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Notes to Accounts of Balrampur Chini Mills Ltd.

Mar 31, 2016

Notes:

i) General reserve is primarily created to comply with the requirements of section 123(1) of the Companies Act, 2013. This is a

free reserve and can be utilized for any general purpose like issue of bonus shares, payment of dividend, buy back of shares etc.

ii) The storage fund for molasses has been created to meet the cost of construction and repair of molasses storage tank as

required under Uttar Pradesh Sheera Niyantran (Sansodhan) Adesh, 1974 and the said storage fund is represented by investment in

the form of fixed deposits with banks amounting to Rs,136.93 lacs (Previous year Rs,114.28 lacs).

a) Nature of securities:

i) Rupee Term Loan from SBI amounting to Rs,17500.00 lacs under Scheme for Extending Financial Assistance to Sugar Undertakings,

2014, is secured by pari passu first charge, by way of hypothecation of all the movable fixed assets and pari passu first charge

on immovable properties, both present and future, pertaining to all the sugar units of the Company except Khalilabad sugar unit.

ii) Rupee Term Loan from SBI amounting to Rs,13638.00 lacs under the Soft Loan Scheme extended by Central Government, is secured by

pari passu first charge on all the movable and immovable fixed assets of ten sugar units of the Company viz; Balrampur, Babhnan,

Tulsipur, Haidergarh, Akbarpur, Mankapur, Rauzagaon, Kumbhi, Gularia and Maizapur.

iii) Rupee/FCNR-B Term Loan from SBI amounting to Rs,12636.95 lacs is secured by first charge, by way of hypothecation of movable

fixed assets, both present and future, pertaining to Company’s sugar and cogeneration units at Balrampur, Akbarpur and Mankapur

and is further secured by way of hypothecation of entire stock of sugar, sugar in process, mill stores, bagasse, molasses and

other current assets including book debts, both present and future, of all the sugar units of the Company. The hypothecation

charge on the stocks as mentioned above ranks pari passu with PNB and HDFC for their Working capital loans.

iv) Rupee Term Loan from PNB amounting to Rs,4921.38 lacs, under Scheme for Extending Financial Assistance to Sugar Undertakings,

2014, is secured by residual charge, by way of hypothecation of all the movable fixed assets, both present and future, pertaining

to all the sugar units of the Company.

v) Rupee Term Loan from PNB amounting to Rs,3250.00 lacs is secured by pari passu first charge, by way of hypothecation on the

fixed assets of Mankapur distillery unit of the Company.

vi) Rupee Term Loan from PNB amounting to Rs,3116.00 lacs under the Soft Loan Scheme extended by Central Government, is secured by

pari passu first charge on all the movable and immovable fixed assets of ten sugar units of the Company viz; Balrampur, Babhnan,

Tulsipur, Haidergarh, Akbarpur, Mankapur, Rauzagaon, Kumbhi, Gularia and Maizapur.

vii) Rupee Term Loan from HDFC amounting to Rs,2900.00 lacs is secured by pari passu first charge, by way of hypothecation of the

movable fixed assets of Balrampur distillery unit of the Company.

viii) Rupee Term Loan from HDFC amounting to Rs,3600.00 lacs is secured by first charge, by way of hypothecation of movable fixed

assets, both present and future, pertaining to Company’s distillery unit at Babhnan and by pari passu first charge, by way of

movable fixed assets, both present and future, pertaning to Company’s distillery unit at Mankapur.

ix) Rupee Term Loan from HDFC amounting to Rs,3150.00 lacs under the Soft Loan Scheme extended by Central Government, is secured by

pari passu first charge on all the movable and immovable fixed assets of ten sugar units of the Company viz; Balrampur, Babhnan,

Tulsipur, Haidergarh, Akbarpur, Mankapur, Rauzagaon, Kumbhi, Gularia and Maizapur.

x) Rupee Term Loans from SDF are secured by an exclusive second charge by way of equitable mortgage on immovable properties and

hypothecation of movable properties (excluding current assets and book debts), both present and future, of the respective sugar

and cogeneration units viz Kumbhi, Gularia and Rauzagaon. Rupee Term Loan from SDF amounting to Rs,1800.00 lacs was secured by

first charge by way of equitable mortgage on immovable properties and hypothecation of movable properties (excluding current

assets and book debts), both present and future. The said amount has been fully repaid during the year.

xi) ECB from International Finance Corporation, Washington (IFC) was secured by way of first equitable mortgage on immovable

properties and hypothecation of movable properties and residual charge on current assets, both present and future, pertaining to

Company’s sugar and cogeneration units at Haidergarh and Rauzagaon. As the amount outstanding as at 31st March, 2015 was payable

entirely within one year, the same was included in the line item “Current maturities of long-term debt” under the head “Other

current liabilities” as at 31st March, 2015.

xii) Release of securities in respect of certain term loans fully repaid by the Company is in progress.

Figures in brackets pertain to previous year.

* Bank rate as prevailing on the date of disbursement.

# Bank rate as applicable from time to time.

*/ Entitled for interest subvention from Sugar Development Fund up to 12.00% p.a.

## Interest subvention from Government for the 1st year limited to 10.00%.

** For the 1st year, applicable interest rate is 10.10% p.a. fixed.

During the year, part of the Rupee Term Loan from SBI was converted into FCNR-B (Term Loan) carrying interest rate of USD 6M

Libor

3.00%. The repayment terms as applicable to Rupee Term Loan are applicable to said FCNR-B (Term Loan).

Rs,1458.40 lacs each.

~ Except last two installments of Rs,852.90 lacs.

^ Except first installment of Rs,2636.95 lacs

Nature of securities:

a) Working capital loans from SBI are secured / to be secured : i) by way of hypothecation of entire stock of sugar, sugar in

process, mill stores, bagasse, molasses and other current assets including book debts, both present and future, of all the sugar

units of the Company on pari passu basis with PNB and HDFC.

ii) by way of exclusive hypothecation of entire current assets of all the Cogeneration units of the Company.

iii) by way of second charge on immovable and movable properties (excluding current assets and book debts), both present and

future, of Maizapur Sugar Unit of the Company on pari passu basis with PNB and HDFC.

iv) by way of third charge on immovable and movable properties (excluding current assets and book debts), both present and

future, of all the sugar units of the Company, except Maizapur Sugar Unit. The said charge ranks pari passu with PNB and HDFC

except for Khalilabad Sugar Unit on which SBI has exclusive charge.

b) Working capital loans from PNB are secured / to be secured :

i) by way of hypothecation of entire stock of sugar, sugar in process, mill stores, bagasse, molasses and other current assets

including book debts, both present and future, of all the sugar units of the Company on pari passu basis with SBI and HDFC.

ii) by way of second charge on immovable and movable properties (excluding current assets and book debts), both present and

future, of Maizapur Sugar Unit of the Company on pari passu basis with SBI and HDFC.

iii) by way of third charge on immovable and movable properties (excluding current assets and book debts), both present and

future, of all the sugar units of the Company, except Maizapur Sugar Unit. The said charge ranks pari passu with SBI and HDFC

except for Khalilabad Sugar Unit on which SBI has exclusive charge.

c) Working capital loans from HDFC are secured / to be secured:

i) by way of hypothecation of entire stock of sugar, sugar in process, mill stores, bagasse, molasses and other current assets

including book debts, both present and future, of all the sugar units of the Company on pari passu basis with SBI and PNB.

ii) by way of second charge on immovable and movable properties (excluding current assets and book debts), both present and

future, of Maizapur sugar unit of the Company on pari passu basis with SBI and PNB.

iii) by way of third charge on immovable and movable properties (excluding current assets and book debts), both present and

future, of all the sugar units of the Company, except Maizapur Sugar Unit. The said charge ranks pari passu with SBI and PNB

except for Khalilabad Sugar Unit on which SBI has exclusive charge.

Notes : 1) Land, Building, Plant & Machinery, Tubewell and Water supply machinery of Balrampur unit were revalued as at 30th

June, 1988 on net replacement value as per the report of S. R. Batliboi Consultants Pvt. Ltd. and the cost of respective asset

aggregating to Rs,1200.77 lacs was substituted by the revalued amount of Rs,1920.52 lacs and the resultant increase was credited to

Revaluation reserve.

2) Land, Building and Plant & Machinery of Tulsipur unit were revalued as at 31st March, 1999 on net replacement value as per the

report of Lodha & Co. and the cost of the respective asset aggregating to Rs,1023.85 lacs was substituted by the revalued amount of

Rs,2944.93 lacs and the resultant increase was credited to Revaluation reserve in the books of erstwhile Tulsipur Sugar Company

Ltd.

^ Unsecured non-convertible debentures carrying overall simple yield to maturity of 9.50% p.a. The coupon amount is payable

annually

@ 5% p.a. for the first six years and 14% p.a. for the next six years. The debentures are redeemable at par at the end of twelve

years from the date of allotment.

* Shares are suspended for Trading by the Stock Exchange.

@ Rs,1/- shown as Nil due to rounding off.

The amounts shown in (i) above represent the best possible estimates arrived at on the basis of available information. The

uncertainties and timing of the cash flows are dependent on the outcome of the different legal processes which have been invoked

by the Company or the claimants, as the case may be and therefore cannot be estimated accurately. The Company does not expect any

reimbursement in respect of above contingent liabilities.

In the opinion of the management, no provision is considered necessary for the disputes mentioned above on the grounds that there

are fair chances of successful outcome of appeals

1. The Employee Stock Option Scheme (Scheme 2005) of the Company was formulated in the year 2005 and under the said Scheme,

Options granted have vesting period of one year and exercise period of maximum eight years. The maximum number of options

granted till date stand at 5245500 and each option is equivalent to one equity share of par value of Rs,1/- each of the Company.

In the year ended 30th September, 2009, Options covered by 1st, 2nd, 3rd and 4th Series which remained outstanding were re-priced

and the revised Exercise Price of Rs,45/- was approved by the Shareholders of the Company in the Extra-Ordinary General Meeting

held on 25th May, 2009.

The Company uses intrinsic value method to account for the employee stock options granted to employees.

Provisions for contingencies as referred to above represent provision towards various claims made/anticipated against the Company

based on the Management’s assessment.

It is not possible to estimate the timing/uncertainties relating to utilization /reversal from the provision for contingencies.

Future cash outflow in respect of the above is determinable only upon Court decision/out of Court settlement/disposal of appeals.

The Company does not expect any reimbursement in respect of above provisions.

2. Sugarcane Price Accounting

State Government of Uttar Pradesh vide its Press Release dated 18th January, 2016 announced certain financial assistances

including Rs,23.30 per quintal of cane for the sugar season 2015-16 linked to average selling price and recovery percentage of

sugar and its byproducts during the specified period which is to be recommended by the Committee constituted by the Government of

Uttar Pradesh.

However, in view of the prevalent sugar prices, the Company has not accounted for the said sugarcane subsidy of Rs,23.30 per

quintal of cane for the sugar season 2015-16.

The Cane Subsidy of Rs,28.60 per quintal of cane paid by the Government of Uttar Pradesh for the sugar season 2014-15 aggregating

to Rs,1238.75 lacs (Previous year Rs,20875.45 lacs ) has been accounted for by the Company and has been included under line item

“Sugar cane” under Note No. 23 - “Cost of material consumed”.

3. Export and Production Subsidy:

The Central Government vide its Notification No. 1(10)/2015-SP-I dated 18th September, 2015 announced Minimum Indicative Export

Quota (MIEQ) under traceable export scrip scheme in order to export surplus sugar inventory out of the country. Under the said

scheme, the Company was allocated quota of 115642.40 MT for export of sugar in respect of its ten sugar units. Further, the

Central Government vide its Notification No. 20(43)/2015-SP - I dated 2nd December, 2015 has announced a scheme for extending

production subsidy @ Rs,4.50 per quintal of actual cane crushed during sugar season 2015-16 or the proportionate cane crushed for

the average sugar production of the Company’s each unit in last three sugar seasons, whichever is lower.

As the Company has substantially complied with the eligibility criteria, the aforesaid subsidy @ Rs,4.50 per quintal of cane

crushed amounting to Rs,3113.15 lacs has been accounted for during the year and adjusted with line item “Sugar cane” under Note No.

23 - “Cost of material consumed”.

Further, the expenses incurred by the Company till 31st March, 2016 towards fulfillment of export obligation amounting to Rs,2620.41

lacs has been included under line item “Professional expenses” under Note No. 28 - “Other expenses”.

In addition to the above, the Company has received financial assistance of Rs,150.00 lacs (Previous year: Nil) from the Hon’ble

Ministry of New and Renewable Energy during the year. The said amount has been received under Scheme to Support “Promotion of

Grid Interactive Biomass Power and Bagasse Cogeneration in Sugar Mills” notified through circular no. F. No. 13/10/2013 – BM. The

entire proceeds would be utilized for prepayment of term loan taken from bank. The said financial assistance has been credited to

Capital Reserve.

During the year, society commission on cane for sugar season 2012-13 was reduced to Rs,2.00 per quintal of cane by the State

Government. Accordingly, the Company has written back a sum of Rs,2752.55 lacs which was accounted for in the books of account in

the relevant years.

The said write back of liability has been disclosed under Note No. 22 - “Other Income”.

4. Depreciation for the previous year was aligned to meet the requirements of Schedule -II to the Companies Act, 2013 and

accordingly an amount of Rs,3180.01 lacs (net of deferred tax benefit of Rs,1682.99 lacs) in relation to the assets whose useful life

has already exhausted was adjusted with Retained Earnings

5. Employee Benefits :

As per Accounting Standard - 15 “ Employee Benefits”, the disclosures of Employee Benefits as defined in the Accounting Standard

are as follows:

Defined Contribution Plan : Employee benefits in the form of Provident Fund, Employee State Insurance and Labour Welfare Fund are

considered as defined contribution plan. However, up to 31st March, 2015, Provident fund in respect of certain employees was

contributed to a fund set up by the Company which was treated as a defined benefit plan since the Company had to meet the

interest shortfall.

Defined Benefit Plan:

On Company’s request, in exercise of the powers conferred under section 17(4) of the Employees’ Provident Fund & Miscellaneous

Provisions Act, 1952, the Hon’ble Ministry of Labour and Employment, Government of India, has cancelled the exemption granted to

the Company with effect from 1st April, 2014 vide its order dated 29th April, 2015. Accordingly, Employees Provident Fund set up

by the Company ceases to exist. After cancellation, contribution to the provident fund of the related employees is being

deposited with Government Provident Fund w.e.f 1st April, 2015.

Long-term employee benefits in the form of gratuity and leave encashment are considered as defined benefit obligation. The

present value of the obligation is determined based on actuarial valuation using projected unit credit method as at the Balance

Sheet date. The amount of defined benefits recognized in the Balance Sheet represent the present value of the obligation as

adjusted for unrecognized past service

VIII. Basis used to determine the expected Rate of return on Plan Assets : The basis used to determine overall expected Rate of

return on Plan Assets is based on the current portfolio of assets, investment strategy and market scenario. In order to protect

the Capital and optimize returns within acceptable risk parameters, the Plan Assets are well diversified

c) Other disclosures :

i) Basis of estimates of Rate of escalation in salary :

The estimates of rate of escalation in salary, considered in actuarial valuation, take into account inflation, seniority,

promotion and other relevant factors including supply and demand in the employment market. The above information is certified by

the actuary.

ii) The Gratuity and Provident Fund Expenses have been recognized under “Contribution to Provident and Other Funds” and Leave

Encashment under “Salaries and Wages” under Note No.25 - “Employee benefits expense”.

6. Segment information as per Accounting Standard - 17 on ‘Segment Reporting’ :

The Company has identified three primary business segments viz. Sugar, Distillery and Co-generation. Segments have been

identified and reported taking into account the nature of the products, the differing risks and returns, the organizational

structure and internal business reporting system.

a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment.

Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been

disclosed as “Unallowable”.

i) Transactions between segments are primarily for materials which are transferred at cost/market determined prices. Common costs

are apportioned on a reasonable basis.

ii) Unallowable expenses are net of unallowable income Rs,912.09 lacs (Previous year Rs,509.31 lacs).

iii) Inter segment sale is net of excise duty Rs,1146.24 lacs (Previous year Rs,1129.13 lacs).

iv) Figures in brackets pertain to previous year.

d) Information about Secondary Geographical Segments : There is no secondary segment.

7. Related party disclosures as per Accounting Standard - 18 are given below :

a) Name of the related parties and description of relationship :

i) Subsidiary (Control exists): Indo Gulf Industries Ltd.

ii) Key Managerial Personnel (KMP): 1. Shri Vivek Saraogi - Managing Director

2. Smt. Meenakshi Saraogi - Joint Managing Director (up to 31.05.2015)

3. Shri Kishor Shah - Director cum Chief Financial Officer (up to 30.11.2015)

4. Dr. Arvind Krishna Saxena - Whole-time Director

iii) Relatives of Key Managerial Personnel :

Shri Vivek Saraogi Smt. Meenakshi Saraogi (Mother)

Smt. Meenakshi Saraogi Shri Vivek Saraogi (Son)

iv) Enterprises over which KMP and their

1. Balrampur Institute of Vocational Aid relatives have substantial interest /

2. Balrampur Foundation significant influence:

3. Balrampur Trust Notes forming part of the financial statements Other information

@ Excluding gratuity payment amounting to Rs,245.19 lacs pursuant to settlement during the year which has been reimbursed by The

Balrampur Sugar Co. Ltd. Employees Gratuity Fund.

* Excluding gratuity payment amounting to Rs,50.77 lacs pursuant to settlement during the year which has been reimbursed by The

Balrampur Sugar Co. Ltd. Employees Gratuity Fund.

# Excluding monetary value of perquisites.

c) The transactions with related parties have been entered at an amount which are not materially different from those on normal

commercial terms.

d) No amount has been written back/written off in respect of due to/ from related parties other than stated above under Note No.

14(b)

(v) and (vi). e) Figures in brackets pertain to previous year.

a) Loan to Subsidiary fall under the category of “Loans and Advances in the nature of Loans where there is no repayment schedule”

and was re-payable on demand.

b) The above loan was interest bearing. However, interest was not accounted for in the previous year as the loan (including

interest accrued thereon) was considered doubtful of realization and was written off during the previous year.

c) No investment is/was made by the loaned company in the shares of the Company.

8. Based on the review made at the Balance Sheet date, MAT credit of Rs,5642.00 lacs (previous year: Rs,5642.00 lacs) recognized in

earlier years is carried forward as the Management is confident that there will be sufficient taxable profit during the specified

period to utilize the same.

18. Under the New Sugar Industry Promotion Policy, 2004 of the Government of Uttar Pradesh, the Company had accounted for

recoverable incentives aggregating to Rs,16900.57 lacs and had availed remissions in respect of Entry Tax on Sugar, Administrative

Charges on Molasses, Trade Tax on Molasses and Cane Purchase Tax. The above policy was terminated by the Government of Uttar

Pradesh vide order dated 4th June, 2007.

The Company’s Writ Petition against withdrawal of the aforesaid policy which has been admitted by the Luck now Bench of the

Hon’ble Allahabad High Court vide its order dated 9th May, 2008 is still pending. As an interim measure, the Order permits

limited protection from remission of taxes. Therefore, the Company continues to account for only remission of taxes, and

accordingly, during the year, the Company has accounted for remission of taxes of Rs,61.43 lacs (Previous year Rs,56.58 lacs).

However, in view of the long pendency of the said writ petition, it might take years for the Hon’ble High Court to decide the

case and the aggrieved party would certainly approach the Hon’ble Supreme Court and due to high pendency in the Hon’ble Supreme

Court, it may take considerable time for the final decision in these cases. Even thereafter, the actual realization of the claims

from the State may not be possible without repetitive intervention of the Apex Court.

Hence, the Company has written off the recoverable incentives aggregating to Rs,16900.57 lacs (Previous year nil) during the year.

The same has been shown as “Claims receivable written off” under

Note No. 9 - “Exceptional Items”.

In the assessment of Entry Tax on Sugar and Trade Tax on Molasses for the years 2008-09 to 2012-13, a sum of Rs,3659.50 lacs and

Rs,883.59 lacs respectively aggregating to Rs,4543.09 lacs has been determined by the assessing officer as the Company’s liability

for four of its units namely Akbarpur, Mankapur, Kumbhi and Gularia though these units are also eligible under the aforesaid

incentive scheme.

However, no demand has been raised on the Company by the assessing officer in view of limited protection from remission of taxes

granted by Hon’ble High Court as aforesaid. Based on the same, the Company neither considers the aforesaid amount of Rs,4543.09

lacs as a liability nor a contingent liability.

10. In view of inadequacy of profits, the Remuneration paid during the year and during the previous year to the Managing Director

and Joint Managing Director is/was the minimum remuneration in accordance with terms and conditions approved by the shareholders.

Necessary approval has been obtained from the Central Government in this regard.

11. Khalilabad Sugar unit, a unit of Company was incurring losses for the last several years and getting low recovery. Further,

the Sugar Mill was old and expenses on wear and tear were abnormally high.

Since, even the most efficient and integrated plants were incurring losses, it was impossible for the said Sugar unit to survive

in long term. Therefore, the Board of Directors of the Company in its meeting held on 27th May, 2015 discussed and decided to

close the said sugar unit of the Company.

As a result of closure of the said unit, the Company announced voluntary retirement scheme (VRS scheme) for the employees of the

said unit pursuant to which, the Company has paid compensation of Rs,409.84 lacs (Previous year: nil) to those who availed the said

VRS scheme.

12. The Hon’ble Board for Industrial and Financial Reconstruction (BIFR) vide its order dated 7th January, 2014 had permitted

transfer of 20% equity shares of Indo Gulf Industries Ltd. (IGIL) held by the Company as well as induction of co-promoter

/strategic investor in IGIL, under a Modified Draft Rehabilitation Scheme (MDRS) to be approved by the Hon’ble BIFR. However, the

Hon’ble BIFR vide its order dated 4th August, 2014, reviewed its directions and directed the Operating Agency to submit its

report after conducting due-diligence of co-promoter/strategic investor and reserved its order for pronouncement.

The order in the subject matter was pronounced on 23rd January, 2015, whereby the concerned Bench observed that induction of

co-promoter/strategic investor was not in transparent manner and was not in accordance with the Law. Aggrieved by the said order

IGIL preferred an Appeal before the Hon’ble AAIFR which was disposed of by the Hon’ble AAIFR on 14th September, 2015 by setting

aside the observation of the Hon’ble BIFR and remanding the matter back to the Hon’ble BIFR with a direction to consider the MDRS

in accordance with law.

In the meantime, net-worth of IGIL turned positive to Rs,12.15 lacs as per its Audited Balance Sheet as at 31st March, 2016.

Accordingly, IGIL has filed an application with the Hon’ble BIFR on 29th April, 2016 for deregistration from the purview of the

Sick Industrial Companies (Special Provisions) Act, 1985.

The Hon’ble BIFR passed an order on 6th May, 2016 wherein it directed the Operating Agency to file status reports (1) on the

business of the strategic investor after evaluating the induction of strategic investor and conducting due diligence, (2) whether

the induction of the strategic investor results in change of management of IGIL and (3) on the operation /function of IGIL after

visiting the unit of IGIL.

13. Call Option Agreement

A Call Option Agreement dated 30th March, 2015 has been entered by the Company with Talma Chemical Industries Private Limited

(Talma), a company having 100% interest in the Equity Share Capital of Visual Percept Solar Projects Private Limited (VPSPPL) to

acquire at a future date, 8914500 Equity Shares of Rs,10/- each fully paid at a mutually agreed price of Rs,25/- per Equity Share of

Rs,10/- each. 23. The Company has not incurred any cost in respect of RECs. The value of RECs remaining unsold and lying in

inventory as at the balance sheet date has been considered as Nil in the accounts.

14. The previous year’s figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Amounts and other

disclosures for the preceding year are included as an integral part of the current year financial statements and are to be read

in relation to the amounts and other disclosures relating to the current year


Mar 31, 2013

1. Based on the review made at the Balance Sheet date, MAT credit of Rs. 5642.00 lacs recognised in earlier years is carried forward as the Management is confident that there will be sufficient taxable profit during the specified period to utilise the same.

2. The Company was granted eligibility certificate dated 23rd February, 2007 under the "New Sugar Industry Promotion Policy, 2004" of the Government of Uttar Pradesh. Till March 2012, the Company had accounted for recoverable incentives aggregating to Rs. 16900.57 lacs and had availed remission of Rs. 8267.19 lacs.

The above policy was terminated by the Government of Uttar Pradesh vide order dated 4th June, 2007 wherein the Government expressed its intention to introduce another policy. Though in the "Sugar Industry, Co-generation & Distillery Promotion Policy, 2013" announced in the month of January, 2013 the benefits available under erstwhile policy are not covered, the Company is legally advised that it continues to be eligible to receive the incentives under the erstwhile policy. Furthermore, the Company has filed Writ Petition against withdrawal of the earlier policy which has been admitted by the Lucknow Bench of the Hon''ble Allahabad High Court vide its Order dated 9th May, 2008, the final hearing in respect of which is yet to be completed. As an interim measure, the Order dated 9th May, 2008 permitted limited protection in respect of remissions of taxes.

Accordingly, during the year, the Company has accounted for only remissions of Rs. 2373.70 lacs (Previous year Rs. 2539.95 lacs). Eligible reimbursements of Rs. 4505.98 lacs have, however, not been accounted for during the year which shall be accounted for in accordance with the final order of the High Court.

3. Employee Benefits :

As per Accounting Standard - 15 " Employee Benefits", the disclosure of Employee Benefits as defined in the Accounting Standard are as follows:

Defined Contribution Plan :

Employee benefits in the form of Provident Fund and Labour Welfare Fund are considered as defined contribution plan except that

4. Segment information as per Accounting Standard - 17 on ''Segment Reporting'' :

The Company has identified three primary business segments viz. Sugar, Distillery, Co-generation. Segments have been identified and reported taking into account the nature of the products, the differing risks and returns, the organisational structure and internal business reporting system.

a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocable".

b) Segment assets and segment liabilities represent assets and liabilities of respective segment. Investments, tax related assets/ liabilities and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable".

5. Related party disclosures as per Accounting Standard - 18 are given below : a) Name of the related parties and description of relationship :

i) Subsidiaries : Indo Gulf Industries Ltd.

(Control exists) Balrampur Overseas Pvt. Ltd. (Upto 04.01.2013)

ii) Associate : VA Friendship Solar Park Pvt. Ltd.

iii) Key Managerial Personnel (KMP): Shri Vivek Saraogi - Managing Director

Smt. Meenakshi Saraogi - Joint Managing Director Shri Kishor Shah - Director-cum-Chief Financial Officer Dr. Arvind Krishna Saxena - Whole-time Director

iv) Relatives of Key Managerial Personnel : Shri Vivek Saraogi

1. Shri K.N.Saraogi (Father) - Chairman Emeritus

2. Smt. Meenakshi Saraogi (Mother)

3. Smt. Sumedha Saraogi (Wife)

4. Shri Karan Saraogi (Son)

5. Miss Avantika Saraogi (Daughter)

6. Smt. Stuti Dhanuka (Sister)

Smt. Meenakshi Saraogi

1. Shri K.N.Saraogi (Husband)

2. Shri Vivek Saraogi (Son)

3. Smt. Stuti Dhanuka (Daughter)

4. Smt. Sumedha Saraogi (Daughter-in-law)

5. Shri Karan Saraogi (Grand-Son)

6. Miss Avantika Saraogi (Grand-Daughter)

v) Enterprises over which KMP and their relatives have substantial interest / significant influence:

1. Meenakshi Mercantiles Ltd.

2. Udaipur Cotton Mills Co. Ltd.

3. Balrampur Institute of Vocational Aid

4. Balrampur Foundation

5. Kamal Nayan Saraogi (HUF)

6. Vivek Saraogi (HUF)

7. Kishor Shah (HUF)

6. The Cabinet Committee on Economic Affairs (CCEA) in its meeting held on 4th April, 2013 approved the dismantling of regulated release mechanism of sugar with immediate effect and also removed the obligation on the sugar mills to supply 10% of their sugar production as levy sugar for sugar produced on or after 1st October, 2012 i.e. for sugar season 2012-13 onwards. Necessary notifications in this regard have been issued on 2nd May, 2013. Therefore, the Company has given necessary effect of the announcement of CCEA in its books of account for the year ended 31st March, 2013.

7. The Board of Directors of the Company in their meeting held on 7th November, 2012 has approved the merger of Khalilabad Sugar Mills Pvt. Ltd. (KSMPL), a sick company registered with Board for Industrial and Financial Reconstruction (BIFR), with the Company subject to the approval of the Hon''ble BIFR and the Shareholders of the Company. The draft scheme of merger is under consideration of Hon''ble BIFR, the final hearing in respect of which is expected shortly. KSMPL has an installed capacity of 2500 TCD and is situated in the cane rich area near one of the Company''s existing facility at Babhnan. The proposed merger of KSMPL with the Company would add value to the Company''s integrated business model.

8. The previous year''s figures have been reworked, regrouped, rearranged and reclassified wherever necessary. Amounts and other disclosures for the preceding year are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year.


Sep 30, 2009

(Rupees in Lacs)

As at 30th As at 30th September, 2009 September, 2008

1. (Note no. 1 of Schedule - 23)

a) Estimated amount of Contracts remaining to be executed on Capital Account and not provided for 234.58 256.97

b) Advances paid against above 95.57 115.57

2. (Note no. 2 of Schedule - 23)

Contingent Liabilities not provided for in respect of:

a) Calls in arrear of a Subsidiary Company in respect of partly paid up Equity Shares 181.90 181.90

b) Differential Cane Price for the Sugar Seasons 1978-79 and 1979-80 pending disposal of the Writs filed by the Company in Honble Calcutta High Court 32.93 32.93

c) Differential Cane Price for the Sugar Season 2007-08 pending disposal of the Writ filed by the U.P. Sugar Mills Association of which the Company is a member, in Honble Supreme Court of India 9076.97 9076.97

d) Claims for acquisition of 1.99 acres of land for the Chemical unit at Balrampur and Amount not Amount not compensation there against is under dispute as the matter is subjudice ascertainable ascertainable

e) Claims against the Company not acknowledged as debts :

i) Excise Duty Demand - under appeal 262.90 228.94

ii) Sales Tax Demand - under appeal 5.12 18.79

iii) Others - under appeal/litigation 861.87 203.46

f) Bank Guarantees furnished (Bank Guarantees are provided under Contractual/Legal obligation) 2884.66 2096.53

g) Corporate Guarantee given to a Bank on behalf of a Subsidiary 3550.00 3550.00

3. (Note no.3 of Schedule - 23)

The Company has accounted for Cane Price for the Sugar Season 2006-07 at State Advised Price of Rs.125/- per quintal. Subsequently, the Honble Supreme Court vide its interim order dated 27th February, 2008 announced the price of Rs.118/- per quintal. Accordingly, subsequent payment of Cane dues remaining outstanding on the date of the Order were made by the Company @ Rs.118/- per quintal. Pending final decision of the Supreme Court, the impact of differential Cane Price has not been given in the Accounts.

4. (Note no. 4 of Schedule - 23)

There is a pari passu charge by way of hypothecation and equitable mortgage on the fixed assets of Kumbhi and Gularia units of the Company for an amount of Euro 4.50 million equivalent to Rs.2456.61 lacs (Previous year Rs.2456.6l lacs) in favour of BNP Paribas, India for securing various Swap Contracts entered into in connection with hedging in respect of External Commercial Borrowings availed by the Company.

5. (Note no. 5 of Schedule - 23)

During the year, the Company sold its Investment in Equity Shares of following Associate Companies -. Name of the Associate No. of Shares sold

Avantika Ganna Private Limited 196600

Asia Sugar Industries Private Limited 750000

As a consequence of above, both ceased to be Associate of the Company.

6. (Note no. 6 of Schedule - 23)

a) Land, Building, Plant & Machinery, Railway Siding, Tubewell and Water Supply Machinery of Balrampur unit were revalued as at 30th June, 1988 on net replacement value as per the report of S.R. Batliboi Consultants Pvt. Ltd. and the cost of respective assets aggregating to Rs. 1200.77 lacs was substituted by the revalued amount of Rs. 1920.52 lacs and the resultant increase was credited to Revaluation Reserve.

b) Land, Building and Plant & Machinery of Tulsipur unit were revalued as at 31st March, 1999 on net replacement value as per the report of Lodha & Co. and the cost of the respective assets aggregating to Rs. 1023.85 lacs was substituted by the revalued amount of Rs.2944.93 lacs and the resultant increase was credited to Revaluation Reserve in the books of erstwhile Tulsipur Sugar Company Limited.

7. (Note no. 7 of Schedule - 23)

The Board of Directors of the Company in its meeting held on 27th July, 2009, has approved, subject to the approval of its Shareholders and the Board for Industrial & Financial Reconstruction (BIFR), revival proposal of its Subsidiary, Indo Gulf Industries Limited (IGIL) which is based on demerger of Sugar Unit of IGIL and merger of the said Sugar Unit with the Company. The draft Rehabilitation Scheme submitted by State Bank of India (Operating Agency) is under consideration of BIFR.

8. (Note no. 9 of Schedule - 23)

Details of Issued, Subscribed and Paid up Equity Share Capital of the Company:

a) 15,55,39,650 Equity Shares have been issued and allotted as fully paid up Bonus Shares by utilisation of Securities Premium, Capital Redemption Reserve and capitalisation of General Reserve.

b) 2,37,55,600 Equity Shares have been issued to the members of erstwhile Babhnan Sugar Mills Limited pursuant to the Scheme of Amalgamation as fully paid up without payment received in cash.

c) 21,15,400 Equity Shares have been issued to the members of erstwhile Tulsipur Sugar Company Limited pursuant to the Scheme of Amalgamation as fully paid up without payment received in cash.

d) Out of 2,27,66,780 Equity Shares of Re.l/- each offered to the shareholders on Rights basis, issue of 17.270 (Previous year 17,270) Equity Shares has been kept in abeyance as per the direction of Court.

e) 1,63,52,000 fully paid up Equity Shares of Re.l/- each were allotted in January, 2006 at a price of Rs.135/- per Share, ranking pari passu with the existing Equity Shares, each of which is represented by one Global Depository Receipt (GDR) issued @ LJS$ 3.0577 each for an aggregate amount of US$ 50 million.

9. (Note no. 10 of Schedule - 23)

The Company had issued 1,00,00,000 warrants convertible into equal number of Equity Shares of Re.l/- each at a premium of Rs.91A per Share to the Promoter Group and received Rs.920.00 lacs being 10% of the value of the warrants during the year 2007-08. As per the terms of issue and allotment of warrants, Promoters/allottees had the option to get the warrants converted into Equity Shares within a period of 18 months from the date of allotment by payment of balance 90% of the issue price. The said period of 18 months expired and the Company did not receive the balance 90% of the issue price. Therefore, 10% of the issue price received initially was forfeited and transferred to Capital Reserve.

10. (Note no. 12 of Schedule - 23)

a) Fixed Deposits with Scheduled Banks include an amount of Rs.84.55 lacs (Previous year Rs.6l.05 lacs) specifically earmarked for construction of Molasses Storage Tank.

b) Fixed Deposits pledged with Excise authorities etc. Rs.45.01 lacs (Previous year Rs.45.01 lacs).

11. (Note no. 15 of Schedule - 23)

The Company has recognised Rs.5904.18 lacs as Minimum Alternate Tax (MAT) Credit Entitlement, the credit of which would be available based on the provisions of Section 115 JAA of the Income Tax, 1961. The Management, based on the future profitability projections and also profit earned during the year, is confident that there would be sufficient taxable profit in future which will enable the Company to utilise the above MAT Credit Entitlement.

12. (Note no. 17 of Schedule - 23)

Excess amount of Levy Sugar Price received to date for various Sugar Seasons as per Orders of the Honble High Court Rs.43.15 lacs (Previous year Rs.43.15 lacs) has not been credited to the Profit & Loss Account as the matter is subjudice.

13. (Note no. 18 of Schedule - 23)

b) The Contingent Liabilities & Liabilities mentioned at SI. No. 2 & 18 (a) respectively are dependent upon Court decision / out of Court settlement/disposal of appeals etc.

c) No reimbursement is expected in the case of Contingent Liabilities & Liabilities shown respectively under Sl.No. 2 & 18(a) above and in view of this no asset has been recognised in this respect.

14. (Note no. 21 of Schedule - 23) Excise Duty & Cess on Stock :

The amount of Excise Duty & Cess on Stock shown in Schedule - 16 represents differential Excise Duty & Cess on Opening & Closing Stock of finished goods/by products.

15. (Note no. 25 of Schedule - 23)

The Company has been granted eligibility certificate dated 23rd February, 2007 under New Sugar Industry Promotion Policy, 2004 of the Government of Uttar Pradesh. Accordingly, incentives aggregating to Rs.3722.93 lacs (Previous year Rs.4281.53 lacs) allowable under the above policy have been accounted for.

The above policy has been terminated by the Government of Uttar Pradesh vide order dated 4th June, 2007 wherein the Government expressed its intention to introduce another policy. The Company has been legally advised that it continues to be eligible to receive the incentives under the above policy. Furthermore, the Company has filed Writ Petition against withdrawal of the aforesaid policy which has been admitted by the Lucknow Bench of the Honble Allahabad High Court vide its Order dated 9th May, 2008, the hearing in respect of which is in progress.

16. (Note no. 26 of Schedule - 23) Intangible Assets

a) The unamortised amount of Share Issue Expenses Rs.53-27 lacs is to be amortised in the next 6 months.

b) The unamortised amount of Computer Software (Acquired) Rs.1.79 lacs and Rs.0.21 lac are to be amortised equally in the next 3 years & three months and 3 years & seven months respectively.

17. (Note no. 27 of Schedule - 23) Employee Benefits :

As per Accounting Standard - 15, the disclosure of Employee Benefits as defined in the Accounting Standard are as follows:

Defined Contribution Plan :

Employee benefits in the form of Provident Fund and Labour Welfare Fund are considered as defined contribution plan except that Provident fund in respect of certain employees is contributed to a fund set up by the Company which is treated as defined benefit plan since the Company has to meet the interest shortfall.

Defined Benefit Plan:

Post employment and other long-term employee benefits in the forms of gratuity and leave encashment are considered as defined benefit obligation. The present value of obligation is determined based on actuarial valuation using projected unit credit method as at the Balance Sheet date. The amount of defined benefits recognised in the Balance Sheet represent the present value of the obligation as adjusted for unrecognised past service cost and as reduced by the fair value of plan assets.

Provident fund in respect of certain employees is contributed to a fund set up by the Company which is treated as a defined benefit plan since the Company has to meet the interest shortfall. The interest shortfall of Rs.6.54 lacs (Previous year Rs.24.6l lacs) at the year end is recognised as expense for the year.

IX. Basis used to determine the expected Rate of return on Plan Assets :

The basis used to determine overall expected Rate of return on Plan Assets is based on the current portfolio of assets, investment strategy and market scenario. In order to protect the Capital and optimise returns within acceptable risk parameters, the Plan Assets are well diversified

18. (Note no. 28 of Schedule - 23)

Segment information as per Accounting Standard - 17 on Segment Reporting :

The Company has identified four primary business segments viz. Sugar, Distillery, Co-generation and Organic Manure. Segments have been identified and reported taking into account the nature of the products, the differing risks and returns, the organisational structure and internal business reporting system.

a) Revenue and expenses have been identified to a segment on the basis of relationship to operating activities of the segment. Revenue and expenses which relate to enterprise as a whole and are not allocable to a segment on reasonable basis have been disclosed as "Unallocable".

b) Segment Assets and Segment Liabilities represent assets and liabilities of respective segment. Investments, tax related assets/ liabilities and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocable".

d) Information about Secondary Geographical Segments :

i) The information about secondary segments has not been furnished as the export revenue is less than 10% of the total revenue of the Company.

ii) The Company has common fixed assets located in India for producing goods for domestic and overseas markets. Therefore, the value of fixed assets and additions thereto can not be allocated to the geographical segments. Hence, the total carrying amount of segment assets and cost incurred during the year to acquire segment assets has not been given in respect of secondary segments.

19. (Note no.29 of Schedule - 23)

Related party disclosures as per Accounting Standard - 18 are given below: a) Name of the related parties and description of relationship :

i) Subsidiaries : Indo Gulf Industries Ltd.

(Control exists) Balrampur Overseas Pvt. Ltd.

ii) Associates : Avantika Ganna Pvt. Ltd. (Till 20.12.2008)

(Where the Company exercises significant influence) Asia Sugar Industries Pvt. Ltd. (Till 02.07.2009)

iii) Key Managerial Personnel (KMP): Mr. Vivek Saraogi - Managing Director

Mrs. Meenakshi Saraogi - Joint Managing Director

Mr. K.N. Ranasaria - Whole-time Director (upto 11.05.2009)

Mr. Kishor Shah - Director-cum-Chief Financial Officer

Mr. R.N. Mishra - Whole-time Director (upto 31.07.2008)

Dr. Arvind Krishna Saxena - Whole-time Director (from 01.08.2008)

iv) Relatives of Key Managerial Personnel:

Mr. Vivek Saraogi 1. Mr. K.N.Saraogi (Father) - Chairman Emeritus

2. Mrs. Meenakshi Saraogi (Mother)

3. Mrs. Sumedha Saraogi (Wife)

4. Mr. Karan Saraogi (Son)

5. Miss Avantika Saraogi (Daughter)

6. Mrs. Satyawati Saraogi (Grand-Mother)

7. Mrs. Stuti Dhanuka (Sister)

Mrs. Meenakshi Saraogi 1. Mr. K.N. Saraogi (Husband)

2. Mr. Vivek Saraogi (Son)

3. Mrs. Stuti Dhanuka (Daughter)

4. Mrs. Sumedha Saraogi (Daughter-in-Law)

5. Mr. Karan Saraogi (Grand-Son)

6. Mrs. Satyawati Saraogi (Mother-in-Law)

7. Miss Avantika Saraogi (Grand-Daughter)

v) Enterprises in which KMP and their 1. Kamal Nay an & Co.

relatives have substantial interest : 2. Meenakshi Mercantiles Ltd.

3. Udaipur Cotton Mills Co. Ltd.

4. Kamal Nayan Saraogi (HUF)

5. Vivek Saraogi (HUF)

20. (Note no.30 of Schedule-23)

Disclosure under clause 32 of the Listing Agreement:

There are no transactions (other than loan transactions with subsidiaries as given in para 29 (b) (xix) (b) above) which are required to be disclosed under Clause 32 of the Listing Agreement with the Stock Exchanges where the Equity Shares of the Company are listed.

21. Previous years figures have been re-grouped / re-arranged wherever found necessary to make them comparable with those of the current year.

 
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