costs, depreciation and tax 26597.21 54225.55

Finance costs 14741.11 14864.46

Depreciation and amortization expense 11078.09 16810.96

Tax expense 115.52 25934.72 6109.38 37784.80

Net profit 662.49 16440.75

Less: Loss of Maizapur unit on merger - 1248.17

Add : Dividend on equity shares (including tax on dividend) 22.89 - for previous period written back

Add : Balance brought forward from the previous year 7219.25 4238.55

Profit available for appropriation 7904.63 19431.13

Appropriations:

Proposed dividend on equity shares - 1852.05

Tax on proposed dividend - 300.45

Dividend on equity shares (including tax on dividend) - 59.38 for the previous year

General Reserve - 10000.00

Leaving a balance to be carried forward to next year's account 7904.63 7219.25

7904.63 19431.13

Dividend

Your Directors do not recommend the payment of dividend on equity shares in view of the lower profits earned by the Company.

Operations

The operational data of the Company for the financial year 2011-12 and 2009-11 are provided as under:

Cane crushed Sugar produced Financial year Recovery % (in lac qntls) (in lac qntls)

2011-12 (12 months) 846.28 80.71 9.54

2009-11 (18 months) 1231.48 115.47* 9.38

*excluding 8.69 lac quintals processed from raw sugar.

Financial year review

The financial and operating results for the year under review are for a period of 12 months and not strictly comparable with the 18 months results for 2009-11.

Performance 2011-12

The Company reported a turnover of Rs2390.31 crores for the year ended 31st March, 2012 as against Rs3067.40 crores during the previous period. During the year under review, the Company earned a net profit of Rs6.62 crores as against Rs164.41 crores during the previous period despite a hefty provision for impugned sugar cane dues of Rs92.35 crores for season 2007-08 during the year under review pursuant to the Hon'ble Supreme Court order dated 17.01.2012.

Sugar: Sugar crushing and production during season 2011-12 were substantially higher at 860.18 lac quintals and 82.17 lac quintals as against 694.60 lac quintals and 65.30 lac quintals respectively in 2010-11 season. The average recovery was higher at 9.55% (the second highest among all sugar producing companies in Uttar Pradesh) for the 2011-12 season as against 9.40% in 2010-11 season.

The Uttar Pradesh government announced a cane price of Rs240 per quintal for season 2011-12 compared to Rs205 for the season 2010-11. This hefty increase in the state advised cane price was politically induced without any economic rationale even as domestic sugar prices remained subdued owing to a surplus production. The result was that most sugar companies were unable to absorb the increased production cost leading to all time high cane price arrears around Rs3200 crores in U.P.

However, the increased crushing and volume growth helped amortise fixed costs more effectively and enhance the availability of byproducts to feed the downstream power and alcohol businesses. The Company is attractively placed to utilise the total availability of byproducts through the manufacture of synergic downstream products through its integrated business model.

The sugar season 2011-12 commenced with an opening stock of approximately 5 million tonnes at national level. The country's production is estimated at 26 million tonnes against a consumption of 23 million tonnes. To mitigate the impact of the surplus, the government prioritised sugar exports under an open general license in two tranches of a million tonnes each [refer to Cane & Sugar Policy], which has helped stabilise domestic sugar realisations.

Power: The power business of the Company performed better during the year under review. The total power generated by our cogeneration plant was 7390.47 lac units, as against 10153.88 lac units in the previous period. Power export to UPPCL was 5267.96 lac units as against 7110.77 lac units in the previous period; the total value of power exported to the grid was Rs21810.68 lacs as against Rs29392.93 lacs in the previous period.

Distillery: The distillery performance was satisfactory. The Company produced 280.47 lac BL industrial alcohol, 165.31 lac BL ethanol and 112.07 lac BL ENA as against 383.01 lac BL, 141.61 lac BL and 186.62 lac BL respectively during the previous period. The average realization (net of excise duty) per BL of industrial alcohol, ethanol and ENA was Rs26.70 as against Rs25.10 in 2009-11.

Organic manure: The performance of organic manure manufacture was satisfactory during the year under review.

Subsidiary companies

Indo Gulf Industries Ltd (IGIL): IGIL reported a net loss of Rs75.10 lacs for the year ended 31st March, 2012.

Balrampur Overseas Pvt. Ltd. (BOPL): BOPL, a wholly owned subsidiary of the Company incorporated in Hong Kong, reported a loss of Hong Kong $ 74166 for the year ended 31st March, 2012.

The statement under section 212(3) of the Companies Act, 1956 in respect of subsidiary companies is separately annexed.

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not attached with the Balance Sheet of the Company. The annual accounts of the subsidiary companies and the related detailed information shall be made available to members of the Company and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall be kept for inspection for members at the Company's Registered Office and at the Registered Office of the subsidiary companies concerned.

Cane and Sugar Policy

Season 2011-12: The salient features of the sugar policy were as under:

- The ratio of levy and free-sale sugar remained at 10:90.

- The Fair & Remunerative Price (F&RP) was fixed at Rs145 per quintal linked to a basic recovery of 9.5% subject to a premium of Rs1.37 per quintal for every 0.1% increase in recovery above that level.

- Consequent to the increase in F&RP, the levy sugar price was raised to Rs1974.90 per quintal from Rs1917.18.

- The UP government increased the state advised price from Rs205 per quintal to Rs240 for normal variety.

- The government permitted the export of 20 lac tons of sugar in tranches of 10 lac tons each under an open general license (OGL) to evacuate surplus sugar. Each sugar factory was given a proportionate tradable license based on its average sugar production in the previous three seasons. Beyond 20 lac tons government further allowed unrestricted exports to enable the industry to reduce its inventory leading to the liquidation of outstanding cane dues. The exports were also permitted under OGL without tradable licenses.

Legal cases related to cane price

The judgment related to the cane price for the sugar seasons 2006-07 and 2007-08, which were pending in the Hon'ble Supreme Court, was delivered on 17th January, 2012. The Order directed the payment of the differential price of Rs7 per qntl. for the season 2006-07 and Rs15 per qntl. for the season 2007-08 within three months of the Order. In line with this directive, a sum of Rs92.35 crores was provided for in the accounts of the Company during the year under review as differential cane price for season 2007-08. The arrears of the cane price for the season 2006-07 were already provided in the books of account.

Consolidated financial statements

In compliance with the Accounting Standards 21 and 23 of the Companies (Accounting Standards) Rules, 2006 and pursuant to the Listing Agreement with the stock exchanges, the consolidated financial statements form a part of this Annual Report.

Outlook

The Government of India constituted an Expert Committee under the Chairmanship of Dr. C. Rangarajan, Chairman of the Economic Advisory Council to the Prime Minister, to examine all aspects related to sugar decontrol. The Committee will meet all stakeholders before submitting its views, touching upon export, cane price linkage, abolition of levy obligation etc. The Committee is expected to submit its report by July 2012.

A final view on the price of ethanol is awaited even though the Expert Committee headed by Dr. Saumitra Chaudhuri, Member Planning Commission submitted its recommendations a long time ago.

Brazil is a relevant example where deregulation a decade-and- a-half ago has benefited the country through increased production, remunerative price to cane growers, energy security and adequate bio-fuel availability. The result is that Brazil reported a significant and sustainable increase in sugar production from a pre-deregulation level of around 17 million tons to of 30 million tons plus, strengthening the country's position as a regular exporter of ethanol and sugar. Currently owing to ambiguity in policy and decision making, India goes through volatile sugar cycles on regular basis. With complete deregulation of the sugar industry, clarity and sustainable growth of sugar industry in India would lead to large scale benefits for all its stakeholders.

Listing of equity shares

Your Company's equity shares are listed on the Bombay, Calcutta and National Stock Exchanges. Your Company paid the annual listing fees to each stock exchange. An application for delisting of our shares from Calcutta Stock Exchange is pending.

Corporate governance

As per Clause 49 of the Listing Agreement with the stock exchanges, Management Discussion and Analysis, Corporate Governance report and the Auditors' Certificate on the compliance of conditions of Corporate Governance, form a part of the Annual Report. However, the voluntary guidelines on Corporate Governance issued by the Ministry of Corporate Affairs, Government of India, will be considered after the enactment of the New Companies Bill by the Government.

Credit rating

ICRA has assigned a credit rating of A & A1 respectively for Company's long term and short term debt.

Risk management

The Board of Directors regularly reviewed risks and threats and took suitable proactive initiatives to safeguard the Company's interest.

Buyback of shares

The Board of Directors at its meeting on 22nd February, 2011 announced a buyback of the Company's fully paid up equity shares of Rs1 each at a price not exceeding Rs85 per share. This was permitted to be paid in cash out of the free reserves by way of purchase from the open market through the stock exchanges for an amount up to Rs110 crores. The buyback closed on 5th July, 2011. The Company bought back 15410135 equity shares at an average price of Rs71.17 per share aggregating Rs109.68 crores. The acquired shares were extinguished and following this, the paid-up share capital of the Company was reduced to Rs24.43 crores.

Employee Stock Option Scheme

Pursuant to the Provision of Guidelines 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended, the details of Stock Options as on 31st March, 2012 under the Employee Stock Option Scheme, 2005 are set out in the Annexure to the Directors' Report.

Directors

Shri S.B. Budhiraja ceased as Director of the Company with effect from 23rd July, 2011 as he did not seek re-election in the last Annual General Meeting. The Board places on record its high appreciation for the valuable services rendered by Shri

S.B. Budhiraja during his tenure as a director and chairman of the Audit Committee.

Shri R.N. Das was appointed as Additional Director of the Company with effect from 23rd July, 2011. He will hold office up to the date of the ensuing Annual General Meeting. The Company received a notice under Section 257 of the Companies Act, 1956 from a member proposing Shri R.N. Das as a director of the Company.

Shri Naresh Chandra and Shri R.Vasudevan, Directors of your Company, retire from the Board by rotation and are eligible for re-election.

Directors' responsibility statement

As required under Section 217 (2AA) of the Companies Act, 1956 your Directors confirm that:

i. In preparation of the annual accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year, and of the profit of your Company for that year.

iii. The Directors have taken proper and sufficient care to maintain adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities, and

iv. The Directors have prepared the annual accounts on a 'going concern' basis.

Particulars of employees

The particulars of employees, as required under Section 217(2A) of the Companies Act, 1956, are given in a separate annexure attached hereto and form part of this report.

Conservation of energy etc.

The particulars related to the conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956, are given in a separate annexure attached hereto and form a part of this report.

Fixed deposits

The Company did not accept any deposit under section 58A of the Companies Act, 1956 during the year under review.

Auditors & Auditors' Report

M/s. G.P. Agrawal & Co., Chartered Accountants, Auditors of your Company, retire and, being eligible, offers themselves for re-appointment. The Notes to Financial Statements referred to in the Auditors' Report are self-explanatory and therefore do not call for any further explanations/ comments.

Cost auditors

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956, M/s. N. Radhakrishnan & Co, Cost Accountants, were appointed to conduct cost audits relating to sugar, electricity and industrial alcohol for the year ended 31st March, 2012.

The Cost Audit Report for the financial year ended 31st March, 2011 was filed by the Cost Auditors with respect to the sugar units of the Company on 21st September, 2011, which is well within the due date of 30th September, 2011.

Appreciation

Your Board of Directors wish to place on record their sincere appreciation for the continued support from shareholders, customers, suppliers, Financial Institutions, Central Government, Government of U.P, State Bank of India, HDFC Bank, Punjab National Bank, other Bankers and other business associates for the growth of the organisation. A particular note of thanks to all employees of the Company for the cooperation and dedicated services rendered at all levels.

For and on behalf of the Board of Directors

Kishor Shah Vivek Saraogi

Director cum Chief Financial Officer Managing Director

Place: Kolkata

Date : 28th May, 2012.


Mar 31, 2011

The Directors have pleasure in presenting their report as a part of the 35th Annual Report along with the audited accounts of the Company for the 18 months period ended 31st March 2011.

Operating and Financial Review [Rs. in Lacs]

Financial Results 2009-11 2008-09 (For 18 months) (For 12 months)

Gross Turnover 306321.81 177101.78

Operating profit before interest, depreciation and tax 53225.45 45439.72

Interest and other financial charges (net) 13814.36 9684.59

Depreciation & Amortisation 16810.96 10794.38

Provision for taxation 6159.38 36784.70 2310.16 22789.13

Net Profit 16440.75 22650.59

Less : Loss of Maizapur unit on merger 1248.17 –

Add : Balance brought forward from the previous year 4238.55 1599.68

Profit Available for Appropriation 19431.13 24250.27

Appropriations

Proposed dividend on equity shares 1852.05 7702.65

Tax on proposed dividend 300.45 1309.07

Dividend on equity shares (including tax on dividend) for the previous year 59.38 –

General Reserve 10000.00 11000.00

Leaving a balance to be carried forward to next years account 7219.25 4238.55

19431.13 24250.27

Change in financial year

The financial year 2009-10 of the company was extended up to 31st March, 2011 from 30th September 2010. Henceforth, the financial year of the company shall be from 1st April to 31st March. The financial year period was changed as the Company needed to allign its accounts with the emerging changes in law and accounting. The financial results for the year under review covered a period of 18 months and are not comparable with the results of 2008-09, a financial year that covered only 12 months.

Dividend

Your Directors are pleased to recommend a dividend for consideration of the shareholders @ Rs. 0.75 per share.

Operations

The operational data of the Company for the 18 months period covering two sugar seasons (2009-10 and 2010-11) are mentioned below :

Season Cane crushed Sugar produced Recovery (in lac qntls) (in lac qntls)

2009-10 538.58 50.34 9.35

* 2010-11 694.60 65.30 9.40

Total 1233.18 115.64

* Figures include Kumbhi Unit continued upto 4.4.2011

Performance 2009-11

The Company reported a turnover of Rs.3063.22 crores for the period ended 31st March, 2011 as against Rs.1771.02 crores in the previous financial year, a growth 72.96%. However, net profit declined by 27.42% to Rs.164.41 crores from Rs.226.51 crores in the previous year due to a substantial increase in the cost of production.

Sugar season 2009-10: Sugar crushing and production during season 2009-10 was higher at 538.58 lac quintals and 50.34 lac quintals as against 483.22 lac quintals and 44.17 lac quintals respectively in the previous season. Average recovery was marginally higher at 9.35% as against 9.14% in the previous season.

The season began with lower national production estimates which led to a rise in domestic sugar realizations from Rs.28 in October 2009 to a short-lived peak of Rs.42 per kg in January 2010. Concurrently, the international market recorded a 28- year high of 35.58 cents per pound, indicating a domestic and global sugar shortage. This was the first time in the history of the industry when sugar prices had moved up sharply and suddenly during the season, resulting in mills needing to compete to obtain raw material at higher prices

following a scenario where farmers were not ready to supply cane at lower prices due to higher end product realisations. What made matters more challenging, mills raised cane prices at regular intervals through the season.

Your company paid Rs.230 per qntl for cane against a State Advised Price (SAP) of only Rs.165 per qntl. Mills not only paid higher cane prices but imported raw and white sugar in a big way, estimated at approximately 50 lac tons. This high cane price increased production costs, which coincided with a decline in global sugar prices.

Meanwhile, the government of India imposed unprecedented restrictions on the sale of sugar - weekly quota sale, stock limits on traders and compulsory imports by bulk consumers etc. - to cool high domestic prices. The combined effect of these measures collapsed sugar realizations from a peak Rs.42 to a low Rs.26 a kg. Since the industry had already paid a higher cane price, it was now saddled with high cost sugar which needed to be liquidated at low realizations, resulting in substantial losses in season 2009-10. However, the Company was able to make good the loss in its sugar segment through its integrated business model covering the cogeneration and distillery businesses.

The Company imported 9.06 lac quintals of raw sugar.

Sugar season, 2010-11: Due to higher sugar cane prices paid to farmers during the 2009-10 season, there was a substantial increase in the planting of sugar cane during the 2010-11 season. The Companys crushing and production were substantially higher at 694.60 lac quintals and 65.30 lac quintals respectively with an average recovery of 9.40%.

The season commenced around a projected national sugar production of 240 lac tons. However, the UP government hiked cane price to Rs.205 per qntl effective for the entire season, which made it difficult to rationalize costs. Following the perception of a sugar output, the government of India permitted sugar export under Advance Licence Scheme as well as under Open General License in December 2010. However, a delay in the implementation of this decision resulted in sugar prices remaining sluggish at Rs.28 per kg.

Following volume growth, your Company succeeded in reducing the incidence of fixed costs across all segments.

Power

The profitability reported by the Power Division was higher on account of adequate capacity utilization that was derived from higher crushing and bagasse availability. The Uttar Pradesh Electricity Regulatory Commission increased the tariff for bagasse-based cogen plants for five years with effect from FY 2009-10. The total power generated by our cogeneration plant was 10153.88 lac units, as against 4957.54 lac units in the previous year. Consequently, power export to UPPCL was higher at 7110.77 lac units as against 3576.58 lac units in the previous year; the total value of power exported to the grid was correspondingly higher at Rs.29392.93 lacs as against Rs.12477.72 lacs in the previous year.

Distillery

The distillery performance was satisfactory as it produced 383.01 lac BL industrial alcohol, 141.61 lac BL ethanol and 186.62 lac BL ENA as against 267.05 lac BL, 101.60 lac BL and 114.07 lac BL respectively during the previous year. The cumulative average realization (net of excise duty) per BL of industrial alcohol, ethanol and ENA was Rs.25.10 in 2009-11 as

against Rs.26.14 in 2008-09.

Organic manure

The performance of our organic manure manufacturing operation was satisfactory.

Subsidiary companies

Indo Gulf Industries Ltd (IGIL): The Honble Board for Industrial & Financial Reconstruction (BIFR) vide its order dated 24.06.2010, sanctioned a Rehabilitation Scheme for the revival of Indo Gulf Industries Ltd (IGIL), a subsidiary of the Company. As per the sanctioned Scheme, the Sugar Division of IGIL, situated at Maizapur, Gonda, Uttar Pradesh was demerged from that company and then merged with Balrampur Chini Mills Ltd (BCML) with effect from 1st October, 2008. As per the Scheme, BCML issued and allotted to IGIL shareholders in the ratio of 1 equity share of Rs.1/- each fully paid up for every 100 equity shares of Rs.1/- each (post restructuring) held by them in IGIL as on 24.08.2010, except to BCML itself to the extent of its shareholding in IGIL. Accordingly, BCML allotted 44048 equity shares of Rs.1/- each to IGIL shareholders. The Explosive units of IGIL continued as the sole business of IGIL as per the sanctioned Scheme. IGIL reported a net loss of Rs.191.94 lacs for the 18 months period ended 31st March, 2011.

Balrampur Overseas Private Limited: Balrampur Overseas Private Limited (BOPL), a wholly owned subsidiary of the Company incorporated in Hong Kong, reported a net profit of Hong Kong $2257495 for the 18 months period ended on 31st March, 2011.

The statement under section 212(3) of the Companies Act, 1956 in respect of subsidiary companies is separately annexed.

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the holding and subsidiary

companies seeking such information at any point. The annual accounts of the subsidiary companies shall be kept for inspection by any shareholders at Registered Office of the holding company and of the subsidiary companies concerned.

Cane & Sugar Policy

Season 2009-10

The salient features of the sugar policy were as under:

- Keeping in mind the requirement of BPL families (2.8 million), the government increased its levy sugar obligation from 10% to 20% for the season 09-10 owing to a lower sugar production envisaged in the said season.

- The Fair & Remunerative Price (F&RP) was fixed at Rs.129.84 per qntl linked to a basic recovery of 9.5% subject to a premium of Rs.1.37 per qntl for every 0.1% increase in recovery above that level.

- Consequent to the increase in F&RP, the levy sugar price was raised to Rs.1826.13 per qntl from Rs.1384.

- The UP government increased SAP to Rs.165 from Rs.140 per qntl.

- The government permitted duty-free imports of white and raw sugar from April 2009 to tide the country over a shortage in domestic production.

Season 2010-11

With a revival in production estimates, the government reverted to the levy obligation level of 10%. F& RP was increased to Rs.139.12 per qntl linked to a basic recovery of 9.5% subject to a premium of Rs.1.37 per qntl for every 0.1% increase in recovery above that level. The levy sugar price was also revised to Rs.1917.18 per qntl. The UP government enhanced SAP from Rs.165 to Rs.205 per qntl. The government of India permitted the export of sugar under Advance Licence Scheme by millers for their earlier years obligation, the quantum of which was around 12 lac tons. The government permitted the export of 5 lac tons under OGL to eliminate the possibility of cane arrears and also stabilize domestic realisations.

Legal cases related to cane price

As reported last year, legal cases relating to cane prices for the sugar seasons 2006-07, 2007-08 and 2008-09 were pending in Supreme Court of India. The next hearing is scheduled after the opening of the Courts following the vacation.

Refinery

The Company had commissioned a refinery of 500 TCD at its Haidergarh plant for Rs.5 crores, increasing the Companys refinery capacity to 1200 TCD (including 700 TCD at the Rauzagaon plant). The Company plans to enhance the refinery capacity at its Haidergarh plant by 3600 TCD. This will provide the Company with revenue and production stability in years when imports are necessary to meet the countrys demand-supply gap.

Consolidated financial statements

In compliance with the Accounting Standards 21 and 23 of the Companies (Accounting Standards) Rules, 2006 and pursuant to the Listing Agreement with the stock exchanges, the consolidated financial statements form a part of this Annual Report.

Outlook

The sugar industrys long standing demand of deregulation was actively considered at the highest level of the government. However, the government was unable to take a decision and the industry waited anxiously for this development. It would pertinent to indicate that the global sugar industry is deregulated. Since India is the largest sugar consumer, deregulation would be in the broader interest of all stake holders – growers, millers and consumers – as it would reduce the cyclic impact and minimize government interference. Brazil is a relevant instance of the benefits of deregulation: following this decision, sugar production at 30 million tons a season has created a win-win proposition for all stakeholders.

The Empowered Group of Ministers [EGOM] has mandated that Oil Marketing Companies [OMC] blend 5% ethanol with

petrol, fixing an interim price of Rs.27 per BL. OMC placed orders on sugar mills for buying 58 crore litres of ethanol. EGOM also constituted a Committee under the chairmanship of Dr Soumitra Choudhury to reconsider a sustainable price of ethanol, a step in the right direction.

Against 187 lac tons of 2009-10 production, season 2010-11 began with an opening stock of 50 lac tons. The export of 12 lac tons under ALS and 5 lac tons under OGL and domestic consumption at 225 lac tons, will ensure no inventory addition. With growth in the countrys GDP and sugar consumption, sugar prices are expected to improve gradually.

With an increase in the volume of bagasse and molasses, capacity utilization of the Companys power and distillery assets will increase, leading to a higher profitability.

Listing of equity shares

Your Companys equity shares are listed on the Calcutta, Bombay and National Stock Exchanges. An application for delisting our shares from Calcutta Stock Exchange is pending. Your Company paid the annual listing fees to each stock exchange. The Companys GDRs are listed on the Luxembourg Stock Exchange.

Corporate governance

As per Clause 49 of the Listing Agreement with the stock exchanges, Management Discussion and Analysis, Corporate Governance report and the Auditors Certificate on the compliance of conditions of Corporate Governance, form a part of the Annual Report. However, the voluntary guidelines on Corporate Governance issued by the Ministry of Corporate Affairs, Govt. of India, will be considered following the introduction of New Companies Bill in the Parliament.

Credit Rating

The ICRA credit rating for short-term debt mobilized by your Company for a sum of Rs.500 crores was A1+.

Change in capital structure

The Company issued and allotted 2924950 equity shares of Rs.1/- each at a price of Rs.45 per share (including premium of Rs.44 per share) upon the exercise of 2924950 options under the Employee Stock Option Scheme. The Company also allotted 44048 equity shares of Rs.1/- each to the shareholders of Indo Gulf Industries Ltd vide BIFR order dated 24.06.2010. Consequently, the paid up share capital of the Company increased to 259724058 equity shares of Rs.1/- each.

Buyback of shares

The Board of Directors of the Company in its meeting on 22nd February, 2011 approved a proposal to buyback the Companys fully paid up equity shares of Rs.1/- each at a price not exceeding Rs.85 per share, payable in cash, for an amount upto Rs.110 crores out of free reserves by way of purchase from the open market through the stock exchanges. Accordingly, the Company bought back 4678678 shares upto 31.03.2011 and extinguished 3449147 shares as on 31.03.2011. Following extinguishment, the paid-up share capital of the Company was Rs.256274911 as on 31.03.2011.

Employee Stock Option Scheme

Pursuant to the Provision of Guidelines 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended, the details of Stock Options as on 31st March, 2011 under the Employee Stock Option Scheme, 2005 are set out in the Annexure to the Directors Report.

Directors

Shri R.K. Choudhury and Shri S.B. Budhiraja, Directors of your Company, retire from the Board by rotation and are eligible for re-election.

Directors responsibility statement

As required under Section 217 (2AA) of the Companies Act, 1956 your Directors confirm that:

i. In preparation of the annual accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year, and of the profit of your Company for that period.

iii. The Directors have taken proper and sufficient care to maintain adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities, and

iv. The Directors have prepared the annual accounts on a going concern basis.

Particulars of employees

The particulars of employees, as required under Section 217(2A) of the Companies Act, 1956, are given in a separate annexure attached hereto and form part of this report. However, as permitted by Section 219(1)(b)(iv) of the Companies Act, 1956, the abridged annual report is being sent to all the members of the Company excluding the said Annexure.

Conservation of energy etc.

The particulars related to the conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 217(1)(e) of the Companies Act, 1956, are given in a separate annexure attached hereto and form a part of this report.

However, as permitted by Section 219(1)(b)(iv) of the Companies Act, 1956 the abridged Annual Report is being sent to all the member of the Company excluding the said Annexure.

Fixed deposits

The Company did not accept any deposit under section 58A of the Companies Act, 1956 during the year under review.

Auditors & Auditors Report

M/s. G.P. Agrawal & Co., Chartered Accountants, Auditors of your Company, retire and, being eligible, offers themselves for re-appointment. The Notes on Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further explanations/comments.

Cost Auditors

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956, M/s. N. Radhakrishnan & Co, Cost Accountants, were appointed to conduct cost audits relating to sugar, electricity and industrial alcohol.

The Cost Audit Report for the last audited accounts for the financial year ended 30th September, 2009 was filed by the Cost Auditors with respect to the sugar units of the Company on 18th March, 2010, which is well within the due date of 31st March, 2010.

Appreciation

Your Board of Directors place on record their sincere appreciation for the continued support from shareholders, customers, suppliers, Financial Institutions, Central Government, Government of U.P, State Bank of India, other Bankers and other business associates for the growth of the organisation. A particular note of thanks to all employees of the Company for the cooperation and dedicated services rendered at all levels.



For and on behalf of the Board of Directors

Kishor Shah Vivek Saraogi Director-cum-Chief Financial Officer Managing Director

Kolkata 13th May, 2011


Sep 30, 2009

Even as the world passed through its most challenging year in decades, BCML reported a vigorous rebound in profits.

While this may seem odd to most people exposed to the phenomenon of a decline in profits at a time of financial uncertainty, decoupling was a visible reality in Indias sugar industry in 2008-09.

Take the macro perspective. The foundation for the next phase in the cyclicality of the Indian sugar industry was laid well before the financial market showed its first sign of collapse. This transpired after the Uttar Pradesh government raised cane prices independent of sugar realisations and the prevailing reality in 2006. The result was that mills could not remunerate farmers in 2006-07 and 2007-08. Meanwhile, other cereal realisations rose, inducing cane farmers to grow alternative crops. The combined effect was a sharp decline in cane cropping, which inevitably translated into higher sugar realisations. The reality of a sugar price increase (.arising out of a drawdown in Indian cane supply) was far too severe to be influenced by the

collapse in the global financial markets.

Take the micro perspective. Even as global markets collapsed in October 2008, Balrampur passed through relatively unscathed for an important reason: we had a relatively under- stressed balance sheet with no cocktailing of foreign exchange transaction derivatives. As a result, every lender knew exactly where we stood — no hidden liabilities. As an extension of this conservative reality, we refused to dilute our equity even when cash was easily available in 2009, simply because we did not have any project at hand to deploy it profitably.

Now to answer the question that was asked: owing to these realities, we grew our topline 14.08% and bottomline 133.44% in 2008-09 over 2007-08, indicating a vigorous rebound from a cyclical bottom.

What were the significant challenges and achievements of 2008-09-

During 2008-09, there were no major challenges for the Company as cane output declined and our operations ran on an auto-pilot mode, except for the period between Qctober and December when the financial sector was affected by turmoil.

So Balrampur set about bringing all variables under its direct control. In January 2008, the promoters reinforced the Companys net worth with an infusion at Rs. 92 per share at one of the most challenging moments in its existence, enhancing creditor comfort. This also reinforced our funding to sustain production during a challenging downturn.

Besides, we were always aware that when profits rise, so do our costs. Not this time though; we set about managing our costs better and though the effects may be visible only in 2009- 10, I can assure that our overheads will be relatively lower and better benchmarked across the industry.

How do you see the sugar trend unfold-

I visualise a robust industry performance for three years due to the following reason: a global production shortage. Brazil, the largest supplier of sugar to the global markets, was affected by a production shortfall because of adverse climatic conditions and cane diversion towards ethanol. In

India, cane is facing competition from alternative inflationary food crops; however, farmers may revert towards cane plantation in the face of surging sugar prices. Sugar production may be no more than 16 million tonnes in 2009-10 and around 21 million tonnes in sugar year 2011-12. That would still be well short of the growing national demand.

So what is the growing demand likely to be-

One of the points that I want to emphasise is that the industry rebound this time has a more sustainable - and less cyclical - character to it; this is so because I can see evidence of robust consumption building up in the country. Even though India has a deep-rooted mithaai tradition, the countrys per capita annual sugar consumption of around 26 kg is less than half that of the US. I see evidence of rising consumption: the annual 25% increase in sugar off-take by Pepsi and Coke are safe indicators. With the GDP rebound, consumption is expected to increase further. I want to emphasise that the industry rebound is not just weather-led but consumption- led. It is a structural shift, not merely a climatic one. As a result, the projected demand of 23 million tonnes in 2009-10 is likely to be 23.5 million tonnes in 2010-11, widening the gap between consumption and supply. Correspondingly, Indias sugar production is not likely to be more than its consumption, and this reality will keep realisations firm across the foreseeable future.

How will Balrampur utilise its profits- More mills-

The other point I wish to make unambiguously to our shareholders is that we do not see any scope of greenfield expansion across the foreseeable future for ourselves or for any player in the industry. The last season was evidence of what I am saying: most mills were scrounging for cane to feed their newly commissioned assets, and the result was that, we were driving up the cost of scarce cane by competing among ourselves. In some cases, plants were operational for only 45 days in the season (compared with around 170 days normally). Our first collective objective will be to maximise asset utilisation from an industry average of a mere 55%. This makes this industry rebound different from the preceding upturns; each previous bull run was accompanied by unprecedented capacity expansion. During this industry rebound, I cannot think of even one sugar manufacturer who is investing in fresh capacity. This makes this bull run more stable than the earlier ones with the industry priority being cane development. Balrampur too would rather work closely with farmers, encourage them to grow more cane, enhance its asset utilisation, then de-bottleneck its existing capacities and seek non- seasonal opportunities. The result is that, should this industry upturn sustain for another couple of years, we expect to generate adequate cash, repay and prepay loans, progress towards a lighter balance sheet and become a considerably more profitable Company.

From which decisions would growth come from-

I have already indicated how we expect to grow our revenues: higher capacity utilisation will lead to enhanced revenues. In addition setting up of 500 million tonnes refinery at Haidergarh Unit will also result in higher utilisation of assets.

In the ethanol division, it will be business as usual, focusing on high utilisation to cover the relatively lower spread between a high molasses cost and a stable ethanol realisation.

In the power division, one sees a significant upside for a number of reasons: the countrys peak power deficit of 12% will sustain, the Uttar Pradesh government has revised the co-generation tariff from Rs.3.03 per unit to around Rs.4.00 per unit; the concept of open-access and inter- regional transfers will enable U.P. co- generators to get the highest realisation that the market can bear. We intend to capitalise through some specific initiatives: enhance our aggregate power capacity, keep our facilities running in the off-season and convert a number of bagasse-fired boilers to multi-feed at a negligible cost. The result is that we expect to emerge as Indias largest power exporting co-generation Company, resulting in a significant increase in our profits from this division. Going ahead, the power business will be integral to our growth.

What is the road ahead for the Company-

In a consumption-led story, I do not see raw material costs declining. However, I expect the increase in costs to be more than covered by increasing realisations, arising out of a demand-supply mismatch. Much as we are concerned about the impact this will have on consumers, the reality is that with low capacity utilisation and cane simply not available, we foresee a sustained industry upside.

Balrampur will leverage this industry reality to emerge as a stronger Company. For one, we do not expect to make significant investments in gross block; the focus will be on maximising returns through an increase in asset utilisation. We will be debt free Company at net levels in two years. The next big growth is likely to come from the extension of our Indian presence to a global one where we leverage our considerable intellectual, organisational, technical, administrative and entrepreneurial capital.

Your Directors have pleasure in presenting their 34th Annual Report along with the audited accounts of the Company for the year ended 30th September, 2009.

Operating and Financial Review [Rupees in Lacs]

Finacial Results 2008-09 2007-08

Gross Turnover 177101.78 155250.21

Operating Profit Before Interest, Depreciation and Tax 45439.72 32949.44

Interest and Other Financial Charges (Net) 9684.59 8965.11

Depreciation and Amortisation 10794.38 11720.50

Provision for Taxation 2310.16 22789.13 2560.90 23246.51

Net Profit 22650.59 9702.93 Add:

Balance brought forward from the previous year 1599.68 (3608.43)

Profit Available for Appropriation 24250.27 6094.50 Appropriations

Proposed Dividend on Equity Shares 7702.65 1277.68

Tax on Proposed Dividend 1309.07 217.14

General Reserve 11000.00 3000.00

Leaving a balance to be carried forward to next years account 4238.55 1599.68

24250.27 6094.50

Dividend

Your Directors are pleased to recommend payment of Dividend for consideration of the Shareholders on 25,67,55,060 Equity Shares of Re.l/- each @ 300% i.e. Rs.3.00 per share.

Operations

The operational data for the last two years are as follows:

Season 2008-09 (2007-08) Balrampur Babhnan Tulsipur Haidergarh Akbarpur

Crushing 12000 10000 7000 5000 7500

capacity (TCD) (12000) (10000) (7000) (5000) (7500)

Start of crushing 02.12.08 02.12.08 02.12.08 05.12.08 29.11.08

season <29.11.07) (29.11.07)(29.11.07) (30.11.07) (29.11.07)

Closing of crushing 01.03.09 01.03.09 04.03.09 04.02.09 08.02.09

season (01.05.08) (10.04.08) (18.05.08) (18.03.08) (20.03.08)

Duration (Days) 90 90 93 61 71

(155) (134) (172) (109) (112)

Sugar cane crushed 93.02 70.95 51.09 17.64 41.16

(Inlacqntls) < 164.98) (110.81) (99.45) (47.23) (72.44)

Recovery (%) 8.95 9.14 9.39 9.17 9.26

(10.05) (10.26) (9.74) (10.25) (10.16)

Sugar produced 8.32 6.48 4.80 1.62 3.81

(Inlacqntls.) (16.57) (11.37) (9.68) (4.84) (7.36)

Season 2008-09 Rauzagaon Mankapur Kuinbhi Guiana Total 2007-08

Crusing 8000 8000 8000 8000 73500

capacity (TCD) (8000) (8000) (8000) (8000) (73500)

Start of crusing 02.12.08 02.12.08 25.11.08 25.11.08 -

season (29.11.07) (29.11.07) (29.11.07) (04.12.07) (-)

Duration (Days) 08.02.09 28.02.09 21.02.09 28.02.09 -

Closing of crushing 26.03.08) (21.04.08) (21.03.08) (26.03.08) (-)

season 69 89 88 96 -

(119) (145) (114) (114) (-)

Sugar cane crushed 33.61 60.15 53.23 62.37 483.22

(In lac qntls> (67.67) (98.35) (74.62) (70.26) (805.81)

Recovery (%) 9.13 8.97 9.35 9.16 9.14

(10.28) (10.33) (10.52) (10.08) (10.16)

sugar produced 3.07 5.39 4.97 5.71 44.17

(In lacs qntls> (6.95) (10.15) (7.85) (7.08) (81.85)

Performance 2008-09

The Company achieved admirable results for the year ended 30th September, 2009 despite much lower production and lower recovery during season 2008-09.

Sugar

The sugar segment contributed significantly to the overall profitability of the Company. There was a sharp fall in production of sugar in the country from 26.3 million tonnes in 2007-08 to 14.7 million tonnes in 2008-09. The global average sugar prices also moved up from US$ 387 in October 2008 to US$ 610 per tonne in October 2009 owing to adverse weather conditions in Brazil resulting in lower production as well as continuous increased demand in India. Both these factors led to sharp upward movement in prices from Rs.1780 in September 2008 to plus Rs.3000 per quintal in the month of September 2009. Average realisation (net of excise duty) for free sale sugar of the Company for 2008-09 was Rs.2215 as against Rs.1504 per quintal last year.

The Company also gained substantially from carry over stocks of sugar.

Owing to depressed sugar prices during 2006-07 and 2007-

08, the industry was unable to pay the farmers on time whereas for other crops more remunerative prices were offered to the growers which resulted in diversion of land resources to other crops.

Crushing of sugarcane and production of sugar of the Company during the season 2008-09 was substantially lower at 483-22 lac quintals and 44.17 lac quintals as against 805.81 lac quintals and 81.85 lac quintals, respectively in the earlier year. Recovery was also lower at 9.14% as against 10.16% in the previous season.

The gross turnover, profit before tax and after tax and earning per share have shown a remarkable improvement over the last year.

Power

The profitability reported by power division has been lower on account of inadequate capacity utilisation owing to lower crushing and thereby lower availability of bagasse.

During the year under review, the total power generated by cogeneration plants was 4957.54 lac units, as against 7906.88 lac units in the previous year. Consequently, the export to UPPCL was also lower at 3576.58 lac units as against 5735.35 lac units in the previous year. Accordingly, the total value of power exported to the grid was also lower at Rs. 12477.72 lacs as against Rs.17393-55 lacs in the previous year.

Distillery

The performance of distillery was satisfactory in the given circumstances. It produced 267.05 lac BL industrial alcohol, 101.60 lac BL ethanol and 114.07 lac BL ENA, as against 663.62 lac BL, 174.33 lac BL and 72.94 lac BL, respectively, during the previous year. The average realisation (net of excise duty) per BL of industrial alcohol, ethanol and ENA was Rs.26.14 in 08-09 as against Rs.19.62 in 2007-08.

Organic Manure

The performance of organic manure was also satisfactory.

Subsidiary Companies

Indo Gulf Industries Ltd.

During the season 2008-09, the sugar unit of the Indo Gulf Industries Limited (IGIL), a subsidiary of the Company has crushed 13.09 lac quintals of sugarcane and produced 1.10 lac quintal of sugar against 29.71 lac quintal of sugarcane and 2.87 lac quintal of sugar respectively in the preceding year. The recovery was also lower at 8.42% against 9.63% in the previous season. The gross turnover of IGIL during the year ended 30th September, 2009 was Rs. 5048.72 lacs and reported a net loss of Rs.1354.92 lacs. The Board for Industrial & Financial Reconstruction (BIFR) had vide its Order dated 23rd October, 2008 declared Indo Gulf Industries Ltd. (IGIL) a Sick Industrial Company in terms of Section 3(l)(o) of the Sick Industrial Company (Special Provisions) Act, 1985 and appointed State Bank of India (SBI) as Operating Agency under Section 17(3) of the Act to examine the viability of IGIL and formulate a rehabilitation scheme based on the IGIL proposal for its revival. IGIL submitted a Draft Rehabilitation Scheme to SBI which is based on demerger of Sugar unit of IGIL, situated at Maizapur, U.P. and merger of the said sugar unit with Balrampur Chini Mills Ltd. The explosive units of IGIL are proposed to be continued as the sole business of IGIL in the draft rehabilitation Scheme. The State Bank of India after examining the viability of the Scheme has submitted the same to the BIFR for their needful and approval.

Balrampur Overseas Private Limited

Balrampur Overseas Private Limited (BOPL), a wholly- owned subsidiary of the Company, incorporated in Hong Kong has reported a net loss of Hong Kong $ 24682 for the year ended 30th September, 2009.

The statement under Section 212(3) of the Companies Act, 1956 in respect of subsidiary companies is separately annexed.

Cane and Sugar Policy

Central Government announced various policy measures during the year under review as well as for the future. Salient features of the sugar policy effective 1st October, 2009 were as follows:

- Levy sugar component has been increased from 10% in season 2008-09 to 20% for season 2009-10 to meet the requirement under Public Distribution System (PDS) at subsidised rates. This would make available close to 2.6 million tonnes of sugar for PDS. Further, imported raw-sugar and white sugar do not have levy obligation. This is applicable for 2009-10 only.

- Levy sugar price henceforth shall be computed based on Fair and Remunerative Price [F&RP] in place of Statutory Minimum Price [SMP]. The F&RP would provide reasonable margin for growers on account of risk and profits.

- F&RP is applicable from 1st October, 2009.

- All action taken by the Central Government for determination of levy sugar price up to season 2008-09 shall be deemed to be valid notwithstanding anything contained in any judgement, decree or order.

- Govt of India has allowed duty-free import of raw-sugar till 1st January, 2011 and white sugar up to 31st March, 2010 to improve the availability of sugar in the domestic market.

- For season 2009-10, the Central Government has announced the F&RP at Rs.129 84 per quintal linked to a basic recovery of 95% subject to a premium of Rs.1.37 per quintal for every 0.1% increase in recovery above that level.

- The U.P. Government has announced the sugarcane price at Rs.l65 per quintal for normal variety. However, Uttar Pradesh Sugar Mills Association [UPSMA] has declared one time incentive of Rs.25 over and above the above SAP for season 2009-10. Hence total price payable for season 2009-10 would be Rs.190 as against Rs.140 per quintal paid during season 2008-09.

Legal Cases related to Cane Price

The Special Leave Petition (SLP) filed by the industry against the order of the Honble Allahabad High Court, Lucknow

Bench upholding the State Advised Price (SAP) for cane fixed by the State Government of II.P. at Rs.125 per quintal for the season 2007-08 before the Honble Supreme Court is pending. However, the industry had to pay Rs.110 per quintal by virtue of the interim order of the Honble Supreme Court pending its decision. Another Bench of the High Court quashed the SAP holding it illegal, which was challenged by an SLP by the State Government before the Supreme Court. This is also pending.

The Government of U.P. announced the SAP at Rs.140 per quintal for the season 2008-09. The industry filed a Writ Petition before the High Court which was rejected by the said Court. The Order of the Court has also been challenged by an SLP before the Supreme Court by the industry, which is pending. In the meantime, considering various factors, all factories have paid on the basis of the price fixed by the State Government.

Power Policy

The Uttar Pradesh Government has very recently announced "Energy Policy 2009" which has special relaxations for the Cogeneration plants facing shortage of fuel and thus emphasis was laid to utilise the idle capacity to bridge the demand-supply gap in the energy deficient State. The relaxations as announced by the U.P. Govt, were as follows

i) Renewable energy [bagasse] based cogeneration plants would be allowed usage of fossil fuel such as coal or gas to generate power in off-season.

ii) As an incentive, all existing or future cogeneration plants [bagasse or bio-mass] will be allowed to sell 10% of their total generation under open access to third party for next 10 years.

iii) As an incentive for off-season generation the state will allow 50% of the power to be sold anywhere under open access system.

New Tariff

The Uttar Pradesh Electricity Regulatory Commission (UPERC) has revised the tariff for bagasse-based cogeneration plant for a period of 5 years i.e. for the financial year 2009-10 to 2013-14. By virtue of the said order, the effective tariff rate for the bagasse based cogen plant of the Company would be increased by about 30% on an average. This would result in higher revenue and profits to the Company.

Ethanol Policy

Recently Government re-iterated its stand to implement 5% ethanol blending with petrol mandatory. This would result in better utilisation of Alcohol Division. Oil marketing companies have invited tenders for the purchase of ethanol. Various sugar mills participated in this tender which is yet to be finalised.

Fresh tenders are expected in the range of Rs.26/27 per litre compared to Rs.21.50 earlier.

Modification of Boilers for use of alternate fuel and setting up of refinery at Haidergarh

Encouraged by change in the Power Policy by U.P. Govt., the Company has decided to embark upon modification of boilers and plant and machinery at Haidergarh for use of coal as alternate fuel during off-season. Owing to the above modification of boiler at Haidergarh Unit, there would be continued availability of power during off-season.

India might not be self-sufficient in balancing between demand and supply and hence import of raw sugar and white sugar would be imminent in next couple of years. Since power would be available from alternate fuel coal in off-season, the Company has contemplated to put up a refinery in Haidergarh unit. Both would cost about Rs.12 crores which would be funded through internal accruals.

Outlook

With the growth in GDP, the country is witnessing consistent increase in sugar consumption. The rising consumption pattern is evidenced by the annual 25% increase in sugar off-take by Pepsi and Coke. Steady and robust growth in consumption would impart long-term strength and sustainability in the sugar sector.

The Company imported 85000 tonnes of raw sugar at around US$ 385 which would be processed in season 2009- 10 and it is expected to yield handsome profits when processed and sold during 2009-10.

Sugar production in the country during 2009-10 season is estimated at 16 million tonnes as against 14.7 million tonnes produced in season 2008-09. The estimated production thus would be far short of estimated consumption of 23 million tonnes. The gap between supply and demand shall be met through import of raw-sugar and white sugar.

Brazil, the largest global sugar producer, is also facing adverse weather conditions. This is likely to restrict their sugar production to last years level. Brazil is also expected to divert a significant part of the cane crop into production of Ethanol in view of rising crude oil prices.

Huge demand of import from India and flat production all over the world is expected to result in higher sugar prices in the global market.

Sugar price in India is expected to remain robust in view of the reasons mentioned above.

Modification in the power policy for season and off season would bring in sustainable profitability through better capacity utilisation in coming years.

Listing of Equity Shares

Your Companys equity shares are listed on the Calcutta, Bombay and National Stock Exchanges. Application for delisting of the shares from Calcutta Stock Exchange is pending. Your Company has paid the annual listing fees to each of these Stock Exchanges. The GDRs are listed on the Luxembourg Stock Exchange.

Corporate Governance

As per Clause 49 of the Listing Agreement with the stock exchanges, Management Discussion and Analysis, a report on Corporate Governance together with the Auditors Certificate on the compliance of conditions of Corporate Governance form part of the Annual Report.

Credit Rating

The credit rating of Al for short-term debts enjoyed by your Company has since been revised to A1+ by ICRA for a sum of Rs.200 crores.

Change in Capital Structure

The Company issued and allotted 12,18,750 Equity Shares of Re.l/- each at a price of Rs.45 per share (including premium of Rs.44 per share) upon exercise of 12,18,750 options under the Employee Stock Option Scheme. Consequently, the issued and subscribed share capital of the Company as at 30th September, 2009 stands increased to 25,67,55,060 Equity Shares of Re.l/- each.

The Company had allotted 1,00,00,000 convertible warrants on 4th January, 2008, to be converted into equal number of equity shares at Rs.92/- per warrant to the promoter group on preferential basis in accordance with the SEBI [DIP] Guidelines. The Company had received upfront money an amount equivalent to the price fixed i.e. Rs.9-20 per warrant aggregating to Rs.9.20 crores towards allotment money on these convertible warrants. In January 2008, the industry was passing through a severe crisis due to which most companies were under a tremendous cash crunch. In this backdrop and considering the cash needs of the Company, the Company brought in about 76.36 crores through a combination of fully paid up equity share and 10% of paid up warrants. Now the financial position of the Company has undergone a sea change, with the results that the Company today is having sufficient cash surplus for normal operations. As such the promoters have not exercised option for conversion of 1,00,00,000 convertible warrants and the upfront money @ 10% made by the promoters aggregating to Rs.9-20 crores was forfeited pursuant to SEBI (DIP) Guidelines.

Employee Stock Option Scheme

Your Company has formulated and implemented an Employee Stock Option Scheme in accordance with the guidelines issued by the SEBI. Pursuant to the scheme, on 25th November 2008 and on 28th May 2009, 12,80,000 and 14,64,500 stock options respectively, were granted to the eligible employees including the Whole time Directors. The details of options granted and outstanding as on 30th September, 2009 along with other particulars as required by Clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Auditors Certificate required to be placed at the forthcoming AGM, pursuant to Clause 14 of the said Guidelines, are set out in the Annexure to the report.

Directors

Shri K.N. Ranasaria has ceased to be Whole time Director of the Company with effect from 12th May, 2009 on completion of his term.

Shri Sudhir Jalan and Shri M.M. Mukherjee resigned from the Directorships of the Company.

The Board placed on record its high appreciation for the valuable services rendered by Shri K.N. Ranasaria, Shri Sudhir Jalan and Shri M.M. Mukherjee during their tenure as Directors of the Company.

Shri Suresh Neotia resigned from the Directorship of the Company, to retire from the corporate life, and consequently ceased to be the Chairman of the Company. Mr. Neotias guidance has been invaluable to the Board for last 25 years as a Director including as Chairman for last two years. His ability and understanding of all aspects of Corporate Life has been an invaluable asset to the Company. The Board placed on record its deep appreciation for the outstanding contribution made by Shri Neotia during his tenure as a Director and as Chairman of the Company.

Shri Naresh Chandra (Retired IAS) has been appointed as Chairman in place of Shri Suresh Neotia.

Shri R. Vasudevan (Retired IAS) has been appointed as an Additional Director of the Company by the Board in its meeting held on 25th November, 2009. He is an Independent Director and shall hold office upto the date of the ensuing Annual General Meeting and the Company has received a requisite notice under Section 257 of the Companies Act, 1956 from a member proposing Shri R. Vasudevan as a Director of the Company.

Shri Naresh Chandra and Shri Kishor Shah, Directors of your Company, retire from the Board by rotation and are eligible for re-election.

Directors Responsibility Statement

As required under Section 217 (2AA) of the Companies Act, 1956 your Directors confirm that -

i. In preparation of the annual accounts, the applicable accounting standards have been followed.

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year, and of the profit of your Company for that period.

iii. The Directors have taken proper and sufficient care to maintain adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities, and

iv. The Directors have prepared the annual accounts on a going concern basis.

Particulars of Employees

Particulars of employees as required under Section 217(2A) of the Companies Act, 1956, are given in a separate annexure attached hereto and forms part of this report.

However, as permitted by Section 219(1 )(b)(iv) of the Companies Act, 1956 the Abridged Annual Report is being sent to all the members of the Company excluding the said Annexure.

Conservation of Energy, etc

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, are given in a separate annexure attached hereto and form part of this report. However, as permitted by Section 219(D(b)(iv) of the Companies Act, 1956 the Abridged Annual Report is being sent to all the members of the Company excluding the said Annexure.

Fixed Deposits

The Company has not accepted any deposit under Section 58A of the Companies Act, 1956 during the year.

Auditors and Auditors Report

M/s. G.P. Agrawal & Co., Chartered Accountants, Auditors of your Company, retire and being eligible, offers themselves for re-appointment. The Notes on Accounts referred to in the Auditors Report are self-explanatory and therefore do not call for any further explanations/ comments.

Cost Auditors

Pursuant to the directives of the Central Government under the provisions of Section 233B of the Companies Act, 1956, M/s. N. Radhakrishnan & Co, Cost Accountants, have been appointed to conduct cost audits relating to sugar.

Appreciation

Your Board of Directors take this opportunity to express their grateful appreciation for the continued co-operation and support received from the Financial Institutions, Central Government, Government of U.P, State Bank of India, other Bankers, Shareholders, Employees and Customers for the growth of the organisation.

For and on behalf of the Board of Directors

Kishor Shah Vivek Saraogi

Director-cum-Chief Financial Officer Managing Director Kolkata 25th November, 2009

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